ENEL CHILE

ANNOUNCES CONSOLIDATED RESULTS

FOR THE PERIOD ENDED DECEMBER 31, 2019

(Amounts expressed in millions of Chilean Pesos)

EXECUTIVE SUMMARY

SUMMARY BY BUSINESS

Generation

Distribution

FINANCIAL SUMMARY- ENEL CHILE

-        Cash and cash equivalents                            US$ 314 million.

-        Undisbursed committed credit lines (*)           US$ 195 million. 

(*) includes Enel Chile´s US$50 million undisbursed committed credit line with related party Enel Finance International.

Enel Chile has established policies and procedures to protect its financial statements against the volatility of the exchange rate and the interest rate mitigating the financial risk related to the variations 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, we have cross currency swap and forward contracts that amount to US$ 691 million and US$ 755 million, respectively.

To reduce financial statement volatility caused by interest rate variations, the Enel Chile Group maintains an adequate debt structure balance. Therefore, the Company has interest rate swaps for US$ 700 million.

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 (“the Reorganization”)  to Enel S.p.A that involved integrating the 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 (“PTO”) for the shares of Enel Generación Chile, (ii) Capital Increase to issue the shares to be exchanged for the shares of Enel Generación Chile and EGPL, and (iii) Merger of EGPL, parent of EGP Chile, and Enel Chile. Each stage of the proposed Reorganization was 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 Renewable Assets 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 increased ownership share of Enel Generación Chile from that same date on. For additional information see Note N^o 6 to the Interim Consolidated Financial Statements of Enel Chile as of December 31, 2019.

Regulatory changes:

Within the framework of the social agenda announced by the Chilean Government, on November 2, 2019, Ministry of Energy Law 21,185 was published in the Official Gazette and creates a temporary electricty price stabilization mechanism for customers subject to regulated tariffs (hereafter “ Tariff Stabilization Law”). This law set the prices for regulated customers from July 1 to December 31, 2020 to be the prices in force during the first semester of 2019 (Decree 20T/2018) and called them the “Regulated Customer Stabilized Price” (“PEC”, in its Spanish acronym). From January 1, 2021 and until the stabilization mechanism concludes, the prices will be those determined by the regular tariff setting process carried out every six months as stated in Article 158 of the Electricity Law, but may not exceed the PEC adjusted by the consumer price index as of January 1, 2021 based on the same date (Adjusted PEC). The billing differences will be booked as an accounts receivable of generation companies and are capped at US$ 1,350 million untill 2023. The balance must be recovered by December 31, 2027.

Also, on December 21, 2019, Law 21,194 (“Distribution Short Law”) was published and reduces the rate of return of distribution companies and refines the tariff setting process of electricity distribution. Through this law, it is eliminated the weigth of two thirds for the VAD study performed by the CNE and the weight of one third for the study performed by the distribution companies, replacing it for a unique study performed by the CNE. Also, it is modified the return rate for the calculation of the annual investment costs, replacing the annual rate of 10%, before taxes, to a rate calculated by the CNE every four years, and it could not be lower than 6% and higher than 8% after taxes, and it will be applied from the new tariff cycle that begins on November 4, 2020. The economic return rate after taxes of the distribution companies, must not be two percentage points higher or three percentage ponits lower than the rate determined by the CNE. Additionally, as of January 2021, the purpose of distribution companies must be only electricity distribution business.

MARKETS IN WHICH ENEL CHILE S.A. OPERATES

Generation business

We own and operate 129 generation units in Chile through our subsidiaries Enel Generación Chile, Pehuenche, and EGP Chile, which combined, have a total 7,303 MW installed capacity as of December 31, 2019. Of this total, 40 are hydroelectric units with 3,548 MW installed capacity, 21 are thermal units that operate using gas, coal or fuel oil and together have an installed capacity of 2,580 MW, 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 41 MW installed capacity. Consequently, 65% of our gross installed capacity is renewable energy and 35% is thermal.

The following chart summarizes the physical information of our generation business segment for the period ended December 31, 2019 compared to the same period of 2018:

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, under an indefinite concession agreement, granted by the Chilean Government 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.. Its service area, from the Chilean tariff regulation perspective, is considered primarily a densely populated area.

