6-K 1 file001.htm FORM 6-K

FORM 6-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

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

For the month of September 2003

Commission File Number: 001-13240

Empresa Nacional de Electricidad S.A.

National Electricity Company of Chile

(Translation of Registrant's Name into English)

Santa Rosa 76,
Santiago, Chile
(562) 6309000
(Address of principal executive office)

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

Form 20-F X Form 40-F

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

Yes No X

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

Yes No X

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

Yes No X

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

This report on Form 6-K is incorporated by reference into the Registration Statement on Form F-4 of Empresa Nacional de Electricidad S.A., Registration No. 333-107533.

Empresa Nacional de Electricidad S.A.

TABLE OF CONTENTS


Item		Sequential Page Number
1.	Press Release From July 31, 2003 Announcing Consolidated Results for the Period Ended June 30, 2003		3
2.	Results of Operations for the Three Months Ended March 31, 2003 and 2002		18
3.	Risk Factors		23
4.	Unaudited Interim Consolidated Financial Statements for the Six Months Ended June 30, 2003 and 2002		F1-1
5.	Unaudited Interim Consolidated Financial Statements for the Three Months Ended March 31, 2003 and 2002		F2-1

ITEM 1


For further information contact: Jaime Montero Investor Relations Director Endesa Chile (56-2) 634-2329 jfmv@endesa.cl				Manuel Irarrázaval mjia@endesa.cl Giovano Suazo gsuazo@endesa.cl

ENDESA CHILE ANNOUNCES CONSOLIDATED RESULTS
FOR THE PERIOD ENDED JUNE 30, 2003

(Santiago, Chile, July 31, 2003) – Endesa Chile (NYSE: EOC), announced on July 31, 2003 its consolidated financial results for the period ended June 30, 2003. All figures are in constant Chilean pesos and are in accordance with the Chilean Generally Accepted Accounting Principles (GAAP) as required by Chilean authorities (FECU). June 2002 figures have been adjusted by the CPI variation year-to-year, equal to 3.5%. The figures expressed in US Dollars were calculated based on the June 30, 2003 exchange rate.

The consolidated financial statements of Endesa-Chile for the period ended June 30, 2003, include all of the Company's Chilean subsidiaries, as well as its Argentinean subsidiaries (Hidroeléctrica El Chocón S.A. and Central Costanera S.A), its Colombian subsidiaries (Central Hidroeléctrica de Betania S.A. and EMGESA), its Brazilian subsidiary (Centrais Elétricas Cachoeira Dourada S.A.), and its Peruvian subsidiary (Edegel).

Highlights for the Period

The net income of Endesa-Chile for the first half of 2003 increased by 28.4% to US$68.5 million compared to a net income of US$53.4 million in the first half of 2002.

Some of the more important aspects of the period are:

A 2.5% increase in operating income generated by improved results in Argentina, Colombia and the electricity business in Chile.

A reduction in liabilities by approximately US$419 million.

The refinancing of US$743 million of bank debt over a period of five years and, later, the placing of US$600 million of long-term bonds in order to prepay liabilities, and

A US$10.8 million decrease in financial expenses reflecting the lower debt level.

Consolidated Income Statement
(Chilean GAAP, thousand US$)

Table 1.1

(Chilean GAAP, Thousand US$ )


	Thousand US$
	1st H 2002			1st H 2003			Var			Chg %
Operating Revenues		684,548			694,341			9,793			1.4	%
Operating Expenses		(410,020	)		(413,062	)		(3,041	)		0.7	%
Operating Margin		274,528			281,279			6,751			2.5	%
SG&A		(22,226	)		(22,623	)		(397	)		1.8	%
Operating Income		252,302			258,656			6,354			2.5	%
Net Financial Income (Expenses)		(139,533	)		(128,590	)		10,943			(7.8	%)
Interest Income		11,430			11,566			135			1.2	%
Interest Expense		(150,963	)		(140,155	)		10,808			(7.2	%)
Net Income from Related Companies		(7,094	)		28,506			35,600			(501.8	%)
Equity Gains from Related Companies		3,649			28,901			25,252			692.1	%
Equity Losses from Related Companies		(10,743	)		(395	)		10,348			(96.3	%)
Net other Non Operating Income (Expense)		(9,306	)		(38,403	)		(29,097	)		312.7	%
Other Non Operating Income		48,592			24,689			(23,903	)		(49.2	%)
Other Non Operating Expenses		(57,898	)		(63,092	)		(5,193	)		9.0	%
Positive Goodwill Amortization		(6,244	)		(1,277	)		4,967			(79.6	%)
Price Level Restatement		(6,394	)		2,955			9,349			(146.2	%)
Exchange differences		1,630			7,197			5,568			341.7	%
Non Operating Income		(166,942	)		(129,612	)		37,331			(22.4	%)
Net Income before Taxes, Min. Interest and Neg. Goodwill Amortization		85,360			129,044			43,685			51.2	%
Income Tax		(36,295	)		(18,283	)		18,012			(49.6	%)
Extraordinary Items		—			—			—
Minority Interest		(30,203	)		(54,748	)		(24,546	)		81.3	%
Negative Goodwill Amortization		34,516			12,506			(22,010	)		(63.8	%)
NET INCOME		53,378			68,519			15,141			28.4	%

Consolidated Income Statement
(Chilean GAAP, Million Ch$)

Table 1.2

(Chilean GAAP, Million Ch$)


	Million Ch$
	1st H 2002			1st H 2003			Var			Chg %
Operating Revenues		478,581			485,428			6,846			1.4	%
Operating Expenses		(286,653	)		(288,780	)		(2,126	)		0.7	%
Operating Margin		191,928			196,648			4,720			2.5	%
SG&A		(15,539	)		(15,816	)		(278	)		1.8	%
Operating Income		176,389			180,832			4,442			2.5	%
Net Financial Income (Expenses)		(97,550	)		(89,900	)		7,651			(7.8	%)
Interest Income		7,991			8,086			94			1.2	%
Interest Expense		(105,541	)		(97,985	)		7,556			(7.2	%)
Net Income from Related Companies		(4,960	)		19,929			24,888			(501.8	%)
Equity Gains from Related Companies		2,551			20,205			17,654			692.1	%
Equity Losses from Related Companies		(7,511	)		(276	)		7,234			(96.3	%)
Net other Non Operating Income (Expense)		(6,506	)		(26,848	)		(20,342	)		312.7	%
Other Non Operating Income		33,972			17,261			(16,711	)		(49.2	%)
Other Non Operating Expenses		(40,478	)		(44,109	)		(3,631	)		9.0	%
Positive Goodwill Amortization		(4,366	)		(893	)		3,473			(79.6	%)
Price Level Restatement		(4,470	)		2,066			6,536			(146.2	%)
Exchange differences		1,139			5,032			3,892			341.7	%
Non Operating Income		(116,713	)		(90,614	)		26,099			(22.4	%)
Net Income before Taxes, Min. Interest and Neg. Goodwill Amortization		59,677			90,218			30,541			51.2	%
Income Tax		(25,374	)		(12,782	)		12,592			(49.6	%)
Extraordinary Items		—			—			—
Minority Interest		(21,115	)		(38,276	)		(17,161	)		81.3	%
Negative Goodwill Amortization		24,131			8,743			(15,387	)		(63.8	%)
NET INCOME		37,318			47,903			10,585			28.4	%

Main Events during the Period

Investments

With respect to the Company's investments, the Ralco Project, whose start-up is planned for the second half of 2004, had reached a 87.94% state of progress in its construction by the end of June 2003. Regarding the relocation agreements, in view of the refusal by four Pehuenche owners to agree land exchanges within the Ralco project framework, ENDESA sought the application of the Electricity Law, which contemplates the appraisal of the lands of these four owners by a Commitee of Ombudsmen. This commission, following an on-site valuation, determined the legal indemnities to be paid to them which were far below those previously offered by the Company; the commission determined a total legal indemnity of Ch$271 million, while Endesa had offered Ch$800 million plus an additional 308 hectares. Endesa Chile has recently deposited in the bank account of the competent court the amounts of the indemnities set by the Committee.

Financial and Economic Strengthening Plan

Regarding the financial strengthening plan announced by the Company in October 2002, we can state that today Endesa has successfully met the principal points set out in this plan. The following is a detail of the actions taken.

Assets Sales

On April 7, 2003, Endesa Chile reached agreement with HQI Transelec to sell its transmission assets on the Chilean Northern Grid System (SING) for US$110 million. The transaction included the disposal of 285 kilometers of 220 kV line circuits for a total of around US$32 million, corresponding to the assets of the Tarapacá plant, and the transfer of 673 kilometers of 220 kV line circuits for approximately US$78 million, corresponding to GasAtacama Generación Limitada, of which Endesa owns 50%.

On April 30, 2003, Endesa completed the transfer of the assets of the Canutillar plant to Cenelca S.A., a subsidiary of Minera Valparaíso S.A., for the sum of US$174 million.

On June 23, 2003 ENDESA closed the deal for the disposal of Infraestructura Dos Mil S.A. to the Spanish company OHL Concesiones, S.L., subsidiary of the Spanish company Obrascón Huarte Lain S.A. for a total of UF 2,305,507 (approximately US$55 million). This transaction also enabled the deconsolidation of UF 9,011,000 of debt (approximately US$220 million) that Infraestructura Dos Mil S.A. owes to third parties.

Financing

Endesa signed bank debt restructuring agreements in May 2003 covering maturities falling due in 2003 and 2004 and amounting to a total of US$743 million. The operation, which was carried out together with the loans of its parent company, Enersis, was arranged through a syndicated loan led by BBVA, Citibank, Dresdner Bank and Santander Central Hispano, plus a group of another 28 international financial entities. The new loan, which carries interest at Libor + 3%, has a final maturity of May 2008 and a grace period of 30 months.

As an event following the close of the first half, and carried out on July 23, 2003, Endesa made a successful bond issue for a total of US$600 million. The issue had a total demand exceeded US$1,500 million, making it the most important transaction this year in the emerging markets. The transaction is structured in two tranches; the first, for an amount of US$400 million of unsecured bonds with maturities extending to 2013 (10-year term) at an interest rate of 8.35%, and the second for a total of US$200 million in unsecured bonds maturing in 2015 (12 years), with an interest rate of 8.625%. The proceeds of the bond issue are being used to prepay Company liabilities and clearly improve its debt profile.

Operating Income

Operating income in the first half of 2003 amounted to US$258.7 million, being US$6.4 million higher than that of the same period of 2002. This reflected the improved operating results of our businesses in Chile,

Argentina and Colombia due to favorable hydrological and market conditions that impacted positively on the operating margin. This was partially offset by weaker results from Brazil and Peru.

In Chile, operating income in the first half of 2003 was US$116.2 million, a reduction of 3.1%. However, taking out the operating income of Infraestructura Dos Mil S.A., which was sold on June 24, 2003, the operating income in Chile would have shown an increase of 2.5%. Energy sales in Chile also grew by 2.5%, basically due to 10.6% greater hydroelectric generation related to higher water levels in the reservoirs and abundant rainfalls in the first half of the year. This greater generation permitted a reduction of US$6.1 million in energy purchase costs.

In Colombia, operating income in the first half increased by 6.3% to US$66.1 million, basically as a result of higher sales prices in the spot market due to lower rainfalls affecting the country. The regulation of the reservoirs and lower energy sales partially offset these higher sales revenues.

In Argentina, operating income in the first half reached US$18.4 million, an increase of 388.3% over the first half of 2002 when it was US$3.8 million. Contributing to this result was an increase of US$7.0 million in the operating income of Central Costanera, mainly explained by increased revenues from power sales under contracts for the second interconnection line with Brazil and lower fuel costs and energy purchases. On the other hand, lower energy prices in the south of Brazil as a result of the high rainfalls in that zone, led to a zero dispatch level of the CIEN interconnection line in the first half. The operating income of El Chocón increased by US$7.6 million, basically as a result of higher energy sales on the spot market given the higher rainfalls and increased generation, growth in consumption and firmer prices following the revaluation of the Argentine peso.

In Peru, the operating income fell by 5.5% to US$47.6 million, mainly explained by a 3% reduction in average sales prices for energy and capacity and the higher cost of energy transportation. This was partially offset by favorable hydrological conditions that enabled hydroelectric generation to increase by 9.8%.

In Brazil, the operating income of Cachoeira Dourada declined by 35.4% to US$10.3 million, principally caused by a 19.8% reduction in average energy sales prices mainly resulting from the devaluation of the real against the US dollar compared to the first half of 2002, and by a 10% decrease under the contract with the distributor Companhia Elétrica do Estado de Goiás S.A. (CELG) from September 2002. In April 2003, CELG suspended payments under this contract, as a result of which the company has taken legal action to find a prompt solution.

Non-Operating Income

The Company's non-operating result for the first half of 2003 improved by 22.4%, producing a loss of US$129.6 million compared to one of US$166.9 million in the same period of 2002. This reduced loss is basically explained by:

•

US$10.8 million of lower financial expenses

•

US$14.9 million of better results from exchange differences and price-level restatements, and

•

US$35.6 of higher income on investments in related companies.

This was partially offset by

•

US$29.1 million of higher non-operating expenses.

Net Income from Related Companies. Regarding the improved result of US$35.6 million from investments in related companies, this is mainly explained by an improvement of US$23.8 million in the net income from the associate company CIEN, of US$6.1 million of improved results from our associated companies Gasatacama Generación Limitada, Gasoducto Atacama Argentina Limitada and Gasoducto Atacama Chile Limitada, and of US$4.7 million of improved results of the associated Compañía de Energía del Mercosur S.A. (CEMSA).

Net Financial Income (Expenses). The decrease of US$10.9 million in net financial expenses is explained principally by lower liability level of US$419 million, as compared to the first half of 2002.

Other non-operating Income Net of Expenses. The decrease of other non-operating expenses of US$29.1 million is mainly explained by greater provisions for contingencies and lawsuits, and also asset sales expenses and provisions for obsolescence of fixed assets made during the period.

The Price-Level Restatement totaled a gain of US$3.0 million in the first half of 2003, as compared with a loss of US$6.4 million in the same period of 2002. This increase was mainly due to the combined effect of inflation in Chile and a higher level of net monetary liabilities in the first half of 2003.

Exchange Differences. With respect to exchange differences which were positive US$7.2 million compared to US$1.6 million in the first half of 2002, these reflect the fact that in the first half of 2003, the Chilean peso appreciated against the US dollar by 2.7%, compared to a depreciation of 5.1% in the same period of 2002.

Goodwill Amortization. Goodwill amortization decreased from US$6.2 million to US$1.3 million, reflecting the reduced balance of goodwill remaining in 2003. We took a substantial charge for impairment of goodwill relating to our Argentine and Brazilian goodwill in the last quarter of 2002.

Consolidated Balance Sheet Analysis

The evolution of the key financial indicators has been as follows:

Table 2


Assets (thousand US$)	As of June 2002		As of June 2003		June 03-02			% Var 03-02
Current Assets		411,556		894,583		483,027			117.4	%
Fixed Assets		8,201,560		7,491,412		(710,148	)		(8.7	%)
Other Assets		730,599		464,205		(266,394	)		(36.5	%)
Total Assets		9,343,715		8,850,200		(493,516	)		(5.3	%)

Table 2, 1


Assets (million Ch$)	As of June 2002		As of June 2003		June 03-02			% Var 03-02
Current Assets		287,727		625,421		337,694			117.4	%
Fixed Assets		5,733,875		5,237,396		(496,479	)		(8.7	%)
Other Assets		510,777		324,535		(186,242	)		(36.5	%)
Total Assets		6,532,378		6,187,352		(345,027	)		(5.3	%)

The increase in the current assets of US$483 million is due to higher cash levels in some of our subsidiaries due to better operating performance during the period and the consideration in the short term of some intercompany loans that were previously included in other assets, and net proceeds from assets sales, The Company's Fixed Assets decreased by US$710.1 million, as compared to the first half of 2002, mainly due to the deconsolidation of Infraestructura Dos Mil S.A., the sale of Canutillar and transmission lines, Regarding to the decrease in Other Assets, it reflects the reduced balance of goodwill amortization in 2003.

Table 3


Liabilities (thousand US$) (1)	As of June 2002		As of June 2003		June 03-02			% Var 03-02
Current liabilities		1,043,840		1,125,229		81,389			7.8	%
Long-term liabilities		4,043,992		3,543,463		(500,529	)		(12.4	%)
Minority interest		2,117,054		2,050,569		(66,485	)		(3.1	%)
Equity		2,138,830		2,130,939		(7,891	)		(0.4	%)
Total Liabilities		9,343,715		8,850,200		(493,516	)		(5.3	%)

Table 3,1


Liabilities (million Ch$)	As of June 2002		As of June 2003		June 03-02			% Var 03-02
Current liabilities		729,770		786,670		56,901			7.8	%
Long-term liabilities		2,827,236		2,477,306		(349,930	)		(12.4	%)
Minority interest		1,480,075		1,433,594		(46,481	)		(3.1	%)
Equity		1,495,299		1,489,782		(5,517	)		(0.4	%)
Total Liabilities		6,532,378		6,187,352		(345,027	)		(5.3	%)

(1)

Ch$ figures divided by June 2003 exchange rate of 1 US$ = Ch$699.12.

As of June 30, 2003, Current Liabilities plus Long-Term Liabilities decreased US$419.1 million, as compared to June 2002, This decrease is mainly explained by the payment of the Yankee Bond of our Chilean subsidiary Pehuenche and the deconsolidation of Infraestructura Dos Mil S.A.

Table 4


Indicator	Unit	As of June 2002		As of June 2003		% Var
Liquidity	Times		0.39		0.80		105.1	%
Acid ratio test *	Times		0.28		0.64		128.6	%
Leverage **	Times		1.20		1.12		(6.7	%)
Short-term debt	%		20.5		24.1		17.4	%
Long-term debt	%		79.5		75.9		(4.5	%)

(*) Current assets net of inventories and pre-paid expenses

(**) Total debt / (equity + minority interest)

The Company's liquidity ratio is higher as compared to the previous period. It is important to remember that normally a large part of the current portion of long-term debt is renegotiated. Also it is important to keep in mind that current liabilities are the current portion of long-term obligations for the next twelve months, and in the current assets accounts receivables amount for about one month of sales. The main input of hydro-facilities is water, and both snow and water reservoirs are not considered current assets in the accounting figures.

Consolidated Balance Sheet
(Chilean GAAP)



Table 5.1	Million Ch$						Thousand US$
ASSETS	As of June 2002			As of June 2003			As of June 2002			As of June 2003
Current assets:
Cash		3,408			20,393			4,874			29,169
Time deposits		59,383			81,389			84,939			116,416
Marketable securities		5			7,946			7			11,366
Accounts receivable, net		77,229			108,428			110,465			155,092
Notes receivable		1,070			810			1,531			1,159
Other accounts receivable		16,767			61,461			23,984			87,912
Amounts due from related companies		45,174			219,899			64,615			314,537
Inventories, net		17,028			12,419			24,357			17,764
Income taxes recoverable		29,336			21,831			41,961			31,226
Prepaid expenses		5,808			6,352			8,308			9,086
Other current assets		32,520			84,492			46,515			120,855
Total currrent assets		287,727			625,421			411,556			894,583

Property, plant and equipment:
Property		40,819			38,980			58,386			55,755
Buildings and Infrastructure		6,322,145			5,978,469			9,043,004			8,551,421
Plant and equipment		1,194,958			1,185,159			1,709,231			1,695,215
Other assets		88,304			52,271			126,308			74,767
Technical appraisal		699,274			705,672			1,000,220			1,009,372
Sub-Total		8,345,500			7,960,551			11,937,149			11,386,530
Accumulated depreciation		(2,611,625	)		(2,723,155	)		(3,735,589	)		(3,895,118	)
Total property, plant and equipment		5,733,875			5,237,396			8,201,560			7,491,412

Other assets:
Investments in related companies		165,254			188,388			236,375			269,464
Investments in other companies		80,688			80,896			115,414			115,712
Positive goodwill		127,585			26,409			182,493			37,774
Negative goodwill		(151,783	)		(80,493	)		(217,106	)		(115,135	)
Long-term receivables		26,455			22,550			37,841			32,255
Amounts due from related companies		173,915			923			248,763			1,320
Intangibles		30,681			32,801			43,886			46,917
Accumulated amortization		(3,806	)		(7,624	)		(5,445	)		(10,905	)
Others		61,788			60,686			88,379			86,803
Total other assets		510,777			324,535			730,599			464,205
Total assets		6,532,378			6,187,352			9,343,715			8,850,200

Consolidated Balance Sheet
(Chilean GAAP)



Table 5.2	Million Ch$					Thousand US$
LIABILITIES AND SHAREHOLDERS' EQUITY	As of June 2002			As of June 2003		As of June 2002			As of June 2003
Current liabilities:
Due to banks and financial institutions:
Short term		55,038			54,592		78,724			78,087
Current portion of long-term debt		230,342			105,842		329,475			151,394
Notes payable		7,116			4,127		10,179			5,902
Current portions of bonds payable		182,976			379,291		261,723			542,526
Current portion of other long-term debt		31,722			35,255		45,375			50,427
Dividends payable		274			905		392			1,294
Accounts payable and accrued expenses		75,922			66,394		108,596			94,967
Miscellaneous payables		21,390			31,264		30,595			44,719
Amounts payable to related companies		82,975			42,068		118,684			60,172
Provisions		26,720			42,321		38,219			60,534
Withholdings		5,239			7,523		7,494			10,761
Income tax		5,535			14,216		7,917			20,334
Deferred income		413			107		590			152
Deferred taxes		468			—		669			—
Other current liabilities		3,641			2,767		5,208			3,958
Total current liabilities		729,770			786,670		1,043,840			1,125,229

Long-term liabilities:
Due to banks and financial institutions		780,173			834,856		1,115,936			1,194,152
Bonds payable		1,744,478			1,355,877		2,495,249			1,939,405
Due to other institutions		146,330			141,009		209,306			201,694
Accounts payable		27,056			17,634		38,700			25,223
Amounts payable to related companies		61,980			43,407		88,654			62,088
Accrued expenses		31,017			40,336		44,366			57,695
Deferred taxes		34,362			33,231		49,151			47,532
Other long-term liabilities		1,839			10,957		2,630			15,673
Total long-term liabilities		2,827,236			2,477,306		4,043,992			3,543,463
Minority interest		1,480,075			1,433,594		2,117,054			2,050,569

Shareholders' equity:
Paid-in capital, no par value		1,044,843			1,039,796		1,494,512			1,487,292
Capital revaluation reserve		6,269			11,438		8,967			16,360
Additional paid-in capital-share premium		206,189			206,213		294,926			294,960
Other reserves		75,009			73,552		107,290			105,206
Total Capital and Reserves		1,332,310			1,330,998		1,905,696			1,903,819
Accumulated surplus (deficit) during development period of certain subsidiaries		(548	)		2,207		(784	)		3,157

Retained earnings:
Retained earnings		126,219			108,674		180,539			155,444
Net income		37,318			47,903		53,378			68,519
Total retained earnings		163,536			156,577		233,917			223,963
Total shareholders' equity		1,495,299			1,489,782		2,138,830			2,130,939
Total liabilities and shareholders' equity		6,532,378			6,187,352		9,343,715			8,850,200

Consolidated Cash Flow
(Chilean GAAP)

Table 6



Effective Cash Flow (thousand US$)	1st H 2002			1st H 2003			Variation			% Var 03-02
Operating		304,591			149,163			(155,428	)		(51.0	%)
Financing		(300,812	)		(287,296	)		13,516			(4.5	%)
Investment		(42,672	)		182,909			225,582			(528.6	%)
Net cash flow of the period		(38,893	)		44,777			83,670			(215.1	%)

Table 6.1



Effective Cash Flow (million Ch$)	1st H 2002			1st H 2003			Variation			% Var 03-02
Operating		212,945			104,283			(108,663	)		(51.0	%)
Financing		(210,304	)		(200,854	)		9,449			(4.5	%)
Investment		(29,833	)		127,875			157,709			(528.6	%)
Net cash flow of the period		(27,191	)		31,304			58,495			(215.1	%)

The variation in the cash flow makeup during the period is basically explained by:

Cash flow from operating activities decreased by 51.0% to US$149.2 million in the first half of 2003, mainly related to the decrease of account payable with related companies in connection with short term debt.

Negative cash flow from financing activities of US$287.3 million primarily produced by the payment of the Yankee bonds of our Chilean subsidiary Pehuenche and dividend payments.

Cash flow from investment activities of US$127.9 millions mainly due to the sale of assets partially offset by the investments in the Ralco hydroelectric project.

Consolidated Cash Flow (Chilean GAAP)

Table 7



	Million Ch$						Thousand US$
	1st H 2002			1st H 2003			1st H 2002			1st H 2003
CASH FLOWS ORIGINATED FROM OPERATING ACTIVITIES
Net income (loss) for the period		37,318			47,903			53,378			68,519
(Profit) loss in sale of assets:
(Profit) loss in sale of assets		(1,309	)		6,277			(1,872	)		8,978
Charges (credits) which do not represent cash flows:		83,833			72,607			119,912			103,855
Depreciation		96,875			105,049			138,567			150,258
Amortization of intangibles		1,553			920			2,222			1,317
Write—offs and provisions		—			—			—			—
Amortization of positive goodwill		4,366			893			6,244			1,277
Amortization of negative goodwill (less)		(24,131	)		(8,743	)		(34,516	)		(12,506	)
Accrued profit from related companies (less)		(2,551	)		(20,205	)		(3,649	)		(28,901	)
Accrued loss from related companies		7,511			276			10,743			395
Net, price—level restatement		4,470			(2,066	)		6,394			(2,955	)
Net exchange difference		(1,139	)		(5,032	)		(1,630	)		(7,197	)
Other credits which do not represent cash flow (less)		(19,567	)		(7,342	)		(27,988	)		(10,502	)
Other charges which do not represent cash flow		16,447			8,857			23,525			12,669
Assets variations which affect cash flow:		71,040			(58,061	)		101,614			(83,049	)
Decrease (increase) in receivable accounts		18,885			(55,125	)		27,013			(78,849	)
Decrease (increase) in inventories		(600	)		(2,123	)		(858	)		(3,036	)
Income from dividends of related companies		—			1,519			—			2,173
Decrease (increase) in other assets		52,755			(2,333	)		75,459			(3,338	)
Liabilities variations which affect cash flow:		948			(2,718	)		1,355			(3,888	)
Accounts payable related to operating results		11,161			(46,475	)		15,965			(66,477	)
Interest payable		16,387			(1,273	)		23,440			(1,821	)
Income tax payable		(3,022	)		(6,918	)		(4,323	)		(9,895	)
Accounts payable related to non operating results		(20,689	)		46,308			(29,594	)		66,238
Accrued expenses and withholdings		(2,890	)		5,640			(4,133	)		8,067
Minority interest		21,115			38,276			30,203			54,748
Net Positive Cash Flow Originated from Operating Activities		212,945			104,283			304,591			149,163
CASH FLOWS ORIGINATED FROM FINANCING ACTIVITIES
Shares issued and subscribed		1,867			—			2,671			—
Proceeds from loans wired		82,161			143,295			117,520			204,965
Proceeds from debt issuance		103,994			32,711			148,749			46,789
Proceeds from loans obtained from related companies		116,389			—			166,480			—
Capital distribution		—			(9,952	)		—			(14,234	)
Other financing sources		—			6,332			—			9,057
Dividends paid		(59,169	)		(28,429	)		(84,633	)		(40,663	)
Loans, debt amortization (less)		(338,065	)		(172,899	)		(483,559	)		(247,309	)
Issuance debt amortization (less)		(5,052	)		(133,407	)		(7,226	)		(190,821	)
Amortization of loans obtained from related companies		(99,857	)		(4,132	)		(142,833	)		(5,911	)
Amortization of expenses in issuance debt		(9,678	)		—			(13,843	)
Other disbursements related to financing (less)		(2,894	)		(34,374	)		(4,139	)		(49,168	)
Net (Negative) Cash Flow Originated from Financing Activities		(210,304	)		(200,854	)		(300,812	)		(287,296	)
CASH FLOWS ORIGINATED FROM INVESTING ACTIVITIES
Sale of fixed assets		12,216			152,365			17,473			217,938
Collection upon loans to related companies		15,825			10,689			22,636			15,290
Other income on investments		2,471			48,637			3,535			69,569
Additions to fixed assets (less)		(32,398	)		(83,791	)		(46,341	)		(119,852	)
Investments in related companies (less)		—			(25	)		—			(35	)
Investments in marketable securities		(15,316	)		—			(21,907	)		—
Other loans provided to related companies (less)		(11,893	)		—			(17,011	)		—
Other investment disbursements (less)		(739	)		—			(1,057	)		—
Net (Negative) Cash Flow Originated from Investment Activities		(29,833	)		127,875			(42,672	)		182,909
Net Positive Cash Flow for the Period		(27,191	)		31,304			(38,893	)		44,777
Effect of Price-Level Restatement Upon Cash and Cash Equivalent		1,848			(26,238	)		2,643			(37,530	)
Net Variation of Cash and Cash Equivalent		(25,344	)		5,066			(36,251	)		7,246
Initial Balance of Cash and Cash Equivalent		94,999			124,216			135,884			177,676
Final Balance of Cash and Cash Equivalent		69,656			129,283			99,633			184,922

Business Information
Main Operating Figures

Table 8


Company	GWh sold 1st Half 2002		GWh sold 1st Half 2003		Dif 03/02			Var 03/02
Chocón		1,291		2,434		1,143			88.58	%
Costanera		2,755		1,810		(945	)		(34.31	%)
Betania		1,171		1,198		27			2.29	%
Emgesa		6,542		5,819		(723	)		(11.05	%)
Cachoeira		1,777		1,679		(98	)		(5.54	%)
Edegel		2,161		2,409		248			11.50	%
Chilean Companies		8,677		9,290		613			7.06	%


Company	GWh produced 1st Half 2002		GWh produced 1st Half 2003		Dif 03/02			Var 03/02
Chocón		1,263		2,113		850			67.31	%
Costanera		2,301		1,433		(868	)		(37.73	%)
Betania		843		697		(146	)		(17.30	%)
Emgesa		4,530		4,380		(150	)		(3.32	%)
Cachoeira		1,014		1,028		14			1.33	%
Edegel		2,223		2,444		221			9.93	%
Chilean Companies		7,874		8,534		659			8.37	%

Endesa Chile's Operating Income break down by country
(Chilean GAAP)

Table 9


	Million Ch$						Thousand US$
	1st Half 2002			1st Half 2003			1st Half 2002			1st Half 2003			Chg %
Operating Revenues		478,581			485,428			684,548			694,341			1.4	%
Energy sales:
Chocón		9,629			18,412			13,772			26,336			91.2	%
Costanera		38,438			40,508			54,981			57,942			5.4	%
Betania - Emgesa		119,610			121,436			171,086			173,699			1.5	%
Cachoeira		29,369			22,239			42,008			31,810			(24.3	%)
Edegel		57,023			61,666			81,564			88,206			8.1	%
Chile		204,377			209,579			292,335			299,775			2.5	%
Other revenues		20,136			11,587			28,802			16,573			(42.5	%)
Operating Expenses		(286,653	)		(288,780	)		(410,020	)		(413,062	)		0.7	%
Chocón		(14,188	)		(17,591	)		(20,295	)		(25,162	)		24.0	%
Costanera		(30,402	)		(27,478	)		(43,485	)		(39,303	)		(9.6	%)
Betania - Emgesa		(74,498	)		(73,361	)		(106,559	)		(104,934	)		(1.5	%)
Cachoeira		(17,155	)		(14,224	)		(24,538	)		(20,345	)		(17.1	%)
Edegel		(18,276	)		(24,736	)		(26,142	)		(35,382	)		35.3	%
Chile		(132,134	)		(131,389	)		(189,001	)		(187,935	)		(0.6	%)
Operating Margin		191,928			196,648			274,528			281,279			2.5	%
SG&A		(15,539	)		(15,816	)		(22,226	)		(22,623	)		1.8	%
Chocón		(171	)		(236	)		(244	)		(338	)		38.4	%
Costanera		(679	)		(785	)		(971	)		(1,123	)		15.7	%
Betania - Emgesa		(1,632	)		(1,935	)		(2,334	)		(2,768	)		18.6	%
Cachoeira		(1,046	)		(801	)		(1,496	)		(1,146	)		(23.4	%)
Edegel		(3,767	)		(4,071	)		(5,388	)		(5,824	)		8.1	%
Chile		(8,245	)		(7,987	)		(11,793	)		(11,425	)		(3.1	%)
Operating Income		176,389			180,832			252,302			258,656			2.5	%

Endesa Chile's Ownership Structure, as of June 30, 2003
Total Shareholders: 28,697, Total Shares Outstanding: 8,201,754,580

Table 10


Shareholder	% Holding
Enersis		59.98
Chilean Pension Funds		18.84
ADR's		4.72
Individuals		7.11
Others		9.35

This Press Release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this announcement and include statements regarding the intent, belief or current expectations of Endesa Chile and its management with respect to, among other things: (1) Endesa Chile's business plans; (2) Endesa Chile's cost-reduction plans; (3) trends affecting Endesa Chile's financial condition or results of operations, including market trends in the electricity sector in Chile or elsewhere; (4) supervision and regulation of the electricity sector in Chile or elsewhere; and (5) the future effect of any changes in the laws and regulations applicable to Endesa Chile or its affiliates. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of various factors. These factors include a decline in equity capital markets of the United States or Chile, an increase in market interest rates in the United States or elsewhere, adverse decisions by government regulators in Chile or elsewhere, and other factors described in Endesa Chile's Annual Report on Form 20-F. Readers are cautioned not to place undue reliance on those forward-looking statements, which speak only as of their dates. Endesa Chile undertakes no obligation to release publicly the result of any revisions to these forward-looking statements.

ITEM 2

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2002

The following discussion should be read in conjunction with our audited consolidated financial statements included in our 2002 Form 20-F, our unaudited interim consolidated financial statements included as Item 5 in this current report, the "Selected Consolidated Financial and Operating Data" included in this report and "Item 5. Operating and Financial Review and Prospects" in our 2002 Form 20-F. Our financial statements are prepared in accordance with Chilean GAAP, which differ in certain respects from US GAAP. See Note 34 to our audited consolidated financial statements, included in the 2002 Form 20-F.

Introduction

Our results of operations are significantly influenced by the regulatory structure for the production and pricing of electricity in Chile, Argentina, Brazil, Colombia and Peru, the principal countries in which we and our equity affiliates operate. Factors such as the pricing of electricity sales to regulated and unregulated customers and in the spot market, our mix of contract and spot market sales and the effect of hydrological conditions on operations, have a material impact on our financial results. Accordingly, the following discussion should be read in conjunction with our discussion of the regulatory structures of the countries in which we operate in "Item 4. Information on the Company—D. Property, plants and equipment—Regulatory Framework" in our 2002 Form 20-F. Our results are also influenced by a variety of other factors not directly related to regulatory structures, such as our business strategy, economic conditions in the countries in which we operate, variations in exchange rates among the Chilean peso, the US dollar and the local currencies of the countries in which we operate outside Chile, government policies, accounting policies and the effects of competition. In particular, such exchange rate variations, if significant, affect the amounts reported in our financial statements of revenues and expenses from our operations in Argentina, Brazil, Colombia and Peru. As a consequence, currency fluctuations in these countries affect the comparability of our results of operations from period to period.

Overview of Results

We had net income of Ch$24.0 billion for the first quarter of 2003, a Ch$6.4 billion increase from net income of Ch$17.6 billion in the first quarter of 2002, principally due to the improved results of operations in Chile, Colombia and Peru, which were partly offset by lower net income from Argentina and Brazil. Other factors contributing to an improved first quarter 2003 net income included Ch$10.5 billion of income from equity affiliates as a result of improved results at Companhia de Interconexão Energética ("CIEN"), CEMSA and Gas Atacama Generación Limitada ("Gas Atacama"), and a Ch$5.8 billion decline in exchange rate losses.

The table below sets forth information concerning our revenues from operations for the first quarter of 2002 and 2003.


	Three months ended March 31,
	2002					2003					% Change
	(in millions of Ch$)		% of Total			(in millions of Ch$)		% of Total
Revenues from Operations:
Sales of electricity (Chile)		102,441		43.2			103,831		42.2			1.4
Sales of electricity (Argentina)		26,238		11.1			29,350		11.9			11.9
Sales of electricity (Colombia)		58,135		24.5			58,215		23.7			0.1
Sales of electricity (Brazil)		13,656		5.8			10,245		4.2			(25.0	)
Sales of electricity (Peru)		26,647		11.2			32,910		13.4			23.5
Other		9,874		4.2			11,356		4.6			15.0
Total		236,990		100.0	%		245,908		100.0	%		3.8

The tables below set forth information concerning our operations for the first quarter of 2002 and 2003.


	Three months ended March 31,
	2002					2003					% Change
GWh Sold			% of Total					% of Total
GWh Sold (Chile)		4,428		35.5			4,574		38.5			3.3
GWh Sold (Argentina)		2,460		19.7			2,043		17.2			(17.0	)
GWh Sold (Colombia)		3,659		29.3			3,201		26.9			(12.5	)
GWh Sold (Brazil)		828		6.7			758		6.4			(8.5	)
GWh Sold (Peru)		1,094		8.8			1,312		11.0			19.9
Total		12,469		100.0	%		11,888		100.0	%		(4.7	)


	Three months ended March 31,
	2002					2003					% Change
GWh Produced			% of Total					% of Total
GWh Produced (Chile)		4,137		39.5			4,309		41.4			4.2
GWh Produced (Argentina)		2,171		20.7			1,844		17.7			(15.1	)
GWh Produced (Colombia)		2,654		25.3			2,518		24.2			(5.1	)
GWh Produced (Brazil)		395		3.8			402		3.9			1.8
GWh Produced (Peru)		1,127		10.7			1,339		12.9			18.8
Total		10,484		100.0	%		10,412		100.0	%		(0.7	)

Revenues from Operations

Total revenues from operations were positively affected by an increase in demand and comparatively favorable hydrological conditions in certain of the regions in which we operate, increasing by 3.8% to Ch$245.9 billion in the first three months of 2003 from Ch$237.0 billion in the same period of last year. These factors were partly offset by decreases in physical sales in Argentina, Colombia and Brazil, as discussed below.

Revenues from sales of electricity in Chile increased by 1.4% to Ch$103.8 billion in the first quarter of 2003 from Ch$102.4 billion in 2002, principally because of a 3.3% increase in physical sales resulting from greater generation due to favorable hydrological conditions. Energy storage in our hydro reservoirs increased from 5,940.7 GWh at March 31, 2002 to 7,268.4 GWh at March 31, 2003. The increase in physical sales was partly offset by a 1.9% decline in average revenues per kWh sold to Ch$22.7 per kWh in the first quarter of 2003 from Ch$23.13 per kWh in 2002, mainly due to the increase in spot-market sales as a proportion of total sales in the first quarter of 2003, compared to the same period in 2002 and a decrease in node prices in the Sistema Interconectado Central ("SIC").

Revenues from sales of electricity in Argentina increased by 11.9% to Ch$29.4 billion, mainly due to an 87.5% increase in physical sales of electricity at Hidroeléctra El Chocón S.A. ("El Chocón") as a result of higher electricity production due to favorable hydrological conditions. This increase was offset in part by a 52% decline in electricity sales by Central Costanera S.A. ("Costanera"), resulting from lower demand from customers in Brazil, where it was less expensive to purchase energy on the local spot market than from the interconnection with Argentina. Average revenue per kWh sold in the first quarter of 2003, increased to Ch$14.42 per kWh in the first quarter of 2003 from Ch$10.67 per kWh in the same period of 2002, as a result of an increase in capacity sales as a proportion of total revenues, offset in part by the effect on reported Chilean peso amounts of the devaluation of the Argentine peso.

Revenues from sales of electricity in Brazil decreased by 25% to Ch$10.2 billion in the first quarter of 2003 from Ch$13.7 billion in the same period of 2002. This decrease principally reflected an 18% decrease in average revenues per kWh of energy sold to Ch$13.52 per kWh in the first quarter of 2003 from Ch$16.49 per kWh in the same period of 2002, mainly due to the effect on reported Chilean peso amounts of the devaluation of the real, offset in part by an increase in Brazilian tariffs. Revenues in the

first quarter of 2003 were also adversely affected by a 10% decline in sales volume under the terms of the take-or-pay contract between Centrais Elétricas Cachoeira Dourada S.A. ("Cachoeira Dourada") and Companhia Elétrica do Estado de Goiás S.A. ("CELG") during the first quarter of 2003 compared to the same period of 2002. The contract provides that sales volume will reduce by 10% annually each September until 2012. CELG suspended payments under this contract in April 2003 and we are currently litigating this matter in Brazil. See the risk factors entitled "Lower energy prices in Brazil have resulted in breaches of contracts entered into by our subsidiaries and equity affiliates, which may impact the amount of dividends and distributions we receive from these investments" in item 3 of this report.

Revenues from sales of electricity in Colombia were largely unchanged at Ch$58.2 billion in the first quarter of 2003 compared to Ch$58.1 billion in 2002. Average revenues per kWh of energy sold increased 14.5% to Ch$18.19 per kWh in the first quarter of 2003 from Ch$15.89 per kWh in 2002 as a result of higher spot prices in the first three months of 2003. The effect of the increase in spot prices was offset by the effect on reported Chilean peso amounts of the devaluation of the Colombian peso and by a 12.5% decline in physical energy sales due to lower energy production by Betania because of less favorable hydrological conditions.

Revenues from sales of electricity in Peru increased by 23.5% to Ch$32.9 billion from Ch$26.7 billion in the first quarter of 2002. This increase was due in large part to a 19.9% increase in physical energy sales, principally in the spot market, as a result of favorable hydrological conditions and increased demand, as well as a 3.0% increase in average revenues per kWh of energy sold to Ch$25.08 in the first quarter of 2003 from Ch$24.36 during the same period of 2002.

Other Revenues

Other income includes revenues from toll roads, engineering services and tunnels. Other revenues for the first quarter ended March 31, 2003 was Ch$11,356 million, representing less than 5% of our total revenues for the quarter and comprising mostly revenues from Infraestructura 2000, Túnel El Melón S.A. ("Túnel El Melón") and Ingendesa. In June 2003, we sold Infraestructura 2000, which contributed Ch$5,953 million of our other revenues in the first quarter of 2003.

Cost of Operations

The table below sets forth the breakdown of costs of operations for the first quarter of 2002 and 2003, and the percentage change from the first quarter of 2002 to 2003.


	Three months ended March 31,
	2002		2003		% Change
	(in millions of Ch$)
Cost of Operations:
Cost of operations (Chile)(1)		62,581		64,233		2.6
Cost of operations (Argentina)		23,476		21,606		(8.0	)
Cost of operations (Colombia)		37,416		35,004		(6.4	)
Cost of operations (Brazil)		6,983		6,078		(13.0	)
Cost of operations (Peru)		8,696		13,727		57.9
Total	$	139,152	$	140,649		1.1

(1)	Includes costs associated with our other income (toll roads, engineering services and tunnels).

Total consolidated operating expenses for the quarter ended March 31, 2003 were Ch$140.6 billion, a 1.1% increase from consolidated operating expenses of Ch$139.2 billion for the corresponding period in 2002, principally due to increases of operating costs in Chile and Peru, which were only slightly offset by the reduction in operating costs in Argentina, Colombia and Brazil.

Cost of operations in Chile increased by 2.6% to Ch$64.2 billion for the first quarter of 2003 from Ch$62.6 billion for the first three months of 2003. This increase was mainly due to higher maintenance costs for the San Isidro Combined Cycle plant during the first quarter of 2003, offset in part by lower thermal generation costs due to reduced levels of thermal generation.

Cost of operations in Argentina decreased by 8.0% to Ch$21.6 billion in the first quarter of 2003 from Ch$23.5 billion in the same period of 2002, mainly due to the effect on reported Chilean peso amounts of devaluation of the Argentine peso and reduced variable costs at Costanera due to lower physical generation. This decline was partially offset by an increase in operational expenses for El Chocón, primarily due to higher transmission expenses associated with increased physical sales.

Cost of operations in Brazil decreased to Ch$6.1 billion, a 13% decline from Ch$7.0 billion for the same period last year. This decline is principally due to the effect on reported Chilean peso amounts of the devaluation of the Brazilian real and a reduction in power purchases as a result of favorable hydrology.

Cost of operations in Colombia declined by 6.4% to Ch$35.0 billion for the three months ended March 31, 2003 from Ch$37.4 billion. This decrease was principally attributable to the effect on reported amounts in Chilean pesos of the devaluation of the Colombian peso against the dollar and a reduction in energy purchases.

Cost of operations in Peru were Ch$13.7 billion for the first three months ended March 31, 2003, a 58% increase over operating costs of Ch$8.7 billion for the corresponding period in 2002. This increase was primarily the result of higher transmission costs associated with increased sales of energy in 2003.

Administrative and Selling Expenses

Administrative and selling expenses rose by 11.6% to Ch$8.2 billion in the first quarter of 2003 from Ch$7.3 billion in the same period of 2002. This increase was primarily due to the effect of nonrecurring expenses during the first quarter 2003 related to severance liabilities in Colombia, and was partly offset by a decline in administrative and selling expenses in Argentina.

Operating Income

Operating income for the first three months ended March 31, 2003 was Ch$97.1 billion, a 7.3% increase from Ch$90.5 billion for the first quarter of 2002. This increase in operating income was due to the factors discussed above.

Non-operating Results

The following table sets forth certain information regarding our non-operating results for each of the periods indicated.


	Three months ended March 31,
	2002			2003			% Change
	(in millions of Ch$)
Non-operating income:
Interest earned		4,156			3,607			(13.2	)
Equity in income of non-consolidated affiliates		(3,592	)		10,529			N/A
Other non-operating income		24,624			13,678			(44.5	)

Non-operating expenses:
Interest expense		(51,758	)		(51,295	)		(0.9	)
Goodwill amortization		(2,087	)		(465	)		(77.7	)
Other non-operating expenses		(27,942	)		(19,882	)		(28.8	)

Monetary correction:
Price level restatement		(328	)		1,726			N/A
Foreign exchange translation		(6,155	)		(354	)		(94.2	)
Non-operating results		(63,083	)		(42,455	)		(32.7	)

Non-operating results for the first three months ended March 31, 2003 amounted to a loss of Ch$42.5 billion compared to a loss of Ch$63.1 billion in the first quarter of 2002.

Net Income from Equity Affiliates. Net income from equity affiliates increased to Ch$10.5 billion in the first quarter of 2003 from a loss of Ch$3.6 billion in 2002 due mainly to improved results of CIEN, CEMSA and Gasoducto Atacama Argentina Limitada ("Gasoducto Atacama Argentina"). CIEN's and CEMSA's results, which accounted for 91% of the gain from net income for equity affiliates in the first quarter of 2003, compared to 2002, benefited from the start-up of the second Argentina-Brazil interconnection line, which was not operational during the first quarter of 2002. Gasoducto Atacama Argentina's results benefitted from the effect of the appreciation of the Argentine peso in the first quarter of 2003 compared to the effect of the devaluation in the first quarter of 2002.

Other Non-Operating Income Net of Expenses. The decrease of other non-operating income net of expenses to Ch$6.2 billion in the first quarter 2003 from Ch$3.3 billion in the same period of 2002 was principally due to the effect of a Ch$5.0 billion provision made in the first quarter of 2003 for expenses arising from the sale of Canutillar and Ch$4.9 billion in provisions for litigation and other contingencies.

Price-Level Restatement. The price-level restatement amounted to a gain of Ch$1.7 billion in the first quarter of 2003, compared to a loss of Ch$328 million for the same period of 2002. This increase was due to the combined effect of higher inflation in Chile (an inflation rate of 0.46% in the first quarter of 2003 versus 0.38% for the same period in 2002) and a higher level of net monetary liabilities in the first quarter of 2003 compared to the same period in 2002.

Exchange Differences. The Ch$354 million loss in exchange differences in the first quarter of 2003 compared to a loss of $6.1 billion for the same period in 2002 was the result of the 1.8% devaluation of the Chilean Peso against the US dollar in the first quarter of 2003, as compared to a 0.2% devaluation in the same period of 2002, and to forward contract transactions, which represented a Ch$3.6 billion profit in the first quarter of 2003 compared to Ch$4.4 billion in exchange losses in the first quarter of 2002.

Goodwill Amortization. Goodwill amortization decreased from Ch$2.1 billion to Ch$0.5 billion, reflecting the reduced balance of goodwill remaining in 2003 we took a substantial charge for impairment of goodwill relating to our Argentine and Brazilian goodwill in the last quarter of 2002.

Income Taxes

Income taxes of Ch$21.2 billion for the first quarter of 2003 were 69% higher than income taxes of Ch$12.5 billion paid for the same period in 2002. This increase in income taxes paid was primarily the result of the improved results of the operations in Chile, Colombia and Peru.

Minority Interest

Participation by the minority interests in the results of operations of our less than wholly owned subsidiaries was Ch$14.0 billion in the first quarter of 2003, compared to Ch$8.8 billion for the same period of 2002. The 59.6% increase in minority interest participation was mainly due to an improvement in the results of Emgesa S.A. E.S.P. ("Emgesa") and Betania S.A. ("Betania") in Colombia.

Negative Goodwill Amortization

Negative goodwill amortization decreased from Ch$11.5 billion to Ch$4.6 billion, reflecting the reduced balance of negative goodwill remaining in 2003. We took a substantial charge for the impairment of goodwill relating to our Argentine and Brazilian subsidiaries in the last quarter of 2002.

Net Income

Endesa-Chile's net income in the first quarter of 2003 increased by 36.3% to Ch$24.0 billion compared to Ch$17.6 billion for the same period of 2002 as a result of the factors discussed above.

ITEM 3

RISK FACTORS

Risks Relating to Our Operations

Our business depends heavily on hydrological conditions, and drought conditions may hurt our profitability.

A substantial portion of our operations in Chile, Argentina, Brazil, Colombia and Peru involve hydroelectric generation, and, accordingly, we are dependent upon hydrological conditions prevailing from time to time in the geographic regions in which we operate. In particular, we are exposed to the risks discussed below.

During periods of drought, electricity from thermal generators, including those that are fueled with natural gas or coal, is dispatched more frequently. During such periods, we are required to purchase electricity from thermal producers to the extent our own production is not sufficient to fulfill contractual obligations. The cost of these spot-market purchases may exceed the price at which we sell electricity under contracts, resulting in a loss.

With the aim of decreasing to some extent the effects of a protracted future drought, since 2000 we have changed our commercial policy by decreasing our contractual energy sales levels to better match the amount of firm energy associated with our installed capacity, giving priority to our higher-paying clients and to industrial firms and distribution companies that demand larger amounts of energy and limiting contractual sales to regulated customers. While we enacted this change to mitigate the impact of a protracted drought period, we can give you no assurance that this new policy will protect us from negative consequences of a protracted drought period.

We may have to pay regulatory penalties related to operating our business during drought conditions.

In Chile, we may have to pay regulatory penalties related to operating our business if rationing occurs. Under current Chilean law, we may be required to pay the following three types of costs or penalties during periods of electricity rationing imposed by the Chilean authorities:

•

Our generation businesses may be subject to regulatory fines, which range from 1 Unidad Tributaria Mensual ("UTM"), or approximately US$44, to 10,000 Unidades Tributarias Annuales ("UTA"), or approximately US$5 million. Any company supervised by the Chilean Superintendency of Electricity and Fuels, or SEF, is subject to these fines, which apply in cases where, in the opinion of the SEF, there are operational failures that affect the regular energy supply to the system. These fines are subject to appeal by SEF-regulated companies.

