FORM 6-K 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

For the month of October, 2018

Commission File Number: 001-37723

Enel Chile S.A. 
(Translation of Registrant’s Name into English)

Santa Rosa 76
Santiago, Chile 
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  [X]   Form 40-F  [   ]

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes    [  ]      No    [X]

Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes    [  ]      No    [X]

Indicate by check mark whether by furnishing the information
ontained in this Form, the Registrant is also thereby furnishing the
information to the Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes    [  ]      No    [X]

If °;Yes” is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A

 

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SUMMARY BY BUSINESS

 

Generation

 

§  Net electricity generation increased 13% when compared to September 2017 (+1,678 GWh) reaching 14,399 GWh mainly due to the addition of EGP Chile power plants since April 2 (+1,641 GWh) and also an increase in Enel Generación Chile generation (+37 GWh) due to greater hydro dispatch (+1,194 GWh) as a consequence of better hydrological conditions, which was partially offset by lower thermal dispatch (-1,158 GWh).

 

§  Operating revenues amounted to Ch$ 1,128,615 million as of September 2018, equivalent to a 3.52% reduction, mainly due to a lower average energy sales price expressed in Chilean pesos.

 

§  Procurement and services costs decreased significantly to Ch$ 571,693 million, 19% less than the amount at September 2017. These cost savings mainly responded to a more efficient generation mix, which led to lower fuel costs, lower energy purchases and other variable procurement and services costs.

 

§  As a result of the abovementioned, the EBITDA of the generation business totaled Ch$ 443,630 million, equivalent to a 19% increase when compared to the figure for same period of last year. Likewise, operating income grew 11% to Ch$ 316,198 million. The increase in both figures responds to the addition of the results of EGP Chile since April 2018.

 

 

Physical Data                                                   As of September 30, 2018

Total Sales (GWh)                                                                   17,694

Total Generation (GWh)                                                         14,399

 

 

Distribution

 

§  Physical sales reached 12,612 GWh as of September 2018, representing a 1.9% increase compared to the same period of last year and is explained by higher toll revenues.

 

 

• 2 •

 

§  The total number of customers increased 1.8% to 1,903,896 when compared to September of 2017, mainly residential and commercial customers. Annual energy losses declined from 5.2% to 5.1%.

 

§  EBITDA of the distribution business decreased 1% to Ch$ 138,209 million as of September 2018, and net income attributable to the controlling shareholders of Enel Distribución Chile decreased 4% to Ch$ 82,377 million.

 

Physical Data                                                  As of September 30, 2018

Total Sales (GWh)                                                                   12,612

Customers                                                                             1,903,896

 

 

 

FINANCIAL SUMMARY

 

§  Gross debt of the company increased US$ 2,498 million to US$ 3,770 million when compared to September 2017. This variation is mainly a consequence of consolidating the debt of EGP Chile into the Enel Chile Group, and also the debt committed to by Enel Chile in March 2018 to finance the Elqui Project and long-term refinancing through the issuance of a Yankee Bond for US$ 1,000 million in June 2018.

 

§  Liquidity available to Enel Chile corresponds to cash and cash equivalents for US$ 302 million.

 

§  In addition, there are undisbursed committed credit lines for US$ 318 million.

 

§  The average cost of Enel Chile’s debt as of September 2018 was 5.2%.

 

 

 

 

§  Hedging and protection:

 

To mitigate the risks associated with exchange rate and interest rate variations, Enel Chile has established policies and procedures to protect its financial statements against the volatility of these variables.

 

Enel Chile’s exchange rate hedging policy states that there should be a balance between the currencies of each company’s operations and the currency of its debt.  Therefore, the Company has cross currency swap and forward contracts that amount to US$ 787 million and US$ 734 million, respectively.

 

• 3 •

 

 

To reduce financial statement volatility caused by interest rate variations, the Enel Chile Group maintains an adequate debt structure balance. Therefore, we have interest rate swaps for US$ 400 million.

