EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Annual Report, Informative Summary
and Financial Statements
as of December 31, 2001 and 2000
Independent Public Accountant’s Report
and Statutory Audit Committee’s Report
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
SUMMARY
Letter from the Chairman to the Shareholders
Pages 1/3
Annual Report and Informative Summary
Pages 1/40
Financial statements as of December 31, 2001 and 2000
Balance sheets
Page 2
Statements of income
Page 3
Statements of changes in shareholders' equity
Page 4
Statements of cash flows
Page 5
Notes to financial statements
Pages 6 / 19
Exhibits A, C, D, E, G, H, and I
Pages 20 / 26
Independent Public Accountants' Report
Statutory Audit Committee's Report
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
LETTER FROM THE CHAIRMAN TO THE SHAREHOLDERS
(English translation of the financial statements originally issued in Spanish - See Note 13)
To the Shareholders:
I have the pleasure to present to you the Annual Report and Financial Statements for
the fiscal year ended December 31, 2001, corresponding to the tenth fiscal year of
Empresa Distribuidora Sur Sociedad Anónima (EDESUR S.A.).
In the year 2001, EDESUR has been forced to manage its business within the
framework of an adverse socio-economic environment, a fact that highlights the good
results attained and the goals accomplished.
One of the most important of them, undoubtedly, has been accomplished late in the
year as a result of the entire Company's combined efforts throughout the year. I am
referring to the certifications obtained by EDESUR for its management systems
according to international standards.
In fact, the Company's environmental management certification under standard ISO
14001, the reading, billing, distribution and collection process certification under
standard ISO 9001, and the certification of works-with-voltage in High and Medium
Voltage under standard IRAM 3800 show that the commitment to quality, safety and
the environment is a reality at EDESUR.
The fact that EDESUR has been the first large Argentine company to face and attain
the challenge of such a simultaneous certification makes us legitimately proud and
requires efforts shared by the entire organization to sustain the leadership gained in
the matter.
However, while this is one of EDESUR's main achievements in the year, it is certainly
not the only one.
The quality of technical service has newly improved in the year 2001 as compared to
the year 2000, by reducing the number of outages due to failures in our own facilities
by 25%, and their duration by 14%. This favorable evolution in the quality of service
was mainly due to the major investment program completed during the year,
amounting to $129.6 million.
As part of this investment program, the Company has developed major works to meet
the increased demand. The new Ezeiza (300 MVA) and Spegazzini (80 MVA)
substations, interconnected through a 132kV High Voltage line, started operating in
the months of April and November, respectively. These substations will enable the
Company to improve the quality of service and supply a relevant zone of the
concession area such as that including the districts of Cañuelas, Ezeiza and Esteban
Echeverría.
On the other hand, the new High Voltage power supplies of the Rivadavia and
Reconquista, Independencia, Once and Pozos substations from Azopardo substation
will enable the Company to provide the "Microcentro" and "Macrocentro" (financial
district and downtown areas) of the City of Buenos Aires both better back-up for the
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
supplying substations and greater reliability of service.
Likewise, we have improved the network's operation through the installation of 1,984
kilometers of Medium and Low Voltage electrical networks and 581 MV/LV
transformers, further incorporating state-of-the-art technology resulting in a far more
efficient service.
It is important to point out, however, that the Company's customers have received
better quality of service at lower prices. In fact, EDESUR's average rate was reduced
by 9.4% in the year as a result of the variation of wholesale market seasonal prices.
It is worth mentioning that the positive evolution in the quality of service indicators
was possible despite having faced two serious power supply contingencies during the
year, such as the tornado that hit an important part of the concession area on January
10, with its epicenter in the city of Guernica, and the floods caused by the storm of
January 24.
Under such hard circumstances, EDESUR was able to successfully overcome the
emergencies by implementing its IRAM-certified General Contingency Plan, which
has demonstrated the Company's current capacity to rapidly and efficiently overcome
contingencies that may affect the regular provision of services.
As regards commercial services, EDESUR's concern for its customers has been
reflected in its efforts to provide new and increasingly better services. EDESUR has
been the first public utility company to create, as part of its internal organization, the
role of the Customer's Advocate in order to improve the activities and processes that
may enhance the customer's satisfaction in regard to the services provided by the
Company.
Along the same lines of providing new services to the customers, this year EDESUR
has taken the first step towards the improvement of public lighting by executing the
first lighting maintenance and restructuring agreement with the Berazategui
municipality within the framework of the Efficient Public Lighting System [Sistema de
Alumbrado Público Eficiente (SAPE)], promoted by the government of the province of
Buenos Aires.
As regards economic-financial issues, I must point out that the current President of
the Nation, Mr. Eduardo Duhalde, who was elected by the Legislature to complete the
1999-2003 presidential period, has passed several economic measures after being
granted special powers through the approval of Law No. 25,561 -Public Emergency
and Foreign Exchange System Reform Law- among which we may include the
annulment of the Convertibility Law, determination of public utility rates in pesos at the
$1 = USD 1 exchange rate when based on foreign currency adjustments, and the
prohibition to introduce indexation clauses based on other countries' price indexes as
well as on any other indexing mechanism. These measures significantly damage the
Company's profitability.
The Company will start negotiations with the Executive Branch in order to protect the
profitability of the business, as provided in Section 9 of the Public Emergency and
Foreign Exchange System Reform Law and in Resolution 293/2002 issued by the
National Executive Branch that sets forth the criteria to be followed for the
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
renegotiation of contracts: the effect of rates on the economy's competitiveness and
on income distribution; service quality and investment plans, when contractually
provided for; users' interests and access to services; the safety of affected systems
and the profitability of companies.
Net income for the fiscal year 2001 amounted to M$98.5, accounting for a 5.5%
increase compared to 2001.
Still immersed in a framework of economic and political crisis, EDESUR demonstrated
its long-term commitment to the country by making those investments that enabled
improvements in the quality of service and contributing M$20 towards the
requirements of the Executive Branch to subscribe a Tax Credit Certificate and a
National Government Bond maturing in the year 2004.
In brief, this has been a hard year in which both workers and executives of EDESUR
have been able to overcome extremely adverse circumstances in order to continue
benefiting customers and adding value to the community and shareholders. The
Board of Directors would like to express its sincere recognition and gratitude to all of
them for their efforts, dedication and commitment to service. I would also like to thank
Perez Companc and Enersis for their contribution and commitment to the Company's
growth.
RAFAEL FERNANDEZ MORANDÉ
CHAIRMAN
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
ANNUAL REPORT AND INFORMATIVE SUMMARY
(English translation of the financial statements originally issued in Spanish - See Note 13)
Pursuant to legal and statutory regulations in force we submit the documentation of
the financial statements for the year ended December 31, 2001 for your
consideration.
GENERAL BACKGROUND OF EDESUR S.A.
COMPANY HISTORY
EDESUR S.A. (hereinafter EDESUR or the Company) was one of the companies
arising our of the process of transformation of the electrical sector developed by the
National Executive Branch between 1991 and 1992 in order to enable the inflow of
private capital to the system's operation.
Law 24,065, known as the "Electric Power Regulatory Framework" -passed by the
National Congress- and its regulatory executive orders, set forth the guidelines and
main patterns for the restructuring and privatization of the electricity industry.
In general, the new regulatory framework established a vertical disintegration of the
business into three segments: electric power generation, transmission and
distribution. Simultaneously, it established guidelines for horizontal disintegration of
large state-owned companies that would enable their subsequent privatization. As a
result, the state-owned company SEGBA (Servicios Eléctricos del Gran Buenos
Aires) was divided into seven business units: four generation companies and three
distribution companies, one of which was EDESUR. The privatization process started
in February 1992 with the sale of SEGBA's generation business units and,
subsequently, its distribution units in July 1992.
EDESUR was created under notarial public deed dated July 21, 1992 in compliance
with Decree No. 714 dated April 28, 1992 of the National Executive Branch and legal
provisions included therein. Said provisions stated that electric power distribution
and trading activities in charge of SEGBA would be subject to privatization and
concession.
After an International Public Bidding where several of the main electricity business
operators participated together with the most relevant business groups of Argentina,
the National Executive Branch, through Decree 1507/92, awarded 51% of shares to
the bid submitted by Consorcio Distrilec Inversora S.A. ("DISTRILEC"), integrated by
Compañía Naviera Perez Companc S.A.C.F.I.M.F.A. (Perez Companc), Distribuidora
Chilectra Metropolitana S.A. (Chilectra), Enersis S.A. (Enersis), Empresa Nacional
de Electricidad S.A. (Endesa) and PSI Energy Argentina Inc. (PSI) upon offering the
best price (US$511,021,021), and the Share Transfer Contract was executed on
August 6, 1992.
1
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
On September 1, 1992, the successful consortium took over and EDESUR started
activities within the concession area.
On December 12, 1995, Enersis -through a subsidiary- submitted the only bid for
39% of Class "B" common book-entry shares of EDESUR held by the Argentine
National Government. The bid for the 387,263,754 shares amounted to
$390,000,641.On May 31, 2000, EDESUR completed the stock redemption transaction of Class "C"
shares under the Employee Stock Ownership Program, accounting for 10% of the
Company's stake. The Company purchased approximately 95% of the total of Class
"C" shares representing 94,398,956 shares for $150.2 million, to be cancelled
through a capital stock reduction. The remaining 4,899,443 Class "C" shares, held
by those employees who did not accept the purchase proposal, were converted into
Class "B" shares and are currently pledged in favor of the Company.
At present, Distrilec, the controlling investment company of EDESUR, owns 56.36%
of the shares, their owners being Enersis group (51.5%) and Perez Companc group
(48.5%).
In compliance with the provisions set forth in the Bidding Conditions of the
International Public Bidding for the sale of Class "A" shares of EDESUR and the
above mentioned Share Transfer Contract, the Company timely entered into an
operation agreement with Chilectra S.A.
CORPORATE PURPOSE
EDESUR's corporate purpose is the provision of electric power distribution and
trading services in the southern area of the Federal Capital City and twelve districts
of the Province of Buenos Aires (Almirante Brown, Avellaneda, Berazategui,
Cañuelas, Esteban Echeverría, Ezeiza, Florencio Varela, Lanús, Lomas de Zamora,
Presidente Perón, Quilmes and San Vicente), as well as the acquisition of the stake
of other electric power distribution companies, either individually or in association
with third parties, after complying with the applicable legislation, and the provision of
operation services related to the distribution and trading of electric power to said
companies.
In addition, and after obtaining authorization from the Federal Electric Power
Regulatory Agency (Ente Nacional Regulador de la Electricidad), granted for each
case specifically, EDESUR will be able to provide services to third parties and carry
out advisory and operation activities, be they ancillary or related to the electric power
industry.
OWNERSHIP STRUCTURE
The authorized capital of EDESUR amounts to $898,585,028, represented by
506,421,831 Class "A" common book-entry shares and 392,163,197 Class "B"
common book-entry shares.
2
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Shareholdings in EDESUR as of December 31, 2001 were as follows:
SHAREHOLDER
QUANTITY
%
506,421,831
56.358%
Enersis S.A.
143,996,758
16.025%
Chilectra S.A.
143,996,758
16.025%
Elesur S.A.
55,933,000
6.224%
Chilectra International Limited
43,337,238
4.823%
4,899,443
0.545%
898,585,028
100,000%
CLASS A
Distrilec Inversora S.A.
CLASS B
Minority Shareholders
TOTAL
Balances and operations with related companies are shown in Note 6 to the financial statements.
3
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
BOARD OF DIRECTORS STRUCTURE
The Company is managed by a board of directors made up by nine regular Directors
that may be replaced by alternate Directors of the same class exclusively. Directors
are appointed for one fiscal year and they may be reappointed.
Class "A" shareholders are entitled to appoint five regular Directors and five alternate
Directors. Class "B" shareholders are entitled to appoint four regular Directors and
four alternate Directors.
Supervision of EDESUR is vested in a statutory audit committee made up by three
regular statutory auditors who shall serve for a term of one year. In addition, three
alternate statutory auditors are appointed to replace regular statutory auditors in
those cases provided for by Law.
The structure of the board of directors of EDESUR, as of December 31, 2001, was
the following:
Chairman:
Rafael Fernández Morandé
Vice-Chairman:
Jesús Burillo Andreu (*)
Regular Directors:
Alberto López García
Marcelo Silva Iribarne
Pablo Ferrero
Juan Carlos Cassagne
Rafael Arias Salgado
Jorge Volpe
Alfredo Mac Laughlin
Alternate Directors:
Domingo Valdés Prieto
Alan Arntsen
Horacio Babino Garay
Pedro Eugenio Aramburu
Jorge Gustavo Casagrande
Manuel María Benites
Pablo Casado Reboiro
Mariano Grondona
Pablo Martín Lepiane
STATUTORY AUDIT COMMITTEE
Regular Statutory Auditors:
Daniel Rennis
María Inés Justo
Jorge Luis Pérez Alati
Alternate Statutory Auditors:
Daniel Casal
4
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Betina Di Croce
Adela Alicia Codagnone
(*) He resigned in December 2001. At the Special Meeting of Class "A"
shareholders held on February 8, 2002, his resignation to the position as Regular
Director and Vice-chairman of the Board of Directors was accepted and it was
resolved to appoint José María Hidalgo Martín-Matteos as his replacement.
ORGANIZATION CHART AND EXECUTIVE OFFICERS
The structure is made up as follows: seven Directors (Legal Affairs, Human
Resources, Commercial Activities, Distribution, Services, Economic Planning and
Control and Administration and Finance) and two Managers (Communications
and Environment and Quality) reporting to the General Manager. Besides, the
Internal Audit Manager reports directly to the Board of Directors.
In addition, the operation of the Procurement and Contracts, Environment,
Safety, Regulations and Communications Committees, made up by the
Company's executive officers in each of the respective areas, has promoted
teamwork and enabled the company to attain significant results and effectively
solve important issues in strategic areas of EDESUR's administration.
BOARD OF
DIRECTORS
Internal Audit
Manager
General
Manager
Environment
and Quality
Manager
Comm. Manager
Legal Affairs
Director
Human
Resources
Director
Commercial
Activities
Director
Distribution Director
5
Services
Director
Economic
Planning &
Control Director
Administration &
Finance Director
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
COMPENSATION OF MEMBERS OF THE BOARD OF DIRECTOR, DIRECTORS
AND MANAGERS
The members of the Board of Directors do not carry out operative functions;
therefore, their compensation is fixed by the General Meeting at the time of approval
of the Annual Report and Financial Statements.
The compensation policy for EDESUR's executives involves a fixed monthly
compensation pursuant to regulations in force, a variable compensation and a
benefits program.
The variable compensation consists of a schedule of annual bonuses subject to the
fulfillment of objectives set annually by the Board of Directors of the Company, which
determine their collection and amount.
As regards the benefits program, it is a complement of the above.
MEMBERS OF THE EXECUTIVE COMMITTEE AS OF DECEMBER 31, 2001
General Manager
José María Rovira
Legal Affairs Director
Alvaro Estivariz
Human Resources Director
Héctor Ruiz Moreno
Commercial Activities Director
Sandro Rollan
Distribution Director
Daniel Héctor Colombo
Services Director
Daniel Roberto Alasia
Planning & Economic Control
Director
Juan Garade
Administration & Finance
Director
Juan Verbitsky
Environment & Quality
Manager
José María Gottig
Communications Manager
Daniel Martini
Internal Audit Manager
Jorge Lukaszczuk
6
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
BUSINESS ACTIVITY
1. EVOLUTION OF DEMAND
The year's recessive context resulted in a substantial reduction in electrical power
demand levels of growth, to the extent of turning the period into one of the slowest
growing fiscal years since the start-out of the concession.
During 2001, EDESUR's demand for electric power exhibited a 2.1% growth as
compared to the year 2000, despite the unfavorable economic context reflected in
the Gross Domestic Product drop.
Electric power supplied to EDESUR's grid amounted to 14,354 GWh, entirely
purchased in the Wholesale Electricity Market.
In the month of February, EDESUR registered the year's peak demand for power,
reaching 2,582 MW; this value was less than the historical peak value reached in
July 2000, at 0.4%. However, the monthly average peak power for 2001 was 4.3%
higher than that of the year 2000.
Evolution of Demand for Electric Power
(in GW h - includes wheeling)
10446
10832
10920
11577
1993
1994
1995
1996
12727
13384
14058
14354
12189
1997
1998
1999
2000
2001
2593
2582
2000
2001
Evolution of Demand for Power
(in MW - includes wheeling)
1929
2002
2078
1993
1994
1995
2170
2224
2291
2369
1996
1997
1998
1999
7
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
2. INVESTMENTS
In order to meet the growth in demand and continue improving the quality of service
by increasing the degree of safety within a framework of increasing respect for the
environment, EDESUR has made significant investments amounting to $129.6
million. The $129.6 million invested by the Company during the year 2001 were
allocated as follows:
Growth in demand
$68.7 million
Network renewal and recovery
$36.2 million
Loss and delinquency control
$ 8.8 million
Management improvements
and other
$15.9 million
Total
$129.6 million
Total investments from the start-up of the private administration in September 1992
are close to US$1,190 million according to the following breakdown:
INVESTMENTS
250
212.2
200
150
136.6
125.8
105.1
115.5
94.0
100
129.6
110.1 105.0
57.2
50
0
1992
1993
1994
1995
8
1996
1997
1998 1999 2000
2001
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
3. TECHNICAL MANAGEMENT
The year 2001 implied the consolidation of the Company's functional organization of the
technical cycle and the enhancement of the culture of prevention in the development of
all of EDESUR's activities.
Within these premises, EDESUR put forth an important effort towards the strengthening
of the electrical system's structure and the incorporation of new technologies to face the
challenges of an increasingly demanding and competitive market.
3.1. NEW WORKS
Works to meet the growth in demand
During the year 2001 EDESUR has developed major investment projects related to the
Company's High, Medium and Low Voltage systems for an amount in excess of $94
million in order to meet the growth in demand and improve the technical quality of
service.
Construction of new substations
New Ezeiza substation 220/132 kV - 2 x 150 MVA and commissioning of the
Spegazzini substation 132/13.2 kV – 2 x 40MVA.
The new Ezeiza substation enabled the Company to increase the transformation
supply at the 220/132 kV level in the area of the province of Buenos Aires. Such
substation, commissioned in April 2001, has two 150 MVA - 220/132 kV
transformers. This work enabled the following:
 Provide 132kV power supply to the new Spegazzini substation.
 Change the power supply of the Cañuelas substation in order to increase its
reliability.
The Spegazzini substation, commissioned in November 2001, has two 40 MVA 132/13.2 kV transformers and its completion enables the Company to efficiently
service the urban and industrial development of its influence area. The power
supply of this substation was carried out by means of two circuits of 132 kV
overhead line. It must be pointed out that this is the first High Voltage overhead
line constructed by EDESUR and its completion required significant technical,
legal and administrative efforts.
On the other hand, the power supply to the Cañuelas substation from the new
Ezeiza substation, which concluded in the month of December 2001, implies a
substantial improvement in terms of quality of service for an area in constant
development.
9
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Expansion of substations and networks
New power supply for Rivadavia and Reconquista substations from the
Azopardo substation and new power supply provision for Independencia,
Once and Pozos substations from the Azopardo substation.
These two projects enable the Company to feed the subtransmission system of
the Microcentro and Macrocentro area of the city of Buenos Aires, providing
greater support to the substations that service it, thus increasing service reliability.
This area concentrates large part of the country's political, business and financial
activities.
The new power supply provision for Rivadavia and Reconquista substations from
the 220/132 kV Azopardo substation was implemented through the laying of 1.5
km of three circuit 132 kV underground cable and is fully operational since August
2001.
On the other hand, the new power supply provision for Independencia, Once and
Pozos substations from the 220/132 kV Azopardo substation implies the laying of
4.6 km of two circuit 132 kV underground cable. This multiannual work has been
under execution since the year 2000, and commissioning is scheduled for the year
2002.
Technological refurbishing and expansion of Charcas substation
These works enable the Company to service the vegetative growth of the demand
currently supplied by the substation Charcas, and part of the demand supplied by
Paraná and Tres Sargentos substations, as well as to service the emergence of
specific demands in the Retiro area.
The project encompasses total refurbishing of the current substation's equipment,
including the installation of two 80 MVA - 132/13.2 kV transformers. The
substation will be compensated at 13.2 kV by means of two capacitor banks and
will be fed by 2.2 km of two circuit 132 kV underground cable from the 132/13.2 kV
- 2 x 80 MVA Azopardo substation. It is a multiannual project that has been under
execution since the year 2000. Its completion is expected for the year 2002.
Technological refurbishing and expansion of Luro substation
The purpose of this project is to increase the 132/13.2 kV level transformation
supply in the western area of the city of Buenos Aires, supplied by Luro, Devoto
and Falcón substations, in order to meet the growth in demand. An additional goal
is to comply with resolution ENRE 245/98, that establishes limitations to the values
of peak demand to be serviced by EDENOR to EDESUR (firm power). For this
specific case, the demand of Luro substation and part of the demand of Devoto
substation will be fed from EDESUR's networks.
Total refurbishing of Luro substation's equipment, including the installation of two
80 MVA - 132/13.2 kV transformers, is provided for within this project. The
substation will be compensated at 13.2 kV by means of two capacitor banks and
will be fed from the Perito Moreno substation, through 4.9 km of two circuit 132 kV
10
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
underground cable. This is a multiannual project that has been under execution
since the year 2000 and commissioning has been scheduled for the year 2002.
Telecommunications links
The implementation of telecommunications links through optical fiber consistent
with High Voltage network underground cabling began during the year 2001. The
works, under execution, correspond to ducts and connector and inspection
chambers through which optical fiber will subsequently be laid. These layings will
link the following EDESUR substations: Azopardo-Independencia, AzopardoRivadavia, Azopardo-Charcas and Perito Moreno-Luro.
Other relevant works
Reactive Compensation - Phase 2
In the 2001 fiscal year, EDESUR completed the second phase (96 MVAr) of its
plan for the installation of capacitor banks in several substations of the concession
area. The plan initiated in the year 2000 was completed, thus enabling the
Company to improve reactive power control, reduce technical losses and achieve
a more efficient use of electrical networks. Since the year 2000, all new
substations incorporate adequate reactive compensation as early as the design
stage.
Upgrade of metering equipment
During 2001, EDESUR continued its power meter renewal plan in full compliance
with resolution No. 110/97 issued by ENRE.
In addition, the Company continued implementing the power meter standardization
program for large customer supplies (Rate 3) and the power meter exchange
program for overloaded meters at medium-sized customers (Rate 2).
New High Voltage and Medium Voltage Breakers in substations
In order to improve the quality of service and reduce network operation costs, the
Company has replaced 132 kV breakers at the Dock Sud (3 breakers), Costanera
(7), Bosques (1), Almirante Brown (1) substations and three 220 kV breakers at
the Ezeiza substation. In Medium Voltage, the Company has replaced 13.2 kV
breakers at the Independencia (19) and Alberdi (22) substations, 33 kV breakers
at the Cañuelas substation (7) and at the San Vicente MV/MVsubstation (2). We
have used new state-of-the-art equipment in all cases, providing both excellent
performance and minimum maintenance costs.
In addition, it must be pointed out that we have made technological upgrades of
substation telecontrol remote units, adding new functionality and improving their
performance.
Medium and Low Voltage Networks
11
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
In addition, investments made by EDESUR during the year enabled us to renew
and install 1,984 km of electrical networks broken down as follows:
Medium voltage underground
cables
162.8 kilometers
Low voltage underground cables
170.0 kilometers
Medium voltage overhead lines
108.9 kilometers
Low voltage overhead lines
1,542.3 kilometers
Besides, 581 Medium Voltage/Low Voltage transformers, 264,199 single-phase
power meters and 14,284 three-phase power meters were installed.
3.2. QUALITY OF TECHNICAL SERVICE AND PRODUCT
In 2001, technical service quality indicators -number and duration of outages- have
maintained their favorable evolution, achieving significant improvements as compared
to the year 2000 indicators.
The number of outages due to failures in our own facilities was reduced by 25% and
their duration was reduced by 14%.
This positive evolution is even more significant considering that in the month of January
EDESUR faced the major contingency of a tornado that hit the southern part of Gran
Buenos Aires, affecting the Presidente Perón, Ezeiza, Alte. Brown, San Vicente and
Florencio Varela districts within its concession area. The event had a severe impact on
overhead installations that service 96,000 customers, including Medium Voltage
networks and transformer centers with concrete poles.
On the other hand, the number and duration of non-EDESUR outages, i.e., originating
in other companies' facilities and affecting the service provided by the Company, had an
uneven evolution as compared to the year 2000.
Thus, it can be stated that the number of outages due to external failures decreased by
21%, while their duration increased by 15%.
As regards technical product quality -voltage level and disturbances- the metering
cycles carried out during the year registered an acceptable quality level.
The graph below illustrates the evolution of quality indicators, including our own failures
and external failures.
12
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Duration of Outages
per KVA (T.T.I.K.)
Number of Outages
per KVA (F.M.I.K.)
3,68
1,93
5.16
3.91
0.87
1.34
2.99
EDESUR
Network
1.06
1.00
EDESUR
Network
3.68
EDESUR NETWORK
1.93
Jan'00/Dec'00
4.29
REDUC T I ON
2.57
External
Hours
Times
External
4.68
REDUC T I ON
EDESUR NETWORK
- 14%
-25%
Jan01/Dec01
Jan'00/Dec'00
Jan'01/Dec'01
3.3. TECHNOLOGICAL INNOVATIONS
In its ongoing search for new solutions to attain greater efficiency in the provision of services, EDESUR
has incorporated several technological innovations that have enabled the Company to improve the quality
and safety of the service provided to our customers. The following are worth mentioning:


















