annual report

Transcription

annual report

ANNUAL
REPORT
2012
ANNUAL
REPORT
2012
CONTENTS
05
COMPANY OVERVIEW
19
FINANCE AND
ADMINISTRATION
37
COMMERCIAL OPERATIONS
Introduction
Letter from the Chairman
Identification of the Company
Brief History
The AES Gener Group of Companies
Ownership and Control
Administration
Chilean Electric System
Investment and Financing Policies
Colombian Electric System
Credit Rating
Non-electric Business
Financial Highlights of 2012
Earnings Distribution
Dividend Policy
Share Transactions
Summary of Shareholders’ Comments and Proposals
Insurance
Brand Names and Internet Domains
71
55
OPERATIONS AND
MAINTENANCE
BUSINESS DEVELOPMENT
Electric Business in Chile
Projects under construction
International Electric Business
79
Projects under development
95
211
CORPORATE SOCIAL
RESPONSIBILITY
FINANCIAL STATEMENTS
ADDITIONAL
INFORMATION
Corporate Values and Business Ethics
Consolidated Financial Statements
Relevant Events
Responsibility to the Community
Discussion and Analysis of Consolidated
Financial Statements
Information on Related Companies
Responsibility to Shareholders
and Investors
Responsibility to Workers
Responsibility to Customers
Responsibility to Suppliers
and Contractors
Subsidiaries’ Financial Statements,
Summarized
Addresses and Telephone Numbers
of Power Plants
Signing and Statement
of Responsibility
01
CHAPTER
COMPANY
OVERVIEW
01 / COMPANY OVERVIEW
INTRODUCTION
AES Gener S.A. (AES Gener or the Company) is an open stock corporation whose mission
is to generate electricity in Chile safely, reliably, and sustainably, meeting its commitments
with customers, shareholders, employees, communities, suppliers, and other individual
and group stakeholders.
As of December 31, 2012, with all of its plants in operation(1),
the Company provides electricity to the Sistema Interconectado
Central (SIC, Central Grid) through four run-of-river hydroelectric
plants, one coal-fired thermoelectric plant, five diesel-fired
thermoelectric plants, and one cogeneration plant, all of which are
owned directly by AES Gener.
(1) Some of these plants have more than one generating unit.
6
Through its subsidiaries, it also provides the SIC with electricity
from a combined cycle plant that can operate on either natural
gas or diesel oil, and from a diesel oil-fired plant, both of which are
owned by Sociedad Eléctrica Santiago S.A. (Eléctrica Santiago), as
well as from a coal-fired thermoelectric plant owned by Empresa
Eléctrica Ventanas S.A. (Eléctrica Ventanas).
ANNUAL REPORT AES GENER 2012
It also supplies the grid with power through its related company
Empresa Eléctrica Guacolda S.A. (Guacolda), which operates four
coal-fired units on Guacolda Island in Huasco in the Region of
Atacama.
Additionally, the Company provides electricity to the Sistema
Interconectado del Norte Grande (SING, Northern Grid) through
its subsidiaries Norgener S.A. (Norgener) and Empresa Eléctrica
Angamos S.A. (Eléctrica Angamos). Norgener has a coal-fired
thermoelectric plant in the city of Tocopilla, while Eléctrica Angamos
has a plant, also coal-fired, located in the municipality of Mejillones.
This combination of electric generation options provides AES
Gener with competitive advantages in the Chilean electric market,
as it does not depend exclusively on a particular energy source to
produce electricity.
In addition to its activities in the Chilean electricity industry, AES
Gener produces electricity in Colombia through its subsidiary AES
Chivor, which has a hydroelectric plant at the Boyacá reservoir, and
in Argentina through its subsidiary TermoAndes S.A. (TermoAndes),
which has a natural gas-fired combined cycle plant in Salta.
TermoAndes is also connected to the SING through a transmission
line owned by the subsidiary InterAndes, and to the Sistema
Argentino de Interconexión, or SADI, the Argentine Grid.
AES Gener transports natural gas through its companies GasAndes
S.A. and GasAndes Argentina S.A.
At the end of 2012, the Company finished construction on a coalfired plant, Ventanas IV, which belongs to the subsidiary Empresa
Eléctrica Campiche S.A. (Eléctrica Campiche) and is located in
Ventanas in Chile’s Region V. Another development in 2012 was
the start of construction on the Tunjita hydroelectric plant in
Colombia, which belongs to AES Chivor; and on the 5th unit at the
Guacolda complex in Huasco, Region III, owned by AES Gener’s
related company Guacolda.
As of December 31, 2012, 70.67% of AES Gener stock is owned
by Inversiones Cachagua Ltda., a subsidiary of AES Corp (AES), an
international power and infrastructure company that does business
in 25 countries. Its headquarters is located in Arlington, Virginia, in
the U.S.
7
LETTER FROM THE CHAIRMAN
DEAR SHAREHOLDERS:
It gives me great pleasure to report to you on the business activities
of AES Gener S.A. (AES Gener) during 2012. This year was marked
by major operational, business, and financial achievements that
would not have been possible without the professionalism and
dedication of our people, or without the strategic vision of our
company’s executives.
The efforts of our collaborators have been key to the success of
our expansion plan that has been underway in recent years. The
plan involves the construction and startup of 10 projects, which
have boosted our installed capacity by 49%. It includes Unit 4 at
the Ventanas Complex, whose operational testing began at the end
of 2012.
Another one of our highlights was the company’s record generation
level due to the commissioning of new projects and greater
availability at our plants, which reached a yearly rate of 91%. With
these figures, the AES Gener Group’s annual generation increased
by 52% from 2007 to 2012, helping to support the country’s
growth and satisfy its needs.
Innovation and excellence are undoubtedly components essential
to the work of our people.These fundamentals add significant value
to our company’s operations, and they are the reason behind one of
the most important highlights of 2012, the recognition AES Gener
received for its successful leadership, construction, innovation, and
operational excellence at the Angamos plant. In less than one year,
this plant received international recognition twice, winning the
International Edison Award from the Edison Electric Institute, as
well as the Plant of the Year Award from the specialized periodical
Power Magazine.
Our operations would not be top quality if our main concern were
not focused on our first value: safety. I am proud to say that our
company’s accident rate declined from 2011 to 2012 (from 0.41%
to 0.39%) even though our work force increased. It is with great
satisfaction that we note that our company’s accident rates are
significantly below the national average, which was 5.5% in 2011.
8
In addition, I am particularly pleased to reaffirm AES Gener’s
commitment to the environment. In this context and fully
complying with the standards required by the authorities, in 2012
the investments and the installation works of emission control
equipment (retrofits) began in units I and II of both the Ventanas
and Norgener plants. The consolidated total investment is US$220
million, investment that will be completed during 2014 as required
by law.
In commercial matters, I would like to note the company’s successful
strategy in attaining today the balance between projected efficient
energy from our plants and the supply agreements in the future.
In 2012 we had to deal with an “imbalance” on the Central Grid (or
SIC) that resulted in a 26% decline in the gross margin compared
to that of 2011 due to higher supply contracts than could be met
with efficient generation. We were able to correct this situation
when the Ventanas IV power plant went into operation in March
of 2013. Also, despite this imbalance, AES Gener signed new longterm agreements that started in 2012, knowing that the long-term
benefits would outweigh the short-term costs under this scenario.
In addition, we must not overlook the fact that the company was
required to supply contracts signed by Campanario, which went
into bankruptcy in 2011.
Looking back over 2012 financial matters, we should note the
upgrade in the credit rating assigned to AES Gener by Fitch, from
BBB- up to BBB. Another highlight is the financial contribution from
our Colombian operations, which reached a record EBITDA of
US$245 million.
So, despite the huge hurdles the company faced in 2012, such as
the energy imbalance on the SIC and the halting of TermoAndes’
energy exports to the SING, we finished the year with solid results.
Exceptional progress was made in the financing for the Cochrane
and Alto Maipo projects, and financing for Guacolda V was closed
in October.
I would particularly like to mention the coal-fired Ventanas IV plant,
which completed the different processes we had scheduled for
2012. It was synchronized to the SIC in December of 2012, and
it was successfully commissioned for commercial operations on
March 15, 2012.
December of 2012. The company progressed with the preliminary
works for this plant in 2012, and three construction agreements
were signed for the main works of supplying and assembling the
generation equipment for the two plants, as well as for civil and
underground works.
We started several new projects in the second phase of our
expansion plan in 2012, and we expect to add new projects in
2013. AES Chivor started work on the 20 MW Tunjita run-of-river
hydroelectric plant in July, and progress stood at 12.7% by the
end of 2012. Construction also got underway on the fifth unit of
related company Guacolda’s 152 MW plant in October; works are
currently in the leveling, clearing, and surveying stage.
We at AES Gener are fully aware that, in order to develop our
projects successfully and to obtain favorable results year after year,
we must see the whole picture and stick to the company’s values.
That is why we have developed a solid policy of corporate social
responsibility (CSR) to complement our operational, financial,
environmental, and commercial excellence. We have built this policy
on the three pillars of education, employability, and infrastructure
for the community.
One of our most noteworthy achievements of 2012 is the
progress on the 532 MW Cochrane thermoelectric project, which
will supply energy to the northern grid (the SING) from its location
in the Region of Antofagasta. The preliminary works on Cochrane
have begun under the engineering and construction contract with
Posco Engineering & Construction. Long-term supply agreements
have already been signed with large mining companies for a large
portion of the power that will be generated at the plant.
The company was also able to finalize the financing for the project,
which will be executed using the project finance model. The
Mitsubishi Corporation became a major shareholder in Eléctrica
Cochrane after acquiring 40% of its stock in November.
Another of our emblematic projects is the 531 MW Alto Maipo runof-river plant located in the Metropolitan Region of Santiago, which
received the electricity concession permit from the government in
After a thorough analysis of the needs of each city or township that
serves as locations for our facilities, present or future, the company
has started important social programs that it has implemented
hand in hand with the community in order to add social value
to the communities where we have operations or are building
projects. Our CSR policy works through our Fundación AES
Gener foundation, which has brought several programs to fruition
that have positioned the company as a key player in the work of
community ties. The goal is to develop and contribute to a better
quality of life for our neighbors, going far beyond our day-to-day
operations.
While it is true that we faced a number of commercial and
operational hurdles in Chile in 2012 that decreased our gross
earnings in the two Chilean markets this year, we have no doubt
9
that this has been a year full of operational, commercial, financial, environmental, and developmental
achievements. Each and every one of these achievements has gone hand in hand with our commitment
to supply reliable energy in a way that is sustainable with the environment and with the communities
in which we operate and with which we have worked intensely, trying always to be good neighbors and
to contribute solidly to the growth of the entire country.
Therefore, I would like to express my deep gratitude for the trust you have placed in the Board of Directors and
in the company in general. I would also like to extend this appreciation to each and every worker at AES Gener who,
through their daily efforts, contribute to the growth of our organization. You can rest assured today that AES Gener remains
steadfast in its commitment to operating under the highest standards of operational excellence, seeking constant improvement, and never
losing sight of our top value: safety. We are certain that this will keep us on the track toward competitive, sustainable development, for the
company and for Chile.
Thank you all for a great 2012.
ANDRÉS GLUSKI W.
Chairman of the Board
10
IDENTIFICATION OF THE COMPANY
COMPANY NAME AES Gener S.A.
CHILEAN TAXPAYER ID NUMBER 94.272.000-9
TYPE OF COMPANY Open Stock Company
REGISTRATION IN THE SECURITIES REGISTRY No. 0176
ADDRESS
Rosario Norte 532, Piso 19, Las Condes, Santiago, Chile
TELEPHONE (56-2) 2686 8900
Fax (56-2) 2686 8991
P.O. BOX No. 3514, Santiago
WEB PAGE
www.aesgener.com
STOCK EXCHANGE STICKER SYMBOL AESGENER
11
BRIEF HISTORY
AES Gener S.A. was founded on June 19, 1981 in a public deed
registered by Santiago Notary Public Patricio Zaldivar Mackenna.
The name of the Company at the time was Compañía Chilena de
Generación Eléctrica S.A. (Chilectra Generación S.A.). Its by-laws
were approved by the Chilean Securities and Insurance Authority
in Resolution 410-S of July 17, 1981 and were published in Diario
Oficial No. 31,023 on July 23 of the same year. The Company
is registered in the Business Registry of the Santiago Property
Registrar on pages 13,107 No. 7,274 of 1981.
The origins of the Company, however, date back to 1889, only
eight years after Thomas Alva Edison invented the light bulb. That
was when the Chilean Electric Tramway and Light Company was
founded in Santiago; its assets later merged in 1921 with those of
the Compañía Nacional de Fuerza Eléctrica, created in 1919, to
form the Compañía Chilena de Electricidad (Chilectra). This was a
privately owned company until 1970, when it was nationalized and
taken over by the Corporation for the Development of Production
(CORFO). In June 1981, it was restructured into a parent company,
Chilectra S.A., and three subsidiaries: Chilectra Metropolitana S.A.,
a distribution company serving the Santiago metropolitan area;
Chilectra Quinta Región S.A., a distribution company serving
Valparaiso and the Aconcagua Valley; and Chilectra Generación
S.A., an electricity generation company and owner of the former
Chilectra’s transmission assets.
Chilectra Generación S.A. began operating as an independent
company on August 1, 1981. In 1986, CORFO began privatizing
the company, and by January 1988, 100% of its ownership had
been transferred to the private sector.
At the Annual Shareholders’ Meeting in September 1989, it was
agreed to change the Company’s name to Chilgener S.A. At that
time, the Company had an installed capacity of 579 MW distributed
throughout Chile’s Metropolitan and Valparaiso Regions. Nine
years later, in March of 1998, the Company’s shareholders
agreed once again to change its name, this time to Gener S.A.
The primary reason for the change was to reflect the Company’s
new international standing as it expanded its operations to new
markets and businesses both in Chile and abroad.
In addition to participating in the electricity generation business in
Chile, Argentina, Colombia, and the Dominican Republic, Gener
has also expanded into other activities such as the generation of
steam; the extraction and sale of coal; the exploration, extraction,
and transportation of natural gas; the exploration and production
of oil; the production and sale of densified biofuel; shipping
and port services; and engineering services provided
primarily to the electricity and sanitation sectors.
12
In April 2000, Gener began the search for a strategic partner
or investor that would enable it to continue growing within the
industry’s new structure. This decision was based on the growth
and development restrictions imposed on the Company by its
smaller size and debt capacity as compared to its large international
competitors.
At the end of this process, AES Corp, through its subsidiary
Inversiones Cachagua Ltda., launched a tender offer for a
controlling percentage of the Company. Additionally, it entered into
an agreement with the French company TotalFinaElf under which
the latter agreed to purchase Gener’s electricity assets in Argentina
if the tender offer was successful. Both operations were subject to
a due diligence process.
On December 28, 2000, the Santiago Stock Exchange auctioned
Gener shares, and Inversiones Cachagua Ltda. purchased 61.11%
of the Company’s capital stock. On the following day in the United
States, Gener’s ADRs, representing a 34.56% stake in the Company,
were exchanged for AES Corp shares. After taking control of the
Company, Inversiones Cachagua Ltda. held a second public offering
in Chile in February 2001, acquiring an additional 2.87% of the
Company’s stock. At this point, Inversiones Cachagua’s ownership
equaled 98.54% and would later increase to 98.65% through other
minor purchases on the stock market.
In April 2006, Inversiones Cachagua sold 7.59% of its shares in
AES Gener to other investors; it sold 0.91% in May 2007, and
repeated the operation in October, selling an additional 10.18%
and remaining with a 80.11% stake in the Company.
In June 2008, AES Gener concluded the preemptive right period
of a capital increase process for approximately US$272 million.
Inversiones Cachagua took part in the process and increased
its ownership to 80.16% by the end of the preemptive period.
However, in November 2008, Inversiones Cachagua sold 9.55%
of AES Gener on the stock market, reducing its stake to 70.61%.
Finally, AES Gener carried out a new capital increase for
approximately US$246 million, whose preemptive right period
ended in February 2009. Inversiones Cachagua took part in the
process and increased its participation slightly.
As of December 31, 2012, Inversiones Cachagua’s stake in the
Company totaled 70.67%.
As part of the AES group, Gener changed its name to AES Gener
S.A. in 2001 and began to sell assets in order to concentrate the
Company’s business activities in power generation, primarily in
Chile. In 2004, through a capital increase, Inversiones Cachagua’s
stake in the Company increased to 98.79%.
13
THE AES GENER
GROUP OF COMPANIES
99.99%
Sociedad
Eléctrica
Santiago S.A.
94%
0.01%
92.04%
6%
Energen S.A.
66.99%
50%
Empresa
Eléctrica
Guacolda S.A
33.01%
13%
13%
Gasoducto
GasAndes
S.A.
Gasoducto
GasAndes
Argentina
S.A.
7.96%
Gener
Argentina
S.A.
86.99%
TermoAndes
S.A.
InterAndes
S.A.
99.99%
Empresa
Eléctrica
Ventanas
S.A.
0.01%
13.01%
99.99%
Empresa
Eléctrica
Angamos
S.A.
0.01%
NOTE:
This chart lists each company with its full legal name (e.g. AES Gener S.A. and Sociedad Eléctrica Santiago S.A.). In the rest of this annual report, except for the
financial statements, an abbreviated form of the names is used to refer to the companies (e.g. AES Gener and Eléctrica Santiago).
Additionally, “AES Gener Group” refers to AES Gener and its subsidiaries and related companies.
14
99.99%
Norgener
S.A.
50.63%
47.50%
AES Chivor
S.A.
99.99%
0.63%
Inversiones
Nueva
Ventanas
S.A.
100%
0.01%
Alto Maipo
SpA
100%
Gener Blue
Water Ltda.
100%
Genergía
Power Ltda.
0,01%
AES Chivor
y Cía. SCA
E. S. P.
99.99%
0.63%
99.99%
Empresa
Eléctrica
Campiche
S.A.
60.00%
Empresa
Eléctrica
Cochrane
SpA
99.99%
Inversiones
Termoenergía
de Chile
Ltda.
99.99%
Genergía S.A.
0.01%
Subsidiaries
Related Companies
15
OWNERSHIP AND CONTROL
AES Gener is an open stock corporation whose shares are traded on three
stock exchanges: the Santiago Stock Exchange, the Valparaiso Securities Exchange, and the Chilean Electronic Stock Exchange.
As of December 31, 2012, shareholders’ equity stood at US$2.481 billion, divided into 8,069,699,033 shares and
distributed among 1,610 shareholders. At the end of the fiscal year, Inversiones Cachagua Ltda. held a 70.67% stake
in AES Gener. The American company AES Corp. controls AES Gener indirectly through its approximately 99.9%
ownership of Inversiones Cachagua Ltda.
Due to the fact that the ownership of AES Corp is highly disperse, the names of the individuals who own shares of that
international corporation are omitted from this report.
SHAREHOLDERS’ OWNERSHIP AS OF DECEMBER 31, 2012
NAME
Inversiones Cachagua Limitada
Banco de Chile through other companies
OWNERSHIP
5,703,106,137
70.7%
177,028,830
2.2%
Celfin Capital S.A. Stock Brokers
171,606,067
2.1%
Provida C Pension Fund
152,964,903
1.9%
Banco Itaú through investors
139,820,959
1.7%
Capital C Pension Fund
105,602,150
1.3%
Provida A Pension Fund
105,179,316
1.3%
Capital A Pension Fund
102,824,086
1.3%
Cuprum A Pension Fund
102,392,718
1.3%
94,717,189
1.2%
Banco Santander - JP Morgan
16
SHARES
Habitat C Pension Fund
92,305,117
1.1%
Provida B Pension Fund
88,202,242
1.1%
Total 12 largest shareholders
7,035,749,714
87.2%
Other shareholders (1,598)
1,033,949,319
12.8%
TOTAL SHARES
8,069,699,033
100.0%
SHAREHOLDERS BY TYPE AS OF DECEMBER 31, 2012
70.7%
13.9%
AES Corp.
Others
TYPE OF
SHAREHOLDER
NUMBER OF
SHAREHOLDERS
NUMBER
OF SHARES
OWNERSHIP
Chilean individual
1,317
29,381,447
0.36%
Foreign individual
1
1,000
0.00%
Foreign legal entity
9
419,202,570
5.20%
Chilean legal entity
283
7,621,114,016
94.44%
1,610
8,069,699,033
100.00%
TOTAL SHAREHOLDERS
15.4%
Pension Funds
(AFPs)
OWNERSHIP BY
TYPE
As of December 31, 2012, shareholders’ equity stood at US$2,481 billion,
divided into 8,069,699,033 shares and distributed among
1,610 shareholders.
17
02
CHAPTER
FINANCE
AND
ADMINISTRATION
02 / FINANCE AND ADMINISTRATION
ADMINISTRATION
BOARD OF DIRECTORS
REGULAR DIRECTORS
as of December 31, 2012
(1)
Andrés Gluski / CHAIRMAN
Master in Economics, University of Virginia, USA
Ph.D. in Economics and International Finance, University of Virginia, USA
Passport No.: 6024620
Venezuelan citizen
Arminio Borjas
Attorney at Law, Universidad Católica Andrés Bello, Venezuela
Passport No.: D0259811
Venezuelan citizen
Iván Díaz-Molina
Civil Engineer, Universidad Nacional de Córdoba, Argentina
Master of Science, Carnegie-Mellon University, USA
Chilean ID No.: 14.655.033-9
Argentine citizen
Juan Andrés Camus
Business Administrator, Pontificia Universidad Católica de Chile, Chile
Chilean ID No.: 6.370.841-0
Chilean citizen
Radovan Razmilic
Road, Canal, and Port Engineer, Universidad Politécnica Superior de Madrid, Spain
RUT: 6.283.668-7
Chilean citizen
Tom O’Flynn (2)
MBA in Finance, University of Chicago, USA
U.S. citizen
ALTERNATE DIRECTORS
Edgardo Campelo
Public Accountant, Universidad de Buenos Aires, Argentina
Passport No.: 16171019N
Argentine citizen
Fernando Pujals
Mechanical Engineer, Universidad Nacional de Rosario, Argentina
MBA, IMD, Switzerland
Passport No.: 7.685.597M
Argentine citizen
Gardner Walkup
Petroleum Engineering, Stanford University, USA
Chemical Engineering, University of California at Davis, USA.
U.S. citizen
Joel Abramson
Bachelor of Arts in International Politics and Economics, Middlebury College, USA
U.S. citizen
Jorge Rauber
Electrical Engineer, Universidad Nacional de la Plata, Argentina
Passport No.: 20605997N
Argentine citizen
Patricio Testorelli
Attorney at Law, Universidad Católica Argentina, Argentina
Master in Business Law, Universidad Austral, Argentina
Passport No.: 16.764.888
Argentine citizen
Varsovia Valenzuela
Business Administration, Pontificia Universidad Católica de Chile, Chile
Chilean citizen
(1) Regular Director Edward C. Hall submitted his resignation on November 19, 2012. Mr. Andrew Vesey was designated as his replacement on February 26, 2013.
(2) Regular Director Victoria Dux Harker submitted her resignation on July 25, 2012, designating Mr. Tom O’Flynn as her replacement under an agreement adopted by the Board
on September 26, 2012.
21
22
EXECUTIVES as of December 31, 2012
Luis Felipe Cerón / CHIEF EXECUTIVE OFFICER
Civil Industrial Engineer, Pontificia Universidad Católica de Chile, Chile
Master of Science in Accounting and Finance, The London School of Economics, England
Chilean citizen
Javier Giorgio / CHIEF OPERATIONS OFFICER
Electronic Engineer, Universidad Tecnológica Nacional, Argentina
MBA, Universidad del Cema, Argentina
Chilean ID No.: 23.202.311-2
Argentine citizen
Daniel Stadelmann / CHIEF FINANCIAL OFFICER
Bachelor of Science in Administration and Finance, , University of St. Gallen, Switzerland
MBA, IMD, Switzerland
Chilean citizen
Iván Jara / CHIEF ENGINEERING AND CONSTRUCTION OFFICER
Civil Mechanical Engineer, Universidad de Chile, Chile
MBA, Universidad Adolfo Ibañez, Chile
Chilean ID No.: 12.458.775-1
Chilean citizen
Michael Whittle / CHIEF DEVELOPMENT OFFICER
Bachelor of Arts, Claremont McKenna College, USA
Master of Science in Foreign Service, Georgetown University, USA
U.S. citizen
Alberto Zavala / LEGAL COUNSEL
Attorney at Law, Pontificia Universidad Católica de Chile, Chile
Chilean citizen
Mariana Soto / CHIEF CORPORATE AFFAIRS OFFICER
Attorney at Law, Universidad de Chile, Chile
Chilean ID No.: 12.240.551-6
Chilean citizen
23
REMUNERATIONS AND ACTIVITIES
BOARD OF DIRECTORS
The Board of Directors is the official organization that, in
accordance with the Chilean Corporation Law Code and the
Company’s by-laws, is responsible for the administration of the
Company. It is composed of seven regular members and their
respective alternates, all of whom are elected for a three-year term
at the ordinary shareholders’ meeting and are eligible for reelection.
AES Gener’s by-laws specify that its Directors are not to be
remunerated for their duties as such.
During fiscal year 2012, the Company’s Directors did not receive
remuneration of any kind for additional duties; for expenses of
representation, travel, or gifts; or any other stipend.
However, those Directors that are also Board Committee members
received remuneration as detailed in the following section.
The Board of Directors did not incur expenses for consultation
services in 2012.
BOARD COMMITTEE
MEMBERS
The members of the Company’s Board Committee are Mr. Iván
Díaz-Molina (Chairman and Independent Director), Mr. Juan Andrés
Camus, and Mr. Radovan Razmilic.
REMUNERATIONS AND BUDGET
At the ordinary shareholders’ meeting held on April 27, 2012, it
was agreed to set Board Committee members’ fees at 160 UF per
month.
The Committee did not make use of the annual expense budget
of US$25,000 approved at the ordinary shareholders’ meeting for
the 2012 fiscal year.
Remunerations were paid to the Directors who are Board
Committee members in the amounts shown in the following table.
24
BOARD COMMITTEE REMUNERATIONS (UF)
2012
2011
Juan Andrés Camus
1,920
1,920
Iván Díaz-Molina
1,920
1,920
Radovan Razmilic
1,920
1,120
-
800
5,760
5,760
Jorge Rodríguez
Total
ANNUAL REPORT ON BOARD COMMITTEE ACTIVITIES
In accordance with Article 50 bis of the Chilean Corporations Law Code, amended by Law 20,382, the Board Committee met on 7 occasions
in 2012 to make decisions regarding the Company’s operations and contracts with related companies in accordance with Title XVI of Law
18,046 governing corporations. It also discussed other matters within its legal capacity and subsequently notified the Board of Directors of
its decisions and recommendations. The operations between related companies examined by the Committee were in accord with market
conditions and in the interest of the corporation, so the Committee recommended their approval by the Board of Directors.
At the January 5 meeting, the Committee examined the
information on the following operations with related companies:
i) The annual renewal of the insurance policy held with AES Global
Insurance, an AES Corp related company, covering AES Gener
and its subsidiaries against all risk and business interruption. The
Board Committee examined the information presented and,
wanting more information, unanimously agreed to request that
the company’s management recommend three independent
consultants to the Committee, from which it will select one to
carry out an insurance market study to determine the premiums
that could be paid for the coverage needed under current market
conditions.
ii) The fees paid in 2010 and 2011 to the parent company AES Corp.
for internal auditing services for the company and its subsidiaries.
The fees were unanimously approved by the Committee.
At the March 28 meeting, the Committee was informed of,
examined, and approved the company’s balance sheet and financial
statements for the fiscal year ended December 31, 2011, as well
as the external auditor’s report. During the meeting, it also agreed:
i) To recommend to the Board that Ernst & Young auditing firm be
proposed at the Company’s next ordinary shareholders’ meeting as
external auditors for fiscal year 2012.
ii) To approve the hiring of Ernst & Young to provide services other
than auditing that are not expressly forbidden, such as tax, legal, and
risk consultancy, provided that Ernst & Young report, in each case
and on each occasion, that its provision of that particular service
will not affect its independence.
iii) Agreement on internal auditing services with the parent
company AES Corp. The Committee recommended that the
agreement be signed on the condition that it contains efficiency
indicators for the internal auditing services to be provided, stating
the hours to be used and the maximum fees to be paid.
At the January 25 meeting, the Committee examined the
information and approved the renewal of the technical
service agreement with AES Servicios América
S.R.L., a subsidiary of AES Corp, covering
administration of the SAP system.
25
iii) ii) iii)
To recommend to the Board that it
request that Ernst & Young auditing
company replace the partner in charge
of the company’s account every four
years as an appropriate control measure.
The partner in charge of the AES Gener
account should be changed starting with the 2012
fiscal year.
At the same meeting, the Committee examined the information
and approved the annual renewal of the insurance policy held with
AES Global Insurance, an AES Corp. related company, covering
AES Gener and all of its subsidiaries against all risk and business
interruption.
At the May 23 meeting, the Committee appointed Iván DíazMolina President of the Board Committee.
At the June 27 meeting, the Committee examined the information
and approved the corporate restructuring process, which included
the merger of Energy Trade and Finance Corporation with AES
Chivor y Cía. SCA E.S.P., and the issuance of a loan from the latter
company to AES Gener.
At the August 16 meeting, the Committee examined the
information and approved the following operations with related
companies:
i) Modification of the conditions for signing the agreement selling
water rights in the Rahue and Cautín Rivers to BESALCO, which
conditions had been approved at the December 11, 2011, Board
meeting. The Committee recommended that the agreement be
signed, with only Director Juan Andrés Camus abstaining(l).
(1) Juan Andrés Camus is also Director of BESALCO Construcciones S.A.
26
ii) Modification of the mercantile account agreement signed
between AES Gener and its subsidiary Eléctrica Santiago. The
Committee unanimously recommended that the agreement be
signed.
At the November 28 meeting, the Committee examined
the information and approved the release of the coal purchase
agreement between AES Gener and AES Hawaii, a subsidiary of
AES Corp.
EXECUTIVES
Total remuneration for the Company’s executive officers during
2012 amounted to US$5,077 million. This includes fixed monthly
remuneration and variable bonuses based on corporate earnings
and performance, which are also awarded to the other AES Gener
employees.
The Company’s incentive plan for its executives consists of an annual
variable bonus based on corporate earnings and performance; the
amount of the bonus is determined on a yearly basis according to
the aforementioned parameters.
It should be noted that Company policy stipulates that AES Gener
executives who are members of related companies’ Boards of
Directors do not receive remuneration for their duties as directors,
or that they may decline the allowance due them as individuals.
In 2012, the Company disbursed a total of MUS$262 in severance
pay for its main executives.
INVESTMENT AND FINANCING POLICIES
In accordance with the agreement reached at the extraordinary
general shareholders’ meeting held on July 4, 2001, the Company’s
by-laws make no reference to investment, financing, or commercial
policies either for the Company or for its subsidiaries.
Not withstanding the above, the by-laws state that in order for
the Company to fulfill its corporate purpose, it may manage the
investments that it makes in each and every one of the companies
that it forms or to which it makes contributions; it may supervise and
coordinate the management of the companies that it forms and to
which it makes contributions; and it may provide, to the companies
that it forms or to which it makes contributions, management
services; auditing services; financial, commercial, technical, and legal
consulting services; and, in general, services of any kind that are
deemed necessary for best performance.
The by-laws also state that whenever it forms companies by
contributing assets directly related to the generation of electricity,
AES Gener will retain at least 51% of the ownership.
Credit Rating
In April, Fitch Ratings upgraded AES Gener’s international credit
rating from “BBB-” to “BBB” with a stable outlook, and upgraded
its national credit rating from “A” to “A+”, also with a stable
outlook. Fitch stated in its rating report that the upgrade reflected
the improvement in the Company’s operations and financing, the
stabilization of its cash flow, and its solid credit metrics. Feller Rate
also confirmed the Company’s current local “A” rating in August.
The agency did, however, raise its credit outlook from “stable” to
“positive” based on expectations that AES Gener’s commercial
position will be back in equilibrium after Ventanas IV plant goes
into operation, and on the financing structure of projects using
the project finance method, for which AES Gener has not had to
provide additional security.
At the end of the fiscal year, both Fitch Ratings and Feller Rate
classified the Company’s shares as First Class, level 2.
Standard & Poor’s and Moody’s both held the Company’s current
international ratings steady, maintaining their “BBB-” and “Baa3”
investment grades, respectively, with stable outlooks.
The following table presents a summary of AES Gener’s national
and international credit ratings as of December 31, 2012:
INTERNATIONAL
NATIONAL
Standard & Poor’s
BBB-
stable outlook
Feller Rate
A
positive outlook
Fitch Ratings
BBB
stable outlook
Fitch Ratings
A+
stable outlook
Moody’s
Baa3
stable outlook
The subsidiary AES Chivor’s 2011 rating with Standard & Poor’s
was confirmed in 2012 at investment grade “BBB-” with a stable
outlook. Moody’s also held their rating steady at “Ba1” with a stable
outlook.
Fitch Ratings upgraded Eléctrica Santiago’s credit rating in January
2013 from “A-” to “A” with a stable outlook as a reflection of
both the ongoing improvement in that company’s individual credit
profile as well as the improved rating of controlling company AES
Gener. Feller Rate confirmed its “BBB” rating of the company in
September 2012, with a stable outlook.
According to the report issued by Fitch Ratings, subsidiary
TermoAndes’ local credit rating maintained at “A” with a stable
outlook.
27
FINANCIAL HIGHLIGHTS OF 2012
HEDGING STRATEGY
INVESTOR RELATIONS
Since the U.S. dollar is AES Gener’s functional currency, it was
decided in 2012 to continue with the strategy for hedging exchange
rates, which limits the Company’s exposure to exchange risks with
the Chilean peso. Although most of the Company’s power supply
agreements have rates denominated in dollars, they are actually paid
in Chilean pesos at an exchange rate that is fixed for a specific
period of time. Therefore, a strategy was established using exchange
rate futures to hedge against the Company’s net exposure to the
dollar/peso exchange rate.
During 2012, AES Gener carried out and took part in a number
of activities aimed at maintaining an ongoing flow of accurate,
reliable communications with current and potential shareholders
and investors, market analysts, and other interested parties. The
Company also continued with its biannual meetings to present its
results, as well as on-site visits to provide thorough information
on our operations on the market. AES Gener also participated in
various national and international conferences.
Our subsidiary AES Chivor in Colombia, which uses the Colombian
peso as its functional currency, also continued with an exchange rate
strategy to hedge against the Company’s exposure to the volatility
of the Colombian currency. This strategy also uses exchange rate
futures, which cover up to 75% of accounts receivable from bilateral
power sale agreements, whose tariffs are stated in Colombian pesos
once expenses have been deducted in the local currency.
CREDIT LINE
In order to give the Company greater liquidity and flexibility, it was
decided to maintain the UF 6,000,000 five-year credit line taken out
in October 2011 with a syndicate of Chilean banks. At the end of
2012, this credit line has not been used.
28
FINANCING OF COCHRANE AND
ALTO MAIPO PROJECTS
AES Gener has continued in 2012 with developing the Cochrane
coal-fired thermoelectric project (532 MW, SING Grid) and the
Alto Maipo hydroelectric project (531 MW, SIC Grid), and has
thoroughly analyzed the options to choose the best financing
structure to build these projects. These projects should be financed
under the Project Finance structure, which is a non-recourse loan
for the Company. This structure was used successfully to finance
the Nueva Ventanas and Angamos plants. It should be noted that
the financing agreement for the Cochrane project, using the project
finance method, was finalized in March of 2013.
EARNINGS DISTRIBUTION
EARNINGS DISTRIBUTION
Thousands of
US$
Net income attributable to parent company shareholders,
2012 fiscal year
202,933
Less: Interim dividends paid
(71,000)
Balance of net income attributable to parent company
shareholders, 2012 fiscal year
131,933
Retained earnings (IFRS) as of 12-31-2011
642,666
Reserves for proposed dividends as of 12- 31-2011
218,757
Final 2011 dividends paid and charged to 2011 earnings
(228,169)
Minimum dividend provision for fiscal year 2012
-
Retained Earnings and Proposed Dividend Reserves Accumulated for Distribution
633,254
TOTAL ACCUMULATED EARNINGS + FUTURE DIVIDEND RESERVE
765,187
DIVIDEND POLICY
As instructed in Chilean Securities and Insurance Authority (SVS) Bulletin No. 687, the
Board of Directors, at meeting 575 held on March 28, 2012, agreed on the dividend policy
it considers suitable for the Company’s 2012 fiscal year. This policy is stated below.
“It is the intention of the Board of Directors to distribute up
to 100% of the net income generated during 2012 in dividends
among its shareholders. The Board also agreed to expressly state
its intention to distribute interim dividends during the 2012
fiscal year. At the same time, the Board also stated expressly
that compliance with the aforementioned dividend policy will be
subject to the net income actually earned, the results of periodic
projections made by the Company, the need for Company funds
to finance investment projects, and restrictions on dividends in
the Company’s by-laws as well as those contained in existing loan
agreements, which consist largely of being in compliance with the
negative covenants of those loans agreements and with Company
cash and investment policy. Regarding dividends in upcoming
years, the Board agreed to maintain a dividend policy similar to
the above over the medium term.”
This policy was approved at the AES Gener ordinary shareholders’
meeting held on April 27, 2012.
The previous year’s divided policy is stated below:
29
2011 DIVIDEND POLICY
As instructed in Chilean Securities and Insurance Authority (SVS) Bulletin No. 687, the
Board of Directors, at meeting 563 held on March 29, 2011, agreed on the dividend policy
it considers suitable for the Company’s 2011 fiscal year. This policy is stated below.
“It is the intention of the Board of Directors to distribute up to
100% of the net income generated during 2011 in dividends among
its shareholders. In addition, the Board agreed to state expressly
that it intends to distribute interim dividends during the 2011
fiscal year. The Board also stated expressly that compliance with
this dividend policy is subject to net income actually earned, the
results of periodic projections made by the Company, the need for
Company funds to finance investment projects, and restrictions on
dividends in the Company’s by-laws as well as those in existing loan
agreements, which consist largely of being in compliance with the
negative covenants of those loans agreements and with Company
cash and investment policy. Regarding dividends in upcoming years,
the Board agreed to maintain a dividend policy similar to the above
over the medium term.”
This policy was reported at the AES Gener S.A. ordinary general
shareholders’ meeting held on April 26, 2011.
DIVIDENDS PAID AGAINST FISCAL YEAR 2011
EARNINGS
At the ordinary shareholders’ meeting held on April 27, 2012, it
was agreed to distribute US$326,083,626.40 or approximately
100% of fiscal year 2011 net income, by distributing:
(a) A minimum mandatory dividend of
US$0.0121225 per share for a
total of US$97,824,926.52,
30
or 30% of fiscal year 2011 net income. This was reduced from
the interim dividend paid in September 2011, which amounted
to US$0.009790 per share for a total of US$79,002,353.53
and equivalent to 24.228% of 2011 fiscal year net income. This
resulted in a dividend of US$0.0023325 per share, for a total of
US$18,822,572.99, or 5.772% of 2011 fiscal year net earnings,
which was paid starting on May 8, 2012.
(b) A first additional dividend of US$0.0093160 per share for a
total of US$75,177,316.19, equivalent to 23.055% of fiscal year
2011 net income, paid starting on May 8, 2012.
(c) A second additional dividend of US$0.0189699 per share for
a total of US$153,081,383.69, or 46.945% of fiscal year 2011 net
income, which was paid starting on August 8, 2012.
Then, in accordance with the dividend policy approved at the
ordinary shareholders’ meeting held on April 27, 2012, the Board
of Directors, at meeting N°. 582 of October 24, 2012, agreed to
distribute US$70,999,633 in interim dividends of US$0.0087983
per share, to be charged to fiscal year 2012 net income. This
interim dividend amounts to 35% of fiscal year 2012 net income.
DIVIDENDS DISTRIBUTED IN RECENT YEARS, IN DOLLARS PER SHARE:
DIVIDEND
NO.
TYPE OF
DIVIDEND
DATE OF
PAYMENT
AMOUNT
PER SHARE
CHARGED TO
FISCAL YEAR
% OF
PROFITS
86
Final
05/07/09
0.005662
2008
30%
87
Additional final
07/07/09
0.005011
2008
25%
88
Interim
12/15/09
0.004960
2009
12%
89
Final
05/11/10
0.008709
2009
21%
90
Additional final
07/07/10
0.005558
2009
14%
91
Additional final
10/07/10
0.005558
2009
14%
92
Interim
01/05/11
0.00905
2010
43%
93
Final
05/06/11
0.011988
2010
57%
94
Eventual
05/06/11
0.008922
2010
25%
95
Interim
09/14/11
0.009790
2011
24%
96
Final
05/08/12
0.002333
2011
6%
97
Additional final
05/08/12
0.009316
2011
23%
98
Additional final
08/08/12
0.018970
2011
47%
99
Interim
11/15/12
0.008798
2012
35%
31
SHARE TRANSACTIONS
There were no share transactions with related individuals during the 2012 and 2011 fiscal years.
SHARE TRANSACTIONS
(1)
NO. OF SHARES
2010
2011
2012
TOTAL (Ch$)
1st Quarter
321,179,658
76,736,307,370
238.9
2nd Quarter
222,505,531
51,567,340,027
231.8
3rd Quarter
396,584,164
106,511,298,877
268.6
4th Quarter
375,235,875
99,793,287,577
265.9
1st Quarter
364,174,066
91,103,061,271
250.2
2nd Quarter
221,673,099
61,191,560,693
276.0
3rd Quarter
236,609,288
63,967,944,621
270.4
4th Quarter
275,198,339
74,687,727,581
271.4
1st Quarter
339,443,867
97,709,144,640
287.9
2nd Quarter
314,993,767
91,064,794,160
289.1
3rd Quarter
263,658,271
72,191,759,761
273.8
4th Quarter
251,986,261
75,025,937,773
297.7
(1) Includes transactions on the Santiago Stock Exchange, the Valparaíso Securities Exchange, and the Chilean Electronic Exchange.
32
AVERAGE PRICE (Ch$)
AVERAGE PRICE AND VOLUME OF SHARES TRADED ON THE SANTIAGO STOCK EXCHANGE IN 2012
MONTH
NO. OF SHARES
TOTAL (Ch$)
AVERAGE PRICE (Ch$)
January
147,211,975
41,184,914,860
280.4
February
98,642,033
28,943,023,082
293.4
March
79,511,567
23,496,074,043
295.5
April
67,329,054
20,378,320,439
303.1
May
88,395,334
25,313,614,139
286.4
June
133,357,681
37,961,869,438
284.6
July
58,873,126
16,544,437,827
281.0
August
126,659,008
33,716,657,149
266.3
September
53,903,974
15,297,381,524
283.8
October
54,072,842
15,404,599,739
284.9
November
100,549,261
29,943,608,874
297.8
December
72,380,199
22,293,604,733
308.0
AVERAGE
90,073,838
25,873,175,487
287.2
SHARE PRICE
350
0.7
300
0.6
US$
Ch$
250
0.5
200
0.4
0
JAN-12
FEB-12
MAR-12
APR-12
MAY-12
JUN-12
JUL-12
AUG-12
SEP-12
OCT-12
Ch$
NOV-12
DEC-12
0
US$
33
SUMMARY OF SHAREHOLDERS’
COMMENTS AND PROPOSALS
During 2012, the Company did not receive comments or proposals regarding the
management of the Company from shareholders or their representatives owning 10%
or more of shares with voting rights, in accordance with Article 74 of Law No. 18,046
governing Chilean stock corporations and Article 13 of that law’s regulations.
INSURANCE
Insurance is an integral part of the Company’s risk management.
AES Gener’s focus in insurance is on mitigating financial losses
and guaranteeing the continuity of its business activities. Among
its relevant insurance coverage are all-risk policies covering the
operation and construction of all of its plants, including coverage
for material damage and financial losses resulting from business
interruption due to machinery breakdown, fire, acts of nature,
and other risk coverage offered on the insurance market. Assets
34
that must be imported such as coal, replacement and spare
parts, and other supplies are covered under all-risk maritime,
land, or air shipping policies. In addition, AES Gener has general
liability insurance coverage for itself and its employees, as well
as its contractors and subcontractors. It also provides insurance
policies for its workers that exceed the coverage required under
Chilean law, including life insurance.
BRAND NAMES AND INTERNET DOMAINS
The Company has duly registered trademarks or
trademark applications in process for all of its brand
names and those of its subsidiaries, including registration
of the different company names and corporate slogans.
The Company has also registered its brands’ Internet
domain names to protect its intangible interests and
assets.
35
03
CHAPTER
BUSINESS
OPERATIONS
03 / BUSINESS OPERATIONS
CHILEAN ELECTRIC SYSTEM
OVERVIEW
Since 1982, the Chilean electricity industry has been based on a private initiative and
property structure, with a competitive framework for the generation market and new
transmission facilities, and a regulated framework for distribution and transmission based
on an efficient company model.
In accordance with the country’s constitution and current
legislation, certain government agencies, including those related
to the electricity sector, perform a regulatory and oversight role.
These agencies are grouped under the Ministries of Energy and
the Environment, and include, among others, the Comisión
Nacional de Energía (the National Energy Commission or CNE),
which establishes, regulates, and coordinates energy policy. It also
publishes the semi-annual indicative investment plan for generation
and transmission activities, whose reports provide important
data which the industry’s companies use in their decision making.
Other agencies include the Superintendencia de Electricidad y
Combustibles (Electricity and Fuels Commission or SEC), the
agency that oversees and supervises compliance with regulations
governing the quality and reliability of service provided to people
and/or assets; the Servicio de Evaluación de Impacto Ambiental
(Environmental Impact Assessment Service), which carries out an
environmental assessment of investment projects prior to their
execution to ensure that the projects meet applicable environmental
standards and that they handle properly any environmental impacts
they may have; and other Environmental Ministry agencies still
being implemented that administer the environmental assessment
system.
38
The Dirección General de Aguas (General Water Authority, DGA),
an agency in the Ministry of Public Works, issues and regulates the
water-use rights for hydroelectric generation, while the Ministry
of Energy grants the concessions for generating, transmitting,
and distributing electricity for public use. The construction and
commissioning of hydroelectric and thermoelectric plants require
environmental permits regulated by Chilean law, and legislation
requires that thermoelectric plants be granted a construction
permit as well.
While the Chilean electric system is subject to the ordinary courts
of law, it also has a Panel of Experts, an independent technical agency
whose role is to study and promptly resolve controversies that may
arise between companies within the electricity sector, or between
one or more of these companies and the energy authorities.
The electricity sector’s different activities are regulated by the
General Electricity Services Law, DFL 1/1982 enacted by the
Mining Ministry, with its subsequent amendments, Law No.
19,940/2004, known as Short Law I, and Law No. 20,018/2005,
or Short Law II, which did not modify the fundamentals of Chile’s
stable electricity sector model. These laws were redrafted and
systematized under DFL 4/2007 of the Economy, Development, and
Reconstruction Ministry. The sector’s activities are also governed by
the corresponding technical regulations and standards.
pricing system, also for a four-year period. These customers receive
electricity from distribution companies, which must hold public bids
to award electricity supply contracts to meet their consumption
needs.
The activity is based primarily on long-term contracts between
generation companies and customers that specify the volume,
price, and conditions for the sale of energy and capacity. The
law recognizes two types of generation company customers:
unregulated and regulated customers:
New supply contracts assigned by distribution companies for
their customers’ consumption must be awarded to generation
companies offering the lowest supply price in regulated public
bid processes. These prices, termed long-term node prices,
include indexation formulas and are valid for the entire term of
the respective contract. More precisely, the long-term node price
for energy under a particular contract is the lowest energy price
offered by the generation companies participating in the respective
public bid, while the long-term node price for capacity is that set
in the node price decree in effect at the time of the bid process.
Unregulated customers are principally and obligatorily customers
whose connected capacity is higher than 2 MW, generally industrial
or mining customers, and those with a connected capacity of
between 500 kW and 2 MW who have opted for the unregulated
pricing mechanism for a period of at least four years. These
customers are not subject to price regulation and are therefore
free to negotiate the prices and conditions for supplying electricity
with the generation companies.
Regulated customers are those whose connected capacity is
less than or equal to 500 kW, as well as those with a connected
capacity of 500 kW to 2 MW who have selected the regulated
Through an adjustment process, each distributor transfers an
average node price to its customers that is different from the
price that it pays when purchasing from its supplier; this price may
not vary more than 5% from the average node price throughout
the system. This average price is determined by the CNE, which
issues a Technical Report informing the Ministry of Energy of the
results. The Ministry of Energy then proceeds to set the prices
39
in a decree that is published in the Official Gazette. Within the
regulatory framework, each bid process establishes specific
indexation formulas applicable to the long-term node prices, and
the respective indices are verified monthly to confirm the price
variations.
In Chile, except for the small isolated grids of Aysén and Punta
Arenas, electricity is generated by two major systems: the Central
Interconnected Grid (known as the SIC), which covers the country
from the southern area of Region II (the Paposo roadstead) to
Region X (the town of Quellón) and supplies electricity to
approximately 92% of the national population; and the Northern
Interconnected Grid (the SING), which covers Regions I, II, and XV
and whose primary customers are mining and industrial companies.
In each of these large grids, electricity generation is coordinated by
the respective independent Economic Load Dispatch Center, or
CDEC, to minimize operational costs and to ensure the highest
economic efficiency of the system while meeting all service quality
and reliability requirements established by law.
Specifically, in order to satisfy demand at all times and at the lowest
possible cost, each CDEC orders dispatch from generation plants
based strictly on their variable generating costs, starting with the
lowest variable cost, and does so regardless of the contracts held
by the generation company that owns each plant. Thus, while the
generation companies are free to enter into supply contracts with
unregulated and regulated customers and are obliged to comply
with such contracts, the energy needed to satisfy demand is generally
produced by the CDEC member whose variable production costs
are lower than the system’s marginal cost at the time of dispatch.
In addition, the Chilean market is designed to include payments for
capacity (or firm capacity), which are explicitly paid to generation
companies for contributing to the system’s sufficient availability.
These payments are assigned according to the output each
generation company can guarantee during critical events, particularly
droughts, fuel shortages, and plant failures, and are added to the final
electricity price paid by both unregulated and regulated customers.
As a result, differences arise between the energy actually produced
and the energy under contract by each generation company, and
between the capacity assigned and that under contract by each
generator, which gives rise to energy and capacity transfers among
the different CDEC members. In these spot transactions, the
companies which, as a result of the CDEC’s economic dispatch,
have generation levels higher than their contractual energy sales
(companies with generation surpluses) sell energy to those
companies with production levels lower than their contractual
energy sales (companies with generation deficits). A similar situation
occurs with capacity transactions, which are determined annually
by the CDEC and result in transfers from generation companies
that have firm capacity surpluses with respect to their peak capacity
commitments to their own customers, to those companies which,
in contrast, are experiencing capacity deficits.
The physical and financial transfers are determined by the CDEC
and are valued, in the case of electrical energy, at the hourly
marginal cost of the system’s operation. For capacity, the price is to
the marginal cost of capacity, which currently corresponds to the
short-term peak capacity node price.
40
The law permits generation companies and regulated customers to
agree voluntarily to temporary reductions in electricity consumption
through the use of incentives. The purpose is to encourage these
customers to conserve electricity and to make efficient use of their
consumption, particularly during shortages.
In addition, Law 20,257 enacted in 2008 promotes non-conventional
renewable energy sources such as solar, wind, mini-hydro, and
biomass generation. Specifically, this law requires that a certain
percentage of generation companies’ supply contracts signed after
August 31, 2007 be supplied by renewable sources. The percentage
of renewable energy required starts at 5% for the years 2010 to
2015 and gradually increases to a maximum of 10% in 2024.
A noteworthy development in environmental regulations is the
Environmental Ministry’s Executive Decree No. 13/2011, which
went into effect on June 23, 2011 and sets an emissions standard
for thermoelectric plants. This standard sets limits for atmospheric
emissions of particulate matter (PM), sulfur dioxide (SO2), nitrogen
oxides (NOx), and mercury (Hg), with different emissions limits
for new and existing plants and for different types of fuel (solid,
liquid, and gas). The standard also sets deadlines for existing facilities’
compliance; for PM, the compliance deadline is 36 months after
the standard was enacted, or December of 2013, and the deadline
for NOx and SO2 compliance is four years after enactment for
plants located in areas declared as latent or saturated (in terms of
pollution) and five years for the rest of the country.
For high voltage transmission, the law guarantees transmission
line owners the right to recover all of their capital, operating,
maintenance, and administrative costs. This is done by dividing
the transmission network into three subsystems: the trunk line,
comprised of transmission lines that are essential to keeping the
entire system supplied; sub-transmission lines, which are primarily
power lines that satisfy consumption in distribution companies’
licensing areas; and additional lines consisting of those that mainly
provide electricity to unregulated customers or evacuate electricity
from generation plants.
The CNE sets regulated tariffs every four years for the trunk
and sub-transmission line systems based on studies done by
independent consultants on the investment value and expansion of
each of these networks.These studies appraise the value of existing
facilities and recommend works to be carried out over the next ten
years. However, and principally for the trunk line system, it is market
interaction that finally determines which works are undertaken
since the opinions of the CDEC and the CNE are also taken into
account, and when controversies arise, the issue is submitted to the
Panel of Experts for resolution. The works are finally assigned to
the company offering the lowest annual charge in public bids held
by each CDEC..
41
COMMERCIAL POLICY
The Company’s commercial policy seeks to minimize cash flow volatility, managing its risks based on market and
industry conditions. In order to do so, the following factors are among those analyzed: contract levels, proportion
of unregulated and regulated customers that make up AES Gener’s and its subsidiaries’ client portfolio, and contract
terms.
In its commercial analyses, AES Gener estimates demand growth and projects marginal costs and prices within the
system. Based on this information, the Company determines the level of contractual sales that will allow it to stabilize
cash flow and manage an acceptable level of risk.
A business factor that is particularly relevant for the Company is the fact that it is the SIC’s principal thermoelectric
generation company, which provides it with a highly reliable supply regardless of hydrological conditions.
OVERALL PARTICIPATION IN THE SIC AND THE SING
Total installed capacity for electricity supply in Chile, including the plants owned by all CDEC-SIC and CDEC-SING
members, amounted to 18,462 MW at the close of 2012. Of this capacity, 32.5% was hydroelectric generation,
66.4% was thermoelectric, and 1.1% was wind and solar generation. The AES Gener Group contributed 3,810 MW,
or 20.6%, to this total, including 3,539 MW of thermoelectric and 271 MW of hydroelectric capacity. In 2012, the
AES Gener Group continued to be the country’s second-largest generation company overall, as well as its largest
thermoelectric generator.
