Chairman's Letter To our Shareholders, As in previous years, I hereby comment on the performance of the Company in 2003. The net income of US$ 72,323,141.50 is 96.65% higher than in 2002, but this cannot be considered as satisfactory given the company's sales growth. Sales increases were substantial in the traffics to China, especially those operated by our subsidiary Norasia. China reported a spectacular 9.1% GDP growth with foreign trade growing as much as 37.1%. Containers (Teus) carried by the Company and its subsidiaries during the year were 1,841,349, compared to 1,446,293 during 2002, a 27.3% growth. Compañía Sud Americana de Vapores has therefore become the number 17 shipping company in this business in the world. Although the Brazilian economy declined by 0.2%, our subsidiary Companhia Libra de Navegaçao produced satisfactory results. To reduce costs, this company merged with the Uruguayan subsidiary Montemar Marítima S.A., leaving CSAV with a 69.215% shareholding in the new company. The results of the company we jointly own with Kristian Gerhard Jebsen Skipsrederi A/S were most satisfactory. Results were also positive in the subsidiary Odfjell y Vapores S.A. and in Belden. Car carriers produced better profits than last year, but fruit transportation was not as good as in 2002. SAAM's results remain satisfactory but port concessions continue to generate very low returns. This is mainly due to the fact that the country's growth was slightly higher than 3%, while the offers for obtaining the concessions assumed an annual growth of 4.5%. How does the year 2004 look? I think that it will probably be better than 2003, in the world and in Chile. However, I remind shareholders what I said last year: we live times full of uncertainty that make accurate forecasting difficult. Chile, as a result of the rise of international prices of raw materials, especially copper, due to the devaluation of the dollar, China's spectacular growth and supply related problems, could have GDP grow by 4% or more. In the United States of America, reliable economists are projecting growth of 4.3%. However, the latest employment numbers and consumer confidence surveys show problems that have to be taken into account. Growth short of 2% is expected in Europe, but only 1.6% is forecast for Germany, the world's third largest economy. Japan, the second largest economy, has seen an unexpected recovery that is partly explained by exports to China. Its economy could grow by 2.6% this year. Asia in general (excluding China and India) should produce satisfactory growth rates of around 5.1%. China is expected to grow by 9%, although official sources are commenting on a reduction to around 7%, which continues to be very important; India is expected to grow by 6%. Latin America continues to have the most problematic economies and, unfortunately, Brazil is in a recession and projecting growth of something over 3%. Regarding the uncertainties, we firstly have terrorism. As I write these lines, there has been the shocking attack in Madrid which killed 200 people and left more than a thousand injured. Concern has increased in recent months about the safety of shipping which could be subjected to various forms of terrorism with grave consequences for world trade. Secondly, oil price increases are worrying as they could affect the recovery of the global economy. In Chile, the continued extraordinary strength of the peso could cause numerous difficulties for medium and small size businesses that export or substitute imports. With great effort they have contributed to the country's development. This could affect investment and employment which are still not at satisfactory levels. I should like to report that during 2003, within its 21st Century Project, the Company began a complete transformation program of its information systems, called the Integra Project. A world-class solution was chosen and will be further developed with the support of Oracle and Accenture. The first stage was implemented on schedule and is operating successfully. The rest of the system will be implemented during this year and in 2005, only five of the world's largest shipping companies have similar systems Chairman's Letter http://www.csav.com/pages/annual_report2003_president.htm (1 of 2) [1/26/2005 6:54:16 AM]
Transcript
Chairman's Letter
To our Shareholders,
As in previous years, I hereby comment on the performance of the Company in 2003.
The net income of US$ 72,323,141.50 is 96.65% higher than in 2002, but this cannot be considered as satisfactory given thecompany's sales growth.
Sales increases were substantial in the traffics to China, especially those operated by our subsidiary Norasia. China reported aspectacular 9.1% GDP growth with foreign trade growing as much as 37.1%.
Containers (Teus) carried by the Company and its subsidiaries during the year were 1,841,349, compared to 1,446,293 during2002, a 27.3% growth. Compañía Sud Americana de Vapores has therefore become the number 17 shipping company in thisbusiness in the world.
Although the Brazilian economy declined by 0.2%, our subsidiary Companhia Libra de Navegaçao produced satisfactory results.To reduce costs, this company merged with the Uruguayan subsidiary Montemar Marítima S.A., leaving CSAV with a 69.215%shareholding in the new company.
The results of the company we jointly own with Kristian Gerhard Jebsen Skipsrederi A/S were most satisfactory. Results were alsopositive in the subsidiary Odfjell y Vapores S.A. and in Belden.
Car carriers produced better profits than last year, but fruit transportation was not as good as in 2002.
SAAM's results remain satisfactory but port concessions continue to generate very low returns. This is mainly due to the fact thatthe country's growth was slightly higher than 3%, while the offers for obtaining the concessions assumed an annual growth of4.5%.
How does the year 2004 look? I think that it will probably be better than 2003, in the world and in Chile. However, I remindshareholders what I said last year: we live times full of uncertainty that make accurate forecasting difficult.
Chile, as a result of the rise of international prices of raw materials, especially copper, due to the devaluation of the dollar, China'sspectacular growth and supply related problems, could have GDP grow by 4% or more.
In the United States of America, reliable economists are projecting growth of 4.3%. However, the latest employment numbers andconsumer confidence surveys show problems that have to be taken into account.
Growth short of 2% is expected in Europe, but only 1.6% is forecast for Germany, the world's third largest economy. Japan, thesecond largest economy, has seen an unexpected recovery that is partly explained by exports to China. Its economy could grow by2.6% this year.
Asia in general (excluding China and India) should produce satisfactory growth rates of around 5.1%.
China is expected to grow by 9%, although official sources are commenting on a reduction to around 7%, which continues to bevery important; India is expected to grow by 6%.
Latin America continues to have the most problematic economies and, unfortunately, Brazil is in a recession and projecting growthof something over 3%.
Regarding the uncertainties, we firstly have terrorism. As I write these lines, there has been the shocking attack in Madrid whichkilled 200 people and left more than a thousand injured. Concern has increased in recent months about the safety of shippingwhich could be subjected to various forms of terrorism with grave consequences for world trade.
Secondly, oil price increases are worrying as they could affect the recovery of the global economy.
In Chile, the continued extraordinary strength of the peso could cause numerous difficulties for medium and small size businessesthat export or substitute imports. With great effort they have contributed to the country's development. This could affectinvestment and employment which are still not at satisfactory levels.
I should like to report that during 2003, within its 21st Century Project, the Company began a complete transformation program ofits information systems, called the Integra Project. A world-class solution was chosen and will be further developed with thesupport of Oracle and Accenture. The first stage was implemented on schedule and is operating successfully. The rest of thesystem will be implemented during this year and in 2005, only five of the world's largest shipping companies have similar systems
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in place.
Acknowledgements
As in previous years, myself and the Board thank the Company's personnel for their contribution to this year's results.
Ricardo Claro ValdésChairman
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Board of Directors CHAIRMAN VICE CHAIRMANRicardo Claro ValdésLawyerMember of the board since April1986Tax No.3.158.999-1
Felipe Lamarca ClaroCommercial EngineerMember of the board since April 2003Tax No. 4.779.125-1
DIRECTORS
Luis Alvarez MarínAgronomistMember of the board since April1979Tax No.1.490.523-5
Bernardo Larraín MatteCommercial EngineerMember of the board since April 2000Tax No.7.025.583-9
Joaquín Barros FontaineCompany directorMember of the board since April2000Tax No.5.389.326-0
Baltazar Sánchez GuzmánCommercial EngineerMember of the board since July 1990Tax No.6.060.760-5
Arturo Claro FernándezAgronomistMember of the board since April1987Tax No.4.108.676-9
Christoph Schiess SchmitzCommercial Engineer & Bachelor of CommerceMember of the board since April 1996Tax No.6.371.875-0
Jaime Claro ValdésCivil Industrial EngineerMember of the board since April1997Tax No.3.180.078-1
Patricio Valdés PérezCompany directorMember of the board since April 1988Tax No.7.443.809-1
Patricio García DomínguezAccountantMember of the board since April1988Tax No.3.309.849-9
HONORARY PRESIDENTJosé Luis Cerda UrrutiaCivil EngineerTax No.1.661.990-6
SECRETARY OF THE BOARDBeltrán Sáez Martínez de MorentinLawyer - Professor emeritus in Civil LawTax No.2.389.041-0
Changes in the BoardThe ordinary shareholders' meeting held on April 14, 2003 renewed the whole of the board, with the same directors completingtheir period being re-elected except for Fernando Léniz Cerda who did not present himself for re-election and was replaced withthe election of Felipe Lamarca Claro.
The chairman and the other re-elected directors agreed to expressly acknowledge the Company's appreciation of Fernando LénizCerda, director and vice-chairman for several years who has had to give up these important duties which he always carried outwith dedication and judgment.
This new board, at its first meeting held that same day, elected Ricardo Claro Valdés as chairman and Felipe Lamarca Claro asvice-chairman.
Directors' CommitteeThe Directors' Committee, as referred to in Clause 50 bis of Law 18046, is made up, as from April 2003, of Luis Alvarez Marin(Chairman), Patricio García Domínguez and Patricio Valdés Pérez.
Historical Summary:A Regional Company with a Global Return Compañía Sud Americana de Vapores (CSAV) was formed by the merger of Compañía Chilena de Vapores and CompañíaNacional de Vapores in the port of Valparaiso on October 9, 1872. The decree authorizing its legal existence was signed by thePresident of the Republic, Federico Errázuriz Zañartu and the Company's first chairman was Maximiano Errázuriz.
The Company carried out coastal shipping services in its first development phase. In 1873, it had its first international experiencewith a service to the port of Callao, Peru which was extended to Panama in 1874. At that time, CSAV's ships were the only linkwith remote parts of Chile.
In 1883, thanks to an agreement with Compañía Inglesa de Vapores, the Panama service acquired stability and staying power. Atthe same time, connections were established with other points around the world through agreements with various foreigncompanies.
The Company attended the Pacific services which extended to San Francisco until 1914, but early in the 20th Century it had torestrict itself to as far as Panama because of intensive competition from European lines.
However, the opening of the Panama Canal enabled it to extend its lines to New York following the withdrawal of the Europeanshipping companies because of the First World War.
In 1938, following the world economic crisis of 1931, CSAV placed three new steamships: Copiapó, Imperial and Aconcagua, ofimpressive aerodynamic lines, which enabled it to consolidate the line to New York and extend it to Europe. This extension had tobe suspended because of the serious risks to merchant shipping because of the Second World War of 1939, particularly in theAtlantic Ocean.
When the Second World War ended, the Company's services developed vigorously with the incorporation of ports in Germany,Belgium, Holland and the United Kingdom.
During this period, the holds of some ships were converted to refrigerated chambers which allowed the transport of fruit on ourregular services to the United States and Europe. The development of this activity made Sud Americana de Vapores a leader in thetransport of refrigerated products.
Bulk shipping gained in importance in 1943 and later, in 1974, there was a strong incentive to consolidate its internationalservices.
Sudamericana, Agencias Aéreas y Marítimas S.A. (SAAM) was formed in 1961 for air and shipping agency businesses.
The 1979 Decree Law 3,059 (National Merchant Marine Development Law) led to great dynamism and growth. New traffics werestarted in 1984 and existing services to North Europe, Far East and Japan, Mediterranean,America Pacific and Southeast Asia weremodified. There was also important growth in the specialized services for refrigerated, vehicle and bulk cargoes.
In the early 1990s, the Company had to face new and greater challenges as a result of competition established by the governmentsof most Latin American countries.
In order to take advantage of the opportunity from this change in the competitive scenario implied and to better face competition,the company and its subsidiaries increased their businesses in Peru, Colombia, Ecuador, Argentina, Mexico and Brazil, with moreand improved services, with new routes and activities related to the shipping business.
In 1996, CSAV reached an agreement with the Norwegian company Kristian Gerhard Jebsen Skipsrederi A/S to jointly operateseven Aframaz OBO ships. These dual-purpose vessels allow the carrying of oil and its byproducts, and of bulk products. The fleetwas later expanded to a total of eleven vessels which operate in the principal Atlantic markets.
In 1997, an agreement was reached with Odfjell ASA, a world leader in its field, to transport chemicals in Chile and othercountries on the West Coast of South America. With these investments, the activities of the Company and its subsidiariesexpanded into new, highly-dynamic areas of the global shipping business.
During 1998, Compañía Sud Americana de Vapores S.A. obtained its ISO 9002 certification, granted by Lloyd's Register QualityAssurance (LRQA). This confirms that CSAV has a Quality Management System applicable to its National and InternationalShipping Service for General Cargo, Containers, Bulk, Vehicles, Frozen and Refrigerated Cargo and complies with internationalstandards.
In 1999, as part of its international expansion, the company acquired majority holdings in Companhia Libra de Navegaçao, Brazil,and Montemar Marítima S.A., Uruguay, which participate in different container carrier markets between the East Coast of South
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America and the United States and Europe.
That same year, CSAV entered the cement carrying business with a 30% holding in Belden Shipping. This company has tenspecialized ships and is one of the largest cement carriers in the world. It has a solid commercial and technical capacity in thehandling and transportation of this product.
Several important events occurred in 2000. These included the start of port operations by the concession-holding companies SanAntonio Terminal Internacional S.A. and San Vicente Terminal Internacional S.A, whose concession contracts were signed inNovember 1999 by the companies owners, Sudamericana, Agencias Aéreas y Marítimas S.A. (SAAM) and the American SSAHolding International (SSA), and the start-up of the concession-holder Iquique Terminal Internacional S.A. whose concessioncontract was signed in May by its owners, SAAM and Urbaser of the Dragados Group, Spain.
CSAV also acquired in 2000 the Maltese shipping company Norasia Lines Ltd which gave it entry to the East West routes andthe company Norasia China Ltd., established in Hong Kong, with operations in various cities in the Republic of China.
During 2003, CSAV continued to expand in the international markets, leading it to sign, through one of its subsidiaries and inassociation with Peter Döhle Schiffahrtskontor KG, the largest shipbuilding contract in its history. This covers 22 container-carrierships with a total capacity of 108,700 Teus.
Compañía Sud Americana de Vapores S.A. has thus consolidated itself as a global carrier with a strong presence on the routesbetween South America and the rest of the world, operating an average fleet of more than 90 ships and actively participating in thegeneral cargo markets in containers, bulk, reefers and vehicles.
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CSAV And The Community CSAV supports social assistance, educational, sports and cultural institutions and promotes research, science and technology.
During 2003, Compañía Sud Americana de Vapores and Viña Santa Rita, sponsored the exhibition of 25 sculptures and otherworks of art by the sculptor, Sergio Castillo (Chile's National Art Prize, 1997), in Beijing, China. The exhibition was held at theNational Museum of Chinese Revolution History, Beijing. The works were later shown at the Shanghai and Dalian Art Museums.
CSAV has had links with Philadelphia since 1978, when the transport of Chilean fruit to the United States through that port began.
In May 2003, CSAV again sponsored a presentation by the Philadelphia Orchestra, this time under the direction of the Russianconductor Yakov Kreizberg. They gave a concert at Santiago's Teatro Municipal which included Symphony No.2 in D, Op 73 byJohannes Brahms, Don Juan by Richard Strauss and the Overture to Tannhauser by Richard Wagner.
In July, at the Pre-Colombian Art Museum,the exhibition "Quipu: counting knots in the Inca Empire" was opened. This event,sponsored by CSAV, showed the use of sheep-string instruments and knots used by the Incas for recording, storing andtransmitting information in their empire.
In November, at the Matta Room of the National Fine Arts Museum and with the sponsorship of CSAV, Viña Santa Rita andCristalerías de Chile, José Vicente Gajardo exhibited eight large stone scultptures. The exhibition was also an opportunity topresent his biography.
Samuel P. Huntington, one of the world's most outstanding political scientists and professor at Harvard University, General LordGuthrie, Professor of Kings College, member of the House of Lords, and Sebastián Edwards, professor in economics at UCLA,were invited in November 2003 by the chairman of CSAV and Ediciones Financieras, to speak in Santiago on "The conflict ofcivilizations following the Iraq war", "The present terrorist situation" and "Prospects for the global economy in 2004" respectively.This event,held in the main lecture hall of the Universidad de Los Andes and also at the Hyatt Hotel, was an important academicand cultural event. Personalities from the academic, diplomatic, business, political, cultural and military worlds were allrepresented there.
In December, the book "Chiloé, Masters of the Shores. An ancestral occupation" by industrial designer Vicente Zegers waslaunched. The presentation, essentially photographic with large pictures of colorful "Chiloean" boats carrying out their work, wasdirected by the historian, Doctor Isidoro Vázquez de Acuña.
Description of the Company and the Industry Description of the Company and the Industry
CSAV and its subsidiaries Libra, Montemar and Norasia are directly involved in container shipping. CSAV also carries bulkliquids and solids, refrigerated (reefer) cargo and automobiles. The subsidiary Sudamericana, Agencias Aéreas y Marítimas S.A.(SAAM), provides port services and inland logistics in different ports of Latin America.
Over the past 25 years, global shipping has shown considerable growth due to global economic development, the strong growth inAsian exports and the deregulation of foreign trade in general and of sea transportation in particular. This trend has especiallyaffected the Latin American economies since the early 1990s when most countries deregulated their economies.
The shipping business is very competitive and is noted for it sensitivity to changes in economic activity. Time lags between theplacing of orders with shipyards and the delivery of new ships generate a high volatility in shipping tariffs and ship charters.
Shipping services can be divided into seven main segments:
Container transport Automobile transport Bulk solids transport Reefer cargo transport Cement transport Oil and byproduct transport Chemicals and gas transport
The most important segment for CSAV is container transport. The principal container carrier markets are the so-called East-West,comprising the sections Asia-Europe, Trans Pacific and Transatlantic. Next are the so-called North-South trades which include,transportation between South America and Asia, North America, and Europe.
Container carrier activity has seen a severe consolidation in recent years, characterized by the formation of alliances andacquisitions that seek to broaden the coverage of services and reduce costs.
Regulatory Framework
The regulatory framework in Chile is mainly covered by the following laws:
Decree Law 2222 of May 31, 1978 that regulates shipping and related activities.
Law 18680 of January 11, 1988 which replaced Chile's sea trade law and promulgated the new Third Book of the CommercialCode, called Navigation and Maritime Trade, which sets out, inter alia, aspects like the obligations and responsibilities of carriersand users in sea freight operations.
There are other rules contained in separate laws.
In the international field, there are a number of regulations that cover various aspects of the shipping business. Important are theenvironmental standards that affect from ship building to its operation; customs rules that define the trade practices that have to beobserved by the parties; immigration rules that regulate crew activities; port operations and, most recently, anti-terroristregulations.
Competition
The transportation of general cargo in containers has shown strong growth since its beginnings. The service quality offered by thecontainer has driven its growth as an alternative to other forms of transport.
Following the recession that affected more or less simultaneously the principal economies of the world in 2001, demand forcontainer ships recovered vigorously starting in the second half of 2002 and producing growth of 10.2% in 2003.
In 2003, there was strong growth in traffics from Asia to Europe and from Asia to North America, where containers carried areestimated to have grown by close to 15% in comparison with 2002. The main driver was the strong growth in demand from Chinawhose economy has benefited from changes in production patterns and global supply as a result of its entry into the World TradeOrganization.
Description of the Company and the Industry
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The supply of container carriers has grown continuously over the last 10 years, increasing both in terms of size and ship speed toallow improvements in service quality and reductions in costs.
The global container ship capacity increased by 7.3% in 2003, slightly below the 8% achieved in 2002.
World Container Ship Fleet
('000 teus)
Note: Teus: Unit equivalent to a 20 foot container (Source: Clarkson Research Studies)
The container cargo shipping market showed significant recovery in 2003. Demand, which recovered toward the end of 2002,remained firm in 2003 and exceeded the supply of ships. Both ship charter rates and freight rates on the East-West trafficstherefore rose continuously during the year. The increase in cargo volumes also enabled new services to be added to these trafficsto meet the increased demand.
In contrast, the South American economies continued to grow slowly and with depressed general cargo imports, except for thosefrom Asia. The surplus space already noted in 2002 remained unchanged and import freight rates did not recover despite the rise inship charter rates. However, exports continued to grow as the currencies of the principal economies remained devalued for most ofthe year.
With respect to special transport segments, the markets showed sustained increases, with spectacular rises toward the last quarterof 2003. Following several years of low tariffs, reefer ships benefited from higher charter rates for the 2002/2003 season, asituation that was repeated in the negotiations for the season starting in late 2003.
Ships for carrying oil and its byproducts saw significant rises in charter rates in the first and last quarters of 2003, ending the yearat very high levels. The strong volatility characterizing this market, as a result of changes in the supply and demand for oil andshipping capacity, made for a very firm market following the global recovery in demand for fuels. At the same time environmentalrestrictions limited the operation of ships that did not meet operating standards.
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The market for bulk carriers advanced strongly in 2003 and reached record ship charter rates. This resulted from an increase ofover 20% in demand from China for raw materials for the production of iron and steel; increased demand for coal for electricityproduction in Europe which suffered one of its hottest summers on record; and information from the principal shipbuilders thatthey have no further capacity for accepting new orders for bulk carriers until 2008 as they are dedicating their production to thebuilding of other kinds of higher value-added ships.
Ship chartering rates
US$ per day
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The CSAV Group in 2003 Results AnalysisThe result for the year was a net income of 72 million 323 thousand dollars compared to 36 million 778 thousand dollars in 2002.
Consolidated sales were 2,136 million dollars, 27% higher than in 2002 and mainly due to the growth in line traffics whosevolumes increased by 27%.
1) Considers the total of CSAV services (Container, Solid Bulk, Liquid Bulk and Automobile Services)Paid tons: freight unit, basically a thousand kilos or, if volumes, a cubic meter or 40 cubic feet.(2) Calculated based on full container operations on Container Carrying Services.(3) Sales of Compañía Sud Americana de Vapores and its subsidiaries expressed i nominal terms.(4) Every 365 days / ship = 1 ship year equivalent.
Total Consolidated Sales of CSAV(Millions of nominal US$)
Operating expenses of 1,863 million dollars are 30% higher than in 2002, in line with the greater volume carried and increases infuel costs and ship charters. Fuel costs are higher than the previous year due to the sustained rises in oil prices because of theconflicts in the Middle East and Venezuela. After the end of the conflicts, fuel prices remained high because of the increase in
The CSAV Group in 2003
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world activity and price agreements between the principal producers. Higher ship charter rates also reflected the increase in tradingactivity which generated an imbalance between world supply and demand for transport capacity.
Administrative and Selling expenses are 206 million 132 thousand dollars, marginally below 2002. The reduction in administrativeexpenses, coherent with the effort to reduce costs begun in 2002, helps to compensate the increase in sales commissions whichincreased in response to the higher volumes carried.
Operating Income reached 66 million 531 thousand dollars, an increase of 92% over 2002. The following factors stand out:
- The container traffics operated by CSAV and the subsidiaries Companhia Libra de Navegaçao and Montemar Marítima in SouthAmerica increased the volumes carried during 2003. The results however were below the year before as a result of higher costs notoffset by higher freight rates, which remained depressed because of the overcapacity on many of the traffics. Regarding CSAV'sspecial services, notable was the improved result of automobile carrying which doubled its operating income following bychartering its own fleet in the market.
- The East-West traffics operated by the subsidiary Norasia Container Lines Ltd. showed 30% higher volumes than in 2002, withsustained higher freight rates, which led to a substantial improvement in its results. This shows the strength of China's trade withthe rest of the world which quickly absorbed the ship overcapacity seen in previous years.
The subsidiary SAAM has continued to generate satisfactory and stable results which totaled 18,293 million pesos, equivalent to30 million 807 thousand dollars, a 10% increase over 2002.
The non-operating result fell by 1 million 474 thousand dollars, mainly explained by higher net income on investments in relatedcompanies of 11 million 943 thousand dollars, from increased results of the associates SKS OBO Holding and SKS OBOShipping. This was more than offset by other net expenses of 7 millions 890 thousand dollars of lower income from shipbuildingcontracts and exchange differences of 4 million 942 thousand dollars, from the impact of revaluation of the Chilean peso againstthe dollar on the valuation of local currency liabilities.
Principal Financial Indicators(according to the Consolidated Financial Statements)
Balance Sheet (millons of US$) 2003 2002 2001 2000 1999Fixed Assets 272,1 262,3 264,3 283,7 332,4Total Assets 1.277,9 1.079,5 1.034,4 1.082,4 877,6Pasivos Circulante y de Largo Plazo 687,2 554,4 535,6 573,5 404,8Patrimonio 568,6 502,4 482,6 482,3 459,4
Statement of Income (millons of US$) 2003 2002 2001 2000 1999Sales 2.135,5 1.674,9 1.735,3 1.743,8 1.079,8Operating Income 66,5 34,7 19,1 41,1 35,9Non-Operating Result 15,0 16,5 16,8 6,9 (0,4)Net Income 72,3 36,8 26,1 43,1 30,9Net Income (US$/100) 9,83 5,0 3,54 5,85 4,2
Other Indicators 2003 2002 2001 2000 1999Return on Assets (%) 6,10 3,50 2,52 3,98 4,00Return on Equity (%) 13,50 7,5 5,40 9,38 6,80Current Ratio 1,65 1,38 1,81 2,05 2,44Debt Ratio 1,21 1,10 1,11 1,19 0,88
The CSAV Group in 2003
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CSAV Services
CSAV Services - Services of Norasia Container Lines Ltd. - Services of Companhia Libra de Navegaçao and Montemar MarítimaS.A.
CSAV Services
Liner Services
Liner services, oriented fundamentally to the transportation of cargo in containers, comprise the principal business area of CSAV.The constant growth in volumes of this business has enabled the Company to position itself as the largest operator in containercargo transportation in Latin America.
Most of these services are operated jointly with other shipowners which agree about the supply of ships, but retaining commercialindependence. The objective of these agreements is to improve the service offered to customers and achieve economies of scale.
1.1 Shipping Services from and to the Pacific Coast of South America
CSAV offers services from and to the Pacific Coast of South America to North Europe, Mediterranean, North America Atlantic,Mexico Pacific, Golf of Mexico-United States, Asia, Atlantic Coast of South America, Caribbean, Chile Center/South and ChileCenter/North.
Notable Events of the Year
Traffic between the Pacific Coast of South America and North America showed increases in export volumes and a stagnation inimports. Sales were constant larger volumen was offset by tariff reductions due to overcapacity. The increase in fuel costs and shipcharters led to a fall in profits.
The Asia service grew by 15% in volume and revenues as business in this area of the world remained very active. In order to bettersatisfy demand from Asia and to compensate the increase in costs, the fleet was replaced by one of larger capacity, increasing thecapacity of the seven ships on this service to 2,500 Teus. This change also allowed us to meet the demand for carrying copper fromChile to Asia without the need for additional sailings.
Traffic to North Europe increased 9% in volume but revenues did not increase because of overcapacity. The service to theMediterranean was adversely affected by sharp fall in cargo to Venezuela, a country that substantially reduced its foreign trade.Tariffs were slightly higher but not sufficient to compensate the increase in ship chartering rates.
1.2 Shipping services from and to the Atlantic Coast of South America
CSAV offers services from and to the Atlantic Coast of South America to North Europe, North America Atlantic, Asia and SouthAfrica, East Coast of Africa and Pacific Coast of South America.
CSAV Services
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Notable Events
CSAV's traffics from and to the East Coast of South America showed higher in volumes to all destinations, exports from Brazilwhich were very dynamic. With respect to imports, only those from Asia grew, with those from North America and Europeremaining stagnant. Higher fuel costs and ship charter rates also adversely affected results, that were unsatisfactory and lower thanthose of 2002
The Asia traffic was restructured during the second half of 2003, CSAV decided to assume the leadership in operating the service,becoming the operator of eight of the ten ships involved.
1.3 Shipping Service East-West
CSAV has historically had the traffic between Asia and Mexico Pacific and, in February 2003, we opened a weekly servicebetween the Mediterranean and Gulf of Mexico. Both services have generated satisfactory revenues and results.
2. Special Services
2.1 Liquid Bulk Shipping Service
CSAV offers shipping services in sulfuric acid and other chemical products in Chile through the subsidiary Odfjell y Vapores S.A.in which the partner is Odfjell Seachem, the principal operator in this kind of product in the world.
Notable Events
The volumes of liquid bulks carried in the Bow Andes and Bow Pacífico ships during the year showed stable results compared tothe previous year.
2.2 Solid Bulk Shipping Service
The Company carries concentrates, nitrates and woodpulp from the Pacific Coast of South America to Asia, and concentrates toNorth Europe. The ships are positioned on the Pacific Coast of South America with coal and grain.
Notable Events
Solid bulk transport produced in 2003 similar results to the previous year, which were unsatisfactory. The service reduced volumessignificantly to focus on more profitable businesses but the increase in fuel costs and ship charters adversely affected performance.
During the last quarter of the year, CSAV, through its subsidiary Corvina Shipping Co. S.A., acquired 50% of two bulk carriers
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being built in Japanese shipyards. This transaction was made jointly with Ceres, a leading company in this type of service, which iscontrolled by the Greek shipowner Peter Livanos. The ships, of the Handymax kind, have their deliveries planned for 2004. Anoperation of Handymax ships is being organized together with other partners, supported by CSAV in the South American bulkproducts market.
2.3 Reefer and Frozen Cargo Shipping Service
CSAV, through its subsidiary CSAV Panamá, carries fruit and frozen products. During the fresh fruit export season, a service isoffered with chartered reefer ships from Chile to both coasts of the United States, Europe and Asia. This service is complementedwith refrigerated containers carried on ships of the Line Services.
Notable Events
The transport of frozen cargoes in containers saw a large increase in sales. Cargoes carried on reefer ships maintained a similarvolume to the year before.
In line with current trends, the transport of refrigerated and frozen cargoes in refrigerated containers continues to increase todifferent destinations, including Peru, Ecuador, Colombia, Europe, United States and Asia.
The increase in sales and revenues was adversely affected by higher fuel costs and ship charter rates, generating a worse result thanin the previous year.
2.4 Automobile Carrier Service
CSAV serves the following routes with specialized ships of the Pure Car and Truck Carrier (PCTC) type, which allow the roll-onand roll-off of the vehicles via ramps:
Japan and South Korea to Peru and Chile. Argentina and Brazil to the East Coast of Mexico, United States and Caribbean. West Coast of Mexico to Central and South America Pacific. Europe to Brazil and Argentina, and the West Coast of South and Central America. Mercosur.
Notable Events
CSAV has seen moderate growth in the volume carried compared to 2002. Brazil is again this year the principal market served bythe Company as its export cargo accounts for approximately 60% of the total volume carried, with new destinations in Asia and theMiddle East.
The renewal of the fleet has been the principal challenge for this year, the acquisitions of M/V Pacific Winner and the commitment
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to long-term charters of three ships to be received over the next three years were main events.
Services of Norasia Container Lines Ltd.
CSAV, through its subsidiary Norasia Container Lines Ltd., offers services on the East-West traffics between North Europe, theMediterranean, the Persian Gulf, the Indian Sub Continent, Asia and North America Pacific and Atlantic.
Notable Events
The East-West traffics grew significantly during 2003 due largely to China's economic development. Norasia, taking advantage ofits position in the region, consolidated itself in all its traffics.
In the Asia to Europe trades, the size of the ships was increased from 3,000 Teus to 4,000 Teus to increase cargo capacity. Fournew services were also created to improvie customers service by offering greater port coverage and frequency. This provided asharp jump in market share. The cargo carried from Asia to North Europe increased by 59% in a market which grew byapproximately 24%.
On the traffics between Asia and North America, Norasia captured market share in cargo to Canada through the creation of a newservice. The volume carried by the Company increased by 29% while the market increased by approximately 9%.
A new service was established to cover India to North Europe with six ships. This enabled Norasia to become one of the marketleaders in this flourishing region by the end of the year.
In summary, Norasia in 2003 increased the volume carried by 29%, and its sales by over 50%, compared to 2002, and achievedsatisfactory profits.
Services of Companhia Libra de Navegaçao and Montemar Marítima S.A.
CSAV, through its subsidiaries Compañía Libra de Navegaçao (Libra) and Montemar S.A. Marítima (Montemar), offers containercarrying services to and from the Atlantic Coast of South America to North Europe, Mediterranean, North America Atlantic, Gulfof Mexico, Caribbean, West Coast of Africa and Pacific Coast of South America. Libra also offers bulk cargo transportation andoil tanker services.
Notable Events
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Libra saw large growth in its cargo carrying capacity in 2003. Larger and more modern ships were introduced on the traffics tomeet the sharp increase in Brazilian exports. The East Coast of South America traffic to the Mediterranean concluded its shiprenovation program with the operation of six 2,500 Teus ships; the traffic between Brazil and the West Coast of South Americaintroduced a new ship, and now operates five units of 1,700 Teus; the traffic from the East Coast of South America to the Gulf ofMexico and USA concluded its ship renovation program and now operates six 3,100 Teus ships.
The cargo volume carried by Libra during 2003 was 29% higher than in 2002. However, sales only increased by 20% mainlybecause of the lower import freight tariffs.
Libra has maintained its certification of its Quality Management System under ISO 9001/2000 and its Ship Safety andEnvironmental Protection Management System for the operation of solid bulk carriers and oil tankers.
The tanker "Libra Albacora" was used intensively, transporting 27.5 million barrels of crude during 2003, from Campos in Río deJaneiro to the principal oil terminals along the Brazilian coast.
The bulk carrier "Braztrans 1" maintained similar levels of activity to recent years, transporting 292,000 metric tons of bulk cargoduring 2003.
Montemar Marítima S.A. opened a second route in its Europe South America traffic, adding the Canary Islands and two ports inWest Africa. It has basically operated two services: one from the East Coast of South America to the East Coast of North Americaand the Gulf of Mexico and the other to North Europe, the Canaries and the West Coast of Africa. The first one uses five 1,730Teus ships and the second five 2,530 Teus and six 1,730 Teus ships.
Montemar shipped a volume slightly higher than in 2002 while sales increased by 8%.
Libra and Montemar services were merged in September 2003. The commercial and financial activities of both companies havenow been centralized at Libra's offices in Río de Janeiro, Brazil. The merger of the two companies has also progressed.
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Another Activity of Exercise Marketing - Systems - Administration and Finance - Investments and Financing - Risk Management - Credit Rating - Operationsand Logistics - Container and Intermodal Logistics - ISO 9000 - Shipmanagement - Research and Development - HumanResources - Personnel Welfare - Labor Relations - Acknowledgement of the Personnel Marketing
Within our 21st Century Project, progress was made in three main areas: brand strategy, customer relations management andmarket research. The first comprises a redefinition of the brands strategy for CSAV and its shipping subsidiaries.
A program is being implemented to strengthen the interaction with customers to significantly improve our knowledge of theirneeds and sales performance.
Finally, in order to have a continuous evaluation of the quality of the transport service of the CSAV group companies, marketsurveys were carried out worldwide in 2003, as in 2002. Specific service attributes were measured at the different points ofinteraction with the customer in order to understand their needs and requirements and to define concrete actions to improvieservices.
Systems
The Company began this year a systems transformation program called the Integra Project for improving customer information,standardizing and improving processes, and unifying its technological and information platforms.
A world-class solution was chosen for this program which will be developed in collaboration with Oracle and Accenture over aperiod of three years.
During 2003, development focused on the financial-accounting modules, that included a redefinition and documentation of morethan 200 processes and sub processes, and on customer service and sales force automation modules. This program will be in placein CSAV in Q1 2004 and will be later rolled out to Compañía Libra de Navegaçao, Montemar Marítima and Norasia ContainerLines and to the Company's own agencies in Brazil, United States and China during 2004. During the third year, the automation ofthe most important operating processes will be developed and carried out.
At the same time, the Company is modernizing the technological platform of its existing systems to guarantee a correct integrationwith the new information system.
Administration and Finance
This area was focused on the implementation of the new administrative accounting systems platform. The preparation andpresentation of the project, the definition and documentation of the business model and of the associated processes, and thetraining prior to its installation, have been the principal activities.
The new systems have strengthened the costs and quality control procedures, and the visibility of management information.
Investments and Financing
The CSAV Group obtained in 2003 a 30-year yen loan from AFLAC yen for an approximate amount of US$ 202 million. AFLACis an American entity with a strong presence in Japan. These funds were mostly used to repay US$ 100 million of Eurobondsissued in 1993 and for other investments. CSAV then chose not to draw down a loan of US$ 80 million whose agreements wassigned in 2001 with a bank syndicate led by Bank of Tokyo Mitsubishi and which was due to be drawn in December 2003.
The acquisition of the Pacific Winner, an car carrier, for US$ 12.5 million was fully financed with a loan from Den Norske Bank.
It was also necessary finance the container carrier building program ordered by CSAV, through one of its subsidiaries, jointly withthe German shipowner Peter Döhle Schiffahrts-KG. This comprised financing 90% of the cost of the 3,100 Teus, 4,050 Teus,5,500 Teus ships for 12 years at very competitive rates. Loans are guaranteed by ships mortgages and the guarantees of the owners(CSAV and Döhle) for only 20% of ship costs (10% each).
The principal banks with which the Company and its subsidiaries work are:
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In ChileBanco de Chile●
BankBoston●
Citibank●
Banco de Crédito eInversiones
●
Bank of America BBVA●
JP Morgan Chase●
Banco Santander Santiago●
BBVA Banco BHIF●
Scotiabank Sud Americano●
AbroadABN AMROBank●
Bank of America●
Citibank●
Deutsche Bank●
Finansbanken HSH●
ING Bank●
Norddeutsche Landesbank●
Brown Brothers Harriman & Co●
BankBoston●
Bank of Nova Scotia●
Credit Lyonnais●
Deutsche Schiffsbank●
Nordbank●
JP Morgan Chase●
Vereins-und Westbank●
Den Norske Bank●
DVB Bank●
HypoVereinsBank●
The Royal Bank of Scotland●
Schiffshypothekenbank Zu Lübeck●
Risk Management
The Company is carrying out a complete Operating Risks Management program which includes internal and external audit workand an insurance program.
Internal Audit carries out a systematic revision of the principal risk areas of the Company and its subsidiaries.
With respect to insurance, the Company's fleet is protected against hull and machinery damage, maritime risks and war. It also hasinsurance for cargo and for the different port activities, containers and its other fixed assets.
One of the challenges facing CSAV is to establish a ship chartering strategy coherent with a variable freight rates market. TheCompany's charter contracts run from six months to five years with fixed rates while freights fluctuate in the short term.
To cover the risk of price fluctuations for its basic inputs, like fuel, the Company keeps small inventories and a portion of thetariffs are adjusted according to variations in fuel prices. The Company and its subsidiaries also take out fuel price hedgingcontracts.
Finally, in order to cover the yen exchange risk under the loan for around US$ 202 million, CSAV has contracted an insurancewhich covers a broad spectrum of fluctuation in that currency for a period of 30 years.
Credit Rating
Our bonds issued in Unidades de Fomento were rated as A+ by the rating agency Humphreys Ltda. and A by Fitch ChileClasificadora de Riesgo Ltda. On the other hand, the rating of S&P for the Company is BBB- (Stable Prospects).
Operations and Logistics
During 2003, the Company experienced high costs in the principal ports of Asia, Europe and United States, mainly due to animbalance between the supply and demand for port services. The increased demand in cargo transport was accompanied by alimited development of port infrastructure which led to price increases. The appreciation of the euro had an additional impact onEuropean ports. However, we managed to contain these cost increases through greater operating efficiency.
Container and Intermodal Logistics
In the face of the cargo volume seen in 2003, the Container Logistics area concentrated on covering the increased demand forequipment, reducing costs per container. Close to 45,000 Teus were added to meet the strong demand in Asia and to improve theglobal turnover of its equipment. For the 2003-2004 season, 10,800 new containers, produced in China, were introduced forrefrigerated cargo to meet increasing demand in that market.
During the first half of the year, container rental charges for dry cargo rose as a result of the increase in steel prices. However, wewere able to cover our needs under current fixed price options. At the same time, tariff negotiations allowed us to introduce reeferunits built to the latest technology at preferential prices. A strict maintenance program and repair control has enabled us to keep acompetitive cost structure for the CSAV Group's lines.
