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Provida Pension Fund Administrator – ‘6-K’ for 3/30/04

On:  Thursday, 4/1/04, at 4:02pm ET   ·   For:  3/30/04   ·   Accession #:  950103-4-476   ·   File #:  1-13406

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 4/01/04  Provida Pension Fd Administrator  6-K         3/30/04    1:314K                                   Davis Polk & … LLP 01/FA

Report of a Foreign Private Issuer   —   Form 6-K
Filing Table of Contents

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FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Report of Foreign Issuer

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

For the month of March, 2004

Commission File Number: 001-13406

Provida Pension Fund Administrator
(Translation of registrant’s name into English)

Avenida Pedro de Valdivia 100
Santiago, Chile
011-562-697-0040

(Address of principal executive offices)

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

Form 20-F    X     Form 40-F        

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

Yes           No    X  

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

Yes           No    X  

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

Yes           No    X  

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





Provida Pension Fund Administrator

TABLE OF CONTENTS


   Item   

1. Press Release titled “AFP PROVIDA S.A. reports its results for the year ended December 31, 2003 dated March 30, 2004.





For Immediate Release
Contact: María Paz Yañez
Planning & Control Manager Phone:
(56-2) 351-1209
Fax: (56-2) 679-2320
E-mail:
myanezm@afpprovida.cl

Santiago, Chile – March 30, 2004 – AFP PROVIDA (NYSE: PVD) announced its consolidated financial results for the period ended December 31, 2003. All figures are expressed in constant Chilean pesos and are prepared in accordance with Chilean Generally Accepted Accounting Principles (Chilean GAAP). Figures for December 31, 2002 are inflation adjusted by the year on year CPI figure of 1.0%.

AFP PROVIDA S.A. reports its results for the year ended
December 31, 2003

GENERAL HIGHLIGHTS FOR THE YEAR 2003
   
Net income for the period amounted to Ch$32,005.5 million, a 6.8% real retrenchment on the figure recorded the previous year. In operational terms, this result is due mainly to the life and disability insurance (L&D), referring to the lower favorable casualty rebates and the higher provisions for this concept for a total of Ch$13,153.6 million, which overshadowed the favorable results obtained in both fee incomes and gains on mandatory investment. In non operating terms, it spotlights gains generated by the price level restatement in accordance with the sale of 20% stake in AFPC Porvenir (Colombia). Furthermore, earnings per share rose Ch$96.6, compared to Ch$103.67 obtained in 2002.
   
During the year, in operating terms it is highlighted higher revenues for Ch$7,922.8 million or 7.4% with respect to last year, sustained both in higher fee income and higher gains obtained in mandatory investments, which were partially offset by lower revenues for rebates on life and disability (L&D) insurance contracts prior to the current one. Regarding operating expenses, they were boosted by Ch$13,814.1 million (19.7%) basically as a result of the L&D insurance, both referring to a higher casualty cost affected by the decrease of interest rates increasing the casualty costs and a larger number of request given the learning process by affiliates to use this benefit, adding the application of even more conservative criteria for provisions according to the requirements set up by the Authority. Higher administration and commercial expenses were originated from new services in the pension industry. Consequently, operating income amounted to Ch$30,196.3 million, a drop of 16.3% or Ch$5,891.2 million to the previous year.
   
Non-operating income increased by Ch$8,182.4 million (464.9%) with respect to 2002, originated by gains obtained in both price level restatement due to lower inflation and differences in exchange rates associated to the sale of AFPC Porvenir in Colombia; transaction that in joint with the acquisition of AFP Porvenir Dominican Republic, are part of the joint international strategy of Provida with the BBVA Group aimed at reinforcing the previsional franchise in Latin America. The aforementioned was partially offset by the lower results obtained in affiliated companies, that in relation to foreign affiliates were affected by the appreciation of Chilean peso respect to dollar; as far as AFORE Bancomer is concerned its results were basically by the depreciation of local currency with respect to dollar, adding the exclusion of the AFPC Porvenir’s results after its sale. In the local scene, the above is the result of losses at two local affiliated companies (PreviRed.com and AFC) that have not reached breakeven point yet.
   
As of December 31, 2003, Provida maintains its leading position in the Chilean pension fund industry, totaling US$15,748 million in assets under management and a portfolio of 2.93 million affiliates equating to market shares of 31.70% and 42.00%, respectively.
   