The following chart summarizes the physical information of our distribution business segment for the period ended December 31, 2019 compared to the same period of 2018:

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 December 31, 2019, reached Ch$ 296,154 million, 18.1% less than the Ch$ 361,710 million booked in 2018.

The following chart compares the figure of each item of the income statement as of December 31, 2019 and 2018:

The consolidated EBITDA of Enel Chile amounted to Ch$ 1,053,492 million as of December 31, 2019, which represents a 18.2% increase when compared to the Ch$ 891,355 million booked the previous year. This increase is primarily explained by improved operational performance, both in the generation business and the distribution business, in addition to the extraordinary income from the early termination of three energy supply contracts signed by Enel Generación Chile and its customer Anglo American Sur in 2016.

Operating revenue, operating costs, personnel and other expenses that determine our EBITDA, broken down by business segment for the periods ended December 31, 2019 and 2018, are presented below:

GENERATION BUSINESS EBITDA

The EBITDA of our Generation Business Segment reached Ch$ 873,917 million as of December 31, 2019, which represents a Ch$ 160,289 million increase, or 22.5%, when compared to 2018. The main variables that explain this result are described below:

Operating revenues amounted to Ch$ 1,726,612 million as of December 31, 2019, a Ch$ 145,959 million, or 9.2% increase when compared to 2018, mainly due to the following:

·       A Ch$ 46,624 million increase in electricity sales, mainly due to a higher average sales price when expressed in Chilean pesos due to a higher average exchange rate for the period, partially offset by an -855 GWh reduction in physical sales (-2,933 GWh less to regulated customers, -275 GWh lower spot market sales, partially compensated by +2,353 GWh more to non-regulated customers).  This variation includes the revenues from energy sales of EGP Chile that amounted to Ch$ 25,662 million.

·       A Ch$ 105,080 million increase in other operating revenue, mainly due to the Ch$ 121,118 million extraordinary income from the early termination of three energy supply contracts with Anglo American Sur, partly offset by lower revenue from insurance claims for Ch$ 16,456 million related to incidents at Central Tarapacá in 2018.

The abovementioned was partially offset by:

·       A Ch$ 5,909 million reduction in other sales, mainly due to lower gas sales amounting to Ch$ 6,153 million.

Operating costs reached Ch$ 678,188 million as of December 31, 2019, a Ch$ 31,318 million decrease, equivalent to 4.4%, due to the following:

·       A Ch$ 53,070 million decrease in energy purchases, 24.9% less than last year, partly explained by a -1,850 GWh reduction in physical energy purchases (-1,216 GWh less spot market purchases and -634 GWh less contracted energy purchases) that was, to a significant extent, explained by the higher availability of our power plants and lower physical sales. This lower cost includes the positive effect of adding EGP Chile to Enel Chile, which led to a net Ch$ 60,156 million decrease in Enel Chile’s cost of energy purchases as a consequence of the elimination of related party transactions (sales among EGP Chile and Enel Generación Chile).

·       Fuel consumption costs reached Ch$ 230,944 million, an Ch$ 84 million decrease, stable when compared to last year, primarily due to: (i) lower fuel oil consumption for Ch$ 7,820 million significantly related to the lower dispatch of the power plants that operate with fuel oil, and (ii) lower gas consumption cost for Ch$ 6,018 million mainly due to the lower price of gas as a consequence of the higher supply of gas from Argentina. The aforementioned was offset by Ch$ 13,754 million higher coal consumption costs due to higher thermal dispatch as a consequence of the hydrologic conditions in Chile.

The abovementioned was partly offset by:

·       A Ch$ 15,019 million increased in transportation costs, mainly due to higher gas transportation costs for Ch$ 14,727 million and higher regasification costs for Ch$ 743 million related to higher gas fueled electricity generation partially offset by lower toll expenses for Ch$ 474 million.

·       Other procurement and services costs increased Ch$ 6,817 million, mainly due to: (i) higher thermal emissions tax cost for Ch$ 10,480 million; and (ii) greater other various electricity generation supplies amounting to Ch$ 1,661 million (water, chemicals, etc). The aforementioned was partially offset by a Ch$ 5,479 million decrease in costs of sales of gas commercialization.

