INDUSTRIAL SECTOR

The company operates in the passenger mass transit market in the Metropolitan Region and services users looking for a quick and safe ride. At present, more than 60% of public transit trips in Santiago involve Metro.

In addition, as of July 2013, Metro took full responsibility for the prepaid Bip! Card reloading services performed in the system, adding street-level reloading stations to the underground card-loading network.

The company also operates in other areas: renting advertising space, leasing retail premises and commercial space, and a new international consulting business area.

ACTIVITIES AND BUSINESS

Corporate Objective

The corporate objective is defined as follows:

“The objective of Empresa de Transporte de Pasajeros S.A. is to carry out all activities pertaining to passenger transit service on metropolitan railways or other supplementary electric means and those connected to such lines of business, thereby entitling Metro to perform any action or operation related to its social purpose.”

Metro’s scope of action is within the Santiago Metropolitan Region, specifically, Greater Santiago, where it carries out the following business:

Transportation: Passenger transit on Lines 1, 2, 4, 4A and 5 of Metro’s network.

Non-fare Related Business: Non-fare business accounted for 20% of the company’s total income in 2014.

The operation of non-fare related business lines has triggered a number of positive outcomes for the community, having a positive social impact on areas such as inclusion, added value services, and a sense of belonging surrounding the company’s brand.

Metro S.A.’s non-fare businesses are::

Leasing of retail space: Makes retail and store space profitable throughout Metro’s network.

Advertising: This business makes use of Metro’s infrastructure and its various venues and trains as advertising support. JCDecaux and SubTV are responsible for managing and marketing static and dynamic advertising, respectively.

Telecommunications: Technology-related business, i.e., antennas providing indoor and outdoor coverage throughout Metro’s network, fiber optics in our network piping, and free Wi-Fi hotspots for our users.

Services and ATMs: These make space inside Metro’s network profitable by placing vending machines, ATMs, pay phones and mobile phone recharge kiosks at Metro facilities in order to provide our customers with more services.

Land Leases: Provide the company a profit from the residual land owned by Metro.

Intermodal Operations: Manages and makes a profit out of intermodal connections within Metro’s network.

International Consulting: This line of business was developed as a result of expertise the company has gained over 40 years of service. Currently, Metro has a customer portfolio consisting of public and private entities located in Lima, Panamá, Buenos Aires and Río de Janeiro, among others.

Points of Sale: Meets contractual obligations between the Ministry of Transportation and Telecommunication and Metro, in regards to issuing access cards, post sales service and operations of the reloading network for the card that provides users with access to Santiago’s Public Passenger Transit System.

Points of Sale manage the Bip! Card reloading network, both in the brick and mortar and remote channels, and is responsible for innovation development at the various points of sale with a view to maximizing the street-level network in order to provide our users with a more convenient service.

Likewise, Points of Sales are responsible for manufacturing and selling the Bip! Card in its various formats and the Tarjeta Nacional Escolar (Student Discount Card).

Network Operations

Ridership

In 2014, network ridership totaled 667.6 million rides, representing a 0.12% increase when compared to 2013. The underground train continues to be the backbone of the capital city’s mass transit system.

2014 ridership breakdown as follows: Line 1, 39.2%; Line 2, 18.3%; Line 4, 17.9%; Line 4A, 3.0%; and Line 5, 21.6%. Mean ridership per working day in 2014 amounted to 2,268 rides.

2014 RIDERSHIP BY LINE

(MillIons of Passengers)

SHOW GRAPH

Upon implementation of Transantiago (Mass Public Transit System) in 2007, Metro ridership underwent an 81% increase. As of 2009, the total number of rides provided by the company increased an additional 9.7%

CANNUAL METRO S.A. RIDERSHIP

(MillIions of Rides)

SHOW GRAPH

Transport Offering

As far as kilometers are concerned, in 2014 more than 140 million car/kilometers were recorded on the network.

Meanwhile, the train breakdown index per million cars/kilometer of trains, with an impact greater than five minutes (all hours), amounted to 0.7 (breakdowns/ MMCkm), which accounts for a 36% improvement compared to the previous year.

Suppliers

The table below illustrates the most important suppliers in 2014:

Customers

Metro’s main customers are riders of Lines 1, 2, 4, 4A and 5, as well as the companies advertising in the network through JC Decaux—a company that markets advertising space on trains and at stations—and lessees of stores and retail space at stations. Additionally, since 2013 all passengers using Bip! Cards are among our customers

Trademarks and Patents

As of December 31st 2014, the company owns the following trademarks registered under various classes, with the National Industrial Property Institute of Chile:.

a) “Metro,” “Metrobús,” “Metropolitano,” “Subterráneo,” “Metro a Metro,” “El Ferrocarril Metropolitano,” “Metrovisión,” “Metropublicidad,” “Metroclub,” “Club Metro”; “Metromático,” “Metro Channel,” “Metro News,” “Metro Noticias,” “Metro Center,” “Viapass,” “Fullpass,” “Transpass,” “Metro Express,” “El Metro te cuida, Cuida el Metro,” “Metro Full Card,” “Metro Card,” “Metro Pass,” “Metromarket,” “Metro Estación Universidad de Chile,” “Metroligero,” “MetroChile,” “Metro Chile,” “Metro-Chile,” “Red Metro,” “Metro Red,” “Metrin,” “Metropolitana,” “Metro de Santiago”; “Cuentos en el Metro,” “Cuentos Metro,” “Cuentos Urbanos,” “Cuentos Urbanos de Metro,” “Cuentos Urbanos en el Metro,” “Metro Cuentos Urbanos,” “Metrocuentos,” “Metrourbano,” “Multired,” “Multitrans,” “Bici Metro,” “Metro Bici,” “Te llevo bajo la piel,” “Metroboutique,” “Metro, pasa por ti,” “Red de Clientes Metro”, ”Te-Guio.”

b) Labels: eight labels registered under various classes.

c) Mixed brands like “Metro,” “Metrobús,” “Metrotren,” “Metroexpreso,” “Metrotaxi,” “MetroInforma,” “Metro S.A.,” “MetroArte,” “El Metro en la Cultura,” “Metroeventos,” “Metrored,” “Ventana Cultural,” “Metroservicios,” “Metro a Metro,” “Metro de Santiago,” “Conozcámonos,” “Metronet,” “Metro Cultura,” “Metroexpress,” “Redmetro,” “Metrocard,” “Metropass,” “Metroligero,” “Metro Tienda,” “Metro en la Cultura”; “Carga Fácil,” “MetroTV,” “Multired,” “Multitrans,” “TVMetro,” “Metro Bici,” “Te llevo bajo la piel,” “Metrociudadano,” “Red Bip!,” “Santiago matemático un desafío entretenido.”

d) Slogans such as: “El Metro te cuida, Cuida el Metro,” “Metro, pasa por ti,” “Metro de Santiago, pasa por ti,” “Metro ciudadano pasa por ti.”

Patents for invention

In 2014, Metro continued to process its patent applications in Europe and Venezuela for invention patents related to Tarjeta Multivía (“A Security and Control Device that records loading and electronic charging of fares on a contactless Card with a predefined amount in a Passenger Transit System”).

Patent applications submitted in other countries for the same invention were granted in the United States, (Registration No. 7,229,016, June 12th, 2007); Mexico (Registration No. 253570, January 18th, 2008); Peru (Registration No. 5070, August 22th, 2008); Argentina (Registration No. AR048314B1, June 14th, 2010); and, finally, in Ecuador toward the end of 2011 (Registration No. PI-11-2072, on September 30th, 2011).

In Chile, a patent was granted on August 11th, 2009 and registered under Patent Registration No. 45,663, thereby completing the patent application process for the invention entitled, “System and Method used for Detecting Brushes or Negative Contacts for Train Positioning on a Railway Track, specifically for trains with rubber tires.”