MV/LV integral filling transformers (without expansion tank or dehydrator).
33/13.2 kV compact substation.
Sulfur hexafluoride MV modular cells with watertight connectors for
floodable or pollution-exposed areas.
Compact Medium Voltage Lines with wooden poles and rigid insulators.
Use of metallic structures with less environmental impact in Medium
Voltage lines.
Use of conductor protected against accidental contacts in wooded areas.
Thermographic inspections with high technology chambers.
Grouped close operation for breakers tripped by underfrequency relays.
Disability of automatic voltage regulation in substations.
Outdoor compact centers.
Low Voltage modular boards with protection against direct contact.
Thoroughfare synthetic material distribution boards.
Thoroughfare synthetic material cable connection and protection box and
meter box.
Programmable short circuit detectors to locate failures in the MV network
(SCADA approved).
High Voltage underground cable laying in concrete ducts.
High Voltage underground cable laying with intelligent equipment.
Maximum security padlocks for chambers.
Cold-contraction/expansion or sliding technology connectors and terminals
13
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)







for dry insulation MV cable and transition connectors.
New design of anti-theft Low Voltage network - ADE Standard 001.
132 kV underground dry cable temperature monitoring.
High Voltage transportable cables.
Voltage test with portable equipment in 132 kV cables.
Development of equipment for on site power meter contrast.
Electronic power meters for light demand (Rate 1).
Enclosures to minimize visual impact in overhead transformer centers.
3.4. FACILITIES SURVEY
During the year we completed the "Electrical Network Survey" project, through which
the Company succeeded in verifying, identifying, surveying and digitalizing EDESUR's
facilities in the High, Medium and Low Voltage levels.
All data entered for the different voltage levels were included in a single data base
related and integrated to the cartographic and single-wire systems.
As from the creation of this single data base, the project for the implementation of
integrated technical systems will be undertaken in order to achieve quality and
consistency in the information and technical management processes, additionally
incorporating management and optimization tools for the operation and planning of
Medium and Low Voltage networks.
3.5. GENERAL CONTINGENCY PLAN.
During the year 2001, the General Contingency Plan, certified and approved by IRAM in
the year 2000, was tested under extreme circumstances due to extraordinary climatic
phenomena in terms of their intensity and serious effects on the electrical network.
EDESUR has been able to prove it is ready and fully prepared to provide fast and
efficient answers under any type of unforeseen situation.
January 10, 2001 Tornado in the southern area of Greater Buenos Aires
During the early hours of January 10, the southern area of Greater Buenos Aires
was hit by a tornado with winds over 200 km/hr.
The more affected areas were the districts of Presidente Perón (Guernica), Ezeiza
(Ezeiza, Tristán Suárez, Canning), Alte. Brown (Longchamps, Glew), San Vicente
(San Vicente, Alejandro Korn) and Florencio Varela (El Pato).
Under such circumstances, the Crisis Committee was summoned and within the
framework of its Contingency Plan, EDESUR was able to successfully overcome
the emergency and reestablish service in record time. The outstanding figures
resulting from this event were:

96,000 customers affected during the emergency.
14
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)

Sixty-eight per cent (68%) of the Medium Voltage network recovered
within 12 hours, and fully operational on the following Monday, January
15.