•

If our Chilean generation subsidiaries are required to buy electricity in the spot market during a period in which a rationing decree is in effect, they are required to pay a "failure cost" to be set by, and paid to, the authorities.

•

If any end-consumer of electricity in Chile fails to receive electricity during any declared rationing period, we must pay that consumer a "compensation payment," which would be equal to a "failure cost" to be set by regulatory authorities.

If rationing policies are imposed by regulatory authorities as a result of adverse hydrological conditions in the countries in which we operate, our business, financial condition and results of operations may be affected adversely in a material way.

We cannot give any assurance that rationing periods will not occur in the future, and consequently, we can give you no assurance that we will not be obligated to pay regulatory penalties if we fail to provide adequate service under such conditions.

Our business could be affected by the proposals being considered by the Chilean Congress in respect to our water rights.

Approximately 72.5% of our installed capacity in Chile is hydroelectric as of the date of this report. We own water rights granted by the Chilean Water Authority for the supply of water from rivers and lakes near its production facilities. Under current law, our water rights are of unlimited duration, are absolute and unconditional property rights and are not subject to any further challenge. The Chilean Congress has

discussed a proposal to amend the laws governing water rights. Under the proposal we would have to pay a fee for previously granted but unused water rights each year that the right continued unused. We are unable to predict whether, or in what form, any such proposed changes to the laws governing water rights will be enacted. There can be no assurance that any changes would not, if enacted, have a material adverse effect on either us or our operations.

We have significant levels of debt.

We and our subsidiaries had approximately Ch$3,056 billion (US$4,177 million) of outstanding indebtedness at March 31, 2003, of which Ch$1,419 billion (US$1,940 million) was debt of Endesa-Chile and Ch$1,637 billion (US$2,237 million) was debt of our subsidiaries. Endesa-Chile guarantees approximately Ch$1,358 billion (US$1,856 million) of outstanding subsidiary debt, of which Ch$894.3 billion (US$1,222 million) corresponds to amounts Endesa-Chile guarantees for its wholly owned finance subsidiary, Endesa-Chile Internacional. Of the remaining US$633 million guaranteed by Endesa-Chile, US$535 million was guaranteed to wholly owned subsidiaries. As a result of our level of debt, we might be limited in our ability to meet our debt service obligations and develop additional projects, to compete effectively or to operate successfully under adverse economic conditions. As of March 31, 2003, we had a consolidated ratio of total financial debt to the sum of shareholders' equity and minority interest of approximately 1.03.

The claims of our creditors are structurally subordinated to the claims of creditors of our subsidiaries.

At March 31, 2003, the indebtedness and obligations of our subsidiaries to creditors, including trade creditors, aggregated approximately Ch$1,856 billion (US$2,537 million). Any right of ours to receive any assets of any of our subsidiaries or equity affiliates upon our liquidation, dissolution, winding up, receivership, reorganization or any bankruptcy, insolvency or similar proceedings are effectively subordinated to the claims of any such subsidiary's or equity affiliate's creditors (including trade creditors and holders of debt or guarantees issued by such subsidiary). As of March 31, 2003, the only outstanding Endesa-Chile indebtedness guaranteed by subsidiaries was our US$743 million of our syndicated and bilateral bank debt indebtedness under a Senior Guaranteed Syndicated Term Loan Facility of our Cayman Islands branch (the "Endesa-Chile Facility"), which is guaranteed by our subsidiaries Empresa Eléctrica Panque S.A. ("Panque"), Compañia Eléctrica Tarapacá S.A. ("Celta"), Empresa Eléctrica Pehuenche S.A. ("Pehuenche") and our wholly owned finance subsidiary Endesa-Chile Internacional.

We depend in part on payments from our subsidiaries to meet our payment obligations.

In order to pay our obligations, we rely in part on dividends, interest payments, loans, and other distributions from our subsidiaries. In 2002, we had total consolidated net cash flow from operations of Ch$352.2 billion. Over half of these cash flows arose from our non-Chilean subsidiaries. The remainder was accounted for by Endesa-Chile and its Chilean subsidiaries. Subject to the limitations described below, we generally have been able to access the cash flows of our Chilean subsidiaries to meet cash needs at the Endesa-Chile level. We have not been similarly able to access cash flows of our non-Chilean subsidiaries and in 2002, we received Ch$168.4 billion in dividends, interest payments, loans and other distributions from our non-Chilean subsidiaries. Our ability to pay our obligations will be substantially dependent on the receipt of distributions from our subsidiaries. In addition, the ability of our subsidiaries to pay dividends, interest payments, loans and other distributions to us is subject to legal limits such as dividend restrictions and fiduciary duties, contractual limitations, foreign exchange controls that may be imposed in any of the five countries where our subsidiaries operate and the operating results of our subsidiaries and equity affiliates.

Our future results of operations outside of Chile may continue to be subject to greater economic and political risks than what we have experienced in Chile, thereby reducing the likelihood that we will be able to rely on cash flow from operations in those entities to repay our obligations.

Dividend Limits and Other Legal Restrictions. We and our Chilean subsidiaries are subject to customary legal restrictions limiting the amount of dividend distributions to net income. Some of our non-Chilean subsidiaries are also subject to legal reserve requirements and other restrictions on dividend payments. In addition, the ability of any of our less-than-wholly owned subsidiaries to upstream cash to us may be limited by the fiduciary duties of the directors of such subsidiaries to their minority shareholders. As a consequence of such duties, any of our subsidiaries could under some circumstances be prevented from upstreaming cash to us.

Contractual Limitations. Upstreaming restrictions in the credit agreements of Pangue, our Chilean subsidiary, include requirements that dividend distributions over the legal minimum be made only if Pangue is in compliance with certain debt to equity ratios and debt coverage ratios (each as defined in those agreements) of 1.857:1 and 1.0:1, respectively. At December 31, 2002, these ratios were 1.22:1 and 3.86:1, respectively. There are no other contractual restrictions on our Chilean subsidiaries' liability to pay dividends, interest payments, loans and other cash flows to us, but there are such restrictions on the ability of some of our non-Chilean subsidiaries to make these payments or transfers. Upstreaming restrictions in our subsidiaries' contractual agreements include:

•

Edegel S.A. ("Edegel") in Peru and Betania in Colombia, whose dividend distributions are prohibited in the case of default of certain loans;

•

Betania in Colombia, where intercompany debt repayment is prohibited unless Betania raises additional funds from the sale of assets or capital reductions of its subsidiaries (Emgesa), and intercompany interest payments are prohibited if any scheduled payment of Betania's syndicated loan is due and not paid; and

•

Costanera in Argentina, whose dividend distributions, capital reductions, intercompany interest payments and debt repayment are prohibited while certain debt is outstanding.

We are not aware of any contractual limitations on our equity affiliates' ability to pay dividends and other distributions to us.

Operating Results at Our Subsidiaries. The ability of our subsidiaries and equity affiliates to make dividends, interest payments, loans and other distributions to us is limited by their operating results. To the extent that the cash needs at any of our subsidiaries exceed its available cash, that subsidiary will not be able to make cash available to us. We expect that in 2003 and 2004 some of our non-Chilean subsidiaries may experience cash flow deficits and not have funds available for distribution to us. For examples of recent disruptions to our non-Chilean subsidiaries' earnings and cash flows, see the risk factor below entitled "Lower energy prices in Brazil have resulted in breaches of contracts entered into by our subsidiaries and equity affiliates, which may impact the amount of dividends and distributions we receive from these investments." Our future results of operations outside Chile may continue to be subject to greater economic and political risks than what we have experienced in Chile, thereby reducing the likelihood that we will be able to rely on cash flow from operations in those entities to repay our obligations.

Foreign Exchange Controls. The payment of dividends and distributions by our subsidiaries and equity affiliates to us are subject to emergency restrictions that may be imposed by the executive power, local authorities, the local Central Bank or other governmental bodies during special circumstances. For example, during the economic crisis in Argentina, the Central Bank of Argentina imposed restrictions on the transfer of funds outside of Argentina.

We are subject to financial covenants and other contractual provisions under our existing indebtedness.

A significant portion of our financial indebtedness is subject to cross-default provisions. Defaults in relation to any single indebtedness of ours or our more relevant subsidiaries with an outstanding amount equal to or in excess of US$30 million after the applicable grace periods (if any) have expired could give rise to a cross-default under the Endesa-Chile Facility. In addition, a payment default by us or any of our subsidiaries on any indebtedness having an aggregate principal amount exceeding US$30 million, would trigger an event of default on our SEC-registered bonds. Finally, any Event of Default arising under those bonds would trigger a cross-default under most of our existing bank credit agreements.

The Endesa-Chile Facility requires us to maintain specified financial covenants related to maximum ratios of indebtedness to cash flow (ranging from 9.50:1 in 2003 to 6.00:1 in the second quarter of 2008), indebtedness to EBITDA (calculated as defined in the Endesa-Chile Facility (ranging from 6.75:1 in 2003 to 4.00:1 in 2008) and indebtedness to stockholders' equity (ranging from 115% in 2003 to 70% in the second quarter of 2008), and a minimum ratio of cash flow to interest expense (ranging from 1.50:1 in 2003 to 2.0:1 in 2008). The Endesa-Chile Facility requires us to apply 75% of our excess cash (as defined in the Endesa-Chile Facility including allowance for dividends), and most of the proceeds derived from asset

sales, equity issuances or debt issuances to prepay the Endesa-Chile Facility. In addition, the Endesa-Chile Facility contains covenants that prohibit (1) any of our subsidiaries whose principal place of business is in Chile from incurring indebtedness, subject to certain exceptions; and (2) us and certain subsidiaries of ours (subject, in each case, to a variety of exceptions) from, among other things, prepaying indebtedness, creating or permitting the existence of liens on properties and assets, making investments, loans (including intercompany loans) or advances, issuing guarantees or providing other credit support, selling or transferring essential operating assets, consummating mergers, consolidations, liquidations or dissolutions, making capital expenditures in excess of certain agreed thresholds, which range from US$36 million to US$262 million per year on a consolidated basis, repurchasing or redeeming capital stock or making other payments in respect of capital stock, entering into agreements (other than the Endesa-Chile Facility) which restrict the ability of our subsidiaries to apply the proceeds from equity or debt issuances and asset sales by way of dividend or repayment of intercompany indebtedness, entering into transactions with affiliates, entering into sale and leaseback transactions and making material changes in the nature of the principal business of ours and our more relevant subsidiaries. These restrictions will no longer apply upon repayment of the Endesa-Chile Facility, which matures on May 15, 2008.

Foreign exchange risks may adversely affect our results of operations and financial condition.

The Chilean peso and the other Latin American currencies in which we and our subsidiaries operate have been subject to large devaluations against the dollar in the past and may be subject to significant fluctuations in the future. Historically, a significant portion of our consolidated indebtedness has been denominated in US dollars and, although a substantial portion of our revenues are linked in part to US dollars, we generally have been and continue to be materially exposed to fluctuations of our local currencies against the dollar because of time lags and other limitations in the indexation of our tariffs to the dollar. Moreover, in the case of our Argentine subsidiaries, regulatory changes introduced in 2002 eliminated dollar indexation altogether. Because of this exposure, the cash generated by us and our subsidiaries can be diminished materially when our local currencies devalue against the dollar. Future volatility in the exchange rate of the Chilean peso, and the other currencies in which we receive revenues or incur expenditures, to the US dollar, may affect our financial condition and results of operations.

The impact on the value of our assets of high levels of devaluation in the country in which we operate outside Chile may not be reflected on our reported financial condition as a result of Chilean accounting treatment.

The manner in which we restate our foreign investments under Chilean GAAP requires us to translate non-monetary assets and non-monetary liabilities of our non-Chilean subsidiaries and equity affiliates into US dollars at historical rates of exchange. This accounting treatment may have the effect of excluding from our reported balance sheet the effect of devaluation on our non-monetary assets in the countries in which our subsidiaries and investments are located because devaluations of the local currency against the dollar or the Chilean peso are not reflected. See "Item 5. Operating and Financial Review and Prospects—Critical Accounting Policies—Technical Bulletin No. 64" in our 2002 Form 20-F.

Changes in government regulations may impose additional operating costs and may cause revenues to decline.

As a public utility company, we are subject to extensive regulation of tariffs and other aspects of our business in the countries in which we operate. The current regulatory framework governing electric utility businesses has been in existence in Chile since 1982, in Argentina since 1992, in Peru since 1993, in Colombia since 1994 and in Brazil since 1997. Nevertheless, changes in the regulatory framework, including changes that if adopted would significantly affect our operations, are frequently submitted to the legislators in the countries in which we operate and could have a material adverse impact on our business.

Chile. In Chile, the National Congress and the Executive Power have been considering proposals, from time to time, for a modification of the electricity framework. More recently, proposals have been made by certain members of the Chilean National Congress and the Executive Power to modify certain aspects of the electricity sector's regulatory framework, short of the full modifications. These more limited changes are referred to as the Ley Corta ("Short Law"). There are currently several competing Short Law proposals, but no single proposal has been submitted by the Executive Power to legislators or emerged

as a future legislative bill, and it is unclear whether and when any legislative action will be taken on any proposal. Accordingly, as of the date of this report we are unable to predict whether or in what form any amendments to the electricity sector regulatory framework will be enacted, the timing and applicability of any new legislation or whether such legislation will have a material effect on our results of operations or financial condition.

Modifications to Chile's Electricity Law, enacted in June 1999, increased the cost of doing business for Chile's electricity generators, particularly hydro-based electricity generators such as us. The modifications include a system of graduated fines for companies that do not comply with regulations, including maximum fines equivalent to approximately US$5 million per violation, a requirement to pay 25% of total outstanding fines before such fines can be appealed and mandatory compensation for regulated users affected by electricity cuts. We can provide no assurance that these modifications will not affect our future profitability adversely.

Resolution 88. In May 2001, the Ministry of Economics issued Resolution 88, under which electricity generators such as us are required to provide power to distribution companies in the SIC if distribution companies are not able to freely contract adequate power supply to deliver to their customers. Under the terms of Resolution 88, each generator must supply power to such distributors in proportion to the generator's share of total firm energy (the estimated aggregate amount of energy that can be reliably delivered to an interconnected system during a given year by all generating units in that system, under certain assumptions as discussed in "Item 4. Regulatory Framework—Chile—Chilean Electricity Act—Sales to Other Generation Companies" of our 2002 Form 20-F) in the SIC at a price equal to the node price. If we cannot generate sufficient power ourselves to supply distribution companies' needs, we are required to purchase power on the spot market, where prices may be significantly higher in general than the price at which we sell to distributors. In addition, the requirement to sell to distributors may limit our ability to expand sales to non-regulated customers. We consider Resolution 88 to be illegal and unconstitutional since it breaches the right to property and the ease of use of the production of a generating company. We also believe that Resolution 88 violates our freedom to contract and we have requested that it be nullified. However, if our request to nullify (demanda de nulidad de derecho público) Resolution 88 is denied by the local civil court, Resolution 88's supply requirements may remain in effect, which could increase our costs and adversely affect our future profitability. Furthermore, any failure to comply with the provisions of Resolution 88 could subject us to the fines under Chile's Electricity Law discussed above.

Brazilian Energy Sector Reform Studies. Following the Brazilian electricity crisis in 2001, the Electric Sector Model Revitalization Committee of the former Brazilian federal government announced several measures to revitalize the energy sector in order to ensure a higher level of competition, encourage further investments and increase the transparency in the rules which regulate these services. However, these proposals were not implemented because of the change in administration in Brazil following elections in 2002. The new administration has undertaken a new phase of studies regarding a possible restructuring of the electricity regulatory framework. The stated objectives of this restructuring include simplifying the operation of the electricity sector and providing long-term stability. It is not yet possible to predict the nature and magnitude of the reforms, and whether these reforms will have a material adverse effect on our activities and operations in Brazil.

Environmental Regulation. We are also subject to environmental regulations, which, among other things, require us to perform environmental impact studies on future projects and obtain regulatory permits. As with any regulated company, no assurance can be given that any such environmental impact studies will be approved by governmental authorities, that public opposition will not result in delays or modifications to any of our proposed projects or that laws or regulations will not change or be interpreted in a manner that could adversely affect our operations or plans for the companies in which we have an investment. See "Item 4. Information on the Company—D. Property, plant and equipment—Environmental Issues—Ralco Project" in our 2002 Form 20-F.

We are currently involved in various litigation proceedings which could result in unfavorable decisions and financial penalties for us, and we will continue to be subject to future litigation proceedings, any of which could have material adverse consequences to our business.

We are party to a number of legal proceedings, some of which have been pending for several years. We cannot be certain that these claims will be resolved in our favor. Our financial condition or results of operations could be adversely affected to a material extent if any of these material claims is resolved against us.

We are currently engaged in litigation brought to halt construction of the Ralco hydroelectric plant. For more details on the Ralco project, see "Item 4. Information on the Company—D. Property, plant and equipment—Environmental Issues—Ralco Project" in our 2002 Form 20-F. On May 15, 2003, the Sixth Civil Court of Santiago ruled that the voluntary procedure undertaken by us for the assessment of the environmental impact of the Ralco project was null since, in the court's opinion, CONAMA, the Environmental Government Agency, was not legally entitled to assess the environmental impact study presented by us to CONAMA. On May 30, 2003, the plaintiffs requested the suspension of the Ralco project. While allowing the works related to the Ralco project to proceed, the judge ruled that the flooding of the dam should be suspended. On June 30, 2003, we appealed this ruling before the Appeals Court of Santiago. We and our co-defendant CONAMA believe the Civil Court's ruling is erroneous, but we can give no assurances that we will prevail in this view on appeal. Accordingly, the commencement of the Ralco project which is expected to help offset the loss of installed capacity following our April 30, 2003 sale of Central Hidroeléctrica Canutillar ("Canutillar"), could be suspended or delayed beyond the second half of 2004, when it is currently scheduled to begin, in which case, there could be a material adverse effect on our business, financial condition and results of operations.

On July 10, 2003, Edegel was notified of a resolution by the Peruvian Tax Administration Superintendent ("SUNAT") imposing a tax liability in the amount of Peruvian soles 555 million (approximately US$159 million) in connection with the 1996 spin-off that created Edegel. See "Item 8. Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings—Peru—SUNAT Income Tax Assessment" of our 2002 Form 20-F. Although SUNAT initially sought Peruvian soles 299 million (approximately US$85 million) in connection with this claim, in the July 10 resolution SUNAT increased its claim to Peruvian soles 555 million. Edegel intends to contest this resolution, but cannot predict the ultimate outcome.

For a list of other pending litigation matters to which we are subject, see the section of our 2002 Form 20-F entitled "Item 8. Financial Information—Consolidated Statements and Other Financial Information—Legal Proceedings."

We are subject to refinancing risk.

Following application of the proceeds of our private placement of notes due 2013 and 2015 to the repayment of our €400 million floating rate notes, and on a consolidated basis we will have US$597 million of indebtedness maturing in the period 2003 to 2004, US$2,116 million of indebtedness maturing in the period 2005 through 2008 and US$1,279 million maturing thereafter (excluding the notes due 2013 and 2015).

We may be unable to refinance any of our indebtedness, including our notes or obtain such refinancing on terms acceptable to us. In the absence of such refinancings, we could be forced to dispose of assets in order to make up for any shortfall in the payments due on our indebtedness, including interest and principal payments due on our notes, under circumstances that might not be favorable to realizing the best price for such assets. Furthermore, any assets may not be sold quickly enough, or for amounts sufficient, to enable us to make any such payments.

There are potential conflicts of interest with our affiliates.

ENDESA S.A. ("Endesa-Spain") currently owns 65.1% of ENERSIS S.A.'s ("Enersis") share capital, and Enersis has a 60% share interest in our company. Therefore, Endesa-Spain and Enersis have the power to determine the outcome of substantially all matters to be decided by a vote of our shareholders, such as the election of our board members and, subject to contractual and legal restrictions,

the distribution of dividends. Endesa and Enersis can also exercise influence over our operations and business strategies. Endesa-Spain conducts its business in Latin America through us and through affiliates not consolidated by us. To the extent any conflict arises between our interests and those of Endesa-Spain's other businesses in any jurisdiction in Latin America, Endesa-Spain might have a conflict of interest, which could have an adverse effect on our business.

Certain of our directors are officers of Endesa-Spain and officers and directors of certain subsidiaries of Endesa-Spain.

Cash management and financing of Endesa-Spain's Chilean businesses is centrally managed by Enersis, principally through the extension of short-term intercompany loans among Endesa-Spain's subsidiaries in Chile. At March 31, 2003, we had extended no intercompany loans to other companies controlled by Endesa-Spain who are not our subsidiaries or equity affiliates, and we were the borrower under Ch$46.6 billion (US$63.7 million) of such loans.

We sell electricity and capacity to other companies controlled by Endesa-Spain at regulated prices and have entered into contracts for other services with other companies under the common control of Endesa-Spain (the "Endesa Group"). Although we believe that these contracts are fair to us in all material respects, it is possible that we could have obtained more favorable terms from third parties. We believe that the amounts of these contracts are not material to us or to the other companies within the Endesa Group.

Our relationship with Enersis and its subsidiaries is a competitive strength that in the past has been the subject of investigations by antitrust authorities in Latin America. We have to date prevailed in all material respects in all such antitrust investigations and proceedings in which we have been involved and such investigations and proceedings have not in the past had a material adverse impact on us, but we cannot give assurances that we will never experience a material adverse effect arising from antitrust enforcement.

The values of our long-term energy supply contracts are subject to fluctuations in the market prices of certain commodities.

We have economic exposure to fluctuations in the market price of certain commodities as a result of the long-term energy sales contracts to which we are a party. We engage in a material amount of long-term fixed-price electricity sale contracts, the value of which fluctuate with the market price of electricity. In addition, we are the selling party in a material amount of long-term energy supply contracts with prices that vary in accordance with the market price of electricity, water levels in our reservoirs, the market prices of primary materials such as natural gas, oil, coal and other energy-related products, as well as the exchange rate of the US dollar. Changes in the market price of these commodities and exchange rate do not always correlate with changes in the market price of electricity or with our cost of production of electricity; accordingly, there may be times when the price paid to us under these contracts is less than our cost of production or acquisition of electricity. We do not carry out transactions in commodity derivative instruments to manage our exposure to commodity price fluctuations. Under Chilean GAAP, we do not reflect in our income statement fluctuations in the fair value of our long-term energy contracts, although we are required to do so under US GAAP. As a matter of policy, we do not enter into supply contracts for amounts of electricity in excess of our firm capacity under adverse hydrological conditions.

Risks Relating to Chile

Our business is dependent on the Chilean economy and our revenues are sensitive to our performance.

A substantial portion of our assets and operations are located in Chile, and accordingly, our financial condition and results of operations are to a certain extent dependent upon economic conditions prevailing from time to time in Chile. In 2002, the Chilean economy grew 2.1% compared to a 3.1% increase in 2001 and an increase of 4.2% in 2000. The Central Bank recently reclassified its criteria for growth estimates, and the figures for 2000, 2001 and 2002 and reported here are different from those reported in annual reports we have filed prior to our most recent Form 20-F. The latest Chilean Central bank forecasts for GDP growths are between 3.0% and 4.0% for 2003 and greater than 4.0% for 2004 (Central Bank "Informe

Política Monetaria", May 2003). There is no assurance that such growth will be achieved in 2003 and 2004 nor that the growth trend will continue in the future or that future developments in the Chilean economy will not impair our ability to proceed with our strategic plans or impact our financial condition or results of operations adversely. Our financial condition and results of operations could also be affected by changes in economic or other policies of the Chilean government, which has exercised and continues to exercise a substantial influence over many aspects of the private sector. In addition, our financial condition and results of operations could also be affected by other political or economic developments in Chile, as well as regulatory changes or administrative practices of Chilean authorities, over which its has no control.

Increased inflation in Chile may affect our results of operations adversely.

Although Chilean inflation has moderated in recent years, Chile has experienced high levels of inflation in the past. High levels of inflation in Chile could adversely affect the Chilean economy. The inflation rate was 27.3% in 1990, although it fell to single digits by 1994, and continued to decline steadily to a low of 2.3% in 1999. Chilean Consumer Price Index, or CPI, for the 12 months ended December 31, 2002, was 2.8%, and government officials expect 2003 Chilean CPI to be approximately 3.0% for 2003 and 2004. Historically, a substantial part of our expenses has been denominated in Chilean pesos, and any future increases in Chilean inflation could cause our expenses to rise significantly. As a result, the level of Chilean inflation may affect our financial condition and results of operations.

We believe that moderate inflation will not materially affect our business in Chile. Electricity tariffs in Chile contain indexing mechanisms that are intended to neutralize the effects of inflation. However, we are unable to give any assurance that the performance of the Chilean economy, our operating results, or the value of securities issued by us, will not be affected adversely by a significant increase in the level of inflation or that Chilean inflation will not increase significantly from the current level.

Chilean corporate disclosure, governance and accounting standards may provide investors different information from that provided under US standards.

The securities laws of Chile that govern publicly listed companies such as us impose disclosure requirements that differ from those in the United States in important respects. There are important differences between Chilean and US accounting and financial reporting standards. As a result, Chilean financial statements and reported earnings generally differ from those reported based on US accounting and reporting standards. See Note 34 to our audited consolidated financial statements for a description of the principal differences between Chilean GAAP and US GAAP relating to our financial statements and a reconciliation between Chilean and US GAAP of net income and total shareholders' equity for the periods and as of the dates therein indicated.

Risks Relating to Argentina

The property, operations and customers of Costanera and El Chocón, our Argentine subsidiaries, and CEMSA, our equity affiliate, are located in Argentina and most of their indebtedness is denominated in US dollars. Accordingly, our Argentine subsidiaries' financial condition and results of operations depend to a significant extent on economic and political conditions prevailing in Argentina and on the rates of exchange between the peso and such other currencies. As detailed below, the Argentine economy has experienced a severe recession as well as a political crisis, and the abandonment of dollar peso parity has led to significant devaluation of the peso against major international currencies. These conditions have and will continue to adversely affect the financial condition of our Argentine investments and their results of operations and may continue to impair their ability to make distributions to us.

The current macroeconomic situation in Argentina and changes to regulations affecting our Argentine subsidiaries could affect the ability of our Argentine subsidiaries to meet their obligations.

On January 6, 2002, the Argentine Congress approved the Public Emergency and Reform of the Exchange Regulation Law 25,561 ("Economic Emergency Law"). The Economic Emergency Law amended the law that had pegged the Argentine peso at parity with the US dollar since April 1991. The Economic Emergency Law empowered the Federal Executive Power to implement, among other things, additional monetary, financial and exchange measures to overcome the economic crisis in the medium

term, including the introduction of foreign exchange controls. The Economic Emergency Law declared a public emergency over social, economic, administrative, financial and foreign exchange matters, and conferred upon the Federal Executive Power full privileges under the law until December 10, 2003. This law also imposed the conversion of dollar-denominated obligations into Argentine pesos at a rate of Ar$1 per US$1 (with some exceptions), authorized the forced renegotiation of public service contracts on a case-by-case basis, froze public service tariffs, and repealed the following:

•

the provisions of the Convertibility Law that fixed the parity of the Argentine peso, or Ar$, with the United States dollar, or US$, at 1 to 1 and instead allowed the Ar$ to float versus the US$;

•

the provisions of public service concessions that called for adjustment of tariffs by foreign currency adjustments; and

•

the recognition of inflation index mechanisms from other countries and any other indexation mechanism to be applicable to public services tariffs.

Some of the more significant measures adopted by the Executive Power decrees included the following:

•

the creation of an exchange market that allowed the Ar$ to float freely;

•

certain restrictions to full access to funds deposited in financial institutions; and

•

asymmetric mandatory conversion of the Argentine banks' foreign currency denominated assets into pesos at an exchange rate of US$1 to Ar$1 and foreign currency denominated deposits at an exchange rate of US$1 to Ar$1.40.

The Economic Emergency Law created an imbalance in the economic and financial equation of Argentine companies and financial institutions. The current devaluation and the Economic Emergency Law's amendment preventing certain tariffs from being pegged to the US dollar (and instead requiring the tariffs to be pegged to the Argentine peso, which we refer to as "pesification" in this report) resulted in a revenue shortfall that led to inadequate cash flow for electricity sector activities. Current electricity tariffs do not take into account the real costs of services provided and the energy prices in the hourly market do not reflect marginal costs of generation as provided for under the previous regulation (Law 24,065).

The measures and developments described above have affected adversely the economic and financial condition of El Chocón. Substantially all of its sources of revenues have been "pesified" and decreased significantly in dollar terms, while substantially all of its liabilities continue to be denominated in US dollars. The pesification of El Chocón's contracts, together with the devaluation of the peso, have had a significant adverse effect on El Chocón's net income and cash flows, and on its financial condition.

As a result of the current macroeconomic crisis affecting Argentina and the modifications to regulations affecting our Argentine subsidiaries, as further described under the risk factors discussed below, we cannot assure you that our Argentine subsidiaries will be able to obtain financial resources to repay or refinance their short-term debt or that they will otherwise be able to comply with the obligations to which they are subject under their credit agreements and other financial contracts. We believe that our investments in Argentina have been significantly adversely affected and can provide no assurance that these events will not continue to have a material adverse effect on our financial condition or results of operations. Furthermore, the current economic environment in Argentina may worsen in the short term and further harm our ability to meet our current and future debt obligations.

The devaluation of the peso following the repeal of the Convertibility Law has adversely affected the US dollar value of the earnings of our Argentine subsidiaries and, thus, impaired our financial condition. Any depreciation of the peso against the US dollar will correspondingly increase the amount of their debt in pesos, with further adverse effects on their results of operation and financial condition. Given the continuing economic crisis in Argentina and the economic and political uncertainties, we cannot predict whether, and to what extent, the value of the peso may further depreciate against the dollar. Moreover, we cannot predict whether the Argentine government will further modify its monetary policy, and if so, what impact these changes will have on the financial condition and results of operations of our Argentine operations.

The Central Bank of Argentina has recently lifted, but may reinstate, restrictions on the transfer of funds outside of Argentina which could prevent our Argentine subsidiaries from distributing dividends and paying principal on certain of their external debt as it comes due.

From December 3, 2001 to May 6, 2003, the Argentine government imposed a number of monetary and currency exchange control measures that included restrictions on the free transfer of funds deposited with banks and severe restrictions on transferring funds abroad, with certain exceptions for transfers related to foreign trade and other authorized transactions. The restrictions requiring the Argentine Central Bank's prior authorization for the transfer of funds abroad in order to make payments of principal and/or interest, which were in place during 2002, were progressively reduced from January to May 2003.

In addition, funds may now be transferred abroad without previous authorization of the Argentine Central Bank in order to pay dividends corresponding to prior periods provided that independent accountants have certified the financial statements for such period.

There can be no assurance, however, that the Argentine Central Bank will not once again require its prior authorization for the transfer of funds abroad for principal and/or interest payment by any of our Argentine subsidiaries to their foreign creditors or for dividend payments by our Argentine subsidiaries to their shareholders.

Should the Central Bank of Argentina impose restrictions again on the transfer of funds outside of Argentina which prevent our Argentine subsidiaries from paying principal on certain of their external debt, a substantial portion of their debt obligations may become due and payable, unless new financing is funded outside Argentina and is available to our Argentine subsidiaries or they are able to renegotiate, or obtain a waiver with respect to the indebtedness that would be subject to such restrictions. If similar restrictions are imposed again, we can provide no assurance that our Argentine subsidiaries will be able to obtain new financing or that they will be able to renegotiate or obtain waivers with respect to indebtedness subject to foreign exchange restrictions. In addition, such restrictions may impede the making of cash distributions by Costanera and El Chocón to us.

As a matter of policy for our Argentine subsidiaries, as long as fundamental issues concerning the electricity sector remain unresolved, we are primarily making interest payments when due and we are negotiating extensions on most of our outstanding debt. No assurance can be given that our creditors will continue to agree to grant extensions on principal when it becomes due.

The results of operations of our Argentine subsidiaries have been, and may continue to be, materially adversely affected by the devaluation of the peso and the economic conditions currently prevailing in Argentina.

Our Argentine subsidiaries realize a significant portion of their revenues in Argentina in pesos. As a result, the devaluation of the peso has had a material adverse effect on the US dollar value of their earnings and on their ability to service their debt, which is largely denominated in US dollars. In addition, the devaluation of the peso has had a material adverse effect on the financial condition of our Argentine subsidiaries and equity affiliates, as their largely peso denominated assets have depreciated accordingly against its largely foreign currency-denominated indebtedness. Any further depreciation of the peso against the US dollar will correspondingly increase the amount of the debt in pesos of our Argentine subsidiaries.

Given the continuing economic crisis in Argentina and the related economic and political uncertainties, it is impossible to predict whether, and to what extent, the value of the peso may further depreciate or appreciate against the US dollar and how these uncertainties will affect the consumption of electricity. Moreover, we cannot predict whether the Argentine government will further modify its monetary policy and, if so, what impact any such changes could have on the financial condition and results of operations of our Argentine subsidiaries.

The Argentine economy may continue to experience the significant inflation that has occurred following the amendment of the Convertibility Law, thereby further impacting the revenues of our Argentine subsidiaries, a substantial portion of which is not subject to indexing.

Argentina experienced significant inflation from December 2001 through January 31, 2003, with cumulative changes in the CPI of 42.8% and in the Wholesale Price Index, or WPI, of 119.1%. This level

of inflation reflected both the effect of the peso devaluation on production costs as well as a substantial modification of relative prices, partially offset by the elimination of tariff adjustments and the large drop in demand resulting from the severe recession. During the first quarter of 2003 the Argentine consumer price index increased by 2.5% and the wholesale price index increased by 0.2%.

On January 24, 2002, the Argentine government amended the charter of the Central Bank to allow the Central Bank to print currency without having to maintain a fixed and direct relationship to the foreign currency and gold reserves. This change allows the Central Bank to make short-term advances to the federal government to cover its anticipated budget deficits and to provide assistance to financial institutions with liquidity or solvency problems. There is considerable concern that if the Central Bank prints currency to finance public-sector spending or assist financial institutions in distress, significant inflation could result.

Moreover, any further inflation could result in further increases in the expenses of our Argentine subsidiaries, including capital expenditures. The current mismatch between revenues and expenses, especially in a potentially inflationary economy like that of Argentina, has affected and may continue to affect materially the results of operations of our Argentine operations.

The unpredictability of Argentina's inflation rate makes it impossible for us to foresee how the business and results of operations of our Argentine subsidiaries and equity affiliates may be affected in the future by inflation.

Risk Factors Relating to the Rest of Latin America

Latin American economic fluctuations are likely to affect our results of operations.

All of our operations are located in Latin America. Although we originally operated only in Chile, we have, through strategic acquisitions and investments, expanded our operations throughout Latin America. We now generate a significant portion of our consolidated operating revenues and consolidated operating income outside Chile. Accordingly, our consolidated revenues are sensitive to the performance of the Latin American economies as a whole. If local, regional or worldwide economic trends adversely affect the economies of any of the countries in which we have investments or operations, our financial condition and results of operations could be affected adversely.

The Latin American financial and securities markets have exhibited significant volatility since October 1997, reflecting the risk created by weakness in global commodity prices and slowing global economic growth. Latin American countries have generally responded to these external factors, including currency speculation, by widening or eliminating currency fluctuation bands, raising interest rates and tightening fiscal policies. Latin American economies, including all of those in which we carry out our operations, have recently been affected adversely by a number of internal and external factors.

The Latin American financial and securities markets are, to varying degrees, influenced by economic and market conditions in other emerging market countries. Although economic conditions are different in each country, investor reaction to developments in one country can have significant effects on the securities of issuers in other countries, including Chile. We can offer no assurance that the Chilean financial and securities markets will not continue to be affected adversely by events elsewhere, especially in other emerging markets, or that such effects will not affect the interest rate yields in the secondary markets associated with our publicly-listed bonds.

Chile continues to be rated "A-" by Standard & Poor's and is the only investment grade country in South America. However, we cannot give assurances that Chile will continue to maintain the credit rating granted by Standard & Poor's and other credit agencies.

Certain Latin American economies have been characterized by frequent and occasionally drastic intervention by governmental authorities.

Governmental authorities have often changed monetary, credit, tariff and other policies to influence the course of the economy of Argentina, Brazil, Colombia and Peru. Any government's actions to control inflation and effect other policies have often involved wage, price and tariff rate controls as well as other interventionist measures, which have included freezing bank accounts and imposing capital controls. Changes in the policies of these governmental authorities with respect to tariff rates, exchange controls,

regulations and taxation could affect our business and financial results adversely, as could inflation, devaluation, social instability and other political, economic or diplomatic developments, including the governments' response to such circumstances. If government authorities intervene in any of these countries, our results of operations may be affected adversely.

Lower energy prices in Brazil have resulted in breaches of contracts entered into by our subsidiaries and equity affiliates, which may impact the amount of dividends and distributions we receive from these investments.

Recent hydrological conditions in Brazil have led to historically low prices in the Brazilian spot-energy market. As a result, a number of our most important Brazilian customers have breached their contracts with us in order to purchase energy in the spot market instead of pursuant to these contracts.

In April 2003, CELG, the sole customer of our Brazilian subsidiary Cachoeira Dourada, obtained an injunction that permitted CELG to suspend its payments under its long-term take-or-pay contract with Cachoeira Dourada. On July 4, 2003 the court presiding over this dispute ruled that CELG would be required to make payments until December 2005 to Cachoeira Dourada at price ranges significantly lower than the R$61.63 per MWh amount provided for under the current terms of the take-or-pay contract. Cachoeira Dourada plans to appeal this ruling. An unfavorable decision would result in Cachoeira Dourada's receiving significantly lower payments of up to half the amount of its contracted from its only customer, which may affect Cachoeira Dourada's ability to pay dividends to us. The terms of this contract provide for an amount of revenues of approximately R$15.4 million per month, for which we have received R$32.1 million in 2003 as of the date of this report.

In January 2003, Companhia Paranaense de Energia - COPEL ("Copel") suspended payments to CIEN, a non-consolidated company in which we have a 45% interest under a take or pay power and energy supply contract signed in 1999. CIEN also sells energy to three other Brazilian companies. Copel claimed the alleged economic and financial imbalance of the 1999 contracts as the reason for its breach. Copel also requested a revision of the prices previously agreed. We estimate that the amounts due and payable by Copel to CIEN total approximately US$136 million as of the date of this report, of which $20 million comprises contractual interest and fines. Copel's nonpayment to CIEN has also affected our subsidiary Costanera, which supplies a portion of the energy sold by CIEN to Copel.

On August 18, 2003 CIEN and Copel entered into a preliminary agreement wherein the parties stated their intention to amend the terms of the existing take or pay power and energy supply contract. The agreement contemplates a significant shortening of the term of the contract and a substantial reduction in the volume to be delivered under the contract, with retroactive effect to January 1, 2003. As a consequence, this settlement will substantially decrease the amount of payments by Copel to CIEN for 2003 and thereafter. We expect the agreement to be finalized in the coming months.

Colombia's electricity power industry has in the past been adversely affected by guerilla attacks.

Guerrilla organizations have long been active in Colombia. Although our Colombian facilities have never been subject to any attacks, we cannot assure you that such attacks will not occur in the future. In many remote regions of the country that have traditionally lacked an effective government presence, the guerillas have exerted influence over the local population. In recent years, guerilla organizations have employed acts of terrorism to draw attention to their causes. Despite efforts by the Colombian government to address the situation, Colombia continues to be affected by social friction and violence related to guerilla activity. Most of this activity has been directed toward the oil industry. The peace negotiations between the former Colombian government and the largest guerrilla organization in the country came to an end in February 2002, and there has been an escalation of violence since then. The increased violence could also result in renewed attacks against electricity assets, which may adversely affect our business. The Colombian government, under its newly elected president in office from 2002, has targeted its intervention on inflation, devaluation, unemployment, fiscal policy and drug-related violence. We cannot assure you, however, that these interventionist measures will result in higher economic growth in Colombia or remove the risks of attack against our electricity assets.

ITEM 4

Endesa-Chile and Subsidiaries

Index to the Unaudited Consolidated Financial Statements


Consolidated Financial Statements:
Consolidated Balance Sheets as of June 30, 2002 and 2003					F1–2
Consolidated Statements of Income for the six-month period ended June 30, 2002 and 2003					F1–4
Consolidated Statements of Shareholders' Equity for the six-month periods ended June 30, 2002 and 2003					F1–5
Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2002 and 2003					F1–6
Notes to the Consolidated Financial Statements					F1–8


Ch$	—	Chilean pesos
US$	—	United States dollars
UF	—	The UF is a Chilean inflation-indexed, peso-denominated monetary unit that is set daily in advance based on the previous month's inflation rate (see Note 2 (b)).
ThCh$	—	Thousands of Chilean pesos
ThUS$	—	Thousands of United States dollars

Application of Constant Chilean Pesos

The consolidated financial statements included herein have been restated for general price-level changes and expressed in constant Chilean pesos of June 30, 2003 purchasing power.

F1-1

Endesa-Chile and Subsidiaries
Unaudited Consolidated Balance Sheets
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, and thousands of US dollars)



		As of June 30,
	Note	2002			2003			2003
Assets		ThCh$			ThCh$			ThUS$
								(Note 2 (b))
Current assets:
Cash			3,407,683			20,392,668			29,169
Time deposits	4		59,382,571			81,388,848			116,416
Marketable securities			4,875			7,946,366			11,366
Accounts receivable, net	5		77,228,500			108,428,262			155,092
Notes receivable, net	5		1,070,206			809,968			1,159
Other accounts receivable, net	5		16,767,488			61,460,815			87,912
Amounts due from related companies	6a		45,173,722			219,898,898			314,537
Inventories, net	7		17,028,382			12,419,435			17,764
Income taxes recoverable	8a		29,336,007			21,830,761			31,226
Prepaid expenses			5,807,968			6,352,346			9,086
Deferred income taxes	8d		—			4,927,769			7,049
Other current assets	9		32,519,512			79,564,531			113,807
Total current assets			287,726,914			625,420,667			894,583
Property, plant and equipment, net	10		5,733,874,835			5,237,396,032			7,491,412

Other assets:
Investments in related companies	11		165,254,191			188,387,637			269,464
Investments in other companies	12		80,687,945			80,896,364			115,712
Long-term receivables	5		26,455,430			22,549,966			32,255
Goodwill, net	13a		127,584,632			26,408,623			37,774
Negative goodwill, net	13b		(151,783,211	)		(80,493,481	)		(115,135	)
Amounts due from related companies	6a		173,914,870			922,824			1,320
Other intangibles	14		30,681,366			32,800,677			46,917
Accumulated amortization	14		(3,806,444	)		(7,623,595	)		(10,905	)
Other assets	15		61,787,729			60,685,879			86,803
Total other assets			510,776,508			324,534,894			464,205
Total assets			6,532,378,257			6,187,351,593			8,850,200

The accompanying notes are an integral part of these consolidated financial statements.

F1-2



			As of June 30,
	Note		2002		2003		2003
Liabilities and Shareholders' equity			ThCh$		ThCh$		ThUS$
							(Note 2 (b))
Current liabilities:
Short-term debt due to banks and financial institutions		16a		55,037,683		54,592,083		78,087
Current portion of long-term debt due to banks and financial institutions		16b		230,342,277		105,842,373		151,394
Promissory notes		17		7,116,292		4,126,544		5,902
Current portion of bonds payable		18a		182,975,966		379,290,807		542,526
Current portion of long-term notes payable				31,722,345		35,254,505		50,427
Dividends payable				274,261		904,692		1,294
Accounts payable		19b		75,921,607		66,389,866		94,962
Notes payable				—		3,647		5
Miscellaneous payables				21,389,894		31,264,262		44,719
Amounts payable to related companies		6b		82,974,565		42,067,660		60,172
Accrued expenses		19a		26,719,713		42,320,675		60,534
Withholdings				5,239,372		7,523,333		10,761
Income taxes payable		8a		5,534,688		14,215,958		20,334
Prepaid income				412,522		106,548		152
Deferred income taxes		8d		467,635		—		—
Other current liabilities				3,640,728		2,767,218		3,958
Total current liabilities				729,769,548		786,670,171		1,125,227
Long-term liabilities:
Due to banks and financial institutions		16c		780,173,208		834,855,890		1,194,152
Bonds payable		18b		1,744,478,133		1,355,876,760		1,939,407
Long-term notes payables				146,330,064		141,008,587		201,694
Miscellaneous payables				27,055,728		17,633,750		25,223
Amounts payable to related companies		6b		61,980,022		43,407,162		62,088
Accrued expenses		19a		31,017,252		40,335,646		57,695
Deferred income taxes		8d		34,362,419		33,230,745		47,532
Other long-term liabilities				1,838,682		10,956,969		15,673
Total long-term liabilities				2,827,235,508		2,477,305,509		3,543,464
Commitments and contingencies		27
Minority interest		20a		1,480,074,624		1,433,593,922		2,050,570
Shareholders' equity:		21
Paid-in capital, no par value				1,044,843,440		1,039,795,887		1,487,292
Price-level restatement				6,269,060		11,437,755		16,360
Additional paid-in capital – share premium				206,188,762		206,212,526		294,960
Other reserves				74,460,996		75,758,677		108,363
Retained earnings				126,218,500		108,674,067		155,444
Net income for the period				37,317,819		47,903,079		68,520
Total shareholders' equity				1,495,298,577		1,489,781,991		2,130,939
Total liabilities and shareholders' equity				6,532,378,257		6,187,351,593		8,850,200

The accompanying notes are an integral part of these consolidated financial statements.

F1-3

Endesa-Chile and Subsidiaries
Unaudited Consolidated Statement of Income
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, and thousands of US dollars)



			Six Months Ended June 30,
	Note		2002			2003			2003
			ThCh$			ThCh$			ThUS$
									(Note 2 (b))
Operating income:
Sales				478,581,293			485,427,692			694,341
Cost of sales				(286,653,341	)		(288,779,712	)		(413,062	)
Gross profit				191,927,952			196,647,980			281,279
Administrative and selling expenses				(15,538,511	)		(15,816,326	)		(22,623	)
Operating income				176,389,441			180,831,654			258,656
Non-operating income and expense:
Interest income				7,991,185			8,085,682			11,566
Equity participation in income of related companies		11		2,550,985			20,205,297			28,901
Other non-operating income		22a		33,971,802			17,260,597			24,689
Equity participation in losses of related companies		11		(7,510,638	)		(276,452	)		(395	)
Goodwill amortization		13a		(4,365,546	)		(892,727	)		(1,277	)
Interest expense				(105,541,393	)		(97,985,183	)		(140,155	)
Other non-operating expenses		22b		(40,477,955	)		(44,108,780	)		(63,092	)
Price-level restatement, net		23		(4,470,418	)		2,065,836			2,955
Foreign currency translation, net		24		1,139,238			5,031,608			7,197
Non-operating expense, net				(116,712,740	)		(90,614,122	)		(129,611	)

Income before income taxes				59,676,701			90,217,532			129,045
Income tax		8e		(25,374,312	)		(12,781,966	)		(18,283	)
Income before minority interest				34,302,389			77,435,566			110,762
Minority interest		20b		(21,115,189	)		(38,275,695	)		(54,748	)
Income before amortization of negative goodwill				13,187,200			39,159,871			56,014
Amortization of negative goodwill		13b		24,130,619			8,743,208			12,506
Net income for the period				37,317,819			47,903,079			68,520

The accompanying notes are an integral part of these consolidated financial statements.

F1-4

Endesa-Chile and Subsidiaries
Unaudited Consolidated Statements of Shareholders' Equity
Translation of financial statements originally issued in Spanish
(Expressed in thousands of historical Chilean pesos, except as stated)


	Number of shares		Paid-in capital		Price-level restatement		Additional paid-in capital		Other reserves			Retained earnings			Net income (loss) for the period			Total
	(In thousands)		ThCh$		ThCh$		ThCh$		ThCh$			ThCh$			ThCh$			ThCh$
As of January 1, 2002		8,201,755		1,009,510,570		—		198,028,027		67,945,775			58,874,284			70,058,270			1,404,416,926
Transfer of prior year loss to retained earnings		—		—		—		—		—			70,058,270			(70,058,270	)		—
Dividends paid		—		—		—		—		—			(7,709,649	)		—			(7,709,649	)
Price-level restatement of capital		—		—		6,057,063		1,188,168		407,675			727,337			—			8,380,243
Deficit of subsidiaries in the development stage		—		—		—		—		(2,575,048	)		—			—			(2,575,048	)
Cumulative translation adjustment		—		—		—		—		6,164,589			—			—			6,164,589
Net income for the period		—		—		—		—		—			—			36,055,864			36,055,864
As of June 30, 2002		8,201,755		1,009,510,570		6,057,063		199,216,195		71,942,991			121,950,242			36,055,864			1,444,732,925
As of June 30, 2002 (1)		8,201,755		1,044,843,440		6,269,060		206,188,762		74,460,996			126,218,500			37,317,819			1,495,298,577

As of January 1, 2003		8,201,755		1,039,795,887		—		203,968,868		71,330,030			124,859,591			(9,319,056	)		1,430,635,320
Transfer of prior year income to retained earnings		—		—		—		—		8,048,876			(17,367,932	)		9,319,056			—
Price-level restatement of capital		—		—		11,437,755		2,243,658		873,168			1,182,408			—			15,736,989
Cumulative translation adjustment		—		—		—		—		(4,501,034	)		—			—			(4,501,034	)
Deficit of subsidiaries in the development stage		—		—		—		—		7,637			—			—			7,637
Net income for the period		—		—		—		—		—			—			47,903,079			47,903,079
As of June 30, 2003		8,201,755		1,039,795,887		11,437,755		206,212,526		75,758,677			108,674,067			47,903,079			1,489,781,991

(1)	Restated in thousands of constant Chilean pesos as of June 30, 2003.

The accompanying notes are an integral part of these consolidated financial statements.

F1-5

Endesa-Chile and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, and thousands of US dollars)



	Six Months Ended June 30,
	2002			2003			2003
	ThCh$			ThCh$			ThUS$
							(Note 2(b))
Cash flows from operating activities:
Net income for the period		37,317,819			47,903,079			68,520
Gain (loss) on sales of property, plant and equipment		(1,308,656	)		6,868,951			9,825
Gain on sale of investments		—			(592,339	)		(847	)
Charges (credits) to income which do not represent cash flows:
Depreciation		96,874,829			105,048,669			150,258
Amortization of intangibles		1,553,149			920,476			1,317
Equity participation in income of related companies		(2,550,985	)		(20,205,297	)		(28,901	)
Equity participation in losses of related companies		7,510,638			276,452			395
Amortization of goodwill		4,365,546			892,727			1,277
Amortization of negative goodwill		(24,130,619	)		(8,743,208	)		(12,506	)
Price-level restatement, net		4,470,418			(2,065,836	)		(2,955	)
Foreign currency translation, net		(1,139,238	)		(5,031,608	)		(7,197	)
Other credits to income which do not represent cash flows		(19,567,163	)		(7,342,146	)		(10,502	)
Other charges to income which do not represent cash flows		16,446,508			8,856,974			12,669
Changes in assets which affect cash flows:
Decrease (increase) in trade receivables		18,885,407			(55,124,719	)		(78,849	)
Decrease in inventory		(600,179	)		(2,122,522	)		(3,036	)
Dividends received from related companies		—			1,519,212			2,173
Decrease (increase) in other assets		52,755,228			(2,333,372	)		(3,338	)
Changes in liabilities which affect cash flows:
Increase (decrease) in accounts payable associated with operating results		11,161,290			(46,475,284	)		(66,477	)
Increase (decrease) in interest payable		16,387,300			(1,273,223	)		(1,821	)
Increase (decrease) in income tax payable		(3,021,953	)		(6,918,094	)		(9,895	)
Increase (decrease) in other accounts payable associated with non-operating results		(20,689,426	)		46,308,356			66,238
Net (decrease) increase in value added tax and other accounts payable		(2,889,611	)		5,640,037			8,067
Income attributable to minority interest		21,115,189			38,275,695			54,748
Net cash flows provided by operating activities		212,945,491			104,282,980			149,163

The accompanying notes are an integral part of these consolidated financial statements.