Personnel costs (net of expenses capitalized as fixed assets) amounted Ch$ 53,984 million as of December 31, 2019 that represents a Ch$ 656 million increase when compared to 2018, and is primarily explained by higher personnel costs of EGP Chile for Ch$ 1,949 million due to the scope of consolidation effect (consolidates 9 months of 2018) and also an increase in the head count in 2019. The aforementioned was partly offset by a Ch$ 1,293 million decrease in the personnel costs of Enel Generación Chile, mainly due to lower head count, amounting to Ch$ 1,682 million, lower employee bonuses granted in collective bargaining processes with unions for Ch$ 2,088 million, and lower severance payments for Ch$ 1,492 million, compensated by higher actuarial benefits for Ch$ 875 million and lower capitalization of personnel costs of the Los Cóndores project for Ch$ 2,776 million.

Other expenses reached Ch$ 120,523 million as of December 31, 2019, a Ch$ 16,332 million increase when compared to 2018, mainly explained by: (i) a Ch$ 8,866 million increase in the costs of repairs and maintenance services; (ii) a Ch$ 2,567 million increase in taxes and fees; (iii) a Ch$ 1,701 million increase in the cost of technical and administrative services; (iv) a Ch$ 1,650 million increase in insurance policy premiums; and (v) an Ch$ 837 million increase in asset retirement expenses due to an incident at our corporate building resulting from the riots during the last few months of 2019. This variation includes the effect of adding the EGP Chile Group to scope of consolidation in April 2018 that amounted to Ch$ 7,154 million.

DISTRIBUTION BUSINESS EBITDA:

The EBITDA of our Distribution Business Segment reached Ch$ 201,153 million as of December 31, 2019, which represents a Ch$ 539 million, or 0.3%, increase when compared to year 2018. The main variables that explain this outcome are described below:

Operating revenues amounted to Ch$ 1,412,872 million, a Ch$ 149,648 million increase, equivalent to 11.8%, when compared to 2018 mainly due to higher energy sales revenue for Ch$ 148,258 million as a result of a higher average sales price when expressed in Chilean Pesos due to the higher exchange rate of the period, also the impact of the implementation of technical standards on tariffs, and higher physical energy sales (+325 GWh).

Operating costs reached Ch$ 1,114,936 million, a Ch$ 142,436 million or a 14.7% increase when compared to 2018, primarily explained by: (i) higher energy purchases for Ch$ 130,178 million, mainly resulting from a higher average energy purchase price and greater physical purchases during the period (+ 397 GWh), and (ii) higher zonal transmission tolls for Ch$ 12,909 million paid to distribution companies and transmission companies. All partially offset by lower other procurement and services cost for Ch$ 651 million.

Personnel costs (net of expenses capitalized as fixed assets) increased Ch$ 174 million when compared to December 2018, primarily explained by Ch$ 1,674 million related to higher head count required to implement the technical standards of the distribution business and Ch$ 555 million due to higher employee performance bonuses, partly offset by greater personnel expenses capitalized in investment projects for Ch$ 2,055 million.

Other expenses increased Ch$ 6,499 million as a consequence of higher operating and maintenance costs, also related to the technical standards of the distribution business, new contracts at customer service offices for Ch$ 3,826 million and higher asset retirement costs for Ch$ 2,673 million, of which Ch$ 1,880 million are related to infrastructure equipment removal and Ch$ 793 million are related to the incidents at Enel Distribución Chile facilities due to the riots during the last few months of 2019.

Depreciation, Amortization and Impairment

The following table summarizes the Enel Chile Group EBITDA, depreciation, amortization and impairment expenses and EBIT broken down by segment as of December 31, 2019 compared to December 31, 2018.