The effect on Medium and Low Voltage networks was considerable and
the Company concentrated all its resources to repair them.

A special operation for the installation of generating sets was arranged to
deal with essential supplies, and it was made available to local authorities.

The Company maintained a proactive communications policy both with
national, provincial and municipal authorities and ENRE.

The Call Center for telephone assistance was reinforced with the voluntary
participation of personnel previously trained for this type of events.
January 24, 2001 storm over Buenos Aires
On January 24, Buenos Aires was once again hit by an intense and windy
rainstorm.
The storm that hit the city of Buenos Aires and its surroundings originated the
flooding of several areas, affecting EDESUR's facilities when rainfall reached 132
mm in barely 2 hours.
From the start we implemented the Contingency Plan, deploying all necessary
resources to overcome this extraordinary event.
Some representative figures arising out of the emergency were:

15,000 customers without service, out of which 5,000 belonged to the city
of Buenos Aires.

Ninety per cent (90 %) of affected customers recovered service within 7
hours.
It is worth mentioning that, due to the significant investments made in the last few
years, the extent of the damage to the electrical service was minimal given the
severity of the meteorological phenomenon.
15
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
4. COMMERCIAL MANAGEMENT
In the year 2001, EDESUR's commercial activities were geared towards optimizing
basic administration processes.
To that end, in the billing process, all procedures related to the reading, billing and
collection of Rate 1 customer bills were analyzed, reviewed and issued. This activity
was the basis for ISO 9001 standard certification.
On the other hand, we implemented a plan to reduce losses, applying new focalization
concepts and information technology tools.
As regards other income, we were able to shape the first public lighting maintenance
and refurbishment contract, a landmark that opens up a new stage for the generation of
new income.
In relation to commercial assistance services, we created the Customer Advocate role
to monitor every customer-related activity or process in order to take the necessary
steps to provide a high degree of customer satisfaction. Along the same lines, we
conducted specific courses for service executives in all operating areas.
4.1. EDESUR'S MARKET
Customers
The total number of customers at the end of year 2001 reached 2,096,673, accounting
for a 0.56% net reduction as compared to the year 2000. Customer breakdown
according to the use of energy is as follows:
Type of User
Residential
General
Large Users
Total
2000
1,818,993
283,603
5,876
2,108,472
2001
1,813,983
276,769
5,921
2,096,673

-0.28%
-2.41%
0.77%
-0.56%
Evolution of the Total Number of Customers
(in Thousands)
2,108
2,094
2.096
2,105
2,078
2,050
2,042
2,038
1,890
1993
1994
1995
1996
1997
1998
1999
2000
2001
During the year the Company registered 65,194 new connections (+3.1%); however, as
a result of the deep crisis occurring during 2001, the Company registered 76,993
16
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
disconnections requested by customers or on account of the default in payment,
specifically in Rate 1 (Residential and Commercial).
Electric power sales
Total annual sales amounted to 12,909 GWh, accounting for a 2.5% increase as
compared to the year 2000. This figure includes 2,658 GWh for distribution services
(wheeling) to large users.
Evolution of Total Electric Power
Sales
(in GWh - includes wheeling)
Own Clients
79%
12.909
13.500
12,596
12.106
11.597
12.000
11.093
21%
10.372
10.500
Wheeling Clients
9.000
power
Share of wheeling in total electric
7.500
6.000
1996
1997
1998
1999
2000
2001
Distribution per type of customer was as follows:
Electric Power Sold per type of client
2001
Large Users
Residential
36%
42%
22%
General
4.2. LOSSES AND DEFAULT IN PAYMENT
In an adverse socio-economic context, where poverty rose in over 40% of the
population in EDESUR's concession area, the Company struggled with and successfully
faced the challenge of restraining increased energy theft and default in payment.
During 2001, EDESUR maintained the electric power loss estimation methodology
implemented in 2000. The year ended with a 9.9% Mobile Annual Rate, accounting for
a 0.4 percentage point reduction.
17
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
10.40
10.20
10.00
10.3
10.3
9.80
9.60
9.9
9.4
9.40
9.20
9.00
8.80
TAM 01
TAM 00
DECEMBER
NOVEMBER
OCTOBER
SEPTEMBER
AUGUST
JULY
JUNE
MAY
APRIL
MARCH
FEBRUARY
JANUARY
DECEMBER
8.60
This achievement in such a hard context was possible due to the development of all
plans and projects geared towards controlling losses.
We can highlight the
Measurement of Focal Losses in Medium and Low Voltage projects, as well as the
development and implementation of information technology tools that resulted in
improved efficiency.
Actually, during the year the Company made information technology-related
investments that were mainly allocated to provide new functionalities to the commercial
systems, such as the dynamic administration of work orders, billing and follow-up of
non-recorded consumption, administration of inspections and follow-up of Rate 2/Rate 3
defaulting clients.
As regards delinquency, the Company has spared no efforts in reducing overdue
amounts through an effective power supply interruption policy supported by payment
plans and easy terms of payment. Within these guidelines, a new information
technology tool that enabled optimization of service interruption reissues was
implemented.
On the other hand, management of outstanding balances was outsourced, with strong
actions geared towards out-of-court collection, and the systems that facilitate the clear
administration and on-line management of customer debts notified to commercial
agencies (Veraz, Decidir) were adjusted.
18
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
98.8
98.6
98.4
98.4
98.2
98.0
97.8
TAM 01
97.8
97.6
TAM (sin Acuerdo Marco y oficiales)
97.4
97.2
DEC
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
NOV
DEC
This enabled the Company to reach a 97.8% average annual collection rate in regard to
billing. The above mentioned value is strongly affected by outstanding balances from
government agencies which doubled their default in payment historical values as from
the "zero deficit" policy implemented by the National Government. In addition, during the
month of August, the funds allocated under the Addenda to the Framework Agreement,
which absorbed electric power consumption by shantytowns, were depleted.
Had it not been for the default in payment by official clients and the atypical increase in
customer balances in default in the month of December we would have reached the
goal set.
It is worth mentioning that in an effort to handle both energy losses and reduce
delinquency level, we carried out a systematic plan for cut-off and removal of illicit
connections which contributed to maintain the market's discipline.
4.3. QUALITY OF COMMERCIAL SERVICE
Since the "Focus on Customers" is one of EDESUR's values and taking into account
that commercial assistance is one of the key contact areas of the Company with over 2
million customers, EDESUR has developed several initiatives focused on improving
customer assistance, evaluating the customers' perception, detecting their needs and
meeting these needs with new products and services.
Customer Advocate
EDESUR has been the first public utility company in Argentina to create the role of the
Customer Advocate within its organization. Its purpose is to serve as a means to
promote and sustain the process of continuous improvement in the quality of service to
clients and increase their level of satisfaction. The strategy involves detecting and
working on alert signals arising from the follow-up of relevant indicators and contacts.
We have established an action plan for each of these signals and have created teams
to analyze them in periodic meetings where these action plans are evaluated and
modified according to the emergence of new signals and/or deviations.
Comprehensive telephone assistance
19
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
In 2001, EDESUR completed the unification of “Fonoservicio” (phone service facilities)
and the Emergency Assistance Service which will enable the Company to extend
business assistance hours to 24 hours, since executives will be qualified both in
commercial issues and emergencies, generating benefits in resource optimization,
increase of productivity and greater management efficiency.
During the year, 66% of customer contacts with the Company were channeled by
telephone and 34% personally.
Agreement with the Spanish Chamber of Commerce to support PYMES (small and
medium-sized companies)
EDESUR and the Spanish Chamber of Commerce of the Argentine Republic entered
into a mutual assistance agreement to promote the development of PYMES businesses
abroad. The agreement sets forth the creation of a "Virtual Business Chamber",
accessible through EDESUR's Internet page, that enables small and medium-sized
companies to have access to new commercial undertaking opportunities in Spain. The
initiative was announced to over 100,000 PYMES - EDESUR's customers or goods and
services providers.
New payment tools and options
Within the framework of the economic crisis affecting the country, EDESUR showed its
efforts to adapt to the needs of its customers by being the first public utility company to
accept 100% payment of electricity bills from employees and retired individuals of the
province of Buenos Aires in "Patacones" provincial bonds.
Likewise, within the framework of economic measures adopted in the month of
December -which restricted cash availability for its clients- the Company successfully
channeled the demand for payment options through an exponential growth of credit
card, bank account automatic debit and Internet-based payments.
Quality perceived by customers
For the sixth consecutive year we have conducted customer satisfaction evaluations at
the business offices, “Fonoservicio” and Emergency Assistance Service using a system
known as "Unknown Customer". Evaluation results as a whole exceeded a score of 9
(in a scale ranging from 1 to 10) and in all cases show an improvement over the
previous year.
In addition, a survey conducted by GALLUP Argentina at EDESUR's request in
December 2001 shows that the positive feedback of the Company's residential clients is
the highest among companies providing public services in its concession area.
"Emailservicio" Management Award
EDESUR received the Mail Industry Award awarded annually by Teleperformance,
leading company in teleservice and Contact Center strategies, in the Public Services
category. The award recognized the “Emailservicio” management through which
EDESUR customers may carry out most of their commercial arrangements via the
20
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Internet. The award organizers have considered it the best service of its type in
Argentina.
4.4. OTHER CUSTOMER SERVICES
Associated and ancillary income increased by 20% this year. Associated income
(connections, reinstatement, non-recorded consumption, surcharges and interest)
increased by 18%, while ancillary income (new products and services, EDESUR
Corporate, work done for third parties, collection for other companies, support
contracts) increased by 28%.
New Products and Services
New product and service lines were focused on the different customer segments
included in EDESUR’s portfolio. Thus, there are products for Large Customers and
products for Residential Customers.
Large Customer-oriented Products:
This was the fastest-growing line in 2001. It grew by 69% as compared to 2000;
related billing amounted to M$1,208. Demand was mainly for facilities construction
and adjustment, Medium-Voltage chamber maintenance and sale of existing
facilities.
Residential Customer-oriented Products:
With a view to meeting unsatisfied needs of residential customers that would also
result in new income for the Company, EDESUR developed a new product and
service program. EDESUR Home line was designed to provide a fast and secure
response in the face of emergency situations at customers’ homes, in addition to
offering high-tech equipment from well-known brands in order to enhance safety at
residential facilities.
4.5. STREET LIGHTING
In the context of the “Efficient Street Lighting System” (SAPE) program launched by
Buenos Aires provincial administration, EDESUR entered into the first agreement
designed to provide street lighting maintenance and refurbishment services in the
district of Berazategui. This is an eight-year contract that will enable EDESUR to
refurbish all street lighting in the district and to improve the system’s efficiency.
Also, out of 12 Buenos Aires districts included in EDESUR’s territory, eight districts
have already entered into agreements that enable EDESUR customers to pay street
lighting rates in EDESUR’s bill, thus significantly improving the local governments’
ability to collect those rates.
Out of the four remaining districts, both Lomas de Zamora and Almirante Brown have
entered into the applicable agreement with EDESUR; there are just a few formalities to
be met before these agreements become effective. We are currently negotiating with
Avellaneda and Lanús district authorities in order to start providing this service to them
too.
21
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
4.6. ELI PROJECT (EFFICIENT LIGHTING PROMOTION)
ELI has been designed by the International Finance Corporation (IFC) and funded by
the Global Environment Fund (GEF) in order to speed up the introduction of lamps, light
devices and ancillary equipment that helps generate efficient lighting.
Argentina has been selected among seven other countries to participate in ELI, and
EDESUR has been chosen to manage the project. The following actions have already
been taken:






Social marketing campaign: by disseminating through the media the economic
and environmental advantages of efficient lighting.
Public education campaign: by organizing educational workshops addressed to
teachers at all levels within the educational system and students throughout
Argentina. The campaign reached over 121,000 students throughout the Argentine
territory.
ELI quality registration introduced in the Argentine market: crediting of the
Universidad Nacional de Tucumán lab, along with ELI registration of efficient lighting
products manufactured by the most important brands of compact fluorescent lamps,
has improved the availability of products that meet the highest safety, quality and
warranty standards.
Institutional sponsorship: the Program has obtained support from the Argentine
Secretariat of Energy and Mining and sponsorship by some prestigious agencies
and entities, including the Ministry of Education, the Argentine Sustainable Growth
and Environmental Policy Department, and governmental agencies reporting to the
governments of Buenos Aires City, Buenos Aires province, Mendoza, Tucumán,
Santa Cruz and Santa Fe, as well as entities, universities and organizations in the
electric power sector.
Efficient-building award: with a view to encouraging the use of efficient lighting
devices in public and private buildings, a contest has been organized that will
acknowledge and reward facilities that use their lighting resources in the best
possible manner.
ELI specifications included in Argentine federal standards: the Argentine ANSI
(Instituto Argentino de Normalización - IRAM) has offered to include ELI standards
in IRAM regulations in order to make them a requirement for this type of products.
22
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
5. HUMAN RESOURCES MANAGEMENT
EDESUR continued to improve productivity levels this year. As of December, the applicable ratio was 925
customers per worker, or a 4.4% improvement as compared to 2000. As of December 31, 2001, the
company’s active staff was 2,267 workers.
5.1. LABOR RELATIONS
In a context of permanent dialogue with the Unions, the company continued to try and
reach agreements that generate a good working environment, in line with market
requirements and challenges.
Some significant agreements were finalized in 2001 in connection with night shifts,
vehicle driving, commuting time and scholarships for students at “13 de Julio” academy.
Also, the Company made progress towards consolidating its relationship with
contracting companies, by means of several meetings with them where the parties
defined a framework for compliance of labor-related obligations, thus respecting each
party’s specific role.
5.2. TRAINING & DEVELOPMENT
Training sessions for the company’s personnel amounted to 135,000 man/hours in 2001. These were
some of the most important actions taken:

A Strategic Training Plan was implemented which consists of 27 specific programs
covering executive levels, middle management, supervisors and department heads.

Development of a program designed to link EDESUR to the academic community, in
the form of cooperation and mutual assistance agreements with ITBA and UBA, as
well as inclusion of 70 students as interns and trainees. Additionally, the Company
implemented an internship program for teachers at technical academies.

For the second time in a row, granting of a Tax Credit promoted by the Ministry of
Economy’s Small and Medium-sized Companies Department, which is designed to
train the staff of small and medium-sized companies (EDESUR suppliers). Training
sessions for our suppliers’ staff covered over 25,000 man/hours. As a result, all
suppliers embraced the same safety measures criteria and their employees
developed the necessary skills in order to perform various technical operations, by
applying technical service and product quality standards and requirements.