Since Provida became the sole shareholder of AFP Genesis (Ecuador) and AFP Porvenir (Dominican Republic), Provida’s financial statements are consolidated with those subsidiaries, which implies acknowledging in all components of its results, a net income for Ch$359.7 million of AFP Genesis and a net loss for Ch$315.8 million of AFP Porvenir in 2003.
   
HIGHLIGHTS OF THE FOURTH QUARTER 2003 (4Q03)
   
In 4Q03 is spotlighted the favorable result recorded by the net income that rose to Ch$7,254.4 million, higher in Ch$779.5 million or 12.0% to the figure obtained in the fourth quarter of the previous year (4Q02). This evolution is sustained in operating factors, concerning fee incomes, given the higher levels of collection observed in the period and higher gains on mandatory investment, which were partially offset by higher provisions of expenses for the L&D insurance, stemming from both an upward trend of the client’s portfolio casualty rate observed across the industry and the application of even more conservative accounting criteria by Provida in accordance with the requirements set up by the Superintendency of AFP. Likewise, “Core Business” result increased in Ch$1,015.3 million or 16.8%, what is explained by higher fee incomes as well.

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AFP PROVIDA, company leader in the Chilean Pension Fund Industry, provides pension fund management and related services throughout the country and has invested in similar companies in Peru, Ecuador, Mexico, El Salvador and Dominican Republic. In July 1999, PROVIDA was incorporated into the financial holding BBVA Group that enjoys pride of place in the Pension Fund Industry and is one of the principal financial conglomerates in Latin America.   Business Drivers December
2003
  Market
Share
 
  Number of Affiliates 2,931,461   42.00 %
  Number of Contributors 1,501,651   41.49 %
  Number of Pensioners 291,045   38.01 %
  Collection Base (US$ Million) 621   33.70 %
  AUM (US$ Million) 15,748   31.69 %
  Pension Fund Average Real Return (Acum 2003) 12.27 %    
  Pension Fund A Real Return (Acum 2003) 27.03 %    
  Pension Fund B Real Return (Acum 2003) 16.00 %    
  Pension Fund C Real Return (Acum 2003) 10.51 %    
  Pension Fund D Real Return (Acum 2003) 8.42 %    
  Pension Fund E Real Return (Acum 2003) 3.25 %    
  Other Variables December
2003
  Market
Share
 
  Number of Branches 78   30.95 %
  Number of Administrative Employees 1,038   31.65 %
  Number of Sales Agents 625   24.11 %

AFP PROVIDA S.A.
COMPARATIVE ANALYSIS TO DECEMBER 2003

During the year, indicators from various economic sectors and economic authorities showed that, in terms of economic growth, Chile was significantly improving; this bore some influence on the way things were regarded to by the Chilean people, whose expectations on the economic performance changed throughout the year. As a matter of fact, the Economic Perception Index revealed that the expectations of consumers improved from July to December 2003, when it reached levels not seen since the third quarter of 1998. This is also the conclusion of a study on “Public Opinion Indicators” carried out in the third quarter of the year, according to which people’s perception of the economic situation has improved in respect of one year ago.

Also, Monetary and loan terms continued to expand, as it is evident from the number of loans granted to individuals. In terms of figures, consumption loans have grown at a rate of two digits for over one year now; this is mainly due to the fact that low risk individuals with high earning capacity apply for loans in this particular segment and, backed up by new competitors and lower interest rates of consumption loans, the level of competitiveness of the system has also increased.

Further more, the Central Bank continued to apply the expansive monetary policy they had started in 2002 by reducing the rate of interest twice. In terms of figures, the 3.0% rate of

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interest imposed by the end of 2002 was further reduced to 2.75% in January 2003 (minus 25 base points). This rate was maintained till November 2003, as beyond the inflationary fluctuations resulting from the temporary rise in the price of petrol in the early months of 2003, the impact of external pressures exerted upon prices was rather reduced or did not exceed the expected margins. Consequently, inflationary prospects were kept in the range of 2% to 4%. However, the rate of interest was again reduced in December 2003 to 2.25%, a decision made on the basis of the low rate of inflation reached in the last months of the year and the effect of such rate on long term inflationary expectations. The latter represented an important risk that inflation might reach extremely low levels for a long time, not allowing a convergence to the middle point of the target range.