F1-6



	Six Months Ended June 30,
	2002			2003			2003
	ThCh$			ThCh$			ThUS$
							(Note 2 (b))
Cash flows from financing activities:
Issuance of subsidiary shares		1,867,373			—			—
Proceeds from the issuance of debt		82,160,707			143,294,925			204,965
Proceeds from bond issuances		103,993,616			32,710,944			46,789
Proceeds from loans obtained from related companies		116,389,438			—			—
Other sources of financing		—			6,332,225			9,057
Dividends paid		(59,168,771	)		(28,428,518	)		(40,663	)
Withdrawal of the capital		—			(9,951,561	)		(14,234	)
Payment of debt		(338,065,463	)		(172,898,687	)		(247,309	)
Payment of bonds		(5,052,156	)		(133,407,040	)		(190,821	)
Payment of loans obtained from related companies		(99,857,106	)		(4,132,224	)		(5,911	)
Payment of bonds issuance costs		(9,677,596	)		—			—
Other disbursements for financing		(2,893,671	)		(34,374,304	)		(49,168	)
Net cash used in financing activities		(210,303,629	)		(200,854,240	)		(287,295	)
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment		12,215,831			152,364,982			217,938
Payments recieved on loans to related companies		15,825,060			10,689,257			15,290
Other receipts from investments		2,471,468			48,637,176			69,569
Additions to property, plant and equipment		(32,398,165	)		(83,791,133	)		(119,852	)
Long-term investments		—			(24,811	)		(35	)
Investments in financial instruments		(15,315,538	)		—			—
Other loans granted to related companies		(11,892,600	)		—			—
Other investment disbursements		(739,127	)		—			—
Net cash (used in)/provided by investing activities		(29,833,071	)		127,875,471			182,910
Net cash flow for the year		(27,191,209	)		31,304,211			44,778
Effect of price-level restatement on cash and cash equivalents		1,847,657			(26,238,095	)		(37,532	)
Net (decrease) increase in cash and cash equivalents		(25,343,552	)		5,066,116			7,246

Cash and cash equivalents beginning of period		94,999,069			124,216,498			177,676
Cash and cash equivalents end of period		69,655,517			129,282,614			184,922

The accompanying notes are an integral part of these consolidated financial statements.

F1-7

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of
constant Chilean pesos as of June 30, 2003, except as stated)

1. Description of Business:

Empresa Nacional de Electricidad S.A. ("Endesa-Chile" or "the Company") is an electric generation and transmisision company domiciled in Chile. It is a publicly traded company, regulated by the Chilean Superintendency of Securities and Insurance (Superintendencia de Valores y Seguros or "SVS") as well as by the United States Securities and Exchange Commission ("SEC") since issuing American Depositary Receipts ("ADRs") in 1994.

The Company's subsidiaries that are regulated by the SVS include Empresa Eléctrica Pehuenche S.A. ("Pehuenche S.A."), Empresa Eléctrica Pangue S.A. ("Pangue S.A."), Sociedad Concesionaria Autopista del Sol S.A., Sociedad Concesionaria Autopista Los Libertadores S.A., and Infraestructura 2000 S.A. registered under the numbers 293, 419, 550, 619, and 693, respectively.

2. Summary of Significant Accounting Policies:

General:

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in Chile and the regulations established by the SVS (collectively "Chilean GAAP"). Certain accounting practices applied by the Company that conform with generally accepted accounting principles in Chile do not conform with generally accepted accounting principles in the United States ("U.S. GAAP"). Certain amounts in the prior periods' financial statements have been reclassified to conform to the current period's presentation.

The preparation of financial statements in conformity with Chilean GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

In certain cases generally accepted accounting principles require that assets or liabilities be recorded or disclosed at their fair values. The fair value is the amount at which an asset could be bought or sold or the amount at which a liability could be incurred or settled in a current transaction between willing parties, other than in a forced or liquidation sale. Where available, quoted market prices in active markets have been used as the basis for the measurement; however, where quoted market prices in active markets are not available, the Company has estimated such values based on the best information available, including using modeling and other valuation techniques.

The accompanying financial statements reflect the consolidated results of operations of Endesa-Chile and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Investments in companies in the development stage are accounted for using the equity method, except that income or losses are included directly in equity instead of being reflected in the Company's consolidated statement of income. The Company consolidates the financial statements of companies in which it controls over 50% of the voting shares, provided there are no substantive minority participating rights that prevent control, as detailed as follows:

F1-8

2. Summary of Significant Accounting Policies: (Continued)


	Percentage of ownership participation as of June 30,
Company name	2002		2003
	Total		Direct		Indirect		Total
Enigesa S.A.		100.00		99.51		0.49		100.00
Ingendesa S.A.		97.64		96.39		1.25		97.64
Pehuenche S.A.		92.65		92.65		—		92.65
Endesa Argentina S.A.		99.99		99.99		—		99.99
Endesa-Chile Internacional		100.00		100.00		—		100.00
Pangue S.A.		92.48		94.97		0.02		94.99
Hidroinvest S.A.		69.93		—		69.93		69.93
Infraestructura 2000 S.A. (*)		60.00		—		—		—
Hidroeléctrica El Chocón S.A.		65.19		—		65.19		65.19
Central Costanera S.A.		51.93		—		51.93		51.93
Endesa Brasil Participacoes Ltda.		100.00		5.00		95.00		100.00
Túnel El Melón S.A.		99.95		99.95		—		99.95
Soc. Concesionaria Autopista del Sol S.A. (*)		100.00		—		—		—
Inecsa 2000 S.A. (*)		97.32		—		—		—
Soc. Concesionaria Autopista Los Libertadores S.A. (*)		99.95		—		—		—
Compañía Eléctrica Cono Sur S.A.		100.00		100.00		—		100.00
Central Hidroeléctrica Betania S.A.		85.62		—		85.62		85.62
Endesa de Colombia S.A.		100.00		5.10		94.90		100.00
Lajas Inversora S.A.		100.00		—		100.00		100.00
Cachoeira Dourada S.A.		99.56		—		99.61		99.61
Capital de Energía S.A.		50.90		—		50.90		50.90
Emgesa S.A		51.32		—		51.32		51.32
Edegel S.A.A.		63.56		—		63.56		63.56
Generandes Perú S.A.		59.63		—		59.63		59.63
Compañía Eléctrica San Isidro S.A.		75.00		50.00		25.00		75.00
Compañía Eléctrica Tarapacá S.A.		100.00		99.90		0.10		100.00
Inversiones Endesa Norte S.A.		100.00		99.99		0.01		100.00

(*)	As of June 23, 2003 these Infraestructura 2000 companies were sold, resulting in the de-consolidation of these entities in the consolidated financial statements.

Constant currency restatement:

The cumulative inflation rate in Chile as measured by the Chilean Consumer Price Index ("CPI") for the two-year period ended June 30, 2003 was approximately 5.74%.

Chilean GAAP requires that the financial statements be restated to reflect the full effects of loss in the purchasing power of the Chilean peso on the financial position and results of operations of reporting entities. The method described below is based on a model that enables calculation of net inflation gains or losses caused by monetary assets and liabilities exposed to changes in the purchasing power of local currency. The model prescribes that the historical cost of all non-monetary accounts be restated for general price-level changes between the date of origin of each item and the period-end.

F1-9

2. Summary of Significant Accounting Policies: (Continued)

and liabilities, all equity accounts and income statement accounts have been restated to reflect the changes in the CPI from the date they were acquired or incurred to period-end (see also Note 23).

The purchasing power gain or loss included in net income reflects the effects of Chilean inflation on the monetary assets and liabilities held by the Company.

The restatements were calculated using the official consumer price index of the National Institute of Statistics and based on the "prior month rule," in which the inflation adjustments are based on the CPI at the close of the month preceding the close of the respective period or transaction. This index is considered by the business community, the accounting profession and the Chilean government to be the index that most closely complies with the technical requirement to reflect the variation in the general level of prices in Chile, and consequently it is widely used for financial reporting purposes.

The values of the Chilean consumer price indices used to reflect the effects of the changes in the purchasing power of the Chilean peso ("price-level restatement") are as follows:


	Index		Change over Previous May 31,

May 31, 2002		110.77		2.1	%
May 31, 2003		114.66		3.5	%

By way of comparison, the actual values of the Chilean consumer price indices as of the balance sheet dates are as follows:


	Index		Change over Previous June 30,

June 30, 2002		110.63		2.0	%
June 30, 2003		114.66		3.6	%

The above-mentioned price-level restatements do not purport to represent appraisal or replacement values and are only intended to restate all non-monetary financial statement components in terms of local currency of a single purchasing power and to include in net income or loss for each year the gain or loss in purchasing power arising from the holding of monetary assets and liabilities exposed to the effects of inflation.

Index-linked assets and liabilities

Assets and liabilities that are denominated in index-linked units of account are stated at the year-end values of the respective units of account. The principal index-linked unit used in Chile is the Unidad de Fomento ("UF"), which is adjusted daily to reflect the changes in Chile's CPI. Certain of the Company's investments are linked to the UF. As the Company's indexed liabilities exceed its indexed assets, the increase in the index results in a net loss on indexation. Values for the UF are as follows (historical Chilean pesos per UF):

F1-10

2. Summary of Significant Accounting Policies: (Continued)

Comparative financial statements

For comparative purposes, the historical June 30, 2002 consolidated financial statements and their accompanying notes have been presented in constant Chilean pesos as of June 30, 2003. Amounts previously presented in constant Chilean pesos as of each balance sheet date have been adjusted by the percentage changes in the CPI to June 30, 2003, as follows:

(1)	Equivalent to the amounts for 2002 multiplied by the change in the CPI for 2003.

This updating does not change the prior periods' statements or information in any way except to update the amounts to constant Chilean pesos of similar purchasing power.

Convenience translation to U.S. dollars

The financial statements are stated in Chilean pesos. The translations of Chilean pesos into US dollars are included solely for the convenience of the reader, using the observed exchange rate reported by the Chilean Central Bank as of June 30, 2003 of Ch$699.12 to US$1.00. The convenience translations should not be construed as representations that the Chilean peso amounts have been, could have been, or could in the future be, converted into US dollars at this or any other rate of exchange.

Assets and liabilities denominated in foreign currencies:

Assets and liabilities denominated in foreign currencies are detailed in Note 29. These amounts have been stated at the observed exchange rates reported by the Central Bank of Chile as of June 30, 2002 and 2003 as follows:


Currency	Symbol used	2002		2003
		Ch$		Ch$
United States dollar (Observed)	US$		688.05		699.12
British pound sterling	£		1,052.71		1,157.48
Colombian peso	$ Col		0.29		0.25
New Peruvian sol	Soles		196.14		201.62
Brazilian real	Rs		244.44		243.59
Japanese yen	¥		5.75		5.84
Euro	€		681.91		592.47
Pool Unit (IBRD) (1)	UP		8,462,348.22		9,370,068.31
Unidad de Fomento (UF)	UF		16,355.20		16,959.67
Unit of Account (IBD) (1)	UC		969.34		1,082.71
Argentine peso	$ Arg		180.59		250.36

(1)	Units of measurement used by the International Bank for Reconstruction and Development (IBRD) and Interamerican Development Bank (IDB) to express the weighted-average of multicurrency loan obligations granted using fixed currency ratios to the US dollar, at a determined date.

Time deposits and Marketable securities:

Time deposits are presented at cost plus accrued interest and UF indexation adjustments, as applicable.

F1-11

2. Summary of Significant Accounting Policies: (Continued)

Accounts receivable and Allowance for doubtful accounts:

Accounts receivable are classified as current or long-term, depending on their collection terms. Current and long-term trade accounts receivable, notes receivable and other receivables are presented net of allowances for doubtful accounts (see Note 5). The Company establishes its allowance for doubtful accounts based on the aging of the accounts and prior experience with specific accounts.

Inventories:

Inventories primarily include fuels for the generation of electricity and are valued at the lower of price-level restated average cost or net realizable value. Inventories are presented net of a provision for obsolescence.

Property, plant and equipment:

Until 1980, property, plant and equipment were previously valued at net replacement cost as determined by the former Chilean Superintendency of Electricity and Fuels (SIC) adjusted for price-level restatement in accordance with Decree Law N° 4 of 1959.

Property, plant and equipment are currently shown at contributed amounts or cost, as appropriate, plus price-level restatement. The interest cost on debt directly obtained in the construction projects is capitalized during the period of construction. Costs of maintenance and repairs are expensed as incurred unless such costs increase the useful life or productivity of the related assets, in which case the costs are capitalized when incurred.

In 1986, an increase based upon a technical appraisal of property, plant and equipment was recorded in the manner authorized by the SVS in Circulars No.'s 550 and 566 dated October 15 and December 16, 1985, respectively, and Communication No. 4790, dated December 11, 1985.

Property, plant and equipment received in leasing which qualify as capital leases, are accounted as acquisitions, recording the total of the lease obligation and interest on an accrual basis. Assets obtained under financial contracts are not the legal property of the Company until it decides to exercise the related purchase option. Therefore, the Company cannot freely dispose of them.

In accordance with Chilean GAAP, the Company has evaluated the recoverability of its foreign investments as required by Technical Bulletins No. 33 and No. 42 of the Chilean Association of Accountants. It is the Company's policy, when evidence exists of an other than temporary impairment of fixed assets, such that the Company's operations are not expected to produce sufficient net cash flows, on a discounted basis, to recover all fixed asset costs, including depreciation, that the book values of those assets must be reduced to their net realizable values with a charge to non-operating expense. The Company has not identified impairments in the net book values of its property, plant and equipment; however, an impairment of goodwill and negative goodwill was identified during the end of 2002 (see Note 13).

Depreciation:

Depreciation expense is calculated on the revalued balances using the straight-line method over the estimated useful lives of the assets. Depreciation expense was ThCh$96,874,829 and ThCh$105,048,669 as of June 30, 2002 and 2003, respectively.

Investments in related companies:

Investments in related companies are included in "Other assets" using the equity method. This accounting method recognizes in income the Company's proportionate share in the net income or loss of each investee on the accrual basis (Note 11).

F1-12

2. Summary of Significant Accounting Policies: (Continued)

Investments in foreign affiliates are recorded in accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants (see Note 2(j)).

Investments in other companies are presented at acquisition cost adjusted for price-level restatement.

Foreign investments:

Under Technical Bulletin No. 64 of the Chilean Association of Accountants, investments in foreign subsidiaries are price-level restated, the effects of which are reflected in income, while the effects of the foreign exchange gains or losses between the Chilean peso and the US dollar on the foreign investment measured in US dollars, are reflected in equity in the account "Cumulative Translation Adjustment".

Intangibles, other than goodwill:

Intangibles, other than goodwill, correspond mainly to easements and rights for the use of waterways and are amortized over periods not exceeding 40 years in accordance with Technical Bulletin No. 55 of the Chilean Association of Accountants.

Goodwill and negative goodwill:

Goodwill and negative goodwill are determined according to Circular No. 368 of the SVS based on differences between the purchase price and the recorded book values of the company acquired at the effective acquisition date. Amortization is determined using the straight-line method, considering the nature and characteristic of each investment, foreseeable life of the business and investment return, and does not exceed 20 years.

The Company has evaluated the recoverability of its recorded goodwill and negative goodwill in accordance with Technical Bulletin No. 56 and Statement of International Accounting Standard No. 36 (IAS No. 36) "Impairment of Assets".

Revenue recognition:

Revenues are recognized at the time energy is supplied to the customer and collectibility is is reasonably measured. Energy supplied and unbilled at each year-end is valued at the selling price using the current rates and has been included in revenue from operations. The unbilled amount is presented in current assets as trade receivables and the corresponding cost is included in cost of operations. The Company recognizes revenue generated from engineering and inspection services and highway tolls at the time the related services are provided.

Income tax and deferred income taxes:

The Company records income taxes in accordance with Technical Bulletin No. 60 of the Chilean Association of Accountants, and with circulars No. 1466 and No. 1560 issued by the SVS, recognizing, using the liability method, the deferred tax effects of temporary differences between the financial and tax values of assets and liabilities. As a transitional provision, a contra asset or liability has been recorded offsetting the effects of the deferred tax assets and liabilities not recorded prior to January 1, 2000. Such contra asset or liability must be amortized to income over the estimated average reversal periods corresponding to the underlying temporary differences to which the deferred tax asset or liability relates calculated using the tax rates to be in effect at the time of reversal.

Accrued vacation expense:

In accordance with Technical Bulletin No. 47 issued by the Chilean Association of Accountants, employee vacation expenses are recorded on the accrual basis.

F1-13

2. Summary of Significant Accounting Policies: (Continued)

Severance indemnity:

The severance indemnity that, under collective bargaining agreements, the Company is obliged to pay to its employees who have completed 15 years of service is stated at the present value of the benefit under the vested cost method, discounted at 9.5%. The value of the obligation is calculated based on an average employment span of 35 years for employees with 15 years or more and includes 75% of the benefit related to employees with less than the required 15 years.

Pension and post-retirement benefits:

Pension and post-retirement benefits are recorded in accordance with the respective employee collective bargaining agreements based on the actuarially determined projected benefit obligation using a discount rate of 9.5% less an unrecognized transition obligation.

Bonds:

Bonds payable are recorded at the face value of the bonds. The difference between the face value and the placement value, equal to the premium or discount, is deferred and amortized over the term of the bonds (see Note 18). Discounts on the bond issuances of Endesa-Chile and its subsidiaries deferred over the term of the respective bonds amounted to ThCh$14,390,207 and ThCh$7,204,207 as of June 30, 2002 and 2003, respectively, presented in "Other assets."

Statements of cash flows:

The Consolidated Statements of Cash Flows have been prepared in accordance with the indirect method.

Cash and cash equivalents presented in the consolidated statements of cash flows include cash, time deposits, and other balances classified as current assets with maturities less than 90 days. For classification purposes, cash flows from operations include collections from clients and payments to suppliers, payroll and taxes.

Financial derivative contracts:

As of June 30, 2002 and 2003, the Company has forward contracts, currency swaps, and interest swaps and collars with various financial institutions, which are recorded according to Technical Bulletin No. 57 of the Chilean Association of Accountants. Forward foreign exchange contracts gains and losses are recorded at estimated fair value with certain gains and losses deferred until settlement if the instrument qualifies as a hedge and is included in earnings as "Other non-operating income and expense."

Research and development costs:

Costs incurred in research and development by the Company which are general in nature (water-level studies, hydroelectric research, seismic-activity surveys) are expensed as incurred. Studies related to specific construction projects are capitalized. During the six months ended June 30, 2002 and 2003 no such costs were incurred.

Computer software:

The Company has deferred the costs of purchased computer software packages, which are being amortized over a period of three years.

3. Change in Accounting Principles:

There were no changes in accounting principles during the six months ended June 30, 2002 and 2003 that would affect the comparability with previously issued financial statements.

F1-14

4. Time deposits:

Time deposits as of June 30, 2002 and 2003 and the applicable annual interest rates and scheduled maturities as of June 30, 2003 are as follows:


Financial Institution	Annual Rate	Scheduled Maturity	As of June 30,
Financial Institution	Annual Rate	Scheduled Maturity	2002		2003
	%		ThCh$		ThCh$
Banco Nationale de Paris	3.50%	July 1, 2003		103,855		251,999
Banco Bilbao Vizcaya	1.25%	July 1, 2003		—		1,118,592
Bank of America	1.00%	July 1, 2003		1,972,598		8,275,370
Fiduvalle Cta 1	7.42%	July 1, 2003		283,727		1,412,005
Citi trust	6.74%	July 1, 2003		235,132		25,155
Citibank New York	1.29%	July 1, 2003		42,310,002		54,894,624
HSBC – RJ	1.89%	July 1, 2003		—		1,888,482
Banco Bradesco	1.82%	July 1, 2003		—		99,879
Banco Votorantim	1.90%	July 1, 2003		1,004,185		2,096,524
Banco Pactual	1.89%	July 1, 2003		752,592		2,949,563
Banco Rio de la Plata	4.75%	July 1, 2003		200,258		1,292,894
Banco Frances	4.00%	July 1, 2003		—		323,848
BNP Paribas	1.93%	July 1, 2003		—		995,056
Banco Citibank N.A.	0.53%	July 1, 2003		—		1,191,315
Banco Santander	2.10%	July 1, 2003		976,692		4,572,218
Certificado de Deposito Termino	7.60%	July 1, 2003		—		1,324
Banco Wiese Sudameris	—	—		669,526		—
Banco Continental	—	—		3,560,659		—
Banco de Colombia	—	—		2,900,281		—
Bancolombia	—	—		2,181,977		—
Banco Interbank	—	—		16,971		—
Banco Santander (Perú)	—	—		608,660		—
Banco CCF Brasil	—	—		972,906		—
Banco Corfivalle	—	—		632,550		—
Total				59,382,571		81,388,848

5. Accounts, notes and other receivables:

Current accounts, notes and other receivables and related allowances for doubtful accounts as of June 30, 2002 and 2003 are as follows:


	As of June 30,
	2002									2003
Account	Under 90 days		91 days to 1 year		Allowance			Total		Under 90 Days		91 days to 1 year		Allowance			Total
	ThCh$		ThCh$		ThCh$			ThCh$		ThCh$		ThCh$		ThCh$			ThCh$
Accounts Receivable		77,423,565		—		(195,065	)		77,228,500		108,256,480		2,675,097		(2,503,315	)		108,428,262
Notes receivable		234,586		835,620		—			1,070,206		219,668		590,300		—			809,968
Other Receivables		8,868,940		8,711,294		(812,746	)		16,767,488		6,538,966		55,835,023		(913,174	)		61,460,815
Total		86,527,091		9,546,914		(1,007,811	)		95,066,194		115,015,114		59,100,420		(3,416,489	)		170,699,045

F1-15

5. Accounts, notes and other receivables: (Continued)

Long-term other receivables as of June 30, 2002 and 2003 are ThCh$26,455,430 and ThCh$22,549,966 respectively.

Current and long-term accounts receivables per country as of June 30, 2002 and 2003 are as follows:


	As of June 30,
Country	2002					2003
	ThCh$		%			ThCh$		%
Chile		57,998,785		47.73	%		93,650,278		48.46	%
Peru		10,427,943		8.58	%		24,263,381		12.56	%
Argentina		7,932,789		6.53	%		14,572,247		7.54	%
Colombia		18,397,980		15.14	%		23,137,850		11.97	%
Brazil		25,689,671		21.14	%		36,687,127		18.98	%
Panama		1,074,456		0.88	%		938,128		0.49	%
Total		121,521,624		100	%		193,249,011		100	%

F1-16

6. Transactions with Related Companies:

Balances of accounts receivable and payable classified according to the nature of the related company transaction are as follows as of June 30, 2002 and 2003:

Notes and accounts receivable due from related companies:


	As of June 30,
	Short-term				Long-term
Company Name	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Transmisora Eléctrica de Quillota Ltda.		377,197		361,712		1,189,035		893,464
Atacama Finance Co.		7,919,457		169,738,203		172,725,835		—
Cía de Energía del Mercosur		2,400,597		5,232,918		—		—
Chilectra S.A.		9,349,620		10,593,004		—		—
Cía. Interconexión Energética S.A.		4,235,732		4,131,095		—		—
Codensa S.A.		16,280,303		17,741,210		—		—
Edelnor S.A.		2,221,593		2,274,131		—		—
Empresa Eléctrica de Bogotá S.A.		252,582		65,695		—		—
Empresa Eléctrica Piura S.A.		174,358		84,070		—		—
Ingendesa Do Brasil		—		—		—		29,360
Enersis S.A.		572,727		148,357		—		—
Etevensa		668,878		244,957		—		—
Gasoducto Tal Tal Ltda.		406,898		—		—		—
Gas Atacama Generación Ltda.		279,933		32,490		—		—
Compañía Americana de Multiservicios Ltda.		—		49,067		—		—
Central Generadora Termoeléctrica de Fortaleza		33,847		4,443,379		—		—
Synapsis Soluciones y Servicios IT Ltda.		—		11,361		—		—
Inversiones Eléctricas Quillota		—		1,000		—		—
Elesur S.A.		—		3,468		—		—
Gesa S.A.		—		4,741,164		—		—
Electrogas S.A.		—		1,617		—		—
Total		45,173,722		219,898,898		173,914,870		922,824

The short-term receivables from Atacama Finance Co. correspond to loans received by Compañía Eléctrica Cono Sur S.A. for the purpose of financing construction works of Gasoducto Atacama Argentina Ltda., Gasoducto Atacama Chile Ltda. and Gas Atacama Generación Ltda. The loans are denominated in US dollars and bear average weighted interest of 2.7275% and mature in September 2003.

The long-term receivable with Sociedad Transmisora Eléctrica de Quillota Limitada resulted from the sale of fixed assets at book value. The amount is recorded in UF with accrued interest at an annual rate of 9% and is to be paid in five equal annual installments beginning in December 2002.

F1-17

6. Transactions with Related Companies: (Continued)

Notes and accounts payable due to related companies:


	As of June 30,
	Short-term				Long-term
Company Name	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$

Compañía de Energía del Mercosur S.A.		249,152		937,673		—		—
Compañía de Transmisión del Mercosur S.A.		93,829		125,757		—		—
Chilectra S.A.		20,139		11,214		—		—
Codensa S.A.		45,221,772		5,423,781		21,933,658		21,532,712
Empresa Eléctrica de Bogotá S.A.		8,816,953		1,180,277		—		895,757
Enersis S.A.		26,000,164		33,077,184		40,046,364		20,978,693
Synapsis Soluciones y Servicios IT Ltda.		1,078,969		812,349		—		—
Transmisora Eléctrica de Quillota Ltda.		82,086		61,686		—		—
Compañía Americana de Multiservicios Ltda.		2,690		50,335		—		—
Electrogas S.A.		228,026		221,081		—		—
Synapsis Perú S.A.		—		73,374		—		—
Synapsis Colombia S.A.		—		44,323		—		—
Compañía A. Multiser. Perú S.A.		—		5,905		—		—
Compañía A. Multiser. Colombia		—		41,477		—		—
Smartcom S.A.		—		1,244		—		—
Edelnor S.A.		6,431		—		—		—
Etevensa S.A.		1,157,166		—		—		—
Enersis Energía de Colombia		17,188		—		—		—
Total		82,974,565		42,067,660		61,980,022		43,407,162

Short-term accounts receivable and payable with related companies are related to the sales and purchases of electricity and various services, as well as operating loans. Transactions for electricity and services have terms of 30 days for payment and are not readjustable, operating loans are readjustable and require payment of interest.

The long-term payable to Codensa S.A. is denominated in US dollars and accrues interest at an average annual rate of 8.35% and is due on November 10, 2004.

The payables to Enersis S.A. for both periods result from financing operations. They are denominated in US dollars and bear interest at market rates.

F1-18

6. Transactions with Related Companies: (Continued)

The most significant transactions and their effects in income (expense) for the six month periods ended June 30, 2002 and 2003, are as follows:


Company	Nature of Transaction	Income (expense)
Company	Nature of Transaction	2002			2003
Atacama Finance Co.	Interest		3,559,293			2,640,735
	Price-level restatement		1,046,018			2,002,516
	Exchange difference		7,631,985			(6,405,341	)
Cia. Americana Multiservicios Ltda.	Services provided		10,958			52,051
	Services received		—			(1,136	)
Central Generadora Termoeléctrica de Fortaleza	Services provided		230,724			203,094
	Exchange difference		(10,015	)		—
Cia. de Energía del Mercosur S.A.	Sales of energy		4,717,873			12,665,258
	Purchase of energy		(1,395,066	)		(1,692,570	)
	Interest		(61,955	)		—
Codensa S.A.	Purchase of energy		(6,735,335	)		(6,540,679	)
	Sales of energy		40,444,713			38,875,951
	Services provided		—			28,730
	Services received		(31,604	)		(190,279	)
	Interest		(2,134,696	)		(1,208,079	)
Cía. Transmisión del Mercosur S.A.	Purchase of energy		(796,163	)		(636,898	)
Cía. Interconexión Energética S.A.	Sales of energy		14,788,128			12,069,608
	Services provided		135,860			—
	Exchange difference		(2,588	)		—
Empresa Propietaria de la Red	Services provided		—			199,474
Chilectra S.A.	Sales of energy		56,331,204			59,126,163
	Services provided		428,681			983,204
Gas Atacama Generación Ltda	Services provided		192,312			46,360
Empresa Eléctrica Piura S.A.	Sales of energy		866,728			617,149
Enersis S.A.	Interest		(2,442,271	)		(854,349	)
	Services provided		(214,537	)		454,600
	Exchange difference		305,307			853,701
	Price-level restatement		(4,863	)		(255,646	)
Enersis Internacional	Interest		—			(19,042	)
	Exchange difference		—			100,262
	Price-level restatement		—			(32,337	)
Enersis de Argentina S.A.	Exchange difference		1,312			—
Etevensa	Sales of energy		2,501,338			1,793,472
	Services provided		—			68,337
Electrogas S.A.	Services provided		—			2,388
	Purchase of gas		(1,582,541	)		(1,374,428	)
Edelnor S.A.	Sales of energy		14,152,340			13,763,368
Cam Colombia	Services provided		—			699
	Services received		—			(201,801	)
Synapsis Sol y Serv. IT Ltda.	Services provided		—			40,463
	Services received		(111,160	)		(997,433	)
Elesur S.A.	Services provided		—			9,856
Synapsis Colombia	Services received		—			(234,333	)
Consorcio ARA – Ingendesa	Services provided		—			1,156,728
	Services received		—			(45,537	)
Transmisora Eléc. de Quillota Ltda.	Interest		78,189			53,413
	Services provided		3,077			15,786
	Price-level restatement		(12,087	)		27,249
Total			131,891,159			127,160,727

F1-19

6. Transactions with Related Companies: (Continued)

These transactions were carried out at prices that approximate market value.

The transfer of short-term funds between related companies, which funds are not for collection or payment of services, is on the basis of a current cash account, at a variable interest rate based on market conditions. The resulting accounts receivable and accounts payable are essentially on 30-day terms, with automatic rollover for the same period and settlement in line with cash flows.

7. Inventories, net:

Inventories are presented net of a provision for obsolescence.

8. Deferred income taxes:

Income taxes recoverable (payable) as of each period-end are as follows:


	As of June 30,
	2002			2003
	ThCh$			ThCh$

Income taxes recoverable		29,336,007			21,830,761

Income tax payable		(5,534,688	)		(14,215,958	)

Endesa-Chile (individual legal entity) had a tax loss of ThCh$26,864,748 and a tax income of ThCh$100,755,001 for the periods ended June 30, 2002 and 2003, respectively. Under current Chilean tax law, such losses do not expire.

As of June 30, 2002 and 2003, Endesa-Chile (individual legal entity) had accumulated tax losses of ThCh$41,663,925 and ThCh$161,188,334 and related tax credits of ThCh$4,561,903 and ThCh$19,891,355.

F1-20

8. Deferred income taxes: (Continued)

In accordance with BT No. 60 and 69 of the Chilean Association of Accountants, and Circular No. 1,466 of the SVS, the Company and its subsidiaries have recorded consolidated deferred income taxes as of June 30, 2002 and 2003 as follows:


	As of June 30, 2002												As of June 30, 2003
	Asset						Liability						Asset					Liability
	Short-term			Long-term			Short-term			Long-term			Short-term		Long-term			Short-term		Long-term
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$		ThCh$			ThCh$		ThCh$

Allowance for doubtful accounts		—			—			—			—			55,237		—			—		—
Deferred income		43,553			243,241			—			—			11,660		1,107,954			—		—
Vacation accrual		134,771			2,212			—			—			341,280		—			—		—
Depreciation		—			3,696,683			3,953,789			294,660,109			—		3,629,139			39,846		240,049,021
Severance indemnities		—			—			—			1,543,597			—		—			—		1,471,079
Other events		65,193			866,105			131,244			1,566,353			126,321		1,982,296			—		—
Deferred charges		—			—			—			3,537,825			—		—			—		—
Finance costs		—			—			20,770			8,954,568			—		—			—		13,767,089
Tax losses		1,115,373			66,054,046			—			—			—		84,452,360			—		—
Contingencies		—			19,111			—			—			4,023,315		—			—		—
Unrealized income Pehuenche, San Isidro		19,164			1,151,342			—			—			—		—			—		—
Derivatives		1,402			731,265			317,813			466,077			—		—			—		—
Imputed interest on construction		—			—			—			4,694,889			—		—			—		4,735,846
Costs of studies		—			—			—			4,463,942			—		—			—		8,024,516
Spare parts used		—			—			—			3,301,207			—		—			—		1,024,666
Leasing payables		1,705			—			—			2,428			1,027		—			—		—
Accruals		—			—			—			—			—		—			—		83,391
Bonds discount		—			—			—			—			—		—			—		210,888
Salaries for construction-in-progress		—			4,936,676			—			—			—		4,605,861			—		—
El Chocon intangibles		—			2,964,349			29,722			1,749,840			—		—			—		—
El Chocón investments		—			—			—			5,417,079			—		—			—		3,405,015
Assets contributions		—			—			—			—			—		—			—		666,149
Leasing receivables		—			—			—			—			—		—			—		827
Forwards and swaps contracts		—			297,224			—			1,437,198			20,210		303,823			84,034		—
Provision for obsolete inventory		—			251,238			—			—			86,853		—			—		—
Provision for employee benefits		—			—			—			—			385,746		1,663,906			—		—
Foreign taxes		—			—			—			—			—		—			—		1,028,525
Loan commissions		—			—			—			—			—		—			—		205,627
Complementary accounts, net		(1,178,354	)		(46,793,293	)		(3,782,896	)		(263,947,545	)		—		(29,652,777	)		—		(175,787,045	)
Valuation allowance		—			(935,051	)		—			—			—		(2,437,713	)		—		—
Total		202,807			33,485,148			670,442			67,847,567			5,051,649		65,654,849			123,880		98,885,594

F1-21

8. Deferred income taxes: (Continued)

Income tax expense for the six-month periods ended June 30, 2002 and 2003 is as follows:


	As of June 30,
	2002			2003
	ThCh$			ThCh$

Current income tax expense
Income tax provision		(18,533,088	)		(43,532,967	)

Deferred tax expense (benefit)
Special tax Art. 21		—			(57,348	)
Adjustment for tax expense prior year		(253,907	)		(1,640	)
Deferred income taxes		(3,644,517	)		47,061,252
Benefits for tax losses		1,745,899			36,927
Other tax expense (benefit)		(297,224	)		(671,716	)
Change in tax rate		—			(36,927	)
Amortization of complementary accounts		(4,391,475	)		(15,579,547	)
Total		(25,374,312	)		(12,781,966	)

9. Other current assets:

Other current assets as of each period-end are as follows:


	As of June 30,
	2002		2003
	ThCh$		ThCh$

Accounts receivable from the Chilean Ministry of PublicWorks		3,222,499		58,737
Guarantees related to rentals		1,146,518		986,752
Ralco and Alto Jahuel Projects		3,082,550		173,730
Deposits for commitments and guarantees		19,361,781		19,703,203
Forward contracts and swaps		1,075,407		57,022,438
Unrealized losses on derivatives		—		905,612
Guarantee certificates		2,819,020		—
Other		1,811,737		714,059
Total		32,519,512		79,564,531

F1-22

10. Property, plant and equipment:

The composition of property, plant and equipment as of each period-end is as follows:


	Estimated years of useful lives	As of June 30,
	Estimated years of useful lives	2002			2003
		ThCh$			ThCh$

Land			40,818,961			38,979,555

Buildings and infrastructure	35 – 40		6,300,042,188			5,958,649,875
Distribution and transmission lines and public lighting	35 – 40		22,102,501			19,819,306
Sub-total			6,322,144,689			5,978,469,181

Machinery and equipment	35 – 40		1,194,957,905			1,185,158,636

Construction in progress	—		56,817,705			20,834,749
Construction materials	—		5,558,778			5,955,804
Furniture and fixtures, tools, software and information technology equipment	3 – 10		21,908,471			15,851,199
Vehicles	6 – 10		1,368,816			2,581,272
Other assets	3 – 8		2,650,673			7,048,375
Sub-total			88,304,443			52,271,399

Technical appraisal			699,273,793			705,672,351

Total property, plant and equipment			8,345,499,791			7,960,551,122

Less: accumulated depreciation			(2,611,624,956	)		(2,723,155,090	)
Total property, plant and equipment, net			5,733,874,835			5,237,396,032

The Company and its foreign subsidiaries have individually purchased insurance policies which cover "all risk", earthquake and machinery breakdown, with coverage limitations of ThUS$400,000, ThUS$150,000 and ThUS$100,000, respectively. This coverage includes business interruption damages. The premiums associated with these policies are recorded proportionately in each company under "Prepaid expenses" and charged to expenses over their term of usage.

Recoverability of property, plant and equipment:

The Company periodically analyzes the recoverability of its recorded book values of its property, plant and equipment, including property, plant and equipment held by the Company's subsidiaries in countries outside of Chile where property, plant and equipment is remeasured into US dollars. The analyses consists in evaluating the recoverability of the Company's property, plant and equipment by comparing estimated future undiscounted cash flows to the carrying amounts of such assets recorded by the Company in these companies, in accordance with Chilean GAAP. These analyses differs from impairment testing performed for goodwill (see note 13). The result of these analyses determined that no adjustments were required to the net book values of the property, plant and equipment of the Company and its subsidiaries as of December 31, 2002.

F1-23

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

11. Investment in related companies:

Investments as of each period-end are as follows:


	As of June 30, 2003						Carrying Value				Equity participation in net earnings (losses)
Related Companies	Number of Shares		Percentage Owned		Related Equity		2002		2003		2002			2003
			%		ThCh$		ThCh$		ThCh$		ThCh$			ThCh$
Cía. de Interconexión Energética S.A. (2)		128,270,106		45.00		149,370,143		49,558,699		67,216,564		(1,257,140	)		15,414,023
Gas Atacama Generación Ltda.		—		50.00		68,469,904		36,725,351		34,234,952		(1,604,609	)		1,268,668
Gasoducto Atacama Argentina Ltda.		—		50.00		63,803,318		27,532,998		31,901,659		(1,926,099	)		659,402
Gasoducto Atacama Chile Ltda.		—		50.00		54,808,619		25,945,807		27,404,310		1,452,810			232,275
Inversiones Eléctricas Quillota S.A.		608,676		50.00		17,318,452		8,052,275		8,659,226		707,062			944,946
Inversiones Electrogas S.A.		425		42.50		15,204,741		6,299,106		6,462,015		193,836			956,934
Com. de Energía del Mercosur S.A. (3)		6,305,400		45.00		8,879,941		2,239,480		3,995,974		(2,666,799	)		630,023
Transmisora Eléctrica de Quillota Ltda.		—		50.00		5,279,999		2,466,117		2,640,000		50,298			96,422
Atacama Finance Co. (2)		3,150,000		50.00		4,723,690		2,642,241		2,361,845		(55,991	)		(157,434	)
Electrogas S.A.		85		0.02		13,612,308		2,168		2,893		108			489
Distrilec Inversora S.A.		4,416,141		0.89		386,742,418		3,679,565		3,432,207		102,850			(119,018	)
Consorcio ARA - Ingendesa		—		50.00		28,110		31,043		14,055		30,469			2,115
Consorcio Ingendesa - Minmetal Ltda (1)		—		50.00		3,328		11,445		1,664		13,552			—
Ingendesa do Brasil Limitada (1) (4)		—		100.00		60,882		67,896		60,273		—			—
Total								165,254,191		188,387,637		(4,959,653	)		19,928,845

(1)	This company is related party to the subsidiary Ingendesa S.A.

(2)	These companies are related parties to the subsidiary Compañía Electrica Conosur S.A.

(3)	This company is a related party to the subsidiary Endesa Argentina S.A.

(4)	This company is in the development stage.

F1-24

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

11. Investment in related companies: (Continued)

Purchase of subsidiary during the periods ended June 30, 2002 and 2003:


	—Lajas Inversora S.A.


	During the six months ended June 30, 2003, Lajas Inversora S.A. purchased 378,508 (0.0131%) shares of Central Eléctrica Cachoeira Dourada S.A. (Brazil) for ThCh$24,811, increasing its participation to 99.61%.


	The costs of this incremental investments is as follows:


	As of June 30,
Purchases	2002		2003
	ThCh$		ThCh$
Central Eléctrica Cachoeira Dourada S.A.		—		24,811
		—		24,811

Sales of subsidiary shares during the periods ended June 30, 2002 and 2003:


	As of June 23, 2003 the Company sold 330,939,522 shares of Infraestructura 2000 S.A. for the price of ThCh$39,097,079 and 3,741 shares of Sociedad Concesionaria Autopista del Sol S.A. for the price of ThCh$40,147, which represented the total participation of the Company in these entities.

In accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants for the six months ended June 30, 2002 and 2003, the Company has recorded foreign exchange gains and losses on liabilities related to net investments in foreign countries that are denominated in the same currency as the functional currency of those foreign investments. Such gains and losses are included in the cumulative translation adjustment account in shareholders' equity, and in this way, act as an economic hedge of the exchange risk affecting the investments. As of June 30, 2003 the corresponding amounts are as follows:

Company

Country of Origin

Investment

Reporting
Currency

Liability

ThCh$

Central Hidroeléctrica Betania

Colombia

583,673,065

US$

337,332,923

Cachoeira Dourada

Brazil

427,040,756

US$

465,569,606

Edegel S.A.

Peru

215,202,567

US$

236,882,715

Cía. Interconexión Energética S.A.

Brazil

67,216,564

US$

60,728,175

Atacama Finance Co.

Cayman Islands

2,361,845

US$

1,804,366

Hidroeléctrica El Chocón S.A.

Argentina

219,988,616

US$

119,865,921

Comercializadora de Energia del Mercosur S.A.

Argentina

3,995,974

US$

3,886,276

Central Costanera S.A.

Argentina

96,842,954

US$

64,403,247

Distrilec Inversora S.A.

Argentina

3,432,207

US$

1,580,235

Total

1,619,754,548

1,292,053,464

F1-25

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

12. Investments in other companies:

Investments in other companies as of June 30, 2002 and 2003 are as follows:


Company	Number of shares		Percentage owned			As of June 30,
Company	Number of shares		Percentage owned			2002		2003
			%			ThCh$		ThCh$
Club de la Banca y Comercio		2		1.00	%		2,613		3,601
Club Empresarial		1		1.00	%		6,185		6,094
Empresa Eléctrica de Aisen S.A		2,516,231		—			1,991,608		1,999,788
Inmobiliaria España S.A.		1		—			98		99
Inverandes S.A.		1,011,899		—			3,443		3,458
Cooperativa Eléctrica de Chillán		—		—			13,045		13,049
CDEC-SIC Ltda.		—		30.77	%		196,545		225,567
Empresa Eléctrica de Bogotá S.A.		6,409,132		5.50	%		78,335,230		76,903,899
Financiera Eléctrica Nacional		4,098		0.10	%		130,936		100,673
Electrificadora del Atlántico		78,807,037		0.16	%		—		1,465,256
Electrificadora de la Costa		1,823,038		0.03	%		—		16,079
Electrificadora del Caribe		8,537,232		0.10	%		—		158,801
Edegas		1		1	%		3,362		—
Autopista del Río Maipo S.A.		25		—			4,880		—
Total							80,687,945		80,896,364

13. Goodwill and Negative Goodwill:

Recognition has been given to the excess of purchase price of the proportional equity in the net assets acquired (goodwill) in the purchase of shares as of June 30, 2002 and 2003, as follows:


	As of June 30,
Company	Amortization				Net Balance
	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Central Costanera S.A.		863,443		—		22,939,089		—
Emgesa S.A.		800,716		785,811		24,555,317		22,534,035
Gasoducto Atacama Chile Ltda.		2,412		2,412		80,406		75,590
Edegel S.A.		20,325		19,954		623,299		572,003
Pangue S.A.		—		84,550		—		3,226,995
C. Hidroeléctrica Cachoeira Dourada S.A.		2,154,295		—		66,783,128		—
Lajas Inversora S.A.		55,685		—		1,726,234		—
Hidroeléctrica El Chocón S.A.		427,652		—		9,550,894		—
Hidroinvest S.A.		41,018		—		1,326,265		—
Total		4,365,546		892,727		127,584,632		26,408,623

F1-26

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

13. Goodwill and Negative Goodwill: (Continued)

Recognition has been given to the excess of the equity in the net assets purchased over the purchase price (negative goodwill) in the purchase of shares as of June 30, 2002 and 2003 as follows:


	As of June 30,
Company	Amortization				Net Balance
	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Edegel S.A.		5,100,680		5,007,482		67,615,290		56,364,888
Central Hidroeléctrica Betania S.A.		17,680,022		3,611,982		41,487,302		20,534,417
Empresa Eléctrica de Bogotá S.A.		126,253		123,744		3,913,841		3,594,176
C. Hidroeléctrica Cachoeira Dourada S.A.		1,092,656		—		35,316,893		—
Hidroeléctrica El Chocón S.A.		131,008		—		3,449,885		—
Total		24,130,619		8,743,208		151,783,211		80,493,481

An analysis of the recoverability of goodwill and negative goodwill associated with investments in and outside Chile was performed in accordance with IAS No. 36 "Impairment of Assets", following the guidance in Technical Bulletin No. 56 issued by the Chilean Association of Accountants. The results of this analysis showed that the goodwill and negative goodwill associated with investments made in Argentina and Brazil were 100% impaired as of December 31, 2002, due to the finding that the future discounted cash flows expected to be produced from the investees in those countries was not sufficient to offset the recovery of recorded goodwill and negative goodwill. Endesa-Chile recorded a charge to income of ThCh$62,151,280, which is recorded in amortization of goodwill and amortization of negative goodwill in the consolidated statement of income for the year ended December 31, 2002. The amount recorded by the Company on a consolidated basis, net of the effect of minority interests, was a net charge to income of ThCh$56,110,189. The impairment was recorded in the fourth quarter of 2002 and is not reflected in the six-month period ended June 30, 2003.