AES GENER’S AND SUBSIDIARIES’ MAIN SUPPLY CONTRACTS IN 2012
MAIN ENERGY AND CAPACITY SALES CONTRACTS
ENERGY [GWh]
REGULATED CUSTOMERS
42
Chilectra S.A.
2,689.1
Chilquinta Energía S.A.
1,164.1
Empresa Eléctrica Melipilla Colchagua y Maule S.A.
673.8
Empresa Eléctrica Atacama S.A.
352.0
Empresa Eléctrica de Talca S.A.
67.5
Empresa Eléctrica Puente Alto Ltda.
66.7
LuzLinares S.A.
54.2
Compañía Eléctrica del Litoral S.A.
40.6
LuzParral S.A.
39.5
Energía de Casablanca S.A.
25.3
Empresa Eléctrica de Antofagasta S.A.
10.5
Empresa Eléctrica de Casablanca S.A.
9.9
MAIN POWER AND CAPACITY SALES CONTRACTS
ENERGY
[GWh]
MAIN ENERGY AND CAPACITY
PURCHASE CONTRACTS
EnergY
[Gwh]
Empresa Eléctrica Ventanas S. A. (2)
2,085.2
UNREGULATED CUSTOMERS
Minera Escondida Ltda. (1)
3,073.2
Anglo American Sur S.A.
961.0
Empresa Eléctrica Guacolda S.A.
Minera Spence
507.6
KDM Energía S.A.
72.9
Energía Coyanco S.A.
54.7
39.5
Compañías Contractuales Minera Candelaria
601.7
y Minera Ojos del Salado
379.4
Masisa Ecoenergía S.A.
Papeles Bio Bio Ltda.
231.2
CMPC Maderas S.A.
2.4
Sociedad Química y Minera de Chile (SQM)
229.4
Enorchile S.A.
0.1
Cemento Polpaico S.A.
144.1
Cristalerías Chile S.A.
68.1
Proacer Ltda.
63.5
Mantos de la Luna S.A.
63.2
Corporación Nacional del Cobre
31.3
CMPC Maderas S.A.
28.4
Fundición Talleres Ltda.
24.1
Chilquinta Energía S.A.
21.3
Puerto Ventanas S.A.
6.7
Minera Río Colorado S.A.
0.8
Minera Lo Valdés Ltda.
0.4
(1) Includes energy redirected to the spot market
(2) Inter-company agreement with AES Gener
AES GENER’S AND SUBSIDIARIES’ CONTRACTS
FOR TRANSMISSION SYSTEM USE
AES Gener has several contracts with companies that use its
transmission systems, including agreements with La Higuera,
Puntilla, GNL Quintero, and others. In turn, the Company also
has contracts with Chilectra and Transelec for the use of their
transmission systems and facilities.
THE CENTRAL GRID (SIC)
of reserves as required under energy rationing Decree No. 26
published on February 27, 2011, and extended under Decree No.
58 through August 31, 2011 due to the drought in the central and
south regions in 2011.
Total installed capacity in the SIC, including the plants owned by
all the CDEC members, amounted to 13,718 MW at the close
of 2012, which accounts for 74.3% of all installed capacity in the
SIC and SING grids in Chile. Of the total, 43.6% is hydroelectric,
54.9% is thermoelectric, and 1.5% is wind and solar generation.
Precipitation continues to be a relevant factor for the SIC, given
that the river flow volumes and initial water levels in reservoirs
largely determine the dispatch from the grid’s hydroelectric and
thermoelectric plants.
Of the total demand for energy in 2012, 41.1% was supplied by
hydroelectric plants, 58.1% by thermoelectric generation, and the
remaining 0.8% was supplied by wind and solar generation. Total
energy production in the SIC in 2012 was 48,952 GWh, 6.0%
higher than in 2011.
The year 2012 began with 14.2% more hydroelectric energy
available in reservoirs than in the previous year, with 2,551.5 GWh
available on January 1, 2012. By the end of the year, the system
had sufficient water in reservoirs to generate some 1,684.4 GWh,
34.9% less than on December 31, 2011. However, it is important to
consider that the water in reservoirs in 2011 included 500 GWh
Reservoir levels continued to be low due to little rainfall in 2012;
this was offset in part by the entry of new efficient plants onto the
grid. The overall result was an average marginal cost of US$193.9/
MWh, compared to the 2011 average of US$200.8/MWh.
SIC: MARGINAL COST OF ENERGY AT ALTO JAHUEL 220 kV
US$/MWh
400
300
200
100
0
jan - 06
jul - 06
jan - 07
jul - 07
jan - 08
jul - 08
jan - 09
jul - 09
jan - 10
jul - 10
jan - 11
jul - 11
jan - 12
MARGINAL ENERGY COST AT ALTO JAHUEL 220 KV
44
2007
[US$/MWh]
2008
[US$/MWh]
2009
[US$/MWh]
2010
[US$/MWh]
2011
[US$/MWh]
2012
[US$/MWh]
January
56.29
251.99
117.76
114.18
175.87
194.30
February
121.37
281.42
145.45
138.87
241.84
192.81
March
142.39
338.82
138.11
144.97
260.80
235.72
April
145.72
290.14
124.28
139.46
223.88
275.95
May
173.71
259.93
96.82
145.34
235.30
244.63
June
262.28
178.98
111.13
158.09
257.40
148.71
July
227.56
197.39
102.17
152.07
196.00
142.17
August
215.66
138.03
97.18
181.51
167.10
171.94
September
180.12
130.56
67.42
132.64
165.80
166.00
October
153.88
150.51
103.04
134.89
135.30
179.80
November
169.37
140.62
83.52
142.78
153.80
193.10
December
218.09
130.54
65.41
202.35
196.50
181.60
AVERAGE
172.20
207.41
104.36
148.93
200.80
193.89
jul - 12
THE AES GENER GROUP’S PARTICIPATION IN THE SIC
The AES Gener Group’s electricity generation capacity in the SIC
was 2,345 MW as of December 31, 2012. The parent company
AES Gener contributes 965 MW, produced by four hydroelectric
and seven thermoelectric plants. The Alfalfal, Maitenes, Queltehues,
and Volcán hydroelectric plants generate 271 MW; while the two
units at the Ventanas plants, the Laguna Verde TV (steam turbine),
the Laguna Verde TG (gas turbine), the Los Vientos TG, the Santa
Lidia TG, the Mostazal plant (gas turbine) and the Laja cogeneration
plant account for the Company’s thermoelectric generation, with
694 MW of installed capacity.
AES GENER GROUP THERMOELECTRIC PLANTS ON
THE SIC
The Renca thermoelectric complex has an installed capacity of 479
MW and is composed of the Renca and Nueva Renca thermoelectric
plants, both owned by subsidiary Eléctrica Santiago. Of the plants
belonging to the Group’s other companies operating in the SIC,
subsidiary Eléctrica Ventanas contributes 272 MW through its
coal-fired Nueva Ventanas plant, while related company Guacolda
contributes 608 MW to the grid with its four-unit Guacolda
thermoelectric plant.
Electrica Santiago
During 2012, the AES Gener Group sold a total of 7,357 GWh to its
customers on the SIC and to other generators in the system, 5,413
GWh of which was sold to distributing companies. AES Gener’s
contractual commitments in the SIC as of December 31, 2012 had
increased by 23% compared to those at the close of 2011 due to
increased consumption in some contracts.
AES GENER
Ventanas Plant (1)
GROSS CAPACITY (MW)
340.0
Laguna Verde TV Plant
47.0
Laguna Verde TG Plant
18.8
Los Vientos TG Plant
132.0
Santa Lidia TG Plant
139.0
Laja Plant
12.7
San Francisco de Mostazal TG Plant
25.0
Nueva Renca Plant
379.0
Renca Plant
100.0
ELECTRICA VENTANAS
Nueva Ventanas Plant
272.0
Guacolda
Guacolda Plant (2)
TOTAL
608.0
2,073.5
(1) Unit No. 1: 120 MW; Unit No. 2: 220 MW
(2) 4 units, 152 MW each
45
AES GENER GROUP HYDROELECTRIC PLANTS ON
THE SIC
AES GENER
Alfalfal
GROSS CAPACITY (MW)
AES GENER’S ENERGY BALANCE ON THE SIC, 2012
ENERGY (GWh)
GENERATION
5,584.4
Purchases
178.0
Eléctrica Santiago
792.7
Queltehues
49.0
Other companies
754.6
Maitenes
31.0
CDEC-SIC
Volcán
13.0
Total Purchases
TOTAL
271.0
202.7
1,750.0
Sales
CDEC-SIC
During the year, 85% of total energy sold to customers was covered
by the efficient generation of AES Gener and its subsidiaries
plus purchases from other producers in the system under longterm contracts that the Company has with EnorChile, Coyanco,
Guacolda, Masisa and KDM. The remaining 15% was covered with
purchases on the spot market.
The energy generated at the Nueva Renca plant was important to
the central part of the country in 2012 due to the system’s water
shortage and restrictions on transmission; the plant was able to
lend greater reliability to the SIC’s energy supply during this time.
Short-term liquefied natural gas (LNG) purchase agreements with
various suppliers guaranteed the availability of this fuel for the plant
from January to mid-May, and it delivered 1,483 GWh to the grid
using LNG generation and an additional 314 GWh using diesel oil.
Total production was 10% lower than in 2011.
The AES Gener Group plants, including Guacolda, contributed 24%
of the SIC’s gross generation in 2012.
202.5
Distribution companies
5,151.1
Unregulated clients
1,944.1
Total Sales
7,297.7
36.7
SYSTEM LOSSES
ELÉCTRICA SANTIAGO’S ENERGY BALANCE ON
THE SIC, 2012
ENERGY (GWh)
GENERATION
Purchases
CDEC-SIC
10.4
Total Purchases
10.4
Sales
CDEC-SIC
943.5
Inter-company sales
792.7
Total Sales
SYSTEM LOSSES
RECENT DEVELOPMENTS ON THE SIC
NEW SUPPLY CONTRACTS
During 2012, AES Gener began providing energy supply under the following contracts with unregulated customers: Cristalerías
Chile in April, and Minera Candelaria and Minera Ojos del Saldo starting in July. It was also awarded a supply contract for 2013
and 2014 with the distribution company CGE Distribución.
INCREASED CAPACITY IN THE SIC
The grid’s installed capacity grew by 1,032 MW due to the completion of other generating companies’ projects, of which 82
MW is hydroelectric generation, 933 is thermal, and 1.2 MW is solar generation. Of particular importance are Endesa’s Bocamina
II plant (350 MW, coal); Santa María, owned by Colbún (342 MW, coal); and Rucatayo, which belongs to Empresa Eléctrica
Pilmaiquén (56.7 MW, hydroelectric).
46
1,796.8
70.9
1,807.1
0.0
THE NORTHERN GRID (SING)
The SING is characterized by having very scarce water resources for electricity generation. Therefore, 99.7% of the
system’s total installed capacity, which was 4,744 MW at the close of 2012, comes from thermoelectric generation. Of
this, 43.8% comes from natural gas plants, 47.3% from coal plants, and 8.6% from oil-fired plants. The remaining 0.3%
is generated by hydroelectric plants. The consumption areas, primarily mining companies, are far apart, and some have
demand levels that account for a relatively high proportion of the grid’s total consumption.
A total of 16,755.7 GWh was generated in the SING in 2012, 5.5% higher than in 2011. Coal generated 82.9% of
the SING’s energy demand for the year, while 13.6% was generated by natural gas and 2.3% by diesel or fuel oil; the
remaining 0.7% was generated using hydraulic generation and cogeneration. The grid’s average marginal cost declined
from US$95.80 per MWh in 2011 to US$86.60 per MWh in 2012 primarily as a result of new coal-fired plants that went
into operation in 2011 and were available throughout most of 2012.
MARGINAL ENERGY COST AT CRUCERO 220 KV
2007
[US$/MWh]
2008
[US$/MWh]
2009
[US$/MWh]
2010
[US$/MWh]
2011
[US$/MWh]
2012
[US$/MWh]
January
35.5
204.5
111.8
100.6
101.6
64.8
February
63.1
174.2
89.9
148.2
96.1
88.2
March
71.9
163.9
91.8
144.5
118.6
78.4
April
64.9
201.1
104.7
143.9
131.9
112.2
May
100.5
230.1
104.9
101.0
104.5
112.0
June
100.9
231.8
120.4
120.6
126.2
133.2
July
139.9
240.6
123.1
113.9
75.4
75.9
August
143.3
290.8
127.4
108.0
74.5
67.6
September
139.0
235.7
140.1
121.7
66.1
71.7
October
141.3
181.1
110.3
108.7
105.9
69.1
November
194.0
163.8
120.9
123.8
83.0
81.6
December
163.1
106.2
89.3
122.9
65.5
84.6
AVERAGE
113.1
202.0
111.2
121.5
95.8
86.6
SING: MARGINAL ENERGY COST AT CRUCERO 220 kV
300
US$/MWh
250
200
150
100
50
0
jan - 06
jul - 06
jan - 07
jul - 07
jan- 08
jul - 08
jan - 09
jul - 09
jan - 10
jul - 10
jan - 11
jul - 11
jan - 12
jul - 12
47
THE AES GENER GROUP’S PARTICIPATION IN THE SING
The AES Gener group has gross installed generation capacity of
1,465 MW in the SING. The Norgener plant contributes 277.3
MW from its plant of the same name, 642.8 MW comes from
the Salta plant belonging to the subsidiary TermoAndes, and 545
MW is generated by the two units at the Angamos plant, which
belongs to the subsidiary Eléctrica Angamos. TermoAndes’ Salta
plant, located in the Argentine province of Salta, is connected to the
SING by means of a 345 kV, 408-kilometer long transmission line
that connects the Salta substation to the Andes substation located
in Chile’s II Region. The TermoAndes plant is also connected to the
Argentine grid, and it should be noted that TermoAndes did not
export energy to the SING in 2012.
AES Gener’s coal-fired plants, Norgener and Angamos, have BESS
systems (Battery Energy Storage System) that allow them to replace
a portion of their spinning reserves and increase their maximum
dispatch capacity. The Norgener plant’s 12 MW BESS system was
installed at the SING’s Andes substation, while the Angamos plant’s
BESS, with its 20 MW total, allows each unit to store 10 MW and
was installed at the Angamos substation.
In 2012, the Norgener and Angamos plants contributed gross
production of 2,143 GWh and 3,359 GWh, respectively, to the
SING, equivalent to 32% of the grid’s total production.TermoAndes
sold 4,137 GWh in 2012 on the Argentine Grid, the SADI, which
accounted for 4% of that grid’s total generation.
Norgener generated a total of 2,000 net GWh and purchased 120
net GWh on the spot market during the year. Overall consumption
of its customers SQM Nitratos, SQM Salar, Minera Escondida, and
Minera Ministro Hales for the year was 2,120 GWh. Angamos, in
turn, generated a total of 2,985 net GWh and sold a total of 425
GWh on the spot market. Angamos customers Minera Escondida
and Spence consumed a total of 2,560 GWh in 2012 (including
redirected energy).
AES GENER GROUP’S THERMOELECTRIC PLANTS ON
THE SING
GROSS CAPACITY (MW)
Norgener
Norgener plant
277.3
(1)
Angamos
Angamos plant (2)
545.0
TermoAndes
Salta plant
642.8
Total
1,465.1
(1) Unit 1: 136.3 MW; Unit 2: 141 MW
(2) Unit 1: 272.4 MW; Unit 2: 272.6 MW
NORGENER’S ENERGY BALANCE ON THE
SING, 2012
ENERGY (GWh)
Net Production
2,000.2
Purchases
CDEC-SING
166.1
Total Purchases
166.1
Sales
CDEC-SING
28.0
Unregulated Customers
2,099.8
Total Sales
2,127.8
LOSSES
38.5
ANGAMOS’ ENERGY BALANCE ON THE
SING, 2012
ENERGY (GWh)
Net Production
2,985.0
Purchases
CDEC-SING
0
Total Purchases
0
Sales
CDEC-SING
1,729.7
Total Sales
2,943.4
LOSSES
48
1,213.7
Unregulated customers
41.6
RECENT DEVELOPMENTS ON THE SING
SUPPLY CONTRACTS WITH MINING COMPANIES
In 2012, the subsidiary Norgener signed a contract with SQM to supply 50 MW of
capacity, which began in April of 2012. It also signed long-term contracts with mining
customers to sell approximately 100% of the energy that will be generated at the
Cochrane plant, which is currently under construction.
THE AES GENER GROUP’S PARTICIPATION IN THE SADI
The 642.8 MW Salta plant, owned by the subsidiary TermoAndes, is located in the Argentine province of Salta and is connected to
both the SADI grid in Argentina and the SING grid in Chile. Before being connected to the SADI, the plant supplied only the SING
through a transmission line owned by the subsidiary InterAndes S.A. (InterAndes). In September of 2007, following the directives of
the Argentine authorities, its TermoAndes steam turbine was connected to the SADI and then, to maximize its energy exports to
the SING, it connected its two natural gas-fired turbines to the SADI in 2008 and used the steam turbine to supply energy for the
Chilean market. However, from mid-December 2011 to the present, 100% of TermoAndes’ generation has been sold to the SADI.
TermoAndes’ export permit expired on January 31, 2013, and the Company is assessing a possible renewal of the permit.
In 2012, TermoAndes increased the capacity purchased under contract by customers considered Large Users on the Wholesale
Power Market (Grandes Usuarios del Mercado Eléctrico Mayorista), whose contracts operate under the Energy Plus (Energía Plus)
regulations. These contracts increased from approximately 207 MW in 2011 to 243 MW in 2012, up from 364 to 423 contracts
by December 2012. Sales went from 96,1 GWh to 1,357 GWh, and TermoAndes became the market leader with a 32% share of
the market.
During 2012, the Salta plant generated energy exclusively for the SADI, selling 4,137 GWh on that grid. All of the energy was
generated with natural gas, of which 1,361 GWh was sold to customers and 2,776 GWh was sold on the spot market.
49
COLOMBIAN ELECTRIC SYSTEM
OVERVIEW
Since 1994, the electricity sector in Colombia has allowed private companies to participate
in the different types of businesses in the industry chain, with a free market framework
for the generation and sale of electricity and a regulated framework for transmission and
distribution.
The different activities of the electricity sector are governed by
the Public Service Code, Law 142 of 1994; and the Electricity
Code, Law 143 of 1994. The industry’s activities are also governed
by the regulations and technical standards issued by the Energy
and Gas Regulation Commission (CREG). The wholesale energy
market began operating in July 1995, and since that time generating
companies have to submit price bids and report the quantity of
energy available on a daily basis in a competitive environment.
50
There are two types of customers in the market: unregulated
and regulated. Unregulated customers can negotiate freely with
generation, distribution, or traders, and they must have a minimum
consumption of 100 kW or 55,000 kWh per month. Regulated
customers’ consumption may be supplied by either energy sellers
or distributors, and it must be purchased through public bids that
establish two-party agreements that normally last from one to
three years.
COMMERCIAL POLICY
AES Chivor’s commercial policy seeks to maximize the business
margin and reduce its volatility. To achieve this objective, it carries
out integral business risk management to determine the desired
level of bilateral contracts for each year depending on each plant’s
generation profile and its customer credit rating policy.
The year 2012 brought important challenges for AES Chivor’s
strategy of giving the margin adding value, including an ongoing
search for the best ways to optimize water use, given the
decrease in rainfall, price volatility on energy markets, energy sales
under energy agreements, backup sales of firm energy to cover
maintenance periods at some of the system’s plants, and additional
coverage through the Energy Derivatives Market, the Derivex
(where AES Chivor had a 7.34% market share out of a total of
279.6 GWh traded during the year). AES Chivor’s business strategy
for 2012 included shoring up water supplies in the second and third
quarters of 2012 given the dry forecast for upcoming quarters,
which would help optimize sales on the spot market.
In addition, a list was made up of acceptable Value at Risk (VaR)
both for the market and for credit. This gives AES Chivor proper
risk management and makes it one of the first companies to include
this type of monitoring in the real sector.
51
OVERALL PARTICIPATION IN THE COLOMBIAN GRID (SIN)
The Colombian electricity system is structured around a single National Interconnected System (SIN), which
had actual installed capacity of 14,533 MW as of December 31, 2012. Of this total, 67.4% is hydroelectric
capacity, 31.7% is thermoelectric, and 0.9% is from alternative resources. Energy demand during 2012 reached
59,355 GWh, a growth of 3.9% compared to 2011 demand.
International energy transactions, or TIES, with Ecuador and exports to Venezuela meant that Colombia
continued to be a net energy exporter, with approximately 715 GWh exported.This accounted for 1.2% of the
demand served by the Colombian generating system, and it imported only 6.5 GWh.
ENERGY PRICES IN THE COLOMBIAN MARKET
US$ / MWh
120
100
80
60
40
20
jan- 05
jul - 05
jan - 06 jul - 06 jan - 07 jul - 07 jan - 08 jul - 08 jan - 09 jul - 09
jan - 10 jul - 10 jan - 11 jul - 11 jan - 12 jul - 12
PRECIO SPOT
THE AES GENER GROUP’S PARTICIPATION IN THE SIN
AES Chivor owns the third largest hydroelectric plant in the country, with an installed capacity of 1,000 MW. In
2012, water flowed into its La Esmeralda reservoir at 118% of the historical average, and the reservoir’s level
was at 84.7% of its useful capacity by the end of the year.
AES Chivor’s net energy production during the year was 4,666 GWh. It sold 6,812 GWh, of which 3,422 GWh
were traded on the energy market, and the remaining 3,390 GWh were sold through long-term agreements.
52
PRECIO CONTRATOS
RECENT DEVELOPMENTS ON THE SIN
RAINFALL DURING THE YEAR IN COLOMBIA
The year 2012 was a dry one overall. La Niña, which had started in the second half of 2010, ended near mid-year,
and the Pacific Ocean began to warm in the last half of the year, affecting the amount of water flowing into the
reservoirs and bringing with it volatile energy market prices. The amount of water flowing into the AES Chivor
basin was at 69% of the historical average, while water flow was at 104% of the historical average for the country
as a whole.
AES CHIVOR’S ENERGY BALANCE, 2012
AES
GENER GROUP PLANT IN COLOMBIA
Energy [GWh]
GROSS CAPACITY (MW)
AES Chivor
1,000.0
NET PRODUCTION
Total
1,000.0
Purchases
4,665.7
Purchases
2,166.8
TOTAL PURCHASES
2,166.8
Sales
Contracts
3,389.5
Spot
3,421.7
TOTAL SALES
6,811.1
SYSTEM LOSSES
21.4
NON-ELECTRIC BUSINESS
In addition to its activities in the electricity industries in Chile, Colombia, and
Argentina, as of December 31, 2012, AES Gener holds a minority share in GasAndes
and GasAndes (Argentina), which are engaged in the transportation of natural gas.
These related companies own and operate the pipeline that
connects La Mora, Argentina with Santiago, Chile. The pipeline
is 463 kilometers long, of which 314 kilometers are in Argentina
and 149 are in Chile. This was the first pipeline to go into service
between the two countries, in August 1997.
As of December 31, 2012, AES Gener holds a 13% stake in
GasAndes and GasAndes (Argentina).
04
CHAPTER
OPERATIONS
AND
MAINTENANCE
04 / OPERATIONS AND MAINTENANCE
ELECTRIC BUSINESS IN CHILE
Consolidating the operational excellence of our plants and innovating the company from
within: these were the pillars of the Production Management’s activities during 2012. As
always, an emphasis was placed on workers’ safety and respect for the environment in
which we work.
56
One of Production Management’s goals in 2012 was to
consolidate decision making at all AES Gener plants under the
Asset Management Framework (AMF), a British standard for
physical optimization asset management; this policy helps ensure
compliance with operational goals over the medium and long
term. This goal was met successfully with the Nueva Renca and
Cordillera plants, which were pending certification at the end of
2011, newly certified at Level 3, termed Proactive. This means that
all of AES Gener’s fossil fuel and hydraulic plants are now AMFcertified at Level 3.
Important milestones were reached in 2012 from the standpoint
of operational results, including no outages at the Nueva Ventanas
plant during the second half of the year and record generation
levels at the Salta plant in Argentina. It is also noteworthy that AES
Gener’s plants had an overall technical availability of 91.6%, the
highest recorded since 2004 despite a 40% increase in installed
capacity as of December 31, 2012.
AES Gener continued to participate actively in the APEX program
(AES Performance Excellence, an AES Corp. initiative), implementing
numerous projects to improve processes in its different lines of
business. In particular, its project Alternative Energy Output at the
Los Vientos Plant earned Honorary Mention at the international
event Process Excellence Awards held in London in April 2012.
All the AES Group companies participated in the event, as well as
other multinational companies.
The year 2012 was also one of important achievements in
innovation. A special website called Ilumina, dedicated to the topic
of innovation, was created. The entire company contributes to the
site, proposing solutions to technical and operational challenges. As
a result of this and other achievements in the area of innovation,
excellence, and ongoing improvement, AES Gener was recognized
in Chile as the seventh-ranked company in the 2012 Innovative
Companies List complied by the ESE School of Business at Los
Andes University. It was also the top-ranked energy company
included on that list.
The AES Gener Group certified 50% of its plants under the
integrated management system called “Genera” in 2012, which
groups together ISO 14001 and OHSAS 18001.The next challenge
will be to obtain certification for the rest of the plants.
AES GENER
THERMOELECTRIC PLANTS
through its new injection point using direct or “express” energy at
the Cerro Navia 110 kV busbar, and under normal conditions at
the Las Vegas substation busbar. In all, the Los Vientos diesel-fired
turbogenerator (TG) produced 83 GWh in 2012. The diesel-fired
TG unit at the Santa Lidia plant operated more frequently than in
2011; they generated 26 GWh during April and May of 2012, which
are months with a higher demand for thermal power. The Los
Vientos and Santa Lidia plants were operated remotely during the
year from the Nueva Renca plant using a remote control system
implemented at the end of 2011. Meanwhile, the diesel-fired TG
at the Laguna Verde and San Francisco de Mostazal plants were
occasionally in operation and generated 2 GWh each. As for the
Laguna Verde steam turbines, they remained in reserve throughout
the year, serving their purpose as backup units.
AES Gener’s thermoelectric units are Units 1 and 2 at the Ventanas
plant; the two diesel-fired steam units at the Laguna Verde plant;
the diesel-fired turbines at the Laguna Verde; the gas-fired turbines
running on diesel at the Los Vientos, Santa Lidia, and San Francisco
de Mostazal plants; and, finally, the Laja plant, which runs on biomass
fuel.
Units 1 and 2 at Ventanas, an efficient 340 gross MW coal-fired plant,
remained in service almost continuously throughout 2012, except
for the year’s scheduled maintenance periods and a breakdown
in the boiler at Ventanas 2, which limited generation from that
unit during May and June. The repair took 12 days. Ventanas 1,
meanwhile, underwent 21 days of regular maintenance involving
inspection of the turbine in preparation for the overhaul scheduled
for 2013. Generation for the two units in 2012 was 2,187 GWh,
only 0.2% higher than in 2011. In another important development,
work began in 2012 to install emissions control equipment on both
units at the Ventanas plant.
The Laja and Constitución biomass plants generated a total of 69.9
net GWh. Sales of steam to customers in the forestry industry were
lower than 2011, due primarily to the closing of the Constitución
plant. The contract with Aserraderos Arauco S.A. terminated
in August of 2012, after which the process of dismantling the
Constitución plant began.
The company’s turbogenerators (TG) produce 113 GWh in
2012, 89% less than in 2011. The Los Vientos plant dispatched
SPECIFIC
CAPACITY
CONSUMPTION
(MW)
(BTU/KWh)
AVAILABILITY
IN 2011 (%)
LOCATION
COMMISSIONING
TURBINE
UNITS
Ventanas 1
Ventanas, Region V
1964
coal-steam
1
120
9,952
91.3
86.4
Ventanas 2
Ventanas, Region V
1977
coal-steam
1
220
10,068
79.0
82.3
1939-1949
diesel-steam
2
47
19,031
86.4
100.0
Laguna Verde,
Laguna Verde
Valparaíso, Region V
Laguna Verde
Laguna Verde,
Valparaíso, Region V
1990
diesel-TG
1
18.8
11,419
99.9
100.0
Los Vientos
Las Vegas, Llay Llay,
Region V
2007
diesel-TG
1
132
11,549
98.7
97.8
Santa Lidia
Cabrero, Region VIII
2009
diesel-TG
1
139
11,419
97.4
100.0
San Francisco San Fco. de Mostazal.
de Mostazal
Region VI
2002
diesel-TG
1
25
13,366
98.4
100.0
Constitución
Constitución, Region
VII
1995
cogeneration
with biomass
1
11.1
17,022
97.8
Laja
Cabrero, Region VIII
1995
cogeneration
with biomass
1
12.7
16,413
97.3
These facilities are owned by AES Gener.
(1) Dismantled in August 2012; information is available for that month only.
58
AVAILABILITY
IN 2012 (%)
PLANT
97.7
(1)
95.4
RUN-OF-RIVER HYDROELECTRIC PLANTS
AES Gener’s hydroelectric plants, Alfalfal, Maitenes, Queltehues, and
Volcán, are all “run of river,” which means that they do not have
reservoirs and, therefore, less of an environmental impact. These
plants, with an installed capacity of 271 MW, represented 12% of
AES Gener’s capacity on the SIC as of 2012, including subsidiaries
and related companies. The four plants remained in service
throughout 2012 and generated a net 1,206 GWh during the year,
a 2% increase over 2011 generation.
In its ongoing efforts towards operational excellence, the AES
Gener Group continued in 2012 with improvement projects at
its hydroelectric plants. This included safety certification under
“Genera” (OHSAS 18001) and environment (ISO 14001), as well
as AMF certification. Another important improvement was the
installation of a closed-circuit television (CCTV) monitoring system
at all of the Alfalfal and Queltehues intake points in order to have
greater control of these remotely controlled facilities. In addition,
Maitenes transformer N°2 and Queltehues transformer N°3
underwent thorough maintenance to ensure smooth operations
over the next few years. Maintenance was also performed on the
Alfalfal plant’s butterfly valve to allow the plant’s tunnel system to
be closed off. This permits overall maintenance of the ball valve on
Unit 1 to be performed without having to empty the tunnel system.
Finally, a public tender was held for the purchase of four Pelton
runners for the Alfalfal plant to replace the runners currently in
service within the next two years. The runners will be received in
Chile at the end of 2013.
PLANT
LOCATION
COMMISSIONING
TURBINE
UNITS
CAPACITY
AVAILAIBILITY
2011 (%)
AVAILAIBILITY
2012 (%)
Maitenes
Los Maitenes, Cajón
Río Colorado, RM
1923-1989
Francis
5
31
97.5
94.1
Queltehues
Los Queltehues, Cajón
Río Maipo, RM
1948
Pelton
3
49
97.0
94.8
Volcán
Cajón Río Maipo, RM.
1949
Pelton
1
13
96.4
99.1
Alfalfal
Cajón Río Colorado, RM.
1991
Pelton
2
178
93.8
77.6
These facilities are owned by AES Gener
59
DISPATCH CENTER, AND OPERATION AND MAINTENANCE ON SIC
SUBSTATION AND TRANSMISSION LINES
In terms of transmission in the SIC, replacement of the conductor
was successfully completed in 2012 on the 110 kV Queltehues-La
Laja transmission line, which evacuates power from the Queltehues
and Volcán plants. This investment completed the replacement of
conductors on all AES Gener lines, a process that began in 2000.
Also in the field of transmission, repairs continued on the damaged
structures of transmission towers in the coastal area of Region V
that had become corroded. All of this work were done using high
safety standards and without limiting generation on AES Gener
plants, whether thermal or hydraulic.
As a result of the study carried out by the transmission area in
2011, the power system in Region V operated as a mesh network
through a 300 MVA autotransformer located at the Ventanas
substation. This made operations more reliable and meant
significant savings from losses and injecting energy at other busbars
in the system. Express dispatch also continued from the Los Vientos
plant to the 110 kV Cerro Navia substation, which allowed for
control of energy transfer on the trunk transmission system at
times of restricted transmission and low hydrology, which affect
the system’s reliability and economic dispatch. Construction also
began on the new Quintero section in 2012, with which the power
feed of the Quintero Substation, owned by Chilquinta, will become
independent from the consumption and processes at the Ventanas
plant.
AES GENER TRANSMISSION LINES AND SUBSTATIONS
TYPE OF CIRCUIT
VOLTAGE (KV)
AES GENER (KM)
Single
220
1
Dual
220
73
Single
110
4
Dual
110
249
Total
327
AES GENER
Substations
Alfalfal
Maitenes, Queltehues
La Laja
Punta de Peuco
Pachacama
San Pedro
Ventanas 110 Kv
Ventanas 220 Kv
Autotransformer
220/110 Kv Ventanas
Torquemada
Laguna Verde
Sections or connections
to other companies’
substations
Los Almendros
Florida
Cerro Navia 110 Kv
Las Vegas
La Calera
Miraflores
60
60
ELÉCTRICA SANTIAGO
Eléctrica Santiago operates the Nueva Renca combined cycle plant, which has a gross installed capacity of 379 MW. Nueva
Renca uses liquefied natural gas (LNG) or diesel interchangeably as its main fuels, and utilizes propane for the supplementary
burners on the heat recovery boiler. It also operates the Renca plant, which has two diesel-fired steam turbines that together
have a joint gross capacity of 100 MW. The Renca plant celebrated 50 years of service in December since its commissioning
in 1962, being available and operating as a backup plant.
The Nueva Renca plant continued to run on either LNG or diesel oil in 2012, and was reliable in its dual operation. With its
combination of LNG and diesel fuel, the Nueva Renca plant had a net generation in 2012 of 1,798.3 GWh, with 4,894 service
hours fired by natural gas and 1,186 service hours running on diesel fuel. The plant’s net generation in 2012 was 9% lower
than that of the previous year, due primarily to tighter supplies of LNG. However, this level of generation, together with a low
forced outage rate of 1.6%, substantially exceeded expectations. No dispatch was required from the Renca plant, although it
was available for operations in 2012.
PLANT
LOCATION
COMMISSIONING
TURBINE
Renca
Renca
Municipality
Santiago, RM.
1962
diesel-steam
Nueva
Renca
Renca
Municipality,
Santiago, RM.
1977
combined
cycle
UNITS
CAPACITY
(MW)
SPECIFIC
CONSUMPTION
(BTU/KWh)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
2
100
15,788
85.3
100.0
1 gas
turbine,
1 steam
turbine
379 (1)
7,167
82.1
92.7
These facilities belong to Eléctrica de Santiago
(1) The Nueva Renca plant has a capacity of 355 MW when operating on diesel and 379 MW when operating on natural gas
61
ELÉCTRICA VENTANAS
The year 2012 constituted the Nueva Ventanas plant’s third year of commercial operations. Its performance
indicators were among the best, with net accumulated generation of 2,090 GWh, a forced outage rate of
1.2%, and 96.9% availability. The plant had six months of continuous operation as of December, remarkable for
a coal-fired plant.
This demonstrates the experience acquired by AES Gener operations and maintenance personnel in
performing their duties in the plant’s different systems, where they have had the challenge of learning how
to work with the new desulfurization technology—the first semi-dry absorption (SDA) system installed in
Chile—and particulate matter capturing systems.
PLANT
LOCATION
COMMISSIONING
TURBINE
UNITS
CAPACITY
(MW)
SPECIFIC
CONSUMPTION
(BTU/KWh)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
Nueva
Ventanas
Ventanas,
Region V
2012
coal-steam
1
272
9,576
87.5
96.9
These facilities are owned by Empresa Eléctrica Ventanas
GUACOLDA
Guacolda has four coal-fired units in Huasco in the Atacama Region totaling 608 MW of gross capacity. A 95day overhaul began on Unit 1 in June of 2012, and an overhaul lasting 105 days began on Unit 2 in mid-October
of 2011. The tertiary reheaters on Units 3 and 4 were also replaced under warranty during the year.
Guacolda’s gross generation in 2012 was 4,422 GWh. Its average gross capacity over the course of the year
was 577.7 MW, and the plant’s availability was 87%.
PLANT
Guacolda
LOCATION
Huasco,
Region III
COMMISSIONING
TURBINE
UNITS
CAPACITY
(MW)
SPECIFIC
CONSUMPTION
(BTU/KWh)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
1995-1996-20092012
coal-steam
4
608
9,321
90.0
87.0
These facilities are owned by Empresa Eléctrica Guacolda
62
ELéCTRICA ANGAMOS
in the United States for leadership, innovation, and contribution
to development in the power industry, which benefits everyone.
Angamos also earned Power magazine’s highest award, Plant of the
Year, and was noted for its location in the world’s driest desert, its
ambitious planning schedule that culminated with early completion
of the units, the implementation of the Battery Energy Storage
System (BESS), the desalinization plant, the use of cooling towers
(the first of their kind in South America), and its innovative system
of financing.
Angamos is South America’s most modern coal-fired plant, with
its cutting edge technology for controlling emissions and reducing
seawater use. It is well within all the current legal standards in
terms of emissions, liquid waste quality, and noise levels. Since Chile
is a highly seismic country, the Angamos plant was designed to
withstand medium-intensity quakes without forced outages.
Teamwork and an emphasis on Operational Excellence during
2012 have been key factors in Angamos’ obtaining ISO 14001 and
OSHAS 18001 certification within the Genera program. It has also
earned ISO 9001 certification.These three standards, together with
the AMF certification obtained in 2011, have Angamos well on its
way to being a world-class company.
The gross installed capacity of the two Angamos units totals 545
MW. They generated 3,005 GWh in 2012 and reached their
monthly generation peak of 362 GWh in December with both
turbines operating at full load.
The Angamos plant was recognized internationally in 2012, winning
the Edison Award given annually by the Edison Electric Institute
PLANT
LOCATION
COMMISSIONING
TURBINE
UNITS
CAPACITY
(MW)
SPECIFIC
CONSUMP-TION
(BTU/KWh)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
Angamos
Mejillones, Region II
2011
coal-steam
2
544.8
9,976
95.0
89.2
These facilities are owned by Eléctrica Angamos
NORGENER
the work to install emissions control equipment in both Norgener
units. In addition, the Norgener plant earned Level 3 Proactive AMF
in-house certification, once again demonstrating its commitment
through its achievement of Operational Excellence.
The Norgener plant consists of two steam turbo generators with
a coal-fired boiler and a gross generation capacity of 277 MW.
The units generated 2,000 GWh in 2012, and Norgener broke its
monthly generation record in January 2012 when it produced 202
GWh. These figures clearly show the results of incorporating the
BESS, a project that went into operation at the end of 2009. The
system has enabled the generating units to reduce their spinning
reserve by replacing it with energy stored in the batteries, which
makes for more efficient use of the turbines’ installed capacity.
In matters of safety, it is very important to note that 2012 marked
nine years without lost-time accidents among Norgener personnel.
Also, the plant was recertified for environmental management
under ISO 14,001 and for work health and safety management
under OHSAS 18,001 version 2007, so that all that remains is to
integrate these standards through Genera. ISO 9001 certification
was also obtained, reaffirming the commitment of Norgener’s entire
staff to safety, excellence, and quality.
Among the work done at the Norgener plant this year was the
annual maintenance done on both units, with the turbine in unit 2
recovered in a 53-day overhaul. Another highlight was the start of
PLANT
LOCATION
COMMISSIONING
TURBINE
UNITS
CAPACITY
(MW)
SPECIFIC
CONSUMPTION
(BTU/KWh)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
Norgener
Tocopilla, Region II
1995-1997
coal-steam
2
277.3
9,497
95.5
90.7
These facilities are owned by Norgener
64
01 / SÍNTESIS CORPORATIVA
DISPATCH CENTER, AND OPERATIONS AND MAINTENANCE ON SING
SUBSTATIONS AND TRANSMISSION LINES
During 2012 and with the BESS system going into commercial
operation at the Angamos plant, the SING Dispatch Center played
a valuable role in coordinating the testing and start-up of the
equipment, followed by operative control and maintenance. It also
played an important role in the electrical studies for the Andes Solar
Substation project and the Norgener Environmental Improvement
project, as well as in inspecting the PMA 220 kV connection at the
Norgener substation.
km of conductor in a circuit of the 220 kV Norgener-Crucero
transmission line. All of the preventive maintenance was also
completed on the customers’ transmission systems, as stipulated
in the different supply contracts or transmission asset leasing
agreements.
In environmental and safety matters, the Bureau Veritas upheld
ISO 14,001 and OHSAS 18,001 certification for the entire
Transmission Department, underscoring the ten years and seven
months that had passed without lost-time accidents. As with
Norgener, both certifications are being integrated under the
Genera project.
Preventive maintenance was done throughout the transmission system
and substations that belong to Norgener, AES Gener, and Angamos
in the SING, with one important aspect being the replacement of 12
AES GENER TRANSMISSION LINES AND SUBSTATIONS
TYPE OF CIRCUIT
VOLTAGE (KV))
AES GENER (KM)
NORGENER (KM)
Single
345
140
Single
220
108
95
Dual
220
63
72
Single
110
Single
220
Sections or connections to other
companies’ substations
142
33
Leased
Total
Substations
ELÉCTRICA ANGAMOS (KM)
228
539
200
142
Gener
Norgener
Angamos
Andes
Nueva Zaldívar
Laberinto
Norgener
Oeste
Minsal
La Cruz
Angamos
2 sections at Mantos Blancos
substation
1 section at Lomas Bayas
substation
2 sections at Crucero
substation
2 sections at Barriles
substation
65
TERMOANDES
grew from 906 GWh to 1,357 GWh, positioning TermoAndes as the
leader over its four competitors in the Energy Plus market, with a
34% share of that market segment.
The Salta plant consists of a combined cycle unit made up of two
gas turbo generators (TG) that can be fueled by either natural gas
or diesel oil, two heat recovery boilers, and a steam turbo generator
(TV) that can connect any of the three turbo generators to either
power grid: the SING in Chile or the SADI in Argentina, without
interconnecting the two grids.
The company bought a 345/500 kV transformer in 2012 to be
installed at the 500 kV Cobos Transformer Station (TS) in order to
evacuate all of the capacity generated at the plant. It also continued
with construction on the 132 kV, 45-km long power transmission
line started in 2011 that will connect the Salta plant directly with the
Salta Este distribution TS located in the city of Salta. Another highlight
occurred in December when TermoAndes submitted to CAMMESA
the information necessary for it to begin providing primary frequency
regulation service to the Argentine grid.
The Salta plant operated under normal conditions in 2012, with the
three units connected to the SADI. It generated 4,137, the highest
ever for the plant. Its record monthly high occurred in March, with
396 GWh. All of the generation was delivered to the SADI, of which
1,357 GWh was sold to customers and 2,768 to the spot market.
TermoAndes had several highlights on the Argentine energy market
in 2012: It increased its average capacity sold under “Energy Plus”
from 104 MW in 2011 to 155 MW in 2012 and expanded the
industries it supplies from 364 to 423. Energy sales under contract
PLANT
Salta
LOCATION
COMMISSIONING
TURBINE
UNITS
CAPACITY
(MW)
SPECIFIC
CONSUMPTION
(BTU/KWh)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
Salta, Argentina
1999
combined cycle
2 gas, 1 steam
turbine
642.8
7,013
86.9
93.2
These facilities are owned by TermoAndes
66
Also, 2012 was a safe year, the fourth year in a row without lost-time
accidents for TermoAndes plant and contractor personnel.
INTERANDES
embankments that protect the towers near the rivers. InterAndes
also continued to make progress on its plan for clearing the
easement strip and service road. In addition, the company carried
out the public safety inspections and contingency plan required for
the line by the Argentine National Energy Regulation Agency.
InterAndes has a concession for transmitting electricity between
the Salta plant in Argentina and the Paso Sico node on the Chilean
border. It also has an agreement with TermoAndes to transport
electrical power and capacity between the Salta plant and the Paso
Sico border node.
Progress continued in 2012 on the annual maintenance plan
and on the improvements to the Wierna and Mojotoro river
INTERANDES TRANSMISSION LINES AND SUBSTATIONS
TYPE OF CIRCUIT
VOLTAGE (KV)
INTERANDES (KM)
345
268
Single
Total
268
INTERANDES
Substation
Salta
These facilities are owned by InterAndes
67
INTERNATIONAL ELECTRIC BUSINESS
AES CHIVOR
The amount of water flowing into the AES Chivor basin was at 118% of the historical
average; 2012 water levels were the sixth highest of the last 35 years.
The high water levels were the result of the La Niña weather
pattern’s effect on Colombian weather throughout the year,
bringing cooler currents to the Pacific Ocean and cool tropical
fronts to the region. AES Chivor generated 4,666 GWh of energy,
which represents 118% of the 2000-2011 average. The amount
generated covered 7.8% of the country’s total energy demand in
2012.
68
The regularly scheduled master maintenance plan was carried out
in 2012 on the plant’s turbines, electromechanical equipment, and
civil structures, fulfilling the technical and commercial requirements
to ensure business continuity. Scheduled maintenance for Units 3, 4,
6, and 8 was done during the year, and Unit 1 was reconditioned in
a process that began in September and was completed in January of
2013. The technology of Unit 1 was also updated, which consisted
of modernizing the temperature instruments; replacing the speed
regulator, starting system, stop valves, and local alarm notifier; and
rewinding the generator.
The Key Performance Indicators (KPI) established for 2012 reflect
the flooding of the plant that occurred in April during a flash
flood in La Rubia Ravine downstream from the turbines’ discharge
channel, halting the units’ turbines and some of the auxiliary
systems’ motors. Operations and maintenance personnel were
able to bring the problem under control, and the units were back
in service three days after the flood. The plant’s Equivalent Forced
Outage Factor (EFOF) and commercial availability were affected
by this event.
Under the company’s operational excellence processes, the plant
was given zero “unsatisfactory” ratings by ICONTEC, the agency
authorized to perform the annual follow-up audit of the ISO
PLANT
AES Chivor
9001:2008 standard on the quality management system, which
covers the plant’s operation and maintenance for electricity
generation, as well as the maintenance and repair of hydromechanical parts. In the plant’s safety records, no lost time incidents
(LTI) were recorded with direct plant personnel, and only one LTI
among the contractors.
In the area of project development, technical support was given in
the processes needed to begin construction on the Tunjita project
in 2012, a 20 MW run-of-river hydroelectric plant. These activities
included obtaining approval for the project from the agency in
charge of planning on the Colombian Grid (UPME), and assisting
with the processes of contracting works and obtaining machinery,
executing the substation connection agreement with the company
that operates the interconnection network, and registering the
project with the official agencies. Construction project began in
July 2012.
LOCATION
COMMISSIONING
TURBINE
UNITS
CAPACITY
(MW)
AVAILABILITY
2011 (%)
AVAILABILITY
2012 (%)
Boyacá,
Colombia
1977-1982
Pelton
8
1,000
91.8%
90.3%
These facilities are owned by AES Chivor
69
05
CHAPTER
BUSINESS
DEVELOPMENT
PROJECTS UNDER CONSTRUCTION
AES Gener continued developing and building projects in 2012 in response to the needs
and opportunities present on the Chilean and Colombian markets.
In 2006, AES Gener started on the first phase of an ambitious
plan for expansion involving the construction and start-up of 1,694
MW, representing a 49% increase in its installed capacity and an
investment of approximately US$3 billion. At the end of 2012, with
the fourth Ventanas unit, Ventanas IV, synchronized to the SIC, AES
Gener is completing the first phase of this expansion plan, which
has enabled the company to continue to be a key contributor
in satisfying the growing demand for energy on the Chilean grid.
The coal-fired Ventanas IV unit began its commercial operations
in March 2013.
The second phase of expansion got underway in 2012 with the
start of construction on both the Tunjita hydroelectric project in
Colombia and the fifth unit of the Guacolda complex on the SIC in
July and October, respectively. Progress also continued to be made
on the Cochrane and Alto Maipo project in order to be ready to
begin construction on these two plants in 2013. This new phase of
expansion involves an investment of approximately US$3.5 billion
and will increase installed capacity by 26%, or 1,235 MW.
VENTANAS IV THERMOELECTRIC PROJECT (SIC - CHILE)
The Ventanas IV thermoelectric project (previously called
Campiche), built by AES Gener subsidiary Eléctrica Campiche,
involved the construction of an approximately 270 gross MW
coal-fired thermoelectric plant fueled by bituminous and subbituminous coal. It is located adjacent to the existing Ventanas and
Nueva Ventanas plants in the municipality of Puchuncaví in Region V.
Although this plant was originally scheduled to go into operation
in May of 2011, on June 22, 2009, the Supreme Court revoked the
plant’s environmental permit due to a territorial zoning issue. Then,
on February 26, 2010, the Region V Environmental Commission
issued a new environmental resolution approving the project, and
72
on August 10, 2010, the Municipality of Puchuncaví issued the
construction permit for the unit.
Construction on the project resumed in 2011 and continued
throughout 2012, with the commercial operations started on
March 15, 2013. The project has a turnkey contract for the
engineering, procurement, and construction of the plant with Posco
E&C, and it is designed with reduction systems to control SO2,
NOx, and particulate emissions. The first synchronization with the
SIC occurred on December 19, 2012, and it was first fired up with
coal on December 24. The unit reached its maximum load of 274
MW on December 28, 2012.
GUACOLDA V THERMOELECTRIC PROJECT (SIC - CHILE)
The Guacolda V thermoelectric project, owned by related
company Guacolda, is the fifth unit in the Guacolda complex
located in Huasco, Region III.The new 152 MW-capacity unit will be
similar to the others already in existence. It will use pulverized coal
technology and will be fueled by bituminous and sub-bituminous
coal. The project is designed with reduction systems to control
SO2, NOx, and particulate emissions. The project obtained its
environmental permit in August 2010, and the plant will contribute
approximately 900 GWh to the SIC yearly.
The company opened a credit line for up to US$318 million with the
Banco Itaú Chile and Banco del Estado de Chile (New York branch)
banks in October of 2012 to finance the procurement, construction,
assembly, and start-up of the Guacolda V project. In addition, the
notice to proceed was given to Mitsubishi Corporation to start
with construction of the project under a turnkey arrangement. As
of December 31, 2012, the leveling, clearing, and surveying works
were underway.
TUNJITA HYDROELECTRIC PROJECT (SIN - COLOMBIA)
The Tunjita hydroelectric project involves the construction of a 20
MW run-of-river plant next to AES Chivor’s Esmeralda Reservoir. It
makes use of the water capacity generated by diverting the Tunjita
River and takes advantage of the tunnel that channels the river’s
water to the reservoir.
Construction on the Tunjita hydroelectric plant was approved in
2012, and work began in the second half of the year. The project
also received the approval of the Colombian Administrative
Department for Science, Technology, and Innovation, which allows
it to receive incentives for innovation and technology. The report
needed for the project to be considered a Clean Development
Mechanism was finished early, making the project eligible for reduced
emissions certification. As of December 31, 2012, preliminary work
was underway involving 85% advance in the project’s engineering
design, construction of alternative roads, excavation work on the
interconnection tunnel, and the machinery building.
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PROJECTS UNDER DEVELOPMENT
In 2012, AES Gener continued identifying and developing new business opportunities,
taking advantage of its presence in and knowledge of the market. Progress was made in
the engineering, construction, and financing of the Cochrane project on the SING and the
Alto Maipo project on the SIC, which together involve an investment of approximately
US$3 billion and installed capacity of 1,063 MW.
The Company has an extensive project portfolio, including coalfired plants, run-of-river hydroelectric plants, and renewable energy
projects such as energy storage batteries, solar, mini-hydro, and
wind generation projects. Among the projects in the development
stage, those in the most advanced phases are the ones that have
already obtained environmental approval. These more advanced
projects include the Cochrane thermoelectric project, Alto Maipo
hydroelectric project, Los Robles thermoelectric project, and Los
Andes solar project, all in Chile.
COCHRANE THERMOELECTRIC PROJECT (SING - CHILE)
The Cochrane thermoelectric project entails the construction
of two coal-fired thermoelectric plants of 266 gross MW each
located north of Antofagasta in the municipality of Mejillones
in Region II. The project obtained environmental approval in
September 2009, while the transmission line to evacuate power
from the project to the SING was given environmental approval
in April 2009.The project will be located adjacent to the Angamos
thermoelectric plant currently in operation, taking advantage of
synergies in terms of port services, coal stock, and other aspects.
The plant, which will use pulverized coal technology, will be fueled
by bituminous and sub-bituminous coal and it will have reduction
systems to control SO2, NOx and particulate emissions.
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The company signed an EPC (Engineering, Procurement, and
Construction) contract in 2011 with Posco E&C under a lump
sum turnkey fixed-date agreement. Its proven experience enabled
AES Gener to complete the Angamos plant, which has similar
characteristics, on time and within budget. In March and September
2012, two limited orders to proceed were issued to start the
project’s preliminary works.
Long-term agreements were signed in 2012 with mining clients
to sell approximately 100% of the energy produced at Cochrane;
these contracts are subject to the closing of the financing for the
project. At the end of the year, Mitsubishi Corporation, through
Both units should be connected to the SING in 2016 to help meet the growing
demand for energy from the large mining companies operating in northern Chile.
Diamond Pacific Investment Limitada, became part owner of
Empresa Eléctrica Cochrane SpA by purchasing 40% of its shares.
As of December 31, 2012, AES Gener has invested US$20 million
on the Cochrane project, involving environmental and engineering
studies as well as limited orders to proceed issued to the contractor.
The financing closed in March 2013 under the project finance
structure, and construction on the project got underway in April
of 2013. Both units should be connected to the SING in 2016 to
help meet the growing demand for energy from the large mining
companies operating in northern Chile.
ALTO MAIPO HYDROELECTRIC PROJECT (SIC - CHILE)
The Alto Maipo hydroelectric project consists of the construction
of two consecutive run-of-river plants in the Maipo River basin,
called Alfalfal II (275 MW) and Las Lajas (256 MW), with a total
installed capacity of 531 MW. The project is designed to have 90%
of its works underground, it does not have a reservoir nor does it
involve relocating residents, and the SIC will benefit from savings
in energy transmission as a result of its proximity to the city of
Santiago, as only 17 kilometers of new transmission lines will be
needed.
and underground works in the Colorado River Valley; and Hochtief/
CMC, which will do the same, but in the Yeso and Volcán River
Valleys.