ISO 9000
As planned, CSAV up-dated its ISO 9000 certification under the new ISO 9001:2000 standard in August. This new standardincorporates certain key elements, like knowledge and measurement of customer expectations and process control.
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Shipmanagements
Ship Purchases and Sales
The most relevant ship purchases, sales and projects of the year are:
In January, the ship Republica di Pisa was received in Rotterdam, a vehicle carrier with a capacity for 4,246 units. It was registeredin the Marshall Islands, as M/V the Pacific Winner.
In January also, an agreement was reached with Peter Döhle Schiffahrts-KG to participate in the acquisition of two containercarriers with a 3,100 Teus capacity each under a contract for the building of a greater number of these that this German shipownerhas with the Polish shipyard Stocznia Szczecinska Nowa, with programmed deliveries for September 2003 and February 2004.Negotiations contemplated the option to extend the contract to another two ships with delivery in September and December 2004.This option was exercised in June 2003 and in December 2003, it was agreed to sell the first of the two ships.
In March, a purchase contract was signed for six container carriers with a 5,500 Teus capacity each, and six 4,050 Teus ships, withChina Shipbuilding Corporation (CSBC), Taiwan. The Company placed these orders jointly with the German shipowner PeterDöhle Schiffahrts-KG.
In September, a shipbuilding contract was signed for the bulk carrier MST Callao by Maritime Shipping and Trading InternationalInc., Marshall Islands, controlled by the associate company Consorcio Naviero Peruano. The delivery of the ship was onNovember 12 at the port of Philadelphia, USA.
In October, a sale contract was signed for the scrapping of the Pacific Rider with Eckhardt Marine GmbH. Delivery was made onNovember 25 in the port of Jiangyin, Republic of China.
In November, a shipbuilding contract was signed for six container carriers of 6,500 Teus capacity each, with the Hyundai shipyard,South Korea. This was ordered jointly with the German shipowner Peter Döhle Schiffahrts-KG.
The Pacific Winner was officially transferred from the Marshall Islands register to the Chilean one in November, CSAV being theowner.
Belden Shipping, the associate company specialized in carrying cement, acquired three ships in 2003: Glory Credo, a 10,600 tonbulk carrier; Glory Sky, a 16,300 ton cement carrier, and Glory Ocean, a 16,300 ton cement carrier.
Operating Time of Own Ships
The ships making up the fleet of the Company and its subsidiaries had, according to the sailings imputable to 2003, a totalconsolidated 5,065 available days, having used 158 of these for careening, maintenance and repairs, thus leaving 4,907 days fortheir commercial operation, the equivalent of 96.9 percent of the total available time. This indicator shows an improvement overthe previous year. The non-operating days are mainly explained by 93 days imputable to careening work on the Imperial, RíoBueno, Toltén, Pacific Explorer and Bow Andes.
Shipmanagement
The technical operation of the Company's fleet, and of its Chilean and foreign subsidiaries, which is composed of ships under theflags of Chile, the Bahamas and Marshall Islands, has continued to be the responsibility of the specialized subsidiary SouthernShipmanagement (Southship) which has 22 years experience and jointly owned by Wallem Shipmanagement Ltd., Hong Kong.
Companhia Libra de Navegaçao, Brazil, on the other hand, acts as shipowner, manager and also commercial operator of the shipsBraztrans I and Libra Albacora.
The two technical operators mentioned have documented management systems which are subject to constant revision, and have thecertification of compliance with the standards of the International Code of Ship Operating Safety and the OMI Prevention ofPollution (ISM Code), and also has its operations audited and certified according to ISO 9001-2000.
Southship, in its constant efforts to improve safety in ship operations is working to implement the ISPS (International Ship andPort Facility Security Code), and it recently obtained its ISO-14000 certification for its commitment to environmental protection.
This all translates into economic efficiency and technical reliability that provides safety for the ships operation and permits theservice offered to customers.
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Ships OwnerDeadweight
tonnage (tonnes)Type of
ShipGRT (TM)
Speed inknots
Years built
Toltén Subsidiary of Corvina 51,459 Woodpulp carrier 36,008 15.0 1999Pacific Explorer Subsidiary of Corvina
(1) 50 % (2) 51 %(3) 49 %During 2003, the Company and its subsidiaries chartered 167 ships to complement its own fleet and enable it to offer shippingservices on the different traffics operated.
Research and Development
CSAV participates in a very competitive market in which variations in global economic growth directly affect demand for cargotransport. This, together with variations in the supply of new shipbuildings, generates cycles associated with the principal variablesof the industry like ship chartering rates, freight tariff levels and cargo volumes, requires a considerable research effort to estimatethe supply of services and maintain the competitive presence of CSAV in the global shipping market.
It is also necessary to regularly monitor variables like fuel prices, exchange rates, interest rates, etc., factors that affect trade flowsand operating costs.
Human Resources
Training and Development
CSAV's training during 2003 enabled it to develop various working skills. In the organizational area, workshops were focused onday meetings of the different management areas to discuss matters like communication, awareness and team work. 14 such daysessions were carried out in which 434 people took part.
An important training activity was the Management Assistance Workshop, especially designed for 14 executive secretaries. Thesediscussed subjects such as protocol, communication and decision taking.
The importance of Information Security was also reinforced this year. 459 employees were trained to understand the new CSAVInformation Protection Policy, introducing new security, classification standards and information protection procedures.
The Integra Project was another big challenge. 2,327 employees were trained over a 30-day period, with a total of 8,481 hours oftraining. Training also continued in languages, computer skills and the shipping business.
During 2003, a total of 34,166 hours of training were given, with an average of 57.90 hours per person. This implied an increase of27.2 % over the previous year and 97% of the training tax credit set by SENCE was utilized.
Personnel of CSAV and Subsidiaries
The total personnel of CSAV and its subsidiaries, at December 31, 2003, was 5,287, distributed as follows:
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The principal changes made at the executive level were:
Appointments
In January, the board of the Company appointed Miss Vivien Swett Brown as Vice President, Research.
In January, Ignacio Jiménez Olmo moved to Uruguay to become Senior Vice President, Montemar Lines.
In January, Cristóbal Rollán became Senior Vice President, Reefers and Automobiles, and Santiago Bielenberg Vásquez becameSenior Vice President, Bulk and Chartering.
In April, Eduardo Parker Gumucio joined the Company as Senior Vice President, Human Resources.
In October, Gonzalo Baeza Solsona joined the Company to become, in 2004, Senior Vice President, East Coast Lines, in SaoPaulo, Brazil.
In December, Ignacio Jiménez Olmo returned to CSAV from being Senior Vice President, Montemar Lines in Uruguay, followingthe merger of Montemar and Libra, to become Senior Vice President, Projects.
Resignations
Claudio Aguayo Herrera resigned in January from being Vice President, Montemar Lines.
Arjun Vikram-Singh, Senior Vice President, Performance Control, left the Company in April in accordance with the terms of hiscontract.
Alberto Feres Lama resigned in July as Senior Vice President, Reefers and Automobiles.
Enrique Ide Valenzuela resigned in August as adviser responsible for the 21st Century Project.
Total remunerations paid to executives in 2003 were Ch$ 2,670,608,000 and severance indemnities amounted to Ch$ 701,758,000.
There are no incentive plans for directors, managers or executives. However, voluntary bonuses are paid for executiveperformance when the board so agrees.
Personnel Welfare
Housing
Since the creation of the mortgage loans scheme for employees, 232 loans have been granted for the purchase, construction andrepair of homes. This benefit has provided an improved housing for employees and their families, at low interest rates and onsuitable repayment terms.
Health and other Benefits
The purpose of the Social Assistance Corporation (CAS) is to improve the quality of life of its members, providing healthassistance and other benefits. Both the Company and the members fund the Corporation. During 2003, the Corporation hadapproximately 384 million pesos of which 15% was provided by its members and 85% by the Company. These funds are used toprovide additional cover for medical expenses, contributions for the education of children and employees, etc.
The Company has also contracted life insurance for its employees that also covers catastrophic illnesses of employees and theirfamilies.
Recreation
The Company has maintained its support for sports and recreational activities of personnel and their families.
Notable were the Olympics organized by the CSAV Sports Club with shared financing. This event brought together the employeesof Santiago and Valparaiso and improved interpersonal relations within the organization.
The Montecarmelo Country Club, in Limache, is another CSAV facility for the recreation of family groups. Summer and winter
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programs are offered. Other activities included the annual meeting organized by the board for all CSAV personnel.
Senior Study Scholarships
The Company awarded a new scholarship in 2003. now totaling seven, for children of personnel with outstanding academic marks.This is an important motivation for the students.
It also maintained nine scholarships for personnel who study at a senior level. These cover university or professional techniciancourses which provide for better development opportunities in the medium and long term.
Labor Relations
Labor relations with Company employees continued to be carried out in a climate of mutual respect and cooperation, reaffirmingCSAV's own organization style.
The collective contracts provide the framework for relations with the CSAV Group Union and The Supervisors Group with fluidand permanent communication through periodic meetings with the employees' representatives.
Notable was the Christmas Party given to CSAV's personnel and their families, at the Montecarmelo Country Club, and financedwith shared funds. The complete family took part, enjoying a day of open-air entertainment in anticipation of the commemorationof this most important date.
Acknowledgement of the Personnel
The board acknowledges the work of the personnel in support of the Company's objectives, which has permitted it to successfullytackle the challenges faced during this year.
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A.F.P. Habitat S.A. Fondos de Pensiones 12,127,191 1.65%Constructora Santa Marta Ltda. 11,000,000 1.49%
Celfin, Gardeweg S.A. Corredores de Bolsa 8,892,470 1.21%AFP Provida S.A.Fondo de Pensiones 7,943,718 1.08%
Internacional Río Plata S.A. 7,358,445 0.99%
According to the Company's registers and the application of Section XV of Law 18,045, individual or corporate shareholders thathold or control the Company directly or through other individuals or entities, are the following:
Name Entity Shares PercentageMarítima de Inversiones S.A. Entity 323,185,618
Por tener controladores comunes con:Servicios y Consultorías Hendaya S.A. Entity 14,219,520
The following shows 2002 and 2003 share transactions carried out by the shareholders, the chairman, directors, managers andadministrators, according to the Company's shareholders register:
Shareholder
Number of Shares
2003 2002
Purchases Sales Purchases SalesAFP Provida S.A. Fondos de Pensiones 8,052,317 108,599 Philtra Limitada 1,000,000 1,000,000Inmobiliaria Copihue S.A. 31,345 74,257 A.F.P. Habitat S.A. Fondos de Pensiones 77,000 Bancard S.A. 15,545,024 Bice Corredores de Bolsa S.A. 3,826,321 11,542,296 Celfin, Gardeweg S.A. Corredores de Bolsa 60,437,647 51,654,883 Scotiabank Sud Americano 10,043,017 The Chile Fund Inc. 5,440,000
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Inmobiliaria Nague S.A. 9,509,151 Cominco S.A. 9,227,863 Inmobiliaria y Forestal Chigualoco S.A. 8,450,999 Inversiones Alonso de Ercilla S.A. 311,236 Mario Torres Chadwick 3,441
Stock Market Statistics
The following shows the quarterly statistics of Company's shares trading over the last three years:
The ordinary shareholders' meeting held on April 14, 2003 agreed to distribute 40% of the net income, authorizing the board todecide on the timing and amount of any interim dividends and when it deemed convenient to distribute dividends against the Fundfor Future Dividends without the need for authorization by a shareholders' meeting.
Dividend Payments
The following dividends per share were paid against income in the years indicated:
Dividend N°Date of
Payment MonthYear
Amount paid per share
Ch$ US$ equivEarnings Year
299 January 2001 3.00 0.0052 2000300 April 2001 5.36341 0.00896 2000301 July 2001 2.9 0.0047 2001302 Octuber 2001 3.1 0.0045 2001303 January 2002 1.4 0.002068 2001304 April 2002 1.91391 0.00296 2001305 Octuber 2002 3.8 0.005377 (1)306 January 2003 3.00 0.004243942 2002307 April 2003 11.38609 0.00157484 2002308 July 2003 4.60 0.006597536 2003309 ctuber 2003 4.50 0.006447823 2003
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1) Against Reserve Fund Future Dividends
Earnings Distribution
The profit and loss statement for the year ended December 31, 2003 showed a net income ofUS$ 73,323,141,50 which includesamortization of negative goodwill (consolidated) in related companies of US$ 1,455,265. The board will propose to the ordinaryshareholders' meeting the following distribution of the net income:
Subject to the approval of the net income and after deducting the final dividend No.311, the Company's shareholders' equity atDecember 31, 2003 will be:
Subscribed and paid capital US$ 170,000,000.00Other reserves US$ ( 4,143,148.04)Fund future dividens US$ 28,347,491.10Retained earnings US$ 360,437,710.66Total US$ 554,642,053.72
According to these figures, the book value per share will be US$ 0.75 at December 31, 2003.
Directors' Remuneration
In accordance with the provisions of Law 18,046, the ordinary shareholders' meeting held on April 14, 2003, agreed the directors'remuneration for 2003, consisting of a fee equivalent to one "Minimum Income" per director and double that amount for thechairman for each meeting they attend, and a 2% share of the net income for the year, of which the chairman receives double thanother Directors. In addition, the members of the Directors' Committee receive a fee of one "Minimum Income" for each meetingattended and double for its chairman.
The total amount paid during 2003 was US$ 830,212.95, detailed as informed in Note 31 to the Consolidated Financial Statements.
Directors' Committee
The Directors' Committee was presided by Fernando Léniz Cerda and its members were Luis Alvarez Marín and Patricio GarcíaDomínguez until April 14, 2003. As from that date, its members are Luis Alvarez Marín (independent), who was appointed aschairman at the initial meeting, Patricio Valdés Pérez (independent) and Patricio García Domínguez (controller).
Apart from its members, committee meetings have also been attended by the Senior Vice President, Administration and Finance,Patrick Horn García; the Controller, Mario Torres Chadwick and the Secretary, lawyer Beltrán Sáez Martínez de Morentin.
Activities
The Committee held twelve meetings during the year. To assess the Company's operations with related companies.
It has also analyzed the quarterly financial statements and, at the beginning of the year, met the external auditors for a detailedstudy of the annual financial statements for 2002. At the end of 2003, it met again with the external auditors to review their reporton compliance with recommendations made to management.
Expenses
The Committee in 2003 payed no advisory fees to third parties as its work was limited to using only the internal resources of theCompany.
Main Buildings of the Company
General Information
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Sudamericana, Agencias Aéreas y Marítimas S.A. ( SAAM )
Constituted under public deed before the Valparaiso notary Rafael L. Barahona Stahr on November 15, 1961. Ministry of FinanceDecree 2,009 of February 15, 1962 approved is existence and bylaws and declared it legally constituted.
The company currently has its legal domicile in Valparaiso and Santiago. Its tax registration number is 92.048.000-4.
The company provides the following services in Chile and abroad full agency services for sea, air or terrestrial transportationscompanies, coastal activities and port services; stevedoring, ship services; tug, launch and mooring services; the construction,development, and operation of ports and port terminals; investment in other related business.
SAAM offers the following services to shipowners and importers and exporters.
Ship Services
Stevedoring
These port services consist of the planning, execution and control of all work related to loading and unloading of merchandise toand from ships for which SAAM acts as stevedoring agent.
Port services in private terminals Tug services
Since its foundation, SAAM has operated tugs for port use and assistance at sea, thus assisting ships in docking and leaving portwhen they are unable to do so under their own steam.
Container storage and workshops
SAAM has container depots located strategically in the different ports of Chile and some Latin American ports in Colombia,Ecuador, Peru and Brazil, operated through related companies.
Ship agency service
Concentrates on the planning, direction and control of activities for providing the services of Ships Agent (Port Agent), ProtectorAgent and/or Documental Agent.
Aircraft services at airports Launch and pilotage service
Cargo Services
SAAM offers the following cargo services:
Loading agent Freight forwarder Overland transport River transport Barge and ferry services Warehousing service Refrigerated warehousing Net placement and maintenance (salmon) Primary zone service in port and airport Mass and bulk cargoes.
CSAV Subsidiaries
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Name Owner Horsepower Port Country Year buAguila III SAAM 5,000 Punta Arenas Chile 2003Fardela III SAAM 4,700 Valparaíso Chile 2003Pequén SAAM 4,000 San Antonio Chile 2002Quetro SAAM 3,500 San Antonio Chile 2001Tagua SAAM 2,560 Valparaíso Chile 1998Saam SAAM 2,800 Bahía/Concepción/San Vicente Chile 1996Huala SAAM 3,400 Bahía Concepción/San Vicente Chile 1996Caiquén II SAAM 2,800 Valparaíso / Coquimbo Chile 1995Gaviota II SAAM 2,800 Iquique Chile 1995Manutara II SAAM 2,800 Mejillones Chile 1993Alondra SAAM 2,448 Valparaíso Chile 1984Pelícano I SAAM 1,800 Iquique Chile 1980Halcón II SAAM 4,200 Puerto Montt Chile 1977Petrel SAAM 3,200 Antofagasta Chile 1976Albatros II SAAM 1,200 Arica Chile 1968Mataquito SAAM 720 Valdivia Chile 1963Bandurria I SAAM 1,860 Puerto Chacabuco Chile 1960Fardela II Subsidiary 4,200 Veracruz Mexico 2003Saam Otomí Subsidiary 4,000 Tampico Mexico 2002Saam Chichimeca Subsidiary 4,660 Veracruz Mexico 2002Saam Azteca Subsidiary 4,660 Ciudad del Carmen Mexico 2000Saam Totonaca Subsidiary 4,300 Ciudad del Carmen Mexico 1999Saam Tacuate Subsidiary 4,300 Veracruz Mexico 1999Saam Jarocho Subsidiary 3,000 Tuxpan Mexico 1998Saam Mixteco Subsidiary 3,000 Altamira Mexico 1998Saam Tomiyauh Subsidiary 4,000 Ciudad del Carmen Mexico 1998Saam Tolteca Subsidiary 4,830 Lázaro Cárdenas Mexico 1997Saam Mexica Subsidiary 4,830 Altamira Mexico 1997Saam Huasteca Subsidiary 4,290 Veracruz Mexico 1991Saam Purepecha Subsidiary 3,672 Altamira Mexico 1991Saam Olmeca Subsidiary 4,660 Tampico Mexico 1989Saam Maya Subsidiary 4,830 Lázaro Cárdenas Mexico 1987Saam Tarasco Subsidiary 4,290 Lázaro Cárdenas Mexico 1985Amazonas I Subsidiary 2,560 Guayaquil Ecuador 1998Azuay Subsidiary 1,350 Puerto Bolívar Ecuador 1981Paute Subsidiary 1,350 Guayaquil Ecuador 1981Tomebamba Subsidiary 1,200 Guayaquil Ecuador 1977Guayas Subsidiary 1,200 Manta Ecuador 1973Daule Subsidiary 1,200 Manta Ecuador 1973Pastaza Subsidiary 2,400 Esmeraldas Ecuador 1970Napo Subsidiary 1,320 Manta Ecuador 1963Chonta Associate 2,090 Buenaventura Colombia 1995Toquepala Associate 3,000 Ilo Peru 2003Kuelap Associate 2,570 Callao Peru 2000Sipán Associate 1,636 Callao Peru 1998San Lorenzo Associate 1,200 Huarmey Peru 1994Máncora Associate 1,300 Bayovar Peru 1994Tramarsa I Associate 1,200 Paita Peru 1981Rimac Associate 1,200 Matarani Peru 1981
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Tramarsa III Associate 1,200 Matarani Peru 1978Tramarsa II Associate 1,200 Salaverry Peru 1978Punta Coles Associate 1,680 Ilo Peru 1972Huracán Associate 1,200 Fray Bentos Uruguay 1994Gaucho Associate 4,000 Montevideo Uruguay 1985Sudestada Associate 4,100 Nueva Palmira Uruguay 1972Pampero Associate 1,600 Montevideo Uruguay 1962Lavalleja Associate 1,800 Montevideo Uruguay 1962Pablo M.Ferrer Associate 1,200 Nueva Palmira Uruguay 1960
Notable Events
In Chile, the year 2003 began with the huge challenge of starting up, in record time, the Antofagasta Terminal Internacional S.A..The company that was awarded the operation of the piers 3 to 7 of Antofagasta Port for a 20-year term. A Gottwald mobile cranewas introduced and construction was begun of a mineral loading terminal.
In San Antonio, port operations were consolidated for the principal customers, increasing the company's share of cargo movedthrough this port to 35%, and to 46% for the movement of containers. The increased demand for warehousing services byimportant customers in the grains, fertilizers and general cargo markets made it necessary to build two new warehouses at the portwith an overall capacity of 5,900 m2.
A similar situation occurred at Iquique Port where the market share rose from 31% to 55%. This port also awarded the engineeringcontract for the construction of an anti-seismic pier for Post-Panamax ships, which was approved by the port authorities.
In Placilla, in Chile's 5th Region, the container terminal has been expanded by 15,000 m2 and a 1,200 m2 warehouse has been builtfor distributing wine, providing the start to this service with a global volume of 4 million cases. Finally, it is important to point outthe good results of the subsidiary SAAM Extraportuarios S.A., a company that is consolidating itself in the provision of primaryzone warehousing services.
In the south of the country, San Vicente Port has consolidated its position as the leading port in the 8th Region and obtained itsISO 9001:2000 certification. The recently-acquired Corral Port not only substantially improved its financial results but, at theoperating level, successfully carried out all the unloading of the heavy equipment for an important woodpulp mill project in theValdivia area, in the process overcoming serious technical challenges.
It is also important to mention the development of warehousing services in Puerto Montt by Reloncaví Ltda., consisting of a new4,000 m2 warehouse to meet the needs of important customers in the fertilizers market. Cargo Park S.A. also built a warehouse inSantiago with an 8,000 m2 capacity.
Aquasaam S.A. inaugurated a plant in Chiloé for offering an integral service to the salmon industry, especially relating to theinstallation, maintenance and manufacture of nets.
In the international area, in Peru, a port operation service was begun at the mining port of Bayovar. In Mexico, an oil platformsupport services contract came into operation for a term of three years which will mean operating three tugs in the Campeche zone.
There were good results in Colombia and Ecuador. A Gottwald mobile crane was built in the port of Guayaquil and two tugs willallow the renewal and strengthening of its present fleet.
SAAM, together with its associate company Reloncaví Ltda., were awarded the operation and maintenance for fifteen years of theprivate M´Bopicuá terminal in Uruguay, from which mainly forestry products are shipped.
Finally, the central management of the international area was restructured, dividing it into a Development Management and anInternational Business Management to improve the management of its foreign businesses.
During 2003, the fleet of SAAM and subsidiaries or associates was increased by four tugs, making a total of 58 own tugs operatingin Latin America. These were positioned in three different countries: the "Toquepala" in Peru where eleven tugs are operating inseven ports; the "Fardela II" in Mexico where sixteen tugs operate in six ports; and the "Aguila III" and "Fardela III" which willsupport the tug services in Chile where seventeen tugs operate throughout the country. These tugs will be based in the ports ofPunta Arenas and Valparaiso, replacing the "Fardela" and "Alcatraz" which were re-positioned in Mexico and Ecuador andre-baptized "Saam Otomí" and "Napo" respectively.
In a year marked for its wide exchange rate fluctuations, the results of SAAM and subsidiaries are outstanding and exceed theprevious year. The company's net income was Ch$18,293,272,661, equivalent to US$ 30,807,128.
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The company's authorized, subscribed and paid capital at December 31, 2003 was
$ 50,627,418,965, equivalent to US$ 85,260,052; CSAV holds 99.9995% of the capital, and Global Commodity Investment Inc.0.0005%.
The management of the Company is conducted by a Board of eleven Directors, who are elected through a three year-old period.
ChairmanVictor Pino Torche
Vice ChairmanManuel Grez Matte
DirectorsLuis Alvarez Marín(CSAV Director)
Arturo Claro Fernández(CSAV Director)
Jaime Claro Valdés(CSAV Director)
Ricardo Claro Valdés(Chairman of CSAV)
Patricio García Domínguez(CSAV Director)
Felipe Lamarca Claro(Vice Chairman, CSAV)
Baltazar Sánchez Guzmán(CSAV Director)
Christoph Schiess Schmitz(CSAV Director)
Patricio Valdés Pérez(CSAV Director)
General ManagerAlejandro García-Huidobro Ochagavía
Empresa de Transportes Sudamericana Austral S.A.
This Company's objects are to:
a. Purchase, sell, charter and manage ships in general and operate shipping lines in Chile and any other part of the world.
b. Operate shipping agencies and carry out shipping operations in general in Chile and abroad.
c. Purchase, sell, barter, lease and trade in goods and property, merchandise of any kind and carry out any other business orfinancial operation relating to the business of the company, and to take holdings in other Chilean or foreign companies.
d. Purchase and trade in shares or rights in companies and, in general, undertake any other commercial, maritime, financial or realestate business permitted by Chilean law or permitted in the future.
Its paid capital at December 31, 2003 was US$ 342,043. Compañía Sud Americana de Vapores S.A. holds 99% of the capital andGlobal Commodity Investment Inc. 1%.
The company produced a profit of US$ 189,520 for the year.
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DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Juan Antonio Alvarez Avendaño(CSAV Deputy General Manager)
Fernando Bustamante Feres(CSAV Senior Vice President Operations and Logistcs)
Odjfell y Vapores S.A.
The objects of this company are to:
a. Purchase, sell, charter and manage ships in general, and operate liner services in Chile or any other part of the world.
b. Operate shipping agencies and carry out shipping operations in general in Chile and abroadc. Purchase, sell, barter, lease and trade in goods and real estate, merchandise of any kind, and carry out any other business orfinancial operation relating to the company's business and to take holdings in other Chilean or foreign companies.
d. Purchase and trade shares or rights in companies and, in general, undertake any other commercial, maritime, financial or realestate business permitted by Chilean laws, or permitted in the future.
Its paid capital as of December 31, 2003 was US$ 1,033,439.
Compañía Sud Americana de Vapores S.A. holds 51% of the shares, and Storli ASA 49%.
The company produced a profit of US$ 1,436,902 for the year.
The members of the board and the general manager are the following:
ChairmanRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
DirectorsJaime Claro Valdés(CSAV Director)
Bjorn SjaastadArturo López Titus
General ManagerHéctor Arancibia Sánchez(CSAV Senior Vice President Shipmanagement)
Foreign Subsidiaries
Corvina Shipping Co. S.A.
The objects of this company are to:
a. Purchase, sale, charter and management of ships in general, and the operation of liner services in Panama or any other part of theworld.
b. Operate shipping agencies and carry out shipping operations in general in Panama or abroad.
c. Purchase, sell, barter, lease and trade in goods and property, merchandise of any kind, and carry out any other business or
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financial operation relating to the business of the company, as well as to take holdings in other Panamanian or foreign companies.
d. Purchase and trade in shares or rights in companies and, in general, undertake any other commercial, maritime, financial or realestate business permitted by the laws of the Republic of Panama, or permitted in the future.
ts paid capital as of December 31, 2003 was US$ 40,600,000 and Compañía Sud Americana de Vapores S.A.'s holding in thecompany is 99.98%.
Corvina Shipping Co. S.A. owns three ships through subsidiary companies.
The result for the year was a loss of US$ 8,820,689.
DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Juan Antonio Alvarez Avendaño(CSAV Deputy General Manager)
Alexander AbfaltererJuerg Chr. PlattnerMario Da-Bove Andrade(Senior Vice President North America Region)
General ManagerAlexander Abfalterer
Tollo Shipping Co. S.A.
The objects of this company are to:
a. Purchase, sell, charter and in general manage ships and operate liner services in Panama or any other part of the world.
b. Operate shipping agencies and undertake maritime operations in general, in Panama or abroad.
c. Purchase, sell, barter, lease and trade in goods and real estate, merchandise of any kind, and undertake any other business orfinancial operation relating to the business of the company and take holdings in other Panamanian or foreign companies.
d. Purchase and sell shares or rights in companies and in general, undertake any other commercial, maritime, financial or realestate business permitted by the laws of the Republic of Panama, or permitted in the future.
Its paid capital as of December 31, 2003 was US$ 91,840,000 and Compañía Sud Americana de Vapores S.A.'s holding in thecompany is 99.999%.
Tollo Shipping Co. S.A. owns two ships through subsidiary companies.
The result for the year was a profit of US$ 18,613,059.
DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Juan Antonio Alvarez Avendaño(CSAV Deputy General Manager)
Alexander AbfaltererJuerg Chr. PlattnerMario Da-Bove Andrade(Senior Vice President North America Region)
General ManagerAlexander Abfalterer
Inversiones Plan Futuro S.A.
CSAV Subsidiaries
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The objects of this company are to:
a. Buy, sell, charter and in general manage ships and operate liner services in Panama or any other part of the world.
b. Operate shipping agencies and undertake maritime operations in general in Panama or abroad.
c. Purchase, sell, barter, lease and trade in goods and real estate, merchandise of any kind, and undertake other business orfinancial operations relating to its business and take holdings in other Panamanian or foreign companies.
d. Purchase and trade in shares or rights of companies and, in general, undertake any other commercial, maritime, financial, realestate business permitted by the laws of the Republic of Panama or permitted in the future.
During 2003, through its holdings in the associate companies SKS OBO, Tollo produced earnings approximately 45% higher thanthe previous year. It was a good year for the companies SKS OBO as they obtained a more than 25% increase in sales which wasaccompanied by an increase in operating margins. Regarding the non-operating result, this was also better than in 2002 because ofhaving more cash and renegotiating its liabilities in good time.
Its paid capital at December 31, 2003 was US$.37,500,000 and the percentage holding of Compañía Sud Americana de VaporesS.A. in it was 99.997%.
The result for the year was a profit of US$ 28,922,990.
DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Alexander AbfaltererJuerg Chr. PlattnerJuan Antonio Alvarez Avendaño(CSAV Deputy General Manager)
Mario Da-Bove Andrade(Senior Vice President North America Region)
General ManagerAlexander Abfalterer
Inversiones Nuevo Tiempo S.A.
The objects of this company are to:
a. Buy, sell, charter and in general manage ships and operate liner services in Panama or any other part of the world.
b. Operate shipping agencies and undertake maritime operations in general in Panama or abroad.
c. Purchase, sell, barter, lease and trade in goods and real estate, merchandise of any kind, and undertake other business orfinancial operations relating to its business and take holdings in other Panamanian or foreign companies.
d. Purchase and trade in shares or rights of companies and, in general, undertake any other commercial, maritime, financial, realestate business permitted by the laws of the Republic of Panama or permitted in the future.
Its paid capital at December 31, 2003 was US$ 10,000 and Compañía Sud Americana de Vapores S.A.'s shareholding is 99.99%.
The result for the year was a profit of US$ 708,813.
DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Alexander AbfaltererJuerg Chr. PlattnerMario Da-Bove Andrade(Senior Vice President North America Region)
Juan Antonio Alvarez Avendaño
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(CSAV Deputy General Manager)
General ManagerAlexander Abfalterer
American Transportation Group, LLC
This company provides general ship agency services in the United State of America and Canada and is responsible for all thecommercial and operational activities.
ATG provides documentation, logistical, intermodal, port operation and equipment positioning and maintenance services for morethan two thousand customers, mostly from the United State of America and Canada.
The subscribed and paid capital amounts to US$ 900,000 and it is 100% owned by CSAV.
The result for the year was a profit of US$ 89,550.
General ManagerMario Da-Bove Andrade(Senior Vice President North America Region)
CSAV Norasia Group (China) Shipping Co. Ltd.
This is a limited partnership whose objects are to promote shipping businesses in own ships or those chartered by CSAV, thecontracting of freights and the provision of joint services.
Subscribed and paid capital amounted to US$ 150,000 and it is 100% owned by CSAV.
The result for the year was a loss of US$ 20,920.
DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Juan Antonio Alvarez Avendaño(CSAV Deputy General Manager)
Alejandro Pattillo Moreira(Senior Vice President Asia Region)
CSAV GmbH
This is a limited partnership whose object is to represent Compañía Sud Americana de Vapores S.A.
Subscribed and paid capital amounted to 250,000 euros and it is 100% owned by CSAV.
The result for the year was a profit of 14,933 euros.
General ManagerJosé Pablo Lafuente
Norgistic (China) Ltd.
This is a limited partnership that books and fills containers, and repairs and maintains them, coordinates operations with the cargoterminals, and signs cargo receipts and service contracts with transport companies.
Subscribed and paid capital amounted to US$ 150,000 and it is 100% owned by CSAV.
The result for the year was a loss of US$ 8,421.
DirectorsRicardo de Tezanos Pinto Domínguez(CSAV General Manager)
Juan Antonio Alvarez Avendaño(CSAV Deputy General Manager)
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Alejandro Pattillo Moreira(Senior Vice President Asia Region)
Significant Events
a) The board on January 27, 2003 unanimously approved the following ship buildings:
1. Three container ships with a 5,500 TEU capacity each to be built by China Shipbuilding Corporation (CSBC), Taiwan. Theprice will be payable 10% (February 2003) in cash, 30% against building progress and 60% on delivery which is estimated to beJanuary 2005 for the first, May 2005 the second and August 2005 the third. The negotiations provide for the Company to extendthe contract to cover the building of another three ships on similar conditions.
2. Two container ships ships with a 4,050 TEU capacity each to be built by the same shipyard. The price will be payable as aboveand delivery is estimated as April 2005 for the first and July 2005 the second. The negotiations provide for the Company to extendthe contract to cover the building of another four ships on similar conditions.
These two contracts are signed jointly with Peter Döhle Schiffahrts KG, with 50% shares, whose structure will be defined later.
3. On the same basis, jointly with Peter Döhle Schiffahrts KG, it was agreed to order two container ships ships with a 3,100 TEUcapacity each, as part of a contract for further ships that the German shipowner has with the Polish shipyard Stocznia SzczecinskaNowa. Delivery is estimated for September and December 2003. The negotiations provide for the Company to extend the contractto cover the building of another two ships for delivery in September and December 2004.
CSAV's share of the total investment totals US$ 153,400,000 in firm orders, and will enable it to replace chartered ships with itsown or jointly-owned vessels and thus provide greater support for the Company's present services and lines. It will also haveoptions, without any obligations, to acquire up to nine ships on a joint basis, in which case CSAV´s share would be US$195,400,000.
b) The board on March 26, 2003
At a Board of Directors Meeting on 25th March 2003, it was agreed to convene a General Meeting of Shareholders on14th April2003, when it would be proposed that a final dividend No. 307 equivalent to a maximum of 40% of the net income for the year2002 be distributed, that is, deducting the interim dividends paid on 9th January 2003, the equivalent sum in pesos of US$11,588,339.68, which means distributing a dividend equivalent in pesos to US$ 0.0157484 per share, payable on Friday, 25th April2003, at the rate of exchange prevailing on the date of the Shareholders General Meeting.
c) General management letter dated 02.06.2003
The board, at its meeting held on May 30th, unanimously approved the exercise of purchase options, jointly with Peter DöhleSchiffahrts-GH, for the acquisition of three additional ships (two of 4,050 Teus and one of 5,500 Teus) contemplated in the fleetacquisition project already announced, and approved the extension of the option to acquire a second 5,500 Teu ship.
The board also authorized the exercising of further options mentioned in the announcement of this agreement on each occasionunless some new circumstance makes this unadvisable. If all the options were to be exercised, the acquisition would consist of four3,100 Teu ships; six 4,050 Teu ships and six 5,500 Teu ships, with a total investment of USD 698.5 million, affecting the twoassociated shipping companies equally. This process will take place during the period 2003 to 2006 during which the building anddelivery of the ships included in this project will take place.
Financing has been confirmed for the building of the 4,050 Teu and 5,500 Teu ships, amounting to USD 562.5 million. This willconsist of a bank loan for 90% of each contract (70% covered by the respective ship mortgage and 20% guaranteed independentlyby Compañía Sud Americana de Vapores S.A. and Peter Döhle Schiffahrts-GH.) and 10% (USD 56.25 million) from the ownfunds of each of the partners, always in equal proportions.
Confirmation is awaited for the financing of the 3,100 Teu ships under the same structure, for a total cost of USD 136 million.
The guarantees to be provided by the partners will cover financing of up to 20% of the contract value and will be given separatelyby each of the partners. CSAV will therefore guarantee an amount equivalent to 10% of the value of each contract plus another 2%to cover interest, expenses and other charges.
To carry out this transaction, Compañía Sud Americana de Vapores S.A. and Peter Döhle Schiffahrts-GH, or subsidiaries of eitheror both of them, will jointly and in equal proportions have to form one or more investment companies and one or more businessoperating and other holding companies for each of the ships they acquire.
Furthermore, in accordance with clause 57 No 5) of Law 18.046, an extraordinary shareholders' meeting of Compañía SudAmericana de Vapores S.A. should authorize the granting of its joint and several guarantee in favor the institution financing theacquisitions and amounting to 10% of the value of each ship acquired (plus a further 12% to cover interest and expenses).
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The board therefore called an extraordinary shareholders' meeting for June 27th, which authorized the Company to grant its jointand several guarantee on behalf of the companies formed with Peter Döhle Schiffahrts-GH or any subsidiary thereof, entities thatwill be associate companies of this Company that, directly or through a subsidiary of it, will hold 50% of its capital - in favor ofthe institution that finances the ship acquisitions.
d) General management letter dated 21.07.2003
At its meeting No.5459 held on July 18th, 2003, the board unanimously resolved:
1. That Compañía Sud Americana de Vapores S.A. guarantee its subsidiary Tollo Shipping Co. S.A., Panama, in favor of aJapanese financial entity for a loan of twenty-four billion yen, equivalent to USD 201,850,294 (two hundred and one million, eighthundred and fifty thousand, two hundred and ninety-four US dollars). The loan, with a term of 30 years, is fully payable in yen onits maturity. Interest will be paid in US dollars semi-annually. The loan may be prepaid, fully or partially, alter the twenty-fifthyear on any interest payment date.
The covenants, default clauses and other provisions of the agreement are similar to those of other outstanding loans of theCompany or guaranteed by it.
2. - That Compañía Sud Americana de Vapores S.A. guarantee its subsidiary Tollo Shipping Co. S.A., Panama in favor of anAmerican financial institution in cover of one or more yen-dollar exchange rate hedge contracts over the term of the loanmentioned in No.1 above, should the yen revalue over its present level and up to an agreed margin, through the payment of anannual rate payable semi-annually on the interest-payment dates of the loan.
The interest rate and cost of this exchange-rate cover for this financing is 6.3% annually.
Despite the size of this transaction, it should not have any special financial effects as a substantial part of the funds will be used torepay current debts, investments that are already of public knowledge or some projects that complement the businesses of theCompany or its subsidiaries.
The transaction should not have any special effect on the market or on the securities issued by the Company.
e) General Management Letter of 08.10.2003
The board meeting No.5464 held on October 7 unanimously approved:
That Compañía Sud Americana de Vapores S.A., jointly with Peter Döhle Schiffahrtskontor KG, may sign a shipbuilding contractwith the Hyundai shipyard in South Korea (Hyundai Heavy Industries Co. Ltd) for three 6,500 Teus units with an option foranother three units.
Delivery of the ships is programmed as follows: a) the first two by the last quarter of 2006 and b) the third, plus the three options,during the first quarter of 2007.
The total investment in the three initial ships to be built will be US$ 203,700,000 and the investment in the three additional ships,should the option be exercised, would be similar. 50% of this investment will correspond to Compañía Sud Americana de VaporesS.A. or a subsidiary and 50% to Peter Döhle Schiffahrtskontor KG or a subsidiary. The price is payable 20% on signing thecontract, 20% 6 months from contract signing, 40% during la construction and 20% on delivery.
Subsequent Events
The board, at its meeting held on January 22nd, 2004, with the unanimous decision of the assisting Directors accepted theresignation presented by Director Mr. Bernardo Larraín Matte.
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2003Annual Report
Other Subsidiaries and Associated Companies
Name & Legal Status Capital Corporate Purpose Manager Management
Chilean Companies :
Inmobiliaria Marítima Ch$ 26,756,540,701 All kinds of trade and/or business related to: a) investments in Miguel Tortello S. Chairman :Portuaria S.A. real estate and their acquisition, commercialization, exploitation and Víctor Pino T.(IMPSA S.A.) construction, and b) investments in other assets like shares, Directors :
bonds, debentures, partnership rights, etc. Miguel Tortello S.Roberto Larraín S.
Agencias Universales S.A. Ch$ 19,661,772,080 Ship agents and wharfage and launch services. Franco Montalbetti M. Chairman:(AGUNSA) José M. Urenda S.
Directors:Jaime Barahona V.Beltrán F. Urenda S..Claudio Del Bene C.Antonio Jabat A.Mikel Uriarte P.Gonzalo Amenábar V.
CPT Agencia Marítima S.A. Ch$ 9,600,772,865 Shipping agents and tugs. Sergio Smith P. Directors :Harald Rosenqvist S.Rodolfo Skalweit W.Franco Montalbetti M.José M. Urenda S.Federico Aranda S.Francisco Jobson V.
Cargo Park S.A. Ch$ 5,039,805,409 Real-estate development. Pedro M. Justiniano Y. Chairman :Guillermo Ariztía C.Directors :Roberto Maristany W.Jaime Claro V. (1)Alejandro García-Huidobro O.Pedro M. Justiniano Y.
Portuaria Corral S.A. Ch$ 3,826,748,980 Cargo transport by river and sea. Horacio Diez O. Chairman :Víctor Pino T.Directors :Alejandro García-Huidobro O.Guisela Skalweit W.Rodolfo Skalweit W.Roberto Larraín S.Francisco Jobson V.
Aerosan Airport Services S.A. Ch$ 2,504,979,151 Airport services and investments. Patricio Latorre S. Chairman :Víctor Pino T.Directors :Jaime Claro V. (1)Pamela Camus G.Arthur Torno
Aquasaam S.A. Ch$ 1,586,977,650 Project advice and execution, especially in shipping, René Quilhot P. Chairman :and the provision of construction, development, Arturo Claro F. (2)shipmanagement, assembly and maintenance of rafts, Víctor Pino T.launches, anchorage services, net maintenance and repairs Alejandro García-Huidobro O.and other services related to the salmon industry, and the Sydney Hamann H.representation and commercialization of implements andaccessories mainly related to salmon and other fishing.
Terminales y Servicios de Ch$ 1,239,985,000 Export of container terminals and services. Andrés Schultz M. Directors :Contenedores S.A. Franco Montalbetti M.(TESCO) Rodrigo Jiménez P.
Sergio Pinto R.
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2003Annual Report
Name & Legal Status Capital Corporate Purpose Manager Management
Inmobiliaria La Divisa S.A. Ch$ 1,127,963,000 Real estate. Rodrigo Jiménez P. Directors :Franco Montalbetti M.Luis Mancilla P.Rodrigo Jiménez P.James Wells M.
Transportes Fluviales Ch$ 1,086,203,382 Cargo transport, tug, agency, repair, maintenance, stevedoring, Horacio R. Diez O.. Chairman :Corral S.A. and port, sea and river shipping services, the Víctor Pino T.
commercialization, operation and exploitation of ships, vessels, Directors :machinery and equipment and the provision of all kinds of Alejandro García-Huidobro Oservices related to river and sea transport and to port work. Guisela Skalweit W.
Francisco Jobson V.
Logística Integral S.A. Ch$ 872,217,993 Export, import and shipping logistical services and cargo, Federico Pümpin V. Chairman :(COSAN S.A.) container terminals and finished product warehouse Alejando García-Huidobro O.
operations, integrating road transport with each of these. Directors :Roberto Larraín S.Felipe Rioja R.
Transbordadora Austral Ch$ 631,783,270 Sea freight transport Alejandro Kusanovic G. Chairman :Broom S.A. James Wells M.
Directors :Pedro Lecaros M.Víctor Pino T.Jorge Glusevic D.
Inversiones y Servicios Ch$ 467,331,715 Investments in real estate and other investments Daniel Labbé F. Chairman :Rigel S.A. like shares, bonds and trade paper and advisory Alejandro García-Huidobro O.
services in general. Stevedoring. Directors :Rolf Mengdehl K.Héctor Oberg S.Felipe Rioja R.Arturo Storaker M.Sergio Vial F.
Servicios Aeroportuarios Ch$ 406,098,565 Export and import merchandise storage and Patricio Latorre S. Chairman :Aerosan S.A. complementary services. Víctor Pino T.
Directors :Jaime Claro V. ( 1)Pamela Camus G.Arthur Torno
SAAM Extraportuarios S.A. Ch$ 337,561,510 Customs depots under the law for merchandise storage Enrique Brito M. Chairman :until its withdrawal for import, export or other Felipe Rioja R. customs destination , and complementary services. Directors :
Miguel Tortello S.Juan Escudero A.
Inmobiliaria Afin Ltda. Ch$ 219,539,751 Real estate. Rodolfo García S. Chairman :Simon MackenzieDirectors :Matthias ReinarzJames WellsSergio Pinto R.Miguel Tortello
Orion Servicios Mercantiles Ch$ 204,369,177 Investments in real estate and other investments Daniel Labbé F. Chairman :Integrados S.A. (ORION like shares, bonds and trade paper and advisory Alejandro García-Huidobro O.S.A.) services in general. Stevedoring. Directors :
Rolf Mengdehl KühlenkampffHéctor Oberg S.Felipe Rioja R.Arturo Storaker M.
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Empresa de Servicios Ch$ 204,232,502 Stevedoring. José M. Jara D. Chairman :Marítimos y Portuarios Víctor Pino T.Hualpén Ltda. Directors :( HUALPEN LTDA.) Rodolfo Skalweit W.
Alejandro García-Huidobro O.Martin Skalweit R.
Inmobiliaria Tumbes Ltda. Ch$ 195,767,498 1. Purchase, exploitation, management and trading directly José M. Jara D. Chairman :or through others: a) all types of assets, urban or rural, corporal or Rodolfo Skalweit W.otherwise. b) all movable goods. Directors :2. Vessel stevedoring Víctor Pino T.
Martín Skalweit R.Alejandro García-Huidobro O.
Servicios Portuarios Ch$ 165,000,000 Stevedoring. Horacio Diez O. Chairman :Reloncaví Ltda. Víctor Pino T.
Directors :Alejandro García-Huidobro O.Francisco Jobson V.Rodolfo Skalweit W.
Muellaje del Maipo S.A. Ch$ 102,616,000 Shipping wharfage. Robert Lobos Ch. Chairman :Victoria Vásquez G.Directors :Juan Prado A.Cristián Irarrázaval T.Serafin Pinedo F.
Muellaje San Vicente Ch$ 89,407,711 Providing San Vicente Terminal Internacional S.A. with needed Felipe Barison K. Chairman :Terminal Internacional S.A. personnel. Transferring, carrying, storage, stevedoring, Víctor Pino T.
container and/or merchandise consolidation and Directors :deconsolidation and any other related services. Guillermo Morales E.
Karin Angerstein H.Alejandro García-Huidobro O.
Recursos Portuarios y Estibas Ch$ 84,923,000 Stevedoring. Luis Heyser D. Directors :Ltda. Franco Montalbetti M.
Luis Mancilla P.Juan E. Bilbao G.
Southern Shipmanagement Ch$ 47,650,000 Ship management and operation and all related services. Héctor Arancibia S. (5) Chairman :(Chile) Ltda. Juan Antonio Alvarez A. (4)
Directors :Juan Antonio Alvarez A. (4)Ricardo de Tezanos Pinto D. ( 3)Harry GilbertRobert G. Buchanan
Muellaje San Antonio Ch$ 44,703,854 Providing San Vicente Terminal Internacional S.A. with Alberto Bórquez C. Chairman :Terminal needed personnel. Transferring, carrying, storage, Víctor Pino T.Internacional S.A. stevedoring, container and/or merchandise consolidation Directors :
and deconsolidation and any other related services. Alejandro García-Huidobro O.Pedro García Morales
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Cía. de Servicios de Ch$ 44,034,313 Stevedoring. Claudio Hurtado L. Chairman :Movilización Ltda. Felipe Rioja R.(COSEM LTDA.) Directors :
Miguel Tortello S.Rodrigo Larenas H.Alejandro Moreno M.
Muellaje Iquique Terminal Ch$ 43,845,816 Providing personnel for the transfer, carrying, storage, Claudio Pommiez I. Chairman :Internacional S.A. stevedoring, container and/or merchandise consolidation Alejandro García-Huidobro O.
and deconsolidation and any other related services. Directors :Víctor Pino T.Enrique Ide V.
Muellaje Roland Ltda. Ch$ 43,760,011 Providing personnel for the transfer, carrying, storage, Temporary Management:stevedoring, container and/or merchandise consolidation Felipe Barison K.and deconsolidation and any other related services. Carlos Elgueta O.
John Charles BressiSandra Ezquerra O.Christian Prieto R.
Servicios de Personal Portales S.A. Ch$ 34,975,292 Personnel for third parties for storage and container &/or Enrique Brito M. Chairman :( SEPSA ) merchandise consolidation and deconsolidation Felipe Rioja R.
and any other related services. Directors :Rodrigo Larenas H.Alejandro Moreno M.
Transcar S.A. Ch$ 31,677,564 Vehicle transport, distribution and storage, and cargo and Federico Pümpin V. Chairman :container depots; representations and rental of transport Guillermo Martínez B.equipment; purchase and sale of real estate, and related services. Directors :
Gonzalo Amenábar V.Alejandro García-Huidobro O.
Petromar S.A. Ch$ 30,546,000 Bunkering services Luis Mancilla P. Directors :Franco Montalbetti M.Luis Mancilla P.Enrico Martini G.Rodrigo Jiménez P.
Modal Trade S.A. Ch$ 274,554,000 Cargo transport and distribution Rodrigo Jiménez P. Directors :Luis Mancilla P.Enrico Martini G.Rodrigo Jiménez P.
Portuaria Patache S.A. Ch$ 23,757,000 Stevedoring. Jorge Fabry B. Directors :Luis Mancilla P.Juan E. Bilbao G.Jorge Fabry B.Francisco Toledo H.
El Litoral Servicios Portuarios S.A. Ch$ 18,239,000 Stevedoring. Arturo Osses G. Directors :(In liquidation) Juan E. Bilbao G.
Luis Mancilla P.Alejandro BartholdArturo Osses G.
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Name & Legal Status Capital Corporate Purpose Manager Management
Terminal Peñuelas S.A. Ch$ 17,761,876 Services related to cargo transport like full and empty container Enrique Brito M. Chairman :Terminal Barrancas S.A. Ch$ 17,521,201 depots, workshop services and complementary services. Miguel Tortello S.Terminal Chinchorro S.A. Ch$ 17,521,201 Directors:Terminal El Colorado S.A. Ch$ 17,521,201 Rodrigo Larenas H.
Roberto Larraín S.
Servicios de Administración Ch$ 14,180,700 Non operative. Alberto Bórquez C. Chairman :'' San Marco S.A. " Felipe Rioja R.
Directors :Alberto Bórquez C.Miguel Tortello S.
Transuniversal Estibas S.A. Ch$ 13,706,000 Stevedoring. Remigio Araneda Directors:Franco Montalbetti M.Ian Taylor M.
Servicios de Aviación Ltda. Ch$ 13,131,732 Airport personnel services. Octavio Faúndez A. Chairman:(SERVIAIR LTDA.) Víctor Pino T.
Directors:Pamela Camus G.Jaime Claro V. (1)Arthur Torno
Terminal El Caliche S.A. Ch$ 10,342,400 Services related to cargo transport like full and empty Enrique Brito M. Chairman :Terminal Renca S.A. Ch$ 10,342,400 container depots, workshop services and complementary services. Alejandro García-Huidobro O.Terminal Las Golondrinas S.A. Ch$ 10,342,400 Directors:
Felipe Rioja R.Roberto Larraín S.
Servicios Marítimos Patillos S.A. Ch$ 1,473,374 Shipping and port services. Enrique Espinoza G. Chairman :(SERMAPAT) Alejandro García-Huidobro O.
Euroatlantic Container Line S.A. Ch$ 1,000,000 Shipping and its technical and administrative support Felipe Rioja R. Chairman :Ricardo de Tezanos Pinto D. (3)Directors :Ignacio Jiménez O. (12)Fernando del Río R.
Empresa SudAmericana Austral CPA Ch$ 1 Non operative.
Sud Americana de Transporte Ch$ 1 Non operative.Líquidos Ltda.
Compañía Chilena de US$ 82,500,000 Shipping. Eugenio Valenzuela C. Chairman:Navegación Beltrán Urenda S.Interoceánica S.A. Directors:
Alexis Ramirez A.Antonio Jabat A.Juan F. Waidele C.Franco Montalbetti M.Hernán Soffia P.Sebastián Swett O.
San Antonio Terminal US$ 33,700,000 Development, maintenance and exploitation of the south Alberto Bórquez C. Chairman:Internacional S.A. (STI) jetty of San Antonio port of Empresa Nacional Portuaria David Leslie Michou
San Antonio. Wharfage and storage. Directors:Víctor Pino T.Alejandro García-Huidobro O.Luis Grez JordánJohn BressiAndrew McLauchlanCarlos Urriola T.
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2003Annual Report
SCL Terminal Aéreo Santiago US$ 31,531,463 Santiago international airport management. Carlos Plass W. Directors:S.A. José M. Urenda S.
San Vicente Terminal US$ 10,000,000 Development, maintenance & exploitation of San Vicente Felipe Barison K. Chairman:Internacional S.A. (SVTI) port of Empresa Nacional Portuaria San Vicente. Víctor Pino T.
Wharfage and storage. Directors:Alejandro García-Huidobro O.Jaime Claro V. (1)José Francisco IribarrenAndrew McLauchlanDavid Michou
Iquique Terminal Internacional S.A. US$ 10,000,000 Development, maintenance and exploitation of wharf No.2 Claudio Pommiez I. Chairman:of Iquique port of Empresa Portuaria Iquique. Alejandro García-Huidobro O.Wharfage and storage. Directors:
Jaime Claro V. (1)José I. Barrenechea G.Juan C. Cabello V.Víctor Pino T.
Compañía Naviera US$ 9,500,000 Shipowner’s business or any shipping trade and transport Héctor Arancibia S.( 5) Chairman :Rio Blanco S.A. especially sea transport, freights and ship chartering; Alberto Feres L.
acquisition of all kinds of vessels for sea trade, Directors :and related services. Ricardo de Tezanos Pinto D. (3)
Fernando Bustamante F. ( 6)Setsuyasu HagiwaraToshitaka Shishido
Saam Internacional S.A. US$ 1,500,000 Investments abroad of all kinds and their management. Alejandro García-Huidobro O. Chairman:Víctor Pino T.Directors:Jaime Claro V. ( 1)Alejandro García-Huidobro O.Roberto Larraín S.Alberto Rawlins B.
Valparaiso Terminal de US$ 1,163,937 Cruise passenger attention Juan Bilbao G. Directors :Pasajeros S.A. José M. Urenda S.(VTP SA) Franco Montalbetti M.
Luis Mancilla P.
Interoceanbulk S.A. US$ 10,000 Liquid and solid bulk freight. Eugenio Valenzuela C. Chairman :Antonio Jabat A.Directors :Sergio Pinto R.Rodrigo Soffia B.Beltrán Urenda S.
Liberian Companies :
West Cape Marine Co. Ltd. US$ 5,000 Shipping. Chairman :Cape West Marine Co. Ltd. 5,000 Antonio JabatKey Colony Marine Co. Ltd. 5,000 Directors :Skyring Maritime Corp. 5,000 Sergio Pinto R.Kirke Maritime Corp. 5,000 José M. Urenda S.Mcpherson Shipping Service Corp. 5,000
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Name & Legal Status Capital Corporate Purpose Manager Management
Panamanian Companies :
Inversiones Alaria S.A. US$ 1,000,000 Trading in all kinds of assets. Investments in general, Chairman :Inversiones Habsburgo S.A. US$ 216,000 real estate operations, and participations in companies. Julio E. Linares F.
Shipping business and shipping agencies in Directors :Panama or abroad. Alberto Rawlins B.
Roberto Larraín S.
Inversiones Marítima US$ 5,000,000 Investments. Luis Mancilla P. Directors :Universales S.A. Franco Montalbetti M.(IMUSA) Luis Mancilla P.
José M. Urenda S.
Dry Bulk Handy Holding Inc. US$ 567,314 Ship owners and managers. Chairman :Nicholas FistesDirectors :Yannis HaramisGeorge Makryniotis
CNP Holdings S.A. US$ 10,000 Ship owners and managers. Alexander Abfalterer Chairman :Picton Maritime Co. S.A. 1,000 Alexander Abfalterer
Directors :Ricardo de Tezanos Pinto D. ( 3)Mario Da-Bove A. (10)Juan Antonio Alvarez A. ( 4)Juerg C. Plattner
CSAV Sudamericana de Vapores S.A. US$ 10,000 Ship owners and managers. Alexander Abfalterer Chairman :Lanco Investments Co. S.A. 10,000 Alexander AbfaltererMalleco Shipping Co. S.A. 10,000 Directors :Maule Shipping Co. S.A. 10,000 Ricardo de Tezanos Pinto D. ( 3)Mayne Shipping Co. S.A. 10,000 Mario Da-Bove A.(10)Rahue Investments Co. S.A. 10,000 Juan Antonio Alvarez A. ( 4)Sea Lion Shipping Co. S.A. 10,000 Juerg C. PlattnerSouth Wind Overseas Co. Inc. 10,000Williams Investments Co. S.A. 10,000Global Commodity Investments Inc. 1,000Lennox Ocean Shipping Co. S.A. 1,000
Southern Shipmanagement Co. S.A. US$ 10,000 Ship owners and managers. Harry Gilbert Chairman :Harry GilbertDirectors :Robert BuchananHéctor Arancibia S. (5)Eduardo Schalchli M.
Belden Cement Holding Inc. US$ 10,000 Ship owners and managers Chairman :Shining Star Shipping 10,000 Juan MontesYakumo Shipping Inc. 10,000 Directors :Belden Management Inc. 10,000 Luz QuintanaEchelon Shipping Inc. 10,000 Luis Gómez
Emblem Shipping Inc. US$ 10,000 Ship owners and managers. Chairman :Tilbury Shipping Inc. 10,000 Juan Montes
Directors :Casilda WattsLuis Gómez
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2003Annual Report
Mattea Shipping Inc. US$ 10,000 Ship owners and managers. Chairman :Guillermo VergaraDirectors :Rubén Bamett S.Lydia Hidalgo
South Cape Financial and US$ 10,000 Shipping. Chairman :Maritime Corp. Beltrán Urenda S.
Directors :Antonio Jabat A.Sergio Pinto R.
Maritime Shipping & US$ 10,000 Ship owners and managers. Directors:Trading International Inc. Dionisio Romero P.
Arturo Woodman P.Cristóbal Rollán R. (8)Juan Carlos ClaroAlejandro Pedraza M.Luis Morales A.Fabio Córdova C.
Key Biscayne Marine, Inc. US$ 10,000 Shipping. Chairman :Antonio JabatDirectors :Sergio Pinto R.José M. Urenda S.
Five Continent Navegation S.A. US$ 5,000 Ship trading and freights. Ship owner and manager Chairman :Toshitaka ShishidoDirectors :Alberto Feres L.Toshihito Inoue
Other Countries :
SKS OBO Holding Limited US$ 70,378,924 Ship owners and managers. Chairman :Bermuda Don P. Dunstan
Directors :James KeyesHans Peter JebsenPaul VogtJan PedersenEnrique Ide V.
SKS OBO Shipping US$ 51,000,000 Ship owners and managers. Chairman :Bermuda Don P. Dunstan
Directors :James KeyesHans Peter JebsenPaul VogtJan PedersenEnrique Ide V.
SAAM Costa Rica US$ 2,500,000 Non operative. Luis Pinochet U. Chairman :Costa Rica Alejandro García-Huidobro O.
Directors :Alberto Rawlins B.Juan Pablo Artigas C.
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Name & Legal Status Capital Corporate Purpose Manager Management
Ecuaestibas S.A. US$ 409,960 All port services. Jorge Oyarce S. Chairman :Republic of Ecuador Alberto Rawlins B.
Directors :Petro Toro A.Alejandro García-Huidobro O.
Carmen Navegation Company US$ 397,500 Ship owners and managers. Directors :Limited James Richard StevensonAntigua Joerg Vanselow
Juan Antonio Alvarez A. (4)Ricardo de Tezanos Pinto D. ( 3)
Cyrill Navegation Company US$ 397,500 Ship owners and managers. Directors :Limited James Richard StevensonAntigua Joerg Vanselow
Juan Antonio Alvarez A. (4)Ricardo de Tezanos Pinto D. ( 3)
Tioga Fruit Terminal Inc. US$ 311,203 Port terminal operations in Philadelphia. Chairman:U.S.A. Mario Da-Bove A. (10)
Directors :Gonzalo IrarrázabalAlberto Feres L.
Serviagencial S.A. US$ 176,680 Servicio de remolques y marítimos en general. Representante:Republic of Ecuador Rodrigo Larenas H.
Norasia Services Ltd. US$ 64,625 Shipping agency. So Chi Leung Directors :Hong Kong Ricardo de Tezanos Pinto (3)
Juan Antonio Alvarez A. (4)Vikas KhanAlejandro Pattillo M. (9)Marcelo Rosas
Libra Usa LLC US$ 50,000 Shipping agency. Chairman:U.S.A. Pedro Henrique G.
Norasia North America LLC US$ 50,000 Being dissolved.U.S.A.
Brunswick Investments Co. US$ 10,000 Ship owner and manager and shipping agency. Alexander Abfalterer Chairman :Inc. Alexander AbfaltererBahamas Directors :
Ricardo de Tezanos Pinto D. (3)Mario Da-Bove A. (10)Juan Antonio Alvarez A. ( 4)Juerg C. Plattner
North Trade Shipping Co. Inc. US$ 10,000 Ship owner and manager and shipping agency. Juan A. Montes G. Chairman :South Trade Shipping Co. Inc. 10,000 Juan A. Montes G.Marshall Island Directors :
Clarissa Plata de AguirreJosé M. Urenda S.Mario Da-Bove A. (10)Elsa M. Sousa Q.
Bureo Shipping Co. S.A. US$ 10,000 Ship owner and manager and shipping agency. Alexander Abfalterer Chairman :Marshall Island Alexander Abfalterer
Directors :Ricardo de Tezanos Pinto D. ( 3)Mario Da-Bove A. (10)Juan Antonio Alvarez A. ( 4)Juerg C. Plattner
Pacific Winner Shipping Co. S.A. US$ 10,000 Ship owner and manager and shipping agency. Alexander F. Abfalterer Chairman :Marshall Island Alexander F. Abfalterer
Directors :Ricardo de Tezanos Pinto D. (3)Mario Da-Bove A. (10)Juan Antonio Alvarez A. (4)Juerg C. Plattner
Marine Shipping & US$ 10,000 Ship owner and manager and shipping agency. Juerg Chr. PlattnerTrading International Inc. Alexander F. AbfaltererMarshall Island Juan A. Alvarez A. (4)
Ricardo de Tezanos Pinto D. (3)Juan Antonio Alvarez A. (4)Mario Da-Bove A. (10)
Norasia Container Lines Ltd. US$ 10,000 Shipping. Hanspeter Kerner Directors:Malta Ricardo de Tezanos Pinto D. (3)
Juan Antonio Alvarez A. (4)
ATG Canada Ltd. US$ 10,000 Agencies. Mario Da-Bove A. (10) Chairman :Mario Da-Bove A. (10)Directors:Sergio HurtadoAlvaro Infante
OBO MAR AS NOK 112,000 Ship owner and manager and shipping agency. Chairman :Norueg Norway Jan Pedersen
Directors :Nils P. HellesundGunnar Saethre
Tolkeyén Patagonia Turismo S.A. PA$ 4,000,000 Activities related to tourism, hotels, transport, exports & imports Claudio de Sousa Chairman:Republic of Argentina Adriano Cafaro
Directors:James Wells M.Constante Moreno P.
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Name & Legal Status Capital Corporate Purpose Manager Management
Atlantis Marine S.A. PA$ 648,000 Pilotage services, tourism and port services, tugs, divers, Chairman :Republic of Argentina salvage, rescue, fire fighting and pollution prevention, Adriano Cafaro
fishing, ship management, building and equipping, Directors :dredging and ship agency. Juan E. Mattson P.
Arturo Storaker M.Mary Hinchliff M.
Comercial e Inversiones PA$ 12,000 Investments in Atlantis Marine S.A., Argentina. Chairman :Coiron S.A. Juan E. Mattson P.Republic of Argentina Directors :
Arturo Storaker M.Alejandro García-Huidobro O.Jorge Pérez A.
CSAV Argentina S.A. PA$ 5,000 Inactive.Republic of Argentina
Logística Integral S.A. PA$ 1,950 Vehicle transport, distribution and storage; installation and Federico Pümpin Chairman :Mendoza operation of container and cargo terminals; representations, Guillermo Martínez B.Republic of Argentina rental of transport equipment, real estate trading and Directors :
related activities. Gonzalo Amenábar V.Alejandro García-Huidobro O.
Aerosan Perú S.A. N/S 121,000,773 Airport services. Chairman :Republic of Peru Víctor Pino T.
Directors :Jaime Claro V. (1)José MoguelRichard Gunthner
Trabajos Marítimos S.A. N/S 9,143,313 Port operator (shipping agent, stevedoring, tugs, Mario Hart P. Chairman :(TRAMARSA) pilotage, equipment rental and terminal operations). Dionisio Romero S.Republic of Peru Directors :
Consorcio Naviero Peruano N/S 4,000,100 Ship owner and manager, ship agency. Alejandro Pedraza M. Chairman :S.A. Juan Rassmuss E.Republic of Peru Directors :
Arturo Woodman P.Juan Cristóbal Rollán (8)Juan C. Claro U.Dionisio Romero P.
Construcciones Modulares N/S 670,000 Installation and operation of container and cargo terminals, Armando Vidal R. Chairman :S.A. cargo storage, packing, container consolidation and Angel Irazola A.Republic of Peru deconsolidation, build, maintain, modify and Directors :
repair containers and modules. Alvaro Galindo N.Calixto Romero S.Guillermo Martínez B.Federico Pümpin V.
Inversiones Misti S.A. N/S 648,029 Shipping and port businesses, stevedoring, storage, Alberto Rawlins B. Chairman :Republic of Peru port operator, launches, ship owner and agent, Alberto Rawlins B.
transport and handling of containers. Directors :Investments in other companies. Roberto Larraín S.
Miguel Tortello S.
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2003Annual Report
Inversiones CNP S.A. N/S 100,000 Ship owners, stevedoring. Juan Cristóbal Rollán (8) Chairman :Republic of Peru Juan Cristóbal Rollán (8)
Directors :Ricardo de Tezanos Pinto D. ( 3)
Aminsa S.A. N/S 30,397 Non operative. Adjuster :Republic of Peru Javier Morales Ch.
Elequip S.A. $Col. 992,674,600 Stevedoring operating equipment Antonio Rodríguez M. Directors :Republic of Colombia Alejandro García-Huidobro O.
Alberto Rawlins B.Claus HauboldJuan Raute
Equiyard S.A. $Col. 850,000,000 Maintenance depot management and container repair. Antonio Rodríguez M. Directors :Republic of Colombia Alejandro García-Huidobro O.
Alberto Rawlins B.Antonio Rodríguez M.Andrés Pahde G.
Equimac S.A. $Col. 97,338,600 Tug services. Juan Mejia V. Directors :Republic of Colombia Alejandro García-Huidobro O.
Alberto Rawlins B.Claus HauboldJuan Raute
Agencia Naviera de Colombia S.A. $Col. 8,000,000 Transport agencies Jorge A. Missas L. Directors :Republic of Colombia Fernando Bustamante F. ( 6)
Ricardo de Tezanos Pinto D. (3)Ana Lucía Estrada M.Beatriz Oesterreich
Montemar Marítima S.A. $Urug 44,960,617 Sea and river transport. Ignacio Jiménez O. (12) Chairman :Republic of Uruguay Juan Antonio Alvarez A. (4)
Directors :Ricardo de Tezanos Pinto D. (3)Fernando Bustamante F. (6)Jaime Claro V. ( 1)Christoph DöhleJochen Döhle
Giraldir S.A. $Urug 7,526,462.15 Tugs and shipping services. Fernando Capurro S. Chairman :Republic of Uruguay Alejandro García-Huidobro O.
Directors :Fernando Capurro S.Alberto Rawlins B.
Kios S.A. $Urug 4,922,599,67 Tug services. Fernando Capurro S. Directors :Republic of Uruguay Fernando Capurro S.
Alberto Rawlins B.Alvaro Tarabal
Tamarim International S.R.L. $Urug 122,000 All types of maritime, river and lake activity Ricardo de Tezanos Pinto D. (3)Republic of Uruguay and connected services and activities, cargo transport, Ignacio Jiménez O. (12)
maritime agency, port services, all commercial andfinancial operations in general.
CSAV Ecuador S.A. ECS 20,000,000 Ship owner and manager, shipping agency. Pedro Toro A. Directors :Republic of Ecuador Fernando Bustamante F. (6)
Ignacio Jiménez O. (12)Fernando del Río R.
Razón social y naturaleza jurídica Capital Objeto social Gerente Administración
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Name & Legal Status Capital Corporate Purpose Manager Management
Companhia Libra de Navegacao R$ 50,713,304 Coastal and international shipping; operation of oil, Chairman :Brazil clear derivatives and liquid petroleum gas tankers; Pedro Henrique G.
ship chartering; investments in other companies. Directors:Rafael Della Maggiora S. ( 7)Eugenio Cruz N.
Tamarim Participacoes Ltda R$ 27,324,150 Investment company. José P. Lafuente D.Brazil Rafael Della Maggiora (7)
Wilson Newton de Mello NetoErnani De Almeida Machado
Navibras Comercial Marítima R$ 22,648,000 Ship agencies. Rafael Della Maggiora (7)e Afretamentos Ltda. Eugenio Cruz N.Brazil
Norgistic Brasil Operador R$ 10,000 Coordination of transport services (sea, air, trail or river) Pedro Enrique Carcia de JesúsMultimodal Lda. with own or third parties resources; promotion and Eugenio Cruz N.Brazil coordination of operations with; terminals, warehouses, Luis Arteaga C.
customs, customs depots, consolidation / desconsolidationof import and export cargo.
Marsud Armazéns Gerais R$ 2,000,000 General storage, shipping agencies, port operator, Directors :Ltda. stevedoring, logistics operator, cargo agent, freight, Jorge Cárdenas C.Brazil cargo and container storage, rental and repair of Osvaldo Douat F.
containers, cargo palletization, container consolidationand deconsolidation, road and rail cargo transport,customsclearance, imports and exports, intermodal terminalmanagement. Rental of equipment like container andother cranes. Commercial representations.Investments in other companies.
Terminal de Contenedores R$ 1,059,001 Vehicle transport, distribution and storage. Federico Pümpin V. Chairman :Santiago do Brasil Ltda. Installation and operation of container and Guillermo Martínez B.Brazil cargo terminals; rental of transport equipment, Directors :
real estate trading and related activities. Gonzalo Amenábar V.Alejandro García-Huidobro O.
Marsud Ltda. R$ 520,000 Ship agencies. Representative:Brazil Jorge Cárdenas C.
Osvaldo Douat F.
Sudamericana Agencia R$ 404,612 1Non operative. Jorge Cárdenas C.Marítima do Brasil Ltda.Brazil
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Name & Legal Status Capital Corporate Purpose Manager Management
SAAM Rebocadores Ltda. R$ 10,000 Non operative.Brazil
SAAM Remolques S.A. de M$ 43,663,265 Tug and launch services. Juan P. Artigas C. Directors :C.V. Eduardo Diez Barroso S.Mexico Alejandro García-Huidobro O.
Roberto Larraín S.Alberto Rawlins B.
Recursos Portuarios S.A. de C.V. M$ 50,000 Technological and labor services, training and Juan P. Artigas C. Directors :management services. Alejandro García-Huidobro O.
Mexico Roberto Larraín S.Alberto Rawlins B.
SAAM Remolcadores S.A. de M$ 50,000 Tug and launch services. Directors :C.V. Daniel del Río LoaizaMexico Juan López de Salinas
Juan P. Artigas C.Alejandro García-Huidobro O.Alberto Rawlins B.
NCL Shipping Agencies Ltd. HK$ 3,000,000 Ship agencies. Andy Russel Directors :Hong Kong Ricardo de Tezanos Pinto D. (3)
Juan Antonio Alvarez A. (4)Alejandro Pattillo M. (9)
Norgistics (China) Limited HK$ 2 Ship agencies. Andy Russel Directors :Hong Kong Ricardo de Tezanos Pinto D. (3)
Juan Antonio Alvarez A. (4)Alejandro Pattillo M. (9)
NL Shipping Services S.A. SFR 100,000 Being dissolved.Switzerland
Belden Shipping Pte Ltd. SGD 317,500 Ship owner and managers, ship agencies and Chairman :Singapore related activities. Dag Audun Rommen
Directors :Alf AndersenRandhir Ram Ch.
Ridge Holding Company GBP 2,000 Ship owner and managers, ship agencies and Directors :Limited related activities. James R. StevensonIsla de Man Joerg Vanselow
Juan Antonio Alvarez A. (4)Ricardo de Tezanos Pinto D. ( 3)
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2003Annual Report
Name & Legal Status Capital Corporate Purpose Manager Management
Pantile Holding Company GBP 2,000 Ship owner and managers, ship agencies and Directors :Limited related activities. James R. StevensonIsla de Man Joerg Vanselow
Juan Antonio Alvarez A. (4)Ricardo de Tezanos Pinto D. (3)
Anakena Bulk Ltd. GBP 2,000 Liquid and solid bulk freight. Rodrigo del Solar Directors :Isla de Man Stuart B. Allen
Juan F. Waidele C.Beltran Urenda S.Eugenio Valenzuela C.Mario Da-Bove A. (10)
Saam Guatemala S.A. GTQ 5,000 Non operative.Guatemala
CSAV Group Agencies (UK) GBP 1,193,057 Agency. Claire Hannah VogtLtd. Paul VogtUnited Kingdom Francisco Subiabre V. (11)
Juan Antonio Alvarez A. (4)
Notes:
A. Commercial relations between the subsidiary or associate companies with the Parent company or its associates are detailed as to their nature and amount in the consolidated financial statements. Current contracts between the Company and itssubsidiaries are made on conditions similar to the market and do not exceed their normal business operations.
B. Relationship of company Manager with CSAV.
( 1) Jaime Claro V. Director( 2) Arturo Claro F. Director( 3) Ricardo de Tezanos Pinto D. General Manager( 4) Juan Antonio Alvarez A. Deputy General Manager( 5) Héctor Arancibia S. Senior Vice President, Shipmanagement( 6) Fernando Bustamante F. Senior Vice President, Operations & Logistics(7) Rafael Della Maggiora Senior Vice President, East Coast Lines(8) Cristóbal Rollán R. Senior Vice President, Reefers & Cars(9) Alejandro Pattillo M. Senior Vice President, Asia Region(10) Mario Da-Bove Senior Vice President, North America Region(11) Francisco Subiabre V. Senior Vice President, Marketing & Commercial(12) Ignacio Jiménez O. Senior Vice President, Projects
C. Currency Codes:CH$ : Chilean pesosUS$ : US dollars $Col : Colombian pesosPA$ : Argentine pesos $Urug : Uruguayan pesosECS : Ecuadorean soles M$ : Mexican pesosN/S : Peruvian nuevos soles GTQ : Guatemalan quetzalesR$ : Brazilian reales NOK : Norwegian krönerHK$ : Hong Kong dollars GBP : UK pounds sterlingSFR : Swiss francs SGD : Singapore dollarsNT$ : Taiwanese dollars
ISSUING COMPANIES PANAMA CNP FUTURO PANAMA Co. S.A. HONG KONG MALTA HOLD. PANAMA BAHAMAS BRASIL S.A. SRL ISLA DE MAN CO. LTD. CO. LTD. ISLA DE MAN MARITIME CORP PANAMA PANAMA
MAULE SHIPPING CO. S.A.
PANAMA 100.00 100.00
MALLECO SHIPPING CO. S.A.
PANAMA 100.00 100.00
LENNOX OCEAN SHIPPING CO.S.A.
PANAMA 100.00 100.00
RAHUE INVESTMENT CO. S.A.
PANAMA 100.00 100.00
CNP HOLDINGS S.A.
PANAMA 100.00 100.00
WILLIAMS INVESTMENTS CO. S.A.
PANAMA 100.00 100.00
BRUNSWICK INVESTMENT CO. INC.
BAHAMAS 100.00 100.00
SOUTH WIND OVERSEAS CO INC.
PANAMA 100.00 100.00
CSAV SUDAMERICANA DE VAPORES S.A.
PANAMA 100.00 100.00
ODFJELL & VAPORES (O&V) LTD.
BERMUDAS 50.00 50.00 100.00
GLOBAL COMMODITY INVESTMENT INC.
PANAMA 100.00 100.00
PICTON MARITIME CO.S.A.
PANAMA 100.00 100.00
SEA LION SHIPPING CO.S.A.
PANAMA 100.00 100.00
BUREO SHIPPING CO. S.A.
ISLAS MARSHALL 100.00 100.00
LANCO INVESTMENT CO. S.A.
PANAMA 100.00 100.00
MAYNE SHIPPING CO. S.A.
PANAMA 100.00 100.00
FIVE CONTINENTS NAVEGATION S.A.
PANAMA 49.00 51.00 100.00
PACIFIC RIDER SHIPPING CO.S A
ISLAS MARSHALL 100.00 100.00
PACIFIC WINNER SHIPPING CO.S A
ISLAS MARSHALL 100.00 100.00
DRY BULK HANDLY HOLDING INC.
PANAMA 50.00 50.00 100.00
CSAV ECUADOR S.A.
ECUADOR 100.00 100.00
NL SHIPPING SERVICES S.A.
SUIZA 100.00 100.00
NORASIA SERVICES LTD.
HONG KONG 100.00 100.00
ATG CANADA LTD
CANADA 100.00 100.00
TAMARIM INTERNACIONAL SRL
URUGUAY 0.01 99.99 100.00
NORASIA CONTAINER LINES LTD.
MALTA 0.01 99.99 100.00
NCL SHIPPING AGENCIES LTD.
HONG KONG 0.01 99.99 100.00
INVERSIONES CNP S.A.
PERU 0.02 99.98 100.00
MONTEMAR MARITIMA S.A.
URUGUAY 70.00 30.00 100.00
AGENCIA NAVIERA DE COLOMBIA S.A.
COLOMBIA 49.98 50.02 100.00
COMPANHIA LIBRA DE NAVEGACAO
BRASIL 2.90 66.10 31.00 100.00
CSAV ARGENTINA
ARGENTINA 1.00 99.00 100.00
CSAV GROUP AGENCIES
UK 50.00 50.00 100.00
MARITIMA SHIPPING & TRADING
PANAMA 51.00 49.00 100.00
MARITIMA SHIPPING & TRADING
ISLAS MARSHALL 51.00 49.00 100.00
CONSORCIO NAVIERO PERUANO S.A.
PERU 49.00 51.00 100.00
SKS OBO HOLDING LTD.
BERMUDAS 50.00 50.00 100.00
SKS OBO SHIPPING LTD.
BERMUDAS 50.00 50.00 100.00
SKS OBO LTD.
BERMUDAS 50.00 50.00 100.00
OBO MAR AS
BERMUDAS 50.00 50.00 100.00
TAMARIM PARTICIPACOES LTDA.
BRASIL 99.00 1.00 100.00
CCNI DEUTSCHLAND MBH
ALEMANIA 100.00 100.00
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2003Annual Report
MCPHERSON SHIPPING SERVICES CORP.
LIBERIA 100.00 100.00
NAVIERA ARICA SA
PANAMA 100.00 100.00
NAVIERA ANTOFAGASTA SA
PANAMA 100.00 100.00
WEST CAPE MARINE CO. LTD
LIBERIA 100.00 100.00
KEY WEST MARINE CO. LTD.
LIBERIA 100.00 100.00
KEY COLONY MARINE CO. LTD.
LIBERIA 100.00 100.00
SKYRING MARITIME CORP
LIBERIA 100.00 100.00
KEY BISCAYNE MARINE INC.
PANAMA 100.00 100.00
KIRKE MARITIME CORP
LIBERIA 100.00 100.00
SOUTH TRADE SHIPPING CO. INC.
ISLAS MARSHALL 50.00 50.00 100.00
NORTH TRADE SHIPPING CO. INC.
ISLAS MARSHALL 50.00 50.00 100.00
EAST TRADE SHIPPING CO. INC.
PANAMA 50.00 50.00 100.00
SOUTHERN SHIPMANAGEMENT CO. S.A.
PANAMA 50.00 50.00 100.00
NORGISTICS (CHINA) LTD
HONG KONG 100.00 100.00
NCL (TAIWAN) LTD
TAIWAN 100.00 100.00
LIBRA USA LLC
EE.UU. 100.00 100.00
NORGISTIC LTDA
BRASIL 40.00 20.00 40.00 100.00
TAMARIM MARITIMA URUGUAY S.A.
URUGUAY 100.00 100.00
NAVIBRAS COMERCIAL MARITIMA E
AFRETAMENTOS LTDA, BRASIL 99.99 0.01 100.00
NORASIA NORTH AMERICA LLC
EE.UU. 100.00 100.00
SHINNING STAR SHIPPING
PANAMA 100.00 100.00
ECHELON SHIPPING INC
PANAMA 100.00 100.00
BELDEN SHIPPING PTE LTD
SINGAPUR 100.00 100.00
BELDEN MANAGEMENT INC.
PANAMA 100.00 100.00
YAKUMO SHIPPING INC.
PANAMA 100.00 100.00
MATTEA SHIPPING INC.
PANAMA 100.00 100.00
EMBLEM SHIPPING INC.
PANAMA 100.00 100.00
TILBURY SHIPPING INC.
PANAMA 100.00 100.00
CHARLOT SHIPPING INC
PANAMA 100.00 100.00
EPSON SHIPPING INC
PANAMA 100.00 100.00
MINARDI SHIPPING INC
PANAMA 100.00 100.00
BELDEN CEMENT HOLDING INC.
PANAMA 30.00 70.00 100.00
RIDGE HOLDING CO. LTD.
ISLA DE MAN 50.00 50.00 100.00
PANTILE HOLDING CO. INC.
ISLA DE MAN 50.00 50.00 100.00
CYRILL NAVEGATION CO. LTD.
ANTIGUA 100.00 100.00
CLEOPATRA NAVEGATION CO. LTD.
ANTIGUA 100.00 100.00
CARMEN NAVEGATION CO. LTD.
ANTI & BERMUDA 100.00 100.00
CHANTAL NAVEGATION CO. LTD.
ANTI & BERMUDA 100.00 100.00
CRYSTAL NAVEGATION CO. LTD.
ANTI & BERMUDA 100.00 100.00
CECILY NAVEGATION CO. LTD.
ANTI & BERMUDA 100.00 100.00
CYNTHIA NAVEGATION CO. LTD.
ANTI & BERMUDA 100.00 100.00
ANAKENA BOLK LTD.
PANAMA 50 50 100.00
INVESTING COMPANIES TOLLO CORVINA CNP INVER INVERS. PICTON SEA NCL NORASIA BELDEN BRUNSWICK WILLIAMS LIBRA MONTEMAR TAMARIM TAMARIM RIDGE AUSTRAL KEY WEST WEST CAPE PANTILE SOUTH CAPE NAVIERA NAVIERA OTROS TOTAL
ISSUING COMPANIES PANAMA CNP FUTURO PANAMA Co. S.A. HONG KONG MALTA HOLD. PANAMA BAHAMAS BRASIL S.A. SRL ISLA DE MAN CO. LTD. CO. LTD. ISLA DE MAN MARITIME CORP PANAMA PANAMA
CSAV's Financial statements are preparedaccording to Chilean accounting standard
practices. This is a free translation, made ingood faith, of the official Spanish-languageversion. The Company, therefore, acceptsno responsibility for any errors, omissions
or incorrect meanings contained in thistranslation.
2003
Balance
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2003Annual Report
CONSOLIDATED BALANCE SHEETSAT DECEMBER 31,
Cash and banks 25,698 33,360Time deposits 177,326 189,582Marketable securities 30,549 56,430Trade Accounts receivables 175,118 110,994Notes receivables 4,340 3,728Sundry debtors 20,623 25,238Due from related companies 14,648 20,135Inventories 5,776 5,640Refundable taxes 9,906 8,105Prepaid expenses 78,937 52,524Deferred taxes 4,570 4,182Other current assets 17,093 8,091Total Current Assets 564,584 518,009
Land 39,255 32,734Buildings and infrastructure works 42,958 35,536Machinery and equipments 379,724 364,471Other fixed assets 12,252 3,864Higher value of fixed assets from technical appraisal - 114Depreciation (202,080) (174,412)Total Fixed Assets 272,109 262,307
Investments in related companies 199,142 159,429Investments in other companies 6,606 5,648Goodwill 15,668 14,854Negative goodwill (5,411) (6,564)Long-term receivables 14,406 13,456Due from related companies – Long-term 5,997 6,073Intangibles 82,654 82,246Amortization (30,036) (27,185)Others 152,269 51,193Total Other Assets 441,295 299,150
TOTAL ASSETS 1,277,988 1,079,466
2003 2002ASSETS (In thousands of U.S. dollars-US$)
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2003Annual Report
Banks - Short term 434 113Banks - Current maturities of long-term – short term 17,478 25,511Current maturities of bonds – short term 875 82,114Current maturities of long-term due within one year 20 9Dividends payable 5,902 3,705Accounts payable 227,708 206,953Notes payable 15,867 176Sundry creditors 1,678 1,421Due to related companies 9,103 7,766Provisions 25,341 21,021Withholdings 3,038 3,040Income taxes 1,230 425Unearned income 33,094 22,413Other current liabilities 98 117Total Current Liabilities 341,866 374,784
Banks 266,618 107,556Bonds 55,564 45,436Notes payable 6 27Sundry creditors 810 816Due to related companies 4,289 11,072Provisions 14,703 11,757Deferred taxes 2,180 1,133Other long term liabilities 1,229 1,830Total Long Term Liabilities 345,399 179,627Minority Interest 22,081 22,584
The total capital authorized, subscribed and paid is 170,000 170,000US$ 170,000, divided into 735,844,521 shares,with no nominal valueOther reserves (4,143) (24,671)Reserve for future dividends 28,347 28,347Accumulated earnings 317,206 295,144Net income for the year 72,323 36,778Interim dividends (14,929) (3,123)Accumulated deficit from the development period (162) (4)Total Shareholders' Equity 568,642 502,471
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,277,988 1,079,466
2003 2002LIABILITIES AND SHAREHOLDERS' EQUITY (In thousands of U.S. dollars-US$)
The attached explanatory notes N° 1 to 33 are integral part of these financial statements.
AT DECEMBER 31,
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2003Annual Report
Operating revenues 2,135,539 1,674,948Operating expenses (1,862,876) (1,430,898)Gross operating income 272,663 244,050Selling and administrative expenses (206,132) (209,359)Operating Income 66,531 34,691
Financial income 10,465 9,702Equity in earnings of related companies 42,340 28,851Other non-operating income 3,714 11,791Equity in losses of related companies (1,657) (285)Amortization of goodwill (1,556) (1,382)Financial expenses (28,723) (27,303)Other non-operating expenses (6,936) (7,123)Monetary correction 452 380Exchange differences (3,051) 1,891Non-Operating Income 15,048 16,522
Net income before income taxes and extraordinary items 81,579 51,213Income taxes (6,420) (7,147)Net income before minority interest 75,159 44,066Minority interest (4,291) (8,568)Net income 70,868 35,498Amortization of negative goodwill 1,455 1,280
NET INCOME 72,323 36,778
CONSOLIDATED STATEMENTS OF INCOME
2003 2002 (In thousands of U.S. dollars-US$)
AT DECEMBER 31,
The attached explanatory notes N° 1 to 33 are integral part of these financial statements.
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2003Annual Report
Net income 72,323 36,778Results of Assets SalesLoss on sales of fixed assets (639) 1,529Profit on sales of investments (62) 78
Charges (credits) to income not affecting cash flow:Depreciation 35,384 29,038Amortization of intangibles assets 3,585 3,561Write-offs and provisions 1,348 7,170Equity in earnings of related companies (42,340) (28,851)Equity in losses of related companies 1,657 285Amortization of goodwill 1,556 1,382Amortization of negative goodwill (1,455) (1,280)Price level restatements (452) (380)Exchange rate differences 3,051 (1,891)Other credits to income not representing cash flow (2,644) (4,652)Other charges to income not representing cash flow 20,830 14,999(Increase) Decrease in Assets
Trade Accounts receivables (61,943) 22,495Inventories (7) (2,870)Other assets (19,653) 8,520(Decrease) Increase in LiabilitiesAccounts payable related with operating result 39,012 (2,351)Interest payable 4,452 (972)Income taxes 2,079 2,547Other accounts payable (653) (381)Provisions or value added tax and other taxes payable 110 847Minority interest (loss) 4,291 8,568Cash Flow from Operating Activities 59,830 94,169
Loans received 238,688 7,076Other loans received from related companies 14 -Other sources of financing - 324Cash dividends paid (24,603) (8,154)Loans paid (91,196) (10,327)Payment of current maturities (76,000) -Related companies’s loans payment (8,404) (6,875)
Cash Flow from Financing Activities 38,499 (17,956)
CONSOLIDATED CASH FLOW STATEMENTS
2003 2002 (In thousands of U.S. dollars-US$)
AT DECEMBER 31,
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2003Annual Report
Sales of fixed assets 9,026 7,464Sales of permanent investments 136 587Sales of other investments 101,748 48,460Related companies's loans collection 225 578Other investment income 19,450 7,780Increase in fixed assets (38,533) (45,677)Permanent investments (2,757) (1,024)Investments in securities (143,428) (86,466)Loans to related companies (218) -Other loans to related companies (1,696) -Other investment disbursements (56,817) -
Cash Flow from Investment Activities (112,864) (68,298)
Net Cash Flow for the Period (14,535) 7,915
Inflation impact on cash and cash equivalent (4,565) 1,103Net changes in cash and cash equivalents (19,100) 9,018Cash and cash equivalents at the beginning of the year 234,462 219,450Cash and Cash Equivalents at the End of the Period 215,362 228,468
CONSOLIDATED CASH FLOW STATEMENTS
2003 2002 (In thousands of U.S. dollars-US$)
AT DECEMBER 31,
The attached explanatory notes N° 1 to 33 are integral part of these financial statements.
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2003Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(In thousands of U.S. dollars - US$)For the period from January 1 to December 31, 2003 and 2002
1. The Company and its Registration
The parent Company (Tax number 90,160,000-7) is a publicly quoted corporation whose subscribed and paid in capital byDecember 31st, was US$ 170,000 thousand, divided into 735,844,521 shares of no nominal value, distributed among 3,499shareholders. It is registered in the Securities Register of the Superintendency of Securities and Insurance (Superintendencia deValores y Seguros) under N° 76.
The subsidiary Sudamericana, Agencias Aéreas y Marítimas S.A. includes in their financial statements the companies IquiqueTerminal Internacional S.A. and Antofagasta Terminal Internacional S.A. inscribed in the Securities Register under number714 and 800 respectively.
2. Accounting Polices Applied
a) Accounting Period
These financial statements covering the accounting periods of twelve months between January 1st and December 31st of 2003and they are compared with the same period of last year.
b) Guidelines for their Preparation
Financial statements have been prepared in accordance with accounting principles generally accepted in Chile and the regulationsof the Superintendency of Securities and Insurance (Superintendencia de Valores y Seguros).
c) Bases for their Presentation
For purposes of comparison, minor re-classifications have been made in the financial statements of December 2002.
d) Bases for Consolidation
The consolidated financial statements include assets, liabilities, results and cash flow of the parent company and subsidiaries,writing off significant transactions between consolidated companies. In addition the participation of minority investors isacknowledged and shown as minority interest.
e) Monetary correction
As from January 1, 1984, the parent Company was authorized to keep its accounting in US dollars; therefore, no monetarycorrection regulations are applied.
Financial statements of some Chilean subsidiaries are subject to price level restatement regulations; therefore, the figures wereadjusted 1.0% in 2003 and 3.0% in 2002.
f) Basis of Conversion
Transactions in currencies different from the US dollar in their original currency and expressed in US dollars at the exchangerate on the transaction date. Outstanding balances, at the closing of the financial statements, resulting from these transactionsare expressed in US dollars according to the exchange rate of each currency on the closing date. Exchange rate differences arerecorded as a charge or credit on the exchange rate differences account, except for fixed assets and shareholders' equity accounts,which are stated in US dollars at the exchange rate on the date of each transaction.
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2003Annual Report
With the exception of Empresa de Transporte Sudamericana Austral Ltda. and Odfjell y Vapores S.A. who present their financialstatements in US dollars, direct Chilean subsidiaries present their financial statements in Chilean pesos. These statements areexpressed in US dollars according to the exchange rate at the closing of financial statements, which by December 31st, 2003was Ch$ 593.80 (Ch$ 718.61 in 2002).
Direct foreign subsidiaries present their financial statements in US dollars, excepting Compañía Sud Americana de VaporesGmbH, Germany who present their financial statements in Euro, which are expressed in US dollars according to the exchangerate for the Euro at the closing of financial statements, which at December 31st, 2003 was EUR 0.7971 per US dollar (EUR 0.95in 2002).
The financial statements of the indirect foreign subsidiaries, whose accountings are kept in a currency different from USdollars, are converted and shown in US dollar.
g) Marketable Securities and Time Deposits
The negotiable securities correspond to mutual funds appraised at the value of the quota at the close of the period, and bondsappraised at market value or cost, whichever is lower.
Time deposits are shown at their investment value plus accrued interest.
Bonds included in long-term under Other Assets item – Other are shown at investments value and accrued interest at the closedate they are shown at Marketable Securities item.
h) Inventories
Inventories are stated at their cost, which does not exceed market value.
i) Uncollectible Debtors Estimate
The provisions for accounts receivable eventually uncollectible have been maintained, and determined based on the time elapsedin each case and on an evaluation of those cases.
j) Fixed Assets
Fixed assets are valued at cost plus accumulated monetary adjustments at December 31st, 1983 and the technical re-appraisalmade on February 28th, 1989, based on Circular 829 of the Superintendency of Securities and Insurance.
k) Fixed Assets Depreciation
Depreciation has been calculated using the straight-line method over the estimated useful life of the assets.
l) Intangibles
These relate to traffic rights and port concessions stated at purchase cost which are amortized during the period when said rightsand concessions are effective and/or investment recovery period.
m) Investments in related companies
Permanent investments in related companies, Chilean or foreign, are stated using the equity method of valuation, in accordancewith Technical Bulletins No. 42 and 64 of Chile’s Association of Accountants A.G. Investments in Chilean companies, whichkeep their accounting records in Chilean pesos, are expressed in US dollars at the end of the period and valuation differences areadjusted in the Other Reserves Account.
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2003Annual Report
Unrealized results between related parties have been omitted and are shown in results in the measure they are realized.
n) Negative goodwill and goodwill
The Higher and Lower figures resulting from the above are controlled in the same currency as the investment and are amortizedcrediting or debiting the result considering the investment recovery period and/or ten and twenty years, as per valid regulation.
o) Operations with Resale Agreements
Financial instruments acquired under repurchase agreements are shown at their acquisition value plus the difference arisingbetween the acquisition price and the sales price agreed to and they are classified under heading Other Current Assets.
p) Public Liabilities
Obligations from issuance of bonds are shown as liabilities at nominal value of the bonds issued. Differences between nominaland underwriter value (including placement costs and the respective reserve requirement) are deferred and amortized over theterm of the bonds, in order to show the real interest rate applicable to the transaction, which appear under Assets Statementunder the heading Other Assets – Other.
q) Income and Deferred Taxes
Income tax is debited to results considering the taxable net income determined for tax purposes.
The impact of the deferred taxes originating from the existing temporary differences between the financial balance and the taxbalance, is recorded considering the tax rate that will be effective on the estimated reversion date, in accordance with stipulationsin Technical Bulletin No. 60 of the Colegio de Contadores de Chile. The impacts of the existing taxes on the implementationdate in said technical bulletin and not previously shown, are acknowledged in results only in the measure that the temporarydifferences were reverted.
r) Severance indemnities
The Company has made provisions for this benefit on the basis of the present value of the accrued cost according to TechnicalBulletin N° 8 of Chile’s Association of Accountants A.G., considering an annual discount rate of 8%. For these purposes,Compañía Sud Americana de Vapores S.A. considers average personnel stay in the company of 25 years.
s) Operating Income
To determine operational results, the voyage progress method is utilized. This method consists of the calculation at the end ofthe period of income and expenses of each voyage in proportion with the days elapsed in respect of the total voyage time,provided that the ships have sailed from the last port of loading. In the case of voyages with shipments still pending theirresults are deferred in the account Expenditure Paid in Advance, Freight Debtors or Income in Progress as it corresponds,except in the case of ships with eventual losses which could be estimated, which are provided for by debiting results.
t) Derivate Contracts
The Company holds forward contracts and options that operate as exchange risk insurance in order to cover against US Dollarfluctuation with respect to other currencies, that have been adjusted to the determined value to the closing of each period. Inaddition an interest rate collar is held to cover the risk of fluctuations in the vessels charter hire.
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2003Annual Report
Tax Company Name Percentage Holding31-12-2003 31-12-2002
Direct Indirect Total Total
The results of these instruments are entered in accordance with coverage development.
Also, the Company holds contracts for future fuel purchases (swap and cap) to cover the price risk of fuel variation.
u) Computer Software
Software items forming part of the fixed assets were acquired as computer packages and these were amortized charging incomewithin 3 and 4 years as it corresponds.
v) Research and Development Expenditure
Expenditure under this heading, when incurred, was debited to income.
w) Statement of Cash Flow
To prepare the Statement of cash flow, and as set out in the Technical Bulletin No. 50 of Chile’s Association of AccountantsA.G. and in Circular No. 1,501 of the Superintendency of Securities and Insurance, the Company has considered as cashequivalents those investments in quotas made at mutual funds fixed rate and time deposits with original maturity of no morethan three months.
"Cash flow from operating activities" includes business-related cash flows, interest paid, financial income, dividends receivedand flows not defined as investment or financing.
x) Deferred Income
Profits obtained from the sale of ships subject to a charter contract, included in Unearned Income and Other Long-term Liabilities,are deferred and stated in the results over the contract period and in proportion with the charter cost.
Consolidated Subsidiaries Companies
Foreign Tollo Shipping Co. S.A. and subsidiaries 99.9990 0.0010 100.0000 100.0000Foreign Inversiones Nuevo Tiempo S.A. 99.9900 0.0100 100.0000 100.0000Foreign American Transportation Group, LLC and subsidiary 100.0000 0.0000 100.0000 100.000089602300-4 Empresa de Transporte Sudamericana Austral Ltda. and subsidiaries 99.0000 1.0000 100.0000 100.000092048000-4 Sudamericana, Agencias Aéreas y Marítimas S.A. and subsidiaries 99.9995 0.0005 100.0000 100.000096840950-6 Odfjell y Vapores S.A. 51.0000 51.0000 51.0000Foreign Inversiones Plan Futuro S.A. 99.9970 0.0030 100.0000 100.0000Foreign Compañía Sud Americana de Vapores GmbH 100.0000 0.0000 100.0000 100.0000Foreign Corvina Shipping Co. S.A. and subsidiaries 99.9980 0.0020 100.0000 100.000087987300-2 Southern Shipmanagement (Chile) Ltda. 50.5000 50.5000 50.5000Foreign South Trade Shipping Co. Inc. 56.5050 56.5050 56.5050Foreign North Trade Shipping Co. Inc. 56.5050 56.5050 56.5050Foreign East Trade Shipping Co. S.A. 0.0000 0.0000 56.5050Foreign CSAV Norasia Group (China) Shipping Co. 100.0000 0.0000 100.0000 -Foreign Norgistic (China) Limited 100.0000 100.0000 -
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2003Annual Report
Bonds 29,187 56,126Banco Central of Chile bonds 1,042 -American Treasure bonds 320 304Total marketable value 30,549 56,430
Financial instruments Book value31-12-2003 31-12-2002
4. Marketable Values (in thousands of US Dollars – US$)
5. Short-term and Long-term Debtors (in thousands of US Dollars – US$)
6. Transactions with Related Companies (in thousands of US Dollars – US$)
Balances with related companies include:
Short-Term
Short-term transactions with related companies relate to operations within the Company’s specific line of business and these arecarried out under market conditions where prices and payment conditions are concerned.
Long-Term
1) Accounts receivable from Five Continents Navigation S.A. and Belden Cement Holding Inc. pertain to loans granted tosubsidiaries Corvina Shipping Co. S.A. at the rate of 4.52% and Williams Investment Co. Inc. at the rate of 6% respectively,both payable each quarter.
Also, include a loan granted by the subsidiary Iquique Terminal Internacional S.A. to Urbaser for US$ 1,600 thousand. Theamount debt will be accrued an annual interest contracted Libor to 90 days plus 1%, annual base with an expiration date every90 days and the balance at the end of the present statement of account it is showed in the short term. In 2002 the capital wasshowed in long-term.
2) Balances of accounts payable pertain to credits granted to subsidiary Odfjell y Vapores S.A. (Chile) for the purchase of thevessels Bow Andes and Bow Pacific from Odfjell & Vapores Ltda. (Bermuda), which are payable in semi-annual quotas andaccrue a 7.5% interest per year.
Also, include severance indemnities of ex-employees’ of Sudamericana, Agencias Aéreas y Marítimas S.A. that were transferredto San Antonio Terminal Internacional and San Vicente Terminal Internacional S.A., to which were maintained this benefitagainst all events, according to contract with the worker.
Finally the payment balance to Transportes Fluviales Corral S.A. corresponds to a loan granted by Sudamericana AgenciasAéreas y Marítimas S.A., in order to make investment in related companies. This loan doesn’t include payment of interests anddoesn’t have expiration date.
Notes and Accounts Receivable from Related Companies (in thousands of US Dollars – US$)
94.058.000-5 Aerosan S.A. 2 6Foreign Agencia Naviera de Colombia S.A. 3096.566.940-K Agencias Universales S.A. 496.663.560-6 Aserradero Arauco S.A. 178.659.260-7 Asesorías Entre Ríos S.A. 114Foreign Belden Cement Holding Inc. 2,717 2,57193.480.000-1 Celulosa Arauco y Constitución S.A. 1089.999.300-4 CMPC Celulosa S.A. 206 15196.529.310-8 CMPC Tissue S.A. 1992.736.000-4 Coelsa Computación y Electrónica S.A. 19790.596.000-8 Compañía Chilena de Navegación Interoceánica S.A. 3,713 2,40090.320.000-6 Compañía Electrometalúrgica S.A. 791.643.000-0 Corpesca S.A. 43Foreign Cosan Peru S.A. 3990.331.000-6 Cristalerías de Chile S.A. 9 105Foreign CSAV Group Agency (U.K.) Limited 5,73496.591.040-9 Empresas Carozzi S.A. 27 29Foreign Five Continents Navegation S.A. 581 582 1,324 1,902Foreign Gertil S.A. 21891.656.000-1 Inforsa Industrias Forestales S.A. 4978.465.520-2 Inmobiliaria Tumbes Ltda. 435 1,95694.660.000-8 Marítima de Inversiones S.A. 1 496.610.780-4 Marítima Portuaria Corral S.A. 1 393.628.000-5 Molibdenos y Metales S.A. 4699.506.030-2 Muellaje del Maipo S.A. 9Foreign Naviera Arica S.A. 901 172Foreign Odfjell & Vapores Ltd. 50094.620.000-K Orión Servicios Mercantiles Integrados S.A. 131Foreign Pantile Holding Co. Ltd. 1,988Foreign Peter Döhle Schieffahrts – KG 9,83887,001,500-3 Quimetal Industrial S.A. 5Foreign Ridge Holding Co. Ltd. 397Foreign SAAM Costa Rica S.A. 23 17Foreign SAAM Remolcadores S.A. de C.V. 1,011 77296.908.970-K San Antonio Terminal Internacional S.A. 1,30786.547.900-K Sociedad Anónima Viña Santa Rita 2184.608.700-1 Sociedad Nacional de Comercio S.A. 99Foreign Trabajos Marítimos S.A. 332 864Foreign Urbaser 1,614 16 1,600Total 14,648 20,135 5,997 6,073
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Notes and Accounts Payable to Related Companies (in thousands US Dollars – US$)
96.885.450-K Aerosan Airport Services S.A. 996.566.940-K Agencias Universales S.A. 25778.659.260-7 Asesorías Entre Ríos S.A. 3Foreign Boreal Emprendimientos e Particioacoes Ltda. 9190.690.000-9 Compañía de Petróleos de Chile S.A. 1,107 633Foreign Consorcio Naviero Peruano S.A. 342 1,053Foreign Douat Fhilo y Otro 557 33188.566.900-K Edipac S.A. 788.482.300-5 Empresa de Servicios Marítimos y Portuarios Hualpen Ltda. 8Foreign Inversiones Coirón S.A. 151 54Foreign Laerob Participacoes e Emprendimientos S.A. 27777.466.580-3 Muellaje Roland Ltda. 396.908.170-9 Muellaje San Vicente Terminal Internacional S.A. 2Foreign Naviera Antofagasta S.A. 471 223Foreign Odfjell & Vapores Ltd. 3,775 3,922 3,812 10,68894.620.000-K Orión Servicios Mercantiles Integrados S.A. 4096.674.780-3 Rigel S.A. 29196.908.970-K San Antonio Terminal Internacional S.A. 320 73 5196.908.930-0 San Vicente Terminal Internacional S.A. 131 162 25 1983.032.100-4 Servicios de Consultoría Hendaya S.A. 696.721.040-4 Servicios Marítimos Patillos S.A. 188 21488.482.300-5 Servicios Marítimos Portuarios Hualpén Ltda. 378.353.000-7 Servicios Portuarios Reloncaví Ltda. 320 11686.547.900-K Sociedad Anónima Viña Santa Rita S.A. 15Foreign Southern Shipmanagement Co. S.A. (Panama) 1,142 56782.074.900-6 Transbordadora Austral Broom S.A. 29 3096.657.210-8 Transportes Fluviales Corral S.A. 5 14 379 314Total 9,103 7,766 4,289 11,072
Abastecimientos CMPC S.A. 96.768.750-2 Shareholders and/or Directors in common Freight 10 10Abastible S.A. 91.806.000-6 ” Fuel 30 -30 9 -9Aerosan Airport S.A. 96.885.450-K Associate Services given 3 3Agencias Universales S.A. 96.566.940-K Associate Sale Port services 890 890 179 179Agencias Universales S.A. 96.566.940-K Associate Received Port services 2,111 -2,111 248 -113Anagra 96.635.340-6 Director in common Port operations 578 578 376 376Aserradero Arauco S.A. 96.663.560-6 Shareholders and/or Directors in common Freight 478 478 1,831 1,831Aserradero Paillaco S.A. 96.697.650-0 ” Freight 2 2Asesorias Entre Rios S.A. 78.659.260-7 Shareholder Services given 13 13Asesorias Entre Rios S.A. 78.659.260-7 Shareholder Fixed Assets Purchase 28 -28 22 -5Azufre Landia S.A. 86.251.900-0 Shareholders and/or Directors in common Bulk and warehouse 117 117Belden Cement Holding Inc. Foreign Associate Interests 145 145 160 160Belden Cement Holding Inc. Foreign Associate Loan payment 657Celulosa Arauco y Constitución S.A. 93.458.000-1 Shareholders and/or Directors in common Freight 11 11 255 255Chubb de Chile Cía. de Seguros Generales S.A. 96.642.610-1 ” Insurance 101 -101 71 -71Compañía de Seguros Cruz del Sur S.A. 99.285.000-0 Majority shareholders Insurance 617 -617 78 -78CMPC Cartulinas S.A. 96.731.890-6 Shareholders and/or Directors in common Freight 23 23 638 638CMPC Celulosa S.A. 89.999.300-4 “ Freight 10,496 10,496 6,955 6,955CMPC Maderas S.A. 95.304.000-K “ Freight 66 66 243 243CMPC Papeles S.A. 79.818.600-0 “ Freight 1 1CMPN Tissue S.A. 96.529.310-8 “ Freight 276 276 31 31Coelsa Computación y Electrónica S.A. 92.736.000-4 “ Freight 273 273 589 589Compañía Chilena de Navegación Interoceánica S.A. 90.596.000-8 Associate Sales freight 21,633 21,633 22,466 22,450Compañía Chilena de Navegación Interoceánica S.A. 90.596.000-8 Associate Received freight 18,273 -18,273 15,223 -15,223
Transactions (in thousands US Dollars – US$)
Companies ID Nature of Relationship Description of Transactions 31.12.2003 31.12.2002Amount Effects Amount Effects
on Results on Results(Debit /Credit) (Debit /Credit)
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Compañía de Petróleos de Chile S.A. 90.690.000-9 Shareholders and/or Directors in common Freight 50 50 89 88Compañía de Petróleos de Chile S.A. 90.690.000-9 “ Fuel 10,999 -10,999 5,746 -5,715Compañía Electrometalúrgica S.A. 90.320.000-6 “ Freight 22 22 80 80Consorcio Naviero Peruano S.A. (Peru) Foreign Associate Administrative services render 38 38 3 3Consorcio Naviero Peruano S.A. (Peru) Foreign Associate Agency services received 1,447 -1,447 1,631 -1,631Corpesca S.A. 91.643.000-0 Shareholders and/or Directors in common Freight 830 830 959 959Cristalerías de Chile S.A. 90.331.000-6 “ Freight 1,046 1,046 811 811Ediciones Financieras S.A. 96.539.380-3 “ Advertisement 47 -47 10 -10Edipac S.A. 88.566.900-K “ Administrative services 20 -20Empresa de Servicios Marítimos y Portuarios Hualpén Ltda. 88.482.300-5 Associate Port services 59 -59 32 -32Empresa Cabo de Hornos S.A. 93501.000-4 Shareholders and/or Directors in common Freight 72 72Empresas Carozzi S.A. 96.591.040-9 “ Freight 244 244 832 832Envases CMF S.A. 86.881.400-4 “ Freight 46 46 320 320Envases Impresos S.A. 89.201.400-0 “ Freight 22 22Estudio Claro y Compañía 79.753.810-8 Chairman Administrative services 1 -1Estudio Claro y Compañía 79.753.810-8 Chairman Legal advise 79 -79 49 -49Exportación y Comercio S.A. 96.515.710-7 Director in common Financial advise 55 -55Forestal Arauco S.A. 82.152.700-7 Shareholders and/or Directors in common Freight 134 134Forestal Valdivia S.A. 79.625.830-6 ” Freight 17 17Framberry S.A. 79.574.560-2 “ Freight 37 37 108 108Inforsa Industrias Forestales S.A. 91.656.000-1 “ Freight 415 415 1,210 1,210Inmobiliaria Tumbes Ltda. 78.465.520-2 Associate Port operations 22 22 27 27Marítima de Inversiones S.A. 94.660.000-8 Majority shareholder Administrative services 76 76 49 49Markeing Meter Limitada 77.658.870-9 Shareholders and/or Directors in common Services 6 -6 28 -28Molibdenos y Metales S.A. Molymet 93.628.000-5 ” Freight 535 535 127 127Muellaje del Maipo S.A. 99.506.030-2 Associate Personnel services 1 1Muellaje Roland Ltda. 77.466.580-3 Associate Personnel services 17 -17 5 -5Odfjell & Vapores Ltd. Foreign Associate Loans payment 6,875 7,565Odfjell & Vapores Ltd. Foreign Associate Interests payment 841 -841 1,421 -1,421Orión Servicios Mercantiles Integrados S.A. 94.620.000-K Associate Received port operations 9 -9 296 -284Paneles Arauco S.A. 96.510.970-6 Shareholders and/or Directors in common Freight 289 289 420 420Peter Dohle Schiffhartskontor KG Foreign Indirect Ship charter 18,617 -18,617 11,486 -11,486Peter Dohle Schiffhartskontor KG Foreign Indirect Payment of accounts payable 2,815Peter Dohle Schiffhartskontor KG Foreign Indirect Sale contracts indemnity 2,900 2,900Portuaria Corral S.A. 96.610.780-4 Associate Received services 16 -16Propa S.A. 79.943.600-0 Shareholders and/or Directors in common Freight 52 52Quimetal Industrial S.A. 87.001.500-3 “ Freight 55 55 119 119Red Televisiva Megavision S.A. 79.952.350-7 “ Advertisement 37 -37Ridge Holding Co. Ltd. Foreign Associate Transfer of funds 398SAAM Remolcadores S.A. de C.V. Foreign Associate Port services 4,366 4,366 283 283San Antonio Terminal Internacional S.A. 96.908.970-K Associate Container services 4,460 4,460 4,074 3,829San Antonio Terminal Internacional S.A. 96.908.970-K Associate Port services 8,263 -8,263 5,084 -5,084San Vicente Terminal Internacional S.A. 96.908.930-0 Associate Port services 1,098 1,098 1,213 854San Vicente Terminal Internacional S.A. 96.908.930-0 Associate Port operations 2,225 -2,225 2,162 -2,162Scotiabank Sudamericano 97.018.000-1 CSAV Shareholder Services 1 -1 4 -4Servicios Aeroportuarios Aerosan S.A. 94.058.000-5 Associate International services 1 1Servicios Aeroportuarios Aerosan S.A. 94.058.000-5 Associate Operation services received 2Servicio de Consultoría Hendaya SA. 83.032.100-4 Shareholders and/or Directors in common Services 61 -61 82 -82Servicios Marítimos Patillos S.A. 96.721.040-4 Associate Vessels 605 605 412 412Servicios Marítimos Patillos S.A. 96.721.040-4 Associate Launch services 1,208Servicios Portuarios Reloncaví Ltda. 78.353.000-7 Associate Port operations 84 84 61 30Servicios Portuarios Reloncaví Ltda. 78.353.000-7 Associate Stevedoring 2,732 -2,732 2,626 -2,626Skyring Maritime Corp Foreign Shareholders and/or Directors in common Shipping services 2,834 2,834Sociedad Anónima Viña Santa Rita 86.547.900-K ” Freight 216 216 530 530Sociedad Anónima Viña Santa Rita 86.547.900-K “ Products purchase 73 -73 71 -59Sociedad Nacional de Comercio S.A. 84.608.700-1 “ Freight 77 77 59 59Southern Peru Limited (Peru) Foreign “ Freight 1,924 1,924 1,724 1,724Southern Shipmanagement Co. S.A. (Panama) Foreign Associate Shipmanagement 28 28 24 24Southern Shipmanagement Co. S.A. (Panama) Foreign Associate Shipmanagement 2,155 -2,155 340 -340Southpacific Korp S.A. 96.929.960-7 Shareholders and/or Directors in common Freight 12 12 18 18Trabajos Marítimos S.A. Foreign Associate Port services 38Transbordadora Austral Broom S.A. 82.074.900-6 Associate Agency services 39 39 31 31Transbordadora Austral Broom S.A. 82.074.900-6 Associate Freight 228 -1Transportes Fluviales Corral S.A. 96.657.210-8 Associate Port services 68 -68Urbaser Foreign Shareholder Interest loan granted 37 37 40 40Viña Los Vascos S.A. 89.150.900-6 Shareholders and/or Directors in common Freight 12 12Wallen Limited Foreign ” Varios services 2 2Wallen Limited Foreign ” Varios services 3 -3
Companies ID Nature of Relationship Description of Transactions 31.12.2003 31.12.2002Amount Effects Amount Effects
on Results on Results(Debit /Credit) (Debit /Credit)
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7. Deferred and Income Taxes
a) Profits resulting from investments in foreign companies are taxed in Chile, in the year in which they are received, with the first categoryincome tax. As the foreign subsidiaries this period have not distributed any dividends, the Company has made no provision for tax in thisrespect.
The accrued results of the foreign subsidiaries amounted to a total of US$ 314,280 thousand as of 31st December 2003 (US$ 274,766thousand in 2002).
b) On December 2nd, 2002, the Company was notified by the Chilean Internal Revenue Services related to income tax revenue calculation2002, determining differences that impact in the Taxable income revenue base, Tributary Earning Funds and determination of the credits.The Company answered under legal term the mentioned notification, which in opinion of the company management and its Legal Advisersis not reasonable.
On April 10, 2003, tax demands Nos.153 to 156 were received from the Internal Tax Service for an amount of Ch$131,581,581 with respectto the tax year 2002, because of differences in declared taxable income, and Resolution 244 was issued which did not agree to the refund ofmonthly tax prepayments resulting from the absorption of losses of Ch$ 396,178,277. The Company and its legal advisers believe that thesedemands and the Resolution are not appropriate and appeals have been lodged within the legally stipulated term.
c) The parent Company has made a provision for income tax of US$ 317 thousand for the period ending December 31st 2003 (US$ 1,223thousand in 2002).
d) The parent Company shows accumulated profit tax balance of US$ 9,961 thousand at 31st December 2003 (US$ 6,939 thousand in 2002).
e) The Company charged US$ 162 thousand and US$ 132 thousand to income for 2003 and 2002 respectively for Special Article 21 Tax (ondisallowed expenses).
Deferred taxes (in thousands of U.S. dollars – US$)
Item Short term Long term Short term Long term Short term Long term Short term Long term
Transitory DifferencesProvision for doubtful accounts 1,939 1,859 5Provisions for vacations 942 830Depreciation of fixed assets 33 443 3,524 3,244Severance indemnities 18 896 14 722Provision for cargo claims 1,164 990 287Deferred result 646 1 715Taxable loss 553 464 375 438Provisions for vessels maintenance and other 742 299 101 244 602 282 287 208Eurobonds, UF Bonds and loan expenses 70 189 106 199Negative result from vessels 131 112Port concession 374 3,840 345 3,996Complementary accounts – net of amortization (137) (309) (328) (5,260) (280) (295) (339) (5,804)Total 5,367 1,170 797 3,350 4,489 1,432 307 2,565
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8. Fixed Assets (in thousands of U.S. dollars – US$)
2003 Book value Higher Accumulated Accrued Net fixed Depreciation DeferredValue due to depreciation Depreciation assets during the year depreciation /
Technical Higher (1) (accrued)Revaluation Value due to (2)
Item TechnicalRevaluation
Income taxes (in thousands US Dollars – US$)
31.12.2003 31.12.2002
Current tax expenditure (tax provision) (5,893) (7,332)Adjustment tax expenditure (previous year) 28 (246)Impact on assets and liabilities of the deferred tax for the period (384) (374)Tax credit for tax losses 183 1,183Impact of payback of deferred assets and liabilities complementary accounts (354) (526)Other debit or credit in the account 148Total (6,420) (7,147)
Land 39,255 39,255Buildings and infrastructure works 42,958 (6,111) 36,847 (1,305)Machinery and equipments 379,724 (193,835) 185,889 (33,354) 61Other fixed assets 12,252 (2,134) 10,118 (725)Total 474,189 (202,080) 272,109 (35,384) 61
2002 Book value Higher Accumulated Accrued Net fixed Depreciation DeferredValue due to depreciation Depreciation assets during the year depreciation /
Technical Higher (1) (accrued)Revaluation Value due to (2)
Item TechnicalRevaluation
Land 32,734 3 32,737Buildings and infrastructure works 35,536 (5) (4,112) (1) 31,418 (984)Machinery and equipments 364,471 116 (168,929) (116) 195,542 (27,493) (8)Other fixed assets 3,864 (1,254) 2,610 (561) (36)Total 436,605 114 (174,295) (117) 262,307 (29,038) (44)
(1) Depreciation of the period are included in the operation costs for the amount of US$ 32,697 thousand in 2003(US$ 24,890 thousand in 2002) and administrative and selling expenses for the amount of US$ 2,687 thousand in 2003 (US$ 4,148 thousand in 2002).
(2) Deferred depreciation / (accrued), corresponding to the vessel depreciation adjustment following the criteria acknowledging operational results.
