Endesa.Es ANNUAL REPORT ACTIVITIES REPORT ACTIVITIES REPORT ANNUAL REPORT 07 Endesa
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REPORT RIBERARIBERA DELDEL LOIRALOIRA 6060 280422 MADRID | TEL 912131000 | www.endesa.es ANNUAL REPORT ACTIVITIES REPORT ACTIVITIES REPORT ANNUAL 07 endesa endesa [P] PUBLICACIONES 00 cubierta_ING.indd 1 29/7/08 08:02:48 WorldReginfo - f76d29ca-f749-4b7a-9bcb-fa9a6103dc6e VISION VALUES ■ ENDESA is an energy sector operator and ■ People: We work to ensure development provider of associated services, focused on opportunities for all Company employees, based on electricity. merit and the professional contribution made. ■ A responsible, effi cient and competitive ■ Health and Safety: We are fi rmly committed to multinational company, committed to health, occupational health and safety, promoting a culture ENDESA was incorporated in 1944 of electricity. The company is also safety and environment. of risk prevention. as Empresa nacional de a major operator in the natural gas sector Electricidad, S.A. ■ A company ready to compete at global level. ■ and develops other energy-related Team work: We encourage involvement towards Its name was changed to ENDESA, S.A. services. achieving a common goal, sharing information and at the General Shareholder’s Meeting Its assets totalled Euro 58,047 million at 31 knowledge. held on 25 June 1997. It is registered December 2007. in volume 323, sheet 1, page 6,045 ■ Ethical conduct: We encourage professionalism, ENDESA is the leading company of the Madrid Mercantile moral integrity, loyalty and respect to others. in the Spanish electricity sector, Register. one of the largest electric utilities ■ The Company’s registered offi ces Customer focus: The focus of ENDESA’s efforts is to in Europe and the largest private and headquarters are located in calle boost customer satisfaction by providing competitive, electricity multinational in MISSION Ribera del Loira No. 60, 28042, Madrid, high-quality solutions. Latin America. and its tax identifi cation code is ■ To maximise the value of its shareholders In 2007, it reported after-tax profi t ■ Innovation: We strive constantly to improve and A28023430. At 31 December 2007, investments. of Euro 2,675 million, EBITDA of Euro 7,485 fi nd innovative solutions to meet the maximum its share capital amounted to million, Operating profi t of Euro 5,596 ■ 1,270,502,540.40 euros, represented To serve its markets and exceed its customers’ profi tability criteria. million and total revenues of Euro 21,931 by 1,058,752,117 shares, each with a par expectations. ■ million. Focused on results: Our activities are aimed at value of Euro 1.2. At year-end 2007, ENDESA directly ■ To contribute to the development of its achieving the objectives of the business project and Its shares are listed in Spanish stock employed 27,019 people, of whom 12,677 employees. profi tability for our shareholders, endeavouring to markets and in the off-shore stock market work in Spain and Portugal, 2,147 in other exceed expectations. of Santiago de Chile. European countries and 12,169 in Latin Its core business is the production, ■ Community and the environment: We have made a America. transmission, distribution and supply social and cultural commitment to the Community and adapt our business strategies to preserve the environment. Edit: Dirección General de Comunicación Design: Dirección General de Comunicación Layout: Cromotex Printing: TF Artes Gráfi cas Legal Deposit: M-24432-2008 00 cubierta_ING.indd 2 29/7/08 08:03:04 WorldReginfo - f76d29ca-f749-4b7a-9bcb-fa9a6103dc6e CONTENTS CHAIRMAN’S LETTER 2 CHIEF EXECUTIVE OFFICER’S LETTER 4 GOVERNING BODIES 6 ENDESA’S STRATEGY: OVERVIEW 8 ECONOMIC, ENERGY AND REGULATORY FRAMEWORK 12 2007 RESULTS 26 BUSINESSES 62 Business in Spain and Portugal 63 Business in Europe 88 Business in Latin America 97 Services and other activities 109 SUSTAINABLE DEVELOPMENT AND ENVIRONMENT 116 TECHNOLOGY AND INNOVATION 128 HUMAN RESOURCES 136 SOCIAL ACTION 152 APPENDICES 162 Main companies of the ENDESA group 162 Key fi nancial indicators 166 Key operating data 169 ENDESA’s generation assets in Spain at 31 December 2007 170 ENDESA’s generation assets in Europe and North Africa at 31 December 2007 173 ENDESA’s generation assets in Latin America at 31 December 2007 174 Signifi cant events in 2007 and 1Q08 176 WorldReginfo - f76d29ca-f749-4b7a-9bcb-fa9a6103dc6e endesa07 2 ANNUAL REPORT Dear shareholder In mid-October 2007, in my first public intervention as Executive Chairman of ENDESA, I asserted that one of this Company’s major strengths was its ability to contribute to changing the energy model worldwide and to play a pivotal role in resolving the major energy challenges of the future. Some may have thought, and may continue to think, that this was an exag- geration. However, if you carefully read the information provided in this Opera- tions Review, you may well come to the conclusion that perhaps I was not ex- aggerating after all, and that I had solid reasons for making