The first contract, with Voith Hydro Ltda. and its local subsidiary
Voith Hydro S.A. (a Brazilian subsidiary of the German firm Voith
Hydro), is a turnkey agreement signed last August that covers the
supplies, assembly, and generation equipment for the project’s two
plants.
Progress continued on the project in 2012: Construction advanced
on the preliminary works (mostly access roads, bridges, and
the worksite’s electrical hookups), and the main contracts
for manufacturing the generation equipment and
building the underground works were signed.
The tenders were awarded to Voith Hydro,
which will provide the supplies, assembly,
and generation equipment for the project;
Strabag, which will execute all of the civil
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05 / BUSINESS DEVELOPMENT
Alto Maipo will be a key energy source for the SIC. It is expected
to produce around 2,300 GWh per year, which is equivalent to
approximately 50% of the energy currently consumed in homes in
the Metropolitan Region.
A second contract was signed in October with the Austrian company
Strabag. This company will execute all of the civil and underground
works in the Colorado River Valley, including the excavation for the
two turbine halls, which involves two-thirds of the project’s overall
underground works. The rest of the civil and underground works,
those in the Yeso and Volcán River Valleys, which represent onethird of the project’s total underground works, will be executed
by the Nuevo Maipo construction company, a holding company
consisting of Hochtief Solutions from Germany and CMC di Ravena
from Italy. Both companies use the latest construction technology
for underground works, including boring machines for digging the
tunnels and vertical drops.
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Environmental approval for the project was obtained in March of
2009, and environmental approval was given for the transmission
system in 2010. Then, in December 2012, AES Gener was given an
indefinite electricity concession for the project.
Alto Maipo will be a key energy source for the SIC. It is expected
to produce around 2,300 GWh per year, which is equivalent to
approximately 50% of the energy currently consumed in homes
in the Metropolitan Region. As of December 31, 2012, AES Gener
has invested US$73 million in the Alto Maipo project, including the
preliminary works, voluntary easements, engineering and geological
studies, and surveying. The financing is expected to be finalized
during 2013 so that construction on the project can begin.
LOS ANDES SOLAR PROJECT (SING - CHILE)
The Los Andes Solar project involves the construction of a 220
MW photovoltaic solar farm in several stages. The first stage of
the project is expected to be built in 2013. This initial stage
consists of a 1 MW solar prototype plant that will integrate the
operation of the BESS (Battery Energy Storage Service) systems
installed at the Andes substation some 260 kilometers southeast of
Antofagasta. A subsidy was obtained from Innova-Corfo to finance
the development of new software and a control system for the
project that will be used to integrate the BESS with the solar panels.
The second stage of the project, planned for 2014, involves the
installation of 20 MW of solar panels connected to the same
substation. Subsequent stages will increase the solar farm’s capacity
by 40 MW each until the project’s full 220 MW capacity is reached.
LOS ROBLES THERMOELECTRIC PROJECT (SIC - CHILE)
The Los Robles thermoelectric project involves the construction
of two coal-fired plants of 375 gross MW each with pulverized
coal boilers that can be fueled by bituminous and sub-bituminous
coal. The property for the project is located 290 km southwest of
Santiago, some 30 km south of the city of Constitución in Region
VII. In addition to building a power plant, this project includes the
construction, equipping, and operation of a port. The plant will
have reduction systems to control SO2, NOx, and particulate
emissions.
The Los Robles project, which obtained environmental approval
in October of 2008, is designed to satisfy electrical needs on the
SIC.
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06
CHAPTER
CORPORATE
SOCIAL
RESPONSIBILITY
CORPORATE SOCIAL RESPONSIBILITY
Corporate Social Responsibility (CSR) or Responsible Business (RB) is a way of doing
business that takes into account social, environmental, and economic effects of business
activities, and incorporates respect for ethical values, individuals, communities,
and environment.
For AES Gener, being socially responsible means fulfilling its business
mission – to provide a reliable source of power – while acting
ethically and responsibly toward all the Company’s stakeholders:
its employees, communities, customers, shareholders, investors,
suppliers, contractors, and partners. In other words, it means
being an efficient, reliable company that understands that the main
issues in its business are risk management, innovation, and creating
value for all of our stakeholders, and thus being mindful of its own
sustainability. It is being a Company whose business activity, as a
whole, makes a positive contribution to society.
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AES Gener puts its CSR into practice on the basis of three
fundamental pillars in all communities where it has operations:
education, employability, and community infrastructure. Our CSR
policy is implemented through the AES Gener Foundation.
AES Gener understands CSR to be part of its operational excellence,
which is not simply how it operates its plants and business activities,
but also how it relates with the communities where it carries out
these activities, the same ones that are home to a large percentage
of its workers and contractors, and with which it has a permanent
“good neighbor” policy.
CORPORATE VALUES AND
BUSINESS ETHICS
We are, and always will be, a Company driven by values. Safety,
integrity, honoring our commitments, striving for excellence,
and enjoying our work: these are the foundation of all that we
do. Commitment to our shared values is what differentiates our
Company on the market. These values, which are presented below,
are at the heart of our Company Business Code:
PUT SAFETY FIRST
Guaranteeing safe operations at our facilities is the cornerstone of
our daily activity and decision-making. Company members must
make work-related safety and risk prevention a prime concern for
personnel, contractors, and the communities in which they work.
AES Gener periodically holds different activities for members
throughout the Company, including monthly talks at all the facilities,
in order to keep this culture of safety alive and well.
ACT WITH INTEGRITY
Company employees must be honest, trustworthy, and responsible.
Integrity must be the essence of their individual behavior and of
their interactions with one other and with third parties on the job..
STRIVE FOR EXCELLENCE
Company members must strive to be the best in all they do and to
have world-class levels of performance.
ENJOY THE JOB
Members of the organization know that work can be interesting
and gratifying. They are called upon to enjoy their work and to
value the satisfaction of being part of a team that makes a positive
difference.
The Company has various ways of promoting the concrete
application of these values on the job, and develops activities and
materials that encourage employees to reflect on them.
The Code of Conduct is distributed to and accepted by all of the
Company’s collaborators. It is also given to contractors, suppliers,
and business partners, and is available on the Company’s web site.
HONOR COMMITMENTS
The individuals who make up the Company must honor
the commitments the organization has made to
all of its stakeholders, which include workers,
customers, communities, shareholders,
investors, suppliers, contractors, and
partners.
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06 / CORPORATE SOCIAL RESPONSIBILITY
ETHICS AND COMPLIANCE PROGRAM
Our Code of Conduct and Ethics and Compliance Program have been approved by the Board of Directors. The purpose
of the Code of Conduct is to regulate, as a requirement for employment, the actions of all those who work at AES Gener,
including those employed by our subsidiary companies.
The Ethics and Compliance Program provides training, information, and certification programs for AES Gener employees on
the Code of Conduct. The Ethics and Compliance Department also has programs to prevent and detect criminal activity, to
promote a business culture that encourages ethical behavior and respect for the law, and to monitor and enforce Company
policies on corruption, bribery, money laundering, and connections with terrorist groups. The Code of Conduct is published
on our website, www.aesgener.cl.
Any changes or exemptions made to the Code of Conduct will be reported on the website.
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RESPONSIBILITY TO THE COMMUNITY
POLICY ON TIES AND RELATIONS WITH LOCAL COMMUNITIES
The Policy on Ties and Relations with Local Communities (PVRCL,
from its initials in Spanish) sums up the concepts and guidelines for
AES Gener’s dealings with the communities where our plants are
located.
The PVRCL enables AES Gener to manage effectively, and
sustainably, its relationship with the communities neighboring the
company’s facilities in terms of both environmental and social
matters.
In addition to the CSR policy that AES Gener implements through
its AES Gener Foundation, each complex has established specific
alliances with their neighboring communities. For example, the
Angamos complex has signed agreements with the Mejillones
Municipality and with educational establishments; it also serves on
the Board of the Foundation for the Sustainability of the Tern and
on the Board of the Mejillones Industrial Association.
The Norgener Complex also finalized in 2012 a number of
initiatives with its neighboring community. One highlight was
the AES Gener Foundation Cup held jointly with the Ganamos
Todos Foundation (the We all Win). In addition, the cooperation
agreement with the Tocopilla Municipality was renewed for a second
year, as was the strategic alliance with the Tocopilla Polytechnic High
School. Meanwhile, the SING Load Dispatch and Substation and
Transmission Line Operations and Maintenance Center continued
with its sponsorship of the San Bartolomé de Socaire School, and
it continued as a member of the Antofagasta Industrial Association
(AIA).
In the Metropolitan Region, the management of the Renca and
Nueva Renca plants has close ties with the community, and
students from various industrial schools and institutes frequently
visit the Renca facilities. Particularly important is its collaboration
with the Andes Professional Technical High School, the only
secondary school associated with DUOC Chile, a branch of the
Pontificia Universidad Católica de Chile. The management and
workers also take part in a variety of activities with the community
and in conjunction with the Municipality of Renca and its social and
athletic organizations.
The AES Gener hydroelectric plants located in the Cajón del
Maipo continue to maintain their long-standing tradition (the first
plant, Maitenes, dates back to 1923) of keeping close ties with the
communities near their production centers, particularly the towns
of Alfalfal and Maitenes, and remaining in line with Company policy.
For example, the Company continued training outdoor guides in
2012, the goal of which is to train and certify the community’s
inhabitants under international programs, including the Leave No
Trace and Wilderness First Responder programs, helping them to
develop skills that can lead to future employment.
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AES GENER FOUNDATION
The AES Gener Foundation was created in 1995 as a non-profit
agency named the Maitenes Foundation. Its mission was to offer
outdoor educational programs that contributed to the educational
and integral ethical development of children, young people, and
adults using a methodology based on adventure, fellowship, and
interaction with the environment.
The Foundation began to diversify its activities in 2008, incorporating
programs on leadership and teamwork as well as workshops and
seminars for the different AES Gener divisions and business units.
In 2012, these programs included a leadership workshop for AES
Gener executives and programs to foster teamwork in different
divisions of the power generation Company.
whose responsibilities are to direct, oversee, and head up the
implementation of the programs and activities that are scheduled
each year.
A broad array of programs have been implemented over the last
19 years, many of which are held in the Los Maitenes Education
Center located in El Colorado, San José de Maipo, and in other
areas of Chile where the Company has plants.
EDUCATION
FRIENDS OF NATURE PROGRAM
Externally, the Maitenes Foundation provided a platform for the
Company to administer, manage, and coordinate the community
benefits that it fosters through its Corporate Policy on Ties and
Relations with Local Communities and other agreements with the
communities.
The Friends of Nature program was held for the seventeenth year
in 2012. The participants of this program are sixth graders at public
schools in the municipalities where AES Gener has its business units
(Tocopilla, Mejillones, Huasco, Puchuncaví, Laguna Verde, Llay Llay,
Cabrero, and Renca).
In 2011, the Maitenes Foundation changed its legal name to the
AES Gener Foundation with the goal of further strengthening its
role in formulating and implementing the Company’s community
programs.The organization’s activities expanded to include designing
and executing social, educational, and work training programs;
promoting employment; improving community infrastructure; and
supporting sports, culture, and the arts. All of this is done within
the framework of the Foundation’s primary values: sustainability,
environmental protection, and safety.
The youngsters first submit a research paper on an energy and/or
environmental topic chosen by the Company, and those selected
are given the opportunity to participate in the Friends of Nature
program. These students spend three days at AES Gener’s Los
Maitenes Center in the Cajón del Maipo, where they work with
a team of experienced mountaineers and instructors especially
trained to handle children.
The Foundation has a General Council made up of AES Gener
executives and professionals who see to it that the Foundation
fulfills its objectives and properly manages the funds it receives
to accomplish its purpose as an organization. Administration of
the AES Gener Foundation is in the hands of a General Director,
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The goals of the Friends of Nature program are to provide
education in environmental matters and foster teamwork, to
develop knowledge and bring about a change in attitudes toward
natural resources and the environment, to educate and develop
habits on environmental stewardship, and to promote human
values such as comradeship and camaraderie.
THE MUNK PROGRAM
DUAL EDUCATION AND EMPLOYABILITY
The Munk program has been in place in Mejillones and Tocopilla
since 2011. In 2012, it benefited over 1,100 fifth and sixth graders
who attend the public schools in those towns.
The AES Gener Foundation helps handle the costs involved in
implementing the Dual Student program at the Ventanas plant in
the Municipality of Puchuncaví. The purpose of this program is to
train competent professionals with practical experience in their
area of expertise, to help young people become employable, to
have better trained technical personnel with skills adapted to actual
industrial conditions, and to create a link between the Company
and the community within its line of business.
The purpose of the program is to reinforce English language
teaching, following the Ministry of Education’s curriculum and using
modern educational software. The program gets the students’
teachers and parents involved as well. The educators use a control
panel to monitor their students’ progress in the challenges given
them and to generate online reports on the class as a whole as
well as on individual pupils. Then they use this data to focus their
teaching on areas where the class or individual students are having
the most difficulty. The parents also receive progress reports and
other information on their children.
ACADEMIC EXCELLENCE AND PRE-UNIVERSITY
SCHOLARSHIPS
Starting in 2011, the AES Gener Foundation began to offer
scholarships to a Viña del Mar pre-university for high school
seniors from Puchuncaví. The goal of the scholarships is to expand
the students’ options for professional development. The program
awarded 20 scholarships to 12th graders of the community during
2012.
Furthermore, as in 2011, academic excellence scholarships were
again awarded to the students earning the municipality’s three
highest 2012 college entrance exam scores to help defray their
living expenses during their first year at the university.
Under this dual program, 11th and 12th graders at Puchuncaví’s
Sargento Aldea Educational Complex go to the AES Gener
Ventanas plant twice a week to gain hands-on experience in
subjects whose theory they have studied in school in their different
areas of expertise: administration, electronics and electricity. AES
Gener not only opens its doors to the students, but also provides
them with an expense allowance, meals, safety equipment, and bus
fare.
SPORTS
“WE ALL WIN” PROGRAM
This program has been held since 2011 in an alliance with the
Ganamos Todos (We All Win) Foundation and benefits the
communities of Tocopilla, Puchuncaví, and Renca. The goals of
the program are to encourage athletic activity among children
and young people; to contribute to young people’s and adult’s
employability through training as athletic coaches, referees, and
managers; to encourage good eating habits that improve the quality
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of life; and to use sports to foster the values of physical activity to
help prevent sedentary lifestyles. The program also encourages such
social values as teamwork, discipline, and perseverance.
A successful soccer league program was held in 2012. It was
called AES Gener Foundation Cup and consisted of a program to
encourage sports among girls and boys aged 12 to 15 who live and
study in Tocopilla. Another goal of the program was to keep these
young people, most of whom come from low-income families, away
from drugs and alcohol.
The program also trains adults who will act as coaches for the
different teams and as referees in the AES Gener Foundation Cup.
These new coaches and referees are hired by the Cup organization
to put their new knowledge to use.
TRAINING AND EMPLOYABILITY
PROGRAMS
The Foundation offers programs that develop and train people to
become leading professionals who are proactive and knowledgeable
on outdoor activities. These activities include the course to train
monitors for the Leave No Trace Program, which teaches people
how to camp in such a way as to make a minimal impact on the
environment; a first aid course and certification in CPR-AED
(cardiopulmonary resuscitation with automatic external defibrillator)
in conjunction with the Association for Emergency and First Aid
Training (ACES, for its initials in Spanish); courses to train field
instructors for Adventure Education programs; a safety course for
working at heights; and a Wilderness First Responder (WFR) first aid
course offered in conjunction with the ACES association.
COMMUNITY INFRASTRUCTURE
One of the pillars of AES Gener’s CSR area is to help out with
community infrastructure. A major project completed in 2012
involved improvements to the Tocopilla shoreline, including both
beaches and seaside avenues.
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Another project, this year, was signed with the Municipality of
Mejillones to improve the community’s athletic infrastructure. New
soccer fields will be added to the municipal sports complex, and
improvements will be made to the bleachers, scoreboard, and locker
rooms.
ALTO MAIPO COMMUNITY ACCORD
The AES Gener Foundation administers the social program that was
created under the Community Accord signed with the municipality
of San José de Maipo within the framework of the Alto Maipo
Hydroelectric Project (PHAM for its initials in Spanish).
This social program is developed through the AES Gener - Alto Maipo
Fund, which awards financing to projects that benefit the community
as a whole. The program will last for 30 years and awards funds of
5,807 UF per year. The first bid for funding was held in 2012. But
first, the San José de Maipo Local Council was created, comprised of
nine members, among whom are local government representatives,
community leaders, and AES Gener executives. The Mayor of San
José de Maipo presides over the Council.
The bid process was publicized in all the towns and villages throughout
the district in June and July, and in August over 100 people were
taught how to draw up a proposal for a community project. A manual
on presenting a proposal was written to help with the training, and
is available on the AES Gener Foundation website (http://www.
fundacionaesgener.cl).
A total of 38 community organizations and 50 micro business owners
submitted bids, out of which 15 were chosen from the areas of
education and training, community development and infrastructure,
and athletic programs. Eight microbusinesses were also selected for
a total of 23 projects, which got underway on December 17, 2012.
The initiatives are highly diverse, and include a summer camp for boys
and girls in Guayacán; infrastructure for the building that houses the
Neighborhood Association and the Rural Potable Water Committee
of the community of Santa María del Estero, on the road to Lagunillas;
heritage postcards for the old El Melocotón railroad station, and
many others.
RESPONSIBILITY TO SHAREHOLDERS
AND INVESTORS
Power generation is a capital-intensive industry in which investments are normally evaluated
over a 25- or 30-year term. Consequently, AES Gener aims not only for short-term financial
results, but seeks to make them sustainable into the future as its primary responsibility
toward its shareholders and investors.
Likewise, AES Gener considers transparency of relevant Company
information, as well as the quality, efficacy, and promptness of its
public availability, in accordance with laws governing corporations
and securities markets, to be a major part of its responsibility
toward shareholders and investors. The limit on transparency
of information is set by the aforementioned legal codes, which
ensure equitable, simultaneous access to information, as well as
by the importance of maintaining the confidentiality of strategic
information that, if made available to the competition, could weaken
the Company’s competitive position.
Periodic meetings were held with local analysts during 2012 to
present the Company’s official results; to explain its business
strategy, including operational, commercial, and financial goals; to
discuss development projects; and to answer the questions of those
attending the meeting. The Company also participated in various
meetings and conferences with local and international investors.
RESPONSIBILITY TO WORKERS
OCCUPATIONAL SAFETY
AND HEALTH
Because AES Gener considers the human factor to be all-important,
“Safety” heads the list of its corporate values. In our efforts to
achieve an accident-free workplace, we strive daily to meet the
world’s highest standards of health and safety. We encourage all
AES Gener personnel and contractors to live a culture of safety
not only while they are on the job, but in their non-work activities
as well.
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The Company has adopted four safety beliefs in order to strengthen
an awareness of how to perform daily activities more safely:
1. Safety comes first for our personnel, our contractors, and the
people in our communities. All work activities must be carried
out safely in order to promote personal health, safety, and
wellbeing.
2. All occupational incidents can be prevented.
3. Working safely is a condition for employment, and all individuals
are responsible for their own safety, as well as for that of their
co-workers and of the people in the communities where we
work.
4. It is the right and obligation of all AES Gener personnel and
contractors to stop work immediately whenever they see a
situation that they consider to be unsafe.
In our Company, all activities are carried out following AES Corp.’s
stringent corporate regulations, which are based on international
standards such as OSHA, ANSI, and others. Chilean standards and
laws on risk prevention such as Law 16,744 are also complied
with.
In 2011, the Company started the arduous process of
implementing an integrated management system, called GENERA,
which is based on ISO 14001 and OHSAS 18001:2007. Integrated
certification under these standards was attained in 2012 by the
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Angamos, Ventanas, Los Vientos, and Santa Lidia plants, as well
as the Cordillera Complex plants of Alfalfal, Queltehues, Volcán,
and Maitenes, with no failures in any portion of the standards.
These facilities are only the first phase of implementation and
certification. The Norgener (generation and transmission),
TermoAndes (the Salta plant in Argentina), Eléctrica Santiago, SIC
transmission, and the Laja plant are all working to be certified
for these standards. When this occurs, all AES Gener facilities will
be working under a single integrated system, which will allow for
more efficient results and even higher and more stringent safety
standards.
Like AES Gener group workers, contractors also carry out their
activities following the guidelines of the Safety, Occupational
Health, and Environmental Management Regulations for
contracting companies, which must be applied in all works,
worksite, and/or service contracting. The purpose of these
regulations is to protect the integrity of individuals, equipment,
materials, and the environment in the work done by AES Gener
personnel and contractor employees. The regulations also
require that contractors carry out their activities under a safety
management system whose starting point is our Occupational
Environmental, Safety, and Health Management system, GENERA.
We created a cartoon character, a virtual safety champion named
Máximo Segura, to help the Company’s leaders promote safety.
We have developed a series of campaigns starring this character
to reinforce safety, including a program promoting the Cardinal
Rules of Occupational Safety and Health. Workers are also
reminded of their responsibility to report incidents and of the
techniques they should use to create a “super safe” workplace.
HUMAN RESOURCES, WORK
BENEFITS, AND QUALITY
OF LIFE ON THE JOB
A total of four lost-time accidents occurred among all AES Gener
Group workers in Chile in 2012. While this is similar in number to
the 2011 figure, the accidents were less serious, involving only 28
lost days compared to the 188 days lost in 2011.
With a view toward Company sustainability and benefit to
its workers, AES Gener wants its team members to develop
along with the organization in order to be equipped to handle
present and future challenges. Therefore, in order to administer
its generating plants efficiently and to realize the projects in its
portfolio, the Company seeks to stimulate and retain its personnel
while strengthening its team with suitable individuals who have the
development potential to handle new projects and to make up
replacement staff.
It should be noted that Company personnel increased in 2012,
with a total of 2,317,395 man-hours worked this year. This results
in an accident rate(1) of 0.39%, down from 0.41% in 2011. It is also
worthy of note that these figures are significantly lower than the
national average accident rate, which was 5.5% in 2011.
There were eight contractor accidents involving time lost in
2012. These accidents occurred during the 2,632,875 manhours worked by an average base number of 1,262 contractor
employees, yielding a 2012 accident rate of 0.63%. This figure is
also considerably below the average accident rate of the country
as a whole.
Construction projects are also built using exacting safety standards.
There were 8 accidents in the course of 2012 among the average
of 2,568 contractor employees who worked a total of 5,645,884
hours. In 2011, there were 28 accidents among an average of
2,651 employees who worked a total of 5,952,449 hours. This
yields a 2012 accident rate of 0.31%, lower than the 2011 rate of
1.01%. These figures are far below the national average accident
rate at construction sites, which was 5.8% in 2011.
During 2012, the AES Gener Group in Chile invested
Ch$894,904,662 in training programs, which involved 216 courses
and a total of 49,638 class hours offered to 764 workers during
the year. This was 15% higher than the Company’s investment in
training the previous year.
A significant portion of this increase went to the execution of the
Technical School Program, which trains employees and develops
the technical skills and competence of AES Gener production
personnel. The goal is to help the Company achieve its business
objectives and make AES Gener a world-class Company while, at
the same time, it gives the workers the
opportunity to reach a higher
level of employability and
better opportunities
and mobility within
the Company.
Desarrollo
(1) The accident rate refers to the number of accidents
per 100 workers.
89
We also continued this year with the Management Development
program for executives and the Leadership Diploma for middle
management. The former ended in December of this year and the
latter ends in the first half of 2013. Both programs are offered
by the Universidad Católica and are geared toward providing
personnel management tools and developing our talents so that
AES Gener’s leaders can direct and implement the Company’s
strategy more effectively.
Additionally, the Performance Management process continued
this year as a key tool for strengthening the performance of all of
the Company’s collaborators. All of the employees from all of the
departments participate, both from AES Gener and its subsidiary
companies. The process has three essential stages: (i) setting
performance objectives, along with the criteria for measuring
achievement; (ii) review or feedback at mid-year to take a look at
the progress made so far; and (iii) final assessment of goals and skills
at the end of the year.
The main goal of the Performance Management system applied
in the Company is to promote the individual’s appropriate
development in a specific job position. The relevant skills and the
annual objectives are assessed in order to identify which aspects
need to be developed over the coming year to maximize an
individual’s effectiveness in his or her job. This helps achieve the
Company’s objectives while also enhancing the employees’ personal
development.
Another important activity was the Great Place to Work survey,
version 2012, carried out for the second year in a row. All of
AES Gener and its subsidiaries took part in the survey, held in
October, and 91% of the employees participated. The main goal is
to compare companies from the same industry and to improve our
current procedures and plans for the Company’s human resource
management. The final ranking will be announced in 2013.
90
Our parent Company, AES Corp., and the AES Gener companies
use the Hay Group methodology to determine their pay structures
in order to balance internal fairness with external competitiveness.
This methodology is used to describe the position’s actual load
and then, based on eight factors, determine the proper level and
range of salaries for each position depending on what the market
is paying and our in-house situation in order to maintain balance
and fairness. The latter is done using market studies on pay scales
and benefits.
AES Gener workers receive a number of benefits that help them in
the different areas of their lives, some of which benefit the family as
well. For example, workers have group health insurance plans and
a supplementary health insurance policy that covers their spouse
and children up to the age of 24. In addition, the Company offers
workers over the age of 35 the opportunity to have a preventive
health checkup every two years. When a worker goes on medical
leave, the Company pays the first three days of the leave, which
are not covered by the insurance company, or Isapre, as well as
a complementary payment in addition to that received from the
Isapre. Women employees receive a monthly supplement to help
defray the cost of child care until the child turns five years old. Finally,
workers receive life insurance coverage plus extra protection in the
event of the death of a child or spouse.
The Company also offers its employees and their families
educational benefits, including higher education scholarships for
workers and their children. It gave out 96 of these scholarships
in 2012, as well as 10 scholarships based on academic excellence
for elementary and high school students in the Tocopilla area. In
addition, all of the workers children receive annual bonuses for
schooling, the amount of which depends on what grade they are in
school. In all, the Company paid out approximately Ch$200 million
in educational benefits in 2012.
The Company’s social responsibility extends into the workers’
benefits as well. AES Gener sponsored educational workshops in
2012 for family members of workers from the Company’s Region
V plants. The 30 families, including daughters, wives, and mothers
who participated in this program learned food handling techniques
and dessert-making in a course taught by INACAP, a well-known
technical institute.
The Quality of Life Program, which is implemented systematically in
all of the country’s work centers, has continued to benefit workers’
health, integration, and the work climate. Nutritional services were
reinforced in 2012, with four consultations per year. In addition,
the alcohol and drug abuse prevention policy continued with its
program of random testing.
Recreational and sports facilities are provided for employees and
their families in Valle Alegre and Maitenes, and activities are held for
workers’ children during their winter and summer school vacations.
In 2012, 200 children of employees participated in these activities
in the central, southern, and northern regions of Chile.
Workers also receive additional bonuses for births, weddings, and
vacations.
The number of workers employed by the Company in 2012
remained the same as in 2011.
AES GENER AND SUBSIDIARIES’ PERSONNEL AS OF DECEMBER 31, 2012
AES GENER EMPLOYEES
Executives
44
Professionals
329
Technicians and Administrative Employees
356
SUBTOTAL
729
SUBSIDIARIES’ EMPLOYEES
AES Chivor
TermoAndes
Norgener
91
58
108
Eléctrica Santiago
58
Eléctrica Angamos
105
Eléctrica Campiche
27
SUBTOTAL
TOTAL AES GENER AND SUBSIDIARIES
447
1,176
In matters of recruiting and hiring, 160 positions were filled in 2012, of which 37% were in-house candidates
and 63% were hired from outside the Company.
In order to attract new talent to the Company, AES Gener has continued with the internship
agreement with the industrial schools near our plants. The goal is to attract internship-level
students who are interested in our Company, and to develop and maintain ties over the long
term. In 2012, 84 internships were filled by students in different towns.
Finally, the Company introduced a Personalized Corporate Induction Program in 2012 that
provides information to each new worker starting out at AES Gener. During this year, 94% of
new workers participated in this program.
91
RESPONSIBILITY TO CUSTOMERS
We at AES Gener are fully aware that the service we provide is very important to
individuals’ quality of life and to the economic development of the country.We know that
the reliability and efficiency of our processes are highly relevant to the competitiveness
of our industrial customers and to the budgets of end consumers.
Knowing that a reliable power supply is crucial, AES Gener, as the
country’s largest thermoelectric generation Company, always seeks
to back its contracts with actual, efficient generating capacity to
ensure that electricity really will be available under critical supply
conditions.
With a view to process efficiency, we at the Company constantly
monitor our operational parameters, seeking to reach world-class
standards in our generation practices. Additionally, for each one
92
of our projects, the Company selects the fuel option that is most
economically efficient for generating electricity and that meets
specific standards of reliability and safety, all while complying with
all applicable regulations and its environmental policy.
Likewise, AES Gener stresses the prevention of outages or
technical problems that are unlikely but could cause potentially
serious impacts, and is constantly seeking to improve the quality
of its service.
RESPONSIBILITY TO
SUPPLIERS AND CONTRACTORS
Providing proper health and safety conditions is AES Gener’s primary responsibility toward
workers and contractors that regularly or occasionally work at Company facilities.The safety
and equipment standards at AES Gener facilities apply to both Company and external
employees, and for technical work at its plants, all workers are required on an equal basis to
undergo pre-hiring medical screening to reduce the risk of accidents.
Another relevant aspect of the Company’s responsibility toward
its contractors, mainly with those who provide specialized services,
is the long-term relationship that the Company seeks to establish
with them. This is due to the high degree of specialization and strict
safety standards required for maintaining electrical power plants
and transmission lines, and it provides an incentive for employers to
train and improve outside personnel as part of a stable relationship
of mutual cooperation that demands high quality service at
competitive prices.
In 2012, AES Gener intensified the use of its e-procurement
system through a platform it developed, as well as an external
platform, Power Advocate, which handles international tender
processes. Using these tools ensures equal access to information
for all potential suppliers and the application of objective selection
criteria, and thus incorporates best practices into the Company’s
procurement system.
The Company seeks to continue to add best practices that
guarantee equal access to information for all possible suppliers
and to apply objective criteria in selecting suppliers. In 2012, it
worked to increase purchases through the e-procurement system
developed by AES Corp. to handle its purchases.
Also with an eye toward ensuring transparency and access of
information, the Company continued strengthening its work with
the REPRO Suppliers Directory administered by Achilles Chile, a
company that specializes in dealings with suppliers. This directory
permits supply companies to see and update the information on
their products and services directly on the Internet, information
that is subsequently validated by Achilles.The system gives suppliers
and contractors greater visibility among their clients while also
generating economies of scale: Since the system is open to all
energy sector clients, the companies registered become available
for any procuring company that participates in REPRO. The system
operates with the industry’s highest security and control standards,
with easily traceable transactions, so purchases are handled safely
and reliably.
93
07
CHAPTER
FINANCIAL
STATEMENTS
Consolidated Financial Statements
96
REPORT OF INDEPENDENT AUDITORS
To
Shareholders and Directors
AES Gener S.A.
We have audited the accompanying consolidated financial statements of AES Gener S.A. and subsidiaries which comprise the consolidated statements of financial position as of December 31, 2012 and 2011, and the related consolidated statements of comprehensive income, changes
in equity and cash flows for the years then ended and the related notes to the financial statements.
Management´s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in conformity with International
Financial Reporting Standards; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair
presentation of consolidated financial statements that are free of material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards in Chile. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.
The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the
entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we
express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AES Gener
S.A. and subsidiaries at December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended in
accordance with International Financial Reporting Standards.
Oscar Galvez R.
ERNST & YOUNG LTDA.
Santiago, Chile
February 26, 2013
97
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
As of December 31, 2012 and 2011
(in thousands of United States Dollars)
NOTE
DECEMBER
31, 2012
THUS$
Cash and Cash Equivalents
8
397,204
409,157
Other Current Financial Assets
9
10,108
140,396
ASSETS
DECEMBER
31, 2011
THUS$
CURRENT ASSETS
Other Current Non-Financial Assets
11
7,612
6,784
Trade and Other Receivables
12
312,627
391,118
Related Party Receivables
13
8,754
13,885
Inventory
14
90,703
105,946
Taxes Receivable
15
28,568
19,603
855,576
1,086,889
9
14,140
12,642
Other Non-Current Non-Financial Assets
11
17,988
11,187
Trade and Other Receivables
12
6,083
9,829
Investments in Associates
16
276,153
273,375
Intangible Assets
17
39,818
33,816
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other Non-Current Financial Assets
Goodwill
17
7,309
7,309
Property, Plant and Equipment
18
4,599,363
4,375,469
Deferred Taxes
19
14,976
18,757
TOTAL NON-CURRENT ASSETS
4,975,830
4,742,384
TOTAL ASSETS
5,831,406
5,829,273
The accompanying notes form an integral part of these financial statements
98
AES GENER AND SUBSIDIARIES
Consolidated Statement of Financial Position
NOTE
DECEMBER
31, 2012
THUS$
Other Current Financial Liabilities
20
124,281
94,654
Trade and Other Payables
21
254,750
347,840
Related Party Payables
13
17,017
9,526
Provisions
22
4,588
3,037
Taxes Payable
15
49,870
32,815
Employee Benefits
23
2,333
3,241
Other Current Non-Financial Liabilities
24
38,459
23,045
491,298
514,158
LIABILITIES AND EQUITY
DECEMBER
31, 2011
THUS$
CURRENT LIABILITIES
TOTAL PASIVOS CORRIENTES
NON-CURRENT LIABILITIES
Other Non-Current Financial Liabilities
20
2,272,486
2,298,096
21
35,441
31,381
13
-
236
Provisions
22
81,125
47,203
Deferred Taxes
19
412,365
358,185
Employee Benefits
23
38,305
28,750
Other Non-Current Non-Financial Liabilities
24
19,365
22,485
TOTAL PASIVOS NO CORRIENTES
2,859,087
2,786,336
TOTAL LIABILITIES
3,350,385
3,300,494
1,901,720
1,901,720
546,430
642,666
EQUITY
Issued Capital
Retained Earnings (Losses)
25
Share Premium
Other Components of Equity
25
Other Comprehensive Income
25
Equity Attributable to Shareholders of Parent
Non-Controlling Interest
49,908
49,908
222,859
222,029
(243,250)
(287,653)
2,477,667
2,528,670
3,354
109
TOTAL EQUITY
2,481,021
2,528,779
TOTAL EQUITY AND LIABILITIES
5,831,406
5,829,273
99
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the years ended December 31, 2012 and 2011
(in thousands of United States Dollars, except for Basic Earnings (Losses) per Share, which are presented in United States Dollars)
STATEMENT OF COMPREHENSIVE INCOME
NOTE
DECEMBER
31, 2012
THUS$
DECEMBER
31, 2011
THUS$
Operating Revenue
26
2,327,721
2,130,286
Cost of Sales
27
(1,737,828)
(1,443,214)
589,893
687,072
GROSS PROFIT
Other Operating Income
2,057
6,144
Administrative Expenses
27
(145,120)
(148,220)
Other Operating Expenses
27
(3,066)
(5,215)
Other Income (Losses)
28
7,433
(23,779)
Finance Income
29
8,407
9,303
Finance Expense
29
(115,452)
(107,148)
Equity Participation in Net Income of Associates
16
9,187
31,109
Foreign Currency Exchange Differences
29
(3,633)
(13,348)
349,706
435,918
30
(146,778)
(109,810)
202,928
326,108
NET INCOME BEFORE TAX
Income Tax Expense
NET INCOME AFTER TAX FROM CONTINUING ACTIVITIES
Income (Loss) from Discontinued Activities
NET INCOME
-
-
202,928
326,108
202,933
326,084
NET INCOME ATTRIBUTABLE TO
Income (Loss) Attributable to Shareholders of Parent
Income (Loss) Attributable to Non-Controlling Interest
NET INCOME
(5)
24
202,928
326,108
0.03
0.04
EARNINGS PER SHARE (PRESENTED IN U.S.$)
BASIC EARNINGS PER SHARE
Net Earnings per Basic Share
Basic Earnings per Share of Discontinued Operations
31
-
-
DILUTED EARNINGS PER SHARE
0.03
0.04
Diluted Earnings per Share of Continued Operations
0.03
0.04
Diluted Earnings per Share of Discontinued Operations
NET DILUTED EARNINGS PER SHARE
100
-
-
0.03
0.04
Consolidated Statement of Comprehensive Income
DECEMBER
31, 2012
THUS$
DECEMBER
31, 2011
THUS$
202,928
326,108
Income (Loss) from Foreign Currency Translation Adjustment, before taxes
52,645
(12,908)
Other Comprehensive Income, before taxes, for Conversion Adjustments
52,645
(12,908)
Income (Loss) for Cash Flow Hedge, before taxes
(21,749)
(91,391)
Other Income (Loss) for Cash Flow Hedge, before taxes
STATEMENT OF OTHER COMPREHENSIVE INCOME
NET INCOME
Components of Other Comprehensive Income, before taxes
Conversion Adjustment Differences
Cash Flow Hedge
(21,749)
(91,391)
Other Comprehensive Income (Loss) from Equity Method Investments, before taxes
10,088
532
Other Comprehensive Income (Loss) from Actuarial Benefit Plans
Other Comprehensive Income participation of Associates and Equity Method investments, accounted for using
Equity Method
Other Components of Other Comprehensive Income, before taxes
(6,269)
(1,918)
2,923
2,924
37,638
(102,761)
Income Tax Related to Cash Flow Hedges of Other Comprehensive Income
5,122
22,237
Income Tax Related to Benefit Plans of Other Comprehensive Income
1,643
326
Income Tax Related to Other Components of Other Comprehensive Income
TOTAL PROFIT FROM COMPREHENSIVE INCOME AND EXPENSES
44,403
(80,198)
247,331
245,910
247,336
245,886
(5)
24
247,331
245,910
OTHER COMPREHENSIVE INCOME ATTRIBUTABLE TO
Profit attributable to Shareholders of the Parent
Profit attributable to Non-Controlling Interest
TOTAL PROFIT FROM COMPREHENSIVE INCOME AND EXPENSES
101
CHANGES IN EQUITY
For the years ended as of December 31, 2012 and 2011
ISSUED
CAPITAL
THUS$
SHARE
PREMIUM
THUS$
DIVIDEND
RESERVE AND
SHARE BASED
OPTIONS
THUS$
Opening Balance, January 1, 2012
Changes in Equity
Net Income
Total Comprehensive Income
Dividends
Increases (Decreases) in Transfers and Other Changes
1,901,720
-
49,908
-
222,029
-
20,735
-
-
-
830
52,645
-
ENDING BALANCE, DECEMBER 31, 2012
1,901,720
49,908
222,859
73,380
ISSUED
CAPITAL
THUS$
SHARE
PREMIUM
THUS$
DIVIDEND
RESERVE AND
SHARE BASED
OPTIONS
THUS$
FOREIGN
CURRENCY
TRANSLATION
RESERVE
THUS$
Changes in Equity
Net Income
Total Comprehensive Income
Dividends
Increases (Decreases) in Transfers and Other Changes
1,901,720
-
49,908
-
293,452
(71,423)
33,643
(12,908)
-
TOTAL CHANGES IN EQUITY
1,901,720
49,908
222,029
20,735
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CHANGES IN EQUITY
102
-
-
-
-
830
(71,423)
FOREIGN
CURRENCY
TRANSLATION
RESERVE
THUS$
52,645
(12,908)
Consolidated Statement of Changes in Equity
OTHER COMPREHENSIVE INCOME
CASH FLOW
HEDGE RESERVE
THUS$
DEFINED
BENEFIT PLAN OTHER VARIOUS
RESERVE
RESERVES
THUS$
THUS$
TOTAL
COMPREHENSIVE
INCOME
THUS$
EQUITY
ATTRIBUTABLE TO
RETAINED
SHAREHOLDERS
EARNINGS
OF PARENT
THUS$
THUS$
EQUITY
ATTRIBUTABLE
TO NONCONTROLLING
INTEREST
THUS$
TOTAL
EQUITY
THUS$
(161,995)
-
(3,515)
-
(142,878)
-
(287,653)
-
642,666
-
2,528,670
-
109
-
2,528,779
-
(13,704)
-
(4,626)
-
10,088
-
44,403
-
(299,169)
-
44,403
247,336
(299,169)
830
(5)
3,250
44,403
247,331
(299,169)
4,080
(175,699)
(8,141)
(132,790)
(243,250)
546,430
2,477,667
3,354
2,481,021
DEFINED
BENEFIT PLAN OTHER VARIOUS
RESERVE
RESERVES
THUS$
THUS$
TOTAL
COMPREHENSIVE
INCOME
THUS$
EQUITY
ATTRIBUTABLE TO
RETAINED
SHAREHOLDERS
EARNINGS
OF PARENT
THUS$
THUS$
EQUITY
ATTRIBUTABLE
TO NONCONTROLLING
INTEREST
THUS$
TOTAL
EQUITY
THUS$
(13,704)
(4,626)
10,088
44,403
(96,236)
(51,003)
3,245
(47,758)
OTHER COMPREHENSIVE INCOME
CASH FLOW
HEDGE RESERVE
THUS$
(95,765)
(66,230)
-
(1,923)
(1,592)
-
(143,410)
532
(80,198)
(161,995)
(3,515)
(142,878)
(287,653)
(66,230)
(1,592)
532
-
(207,455)
(80,198)
-
511,238
326,084
(266,652)
71,996
2,548,863
326,084
(80,198)
245,886
(266,652)
573
87
24
24
(2)
2,548,950
326,108
(80,198)
245,910
(266,652)
571
642,666
2,528,670
109
2,528,779
131,428
(20,193)
22
(20,171)
103
Consolidated Statement of Cash Flows
CASH FLOWS
For the years ended December 31, 2012 and 2011
STATEMENT OF CASH FLOWS
NET CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net Income
Adjustments to Reconcile with Operating Profit (Loss)
Income Tax Expenses
Decrease (Increase) in Inventory
Decrease (Increase) in Trade and Other Receivables
Decrease (Increase) in Trade and Other Receivables from Operating Activities
Decrease in Trade and Other Payables
Increase in Trade and Other Payables from Operating Activities
Depreciation and Amortization
Movement in Provisions
Unrealized Foreign Exchange Losses (Gains)
Undistributed Equity Participation in Net Income of Associates
Other Non-Cash Adjustments
Gains from Sale of Assets
Other Adjustments to Reconcile to Investing and Financing Activities
Total Non-Cash Adjustments to Net Income
Dividends Paid
Dividends Received
Interest Paid
Interest Received
Income Tax Paid
Other Operating Outflows of Cash and Cash Equivalent
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Proceeds from Sale of Property, Plant and Equipment
Purchases of Property, Plant and Equipment
Proceeds from Sale of Intangible Assets
Purchases of Intangible Assets
Other Inflows from Investing Activities
NET CASH FLOWS USED IN INVESTING ACTIVITIES
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from Share Issuance
Proceeds from Non-Current Loans
Payments on Loans
Payments of Finance Lease Liabilities
Other Financing Inflows (Outflows) of Cash and Cash Equivalent
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Increase (Decrease) in Cash and Cash Equivalents, before Effects of Foreign Exchange Differences
EFFECTS OF FOREIGN EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
Net Foreign Exchange Differences
Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents at the Beginning of Period
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD
104
DECEMBER 31,
2012
THUS$
DECEMBER 31,
2011
THUS$
202,928
326,108
146,778
15,243
26,988
(33,232)
(45,313)
99,037
214,019
24,105
(5,588)
(9,187)
87,724
(215)
1,857
522,216
(316,707)
13,409
(99,027)
7,193
(79,056)
2,369
253,325
109,810
(63,868)
(24,186)
(15,591)
(94,398)
185,760
195,648
5,030
3,957
(31,109)
111,722
2,373
385,148
(320,377)
23,240
(96,890)
8,496
(95,532)
(52,669)
177,524
893
(419,182)
3,927
(6,824)
182,047
(239,139)
822
(395,439)
10,000
(1,180)
213,809
(171,988)
12,361
(48,978)
(2,157)
80
(38,694)
(24,508)
165,954
(37,944)
(2,044)
(8,508)
117,458
122,994
12,555
(11,953)
409,157
(8,098)
114,896
294,261
397,204
409,157
Notes to the Consolidated Financial Statements
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - GENERAL INFORMATION
AES Gener S.A. (www.gener.cl) (hereinafter “the Company”, “the Group”, “AES Gener” or “Gener”) was formed by public deed on June 19, 1981, signed
before Santiago Notary Public Mr. Patricio Zaldívar Mackenna.
Its corporate name at that time was Compañía Chilena de Generación Eléctrica S.A. (“Chilectra Generación S.A.”). Its bylaws were approved by the
Chilean Securities and Insurance Supervisor in resolution No. 410-S on July 17, 1981, published in the Official Bulletin No. 31,023 on July 23, 1981. The
Company is registered in the Commercial Registry of the Santiago Real Estate Registrar, on page 13,107, number 7,274 of 1981.
Gener is a publicly-held corporation dedicated primarily to electricity generation. Its role is to efficiently, safely and sustainably supply electricity, while
fulfilling commitments with customers, shareholders, employees, communities, suppliers, regulators and other persons and groups with which it interacts.
The Company operates in the Central Interconnected System (“SIC”) through the following powerplants: four run of the-river hydroelectric power
plants, one coal-fired thermoelectric power plant, four diesel-fueled turbogas power plants, two cogeneration power plants and one gas turbine, all of
which belong directly to Gener; a natural gas and/or diesel combined-cycle power plant and a diesel power plant belonging to its subsidiary Sociedad
Eléctrica Santiago S.A (“ESSA”); a coal-fired thermoelectric power plant belonging to its subsidiary Empresa Eléctrica Ventanas S.A. (“EEVSA”); and a coal
fired thermoelectric power plant belonging to its associate Empresa Eléctrica Guacolda S.A. (“Guacolda”).
Gener also provides energy to the Great North Interconnected System (SING), through its subsidiaries Norgener S.A. (“Norgener”), Empresa Eléctrica
Angamos S.A. and TermoAndes S.A. (“TermoAndes”). The first has a coal-fired thermoelectric power plant in the city of Tocopilla; the second plant is also
a coal-combined thermoelectric power plant in the city of Mejillones; and the third has one natural gas combined-cycle power plant in Salta, Argentina,
connected to the SING by a transmission line owned by its subsidiary Interandes S.A.
To address opportunities offered by the Chilean market, Gener is in the process of building various new power plants. In the SIC, the Company has a
unit under construction which belongs to its subsidiary Empresa Eléctrica Campiche S.A. (“EEC”). Additionally, Gener has received approval of environmental impact studies for other projects under development, namely the new project Empresa Eléctrica Cochrane S.A.in the SING grid and the Alto
Maipo project in the SIC grid.
In addition to its share in the Chilean electricity market, Gener produces electricity in Argentina and Colombia through its subsidiaries TermoAndes S.A.
and AES Chivor & Cía. S.C.A. E.S.P. (“Chivor”), respectively.
Gener’s commercial office is located at Rosario Norte N°532, floors 18-20, Las Condes, Santiago, Chile.
The Company is controlled by AES Corporation through its investment subsidiary Cachagua Ltda. with a 70.67% interest as of December 31, 2012.
These consolidated financial statements were approved by the Company’s Board of Directors on February 26, 2013.
105
07 / FINANCIAL STATEMENTS
NOTE 2 – BASIS OF PREPARATION
The Group prepares its Financial Statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements of AES Gener S.A. and subsidiaries (“the Group”) cover the consolidated statements of financial position as
December 31, 2012 and 2011, the statements of comprehensive income for the year ended December 31, 2012 and 2011, the statements of changes in
equity and cash flows for the year ended December 31, 2012 and 2011, and their related notes, which have been prepared and presented in accordance
with IFRS considering the respective presentational regulations of the Chilean Superintendency of Securities and Insurance (“SVS”).
The preparation of these consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgment in the process of applying the Company’s accounting principles. The areas involving a higher degree of judgment or
complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 6.
An asset or liability is considered as current when is expected to be realized, sold or consumed during the normal operating cycle of the company, is
maintained for commercialization or is expected to be realized within the next 12 months after the date it was informed.
The information contained in these consolidated financial statements is the responsibility of the management of AES Gener S.A.
As of the date of these consolidated financial statements, the following accounting standards have been issued by the IASB whose application was not
yet mandatory, and as such they will be applied as of the dates described below.
STANDARDS AND AMENDMENTS
NEW STANDARDS
IFRS 9: Financial Instruments: Classification and Measurement
IFRS 10: Consolidated Financial Statements
IFRS 11: Joint Arrangements
IFRS 12: Disclosure of Interests in Other Entities
IFRS 13: Fair Value Measurement
AMENDMENTS
IAS 1: Presentation of Financial Statements
IAS 16: Property, Plant and Equipment
IAS 19: Employee Benefits
IAS 27: Separate Financial Statements
IAS 28: Investments in Associates and Joint Ventures
IAS 32: Financial Instruments: Presentation
IAS 34: Interim Financial Reporting
IFRS 7: Financial Instruments: Presentation & Disclosures
MANDATORY
APPLICATION
Date
January 1, 2015
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2013
January 1, 2014
January 1, 2013
January 1, 2013
NEW STANDARDS
IFRS 9 “FINANCIAL INSTRUMENTS: CLASSIFICATION AND MEASUREMENT”
This standard introduces new requirements for the classification and measurement of financial assets. The basis of classification depends on the business
model of the Company and the characteristics of the contractual cash flows of the financial asset. Financial assets may be measured initially at amortized
cost or fair value. For financial assets designated to be measured at amortized cost, the Company must assess at each reporting date if there is evidence
of impairment; if there is, then an impairment review should be performed.
IFRS 10 “CONSOLIDATED FINANCIAL STATEMENTS”
This standard establishes control as the basis for consolidation (including the concept of special purpose entities or structured entities).
106
IFRS 11 “JOINT ARRANGEMENTS”
IFRS 11 outlines the accounting treatment for an entity that is jointly controlled, such as joint operations or a joint venture using the concept of control
as defined in IFRS 10. The accounting treatment depends on the type of arrangement and requires the identification of rights and obligations. The proportional consolidation method is no longer permitted.
IFRS 12 “DISCLOSURE OF INTERESTS IN OTHER ENTITIES”
The new standard includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose
vehicles and other balance sheet vehicles. Although IFRS 12 includes the same disclosures as found in IAS 27, IAS 28, and IAS 31, it also introduces new
required disclosures.
IFRS 13 “FAIR VALUE MEASUREMENT”
IFRS 13 provides a clear definition and introduces a single set of guidance for fair value measurements when required or permitted by IFRS. It also requires
new disclosures related to the measurement of assets and liabilities.
AMENDMENTS
IAS 1 “PRESENTATION OF FINANCIAL STATEMENTS”
The amendment effective January 1, 2013 resulted from the annual improvement project and clarifies the difference between the minimum amount of
required comparative information and voluntary disclosures.
IAS 16 “PROPERTY, PLANT AND EQUIPMENT”
This amendment provides clarification when major spare parts and servicing equipment meet the definition of Property, Plant and Equipment and are
not Inventory.
IAS 19 “EMPLOYEE BENEFITS”
The modifications require immediate recognition of changes in defined benefit plans, eliminating the corridor method and accelerated recognition of past
service costs. The treatment is retroactive and may be early implemented.
IAS 27 “SEPARATE FINANCIAL STATEMENTS”
The amendments to this standard are product of changes originating from IFRS 10.
IAS 28 “INVESTMENTS IN ASSOCIATES AND JOINT VENTURES”
This standard will be amended by changes made to IFRS 10a and IFRS 11, which establish the requirements for the application of the equity method for
investments in associates and joint ventures, along with more guidance for the impairment testing for these investments.
IAS 32 “FINANCIAL INSTRUMENTS: PRESENTATION”
The changes made in this standard provide more clarification of offsetting financial instruments in order to reduce the diversity being used in practice.
IAS 34 “INTERIM FINANCIAL REPORTING”
This amendment clarifies that only total assets for a segment is disclosed in the case that this information is reported to the chief decision maker on a
regular basis and there has been a material change in comparison to the amounts previously reported.
IFRS 7 “FINANCIAL INSTRUMENTS: PRESENTATION & DISCLOSURES”
Modified are the disclosure requirements associated with financial assets and liabilities that have been offset in the statement of financial position or
subject to netting agreements.
The Company is currently in the process of evaluating the initial effects of their application.
Management estimates that adoption of the aforementioned standards, amendments and interpretations will not have a significant impact on the
Company’s consolidated financial statements during the period of initial application.
107
NOTE 3 – BASIS OF CONSOLIDATION
The consolidated financial statements consist of the financial statements of AES Gener S.A. (the “Parent Company”) and its subsidiaries as of December 31, 2012
and December 31, 2011.
The financial statements of the subsidiaries are prepared as of and for the same periods as the Parent Company, consistently applying the same accounting policies.
(A)SUBSIDIARIES
Subsidiaries consist of all entities over which AES Gener has the power to direct financial and operating policies and generally over which it
holds more than half of the voting rights. Subsidiaries are consolidated from the date control is transferred to AES Gener S.A. and are no longer
consolidated from the date control ceases.
The purchase method is used to account for acquisitions of subsidiaries. The purchase cost is the fair value of the assets delivered, the equity
instruments issued and the liabilities incurred or assumed on the date of exchange. All identifiable assets acquired and liabilities and identifiable
contingencies assumed in a business combination are initially valued at fair value as of the acquisition date, irrespective of the extent of any
non-controlling participation. The excess of the purchase price over the fair value of AES Gener’s share of the net identifiable assets acquired is
recognized as goodwill. If the purchase price is less than the fair value of the net assets of the acquired subsidiary, the difference is recognized
directly in the income statement.
The Company consolidates the following subsidiaries:
ONWERSHIP INTEREST
TAXPAYER ID
COMPANY NAME
COUNTRY
FUNCTIONAL
CURRENCY
96.678.770-8
96.717.620-6
96.814.370-0
Foreign
Foreign
Foreign
76.803.700-0
78.759.060-8
Foreign
Foreign
Foreign
96.761.150-6
Foreign
76.004.976-K
76.008.306-2
Foreign
Foreign
76.085.254-6
76.170.761-2
NORGENER S.A.
SOCIEDAD ELECTRICA SANTIAGO S.A.