The labor market performance, a factor of great relevance to the pension fund industry, highlights during this period. As a matter of fact, the rate of unemployment by the fourth quarter of the year had reached 7.4% (0.4 points lower as compared to the previous year) and an average 8.5% over the full year, the best figure in the last five years. The remarkable element of this performance lies in the fact that there has been an increase in the number of employments offered by all the sectors of the economy, and unlike previous years, this is the result of the creation of new employments rather than an increase in the number of emergency jobs. In figures, 15,640 people were no longer part of the laid off group of workers compared to 4Q02, and the total number of employed increased 2.6% regarding 2002 and reaching 5,675,130 people; an indication that 143,780 new job vacancies had been created.

Finally, as far as labor market prospects are concerned, it is expected that the number of new jobs will continue to grow. This is based on the consensus| opinion that the economy has entered into a phase of a faster growth (it is expected that the GDP will grow by 5% or so during 2004), sustained by the contribution of investment and companies adjusted in order to attain higher levels of return and competitiveness. This would also permit a further increase in productivity along with real salary increments, elements that should give a fillip to the reactivation of economy and private consumption.

Likewise, the non-operating income showed a positive deviation of Ch$8,182.4 million (464.9%) with respect to the previous year, due fundamentally to the earning before taxes by Ch$8,585 million obtained on the sale of 20% stake in AFPC Porvenir, Colombia carried out in September. It adds up to it, a positive deviation of Ch$2,298.7 million in price level restatement, where Ch$1,165.5 million stemmed from the lower inflation applied net passive position of Provida. Besides, contributing to the above is a higher income for the exchange rate differences of Ch$1,133.2 million originated by dividends receivable by subsidiaries and by releasing the equity when carried out the sale of 20% of AFPC Porvenir, Colombia. Partially offsetting the above are the lower gains from affiliated companies by Ch$2,796.6 million, that internationally are explained by the impact of the Chilean peso

3



appreciation with respect to US dollar in Provida’s results; the exchange rate effects of the local currency depreciation with respect to US dollar in results of AFORE Bancomer; and the exclusion of results of AFPC Porvenir, Colombia after its sale in September. In local terms, this result stems from the losses recorded by the affiliates PreviRed.com and AFC that have not yet reached their breakeven point.

The income taxes, therefore, increased in Ch$4,632.8 or 132.4% mainly as a result of the tax figure involved in the 20% sale of the stake in AFPC Porvernir, Colombia, reaching Ch$3,793.5 million. The rest of the difference is explained by the higher and current tax rate in the period of 16.5% (16.0% in the last period).

  2003   2002   Variación   Variación %  
 







  (En millones de pesos al 31 de diciembre de 2003, excepto porcentajes)
Utilidad Operacional 30,196.3   36,087.5   (5,891.2 ) -16.3 %
   Ingresos Operacionales 114,297.0   106,374.2   7,922.8   7.4 %
   Gastos Operacionales (84,100.7 ) (70,286.7 ) (13,814.1 ) 19.7 %
Otros Ingresos (Gastos) No Operacionales 9,942.4   1,760.0   8,182.4   464.9 %
Impuesto a la Renta (8,133.2 ) (3,500.4 ) (4,632.8 ) 132.4 %
Utilidad Neta 32,005.5   34,347.1   (2,341.6 ) -6.8 %

Recent Developments and Projects

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5



Business Development

6



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in order to achieve commercial goals in a more competitive environment as well as the increase in commissions related to a higher commercial activity reflected in a greater volume of transfers. In figures, the production volume of sales force in relation to incomes increased from Ch$38,222 million in 2002 to Ch$45,435 million in 2003, representing an increase of Ch$7,102 million or 18.5% in real terms. Further, in terms of net salary transfers among AFPs, this resulted from nearly no transfers in 2002 to a positive net transfer of Ch$6.918 million, situation that is even more remarkable if it is considered that commercial staff has diminished whereas productivity has increased.

Regarding staff, the average figure of sales personnel decreased a 5.7% from 673 in 2002 to 634 in 2003. With respect to the evolution at the end of each period, the sales force fell from 652 to 625 sales agents, recording a decrease of 4.1%.

Besides, this year was marked by changes in the criteria of accounting provisions related to casualties. First of all, Superintendency of Pension Fund Administrators instructed about provisions to be included in the year 2003 in connection with higher casualties. That’s why at the close of the period AFP Provida made provisions for 100% of the balance of the Insurance Company up to January 2004, that is, the amount to be paid in March 2004, regarding contracts prior to the current one.