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9. Investments in Related Companies
a) Muellaje del Maipo S.A.
On 19th March 2003, Sepsa S.A sells 5,000 shares of Muellaje del Maipo S.A. to SSA Holdings International Chile Ltda.,maintaining 49,5% of the property through by its subsidiary Cosem Ltda.
b) Transportes Fluviales Corral S.A.
On 13th March 2002, SAAM holding increased in Transportes Fluviales Corral S.A. from 25% to 50% through the purchase of300 shares, calculating a new Proportional Equity Value (V.P.P.) retroactive at December 31st 2001, equivalent to M$ 347,261.
c) Portuaria Corral S.A.
On 13th June 2002, the Company acquired a share corresponding to 0.002% of ownership of the Company, equivalent in VPP$ 47,338.
d) Unrealized important income
d.1. Gain on the sale of containers by SAAM S.A. to San Vicente Terminal Internacional S.A. in January 2002.
d.2. Gain on the sale of an ARPA server user license by SAAM S.A. to San Antonio Terminal Internacional S.A. in December2002.
d.3. Gain on the sale of the Aguila II tug by SAAM S.A. to Trabajos Marítimos S.A., in August 2002.
e) Potentially remittable earnings from investments in related companies
Potentially remittable earnings are not contemplated because of the constant investment by the Company in its businesses.
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ID Companies Country Currency Share Percentage Shareholder’s Result for the Period Accrued Results Proportional Equity Non-interestment Book ValueStocks Holding Equity Value Results
Types of Currency & Readjustment IndexTax Bank or Financial Institution US Dollars UF Non – Indexed $ TOTAL
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2003Annual Report
14. Liabilities with banks and Others – Long-term (in thousands U.S. Dollars – US$)
Foreign Nedship Bank US Dollar 1,848 1,848 8,696 10,868 23,260 2.58 91,108Foreign Den Norske Bank US Dollar 1,020 1,020 2,040 6,890 10,970 2.24Foreign Banco Santander N.Y. US Dollar 3,571 3,571 1.80 7,14297004000-5 Banco de Chile Non – Indexed $ 590 590 6.2 470Foreign Banco Santander Mexico US Dollar 10,151 10,151 2.45 5,395Foreign Banco Sudamertis Miami US Dollar 928 928 9.5688 1,477Foreign Deutsche Schiffsbank US Dollar 1,120 1,120 2,240 9,455 13,935 2.0890Foreign Hipovereinbank US Dollar 785 393 1,178 4.57 1,964Foreign American Family y Life Assurance
Co. of Columbus Yen 201,850 201,850 4.16Foreign Banco Safra US Dollar 185 185 1.97Total 8,344 5,494 12,976 37,954 201,850 266,618 107,556Foreign currency obligations percentage (%): 99.7787Chilean currency obligations percentage (%): 0.2213
PreviousExpiring years Updated close date close date
ID Bank or Financial nstitution Currency readjust-ment More than 1 More than 2 More than 3 More than 5 Long term total Average annual Long term totalindex upto 2 upto 3 upto 5 upto 10 More than 10 at close of interest rate at close of
financial statements financial statements
15. Public Liabilities Short-term and Long-term (in thousands of U.S. dollars – US$)
a) Eurobonds
Bearer bonds issued in US dollars and placed abroad:
Nominal value issued US$ 100,000 thousandPlacement value (100% of issue) US$ 99,340 thousandDate of issue and placement 8th December 1993Maturity of principal 8th December 2003Interest rate 7.375% AnnualInterest Semi-annually, payable on June 8 and December 8 of each year
Classification:
Level BBB - STABLE PROSPECTSRating agency Standard and Poor's CorporationUse of funds Investment on fixed assets : VesselsStock exchange LuxembourgPlacement bank Citibank International PLCLegislation EnglishConvenants Consolidated Financial debt not to exceed 100% of shareholders' equity.
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2003Annual Report
During the second semester of 2001 indirect subsidiary Rahue Investment Co. S.A. acquired in the market part of these Eurobondsfor a nominal value of US$ 19,000, which are shown deducting the item liabilities with the public in 2002.
Additionally, in 2003 the same subsidiary did new acquisitions of these Eurobonds for a nominal value of US$ 5,000 thousand,which were paid to the expiration date (December 2003).
b) Bonds
Refers to index inflated (UF) non-physical bonds placed in Chile.
Series A 1 Series A 2Total issued bonds quantities 190 100Nominal value of each bond U.F. 5,000 U.F. 10,000Nominal value of the series U.F. 950,000 U.F. 1,000,000Placement value (100% of issue) U.F. 908,096 U.F. 955,891
Date of issue 1.10.2001Date of placement 14.11.2001 (100%)Annual interest rate 6.40%Interest payment Expired semi-annual termInitial date of interest accumulation 1st October 2001Due date 1st October 2022Amortization of capital Semi-annually and payment from 1.04.2009
Classification:
Registration S.V.S. under N° 274 on 12.10.2001Rating agency A+ Clasificadora de Riesgo Humphreys Ltda.
A Fitch Chile Clasificadora de Riesgo de BolsaUnderwriters Salomon Smith Barney S.A., Corredores de BolsaBond holders representatives Banco de Chile
Usage of fundsPayment of liabilities expiring in 2002 and 2003 and funding of future acquisitions of shares in companies whose line of business isdirectly related with the corporate purpose of the Issuer, and/or the funding of other investments or development of projects linkedwith said objective.
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Long-term bonds – portion of short-termOne only 100,000 US$ 7.375 08-12-2003 Semi-annual One only 81,398 Foreign
274 A-1 950 UF 6.4 01-10-2022 Semi-annual Semi-annual 426 349 Chilean274 A-2 1,000 UF 6.4 01-10-2022 Semi-annual Semi-annual 449 367 ChileanTotal-portion of short term 875 82,114
Long-term bondsOne only 100,000 US$ 7.375 08-12-2003 Semi-annual One only Foreign
Inscription N° or Series Current Bond Interest Deadline Periodicity Par value Placement inIdentification of Par Value Readjust- rate Interest Amortization 31-12-2003 31-12-2002 ChileInstrument Placed ment Unit payment payment or Abroad
Bearer bonds issued in US dollars and placed abroad:
16. Provisions and Write-offs (in thousands U.S. Dollars – US$)
Doubtful debtors write-offs amounted to US$ 915 thousand at 31st December 2003 (US$ 4,493 thousand in 2002).
17. Severance Indemnities
In 2003, US$ 3,952 thousand (including exchange rate differences) were charged to income for severance indemnities, andpayments for US$ 1,591 thousand were made (US$ 1,681 thousand and US$ 3,717 thousand in 2002, respectively).
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18. Minority Interest (in thousands of U.S. dollars – US$)
31.12.2003 31.12.2002Liabilities Result of the period Liabilities Result of the period
MUS$ MUS$ MUS$ MUS$
19. Equity Changes
a) Dividends
The bylaws do not contain any dividend payment restrictions. In any event, these are payable in Chilean pesos.
b) Shareholders Ordinary General Meeting
At the meeting held on April 14th, 2003, the Annual Report, Balance Sheets and Results for 2002 were unanimously approved.Net income was distributed as follows:
In thousands of US$ DollarsDividends:Interim No. 306 3,123Final No. 307 11,588Deficit accrued during the development period 4Accumulated earnings 22,063Total 36,778
The meeting also approved, for the year 2003, as dividends policy and future earnings distribution to complete at least 40% ofthe net income of the year, authorizing the Board of Directors to define the opportunity and the amounts of the interim dividendsto be paid, which will be effected depending on the results during the period and also, distribute dividends to Future DividendFunds without Shareholders General Meeting’s approval, when necessary.
c) Other Reserves
Up to December 31st, 2003, differences arising from applying the equity valuation method to investments in related companieswhose books are kept in currencies other than US dollars, it has been adjusted with credit to other reserves. Up to December31st, 2003 this adjustment entailed a credit of US$ 20,528 thousand (a charge of US$ 7,443 thousand in 2002). This adjustmentmainly corresponds to the investments in the subsidiary Sudamericana, Agencias Aéreas y Marítimas S.A.
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Equity Changes
Deficit accrued during the development period of subsidiary
ID Companies Amountperiod accumulated Remark
99.511.240-K Antofagasta Terminal Internacional S.A. 140 140 -96.696.270-4 Inmobiliaria Marítima Portuaria S.A. 1 1 -86.712.100-5 Compañía de Servicios de Movilización Ltda. 21 21 -
d) Interim dividends
The Board of Directors in a meeting held on November 28th, 2003 approved the payment of interim dividend of $ 4.5 per share,which will be paid January 13th, 2004.
31.12.2003 31.12.2002Other reserves initial balance (24,671) (17,228)Sudamericana, Agencias Aéreas y Marítimas S.A. 20,475 (7,405)Logística Integral S.A. - (82)Corvina Shipping Co. S.A. (16)Compañía Sud Americana de Vapores GmbH 62 47Other 7 (3)Accumulated total (4,143) (24,671)
Stocks:
Series Number of subscribed shares Number of paid shares Number of Voting Shares
Unique 735,844,521 735,844,521 735,844,521
Capital (in thousands of U.S. dollars – US$)
Series Subscribed capital Payment capital
Unique 170,000 170,000
Original balance 170,000 (24,671) 28,347 295,143 (3,123) (4) 36,778 170,000 (17,228) 32,304 279,795 (8,251) (63) 26,081Result distribution 22,063 14,711 4 (36,778) 15,585 10,432 63 (26,081)Final dividend (11,588) (2,181)Accumulated development cost (162) (4)Investment adjustment 20,528 (7,443) (236)Eventual final dividend (3,957)Net income for the year 72,323 36,778Interim dividends (14,929) (3,123)Final balance 170,000 (4,143) 28,347 317,206 (14,929) (162) 72,323 170,000 (24,671) 28,347 295,144 (3,123) (4) 36,778Updated balances 170,000 (24,671) 28,347 295,144 (3,123) (4) 36,778
31-12-2003 31-12-2002Headings Capital Other Future Accumulated Interim Development Net equity Capital Other Future Accumulated Interim Development Net equity
paid reserves dividends Results dividends cost income paid reserves dividends results dividends cost incomereserves for the year reserves for the year
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21. Monetary correction (in thousands U.S. Dollars – US$)
20. Other non-operating Income and Expenses (in thousands of U.S. dollars – US$)
Other non-operating income31.12.2003 31.12.2002
Amortization on deferred results for ship’s sales and ship’s building contract 95 5,164Deferred profit amortization 258 304Profit in fixed assets sale 1,272 296Profit in forward contract - 1,116Profit in system arpa sale to SVTI 184 890Reversal of exchange difference subsidiaries’ capital reductions - 3,215PPM from absorbing the loss and negative RLI - 42Other 1,905 764Total 3,714 11,791
Other non-operating expenses31.12.2003 31.12.2002
Loss in forward contracts 648 370Dividend withdrawal in Colombia commission 79 125Loss for Swap’s 393 -Loss in fixed assets sale 633 1,825Intangibles amortization 2,372 2,372Wind-up SAAM Brazil expenses 38 211Indemnity and re-structuring Cosan - 226Other 2,773 1,994Total 6,936 7,123
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22. Exchange Rate Differences (in thousands U.S. Dollars – US$)
Currency 31-12-2003 31-12-2002
Current assets Chilean Pesos 149 (41)US Dollar (398) 17Euro 6,312 627Yen 12 (9)Other 1,261 (1,955)
Other 136 65Other Other 228 (187)Prepaid expenses Other 45 (293)Due from related companies – long-term US Dollar (2,364) 45Long-term debtors US Dollar (1,227) 565Other current – long term US Dollar (425)
US Dollar 34 (74)Euro 1,361 1,788Yen (35) (463)Other 312 (1,848)
Sundry creditors Chilean Pesos 53 (51)Due to related companies Chilean Pesos (21) (44)
US Dollar 522 (348)Other 96 374
Provisions Chilean Pesos (1,800) 898Other 50 60
Withholdings Chilean Pesos (67) 4Income in progress Other (4)Due to related companies – long term US Dollar 3,032 (3,089)Provisions – long term US Dollar (504)Sundry creditors – long term US Dollar 6 (19)Income taxes Chilean Pesos (256) 3Total (debit) credit (7,473) 2,221(Loss) Profit exchange rate difference (3, 051) 1,891
Item Amount
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23. Statement of Cash Flow
In accordance with the stipulations in the Securities and Insurance Superintendent’s Office Circular No. 1501, a summaryfollows of the main funding activities involving future flow for the Company:
Funding Activities
a) Interim dividend No. 310 for US$ 5,330 thousand to be paid by January 2004 and payment of old payable dividends US$ 572thousand. It is not known when their shareholders will collect old dividends and if this does not occur within five years, theprovisions of clause 85 of the Corporations Law 18,046 will be applied, i.e. they will be paid to the Chilean Firemen Institution.
Investment Activities
a) Other investment income
Relates to the redemption of a time deposit held to cover letters of credit in favor of SKS OBO Holdings Limited.
b) Other investment disbursements
They correspond to US$ 55,625 thousand of advance payment for purchase of vessel hulls contract and US$ 1,192 thousand toothers.
24. Derivative Contracts (in thousands U.S. Dollars – US$)
FR CCPE 10.000 I 2004 EXCHANGE RATE US$/UF C TIME DEPOSIT IN UF 10,000 10,000 TIME DEPOSIT IN UF 1,851 0 1,851FR CCPE 20.000 I 2004 EXCHANGE RATE US$/UF C TIME DEPOSIT IN UF 20,000 20,000 TIME DEPOSIT IN UF 3,702 0 3,702FR CCPE 5.337 I 2004 EXCHANGE RATE US$/CLP C 5,337 5,337 PAYMENT DIVIDEND IN CHILEAN PESOS 247 0 247C CCTE 5.948 I 2004 FUEL PRICE C FUEL PURCHASE 5,948 5,948 FUEL PURCHASE 0 0 0C CCTE 17.550 I 2004 FUEL PRICE C FUEL PURCHASE 17,550 17,550 FUEL PURCHASE 0 0 0FR CCPE 332 I 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 332 332 OTHER CURRENT LIABILITIES 1 0 -1FR CCPE 105 I 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 105 105 OTHER CURRENT LIABILITIES 4 0 4FR CCPE 207 I 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 207 207 OTHER CURRENT LIABILITIES 3 0 3FR CCPE 1.872 I 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 1,872 1,872 OTHER CURRENT LIABILITIES 11 0 -11FR CCPE 5.423 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 5,423 5,423 OTHER CURRENT LIABILITIES 54 0 -54FR CCPE 334 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 334 334 OTHER CURRENT LIABILITIES 3 0 -3FR CCPE 105 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 105 105 OTHER CURRENT LIABILITIES 4 0 4FR CCPE 207 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 207 207 OTHER CURRENT LIABILITIES 3 0 3FR CCPE 4.838 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 4,838 4,838 OTHER CURRENT LIABILITIES 48 0 -48FR CCPE 1.580 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 1,580 1,580 OTHER CURRENT LIABILITIES 60 0 60FR CCPE 3.118 II 2004 EXCHANGE RATE C US$ LOAN IN MEXICO 3,118 3,118 OTHER CURRENT LIABILITIES 41 0 41S CI 16.071 III 2005 EXCHANGE RATE C US$ LOAN IN MEXICO 14,542 14,542 OTHER CURRENT LIABILITIES 84 -234 -84S CCTE 3.535 I 2006 INTEREST RATE 4.57% C BANKS- CURRENT MATURITIES 1,964 1,964 DUE TO RELATED COMPANIES 17 -59 -17C CCPE 201.850 III 2033 EXCHANGE RATE US$/JPY C JPY LOAN 201,850 201,850 BANKS – CURRENT MATURITIES 0 0 0C CCPE 201.850 III 2033 EXCHANGE RATE US$/JPY V JPY LOAN 201,850 201,850 BANKS – CURRENT MATURITIES 0 0 0S CCTE 27.500 III 2004 INTEREST RATE 7.655% C US$ LOAN 27,500 20,108 ACCOUNTS PAYABLE 0 0 0S CCTE 1.934 II 2004 FUEL PRICE C FUEL PURCHASE 1,934 1,934 FUEL PURCHASE 0 0 0S CCTE 2.359 II 2004 FUEL PRICE C FUEL PURCHASE 2,359 2,359 FUEL PURCHASE 0 0 0S CCTE 639 II 2004 FUEL PRICE C FUEL PURCHASE 639 639 FUEL PURCHASE 0 0 0S CCTE 1.675 II 2004 FUEL PRICE C FUEL PURCHASE 1,675 1,675 FUEL PURCHASE 0 0 0
Contrac Descriptions Value Type Type Contract Due or Specific Purchase of the Bookkeeping accounts affectedof of Value expiry item sale / Protected Entry or Transaction protected Asset / Liability Effected as resultderivative contract date status Name Amunt THUS$ entry Name Amount Effected Non- Effected
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S CCTE 473 II 2004 FUEL PRICE C FUEL PURCHASE 473 473 FUEL PURCHASE 0 0 0S CCTE 851 II 2004 FUEL PRICE C FUEL PURCHASE 851 851 FUEL PURCHASE 0 0 0S CCTE 879 II 2004 FUEL PRICE C FUEL PURCHASE 879 879 FUEL PURCHASE 0 0 0S CCTE 2.936 II 2004 FUEL PRICE C FUEL PURCHASE 2,936 2,936 FUEL PURCHASE 0 0 0C CCTE 42.977 II 2004 FUEL PRICE C FUEL PURCHASE 42,977 42,977 FUEL PURCHASE 0 0 0C CCTE 5.948 I 2004 FUEL PRICE C FUEL PURCHASE 5,948 5,948 FUEL PURCHASE 0 0 0C CCTE 5.948 I 2004 FUEL PRICE C FUEL PURCHASE 5,948 5,948 FUEL PURCHASE 0 0 0C CCTE 17.550 I 2004 FUEL PRICE C FUEL PURCHASE 17,550 17,550 FUEL PURCHASE 0 0 0INTERESTRATE COLLAR CCTE 28.600 I 2007 7.09% INTEREST RATE C SHIP CHARTER 28,600 25,000 ACCOUNT PAYABLE 21 -1 0INTEREST RATE COLLAR CCTE 28.600 III 2007 7.09% INTEREST RATE C SHIP CHARTER 28,600 26,200 ACCOUNT PAYABLE 400 -1 0INTERESTRATE COLLAR CCTE 28.600 IV 2007 7.09% INTEREST RATE C SHIP CHARTER 28,600 26,200 ACCOUNT PAYABLE 941 -1 0INTERESTRATE COLLAR CCTE 28.600 I 2008 7.09% INTEREST RATE C SHIP CHARTER 28,600 27,400 ACCOUNTS PAYABLE 851 -851 0INTEREST RATE COLLAR CCTE 28.600 II 2008 7.09% INTEREST RATE C SHIP CHARTER 28,600 27,400 ACCOUNTS PAYABLE 584 -584 0INTERESTRATE COLLAR CCTE 28.600 IV 2008 7.09% INTEREST RATE C SHIP CHARTER 28,600 28,600 ACCOUNTS PAYABLE 0 0 0INTERESTRATE COLLAR CCTE 28.600 IV 2008 7.09% INTEREST RATE C SHIP CHARTER 28,600 28,600 ACCOUNTS PAYABLE 0 0 0INTERESTRATE COLLAR CCTE 70.590 III 2004 7.09% INTEREST RATE C NEDSHIP LOAN 70,590 48,360 ACCOUNTS PAYABLE 743 -3 0
Contrac Descriptions Value Type Type Contract Due or Specific Purchase of the Bookkeeping accounts affectedof of Value expiry item sale / Protected Entry or Transaction protected Asset / Liability Effected as resultderivative contract date status Name Amunt THUS$ entry Name Amount Effected Non- Effected
25. Contingencies and Restrictions
A) Compañía Sud Americana de Vapores S.A.
a.1. Guarantees granted
On July 24th, 1997, the Company granted a guarantee letter in favor of its subsidiary Inversiones Nuevo Tiempo S.A., Panama,to cover a line of credit for US$ 150,000 thousand contracted with a syndicate of banks led by Nedship Bank (America) N.V.This line of credit was used to finance investments required by the Company’s subsidiaries. On April 26th, 2002, a semi-annualrepayment program was agreed, that meant the reduction of the maximum amount of the credit to US$ 95,000 thousand.During 2003, the Company made three voluntary payments for a total amount of US$ 74,000. The amount drawn at December31st 2003 is US$ 5,000 thousand (US$ 87,000 thousand, in 2002) out of a maximum of US$ 71,000 thousand (US$ 95,000thousand, in 2002).
On July 20th,1999, Compañía Sud Americana de Vapores S.A. gave a guarantee letter to its subsidiaries Bureo Shipping Co.S.A., Maule Shipping Co. S.A. and Malleco Shipping Co. S.A. to cover a line of credit for US$ 62,500 thousand from asyndicate of international banks led by Nedship Bank (America) N.V. This line of credit was used to finance ship purchases byeach of these subsidiaries. The ships acquired by Malleco Shipping Co S.A. and Maule Shipping Co. S.A. was sold in thesecond half of 2000 and the respective debts were repaid. The loan of Bureo Shipping Co. S.A. remained outstanding, with abalance of US$ 21,956 thousand at December 31st, 2002. At December 31st, 2003, this line of credit has been reduced to US$20,108 thousand and the direct debtor, Bureo Shipping Co.S.A. has provided a ship mortgage over the MV Toltén, whose bookvalue at December 31st, 2003 is US$ 31,463 thousand.
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With respect to the transaction mentioned in the preceding paragraph, Compañía Sud Americana de Vapores S.A. has guaranteedan interest rate hedge contract for US$ 62,500 thousand signed by the subsidiaries Bureo Shipping Co. S.A., Maule ShippingCo. S.A. and Malleco Shipping Co. S.A. with Nedship Bank (America) N.V., which is now limited to the contract of BureoShipping Co. S.A. for US$ 20,108 thousand.
Since 7th September 2000, Compañía Sud Americana de Vapores S.A. maintains a bank guarantee, through the Bank of America,in favor of the European South Pacific Magellan Conference for the purpose of ensuring fulfillment of their financial commitments.The guarantee figure amounted to 30,000 pounds sterling.
On 31st January 2003, Compañía Sud Americana de Vapores S.A. issued a bank guarantee, through the Scotiabank – SudAmericano, in favor of the “Minera Los Pelambres” for the purpose of ensuring fulfillment of the financial commitments. Theguarantee figure amounted to Ch$147,800,000 (US$ 202 thousand), expiring date 31st March 2005.
The Company approved a project for the acquisition of 50% of four 3,100 Teus ships ordered from the shipyard StoczniaSzczecinska Nowa Sp. Z., Poland. The other 50% will be maintained by the German partner Peter Döhle Schiffarts KG. In2003, the first ship was sold, and it remains pending the delivery of three ships in February 2004, November 2004 and February2005. The cost price is payable on the delivery of each ship, CSAV having to contribute its 50% share.
The total investment of these three vessels amounted US$ 105,600 thousand in which either CSAV or any of its subsidiarieswill acquire 50% of it with the guarantee of CSAV.
The Company, through its subsidiary Brunswick Investment Co. Inc. and with the guarantee of CSAV, has also signed twoshipbuilding contracts with China Shipbuilding Corporation (CSBC) of Taiwan both related to two types of ships:
a) Three 4,050 Teu ships to be delivered successively between April 2005 and December 2006.
b) Three 5,500 Teu ships to be delivered successively between December 2004 and October 2006.
CSAV guarantees to the shipyard all the obligations of its subsidiary Brunswick Investment Co. Inc.
On the other hand, Peter Döhle Schiffahrts KG has signed a similar contract with the same shipyard.
The two transactions mentioned with the CSBC shipyard represent a total investment of US$ 562,500 thousand.
Together with the vessels delivery, they will be hand over to the companies in which Brunswick Investment Co. Inc. and PeterDöhle Schiffahrts KG participate in equal property (ownership).
To finance the acquisitions from Stocznia Szczecinska Nowa Sp. Z., Poland, shipyard and China Shipbuilding Corporation(CSBC), Taiwan, there have been arranged with HSH Nordbank long-term loans to be drawn on the delivery of each vessel fora value of up to 90% of these investments, where the total amount involved is US$ 664,500 thousand. The Company and PeterDöhle Schiffahrts-KG, each acting through one of its subsidiaries, should finance the other 10% with their own funds, that isUS$ 34,925 thousand each one.
As part of these financing arrangements, the Company is obliged to give its joint and several guarantee for its subsidiaries, onequal conditions to its partner Peter Döhle Schiffahrts-KG, in favor of HSH Nordbank AG, Hamburg, Germany to cover therespective loans. This guarantee will be, in each case, for the equivalent of 10% of the cost of the respective ship, whichpercentage will be increased in 20% to cover interest and expenses, making a total of 12% of the cost of each ship. Thispercentage, in the case of some of these ships, could amount to 15%, that would rise to 18% of their value, being increased byinterests and expenses.
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On 14th February 2003, a credit contract was subscribed between Compañía Sud Americana de Vapores S.A. and DeutscheSchiffsbank for US$ 15,615 thousand.The total amount was obtained at the same date. Such loan was contracted to financethe acquisition of MV Mapocho. The update amount is US$ 15,055 thousand and the vessel book value is US$ 16,196thousand both values at 31st December 2003.
The Company has granted a ship mortgage in cover of its obligations with Deutsche Schiffsbank for up to a principal sum ofUS$ 15,615 thousand. It also signed a promissory note on the same day in favor of the creditor, conditionally assigned certainrevenues and insurance policies relating to the ship and granted a pledge over certain rights, credits, receivables and revenuesrelating to the ship.
On May 22nd, 2003, Compañía Sud Americana de Vapores S.A. granted its guarantee in favor of its subsidiary Pacific WinnerShipping Co. S.A., Panama, to cover a credit contract for US$ 12,500 thousand with Den Norske Bank ASA to be expended atthe same date. This loan was contracted to finance the acquisition of MV Pacific Winner which was afterwards acquired byCompañía Sud Americana de Vapores S.A. from its subsidiary setting up mortgage over this vessel in order to guarantee a loangiven by Den Norske Bank ASA to the subsidiary Pacific Winner Shipping Co. S.A.. The updated amount is US$ 11,990thousand and the vessel book value is US$ 12,041 thousand both values at 31st December 2003.
On August 1st, 2003, Compañía Sud Americana de Vapores S.A. guaranteed its subsidiary Tollo Shipping Co. S.A., Panama infavor of American Family Life Assurance Company of Columbus (AFLAC), agency in Japan, a loan for JPY 24,000,000,000(twenty-four billion Japanese yen), equivalent to USD 201,850,294 (two hundred and one million, eight hundred and fiftythousand, two hundred and ninety-four US dollars). This loan was directed to pay outstanding debts, to public acknowledgedinvestments and to projects that complement businesses of CSAV or its subsidiaries. The loan, with a term of 30 years, will befully payable in yen on final maturity. Interest will be paid in US dollars semi-annually. The loan may be prepaid, fully orpartially, after the fifteenth year on any interest payment date.
On July 18th, 2003, Compañía Sud Americana de Vapores S.A. guaranteed its subsidiary Tollo Shipping Co. S.A., Panama infavor of Goldman, Sachs & Co. in cover of one or more yen-dollar exchange rate hedge contracts over the term of the loanmentioned in the preceding paragraph, should the yen revalue over its present level and up to an agreed margin, through thepayment of an annual rate payable semi-annually on the interest-payment dates of the loan.The interest rate and cost of this exchange-rate cover for this financing is 6.3% annually.
The Company approved a plan to acquire three 6,500 Teu ships ordered to the shipyard Hyundai of Korea (Hyunday HeavyIndustries Co., Ltd.). The delivery of these vessels has the following schedule: a) the first two during the fourth quarter of 2006;b) the third, during the first quarter of 2007.
The total investment in this transaction (three vessels) is US$ 206,450 thousand, that will be acquired by the subsidiaryBrunswick Investment Co. Inc. with the guarantee of CSAV.
CSAV issued its guarantee in favor of the shipyard to cover the obligations of its subsidiary Brunswick Investment Co. Inc.
On the other hand, Peter Döhle Schiffarts KG has signed a similar contract with the same shipyard.
On delivery of the ships, they will be contributed to companies jointly owned by Brunswick Investment Co. Inc. and PeterDöhle Schiffarts KG.
For purposes of guaranteeing the issuance of payment guarantee issued by the Banco Bilbao Vizcaya Argentaria, S.A., LondonBranch in favor of Aassurance Foreningen Gard, for the account of Sud Americana de Vapores S.A. signed a standby letter ofcredit to be issued with BBVA Banco Bhif for a maximum sum of US$ 14,000 thousand. Validity period until 2nd March 2004.
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a.2 Documents in guarantee
The Company maintains a guarantee with the Chilean Treasury for US$ 3,013 thousand at 31st December 2003 (US$ 3,292thousand in 2002).
There are other insignificant guarantees that are not necessary to mention for the interpretation of these financial statements.
b) Other guarantees
The Company guarantees that an insurance policy will be taken out making it possible to obtain the guarantees which the U.S.government requires for domestic transportation of goods by subsidiaries Companhia Libra Navegaçao, Montemar MarítimaS.A. and Norasia Container Lines Ltd.
On November 21, 2003, Compañía Sud Americana de Vapores S.A. guaranteed the obligations of its subsidiary CorvinaShipping Co. S.A. to indemnify or provide funds to cover 50% of any amounts payable or collectable by any of DrylogBulkcarriers Ltd., Drylog Ltd. or Churchill Investments Corporation Ltd. under their respective guarantees of the obligations ofthe Panamanian company 50% owned by Corvina Shipping Co. S.A., Dry Bulk Handy Holding Cinc., under (i) a loan grantedby HSH Nordbank AG for up to US$ 9,102,096 and (ii) a sale contract with respect to the ships Magnes and Virgo for Th¥906,602 and US$ 28,335 thousand.
c) Other legal contingencies
The Company is the subject of various lawsuits and arbitrations related to cargo transport and damages, and these are coveredby insurance. Sufficient provisions are held to cover the amounts of deductibles.
The Company, where credits currently held with private banks, both in local and foreign currency, are concerned, is tied tostandard covenants for this type of transactions. In relation to the financial statements referred to as at 31st December 2003 theCompany has complied with these convenants.
d) Restrictions on negotiations or financial indicators
d.1) Nedship Bank line of credit US$ 71,000 thousand – a) Financial indebtedness will not exceed 100% Tangible Net Worth b)Tangible Net Worth not less than US$ 350,000 thousand c) Maintain a free liquid Asset minimum of US$ 50,000 thousand(Available, Time deposits and Negotiable instruments). Indicators were calculated based on consolidated financial statements.
d.2) Nedship Bank line of credit US$ 20,108 thousand – a) Net financial indebtedness will not exceed 120% Tangible NetWorth b) Tangible Net Worth not less than US$ 350,000 thousand c) Maintain a free liquid Asset minimum of US$ 50,000thousand (Available, Time deposits and Negotiable securities). Indicators were calculated based on consolidated financialstatements.
d.3) Commitments with the public (Readjustable Bonds) UF 1,950,000 – a) Assets, free of any type of lien, must always be atleast 1.3 times the outstanding amount of the total financial liabilities with no guarantees held by the issuer b) Indebtednesslevel on an individual level whereby the Financial Indebtedness / Total Net Worth does not exceed 1.0 times. Likewise, a levelof indebtedness on a consolidated level must be maintained where the relationship Consolidated Financial Indebtedness /(Total Net Worth + Minority Interest) must not exceed 1.2 times c) Minimum individual and consolidated Net Worth US$350,000 thousand.
d.4) American Family Life Assurance Company of Columbus (AFLAC) contract of credit US$ 201,850 thousand – a) Interestcoverage ratio (EBITDA / Net Interests) must not be less than 2.5 b) Leverage ratio must not be greater than 1.0 c) MinimumCash Level (Available, Time Deposit and Negotiable Instruments) must not be less than US$ 50,000 thousand.
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d.5) Den Norske Bank contract of credit US$ 12,500 thousand – a) Tangible Net Worth will not be less than US$ 350,000thousand and it will increase quarterly with an amount of 50% of the net income for the year b) Financial indebtedness to theTangible Net Worth should be smaller than 1.0 c) Maintain minimum balance of US$ 50,000 thousand in cash short termdeposit and marketable securities.
In addition, the credits and bonds obliges the Company to comply with certain affirmative restrictions, such as abiding by thelaw, payment of taxes, insurance coverage and other similar, and also compliance with certain negative restrictions, such as noliens are permitted, except when authorized by the contract, no mergers with companies except when authorized or no sales offixed assets. The Company has fully complied with these restrictions or covenants.
B) Corvina Shipping Co. S.A.
Bureo Shipping Co. S.A. maintains a mortgage on M/V Toltén in favor of Nedship Bank (America) NV, guaranteeing the lineof credit mentioned in note 25 a.1. The book value at 31st December 2003 of M/V Toltén was US$ 31,463 thousand(US$ 34,099 thousand in 2002).
C) Odfjell y Vapores S.A.
c.1 The following mortgages have been established:
c.1.1) First priority naval mortgage on MT Bow Andes guaranteeing the obligations assumed by Odfjell y Vapores Ltd. withDen norske Bank ASA, Norway up to US$ 10,000 thousand. At December 31st 2003, the effective debt with Den norske BankASA amounts to US$ 3,750 thousand.
c.1.2) Second priority naval mortgage on MT Bow Andes guaranteeing the credit given by Odfjell y Vapores Ltd. to Odfjelly Vapores S.A. in the amount of US$ 16,000 thousand equivalent to the price of the vessel. The debt amounts to US$ 5,000thousand at December 31st 2003.
c.1.3) First priority naval mortgage on MT Bow Pacifico guaranteeing the obligations assumed by Odfjell y Vapores Ltd. withDen norske Bank ASA, Norway and Deutsche Schiffsbank Aktiengesellschaft, Germany up to US$ 10,000 thousand. AtDecember 31st 2003, the effective debt with banks amounts to US$ 2,250 thousand.
c.1.4) Second priority naval mortgage on MT Bow Pacifico guaranteeing the credit given by Odfjell & Vapores Ltd. to Odfjelly Vapores S.A. in the amount of US$ 13,000 thousand. At December 31st 2003, the effective debt amounts to US$ 2,438thousand.
c.2. Also, the following other guarantees have been granted:
c.2.1) Joint and several bond and special guarantee endorsement guaranteeing the credit taken out by Odfjell & Vapores Ltd.with Den norske Bank ASA, Norway and Deutsche Schiffsbank Aktiengesellschaft, Germany up to US$ 10,000 thousand.
c.2.2) In order to guarantee due fulfillment of the obligations and liabilities assumed by the contract for maritime transportationof sulfuric acid between Corporación Nacional del Cobre (Codelco) and Odfjell y Vapores S.A., the latter have provided aperformance bond in favor of Codelco-Chile for US$ 250 thousand, expiring date 31st January 2004.
D) Tollo Shipping Co. S.A.
d.1. The following guarantees in favor of subsidiaries and associates:
d.1.1. Tollo Shipping Co. S.A. gave its guarantee in favor of DvB Group Merchant Bank (Asia) Ltd. on January 29th, 2001 tocover up to US$ 250 thousand of the obligations of its associate company Tilbury Shipping Inc. with respect to the acquisitionof the ship Alcem Lugait.
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d.1.2. It also has a guarantee in favor of DvB Group Merchant Bank (Asia) Ltd. dated January 29th, 2001 in cover of theobligations of its associate company Emblem Shipping Inc. with that bank for up to US$ 250 thousand with respect to theacquisition of the ship Alcem Calaca
d.1.3. Tollo Shipping Co. S.A. has given two guarantees to Den Norske Bank ASA, Norway, dated July 22, 1998 and May 10th,2001, to cover the obligations of its associate company Odfjell y Vapores Ltd. consisting of various loans of up to US$ 10,000thousand each with respect to the acquisition of the ships Bow Andes and Bow Pacífico respectively. At December 31st, 2003,the balance outstanding under these guarantees amounts to US$ 6,000 thousand.
d.1.4. Tollo Shipping Co. S.A. has given its guarantee for US$ 300 thousand to Nordea Bank Norge ASA, dated July 20th,2001, in cover of the obligations of its associate company Mattea Shipping Inc. with respect to the acquisition of the ship GlorySun.
E) American Transportation Group LLC
Holds valid for the development of their operations the following five credit letters:
e.1.1 By US$ 61.48 thousand to guarantee fulfillment contract of lease of the offices in New Jersey.
e.1.2 By US$100 thousand to guarantee their port operations in Miami.
e.1.3 By US$ 100 thousand, Custom Bond, so the United States Customs accept the access of the ships consigned to theCompany.
e.1.4 By US$ 25 thousand, in favor of the “Japan-Latin America Eastbound Conference” for the purpose of ensuring of theirfinancial commitments.
e.1.5 By MCAN 250, in favor of the “Societe des Alcools du Quebec” for the purpose of ensuring due fulfillment of theobligations by the contract for maritime transportation.
F) Sudamericana, Agencias Aéreas y Marítimas S.A.
Details of the Company’s contingencies and commitments as of 31st December 2003 is the following:
Guarantees Given
- Bank certificates of deposit in the name of Empresas Portuarias (Port Operation Companies), Inspección del Trabajo (LaborInspectorate), Fisco de Chile, Directemar (Maritime Territory and Merchant Marine General Directorate – Chilean Navy),Codelco Chile (Chilean Government Copper Corporation) and Refinería de Petróleos Con-Con S.A. for US$ 1,037 thousandin 2003 (US$ 1,300 thousand in 2002).
- Certificates of deposit in US Dollars in the name of Empresas de Valparaiso and San Antonio, Instituto Costarricense dePuertos del Pacífico (2003); Dirección Regional de Aduanas, Empresa Portuaria de Arica and IATTA CASS Chile (2002) forUS$ 1,247 thousand in 2003 (US$ 307 thousand in 2002).
- Certificates in deposit issued by Banco Santander Santiago taken on behalf of the subsidiary Cosem Ltda. in favor of Inspec-ción del Trabajo (Labor Inspectorate) of Arica, Antofagasta, Iquique, Coquimbo, Valparaíso, San Antonio, Puerto Aysén –Chacabuco and Punta Arenas, to guarantee the obligations as a wharfage company for a total of UF 25,050, expiring date 31stMarch 2004.
- Certificates in deposit issued by Banco Santander Santiago taken on behalf of the subsidiary Saam Extraportuarios S.A. infavor of Servicio Nacional de Aduanas, to guarantee the obligations as a warehouse owner for a total of UF 18,000, expiringdate 31st March 2004.
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- Guarantee in favor of Banco Crédito e Inversiones, SAAM being the backer, guarantor and joint and several co-debtor for upto US$ 5,466 thousand endorsing guarantee bonds to the correct accomplishment of the contract on the part of San AntonioTerminal Internacional S.A., issued in favor of Empresa Portuaria San Antonio, expiring date 30th April 2004.
- Guarantee in favor of Banco de Crédito e Inversiones, SAAM being the backer, guarantor and joint and several co-debtor forup to US$ 7,059 thousand endorsing guarantee bonds to the correct accomplishment of the contract on the part of San VicenteTerminal Internacional S.A., issued in favor of Empresa Portuaria San Vicente, expiring date 30th April 2004.
- Guarantee in favor of Banco de Créditos e Inversiones, SAAM being the backer, guarantor and joint and several co-debtor forup to US$ 3,563 thousand endorsing guarantee bonds to the correct accomplishment of the contract on the part of AntofagastaTerminal Internacional S.A., issued in favor of Empresa Portuaria Antofagasta, expiring date 31st April 2004.
- Guarantee in favor of Banco de Créditos e Inversiones, SAAM being the backer, guarantor and joint and several co-debtor forup to US$ 5,000 thousand endorsing bonds guaranteeing the execution of obligatory works on the part of subsidiary AntofagastaTerminal Internacional S.A., issued in favor of Empresa Portuaria Antofagasta, expiring date 31st August 2004 and 1st November2005.
- Guarantee in favor of Banco de Santander Santiago, SAAM being the backer, guarantor and joint and several co-debtor for upto US$ 6,000 thousand endorsing bonds guaranteeing the execution of obligatory works on the part of subsidiary IquiqueTerminal Internacional S.A., issued in favor of Empresa Portuaria Iquique, expiring date 1st September 2005.