Depreciation, amortization and impairment costs amounted to Ch$ 527,437 million, a Ch$ 306,687 million increase when compared to 2018.  This variation is mainly explained by: (i)  impairment provisions related to the Tarapacá and Bocamina I coal-fired units for Ch$ 197,188 million and Ch$ 82,832 million respectively, as a consequence of the Group´s decarbonization process; (ii) greater depreciation from EGP Chile that amounted to Ch$ 27,030 million; and (iii)  higher fixed asset depreciation of Enel Distribución Chile related to capitalized works amounting to Ch$ 2,252 million; greater amortization of intangible software developments for Ch$ 1,072 million; and a Ch$ 3,476 million increase in impairment provisions mainly related to the increase in the commercial debt.

The above was partially compensated by Ch$ 7,041 million lower depreciation of coal power plants that were impaired during the first semester of 2019.

The following chart presents consolidated non-operating income as of December 31, 2019, and 2018.

Net Financial Result

The consolidated net financial income of Enel Chile, as of December 31, 2019, amounted to a Ch$ 150,893 million loss, Ch$ 40,018 million more than the Ch$ 110,875 million loss booked in 2018. This is primarily explained by the following

Financial income increased Ch$ 7,465 million mainly explained by: (i) Ch$ 5,226 million related to the application of the Tariff Stabilization Law; and (ii) Ch$ 5,314 million higher interest income related to regulated customer accounts receivables to be billed after the la publication of the Tariff Stabilization Law. The aforementioned was partially offset by lower income on short-term fixed income investments for Ch$ 2,365 million and lower income related to customer refinancing for Ch$ 238 million.

Financial expenses increased Ch$ 42,714 million, primarily explained by (i) a Ch$ 19,062 million increase in expenses related to the tariff stabilization Law; (ii) higher financial expenses due to the consolidation of the EGP Group since April 2018 amounting to Ch$ 14,894 million; (iii) higher interest on bank loans and bonds amounting to Ch$ 11,877 million  related to the corporate reorganization carried out in 2018 (Elqui Project); and (iv) higher financial expenses due to  factoring operations for Ch$ 1,783 million. The aforementioned was partially compensated by lower financial expenses as a consequence of the renegotiation of the loan of EGP del Sur with EFI for Ch$ 4,902 million.

Income related to indexation decreased Ch$ 2,164 million, primarily due to (i) a greater negative impact of IAS 29 “Financial Reporting in Hyperinflationary Economies” on the branch of the Gas Atacama Group located in Argentina that amounted to Ch$ 1,579 million, (ii), lower income from recoverable taxes for Ch$ 821 million, and (iii) lower income from hedging derivative contracts for Ch$ 462 million. The aforementioned was partially offset by lower losses as a result of indexation of financial liabilities recorded in U.F. for Ch$ 697 million.

Income from exchange rate differences decreased Ch$ 2,605 million, mainly due to greater negative exchange rate differences on: (i) forward contracts for Ch$ 6,385 million; and (ii) cash and cash equivalents for Ch$ 521 million. The aforementioned was partly offset by the positive effects of: (i) trade accounts payables for Ch$ 3,034 million; (ii) trade accounts receivables for Ch$ 1,085 million, which include the Ch$ 3,835 million positive effect of the Tariff Stabilization Law that dollarized the regulated customer accounts receivables whose billing is pending.

Corporate Taxes

Corporate income tax reached Ch$ 61,228 million as of December 31, 2019, a Ch$ 92,255 million reduction when compared to 2018, primarily explained by: (i) Ch$ 75,605 million lower tax expenses due to the impairment loss related to the coal units of Tarapacá and Bocamina I power plants; (ii) the Ch$ 29,269 million positive effect of the absorption of Gasoducto Atacama Argentina by GasAtacama Chile; (iii) a Ch$ 5,131 million lower tax expense in Enel Chile due to the loss from the sale of the shareholding in GasAtacamama Chile to Enel Generación Chile; (iv) a Ch$ 6,299 million lower tax expense related to non-refundable tax credits that were booked as losses in 2018; and v) a Ch$ 8,129 million lower tax expense responding to the lower profit of the Enel Chile Group. The aforementioned was partially offset by the Ch$ 32,702 million effect of the extraordinary income generated by the early termination of three energy supply contracts with Anglo American Sur.