14. Intangibles:

The detail of intangibles as of each period-end is as follows:


	As of June 30,
	2002		2003
	Net Balance		Net Balance
	ThCh$		ThCh$
Easements		662,527		650,570
Water rights		17,397,445		16,578,932
Salex- fourth line Comahue		7,691,624		6,942,945
Software		551,229		416,103
Mine rights		51,009		51,015
Tolls license		37,454		13,533
Other		483,634		523,984
Total		26,874,922		25,177,082

F1-27

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

15. Other assets:

Other assets as of each period-end are as follows:


	As of June 30,
	2002		2003
	ThCh$		ThCh$
Bond discount		14,390,209		7,204,207
Reimburseable contributions		4,442,891		3,918,525
Deferred commissions on loans and lines of credit		18,658,304		31,427,710
Minimum tax on earnings of certain productive assets (Argentina)		2,461,359		4,539,894
Bond issuance costs		11,024,477		—
Unrealized loss on forward contracts and collars		—		8,416,624
Software and licenses		—		1,220,471
Forward contracts and swaps		10,169,491		3,260,151
Others		640,998		698,297
Total		61,787,729		60,685,879

F1-28

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

16. Due to banks and financial institutions:

Short-term debt due to banks and financial institutions:


	Foreign Currency												Local Currency						Total
Financial Institution	US$						Other Foreign Currencies						Ch$
	2002			2003			2002			2003			2002			2003			2002			2003
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Banco BBVA Bhif		—			—			—			—			1,213,083			44			1,213,083			44
Banco Barings		7,178,288			4,163,917			—			—			—			—			7,178,288			4,163,917
Banco Continental		78,623			—			65,969			6,045,065			—			—			144,592			6,045,065
Banco de Bogotá		—			—			7,430,228			—			—			—			7,430,228			—
Banco de Chile		—			—			—			—			4,396,367			—			4,396,367			—
Banco de Occidente		—			—			—			322,993			—			—			—			322,993
Banco Crédito e Inversiones - Perú		—			—			10,185,994			8,906,387			—			—			10,185,994			8,906,387
Banco Ganadero		—			—			—			2,261,653			—			—			—			2,261,653
Banco Itau		2,886,270			2,320,128			—			—			—			—			2,886,270			2,320,128
Banco Lloyds		3,577,750			3,514,756			—			—			—			—			3,577,750			3,514,756
Banco Santander		—			—			—			2,081,280			—			—			—			2,081,280
Interbank		—			—			6,946			—			—			—			6,946			—
Banco Santiago		—			—			—			—			8,761,996			—			8,761,996			—
Bank Boston		2,318,701			1,826,898			—			5,601,833			—			—			2,318,701			7,428,731
Citibank		6,937,468			—			—			2,928,614			—			—			6,937,468			2,928,614
Banco Hermes		—			5,237,723			—			—			—			—			—			5,237,723
Davivienda		—			—			—			3,752,177			—			—			—			3,752,177
Granahorrar		—			—			—			3,132,058			—			—			—			3,132,058
Banco AV Villas		—			—			—			2,496,557			—			—			—			2,496,557
Total		22,977,100			17,063,422			17,698,137			37,528,617			14,371,446			44			55,037,683			54,592,083
Total principal		15,789,386			16,934,456			16,804,679			37,351,320			14,371,446			44			46,965,511			54,285,820
Weighted average annual interest rate		9.59	%		5.90	%		5.67	%		6.55	%		4.52	%		3.60	%		6.59	%		6.34	%


	As of June 30,
	2002		2003
	%		%
Percentage of debt in foreign currency:		73.89		100.00
Percentage of debt in local currency:		26.11		0.00
Total		100.00		100.00

F1-29

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

16. Due to banks and financial institutions: (Continued)

Current portion of long-term debt due to banks and financial institutions:


	Foreign Currency								Local Currency				Total
	US$				Other foreign currencies				Ch$
	2002		2003		2002		2003		2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$
ABN Amro Bank		2,871,219		2,100,709		—		—		—		—		2,871,219		2,100,709
Banco Estado		1,683,816		108,792		—		—		1,403,798		1,380,036		3,087,614		1,488,828
Banco Hermes		5,563,425		—		—		—		—		—		5,563,425		—
Banco Medio Crédito		4,446,550		1,245		—		2,250,153		—		—		4,446,550		2,251,398
Banco Santander		1,523,119		—		—		—		—		—		1,523,119		—
Banco Santander Central Hispano		436,512		744,484		48,217		—		—		—		484,729		744,484
Banco San Paolo		71,487,534				—		—		—		—		71,487,534		—
Banesto		4,489,480		5,506,747		—		—		—		—		4,489,480		5,506,747
Bank of América		67,681,714		29,337,487		—		—		—		—		67,681,714		29,337,487
Banco Nationale París		8,317,495		12,601,300		—		—		—		—		8,317,495		12,601,300
Bank of Tokio - Mitsubishi		7,186,570		6,914,461		1,013,504		1,036,394		—		—		8,200,074		7,950,855
Bndes		—		—		227,726		1,214,984		—		—		227,726		1,214,984
Citibank N.A.		577,092		247,519		—		—		—		—		577,092		247,519
Citibank N.Y.		22,542,638		22,038,895		—		—		—		—		22,542,638		22,038,895
Banco sudamericano		224,104		—		—		—		—		—		224,104		—
Export Develop. Corp.		1,757,353		2,174,517		—		—		—		—		1,757,353		2,174,517
Kreditanstal Fur Weideraubau		555,140		410,574		—		—		—		—		555,140		410,574
Midland Bank		5,365,426		—		—		—		—		—		5,365,426		—
Santander Inv. Bank		5,746,833		—		—		—		—		—		5,746,833		—
Skandinaviska Enskildabnken		2,391,744		2,340,576		—		—		—		—		2,391,744		2,340,576
BIRF		—				1,160,137		1,220,958		—		—		1,160,137		1,220,958
Societe Generale		1,834,695		1,792,117		—		—		—		—		1,834,695		1,792,117
J.P. Morgan Chase Bank		3,290,356		384,371		4,692,622		2,427,848		—		—		7,982,978		2,812,219
Dresdner Bank		—		151,208		—		—		—		—		—		151,208
Electrobras – Brasil		—		—		1,823,458		—		—		—		1,823,458		—
Santander Investment Bank Ltd.		—		6,847,018		—		—		—		—		—		6,847,018
Davivienda		—		—		—		164,293		—		—		—		164,293
Conavi		—		—		—		137,028		—		—		—		137,028
Confisura		—		—		—		219,524		—		—		—		219,524
Bancafe		—		—		—		82,496		—		—		—		82,496
Bancolombia		—		—		—		219,524		—		—		—		219,524
Colpatria		—		—		—		54,531		—		—		—		54,531
Granahorrar		—		—		—		13,982		—		—		—		13,982
Subtotal		219,972,815		93,702,020		8,965,664		9,041,715		1,403,798		1,380,036		230,342,277		104,123,771

F1-30

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

16. Due to banks and financial institutions: (Continued)

Current portion of long-term debt due to banks and financial institutions, continued:


	Foreign Currency												Local Currency						Total
	US$						Other foreign currencies						Ch$
	2002			2003			2002			2003			2002			2003			2002			2003
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Subtotal from previous page		219,972,815			93,702,020			8,965,664			9,041,715			1,403,798			1,380,036			230,342,277			104,123,771
Banco Bilbao Vizcaya Argentaria		—			151,208			—			—			—			—			—			151,208
HSBC Bank plc, Spanish Branch		—			181,478			—			—			—			—			—			181,478
San Paolo IMI S.p.A.		—			173,360			—			—			—			—			—			173,360
BNP Paribas, Spanish Branch		—			151,208			—			—			—			—			—			151,208
Deutsche Bank AG		—			151,208			—			—			—			—			—			151,208
Landesbank Rheinland-Pfalz		—			47,193			—			—			—			—			—			47,193
Credit Lyonnais		—			96,311			—			—			—			—			—			96,311
ING Bank N.V.		—			96,311			—			—			—			—			—			96,311
The Bank of Tokyo-Mitsubishi		—			96,311			—			—			—			—			—			96,311
WestLB AG		—			96,311			—			—			—			—			—			96,311
Banco Popular Español S.A.		—			67,418			—			—			—			—			—			67,418
Bayerische Hypo-und Vereinsbank		—			28,893			—			—			—			—			—			28,893
Bayerische Landesbank		—			28,893			—			—			—			—			—			28,893
Banco de Sabadell, SA		—			19,262			—			—			—			—			—			19,262
Israel Discount Bank of New York		—			15,410			—			—			—			—			—			15,410
Banca Intesa, S.p.A.		—			96,311			—			—			—			—			—			96,311
Banco Español de Crédito		—			48,155			—			—			—			—			—			48,155
Mizuho Corporate Bank, Ltd.		—			38,524			—			—			—			—			—			38,524
Landesbank Baden-Wurttemberg		—			38,524			—			—			—			—			—			38,524
Royal Bank of Canada Europe		—			96,313			—			—			—			—			—			96,313
Total		219,972,815			95,420,622			8,965,664			9,041,715			1,403,798			1,380,036			230,342,277			105,842,373
Total principal		205,436,458			89,036,445			8,921,577			8,088,454			1,403,798			1,257,000			215,761,833			98,381,899
Weighted average annual interest rate		8.31	%		4.44	%		3.71	%		4.55	%		9.00.	%		9.00	%		8.28	%		4.74	%


	As of June 30,
	2002		2003
	%		%
Percentage of debt in foreign currency:		99.39		98.70
Percentage of debt in local currency:		0.61		1.30
Total		100.00		100.00

F1-31

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

16. Due to banks and financial institutions: (Continued)

Long-term portion of debt due to banks and financial institutions:


		As of June 30, 2002		As of June 30, 2003
Financial Institution	Currency	Long-term portion		After 1 year but within 2 years		After 2 year but within 3 years		After 3 year but within 5 years		After 5 year but within 10 years		After 10 year		Total long-term portion		Annual interest rate
		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$
ABN Amro Bank	US$		2,073,502		63,370		63,370		126,740		125,883		—		379,363		4.29	%
Banco Estado	UF		6,460,499		1,399,173		1,548,893		2,125,487		—		—		5,073,553		9.35	%
	US$		109,017		—		—		—		—		—		—		—
Banco Medio Crédito	US$		35,048,882		—		—		—		—		—		—		—
	$ Arg		—		2,220,480		2,220,480		2,220,480		8,881,920		—		15,543,360		1.75	%
Bandes	Rs		—		1,464,814		1,528,044		5,623,694		—		—		8,616,552		28.00	%
Banco Santander Central His.	US$		109,668,290		—		45,034,980		90,069,960		—		—		135,104,940		4.31	%
Banesto	US$		31,398,826		2,990,597		2,990,597		5,981,194		11,962,388		—		23,924,776		4.29	%
Banco Nationales de Paris	US$		64,054,133		11,041,927		10,336,209		20,672,418		10,336,211		—		52,386,765		4.80	%
	US$		9,778,976		2,226,839		2,226,839		4,453,678		5,930,579		2,314,837		17,152,772		5.33	%
Bank of Tokio Mitsubishi	US$		17,082,230		6,708,044		3,354,022		—		—		—		10,062,066		2.07	%
	Libra		1,037,127		440,713		220,357		—		—		—		661,070		4.50	%
	Yen		1,132,448		444,511		222,256		—		—		—		666,767		0.89	%
	Euros		289,688		131,365		65,682		—		—		—		197,047		3.38	%
Corfinsura	$ Col.		—		—		—		9,926,105		—		—		9,926,105		12.44	%
BIRF	UP		1,702,529		631,180		—		—		—		—		631,180		5.02	%
JP Morgan Chase Bank	US$		59,097,418		38,451,600		—		17,478,000		—		—		55,929,600		8.53	%
	US$		—		21,972,342		—		—		—		—		21,972,342		3.35	%
Citibank N.Y.	US$		44,762,567		—		14,972,820		29,945,640		—		—		44,918,460		4.31	%
	US$		356,065,875		—		—		—		—		—		—		—
Export Develop. Corp.	US$		7,238,524		1,015,180		1,015,180		2,030,360		2,030,363		—		6,091,083		2.75	%
	US$		9,693,544		969,252		969,252		1,938,504		4,846,260		1,453,877		10,177,145		2.39	%
Kreditanstal Fur Weideraubau	US$		2,337,369		382,442		382,442		764,884		382,445		—		1,912,213		4.85	%
Midland Bank	US$		2,543,327		—		—		—		—		—		—		—
Santander Investment	US$		6,907,678		—		—		—		—		—		—		—
Skandinaviska Enskildabnken	US$		9,414,717		2,310,704		2,310,704		2,310,592		—		—		6,932,000		0.65	%
Bank of America	US$		—		33,327,225		—		—		—		—		33,327,225		5.66	%
Societe Generale	US$		2,276,042		446,891		—		—		—		—		446,891		1.31	%
Davivienda	$ Col.		—		—		—		7,444,229		—		—		7,444,229		12.44	%
Bancolombia	$ Col.		—		—		—		9,926,105		—		—		9,926,105		12.44	%
Conavi	$ Col.		—		—		—		6,203,990		—		—		6,203,990		12.44	%
Bancafe	$ Col.		—		—		—		3,722,114		—		—		3,722,114		12.44	%
Colpatria	$ Col.		—		—		—		2,481,176		—		—		2,481,176		12.44	%
Granahorrar	$ Col.		—		—		—		3,722,114		—		—		3,722,114		12.37	%
Banco Bilbao Viscaya Argent.	US$		—		—		9,146,820		18,293,640		—		—		27,440,460		4.31	%
Dresdner Bank Luxembourg	US$		—		—		9,146,820		18,293,640		—		—		27,440,460		4.31	%
HSBC Bank	US$		—		—		10,977,849		21,955,698		—		—		32,933,547		4.31	%
San Paolo IMI	US$		—		—		10,486,800		20,973,600		—		—		31,460,400		4.31	%
Subtotal			780,173,208		128,638,649		129,220,416		308,684,042		44,496,049		3,768,714		614,807,870

F1-32

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

16. Due to banks and financial institutions: (Continued)

Long-term portion of debt due to banks and financial institutions, continued:


		As of June 30, 2002		As of June 30, 2003
Financial Institution	Currency	Long-term portion		After 1 year but within 2 years		After 2 year but within 3 years		After 3 year but within 5 years		After 5 year but within 10 years		After 10 year		Total long-term portion		Annual interest rate
		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$
Subtotal from previous page			780,173,208		128,638,649		129,220,416		308,684,042		44,496,049		3,768,714		614,807,870		—
BNP Paribas	US$		—		—		9,146,820		18,293,640		—		—		27,440,460		4.31	%
Deutsche Bank AG	US$		—		—		9,146,820		18,293,640		—		—		27,440,460		4.31	%
Landesbank Rheinland-Pfalz	US$		—		—		2,854,740		5,709,480		—		—		8,564,220		4.31	%
Credit Lyonnais	US$		—		—		5,826,000		11,652,000		—		—		17,478,000		4.31	%
ING Bank N.V.	US$		—		—		5,826,000		11,652,000		—		—		17,478,000		4.31	%
Bank of Tokio Mitsubishi Ldta	US$		—		—		5,826,000		11,652,000		—		—		17,478,000		4.31	%
WestLB AG	US$		—		—		5,826,000		11,652,000		—		—		17,478,000		4.31	%
Banco Popular Español S.A.	US$		—		—		4,078,200		8,156,400		—		—		12,234,600		4.31	%
Bayerische Hypo-und Vereinsbank	US$		—		—		1,747,800		3,495,600		—		—		5,243,400		4.31	%
Bayerische Landesbank	US$		—		—		1,747,800		3,495,600		—		—		5,243,400		4.31	%
Banco de Sabadell, SA	US$		—		—		1,165,200		2,330,400		—		—		3,495,600		4.31	%
Israel Discount Bank of New York	US$		—		—		932,160		1,864,320		—		—		2,796,480		4.31	%
Banca Intesa S.p.A.	US$		—		—		5,826,000		11,652,000		—		—		17,478,000		4.31	%
Banco Español de Crédito	US$		—		—		2,913,000		5,826,000		—		—		8,739,000		4.31	%
Mizuho Corporate Bank, Ltd.	US$		—		—		2,330,400		4,660,800		—		—		6,991,200		4.31	%
Landesbank Baden-Wurttemberg	US$		—		—		2,330,400		4,660,800		—		—		6,991,200		4.31	%
Royal Bank of Canada Europe	US$		—		—		5,826,000		11,652,000		—		—		17,478,000		4.31	%
Totales			780,173,208		128,638,649		202,569,756		455,382,722		44,496,049		3,768,714		834,855,890


	As of June 30,
	2002		2003
	%		%
Percentage of debt in foreign currency:		99.39		99.39
Percentage of debt in local currency:		0.61		0.61
Total		100.00		100.00

F1-33

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

17. Promissory notes:


Financial Instrument	Maturity Date	Interest Rate		As of June 30,
Financial Instrument	Maturity Date	Interest Rate		2002		2003
		%		ThCh$		ThCh$
Commercial paper	December 10, 2002		4.33		3,768,663		—
Commercial paper 1st issuance	June 10, 2003		4.84		3,347,629		—
Commercial paper 2nd issuance	September 5, 2003		4.50		—		4,126,544
Total					7,116,292		4,126,544

18. Bonds payable:

Details of the current portion of bonds payable is as follows at each period-end:

Short-term portion of long-term bonds:


Issuer	Series	Currency	Face Value Outstanding		Interest rate			Maturity date		Par value
Issuer	Series	Currency	Face Value Outstanding		Interest rate			Maturity date		2002		2003
Bonos Endesa-Chile	1	US$		230,000,000		7.88	%		2/1/2027		4,814,541		4,722,884
Bonos Endesa-Chile	2	US$		220,000,000		7.33	%		2/1/2037		4,781,669		4,694,301
Bonos Endesa-Chile	3	US$		200,000,000		8.13	%		2/1/2097		1,000,023		956,570
Bonos Endesa-Chile	1	US$		400,000,000		7.75	%		7/15/2008		10,118,205		9,933,329
Bonos Endesa-Chile	1	US$		400,000,000		8.50	%		4/1/2009		6,053,120		5,942,520
Bonos Endesa-Chile	E-1, E-2	UF		6,000,000		6.20	%		8/1/2006		2,584,341		2,589,233
Bonos Endesa-Chile	C2, D1, D2	UF		1,251,257		6.80	%		11/1/2010		2,415,225		2,542,553
Bonos Endesa-Chile	F	UF		1,500,000		6.20	%		8/1/2022		646,085		647,308
Bonos Pehuenche-Chile	1	US$		170,000,000		7.30	%		5/1/2003		122,535,323		—
Bonos Edegel-Peru	1	US$		30,000,000		8.75	%		6/3/2007		142,379		139,794
Bonos Edegel-Peru	2	US$		30,000,000		8.41	%		2/14/2007		883,368		657,492
Bonos Edegel-Peru	3	US$		30,000,000		8.75	%		6/13/2006		91,529		29,963
Bonos Edegel-Peru	4	US$		20,000,000		8.46	%		11/21/2005		134,153		131,701
Bonos Edegel-Peru	5A	Soles		30,000,000		11.60	%		8/22/2003		290,353		7,337,862
Bonos Edegel-Peru	5B	Soles		35,000,000		6.00	%		4/22/2004		129,847		6,171,431
Bonos Edegel-Peru	1A	Soles		100,000,000		6.00	%		6/6/2005		—		80,566
Bonos Emgesa-Colombia	A-1	$ Col.		15,000,000		9.89	%		7/26/2006		3,713,335		66,416
Bonos Emgesa-Colombia	B-3	$ Col.		31,525,018		14.79	%		2/8/2003		97,300		—
Bonos Emgesa-Colombia	B-5	$ Col.		12,750,000		9.97	%		10/9/2004		109,240		72,708
Bonos Emgesa-Colombia	B-7	$ Col.		19,500,000		10.29	%		10/9/2006		171,327		114,656
Bonos Emgesa-Colombia	B-10	$ Col.		229,825,000		15.60	%		10/9/2009		2,069,467		1,392,680
Bonos Emgesa-Colombia	B-10	$ Col.		60,000,000		10.57	%		11/10/2009		—		216,028
Bonos Emgesa-Colombia	C-10	$ Col.		7,701,962		9.88	%		10/9/2009		—		258,674
Bonos Emgesa-Colombia	C-10	$ Col.		19,777,918		10.25	%		10/8/2009		339,322		44,045
Bonos Emgesa-Colombia	B-10 2nd issue	$ Col.		50,000,000		15.18	%		6/26/2006		312,187		2,368,554
Bonos Emgesa-Colombia	A-5	$ Col.		172,858		8.35	%		10/8/2004		260,851		—
Bonos Emgesa-Colombia	B-1	$ Col.		85,000,000		13.95	%		7/26/2006		—		2,741,981
Endesa Chile Internacional	1	Euro		400,000,000		3.34	%		7/24/2003		1,990,525		323,549,934
Bonos Emgesa-Colombia	1	$ Col.		40,000,000		12.54	%		8/1/2002		12,520,666		—
Endesa Chile Internacional	1	US$		150,000,000		7.20	%		4/1/2006		1,922,756		1,887,624
Bonos Autopista del Sol S.A.	A-1	UF		3,446,160		5.80	%		1/15/2018		1,779,222		—
Bonos Autopista del Sol S.A.	A-2	UF		861,540		5.80	%		1/15/2018		444,808		—
Bonos Autopista del Sol S.A.	B-1	UF		964,372		5.80	%		1/15/2018		498,802		—
Bonos Autopista del Sol S.A.	B-2	UF		243,578		5.80	%		1/15/2018		125,997		—
Total											182,975,966		379,290,807

F1-34

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

Details of the long-term portion of bonds payable is as follows at each period-end:

Long-term portion of long-term bonds:


Issuer	Series	Currency	Face value outstanding		Interest rate			Maturity date		Par value
Issuer	Series	Currency	Face value outstanding		Interest rate			Maturity date		2002		2003
Bonos Endesa-Chile	1	US$		230,000,000		7.88	%		2/1/2027		146,614,396		143,935,525
Bonos Endesa-Chile	2	US$		220,000,000		7.33	%		2/1/2037		156,668,985		153,806,400
Bonos Endesa-Chile	3	US$		200,000,000		8.13	%		2/1/2097		28,781,517		28,255,634
Bonos Endesa-Chile	1	US$		400,000,000		7.75	%		7/15/2008		284,852,700		279,648,000
Bonos Endesa-Chile	1	US$		400,000,000		8.50	%		4/1/2009		284,852,700		279,648,000
Bonos Endesa-Chile	E-1, E-2	UF		6,000,000		6.20	%		8/1/2006		101,565,792		101,758,020
Bonos Endesa-Chile	C2, D1, D2	UF		1,251,257		6.80	%		11/1/2010		21,180,813		18,914,897
Bonos Endesa-Chile	F	UF		1,500,000		6.20	%		8/1/2022		25,391,448		25,439,505
Bonos Edegel-Peru	1	US$		30,000,000		8.75	%		6/3/2007		21,363,953		20,973,600
Bonos Edegel-Peru	2	US$		30,000,000		8.41	%		2/14/2007		21,363,953		20,973,600
Bonos Edegel-Peru	3	US$		30,000,000		8.75	%		6/13/2006		21,363,953		20,973,600
Bonos Edegel-Peru	4	US$		20,000,000		8.46	%		11/21/2005		14,242,635		13,982,400
Bonos Edegel-Peru	1A	Soles		100,000,000		6.00	%		6/6/2005		—		20,141,746
Bonos Edegel-Peru	5A	Soles		35,000,000		11.50	%		8/22/2003		7,101,029		—
Bonos Edegel-Peru	5B	Soles		30,000,000		6.00	%		2/22/2004		6,086,596		—
Bonos Emgesa-Colombia	A-1	$ Col.		15,000,000		9.89	%		7/26/2006		4,453,013		3,722,115
Bonos Emgesa-Colombia	B-1	$ Col.		85,000,000		13.95	%		7/26/2006		25,233,740		21,093,150
Bonos Emgesa-Colombia	B-5	$ Col.		12,750,000		9.97	%		10/9/2004		3,785,061		3,164,217
Bonos Emgesa-Colombia	B-7	$ Col.		19,500,000		10.29	%		10/9/2006		5,788,916		4,838,610
Bonos Emgesa-Colombia	B-10	$ Col.		229,825,000		10.60	%		10/9/2009		68,227,578		57,031,413
Bonos Emgesa-Colombia	B-10	$ Col.		60,000,000		10.57	%		11/10/2009		—		14,889,159
Bonos Emgesa-Colombia	C-10	$ Col.		7,701,962		9.88	%		10/9/2009		—		3,464,839
Bonos Emgesa-Colombia	C-10	$ Col.		19,777,918		10.25	%		10/9/2009		6,058,952		1,947,049
Bonos Emgesa-Colombia	B-10 2nd issue	$ Col.		50,000,000		15.18	%		7/26/2006		17,812,051		12,407,281
Bonos Autopista del Sol S.A.	A-1	UF		3,446,160		5.80	%		1/15/2018		58,335,328		—
Bonos Autopista del Sol S.A.	A-2	UF		861,540		5.80	%		1/15/2018		14,583,832		—
Bonos Autopista del Sol S.A.	B-1	UF		964,372		5.80	%		1/15/2018		16,354,124		—
Bonos Autopista del Sol S.A.	B-2	UF		243,578		5.80	%		1/15/2018		4,130,682		—
Endesa Chile Internacional	1	Euro		400,000,000		3.34	%		7/24/2003		271,464,623		—
Bonos Endesa Chile Internacional	1	US$		150,000,000		7.20	%		4/1/2006		106,819,763		104,868,000
Total											1,744,478,133		1,355,876,760

F1-35

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)


i)	Endesa-Chile (Individual legal entity):


I)	The Company made four public offerings of bonds in the local market on the following dates:

•

On September 12, 1988, the Company registered in the Securities Register of the Chilean Superintendency of Securities and Insurance, under No. 105, the first issuance of bonds in the amount of UF 5,000,000, which was issued prior to the end of the year ending December 31, 1988; and it has been paid in full on September 1, 2000.

•

On August 24, 1989, the second issuance of bonds was registered under No. 111, amounting to UF 6,000,000, and was fully placed as of December 31, 1990; it has been paid in full on October 1, 2001.

•

On December 7, 1990, the third bond issuance was registered under No. 131 in the amount of UF 4,000,000. Of this issuance the amount of UF 2,030,000 has been placed as of December 31, 1997. The balance of UF 1,970,000 has been cancelled due to the expiration of the placement period.

•

On August 9, 2001, the fourth bond issuance was registered under No. 264 in the amount of UF 7,500,000, and was fully placed as of December 31, 2001.

Risk ratings of the bonds issued are as follows as of the date of these financial statements:

F1-36

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

ISSUANCE TERMS

Third Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Bearer bonds in local currency, denominated in Unidades de Fomento
Issuance Value				Four million Unidades de Fomento (UF 4,000,000) divided into: — Series C-1: 120 bonds at UF 10,000 each — Series C-2: 800 bonds at UF 1,000 each — Series D-1: 120 bonds at UF 10,000 each — Series D-2: 800 bonds at UF 1,000 each
Indexation				Based on variations in Unidad de Fomento index
Amortization period				Series C-1 and C-2: 15 years (5-year grace period and 10 years to amortize capital) Series D-1 and D-2: 20 years (5-year grace period and 15 years to amortize capital)
Capital amortization				Series C-1 and C-2: 20 consecutive installments payable semi-anually, starting April 1, 1996. Amortization installments will increase with time. Series D-1 and D-2: 30 consecutive installments payable semi-anually, starting May 1, 1996. Amortization installments will increase with time.
Early Redemption				At the issuers option, starting May 1, 1996 and only on the interest payment and amortization dates.
Nominal interest rate				6.8% annually, compounded and on semi-annually outstanding capital, readjusted by the value of the Unidad de Fomento. The applicable interest rate will be equal to 3.34409%.
Interest Payments				Interest will be paid semi-anually each May 1 and November 1, starting May 1, 1991. Accrued interest at the end of the period amounts to ThCh$236,549 (ThCh$260,124 in 2002), and is shown under current liabilities.
Guarantee				There is no specific guarantee, however there is a general guarantee over the issuer's assets
Placement period				48 months from the registration date in the Chilean Securities Register of the Superintendency of Securities and Insurance.

F1-37

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

Fourth Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Bearer bonds in local currency, denominated in Unidades de Fomento
Issuance Value				Seven and a half million (UF 7,500,000) divided into (1): Series E-1: 1,500 bonds at UF 1,000 each. Series E-2: 600 bonds at UF 10,000 each. Series F: 200 bonds at UF 10,000 each.
Indexation				Based on variations in Unidad de Fomento index
Amortization period				Series E-1 and E-2: August 1, 2006. Series F: August 1, 2022.
Early Redemption				Only in the case of Series F, beginning February 1, 2012.
Nominal interest rate				6.2% annually, compounded on outstanding capital, readjusted by the value of the Unidad de Fomento. The interest rate applied semi-annually will be equal to 3.0534%.
Placement period				36 months from the registration date in the Chilean Securities Register of the Superintendency of Securities and Insurance.
Guarantee				There is no specific guarantee, however, there is a general guarantee over the issuer's assets.
Interest payments				Interest wil be paid semi-annually each August 1 and February 1, starting August 1, 2001. Accrued interest at the end of the period amounted to ThCh$3,236,541 (ThCh$3,230,426 in 2002) and is presented under current liabilities.

(1)	The Company holds a currency swap that swaps UF payments to US dollars, and which has a fair value of ThCh$494,316 as of June 30, 2003 and is included in long-term miscellaneous payables.

II)

The Company has issued and placed three public offerings of bonds in the international market as follows:

Risk ratings of the bonds are as follows as of the date of these financial statements:

First Issuance

F1-38

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)


Issuance Value				Six hundred and fifty million US Dollars (US$650,000,000) divided into: Series 1: US$230,000,000 Series 2: US$220,000,000 Series 3: US$200,000,000
Indexation				Variation in the US Dollar
Capital Amortization				Series 1 full expiration on February 1, 2027 Series 2 full expiration on February 1, 2037 (Put Option on February 1, 2009, on which date the holders may redeem 100% of the securities plus accrued interest). Series 3 full expiration on February 1, 2097
Nominal interest rate				Series 1: 7.875% annually Series 2: 7.325% annually Series 3: 8.125% annually
Interest Payments				Interest will be paid semi-anually each February 1 and August 1 annually, starting January 27, 1997. Accrued interest as of June 30, 2003 amounts to ThCh$14,704,098 (ThCh$14,977,764 in 2002), which is shown under current liabilities.

Second Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Marketable securities denominated in US$ (Yankee bonds) in the US market.
Issuance Value				Four hundred million US Dollars (US$400,000,000)
Indexation				Variation in the US Dollar
Capital amortization				Series 1 full expiration on July 15, 2008
Nominal interest rate				Series 1: 7.75% annually
Interest Payments				Interest will be paid semi-anually each January 15 and July 15 annually, starting January 15, 1999. Accrued interest as of June 30, 2003 amounts to ThCh$9,933,329 (ThCh$10,118,205 in 2002), which is shown under current liabilities.

Third Issuance

F1-39

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

Repurchase of Yankee Bonds

During November 2001, the company made a tender offer to repurchase all of a portion of the First Issuance of the following series of Yankee Bonds:

— Series 1: US$230,000,000; 30 years term with maturity in 2027.

— Series 3: US$200,000,000; 100 years term with maturity in 2097.

The offer expired November 21, 2001, and the Company repurchased a total of US$24,119,000 and US$159,584,000 of Series 1 and 3 bonds, respectively, with accrued interest, at prices of US$21,324,000 and US$134,828,000 for Series 1 and 3, respectively.


ii)	Subsidiaries of Endesa-Chile

Endesa-Chile Internacional


a)	Endesa-Chile Internacional issued Yankee Bonds on April 1, 1996.

The risk rating of these bonds is as follows as of the date of these financial statements:

ISSUANCE TERMS

First Issuance


Issuer				Endesa-Chile Internacional
Securities issued				Marketable securities denominated in US$ (150,000 bonds).
Issuance Value				One hundred and fifty million Dollars (US$150,000,000)
Readjustment				Variation in the US Dollar
Capital amortization				Full expiration as of April 1, 2006
Nominal interest rate				7.2% annually until expiration

F1-40

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

As of July 24, 2000, the first registration of Eurobonds (European Medium Term Note Programme) was registered in England, for a total of 1,000 million Euros.

ISSUANCE TERMS

First Registration


Securities registered				1,000 million Euros
Issuance Value				Euros 400,000,000 (1)
Capital amortization				Principal due July 24, 2003
Nominal interest rate				Euribor + 0.80%
Interest Payments				Interest is to be paid quarterly, beginning on October 24, 2000. Accrued interest as of June 30, 2003 amounts to ThCh$2,005,934 (ThCh$1,990,525 in 2002) and is presented in current liabilities.
Guarantee				Guarantee from Empresa Nacional de Electricidad S.A.

(1)	Through a cross-currency swap, the company has elected to change the debt from Euros to US dollars.


II)	Empresa Eléctrica Pehuenche S.A. issued bonds on May 2, 1996.

First Issuance


Issuer				Empresa Eléctrica Pehuenche S.A.
Securities issued				Marketable securities denominated in US$.
Issuance Value				One hundred and seventy million US Dollars (US$170,000,000)
Capital amortization				Full expiration as of May 1, 2003
Nominal interest rate				7.3% annually upon expiration
Interest Payments				Interest will be paid semi-anually, starting November 1, 1996. As of June 30, 2003 these bonds were fully paid.


III)	Edegel S.A. issued bonds on June 4, 1999, February 15, 2000, June 14, 2000 and November 27, 2000, August 22, 2001 and June 6, 2003(of this last but one issuance, series B was placed on February 2, 2002) as per the following:

F1-41

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

First Issuance


Issuer				Edegel S.A.
Securities issued				Marketable securities denominated in US$ (120,000 bonds).
Issuance Value				One hundred and twenty million US dollars (US$120,000,000)
Capital amortization				Full expiration as of June 3, 2007, February 14, 2007, June 03, 2006, November 21, 2005 and February 22, 2004, respectively.
Nominal interest rate				8.75%, 8.41%, 8.75%, 8.44%, 11.5% and 6.0% annually.
Interest Payments				Interest will be paid semi-anually. Accrued interest as of June 30, 2003 amounts to ThCh$1,376,108 (ThCh$1,671,629 in 2002) and is shown under Other Current Liabilities.
Issuer				Edegel S.A.
Securities issued				Marketable securities denominated in Peruvian Soles (20,000 bonds).
Issuance Value				One hundred and million Peruvian Soles (Peruvian Soles 120,000,000)
Capital amortization				Full expiration as of June 6, 2005.
Nominal interest rate				6.0% annually.
Interest Payments				Interest will be paid semi-anually. Accrued interest as of June 30, 2003 amounts to ThCh$80,566 (ThCh$0 in 2002) and is shown under Other Current Liabilities.


IV)	Emgesa S.A. issued bonds on October 8, 1999 and July 9, 2001 from the first issuance, and on February 26, 2003 from the second issuance, as per the following:

First Issuance


Issuer				Emgesa S.A.
Securities issued				Marketable securities denominated in Colombian pesos
Issuance Value				$Col 530,000,000,000
Capital amortization				Full expiration as of 2002, 2007, 2009, 2010, 2006, 2006 and 2002 for $Col 1,525,000; $Col 81,407,744; $Col 19,500,000; $Col 297,567,256; $Col 15,000,000; $Col 85,000,000 and $Col 30,000,000 respectively.
Nominal interest rate				15.5% annual average rate
Interest Payments				Interest will be paid quarterly and annually. Accrued interest as of June 30, 2003 amounts to ThCh$4,907,188 (ThCh$3,359,694 in 2002) and is shown under current liabilities.

F1-42

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

18. Bonds payable: (Continued)

Second Issuance


Issuer				Emgesa S.A.
Securities issued				Marketable securities denominated in Colombian pesos
Issuance Value				$Col 50,000,000,000
Capital amortization				Full expiration as of July 26, 2006.
Nominal interest rate				15.18% annual average rate
Interest Payments				Interest will be paid annually. Accrued interest as of June 30, 2003 amounts to ThCh$2,368,554 (ThCh$0 in 2002) and is shown under current liabilities.

19. Accrued expenses:

The accrued expenses included in short-term and long-term liabilities as of each period-end are as follows:


	Short-term				Long-term
	As of June 30,				As of June 30,
	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Employee salaries		4,551,910		6,045,669		—		—
Provision for contingences, lawsuits, and others		1,712,140		7,368,367		—		—
Chilean Ministry of Public Works annual cost		4,860,848		1,178,437		—		—
Provisional tax payments and other		—		—		8,542,483		11,897,039
Deferred revenue		1,390,874		—		—		—
Post retirement benefits		802,500		800,986		2,372,808		2,654,382
Employee severance indemnities (1)		272,406		57,694		2,216,184		2,744,503
Pensions and post-retirement benefits of foreign subsidiaries		—		—		17,885,777		22,844,445
Provision for purchases of energy and power		9,702,127		24,423,665		—		—
Others		3,426,908		2,445,857		—		195,277
Total		26,719,713		42,320,675		31,017,252		40,335,646

(1)	Long-term accruals include severance indemnities to personnel, calculated in accordance with the policy described in Note 2, Analysis of the changes in the accrual in each period is as follows:


	As of June 30,
	2002			2003
	ThCh$			ThCh$
Opening balance as of January 1		2,168,630			2,673,572
Net increase in accrual		58,730			252,601
Net transfers to short-term accrual		—			(181,670	)
Payments during the period		(11,176	)		—
Total		2,216,184			2,744,503

F1-43

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

19. Accrued expenses: (Continued)

Accounts payable:


	As of June 30,
	2002		2003
	ThCh$		ThCh$
Suppliers and services		38,658,176		31,192,522
Materials purchases		12,437,633		5,918,051
Energy purchases and other		21,232,819		25,606,886
Fuel and transportation		1,101,468		1,114,307
Others		2,491,511		2,558,100
Total		75,921,607		66,389,866

20. Minority interest:


a.	Minority shareholders' participation in the shareholders' equity of the Company's subsidiaries as of each period-end is as follows:


	As of June 30, 2002									As of June 30, 2003
Company	Equity			Participation			Total			Equity			Participation			Total
	ThCh$			%			ThCh$			ThCh$			%			ThCh$
Autopista Los Libertadores S.A.		24,989,266			0.05	%		12,495			—			—			—
Capital de Energía S.A.		546,987,618			49.10	%		268,570,924			540,720,983			49.10	%		265,494,003
Central Hidroeléctrica Betania S.A.		520,804,391			14.38	%		74,880,213			503,924,986			14.38	%		72,453,326
Central Cachoeira Dourada		530,828,655			0.44	%		2,347,557			483,317,227			0.39	%		1,904,849
Central Costanera S.A.		151,616,973			48.07	%		72,878,431			186,478,375			48.07	%		89,635,422
Cía. Eléctrica San Isidro S.A.		32,125,402			50.00	%		16,062,701			34,596,631			50.00	%		17,298,316
Edegel S.A.		711,853,657			36.44	%		259,426,523			654,956,323			36.44	%		238,690,972
Emgesa S.A.		922,446,285			51.52	%		475,215,731			920,421,542			51.52	%		474,172,646
Empresa Eléctrica Pangue S.A.		66,526,738			7.52	%		5,002,811			82,935,439			5.02	%		4,160,207
Endesa Argentina S.A.		18,660,348			0.01	%		1,866			36,530,295			0.01	%		3,653
Generandes Perú S.A.		384,878,245			40.37	%		155,371,576			359,931,305			40.37	%		145,300,741
Hidroeléctrica El Chocón S.A.		228,140,579			34.81	%		79,415,735			233,536,745			34.81	%		81,294,141
Hidroinvest S.A.		103,547,362			30.07	%		31,136,692			96,876,893			30.07	%		29,130,882
Inecsa 2000 S.A.		25,196,328			2.68	%		675,262			—			—			—
Infraestructura 2000 S.A.		64,405,974			40.00	%		25,762,390			—			—			—
Ingendesa S.A.		2,233,999			2.36	%		52,778			2,628,860			2.36	%		62,107
Pehuenche S.A.		180,435,337			7.35	%		13,261,997			190,410,126			7.35	%		13,995,144
Túnel El Melón S.A.		(2,116,237	)		0.05	%		(1,058	)		(4,974,191	)		0.05	%		(2,487	)
Total								1,480,074,624									1,433,593,922

F1-44

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

20. Minority interest: (Continued)


b.	Minority shareholders' equity participation in the results from operations of the Company's subsidiaries for each period-end is as follows:


	Six Months Ended June 30, 2002									Six Months Ended June 30, 2003
	Net Income			Participation			Total			Net Income			Participation			Total
Company	ThCh$			%			ThCh$			ThCh$			%			ThCh$
Autopista Los Libertadores		(582,847	)		0.05	%		(292	)		—			—			—
Capital de Energía S.A.		9,325,743			49.10	%		4,578,939			3,691,256			49.10	%		1,812,407
Central Hidroeléctrica Betania S.A.		(1,261,196	)		14.38	%		(181,332	)		(1,445,091	)		14.38	%		(207,772	)
Central Cachoeira Dourada		8,097,976			0.44	%		35,813			9,869,724			0.39	%		38,899
Central Costanera S.A.		6,213,131			48.07	%		2,986,495			19,666,945			48.07	%		9,453,401
Cía. Eléctrica San Isidro S.A.		2,840,958			50.00	%		1,420,480			3,790,950			50.00	%		1,895,475
Edegel S.A.		16,060,099			36.44	%		5,852,911			14,974,907			36.44	%		5,457,425
Emgesa S.A.		22,175,839			51.52	%		11,424,304			10,123,257			51.52	%		5,215,188
Empresa Eléctrica Pangue S.A.		6,304,696			7.52	%		474,113			16,705,354			5.02	%		837,974
Endesa Argentina S.A.		(13,620,908	)		0.01	%		(1,362	)		15,168,983			0.01	%		1,517
Generandes Perú S.A.		15,304,924			40.37	%		6,178,448			14,355,760			40.37	%		5,795,280
Hidroeléctrica El Chocón S.A.		(22,529,369	)		34.81	%		(7,842,473	)		12,520,430			34.81	%		4,358,362
Hidroinvest S.A.		(14,350,300	)		30.07	%		(4,315,135	)		6,891,444			30.07	%		2,072,257
Inecsa 2000 S.A.		(592,017	)		2.68	%		(15,867	)		—			—			—
Infraestructura 2000 S.A.		124,383			40.00	%		49,753			—			—			—
Ingendesa S.A.		362,861			2.36	%		8,573			930,632			2.36	%		21,986
Pehuenche S.A.		6,288,651			7.35	%		462,215			20,729,855			7.35	%		1,523,644
Túnel El Melón S.A.		(788,806	)		0.05	%		(394	)		(696,769	)		0.05	%		(348	)
Total								21,115,189									38,275,695

21. Shareholders' equity:

Dividends

In the six-month period ended June 30, 2002, the Company paid a dividend of Ch$0.99338 in April 2002.

There were no dividends paid during the six-month period ended June 30, 2003.


b.	Number of shares

As of each of the six-month periods ended June 30, 2002 and 2003, the number of shares authorized, subscribed, and paid for was 8,201,754,580, all having voting rights.


c.	Subscribed and paid capital

Subscribed and paid capital as of six-month periods ended June 30, 2002 and 2003 amounted to ThCh$1,044,843,440 and ThCh$1,039,795,887, respectively.

F1-45

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

21. Shareholders' equity: (Continued)


d.	Net losses from operations and accumulated net earnings (losses) of development-stage subsidiaries are as follows:


	As of June 30, 2003
	Net Earnings (Losses)
Company	During the period		Accumulated
	ThCh$		ThCh$
Compañía Eléctrica Taltal Ltda.		—		246,714
Infraestructura 2000 S.A.		—		585,306
Gas Atacama Generación Ltda.		—		1,367,219
Ingendesa (Brazil)		7,540		7,540
Enigesa S.A. (Brazil)		97		97
Total		7,637		2,206,876


e.	Other reserves

Other reserves are composed of the following as of June 30, 2002 and 2003:


	As of June 30,
	2002			2003
	ThCh$			ThCh$
Accumulated net earnings (losses) of developed-stage subsidiaries		(547,787	)		2,206,876
Accumulated capital revaluation		1,669,297			1,669,490
Revaluation of fixed assets under Decree Law No. 4 (see Note 2)		1,144,475			1,144,607
Other revaluations		74,474			74,484
Reserve for technical revaluation of fixed assets (Circulars 550 and 566)		28,629,987			28,633,286
Reserve for technical revaluation of investments in subsidiaries subsequently sold (Circulars 550 and 566)		24,075,665			24,078,439
Equity adjustment of unconsolidated subsidiaries		(326,219	)		(326,256	)
Reduction of capital in foreign subsidiaries		(6,076,644	)		(6,077,344	)
Accumulated foreign currency translation adjustments (1)		25,817,748			24,355,095
Total		74,460,996			75,758,677

(1)	The detail of the cumulative translation adjustment for foreign currency gains and losses on assets and liabilities and net investments measured in currencies other than the Chilean peso as of June 30, 2002 and 2003 are as follows:


	As of June 30,
	2002			2003
	ThCh$			ThCh$
Endesa-Chile equity method investments		16,120,094			14,394,454
Endesa Argentina		6,995,987			6,948,029
Endesa Chile Internacional		1,203,798			1,646,136
Distrilec Inversora S.A		491,748			454,075
Endesa Colombia S.A.		1,014,053			924,475
Ingendesa Do Brasil Ltda.		(7,932	)		(12,074	)
Total		25,817,748			24,355,095

F1-46

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

22. Other income and expenses:

The detail of other non-operating income in each six month period is as follows:


	Six Months Ended June 30,
	2002		2003
	ThCh$		ThCh$
Effect of application of BT 64		16,544,494		6,562,195
Gain on sale of fixed assets		2,058,196		1,011,008
Settlement of purchases of energy		12,061,894		1,802,413
Costs recovery and client portofolio		—		2,759,353
Dividends Empresa Eléctrica de Bogotá		—		564,545
Indemnities and commissions		—		1,091,093
Sales of designing and other sevices		123,124		368,707
Sales of subsidiaries		—		592,339
Guarantee for bonds of subsidiaries		—		730,792
Other		3,184,094		1,778,152
Total		33,971,802		17,260,597

Other non-operating expenses in each six month period are as follows:


	Six Months Ended June 30,
	2002		2003
	ThCh$		ThCh$
Effect of application of BT 64		12,977,213		3,609,556
Loss on sale of fixed assets		749,540		7,879,959
Board of directors compensation		105,769		131,404
Contingencies and litigation		2,222,340		12,984,878
Energy and power settlement		16,072,657		2,507,972
Retirement benefits and severance indemnities		609,356		909,253
Edegel recovered income		—		1,000,126
Other taxes		1,032,581		2,727,264
Provision for obsolecence of fixed assets		—		5,942,675
Provision for dismantling turbines		601,194		—
Intangible amortization and other deferred expenses		3,742,815		2,102,844
Other		2,364,490		4,312,849
Total		40,477,955		44,108,780

F1-47

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

23. Price-level restatement:

The gain (loss) from price-level restatement as of each period-end is as follows:


	Six Months Ended June 30,
	2002			2003
	ThCh$			ThCh$
Assets
Current assets		1,054,459			5,892,009
Accounts receivable from subsidiaries		1,033,930			2,029,765
Fixed assets		11,846,846			23,018,501
Investments in subsidiaries		526,933			1,921,846
Amortization of goodwill and negative goodwill		(225,695	)		(959,389	)
Other assets		10,572,424			12,155,548
Net gain from asset accounts		24,808,897			44,058,280

Liabilities and Shareholders' equity
Shareholders' equity		(8,673,552	)		(15,736,989	)
Curent and long-term liabilities		(21,434,396	)		(28,077,279	)
Minority interest		1,400,904			2,412,853
Accounts payable to subsidiaries		(4,863	)		(287,983	)
Net loss from liabilities and shareholders' equity accounts		(28,711,907	)		(41,689,398	)
Net gain (loss) from price-level restatement of balance sheet accounts		(3,903,010	)		2,368,882

Net gain (loss) from price-level restatement of income statement		(567,408	)		(303,046	)

Net gain (loss) from price-level restatement in income		(4,470,418	)		2,065,836

F1-48

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

24. Foreign currency translation:

The (charge) credit to income for foreign currency translation as of each period-end is as follows:


		Six Months Ended June 30,

Current assets	Currency	2002			2003

Cash	US$		2,690,521			1,495,321
	Other		—			6,853
Time deposits	US$		8,996			(3,343,272	)
	Other		—			—
Marketable securities	US$		—			—
Accounts receivables, net	US$		136,551			19,488
	Other		—			63,496
Other accounts receivable, net	US$		229,990			(26,153	)
	Other		41,417			(41,303	)
Prepaid expenses	US$		17,570			(31,665	)
Other current assets	US$		7,137,931			(11,434,599	)
	Other		454			(108,341	)
Amounts due from related companies	US$		(11,286	)		(6,405,341	)






Non-current assets

Long-term receivables	US$		19,677,916			(36,328,251	)
	Other		61,719			13,926
Amounts due from related companies	US$		7,937,293			—
Deferred expense	US$		146,739			—
Other non-current assets	US$		(54,971	)		—
Forward contracts	US$		6,262,463			—







Total gain (loss)			44,283,303			(56,119,841	)


		Six Months Ended June 30,

Current liabilities	Currency	2002			2003

Short-term debt due to banks and financial institutions	US$		(448,625	)		(694,885	)
Current portion of long-term debt due to banks and financial institutions	US$		(2,642,220	)		7,742,794
	Yen		(60,422	)		26,932
	Euro		(17,657	)		(235,000	)
	UP		(104,412	)		(35,503	)
	Other		(39,838	)		6,522
Current portion of bonds payable	US$		(125,705	)		15,071,963
Current portion of long-term notes payable	US$		(599,425	)		188,597
	Other		—
Amounts payable to related companies	US$		—
Dividends payable	Other		—
Accrued expenses	US$		2,640			104,453
Accounts payable	US$		(2	)		1,992
	Other		—			(320	)
Miscellaneous payables	US$		(102,328	)		26,205
Other current liabilities	US$		(6,537	)		595,519

Long-term liabilities

Due to banks and financial institutions	US$		(8,485,006	)		21,985,214
	Yen		(146,164	)		25,046
	Euro		(43,211	)		(14,677	)
	GBP		(98,885	)		1,088
	Otras		(137,622	)		(34,152	)
Bonds payable	US$		(24,431,937	)		18,030,552
Account payable	US$		(1,917,133	)		1,939,016
Miscellaneous payables	US$		(1,074,452	)		(191,334	)
	Other		—			2,366
Other long-term liabilities	US$		(2,665,124	)		1,786,598
Amounts payable to related companies	US$		—			953,963
Forward contracts	US$		—			(6,131,500	)


Total (loss) gain			(43,144,065	)		61,151,449

Net gain			1,139,238			5,031,608

F1-49

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

25. Extraordinary loss:

There were no extraordinary losses in the six-month periods ended June 30, 2002 and 2003.

26. Financial derivatives:

As of June 30, 2003 the Company and its subsidiaries held the following financial derivative contracts with financial institutions with the objective of decreasing exposure to interest rate and foreign currency risk according to the following detail:

As of June 30, 2003

Type
(1)

Nominal
Amount

Period of
Maturity

Item

Sales/
Purchase

Hedged
Item

Initial hedged
amount

Closing hedged
amount

US$

ThCh$

50,000,000

2^nd Quarter 2004

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

2^nd Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

3^rd Quarter 2004

Interest rate

S\P

Bank Obligations

34,956,000

25,000,000

3^rd Quarter 2004

Interest rate

S\P

Bank Obligations

17,478,000

50,000,000

3^rd Quarter 2004

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

2^nd Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

1^st Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

1^st Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

2^nd Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

2^nd Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

2^nd Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

381,200,000

3^rd Quarter 2003

Interest rate/Currency

S\P

Bonds

266,504,544

15,700,000

2^nd Quarter 2005

Interest rate

Loans in US$

10,976,184

1,000,000

3^rd Quarter 2003

Interest rate

Loans in US$

699,120

1,000,000

3^rd Quarter 2003

Interest rate

Loans in US$

699,120

1,000,000

3^rd Quarter 2003

Interest rate

Loans in US$

699,120

1,000,000

3^rd Quarter 2003

Interest rate

Loans in US$

699,120

2,000,000

1^st Quarter 2004

Interest rate

Loans in US$

1,398,240

95,000,000

3^rd Quarter 2003

Exchange rate

Bank Obligations

66,416,400

78,000,000

3^rd Quarter 2003

Exchange rate

Bank Obligations

54,531,360

15,000,000

3^rd Quarter 2003

Currency

Bonds

10,486,800

5,000,000

3^rd Quarter 2003

Currency

Bonds

3,495,600

3,333,390

4^th Quarter 2003

Exchange rate

Bank Obligations

2,330,440

144,470,311

3^rd Quarter 2006

Currency

Bonds

101,758,020

144,470,311

3^rd Quarter 2006

Currency

Bonds

2,589,233

50,000,000

3^rd Quarter 2006

Currency

Bonds

(35,217,620

)

(35,217,620

)

50,000,000

3^rd Quarter 2006

Currency

Bonds

(769,115

)

(769,115

)

54,000,000

2^nd Quarter 2008

Interest rate

Bank Obligations

37,752,480

24,000,000

2^nd Quarter 2008

Interest rate

Bank Obligations

16,778,880

48,000,000

2^nd Quarter 2008

Interest rate

Bank Obligations

33,557,760

24,000,000

2^nd Quarter 2008

Interest rate

Bank Obligations

16,778,880

54,000,000

2^nd Quarter 2008

Interest rate

Bank Obligations

37,752,480

50,000,000

2^nd Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

3^rd Quarter 2004

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

1^st Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

50,000,000

1^st Quarter 2006

Interest rate

S\P

Bank Obligations

34,956,000

(1)	Fr = Forward, EO = European Option, S = Swap

F1-50

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies:

The detail of guaranties granted by the Company and its subsidiaries as of June 30, 2003 is the following:

Direct guarantees held by third parties:


		As of June 30, 2003
		Guarantee Released
Guarantee	Subsidiary	2003	2004-2006		After 2006		Total
		ThCh$	ThCh$		ThCh$		ThCh$
Banco del Estado de Chile	Pehuenche S.A.	—		111,990		—		111,990
Chilean Customs	Pehuenche S.A.	—		45,257		5,221		50,478
Chilean Customs	Pangue S.A.	—		62,921		—		62,921
Various banks	Pangue S.A.	—		11,124,866		7,644,344		18,769,210
Mitsubishi Corp.	San Isidro S.A.	—		—		43,778,479		43,778,479
Bank Syndicate Citibank N.A.	Pehuenche, Pangue, Celta	—		—		519,346,286		519,346,286
Banco Estado	Tunel el Melón	—		—		6,458,589		6,458,589
Soc. de Energía de la República Argentina	Endesa Argentina	—		—		15,543,360		15,543,360
J. P. Morgan Bank and ING Bank	Central Costanera	—		—		62,664,712		62,664,712
Banco Santander Central Hispano	Conosur	—		—		127,503,511		127,503,511
Varios creditors	Endesa-Chile	—		—		1,223,963		1,223,963
Total		—		11,345,034		784,168,465		795,513,499

Indirect guarantees held by third parties:


		As of June 30, 2003
		Guarantee Released
Guarantee	Subsidiary	2003		2004-2006		After 2006		Total
		ThCh$		ThCh$		ThCh$		ThCh$
J.P. Morgan & Co. and C.S.F.B.	Endesa Chile Internacional		—		106,755,624		—		106,755,624
BNP	Endesa Chile Internacional		161,774,967		—		—		161,774,967
BBVA	Endesa Chile Internacional		161,774,967		—		—		161,774,967
Mitsubishi Co.	Cía. Eléctrica San Isidro S.A.		—		—		43,778,479		43,778,479
Banco Español de Crédito	Cía. Eléctrica Tarapacá S.A.		—		—		29,431,524		29,431,524
ABN Bank	Cía. Eléctrica Tarapacá S.A.		—		2,480,927		—		2,480,927
Chase Manhattan Bank	Endesa de Colombia S.A.		205,503,263		—		—		205,503,263
Banco Santander C.H.	Cia. Eléctrica Conosur S.A.		—		—		127,503,511		127,503,511
Total			529,053,197		109,236,551		200,713,514		839,003,262

Litigation and other legal actions:

The Company is party to various lawsuits arising in the ordinary course of its business. Management considers it unlikely that any losses associated with the pending lawsuits described below will significantly affect the Company or it subsidiaries' results of operations, financial position and cash flows, although no assurance can be given to such effect. Accordingly, the Company has established a provision for these lawsuits, which Management considers to be adequate.

Endesa-Chile (Individual Legal Entity)

There are pending lawsuits that have been filed against Endesa-Chile for which the corresponding defenses have been filed, which altogether amount to approximately ThCh$2,328,375 and ThCh$6,027,620 as of June 30, 2002 and 2003, respectively.