A patent was previously granted on December 31th, 2008, under Patent Registration No. 44,277, which completed the patent application process for the invention of a “tire pressure control system for drive rubber tires as well as horizontal guiding wheels on metropolitan trains.”

Property and Equipment

The company is the sole owner of all the facilities and equipment it utilizes, such as: stations, tunnels, rolling stock, tracks, electrical equipment, tools, spare parts, retail space and buildings, etc., and they are located in the Metropolitan Region. Buildings owned by Metro are, among others:

1. Corporate Building and SEAT: The company’s main office is located on an 11,250-m2 plot with close to 33,781 m2 of built building floor area on the corner of Lord Cochrane Street and 1414 Alameda Ave., right above La Moneda Metro Station, in the District of Santiago.

2. Workshops and Car Yards for Train Maintenance and Storage: The following facilities make up the total surface area of 488,539 m2.:

L1 Neptuno Workshop: Located on #6252 Dorsal Ave., Lo Prado, with a total surface area of 220,455m2.

L2 Lo Ovalle Workshop: Located on #1001 Lo Ovalle Ave., San Miguel District, with a total surface area of 54,038 m2.

L4 Intermediate train yards: Located on #3652 Américo Vespucio Sur Ave., Peñalolén District, with a total surface area of 59,486 m2.

L4 Puente Alto Workshop: Located on Nemesio Vicuña Ave., Puente Alto District, with a total surface area of 104,000 m2.

L5 San Eugenio Workshop: Located on #1290 Vicuña Mackenna Ave., Ñuñoa District, with a total surface area of 50,560 m2.

Two new workshops and train yards will be added when lines 3 and 6 are completed, one for each new line.

L3 North Terminal Workshop: Located on the corner of Américo Vespucio Ave. and Autopista Los Libertadores (Ruta CH 57), Quilicura District, with a total surface area of 133,806 m2.

L6 Suiza Workshop: Located on the corner of Pdte. Salvador Allende Ave. S/N, Cerrillos District, with a total surface area of 47,886 m2

Metro’s network covers 103 kilometers, and consists of 108 stations, four workshops, seven cultural areas and facilities. It also has six types of trains, the difference being the kind of rolling undercarriage (rubber-tired or steel-on-steel) and the assembly date. Metro has a total fleet of 1,093 cars, all of which operate in the Metropolitan Region.

Insurance

MMetro S.A. currently has several valid insurance policies described below: a general liability insurance policy is held with RSA Seguros Chile S.A.; fire and additional risks insurance policy covering the Main Administrative Building, Metro S.A Offices on Miraflores, Neptuno Workshop, Lo Ovalle Workshop, San Eugenio Workshop, Puente Alto Workshop, Intermediate Car Yards Line 4, Vasconia Warehouse, Pajaritos Intermodal Station, Vespucio Norte Intermodal Station, Estación del Sol Intermodal, La Florida Intermodal Station, and Lo Ovalle Intermodal Station, with additional risk coverage for Edificio Casona and General Management Offices is held with Mapfre Seguros Generales de Chile S.A.; a Life Insurance Policy for Senior Management at Metro S.A. is held with Chilena Consolidada Seguros de Vida Chile S.A.; a Passenger Accident Insurance Policy is held with Bice Vida Compañía de Seguro S.A.; a Life Insurance Policy for Security Guards is held with Chilena Consolidada Seguros de Vida Chile S.A.; and a Floating Insurance Policy for Transporting Cargo is held with RSA Seguros Chile S.A.

Metro S.A. also keeps the following current and valid policies for Projects on Lines 3 and 6 covering specific risks pertaining to those works: a Civil Liability Policy is held with RSA Seguros Chile S.A., and a Fully Comprehensive Construction and Assembly Insurance Policy is held with Seguros Generales Penta - Security S.A.

Contracts

The company has entered into various contracts with third parties, the most significant of which are described as follows:

Contract with JCDecaux for leasing advertising space at Metro stations and on trains.

Contract with Banco Santander Chile for checking accounts and other banking services.

Contract with Banco del Estado de Chile for Metro’s Financial Investment Portfolio Management.

Contract for network hardware maintenance, user support and network administration with Integración de Tecnologías ITQ Ltda. and an ERP SAP Financial and Accounting Support contract with Novis S.A., among others.

Contracts with cleaning and maintenance service providers for workshops, trains, stations, tracks and buildings, and other services: Servicios Industriales GVL Comao Ltda; Alstom Chile S.A.; CAF Chile S.A.; Balfour Beatty Chile S.A.; Siemens S.A.; Sometec S.A.; Bitelco Diebold Chile Ltda.; Garage INC S.A.; Thyssenkrup Elevadores S.A.; Inversiones Cosenza Ltda.; ISS Servicios Integrales Ltda.; and Proyectos y Productos Profesionales Ltda.

Contracts with catering service providers, security guards, telephone operators, auditing and other general services: Central Restaurantes Ltda., Eulen Seguridad S.A., Securitas S.A., Esert Servicios Integrales de Seguridad Ltda., Securitas S.A.; GTD Telesat S.A., Entel PCS Telecomunicaciones S.A., Ernst & Young Servicios profesionales de Auditoría, Dimacofi S.A., among others.

Contracts with underground-level Sales Channel operators: EME Servicios Generales Ltda., Consorcio GSI SPA, and Ingeniería en Electrónica Computación y Medicina S.A.

Contracts with street-level Sales Channel operators: Transbank S.A., Soc.de Recaudación y Pagos de Servicios Ltda. (Servipag), and BancoEstado Centro de Servicios S.A.

Financial Activities

The company has checking accounts at Banco Santander Chile, Banco de Chile, Banco BICE and Banco del Estado de Chile, in order to facilitate payment of its obligations with different suppliers for goods and services, as well as with its workers. The company’s main financial assets are term deposits and repurchase agreements (fixed income securities), the details of which are provided in the company’s financial statements. Local banks with credit ratings equal to or higher than N1+ and AA- for short and long-term deposits, respectively, manage these operations, or they are managed by brokerage firms that are jointly or severally liable with those banks, and by international banks with a credit rating equal to or higher than A1 or equivalent. Financial operations must be carried out in accordance with the Financial Investment Policy set forth by Metro S.A., which in turn is pursuant to regulations provided for by the Ministry of Finance to that effect. A third party, namely Banco del Estado de Chile, manages the company’s financial investment portfolio.

STRATEGIC ANALYSIS: RISK FACTORS

Metro is exposed to a variety of market-related and business-specific risks. In order to address this matter, the company has developed organizational structures to develop strategies that help minimize those risks and reduce the potential adverse effects thereof.

Regarding passenger demand, strategies must take into consideration Chile’s economic activity, its unemployment and inflation rates, as well as other the relevant factors. In terms of Metro’s technical fare, its purpose is to cover the company’s costs, which consist of operating costs, and asset replenishment and debt for a 40-year horizon. The technical fare is updated on a monthly basis by way of a polynomial, which reflects variations in the variables making up the company’s long-term cost structure (CPI, dollar, euro, price of power and electric power). This allows for a natural indexation to cost variations resulting from an increase in any one of the variables making up the polynomial.

It must be noted that the fare paid by riders is different from the fare that Metro receives per transported passenger. Although in December 2014 customers paid a fare of $700 during peak hours, $640 during intermediate hours and $590 during off-peak hours, on average the company received a technical fare of $349.25 per passenger that month.

The risks described below constitute the most significant ones that could possibly affect Metro’s performance:

Financial Risks: This category includes market, liquidity and credit risks.

At December 31st, 2014, 65% of Metro’s financial debt was denominated in UF (inflation adjusted units) and the remaining 35% in US dollars. The latter exposes the company to exchange-rate risk, which results in a “natural hedge” for long-term operation cash flow because of the polynomial used to update the technical fare in the event of dollar and euro fluctuations, among other variables.