 

 

 

• 4 •

 

___________________________________________________________________

 

INFORMATION RELEVANT TO THE ANALYSIS OF THESE FINANCIAL STATEMENTS

 

Change in Scope of Consolidation:

 

Corporate Reorganization Project

 

On August 25, 2017, Enel Chile proposed a corporate reorganization (hereafter “the Renewable Assets Reorganization”)  to Enel S.p.A that involved integrating Enel Green Power Latin America Ltda. (EGPL”) renewable energy assets in Chile into Enel Chile, which controls the conventional electricity generation assets owned by Enel Generacion Chile S.A. (“Enel Generación Chile”) and the electricity distribution assets owned by Enel Distribución Chile S.A.

 

The proposed Reorganization involved the following stages: (i) Public Tender Offer for Shares (“PTO”), (ii) Capital Increase, and (iii) Merger, each stage conditioned to the implementation of the others.

 

On December 20, 2017, the Extraordinary Shareholders’ Meeting of Enel Chile approved the Reorganization subject to complying with the conditions established for the PTO, Capital Increase, and Merger. The Shareholders’ Meeting also approved the Ch$ 1,891,727,278,668 capital increase of Enel Chile through the issuance of 23,069,844,862 new common shares, all of one same series and without par value, for a price and other terms approved by the Shareholders’ Meeting.

 

Finally, on March 25, 2018, the amendments to the articles of incorporation of Enel Chile to include the agreements related to the Merger, Capital Increase and changes to the corporate purpose of Enel Chile, among other provisions, were approved. The PTO took place between February 16 and March 22 of 2018, the subscription of preferred shares related to the capital increase took place between February 15 and March 16 of 2018 and the Reorganization (including the Merger) concluded and became effective on April 2, 2018 and led to the increase in Enel Chile’s shareholding in Enel Generacion Chile from 59.98% to 93.55%. The merger of Enel Chile and EGPL from that date on increased Enel S.p.A total shareholding in Enel Chile to 61.93%.

 

As a consequence of the aforementioned, the results of the Enel Chile Group include the results of the EGP Chile Group since April 2, 2018 and the ownership share of Enel Generación Chile increased from that same date on. For additional information see Note N^o 6 to the Interim Consolidated Financial Statements of Enel Chile as of September 30, 2018.

 

• 5 •

 

 

 

 

MARKETS IN WHICH ENEL CHILE S.A. OPERATES

 

Generation business

 

We own and operate 130 generation units in Chile through our subsidiaries Enel Generación Chile, Pehuenche, Gas Atacama, and EGP Chile, which combined, have a total 7,547 MW installed capacity as of September 30, 2018. Of this total, 40 are hydroelectric units with 3,557 MW installed capacity, 22 are thermal units that operate using gas, coal or fuel oil and together total 2,808 MW installed capacity, 59 are wind generation units with 642 MW installed capacity, 8 are solar generation units with 492 MW installed capacity and 1 generation unit is geothermal with 48 MW installed capacity.

 

The following chart summarizes the physical information of our generation business segment for the period ended September 30, 2018 compared to the same period of 2017:

 

 

 

Distribution business

 

Our distribution business is carried out by our subsidiary Enel Distribución Chile S.A.

 

Enel Distribución Chile is one of the largest electricity distribution companies in Chile, in terms of the number of regulated customers, distribution assets, and electricity sales. It operates in a 2,105 square kilometer concession area. The Chilean Government granted the concession agreement to transmit and distribute electricity to 33 districts of the Metropolitan Region, including the concession areas of our subsidiaries Eléctrica de Colina Ltda., Luz Andes Ltda. and Empresa de Transmisión Chena S.A., for an unlimited period of time. Its service area, from the Chilean tariff regulation perspective, is considered to be primarily a densely populated area.

 

The following chart summarizes the physical information of our distribution business segment for the period ended September 30, 2018 compared to the same period of 2017:

 

• 6 •

 

 

 

 

 

 

The following chart shows the electricity sales revenue per business segment and customer type:

 

 

 

CONSOLIDATED FINANCIAL STATEMENT ANALYSIS

 

1.    Statement of Comprehensive Income Analysis

 

Net income attributable to the controlling shareholders of Enel Chile as of September 30, 2018, reached Ch$ 208,589 million. This amount represents a 15.7% reduction in profit when compared to the same period of last year in which the figure amounted to a Ch$ 247,566 million.

