FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of May, 2020
Commission File Number: 001-12440
Enel Américas S.A.
(Translation of Registrant’s Name into English)
Santa Rosa 76
Santiago, Chile
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:
Form 20-F [X] Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes [ ] No [X]
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes [ ] No [X]
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
|
PRESS RELEASE
CONSOLIDATED FINANCIAL STATEMENTS OF ENEL AMÉRICAS GROUP
AS OF MARCH 31, 2020
§ | Revenues decreased by 10.3% as compared to the first quarter of 2019 reaching US$ 3,216 million explained mainly by lower revenues in the 4 countries where we have our operations. |
§ | EBITDA decreased by 6.7% reaching US$ 848 million, explained mainly by lower results in Brazil and to a lesser degree in Argentina and Peru, which was partially offset by an improved performance in Colombia. The decrease is mainly due to the devaluation of local currencies against the US dollar. Without this effect in the exchange rate, EBITDA would have increased by 9%. |
| EBITDA |
| |
Country | March 31 |
| |
2020 | 2019 | Variation | |
| million US$ | % | |
Argentina | 63 | 71 | (11.2) |
Brazil | 347 | 400 | (13.2) |
Colombia | 313 | 301 | 3.8 |
Peru | 132 | 143 | (8.3) |
Enel Américas (*) | 848 | 909 | (6.7) |
(*) Includes Holding and Adjustments |
§ | Operating Income (EBIT) decreased by 12.4% reaching US$ 545 million mainly explained by the fall in EBITDA and increased impairment losses of accounts receivable. This was partially offset by lower depreciation and amortization. |
§ | Net Income attributable to the parent company reached US$ 208 million, 1.6% more than in the same period of 2019. |
§ | Net financial debt reached US$ 3,837 million, 11.8% higher than at the close of 2019, explained mainly by a decrease in payments in Emgesa and Enel Distribución Sao Paulo. |
§ | CAPEX for the period reached US$ 301 million, 6.6% less than in the same period of the previous year, mainly because of decreased investments in Enel Distribución Sao Paulo, Codensa and Edesur. This was partially offset by CAPEX acceleration in Enel Distribución Goiás. |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
|
§ | As to the current situation arising from COVID-19, we are taking all the necessary measures to guarantee the proper functioning of our operations and safeguard the well-being of both our workers and our clients. With this in mind, we have implemented measures such as teleworking for almost 50% of our staff members and we have promoted digital means to provide information and allow remote payments, amongst others. |
SUMMARY BY BUSINESS SEGMENT
Generation
EBITDA in the generation segment decreased by 9.0% in comparison to the first quarter of last year, reachingUS$ 396 million. It is explained by worse performance mainly in Brazil due tolower energy sales and, to a lesser extent, in Argentina. Additionally, there is the effect of the devaluation of currencies which had a negative impact ofUS$ 66 million. Without this effect, EBITDA would have increased by 6%.
Physical Data
Distribution
EBITDA in the distribution segment was5.7% lower than in the first quarter of 2019, reachingUS$ 471 million; explained mainly by lower results in Brazil, Peru and, to a lesser extent, in Argentina, principally offset by improved EBITDA in Colombia. This was partially due to currency devaluation in the 4 countries. Had this not happened, EBITDA would have increased by 10%.
The number of consolidated clients increased by 0.6% while physical sales decreased by1.0%.
Physical Data
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
|
FINANCIAL SUMMARY
Ø The Company’s available liquidity has remained strong, as shown below:
• Cash and cash equivalents US$ 1,631 million
• Cash and cash equiv. + cash investments over 90 days US$ 1,671 million
• Available committed lines of credit US$ 931 million
Ø The average nominal interest rate in March 2020 decreasedto 5.9% from7.3%during the same period of the previous year, primarily affected by lower debt costs in Brazil related to the debt payment for the acquisition ofEnel Distribución Sao Paulo.
Hedging and protection:
To mitigate the financial risks associated with foreign exchange rate and interest rate fluctuations, Enel Américas S.A. has established policies and procedures aimed at protecting its financial statements against the volatility of these variables.
· | Enel Américas S.A. (consolidated) foreign exchange rate risk hedging policy establishes that there must be a balance between the index currency of the flows generated by each company and the currency in which they assume any type of debt. Therefore, the Enel Américas Group has entered intocross currency swaps ofUS$ 668 million and forwardsofUS$ 128 million. |
· | To reduce the volatility of the financial statements stemming from interest rate changes, Enel Américas Group keeps an adequate debt structure balance. To achieve the above, we have entered into interest rateswaps totalingUS$ 154 million. |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
|
INFORMATION RELEVANT TO THE ANALYSIS OF THESE FINANCIAL STATEMENTS
COVID-19 CONTINGENCY
On January 30, 2020, the World Health Organization (WHO) declared the outbreak of the new 2019 coronavirus, or COVID-19, as a "public health emergency of international concern". On March 11, 2020, the WHO confirmed that the COVID-19 outbreak has reached pandemic level, which could significantly affect all the countries in which we operate, as well as our trading partners within and outside these countries.
To address this COVID-19 international public health emergency, the governments of all the countries in which we operate have implemented various containment measures, essentially aimed at restricting the free movement of people, including quarantines, social isolation, temporary closure of businesses, amongst other measures. Governments have also taken steps to guarantee access to essential services during this health emergency, such as water and electricity, especially targeting lower-income residential clients, small and medium-sized enterprises, and institutions that provide other essential services, such as health facilities. These measures basically involve a temporary suspension of power cuts because of non-payment and also electricity bill payment deferral for a specified number of months, without any interest or penalty charges to clients.
In this regard, the Group has issued guidelines aimed at complying with the measures implemented by the governments in the countries in which we operate and has undertaken numerous actions to adopt the most appropriate procedures to prevent and/or mitigate the COVID-19 effects in the workplace, while safeguarding business continuity. The above has been possible mainly due to:
- | the use of teleworking for all employees whose work can be done remotely, a method already introduced for some years in the Group that, thanks to investments in digitization, allows remote working with the same level of efficiency and effectiveness. |
- | process and infrastructure digitization which guarantees the normal functioning of our generation assets, the continuity of electrical services and the remote management of all activities related to the market and the relationship with our clients. |
Based on the currently available information, in a scenario of continuous changes in the extent of contagion and containment measures taken by governments, it is not possible, at this time, to quantify the effects that the COVID-19 pandemic could have on our business. However, because our Group has implemented a business model that is integrated along the value chain, a sound financial structure and digitization level that guarantees the continuity of operational activities with the same level of efficiency, on the date of presenting these consolidated financial statements, there is no evidence of a significant impact by COVID-19 on the Group.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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MARKETS IN WHICH THE COMPANT OPERATES
Enel Américas owns and operates generation, transmission and distribution companies in Argentina, Brazil, Colombia and Peru. Virtually all our revenues, income and cash flows come from the operations of our subsidiaries; jointly controlled entities and associates in these four countries.
The following tables show some key indicators, as of March 31, 2020 and 2019 of the entities operating in Argentina, Brazil, Colombia and Peru.
Generation and transmission business segment
Company | Markets | Energy Sales | Market | ||
in which | (GWh) | Share | |||
operates | 2020 | 2019 | 2020 | 2019 | |
Enel Generación Costanera S.A. | SIN Argentina | 1,917 | 2,005 | 5.6% | 6.1% |
Enel Generación El Chocón S.A. | SIN Argentina | 650 | 619 | 1.9% | 1.9% |
Central Dock Sud | SIN Argentina | 1,342 | 1,066 | 3.9% | 3.3% |
Enel Generación Perú S.A. (Edegel) | SICN Peru | 2,660 | 2,737 | 20.5% | 20.7% |
Enel Generación Piura S.A. (Piura) | SICN Peru | 144 | 153 | 1.1% | 1.2% |
Emgesa S.A. | SIN Colombia | 4,183 | 4,116 | 23.2% | 23.7% |
EGP Cachoeira Dourada S.A. | SICN Brasil | 4,508 | 5,640 | 3.7% | 4.6% |
Enel Generación Fortaleza S.A. | SICN Brasil | 690 | 1,313 | 0.6% | 1.1% |
EGP Volta Grande S.A. | SICN Brasil | 536 | 561 | 0.4% | 0.5% |
Total |
| 16,630 | 18,210 |
|
|
Distribution business segment
| Energy Sales | Energy Losses | Clients | Clients / Employees | ||||
Company | (GWh)1 | (%) | (thousand) |
| ||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 20192 | 2020 | 2019 |
Empresa Distribuidora Sur S.A. (Edesur) | 4,286 | 4,214 | 15.8% | 15.4% | 2,497 | 2,472 | 715 | 664 |
Enel Distribución Perú S.A. (Edelnor) | 2,052 | 2,151 | 8.4% | 8.0% | 1,438 | 1,429 | 2,479 | 2,431 |
Enel Distribución Río S.A. | 3,066 | 3,060 | 22.0% | 21.5% | 2,951 | 3,090 | 3,002 | 3,153 |
Enel Distribución Ceará S.A. | 3,012 | 2,932 | 14.4% | 13.9% | 4,012 | 4,058 | 3,525 | 3,646 |
Enel Distribución Goiás S.A. | 3,466 | 3,484 | 12.4% | 11.1% | 3,136 | 3,047 | 2,798 | 2,902 |
Enel Distribución Sao Paulo S.A. | 10,720 | 11,142 | 9.8% | 9.5% | 7,805 | 7,680 | 1,234 | 1,125 |
Enel Codensa S.A. | 3,567 | 3,505 | 7.5% | 7.8% | 3,552 | 3,458 | 2,378 | 2,241 |
Total | 30,169 | 30,488 | 12.9% | 12.5% | 25,391 | 25,234 | 1,678 | 1,595 |
1. Includes final customer sales and tolls.
2. The number of clients for the period 2019 was modified compared to clients reported during March 2019, due to a new methodology applied since 2020.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
The following table provides a breakdown of energy sale revenues of continued operations by business segment, by client category and by country as of March 31, 2020 and 2019.
Energy Sale Revenues | ||||||||||||||
Generation and Distribution | ||||||||||||||
(Figures in million US$) | ||||||||||||||
Country | Argentina | Brazil | Colombia | Peru | Total Segments | Structure and adjustments | Total | |||||||
1Q 2020 | 1Q 2019 | 1Q 2020 | 1Q 2019 | 1Q 2020 | 1Q 2019 | 1Q 2020 | 1Q 2019 | 1Q 2020 | 1Q 2019 | 1Q 2020 | 1Q 2019 | 1Q 2020 | 1Q 2019 | |
Generation | 83 | 128 | 175 | 185 | 296 | 299 | 129 | 149 | 683 | 761 | (182) | (199) | 501 | 562 |
Regulated customers | - | - | 62 | 83 | 145 | 150 | 74 | 85 | 281 | 318 | (183) | (198) | 98 | 120 |
Non regulated customers | - | - | 80 | 85 | 92 | 108 | 48 | 56 | 220 | 249 | 1 | (1) | 221 | 248 |
Spot Market | 83 | 128 | 29 | 14 | 59 | 41 | 5 | 4 | 176 | 187 | - | - | 176 | 187 |
Other Clients | - | - | 4 | 3 | - | - | 2 | 4 | 6 | 7 | - | - | 6 | 7 |
Distribution | 216 | 266 | 1,416 | 1,673 | 244 | 348 | 227 | 236 | 2,103 | 2,523 | (1) | (5) | 2,102 | 2,518 |
Residential | 98 | 107 | 839 | 865 | 99 | 145 | 121 | 135 | 1,157 | 1,252 | (1) | (5) | 1,156 | 1,247 |
Commercial | 83 | 89 | 357 | 358 | 82 | 69 | 26 | 30 | 548 | 546 | - | - | 548 | 546 |
Industrial | 18 | 31 | 106 | 115 | 32 | 26 | 43 | 30 | 199 | 202 | - | - | 199 | 202 |
Other | 17 | 39 | 114 | 335 | 31 | 108 | 37 | 41 | 199 | 523 | - | - | 199 | 523 |
Less: Consolidation adjustments | - | - | (69) | (77) | (74) | (75) | (40) | (52) | (183) | (204) | 183 | 204 | - | - |
Energy Sales Revenues | 299 | 394 | 1,522 | 1,781 | 466 | 572 | 316 | 333 | 2,603 | 3,080 | - | - | 2,603 | 3,080 |
Variation in million US$ and %. | (95) | 24.1% | (259) | (14.5%) | (106) | (18.5%) | (17) | (5.1%) | (477) | (15.5%) | - | - | (477) | (15.5%) |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
I.- ANALYSIS OF THE FINANCIAL STATEMENTS
1. Analysis of Income Statement
The income attributable to the controlling shareholders of Enel Américas for the period which ended on March 31, 2020 reachedUS$ 208 million, which represents a1.6% increase in relation to theUS$ 204 million income registered in the same period of the previous year.