EMPRESA ELECTRICA VENTANAS S.A.
ENERGY TRADE AND FINANCE CORPORATION (2-3)
AES CHIVOR & CIA S.C.A. E.S.P.
GENER BLUE WATER (1)
INVERSIONES NUEVA VENTANAS S.A.
INVERSIONES TERMOENERGIA DE CHILE LTDA.
GENER ARGENTINA S.A.
TERMOANDES S.A.
INTERANDES S.A.
GENERGIA S.A.
GENERGIA POWER LTD. (ISLAS CAIMAN) (1)
EMPRESA ELECTRICA ANGAMOS S.A.
EMPRESA ELECTRICA CAMPICHE S.A.
ENERGEN S.A.
AES CHIVOR S.A.
EMPRESA ELECTRICA COCHRANE SpA (4)
ALTO MAIPO S.P.A.
CHILE
CHILE
CHILE
ISLAS CAIMAN
COLOMBIA
ISLAS CAIMAN
CHILE
CHILE
ARGENTINA
ARGENTINA
ARGENTINA
CHILE
ISLAS CAIMAN
CHILE
CHILE
ARGENTINA
COLOMBIA
CHILE
CHILE
US$
US$
US$
US$
COL$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
US$
COL$
US$
US$
DECEMBER 31, 2012
DIRECT
INDIRECT
99.9999
99.9999
0.0001
0.0001
0.0000
100.0000
0.0001
0.0000
92.0400
8.8200
13.0100
0.0000
100.0000
0.0001
0.0001
94.0000
47.5000
0.0000
0.0000
0.0000
0.0001
99.9999
99.9999
99.9800
0.0000
99.9999
99.9999
7.9600
91.1800
86.9900
99.9999
0.0000
99.9999
99.9999
6.0000
50.6200
60.0000
100.0000
TOTAL
DECEMBER
31, 2011
TOTAL
99.9999
100.0000
100.0000
100.0000
99.9800
100.0000
100.0000
99.9900
100.0000
100.0000
100.0000
99.9999
100.0000
100.0000
100.0000
100.0000
98.1200
60.0000
100.0000
99.9999
100.0000
100.0000
100.0000
99.9800
100.0000
100.0000
99.9900
100.0000
100.0000
100.0000
99.9999
100.0000
100.0000
100.0000
100.0000
98.1200
100.0000
100.0000
For the purposes of these consolidated financial statements, intercompany transactions and unrealized gains are eliminated. Unrealized losses are also
eliminated, unless the transaction provides evidence of an impairment of the asset transferred.
(1)
In the written resolution of subsidiary Energy Trade and Finance Corporation (“ETFC”) on June 21, 2012, it was agreed upon to reduce capital by
transferring 21,389,746 of its shares from AES Gener S.A. As payment for this reduction in capital, ETFC transferred two subsidiaries, Genergía Power
Ltd. And Gener Blue Water Limited, to AES Gener S.A. through a transfer of all of the 14,873,107 shares in these two investments. This resulted in
AES Gener S.A. being a direct owner of both Genergía Power Ltd. And Gener Blue Water Limited.
(2)
The Board of Directors of Norgener S.A. met on June 28, 2012 to issue capital through 7,196,787 new single-series shares with no par value, totaling US$2,206,989. These shares were subscribed and paid for by AES Gener S.A. with 2,206,989 shares of Energy Trade and Finance Corporation,
resulting in Norgener S.A. owning 99,99999576% of the total capital of Energy Trade And Finance Corporation.
108
In a written resolution issued by the Superintendency of Companies in Colombia, dated December 18, 2012, authorizing the merger of Energy Trade
And Finance Corporation (“ETFC”) and AES Chivor & Cia S.C.A. The accounting impact of this merger was recorded as of December 31, 2012,
effectively legally dissolving ETFC and resulting in Norgener becoming the majority shareholder in AES Chivor & Cia S.C.A.
(3)
During the last quarter of 2012, the Norgener subsidiary sold 40% of its participation of its subsidiary Empresa Eléctrica Cochrane to Mitsubishi.
However, as of December 31, 2012, the new shareholder of Empresa Eléctrica Cochrane has only paid for 12,360,665 shares of the total 114,878,912
of the total shares and holds the corresponding participation of 10.76% while Norgener holds a 89.24% participation (owning 102,518,247 of the
total shares). Therefore, the definitive participation of the new shareholder will not be reflected in the accounting until the remainder of the shares
are subscribed and purchased.
(4)
(B) TRANSACTIONS WITH NON-CONTROLLING INTEREST
Non-controlling interest represents the share of net income or net losses and net assets of subsidiaries not 100% held by the Group. Non-Controlling
interests are presented separately in the Statements of Comprehensive Income and Financial Position. AES Gener S.A. considers transactions with noncontrolling interests to be transactions with third parties outside the Group. Disposal or acquisitions of non controlling interests that do not result in a
change in control are accounted for as an equity transaction without recognizing gains and/or losses in the net income. Any difference between the price
paid and the corresponding share of the carrying amount of the subsidiary’s net assets is recognized in equity as a capital increase or decrease.
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1ASSOCIATES
Associates consist of all entities over which AES Gener exercises significant influence but not control, and in which it generally holds between 20% and
50% of the voting rights. Investments in associates are accounted for using the equity method and are initially recognized at cost. AES Gener’s investments
in associates include goodwill identified in the acquisition, net of accumulated impairment losses.
The Group’s share of post-acquisition losses or gains (“equity in earnings”) of its associates is recognized in income and its share of post acquisition equity
movements that do not constitute income are recognized in the corresponding equity reserves (and reflected in the Statement of Other Comprehensive
Income). In the event that the Group’s share of an associate’s losses is equal to or greater than its share in that company, including any other unsecured
receivables, the Group does not recognize further losses unless it has incurred obligations or made payments on behalf of that associate.
Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associate. Unrealized
losses are also eliminated, unless the transaction provides evidence of impairment of the asset transferred. When necessary, the accounting policies of
associates are modified to ensure their uniformity with policies adopted by the Company.
4.2 OPERATING SEGMENTS
Segment information is presented consistently within interim reports provided to the Company’s management, who is responsible for assigning resources
and evaluating the performance of the operating segments. In making strategic decisions, management identifies its operating segments based on the
markets in which it participates: the SIC market, the SING and SADI markets in Chile and Argentina, respectively, and the National Interconnected System
(SIN) in Colombia, where strategic decisions are made.
This financial information is detailed by operating segments in Note 7.
4.3 FOREIGN CURRENCY TRANSACTIONS
(A)PRESENTATION AND FUNCTIONAL CURRENCY
The items included in the financial statements of each of the Company’s entities are valued using the currency of the principal economic environment in
which the entity operates (“functional currency”). The consolidated financial statements of AES Gener are presented in US dollars, which is the functional
and presentation currency of the Company and all subsidiaries, except for its Colombian subsidiary, Chivor, whose functional currency is the Colombian
peso.
109
(B) TRANSACTIONS AND BALANCES
Transactions in foreign currencies other than the functional currency are converted to the functional currency using the exchange rate in effect as of the
date of the transaction. Exchange differences that result from settling these transactions and converting foreign currency denominated monetary assets
and liabilities to closing exchange rates are recognized in the consolidated income statement, except when deferred in equity as an effective cash flow
hedge.
Non monetary items that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of the initial transaction. Non monetary items measured at fair values in a foreign currency are translated using the exchange rate at the date the fair value was determined.
(C) BASIS OF CONVERSION
Assets and liabilities denominated in foreign currencies and Unidades de Fomento are presented using the following respective exchange rates and closing
values per U.S.$1:
DECEMBER 31, 2012
DECEMBER 31, 2011
479.96
4.918
1,767.00
0.7565
0.02101
519.20
4.304
1,938.50
1.2962
0.02329
Chilean Pesos ($)
Argentine Pesos (Ar$)
Colombian Pesos (Col$)
Euro
Unidad de Fomento (UF)
The Unidad de Fomento (UF) is an inflation indexed monetary unit denominated in Chilean pesos. The UF rate is established daily in advance based on
the prior month’s variation in the Chilean Consumer Price Index.
(D)BASIS OF CONVERSION FOR SUBSIDIARIES WITH DIFFERENT FUNCTIONAL CURRENCIES
The net income and financial position of all Group entities (none of which are in a hyperinflationary economy) with a functional currency that differs from
the presentation currency are converted as follows:
(i) Assets and liabilities are converted using the period end exchange rate.
(ii) Goodwill and fair value adjustments that arise in the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and converted using the appropriate year or period end exchange rate.
(iii) Income and expense accounts are converted using monthly average exchange rates (unless this average is not a reasonable approximation of the
cumulative effect of the exchange rates prevailing at the dates of the transactions, in which case income and expenses are converted using the exchange rate as of each transaction date).
All resulting foreign exchange translation differences are recognized as a separate component of Other Comprehensive Income, within Foreign
Currency Translation Reserve.
On disposal of the foreign operation, the component of Other Comprehensive Income relating to that par ticular foreign operation is recognized
in net income.
4.4 PROPERTY, PLANT AND EQUIPMENT
Land belonging to the Group is recognized at cost, net of accumulated impairment losses.
Plants, buildings, equipment and transmission systems used for electricity generation and other items of property, plant and equipment are recognized at
historical cost less related accumulated depreciation and impairment losses.
The cost of an asset includes its acquisition cost, all costs directly related to bringing the asset to the location and condition necessary for it to be capable
of operating as intended by management, the initial estimate of costs for the decommissioning of the asset, as well as costs for restoring the site where it
is located, all of which the Company undertakes upon acquiring the asset or as a consequence of using the asset during a given period.
Subsequent costs are recognized as part of the carrying amount of the asset or as a separate asset, only if they meet the recognition criteria in IAS 16
“Property, Plant and Equipment”:
• It is probable that the future economic benefits related with the item will flow to the Group; and
• The cost of the parts can be determined reliably.
110
When parts are replaced, the respective carrying amount is derecognized. All other repairs and maintenance are charged to income for the period in
which they are incurred.
Projects under construction include the following expenses that are capitalized during the construction period:
(i) Interest expenses related to external financing that are directly attributable to construction, both specific and generic in nature. In terms of generic financing, capitalized interest expenses are obtained by applying the weighted average cost of long term financing to the average accumulated
investment not directly financed.
(ii) Directly related personnel and other expenses of an operating nature attributable to the construction.
Balances of construction in progress are transferred to property, plant and equipment once the testing period is finalized and when they are available for
use, at which time depreciation begins.
Depreciation of property, plant and equipment is calculated using the straight line method over the estimated economic useful lives. The estimated useful
lives of property, plant and equipment are detailed in Note 18.
The residual value and the useful life of the assets are reviewed, and adjusted if necessary, as of each year end, so that the remaining useful life is in accordance with usage expectations for the asset.
When the fair value of an asset is greater than its estimated recoverable value, its carrying amount is written down to its recoverable value by recognizing
an impairment loss (see Note 4.7).
Gains and losses on sales of property, plant and equipment are calculated by comparing the proceeds from the sale with the carrying amount and are
included in “Other Income (Losses)”.
The amounts corresponding to the write off of property, plant and equipment include the accounting value less accumulated depreciation.
4.5GOODWILL
Goodwill represents the excess of the purchase price over the fair value of AES Gener’s share of the net identifiable assets of an acquired subsidiary /
associate as of the acquisition date. Goodwill related to acquisition of subsidiary is included in Intangible Assets, whereas Goodwill relating to acquisitions
of associates is included in Investments in Associates. Goodwill is subject to impairment testing and valued at cost less accumulated impairment losses.
Gains and losses on the sale of an entity include the carrying amount of goodwill related to the entity sold.
Goodwill impairment is determined by assessing the recoverable amount of each cash generating unit (“CGU”) to which the goodwill relates. Where
the recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized (see Note 4.7). Impairment losses relating to
goodwill cannot be reversed in future periods
4.6 INTANGIBLE ASSETS
(A)SOFTWARE
Licenses for purchased software are capitalized on the basis of the costs of each specific program incurred to purchase and prepare it for its intended
use. These costs are amortized over their estimated useful lives, using the straight-line method (see Note 17).
Expenses related to software development or maintenance are expensed as incurred. Costs directly related to the production of unique and identifiable
software controlled by the Group, and which will probably generate economic benefits greater than these costs for more than one year, are recognized as
intangible assets. Direct costs include expenses for personnel that develop the software. Software development costs recognized as assets are amortized
over their estimated useful lives.
(B)EASEMENTS
Easement rights are presented at historical cost. These rights have no time limits and therefore are considered assets with an indefinite useful life, and
consequently are not subject to amortization. However, the determination of useful life is reviewed during each reporting period to determine whether
the status of indefinite useful life still applies. These assets undergo impairment testing on an annual basis. An exception to this concept of indefinite useful
life exists in the cases where there is a contractual obligation that limits the useful life of the easement (see Note 17).
111
(C)WATER RIGHTS
Water rights are presented at historical cost. These rights have no time limits and therefore they are considered assets with an indefinite useful life and
consequently are not subject to amortization. However, the determination of indefinite the useful life is reviewed during each reporting period to determine whether the status of indefinite useful life still applies. These assets undergo impairment testing on an annual basis.
4.7 IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets subject to amortization are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized at the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
the fair value of an asset less costs to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there
are separately identifiable cash flows (“cash generating units”). Cash generating units are equivalent to operative segments.
An impairment loss is recognized when there is an excess between the carrying amount of the assets or cash-generating unit of cash and the corresponding
recoverable amount. The recoverable amount is the higher of fair value less costs to sell and the value in use. The estimate of the value in use is based on cash
flows projections that are discounted using a rate that reflects the current evaluations of the market and the risks associated with the assets or cash generating
unit. The best estimate of fair value less costs to sell includes prices of similar transactions carried out in the market place. If the transactions cannot be identifying
in the market, a valuation model will be used.
Non financial assets, other than goodwill, that have suffered an impairment loss are assessed at the end of each reporting period for indications that the impairment loss may no longer exist. Loss reversals cannot exceed the carrying amount that would have been obtained, net of amortization and depreciation, had no
impairment loss been recognized for the asset in prior years.
Impairment tests of goodwill and intangible assets with defined useful life are performed annually in October.
4.8 FINANCIAL ASSETS
PRESENTATION AND CLASSIFICATION
AES Gener classifies its financial assets into the following categories: at fair value through profit and loss, loans and receivables, held to maturity financial
investments, available for sale financial investments and derivatives designated as hedging instruments in an effective hedge. The classification depends
on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets upon initial recognition.
(A)FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
Financial assets at fair value through profit and loss are financial assets held for trading or designated as such upon initial recognition. A financial asset is
classified in this category if acquired principally to sell in the short term. This category also includes derivative financial instruments that are not designated
as hedging instruments.
(B) LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included
in current assets, except those with maturities greater than 12 months from year-end, which are classified as non-current assets. Loans and receivables
are included in Trade and Other Receivables in the Statement of Financial Position.
(C)HELD TO MATURITY FINANCIAL INVESTMENTS
Held-to-maturity financial investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s
management has the positive intention and ability to hold until their maturity. If the Group were to sell more than an insignificant amount of held-tomaturity financial assets, the entire category would be reclassified to the available-for-sale category.
112
(D)AVAILABLE FOR SALE FINANCIAL INVESTMENTS
Available for sale financial assets are non-derivative financial assets that are designated in this category or not classified in any other category. They
are included in non-current assets unless Management intends to dispose of the investment within the upcoming 12 months.
INITIAL RECOGNITION AND DISPOSAL
INITIAL VALUATION
Acquisitions and disposals of financial investments are recognized as of the date of negotiation (i.e. the date on which the Group commits to purchase
or sell the asset). Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit and
loss. Financial assets at fair value through profit and loss are initially recognized at fair value, and transaction costs are registered in the income statement.
SUBSEQUENT VALUATION
Available for sale financial assets and financial instruments at fair value through profit and loss are subsequently recorded at fair value. Loans and other
receivables and held-to-maturity financial assets are accounted for at amortized cost using the effective interest rate method.
Financial assets at fair value through profit and loss are carried in the statement of financial position at fair value with changes in fair value recognized in
Finance Income or Finance Expense in the income statement. Dividend income from financial assets at fair value through profit and loss is recognized in
the Statement of Comprehensive Income within Other Income when the Group’s right to receive payment is established.
Variations in the fair value of debt instruments denominated in foreign currency and classified as available for sale are analyzed by separating the differences arising from the amortized cost of the instrument and other changes in the instrument’s carrying amount. Exchange differences of monetary instruments are recognized in the net income; foreign currency translation differences of non monetary instruments are recognized in Other Comprehensive
Income. Variations in the fair value of monetary and non monetary instruments classified as available for sale are recognized in Other Comprehensive
Income in the Available-for-sale Reserve.
When instruments classified as available for sale are disposed of or impaired, the accumulated fair value adjustments previously recognized in Other
Reserves are included in the net income.
Interest from available for sale instruments calculated using the effective interest rate method is recognized in the net income within the account Finance
Income. Dividend income from available for sale equity instruments is recognized in the net income within Other Income when the Group’s right to
receive payment is established.
The fair values of quoted investments are based on current acquisition costs. If the market for a financial asset is not active, the Group establishes the
fair value using valuation techniques that include the following:
(i) the use of recent transactions between willing and duly informed interested parties, in reference to other substantially similar instruments; or
(ii) discounted cash flow analysis; or
(iii) options price fixing models, maximizing use of market inputs and relying as little as possible on entity specific assumptions.
The investments are written-off when the rights to receive cash flows of the investments have expired or the Group has transferred substantially all the
risks and rewards.
113
IMPAIRMENT
As of each reporting date, the Group assesses whether there is objective evidence that a financial asset or a group of financial assets may be impaired. In
the case of equity instruments classified as available-for-sale, to determine if impairment exists, the Company will consider whether there is a significant
or prolonged decline in the fair value of the instruments below their cost has taken place. If any evidence of this type exists for available for sale financial
investments, the accumulated loss determined as the difference between the acquisition cost and the current fair value, less accumulated impairment loss
is eliminated from Other Comprehensive Income and is recognized in net income. Impairment losses recognized in the Statement of Comprehensive
Income for equity instruments are not reversed. However, increases in their fair value subsequent to impairment are recognized directly in Other Comprehensive Income.
Trade and Other Receivables are recognized initially at fair value and subsequently at amortized cost, in accordance with the effective interest rate method
less allowance for doubtful accounts.
The allowance for doubtful accounts in Trade and Other Receivables is established when evidence exists that the Group will not be able to receive the
amounts according to the original terms. The existence of financial difficulties of the debtor, the probability that the debtor will enter into bankruptcy
or financial reorganization and the failure or delay of payments are considered indicators that the account receivable is impaired. The amount of the
allowance is the difference between the carrying amount of the asset and the present value of the future estimated cash flows discounted at the effective
interest rate. The carrying amount of the asset is reduced by the allowance for doubtful accounts and the loss is recognized in Costs of Sales. When an
amount is determined to be unrecoverable, the amount is written off against the allowance for doubtful accounts.
The subsequent recovery of amounts previously written-off is recognized as a credit to Costs of Sales.
4.9 FINANCIAL LIABILITIES
AES Gener classifies its financial liabilities into the following categories: at fair value through profit and loss, trade payables, interest bearing loans or
derivatives designated as hedging instruments in an effective hedge (see Note 4.10). Management determines the classification of its financial liabilities
upon initial recognition.
Financial liabilities are derecognized when the obligation is settled, cancelled or expires. When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of the existing liability are substantially modified, the original liability is derecognized and the
new liability recognized with the difference in the respective carrying amounts recorded in income.
Financial liabilities are initially recognized at fair value and, in the case of loans, include directly attributable transaction costs. Subsequent measurement of
financial liabilities depends on their classification, as described below:
(A)FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Financial liabilities are classified as at fair value through profit and loss when they are held for trading or designated as such upon initial recognition. Gains
and losses from liabilities held for trading are recognized in net income. This category includes derivative instruments not designated for hedge accounting.
(B)TRADE AND OTHER PAYABLES
Balances payable to suppliers are subsequently measured at their amortized cost using the effective interest rate method. Accounts payables based on
generally accepted commercial terms are not discounted.
(C)INTEREST BEARING LOANS
Interest bearing loans are subsequently measured at their amortized cost using the effective interest rate method. Amortized cost is calculated by taking
into account any initial premium or discount on the loan and includes any transaction costs that are an integral part of the effective interest rate.
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4.10 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
The Group uses derivative financial instruments such as interest rate swaps, cross currency swaps and currency forwards to hedge its risks associated
with interest and exchange rate fluctuations. Derivatives are initially recognized at fair value on the date on which the derivative contract is executed
and are subsequently re measured at their fair value. The method for recognizing the loss or gain resulting from changes in the fair value depends on if
the derivative has been designated as a hedging instrument and, if so, of the nature of the hedged item. The Group designates particular derivatives as:
(a) fair value hedges; and
(b) cash flow hedges;
The Group documents the relationship between hedge instruments and the hedged items at the inception of the transaction, as well as its risk
management objectives and strategy for carrying out diverse hedge transactions. The Group also documents its assessment, both at inception as well
as on a continual basis, of whether the derivatives used in hedge transactions are highly effective at offsetting changes in fair value or in the cash flows of
hedged items.
(A) FAIR VALUE HEDGE
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in net income, together with any change in the
fair value of the hedged asset or liability that is attributable to the hedged risk.
The Group has not used fair value hedges in the current reporting years.
(B)CASH FLOW HEDGE
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognized in Other Comprehensive
Income within the cash flow hedge reserve. Any loss or gain related to the ineffective portion is recognized immediately in Other Income.
Amounts accumulated in Other Comprehensive Income are recorded in the income statement in the periods in which the hedged item impacts the income
statement. For variable interest rate hedges, the amounts recognized in equity are reclassified to Financial Expense as the associated debts accrue interest. In
the case of interest rate, the amounts recognized in Other Comprehensive Income are reclassified to Finance Expense as interest accrues. For cross currency
swaps, the amounts recognized in Other Comprehensive Income are reclassified to Foreign Currency Exchange Differences in net income.
When a hedge instrument matures, is sold or when it no longer meets hedge accounting requirements, gains or losses accumulated in Other Comprehensive
Income remain in equity and are recognized when the forecasted transaction affects earnings. When the forecasted transaction is not expected to occur, any
accumulated gain or loss in Other Comprehensive Income is immediately recognized in net income.
(C)DERIVATIVES NOT DESIGNATED AS HEDGES
Derivatives that are not designated as hedging instruments in an effective hedge are recognized at fair value through profit and loss. Changes in the fair
value of any derivative instrument recorded in this way are recognized immediately in the income statement within Other Income.
(D)EMBEDDED DERIVATIVES
The Company evaluates the existence of embedded derivatives in financial and non financial instrument contracts, which are not already accounted for
as assets or liabilities at fair value through profit or loss, to determine if their characteristics and risks are closely related to the host contract. If not closely
related, the embedded derivatives are bifurcated and the variations in fair value of these embedded derivatives are recorded in net income.
4.11INVENTORY
Inventory is valued at the lesser of cost and net realizable value. Cost is determined using the average weighted price method. The net realizable value
is determined as the estimated sales price during the normal course of business, less applicable variable sales costs.
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4.12 CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash, time deposits in credit institutions and other highly liquid, short term investments with original maturities not in
excess of three months net of bank overdrafts. In the Statement of Financial Position, bank overdrafts are classified as external resources within Other
Financial Liabilities. The classification of Cash and Cash Equivalents does not differ from that used in the Statement of Cash Flows.
Restricted cash is included in the Statement of Financial Position in Cash and cash Equivalent except when the nature of the restriction is such that to
stops being liquid or easily convertible to cash. In this case the cash restricted with restrictions less than 12 months will be recognized in Other Current
Financial Assets and those greater than 12 months will be recognized in Other Non-Current Financial Assets.
4.13 ISSUED CAPITAL
The Company’s issued share capital consists of a single class of ordinary shares with one vote per share.
Incremental costs directly attributable to the issuance of new shares or options are presented in equity as a reduction of the funds obtained by issuing
new shares, net of taxes.
4.14TAXES
CURRENT TAXES
The Company and its subsidiaries determine their current income taxes based on their net taxable income, which is determined in accordance with
tax laws in effect for each period. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the
reporting date in the countries where the Group operates and generates taxable income.
Income taxes for the period are determined as the sum of the Company’s current taxes and those of its subsidiaries, which result from applying taxes
to net taxable income for the period, which includes taxable income and deductible expenses, plus variations in deferred tax assets and liabilities and tax
credits.
DEFERRED TAXES
Deferred taxes arising from temporary differences and other events that generate differences between the carrying amount for financial reporting purposes and tax bases of assets and liabilities are recorded in accordance with IAS 12 “Income Taxes”.
With the exception of investment in subsidiaries, affiliates and interests in joint ventures as indicated below, deferred tax is provided using the liability
method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting
purposes. A deferred tax liability is recognized for temporary tax differences related to investments in subsidiaries, associates and interests in joint ventures, except when the following conditions are met:
(a) the parent company, investor or participant of a business can control the opportunity to reverse the temporary difference; and
(b) it is probable that the temporary difference will not be reversed in the future.
A deferred tax asset is recognized for all deductible temporary tax differences that originate from investments in subsidiaries, associates or interests in
joint ventures, only to the extent that it is probable that:
(c) Carry forwards of unused tax credits and losses can be utilized; and
(d) There is taxable profit available against which temporary differences can be used.
Current taxes and variations in deferred taxes that do not arise from business combinations are recorded to income or equity, based on where the
originating gains or losses were recorded.
Deferred tax assets related to tax losses are recognized to the extent that it is probable that sufficient taxable profit will be available to allow all or part
of the deferred tax asset to be utilized and the tax losses have not expired. In both Chile and Colombia, tax losses do not expire, but in Argentina they
expire after five years.
116
Argentine subsidiaries determine minimum expected income taxes by applying the current rate of 1% to all allowable assets as of each period end.
This tax is complementary to income tax. The obligation for each period consists of the greater of minimum expected tax or income tax. However, if
the minimum expected tax exceeds income tax in any fiscal year, this excess may be applied as payment for any income tax surplus over the minimum
expected tax that may arise in any of the following ten fiscal years.
4.15 EMPLOYEE BENEFITS
(A)SHORT TERM EMPLOYEE BENEFITS AND OTHER POST-EMPLOYMENT OBLIGATIONS
The Company recognizes all liabilities related to short term benefits to employees such as salary, vacation, bonus and others as they are accrued considering amounts stipulated in collective agreements following normal Company policy.
(B)PENSIONS: DEFINED BENEFIT PENSION PLANS
The Company has recognized the total obligation related to voluntary pension and other post-employment benefits for retired employees as stipulated
in collective agreements held by Chilean companies within the Group. The current active employees do not have the rights to these benefits upon retirement. Pension benefits include a complementary pension plan, which is paid throughout the retired employee’s lifetime, in addition to benefits received
through the Chilean social security system. These benefits also include complementary health services and electricity subsidies. Likewise, the Colombian
subsidiary Chivor has a pension plan limited to a certain group of employees that consists of a complementary pension for those persons not covered
by the provisions of Law No. 100 of 1993.
The value of these liabilities is calculated using the projected unit credit method. This actuarial calculation includes the projected benefit discounted at an
annual nominal rate considering the probability of such payments or benefits based on mortality and rotation. In Chile, the discount rate is based on the
performance of UF denominated sovereign bonds from the Chilean Central Bank and average long term projected inflation, while the rate in Colombia
is determined based on the performance of long term sovereign bonds issued by the Colombian government. Benefits for retired employees, entitled to
medical benefits and electricity subsidies, are recognized based on an estimate of the portion of benefits earned as of the reporting date. Liabilities for
medical benefits and electricity subsidies have been determined based on trends for future medical and fixed electricity costs.
Actuarial gains and losses are recognized as income or expense when the net cumulative unrecognized actuarial gains and losses of an individual plan
exceed 10% of the defined benefit obligation. These amounts are recognized in net income over the employees’ remaining expected work lives.
Actuarial losses and gains that do not exceed 10% are recognized in equity in the defined benefit plan reserve in the period in which they are generated.
(C)SHARE BASED COMPENSATION
AES Corporation, majority shareholder of AES Gener S.A., grants share based compensation, which consists of a combination of options and restricted
stock, to certain employees of its subsidiaries. Rights to these plans generally vest over a term of three years.
The fair value of employee services received in exchange for a stock option awards is recognized as an expense and a corresponding capital contribution,
increasing the Company’s equity. The cost is measured on the granting date based on the fair value of the equity instruments or liabilities issued and is
recognized as an expense using the straight line method over the vesting period, net of an estimate for unexercised options (see Note 34 Share-Based
Payments).
The Company uses the Black Scholes model to estimate the fair value of the stock options granted to employees.
(D)STAFF SEVERANCE INDEMNITIES
The Company’s obligation for staff severance indemnities is measured and recorded at the present value of the total obligation using the projected benefit
cost method, considering a discount rate based on UF denominated sovereign bonds from the Chilean Central Bank and average long term projected
inflation.
Assumptions considered in the calculation include the probability of such payments or benefits based on mortality, employment rotation, future costs,
amounts of benefits offered and the discount rate. The discount rate is determined in the same way as pension benefits as detailed in Note 4.15 (b)
Defined Benefit Pension Plans.
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4.16PROVISIONS
Provisions for environmental restoration, site restoration and asset removal, as well as restructuring and litigation expenses are recognized when:
(a) the Group has a current obligation, whether legal or constructive, as a result of past events; and
(b) it is probable that an outflow of resources will be needed to settle the obligation; and
(c) the amount can be reliably estimated.
Provisions are not recognized for future operating losses.
These provisions are recorded at the present value of the expected costs to settle the obligation using estimated cash flows. The cash flows are discounted at a current pre tax rate that reflects the risks specific to the decommissioning liability. The unwinding of the discount is expensed as incurred and
recognized in the income statement as Finance Expense.
4.17 REVENUE RECOGNITION
The Group recognizes revenues when:
(a) The amount can be reliably measured, and
(b) It is probable that the future economic benefits flow to the entity; and
(c) Specific conditions have been met for each of the Group’s activities as described below.
The amount of revenue is not considered to be reliably measured until all contingencies related to the sale have been resolved. The Group bases its estimates
on historical data, taking into account the type of customer, type of transaction and the concrete terms of each agreement.
Operating revenue includes the fair value of considerations received or to be received for the sale of goods and services in the ordinary course of the Group’s
activities. Operating revenue is presented net of value added taxes, returns, rebates and discounts and after eliminating inter group sales.
(A)SALES REVENUES
Revenues from energy and capacity sales are recognized once the energy or capacity has been physically delivered at prices established in the
respective contracts or at prevailing electricity market prices in accordance with current regulations. Operating income includes un-invoiced
income from energy and capacity supplied but not billed at each period end, which is accounted for at the contractual rates existing at each
respective period end. These amounts are included in current assets as trade accounts receivable. The related cost of this energy has been
included in operating costs. The Company recognizes revenues from sales of inventory such as coal and gas upon delivery and revenues from
shipping and engineering services upon performance of such services.
(B)FINANCE INCOME
Finance income is recognized using the effective interest rate method.
(C)DIVIDEND INCOME
Dividend income is recognized when the shareholder’s right to receive payment is established once the Company’s Board of Directors has approved the
dividend distribution.
(D)DEFERRED REVENUES
The Company has included amounts paid in advance for facility use and supply contracts within both current and non-current liabilities. The effect on
income of these payments is recognized as operating income over the life of the respective contract.
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4.18LEASES
In determining whether there is an agreement contains a lease, the Group analyzes if the agreement depends on the use of assets or specific assets or
the agreement implies a right to use an asset. The leases in which all the risks and benefits are substantially transferred to the property are classified
as a finance lease. Examples of indicators that the agreement consists of a financial lease are the following:
· the lease transfers ownership of the asset to the lessee by the end of the lease term;
· the lessee has the option to buy the asset at a price that is expected to be sufficiently lower that fair value at the date of the option becomes exercisable for it to be reasonably certain, at the inception of the lease, that the option will be exercised;
· the lease term is for the major part of the economic life of the asset even if title is not transferred;
· at the beginning of the leasing, the present value of future minimum lease payments is at least substantially all of the fair value of the leased asset; and
· the assets leased are of a nature so specialized that only the lessee can use them without realizing major modifications.
Contracts which not comply with the finance lease indicators are classified as operating lease.
(A)GROUP AS A LESSEE – FINANCE LEASE
Leases of property, plant and equipment in which the Group retains substantially all risks and rewards of ownership are classified as finance leases.
Assets subject to finance leases are capitalized at the beginning of the lease at the lesser of the fair value of the leased property and the present value
of the minimum lease payments.
Each lease payment is distributed between the liability and finance charges to attain a constant interest rate on the outstanding balance of the obligation. The corresponding lease obligations, net of finance charges, are included in other non-current accounts payable. The interest element of the
finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance
of the liability for each period. Items of property, plant and equipment acquired under a finance lease are depreciated over the lesser of their useful
lives and the duration of the respective contract.
(B)GROUP AS A LESSEE – OPERATING LEASE
Leases in which the lessor retains an important part of the risks and rewards of ownership are classified as operating leases. Payments for operating leases
(net of any incentive received from the lessor) are recognized as an operating expense on a straight line basis over the lease term.
(C)GROUP AS A LESSOR – FINANCE LEASE
When assets are leased under finance leases, the present value of the minimum lease payments is recognized as an accounts receivable. The difference
between the gross amount receivable and the present value of that amount is recognized as a profit or loss on the sale.
Income from leases is recognized during the lease term using a constant periodic rate of return over the net investment.
(D) GROUP AS A LESSOR – OPERATING LEASE
Los activos arrendados a terceros bajo contratos de arrendamiento operativo se incluyen dentro de Propiedades, plantas y equipos en el estado de
situación financiera.
Los ingresos derivados de arrendamientos operativos se reconocen en el estado de resultados de forma lineal durante el plazo del arrendamiento.
4.19DIVIDENDS
Dividend distributions to the Company’s shareholders are recognized as a liability with a corresponding decrease in the Group’s consolidated equity in
the fiscal year in which the dividends are approved by the Company’s Board of Directors.
As of each year-end, the Company records a liability equivalent to 30% of the annual net income as a minimum dividend in accordance with Law 18,046:
The law in Chile requires the distribution of at least 30% of financial net income of the period, unless the Board of Directors decides unanimously
against it.
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4.20 ENVIRONMENTAL EXPENDITURES
Expenses related to environmental impact prevention are recorded in net income when incurred. Investments in infrastructure intended to comply with
environmental standards are capitalized based on the general accounting criteria for property, plant and equipment, in accordance with the applicable
standards of IFRS.
NOTE 5 – INANCIAL RISK MANAGEMENT, OBJECTIVES AND POLICIES
5.1 RISK MANAGEMENT POLICY
The Company’s risk management strategy is designed to safeguard the stability and sustainability of AES Gener and its subsidiaries at all times, under both
normal and exceptional circumstances in relation to all relevant components of financial uncertainty. The Company’s risk management is aligned with the
general guidelines defined by its controlling shareholder, the AES Corporation.
“Financial risk events” refer to situations in which there is exposure to conditions that indicate financial uncertainty, and are classified based on the source
of the uncertainty and associated sources. The responsible and effective management of these uncertainties is viewed by the Company as strategic from
the standpoint of value creation.
The following aspects of financial risk management are most important:
·
Providing transparency, establishing and managing risk tolerances and determining guidelines in order to develop strategies to limit significant
exposure to risk.
·
Providing a disciplined and formal process for assessing risk and carrying out the commercial aspects of the business.
Financial risk management involves the identification, analysis, quantification, measurement and control of these events. It is management’s responsibility,
particularly the financial and commercial management teams, to constantly assess and manage financial risk.
5.2 RISK FACTORS
(A)MARKET RISK
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of a change in market prices. Market prices
comprise of three types of risk: Foreign Currency risk, Interest Rate Risk and Commodity Price Risk.
(i) Foreign Currency Risk
With the exception of operations in Colombia, the Company’s functional currency is the US dollars given that its revenue, expenses and investments in equipment are mainly determined using the US dollars. Also, the Company is authorized to declare and pay its taxes in US dollars.
Foreign currency risk is associated with any revenue, expenses, investments and debt denominated in any currency other than US dollars. The
main concepts denominated in Chilean pesos are contract energy sales and tax credits mainly associated with VAT. As of December 31, 2012,
Gener maintained several currency derivative instruments to cover its exposure to Chilean peso variations. As of December 31, 2012, the
impact of a 10% variation in the exchange rate of the Chilean peso with respect to the US dollars could have generated a negative impact of
approximately ThUS$2,266 in the Group’s net income, holding all other variables held constant. During the same period, approximately 85.8%
of operating revenue and 92.0% of the Company’s expenses were in US dollars, while during the year ended December 31, 2011, approximately 85.6% of operating revenue and 91.6% of the Company’s expenses were denominated in US dollars.
120
In relation to the foreign subsidiaries, Chivor’s functional currency is the Colombian peso, since the majority of the subsidiary’s revenue, particularly contract sales and operating costs are linked to the Colombian peso. As of December 31, 2012, sales in Colombian pesos represented
10.7% of the Company’s consolidated operating revenue. For the year ended December 31, 2011, 12.0% if sakes were in denominated in
Colombian pesos. Additionally, Chivor dividends are determined in Colombian pesos, although financial hedge instruments are used to fix
the amount to be distributed in US dollars. Furthermore, spot prices in the Argentinean market are denominated in Argentinean pesos. Argentinean peso denominated sales represented just 3.6% of the Company’s consolidated operating revenue, as of December 31, 2012, while
during the same period ended in 2011, this amount was 2.4%. It A variation of 10% in the foreign exchange rate between the US dollar and
the Argentine Peso would have a negative impact of ThUS$6,000.
In addition, the majority of investments in new plants and maintenance of equipment are denominated in US dollars. The majority of short term
investments for cash management purposes are also in US dollars. As of December 31, 2012, 75.0% of short term investments were in US dollars,
8.70% in Chilean pesos, 13.0% in Colombian pesos and 3.30% in Argentinean pesos.The balances in Cash and Cash Equivalents that are denominated
in Argentine Pesos are subject to exchange restrictions and volatility in the foreign currency exchange rate. At December 31, 2012, 82.0% of the
investments are denominated in US dollars, 15.1% in Chilean Pesos, 2.20% in Colombian Pesos and 0.70% in Argentine Pesos.
With respect to debt denominated in currencies other than the US dollars, Gener has entered into currency swaps to eliminate the majority of the
exchange rate risk. For the UF denominated bonds issued in 2007 for approximately ThUS$219,527, AES Gener has a cross currency swap for the
duration of the debt. As of December 31, 2011, 97.5% of the Company’s debt is denominated in US dollars, including the bonds mentioned above.
The following table shows the composition of debt by currency as of December 31, 2012 and 2011:
CURRENCY
US$
UF
Col$
DECEMBER 31,2012
%
DECEMBER 31,2011
%
97.5
2.1
0.4
98.1
1.9
0.0
(ii) Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long term debt obligations with floating interest
rates.
The Group manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans. Additionally, the Company has entered into
interest rate swaps to mitigate interest rate risk for long term obligations. Currently, the Group has interest rate swaps for an important part of the
debt associated with subsidiaries Ventanas and Angamos. The following table shows the composition of debt by type of interest rate as of December
31, 2012 and 2011:
RATE
Fixed rate
Variable rate
DECEMBER 31, 2012
%
DECEMBER 31, 2011
%
89.8
10.2
90.1
9.9
(iii)Commodity Price Risk
The Group is affected by the volatility of certain commodities. The fuels used by the Company, mainly coal, diesel and liquid natural gas (LNG), are
commodities with international prices set by market factors outside of the Company’s control. Specifically, diesel and LNG are bought based on
international oil prices through bilateral local supply agreements. Commodity price risk is related to fluctuations in these prices.
The price of fuel is a key factor in plant dispatch and spot prices both in Chile and Colombia. Price variations for fuels such as coal, diesel and natural
gas can change the composition of the Company’s costs through variations in marginal cost. Since AES Gener is a company with based mainly on
thermal generation, fuel costs represent a significant portion of the cost of sales.
Currently the majority of Gener’s energy sales contracts incorporate an indexation that adjusts the energy sales price to the variations in coal prices,
according to the indexes and schedules contained in each contract. In addition, the Company has created a coal acquisition strategy that consists of
maintaining a portion of purchases at both fixed and variable prices in order to align its generation costs with its contracted energy sales.
Currently, diesel purchases and LNG are not hedged. Given that the Company has a policy of physically backing up its contract sales with efficient
generation, it is expected that diesel fired or LNG units will operate for only for spot sales in rare circumstances such as drought conditions in the
SIC. Given those conditions and the fact that Sociedad Eléctrica Santiago S.A. (“ESSA”) plant used LNG for its generation this period, it is estimated
that a 10% increase in diesel cost would have caused a negative impact in the Company’s consolidated gross margin of ThUS$18,338 during 2012,
while a 10% decrease would have caused a positive impact in the same magnitude. It is worth noting that Nueva Renca’s unit within the subsidiary
of ESSA can use either diesel or LNG and is able to acquire the necessary LNG volumes using short term contracts when the LNG price is more
competitive than diesel.
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(B)CREDIT RISK
Credit risk is related to the credit rating of the parties with whom AES Gener and its subsidiaries do business. The Company is exposed to credit
risk primarily from its operating activities related to trade receivables and from its financing activities including deposits with banks and financial
institutions and other financial instruments.
With regard to accounts receivable, AES Gener’s counterparties in Chile are principally distribution companies and industrial customers of
elevated solvency and over 90% of these customers have local and/or international investment grade credit ratings. Sales made by the AES Gener group companies in the spot market are obligatorily made to other generators, members of the CDEC, in accordance with the economic
dispatch determined by this entity. It should be noted that one generator participant of the CDEC was declared in bankruptcy in September
2011 as a result of the financial losses caused by the dry hydrological conditions experienced in the SIC. In the proceedings, Gener and Eléctrica
Santiago presented evidence of the outstanding debt owed by such generator, equal to ThUS$70 and ThUS$2,937 plus applicable interest. To
date, of this amount outstanding, ThUS$1,169 has been paid and based on management’s estimation no further payments will occur and thereby
the remaning amounts have been written down.
In Colombia, AES Chivor performs risk assessments of its counterparties based on an internal credit quality evaluation, which in some cases may
include guarantees. In 2010, also in dry hydrological conditions, AES Chivor suffered collection problems with an energy trader and eventually
registered a loss of ThUS$1,300. In this case, the trader was suspended from participating in the Bolsa or spot market and AES Chivor presented
actions to recover the outstanding amount. Meanwhile, it has been determined that Termoandes is not exposed to major credit risks given that
the commercial counterparty is CAMMESA (“Compañía Administradora del Mercado Mayorista Eléctrico S.A., which is the administrator of the
wholesale electricity market in Argentina and its non-regulated customers operate under the Energy-Plus scheme.
Financial investments by AES Gener and its subsidiaries such as mutual funds, time deposits and derivatives, are executed with local and foreign
financial institutions which have national and/or international credit ratings greater than or equal to “A” under the S&P and Fitch scale and “A2”
under the Moody’s scale. Similarly, derivative instruments are executed with highly rated international entities. The Company has cash, investment
and treasury policies to guide its cash management and minimize credit risk.
The maximum credit exposure at the date of this report is the accounting value for each kind of financial assets referred in Note 10 Financial
Instruments. The Company does not maintain any guarantees for those financial assets.
(C)LIQUIDITY RISK
Liquidity risk relates to the ability to meet payment obligations. The Company’s objective is to maintain a balance between fund continuity and financial
flexibility through normal operating cash flows, bank loans, public bonds, short term investments and both committed and uncommitted credit lines.
As of December 31, 2012, AES Gener had available liquid resources of ThUS$405,504, that included cash and cash equivalents of ThUS$397,204, time
deposits and short term US dollars mutual funds for a total of ThUS$8,300, recorded in Other Current Financial Assets. As of December 31, 2011, the
total cash balance was ThUS$537,778, which included cash and cash equivalents of ThUS$409,157 and time deposits and short term US dollars mutual
funds of ThUS$128,621. Cash and Cash Equivalents include cash, time deposits with original maturities of less than three months, marketable securities,
US dollars available-for-sale mutual funds, repurchase agreements and fiduciary rights.
As of December 31, 2012, AES Gener holds committed and unused lines of credit for close to ThUS$285,533, in addition to uncommitted and unused
lines of credit for close to ThUS$255,163.
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In relation to debt maturities, Gener has no significant maturities during 2013.The debt amount originally maturing in 2014 was significantly reduced from
ThUS$628,344 as of June 30, 2011 to ThUS$379,567 as of December 31, 2011due to the refinancing process held in August 2011. This process, part of
the active debt management of the Company, was performed in order to extend the maturity term of an significant part of the corporate debt. The refinancing process included the exchange and voluntary tender of approximately 63% on the ThUS$400,000 Senior Notes due in 2014, and the voluntary
tender of approximately 48% of the Serie Q Chilean Bond of ThUS$196,000 due in 2019 and the issuance of New Notes for a total of ThUS$401,682
due in 2021 with an interest rate of 5.25%. The graphic and table below shows the maturity profile, based on actual debt, in millions of US dollars as
of December 31, 2011:
DEBT MATURITY PROFILE
millon US$
1,200
1,142
1,000
800
600
380
400
200
113
66
63
77
2016
2017
104
214
120
0
2013
2014
AVERAGE
INTEREST
RATE
FIXED RATE
(UF Swapped to U.S.$)
(UF Swapped to U.S.$)
(U.S.$)
(U.S.$)
(U.S.$)
(UF)
(U.S.$)
(U.S.$)
VARIABLE RATE
(US$)
(US$)
(Col$)
5.50%
7.34%
7.50%
5.25%
8.00%
7.50%
9.75%
6.95%
LIBOR + Spread
LIBOR + Spread
DTF(1) + Spread
TOTAL
2015
2013
2018
2019
2020
2021+
AS OF DECEMBER 31, 2012
EXPECTED CONTRACTUAL MATURITY DATE
(IN MILLION US$)
2014
2015
2016
2017 +
1.0
6.0
147.1
1.1
170.0
3.0
47.0
1.2
-
1.3
-
172.3
401.7
102.2
42.9
-
22.5
36.6
-
25.5
33.0
-
25.9
39.1
-
30.4
31.3
0.3
251.3
676.1
9.6
66.1
379.7
113.2
63.4
1,656.0
5.3 RISK MEASUREMENT
The Company has developed methods to measure the efficiency and effectiveness of risk strategies, both prospectively and a retrospectively.
For those analyses, different market methods for risk quantification are used, such as regression methods, risk bearing capacity and maximum risk exposure, which allow the Company to adjust risk strategies and mitigation methods and assess their impact.
123
NOTE 6 – SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
Management must make judgments and estimates that can have a significant effect on the figures presented in the financial statements. Changes in
these assumptions and estimates may have a significant impact on the financial statements. The estimates and critical judgments used by the Company’s
management are detailed below:
·
Hypotheses used in actuarial calculations of employee benefits obligations. (See Note 23)
·
The useful life and residual values of property, plant and equipment and intangible assets. (See Note 17 and 18)
·
The assumptions used to calculate the fair value of financial instruments, including credit risk. (See Note 10)
·
The probability of occurrence and the value of contingent liabilities or liabilities whose amount is uncertain. (See Note 22)
·
Future disbursements for asset dismantling or removal obligations. (See Note 22)
·
Determination of the existence of finance or operating leases based on the transfer of risks and rewards of the leased assets. (See Note 18)
·
Asset and investment valuation and the existence and amount of associated impairment. (See Note 17)
Although these estimates have been made based on the best information available as of the date of issuance of these consolidated financial statements,
it is possible that future developments may force the Company to modify these estimates in upcoming periods. Such modifications would be adjusted
prospectively, recognizing the effects of the change in estimate on the corresponding future consolidated financial statements, as required by IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”.
NOTE 7 – OPERATING SEGMENTS
7.1 EARNINGS BY SEGMENT
The Company defines and manages its activities based on certain business segments that meet economic, regulatory, commercial or operating characteristics.
A segment is a component of the Group:
·
that engages in business activities from which it generates income and incurs costs; and
·
whose operating results are regularly monitored by management, in order to make decisions, allocate resources and evaluate performance; and
·
for which discrete financial information is available.
Management monitors the results from operations of each business segment separately to make decisions related to resource allocation and performance evaluations. A segment’s performance is evaluated based on certain operating indicators such as gross profit and adjusted Earnings before Interest,
Taxes, Depreciation and Amortization (“EBITDA”). The adjusted EBITDA is composed of net income, less the effects of interest, taxes, depreciation,
amortization, foreign exchange differences, other income and the participations in earnings of associates. Finance income and income taxes are analyzed
and managed on a consolidated basis and, therefore, are not allocated to operating segments.
Earnings and asset balances within each segment are measured in accordance with the same accounting policies applied to the financial statements.
Transactions and associated unrealized gains or losses between segments are eliminated.
AES Gener’s financial liabilities are centralized and controlled at a corporate level and are not presented by reportable segments.
124
7.2 CUSTOMERS BY SEGMENT
The Company segments its business activities based on the interconnected energy markets in which it operates, which are:
·
the Central Interconnected System (“SIC”)
·
the Great North Interconnected System (“SING” which includes the Argentine Interconnection System or “SADI”)
·
the Northern Interconnected System (“SIN”), for its operations in Colombia.
Los segmentos mencionados se refieren a áreas geográficas.
Throughout all segments, the Company’s principal activity consists of electricity generation.
7.3 ASSETS BY SEGMENT
The details of the Assets by Segment are as follows:
ASSETS BY OPERATING
SEGMENT
Trade and Other Receivables (1)
Property, Plant and Equipment, Net (2)
Investment in Empresa Eléctrica Guacolda S.A.
(1)
(2)
SIC
MARKET
THUS$
SING
MARKET
THUS$
DECEMBER 31, 2012
SIN INTERCOMPANY
MARKET ELIMINATIONS
THUS$
THUS$
288,563 384,010
2,014,399 1,861,014
276,153
-
186,476
725,800
-
TOTAL
THUS$
SIC
MARKET
THUS$
SING
MARKET
THUS$
(531,585) 327,464
(1,850) 4,599,363
- 276,153
368,795
1,856,693
273,375
179,580
1,859,235
-
DECEMBER 31, 2011
SIN INTERCOMPANY
MARKET ELIMINATIONS
THUS$
THUS$
82,747
661,391
-
TOTAL
THUS$
(216,290)
(1,850)
-
414,832
4,375,469
273,375
Trade and Other Receivables, includes both current and non-current portions as well as the account Current Related Party Receivables.
See Note 18 Property, Plant and Equipment
7.4 REVENUE AND COSTS BY SEGMENT
The details of Revenues and Costs and other selected information are as follows:
PROFIT
Operating Revenue
Cost of Sales
GROSS PROFIT
Net Income, before Taxes
Net Income
Adjusted EBITDA
Equity participation in income from Guacolda
Investment
Capital Expenditures
DECEMBER 31, 2012
SIN INTERCOMPANY
MARKET ELIMINATIONS
THUS$
THUS$
SIC
MARKET
THUS$
SING
MARKET
THUS$
1,396,259
1,211,350
707,196
549,872
453,076
205,416
306,982
270,076
178,042
225,038
185,522
237,741
213,847
143,496
244,918
184,909
157,324
247,660
DECEMBER 31, 2011
SIN INTERCOMPANY
MARKET ELIMINATIONS
THUS$
THUS$
TOTAL
THUS$
SIC
MARKET
THUS$
SING
MARKET
THUS$
(228,810)
(228,810)
2,327,721
1,737,828
1,364,988
1,115,674
592,342
386,603
364,848
132,829
(191,892)
(191,892)
2,130,286
1,443,214
(396,161)
(396,161)
-
349,706
202,933
660,701
300,371
279,155
245,697
182,459
160,296
269,600
188,249
121,794
221,978
(235,161)
(235,161)
-
435,918
326,084
737,275
-
589,893
249,314
205,739
232,019
-
TOTAL
THUS$
687,072
9,187
-
-
-
9,187
31,109
-
-
-
31,109
272,459
93,343
19,215
-
385,017
244,661
186,059
4,933
-
435,653
125
The following table details the EBITDA calculation:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2012
THUS$
2,327,721
(1,737,828)
2,130,286
(1,443,214)
214,019
195,648
2,918
2,057
(3,066)
(145,120)
1,846
6,144
(5,215)
(148,220)
660,701
737,275
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Cash on Hand
Cash at Banks
Short‑Term Deposits
Other Cash and Cash Equivalents
4,486
198,682
184,552
9,484
41
134,727
212,144
62,245
CASH AND CASH EQUIVALENTS
397,204
409,157
Operating Revenues
Costs of Sales
GROSS PROFIT
589,893
Depreciation and Amortization
OPERATING EBITDA
803,912
ARO
Other Operating Income
Other Income (Expense)
Administrative Expenses
TOTAL ADJUSTED EBITDA
687,072
882,720
NOTE 8 - CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS
Short Term Deposits mature in less than three months from their date of acquisition and accrue interest at market rates.
Other Cash and Cash Equivalents primarily includes mutual funds, which are low risk investments in US dollars that allow for immediate liquidation
without restrictions, recorded at their fair value as of the closing date of these financial statements, and repurchase agreements, which are short term
investments with banks and stock brokerage firms, backed by financial instruments issued by the Chilean Central Bank and private banks with high quality
credit ratings.
Balances of Cash and Cash Equivalents included in the Statement of Financial Position do not differ from those in the Statement of Cash Flows.
Cash and Cash Equivalents by type of currency as of December 31, 2012 and 2011 are detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Chilean Pesos
Argentine Pesos
Colombian Pesos
United States Dollars
34,916
51,968
13,011
297,309
81,326
3,428
11,995
312,408
TOTAL CASH AND CASH EQUIVALENTS
397,204
409,157
CASH AND CASH EQUIVALENTS BY CURRENCY
126
As of December 31, 2012 and 2011, cash amounts with minor restrictions are being held, however, are being used by the Company for operational
requirements, as detailed as follows:
RESTRICTED CASH AND CASH EQUIVALENTS
Empresa Eléctrica Angamos S.A.
Empresa Eléctrica Ventanas S.A.
TOTAL
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
85,571
16,868
68,465
9,754
102,439
78,219
The balance related to Angamos is restricted by the requirements of the credit agreement with Royal Bank of Scotland (formerly ABN AMRO bank) and
BNP Paribas bank (formerly Fortis).