 

 

• 7 •

 

The following chart compares the figure of each item of the income statement as of September 30, 2018 and 2017:

 

 

 

EBITDA:

 

The consolidated EBITDA of Enel Chile amounted to Ch$ 565,872 million as of September 30, 2018, which represents a 12.4% increase when compared to the Ch$ 503,679 million booked the same period of the previous year. This increase is primarily explained by lower operating costs in both generation and distribution business segments.

 

Revenues, operating costs, personnel and other expenses that determine our EBITDA, broken down by business segment for the periods ended September 30, 2018 and 2017, are presented below:

 

 

• 8 •

 

 

 

 

GENERATION BUSINESS EBITDA

 

The EBITDA of our Generation Business reached Ch$ 443,630 million as of September 30, 2018, which represents a Ch$ 71,745 million increase when compared to the same period of the previous year. The main variables that explain this result are described below:

 

Operating revenues amounted to Ch$ 1,128,615 million as of September 30, 2018, a Ch$ 41,170 million reduction, or 3.5%, when compared to the same period of the year before, mainly due to the following:

 

·         A Ch$ 39,990 million reduction in energy sales due to a lower average sales price in Chilean pesos, partially compensated by higher physical sales (+333 GWh) mainly to non-regulated customers (+1,468 GWh), offset by lower sales to regulated customers (-1,097 GWh), and spot market sales (-38 GWh). This variation includes the revenues from energy sales of EGP Chile that amounted to Ch$ 32,990 million for the six-month period ended September 30, 2018.

 

·         A Ch$ 15,270 million decrease in other services revenues, primarily due to Ch$ 16,045 million less toll revenue offset by higher revenue for engineering services for Ch$ 775 million.

 

• 9 •

 

 

The abovementioned is partially offset by:

 

·         A Ch$ 3,908 million increase in other sales, mainly due to a Ch$ 3,500 million increase in gas sales.

 

·         A Ch$ 10,182 million increase in other operating revenues, mainly due to insurance claims related to Central Tarapacá that represented Ch$ 12,021 million income and a higher revenue from commodity hedging derivatives for Ch$ 1,120 million, partly offset by the Ch$ 2,245 million reversal of fine provisions related to returning the concessions of the Tames and Totoralillo projects in 2017.

 

Operating costs reached Ch$ 571,693 million as of September 30, 2018, a Ch$ 135,279 million reduction, equivalent to 19.1%, due to the following:

 

-          An Ch$ 87,049 million reduction in energy purchases primarily explained by lower physical energy purchases (-1,345 GWh), mainly contracted energy purchases (-2,017 GWh) that were partially compensated by higher spot market purchases (+672 GWh). This lower cost includes the positive effect of adding EGP Chile to Enel Chile, which led to a net Ch$ 68,488 million reduction in Enel Chile’s cost of energy purchases mainly explained by the elimination of related party transactions (sales of EGP Chile to Enel Generación Chile).

 

·         A Ch$ 35,402 million decrease in fuel consumption, primarily Ch$ 23,217 million less gas consumption and Ch$ 11,317 million less coal use, both responding to the lower level of thermal dispatch.

 

·         Other variable procurement and services costs declined Ch$ 29,274 million mainly due to a Ch$ 16,432 million reduction in the commercialization costs of gas sales, lower costs related to the agreement with AES Gener that allows the Nueva Renca combined cycle to use the LNG available of Enel Generación Chile amounting to Ch$ 7,139 million, lower thermal emissions tax for Ch$ 3,397 million, and lower water consumption costs for Ch$ 2,707 million. These effects were partly offset by greater commodity derivative costs for Ch$ 1,802 million.

 

·         The above mentioned was partially offset by a Ch$ 16,447 million increase in transportation costs, mainly due to the Ch$ 11,287 million effect of adding EGP Chile to Enel Chile, and higher tolls for Ch$ 6,574 million, offset by a reduction in transportation and regasification costs for Ch$ 1,411 million,

 

 

• 10 •

 

 

Personnel expenses amounted to Ch$ 40,268 million as of September 30, 2018, a Ch$ 3,590 million increase when compared to the same period of 2017, mainly due to the Ch$ 4,693 million effect of including EGP Chile in Enel Chile´s scope of consolidation, which was compensated by the Ch$ 1,103 million reduction is costs related to having less staff in Enel Generación.