F1-51

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

Court: Supreme Court of Argentina


	Process number: 2753-4000/97


	Cause: Dirección Provincial de Rentas, Provincia de Neuquén versus TGN (Transportadora de Gas del Norte S.A.). Resolution regarding Stamp Tax sum that eventually should be paid jointly by TGN and Endesa-Chile.


	Process status: TGN requested a precursory measure before the Supreme Court of Argentina to suspend the proceeding filed by the Province of Neuquen, which was accepted. Therefore the administrative complaint proceeding remains pending.


	Amounts involved: $Arg 13,943,572 (Includes tax, interest and fines).

ii.

Court: Arbitration Court


	Process number: N/A

Cause: On December 27, 2001, Empresa Nacional de Electricidad S.A. was notified of an arbitration to resolve controversies related to insurance policy No. 96.676, issued by Compañía de Seguros Generales Consorcio Allianz, currently AGF/Allianz Chile Compañía de Seguros Generales S.A., to cover Endesa-Chile related to "all risks", civil liability and anticipated loss of benefits for the construction of the Ralco Hydroelectric Plant. The suit is directly related to the Ralco Project Cofferdam loss, which occurred on May 27, 2001, and is based on the existence of certain risks that were realized and the lack of information provided by regarding the nature and extension of the risks being covered.

Process status: Endesa replied to the complaint sustaining that the plaintiff is distorting the facts, omitting information that was provided by Endesa-Chile, altering the risks covered by the contract and is unaware of the stipulations in the policy; that the flood that affected the Cofferdam was an insurable risk, included in the policy, and therefore it should be rejected since it has no foundation in fact or in law.


	Amounts involved: US$32 million.

iii.

Court: Third Civil Court of Santiago


	Process number: 3140-2000

Cause: Lawsuit filed by Endesa-Chile versus the Chilean Government to define the criteria for applying the General Electric Services Law with respect to compensation payments for interruptions in the supply during periods of electric rationing. Under Supreme Decree No. 287 of 1999, with which the Chilean Ministry of Economy, Development and Reconstruction ordered electric rationing from June 12, 1999 to August 31, 1999 in the Central Interconnected System, and the modification of Article 99 of the D.F.L.

No. 1/82 Mining Law (Electrical Services General Law introduced by Law 19.613 dated June 8, 1999), when a electricity generating companies produced generation at deficits and were not able to satisfy the normal consumption of their distributor or final customers subject to price regulation (whether due to prolonged failures of thermal power plants or due to droughts), they were obligated to pay compensation or damages to these customers in accordance with the regulations and procedures established in the rationing decree. This situation affected Endesa-Chile and its subsidiaries Pehuenche and Pangue.

F1-52

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

Endesa-Chile has requested that the Court declare the Company is obligated only to pay compensation and damages to its distribution customers for those days and hours in which, during the term of rationing Decree No. 287, there were interruptions in the supply of electricity that affected these customers. The Government has maintained the position that the compensation must be paid for the entire rationing period.


	Process status: Pending resolution.


	Amounts involved: Undeterminable.

Pehuenche S.A.

Court: 20th Civil Courthouse of Santiago


	Process number: 5.863-2001

Cause: Lawsuit by Empresa Eléctrica Pehuenche S.A. versus Empresa Eléctrica Colbún S.A. for services rendered by Pehuenche S.A. to Colbún S.A. during the last drought period. Colbún S.A. responded with a countersuit against Pehuenche S.A. seeking payment for losses from April and May 2001 related to the sentence dictated by the Appeals Court of Talca that was later reversed by the Supreme Court.


	Process status: Case is awaiting sentencing.


	Amounts involved: Pehuenche S.A. is seeking US$7 million in capital and interest and Colbún S.A. is seeking US$2 million.


	Expected outcome: Taking into account the status and details of the case, it is impossible to predict the outcome of the trial.

ii.

Court: Talca Court of Appeals


	Process number: 39.945


	Cause: Asociación del Canal Maule versus DGA Resolution 1768 dated November 1984 related to the approval of reservoir works and building of the Colbún power plant. Pehuenche also filed a complaint to reinforce the claim of the irrigation subscribers that it is the obligation of Colbún S.A. to operate the reservoir.


	Process status: Resolution was passed rejecting the complaint.


	Amounts involved: Undeterminable.

iii.


	a. Court: 24^th Civil Court of Santiago


	Process number: 3908-99


	Cause: Pehuenche filed an ordinary public law motion to vacate against Sociedad Austral de Electricidad


	Process status: Sentence was passed on December 10, 2002. Pehuenche has appealed the verdict and is awaiting the decision of the Appeals Court of Santiago.


	Amounts involved: Undeterminable.

F1-53

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)


	b. Court: 17^th Civil Court of Santiago


	Process number: 3940-99


	Cause: Pehuenche filed an ordinary public law motion to vacate against Chilectra S.A.


	Process status: Summoned to hear sentence.


	Amounts involved: Undeterminable.


	c. Court: 20^th Civil Court of Santiago


	Process number: 4005-99


	Cause: Pehuenche presented an ordinary public law motion to vacate against Empresa Eléctrica Atacama


	Process status: Pending sentencing.


	Amounts involved: Undeterminable.

iv.

Claims against fines assigned by the Superintency of Electricity and Fuels (Superintendencia de Electricidad y Combustibles—SEC). All are currently in process.


	a. Court: Santiago Court of Appeals.


	Process number: 6515-99


	Cause: Failure of CDEC-SIC to provide timely information to the CNE. Resolution 1,557 dated October 1, 1999. The State Defense Council made itself a party to the case.


	Process status: Pending hearing. CDEC-SEC report ordered once again to hear the resource.


	Amounts involved: Five fines for a total of 1,610 Units of Tax Measurement ("UTM") or ThCh$47,316.


	b. Court: 5th Civil Court of Santiago


	Process number: 2272-99


	Cause: Resolution 631 dated April 27, 1999, for not establishing Dispatch Center before January 1, 1999. Process status: We notified handling official letter on November 10, 2000. On March 2, 2001, a request was made to hear sentencing. It was previously certified that the evidence stage had expired. Judgment passed, pending notification of sentence to parties.


	Amounts involved: Fine of 500 UTM (ThCh$14,695).


	c. Court: 16th Civil Court of Santiago


	Process number: 4164-97


	Cause: Resolution 856 dated October 16, 1997, due to blackout on May 11, 1997.


	Process status: Rejected recourse. Appeal prepared, awaiting reopening of file.


	Amounts involved: Fine of 450 UTM (ThCh$13,225).


	d. Court: 16th Civil Court of Santiago


	Process number: 1928-98


	Cause: Resolution 331 dated May 8, 1998, due to blackout on October 13, 1997.

F1-54

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)


	Process status: Rejected recourse. Appeal prepared, awaiting reopening of file.


	Amounts involved: Fine of 300 UTM (ThCh$8,817).


	e. Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Resolution 805 dated May 2, 2000 due to blackout on July 14, 1999.


	Process status: Pending resolution.


	Amounts involved: Fine of 400 UTA (ThCh$141,067).

Other cases


	a. Court: 3^rd Local Police Court of Santiago


	Process number: 50.419-AGO


	Cause: SERNAC versus Pehuenche, claim for lack of electrical supply. Court ruled in favor of Pehuenche and SERNAC appealed. The appeal was granted and the case, including a hearing and exhibition of evidence, was heard again in the 3^rd Local Police Court of Santiago.


	Process status: Pending decision of 3^rd Local Police Court of Santiago.


	Amounts involved: Undeterminable.

vi.

Court: 5^th Labor Court of Santiago


	Process number: 2.923-2001


	Cause: Labor lawsuit for work accident. Manuel Rolando Muñoz Zamorano versus the Chilean Association of Security, S.S.S. and Pehuenche. Second petition verdict confirming first petition verdict.


	Process status: Pending confirmation of appeal for dismissal.


	Amounts involved: Undeterminable.

Pangue S.A.

Endesa-Chile is seeking recourse related to the following fines imposed by the Superintendency of Electricity and Fuel:

Court: Santiago Court of Appeals


	Process number: 1294-99


	Cause: Resolution 415 dated March 12, 1999 for not complying with Article 90 of Decree 640 related to rationing by informing the Superintendency of normal consumption of Pangue's customers. Pangue made itself a party before the Court of Appeals. A motion to vacate was filed before the Supreme Court.


	Process status: Pending hearing


	Amounts involved: Fine of 10 UTM (ThCh$294).

ii.

Court: 1^st Civil Court of Santiago


	Process number: 2273-99

F1-55

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)


	Cause: Resolution No. 631 dated April 27, 1999 for infraction of Article 183 of the Regulations by not establishing the independent Dispatch and Control Center.


	Process status: On June 16, 2002, a judgment was passed ordering a fine to be paid. Pending official notification of judgment.


	Amounts involved: Fine 500 UTM (ThCh$14,695)

iii.

Court: 23rd Civil Court of Santiago


	Process number: 4293-97


	Cause: Resolution No. 856 dated October 16, 1997 for blackout on May 10, 1997.


	Process status: On May 31, 1999, judgment was passed ordering fine to be paid. Appeal made on November 29, 1999 and is pending hearing. As of January 9, 2003 case is still pending hearing.


	Amounts involved: Fine of 450 UTM (ThCh$13,225)

iv.

Court: 23rd Civil Court of Santiago


	Process number: 1910-98


	Cause: Resolution No. 331 dated May 8, 1998 for blackout on October 13, 1997.


	Process status: On July 30, 1999, judgment was passed ordering fine to be paid. Appeal has been filed and is pending hearing. As of January 9, 2003, case is still pending hearing.


	Amounts involved: Fine of 500 UTM (ThCh$14,695)

Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Motion to set aside filed before the SEC against SEC Resolution No. 740 dated April 26, 2000 which fined Pangue for blackout on July 14, 1999.


	Process status: Pending resolution


	Amounts involved: Fine of 300 UTA (ThCh$105,800).

Other lawsuits involving Pangue:

vi.

Court: 18^th Civil Court of Santiago


	Process number: 3886-99


	Cause: Pangue against Chilectra. Lawsuit to annul obligation to pay compensation to regulated price users derived from electricity rationing decree No. 287 issued by the Chilean Ministry of Economy.


	Process status: Case is currently being heard. At the current status of the process and with the available information, it is impossible to foresee the outcome of the lawsuit


	Amounts involved: Undeterminable.

vii.

There are 37 administrative objections presented by Pangue S.A. before the Gobernación Provincial de Malleco to the corresponding requests of various individual to regularize rights to water use in the Commune of Lonquimay.

viii.

Court: Civil Court of Santa Bárbara

F1-56

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)


	Process number: 992-96


	Cause: Disagreement over rates of electricity provided to the community of San Jose, for which Pangue is ordered to pay Ch$13,757,896


	Process status: The case has been decided and the sentence set, details of payment pending.

ix.

Petitioner: Ilustre Municipalidad de Hualqui, VIII Region,


	Appeal against: Empresa Eléctrica Pangue S.A.

Contents of the Lawsuit: Ilustre Municipalidad de Hualqui filed a constitutional protection complaint, against Pangue, claiming illegal and arbitrary omission causing damages and devastation to the population living on the shores of the Bio Bio River, in the community of Hualqui, due to opening of the floodgates without prior notice, during the winter of 2001, because the river rose due to rainfall.


	Amounts involved: Undeterminable


	Process Status: The Court of Appeals rejected the motion. The petitioner filed an appeal with the Supreme Court.

Petitioner: Carlos Castillo Osorio et al


	Appeal against: Empresa Eléctrica Pangue S.A.

Recourse: The inhabitants of Hualqui filed a protection recourse against Pangue S.A. for flooding three villages in that locality. They attribute to the rise of the Bio Bio River as a consequence of opening the floodgates of the Pangue Power Plant. They request that the Court adopt all necessary measures to reestablish the jurisdiction of the law and ensure due protection of the inhabitants of the Hualqui Community.


	Process Status: The Court of Appeals requested a report from Pangue S.A. extending the deadline to inform.

xi.

Judicial collections from Pangue debtors

6th Courthouse. Process Number 592-2002 against Jorge Gustavo Orrego Valdivia. Server stamps negative search. Subsequently confirms that the defendant no longer lives at Julio Prado 1925, Apartment B, he moved to Los Angeles. The new address was noted and letters requisitorial were requested. Completed.

10th Courthouse. Process Number 455-2002 against Mónica Pamela Jiron Tokos. The server stamped a report that the defendant moved three years ago from the address on Pasadena Street 7413, Vitacura. The new address was noted and letters requisitorial was requested. It was exhorted and returned to court duly served. Completed.

11th Courthouse. Process Number 455-2002 against Richard Didier Peña Leighton. Negative search. Server indicated that the defendant does not live at Sócrates Street, Apartment 405. An official letter was requested for the indicated purpose. Completed.

40th Courthouse. Process Number 437-2002 against Julio Alfonso Abarca Muñoz. With search. Was notified by Art. 44 of CPC. Did not appear at the hearing. Confession of indebtedness was requested. On April 29, 2002 the defendant was considered to acknowledge the debt. On July 4 an executive complaint was filed, which was executed and payment was required from the debtor, who did not pay, therefore he is in the process of having his assets seized. Completed.

F1-57

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

27th Civil Courthouse. Process Number 426-2002 against Claudia Andrea Stuardo Sanhueza. Letters requisitorial in process. Defendant was notified by letters requisitorial which was returned duly served. The hearing took place, the defendant was summoned and did not appear, which was certified by the Court Secretary. Completed.

San Isidro S.A.

Court: 7^th Civil Court of Santiago


	Process number: 2195-99


	Cause: Resolution No. 628 dated April 27, 1999 for infraction of Article 183 of Supreme Decree 327, issued by the Chilean Ministry of Economy, by not establishing the independent Dispatch and Control Center before January 1, 1999.


	Process status: Pending judgment of the Court

Amounts involved: Fine 500 UTM (ThCh$14,695).

ii.

Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Resolution No. 719 dated April 24, 2000 due to blackout on July 14, 1999.


	Process status: Pending administrative resolution


	Amounts involved: Fine 150 UTA (ThCh$52,900).

iii.

File No. 2753-4000/97.

Cause: Resolution regarding Stamp Tax (Includes taxes, interest and fines), amount that eventually must be paid by TGN and Endesa, according to gas transport contracts signed by both companies on October 17, 1995 and February 20, 1998. Notified on March 27, 2001. Reconsideration will be requested. TGN filed a precautionary measure with the Supreme Court of Argentina to stop the procedure initiated by the Province of Neuquén, which was accepted, and in consequence, the administrative claim proceeding is currently pending.


	Amounts involved: Arg.$13,943,573

iv.

Cause: On June 12, 2003, arbitration proceeding filed were against San Isidrio and Endesa-Chile by Minera Los Pelambres in order for the arbitrator to declare the non-fulfillment of San Isidro with the energy and power supply contract originally signed by Endesa-Chile with Pelambres on October 28, 1996 and which on January 26, 2000, Endesa-Chile assigned to San Isidro, leaving it subsidiarily obligated for the obligations arising from the contract with San Isidro. The complaint is founded on interruptions and unavailability of electricity during 2001 and 2002, which according to the contract are penalized with fines, which San Isidro has refused to pay.


	Process Status: currently answering complaint.


	Amounts involved: US$2,677,241 plus the readjustment established in the contract and common interest up to the date of the effective payment.


	Outcome: Undeterminable.

F1-58

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

Compañía Eléctrica de Tarapacá S.A. (Celta)

Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Charges against the company per Official Letter 4966 of August 3, 2000 for SING blackout on September 23, 1999.


	Process status: Pending resolution


	Amounts involved: Undeterminable.

ii.

Court: 20^th Civil Court of Santiago


	Process number: 2760-2000


	Cause: Verification of Credit in Inmobiliaria La Cascada Agreement.


	Process status: Report No. 1 was received from the Liquidating Commission. A first distribution of funds from the sale of goods took place, Celta received ThCh$60,558.


	Amounts involved: ThCh$203,718

iii.

Court: 30^th Civil Court of Santiago


	Process number: 4061-2002

Cause: Lawsuit for annulment and other actions filed by Sociedad Punta de Lobos S.A. against Endesa-Chile, Celta and the Chilean Government. The complaint requests that any attempted assignment, transfer, or any legal action presented by Endesa-Chile to Celta be rejected with respect to the marine concession granted to Endesa-Chile in the Punta Patache sector. It also requests that the concession be taken away from Endesa-Chile due to alleged violations of the laws that regulate marine concessions, and that all assets constructed on the concession lands be converted to property of the Government. Endesa-Chile contends that the plaintiff lacks a legal interest in its claim due to the fact that it is not a party to the concession contract.


	Process status: On August 28, 2002 the Tribunal declared as a precautionary measure the prohibition to take action or execute contracts in respect to the marine concession granted to Endesa-Chile and in respect to the real estate which by nature composes or forms part of that concession.


	Amounts involved: If a forfeiture of the marine concession is declared, the dock installation would be affected, which has a value of US$15,000,000 and would become the property of the government, seriously affecting the operation of Celta's thermal power plant.

iv.

Court: 12^th Civil Court of Santiago


	Process number: 5237-2002

Cause: Lawsuit against Empresa Eléctrica del Norte Grande S.A. (Edelnor, including Celta) for reimbursement of compensation paid by the electrical distributors Empresa Eléctrica de Arica S.A., Empresa Eléctrica de Iquique S.A. and Empresa Eléctrica de Antofagasta S.A., to their customers due to the blackout on July 25, 1999 of the Sistema Interconectado del Norte Grande (SING). The complaint is directed against Edelnor, Electroandina, Norgener, AES Gener and Celta to jointly reimburse the electrical distributors.


	Process status: Court resolution pending regarding pleas filed by the defendants that the case is without merit. Outcome of the lawsuit if taken to trial is not determinable.


	Amounts involved: ThCh$64,269

F1-59

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

Court: 8^th Civil Court of Santiago


	Process number: 129-2003


	Cause: Lawsuit brought against Endesa S.A., Celta S.A. and Terminal Marítimo Minera Patache S.A. by Sociedad Punta de Lobos S.A. regarding the rejection of its offer for the concession to operate the Minera Patache sea terminal, which Punta de Lobos S.A. considers a breach of contract. Endesa S.A. maintains that no such contractual obligations regarding the concession exist.


	Process status: In discussion.


	Amounts involved: Undeterminable.

vi.

Plaintiff: Sociedad Punta de Lobos S.A.


	Defendant: Chilean Treasury


	Cause: The plaintiff requests that decree 139 is lifted. This decree accepted extension of Endesa's Marine Concession for shipping salt via Puerto Patache, which was one of the conditions established in the promise of sale that Endesa and Celta signed with Terminal Marítimo Puerto Patache S.A. Therefore, if the lawsuit is accepted said operation would be at risk.


	Process Status: The plaintiff obtained a precautionary measure for "immediate suspension of the decree.


	The Treasury filed dilatory exceptions which have not been resolved. Endesa and Celta are parties in the lawsuit.


	Amounts involved: Undetermined.

Hidroelectrica El Chocon S.A.

On December 28, 2000 the Federal Public Revenues Administration – General Tax Services (FPRA-GTS) notified Hidroelectrica El Chocon S.A. that it owed ThCh$439,753 of taxes related to failure to withhold income tax on certain payments made abroad for a bank loan obtained in 1994. It was also determined that Hidroelectrica El Chocon S.A. must pay ThCh$999,120 for related accrued interest calculated as of December 20, 2000. Hidroelectrica El Chocon S.A. did not make these payments as it considered them relating to foreign source income and therefore not subject to taxes. Hidroelectrica El Chocon S.A. entered a plea in which it objected to payment of the taxes. FPRA-GTS has also fined Hidroelectrica El Chocon S.A. ThCh$307,828 which Hidroelectrica El Chocon S.A appealed by on February 20, 2001.

ii.

On December 28, 2000 Hidroelectrica El Chocon S.A. was notified that it owed accrued interest related to value-added-tax for the period from December 1993 to July 1995 amounting to ThCh$198,985 as of December 11, 2000, as well as an imposed fine of ThCh$251,208. On February 20, 2001 Hidroelectrica El Chocon S.A. filed an appeal with the courts under the premise that Chilean law does not require payment of fines, including accrued interests, for obligations or infractions committed before July 31, 1995.

iii.

On June 26, 2000, Hidroelectrica El Chocon S.A. was notified of a lawsuit for interest to be paid related to royalties, initially amounting to ThCh$394,414. Additionally, on September 27, 2000, the Company was notified of a new complaint from the province of Neuquén against the State and hydroelectric generators of Comahue to obtain royalties earned on accumulated funds in the Salex Account. The complaint does not state the precise amount or date as of which the sums claimed are considered as owed, but seeks charges from each generator equal to 12% of the funds contributed to the account.

F1-60

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

iv.

On December 28, 2001 Hidroelectrica El Chocon S.A. received notification from the Provincial Revenue Services of Buenos Aires that it owed ThCh$434,147 for tax on gross income for the fiscal periods from February 1995 to December 1998 and that the fine was 10% of the allegedly unpaid amount. On January 15, 2002, Hidroelectrica El Chocon S.A. filed an appeal citing erroneous computation of the amount owed and other reasons as to why the taxes were not applicable.

Hidroinvest S.A.

On December 27, 2000 Hidroinvest S.A. was notified that it owed tax of ThCh$794,530 for gains realized in 1993 on the difference between the acquisition cost and transfer price of bonds, accrued interest of ThCh$1,709,035 and related fines of ThCh$556,917. On February 19, 2001, Hidroinvest S.A. filed an appeal to the notice.

Central Costanera S.A.

Central Costanera S.A. has a debt obligation corresponding to an agreement related to Work Order No. 4322 (the "Agreement"). Central Costanera S.A. has fixed the obligation at Arg.$1 equal to one US$1 in accordance with applicable laws. However, certain laws have exempted certain obligations from this fixed exchange rate, and should the Secretary of Energy rule that the obligations of Central Costanera S.A be exempted, an appeal would be filed. As of June 30, 2003, Central Costanera S.A. would to have to pay an additional ThCh$16,800,000 in the event of an unfavorable ruling.

Edegel S.A.

Court: Peruvian Tax Administration Superindendent (SUNAT)


	Process number: N/A


	Cause: From November 2000 to October 2001, the Peruvian tax authority, the National Superintendency of Tax Administration (SUNAT) audited the income taxes and general sales taxes of Edegel S.A. from 1996 to 1999. As a result of the audits, in December 2001, SUNAT imposed back taxes and related fines.


	Process status: In November 2002, the Tax Court issued its verdict indicating that: SUNAT would have to once again audit Edegel S.A. related to tax depreciation of negative goodwill.

On July 9, 2003, Edegel S.A.A. was notified by SUNAT regarding a review of the fiscal notations required by the Office of the Controller of the Currency. The total amount of the new fiscal notation amounts to approximately US$160 million (Ch$111,859 million) originating mainly from non-recognition of reevaluation of the Company's property, plant and equipment and in the opinion of its external legal counsel, the result of this controversy will be favorable to the Company.

ii.

Lawsuits have been filed by ESSALUD for payment of contributions amounting to ThCh$201,418 (US$288,000). In the opinion of Management and their external legal counsel, it is probable that these proceedings will be resolved in favor of the Edegel S.A.; thus no liabilities have been recorded as of June 30, 2003 and 2002.

Claims have been filed against Talleres Mayopampa S.A. amounting to ThCh$1,115,853 (US$1,596,000). The subsidiary has filed the corresponding countersuits and appeals, which have not yet been settled. In the opinion of Management and external legal counsel, these actions neither independently nor jointly will have a significant adverse effect on the financial position, results of operations or liquidity of Edegel S.A.

F1-61

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

iii.

A lawsuit has been filed by Edegel S.A.'s workers' union, which seeks an increase in revenue sharing from the current 5%, as required by law, to 10%, which would mean doubling the payments already made in 1994, 1995 and 1996, meaning additional aggregate payments of ThCh$4,742,876 (US$6,784,000) plus interest. On August 24, 2000, the lawsuit was ruled unfounded, but on December 12, 2000 a second ruling reversed that ruling. In the opinion of Management and external legal counsel, the final resolution will be favorable to Edegel S.A., and therefore no liabilities have been recorded related to this lawsuit as of June 30, 2003 and 2002.

Central Cachoeira Dourada

In April 2003, Companhia Elétrica do Estado de Goiás S.A. ("CELG"), the only client of our Brazilian subsidiary, Cachoeira Dourada, obtained an interim order that allowed CELG to suspend payments in respect to a firm contract for long-term purchase of energy it has with Cachoeira Dourada. On July 4, 2003, the Court presiding over this dispute determined that CELG had to make payments to Cachoeira Dourada until the final resolution of the litigation with price ranges inferior to those of R$61.63 per MWh, amount foreseen under the current conditions of the firm purchase contract. Cachoeira Dourada has decided to appeal this decision.

On July 23, 2003, the Regional Federal Court of the 1st Region has decided in favor of Cachoeira Dourada finding that CELG must pay all the amount owed.

Compañía de Interconección Energética (CIEN)

In January 2003, Companhia Paranaense de Energía - COPEL ("Copel") suspended its payments to Companhia de Interconexão Energética (CIEN"), in respect to the firm contract for purchase of energy and power, which was signed in 1999. In addition CIEN sells energy to another three Brazilian companies. Copel cited the economic and financial imbalance of the 1999 contracts as the reason for its violation. In addition Copel has requested a review of the previously agreed upon prices.

CIEN and Copel are currently negotiating in order to reach an agreement on the matter in order to continue with the current contracts.

Central Hidroeléctrica de Betania S.A.

Tax contingencies:

Presumptive income tax contingency – In 1997, 1998 and 1999 Betania was exempted from paying taxes under the presumptive income tax system – a system which calculates taxes payable on concepts other than net income – due to a regulation passed by the Administration of National Taxes (DIAN) in 1995. Since Betania had tax losses for those years, no taxes were paid. That regulation was modified in 1999, which resulted in Betania qualifying for the presumptive income tax system, which means that according the DIAN it should have paid taxes in 1997 and 1998 amounting to ThCh$23,218,307 (including interest in the amount of ThCh$9,173,140 and sanctions of ThCh$8,591,311). Betania believes that the conclusions of DIAN were unfounded and, therefore on September 13, 2002 filed a complaint before the Administrative Court of Huila. Since then, DIAN has ruled against the petition to reconsider the income tax payable for 1997, while for the 1998 period, DIAN has yet to respond. As of June 30, 2003 Betania recorded a provision amounting to ThCh$6,144,551 to cover this contingency.

ii.

DIAN reviewed Betania's calculation of its ordinary income tax payable for 1997 and 1998 and declared that Betania owes ThCh$10,975 and ThCh$42,844 for 1997 and 1998, respectively,

F1-62

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

including tax, sanctions and estimated overdue interest. In 1997 and 1998 the company has been audited both in the calculation of its ordinary income as well as presumptive income, therefore it should be noted that only the greater of the two becomes taxable net income on which the corresponding taxes, sanctions and interest must be paid.

iii.

DIAN notified Betania that it owes ThCh$20,195 related to the incorrect calculation of income for 1999. Betania has requested that DIAN reconsider the validity of its calculation.

Other contingencies:

iv.

As of December 31, 2002, amounts demanded in lawsuits relating to administrative, civil and labor litigations amounted to ThCh$5,439,137, and there exist other lawsuits for undetermined amounts. Based on the evaluation of the probability of success in the defense of these suits, ThCh$907,631 has been provisioned as of June 30, 2003, to cover probable losses due to these contingencies.

Restrictions:

Endesa-Chile Consolidated

The Company is in compliance with all financial ratios and covenants as of June 30, 2003.

Endesa-Chile (Individual Legal Entity)

On a consolidated basis, the Company must comply with financial covenants and requirements derived from loan agreements with financial institutions. Some of the more restrictive covenants are summarized as follows:

•

Endesa's ratio of debt to cash flows for four quarters and that of its Chilean subsidiaries did not exceed 9.50x;

•

The ratio of consolidated debt to EBITDA for four consolidated quarters, not exceeding 6.75x;

•

The ratio of Endesa-Chile and its Chilean subsidiaries' cash flows to financial expenses for four quarters, not less than 1.50x;

•

The ratio of consolidated debt to shareholders' equity plus minority interest not exceeding 115%;

•

No less than 50% of the total consolidated assets of Endesa-Chile must be dedicated to electric generation, transmission and commercialization activities;

•

Minimum shareholders' equity at least equal to UF 45,000,000.

Pehuenche S.A.

The Santander Investment Bank Ltd. and the Chase Manhattan Bank N.A., in relation to loans granted to Pehuenche, impose obligations and restrictions on Pehuenche S.A., some of which are of a financial nature, such as: long-term financial liabilities not exceeding 1.5 times the shareholders' equity, and a minimum company equity of UF 9,500,000.

Pangue S.A

The following is a summary of the main obligations, which Empresa Eléctrica Pangue S.A. must comply with as per agreements with financial institutions:

F1-63

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

•

Maintain creditors duly informed regarding its financial situation.

•

Different conditions with the objective of guaranteeing a healthy financial situation. Thus, the institutions have defined certain indexes such as restrictions for the payment of dividends and indebtedness, and acceleration clauses. In regard to the long-term debt limit for loans in cash, for these events, the limit is 2.0 times shareholders' equity.

•

Insure and maintain insured all assets.

Central Costanera S.A.

In virtue of the arrangement in Annex VI-A of the "Concurso Público Internacional para la Venta de las Acciones de Central Costanera Sociedad Anónima" (International Public Tender for the Sale of Shares of Central Costanera Sociedad Anonymous), the domain of Central Costanera S.A.'s land was transferred subject to the condition that it used as the location for an electric power plant for a term of twenty five years as of the date of possession.

If under any circumstance whatsoever the land ceases to be used for that purpose during the indicated period, its domain shall be considered revoked due to this cause, returning such title effective immediately, and as a matter of law, to SEGBA S.A. or, as applicable, to the National State.

The most demanding requirements in respect to financial coefficients are those contained in the Syndicated loan, the Agent of which is Bank of America, and in the bilateral with JP Morgan, which are the following:

•

The long-term debt with third parties cannot exceed US$347 million; the debt with a maximum of 30 days cannot exceed US$10 million.

•

Clauses that restrict change of Control;

•

Clauses that restrict payments to shareholders, including subordination of the related debt.

Edegel S.A.A.

Financial indicators originated by credit contracts, Bonds Program and Short-term instruments:

•

Net Shareholders' Equity must not be less than Soles 2,400 million, inflation-indexed.

•

Debt ratio no greater than 1.5.

•

EBITDA / twelve month interest expense no less than 4.5.

•

Financial Debt no greater than ThUS$400.

•

Net Liabilities (Liabilities - Cash) no greater than ThUS$550.

Betania

Convenants include limitations on the payment of related debt and limitations on change in control and the following financial ratios:

•

EBITDA/Senior Financial Debt no less than 1.4.

•

Cash Flows before Dividend Payments / Senior Financial Debt no less than 1.3.

•

Shareholders' Equity / Senior Debt no less than 5.

F1-64

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

27. Commitments and contingencies: (Continued)

Cross-Default Provisions:

As is customary for certain credit and capital market debt facilities, a substantial portion of Enesa-Chile's financial indebtedness is subject to cross-default provisions. Certain events including payment defaults and bankruptcy by Endesa-Chile or any of its subsidiaries, left uncured over time (in those specific provisions which allow for a cure period), could result in a cross-default at the Endesa-Chile level, and if a cross-default were to occur, approximately 60% of Endesa-Chile's consolidated liabilities would eventually become due and payable. There are no longer debt covenants that specify the acceleration of maturities, if the Company's risk-rating falls below investment-grade.

Pre-Payment Provisions:

The US$743 million syndicated loan signed during May 2003 specifies that cash obtained from the sale of Company assets, capital increases, new debt issuances, and at least 75% of excess annual cash is to be used to pre-pay the syndicated loan.

28. Securities obtained from third parties:

Endesa-Chile (Individual Legal Entity)

The Company has received guaranteed performance bonds from contractors and third parties to guarantee performance and construction (mainly the Ralco Project) in the amount of ThCh$21,011,032 as of June 30, 2003 (ThCh$32,077,618 in 2002).

Compañía Eléctrica de Tarapaca S.A.

The Company has received documents in guarantee amounting to ThCh$221,044 as of June 30, 2003 (ThCh$223,865 in 2002)

Compañía Eléctrica San Isidro S.A.

The Company has received documents in guarantee amounting to ThCh$4,489,023 as of June 30, 2003 (ThCh$4,562,283 in 2002).

Empresa Eléctrica de Pangue

Empresa Eléctrica Pangue S.A. has received from contractors guaranteed performance bonds from banks in the amount of ThCh$9,476 as of June 30, 2003, which guarantee advances granted and compliance with contracts.

F1-65

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies:

As of June 30, 2002 and 2003, foreign currency denominated assets and liabilities are as follows:

a. Current assets


		As of June 30,
Account	Currency	2002		2003
		ThCh$		ThCh$
Cash	Ch$.		640,553		2,089,284
	US$		507,472		9,042,930
	$ Col.		1,417,394		7,483,021
	Soles		52,957		592,789
	$ Arg.		747,431		888,981
	Reales		41,876		295,663

Time deposits	US$		41,295,230		63,837,691
	$ Col.		11,887,145		2,960,760
	Soles		1,278,186		—
	$ Arg.		304,113		1,988,675
	Reales		4,617,897		12,601,722

Marketable securities	Ch$		4,875		4,876
	US$		—		5,662,873
	$ Col.		—		143,593
	Soles		—		2,135,024

Accounts receivable, net	Ch$		34,537,071		37,961,930
	US$		5,457,369		6,599,019
	$ Col.		15,515,179		21,219,690
	Soles		1,986,119		2,637,972
	$ Arg.		7,910,045		14,541,163
	Reales		11,822,717		25,468,488

Notes receivable	Ch$		58,820		51,920
	US$		1,011,386		710,445
	Soles		—		47,603

Other receivables	UF		52,688		39,786,558
	Ch$		201,763		8,693,905
	US$		5,458,027		1,171,579
	$ Col.		2,882,801		1,918,160
	Soles		6,189,182		8,566,000
	$ Arg.		22,743		31,084
	Reales		885,828		157,751
	U.C.		1,074,456		1,135,778

F1-66

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)


		As of June 30,
Account	Currency	2002		2003

Amounts due from related companies	Ch$.		10,986,375		15,943,240
	US$		8,007,397		179,102,216
	$ Col.		16,532,885		17,806,905
	Soles		3,064,830		2,603,158
	$ Arg.		6,582,235		—
	Reales		—		4,443,379

Inventory, net	Ch$		6,232,102		4,314,781
	$ Col.		1,032,831		977,369
	Soles		4,730,560		3,860,297
	$ Arg.		5,032,889		3,266,988

Tax receivables	Ch$		16,730,125		13,853,545
	US$		9,452,837		2,503,925
	$ Col.		3,153,045		—
	$ Arg.		—		5,473,291

Prepaid expenses	Ch$		808,543		629,078
	US$		993,139		1,366,499
	$ Col.		1,125,616		1,312,947
	Soles		980,671		876,618
	$ Arg.		1,652,927		1,583,785
	Reales		247,072		583,419

Deferred tax	Ch$		—		4,397,183
	UF		—		2,750
	$ Col.		—		527,836

Other current assets	UF		16,239,813		1,038,573
	Ch$		16,096,091		1,570,283
	Euro		—		76,532
	US$		—		74,607,274
	$ Arg.		183,608		46,666
	Reales		—		2,225,203
Total current assets			287,726,914		625,420,667

F1-67

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

b. Property, plant, and equipment:


		As of June 30,
Account	Currency	2002			2003
		ThCh$			ThCh$
Land	Ch$		19,905,444			18,329,402
	$ Col.		13,359,379			13,234,342
	Soles		298,229			292,780
	$ Arg.		6,815,408			6,690,578
	Reales		440,501			432,453

Buildings and Infrastructure and electrical lines	Ch$		3,160,056,203			2,879,779,700
	$ Col.		1,907,078,522			1,876,293,361
	Soles		344,291,183			327,323,724
	$ Arg.		335,580,951			329,449,366
	Reales		575,137,830			565,623,030

Machinery and Equipment	Ch$		11,609,391			11,126,306
	$ Col.		16,180,306			16,521,604
	Soles		420,955,528			423,317,208
	$ Arg.		746,212,680			734,193,518

Other fixed assets	Ch$		10,541,101			20,400,580
	$ Col.		11,611,647			10,072,921
	Soles		7,319,776			9,280,841
	$ Arg.		9,490,649			9,313,364
	Reales		49,341,270			3,203,693

Technical appraisal	Ch$		11,642,806			10,329,781
	$ Col.		67,651,896			71,415,108
	Soles		501,872,262			492,266,589
	Reales		118,106,829			131,660,873

Accumulated Depreciation	Ch$		(1,206,569,921	)		(1,191,064,609	)
	$ Col.		(364,208,996	)		(405,937,736	)
	Soles		(435,203,883	)		(448,240,441	)
	$ Arg.		(395,903,113	)		(434,991,753	)
	Reales		(209,739,043	)		(242,920,551	)
Total property, plant and equipment, net			5,733,874,835			5,237,396,032

F1-68

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

c. Other assets:


		As of June 30,
Account	Currency	2002			2003
		ThCh$			ThCh$
Investments in related companies	Ch$		107,134,207			113,742,892
	US$		58,119,984			74,644,745

Investments in other companies	Ch$		2,209,620			2,241,961
	$ Col.		78,466,165			78,644,708
	Soles		12,160			9,695

Goodwill, net	Ch$		80,406			3,302,585
	US$		67,406,426			572,003
	$ Col.		24,555,317			22,534,035
	Soles		1,726,234			—
	$ Arg.		33,816,249			—

Negative goodwill, net	US$		(35,316,894	)		—
	$ Col.		(45,401,143	)		(24,128,593	)
	Soles		(67,615,289	)		(56,364,888	)
	$ Arg.		(3,449,885	)		—

Long-term receivables	UF		315,253			4,041,691
	Ch$		1,617,113			1,429,735
	$ Arg.		9,289,296			—
	Soles		754,563			5,468,891
	Reales		12,950,076			11,059,579
	U.C.		1,529,129			550,070

Amounts due from related parties	Ch$		1,189,035			893,464
	US$		172,725,835			—
	Reales		—			29,360

Other assets	UF		3,320,562			494,316
	Ch$		31,196,141			34,117,414
	US$		28,878,633			16,645,677
	$ Col.		21,762,361			22,204,751
	Soles		480,433			496,209
	$ Arg.		2,473,292			11,482,839
	Reales		551,229			421,755
Total other assets			510,776,508			324,534,894

F1-69

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

d. Total assets:


		As of June 30,
Account	Currency	2002		2003
		ThCh$		ThCh$
Total assets by currency	UF		19,928,316		45,363,888
	Ch$		2,236,907,864		1,994,139,236
	US$		363,996,841		436,466,876
	Euro		—		76,532
	$ Col.		1,784,602,350		1,735,204,782
	Soles		793,173,701		775,170,069
	$ Arg.		766,761,518		683,958,545
	Reales		564,404,082		515,285,817
	U.C.		2,603,585		1,685,848
Total assets per currency			6,532,378,257		6,187,351,593

F1-70

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

e. Current liabilities


		Within 90 days										91 days to 1 year
		As of June 30, 2002					As of June 30, 2003					As of June 30, 2002					As of June 30, 2003
Account	Currency	Amount		Average Rate			Amount		Average Rate			Amount		Average Rate			Amount		Average Rate
		ThCh$		%			ThCh$		%			ThCh$		%			ThCh$		%

Short-term due to banks and financial institutions	Ch$		14,371,446		4.52	%		44		3.60	%		—		—			—		—
	US$		22,977,100		9.59	%		17,063,422		5.90	%		—		—			—		—
	$ Col.		7,430,228		12.00	%		20,760,368		5.67	%		—		—			—		—
	Soles		10,258,909		6.50	%		16,768,249		3.98	%		—		—			—		—

Current portion of long-term debt due to banks and financial institutions	UF		—		—			—		—			1,403,798		9.00	%		1,380,036		—
	US$		171,253,542		8.31	%		40,846,654		4.46	%		48,719,273		8.31	%		54,573,968		4.44	%
	Euro		—		—			—		—			4,692,622		4.31	%		2,562,353		3.42	%
	Yen		—		—			—		—			457,220		0.95	%		447,321		0.89	%
	$ Arg.		—		—			—		—			—		—			2,250,153		1.75	%
	Reales		227,726		28.00	%		1,214,984		28.00	%		1,160,137		5.08	%		—		—
	UP		—		—			—		—			1,992,205		5.08	%		1,220,958		5.02	%
	$ Col.		—		—			—		—			—		—			891,378		12.44	%
	Libra		—		—			—		—			435,754		5.08	%		454,568		4.50	%

Promissory notes	Soles		7,116,292		4.33	%		4,126,544		4.50	%		—		—			—		—

Current portion of long-term bonds payable	UF		—		—			—		—			8,494,480		6.29	%		5,779,094		6.29	%
	US$		97,945,005		8.04	%		1,604,632		7.88	%		54,532,061		7.88	%		27,491,546		8.04	%
	Euro		—					323,549,934		3.52	%		1,990,525		3.34	%		—		—
	$ Col.		7,073,029		13.44	%		7,275,742		10.50	%		12,520,666		12.54	%		—		—
	Soles		—		—			497,724		8.80	%		420,200		9.00	%		13,092,135		8.80	%

Current portion of long-term payables	US$		17,063,005		14.00	%		12,618,398		5.00	%		14,049,448		12.86	%		22,636,107		7.42	%
	$ Arg.		609,892		—			—		—			—		—			—		—

Dividends payable	Ch$		194,540		—			830,597		—			—		—			—		—
	Soles		79,041		—			73,182		—			—		—			—		—
	$ Arg.		680		—			913		—			—		—			—		—

F1-71

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

e. Current liabilities, continued


		Within 90 days										91 days to 1 year
		As of June 30, 2002					As of June 30, 2003					As of June 30, 2002				As of June 30, 2003
Account	Currency	Amount		Average Rate			Amount		Average Rate			Amount		Average Rate		Amount		Average Rate
		ThCh$		%			ThCh$		%			ThCh$		%		ThCh$		%

Accounts payable	Ch$		25,994,161		—			32,791,984		—			8,543		—		—		—
	US$		14,623,194		—			5,993,124		—			82,914		—		322		—
	$ Col.		9,189,389		—			10,707,175		—			—		—		—		—
	Soles		1,276,087		—			3,079,251		—			—		—		—		—
	$ Arg.		4,278,123		—			1,973,462		—			—		—		—		—
	Reales		20,469,196		—			11,844,548		—			—		—		—		—

Notes payable	US$		—		—			3,647		—			—		—		—		—

Miscellaneous payables	UF		—					—		—			—		—		—		—
	Ch$		6,405,677		—			6,425,976		—			2,501,225		—		—		—
	US$		3,098,329		—			—		—			1,398,005		—		6,999,072		7.95	%
	$ Col.		194,725		—			2,959,375		—			—		—		—		—
	Soles		1,499,851		—			2,834,509		—			5,979,401		—		11,497,705		—
	Reales		312,681		—			547,625		—			—		—		—		—

Amounts payable to related companies	UF		—					—		—			—		—		—		—
	Ch$		27,172,970		—			34,235,093		—			—		—		—		—
	US$		214,848		3.33	%		1,063,430		10.75	%		—		—		1,180,277		3.27	%
	$ Col.		54,055,913		—			5,509,581		—			—		—		—		—
	Soles		1,187,853		—			79,279		—			—		—		—		—
	$ Arg.		342,981		—			—		—			—		—		—		—

Accrued expenses	Ch$		6,625,035		—			2,342,950		—			14,675,378		—		28,561,917		—
	US$		110,895		—			1,024		—			—		—		—		—
	$ Col.		3,380,312		—			9,932,398		—			—		—		—		—
	Soles		—		—			—		—			1,585,518		—		1,120,887		—
	$ Arg.		148,863		—			229,080		—			—		—		—		—
	Reales		193,712		—			132,419		—			—		—		—		—

Withholdings	Ch$		1,967,189		—			2,330,906		—			—		—		3,045		—
	$ Col.		—		—			637,597		—			—		—		—		—
	Soles		1,828,386		—			1,772,670		—			—		—		—		—
	$ Arg.		1,434,561		—			2,735,709		—			—		—		40,406		—
	Reales		9,236		—			3,000		—			—		—		—		—

F1-72

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

e. Current liabilities, continued


		Within 90 days								91 days to 1 year
		As of June 30, 2002				As of June 30, 2003				As of June 30, 2002				As of June 30, 2003
Account	Currency	Amount		Average Rate		Amount		Average Rate		Amount		Average Rate		Amount		Average Rate
		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%

Income tax payable	Ch$		11,859		—		2,768,042		—		—		—		2,037,850		—
	$ Col.		2,089,433		—		226,515		—		—		—		6,747,775		—
	Soles		—		—		—		—		3,166,068		—		2,435,776		—
	$ Arg.		84,949		—		—		—		—		—		—		—
	Reales		182,379		—		—		—		—		—		—		—

Deferred income	Ch$		138,631		—		35,879		—		273,891		—		70,669		—

Deferred tax	Ch$		—		—		—		—		299,411		—		—		—
	$ Col.		—		—		—		—		—		—		—		—
	$ Arg.		29,722		—		—		—		—		—		—		—
	Other		138,502		—		—		—		—		—		—		—

Other current liabilities	Ch$		498,675		—		—		—		1,997,691		—		660,299		—
	US$		—		—		—		—		—		—		2,043,998		2.30	%
	Euro		—		—		—		—		—		—		—		—
	$ Col.		1,040,697		—		—		—		—		—		—		—
	Soles		—		—		—		—		—		—		—		—
	$ Arg.		—		—		62,921		—		—		—		—		—
	Reales		2,699		—		—		—		—		—		—		—
	Other		100,966		—		—		—		—		—		—		—

Total current liabilities per currency	UF		—		—		—		—		9,898,278		—		7,159,130		—
	Ch$		83,380,183		—		81,761,471		—		19,756,139		—		31,333,780		—
	US$		327,285,918		—		79,194,331		—		118,781,701		—		114,925,290		—
	Euro		—		—		323,549,934		—		6,683,147		—		2,562,353		—
	Yen		—		—		—		—		457,220		—		447,321		—
	$ Col.		84,453,726		—		58,008,751		—		12,520,666		—		7,639,153		—
	Soles		23,246,419		—		29,231,408		—		11,151,187		—		28,146,503		—
	$ Arg.		6,929,771		—		5,002,085		—		—		—		2,290,559		—
	Reales		21,397,629		—		13,742,576		—		1,160,137		—		—		—
	UP		—		—		—		—		1,992,205		—		1,220,958		—
	Libra		—		—		—		—		435,754		—		454,568		—
	Other		239,468		—		—		—		—		—		—		—

Total current liabilities			546,933,114				590,490,556				182,836,434				196,179,615

F1-73

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

f. Long-term liabilities, June 30, 2002


		1 to 3 years					3 to 5 years					5 to 10 years					More than 10 years
Account	Currency	Amount		Average rate			Amount		Average rate			Amount		Average rate			Amount		Average rate
		ThCh$		%			ThCh$		%			ThCh$		%			ThCh$		%

Due to banks and financial institutions	UF		2,697,638		9.00	%		2,935,539		9.00	%		827,322		9.00	%		—		—
	US$		632,759,032		3.62	%		67,929,242		3.62	%		68,862,643		3.62	%		—		—
	Yen		1,132,448		0.95	%		—		—			—		—			—		—
	Euro		289,688		4.31	%		—		—			—		—			—		—
	U.P.		1,702,529		5.03	%		—		—			—		—			—		—
	GBP		1,037,127		5.13	%		—		—			—		—			—		—

Bonds payable	UF		4,759,809		6.29	%		105,735,669		6.29	%		19,618,758		6.29	%		111,427,783		6.29	%
	US$		14,242,635		8.44	%		170,911,620		8.75	%		569,705,400		7.20	%		332,064,900		7.96	%
	Euro		271,464,623		3.34	%		—		—			—		—			—		—
	$ Col.		3,785,061		14.95	%		35,475,669		14.00	%		92,098,581		14.00	%		—		—
	Soles		13,187,625		9.00	%		—		—			—		—			—		—

Notes payable	US$		42,467,113		7.30	%		37,756,388		7.30	%		60,898,656		7.30	%		—		—
	$ Arg.		1,225,390		7.42	%		1,225,390		7.42	%		2,757,127		7.42	%		—		—

Miscellaneous	UF		6,192		—			—		—			—		—			163,507		—
	Ch$		2,154,841		—			—		—			—		—			66,616		—
	US$		6,556,113		7.95	%		7,812,573		—			10,295,886		9.48	%		—		—

Amounts payable to related parties	US$		61,980,022		8.35	%		—		—			—		—			—		—

Accrued expenses	UF		—		—			58,498		—			—		—			—		—
	Ch$		1,159,121		—			753,352		—			1,506,713		—			993,533		—
	US$		91,674		—			—		—			—		—			—		—
	$ Col.		199,811		—			—		—			—		—			17,647,022		—
	Reales		1,340,025		—			1,274,980		—			3,187,449		—			2,805,074		—

Deferred tax	Ch$		—		—			1,880,176		—			13,192,964		—			24,986		—
	Soles		—		—			18,457,728		—			—		—			—		—
	$ Arg.		172,836		—			115,223		—			518,506		—			—		—

Other long-term liabilities	Ch$		821,556		—			1,017,126		—			—		—			—		—

Total long-term liabilities per currency	UF		7,463,639		—			108,729,706		—			20,446,080		—			111,591,290		—
	Ch$		4,135,518		—			3,650,654		—			14,699,677		—			1,085,135		—
	US$		758,096,589		—			284,409,823		—			709,762,585		—			332,064,900		—
	Euro		271,754,311		—			—		—			—		—			—		—
	Yen		1,132,448		—			—		—			—		—			—		—
	$ Col.		3,984,872		—			35,475,669		—			92,098,581		—			17,647,022		—
	Soles		13,187,625		—			18,457,728		—			—		—			—		—
	$ Arg.		1,398,226		—			1,340,613		—			3,275,633		—			—		—
	Reales		1,340,025		—			1,274,980		—			3,187,449		—			2,805,074		—
	U.P.		1,702,529		—			—		—			—		—			—		—
	GBP		1,037,127		—			—		—			—		—			—		—

Total long-term liabilities			1,065,232,909					453,339,173					843,470,005					465,193,421

F1-74

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

29. Foreign currencies: (Continued)

g. Long-term liabilities, June 30, 2003


		1 to 3 years					3 to 5 years					5 to 10 years					More than 10 years
Account	Currency	Amount		Average rate			Amount		Average rate			Amount		Average rate			Amount		Average rate
		ThCh$		%			ThCh$		%			ThCh$		%			ThCh$		%

Due to banks and financial institutions	UF		2,948,066		9.00	%		2,125,487		9.00	%		—		—			—		—
	US$		318,670,457		4.44	%		401,987,228		4.44	%		35,614,129		4.44	%		3,768,714		4.44	%
	Euro		197,047		3.38	%		—		—			—		—			—		—
	Yen		666,767		0.89	%		—		—			—		—			—		—
	$ Arg.		4,440,960		1.75	%		2,220,480		1.75	%		8,881,920		1.75	%		—		—
	$ Col.		—		—			43,425,833		—			—		—			—		—
	Reales		2,992,858		28.00	%		5,623,694		28.00	%		—		—			—		—
	U.P.		631,180		5.02	%		—		—			—		—			—		—
	GBP		661,070		4.50	%		—		—			—		—			—		—

Bonds payable	UF		5,057,800		6.29	%		107,413,940		6.29	%		16,681,012		6.29	%		16,959,670		6.29	%
	US$		34,956,000		8.43	%		18,384,759		8.43	%		559,296,000		8.13	%		454,428,000		7.77	%
	$ Col.		122,557,833		10.50	%		—		—			—		—			—		—
	Soles		20,141,746		6.00	%		—		—			—		—			—		—

Notes payable	US$		30,250,868		12.42	%		63,085,999		7.42	%		47,671,720		7.42	%		—		—

Miscellaneous	UF		—		—			—		—			—		—			163,817		—
	Ch$		946,320		—			—		—			—		—			—		—
	US$		6,151,843		—			—		—			10,371,770		6.54	%		—		—

Amounts payable to related parties	US$		43,407,162		—			—		—			—		—			—		—

Accrued expenses	Ch$		424,871		9.50	%		441,976		—			958,680		—			3,560,774		—
	US$		141,445		—			3,498,759		—			—		—			—		—
	$ Col.		22,898,277		—			—		—			—		—			12,584		—
	Reales		8,398,280		—			—		—			—		—			—		—

Deferred tax	Ch$		6,532,294		—			692,160		—			6,214,624		17.00	%		1,273,329		—
	Soles		—		—			18,518,338		—			—		—			—		—

Other long-term liabilities	Ch$		1,580,312		—			861,254		—			1,809,341		—			2,988,690		—
	US$		3,023,135		—			694,237		—			—		—			—		—

Total long-term liabilities per currency	UF		8,005,866		—			109,539,427		—			16,681,012		—			17,123,487		—
	Ch$		9,483,797		—			1,995,390		—			8,982,645		—			7,822,793		—
	US$		436,600,910		—			487,650,982		—			652,953,619		—			458,196,714		—
	Euro		197,047		—			—		—			—		—			—		—
	Yen		666,767		—			—		—			—		—			—		—
	$ Col.		145,456,110		—			43,425,833		—			—		—			12,584		—
	Soles		20,141,746		—			18,518,338		—			—		—			—		—
	$ Arg.		4,440,960		—			2,220,480		—			8,881,920		—			—		—
	Reales		11,391,138		—			5,623,694		—			—		—			—		—
	U.P.		631,180		—			—		—			—		—			—		—
	GBP		661,070		—			—		—			—		—			—		—

Total long-term liabilities			637,676,591					668,974,144					687,499,196					483,155,578

F1-75

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of June 30, 2003, except as stated)

30. Sanctions:

The Company and its directors have not been the subject of sanctions by the SVS nor by any other administrative authorities.