BALANCE SHEET ANALYSIS

ASSETS

Total assets of the Company as of December 31, 2019, increased Ch$ 369,969 million, equivalent to 4.9%, when compared to total assets as of December 31, 2018, mainly due to the following:

Current Assets increased Ch$ 21,265 million as of December 31, 2019. The variations in the main categories are presented below:

·       Cash and cash equivalents decreased Ch$ 9,487 million, mainly explained by the following cash disbursements: (i) principal and interest payments on loans for Ch$ 449,753 million; (ii) purchase of property, plant and equipment for Ch$ 300,346 million; (iii) dividend payments for Ch$ 236,479 million; (iv) employee-related payments for Ch$ 130,103 million; (v) income tax payments for Ch$ 82,779 million; (vi) other cash disbursements related to financing activities for Ch$ 33,537 million; (vii) net payments for making or purchasing goods for lease or sale for Ch$ 31,686 million; (viii) purchase of intangible assets amounting to Ch$ 20,732 million; (ix) net payments on forward contract liquidations for Ch$ 4,813 million; (x) payments of financial leasing liabilities for Ch$ 4,498 million; and (xi) the negative effect of exchange rate variations on cash and cash equivalents for Ch$ 1,232 million. The aforementioned effects were partially offset by (i) other operational cash flows for Ch$ 974,977 million, primarily from customer collections net of payments to suppliers; (ii) loans from related companies for Ch$ 283,832 million; (iii) insurance policy collections net of premium payments for Ch$ 13,303 million; (iv) interest payments received for Ch$ 6,034 million; (v) dividends received for Ch$ 6,456 million; and (vi) other cash inflows related to investment activities for Ch$ 1,870 million.

·       Other current financial assets decreased Ch$ 38,993 million, mainly related to hedging derivatives on local bonds for Ch$ 38,076 million.

·       Other current non-financial assets increased Ch$ 12,228 million, mainly due to: (i) an increase in Value Added Tax credit (“IVA” in its Spanish acronym) for Ch$ 8,216 million; and (ii) advance payments on expenses of Enel X Chile projects for Ch$ 4,012 million. 

·       Trade accounts receivables and other current accounts receivables increased Ch$ 33,285 million, mainly due to (i) a Ch$ 42,530 million increase in the distribution segment´s trade accounts receivables primarily explained by the billings to final customers related to the tariff decree that are pending, (ii) a Ch$ 6,544 million increase in trade accounts receivables of Enel Green Power Chile; and (iii) a Ch$ 13,421 million increase in trade accounts receivables of Enel X Chile mainly explained by accounts receivables of electric bus leasings and an increase in sales of goods and services. These effects were partially offset by a reduction in trade accounts receivables of Enel Generación Chile for Ch$ 30,247 million as a consequence of the reclassification of certain balances from the short term to the long term related to the Tariff Stabilization Law.

·       Current trade accounts receivables from related parties increased Ch$ 14,011 million, mainly due to greater advance payments of gas purchases from GNL Chile S.A. for Ch$ 16,359 million offset in part by lower gas purchases from Enel Global Trading S.p.A. IT for Ch$ 1,685 million.

·       Inventories decreased Ch$ 17,289 million, mainly due to: (i) a Ch$ 13,516 million reduction in inventories of the generation business, namely lower inventory of coal and other fuels; and (ii) a Ch$ 5,212 million reduction in the level of inventories of Enel X Chile for booking electric bus leasings. The aforementioned is partially offset by a Ch$ 1,439 million increase in the purchase of inventory and materials.

·       An increase in current tax assets for Ch$ 27,509 million mainly due to: (i) the Ch$ 54,989 million increase in monthly employee pension payments; and (ii) a Ch$ 2,199 million increase in employee training related tax credits.  The above is partially compensated by a Ch$ 29,679 million reduction in tax credits of absorbed profit.

Non-Current Assets increased Ch$ 348,704 million to Ch$ 6,839,775 million as of December 2019 when compared to December 31, 2018. The variations in the main categories are presented below:

·       A Ch$ 6,558 million decrease in other non-financial non-current assets, mainly due to the use of the remaining value added tax credit of the EGP Group for Ch$ 9,399 million, offset by the reclassification of spare parts from short term to long term for Ch$ 1,450 million (consumption schedule over one year) and an increase in water rights related assets and other non-financial assets for Ch$ 1,415 million.