A training program for Company executives was implemented around three basic
axis: Quality Management, Commercial Management at Service Companies, and
Project Leadership and Management.

Development of an intensive training program for middle management, addressed to
all Department and Unit Heads, designed for them to learn new leadership tools.
23
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)

Participation in the Second International CIER Corporate Areas Meeting, held in
Colombia, with a paper called “Training & Development Strategy: its connection with
Business Development”.
Training – Subject Areas
ADMINISTRATION
ION 12%
COMPUTER SKILLS
- INF. SYSTEMS
2%
TECHNICAL
31%
H.R.
DEVELOPMENT
10%
LANGUAGE
3%
ENVIRONMENTAL
MANAGEMENT
10%

COMMERCIAL
22%
INDUSTRIAL
SAFETY
10%
The Company continued to work on the Competence Model and the design of a
Performance Evaluation System for all EDESUR personnel, adapted to meet the
changes and needs posed by business development. This action was
complemented by a Job Description and Evaluation Program and a Potential
Evaluation Program, the first stage of which was completed in 2001.
“Carlos Pellegrini Award”
At the Argentine Industrial Union’s Annual Meeting, EDESUR received the “Carlos
Pellegrini” award for its training and development program. The panel of judges
included the Argentine Minister of Education and the Presidents of several private and
public universities. The award was handed to EDESUR by the President of Argentina.
5.3. HYGIENE AND SAFETY
EDESUR S.A. Safety Inspectors Team (“GISE”)
This project is in line with EDESUR’s safety requirements and basically seeks to
examine the condition of facilities and work safety conditions affecting both our own
staff and subcontractors’ staff.
The scope of this project covers all of EDESUR’s territory, with an emphasis on the
most sensitive areas, such as areas surrounding schools, hospitals, areas where
numerous pedestrians walk by, etc.
24
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
These are some of the most significant actions carried out by GISE:






Surveying thoroughfare problems
Temporary clearing of thoroughfare emergency areas
Replacing signals at cable connection and protection boxes and metering devices
Answering customers’ inquiries
Surveying closure of and signals placed at transformers
Monitoring work performed by the Company’s and its subcontractors’ personnel
Fire detection system at level II Substations
The Company has completed installation of a fire detection system at 43 substations.
This will enable EDESUR to get an early warning if anything goes wrong at those
facilities.
Work Accidents
The “serious accidents” rate fell again in 2001, from 0.48 to 0,43, thus consolidating the
improvement experienced in 2000 as compared to 1999.
5.4. WORK MEDICINE
In accordance with the applicable regulatory provisions, the Company continued to implement plans and
actions designed to reduce work disease and accidents, thus improving work capacity and productivity.
As far as health checks are concerned, regular checks were run on all personnel.
5.5. PERSONNEL INFORMATION SYSTEMS
With a view to optimizing the Company’s human and technological resources, an effort was made to
modify and generate data structures within the Personnel Information System (SIP) which will enable the
Company to load information in connection with ISO 9001 and 14001 and IRAM 3800 standards at the
organization’s workstations. As a result, users will be able to generate reports in connection with their job
description and professional charts from their workstations.
In line with the Company’s efforts to automate settlement of variable items, within the
Punctuality and Attendance System, EDESUR decentralized loading of overtime
worked by the staff of “Asociación del Personal Superior de Empresas Eléctricas”
(APSEE) as well as commuting time for authorized personnel and vehicle-related
expenses.
5.6. STAFF BENEFITS
Throughout 2001, the Company continued to develop the Staff Benefit program, by implementing the first
Addiction Prevention Workshop, addressed to the teenage children of the Company’s employees, who
attended the workshop accompanied by their parents.
Also, EDESUR sponsored the traditional Children’s Drawing Contest, addressed to
employee’s children. This time the contest’s theme was “Christmas”. The winning
drawings were printed on EDESUR’s Christmas cards.
25
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
5.7. ASSET SECURITY
In order to meet the Company’s security needs and further in order to incorporate new technology, in
2001 EDESUR installed new VCRs in public areas. This technology, along with the implementation of
new watch schedules and the inclusion of mobile units in various areas, enabled the Company to reduce
by 50% the rate of occurrence of crimes against EDESUR.
At the same time, the Company enhanced controls over subcontractors’ staff by issuing
4,300 badges; personal identification data printed on these badges was loaded into the
Asset Security System.
26
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
6. ENVIRONMENTAL AND QUALITY MANAGEMENT
In December 2001, the firm Det Norske Veritas (DNV) completed an audit of EDESUR’s
Management Systems. No significant non-conformities were detected. Thus, the
Company secured ISO 14001 certification for its Environmental Management System
(SGA), ISO 9001 certification for its Quality Management System for the Company’s
Reading, Billing & Collection process, and OSHAS18001/IRAM 3800 certification for the
Company’s Work Safety & Health Management System for Work-with-voltage involving
High-Voltage and Medium-Voltage.
This achievement (simultaneous registration of the Company’s three management
systems) is unprecedented among major Argentine companies. This shows that
EDESUR has turned one of its core values into facts: “Commitment to Quality, Safety
and the Environment”.
Implementation of management systems based on internationally acknowledged
models is an appropriate path towards a gradual inclusion of environmental, safety &
health and quality considerations in the Company’s corporate goals and daily practice.
All three management systems include the Company’s own policies, management
manuals and management plans; yet they are fully integrated at the operational and
implementation levels.
All three systems have the following shared features: documentation control, internal
evaluation (audit) system, training, non-conformity identification and follow-up, and
operating procedures generally.
The Environmental Management System is based on three strategic axes: continuous
improvement, pollution prevention and quality of life. The System encourages strict
compliance with applicable laws and EDESUR’s environmental policy.
When planning and implementing the SGA, the Company identified the applicable legal
requirements and evaluated environmental issues. As a result, operating controls and
continuous improvement goals were defined (Environmental Management Plan). The
following elements are worth mentioning:

survey plan for insulating liquids at transformers, waste disposal and
management program, and remodeling of warehouse yards, which were specially
designed to store distribution transformers.

facility measurement and control program (High and Medium Voltage and
Substations), environmental performance evaluation of critical subcontractors
and definition of environmental management and operational indicators.

reduction of noise at substations with specific problems.

environmental impact studies for High and Medium Voltage work projects.

implementation of paper and ink cartridges segregation programs.
27
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)

technological innovation, including development of new, environment-friendly
technologies (design, texture, color), visual intrusion prevention and anti-leakage
plates.