On February 22, 2002, through Resolución Exenta No, 44, the SVS applied a sanction to censure Héctor López Vilaseco, the Company's Chief Executive Officer infringing on the arrangement in Section III of Circular No. 1,481 of May 25, 2000, for having sent to the SVS, after the imposed deadline, the Company's list of shareholders as of December 31, 2001.

31. Subsequent events:

On July 4, 2003, the Board of Directors of Empresa Eléctra Pangue S.A. agreed to call an extraordinary shareholders' meeting to take place on July 29, 2003, in order to vote to de-list Pangue from the Chilean SVS and change to a privately-held corporation.

On July 23, 2003, the Endesa-Chile issued bonds for US$600 million in a cross-border private placement with subsequent registration rights. The purpose of the issuance was to provide funds for payment of European Medium Term Notes of €400 million (US$381 million obligation due to currency swap).

The bonds were issued in two series:

US$400 million, maturing in 2013, with interest rate of 8.35% per annum, not guaranteed;

US$200 million, maturing in 2015, with interest rate of 8.625% per annum, not guaranteed.

32. Environment:

During the period ended June 30, 2003, the Company and its domestic and foreign subsidiaries made expenditures in the amount of ThCh$6,062,708 corresponding primarily to the following:

Operating expenses during the year included costs of studies, monitoring, follow-up, and laboratory analysis which amounted to ThCh$214,097 and costs related to Environment Law No. 99 in Colombia and ISO 14.001 certification at Central Costanera and El Chocón which amounted to ThCh$3,172,834 (US$4,538,325). Investments related with the following projects were capitalized and amounted to ThCh$2,675,777:

•

Central Ralco environment program

•

Implementation of the environmental management system and its ISO 14.001 certification at the San Isidro, Pangue, Tal Tal, Pehuenche, Loma Alta and Curillinque power plants

•

Central Pangue - restoration of local environment

F1-76

ITEM 5

Endesa-Chile and Subsidiaries

Index to the Unaudited Consolidated Financial Statements


Consolidated Financial Statements:
Consolidated Balance Sheets as of March 31, 2002 and 2003					F2–2
Consolidated Statements of Income for the three-month period ended March 31, 2002 and 2003					F2–4
Consolidated Statements of Shareholders' Equity for the three-month periods ended March 31, 2002 and 2003					F2–5
Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2002 and 2003					F2–6
Notes to the Consolidated Financial Statements					F2–8


Ch$	—	Chilean pesos
US$	—	United States dollars
UF	—	The UF is a Chilean inflation-indexed, peso-denominated monetary unit that is set daily in advance based on the previous month's inflation rate (see Note 2 (b)).
ThCh$	—	Thousands of Chilean pesos
ThUS$	—	Thousands of United States dollars

Application of Constant Chilean Pesos

The consolidated financial statements included herein have been restated for general price-level changes and expressed in constant Chilean pesos of March 31, 2003 purchasing power.

F2-1



		As of March 31,
	Note	2002			2003			2003
Assets:		ThCh$			ThCh$			ThUS$
								(Note 2 (b))
Current assets:
Cash			15,561,339			4,894,773			6,691
Time deposits	4		43,711,831			120,486,427			164,698
Marketable securities			4,841			4,847			7
Accounts receivable, net	5		87,122,035			92,006,635			125,768
Notes receivable, net	5		1,000,023			825,531			1,128
Other accounts receivable, net	5		22,422,207			20,493,491			28,013
Amounts due from related companies	6a		40,460,738			212,393,414			290,329
Inventories, net	7		15,993,638			10,882,810			14,876
Income taxes recoverable	8a		28,340,339			22,360,232			30,565
Prepaid expenses			3,857,618			8,949,691			12,234
Deferred income taxes	8d		—			4,152,367			5,676
Other current assets	9		21,333,338			237,011,965			323,982
Total current assets			279,807,947			734,462,183			1,003,967
Property, plant and equipment, net:	10		5,571,032,523			5,595,822,689			7,649,164
Other assets:
Investments in related companies	11		159,632,701			187,207,975			255,902
Investments in other companies	12		77,188,598			86,193,110			117,821
Long-term receivables	5		47,791,092			18,142,779			24,800
Goodwill, net	13a		124,065,437			27,926,704			38,174
Negative goodwill, net	13b		(156,572,226	)		(88,813,734	)		(121,403	)
Amounts due from related companies	6a		166,024,523			900,210			1,231
Other intangibles	14		31,016,434			32,870,118			44,932
Accumulated amortization	14		(5,712,243	)		(7,262,955	)		(9,928	)
Other assets	15		40,008,382			70,174,578			95,925
Total other assets			483,442,698			327,338,785			447,454
Total assets			6,334,283,168			6,657,623,657			9,100,585

The accompanying notes are an integral part of these consolidated financial statements.

F2-2



		As of March 31,
	Note	2002			2003		2003
Liabilities and Shareholders' equity:		ThCh$			ThCh$		ThUS$
							(Note 2 (b))
Current liabilities:
Short-term debt due to banks and financial institutions	16a		42,167,985			133,871,927		182,995
Current portion of long-term debt due to banks and financial institutions	16b		240,986,944			223,202,468		305,105
Current portion of long-term notes payable			23,959,597			34,417,683		47,047
Promissory notes	17		—			7,881,697		10,774
Current portion of bonds payable	18a		47,131,043			491,181,020		671,416
Dividends payable			28,873			12,379,162		16,922
Accounts payable	19b		76,891,638			70,240,890		96,015
Miscellaneous payables			22,212,133			42,725,922		58,404
Amounts payable to related companies	6b		111,708,935			30,882,337		42,214
Accrued expenses	19a		36,079,703			48,871,947		66,805
Withholdings			7,096,549			7,684,823		10,505
Income taxes payable	8a		12,070,923			13,296,773		18,176
Prepaid income			490,524			401,133		548
Deferred income taxes	8d		315,940			—		—
Other current liabilities			4,069,920			5,675,876		7,759
Total current liabilities			625,210,707			1,122,713,658		1,534,685
Long-term liabilities:
Due to banks and financial institutions	16c		782,548,820			716,393,515		979,268
Bonds payable	18b		1,708,616,195			1,483,258,980		2,027,529
Long-term notes payables			150,467,521			154,597,281		211,325
Miscellaneous payables			25,118,629			20,372,952		27,849
Amounts payable to related companies	6b		65,222,958			47,492,845		64,920
Accrued expenses	19a		31,885,172			39,807,284		54,413
Deferred income taxes	8d		30,643,791			71,691,601		97,998
Other long-term liabilities			6,997,409			25,349,012		34,651
Total long-term liabilities			2,801,500,495			2,558,963,470		3,497,953
Commitments and contingencies	28
Minority interest:	20a		1,440,178,096			1,512,635,485		2,067,685
Shareholders' equity:	21
Paid-in capital, no par value			1,047,871,972			1,039,795,887		1,421,341
Price-level restatement			(4,191,488	)		5,198,979		7,107
Additional paid-in capital — share premium			204,730,880			204,988,712		280,208
Other reserves			68,091,178			81,315,599		108,168
Retained earnings			133,296,662			108,029,117		150,655
Net income for the period			17,594,666			23,982,750		32,783
Total shareholders' equity			1,467,393,870			1,463,311,044		2,000,262
Total liabilities and shareholders' equity			6,334,283,168			6,657,623,657		9,100,585

The accompanying notes are an integral part of these consolidated financial statements.

F2-3

Endesa-Chile and Subsidiaries
Unaudited Consolidated Statements of Income
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of December 31, 2002, and thousands of US dollars)



		Three Months Ended March 31,
	Note	2002			2003			2003
		ThCh$			ThCh$			ThUS$
								(Note 2 (b))
Operating income:
Sales			236,990,288			245,907,556			336,141
Cost of sales			(139,152,298	)		(140,648,502	)		(192,258	)
Gross profit			97,837,990			105,259,054			143,883
Administrative and selling expenses			(7,310,649	)		(8,155,837	)		(11,149	)
Operating income			90,527,341			97,103,217			132,734
Non-operating income and expense:
Interest income			4,155,735			3,606,900			4,930
Equity participation in income of related companies	11		2,549,584			10,702,445			14,630
Other non-operating income	22a		24,623,929			13,678,053			18,697
Equity participation in losses of related companies	11		(6,141,211	)		(173,003	)		(236	)
Goodwill amortization	13a		(2,086,857	)		(464,800	)		(635	)
Interest expense			(51,757,688	)		(51,295,370	)		(70,118	)
Other non-operating expenses	22b		(27,942,289	)		(19,881,680	)		(27,177	)
Price-level restatement, net	23		(328,476	)		1,726,348			2,360
Foreign currency translation, net	24		(6,155,411	)		(354,215	)		(484	)
Non-operating expense, net			(63,082,684	)		(42,455,322	)		(58,033	)
Income before income taxes			27,444,657			54,647,895			74,701
Income tax	8e		(12,536,367	)		(21,181,804	)		(28,954	)
Income before minority interest			14,908,290			33,466,091			45,747
Minority interest	20b		(8,800,233	)		(14,047,718	)		(19,203	)
Income before amortization of negative goodwill			6,108,057			19,418,373			26,544
Amortization of negative goodwill	13b		11,486,609			4,564,377			6,239
Net income for the period			17,594,666			23,982,750			32,783

The accompanying notes are an integral part of these consolidated financial statements.

F2-4


	Number of shares		Paid-in capital		Price-level restatement			Additional paid-in capital			Other reserves			Retained earnings			Net income (loss) for the period			Total
	(In thousands)		ThCh$		ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
As of January 1, 2002		8,201,755		1,009,510,570		—			198,028,027			67,945,775			58,874,284			70,058,270			1,404,416,926
Transfer of prior year loss to retained earnings		—		—		—			—			—			69,778,037			(69,778,037	)		—
Price-level restatement of capital		—		—		(4,038,042	)		(792,112	)		(271,783	)		(235,498	)		(280,233	)		(5,617,668	)
Deficit of subsidiaries in the development stage		—		—		—			—			(2,932,964	)		—			—			(2,932,964	)
Cumulative translation adjustment		—		—		—			—			857,410			—			—			857,410
Net income for the period		—		—		—			—			—			—			16,950,545			16,950,545
As of March 31, 2002		8,201,755		1,009,510,570		(4,038,042	)		197,235,915			65,598,438			128,416,823			16,950,545			1,413,674,249
As of March 31, 2002 (1)		8,201,755		1,047,871,972		(4,191,488	)		204,730,880			68,091,178			133,296,662			17,594,666			1,467,393,870
As of January 1, 2003		8,201,755		1,039,795,887		—			203,968,868			71,330,030			124,859,591			(9,319,056	)		1,430,635,320
Transfer of prior year income to retained earnings		—		—		—			—			8,048,876			(17,367,932	)		9,319,056			—
Price-level restatement of capital		—		—		5,198,979			1,019,844			396,895			537,458			—			7,153,176
Cumulative translation adjustment		—		—		—			—			319,263			—			—			319,263
Changes in equity of affiliates		—		—		—			—			1,220,535			—			—			1,220,535
Net income for the period		—		—		—			—			—			—			23,982,750			23,982,750
As of March 31, 2003		8,201,755		1,039,795,887		5,198,979			204,988,712			81,315,599			108,029,117			23,982,750			1,463,311,044

(1)	Restated in thousands of constant Chilean pesos as of March 31, 2003.

The accompanying notes are an integral part of these consolidated financial statements.

F2-5


	Three Months Ended March 31,
	2002			2003			2003
	ThCh$			ThCh$			ThUS$
							(Note 2 (b))
Cash flows from operating activities:
Net income for the period		17,594,666			23,982,750			32,783
Gain on sales of property, plant and equipment		(1,183,587	)		(3,328	)		(5	)
Charges (credits) to income which do not represent cash flows:
Depreciation		46,196,937			53,717,084			73,428
Amortization of intangibles		2,289,086			606,089			828
Equity participation in income of related companies		(2,549,584	)		(10,702,445	)		(14,630	)
Equity participation in losses of related companies		6,141,211			173,003			236
Amortization of goodwill		2,086,857			464,800			635
Amortization of negative goodwill		(11,486,609	)		(4,564,377	)		(6,239	)
Price-level restatement, net		328,476			(1,726,348	)		(2,360	)
Foreign currency translation, net		6,155,411			354,215			484
Other credits to income which do not represent cash flows		(3,113,251	)		(8,933,779	)		(12,212	)
Other charges to income which do not represent cash flows		16,751,502			11,308,371			15,458
Changes in assets which affect cash flows:
Decrease (increase) in trade receivables		(7,666,068	)		(257,922	)		(353	)
Decrease in inventory		784,261			1,188,425			1,625
Decrease (increase) in other assets		(9,897,796	)		(13,334,959	)		(18,228	)
Changes in liabilities which affect cash flows:
Increase in accounts payable associated with operating results		15,123,270			18,728,290			25,600
Increase in interest payable		16,479,656			(1,893,595	)		(2,588	)
Increase (decrease) in income tax payable		—			9,992,356			13,659
Increase (decrease) in other accounts payable associated with non-operating results		1,908,016			11,443,655			15,643
Net increase in value added tax and other accounts payable		907,075			(3,592,257	)		(4,910	)
Income attributable to minority interest		8,800,233			14,047,718			19,202
Net cash flows provided by operating activities		105,649,762			100,997,746			138,056

The accompanying notes are an integral part of these consolidated financial statements.

F2-6


	Three Months Ended March 31,
	2002			2003			2003
	ThCh$			ThCh$			ThUS$
							(Note 2 (b))
Cash flows from financing activities:
Proceeds from the issuance of debt		27,799,881			88,746,875			121,312
Proceeds from bond issuances		5,927,083			12,364,743			16,902
Proceeds from loans obtained from related companies		111,241,931			—			—
Other sources of financing		1,872,974			5,737,977			7,843
Dividends paid		(5,539,620	)		(12,878,501	)		(17,604	)
Payment of debt		(208,874,783	)		(101,949,360	)		(139,359	)
Payment of bonds		(34,341,202	)		(185,962	)		(254	)
Payment of loans obtained from related companies		(39,279,270	)		(2,006,807	)		(2,743	)
Other disbursements for financing		(79,495	)		(2,143,930	)		(2,931	)
Net cash used in financing activities		(141,272,501	)		(12,314,965	)		(16,834	)
Cash flows from investing activities:
Proceeds from sales of property, plant and equipment		11,418,148			6,916			9
Payments recieved on loans to related companies		16,115,888			7,506,274			10,261
Other receipts from investments		454,768			2,344			3
Additions to property, plant and equipment		(14,172,997	)		(52,221,555	)		(71,384	)
Long-term investments		—			(5,444	)		(7	)
Other loans granted to related companies		(11,369,764	)		(8,606,417	)		(11,764	)
Other investment disbursements		(2,041,170	)		(161,852	)		(221	)
Net cash used in investing activities		404,873			(53,479,734	)		(73,103	)
(Negative) Positive net cash flow for the year		(35,217,866	)		35,203,047			48,119
Effect of price-level restatement on cash and cash equivalents		163,668			(1,307,481	)		(1,787	)
Net (decrease) increase in cash and cash equivalents		(35,054,198	)		33,895,566			46,332
Cash and cash equivalents beginning of period		94,327,368			123,479,307			168,789
Cash and cash equivalents end of period		59,273,170			157,374,873			215,121

The accompanying notes are an integral part of these consolidated financial statements.

F2-7

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

1. Description of Business:

2. Summary of Significant Accounting Policies:

General:

The unaudited information for the three-month periods ended March 31, 2002 and 2003 includes all adjustments, consisting of only normal recurring adjustments, which in the opinion of management are necessary for the fair presentation of such information. The results of operations for the three months ended March 31, 2003 are not necessarily indicative of the results to be expected for the year ending December 31, 2003 or any other period.

F2-8

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

2. Summary of Significant Accounting Policies: (Continued)


	Percentage of ownership participation as of March 31,
Company name	2002		2003
	Total		Direct		Indirect		Total
Enigesa S.A.		100.00		99.51		0.49		100.00
Ingendesa S.A.		97.64		96.39		1.25		97.64
Pehuenche S.A.		92.65		92.65		—		92.65
Endesa Argentina S.A.		99.99		99.99		—		99.99
Endesa-Chile Internacional		100.00		100.00		—		100.00
Pangue S.A.		92.48		94.97		0.02		94.99
Hidroinvest S.A.		69.93		—		69.93		69.93
Infraestructura 2000 S.A.		60.00		60.00		—		60.00
Hidroeléctrica El Chocón S.A.		65.19		—		65.19		65.19
Central Costanera S.A.		51.93		—		51.93		51.93
Endesa Brasil Participacoes Ltda.		100.00		5.00		95.00		100.00
Túnel El Melón S.A.		99.95		99.95		—		99.95
Soc. Concesionaria Autopista del Sol S.A.		100.00		0.10		99.90		100.00
Inecsa 2000 S.A.		97.32		—		97.32		97.32
Soc. Concesionaria Autopista Los Libertadores S.A.		99.95		—		99.95		99.95
Compañía Eléctrica Cono Sur S.A.		100.00		100.00		—		100.00
Central Hidroeléctrica Betania S.A.		85.62		—		85.62		85.62
Endesa de Colombia S.A.		100.00		5.10		94.90		100.00
Lajas Inversora S.A.		100.00		—		100.00		100.00
Cachoeira Dourada S.A.		99.51		—		99.60		99.60
Capital de Energía S.A.		50.90		—		50.90		50.90
Emgesa S.A		51.32		—		51.32		51.32
Edegel S.A.A.		63.56		—		63.56		63.56
Generandes Perú S.A.		59.63		—		59.63		59.63
Compañía Eléctrica San Isidro S.A.		75.00		50.00		25.00		75.00
Compañía Eléctrica Tarapacá S.A.		100.00		99.90		0.10		100.00
Inversiones Endesa Norte S.A.		100.00		99.99		0.01		100.00

Constant currency restatement:

The cumulative inflation rate in Chile as measured by the Chilean Consumer Price Index ("CPI") for the two-year period ended March 31, 2003 was approximately 6.46%.

The financial statements of the Company have been price-level restated in order to reflect the effects of the changes in the purchasing power of the Chilean currency during each year. All non-monetary assets and liabilities, all equity accounts and income statement accounts have been restated to reflect the changes in the CPI from the date they were acquired or incurred to year-end (see also Note 23).

F2-9

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

2. Summary of Significant Accounting Policies: (Continued)

The purchasing power gain or loss included in net income reflects the effects of Chilean inflation on the monetary assets and liabilities held by the Company.

The values of the Chilean consumer price indices used to reflect the effects of the changes in the purchasing power of the Chilean peso ("price-level restatement") are as follows:


	Index		Change over Previous February 28,
February 28, 2002		109.67		2.5	%
February 28, 2003		113.88		3.8	%

By way of comparison, the actual values of the Chilean consumer price indices as of the balance sheet dates are as follows:


	Index		Change over Previous March 31,
March 31, 2002		110.26		2.6	%
March 31, 2003		115.21		4.5	%

Index-linked assets and liabilities

F2-10

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

2. Summary of Significant Accounting Policies: (Continued)

Comparative financial statements

For comparative purposes, the historical March 31, 2002 and 2003 consolidated financial statements and their accompanying notes have been presented in constant Chilean pesos as of March 31, 2003. Amounts previously presented in constant Chilean pesos as of each balance sheet date have been adjusted by the percentage changes in the CPI to March 31, 2003, as follows:

(1)	Equivalent to the amounts for 2002 multiplied by the change in the CPI for 2003.

This updating does not change the prior periods' statements or information in any way except to update the amounts to constant Chilean pesos of similar purchasing power.

Convenience translation to U.S. dollars

The financial statements are stated in Chilean pesos. The translations of Chilean pesos into US dollars are included solely for the convenience of the reader, using the observed exchange rate reported by the Chilean Central Bank as of March 31, 2003 of Ch$731.56 to US$1.00. The convenience translations should not be construed as representations that the Chilean peso amounts have been, could have been, or could in the future be, converted into US dollars at this or any other rate of exchange.

Assets and liabilities denominated in foreign currencies:

Assets and liabilities denominated in foreign currencies are detailed in Note 30. These amounts have been stated at the observed exchange rates reported by the Central Bank of Chile as of March 31, as follows:


Currency	Symbol used	2002		2003
		Ch$		Ch$
United States dollar (Observed)	US$		655.9		731.56
British pound sterling	£		934.86		1,156.25
Colombian peso	$ Col		0.29		0.25
New Peruvian sol	Soles		190.84		210.6
Brazilian real	Rs		282.23		218.38
Japanese yen	¥		4.95		6.19
Euro	€		570.94		797.34
Pool Unit (IBRD) (1)	UP		7,755,284.77		9,433,474.12
Unidad de Fomento (UF)	UF		16,197.66		16,783.6
Unit of Account (IBD) (1)	UC		924.25		1,119.26
Argentine peso	$ Arg		223.86		244.67

(1)

Units of measurement used by the International Bank for Reconstruction and Development (IBRD) and Interamerican Development Bank (IDB) to express the weighted-average of multicurrency loan obligations granted using fixed currency ratios to the US dollar, at a determined date.

Time deposits and Marketable securities:

Time deposits are presented at cost plus accrued interest and UF indexation adjustments, as applicable.

F2-11

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

2. Summary of Significant Accounting Policies: (Continued)

Accounts receivable and Allowance for doubtful accounts:

Inventories:

Property, plant and equipment:

Depreciation:

Depreciation expense is calculated on the revalued balances using the straight-line method over the estimated useful lives of the assets. Depreciation expense was ThCh$46,196,937 and ThCh$53,717,084 as of March 31, 2002 and 2003, respectively. Depreciation expense of ThCh$46,008,989 and ThCh$53,463,834 were included in "Cost of sales" and ThCh$187,948 and ThCh$253,250 were included in "Administrative and selling expenses" as of March 31, 2002 and 2003, respectively.

F2-12

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

2. Summary of Significant Accounting Policies: (Continued)

Investments in related companies:

Investments in foreign affiliates are recorded in accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants (see Note 2(j)).

Investments in other companies are presented at acquisition cost adjusted for price-level restatement.

Foreign investments:

Under Technical Bulletin No. 64 of the Chilean Association of Accountants, investments in foreign subsidiaries are price-level restated, the effects of which are reflected in income, while the effects of the foreign exchange gains or losses between the Chilean Peso and the US Dollar on the foreign investment measured in US dollars, are reflected in equity in the account "Cumulative Translation Adjustment".

Intangibles, other than goodwill:

Goodwill and negative goodwill:

Revenue recognition:

Revenues are recognized at the time energy is supplied to the customer and collectibility is reasonably measured. Energy supplied and unbilled at each year-end is valued at the selling price using the current rates and has been included in revenue from operations. The unbilled amount is presented in current assets as trade receivables and the corresponding cost is included in cost of operations. The Company recognizes revenue generated from engineering and inspection services and highway tolls at the time the related services are provided.

Income tax and deferred income taxes:

F2-13

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

2. Summary of Significant Accounting Policies: (Continued)

Accrued vacation expense:

In accordance with Technical Bulletin No.47 issued by the Chilean Association of Accountants, employee vacation expenses are recorded on the accrual basis.

Severance indemnity:

Pension and post-retirement benefits:

Bonds:

Bonds payable are recorded at the face value of the bonds. The difference between the face value and the placement value, equal to the premium or discount, is deferred and amortized over the term of the bonds (see Note 18). Discounts on the bond issuances of Endesa-Chile and its subsidiaries deferred over the term of the respective bonds amounted to ThCh$10,912,367 and ThCh$11,755,394 as of March 31, 2002 and 2003, respectively, presented in "Other assets."

Statements of cash flows:

The Consolidated Statements of Cash Flows have been prepared in accordance with the indirect method.

Financial derivative contracts:

As of March 31, 2002 and 2003, the Company has forward contracts, currency swaps, and interest swaps and collars with various financial institutions, which are recorded according to Technical Bulletin No. 57 of the Chilean Association of Accountants. Forward foreign exchange contracts gains and losses are recorded at estimated fair value with certain gains and losses deferred until settlement if the instrument qualifies as a hedge and is included in earnings as "Other non-operating income and expense."

Research and development costs:

Costs incurred in research and development by the Company which are general in nature (water-level studies, hydroelectric research, seismic-activity surveys) are expensed as incurred. Studies related to specific construction projects are capitalized. During the three months ended March 31, 2002 and 2003 no such costs were incurred.

Computer software:

The Company has deferred the costs of purchased computer software packages, which are being amortized over a period of three years.

F2-14

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

3. Change in Accounting Principles:

There were no changes in accounting principles during the three months ended March 31, 2002 and 2003 that would affect the comparability with previously issued financial statements.

4. Time deposits:

Time deposits as of March 31, 2002 and 2003 and the applicable annual interest rates and scheduled maturities as of March 31, 2003 are as follows:


Financial Institution	Annual Rate		Scheduled Maturity	As of March 31,
Financial Institution	Annual Rate		Scheduled Maturity	2002		2003
	%			ThCh$		ThCh$
Banco Nationale de Paris		3.10	April 04, 2003		108,139		76,592
Banco Bilbao Vizcaya		1.25	April 04, 2003		13,591,315		5,047,764
Banco Wiese Sudameris		1.58	April 04, 2003		1,157,756		3,347,403
Bank of America		1.00	April 04, 2003		3,457,220		8,299,566
Banco Continental		2.59	April 04, 2003		2,469,618		10,137,265
Fiduvalle		7.42	April 04, 2003		551,317		440,358
Cititrust		4.00	April 04, 2003		78,580		2,939
Citibank New York		1.01	April 04, 2003		16,544,531		41,084,802
HSBC - Bamerindus		1.96	April 04, 2003		—		2,820,004
Citibank		2.47	April 04, 2003		—		24,411,209
Banco de credito		3.70	April 04, 2003		—		1,884,704
Banco Bradesco		1.87	April 04, 2003		—		3,246,180
Banco Votorantim		1.79	April 04, 2003		—		1,759,946
Banco Pactual		1.79	April 04, 2003		—		2,917,978
Banco Rio de la Plata		5.50	April 04, 2003		—		452,942
Credifondos		2.99	April 04, 2003		—		4,413,299
Banco Itaú		4.74	April 04, 2003		—		23,964
Banco BBM		1.77	April 04, 2003		—		1,394,908
Banco Interbank		3.75	April 04, 2003		—		2,147,931
Banco Interbank		1.10	April 04, 2003		—		2,165,418
Interfondos-dolares		1.90	April 04, 2003		—		731,559
Banco Citibank N.A.		0.71	April 04, 2003		—		197,399
Banco Santander		2.17	April 04, 2003		—		3,482,297
Banco Santander		—	—		1,048,572		—
Banco CCF Brasil		—	—		1,264,866		—
Banco Cooperativo		—	—		17,099		—
Banco Corfivalle		—	—		1,764,783		—
Fideicom Santander C		—	—		355,218		—
Encargos Fiduciarios		—	—		670		—
Banco Boston		—	—		1,302,147		—
Total					43,711,831		120,486,427

F2-15

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

5. Accounts, notes and other receivables:

Current accounts, notes and other receivables and related allowances for doubtful accounts as of each March 31, 2002 and 2003 are as follows:


	As of March 31,
	2002									2003
Account	Under 90 days		91 days to 1 year		Allowance			Total		Under 90 Days		91 days to 1 year		Allowance			Total
	ThCh$		ThCh$		ThCh$			ThCh$		ThCh$		ThCh$		ThCh$			ThCh$
Accounts Receivable		87,282,221		26,302		(186,488	)		87,122,035		91,209,714		3,245,201		(2,448,280	)		92,006,635
Notes receivable		216,149		783,874		—			1,000,023		172,175		802,033		(148,677	)		825,531
Other Receivables		13,549,291		9,664,362		(791,446	)		22,422,207		7,171,709		14,273,615		(951,833	)		20,493,491
Total		101,047,661		10,474,538		(977,934	)		110,544,265		98,553,598		18,320,849		(3,548,790	)		113,325,657

Long-term other receivables as of March 31, 2002 and 2003 are ThCh$47,791,092 and ThCh$18,142,779 respectively.

Current and long-term accounts receivables per country as of March 31, 2002 and 2003 are as follows:


	As of March 31,
Country	2002				2003
	ThCh$		%		ThCh$		%

Chile		67,962,421		42.92		48,027,347		36.53
Peru		23,401,837		14.78		25,011,826		19.02
Argentina		9,210,029		5.82		12,823,300		9.75
Colombia		26,145,702		16.51		22,273,439		16.94
Brazil		27,873,855		17.60		22,146,191		16.85
Panama		3,741,513		2.37		1,186,333		0.91
Total		158,335,357		100.00		131,468,436		100.00

F2-16

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

6. Transactions with Related Companies:

Balances of accounts receivable and payable classified according to the nature of the transaction are as follows as of March 31, 2002 and 2003:

Notes and accounts receivable due from related companies:


	As of March 31,
	Short-term				Long-term
Company Name	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Transmisora Eléctrica de Quillota Ltda.		78,187		64,124		1,170,064		884,189
Atacama Finance Co.		6,230,058		176,399,359		164,854,459		—
Cía de Energía del Mercosur		636,119		4,847,404		—		—
Chilectra S.A.		9,349,398		10,070,256		—		—
Cía. Interconexión Energética S.A.		3,989,291		2,013,788		—		—
Codensa S.A.		16,090,726		11,601,181		—		—
Edelnor S.A.		2,303,032		2,425,602		—		—
Empresa Eléctrica de Bogotá S.A.		214,670		475,312		—		—
Empresa Eléctrica Piura S.A.		119,697		207,664		—		—
Enersis S.A.		438,192		125,696		—		—
Etevensa		314,320		371,555		—		—
Gasoducto Tal Tal Ltda.		322,776		—		—		—
Gas Atacama Generación Ltda.		131,833		371,951		—		—
Compañía Americana de Multiservicios Ltda.		11,164		7,761		—		—
Central Generadora Termoeléctrica de Fortaleza		210,252		3,382,251		—		—
Synapsis Colombia		—		14,917		—		—
Compañía A. Multiser.Colombia		—		661		—		—
Synapsis Soluciones y Servicios IT Ltda.		—		11,979		—		—
Inversiones Eléctricas Quillota		—		1,000		—		—
Elesur S.A.				953		—		—
Smartcom S.A.		20,867		—		—		—
Enersis Energía de Colombia		156		—		—		—
Ingendesa Do Brasil		—		—		—		16,021
Total		40,460,738		212,393,414		166,024,523		900,210

F2-17

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

6. Transactions with Related Companies: (Continued)

Notes and accounts payable due to related companies:


	As of March 31,
	Short-term				Long-term
Company Name	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Compañía de Energía del Mercosur S.A.		1,133,553		333,239		—		—
Compañía de Transmisión del Mercosur S.A.		115,075		122,824		—		—
Chilectra S.A.		21,683		10,761		—		—
Codensa S.A.		14,011,341		6,838,274		20,969,385		22,532,048
Empresa Eléctrica de Bogotá S.A.		14,983,556		1,261,260		—		937,128
Enersis S.A.		79,022,679		20,808,942		44,253,573		21,828,989
Synapsis Soluciones y Servicios IT Ltda.		941,052		510,582		—		—
Transmisora Eléctrica de Quillota Ltda.		40,482		70,846		—		—
Compañía Americana de Multiservicios Ltda.		1,200		66,116		—		—
Electrogas S.A.		266,036		239,283		—		—
Enersis Internacional		—		17,618		—		2,194,680
Synapsis Perú S.A.		—		83,320		—		—
Synapsis colombia S.A.		—		61,234		—		—
Compañía A. Multiser. Perú S.A.		—		16,276		—		—
Compañía A. Multiser.Colombia		—		36,182		—		—
Gasoducto Tal Tal Ltda.		—		402,399		—		—
Smartcom S.A.		—		31		—		—
Empresa Eléctrica Piura S.A.		—		3,150		—		—
Edelnor S.A.		28,007		—		—		—
Etevensa S.A.		1,126,839		—		—		—
Enersis Energía de Colombia		17,432		—		—		—
Total		111,708,935		30,882,337		65,222,958		47,492,845

Short-term accounts receivable and payable with related companies are related to the sales and purchases of electricity and various services, as well as operating loans. Transactions for electricity and services have terms of 30 days for payment and are not readjustable. Operating loans are readjustable and require payment of interest.

The long-term payable to Codensa S.A. is expressed in U.S. Dollars and accrues interest at an average annual rate of 8.35% and is due on November 10, 2004.

F2-18

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

6. Transactions with Related Companies: (Continued)

The most significant transactions and their effects in income (expense) for each three months period ended March 31 are as follows:


Company	Nature of Transaction	Income (expense)
Company	Nature of Transaction	2002			2003
		ThCh$			ThCh$
Atacama Finance Co.	Interest		1,932,105			1,468,333
	Price-level restatement		(524,524	)		956,057
	Exchange difference		780,801			2,474,676
Cia. Americana Multiservicios Ltda.	Services		6,723			15,752
Central Generadora Termoeléctrica de Fortaleza	Services		133,926			198,512
Com. de Energía del Mercosur S.A.	Sale of energy		1,824,609			7,001,029
	Purchase of energy		(821,596	)		(531,113	)
	Interest		(46,244	)		—
Codensa S.A.	Purchase of energy		(3,077,734	)		(3,319,088	)
	Sale of energy		20,675,032			16,010,923
	Services		—			(54,135	)
	Interest		(434,533	)		(670,109	)
Cía. Transmisión del Mercosur S.A.	Purchase of energy		(466,430	)		(350,417	)
Cía. Interconexión Energética S.A.	Sale of energy		8,092,235			6,238,012
	Services		100,651			—
Empresa Propietaria de la Red	Services		—			108,037
Chilectra S.A.	Sale of energy		26,698,552			28,778,044
	Services		176,391			480,806
	Interest		—			4,124
Empresa Eléctrica Piura S.A.	Sale of energy		314,043			568,791
Enersis S.A.	Interest		(1,115,476	)		(421,532	)
	Services		45,813			227,766
	Services					(346	)
	Exchange difference		(306,236	)		(263,511	)
	Price-level restatement		(4,878	)		(106,050	)
Etevensa	Sale of energy		995,344			1,047,318
Electrogas S.A.	Purchase of gas		(941,893	)		(703,392	)
	Services		2,039			1,011
Edelnor S.A.	Sale of energy		6,570,424			7,140,406
Endesa Internacional S.A.	Services		—			(13,552	)
Cam Colombia	Services		—			(106,077	)
Synapsis Sol y Serv. IT Ltda.	Services		(59,399	)		(425,152	)
Elesur S.A.	Services		—			(5,700	)
Synapsis Colombia	Services		—			(98,029	)
Transmisora Eléc. de Quillota Ltda.	Interest		44,033			26,308
	Services		2,039			14,316
	Price-level restatement		(26,252	)		12,153
Consorcio ARA- Ingendesa	Services		—			161,412
Gas Atacama Generación Ltda.	Services		25,179			29,310
Total			60,594,744			65,894,893

F2-19

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

6. Transactions with Related Companies: (Continued)

These transactions were carried out at prices that approximate market value.

7. Inventories, net:

Inventories are presented net of a provision for obsolescence.

8. Deferred income taxes:

Income taxes (recoverable) payable as of each period-end are as follows:


	As of March 31,
	2002			2003
	ThCh$			ThCh$

Income tax payable		12,070,923			13,296,773
Income taxes recoverable		(28,340,339	)		(22,360,232	)

Endesa-Chile (individual legal entity) had a tax loss of ThCh$12,287,325 and a tax income of ThCh$12,565,602 for the periods ended March 31, 2002 and 2003, respectively. Under current Chilean tax law, such losses do not expire.

As of March 31, 2002 and 2003, Endesa-Chile (individual legal entity) had accumulated tax losses of ThCh$66,076,592, and ThCh$58,992,746 and related tax credits of ThCh$9,401,629 and ThCh$5,493,580.

F2-20

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

8. Deferred income taxes: (Continued)


	As of March 31, 2002												As of March 31, 2003
	Asset						Liability						Asset					Liability
	Short-term			Long-term			Short-term			Long-term			Short-term		Long-term			Short-term			Long-term
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$		ThCh$			ThCh$			ThCh$
Depreciation		—			3,534,165			64,584			282,263,192			—		3,797,535			38,904			307,593,485
Severance indemnities		—			—			—			1,560,725			—		—			—			444,702
Prepaid income		57,272			236,673			—			—			41,032		1,357,994			—			—
Deferred charge		—			—			14,426			3,120,920			610,853		—			—			3,748,475
Unrealized income Pehuenche y San Isidro		38,210			1,157,700			—			—			—		—			—			—
Finance costs		—			193,373			41,412			7,430,712			—		117,034			—			14,705,065
Derivative contracts		16,000			714,368			—			488,492			—		—			—			—
Vacation accrual		136,281			—			—			—			347,819		—			—			—
Tax losses		1,128,844			57,317,526			—			—			—		61,344,916			—			—
Contingencies		331			41,812			—			—			2,474,024		1,432			—			—
Forward contracts and swaps		—			—			—			—			587,105		554,868			—			—
Imputed interest on construction		—			—			—			4,754,927			—		—			—			4,863,438
Cost of studies		—			—			—			4,562,743			—		—			—			7,972,554
Spare parts used		—			—			—			3,319,888			—		—			—			1,086,285
Leasing receivables		1,611			2,977,980			—			—			1,476		1,984,384			—			—
Bonds discount		—			—			—			—			—		—			—			221,947
El Chocón investments		—			—			—			5,441,990			—		—			—			3,324,684
Salaries for construction-in- progress		—			5,776,771			—			—			—		4,145,779			—			—
Provision for employee obligations		—			—			—			—			—		898,356			—			—
Other events		63,162			668,406			261,678			2,735,609			128,962		1,180,111			37			3,172,971
Complementary accounts, net		(1,389,977	)		(46,170,861	)		(14,426	)		(259,422,068	)		—		(38,011,356	)		(37	)		(240,368,243	)
Valuation allowance		—			(834,574	)		—			—			—		(2,297,291	)		—			—
Total		51,734			25,613,339			367,674			56,257,130			4,191,271		35,073,762			38,904			106,765,363

F2-21

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

8. Deferred income taxes: (Continued)

Income tax expense for the three months ended March 31, 2002 and 2003 is as follows:


	As of March 31,
	2002			2003
	ThCh$			ThCh$
Current income tax expense
Income tax provision		(9,736,146	)		(15,740,085	)

Deferred tax expense (benefit)
Special tax Art.21		(10,398	)		(88,954	)
Adjustment for tax expense prior year		52,288			—
Deferred income taxes		(4,205,825	)		(4,468,317	)
Benefits for tax losses		1,965,972			—
Amortization of complementary accounts		(602,258	)		(884,448	)
Total		(12,536,367	)		(21,181,804	)

9. Other current assets:

Other current assets as of each period-end are as follows:


	As of March 31,
	2002		2003
	ThCh$		ThCh$
Accounts receivable from the Chilean Ministry of PublicWorks		3,142,885		2,107,344
Guarantees related to rentals		1,143,332		986,752
Ralco and Alto Jahuel Proyects		2,950,124		173,730
Deposits for commitments and guarantees		11,756,824		12,365,120
Forward contracts and swaps		—		40,651,334
Unrealized losses on derivatives		—		686,542
Canutillar assets held for sale		—		125,496,981
Celta transmission assets held for sale		—		21,562,962
Restricted time deposits Infraestructura 2000 S.A.		—		24,218,422
Reserve funds Infraestructura 2000 S.A.		—		7,777,717
Other		2,340,173		985,061
Total		21,333,338		237,011,965

F2-22

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

10. Property, plant and equipment:

The composition of property, plant and equipment as of each period-end is as follows:


	Estimated years of useful lives	As of March 31,
	Estimated years of useful lives	2002			2003
		ThCh$			ThCh$
Land			39,753,288			40,093,846
Buildings and infrastructure	35 – 40		6,108,649,646			6,283,500,780
Distribution and transmission lines and public lighting	35 – 40		21,808,854			18,032,042
Sub-total			6,130,458,500			6,301,532,822
Machinery and equipment	35 – 40		1,143,211,462			1,229,377,417
Construction in progress	—		53,303,862			20,404,693
Construction materials	—		5,366,116			5,637,789
Furniture and fixtures, tools, software and information
Technology equipment	3 – 10		20,141,665			14,188,596
Vehicles	6 – 10		782,727			1,451,801
Other assets	3 – 8		2,398,843			3,334,584
Sub-total			81,993,213			45,017,463
Technical appraisal			670,394,225			739,028,161
Total property, plant and equipment			8,065,810,688			8,355,049,709
Less: accumulated depreciation			(2,494,778,165	)		(2,759,227,020	)
Total property, plant and equipment, net			5,571,032,523			5,595,822,689

The Company and its foreign subsidiaries have individually purchased insurance policies which cover "all risk", earthquake and machinery breakdown, with coverage limitations of ThUS$400,000, ThUS$150,000 and ThUS$100,000 respectively. This coverage includes business interruption damages. The premiums associated with these policies are recorded proportionately in each company under "Prepaid expenses" and charged to expenses over its term.

Recoverability of property, plant and equipment:

The Company periodically analyzes the recoverability of its recorded book values of its property, plant and equipment, including property, plant and equipment held by the Company's subsidiaries in countries outside of Chile where property, plant and equipment is remeasured into United States dollars. The analysis consists in evaluating the recoverability of the Company's property, plant and equipment by comparing estimated future undiscounted cash flows to the carrying amounts of such assets recorded by the Company in these companies, in accordance with Chilean GAAP. This analysis differs from impairment testing performed for goodwill (see note 13). The result of this analysis determined that no adjustments were required to the net book values of the property, plant and equipment of the Company and its subsidiaries as of December 31, 2002.

F2-23

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

11. Investment in related companies:

Investments as of each period-end are as follows:


	As of March 31, 2002						Carrying Value				Equity participation in net earnings (losses)
Related Companies	Number of Shares		Percentage Owned		Related Equity		2002		2003		2002			2003
			%		ThCh$		ThCh$		ThCh$		ThCh$			ThCh$
Cía. de Interconexión Energética S.A. (2)		128,270,106		45.00		141,132,311		47,702,103		63,509,540		(391,324	)		9,303,298
Gas Atacama Generación Ltda.		—		50.00		69,683,598		35,728,058		34,841,799		(916,797	)		345,840
Gasoducto Atacama Argentina Ltda.		—		50.00		66,047,388		25,628,160		33,023,694		(2,535,822	)		331,759
Gasoducto Atacama Chile Ltda.		—		50.00		57,046,927		24,189,754		28,523,464		772,557			90,614
Inversiones Eléctricas Quillota S.A.		608,676		50.00		15,197,424		8,873,918		7,598,712		1,243,297			(70,744	)
Inversiones Electrogas S.A.		425		42.50		16,476,680		6,274,673		7,002,589		212,609			292,654
Com. de Energía del Mercosur S.A. (3)		6,305,400		45.00		8,420,753		2,440,654		3,789,339		(2,283,954	)		267,204
Transmisora Eléctrica de Quillota Ltda.		—		50.00		5,172,236		2,396,333		2,586,118		(1,966	)		57,635
Atacama Finance Co. (2)		3,150,000		50.00		5,220,474		2,568,261		2,610,237		(11,348	)		(25,947	)
Electrogas S.A.		85		0.02		11,841,998		2,158		2,516		111			127
Distrilec Inversora S.A.		4,416,141		0.89		410,122,123		3,724,455		3,639,694		304,984			(76,312	)
Consorcio ARA - Ingendesa		—		50.00		50,421		9,203		25,211		8,686			13,314
Consorcio Ingendesa - Minmetal Ltda (1)		—		50.00		3,658		31,051		1,829		7,340			—
Ingendesa do Brasil Limitada (1) (4)		—		100.00		53,233		63,920		53,233		—			—
Total								159,632,701		187,207,975		(3,591,627	)		10,529,442

(1)	These companies are related parties to the subsidiary Ingendesa S.A.

(2)	These companies are related parties to the subsidiary Compañía Electrica Conosur S.A.

(3)	This company is a related party to the subsidiary Endesa Argentina S.A.

(4)	This company is in the development stage.

b) Purchase of shares made in equity method investments during the periods ended March 31, 2002 and 2003:

—Lajas Inversora S.A.

During the three months ended March 31, 2003, Lajas Inversora S.A. purchased 92,980 (0.0032%) shares of Central Eléctrica Cachoeira Dourada S.A. (Brazil) for ThCh$5,444, increasing its participation to 99.60%.

F2-24

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

11. Investment in related companies: (Continued)

The costs of these incremental investments are as follows:


	As of March 31,
	2002		2003
Purchases	ThCh$		ThCh$
Central Eléctrica Cachoeira Dourada S.A.		—		5,444
		—		5,444

In accordance with Technical Bulletin No. 64 of the Chilean Association of Accountants for the three months ended March 31, 2002 and 2003, the Company has recorded foreign exchange gains and losses on liabilities related to net investments in foreign countries that are denominated in the same currency as the functional currency of those foreign investments. Such gains and losses are included in the cumulative translation adjustment account in shareholders' equity, and in this way, act as an economic hedge of the exchange risk affecting the investments. As of March 31, 2003 the corresponding amounts are as follows:

Company

Country of Origin

Investment

Reporting
Currency

Liability

ThCh$

Central Hidroeléctrica Betania

Colombia

616,998,128

US$

345,533,487

Cachoeira Dourada

Brazil

440,242,808

US$

496,079,749

Edegel S.A.

Peru

228,010,371

US$

247,874,354

Cía. Interconexión Energética S.A.

Brazil

63,509,540

US$

63,702,561

Atacama Finance Co.

Cayman Islands

2,610,237

US$

1,888,091

Hidroeléctrica El Chocón S.A.

Argentina

214,709,927

US$

124,766,187

Comercializadora de Energia del Mercosur S.A.

Argentina

3,789,736

US$

4,045,601

Central Costanera S.A.

Argentina

92,214,759

US$

67,043,575

Distrilec Inversora S.A.

Argentina

3,639,694

US$

1,653,559

Total

1,665,725,200

1,352,587,164

F2-25

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

12. Investments in other companies:

Investments in other companies at March 31, 2002 and 2003 are as follows:


Company	Number of shares		Percentage owned		As of March 31,
Company	Number of shares		Percentage owned		2002		2003
			%		ThCh$		ThCh$
Club de la Banca y Comercio		2		1.00		2,432		3,599
Club Empresarial		1		1.00		6,013		6,548
Empresa Eléctrica de Aisen S.A		2,516,231		—		1,985,420		1,987,920
Inmobiliaria España S.A.		1		—		98		98
Inverandes S.A.		1,011,899		—		3,433		3,437
Cooperativa Eléctrica de Chillán		—		—		12,956		12,973
CDEC-SIC Ltda.		—		30.77		153,672		224,228
Empresa Eléctrica de Bogotá S.A.		6,409,132		5.50		74,891,368		80,472,332
Financiera Eléctrica Nacional		4,098		0.10		125,180		1,824,427
Electrificadora del Atlántico		8,537,232		—		—		1,651,863
Termocartagena		22		—		—		326
Distasa S.A. E.S.P.		1		—		—		326
Emgesa S.A. E.S.P.		1		—		—		163
Edegas		1		1.00		3,181		—
Autopista del Río Maipo S.A.		25		—		4,845		4,870
Total						77,188,598		86,193,110

13. Goodwill and Negative Goodwill:

Recognition has been given to the excess of purchase price of the proportional equity in the net assets acquired (goodwill) in the purchase of shares as of March 31, 2002 and 2003, as follows:


	As of March 31,
Company	Amortization				Net Balance
	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Central Costanera S.A.		412,741		—		22,343,359		—
Emgesa S.A.		382,757		411,137		23,858,546		23,991,510
Gasoducto Atacama Chile Ltda.		1,198		1,199		81,036		76,341
Edegel S.A.		9,715		10,440		605,613		608,985
Pangue S.A.		—		42,024		—		3,249,868
C. Hidroeléctrica Cachoeira Dourada S.A.		1,029,793		—		64,876,924		—
Lajas Inversora S.A.		26,618		—		1,676,963		—
Hidroeléctrica El Chocón S.A.		204,426		—		9,335,432		—
Hidroinvest S.A.		19,609		—		1,287,564		—
Total		2,086,857		464,800		124,065,437		27,926,704

F2-26

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

13. Goodwill and Negative Goodwill: (Continued)

Recognition has been given to the excess of the equity in the net assets purchased over the purchase price (negative goodwill) in the purchase of shares as of March 31, 2002 and 2003 as follows:


	As of March 31,
Company	Amortization				Net Balance
	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Edegel S.A.		2,438,219		2,619,918		67,080,927		61,600,204
Central Hidroeléctrica Betania S.A.		8,404,684		1,879,350		48,161,458		23,387,471
Empresa Eléctrica de Bogotá S.A.		60,351		65,109		3,802,128		3,826,059
C. Hidroeléctrica Cachoeira Dourada S.A.		520,730		—		34,166,872		—
Hidroeléctrica El Chocón S.A.		62,625		—		3,360,841		—
Total		11,486,609		4,564,377		156,572,226		88,813,734

An analysis of the recoverability of goodwill and negative goodwill associated with investments in and outside Chile was performed in accordance with IAS No. 36 "Impairment of Assets", following the guidance in Technical Bulletin No. 56 issued by the Chilean Association of Accountants. The results of this analysis showed that the goodwill and negative goodwill associated with investments made in Argentina and Brazil were 100% impaired as of December 31, 2002, due to the finding that the future discounted cash flows expected to be produced from the investees in those countries were not sufficient to offset the recovery of recorded goodwill and negative goodwill. Endesa-Chile recorded a charge to income of ThCh$62,151,280, which is recorded in amortization of goodwill and amortization of negative goodwill in the consolidated statement of income for the year ended December 31, 2002. The amount recorded by the Company on a consolidated basis, net of the effect of minority interests, was a net charge to income of ThCh$56,110,189. This impairment was recorded in the fourth quarter of 2002 and is not reflected in the three-month period ended March 31, 2002.