Below we present an item-by-item comparison of the income statement of the continuing operations for the periods ended on March 31, 2020 and 2019:
CONSOLIDATED INCOME STATEMENT (Continuing Operations) (million US$) | March 2020 | March 2019 | Change | % Change |
Revenues | 3,216 | 3,587 | (371) | (10.3%) |
Sales | 2,985 | 3,369 | (384) | (11.4%) |
Other operating income | 231 | 218 | 13 | 6.1% |
Procurements and Services | (1,920) | (2,208) | 288 | 13.0% |
Energy purchases | (1,351) | (1,586) | 235 | 14.8% |
Fuel consumption | (51) | (90) | 40 | 43.9% |
Transportation expenses | (260) | (291) | 32 | 10.6% |
Other variable costs | (258) | (241) | (18) | (7.1%) |
Contribution Margin | 1,296 | 1,379 | (83) | (6.0%) |
Personnel costs | (145) | (169) | 24 | 14.4% |
Other fixed operating expenses | (303) | (301) | (2) | (0.5%) |
Gross Operating Income (EBITDA) | 848 | 909 | (61) | (6.7%) |
Depreciation and amortization | (223) | (238) | 15 | 6.4% |
Reversal of impairment profit (impairment loss) recognized in profit or loss | - | - | - | - |
Impairment gains and impairment losses reversal (Impairment losses) determined in accordance with IFRS 9 | (80) | (49) | (32) | (65.6%) |
Operating Income | 545 | 622 | (77) | (12.4%) |
Net Financial Income | (114) | (150) | 36 | 24.1% |
Financial income | 80 | 119 | (39) | (32.5%) |
Financial costs | (185) | (342) | 156 | 45.7% |
Gain (Loss) for indexed assets and liabilities | 19 | 25 | (6) | (25.5%) |
Foreign currency exchange differences, net | (27) | 48 | (75) | (157.4%) |
Other Non Operating Income | 1 | - | 1 | 100.0% |
Others profit (loss) | - | - | - | - |
Results of companies accounted for by participation method | 1 | - | 1 | 100.0% |
Net Income Before Taxes | 432 | 472 | (40) | (8.5%) |
Income Tax | (122) | (156) | 34 | 21.7% |
Net Income from Continuing Operations | 310 | 316 | (6) | (2.0%) |
NET INCOME | 310 | 316 | (6) | (2.0%) |
Net Income attributable to owners of parent | 208 | 204 | 4 | 1.6% |
Net income attributable to non-controlling interest | 102 | 112 | (10) | (8.9%) |
Earning per share (US$ /share) | 0.00273 | 0.00356 | (0.00083) | (23.3%) |
(*) As of March 31, 2020 and 2019 the average number of ordinary shares were 76,086,311,036 and 57,452,641,516, respectively |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
EBITDA: |
EBITDA during the period which ended on March 31, 2020 reachedUS$ 848 million, which represents aUS$ 61 million decrease, equivalent to a 6.7% decrease in comparison to theUS$ 909 million EBITDA for the period which ended on March 31, 2019.
Operating income, operating costs, staff expenses and other costs by nature for the operations that determine our EBITDA, broken down for each business segment for periods that ended on March 31, 2020 and 2019, are presented below:
EBITDA FROM CONTINUING OPERATIONS | ||||||||
BY BUSINESS SEGMENT | ||||||||
| ||||||||
|
| As of March 31 | ||||||
|
| 2020 |
| 2019 |
| Variation |
| Variation |
|
| (US$ million) |
| % | ||||
Generation and Transmission businesses |
|
|
|
|
|
|
|
|
Argentina |
| 84 |
| 131 |
| (48) |
| (35.9) |
Brazil |
| 191 |
| 205 |
| (14) |
| (6.7) |
Colombia |
| 302 |
| 305 |
| (3) |
| (1.0) |
Peru |
| 133 |
| 158 |
| (25) |
| (15.9) |
Revenues Generation and Transmission businesses |
| 711 |
| 799 |
| (89) |
| (11.0) |
Distribution business |
|
|
|
|
|
|
|
|
Argentina |
| 226 |
| 278 |
| (52) |
| (18.6) |
Brazil |
| 1,834 |
| 2,060 |
| (224) |
| (10.9) |
Colombia |
| 400 |
| 418 |
| (19) |
| (4.4) |
Peru |
| 237 |
| 247 |
| (10) |
| (4.0) |
Revenues Distribution business |
| 2,698 |
| 3,003 |
| (305) |
| (10.2) |
Less: consolidation adjustments and other activities |
| (192) |
| (215) |
| 23 |
| (10.9) |
Total consolidated Revenues Enel Américas |
| 3,216 |
| 3,587 |
| (370) |
| (10.3) |
|
|
|
|
|
|
|
|
|
Generation and Transmission businesses |
|
|
|
|
|
|
|
|
Argentina |
| (15) |
| (54) |
| 39 |
| 72.4 |
Brazil |
| (106) |
| (73) |
| (33) |
| (44.6) |
Colombia |
| (102) |
| (114) |
| 11 |
| 9.9 |
Peru |
| (37) |
| (67) |
| 30 |
| 44.5 |
Procurement and Services Generation and Transmission businesses | (261) |
| (308) |
| 47 |
| 15.2 | |
Distribution business |
|
|
|
|
|
|
|
|
Argentina |
| (157) |
| (205) |
| 47 |
| 23.6 |
Brazil |
| (1,299) |
| (1,503) |
| 204 |
| 13.6 |
Colombia |
| (234) |
| (252) |
| 18 |
| 7.3 |
Peru |
| (161) |
| (156) |
| (5) |
| (3.0) |
Procurement and Services Distribution business |
| (1,850) |
| (2,116) |
| 266 |
| 12.5 |
Less: consolidation adjustments and other activities |
| 191 |
| 216 |
| (26) |
| 11.8 |
Total consolidated Procurement and Services Enel Américas |
| (1,920) |
| (2,208) |
| 288 |
| (13.0) |
|
|
|
|
|
|
|
|
|
Generation and Transmission businesses |
|
|
|
|
|
|
|
|
Argentina |
| (8) |
| (9) |
| 1 |
| 16.7 |
Brazil |
| (4) |
| (4) |
| 0 |
| 4.5 |
Colombia |
| (7) |
| (7) |
| 0 |
| 3.6 |
Peru |
| (8) |
| (7) |
| 0 |
| (14.2) |
Personnel Exepenses Generation and Transmission businesses | (25) |
| (27) |
| 1 |
| 7.3 | |
Distribution business |
|
|
|
|
|
|
|
|
Argentina |
| (27) |
| (26) |
| (1) |
| (2.2) |
Brazil |
| (70) |
| (90) |
| 20 |
| 21.9 |
Colombia |
| (10) |
| (13) |
| 3 |
| 19.6 |
Peru |
| (7) |
| (7) |
| 0 |
| 3.4 |
Personnel Exepenses Distribution business |
| (114) |
| (136) |
| 22 |
| 16.1 |
Less: consolidation adjustments and other activities |
| (5) |
| (6) |
| 1 |
| 19.0 |
Total consolidated Personnel Expenses Enel Américas |
| (145) |
| (169) |
| 24 |
| 14.2 |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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|
Continued:
|
| As of March 31 | ||||||
|
| 2020 |
| 2019 |
| Variation |
| Variation |
|
| (US$ million) |
| % | ||||
Generation and Transmission businesses |
|
|
|
|
|
|
|
|
Argentina |
| (6) |
| (6) |
| 0 |
| (8.8) |
Brazil |
| (4) |
| (5) |
| 1 |
| (15.4) |
Colombia |
| (9) |
| (8) |
| (1) |
| (18.6) |
Peru |
| (10) |
| (10) |
| 0 |
| 3.1 |
Other Expenses Generation and Transmission businesses |
| (29) |
| (29) |
| 0 |
| 0.3 |
Distribution business |
|
|
|
|
|
|
|
|
Argentina |
| (36) |
| (38) |
| 2 |
| 4.9 |
Brazil |
| (185) |
| (171) |
| (14) |
| (8.4) |
Colombia |
| (27) |
| (29) |
| 2 |
| 4.6 |
Peru |
| (14) |
| (14) |
| 0 |
| 0.4 |
Other Expenses Distribution business |
| (262) |
| (252) |
| (11) |
| (4.0) |
Less: consolidation adjustments and other activities |
| (12) |
| (20) |
| 8 |
| 38.7 |
Total consolidated Other Expenses Enel Américas |
| (303) |
| (301) |
| (3) |
| (0.8) |
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
|
|
|
|
|
|
Generation and Transmission businesses |
|
|
|
|
|
|
|
|
Argentina |
| 56 |
| 62 |
| (6) |
| (10.1) |
Brazil |
| 78 |
| 123 |
| (45) |
| (37.1) |
Colombia |
| 184 |
| 176 |
| 8 |
| 4.5 |
Peru |
| 79 |
| 74 |
| 5 |
| 6.7 |
EBITDA Generation and Transmission businesses |
| 396 |
| 435 |
| (38) |
| (9.0) |
Distribution business |
|
|
|
|
|
|
|
|
Argentina |
| 7 |
| 9 |
| (2) |
| (22.8) |
Brazil |
| 280 |
| 296 |
| (16) |
| (5.3) |
Colombia |
| 129 |
| 124 |
| 5 |
| 4.0 |
Peru |
| 55 |
| 70 |
| (15) |
| (20.7) |
EBITDA Distribution business |
| 471 |
| 499 |
| (28) |
| (5.7) |
Less: consolidation adjustments and other activities |
| (19) |
| (25) |
| 6 |
| 25.8 |
Total consolidated EBITDA Enel Américas |
| 848 |
| 909 |
| (61) |
| (6.7) |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
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EBITDA OF THE GENERATION AND TRANSMISSION SEGMENT:
Argentina
EBITDA of our generation subsidiaries in Argentina reachedUS$ 56 million in March 2020 representing aUS$ 6 million decrease as compared to the same period of 2019. The main variables, by subsidiary, which explain this decrease in the 2020 results are described below:
Enel Generación Costanera S.A.: (US$ 2 million lower EBITDA, mostly attributable to the conversion effects of the devaluation of the Argentine peso in relation to the US dollar and lower energy generation in relation to the same period of the year before.)
Enel Generación Costanera’s operating revenuesdecreased by US$ 29 million,or37.5%, as of March 2020 compared to the previous year. The decrease is mainly explained by,(i) lower revenues ofUS$ 25 million,as a result of the devaluation of the Argentine peso against the US dollar,(ii)lower sales revenues of US$ 4 million, mainly due to lower physical sales of (-88 GWh), as a result of lower generation; and lower revenues due to the application of new regulations Resolution No. 31/2020, which established that energy and power values be charged in Argentine pesos, added to the effects of Resolution No. 12/2019 which established that fuel supply would be charged to CAMMESA.
Enel Generación Costanera’soperating costsdecreased by US$ 25 millionand are due mainly to lower gas consumption ofUS$ 13 million as a result of the application ofResolution No. 12/2019 which established that the company no longer had its own fuel management, and ofUS$ 12 million as a result of the devaluation of the Argentine peso.
Enel Generación Costanera’sstaff expenses decreasedby US$ 1 million which is mainly explained by theUS$ 2 million cost decrease as a result of the devaluation of the Argentine peso in relation to the US dollar. The above was partially offset by theUS$ 1 million salary cost increase related to the country’s inflation.