·       Trade accounts receivables and other non-current accounts receivables increase Ch$ 253,047 million, mainly related to (i) a Ch$ 103,528 million and Ch$ 86,660 million increase in trade accounts receivables of the distribution and generation segments, respectively, primarily explained by the tariff decree billings to final customers that are pending, the reclassification of accounts receivables from the short term to the long term as a consequence of the publication of the Tariff Stabilization Law; and (ii) higher leasing receivables booked for Ch$ 62,222 million primarily of Enel X Chile.

·       Non-current trade accounts receivables from related parties increase Ch$ 34,407 million, mainly due to greater advance payments to GNL Chile S.A. for gas purchases.

·       Intangible assets other than goodwill increase Ch$ 16,906 million, mainly explained by (i) new investments in software for Ch$ 16,095 million, and (ii) the purchase of concessions, licenses, and other intangible assets for Ch$ 811 million.

·       Property, plant and equipment increase by Ch$ 51,672 million, mainly due to (i) a Ch$ 219,682 million increase in ongoing projects, mainly in the generation business segment, (ii) a Ch$ 74,294 million increase in buildings, network infrastructure and other facilities; and (iii) an increase in usage rights as a consequence of the implementation of IFRS 16 “Leasing” that amounted to Ch$ 38,189 million. These effects were partially offset by asset impairment losses of coal generation units of Central Tarapacá and Bocamina I for Ch$ 197,189 million and Ch$ 82,832 million, respectively, responding to the Group´s decarbonization process.

LIABILITIES

Total Liabilities of the Company as of December 31, 2019, including Equity, increased Ch$ 369,968 million when compared to total liabilities as of December 31, 2018, mainly due to the following:

Current Liabilities decreased Ch$ 176,164 million. The variations in the main categories are presented below:

·       Other current financial liabilities decreased Ch$ 196,009 million, mainly (i) bank loan principal amortization payments for Ch$ 164,858 million (bridge loan to finance PTO), and (ii) a reduction in hedging derivative liabilities and other derivatives for Ch$ 31,151 million.

·       Trade accounts payable and other current accounts payable increased Ch$ 44,977 million, mainly (i) higher energy purchases and fuel accounts payable for Ch$ 38,422 million (ii) higher accounts payable to suppliers of goods, services and fixed assets for Ch$ 12,944 million; and (iii) an increase in other accounts payable for Ch$ 5,786 million. The above mentioned was partially offset by (i) lower dividends payable for Ch$ 10,477 million, and (ii) lower tax accounts payable, other than income tax, for Ch$ 1,698 million.

·       Other non-financial current liabilities decreased Ch$ 25,801 million, primarily a reduction in value added tax (I.V.A. in its Spanish acronym) debits as a consequence of greater tax credits.

Non-Current Liabilities increased Ch$ 473,012 million as of December 31, 2019, which is explained by the following:

·       Other non-current financial liabilities increased Ch$ 34,336 million, mainly due to: (i) a Ch$ 35,255 million increase in financial liabilities due to the application of IFRS 16 “Leasing”; and (ii) an increase in hedging derivative and other derivative liabilities for Ch$ 22,543 million. The aforementioned was offset by less bank debt for Ch$ 23,462 million primarily as a consequence of the reclassification of other current financial assets.

·       Other Non-current accounts payable increased Ch$ 53,666 million mainly explained by an increase in accounts payable for energy purchases related to the impact of the Tariff Stabilization Law on the electricity distribution business segment.

·       Non-current accounts payable to related parties increased Ch$ 337,180 million mainly explained by Enel Chile´s new loan provided by EFI (US$ 400 million), with a year end 2019 balance amounting to Ch$ 297,534 million, and a Ch$ 37,148 million increase in EGP Chile Group´s accounts payable to EFI, mainly due to the impact of the exchange rate on commitments from previous years.