 

Other expenses reached Ch$ 73,024 million as of September 30, 2018, an Ch$ 18,774 million increase when compared to the same period of 2017, due to the Ch$ 13,485 million effect of including EGP Chile in the scope of consolidation and technical and management services for Ch$ 5,943 million.

 

 

DISTRIBUTION AND SUBSIDIARIES SEGMENT:

 

The EBITDA of our Distribution Business Segment reached Ch$ 138,209 million as of September 30, 2018, which represents a Ch$ 2,091 million, or 1.5%, reduction when compared to the same period of the previous year. The main variables that explain this outcome are described below:

 

 

 

 

 

 

Operating revenues amounted to Ch$ 933,176 million, a Ch$ 69,978 million decrease, equivalent to 7%, when compared to the same period of 2017, basically due to (i) a Ch$ 47,375 million reduction in other services revenues, namely lower revenue from transmission and transportation tolls for Ch$ 38,532 million and lower construction and customer connection services, installations of lines, street lighting and others for Ch$ 9,836 million, and (ii) lower energy sales revenues for Ch$ 21,609 million.

 

Operating costs reached Ch$ 726,072 million, a Ch$ 70.256 million reduction when compared to the same period of 2017, mainly due to: (i) lower transportation expenses for Ch$ 39,972 million, (ii) lower energy purchases for Ch$ 14,510 million and (iii) lower other variable procurement and services costs for Ch$ 15,774 million, primarily meter rentals and street lighting services.

 

Personnel expenses amounted to Ch$ 18,298 million, a Ch$ 6,759 million reduction compared to expenses accrued by September 30, 2017, mainly due the lower extraordinary non-recurrent employee bonuses given to employees during 2018.

 

 

• 11 •

 

 

Other expenses reached Ch$ 50,598 million as of September 30, 2018, a Ch$ 9,129 million increase when compared to the same period of the previous year, mainly due to higher operating and maintenance expenses related to a tree trimming plan that began in 2017 and higher repair and conservation costs.

 

The following table summarizes the Enel Chile Group EBITDA, depreciation, amortization and impairment expenses and EBIT broken down by segment as of September 30, 2018 compared to September 30, 2017.

 

 

 

 

 

 

 

Depreciation, Amortization and Impairment

 

Depreciation, amortization and impairment costs amounted to Ch$ 157,019 million, a Ch$ 38,105 million increase when compared to the same period of the previous year.  This variation is mainly explained by the depreciation of EGP Chile that amounted to Ch$ 40,816 million for the six-month period ended September 30, 2018.

 

 

The following chart presents consolidated non-operating income as of September 30, 2018, and 2017.

 

 

• 12 •

 

 

 

 

Financial Result

 

 

• 13 •

 

 

The financial result of Enel Chile as of September 30, 2018, reached a Ch$ 73,837 million expense, which represents a negative Ch$ 57,837 million variation when compared to the same period of 2017. This outcome is primarily explained by the following:

 

Financial income decreased Ch$ 1,487 million due to lower income related to customer refinancing for Ch$ 2,136 million, compensated by greater income from short term fixed income investments for Ch$ 649 million.

 

Financial expenses increased Ch$ 50,781 million, mainly due to higher interest on bank loans and bonds amounting to Ch$ 26,460 million and higher interest expenses related to the addition of EGP Chile for Ch$ 24,613 million.

 

Income related to indexation increased Ch$ 609 million primarily due to the positive effect on recoverable taxes for Ch$ 2,917 million, and income on hedging derivative contracts for Ch$ 2,505 million. These effects were offset by indexation of U.F.-denominated financial liabilities amounting to Ch$ 3,036 million and the negative effects of the application of IAS 29 "Financial Information in Hyperinflationary Economies" on the branch of the GasAtacama Group located in Argentina which effect was a loss of Ch$ 1,777 million.