Reserve amounts related to operational activities of Ventanas are required by the credit agreement with BNP Paribas (formerly Fortis) and Credit Agricole (formerly Calyon Bank) banks.
NOTE 9 - OTHER FINANCIAL ASSETS
As of December 31, 2012 and 2011 other financial assets are detailed as follows:
OTHER FINANCIAL ASSETS
Time Deposits (1)
Embedded Derivatives (2)
Foreign Exchange Forwards (2)
Hedging Instruments (2)
Gasoducto Gasandes S.A. (3)
Gasoducto Gasandes S.A (Argentina) (3)
Account Receivables from Gasoducto Gasandes S.A.
CDEC SIC Ltda.
CDEC SING Ltda.
Restricted Investments
Other
TOTAL
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
NON-CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
8,300
1,808
128,621
475
717
7,014
2,215
1,354
6,295
4,417
2,200
137
557
534
-
1,330
7,927
2,200
137
557
491
-
10,108
140,396
14,140
12,642
Time deposits investments are considered to be other financial assets as they have a maturity of more than three months. Given the short term
nature of these instruments, their carrying value represents their fair value.
(1)
Investments in time deposits include investments of Chivor & Cía. S.C.A E.S.P, which are restricted since they are a guarantee for the Company’s bond
debt. As of December 31, 2012 and 2011, the amount of such investments was ThUS$8,300 and ThUS$8,294, respectively.
Embedded derivatives, foreign exchange forwards and hedging instruments are recorded at their fair value (more detail in Note 10.4 Derivative
Instruments).
(2)
The investments in Gasoducto Gasandes S.A. (Argentina) and Gasoducto Gasandes S.A. correspond to a 13% interest that AES Gener S.A. holds in
both companies as detailed in Note 10.1 Financial Assets and Note 28 Other Income (Losses).
(3)
127
NOTE 10 - FINANCIAL INSTRUMENTS
10.1 FINANCIAL ASSETS AND LIABILITIES
Financial assets are classified into the categories described in Note 4.8, detailed as follows:
CASH
AND CASH
EQUIVALENTS
THUS$
LOANS
AND
RECEIVABLES
THUS$
AT FAIR VALUE
THROUGH
PROFIT
AND LOSS
THUS$
HEDGING
INSTRUMENTS
THUS$
AVAILABLE
FOR SALE
THUS$
TOTAL
THUS$
Current Other Financial Assets
Trade Receivables
Non Current Other Financial Assets
397.204
-
266.063
534
8.754
-
6.295
-
10.108
7.311
-
397.204
10.108
266.063
14.140
8.754
TOTAL
397.204
275.351
-
6.295
17.419
696.269
CASH
AND CASH
EQUIVALENTS
THUS$
LOANS
AND
RECEIVABLES
THUS$
AT FAIR VALUE
THROUGH
PROFIT
AND LOSS
THUS$
HEDGING
INSTRUMENTS
THUS$
AVAILABLE
FOR SALE
THUS$
TOTAL
THUS$
Current Other Financial Assets
Trade Receivables
Non Current Other Financial Assets
409.157
-
271.973
491
13.885
1.192
-
7.014
1.330
-
132.190
10.821
-
409.157
140.396
271.973
12.642
13.885
TOTAL
409.157
286.349
1.192
8.344
143.011
848.053
DECEMBER 31, 2012
DECEMBER 31, 2011
The carrying amount of the financial assets such as Cash and Cash Equivalents and the current portion of Related Party Receivables from related companies are approximately equivalent to their fair values, due to the short term nature of their maturities.
Instruments recorded in Other Financial Assets, classified as at fair value through profit and loss and derivative instruments (i.e. embedded derivatives,
hedging instruments and instruments not designated as hedging instruments) are presented at their fair value in the Consolidated Statement of Financial
Position. See Note 10.2 for the method used in the calculation of their fair value.
Financial instruments classified as Available for Sale are recorded in Other Current and Non-Current Financial Assets, and relate to investment funds that
are recorded at fair value (coupon value of the funds) and time deposits, that due to the short term nature of their maturities, their carrying amounts are
approximately equivalent to their fair values. Additionally, investments in CDEC and Gasoducto Gasandes are presented at cost due to the insufficient
information available necessary to determine their market value (see Note 9 Other Financial Assets for more information).
The balances of the current portion of Trade and Other Receivables are approximately equivalent to their fair values, due to the short term nature of
their maturities.
128
Financial liabilities’ classification into the categories described in Note 4.8 is detailed as follow:
FINANCIAL
LIABILITIES AT FAIR
VALUE, THROUGH
PROFIT AND LOSS
THUS$
HEDGING
INSTRUMENTS
THUS$
OTHER
FINANCIAL
LIABILITIES
THUS$
TOTAL
THUS$
Current Other Financial Liabilities
Trade Payables
Other Non Current Financial Liabilities
1,476
-
31,366
85,042
-
91,439
262,987
2,187,444
17,017
124,281
262,987
2,272,486
17,017
TOTAL
1,476
116,408
2,558,887
2,676,771
DECEMBER 31, 2012
DECEMBER 31, 2011
FINANCIAL LIABILITIES
AT FAIR VALUE,
THROUGH PROFIT
HEDGING
AND LOSS INSTRUMENTS
THUS$
THUS$
OTHER
FINANCIAL
LIABILITIES
THUS$
TOTAL
THUS$
Current Other Financial Liabilities
Trade Payables
Other Non Current Financial Liabilities
236
30,032
94,686
-
64,622
331,348
2,203,410
9,526
94,654
331,348
2,298,096
9,762
TOTAL
236
124,718
2,608,906
2,733,860
The carrying amounts of the current portion of Related Party and Trade Payables approximate their fair values given the short term nature of their
maturities.
Instruments recorded in Other Current and Other Non Current Financial Liabilities classified as Financial Liabilities at their Fair Value through Profit and
Loss include derivatives not designated as hedging instruments and embedded derivatives. See Note 10.2 Fair Values for the methodologies used to
calculate these fair values and those of the Hedging Instruments.
The carrying value of interest bearing loans included in Other Current and Other Non Current Financial Liabilities differ from their fair values principally
due to fluctuations in exchange rates and market interest rates.The methodology to calculate fair values of these instruments consists of discounting future cash flows of the debt using a yield curve. For the purposes of calculating this present value, assumptions are used such as the value of the exchange
rate of the debt, the credit rating of the instrument in addition to the credit rating of the Company or Group.
The following table details the carrying values and fair values of interest bearing loans:
INTEREST-BEARING LOANS
Interest-Bearing Loans
DECEMBER 31, 2012
CARRYING
FAIR VALUE
VALUE
MUS$
MUS$
2,281,614
2,471,599
DECEMBER 31, 2012
CARRYING
FAIR VALUE
VALUE
MUS$
MUS$
2,268,032
2,467,185
10.2 FAIR VALUES
The Company uses the Reval Hedge Rx system to calculate the fair value of interest rate, cross currency swaps and foreign currency forwards. For the
calculation of the fair value of embedded derivatives, the Company has developed internal valuation models.
The following principal assumptions are used in valuation models for derivative instruments:
a) Market assumptions such as future spot prices, other price projections, credit risk (own and counterparty).
b) Discount rate inputs such as risk free rates, local and counterparty spreads (based on risk profiles and data available in the market).
c) The models also incorporate variables such as volatilities, correlations, regression formulas and market spreads using observable market data and
techniques commonly used by market participants.
129
VALUATION METHODOLOGY FOR DERIVATIVE INSTRUMENTS
(A)INTEREST RATE HEDGES
The valuation model for interest rate swaps involves forecasting cash flows using forward curves for each intermediate and final settlement date, and then
discounting those cash flows using the LIBOR zero coupon rate. The factors used in the model include historical transactions, prices and rates observable
in the market, risk free rates, country and/or counterparty risk, as well as the Group’s own credit risk.
(B)CROSS CURRENCY HEDGES
The valuation model for cross currency swaps involves discounting expected cash flows using the local curve for the forecasted exchange rate and then
converts these discounted cash flows into US dollars using spot rates. The factors used in the model include historic transactions, prices and rates observable in the market, risk free rates, country and/or counterparty risk, as well as the Group’s own credit risk.
(C)FOREIGN CURRENCY FORWARDS
The Company uses forward prices observable in the market and other assumption, such as country and/or counterparty risk and the Group’s own credit
risk, to calculate the fair value of foreign currency forwards.
(D)EMBEDDED DERIVATIVES
The company uses two methods for calculating the fair value of embedded derivatives:
1) The embedded derivative in ESSA is calculated using a probability weighted average of future cash flows that is based on internal information, market
indicators and then discounted using a relevant interest rate. The assumptions used in the fair value model include energy and fuel prices, risk-free interest
rate, the risks inherent in the market, geography and credit risk.
2) The model used in calculating the fair value of the embedded derivative of Gener uses future fuel prices based on future spot rates and are discounted by using the zero coupon LIBOR rate. The assumptions used in this model include prices and rates observed in the market, risk free tax rates,
market and country risks as well as credit risk.
(E) HIERARCHY OF FAIR VALUE OF DERIVATIVE INSTRUMENTS
Derivative instruments recognized at fair value in the statement of financial position are classified using the following hierarchy:
Level 1: Quoted prices in active markets for identical assets and liabilities.
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).
Level 3: Inputs for the asset or liability are not based on observable market data.
130
The following table shows the financial asset and liability fair value hierarchy:
NOTE
MARKET PRICES
FOR IDENTICAL
ASSETS AND
LIABILITIES
(LEVEL 1)
THUS$
OTHER
OBSERVABLE
ASSUMPTIONS
(LEVEL 2)
THUS$
OTHER NON
OBSERVABLE
ASSUMPTIONS
(LEVEL 3)
THUS$
10.4 (a.2)
-
6,295
-
Mutual Funds
533
-
-
TOTAL ASSETS
533
6,295
-
-
1,476
-
-
6,457
108,098
1,853
-
-
117,884
-
117,884
OTHER OTHER NON
OBSERVABLE
OBSERVABLE
ASSUMPTIONS ASSUMPTIONS
(LEVEL 2)
(LEVEL 3)
THUS$
THUS$
TOTAL
MUS$
DECEMBER 31, 2012
ASSETS
HEDGING INTRUMENTS
Cross Currency Swap
AVAILABLE FOR SALE
LIABILITIES
LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Foreign Currency Forwards
HEDGING INTRUMENTS
Cross Currency Swap
Interest Rate Swap
10.4 (a.2)
10.4 (a.1)
10.4 (a.3)
TOTAL LIABILITIES
DECEMBER 31, 2011
ASSETS
ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
NOTE
MARKET PRICES
FOR IDENTICAL
ASSETS AND
LIABILITIES
(LEVEL 1)
THUS$
Embedded Derivative
10.4 (c)
10.4 (b)
-
475
717
-
Cross Currency Swap
Interest Rate Swap
10.4 (a.2)
10.4 (a.1)
-
7,014
1,330
-
Mutual Funds
13,000
-
-
TOTAL ASSETS
13,000
8,206
1,330
HEDGING INTRUMENTS
AVAILABLE FOR SALE
LIABILITIES
LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Embedded Derivative
10.4 (c)
-
-
236
Cross Currency Swap
Interest Rate Swap
10.4 (a.2)
10.4 (a.1)
-
105,557
19,161
-
-
105,557
19,397
HEDGING INTRUMENTS
TOTAL LIABILITIES
TOTAL
MUS$
6,295
533
6,828
1,476
116,408
1,192
8,344
13,000
22,536
236
124,718
124,954
131
The following information represents movements in the assets and liabilities where the determination of their fair values involved using various significant
assumptions that are not observable in the market (level 3) during the years ended December 31, 2012 and 2011 (by derivative type):
DECEMBER 31, 2012
EMBEDDED
DERIVATIVE
TERMOANDES
THUS$
EMBEDDED
DERIVATIVE
ESSA
THUS$
EMBEDDED
DERIVATIVE
AES GENER
THUS$
TOTAL
THUS$
(17,831)
-
17,062
-
(236)
-
(18,067)
-
-
17,062
585
(80)
264
-
236
-
-
821
(80)
264
-
-
-
-
-
CROSS CURRENCY
SWAP AES GENER
THUS$
EMBEDDED
DERIVATIVE
TERMOANDES
THUS$
EMBEDDED
DERIVATIVE
ESSA
THUS$
EMBEDDED
DERIVATIVE
AES GENER
THUS$
TOTAL
THUS$
CROSS CURRENCY
SWAP AES GENER
THUS$
Balance as of January 1, 2012
Income (Losses) - Other Comprehensive
Income
Income (Losses) – Net Income
Settlements
Transfers to Level 2
BALANCE AS OF DECEMBER 31, 2012
DECEMBER 31, 2011
Balance as of January 1, 2011
Income (Losses) - Other Comprehensive
Income
Income (Losses) – Net Income
Settlements
Transfers to Level 2
4,513
158
(5,072)
354
(47)
(32,559)
-
-
-
(32,559)
8,168
2,047
-
39
(197)
-
4,836
-
121
(475)
13,164
1,850
(475)
(17,831)
-
(236)
-
(18,067)
During 2012 there were no movements between level 1 and level 2 for instruments classified as Fair Value through Profit or Loss. The transfer between
level 3 and level 2 corresponds to a cross currency swap in AES Gener. During the first quarter of 2012, there was a change in information available and
market published prices now existed, and therefore, observable for a fair value measurement.
10.3 CREDIT RISK OF FINANCIAL ASSETS
The Company is exposed to credit risk in its commercial activities as well as in its financial activities.
CREDIT QUALITY OF GENER COUNTERPARTIES AND CHILEAN SUBSIDIARIES
The Company evaluates the credit quality of its counterparties, which includes principally suppliers’ company and industrial clients, which in the case of
Gener, 90% of them are locally and internationally classified with investment grade. The credit quality is determined by qualified rating agencies which
determines the solvency of the entities from most solvent (rating of “AAA”) to the lowest (rating of “E”), obtaining investment grade with a risk rating
of “BBB” or higher.
Regarding financial assets and derivatives, the investments executed by Gener and its subsidiaries are executed with local and international counterparties
with international or national risk classification of A or A2 according to Standard & Poor’s and Moody’s respectively. All other derivative instruments are
also executed with highly rated international entities. To minimize credit risk, the Group has risk management policies for cash and investments.
CREDIT QUALITY OF FOREIGN SUBSIDIARIES
The Colombian subsidiary, AES Chivor & Cía S.C.A. E.S.P (“Chivor”), executes transactions that are denominated in Colombian pesos with banks that
have credit ratings of “AAA”, which is considered to be the highest credit quality rating according to Duff & Phelps, Colombia’s risk rating agency. With
respect to the credit quality of the counterparty for Chivor´s financing activities in US dollars, they have a rating of “A+” (Standard & Poor’s) or “A1”
(Moody’s) which indicates a low credit risk.
Historically, Chivor has maintained minimal exposure to credit risk given the short term nature of its receivables.
Management considers that the Argentine subsidiary,TermoAndes S.A. has no major credit risks as its commercial operations are primarily with its parent
company, AES Gener, Argentina’s wholesale electric market administrative agent, CAMMESA, which is a governmental institution, and clients denominated
“Major Users of the Electric Market” (GU), whose contracts operates under Energía Plus legislation.
132
10.4 DERIVATIVE INSTRUMENTS
Financial derivatives that Gener and its subsidiaries hold correspond primarily to transactions entered into with the intent to hedge interest and exchange
rate volatility arising from financing development projects.
The Company, in line with its risk management policy, enters into interest rate and cross currency swaps to reduce the anticipated variability of the underlying debt’s future cash flows.
The portfolio of derivative instruments as of December 31, 2012 and 2011, is detailed as follows:
(A)CASH FLOW HEDGES
(A.1)
INTEREST RATE SWAPS:
These swap contracts partially hedge the syndicated loan related to Empresa Eléctrica Angamos S.A. and Empresa Eléctrica Ventanas S.A. The fair values
are as follow:
DECEMBER 31, 2012
ASSET
DERIVATIVE
INSTRUMENT
COUNTERPARTY CLASSIFICATION INTEREST RATE
Interest Rate
Swap
Various
Cash Flow
Hedge
CURRENT
MUS$
DECEMBER 31, 2011
LIABILITY
NONCURRENT CORRIENTE
MUS$
MUS$
ASSET
NONCURRENT
MUS$
LIABILITY
CURRENT
MUS$
NONCURRENT
MUS$
CURRENT
MUS$
NONCURRENT
MUS$
2,80% - 5,77%
-
-
24,793
83,305
-
-
24,521
81,036
TOTAL
-
-
24,793
83,305
-
-
24,521
81,036
In June 2007, Empresa Eléctrica Ventanas S.A. signed four interest rate swap contracts with the banks Standard Chartered, Scotiabank, Calyon New York
Branch and BNP Paribas, maturing in 15 years for ThUS$315,000, to fix variable interest rates during the construction and operating periods of its facility.
These swap contracts partially hedge the loan led by BNP Paribas (formerly Fortis) for the Nueva Ventanas Power Plant whose construction finalized in
December 2009.
In December 2008, Empresa Eléctrica Angamos executed seven interest rate swap contracts, which are currently held by SMBC, the Royal Bank of
Scotland Bank, BNP Paribas (formerly Fortis), Credit Agricole (formerly Calyon), HSBC and ING, maturing in 17 years for ThUS$690,000, to fix variable
interest rates during the construction and operating periods of its facility.
(A.2)
CROSS CURRENCY SWAPS
DECEMBER 31, 2012
ASSET
DERIVATIVE
INSTRUMENT
COUNTERPARTY
Cross Currency Credit Suisse Swap
Deutsche Bank
CURRENT
MUS$
NONCURRENT
MUS$
Cash Flow Hedge
-
TOTAL
-
CLASSIFICATION
DECEMBER 31, 2011
LIABILITY
ASSET
CURRENT
MUS$
NONCURRENT
MUS$
6,295
4,720
6,295
4,720
LIABILITY
CURRENT
MUS$
NONCURRENT
MUS$
CURRENT
MUS$
NONCURRENT
MUS$
1,737
-
1,330
5,511
13,650
1,737
-
1,330
5,511
13,650
In December 2007, AES Gener signed two cross currency swaps with Credit Suisse International to fix in U.S. Dollars the UF 5.6 million obligation in two
series of locally placed bonds (N and O), equivalent to approximately ThUS$ 217,000 as of the date of issuance, maturing in 2015 and 2028.
On September 2009, AES Gener S.A. signed a modification to the cross currency swap contract associated with the N Series of the locally placed bond.
The previous contract was terminated and replaced by new contracts that were executed with Credit Suisse and Deutsche Bank. Both swap contracts
include provisions that require AES Gener to grant a guarantee when the swap market value exceeds the limit established in the contracts.
133
(A.3)
FOREIGN CURRENCY FORWARDS
In February 2012, AES Gener S.A. executed foreign currency forwards, related to accounts receivable from regulated customers, with Deutsche Bank and
JP Morgan Chile for a total nominal amount of ThUS$124,588, with partial maturities with the last payment on November 29, 2012. As of December 31,
2012, there is no nominal amount outstanding.
In April 2012, AES Gener S.A. executed foreign currency forwards, related to accounts receivable from regulated customers, with Corpbanca for a total
nominal amount of ThUS$21,986, with partial maturities with the last payment on November 29, 2012. As of December 31, 2012, there is no nominal
amount outstanding.
In August 2012, AES Gener S.A. executed foreign currency forwards, related to accounts receivable from regulated customers, with Banco de Chile, JP
Morgan and Banco Santander for a total nominal amount of ThUS$131,004, with partial maturities with the last payment on May 27, 2013. The nominal
amount outstanding as of December 31, 2011 is ThUS$108,133.
The nominal amount outstanding is classified as current assets.
(A.4).
OTHER INFORMATION - CASH FLOW HEDGES
Hedge maturities are included in the following table:
PERIOD
EMPRESA
DERIVATIVE
INSTRUMENT
Cross Currency
Swap
Cross Currency
AES Gener S.A.
Swap
Emp Eléctrica Angamos S.A. Interest Rate Swap
Emp Eléctrica Ventanas S.A. Interest Rate Swap
AES Gener S.A.
COUNTERPARTY
HEDGED ITEM
START
END
Credit Suisse
Cash Flow
01-12-07
01-06-15
Deutsche Bank y Credit
Suisse
Various
Various
Cash Flow
01-12-07
01-12-28
Interest Rate
Interest Rate
30-12-08
31-08-07
30-09-25
30-06-22
TOTAL
2013
2014
2015
THUS$ THUS$ THUS$
-
- 47,042
-
-
THEREAFTER
THUS$
TOTAL
THUS$
-
47,042
-
172,264
172,264
30,169 27,194 32,213
16,000 18,000 20,000
583,128
226,000
672,704
280,000
46,169
981,392
1,172,010
45,194
99,255
For more details on debt maturity, see Note 20 Other Financial Liabilities.
The Company has not executed cash flow hedge instruments for highly probable transactions that then failed to occur.
Amounts recognized in Other Comprehensive Income (OCI) for the years 2012 and 2011 are:
Amount recognized in Other Comprehensive Income
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
13,704
66,230
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
627
304
1,362
627
239
(2,369)
Amounts transferred from OCI to Net Income:
Amortization of Cross Currency Swap, Series N Bonds
Amortizastion of Capitalized Interest
Ineffective Hedge Portion
134
(B)DERIVATIVES NOT DESIGNATED AS HEDGING INSTRUMENTS
In March 2012, AES Chivor executed currency forward contracts, with Bancolombia for a nominal amount of ThUS$76,541, maturing in December 2012.
As of December 31, 2012, no nominal amounts were outstanding.
In April 2012, AES Chivor executed currency forward contracts, with Bancolombia for a nominal amount of ThUS$28,606, maturing in March 2013. The
nominal amounts as of December 31, 2012 are ThUS$13,367.
In July 2012, AES Chivor executed currency forward contracts, with JP Morgan for a nominal amount of ThUS$35,181, maturing in September 2013. The
nominal amounts as of December 31, 2012 are ThUS$35,181.
Amounts are classified as current.
(C) EMBEDDED DERIVATIVES
During 2010 AES Gener S.A. entered into a coal purchase agreement with AES Hawaii containing a fuel index in the purchase price that is not considered
to be closely related to the host contract and, therefore, it has been separated and accounted for at fair value.
As of December 31, 2012, no amounts were recognized for this embedded derivative.
NOTE 11 – OTHER NON FINANCIAL ASSETS
Al 31 de diciembre de 2012 y 2011, el detalle de otros activos no financieros es el siguiente:
OTROS ACTIVOS NO FINANCIEROS
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
NON CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
Prepaid Insurance
Taxes Receivable (a)
Take or Pay YPF
Other Project Related Services
Prepaid Compañía Papelera del Pacífico
Prepaid Import Right
Other
6,230
642
278
462
5,408
589
238
549
15,198
2,194
596
6,888
345
969
2,890
95
TOTAL
7,612
6,784
17,988
11,187
a) Related to taxes receivable from the Parent company related to water rights.
135
NOTE 12 – TRADE AND OTHER RECEIVABLES
Amounts in Trade and Other Receivables relate to transactions within the Company’s line of business and that of its subsidiaries, which principally consists
of sales of energy, capacity and coal.
Amounts in Trade and Other Receivables as of December 31, 2012 and 2011 includes ThUS$686 and ThUS$8,286 respectively, related to electricity
rationing decree.
Amounts in Other primarily consist of tax credits related to Argentinian subsidiaries, prepayments from suppliers, among others.
1) As of December 31, 2012 and 2011, this account is detailed as follows:
TRADE AND OTHER RECEIVABLES
CURRENT
DECEMBER 31,
DECEMBER 31,
2012
2011
THUS$
THUS$
NON CURRENT
DECEMBER 31,
DECEMBER 31,
2012
2011
THUS$
THUS$
Trade Receivables, Gross
Provision for Doubtful Accounts (1)
Trade Receivables, Net
Sales Tax Credits
Other Accounts Receivable
271,592
(7,181)
264,411
25,471
22,745
277,727
(6,951)
270,776
105,732
14,610
1,652
1,652
3,943
488
1,197
1,197
7,033
1,599
TRADE AND OTHER RECEIVABLES, NET
312,627
391,118
6,083
9,829
1) As of December 31, 2012 and 2011, the Company included among its Allowance for Doubtful Accounts, an impairment loss in current account
receivables relating to Campanario Generación S.A.
The fair value of Trade and Other Receivables does not differ significantly from their carrying amount.
2) Trade Receivables neither past due nor impaired are detailed as follows:
DECEMBER 31,
2012
THUS$
DECEMBER 31,
2011
THUS$
Less than Three Months
Between Three and Six Months
Between Six and Twelve Months
More than Twelve Months
23,615
215
5,436
44,567
5,662
199
4
TOTAL TRADE RECEIVABLES NEITHER PAST DUE NOR IMPAIRED
29,266
50,432
TRADE RECEIVABLES NEITHER PAST DUE NOR IMPAIRED
136
3) The movements in allowance for doubtful accounts related to Trade and Other Receivables are detailed in the following table
CURRENT
THUS$
ALLOWANCE FOR DOUBTFUL ACCOUNTS
4,910
Increase (Decrease) for the Year
Amounts Written off in Net Income
2,041
-
Increase (Decrease) for the Year
Amounts Written off in Net Income
230
-
6,951
7,181
NOTE 13 – BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Transactions between the Company and its subsidiaries consist of recurring transactions made at terms equivalent to those that prevail in an arm’s
length transaction. These intercompany transactions have been eliminated upon consolidation and are not disclosed in this note.
13.1 BALANCES AND TRANSACTIONS WITH RELATED PARTIES
(a) The balances of accounts receivable between the Company and its related companies are detailed as follows:
TAXPAYER ID
NUMBER
COMPANY
RELATED PARTY RECEIVABLES
DESCRIPTION OF
COUNTRY
TRANSACTION
Foreign
AES Corporation
United States
Miscellaneous Services
Foreign
AES Corporation (P.CLAIMS)
United States
Insurance Settlements
Foreign
AES Energy Storage
United States
Project Consulting
Foreign
AES Maritza East Ltd.
Bulgaria
Foreign
AES Panamá Limitada
Panama
Foreign
AES Hawaii
United States
Fuel Sales
Foreign
Compañía de Alumbrado Eléctrico
El Salvador
Foreign
Masinloc Power Partners Co. Ltd
Phillipines
Foreign
AES TEG Operations, S.de R.L. de CV Mexico
Foreign
AES Andres BV
Dominican Republic
Foreign
AES Pacífic
United States
Chile
96.635.700-2 Empresa Eléctrica Guacolda S.A.
TOTAL
RELATIONSHIP
Ultimate Parent
Company
Ultimate Parent
Company
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Associate
CURRENCY
CURRENT
DECEMBER
DECEMBER
31, 2012 31, 20112011
THUS$
THUS$
NON-CURRENT
DECEMBER
DECEMBER
31, 20122012
31, 2011
THUS$
THUS$
US$
415
397
-
-
US$
7,350
6,082
-
-
US$
301
209
-
-
US$
54
19
-
-
US$
29
35
-
-
US$
553
7,090
-
-
US$
27
-
-
-
US$
4
-
-
-
US$
1
-
-
-
US$
6
-
-
-
US$
6
-
-
-
$
8
53
-
-
8,754
13,885
-
-
137
(b) The balances of accounts payable between the Company and its related companies are detailed as follows:
CUENTAS POR PAGAR A ENTIDADES RELACIONADAS
NON-CURRENT
DECEMBER DECEMBER
31, 2012
31, 2011
MUS$
MUS$
TAXPAYER ID
NUMBER
COMPANY
COUNTRY
Foreign
AES Corporation
United States Miscellaneous Services
US$
9,252
7,702
-
-
Foreign
AES Corporation
United States
US$
668
578
-
-
Foreign
AES Corporation
United States
US$
442
249
-
-
Foreign
AES Servicios América
Argentina
US$
651
390
-
-
Foreign
AES Argentina Generacion S.A.
Argentina
US$
24
10
-
-
Foreign
AES Energy Ltd
Argentina
US$
8
11
-
-
Foreign
El Salvador
US$
670
459
-
-
Foreign
Compañía de Alumbrado
Eléctrico
AES Panamá Limitada
Panama
US$
38
38
-
-
Foreign
AES Big Sky, LLC
United States
US$
15
2
-
-
Foreign
AES Solutions
United States
US$
-
6
-
-
Foreign
AES Maritza East Ltd.
Bulgaria
US$
-
2
-
-
Foreign
AES Nejapa Gas
El Salvador
US$
-
79
-
-
Foreign
Masinloc Power Partners Co. Ltd Phillipines
US$
2
-
-
-
Foreign
AES Energy Storage
United States
US$
21
-
-
-
Foreign
AES Alicura
Argentina
US$
3
-
-
-
96.635.700-2
96.721.360-8
Gasoducto Gasandes Chile S.A.
Chile
Chile
US$
US$
5,223
-
-
-
236
TOTAL
138
DESCRIPTION OF
TRANSACTION
CURRENT
DECEMBER DECEMBER
31, 2012
31, 2011
MUS$
MUS$
RELATIONSHIP
Ultimate
Parent
Company
Ultimate
Parent
Company
Other Services
Ultimate
Parent
Company
Information system consulting Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Project Consulting
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Common
Parent
Associate
Gas Transportation Contract Investment
CURRENCY
17,017
9,526
-
236
c) The effects on the income statement of these transactions with unconsolidated related companies during the year ended December 31, 2012 and
2011 are detailed as follows:
TAXPAYER ID
NUMBER
96.635.700-2
96.635.700-2
96.635.700-2
96.635.700-2
96.635.700-2
96.635.700-2
96.635.700-2
99.588.230-2
99.588.230-2
99.588.230-2
99.588.230-2
Foreign
Foreign
96.721.360-8
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
Foreign
DECEMBER
31, 2012
THUS$
EFFECT
IN NET
INCOME
THUS$
DECEMBER
31, 2011
THUS$
EFFECT
IN NET
INCOME
THUS$
COMPANY
COUNTRY
DESCRIPTION OF
TRANSACTION
RELATIONSHIP
Compañía Transmisora del Norte
Chico S.A.
Chico S.A.
Chico S.A.
Chico S.A.
Gasoducto Gasandes Argentina
Gasoducto Gasandes Argentina
Gasoducto Gasandes Chile S.A.
AES Corporation
AES Corporation
Compañía de Alumbrado Eléctrico
AES Big Sky, LLC
AES Energy Ltd
AES Energy Storage,
AES Andres BV
AES Fonseca Energía Limit
AES Panama
AES Pacific
AES Carbón Exchange
AES Solutions, LLC
AES Servicios America S.R.L.
AES - 3 Maritza East 1 LTD.
AES Hawaii
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Associate
Associate
Associate
Associate
Associate
Associate
Associate
Associate's Subsidiary
Sale of Energy and Capacity
Purchase of Energy and Capacity
Sale of Coal
Purchase of Coal
Transmission Charges Cost
Transmission Charges Revenue
Sale of Energy and Capacity
39,750
69,556
5
276
76
3
39,750
(69,556)
(5)
276
62
3
4,073
918
2,073
4,034
6
204
94
4
4,073
(918)
2,073
(4,034)
(6)
204
94
4
Chile
Purchase of Energy and Capacity
359
(359)
596
(596)
Chile
Transmission Charges Cost
464
(464)
203
(203)
Chile
Transmission Charges Revenue
335
335
596
596
Argentina
Argentina
Chile
United States
United States
El Salvador
United States
Argentina
United States
Dominican Republic
Salvador
Panama
United States
England
United States
Argentina
Bulgaria
United States
Investment
Investment
Investment
Ultimate Parent Company
Ultimate Parent Company
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Common Parent
Dividends
Gas Transportation Contract
Gas Transportation Contract
Insurance Settlement
Sale of Coal
4,077
7,350
3,270
211
52
38
65
8
35
8
6
6
2,630
59
32,558
4,077
7,350
(3,250)
(211)
(52)
(38)
65
8
35
8
6
(6)
(1,501)
59
32,558
5,531
5,836
233
15,083
1,508
219
105
37
26
57
56
12
6
36,025
5,531
(5,836)
(233)
15,083
(1,476)
(219)
35
37
26
57
56
(12)
(6)
36,025
Transactions with related companies, in general, consist of recurring transactions made at terms equivalent to those that prevail in an arm’s length
transaction. To date, there are no allowances for doubtful accounts relating to these balances.
13.2 KEY MANAGEMENT PERSONNEL
Key People are those that have the authority and responsibility to plan, direct and control the activities of the Company, whether direct or indirectly.
AES Gener S.A. is managed by the members of the Senior Management and by a Board of Directors composed of seven directors and their respective
alternates, who are elected for a period of three years by the Shareholders in the Ordinary General Shareholders’ Meeting.
In compliance with the provisions of Article 50 bis of Law 18,046 on Corporations, AES Gener and its subsidiaries each have an Audit Committee composed of 3 members that have been granted the powers contained in that article.
(A)BALANCES AND TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL
There are no pending receivables or payables between the Company and its Directors and Senior Management.
In the periods covered by these financial statements, no transactions took place between the Company and its Directors or Senior Management.
There are no guarantees granted in favor of the Directors.
There are no guarantees granted by the Company in favor of the Senior Management.
There are no plans of retribution to the market value of shares.
139
(B)BOARD COMPENSATION
AES Gener’s by-laws establish that its directors do not receive compensation for serving as directors.
During the periods covered by these financial statements, the Company’s Directors, did not receive any compensation, entertainment or travel
expenses, royalties, or any other stipend. However, some directors do receive compensation for serving as members of the Audit Committee,
as disclosed in the following paragraph.
In the Ordinary General Shareholders’ Meeting held April 27, 2012, shareholders agreed to set remuneration for the Audit Committee members at 160 Unidades de Fomento for the 2012 period. During the periods covered by these financial statements, the amounts detailed in the
following table were paid to Audit Committee members and directors of subsidiaries.
NOMBRE
DIRECTOR REMUNERATION
CARGO
Andrés Gluski
Tom O´Flynn
Arminio Borjas
Iván Díaz-Molina
Juan Andrés Camus Camus
Radovan Roque Razmilic Tomicic
DECEMBER 31, 2012
BOARD OF DIRECTORS BOARD OF DIRECTORS
AES GENER
SUBSIDIARIES
THUS$
THUS$
AUDIT COMMITTEE
THUS$
President
Director
Director
Director
Director
Director
-
-
89
89
89
TOTAL
-
-
267
DECEMBER 31, 2011
BOARD OF DIRECTORS BOARD OF DIRECTORS
AES GENER
SUBSIDIARIES
THUS$
THUS$
AUDIT COMMITTEE
DIRECTOR REMUNERATION
NAME
POSITION
Andrés Gluski
Andrew Vesey
Bernerd da Santos
Arminio Borjas
Jorge Rodriguez Grossi
Iván Díaz-Molina
Juan Andrés Camus Camus
Radovan Roque Razmilic Tomicic
President
Director
Director
Director
Ex Director
Director
Director
Director
-
-
51
87
87
35
TOTAL
-
-
260
THUS$
In the Ordinary General Shareholders’ Meeting N°570 held October 26, 2011, AES Board of Directors accepted the resignations presented by Mr. Andrew Vesley and Mr. Bernard da Santos as Directors and by Mr.Britaldo Soares as alternate Director. The Board of Director chose Mr. Edward C Hall III as
new Director and Mr. Fernando Pujal as alternate Director, for the replacement of Mr. Vesley; Mrs. Victoria Dux Harker as new Director and Mr. Edgardo
Victor Campelo as alternate Director, as replacement of Mr. da Santos, and Mr. Joel William Abramson as alternate Director of Mr. Radovan Razmilic
Tomicic, as replacement for the alternate Director Mr. Soares.
In the Ordinary General Shareholders’ Meeting N°579 held July 25, 2012, the AES Board of Directors accepted the resignation of Mrs. Victoria Dux Harker as Director. During the Ordinary General Shareholders’ Meeting N° 581 held on September 26, 2012, Mr. Tom O’Flynn was named as Mrs. Victoria
Dux Harker’s replacement as director.
On November 19, 2012, AES Gener accepted the resignation of Mr. Edward C. Hall as Director.
140
(C)OVERALL COMPENSATION OF EXECUTIVES THAT ARE NOT DIRECTORS
The overall compensation of the Company’s Senior Management includes fixed monthly compensation, bonuses based on performance and corporate
results as compared to the prior period, in addition to long term compensation, such as stock options, employee benefits and severance.
The Company’s key management personnel include its Chief Executive Officer and Managers of the following departments: Operations, Legal and
Corporate Matters, Engineering and Construction, Development, and Finance. Key management personnel take part in an annual bonus plan based
on goal achievement and individual contribution to the Company’s results. These incentives are based on a minimum and maximum number of gross
monthly salaries and are paid once a year.
The Company’s key executives received overall compensation for the years ended as of December 31, 2012 and 2011 of ThUS$5,077 and ThUS$6,094
respectively.
NOTE 14 – INVENTORY
Inventory, valued in accordance with Note 4.11 Inventory, is detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Coal
Oil
Spare Parts and Materials
Coal in Transit
Materials in Transit
Other Inventory
34,820
11,213
26,768
15,347
2,320
235
49,328
8,370
11,920
35,410
695
223
TOTAL
90,703
105,946
INVENTORY
The amount of inventory recognized as cost of sales in net income for the years ending December 31, 2012 and 2011, is detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Coal
Oil
Gas
Other
447,946
108,268
310,865
16,917
406,934
132,712
302,768
14,430
TOTAL
883,996
856,844
INVENTORY RECOGNIZED AS COST OF SALES IN NET INCOME
The Other Inventory costs are principally materials being used and biomass consumption.
In the periods covered by these financial statements, no adjustments exist that would significantly affected the carrying value of inventory.
141
NOTE 15 - CURRENT TAXES
Current Taxes Receivable as of December 31, 2012 and 2011, are detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
15,568
319
125
2,323
6,000
14,528
308
18,916
218
17
103
17
3,175
120
921
94
9,588
1,686
79
1,198
28,568
19,603
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
527
95,920
4,006
376
1,053
3
78,757
4,061
-
Monthly Provisional Tax Recoverable
Sence Training Credits
Donation Credits
Property, Plant and Equipment Credits
Argentine regulation Credits
Colombia Income Tax Advance Payment
Other
10,347
18
3
93
40,496
2
18,637
33
132
958
31,007
292
TOTAL
49,870
32,815
CURRENT TAXES RECEIVABLE
Monthly Provisional Tax Payments
Sence Training Credits
Donation Credits
Property, Plant and Equipment Credits
Argentine Standard Credits
Used Loss Carryforwards
Taxes Receivable for Income Tax Return
Other
LESS:
Monthly Tax Provision
Rejected Expenses Provision
First Category Tax Provision
TOTAL
Current Taxes Payable are detailed as follows:
CURRENT TAXES PAYABLE
Monthly Provisional Tax Payments
Rejected Expenses Provisional Tax
First Category Provisional Tax Payments
Colombia Equity Provisional Tax Payments
Other
LESS:
NOTE 16 - INVESTMENTS IN ASSOCIATES
The following table includes detailed information on associates as of December 31, 2012 and 2011:
MOVEMENTS IN
INVESTMENTS IN
ASSOCIATES
FUNCTIONAL
COUNTRY CURRENCY
Empresa Eléctrica
Guacolda S.A.
Chile
US$
MOVEMENTS IN
INVESTMENTS IN
ASSOCIATES
FUNCTIONAL
COUNTRY CURRENCY
Empresa Eléctrica
Guacolda S.A
Chile
142
US$
OWNERSHIP
INTEREST
50,00%
OWNERSHIP
INTEREST
50,00%
PERCENTAGE
OF VOTING JANUARY 1, 2012
RIGHTS
THUS$
EQUITY
PARTICIPATION IN
EARNINGS
THUS$
CONVERSION
DIFFERENCE
THUS$
OTHER
INCREASES
(DECREASE)
THUS$
DECEMBER 31,
2012
THUS$
50,00%
273,375
9,187
-
(6,409)
276,153
TOTALES
273,375
9,187
-
(6,409)
276,153
PERCENTAGE
OF VOTING JANUARY 1, 2012
RIGHTS
THUS$
EQUITY
PARTICIPATION IN
EARNINGS
THUS$
CONVERSION
DIFFERENCE
THUS$
OTHER
INCREASES
(DECREASE)
THUS$
DECEMBER 31,
2012
THUS$
50,00%
252,051
31,109
-
(9,785)
273,375
TOTALES
252,051
31,109
-
(9,785)
273,375
The associate Guacolda can distribute dividends as long as:
(i) it is not in breach of one of its credit agreements,
(ii) its debt reserve accounts are funded or covered by bank guarantees, and
(iii) it complies with the debt coverage ratio that increases inversely to its contracted capacity.
The following tables contain summarized information as of December 31, 2012 and 2011 on the financial statements of our associates:
DECEMBER 31, 2012
NON
CURRENTS
ASSETS
THUS$
CURRENT
LIABILITIES
THUS$
NON
CURRENT
LIABILITIES
CORRIENTES
THUS$
OPERATING
INCOME
THUS$
OPERATING
EXPENSES
THUS$
NET INCOME
(LOSS)
THUS$
INVESTMENTS IN
ASSOCIATES
% OWNERSHIP
INTEREST
CURRENT
ASSETS
THUS$
Empresa Eléctrica
Guacolda S.A
50%
165,213
1,129,273
114,389
611,090
612,667
519,228
18,375
TOTAL
165,213
1,129,273
114,389
611,090
612,667
519,228
18,375
DECEMBER 31, 2011
NON
CURRENTS
ASSETS
THUS$
CURRENT
LIABILITIES
THUS$
NON
CURRENT
LIABILITIES
CORRIENTES
THUS$
OPERATING
INCOME
THUS$
OPERATING
EXPENSES
THUS$
NET INCOME
(LOSS)
THUS$
INVESTMENTS IN
ASSOCIATES
% OWNERSHIP
INTEREST
CURRENT
ASSETS
THUS$
Empresa Eléctrica
Guacolda S.A
50%
271,180
1,071,439
151,279
640,386
537,382
407,821
62,218
TOTAL
271,180
1,071,439
151,279
640,386
537,382
407,821
62,218
NOTE 17 – INTANGIBLE ASSETS
Movements in the principal classes of intangible assets, valued as described in Note 4.5 and 4.6, are detailed as follows:
GROSS VALUE
THUS$
DECEMBER 31, 2012
ACCUMULATED
AMORTIZATION
THUS$
NET VALUE
THUS$
Goodwill
Intangible Assets with Infinite Useful Lives
Intangible Assets with Definite Useful Lives
Intangible Assets
Software
Easements
Water Rights
Other Identifiable Intangible Assets
7,309
24,970
23,214
55,493
10,298
10,021
16,729
11,136
(8,366)
(8,366)
(7,329)
(86)
(951)
7,309
16,604
23,214
47,127
2,969
9,935
16,729
10,185
IDENTIFIABLE INTANGIBLE ASSETS
48,184
(8,366)
39,818
INTANGIBLE ASSETS
143
GROSS VALUE
THUS$
DECEMBER 31, 2011
ACCUMULATED
AMORTIZATION
ACUMULADA
THUS$
NET VALUE
THUS$
Goodwill
Intangible Assets with Infinite Useful Lives
Intangible Assets with Definite Useful Lives
Intangible Assets
Software
Easements
Water Rights
Other Identifiable Intangible Assets
7,309
19,840
20,787
47,936
8,401
6,846
14,245
11,135
(6,811)
(6,811)
(6,434)
(59)
(318)
7,309
13,029
20,787
41,125
1,967
6,787
14,245
10,817
IDENTIFIABLE INTANGIBLE ASSETS
40,627
(6,811)
33,816
INTANGIBLE ASSETS
Easements and water rights do not have defined useful lives, therefore it has been established that they are indefinite and continuously permanent. These
intangibles have not suffered any contractual or legal modification as of December 31, 2011. Accumulated amortization of easements as of December
31, 2012 and 2011 correspond exclusively to easements of Mejillones lot A of Empresa Elécrica Angamos, the land easements of the lines associated with
the substation Angamos-Atacama/Angamos-Encuentro of Empresa Elécrica Cochrane and the easements of the lines Laberinto-Lomas Bayas/NorgenerCrucero of Norgener, as their useful lives relate to the duration of the contract.
2012
SOFTWARE
THUS$
EASEMENTS
THUS$
WATER
RIGHTS
THUS$
OTHER
IDENTIFIABLE
INTANGIBLE
ASSETS
THUS$
1,967
1,686
(829)
6,787
3,176
(28)
14,245
2,489
(5)
-
10,817
303
(935)
7,309
-
41,125
7,654
(5)
(1,792)
145
-
-
-
-
145
TOTAL CHANGES
1,002
3,148
2,484
(632)
-
6,002
FINAL BALANCE OF INTANGIBLE ASSETS AS
OF DECEMBER 31, 2012
2,969
9,935
16,729
10,185
7,309
47,127
OTHER
IDENTIFIABLE
INTANGIBLE
ASSETS
THUS$
GOODWILL
THUS$
INTANGIBLE
ASSETS
THUS$
MOVEMENTS IN INTANGIBLE ASSETS
Initial Balance as of January 1, 2012
Additions
Removals
Amortization
Increase (Decrease) in Foreign Currency
Translation
GOODWILL
THUS$
INTANGIBLE
ASSETS
THUS$
2011
SOFTWARE
THUS$
EASEMENTS
THUS$
WATER
RIGHTS
THUS$
2,424
322
(769)
7,705
899
(1,808)
(9)
2,346
11,908
(9)
-
207
10,913
(303)
7,309
-
19,991
24,042
(1,817)
(1,081)
(10)
-
-
-
-
(10)
TOTAL CHANGES
(457)
(918)
11,899
10,610
-
21,134
FINAL BALANCE OF INTANGIBLE ASSETS AS
OF DECEMBER 31, 2011
1,967
6,787
14,245
10,817
7,309
41,125
MOVEMENTS IN INTANGIBLE ASSETS
Initial Balance as of January 1, 2012
Additions
Removals
Amortization
Increase (Decrease) in Foreign Currency
Translation
144
ESTIMATED USEFUL LIVES OR AMORTIZATION RATES USED
MAXIMUM LIFE
OR RATE
MINIMUM LIFE
5 years
Indefinite
Indefinite
40 years
or Rate
2
Indefinite
Indefinite
2
Software
Easements
Water Rights
Other Identifiable Assets
INDIVIDUALLY SIGNIFICANT IDENTIFIABLE INTANGIBLE ASSETS
THUS$
REMAINING
AMORTIZATION
PERIOD
(YEARS)
Rights Laja plant, PPA contract with CMPC Maderas S.A
Water Rights Volcán River, exchange with RPG
Water Rights Colorado River, Maipo River
9,963
10,658
1,800
11,5 años
Indefinite
Indefinite
CARRYING AMOUNT
GOODWILL IMPAIRMENT AND INTANGIBLE ASSETS WITH INDEFINITE USEFUL LIVES
The goodwill acquired through business combinations and intangible assets with indefinite lives have been assigned to the following cash generating units,
which at the same time are operating segments for the purposes of the annual impairment test:
CONCEPTS
SIC
DECEMBER 31,
2012
THUS$
DECEMBER 31,
2011
THUS$
SING
DECEMBER 31,
2012
THUS$
DECEMBER 31,
2011
THUS$
TOTAL
DECEMBER 31,
DECEMBER 31,
2012
2011
THUS$
THUS$
Goodwill
Water Rights
Easements
Other Intangibles
7,309
15,342
6,440
217
7,309
14,245
4,640
218
1,215
-
1,684
-
7,309
15,342
7,655
217
7,309
14,245
6,324
218
TOTAL
29,308
26,412
1,215
1,684
30,523
28,096
The recoverable value that was applied in the impairment test is the fair value less costs to sell. Considering that an active market for these assets does
not exist, the fair value was calculated using the income method. The assumptions used for the income method are consistent with the information used
in the projected budget values and adjusted to include the assumptions of a market participant. As of December 31, 20120, impairment losses were not
identified, given that the recoverable value was greater than the carrying value.
145
NOTE 18 – PROPERTY, PLANT AND EQUIPMENT
The balances of the different categories of property, plant and equipment for the years ended as of December 31, 2012 and 2011 are detailed
as follows:
GROSS VALUE
THUS$
DECEMBER 31, 2012
ACCUMULATED
DEPRECIATION
THUS$
NET VALUE
THUS$
Construction in Progress
Land
Buildings
Plant and Equipment
IT Equipment
Furniture
Motor Vehicles
Other Property, Plant and Equipment
755,715
35,772
830,974
4,050,891
11,401
11,679
3,689
65,737
(114,771)
(1,034,092)
(4,926)
(7,010)
(2,038)
(3,658)
755,715
35,772
716,203
3,016,799
6,475
4,669
1,651
62,079
TOTAL
5,765,858
(1,166,495)
4,599,363
GROSS VALUE
THUS$
DECEMBER 31, 2011
ACCUMULATED
DEPRECIATION
THUS$
NET VALUE
THUS$
Construction in Progress
Land
Buildings
Plant and Equipment
IT Equipment
Furniture
Motor Vehicles
469,436
35,097
811,535
3,952,063
10,931
6,411
3,113
37,621
(97,317)
(840,424)
(5,265)
(3,876)
(1,626)
(2,230)
469,436
35,097
714,218
3,111,639
5,666
2,535
1,487
35,391
TOTAL
5,326,207
(950,738)
4,375,469
CLASSES OF PROPERTY, PLANT AND EQUIPMENT
CLASSES OF PROPERTY, PLANT AND EQUIPMENT
In April 2011, Unit 1 of Empresa Eléctrica Angamos thermoelectric plant started up its operations with a gross capacity of 260 MW, while Unit 2 started
up its operations in October 2011, also with a gross capacity of 260 MW. This energy is being injected into the SING which supplies energy from the I to
II Region of Chile. The plant is located in the II Region of Antofagasta, in the local area of Mejillones.
The balance of Construction in Progress consists of amounts related to Campiche and to a lesser extent the Alto Maipo and Cochrane projects and
other minor projects.
The useful lives of the Company’s Property, Plant and Equipment are detailed as follows:
METHOD USED FOR DEPRECIATION
EXPLANATION
OF RATE
Buildings
Plant and Equipment
Plant and Equipment (Columbian Dam)
IT Equipment
Stationary Facilities and Accessories
Motor Vehicles
Years
Years
Years
Years
Years
Years
Years
146
MINIMUM LIFE
MAXIMUM LIFE
20
5
80
2
2
2
5
45
45
80
5
20
5
25
ADDITIONAL DISCLOSURES FOR PROPERTY, PLANT AND EQUIPMENT
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
419,182
1,147,643
395,439
494,019
Expenditures on Construction in Progress
Commitments for Additions
The following tables present movements in property, plant and equipment during the years ended December 31, 2012 and 2011, respectively:
MOVEMENTS DURING THE YEAR 2012
Changes
Additions
Disposals
Removals
Depreciation Expense
Increase (Decrease) in Foreign
Currency Translation (*)
Transfers
TOTAL CHANGES
CONSTRUCTION
IN PROGRESS
THUS$
LAND
THUS$
469,436
339,641
-
35,097
758
(196)
-
714,218
4,753
(969)
(20,886)
276
186
68
(73)
19,019
1,985
(94,840)
35,772
716,203
286,279
ENDING BALANCE, DECEMBER 31,
2012
MOVEMENTS DURING THE YEAR 2011
Changes
Additions
Disposals
Removals
Depreciation Expense
Increase (Decrease) in Foreign
Currency Translation (*)
Transfers
TOTAL CHANGES
ENDING BALANCE, DECEMBER 31,
2011
(*)
CONSTRUCTION
IN PROGRESS
THUS$
675
LAND
THUS$
PLANT AND
BUILDINGS EQUIPMENT
THUS$
THUS$
PROPERTY,
PLANT AND
EQUIPMENT
THUS$
IT
EQUIPMENT
THUS$
FURNITURE
THUS$
MOTOR
VEHICLES
THUS$
3,111,639
9,602
(11,007)
(187,199)
5,666
635
(1,810)
2,535
755
(6)
(906)
1,487
527
(47)
(556)
35,391
28,346
(1,428)
4,375,469
385,017
(12,225)
(212,785)
62,918
283
114
8
34
63,887
30,846
1,701
2,177
232
164
26,688
223,894
3,016,799
6,475
4,669
1,651
62,079
4,599,363
OTHER
PROPERTY,
PLANT AND
EQUIPMENT
THUS$
PROPERTY,
PLANT AND
EQUIPMENT
THUS$
PLANT AND
BUILDINGS EQUIPMENT
THUS$
THUS$
2,134
(264)
-
IT
EQUIPMENT
THUS$
FURNITURE
THUS$
MOTOR
VEHICLES
THUS$
5,754
147
(414)
(1,898)
2,048
136
(2)
(645)
737
1,038
(19)
(2)
(477)
22,660
14,359
(1,628)
4,179,193
435,653
(345)
(34,563)
(194,567)
(9,902)
40,629
2,045
(246)
(7,302)
-
(70)
(29)
(5)
(9,731)
(48)
(18)
(1)
-
(1,187,139)
-
287,512
896,275
2,125
1,016
211
750
-
12,731
196,276
35,097
714,218
3,111,639
5,666
2,535
1,487
35,391
4,375,469
268,335
2,423,268
(458)
(80)
(26,828)
(170,807)
809
1,238,214
418,431
-
(5,532)
445,883
(45)
(15)
(19,112)
OTHER
PROPERTY,
PLANT AND
EQUIPMENT
THUS$
688,371
(88)
487
-
It is related with the currency translation of Colombian subsidiary AES Chivor & S.C.A E.S.P, which has the Colombian Peso as its functional currency.
Capitalized interest costs and the average effective rate of the Company’s debt are detailed as follows:
CAPITALIZED INTEREST
Capitalized Interest Expense
Capitalization Rate
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
33,714
6.36%
32,280
6.88%
The Company and its subsidiaries have insurance contracts for their generation plants, including all risk policies and business interruption insurance, which
cover damages caused by fire, flood and earthquakes, among other costs.