14. Intangibles:

The detail of intangibles as of each period-end is as follows:


	As of March 31,
	2003					2002		2003
	Total		Accumulated Amortization			Net Balance		Net Balance
	ThCh$		ThCh$			ThCh$		ThCh$
Easements		1,510,734		(862,782	)		661,412		647,952
Water rights		17,545,735		(1,175,617	)		15,999,181		16,370,118
Salex- fourth line Comahue		11,965,960		(4,541,764	)		7,501,533		7,424,196
Software		842,535		(311,963	)		586,170		530,572
Mine rights		50,712		—			39,621		50,712
Tolls license		27,401		—			40,314		27,401
Other		927,041		(370,829	)		475,960		556,212
Total		32,870,118		(7,262,955	)		25,304,191		25,607,163

F2-27

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

15. Other assets:

Other assets as of each period-end are as follows:


	As of March 31,
	2002		2003
	ThCh$		ThCh$
Bond discount		10,912,367		11,755,394
Reimburseable contributions		4,544,723		4,022,738
Deferred commissions on loans and lines of credit		17,854,635		13,918,544
Minimum tax on earnings of certain productive assets (Argentina)		2,543,029		3,859,916
Bond issuance costs		1,427,414		11,463,738
Unrealized loss on forward contracts and collars		—		20,379,021
Software and licenses		—		1,707,461
Accounts receivable from the Chilean Ministry of Public Works		—		2,142,969
Forward contracts and swaps		2,520,143		—
Others		206,071		924,797
Total		40,008,382		70,174,578

F2-28

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

14. Intangibles: (Continued)

16. Due to banks and financial institutions:

Short-term debt due to banks and financial institutions:


	Foreign Currency												Local Currency						Total
Financial Institution	US$						Other Foreign currencies						Ch$
	2002			2003			2002			2003			2002			2003			2002			2003
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
Banco BBVA Bhif		—			—			—			—			—			7,972,594			—			7,972,594
Banco Barings		6,859,304			5,135,551			—			—			—			—			6,859,304			5,135,551
Banco Continental		—			—			—			3,810,461			—			—			—			3,810,461
Banco Crédito e Inversiones		—			—			—			—			—			3,810,966			—			3,810,966
Banco Crédito e Inversiones - Perú		—			—			9,003,590			16,970,491			—			—			9,003,590			16,970,491
Banco Ganadero		—			—			—			2,235,647			—			—			—			2,235,647
Banco Itau		2,728,743			2,376,107			—			—			—			—			2,728,743			2,376,107
Banco Lloyds		3,488,544			3,667,310			—			—			—			—			3,488,544			3,667,310
The Bank Tokyo Mitsubishi Ltda.		—			—			—			—			—			700,000			—			700,000
Banco Santander		—			—			2,967,520			2,987,692			—			—			2,967,520			2,987,692
Banco Santiago		—			—			—			—			7,795,305			11,677,405			7,795,305			11,677,405
Bank Boston		2,694,098			2,064,462			—			1,898,202			—			—			2,694,098			3,962,664
Citibank		—			—			6,630,881			2,970,865			—			—			6,630,881			2,970,865
Citibank NY		—			18,353,032			—			—			—			—			—			18,353,032
Banco Hermes		—			5,453,780			—			—			—			—			—			5,453,780
Corfinsura		—			—			—			750,478			—			—			—			750,478
Banco San Paolo		—			41,036,884			—			—			—			—			—			41,036,884

Total		15,770,689			78,087,126			18,601,991			31,623,836			7,795,305			24,160,965			42,167,985			133,871,927

Total principal		15,539,209			77,869,831			11,952,950			31,192,117			7,795,305			24,160,965			35,287,464			133,222,913

Weighted average annual interest rate		12.50	%		3.22	%		6.07	%		5.36	%		4.75	%		1.38	%		8.23	%		3.49	%


	As of March 31,
	2002		2003
	%		%
Percentage of debt in foreign currency:		81.51		81.95
Percentage of debt in local currency:		18.49		18.05
Total		100.00		100.00

F2-29

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)


b)	Current portion of long-term debt due to banks and financial institutions:


	Foreign Currency												Local Currency						Total
	US$						Other foreign						Ch$
	2002			2003			2002			2003			2002			2003			2002			2003
	ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$			ThCh$
ABN Amro Bank		3,044,176			2,186,705			—			—			—			—			3,044,176			2,186,705
Banco Estado		1,582,115			111,989			—			—			1,430,875			1,476,598			3,012,990			1,588,587
Banco Hermes		5,278,430			—			—			—			—			—			5,278,430			—
Banco Medio Crédito		4,428,081			—			—			2,449,525			—			—			4,428,081			2,449,525
Banco Santander		1,452,369			—			—			—			—			—			1,452,369			—
Banco Santander Central Hispano		362,772			112,951,903			—			—			—			—			362,772			112,951,903
Banco San Paolo		68,272,734			—			—			—			—			—			68,272,734			—
Banesto		4,957,219			8,623,387			—			—			—			—			4,957,219			8,623,387
Bank of América		64,717,106			23,060,704			—			—			—			—			64,717,106			23,060,704
Banco Nationale París		3,856,699			11,645,908			—			—			—			—			3,856,699			11,645,908
Bank of Tokio - Mitsubishi		6,672,621			7,131,472			860,527			1,043,845			—			—			7,533,148			8,175,317
Bndes		—			—			4,038,046			1,335,445			—			—			4,038,046			1,335,445
Citibank N.Y.		22,240,109			23,473,343			—			—			—			—			22,240,109			23,473,343
Banco sudamericano		410,039			—			—			—			—			—			410,039			—
Export Develop. Corp.		1,485,718			1,094,238			—			—			—			—			1,485,718			1,094,238
Export Develop. Corp.		58,124			1,746,600			—			—			—			—			58,124			1,746,600
Kreditanstal Fur Weideraubau		440,924			400,189			—			—			—			—			440,924			400,189
Midland Bank		5,125,316			5,771,667			—			—			—			—			5,125,316			5,771,667
Santander Inv. Bank		5,369,926			6,645,616			—			—			—			—			5,369,926			6,645,616
Skandinaviska Enskildabnken		2,268,110			2,433,289			—			—			—			—			2,268,110			2,433,289
BIRF		—			—			1,033,386			1,206,026			—			—			1,033,386			1,206,026
Societe Generale		1,784,234			1,892,073			—			—			—			—			1,784,234			1,892,073
J.P. Morgan Chase Bank		25,262,978			1,664,299			—			—			—			—			25,262,978			1,664,299
J.P. Morgan Chase Bank		—			—			4,449,956			4,857,647			—			—			4,449,956			4,857,647
Dresdner Bank		104,354			—			—			—			—			—			104,354			—
Total		229,174,154			210,833,382			10,381,915			10,892,488			1,430,875			1,476,598			240,986,944			223,202,468

Total principal		185,824,725			206,729,105			10,275,288			10,615,922			1,430,875			1,476,598			197,530,888			218,821,625
Weighted average annual interest rate		5.37	%		3.50	%		0.90	%		0.89	%		9.00	%		9.00	%		5.46	%		3.66	%

F2-30

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

16. Due to banks and financial institutions: (Continued)


	As of March 31,
	2002		2003
	%		%
Percentage of debt in foreign currency:		96.74		92.82
Percentage of debt in local currency:		3.26		7.18
Total		100.00		100.00


c)	Long-term portion of debt due to banks and financial institutions:


		As of March 31, 2002		As of March 31, 2003
Financial Institution	Currency	Long-term portion		After 1 year but within 2 years		After 2 year but within 3 years		After 3 year but within 5 years		After 5 year but within 10 years		After 10 year		Total long-term portion		Annual interest rate
		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		ThCh$		%
ABN Amro Bank	US$		1,982,344		175,607		175,607		351,214		351,214		—		1,053,642		1.75	%
Banco Estado	UF		6,789,714		1,384,647		1,414,622		2,593,855		—		—		5,393,124		9.35	%
	US$		104,224		—		—		—		—		—		—
Banco Medio Crédito	US$		35,602,340		—		—		—		—		—		—
	$ Arg		—		2,158,612		4,317,223		4,317,223		3,222,798		—		14,015,856		1.75	%
Bndes -Opel I y II	Rs		—		1,312,176		1,722,166		4,611,920		—		—		7,646,262		28.00	%
Banco Santander Central His.	US$		104,846,928		—		—		—		—		—		—
Banesto	US$		33,161,887		3,187,504		3,187,504		6,375,008		12,750,018		—		25,500,034		6.42	%
Banco Nationale París	US$		65,404,437		10,815,822		10,815,822		21,631,644		12,292,751		—		55,556,039		4.04	%
	US$		7,733,314		1,598,327		2,277,107		4,554,214		6,634,072		2,758,632		17,822,352		4.44	%
Bank Of Tokio Mitsubishi ltda.	US$		16,537,552		7,019,305		3,731,338		—		—		—		10,750,643		2.08	%
	Libra		923,690		440,245		220,122		—		—		—		660,367		4.50	%
	Yen		977,716		471,152		235,576		—		—		—		706,728		0.89	%
	Euros		243,248		130,299		65,150		—		—		—		195,449		3.38	%
Corfinsura	$ Col.		—		—		—		39,566,900		—		—		39,566,900		12.41	%
BIRF	UP		1,564,799		635,451		—		—		—		—		635,451		4.07	%
J.P. Morgan Chase Bank	US$		54,465,936		40,235,800		—		18,289,000		—		—		58,524,800		8.53	%
	Euros		3,571,847		—		—		—		—		—		—
Citibank N.Y.	US$		408,883,562		400,267,828		—		—		—		—		400,267,828		2.83	%
Export Develop. Corp.	US$		6,540,081		505,009		1,010,019		2,020,038		5,050,095		2,020,038		10,605,199		1.48	%
	US$		6,920,298		1,062,286		1,062,286		2,124,572		2,124,576		—		6,373,720		2.75	%
Kreditanstal Fur Weideraubau	US$		2,420,823		400,188		400,188		800,376		400,190		—		2,000,942		4.85	%
Midland Bank	US$		2,431,515		—		—		—		—		—		—
Santander Investment	US$		9,395,373		3,730,956		—		—		—		—		3,730,956		7.25	%
Skandinaviska Enskildabnken	US$		9,000,820		2,417,922		2,417,922		2,417,805		—		—		7,253,649		0.65	%
Bank of América	US$		—		46,730,692		—		—		—		—		46,730,692		5.66	%
Societe Generale	US$		3,046,372		1,402,882		—		—		—		—		1,402,882		1.62	%
Totales			782,548,820		526,082,710		33,052,652		109,653,769		42,825,714		4,778,670		716,393,515

F2-31

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

16. Due to banks and financial institutions: (Continued)


	As of March 31,
	2002		2003
	%		%
Percentage of debt in foreign currency:		99.11		99.25
Percentage of debt in local currency:		0.89		0.75
Total		100.00		100.00

17. Promissory notes:


Financial Instrument	Maturity Date	Interest Rate		As of March 31,
Financial Instrument	Maturity Date	Interest Rate		2002		2003
		%		ThCh$		ThCh$
Commercial paper 1st issuance	June 10, 2003		4.84		—		3,611,105
Commercial paper 2nd issuance	September 5, 2003		4.50		—		4,270,592
Total					—		7,881,697

F2-32

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable:

Details of the current portion of bonds payable is as follows at each period-end:


Issuer	Series	Currency	Face Value Outstanding		Interest Rate		Maturity Date		Par Value
Issuer	Series	Currency	Face Value Outstanding		Interest Rate		Maturity Date		2002		2003
					%				ThCh$		ThCh$
Bonos Endesa-Chile	1	US$		230,000,000		7.88		02-01-2027		1,843,306		1,976,813
Bonos Endesa-Chile	2	US$		220,000,000		7.33		02-01-2037		1,828,581		1,964,849
Bonos Endesa-Chile	3	US$		200,000,000		8.13		02-01-2097		397,136		430,592
Bonos Endesa-Chile	1	US$		400,000,000		7.75		07-15-2008		4,396,990		4,724,658
Bonos Endesa-Chile	1	US$		400,000,000		8.50		04-01-2009		11,574,011		12,436,520
Bonos Endesa-Chile	E-1, E-2	UF		6,000,000		6.20		08-01-2006		1,026,747		1,024,941
Bonos Endesa-Chile	C2, D1, D2	UF		1,315,960		6.80		11-01-2010		2,745,564		2,823,714
Bonos Endesa-Chile	F	UF		1,500,000		6.20		08-01-2022		256,686		256,234
Bonos Pehuenche-Chile	1	US$		170,000,000		7.30		05-01-2003		3,520,428		128,147,975
Bonos Edegel-Peru	1	US$		30,000,000		8.75		06-13-2007		578,505		621,617
Bonos Edegel-Peru	2	US$		30,000,000		8.41		02-14-2007		214,986		231,008
Bonos Edegel-Peru	3	US$		30,000,000		8.75		06-03-2006		529,892		569,380
Bonos Edegel-Peru	4	US$		20,000,000		8.44		11-21-2005		406,522		440,177
Bonos Edegel-Peru	5A	Soles		10,000,000		11.5		08-22-2003		81,732		7,459,819
Bonos Edegel-Peru	5B	Soles		30,000,000		6.00		04-22-2004		36,550		40,010
Bonos Emgesa-Colombia	A-1	$ Col.		15,000,000		9.78		07-26-2006		2,864,869		64,377
Bonos Emgesa-Colombia	B-3	$ Col.		31,525,018		14.79		02-08-2003		9,668,338		—
Bonos Emgesa-Colombia	B-5	$ Col.		12,750,006		9.99		10-09-2004		118,294		71,693
Bonos Emgesa-Colombia	B-7	$ Col.		19,500,000		10.31		10-09-2006		185,202		112,660
Bonos Emgesa-Colombia	B-10	$ Col.		229,815,122		10.62		10-09-2009		1,930,715		1,372,406
Bonos Emgesa-Colombia	B-10	$ Col.		60,000,000		10.57		11-10-2009		302,616		215,079
Bonos Emgesa-Colombia	C-10	$ Col.		7,701,962		9.88		10-09-2009		48,585		42,430
Bonos Emgesa-Colombia	C-10	$ Col.		13,706,882		10.25		10-09-2009		191,007		166,796
Bonos Emgesa-Colombia	B-10 2nd issue	$ Col.		50,000,000		15.18		07-26-2019		324,119		1,947,413
Bonos Emgesa-Colombia	A-5	$ Col		172,858		8.35		07-12-2006		234,836		—
Bonos Emgesa-Colombia	B-1	$ Col.		85,000,000		13.95		07-01-2006		—		2,000,817
Endesa Chile Internacional (Eurobono)	I	Euro		400,000,000		3.34		07-24-2003		1,894,826		320,915,929
Bonos Autopista del Sol S.A. –Chile	A-1	UF		3,446,160		5.8		01-15-2018		—		701,717
Bonos Autopista del Sol S.A. –Chile	A-2	UF		861,540		5.8		01-15-2018		—		175,429
Bonos Autopista del Sol S.A. –Chile	B-1	UF		964,372		5.8		01-15-2018		—		196,368
Bonos Autopista del Sol S.A. –Chile	B-2	UF		243,578		5.8		01-15-2018		—		49,599
Total										47,131,043		491,181,020

F2-33

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)


b)	Details of the long-term portion of bonds payable is as follows at each period-end:


Issuer	Series	Currency	Face Value Outstanding		Interest Rate		Maturity Date		Par Value
Issuer	Series	Currency	Face Value Outstanding		Interest Rate		Maturity Date		2002		2003
					%				ThCh$		ThCh$
Bonds Endesa-Chile	1	US$		230,000,000		7.88		02-01-27		140,168,767		150,614,304
Bonds Endesa-Chile	2	US$		220,000,000		7.33		02-01-37		149,781,324		160,943,200
Bonds Endesa-Chile	3	US$		200,000,000		8.13		02-01-97		27,516,190		29,566,729
Bonds Endesa-Chile	1	US$		400,000,000		7.75		07-15-08		272,329,680		292,624,000
Bonds Endesa-Chile	1	US$		400,000,000		8.50		04-01-09		272,329,680		292,624,000
Bonds Endesa-Chile	E-1, E-2	UF		6,000,000		6.20		08-01-06		100,879,027		100,701,600
Bonds Endesa-Chile	C2; D1, D2	UF		1,439,153		6.80		01-11-10		22,125,459		19,878,326
Bonds Endesa-Chile	F	UF		1,500,000		6.20		08-01-22		25,219,757		25,175,400
Bonds Pehuenche-Chile	1	US$		170,000,000		7.30		05-01-03		115,740,114		—
Bonds Edegel-Peru	1	US$		30,000,000		8.75		06-13-07		20,424,726		21,946,800
Bonds Edegel-Peru	2	US$		30,000,000		8.41		02-14-07		20,424,726		21,946,800
Bonds Edegel-Peru	3	US$		30,000,000		8.75		06-03-06		20,424,726		21,946,800
Bonds Edegel-Peru	4	US$		20,000,000		8.44		11-21-05		13,616,484		14,631,200
Bonds Edegel-Peru	5 A	Soles		35,000,000		11.54		08-22-03		6,914,930		—
Bonds Edegel-Peru	5 B	Soles		30,000,000		6.00		02-22-04		5,927,082		6,317,444
Bonds Emgesa-Colombia	A-1	$ Col.		15,000,000		13.43		07-09-06		4,516,287		3,709,741
Bonds Emgesa-Colombia	B-1	$ Col.		85,000,000		15.75		07-01-06		25,592,292		21,019,913
Bonds Emgesa-Colombia	B-5	$ Col.		12,750,000		14.95		10-09-04		3,838,844		3,153,024
Bonds Emgesa-Colombia	B-7	$ Col.		19,500,000		15.27		10-09-06		5,871,173		4,822,444
Bonds Emgesa-Colombia	B-10	$ Col.		229,825,000		15.60		10-09-09		54,873,251		56,865,622
Bonds Emgesa-Colombia	B-10	$ Col.		60,000,000		15.78		11-10-09		14,323,787		14,837,500
Bonds Emgesa-Colombia	C-10	$ Col.		7,701,962		9.88		10-09-09		2,179,396		1,893,277
Bonds Emgesa-Colombia	C-10	$ Col.		13,706,882		10.25		10-09-09		3,879,532		3,369,565
Bonds Emgesa-Colombia	B-10 2nd issue	$ Col.		50,000,000		15.18		07-26-06		18,065,146		12,364,827
Bonds Autopista del Sol S.A. –Chile	A-1	UF		3,446,160		5.80		01-15-18		—		57,838,971
Bonds Autopista del Sol S.A. –Chile	A-2	UF		861,540		5.80		01-15-18		—		14,459,743
Bonds Autopista del Sol S.A. –Chile	B-1	UF		964,372		5.80		01-15-18		—		16,185,628
Bonds Autopista del Sol S.A. –Chile	B-2	UF		243,578		5.80		01-15-18		—		4,088,122
Endesa-Chile Internacional (Eurobonds)	1	Euro		400,000,000		3.34		07-24-03		259,530,185		—
Bonds - Endesa-Chile Internacional	1	US$		150,000,000		7.20		04-01-06		102,123,630		109,734,000
Total										1,708,616,195		1,483,258,980

F2-34

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)


i)	Endesa-Chile (Individual legal entity):


I)	The Company made four public offerings of bonds in the local market on the following dates:

•

On August 24, 1989, the second issuance of bonds was registered under No. 111, amounting to UF 6,000,000, and was fully placed as of December 31, 1990; it has been paid in full on October 1, 2001.

•

On August 9, 2001, the fourth bond issuance was registered under No. 264 in the amount of UF 7,500,000, and was fully placed as of December 31, 2001.

Risk ratings of the bonds issued are as follows as of the date of these financial statements:

ISSUANCE TERMS

Third Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Bearer bonds in local currency, denominated in Unidades de Fomento
Issuance Value				Four million Unidades de Fomento (UF 4,000,000) divided into: — Series C-1: 120 bonds at UF 10,000 each — Series C-2: 800 bonds at UF 1,000 each — Series D-1: 120 bonds at UF 10,000 each — Series D-2: 800 bonds at UF 1,000 each
Indexation				Based on variations in Unidad de Fomento index
Amortization period				Series C-1 and C-2: 15 years (5-year grace period and 10 years to amortize capital) Series D-1 and D-2: 20 years (5-year grace period and 15 years to amortize capital)
Capital amortization				Series C-1 and C-2: 20 consecutive installments payable semi-anually, starting April 1, 1996. Amortization installments will increase with time. Series D-1 and D-2: 30 consecutive installments payable semi-anually, starting May 1, 1996. Amortization installments will increase with time.

F2-35

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)

Fourth Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Bearer bonds in local currency, denominated in Unidades de Fomento
Issuance Value				Seven and a half million (UF 7,500,000) divided into (1): Series E-1: 1,500 bonds at UF 1,000 each. Series E-2: 600 bonds at UF 10,000 each. Series F: 200 bonds at UF 10,000 each.
Indexation				Based on variations in Unidad de Fomento index
Amortization period				Series E-1 and E-2: August 1, 2006. Series F: August 1, 2022.
Early Redemption				Only in the case of Series F, beginning February 1, 2012.
Nominal interest rate				6.2% annually, compounded on outstanding capital, readjusted by the value of the Unidad de Fomento. The interest rate applied semi-annually will be equal to 3.0534%.
Placement period				36 months from the registration date in the Chilean Securities Register of the Superintendency of Securities and Insurance.
Guarantee				There is no specific guarantee, however, there is a general guarantee over the issuer's assets.
Interest payments				Interest wil be paid semi-annually each August 1 and February 1, starting August 1, 2001. Accrued interest at the end of the period amounted to ThCh$1,281,176 (ThCh$1,283,433 in 2002) and is presented under current liabilities.

(1)	The Company holds a currency swap that swaps UF payments to US dollars, and which has a fair value of ThCh$3,261,102 as of March 31, 2003 and is included in long-term miscellaneous payables.

F2-36

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)

II)

The Company has issued and placed three public offerings of bonds in the international market as follows:

Risk ratings of the bonds are as follows as of the date of these financial statements:

First Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Marketable securities denominated in US$ (Yankee bonds) in the US market.
Issuance Value				Six hundred and fifty million US Dollars (US$650,000,000) divided into: Series 1: US$230,000,000 Series 2: US$220,000,000 Series 3: US$200,000,000
Indexation				Variation in the US Dollar
Capital Amortization				Series 1 full expiration on February 1, 2027 Series 2 full expiration on February 1, 2037 (Put Option on February 1, period 2009, on which date the holders may redeem 100% of the securities plus accrued interest). Series 3 full expiration on February 1, 2097.
Nominal interest rate				Series 1: 7.875% annually Series 2: 7.325% annually Series 3: 8.125% annually
Interest Payments				Interest will be paid semi-anually each February 1 and August 1 annually, starting January 27, 1997. Accrued interest as of March 31, 2003 amounts to ThCh$6,154,555 (ThCh$5,727,718 in 2002), which is shown under current liabilities.

F2-37

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)

Second Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Marketable securities denominated in US$ (Yankee bonds) in the US market.
Issuance Value				Four hundred million US Dollars (US$400,000,000)
Indexation				Variation in the US Dollar
Capital amortization				Series 1 full expiration on July 15, 2008
Nominal interest rate				Series 1: 7.75% annually
Interest Payments				Interest will be paid semi-anually each January 15 and July 15 annually, starting January 15, 1999. Accrued interest as of March 31, 2002 amounts to ThCh$4,724,658 (ThCh$4,396,989 in 2002), which is shown under current liabilities.

Third Issuance


Issuer				Empresa Nacional de Electricidad S.A
Securities issued				Marketable securities denominated in US$ (Yankee bonds) in the US market.
Issuance Value				Four hundred million US Dollars (US$400,000,000)
Indexation				Variation in the US Dollar
Capital amortization				Series 1 full expiration on April 1, 2009
Nominal interest rate				Series 1: 8.502% annually
Interest Payments				Interest will be paid semi-anually each October 1 and April 1 annually, starting October 1, 1999. Accrued interest as of March 31, 2003 amounts to ThCh$12,436,520 (ThCh$11,574,011 in 2002), which is shown under current liabilities.

Repurchase of Yankee Bonds

During November 2001, the company made a tender offer to repurchase all of a portion of the First Issuance of the following series of Yankee Bonds:

— Series 1: US$230,000,000; 30 years term with maturity in 2027.
— Series 3: US$200,000,000; 100 years term with maturity in 2097.

The offer expired November 21, 2001, and the company repurchased a total of US$24,119,000 and US$159,584,000 of Series 1 and 3 bonds, respectively, with accrued interest, at prices of US$21,324,000 and US$134,828,000 for Series 1 and 3, respectively.

F2-38

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)


ii)	Subsidiaries of Endesa-Chile

Endesa-Chile Internacional


a)	Endesa-Chile Internacional issued Yankee Bonds on April 1, 1996.

The risk rating of these bonds is as follows as of the date of these financial statements:

ISSUANCE TERMS

First Issuance


Issuer				Endesa-Chile Internacional
Securities issued				Marketable securities denominated in US$ (150,000 bonds).
Issuance Value				One hundred and fifty million US Dollars (US$150,000,000)
Readjustment				Variation in the US Dollar
Capital amortization				Full expiration as of April 1, 2006
Nominal interest rate				7.2 % annually until expiration
Interest Payments				Interest will be paid semi-annually, starting October 1, 1996.
Guarantee				Guarantee from Empresa Nacional de Electricidad S.A.

As of July 24, 2000, the first registration of Eurobonds (European Medium Term Note Programme) was registered in England, for a total of 1,000 million Euros.

ISSUANCE TERMS

First Registration


Securities registered				1,000 million Euros
Issuance Value				Euros 400,000,000 (1)
Capital amortization				Principal due July 24, 2003
Nominal interest rate				Euribor + 0.80%
Interest Payments				Interest is to be paid quarterly, beginning on October 24, 2000. Accrued interest as of March 31, 2003 amounts to ThCh$2,118,675 (ThCh$1,824,826 in 2002) and is presented in current liabilities.
Guarantee				Guarantee from Empresa Nacional de Electricidad S.A.

(1)	Through a cross-currency swap, the company has elected to change the debt from Euros to US dollars.

F2-39

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)


II)	Empresa Eléctrica Pehuenche S.A. issued bonds on May 2, 1996.

First Issuance


Issuer				Empresa Eléctrica Pehuenche S.A.
Securities issued				Marketable securities denominated in US$.
Issuance Value				One hundred and seventy million US Dollars (US$170,000,000)
Capital amortization				Full expiration as of May 1, 2003
Nominal interest rate				7.3 % annually upon expiration
Interest Payments				Interest will be paid semi-anually, starting November 1, 1996. Accrued interest as of March 31, 2003 amounts to ThCh$3,782,775(ThCh$3,520,428 in 2002) and is shown under Other Current Liabilities.


III)	Edegel S.A. issued bonds on June 4, 1999, February 15, 2000, June 14, 2000 and November 27, 2000 and August 22, 2001 (of this last issuance, series B was placed on February 2, 2002) as per the following:

First Issuance


Issuer				Edegel S.A.
Securities issued				Marketable securities denominated in US$ (120,000 bonds).
Issuance Value				One hundred and twenty million US dollars (US$120,000,000)
Capital amortization				Full expiration as of June 3, 2007, February 14, 2007, June 03, 2006, November 21, 2005 and February 22, 2004, respectively.
Nominal interest rate				8.75%, 8.41%, 8.75%, 8.44%, 11.5% and 6.0% annually.
Interest Payments				Interest will be paid semi-anually. Accrued interest as of March 31, 2003 amounts to ThCh$2,046,309 (ThCh$1,848,188 in 2002) and is shown under Other Current Liabilities.

F2-40

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)


IV)	Emgesa S.A. issued bonds on October 8, 1999 and July 9, 2001 from the first issuance, and on February 26, 2003 from the second issuance, as per the following:

First Issuance


Issuer				Emgesa S.A.
Securities issued				Marketable securities denominated in Colombian pesos
Issuance Value				$Col 530,000,000,000
Capital amortization				Full expiration as of 2002, 2007, 2009, 2010, 2006, 2006 and 2002 for $Col 1,525,000; $Col 81,407,744; $Col 19,500,000; $Col 297,567,256; $Col 15,000,000; $Col 85,000,000 and $Col 30,000,000 respectively.
Nominal interest rate				15.5% annual average rate
Interest Payments				Interest will be paid quarterly and annually. Accrued interest as of March 31, 2003 amounts to ThCh$4,046,258 (ThCh$3,335,373 in 2002) and is shown under current liabilities.

Second Issuance


Issuer				Emgesa S.A.
Securities issued				Marketable securities denominated in Colombian pesos
Issuance Value				$Col 50,000,000,000
Capital amortization				Full expiration as of July 26, 2006.
Nominal interest rate				15.18% annual average rate
Interest Payments				Interest will be paid annually. Accrued interest as of March 31, 2003 amounts to ThCh$1,947,413 (ThCh$0 in 2002) and is shown under current liabilities.

F2-41

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

18. Bonds payable: (Continued)


V)	Sociedad Concesionaria Autopista del Sol S.A. issued bonds on March 8, 2002 as per the following:

First Issuance


Issuer				Sociedad Concesionaria Autopista del Sol S.A.
Securities issued				Bearer bonds in local currency, denominated in UF
Issuance Value				U.F. 5.540.000, divided into: Serie A-1 U.F 3,460,000 Serie A-2 U.F. 865,000 Serie B-1 U.F. 970,000 Serie B-2 U.F. 245,000
Readjustment				Variation in the U.F.
Amortization period				16 years
Capital amortization				Every six months.
Nominal interest rate				5.8% annually, composed semi-annuallly and effective over capital outstanding readjusted by the value of the U.F. The interest rate to be applied semi-annually will be 2.8591%
Interest Payments				Accrued interest as of March 31, 2003 amounts to ThCh$1,123,113 and is recorded in current liabilities.

19. Accrued expenses:

The accrued expenses included in short-term and long-term liabilities as of each period-end are as follows:


	Short-term				Long-term
	As of March 31,				As of March 31,
	2002		2003		2002		2003
	ThCh$		ThCh$		ThCh$		ThCh$
Employee salaries		6,036,048		7,596,691		—		—
Provision for contingences, lawsuits, and others		1,054,800		8,264,433		—		1,211,327
Chilean Ministry of Public Works annual cost		7,126,149		4,709,317		—		—
Provisional tax payments and other		—		—		10,111,751		11,199,305
Post retirement benefits		888,574		804,296		1,978,545		2,541,959
Employee severance indemnities (1)		273,194		103,823		2,193,504		2,851,090
Pensions and post-retirement benefits of foreign subsidiaries		—		—		17,601,372		20,049,865
Highway construction costs		—		952,544		—		1,810,877
Provision for purchases of energy and power		14,210,275		19,138,078		—		—
Provision for sale of Canutillar		—		5,032,803		—		—
Others		6,490,663		2,269,962		—		142,861
Total		36,079,703		48,871,947		31,885,172		39,807,284

(1)	Long-term accruals include severance indemnities to personnel, calculated in accordance with the policy described in Note 2. Analysis of the changes in the accrual in each period is as follows:

F2-42

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

19. Accrued expenses: (Continued)

Changes in the long-term portion of the employee severance indemnity accrual are as follows:


	As of March 31,
	2002		2003
	ThCh$		ThCh$
Opening balance as of January 1		2,174,916		2,634,110
Net increase in accrual		18,588		216,641
Net transfers to short-term accrual		—		339
Payments during the period		—		—
Total		2,193,504		2,851,090

Accounts payable:


	As of March 31,
	2002		2003
	ThCh$		ThCh$
Suppliers and services		33,923,116		41,045,218
Materials purchases		14,095,785		7,965,591
Energy purchases and other		25,230,377		19,264,402
Fuel and transportation		1,539,076		1,063,062
Others		2,103,284		902,617
Total		76,891,638		70,240,890

F2-43

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

20. Minority interest:


a)	Minority shareholders' participation in the shareholders' equity of the Company's subsidiaries as of each period-end is as follows:


	As of March 31, 2002									As of March 31, 2003
Company	Equity			Participation			Total			Equity			Participation			Total
	ThCh$			%			ThCh$			ThCh$			%			ThCh$
Autopista Los Libertadores S.A.		25,034,075			0.05	%		12,517			25,473,753			0.05	%		12,737
Capital de Energía S.A.		537,655,505			49.10	%		263,988,852			567,237,724			49.10	%		278,513,722
Central Hidroeléctrica Betania S.A.		495,501,330			14.38	%		71,242,190			531,573,443			14.38	%		76,428,566
Central Cachoeira Dourada		510,687,620			0.49	%		2,509,162			498,182,610			0.40	%		2,013,071
Central Costanera S.A.		148,611,531			48.07	%		71,433,791			177,566,438			48.07	%		85,351,680
Cía. Eléctrica San Isidro S.A.		35,446,413			50.00	%		17,723,206			30,340,066			50.00	%		15,170,033
Edegel S.A.A.		676,472,093			36.44	%		246,532,136			691,845,098			36.44	%		252,134,644
Emgesa S.A.		902,640,666			51.52	%		465,012,490			965,197,585			51.52	%		497,239,875
Empresa Eléctrica Pangue S.A.		62,166,267			7.52	%		4,674,903			74,861,237			5.01	%		3,750,548
Endesa Argentina S.A.		25,935,751			0.01	%		2,594			22,488,854			0.01	%		2,249
Generandes Perú S.A.		363,167,520			40.37	%		146,607,169			381,347,726			40.37	%		153,946,340
Hidroeléctrica El Chocón S.A.		227,090,711			34.81	%		79,050,277			229,673,868			34.81	%		79,949,473
Hidroinvest S.A.		104,791,787			30.07	%		31,510,891			92,929,405			30.07	%		27,943,872
Inecsa 2000 S.A.		25,249,821			2.68	%		676,695			25,671,143			2.68	%		687,987
Infraestructura 2000 S.A.		64,542,192			40.00	%		25,816,877			64,913,872			40.00	%		25,965,549
Ingendesa S.A.		2,416,270			2.36	%		57,085			2,348,960			2.36	%		55,494
Pehuenche S.A.		181,334,464			7.35	%		13,328,083			183,290,112			7.35	%		13,471,823
Túnel El Melón S.A.		(1,644,625	)		0.05	%		(822	)		(4,356,447	)		0.05	%		(2,178	)
Total								1,440,178,096									1,512,635,485

F2-44

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

20. Minority interest: (Continued)


b)	Minority shareholders' equity participation in the results from operations of the Company's subsidiaries for each period-end is as follows:


	Period ended March 31, 2002									Period ended March 31, 2003
Company	Net Income			Participation			Total			Net Income			Participation			Total
	ThCh$			%			ThCh$			ThCh$			%			ThCh$
Autopista Los Libertadores		(357,226	)		0.05	%		(179	)		134,667			0.05	%		67
Capital de Energía S.A.		810,953			49.10	%		398,179			5,289,179			49.10	%		2,596,987
Central Hidroeléctrica Betania S.A.		(3,612,612	)		14.38	%		(519,414	)		2,753,591			14.38	%		395,906
Central Cachoeira Dourada		4,797,651			0.49	%		23,572			2,696,124			0.40	%		10,895
Central Costanera S.A.		9,600,099			48.07	%		4,614,523			3,014,758			48.07	%		1,449,118
Cía. Eléctrica San Isidro S.A.		4,975,408			50.00	%		2,487,704			(286,643	)		50.00	%		(143,322	)
Edegel S.A.A.		8,182,934			36.44	%		2,982,172			3,398,756			36.44	%		1,238,636
Emgesa S.A.		3,824,401			51.52	%		1,970,213			12,660,377			51.52	%		6,522,234
Empresa Eléctrica Pangue S.A.		2,370,032			7.52	%		178,227			3,334,311			5.01	%		167,049
Endesa Argentina S.A.		(5,065,142	)		0.01	%		(507	)		248,124			0.01	%		25
Generandes Perú S.A.		7,640,269			40.37	%		3,084,302			4,775,260			40.37	%		1,927,726
Hidroeléctrica El Chocón S.A.		(12,558,999	)		34.81	%		(4,371,787	)		(1,597,866	)		34.81	%		(556,217	)
Hidroinvest S.A.		(7,947,928	)		30.07	%		(2,389,942	)		(1,212,152	)		30.07	%		(364,494	)
Inecsa 2000 S.A.		(356,183	)		2.68	%		(9,545	)		131,706			2.68	%		3,530
Infraestructura 2000 S.A.		715,112			40.00	%		286,045			591,381			40.00	%		236,552
Ingendesa S.A.		132,348			2.36	%		3,126			395,654			2.36	%		9,347
Pehuenche S.A.		866,764			7.35	%		63,707			7,533,749			7.35	%		553,731
Túnel El Melón S.A.		(326,580	)		0.05	%		(163	)		(104,411	)		0.05	%		(52	)
Total								8,800,233									14,047,718

21. Shareholders' equity:

Dividends

There were no dividends paid during the periods covered by these financial statements.


b)	Number of shares

As of each of the three-month periods ended March 31, 2002 and 2003, the number of shares authorized, subscribed, and paid for was 8,201,754,580, all having voting rights.


c)	Subscribed and paid capital

Subscribed and paid capital as of three-month periods ended March 31, 2002 and 2003 amounted to ThCh$1,047,871,972 and ThCh$1,039,795,887, respectively.

Net losses from operations and accumulated net earnings (losses) of development-stage subsidiaries are as follows:

F2-45

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

21. Shareholders' equity: (Continued)


	As of March 31, 2003
	Net Earnings (Losses)
Company	During the period			Accumulated
	ThCh$			ThCh$

Compañía Eléctrica Taltal Ltda.		—			245,250
Infraestructura 2000 S.A.		—			581,832
Gas Atacama Generación Ltda.		—			1,359,106
Ingendesa (Brazil)		(2,461	)		(2,461	)
Enigesa S.A. (Brazil)		(32	)		(32	)
Total		(2,493	)		2,183,695


e)	Other reserves

Other reserves are composed of the following as of March 31, of each year:


	As of March 31,
	2002			2003
	ThCh$			ThCh$

Accumulated net earnings (losses) of developed-stage subsidiaries		(942,001	)		2,183,695
Accumulated capital revaluation		1,657,494			1,659,582
Revaluation of fixed assets under Decree Law No. 4 (see Note 2)		1,136,383			1,137,814
Other revaluations		73,948			74,041
Reserve for technical revaluation of fixed assets (Circulars 550 and 566)		28,427,555			28,463,356
Reserve for technical revaluation of investments in subsidiaries subsequently sold (Circulars 550 and 566)		23,905,435			23,935,540
Equity adjustment of unconsolidated subsidiaries		(323,912	)		(324,320	)
Accumulated foreign currency translation adjustments		20,189,954			30,227,168
Reduction of capital in foreign subsidiaries		(6,033,678	)		(6,041,277	)
Total		68,091,178			81,315,599

F2-46

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

21. Shareholders' equity: (Continued)

The detail of the cumulative translation adjustment for foreign currency gains and losses on assets and liabilities and net investments measured in currencies other than the Chilean peso as of March 31, 2002 and 2003 are as follows:


	As of March 31,
	2002			2003
	ThCh$			ThCh$
Endesa-Chile equity method investments		12,601,558			19,091,511
Endesa Argentina		5,894,511			7,937,591
Endesa-Chile Internacional		382,919			1,541,744
Distrilec Inversora S.A		415,699			554,534
Endesa Colombia S.A.		896,970			1,109,735
Ingendesa Do Brasil Ltda.		(1,703	)		(7,947	)
Total		20,189,954			30,227,168

22. Other income and expenses:

The detail of other non-operating income in each three month period is as follows:


	Three Months Ended March 31,
	2002		2003
	ThCh$		ThCh$
Effect of application of BT 64		10,525,611		8,495,621
Gain on sale of fixed assets		1,993,802		44,942
Energy and power contract settlement		35,454		2,482,115
Settlement of purchases of energy		11,033,337		516,424
Dividends Empresa Eléctrica de Bogotá		—		461,464
Indemnities and commissions		—		916,407
Other		1,035,725		761,080
Total		24,623,929		13,678,053

Other non-operating expenses in each three month period are as follows:


	Three Months Ended March 31,
	2002		2003
	ThCh$		ThCh$
Effect of application of BT 64		11,383,290		3,690,226
Loss on sale of fixed assets		810,215		973,314
Board of directors compensation		48,722		72,608
Contingencies and litigation		1,770,580		4,949,981
Energy and power settlement		11,120,739		1,578,052
Retirement benefits and severance indemnities		292,647		200,316
Amortization of bond discount		1,006,521		295,364
Other taxes		118,671		808,629
Intangible amortization and other deferred expenses		—		127,468
Edegel recovered income		—		1,312,494
Provision for Canutillar sale		—		5,032,803
Other		1,390,904		840,425
Total		27,942,289		19,881,680

F2-47

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

23. Price-Level Restatement:

The gain (loss) from price-level restatement as of each period-end is as follows:


	Three Months Ended March 31,
	2002			2003
	ThCh$			ThCh$
Assets
Current assets		(497,208	)		967,559
Accounts receivable from subsidiaries		(555,654	)		968,210
Fixed assets		(7,824,919	)		10,187,588
Investment in subsidiaries		(352,307	)		873,566
Amortization of goodwill and negative goodwill		150,155			(436,088	)
Other assets		30,626			6,981,781
Net gain (loss) from asset accounts		(9,049,307	)		19,542,616
Liabilities and Shareholders' equity
Shareholders' equity		5,831,139			(7,153,177	)
Current and long-term liabilities		1,835,459			(11,556,967	)
Minority interest		945,350			1,181,822
Accounts payable to subsidiaries		—			(106,050	)
Net gain (loss) from liabilities and shareholders' equity accounts		8,611,948			(17,634,372	)
Net gain (loss) from price-level restatement of balance-sheet accouts		(437,359	)		1,908,244
Net gain (loss) from price-level restatement of income statement		108,883			(181,896	)
Net gain (loss) from price-level restatement in income		(328,476	)		1,726,348

F2-48

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

24. Foreign currency translation:

The (charge) credit to income for foreign currency translation as of each period-end is as follows:


Assets								Liabilities
		Three Months Ended March 31,								Three Months Ended March 31,
Current assets	Currency	2002			2003			Current liabilities	Currency	2002			2003
		ThCh$			ThCh$					ThCh$			ThCh$
Cash	US$		200,829			1,126,851		Short-term debt due to banks and financial institutions	US$		(443,094	)		(889,318	)
	Other		—			—			Other		(47	)		—
Time deposits	US$		—			503,901		Current portion of long-term debt due to banks and financial institutions	US$		(410,567	)		(507,167	)
	Other		—			—			¥		(1,330	)		(2,932	)
Marketable securities	US$		1,518,861			1,251,924			Euro		219			(251,699	)
Accounts receivable, net	US$		—			32,983			UP		(21,684	)		(51,614	)
Other accounts receivable, net	US$		75,759			106,698			Other		2,880			3,927
	Other		(35,227	)		(2,990	)	Current portion of bonds payable	US$		(743,186	)		(1,572,869	)
Prepaid expenses	US$		3,327			(4,977	)	Current portion of long-term notes payable	US$		(73,781	)		(107,114	)
Other current assets	US$		412,282			2,663,367			Other		—			—
	Other		407			—		Amounts payable to related companies	US$		—			—
Amounts due from related companies	US$		—			2,474,676		Dividends payable	Other		—			—
								Accrued expenses	US$		—			—
								Accounts payable	US$		—			(2,767	)
									Other		541			—
								Miscellaneous payables	US$		(142,585	)		(319,980	)
								Other current liabilities	US$		—			187,149

Non-current assets								Long-term liabilities
Long-term receivables	US$		17,010			5,670
	UC		(9,759	)		25,918		Due to banks and financial institutions	US$		(1,185,167	)		(2,870,944	)
Amounts due from related companies	US$		780,801			—			¥		1,590			(19,759	)
Deferred expenses	US$		25,476			—			Euro		1,483			(14,369	)
Other Assets	US$		1,492,890			3,598,420			£		7,925			—
Forward contracts	US$		—			3,639,143			UP		(10,940	)		(45,527	)
								Bonds payable	US$		(2,208,653	)		(6,000,327	)
								Long-term notes payables	US$		(376,327	)		(535,522	)
								Accounts payable	US$		(24,373	)		(97,465	)
								Other long-term liabilities	US$		(588,953	)		(2,413,991	)
								Amounts payable to related companies	US$		—			(263,511	)
								Forwards	US$		(4,422,018	)		—
Total gain			4,482,656			15,421,584		Total loss			(10,638,067	)		(15,775,799	)
								Net charges to income			(6,155,411	)		(354,215	)

F2-49

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

25. Bond issuance costs:

The capitalization costs related to the registration and issuance of bonds of Endesa-Chile incurred during the three-month periods ended March 31, 2002 and 2003 are as follows:


	As of March 31,
	2002		2003
	ThCh$		ThCh$
Stamp taxes		—		1,432,639
Commissions		303,576		404,455
Consulting fees		695,380		1,731,460
Insurance		290,680		7,895,184
Other		137,778		—
Total		1,427,414		11,463,738

Bond issuance costs are included in Other Assets and are amortized over the life of the bonds. The amortization period for the Series B-1 is 8 years, Series B-2 and Series F is 21 years, and Series E-1 and E-2 is 6 years, respectively.

26. Extraordinary loss:

There were no extraordinary losses in the three-month periods ended March 31, 2002 and 2003.

27. Financial derivatives:

As of March 31, 2003 the Company and its subsidiaries held the following financial derivative contracts with financial institutions with the objective of decreasing exposure to interest rate and foreign currency risk according to the following detail:

As of March 31, 2003

Type
(1)

Nominal
Amount

Period of
Maturity

Item

Sales/
Purch.

Hedged
Item

Initial Hedged
Amount

Closing Hedged
Amount

US$

ThCh$

15,000,000

II Quarter 2003

Exchange rate

U.S. Dollar Account Payable

10,973,400

105,000,000

II Quarter 2003

Exchange rate

Bonds

76,813,800

30,000,000

II Quarter 2003

Exchange rate

Bonds

10,973,400

158,200,000

II Quarter 2003

Exchange rate

Bank Obligations/ Yankee
Bonds/Others

115,732,792

67,800,000

II Quarter 2003

Exchange rate

Bank Obligations

49,599,768

125,000,000

III Quarter 2004

Interest rate

C/V

Bank Obligations

91,445,000

50,000,000

II Quarter 2004

Interest rate

C/V

Bank Obligations

36,578,000

100,000,000

I Quarter 2006

Interest rate

C/V

Bank Obligations

73,156,000

250,000,000

II Quarter 2006

Interest rate

C/V

Bank Obligations

182,890,000

381,200,000

III Quarter 2003

Interest rate and
currency

C/V

Bonds

278,870,672

19,600,000

II Quarter 2005

Interest rate

Loan in US$

14,338,576

144,470,311

III Quarter 2006

Currency

Bonds

100,701,600

144,470,311

III Quarter 2006

Currency

Bonds

1,024,941

50,000,000

III Quarter 2006

Currency

Bonds

(34,852,001

)

(34,852,001

)

50,000,000

III Quarter 2006

Currency

Bonds

(304,452

)

(304,452

)

6,667,981

IV Quarter 2003

Exchange rate

Bank Obligations

4,545,759

(1)	Fr = Forward, EO = European Option, S = Swap

F2-50

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies:

The detail of guaranties granted by the Company and its subsidiaries as of March 31, 2003 is the following:

Direct guarantees held by third parties:


		As of March 31, 2003
		Guarantee Released
Guarantee	Subsidiary	2003	2004-2006		After 2006		Total
		ThCh$	ThCh$		ThCh$		ThCh$
Ministry of Public Works	Autopista del Sol	—		—		671,344		671,344
Banco del Estado de Chile	Pehuenche S.A.	—		111,990		—		111,990
Director Aduana de Chile	Pehuenche S.A.	—		—		50,478		50,478
Director Aduana de Chile	Pangue S.A.	—		66,286		—		66,286
Bancos Acreedores	Pangue S.A.	—		11,641,071		7,914,956		19,556,027
Mitsubishi Corp.	San Isidro S.A.	—		—		50,802,945		50,802,945
Chilean Internal Revenue Service	Celta S.A.	—		—		172,681		172,681
Banco del Estado	Tunel el Melón	—		—		6,869,722		6,869,722
Financial Security Assurence Inc.	Infraestructura 2000 S.A., Autopista del Sol y Endesa Chile	—		—		93,695,577		93,695,577
Soc. de Energía de la Rep. Arg. S.A.	Endesa Argentina S.A.	—		—		16,465,381		16,465,381
J P Morgan Bank (syndicate) and Ing Bank	Central Costanera	—		—		74,868,221		74,868,221
Total		—		11,819,347		251,511,305		263,330,652

Indirect guarantees held by third parties:


		As of March 31, 2003
		Guarantee Released
Guarantee	Subsidiary	2003		2004-2006		After 2006		Total
		ThCh$		ThCh$		ThCh$		ThCh$
Citibank N.A.	Endesa Chile Internacional		—		366,175,627		—		366,175,627
Citibank N.A.	Endesa Chile Internacional		—		—		—		—
Midlabank (BSCH)	Endesa Chile Internacional		5,771,668		—		—		5,771,668
Banco Santander Central Hispano	Endesa Chile Internacional		112,951,903		—		—		112,951,903
J.P. Morgan & Co. Y C.S.F.B.	Endesa Chile Internacional		—		109,734,000		—		109,734,000
Banco San Paolo IMI	Endesa Chile Internacional		—		—		—		—
BNP	Endesa Chile Internacional		160,457,965		—		—		160,457,965
BBVA	Endesa Chile Internacional		160,457,965		—		—		160,457,965
Mitsubishi Co.	Cía. Eléctrica San Isidro S.A.		—		—		50,802,945		50,802,945
Banco Español de Crédito	Cía. Eléctrica Tarapacá S.A.		—		—		34,123,421		34,123,421
ABN Bank	Cía. Eléctrica Tarapacá S.A.		—		3,240,347		—		3,240,347
Banco del Estado de Chile y Santander	Autopista del Sol S.A.		—		—		—		—
Financial Security Assurance Inc.	Autopista del Sol S.A.		—		35,807		—		35,807
Chase Manhattan Bank	Endesa de Colombia S.A.		212,115,841		—		—		212,115,841
Banco Santander C.H.	Cia. Eléctrica Conosur S.A.		—		—		141,820,283		141,820,283
			651,755,342		479,185,781		226,746,649		1,357,687,772

Litigation and other legal actions:

F2-51

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

affect the Company or it subsidiaries' results of operations, financial position and cash flows, although no assurance can be given to such effect. Accordingly, the Company has established a provision for these lawsuits, which Management considers to be adequate.

Endesa-Chile (Individual Legal Entity)

There are pending lawsuits that have been filed against Endesa-Chile for which the corresponding defenses have been filed, which altogether amount to approximately ThCh$3,708,289 and ThCh$6,133,733 as of December 31, 2002 and 2003, respectively.