 

Income from exchange differences decreased Ch$ 6,178 million mainly due to the greater negative exchange differences on forward contracts for Ch$ 3,372 million and the negative exchange differences on cash and cash equivalents for Ch$ 3,643 million. These effects were offset by a lower negative exchange difference on supplier accounts for Ch$ 837 million.

 

 

Other Non-operating Income

 

The result from companies accounted for using the equity method amounted to a Ch$ 1,963 million profit as of September 30, 2018, which represents a Ch$ 3,424 million increase when compared to the same period of last year, mainly explained by better results from HydroAysén for Ch$ 3,562 million, up to the date of its liquidation, and lower results from GNL Chile for Ch$ 138 million.

 

 

Income from other investments decreased Ch$ 105,370 million, mainly explained by the sale of Electrogas S.A. in February 2017, for Ch$ 105,312 million.

 

 

Corporate Taxes 

 

 

• 14 •

 

 

Corporate income tax reached Ch$ 88,747 million as of September 30, 2018, a Ch$ 28,314 million reduction when compared to the same period of the previous year, basically explained by: (i) lower taxes related to the sale of the Electrogas S.A. in February 2017 for Ch$ 27,675 million, (ii) a lower tax expense of Ch$ 7,480 million explained by a higher financial expense in 2018, and (iii) lower tax expenses amounting to Ch$ 2,451 million related to inflation indexation. The aforementioned was partly offset by (i) a Ch$ 4,502 million higher expense as a result of the incorporation of the EGP Chile Group during the current period, and (ii) Ch$ 4,680 million higher expenses due to the increase in the income tax rate from 25.5% in 2017 to 27% in 2018.

 

 

 

BALANCE SHEET ANALYSIS

 

 

 

Total assets of the Company as of September 30, 2018, increased Ch$ 1,463,907 million when compared to total assets as of December 31, 2017, mainly due to the following:

 

Current Assets decreased Ch$ 282,866 million as of September 30, 2018. The variations in the main categories are presented below:

 

·         Trade accounts receivables and other current accounts receivables increase Ch$ 11,031 million, mainly due to lower services accounts receivables.

 

·         Cash and cash equivalents decreased Ch$ 220,037 million, explained by cash disbursements related to (i) the payment of the Enel Generación PTO for Ch$ 1,624,327 million, (ii) dividend payments for Ch$ 229,061 million, (iii) purchase of property, plant and equipment for Ch$ 250,594 million, (iv) income tax payments for Ch$ 94,201 million, (v) employee related payments for Ch$ 86,441  million, (vi) interest payments on loans for Ch$ 46,525 million, (vii) loan repayments for Ch$ 740,148 million, (viii) other cash disbursements for Ch$ 22,671 million. All these effects were offset by (i) the issuance of a Yankee bond for Ch$ 622,521 million, (ii) a Bridge loan to finance the Enel Generación PTO for Ch$ 940,414 million, (iii) a capital increase, net of the purchase of own shares, for Ch$ 593,451 million, (iv) payments received from related parties  for Ch$ 42,460 million, (v) cash inflows from forward contract payments for Ch$ 9,258 million, (vi) interest payments received for Ch$ 5,473 million, (vii) dividends received for Ch$ 1,232 million, and (viii) other operational cash inflows for Ch$ 671,271 million, mainly customer collections net of payments to suppliers.

 

• 15 •

 

 

·         Current related party accounts receivables decrease Ch$ 41,848 million, mainly explained by lower Enel Global Trading SPA receivables for Ch$ 39,021 million related to gas and commodities purchases, lower GNL Chile receivables for Ch$ 5,687 million due to advance payments of gas purchases. Also, because of the merger between Enel Chile and EGPL, the accounts receivables of Enel Green Power Perú for Ch$ 1,631 million, and Enel Green Power SPA for Ch$ 1,264 million were consolidated as of September 30, 2018, among others.

 

·         Current tax assets decline Ch$ 34,356 million mainly due to the payment of taxes for fiscal year 2017.

 

 

Non-Current Assets increase Ch$ 1,746,773 million as of September 30, 2018. The variations in the main categories are presented below:

 

·         Trade accounts receivables and other non-current accounts receivables increase Ch$ 59,271 million, mainly explained by the consolidation of EGP Chile that as of September 30, 2018 had accounts receivables for Ch$ 54,768 million of which Ch$ 54,364 million are VAT (“IVA”)  tax credits.

