Annual Report 2010 Highlight
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Contents 1 Cover 2 Resume 4 Chairman’s Letter to Shareholders 10 2010 Highlight 16 Main financial and operational indicators 20 Identification of the Company 24 Ownership and control 28 Administration 38 Human resources 44 Stock Exchange Transactions 50 Dividends 56 Investment and financing policy 2010 60 The company´s businesses 66 Investments and financial activities 78 Risk factors 84 Regulatory framework of the electricity industry 2010 Annual Report 100 Description of the business by Country 128 Other businesses 132 Sustainability 136 Diagram of shareholdings 144 Consolidated relevant facts 154 Identification of subsidiaries and related companies 180 Declaration of responsibility 182 Consolidated Financial Statements 326 Summarized Financial Information for Subsidiaries pages control previously next Santiago Stock Exchange ENERSIS Contents New York Stock Exchange ENI 1 Cover Madrid Stock Exchange 2 Resume XENI 4 Chairman’s Letter to Shareholders 10 2010 Highlight 16 Main financial and operational indicators 20 Identification of the Company 24 Ownership and control 28 Administration 38 Human resources 44 Stock Exchange Transactions 50 Dividends 56 Investment and financing policy 2010 60 The company´s businesses 66 Investments and financial activities 78 Risk factors 84 Regulatory framework of the electricity industry 100 Description of the business by Country 128 Other businesses 132 Sustainability 136 Diagram of shareholdings 144 Consolidated relevant facts 154 Identification of subsidiaries and related companies 180 Declaration of responsibility 182 Consolidated Financial Statements 326 Summarized Financial Information Enersis S.A. was incorporated, initially, with the name Compañía Metropolitana de Distribución Eléctrica S.A., for Subsidiaries and changed its name to Enersis S.A. on August 1, 1988. Its corporate capital is ThCh$2,824,882,835, divided into 32,651,166,465 shares. Its shares are quoted on the Chilean exchanges, on the New York Stock Exchange in the form of American Depositary Receipts (ADR) and on the Latin American Securities Exchange of the Madrid Stock Exchange (Latibex). Its main business is the exploitation, development, operation, generation, distribution, transmission, transformation and/or sale of energy in any of its forms or nature, directly or through other companies, and also businesses in telecommunications and engineering consultancy services, in Chile and abroad, in addition to investing and managing its investments in subsidiaries and associate companies. Its total assets amounted to ThCh$13,005,845,107 as of December 31, 2010. Enersis controls and manages a group of companies that operate in the electricity markets of five countries in Latin America (Argentina, Brazil, Chile, Colombia and Peru). In 2010, net income attributable to the dominant company amounted to ThCh$486,226,814 and operating income amounted to ThCh$1,704,300,738. At the end of 2010, it provided direct jobs to 12,264 people through its subsidiaries in Latin America. pages control previously next Contents Enersis 1 Cover 2010 Annual Report 2 Resume 4 Chairman’s Letter to Shareholders 10 2010 Highlight 16 Main financial and operational indicators 20 Identification of the Company 24 Ownership and control 28 Administration 38 Human resources 44 Stock Exchange Transactions 50 Dividends 56 Investment and financing policy 2010 60 The company´s businesses 66 Investments and financial activities 78 Risk factors 84 Regulatory framework of the electricity industry 100 Description of the business by Country 128 Other businesses 132 Sustainability 136 Diagram of shareholdings 144 Consolidated relevant facts 154 Identification of subsidiaries and related companies 180 Declaration of responsibility 182 Consolidated Financial Statements 326 Summarized Financial Information for Subsidiaries pages control previously next Contents 1 Cover 2 Resume 4 Chairman’s Letter to Shareholders 10 2010 Highlight 16 Main financial and operational indicators 20 Identification of the Company 24 Ownership and control 28 Administration 38 Human resources 44 Stock Exchange Transactions 50 Dividends 56 Investment and financing policy 2010 60 The company´s businesses 66 Investments and financial activities 78 Risk factors 84 Regulatory framework of the electricity industry 100 Description of the business by Country 128 Other businesses 132 Sustainability 136 Diagram of shareholdings 144 Consolidated relevant facts 154 Identification of subsidiaries and related companies 180 Declaration of responsibility 182 Consolidated Financial Statements 326 Summarized Financial Information for Subsidiaries pages control previously next 4 Enersis 2010 Annual Report Contents Chairman´S Letter to 1 Cover Shareholders 2 