Likewise, criteria applied until November 2003 as informed to the Authority, consisted in recording monthly all contracts from the accrued proportion obtained from the unfavorable difference for implicit casualties in the estimation for payment of pre-settlements, recorded in results as insurance cost and in a provision account as a liabilities. At the moment of knowing exactly the amount of settlements or pre-settlements these provisions were used, adjusting that month the difference for deficit or surplus of provisions. In this way, result for 12 month-period paid in March was distributed affecting 9 out of 12 months of that year, and 3 out of 12 months of the following year, corresponding the last twelfth month to date of payment. The application of the aforementioned implied a review on constituted provisions, which led to an adjustment for Ch$6,723.7 million considered as an increment in provisions for higher casualties, affecting results of previous years for an amount of Ch$5,614.3 million net of taxes according to the analysis carried out and contrasted with the Company’s external auditors, with the respective approval by Authority.

Furthermore and as it was mentioned in the last quarter report, with the coming into effect of the new August 2003-December 2004 contract, whose first pre-settlement will be made in March 2005, AFP Provida decided to strengthen the application of more conservative criteria of the recognition of the casualty rate through the application of the accrued criteria of the projected casualty rate of the contract in its period of coverage, of 17 months, in order to maintain an adequate correlation between revenues and expenses recognized on monthly basis. This criteria could not be applied previously since it did not have enough reasonable evidence that allowed for an adequate predictive capacity, implying to make 100% of provisions in December 2004 for the payment that will take place in March 2005 as required by Authority. As a result, over the total client salary base expected of the contract, it is recognized monthly at a rate of 1/17, an additional provision over the temporary premium in relation to the estimated casualty rate of the contract. The latter is subject to periodic reviews in accordance with the monthly balances given by the insurance

8



company, adjusting to the rise if initial projections are exceeded. Since at December 2003, the new contract has been in force for five months, the impact of higher provisions considering the above mentioned is added for a sum of Ch$2,707.0 million.

9



    2003   2002   Variación   Variación %  
   







Compañía País (En millones de pesos al 31 de Diciembre de 2003, excepto porcentajes)  
Horizonte Perú 1,944.2   2,055.4   (111.2 ) -5.4 %
Porvenir Colombia 929.1   1,548.8   (619.7 ) -40.0 %
Bancomer México 4,277.9   6,006.3   (1,728.3 ) -28.8 %
Crecer El Salvador 790.5   799.6   (9.1 ) -1.1 %
DCV Chile 49.7   58.3   (8.6 ) -14.8 %
PreviRed.com Chile (421.0 ) (404.0 ) (17.0 ) 4.2 %
AFC Chile (566.4 ) (255.2 ) (311.2 ) 122.0 %
   







TOTAL 7,003.9   9,809.1   (2,805.2 ) -28.6 %

In Peru, Provida Internacional is present in AFP Horizonte since 1993 and currently has a 15.87% shareholding. In 2003, this affiliate generated an income of Ch$1,944.2 million for Provida representing a negative deviation equivalent to Ch$111.2 million (5.4%) with respect to 2002. The above is a result of the appreciation of the Chilean peso with respect to the dollar (17.4% in 12 months) since analyzing the dollar figure, revenue reaches to US$3.27 million implying an increase of US$442 thousand or 15.6% with respect to the dollar result obtained at December 2002. The main factor behind this is referred to higher earnings in fees charged to a greater average number of contributors (5.5%) as well as to higher gains on mandatory investments. According to information at December 2003, this subsidiary accounts for 838,329 affiliates and assets under management for US$1,604.0 million, figures equivalent to market shares of 26% and 25% respectively, and situates it in first place in terms of affiliates and third place for assets under management.

In the case of Colombia, Provida Internacional had been present from 1994 until September 2003 when it sold its 20.00% stake to the controllers of AFPC Porvenir. Until August 2003, this affiliate generated for Provida an income of Ch$929.1 million, comparing unfavorably with the results recognized in 2002 of Ch$1,548.8 million. In comparative terms, there are four months less of results in 2003 as a result of the sale and, together with the rest of the foreign affiliates, the earnings were additionally affected by the appreciation of the Chilean peso with respect to the dollar by 17.4%. At August 2003, this affiliate had a total of 1,280,205 affiliates and assets under management of US$1,792 million, figures equivalent to market shares of 25% and 27%, respectively, maintaining its first place of the market share in all the relevant variables.