Enel Generación Costanera’s other expenses by nature decreased by US$ 1 million which is mainly explained by the devaluation of the Argentine peso in relation to the US dollar.
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Enel Generación El Chocón: (US$ 2 million lower EBITDA, mainly due to higher income as a result of a higher indexation of sales to the US dollar)
Enel Generación El Chocónoperating revenues decreased byUS$ 2 million in relation to the same period of last year, mostly because ofUS$ 5 milliondue toincome decrease as a result of the conversion effects as a result of the devaluation of the Argentine peso in relation to the US dollar, offset by higher energy sales for the period (+31 GWh) ofUS$ 3 million.
Enel Generación El Chocón operating costs were in line with March 2019.
Staff expensesin Enel Generación El Chocón were in line with the same period of last year.
Other expenses by naturein Enel Generación El Chocón were in line with the same period of last year.
Central Dock Sud: (EBITDA in line in relation to the same period of the year before)
Dock Sud’soperating revenues decreased byUS$ 14 million or 39.3% as ofMarch 2020 compared to March of the previous year, which is mainly explained by(i)US$ 11millionfrom lower revenue as a result of the devaluation of the Argentine peso against the US dollar and(ii)US$ 10million lower fuel management revenues according to Resolution No. 12/2019 applicable as of January 1, 2020. This was partially offset by higher energy sales (+276 GWh) totalingUS$ 7 million
Dock Sud´s Operating costsdecreased by US$ 14 millionin relation to March of the year before, and is due mainly to (i)US10 million lower gas consumption of as a result of the application ofResolution No. 12/2019 which established that the company no longer controlled its own fuel management, and (ii)US$ 4 million lower costs as a result of the devaluation of the Argentine peso.
Staff expenseswere in line with the same period of last year.
Other expenses by naturewere in line with the same period of last year.
Enel Trading Argentina: (US$ 2 lower EBITDA, mainly due to lower sale services totaling US$ 2 million).
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Brazil
EBITDA of our generation and transmission subsidiaries in Brazil totaledUS$ 78 million in March 2020 representing aUS$ 45 million decrease in relation to the same period of the previous year. The main variables, by subsidiary, that explain this income decrease in March 2020 are described below:
EGP Cachoeira Dourada S.A.: (US$ 5 million higher EBITDA due to lower energy purchases).
EGP Cachoeira Dourada’soperating revenues decreased byUS$ 15 million, or 11.8%, in March 2020. This decrease is mostly explained by aUS$ 21 million income decrease as a result of the18.4% devaluation of the Brazilian real in relation to the US dollar, offset by aUS$ 6 millionincrease explained by higher sale prices and despite lower physical sales (- 1,131 GWh).
EGP Cachoeira Dourada’soperating costs decreased byUS$ 20 million,or 20.5% as of March 2020, mostly composed by aUS$ 15 million decrease in the conversion effects as a result of the devaluation of the Brazilian real and lower energy purchases (- 1,041 GWh) ofUS$ 5 million.
Staff expenseswere in line with the same period of last year.
Other expenses by naturewere in line with the same period of last year.
Enel Generación Fortaleza: (US$ 42 million lower EBITDA mainly due to lower energy sales and higher PIS/COFINS costs)
Enel Generación Fortaleza’soperating revenues decreased byUS$ 35 million, mostly due toUS$ 24 million lower energy sales of (- 623 GWh), mainly as a result of a lower demand during the period, andUS$ 11 million decrease stemming from the devaluation of the Brazilian real in relation to the US dollar.
Enel Generación Fortaleza’s operating costsincreased byUS$ 8 million,mainly because ofPIS/COFINSof US$ 23 millionrecorded in 2019 as lower costs, higher gas consumption ofUS$ 8 million,mainly from higher purchase prices compared to the previous period. This was partially offset by lower energy purchases ofUS$ 19million (-662 GWh), andUS$ 4million lower costs from devaluation of the Brazilian real in relation to the US dollar.
Staff expenseswere in line with the same period of last year.
Other expenses by naturewere in line with the same period of last year.
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Enel Cien S.A.: (US$ 5 million lower EBITDA as a result of lower conversion effects resulting from the 18.4% devaluation of the Brazilian real in relation to the US dollar totaling US$ 3 million and US$ 2 million lower transmission income).
Enel Green Power Volta Grande (US$ 3 million lower EBITDA mainly due to lower energy purchases and the effects of the devaluation of the real in relation to the US dollar)
Enel Green Power Volta Grande'sEBITDAreachedUS$ 13 million as of March 2020, representing aUS$ 3 million decrease in relation to the same period of the year before. The main variables that explain this decrease as of March 2020 are described below:
Enel Green Power Volta Grande’soperating revenues decreased byUS$ 7 million mainly due to US$ 4 million from lower conversion effects of the devaluation of the Brazilian real in relation to the US dollar andUS$ 3 millionfrom lower energy sales(-25 GWh).
EGP Volta Grande’soperating costs decreased byUS$ 4 million which corresponds to lower energy purchases (-79 GWh) due to lower demand.
Staff expenseswere in line with the same period of last year.
Other expenses by naturewere in line with the same period of last year.
Colombia
EBITDA of our generation subsidiary in Colombia reachedUS$ 184 million in March 2020, which represents aUS$ 8 million increase in relation to the same period of the previous year. The main variables that explain this increase in the results are described below
Emgesa SA: (US$ 8 million higher EBITDA mainly due to tariff increases through higher sale prices)
Emgesa’soperating revenues decreased byUS$ 3 million, or1% as of March 2020.This decrease is mainly explained byUS$ 34 million from lower revenues as a result of the 13.0% devaluation of the Colombian peso in relation to the US dollar. This was partially offset by aUS$ 31 million operational improvement mainly due to better average sale prices and higher physical sales (+67 GWh).
Emgesa’soperating costs decreased byUS$ 11 millionand is mainly explained by aUS$ 12million lower conversion effects due to the devaluation of the Colombian peso andUS$ 2 million lower fuel consumptions costs. This was partially offset byUS$ 3 million higher energy purchases as a result of higher average purchase prices.
Emgesa’sstaff expenseswere in line in relation to last year’s results explained mainly by aUS$ 7 million salary adjustment and internal inflation increase offset byUS$ 7 million by the devaluation of the Colombian peso in relation to the US dollar.
Emgesa’sother expenses by naturewere in line in relation to last year’s results.
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Peru
EBITDA of our generation subsidiaries in Peru reachedUS$ 79 million in March 2020, which represents aUS$ 5 million increase in relation to the same period of the previous year. The main variables, by subsidiary, that explain this increase in the March 2020 results are described below:
Enel Generación Perú S.A.: (US$ 6 million higher EBITDA mostly because of lower energy purchases and lower transport costs)
Enel Generación Perú’soperating revenues decreased byUS$ 19 million, or14.9% in March 2020. This decrease is mostly explained by (i)US$ 20 milliondecrease in lower energy sales (-77GWh) (ii)US$ 3 million lower revenues from the loss of profit related to the Central de Callahuanca accident recorded in 2019, and(iii))US$ 3 million lower income from the conversion effects related to the 2.3% devaluation of the new Peruvian sol in relation to the US dollar. This was partially offset by higher average sales prices ofUS$ 7million.
Enel Generación Peru’soperating costs decreased byUS$ 25 millionor44.8%as of March 2020,mainly as a result of(i)US$ 10 million lower energy purchases(ii) US$ 4 million lower gas consumption due to thermal power plants lower production, and(iii)US$ 11 million lower gas transport and distribution costs by reducing Take or Pay levels with suppliers.
Staff expenseswere in line with the same period of last year.
Other expenses by naturewere in line with the same period of last year.
Enel Generación Piura S.A.: (US$ 3 million lower EBITDA due to lower energy and gas sales)
Enel Generación Piura SA’s operating revenuedecreased byUS$ 5 millionmainly explained by lower energy sales (-9 GWh) andUS$ 3 million in gas sales.
Enel Generación Piura S.A.’s operating costsdecreased byUS$ 5 million explained by lower transport costs and lower energy purchases.
Chinango S.A.: (EBITDA increased by US$ 1 million mainly due to lower energy purchases and transport).
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DISTRIBUTION SEGMENT EBITDA:
EBITDA of our distribution subsidiaries in Argentina reachedUS$ 7 million as of March 2020, representing a decrease ofUS$ 2 million compared to March of the previous year. The main variables, per subsidiary, that explain this decrease in the March 2020 results are described below:
Argentina
Empresa Distribuidora Sur S.A. (Edesur): (US$ 2 million lower EBITDA mainly due to the conversion effects of the Argentine peso in relation to the US dollar)
EBITDAof our Argentinean subsidiary Edesur reachedUS$ 7 million in March 2020, which represents aUS$ 2 million decrease in relation to the same period of last year. The main variables that explain this decrease in the March 2020 income are described below:
Edesur’s operating revenue decreased byUS$ 52 million, or18.6% in March 2020,which is mainly explained byUS$ 89 million from lower conversion effects as a result of the devaluation of the Argentine peso against the US dollar. This was partially offset byUS$ 37 million higher energy sales, due to higher physical sales (+72 GWh); along with a tariff increase made in March 2019, which remains frozen since that date, and an increase in the social tariff (low income and low consumption customers, which are partially subsidized by the state).
Edesur’soperating costs decreased byUS$ 48 million, or23.6% explained mainly by(i)aUS$ 66million decrease as a result of the devaluation of the Argentine peso against the US dollar, and(ii)US$ 4 millionlower revenues mainly due to lower generator equipment rental. This was partially offset by(i)US$ 5million higher energy purchases(ii) a US$ 14 millionincrease in the average purchase price of energy due to the effects of domestic inflation and(iii) US$ 3 million higher high-voltage transportation costs.
Edesur’s staff expenseswere in line with the same period of last year.This is explained byUS$ 8 million lower expenses due to lower conversion effects as a result of the devaluation of the Argentine peso against the US dollar. This was partially offset by
US$ 8 million in wage increases, mainly explained by the recognition of inflation in wages and social charges.
Edesur’sother expenses by nature decreased byUS$ 2 millionmainlyexplained byUS$12 million lower effects due to the devaluation of the Argentine peso against the US dollar, offset byUS$ 10 million higher costs for maintenance and network renewal services and others.
Energy losses increased by 0.4 p.p. reaching15.8% of operating costs as of March 2020. The number of Edesur’s clients as of March 2020 reached 2.5 millionwhich represents a 25,000 increase in relation to the same period of the year before.
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Brazil
EBITDA of our distribution subsidiaries in Brazil reachedUS$ 280 million in March 2020, which represents aUS$ 16 million decrease in relation to the same period of the previous year. The main variables, by subsidiary, that explain such a decrease in the March 2020 results are described below:
Enel Distribución Río S.A.: (US$ 20 million lower EBITDA mostly attributable to lower income stemming from asset and liability sales and due to the effects of the devaluation of the Brazilian real).
Enel Distribución Rio’soperating revenuedecreased byUS$ 70 millionor16.7%in March 2020 explained mainly by:US$ 95 millionin lower energy sales attributable mainly to the following effects,(i)US$53 millionless from lower conversion effects due to the 18.4% devaluation of the Brazilian real in relation to the US dollar,(ii)US$ 33million lower income due to the net effect of assets and regulatory liabilities, due to higher cost recovery through the tariff, and(iii) US$ 30 million lower revenues due to lower energy supply and unbilled energy sales. The above was partially offset by:(i) US$ 16 million higher revenue from research and development and energy efficiency(ii))US$ 5 million higher PIS/COFINS tax revenues.
On the other hand, other services increased byUS$ 11 millionmainly explained by greater toll revenue ofUS$ 17 million,offset by lower conversion effects ofUS$ 6 million, due to the devaluation of the Brazilian real in relation to the US dollar.
Finally,other operating income increased byUS$ 14 million, explained by higher construction revenues ofUS$ 20 million, stemming from the application of IFRS 12 "Services Grant Agreements" (hereinafter "IFRS 12"), offset byUS$ 6 million of lower income due to the devaluation of the Brazil real in relation of the US dollar.