throughout 2001, direct investment in environmental issues amounted to
$650,000, while environment-related expenses (pollutants disposal) amounted to
almost $1MM.
As far as quality is concerned, the Company consolidated its organizational and
functional structure by creating a Quality Department. This contributed to process
systematization and consolidation and established a tangible customer – internal
supplier link.
In order to implement the Quality Management System, EDESUR encouraged
multidisciplinary and team work within the organization. The whole Company was
involved in designing and implementing management systems and their alignment with
international and/or domestic ISO, IRAM and OSHAS standards.
Company members were also actively involved in designing and implementing
OSHAS18001 / IRAM 3800 standards for the Work-with-Voltage (TCT) process, which
was also registered by DNV.
Additionally, EDESUR issued general procedures including guidelines for documentary
reordering and for dealing with deviations from processes, procedures and/or systems,
in order to ensure proper and specific planning of corrective and/or preventive actions,
with a view to continuous improvement, compliance with the applicable laws and
customer and governmental requirements.
28
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
7. COMMUNICATION AND INVOLVEMENT WITH THE COMMUNITY
In 2001, EDESUR S.A. continued to work on initiatives designed to improve the
Company’s image, achieve greater involvement with the community and reinforce the
attributes and perception of EDESUR among different audiences. Those initiatives
included, among others, the following:
“EDESUR FOR THE CHILDREN” Campaign
For the fifth year in a row, EDESUR carried out its “EDESUR for the Children”
campaign, which carries information about safe and efficient use of electric power to
pre-school children.
This year, the method used in the campaign was a puppet show that visited the
following districts: Florencio Varela, San Vicente, Lomas de Zamora, Avellaneda,
Cañuelas, Lanús and the City of Buenos Aires, in addition to a meeting with about
1,000 children at General San Martín Theater, where the annual campaign was closed.
The show was organized with the relevant districts’ authorities.
Specifically with the City of Buenos Aires Administration, in addition to coordinating
campaign closing actions, the Company organized a show at Arenales square (in the
Villa Devoto area) in the context of the “Solidarity Week”. Over 3,000 children
participated in this meeting.
Mural Painting at Substations
In the context of the “Mural Painting at Substations” program that EDESUR has been
carrying out for three years now with the Primary Education Area of the City of Buenos
Aires Administration, in 2001 the Company inaugurated several murals painted by
students from School N° 16 and School N° 20 (School District N° 19) at Pompeya
Substation, and School N° 17 (School District Nº 2) at Centenario Substation.
This program has already involved primary school students in the city quarters known
as La Boca, Flores, Caballito, Pompeya and Parque Centenario. These children have
had a chance to develop their mural-painting skills in the context of their Art classes, by
using supplies provided by EDESUR.
EDESUR’s Involvement in BIEL and the World Energy Congress
Buenos Aires hosted these two important electric sector meetings and EDESUR had a
significant institutional presence in both.
The Company had a significant involvement in BIEL 2001, an exhibition that has
become a major forum for the electricity and light industry, and the World Energy
Congress held in Buenos Aires and attended to by top Argentine electricity sector
executives and first-class representatives from all over the world.
On both occasions, EDESUR presented a stand, with a view to consolidating the
Company’s new image of commitment to quality, safety, the environment, technological
innovation, continuous improvement and satisfaction of our customers’ changing needs.
29
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Also, EDESUR was one of the corporate sponsors of the World Energy Congress, the
most important event in the electric sector on a global level.
Southern Greater Buenos Aires Second Industrial Exhibition
For the second year in a row, EDESUR sponsored the “Southern Greater Buenos Aires
Industrial Exhibition”, an important event organized by the districts of Quilmes and
Avellaneda (province of Buenos Aires) and the Industrial Union offices of both districts.
The exhibition’s main goal is to promote local industries. This time, the exhibition was
held at the “Area Material Quilmes” (IMPA), with the presence of 240 companies that
had a chance to show their growth.
Sponsorship of “Provincia del Neuquén” Square
EDESUR continued to sponsor “Provincia del Neuquén”, a square “adopted” under an
agreement that the Company entered into with the City of Buenos Aires Administration
last year.
The square is located on 9 de Julio avenue, at the intersection with Bartolomé Mitre
street, right in the middle of Buenos Aires downtown, above Carlos Pellegrini
substation. The Company has undertaken to take care of maintenance, repairs and
cleaning tasks for three years.
Large Clients Communication Plan
With a view to creating new links and establishing a direct contact with R3 clients and
large users under the wheeling system, in April 2001 EDESUR’s Large Clients
Department launched its 2001 Communication Plan. Relational programs under the
Plan were developed with a clear objective in mind: making clients loyal to the
Company.
This has enabled the Company to generate stronger links by personalizing the
connection with its clients. As a result, clients appreciate the presence of EDESUR’s top
executives in their companies.
Through joint efforts, capacity and integration of solutions at the technical and
commercial levels, this initiative translated into a visitation plan that contemplates each
client’s specific requirements and features.
Advertising Campaign on the Safe Use of Electricity
For the third year now, EDESUR has carried out an information campaign about
electricity safety through the media (newspapers and radio stations) which
complemented some major investments made by the Company in this area.
Eikon Awards for Excellence in Institutional Communication
EDESUR won the “EIKON Awards for Excellence in Institutional Communication” as a
result of the Company’s work to improve its image among journalists and the
30
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
communication management actions taken during a tornado that hit most of the
Southern Greater Buenos Aires area in January 2001.
A panel of judges comprised of journalists and institutional communication professionals
had to choose -from 115 works submitted- the winners in the 14 categories of the award
granted by Imagen magazine every year.
In the 2001 edition, EDESUR won awards in the following categories: “Relationship with
the Press” and “Communication in Critical Situations”. These awards are particularly
important if we consider that they reflect the changes experienced by the Company
after the new stage launched in June 1999.
31
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
8. PROCUREMENT MANAGEMENT
In 2001, EDESUR negotiated with some local suppliers with a view to lowering stockrelated financial costs by increasing inventory turnover. This action also resulted in
reduced storage space, thus optimizing operational tasks. The agreements reached are
long-term and establish fixed prices per unit for all the life of the agreements, with a
delivery plan that directly connects the Company’s suppliers and subcontractors, with
permanent dispatch assistance and safety stocks being the responsibility of suppliers.
The Company developed a subcontractor rating system, with a view to measuring
progress under their contracts with EDESUR. This system seeks to improve service
terms and will be used as a support tool to select offerors in future bidding processes.
The system contemplates an evaluation of each subcontractor’s operational quality in
performing under their respective contracts, compliance with safety regulations, labor
and social security issues, insurance coverage, quality and aspect of vehicles driven on
the streets and the subcontractor’s basic economic and financial condition.
Also, the Company launched a rationalization plan involving non-strategic, lowoccupancy buildings, which will be sold or decommissioned.
32
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
9. ECONOMIC/FINANCIAL ADMINISTRATION AND RESULTS OF OPERATIONS
9.1. ANALYSIS OF RESULTS OF OPERATIONS.
Net income for the year ended December 31, 2001 amounted to M$98,520, compared
to M$93,423 for the year ended December 31, 2000, accounting for a 5.5% increase
over the previous year.
Revenues from services rendered for the year ended December 31, 2001 amounted to
M$887,424 as compared to M$899,444 for the year ended December 31, 2000. This
was mainly due to a decrease in the average sale price of approximately 6% which was
partially offset by an increase in demand of approximately 2%.
As a result of the above and a decrease of approximately 4.5% in operating costs,
gross profit for the year ended December 31, 2001 increased by 6.3%, amounting to
M$278,755, as compared to M$262,227 in 2000.
Administrative and selling expenses decreased by approximately 1.7%, amounting to
M$113,063 for the year ended December 31, 2001 compared to M$115,056 for the year
ended December 31, 2000. This was mainly due to lower restructuring charges partially
offset by the higher cost resulting from the application of the new tax on bank account
credits and debits.
Net financial income increased from a M$1,129 net profit for the year ended December
31, 2000 to a M$1,855 net profit for the year ended December 31, 2001 as a result of
the increase in late payment penalty income that was partially offset by an increase in
the amount and cost of medium-term financial indebtedness.
In 2001, income tax charges amounted to M$61,501 compared to M$48,270 for the
previous year. The increase is basically due to the larger profits for the year ended
December 31, 2001.
9.2. LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2001 and 2000, the Company's funds amounted to M$11,251 and
M$44,495, respectively.
Funds provided by ordinary operations as of December 31, 2001 amounted to
M$180,174, compared to M$230,257 as of December 31, 2000.
In 2001, financial administration was geared towards meeting operating cash-flow
requirements, commercial debts with suppliers and contractors in compliance with the
year's investment plan, complying with the planned policy on dividends and timely
paying off financial obligations undertaken.
In addition to commercial and financial obligations planned for the year, there were
significant unplanned disbursements amounting to approximately $60 million that were
mainly due to the cancellation of a $22 million debt for Función Técnica de Transporte
(PAFTT), $10 million for subscription to the Bono Patriótico, an additional $10 million for
the subscription in installments of Tax Credit Certificates, to be allocated to the payment
33
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
of future taxes and larger investments than those planned amounting to $20 million.
In addition, financial results for the period were affected by increased interest costs
arising from the new economic measures coupled with the fact that, during the last
months of the year, the flow of regular revenues from collection has been hindered by
the restrictions imposed by economic measures to cash withdrawals, which in turn
created the need to adjust and accept new forms of payment (Patacón, Patacón 2,
Lecop, dollar bills, etc.).
On the other hand, the Company continued investing temporary cash surpluses in first
line local and/or foreign market financial entities -giving priority to sound strategies with
low risks or none altogether- according to the best market conditions and taking into
account the Company's short-term needs or obligations. As of December 31, 2001,
these investments amounted to M$8,764.
Investment activities
In 2001, funds used in investment activities amounted to M$135,717 as compared to
M$106,691 in 2000. Capital expenditures for both fiscal years were made in order to
meet increased demand, enhance the quality of service through renewal and recovery
of networks and management improvements as well as improve control of losses and
delinquency.
Financing activities
In 2001, funds used in financing activities amounted to M$77,701, as compared to
M$97,646 for the year 2000.
Finance was probably one of the most complex factors the Company had to face during
the year. While we have redoubled efforts made in previous years in order to extend the
average maturity of the current financial debt and reduce its cost, market conditions
were highly unfavorable to achieve such goals.
Changes in EDESUR's financial position during the year were affected by the
progressive decline of Argentina's economic and financial situation. The activity of the
country's economy extended its state of recession and resulted in political conflicts resignation of the president and ministers of economy- that brought about an increasing
financial market instability.
Economic measures adopted thereafter (bailout package, adjustment plan, megaswap,
zero deficit, etc.) failed to generate positive expectations that would break the
economy's vicious circle and clear out doubts regarding the National Government's
capacity to meet its commitments, which ended up in public default. As a result of this
scenario, both the Government and the companies were severely affected in terms of
accessibility to financing sources.
Despite the Argentine context, EDESUR maintained its indebtedness' effective rate of
interest (including taxes) below 10% and maintained adequate hedging (12.5x) and
creditworthiness (2x) indicators. In addition, during the first quarter the Company had
easy access to international credit and therefore, it refinanced most of the loans
34
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
maturing in the third and fourth quarters for an aggregate amount of US$80 million in
advance.
In order to reduce indebtedness costs, EDESUR used hedging instruments to curb the
exposure to future exchange rate fluctuations of loans in their original currencies
against the U.S. dollar. In turn, the Company used all available commercial lines for the
financing of imports under convenient maturity terms and rates.
Capital resources
As regards capital resources, EDESUR has followed a financing policy that has
combined funds generated internally from its operations with access to credit lines
granted by commercial banks.
The total year-end financial debt amounts to US$274 million (US$202 million in offshore
loans and US$72 million in "argendollar" loans). In addition, the Company has strived
to avoid the concentration of debt repayment maturities.
EDESUR has taken on liabilities with first line financial entities, assuming the usual
commitments for this type of transactions, namely to avoid encumbering or creating a
right in rem on its assets or current or future revenues unless certain conditions are
fulfilled. We repeat EDESUR has no restrictions in terms of specific financial
commitments on any of its current loan agreements.
The total indebtedness to total indebtedness plus shareholders' equity ratio reached
33.9% as of December 31, 2001; the indicator relating earnings before interest, taxes,
depreciation and amortization (EBIDTA)-to-interest stood at 15 times at year-end and
the aggregate financial debt-to-EBIDTA indicator stood at 0.9 times. Such indicators are
proof of EDESUR's sound financial position and consequently we may assume that if
capital market conditions go back to normal the Company shall have no problem
whatsoever in obtaining regular credit lines both in the domestic and international
markets and abroad.
For the next fiscal year we foresee adverse conditions in the capital markets, both for
Argentina and its companies. In line with this, we believe the Company should
implement cautious management according to the country's general prevailing scenario.
We will continue reviewing the structure of expenses and, specifically, the financial cost
and will be looking for financial market opportunities, extension of terms and/or rate
reduction.
It is worth mentioning that the impact of the currency devaluation, the measures related
to pesification and the restrictions set forth by the BCRA regarding the transfer of
foreign currency abroad will affect the economic-financial situation of the Company,
since the entire financial debt was incurred in foreign currency, mainly with foreign
entities. There is uncertainty regarding the evolution of exchange rates and the terms
under which these obligations must be paid off.
The definition of the capital requirements for the next fiscal year will depend on
investment plans, financial debt amortizations, working capital requirements and
dividend payment policy -definitions that in this fiscal year will be strongly affected by
the evolution of the economy and the measures adopted by the Government in the last
35
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
few months, as well as by the terms of the renegotiation of the Concession Contract to
take place pursuant to provisions set forth in Law No. 25,561 -Public Emergency and
Foreign Exchange System Reform Act- and in Regulatory Order 293/2002 of the
National Executive Branch.
Generation of operating funds will be directly related to the conversion of the
Company's rates to pesos and the decision to annul the current indexation
mechanisms, the above mentioned renegotiation of the Concession Contract and the
evolution of the Argentine economy and its impact on Company collections and nontechnical losses.
Capital requirements for the next fiscal year will be covered through the generation of
operating funds and the access to external financing the Company may be able to
obtain within the context of the market evolution and its particular position.
36
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
INFORMATIVE SUMMARY FOR THE YEARS ENDED
DECEMBER 31, 2001, 2000, 1999, 1998 AND 1997
According to the provisions of general resolution No. 368 of the Argentine National
Securities Commission, as amended, the Board of Directors reports:
1. Comparative balance sheet structure (stated in thousand of pesos). (1)
12/31/2001
Current assets
12/31/2000
12/31/1999
12/31/1998
12/31/1997
163,913
188,882
167,475
133,025
184,978
Noncurrent assets
Total
1,346,875
1,510,788
1,319,664
1,508,546
1,314,121
1,481,596
1,318,890
1,451,915
1,285,345
1,470,323
Current liabilities
385,865
413,541
377,883
208,581
238,135
Noncurrent liabilities
126,865
108,315
24,986
158,595
156,435
Subtotal
512,730
521,856
402,869
367,176
394,570
Shareholders' Equity
998,058
986,690
1,078,727
1,084,739
1,075,753
1,510,788
1,508,546
1,481,596
1,451,915
1,470,323
Total
(1) Amounts indicated in the comparative balance sheet structure for the years ended December 31,
1999, 1998 and 1997 include reclassification of certain items to adjust them to classifications as of
December 31, 2001 and 2000 for comparative purposes.
2. Comparative income structure (stated in thousand of pesos).
31/12/01
Operating income
Other (expenses) income, net
165,692
31/12/00
147,171
31/12/99
43,499
31/12/98
31/12/97
126,554
90,085
(7,526)
(6,607)
(5,062)
1,266
2,421
1,855
1,129
16,144
24,021
16,485
Net income before
income tax
160,021