As was mentioned previously, this affiliate sale is linked to joint strategy to boost the pension franchise in Latin America with BBVA group, also considering Colombian market conditions and Provida’s non management position. In addition, transaction was jointly with Provida’s acquisition of a position with management capacity in AFP Porvenir in Dominican Republic that in addition sustains itself financially on the expected results in the medium and long term that are strengthened by the benefits of the future merger agreed on with BBVA Crecer, the AFP of the BBVA Group in that country. Due to Provida controls 100% of the acquired company, its results of are consolidated with those the Company.

In El Salvador, AFP Crecer was created in September 2000 as the result of a merger of AFPs Porvenir, Prevision and Maxima, converting it into the country’s largest pension fund administrator in terms of clients. At December 2003, the client’s portfolio ascended to 596,863 with assets under management of US$720.7 million, figures equivalent to market shares of 56% and 48%, respectively. Provida Internacional has an ownership of 19.00% of AFP Crecer, originating earnings for Provida of Ch$790.5 million at 2003, implying a decrease of Ch$9.1 million with respect to 2002, deviation that have underlying a Chilean

10



peso appreciation between both periods. In dollars, this affiliate experienced revenues for US$1.33 million, representing an increase of US$230 thousand (20.8%), to the accrued income in 2002, mainly sustained in higher results of fee income basically given by higher average contributors.

Regarding Mexico, in November 2000, Provida Internacional purchased 7.5% of the equity of AFORE Bancomer, whose contribution in results maintain it as the largest investment and the highest volume in earnings for Provida. In figures, earnings for 2003 reached Ch$4,277.9 million, with 53.9% participation over the total contributed by the foreign affiliates during the period. Compared to the same period the previous year, this affiliate income dropped by Ch$1,728.3 million or 28.8% as a result of the depreciation experienced by the local currency versus the dollar between both periods under comparison reaching 10.0% in addition to the negative effect of the appreciation of the Chilean peso with respect to the dollar of 17.4%. In fact, in local terms (Mexican currency) affiliate experienced a decrease in net income of 4.3%, produced by the low growth in fee income due to higher unemployment rates, plus expenses and unexpected provisions, as well as higher depreciation. At December 2003, AFORE Bancomer maintains a client portfolio of 4,328,805 and funds under management of US$7,386.5 million, representing market shares of 14% and 21%, respectively, situating it in second place of the market share on all relevant variables.

Finally, the results of local affiliates, jointly contributed lower earnings for Provida of Ch$328.3 million, product of higher losses at two of the three companies. On the one hand, the “Unemployment Funds Administrator of Chile S.A.” (AFC), a company which started operations in October, 2002 and where Provida has a 37.8% ownership, represented a loss for the Company of Ch$421.0 million in 2003, comparing unfavorably with the loss obtained in 2002 of Ch$404.0 million. Basically, this result lays on the fact that this subsidiary still has not reached breakeven point and in the fact that benefits granted have surpassed projections resulting in higher costs for the company. Furthermore, PreviRed.com, an electronic collection company where Provida also has 37.8% ownership, implied a loss of Ch$566.4 million for the Company in 2003, representing a negative deviation of Ch$311.2 million or 122.0% with respect to the same period last year, and that still has not reached breakeven point, even though its achievements in market penetration are remarkable during the year. Lastly, “Investments DCV” (DCV), represented for Provida an income of Ch$49.7 million in the period, resulting inferior in Ch$8.6 million or 14.8% to the returns of the same period last year. In this Company whose business is to invest in companies devoted to public offering securities, Provida participates with a 23.14% stake and the rest of its main shareholders being other AFPs of the industry, the same as with the other two local investments (AFC and PrevirRed.com), where also other financial institutions participate.

11



reflect the differences in the exchange rate produced both by dollar denominated investments and loans denominated in dollar related to these investments (hedge) in a patrimony account. Despite that the loan denominated in dollar was paid off in March 2000, the accumulated balance of the equity capital for the assets and liabilities accounts is released the moment the sale of the investment take place.