 

·         Intangible assets other than goodwill increase Ch$ 50,300 million, mainly due to i) new investments for Ch$ 7,080 million, and (ii) the consolidation of EGP Chile, with intangible assets that amounted to Ch$ 43,220 million at the end of the third quarter.

 

·         Goodwill increases Ch$ 26,481 million due to the consolidation of EGP Chile that has Ch$ 19,200 million in goodwill of Empresa Eléctrica Panguipulli S.A, Ch$ 7,209 million in Parque Eólico Talinay Oriente and Ch$ 72 million in Geotérmica del Norte.

 

·         Property, plant and equipment increases by Ch$ 1,553,872 million, mainly due to (i) an increase in new investments for Ch$ 90,643 million, and (ii) the consolidation of EGP Chile that contributes Ch$ 1,463,229 million in property, plants and equipment as of September 30, 2018.

 

 

• 16 •

 

 

·         Deferred tax assets increase Ch$ 45,926 million, mainly due to higher deferred taxes related to tax losses, which includes the Ch$ 27,073 million from the consolidation of EGP Chile at the end of the third quarter of this year

 

 

 

Total liabilities of the Company, including Equity, increased Ch$ 1,463,907 million as of September 30, 2018, when compared to total assets as of December 31, 2017, mainly due to the following:

 

Current liabilities increase Ch$ 152,486 million. The variations in the main categories are presented below:

 

·         Other current financial liabilities increase Ch$ 386,916 million, mainly (i) the non-current financial liability transfers for Ch$ 285,759 million related to the funds obtained by Enel Chile to guarantee the timely payment of commitments originated as part of the Enel Generacion Chile PTO (ii) accruals of interest on bonds and bank loans for Ch$ 47,898 million, (iii) bond obligations being transferred to the short term for Ch$ 12,435 million, (iv) an increase in hedging derivative liabilities for Ch$ 7,115 million, and (v) the Ch$ 68,899 million in bank loans of EGP Chile as of September 30, 2018 as a consequence of the consolidation of EGP Chile. All the above were offset by interest payments made on bonds for Ch$ 37,037 million.

 

·         Trade accounts payable and other current accounts payable decrease Ch$ 165,472 million, mainly (i) lower accounts payable of energy purchases for Ch$ 100,956; (ii) lower dividends payable to third parties for Ch$ 90,569 million; and (iii) lower accounts payable related to the purchase of assets for Ch$ 39,409 million.

 

The aforementioned was partly offset by the following greater trade accounts and other accounts payable: (i) higher accounts payable to suppliers and services for Ch$ 16,761 million, (ii) VAT payables for Ch$ 32,851 million, (iii) greater accounts payable to suppliers of fuel and gas for Ch$ 10.319 million, (iv) personnel accounts payable for Ch$ 2,774 million, and (v) other non-income tax accounts payable for Ch$ 1,937 million.

 

• 17 •

 

 

·         Related party accounts payable decrease Ch$ 8,648 million, mainly due to (i) a reduction in accounts payable to Enel SpA for Ch$ 54,668 million, mainly dividend payments, (ii) a reduction in accounts payable to Enel Green Power del Sur SpA for Ch$ 10,324 million, (iii) a reduction in accounts payable to Empresa Eléctrica de Panguipulli S.A. related to the purchase of energy and tolls for Ch$ 3,247 million, and (iv) a reduction in accounts payable to Enel Distribuzione for Ch$ 2,690 million. The aforementioned was offset by (i) Ch$ 10,815 million higher accounts payable to GNL Chile S.A. for gas purchases, (ii) greater accounts payable to Enel Green Power SpA for Ch$ 35,066 million, (iii) higher accounts payable to Enel Italia Srl for Ch$ 2,614 million, (iv) higher accounts payable to Enel Financial International NV for Ch$ 7,751 million, and (v) higher accounts payable to Enel Global Trading for Ch$ 6,328 million.

 

·         Current tax liabilities decrease Ch$ 64,654 million, mainly due to the payment of income tax for fiscal year 2018.