Enel Distribución Rio’soperating costs decreased byUS$ 49 million or 16.6% as of March 2020, explained by:
Energy purchases decreasedbyUS$ 61 million, a variation explained by:(i) aUS$ 27 million decrease in spot market purchases and(ii) US$ 34 million from lower conversion effects due to the devaluation of the Brazilian real.
Energy transport costs decreasedbyUS$ 1 million mainly due to the lower conversion effects caused by the devaluation of the Brazilian real.
A US$ 14 million increase in other variable suppliesmainly due toUS$ 20 million related to higher costs linked to construction services under IFRS 12, offset byUS$ 6 million due to lower conversion effects arising from the devaluation of the Brazilian real.
Staff expenses at Enel Distribución Ríodecreased byUS$ 2 million, mainly due to the lower conversion effects caused by the devaluation of the Brazilian real.
Enel Distribución Rio’sother expenses by nature increased byUS$ 1 million due mainly toUS$ 2 million from higher costs of provisions for litigation risks andUS$ 5 million increase in maintenance costs from third parties includingUS$ 3 million in technology and software services, offset byUS$ 6 million from lower conversion effects of the devaluation of the Brazilian real.
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Energy losses increased by 0.5 p.p. reaching22.0% in March 2020. As of March 2020, Enel Distribución Río had 2.95 million clients, 139,000 less than in March 2019.
Enel Distribución Ceará S.A.: (US$ 23 million higher EBITDA mainly due to higher energy sales and tariff review effects)
Enel Distribución Ceará’s operating revenue decreased by US$ 6 million,or1.7% in March 2020, mostly due to:
Energy sales increased by US$ 2 million, mainly due to:(i) US$ 16 million increase in physical sales of energy (+ 80 GWh),(ii) US$ 38 milliondue to the accumulated effect of tariff revisionapplied as of April 2019 and(iii)US$ 12 million income from research and development.
This was partially offset by(i)US$ 37 million from lower conversion effects, due to the devaluation of the Brazilian real, and(ii)US$ 27 million in lower net income of sector assets and liabilities.
Other sales decreased by US$ 3 milliondue to thelower conversion effects of the devaluation of the Brazilian real.
Other services decreased by US$ 12 millionas a result ofUS$ 7 millionin lower income from tolls from free clients andUS$ 5 milliondue to lower conversion effects as a result of the devaluation of the Brazilian real.
Other operating income increased by US$ 7 millionmainly due toUS$ 15 million from lower construction revenue from the application of IFRS12 andUS$ 8 million for lower conversion effects due to the devaluation of the Brazilian real.
Enel Distribución Ceará’soperating costs decreased byUS$ 28 million or11.3% in March 2020, which is mainly explained by (i)US$ 35 million in lower energy purchases mainly ofUS$ 28 million due to the conversion effects of the devaluation of the Brazilian real andUS$ 7 million lower energy purchases and average prices (ii) aUS$ 1 million decrease due to lower conversion effects because of the devaluation of the Brazilian real.
This was offset by aUS$ 8 million increase inother supplies and services,mainlyUS$ 15 million from higher construction costs due to the application IFRS 12, offset byUS$ 7 million of the conversion effects of the devaluation of the Brazilian real.
Enel Distribución Ceará’s staff expensesdecreased byUS$ 3 millionin relation to the year before mainly due to the conversion effects of the devaluation of the Brazilian real in relation to the US dollar.
Enel Distribución Ceará’sother expenses by nature increased byUS$ 2 million in relation to theMarch 2019 period, mainlyUS$ 1millionfrom higher costs for provisions for civil litigation risks andUS$ 6 million for increased third-party services includingUS$ 3 millionin technology and software services offset byUS$ 5million in lower conversion effects due to the devaluation of the Brazilian real.
Energy losses decreased by 0.5 p.p. reaching14.4% as of March 2020. Enel Distribución Ceará had 4.01 million clients in March 2020 which represented a 46,000 decrease in the number of clients as compared to the same period of the previous year.
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Enel Distribución Goiás: (US$ 41 million lower EBITDA mainly due to lower energy sales and the devaluation of the Brazilian real in relation to the US dollar)
Enel Distribución Goiás’operating revenue decreased byUS$ 53millionwhich is mainly explained byUS$ 65 million from lower energy sales,mainly due toUS$ 51 million from lower conversion effects,due to the18.4% devaluation of the Brazilian real in relation to the US dollar andUS$ 26 million lower physical energy sales (-18 GWh). This is partially offset byUS$ 9million higher revenue from research and development and energy efficiencyandUS$ 3million higher PIS/COFINS tax revenues.
All of the above was partially offset by(i) aUS$ 8 millionincrease in other services explained by aUS$ 12 millionincrease in toll revenue due to a tariff adjustment for free clients, which also increased as compared to the same period last year, offset byUS$ 4 million as a result of the conversion effects stemming from the devaluation of the Brazilian real against US dollars, and(ii) US$ 4 million higher other operatingincomes increased byUS$ 14 million higher construction revenues from the application of IFRS 12 "Service Concession Agreements" (hereinafter "IFRS 12"),offsetUS$ 8 million from lower conversion effects due to the18.4% devaluation of the Brazilian real andUS$ 2 million from lower revenues for lower fines due to renegotiating with clients.
Enel Distribución Goiás’ operating costsdecreased by US$19 million, explained by US$ 41 million from lower conversion effects due to the devaluation of the Brazilian real partially offset by (i)US$ 5 million in increased transport costs from higher tariffs from the use of networks, (ii) higher energy purchases totalingUS$ 3 million,due to higher average prices, and (iii)US$14 million increase in other variable supplies and services mainly for lower construction costs as per the application of IFRS 12.
Enel Distribución Goiás’ staff costsdecreased byUS$ 3 million mainly due to lower conversion effects due to the devaluation of the Brazilian real.
Enel Distribución Goiás’ other expenses by nature increased by US$10 millionmainly due to higher costs of maintenance and conservation of electrical installations, services for meter reading and client assistance and other related services totalingUS$ 17 millionoffset byUS$ 7 million from lower conversion effects due to the devaluation of the Brazilian real.
Energy losses increased by 1.3 p.p. reaching12.4% as of March 2020. As of March 2020, Enel Distribución Goiás had 3.14 million clients which represented an 89,000 increase in new clients as compared to the same period of the previous year.
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Enel Distribución Sao Paulo (former Eletropaulo): US$ 22 millon higher EBITDA due to tariff review applied as of July 2019
Enel Distribución Sao Paulo’s operating revenuedecreased by US$ 97 millionin relation to the same period of the previous year. The main variations are explained below:(i)US$ 142 millionlower revenues as a result of the devaluation of the Brazilian real in relation to the US dollar and (ii)US$ 23 million lower income from the net effect of regulatory assets and liabilities. The above was partially offset byUS$ 43million higher energy sales,as a result of tariff review applied as of July 2019, despite lower physical sales (-422 GWh), and(ii)US$ 25millionin other services which correspond to revenues for toll-free services.
Enel Distribución Sao Paulo’s operating costsdecreased by US$ 109 millionin relation to March2019 which ismainly explained by:(i)US$ 108 million lower costs as a result of the conversion effects due to the devaluation of the Brazilian real and(ii)US$ 6 million lower energy purchases.This partly offset byUS$ 5 million higher transportation costs.
Enel Distribución Sao Paulo’s staff costsdecreased by US$ 12 million inrelation to March2019 which is mainly explained by US$ 9millionas a result of theconversion effects due to the devaluation of the Brazilian real against the US dollar andUS$ 3 million lower remuneration costs due to efficiency plan and project digitalization.
Enel Distribución Sao Paulo’s other expenses by natureincreased byUS$ 1 millioninrelation to March2019with aUS$ 9 million increase mainly in third party service costs for line and network maintenance and other services, offset byUS$ 8 million as a result of the conversion effects due to the devaluation of the Brazilian real.
Energy losses during March 2020 increased by 0.3 p.p. reaching9.8%. The number of clients of Enel Distribución Sao Paulo reached 7.81 million as of March 2020, representing an increase of 125,000 new clients compared to the same period of the previous year.
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Colombia
EBITDA of our subsidiaryCodensa in Colombia reachedUS$ 129 million in March 2020, which represents aUS$ 5 million increase in relation to the same period of the previous year. The main variables that explain such increase in the March 2020 results are described below:
Codensa S.A.: (US$ 5 million higher EBITDA mainly explained by higher average sales prices, higher physical sales and lower staff costs)
Codensa’soperating revenuedecreased by US$ 18 million, or4.4%as of March 2020, and were mainly accounted for byUS$ 47 million fromlower conversion effects, due to the13%devaluation ofthe Colombian peso in relation to the USdollar. This was partially offset by(i)US$ 20 million mainly due to a higher average price ofUS$ 19 million andUS$ 1 million due to higher physical sales (+62 GWh),(ii) aUS$ 7 million increase mainly due to a better credit card margins, given the start of the new Open Book model with Colpatria as of November 2019, and increased margins due to implementation of cleaning services billing and other services, and(iii) aUS$ 2 million increase in fines and penalties on clients.
Codensa’soperating costsdecreased byUS$ 19 million or7.3%as of March 2020 and can be mainly explained byUS$ 29 million lower conversion effects due to the devaluation of the Colombian peso against the US dollar. The above was partially offset by(i) a US$ 4 millionincrease in greater energy purchases, mainly due to higher average energy prices(ii) a US$ 2 millionincrease in transport costs and (iii)US$ 5 million in variable services and supplies for line connections and maintenance charges.
Staff costs decreased byUS$3 million,mainly explained by the devaluation of the Colombian peso against the US dollar ofUS$2 million andUS$ 3 million lower labor activations for investment projects. This partially offset byUS$ 2 millionin higher wage adjustment expenses and additional benefits under the Collective Agreement.
Codensa’s other expenses by nature decreased byUS$ 1 millionarising from thelower conversion effects due to the devaluation of the Colombian peso against the US dollar.
Energy losses in March 2020 decreased by 0.5 p.p. in relation to the year before and reached7.5%in March 2020. Codensa had 3.55 million clients as of March 2020 which represents an increase of 94,000 new clients, as compared to the same period of the previous year.
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Peru
EBITDA of our subsidiary Enel Distribución Perú S.A. reachedUS$ 55 million in March 2020 which represents aUS$ 15 million decrease in relation to the same period of the previous year.
Enel Distribución Peru S.A.: (US$ 15 million lower EBITDA mainly due to higher physical sales and tariff increases).
Enel Distribución Perú’soperating revenue decreased byUS$ 10 millionmainly explained byUS$ 6 million lower conversion effectsdue to the2.3% devaluation of the new Peruvian sol in relation to the US dollar and lower energy sales ofUS$ 8million(-99GWh).This was offset byUS$ 4 million inhigher revenuesdue to better average saleprices.
Enel Distribución Perú’soperating costs increased byUS$ 5 millionwhich is mainly explained(i) US$ 4million higher energy purchases explained byUS$ 10million inhigher purchase pricesoffset byUS$ 6 million from lower physical purchases and(ii) US$ 4 millionforhigher variable costs for line connections and maintenance charges. The above was partially offset byUS$ 3 millionrelated to the lowerconversion effectsfrom the devaluation of the newPeruvian sol.
Enel Distribución Perú’sstaff expenses were in line with March 2019.
Enel Distribución Perú’sother expenses by naturewere in line with March 2019.
Energy losses in March 2020 increased by 0.4 p.p. reaching8.4%. Enel Distribución Perú had1.44 millionclients in March 2020 which represents an increase of 9,000 new clients, as compared to the same period of the previous year.