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CONSOLIDATED INCOME STATEMENT

  2003   2002   Change   %  
  (Million of constant Chilean pesos at December 31, 2003, except percentages)  
OPERATING REVENUES                
   Fee income 100,246.4   95,852.1   4,394.3   4.6 %
   Gains on mandatory investments 9,806.1   4,906.3   4,899.8   99.9 %
   Rebates on L&D insurance 1,105.1   2,979.0   (1,873.9 ) -62.9 %
   Other operating revenues 3,139.5   2,636.8   502.7   19.1 %
 






 
   Total Operating Revenues 114,297.0   106,374.2   7,922.8   7.4 %
                 
OPERATING EXPENSES                
   Administr. personnel remunerations (15,957.5 ) (16,434.9 ) 477.4   -2.9 %
   Sales personnel remunerations (8,999.1 ) (7,792.3 ) (1,206.8 ) 15.5 %
   L&D insurance (44,700.2 ) (33,420.6 ) (11,279.6 ) 33.8 %
   Other operating expenses (14,443.9 ) (12,638.8 ) (1,805.0 ) 14.3 %
 






 
   Total Operating Expenses (84,100.7 ) (70,286.7 ) (13,814.1 ) 19.7 %
                 
OPERATING INCOME 30,196.3   36,087.5   (5,891.2 ) -16.3 %
                 
OTHER INCOME (EXPENSES)                
   Gains on investments 55.1   176.0   (120.9 ) -68.7 %
   Profit (loss) in affil. companies 7,003.9   9,809.1   (2,805.2 ) -28.6 %
   Amortization of goodwill (4,993.2 ) (4,978.9 ) (14.3 ) 0.3 %
   Interest expense (1,359.3 ) (1,511.7 ) 152.4   -10.1 %
   Other income net 9,022.7   350.9   8,671.8   2471.5 %
   Price level restatement 213.4   (2,085.4 ) 2,298.7   -110.2 %
 







   Total Other Income (Expenses) 9,942.4   1,760.0   8,182.4   464.9 %
                 
INCOME BEFORE TAXES 40,138.7   37,847.5   2,291.2   6.1 %
INCOME TAXES (8,133.2 ) (3,500.4 ) (4,632.811 ) 132.4 %
                 
NET INCOME 32,005.5   34,347.1   (2,341.6 ) -6.8 %

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CONSOLIDATED BALANCE SHEET

  2003   2002   Change   %  
  (Million of constant Chilean pesos at December 31, 2003, except percentages)  
ASSETS                
   Current Assets 15,540.2   9,799.7   5,740.5   58.6 %
   Marketable Securities - Reserve 92,252.7   80,188.5   12,064.2   15.0 %
   Premises and Equipment 25,817.2   23,880.9   1,936.3   8.1 %
   Other Assets 97,807.9   105,581.2   (7,773.3 ) -7.4 %
 






 
TOTAL ASSETS 231,418.0   219,450.3   11,967.7   5.5 %
                 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
   Current Liabilities 50,124.0   34,881.8   15,242.1   43.7 %
   Long-Term Liabilities 8,481.6   11,516.6   (3,034.9 ) -26.4 %
   Minority Interest 0.1   0.1   (0.0 ) -3.3 %
   Shareholders´ Equity 172,812.3   173,051.9   (239.5 ) -0.1 %
 






 
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 231,418.0   219,450.3   11,967.7   5.5 %

                 
CONSOLIDATED CASH FLOW STATEMENT
                 
  2003   2002   Change   %  
  (Million of constant Chilean pesos at Dicember 31, 2003, except percentages)
CASH FLOW FROM OPERATING ACTIVITIES 33,996.8   28,163.3   5,833.5   20.7 %
   Total Operational Income 104,663.5   100,427.9   4,235.5   4.2 %
   Total Operational Expenses (70,666.7 ) (72,264.6 ) 1,597.9   -2.2 %
                 
CASH FLOW FROM FINANCING ACTIVITIES (43,688.5 ) (24,467.2 ) (19,221.3 ) 78.6 %
                 
CASH FLOW FROM INVESTING ACTIVITIES 10,103.4   (3,275.1 ) 13,378.5   -408.5 %
                 
TOTAL NET CASH FLOW 411.6   421.0   (9.3 ) -2.2 %

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A.F.P. PROVIDA S.A.
COMPARATIVE ANALYSIS FOR FOURTH QUARTER 2003 (4Q03)