141,693
54,581
151,841
108,991
Income tax
(61,501)
(48,270)
(31,654)
(58,681)
(42,047)
Net income
98,520
93,423
22,927
93,160
66,944
Financial income (expenses), net
37
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
3. Comparative statistical data (in physical units).
Quarterly
Electric power purchased (Gwh)
Electric power billed (Gwh)
(1)
Accumulated
Electric power purchased (Gwh)
Electric power billed (Gwh)
(1)
(1)
Oct/Dec'01
Oct/Dec’00
Oct/Dec’99
Oct/Dec’98
Oct/Dec’97
2,777
2,736
2,696
2,570
2,506
2,353
2,362
2,523
2,330
2,246
12/31/2001
12/31/2000
12/31/1999
12/31/1998
12/31/1997
11,719
11,309
10,666
10,256
10,320
10,212
9,765
9,581
9,183
9,291
Does not include electric power distributed under the wheeling system.
4. Comparative ratios.
12/31/2001
12/31/2000
12/31/1999
12/31/1998
12/31/1997
Current ratio
0.42
0.46
0.44
0.64
0.78
Debt to equity
0.51
0.53
0.37
0.34
0.37
Short-term debt to
Shareholders' equity
0.39
0.42
0.35
0.19
0.22
16.0%
14.4%
5.1%
14.0%
10.1%
18.0%
15.8%
6.0%
17.6%
12.5%
10.6%
9.4%
3.7%
10.5%
7.4%
Net income for the year
Shareholders' equity
(1)
to
(1)
Net income for the year
to
Revenues from services rendered
Net income for the year
Total assets
(1)
(1)
to
Before income tax
- 38 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
10. OUTLOOK
Law 25,561, passed by the National Congress and enacted by the Executive Branch
on January 7, 2002, declared a social, economic, administrative, financial and foreign
exchange public emergency, amending the Convertibility Law and annulling dollar or
other foreign currency adjustment clauses and indexation clauses based on other
countries' price indexes and any other indexing mechanism in contracts executed by
the Public Administration pursuant to Public Law rules, including works and public
services contracts. Consequently, prices and rates resulting from such clauses were
set in pesos to the exchange ratio of 1 peso = 1 U.S. dollar.
The enactment of this law is a relevant fact that will affect EDESUR's situation during
fiscal year 2002 to an extent that will be duly evaluated based on its implementation.
The Company will start negotiations with the National Executive Branch in order to
protect the profitability of the business, as provided for in Section 9 of the Public
Emergency and Foreign Exchange System Reform Act and in Regulatory Order
293/2002 issued by the National Executive Branch, which set forth the criteria to be
followed for the renegotiation of contracts: the effect of rates on the economy's
competitiveness and on income distribution; service quality and investment plans,
when contractually provided for; users' interests and access to services; the safety of
affected systems, the profitability of companies, investments actually made and all
other contractually committed obligations.
The result of the above mentioned negotiations will dictate, in general, the
Company's performance and, specifically, aspects such as business planning,
commercial policy and investment plan development. Notwithstanding the above,
EDESUR will continue meeting market demands as efficiently as possible.
- 39 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
BOARD OF DIRECTORS' PROPOSAL
The Board of Directors proposes that the allocation of retained earnings for the year,
amounting to M$93,594, after creating a Legal Reserve amounting to M$4,926, be
decided by the General Shareholders’ Meeting that will approve this Annual Report and
Financial Statements.
Board of Directors and Statutory Audit Committee's fees, as well as the amount
corresponding to employees' bonuses, have been deducted from the year's net income.
The Company must distribute 0.5% of the net income for the year among its employees.
Buenos Aires, February 26, 2002.
THE BOARD OF DIRECTORS
RAFAEL FERNANDEZ MORANDE
Chairman
- 40 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
Registered office:
San José 140 – Buenos Aires, República Argentina
Fiscal years N° 10 and 9:
Began January 1, 2001, and 2000, respectively.
Financial statements:
For the fiscal years ended December 31, 2001 and 2000.
Main business:
Electric power distribution and trading.
Registration with the Public Registry of Commerce:
- Of the bylaws: August 3, 1992.
- Of the amendments: August 26, 1992; September 18, 1992; July 12, 1993; October 4, 1995; August 12,
1996; May 2, 1997 and February 27, 2001.
Registration number with the Inspección General de Justicia (the governmental regulatory agency
of corporations):
7,042 – Book 111 – Volume A of sociedades anónimas (stock corporations).
Articles of incorporation effective through:
August 2, 2087.
Parent:
Distrilec Inversora S.A.
Registered office of the parent:
San José 140 – Buenos Aires, República Argentina.
Main business of the parent:
Investment company.
Percentage of capital stock and voting rights in Edesur held by the parent:
56.36%.
Capital stock breakdown:
Common book-entry shares, face value $1 per share and entitled to one vote per share
Type
Capital authorized for public trading,
subscribed and paid-in
Stated in pesos
Class "A"
506,421,831
Class "B"
392,163,197
898,585,028
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-1-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
BALANCE SHEETS AS OF DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
2001
2000
ASSETS
Current assets
Cash
Investments (Exhibit D)
Receivables from services rendered (Note 3.b)
Other receivables (Note 3.c)
Total current assets
2,487
8,764
142,130
10,532
163,913
3,057
41,438
134,487
9,900
188,882
Noncurrent assets
Investments (Note 3.a)
Receivables from services rendered (Note 3.b)
Other receivables (Note 3.c)
Property, plant and equipment (Exhibit A)
Total noncurrent assets
10,105
1,411
20,556
1,314,803
1,346,875
116
1,784
13,897
1,303,867
1,319,664
Total ASSETS
1,510,788
1,508,546
LIABILITIES
Current liabilities
Accounts payable (Note 3.d)
Financial loans (Note 4.II.a)
Payroll, social security and taxes payable (Note 3.e)
Other liabilities (Note 3.f)
Total current liabilities
107,583
177,071
64,915
36,296
385,865
139,234
166,294
65,255
42,758
413,541
Noncurrent liabilities
Financial loans (Note 4.II.b)
Payroll, social security and taxes payable (Note 3.e)
Other liabilities (Note 3.f)
Total noncurrent liabilities
96,930
13,921
16,014
126,865
86,175
13,390
8,750
108,315
Total LIABILITIES
512,730
521,856
SHAREHOLDERS' EQUITY (per related statements)
998,058
986,690
1,510,788
1,508,546
Total LIABILITIES and SHAREHOLDERS' EQUITY
The accompanying notes 1 to 13 and the exhibits A, C, D, E, G, H and I are an integral part of these financial statements.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-2-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
2001
Revenues from services rendered (Note 3.g)
Operating expenses (Exhibit H)
Gross income
2000
887,424
(608,669)
278,755
899,444
(637,217)
262,227
(49,793)
(63,270)
165,692
(48,922)
(66,134)
147,171
(7,526)
(6,607)
Financial income (expenses):
Generated on assets (Note 3.i)
Generated on liabilities (Note 3.i)
20,127
(18,272)
17,423
(16,294)
Net income before income tax
160,021
141,693
Income tax ( Note 2.II.h)
(61,501)
(48,270)
98,520
93,423
Administrative expenses (Exhibit H)
Selling expenses (Exhibit H)
Operating income
Other (expenses) net (Note 3.h)
Net income
The accompanying notes 1 to 13 and the exhibits A, C, D, E, G, H and I are an integral part of these financial statements.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-3-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
Shareholders' contribution
Adjustment
Account
Balance at beginning
2000
2001
Reserved earnings
Capital
to
Legal
Unappropriated
stock
capital
reserve
earnings
Total
Total
898,585
45,858
12,024
30,223
986,690
Distribution of cash dividends approved by the Ordinary
Shareholders' Meeting on April 19, 2000
-
-
-
-
-
(21,781)
Distribution of anticipated cash dividends voted by the
Board of Directors on October 31, 2000
-
-
-
-
-
(17,000)
to Legal Reserve
-
-
4,671
(4,671)
to Cash dividends
-
-
-
(25,552)
(25,552)
-
Distribution of anticipated cash dividends voted by the
Board of Directors on April 24, 2001
-
-
-
(22,800)
(22,800)
-
Distribution of anticipated cash dividends voted by the
Board of Directors on July 20, 2001
-
-
-
(19,000)
(19,000)
-
Distribution of anticipated cash dividends voted by the
Board of Directors on October 30, 2001
-
-
-
(19,800)
(19,800)
-
Reduction in capital stock
-
-
-
-
Distribution of income approved by the
Shareholders' Meeting on February 28, 2001:
Net income
Balance at end
1,078,727
Ordinary
-
-
-
(146,679)
-
-
-
98,520
98,520
93,423
898,585
45,858
16,695
36,920
998,058
986,690
The accompanying notes 1 to 13 and the exhibits A, C, D, E, G, H and I are an integral part of these financial statements.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-4-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
STATEMENTS OF CASH FLOWS (1)
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
2001
Funds provided by operations:
Net income
2000
98,520
93,423
48,205
3,889
104,460
10,321
12,081
23,475
11
33,319
11,230
101,884
10,243
12,011
24,677
(5)
(25,722)
(7,291)
(31,651)
(27,173)
(28,951)
180,174
(12,705)
(14,742)
16,358
(9,167)
(36,269)
230,257
Funds provided by (used for) investing activities:
Acquisition of Government securities
Adquisition of property, plant and equipment
Sales of property, plant and equipment
Net funds (used for) investing activities
(10,000)
(127,338)
1,621
(135,717)
(107,527)
836
(106,691)
Funds provided by (used for) financing activities:
Cash dividends paid
(Decrease) increase in short-term loans
Increase in long-term loans
Payment of long-term loans
Payment of corporate bonds
Redemption of Company's own shares
Net funds (used for) financing activities
(87,152)
(37,346)
74,797
(28,000)
(77,701)
(38,781)
160,789
79,669
(152,644)
(146,679)
(97,646)
(Decrease) Increase in funds
(33,244)
25,920
Funds at beginning
44,495
18,575
Funds at end
11,251
44,495
Adjustments to reconcile net income to funds provided by (used for)
operations:
Increase in reserves
Retirements and early retirements
Depreciation of property, plant and equipment
Loss from property, plant and equipment retirements
Financial interests payable
Income tax
Income on investment in related company
Changes in assets and liabilities:
Receivables from services rendered
Other receivables
Accounts payable
Payroll, social security and taxes payable
Other liabilities
Net funds provided by operations
(1) Cash plus current investments with original maturities of three months or less.
The accompanying notes 1 to 13 and the exhibits A, C, D, E, G, H and I are an integral part of these financial statements.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-5-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 2001 AND 2000
(Figures stated in thousands of pesos)
1. The Company's organization and business
Empresa Distribuidora Sur S.A. (Edesur o the Company) was organized on July 21, 1992, in
connection with the privatization and concession of electric power distribution and trading services
that, until that date, had been conducted by Servicios Eléctricos del Gran Buenos Aires (Segba S.A.).
Through an International Public Bidding Process, the Argentine Executive awarded 51% of Edesur’s
shares, represented by Class “A” shares, to Distrilec Inversora S.A. The parties have executed the
related Transfer Contract on August 6, 1992.
On September 1, 1992, Edesur commenced with its activities in the City of Buenos Aires and the
Province of Buenos Aires (southern area), as established in the related Concession Agreement.
The Company has the exclusive control over distribution and trading of electric power within the
concession area to all users not empowered to supply themselves from the Wholesale Electric Power
Market (MEM). The Company has to meet all requests for service that it receives and has to give
MEM agents who wish to do so free access to its facilities.
2. Basis of presentation of the financial statements
These financial statements have been prepared in compliance with generally accepted accounting
principles in Argentina and the provisions of the Argentine National Securities Commission (CNV).
The financial statements include reclassifications when preparing certain accounts as of December
31, 2000, to adapt their comparative disclosure to the classifications prepared as of December 31,
2001.
The main accounting policies applied were the following:
I. Restatement in constant pesos:
The financial statements recognize the effects of variations in the currency purchasing power
comprehensively through August 31, 1995, by applying the restatement method in constant pesos as
provided by Technical Resolution 6 of the Argentine Federation of Professional Councils in Economic
Sciences (FACPCE). As from September 1, 1995, as required by CNV General Resolution 368, the
Company discontinued applying the method maintaining restatements registered through that date.
This method is accepted by generally accepted accounting principles as long as the variation in the
price index used for restatement does not exceed 8% per annum. Variation in such index for each of
the years ended as from September 1, 1995, was lower than the aforesaid percentage.
II. Valuation and disclosure methods:
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-6-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
The following are the main valuation and disclosure methods used in the preparation of these financial
statements:
a) Cash, other receivables and liabilities:
- In local currency: at face value plus, if applicable, interest accrued as of each year-end.
- In foreign currency: at their foreign currency face value plus, if applicable, interest accrued as of each
year-end, translated at the prevailing exchange rates on the respective dates for settlement of these
transactions.
b) Receivables from services rendered:
At nominal value. They include billed but uncollected services and services rendered but not yet billed
as of each year-end. The services rendered but not yet billed were estimated on the basis of series of
actual historical data and billings subsequent to each year-end. The total amount of receivables is net
of an allowance for doubtful accounts, which is based on estimates of collection carried out by the
Company.
c) Investments:
- Current:
Time deposits have been valued at their face value plus interest accrued as of each year-end.
Mutual investment funds as of December 31, 2000 have been valued at the listed price of the quotas.
- Noncurrent:
Participation in related company: Includes a 50% interest in the capital stock of Sociedad Anónima
Centro de Movimiento de Energía (SACME S.A.). Such investment was valued by the equity method
using the last available financial statements of SACME S.A. as of each year-end.
Investments in government securities to be held to maturity: At their original cost, increased on the
basis of its internal rate of return at acquisition.
d) Property, plant and equipment:
Property, plant and equipment was valued as follows:
- The assets added under the Transfer Contract, were valued on the basis of the price effectively paid
for the majority shareholding offered. The breakdown of the lump-sum value transferred between the
related items of this accounts was carried out on the basis of the work of an independent expert.
- Subsequent incorporations, at their cost of acquisition plus, of corresponding, those direct and
indirect related costs with their setting in service, as well as financial costs resulting from loans granted
to perform works over time.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-7-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
During this year, the Company capitalized 13,588 and 5,927, in direct and indirect costs and financial
costs, respectively. During the fiscal year ended December 31, 2000, the Company capitalized 12,261
and 3,532 in such items, respectively.
The amounts thus assessed were reduced by the related accumulated depreciation, which was
calculated by the straight-line method applying annual enough rates in order to extinguish their values
at the end of the estimated useful life.
The valuation of the property, plant and equipment taken as a whole does not exceed the recoverable
value of these assets.
e) Reserves for contingences:
These reserves have been set up to cover potential losses for the Company derived from existent
situations, the materialization of which depends on the occurrence or non-occurrence of one or more
future events. Contingent liabilities are evaluated by the Company’s management on the basis of the
legal counsel’s opinion and the remaining elements of judgement available to the date of the financial
statements.
If, in evaluating the contingency, a probability exists for a loss to be sustained and the amount of such
loss can be estimated, a liability is accrued in the reserves account. If the potential loss is not probable
but is reasonably possible, or it is probable but cannot be estimated, the nature of the contingent
liability and an estimate of the likelihood of its materialization are disclosed in a note to the financial
statements. Contingencies considered to be remote are not disclosed in the financial statements
unless guarantees are involved, in which case such guarantees are included in a note to the financial
statements with an indication of their nature.
f) Shareholders’ equity accounts:
Restated as described in section I of this note, except the “Capital stock” account, which has been
kept at its original value. The adjustment derived from restatement is disclosed in the “Adjustment to
capital” account.
g) Statement of income accounts:
- Accounts accumulating monetary transactions were calculated at their nominal value.
- Charges for consumption of nonmonetary assets valued at cost have been calculated at nominal
value, or, if applicable, on the basis of the inflation-adjusted amounts of such assets following the
restatement method described in section I of this note.
- Financial results have been segregated in generated on assets or liabilities as described in Note 3.i).
Interest generated on liabilities are recorded net of capitalized financial costs, as described in further
detail in point d) of this note.
- Operating, selling and administrative expenses are recorded net of capitalized direct and indirect
costs, as described in further detail in point d) of this note.
h) Income tax and tax on minimum presumed income:
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-8-
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
The Company calculates income tax by applying the currently effective thirty-five percent rate to the
estimated taxable income, without considering the effect of temporary differences between book and
taxable income.
Law 25,063 provided a tax on minimum presumed income to be applied to tax years ended after
December 31, 1998 and for ten tax years. This tax is supplementary to income tax since is a minimum
obligation applicable to the potential income from certain production assets and calculated by applying
a one percent rate to the value of such assets, to the effect that the Company’s tax obligation shall be
the higher of these two taxes. However, should minimum presumed income tax be higher than
income tax in any given tax year, such excess may be considered as a prepayment on account of any
excess of income tax over tax on minimum presumed income that may arise in any of the ten
subsequent tax years.
For the years ended December 31, 2001 and 2000, income tax charges amounted to 61,501 and
48,270, respectively, were higher than the tax on minimum presumed income and were charged to