147
- INFORMATION ABOUT LEASES:
Finance leases by asset class, lessee:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Buildings
Plant and Equipment
IT Equipment
Motor Vehicles
11,533
3,710
16
-
6,483
9,020
49
65
TOTAL PROPERTY, PLANT AND EQUIPMENT UNDER FINANCE LEASES
15,259
15,617
FINANCE LEASE
Minimum lease payments related to operating leases, lessee:
DECEMBER 31, 2012
DECEMBER 31, 2011
GROSS
THUS$
INTEREST
THUS$
PRESENT
VALUE
THUS$
Less than a Year
Between 1 and 5 years
More than 5 years
1,638
4,726
53,589
814
2,040
30,205
824
2,686
23,384
1,416
4,407
51,766
810
2,066
29,723
606
2,341
22,043
TOTAL
59,953
33,059
26,894
57,589
32,599
24,990
MINIMUM LEASE PAYMENTS ON FINANCE
LEASES, LESSEE
GROSS
THUS$
INTEREST
THUS$
PRESENT
VALUE
THUS$
Minimum lease payments related to finance leases, lessor:
DECEMBER 31, 2012
THUS$
‘DECEMBER 31, 2012
(ADJUSTED)
THUS$
DECEMBER 31, 2011
THUS$
Less than a Year
More than 5 years
6,592
19,099
4,564
21,127
4,700
25,501
58,816
TOTAL
25,691
25,691
89,017
PAMINIMUM LEASE PAYMENTS ON OPERATING LEASES, LESSEE
Minimum lease payments related to finance leases, lessor:
DECEMBER 31, 2012
DECEMBER 31, 2011
GROSS
THUS$
INTEREST
THUS$
PRESENT
VALUE
THUS$
Less than a Year
24
-
-
24
-
280
24
16
-
264
24
TOTAL
24
-
24
304
16
288
MINIMUM LEASE PAYMENTS ON FINANCE
LEASES, LESSOR
-
GROSS
THUS$
INTEREST
THUS$
PRESENT
VALUE
THUS$
IMPAIRMENT IN ASSET VALUE
According to Note 4.7, the recoverable amount of the properties, plants and equipment is evaluated when there is evidence that the asset may be
impaired.
No new impairment losses were identified during the year ended December 31, 2011.
148
-
SALE OF PROPERTY, PLANT AND EQUIPMENT
In June 2011, the Energy and Steam Supply Contract between Compañía Papelera del Pacífico S.A. and Norgener S.A. was terminated, resulting in the
following:
- ThUS$3,500 was recognized as compensation for early terminating the contract between Energía Verde and Compañía Papelera del Pacífico S.A.
-
Energía Verde S.A. sold its two steam boilers, generating a loss of ThUS$581
-
A contract of usufruct is celebrated between Energía Verde S.A. and Compañía Papelera del Pacífico S.A. for a total amount of ThUS$3,854, that
allows Energía Verde S.A. continued to use the land located in San Francisco of Mostazal where the Generation Plant is located and shall remain until
2017. This contract allows San Francisco de Mostazal Plant to continue injecting energy to the Central Interconnected Grid (SIC).
-
The decommissioning provision related to the San Francisco of Mostazal Plant has been modified to include the assets that are still property of the
Company. The change in the provision resulted in a gain of ThUS$977.
During the last quarter of 2011, Gener transferred the Laja plant to CMPC Maderas S.A., as a financial lease.
During the 2012, no significant sales of Property, Plant and Equipment have occurred.
NOTE 19 - DEFERRED TAXES
Balances of Deferred Tax Assets as of December 31, 2012 and 2011 are detailed as follow:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Provisions
Employee Benefits
Fair Value of Financial Instruments
Tax Losses
Deferred Income
Interesting-Bearing Loans
Lease Obligations
Finance Expenses
Others
8,343
4,003
23,043
145,428
4,702
529
5,309
2,840
20,031
6,867
2,008
21,638
86,057
4,867
3,075
4,812
1,489
10,521
TOTALES
214,228
141,334
DEFERRED TAX ASSETS
The most significant deferred asset, is related to the tax losses of those companies that are in construction or have been oeprating for a short
period. These are: Empresa Electrica Ventanas S.A., Empresa Electrica Angamos S.A., and Empresa Electrica Campiche S.A. The cause of these
losses is principally due the inability to capitalize finance expenses to the project.
It is probable that these losses will be used in the future product of taxable income associated with energy supply contracts (PPAs).
As of December 31, 2012, the item “Other” is principally due to the decommissioning of fixed assets.
149
Balances of Deferred Tax Liabilities as of December 31, 2012 and 2011 are detailed in the following table:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
568,043
960
379
7,825
8,154
13,608
12,648
441,727
1,882
3,509
10,443
14,973
8,228
(397,389)
(339,428)
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Deferred Tax Assets
Deferred Tax Liabilities
14,976
(412,365)
18,757
(358,185)
DEFERRED TAXES NET POSITION
(397,389)
(339,428)
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Deferred Tax Assets
Deferred Tax Liabilities
214,228
(611,617)
141,334
(480,762)
(397,389)
(339,428)
DEFERRED TAX LIABILITIES
Depreciation
Provisions
Employee Benefits
Fair value of Financial Instruments
Interesting-Bearing Loans
Finance Expenses
Others
TOTAL
611,617
DEFERRED TAX ASSETS AND LIABILITIES’ NET BALANCE
480,762
As of December 31, 2012, the item “Other” is principally due to the decommissioning of fixed assets.
Reconciliation between Statement of Financial Position amounts and deferred tax tables
STATEMENT OF FINANCIAL POSITION
The following movements occurred in deferred tax assets and liabilities during the years ended as of December 31, 2012 and 2011, were:
MOVEMENTS IN DEFERRED TAX
ASSETS
THUS$
LIABILITIES
THUS$
OPENING BALANCE, JANUARY 1, 2011
110,818
450,255
141,334
65,635
6,766
493
121,539
147
9,169
214,228
611,617
Increase (Decrease) in Income (Losses)
Increase (Decrease) in Comprehensive Income
Increase (decrease) in Foreign Currency Translation
Increase (Decrease) in Income (Losses)
Increase (Decrease) in Comprehensive Income
150
7,934
22,563
19
31,890
(1,383)
480,762
NOTE 20 – OTHER FINANCIAL LIABILITIES
As of December 31, 2012 and 2011 the Other Financial Liabilities are detailed as follows:
OTHER FINANCIAL LIABILITIES
Interest-Bearing Loans (20.1)
Hedge Liabilities (10.1)
Other Financial Liabilities
TOTAL
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
NON-CURRENT
DECEMBER 31, 201212
DECEMBER 31, 2011
THUS$
THUS$
91,439
31,366
1,476
64,622
30,032
-
2,190,175
85,042
(2,731)
2,203,410
94,686
-
124,281
94,654
2,272,486
2,298,096
20.1 INTEREST-BEARING LOANS
INTEREST-BEARING LOANS
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
NON-CURRENT
DECEMBER 31, 201212
DECEMBER 31, 2011
THUS$
THUS$
Bank Loans
Bonds Payable (1)
Lease Obligations
Deferred Interests (2)
73,743
16,872
824
-
46,522
17,494
606
-
1,074,624
1,090,133
26,070
(652)
1,122,484
1,057,367
24,384
(825)
TOTAL
91,439
64,622
2,190,175
2,203,410
In August 2011, the Company successfully completed the refinancing process of its 7.5% ThUS$400,000 U.S. Senior Notes due in 2014 and 8.0%
ThUS$196,000 Series Q Chilean Notes due in 2019. In the process the Company accepted offers of exchange and tender for approximately 63%
of the U.S. Senior Notes and tender for approximately 48% of Series Q Chilean Notes. Additionally, the Company issued new U.S Senior Notes for
ThUS$401,682, due in 2021 and with an interest rate of 5.25%.The final amounts of the U.S. Senior Notes due in 2014 and Series Q Chilean Notes
due in 2019 are ThUS$ 147,050 and ThUS$ 102,200, respectively. (see Note 28).
(1)
Corresponds to the interest costs related to the UF 6,000,000 (ThUS$257,635) committed credit line renewal with a syndicate of banks in October
2011. As of December 31, 2011, this line hasn’t been used.
(2)
151
(A)BANK LOANS
The following is a detail of the bank loans by financial institution, currency, rates and maturity as December 31, 2012:
ID NUMBER
COMPANY NAME
COUNTRY LENDER NAME
CURRENCY AMORTIZATION
76.004.976-K
96.814.370-0
96.717.620-6
Extranjera
Eléctrica Santiago S.A.
AES Chivor S.A.
Chile
Chile
Chile
Colombia
US$
US$
US$
Col$
Sindicato de Bancos - BNP PARIBAS
Sindicato de Bancos - BNP PARIBAS
Sindicato de Bancos - BCI
Leasing Bancolombia S.A.
EFFECTIVE
ANNUAL RATE
EFFECTIVE
NOMINAL
RATE
MATURITY
CARRYING
VALUE
THUS$
2.60%
2.19%
7.69%
8.54%
2.60%
1.74%
6.95%
8.49%
2025
2022
2014
2013
779,994
346,535
8,962
12,876
TOTAL
1,148,367
Semi-Annual
Semi-Annual
Semi-Annual
Monthly
CURRENT
ID NUMBER
COMPANY NAME
COUNTRY LENDER NAME
76.004.976-K Empresa Eléctrica Angamos S.A. Chile
96.814.370-0 Empresa Eléctrica Ventanas S.A.
Chile
96.717.620-6 Eléctrica Santiago S.A.
Foreign
AES Chivor S.A.
Chile
Colombia
Sindicato de Bancos BNP PARIBAS
Sindicato de Bancos BNP PARIBAS
Leasing Bancolombia S.A.
NON-CURRENT
MATURING
MATURING
LESS THAN 90 MORE THAN 90
DAYS
DAYS
THUS$
THUS$
TOTAL
CURRENT
DECEMBER
31, 2011
THUS$
MATURING
BETWEEN 1
AND 3 YEARS
THUS$
MATURING
BETWEEN 3
AND 5 YEARS
THUS$
MATURITY
MORE THAN 5
YEARS
THUS$
TOTAL NONCURRENT
DECEMBER
31, 2011
THUS$
-
56,089
56,089
109,373
106,323
719,749
935,445
-
27,945
27,945
61,151
72,621
228,759
362,531
-
6,507
12,876
6,507
12,876
3,095
-
-
-
3,095
-
-
103,417
103,417
173,619
178,944
948,508
1,301,071
The following is a detail of the bank loans by financial institution, currency, rates and maturity as December 31, 2011:
ID NUMBER
COMPANY NAME
COUNTRY
96.814.370-0 Empresa Eléctrica Ventanas S.A. Chile
96.717.620-6 Eléctrica Santiago S.A.
Chile
LENDER NAME
CURRENCY
Sindicato de Bancos - BNP PARIBAS US$
Sindicato de Bancos - BNP PARIBAS US$
US$
AMORTIZATION
EFFECTIVE
ANNUAL RATE
EFFECTIVE
NOMINAL
RATE
MATURITY
CARRYING
VALUE
THUS$
2.14%
2.08%
7.69%
2.14%
1.41%
6.95%
2025
2022
2014
787,122
366,934
14,950
TOTAL
1,169,006
Semi-Annual
Semi-Annual
Semi-Annual
CURRENT
ID NUMBER
COMPANY NAME
COUNTRY LENDER NAME
96.814.370-0
Empresa Eléctrica Ventanas S.A. Chile
96.717.620-6
152
Chile
Sindicato de Bancos - BNP
PARIBAS
Sindicato de Bancos - BNP
PARIBAS
MATURING
MATURING
LESS THAN 90 MORE THAN 90
DAYS
DAYS
THUS$
THUS$
NON-CURRENT
TOTAL
CURRENT
DECEMBER
31, 2011
THUS$
MATURING
BETWEEN 1
AND 3 YEARS
THUS$
MATURING
BETWEEN 3
AND 5 YEARS
THUS$
MATURITY
MORE THAN 5
YEARS
THUS$
TOTAL
NONCURRENT
DECEMBER
31, 2011
THUS$
4,566
31,523
36,089
109,605
106,972
781,914
998,491
-
26,421
26,421
58,516
65,542
266,377
390,435
-
7,409
7,409
9,602
-
-
9,602
4,566
65,353
69,919
177,723
172,514
1,048,291
1,398,528
(B)BONDS PAYABLE
The following table details bonds payable as of December 31, 2012: ID NUMBER
COMPANY NAME
COUNTRY
94.272.000-9 AES Gener S.A.
94.272.000-9 AES Gener S.A.
Chile
Chile
94.272.000-9 AES Gener S.A.
Chile
94.272.000-9
94.272.000-9
96.717.620-6
Foreign
Chile
Chile
Chile
Colombia
AES Gener S.A.
AES Gener S.A.
AES Chivor S.A.
INSTRUMENT
REGISTRATION
NUMBER
Series O Bond
Series N Bond
Rule 144A/REG S
Bonds
Senior Bonds
Ordinary Bonds
214
Ordinary Bonds
SERIES
CURRENCY
O SERIES
N SERIES
U.F.
U.F.
USD Bonds US$
USD Bonds
Q SERIES
B SERIES
Single
US$
US$
U.F.
US$
EFFECTIVE
ANNUAL
RATE
EFFECTIVE
NOMINAL
RATE
MATURITY
CARRYING
VALUE
THUS$
6.35%
7.92%
5.50%
7.34%
01-06-15
01-12-28
55,261
204,184
8.26%
7.50%
25-03-14
148,073
5.64%
8.23%
8.04%
10.76%
5.25%
8.00%
7.50%
9.75%
15-08-21
01-04-19
15-10-24
30-12-14
389,073
101,190
46,637
162,587
TOTAL
1,107,005
CURRENT
ID NUMBER
COMPANY NAME
INSTRUMENT
REGISTRATION
COUNTRY NUMBER
94.272.000-9 AES Gener S.A.
94.272.000-9 AES Gener S.A.
Chile
Chile
94.272.000-9 AES Gener S.A.
Chile
94.272.000-9
94.272.000-9
96.717.620-6
Foreign
AES Gener S.A.
Chile
AES Gener S.A.
Chile
Eléctrica Santiago S.A. Chile
AES Chivor S.A.
Colombia
NON-CURRENT
TOTAL
CURRENT
MATURING
MATURING
MATURITY
DECEMBER
BETWEEN
BETWEEN MORE THAN 5
31, 2012 1 AND 3 YEARS 3 AND 5 YEARS
YEARS
MUS$
MUS$
MUS$
MUS$
MATURING
LESS THAN 90
DAYS
MUS$
MATURING
MORE THAN
90 DAYS
MUS$
-
2,623
12,819
2,623
12,819
50,973
25,639
Series O Bond
Series N Bond
Rule 144A/REG S
Bonds
Senior Bonds
Ordinary Bonds
214
Ordinary Bonds
25,674
TOTAL
NONCURRENT
DECEMBER
31, 2012
MUS$
246,016
50,973
297,329
5,514
5,514
11,028
152,564
-
-
152,564
10,544
4,009
-
10,544
4,009
4,346
16,575
21,088
8,018
4,346
16,575
42,177
16,037
8,760
186,575
42,177
16,037
8,800
-
486,035
114,228
55,889
-
570,389
146,302
73,449
186,575
20,067
56,430
76,497
482,725
92,688
902,168
1,477,581
The following table details bonds payable as of December 31, 2011:
ID NUMBER
94.272.000-9
94.272.000-9
94.272.000-9
94.272.000-9
94.272.000-9
COMPANY
NAME
AES Gener S.A.
AES Gener S.A.
AES Gener S.A.
AES Gener S.A.
AES Gener S.A.
96.717.620-6 Eléctrica
Santiago S.A.
Foreign
AES Chivor S.A.
INSTRUMENT
COUNTRY REGISTRATION NUMBER
SERIES
CURRENCY
Chile
Chile
Chile
Chile
Chile
O SERIES
N SERIES
USD Bonds
USD Bonds
Q SERIES
U.F.
U.F.
US$
US$
US$
Series O Bond
Series N Bond
Rule 144A/REG S Bonds
Senior Bonds
Ordinary Bonds
EFFECTIVE
ANNUAL
RATE
EFFECTIVE
NOMINAL
RATE
6.35%
7.92%
8.26%
5.64%
8.23%
5.50%
7.34%
7.50%
5.25%
8.00%
CARRYING
VALUE
MATURITY
THUS$
01-06-15
01-12-28
25-03-14
15-08-21
01-04-19
49,814
184,082
147,623
387,486
100,923
Chile
214
B SERIES
U.F.
8.04%
7.50%
15-10-24
42,830
Colombia
Ordinary Bonds
Single
US$
10.76%
9.75%
30-12-14
162,103
TOTAL
1,074,861
153
CURRENT
ID NUMBER
COMPANY
NAME
COUNTRY
INSTRUMENT
REGISTRATION
NUMBER
NON-CURRENT
MATURING LESS
THAN 90 DAYS
THUS$
MATURING
MORE THAN 90
DAYS
THUS$
TOTAL
CURRENT
DECEMBER 31,
2011
THUS$
MATURING
BETWEEN 1 AND
3 YEARS
THUS$
MATURING
BETWEEN 3 AND
5 YEARS
THUS$
TOTAL NONCURRENT
MATURITY MORE DECEMBER 31,
THAN 5 YEARS
2011
THUS$
THUS$
-
2,630
12,855
2,630
12,855
5,246
25,639
48,350
25,674
258,836
53,596
310,149
5,514
5,514
11,028
163,593
-
-
163,593
11,306
4,009
10,544
4,009
21,850
8,018
42,177
16,037
42,177
16,037
507,124
122,247
591,478
154,321
94.272.000-9 AES Gener S.A.
94.272.000-9 AES Gener S.A.
Chile
Chile
94.272.000-9 AES Gener S.A.
Chile
94.272.000-9 AES Gener S.A.
94.272.000-9 AES Gener S.A.
96.717.620-6 Eléctrica
Santiago S.A.
Foreign
AES Chivor S.A.
Chile
Chile
Series O Bond
Series N Bond
Rule 144A/REG S
Bonds
Senior Bonds
Ordinary Bonds
Chile
214
-
4,687
4,687
8,096
8,161
55,993
72,250
Colombia
Ordinary Bonds
-
16,575
16,575
203,150
-
-
203,150
20,829
56,814
77,643
463,938
140,399
944,200
1,548,537
NOTE 21 - TRADE AND OTHER PAYABLES
Trade and Other Payables as of December 31, 2012 and 2011 are detailed as follows:
TRADE AND OTHER PAYABLES
CURRENT
DECEMBER 31, 2012 DECEMBER 31, 2011
THUS$
THUS$
NON-CURRENT
DECEMBER 31, 2012 DECEMBER 31, 2011
THUS$
THUS$
Trade Payables (a)
Other Accounts Payable (b)
242,084
12,666
316,879
30,961
20,903
14,538
14,469
16,912
TOTAL TRADE AND OTHER PAYABLES
254,750
347,840
35,441
31,381
Includes amounts related to the effect of terminating the gas transportation contract between Sociedad Eléctrica Santiago S.A. and TGN that has
been recognized at fair value. The current portion includes ThUS$385 and ThUS$29,745 as of December 31, 2012 and 2011, respectively and the
non-current portion during 2011 includes ThUS$2,264.
(a)
The non-current portion also includes the contract between the subsidiary TermoAndes and Siemens Power Generation Inc. and Siemens S.A. for
the spare parts and maintenance services.
(b)
As of December 31, 2012, the current amount primarily consists of taxes payable and obligations to a third party associated with employees. The
non-current portion consists of a tax liability associated with AES Chivor & S.C.A. E.S.P. and an obligation related to a trade of water rights.
The average payment period for suppliers is 30 days; therefore, carrying amounts do not differ significantly from their fair values.
NOTE 22 – PROVISIONS
As of December 31, 2012 and 2011, provisions are detailed as follows:
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
PROVISIONS
Legal Provision (a)
Decommissioning Costs
Other Provisions ( c )
TOTAL
154
(b)
NON-CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
1,461
2,649
478
1,887
871
279
11,556
69,006
563
5,791
40,746
666
4,588
3,037
81,125
47,203
(A) LEGAL PROVISION
Current balances correspond primarily to contingent fines and penalties with the regulatory body (SEC), mentioned in greater detail in Note 32.
Taking into consideration the facts specific to this type of provision, it is difficult to estimate when the amounts will be paid. A portion of the non
current total corresponds to a provision of ThUS$10,811 as estimated by the subsidiary, AES Chivor & Cía. S.C.A. E.S.P. (“Chivor”), that comes from
an equity tax review process that is being conducted by the regulatory body in Colombia.
(B) DECOMMISSIONING COSTS
Non-current balances within this provision relate to the decommissioning costs and rehabilitation of land on which the Company’s different plants are
located. The terms of the estimated disbursements vary between 30 and 45 years, depending on the contract or law that originates the obligation.
In December 2011, subsidiary Empresa Eléctrica Ventanas S.A., Empresa Eléctrica Angamos S.A. and Empresa Eléctrica Campiche S.A. adjusted its
decommissioning provision to account for changes in the discount rate. The adjustment resulted in an increase of ThUS$13,208 in the provision.
During 2012, the decommissioning provisions associated with plants Laja, Los Vientos, Eléctrica Angamos, Eléctrica Campiche and Eléctrica Ventanas
were adjusted to account for changes in the estimated future amounts to be paid and the discount rate. The impact was an increase of ThUS$27,233
in the provision.
(C) OTHER PROVISIONS
This item primarily includes the provisions for employee involvement in Company income and bonuses, which are generally paid within the next months.
(D) MOVEMENTS IN PROVISIONS
RESTRUCTURING
PROVISIONS
MOVEMENTS IN PROVISIONS
Decommissioning costs
Additional Provisions
Increase (Decrease) in Existing Provisions
Provisions Paid Out
Other Increases (Decreases)
-
CHANGES IN PROVISIONS
-
-
PROVISIONS
MOVEMENTS IN PROVISIONS
Decommissioning costs
Additional Provisions
Increase (Decrease) in Existing Provisions
Adjustment to decommission costs due to disposal
of assets
Provisions Paid Out
Reversal of Unused Provisions
CHANGES IN PROVISIONS
LEGAL CLAIMS
THUS$
DECOMMISSIONING
COSTS
THUS$
OTHER
PROVISIONS
THUS$
TOTAL
THUS$
7,678
41,617
945
50,240
5,379
(692)
652
-
2,811
27,223
4
(2)
73
193
(160)
(8)
2,809
5,452
27,416
(852)
652
(4)
13,017
71,655
1,041
85,713
5,339
30,038
96
35,473
RESTRUCTURING
THUS$
LEGAL CLAIMS
THUS$
DECOMMISSIONING
COSTS
THUS$
OTHER
PROVISIONS
THUS$
TOTAL
MUS$
250
6,558
26,951
1,520
35,279
1,626
1,190
1,852
14,177
-
109
382
1,852
15,912
1,572
-
(1,363)
-
(1,363)
(144)
(106)
-
(1,620)
(76)
1,120
-
14,666
(1,057)
(9)
(2,821)
(106)
(85)
-
7,678
41,617
945
50,240
(250)
(575)
14,961
155
NOTE 23 –EMPLOYEE BENEFITS
AES Gener and some of its subsidiaries offer different employee benefit plans to some of their active or retired workers, which are determined and
recorded in the financial statements based on the criteria described in Note 4.15, sections b) and d).
As of December 31, 2012 and 2011, the Company’s Employee Benefit liability is detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2012
THUS$
Current Portion
Non-Current Portion
2,333
38,305
3,241
28,750
TOTAL
40,638
31,991
EMPLOYEE BENEFITS
23.1 PRESENT VALUE OF EMPLOYEE PENSION PLANS
The following movements took place in employee benefit liabilities for services provided in the years ended as of December 31, 2012 and 2011:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2012
THUS$
Opening Balance
Current Service Costs
Interest Costs
Participant Contributions
Actuarial Losses
Increase (Decrease) in Foreign Currency Translation
Contributions Paid
Other
31,991
2,808
1,495
326
5,912
2,443
(4,337)
-
32,733
2,688
1,356
1,901
(2,532)
(4,149)
(6)
ENDING BALANCE
40,638
31,991
PRESENT VALUE OF DEFINED BENEFIT PENSION PLAN
23.2 IMPACT ON EARNINGS
The following amounts were recorded in consolidated income within Cost of Sales and Administrative Expenses in the statement of comprehensive income for the years ended as of December 31, 2012 and 2011:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2012
THUS$
Current Service
Interest Costs
Net Actuarial Losses
Expenses related to settlement of obligations
2,744
1,481
427
651
2,665
1,507
2,793
-
TOTAL IMPACT IN NET INCOME
5,303
6,965
EXPENSES RECOGNIZED IN INCOME
156
23.3 OTHER DISCLOSURES
(A)THE FOLLOWING HYPOTHESES WERE USED IN ACTUARIAL CALCULATIONS OF EMPLOYEE BENEFITS:
CHILE
ACTUARIAL ASSUMPTIONS USED IN
CALCULATING THE LIABILITY
Nominal Discount Rate
Average Personnel Rotation Rate
Expected Salary Increase
MORTALITY TABLE
COLOMBIA
DECEMBER 31, 2012
DECEMBER 31, 2011
DECEMBER 31, 2012
DECEMBER 31, 2011
5.83%
3.00%
UF + 1.5%
6.45%
2.50%
UF + 1.5%
7.60%
0.010%
4.00%
8.00%
0.006%
5.00%
TABLES ISSUED IN ACCORDANCE WITH JOINT
STANDARD OF THE CHILEAN SECURITIES AND
INSURANCE SUPERVISOR AND THE CHILEAN
PENSION SUPERVISOR
TABLES ISSUED IN ACCORDANCE WITH US
INSTITUTIONS GAM 1971
(B) SENSITIVITY ANALYSIS:
As of December 31, 2012, a variation in the discount rate and the cost of medical benefits would have generated the following effects:
MEDICAL EXPENSES SENSITIVITY
Effect in the Defined Benefit Obligations
DISCOUNT RATE SENSITIVITY
Effect in the Defined Benefit Obligations
INCREASE OF 1%
THUS$
DECREASE OF 1%
THUS$
(373)
334
INCREASE OF 0.25%
THUS$
DECREASE OF 0.25%
THUS$
(574)
607
NOTE 24 - OTHER NON FINANCIAL LIABILITIES
As of December 31, 2012 and 2011, balances of non-financial liabilities are detailed as follows:
OTHER NON-FINANCIAL LIABILITIES
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
NON-CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
Deferred Revenue (24.1)
Accumulated Liabilities (24.2)
Other Liabilities (24.3)
4,410
34,049
-
4,663
18,382
-
19,157
208
22,262
223
TOTAL
38,459
23,045
19,365
22,485
157
24.1 DEFERRED REVENUE
As of December 31, 2012 and 2011, deferred revenues are detailed as follows:
DEFERRED REVENUE
CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
NON-CURRENT
DECEMBER 31, 2012
DECEMBER 31, 2011
THUS$
THUS$
Escondida Right of Use
Torquemada
LNG Quintero-Right to Use and Connect to
Transmission Line
Other Deferred Revenue
3,778
281
3,778
281
7,556
6,628
11,333
6,909
168
479
2,517
1,438
183
125
2,456
2,582
TOTAL
4,410
4,663
19,157
22,262
24.2 ACCUMULATED LIABILITIES
Accumulated liabilities are primarily vacations and other employee benefits, accrued as of December 31, 2012.
24.3. OTHER LIABILITIES
Other liabilities are primarily withholdings from sub-contract amounts paid out and other minor effects of tax payable under Argentinian legislation.
NOTE 25 – EQUITY
25.1 EQUITY MANAGEMENT
Equity includes paid-in capital, retained earnings and other reserves.
The main objective of the Company’s capital management is to ensure that it maintains a strong credit rating and solid capital ratios in order to sustain
business and maximize shareholder value.
The Company manages its capital structure and makes adjustments based on changes in economic conditions. To maintain or adjust its capital structure,
the Company can adjust dividend payments or capital returns to shareholders or issue new shares.
No changes were made to the Company’s lines of business, policies or processes during the years ended as of December 31, 2012 and 2011.
25.2 SUBSCRIBED AND PAID-IN CAPITAL
As of December 31, 2012 and 2011, the Company’s share capital consists of 8,069,699,033 subscribed and paid shares.
a) The Company’s movement in shares is as follows:
AUTHORIZED
ISSUED CAPITAL
ISSUED
SUBSCRIBED
PAID
Balance as of December 31, 2010
Reduction due to expiration of subscription
plazo de suscripción
8,227,890,863
8,227,890,863
8,069,699,033
8,069,699,033
(151,313,083)
(151,313,083)
-
-
Reduction due to expiration of subscription
plazo de suscripción
8,076,577,780
8,076,577,780
8,069,699,033
8,069,699,033
(6,878,747)
(6,878,747)
-
-
8,069,699,033
8,069,699,033
8,069,699,033
8,069,699,033
8,069,699,033
8,069,699,033
8,069,699,033
8,069,699,033
BALANCE AS OF SEPTEMBER 30, 2011
Subscription and Payment
158
-
-
-
-
25.3 CAPITAL INCREASES
In an Extraordinary Shareholders’ Meeting held March 4, 2008, shareholders of AES Gener S.A. agreed to increase capital by issuing 896,053,843 new
single-series shares with no par value, totaling $165,420,500,000. These shares must be issued, subscribed and paid in full within 3 years beginning on
the date of the meeting. As of March 4, 2011, 744,740,760 shares were subscribed and paid as part of this capital increase. According to the public deed
dated March 28, 2011, the social capital was reduced in 151,313,083 shares without nominal value, for a total amount of US$47,401,400.
In an Extraordinary Shareholders’ Meeting held November 19, 2008, shareholders of AES Gener S.A. agreed to increase capital by issuing 945,000,000
new single-series shares with no par value, totaling $153,562,500,000. These shares must be issued, subscribed and paid in full within 3 years beginning on
the date of the meeting. As of November 19, 2011, $152,444,703,824 (U.S.$ 239,523,456) has been paid for 938,121,253 shares as part of this capital
increase. According to the public deed dated November 21, 2011, the social capital was reduced in 6,878,747 shares without nominal value, for a total
amount of US$1,754,543, as the issuing, subscription and paid in term expired.
25.4 DIVIDEND POLICY
In an Ordinary General Shareholders’ Meeting held April 27, 2012, the Board agreed to distribute up to 100% of 2012 earnings in dividends to
shareholders, conditional upon: the Company’s actual net profits, the forecasts it prepares periodically and the requirement that it use its own resources
to finance investment projects, among other conditions. Also, it was concluded that the Company intends to distribute interim dividends in 2012.
Shareholders agreed to distribute the following dividends, for the year-ended December 31, 2011:
(a) The quantity of U.S.$ 97,824,926.52, corresponding to 30% of 2011 profits, by distributing a minimum mandatory dividend of U.S.$ 0.0121225
per share, plus an interim dividend distributed in September 2011 for U.S.$79,002,353.53, equivalent to 24.228% of 2011 profits, equivalent to
US$0.0023325 per share and totaling US$18,822,572.99.
(b) A first additional dividend of US$0.0093160 per share and totaling US$75,177,316.19, equivalent to 23.055% of net income during 2011.
(c) A second additional dividend of US$0.0189699 per share and totaling US$153,081,383.69, equivalent to 46.945% of net income during 2011.
(d) The quantity of U.S.$ 262.80 of the remaining net income was designated as an addition to the dividend reserve.
In the Ordinary Shareholders’ Meeting N°582 held October 24, 2012, the Board agreed to distribute ThUS$71,000 of 2012 earnings through an interim
dividend of US$0.0087983 per share. The payment was done on November 15, 2012.
159
25.5 RETAINED EARNINGS (LOSSES)
El siguiente es el detalle de las ganancias (pérdidas) en cada ejercicio:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
642,666
202,933
(228,169)
(71,000)
-
511,238
326,084
(168,737)
(79,002)
71,996
(18,913)
546,430
642,666
SHARE BASED
OPTION PLANS
THUS$
PROPOSED
DIVIDENDS
RESERVE
THUS$
TOTAL
THUS$
Opening Balances as of January 1, 2012
Share-Based Option Plans
3,272
830
218,757
-
222,029
830
ENDING BALANCES AS OF DECEMBER 31, 2012.
4,102
218,757
222,859
SHARE BASED
OPTION PLANS
THUS$
PROPOSED
DIVIDENDS
RESERVE
THUS$
TOTAL
THUS$
Opening Balances as of January 1, 2011
Share-Based Option Plans
2010 Proposed Dividends
2,699
573
-
290,753
(71,996)
293,452
573
(71,996)
ENDING BALANCES AS OF DECEMBER 31, 2011
3,272
218,757
222,029
Opening Balance
Net Income Attributable to Shareholders of Parent
Declared Dividends
Interim Dividends
Income Distribution to Future Dividend Reserve
Minimum Dividend Reserve
ENDING BALANCE
25.6 OTHER COMPONENTS OF EQUITY
El detalle de las otras participaciones en el patrimonio se detalla a continuación:
25.7 OTHER COMPREHENSIVE INCOME
Other Comprehensive Income for each period is detailed as follows:
FOREIGN
CURRENCY
TRANSLATION
CASH FLOW
RESERVE HEDGE RESERVE
THUS$
THUS$
DEFINED
BENEFIT PLAN
RESERVE
THUS$
EQUITY
TRANSLATION
RESERVES (1)
THUS$
(6,137)
10,088
(287,653)
(18,826)
6,765
52,645
3,819
3,951
(243,250)
Opening Balances, January 1, 2012
Derivative Instruments Valuation
Deferred Taxes
Associate Foreign Currency Exchange
Other Variations
20,735
52,645
-
(161,995)
(18,826)
5,122
(3,515)
1,643
-
(6,269)
(136,741)
-
ENDING BALANCES, DECEMBER 31,
2012
73,380
(175,699)
(8,141)
(136,741)
160
OTHER
RESERVES
THUS$
TOTAL
THUS$
FOREIGN
CURRENCY
TRANSLATION
CASH FLOW
RESERVE HEDGE RESERVE
THUS$
THUS$
DEFINED
BENEFIT PLAN
RESERVE
THUS$
EQUITY
TRANSLATION
RESERVES (1)
THUS$
OTHER
RESERVES
THUS$
TOTAL
THUS$
Opening Balances, January 1, 2011
Derivative Instruments Valuation
Deferred Taxes
Associate Foreign Currency Exchange
Other Variations
33,643
(12,908)
-
(95,765)
(88,467)
22,237
-
(1,923)
326
(1,918)
(136,741)
-
(6,669)
532
(207,455)
(88,467)
22,563
(12,908)
(1,386)
ENDING BALANCES, DECEMBER 31,
2011
20,735
(161,995)
(3,515)
(136,741)
(6,137)
(287,653)
(1)
This item corresponds to an adjustment for the difference between paid-in capital at the period end exchange rate as of December 31, 2008 and its
historical value, in accordance with Official Form Letter 456 dated June 20, 2008, issued by the Chilean Securities and Insurance Supervisor.
25.8 RESTRICTIONS ON DIVIDEND DISTRIBUTIONS FROM SUBSIDIARIES
Gener’s subsidiaries can distribute dividends as long as they comply with the restrictions, ratios and limits established in their respective loan agreements.
NOTE 26 – REVENUE
26.1 OPERATING REVENUES
Operating revenue for the years ended December 31, 2012 and 2011 is detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Contracted Energy and Capacity Sales
Spot Market Energy and Capacity Sales
Other Operating Revenues (*)
1,554,632
616,854
156,235
1,381,449
591,561
157,276
TOTAL
2,327,721
2,130,286
(*)
Included in Other Operating Revenues are transmission revenues and revenues from the sales of coal.
161
NOTE 27 - EXPENSES
27.1 EXPENSES BY NATURE
The table below details the principal operating and administrative costs and expenses recorded by the Company in the years ended as of December
31, 2012 and 2011, within the following accounts in the Statement of Comprehensive Income: Cost of Sales, Administrative Expenses and Other
Operating Expenses.
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
340,593
824,855
51,058
97,694
258,750
99,045
212,227
1,792
143,527
797,372
70,438
77,863
219,050
92,751
194,567
1,081
1,886,014
1,596,649
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Salaries and Wages
Short-Term Employee Benefits
Post-Employment Benefit Liability Expenses
Employment Termination Benefits
Share-Based Payments
Other Personnel Expenses
78,402
11,311
1,894
3,409
1,149
2,880
70,976
10,991
2,270
4,695
1,154
2,665
TOTAL
99,045
92,751
EXPENSES BY NATURE
Energy and Capacity Purchases (1)
Fuel Consumption
Cost of Fuel Sales
Transmission System Use Costs
Cost of Production and Other Sales
Personnel Expenses
Depreciation
Amortization
TOTAL
Energy and Capacity Purchases includes energy and capacity contracts recorded as operating leasing.
(1)
27.2 PERSONNEL EXPENSES
Personnel Expenses for the years ended December 31, 2012 and 2011 are presented as follows:
PERSONNEL EXPENSES
162
NOTE 28 – OTHER INCOME (LOSSES)
Other income (losses) for the years ended December 31, 2012 and 2011 are presented as follows:
OTHER INCOME (LOSSES)
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
(3,544)
5,484
4,077
1,212
204
(18,358)
9,600
(3,247)
(41,200)
5,531
15,083
3,500
4,000
977
335
7,433
(23,779)
Property, Plant and Equipment Disposals (1)
Sale of Property, Plant and Equipment and Intangible Assets
Transport Companies Agreement (3)
Bond Refinancing Costs (4)
Dividends Received
Insurance Loss Proceeds (1)
Compensation Recognition CPP (2)
Compensation HydroChile contract termination
ARO Adjustment from Sale of Property, Plant and Equipment (2)
Scrap Sales
Other
TOTAL
(1)
As at December 31, 2012, this amount corresponds primarily to assets that were written off during the process of major overhauls in Norgener
S.A. and AES Gener’s plant Ventanas. As at December 31, 2011, this amount includes ThUS$13,782 that relates to a loss that occurred in TG11 of
subsidiary TermoAndes. The “Insurance loss proceeds” item is the income received from the insurance company related to this loss event.
(2)
Corresponds to the income effect for the termination of the energy and steam contract between the subsidiary Energía Verde S.A. and Compañía
Papelera del Pacífico S.A., related to the compensation received for early termination of the contract and the decommissioning provision for the sale
of part of the assets of San Francisco de Mostazal Plant.
(3)
On December 29, 2010, Empresa Eléctrica Santiago S.A. reached an agreement with GasAndes Argentina, GasAndes Chile and Transportadora de
Gas Norte S.A. to terminate their respective agreements for gas transportation and to solve the pending and potential litigations as of that date. As
of December 31, 2011, the amount recognized represents an update of the estimates made by management.
(4)
Corresponds to the expenses and premiums incurred during the refinancing process of the ThUS$400,000 U.S Senior Notes due in 2014 and
ThUS$196,000 Serie Q Chilean Bond due in 2019.
NOTE 29 - FINANCE INCOME AND EXPENSES
Finance Income and Expenses for years ended as of December 31, 2012 and 2011 is detailed as follows:
FINANCE INCOME AND EXPENSES
Income from Financial Assets
Other Finance Income
TOTAL FINANCE INCOME
Interest on Bank Loans (1)
Interest on Bonds
Gain (loss) from Valuation of Derivative Instruments
Other Expenses
Capitalized Finance Expenses
TOTAL FINANCE EXPENSES
FOREIGN CURRENCY EXCHANGE DIFFERENCES
TOTAL NET FINANCE INCOME
(1)
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
4,055
4,352
1,917
7,386
(30,929)
(76,514)
(29,405)
(12,318)
33,714
(31,461)
(78,384)
(23,209)
(6,374)
32,280
8,407
9,303
(115,452)
(107,148)
(3,633)
(13,348)
(110,678)
(111,193)
As of December 31, 2012 and 2011, the interest on bank loans from the recognition of finance costs associated with the agreement with Transportes
de Gas Norte S.A. include ThUS$2,376 and ThUS$6,292 respectively.
163
NOTE 30 - INCOME TAX EXPENSE
The effect in income from income tax expense for the years ended as of December 31, 2012 and 2011 is detailed as follows:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
101,294
(9,995)
(567)
142
85,891
(195)
74
55,904
-
23,956
84
146,778
109,810
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Foreign Current Tax Expense
National Current Tax Expense
79,029
11,845
72,783
12,987
Foreign Deferred Tax Expenses
National Deferred Tax Expenses
3,571
52,333
(976)
25,016
146,778
109,810
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Tax Expense Using Legal Rate
Rates in Other Jurisdictions
Non-Taxable Operating Income
Non-Deductible Expenses
Reversal of Tax Benefit from Prior Year
Changes in Income Tax Rate
Adjustment for over-payment of taxes in prior years
Foreign Currency Exchange Rate
Other Increase (Decrease) in Charge for Legal Taxes
69,941
29,408
(8,068)
8,402
51
38,300
(441)
9,418
(233)
87,184
24,919
(10,273)
(581)
385
(2,693)
9,103
1,766
TAX EXPENSE USING EFFECTIVE RATE
146,778
109,810
CURRENT AND DEFERRED INCOME TAX EXPENSE
Current Tax Expense
Tax Credits not recognized in Prior Periods
Adjustments to Prior Period Current Tax
Other Current Tax Expenses
TOTAL CURRENT TAX EXPENSE
90,874
Deferred Tax Expenses (Income) Related to Changes in Temporary Differences
Other Deferred Tax Expenses
TOTAL DEFERRED TAX EXPENSE (INCOME)
55,904
INCOME TAX EXPENSE (INCOME)
FOREIGN AND NATIONAL INCOME TAX EXPENSE
TOTAL CURRENT TAX EXPENSE
90,874
TOTAL DEFERRED TAX EXPENSE (INCOME)
55,904
INCOME TAX EXPENSE (INCOME)
85,770
24,040
85,770
24,040
The following table reconciles the application of the legal rate and the effective rate in 2012 and 2011 income:
RECONCILIATION OF TAX EXPENSE
ADJUSTMENTS TO TAX EXPENSE USING LEGAL RATE
76,837
22,626
Rates in Other Jurisdictions presents the differences that arise between the current rate in Chile (20%) and the other jurisdictions in which foreign
subsidiaries are domiciled (Argentina 35% and Colombia 33%).
Changes in Income Tax Rate represents the increase in the tax rate in Chile. The amount recognized in net income is primarily due to impact of applying
the increased in tax rate to deferred taxes related to fixed assets and tax loss carryforwards.
164
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
Deferred Taxes Related to Items recorded in Net Equity
(6.765)
(22.563)
TOTAL TAX EFFECT RELATED TO ITEMS RECORDED IN NET EQUITY
(6.765)
(22.563)
TAXES RELATED TO ITEMS RECORDED IN NET EQUITY
Deferred taxes arising from movements in cash flow hedges are related to interest rate and currency derivatives.
NOTE 31 - EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the profit attributable to the Company’s share holders by the weighted average number of shares in
circulation in a year, excluding, should any exist, common shares acquired by the Company and maintained as treasury shares.
(Amounts in thousands of US dollars are expressed in thousands, except for unit values.)
BASIC AND DILUTED EARNINGS PER SHARE
Net Income Attributable to Shareholders of Parent
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS, BASIC
Weighted Average Number of Shares, Basic
BASIC EARNINGS PER SHARE (PRESENTED IN U.S.$)
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
202,933
326,084
8,069,699,033
8,069,699,033
0,03
0,04
202,933
326,084
There are no transactions or concepts that create a dilutive effect on earnings per share. Shares do not have nominal values.
NOTE 32 - CONTINGENCIES, LAWSUITS AND OTHER
CONTINGENCIES AND RESTRICTIONS
32.1 GUARANTEES GRANTED
Gener has the following commitments, guarantees and contingent liabilities:
A) COMMITMENTS WITH FINANCIAL AND OTHER INSTITUTIONS
Both the loan covenants entered into by Gener with various financial institutions and the issuance contracts that govern the Company’s bonds impose
certain financial obligations over the duration of the loans and bonds. These obligations are standard for these types of transactions. As of December 31,
2012, Gener is in compliance with all of its debt commitments and financial restrictions in accordance with the terms and conditions of each covenant
and contract.
B) GUARANTEES TO THIRD PARTIES
On December 19, 2007, Gener signed a cross currency swap contract with Credit Suisse International to hedge the risk of foreign exchange variations
between the UF and US dollars for the UF bonds issued in December 2007. On September 16, 2009, this swap contract was modified and one part
was assigned to Deutsche Bank Securities. Both swap contracts, including its modifications, requires Gener to grant a guarantee when the fair value of
the swap exceeds the limit established in the contract. As of December 31, 2012, it was not necessary to grant any guarantee based on the fair value
of the swap.
165
C) GUARANTEES ON BEHALF OF SUBSIDIARIES
(i) The transport gas agreement between TermoAndes S.A. (“TermoAndes”) and Transportadora de Gas del Norte S.A. (“TGN”) does not require a
guarantee from Gener. According to the contract, no guarantee is required if TermoAndes or any of its shareholders have an investment grade rating,
defined in the contract as BBB- (in Argentina) or higher. If TermoAndes does not maintain and minimum investment grade rating of BBB- and one
of its direct or indirect controlling shareholders held such investment grade, such shareholder must provide the corporate guarantee to TGN. In the
event TermoAndes and none of its shareholders maintains investment grade, a bank guarantee must be provided for an amount equivalent to one
year of transport service payments. Currently, TermoAndes has an investment grade rating of A (in Argentina) with stable perspective according to
Fitch Ratings.
(ii) On October 4, 2006, Gener signed a joint debtor contract to guarantee all the obligations of its subsidiary Empresa Eléctrica Santiago S.A. (“ESSA”)
under the loan agreement with a syndicate of local banks led by Banco de Crédito e Inversiones for a total of ThUS$30,000. As of December 31,
2012, the amount totaled ThUS$9,000. That contract was amended on May 29, 2009 (See Note 32.3 c))
(iii) On August 4, 2011, Gener issued a bank guarantee to Posco Engineering and Construction Co. Ltd and to Posco Engineering Construction Co. Ltd.,
Chilean agency, for up to ThUS$30,000 to guarantee the obligations assumed by Empresa Eléctrica Campiche S.A. under the EPC Contract.
(iv) On December 29, 2010 ESSA reached a settlement agreement with transport companies TGN, GasAndes S.A. (“GAC”) and Gasoducto GasAndes
(Argentina) S.A. (“GAA”), finalizing all pending litigations. Gener acts as joint debtor to guarantee future payments by ESSA. As of December 31,
2012, ESSA had paid in full all pending payments to Gasoducto GasAndes (Argentina), Gasoducto GasAndes S.A. and 99% of amounts owing to TGN.
For additional information, see Note 33.
32.2 LITIGATION AND DISPUTES
A) JUDICIAL PROCEEDINGS
Fines imposed by the Superintendency of Electricity and Fuels (hereinafter “SEC”)
On September 29, 2011, the SEC filed charges against Gener and other members of the CDEC-SIC, related to the power failure that occurred on March
14, 2010 in the Central Interconnected System (hereinafter “SIC”). Gener and ESSA were fined 1,151 Annual Tax Units or UTA (ThUS$1,157) and 436
UTA (ThUS$438), respectively. In May 2012, both companies filed motions with the SEC to vacate, which were denied. The Companies then entered in a
claim with Santiago’s Court of Appellations that according to the local standards, this fine should be reduced by 25% of the total. Each entity recorded a
provision of 1,190 UTA (ThUS$1,196). On October 26, 2012, the Court of Appeal rejected the motions brought by the companies. The companies have
appealed the decision made by the Court of Appeal and are awaiting the outcome.
B) CUSTOMS CHARGES FROM VALPARAÍSO
During June and July of 2012, AES Gener S.A. received customs charges from the port in Valparaiso resulting from requirements relating to the documentation of the origin for shipments of coal during 2011 and 2012. The custom duties and the associated VAT tax totals ThUS$4,659. The Company plans
on appealing these charges within the legally permitted timeframe.
32.3 FINANCIAL COMMITMENTS
a) In August 2011, Gener successfully completed a refinancing process which included the exchange and voluntary tender of approximately 63% on the
ThUS$400,000, 7,5% Senior Notes due 2014, and the issuance of new Senior Notes for a total of ThUS$401,682 due 2021 and an interest rate of
5.25%. Upon conclusion of the transaction, the outstanding amount under the 2014 Senior Notes totals ThUS$147,050. It should be noted that as
part of the refinancing process, the covenants under the 2014 Senior Notes were modified and the indebtedness and restricted payments conditions
were eliminated.
b) In December 2007, Gener placed UF 5,600,000 (ThUS$240,459) in bonds, issued in two series, which were registered in Chile’s Securities
Registry under numbers 516 and 517 on November 9, 2007. This issuance includes Series N bonds for UF 4,400,000 at 4.3% maturing in
2028 and Series O bonds for UF 1,200,000 at 3.10% maturing in 2015. On April 8, 2009, Gener issued a second bond under the line of bonds
registered in the Securities Registry under number 517 on November 9, 2007. Tthe issuance consisted of Series Q bonds for U.S.$196 million
at 8.0% maturing in 2019. As part of the same refinancing process detailed above, on July 28, 2011 Gener accepted voluntary tender offers
for approximately 48% of the Series Q bonds, reducing the outstanding principal to ThUS$102,200.
166
In accordance with the obligations established in the bond agreements, the Company must comply with the following financial ratios on a quarterly basis,
calculated using the consolidated financial statements.
·
Consolidated indebtedness level no greater than 1.20;
·
Financial expense coverage ratio no less than 2.50;
·
Minimum equity no less than ThUS$1,575; and
·
Maintain essential assets equivalent to at least 70% of total consolidated operating income in investments related to generating, transmitting,
retailing, distributing and/or supplying electricity or fuels.
As of December 31, 2012, Gener was in compliance with the aforementioned ratios.
c) The loan agreement entered into by ESSA and a syndicate of local banks led by Banco de Crédito e Inversiones for a total of ThUS$30,000 was
amended on May 29, 2009, primarily to replace the financial ratios applicable to ESSA with financial ratios applicable to Gener as joint debtor. In
accordance with the obligations undertaken in this amendment, the Company must comply with the following financial ratios on a quarterly basis,
calculated using the consolidated financial statements. As of December 31, 2012, such amount reaches ThUS$9,000.
·
Consolidated indebtedness level no greater than 1.20;
·
Interest expense coverage ratio no less than 2.50; and
·
Minimum equity no less than ThUS$1,575.
As of December 31, 2012, Gener was in compliance with the aforementioned ratios.
d) Every six months, Gener must comply with the following financial ratios, calculated based on its consolidated financial statements, that are establishe,d
in the loan agreement signed with a bank syndicate in October 2011 for UF 6,000,000 (ThUS$285,533). On a quarterly basis, Gener must comply
with the following ratios:
· Indebtedness level no greater than 1.20;
· Financial expense coverage ratio no less than 2.50;
· Minimum equity no less than ThUS$1,575; and
· Maintain essential assets equivalent to at least 70% of total consolidated operating income in investments related to generating, transmitting,
retailing, distributing and/or supplying electricity or fuels.
As of December 31, 2012, this credit line has not been drawn down and Gener was in compliance with the aforementioned ratios.
32.4 OTHER CONTINGENT LIABILITIES
A) CONTINGENT LIABILITIES ASSOCIATED WITH AES CHIVOR & CÍA S.C.A. E.S.P. (“CHIVOR”)
A.1 BOND ISSUANCE AND COLOMBIAN LOAN AGREEMENT
On November 30, 2004, Chivor completed the debt refinancing of ThUS$253,000. As part of this process, Chivor issued guaranteed senior bonds at
9.75% for ThUS$170,000, maturing in 2014.
The guaranteed senior bonds are guaranteed by: (a) an onshore fiduciary agreement by which Chivor’s income from generating and retailing electricity
are administered and maintained in a trust to guarantee payment of its obligations under the local syndicated loan, (b) a pledge on all of Chivor’s shares
owned by Energy Trade and Finance Corporation and (c) a pledge on all shares of AES Chivor S.A., Chivor’s managing partner.
In addition to the guarantees detailed in the previous paragraph, Chivor maintains a reserve account that was established at the close of the senior notes.
This reserve should be equal, at all times, to the next interest payment. The account can be financed in cash or with one or more letters of credit. For
this purpose, on July 16, 2012, Chivor financed the account in cash, depositing ThUS$ 8,287.
167
Among its principal financial commitments, Chivor must comply with the following financial ratios in order to make restricted payments, including dividends:
• Interest expense coverage ratio no less than 2.25; and
• Total debt-to-EBITDA ratio no greater than 3.80.
As of December 31, 2012, all restrictions and obligations related to obligations with financial institutions and bonds have been met.
A.2 JUDICIAL AND ADMINISTRATIVE PROCEEDINGS
A.2.1. REVINDICATION PROCESSES
In December 2005, Chivor initiated a special plan to recover possession of the lands located within the reservoir’s 8 meter security parameter. As a part
of this process, the Company has filed 22 revindication lawsuits on illegally occupied properties. Chivor has established a provision of ThCol$306,182
(ThUS$173).
A.2.2 EQUITY TAX 2005 AND 2006
On July 31, 2008 and August 11, 2008, the Colombian National Tax and Customs Service (“DIAN”) issued special notifications with respect to the
Company’s private equity tax returns for 2005 and 2006, respectively, proposing modifications to the returns filed by Chivor. Chivor responded to those
requirements but thereafter the DIAN issued official liquidations, which were appealed by Chivor in June, 2009. The DIAN rejected Chivor’s arguments
in June 2010. In October 2010 Chivor began judicial proceedings and restitution of rights, which were rejected in May 2012 by the Cundinamarca
Administrative Court, requiring Chivor to pay these taxes and interest. However, on May 15th and 29th, 2012, Chivor appealed this resolution. As of
December 31, 2012, Chivor has recognized a provision in the amount of ThCol$ 20,113,899 (ThUS$11,383) for both proceedings. On February 7, 2013,
it was presented to the State Council of Colombia a request to settle the case for 100% of the interests and sanctions.
B) CONTINGENT LIABILITIES AND COMMITMENTS INVOLVING ESSA
B.1 FINANCIAL COMMITMENTS
On a quarterly basis, ESSA must comply with the following financial ratios established in its bond issuance contract (outstanding balance UF998,577
(ThUS$47,521)) for bonds registered in Chile’s Securities Registry under No. 214, calculated based on its unconsolidated financial statements:
• Unencumbered assets should be equal to at least 125% of unsecured current liabilities;
• Indebtedness level no greater than 1.75;
• Minimum equity no less than UF 2 million (ThUS$95,178); and
• Prohibition to sell “essential assets”, which represent more than 40% of total assets, without prior authorization from the Bondholders’ Council.