  4Q 2003   4Q 2002   Change   % Change  
 






 
  (Million of constant Chilean pesos at December 31, 2003, except percentages)
Operating Income 9,817.1   7,451.9   2,365.1   31.7 %
   Total Operating Revenues 29,647.7   25,121.9   4,525.8   18.0 %
   Total Operating Expenses (19,830.6 ) (17,669.9 ) (2,160.7 ) 12.2 %
Other Income (Expenses) (1,060.9 ) (1,132.4 ) 71.5   6.3 %
Income Taxes (1,501.8 ) 155.4   (1,657.2 ) -1066.4 %
Net Income 7,254.4   6,474.9   779.5   12.0 %

Operationally speaking, higher contribution is related to fee income higher by Ch$3,176.0 million or 13.4% compared to 4Q02, which was accompanied by the favorable evolution of gains on mandatory investment higher in Ch$1,117.7 million with respect to the result recorded in 4Q02. Partially offsetting the above are higher operating expenses (Ch$2,160.7 million or 12.2%) resulting from the provisions of the L&D Insurance as a consequence of casualties observed throughout industry as well as a more conservative criteria applied by the Company in the way of recognizing this expense which led to an anticipation of provisions with respect to previous periods which is in accordance with Authority’s instruction about this matter at early 2004.

In non operating terms, during 4Q03 a lower loss of Ch$71.5 million or 6.3% was recorded, difference that is positively affected by minor loss of Ch$1,298.3 million due to price level restatement, given the lower inflation applied during the period in comparison to the same quarter in 2002 (-0.3% 4Q03 versus 1.6% 4Q02). However, this positive result was partially offset by the lower other net non operating revenues due to the effect of the appreciation of Chilean peso respect to dollar over its main component, gains obtained for sale of AFPC Porvenir Colombia, that was recognized in dollar. Furthermore, Chilean peso appreciation affected gains obtained in investments of affiliated companies abroad plus lower results recorded by AFORE Bancomer, Mexico given depreciation of local currency

15



with respect to dollar, and the exclusion of AFPC Porvenir Colombia after its sale; originates a negative deviation in gains on affiliated companies for Ch$275.8 million.



16



commercial activity which originated an increment on sales force remuneration (higher commissions). The latter partially offset by lower remuneration of administrative personnel given rationalization of staff initiated some years ago that was maintained during the quarter.

Regarding staff, the average number of sales agents fell from 661 in 4Q02 to 627 in 4Q03, representing a drop of 5.1%. This rationalization took place in order to maintain only highly productive agents to achieve commercial goals in relation to higher volumes of net rents in those segments of higher returns, as well as capturing a bigger number of clients regarding voluntary pension savings.

The latter and as it was mentioned previously, as the contract for August 2003 –December 2004 came into force, AFP Provida decided to strengthen the application of more conservative criteria of the acknowledgment of the casualty rate through the application of the accrued criteria of the projected casualty rate of the contract in its period of coverage, of 17 months, in order to maintain an adequate correlation between revenues and expenses recognized on monthly basis. This criteria could not be applied previously since it did not have enough reasonable evidence that allowed for an adequate predictive capacity, situation that through greater historical evidence plus the internal development of a model to forecast casualties, has allowed to apply the aforementioned criteria.

For the new contract applied between August 2003-December 2004 the total of client salary base was estimated at a rate of 1/17, an additional over the temporary premium in relation

17



to projected casualty rate adjusting it to a rise if it exceeds initial projections. Therefore, for 4Q03 3 out of 17 months have been recognized from the estimated difference for casualty rate for an amount of Ch$1,624.2 million, whereas according to criteria applied for previous contracts would have begun 12 months before the first pre-settlement owing to gather more information to make provisions, that applied to the current contract had corresponded to start making provisions from April 2004 onwards.

This criteria is according to instructions established by Authority in the constitution of insurance provisions, due to it contemplates that in December 2004 settlement to be made to the insurance Company must be replenished in its 100%.

Finally, a favorable aspect contributed to this negative result, given by the growth of Company in collected incomes of clients, resulting in higher cost for temporary premium for an amount of Ch$811.7 million.