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The following table shows, by segment and by country, a summary of EBITDA, Depreciation Expenses, Amortization and Impairment, and EBIT for the subsidiaries of the Enel Américas Group during the periods ended as of March 31, 2020 and 2019.
| As of March 31, 2020 | As of March 31, 2019 | ||||
Segment | EBITDA | Depreciation, amortization and impairment | EBIT | EBITDA | Depreciation, amortization and impairment | EBIT |
| (Million US$) | |||||
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Generation and Transmission |
|
|
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Argentina | 56 | (24) | 32 | 62 | (14) | 48 |
Brazil | 78 | (7) | 71 | 123 | (10) | 113 |
Colombia | 184 | (18) | 166 | 176 | (18) | 158 |
Peru | 79 | (16) | 63 | 74 | (17) | 57 |
Total Generation and Transmission | 396 | (65) | 331 | 435 | (59) | 376 |
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Distribution |
|
|
|
|
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Argentina | 7 | (25) | (18) | 9 | (25) | (16) |
Brazil | 280 | (162) | 118 | 296 | (155) | 141 |
Colombia | 129 | (35) | 94 | 124 | (33) | 91 |
Peru | 55 | (16) | 39 | 70 | (15) | 55 |
Total Distribution | 471 | (238) | 233 | 499 | (228) | 270 |
Less: consolidation adjustments and other activities | (19) | - | (19) | (25) | - | (25) |
Total Consolidated Enel Américas | 848 | (303) | 545 | 909 | (287) | 622 |
Depreciation, Amortization, Impairment
Depreciation, amortization and impairment totaledUS$ 303 million in March 2020 which represents aUS$ 16 million increase in relation to the same period of 2019.
Depreciation and amortization reachedUS$ 223 million in March 2020 representing aUS$ 15 million decrease compared to same period of 2019. The above is mainly explained by (i)US$ 6 million inEnel Distribución Sao Paulo mainly due to the conversion effects of the devaluation of the Brazilian real in relation to the US dollar totalingUS$ 8 million,offset byUS$ 2 million higher depreciation due to increased asset activations and
(ii)US$ 11 million inEnel Distribución Rio mainly for accelerated depreciation of certain assets registered in March 2019totalingUS$ 8 million, the difference corresponds to the conversion effects resulting from the devaluation of the Brazilian real against the US dollar.
At the same time,the impairmentlossesonfinancial assets from the application of IFRS 9 totaled US$ 80 million as of March 2020, representing aUS$ 32 million increase as compared to the same period of the previous year, which is explained mainly in Brazilian subsidiaries, namely:US$ 8million inEnel Distribución Sao Paulo, US$ 9 million inEnel Distribución Río, US$ 11 millioninEnel Distribución Goiás and US$ 4 million inEnel Distribución Ceará. The above was offset byUS$ 2 million from the conversion effects.
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The following table shows the consolidated non-operating income from continued activities for the periods ended March 31, 2020 and 2019:
NON OPERATING INCOME CONTINUING OPERATIONS | |||||
| |||||
|
| As of March 31 | |||
|
| 2020 | 2019 | Variation | Variation |
|
| (US$ million) | % | ||
Financial Income |
|
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|
Argentina |
| 14 | 22 | (8) | (36.4) |
Brazil |
| 57 | 88 | (31) | (35.2) |
Colombia |
| 4 | 3 | 1 | 33.3 |
Peru |
| 3 | 2 | 1 | 50.0 |
Consolidation adjustments and other activities |
| 3 | 4 | (1) | 23.7 |
Total Financial Income |
| 81 | 119 | (38) | (32.0) |
Financial Costs |
|
|
|
|
|
Argentina |
| (22) | (68) | 46 | 67.6 |
Brazil |
| (119) | (219) | 100 | 45.7 |
Colombia |
| (30) | (39) | 9 | 23.1 |
Peru |
| (8) | (9) | 1 | 11.1 |
Consolidation adjustments and other activities |
| (7) | (7) | - | - |
Total Financial Costs |
| (186) | (342) | 156 | 45.6 |
Foreign currency exchange differences, net |
|
|
|
|
|
Argentina |
| 15 | 35 | (20) | 57.1 |
Brazil |
| (99) | - | (99) | (100.0) |
Colombia |
| (7) | - | (7) | (100.0) |
Peru |
| - | (1) | 1 | 100.0 |
Consolidation adjustments and other activities |
| 63 | 14 | 49 | 349.1 |
Total Foreign currency exchange differences, net |
| (27) | 48 | (75) | 155.7 |
Gain (Loss) for indexed assets and liabilities |
| 19 | 25 | (6) | (25.5) |
Net Financial Income Enel Américas |
| (114) | (150) | 36 | 23.8 |
|
|
|
|
|
|
| |||||
|
|
|
|
|
|
|
| As of March 31 | |||
|
| 2020 | 2019 | Variation | Variation |
|
| (US$ million) | % | ||
Share of profit (loss) of associates accounted for using the equity method: | |||||
Argentina |
| - | - | - | - |
Brazil |
| - | - | - | - |
Colombia |
| - | - | - | - |
Peru |
| - | - | - | - |
Less: consolidation adjustments and other activities |
| 1 | - | 1 | 100.0 |
Total Share of profit (loss) of associates accounted for using the equity method | 1 | - | 1 | 100.0 | |
Total Non Operating Income |
| 1 | - | 1 | 100.0 |
Net Income Before Taxes |
| 432 | 472 | (40) | 14.3 |
Income Tax | |||||
Enel Américas (holding) |
| (24) | 3 | (21) | (900.0) |
Argentina |
| (14) | (60) | 46 | 76.7 |
Brazil |
| (71) | (70) | (1) | (1.4) |
Colombia |
| (19) | (32) | 13 | 40.1 |
Peru |
| 4 | 3 | 1 | (44.7) |
Total Income Tax |
| (122) | (156) | 34 | 21.9 |
|
|
|
|
|
|
Net Income after taxes |
| 310 | 316 | (6) | (2) |
|
|
|
|
|
|
Net Income attributable to owners of parent |
| 208 | 204 | 4 | 2 |
Net income attributable to non-controlling interest |
| 102 | 112 | (10) | (9) |
23
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
Financial Income
Financial income reached aUS$ 114 million loss as of March 2020 which represents aUS$ 36 million decrease in relation to the same period of the previous year. The foregoing is mostly explained by:
(a) Lower financial income of US$ 38 million mainly due to(i)US$ 8 million in Enel Distribución Sao Paulo,mainly due toUS$ 5 million conversion effects of the devaluation of the Brazilian real against the US dollar of andUS$ 3 million lower revenue from the application of IFRS 12 updates,(ii)US$ 22 million inEnel Generación Fortalezamainly for financial update of PIS/COFINS taxes receivable, registered in 2019, which includedUS$ 3 million for the devaluation of the real and(iii))US$ 6 million lower income inEdesurmainly due to theUS$ 3 million conversion effects of the devaluation of the Argentine peso against the US dollar of andUS$ 3 million lower interest charged for arears from clients.
(b) US$ 156 million decrease in financial expensesmainly attributable to:(i)US$ 21 millionlower expenses attributable toEnel Distribución Sao Paulo, mainly due toUS$ 11 million lower costs for civil and labor contingency upgrades andUS$ 10 milliondue tothe effects of the devaluation of the Brazilian real(ii)US$ 62 million lowerfinancial expenses inEnel Brasilrelatedto theUS$ 52milliondebtwith Enel Finance International for the purchaseEnel Distribución Sao Paulo andUS$ 10 milliondue to the conversion effects of thedevaluation the Brazilian real,(iii)US$ 16millionlower expenses inEnel Distribución Rio,mainlyUS$ 9 millionlower expenses for bank debtsandUS$ 7 million for the conversion effectsdue to thedevaluation of the Brazilian real as compared to the same period of the previousyear, (iv) US$ 27 million lower expenses inEdesur,mainlyUS$18 milliondue to the devaluation of the Argentine peso against the US dollar andUS$9 million lower costs for theCammesadebt,(v)US$ 7 millionlower expenses inEnel Generación CostaneraofUS$ 4 millionlower debt costs withCammesaandUS$ 3 million conversion effects due to the devaluation of the Argentine peso,(vi)US$7 millionlower expenses inEmgesaofUS$ 4 million for lower bank debt costs of andUS$ 3 million of the conversioneffects due to the devaluation of the Colombian peso against the US dollar,and(vii)US$ 4 millionlower expenses inCodensamainly for financial debt and the conversion effects of the Colombian peso in equal parts.
(c)AUS$ 6 milliondecrease inresults from readjustmentscorresponding to the income generated by the application of IAS 29 in Argentina. It reflects the net balance arising from implementing inflation to non-monetary assets and liabilities and income accounts that are not determined on a current basis converted to US Dollars at year-end Exchange rate.
(d) US$ 75 million negativeresultsfor exchange differences as compared to the previous year, mainly due to:(i)US$ 20million negative exchange differences inEnel Brasilfor accounts payable in foreign currencies,(ii) US$ 27million negative exchange differences related to receivables in foreign currencies for VOSA credits in Argentina, of whichEnel Generación el Chocón hasUS$ 22million andCentral Dock SudUS$ 5million, includingUS$ 15 millionof conversion effects due to the devaluation of the Argentine peso,(iii) US$ 7 million negative exchange differences inEmgesaand Codensa, (iv) US$ 15 millionnegative exchange differences in EnelAméricasHolding,as a result offinancial investments in Chilean pesos , and(vi) approximately a US$ 6million difference that corresponds to the conversion effects of currencies in the different countries in which we operate.
24
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
Corporate Taxes
The gains tax levied on companies’ profits reachedUS$ 122 millionon March 31, 2020and isUS$ 34 lessin relation to the same period of the same year, mainly due to:
(i) US$ 32 million lowerexpenses inEnel Brasilmainly for the registration of deferred taxes on assets due to the differences in a negative foreign currency debt exchange,(ii)US$ 20 million from lower expenses inEnel Generación Fortalezamainly explained by lower financial results compared to the same period of the previous year, (iii) US$ 22 million from lowerexpenses inEnel Distribución Goiásexplained by lower financialresults,(iv)US$ 9 million from lower expenses inEnel Generación Perumainly due to legal contingency with Electroperú,(v) US$ 3 millionfrom lowerexpenses inEnel Distribución Perudue to lower financialresults.
This was partially offset by higher tax expenses(i)US$ 18 millionin Enel Distribución Sao Paulodue to improved financial results as compared to the results of the same period of the previous year,(ii) US$ 4 million from higher expenses inEnel Distribución Cearádue to better financial results,(iii)US$ 5 million from higher expenses inEnel Ciendue to better financial results,(iv) US$ 15 million from higher expenses inCentral Dock Sudmainly explained by lower tax benefits arising from the revaluation offiscal non-monetary assets and liabilities that was recorded in 2019, (v) US$ 7 million higherexpenses inEnel Generación el Chocónmainlyfor tax benefit adjustments in the2018 fiscal year filed in 2019,and(vi)US$ 6 million from higher taxes inEnel Generación Costanerafor the income from the 2019 taxrevaluation.