- Guarantee in the name of International Finance Corporation (IFC), extended to guarantee long-term credit facilities for SanAntonio Terminal Internacional S.A. (STI);
a) Support Agreement: Obliges the parties to contribute funds to STI in case of liquidity shortfall of a maximum ofUS$ 10,983 thousand and restricts the transfer of STI shares.
b) Put and Call and Tag-Along Rights Agreement: Includes buying and selling options in respect of the IFC and STI shares andcertain restrictions on the transfer of shares.
c) Pledge on shares: Contains the commercial pledge on the shares issued by STI owned by, or which could be acquired in thefuture by SAAM S.A.
- Guarantee in favor of Santander Investment International Bank Inc. of Puerto Rico, SAAM being the backer, guarantor andjoint and several co-debtor for up to US$ 18,000 thousand for credit facilities granted to San Vicente Terminal InternacionalS.A., expiring date 28th March 2006.
- Guarantee in favor of Citibank, N.A. New York Branch, SAAM being the backer, guarantor and joint and several co-debtorfor up to US$ 2,550 thousand for credit facilities granted to subsidiary Inversiones Alaria S.A., expiring date 30th September2004.
- Guarantee in favor of Citibank, N.A. New York Branch, SAAM being the backer, guarantor and joint and several co-debtorfor up to US$ 1,500 thousand for the issuance of standby letter of credit on the part of Inversiones Alaria S.A. to AfianzadoraSofimex S.A., expiring date 30th November 2006
- Stand by letter of credit issued by the Banco Citibank NA New York Branch of Citibank (Costa Rica) for US$ 246 thousand,expiring date 15th June 2004, to endorse fulfillment guarantee in favor of the Instituto Costarricense de Puertos del Pacífico.
- Stand by letter of credit issued by Banco Santander for loans granted to subsidiaries Saam Remolques S.A. de C.V. in favorof Banco Santander Central Hispano N.Y. for US$ 8,043 thousand, expiring date 1st November 2005.
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- Stand by letter of credit issued by Banco Santander Santiago for credit line to lease back granted to subsidiary Saam Remol-ques S.A. de C.V. in favor of Banco Santander Mexico for US$ 14,227 thousand, expiring date 30th June 2008.
- Stand by letter of credit issued by the Banco Santander Santiago in favor of Banco Rio de la Plata, Argentina, for US$ 500thousand, expiring date 31st July 2004 for issuance of guarantee letter for bond ordered by Court of General Arbitration ofBuenos Aires
G) IMPSA S.A.
Guarantee given:
- A mortgage over the property in Valdivia, Chumpullo area, sign on September 30th, 2002 in favor of MASISA S.A., in orderto guarantee the full and due payment of purchase price.
- Mortgage in favor of Impsa Ltda. to guarantee the balance of the sale price of real estate at Avenida Barros Luco 1683, SanAntonio.
H) Saam Extraportuarios S.A.
Lawsuits :
- Case No. C-1741-2001, “Cuadros /SAAM Extraportuarios”, 70th Civil Court, Valparaíso. Complaint regarding extra-con-tractual liability, in transporter / carrier accident when transferring Container (May 2000). Amount claimed isCh$ 52,000 thousand.
I) Cosem Ltda.
Lawsuits :
The litigations in which the company is the defendant are in process and can be summarized as follows:
- Cepeda and others vs. SAAM S.A., Cosem Ltda. and CSAV S.A. for a sum of US$ 250 thousand. Proceedings in the secondinstance before the Valparaíso court. There are insurance cover for this contingency.
- C. Vinnen & Co, (GMBH) vs. Cosem Ltda., sum demanded Ch$105,000 thousand. The plaintiff has already presented itsdemand which we opposed with a dilatory plea. The court has notified the plaintiff of this action which is still not answered. Itis still difficult to make an evaluation but we believe that Cosem Ltda. is in a good position to discuss the lack of argumentssupporting the demand.
- Nowadays it is in process before the second Labor Court in Valparaíso a claim for damage compensation in an ordinary Laborlawsuit, brought by Mr. Luis Ibaceta Casanga, Case No. 5414-2000. It is based on the injuries suffered by the occasional portlaborer, in an occupational accident which occurred during a container discharge procedure in the port of Antofagasta. The caseis still to be resolved. The quantum of the suit amounts to Ch$ 90,000 thousand.
- On 2nd May, 2002 before the second Labor Court of Valparaíso a suit has been filed by Aurora Contreras Ugalde and others,Case No. 5891-2001, members of what was called Cosem Internal Stock Exchange, who claim the payment of a supposedindemnity paid to other workers who were in a similar position to the plaintiffs. In their suit they request payment of Ch$ 400thousand for each plaintiff, which total 38 workers, the payment of allowances, plus interests and readjustments, as well as theexpenses incurred in the lawsuit. At present, it is in the judicial sentence step.
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J) Iquique Terminal Internacional S.A.
Guarantees given:
- Certificates in deposit issued by Banco de Chile in favor of Empresa Portuaria Iquique, to guarantee fulfillment of theconcession contract for US$ 2,040 thousand, expiring date 31st October 2004.
- Certificate in deposit issued by the Banco Santander Santiago in favor of Empresa Portuaria Iquique, to guarantee full andexpedite execution of the obligators contracts mentioned in section 6.31 of the concession contract for US$ 10,000 thousand,expiring date 1st September 2005.
- Certificate in deposit issued by the Corpbanca taken for account of the subsidiary Muellaje ITI S.A. in favor of InspecciónProvincial del Trabajo of Iquique to guarantee correct fulfillment of the labour and social security contributions for UF 3,938,expiring date 31st March 2004.
- Certificate in deposit issued by the Corpbanca in favor of Servicio Nacional de Aduanas (Chilean Customs) to guarantee fullperformance as authorized warehouse operator for UF 6,000, expiring date 31st March 2004.
- Chattel mortgage in favor of Banco de Crédito e Inversiones in respect of two Gottwald cranes, in order to guarantee a banksurety for long-term credit arrangements granted by Bayerische Hypo-Und Vereinsbank AG Munich, for an outstandingamount of US$ 1,964 thousand, expiring date 30th March 2006.
K) Antofagasta Terminal Internacional S.A.
- Certificate in deposit issued by Banco de Crédito e Inversiones in favor of Empresa Portuaria of Antofagasta, to guaranteefull and expedite execution of the obligators contracts mentioned in section 6.31 of the concession contract for US$ 4,000thousand, expiring date 1st November 2005.
- Certificate in deposit issued by Banco de Crédito e Inversiones in favor of Empresa Portuaria of Antofagasta, to guarantee theperformance of the concession contract for a total amount of US$ 3,563 thousand, expiring date 30th April 2004.
- Certificate in deposit issued by Banco de Crédito e Inversiones in favor of Empresa Portuaria of Antofagasta, to guarantee thepayment of the Established fine in the concession contract for a total amount of US$ 1,000 thousand, expiring date 31st August2004.
- Certificate in deposit issued by Banco de Crédito e Inversiones in favor of Inspección Provincial del Trabajo of Antofagastato guarantee correct fulfillment of the labour and social security contributions for UF 880, expiring date 31st March 2004.
- Certificate in deposit issued by Banco de Crédito e Inversiones in favor of Servicio Nacional de Aduanas (Chilean Customs)to guarantee full performance as authorized warehouse operator for UF 6,000, expiring date 31st March 2004.
Guarantees received:
- Guarantees of suppliers for due performance of conveyor belts design and manufacture contracts, civil works and others fora total of US$ 469 thousand.
L) Aquasaam S.A.
Guarantees given:
Land mortgage and property constructions in Quinched sector (without address number), made up on August 28th 2002, infavor of Banco Chile, to guarantee the fulfillment of all financial operations that are carried out in the future.
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- Pledge over assets (shed, net workshop, net washing machine, “riles” treatment machine and a press residues system) in favorof Banco de Chile to cover the guarantee of due payments of loans made to the company at different times for a total ofU.F.27,406 plus interest.
M) Inversiones Alaria S.A.
Guarantees given:
- Stand by letter of credit issued by Citibank N.A. New York Branch in favor of Citibank N.A. Nassau Branch guaranteeing theobligations assumed with the BankBoston for US$ 395 thousand, expiring date 15th July 2004.
- Stand by letter of credit issued by Citibank N.A. New York Branch in favor of Citibank N.A. Nassau Branch guaranteeing theobligations assumed with the Banco Continental for US$ 400 thousand, expiring date 15th July 2004.
- Stand by letter of credit issued by Citibank N.A. New York Branch in favor of Citibank N.A. Nassau Branch guaranteeing theobligations assumed with the Banco de Continental of Peru for US$ 1,000 thousand, expiring date 30th September 2004.
- Stand by letter of credit issued by Citibank N.A. New York Branch in favor of Afianzadora Sofimex S.A. guaranteeing thecontractual obligations assumed by Saam Remolcadores S.A. de C.V. with Pemex Exploración y Producción for US$ 1,500thousand, expiring date 30th November 2006.
N) Ecuaestibas S.A.
Guarantees given:
- Guarantee issued by Banco Citibank NY in favor of the Dirección Nacional de Aduanas for staffing and stripping activity foran amount of US$ 50 thousand, expiring date 11th December 2004.
- Guarantees issued by Citibank, New York in favor of the Chilean customs authority to cover the payment of duties on fixedassets that are re-exportable (tugs, launches and cranes) for a total of US$ 965 thousand with different maturities extendingthrough 2004.
- Pledge over the following port equipment: Taylor container carrier, serial number SJ3-19414; Taylor container carrier, serialnumber P-1515-1; Taylor container carrier, serial number SK2 25491; Caterpillar container carrier, serial number 9SC00103;Caterpillar container carrier, serial number 72Y01994.
Lawsuits :
- The lawsuit brought by the Cedibra company before the Second Court for action under administrative law in Guayaquil,requesting annulment of the resolution taken by APG in the call for bids for pilotage support services within the jurisdiction ofthe entity referred to, entailing annulment of the award in favor of the Ecuadorian subsidiary Ecuaestibas in which the lawsuitwas contested as injured third parties. To date there have been no changes to record.
- Demands made with respect to pension claims by former stevedores against 17 shipping lines including Ecuaestibas S.A.. Inour lawyer’s opinion, the employers of the stevedores are the lines jointly with the agency responsible so should Ecuaestibas berequired to pay the amounts claimed in the demands, it would be entitled in turn to claim the amounts involved from the line.
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-Demand made by Cía. Righetti for the payment of the balance outstanding under a contract for refurbishing the company’shead office. In this case, that company did not comply with the terms of the contract thus enabling Ecuaestibas to make use ofits contractual rights in the case of default. Amount of the demand approx. S$ 65,000,000 sucres plus interest and legal costs(around US$ 13 thousand).The case continues.
O) Serviagencial S.A.
Guarantees:
- Guarantees issued by Citibank and Cía de Seguros Bolívar in favor of the Chilean customs authority covering the payment ofcustoms duties on the Gottwald crane imported temporarily as a re-exportable asset, for a total amount of US$ 365 thousand,expiring date September 27th, 2004.
Lawsuits :
- The company is being sued by the Cuban company, Empresa Navegación Caribe. Where a compensation recoverable in courtfor damage, injury or harm suffered, caused by reckless or impudent activities. The amount of the demand isUS$ 800 thousand. The lawsuit is currently in the annulment stage where our lawyer is confident that the outcome will befavorable to our interests.
P) Saam Remolques S.A. de C.V.
Guarantees given:
- Guarantee issued in favor of Administradoras Portuarias Integrales of Veracruz, Altamira, Tampico, Lázaro Cárdenas andTuxpan guaranteeing fulfillment of the concession contract for the total amount of Mex$ 7,385,380.
Q) Saam Do Brasil Ltda.
Lawsuits :
- Labour lawsuits; at the present time the Company has 14 current litigations with Saam Brazil ex–workers, these cases beingnegotiated through the “Prata Advocacia” lawyer’s office, for the sum of US$ 100 thousand.
R) Marsud Ltda.
Lawsuits :
- “Los Trabajadores Portuarios de Itajaí” (Itajaí Port Workers) pending litigation, refers to art. 14 of the Instituto Nacional deRiesgo (National Risks Institute), making an over-remuneration of 40% extra to work under risk conditions, obligatory. Thisclaim was presented in September of 2001 to several companies, which around 200 port workers took advantage of. In thelawyers’ opinion, there are good possibilities of success but we have insufficient information to place a value on the lawsuit.
S) Kios S.A.
Guarantees given:
- American treasury bonds of Uruguay handed over as guarantee in favor of the National Port Administration to guarantee the obligations asport operator in Uruguay as per Decree No. 413 dated 1st September 1992, US$ 70 thousand.
- Ship mortgage in favor of Banco de la República Oriental del Uruguay over the Pampero tugboat to cover a loan ofUS$ 180 thousand which is now repaid. The mortgage has not been released however in order to cover a line of credit to use in case of need.
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Direct Guarantees (in thousands U.S. Dollars – US$)
Indirect Guarantees (in thousands U.S. Dollars – US$)
Deutsche Schiffsbank Compañía Sud Americana de Vapores .S.A Nil Mortgage Ship 16,196 15,055 1,120 Ship 1,120 Ship 1,120 VesselDen Norske Bank ASA Pacific Winner Shipping Co. S.A. Subsidiary Guarantee / Mortgage Ship 12,041 11,990 1,020 Ship 1,020 Ship 1,020 Vessel
Nedship Bank Inversiones Nuevo Tiempo S.A. Subsidiary Guarantee 5,000 87,000Nedship Bank Bureo Shipping Co. S.A. Subsidiary Guarantee/Mortgage Ship 31,463 20,108 21,956 1,848 Ship 1,848 Ship 1,848 ShipDen Norske Bank ASA Odfjell y Vapores S.A. Subsidiary Mortgage Ship 4,919 3,750 5,000 1,250 Ship 1,250 Ship 1,250 ShipDen Norske Bank ASA Odfjell y Vapores S.A. Subsidiary Mortgage Ship 11,567 2,250 7,750 1,500 Ship 750 Ship ShipAmerican Family Life AssuranceCompany of Columbus Tollo Shipping Co. S.A. Subsidiary Guarantee 201,850
Creditor of the Guarantee Debtor Assets in Guarantees Pending balance as of Realized Guarantees
Name Relationship Type of Guarantee Type Book Value 31-12-2003 31-12-2002 31-12-2004 Activos 31-12-2005 Activos 31-12-2006 Activos
Creditor of the Guarantee Debtor Assets in Guarantees Pending balance as of Realized Guarantees
Name Relationship Type of Guarantee Type Book Value 31-12-2003 31-12-2002 31-12-2004 Activos 31-12-2005 Activos 31-12-2006 Activos
26. Bail Received from Third Part
There were no bail received from third part in 2003 and 2002.
27. Local and Foreign Currencies (in thousands U.S. Dollars – US$)
Deferred taxes Chilean Pesos 3,421 3,350US Dollar 1,149 832
Other current assets Chilean Pesos 8,640 1,256US Dollar 8,102 6,182Other 351 653
Fixed AssetsLand Chilean Pesos 35,774 29,256
US Dollar 3,481 3,478Buildings and infrastructure works Chilean Pesos 26,514 21,565
US Dollar 16,444 13,971Machinery and equipments Chilean Pesos 52,210 43,810
US Dollar 327,514 320,661Other fixed assets Chilean Pesos 4,113 1,548
US Dollar 8,139 2,316Higher value of fixed assets from technical appraisal US Dollar 0 114Accumulated depreciation Chilean Pesos -36,493 -25,664
US Dollar -165,587 -148,748Other AssetsInvestments in related companies Chilean Pesos 65.582 28.970
US Dollar 133.560 130.459Investments in other companies Chilean Pesos 47 73
US Dollar 6.559 5.575Goodwill Chilean Pesos 307 276
US Dollar 15.361 14.578Negative goodwill Chilean pesos -794 -1.359
US Dollar -4.617 -5.205Long-term receivables Chilean Pesos 4.774 4.548
US Dollar 9.632 8.908Due from related companies – Long term US Dollar 5.997 6.073Intangibles Chilean Pesos 1 81
US Dollar 82.653 82.165Amortization Chilean Pesos 28 -3
US Dollar -30.064 -27.182Other Chilean Pesos 591 3.622
US Dollar 151.672 47.567Other 6 4
Total AssetsChilean Pesos 230.469 142.894US Dollar 976.479 908.696Euro 51.441 12.780Other 19.583 14.936Yen 16 160
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Current Liabilities (in thousands U.S. Dollars – US$)
Obligations with bank Chilean Pesos 113 431US Dollar 3 5.6
Obligations with bank - long-term US Dollar 6.398 2.9 18,479 3.3 11,080 2.9 7,032 3.3Current maturities (bonds) due within one year US Dollar 81,398 7.3750
Chilean Pesos 875 716Current maturities of long-term due within one year US Dollar 20 9Dividends payable Chilean Pesos 5,902 3,285 420Account payable Chilean Pesos 9,041 12,063 855
US Dollar 205,083 171,700 395Euro 3,646 16,712Yen 723Other 8,688 5,755
Notes payable US Dollar 15,867 165 11Sundry creditors Chilean Pesos 556 816 45
US Dollar 966 517 98Other 58 43
Due to related companies Chilean Pesos 3,479 816US Dollar 3,811 6,950 1,813 7.500
Annual average Annual average Annual average Annual averageAmount interest rate Amount interest rate Amount interest rate Amount interest rate
Item Currency 1-3 years 3-5 years 5-10 years More 10 years
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Long-term Liabilities 2003 (in thousands U.S. Dollars – US$)
Long-term Liabilities 2002 (in thousands U.S. Dollars – US$)
Obligations with bank US Dollar 13,838 2.53 12,976 2.53 37,364 2.53Chilean Pesos 590 6.2Yen 201,850 4.16
Current maturities (bonds) UF 55,564 6.4Due to related companies US Dollar 4,289 7.5Notes payable US Dollar 6Sundry creditors Chilean Pesos 423
US Dollar 387Provision Chilean Pesos 3,548 3,226 3,430 4,397
US Dollar 102Deferred taxes Chilean Pesos 2,067 113Other liabilities US Dollar 1,229Total Long-term Liabilities
US Dollar 19,851 12,976 37,364Chilean Pesos 6,038 3,339 4,020 4,397Yen 201,850UF 55,564
Obligations with bank US Dollar 43,031 3.22 46,414 3.22 18,111 3.22Current maturities (bonds) UF 45,436 6.4Notes payable US Dollar 27Sundry creditors Chilean Pesos 580
US Dollar 236Due to related companies Chilean Pesos 344
US Dollar 7,290 7.5 3,438 7.5Provision Chilean Pesos 1,416 2,877 5,946 850
US Dollar 668Deferred taxes Chilean Pesos 1,133Other liabilities US Dollar 1,830Total Long-term Liabilities
US Dollar 53,082 49,852 18,111UF 45,436Chilean Pesos 3,129 3,221 5,946 850
Annual average Annual average Annual average Annual averageAmount interest rate Amount interest rate Amount interest rate Amount interest rate
Item Currency 1-3 years 3-5 years 5-10 years More 10 years
Annual average Annual average Annual average Annual averageAmount interest rate Amount interest rate Amount interest rate Amount interest rate
Item Currency 1-3 years 3-5 years 5-10 years More 10 years
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28. Sanctions
During the periods 2003 and 2002, the Company, their directors and managers were no penalties by the Stock and InsuranceSuperintendent’s Office and other administrative entities.
29. Subsequent Events
a) The board, at its meeting held on January 22nd, 2004, with the unanimous decision of the assisting Directors accepted theresignation presented by Director Mr. Bernardo Larraín Matte.
b) Between December 31st, 2003 and the date of presentation of this report, there are no other events that could significantlyaffect the presentation and/or interpretation of Financial Statements of the Company.
30. The Environment
The Company and subsidiaries, due to the nature of its services, does not incur disbursements related with the improvementand/or reversion of productive procedures, verification and control over fulfillment of ordinances and laws relating to industrialprocesses and facilities and any others which could directly or indirectly affect environmental protection.
31. Directors' Remuneration
a) Compañía Sud Americana de Vapores S.A.
Profit sharing:
2003US$ 122.59 thousand to Mr. Ricardo Claro V., US$ 61.30 thousand each to Mr. Fernando Léniz C., Mr. Luis Alvarez M., Mr.Arturo Claro F., Mr. Patricio García D., Mr. Jaime Claro V., Mr. Baltazar Sánchez G., Mr. Christoph Schiess S., Mr. PatricioValdés P., Mr. Bernardo Larraín M. and Mr. Joaquín Barros F.
2002US$ 86.93 thousand to Mr. Ricardo Claro V., US$ 43.47 thousand each to Mr. Fernando Léniz C., Mr. Luis Alvarez M., Mr.Arturo Claro F., Mr. Patricio García D., Mr. Jaime Claro V., Mr. Baltazar Sánchez G., Mr. Christoph Schiess S., Mr. PatricioValdés P., Mr. Bernardo Larraín M. and Mr. Joaquín Barros F.
Meeting attendance fee:
2003US$ 4.37 thousand to Mr. Ricardo Claro V., US$ 0.30 thousand to Mr. Fernando Léniz C., US$ 2.18 thousand to Mr. LuisAlvarez M., US$ 1.68 thousand to Mr. Felipe Lamarca C., US$ 2.00 thousand to Mr. Arturo Claro F., US$ 2.18 thousand to Mr.Patricio García D., US$ 1.66 thousand to Mr. Jaime Claro V., US$ 1.83 thousand to Mr. Bernardo Larraín M., US$ 2.18thousand to Mr. Joaquín Barros B., US$ 1.72 thousand to Mr. Baltazar Sánchez G., US$ 1.86 thousand to Mr. Christoph SchiessS. and US$ 2.18 thousand to Mr. Patricio Valdés P.
2002US$ 3.16 thousand to Mr. Ricardo Claro V., US$ 1.59 thousand to Mr. Fernando Léniz C., US$ 1.58 thousand to Mr. LuisAlvarez M., US$ 1.75 thousand to Mr. Arturo Claro F., US$ 1.42 thousand to Mr. Patricio García D., US$ 1.42 thousand to Mr.Jaime Claro V., US$ 1.74 thousand to Mr. Bernardo Larraín M., US$ 1.27 thousand to Mr. Joaquín Barros B., US$ 1.75thousand to Mr. Baltazar Sánchez G., US$ 1.27 thousand to Mr. Christoph Schiess S. and US$ 1.58 thousand to Mr. PatricioValdés P.
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Committee attendance:
2003US$ 1.21 thousand to Mr. Fernando Léniz C., US$ 3.37 thousand to Mr. Luis Alvarez M., US$ 1.80 thousand to Mr. PatricioGarcía D and US$ 1.38 to Mr. Patricio Valdés P.
2002US$ 3.50 thousand to Mr. Fernando Léniz C., US$ 1.59 thousand to Mr. Luis Alvarez M. and US$ 1.58 thousand to Mr. PatricioGarcía D.
In respect of fees for work performed other than the duties of a Director, Mr. Jaime Claro V. was paid US$ 54.29 thousand (US$57.31 thousand in 2002).
Expenses for services commissions
In 2003 was paid US$ 12.18 thousand to Mr. Ricardo Claro V. (US$ 12.37 thousand in 2002) and US$ 4.03 thousand to Mr.Jaime Claro V. (US$ 0.85 thousand in 2002).
b) Directors of Sudamericana, Agencias Aéreas y Marítimas S.A.
The following amounts were paid to the directors of the company:
Profit sharing:
2003US$ 117.59 thousand to Mr. Víctor Pino T. and US$ 58.79 thousand each to Mr. Ricardo Claro V., Mr. Jaime Claro V., Mr.Manuel Grez M., Mr. Baltazar Sánchez G., Mr. Patricio Valdés P., Mr. Luis Alvarez M., Mr. Fernando Léniz C., Mr. PatricioGarcía D., Mr. Arturo Claro F. and Mr. Christoph Schiess S.
2002US$ 82.84 thousand to Mr. Víctor Pino T. and US$ 41.41 thousand each to Mr. Ricardo Claro V., Mr. Jaime Claro V., Mr.Manuel Grez M., Mr. Baltazar Sánchez G., Mr. Patricio Valdés P., Mr. Luis Alvarez M., Mr. Fernando Léniz C., Mr. PatricioGarcía D., Mr. Arturo Claro F. and Mr. Christoph Schiess S.
Meeting attendance fee:
2003US$ 1.91 thousand to Mr. Ricardo Claro V., US$ 4.21 thousand to Mr. Víctor Pino T., US$ 1.92 thousand to Mr. Luis AlvarezM., US$ 1.72 thousand to Mr. Arturo Claro F., US$ 2.11 thousand to Mr. Manuel Grez M., US$ 1.54 thousand to Mr. JaimeClaro V., US$ 1.92 thousand to Mr. Patricio García D., US$ 1.72 thousand to Mr. Baltazar Sánchez G., US$ 2.11 thousand toMr. Patricio Valdés P., US$ 0.56 thousand to Mr. Fernando Léniz C., US$ 1.54 thousand to Mr. Christoph Schiess S. and US$1.54 thousand to Mr. Felipe Lamarca C.
2002US$ 0.76 thousand to Mr. Ricardo Claro V., US$ 3.34 thousand to Mr. Víctor Pino T., US$ 1.67 thousand to Mr. Luis AlvarezM., US$ 1.52 thousand to Mr. Arturo Claro F., US$ 1.52 thousand to Mr. Manuel Grez M., US$ 1.38 thousand to Mr. JaimeClaro V., US$ 1.36 thousand to Mr. Patricio García D., US$ 1.67 thousand to Mr. Baltazar Sánchez G., US$ 1.67 thousand toMr. Patricio Valdés P., US$ 1.37 thousand to Mr. Fernando Léniz C. and US$ 1.52 thousand to Mr. Christoph Schiess S.
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32. Time Deposits (in thousands U.S. Dollars – US$)
The Main Company and their subsidiaries show under this item the following amount invested in banks and others, valorizedaccording to the criteria described in Note 2 g):
2003 2002Dresdner Bank New York 44,210Rabobank New York 11,500 5,401Credit Lyonnais Bank New York 7,400 27,909Bank of América New York 10,129 8,957Bank of América London 6,373 1,206Citibank New York 35,190 19,770Citibank Brazil 1,073 425Goldman Sachs - 13,868Brown Brothers USA ( 1) 30,590 30,270Banco Safra Brazil 207 1Julius Baer Switzerland ( 1 ) 30,589 32,194Ing Bank Holland 6,360 -Bradesco CDB Brazil 3,414 -Banco Santander USA - 2,604Banco Santander Santiago 31,278 -Banco Santander Mexico 450 1,800Banco de Chile 93 967ScotiaBank Sud Americano 472 -Banco Santander Hispano 1,802 -Corpbanca 406 -Total 177,326 189,582
(1) Investments in diverse financial products with a classification of AAA.
33. Prepaid Expenses (in thousands U.S. Dollars – US$)
31.12.2003 31.12.2002Bunkers stock 25,009 15,444Insurance 6,362 1,962Ship chartering 21,213 13,115Positioning of vessels and containers 2,632 3,955Operational expenses in progress 1,604 2,838Price coverage contracts for fuel premium 3,391 1,387Results from vessels underway 16,512 11,970Other 2,214 1,853Total 78,937 52,524
Luis Mariángel R. Patrick Horn G.Chief Accountant Senior Vice President
Administration and Finance
Ricardo de Tezanos Pinto D.General Manager
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RATIO ANALYSIS SUMMARY
1. Analysis of the Consolidated Financial Statements
BALANCE SHEET
At December 31st, 2003, total assets increased by US$ 198,522 thousand compared to December 31st, 2002 ending in US$1,277,988 thousand. This is mainly explained by increases in Current assets for US$ 46,575 thousand, Fixed assets for US$9,802 thousand and Other assets for US$ 142,145 thousand. The rise in Current assets was mainly due to increases in Tradeaccounts receivable for US$ 64,124 thousand and Prepaid expenses for US$ 26,413 thousand, increase in Available, Marketablesecurities and Time deposit for US$ 45,799 thousand. The net change in Fixed assets was basically due to the acquisition of theship Pacific Winner in the first quarter of 2003 and the sale of the ship Pacific Rider. The increase in Other assets was the resultof increase in related companies investments for US$ 39,713 thousand, as a consequence of the results obtained by the associatecompanies and increase in Other assets – others for US$ 101,076 thousand, in which their main variation corresponds toadvance payment for hull vessel building and investments in bonds.
Current liabilities declined by US$ 32,918 thousand compared to the year before, mainly due to the reduction in Bonds payablefor US$ 81,239 thousand, following the repayment in December 2003 of the outstanding Eurobonds. Accounts and Notespayable increased by US$ 36,446 thousand because of the greater activity and Unearned income by US$ 10,681 thousand.Long-term liabilities increased by US$ 165,772 thousand as a result of the increase in Borrowings from banks and financialinstitutions and an increase in debt in UF of Bonds payable long-term due to the peso revaluation, and a reduction in Notes andaccounts payable to related companies of US$ 6,783 thousand.
The Company’s equity increases by US$ 66,171 thousand compared to December 2002, mainly reflecting the results for theperiod, net of dividends paid.
STATEMENT OF INCOME
The result for the period is a net income for US$ 72,323 thousand, compared to income for US$ 36,778 thousand for the sameperiod of 2002.
Consolidated sales amounted to US$ 2,135,539 thousand, it represents an increase of 27% compared to December 2002, mainlyexplained for the growth in the traffics of line whose volumes increases 27%.
The Cost of sales of US$ 1,862,876 thousand showed a rise of 30% over the year before, in line with the greater volumes carriedand increases in fuel costs and ship charters. Fuel costs exceed those of the year before because of the sustained rises in oilprices due to the conflicts in the Middle East and Venezuela. With the ending of the conflicts, fuel prices remained high becauseof the increase in global activity and price agreements among the principal producers. The higher ship charter rates also havetheir origin in the increase in trading activity which generates an imbalance between the global supply and demand for shippingcapacity.
Administrative and selling expenses amounted to US$ 206,132 thousand slightly lower than 2002. The reduction in administrativeexpenses, in line with the efforts to reduce costs begun in 2002, help to compensate the sales commissions increase because ofhigher volumes carried.
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Taking all the above into account, Operating income is US$ 66,531 thousand, representing an increase of 92% over the previousyear. The following are the important factors behind this increase:
- The container traffics operated by CSAV and its subsidiaries Companhia Libra de Navegacao and Montemar Marítima inSouth America increased their volumes carried during 2003. The results however were below 2002 due to the increased costscommented on above which are not compensated by higher freight rates which remained depressed due to the overcapacity inmany of the traffics. With respect to CSAV’s special services, notable were the improved results of automobile carriers whichdoubled their operating income because of the increased activity in chartering own ships in the market.
- The east-west traffics operated by the subsidiary Norasia Container Lines Ltd. show an increase around 30% in the carriedvolumes in comparison with the previous year which together with the consistently increase in freight rates allowed to produceprofits with a substantial improvement in comparison with the losses shown in the previous year. Notable in this result was thestrength of trade between China and the rest of the world which quickly absorbed the ship over-capacity seen the previousperiod.
The subsidiary SAAM has continued to produce satisfactory and stable results which amounted to M$ 18,293,273 equivalent toUS$ 30,807 thousand in 2003, an increase of 10% in comparison with 2002 profit.
The non-operating result shows a reduction of US$ 1,474 thousand compared to 2002. This is mainly explained by a higher (net)income on Investments in related companies of US$ 12,117 thousand, particularly due to the better results produced by theassociate companies SKS OBO Holding and SKS OBO Shipping which operate dual-purpose OBO ships; but these were morethan offset by a reduction in (net) Other income/expenses of US$ 7,890 thousand due to reduced income from the amortizationof shipbuilding contracts; and an adverse change in Exchange differences of US$ 4.942 thousand, whose principal impact arosefrom the effects of the peso revaluation against the dollar on local currency liabilities.
Trends in the principal financial indicators at December 31st, 2003 are as follows:
LIQUIDITY INDICATORS
. Current ratio: 0.269 percentage points higher than at December 2002 due to the increase in current assets.
. Acid Test: Lower than December 2002, due to the reduction of available funds.
INDEBTEDNESS INDICATORS
-Debt: The debt ratio at December 2003 is higher than December 2002 as liabilities grew at a faster rate than shareholders’equity.
Short-term debt: this indicator fell because current liabilities during the year declined by US$ 32,918 thousand and total liabilitiesincreased by a greater proportion.
. Long-term debt: increased compared to December 2002 due to the net increase of long-term liabilities (new credits lesstransfers to short term and prepayment of credits) is lower to the increase of total liabilities.
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· Financial expense coverage: this increased compared to December 2002 because of the improved results.
PROFITABILITY INDICATORS
. Return on equity: this was higher than the previous period due to the better results in January – December 2003.
· Return on assets: this has also increased due to the improved results.
. Return on operating assets: operating income for US$ 66,531 thousand in 2003 was substantially higher than the year before.The Company’s operating assets increased by US$ 23,641 thousand. The combination of these factors produced the improvementin this ratio.
. Dividend yield (figures in US cents): the value to December 2003 is higher than same date last year. Dividends paid are highercompared to the previous year.
· Earnings per share (in US cents): with a constant number of shares for both years, the higher result in 2003 produced a muchimproved earnings per share ratio.
· Share price (in Ch$): there was a Ch$450.00 increase compared to December 2002, being this in Ch$770.00 at 31st December,2003.
2. Difference between the economic and book values of assets
The financial statements at December 31st, 2003 have been prepared in accordance with generally accepted accounting principlesand the general and specific instructions of the Superintendency of Securities and Insurance, the Company’s regulatory authority.
The book value of the principal asserts of the Company and subsidiaries does not significantly vary from their market value.
3. Market situation
The shipping industry has continued to show the favorable trends in volumes and freight tariffs during 2003 that were first seenin the second half of 2002. China is playing a key role in this increased freight demand, both in the import of inputs and theexport of value-added products. The increased freight demand has affected the cost of chartering container and bulk ships,which has increased significantly.
The economies in South America have had a low growth, exports have shown a healthy growth and the revaluation of thecurrencies of the most important economies has improved import potential which has slowly begun to show a certain recovery.
The volumes and freight rates on the principal traffics east-west operated by Norasia, particularly those covering China, improvedand with them the results of this subsidiary.
Sales of CSAV and subsidiaries to December 2003 increased by US$ 460,591 thousand or 27% compared to the same period of2002, mainly reflecting the greater volumes carried.
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4. Cash Flow Analysis
The operations of the Company and its subsidiaries generated a positive flow for US$ 58,930 thousand, below the level of theprevious year. Notable were the improved results for 2003, the increase in Trade accounts receivables for US$ 61,943 thousanddue to activity level higher and increased in account payable for US$ 39,012 thousand.
Financing activities generated a positive flow for US$ 38,499 thousand. During this period, there was a loan net income 2003for US$ 147,492 thousand, current maturities payment (Eurobonds) for US$ 76,000 thousand and dividends payment for US$24,603 thousand.
Finally, the net flow for investment activities was a negative US$ 112,864 thousand. The most important movements in 2003have been outflows for US$ 38,533 thousand for investments in fixed assets, US$ 41,680 thousand (net income) for investmentsin financial instruments and US$ 56,817 thousand for other investments disbursements, mainly for advances paid under vesselhulls contracts.
5. Market Risk Analysis
CSAV participates in a highly-competitive market in which cargo volumes are directly affected by global economic growth.This generates cycles associated with the principal industry variables like ship charter rates, freight rates, fuel prices, exchangerates and cargo volumes, which demand constant control to maintain a competitive presence in the world shipping market.
One of the challenges facing CSAV is to link a chartering strategy coherent with freight rate variables. The Company´s charteringcontracts run from 6 months to 5 years at fixed rates and freights fluctuate in the short term.
Regarding commodity price risks, the most important are those of ship fuels. To cover this, the Company holds no significantstocks and a portion of the freights charged to customers are adjusted according to variations in fuel prices. The Company andsubsidiaries also take out fuel price hedging contracts.
Regarding the interest rate risk, the Company has issued bonds for UF 1,950,000 and granted mortgage loans for US$ 1,692thousand, which carry fixed interest rates. All other interest-bearing assets and liabilities are at variable rates. Interest rate coveris taken out to cover debt with floating rates.
Regarding exchange risks, the Company has 92% of its sales and 86% of its cost of sales in US dollars, 6% and 4% respectivelyin euros, 1% and 3% respectively in Chilean pesos and the rest in other currencies.
On August 1st, 2003, the Company obtained, through one of its subsidiaries, a loan for 24 billion yen payable in one amount ata 30-year term. Interest is payable semi-annually in US dollars. The Company has negotiated hedging contracts to cover exchangefluctuations between the yen and the dollar over the term of the loan. By the payment of an annual rate, the contracts providecover against the yen revaluing against its current exchange rate up to an agreed margin.
Assets and liabilities are generally denominated in US dollars, but there are others in other currencies which are detailed underLocal and foreign currencies (Note 27) in the consolidated financial statements.
The Company’s policy regarding exchange risks has been not to cover the mis-match in Chilean pesos. No permanent policyexists in this regard.
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Financial Indicators - Consolidated
To: Dec-03 Dec-02
Current liquidity = Current Assets 1.651 1.382Current Liabilities
Acid test = Available resources 0.683 0.745Current Liabilities
Leverage ratios = Total Liabilities 1.209 1.103Shareholders’ Equity
= Short-term debt 0.497 0.676Total debt
= Long-term debt 0.503 0.324Total debt
Financial expense cover = Income before taxes and interests 3.840 2.876Financial expenses
Return on equity Net = Net income for the year 0.135 0.075Average shareholders’ equity
Return on assets = Net income for the year 0.061 0.035Average assets
Return on operating assets = Operating income 0.175 0.095Average operating assets (1)
Dividends yield(US$ cents) = Dividends paid in last 12 months 2.548 2.337
Share market value
Earning per share = Net income for the year 9.829 4.998(US$ cents) Number of shares
Market value 770.00 320.00(Chilean Pesos)
(1) Operating assets = Machinery and equipment and other fixed assets
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To: Dec-03 Dec-02Total Assets(millions of US dollars)Current 564.584 518.009Fixed 272.109 262.307Other 441.295 299.150
Total assets 1,277.988 1,079.466
Increases / Decreases for: January to: Dec.03 Dec.02
Fixed assets: Purchases 38.533 45.677 Sales 9.026 7.464Investments in Subsidiaries:Investments 2.757 1.024 Net income 40.683 28.566
Thousands of paying tons carried 20,737 19,134
Statement of Income(millions of US dollars)Sales 2,135.539 1,674.948Cost of sales -1,862.876 -1,430.898Cost of: Administration -206.132 -209.359 Finance -28.723 -27.303Results: Operating 66.531 34.691 Non-operating 15.048 16.522EBITDA (2) 147.242 108.936Income tax -6.420 -7.147Net income 72.323 36.778
(2) Income before income taxes, interest, depreciation, amortization and extraordinary items
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BalanceAt December 31, 2003
Sheets
CSAV's Financial statements are preparedaccording to Chilean accounting standard
practices. This is a free translation, made ingood faith, of the official Spanish-languageversion. The Company, therefore, acceptsno responsibility for any errors, omissions
or incorrect meanings contained in thistranslation.