income for the year under the “Income tax” account.
III. Accounting for derivative instruments:
The Company uses derivative to reduce its exposure to changes in future exchange rates of the
original loan currency with respect to the US dollar. Such hedging instruments are booked together
with the loans hedged. As of December 31, 2001, the amount of loans, considering the effect of such
agreements, amounts to about 180,000. The Company does not use these instruments for
speculative purposes.
IV. Interest in joint ventures:
The Company uses the proportional consolidation method to disclose its interest in joint ventures.
Such method implies recognizing its proportional interest in the assets, liabilities, revenues, costs and
expenses in each of the financial statements accounts. The detail as of December 31, 2001, is
described in Note 11.
3. Detail of certain accounts of the financial statements
2001
a) Investments:
- Noncurrent
Argentina 2004 bonds (Exhibit D)
Sacme S.A. (Exhibit C)
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
2000
10,000
105
10,105
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
-9-
116
116
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
b) Receivables from services rendered:
- Current:
Electric power billed
Electric power unbilled
Other
2001
97.476
52.560
8.107
158.143
(16.013)
142.130
Allowance for doubtful accounts (Exhibit E)
- Noncurrent -- Electric power billed
c) Other receivables:
- Current:
Unaccrued hedge premiums
Other receivables with related companies (Note 6)
Provincial taxes to be recovered
Expenses paid by bill of SEGBA S.A.
Advances to personnel
Expenses to be recovered
Prepaid expenses
Other
- Noncurrent:
Tax credit certificates
Unaccrued hedge premiums
Receivables with minority shareholders (Note 7)
Other
d) Accounts payable:
- Current:
For electric power purchases
For materials and services purchases
For materials and services purchases to related
companies (Note 6)
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
2000
86.978
54.246
6.478
147.702
(13.215)
134.487
1.411
1.784
1.546
1.453
1.376
1.100
776
458
362
3.461
10.532
2.239
956
1.376
1.100
398
605
507
2.719
9.900
10.000
5.502
3.079
1.975
20.556
9.037
3.550
1.310
13.897
52.100
41.678
91.550
34.452
13.805
107.583
13.232
139.234
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 10 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
e) Payroll, social security and taxes payable:
- Current:
Payroll and social security payable:
Retirements, early retirements and other
Other
2001
Taxes payable:
Income tax accrual (net of prepayments and withholdings)
Federal, provincial and municipal contributions and taxes
Other fiscal liabilities
- Noncurrent:
Payroll and social security payable - Retirements, early retirements
and other
f) Other liabilities:
- Current:
Reserves for contingencies (Exhibit E)
Provincial fund
Other
- Noncurrent - Reserves for contingencies (Exhibit E)
g) Revenues from services rendered:
Electric power sales
Other services
h) Other (expenses) net:
Loss from property, plant and equipment retirement
Penalties to suppliers
Other
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
2000
13.863
2.372
16.235
14.102
2.435
16.537
23.475
22.572
2.633
48.680
64.915
24.677
21.408
2.633
48.718
65.255
13.921
13.390
33.224
3.072
36.296
32.630
6.911
3.217
42.758
16.014
8.750
815.268
72.156
887.424
828.299
71.145
899.444
(10,321)
1,280
1,515
(7,526)
(10,243)
1,633
2,003
(6,607)
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 11 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
i) Financial income (expenses):
Generated on assets:
Interests and overcharges
2001
Generated on liabilities:
Interests
Financial expenses
2000
20.127
17.423
(17.771)
(501)
(18.272)
(16.045)
(249)
(16.294)
4. Debt
I. Notes:
As of December 31, 2001, there are no Company outstanding notes under the medium-term note
program for USD 450,000,000, or its equivalent in other currencies, maturing in 2003.
II. Main loans from banks:
a) Current:
The Company carries short-term loans for 177,071, which includes 693 for interest on long-term loans.
b) Noncurrent:
As of December 31, 2001, the Company carries long-term loans for 96,930 with different maturity
terms from two to three years, with rates ranging from 1.6% in Yen to 7% in US dollars according to
the following breakdown:
Bank
Amount
Lloyds Bank
Bank Boston
Bank of Tokyo Mitsubishi
BNL
Bayerische Landesbank
Santander
Central
Hispano
Total
11,500
21,125
33,989
4,898
3092
22,326
Original
currency
US$
(1)
(1)
(1)
(1)
(1)
¥
¥
¥
¥
¥
96,930
(1) Loans hedged by Yen forward purchase agreements for the purpose of hedging the Company
against changes in the exchange rate with respect to the US dollar (see Note 2.III).
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 12 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
5. Normalization of electric power supply in shantytowns and in low-income districts
The Company has executed a Framework Agreement with the Federal Government and the
Government of the Province of Buenos Aires to normalize electric power supply and installation of
individual meters in shantytowns and low-income districts that meet the urban features to effect such
works. Such agreement will be effective until August 2002.
The agreement is supported by a special fund made up by the Federal Government and the Province
of Buenos Aires through contributions on federal and provincial taxes included in the bills effectively
collected from users in shantytowns and low-income districts that are included in the agreement. As
of the issuance of these financial statements, there are balances pending collection in the fund in the
amount of 2,861. Such amount pending collection has been included under Receivables from
services rendered in Current Assets.
6. Main transactions and balances with related companies
a) Balances
Company
Receivables
Central Costanera S.A.
Chilectra S.A.
Codensa
Coelce
Edelnor S.A.
Cam S.A.
Endesa Internacional S.A.
Enersis S.A.
Sacme S.A.
Synapsis Argentina S.A.
Total 2001
Total 2000
1
82
285
20
6
604
14
441
1,453
956
Liabilities
For materials
and services
8
12,266
983
2
468
78
13,805
13,232
b) Transactions
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 13 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
Company
Fees
Central Costanera S.A.
Chilectra S.A.
Cam S.A.
Sacme S.A.
Synapsis Argentina S.A.
Total 2001
Total 2000
48,711
48,711
41,291
Materials and
services purchases
602
6,645
1,330
60
8,637
14,413
Electric power
purchases
63,570
7. Capital Stock and restrictions on the distribution of unappropriated retained earnings
a) Capital stock
As of December 31, 2001 the Company's capital stock totals 898,585, fully subscribed and paid in.
Over the last three years, capital stock movements were as follows:
12/31/01
Class A
Class B
Class C
12/31/00
506,422
392,163
898,585
506,422
392,163
898,585
12/31/99
506,422
387,264
99,298
992,984
On April 3, 2000, the Special Shareholders’ Meeting and the Class Meetings involving classes “A”, “B”
and “C” shareholders approved the acquisition of Class “C” shares related to the employee stock
ownership program and the cancellation of such shares through a capital stock reduction.
On May 30, 2000, the Company obtained the approval of the Federal Electric Power Regulatory
Agency (ENRE) and later paid about 150,000 involving $0.80 per share to each accepting employee
and the cancellation of Class “C” outstanding purchase price owed by accepting and nonaccepting
employees to the Argentine Federal Government. The debt of nonaccepting employees was
transferred to the Company and will be settled by assigning 50% of the amount received by each
employee as income from Income-Sharing bonds and dividends from future distributions of profits.
The balance as of December 31, 2001, and 2000, has been disclosed under “Other noncurrent
receivables”.
On June 21, 2000, the Board of Directors approved the capital stock reduction involving 94,398,986
Class “C” shares related to the employee stock ownership program that accepted the cancellation
offer made by the Company and the conversion of 4,899,443 Class “C” shares into Class “B” shares of
employees that did not accept the offer.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 14 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
b) Restrictions on unappropriated retained earnings
Under Law No. 19,550 and subsequent amendments, and under General Resolution No. 368 of the
CNV, 5% of the year's net income is to be appropriated to legal reserve until such reserve equals 20%
of capital stock.
In addition, under Law No. 25,063, dividends in cash or in kind distributed in excess of accumulated
taxable income shall be subject to a 35% income tax withholding, as a once-only and definitive
payment.
c) Limitation to shares transferability
The Concession Contract provides that as from September 1, 1997, Distrilec Inversora S.A., holder of
the Class "A" shares, can sell these shares with prior approval by the ENRE.
In addition, the Concession Contract provides that the Class "A" shares shall remain pledged through
the entire concession term to guarantee that the obligations assumed in the Concession Contract are
met. This pledge does not interfere with the rights associated to the Company’s shares.
8. Regulatory framework
The Company's business is regulated by Law No. 24,065 which established the Electric Power
Regulatory Framework and set up the ENRE as enforcement authority. Among others, ENRE is
empowered to control service quality and to approve and audit the correct application of the rate
schedule.
The Concession Contract has granted an exclusive territorial concession for 95 years. This term has
been divided into nine management periods (the first period is 15 years and the remaining eight
periods 10 years each). Before the end of each management period the ENRE will call a bid for the
sale of Edesur's majority shares (Class "A" shares held by Distrilec Inversora S.A.) under conditions
similar to the first call to bid. The holder of the majority shares can also present a bid. In case none of
the bidders exceeds or equals the holder's bid, the latter will retain the ownership of the shares without
any obligation to pay anything.
The contract establishes that Edesur must provide the distribution service in accordance with defined
quality levels, must satisfy the requests for new connections and supply upgrades, and ensure supply
sources making the adequate investments and works to maintain the service quality. Failure to
comply with the provisions of the Concession Contract and with the rules governing the Company’s
activity may give rise to penalties for noncompliance with service quality levels.
The Concession Contract establishes that Edesur shall not create mortgages, pledges, liens or other
encumbrance for the benefit of others over the assets earmarked for the provision of the service. This
limitation will not include the creation of interests over the assets acquired by Edesur upon their
acquisition as security for payment of the purchase price.
Upon expiration of the concession term, the assets earmarked for the provision of the service will be
transferred to a new concessionaire.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 15 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
The Concession Contract defines the rate schedule that is denominated in US dollars and that will be
effective until August 2002, date on which the rate system and the rate schedule will be reviewed.
After such date, the review will be made every 5 years.
In compliance with the terms of the Bidding Conditions of the International Public Call to Bid for the
sale of Class "A" Edesur shares and with the Transfer Contract, the Company has signed an
Operating Contract with Chilectra S.A. The latter will provide technical assistance in the distribution
and trading of electric power, contributing its experience, technical know-how, management and
training to run the electric power distribution and trading service for which Edesur is responsible. This
agreement will be effective until August 2007.
9. Lawsuits with Transportes Metropolitanos General Roca (TMGR)
Transportes Metropolitanos General Roca (TMGR) is claiming to collect an annual rent charge from
the Company for each instance of electric power cables crossing or running parallel to the railroad
tracks, existing or to be laid in the future, over grounds destined for rendering railroad transportation
service. In addition, TMGR wants the Company to pay for any expenses incurred in proceedings
related to and inspection of future power line crossings.
In view of the above claims, on February 28, 1997 the Company initiated a lawsuit (declaratory action)
at the La Plata courts of law, questioning the payment of the annual rent charge, on the grounds that
section No. 17 of the Edesur Concession Contract provides for the occupation of zones in the public
domain free of charge.
Contrary to the provisions of the Edesur Concession Contract, the railroad concession contract
provides that public utility crossing should pay a charge. In addition, TMGR disagrees with Edesur
with respect to the legal status of the grounds occupied by the railroad.
On March 21, 1997, a restraining order not to alter the status quo was issued whereby the Company is
not obliged to pay the aforesaid rent charge while the lawsuit is still outstanding. As of the issuance of
these financial statements, the trial stage of the lawsuit is in its last phase.
Lastly, although there is uncertainty about the outcome of the issue of substance, in the Company's
and its legal counsel's opinion, the Company has sound arguments to uphold its position, based on a
reasonable interpretation of applicable legislation and on the decision already taken by the court, so
that there should be no significant impact on the financial statements taken as a whole.
10. Lawsuit against Alstom Argentina S.A. and its principal Alstom Energietechnik Gmbh
On December 14, 1999, Edesur brought a lawsuit against the companies mentioned in the heading for
an amount of about 77,000 with respect to these companies' liability for the outage at the Azopardo
Substation on February 15, 1999.
Mediation was unsuccessful, and accordingly on April 27, 2000 Edesur filed its claim, setting the ball
in motion at court. Subsequently, on June 6, 2000, the claim was expanded in pursuit of restitution of
the price for the part of the works causing the outage and which Edesur had paid. In addition, Edesur
is pressing for damages caused by the failure of the project because the respective works were not
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 16 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
executed in the proper manner and on a timely basis. The value of this last mentioned item was left
for the court to decide based on expert witness testimony.
As of the issuance of these financial statements, the lawsuit’s trial stage commenced and the parties
submitted their evidence and filed oppositions against the evidence provided by the other party. The
judge has not resolved on the oppositions yet.
11. Unión Transitoria de Empresas (joint venture) EDESUR – LESKO S.A.C.I.F.I.A.
On June 26, 2001, Edesur and Lesko S.A.C.I.F.I.A. have executed a joint venture (JV) agreement in
the terms of sections 377 through 383 of Law No. 19,550, as amended.
The purpose of the JV is to conduct the works required to implement the refurbishment, enlargement
and maintenance of public lighting and enlargement of the traffic light network in the district of
Berazategui, province of Buenos Aires, as agreed in the agreement executed with such district.
The life of the JV will be equivalent to the duration of the works until total fulfillment of the obligations
and responsibilities arising from its operating agreement, as well as from the agreement executed with
the municipality.
Interests in the JV are divided as follows: Edesur: 77% and Lesko S.A.C.I.F.I.A.: 23%
As of December 31, 2001, the JV’s financial statements for the irregular 188-day fiscal year then
ended, prepared in accordance with Argentine professional accounting standards were used for
consolidation purposes. An account-by-account breakdown of Edesur’s interest is as follows:
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 17 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
ASSETS AND LIABILITIES
2001
ASSETS
Current assets
Cash
Receivables from services rendered – District of Berazategui
Total current assets
223
88
311
Noncurrent assets
Receivables from services rendered – District of Berazategui
Total noncurrent assets
1,439
1,439
Total ASSETS
1,750
LIABILITIES
Current liabilities
Accounts payable
Taxes payable
Total LIABILITIES
582
16
598
INCOME (EXPENSES)
2001
Revenues from services rendered
Cost of services rendered
Gross income
1,606
(1,356)
250
Administrative expenses
(13)
Financial income (expenses)
Generated on assets
Net income
24
261
12. Subsequent events
a) Class A shareholders’ meeting:
On February 8, 2002, the Class A shareholders meeting accepted the resignation of Jesús Burillo
Andreu as member and deputy chairman of the board of directors and resolved to appoint José María
Hidalgo Martín – Mateos as member and deputy chairman of the board of directors for the remaining
part of the period.
b) Law on Public Emergency and Exchange System Reform:
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 18 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
After year-end, the Argentine Congress approved Law No. 25,561 on Public Emergency and
Exchange System Reform. The law abrogated the currency board that pegged the Argentine peso at
parity with the US dollar, switched utility rates into pesos at the $ 1 to USD 1 exchange rate and
abrogated indexation clauses linked to foreign price index. The law empowered the Federal Executive
to renegotiate concession agreements with utility companies.
On the basis of the powers granted by such law, Presidential Decree No. 71/2002 and Communiqué
“A” 3425, as amended, of the Central Bank of Argentina (the BCRA) established an “official” exchange
system, mainly for exports and certain imports, and a “freely floating” exchange market for the rest of
the transactions.
Later, in February 2002, Presidential Decree No. 214/2002 (Reorganization of the Financial System),
Presidential Decree No. 260/2002 and other regulations were issued, which further amended the new
regulations then in effect. The main aspects of such other regulations as of the approval date of these
financial statements are summarized below:
a) consolidation of exchange markets into a “free” market for negotiating foreign trade transactions,
with prior authorization of the BCRA in certain cases. As approval of these financial statements,
the exchange rate in such market ranged from $2.10 to $2.20 to USD 1, selling rate;
b) Restrictions on the free availability of funds deposited with financial institutions.
c) de-dollarization of US dollar-denominated deposits with Argentine financial institutions at the
$1.40-to-USD 1 exchange rate, and of all US dollar-denominated obligations assumed as of
January 6, 2001, in Argentina at the $ 1-to-USD 1 exchange rate. Deposits and loans switched
into pesos will be subsequently adjusted by a “benchmark stabilization coefficient” (CER) to be
published by the BCRA, plus a minimum interest rate for deposits with the financial system and a
maximum interest rate for loans granted by such system fixed by the BCRA;
d) de-dollarization of all private agreements entered into as of January 6, 2002, at the $1-to-USD 1