·       Other non-current provisions increased Ch$ 65,989 million mainly explained by a Ch$ 68,247 million increase in dismantling costs related to the programmed shutdown of coal fueled generation units of Tarapacá and Bocamina I power plants.  The above was partially offset by a reduction in legal claim provisions for Ch$ 2,259 million.

·       A reduction in deferred tax liabilities for Ch$ 28,795 million, due to the Ch$ 32,195 million increase in assets from deferred tax provisions mainly related to the higher impairment loss provisions for asset dismantling that was partially compensated by a Ch$ 3,174 million increase in other deferred tax liabilities.

·       An increase in non-current employee benefit provisions for Ch$ 9,561 million mainly due to a Ch$ 8,858 million increase in severance provisions and other provisions, such as, complementary pensions and health plans amounting to Ch$ 703 million.

Total Equity amounted to Ch$ 3,747,284 million as of December 31, 2019

Equity attributable to owners of Enel Chile amounted to Ch$ 3,484,698 million, comprised of the following: Issued capital for Ch$ 3,882,103 million, Retained earnings for Ch$ 2,008,104 million, and Other reserves for Ch$ -2,405,509 million.

Retained earmings increased Ch$ 93,306 million in 2019 mainly due the period´s earnings for Ch$ 296,154 million. The above is partially offset by dividends of the period amounting to Ch$ 197,359 million and other deductions amounting to Ch$ 5,489 million.

Other reserves decreased Ch$ 29,837 million mainly due to lower cash flow hedge reserves for Ch$ 99,136 million, partially compensated by higher conversion reserves for Ch$ 64,462 million and other reserves for Ch$ 4,840 million.

Equity attributable to non-controlling shareholdings amounted to Ch$ 262,586 million, which considers an initial Ch$ 252,935 million starting balance, plus the transactions booked throughout the year up to December 31, 2019, related to net income of the period for Ch$ 19,940 million, higher other comprehensive income for Ch$ 5,310 million, and other increments for Ch$ 979 million. The aforementioned was partially offset by a Ch$ 16,578 million reduction in dividends

The performance of main financial ratios is the following:

The current ratio, as of December 31, 2019, reached 0.98 times, which represents a 19.5% increase when compared to December 31, 2018.  This increase is mainly due to the reduction of short-term financial liabilities.

The acid test, as of December 31, 2019, was 0.94 times, which represents a 22.1% increase when compared to December 31, 2018, which is also mainly due to the reduction of short-term financial liabilities.

Working capital, as of December 31, 2019, amounted to a negative Ch$ 23,087 million, which represents a Ch$ 197,429 million positive variation when compared to December 2018, also mainly due to the reduction of short-term financial liabilities.

The debt ratio was 1.10 times, which means that the level of commitment of Enel Chile equity was 1.10 times for the twelve-month period ended December 31, 2019.

The financial expenses coverage ratio for the period ended December 31, 2019, was 5.91 times, which represents the ability to cover all financial expenses with the EBITDA obtained during 2019 period. Excluding the impact of the early termination of the Anglo American Sur contract, the financial expense coverage ratio would have reached 5.23 times.

The profitability index, calculated by dividing operating income by operating revenues, reached 19% as of December 31, 2019, 30.5% less when compared to 2018, to due to lower operating income this period when compared to last year. If the impact of the early termination of the Anglo American Sur contracts, and the impairment loss related to Central Tarapacá and Bocamina I were excluded, this index would have increased 25.9%.

Return on equity of the owners of the controlling shareholder was 8.6% for the year ended December 31, 2019. If the impact of the early termination of the Anglo American Sur contracts, and the impairment loss related to Central Tarapacá and Bocamina I were excluded, return on equity would have reached 11.5%.

Return on assets was 4.1% for the twelve-month period ended December 31, 2019. If the impact of the early termination of the Anglo American Sur contract, and the impairment loss related to Central Tarapacá and Bocamina I were excluded, return on assets would have reached 5.6%.

MAIN CASH FLOWS

The net cash flow of Enel Group Chile reached a negative Ch$ 8,256 million as of December 31, 2019, which represents a Ch$ 171,201 million increase when compared to 2018. The main factors that explain this decreasing in cash flow, classified as either operating, investing, or financing activities, compared to December 2018, are presented below: