compañía electro metalúrgica s.a

Annual Report

2013

Compañía Electro Metalúrgica S.A.

2

Indice

Chapter 1

Company Information 5

Board Of Directors 6

Managent Of Elecmetal S.a. 9

Historical Information 10

Chapter 2

2013 Business Results 15

2.1 Business Results 16

Metallurgic Business 17

Container Business 18

Wine Business 18

2.2 Metallurgic Business 20

Growth Strategy 21

Important Investment Plan 23

3

Territorial Expansion And Global Coverage 24

Delivery Of Comprehensive Solutions To Clients 24

Organizational Development 27

Financial Results 28

2.3 Container Business 30

2.4 Wine Business 34

2.5 Communication Business 38

Ediciones Financieras S.A. 39

Ediciones e Impresos S.A. 39

Chapter 3

Consolidated Financial Statements 2013 41

Classified Statement Of Financial Position 42

Incomes Statement By Function 44

Comprehensive Income Statement 45

Direct Cash Flows Statement 46

Independent Auditors Report 48

Related Companies 50

Main Related Companies 50

Summary Of Financial Statement Of Main Subsidiaries 55

Statement of Liability 59

CHAPTER 1Company Information

Corporate Name: Compañía Electro Metalúrgica S.A. Elecmetal S.A.

Address: Av. Vicuña Mackenna 1570, Ñuñoa.

Telephone: 23614010

I.D. No.: 90,320,000-6

Type Of Entity: Open Corporation, Registered in the Securities Registry of the Securities and Insurance Supervisor, N° 45.

Web Page: www.me-elecmetal.com / www.elecmetal.cl

6

Board Of Directors

CHAIRMAN

JAIME CLARO VALDES

I.D. Number 3,180,078-1

Industrial Civil Engineer, chairman of the board of directors of ME Global Inc. (USA), vice-chair-

man of the board of Cristalerías de Chile S.A.; and director of Viña Los Vascos S.A.

VICE-CHAIRMAN

BALTAZAR SÁNCHEZ GUZMÁN

I.D. Number 6,060,760-5

Commercial Engineer; chairman of the board of directors of Cristalerías de Chile S.A., Edicio-

nes Financieras S.A., and Ediciones e Impresos S.A.; vice-chairman of the board of Sociedad

Anónima Viña Santa Rita and Quemchi S.A.; and director of Navarino S.A., ME Global Inc.

(USA), and Inversiones Siemel S.A.

DIRECTORS

JUAN ANTONIO ÁLVAREZ AVENDAÑO

I.D. Number 7,033,770-3

Lawyer; MBA Pontificia Universidad Católica de Chile; chairman of the board of Quemchi S.A.

and Navarino S.A.; vice-chairman of the board of Parque Arauco S.A.; director of Cristalerías

de Chile S.A., Compañía Sud Americana de Vapores S.A., SM SAAM S.A. and Marítima de In-

versiones S.A.; member of the Advisory Board of Generación Empresarial.

CARLOS F. CÁCERES CONTRERAS

I.D. number 4,269,405-3

Commercial Engineer, MBA Cornell University, ITP Harvard Business School; president of BAT

(Chile); vice-chairman Carozzi S.A., SIPSA S.A.; president of Instituto Libertad y Desarrollo

and member of Board of other companies, as well as nonprofit organizations; president of the

Executive Committee of Universidad del Desarrollo’s MBA program. As a civil servant he has

been a member of the State Committee; president of the Chilean Central Bank, Minister of

Finance, and Minister of the Interior.

7

JUAN AGUSTÍN FIGUEROA YÁVAR

I.D. number 3,513,761-0

Lawyer, partner of the Law Firm DyP Abogados; chairman of the board of directors of S.A.

Viña Santa Rita, Marítima de Inversiones S.A., and Termas de Puyehue S.A.; director of Cris-

talerías de Chile S.A. and Quemchi S.A.; chairman of Fundación Pablo Neruda and Sociedad

de Bibliófilos de Chile, former tenured professor of procedural law at Universidad de Chile.

FERNANDO FRANKE GARCÍA

I.D. number 6,318.139-0

Commercial Engineer, Master of Finance, Universidad Adolfo Ibañez; director of Cristalerías

de Chile S.A., Enlasa S.A., Edelpa S.A., Cía. Inversiones la Española S.A.; director of Un Techo

para Chile and Colegio San José de Lampa.

ALFONSO SWETT SAAVEDRA

I.D. number 4,431,932-2

Businessman; chairman of the board of Forus S.A., Costanera S.A.C.I., and Olivos del Sur S.A.;

director of Cristalerías de Chile S.A., Sociedad Anónima Viña Santa Rita, Marbella Chile S.A.;

and Counselor of SOFOFA.

DIRECTORS’ COMMITTEE

CHAIRMAN

CARLOS F. CÁCERES CONTRERAS

DIRECTORS

JUAN ANTONIO ÁLVAREZ AVENDAÑO

ALFONSO SWETT SAAVEDRA

9

GENERAL MANAGER

ROLANDO MEDEIROS SOUX

I.D. number 5,927,393-0

Chemical Engineer. M.Sc Upsala

DEPUTY GENERAL MANAGER

JOSÉ PABLO DOMÍNGUEZ BUSTAMANTE

I.D. number 10,557,722-2

Commercial Engineer. MBA UC

ADMINISTRATION AND FINANCE MANAGER

NICOLÁS CUEVAS OSSANDÓN

I.D. number 7,050,857-5

Commercial Engineer

COMMERCIAL MANAGER

ROBERTO LECAROS VILLARROEL

I.D. number 9,982,226-0

Civil Engineer

CONTROLLING MANAGER

JORGE SAAVEDRA ALMONACID

I.D. number 11,595,917-4

Commercial Engineer

OPERATIONS MANAGER

RAOUL MEUNIER ARTIGAS

I.D. number 4,855,515-2

Technical Mechanical Engineer

CAST OPERATIONS MANAGER

IVÁN LEMUS CORDERO

I.D. number 10,855,370-7

Civil Engineer. MBA UC.

MACHINE SHOP OPERATIONS MANAGER

JUAN CARLOS ALLENDE SÁNCHEZ

I.D. number 7,031,802-4

Mining Civil Engineer

PROJECT MANAGER

MATÍAS BUSTOS SANTA MARÍA

I.D. number 13,436,386-k

Electrical Civil Engineer

HUMAN RESOURCES MANAGER

RODRIGO OGALDE CONTRERAS

I.D. number 10,134,671-4

Commercial Engineer

INTERNAL AUDITING MANAGER

MARIO OLIVARÍ VOLPATO

I.D. number 7,171,528-0

Accountant Auditor

Management Of Elecmetal S.A.

10

Historical Information

Emilio Orrego Luco, together with a group of

important local businessmen and investors,

founded Compañía Electro Metalúgica S.A.,

Elecmetal, in 1917.

The project meant installing the first electric

arc furnace in Latin America, initially to make

steel spare parts for agriculture, mining, and

industry applications, and the publicly owned

Empresa de Ferrocarriles del Estado.

In the mid 1970’s, Elecmetal initiated an ac-

tive plan of investment and diversification of

its assets. In 1975 the company acquired 46%

of the shares of Cristalerías de Chile S.A., a

manufacturer of glass containers, in a tender

offering convened by the Corporación de Fo-

mento de la Producción (CORFO). Thereafter,

it continued buying shares until completing

68.17% of its shareholding. From then on, an

important technological and commercial mo-

dernization process began; highlighting a te-

chnical cooperation agreement celebrated in

1977 with the company Owens Illinois of the

United States, the world’s leading producer

of glass containers.

As a natural extension of the glass container

business, in 1980 the Company expanded its

activities through Cristalerías de Chile S.A.

into plastic packaging. By means of the latter

and jointly with Owens Illinois, the Company

continued its diversification policy by acqui-

ring Viña Santa Rita Ltda. that same year,

thus initiating its involvement in the agro-in-

dustrial sector.

In 1986 new steps were taken into diversifi-

cation policy. Through its subsidiary, Crista-

lerías de Chile S.A., it acquired 17% of Marin-

sa S.A., an investment company with a large

shareholding in Compañía Sud Americana

de Vapores S.A., in a public tender. Later it

increased its shareholding in Marinsa S.A. to

52.9%.

In late 1989, Navarino S.A. was born, a com-

pany that originated from the division of

Cristalerías de Chile S.A., into which all in-

vestments in the shipping sector were trans-

ferred.

Elecmetal continued with its diversification

plan in 1989 by acquiring, through Cristale-

rías de Chile S.A. television frequencies ten-

dered by Televisión Nacional de Chile, and

creating the company Red Televisiva Mega-

visión S.A. “MEGA.”Which was sold in early

2012.

In 1992, the board approved the division of

Elecmetal, creating a new company Quemchi

S.A. into which all the investments in the shi-

pping sector were transferred, and giving it a

68.17% shareholding in Navarino S.A.

Toward the end of 1993, and as a way to fi-

nance its modernization and diversification

process, Cristalerías de Chile S.A. carried out

a capital increase, of which a large part of the

shares were sold in the international markets

by means of the American Depositary Re-

ceipts (ADR) mechanism. As of that moment,

and until 2005, its shares were traded on the

New York Stock Exchange, under the ticker

symbol «CGW». This way, Elecmetal and its

subsidiaries reduced their shareholding in

Cristalerías de Chile S.A.

In 1994, Elecmetal, through its subsidiary

Cristalerías de Chile S.A., expanded its in-

vestments in the area of communications

by entering the cable television services bu-

siness together with TCI/Bresnan, current-

ly Liberty Global Inc.. Cable systems were

acquired and the company Metrópolis S.A.

was created. The following year, the board

agreed to the merger of Metrópolis S.A. and

the cable television company, Intercom, crea-

ting Metrópolis-Intercom S.A., where Crista-

lerías and Liberty participated with 60% of

the shareholding. Later, in 2000, Cristalerías

de Chile and Liberty bought in equal shares

from their partner the remaining 40% of the

shares of Metrópolis-Intercom. In 2005 Cris-

talerias entered into an agreement with LGI

Internacional, Inc. (a subsidiary of Liberty

Global Inc.) to merge the operations of Me-

trópolis-Intercom S.A. and VTR GlobalCom

S.A., under the latter; leaving Cristalerías de

Chile S.A. with 20% of VTR GlobalCom S.A.,

participation which it sold in 2010.

The year 1995 marked the completion of

the acquisition, through Cristalerías de Chile

S.A., of a considerable percentage of the sha-

reholding of the financial newspaper “El Dia-

rio”, presently “Diario Financiero”. As of 2013

12

the participation in Ediciones Chiloé S.A. is

equivalent to 99.5%; the latter owns 74.84%

of Ediciones Financieras S.A., the publishing

company of the newspaper «Diario Financie-

ro», and 99.5% of Ediciones e Impresos S.A.,

editor of the magazine CAPITAL.

In 1996, the subsidiary Cristalerías de Chile

S.A. acquired an additional 49.9% interest in

the companies of the plastics sector, Cristal

Plásticos Ltda. (Crowpla) and Reicolite S.A.,

completing 99.9% of the holdings in both

companies which were later merged to form

a new company called Crowpla-Reicolite S.A.

Afterwards, in 2001, Cristalerías de Chile S.A.

and Embotelladora Andina S.A. established a

business venture in the plastic container bu-

siness through their respective subsidiaries,

Crowpla-Reicolite S.A. and Envases Multipack

S.A., forming the company Envases CMF S.A.

where they held equal ownership until 2012,

when Cristalerías de Chile sold it its share.

In the year 1996, the subsidiary S.A. Viña

Santa Rita acquired 39.4% of the share ca-

pital of Viña Los Vascos, which was later in-

creased to 43% in 1999. The main sharehol-

der, with a holding of 57%, is Les Domaines

Barons de Rothschild (Lafite) controlled by

the Rothschild family.

In 1999, the subsidiary Cristalerías de Chile

S.A. acquired 40% of Rayén Curá S.A.I.C., a

glass container production company located

in the province of Mendoza, Argentina, from

the Spanish company Vicasa S.A., which

maintains the remaining 60% shareholding

and is a subsidiary of the French multina-

tional Saint Gobain Emballage D.F.A. Rayén

Curá S.A.I.C. The latter maintains a technical

cooperation agreement with Saint Gobain,

which is the world’s second largest manufac-

turer of glass containers.

In 2001, Elecmetal formed the subsidiary ME

Global Inc. in Delaware, USA, with the objecti-

ve of carrying out its globalization project as

a supplier of steel spare parts. With this goal,

the company then successfully participated

in the acquisition process of the assets of ME

International, Inc. and ME West Castings, Inc..

Both companies were under the provisions of

Chapter 11 of the US Bankruptcy Law because

of the financial problems of their owners, GS

Industries Inc. and its holding company GS

Technologies Corp. The purchased assets are

primarily two high-technology furnaces loca-

ted at Duluth, Minnesota, and Tempe, Arizo-

na, USA.

Continuing with the development of the steel

spare-parts business, in 2003 Elecmetal was

awarded 60% of the property of the com-

pany Fundición Talleres S.A. in the National

and International Public Tender of the Fur-

nace Business of the Workshops Division ca-

rried out by Codelco, Chile. Subsequently, in

2007, Elecmetal completed the acquisition of

100% of its ownership.

In 2006, the subsidiary Cristalerías de Chi-

le initiated the operation of its second glass

container production plant in Chile, located

in the municipality of Llay-Llay, in the Fifth

Region.

ANNUAL REPORT 2013Chapter 1 / Historical Information

In 2007, Elecmetal and Esco Corp. (USA) sig-

ned a joint-venture agreement and establi-

shed the company Esco Elecmetal Fundición

Limitada, subsidiary that produces steel spa-

re parts for ground engaging to supply the

domestic and export market.

In 2009, as part of the development of new

products and markets, Elecmetal began the

sale of grinding balls for large mining com-

panies.

In 2011, Elecmetal and Changshu Longteng

Special Steel Co., Ltd., a grinding ball pro-

ducer, established a 50/50 Joint Venture in

China. In 2013 the new company, named “ME

Long Teng Grinding Media (Changshu) Co.

Ltd.” completed the second stage of a pro-

duction plant in Changshu, China, which will

produce 400,000 tons of grinding balls with

ME Elecmetal’s technology. Additionally, the

Board has agreed to continue with the third

phase of the project that should be comple-

ted in mid 2014.

In 2012 Elecmetal continued with its interna-

tional expansion program by incorporating

the subsidiary ME Elecmetal (China) Co., Ltd

in the city of Changzhou, China. In 2013 this

subsidiary initiated the construction of liners

for US$45 million. The latter will begin ope-

rating during the second semester of 2014

and will serve the markets of Asia, Africa and

Oceania.

15

CHAPTER 22013 Business Results

ELECMETAL (Consolidated) 01/01/2013 01/01/2012

Income Statement (MM$) 12/31/2013 12/31/2012

Revenue from explotation 516,017 460,522

Costs from explotation (380,755) (344,286)

Gross earnings 135,262 116,236

Distribution cost (10,787) (9,411)

Administration cost (60,883) (52,817)

Earnings from operational activities 65,396 55,219

Income in Associates 2,465 2,545

Taxes in earnings (15899) (15,533)

Earnings from discontinued operations 0 29,540

Total profit after taxes 46,469 65,207

16

2.1 2013 Business Results

The result for 2013 periodis a total profit of $46,469 million, figure that is not comparable to

the total profit of $65,207 million of the previous year that includes extraordinary earnings of

$29,540 million after taxes from the sale of Megavisión and its affiliates. If this extraordinary

effect is excluded, the total profit of 2013 increased by $10,802 million or 30.3% regarding

the previous year.

From total earnings of $46,469 million for the year, the amount of $37,021 million is attribu-

table to shareholders of the parent and $9,449 million attributable to non-controlling partici-

pants (minority interest).

Consolidated sales for 2013 reached $516,017 million, figure that is 12.1% greater than the

year 2012 ($460,522 million). The increase is due to greater sales in the metallurgic (19.7%),

wine (8.4%), and glass container (0.8%) businesses.

The exercises’ gross earnings were equivalent to $135,262 million, which represents an in-

crease of 16.4% in comparison to the year 2012. This can be explained by a greater gross

earning in the metallurgic, wine, and container businesses.

The earnings of the consolidated operational activities reached $65,396 million, figure that is 18.4%

greater than the previous year, of which $37,686 million are attributable to the metallurgic business

(increase of 11.8%), $19,314 million to the glass container business (increase of 14.2%), $8,625 mi-

llion to the wine business (increase of 39%), and a loss of $229 million in other businesses.

Income statement (MM$)

01/01/2013 01/01/2012

12/31/2013 12/31/2012

Revenue 284,855 238,021

Explotation Cost (226,279) (187,119)


Earnings from operational activities

37,686 33,712

17

In 2013, the participation in associated com-

panies (non-consolidated subsidiaries) repor-

ted a profit of $2,465 million, which is com-

parable to a profit of $2,545 million obtained

during the previous exercise.

The expense for income tax on earnings at

the close of 2013 is a charge of $15,899 mi-

llion (charge of $15,533 million in 2012).

In relation to the results by business area, the

analysis is as follows:

METALLURGIC BUSINESS

The sales revenue of the metallurgic busi-

ness, which includes the individual business

of Elecmetal, Fundición Talleres, and ME Glo-

bal (EE.UU.), in addition to the commerciali-

zation of products produced by third parties

under our specifications, reached $284,855

million in the year 2013, 19.7% greater than

the previous year. The increase in sales is

due to the activity in global mining where the

company is present in 35 countries and its

successful penetration in the new business

of grinding balls. The consolidated earnings

of operational activities of the steel business

were $37,686 million, which is comparable to

$33,712 million in 2012, product of the increa-

se in sales and operational efficiencies that

stem from executed extension and optimiza-

tion projects.

In relation to the development of the meta-

llurgic business, the advance of projects is as

follows:

i) ME Long Teng Grinding Media (Changshu)

Co. Ltd, the Chinese subsidiary with our local

partner Long Tengo Steel Co. Ltd., completed

the second phase of the plant of 400,000

tons of grinding balls, inaugurated in march

2012, during the fourth quarter of 2013. The

third phase is currently in full development;

the first line of the two contemplated has

been finished.

ii) In 2012 the Board approved an investment

of US$45 million plus work capital for the

construction of a special steels foundry in

the city of Changzhou, province of Jiangsu,

China.

The plant will have a capacity of 30,000

tons of spare parts for grinding equipment,

which will be mainly directed towards large

scale mining in the region of Asia, Africa, and

Oceania. The second semester of 2013 began

with the construction of the plant, which, to-

gether with the production of the equipment,

progresses as planned and should gradually

enter into production during the second se-

mester of 2014.


01/01/2013 01/01/2012

12/31/2013 12/31/2012

Revenue 109,822 108,948




19,314 16,915

18

iii) In regards to the Modernization Project

for the Rancagua plant, the engineering stu-

dies are being completed and the ground-

work has begun.

CONTAINER BUSINESS(Cristalerías de Chile individual)

In 2013 the sale of containers reached

$109,822 million, which is 0.8% greater than

sales in 2012 ($108,948 million). The gross

earnings of the container business were

$30,595 million, which is 14.2% greater than

2012 ($26,790 million).

This is mainly due to the increase in producti-

vity in operations and the reduction of ener-

gy costs and other production costs.

The earnings of operational activities were

$19,314 million in 2013, compared to $16,915

million the year before.

The total consolidated income of Cristalerías

de Chile as of December 31, 2013 was a profit

of $21,126 million, which is not comparable to

the profit of 2012 of $46,247 million, since

the latter includes extraordinary earnings

of $29,973 after taxes product of the sale

of Megavision and its affiliates carried out in

March 2012.

ANNUAL REPORT 2013Chapter 2 / 2013 Business Results


01/01/2013 01/01/2012

12/31/2013 12/31/2012

Revenue 121,535 112,132




8,625 6,207

SalesViña Santa Rita

01/01/2013 01/01/2012

12/31/2013 12/31/2012

Wine exports

M.boxes 2,841 2,665

MUS$ 104,400 94,241

Sales in the domestic market

MLts. 64,400 60,762

19

WINE BUSINESS(Viña Santa Rita)

Viña Santa Rita and its subsidiaries reached

revenue from sales of $121,535 million during

the year 2013, which represents an increase

of 8.4% in regards to 2012 and includes the

sale of wine in the domestic and export mar-

kets, the sale of liquors, and others.

In relation to consolidated exports, Viña San-

ta Rita and its subsidiaries exported, in the

period, a total of 2,841,000 boxes, amount

that is 6.6% greater than 2012. The avera-

ge FOB price per box was US$36.8 and the

valued export sales reached an amount of

US$104.4 million, which is 3.9% and 10.8%

greater, respectfully, to 2012. The main ex-

port markets for Viña Santa Rita and its sub-

sidiaries are the United States, Ireland, Scan-

dinavia, Canada, United Kingdom, Holland,

Japan, China, Brazil, and Colombia.

In the national market, the volume of sales

for 2013 reached 64.4 million liters, which re-

presents an increase of 6% in relation to the

previous year. At the same time, the avera-

ge sales price decreased in 0.8% in regards

to the previous year. The valued sales of the

domestic market reached $57,670 million,

which represents an increase of 5.2% in re-

gards to the previous period.

The gross earnings were $46,258 million,

which is 19.7% greater than the previous

year. The earnings of operational activities

were $8,625 million, which is 39% greater

than the gain of $6,207 million in 2012. DIs-

tribution Expenses increased 9% which are

explained becausee of an increase in expor-

tation and sales in the domestic market. Total

Administration and Sales Expenses Increa-

sed 16%, which are explained because of an

increase of total sales, investment in marke-

ting, expansion of commercial offices abroad

and because of greater expenses in wages

and severance payments due to the rationali-

zation of central expenses.

The total consolidated income of Viña Santa

Rita as of December 31, 2013 was a net profit

of $6,105 million ($3,115 million in 2012).

20

2.2 METALLURGIC BUSINESS

21

ME Elecmetal is a global company, leader in innovation and development of alloys, products

and service design, supplying comprehensive solutions to mining industry in more than 35

countries.

As a result of the consolidation of its strategic and global plan, ME Elecmetal has become one

of the main producers and retailers of steel parts in the global market. This plan includes:

acquisitions (ME Global Inc. and Fundición Talleres Ltda.); strategic alliances (particularly with

ESCO Corporation, USA; Ferry Capitain, France; Changshu Long Teng Special Steel Co. Ltd.,

China; and FUCASA, Mexico); territorial expansion, and the extension and innovation of its line

of products and services for mining.

ME Elecmetal is oriented into satisfying domestic and international demand of the following

groups of products and comprehensive solutions: spares for grinding equipment (liners in ste-

els and white irons for SAG mills, ball and bars); grinding balls; spares for grinding equipment

(wearing parts for rotating crushers, cones, jaws, impact, and others), and spares for ground

engaging equipment (knife systems, adaptors, points, and bail protectors for mechanical and

hydraulic shovels, front loaders, and others). Additionally, it manufactures pump components

for the transport of pulp and industrial applications, large castings for mining and industrial

machinery, and delivers high strength steel plates and repair and reconditioning services for

mineral processing crusher equipment, mills, pales, hoppers, melting pots, and other equip-

ment. By means of its lines of representation it offers a large variety of products and comple-

mentary solutions for mining applications, for example, in mills (PAR System equipment for

the handling of coatings, bolts and nuts Valley Forge), for grinders (bronze components and

others, epoxy resin backing), and for mining shovels, the leasing of pales, etc.

GROWTH STRATEGY

ME Global Inc., an affiliate incorporated in 2001 in the United States of America, was the ve-

hicle for the acquisition of the assets of the companies ME International, Inc. and ME West

Castings, Inc. in that country. As of 2002, ME Elecmetal initiated an optimization program

of these assets, introduction of new products and process technologies and organizational

development that have allowed for the attainment of the highest standards of the industry at

a global level.

In Chile, 60% of the property of Fundición Talleres Ltda., dedicated to the manufacturing and

commercialization of steel spares in the region, was acquired by means an international ten-

der process in 2004, completing 100% of the company’s property in 2007.

ESCO Corp., world leader in the manufactu-

ring of steel parts for ground engaging tools,

which celebrated its 100-year anniversary in

2013, has been the licensor of ME Elecmetal

since 1959 with a license and technical coope-

ration agreement to manufacture and com-

mercialize its products in Chile. This alliance

with ME Elecmetal was extended in 2007 to

a 50/50 Joint Venture, creating the affiliate

company “Esco Elecmetal Fundición Ltda.”

As part of the development of new products

and markets and its vision to deliver compre-

hensive solutions to its clients, ME Elecmetal

developed the technology, metallurgic as well

as process, for the elaboration of balls of spe-

cial steels, forged and laminated of superior

quality, used in conjunction with liners in mills

in the grinding process of large-scale mining.

Through exclusive manufacturing agree-

ments with Changshu Longteng Special Steel

Co., Ltd., its new products “ME Super SAG”

and “ME Ultragrind” began to be successfully

commercialized world-wide in 2009. In 2011,

ME Elecmetal and Changshu Longteng Spe-

cial Steel Co., Ltd. established, in China, the

50/50 joint venture company “ME Long Teng

Grinding Media (Changshu) Co. Ltd.” (“ME

Long Teng”) for the manufacturing of these

products that ME Elecmetal commercializes

worldwide.

ME Elecmetal has continued to deepen its

strategic alliance with FUCASA of Mexico,

which includes manufacturing, technical coo-

peration, and licensing agreements.

ANNUAL REPORT 2013Chapter 2 / Metallurgic Business

23

ME Elecmetal has developed important com-

mercial and strategic alliances with famous

international trademarks, in the form of re-

presentations that have been maintained for

many years. A clear example of the latter is

the representation of the trademarks Ferry

Capitain and CMD, of Groupe CIF of France.

The latter is an important conglomerate that

supplies the international heavy industry

from its seven plants located in France and

Germany, and that provides us large cast

components, such as: gears, pinions, crowns,

crusher bodies, mills, and mill caps. In addi-

tion, continuing with its permanent search of

new alliances, ME Elecmetal began to com-

mercialize, in the Chilean market a line of

“ME Elecmetal” high quality epoxic resins for

the application of backing in grinding equip-

ment. In relation to grinding equipment, the

company maintains the representation of the

liner bolts of the trademark “Valley Forge”

and of the equipment for the manipulation

and installation of liners of the trademark

“PAR Systems”, both North American trade-

marks of recognized prestige in the global

industry.

IMPORTANT INVESTMENT PLAN

ME Elecmetal is carrying out an important

investment plan to supply the demand of the

mining activity at a global level.

In 2012 the subsidiary “Esco Elecmetal” inau-

gurated a state of the art steel foundry to su-

pply ESCO products from Chile exclusively to

the Chilean and Latin American market. The

new plant, located in Santiago, manufactu-

res a market leading line of ground engaging

products.

In addition, subsequent to the launching of a

pilot plant in 2010, the new affiliate in China,

“ME Long Teng”, initiated in 2011 the cons-

truction of a modern manufacturing plant of

grinding balls, in the city of Changshu, China,

with a total production capacity of 400,000

MTons of grinding balls that ME Elecmetal

will directly commercialize world-wide. The

second stage of this plant was inagurated in

2013 and the Board approved the investment

to continue with the following phase that

should begin operating in mid-2014.

In relation to projects that are in a development

stage, the new subsidiary “ME Elecmetal (Chi-

na) Co., Ltd.” is advancing in the construction

of a special steel foundry in the city of Chan-

gzhou, province of Jiangsu, China, which

will have a capacity of 30,000 tons of spa-

re parts for grinding equipment, production

which will be directed towards large scale mi-

ning in the region of Asia, Africa and Oceania.

The Project contemplates an investment of

US$45 million and is expected to be comple-

ted during the first semester of 2014. On the

other hand, in Chile, the company is initiating

the modernization of its special steel foundry

plant and machine shop in Rancagua.

ME Elecmetal has five foundries in full pro-

duction, in which it operates with the highest

standards in quality, productivity, and protec-

tion of the environment, reaching 100,000

MTons of capacity of castings of steel in wear

24

parts. Additionally, in Cananea, Mexico, the FUCASA foundry operates with a license of ME

Elecmetal. On the other hand, ME Elecmetal established manufacturing agreements of some cas-

ting parts selected for grinding equipment with three foundries in China, which elaborate

these products in accordance with the standards of quality, industrial security, protection of

the environment, and technical specifications of ME Elecmetal.

TERRITORIAL EXPANSION AND GLOBAL COVERAGE

ME Elecmetal has a worldwide distribution network with technical and sale service capability

that covers the five continents. The company is capable of ensuring the satisfaction of its

client’ needs, currently distributed in more than 35 countries, and to work together with them

in the design of solutions and productivity improvements by means of products and services

that meet the highest standards of quality and innovation technology.

In the Asian and African markets, jointly with the visits to the clients of the region by ME Elecmetal’s

commercial personnel, we operate through representation alliances and with subsidiary offi-

ces in Mongolia and Australia. On the other hand, in order to penetrate the markets of Russia

and countries of the Ex Soviet Union (CIS: Commonwealth of Independent States) the com-

pany maintains a representation agreement with FLSmidth Knelson from Russia. In addition,

in Latin America, the company has new affiliate offices in Peru, and has subsidiary offices in

Brazil.

DELIVERY OF COMPREHENSIVE SOLUTIONS TO CLIENTS

The prestige of ME Elecmetal’s quality is recognized worldwide and stems from a unique com-

bination of designs and alloys tailored to the needs of each client with the strictest technical

standards, which make it possible to achieve returns that significantly reduce mineral proces-

sing costs and other materials. This value proposal is much appreciated by our clients, with

whom we have been able to establish long-term strategic relationships that have enabled us

to lead in the market of wear parts for global mining.

An example of this is the leadership obtained in the market of wear components for crushing

SAG. In this market, excluding China and Russia/CIS (where the company has just started to

penetrate), ME Elecmetal boasts more than 50% share worldwide.


26

The technical service delivered by ME Elecmetal,

which generates an effective differentiation

with the competition, is aimed at finding the

least effective cost for its clients and inclu-

des advisory services in the optimization of

loading processes and treatment of minerals

and other materials, new designs, and on site

visits, with highly trained and highly expe-

rienced staff.

In addition to working jointly with clients in

identifying opportunities, finding innovative

solutions, and applying improvements in pro-

duction processes and maintenance practi-

ces, the benefit sales strategy allows for the

establishment of real strategic alliances with

clients. As part of this philosophy, Elecmetal

ME’s VAES program (“Value Added Enginee-

ring Services”) includes a series of activities

focused on six key areas of the mining opera-

tion: Production Increase, Greater Equipment

Availability, Effective Cost Reduction, Envi-

ronment Protection, Training, and Security.

Noteworthy is the introduction in the Chi-

lean market of ESCO’s adapter system and

Hammerless tip, which represents major im-

provements in the above-mentioned areas.

This system’s design incorporates significant

productive advantages for clients, which

translate into higher yields, important re-

duction of risks in the installation operation

and removal of items of wear, and effective

reduction of time devoted to these activities.

In this market of wear products for ground

engaging equipment, clients have recognized

the quality, safety, and ease of installation of

our products. In the haulage blade market for

large-scale mining, ME Elecmetal maintains a

leadership position in Chile, achieving a mar-

ket share of approximately 65%.

Complementing the line of business and com-

prehensive services of its clients, ME Elecmetal

consolidated its new business area of Inspec-

tion and Early Alert Service that delivers ins-

pections of mining equipment, 3D laser mea-

surements, predictive/symptomatic analysis,

and the most advanced technology available

in the market with ultrasound, thermography,

and laser scanning equipment and a highly

qualified technical team.

All these developments and the continued

emphasis on high quality products and ser-

vice excellence are part of the innovation

program that is present in the ongoing con-

duct of ME Elecmetal’s staff. A reflection of

this was the award granted to ME Elecmetal

in 2011 by Anglo American, as part of their

“Supplier Awards” program. Anglo American

grants this annual award worldwide in three

categories in recognition of the excellence of


27

its most outstanding suppliers. ME Elecmetal

was selected amongst the providers that su-

pply at different work sites worldwide, and

obtained the award of Best Global Supplier

in the Innovation Category. This achievement

recognizes the positive results obtained by

Anglo American when implementing new de-

signs and alloys proposed by ME Elecmetal

through the new benefit sales philosophy

VAES. Working together with the client, the

technical knowledge and the application of

world-class simulation software by our Engi-

neering and Design team, were fundamental

to increase the up time of the mills, increa-

se the processing rate and the quality of the

product, obtaining gains of service life and

lower accident exposure of workers, amongst

other benefits, and which constitute innova-

tive solutions and best practices for the mi-

ning market.

ORGANIZATIONAL DEVELOPMENT

ME Elecmetal’s Steel business is comprised

of close to 1,100 individuals, which are distri-

buted mainly in Chile, U.S.A., and China and

also in Australia, Brazil, Canada, and Mongo-

lia.

During the year, ME Elecmetal continued de-

veloping its efforts of organizational align-

ment and of motivation and commitment of

its staff to achieve its vision of the future: “to

be a globally competitive supplier, recognized

for its excellence and leadership in delivering

comprehensive solutions that add value to

mining processes and other target markets.”

Towards this end, ME Elecmetal advances ful-

filling its corporate mission of satisfying the

needs and exceeding expectations of its sha-

reholders, clients, employees, and communi-

ties where it operates, by providing compre-

hensive solutions to the market.

The values framework for management is ba-

sed on the fundamental principle of respect

for an individual’s dignity, and consists of a

set of corporate values such as comprehen-

sive human development, proactive search

for excellence, focus on the client, creativity

and innovation, teamwork and cooperation,

responsibility and integrity, and the commit-

ment to the environment. In this manner, ME

Elecmetal accords the highest priority to esta-

blishing work environments where individuals

can display their full potential, their creativity,

and initiative; so that they feel they are fulfi-

lling themselves through their job. This is the

essence of ME Elecmetal’s Path to Excellence.

28

On the other hand, during 2013, the company

continued to promote their people manage-

ment policies aimed at promoting the perso-

nal and professional development of its colla-

borators, security in the work place, and the

improvement of the quality of life of workers

and their families.

It is important to highlight the excellent labor

relations that exist in the plants, the spirit

of understanding amongst workers and ma-

nagement, and the collaboration and com-

promise of all to face challenges. Like years

before, the Great Place To Work survey was

carried out; this tool is used as the basis for

identifying and implementing specific pro-

grams for improving the organizational envi-

ronment. This is done by the company at a

general level with the help of external consul-

tants as well as the work teams.

FINANCIAL RESULTS

The year 2012 constituted an all-time record

in sales and profits for the steel business,

achieving active sales worldwide and optimal

levels of production as a result of expansion

projects, new plants, and new products and

services.

In regards to ME Elecmetal’s financial re-

sults, sales revenue of the metallurgic bu-

siness, which includes Elecmetal, Fundicion

Talleres, and ME Global (U.S.A.) in addition

to the commercialization of products produ-

ced by third parties under our specifications,

reached $284,855 million in 2013, a figure

19.7% higher than the year 2012. The increa-

se in sales is related to the global mining

activity where the company is present in 35

countries and the successful penetration of

the ball grinding business. The earnings of

the consolidated operational activities of the

steel business were $37,686 million, compa-

red to $33,712 million in 2012, product of the

increase in sales and operational efficiencies

originating from expansion and optimiza-

tion projects that have been carried out. The

EBITDA was $45,196 million in 2013, compa-

red to $40,151 million in 2012.

As occurred the year before, it’s difficult to

predict the evolution of the global economy

due to the growing environment of uncer-

tainty. However, all the matter experts agree

in predicting continuous growth in global

mining activity, the main destination of ME

Elecmetal’s goods and services. The com-

pany has made significant investments and is

currently developing projects to successfully

meet demand, maintaining high standards of

client satisfaction and loyalty, and good ma-

nagement results.


30

2.3 GLASS CONTAINER BUSINESS

31

Cristalerías de Chile is the country’s leader in the production and sale of glass containers,

with more than 100 years’ experience, supplying the wine, beer, soft drink, juices, mineral

water, and food markets.

In the year 2013, the glass container business registered sales for $109,822 million, which

represents an increase of 0.8% in regards to the previous year ($108,948 million).

The sale of containers for the wine industry, the company’s principal market, measured in

tons, showed an increase in relation to 2012 due mainly to the increase in the sale of wine

containers for the domestic market and the sale of containers for the sparkling wines market,

which were compensated in part by a reduction in the sale of containers for wine exports. It

is important to point out that in 2013 exports of bottled wine at a national level reached 48.4

million boxes, which represents a 0.81% decrease.

Regarding bottles for non-alcoholic drinks, sales of returnable containers and non-returnable

containers showed similar level to the year before.

In relation to the beer market, the consumption of beer showed an increase in 2013. The vo-

lume of sales of returnable container increased as a result of the continuation of the launch

of a 1,200 cc bottle the year before. The sale of non-returnable containers experienced an

important increase due to increased sales of individual formats.

The sales of bottles for pisco and liquor showed a decrease in regards to the previous year,

due mainly to decreased sales of containers for rum, as a result of a decrease in consumption

for the term.

The sales of containers for the food sector showed an increase over the previous year, due

mainly to the increase in sales of jars for infant food and bottles for olive oil.

In relation to the monetary results of the glass container business, the gross earnings for the

period were $30,595 million, which is 14.2% greater than the gross earnings of 2012. This

greater result is due mainly to the increase in revenue and improvements in the Company’s

productivity with a reduction in energy costs and other production costs. The earnings of

operational activities reached $19,314 million, compared to $16,915 million in 2012.

In commercial matters, the company carried out different activities with the objective of providing

a better service to its clients, studying, and promoting the development of new projects of glass

containers, and highlighting benefits of the latter. Some of the most important information:

• Working jointly with clients in new con-

tainer projects and the support with

marketing and materials in sale points

for the final product. Noteworthy in this

regard is the second stage of develop-

ment of a line of lightweight containers

for wine, Ecoglass.

• The sponsorship of important wine,

beer and food fairs, where Cristalerías

de Chile’s clients had a prominent par-

ticipation.

• Support to different activities oriented

towards the promotion of Chilean wine

abroad.

• Continuous massive campaign for the

recycling of glass containers and, as in

previous years, the collaboration with

Corporación de Ayuda al Niño Quema-

do – COANIQUEM -, an institution of re-

cognized prestige in Chile.

• Continuation of the publication of “En

Vitrina” a magazine directed to our

clients, which includes matters relative

to the different industries that use glass,

information is provided regarding new

products packaged in glass and gives

company information. This continues

to be an excellent contact opportunity

with clients and has allowed for the in-

crease and improvement of communi-

cation and information towards them.

In relation to investments, during the year

the company carried out investments for

approximately US$15 million in fixed assets

for the glass container business, mainly in

new lines of container transportation imple-

mented in Furnace C, Padre Hurtado Plant,

with the objective of increasing the speed

and improving the management of conic and

other shaped containers. Additionally, invest-

ments were made in a decorating line, which

will allow for delivering new container op-

tions for clients.

ANNUAL REPORT 2013Chapter 2 / Container Business

33

These investments are part of the Company’s

plan to incorporate the most modern techno-

logy and the necessary equipment for the

manufacturing of containers of the highest

international quality in order to be in optimal

conditions to supply the domestic and export

market demand.

The Company has a total production capacity

of over 500,000 annual tons to deliver the

best quality and opportunity, granting the

best service.

In regards to total results of the Company,

Cristalerías de Chile S.A. mainly consolidates

its results with S.A. Viña Santa Rita, Edicio-

nes Chiloé S.A., and Cristalchile Inversiones

S.A..

The total consolidated results of Cristalerías

de Chile as of December 31, 2013 was a net

profit of $21,126 million, which is not compa-

rable with that registered in 2012 of $46,247

million, since the latter includes extraordi-

nary earnings of $30,000 million after-taxes

from the sale of Megavisión S.A. in March

2012.

From the total earnings of 2013, equivalent

to $21,126 million, the amount of $18,899 mi-

llion is attributable to the shareholders of the

parent and $2,227 million are attributable to

non-controlling participants (minority inte-

rest).

During 2013 the Company’s consolidated sa-

les reached $231,105 million, which are com-

parable to $222,685 million in 2012. This in-

crease of 3,8% is mainly due to the increase

in sales of Viña Santa Rita (8.4%) and glass

containers (“Cristalchile Vidrio”) (0.8%).

Gross consolidated earnings of the exercise

reached $78,391 million that is comparable

to $67,772 million in 2012. The income tax for

the term is a charge of $4,133 million (charge

of $5,432 million in 2012).

34

2.4 WINE BUSINESS

35

Elecmetal participates in the wine business through direct and indirect ownership in So-

ciedad Anonima Viña Santa Rita. It commercializes Chilean wines with its own trademark,

in addition to the trademark Viña Carmen, Terra Andina, and Nativa, and commercializes

wines of Argentinian origin mainly with the trademark Doña Paula.

Viña Santa Rita disputes the leadership in sales in the domestic market and is, jointly with

its subsidiaries, the third wine group in valued exports of bottled wine.

During 2013 the consolidated sales of Viña Santa Rita and its subsidiaries reached $121,535

million, which represents an increase of 8.4% to 2012.

Export sales reached US$104.4 million dollars, which represent an increase of 10.8% in

regards to 2012; sales in the domestic market reached $57,670 million, 5.2% greater than

the sales of the prior year, and the revenue of other sales were $11,723 million, 1.9% grea-

ter than the year before.

In relation to exports, in 2013 Viña Santa Rita and its subsidiaries exported a total of 2,841

million boxes, a figure that is 6.6% greater than the previous year.

In 2013 the total average consolidated price of exports was US$36.8 per box, price that is

3.9% higher than the year 2012. For the principal trademarks, the average price of wines

was: Santa Rita, US$38.6 per box; Viña Carmen US$41.0 per box; and Viña Doña Paula

US$43.2 per box.

The main export markets for Viña Santa Rita and its subsidiaries are: United States of

America, Ireland, Scandinavia, United Kingdom, Holland, Japan, China Brazil, and Colom-

bia.

In relation to sales in the domestic market, physical sales reached 64.4 million liters,

which represents an increase of 6% in respect to the previous year, which can be explai-

ned by the increase in wine consumption domestically. In addition, the sale prices decrea-

sed 0.8%.

The year 2013 was very important for the wines of Viña Santa Rita and its subsidiaries in

terms of expert recognition and international coverage. Amongst these is the recognition

of Casa Real as Wine Legend by the prestigious British magazine Decanter. With this pu-

blication. Chile entered the wine’s big leagues for the first time, this being the first Chilean

and South American wine ever recognized as such, placing itself with Chateau Margaux,

36

Vega Sicilia, Mouton-Rothschild, Lafite, and Dom Pérignon, amongst others. On the other

hand, Santa Rita’s Triple C was selected amongst the 100 best wines of the world by the

American publication Wine Spectator. Amongst the awards obtained in international wine

competitions are: Gran Medalla de Oro for Nativa Terra Reserva Sauvignon Blanc 2013,

Casa Real Reserva Especial 2009, and Carmen Winemaker’s Reserve Carmenere 2009

in the Concours Mondial de Bruxelles Chile. Also this year, the German Contest Mundus

Vini where six medals were obtained and the recognition for the best Chilean red wine for

Carmen Reserva Grande Vidure – Cabernet Sauvignon 2011.

In regards to communications and public relations, diverse activities and publications

were developed at an international level, amongst which its worth mentioning the disse-

mination of the second educational seminar South American Wine Workshop in London in

January 2013. The latter featured prominent personalities of the written press in the UK

and achieved significant international coverage. Within the framework of this Seminar a

dinner and wine tasting was heldwith great writers and critics of international wine, Mas-

ter of Wine. The event included a blind tasting of Cabernet Sauvignons of the world with

the best exponents of this variety, amongst which were Santa Rita Casa Real and Carmen

Gold Reserve. International critics praised both the execution of this event and the Pre-

mium sample that was presented.

In regards to investments, during 2013 Viña Santa Rita invested 8.5 million dollars mainly

in the areas of agriculture, enology, and infrastructure with impact in improvements in

productivity and the concentration of operations. This investment aims at sustaining Viña

Santa Rita’s strategic plan, oriented towards improving the enological efficiency, obtai-

ning greater self sufficiency of fine grapes and increasing the production of high quality

wine.

In the area of agriculture, Viña Santa Rita continued with its program of planting fine

varieties mainly in the areas of Alhué, Palmilla, Pumanque, and Los Hualpes. In addition,

investments were made in anti-hail nets, irrigation systems, and deep wells, in addition

to investments in different agricultural machineries to automate processes and increase

productivity.

In relation to the financial results of the year, the consolidated gross earnings of Viña

Santa Rita were of $46,258 million, which is 19.7% greater than the previous year. The

earnings of operational activities were $8,625 million, 39% greater to the earnings of

2012, which were equivalent to $6,207 million. The increase in the results is due to the in-

crease in sales and the higher gross margins, which increased from 34.5% the year befo-

ANNUAL REPORT 2013Chapter 2 / Wine Business

re to 38.1% in 2013. The latter is a result of

greater average price in the export market

and reduced unitary cost in both the local

and export market.

Distribution costs increased 9% due to in-

creased shipments abroad and sales in the

domestic market; administration costs and

total sales increased in 16%, which is main-

ly explained by the growth of total sales

and also product of a greater investment

in marketing, both nationally as well as in-

ternationally, the opening and expansion

of commercial offices abroad and because

of greater costs in salaries and severance

payment due to the rationalization of cen-

tral costs.

Viña Santa Rita registered an investment

in subsidiaries for $497 million, which can

be explained mainly by the result of Viña

Los Vascos S.A., whose controlling share-

holders with 57% is Les Domaines Barons

de Rothschild (Lafite) and where Viña San-

ta Rita is the owner of the remaining 43%.

During the year 2013 Viña Los Vascos sold

420 thousand boxes, which is 6.1% greater

than 2012 with an average Price of US52.4

per box, in comparison to US$51 from the

previous exercise. The result recognized by

Viña Santa Rita was a profit of $479 million

in 2013 ($535 million is 2012).

The total consolidated results of Viña San-

ta Rita as of December 31, 2013 were a net

profit of $6,105 million ($3,115 million in

2012).

38

2.5 COMMUNICATIONS BUSINESS

39

Since 1989 ELECMETAL participates in the

media and communications area via Cris-

talerías de Chile S.A., which, through its sub-

sidiary Ediciones Chiloé S.A., is present in the

written news business with “Diario Financie-

ro” and in the editorial with the magazines

“CAPITAL”,“ED”, and others.

EDICIONES FINANCIERAS S.A.

Diario Financiero, which celebrated its 25-

year anniversary this year, is the most read

business newspaper by executives in Chile,

according to the reading study carried out

annually by Ipsos Chile.

The printed media industry is experiencing

a process of big changes in reading habits,

transitioning from paper to digital. Notwith-

standing the increase in total readership,

sales from marketing decreased for a second

consecutive year, estimating a reduction of

4.1% this exercise.

During 2013 the company had income for

$4,856 million and the final result was a loss

of $207 million (loss of $31 million in 2012).

EDICIONES E IMPRESOS S.A.

Ediciones e Impresos S.A. publishes the busi-

ness magazine “CAPITAL” and the decoration

and design magazine “ED”, both trademarks

are leaders in their corresponding focus

groups.

“CAPITAL” in the most read magazine by

Chilean executives, in accordance to a study

carried out annually by Ipsos Chile, in 2013 it

won three Mag awards, which distinguish the

best in the magazine industry.

In 2013 the company launched the first digi-

tal magazine of sustainability and innovation,

“The Note”, a niche magazine amongst exec-

utives.

The magazine “ED” on the other hand won

four Mag Awards. The award highlights Bazar

ED Online, the company’s first ecommerce

site.

The company’s revenue increased to $3,988

million and the final income of the period was

a profit of $278 million (profit of $339 million

in 2012).

41

Consolidated Financial Statements 2013CHAPTER 3

Consolidated Financial Statements 2013 41

Classified Statement Of Financial Position 42

Incomes Statement By Function 44

Comprehensive Income Statement 45

Direct Cash Flow Statement 46

Independent Auditors Report 48

Related Companies 50

Main Related Companies 50

Summary Of Financial Statement Of Main Subsidiaries 55

Statement of Liability 59

42

CONSOLIDATED FINANCIAL STATEMENTS

Assets 12-31-2013 12-31-2012

Current Assets

Cash and cash equivalents 63,472,894 46,320,018

Other current financial assets 24,500,705 17,738,116

Other non-financial assets, current 1,968,342 2,713,778

Trade and other receivables, current 139,328,515 108,579,755

Receivable from Related Entities, current 4,141,126 17,240,433

Inventory 146,303,462 144,646,072

Biological assets, current 5,937,851 5,240,875

Tax assets, current 14,241,850 12,403,683

Total current assets different from assets or groups of assets for their for their disposal classified as maintained for sale or maintai-ned for distribution to owners

399,894,745 354,882,730

Non-current assets or groups of assets for their disposal classified as maintained for sale

0 0

Non-current assets or groups of assets for their disposal classified as maintained for distribution to owners

0 0

Non-current assets or groups of assets for their disposal classified as maintained for sale or maintained for distribution to owners

0 0

Total current assets 399,894,745 354,882,730

Non-current assets

Other financial assets, non-current 3,621,510 13,695,726

Other non-financial assets, non-current 4,535,992 4,880,456

Receivables, non-current 799,021 114,316

Non-current Inventory 0 0

Receivable from Related Entities, non-current 0 0

Investments accounted using equity method 47,111,1530 44,218,6860

Intangible assets different from capital gain 9,428,466 7,592,320

Capital gain 4,451,237 4,451,237

Property, Plant and Equipment 240,678,153 233,517,796

Biological assets, non-current 24,708,852 25,138,418

Investment property 2,361,041 2,421,429

Non-current tax assets 0 0

Deferred tax assets 6,201,211 5,484,668

Total non-current assets 343,896,636 341,515,052

Total Assets 743,791,381 696,397,782

CLASSIFIED STATEMENT OF FINANCIAL POSITION

43

Equity and Liabilities 12-31-2013 12-31-2012

Liabilities

Current Liabilities

Other financial liabilities, current 30,401,923 9,588,931

Trade and other payables, current 76,451,433 58,942,126

Payables to Related Parties, current 3,277,328 1,611,566

Other provisions, current 734,722 686,776

Liabilities from taxes, current 11,271,979 23,389,222

Provisions of employee benefits, current 7,314,317 6,854,038

Other non-financial liabilities, current 3,265,111 4,022,801

Total current liabilities different from the liabilities included in the groups of assets for their disposal classified as being maintained for its sale

132,716,813 105,095,460

Total current liabilities 132,716,813 105,095,460

Non-current liabilities

Other financial liabilities, non-current 182,529,841 166,981,948

Other Payables, non-current 19,167 18,845

Payables to Related Parties, non-current 0 0

Other provisions, non-current 204,484 204,484

Deferred tax liability 22,306,499 21,410,634

Provisions for employee benefits, non-current 9,241,360 10,006,097

Other financial liabilities, non-current 3,550,250 1,791,227

Total non-current liabilities 217,851,601 200,413,235

Total liabilities 350,568,414 305,508,695

Equity

Share capital 23,024,953 23,024,953

Retained earnings (losses) 246,461,550 238,587,019

Other reserves (2,031,857) (4,907,257)

Total equity attributable to the shareholders of the parent 267,454,646 256,704,715

Non-controlling interest 125,768,321 134,184,372

Total equity 393,222,967 390,889,087

Total de equity and liabilities 743,791,381 696,397,782

44

INCOME STATEMENT BY FUNCTION

Income Statement by Function01-01-2013 01-01-2012

12-31-2013 12-31-2012

Profit (loss)

Revenue from ordinary activities 516,016,883 460,522,388

Cost of sales (380,754,673) (344,286,435)

Gross profit 135,262,210 116,235,953

Other income, by function 4,419,753 3,249,706

Distribution Costs (10,787,190) (9,411,041)

Administration costs (60,883,484) (52,816,502)

Other expenses, by function (1,759,277) (1,111,446)

Other earnings (loss) (855,930) (927,599)

Earnings (loss) from operational activities 65,396,082 55,219,071

Financial revenue 2,121,693 3,617,576

Financial costs (8,618,929) (7,308,262)

Participation in earnings (loss) of associates and joint businesses that are accounted using the equity method

2,465,445 2,545,400

Exchange rate differential 3,603,699 (207,674)

Results for indexation units (2,599,285) (2,667,157)

Earnings (loss), before taxes 62,368,705 51,198,954

Expenses from income tax (15,899,410) (15,532,602)

Earnings (loss) from continued operations 46,469,295 35,666,352

Earnings (loss) from discontinued operations 0 29,540,245

Earnings (loss) 46,469,295 65,206,597

Earnings (losses), attributable to

Earnings (loss), attributable to shareholders of the parent 37,020,697 43,577,071

Earnings (loss), attributable to non-controlling interest 3,743,047 21,629,526

Earnings (loss) 46,469,295 65,206,597

Earnings per share

Earnings per basic share

Earnings (loss) per basic share in continued operations 1,060,94 814,30

Earnings (loss) per basic share in discontinued operations 0,00 674,43

Earnings (loss) per basic share 1,060,94 1,488,73

ANNUAL REPORT 2013Chapter 3 / Consolidated Financial Statements

45

COMPREHENSIVE INCOME STATEMENT

Comprehensive Income Statement 01-01-2013 01-01-2012

12-31-2013 12-31-2012

Earnings (loss) 46,469,295 65,206,597

Components of other comprehensive income, before taxes

Differences currency adjustments

Earnings (loss) from differences currency adjustments, before ta-xes

3,743,047 (6,128,118)

Other comprehensive income, before taxes, differences from currency adjustments

3,743,047 (6,128,118)

Cash flow hedges

Earnings (loss) from cash flow hedges, before taxes (180,867) 38,613

Other comprehensive income, before taxes, cash flow hedges (180,867) 38,613

Other comprehensive income, before taxes, earnings (loss) from revaluation

(444,058) (170,860)

Other comprehensive income, before taxes, earnings (loss) from actuarial defined benefit plans

(242,722) 0

Participation in the other comprehensive results of associates and joint businesses that are accounted using the equity method

0 277,910

Other components of other comprehensive income, before ta-xes

2,875,400 (5,982,455)

Other Comprehensive Income 2,875,400 (5,982,455)

Total Comprehensive Income 49,344,695 59,224,142

Comprehensive income attributable to

Comprehensive income, attributable to shareholders of the parent 39,896,097 37,594,616

Comprehensive income, attributable to non-controlling interest 9,448,598 21,629,526

Total Comprehensive income 49,344,695 59,224,142

46

DIRECT CASH FLOW STATEMENT

Direct Cash flow Statement01-01-2013 01-01-2012

12-31-2013 12-31-2012

Cash flow from (utilized in) operational activities

Types of charges by operational activities

Charges from the sale of goods and the provision of services 564,832,567 507,434,802

Types of payments

Payments to suppliers for the supply of goods and services (401,952,468) (375,378,917)

Payments to and on behalf of employees (73,552,122) (64,431,124)

Other payments by operational activity (14,660,581) (8,971,883)

Net cash flows from (used in) operational activities 74,667,396 58,652,878

Dividends 132,570 2,113,718

Paid interest (8,395,045) (7,003,019)

Interest received 2,488,936 3,684,333

Reimbursed income tax (paid) (17,684,959) (10,212,713)

Other case entries (outflows) 330,828 (948,948)

Cash flow from (used in) operational activities 51,539,726 46,286,249

Cash flows from (used in) investment activities

Cash flows from loss of control of subsidiaries or other business 0 88,829,218

Cash flow used to gain control of subsidiaries or other businesses 0 (7,931,652)

Cash flows used in the purchase of non-controlling interest (145,799) (268,889)

Other charges for the sale of interest or debt instruments of other entities

55,543,003 114,938,595

Other payments to acquire interest or debt instruments of other entities

(49,064,366) (90,945,537)

Other charges for the sale of interest in joint businesses 13,125,000 0

Other payments to acquire interest in joint businesses (4,621,970) (3,062,104)

Debt to related entities 0 (2,200,930)

Amounts from the sale of property, plant and equipment 87,418 105,760

Purchase of property, plant, and equipment (25,732,567) (40,384,035)

Purchase of intangible assets (2,185,126) (99,453)

Purchase of other long term assets (2,017,085) (887,567)

Amounts from government subsidies 837,391 0

Payments derived from futures, forwards, options, and swaps agreements

(1,517,178) (5,842,727)

Charges from futures, forwards, options, and swaps agreements 274,340 7,935,623

Charges to related entities 0 2,772,224

Other cash outflows (419,527) (102,857)

Net cash flows from (used in) investment activities (15,836,466) 62,855,669


47

Cash flows from (used in) financing activities

Payments from other equity participations 0 (379,179)

Amounts from long term debt 3,849,570 5,067,621

Amounts from short term debt 11,227,658 39,400,913

Total amounts from debt, classified as financing activities 15,077,228 44,468,534

Debt of related entities 1,077 595

Payments of debt (20,917,252) (49,569,172)

Dividends paid (34,589,595) (107,445,793)

Other sources of financing (Inflows from Bond Emissions) 34,093,812 0

Other cash outflows (14,856,119) 0

Net cash flows from (used in) financing activities (21,190,849) (112,925,015)

Net increase (decrease) in cash and cash equivalents, before the effect of changes in exchange rate

14,512,411 (3,783,097)

Effects of the variation in the exchange rate over cash and cash equivalents

2,640,465 (167,166)

Net increase (decrease) of cash and cash equivalents 17,152,876 (3,950,263)

Cash and cash equivalents at the beginning of the term 46,320,018 50,270,281

Cash and cash equivalents at the end of the term 63,472,894 46,320,018

48

INDEPENDENT AUDITORS REPORT

Sirs.

Directors and Shareholders

Compañía Electro Metalúrgica S.A.:

Report on the consolidated financial statements

We have audited the enclosed consolidated financial statement of Compañía Electro Metalúrgica S.A.

and subsidiaries, which include the consolidated statement of the financial situation as of December

31, 2013 and 2012 and the corresponding consolidated statement of comprehensive income, of chang-

es in equity and cash flows for the years ending on those dates, and the corresponding notes to the

consolidated financial statements.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and reasonable presentation of these consolidated

financial statements in accordance with International Standards of Financial Information. This respon-

sibility includes the design, implementation, and maintenance of the pertinent internal controls for the

preparation and reasonable presentation of these consolidated financial statements so that they are

free from significant incorrect representations, whether due to fraud or error.

Responsibility of the Auditor

Our responsibility consists of issuing an opinion regarding these financial statements, based on our

audits. We have not audited the financial statements of the indirect subsidiaries (consolidated) Viña

Doña Paula S.A. and Sur Andino Argentina S.A., which show total assets that represent 2.2% and

2.4% as of December 31, 2013 and 2012 and a total revenue that represents a 2% and 1.7% respect-

fully for the years ending on those dates. Neither have we audited the financial statements of the

associate (indirect) Viña Los Vascos S.A., the investment as of December 31, 2013 and 2012 that was

of M$15,159,245 (2.03% of total assets) and of M$13,189,719 (1.9% of total assets) respectfully and

its accrued net income was M$478,586 (1% of the total results) and M$534,738 (0.8% of the total

results) respectfully for the years ending on those dated. The financial statements of Viña Doña Pau-

la S.A., Sur Andino Argentina S.A., and Viña Los Vascos S.A., were audited by other auditors whose

reports have been supplied to us and our opinion expressed herein, referred to the amounts included

in relation to such companies, is based solely on the reports issued by those auditors. We conducted

our audits in accordance with generally accepted auditing standards in Chile. Those standards require

that we plan and perform our job with the objective of obtaining a reasonable degree of security that

the consolidated financial statements are free from of material misstatement. An audit involves car-

rying out procedures to obtain auditing evidence on the amounts and revelations in the consolidated


49

financial statements. The selected procedures depend on the judgment of the auditor, including the

evaluation of the risks of material misstatements in the consolidated financial statements, whether

due to fraud or error. When carrying out these risk evaluations, the auditor considers the pertinent

internal control for the preparation and reasonable presentation of the consolidated financial state-

ments of the entity with the objective of designing auditing procedures that are appropriate to the

circumstances, but without the intention of expressing an opinion on the effectiveness of the internal

control of the entity. Consequently, we do not issue an opinion of that nature. An audit includes, as

well, evaluating how appropriate the accounting policies that were used are, and the reasonability of

the material accounting estimations carried out by management, as well as an evaluation of the gen-

eral presentation of the consolidated financial statements.

We believe that the auditing evidence that we have obtained is sufficient and appropriate to provide a

basis to support our auditing opinion with exceptions.

Basis for the opinion with exceptions

The company maintains registered as of December 31, 2013 and 2012, its indirect investment of 40%

in Rayen Curá S.A.I.C., which represent a 1.66% and a 1.83% respectfully of its total consolidated

assets, on the basis of financial statements prepared in their origin, in accordance with Generally

Accepted Accounting Principles in Argentina. The accounting treatment of these investments is not

in accordance with International Financial Reporting Standards. The effects of these deviations in the

Company’s consolidated financial statements, had the investments been valued according to Interna-

tional Financial Reporting Standards, have not been determined.

Opinion with exceptions

In our opinion, based on our audits and the reports of the other auditors, and except for the effects

of not booking the investments mentioned above of “Basis of the Opinion with Exceptions”, the con-

solidated financial statements referred to above present fairly, in all material respects, the financial

position of Compañía Electro Metalúrgica S.A. and subsidiaries as of December 31, 2013 and 2012, and

the results of their operations and cash flows for the years ending on those dates, in accordance with

International Financial Reporting Standards.

Alejandra Vicencio S.

KPMG Ltda. Santiago, March 4, 2014

50

In accordance with current regulations of the Superintendence of Securities and Insurance, a

detailed summary of the Subsidiary’s Financial Statements is included herein below.

Such Financial Statements, in complete form, may be consulted in the offices of Electro Meta-

lúrgica S.A. and the Superintendence of Securities and Insurance.

MAIN RELATED COMPANIES

Inversiones Elecmetal Ltda.

Equity MUS$ 140.379

Type of entity Limited Liability Company

Corporate Purpose Investments

Tax Number 99,506,820-6

Chairman Jaime Claro Valdés (Chairman Elecmetal)

Vice-chairman Baltazar Sánchez Guzmán (Vice-chairman Elecmetal)

Director Rolando Medeiros Soux (General Manager Elecmetal)

General Manager Rolando Medeiros Soux (General Manager Elecmetal)

Direct interest 99.99%

Direct and Indirect Interest 100%

ME Global Inc. (EE.UU.)

Equity MUS$ 144,517

Type of entity Closed corporation

Corporate purpose Steel foundry


DirectorsRolando Medeiros Soux (General Manager Elecmetal)

Baltazar Sánchez Guzmán (Vice-chairman Elecmetal)

CEO Rolando Medeiros Soux (General Manager Elecmetal)

Indirect interest 100%

RELATED COMPANIES

51

Servicios y Consultorías Hendaya S.A.

Equity M$ 84,615,203


Corporate PurposeInvestments in companies and provision of services and con-

sultancies.

Tax number 83,032,100-4


Directors

Juan Antonio Álvarez Avendaño (Director Elecmetal)

Juan Agustín Figueroa Yávar (Director Elecmetal)

Patricio García Domínguez

Rolando Medeiros Soux (General Manager Elecmetal)

Alfonso Swett Saavedra (Director Elecmetal)

General Manager Luis Grez Jordán

Direct Interest 99.99%

Cristalerías de Chile S.A.

Equity M$ 224.248.163

Type of Entity Open corporation

Corporate purpose Manufacture of glass and investments in companies

Tax number 90,331,000-6

Chairman Baltazar Sánchez Guzmán (Vice-chairman Elecmetal)

Vice-Chairman Jaime Claro Valdés (Chairman Elecmetal)

Directors

Juan Antonio Álvarez Avendaño (Director Elecmetal)

Joaquín Barros Fontaine

Juan Agustín Figueroa Yávar (Director Elecmetal)

Fernando Franke García (Director Elecmetal)

Arturo Concha Ureta


Blas Tomic Errázuriz

Antonio Tuset Jorratt

General Manager Cirilo Elton González


Direct and Indirect Interest 53.57%

52

Sociedad Anónima Viña Santa Rita

Equity M$ 152,361,218

Type of entity Open corporation

Corporate purpose Production and commercialization of wines

Tax number 86,547,900-K

Chairman Juan Agustín Figueroa Yávar (Director Elecmetal)

Vice-Chairman Baltazar Sánchez Guzmán (Vice-Chairman Elecmetal)

Directors

Gregorio Amunategui Prá

Joaquín Barros Fontaine

Arturo Claro Fernández

Andrés Navarro Betteley

Pedro Ovalle Vial


General Manager Silvio Rostagno Hayes


Direct and indirect interest 57.92%

Fundición Talleres Ltda.

Equity M$ 17.997.203

Type of entity Limited liability company


Tax number 99,532,410-5

Chairman Rolando Medeiros Soux (General Manager Elecmetal)

Directors

José Ignacio Figueroa Elgueta

Eduardo González Errázuriz

Nicolás Cuevas Ossandón

Raoul Meunier Artigas

José Pablo Domínguez Bustamante

General Manager José Pablo Domínguez Bustamante

Direct interest 98%

Direct and indirect interest 100%

ANNUAL REPORT 2013Chapter 3 / Related Companies

53

Cristalchile Inversiones S.A.

Equity M$ 1.634.453


Corporate purposeInvestments, both in Chile and abroad, in all types of goods,

tangible or intangible, shares and corporate interest

Tax number 96,972,440-5


DirectorsPedro Jullian Sánchez

Baltazar Sánchez Guzmán (Vice-Chairman Elecmetal)

General Manager Cirilo Elton González

Indirect interest 53.56%

ME Elecmetal (China) Co., Ltd.

Equity MUS$ 21.718

Type of entity Wholly Foreign Owned Enterprise



DirectorsBaltazar Sánchez Guzmán (Vice-Chairman Elecmetal)

Rolando Medeiros Soux (General Manager Elecmetal)

Plant Manager Roger Luo

Indirect interest 100%

54

Rayén Curá S.A.I.C. (República Argentina)

Equity M$ Arg. 383.780


Corporate purpose Manufacture and sale of glass of glass objects

Tax number 99,532,410-5

Chairman Benoit D’iribarne

Vice-chairman Cirilo Elton González

Directors

Damián Fernando Beccar Varela

Edgardo Federico Del Popolo Kremer

Walter Formica

Roberto Luiz Hecksher Correa Netto -alternate-

Baltazar Sánchez Guzmán -alternate- (Vice-Chairman Elec-

metal)

Néstor Silva Gómez - alternate -

Ricardo Vicente Seeber - alternate -

General Manager Walter Formica

Direct Interest 98%

Direct and Indirect Interest 100%

Esco Elecmetal Fundición Limitada

Equity M$ 24.332.174

Type of entity Limited liability company

Corporate Purpose Steel foundry

Tax number 76,902,190-6

Chairman Rolando Medeiros Soux (General Manager Elecmetal)

Vice-Chairman Joe Weber

DirectorsRaoul Meunier Artigas

Andy Rowzee

Site Manager Ramón Alarcón Arias

Direct Interest 50%


55

SUMMARY OF FINANCIAL STATEMENT OF MAIN SUBSIDIARIES

INVERSIONES ELECMETAL LTDA. (CONSOLIDATED)2013 2012

MUS$ MUS$

Current Assets 138,524 101,266

Non-current Assets 116,866 93,921

Total Assets 255,390 195,187

Current Liabilities 37,168 36,634

Non-Current Liabilities 77,690 56,822

Equity 140,532 101,731

Total liabilities and equity 255,390 195,187

Revenue from ordinary activities 355,972 322,169


Earnings of the period 37,423 32,272

Variation of net cash and cash equivalents 24,536 8,624

Cash and cash equivalents at the end of the period 33,168 8,632

ME GLOBAL INC (U.S.A.)2013 2012

MUS$ MUS$

Current assets 116,728 90,206

Non-current assets 81,092 82,321

Total Assets 197,820 172,527

Current liabilities 26,088 32,838

Non-current liabilities 27,214 34,561

Equity 144,518 105,128

Total liabilities and Equity 197,820 172,527

Revenue from Ordinary Activities 290,320 285,714


Earnings of the period 39,114 32,856

Variation of net cash and cash equivalents 24,080 26

Cash and cash equivalents at the end of the period 24,108 28

56

SERVICIOS Y CONSULTORÍAS HENDAYA S.A. (CONSOLIDADO)

2013 2012

M$ M$

Current assets 3,687,153 3,199,310

Non-current assets 84,983,754 86,482,600

Total Assets 88,670,907 89,681,910


Non-current liabilities 748,037 1,067,249

Equity 87,027,874 87,831,151

Total liabilities and Equity 88,670,907 89,681,910

Revenue from Ordinary Activities 1,790,518 2,088,832


Earnings of the period 5,548,654 9,445,725

Variation of net cash and cash equivalents (139,891) (29,102)

Cash and cash equivalents at the end of the period 2,528,108 2,667,999

CRISTALERÍAS DE CHILE S.A. (CONSOLIDADO)2013 2012

M$ M$

Current assets 217,960,846 225,408,290


Total Assets 475,461,664 498,368,008

Current liabilities 71,685,785 58,862,707

Non-current liabilities 119,107,923 143,387,990

Equity 284,667,956 296,117,311



Gross earnings 78,391,492 67,772,366

Earnings from continued operations 21,125,964 16,274,009

Earnings from discontinued operations - 29,973,156


Variation of net cash and cash equivalents (1,296,777) (16,635,273)

Cash and cash equivalents at the end of the period 25,132,090 26,428,867


57

SOCIEDAD ANÓNIMA VIÑA SANTA RITA (CONSOLIDADO)2013 2012

M$ M$

Current assets 116,023,755 111,755,093


Total Assets 225,273,028 220,563,460



Equity 152,368,036 149,289,131



Gross earnings 46,258,043 38,645,268


Variation of net cash and cash equivalents 8,561,861 (991,035)

Cash and cash equivalents at the end of the period 9,531,712 969,851

FUNDICIÓN TALLERES LTDA.(CONSOLIDADO)2013 2012

M$ M$

Current assets 19,023,124 19,791,908


Total Assets 27,565,559 28,100,914


Non-current liabilities 441,861 184,877

Equity 17,997,192 16,489,610



Gross earnings 4,999,877 5,401,680


Variation of net cash and cash equivalents 401,172 614,747

Cash and cash equivalents at the end of the period 1,065,471 664,299

58

CRISTALCHILE INVERSIONES S.A.2013 2012

M$ M$

Current assets - -


Total Assets 15,439,618 15,861,341



Equity 1,634,453 2,340,984



ESCO ELECMETAL FUNDICION LIMITADA2013 2012

M$ M$

Current Assets 6,387,623 7,855,971


Total assets 43,521,370 45,878,901


Non-current liabilities 9,568,886 -

Equity 24,332,174 24,226,102

Total liabilities and equity 43,521,370 45,878,901

Earning (loss) for the period 106,072 (1,330,528)

Variation of net cash and cash equivalents 602,551 (2,466,767)

Cash and cash equivalents at the end of the period 899,996 297,445

59

The signing parties, acting as Director and General Manager of Compañía Electro Metalúrgica S.A.,

Elecmetal S.A., registered in the Securities Registry No. 045 swear under oath that the information

contained in the Annual Report of the Company is true and that it is sent to the Superintendence of

Securities and Insurance duly signed by the majority of its Board Directors.

JAIME CLARO VALDÉSChairman

I.D. Number 3,180,078-1

BALTAZAR SÁNCHEZ GUZMÁNVICE-CHAIRMAN

I.D. Number 6,060,760-5

JUAN ANTONIO ÁLVAREZ AVENDAÑODIRECTOR

I.D. Number 7.033.770-3

CARLOS F. CÁCERES CONTRERASDIRECTOR

I.D. Number 4.269.405-3

JUAN AGUSTÍN FIGUEROA YÁVARDIRECTOR

I.D. Number 3.513.761-0

FERNANDO FRANKE GARCÍADIRECTOR

I.D. Number 6.318.139-0

ALFONSO SWETT SAAVEDRADIRECTOR

I.D. Number 4.431.932-2

ROLANDO MEDEIROS SOUXGERENTE GENERAL

I.D. Number 5.927.393-0

Statement of Liability

www.me-elecmetal.com

compañía electro metalúrgica s.a

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