exchange rate, and subsequent adjustment thereof by the CER under the same conditions
indicated in (c) above;
To the approval date of these financial statements, the outcome of the unilateral amendment of the
Concession Agreement and the way in which private external debt payments will be made are
uncertain since the Government is analyzing supplementary policies that may modify some of the
measures applied.
On the other hand, and as a consequence of the changes implemented in January, there was an
increase in the Argentine consumer price index of 2.3% and in the Argentine wholesale price index of
6.6% according to the information provided by the INDEC (Argentine Institute of Statistics and
Census).
The estimated effect of subsequent devaluations on the net position of assets and liabilities in foreign
currency as of December 31, 2001, disclosed in Exhibit G (that has not changed significantly as of
approval of these financial statements) gives rise to a negative exchange difference of about 236
million, considering an exchange rate of $ 2.15 to USD 1, that will be disclosed in the first 2002 quarter
according to General Resolution No. 392 of the CNV.
As a consequence of the effects of subsequent devaluation, unappropriated retained earnings that
may be distributed as dividends as of December 31, 2001 will be fully absorbed by the
abovementioned exchange difference.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 19 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
As provided in the Public Emergency and Exchange System Reform Law mentioned above, any loss
resulting from applying the new exchange rate to the net position of assets and liabilities in foreign
currency as of enactment of the law will be deductible from income tax at the rate of 20% per annum
over the five fiscal years ending after the Law’s effective date.
Due to the restrictions imposed on the free availability of funds deposited with the banking system and
to the requirement to obtain the BCRA’s prior authorization to transfer currency abroad for financial
loan servicing, the Company’s has decided to refinance its payables to banks until transfers of money
abroad return to a normal status. Additionally, and due to the above regulations, the Company must
request the BCRA’s authorization to remit foreign currency abroad to pay dividends.
13. Explanation added for translation into English
These financial statements are the English translation of those originally issued in Spanish. They are
presented in accordance with generally accepted accounting principles in Argentina.
Certain accounting practices applied by the Company, that conform with generally accepted
accounting principles in Argentina, may not conform with generally accepted accounting principles in
other countries. The effects of the differences, if any, between generally accepted accounting
principles in Argentina and the generally accepted accounting principles in the countries in which
these financial statements may be used, have not been quantified. Accordingly, these financial
statements are not intended to present the information on the Company’s financial position, and the
related results of operations and cash flows in conformity with generally accepted accounting
principles in countries other than Argentina.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 20 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 21 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
EXHIBIT " C "
PARTICIPATION IN RELATED COMPANY AS OF DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
2001
Information on the issuing company per last financial statements
Shareholdings
Main
account
Face value
in pesos
Class
Number
Net
book
value
Main
business
Date
Capital
stock
6,000
105
Services
12/31/01
12
Net loss
Shareholder´s
for the year
equity
2000
% interest
in
capital
stock
Net
book
value
Noncurrent
investment -Companies section 33
law No. 19550:
Related
company
Sacme S.A.
Common
nonendorsable
1,0
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
(22)
210
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 22 -
50%
116
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
EXHIBIT "D"
OTHER INVESTMENTS AS OF DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
2001
Account
Net book
value
Original
cost
2000
Net book
value
Current investments
Time deposits
Mutual investment funds
Other
Total current investments
-
8,470
294
8,764
21,433
20,005
41,438
10,000
10,000
-
Noncurrent investments
Argentina 2004 Bonds
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 23 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
EXHIBIT " E "
RESERVES AND ALLOWANCES AS OF DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
2001
Account
Balance
at
beginning
Increase
Decrease
2000
Balance
at
end
Balance
at
end
Deducted from assets:
- Allowance for doubtful accounts
13,215
18,452 (1)
15,654 (3)
16,013
13,215
- Allowance for devaluation of materials and spares
1,121
14,336
18,452
307 (3)
15,961
814
16,827
1,121
14,336
- Current - Reserve for contingencies
32,630
22,486 (2)
21,892 (3)
33,224
32,630
- Noncurrent - Reserve for contingencies
8,750
41,380
55,716
69,759
7,267 (2)
29,753
48,205
38,334
3 (3)
21,895
37,856
52,377
16,014
49,238
66,065
8,750
41,380
Included in liabilities:
Total 2001
Total 2000
55,716
(1) Charge for the year allocated to selling expenses in the statement of income (Exhibit H).
(2) Charge for the year allocated to operating expenses in the statement of income (Exhibit H).
(3) Used in the year.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 24 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
EXHIBIT " G "
FOREIGN CURRENCY ASSETS AND LIABILITIES AS OF DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
Account
Current assets
Cash
Investments
Other receivables:
Unaccrued hedge premiums
Related companies
Noncurrent assets
Investments - Argentina 2004 Bonds
Other receivables:
Unaccrued hedge premiums
Tax credit certificates
Property, plant and equipment:
Prepayments to vendors
Prepayments to vendors
Total assets
Current liabilities
Accounts payable:
For materials and services purchases
For services purchases to related companies - Chilectra S.A.
Loans:
Hedged financial loans
Financial loans
Noncurrent liabilities
Hedged financial loans
Financial loans
Total liabilities
2001
Amount
in thousands
Foreign
currency
Exchange
rate (1)
Local currency
and book
amount
2000
Local currency
and book
amount
US Dollars
US Dollars
360
1,834
1.00
1.00
360
1,834
-
US Dollars
US Dollars
1,546
593
1.00
1.00
1,546
593
2,239
-
US Dollars
10,000
1.00
10,000
-
US Dollars
US Dollars
5,502
10,000
1.00
1.00
5,502
10,000
9,037
-
US Dollars
510
313
1.00
0.90
510
282
30,627
868
12,144
6,931
12,266
1.00
1.00
6,931
12,266
2,364
10,408
Euros
US Dollars
US Dollars
US Dollars
US Dollars
(2)
95,057
82,014
1.00
1.00
95,057
82,014
103,777
62,517
US Dollars
US Dollars
(2)
85,430
11,500
1.00
1.00
85,430
11,500
293,198
86,175
265,241
(1) Buying and selling exchange rate.
(2) See note 2.III to the financial statements.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 25 -
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
EXHIBIT " H "
INFORMATION REQUIRED UNDER SECTION 64 CLAUSE B) OF LAW No. 19550 - FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(Stated in thousands of pesos)
Account
Operating
expenses
Electric power purchases
Depreciation of property, plant and equipment
Payroll and social security taxes
Fees
Hired services
Reserve for contingencies
Allowance for doubtful accounts
Transportation services
Taxes and contributions
Tax on bank transactions
Bank collection fees
Inputs
Other
Total 2001
Total 2000
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Administrative
expenses
370,737
96,733
36,433
48,820
17,167
29,753
2,772
807
4,438
1,009
608,669
637,217
3,535
25,069
1,365
5,682
342
3,648
4,558
129
473
4,992
49,793
48,922
2001
Selling
expenses
4,192
17,042
352
16,290
18,452
990
61
3,941
1,303
647
63,270
66,134
Capitalized
costs
Total
12,231
15
815
102
106
105
214
13,588
12,261
370,737
104,460
90,775
50,552
39,954
29,753
18,452
4,206
4,622
4,558
4,070
6,319
6,862
735,320
411,995
101,884
109,835
42,292
35,701
16,305
17,014
5,242
4,320
3,973
4,701
11,272
764,534
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 26 -
2000
Total
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA (EDESUR S.A.)
(English translation of the financial statements originally issued in Spanish – See Note 13)
EXHIBIT " I "
INVESTMENTS, RECEIVABLES AND LIABILITIES BY MATURITY DATE
AS OF DECEMBER 31, 2001
(Stated in thousands of pesos)
Investments
Maturity
Receivables
Loans
With no maturity
Liabilities
Other liabilities
-
5,707
-
-
With maturity
Matured
Up to three months
From three to six months
From six to nine months
From nine to twelve months
From one to two years
Over two years
Total matured amount
To mature
Up to three months
From three to six months
From six to nine months
From nine to twelve months
From one to two years
From two to three years
From three to four years
From four to five years
From five to six years
Over six years
Total amount to mature
-
37,105
7,544
3,732
1,890
6,188
5,118
61,577
-
-
8,764
6,000
4,000
18,764
102,931
1,400
363
1,159
6,091
9,796
1,403
145
70
123,358
108,032
47,032
3,733
18,274
83,969
12,961
274,001
171,423
1,646
1,283
1,218
3,395
2,631
2,126
1,642
1,166
2,961
189,491
Total with maturity
18,764
184,935
274,001
189,491
TOTAL
(1)
18,764
(2) (3)
190,642
(4)
274,001
(5)
189,491
(1) It is related to term deposits and Argentina 2004 Bonds that accrue interest at an approximate annual rate of 3% and 18%, respectively. It does not
include 105 related to the interest in Sacme S.A.
(2) Without offsetting 16,013 related to the allowance for doubtful accounts.
(3) About 33% accrue interest at a variable rate of approximately 17% per annum.
(4) See note 4 to the financial statements. The loans accrue interest at a weighted-average rate of about 9% per annum, which includes commisions and
taxes.
(5) Comprises total liabilities, except reserves and loans.
Signed for purposes of identification with our
report dated 02/26/2002
PISTRELLI, DIAZ Y ASOCIADOS
Signed for purposes of identification with our
report dated 02/26/2002
ENRIQUE C. GROTZ
JORGE PEREZ ALATI
RAFAEL FERNANDEZ MORANDE
Partner
For the Statutory Audit Committee
Chairman
- 30 -
INDEPENDENT PUBLIC ACCOUNTANTS’ REPORT
(English translation of the report originally issued
in Spanish, except for the omission of paragraph V,
related to formal requirements for reporting in Argentina,
and addition of paragraph IV of this report See note 13 to the financial statements)
To the Board of Directors of
EMPRESA DISTRIBUIDORA SUR SOCIEDAD ANONIMA
(EDESUR S.A.)
I. We have audited the accompanying balance sheets of EDESUR S.A. as of December 31, 2001 and 2000,
and the related statements of income, changes in shareholders´ equity and cash flows for the years then
ended. These financial statements are the responsibility of the Company’s Management. Our responsibility
is to express an opinion on these financial statements based on our audits.
II. We conducted our audits in accordance with generally accepted auditing standards in Argentina. Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the Company’s Management,
as well as evaluating the overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
III. As described in note 12 b) to the accompanying financial statements, in the last few months, a deep change
has been implemented in the economic model of the country as well as in the Convertibility Law that was in
place since March 1991 (whereby the Argentine peso was pegged at parity with the US dollar). The main
consequences of the set of measures adopted by the Argentine Federal Government, which are detailed in
the above mentioned note, have been (a) the devaluation of the Argentine peso with respect to the US
dollar and de-dollarization of assets and liabilities in foreign currency, the effects of which will be recognized
in the next year in accordance with Argentine generally accepted accounting principles; (b) de-dollarization
of utility rates previously agreed in US dollars and their subsequent renegociation on a case-by-case basis,
(c) the implementation of restrictions on the withdrawal of funds deposited with financial institutions; (d) the
restriction on transfers abroad on account of financial loan service and dividend distributions without prior
authorization from the Central Bank; and (e) the increase in domestic prices. The future development of the
economic crisis may require further measures from the Argentine Federal Government. The accompanying
financial statements should be read taking into account the issues mentioned above.
IV. As further explained in note 13 to the financial statements, the accompanying financial statements and this
report have been translated into the English language from those originally issued in Spanish. They are
presented in accordance with generally accepted accounting principles in Argentina. Certain accounting
practices applied by the Company, that conform with generally accepted accounting principles in Argentina,
may not conform with generally accepted accounting principles in other countries. The effects of the
differences, if any, between generally accepted accounting principles in Argentina and the generally
accepted accounting principles in the countries in which these financial statements may be used, have not
been quantified. Accordingly, these financial statements are not intended to present the information on the
Company’s financial position, and the related results of operations and cash flows in conformity with
generally accepted accounting principles in countries other than Argentina.
-2-
V. In our opinion, the financial statements mentioned in paragraph I present fairly, in all material respects, the
financial position of EDESUR S.A. as of December 31, 2001 and 2000, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted accounting principles in
Argentina, the Argentine Business Associations Law and the applicable rules of the Argentine National
Securities Commission.
Buenos Aires, February 26, 2002
PISTRELLI, DIAZ Y ASOCIADOS
ENRIQUE C. GROTZ
Partner
STATUTORY AUDIT COMMITTEE’S REPORT
(English translation of the report originally issued in Spanish, except for paragraph IV
of this report - See note 13 to the financial statements)
To the Shareholders of
EDESUR S.A.
Dear Sirs,
I.
We have examined the inventory and the balance sheet of EDESUR S.A. as of December 31,
2001, and the related statements of income, changes in shareholders´ equity and cash flows and the Annual
Report and Informative Summary for the year then ended. In addition, we have examined the related
“Additional information to the notes to the financial statements – Section 68 of the Buenos Aires Stock
Exchange regulations”. The above mentioned documents are the responsibility of the Company’s Board of
Directors in exercise of their exclusive duties. Our responsibility is to report on the above mentioned documents
based on the work mentioned in the next paragraph.
II.
Our work was based on the audit of the above mentioned documents perfomed by the firm
Pistrelli, Díaz y Asociados, and it was confined to verifying the significant information of the examined
documents, its consistency with the information on corporate decisions, and compliance of such decisions with
the Argentine law and the Company’s bylaws, in all formal and documentary respects. We have not engaged
in any management control and, accordingly, we have not evaluated business judgment and decisions on
issues of administration, financing, selling, operating and investing as such issues fall within the exclusive
responsibility of the Board of Directors.
III. As described in note 12 b) to the accompanying financial statements, in the last few months, a
deep change has been implemented in the economic model of the country as well as in the Convertibility Law
that was in place since March 1991 (whereby the Argentine peso was pegged at parity with the US dollar). The
main consequences of the set of measures adopted by the Argentine Federal Government, which are detailed
in the above mentioned note, have been (a) the devaluation of the Argentine peso with respect to the US dollar
and de-dollarization of obligations in foreign currency, the effects of which will be recognized in the next year in
accordance with Argentine generally accepted accounting principles; (b) de-dollarization of utility rates
previously agreed in US dollars and their subsequent renegociation on a case-by-case basis, (c) the
implementation of restrictions on the withdrawal of funds deposited with financial institutions; (d) the restriction
on transfers abroad on account of financial loan service and dividend distributions without prior authorization
from the Central Bank; and (e) the increase in domestic prices. The future development of the
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economic crisis may require further measures from the Argentine Federal Government. The accompanying
financial statements should be read taking into account the issues mentioned above.
IV. As further explained in note 13 to the financial statements, the accompanying financial statements
and this report have been translated into the English language from those originally issued in Spanish. They
are presented in accordance with generally accepted accounting principles in Argentina. Certain accounting
practices applied by the Company, that conform with generally accepted accounting principles in Argentina,
may not conform with generally accepted accounting principles in other countries. The effects of the
differences, if any, between generally accepted accounting principles in Argentina and the generally accepted
accounting principles in the countries in which these financial statements may be used, have not been
quantified.
Accordingly, these financial statements are not intended to present the information on the
Company’s financial position, and the related results of operations and cash flows in conformity with generally
accepted accounting principles in countries other than Argentina.
V. In our opinion, based on our review and the report dated February 26, 2002, issued by the
auditors, the financial statements indicated and the “Additional information to the notes to the financial
statements – Section 68 of the Buenos Aires Stock Exchange regulations” mentioned in the first paragraph
include all the facts and circumstances of which we are aware and in regard thereto, we have no objections to
make for them to be disclosed in accordance with regulations effective in Argentina.
VI. As required by Argentine National Securities Commission General Resolution No. 340 regarding
external auditor independence and the quality of the audit policies applied by such auditors and the accounting
policies applied by the Company, the external auditor’s report described above includes a representation that
current auditing standards, including independence requirements, were applied and they include no
qualifications regarding the application of such regulations and professional accounting standards.
VII. In compliance with current Argentine statutory regulations, we further report that exercising the
regulatory control within our jurisdiction, during the last fiscal year we applied the remaining procedures
described in section No. 294 of Law No. 19,550, which as we deemed necessary under the circumstances, and
Buenos Aires Stock Exchange regulations and have no objections to make.
Buenos Aires, February 26, 2002
JORGE PEREZ ALATI
For the Statutory Audit Committee