25
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
ANALYSYS OF THE FINANCIAL STATEMENT
Assets |
| |||
March 2020 | December 2019 | Variation | Variation | |
(US$ million) | % | |||
|
|
|
|
|
Current Assets | 5,711 | 6,581 | (870) | (13.2%) |
Non current Assets | 19,636 | 23,195 | (3,559) | (15.3%) |
|
|
|
|
|
Total Assets | 25,347 | 29,776 | (4,429) | (14.9%) |
Enel Américas’ total assets as of March 31, 2020 decreased byUS$ 4,429 million as compared to the total assets held on December 31, 2019, mainly as a result of:
Current assets decreased byUS$ 870 million, equivalentto 13.2%, mostly explained by:
· | A US$ 308 million cash and cash equivalentsdecrease composed mainly of:(i)US$ 306 net income from operational flowscorresponding to charges for sales and services, net of supplier payments and others,(ii)US$ 54 million in net outgoings for financing activities corresponding toUS$ 88 million cash income for bank loans andUS$ 217 millionnewbond emission. This was partially offset by loan payments ofUS$ 83 million, which includesUS$ 33 million in bank credit payments,US$ 44 million in bonds andUS$ 6 millionfrom other sources of financing, dividend payment ofUS$ 167 million, interest payment ofUS$ 92 million, lease liability payments ofUS$ 15 million,andUS$ 2 millionin other cash outgoingsand (iii) US$ 374 millionin net cash outgoings corresponding to investment activitiesthat correspond todisbursements for the incorporation of plant, equipment and properties totalingUS$ 216 million,US$ 173 million payments for the incorporation of intangible assets,US$ 31 million from 90 plus days investments. These investment cash outflows were offset byUS$ 14 million Interest received,US$ 32 millionfrom 90 plus days investment interest,andUS$ 186 million from the variations of the exchange rate in cash and cash equivalents. |
· | AUS$ 133 millionincrease inother current financial assetsmainly consisting of 90+ day collocations as follows:(i)US$ 45 millioninEnel Distribución Rio, (ii)US$ 63 millioninEnel Distribución Goiasand(iii)US$ 22 millioninEnel Distribución Ceará. |
· | AUS$ 39 milliondecrease inother current non-financial assetsmainly explained by the conversion effects due to the devaluation of the different currencies in the countries where we operate. |
· | US$ 615 milliondecrease in Commercial Receivables and other current receivables which is mainly explained by the effects of the devaluation of currencies against the US dollar, as follows:(i) US$ 125 million in Enel Distribución Rio,(ii) US$ 249 million in Enel Distribución Sao Paulo,(iii) US$ 94 million in Enel Distribución Goiás,(iv) US$ 111 million Enel in Distribución Ceará, and(v) US$ 14 million Emgesa. |
· | US$ 12 million Decrease in Current stocksexplained by the effects of the devaluation of currencies against the US dollar. |
26
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
· | A US$ 25 milliondecrease in Other Assets for Current Taxesmainly corresponding toUS$ 15 millioneffects of the devaluation of currencies against the US dollar and aUS$ 12 milliondecrease in tax advancesinEnel Generación el Chocón. |
AUS$ 3,559 million decrease ofnon-current assetsequivalent to15.3%, mainly due to:
· | A US$ 644 milliondecrease inother non-current financial assets mainly due toUS$ 674 million effects of the devaluation of the Brazilian real in accounts receivable from distribution companies in Brazil due to the application ofIFRS 12 ofUS$ 38 million in increased IFRS assets |
· | A US$ 104 milliondecrease in other non-financial and non-current assetsmainly (i)US$ 441 tax recognition for recovery inEnel Distribución Sao Paulo andUS$ 2 million inEnel Distribución Ceará respectively, as a result of a ruling of the Brazilian supreme court that granted our subsidiaries the right to recover certain taxes that, following a market practice, were overpaid in the past (PIN/COFINS). The point in question is that the basis for determining these taxes included the ICMS tax, a situation which has now been resolved. |
| The overpayment of PIS/COFINS taxes was also passed on at the time to the end customers, so simultaneously with the recognition of these taxes to recover, our subsidiaries have recognized a regulatory liability and for the same amounts.Our subsidiaries have recognized a regulatory liability for the same amounts as the ones indicated above, net of any costs incurred by the Companies in these court proceedings. (see page 33 of this documentexplainingthe increase in commercial accounts payable and othernon-currentpayables). |
The amounts indicated above were partially offset by the effects of the currency devaluation in relation to the US dollar totalingUS$ 361 million. | |
Inaddition,there was an evidentdecrease inrecoverabletaxes:US$ 12 million inEnel FortalezaGeneracion,includingUS$ 7 million from the conversioneffects. | |
· | A US$ 87 milliondecrease incommercial receivables and other non-current receivables mainly from:(i) US$ 49 millioninSao Paulo Distribución due toUS$ 23 million effects of the devaluation of the Brazilian real against the al US dollar, andUS$ 25 million short-term transfers of regulatory assets,net offinancial updates and new registrations,(ii) US$ 18 millionin Distribución Ceará due toUS$ 13 million short-term transfers of regulatory assets net offinancial updates and new registrations andUS$ 5 million effects of the devaluation of the Brazilian real,(iii) US$ 6 millionin Codensamainly for the effectsof the devaluation of the Colombian pesoagainsttheUS dollar, and(iv) US$ 7 millionin Enel GeneraciónChocóndue to theUS$ 14million effects of the devaluation of the Argentine peso offset by aUS$ 7million increase in exchange variations for receivables to get fromVOSA. |
· | A US$ 1,262milliondecrease in intangible assets other than capital gains consisting mainly of(i)aUS$ 1,215milliondecreasedue to the conversioneffects of the U.S. dollar from each subsidiary's functional currencies,(ii)depreciation and impairment losses ofUS$ 109 millionand(iii) US$ 26 million in other decreasesmainly for transfers to financial assets to be recovered at the end of the concession. This waspartiallyoffset by (i)aUS$ 87millionincreasefor new investments. |
27
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
· | A US$ 219 million decrease in valuemainly explained by the conversion effects of the US dollar from the functional currencies of each subsidiary. |
· | A US$ 1,012 milliondecreasein properties, plants and equipmentconsisting mainly of(i)US$ 1,103 milliondecreasedue tothe conversion effects of the US dollar fromthe functional currencies of each subsidiary,(ii)aUS$ 108 milliondepreciation and impairment losses and (iii)US$ 40 millionother decreases. This was partially offset by(i)aUS$ 117 millionincreasefor newinvestments and(ii)US$ 122 millioninother increasesas a result of the application ofIAS 29 in our Argentine subsidiaries. |
· | A US$ 207 million increase in Deferred Tax Assets,mainly explained by theconversion effects of the US dollar from the functional currencies of each subsidiary. |
28
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
Liabilities and Equity |
| |||
March 2020 | December 2019 | Variation | Variation | |
(US$ million) | % | |||
|
|
|
|
|
Current Liabilities | 6,214 | 6,736 | (522) | (7.7%) |
Non Current Liabilities | 8,924 | 10,794 | (1,870) | (17.3%) |
|
|
|
| |
Total Equity | 10,209 | 12,246 | (2,037) | (16.6%) |
attributable to owners of parent company | 8,334 | 9,966 | (1,632) | (16.4%) |
attributable to non-controlling interest | 1,875 | 2,280 | (405) | (17.8%) |
|
|
|
|
|
Total Liabilities and Equity | 25,347 | 29,776 | (4,429) | (14.9%) |
Enel Américas’ total liabilities and equityas of March 31, 2020 decreased byUS$ 4,429 millionas compared to the total liabilities and equity as of December 2019, mostly attributable to:
Current liabilities decreased byUS$ 522 million, explained mainly by:
· | A US$ 458 millionincrease inother current financial liabilitieswhich is basically explained by:(i) US$ 122 millioninEnel Distribución GoiásmainlyUS$ 190 millionfor debt transfer from short-term,US$ 43 millionaccrued interest and exchange rate variation offset byUS$ 111 millioncorresponding to conversion effects of the devaluation of the Brazilian real,(ii) a US$ 84 millionincrease inEnel Distribución Rio,mainly for long-term debt transfers totalingUS$ 111 million, US$ 45 millionaccrued interest, exchange change variations and loan collection of net of payments, offset byUS$ 72 millionrelated to the conversion effects of the devaluation of the Brazilian real, (iii)aUS$ 72 millionincrease inEnel Distribución Cearáfor loans totalingUS$ 79 millionnet of payments,US$ 29 millionaccrued interest and exchange rate variations, offset byUS$ 36 millionconversion effects of the devaluation of the Brazilian real against the US dollar,(iv)aUS$ 23 millionincrease inEnel Distribución Sao Paulo, US$ 45 millionfor the acquisition of new loans, net of payments, offset byUS$ 22 millioncorresponding to conversion effects of the devaluation of the Brazilian real,(v)aUS$ 13 millionincrease inEnel Fortaleza Generaciónfor accrued interest and exchange variations ofUS$ 32 million, offset byUS$ 18 millionfrom the conversion effects of the devaluation of the real,and(vi) a US$ 149 millionincrease inEmgesamainly for theUS$ 193 milliontransfer of long-term bonds net of paymentsoffsetbyUS$ 44 million forthe conversion effects due to the devaluation of the Colombian peso against the US dollar. |
· | A US$ 751 milliondecrease incommercial accounts and other current payableswhich is mainly explained by:(i) aUS$ 276 milliondecrease in(i) Enel Sao PauloDistribución, corresponding toUS$ 249 millionfrom the conversion effects of the devaluation of the Brazilian real against the US dollar, the difference corresponds to lower accounts payable for the purchases of energy and net suppliers of its provisions and long term transfers,(ii)US$ 136 millioninEnel Distribución Goiáswhich includesUS$ 85 millionfrom the conversion effects of the devaluation of the Brazilian real, the difference corresponds to lower accounts payable for energy purchases and suppliers, net of provisions and long term transfers,(iii) US$ 112 millioninEnel Distribución RiomainlyUS$ 85 millionfrom the conversion effects of the devaluation of the Brazilian real, the difference corresponds to lower accounts payable for energy purchases and suppliers, net of provisions and long term transfers,(iv)US$ 124 millioninEnel Distribución n Cearáwhich includesUS$ 82 millionfrom the conversion effects of the devaluation of the real, the difference corresponds tolower accounts payable for energy purchases and suppliers, net of provisions and long term transfers,(v)US$ 44 millioninEnel Generación Cachoeira Douradamainly due to the conversion effects of the devaluation of the real against the US dollar,(vi)US$ 16 millioninEnel Generación Perufor lower accounts payable from suppliers, and(vii)US$ 20 millioninEnel Distribución Perufrom lower accounts payable from suppliers. |
29
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
· A US$ 82 million decrease in accounts payable to current related entities mainly forlower dividend payments toEnel SpA ofUS$71 million, the difference corresponds to the conversion effects of the different currencies of the subsidiaries.
· AUS$ 56 milliondecrease in other current provisionsmainly related to:(i) aUS$ 44decrease inEnel Distribución Sao Pauloof whichUS$ 30 million is due to the conversion effects of the devaluation of the Brazilian real andUS$ 14 million to the long-term transfer for labor and civil provisions, and(ii) aUS$ 11million decrease inEmgesa,of whichUS$ 5 million is related to the conversion effects of the devaluation of the Colombian peso andUS$ 6 million to lower environmental provisions for updates and long-term transfers.
· AUS$ 73 milliondecrease of other non-financial current liabilities explained by(i) a US$ 47 million decrease inEnel Distribución Sao Paulo of whichUS$ 22 million isrelated to the conversion effects of the devaluation of the Brazilian real,theUS$ 25 milliondifference corresponds to PIS/COFINS and ICMS tax payments,(ii) aUS$ 13 million decrease inEnel Distribución Rio of whichUS$ 4 million is related to the devaluation of the Brazilian real andUS$ 9 millionto lower payable VAT taxes, and (iii) aUS$ 17 million decrease inEnel Distribución Ceará of whichUS$ 5 million is related to the devaluation of the Brazilian real andUS$ 12 milliontolower VAT and ICMS tax bills.
A US$ 1,870 milliondecrease in non-Current Liabilitiesequivalent to a17.3% variation explained mainly by:
· A US$ 1,109 milliondecrease in other non-current financial liabilities (financial debt and derivatives)mainly explained by(i)aUS$ 200 million decrease inEnel Distribución Sao Paulo,mainlyUS$ 202 milliondue to the conversion effects of the devaluation of the Brazilian real against the US dollar, (ii)aUS$ 170 milliondecrease inEnel Distribución Goiás explained by
US$ 126 millionfor short-term transfers of new acquisitions net bank loans andUS$ 44 million conversion effects of by the devaluation of the Brazilian real,(iii) aUS$ 178 million decrease inEnel Distribución Rio which includesUS$ 109million from theconversion effect of the devaluation of the Brazilian real and forUS$ 69 million for short-term bank loans transfer net of exchange variations , (iv) aUS$ 102 milliondecrease inEnel Distribución Ceará mainly because of the conversion effects of the devaluation of the Brazilian real, (v) aUS$ 338 milliondecrease inEmgesa mainly from the debt transfer to short-term bonds ofUS$ 208 million andUS$ 130 million, due to the devaluation of the Colombian peso against the US dollar, and (vi) aUS$ 64 million decrease inCodensa mainlyUS$ 120 million as a result of the devaluation of the Colombian peso, offset byUS$ 56 millionin new bank loans.