As of December 31, 2012, ESSA was in compliance with the aforementioned obligations.
B.2FINES IMPOSED BY THE SUPERINTENDENCE OF ELECTRICITY AND FUEL (HEREINAFTER “SEC”)
On April 12, 2004, the SEC brought charges against ESSA and the remaining members of the CDEC-SIC as a result of the power failure that occurred
in the SIC on November 7, 2003, alleging they were responsible based on the fact that they are members of the CDEC-SIC. ESSA responded to the
charges on May 3, 2004.
On June 30, 2005, the SEC fined all members of the CDEC-SIC as a result of the power failure for not acting in a coordinated manner to preserve the
service reliability of the electricity system, alleging they were justifiably responsible solely because they were members of the CDEC-SIC. ESSA was fined
350 UTA (equivalent to approximately ThUS$352). On July 11, 2005, ESSA filed a motion to vacate before the SEC.
On September 4, 2009, the motion to vacate filed by ESSA was rejected by the SEC. On November 18, 2005, ESSA filed a motion to overturn before
the Santiago Court of Appeals, depositing 25% of the fine with the court, in accordance with applicable standards. This motion is pending ruling. ESSA
has established a provision for this contingent liability of 350 UTA (ThUS$351).
168
C) CONTINGENT LIABILITIES AND COMMITMENTS INVOLVING EMPRESA ELÉCTRICA VENTANAS S.A. (“EEVSA”)
On June 13, 2007, EEVSA secured financing for up to ThUS$415,000 to construct the Ventanas thermoelectric power plant and also provided a letter
of credit for up to ThUS$25,000 to guarantee six months of debt service. The loan is for a 15-year period, including a 3-year construction period, and is
guaranteed by assets, shares and project cash flows.
D) CONTINGENT LIABILITIES AND COMMITMENTS INVOLVING EMPRESA ELÉCTRICA ANGAMOS S.A. (“EEA”)
On October 22, 2008, EEA secured financing for up to ThUS$908.5 to construct the Angamos thermoelectric power plant as well as letters of credit for
up to ThUS$80,000 to guarantee EEA’s obligations, including a ThUS$48,000 letter of credit to guarantee six months of debt service. The loan is for a
17-year period, including a 3-year construction period, and is guaranteed by assets, shares and project cash flows.
E) CONTINGENT LIABILITIES AND COMMITMENTS INVOLVING INVERSIONES NUEVA VENTANAS S.A. (“INVERSIONES NUEVA
VENTANAS”)
On June 8, 2007, Inversiones Nueva Ventanas and Gener constituted a commercial pledge on shares issued by EEVSA in favor of its creditors to guarantee
its obligations related to the financing for the Nueva Ventanas power plant.
On October 22, 2008, Inversiones Nueva Ventanas and Gener constituted a commercial pledge on shares issued by EEA in favor of its creditors to guarantee its obligations related to financing for the Angamos power plant.
NOTE 33 – GUARANTEES
GUARANTEES GRANTED
BENEFICIARY
GUARANTEE DESCRIPTION
HSBC Bank N.A.
Posco Engineering & Construction Co.
Deutsche Bank Trust Company Americas
Terminal Graneles del Norte S.A.
Sierra Gorda SCM
Ministerio de Obras Públicas, Dirección General
de Aguas
Minera Escondida Ltda
Terminal Graneles del Norte S.A.
Luis Gardeweg Baltra
Minera Spence S.A.
Ilustre Municipalidad de Mejillones
Innova Chile
Crompton Greaves Limited
CGE Distribucion S.A.
Fisco de Chile - Servicio Nacional de Aduanas
Otros
Angamos Debt Service payment guarantee
Guarantees faithful completion of Campiche contract
Ventanas Debt Service payment guarantee
Port contract services compliance
Performance Guarantee for Energy Supply Contract
Guarantees faithful completion of hydraulic works for Alto Maipo
project
Port contract services compliance
Contract extension
Performance Guarantee for completion of contract
Guarantee execution of solar project
Purchase Guarantee of Property, Plant and Equipment
Guarantee of Tender for Energy and Capacity Supply
Purchase Guarantee of Property, Plant and Equipment
Minor Guarantees
TOTAL
DATE
FROM
TO
THUS$
20-12-11
29-07-11
25-10-10
11-02-11
05-02-13
22-10-13
31-08-13
06-11-14
11-02-13
30-04-13
48,000
30,000
25,000
12,000
10,000
07-09-12
10-09-13
8,607
28-11-11
11-02-11
25-10-11
25-11-11
21-09-12
22-10-12
25-07-12
30-11-12
16-08-12
22-10-13
11-02-13
28-10-13
22-10-13
10-10-13
30-06-13
30-01-13
01-12-13
30-09-13
6,568
6,000
2,079
1,750
1,073
517
471
321
226
292
152,904
169
GUARANTEES RECEIVED
DATE
GRANTOR OF GUARANTEE
GUARANTEE DESCRIPTION
Posco Engineering and Construction Co. Ltd.
Andritz Energy & Environment GMBH
Andritz Chile Ltda.
Andritz Energy & Enviroment GMBH
Compañía Portuaria de Mejillones S.A.
Andritz Chile Ltda.
Andritz Energy & Environment GMBH
Andritz Chile Ltda.
Andritz Energy & Enviroment GMBH
Andritz Chile Ltda.
SK Indistrial S.A.
Constructora Con Pax S.A.
Sigen S.A.
SK Industrial S.A.
IDE Tecnologies Ltd.
Alusa Ingeniería Ltda.
Pitágora S.A.
Padilla y Benavides Ltda.
Hiroeléctrica El Paso Limitada
Padilla y Benavides Ltda.
Elimco Soluciones Integrales
Elimco Soluciones Integrales (Agencia)
GE Energy Control Solutions
Atlas Copco Chilena S.A.C.
Sinto S.A.
Empresa Constructora Agua Santa S.A.
Otros
Engineering, construction, assembly and commissioning of Campiche Thermoelectric Power Plant
Engineering, construction, assembly and commissioning of Angamos Thermoelectric Power Plant
Engineering, construction, assembly and commissioning of Ventanas Thermoelectric Power Plant
Engineering, construction, assembly and commissioning of Cochrane Thermoelectric Power Plant
Engineering, construction and assembly of desulphurization system for units 1 &2 of Norgener Plant
Engineering, construction and assembly of desulphurization system for units 1 &2 of Ventanas Plant
Bulk contract transfer of coal
Contract compliance
Phase I preliminary works contract compliance
Phase I preliminary works contract compliance
Purchase Order for Spare Parts
Prepayment of Unit 1 of the Ventanas Plant
Contract compliance desalination of Plants
Phase II Alto Maipo preliminary works contract compliance
Change in Conductor in Transmission Line
Contract compliance
Contract compliance
PPA contract
Guarantee BESS contract
Energy compliance
Project compliance
Purchase Order
Purchase Order
Alto Maipo preliminary works contract compliance
Contract compliance
Contract compliance for Angamos
Minor guarantees
TOTAL
170
FROM
7/20/2011
5/28/2008
2/17/2010
4/20/2012
3/12/2012
3/16/2012
3/12/2012
3/9/2012
3/16/2012
3/12/2012
3/16/2012
3/12/2012
3/16/2012
11/26/2012
6/29/2012
6/29/2012
12/12/2012
12/18/2012
12/13/2011
6/29/2012
11/14/2012
4/9/2012
9/21/2012
4/18/2011
4/27/2012
8/9/2012
9/30/2012
12/7/2012
11/28/2012
10/11/2012
8/25/2011
10/11/2012
9/28/2012
3/5/2012
TO
3/13/2013
11/16/2013
9/30/2013
3/31/2013
10/14/2016
10/14/2016
10/14/2016
3/6/2013
10/14/2016
10/31/2013
10/31/2013
10/31/2013
10/31/2013
4/23/2013
10/1/2013
11/30/2013
3/1/2013
9/15/2013
5/6/2013
12/31/2013
6/30/2013
2/28/2013
5/20/2013
4/30/2013
1/31/2013
5/6/2013
5/13/2013
6/11/2013
4/22/2013
3/5/2013
8/25/2013
3/5/2013
1/31/2013
3/1/2013
THUS$
115,280
65,777
10,412
15,000
8,019
6,703
6,009
6,000
5,456
4,009
3,352
3,005
2,728
933
704
621
507
495
451
441
399
312
311
300
296
290
290
274
259
239
238
222
217
206
3,444
263,199
NOTE 34 - SHARE-BASED PAYMENTS
A)
STOCK OPTIONS
AES Corporation (“AES Corp”), the parent company, grants options to purchase common stock under stock option plans for employees of AES Gener
S.A. Under the terms of the plans, AES Corporation may issue options to purchase shares of common stock of AES Corporation at a price equal to
100% of the market price at the date the option is granted. Stock options are generally granted based upon a percentage of an employee’s base salary.
Stock options issued under these plans in 2012 and 2011 have a three-year vesting schedule and vest in one-third increments over the three-year period.
The stock options have a contractual term of ten years.
The weighted average fair value of each option grant has been estimated, as of the grant date, using the Black Scholes option pricing model with the
following weighted average assumptions:
DECEMBER 31, 2012
DECEMBER 31, 2011
26.29%
1.10%
6
1.16%
30.97%
0.00%
6
2.65%
Expected Volatility
Expected Annual Dividend Yield
Expected Option Term (Years)
Risk-Free Interest Rate
The Company exclusively relies on implied volatility as the expected volatility to determine the fair value using the Black Scholes option-pricing model.
The implied volatility may be exclusively relied on due to the following factors:
·
The Company utilizes a valuation model that is based on a constant volatility assumption to value its employee share options;
·
The implied volatility is derived from options to purchase common stock of AES Corporation that are actively traded;
·
The market prices of both the traded options and the underlying shares are measured at a similar point in time to each other and on a date
reasonably close to the grant date of the employee share options;
·
The traded options have exercise prices that are both near the money and close to the exercise price of the employee share options; and
·
The remaining maturities of the traded options on which the estimate is based are at least one year.
The Company used a simplified method to determine the expected term based on the average of the original contractual term and the pro rata vesting
term. This simplified method was used for the years ended as of December 31, 2012 and 2011. This is appropriate given a lack of relevant stock option
exercise data.
This simplified method may be used, as the stock options of AES Corporation have the following characteristics:
·
The stock options are granted at-the-money;
·
Exercisability is conditional only on performing service through the vesting date;
·
If an employee terminates service prior to vesting, the employee forfeits the stock options;
·
If an employee terminates service after vesting, the employee has a limited time to exercise the stock option; and
·
The stock option is non hedgeable and not transferable.
The Company does not discount the grant date fair values determined to estimate post-vesting restrictions. Post vesting restrictions include black out
periods when the employee is not able to exercise stock options based on their potential knowledge of information prior to the release of that information to the public. The assumptions that the Company has made in determining the grant date fair value of its stock options and the estimated forfeiture
rates represent its best estimate.
Using the above assumptions, the weighted average fair value of each stock option granted was U.S.$3.26 and U.S.$4.54 for the years ended as of December 31, 2012 and 2011, respectively.
171
The following table summarizes the components of stock-based compensation related to employee stock options recognized in the Company’s financial
statements:
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
18
76
38
90
173
95
Total Intrinsic Value of Options Exercised
Total Grant Date Fair Value of Options Vested
Cash Received from the Exercise of Stock Options
There were no modifications to stock option awards during the year ended as of December 31, 2012.
The following table summarizes option activity for the year ended as of December 31, 2012:
WEIGHTED
AVERAGE
EXERCISE PRICE
OPTIONS
US$
Outstanding as of December 31, 2011
Exercised During the Period
Forfeited and Expired During the Period
Granted During the Period
Transfer to Gener During the Period
273,720
(4,403)
(16,129)
26,279
24,969
15.80
8.70
17.23
13.70
17.21
Vested and Expected to Vest as of December 31, 2012
Eligible for Exercise as of December 31, 2012
301,601
255,912
15.78
16.24
OUTSTANDING AS OF DECEMBER 31, 2012
304,436
15.76
WEIGHTED
AVERAGE
REMAINING
CONTRACTUAL
LIFE
(IN YEARS)
AGGREGATE
INTRINSIC
VALUE
THUS$
-
-
4.43
4.39
3.65
115
115
115
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing stock price of AES Corporation on the last trading day of the 4th quarter 2012 and the exercise price, multiplied by the number of in the money options) that would have been
received by options holders had all options holders exercised their options on December 31, 2012. The amount of the aggregate intrinsic value will
change based on the fair market value of AES Corporation’s stock.
The Company initially recognizes compensation cost based on the estimated number of instruments for which the requisite service is expected to be
rendered.
B)
RESTRICTED STOCK
AES Corporation also issues restricted stock units (“RSUs”) under its long term compensation plan. The RSUs are generally granted based upon a percentage of the participant’s base salary. The units have a three year vesting schedule and vest in one third increments over the three year period. The
units are then required to be held for an additional two years before they can be redeemed for shares, and thus become transferable.
For the years ended as of December 31, 2012 and 2011, RSUs issued had a grant date fair value equal to the closing price of AES Corporation’s stock
on the grant date. The Company does not discount the grant date fair values to reflect any post vesting restrictions.
The RSUs granted to employees during the years ended as of December 31, 2012 and 2011 had grant date fair values per RSU of U.S.$ 13.70 and U.S.$
12.88, respectively.
172
The following table summarizes the components of stock based compensation related to employee RSUs recognized in the Company’s financial statements:
Total Intrinsic Value of RSUs Converted
Total Intrinsic Value of RSUs Vested
(1) (1)
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
528
609
282
536
Amount represents the fair value on the conversion date
There was no cash used to settle RSUs or compensation cost capitalized as part of the cost of an asset for the years ended as of December 31, 2012
and 2011.
The following table summarizes RSU activity for the year ended as of December 31, 2012:
WEIGHTED AVERAGE GRANT DATE
FAIR VALUE
RSU
US$
WEIGHTED
AVERAGE
REMAINING
VESTING TERM
Non-Vested as of December 31, 2011
Vested During the Period
Forfeited and Expired During the Year
Granted During the Year
Stock Transfer
134,420
(57,722)
(5,395)
84,615
13,508
12.10
10.56
10.49
14.29
11.50
13.72
1.53
Vested as of December 31, 2012
Vested and Expected to Vest as of December 31, 2012
127,504
282,440
11.40
12.65
-
NON-VESTED AS OF DECEMBER 31, 2012
169,426
-
173
NOTE 35 – ENVIRONMENTAL EXPENDITURES
The Group has a long-term sustainable development policy that governs its activities. Therefore investments are made in facilities, equipment and
industrial plants to include state-of-the-art technology with the latest advances available.
The principal environmental expenses for the years ended as of December 31, 2012 and 2011 are presented as follows:
DESCRIPTION
DECEMBER 31, 2012
THUS$
DECEMBER 31, 2011
THUS$
745
75
2,044
202
114
9,806
341
223
973
478
42
1,082
234
177
10,630
293
895
14,523
13,831
Air Quality Monitoring Station
Waste Water System
Ash Deposit
Marine Monitoring (Oceanographic Monitoring and Liquid Industrial Waste Control)
Smokestack and Noise Monitoring
Expenses for Law 99 in Colombia
ISO 14001-2004 Consultancy
Waste Disposal
Other
TOTAL
The following table details the principal disbursements during the period by subsidiary and project:
ACCOUNTING
RECOGNITION
Capex
Capex
Capex
COMPANY
PROJECT
AES Gener S.A. New discharges U1 and
U2 Ventanas Plant
AES Gener S.A. Emission Protection
Ventanas Plant
Norgener S.A. PDA Tocopilla Project
TOTALES
ACCUMULATED
AMOUNTS
DECEMBER 31, 2012
THUS$
541
37,550
33,133
71,224
TOTAL
PROJECT
THUS$ DESCRIPTION
25,128 Change of discharge pipelines of Ventanas
Plant
96,549 Control of carbon emissions for the Ventanas
Plant
130,560 Plan of environmental decontamination in
Tocopilla complex
252,237
The projects included here are intended to optimize plant performance in order to guarantee compliance with applicable standards.
All projects detailed here are currently under development as of the date of these financial statements. AES Gener also has other projects to develop
new applied technologies to reduce environmental impact.
174
NOTE 36 – ASSETS AND LIABILITIES IN FOREIGN CURRENCIES
(A) CURRENT ASSETS AND LIABILITIES
CURRENT ASSETS
FOREIGN
CURRENCY
FUNCTIONAL
CURRENCY
DECEMBER 31, 2012
LESS THAN 90 FROM 91 DAYS
DAYS
TO 1 YEAR
THUS$
THUS$
DECEMBER 31, 2011
DAYS
TO 1 YEAR
THUS$
THUS$
Chilean Peso
Other
Currencies
US$
34,916
-
81,326
-
US$
64,979
-
15,423
-
Other Financial Assets
Other
Currencies
US$
710
1,098
382
972
Other Non Financial Assets
Chilean Peso
Other
Currencies
US$
81
77
142
857
US$
552
744
475
694
Trade and Other Receivable
Inventory
Taxes Receivable
Chilean Peso
UF
Other
Currencies
US$
US$
194,695
13,570
13,258
12,283
180,018
238
2,161
98,656
US$
73,904
-
69,932
-
Chilean Peso
Other
Currencies
US$
8
-
-
-
US$
643
1,086
1,466
-
US$
US$
-
57
12
11
-
208
12
US$
2,323
-
15
-
386,381
28,615
349,428
103,560
Pesos
UF
Other
Currencies
TOTAL ACTIVOS CORRIENTES
CURRENT LIABILITIES
FOREIGN
CURRENCY
UF
Other
Currencies
FUNCTIONAL
CURRENCY
DECEMBER 31, 2012
DAYS
TO 1 YEAR
THUS$
THUS$
DECEMBER 31, 2011
DAYS
TO 1 YEAR
THUS$
THUS$
US$
137
2,128
118
1,869
US$
6
19
21
-
Chilean Peso
UF
Other
Currencies
US$
US$
106,104
32,325
2,809
7,880
95,702
7,008
2,400
1,016
US$
17,026
1,369
11,872
223
Chilean Peso
US$
5,223
-
-
-
Provisions
Chilean Peso
UF
Other
Currencies
US$
US$
13
-
593
868
630
-
15
1,038
US$
-
-
30
-
Taxes Payable
Other
Currencies
US$
14,462
26,404
2,834
29,362
Post-Employment Benefit Liability
Chilean Peso
Other
Currencies
US$
1,424
46
342
2,101
US$
348
515
144
654
Chilean Peso
Other
Currencies
US$
26,000
2,838
9,579
5,592
US$
2,971
303
3,352
-
206,039
45,772
131,632
44,270
Other Current Non-Financial Liabilities
TOTAL PASIVOS CORRIENTES
175
(B) NON CURRENT ASSETS AND LIABILITIES
DECEMBER 31, 2012
BETWEEN BETWEEN
MORE
1 TO 3
3 TO 5
THAN 5
YEARS
YEARS
YEARS
MUS$
MUS$
MUS$
DECEMBER 31, 2011
BETWEEN BETWEEN
MORE
1 TO 3
3 TO 5
THAN 5
YEARS
YEARS
YEARS
MUS$
MUS$
MUS$
NON-CURRENT ASSETS
FOREIGN
CURRENCY
FUNCTIONAL
CURRENCY
Other Financial Assets
Chilean Peso
US$
533
-
-
493
-
-
Other Non-Financial Assets
Chilean Peso
US$
UF
US$
Other Currencies US$
45
48
281
-
15,124
-
84
1,470
-
6,742
-
Rights Receivables
Chilean Peso
US$
937
5,079
8
59
-
410
8,290
30
74
-
Intangible Assets (Other than Goodwill)
1,793
-
28
173
1,397
-
Property, Plant and Equipment
-
-
723,159
-
-
661,391
Deferred Taxes
-
-
256
-
-
464
8,716
67
738,567
10,920
1,501
668,597
TOTAL NON-CURRENT ASSETS
NON-CURRENT LIABILITIES
FOREIGN
CURRENCY
FUNCTIONAL
CURRENCY
DECEMBER 31, 2012
BETWEEN BETWEEN
MORE
1 TO 3
3 TO 5
THAN 5
YEARS
YEARS
YEARS
MUS$
MUS$
MUS$
DECEMBER 31, 2011
BETWEEN BETWEEN
MORE
1 TO 3
3 TO 5
THAN 5
YEARS
YEARS
YEARS
MUS$
MUS$
MUS$
UF
US$
3,486
14,428
3,987
1,513
43,731
12,862
2,990
1,299
3,472
1,299
41,025
11,694
Chilean Peso
US$
549
3,469
1,253
-
9,266
-
6,254
-
-
Provisions
Chilean Peso
US$
272
425
11,383
-
337
5,563
-
Deferred Taxes
-
-
151,533
-
-
88,179
Employee Benefits
Chilean Peso
US$
216
1,465
525
7,718
27,606
-
5,044
1,204
3,301
5,599
13,602
-
Other Non-Financial Liabilities
Chilean Peso
US$
16
191
-
-
4,583
191
2,654
-
7,341
-
24,092
26,804
244,998
21,902
21,888
161,841
TOTAL NON-CURRENT LIABILITIES
176
NOTE 37 – STATEMENT OF CASHFLOWS – DIRECT METHOD (NON-COMPARATIVE)
In accordance with the new regulation, Circular N°2058, as issued by the Chilean Superintendence of Securities and Insurance (“SVS”), the
following is a presentation of the direct method for the Statement of Cash flows for the year ended December 31, 2012.
DECEMBER 31, 2012
THUS$
STATEMENT OF CASH FLOWS - DIRECT METHOD
Other Receipts from Operating Activities
Payment by Type:
Payment to Suppliers
Payments made to employees
Other Payments for Operating Activities
Payment of Dividends
Receipt of Dividends
Payment of Interest
Receipt of Interest
Income Taxes Paid
Other Operating Outflows from Operating Activities
3.069.033
102.321
(2.210.168)
(110.304)
(28.413)
(316.707)
13.409
(99.028)
7.193
(79.055)
(94.956)
NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
253.325
Proceeds from Sale of Property, Plant and Equipment
Purchases of Property, Plant and Equipment
Proceeds from Sale of Intangible Assets
Purchases of Intangible Assets
Other Inflows from Investing Activities
893
(419.182)
3.927
(6.824)
182.047
NET CASH FLOWS USED IN INVESTING ACTIVITIES
NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
(239.139)
Proceeds from Share Issuance
Payments on Loans
Payments of Finance Lease Liabilities
Other Financing Inflows (Outflows) of Cash and Cash Equivalent
12.361
(48.978)
(2.157)
80
NET CASH FLOWS USED IN FINANCING ACTIVITIES
(38.694)
Increase (Decrease) in Cash and Cash Equivalents, before Effects of Foreign Exchange Differences
en la tasa de cambio
(24.508)
EFFECTS OF FOREIGN EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS
Net Foreign Exchange Differences
Increase (Decrease) in Cash and Cash Equivalents
12.555
(11.953)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD
409.157
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD
397.204
NOTE 38 – SUBSEQUENT EVENTS
As of the date of issuance of these financial statements, no subsequent events were registered that have affected or could affect the information herein
presented.
********
177
DISCUSSION AND ANALYSIS OF CONSOLIDATED FINANCIAL
STATEMENTS
AES Gener S.A. results as of December 31,2012
1.SUMMARY
In the year ended December 31, 2012, AES Gener S.A. (AES Gener or the Company) registered net income of ThUS$202,933, 38% lower than the
earnings of ThUS$326,084 recorded in the same period in 2011. EBITDA totaled ThUS$660,701, 10% lower than in 2011, principally the result of lower
gross profit in 2012. In terms of quarterly results, the Company registered net income of ThUS$75,429 in the last quarter of 2012, which is ThUS$13,977
lower than the earnings of ThUS$89,405 recorded in the same period in 2011. EBITDA increased by 13% between the last quarter of 2011 and 2012,
primarily due to higher gross profit in 2012.
In 2012, gross profit totaled ThUS$589,893, representing a decrease of 14%, when compared to the total of ThUS$687,072 recorded in the same
period in the previous year. This negative variation is principally due to lower gross profit in both Chilean markets, which was partially offset by improved
operating results in Colombia.
In the SIC, the lower gross profit is explained by a higher level of energy supply contracts, including the contract volumes that the Company was obligated
to supply due to the bankruptcy of Campanario Generación (Campanario), together with the higher cost of supplying these contracts. This situation
will terminate with the initiation of commercial operations of the coal-fired Ventanas IV plant expected in March 2013 and termination of supply of
the Campanario contracts. In the SING, spot sales decreased between 2011 and 2012 as a result of the suspension of exports by TermoAndes S.A.’s
(TermoAndes’) plant located in Argentina since the end of 2011.
In Chile, these negative impacts were partially offset by the increase in coal generation related to the initiation of operation of the Angamos plant in 2011
and its new long term contracts with mining customers in the SING. Additionally, the Company’s foreign subsidiaries achieved improved earnings in the
period. In Colombia, AES Chivor reported higher gross profit principally as the result of optimal reservoir management, achieving higher revenue from
spot sales despite lower generation volumes. In Argentina, TermoAndes reported higher spot sales as well as higher contract sales under the “Energía
Plus” program.
Non-operating income also decreased between 2011 and 2012, with a negative variation of ThUS$36,968 in income taxes due to the increase in the
first category corporate income tax rate from 17% to 20% upon the promulgation of the Chilean Tax Reform Act in September 2012, impacting both
deferred taxes and income taxes. Additionally, equity in earnings of associates decreased due to the lower level of net income recorded by equity-method
investee Guacolda principally related to maintenance and related higher spot purchases, as well as the higher corporate income tax rate. Financial costs
also increased by ThUS$8,304 principally due to the completion of the Angamos plant and the registration of the interest expenses for the project’s debt,
previously capitalized. These negative impacts were partially offset by higher other income of ThUS$31,212 from the extraordinary loss registered in
September 2012 related to the premium and expenses from the voluntary bond refinancing process which was completed in August 2011 and a gain
of ThUS$9,715 in foreign exchange differences primarily due the appreciation of the Chilean peso during the period and the Company’s net monetary
position in pesos.
The highlights during 2012 were:
178
·
Contract sales in Chile increased by 29% between 2011 and 2012, as a result of the start-up of new long term contracts, including the new
contracts related to the Angamos plant which initiated operations in the SING in 2011.
·
In December, in the public auction held by distribution company CGE, AES Gener was awarded a supply contract for 120 GWh in 2013 and 250
GWh in 2014.
·
In April, Fitch Ratings upgraded AES Gener’s international credit rating from “BBB-” to “BBB” and in September, local rating agency Feller Rate
upgraded AES Gener’s local rating perspective from “A” stable to positive.
·
·
During 2012, AES Gener was awarded the 2012 International Edison Award for its leadership, innovation and contribution to the advancement
of the electric industry with the Angamos plant. The Angamos plant, which is owned by subsidiary Empresa Eléctrica Angamos S.A. (Eléctrica
Angamos), was also awarded “Plant of the Year” by Power Magazine for innovation and operational excellence.
Colombian subsidiary AES Chivor & Cia S.C.A. E.S.P (AES Chivor) initiated construction of the 20 MW Tunjita hydroelectric plant in July 2012,
reaching construction progress of 12.7% as of December 31, 2012.
·
In October, equity-method investee Empresa Eléctrica Guacolda S.A. (Guacolda) started construction of its fifth coal plant, Guacolda V, initiating
topographic and site leveling works.
·
During 2012, construction of the 270 MW Ventanas IV coal-fired project, owned by subsidiary Empresa Eléctrica Campiche S.A. (Eléctrica
Campiche), continued as scheduled, reaching progress of 99.5% as of December 31, 2012. The plant was synchronized to the SIC grid in late
December 2012 and is expected to start commercial operations in March 2013. In December 2012, Ventanas IV also achieved an important
safety milestone, recording 6.3 million man-hours without lost time accidents.
·
During 2012, investment and construction works began for the installation of new emission control equipment (“retrofits”) at the Ventanas I and
II and Norgener I and II coal plants.
·
During 2012, the Company achieved important milestones in the development of the Cochrane coal project (532 MW) located in the SING.
With regard to construction, the project advanced with preliminary project works under the engineering and construction contract executed
with Posco Engineering & Construction and on the commercial side, long term contracts were executed for most of the plant’s energy
production with mining companies. Significant financing progress was also made under the project finance facility currently being negotiated.
Additionally, in November, Mitsubishi Corporation was incorporated as shareholder of the project company, Empresa Eléctrica Cochrane S.A.
(Eléctrica Cochrane), with the subscription of 40% participation.
·
During 2012, the Company has progressed with development of the Alto Maipo hydroelectric project (531 MW) located in the SIC, advancing
with preliminary works and executing the three construction contracts required for the principal project works. Voith Hydro was selected to
provide the supply, erection and generation equipment for the project; Strabag, was selected to execute all the civil and underground works that
are developed in the Colorado river valley, and Constructora Nuevo Maipo, a consortium composed of Hochtief Solutions and CMC di Ravena
was selected to execute the civil and underground works in the Yeso and Volcán river valleys.
179
2.
2012 INCOME STATEMENT ANALYSIS
INCOME STATEMENT
OPERATING REVENUE
Energy and capacity sales
Other operating revenue
TOTAL OPERATING REVENUE
COST OF SALES
Fuel consumption
Fuel cost of sales
Energy and capacity purchases
Transmission tolls
Other cost of sales
Depreciation and amortization
TOTAL COST OF SALES
GROSS PROFIT
2012
THUS$
2011
THUS$
2,171,486
156,235
1,973,010
157,276
2,327,721
(824,856)
(51,056)
(340,593)
(97,694)
(209,610)
(214,019)
2,130,286
(797,372)
(70,438)
(143,528)
(77,863)
(158,366)
(195,648)
(1,737,828)
(1,443,214)
589,893
687,072
Other operating revenues
Selling, general and administrative expenses
Other operating expense
Other income / (expense)
Financial income
Financial expense
Equity in earnings of associates
Foreign currency exchange differences
2,057
(145,120)
(3,066)
7,433
8,407
(115,452)
9,187
(3,633)
6,144
(148,220)
(5,215)
(23,779)
9,303
(107,148)
31,109
(13,348)
Income tax income (expense)
(146,778)
(109,810)
NET INCOME (LOSS) BEFORE TAX AND NON-CONTROLLING INTEREST
NET INCOME (LOSS) AFTER TAX
Income (loss) from discontinued operations, net of tax
349,706
202,928
435,918
326,108
NET INCOME
202,928
326,108
INCOME (LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF PARENT
202,933
326,084
NET INCOME
202,928
326,108
Non-controlling interest
(5)
24
2.1. EBITDA
In the period ended December 31, 2012, EBITDA totaled ThUS$660,701, compared with EBITDA of ThUS$737,278 recorded in 2011. This reduction of
ThUS$76,573 is related to lower gross profit in the two Chilean markets, partly offset by higher gross profit in Colombia. In the SIC, this negative variation
in EBITDA is related to a higher level of energy supply contracts, regulated and unregulated, including the contract volumes that the Company was
obligated to supply as a result of the bankruptcy of Campanario, relative to efficient generation, in addition to the higher generation cost of supplying these
contracts due to higher LNG prices and forced outages at certain coal plants during the second quarter, all of which are back in service and operating
normally. Additionally, EBITDA was negatively impacted by the suspension of exports to the SING by the TermoAndes plant located in Argentina since
the end of 2011. These negative impacts were partially compensated by an increase in sales related to the start-up of operations of Angamos in 2011 in
the SING and higher sales by TermoAndes in Argentina. Additionally, an increase in EBITDA of 10% was registered in Colombia due principally to spot
energy sales at higher prices. EBITDA from the SIC and SING/SADI decreased by ThUS$67,655 and ThUS$31,859, respectively, while EBITDA from
Colombia increased by ThUS$22,940.
AES Gener operates principally in three independent markets, the Central Interconnected System or SIC, and the Greater Northern Interconnected
System or SING, each in Chile, and the National Interconnected System or SIN in Colombia. Additionally, the Company also sells electricity in the
Argentine Interconnected System or SADI in Argentina.
180
In the period ended December 31, 2012, the contribution to EBITDA from each market in which AES Gener participates was: the SIC 26.9%, SING &
SADI 36.0%, and Colombia 37.1%.
EBITDA (THUS$)
Gross Profit
Depreciation and amortization (-)
Selling, general and administrative expenses
Other operating expense
Other costs not included in EBITDA
EBITDA
2012
2011
589,893
214,019
2,057
(145,120)
(3,066)
2,918
687,072
195,648
6,144
(148,220)
(5,215)
1,846
660,701
737,275
2.1.1. GROSS PROFIT
Gross profit decreased by ThUS$97,179, explained by lower gross profit in both markets in Chile, partly offset by higher gross profit in Colombia. Gross
profit decreased by ThUS$64,405 and ThUS$48,415 in the SIC and SING/SADI, respectively, and increased by ThUS$15,640 in Colombia. The consolidation adjustment represents intercompany coal sales from AES Gener to subsidiaries Norgener S.A. (Norgener) and Eléctrica Angamos in the SING.
GROSS PROFIT (THUS$)
OPERATING REVENUE
SIC
SING & SADI
Colombia
Consolidation adjustments
COST OF SALES
SIC
SING & SADI
Colombia
Consolidation adjustments
TOTAL COST OF SALES
TOTAL GROSS PROFIT
2012
2011
1,396,260
707,196
453,076
(228,810)
1,364,988
592,342
364,848
(191,892)
(1,211,351)
(549,872)
(205,416)
228,810
(1,115,674)
(386,603)
(132,829)
191,892
2,327,721
(1,737,828)
589,893
2,130,286
(1,443,214)
687,072
The variations in gross margin in each of the three principal markets are explained below.
CENTRAL INTERCONNECTED GRID (SIC)
In the SIC, gross profit decreased by ThUS$64,405, equivalent to 26%, comparing 2011 and 2012, principally due to a higher volume of electricity supply
contracts, regulated and unregulated, relative to the Company’s efficient energy generation and the increased cost of supplying these contracts. The following table presents gross profit in the SIC for both periods:
SIC
OPERATING REVENUE
Regulated customer sales
Unregulated customer sales
Spot sales
COST OF SALES
Fuel consumption
Transmission tolls
Fuel cost of sales
Other cost of sales
TOTAL COST OF SALES
TOTAL GROSS PROFIT
2012
2011
544,664
254,909
222,587
374,100
599,982
230,449
198,401
336,156
1,396,260
(539,804)
(156,512)
(93,643)
(238,572)
(86,929)
(95,891)
1,364,988
(575,740)
(57,956)
(74,509)
(243,448)
(89,953)
(74,067)
(1,211,351)
(1,115,674)
184,909
249,314
181
In the SIC, gross profit decreased in part due to a higher level of electricity supply contracts relative to the Company’s efficient energy generation,
specifically coal-fired thermoelectric and run-of-river hydroelectric generation, together with the higher cost of supplying these contracts due to higher
LNG prices. This situation is temporary and will terminate with the start-up of the Ventanas IV project in March 2013 and the termination of supply of
the Campanario contracts. Between 2011 and 2012, long term contract volumes in the SIC increased by 12%. Non-recurring forced outages at certain
coal-fired facilities situation during the second quarter of 2012 also contributed to this negative variation, although it should be noted that all affected
plants are currently operating normally.
Regulated sales volumes increased, from 5,004 GWh at the end of 2011 to 5,406 GWh in 2012, including the additional sales of 212 GWh that the
Company supplied to distribution companies SAESA and CGE Distribución as a result of the bankruptcy of Campanario. It should be noted that the
contract with SAESA ended in April 2012, and only a portion of the CGE Distribución contract remains valid, given that AES Gener was awarded part
of the supply in December 2012. Despite the increase in sales volumes, regulated sales revenue decreased by ThUS$55,318 associated with lower sales
prices, principally related to the contract with Chilquinta Energía which was indexed to the system marginal cost until the beginning of 2012.This decrease
was partially offset by an increase of ThUS$24,460 in sales to unregulated customers between 2011 and 2012, due to an increase in sales volumes of 397
GWh due the start-up of new long term contracts. It should be noted that some contracts with unregulated customers include sales prices which are
indexed to the system marginal cost until the Ventanas IV plant commences operations.
Energy purchases, including spot purchases, purchases from affiliate Guacolda and purchases from other third parties under contracts, increased
ThUS$98,556, and in physical terms from 234 GWh in 2011 to 1,004 GWh in 2012. It should be noted that the power purchase agreement with
Guacolda was executed to cover the Company’s efficient capacity deficit related to the delay in Ventanas IV. The higher spot purchases were partially
offset by spot sales increase of ThUS$24,186 between 2011 and 2012. The marginal cost or spot price was similar between the two periods, increasing
by 5%, from an average of 181.0 US$/MWh during 2011 to 189.8 US$/MWh in 2012 (at the Quillota 220 kV substation).
Finally, the net cost of fuel sales decreased by ThUS$35,936 mainly related to lower annual generation with diesel, falling from 494 GWh in 2011 to 427
GWh in 2012 and lower gas generation, which decreased from 1,704 GWh in 2011 to 1,483 GWh in 2012.
GREATER NORTHERN INTERCONNECTED GRID (SING) & INTERCONNECTED ARGENTINE SYSTEM (SADI)
Between the years ended December 31, 2011 and 2012, gross profit in the SING & SADI decreased by ThUS$48,415 equivalent to 24%, principally
associated with the suspension in energy exports by TermoAndes to the SING since late 2011 and higher fuel costs associated with the initiation of
operations of the Angamos plant in 2011. This reduction was partially offset by higher sales to unregulated customers in the SING associated with long
term contracts which initiated in 2011, after the commissioning of Angamos.The following table presents gross profit in the SING & SADI for both periods:
SING & SADI
INGRESOPERATING REVENUE
Unregulated customer sales - SING
Contract sales - SADI
Spot sales - SING
Spot sales - SADI
COST OF SALES
Fuel consumption
Transmission tolls
Fuel cost of sales
Other cost of sales
TOTAL COST OF SALES
TOTAL GROSS PROFIT
182
2012
2011
421,328
84,870
107,300
82,790
10,907
241,152
52,768
236,894
51,366
10,162
(316,657)
(38,384)
(3,802)
(3,883)
(108,301)
(78,845)
(234,776)
(13,258)
(3,061)
(3,057)
(85,387)
(47,065)
707,196
(549,872)
157,324
592,342
(386,603)
205,739
In the SING, between 2011 and 2012, spot sales volumes decreased by 614 GWh and spot revenue fell by ThUS$129,594, principally due to the
suspension in energy exports by TermoAndes to the SING and re-configuration of the entire plant toward the Argentine market and the decrease of
22% in the average marginal cost from 131.5 US$/MWh in 2011 to 103.0 US$/MWh in 2012 (at the 220 kV Crucero substation). Additionally, energy
purchases increased by ThUS$25,126 due to lower availability of coal facilities in the second quarter related to scheduled maintenance and unscheduled
outages. However, it should be noted that the unplanned outages were non-recurring events and all the affected plants are back in service and operating
normally.
The start-up of both units of the Angamos plant in April and October 2011, respectively, also resulted in higher operating costs, with higher fuel costs
of ThUS$81,881 associated with higher coal generation and higher depreciation of ThUS$22,914. Other operating costs increased by ThUS$32,227,
principally related to port services and maintenance.
These negative variations were partially offset by an increase in sales to unregulated customers of ThUS$180,176 principally due to higher physical
sales. In the SING, long term contract volumes grew by 77% between 2011 and 2012, rising from 2,209 GWh at the end of December 2011 to 3,908
GWh during 2012, primarily explained by the initiation of supply contracts executed by Eléctrica Angamos. It should be noted that Eléctrica Angamos’
contracted capacity increased in June 2012, in accordance with the terms of the supply contracts that began in the second half of 2011.
In the SADI, TermoAndes’ sales increased with higher Energía Plus contract sales of ThUS$32,102 as a result of higher volume sales of 448 GWh and
higher spot sales of ThUS$31,424 associated with an increase in physical sales of 1,147 GWh. It should be noted that as a result of the reconfiguration
of TermoAndes plant to the SADI, generation to this market increased by 63%, from 2,543 GWh as of December 31, 2011 to 4,138 GWh at the end
of December 2012.
COLOMBIAN NATIONAL GRID (SIN)
In Colombia, gross profit increased by ThUS$15,640, equivalent to 7%, between 2011 and 2012. This positive variation is principally associated with higher
net spot sales, slightly offset by lower contract sales to distribution companies. The following table presents gross profit in Colombia for both periods:
COLOMBIA
OPERATING REVENUE
Contract sales
Spot sales
COST OF SALES
Other cost of sales
TOTAL COST OF SALES
TOTAL GROSS PROFIT
2012
2011
248,855
204,184
36
254,564
110,123
160
(145,696)
(18,794)
(40,926)
(72,313)
(20,308)
(40,207)
453,076
364,848
(205,416)
(132,829)
247,660
232,019
In Colombia, spot and ancillary service sales increased by ThUS$94,091 as a result of higher spot prices, which rose from 40.3 US$/MWh in 2011 to
63.4 US$/MWh in 2012. During 2012, AES Chivor’s commercial strategy involved storing water in the reservoir during the second and fourth quarter
of 2012 given projected drier hydrological conditions in subsequent periods, in order to optimize spot sales. In 2012, this optimal reservoir management
strategy achieved higher spot sales despite lower physical sales of 136 GWh, which decreased from 3,558 GWh in year ended December 31, 2011 to
3,422 GWh in 2012. Spot purchases increased by ThUS$73,383 due to higher purchase volumes which rose from 1,777 GWh during 2011 to 2,117
GWh during 2012.
Contract sales to distribution companies decreased by ThUS$5,709 due to lower physical sales which fell by 182 GWh, partly offset by higher prices
which rose from 71.0 US$/MWh in 2011 to 73.6 US$/MWh in 2012.
183
PHYSICAL ENERGY SALES BY SEGMENT
Physical energy sales in each market were as follows in year ended December 31, 2012 and 2011:
PHYSICAL SALES (GWH)
SIC
2012
8,496
2011
7,756
Spot (CDEC)
Other customers
5,406
1,146
1,944
5,004
1,205
1,547
SING
5,150
4,065
Spot (CDEC)
Other customers
SIN-COLOMBIA
Spot and other
SADI
Customers
Spot
TOTAL VENTAS
1,242
3,908
6,811
1,855
2,209
7,130
3,422
3,389
3,558
3,572
1,362
2,776
914
1,629
4,138
24,595
2,543
21,494
2.1.2. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses decreased by 2%, from ThUS$148,220 in the year ended December 30, 2011 to ThUS$145,120 in 2012,
principally related to lower equity tax expenses of ThUS$9,689 at AES Chivor in Colombia. This reduction was partially offset by higher costs of
ThUS$7,096 related to insurance associated with Angamos’ operational insurance and higher other premiums in the AES Gener Group.
2.2. FINANCIAL RESULTS
The non-EBITDA variables which experienced the most significant changes between 2011 and 2012, include a positive variation in other income of
Th$31,212, partially offset by lower equity in earnings of associates of Th$21,922 and higher financial costs of Th$8,304.
The following table shows variances of these items:
FINANCIAL RESULTS (THUS$)
Other income / (loss)
Finance income
Finance expense
Equity in earnings of associates
Foreign currency exchange differences
2012
2011
7,433
8,407
(115,452)
9,187
(3,633)
(23,779)
9,303
(107,148)
31,109
(13,348)
As of December 31, 2012, other income increased by ThUS$31,212 compared to 2011.This positive variation is principally explained by the extraordinary
loss registered in the third quarter of 2011 of ThUS$41,200 associated with redemption premiums and expenses from the voluntary bond refinancing
process completed in August 2011.
The gain from exchange rate differences between 2011 and 2012 is mainly due to the appreciation of the Chilean peso and the Company’s net monetary
position in Chilean pesos between December 2011 and December 2012.The principal effects include the effect of exchange rate differentials on accounts
receivable in Chilean pesos, mainly electricity sales to customers. It should be noted that between December 31, 2011 and December 31, 2012 the
Chilean dolar observado exchange rate appreciated by 8%, from $519.2 to $479.9, respectively, while the exchange rate depreciated by 11% from $468.0
to $519.2 between December 31, 2010 and December 31, 2011.
The negative variation of ThUS$21,922 recorded in earnings of associates from equity-method investee Guacolda is explained by lower gross profit due
to major maintenance of Unit 1 between June and September 2012, and consequently, higher energy purchases. Additionally, income taxes increased as
a result of the change in the tax rate in Chile from 17% to 20%.
The increase in net financial costs of ThUS$8,304 between 2011 and 2012 is primarily due to lower capitalized interest expenses associated with the
commercial operation of Angamos Unit I and II in April and October 2011, respectively.
184
2.3. INCOME TAX
In September 2012, the Tax Reform Act was promulgated in Chile, which resulted in the registration of higher deferred taxes and income tax expense, due
to the increase in the first category corporate tax rate from 17% to 20%.The variation in deferred taxes amounted to ThUS$38,300 between December
2011 and 2012, and income tax expense increased by ThUS$36,968, from ThUS$109,810 at the end of December 2011 to ThUS$146,778 during 2012,
despite the registration of lower income before taxes.
3. BALANCE SHEET ANALYSIS
As of December 31, 2012, total assets registered were ThUS$5,831,406, slightly higher than the ThUS$5,829,273 registered at the end of December
2011. This variation is explained by an increase in non-current assets of ThUS$233,446, partially offset by a decrease in current assets of ThUS$231,313.
Total net equity and liabilities registered a positive variation of ThUS$1,496, explained by an increase of ThUS$72,144 in non-current liabilities, partially
offset by a decrease of ThUS$47,758 and ThUS$22,860 in net equity and current assets, respectively.
BALANCE SHEET (MUS$)
Current Assets
Non-Current Assets
TOTAL ASSETS
Current Liabilities
Non-Current Liabilities
Net Equity
TOTAL NET EQUITY AND LIABILITIES
DECEMBER 2012
DECEMBER 2011
855,576
4,975,830
1,086,889
4,742,384
5,831,406
491,298
2,859,087
2,481,021
5,831,406
5,829,273
514,158
2,786,336
2,528,779
5,829,273
Current assets registered a negative variation of ThUS$231,313, principally as a result of lower other current financial assets of ThUS$130,288 associated
with a decrease in time deposits with maturity over three months, as well as a decrease in trade and other receivables of ThUS$78,491 mainly due to
lower remaining value-added tax (VAT) after the start-up of commercial operations of Angamos plant, as compared to December 2011, and the start of
commissioning tests of Ventanas IV plant at the end of December 2012.
Non-current assets increased by 5%, principally due to an increase in property, plant and equipment of ThUS$223,894, mainly related to the construction
of Ventanas IV (270 MW), owned by subsidiary Eléctrica Campiche, which was synchronized to the SIC and started its commissioning period in
December 2012.
Current liabilities decreased by 4% as compared with December 31, 2011. The most important variations includes the decrease in trade and other
payables of ThUS$93,090 principally related to lower creditors at Sociedad Eléctrica Santiago S.A. (Eléctrica Santiago) associated with lower spot sales.
This variation was partially offset by an increase in other current financial liabilities of ThUS$29,627, associated with the transfer from non-current liabilities
to current liabilities of a portion of the Angamos “project finance” debt, a positive variation in taxes payable of ThUS$17,055 related to the 1st category
tax, and an increase of ThUS$15,414 in other current non-financial liabilities.
Non-current liabilities were higher by ThUS$72,751 mainly due to the increase of ThUS$54,180 in deferred taxes associated with the increase in the
1st category tax rate from 17% to 20% after the new law on tax reform was enacted (Ley de Reforma Tributaria) in September 2012 and a change in
the differ calculation base on the fixed asset. Additionally, there was an increase in provisions of ThUS$33,922 principally associated with an adjustment
in the future decommissioning costs of plants. Nevertheless, these effects were slightly offset by a decrease of ThUS$25,610 in other financial liabilities
related to the market value of coverage derivatives and the transfer of a portion of the Angamos debt from non-current liabilities to current liabilities.
During 2012, net equity decrease ThUS$47,758 mainly related to lower retained earnings of ThUS$96,236, associated with lower income in the period
and the payment of a definite and interim dividend in August and November 2012, respectively. This effect was partially offset by a positive variation in
other reserves of ThUS$44,403 associated to the conversion of AES Chivor results from Colombian pesos to dollars and lower results from derivatives
market value.
185
4. FINANCIAL INDICATORS
Liquidity indicators decreased due to the reduction in current assets, which was higher than the reduction in current liabilities.
Liabilities remained relative stable compared to December 2011, despite the negative variation in current trade and other payables and the increase in
deferred taxes and non-current provisions.
Interest coverage decreased due to lower income before taxes in the last twelve months as compared to 2011.
Return on assets and net equity as of December 2012 were lower than the previous year as a result of lower income registered in the last twelve months
as of December 2012.
LIQUIDITY
Current Assets / Current Liabilities
Cash and Cash Equivalent / Current Liabilities
Current Assets – Inventory / Current Liabilities
INDEBTNESS
Liabilities / Net Equity
Current Liabilities / Liabilities
Non-Current Liabilities / Liabilities
Liabilities
Interest Coverage
ACTIVITY
Net Equity
Property, Plant and Equipment, Net
Total Assets
PROFITABILITY
Return on Assets (1)
Return on Net Equity (1)
Return on Operating Assets (2)
Net Incomes / Shares (3)
Dividend Return (4)
(times)
(times)
(times)
(times)
(times)
(times)
(million of dollars)
(times)
(%)
(%)
(%)
(dollars)
(%)
DECEMBER 2012
DECEMBER 2011
1.74
0.81
1.56
1.35
0.15
0.85
3,350
4.03
2,481
4,599
5,831
3.48
8.18
12.83
0.03
6.17
2.11
0.80
1.91
1.31
0.16
0.84
3,300
5.07
2,529
4,375
5,829
5.59
12.89
15.70
0.04
6.68
Return on assets and net equity are calculated considering 12-month net income as of the end of each period and assets and net equity registered
as of the closing date of each period.
(2)
Operating assets are registered as Property, Plant and Equipment, Net.
(3)
Net Income over shares considers number of shares paid at the end of each period.
(4)
Considers dividends paid in the last 12 months divided by share market price at the end of each period.
(1)
5. CASH FLOW
Total net cash in the period ended December 31, 2012 registered a positive inflow of ThUS$397,204, which is 3% lower than the positive net cash
position of ThUS$409,157 registered at the end of 2011.Total cash flow during year ended December 31, 2012 was equal to an outflow of ThUS$24,508,
which negatively compares with the inflow of ThUS$122,994 at the end of 2011. This decrease is due to negative variations in investing and financing
activities, partially offset by a positive variation in operating activities.
CASH FLOW (THUS$)
Net cash from operating activities
Net cash from investing activities
Net cash from financing activities
TOTAL NET CASH FOR THE PERIOD
TOTAL CASH AT THE END OF THE PERIOD
186
2012
2011
253,325
(239,139)
(38,694)
177,524
(171,988)
117,458
397,204
409,157
(24,508)
122,994
Net cash from operating activities registered a positive variation of ThUS$75,801 in the year ended December 31, 2012, compared to 2011.This increase
is principally the result of lower other operating outflows of ThUS$55,038 mainly associated with VAT payments in 2011 and a reduction in income tax
payments of ThUS$16,476.
Net cash from investment activities registered a negative variation of ThUS$67,151 between 2011 and 2012. The principal variation relates to higher
purchases of plant, property and equipment of ThUS$23,743 principally due to the initiation of the installation of emission reduction equipment at some
AES Gener coal plants and investments in the Ventanas IV project, and lower other cash inflows of ThUS$31,762 associated with a negative variation in
financial investments, partially offset by higher VAT recovery (mainly from the Ventanas IV project).
Net cash from financing activities registered a negative variation of ThUS$156,152 in period ended December 31, 2012, when compared to the previous
year. The principal variation in financing activities relates to lower proceeds from long term debt of ThUS$165,954 due to lower disbursements under
the Angamos project finance credit facility.
6. ENERGY GENERATION, PURCHASES & SALES
The following table shows Energy Generation, Purchases and Sales from the operating affiliates in each markets in which AES Gener participates:
ENERGY (GWh)
GENERATION
Hydro
Thermo
TOTAL
GENERATION
SIC
AES ELÉCTRICA ELÉCTRICA
GENER SANTIAGO VENTANAS
1,206
2,371
1,797
3,577
1,797
SING
NORGENER
2,000
-
2,985
4,137
4,664
21,168
102
-
-
-
2,117
-
2,635
755
2,800
102
-
6,190
3,794
10
-
166
-
2,117
(42)
1
30
37
3,389
3,422
-
8,795
7,214
8,585
2,800
6,811
27,395
-
(23)
63
-
1,730
1,214
-
1,362
2,776
-
63
2,943
4,138
Regulated(1)
Unregulated
Spot
Intercompany
5,335
1,944
203
-
71
944
793
2,008
2,116
28
-
TOTAL SALES
7,481
1,807
2,008
2,144
SALES
5,870
15,298
2,008
TOTAL PURCHASES
4,664
-
2,985
-
-
TOTAL
-
10
-
110
AES
CHIVOR
2,008
Spot
Other generators
Intercompany
LOSSES
TERMOANDES
4,137
166
-
SIN
2,000
239
755
2,800
PURCHASES
SADI
ELÉCTRICA
TERMOANDES ANGAMOS
(39)
(1) Regulated sales include obligatory sales to distribution customers of a generation company which was declared in bankrupt in September 2011.
187
7. MARKET INFORMATION
In Chile, AES Gener does business principally in two large interconnected electric systems: the Central Interconnected System or SIC, that runs from the
southern part of Region II to Region X, and the Greater Northern Interconnected System or SING, that encompasses Region I and Region XV, as well
as part of Region II. AES Gener’s Colombian subsidiary, AES Chivor, is one of the principal electric generators in the Colombian National Interconnected
System or SIN. TermoAndes also sells to the Argentine market.
SIC
The average marginal increased by 5% between 2011 and 2012, principally explained by continued hydrological conditions. In the period ended December
31, 2012, the AES Gener group companies, including Guacolda, accounted for 24% of the net generation in the SIC. The table below shows certain
principal variables in the SIC for the periods ended December 31, 2012 and 2011.