2003
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BALANCE SHEETSAT DECEMBER 31, 2003 AND 2002
Cash and banks 7,413 9,576Time deposits 33,057 1,105Marketable securities 1,042 707Account receivables 39,092 30,895Notes receivables 2,742 2,550Sundry debtors 2,423 3,229Due from related companies 43,702 37,622Inventories 251 339Refundable taxes 5,437 5,029Prepaid expenses 52,604 35,301Deferred taxes 2,647 2,703Other current assets 3,217 2,986Total Current Assets 193,627 132,042
Land 3,014 3,011Buildings and infrastructure 15,412 14,567Machinery and equipments 64,739 55,940Other fixed assets 2,990 154Higher value of fixed assets from technical appraisal - 114Depreciation (27,562) (25,540)Total Fixed Assets 58,593 48,246
Investments in related companies 702,199 613,277Investments in other companies 170 163Negative goodwill (4,217) (4,779)Long-term receivables 4,089 3,782Due from related companies 41,336 53,246Other 57,976 8,653
Total Other Assets 801,553 674,342
TOTAL ASSETS 1,053,773 854,630
(In thousands of U.S. dollars-US$)
ASSETS 2003 2002
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Banks - Current maturities of long-term – short term 1,241 -Current maturities of bonds – short term 875 82,114Dividends payable 5,902 3,285Accounts payable 72,597 93,480Notes payable 15,810 45Sundry creditors 131 522Due to related companies 278,918 99,635Provisions 10,293 9,624Withholdings 768 306Unearned income 18,007 8,117Total Current Liabilities 404,542 297,128
Banks 13,935 -Bonds 55,564 45,436Sundry creditors 394 327Provisions 9,129 7,316Deferred taxes 338 122Other 1,229 1,830Total Long Term Liabilities 80,589 55,031
Capital paid 170,000 170,000Other reserves (4,143) (24,671)Reserve for future dividends 28,347 28,347Accumulated earnings 317,206 295,144Net income for the year 72,323 36,778Interim dividends (14,929) (3,123)Accumulated deficit from the development period (162) (4)
Total Shareholders' Equity 568,642 502,471
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,053,773 854,630
(In thousands of U.S. dollars-US$)
LIABILITIES AND SHAREHOLDERS' EQUITY 2003 2002
The attached explanatory notes N° 1 to 28 are an integral part of these financial statements.
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Operating revenues 922,321 830,861Operating expenses (807,719) (727,934)Gross Operating Income 114,602 102,927Selling and Administrative expenses (91,310) (85,955)Operating Income 23,292 16,972
Financial income 2,090 151Equity in earnings of related companies 79,622 47,362Other non-operating income 1,231 5,665Equity in losses of related companies (10,007) (21,737)Financial expenses (13,565) (13,760)Other non-operating expenses (1,031) (1,814)Exchange differences (9,115) 5,574Non- Operating Income 49,225 21,441
Net income before income taxes 72,517 38,413Income taxes (756) (2,197)
Net income before negative goodwill 71,761 36,216Amortization of negative goodwill 562 562
NET INCOME 72,323 36,778
STATEMENT OF INCOMEFor the years ending December 31, 2003 and 2002
2003 2002
(In thousands of U.S. dollars-US$)
The attached explanatory notes N° 1 to 28 are an integral part of these financial statements.
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Net income 72,323 36,778(Profit) Loss on sales of fixed assets (221) 1,265
Charges (credits) to income not affecting cash flow:Depreciation 5,109 2,324Write-offs and provisions 479 6,391Equity in earnings of related companies (79,622) (47,362)Equity in losses of related companies 10,007 21,737Amortization of negative goodwill (562) (562)Exchange differences 9,115 (5,574)Other credits to income not representing cash flow (16) (4,946)Other charges to income not representing cash flow 11,127 10,654
Decrease (Increase) in AssetsDecrease in account receivables (8,899) 20,326(Increase) decrease inventories 88 (162)(Increase) decrease other assets 597 (20,109)
(Decrease) Increase in LiabilitiesIncrease (decrease) accounts payable 175,384 851Decrease interest payable (239) (763)Increase (decrease) Income taxes 469 1,138Increase provisions or value added tax and other taxes payable (605) 332Cash flow from operating activities 194,534 22,318
Loans received 15,615 -Cash dividends paid (23,900) (7,826)Loans payment (560) -Payment of current maturities (76,000) -Cash flow from financing activities (84,845) (7,826)
CASH FLOW STATEMENTFor the years ending December 31, 2003 and 2002
2003 2002
(In thousands of U.S. dollars-US$)
The attached explanatory notes N° 1 to 28 are an integral part of these financial statements.
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Sales of fixed assets 3,838 2,819Sales of permanent investments - 587Collection of loans to related companies 11,217 7,095Acquisition of fixed assets (19,134) (17,927)Permanent investment (25,403) -Investments in securities (50,000) -Documented loans to related companies (83) (8,575)Cash Flow from Investment Activities (79,565) (16,001)
Net cash flow for the year 30,124 (1,509)Cash and cash equivalents at the beginning of the year 11,388 12,897Cash and cash equivalents at the end of the year 41,512 11,388
2003 2002
CASH FLOW STATEMENTFor the years ending December 31, 2003 and 2002
(In thousands of U.S. dollars-US$)
The attached explanatory notes N° 1 to 28 are an integral part of these financial statements.
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NOTES TO THE FINANCIAL STATEMENTS(In thousands of U.S. dollars - US$)For the period from January 1 to December 31, 2003 and 2002
1.The Company and its Registration
The Company (Tax number 90,160,000-7) is a publicly quoted corporation whose subscribed and paid in capital by December31st, was US$ 170,000 thousand, divided into 735,844,521 shares of no nominal value, distributed among 3,499 shareholders.It is registered in the Securities Register of the Superintendency of Securities and Insurance (Superintendencia de Valores ySeguros) under N° 76.
2.Accounting Polices Applied
a) Accounting Period
These financial statements covering the accounting periods of twelve months between January 1st and December 31st of 2003and they are compared with the same period of last year.
b) Guidelines for their Preparation
Financial statements have been prepared in accordance with accounting principles generally accepted in Chile and the regulationsof the Superintendency of Securities and Insurance (Superintendencia de Valores y Seguros).
Investments in affiliates have been recorded in one line of the general balance sheet at their proportional equity value and havetherefore not been consolidated line by line, the situation being different from accounting principles generally acceptable inChile. This treatment does not modify the net result for the period no the net worth of the Company.
These financial statements were emitted only for purposes of an individual analysis of the Company, and therefore they mustbe read together with the consolidated financial statements required by accounting principles generally accepted in Chile.
c) Bases for their Presentation
For purposes of comparison, minor re-classifications have been made in the financial statements of December 2002.
d) Monetary correction
As from January 1, 1984, the parent Company was authorized to keep its accounting in US dollars; therefore, no monetarycorrection regulations are applied.
e) Basis of Conversion
Transactions in currencies different from the US dollar in their original currency and expressed in US dollars at the exchangerate on the transaction date. Outstanding balances, at the closing of the financial statements, resulting from these transactionsare expressed in US dollars according to the exchange rate of each currency at the closing date. Exchange rate differences arerecorded as a charge or credit on the exchange rate differences account, except for fixed assets and shareholders' equityaccounts, which are stated in US dollars at the exchange rate on the date of each transaction.
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At the closing of financial statements the exchange rate of US dollar against Chilean pesos is Ch$ 593.80 andCh$ 718.61 to December 31, 2003 and 2002, respectively.
f) Time Deposits and Marketable Securities
Time deposits are shown at their investment value plus accrued interest.
The marketable securities correspond to mutual funds appraised at the value of the quota at the close of the period.
Bonds (Banco Central de Chile) included in long-term period under Other Assets item – Other are shown at investment value.Accrued interests at the closing date are shown under Marketable Securities item.
g) Inventories
Inventories are stated at their cost, which does not exceed market value.
h) Uncollectible Debtors Estimate
The provisions for accounts receivable eventually uncollectible have been maintained, and determined based on the timeelapsed in each case and an evaluation of those cases.
i) Other currents assets
Include containers spareparts valued at restated cost.
j) Fixed Assets
Fixed assets are valued at cost plus accumulated monetary adjustments at December 31st, 1983 and the technical re-appraisalmade on February 28th, 1989, based on Circular 829 of the Superintendency of Securities and Insurance.
k) Fixed Assets Depreciation
Depreciation has been calculated using the straight-line method over the estimated useful life of the assets.
l) Investments in related companies
Permanent investments in related companies, Chilean or foreign, are stated using the equity method of valuation, in accordancewith Technical Bulletins No. 42 and 64 of Chile’s Association of Accountants A.G. Investments in Chilean companies, whichkeep their accounting records in Chilean pesos, are expressed in US dollars at the end of the year and valuation differences areadjusted in the Other Reserves Account.
For purposes of the equity valuation method, investments in direct foreign subsidiaries are stated in US dollars (exceptinginvestments of Compañía Sud Americana de Vapores GmbH, who is stated in Euro), and investments in their subsidiaries andassociates are converted into US dollars, when necessary.
Unrealized results between related parties have been omitted and are shown in results in the measure they are realized.
m) Negative goodwill
The difference between the cost of the investments on the date of purchase and their Proportional Capital Value (VPP – ValorPatrimonial Proporcional) on that date, is attributed to the negative goodwill account, which is amortized crediting results in amaximum period of 10 years.
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n) Operations with Resale Agreements
Financial instruments acquired under repurchase agreements are shown at their acquisition value plus the difference arisingbetween the acquisition price and the sales price agreed to and they are classified under heading Other Current Assets.
o) Public Liabilities
Obligations from issuance of bonds are shown as liabilities at nominal value of the bonds issued. Differences between nominaland underwriter value (including placement costs and the respective reserve requirement) are deferred and amortized over theterm of the bonds, in order to show the real interest rate applicable to the transaction, which appear under Assets Statementunder the heading Other Assets – Other.
p) Income and Deferred Taxes
Income tax is debited to results considering the taxable net income determined for tax purposes.
The impact of the deferred taxes originating from the existing temporary differences between the financial balance and the taxbalance, is recorded considering the tax rate that will be effective on the estimated reversion date, in accordance with stipulationsin Technical Bulletin No. 60 of the Colegio de Contadores de Chile. The impacts of the existing taxes on the implementationdate in said technical bulletin and not previously shown, are acknowledged in results only in the measure that the temporarydifferences were reverted.
q) Severance indemnities
The Company has made provisions for this benefit on the basis of the present value of the accrued cost according to TechnicalBulletin N° 8 of Chile’s Association of Accountants A.G., considering an annual discount rate of 8%. For these purposes,Compañía Sud Americana de Vapores S.A. considers average personnel stay in the company of 25 years.
r) Operating Income
To determine the operational results, the Company utilizes the voyage progress method. This method consists of a record at theend of the financial year of income and expenses of each voyage in proportion with the number of days elapsed compared withthe total voyage time, provided that the ships have sailed from the last loading port. In the case of voyages with shipments stillpending their results are deferred in the account Expenditure Paid in Advance, Freight Debtors and Income in Progress as itcorresponds, except in the case of ships with eventual losses which could be estimated, which are provided for by debitingresults.
s) Derivate Contracts
The Company holds contracts (swap and cap) to cover the risk of the price of fuel variation and forward contracts which operateas exchange risk insurance in order to be covered against US Dollar fluctuation with respect to Unidad de Fomento. Theseoptions are acknowledged and classified in the financial statements, in accordance with stipulations stated in Technical BulletinNo. 57 of the Colegio de Contadores de Chile A.G.
t) Computer Software
Software items forming part of the fixed assets were acquired as computer packages and were amortized charging incomewithin 3 years.
u) Research and Development Expenditure
Expenditure under this heading, when incurred, are debited to income.
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v) Statement of Cash Flow
To prepare the Statement of cash flow, and as set out in the Technical Bulletin No. 50 of Chile’s Association of AccountantsA.G. and in Circular No. 1,501 of the Superintendency of Securities and Insurance, the Company has considered as cashequivalents those investments in quotas made in rent fix mutual funds and time deposits with original maturity of no more thanthree months.
"Cash flow from operating activities" includes business-related cash flows, interest paid, financial income, dividends receivedand flows not defined as investment or financing.
w) Sale of Vessels and Sale of Vessels Building Contracts
Income arising from the sale of vessels and the sale of vessels building contracts of the Tollo Shipping Co. S.A. and CorvinaShipping Co. S.A. subsidiaries, with leaseback by Compañía Sud Americana de Vapores S.A., are deferred and recorded asincome during the contract term and in proportion with the leasing expenditure.
3. Accounting Changes
There were not countable changes.
4. Marketable Values
Book valueFinancial instruments 31.12.2003 31.12.2002
Mutual funds - 707Banco Central of Chile bonds 1,042 -Total marketable value 1,042 707
5. Short-term and Long-term Debtors (in thousands of US Dollars – US$)
CIRCULANTESItem Up to 90 days More than 90 days up to 1 year Subtotal Total Current (net) Long-term
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Foreign American Transportation Group. LLC. 1,802 6,69296.566.940-K Agencias Universales S.A. 1496.663.560-6 Aserradero Arauco S.A. 193.480.000-1 Celulosa Arauco y Constitución S.A. 1089.999.300-4 CMPC Celulosa S.A. 206 15196.529.310-8 CMPC Tissue S.A. 19Foreign CNP Holdings S.A. 2,98492.736.000-4 Coelsa Computación y Electrónica S.A. 197Foreign Companhia Libra de Navegacao 8,22290.596.000-8 Compañía Chilena de Navegación Interoceánica S.A. 3,657 3,18690.320.000-6 Compañía Electrometalúrgica S.A. 796.838.090-7 Compañía Naviera Río Blanco S.A. 154Foreign Compañía Sud Americana de Vapores GmbH 6 1,09091.643.000-0 Corpesca S.A. 43Foreign Corvina Shipping Co. S.A. (Panama) 41290.331.000-6 Cristalerias de Chile S.A. 9 10489.602.300-4 Empresa de Transporte Sudamericana Austral Ltda. 7,038 7,89796.591.040-9 Empresas Carozzi S.A. 27 2991.656.000-1 Inforsa Industrias Forestales S.A. 4994.660.000-8 Marítima de Inversiones S.A. 1 4Foreign Marsud Ltda. (Brazil) 693.628.000-5 Molibdenos y Metales S.A. 46Foreign Norasia Container Line Ltd. 14,191 24,732
6. Transactions with Related Companies (in thousands of US Dollars – US$)
Balances with related companies include:
Short-Term
Short-term transactions with related companies are connected with the line of business and are carried out under market conditionsregarding price and payment conditions.
Rahue Investment Co. S.A. balance corresponds to current account in US Dollars without interest to line of business operations.
Additionally, in 2002, the Eurobonds issued by the Company are shown in short term period, which were acquired by theindirect subsidiary Rahue Investment Co. S.A. in 2001 with an annual interest rate of 7.375%, with maturity on December2003.
Long-Term
1) Current account with Sudamericana, Agencias Aéreas y Marítimas S.A. in Chilean pesos convertible in US dollar withoutinterest, for investment in companies and purchase of fixed assets.
2) Loan in UF granted to Southern Shipmanagement (Chile) Limitada with an annual interest rate of 5% and monthly amortization.
3) In late 2001, an interest-bearing US dollar loan was granted to Empresa de Transporte Sudamericana Austral Ltda. at Liborrate. The interest is repayable semi-annually and the capital has five years of grace.
Notes and Accounts Receivable from Related Companies (in thousands of US Dollars – US$)
31-12-2003 31-12-2002 31-12-2003 31-12-2002
Tax Companies Short-term Long-term
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Notes and Accounts Payable to Related Companies (in thousands US Dollars – US$)
Foreign Norasia Services Ltd. (Hong Kong) 6 112Foreign Norgistics (China) Ltd. 21Foreign Norgistics (Brazil) Ltda. 29Foreign North Trade Shipping Co. Inc. 37996.840.950-6 Odfjell y Vapores S.A. 2 187.001.500-3 Quimetal Industrial S.A. 5Foreign Sea Lion Shipping Co. S.A. (Panama) 9,75586.547.900-K Sociedad Anónima Viña Santa Rita S.A. 1584.608.700-1 Sociedad Nacional de Comercio S.A. 99Foreign South Trade Shipping Co. Inc. 487 89187.987.300-2 Southern Shipmanagement (Chile) Ltda. 20 399 33592.048.000-4 Sudamericana, Agencias Aéreas y Marítimas S.A. 33,899 45,014Foreign Tollo Shipping Co. S.A. (Panama) 1,451Total 43,702 37,622 41,336 53,246
96.566.940-K Agencias Universales S.A. 699.511.240-K Antofagasta Terminal Internacional S.A. 271Foreign CNP Holdings S.A. 220Foreign Companhia Libra Navegacao 4,16390.690.000-9 Compañía de Petróleos de Chile Copec S.A. 990 63396.838.090-7 Compañía Naviera Rio Blanco S.A. 34Foreign Consorcio Naviero Peruano S.A. 343 1,077Foreign CSAV Sudamericana de Vapores S.A. 1,111 30,304Foreign East Trade Shipping Co. Inc. 84Foreign Ecuaestibas S.A. 251 71088.566.900-K Edipac S.A. 796.838.110-5 Euroatlantic Container Line S.A.. 2,16196.915.330-0 Iquique Terminal Internacional S.A. 123 167Foreign Lennox Ocean Shipping Co. S.A. 845 2,750Foreign Marsud Ltda. 17Foreign Montemar Marítima S.A. 41 3,101Foreign Norgistics (China) Ltd. 10Foreign North Trade Shipping Co. Inc. 14Foreign Rahue Investment Co. S.A. 270,287 43,46296.908.970-K San Antonio Terminal Internacional S.A. 1,259 59496.908.930-0 San Vicente Terminal Internacional S.A. 169 11883.032.100-4 Servicios de Consultores Hendaya S.A. 696.556.920-0 Servicios de Personal Portales S.A. 286.547.900-K Sociedad Anónima Viña Santa Rita 1587.987.300-2 Southern Shipmanagement (Chile) Ltda. 91Foreign Southern Shipmanagement Co. S.A. 214 200Foreign Sudamericana Agencias Marítimas do Brasil Ltda. 3292.048.000-4 Sudamericana, Agencias Aéreas y Marítimas S.A. 2,978 9,693Total 278,918 99,635
31-12-2003 31-12-2002 31-12-2003 31-12-2002
Tax Companies Short-term Long-term
31-12-2003 31-12-2002 31-12-2003 31-12-2002
Tax Companies Short-term Long-term
155
2003Annual Report
Transactions (in thousands US Dollars – US$)
ABASTECIMIENTOS CMPC S.A. 96768750-2 ACC. Y/O DIRECT COMUNES FLETES 10 10ABASTIBLE S.A. 91806000-6 ACC. Y/O DIRECT COMUNES COMBUSTIBLE 4 -4 2 -2AGENCIAS UNIVERSALES S.A. 96566940-K COLIGADA FLETES 38 38 1 1AGENCIAS UNIVERSALES S.A. 96566940-K COLIGADA SERVICIOS PORTUARIOS RECIBIDOS 228 -228 38 -38AMERICAN TRANSPORTATION GROUP, LLC (ESTADOS UNIDOS) 0-E FILIAL SERVICIOS 8 8 1 1AMERICAN TRANSPORTATION GROUP, LLC (ESTADOS UNIDOS) 0-E FILIAL SERVICIOS DE AGENCIAMIENTOS 11.816 -11.816 9.955 -9.955ANTOFAGASTA TERMINAL INTERNACIONAL S.A. 99511240-K FILIAL SERVICIOS PORTUARIOS RECIBIDOS 2.048 -2.048ASERRADERO ARAUCO S.A. 96663560-6 ACC. Y/O DIRECT COMUNES FLETES 475 475 1.829 1.829BUREO SHIPPING CO. S.A. 0-E FILIAL ARRIENDO DE NAVES 3.167 -3.167 3.634 -3.634CELULOSA ARAUCO Y CONSTITUCIÓN S.A. 93480000-1 ACC. Y/O DIRECT COMUNES FLETES 10 10 255 255CHUBB DE CHILE CÍA. DE SEGUROS GENERALES S.A. 96642610-1 ACC. Y/O DIRECT COMUNES SERVICIOS ADMINISTRATIVOS 15 15CHUBB DE CHILE CÍA. DE SEGUROS GENERALES S.A. 96642610-1 ACC. Y/O DIRECT COMUNES SEGUROS 101 -101 71 -71CÍA. DE SEGUROS CRUZ DEL SUR S.A. 99285000-0 DIRECTOR COMUN SEGUROS 68 -68CMPC CARTULINAS S.A. 96731890-6 ACC. Y/O DIRECT COMUNES FLETES 23 23 638 638CMPC CELULOSA S.A. 89999300-4 ACC. Y/O DIRECT COMUNES FLETES 10.496 10.496 6.955 6.955CMPC MADERAS S.A. 95304000-K ACC. Y/O DIRECT COMUNES FLETES 66 66 243 243CMPC PAPELES S.A. 79818600-0 ACC. Y/O DIRECT COMUNES FLETES 1 1CMPC TISSUE S.A. 96529310-8 ACC. Y/O DIRECT COMUNES FLETES 276 276 31 31COELSA COMPUTACIÓN Y ELECTRÓNICA S.A. 92736000-4 ACC. Y/O DIRECT COMUNES FLETES 273 273 589 589COMPANHIA LIBRA NAVEGACAO (BRASIL) 0-E FILIAL SERVICIOS MARÍTIMOS PRESTADOS 41.698 22.649 41.117 23.811COMPANHIA LIBRA NAVEGACAO (BRASIL) 0-E FILIAL FLETES MARÍTIMOS RECIBIDOS 14.766 -14.766 17.013 -17.013RAHUE INVESTMENT CO. S.A. 0-E FILIAL REMESAS ENVIADAS 317.183 308.686RAHUE INVESTMENT CO. S.A. 0-E FILIAL REMESAS RECIBIDAS 544.008 291.228COMPAÑÍA CHILENA DE NAVEGACIÓN INTEROCEÁNICA S.A. 90596000-8 COLIGADA FLETES PRESTADOS 24.474 24.474 22.253 22.253COMPAÑÍA CHILENA DE NAVEGACIÓN INTEROCEÁNICA S.A. 90596000-8 COLIGADA FLETES RECIBIDOS 18.271 -18.271 15.223 -15.223COMPAÑÍA DE PETRÓLEOS DE CHILE COPEC S.A. 90690000-9 ACC. Y/O DIRECT COMUNES FLETES 44 44 79 79COMPAÑÍA DE PETRÓLEOS DE CHILE COPEC S.A. 90690000-9 ACC. Y/O DIRECT COMUNES COMBUSTIBLE 9.783 -9.783 4.418 -4.418COMPAÑÍA ELECTRO METALÚRGICA S.A. 90320000-6 ACC. Y/O DIRECT COMUNES FLETES 19 19 76 76COMPAÑÍA NAVIERA RÍO BLANCO S.A. 96838090-7 FILIAL SERVICIOS ADMINISTRATIVOS 36 36 36 36COMPAÑÍA NAVIERA RÍO BLANCO S.A. 96838090-7 FILIAL ARRIENDO DE NAVES 2.862 -2.862 3.103 -3.103COMPAÑÍA SUD AMERICANA DE VAPORES GMBH (ALEMANIA) 0-E FILIAL SERVICIOS COMERCIALES 13.626 -13.626 10.872 -10.872COMPAÑÍA DE SEGUROS CRUZ DEL SUR S.A. 99285000-0 ACC. Y/O DIRECT COMUNES SEGUROS 83 -83 68 -68CONSORCIO NAVIERO PERUANO S.A. (PERÚ) 0-E FILIAL SERVICIOS ADMINISTRATIVOS 3 3CONSORCIO NAVIERO PERUANO S.A. (PERÚ) 0-E FILIAL SERVICIOS DE AGENCIAMIENTOS 1.447 -1.447 1.631 -1.631CORPESCA S.A. 91643000-0 ACC. Y/O DIRECT COMUNES FLETES 830 830 959 959CORVINA SHIPPING CO. S.A. (PANAMÁ) 0-E FILIAL SERVICIOS ADMINISTRATIVOS 534 534 13 13CRISTALERÍAS DE CHILE S.A. 90331000-6 ACC. Y/O DIRECT COMUNES FLETES 293 293 258 258CSAV NORASIA GROUP (CHINA) SHIPPING COMPANY LIMITED 0-E FILIAL COMISION 14 14CSAV SUDAMERICANA DE VAPORES S.A. (PANAMÁ) 0-E FILIAL SERV. CONTENEDORES Y ADMINIST. 5.841 1.500 7.385 3.380CSAV SUDAMERICANA DE VAPORES S.A. (PANAMÁ) 0-E FILIAL FLETES 2.580 -2.580 3.125 -3.125ECUAESTIBAS S.A. (ECUADOR) 0-E FILIAL SERVICIO DE CONTENEDORES 17 17 1 1ECUAESTIBAS S.A. (ECUADOR) 0-E FILIAL SERVICIO DE AGENCIAMIENTO 3.366 -3.366 2.819 -2.819EDICIONES FINANCIERAS S.A. 96539380-3 ACC. Y/O DIRECT COMUNES PUBLICIDAD 47 -47 10 -10EDIPAC CHILE S.A. 88566900-K ACC. Y/O DIRECT COMUNES FLETES 79 79EDIPAC CHILE S.A. 88566900-K ACC. Y/O DIRECT COMUNES SERVICIOS ADMINISTRATIVOS 20 -20EMPRESA CABO DE HORNOS S.A. 93501000-4 ACC. Y/O DIRECT COMUNES FLETES 72 72EMPRESA DE NAVEGACAO SUDAMERICANA DE VAPORES LTDA. 0-E FILIAL SERVICIO DE AGENCIAMIENTO 169 169EMPRESA DE TRANSPORTE SUDAMERICANA AUSTRAL LTDA. 89602300-4 FILIAL INTERESES 219 219 318 318EMPRESA DE TRANSPORTE SUDAMERICANA AUSTRAL LTDA. 89602300-4 FILIAL SERVICIOS ADMINISTRATIVOS 575 -575EMPRESAS CAROZZI S.A. 96591040-9 ACC. Y/O DIRECT COMUNES FLETES 244 244 832 832ENVASES CMF S.A. 86881400-4 ACC. Y/O DIRECT COMUNES FLETES 42 42 313 313ENVASES IMPRESOS S.A. 89201400-0 ACC. Y/O DIRECT COMUNES FLETES 3 3 22 22ESTUDIO CLARO Y COMPAÑÍA 79753810-8 PRESIDENTE ASESORIAS LEGALES 79 -79 35 -35EXPORTACIÓN Y COMERCIO S.A. 96515710-7 DIRECTOR COMUN ASESORIAS FINANCIERAS 55 -55FORESTAL ARAUCO S.A. 82152700-7 ACC. Y/O DIRECT COMUNES FLETES 134 134FORESTAL VALDIVIA S.A. 79625830-6 ACC. Y/O DIRECT COMUNES FLETES 17 17FRAMBERRY LTDA. 79574560-2 ACC. Y/O DIRECT COMUNES FLETES 37 37 108 108
31-12-2003 31-12-2002Companies ID Nature of Relatonship Description of Transactions Amount Effects on Results Amount Effects on Results
(Debit)/Credit) (Debit)/Credit)
156
2003Annual Report
Inforsa Industrias Forestales S.A. 91.656.000-1 “ Freight 415 415 1,210 1,210Inversiones Nuevo Tiempo S.A. Foreign Affiliate Administrative service 2 2 2 2Inversiones Plan Futuro S.A. Foreign Affiliate Administrative service 2 2 2 2Iquique Terminal Internacional S.A. 96.915.330-0 Affiliate Sale port services 16 16 4 4Iquique Terminal Internacional S.A. 96.915.330-0 Affiliate Received port services 1,229 -1,229 873 -873Lennox ocean Shipping Co. S.A. Foreign Affiliate Ship charter and transfer funds 5,774 -5,774 6,574 -6,574Logística Integral S.A. 95.503.000-1 Affiliate Container services and advice 1 1 338 241Logística Integral S.A. 95.503.000-1 Affiliate Container services 27 -27Marítima de InversionesS.A. 94.660.000-8 Majority shareholder Administrative services 76 50 49 49Marketing Meter Limitada 77.658.870-9 Shareholders and/or Directors in common Administrative services 6 -6 28 -28Marsud Ltda. (Brazil) Foreign Affiliate Agerncy service 215 -215 102 -102Mayne Shipping Co. S.A. (Liberia) Foreign Affiliate Ship charter 121 121Mayne Shipping Co. S.A. (Liberia) Foreign Affiliate Ship charter 679 -679Molibdenos y Metales S.A. 93.628.000-5 Shareholders and/or Directors in common Freight 535 535 127 127Montemar Marítima S.A. (Uruguay) Foreign Affiliate Freight 30,541 17,525 24,569 8,942Montemar Marítima S.A. (Uruguay) Foreign Affiliate Agency service 18,179 -18,179 12,530 -12,530Norasia Container Lines Ltd. (Malta) Foreign Affiliate Sales shipping services 74,053 24,019 45,091 19,631Norasia Container Lines Ltd. (Malta) Foreign Affiliate Received shipping services 1,936 -1,936 6,096 -6,096Norasia Services (Hong Kong) Ltd. Foreign Affiliate Agency services 1,866 -1,866North Trade Shipping Co. Inc. Foreign Affiliate Ship charter 2,432 -2,432 2,891 -2,891Odfjell y VaporesS.A. 96.840.950-6 Affiliate Administrative service and other 346 346 186 186Odfjell y VaporesS.A. 96.840.950-6 Affiliate Received ship charter 213 -213Pacific Rider Shipping Co. S.A. Foreign Affiliate Ship charter 475 -475Pacific Winner Shipping Co. S.A. Foreign Affiliate Ship charter 1,361 -1,361Paneles Arauco S.A. 96.510.970-6 Shareholders and/or Directors in common Freight 289 289 420 420Peter Dohle Schiffahrts - KG (GmbH + co) Foreign Indirect Contracts indemnity 2,900 2,900Propa S.A. 79943600-0 Shareholders and/or Directors in common Freight 52 52Quimetal Industrial S.A. 87.001.500-3 “ Freight 45 45 116 116Red Televisiva Megavisión S.A. 79.952.350-7 “ Advertisement 37 -37San Antonio Terminal Tnternacional Ss.a. 96.908.970-K Associate Container services 155 64 39 39San Antonio Terminal Tnternacional Ss.a. 96.908.970-K Associate Port services 8,117 -8,117 4,475 -4,475San Vicente Terminal Internacional S.A. 96.908.930-0 Associate Port services 111 98San Vicente Terminal Internacional S.A. 96.908.930-0 Associate Received services 2,136 -2,136 1,875 -1,875Scotiabank Sudamericano S.A. 97.018.000-1 Shareholders and/or Directors in common Services 1 -1Sea Lion Shipping Co. S.A. (Panama) Foreign Affiliate Container charter 11,416 11,416 13,422 13,422Servicios y Consultoría Hendaya S.A. 83.032.100-4 Shareholders and/or Directors in common Services 61 -61 82 -82Sociedad Anónima Viña Santa Rita 86.547.900-K “ Freight 67 67 500 500Sociedad Anónima Viña Santa Rita 86.547.900-K “ Purchase Product 54 -54 59 -59Sociedad Nacional de Comercio S.A. 84.608.700-1 “ Freight 77 77 59 59South Trade Shipping co. Inc. Foreign Affiliate Ship charter 3,668 -3,668 2,442 -2,442Southern Peru Limited (Peru) Foreign Shareholders and/or Directors in common Freight 1,924 1,924 1,054 1,054Southern Shipmanagement (Chile) Ltda. 87.987.300-2 Affiliate Interests 140 111 41 41Southern Shipmanagement (Chile) Ltda. 87.987.300-2 Affiliate Shipmanagement services 6,531 -6,531 5,120 -5,120Southern Shipmanagement Co. S.A. Foreign Associate Shipmanagement services 20 24 24Southern Shipmanagement Co. S.A. Foreign Associate Sundry services 263 -263 150 -150Southpacific Korp S.A. 96.929.960-7 Shareholders and/or Directors in common Freight 12 12 18 18Sudamericana Agencias Aéreas y Marítimas S.A. 92.048.000-4 Affiliate Container services and advices 884 495 645 475Sudamericana Agencias Aéreas y Marítimas S.A. 92.048.000-4 Affiliate Agency services 12,887 -12,887 11,376 -11,376Tollo Shipping Co. S.A. (Panama) Foreign Affiliate Administrative services 1,804 1,804 20 20Viña Los Vascos S.A. 89.150.900-6 Shareholders and/or Directors in common Freight 12 12
31-12-2003 31-12-2002Companies ID Nature of Relatonship Description of Transactions Amount Effects on Results Amount Effects on Results
(Debit)/Credit) (Debit)/Credit)
157
2003Annual Report
Transitory DifferencesProvision for doubtful accounts 1,455 1,519Income in progress 311 410Provisions for vacations 244 202Depreciation of fixed assets 561 548Severance indemnities 547 437Provision for cargo claims 920 968Eurobonds expenses 38Provision for dry-docking 86 43Negative result from vessels 131 112Eurobonds, UF Bonds and loan expenses 106 111Credit line loan expenses 50Assets in leasing 146 121Amortization corporate bonds 70Price contracts of derivative 189Complementary accounts – net of amortization (138) (487) (141) (141) (672)Total 2,836 389 189 727 2,703 390 - 512
Short Term Long Term Short Term Long Term Short Term Long Term Short Term Long Term
a) Profits resulting from investments in foreign companies are taxed in Chile, in the year in which they are received, with thefirst category income tax. As the foreign subsidiaries this period have not distributed any dividends, the Company has made noprovision for tax in this respect.
The accrued results of the foreign subsidiaries amounted to a total of US$ 314,280 thousand as of 31st December 2003 (US$274,766 thousand in 2002).
b) On December 2nd, 2002, the Company was notified by the Chilean Internal Revenue Services related to income tax revenuecalculation 2002, determining differences that impact in the Taxable income revenue base, Tributary Earning Funds anddetermination of the credits. The Company answered under legal term the mentioned notification, which in opinion of thecompany management and its Legal Advisers is not reasonable.
On April 10, 2003, tax demands Nos.153 to 156 were received from the Internal Tax Service for an amount of Ch$131,581,581 withrespect to the tax year 2002, because of differences in declared taxable income, and Resolution N° 244 was issued which did not agree tothe refund of monthly tax prepayments resulting from the absorption of losses of Ch$ 396,178,277. The Company and its legal advisersbelieve that these demands and the Resolution are not appropriate and appeals have been lodged within the legally stipulated term.
c) The Company has made a provision for income tax of US$ 317 thousand for the period ending December 31st 2003 (US$ 1,223thousand in 2002).
d) The Company shows accumulated profit tax balance of US$ 9,961 thousand at 31st December 2003 (US$ 6,939 thousand in 2002).
e) The Company charged US$ 162 thousand and US$ 132 thousand to income for 2003 and 2002 respectively for Special Article 21Tax (on disallowed expenses).
Deferred taxes (in thousands of U.S. dollars – US$)
158
2003Annual Report
8. Fixed Assets (in thousands of U.S. dollars – US$)
Land 3,014 3,014Buildings and infrastructure works 15,412 (1,534) 13,878 (162)Machinery and equipments 64,739 (26,028) 38,711 (4,947) (61)Other fixed assets 2,990 2,990Total 86,155 (27,562) 58,593 (5,109) (61)
2003 Book Value Higher value Accumulated Accumulated Net fixed Depreciation Deffereddue to technical depreciation depreciation assets during the year depreciation /
Revaluation Higher value due to .( 1 ) (accrued)technical Revaluation .( 2 )
(1) Depreciation of the period are included in the operation costs for the amount of US$ 4,129 thousand in 2003(US$ 1,074 thousand in 2002) and administrative and selling expenses for the amount of US$ 980 thousand in 2003 (US$ 1,250 thousand in 2002).
(2) Deferred depreciation / (accrued), corresponding to the vessel depreciation adjustment following the criteria acknowledging operational results.
Income taxes (in thousands US Dollars – US$)
31.12.2003 31.12.2002Current tax expenditure (tax provision) (479) (1,355)Adjustment tax expenditure (previous year) (5)Impact on assets and liabilities of the deferred tax for the period (231) (799)Impact of payback of deferred assets and liabilities complementary accounts (41) (43)Total (756) (2,197)
2002 Book Value Higher value Accumulated Accumulated Net fixed Depreciation Deffereddue to technical depreciation depreciation assets during the year depreciation /
Revaluation Higher value due to .( 1 ) (accrued)technical Revaluation .( 2 )
159
2003Annual Report
9. Investments in Related Companies
a) Logística Integral S.A.
The financial statements of this subsidiary were sent on April 26, 2002. The original report, issued on February 1, 2002,included a qualification concerning the scope of the audit because of the absence of audited financial statements of its subsidiaryLogística Integral S.A., Argentina Branch
In order to correct this, every action was taken to allow the auditors to complete their examination of the financial statements ofthat Branch. On the other hand, as a result of the gradual reduction of activities begun in July 2001 which included a reductionin personnel and disposals of assets prior to closing, the Company decided to discontinue the Branch’s operations and transferredall its fixed assets, adjusting them to their realization value. This, together with other minor adjustments, generated a consolidatedloss in 2001 of US$ 1,006 thousand, originally advised as US$ 902 thousand. The new report issued therefore does not containthe qualification of the original one. The increased loss of US$ 104 thousand has been charged to income for 2002 by the parentcompany CSAV.
In October 2002, the Company sold to its subsidiary Sudamericana, Agencias Aéreas y Marítimas S.A., 99.99% of this investment,equivalent to 4,999 shares, at their book value of US$ 587 thousand, leaving its direct holding at 0.01%.
b) CSAV Norasia Group (China) Shipping Company Limited
Investment made in March 2003 with a capital increase payment of US$ 150 thousand.
c) Sudamericana, Agencias Aéreas y Marítimas S.A.
On 20th June 2003, the Company made a capital increase payment to this subsidiary for US$ 25,103 thousand.
d) Norgistic (China) Limited
On 20th October 2003, the Company made a capital increase payment to this subsidiary for US$ 150 thousand.
e) Unrealized Results
These were the results from the sale of ships of the subsidiaries Tollo Shipping Co. S.A. and Corvina Shipping Co. S.A. tocompanies outside the group, chartered back by CSAV. The unrealized results of Corvina Shipping Co. S.A. are totally amortizedto December 31st, 2003. In addition, the VPPs of Tollo Shipping Co. S.A. and Sudamericana, Agencias Aéreas y MarítimasS.A. were adjusted for the deferred loss in the purchase of the vessel and a deferred profit due to adjustments in agencyingcosts, respectively.
f) Potentially remittable earnings from investments in related companies
Potentially remittable earnings are not contemplated because of the constant investment by the Company in its businesses.