 

 

Non-Current Liabilities increase Ch$ 1,433,166 million as of September 30, 2018, which is explained by the following:

 

·         Other non-current financial liabilities increase Ch$ 907,733 million, mainly due to (i) debt issued by Enel Chile for Ch$ 945,684 million, net of arrangement expenses (includes US$ 1,000 million Yankee Bonds), to guarantee the timely payment of debt arising from the Enel Generación PTO, and (ii) the consolidation of EGP Chile, which as of the end of the third quarter, had bank loans for Ch$ 218,264 million, (iii) exchange differences on the US$ bonds for Ch$ 47,670 million. The aforementioned is compensated by the transfer of Ch$ 285,759 in bank loans and Ch$ 30,000 million in capital payments to other current financial liabilities.

 

·         Non-current accounts payable to related parties increase Ch$ 425,871 million mainly explained by the consolidation of EGP Chile that implied adding a debt with the related company Enel Financial International NV for Ch$ 426,190 million.

 

·         Deferred tax liabilities increase Ch$ 79,841 million mainly due to the Ch$ 69,977 million deferred tax liability of EGP Chile.

 

 

 

• 18 •

 

 

Total Equity amounted to Ch$ 3,665,217 million as of September 30, 2018 and is explained as follows:

 

Equity attributable to the shareholders of Enel Chile increased by Ch$ 433,435 million in the current period mainly due to (i) Issued capital increased by Ch$ 1,725,383 million as a result of the merger of Enel Chile with EGPL; (ii) decrease of other reserves by Ch$ 1,338,286 million, mainly due to: lower reserves due to changes in subsidiaries’ interests that do not result in a loss of control of Ch$ 1,314,567 million, lower cash flow hedging reserves for Ch$ 80,719 million and higher translation differences for Ch$ 57,000 million; (iii) Ch$ 121,243 million increase in Retained earnings mainly comprising: Net income for the nine-month period ended September 30, 2018 for Ch$ 208,589 million and a Ch$ 87,346 million decrease in Dividends paid; and (iv) Ch$ 72,388 million decrease relating to treasury shares.  

 

Additionally, as a result of the first application of IFRS 9 "Financial Instruments" and IAS 29 "Financial Information in Hyperinflationary Economies", a net charge of Ch$ 2,517 million was recorded in the retained earnings. Specifically, the effect of the first application of the new model to determine the provisions for the impairment of financial assets, established in IFRS 9, generated a charge of Ch$ 3,140 million in the retained earnings, while the application of IAS 29, on the branch of the GasAtacama Group located in Argentina, generated a credit in the retained earnings of Ch$ 623 million, both net of deferred taxes.

 

Equity attributable to non-controlling shareholdings decreased by Ch$ 555,180 million, mainly explained by (i) net income of the period for Ch$ 39,732 million and (ii) higher other comprehensive results for Ch$ 9,218 million. The aforementioned was partly offset by lower reserves for Ch$ 592,807 million related to changes in the subsidiaries' interests that do not result in a loss of control, and (iii) dividends paid for Ch$ 11,280.

 

In addition, as a result of the first application of IFRS 9 "Financial Instruments" and IAS 29 "Financial Information in Hyperinflationary Economies", a net charge of Ch$ 43 million was recorded in the retained earnings. Specifically, the effect of the first application of the new model to determine the provisions for the impairment of financial assets, established in IFRS 9, generated a charge of Ch$ 85 million in the retained earnings, while the application of IAS 29, on the branch of the GasAtacama Group located in Argentina, generated a credit in the retained earnings of Ch$ 42 million, both net of deferred taxes.

 

 

The performance of main financial ratios is the following:

 

 

• 19 •

 

 

 

 

 

The current ratio as of September 30, 2018, reached 0.80 times, which represents a 38% decrease compared to December 2017.  This reduction is due to the transfer of the bridge loan obtained to finance the Enel Generacion PTO to other current financial assets.

 

Acid test or quick ratio, as of September 30, 2018, was 0.74 times, which represents a 40.3% reduction when compared to December 31, 2017.