Court: Supreme Court of Argentina


	Process number: 2753-4000/97


	Cause: Dirección Provincial de Rentas, Provincia de Neuquén versus TGN (Transportadora de Gas del Norte S.A.). Resolution regarding Stamp Tax sum that eventually should be paid jointly by TGN and Endesa-Chile.


	Process status: TGN requested a precursory measure before the Supreme Court of Argentina to suspend the proceeding filed by the Province of Neuquen, which was accepted. Therefore the administrative complaint proceeding remains pending.


	Amounts involved: $Arg 13,943,572 (Includes tax, interest and fines).

ii.

Court: Arbitration Court


	Process number: N/A


	Amounts involved: US$32 million.

iii.

Court: Third Civil Court of Santiago


	Process number: 3140-2000

Cause: Lawsuit filed by Endesa-Chile versus the Chilean Government to define the criteria for applying the General Electric Services Law with respect to compensation payments for interruptions in the supply during periods of electric rationing. Under Supreme Decree No. 287 of 1999, with which the Chilean Ministry of Economy, Development and Reconstruction ordered electric rationing from June 12, to August 31, 1999 in the Central Interconnected System, and the modification of Article 99 of the D.F.L. No. 1/82 Mining Law (Electrical Services General Law

F2-52

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

introduced by Law 19.613 dated June 8, 1999), when a electricity generating companies produced generation at deficits and were not able to satisfy the normal consumption of their distributor or final customers subject to price regulation (whether due to prolonged failures of thermal power plants or due to droughts), they were obligated to pay compensation or damages to these customers in accordance with the regulations and procedures established in the rationing decree. This situation affected Endesa-Chile and its subsidiaries Pehuenche and Pangue.

Endesa-Chile has requested that the Court declare the Company is obligated only to pay compensation and damages to its distributor customers for those days and hours in which, during the term of rationing Decree No. 287, there were interruptions in the supply of electricity that affected these customers. The Government has maintained the position that the compensation must be paid for the entire rationing period.


	Process status: Pending resolution.


	Amounts involved: None.

Pehuenche S.A.

Court: 20th Civil Courthouse of Santiago


	Process number: 5.863-2001


	Process status: Case is awaiting sentencing.


	Amounts involved: Pehuenche S.A. is seeking US$7 million in capital and interest and Colbún S.A. is seeking US$2 million.


	Expected outcome: Taking into account the status and details of the case, it is impossible to predict the outcome of the trial.

ii.

Court: Talca Court of Appeals


	Process number: 39.945


	Cause: Asociación del Canal Maule versus DGA Resolution 1768 dated November 1984 related to the approval of reservoir works and building of the Colbún power plant. Pehuenche also filed a complaint to reinforce the claim of the irrigation subscribers that it is the obligation of Colbún S.A. to operate the reservoir.


	Process status: Resolution was passed rejecting the complaint.


	Amounts involved: Undeterminable.

iii.

Actions were filed related to the payment of compensation as per Supreme Decree No. 287, dated 1999 issued by the Chilean Ministry of Economy, Development and Reconstruction and modification of Art. 99 bis of DFL No. 1/82 of Mining Law. The objective of the aforementioned decrees and laws is to declare as null and void the obligation to pay compensations.


	a. Court: 24^th Civil Court of Santiago

F2-53

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)


	Process number: 3908-99


	Cause: Pehuenche filed an ordinary public law motion to vacate against Sociedad Austral de Electricidad S.A.


	Process status: Sentence was passed on December 10, 2002. Pehuenche has appealed the verdict and is awaiting the decision of the Appeals Court of Santiago.


	Amounts involved: Undeterminable.


	b. Court: 17^th Civil Court of Santiago


	Process number: 3940-99


	Cause: Pehuenche filed an ordinary public law motion to vacate against Chilectra S.A.


	Process status: Pending sentencing.


	Amounts involved: Undeterminable.


	c. Court: 20^th Civil Court of Santiago


	Process number: 4005-99


	Cause: Pehuenche presented an ordinary public law motion to vacate against Empresa Eléctrica Atacama S.A.


	Process status: Pending sentencing.


	Amounts involved: Undeterminable.

iv.

Claims against fines assigned by the Superintency of Electricity and Fuels (Superintendencia de Electricidad y Combustibles—S.E.C.). All are currently in process.


	a. Court: Santiago Court of Appeals


	Process number: 6515-99


	Cause: Failure of CDEC-SIC to provide timely information to the CNE. Resolution 1,557 dated October 1, 1999. The State Defense Council made itself a party to the case.


	Process status: Pending hearing.


	Amounts involved: Five fines for a total of 1,610 Units of Tax Measurement ("UTM") or ThCh$47,316.


	b. Court: 5th Civil Court of Santiago


	Process number: 2272-99


	Cause: Resolution 631 dated April 27, 1999, for not establishing Dispatch Center before January 1, 1999. Process status : Judgment passed, pending notification of sentence to parties.


	Amounts involved: Fine of 500 UTM (ThCh$14,695).


	c. Court: 16th Civil Court of Santiago


	Process number: 4164-97


	Cause: Resolution 856 dated October 16, 1997, due to blackout on May 11, 1997.


	Process status: Rejected recourse. Appeal prepared, awaiting reopening of file.

F2-54

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)


	Amounts involved: Fine of 450 UTM (ThCh$13,225).


	d. Court: 16th Civil Court of Santiago


	Process number: 1928-98


	Cause: Resolution 331 dated May 8, 1998, due to blackout on October 13, 1997.


	Process status: Rejected recourse. Appeal prepared, awaiting reopening of file.


	Amounts involved: Fine of 300 UTM (ThCh$8,817).


	e. Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Resolution 805 dated May 2, 2000 due to blackout on July 14, 1999.


	Process status: Pending resolution.


	Amounts involved: Fine of 400 UTA (ThCh$141,067).

Other cases


	a. Court: 3^rd Local Police Court of Santiago


	Process number: 50.419-AGO


	Cause: SERNAC versus Pehuenche, claim for lack of electrical supply. Court ruled in favor of Pehuenche and SERNAC appealed. The appeal was granted and the case, including a hearing and exhibition of evidence, was heard again in the 3^rd Local Police Court of Santiago.


	Process status: Pending decision of 3^rd Local Police Court of Santiago.


	Amounts involved: Undeterminable.

vi.

Court: 5^th Labor Court of Santiago


	Process number: 2.923-2001


	Cause: Labor lawsuit for work accident. Manuel Rolando Muñoz Zamorano versus the Chilean Association of Security, S.S.S. and Pehuenche. Second petition verdict confirming first petition verdict.


	Process status: Pending confirmation of appeal for dismissal.


	Amounts involved: Undeterminable.

Pangue S.A.

Endesa-Chile is seeking recourse related to the following fines imposed by the Superintendency of Electricity and Fuel:

Court: Santiago Court of Appeals


	Process number: 1294-99


	Cause: Resolution 415 dated March 12, 1999 for not complying with Article 90 of Decree 640 related to rationing by informing the Superintendency of normal consumption of Pangue's customers. Pangue made itself a party before the Court of Appeals. A motion to vacate was filed before the Supreme Court.

F2-55

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)


	Process status: Pending hearing


	Amounts involved: Fine of 10 UTM (ThCh$294).

ii.

Court: 1^st Civil Court of Santiago


	Process number: 2273-99


	Cause: Resolution No. 631 dated April 27, 1999 for infraction of Article 183 of the Regulations by not establishing the independent Dispatch and Control Center.


	Process status: On June 16, 2002, a judgment was passed ordering a fine to be paid. Pending official notification of judgment.


	Amounts involved: Fine 500 UTM (ThCh$14,695)

iii.

Court: 23rd Civil Court of Santiago


	Process number: 4293-97


	Cause: Resolution No. 856 dated October 16, 1997 for blackout on May 10, 1997.


	Process status: On May 31, 1999, judgment was passed ordering fine to be paid. Appeal made on November 29, 1999 and is pending hearing. As of January 9, 2003 case is still pending hearing.


	Amounts involved: Fine of 450 UTM (ThCh$13,225)

iv.

Court: 23rd Civil Court of Santiago


	Process number: 1910-98


	Cause: Resolution No. 331 dated May 8, 1998 for blackout on October 13, 1997.


	Process status: On July 30, 1999, judgment was passed ordering fine to be paid. Appeal has been filed and is pending hearing. As of January 9, 2003, case is still pending hearing.


	Amounts involved: Fine of 500 UTM (ThCh$14,695)

Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Motion to set aside filed before the SEC against SEC Resolution No. 740 dated April 26, 2000 which fined Pangue for blackout on July 14, 1999.


	Process status: Pending resolution


	Amounts involved: Fine of 300 UTA (ThCh$105,800).

Other lawsuits involving Pangue:

vi.

Court: 18^th Civil Court of Santiago


	Process number: 3886-99


	Cause: Pangue against Chilectra. Lawsuit to annul obligation to pay compensation to regulated price users derived from electricity rationing decree No. 287 issued by the Chilean Ministry of Economy.


	Process status: Case is currently being heard.


	Amounts involved: Undeterminable.

F2-56

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

vii.

viii.

Court: Civil Court of Santa Bárbara


	Process number: 992-96


	Cause: Disagreement over rates of electricity provided to the community of San Jose, for which Pangue is ordered to pay Ch$13,757,896.


	Process status: The case has been decided and the sentence set, details of payment pending.

San Isidro S.A.

Court: 7^th Civil Court of Santiago


	Process number: 2195-99


	Cause: Resolution No. 628 dated April 27, 1999 for infraction of Article 183 of Supreme Decree 327, issued by the Chilean Ministry of Economy, by not establishing the independent Dispatch and Control Center before January 1, 1999.


	Process status: Pending judgment of the Court


	Amounts involved: Fine 500 UTM (ThCh$14,695).

ii.

Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Resolution No. 719 dated April 24, 2000 due to blackout on July 14, 1999.


	Process status: Pending administrative resolution


	Amounts involved: Fine 150 UTA (ThCh$52,900).

Compañía Eléctrica de Tarapacá S.A. (Celta)

Administrative tribunal: Superintendency of Energy and Fuels


	Process number: N/A


	Cause: Charges against the company per Official Letter 4966 of August 3, 2000 for SING blackout on September 23, 1999.


	Process status: Pending resolution


	Amounts involved: Undeterminable.

ii.

Court: 20^th Civil Court of Santiago


	Process number: 2760-2000


	Cause: Verification of Credit in Inmobiliaria La Cascada Agreement.


	Process status: Report No. 1 was received from the Liquidating Commission. A first distribution of funds from the sale of goods took place, Celta received ThCh$60,558.


	Amounts involved: ThCh$203,718

F2-57

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

iii.

Court: 30^th Civil Court of Santiago


	Process number: 4061-2002


	Process status: On August 28, 2002 the Tribunal declared as a precautionary measure the prohibition to take action or execute contracts in respect to the marine concession granted to Endesa-Chile and in respect to the real estate which by nature composes or forms part of that concession.


	Amounts involved: If a forfeiture of the marine concession is declared, the dock installation would be affected, which has a value of US$15,000,000 and would become the property of the government, seriously affecting the operation of Celta's thermal power plant.

iv.

Court: 12^th Civil Court of Santiago


	Process number: 5237-2002

Cause: Lawsuit against Empresa Eléctrica del Norte Grande S.A. (EDELNOR et al, including Celta) for reimbursement of compensation paid by the electrical distributors Empresa Eléctrica de Arica S.A., Empresa Eléctrica de Iquique S.A. and Empresa Eléctrica de Antofagasta S.A., to their customers due to the blackout on July 25, 1999 of the Sistema Interconectado del Norte Grande (SING). The complaint is directed against EDELNOR, Electroandina, Norgener, AES Gener and Celta to jointly reimburse the electrical distributors.


	Process status: Court resolution pending regarding pleas filed by the defendants that the case is without merit. Outcome of the lawsuit if taken to trial is not determinable.


	Amounts involved: ThCh$64,269

Court: 8^th Civil Court of Santiago


	Process number: 129-2003


	Cause: Lawsuit brought against Endesa S.A., Celta S.A. and Terminal Marítimo Minera Patache S.A. by Sociedad Punta de Lobos S.A. regarding the rejection of its offer for the concession to operate the Minera Patache sea terminal, which Punta de Lobos S.A. considers a breach of contract. Endesa S.A. maintains that no such contractual obligations regarding the concession exist.


	Process status: In discussion.


	Amounts involved: Undeterminable.

Infraestructura Dos Mil S.A.

Court: Local Police Court of Talagante


	Process number: 217-00


	Cause: Lawsuit brought against Infraestructura Dos Mil S.A. and Endesa S.A. by Christian Andrés García Delgado seeking damages of Ch$3,839.

F2-58

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)


	Process status: Pending decision of court.


	Amounts involved: Ch$3,839

ii.

Court: 18^th Civil Court of Santiago


	Process number: 6504-2002


	Cause: The public law motion to nullify public right filed on December 23, 2002 by Infraestructura Dos Mil S.A. against the Chilean government. On March 31, 2003, the Court declared that the second round of argument presentation had finished.


	Process status: Pending reconciliatory meeting with judge to avoid further proceedings.


	Amounts involved: N/A

Sociedad Concesionaria Autopista Los Libertadores S.A.

There are pending lawsuits in favor of the company for ThCh$10,070 and against the company, for which the corresponding defense has been filed, in the aggregate amount of ThCh$1,722,826.

Sociedad Concesionaria Autopista del Sol S.A.

ii.

There are pending lawsuits in favor of the company for ThCh$170,230 and against the company, for which the corresponding defense has been filed, in the aggregate amount of ThCh$447,800.

Inecsa Dos Mil S.A.

On July 17, 2000, the Chilean Ministry of Public Works filed suit to annul the public right to bidding for the Northeast Santiago Access project. On April 8, 2003, the court began receiving evidence, pending notification of the parties.

Hidroelectrica El Chocon S.A.

On December 28, 2000 the Federal Public Revenues Administration – General Tax Services (FPRA-GTS) notified Hidroelectrica El Chocon S.A. that it owed ThCh$432,627 of taxes related to failure to withhold income tax on certain payments made abroad for a bank loan obtained in 1994. It was also determined that Hidroelectrica El Chocon S.A. must pay ThCh$982,929 for related accrued interest calculated as of December 20, 2000. Hidroelectrica El Chocon S.A. did not make these payments as it considered them relating to foreign source income and therefore not subject to taxes. Hidroelectrica El Chocon S.A. entered a plea in which it objected to payment of the taxes. FPRA-GTS has also fined Hidroelectrica El Chocon S.A. ThCh$302,839 which Hidroelectrica El Chocon S.A appealed by on February 20, 2001.

ii.

On December 28, 2000 Hidroelectrica El Chocon S.A. was notified that it owed accrued interest related to value-added-tax for the period from December 1993 to July 1995 amounting to ThCh$195,760 as of December 11, 2000, as well as an imposed fine of ThCh$247,137. On February 20, 2001 Hidroelectrica El Chocon S.A. filed an appeal with the courts under the premise that Chilean law does not require payment of fines, including accrued interests, for obligations or infractions committed before July 31, 1995.

iii.

On June 26, 2000, Hidroelectrica El Chocon S.A. was notified of a lawsuit for interest to be paid related to royalties, initially amounting to ThCh$388,022. Additionally, on September 27, 2000, the

F2-59

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

Company was notified of a new complaint from the province of Neuquén against the State and hydroelectric generators of Comahue to obtain royalties earned on accumulated funds in the Salex Account. The complaint does not state the precise amount or date as of which the sums claimed are considered as owed, but seeks charges from each generator equal to 12% of the funds contributed to the account.

iv.

On December 28, 2001 Hidroelectrica El Chocon S.A. received notification from the Provincial Revenue Services of Buenos Aires that it owed ThCh$242,564 for tax on gross income for the fiscal periods from February 1995 to December 1998 and that the fine was 10% of the allegedly unpaid amount. On January 15, 2002, Hidroelectrica El Chocon S.A. filed an appeal citing erroneous computation of the amount owed and other reasons as to why the taxes were not applicable.

Hidroinvest S.A.

On December 27, 2000 Hidroinvest S.A. was notified that it owed tax of ThCh$831,397 for gains realized in 1993 on the difference between the acquisition cost and transfer price of bonds, accrued interest of ThCh$1,788,336 and related fines of ThCh$581,978. On February 19, 2001, Hidroinvest S.A. filed an appeal to the notice.

Central Costanera S.A.

Central Costanera S.A. has a debt obligation corresponding to an agreement related to Work Order No. 4322 (the "Agreement"). Central Costanera S.A. has fixed the obligation at one peso equal to one US dollar in accordance with applicable laws. However, certain laws have exempted certain obligations from this fixed exchange rate, and should the Secretary of Energy rule that the obligations of Central Costanera S.A be exempted, an appeal would be filed. As of March 31, 2003, Central Costanera S.A. would to have to pay an additional ThCh$22,510,000 in the event of an unfavorable ruling.

Edegel S.A.

Court: Chilean Federal Court


	Process number: N/A


	Cause: From November 2000 to October 2001, the Chilean tax authority, the National Superintendency of Tax Administration (SUNAT) audited the income taxes and general sales taxes of Edegel S.A. from 1995 to 1999. As a result of the audits, in December 2001, SUNAT imposed back taxes and related fines.


	Process status: In November 2002, the Government Court issued its verdict indicating that: SUNAT would have to once again audit Edegel S.A. related to rejected expenses for amortization of negative goodwill.


	Amounts involved: As of March 31, 2003, provisions for these contingencies have been made amounting to ThCh$11,558,000 (US$15.8 million).

ii.

Lawsuits have been filed by ESSALUD for payment of contributions amounting to ThCh$3,080,000 (US$4.21 million). In the opinion of Management and their external legal counsel, it is probable that these proceedings will be resolved in favor of the Edegel S.A.; thus no liabilities have been recorded as of March 31, 2003 and 2002.


	Claims have been filed against Talleres Mayopampa S.A. amounting to ThCh$425,036 (US$581,000).

F2-60

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)


	The subsidiary has filed the corresponding countersuits and appeals, which have not yet been settled. In the opinion of Management and external legal counsel, these actions neither independently nor jointly will have a significant adverse effect on the financial position, results of operations or liquidity of Edegel S.A.

iii.

A lawsuit has been filed by Edegel S.A.'s workers' union, which seeks an increase in revenue sharing from the current 5%, as required by law, to 10%, which would mean doubling the payments already made in 1994, 1995 and 1996, meaning additional aggregate payments of ThCh$3,141,191 (US$4,294). On August 24, 2000, the lawsuit was ruled unfounded, but on December 12, 2000 a second ruling reversed that ruling. In the opinion of Management and external legal counsel, the final resolution will be favorable to Edegel S.A., and therefore no liabilities have been recorded related to this lawsuit as of March 31, 2003 and 2002.

Central Hidroeléctrica de Betania S.A. (Betania)

Tax contingencies:

Presumptive income tax contingency – In 1997, 1998 and 1999 Betania was exempted from paying taxes under the presumptive income tax system – a system which calculates taxes payable on concepts other than net income – due to a regulation passed by the Administration of National Taxes (DIAN) in 1995. Since Betania had tax losses for those years, no taxes were paid. That regulation was modified in 1999, which resulted in Betania qualifying for the presumptive income tax system, which means that according the DIAN it should have paid taxes in 1997 and 1998 amounting to ThCh$24,295,664 (including interest in the amount of ThCh$9,598,785 and sanctions of ThCh$8,989,958). Betania believes that the conclusions of DIAN were unfounded and, therefore on September 13, 2002 filed a complaint before the Administrative Court of Huila. Since then, DIAN has ruled against the petition to reconsider the income tax payable for 1997, while for the 1998 period, DIAN has yet to respond. As of March 31, 2003 Betania recorded a provision amounting to ThCh$6,429,666 to cover this contingency.

ii.

DIAN reviewed Betania's calculation of its ordinary income tax payable for 1997 and 1998 and declared that Betania owes ThCh$11,484 and ThCh$44,832 for 1997 and 1998, respectively, including tax, sanctions and estimated overdue interest. In 1997 and 1998 the Company has been audited both in the calculation of its ordinary income as well as presumptive income, therefore it should be noted that only the greater of the two becomes taxable net income on which the corresponding taxes, sanctions and interest must be paid.

iii.

DIAN notified Betania that it owes ThCh$21,132 related to the incorrect calculation of income for 1999. Betania has requested that DIAN reconsider the validity of its calculation.

Other contingencies:

iv.

As of December 31, 2002, amounts demanded in lawsuits relating to administrative, civil and labor litigations amounted to ThCh$5,691,519, and there exist other lawsuits for undetermined amounts. Based on the evaluation of the probability of success in the defense of these suits, ThCh$949,746 has been provisioned as of March 31, 2003, to cover probable losses due to these contingencies.

Restrictions:

Endesa-Chile Consolidated

The Company is in compliance with all financial ratios and covenants as of March 31, 2003.

F2-61

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

Endesa-Chile (Individual Legal Entity)

•

Gross cash flows (defined as operating income plus depreciation, amortization, financial income, and dividends received from consolidated subsidiaries) equal to or greater than 13% of the average consolidated financial debt for terms longer than one year, plus short-term bank debt if the term is extendable to more than one year, obtained from the debt in the consolidated financial statements at the closing date of the last four quarters.

•

Gross Cash Flow equal to or greater than 1.9 times the consolidated financial expenses, obtained according to the expenses reflected in the consolidated financial statements at the closing date of the last four quarters.

•

The financial debt for terms longer than one year, plus short-term bank debt if its term is extendable to more than one year, cannot exceed 58% of the sum of shareholders' equity, plus minority interests, plus financial debt with terms longer than one year and short-term bank debt.

Infraestructura Dos Mil S.A.

Due to the placement of bonds by the subsidiary Concesionaria Autopista Del Sol S.A., Infraestructura Dos Mil S.A. concurred as "Sponsor" to the contracts of that transaction, committing itself to comply with restrictions in the transfer of its property to the bond issuer. Additionally, Infraestructura Dos Mil S.A., cannot make fundamental changes in its assets without written consent from the insurance company guaranteeing the bond issuance (FSA Inc). Likewise, the shares of the Concesionaria Autopista de Sol S.A. owned by Infraestructura Dos Mil S.A. were pledged in favor of FSA Inc.

Pehuenche S.A.

Sociedad Concesionaria Autopista del Sol S.A.

In virtue of the bond issuance contract, Sociedad Concesionaria Autopista del Sol S.A. must meet certain financial ratios based on the generation of operating cash flows. Additionally, the Company must request authorization from the insurer to obtain additional financing.

Pangue S.A.

The following is a summary of the main obligations, which Empresa Eléctrica Pangue S.A. must comply with as per agreements with financial institutions:

•

Maintain creditors duly informed regarding its financial situation.

•

F2-62

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

•

Insure and maintain insured all assets.

Central Costanera S.A.

Edegel S.A.A.

Financial indicators originated by credit contracts:

•

Maintain financial debt to equity ratio not exceeding 0.55 during the term of the contract

•

Maintain a ratio of EBITDA to net financial expenses of no less than 4.5 during each quarter of 2002 and 2003. For 2004 the ratio of EBITDA to financial expenses, for four consecutive quarters should be no less than 5.0 for each quarter.

•

Maintain a ratio of financial debt less cash to EBITDA (for four consecutive quarters) no greater than 3.0 for each quarter, effective beginning in 2002.

•

The financial debt of Edegel must not exceed ThCh$292,624 (ThUS$400,000).

Financial indicators originated by Bonds Program and Short-term instruments:

•

Maintain indebtedness no greater than ThCh$402,358,000 (ThUS$550,000) as of the close of each quarter ending on March 31, June 30, September 30 and December 31 of each year during the term of the bonds.

•

Maintain net shareholders' equity of no less than ThCh$499,500,389 (ThUS$682,788) as of the close of each quarter ending on March 31, June 30, September 30 and December 31 of each year during the term of the bonds.

•

Edegel may not transfer or assign all or part of the debt it assumes as a consequence of the issuance in the framework of the Bond Program, unless there is a favorable agreement adopted by the General Assembly of bond holders.

Cross-Default Provisions:

Investment Grade Debt Rating

Certain of the Company's loan agreements have special provisions in the event that the Company's US$-denominated debt rating falls bellow "investment grade" by the applicable rating agency, principally

F2-63

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

28. Commitments and contingencies: (Continued)

Standards & Poor's (S&P). In the event that senior unsecured long-term foreign currency denominated debt were to be rated "non-investment grade," or less than "BBB-" by S&P nomenclature, then within certain applicable grace periods (normally 60 days), a "mandatory prepayment" would be triggered and all the outstanding principal under these loans would become due. As of March 31, 2003, US$743 million of Endesa-Chile's loan agreements have mandatory prepayment provisions of this type. As of March 31, 2003, S&P long-term foreign currency debt ratings classify the Company's applicable liabilities as "investment grade".

29. Securities obtained from third parties:

Endesa-Chile (Individual Legal Entity)

The company has received guaranteed performance bonds from contractors and third parties to guarantee performance and construction (mainly the Ralco Project) in the amount of ThCh$21,526,231 as of March 31, 2003 (ThCh$31,917,766 in 2002).

Autopista Los Libertadores S.A.

Deposits and guaranteed performance bonds amount to UF 26,011 as of March 31, 2003.

Sociedad Concesionaria Autopista del Sol S.A.

Deposits and guaranteed performance bonds amount to UF 32,495 as of March 31, 2003.

Compañía Eléctrica de Tarapaca S.A.

The Company has received documents in guarantee amounting to ThCh$219,664 as of March 31, 2003.

Compañía Eléctrica San Isidro S.A.

The Company has received documents in guarantee amounting to ThCh$4,685,095 as of March 31, 2003.

Empresa Eléctrica de Pangue

Empresa Eléctrica Pangue S.A. has received from contractors guaranteed performance bonds from banks in the amount of ThCh$8,879 as of March 31, 2003, which guarantee advances granted and compliance with contracts.

F2-64

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies:

As of March 31, 2002 and 2003, foreign currency denominated assets and liabilities are as follows:

Current assets


		As of March 31,
Account	Currency	2002		2003
		ThCh$		ThCh$
Cash	Ch$		1,698,543		811,054
	US$		3,273,440		1,594,720
	$ Col.		2,193,282		1,404,207
	Soles		248,767		90,620
	$ Arg.		8,147,307		638,532
	Reales		—		355,640

Time deposits	US$		16,029,837		91,194,345
	$ Col.		20,330,896		2,130,315
	Soles		3,627,374		9,918,386
	$ Arg.		108,139		1,622,068
	Reales		3,615,585		15,621,313

Marketable securities	Ch$		4,841		4,847

Accounts receivables, net	Ch$		33,782,478		36,564,525
	US$		5,170,087		4,858,817
	$ Col.		23,397,740		20,561,226
	Soles		2,686,435		5,033,150
	$ Arg.		9,181,836		12,791,615
	Reales		12,903,459		12,197,302

Notes receivables	Ch$		58,991		47,989
	US$		941,032		777,542

Other receivables	UF		470,647		—
	Ch$		4,534,748		7,924,832
	US$		6,689,543		745,581
	$ Col.		2,747,963		2,782,256
	Soles		6,066,119		7,779,977
	$ Arg.		28,193		31,685
	Reales		903,376		86,969
	U.C.		981,618		1,142,191

Amounts due from related companies	Ch$		10,352,416		10,860,431
	US$		10,219,350		183,260,551
	$ Col.		16,305,552		12,092,071
	Soles		2,737,049		2,425,602
	$ Arg.		636,119		372,508
	Reales		210,252		3,382,251

F2-65

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


		As of March 31,
Account	Currency	2002		2003
		ThCh$		ThCh$
Inventory, net	Ch$		5,602,613		3,719,338
	$ Col.		867,904		1,068,078
	Soles		4,582,553		4,107,745
	$ Arg.		4,940,568		1,987,649

	US$		—		6,904,463
	$ Col.		288,716		—
	$ Arg.		11,654,845		3,567,892

Prepaid expenses	Ch$		398,261		1,372,355
	US$		1,295,491		2,056,739
	$ Col.		45,665		1,968,628
	Soles		1,216,229		1,215,336
	$ Arg.		893,774		1,744,529
	Reales		8,198		592,104

Deferred tax	Ch$		—		3,541,514
	$ Col.		—		610,853

Other current assets	UF		449,708		—
	Ch$		8,905,079		182,713,029
	US$		11,756,824		54,073,014
	$ Arg.		221,727		225,922

Total current assets			279,807,947		734,462,183

F2-66

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


b)	Property, plant, and equipment:


		As of March, 31
Account	Currency	2002			2003
		ThCh$			ThCh$
Land	Ch$		19,764,699			18,485,502
	$ Col.		12,763,705			13,848,431
	Soles		285,118			306,365
	$ Arg.		6,515,781			7,001,029
	Reales		423,985			452,519

Buildings and Infrastructure and electrical lines	Ch$		3,107,645,181			3,043,585,502
	$ Col.		1,823,096,821			1,979,908,615
	Soles		329,155,061			342,565,557
	$ Arg.		320,827,756			344,736,209
	Reales		549,733,681			590,736,939

Machinery and Equipment	Ch$		11,768,473			11,680,844
	$ Col.		15,468,969			6,877,396
	Soles		402,449,565			442,889,886
	$ Arg.		713,524,455			767,929,291

Other fixed assets	Ch$		8,591,035			16,566,449
	$ Col.		10,393,403			3,668,042
	Soles		6,696,547			10,757,429
	$ Arg.		9,069,112			9,746,616
	Reales		47,243,116			4,278,927

Technical appraisal	Ch$		11,533,708			11,420,676
	$ Col.		65,025,435			74,728,854
	Soles		479,808,379			515,108,344
	Reales		114,026,703			137,770,287

Accumulated Depreciation	Ch$		(1,182,867,343	)		(1,190,438,566	)
	$ Col.		(337,993,459	)		(413,418,456	)
	Soles		(411,586,105	)		(463,547,990	)
	$ Arg.		(367,262,293	)		(442,992,199	)
	Reales		(195,068,965	)		(248,829,809	)
Total property, plant and equipment, net			5,571,032,523			5,595,822,689

F2-67

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


c)	Other assets:


		As of March 31,
Account	Currency	2002			2003
		ThCh$			ThCh$
Investments in related companies	Ch$		103,133,307			113,605,932
	US$		56,499,394			73,602,043

Investments in other companies	Ch$		2,160,424			2,233,526
	$ Col.		75,016,548			83,949,437
	Soles		11,626			10,147

Goodwill, net	Ch$		81,036			3,326,209
	US$		65,482,537			608,985
	$ Col.		23,858,546			23,991,510
	Soles		1,676,963			—
	$ Arg.		32,966,355			—

Negative goodwill, net	US$		(34,166,872	)		—
	$ Col.		(51,963,586	)		(27,213,530	)
	Soles		(67,080,927	)		(61,600,204	)
	$ Arg.		(3,360,841	)		—

Long-term receivables	UF		2,360,339			321,235
	Ch$		1,556,131			1,437,161
	US$		25,604,614			5,953,824
	Soles		1,823,929			—
	Reales		14,984,175			9,861,920
	U.C.		1,461,904			568,639

Amounts due from related parties	Ch$		1,170,064			900,210
	US$		164,854,459			—

Other assets	UF		5,980,445			2,142,969
	Ch$		10,502,114			35,753,728
	US$		22,335,147			32,761,106
	$ Col.		22,706,650			20,266,664
	Soles		461,725			524,799
	$ Arg.		2,740,319			3,859,916
	Reales		586,173			472,559
Total other assets			483,442,698			327,338,785

F2-68

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


d)	Total assets:



Total assets by currency	UF	8,340,784	3,384,559
	Ch$	2,289,351,274	2,215,427,267
	US$	646,075,051	168,301,562
	$ Col.	1,777,848,674	1,755,926,673
	Soles	815,543,723	766,907,833
	$ Arg.	741,749,179	722,347,235
	Reales	532,214,790	544,333,869
	U.C.	2,604,095	1,550,257
Total assets by currency		6,813,727,570	6,178,179,255

Current liabilities:


		Within 90 days								91 days to 1 year
		As of March 31, 2002				As of March 31, 2003				As of March 31, 2002				As of March 31, 2003
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate		Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%

Short-term due to banks and financial institutions	Ch$		7,795,305		4.75		24,160,965		1.38		—		—		—		—
	US$		15,770,689		12.50		9,178,152		3.22		—		—		68,908,974		3.22
	$ Col.		6,630,652		6.07		8,194,101		7.45		—		—		750,581		12.38
	Soles		11,971,339		6.07		22,679,154		4.30		—		—		—		—

Current portion of long-term debt due to banks and financial institutions	UF		—		—		—		—		1,430,875		9.00		1,476,598		9.00
	US$		188,818,677		5.37		61,893,250		3.50		40,355,477		5.37		148,940,132		3.50
	Euro		—		—		—		—		4,449,956		3.49		4,988,282		3.42
	Yen		—		—		—		—		391,462		—		471,473		0.89
	$ Arg.		—		—		—		—		—		—		2,449,525		1.75
	Reales		—		—		1,335,445		9.00		4,038,045		9.24		—		—
	U.P.		—		—		—		—		1,033,387		5.03		1,206,026		5.07
	Libra		—		—		—		—		371,571		5.38		441,737		4.50
	Other		—		—		—		—		97,494		4.44		—		—

Promissory notes	Soles		—		—		3,611,105		4.84		—		—		4,270,592		4.50

Current portion of long-term bonds payable	UF		—		—		—		—		4,028,997		6.30		5,228,002		6.00
	US$		1,861,733		7.30		—		—		23,428,624		7.20		151,543,589		7.30
	Euro		1,824,826		3.34		—		—		—		—		320,915,929		3.34
	$ Col.		15,868,581		14.00		5,993,671		10.60		—		—		—		—
	Soles		—		—		40,010		6.00		118,282		8.75		7,459,819		11.50

F2-69

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)

Current liabilities: (Continued)


		Within 90 days								91 days to 1 year
		As of March 31, 2002				As of March 31, 2003				As of March 31, 2002				As of March 31, 2003
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate		Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%

Current portion of long-term payables	US$		18,533,515		9.00		10,703,052		9.00		5,426,082		9.00		23,714,631		9.00
Dividends payable	Ch$		2,034		—		2,659,122		—		—		—		—		—
	$ Col.		—		—		8,690,201		—		—		—		—		—
	Soles		26,004		—		70,868		—		—		—		—		—
	$ Arg.		835		—		958,971		—		—		—		—		—

Accounts payable	Ch$		22,422,129		—		39,505,027		—		83		—		—		—
	US$		17,924,971		—		7,968,030		—		78,755		—		287		—
	Euro		—		—		—		—		—		—		—		—
	$ Col.		7,996,704		—		5,518,919		—		—		—		—		—
	Soles		1,666,324		—		2,922,396		—		2,007,570		—		—		—
	$ Arg.		3,017,092		—		2,959,647		—		—		—		—		—
	Reales		21,778,010		—		11,366,584		—		—		—		—		—

Miscellaneous payables	Ch$		6,176,089		—		6,010,526		—		3,891,216		—		8,949		—
	US$		2,964,693		—		355		—		1,336,543		—		9,442,839		—
	$ Col.		680,798		—		5,503,527		—		—		—		—		—
	Soles		—		—		7,806,350		—		6,806,169		—		13,589,833		—
	Reales		356,625		—		363,543		—		—		—		—		—

Amounts payable to related companies	UF		40,745,101		7.04		—		—		—		—		—		—
	Ch$		39,500,966		—		953,227		—		—		—		21,211,341		—
	US$		24,561		3.33		17,618		—		—		—		—		—
	$ Col.		29,012,329		—		61,234		—		—		—		8,099,534		—
	Soles		—		—		83,320		—		1,177,351		—		—		—
	$ Arg.		1,248,627		—		456,063		—		—		—		—		—

Accrued expenses	Ch$		11,200,265		—		6,897,791		—		17,004,401		—		28,265,458		—
	US$		260,135		—		248,249		—		—		—		—		—
	$ Col.		4,796,992		—		10,645,661		—		—		—		—		—
	Soles		2,288,850		—		2,432,668		—		—		—		—		—
	$ Arg.		203,946		—		279,134		—		—		—		—		—
	Reales		—		—		102,986		—		182,369		—		—		—
	Other		142,745		—		—		—		—		—		—		—

F2-70

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)

Current liabilities: (Continued)


		Within 90 days								91 days to 1 year
		As of March 31, 2002				As of March 31, 2003				As of March 31, 2002				As of March 31, 2003
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate		Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%

Withholdings	Ch$		4,134,726		—		2,509,153		—		—		—		89,557		—
	$ Col.		—		—		466,737		—		—		—		—		—
	Soles		1,679,480		—		1,769,091		—		—		—		—		—
	$ Arg.		576,545		—		2,819,517		—		—		—		26,570		—
	Reales		24,216		—		4,198		—		—		—		—		—
	Other		681,582		—		—		—		—		—		—		—

Income taxes payable	Ch$		237		—		160,227		—		10,397		—		2,345,789		—
	$ Col.		6,474,995		—		2,049,587		—		—		—		225,270		—
	Soles		2,210,248		—		3,900,617		—		2,178,764		—		2,721,181		—
	$ Arg.		20,724		—		457,175		—		—		—		—		—
	Reales		1,175,558		—		1,436,927		—		—		—		—		—

Deferred income	Ch$		128,238		—		152,456		—		362,286		—		248,677		—

Deferred income tax	Ch$		—		—		—		—		109,629		—		—		—
	$ Arg.		36,451		—		—		—		—		—		—		—
	Other		169,860		—		—		—		—		—		—		—

Other current liabilities	Ch$		9,891		—		2,176,470		—		1,692,553		—		2,288,483		—
	US$		—		—		73,156		—		1,094,762		—		1,121,673		—
	$ Col.		1,128,710		—		—		—		—		—		—		—
	$ Arg.		—		—		16,094		—		—		—		—		—
	Reales		6,464		—		—		—		—		—		—		—
	Other		137,540		—		—		—		—		—		—		—

Total current liabilities by currency	UF		40,745,101		—		—		—		5,459,872		—		6,704,600		—
	Ch$		91,369,880		—		85,184,964		—		23,070,565		—		54,458,254		—
	US$		246,158,974		—		90,081,862		—		71,720,243		—		403,672,125		—
	Euro		1,824,826		—		—		—		4,449,956		—		325,904,211		—
	Yen		—		—		—		—		391,462		—		471,473		—
	$ Col.		72,589,761		—		47,123,638		—		—		—		9,075,385		—
	Soles		19,842,245		—		45,315,579		—		12,288,136		—		28,041,425		—
	$ Arg.		5,104,220		—		7,946,601		—		—		—		2,476,095		—
	Reales		23,340,873		—		14,609,683		—		4,220,414		—		—		—
	U.P.		—		—		—		—		1,033,387		—		1,206,026		—
	Libra		—		—		—		—		371,571		—		441,737		—
	Other		1,131,727		—		—		—		97,494		—		—		—

Total current			502,107,607				290,262,327				123,103,100				832,451,331

F2-71

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


f.	Long-term liabilities, March 31, 2002


		1 to 3 years				3 to 5 years				5 to 10 years					More than 10 years
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate			Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%			ThCh$		%

Due to banks and financial institution	UF		2,651,454		9.00		2,817,030		9.00		1,321,230		9.00	%		—		—
	US$		150,393,492		4.20		525,652,422		4.20		92,431,892		4.20	%		—		—
	Yen		977,716		0.90		—		—		—		—			—		—
	Euro		3,815,095		4.44		—		—		—		—			—		—
	U.P.		1,564,799		5.03		—		—		—		—			—		—
	Libra		923,690		5.38		—		—		—		—			—		—

Bonds payable	UF		—		—		100,879,026		6.30		22,125,459		6.30	%		25,219,758		6.30	%
	US$		115,740,114		7.30		177,014,292		8.75		544,659,360		7.20	%		317,466,281		7.96	%
	Euro		259,530,185		3.34		—		—		—		—			—		—
	$ Col.		3,838,843		14.00		—		14.00		123,429,692		14.00	%		—		—
	Soles		12,842,012		8.75		—		—		—		—			—		—

Notes payable	US$		42,999,757		7.30		38,296,487		7.30		61,128,403		7.30	%		2,680,410		7.30	%
	$ Arg.		1,340,559		7.42		1,340,559		7.42		2,681,346		7.42	%		—		—

Miscellaneous	UF		9,005		—		—		—		—		—			162,401		—
	Ch$		2,122,386		—		—		—		—		—			66,165		—
	US$		6,177,232		7.95		6,562,006		—		9,770,247		4.74	%		—		—
	Soles		—		—		249,187		—		—		—			—		—

Amounts payable to related parties	US$		65,222,958		8.35		—		—		—		—			—		—

Accrued expenses	Ch$		—		—		58,424		—		1,478,429		—			1,263,550		—
	US$		826,198		—		591,371		—		—		—			—		—
	$ Col.		82,341		—		—		—		—		—			17,473,108		7.00	%
	Reales		1,814,861		—		1,113,063		—		2,782,657		—			4,401,170		—

Deferred income taxes	Ch$		1,538,034		—		1,316,631		—		3,389,572		—			7,472,658		—
	Soles		—		—		15,937,700		—		—		—			—		—
	$ Arg.		211,971		—		141,313		—		635,912		—			—		—

F2-72

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


f.	Long-term liabilities, March 31, 2002: (Continued)


		1 to 3 years				3 to 5 years				5 to 10 years				More than 10 years
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate		Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%
Other liabilities	Ch$		1,820,774		—		687,581		—		823,469		—		1,168,645		—
	US$		1,063,670		—		967,876		—		—		—		—		—
	Soles		—		—		—		—		465,394		—		—		—

Total long-term liabilities by currency	UF		2,660,459		—		103,696,056		—		23,446,689		—		25,382,159		—
	Ch$		5,481,194		—		2,062,636		—		5,691,470		—		9,971,018		—
	US$		382,423,421		—		749,084,454		—		707,989,902		—		320,146,691		—
	Euro		263,345,280		—		—		—		—		—		—		—
	Yen		977,716		—		—		—		—		—		—		—
	$ Col.		3,921,184		—		5,871,173		—		123,429,692		—		17,473,108		—
	Soles		12,842,012		—		16,186,887		—		465,394		—		—		—
	$ Arg.		1,552,530		—		1,481,872		—		3,317,258		—		—		—
	Reales		1,814,861		—		1,113,063		—		2,782,657		—		4,401,170		—
	U.P.		1,564,799		—		—		—		—		—		—		—
	Libra		923,690		—		—		—		—		—		—		—

Total long-term liabilities			677,507,146				879,496,141				867,123,062				377,374,146

F2-73

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)

Long-term liabilities, March 31, 2003


		1 to 3 years				3 to 5 years				5 to 10 years				More than 10 years
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate		Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%		ThCh$		%

Due to banks and financial institutions	UF		2,799,269		9.35		2,593,855		9.35		—		—		—		—
	US$		544,627,921		2.85		58,563,871		2.75		39,602,916		2.22		4,778,670		3.32
	€		195,449		3.38		—		—		—		—		—		—
	Yen		706,728		0.89		—		—		—		—		—		—
	$ Arg.		6,475,835		1.75		4,317,223		1.75		3,222,798		1.75		—		—
	$ Col.		—		—		39,566,900		12.41		—		—		—		—
	Rs		3,034,342		28.00		4,611,920		28.00		—		—		—		—
	UP		635,451		4.07		—		—		—		—		—		—
	£		660,367		4.50		—		—		—		—		—		—
			559,135,362				109,653,769				42,825,714				4,778,670
Bonds payable	UF		100,701,600		6.20		—		—		19,878,326		6.80		117,747,864		6.00
	US$		146,312,000		7.82		336,517,600		7.60		292,624,000		7.82		341,124,233		7.96
	$ Col.		32,705,122		12.56		—		—		89,330,791		11.21		—		—
	Soles		6,317,444		6.00		—		—		—		—		—		—
			286,036,166				336,517,600				401,833,117				458,872,097
Notes payable	US$		33,907,261		7.42		66,687,710		7.42		54,002,310		7.42		—		—
			33,907,261				66,687,710				54,002,310				—
Miscellaneous payables	UF		—		—		—		—		—		—		162,115		—
	Ch$		2,162,926		—		—		—		—		—		—		—
	US$		7,254,262		—		—		—		10,793,376		—		—		—
	Other		273		—		—		—		—		—		—		—
			9,417,461				—				10,793,376				162,115
Amounts payable to related parties	US$		—		—		47,492,845		—		—		—		—		—
			—				47,492,845				—				—
Accrued expenses	UF		1,103,983		—		—		—		—		—		—		—
	Ch$		—		—		920,214		—		2,031,218		—		4,302,223		—
	US$		142,861		—		3,661,105		—		—		—		—		—
	$ Col.		20,103,269		—		—		—		—		—		—		—
	Rs		7,542,411		—		—		—		—		—		—		—
			28,892,524				4,581,319				2,031,218				4,302,223
Deferred income taxes	Ch$		6,984,730		—		2,060,741		—		6,119,471		—		18,418,263		—
	Soles		—		—		37,052,593		—		—		—		—		—
	$ Arg.		226,244		—		150,829		—		678,730		—		—		—
			7,210,974				39,264,163				6,798,201				18,418,263
Other liabilities	Ch$		8,134,545		—		—		—		—		—		—		—
	US$		17,214,467		—		—		—		—		—		—		—
			25,349,012				—				—				—

F2-74

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

30. Foreign currencies: (Continued)


g.	Long-term liabilities, March 31, 2003: (Continued)


		1 to 3 years		3 to 5 years		5 to 10 years		More than 10 years
Account	Currency	Amount		Average rate		Amount		Average rate		Amount		Average rate
		ThCh$		%		ThCh$		%		ThCh$		%

Total long-term liabilities			949,948,760				604,197,406				518,283,936

Long-term liabilities by currency	UF		104,604,852		—		2,593,855		—		19,878,326		—
	Ch$		17,282,201		—		2,980,955		—		8,150,689		—
	US$		749,458,772		—		512,923,131		—		397,022,602		—
	€		195,449		—		—		—		—		—
	Yen		706,728		—		—		—		—		—
	$ Col.		52,808,391		—		39,566,900		—		89,330,791		—
	Soles		6,317,444		—		37,052,593		—		—		—
	$ Arg.		6,702,079		—		4,468,052		—		3,901,528		—
	Rs		10,576,753		—		4,611,920		—		—		—
	UP		635,451		—		—		—		—		—
	£		660,367		—		—		—		—		—
	Other		273		—		—		—		—		—
Total long-term liabilities			949,948,760				604,197,406				518,283,936

31. Sanctions:

The Company and its directors have not been the subject of sanctions by the SVS nor by any other administrative authorities.

On February 22, 2002, through Resolución Exenta No. 44, the SVS applied a sanction to censure Héctor López Vilaseco, the Company's general manager infringing on the arrangement in Section III of Circular No. 1.481 of May 25, 2000, for having sent to the SVS, after the imposed deadline, the Company's list of shareholders as of December 31, 2001.

32. Subsequent events:

On April 8, 2003 the Company sold 285 kilometers of 220 kV transmission lines to Transelec for US$32 million (ThCh$23,409,920). The carrying value of net assets sold under Chilean GAAP amounted to ThCh$21,562,962 as of March 31, 2003. Additionally, GasAtacama Generación Limitada, of which Endesa Chile has a 50% participation, sold 673 kilometers of 220 kV line transmission lines for US$78 million (ThCh$57,061,680). In both cases, the transaction included the transfer of the respective substations.

On April 30, 2003 the Company sold the Canutillar Plant to Cenelca S.A. for US$174 million (ThCh$127,291,440). The carrying value of net assets sold under Chilean GAAP amounted to ThCh$125,496,981 as of March 31, 2003 and its installed capacity was 172 MW.

On May 13, 2003, the Company refinanced its loans of US$743 million (ThCh$543,549,080) with a consortium of 30 banks lead by BBVA, Dresdner Kleinwort Wasserstein, Salomon Smith Barney and Inc. and Santander Central Hispano Investment Securities. According to the new agreements the payment

F2-75

Endesa-Chile and Subsidiaries
Notes to the Unaudited Consolidated Financial Statements
Translation of financial statements originally issued in Spanish
(Restated for general price-level changes and expressed in thousands of constant
Chilean pesos as of March 31, 2003, except as stated)

32. Subsequent events: (Continued)

period was extended to 2008 and semi-annual principal payments will begin in 2005. As a part of refinancing the debt covenants were modified, eliminating the interest rate spread indexed to the Company's variable credit-rating and the investment grade debt rating covenant, which specified that in the event senior unsecured long-term foreign currency denominated debt were to be rated "non-investment grade" or less than "BBB-" a "mandatory repayment" would be triggered and all outstanding principals under these loans would become due.

On May 14, 2003, Fitch lowered its local and international foreign currency ratings of Endesa-Chile from "BBB+" to "BBB-". Both Fitch and Standard & Poor's gave stable outlooks to the Company and its debt.

During January 2003, the governor of the State of Paraná in Brazil suspended payment and announced its intention to cancel or renegotiate the long-term energy contracts between Copel and Endesa-Chile's equity method investment, CIEN. The 20-year long-term contracts were negotiated during almost two years of negotiations and aim to relieve the energy-supply shortages in Brazil, and were complied with through December 31, 2002. An investment of more than US$700 million was made to build the Interconnection-line between Brazil and Argentina. During 2002, energy for approximately R$606 millon (approximately US$173 million) was sold by CIEN to Copel through the long-term energy contracts. The governor of Paraná has been supporting Copel's decision to suspend payment on its contractual obligations. CIEN has notified: (i) the financial institutions holding CIEN's long-term debt, (ii) the Brazilian National Development Bank (BNDES), Copel's shareholder, (iii) the Brazilian Security Exchange Commission (CVM), (iv) the Ministry of Mines and Energy and (v) the Electric Energy Regulatory Agency ("ANEEL") of Copel's default. CIEN has 20-year long-term energy purchase commitments in Argentina to satisfy the supply contracts with Copel. Additionally, the estimated indemnity for terminating both long-term energy contracts, would give rise to a payment obligation by COPEL of US$600 millon as of December 31, 2002. Any changes or cancellation of the contracts would likely have a material impact in the Company's consolidated net income and shareholders' equity.

During March 2003, the Brazilian company, Celg, has suspended the payment of its obligations with Endesa-Chile's subsidiary Cachoeira Dourada, and has entered in a legal process against Cachoeira Dourada and the Brasilian regulator, ANEEL. Celg was the State-owned company that sold Cachoeira Dourada to Endesa-Chile in a bidding process in 1997, with a 30-year concession and a 15-year contract to purchase energy (with an annual reduction of 10% since September 2002), in accordance with Brazilian regulation and law. The monthly payments reach approximately R$16 million (approximately US$4.8 million).

On June 23, 2003, the subsidiary Infraestructura 2000 was sold for 2,305,507 UF (approximately US$55 million).

33. Environment:

During the period ended March 31, 2003, the Company and its domestic and foreign subsidiaries made expenditures in the amount of ThCh$3,044,862 corresponding primarily to the following:

Operating expenses during the year included costs of studies, monitoring, follow-up, and laboratory analysis which amounted to ThCh$131,130 and costs related to Environment Law No. 99 in Colombia and ISO 14.001 certification at Central Costanera and El Chocón which amounted to ThCh$1,641,245 (US$2,427,231).

Investments related with the following projects were capitalized and amounted to ThCh$1,272,487:

•

Central Ralco environment program

•

Implementation of the environmental management system and its ISO 14.001 certification at the San Isidro, Pangue, Tal Tal, Pehuenche, Loma Alta and Curillinque power plants.

F2-76

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Empresa Nacional de Electricidad S.A.
Date: September 3, 2003	By:	/s/ Manuel Irarrazaval
		________________________________
		Name: Manuel Irarrazaval
		Title: Deputy Financial Officer

June 30, 2002

June 30, 2003