· A US$ 74 milliondecrease incommercial accounts and other non-current payables which is mainly explained by(i) US$ 16million in Enel Distribución Cearácorresponds to short-term transfers of regulatory liabilities of net increases in accounts payable,(ii)US$ 78million inEnel Distribución Goiás which includesUS$ 62 million as a result of the devaluation of the Brazilian real,the difference ofUS$ 16 millioncorresponds to the transfer of regulatory liabilities to short term net of increases in accounts payable and(iii)US$ 86millioninEnel Distribución Sao Paulo(net of PIS/COFINS tax recognition, net of theUS$ 161 millionconversion difference),which includesUS$ 125 millionas a result of the devaluation of the Brazilian real, offset by aUS$ 39 millionincrease corresponding to registration of regulatory liabilities netof short-term transfers. The above partially offset by aUS$ 27 millionincrease inEnel Distribución Riowhich includesUS$ 38 millionnew regulatory liabilities net of short-term transfers, offset byUS$ 11 millionrelated to the conversion effects of the devaluation of the Brazilian real.
30
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
· In addition to the recognition of new liabilities inEnel Distribución Sao PauloofUS$ 441 million and inEnel Distribución Ceará ofUS$2 million,which are amounts that our subsidiaries must return to their clients as they recover certain past taxes paid in excess, net of any costs incurred by the companies in the legal proceedings related to this case, see page 29 of this document in Increase of Other Non-Current Financial Assets).
The amounts indicated above were partially offset by theUS$361 millionas a result of theeffects of the devaluation of currencies against the US dollar in respect of theiraccumulated balances for these same concepts. ($280 millioninEnel Distribución Sao PauloandUS$ 81 millioninEnel Distribución Ceará).
· A US$ 200 milliondecrease in other non-current provisionsexplained mainly bythe effects of conversion to US dollar from the functional currencies of each subsidiary, as follows:(i) Enel Distribución Sao PauloofUS$ 83 million,(ii) Enel Distribución GoiásofUS$ 65 million,(iii) Enel Distribución RíoofUS$ 37 million,and(iv) Enel Distribución CearáofUS$ 10 million.
· AUS$ 427 million decrease in non-current provisions for employee benefits, explained mainly by the effects of the conversion effects of the functional currencies of each subsidiary in relation to the US dollar, as follows, among others:(i)Enel Distribución Sao PauloofUS$ 332 million,(ii) Enel Distribución RioofUS$ 26 million,(iii) Enel Distribución Goiás ofUS$ 11 million, (iv)Enel Distribución Ceará ofUS$ 5 million, (v) Codensa ofUS$ 20 million,and(vi) Emgesa ofUS$ 6 million
· Total Equitydecreased byUS$ 2,037 millionexplained by:
Equity attributable to the property (shareholders) of the controllerdecreased byUS$ 1,632 millionmainly due to(i) aUS$ 208 million profit increase for the period,(ii) aUS$ 1,840 million decrease of other miscellaneous reserves mainly conversion differences ofUS$ 1,889 million, other reserves ofUS$ 12 million,offsetby aUS$ 61 million increase from the application ofIAS 29 in "hyperinflationary economies" in Argentina.
Non-controlling shareholdings decreased byUS$ 405 millionand can be explained mainly by(i) aUS$ 102 millionprofitincrease during the period,offset by(ii) a US$ 35 millionincreaseof other miscellaneous reserves due to theapplication ofIAS 29 in"hyperinflationary economies" in Argentina,(iii)aUS$ 243milliondecrease in dividendpayment and(ii) aUS$ 299 milliondecrease of comprehensive income.
31
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
| |
|
The development of the main financial indicators is as follows
Indicator | Unit | 03/31/2020 | 12/31/2019 | 03/31/2019 | Change | % Change | |
Liquidity | Current liquidity (1) | Times | 0.92 | 0.98 |
| (0.06) | (5.9%) |
| Acid ratio test (2) | Times | 0.86 | 0.92 |
| (0.06) | (6.6%) |
| Working Capítal | MMUSD | (503) | (155) |
| (348) | 224.5% |
Leverage | Leverage (3) | Times | 1.48 | 1.43 |
| 0.1 | 3.6% |
| Short Term Debt (4) | % | 41.0% | 38.4% |
| 2.6 | 6.8% |
| Long Term Debt (5) | % | 59.0% | 61.6% |
| (2.6) | (4.3%) |
| Financial Expenses Coverage (6) | Times | 4.37 |
| 3.38 | 0.99 | 29.3% |
Profitability | Operating Income/Operating Revenues | % | 16.9% |
| 17.4% | (0.5) | (2.6%) |
| ROE (annualized) (7) | % | 17.7% |
| 17.3% | 0.4 | 2.2% |
| ROA (annualized) (8) | % | 7.9% |
| 5.7% | 2.2 | 37.7% |
| |||||||
(1) Corresponds to the ratio between (i) Current Assets and (ii) Current Liabilities. | |||||||
(2) Corresponds to the ratio between (i) Current Assets net of Inventories and anticipated Expenses and (ii) Current Liabilities. | |||||||
(3) Corresponds to the ratio between (i) Total Liabilities and (ii) Total Equity. | |||||||
(4) Corresponds to the proportion of (i) Current Liabilities in relation to (ii) Total Liabilities | |||||||
(5) Corresponds to the proportion of (i) Non-Current Liabilities in relation to (ii) Total Liabilities. | |||||||
(6) Corresponds to the ratio between (i) the Gross Operating Income and (ii) Net financial result of Financial Income. | |||||||
(7) Corresponds to the ratio between (i) Net Income attributable to owners of parent for 12 mobile months as of September 30 and (ii) the average between Equity attributable to owners of parent at the beginning of the period and at the end of the period. | |||||||
(8) Corresponds to the ratio between (i) total result for 12 mobile months as of September 30 and (ii) the average of total assets at the beginning of the period and at the end of the period. |
The Company’sCurrent liquidityas of March 31, 2020 reached 0.92 times, showing a5.9% decrease in relation to December 31, 2019, mostly explained by decreased current liabilities as a result of the devaluation effects of the currencies of our subsidiaries.
The Company’sAcid Testas of March 31, 2020 reached 0.86 times, showing a6.6% decrease in relation to December 31, 2019 also mostly explained by decreased current liabilities.
The Company’sWorking capital as of March 31, 2020 was US$ - 50.3 million showing an improvement in relation to December 31, 2019 when it reached US$ -155 also related to the decrease of total liabilities.
The Company’sLeverage (indebtedness ratio) stood at 1.48 times as of March 31, 2020, a3.6% increase in relation to December 31, 2019 mostly on account of lower equity attributable to the controller.
TheHedging of financial costs as of the period that ended on March 31, 2020 was4.37 times, which represents a 29.3% increase as compared to the same period of the previous year, mainly because of higher operating income as compared to the same period of the previous year.
TheReturn-on-equity (profitability) index, measured in terms ofoperating income over operating revenues reached16.9% on March 31, 2020.
TheReturn-on-equity of the controller’s property owners (shareholders) was17.7% representing a 2.2% increase as a result of an increase in the income attributable to the property owners for the previous period.
TheReturn-on-assetsstood at7.9%as of March 31, 2020 representing a 37.7% increase mostly due to general income increases for the 12-month period in relation to the same period of the year before.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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MAIN CASH FLOWS
The Company’snet cash flows were negative as of March 31, 2020 and reachedUS$121 million which represents aUS$ 146 million decrease in relation to the same period of the previous year.
The main variables on account of the flows of operation, investment and financing activities that explain this decrease in net cash flows, as compared to March 2019 are described below:
Net Cash Flow |
| |||
March 2020 | March 2019 | Variation | Variation | |
(US$ million) | % | |||
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From Operating Activities | 306 | 291 | 15 | 5.2% |
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| |
From Investing Activities | (374) | (360) | (14) | 3.9% |
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| |
From Financing Activities | (53) | 94 | (147) | (156.4%) |
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Total Net Cash Flow | (121) | 25 | (146) | (584.0%) |
Thenet cash flows stemming from operating activities totaledUS$ 306 millionin March 2020, representing a5.2% increase in relation to the same period of the previous year. This variation is mostly explained by an increase in thetype of collections for operations activities mainly in(i) aUS$ 343 million increase in collections from the sale and provision of services,(ii)a US$ 35 million charge increase for operations, (iii)US$ 12 million more from charges related to premiums, services, annual fees and other benefits from endorsed policies and(iv)US$ 1 million less from royalties and commissions.
These effects were partially offset by thetype of cash payments from operations mainly from(i)US$ 22 million more in payments to suppliers for the supply of goods and services,(ii) US$ 16 million more in payments to and on behalf of employees,(iii)US$ 427 million more in other payments for operating activities(iv)US$ 59 million more in other cash outgoings and (v)US$ 20 million less in income tax payments.
Thenet cash flows coming from (used in) investment activities were outgoings totalingUS$ 374 million as of March 2020, stemming mainly from (i)US$ 216 million for the incorporation of plants and equipment, (ii)US$ 173 incorporation of intangible assets, (iii)US$31 million 90 days + investments. These investment cash outflows were offset by(i) US$ 14 million of interest received, and(ii) US$ 32 millionfor redemption of investments payments of 90 days+.
Thenet cash flows coming from (used in) financing activities were outgoings totalingUS$ 53 million as of March 2020, stemming mainly from (i)US$ 306 million in bankloansThis was partially offset by(i)US$ 83million of loan repayments of whichUS$ 33 million was for bank credit payments,US$ 44 million in bonds andUS$ 6 million from other sources of financing,(ii)US$ 167 million of dividend payments,(iii)US$ 92 million of interest payments,(iv)US$ 15 million of financial lease liability payments, and(v) US$ 2 million of other cash outgoings.
Below we present the Disbursements of the Incorporation of Properties, Plants and Equipment and their Depreciation for the periods ended in March 2020 and 2019.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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PROPERTY, PLANTS AND EQUIPMENT INFORMATION BY COMPANY | ||||
(million US$) | ||||
Company | Payments for additions of Property, plant and equipment | Depreciation | ||
2020 | 2019 | 2020 | 2019 | |
Enel Generación Chocon S.A. | - | - | 0 | 4 |
Enel Generación Costanera | - | 1 | 15 | 3 |
Emgesa S.A.E.S.P | 29 | 25 | 17 | 18 |
Enel Generación Perú | 13 | 13 | 12 | 13 |
Enel Distribución Goiás (Celg) | 40 | 32 | 19 | 21 |
EGP Cachoeira Dourada | - | - | 1 | 2 |
Enel Generación Fortaleza | 2 | 1 | 3 | 6 |
Enel Cien | - | - | 3 | 2 |
Enel Distribución Sao Paulo S.A. | 45 | 58 | 45 | 52 |
Edesur S.A. | 23 | 51 | 11 | 12 |
Enel Distribución Perú S.A. | 47 | 47 | 15 | 14 |
Enel Distribución Rio (Ampla) (*) | 40 | 36 | 22 | 34 |
Enel Distribución Ceara (Coelce) (*) | 45 | 43 | 15 | 16 |
Codensa S.A. | 97 | 87 | 31 | 30 |
Enel Trading Argentina S.R.L. | - | - | - | - |
Central Dock Sud S.A. | - | 1 | 8 | 7 |
Enel Generación Piura S.A. | 3 | 1 | 3 | 3 |
Holding Enel Americas y Sociedades de Inversión | 4 | 1 | 3 | 2 |
Total | 389 | 398 | 223 | 238 |
(*) Includes intangible assets concessions |
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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MAIN RISKS RELATED TO THE ACTIVITIES OF ENEL AMÉRICAS SA GROUP
The Group’s operations are subject to a broad set of governmental regulations, and any changes introduced in them might affect their operations, economic situation and operating income.
The Group’s operative subsidiaries are subject to a wide range of tariff regulations and other aspects that govern their operations in the countries in which they operate. Consequently, the introduction of new laws or regulations, such as the modification of laws or regulations currently in effect, could impact their operations, economic situation and operating results.
Such new laws or regulations sometimes modify regulatory aspects that may affect existing entitlements, which, as the case might be, may adversely affect the group’s future results.
The Group’s activities are subject to wide-ranging environmental regulations that Enel Américas continuously complies with. Eventual modifications introduced to such regulations could impact its operations, economic situation and operating income.