Resume 4 Chairman’s Letter to Shareholders 10 2010 Highlight 16 Main financial and operational indicators 20 Identification of the Company Dear Shareholder, 24 Ownership and control As Chairman of the board of directors of Enersis, I am proud to present you with 28 Administration the 2010 Annual Report, which summarizes the series of actions the Company has undertaken in the electricity generation, transmission, and distribution business in the 38 Human resources five countries in which it operates in Latin America: Argentina, Brazil, Chile, Colombia 44 Stock Exchange Transactions and Peru. 50 Dividends Before detailing the main events of our administration, I would like to mention 56 Investment and financing policy 2010 a series of occurrences that impacted our business and that were related to external events. I am referring to the effects caused by the earthquake in Chile, the drought 60 The company´s businesses experienced by the Colombian and Chilean market, and the unusual weather conditions 66 Investments and financial activities in Brazil and Argentina, situations that tested our subsidiaries’ and their employees 78 Risk factors capacity 84 Regulatory framework of the Pablo Yrarrázaval Valdés With satisfaction, and despite the ravages of nature, I can say that thanks to electricity industry Chairman Enersis´ diversified portfolio of assets, in the entire chain of the electricity business 100 Description of the business by and in the main countries of the region, we were able to successfully overcome each Country and every complicated situation, maintaining our leadership position in an increasingly competitive energy market. 128 Other businesses 132 Sustainability 136 Diagram of shareholdings Context 2010 144 Consolidated relevant facts 154 Identification of subsidiaries and The morning of February 27, 2010, nearly 70% of the population in Chile was affected related companies by a tragic earthquake and then a tsunami, impacting the life of more than two million Chileans. 180 Declaration of responsibility The earthquake of intensity 8.8 on the Richter scale, the second largest in the history 182 Consolidated Financial Statements of our country, ravaged the electrical network and contracted economic activity for several 326 Summarized Financial Information months. for Subsidiaries To give you an idea of the magnitude of the earthquake, our subsidiary Chilectra reinstalled 144,244 meters of cable, 14,552 fuses and more than 1,000 crossarm. The above implied doing jobs, that could normally take up to two years and a half, in twelve days. In generation, our subsidiary Endesa Chile played a fundamental role in recovering normality and assuring the supply of electricity in the south central area of the country within hours of the occurrence of the catastrophe. Of the 5,611 MW of installed capacity that we own in Chile, more than 50% is located in the regions most affected by the earthquake; I refer to the Maule and the Bio Bio regions, and of those plants, only Bocamina, a 128 MW coal unit, suffered damages. This power plant, located in Coronel county, restarted operations on the thirteenth of December We had not yet recuperated from the earthquake and the tsunami when during the pages control first days of April a storm hit the state of Rio de Janeiro, where our distribution subsidiary Ampla is located, leaving nearly 15,000 victims. previously next 5 2010 Annual Report Chairman´s Letter to Shareholders As a result of the phenomenon El Niño, the market in Colombia showed drought Contents conditions during the first semester of the year, while the effect of La Niña phenomenon in Chile was noted in the second half, reaching the last month of 2010 with a history that showed clearly that the drought was one of the most extreme of the last 50 years. 1 Cover This forced our generation companies to incur in higher costs of energy purchases, 2 Resume greater transportation expenses and an increased use of fuel for thermal generation, 4 Chairman’s Letter to Shareholders compensating for the reduced hydrology availability. During the last days of December, 2010, our subsidiary Edesur, distribution company 10 2010 Highlight that supplies electricity in the southern area of Buenos Aires, Argentina, was faced with an 16 Main financial and operational unusual heat wave, the worst in the last 58 years, which led electricity demand to reach indicators historical peaks, event that proved the capability of our entire infrastructure and lines in 20 Identification of the Company the area. 24 Ownership and control 28 Administration Demand and growth 38 Human resources 44 Stock Exchange Transactions As I mentioned, a series of events occurred during 2010, that, somehow, impacted our 50 Dividends operations , although the last months of the year confirmed a trend that we