SIC
Demand growth
Average monthly consumption
Average annual marginal cost (Quillota 220 kV)
(%)
(GWh)
US$/MWh
DECEMBER 2012
DECEMBER 2011
5.7
3,857
189.8
5.1
3,650
181.0
SING & SADI
The decrease in the marginal cost in the SING of 22% is explained by the start-up of commercial operations of new coal-fired plants in 2011, and
which in 2012 these were available most of the year. In the period ended December 31, 2012, the AES Gener group companies contributed 32% of the
net generation in the SING, including annual generation from Angamos Units I and II, which started commercial operation in April and October 2011,
respectively. In the SADI, TermoAndes’ contribution in 2012 corresponds to approximately 4% of total system generation. The table below shows certain
principal variables in the SING & SADI for the period ended December 31, 2012 and 2011.
SING & SADI
SING demand growth
SING average monthly consumption
SING average annual marginal cost (Crucero 220 kV)
SADI average annual marginal cost
(%)
(GWh)
US$/MWh
US$/MWh
DECEMBER 2012
DECEMBER 2011
3.9
1,236
103.0
30.2
3.5
1,190
131.5
29.8
COLOMBIA
In Colombia, spot prices in U.S. dollars increased significantly by 57% between 2011 and 2012, related to drier hydrological conditions which resulted in
lower water levels in reservoirs. Consequently, spot prices in Colombian pesos increased by 53%. In the period ended December 31, 2012, AES Chivor’s
generation represented 8% of total generation in Colombia. The table below presents certain principal variables in Colombia for the periods ended
December 31, 2012 and 2011:
COLOMBIA
Demand growth
Average monthly consumption
Average annual marginal cost
188
(%)
(GWh)
US$/MWh
DECEMBER 2012
DECEMBER 2011
3.8
4,946
63.4
1.8
4,763
40.3
8.
RISK ANALYSIS
8.1. MARKET AND FINANCIAL RISKS
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to a change in market prices. Market risks include
the following three categories: foreign currency risk, interest rate risk and commodity price risk. Financial risk relates to the potential occurrence of events
which could have a negative financial impact on the Company and specifically includes: credit risk and liquidity risk.
8.1.1. FOREIGN CURRENCY RISK
With the exception of its Colombian operations, the Company’s functional currency is the U.S. dollar, given that its revenue, costs and investments in
equipment are principally determined in dollars. Additionally, the Company has been authorized to file and pay its taxes in U.S. dollars. Foreign currency
risk is associated with revenues, costs, investments and debt denominated in currencies other than the U.S. dollar.The principal components denominated
in Chilean pesos include the accumulated credit balances from electricity sales and tax credits mainly associated with VAT. As of December 31, 2012,
AES Gener maintained several currency forwards with banks to mitigate its exposure to foreign exchange variations associated with energy sales, given
that even though most of the Company’s energy supply agreements have prices denominated in US dollars, payments are made in Chilean pesos at an
exchange rate that is fixed for a specific period of time. As of December 31, 2012, the impact of a variation of 10% in the Chilean peso to U.S. dollar
exchange rate would have resulted in a variation of approximately ThUS$2,266 in AES Gener’s net income. In the year ended December 31, 2012,
approximately 85.8% of the Company’s revenue and 92.0% of its costs of sale were denominated in U.S. dollars, while in 2011 approximately 85.6% of
the revenue and 91.6% of costs of sale were denominated in U.S. dollars.
With regard to its foreign subsidiaries, it should be noted that the AES Chivor’s functional currency is the Colombian peso since most of its revenue,
specifically contract sales, and its operating costs are linked primarily to the Colombian peso. As of December 31, 2012, sales in Colombian pesos
represented 10.7% of consolidated revenue, while at the close of 2011, these sales represented 12.0% of consolidated revenue. Additionally, AES Chivor’s
dividends are determined in Colombian pesos, although financial coverage mechanisms are utilized to fix the amounts in U.S. dollars. It should also be
noted that spot prices in the Argentine market are set in Argentine pesos and these sales represented 3.6% of consolidated revenue in 2012, as compared
to 2.4% in 2011. As of December 31, 2012, the impact of a variation of 10% in the Argentinean peso to U.S. dollar exchange rate would have resulted in
a variation of approximately ThUS$6,000 in AES Gener’s net income.
Additionally, investments in new plants and maintenance equipment are principally set in U.S. dollars. Short-term investments are also mostly held in U.S.
dollars. As of December 31, 2012, 75.0% of AES Gener’s short-term investments and bank account balances were denominated in U.S. dollars, 8.7% in
Chilean pesos, 13.0% in Argentinean pesos and 3.3% in Colombian pesos. Cash balances in Argentine pesos are subject to foreign exchange restrictions
and exchange rate volatility inherent to the Argentine market. At the close of December 2011, 82.0% of AES Gener’s short-term investments and bank
account balances were denominated in U.S. dollars, 15.1% in Chilean pesos, 2.2% in Colombian pesos and 0.7% en Argentine pesos.
With regard to debt (bank loans and bonds payable) denominated in currencies other than the U.S. dollar, AES Gener has executed coverage in the
form of cross currency swaps to eliminate exchange rate risk. AES Gener executed a cross currency swap for the UF-denominated bonds issued in 2007
for approximately ThUS$219,527 and the swaps extend throughout the duration of the debt. As of December 31, 2012, 97.5% of AES Gener and its
subsidiaries’ debt was denominated in U.S. dollars, including the local bonds mentioned above and the associated swaps. The following table details the
debt composition by currency for the periods ended December 31, 2012 and December 31, 2011:
CURRENCY
2012
%
2011
%
US$
UF
Col$
97.5
2.1
0.4
98.1
1.9
0.0
8.1.2. INTEREST RATE RISK
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. AES
Gener’s exposure to the risk of changes in market interest rates relates primarily to its long-term debt obligations with floating interest rates.
189
AES Gener manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans. Additionally, the Company has entered into
interest rate swaps to mitigate interest rate risk for long-term obligations. Currently, AES Gener has interest rate swaps for an important part of the debt
associated with subsidiaries Empresa Eléctrica Ventanas S.A. (Eléctrica Ventanas) and Eléctrica Angamos. The following table shows the composition of
debt by type of interest rate as of December 31, 2012 and December 31, 2011:
RATE
2012
%
2011
%
Fixed
Variable
89.8
10.2
90.1
9.9
8.1.3. COMMODITY PRICE RISK
AES Gener may be affected by the volatility of certain commodity prices.The fuels used by the Company, primarily coal, diesel and LNG, are commodities
with international prices set by external market factors. Diesel and LNG are purchased from local suppliers under bilateral agreements, based on the
international price of diesel. Fuel price risk is associated with fluctuations in these prices.
The price of fuel is a key factor for dispatch and spot prices in both Chile and Colombia. The change in the price of fuels, such as coal, diesel and natural
gas, can modify the Company’s cost composition through changes in the marginal cost. Since AES Gener is a company with primarily a thermoelectric
generation mix, fuel costs represent an important part of operating costs.
Currently, the majority of the Company’s power purchase agreements include indexation mechanisms that adjust prices based on the increase and
decrease in the price of coal in accordance with the indices and adjustment periods specified under each contract, in order to align AES Gener’s
generation costs with energy sales contract revenue. Additionally, AES Gener has structured a coal purchase strategy, maintaining part at fixed price and
part at variable price, in order to align costs with revenue generation associated with the energy sales contract.
At present, derivative instruments are not utilized for diesel and LNG purchases. Given that AES Gener’s contracted energy is balanced with its efficient
generation, back-up facilities which utilize diesel or LNG are expected to generate and sell energy on the spot market only during periods with limited
market supplies such as dry hydrological conditions in the SIC. It should be noted that Eléctrica Santiago’s Nueva Renca plant is able to alternatively utilize
diesel and LNG and it acquires defined volumes of LNG under short-term contracts when the price of LNG is more competitive than diesel. Under
these conditions, and considering that Nueva Renca generated with LNG during the current period, the Company estimates that an increase of 10% in
the cost of diesel during the period ended December 31, 2012 would have resulted in a negative variation of approximately ThUS$18,338 in gross profit,
while a decrease of 10% would have resulted in a positive variation of the same proportion.
CREDIT RISK
Credit risk relates to the credit quality of counterparties with which AES Gener and its subsidiaries establish relationships. These risks are reflected
primarily in accounts receivables and financial assets including bank and other deposits and other financial instruments.
With regard to accounts receivable, AES Gener’s counterparties in Chile are principally distribution companies and industrial customers of elevated
solvency and over 90% of these customers have local and/or international investment grade credit ratings. Sales made by the AES Gener group companies
in the spot market are obligatorily made to other generators, members of the CDEC, in accordance with the economic dispatch determined by this entity.
It should be noted that one generator participant of the CDEC was declared in bankruptcy in September 2011 as a result of the financial losses caused
by the dry hydrological conditions experienced in the SIC. In the proceeding, AES Gener and Eléctrica Santiago presented evidence of the outstanding
debt owed by such generator, equal to ThUS$70 and ThUS$2,937 plus applicable interest, of which the Company has received ThUS$1,169. Additional
payments are not expected and the respective provision has been registered as irrecoverable debt.
In Colombia, AES Chivor performs risk assessments of its counterparties based on an internal credit quality evaluation, which in some cases may include
guarantees. In 2010, also in dry hydrological conditions, AES Chivor suffered collection problems with an energy trader and eventually registered a loss
of ThUS$1,300. In this case, the trader was suspended from participating in the Bolsa or spot market and AES Chivor presented actions to recover the
outstanding amount. In Argentina, the Company estimates that TermoAndes does not face significant credit risk given that its principal counterparties with
CAMMESA (Compañía Administradora del Mercado Mayorista Eléctrico S.A.) and unregulated consumers with contracts operated under the Energía
Plus program.
Financial investments by AES Gener and its subsidiaries such as mutual funds, time deposits and derivatives, are executed with local and foreign financial
institutions which have national and/or international credit ratings greater than or equal to “A” under the S&P and Fitch scale and “A2” under the
Moody’s scale. Similarly, derivatives for financial debt are executed with first class international entities. Cash, investment and treasury policies direct the
management of the Company’s cash portfolio and minimize credit risk.
190
LIQUIDITY RISK
Liquidity risk relates to the funding requirements to meet payment obligations. The Company’s objective is to maintain a balance between continuity of
funding and financial flexibility through internally generated cash flows, bank loans, bonds, short-term investments, committed credit lines and uncommitted
credit lines.
As of December 31, 2012, AES Gener’s available liquid funds totaled ThUS$405,504 which includes cash and cash equivalents equal to ThUS$397,204 and
term deposits and immediate liquidity funds in U.S. dollars for a total of ThUS$8,300, which are registered in other current financial assets. At the close of
December 2011, available liquid funds equaled ThUS$537,778, including cash and cash equivalents of ThUS$409,157 and term deposits and immediate
liquidity funds in U.S. dollars for a total of ThUS$128,621. It should be noted that the balance of cash and cash equivalents includes cash, term deposits
with expiration of less than 90 days, securities, low risk immediately available mutual funds in U.S. dollars and re-sale agreements.
In addition, as of December 31, 2012, AES Gener has in place unused committed credit facilities for approximately ThUS$285.533, in addition to unused
uncommitted lines of credit for approximately ThUS$229,809.
With regard to the Company’s debt amortization schedule, Gener does not have significant debt maturing in 2013. It should be noted that 2014
maturities were reduced significantly, from ThUS$628.344 as of June 30, 2011 to ThUS$379,567 as of December 31, 2011 as the result of the refinancing
process that was completed in August 2011. This process, as part of a liability management activity was conducted in order to extend the maturity of a
significant portion of the Company’s corporate debt. The process included the acceptance of offers of exchange and tender for approximately 63% of
the 7.5% ThUS$400,000 U.S. Senior Notes due 2014, offers of tender for approximately 48% of the 8.0% ThUS$196,000 Series Q Chilean Notes due
2019 and issuance of new 5.25% ThUS$401.682 U.S. Senior Notes due 2021.
OPERATIONAL RISKS
Operational risks relate to the possibility of future outages or deficiencies that can negatively affect the Company’s strategic operational and/or financial
objectives.
HYDROLOGY
AES Gener’s operations in the SIC and Colombia may be affected by hydrological conditions, as hydrology is key to plant dispatch and prices in both
systems. The Company uses its own statistical models to evaluate the risks associated with its contractual commitments. In general terms, AES Gener’s
commercial strategy in Chile is to execute long-term contracts for its efficient generation plants, reserving other more expensive units for sales in the
spot market. In Colombia, the commercial strategy focuses on optimal use of the reservoir with the general objective of contracting 75-85% of expected
generation, taking into account project hydrological conditions.
NATURAL GAS SUPPLY
As a result of restrictions in the supply of natural gas, combined cycle plants in Chile, including Eléctrica Santiago’s plant, currently operate alternatively
with diesel or LNG.TermoAndes, following requirements of the Argentine authorities and seeking to maximize energy exports to the SING, connected its
two gas turbines to the Argentine electricity market or SADI in 2008, maintaining its steam turbine connected to the SING. In recent years, TermoAndes
has been affected by gas restrictions which resulted in suspension of electricity exports to Chile, particularly during winter months. However, since midDecember 2011 to the present, 100% of TermoAndes’ production has been utilized to supply demand in the SADI. It should be noted that the export
permit to deliver energy to the SING in Chile expired on January 31, 2013 and its renewal and other alternatives are being evaluated by the Company.
Currently, TermoAndes holds natural gas supply contracts with Argentine producers and the Company estimates that in the case of potential gas supply
restrictions, TermoAndes has certain alternatives to mitigate the impact of gas supply interruptions which include contract price indexation mechanisms,
spot gas purchases and back-up supply from other generators.
191
INVESTMENT PROJECTS
The execution of the investment projects being developed by the Company depends on numerous factors, including fuel availability, the cost and
availability of construction equipment and financing, and the effect of delays or difficulties in the regulatory authorization and permitting process, including
potential litigation or lawsuits. It should be noted that adequate project development includes making investments related to diverse project areas such
as studies, easements, land preparation and construction of roads, among others, before the approval and final execution of the project.
REGULATORY RISKS
AES Gener, its subsidiaries and related companies are subject to regulation in diverse aspects of their businesses in the countries in which they operate.
Regulatory risk is related to potential modifications in existing legislation that could adversely affect the Company’s financial results.
REGULATORY FRAMEWORK
As electric generation companies, AES Gener, its subsidiaries and related companies are subject to regulation in diverse aspects of their business. The
current regulatory framework which governs all electricity supply companies has been in effect in Chile since 1982 and in Colombia since 1994.
In Chile, the authorities, together with electric sector companies, is currently working to establish and implement a regulatory mechanism to resolve
potential situations in which distribution companies do not have valid energy supply contracts, since this situation is not addressed in existing legislation.
In the past, and most recently as a result of the Campanario bankruptcy in 2011, the government has implemented additional and specific measures to
maintain uninterrupted energy supply to distribution companies. In this case, the authorities required all the CDEC-SIC generators to supply Campanario’s
contracts with two distribution companies based on their pro rata contributions of effective injections to the system.
In the past few years, Colombian authorities have discussed proposals to make certain regulatory changes. One proposal is to replace or complement
the current public auction system in which each distribution company holds an auction for its specific requirements and subsequently executes bilateral
contracts with generation or trading companies, with a centralized auction in which the market administrator purchases energy for all distribution
companies. Additionally, a proposal has been discussed which would allow authorities to dictate emergency energy situations, in cases such as severe
drought conditions, in order to implement measures to prevent shortages and other negative economic impacts.
In Argentina, since 2001, significant modifications have been made to the electricity regulatory framework. These modifications include tariff conversion
to Argentinean Pesos, freezing of tariffs, the cancelation of inflation adjustment mechanisms and the introduction of a complex pricing system, which
have materially affected electricity generators and other market agents, and generated substantial price differences within the market. The Argentine
government has continued to intervene in the energy sector additional modifications to Argentine electricity sector regulations are likely. In August 2012,
authorities advised of a proposal to modify the current energy regulatory framework, moving from a “marginal cost market” to a “revenue requirement
market”, although, at present, the details or timing for this modification are not known.
AES Gener cannot guarantee that the laws or regulations in the countries in which it operates or has investments will not be modified or interpreted in
a manner which could adversely affect the Company or that governmental authorities will effectively grant any approval requested. AES Gener actively
participates in the development of the regulatory framework, submitting comments and proposals to the proposed regulations presented by authorities.
ENVIRONMENTAL REGULATION
AES Gener is also subject to environmental regulations, which, among others, require that it perform environmental impact studies for its future projects
and obtain regulatory permits. AES Gener cannot guarantee that governmental authorities will effectively grant any environmental approval requested.
It should be noted that in June 2011, a new regulation on air emission standards was enacted which established new emission limits for particulate matter
and gases produced of thermoelectric power generation. For existing plants, including those currently under construction, the new limits for particulate
matter emission will go into effect by the end of 2013 and the new limits for SO2, NOX and mercury emission will begin to apply by mid-2016, with the
exception of plants that operates in zones declared as latent or saturated, where the limits will go into effect in June 2015. In order to comply with the
new emission standards, we estimate that AES Gener will have to invest approximately ThUS$280,000 between 2012 and 2015, in emissions reduction
equipment in four older coal plants (constructed between 1964 and 1997), including its proportional investment in an equity-method investee, Guacolda.
The Company has already executed contracts with equipment suppliers and has initiated preliminary works in order to comply within the required
timeframe. It should be noted that during 2012, the Company initiated these investments, totaling an amount of ThUS$42,000 in the period. AES Gener’s
coal plants that recently initiated operations (Nueva Ventanas in the SIC and Angamos Units I and II in the SING) and the Ventanas IV plant currently in
construction will not require additional investments.
192
TAX REGULATION
AES Gener, its subsidiaries and affiliates are subject to existing tax legislation in each country where they operate. Amendments to laws or modification
in tax rates may have a direct effect on earnings.
In Chile, on September 27, 2012, Tax Reform Law 20,630 was published, the principal impact of which was a permanent increase in the first category
corporate tax rate from 17% to 20%. Similarly, in Colombia, on December 26, 2012, Tax Reform Law 1620 was published. Under this amendment, the
corporate income tax rate was reduced 33% to 25%; additionally, however, a new tax called the “Equality Income Tax” (CREE) equivalent to 8% was
adopted. Nonetheless, the tax reform specified that this new tax will temporarily be equal to 9% in years 2013, 2014 and 2015, before being reduced to
the permanent rate of 8%. Finally, in Argentina in 2012, the government announced the termination of the tax treaty between Chile and Argentina which
prevented double taxation, effective from January 1, 2013.
193
SUMMARIZED FINANCIAL STATEMENTS FROM SUBSIDIARIES
EMPRESA ELÉCTRICA ANGAMOS S.A.
ASSETS
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
153,028
1,065,870
189,169
1,041,072
TOTAL ASSETS
1,218,898
1,230,241
12-31-2012
THUS$
12-31-2011
THUS$
94,762
805,779
318,357
102,339
813,687
314,215
1,218,898
1,230,241
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
Profit (Loss) before Tax
Income Tax Expense (Income)
94,735
44,941
7,839
55,296
26,206
6,622
PROFIT (LOSS )
37,102
19,584
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
Total Other Income and Expenses with Charge or Credit to Net Equity
37,102
-5,949
19,584
-66,045
TOTAL RESULTS FROM COMPREHENSIVE INCOME AND EXPENSES
31,153
-46,461
NET EQUITY AND LIABILITIES
Current Liabilities
Net Equity
TOTAL NET EQUI TY AND LIABILITIES
194
AES GENER S.A. Y SUBSIDIARIAS
Estados Resumidos de Filiales
Net Cash Flows from (used in) Operating Activities
Net Cash Flows from (used in) Investing Activities
Net Cash Flows from (used in) Financing Activities
Increase (Decrease) in Net Cash and Cash Equivalent
Effects of Foreign Exchange Variations on Cash and Cash Equivalent
Cash and Cash Equivalent, Statement of Cash Flows, Initial Balance
Cash and Cash Equivalent, Statement of Cash Flows, Final Balance
12-31-2012
THUS$
12-31-2011
THUS$
102,227
-64,569
-21,040
16,618
488
68,465
85,571
9,959
-117,323
165,954
58,590
-2,710
12,585
68,465
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
Beginning Balance Current Period 01/01/2012
Changes in Net Equity
336,927
-27,000
1,125
0
2,620
-11
-49,050
-5,949
22,593
37,102
0
0
314,215
4,142
FINAL BALANCE CURRENT PERIOD
12/31/2012
309,927
1,125
2,609
-54,999
59,695
0
318,357
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
STATEMENT OF CHANGES IN NET EQUITY
12/31/2011
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
THUS$
THUS$
336,927
1,125
2,604
16
16,995
-66,045
3,009
19,584
0
360,660
-46,445
336,927
1,125
2,620
-49,050
22,593
0
314,215
195
ENERGEN S.A.
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
90
104
114
94
TOTAL ASSETS
194
208
12-31-2012
THUS$
12-31-2011
THUS$
Current Liabilities
Net Equity
1
187
6
12
187
9
194
208
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
0
-2
0
0
-12
0
PROFIT (LOSS )
-2
-12
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
-2
0
-12
0
-2
-12
ASSETS
196
12-31-2012
THUS$
12-31-2011
THUS$
-5
0
0
-5
0
13
8
-3
0
0
-3
0
17
13
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
THUS$
THUS$
38
-7
0
0
0
0
0
-29
4
0
0
9
-3
12/31/2012
31
0
0
0
-25
0
6
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
12/31/2011
THUS$
THUS$
38
0
0
0
0
0
-17
-12
0
21
-12
38
0
0
0
-29
0
9
197
GENER ARGENTINA
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
100,194
248,037
73,983
292,579
TOTAL ASSETS
348,231
366,562
12-31-2012
THUS$
12-31-2011
THUS$
Current Liabilities
Net Equity
81,175
74,091
192,965
67,454
64,077
235,031
348,231
366,562
12-31-2012
THUS$
12-31-2011
THUS$
34,057
13,453
12,245
18,429
6,702
5,377
1,208
1,325
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
1,208
0
1,325
7
1,208
1,332
ASSETS
Gross Profit
PROFIT (LOSS )
198
12/31/2012
12/31/2011
ISSUED
SHARE
CAPITAL PREMIUM
12-31-2012
THUS$
12-31-2011
THUS$
83,889
-27,325
0
56,564
-5,029
6,490
58,025
29,173
-42,760
0
-13,587
-294
20,371
6,490
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
THUS$
THUS$
224,929
0
0
0
98
8,903
-60,728
1,123
70,732
-52,092
235,031
-42,066
224,929
0
0
9,001
-59,605
18,640
192,965
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
THUS$
THUS$
224,929
0
0
0
91
7
-61,401
673
70,076
656
233,695
1,336
224,929
0
0
98
-60,728
70,732
235,031
199
NORGENER S.A.Y FILIALES
ASSETS
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
585,379
3,176,111
292,242
2,263,900
TOTAL ASSETS
3,761,490
2,556,142
12-31-2012
THUS$
12-31-2011
THUS$
Current Liabilities
Net Equity
236,088
2,113,398
1,412,004
187,649
1,775,785
592,708
3,761,490
2,556,142
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
430,796
311,464
100,773
155,569
83,983
18,100
PROFIT (LOSS )
210,691
65,883
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
210,691
626,097
65,883
-78,272
TOTAL RESULTS FROM COMPREHENS IVE INCOME AND EXPENSES
836,788
-12,389
200
ISSUED
SHARE
CAPITAL PREMIUM
12-31-2012
THUS$
12-31-2011
THUS$
281,433
-228,143
-12,416
40,874
12,931
206,310
260,115
46,378
-265,387
259,327
40,318
-3,021
40,991
78,288
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
THUS$
THUS$
Statement of Changes in Net Equity
Cambios en patrimonio
261,538
20,974
0
197,007
5,612
-146,556
626,097
280,702
163,270
17
3,343
592,708
819,296
12/31/2012
282,512
0
202,619
479,541
443,972
3,360
1,412,004
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
12/31/2011
THUS$
THUS$
261,538
0
196,669
338
-68,284
-78,272
219,819
60,883
17
609,759
-17,051
261,538
0
197,007
-146,556
280,702
17
592,708
201
EMPRESA ELÉCTRICA VENTANAS S.A.
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
29,974
400,566
16,773
409,518
TOTAL ASSETS
430,540
426,291
12-31-2012
THUS$
12-31-2011
THUS$
Current Liabilities
Net Equity
49,086
387,833
-6,379
39,506
408,470
-21,685
430,540
426,291
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
45,348
20,105
3,959
43,034
16,446
2,849
PROFIT (LOSS )
16,146
13,597
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
16,146
3,853
13,597
-11,915
19,999
1,682
ASSETS
202
12-31-2012
THUS$
12-31-2011
THUS$
40,047
-11,979
-21,089
6,979
135
9,754
16,868
45,430
-2,101
-61,809
-18,480
-108
28,342
9,754
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
34,247
-4,693
0
0
116
0
-38,928
3,853
-17,120
16,146
0
0
-21,685
15,306
12/31/2012
29,554
0
116
-35,075
-974
0
-6,379
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
12/31/2011
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
THUS$
THUS$
THUS$
THUS$
THUS$
THUS$
77,068
-42,821
0
116
0
-27,013
-11,915
-30,717
13,597
0
19,454
-41,139
34,247
0
116
-38,928
-17,120
0
-21,685
203
GENER BLUE WATER LTD.
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
25,110
0
23,285
0
TOTAL ASSETS
25,110
23,285
12-31-2012
THUS$
12-31-2011
THUS$
Current Liabilities
Net Equity
7
12
25,091
7
12
23,266
25,110
23,285
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
-62
1,825
0
-134
-2,666
0
PROFIT (LOSS )
1,825
-2,666
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
1,825
0
-2,666
0
1,825
-2,666
ASSETS
204
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
24,166
0
0
0
0
0
8,750
0
-9,652
1,825
2
0
23,266
1,825
12/31/2012
24,166
0
0
8,750
-7,827
2
25,091
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
MUS$
MUS$
MUS$
MUS$
12/31/2011
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
MUS$
MUS$
MUS$
MUS$
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
24,166
0
0
8,750
0
-6,987
-2,665
3
-1
25,932
-2,666
24,166
0
0
8,750
-9,652
2
23,266
205
AES CHIVOR & CIA S.C.A. E.S.P.
12-31-2012
THUS$
12-31-2011
THUS$
345,110
727,741
183,783
664,053
1,072,851
847,836
12-31-2012
THUS$
12-31-2011
THUS$
276,602
314,062
482,187
37,553
283,530
526,753
1,072,850
847,836
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
247,660
210,698
70,356
232,278
188,474
66,431
PROFIT (LOSS )
140.342
122.043
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
140,342
54,808
122,043
-4,922
195,150
117,121
ASSETS
Current Assets
Non-Current Assets
TOTAL ASSETS
Current Liabilities
Net Equity
206
12-31-2012
THUS$
12-31-2011
THUS$
170,814
-163,425
-1,605
5,784
12,426
128,022
146,232
141,516
-5,726
-13,017
122,773
-86
5,335
128,022
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
0
0
10,553
0
58,932
124
152,341
54,808
304,927
-99,498
0
0
526,753
-44,566
12/31/2012
0
10,553
59,056
207,149
205,429
0
482,187
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
COMPONENTS
OF EQUITY
THUS$
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
MUS$
MUS$
MUS$
MUS$
12/31/2011
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
MUS$
MUS$
MUS$
MUS$
THUS$
THUS$
0
10,553
58,806
126
157,263
-4,922
190,875
114,052
0
0
417,497
109,256
0
10,553
58,932
152,341
304,927
0
526,753
207
GENERGÍA POWER LTD.
12-31-2012
THUS$
12-31-2011
THUS$
Current Assets
Non-Current Assets
16,707
0
15,897
0
TOTAL ASSETS
16,707
15,897
12-31-2012
THUS$
12-31-2011
THUS$
Current Liabilities
Net Equity
17
28
16,662
311
28
15,558
16,707
15,897
12-31-2012
THUS$
12-31-2011
THUS$
Gross Profit
-44
1,104
0
-111
-1,651
0
PROFIT (LOSS )
1,104
-1,651
12-31-2012
THUS$
12-31-2011
THUS$
Profit (Loss)
1,104
0
-1,651
0
1,104
-1,651
ASSETS
208
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
22,448
0
0
0
0
0
-1,413
0
-5,479
1,104
2
0
15,558
1,104
12/31/2012
22,448
0
0
-1,413
-4,375
2
16,662
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
MUS$
MUS$
MUS$
MUS$
12/31/2011
ISSUED
SHARE
CAPITAL PREMIUM
OTHER
RESERVES
RETAINED
EARNINGS
MINORITY
INTERESTS
NET EQUITY
TOTAL
MUS$
MUS$
MUS$
MUS$
THUS$
THUS$
OTHER
COMPONENTS
OF EQUITY
THUS$
22,448
0
0
-1,413
0
-3,828
-1,651
2
17,209
-1,651
22,448
0
0
-1,413
-5,479
2
15,558
209
08
CHAPTER
ADDITIONAL
INFORMATION
08 / ADDITIONAL INFORMATION
RELEVANT EVENTS
REPORTED TO THE CHILEAN SECURITIES AND
INSURANCE AUTHORITY (SVS) IN 2012
JANUARY 4
MARCH 30
Pursuant to SVS Official Circular No. 1891 of May 14, 1993, the
Company reported the total amount that went uncollected on
dividend no. 83, paid starting on December 27, 2006.
The SVS was informed of the Ordinary Shareholders’ Meeting
called for April 27, 2012 to discuss the following matters:
FEBRUARY 15
Pursuant to SVS Official Circular No. 1368 of 1993, the Company
reported on fees paid to external auditors for the period from
January 1 to December 31, 2011.
MARCH 13
The External Auditors’ Report was sent to the SVS, pursuant to
SVS Circular No. 979 of 1990.
212
1. Approval of the Financial Statements and the Annual Report for
the fiscal year ending December 31, 2011, including the External
Auditors’ Report;
2. Distribution of earnings and dividends, especially the payment
of a mandatory dividend of US$0.0121225 per share, from which
the interim dividend of US$0.009790 paid in September 2011
was to be deducted; a first additional dividend of US$0.0093160
per share, and a second additional dividend of US$0.0189699
per share, all charged against fiscal year 2011 earnings;
3. The election of the company’s Board of Directors;
MARCH 30
Material Event
4. Setting of the remunerations for the Board Committee
members, approval of the budget for the Committee and
its consultants for 2012, and the report on the Committee’s
expenses and activities during 2011;
5. Designation of an external auditing company for the 2012
fiscal year;
6. Dividend policy;
7. Information on transactions between related companies as
referred to in Title XVI of the law governing corporations.
8. Other matters pertinent to this type of meeting; and
9. In general, to reach any other agreements necessary or
appropriate for resolving matters normally handled at Ordinary
Shareholders’ Meetings.
The company reported on the dividend distribution proposal
agreed upon at the regular meeting of the Board of Directors
held on March 28, 2012. The proposal consists of distributing the
following dividends:
i) A minimum mandatory dividend of US$0.0121225 per share,
charged against fiscal year 2011 earnings, from which the interim
dividend of US$0.009790 per share paid in September of 2011 is
to be deducted; this gives a dividend of US$0.0023325 per share
to be paid on May 8, 2012.
ii) A first additional dividend of US$0.0093160 per share, also
charged against fiscal year 2011 earnings and to be paid on May 8,
2012.
iii) A second additional dividend of US$0.0189699 per share,
also charged against fiscal year 2011 earnings, to be paid on
August 8, 2012.
213
APRIL 27
Material Event
It reported that the Company’s entire Board of Directors was
voted on at the Ordinary AES Gener Shareholders’ meeting held
on April 27, 2012, and that the Chairman was appointed at the
Extraordinary Meeting of the Board held on the same date.
APRIL 30
I t r e por ted t hat t he A E S G e ne r s ha r e hold e r s , in a n
Ordinary Meeting held on April 27, 2012, voted to distribute
approximately 100% of the fiscal year 2011 earnings, equivalent
to US$326 ,083,626 .40, by dis tr ibuting: (a) a minimum
mandatory dividend of US$0.0121225 per share for a total of
US$97,824,926.52, which is 30% of fiscal year 2011 earnings; the
interim dividend of US$0.009790 per share paid in September
2011 for a total of US$79,002,353.53, equivalent to 24.228% of
fiscal year 2011 earnings, was to be deducted from this dividend.
214
This gave a dividend of US$0.0023325 per share for a total
of US$18,822,572.99, equivalent to 5.772% of fiscal year 2011
earnings; (b) a first additional dividend of US$0.0093160 per
share for a total of US$75,177,316.19, equivalent to 23.055% of
fiscal year 2011 earnings; and (c) a second additional dividend
of US$0.0189699 per share for a total of US$153,081,383.69,
equivalent to 46.945% of fiscal year 2011 earnings. The minimum
mandatory dividend and the first additional dividend were paid
star ting on May 8, 2012, while the second additional dividend
was paid star ting on August 8, 2012.
JULY 27
Material Event
It reported the resignation of Victoria Dux Harker from her
position as Regular Director of AES Gener.
MEMORIA ANUAL AES GENER 2012
SEPTEMBER 27
Material Event
NOVEMBER 20
Material Event
It reported that Tom O’Flynn had been appointed Regular
Director of the company, replacing Victoria Dux Harker. It also
reported that Edgar Victor Campelo had been approved as
Alternate Director for the now Regular Director Tom O’Flynn.
It reported the resignation of Edward C. Hall as Regular Director
of AES Gener.
OCTOBER 26
It reported that Diamond Pacific Investment Limitada, a subsidiary
of the Mitsubishi Corporation, had become a shareholder of
the AES Gener subsidiary Empresa Eléctrica Cochrane SpA by
subscribing 40% of the shares of that Company.
It reported that in the regular meeting held on October 24, 2012,
the AES Gener Board agreed to distribute US$71,000,000, to be
charged against fiscal year 2012 earnings, in an interim dividend
of US$0.0087983 per share to be paid starting on November
15, 2012.
NOVEMBER 30
Material Event
INFORMATION ON
RELATED COMPANIES
AS OF DECEMBER 31, 2012
216
AES CHIVOR & CIA SCA ESP
Identification
Directors
Type of Company
Regular Directors
Foreign Partnership Limited by Shares
(57 1) 407-9555
Daniel Stadelmann (1)
Luis Carlos Valenzuela
Roberto Junguito
Felipe Cerón (2)
Francisco Morandi
(57 1) 642-7311
Alternate Directors
Address
Av. Calle 100 N° 19-54, 9th Floor, Bogotá, Colombia
Telephone
Fax
Generation and sale of electricity. Maintenance and repair
of equipment used in generation or other similar types of
plants.
Federico Echavarría
Alberto Zavala (9)
Bernerd Da Santos
Arminio Borjas (3)
Javier Giorgio (4)
Capital and shares
CEO
Business activity
Paid-in capital
Subscribed and paid shares
Personnel*
US$ 0 (Col$ 0)
222,818,836
Ownership
99.99% indirectly through Norgener S.A.
(222,769,668 shares) and AES Gener (1 share)
Technicians and administrative personnel: 30
Professionals: 55
Executives: 6
AES CHIVOR S.A. (MANAGING PARTNER OF AES CHIVOR & CIA SCA E.S.P.)
Identification
Capital and shares
Type of Company
Paid-in capital
Address
Corporation (Foreign)
Av. Calle 100 Nº 19-54, 9th Floor, Bogotá, Colombia
Telephone
(57 1) 407-9555
Fax
(57 1) 642-7311
Business activity
The subscription, acquisition, sale of, or investment in
securities, shares, bonds convertible into shares, and all
types of debt instruments; investments in other companies;
investments in all types of goods for it to carry out its
business activities; joint ownership of other companies,
contributing capital to or acquiring or holding shares
and debt of other companies. It does not collateralize or
guarantee third-party debt or that of its own shareholders.
US$57,554 (Col$120,000,000)
120,000
Ownership
99.38% directly and indirectly through
Norgener S.A. and Sociedad Eléctrica Santiago S.A.
Directors
Regular Directors
Felipe Cerón (2)
Alberto Zavala (9)
Alternate Directors
Martha Lucia Martinez
Patricia Aparicio
CEO
217
ALTO MAIPO SPA
Identification
Capital and shares
Type of Company
Capital
Chilean Taxpayer ID No.
Paid-in capital
Stock Corporation
76.170.761-2
Address
Rosario Norte N° 532, 19th Floor
Las Condes, Santiago, Chile
US$ 200,000
US$ 2,000
Issued and paid shares
100
Ownership
(56 2) 2686-8900
100% directly and indirectly through
Norgener S.A.
(56 2) 2686-8990
Telephone
Fax
Business activity
Hydroelectric power generation; providing engineering services;
transmission and distribution of electricity.
Directors
Javier Giorgio (4)
Michael Whittle (7)
CEO
Osvaldo Ledezma (6)
Identification
Type of company
Close Corporation
76.004.976-K
Address
21,002,628,303
Ownership
Inversiones Nueva Ventanas S.A.
(56 2) 2686-8900
Directors
Telephone
Fax
(56 2) 2686-8990
Business activity
Osvaldo Ledezma (6)
Iván Jara (8)
Generation, transmission, purchase, sale, and distribution of
electricity or any other kind of energy, anywhere in the country or
in other countries.
CEO
Capital and shares
Professionals: 44
Executives: 2
Paid-in capital
US$ 309,927,180
218
Javier Giorgio (4)
Personnel*
Empresa Eléctrica Campiche S.A.
Identification
Ownership
Close Corporation
76.008.306-2
Rosario Norte 532, 19th Floor
Directors
Type of Company
Address
Telephone
(56 2) 2686-8900
Business activity
Osvaldo Ledezma (6)
Javier Giorgio (4)
Osvaldo Ledezma (6)
Generation, transmission, sale, and distribution of electricity;
extraction, distribution, and exploitation of fuels.
CEO
Capital and shares
Personnel*
Iván Jara (8)
Professionals: 20
Executives: 2
Paid-in capital
US$8,669,066
522,974,841
Empresa Eléctrica Cochrane SpA
Ownership
Identification
Close Corporation
60% indirectly through
Norgener S.A.
76.085.254-6
Type of Company
Address
Rosario Norte N° 532, 19 Floor
th
Telephone
(56 2) 2686-8900
Business activity
Generation, transmission, sale, and distribution of electricity;
extraction, distribution, and exploitation of fuels.
Capital and shares
Paid-in capital
US$22,766,544
102,518,247
Directors
Luciano Aparicio (15)
Laurie Kelly (12)
CEO
Javier Giorgio (4)
Identification
Type of Company
Jorge Rodríguez Grossi
Directors
Address
Felipe Cerón (2)
Osvaldo Ledezma (6)
Javier Giorgio (4)
Sven Von Appen
Marcos Büchi
Eduardo Navarro
Jorge Ferrando
Close Corporation
96.635.700-2
Apoquindo N° 3885, 10th Floor Las Condes, Santiago, Chile
Telephone
(56 2) 2362-4031
Fax
(56 2) 2362-1675
Business activity
Exploitation, generation, transmission, purchase, distribution, and
sale of electricity; providing port and pier, engineering, and other
services.
Capital and shares
Paid-in capital
US$343,160,031,000
217,691,224
Ownership
50%
Regular Directors
Alternate Directors
Carlos Aguirre (10)
Laurie Kelly (12)
Juan Ricardo Inostroza (11)
Iván Jara (8)
Dag Von Appen
Wolf Von Appen
Rodrigo Huidobro
Franco Gorziglia
CEO
Marco Arróspide
Identification
Capital and shares
Type of company
Paid-in capital
Close Corporation
96.814.370-0
Address
Rosario Norte N° 532, 19th Floor,
Telephone
(56 2) 26868900
Business activity
Generation, transmission, purchase, sale, and distribution of
electricity or any other kind of energy, anywhere in the country
or in other countries; extraction, distribution, sale, and exploitation,
in any way, of solid, liquid, and gaseous fuels; sale and providing of
engineering, maintenance, and repair services; lease, construction,
or acquisition of piers or ports and their exploitation, in any
way, and all other productive and commercial activities that are
complementary to these business activities.
US$ 29,553,538
39,719,916,310
Ownership
Directors
Regular Directors
Osvaldo Ledezma (6)
Iván Jara (8)
Alternate Directors
Cristián Antúnez (16)
Jimena Alvarado (17)
CEO
Javier Giorgio (4)
220
Energen S.A.
Identification
Type of Company
Foreign Corporation
Address
Avda. Alicia M. de Justo 270 2nd Floor, Capital Federal
C1107AAF, Argentina
Telephone
Capital and shares
Paid-in capital
US$30,704 (AR$111,710)
111,710
Ownership
(54 11) 4891-2300
94% directly and 6% indirectly
through Gener Argentina S.A.
Business activity
Wholesale purchase and sale of electricity generated by or to be
used by other companies; import, export, consignment, brokerage,
and sale of electricity in Argentina and/or in other countries; any
type of business and/or activity related to electricity generation,
transmission, and distribution; sale of fuel of any kind.
Javier Giorgio (4)
Directors
Regular Directors
Martín Genesio
Jorge Rauber (5)
Alternate Director
Osvaldo Ledezma (6)
CEO
Martín Genesio
Gasoducto Gasandes S.A.
Identification
Capital and shares
Type of Company
Paid-in capital
Close Corporation
96.721.360-8
Address
Avenida Chena 11650, Parque Industrial Puerta Sur San Bernardo,
Santiago, Chile
Telephone
(56 2) 2366-5960
Fax
US$59,264,000
172,800
Ownership
13%
Alain Petitjean
(56 2) 2366-5983
Directors
Business activity
Alain Petitjean
Raúl Montalva D.
Eric Delaffose
Matías Pérez Cruz Santiago Marfort
Rubén Nasta
María Inés Canalis
Osvaldo Ledezma (6)
Eduardo Ojea Quintana
Ricardo Bravo
Philippe Dupuis
Martín Genesio
Néstor Raffaeli
Claudia Elsholz
Hugo Carranza
Marisa Basualdo
Víctor Turpaud Fernández.
Fernando Liguori
This company is in the business of transporting natural gas and
investing in everything related to natural gas services in Chile or
in other countries, on its own behalf, in association with, or on
behalf of third parties; it is able to apply for the concessions and
permits needed for these purposes. The company may take part
in any kind of business or activity directly or indirectly related
to its line of business, including but not limited to: establishing,
operating, exploiting, handling, and using natural gas transportation
facilities or networks; separating and processing natural gas liquids;
the engineering and technical services necessary for pipelines or
ducts; administering the construction of pipelines or ducts; and, in
general, all of the services or activities connected with transporting,
marketing, storing, or processing natural gas.
Regular Directors
Alternate Directors
221
Gasoducto Gasandes Argentina S.A.
Identification
Type of Company
Foreign Corporation
83,467,000
Ownership
Address
13%
Telephone
Moreno 877, 11th Floor, Capital Federal, Argentina
(54 11) 4316-5600
Fax
(54 11) 4316-5601
Business activity
Natural gas transportation
Capital and shares
Paid-in capital
AR$83,467,000 (US$19,393,000)
83,467,000
Alain Petitjean
Directors
Raúl Montalva
Alain Petitjean
Ruben Nasta
María Ines Canalis
Eduardo Ojea Quintana
Santiago Marfort
Eric Delafosse
Matías Pérez
Osvaldo Ledezma (6)
Gener Argentina S.A.
Identification
Type of Company
Foreign Corporation
Address
Avda. Alicia M. de Justo 270 2nd Floor, Capital Federal C1107AAF,
Argentina
Capital and shares
Paid-in capital
AR$544,443,672 (US$ 224,928,640)
544,443,672
Ownership
Telephone
(54 11) 4891-2300
92.0% directly and 7.96% indirectly
through Norgener S.A.
Business activity
Financial and investment transactions on its own or others’
behalf, including granting or taking out loans; capital contributions;
purchases of shares, debentures, negotiable debt instruments,
transferable securities, and commercial papers; taking part directly
or through other controlled or related companies in bid(s) for
shares of companies whose assets are hydraulic or thermal plants
that have not yet been privatized by the Argentine government or
that develop other projects in the Argentine power industry.
Javier Giorgio (4)
Directors
Regular Directors
Martín Genesio
Jorge Rauber (5)
Alternate Directors
Osvaldo Ledezma (6)
CEO
Martín Genesio
222
Gener Blue Water Limited
Identification
Type of Company
Foreign Limited Company
Address
P.O. Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
Telephone
(1 345) 949-8066
Fax
Capital and shares
Paid-in capital
US$17.098.026
Participación
100%
Directors
Laurie Kelly (12)
Alberto Zavala (4)
(1 345) 949-8080
Business activity
Any line of business, may carry out all types of business activities
and investments.
Genergia Power LTD.
Identification
Type of Company
Foreign Limited Company
Address
P.O. Box 309, Ugland House
Grand Cayman
KY1-1104
Cayman Islands
Telephone
(1 345) 949-8066
Fax
Capital and shares
Paid-in capital
US$4.291.721
Ownership
100%
Directors
Laurie Kelly (12)
Alberto Zavala (9)
(1 345) 949-8080
Business activity
Investments in South America
223
Genergía S.A.
Identification
Type of Company
Directors
Close Corporation
96.761.150-6
Regular Directors
Rosario Norte N°532 , 19th Floor
Javier Giorgio (4)
Laurie Kelly (12)
(56 2) 2686-8900
Alternate Directors
Address
Telephone
Fax
(56 2) 2686-8990
Business activity
Investments, engineering consultation services.
Capital and shares
Armando Lolas (18)
Jimena Alvarado (17)
CEO
Cristián Antúnez (16)
Paid-in capital
US20,613,514
2,488,637
Ownership
99.99% indirectly through Genergia Power Ltd.
InterAndes S.A.
Identification
Capital and shares
Type of Company
Paid-in capital
Address
Foreign Corporation
Ruta Nacional N°9 Km. 1557, Cobos, Salta CP4432,
Argentina
AR$135,365,996 (US$55,876,946.)
135,365,996
Ownership
(54 387) 491-9646
13% directly and 87% indirectly
(54 387) 491-9657
Telephone
Fax
Business activity
Building, operating, and/or maintaining power transmission lines and
systems of any voltage; transmitting power of any voltage within
Argentina or across its borders; and generating, selling, exporting,
and importing electricity.
Javier Giorgio (4)
Directors
Regular Directors
Jorge Rauber (5)
Martín Genesio
Alternate Directors
Osvaldo Ledezma (6)
CEO
Martín Genesio
224
Identification
Capital and shares
Type of Company
Paid-in capital
Close Corporation
76.803.700
Address
Telephone
(56 2) 2686-8900
Fax
(56 2) 2686-8990
Business activity
Investments in all types of assets, movable and immovable,
tangible and intangible; ownership interest in other companies.
US$ 373,003,211
261,660,937,852
Ownership
100% directly and indirectly
through Norgener S.A.
Directors
Laurie Kelly (12)
CEO
Iván Jara (8)
Inversiones Termoenergia de Chile Limitada
Identification
Capital
Type of Company
Paid-in capital
Ownership
Limited Liability Company
78.759.060-8
Address
Telephone
(56 2) 2686-8900
Fax
(56 2) 2686-8990
Business activity
All types of energy projects: generation,
transmission, marketing, and purchase and
sale of electricity, natural gas, and all types of
energy, on its own or others’ behalf.
US$23,016,394
99.99% indirectly through
Gener Blue Water Ltd.
Norgener S.A.
Identification
Type of Company
Close Corporation
96.678.770-8
Address
Jorge Hirmas 2960,
Renca, Santiago, Chile
Telephone
(56 2) 2680-4710
1,967,659,831
Ownership
99.99% directly
Directors
Fax
(56 2) 2680-4895
Juan Ricardo Inostroza (11)
Javier Giorgio (4)
Business activity
CEO
Generation, transmission, and sale
of electricity.
Capital and shares
Paid-in capital
US$282,511,865
Javier Giorgio (4)
Personnel*
Professionals: 52
Sociedad Eléctrica Santiago S.A.
Identification
Type of Company
Javier Giorgio (4)
Directors
Close Corporation
Jorge Hirmas 2964, Renca, Santiago, Chile
Javier Giorgio (4)
Gil Posada (13)
(56 2) 2680-4760
CEO
96.717.620-6
Address
Telephone
Fax
(56 2) 2680-4743
Business activity
Exploitation, generation, transmission, purchase, distribution,
and sale of electricity or any other type of energy; sale of fuels;
engineering services.
Capital and shares
Paid-in capital
US$247,765,685
125,308,749
Ownership
100% directly
226
Carlos Moraga
Personnel*
Professionals: 27
TermoAndes S.A.
Identification
Type of Company
Javier Giorgio (4)
Address
Regular Directors
Foreign Corporation
Ruta Nacional N°9 Km. 1557, Cobos, Salta
CP4432, Argentina
Telephone
(54 387) 491-9646
Fax
(54 387) 491-9657
Business activity
Production, sales, export, and import of electricity,
on its own or others’ behalf.
Capital and shares
Paid-in capital
AR$581,869,516 (US$299,833,447)
Martín Genesio
Jorge Rauber (5)
Alternate Director
Osvaldo Ledezma (6)
CEO
Martín Genesio
Personnel*
Professionals: 20
Executives: 1
581,869,516
Ownership
33.01% directly and 66.99% indirectly
AES Gener S.A.’s business relations with its related companies are governed by contracts that are currently in force.Their effects are presented
in the Financial Statements.
AES Gener S.A. executives do not receive remunerations for serving as directors of related companies.
The information on subsidiaries whose corporate capital is expressed in a foreign currency other than the U.S. dollar is presented in this
section in U.S. dollars using the exchange rate in effect on December 31, 2012.
* Personnel from related companies whose results are consolidated with those of AES Gener and that have hired personnel.
(1) Chief Financial Officer of AES Gener S.A.
(2) CEO of AES Gener S.A.
(3) Director of AES Gener S.A.
(4) Chief Operations Officer of AES Gener S.A.
(5) Alternate Director of AES Gener S.A.
(6) Production Director of AES Gener S.A.
(7)Chief Development Officer of AES Gener S.A.
(8) Chief Engineering and Construction Officer of AES Gener S.A.
(9) Legal Counsel of AES Gener S.A.
(10) Margin and Transmission Manager of AES Gener S.A.
(11) Business Director of AES Gener S.A.
(12) Treasury and Investor Relations Manager
(13) Human Resources and Organizational Development Director of AES Gener S.A.
(14) Technical Manager of AES Gener S.A.
(15) Planning and Process Control Manager of AES Gener S.A.
(16) Assistant Manager of the Supply Chain of AES Gener S.A.
(17) Head of Centralized Process Department of AES Gener S.A.
(18) Equipment Manager of AES Gener S.A.
227
ADDRESSES AND TELEPHONE NUMBERS
OF POWER PLANTS
Angamos Plant
7ª Industrial N° 1100 esquina Avda.
Longitudinal Barrio Industrial Portuario
de Mejillones, Mejillones, Chile
Telephone: (56 2) 2680-4716
Alfalfal Plant
Ruta G-345 Km. 23,
San José de Maipo, Chile
Telephone: (56 2) 2686-8111
Fax: 56 2) 2686-8131
Chivor Plant
Central Hidroeléctrica Chivor,
Santa María, Boyacá, Colombia
Telephone: (57 1) 594-1400
Fax: (57 8) 594-1394
Constitución Plant
Camino a Chanco Km. 1.5
Constitución, Chile
Telephone: (56 71) 673-598
Fax: (56 71) 673-029
228
Guacolda Plant
Isla Guacolda s/n, Huasco, Chile
Telephone: (56 51) 531-577
Fax: (56 51) 531 666
Laguna Verde Plant
Camino Principal s/n,
Laguna Verde, Chile
Telephone: (56 32) 234-8055
(56 32) 234-8056
Laja Plant
Camino a Laja Km. 1.5,
Cabrero, Chile
Telephone: (56 43) 402 700
Fax: (56 43) 402 700
Los Vientos Plant
Ruta 5 Norte, Km. 91
Llay Llay, Chile
Telephone: (56 32) 686-8601
Maitenes Plant
Ruta G-345 Km. 14,
Telephone: (56 2) 2686-8111
Fax: (56 2) 2686-8111
San Francisco de Mostazal Plant
Longitudinal Sur Km. 63,
San Francisco de Mostazal, Chile
Telephone: (56 72) 492-591
Fax: (56 72) 492-460
Santa Lidia Plant
Camino a Yungay s/n Km. 7
Cabrero, Chile
Telephone (56 43) 450526
Norgener Plant
Balmaceda s/n, Tocopilla, Chile
Telephone: (56 55) 432-400
Fax: (56 55) 432-413
TermoAndes Plant
Ruta Nacional N° 9 - Km. 1557
(4432) Cobos-Salta, Argentina
Telephone: (54 387) 491-9600
Fax: (54 387) 491-9657
Nueva Ventanas Plant
Camino Costero s/n,
Puchuncaví, Chile
Telephone: (56 32) 279-6148
Ventanas Plant
Camino Costero s/n,
Puchuncaví, Chile
Telephone: (56 32) 279-6148
Queltehues Plant
Ruta G-465, Km. 3,
Telephone: (56 2) 2686 4876
Fax: (56 2) 2686 8746
Volcán Plant
Ruta G-465, Km. 3,
Telephone: (56 2) 2686-8111
Fax: (56 2) 2686-8746
Renca and Nueva Renca Plants
Jorge Hirmas 2964
Renca, Chile
Telephone: (56 2) 2680-4700
Fax: (56 2) 2680-4844
229
230
SIGNING AND STATEMENT
OF RESPONSIBILITY
As required by the regulations of the Superintendencia de Valores y Seguros (the Chilean Securities and Insurance
Authority) this AES Gener S.A. annual report has been approved and signed by the Company’s Chief Executive
Officer and the Directors listed below, who comprise a majority of the AES Gener S.A. Board of Directors as it
stands as of the date this report was published. They assume responsibility, under oath, for the accuracy of the
information contained in this report.
Andrés Gluski Weilert
CHAIRMAN OF THE BOARD
Passport Nº: 6.024.620
Venezuelan Citizen
Juan Andrés Camus
DIRECTOR
Chilean ID Nº.: 6.370.841-0
Chilean Citizen
Iván Díaz-Molina
DIRECTOR
Chilean ID Nº.: 14.655.033-9
Argentine Citizen
Radovan Razmilic Tomicic
DIRECTOR
Chilean Citizen
Luis Felipe Cerón Cerón
CHIEF EXECUTIVE OFFICER
Chilean Citizen
231
Editing and Coordination
Finance and Corporate Affairs Departments
Design and Production
Icono
Photography
AES Gener Files

annual report

Transcription

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