Enel Américas and its operative subsidiaries are subject to environmental regulations; which, among other things, require preparing and submitting Environmental Impact Studies for projects under study, obtaining licenses, permits and other mandatory authorizations and complying with all the requirements imposed by such licenses, permits and regulations. Just as with any regulated company, Enel Américas cannot guarantee that:
Public authorities will approve such environmental impact studies.
Public opposition will not derive in delays or modifications to any proposed project.
Laws or regulations will not be modified or interpreted in a manner such as to increase expenses or affect the Group’s operations, plants or plans.
The Group’s Commercial activity has been planned to moderate eventual impacts resulting from changes in the hydrologic conditions.
Enel Américas Group’s operations include hydroelectric generation and, therefore, they depend from the hydrological conditions that exist at each moment in the broad geographical areas where the Group’s hydroelectric generation facilities are located. If the hydrological conditions generate droughts or other conditions that may negatively impact hydroelectric generation, then, the outcome will be adversely affected, reason why Enel has established -as an essential part of its commercial policy - to refrain from contractually committing 100% of its generation capacity. The electric business, in turn, is also affected by atmospheric conditions such as mean temperatures that condition consumption.
Depending on the weather conditions, differences may arise in the margins obtained by the business.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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The financial situation and result of the operations may be adversely affected if the exposure to interest rate fluctuations, commodity prices and foreign exchange rates are not effectively managed.
RISK MANAGEMENT POLICY
The companies that are part of the Enel Américas Group are exposed to certain risks managed through the application of systems of identification, measurement, limitation of concentration and supervision.
Among the basic principles defined by the Group when establishing risk management policies are the following:
- Compliance with the good corporate governance standards.
- Strictly compliance with the Group’s whole regulatory system
- Each business and corporate area define:
I. Los mercados en los que puede operar en función de los conocimientos y capacidades suficientes para asegurar una gestión eficaz del riesgo.
II. Criterios sobre contrapartes.
III. Operadores autorizados.
- For each market in which they operate business and corporate areas establish their predisposition to risk consistent with the defined strategy.
- All operations of corporate areas and business operate within the limits approved in each case.
- Business, corporate areas, lines of business and companies establish risk management controls to ensure that markets transactions are carried out in accordance with the policies, standards and procedures of Enel Américas.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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21.1 Interest Rate Risk
Interest rate fluctuations modify the fair value of those assets and liabilities that accrue a fixed rate of interest, as well as the future flows of assets and liabilities indexed at a variable rate of interest.
The aim of managing the interest rate risk is to reach a debt structure equilibrium that would enable minimizing debt costs while reducing Income Statement volatility.
Depending on the Group’s estimates and on the objectives of its debt structure, various hedging operations are performed by contracting derivatives to mitigate such risks. The instruments currently used are rate swaps of variable rates to fixed rates.
The comparative structure of the financial debt of the Enel Américas Group, according to fixed and/or protected and variable rates of interest over total gross debt, after the derivative contracts, is the following:
Gross position
| 03-31-2020 | 12-31-2019 |
Fixed Interest Rate | 35% | 39% |
21.2 Foreign exchange rate risk
Foreign exchange rate risks are primarily inherent to the following transactions:
- Debt contracted by Group companies denominated in currencies other than those in which their cash flows are indexed.
- Payments to be made in currencies other than those in which their cash flows are indexed, for material purchases associated to projects and payment of corporate insurance policy premiums, amongst others.
- Income of the Group’s companies directly linked to the fluctuation of currencies other than those of its own cash flows.
- Cash flows from foreign subsidiaries to parent companies in Chile exposed to foreign exchange rate variations.
In order to mitigate the foreign exchange rate risk, the hedging policy of the Enel Américas Group regarding foreign exchange rates is based on cash flows and aims at maintaining a balance between US$-indexed flows, or local currencies if there are any, and the level of assets and liabilities in such currency. The objective is to minimize the exposure of cash flows to foreign exchange rate variations.
The instruments currently used in compliance with the policy are: cross-currency swaps and foreign exchange rate forwards. Similarly, the policy seeks to refinance debt in each company’s operating currency.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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21.3 Commodities risk.
The Enel Américas Group might be exposed to the risk of price variations of certain commodities, primarily through:
- Fuel purchases in the process of electric energy generation.
- Spot energy purchases in local markets.
In order to reduce the risk under extreme drought conditions, the Group has designed a commercial policy that defines sale commitment levels in line with the capacity of its generating centrals during a dry year, by including risk mitigation clauses in some contracts with free clients. In the case of regulated clients subject to long-term tender processes, indexing polynomials are determined in order to reduce commodity exposure.
In consideration of the operative conditions confronted by the electricity generation market, plus the drought and commodity price volatility in international markets, the Company is continuously checking the convenience of hedging the impact of these price variations in its income.
As of March 31 2020, there are no existing operations to hedge portfolio contracts.
As of March 31, 2020, 5.28 GWh in sale contracts and energy futures purchases have been settled to hedge portfolio contracts.
21.4 Liquidity Risk
The Group maintains a liquidity policy that consists in contracting long-term credit commitment facilities and temporary financial investments for amounts sufficient to support the projected needs of a given period; which, in turn, is a function of the overall situation and expectations of the debt and capital markets.
The above-mentioned projected needs include maturities of net financial debt; namely, after financial derivatives. For additional information regarding the characteristics and the terms and conditions of such financial debt and financial derivatives (see notes 20 and 22).
21.5 Riesgo de crédito.
As of March 31, 2020, the Enel Américas Group held a liquidity position of MUS$ 1,631,324 million in cash and other equivalents and MUS$ 54,000 million in long-term credit lines available unconditionally. As of December 31, 2019, the Enel Américas Group’s liquidity position totaled MUS$ 1,938,997 in cash and cash equivalents and MUS$ 706,000 in unconditionally-available long-term lines of credit.
The Enel Américas Group monitors its credit risks continuously and in detail.
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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Commercial accounts receivable:
In relation to the credit risks of accounts receivable from commercial activities, this is a risk that has been historically quite limited since the short collection term afforded our clients prevents significant individual accumulation. The foregoing is applied to both our electricity generation and distribution lines of business.
In our electricity generation line of business, in certain countries, when confronted to payment defaults it is possible to cut off supply, and almost every contract establishes non-payment as a cause for contract termination. To that effect, we continuously monitor the credit risk and measure the maximum amounts exposed to payment risk, which, as said earlier, are quite limited.
Our electricity distribution companies are authorized, in all cases, to cut off supply to non-performing customers, which is applied in line with the current regulations of each country; all of which facilitates the credit risk evaluation and control process; which, to be sure, is just as limited.
Assets of a financial nature:
Cash surpluses are invested in top domestic and foreign financial institutions (inasmuch as possible with a risk classification of investment grade or equivalent) with pre-established limits per institution.
In our selection of banks for investments, we consider those ranked with investment grade according to the three top international risk classification agencies (Moody’s, S&P and Fitch).
Our placements may be backed up with treasury bonds of those countries in which we operate and/or bank notes issued by top banks, preferring the latter since they offer better returns (always framed within current placement policies).
21.6 Risk Management
The Enel Américas Group prepares a Value at Risk measurement for its own debt positions and financial derivatives, with the purpose of monitoring the risk assumed by the company, thus circumscribing Income Statement volatility.
The portfolio of the positions included for the purposes of calculating the present Value at Risk, is comprised of:
- Financial debt.
- Derivatives for debt hedging
The calculated Value at Risk represents the possible value variation of the above-described positions portfolio within one day and with 95% certainty. To that effect we have studied the volatility of the risk variables that affect the value of the position’s portfolio, in relation to the Chilean peso, which includes:
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PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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- The USS Libor rate of interest.
- The various currencies in which our companies operate, the habitual local indices of bank practices.
- The exchange rates of the different currencies implied in the calculation.
- .
The Value at Risk calculation is based on the extrapolation of future market value scenarios (one quarter out) of the risk variables based on real observations for the same period (quarter) through a 5-year period.
The Value at Risk for the next quarter, with 95% confidence level, is calculated as the percentile of the most adverse 5% of the possible quarterly variations.
Considering the scenarios described above, the Risk Value in a quarter, of the above-mentioned positions, corresponds to MUS$ 361,000.
This value represents the potential increase in the debt and derivatives portfolio, therefore this value at risk is intrinsically related, among other factors, to the value of the portfolio at the end of each quarter.
Other risks
As is the habitual practice in bank credits and capital market operations, a portion of the financial indebtedness of Enel Américas is subject to cross-default provisions. If certain defaults (non-complying) are not indeed remedied, they may result in a cross-default situation and certain liabilities of Enel Américas may eventually become callable.
The non-payment of debt following any applicable grace period of any debt of Enel Américas either individual or of any important subsidiary (as defined by contract), of a capital amount in excess of US$ 150 million, may lead to the forced acceleration payment of the bank credit pursuant the law of the State of New York. In addition, this appropriation contains provisions according to which certain events other than non-payment, in Enel Américas, such as bankruptcy, insolvency, court ordered judgments adverse amounting to more than US$150 million, among others, could result in the declaration of acceleration of those credits.
The non-payment of debt following any applicable grace period of any debt of Enel Américas either individual or of any important subsidiary with an unpaid capital whose amount is in excess of US$ 150 million, or its equivalent in other currencies, may lead to the forced acceleration payment of a substantial part of the Yankee Bonds.
Finally, in the case of local bonds, credit lines and international syndicated loan of Enel Américas, the early payment of these debts, it triggered only by breach of the issuer or debtor, i.e. Enel Américas not referring to their foreign subsidiaries. In the case of local bonds, the cross default may be triggered in cases where the amount in arrears exceeding 3% of Total Consolidated Assets, either on an individual debt or debt at the aggregate level.
40
PRESS RELEASE | |
ENEL AMÉRICAS GROUP’S CONSOLIDATED FINANCIAL STATEMENTS | |
AS OF MARCH 31, 2020 | |
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There are no provisions in the credit agreements by means of which changes in the corporate classification of the debt of Enel Américas by risk classification agencies may generate an obligation to make debt prepayments.
BOOK VALUE AND ECONOMIC VALUE OF ASSETS
In relation to the assets of higher importance, the following should be noted:
Real estate properties, plant and equipment are valued at their purchasing cost, net of their corresponding accumulated depreciation and losses experienced on account of depreciation. Real estate properties, plant and equipment, net of their residual value, as the case might be, are depreciated lineally by distributing the cost of their different integral elements over their estimated useful life, which is the period during which the companies expect to use them. Such useful life estimate is reviewed periodically.
The goodwill (lower value of investments or commercial funds) generated in the consolidation exercise represents the excess acquisition cost over the group’s participation in the fair value of assets and liabilities, including contingent liabilities and any non-controlling shareholdings identifiable in a subsidiary company as of the date of acquisition. Goodwill is not amortized, but rather, at the closing of each fiscal year it is estimated whether it has been the subject of any depreciation that might reduce its recoverable value for an amount below its registered net cost, in which case its value is restated accordingly. (See Note 3.e of the Financial Statements).
Throughout the year and, primarily at its closing date, an evaluation is performed to determine whether there is any indication that any given asset would have possibly suffered a loss due to impairment. Should there be such an indication, we estimate the recoverable amount of such asset in order to determine, as the case might be, the amount of such impairment. If these are identifiable assets that do not generate independent cash flows, we then estimate the recoverability of the cash generating unit to which such asset belongs, understanding as such the smallest identifiable group of assets that generates independent cash inflows.
Foreign-currency-denominated assets are shown at their rate of exchange at the closing of the period.
Notes and accounts receivable from related companies are classified according to their short and long-term maturities. Operations adhere to fair conditions similar to those that prevail in the market.
In short, assets are valued pursuant to the International Financial Reporting Standards (IFRS), whose criteria are set forth in Notes No. 2 and 3 of these Enel Américas’ Consolidated Financial Statements.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Enel Américas S.A. | |
By: /s/ Maurizio Bezzeccheri | |
-------------------------------------------------- | |
Title: Chief Executive Officer |
Date: May 5, 2020