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Companhia Libra de Navegacao - LIBRAMAR (Rio de Janeiro) - (as agent for CSAV) (ID: 2345)
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d in separate laws. In the international arena, there is a set of regulations that cover different factors of the shipping industry. It should be emphasized that they establish environmental regulations which determine the outcome from shipbuilding to vessel operation; customs practices, and define business practices that parties should observe; as well as immigration rules, and regulate crew activities; port operations, and most recently provide anti-terrorism regulations, which lately have acquired a greater relevance in terms of cargo operations. Competitive Environment General containerized cargo transport has grown since its early beginnings. The productivity and quality service provided by the container has allowed it to develop as an alternative transport, allowing us to better understanding that the growth in this segment has been larger than in foreign trade in general. After the 2001 recession that at any one time had the same impact on main world economies, the demand for container transport had a strong recovery after the second half of 2002. In 2003 there was an 11% growth and in 2004 it reached a 13.1% growth. During 2004, as well as in the previous year, there was a strong growth in traffic from Asia to Europe and from Asia to North America . The estimated volume of container transport was 15% greater than in 2003. Thus, the initial boost generated by the demand in China continued, both in the import of inputs, as well as in the export of products, with a greater added value. Demand Analysis for Container Freight During the past 10 years, the supply of container transport vessels has continually grown, increasing the size as well as the speed capacity of the vessels, enabling them to improve the quality of service and reduce costs. In 2004, the global container transport capacity increased 8%, this was a larger increase compared to a 7.3% obtained in 2003. The container transport market remained steady in 2004. The demand growth again exceeded the growth of supply, therefore, increasing the gap between them, in regards to the previous year. This was compounded by the great demand for shipping generated by the economic development in China , causing a continuous increase trend on shipping rates in the East-West routes, as well as in the charter of vessels rates. There was a steady trend in the incorporation of new services, mainly on the East-West and Trans-Pacific routes to respond to a greater demand. In South America , the leading economies have shown a greater growth in 2004 compared to the previous year. This has allowed for a steady flow of exports, which generated an incentive to increase rates in the routes going north. At the same time, there was a relative recovery in the volume of imports. The special transportation segment market held a sustained increase during 2004, as well as in the previous year. The reefer vessels market was influenced by an important increase in chartering, reaching one of its highest levels during the last quarter. The oil and byproducts carrying vessels enjoyed substantial increases in charter levels in 2004, reaching a historical height towards the end of the year. This market is characterized by its high volatility due to the changes in supply and demand of oil and its transport capacity. Thus, creating a strong market generated by the recovery of the global demand for fuel coupled with a limited supply. This was due to environmental restrictions, which limit the operation of vessels that do not comply with operating standards. The bulk vessels market showed fluctuations during 2004, but it always remained at substantially higher values than those observed during the last decade. World Container Ship Fleet Historical Evolution of Vessel Charter Annual Report CSAV 2004 Board of Directors Board of Directors CHAIRMAN VICE PRESIDENT Ricardo Claro Valdés Lawyer Board Member since April 1986 TAX ID: 3.158.999-1 Felipe Lamarca Claro Business Engineer Board Member since April 2003 TAX ID: 4.779.125-1 DIRECTORS Luis Alvarez Marín Agronomist Board Member since April 1979 TAX ID: 1.490.523-5 Baltazar Sánchez Guzmán Business Engineer Board Member since July 1990 TAX ID: 6.060.760-5 Joaquín Barros Fontaine General Manager Board Member since April 2000 TAX ID: 5.389.326-0 Christoph Schiess Schmitz Business Engineer Board Member since April 1996 TAX ID: 6.371.875-0 Juan Andrés Camus Camus Business Engineer Board Member since April 2004 TAX ID: 6.370.841-0 Patricio Valdés Pérez General Manager Board Member since April 1988 TAX ID: 7.443.809-1 Arturo Claro Fernández Agronomist Board Member since April 1987 TAX ID: 4.108.676-9 PRESIDENT AD-HONOREM José Luis Cerda Urrutia Civil Engineer TAX ID: 1.661.990-6 Jaime Claro Valdés Civil Industrial Engineer Board Member since April 1997 TAX ID: 3.180.078-1 SECRETARY TO THE BOARD Alexander Tavra Checura Navy-Systems Engineer TAX ID: 6.215.367-9 Patricio García Domínguez General Accountant Board Member since April 1988 TAX ID: 3.309.849-9 Changes in the Board On January 1, 2004, Mr. Bernardo Larraín Matte resigned as Director. This position was declared vacant until the next Shareholders General Meeting which took place on April 16, 2004. The Chairman and the Board agreed to express their utmost gratitude to Mr. Bernardo Larraín Matte, for his most valuable contribution as Director of CSAV. During the Shareholders General Meeting that took place on April 16, 2004, the entire Board was renewed. The same Directors who were carrying-out their term, were re-elected. Mr. Juan Andrés Camus Camus was elected as new Director. During the first meeting that took place on April 16, 2004 this new Board appointed Mr. Ricardo Claro Valdés as Chairman and Mr. Felipe Lamarca Claro as Vice President. Directors' Committee The Directors' Committee as referred to in Article 50 Bis of Law 18.046, as of April 16, 2004 was made up of Mr. Luis Alvarez Marín (President), Mr. Patricio García Domínguez and Mr. Juan Andrés Camus Camus. Annual Report CSAV 2004 The CSAV Group in 2004 The CSAV Group in 2004 Earnings Analysis There was a profit of US$207,124,083 in 2004 compared to US$72,323,141 in the previous year. Consolidated sales reached US$2,686 million, a 26% increase compared to 2003. This increase mainly accounts for greater haulage in 2004, which reflected 30% growth compared to 2003. Summary of Cargo Carried Year Paying Freight (2) Sales (3) Vessels Operating Days Annual vessel Tons. (1) (Teus) $Thousand (Days / Vessels) Equivalents (4) 1993 5,983,121 115,000 584,518 19,443 53.27 1994 6,603,227 160,859 657,837 18,982 52.01 1995 8,029,315 272,947 817,601 19,382 53.10 1996 8,569,376 346,711 944,603 18,262 50.03 1997 9,679,159 421,714 1,054,788 20,224 55.41 1998 9,862,537 464,958 1,032,352 19,174 52.53 1999 12,638,896 684,800 1,079,760 22,601 61.92 2000 19,020,536 1,196,056 1,743,761 26,955 73.85 2001 18,535,821 1,334,978 1,735,112 25,648 70.27 2002 19,134,362 1,446,293 1,674,948 26,431 72.41 2003 20,737,238 1,841,349 2,135,539 28,476 78.02 2004 21,045,372 2,404,747 2,685,886 32,770 89.54 (1) Total of CSAV Services (container services, solid bulks, liquid bulks and automobiles). Paying Tons: freight size unit= one thousand kilos, or if volume, a cubic meter or 40 cubic feet. (2) Freight based on full container operations on Container Transport. (3) The sales of Compañía Sud Americana de Vapores and its subsidiaries, in nominal figures. (4) Each 365 days / vessel = 1 annual vessel equivalent. CSAV Total Consolidated Sales (Nominal U$ million) Routes operated by CSAV lines from the west coast of South America to Asia and North America reflected a steady volume with an increase in rates. This offset greater costs and increased profit margins. In the routes operated from the same coast to Europe , revenues increased mainly derived from a greater volume of transport, since there was only a marginal increase in average rates. Routes to and from the east coast of South America, mainly those covering Asia , increased their volumes and rates compared to 2003, while bulk transport earnings were substantially improved. Reefer cargo transport shipped through CSAV subsidiary Panama , improved its earnings compared to 2003, generated by an increase in rates and profit. Container transport operated by Companhia Libra de Navegacao and Montemar Marítima S.A., reflected significant rate increases compared to 2003, with increasing volumes, allowing to offset cost increases and to achieve better earnings than in 2003. Routes operated by Norasia Container Lines Ltd sustained the positive trend achieved during previous quarters, with substantial increases in volume and shipping rates. Thus, improving their earnings compared to 2003. Operating costs that amount to US$2,285 million are 23% greater than those in 2003, along with greater transport volume and an increase in fuel costs, as well as in the charter of vessels. Fuel costs exceed those of last year due to sustained oil price increases. Higher oil prices result from an increase in global activities and values agreed upon among the main oil producers. The increases in charter costs are also derived from the increase in global activities, which generate an imbalance between the global supply and demand of transport capacity. Administrative and selling costs during 2004 reached US$255 million, that is 24% higher than those in 2003. The increase in administrative costs is consistent with revenue increase. However, there is a strong increase due to commission payments, the negative impact of the appreciation of the Chilean peso, the Brazilian real and the Euro, as well as expenses related to Project Integra, and the switch in criteria to estimate compensation paid for years worked in the Company. Operating income reached US$145 millions. This reflects 118% increase compared to the previous year. This substantial increase in revenue is a result of the following facts: CSAV subsidiary SAAM continued to generate productive earnings, reaching 15.747 million pesos, equivalent to 28 million 250 thousand dollars. Non-operating earnings reflected an increase of US$68,503 thousand compared to US$15,048 thousand in 2003. This fluctuation mainly accounts for greater net profit derived from investments made in associated companies for US$14,745 thousand, where outstanding earnings were generated from SKS OBO, and other non-operating net revenues and expenses for US$49,334 thousand, being greater than in 2003. Other revenues derived from greater profit generated by the sale of assets, especially; profit generated by the sale of SKS OBO Holdings, and shipbuilding contracts. The most significant disbursement is the loss of interest rate in forward contracts. Main Financial Indicators (As per Consolidated Financial Statements) Balance Sheet (US$million) 2004 2003 2002 2001 2000 1999 Fixed Assets 245,3 272,1 262,3 264,3 283,7 332,4 Total Assets 1.608,9 1.277,9 1.079,5 1.034,4 1.082,4 877,6 Current & Long Term Liabilities 842,0 687,2 554,4 535,6 573,5 404,8 Shareholders Equity 746,4 568,6 502,4 482,6 482,3 459,5 Revenue Statement (US$million) 2004 2003 2002 2001 2000 1999 Sales 2.685,9 2.135,5 1.674,9 1.735,3 1.743,8 1.079,8 Operating Income 145,4 66,5 34,7 19,1 41,1 35,9 Non-operating Income 83,6 15,0 16,5 16,8 6,9 (0,4) Net Profit 207,1 72,3 36,8 26,1 43,1 30,9 Earnings per Share (US$/100) 28,15 9,83 5,0 3,54 5,85 4,2 Other Indicators 2004 2003 2002 2001 2000 1999 Return on Assets (%) 14,3 6,10 3,50 2,52 3,98 4,00 Return on Equity (%) 31,5 13,50 7,50 5,40 9,38 6,80 Current Liquid Assets 1,99 1,65 1,38 1,81 2,05 2,44 Debt Ratio 1,13 1,21 1,10 1,11 1,19 0,88 Annual Report CSAV 2004 Historical Summary Historical Summary Historical Summary: A Regional Company Going Global Compañía Sud Americana de Vapores (CSAV) was founded in the Port of Valparaíso on October 9, 1872 when Compañía Chilena de Vapores merged with Compañía Nacional de Vapores. The decree, which established the Company's legal entity, was signed by the then President of Chile Mr. Federico Errázuriz Zañartu, Mr. Maximiliano Errázuriz chaired the first Board of Directors and Mr. Alfredo Lyon Santamaría was the first General Manager. During the first stage of its development the Company provided coasting trade services. Its first international experience was to establish service to Callao , Peru , in 1873. In 1874 this service was expanded to Panama. Then, CSAV vessels were the only link to the remote Chilean regions. As a result of an agreement with Compañía Inglesa de Vapores in 1833, the service to Panama became regular and steady. At the same time, through agreements with several foreign companies, new connections were established to other places in the world. Until 1914, the Company provided services along the Pacific Coast all the way to San Francisco . But, at the beginning of the 20th Century services were limited to Panama due to the vast competition with European lines. However, the opening of the Panama Canal allowed CSAV to extend its services to New York since European lines had withdrawn as a result of World War I. In 1938, after the great economic crisis of 1931, CSAV put into service three new motor vessels: Copiapó, Imperial and Aconcagua, of impressive aerodynamic design, which enabled CSAV to consolidate its line to New York and expand it to Europe . Later, in 1939 these services were suspended due to the high risk in sea transportation in the Atlantic ocean , as a result of World War II. Once the War ended, the Company's services developed vigorously, incorporating ports in Germany , Belgium , Netherlands and England . During that time, the holds of certain vessels were converted into reefer chambers to transport fresh fruit on CSAV's regular services to the United States and Europe . This development made CSAV a leader in the transport of reefer products. Bulk cargo transport became relevant at the beginning of 1943, and later in 1974; it gained momentum when its status as an international service was consolidated. In 1961, Sudamericana Agencias Aéreas y Marítimas S.A. (SAAM) was created with funds from CSAV, to further air and shipping business. In 1979, Law Decree 3.059 was enacted to promote the Chilean Merchant Marine; the Company generated growth and expanded its activities. Starting in 1984, new trade routes were established and existing services to northern Europe, the Far East and Japan , the Mediterranean, American Pacific and South East Asia were modified. At the same time, specialized reefer, automobile and bulk cargo services grew substantially. Since the early 1990s, the Company faced new and greater challenges, as most governments in Latin American countries encouraged open competition. In order to benefit from these opportunities arising from vast changes in competition, the Company and its subsidiaries established and increased their activities in Peru, Colombia, Ecuador, Argentina, Mexico and Brazil, operating new sea routes and shipping activities, thus providing more and better services. In 1996 an agreement was reached with the Norwegian company Kristian Gerhard Jebsen Skipsrederi A/S to jointly participate in the operation of seven Aframax-type OBO vessels, which are dual-purpose vessels that transport crude oil and its byproducts, as well as bulk cargo. Later, the fleet was increased to a total of eleven vessels, which operate in the main Atlantic markets. In 1997 an agreement was reached with Odfjell ASA, a world leader, to exploit the transport of chemical products in Chile and other countries on South America 's west coast. These investments expanded the Company business and its subsidiaries into new and dynamic global shipping areas. During 1998, CSAV obtained its ISO 9002 certification granted by Lloyd's Register Quality Assurance (LRQA). This accreditation certifies that CSAV maintains a Quality Management System for its National and International Sea Transport of general, containerized, bulk, automobile, frozen and refrigerated cargo that meets international standards. In 1999, as part of the international expansion process, the Company acquired a majority share in Companhia Libra de Navegaçao, Brazil and Montemar Marítima S.A., Uruguay , which are involved in different container shipping markets between the east Coast of South America and the United States and Europe . That same year, CSAV joined the cement transport business through its share in Belden Shipping. This company is amongst the largest cement transportation companies in the world. It has developed a well-established business and technical capability in the management and transportation of this product. San Antonio Terminal Internacional S.A. and San Vicente Terminal Internacional S.A, started their operations in 2000. These were important events, since their concession contracts were signed in November 1999 by companies owned by Sudamericana, Agencias Aéreas y Marítimas S.A. (SAAM) and the US company SSA Holding International (SSA). The other event of great importance that year was the starting of operations of the concession-holding company Iquique Terminal Internacional S.A., which contract was signed in May. SAAM and Urbaser of the Spanish Dragados Group jointly own this company. The same year, CSAV acquired the Maltese shipping company Norasia Lines Ltd. This has allowed the Company to enter the East-West routes, and Norasia China Ltd., created in Hong Kong , with operations in several cities in the Republic of China. In 2003 CSAV signed through one of its subsidiaries, and in association with Peter Döhle Schiffahrtskontor KG, the largest shipbuilding contract of its history. These are 22 container- holding vessels with a total capacity of 108.700 Teus. On the other hand, SAAM was awarded a 20 year contract to operate two port terminals in Antofagasta . During 2004, CSAV continued to expand its international markets, earning the15th place amongst the world's container-transport vessels. Partnership was created with Drylog Bulk carriers Ltd., Bocimar International N.V., and AMN Shipventure Inc., to operate bulk vessels. The share in SKS OBO Holding Limited, Bermuda; SKS OBO Limited, Bermuda y OBO MAR AS, Norway was sold. SAAM continued to consolidate its business as the main port operator of the country when it was jointly awarded a 20 years concession contract with other associates to operate two port terminals in Arica . Thus, CSAV has consolidated its position as a global carrier, with a strong presence in the routes between South America and the rest of the world. It operates an average fleet of more than 90 vessels, with an active share of the containerized general cargo, bulk, reefer and automobile cargo markets. Annual Report CSAV 2004 General Information General Information Ownership Structure - Share Transactions - Stock Market Statistics - Dividend Policy - Dividend Payments - Earnings Distribution - Shareholders' Equity - Directors' Remuneration - Directors' Committee - Relevant Information Ownership Structure Detail of the 12 largest shareholders Name Number of Shares Shareholding Marítima de Inversiones S.A. 323,185,618 43.92% Antarchile S.A. 113,432,949 15.42% Philtra Limitada 23,110,142 3.14% Inversiones Angelini y Cía. Ltda. 21,989,986 2.99% A.F.P. Provida S.A. Fondos de Pensiones 15,417,241 2.09% Servicios y Consultoría Hendaya S.A. 14,219,520 1.93% Inmobiliaria Copihue S.A. 12,569,645 1.71% A.F.P. Habitat S.A. Fondos de Pensiones 11,692,588 1.59% Constructora Santa Marta Ltda. 11,000,000 1.49% Internacional Río Plata S.A. 7,358,445 1.00% Turismo Americano Sociedad Comercial Ltda. 5,177,462 0.70% Navarino S.A. 4,994,300 0.68% Pursuant to Company records and the provisions of Chapter 15, Law 18.045, shareholders with natural or legal entity who have direct or indirect control of the company through other persons or entities, are the following: Name Type of Holder Number of shares Total percentage Marítima de Inversiones S.A. Legal 323,185,618 . Having control in common with: . . . Servicios y Consultorías Hendaya S.A. Legal 14,219,520 . Navarino S.A. Legal 4,994,300 . María Luisa Vial Lecaros Natural 10,781 . Ricardo Claro Valdés Natural 4,590 . . 342,414,809 46.53% Share Transactions The following table shows share transactions during 2004 and 2003 by majority shareholders, chairman, directors, managers and administrators In accordance with the Company's share register: Shareholder Number of Shares 2004 2003 Purchases Sales Compras Ventas AFP Provida S.A. 7,648,523 175 8,052,317 108,599 Philtra Limitada 1,000,000 . 1,000,000 . Inmobiliaria Copihue S.A. 329,093 . 31,345 . A.F.P. Habitat S.A. 954,419 1,389,022 77 . Bancard S.A. 3,790,384 19,335,408 15,545,024 . Bice Corredores de Bolsa S.A. . . 3,826,321 11,542,296 Celfin, Gardeweg S.A. Corredores de Bolsa 18,508,384 23,021,218 60,437,647 51,654,883 Scotiabank Sud Americano 10,043,017 The Chile Fund Inc. 5,440,000 Inmobiliaria Nague S.A. . 9,509,151 Cominco S.A. . 9,227,863 Inmobiliaria y Forestal Chigualoco S.A. . . 8,450,999 Inversiones Alonso de Ercilla S.A. 311,236 . . . Mario Torres Chadwick . . . . 3,441 Stock Market Statistics Quarterly securities trading information covering the past three years is as follows: Year AverageNumber of SharesTraded Volume$ AveragePriceCh$ 2002 First quarter 3,376,017 1,128,226,757 334.19 Second quarter 5,747,002 1,643,678,508 286.01 Third quarter 3,835,403 1,008,572,817 262.96 Fourth quarter 665,865 192,604,394 289.25 2003 First quarter 862,282 278,782,197 323.31 Second quarter 3,079,243 1,369,429,658 444.73 Third quarter 3,180,123 2,146,028,805 674.83 Fourth quarter 73,810,183 55,448,338,772 751.23 2004 First quarter 15,744,526 12,328,001,965 783.00 Second quarter 21,252,206 16,342,842,193 769.00 Third quarter 36,467,496 33,467,174,777 917.73 Fourth quarter 36,342,867 48,500,621,772 1,334.53 Dividend Policy The General Shareholders Meeting held on April 16, 2004 agreed to distribute 30% of the net profit, authorizing the Board to decide on the timing and amount of any interim dividends to be paid, as well as the timing for dividend distribution against the Fund for Future Dividends, without the authorization of a General Shareholders Meeting. Dividend Payments The following dividends per share have been paid against the net profit for the year stated: Dividend Nbr. Dividend Payments Month Year Payment per share Net ProfitYear Ch$ US$ 301 July 2001 2.9 0,0047 2001 302 October 2001 3.1 0.0045 2001 303 January 2002 1.4 0.002068 2001 304 April 2002 1.91391 0.00296 2001 305 October 2002 3.8 0.005377 (1) 306 January 2003 3.00 0.004243942 2002 307 April 2003 11.38609 0.0157484 2002 308 July 2003 4.60 0.006597536 2003 309 October 2003 4.50 0.006447823 2003 310 January 2004 4.50 0.007243 2003 311 April 2004 11.52450 0.019026 2003 312 July 2004 4.70 0.007268 2004 313 October 2004 6.60 0.010752 2004 1) Against Fund for Future Dividends Earnings Distribution The statement of earnings for the year ended on December 31, 2004, reflecting a profit for US$207,124,082 figure which includes US$1,451,633 derived from amortization of negative goodwill in related companies. The Board will propose to the Shareholders Meeting the following distribution of the net profits: Dividends to cover: Interim Dividend Nº 312 US$ 5,348,617.02 Interim Dividend Nº 313 US$ 7,911,662.20 Interim Dividend Nº 314 US$ 12,532,265.84 Final Dividend Nº 315 US$ 36,344,679.77 Accumulated deficit to cover: Development stage Subsidiaries (Circular 981 S.V.S.) US$ 362,920.08 Retained profit fund US$ 144,623,937.85 Total US$ 207,124,082.76 Shareholders' Equity Once earnings distribution is approved and the final dividend Nº 315 is reduced, the Company's shareholders equity at December 31, 2004 will be: Paid capital US$ 170,000,000.00 Other reserves US$ 6,642,537.01 Fund for Future Dividends US$ 28,347,491.10 Retained profit fund US$ 505,061,648.51 Total US$ 710,051,676.62 In accordance with these figures, the book value of each share will reach US$0,96 on December 31, 2004. Directors' Remuneration In accordance with the provisions of Law 18.046, the Shareholders General Meeting held on April 16, 2004, approved the Board's reward for the year 2004. This consists of a "minimum allowance" per Director and double for the Chairman for each meeting they attend, and a 2% share of the net income in 2004. In addition, Directors members of the Directors Committee receive a "minimum allowance" for each meeting attended and the Chairman received double that amount. The total amount paid during 2004 was US$1,551,051. Details are reflected in Note 31 in the Consolidated Financial Statements. Directors' Committee At the beginning of 2004, the Directors Committee was formed by Mr. Luis Alvarez Marín, and presided by Mr. Patricio García Domínguez and Patricio Valdés Pérez. Mr.Luis Alvarez Marín (independent), Mr.Patricio García Domínguez (comptroller) and Mr. Juan Andrés Camus Camus (independent) were elected as members for new term on April 16, 2004. When the new committee was formed on May 5, 2004, Mr. Luis Alvarez was elected Chairman, and the appointments were confirmed for Mr. Beltrán Sáez Martínez de Morentin as secretary, and as informants, the Vice President for Administration and Finance Mr. Patrick Horn García, and the Comptroller General Mr. Mario Torres Chadwick. Activities During 2004 the Committee held 15 sessions where they were informed of the Company's operations with related companies, quarterly financial statements, external auditors reports together with the 2003 Financial Statements, its ratio analysis, and the auditors notes. Expenses During 2004, the Committee did not incur third party consulting expenses in the performance of its activities, since they limited their activities to the use of the Company's internal resources. Relevant Information a) General Management letter dated January 26, 2004 During the Board Meeting held on January 22, 2004, the Board unanimously approved the resignation of Mr. Bernardo Larraín Matte. b) General Management letter dated March 29, 2004 The Board meeting held on March 26, 2004, agreed to propose to the Shareholders General Meeting, held on April 16, 2004, the Final Dividend distribution number 311, until 40% of the 2003 net income was completed, deducting the three interim dividends, for US$14,000,011.51 per share equivalent in Chilean pesos. Which means that the dividend distribution will amount to US$0.0190258 per share in the equivalent of Chilean pesos, to be paid on April 29, 2004 valued at the exchange rate in effect at the time the Shareholders General Meeting is held. c) General Management letter dated September 9, 2004 During the meeting held on September 9, 2004, the Board agreed to approve the total sales of shares which its subsidiary Inversiones Plan Futuro S.A. owns in the partnership with SKS OBO Holding Limited, Bermuda; SKS OBO Limited, Bermuda and OBO MAR AS, Norway, equivalent to 50% of the stocks issued for these partnerships. The agreed upon value is US$149,500,000. The above transaction is subject to approval from the buyer's Board of Directors, KGJS/Norship and the funding for the purchase noted. This transaction will generate a profit close to US$50,000,000 for Compañía Sudamericana de Vapores S.A. On September 9, the buyer company KGJS/Nordship, informed of its approval of the previous mentioned transaction, however, funding from the buying company is still pending. d) General Management letter dated September 30, 2004 On September 30, 2004 the buyer confirmed funding, only the regulations of the terms of the contract and its subsequent signature is now missing. Annual Report CSAV 2004 Consolidated Financial Statements Consolidated Financial Statements Annual Report CSAV 2004 Balance Sheet Balance Sheet Annual Report CSAV 2004 Historical Summary Other Subsidiaries and Related Companies Annual Report CSAV 2004 Investments as a Percentage of the Total Assets Investments as a Percentage of the Total Assets Annual Report CSAV 2004 Summary Financial Statements Summary Financial Statements Annual Report CSAV 2004 Summarized Ownership Structure of Subsidiaries Summarized Ownership Structure of Subsidiaries Annual Report CSAV 2004 Organizational Structure Organizational Structure Annual Report CSAV 2004 Other Activities in 2004 Other Activities in 2004 Marketing - Systems Management - Administration and Finances - Investments and Financing - Risk Management - Risk Rating - Logistics and Operations - Containers and Intermodal Logistics - ISO 9000 - Ship Management - Research and Development - Human Resources - Labor Relations - Staff Acknowledgement Marketing In 2004, important events took place for each of the clients segments with the purpose of strengthening business relations through improved mutual understanding. A new quality survey was performed at a global level, in order to find out the needs and requirements of clients, as well as to carry out the appropriate changes in an efficient manner by improving our service. The first stage of the client interaction project has already been implemented in Chile and in Shanghai , and it is now expanding to other ports in China . Its main objective is to expand the knowledge of our clients through a comprehensive record of our interactions with them, and then analyze this information to better respond to their needs. Systems Management In 2004, CSAV set-up Oracle E-business Suite supported financial-accounting applications at a global level within the framework of Century 21st Project, and to continue with the implementation of Project Integra. This is a project to bring about radical changes in business practices and achieve technological improvement. Thus, enabling it to standardize its technological platform, as well as the Company's financial procedures, enhancing information access. Headway has been made to implement Oracle applications in foreign subsidiaries Montemar Marítima S.A. and Companhia Libra de Navegacao. This will imply important progress in CSAV's integration process. At the same time, the implementation of Oracle business management support applications in Chile was concluded, and it was almost completed in China 's agency. Administration and Finance This management division focused on flattening out the curve of CSAV's newly implemented accounting and administrative system in the Company and at Libra and Montemar. The new systems are geared to strengthen quality and cost controls, and information management transparency, as well as increasing Management productivity. The implementation of a new budgetary tool substantially enhanced this process. Investments and Financing Loan documentation was streamlined in 2004 to finance the shipbuilding of containerized vessels undertook by CSAV through one of its subsidiaries in equal parts with the German shipbuilder Peter Döhle Schiffahrts-KG. The financing of two vessels of 3.100 Teus, of 4.050 Teus, of 5.500 Teus and of 6.500 Teus has been confirmed. These are 12-year loans, which finance 90% of the value of the vessels at very competitive rates, underwritten by a mortgage for the value of the vessels, and with an additional underwritting from the owners (CSAV y Döhle) for just 20% of the vessels value (10% each partner). The principal banks with whith the Company and its subsidiaries work are : In Chile: Banco de Chile Banco de Crédito e Inversiones Banco Santander Santiago BankBoston Bank of America BBVA Banco BHIF Citibank Deutsche Bank JP Morgan Chase HSBC Scotiabank Sud Americano Overseas: ABN AMRO Bank BankBoston Bank of America Bank of Nova Scotia BNP Paribas Brown Brothers Harriman &Co. CALYON Citibank Den Norske Bank Deutsche Bank Deutsche Schiffsbank DVB Bank Finansbanken HSH Goldman Sachs HSBC HypoVereinsBank ING BankNorddeutsche Landesbank JP Morgan Chase NordbankThe Royal Bank of Scotland Schiffshypothekenbank Zu Lübeck Vereins- und Westbank Risk Management The Company has a comprehensive Operating Risk Management program, which consists of an internal and external auditing and an insurance plan. The internal audit work consists on a systematic review of the main risk areas of the Company and its subsidiaries. In terms of insurance, it should be emphasized that the Company's fleet is protected against fire damages to the hull and machinery, maritime risks, and war. It also carries cargo protection and indemnity coverage, and other insurance policies covering other port activities, containers and other own fixed assets goods. One of the challenges faced by CSAV is to establish a vessel leasing strategy consistent with the fluctuating shipping rate market. The Company's leasing contracts vary from six months up to five years and in a short term shipping rates fluctuate. During 2004 there was a remarkable rate increase, as well as in vessel leasing terms derived from greater global activity in containerized transport. In order to hedge fuel price fluctuations, the Company, holds no inventory to readjust a portion of the rates charged to its clients In accordance with these fluctuations. CSAV and its subsidiaries have taken fuel price hedge contracts. Finally, in order to cover Yen price fluctuations in the US$202 million loan, granted by its subsidiary in Japan, American Life Assurance Co. of Colombus; CSAV has taken a 30 year insurance policy to cover such currency fluctuation. Additionally, the Company took a ten-year term interest rate coverage to cover loans obtained for the purchase of new vessels that will be delivered in 2005. Risk Rating Bonds issued in “Unidades de Fomento” maintained their A+ rating awarded by Humphreys Ltda., and an A rating awarded by Fitch Chile Clasificadora de Riesgo Ltda. S&P maintained the BBB (stable prospects) risk rating previously awarded to the Company. In November, Fitch Chile Clasificadora de Riesgo Ltda., and Humphreys Ltda., rated CSAV corporate equities at a First Rate Level 2. Later, the Risk Rating Commission granted its approval to AFP to invest in CSAV corporate equities. Logistics and Operations Operations The global volume growth of transported cargo did not only exceed the port system infrastructure, but also its labor capacity. This had a particular impact in Europe, Asia and the United States . This growth created an unprecedented congestion in the industry, disrupting the uniformity of some services. The increased demand for port services created a trend in price rises during 2004, which was controlled through a better management in price negotiation, thus keeping efficiency standards in operations control. The appreciation of the Euro and the Real against the US dollar, also coincided with the rise in port costs respectively in Europe and Brazil , being partially offset by lesser costs in other areas. Containers and Intermodal Logistics This was a complex year for the industry in terms of container supply. The increase in the price of steel, together with the steel wool shortage, had a direct impact on the price of containers, with rates increasing above 50%. This meant that some of the leading shipbuilders in the industry suffered supply interruption, mainly during the first semester. However, CSAV managed continued supply throughout the year, delivering continuous support to the cargo transportation industry. In 2004, the Company growth required a container fleet increase, reaching 425.000 Teus by December of this year. Despite port congestion problems in certain regions of the United States and Europe , in 2004, intermodal transport reflected an activity growth above 20% of that obtained in 2003. Unfortunately, the oil price increase and vessel charter situation during 2004 had an impact, beyond budget on land costs, as well as on feeders. ISO ISO 9000 In accordance with plans made in July 2004, CSAV renewed its ISO 9000 certification under the new regulation ISO 9001:2000 for three additional years. At the same time, the certification scope was expanded to incorporate Liquid Bulk Transport Service. ISO 14000 During the second semester of this year, CSAV applied to the environmental management regulation ISO 14.001. This procedure should be completed during 2005. Ship Management Purchase and Sale of Vessels The following are the most outstanding purchase, sale and vessel project operations of the year: In January, a sale agreement was signed with Gearbulk Shipowning Limited for the vessel “Tolten”. The delivery took place on July 19 at the port of Nagoya , Japan . In February, a sale contract was signed with its subsidiary Companhia Libra de Navegacao for the scrapping of the vessel MT “Libra Albacora”. The delivery took place on May 24 in Shanghai , China . The vessel “Norasia Alya” was also received in February from the Polish shipyard Stocznia Szczecinska Nowa, purchased in equal partnership with Peter Döhle Schiffahrts (PDS) from Germany . This container transport vessel, with a nominal capacity for 3.091 Teus was registered in Liberia , managed by PDS, and joined Norasia's fleet. In March, the vessel “Imperial” was sold to Hansen and Lange from Denmark . The vessel was delivered on May 10 th at the port of Haifa , Israel . The option to jointly build a container transport vessel with PDS with a capacity of 3.091 Teus was carried out in July at the Polish shipyard Stocznia Szczecinska Nowa. Its delivery is projected for July 2007. Also during July 2004, CSAV and PDS engaged in a stand-by agreement for two vessels with a capacity of 4.050 Teus. They were ordered from the China Shipbuilding Corporation of Taiwan , and their delivery is projected for the second semester in 2006, when the sale will be conducted. During the same month, the Company granted Peter Dohle Shiffahts-KG, its equity rights for two vessels B-178 with a capacity of 3.100 Teus, ordered from the Polish shipyard Stocznia Szczecinska Nowa to be delivered during the first semester of 2005. The vessel “Copiapó”, first in the 5.500 Teus series, built at the China Shipbuilding Corporation (CSBC) of Taiwan was received in October. This vessel registered in Liberia is managed by PDS, and joined Norasia's fleet. Finally, two bulk vessels ordered from Japanese shipyards jointly with Greek ship owner Peter Livanos, were sold to third parties. Operation Days of Own Vessels During 2004, the vessels from the Company's fleet and its subsidiaries had a consolidated total of 4,134 available days, having used 203 of them to perform dock repairs, and maintenance work. Therefore, 3,931 days were allocated to business operations, equivalent to 95.1% of their total available time. The non-operational days are justified mainly by 114 days assigned to dock repairs of the following vessels: “Río Enco”, “Río Blanco”, “Mapocho”, “Pacific Winner” and “Braztrans I”. Ship Management he technical operation of the Company's fleet, and its foreign and domestic subsidiaries, which consists of vessels that sail under the flags from Chile, Liberia and Marshall Islands, have continued to settle in its specialized subsidiary Southern Shipmanagement (Southship), which has 23 years of experience and maintains co-ownership with Wallem Shipmanagement Ltd., Hong Kong. On the other hand, Companhia Libra de Navegacao continued to be the shipbuilder, manager and business operator of the vessel “Braztrans I” and MT “Libra Albacora” before being scrapped. The two technical operators mentioned above have verified management systems subject to constant revision, as well as certifications of compliance with the WMO standards of the International Code of Ship Operating Safety and the Prevention of Pollution (ISM Code), and the International Ship And Port Facility Security Code. In addition, they have their operations audited and certified In accordance with International Quality Standards ISO 9001-2000 and ISO-14001. In early June 2004 the International Ship and Port Facility Security Code certification procedure was completed for the Company's own vessels, which on July 1, 2004 came into effect as a statutory requirement for all vessels over 500 GRT. All of the above translates into economic efficiency and technical reliability, which grants vessel safety operation and improves customer service. Fleet of CSAV, Subsidiaries and Related Companies Ship Owner Deadweight Tonnage (Tons) Type of Ship GRT (TM) Speed in knots Year Built Norasia Alya Consortium 41,748 Container Transport 35,881 22.3 2004 Copiapó Consortium 67,970 Container Transport 64,500 24 2004 Pacific Explorer Subsidiary 17,800 Automobile Transport 38,970 19 1978 Pacific Runner Subsidiary 17,830 Automobile Transport 38,754 17 1977 Pacific Winner CSAV 23,485 Automobile Transport 53,816 6 1987 Mapocho CSAV 21,182 Container Transport 16,986 19 1999 Río Bueno CSAV 11,076 Automobile Transport 25,984 17 1980 Río Enco CSAV 7,426 Automobile Transport 19,867 17 1978 Río Blanco Subsidiary 18,142 Automobile Transport 41,208 17 1981 Bow Andes Subsidiary 28,050 Chemical Transport 17,561 17 1977 Bow Pacifico Subsidiary 18,657 Chemical Transport 12,198 17 1982 Atlixco Consortium 18,217 Automobile Transport 41,697 18 1982 Braztrans I Libra 38,186 Bulk Container 22,011 15 1980 During 2004, the Company and its subsidiaries chartered 167 vessels that together with its own fleet, made it possible to provide shipping services in different operated routes . Research and Development CSAV operates in a highly competitive market, in which global economic growth directly affects cargo demand. This generates cycles related to the industry's main variables such as the volume of vessel charter, shipping rates, fuel prices and cargo volume, requiring relevant research efforts in order to define the supply of services and maintain CSAV's competitive edge in the global shipping market. Furthermore, it is of essential importance to follow fluctuations in fuel prices, exchange rates, interest rates, etc., indicators that have an impact on business flow and operating costs. Human Resources Training and Development During 2004 the training program led to the development of the Company's relevant areas. Over three hundred people participated in time management courses and workshops. Most supervisors were trained in leadership techniques. Another important training activity was to enhance the training procedure of new employees with the aid of e-Learning tools, enabling personal skill development through the Internet. During 2004 a total of 12,856 hours of skill training took place, with an average of 22 hours per person. This program consisted of subjects related to the shipping industry, computer skills development, languages and management. CSAV and Subsidiaries Staff By December 31, 2004 CSAV and its subsidiaries staff had 5,541 employees distributed as shown in the following chart: Company Management Staff Professionals Employees Total CSAV 24 335 220 579 SAAM 28 126 416 570 Other 55 1,201 3,136 4,392 Total 107 1,662 3,772 5,541 The main changes made in Management staff in the organization are as follows: Appointments Mr. Rafael Della Maggiora Silva ended his assignment in the Brazil Regional Office, where he was Senior Vice President of Líneas Costa Este Sudamérica. Upon his return to CSAV, he took charge as Senior Vice President Cargo Services. Mr. Gonzalo Baeza Solsona replaced Mr. Della Maggiora. Mr. Rodrigo de la Cuadra Infante joined the Organization in July, and took charge as Senior Vice President of Century 21st Project and Management Control. Mr. Arturo Ricke Guzmán joined the Company in August, and became Senior Vice President Europe. In September Mr. Ignacio Jiménez Olmo took charge as Vice-President of Projects In October, Mr. Cristian Araya Maggi joined the Company as Head Lawyer in the Law Department. In November, Mr. Juan Carlos Valenzuela Aguirre joined the Company as Vice President of Human Resources. Resignations In August Mr. Eduardo Parker Gumucio left the Company as Vice President of Human Resources. In December Mr. Mario Torres Chadwick left the Company as the General Comptroller. During 2004, Ch$2.987,916 thousand in payments were made to managerial staff, and Ch$62.297 thousand were made for compensation payments. There are no incentive plans for Directors, Administrative or Management Staff. However, the Board of Directors determines bonus payments to management staff. Health and Education Through the Social Assistance Corporation (CAS), the Company contributes funds for improving the quality of life of its employees. These funds are mainly targeted to education and health expenses of the employees and their dependents. During 2004, the Corporation managed a fund of 425 million pesos, 15% was funded by the employees and 85% by the Company. During the month of May the regular shareholders meeting took place with active and founding members of the Corporation, at which time, 2003 financial statements were approved, in accordance with the statutes. Life Insurance The Company provides life insurance for its employees which has an additional coverage for terminally ill employees and their dependents. Housing Since the creation of mortgage loans for employees, 238 loans have been granted for housing purchase, building and repairs. Six loans were granted in 2004. The total funds available were 400 million pesos, of these nearly 100 millions were allocated. This benefit has provided housing solutions at low interest rates and adequate terms. Educational Scholarships During 2004 the Company granted six scholarships geared to finance higher education for employees' children with outstanding academic standards. In addition, a scholarship was granted to the son of a deceased employee to allow him to continue university education. During 2004, seven employees have attended graduate and higher education schools, funded in its entirety by CSAV, enabling employees to access better opportunities and professional development. Recreation Among the recreational activities that the Company organizes for its employees, there was a remarkable active participation this year of the employees in Santiago as well as in Valparaiso during the traditional annual picnic to celebrate the end of the year. The Company supports sports and recreational activities of the employees and their families by contributing funds. The CSAV Olympics took place this year. It is important to highlight that for the first time, CSAV presented sports events in accordance to the Sports Promotion Law, thus enabling CSAV to increase its support to such activity. Traditionally, CSAV offers year long relaxation and recreation for the entire family at Club de Campo Montecarmelo, in Limache. CSAV employees and their families celebrated the Christmas party at Montecarmelo this year, an important Christian date. Employees and their families enjoy a day of relaxation with open-air activities. The funding for this event is shared. Labor Relations Labor relations with Company employees are carried out in an environment of mutual respect and cooperation. This was reflected during the renewal of the CSAV Company Association Collective Bargaining, as well as in the Supervisors Collective Agreement, for a four-year period from 2004 to 2008. Traditionally, the use of collective bargaining instruments frames labor relations within the Company with both groups of workers, facilitating fluid and constant communication, through regular meetings with employees' representatives. Staff Acknowledgement This year there was a remarkable commitment from staff to undertake new challenges in a globalized company. The Board especially acknowledges the persistent effort made throughout the year and reflected in the earnings obtained. Santiago Valparaíso Office Building Hendaya 60 Floor 9 Rol 214-142 Floor 11 Reg. 214-146 Reg. 214-145 Floor 13 Reg. 214-150 Floor 10 Reg. 214-144 Floor 12 Reg. 214-148 Reg. 214-147 Floor 14 Reg. 214-151 Reg. 214-152 Office Building Valparaiso Plaza Sotomayor 50 Reg. 8-004 Other Real Estate Apartment 1109 Pasaje Ross 149 Reg. 37-110 Warehouse José Tomás Ramos 22 Reg. 90-22 Land Blanco 509 al 529 Reg. 8-001 Blanco 541 al 545 Reg. 8-002 Iquique For Personnel Recreational Activities: Offices Aníbal Pinto 444 Reg. 255-19 Club de Campo Montecarmelo Avda. Eastman 917, Limache Reg. 322-1 y 322-8 Annual Report CSAV 2004 The Chairman's Statement The Chairman's Statement Dear Shareholders: As in previous years I comment on the performance of the Company in 2004. The Company had a profit of US$207,124,083 making it the largest in its history and almost tripled 2003 profit, which was US$72,323,141. The Company had an increase in its consolidated sales that went from US$2,135,539,858 to US$2,685,886,778 which represents a 25.8% increase. This increase in sales was due to a productive development of in the world economy, which reached its largest growth of the past 16 years. In accordance with methods used by the International Monetary Fund, such as the purchasing power parity, this growth reached a 4.9%. This, was substantial in the United States , the main economic power in the world, where it reached a 4.4% growth. In China, it was remarkable where it reached 9.5% growth, exceeding 9.3% growth achieved during the previous year. The economic performance in India , satisfactory as well 6.5% growth. Asia (except in China and India ) reached a 5.8% growth, and Latin America reached a 5.6% growth. Chile recovered the momentum lost during the Asian crisis and its aftereffects reaching 5.9% growth. The rise in copper prices and other commodities were essential for this change to take place, caused mainly, by the increase in demand due to China 's economic growth. The number of (Teus) containers transported by the Company and its subsidiaries during 2004 reached 2,404,747 compared to 1,841,349 during the previous year. This represents 30.6% increase. Thus, Compañía Sud Americana de Vapores went from being in the 17th place to the 15th place in the global shipping industry. The increase in the transport of containers was virtually observed in all traffics, but it was essentially important to those related to China , this increase had a weighted average of 67.9%, and those related to Brazil which had an increase of 44.6 % . The subsidiary Inversiones Plan Futuro S.A. sold its 50% share in SKS OBO Holding Limited, Bermuda; SKS OBO Limited, Bermuda and OBO MAR AS, Norway companies to KGJS/Nordship for US$149,500,000. This sale produced a profit of US$49,232,478 thus, making a substantial contribution to the annual earnings. SAAM continued to have satisfactory earnings, however due to the devaluation of the US dollar, lower than those of last year. How do I foresee 2005? I believe it will be a good year, but somehow inferior to 2004. In accordance with several forecasts, the world economy should approximately reach an average growth of 4.2%, and in Chile it could reach approximately 5.8%. However, I'd like to remind our shareholders that we live in an era full of uncertainties, which may affect even the best-supported forecasts. I am concerned by the new and speedy devaluation of the US dollar, due to the double deficit problem: the fiscal deficit and the balance of payments deficit. If it worsens, it could reach devastating effects. How would the adjustment take place in China? I maintain that this should be slow. However, there is a minority opinion that believes this could reach catastrophic episodes leading to serious consequences for the world economy. We should also keep in mind the price of oil. We no longer talk about US$30 a barrel. In addition to the increase in consumption in China and India , which were not duly taken into account by analysts, it has made all possibilities of over-demand to disappear. If oil prices continue to stay at US$50 a barrel, the International Monetary Fund believes it could have an impact on the growth rate of the US economy. I must mention the risk involved in new terrorist acts such as those, which took place in New York in 2001 and in Madrid in 2004. I believe terrorist attempts can take place within ports, seaways, such as the Panama Canal , or vessels. This type of terrorism will aim to achieve major disruptions in sea transportation and world trade. 21st Century Project has continued to advance but not within expectations. Project Integra has been delayed in more than six months facing several difficulties, which has overcome. The Marketing Plan has advanced in relative terms, but I hope it will speed-up. In terms of human relations we have not made much progress. Therefore, given the importance of this matter we should apply ourselves towards that direction. I am optimist about our achievements during 2005. Acknowledgements As in previous years I would like to express our appreciation and that of the Board of Directors, to the employees of the Company for their contribution to this year's results. Ricardo Claro Valdés Chairman Annual Report CSAV 2004 CSAV Services CSAV Services Liner Services - Norasia Container Lines Ltd. Services - Companhia Libra de Navegaçao and Montemar Marítima S.A. Services Liner Services These services, the main business area of CSAV provide containerized cargo transport. The sustained volume growth in this type of transport has enabled CSAV to become one of the leading operators of cargo transport in Latin America . Most of these services are jointly operated with other ship-owners, where the parties agree on which way the capacity supply is shared on a certain route. Usually, this is done in terms of vessel availability; thus, each company maintains its business independence. The objective of this agreement is to improve services provided to clients in order to achieve economies of scale. 1.1 Shipping Services to and from the Pacific Coast of South America CSAV provides services to and from the Pacific Coast of South America to Northern Europe, the Mediterranean, Atlantic North America, the Pacific Coast and the Gulf of Mexico - United States , Asia, the Atlantic Coast of South America, the Caribbean , Chile Center/South and Chile Center/North. Relevant Information The traffic between the Pacific Coast of South America and North America registered an increase in total revenues as a result of export rate increases, generated by the high demand in this segment. However, that being said, the increases recorded in vessel charter costs and fuel costs, enabled the Company to achieve positive earnings during 2004. Services to Asia reflected an import and export revenue increase. These increases account for substantial improvements in rate levels, as well as, in greater transport volume. Its major haulage was obtained due to capacity supply, as a result of the increase in fleet size achieved in 2003. Operating costs increased as a result of the rise in vessel charter rates and in fuel prices. Despite all this, there was a positive result during 2004. Services to Europe and the Mediterranean sustained good profit, with a recovery in shipping levels along with general increases in vessel charters and fuel. During August 2004 a new service was launched between the Pacific Coast of South America-Chile, Peru, Ecuador and Colombia . This took place as a response to an unmet cargo demand and was established through a vessel that links the port of Callao , Peru , with a vessel destined to provide services to the ports of Guayaquil and Buenaventura . The service that runs every 10 days was well received by the market, obtaining positive earnings. 1.2 Shipping Services to and from the Atlantic Coast of South America CSAV provides services to and from the Atlantic Coast of South America to Northern Europe, the East Coast of North America, Asia and South Africa , Western Africa and the Pacific Coast of South America. Relevant Information in 2004 All CSAV traffic to and from the East Coast of South America reflected increases, both in transport volume, as well as in shipping rates. There was a substantial growth in imports to the region, especially from Asia , where CSAV took the lead in operating this service in mid-2004. The exports from the region were less dynamic and only increased in the Europe to North America traffic. In 2004 it was necessary to gradually increase the fleet size that covers the Asia traffic. In the traffic to North America CSAV withdrew from the jointly operated traffic with other shipownwers, in order to join as of April 2004, a service made of 80% of CSAV Group vessels. The earnings of these services were positive and greater than those in 2003, despite the greater fuel costs and vessel charter costs. 2. Special Services 2.1 Liquid Bulk Shipping Services CSAV provides transport services of sulfuric acid and other chemicals in Chile , through its subsidiary Odfjell y Vapores S.A. , the partner being Odfjell Seachem, the world's leading operator for this kind of product. Relevant Information in 2004 Cargo volumes transported by vessels “Bow Andes ” and “Bow Pacífico” during 2004 are similar to the previous year. Contracts were extended in 2004 and thus ensure cargo availability beyond 2005. 2.2 Solid Bulk Shipping Services The Company transports concentrates, metallic copper and wood pulp from the Pacific Coast of South America to Asia, and concentrates to Northern Europe . Vessels are positioned on the Pacific Coast of South America with coal and grains. Relevant Information in 2004 The transport of solid bulks improved its earnings in 2004, compared to the previous year, as a result of a steady rise in the demand, thus allowing for a better selection of cargo and vessels. Both grain transport vessels bought through its subsidiary Corvina Shipping Co., in equal shares with Greek ship owner Peter Livanos, were sold to third parties during 2004 when the shipyards made their deliveries. At the same time, there is a purchase order for another grain transport vessel, to be delivered by 2006. The grain transport vessel operation through its associate DBCN has generated positive earnings. 2.3 Refrigerated and Frozen Cargo Transport Services CSAV, through its subsidiary CSAV Panama, transports fruits and frozen products. During the fresh fruit export season, the Company provides services in chartered refrigerated vessels from Chile to both coasts in the United States , Europe and Asia . This service is transported on vessels of the Liner Services. Relevant Information in 2004 The containerized transport of frozen and refrigerated cargo continues to reflect increases in all different destinations served by the Company. This line has noted a sustained increase in refrigerated cargo volume to countries such as Colombia and Ecuador during 2004. In terms of frozen storage vessels the volumes transported were slightly higher than those of the previous year. Finally, with the purpose of supporting the business of our exporters' frozen and refrigerated cargo, a Comprehensive Service has been made available to them, providing for a more efficient and better coordinated seasonal production planning and shipping endeavor. 2.4 Automobile Transport Services CSAV provides services for the following routes with specialized Pure Car and Truck Carrier (PCTC)-type vessels, providing a loading/unloading system called “roll-on/roll-off”, enabling them to drive up and down ramps between the vessel and the dock. Japan/Korea to Chile/Peru. Argentina/Brazil to the East Coast of Mexico , United States and the Caribbean . Brazil/Argentina to the West Coast of Central/South America . Brazil/Argentina both ways (Mercosur). West Coast of Mexico /Central America to the West Coast of South America . Northern Europe to the West Coast of Central/South America . United States East Coast to South America West Coast. Relevant Information in 2004 With the purpose of continuing to strengthen this segment's development, a long-term charter contract was signed for four new PCTC (Pure Car and Truck Carrier)-type vessels. The first two will be delivered by 2006, and the next two during 2007. Aside from these two additions to the fleet, a four-year agreement was signed to charter two used vessels, which will be delivered by 2005. Chile and Mexico have become the main destinations in this service. Actually, in 2004 the sustained sales increase in such markets gave place to the consolidation of these routes, being Brazil , Argentina , Europe, Japan , and Korea the points of origin. In 2004 Chile was one of the leading markets for new automobile sales in Latin America , with a total of 148,586 units sold. This has been the largest sales volume in seven years and reflects 24.3% growth compared to sales in 2003. On the other hand, Mexico , was the leader importer from the East Coast of South America, becoming a country that produces, exports and imports automobiles. Its total sales amounted to 1,100 vehicles, a 12% increased compared to sales in 2003. Norasia Container Lines Ltd. Services CSAV, through its subsidiary Norasia Container Lines Ltd., provides services in the East-West routes between Northern Europe, the Mediterranean, the Persian Gulf, the Indian sub-continent, Asia, and North America . Relevant Information in 2004 In 2004, the East-West market volumes underwent a rapid growth, in great part, boosted by the development of the Chinese industry. In order to invest in the region, Norasia introduced eight new services, increased its transportation volume in a 32% more than in 2003, achieving a positive result. Norasia and its associates provide 11 weekly departures from Asia to Europe . These services exceed the market growth. Along with this growth, Norasia increased the size of its vessels between the Northern China and Europe route. It recently launched a new service that differentiates itself from the Asia–Europe transport with a direct service to growing markets in Turkey and along the Black Sea (former Eastern European countries). Early in 2004, Norasia initiated an exclusive new service called “Around the World”, providing its clients with greater port coverage and additional frequency from Asia to the Middle East, from India to Europe, and from Europe to the East Coast of the United States . This service, has positioned Norasia amongst the four leading carriers in the India to Europe market. At the same time, the service has allowed Norasia to participate in the transatlantic route, and to triple its share in the route from Asia to the Middle East . To better serve the needs of the market in the route between Asia and the East Coast of the United States , Norasia started to provide services in a new Trans-Pacific route, by supplying a new vessel. Companhia Libra de Navegaçao and Montemar Marítima S.A. Services Subsidiaries Companhia Libra de Navegaçao (Libra) and Montemar Marítima S.A. (Montemar), provide containerized cargo transport to and from the Atlantic Coast of South America to Northern Europe, the Mediterranean, Atlantic North America, the Gulf of Mexico, the United States , the Caribbean , the West Coast of Africa and the Pacific Coast of South America. Libra also provides solid bulk transport services. Relevant Information in 2004 During 2004, Libra and Montemar increased their cargo transport capacity. In some services, space availability was increased through additional vessels, in order to meet the demand generated by the heavy increase of exports in Brazil . A new vessel was added to the route from Brazil to the West Coast of South America, now with five units in operation. Three more vessels were added to the route from the West Coast of South America to the Gulf of Mexico and the United States during the month of July, expanding to a bi-monthly additional route, aside from the one already in operation. In June 2004 Libra and Montemar jointly with CSAV began their operation with a new service from the West Coast route of South America to the East Coast of North America with six vessels in operation. During the month of October, 2004 a new vessel was added to the West Coast of Africa route, now with seven vessels in operation. Cargo volume transported by Libra and Montemar in 2004 had an 8% increase compared to 2003. Sales increased in 24% compared to the same period, as a result of a general increase in the shipping rates for exports. Libra and Montemar's Operations and Administration units were consolidated as planned and within the framework of Project 21st Century. During 2004 both companies completed the development of their financial-accounting modules to be implemented with Oracle Financials. Libra has maintained its certification from Quality Systems Management, In accordance with ISO 9001/2000, and the certification from Vessel Safety Management Systems and Environmental Protection (ISM code), for the safe operation in the transport of solid bulk cargo and crude oil. In addition to having obtained certification for the vessel "Braztrans 1" through the International Vessel and Port Facilities Code (ISPFS code). The tanker vessel "Libra Albacora" maintained its shipping contract with Petrobras until April 2004. Later, it was sold and delivered in the port of Shanghai in May 2004. The bulk vessel "Braztrans 1", sustained levels of activity similar to previous years, with a transport of 300.855 metric tons of bulk cargo during 2004. anual report 2000_informac.htm Informacion General CSAV Informaciones de Car cter General HECHOS RELEVANTES - REMUNERACION DEL DIRECTORIO - PAGO DE DIVIDENDOS - POLITICA DE DIVIDENDOS - DISTRIBUCION DEL RESULTADO - PATRIMONIO Hechos Relevantes Carta Gerencia General N 5/2000 del 22.3.2000 En reuni n de Directorio, celebrada el 21 de Marzo de 2000, se acord citar a Junta General Ordinaria de Accionistas para el 17 de Abril de 2000, ocasi n en que se propondr distribuir un dividendo definitivo hasta completar el 40% de la utilidad l quida del ejercicio 1999, esto es, deducidos los tres dividendos provisorios, la suma equivalente en pesos de US$ 4.178.050,36 lo que significa repartir un dividendo, por el equivalente en pesos, de US$ 0,00568 por acci n, a pagarse el d a lunes 28 de Abril de 2000, al tipo de cambio observado vigente a la fecha de celebraci n de la citada Junta General Ordinaria de Accionistas. Carta Gerencia General del 29.5.2000 El Directorio aprob la compra por parte de una filial, de ciertos activos, derechos y beneficios pertenecientes a la empresa naviera maltesa Norasia Lines (Malta) Ltd. (en adelante "Norasia"), relacionados con sus actuales cinco servicios de transporte mar timo de l nea y otras actividades asociadas o complementarias. Se incluir a la cesi n de los derechos relacionados con la explotaci n de los referidos tr ficos, y el traspaso de la propiedad de dos empresas filiales de Norasia: Norasia Services (Hong Kong) Ltd. y Norasia Services (Middle East) FZE, empresas recientemente constituidas en Hong Kong y los Emiratos Arabes Unidos respectivamente y libres de pasivos y contingencias. El precio a pagar por la referida transferencia ser a la suma de US$ 38 millones. El comprador, adquirente o beneficiario en general, seg n corresponda ser una filial de CSAV constituida en Malta por las sociedades liberianas CNP Holding S.A. y West Wind Overseas Investments Inc., de nombre Norasia Container Lines Limited. CSAV garantizar a CMA CGM S.A. el cumplimiento por parte de la filial de CSAV que pase a ser parte de los contratos, de las obligaciones establecidas en los convenios de arriendo de espacio. Carta Gerencia General del 17.5.2000. En sesi n celebrada el d a martes 16 de Mayo del a o 2000: A. El Directorio tom conocimiento que con el objeto de financiar las operaciones e inversiones que deber efectuar nuestra filial "San Antonio Terminal Internacional S.A." en la concesi n del Frente de Atraque Molo Sur del Puerto de San Antonio, la entidad "International Finance Corporation (IFC)" con sede en Washington D.C., Estados Unidos, ha aprobado un plan de inversi n por US$ 103,7 millones, consistente en: 1. Un cr dito sindicado otorgado a "San Antonio Terminal Internacional S.A." por US$ 65 millones a un plazo de 10 a os, con cuotas de capital pagaderas semestralmente, la primera pagadera el d a 15 de Julio del a o 2004; 2. Un cr dito otorgado a "San Antonio Terminal Internacional S.A." por US$ 35 millones a un plazo de 12 a os, con cuotas de capital pagaderas semestralmente, la primera pagadera el d a 15 de Julio del a o 2004; y 3. Una inversi n por US$ 3,7 millones que la entidad "International Finance Corporation (IFC)" deber aportar como capital en la sociedad San Antonio Terminal Internacional S.A., representativa del 9% del capital social de esta ltima sociedad. Esto se materializar mediante un aumento de capital que deber ser aprobado por los accionistas de "San Antonio Terminal Internacional S.A." Se deja constancia que los desembolsos del referido plan de inversi n est n sujetos al cumplimiento de diversas condiciones, entre otras la firma de la documentaci n respectiva y a la sindicaci n exitosa de una parte del financiamiento. B. El Directorio tom conocimiento en la sesi n celebrada el d a martes 16 de Mayo de 2000, del acuerdo suscrito por nuestra filial "Sudamericana, Agencias A reas y Mar timas S.A." para que esta pueda adquirir el 83,333% del capital accionario de la sociedad "Terminales Portuarias Argentinas S.A. (TPA)", sociedad esta ltima constituida y existente bajo las leyes de la Rep blica Argentina. La sociedad "Terminales Portuarias Argentinas S.A. (TPA)" ha sido valorizada en la cantidad de US$ 36 millones, por lo tanto el precio convenido por el 83,333% que deber pagar "Sudamericana, Agencias A reas y Mar timas S.A." asciende a US$ 29.999.880. La materializaci n de la operaci n y transferencia de las acciones se deber efectuar el d a 23 de Junio del a o 2000, una vez concluido en forma exitosa el "due diligence" de la sociedad objeto de esta operaci n. Carta Gerencia General del 29.6.2000 Con fecha 17 de Mayo del presente a o, se inform el acuerdo de la filial Sudamericana, Agencias A reas y Mar timas S.A. (en adelante "SAAM") para adquirir el 83,333% del capital accionario de la sociedad "Terminales Portuarias Argentinas S.A. (TPA)", sociedad esta ltima constituida y existente bajo las leyes de la Rep blica Argentina. Sin embargo, la vendedora se ha negado a cumplir lo convenido, por lo que no se han suscrito los documentos finales dentro de los plazos establecidos para ello. SAAM recurrir a las instancias pertinentes para el adecuado resguardo de sus derechos. Carta Consejo Directivo del 17.11.2000 Nuestra filial San Antonio Terminal Internacional S.A., el d a 15 de Noviembre del presente a o, en la ciudad de Washington D.C., de los Estados Unidos de Am rica, obtuvo un cr dito de la International Finance Corporation (IFC), por un monto de US$ 100 millones (cien millones de d lares de los Estados Unidos de Am rica). Los recursos provenientes de dicho pr stamo, ser n utilizados por la sociedad San Antonio Terminal Internacional S.A., para pagar un cr dito puente otorgado a ella por el Banco Santander-Chile, financiar los pagos que sta debe efectuar a la Empresa Portuaria de San Antonio, conforme al Contrato de Concesi n y, en general, a objeto de financiar las operaciones e inversion. Remuneraci n del Directorio I De acuerdo con las disposiciones de la ley 18.046, la Junta General Ordinaria de Accionistas, celebrada el 17 de Abril de 2000, acord la remuneraci n que corresponde al Directorio por el ejercicio 2000. Detalle de los montos se indican en la nota 26 de los Estados Financieros Consolidados. Los gastos del Directorio por concepto de viaje y representaci n ascendieron a US$ 66.992. Remuneraci n de Ejecutivos Durante el Ejercicio 2000 ascendi a $ 2.469.894.002. Pago de Dividendos Con cargo a las utilidades de los a os que se indican se pagaron los siguientes dividendos por acci n: Dividendo Número Fecha de pago mes Año Valor pagado por acción $ US$ equiv Con cargo utilidades ejercicio 280 Enero 1996 3.00 0.0074 1995 281 Abril 1996 4.39963 0.0108 1995 282 Septiembre 1996 1.60 0.0039 1996 283 Enero 1997 2.60 0.0061 1996 284 Abril 1997 4.60033 0.0110 1996 285 Julio 1997 2.25 0.0054 1997 286 Octubre 1997 2.50 0.0061 1997 287 Enero 1998 2.90 0.0063 1997 288 Abril 1998 6.30237 0.01392 1997 289 Julio 1998 2.10 0.0046 1998 290 Octubre 1998 2.40 0.0051 1998 291 Enero 1999 2.75 0.0058 1998 292 Abril 1999 6.08114 0.01272 1998 293 Julio 1999 2.10 0.0041 1999 294 Octubre 1999 2.10 0.0039 1999 295 Enero 2000 1.70 0.0031 1999 296 Abril 2000 4.95029 0.00974 1999 297 Julio 2000 2.20 0.0041 2000 298 Octubre 2000 2.90 0.0051 2000 Pol tica deDividendos En Junta General Ordinaria de Accionistas celebrada el 17 de Abril de 2000 se acord repartir el 40% de las utilidades, facult ndose al Directorio para definir la oportunidad y el monto de los dividendos provisorios a pagar, como tambi n, para que cuando lo estime oportuno pueda repartir dividendos con cargo al Fondo de Futuros Dividendos sin necesidad de autorizaci n de una Junta General de Accionistas. Distribuci n del Resultado El estado de resultados, por el ejercicio comercial terminado el 31 de Diciembre de 2000, presenta una utilidad de US$ 43.083.303,35 que el Directorio propondr a la Junta de Accionistas distribuir de la siguiente manera: A cubrir los siguientes dividendos: Provisorios N 297 US$ 3,012,501.30 Provisorios N 298 US$ 3,777,101.64 Provisorios N 299 US$ 3,848,626.31 Definitivo N 300 US$ 6,595,092.09 A cubrir d ficit acumulado en per odo de desarrollo en filiales (Circular 981 S.V.S.) - US$ 191,096.57 A utilidades acumuladas US$ 25,658,885.44 Total US$ 43,083,303.35 Patrimonio Aprobada la distribuci n de la utilidad y una vez rebajado el dividendo definitivo N 300, el capital y reservas de la Compa a al 31 de Diciembre de 2000 quedar a : Capital suscrito y pagado US$ 170,000,000.00 Otras reservas US$ ( 6,376,617.29) Fondo futuros dividendos US$ 32,303,924.32 Fondo utilidades acumuladas: US$ 279,795,647.56 - US$ 475,722,954.59 De acuerdo a estas cifras, el valor libros de cada acci n alcanzar a a US$ 0,65 al 31 de Diciembre de 2000. 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