 

Working capital, as of September 30, 2018, amounted to - Ch$ 197,031 million, which represents a Ch$ 435,351 million negative variation when compared to December 2017.  

 

The debt ratio was 0.95 times, which means that the level of commitment of Enel Chile equity was 0.95 times at the end of the third quarter of 2018.

 

The financial expenses coverage ratio for the period ended September 30, 2018, was 6.40 times, which represents the ability to cover all financial expenses with the EBITDA obtained during the period ended September 30, 2018.

 

The profitability ratio, calculated by dividing operating income by operating revenues, increased 11.1% when compared to the same period of the previous year, reaching 23.1% as of September 30, 2018, due to higher operating income obtained this period when compared to the same period of last year.

 

Return on equity of the owners of the controlling shareholder (dominant) was 9.7% for the twelve-month period ended September 30, 2018.

 

Return on assets was 6.5% for the twelve-month period ended September 30, 2018.

 

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MAIN CASH FLOWS

 

The net cash flow of Enel Group Chile reached a negative Ch$ 215,342 million as of September 30, 2018, which represents a Ch$ 239,574 million reduction when compared to the same period of the previous year.  The main factors that explain this cash flow, classified as either operating, investing, or financing activities, compared to September 2017, are presented below:

 

 

 

Net cash flow from operating activities amounted to a Ch$ 489,630 million for the nine-month period ended September 30, 2018, which represents a 23.3% increase when compared to September 2017. These cash flows come primarily from sales and other revenues amounting to Ch$ 2,245,730 million, cash inflows from insurance policy premiums and services, annuities and other insurance benefits for Ch$ 8,229 million and other cash from operations for Ch$ 1,699 million, which were partially offset by cash outflows related to (i) supplier payments for Ch$ 1,464,147 million; (ii) employee payments for Ch$ 86,441 million; (iii) income tax payments for Ch$ 94,201 million; (iv) other payments of operational activities for Ch$ 103,358 million, and (v) insurance premium payments and other payments related to insurance policies for Ch$ 14,436 million, and (vi) other cash outflows for Ch$ 3,446 million.

 

Net cash flow used in investing activities amounted to Ch$ 1,830,469 million for the nine-month period ended September 30, 2018, which represents a Ch$ 1,754,419 million increase in cash outflows when compared to September 2017. These cash flows are mainly comprised of (i) Ch$ 1,624,327 million to pay the Enel Generación Chile PTO, (ii) Ch$ 259,411 million to purchase property, plant and equipment, (iii) payments of futures, options and swaps for Ch$ 64,735 million. These cash outflows were partially compensated by (i) cash inflows from related parties for Ch$ 42,460 million, (ii) cash inflows originating from futures, options and swaps for Ch$ 73,993 million, (iii) dividends received for Ch$ 1,232 million, (iv) interest payments received amounting to Ch$ 5,473 million, and (v) other cash outflows for Ch$ 5,154 million.

 

 

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Net cash flow from financing activities amounted to Ch$ 1,125,496 million for the nine-month period ended September 30, 2018, which represents a Ch$ 1,422,274 million variation when compared to September 2017. These cash flows are comprised of (i) funds from long term bonds issued for Ch$ 622,521 million (Yankee Bonds), (ii) funds from a Bridge loan to finance the Enel Generación PTO for Ch$ 940,414 million, and (iii) funds from shares issued for Ch$ 665,839 million. The aforementioned were offset by (i) payments to repurchase shares for Ch$ 72,388 million, (ii) dividend payments for Ch$ 229,061 million, (iii) interest payments for Ch$ 46,525 million, (iv) Bridge loan payment for Ch$ 740,148 million, (v) financial leasing liability payments for Ch$ 1,374 million and (vi) other cash outflows for Ch$ 13,770 million.

 

 

The following table presents the cash disbursements related to additional property, plant and equipment and its depreciation for the nine-month period ended September 30, 2018 and 2017. 

 

 

The most relevant cash outflows originate in the generation business and respond to major maintenance and investment in power plants that amounted to Ch$ 191,159 million as of September 30, 2018. In the distribution business, cash disbursements amounted to Ch$ 66,032 million and are basically investments in network operational optimization to increase the level of efficiency and service quality.

 

 

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