Locally, the negative deviation is associated with higher administration expenses of Ch$618.1 million stemming from the hiring of temporary services basically to cover the technical support of the AFC and the expenses related to the administration of funds given the enforcement of the Multiple Funds that led to a greater investment in variable income, which incremented costs of transactions and custody. Finally, also contributing to the above are higher costs in relation to the process of externalization of the collection in order to improve the quality of customer service in branch offices aimed at maintaining client fidelity and reducing the costs associated to that process.

18



generated by AFORE Bancomer of Mexico owing to the depreciation of Mexican peso with respect to the dollar and sluggish employment levels affecting directly fee income, adding the exclusion of AFPC Porvenir in Colombia after its sale which implied lower results for Ch$167.8 million. In connection with local affiliates and unlike previous quarters, these subsidiaries register a positive deviation of Ch$97.5 million with respect to 4Q02. In this is highlighted the contribution of PreviRed.com for Ch$85.3 million, society that has not yet reached breakeven point, it has diminished its losses as a results of collection contracts with previsional institutions and payment contracts with financial institutions which have implied larger volume of activity and its effect in revenues.

    4Q03   4Q02   Change   % Change  
   






 
Company Country (Million of constant Chilean pesos at December 31, 2003, except percentages)  
Horizonte Peru 429.4   421.6   7.8   1.9 %
Porvenir Colombia -   167.8   (167.8 ) -100.0 %
Bancomer Mexico 891.4   1,176.1   (284.7 ) -24.2 %
Crecer El Salvador 242.2   170.7   71.4   41.8 %
DCV Chile 2.2   9.6   (7.4 ) -76.8 %
PreviRed.com Chile (57.5 ) (142.9 ) 85.3   -59.7 %
AFC Chile (145.3 ) (164.8 ) 19.5   -11.8 %
   






 
  TOTAL 1,362.4   1,638.3   (275.8 ) -16.8 %

19



CONSOLIDATED INCOME STATEMENT

  4Q 2003   4Q 2002   Change   %  
  (Million of constant Chilean pesos at December 31, 2003, except percentages) 
OPERATING REVENUES                
   Fee income 26,891.2   23,715.2   3,176.0   13.4 %
   Gains on mandatory investments 1,763.3   645.6   1,117.7   173.1 %
   Rebates on L&D insurance 131.1   130.0   1.1   0.8 %
   Other operating revenues 862.1   631.1   231.0   36.6 %
 
   Total Operating Revenues 29,647.7   25,121.9   4,525.8   18.0 %
                 
OPERATING EXPENSES                
   Administr. personnel remunerations (3,541.8 ) (4,312.7 ) 770.9   -17.9 %
   Sales personnel remunerations (2,422.7 ) (2,154.9 ) (267.8 ) 12.4 %
   L&D insurance (9,901.3 ) (7,780.8 ) (2,120.5 ) 27.3 %
   Other operating expenses (3,964.8 ) (3,421.5 ) (543.3 ) 15.9 %
 
   Total Operating Expenses (19,830.6 ) (17,669.9 ) (2,160.7 ) 12.2 %
                 
OPERATING INCOME 9,817.1   7,451.9   2,365.1   31.7 %
                 
OTHER INCOME (EXPENSES)                
   Gains on investments (1.4 ) 64.9   (66.3 ) -102.1 %
   Profit (loss) in affil. companies 1,362.4   1,638.3   (275.8 ) -16.8 %
   Amortization of goodwill (1,257.5 ) (1,168.2 ) (89.2 ) 7.6 %
   Interest expense (306.9 ) (235.2 ) (71.7 ) 30.5 %
   Other income net (621.2 ) 102.6   (723.8 ) -705.6 %
   Price level restatement (236.4 ) (1,534.7 ) 1,298.3   -84.6 %
 
   Total Other Income (Expenses) (1,060.9 ) (1,132.4 ) 71.5   -6.3 %
                 
INCOME BEFORE TAXES 8,756.2   6,319.5   2,436.7   38.6 %
INCOME TAXES (1,501.8 ) 155.4   (1,657.2 ) -1066.4 %
                 
NET INCOME 7,254.4   6,474.9   779.5   12.0 %
                 

 

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

    Provida Pension Fund Administrator
         
         
Date: March 31 , 2004 By: /s/ Salvador Milán Alcaraz
     
      Name: Salvador Milán Alcaraz
      Title: Chief Financial Officer

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘6-K’ Filing    Date    Other Filings
Filed on:4/1/04
For Period End:3/30/04
12/31/0320-F
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8/1/02
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