Financial Statements - Entel

EMPRESA NACIONAL DE TELECOMUNICACIONES S.A. & SUBSIDIARIESNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFor Transalation Purposes Onlyliabilities (equivalent to 12.2%) and a CLP $41 billion increase in equity (equivalentto 5.3%).The increase in liabilities was largely derived from a CLP $64 billion increase infinancial liabilities assigned for ordinary activities and operations expansion, aswell as CLP $47 billion of supplier credits deriving from the higher volume ofoperations. On the other hand, equity increased as a result of the accumulation ofhigher profits.Exchange rate fluctuations had no significant effects as they have been neutralizedby the Group’s exchange rate protection policies based on using derivativeinstruments to hedge exposure.Liquidity indicators increased, providing almost 100% coverage of current assetsover current liabilities, due to a higher percentage growth in current assets thancurrent liabilities, largely derived from a CLP $31 billion increase in cash and cashequivalents and a CLP $25 billion increase in commercial debtors.EBITDA, as previously mentioned, increased by 4.1% between the financial years inquestion.The financial expenditure hedge ratio remained indicative of a high level ofsolvency. The coverage of this expenditure by pre-tax profits remains above 15times, in spite of a slight decrease as a result of an increase in financial expenditureand also arising from the new accounting procedure for postpaid mobile handsetsdescribed in Note 22 d) of the Financial Statements.The performance of this indicator becomes even more significant if the net financialcost is taken into account (i.e. compensating revenue and financial expenditure),since when measured in this way, it was 19 times at the close of December 2012.Similarly, if the level of coverage is calculated for cash flows based on profits beforedepreciation it increases to 48 times.The following are taken into account when calculating the ratios for the coverage offinancial expenditure: interest from bank loans, differences in rates from theapplication of interest rate hedge contracts, and interest arising from financialleasing contracts. Interest is calculated based on effective rates, using the amortizedcost method (IAS 39).The Group’s total assets have seen an annual increase of 9%, equivalent toCLP $137 billion.The largest change was in Property, Plant and Equipment, which received netinvestment of CLP $61 billion for the year, the value by which investmentsexceeded depreciations for the period. Gross investment totaled CLP $384 billion,- 75 -