160
2003Annual Report
10. Negative Goodwill of Investments (in thousands of U.S. dollars – US$)
ID Companies 31-12-2003 31-12-2002Amortization Goodwill Amortization Goodwillfor the period balance for the period balance
11. Other Assets (in thousands of US Dollars – US$)
Item 31.12.03 31.12.02Positioning costs of containers and ships 4,454 5,041Bonds in U.F. issue costs 2,605 2,752Banco Central of Chile bonds 50,000 -Other 917 860Total 57,976 8,653
92048000-4 Sudamericana, Agencias Aéreas y Marítimas S.A. Chile Chilean Pesos 53,144,074 99.99 99.99 203,146 152,651 30,807 29,150 30,807 29,150 203,145 152,650 1,399 -798 201,746 151,85295503000-1 Logística Integral S.A. Chile Chilean Pesos 1 0.01 0.01 1,752 2,126 -25 -674 0 -393 0 0 0 0 0 089602300-4 Empresa de Transporte Sudamericana Austral Ltda. Chile US Dollar 0 99.00 99.00 -1,568 -1,416 190 -342 188 -338 0 0 0 0 0 096840950-6 Odfjell y Vapores S.A. Chile US Dollar 510,000 51.00 51.00 8,203 6,767 1,437 2,369 733 1,208 4,184 3,451 0 0 4,184 3,451Foreign Tollo Shipping Co. S.A. Panama US Dollar 91,840 99.99 99.99 225,354 206,742 18,613 -19,018 18,613 -19,017 225,352 206,740 112 284 225,240 207,024Foreign Corvina Shipping Co. S.A. Panama US Dollar 40,600 99.99 99.99 178,930 187,766 -8,821 -1,988 -8,820 -1,988 178,926 187,762 0 0 178,926 187,762Foreign Inversiones Plan Futuro S.A. Panama US Dollar 37,500 99.99 99.99 82,118 53,196 28,922 15,883 28,922 15,882 82,116 53,194 0 0 82,116 53,194Foreign American Transportation Group LLC. United States US Dollar 10,000 100.00 100.00 1,366 1,277 90 171 90 171 1,366 1,277 0 0 1,366 1,277Foreign Compañia Sud Americana de Vapores GmbH Germany EURO 100,000 100.00 100.00 397 316 19 16 19 16 397 316 0 0 397 316Foreign Inversiones Nuevo Tiempo S.A. Panama US Dollar 100 99.99 99.99 1,354 645 709 580 709 580 1,354 645 0 0 1,354 64590596000-8 Compañía Chilena de Navegación Interoceánica S.A. Chile US Dollar 273,412,300 13.01 13.01 50,722 59,615 -8,893 148 -1,157 19 6,599 7,756 0 0 6,599 7,756Foreign CSAV Norasia Group (China) Shipping Company Limited China US Dollar 0 100.00 0.00 129 0 -21 0 -21 0 129 0 0 0 129 0Foreign Norgistic (China) Limited China US Dollar 0 100.00 0.00 142 0 -8 0 -8 0 142 0 0 0 142 0
TOTAL 703,710 613,791 1,511 -514 702,199 613,277
Tax Companies Country Currency Share Percentage Shareholder’s Result for Accrued Non-interesment Book stocks Holding Equity the period Results VP/VPP result Value
Expiring years Updated close date Previous close dateID Bank or Financial Institution Currency readjust-ment More than 1 More than 2 More than 3 More than 5 Long - Term Total at Average Annual Long - Term Total
Index upto 2 upto 3 upto 5 upto 10 More than 10 Close of Financial Interest Rate at Close of FinancialStatement Statement
s
13. Liabilities with banks and Others – Long-term (in thousands U.S. Dollars – US$)
Foreign Deutsche Schiffsbank US Dollar 1,120 1,120 2,240 9,455 13,935 2.24
12. Liabilities with banks and Others – Short-term (in thousands U.S. Dollars – US$)
14. Public Liabilities Short-term and Long-term (in thousands of U.S. dollars – US$)
a) Eurobonds
Bearer bonds issued in US dollars and placed abroad:
Nominal value issued US$100,000 thousandPlacement value (100% of issue) US$99,340 thousandDate of issue and placement 8th December 1993Maturity of principal 8th December 2003Interest rate 7.375% AnnualInterest Semi-annually, payable on June 8 and December 8 of each year
162
2003Annual Report
Classification:Level BBB - STABLE PROSPECTSRating agency Standard and Poor's CorporationUse of funds Investment on fixed assets : VesselsStock exchange LuxembourgPlacement bank Citibank International PLCLegislation EnglishConvenants Consolidated Financial debt not to exceed 100% of shareholders'equity.
During the second semester of 2001 indirect subsidiary Rahue Investment Co. S.A. acquired in the market part of these Eurobondsfor a nominal value of US$ 19,000 thousand , which is shown deducting the item liabilities with the public in 2002.
Additionally, in 2003 the same subsidiary did new acquisitions of these Eurobonds for a nominal value of US$ 5,000 thousand,which were paid to the expiration date (December 2003).
b) Bonds
Refers to index inflated (UF) non-physical bonds placed in Chile.
Series A 1 Series A 2Total issued bonds quantities 190 100Nominal value of each bond U.F. 5,000 U.F. 10,000Nominal value of the series U.F. 950,000 U.F. 1,000,000Placement value (100% of issue) U.F. 908,096 U.F. 955,891
Date of issue 1.10.2001Date of placement 14.11.2001 (100%)Annual interest rate 6.40%Interest payment Expired semi-annual termInitial date of interest accumulation 1st October 2001Maturity date 1st October 2022Amortization of capital Semi-annually and payment from 1.04.2009
Classification:
Registration S.V.S. under N° 274 on 12.10.2001Rating agency A+ Clasificadora de Riesgo Humphreys Ltda.
A Fitch Chile Clasificadora de Riesgo de BolsaUnderwriters Salomon Smith Barney S.A., Corredores de BolsaBond holders representatives Banco de ChileUsage of funds Payment of liabilities expiring in 2002 and 2003 and funding of
future acquisitions of shares in companies whose line of business isdirectly related with the corporate purpose of the Issuer, and/or thefunding of other investments or development of projects linked withsaid objective.
163
2003Annual Report
Bearer bonds issued in US dollars and placed abroad:
Long-term bonds – portion of short-termOne only 100,000 US$ 7.375 08-12-2003 Semi-annual One only - 81,398 Foreign
274 A-1 950 UF 6.4 01-10-2022 Semi-annual Semi-annual 426 349 Chilean274 A-2 1,000 UF 6.4 01-10-2022 Semi-annual Semi-annual 449 367 ChileanTotal-portion of short term 875 82,114
Long-term bondsOne only 100,000 US$ 7.375 08-12-2003 Semi-annual One only - - Foreign
Inscription N° orIdentification of Series Current Bond Interest Deadline Periodicity 31-12-2003 31-12-2002 PlacementInstrument par value Readjust- rate Interest Amortization in Chile
placed ment Unit payment payment or Abroad
15. Provisions and Write-offs (in thousands U.S. Dollars – US$)
Doubtful debtors write-offs amounted to US$ 915 thousand to 31st December 2003 (US$ 4,493 thousand in 2002).
16. Severance Indemnities
In 2003, US$ 2,487 thousand (including exchange rate differences) were charged to income for severance indemnities, andpayments for US$ 592 thousand were made (US$ 393 thousand and US$ 2,931 thousand in 2002, respectively).
17. Equity Changes
a) Dividends
The bylaws do not contain any dividend payment restrictions. In any event, these are payable in Chilean pesos.
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b) Shareholders Ordinary General Meeting
At the meeting held on April 14th, 2003, the Annual Report, Balance Sheets and Results for 2002 were unanimously approved.Net income was distributed as follows:
In thousands of US$ DollarsDividends:Interim No. 306 3,123Final No. 307 11,588Deficit accrued during the development period 4Accumulated earnings 22,063Total 36,778
The meeting also approved, for the year 2003, as dividends policy and future earnings distribution to complete at least 40% ofthe net income of the year, authorizing the Board of Directors to define the opportunity and the amounts of the interim dividendsto be paid, which will be effected depending on the results during the period and also, distribute dividends to Future DividendFunds without Shareholders General Meeting’s approval, when necessary.
c) Other Reserves
Up to December 31st, 2003, differences arising from applying the equity valuation method to investments in related companieswhose books are kept in currencies other than US dollars, it has been adjusted with credit to other reserves. Up to December31st, 2003 this adjustment entailed a credit of US$ 20,528 thousand (a charge of US$ 7,443 thousand in 2002). This adjustmentmainly corresponds to the investments in the subsidiary Sudamericana, Agencias Aéreas y Marítimas S.A.
Conversion differences adjustment
31.12.2003 31.12.2002Other reserves initial balance (24,671) (17,228)Sudamericana, Agencias Aéreas y Marítimas S.A. 20,475 (7,405)Logística Integral S.A. - (82)Corvina Shipping Co. S.A. (16)Compañía Sud Americana de Vapores GmbH 62 47Other 7 (3)Accumulated total (4,143) (24,671)
d) Interim dividends
The Board of Directors in a meeting held 28th November, 2003 approved the payment of interim dividend of $ 4.5 per share,which will be paid January 13th, 2004.
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Equity Changes
Original balance 170,000 (24,671) 28,347 295,143 (3,123) (4) 36,778 170,000 (17,228) 32,304 279,795 (8,251) (63) 26,081Result distribution 22,063 14,711 4 (36,778) 15,585 10,432 63 (26,081)Final dividend (11,588) (2,181)Accumulated development cost (162) (4)Investment adjustment 20,528 (7,443) (236)Eventual final dividend (3,957)Net income for the year 72,323 36,778Interim dividends (14,929) (3,123)Final balance 170,000 (4,143) 28,347 317,206 (14,929) (162) 72,323 170,000 (24,671) 28,347 295,144 (3,123) (4) 36,778Updated balances 170,000 (24,671) 28,347 295,144 (3,123) (4) 36,778
Headings Capital Other Future Accumulated Interim Develop- Net equity Capital Other Future Accumulated Interim Develop- Net equitypaid reserves dividends results dividends ment cost income for paid reserves dividends results dividends ment cost income for
reserves the year reserves the year
31-12-2003 31-12-2002
Stocks:
Series Number of subscribed shares Number of paid shares Number of Voting SharesUnique 735,844,521 735,844,521 735,844,521
Capital (in thousands of U.S. dollars – US$)
Series Subscribed capital Payment capitalUnique 170,000 170,000
Deficit accrued during the development period of subsidiaryAmount
ID Companies Period Accumulated Remark99.511.240-K Antofagasta Terminal Internacional S.A. 140 140 -96.696.270-4 Inmobiliaria Marítima Portuaria S.A. 1 1 -86.712.100-5 Compañía de Servicios de Movilización Ltda. 21 21 -
18. Other non-operating Income and Expenses (in thousands of U.S. dollars – US$)
Other non-operating income31.12.2003 31.12.2002
Amortization on deferred results for ship’s sales and ship’s building contract 82 5,164Income in fixed assets sale 387 103Adjustments 145 159Other 617 239Total 1,231 5,665
Other non-operating expenses 31.12.2003 31.12.2002Loss in fixed assets sale 166 1,368Loss in inventories sale 355 133Expenses for sale of asset 59 313Other 451Total 1,031 1,814
19. Exchange Rate Differences (in thousands U.S. Dollars – US$)
20. Statement of Cash Flow
In accordance with the stipulations in the Securities and Insurance Superintendent’s Office Circular No. 1501, a summaryfollows of the main funding activities involving future flow for the Company:
Funding Activities
a) Interim dividend No. 310 for US$ 5,330 thousand to be paid by January 2004 and payment of old payable dividends for US$572 thousand. It is unknown when their shareholders will collect old dividends and if this does not occur within five years, theprovisions of clause 85 of the Corporations Law 18,046 will be applied, i.e. they will be paid to the Chilean Firemen Institution.
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21. Derivative Contracts (in thousands U.S. Dollars – US$)
FR CCPE 10,000 I 2004 EXCHANGE RATE US$/UF C TIME DEPOSIT IN UF 10,000 10,000 TIME DEPOSIT IN UF 1,851 1,851FR CCPE 20,000 I 2004 EXCHANGE RATE US$/UF C TIME DEPOSIT IN UF 20,000 20,000 TIME DEPOSIT IN UF 3,702 3,702FR CCPE 5,337 I 2004 EXCHANGE RATE US$/CHP C PAYMENT DIVIDEND IN CHILEAN PESOS 5,337 5,337 PAYMENT DIVIDEND IN CHILEAN PESOS 247 247C CCTE 5,948 I 2004 FUEL PRICE C FUEL PURCHASE 5,948 FUEL PURCHASE
C CCTE 5,948 I 2004 FUEL PRICE C FUEL PURCHASE 5,948 FUEL PURCHASE
C CCTE 5,948 I 2004 FUEL PRICE C FUEL PURCHASE 5,948 FUEL PURCHASE
C CCTE 17,550 I 2004 FUEL PRICE C FUEL PURCHASE 17,550 FUEL PURCHASE
Type of Type of Contract Due or Specific Purchase / Protected Entry of the Asset / Liability Effected as resultderivative contract value expiry date Item sale status or transaction protected effected Non
Name Amount entry Name effected
22. Contingencies and Restrictions
a.1). Guarantees granted
On July 24th, 1997, the Company granted a guarantee letter in favor of its subsidiary Inversiones Nuevo Tiempo S.A., Panama,to cover a line of credit for US$ 150,000 thousand contracted with a syndicate of banks led by Nedship Bank (America) N.V.This line of credit was used to finance investments required by the Company’s subsidiaries. On April 26th, 2002, a semi-annualrepayment program was agreed, that meant the reduction of the maximum amount of the credit to US$ 95,000 thousand.During 2003, the Company made three voluntary payments for a total amount of US$ 74,000. The amount drawn at December31st 2003 is US$ 5,000 thousand (US$ 87,000 thousand, in 2002) out of a maximum of US$ 71,000 thousand (US$ 95,000thousand, in 2002).
On July 20th,1999, Compañía Sud Americana de Vapores S.A. granted its guarantee for its subsidiaries Bureo Shipping Co.S.A., Maule Shipping Co. S.A. and Malleco Shipping Co. S.A. to cover a line of credit for US$ 62,500 thousand from asyndicate of international banks led by Nedship Bank (America) N.V. This line of credit was used to finance ship purchases byeach of these subsidiaries. The ships acquired by Malleco Shipping Co S.A. and Maule Shipping Co. S.A. was sold in thesecond half of 2000 and the respective debts were repaid. The loan of Bureo Shipping Co. S.A. remained outstanding, with abalance of US$ 21,956 thousand at December 31st, 2002. At December 31st, 2003, this line of credit has been reduced to US$20,108 thousand and the direct debtor, Bureo Shipping Co. S.A. has provided a ship mortgage over the MV Toltén, whose bookvalue at December 31st, 2003 is US$ 31,463 thousand.
With respect to the transaction mentioned in the preceding paragraph, Compañía Sud Americana de Vapores S.A. has guaranteedan interest rate hedge contract for US$ 62,500 thousand signed by the subsidiaries Bureo Shipping Co. S.A., Maule ShippingCo. S.A. and Malleco Shipping Co. S.A. with Nedship Bank (America) N.V., which is now limited to the contract of BureoShipping Co. S.A. for US$ 20,108 thousand.
On 7th September 2000, Compañía Sud Americana de Vapores S.A. maintain a bank guarantee, through the Bank of America,in favor of the European South Pacific Magellan Conference for the purpose of ensuring fulfillment of their financial commitments.The guarantee figure amounted to 30,000 pounds sterling.
On 31st January 2003, Compañía Sud Americana de Vapores S.A. issued a bank guarantee, through the Scotiabank – SudAmericano, in favor of the “Minera Los Pelambres” for the purpose of ensuring fulfillment of the financial commitments. Theguarantee figure amounted to Ch$147,800,000 (US$ 202 thousand), expiring date 31st March 2005.
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The Company approved a project for the acquisition of 50% of four 3,100 Teus ships ordered from the shipyard StoczniaSzczecinska Nowa Sp. Z., Poland. The other 50% will be maintained by the German partner Peter Döhle Schiffarts KG. In2003, the first ship was sold, there remaining pending the delivery of three ships in February 2004, November 2004 andFebruary 2005. The cost price is payable on the delivery of each ship, CSAV having to contribute its 50% share.
The total investment of these three vessels amounted US$ 105,600 thousand in which either CSAV or any of its subsidiarieswill acquire 50% of it with the guarantee of CSAV.
The Company, through its subsidiary Brunswick Investment Co. Inc. and with the guarantee of CSAV, has also signed twoshipbuilding contracts with China Shipbuilding Corporation (CSBC) of Taiwan both related to two types of ships:
a) Three 4,050 Teu ships to be delivered successively between April 2005 and December 2006.
b) Three 5,500 Teu ships to be delivered successively between December 2004 and October 2006.
CSAV guarantees to the shipyard all the obligations of its subsidiary Brunswick Investment Co. Inc.
On the other hand, Peter Döhle Schiffahrts KG has signed a similar contract with the same shipyard.
The two transactions mentioned with the CSBC shipyard represent a total investment of US$ 562,500 thousand.
Together with the vessels delivery, they will be hand over to the companies in which Brunswick Investment Co. Inc. and PeterDöhle Schiffahrts KG participate in equal property (ownership).
To finance the acquisitions from Stocznia Szczecinska Nowa Sp. Z., Poland, shipyard and China Shipbuilding Corporation(CSBC), Taiwan, there have been arranged with HSH Nordbank long-term loans to be drawn on the delivery of each vessel fora value of up to 90% of these investments, where the total amount involved is US$ 664,500 thousand. The Company and PeterDöhle Schiffahrts-KG, each acting through one of its subsidiaries, should finance the other 10% with their own funds, that isUS$ 34,925 thousand each one.
As part of these financing arrangements, the Company is obliged to give its joint and several guarantee for its subsidiaries, onequal conditions to its partner Peter Döhle Schiffahrts-KG, in favor of HSH Nordbank AG, Hamburg, Germany to cover therespective loans. This guarantee will be, in each case, for the equivalent of 10% of the cost of the respective ship, whichpercentage is increased by 20% to cover interest and expenses, making a total of 12% of the cost of each ship. This percentage,in the case of some of these ships, could amount to 15%, that would rise to 18% of their value, being increased by interests andexpenses.
On 14th February 2003, a credit contract was subscribed between Compañía Sud Americana de Vapores S.A. and DeutscheSchiffsbank for US$ 15,615 thousand which was obtain the total amount at that date. Such loan was contracted to finance theacquisition of MV Mapocho. The update amount in US$ 15,055 thousand and the vessel book value is US$ 16,196 thousandboth values at 31st December 2003.
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The Company has granted a ship mortgage in cover of its obligations with Deutsche Schiffsbank for up to a principal sum ofUS$ 15,615 thousand. It also signed a promissory note on the same day in favor of the creditor, conditionally assigned certainrevenues and insurance policies relating to the ship and granted a pledge over certain rights, credits, receivables and revenuesrelating to the ship.
On May 22nd, 2003, Compañía Sud Americana de Vapores S.A. granted its guarantee in favor of its subsidiary Pacific WinnerShipping Co. S.A., Panama, to cover a credit contract for US$ 12,500 thousand with Den Norske Bank ASA to be expended atthe same date. This loan was contracted to finance the acquisition of MV Pacific Winner which was afterwards acquired byCompañía Sud Americana de Vapores S.A. from its subsidiary setting up mortgage over this vessel in order to guarantee a loangiven by Den Norske Bank ASA to the subsidiary Pacific Winner Shipping Co. S.A.. The updated amount is US$ 11,990thousand and the vessel book value is US$ 12,041 thousand both values at 31st December 2003.
On August 1st, 2003, Compañía Sud Americana de Vapores S.A. guaranteed its subsidiary Tollo Shipping Co. S.A., Panama infavor of American Family Life Assurance Company of Columbus (AFLAC), agency in Japan, a loan for JPY 24,000,000,000(twenty-four billion Japanese yen), equivalent to USD 201,850,294 (two hundred and one million, eight hundred and fiftythousand, two hundred and ninety-four US dollars). This loan was directed to pay outstanding debts, to public acknowledgedinvestments and to projects that complement businesses of CSAV or its subsidiaries. The loan, with a term of 30 years, will befully payable in yen on final maturity. Interest will be paid in US dollars semi-annually. The loan may be prepaid, fully orpartially, after the fifteenth year on any interest payment date.
On July 18th, 2003, Compañía Sud Americana de Vapores S.A. guaranteed its subsidiary Tollo Shipping Co. S.A., Panama infavor of Goldman, Sachs & Co. in cover of one or more yen-dollar exchange rate hedge contracts over the term of the loanmentioned in the preceding paragraph, should the yen revalue over its present level and up to an agreed margin, through thepayment of an annual rate payable semi-annually on the interest-payment dates of the loan.The interest rate and cost of this exchange rate cover for this financing is 6.3% annually.
The Company approved a plan to acquire three 6,500 Teu ships ordered to the shipyard Hyundai of Korea (Hyunday HeavyIndustries Co., Ltd.). The delivery of these vessels has the following schedule: a) the first two during the fourth quarter of 2006;b) the third, during the first quarter of 2007.
The total investment in this transaction (three vessels) is US$ 206,450 thousand, that will be acquired by the subsidiaryBrunswick Investment Co. Inc. with the guarantee of CSAV.
CSAV issued its guarantee in favor of the shipyard to cover the obligations of its subsidiary Brunswick Investment Co. Inc.
On the other hand, Peter Döhle Schiffarts KG has signed a similar contract with the same shipyard.
On delivery of the ships, they will be contributed to companies jointly owned by Brunswick Investment Co. Inc. and PeterDöhle Schiffarts KG.
For purposes of guaranteeing the issuance of payment guarantee issued by the Banco Bilbao Vizcaya Argentaria, S.A., LondonBranch in favor of Aassuranceforeningen Gard, for the account of Sud Americana de Vapores S.A. signed a standby letter ofcredit to be issued with BBVA Banco Bhif for a maximum sum of US$ 14,000 thousand. Validity period until 2nd March 2004.
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a.2) Documents in guarantee
The Company maintains a guarantee with the Chilean Treasury for US$ 3,013 thousand at 31st December 2003 (US$ 3,292thousand in 2002).
There are other insignificant guarantees that are not necessary to mention for the interpretation of these financial statements.
b) Other guarantees
The Company guarantees that an insurance policy will be taken out making it possible to obtain the guarantees which the U.S.government requires for domestic transportation of goods by subsidiaries Companhia Libra Navegaçao, Montemar MarítimaS.A. and Norasia Container Lines Ltd.
On November 21, 2003, Compañía Sud Americana de Vapores S.A. guaranteed the obligations of its subsidiary CorvinaShipping Co. S.A. to indemnify or provide funds to cover 50% of any amounts payable or collectable by any of DrylogBulkcarriers Ltd., Drylog Ltd. or Churchill Investments Corporation Ltd. under their respective guarantees of the obligationsof the Panamanian company 50% owned by Corvina Shipping Co. S.A., Dry Bulk Handy Holding Cinc., under (i) a loangranted by HSH Nordbank AG for up to US$ 9,102,096 and (ii) a sale contract with respect to the ships Magnes and Virgo forTh¥ 906,602 and US$ 28,335 thousand.
c) Other legal contingencies
The Company is the subject of various lawsuits and arbitrations related to cargo transport and damages, and these are coveredby insurance. Sufficient provisions are held to cover the amounts of deductibles.
The Company, where credits currently held with private banks, both in local and foreign currency, are concerned, is tied tostandard covenants for this type of transactions. In relation to the financial statements referred to as at 31st December 2003 theCompany has complied with these convenants.
d) Restrictions on negotiations or financial indicators
d.1) Nedship Bank line of credit US$ 71,000 thousand – a) Financial indebtedness will not exceed 100% Tangible Net Worthb) Tangible Net Worth not less than US$ 350,000 thousand c) Maintain a free liquid Asset minimum of US$ 50,000 thousand(Available, Time deposits and Negotiable instruments). Indicators were calculated based on consolidated financial statements.
d.2) Nedship Bank line of credit US$ 20,108 thousand – a) Net financial indebtedness will not exceed 120% Tangible NetWorth b) Tangible Net Worth not less than US$ 350,000 thousand c) Maintain a free liquid Asset minimum of US$ 50,000thousand (Available, Time deposits and Negotiable securities). Indicators were calculated based on consolidated financialstatements.
d.3) Commitments with the public (Readjustable Bonds) UF 1,950,000 – a) Assets, free of any type of lien, must always be atleast 1.3 times the outstanding amount of the total financial liabilities with no guarantees held by the issuer b) Indebtednesslevel on an individual level whereby the Financial Indebtedness / Total Net Worth does not exceed 1.0 times. Likewise, a levelof indebtedness on a consolidated level must be maintained where the relationship Consolidated Financial Indebtedness /(Total Net Worth + Minority Interest) must not exceed 1.2 times c) Minimum individual and consolidated Net Worth US$350,000 thousand.
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Direct Guarantees (in thousands U.S. Dollars – US$)
Nedship Bank Inversiones Nuevo Tiempo S.A. Subsidiary Guarantee - 5,000 87,000 - - - - - -Nedship Bank Bureo Shipping Co. S.A. Subsidiary Guarantee/Mortgage Ship 31,463 20,108 21,956 1,848 - 1,848 - 1,848 -American Family Life Assurance Company of Columbus Tollo Shipping Co. S.A. Subsidiary Guarantee - 201,850 - - - - - - -
Deutsche Schiffsbank Compañía Sud Americana de Vapores .S.A Nil Mortgage Ship 16,196 15,055 1,120 Ship 1,120 Ship 1,120 VesselDen norske Bank ASA Pacific Winner Shipping Co. S.A. Subsidiary Guarantee/Mortgage Ship 12,041 11,990 1,020 Ship 1,020 Ship 1,020 Vessel
Indirect Guarantees (in thousands U.S. Dollars – US$)
23. Bail Received from Third Part
There were no bail received from third part in 2003 and 2002.
24. Local and Foreign Currencies (in thousands U.S. Dollars – US$)
Assets (in thousands U.S. Dollars – US$)
d.4) American Family Life Assurance Company of Columbus (AFLAC) contract of credit US$ 201,850 thousand – a) Interestcoverage ratio (EBITDA / Net Interests) must not be less than 2.5 b) Leverage ratio must not be greater than 1.0 c) MinimumCash Level (Available, Time Deposit and Negotiable Instruments) must not be less than US$ 50,000 thousand.
d.5) Den norske Bank contract of credit US$ 12,500 thousand – a) Intangible Net Worth will not be less than US$ 350,000thousand and it will increase quarterly with an amount of 50% of the net income for the year b) Financial indebtedness to theIntangible Net Worth should be smaller than 1.0 c) Maintain minimum balance of US$ 50,000 thousand in cash short termdeposit and marketable securities.
In addition, the credits and bonds obliges the Company to comply with certain affirmative restrictions, such as abiding by thelaw, payment of taxes, insurance coverage and other similar, and also compliance with certain negative restrictions, such as noliens are permitted, except when authorized by the contract, no mergers with companies except when authorized or no sales offixed assets. The Company has fully complied with these restrictions or covenants.
Creditor of the Guarantee Debtor Type of Guarantee Assets in Guarantees Pending balance as of Realized GuaranteesName Relationship Type Book Value 31-12-2003 31-12-2002 31-12-2004 Assets 31-12-2005 Assets 31-12-2006 Assets
Creditor of the Guarantee Debtor Type of Guarantee Assets in Guarantees Pending balance as of Realized GuaranteesName Relationship Type Book Value 31-12-2003 31-12-2002 31-12-2004 Assets 31-12-2005 Assets 31-12-2006 Assets
US Dollar 50,664 35,298Deferred taxes Chilean pesos 2,647 2,703Other current assets Chilean pesos - 150
US Dollar 3,217 2,836
Fixed AssetsLand US Dollar 3,014 3,011Buildings and infrastructure US Dollar 15,412 14,567Machinery and equipments US Dollar 64,739 55,940Other fixed assets US Dollar 2,990 154Higher value of fixed assets from technical appraisal US Dollar 114Depreciation US Dollar -27,562 -25,540Other AssetsInvestment in related companies Chilean pesos 186,193 151,852
US Dollar 515,610 461,109Euro 396 316
Investments in other companies Chilean pesos 34US Dollar 170 129
Negative goodwill US Dollar -4,217 -4,779Debtors long term Chilean pesos 4,087 3,780
US Dollar 2 2Due from related companies long term Chilean pesos 504 8,177
US Dollar 40,832 45,069Other Chilean pesos - 2,752
Luis Mariángel R. Patrick Horn G.Chief Accountant Senior Vice President
Administration and FinanceRicardo de Tezanos Pinto D.
General Manager
25. Sanctions
During the periods 2003 and 2002, the Company and its subsidiaries, their directors and managers were no penalties by theStock and Insurance Superintendent’s Office and other administrative entities.
26. Subsequent Events
a) The board, at its meeting held on January 22nd, 2004, with the unanimous decision of the assisting Directors accepted theresignation presented by Director Mr. Bernardo Larraín Matte.
b) Between December 31st, 2003 and the date of presentation of these reports, there are no other events that could significantlyaffect the presentation and/or interpretation of Financial Statements of the Company.
27. The Environment
The Company and subsidiaries, due to the nature of its services, does not incur disbursements related with the improvementand/or reversion of productive procedures, verification and control over fulfillment of ordinances and laws relating to industrialprocesses and facilities and any others which could directly or indirectly affect environmental protection.
28. Prepaid Expenses (in thousands U.S. Dollars – US$)
31.12.2003 31.12.2002Bunkers stock 14,789 8,101Insurance 2,206 830Ship chartering 20,885 13,071Positioning of vessels and containers 2,632 3,955Results from vessels underway 8,633 7,102Price coverage contracts for fuel premium 1,113 1,387Other 2,346 855Total 52,604 35,301
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RATIO ANALYSIS SUMMARY
1. Analysis of the Unconsolidated Financial Statements
BALANCE SHEET
Total assets at December 31st, 2003 increased by US$ 199,143 thousand compared to US$ 1,053,773 thousand in 2002.Current assets increased by US$ 61,585 thousand, Fixed assets by US$ 10,347 thousand and Other assets by US$ 127,211thousand.The increase in Current assets included rises in Time deposits, Trade accounts receivable, Note and accounts receivable fromrelated companies and Prepaid expenses, offset by a reduction in Cash and banks.Fixed assets rose basically because of the acquisition of the vessel "Pacific Winner" during the year less the sale of the "PacificRider".Other assets increased mainly because of the increase in Investments in related companies of US$ 88,922 thousand due to theresults of the subsidiaries and capital increase of the subsidiary SAAM, and a reduction in Notes and accounts receivable fromrelated companies of US$ 11,910 thousand, plus an increase in Other assets of US$ 49,323 thousand due to investments inbonds.
Current liabilities rose by US$ 107,414 thousand mostly due to the increase in Notes and accounts payable to related companies,Notes payable and Unearned income, and reductions in Bonds payable (current portion) following the repayment of the Eurobondsin December 2003 and in Accounts payable.
Long-term liabilities increased by US$ 25,558 thousand due to the rise in Borrowings from banks of US$ 13,935 thousand dueto the financing obtained for the purchase of the "Mapocho" and an increase in Bonds payable because of the effect of the pesorevaluation on bonds denominated in UF.
The Company’s shareholders’ equity shows an increase of US$ 66,171 thousand compared to the year before caused mainly bynet income for the year less dividends paid.
STATEMENT OF INCOME
The result for 2003 was a net income of US$ 72,323 thousand compared to US$ 36,778 thousand the year before.
CSAV’s sales were US$ 922,321 thousand, representing an 11% increase over 2002, mainly explained by an increase in thevolume of containers carried.
The Cost of sales of US$ 807,719 thousand showed a rise of 11% over the year before, in line with the greater volumes carried andincreases in fuel costs and ship charters. Fuel costs exceed those of the year before because of the sustained rises in oil prices dueto the conflicts in the Middle East and Venezuela. With the ending of the conflicts, fuel prices remained high because of theincrease in global activity and price agreements among the principal producers. The higher ship charter rates also have their originin the increase in trading activity which generates an imbalance between the global supply and demand for shipping capacity.
Administrative and selling expenses were US$ 91,310 thousand, 6% higher than in 2002. Administrative expenses declined as areflection of the cost reduction efforts begun in 2002, which helped offset the increase in sales commissions which increased inline with the higher volumes transported.
Taking all the above into account, Operating income is US$ 23,292 thousand, representing an increase of 37% over the previousyear.
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Non-operating income amounted to US$ 49,225 thousand, considerably higher than that of 2002 which was US$ 21,441thousand. Notable in this result was the higher net income from related companies of US$ 43,990 thousand which more thanoffset the adverse change in Exchange differences of US$ 14,689 thousand whose main impact derived from the effects of therevaluation of the Chilean peso against the US dollar on the valuation of local currency liabilities, and the reduction in Otherexpenses-income (net) of US$ 3,651 thousand.
- The container traffics operated by the subsidiaries Companhia Libra de Navegacao and Montemar Marítima in South Americaincreased their volumes carried during 2003. The results however were below 2002 due to the increased costs which are notcompensated by higher freight rates which remained depressed due to the overcapacity in many of the traffics.
- The east-west traffics operated by the subsidiary Norasia Container Lines Ltd. show an increase around 30% in the carriedvolumes in comparison with the previous year which together with the consistently increase in freight rates allowed to produceprofits with a substantial improvement in comparison with the losses shown in the previous year. Notable in this result was thestrength of trade between China and the rest of the world which quickly absorbed the ship over-capacity seen the previousperiod.
The subsidiary SAAM has continued to produce satisfactory and stable results which amounted to M$ 18,293,273 equivalent toUS$ 30,807 thousand in 2003, an increase of 10% in comparison with 2002 profit.
The subsidiary Inversiones Plan Futuro S.A. which holds 50% of the companies operating the OBO ships, obtained a netincome of US$ 28,922 thousand, 82 % higher than in 2002 due to the good conditions prevailing in the market.
Trends in the principal financial indicators at December 31st, 2003 are as follows:
LIQUIDITY INDICATORS
. Current ratio: this is slightly higher than in December 2002 as the increase in Current assets is proportionately higher to thatof Current liabilities.
· Acid test: greater than at December 2002 due to the increase in available funds.
INDEBTEDNESS INDICATORS
- Debt: The debt ratio at December 2003 is higher than December 2002 as liabilities grew at a faster rate than shareholders’equity.
. Short-term debt: a slight fall competed to December 2002.
· Long-term debt: increase over December 2002 due to the loan obtained to finance the "Mapocho" ship.
· Financial expense cover: this ratio is higher than the year before as net income for the year was much higher while Financialexpenses remained stable.
PROFITABILITY INDICATORS
. Return on equity: this was higher than the previous period due to the better results in 2003.
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· Return on assets: this has also increased due to the improved results in 2003.
· Return on operating assets: operating income was higher than in 2002 while operating assets also showed an increase. Thecombination of these factors produces a positive change in this ratio.
· Dividend yield (figures in US$ cents): the yield at December 2003 is better due to the higher amount paid as dividends.
· Earnings per share (in US cents): with a constant number of shares for both years, the higher result in 2003 produced a muchimproved earnings per share ratio.
· Share price (in Ch$): there was a Ch$450.00 increase compared to December 2002, being this in Ch$770.00 at 31st December,2003.
2. Difference between the economic and book vales of assets
The financial statements at December 31st, 2003 have been prepared in accordance with generally accepted accounting principlesand the general and specific instructions of the Superintendency of Securities and Insurance, the Company’s regulatory authority.
The book value of the principal asserts of the Company does not significantly vary from their commercial value.
3. Market situation
The shipping industry has continued to show the favorable trends in volumes and freight tariffs during 2003 that were first seenin the second half of 2002. China is playing a key role in this increased freight demand, both in the import of inputs and theexport of value-added products. The increased freight demand has affected the cost of chartering container and bulk ships,which has increased significantly.
The economies in South America have had a low growth, exports have shown a healthy growth and the revaluation of thecurrencies of the most important economies has improved import potential which has slowly begun to show a certain recovery.
The volumes and freight rates on the principal traffics east-west operated by Norasia, particularly those covering China, improvedand with them the results of this subsidiary.
Sales of CSAV to December 2003 increased by US$ 91,460 thousand compared to the same period of 2002, mainly reflectingthe greater volumes carried.
4. Cash Flow Analysis
The Company’s operations generated a positive net cash flow of US$ 194,534 thousand in 2003, compared to US$ 172,216thousand during 2002.
Financing activities generated a net negative cash flow of US$ 84,845 thousand following the drawing of a loan for US$ 15,615thousand for the purchase of the Mapocho ship, payment of dividends for US$ 23,900 thousand, repayment of Eurobonds forUS$ 76,000 thousand and loan repayments of US$ 560 thousand. The negative flow of US$ 7,826 thousand in 2002 related todividend payments.
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Investment activities produced a net negative cash flow of US$ 79,565 thousand. The principal flows came from the collectionof loans to related companies of US$ 11,217 thousand, higher disbursements of US$ 25,103 thousand in investments in relatedcompanies relating to the capital increase of the subsidiary SAAM and US$ 300 thousand in two foreign subsidiaries during theyear, plus higher investments in financial instruments of US$ 50,000 thousand.
5. Market Risk Analysis
CSAV participates in a highly-competitive market in which cargo volumes are directly affected by global economic growth.This generates cycles associated with the principal industry variables like ship charter rates, freight rates, fuel prices, exchangerates and cargo volumes, which demand constant control to maintain a competitive presence in the world shipping market.
One of the challenges facing CSAV is to link a chartering strategy coherent with freight rate variables. The Company´s charteringcontracts run from 6 months to 5 years at fixed rates and freights fluctuate in the short term.
Regarding commodity price risks, the most important are those of ship fuels. To cover this, the Company holds no significantstocks and a portion of the freights charged to customers are adjusted according to variations in fuel prices. The Company alsotakes out fuel price hedging contracts.
Regarding the interest rate risk, the Company has issued bonds for UF 1,950,000 and granted mortgage loans for US$ 1,692thousand, which carry fixed interest rates. All other interest-bearing assets and liabilities are at variable rates. Interest rate coveris taken out to cover debt with floating rates.
Regarding exchange risks, the Company has 92% of its sales and 86% of its cost of sales in US dollars, 6% and 4% respectivelyin euros, 1% and 3% respectively in Chilean pesos and the rest in other currencies.
Assets and liabilities are generally denominated in US dollars, but there are others in other currencies which are detailed underLocal and foreign currencies (Note 24) in the consolidated financial statements.
The Company’s policy regarding exchange risks has been not to cover the mis-match in Chilean pesos. No permanent policyexists in this regard.
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Financial Indicators - Individual
To: Dec.03 Dec.02
Current liquidity = Current Assets 0.479 0.444Current Liabilities
Acid test = Available resources 0.103 0.038Current Liabilities
Leverage ratios = Total Liabilities 0.853 0.701Shareholders’ Equity
= Short-term debt 0.834 0.844Total debt
= Long-term debt 0.166 0.156Total debt
Financial expense cover = Income before taxes and interests 6.346 3.792Financial expenses
Return on equity Net = Net income for the year 0.135 0.075Average shareholders’ equity
Return on assets = Net income for the year 0.076 0.044Average assets
Return on operating assets = Operating income 0.376 0.332Average operating assets (1)
Dividends yield(US$ cents) = Dividends paid in last 12 months 2.548 2.337
Share market value
Earning per share = Net income for the year 9.829 4.998(US$ cents) Number of shares
Market value (Chilean Pesos) 770.00 320.00
(1) Operating assets = Machinery and equipment and other fixed assets
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Total Assets To: Dec.03 Dec.02(millions of US dollars)
Current 193.627 132.042Fixed 58.593 48.246Other 801.553 674.342
Total assets 1,053.773 854.630
Increases / Decreases for: January to: Dec.03 Dec.02
Fixed assets:Purchases 19.134 17.927 Sales 3.838 2.819Investments in Subsidiaries:
AMERICAN TRANSPORTATION COMPAÑIA SUD AMERICANA INVERSIONES PLAN INVERSIONES NUEVO NORTH TRADE SOUTH TRADE EAST TRADE CSAV NORASIA NORGISTIC ( CHINA)GROUP, LLC Y FILIAL DE VAPORES GMBH FUTURO S.A. TIEMPO S.A. SHIPPING CO. INC. SHIPPING CO. INC. SHIPPING CO. INC. GROUP ( CHINA) LTD
( Estados Unidos ) ( Republica Alemana ) ( República de Panamá) ( República de Panamá) ( Islas Marshall ) ( Islas Marshall ) ( República de Panamá)
AMERICAN TRANSPORTATION COMPAÑIA SUD AMERICANA INVERSIONES PLAN INVERSIONES NUEVO NORTH TRADE SOUTH TRADE EAST TRADE CSAV NORASIA NORGISTIC ( CHINA)GROUP, LLC Y FILIAL DE VAPORES GMBH FUTURO S.A. TIEMPO S.A. SHIPPING CO. INC. SHIPPING CO. INC. SHIPPING CO. INC. GROUP ( CHINA) LTD
( Estados Unidos ) ( Republica Alemana ) ( República de Panamá) ( República de Panamá) ( Islas Marshall ) ( Islas Marshall ) ( República de Panamá)
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Declaration of Responsibility
The undersigned, in their capacity as Members of the Board of Directors, and General Manager, of Companía Sud America-na de Vapores S.A., domicile Plaza Sotomayor 50, Valparaíso, declare under oath that the information contained in thisAnnual Report covering the Financial Year 2002 is truly consistent with the background data we were able to establish withthe diligence required by the positions we hold, and we therefore accept the pertinent responsibility.
Ricardo Claro Valdés President 3.158.999-1
Felipe Lamarca Claro Vicepresident 4.779.125-1
Luis Alvarez Marín Director 1.490.523-5
Arturo Claro Fernández Director 4.108.676-9
Jaime Claro Valdés Director 3.180.078-1
Patricio García Domínguez Director 3.309.849-9
Baltazar Sánchez Guzmán Director 6.060.760-5
Christoph Schiess Schmitz Director 6.371.875-0
Joaquín Barros Fontaine Director 5.389.326-0
Patricio Valdés Pérez Director 7.443.809-1
Ricardo de Tezanos Pinto Domínguez General Manager 8.010.829-k