these assertions. ENDESA, including its discontinued operations, closed 2007 with installed capacity of 49,187 MW, produced 183,946 GWh in the year and supplied 227,502 GWh to more than 23 million customers. This huge industrial scope goes hand in hand with a no-less-significant financial strength with assets of Euro 58,047 million, revenues: Euro 21,931 million, EBITDA: Euro 7,485 mil- CHAIRMAN’S lion, cash flow: Euro 5,258 million, net income: Euro 2,675 million and capex: LETTER Euro 4,746 million. It is also worth recalling that these results were attained in a difficult context, shaped by slowing electricity demand in Europe and by the problems caused by low precipitation levels and natural gas supplies which undermined the business in Latin America. This was compounded by the increasingly delicate international financial situation, which saw the energy raw materials markets come under increasing pressure, and uncertainty mounted. In addition to the aforementioned results, the Company boasts a highly com- petitive and diversified generation mix; service quality has steadily improved in the countries where ENDESA operates; the Group has made a strong com- mitment as an operator in the deregulated electricity market and it is making increasing efforts in the field of renewable energy and technological innovation, which are a cornerstone in its fight against climate change. We also highlights ENDESA’s traditional commitment to the communities where it operates, as evidenced by the Euro 39.2 million invested social action projects in 2007, i.e. 24.5% more than in the previous year. These and other aspects of the company’s industrial and corporate reality make ENDESA one of the leading electric utilities, not just in Europe, but in the world. And, on that basis, I do not think there can be any doubt that one of the world’s leading electric utilities must necessarily be in a sufficiently strong and competitive position to contribute to developing a new energy model. WorldReginfo - f76d29ca-f749-4b7a-9bcb-fa9a6103dc6e ACTIVITIES REPORT 3 CHAIRMAN’S LETTER Not only can it do this: it must. • Boost our income statement growth. It is obliged to do so by its economic significance in the countries where it • Guarantee the supply of primary energy sources. operates and by the major impact of its corporate purpose — the provision of • Seek to constantly improve supply quality. electric power services — on economic and social development in these coun- • Slash CO2 emissions. tries. It is also obliged to do so because the cornerstone of its business project • And, achieve all of this with a particular focus on the Company’s main as- are the thousands of men and women who are fully aware that society demands set, its professionals. from authorities, international bodies and companies an urgent response to the Furthermore, compliance with these targets will be accompanied by a major threat posed to our children and our children’s children. effort in technological innovation, since this will remain vital to our strategy, Accordingly, ENDESA strives to be the right place for those thousands of via sustainable generation with clean coal and renewable energy, “smart” net- people to help create value and wealth, respecting the environment, through a works, eco-efficiency and excellence in all processes. balanced use of natural resources and paving the way for social progress in the In other words, we undertake to perform a duty which we accept at both communities we serve. In short, we strive to ensure a lasting future for this great individual and collective level with enthusiasm and conviction, because we business project and to thereby contribute to the sustainability of our model of are convinced not only that it is possible to keep on creating value using new, society. more sustainable methods of conducting our business, but that this is indeed This means affording particular attention to the needs of Company employ- the only way to proceed with security and future prospects. ees: providing them with adequate professional development, enabling them to reconcile their work with their personal and family life, unlocking the value of the diversity of their opinions, cultures and convictions, and providing them Yours gratefully with a safe and healthy place to work. In this connection, we are proud to say that the frequency of accidents fell by 22% in all ENDESA’s businesses in 2007, and that its track record is currently above the average for the Spanish electricity sector and the bench- mark EU sectors. These results pave the way for further improvements in this regard. In short, all of the data pertaining to energy, economic, technological, so- José Manuel Entrecanales Domecq cial and environmental performance at the Company evidence its capacity to Executive Chairman play a pivotal role in overcoming the energy challenges facing society. And the enthusiasm and commitment of the men and women working at ENDESA make an even greater contribution to meeting this challenge successfully.