Regarding interest-rate risks (Libor) associated with the company’s variable interest rate loans, Metro has a Hedging Policy that allows for trading derivatives such as cross currency swaps (CCS) and placing fixed-rate UF denominated bonds.

In February 2014, for the first time ever, Metro S.A. placed bonds on the international financial market in the amount of US$500 million at a 4.85% rate, which underscores the remarkable interest among international investors who offered 7.6 times the amount of the placement.

As far as liquidity is concerned, income from the passenger transit business is subtracted on a daily basis from revenues collected by Metro’s Points of Sale, providing the company with the funds it need to meet its financial obligations. In addition, Metro has duly approved bank credit lines, which help lower liquidity risks.

There is very little credit risk arising from accounts receivables or commercial debtors, in connection with income from retail space leases, advertising or invoices due, since this income only represents 20% of the company’s regular income. The remaining 80% comes from the technical fare, and there is very limited delinquency related to this type of debtors.

Likewise, the company’s Financial Investment Policy establishes the level ofexposure to financial asset risk the company is allowed to accept. The purpose of this policy is to reduce risk by diversifying the portfolio and by setting maximum investment levels permitted per bank, in addition to taking into consideration lender banks’ minimum credit risk ratings.

Capital Risk: Regarding capital management, Metro aims to have an optimal capital structure by reducing its costs and ensuring long-term financial stability, in addition to overseeing the fulfillment of its debt-related financial obligations and covenants.

Every year Metro holds a Special Shareholders’ Meeting in order to capitalize on capital and Fiscal contributions linked to its expansion projects. Additionally, the company keeps a watchful eye on its capital structure by means of debt and equity indexes.

Commodity Risks: Electric power is the main commodity used by the company in its operation. Should there be a power outage, Metro has two direct power supply connections to the Main Grid (SIC), which supply Lines 1, 2 and 5, as well as two direct connections supplying Line 4. Additionally, those power supply systems are duplicated and designed under redundant criteria, that is, they are “stand by,” thus, should one of them fail, the other one will immediately come on line, thereby ensuring the power supply for normal operations of the underground network.

In terms of the power supply for Lines 1, 2 and 5, in the event of a power outage on the SIC’s main grid, by definition, the power utility company’s first priority involves restoring power to the government sector in downtown Santiago. The latter makes it possible for Metro’s network to simultaneously resume operation since Metro’s power supply comes from the same system.

Likewise, it must be noted that in March 2014, the company entered into a power supply agreement with Enorchile S.A., effective as of April 1st, 2015, thereby securing the current network’s power supply for a three-year period (until March 31st, 2017).

INVESTMENT PLANS

Investment and Financing Policies

Metro de Santiago allocates significant resources to investment studies and projects aimed at expanding our network in addition to up keeping and improving our current infrastructure. Investments in network expansion seek to consolidate Metro as a backbone of the capital city’s public transportation system, whereas our investments in maintenance and infrastructure improvements are earmarked for the following areas: improving the quality of our services; bolstering operational safety and stability; preserving and maintaining our facilities and grounds; and updating, renewing and modernizing technology used by our equipment and systems, all with a view to better serve our customers.

In 2014, infrastructure and equipment improvements and renewals were financed by operations and capital contributions. Regarding network expansions, however, generally speaking Metro S.A. finances imported equipment and parts through borrowed funds, which are paid back through increases in Metro S.A.’s technical fare, whereas domestically-obtained components—consisting of infrastructure, civil works and other expenses, in addition to entry import duties and tariffs placed on imported goods—have been financed by Fiscal contributions, which are subsequently capitalized.

Metro’s Development Plan

Construction of New Lines 6 & 3

The most challenging project undertaken by Metro since founded was still underway in 2014. Investments in Line 6 and Line 3, scheduled for completion in 2017 and 2018, respectively, involve a financing structure consisting of partner contributions (two thirds of the total investment was furnished by the State and Corfo) and Metro contributions (one third of the total investment).

This is a high-level project involving the best international practices in areas such as: platform doors, overhead electric-power cabling, automated train control system, cameras on-board cars, air conditioning, and passenger information systems.

The tender process for tunnels, shafts and drives, in addition to most system components, concluded in 2014. To-date, 93% of the nearly 13 km of tunnels, two kilometers of drives and 55 shafts already laid and dug, is complete.

At year-end, 86% of the budget was tendered and contracted out, and a 29% financial advance on the 2.758-million dollar investment had been issued.

Operation-Related Projects

In 2014, the following improvements were made to Metro’s current network:

Remodeled Trains: new air conditioning systems

Started in October 2013, this project aimed to improve riders’ experience on underground trains by installing air conditioning on all Line 1 cars. To this end, train manufacturers were hired to install AC equipment on the entire Line 1 fleet.

By the end of 2014, 12 trains had been successfully modified, in addition to the 14 new trains added to the fleet during the September 2012 to October 2013 period—bringing the amount of Line 1 fleet cars with AC up to 60%. The company expects to have all Line 1 trains equipped with AC by the end of 2015.

Once the above mentioned is complete, the same improvements will be applied to nearly 60% of Lines 2 & 5 cars.

Overhauling NS74 Trains

In December 2013, Metro signed a detail-engineering contract for changes to trains in 2014. In addition to the latter, construction began on a plant located at the Neptune workshop where project-related activities will be carried out. The plant will begin operations in March 2015. In 2016, Lines 2 and 5 will be the first to use the overhauled trains, the 35th of which will enter into service toward the end of 2018.

Universal Access Project

In 2014, elevators were installed at seven stations along Lines 1 and 2, to wit, Manuel Montt, Salvador, Universidad Católica, Las Rejas, Rondizzoni, San Miguel, and Ciudad del Niño. The engineering studies on the seven stations involved in the second stage of the project will be complete in 2015. The following stations are included in the second stage: Toesca, La Moneda, República, Neptuno, Parque O´Higgins, El Llano, and Lo Ovalle.

Moreover, during the first half of 2014 a pilot project was launched on the NFC Audible Information System at the Santa Lucía station (providing support for blind and vision-impaired passengers). This system will be installed at an additional ten stations in 2015, to wit: Los Héroes Line 1, Pedro de Valdivia, Las Rejas, Salvador, Los Héroes Line 2, El Parrón, Plaza Puente Alto, Simón Bolívar, Plaza Maipú, and Plaza de Armas.

Installation of Automated Train Control System

Several activities carried out in 2014 made it possible to move forward on this project. Once available, this system will provide benefits related to transportation supply and electric-power consumption, among others.

ORGANIZATION DESCRIPTION

Metro de Santiago’s administration is managed by a Board of Directors comprised of a chairman, vice chairman and five board members. Twenty-three regular board meetings were held in 2014.

Metro’s General Manager and the Office of Comptroller (an advisory body) are under the Board of Director’s purview.

At year-end 2014, the General Manager was in charge of managing the Company through the following eight Corporate Managements: Human Resources; Administration and Finance; Business Planning and Control; Commercial and Corporate Affairs; Project Development; Engineering and Technology; Operations and Services; and Maintenance; in addition to receiving direct support from the Legal Department.

EXECUTIVES

Metro’s senior executives and board members do not hold any shares of company capital since the Chilean State is the company’s sole shareholder.

Changes to Managerial Team

At the 840th Board Meeting held on Monday, May 12th, 2014, the Board of Directors accepted the voluntary resignation of ramón Cañas Cambiaso as the company’s General Manager, made effective as of May 31st, 2014.

At the 841st Board Meeting held on May 26, 2014, the Board of Directors approved the appointment of Hernán Vega Molina, former Administration and Finance Manager, as the company’s General Manager.

At 852nd Board Meeting held on September 15th, 2014, the Board of Directors appointed Rubén Alvarado Vigar as General Manager. Mr. Vigar accepted the appointment and took office on September 29th, 2014.

on November 22th, 2014, Felipe Bravo Busta joined the company as Maintenance Manager, and on December 1st, 2014, patricio Baronti Correa took over as Human resources Manager.

Board Compensation

the following table contains a 2013-2014 comparison of compensation paid to board members for services rendered, in thousands of Chilean pesos:

2014 Compensation and Allowances

the following corresponds to allowances and board member compensation for attending each board meeting.

2013 Compensation and Allowances

2014 Meeting Attendance

The following corresponds to a single, monthly payment for attending “Board Committee” meetings.

2013 Meeting Attendance

Travel, Per Diems and other Stipends

In 2014, the company disbursed a total of M$4,476 Chilean pesos in travel expenses for board member Aldo González Tissinetti and zero travel expenses in 2013.

Board member Aldo González Tissinetti received M$1,576 Chilean pesos in per diem in 2014. there were no per diem expenses recorded in 2013.

Senior Executives

the General Manager’s 2014 compensation amounted to M$ 180,749 Chilean pesos (M$ 183,677 Chilean pesos in 2013) while compensation received by other managers (senior executives) totaled M$ 1,191,435 Chilean pesos (M$ 1,125,266 Chilean pesos in 2013).

During the first quarter of each year, managers are entitled to an individual annual bonus calculated on the basis of company results and individual performance during the previous calendar year, subject to annual approval by the company’s Board of Directors.

Summary of Shareholder and Board Committee Remarks and Proposals

Neither shareholders nor board committees issued requests to submit remarks or proposals to this Annual report.

OWNWERSHIP

Two shareholders, to wit, CorFo, the majority shareholder, and the Chilean State, represented by the Ministry of Finance, own the Company. Metro does not have any joint action agreements.

Regarding capital increases, at the 31st Special Shareholders’ Meeting held on August 28, 2014, the following was agreed:

To increase subscribed and paid capital through the capitalization of fiscal contributions in the amount of M$ 52,200,000, par value, by issuing 1,498,277,842 Series A shares to be subscribed and paid by Corfo no later than December 31st, 2014.

On November 19th, 2014 Corfo paid the fiscal contributions subscribed on August 28th, 2014.

At the 32nd Special Shareholders’ Meeting held on December 23rd, 2014, the following was agreed:

To increase subscribed and paid capital in the amount of M$ 154,490,793, par value, by issuing 4,675,871,458 Series A shares subscribed and paid by the State and Corfo, calculated in proportion to their interests and share in the company.

A Series shares correspond to the initial capital and capital increases subscribed and paid by the Chilean State and the Corporación de Fomento de la producción, and they shall not be transferred. B Series shares correspond to capital increases and may be held by other shareholders

Bearing in mind the above mentioned capital increases, as of December 31st, 2014, the company’s capital stock consisted of a total of 38,012,527,629 Series A and 19,163,677,063 Series B, par value, registered shares, 35,878,695,886 of which are held by Corporación de Fomento de la producción and 21,297,508,806 are held by the Chilean State.

As of December 31st, 2013, the company’s capital stock consisted of a total of 31,838,378,329 Series A and 19,163,677,063 Series B, par value, registered shares, 31,446,308,704 of which are held by Corporación de Fomento de la producción and 19,555,746,688 are held by the Chilean State.

As of December 31st, 2014, shareholders’ company ownership was broken down as follows:

DIVIDENDS POLICY

The company’s dividend policy is defined according to its articles of incorporation and Chilean Corporation Law, which provide that each fiscal year at least 30% of the company’s net profit must be distributed and that said policy shall be reviewed annually. the purpose of the latter is to assess certain topics such as the existence of hefty investments, important projects under execution or, in general, any other circumstance that may constitute grounds for adopting a decision other than the above mentioned policy.

The company’s dividend policy is in keeping with current legislation in that at least 30% of annual net profits must be earmarked for cash dividend distribution, except when otherwise agreed to by a unanimous vote of issued shares by the Shareholders’ Meeting.

At the 23rd regular Shareholders’ Meeting held on April 24th, 2014, shareholders agreed to not distribute company profits or issue dividends. Note that Metro has not issued dividends over the last three years.

SUBSIDIARIES, RELATED COMPANIES AND INVESTMENTS IN OTHER COMPANIES

Metro S.A. has only one subsidiary, empresa de transporte Suburbano de pasajeros S.A (transub S.A.).

In a public deed issued January 30th, 1998, by and between Empresa de Ferrocarriles del estado and empresa de transporte de pasajeros Metro S.A., at the Santiago Offices of Notary Public Francisco Rosas Villarroel, Empresa de transporte Suburbano de pasajeros S.A. was duly incorporated. the subsidiary’s corporate information is as follows:

• Company Identification and Type: transporte Suburbano de pasajeros S.A., also hereinafter referred to as “Transub S.A.,” is an unlimited duration, stock corporation, domiciled in the City of Santiago.
• Subscribed and Paid Capital: the company’s subscribed and paid capital amounts to $ 30,000,000 (thirty million pesos), divided up into one series of thirty thousand, nonpar-value registered shares.
• Corporate Purpose and Scheduled Activities: the company’s was founded in order to meet the urban transportation needs of passengers and earn a profit from its assets through complementary activities and services.
• Board Members and General Manager: the following members sit on the company’s Board of Directors: Hernán Vega Molina, Ignacio Tapia Hortuvia and Roland Zamora Vega on behalf of Metro S.A.; and Darío Farren Spencer and Cecilia Araya Catalán, on behalf of EFE.
• Given that transub S.A. is not an active entity, its Board Members and General Manager do not receive compensation for any of the board meetings they must attend.

Board of Director and General Management Positions:

Chairman: Hernán Vega Molina

Vice Chair: Darío Farren Spencer

Interim General Manager: Augusto Lucero Alday

Share Percentage: Metro S.A. holds a 66.66% ownership share in its subsidiary.

Parent Company Board Members and Managers: Hernán Vega Molina is Metro S.A.’s Corporate Administration and Finance Manager; Ignacio tapia Hortuvia is the Assistant Finance Manager; Roland Zamora Vega is the Corporate Business planning and Control Manager; and Augusto Lucero Alday is Metro S.A.’s Senior Legal Advisor.

Commercial Relations with the Subsidiary: there have never been any commercial relations between the parent company and its subsidiary.

Acts and Contracts Entered into with the Subsidiary: there haven’t been any acts or contracts entered into with the subsidiary.

Percentage of Investment in Assets: the company’s investment in the subsidiary amounts to 0% of Metro S.A.’s assets (the subsidiary has a negative net worth and is therefore valued at $1 on Metro S.A.’s books).

Ownership Relationship between Subsidiaries and Related Companies: Metro S.A. does not have any other subsidiaries or related companies.

There is a direct ownership relationship between Metro S.A. and transub S.A., in which Metro S.A. is the direct owner, as illustrated below:

STAFFING

Company personnel constitute one of Metro’s main pillars, and, accordingly, the organization understands that providing personnel with the appropriate career development conditions is key to a successful administration.

TRAINING

Metro de Santiago’s formal training programs are aimed at two large groups, to wit, Corporate Training Programs and Operations Training Programs.

Corporate training programs consist of annual training plans for each management group. these plans entail activities aimed at closing the various functional and skill gaps, which are identified by way of a survey on training needs. In 2014, a total of 3,343 individuals received training during 255 training activities held that year, for a total of 119,977 man-hours of training provided to Metro’s corporate management groups.

operation training programs, however, are broken down into two main categories, to wit, job post training (drivers, private security guards, station heads, and supervisors) and refresher training courses aimed at maintaining user know-how or providing them with skills required by the company to meet its goals. In 2014, 1,433 operating workers took part in a refresher course provided to 533 Station Heads, Intermodal Inspectors and Service Supervisors. these refresher courses consist of teaching workers and furthering their know how on matters such as the Subcontracting Law, our emergency Manual on trains, tunnels, tracks and Stations, operational emergency leadership issues, effective communications, analysis of incidents occurring at our stations, all with a view to compile best practices and strengthening procedures.

Additionally, a refresher course was held for drivers because of the poor results of an on-line gap assessment conducted as part of the eDUMetro training platform. the assessment was performed with a view to determine key, operation-wide aspects such as signage, maneuvering zone, breakdown area, etc., starting with the NS-74 technology, followed by other technological solutions used on our trains. Moreover, 900 drivers took part in another refresher course on the updated material contained in our train, tunnel, tracks and Station emergencies Manual.

In addition to the aforementioned, during the first half of 2014 the Service School (for internal and external operational staff) completed its second stage of implementation, providing training to 1,257 participants. this program is aimed at training personnel in customer service skills, such as empathy or assertiveness, in addition to ensuring that Metro’s Service Strategy operational practices are correctly implemented.

In 2014, the company continued enforcing the induction process as part of Metro’s Corporate Integration program, which aims to better educate new Metro workers in matters pertaining to corporate culture and mission. the revised program format is based on a participation- and experience-based methodology that seeks to create ties among participants and foster a greater sense of belonging within the organization. twenty Corporate Integration cycles were held in 2014 for a total of 272 new workers.

LABOR RELATIONS

the company decided to continue implementing the Preventive Health Program in 2014 as part of the Quality of Life program, with a view to fostering self-care and healthy lifestyles. Some of the activities carried out under this program were: a vaccination campaign; a program for at-risk individuals that provides medical and nutritional counseling to workers with cardiovascular risk factors; cost-free preventive testing for workers; and the second annual Health Fair. In addition to the above, the company has an Employee Assistance Program aimed at drug and alcohol use prevention and control. We also updated our Drug and Alcohol Use policy and held a training session on this matter for 43 new managerial and supervisory hires.

Metro also has a Wellbeing Fund, which is a company benefit available to all workers with open-ended contracts. In order to access these benefits workers must pay a monthly fee (and the company matches workers’ contribution by five to one). Membership benefits include reimbursement for medical and dental services, medical and low-interest loans, and a variety of different discounts at dental care facilities, drug stores, eye care stores, clinics and hospitals. 2014 Wellbeing Fund membership amounted to 3,455.

With a view to encouraging the participation of workers and their family members in company events and a healthy lifestyle through recreational, sports and educational activities, Metro founded the Recreation and Sports Program. the most outstanding activities sponsored through the program in 2014 were: the Women’s, Men’s, and Senior Citizen’s Quality of Life Cup with 434 participants; a Bowling tournament for 122 workers; and the Fitness Program which includes classes at Metro’s gym, Metrorunners training sessions, and active pause classes with an annual attendance of 245 individuals for 1,141 hours yearly.

the most noteworthy recreational activities held in 2014 for our workers and their families were as follows: Winter and Summer Vacation program for workers’ children serving 182 children in 2014; the Child’s Day Festivities with a turnout of 786 individuals; the My Family Visits the Metro Day for which 228 individuals came out; the Christmas Party with a grand total of 2,200 guests 58 including workers and their families; the Mt. San Cristóbal Family Hike, the Family Bike-Along, and a theatre cycle with two showings.

Furthermore, the company sponsored the 2nd Annual Children’s Drawing Contest entitled “The Metro of the Future”, in which 56 children participated and the 12 winning drawings were used in the 2015 Metro Calendar given out as a gift to each worker.

In 2013, the company launched Más Cerca de Ti (Closer to you), a program aimed at providing workers with greater and closer support. Under this initiative the company provides assistance to workers facing difficult situations affecting their and their families’ quality of life, marking its presence in important times. In addition to the above, there were several talks given on program benefits and meetings with supervisors.

Finally, as of December 2014, 85% of Metro employees are unionized. the labor organizations represented in the company constitute an important outlet for worker involvement, and the company works closely with workers on a handful of joint initiatives aimed a reinforcing Metro’s productivity and worker wellbeing.

ESSENTIAL FACTS

For the period covering January 1st to December 31st, 2014

1) on February 4th, 2014, empresa de transporte de pasajeros Metro S.A. issued bonds in the amount of US$500,000,000 and placed them on the international market pursuant to rule 144A and regulation S of the US Securities and exchange Act.

2) By way of publication No. 137 dated March 24th, the company reported that at the Board meeting held on March 24th, the Board of Directors agreed to call a regular Shareholders’ Meeting for April 24th, 2014 at 10:00 am at corporate headquarters.

3) By way of publication No. 208 dated April 24th, the company reported that the 23rd regular Shareholders’ Meeting held on April 24th adopted the following agreements:

• the 2013 Fiscal Year Annual report, Consolidated Financial Statements, Independent Auditors’ report, and Board expenses as stated in the Annual report were approved.
• The Regular Shareholders’ Meeting agreed that neither profits nor dividends would be distributed.
• the dividend policy was agreed to.
• KPMG Auditores Consultores Ltda. was appointed as the independent auditing firm for fiscal years 2014, 2015 and 2016.
• Credit rating agencies were appointed in reference to the local emission of Metro S.A. bonds. Appointments are for a period of a year, renewable for two yearlong periods per each agency appointed, to wit, Feller Rate Clasificadora de Riesgo Ltda. and Fitch Chile Clasificadora de Riesgo Ltda.
• The Estrategia newspaper was designated as the official gazette for summons issued by the Shareholders’ Meeting.
• Board member compensation was defined
• Aldo González Tissinetti, Carlos Mladinic Alonso, Juan Carlos Muñoz Abogabir, Vicente Pardo Díaz, Claudio Soto Gamboa, Karen Poniachik Pollak and paulina Soriano Fuenzalida were elected members of Metro’s Board of Directors.

4) By way of publication No. 210 dated April 24th, the company reported that pursuant to an agreement adopted by the Board of Directors at a special board meeting held today, the Board of Directors accepted the appointment of Aldo González Tissinetti as Chairman of the Board.

5) By way of publication No. 251 dated May 13th, the company reported that at the board meeting held on May 12th, the Board of Directors accepted the voluntary resignation of ramón Cañas Cambiaso as General Manager, effective as of May 31st, 2014.

6) By way of publication No. 280 dated May 27th, the company reported that at the board meeting held on May 26th, the Board of Directors accepted the appointment of Hernán Vega Molina, (commercial engineer, currently Administration and Finance Manager) as General Manager of the company.

7) By way of Publication No. 347 dated July 15th, the company reported that at the board meeting held on July 14th, the Board of Directors agreed to call a Special Shareholders’ Meeting, scheduled for August 6th, 2014 at 11:00 am at corporate headquarters, in order to issue a statement regarding the capitalization of fiscal contributions in the amount of M$ 52,200,000.

8) By way of publication No. 392 dated August 12th, the company reported that at the board meeting held on August 11th, the Board of Directors agreed to call a second Special Shareholders’ meeting for August 28th, 2014 at 10:00 am at corporate headquarters, in order to issue a statement on the capitalization of fiscal contributions in the amount of M$ 52,200,000.

9) By way of publication No. 472 dated September 17th, the company reported that at the board meeting held on September 15th, the Board of Directors agreed to appoint Rubén Rodrigo Alvarado Vigar (chemical engineer, I.D. No. 7.846.224–8) as the Company’s General Manager, who duly accepted the appointment and agreed to take office as of September 29th, 2014.

10) By way of publication No. 531 dated october 13th, the company reported that the Administration decided to proceed with the early termination of contract No. PL6-0602-02-12 “Construction of Civil Works, Shafts, Drives and Tunnels on Metro de Santiago’s Line 6, Sections 1 & 2,” entered into by and between Metro, the construction company Constructora Metro 6 Ltda. and the companies Salini S.p.A. and Impregilo S.p.A. as joint co-debtors. the latter is in keeping with authorization granted by the Board of Directors under agreement No. 3422/853. the contract was issued for an amount of UF 3,942,975.091, and the grounds for early termination were contractual non-compliance by said company.

11) By way of publication No. 565 dated october 14th, the material fact issued under publication GG No. 531 was complemented, reporting on the early termination of contract No. pL6-0602-02-12 dated october 03, 2014 and, that on that same date, the performance bonds issued by the contractor were called in. Furthermore, with a view to ensuring compliance with the proposed Line 6 start up date, the company reported that execution of all postponed works shall be taken over by the contractors currently in charge of executing works on Lines 6 and 3.

12) By way of publication 604, dated November 11th, the company informed that on that same date, the Board of Directors resolved to call a Special Shareholders’ Meeting on December 23rd, 2014 at 11:00 am at corporate headquarters in order to issue a statement on the capitalization of fiscal contributions in the amount of $ 154,490,793,000.

13) By way of publication No. 15-14e, dated November 15th, the company reported that at the Special Board Meeting held on that same date, the Board of Directors accepted the resignation of Aldo González Tissinetti, as Chairman of the Board, and accepted the appointment of rodrigo Azócar Hidalgo as Board Member and Chairman of the Board.

14) By way of publication No. 690 dated December 18th, the company reported that Metro S.A. entered into the following credit contracts:

• Commercial Bank Facility Agreement with international syndicate bank headed up by Sumitomo Mitsui Banking Corporation as the agent bank, for a sum of up to US$ 250,000,000, earmarked for financing part of the civil works, supplies and other expenses related to carrying out Metro S.A.’s expansion projects. the contract was signed for a 12-year term effective as of the date it was entered into, with a five-year grace period, and does not involve any pledges.
• ECA Multisource Facility Agreement with an international syndicate bank headed up by BNp paribas S.A. as the agent bank, for a sum of up to US$ 550,000,000, earmarked as part of the external financing for equipment, rolling stock and other expenses related to the execution of Metro S.A.’s expansion projects. the contract was signed for a 14-year term effective as of the date it was entered into, with a five-year grace period, and does not involve any pledges.

SUMMARY OF COMPANY RESULTS

In 2014, Metro remained within the small group of global metros able to finance their own operations, in addition to a portion of their own investment plans, as explained below:

Income from regular Activities as of December 2014 totaled MM$ 281,290, up 12.4% from 2013, primarily due to greater revenues from transportation, which amounted to MM$ 223,723, 8.6% greater than the previous year and due to a fare increase resulting from AC installment and, to a lesser extent, because of a 774,000 increase in ridership when compared to the previous year (the number of rides increased from 666.9 million in 2013 to 667.6 million in 2014).

Furthermore, Metro booked a 30.5% increase in non-fare revenues primarily due to increased revenues at points of Sale. In 2014, Metro was responsible for 100% of the collection activities for the City of Santiago’s public transportation System, whereas in 2013 it took over this task in September. This figure also grew due to an increase in Store, Commercial Site and Intermodal terminal Leases, as well as other income.

Cost of sales amounted to MM$ 253,670, up 16.9% from 2013, due to greater expenses in energy, Maintenance and points of Sales. Note that energy expenses increased because of a new electric power supply agreement signed by Metro, effective as of April 2014, stipulating that energy be sold at the marginal cost (market price) and not at the nodal price, as provided under the previous contract. Maintenance cost hikes are related to station cleaning, rolling stock maintenance and the new track maintenance contract. Furthermore, points-of-sale related costs also increased due to Metro’s take over of all poSs.

As a result of the above, Metro’s 2014 gross earnings amounted to MM$ 27,619.

Administrative expenses totaled MM$ 22,441, 11% less than 2013, primarily due to a drop in personnel spending and overhead.

2014 EBITDA amounted to MM$ 79,546, which was 2% less than the 2013 figure.

Interest expense on financial debt was booked for a sum of MM$ 50,137, which is similar to the 2013 figure. However, indexation unit results came in at a loss of MM$ 46,824, due to a 5.7% increase in the UF during the year.

In 2014, the company recorded a MM$ 57,761 loss for foreign exchange translation due to a 15.7% increase in the dollar value during the year (from $524.61 per dollar at 31 December 2013 to $606.75 per dollar at 31 December 2014).

As a result of the above, at 31 December 2014 the company recorded a loss of MM$ 131,141, which was greater than the MM$ 73,319 in losses recorded for 2013.

At 31 December 2014, the company’s total assets amounted to MM$ 3,519,027, i.e., a 12.3% increase over the previous year.

FINANCIAL STATEMENT REPORTING

The following reports are attached hereto: Classified Consolidated Statement of Financial position, Consolidated Income Statements by Function, Consolidated Statement of Changes in Net equity, Consolidated Cash Flow Statement, Notes to the Consolidated Financial Statements, and Independent Auditors’ report.

MANAGEMENT, DISCUSSION AND ANALYSIS OF THE CONSOLIDATED FINANCIAL STATEMENTS

INTRODUCTION

This report aims to present an analysis of the economic/financial performance of the Company as of December 31, 2014, analyzing the financial structure and its main trends, through comparative tables of the Statements of Financial Position as of December 31, 2014 and 2013, and the Statements of Comprehensive Income as of December 31, 2014 and 2013, expressed in million of Chilean pesos.

STATEMENT OF FINANCIAL POSITION

As of December 31, 2014, total of Assets and Liabilities amount to MCh$3,519,027, representing an increase of MCh$384,454, equivalent to 12.3% compared to December 2013.

Total Assets are clearly dominated by the fixed portion of its resources. Accordingly, as of December 31, 2014, Property, Plant & Equipment and Net Investment Property represent 88.5% of total Assets. Additionally, current Assets and the other non-current Assets represent 9.9% and 1.6% of total Assets, respectively.

Net Property, Plant & Equipment, and Investment Properties, commercial premises and other properties, granted under operating lease, increased by 9.8% -MCh$278,377 - as of December 2014, as a result of purchases of properties -MCh$ 352,665- associated to the expansion projects of the Metro subway network, mainly on Lines 3 and 6, that include MCh$320,185 for works in progress. MCh$19,361 for Land, MCh$9,908 for Railway rolling stock, MCh$1,508 for Machinery and equipment, and MCh$1,703 for Other property. This was offset by depreciation expenses associated with the Company's assets (MCh$73,501) and to a lesser extent to sales and/or retirement (MCh$199), and transfers to other assets of the Company (MCh$370). Additionally, Investment Property decreased by MCh$218.

Current Assets as of December 2014, increased by 57.7% (MCh$127,346) and its variation was mainly due to increases in Cash and cash equivalents (MCh$93,018) and other current financial assets (MCh$28,798), due to a higher level of investments in long-term and short-term deposits under 90 days, as a result of cash resources obtained from the new issuance and placement of bonds in the international market of USD$500,000,000 on February 4, 2014. To a lesser extent, the other items that showed an increase were, Inventories (MCh$4,850), Other non-financial Assets (MCh$342) and Current Tax Assets (MCh$484), despite the decrease in current trade and other receivables (MCh$146). Cash and cash equivalents (MCh$222,297), Other current financial assets (MCh$97,949), -Financial investments greater than three months-, Trade and other accounts receivable (MCh$10,281), Inventories (MCh$12,142) and Other non-financial assets (MCh$3,816) are among the main components of current assets.

As of December 2014, non-current assets, excluding property, plant and equipment and Investment Properties decreased by 27.1% (MCh$21,269) and its variation was mainly due to the decrease in other non-financial assets (MCh$26,634), due to the acquisition of land and other property associated with projects within lines 3 and 6. This was offset by an increase of MCh$3,452 in Other non-current financial assets, MCh$1,612 in Intangible assets other than Goodwill and MCh$301 in Non-current rights receivable.

The main variations regarding liabilities as of December 2014, originated from Non-current liabilities which increased by MCh$301,903. To a lesser extent, both Equity and Current liabilities increased by MCh$7,001 and MCh$75,550, respectively. Equity varied due to an increase of MCh$206,691 in issued capital, resulting from capital increases agreed upon at the Extraordinary Shareholders meeting in December 23 (MCh$154,491) and August 28 (MCh$52,200). This was offset by an increase of MCh$131,141 in Accumulated losses as a result of loss for the year 2014. Non-current liabilities varied mainly due to an increase of MCh$317,547 in Other non-current financial liabilities, due to increased obligations with public, bonds (MCh$329,732) - new issuance and allocation of bonds in the international market by US$500,00,000 on February 4, 2014 - and megaproject contract withholdings (MCh$8,140). This is offset by decreases in interest-bearing loans (MCh$15,610) and Derivative transactions (MCh$4,715). Other variations in Non-current liabilities occurred in Non-current provisions for employee benefits, which increased by MCh$1,321. Non-current accounts payable to related entities decreased by MCh$16,952 as a result of capitalizations of contributions received by the Chilean Government for expansion projects on the subway network (Lines 3 and 6), and a decrease of MCh$13 in other non-current non-financial liabilities.

Additionally, current liabilities varied due to a decrease of MCh$22,950 in Other current financial liabilities due to a decrease of MCh$32,633 in Interest-bearing loans and MCh$94 for Derivative transactions, despite an increase of MCh$9,777 in Public obligations (Bonds). To a lesser extent, this was due to a decrease of MCh$901 in Current provisions for benefits paid during 2014. This was offset by an increase of MCh$18,093 in Other current non-financial liabilities, Trade and other accounts payable of MCh$12,001 and Other short-term provisions of MCh$758.

Non-current liabilities (MCh$1,433,857) are constituted by a 38.0% (MCh$545,279) in foreign currency obligations, a 61.7% (MCh$883,741) in obligations in local currency readjustable and 0.3% (MCh$4,837) in local currency non-readjustable. Interest-bearing loans (MCh$246,292) and Public obligations (MCh$298,987) are included in obligations in foreign currency with banks and financial institutions. The readjustable local currency component is constituted by Public obligations (Bonds) of MCh$858,397. Non-current provisions for employee benefits (MCh$13,723). In foreign currency obligations is included (a) Other non-current financial liabilities MCh$3,482 and Other financial liabilities MCh$8,139. The local currency component is composed by Accounts payable to related companies for the contributions received by the Chilean Government for various ongoing projects.

Regarding liquidity ratios, positive net working capital amounts to MCh$159,561 (which increased by MCh$120,345 compared to December 2013). Current liquidity ranged from 1.22 to 1.85 times and the acid ratio ranged from 0.71 to 1.18 times. The variations of these ratios are explained by an increase of MCh$127,346 in current assets (financial investments) and MCh$7,001 in increased current liabilities.

Indebtedness ratios increased compared with December 2013: the total debt-to-equity ratio went from 0.72 to 0.86 times; the current portion of long-term debt from 86.19% to 88.39%, despite the current portion of short-term debt decreased from 13.81% to 11.61%.

STATEMENT OF COMPREHENSIVE INCOME

As of December 31, 2014, the Company recorded a positive gross profit (Revenue less Cost of Sales) of MCh$27,620, a Loss of MCh$157,670 for results other than Cost of sales, reaching a loss for the year after tax of MCh$130,050. A loss of MCh$1,091 corresponding to Other comprehensive income is added to the previous result, with a total loss of MCh$131,141.

As of December 2014, revenue amounted to MCh$281,290 with an increase of MCh$31,110 (12.4%) compared with last year. Some of the main increases include: Revenue for passenger transportation service (MCh$21,503) mainly due to the new agreement with the Ministry of Transport and Telecommunications, where beginning from January 1, 2014, the technical fare per passenger transported during rush hour increased by $30, to cover for the costs of air conditioning systems incorporated in the trains in Santiago. To a lesser extent, during the period between January and December 2014, we noted an increase of only 774,000 trips (0.8%), compared to 2013. This was due to a decrease of 3.8% and 5.0%, respectively, in the passenger flow during August and November; due to fewer working days, a greater number of holidays and a decrease in the Chilean economic activity, compared with 2013. Other increases occurred in Sales channel revenue (MCh$11,864) where Metro S.A. is responsible for the entire sales channel of the transportation system, Transantiago. On the other hand, Other operating income increased by MCh$1,306 and Leasing income by MCh$274, which is offset by a decrease in supplementary transport income - fixed and variable compensation AFT-MCh$3,837.

Cost of Sales (MCh$253,670) increased 16.9% (MCh$36,674) compared to December 2013, mainly due to higher expenses on electricity (MCh$14,013), general expenses (MCh$11,568), Operation and maintenance expenses (MCh$9,111), Personnel (MCh$5,000) and Depreciations and amortizations (MCh$819); despite a decrease in Supplementary transport costs - fixed and variable commission was recorded of AFT-MCh$3,837

Energy costs increased as a result of a new electricity supply contract entered into by Metro in April 2014, where the price of electricity is considered as a marginal cost (market price) and not as regulated prices as in the previous contract. General expenses within cost of sales increased mainly due to greater expenses in contracts for service received, such as security contracts, business management advisory, corporate image and other general expenses. Operation and maintenance costs were affected by increases in station maintenance and cleaning, rolling stock, new contract for track maintenance and other maintenance contracts mainly associated with the increased train load. Personnel expenses varied mainly due to greater payroll expenses associated with an increase in the average number of personnel, as a result of the Company’s greater operating level compared with the previous year. Depreciation varied due to additions from projects associated with the extension of the metro network, mainly rolling stock and electrical equipment.

Results other than gross profit, showed a loss of MCh$157,670 due to the negative effect of MCh$57,761 for Exchange rates, MCh$50,137 for Financial expenses - External credits, Bonds and derivative transactions interest - MCh$46,824 for Results from Inflation Adjusted Units, MCh$21,907 for Management fees, MCh$8,532 for Other operating expenses and MCh$534 for Depreciations and amortizations. This is offset by the positive effects of financial income (MCh$10,343) - Financial Investment Revenue and other income (MCh$8,773) - Net swap valuation and Other operating revenue (MCh$8,909). Complementing the aforementioned, the loss result of the foreign currency exchange differences, was due to a depreciation of 15.7% of the Chilean peso compared to the US dollar (from Ch$524.61 in December 2013 to Ch$606.75 in December 2014), which generates a greater loss for the

year 2014, mainly as a result of liabilities held in US dollars. Additionally, the negative effect of the Inflation Adjusted Units, was due to an increase in the value of the UF of 5.7% as of December 2014.

Compared with the prior year, Results other than gross profit increased their loss in MCh$51,558 due to the negative effects/losses of foreign currency exchange differences (MCh$30,648), Results from Inflation Adjusted Units (MCh$29,999), Other by function expenses (MCh$7,335) and Financial expenses (MCh$105). These variations were offset by the positive effects/gain from other income by function that increased by MCh$6,671, Other revenue that increased by MCh$5,782 - Swap valuations - Financial income that increased by MCh$1,307 and Management expenses that decreased by MCh$2,769.

VALUATION OF MAIN ASSETS

No information is available regarding differences between the carrying amounts and economic and/or market values that are worth mentioning, except for those that may arise in property, plant and equipment, given the particular characteristics of the Company's assets, such as tunnels, stations and civil works.

STATEMENT OF CASH FLOW

Net cash generated from operating activities

As of December 31, 2014 the total net cash generated from operating activities was MCh$101,844, (MCh$81,327) when compared to last year 2013. Positive cash flows include: Collection from the sale of goods and rendering of services (MCh$280,067) representing an increase of MCh$32,780 compared with December 2013, item that represents the main Company's revenue, which are the transport of passengers, sales channel and non-tariff related revenue (leases) and to a lesser extent Other operating activities amounts to MCh$27,315 that mainly include interests and financial investments of less than 90 days and other operating charges.

The negative operating cash flows consists of payments of MCh$131,091 to suppliers for the provision of goods and services, MCh$67,338 for Payment to or on behalf of employees and MCh$7,109 for Other payments for operating activities, mainly for payment of property taxes and other.

Operating cash flows are of the same nature compared with last year, reflecting an increase in positive net cash flow of MCh$20,517 due to higher positive net cash of MCh$54,826 which are offset to a lesser extent by higher negative cash flows of MCh$34,309.

Net cash generated from financing activities

Net cash flows as of December 31, 2014 amounted to MCh$310,089, compared to last year’s MCh$130,272. During 2014 there were cash inflows from other sources of MCh$267,496, mainly due to the new issuance and allocation of Bonds in the international market of MUS$ 500 on February 4, 2014. Other cash flows were obtained from the issuance of shares of MCh$184,902, due to the capitalization of government contribution agreed upon at the Extraordinary Sharholders’ meeting held on December 23 and August 28. To a lesser extent, cash was obtained from Loans to relate entities by MCh$4,837 corresponding to contributions received from the Chilean government for investment projects, mainly related to the projects Lines 3 and 6. Additionally, the Payment of external loans (MCh$96,543) and Interests paid (MCh$50,603) which include External credits and Obligations with the public (Bonds) are within cash outflows.

Positive net cash flow increased by MCh$179,816 (compared with 2013) due to higher cash inflows of MCh$274,144 and higher cash outflows of MCh$94,328. Positive variations include MCh$274,144 for other cash inflows and the negative variation include lower cash inflows of MCh$34,398 for the issuance of shares, MCh$15,051 for Loans to related entities, MCh$44,500 for higher payments of long-term borrowings and MCh$479 for higher interests paid.

Net cash generated from investment activities

As of December 31, 2014 investment activities recorded a negative net cash flow of MCh$335,294 (MCh$(219.183) in 2013). Negative cash flows include: MCh$299,589 for the Purchase of property, plant and equipment mainly associated to the Line 3 and 6 projects, MCh$27,737 for Other payments to acquire equity or debt instruments from other entities, deposit investments for periods greater than three months, MCh$1,168 for the Purchase of intangible assets (software and easement) and MCh$6,800 for Interests paid, among others.

Negative cash flows increased by MCh$116,111 compared to last year, due to higher negative cash flows of MCh$118,353 in the purchase of property, plant and equipment, MCh$1,085 in the purchase of intangible assets and MCh$6,800 in interests paid, which are offset by lower payments to acquire equity or securities from other entities (MCh$10,127).

Increase (decrease) in cash and cash equivalents

At the beginning of 2014, an opening balance of cash and cash equivalents balance (financial investments not exceeding 90 days) of MCh$129,279 was recognized. The closing balance of cash and cash equivalents as of December 31, 2014 amounted to MCh$222,297. Consequently, the net variation in cash and cash equivalents for the year was positive and amounts to MCh$93,018.

In comparison with 2013, the opening balance of cash and cash equivalents amounted to MCh$132,034. The closing balance for cash and cash equivalent amounted to MCh$129,279 and net change for the period was MCh$2,755. The effects of the variation in exchange rates on cash and cash equivalents recorded a positive effect of MCh$16,379 as of December 31, 2014 as result of an increase in the exchange rate, (15.7%) mainly US dollars, (MCh$$4,828 compared to prior year).

MARKET RISK ANALYSIS

The Company faces various risks inherent to the activities performed in the public transportation of passengers, in addition to the risks associated with economic/financial changes in market conditions, accidental events or force majeure, among others.

Pricing structure

The Company is part of the Integrated System of Public Passenger Transport of Santiago. Transantiago, and its tariff revenue is based on the number of transported passengers effectively validated and the technical fare established in Appendix No.1 based on the Tender Conditions for the use of Ways in Santiago.

On December 14, 2012 a new Transport agreement was entered into replacing the aforementioned Appendix No.1, where a flat fee of $302.06 per validated transported passenger was established, based on September 2012, and is updated monthly by indexation polynomial, included in this new agreement, which indicates the fluctuation of the variables comprising the structure of the Company’s long-term expenses (CPI, US dollars, Euros, the price of power and electricity). This allows a natural hedge to changes in cost, due to an increase in any of the variables included in the polynomial.

Passenger demand

The demand for passenger transport is a demand derived from other economic activities. During the period between January to December 2014, an increase of only 774,000 trips was observed, compared to 2013, mainly due to a decrease in passenger flow in August and November of 3.8% and 5.0%, respectively, due to fewer working days, a greater number of holidays and a decrease in the level of economic activity in the country, compared with 2013.

Interest rate and exchange rate risk

In order to reduce the exposure to changes in exchange and interest rates of financial debt, the Company has a Financial Risk Coverage Policy. Within the framework of this policy, the Company performed derivative transactions which amounts to MUS$138 as of December 31, 2014, and placed, for the first time, bonds in the international financial market of MUS$500 at a rate of 4.85%, highlighting the high degree of participation of foreign investors, which reached a demand of 7.6 times the amount of the placement. These actions helped reduce de level of exposure to changes in the aforementioned variables.

Accordingly, it is worth noting that the indexation polynomial through which the technical rate of Metro S.A. is updated, includes the US dollar and Euro variables, among others, which is a "natural hedge" in the long-term cash flow.

Liquidity risk and financial liabilities structure

Tariff revenue associated with Metro´s passenger transportation, in accordance with the new transport agreement, are deducted daily from funds raised by the Company's Sales Channel, generating the necessary liquidity to cover the Company’s obligations. This income corresponds to 80% of the total revenue.

The overall debt structure of the Company is mainly composed of bonds and long-term bank loans, aimed at ensuring financial stability and improving the matching with the maturity terms of the Company's assets.

Credit risk

Credit risk of accounts receivable from commercial activity (passenger transportation) is limited, as 80% of the revenue received by the Company, is in cash on a daily basis, while the remaining 20% corresponds to revenue not related to the main business.

Debtors relate mainly to commercial leases, advertising and invoices receivable, with low delinquency. In addition, there are no customers who owe significant amounts relative to the total of accounts receivable.

Credit risk of financial assets (cash and short-term investments), is limited considering the Company's Financial Investments Policy that aims to reduce risks by means of portfolio diversification, setting maximum investment limits for each bank, as well as considering minimal risk classifications by issuer.

Electricity Supply Risk

One of the main risk factors is the supply of electrical energy required to operate the Metro and the need for service continuity, to avoid interruptions in supply. In this regard, the Company has a feeding system that allows it to reduce exposure to outages, having a direct connection to two points of the Central Interconnected System (SIC), which feeds Lines 1, 2 and 5, as well as two points for the feeding of Line 4. Additionally, please note the following:

The electricity feeding systems are duplicated, and in the event of failure of one of them there is always a backup that keeps the power supply for the regular operation of the network.

The operational control systems are designed with redundant criteria, i.e., they work in a standby mode, so that in the absence of one of the systems, the other comes into operation immediately, maintaining the normal operation of the network.

For Lines 1, 2 and 5, in the event of a crash of the Central Interconnected System, the distributing company has defined as a first priority the replenishment of the supply that feeds the center of Santiago, which allows the Metro network to have energy simultaneously, since the Metro is supplied by the same feeder.

Accordingly, it should be noted that in March 2014, Company entered into the Electricity Supply Contract with Enorchile S.A., in effect as of April 1, 2014 and allows it to ensure the power supply to the current network for a period of three years (until March 31, 2017)

COMPARATIVE TABLE OF THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

COMPARATIVE TABLE OF THE CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, BY FUNCTION

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