Enel Americas
Annual Report 2010

Plain-text annual report

Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 2010 Annual Report Santiago Stock Exchange ENERSIS New York Stock Exchange ENI Madrid Stock Exchange XENI Enersis S.A. was incorporated, initially, with the name Compañía Metropolitana de Distribución Eléctrica S.A., 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. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Enersis 2010 Annual Report Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 4 Enersis 2010 Annual Report Pablo Yrarrázaval Valdés Chairman Chairman´S Letter to Shareholders Dear Shareholder, As Chairman of the board of directors of Enersis, I am proud to present you with the 2010 Annual Report, which summarizes the series of actions the Company has undertaken in the electricity generation, transmission, and distribution business in the five countries in which it operates in Latin America: Argentina, Brazil, Chile, Colombia and Peru. Before detailing the main events of our administration, I would like to mention 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 experienced by the Colombian and Chilean market, and the unusual weather conditions in Brazil and Argentina, situations that tested our subsidiaries’ and their employees capacity With satisfaction, and despite the ravages of nature, I can say that thanks to Enersis´ diversified portfolio of assets, in the entire chain of the electricity business and in the main countries of the region, we were able to successfully overcome each and every complicated situation, maintaining our leadership position in an increasingly competitive energy market. Context 2010 The morning of February 27, 2010, nearly 70% of the population in Chile was affected by a tragic earthquake and then a tsunami, impacting the life of more than two million Chileans. The earthquake of intensity 8.8 on the Richter scale, the second largest in the history of our country, ravaged the electrical network and contracted economic activity for several months. 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 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. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control 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 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. This forced our generation companies to incur in higher costs of energy purchases, greater transportation expenses and an increased use of fuel for thermal generation, compensating for the reduced hydrology availability. During the last days of December, 2010, our subsidiary Edesur, distribution company that supplies electricity in the southern area of Buenos Aires, Argentina, was faced with an unusual heat wave, the worst in the last 58 years, which led electricity demand to reach historical peaks, event that proved the capability of our entire infrastructure and lines in the area. Demand and growth As I mentioned, a series of events occurred during 2010, that, somehow, impacted our operations , although the last months of the year confirmed a trend that we began to visualize earlier in the year, and that is related to the recovery of the economic activity in the region, and specially, in the five countries in which we operate. To give you an idea of magnitude, the improved economic conditions during the last quarter of the year ratified the recovery of electricity demand in Chile, showing a 4.4% increase in electricity consumption , and also the consolidation in Peru and Brazil, with a 8.5% and 7.1% increase respectively. Electricity demand in the areas in which we operate increased an average 5.6% compared to 2009, as a result of the dynamic activity of the economies in these countries. This activity is confirmed by the positive perspectives for 2011, where, according to market consensus, forecast of growth rates are 6.3% for Peru, 6% for Chile, 5.2% for Argentina, 4.6% for Colombia and 4.5% for Brazil. Financial results Dear shareholders, the fact that we have a diversified portfolio of assets, both by business and by country, has allowed us to face the different situations described above in a positive manner and capture the improved macroeconomic conditions present during the last two quarters of the year. By this means, the efficient portfolio in the electricity generation, transmission and distribution business and the presence in Argentina, Brazil, Chile, Colombia and Peru allowed the company to reach Ch$2,261.691 million EBITDA, roughly US$4,433 million, during the year. This figure represents a 10% average annual growth rate for the 2006-2010 five year period, confirming the stategy and policies that the Enersis Group has adopted in the last few years. In line with the above, the Company contributed with Ch$486,227 million profit to controlling owners as of December 31, 2010. Although this figure represented a 26.4% reduction with respect to 2009, year in which the company reached historical profits, we must point out that during the last five years, profits have reached an average 34.8% increase. We have been capable of maintaining a balance among the contribution by business segment: distribution representing 43%, and generation and transmission the remaining 57%. In terms of country, Chile contributes with 32.1% of consolidated EBITDA, Brazil with 30.1%, Colombia with 25.4%, Peru with 8.7% and Argentina with 3.8%. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 6 Enersis 2010 Annual Report Revenues reached Ch$6,563,581 million, figure that represents a 1.4% increase, confirming the favorable demand perspectives expected for the second half of 2010. Total Operating Income of the period totaled Ch$ 1,704,301 million, equivalent to an 11.6% decrease, mainly due to lower results of our generation business segment, fundamentally in Chile and Brazil, partially compensated by the better performance of our distribution business in Peru and Colombia. Physical sales in generation reached a total 63,431 GWh, and in distribution climbed from 63,694 GWh to 67,274 GWh, which represents a 5.6% increase. Our main business During 2010 we carried out two operations intended to focus our actions on our “core” or essence, which is the electricity business, and thus to concentrate on the challenge to meet the increased requirements of energy supply demanded by more than 50 million people we service in Latin America. Within that framework, we accept the bid submitted by the company Graña y Montero SAA, to acquire the entire holding in the Compañía Americana de Multiservicios Limitada, CAM, and equally, we accept the bid submitted by Riverwood Capital LP to purchase the entire holding in Synapsis Soluciones y Servicios IT Ltda. As noted above, such sales were intended to focus the operations of Enersis in its “core business” which is the electricity business and focus resources to meet planned investments in generation and power distribution business segments. Among the award criteria, consideration was placed on the applicant company´s capacity to guarantee the continuity of excellence in services of both Synapsis and CAM, and also the concern for their workers. Enersis group confirms its commitment to remain a model of the energy industry, both in the electricity supply necessary and sufficient to support growth in the five countries of operation, and the quality of service to its more than 13 million customers. Contribution to supply An example of this, and of the company´s commitment with each of the countries in which it operates, was the construction of the hydroelectric plant El Quimbo (400 MW) in Colombia, in Chile, the re-entry of the environmental impact assessment study (EIA) of Central Hidroeléctrica Neltume (490 MW) and the presentation of the EIA of its transmission line, and finally, the presentation of the EIA of Central Hidroeléctrica Los Cóndores transmission line, all in the generation business segment. In the distribution business, I would like to highlight, among other initiatives, a number of projects that aim to meet the increasing demand for electricity in the cities we serve, initiatives related to energy efficiency and reducing the levels of energy losses and also the development and implementation of the first charging points for electric cars through Electrolinera. In short, the company maintains an active portfolio of projects to meet the increased requirements of demand: In Chile, for example, as noted, are the hydroelectric plants Los Condoress (150 MW), Neltume (490 MW), Choshuenco (128 MW), HidroAysén (2,750 MW) and mini hydro Piruquina (7.6 MW), and thermoelectric Punta Alcalde (740 MW). Currently under construction, the thermoelectric Bocamina II (370 MW), will begin operations in late 2011. In the rest of Latin America, in Peru we may highlight the hydroelectric Central Hidroeléctrica Curibamba (188 MW), an initiative that is in the process of environmental assessment, and in Colombia, the construction of El Quimbo with 400 MW. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 7 2010 Annual Report Chairman´s Letter to Shareholders Enersis group has more than 14,800 MW of installed capacity in Latin America and to maintain leadership we must perform a series of investments. That is why, by 2014, we will increase our capacity to 15,600 MW, this, with the commissioning of Bocamina II and El Quimbo. After 2014, some of the projects that we keep under review will come into operation. Simultaneously, we have a large portfolio of projects under analysis or in different degrees of feasibility and basic design, totaling close to 13,000 MW. In other words, the Enersis Group has a broad portfolio of initiatives and we are willing to support the growth of the five countries in which we operate, through the implementation of projects that go hand in hand with environmental stewardship and supporting the development of the communities found in the surroundings. However, we note, especially in the Chilean market, some delay in the process of environmental approval of projects, delays that ultimately threaten the viability of the initiatives themselves. In 2010 we witnessed the paralization of a project and subsequent suspension, despite having received the corresponding environmental approval. Any investor and player in the energy industry needs clear and stable rules. The delay in the process of environmental approval must be solved as soon as possible; if not, Chile will not be able to have the 1.200 MW of additional capacity it requires each year to reach it´s 6% growth rate goal. We understand that when a project makes sense and it is in line with the country’s proposed energy strategy it must be processed in an agile manner, respecting all the criteria stipulated by environmental regulation. And in contrast, if a project does not meet the requirements, the investor is entitled to know promptly to avoid unnecessary costs on all involved, including the State itself. HidroAysén We can say with satisfaction that the HidroAysén project has advanced in its environmental assessment process, receiving in October 2010 the third ICSARA with a total of 199 questions, reducing doubts about the services involved by more than 85% compared to second ICSARA. At the same time, I can proudly point out that the administration of HidroAysén and companies that promote its development, have been able to focus the discussion on energy development in the country on issues of substance, while wielding opponent’s arguments have fallen due to their own inconsistency. For example, just to name a few, critics say that Patagonia will be destroyed and it is not a sustainable initiative. But being realistic, the area of the HidroAysén reservoir is equivalent to 0.05% of the total area of the Aysén region and represents 1.5% of its natural lakes. There are some groups with strong financial backing from foreign entities that ignore the real energy situation in the country and have been commissioned to confuse the public with publicity that does not conform to reality and focuses the debate on other issues. HidroAysén opponents argue that the 2,750 MW, which will flood 5,900 hectares, can be replaced with non-conventional renewable energies, but these groups do not tell the population that in order to replace HidroAysén, 90,000 to 100,000 hectares of wind farms would we required, from 160,000 to 180,000 hectares of solar panels, causing a much greater environmental impact. We must be clear that in order to grow 6%, Chile needs roughly 1,200 MW of additional capacity each year, and that growing at such rate it is estimated that we could become a developed nation by year 2020, with social equity and new challenges. But we must also be clear about the fact that Chile has virtually no fossil fuels and, Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 8 Enersis 2010 Annual Report therefore, not to depend on imported fuels that are less efficient and more polluting, we should make use of a natural, clean, renewable and indigenous resource like water. HidroAysén gives Chile energy independence and we want the public to understand that this is relevant to the country and its people. The investment decision will be taken with all required permissions approved, and we do see that the country´s will is to consider this initiative as a strategic project for development. Social Responsibility 2010 tested our commitment to each of the countries where we operate, and in particular with Chile. After the earthquake, our support to the country went further and was not only limited to “do our work well” to restore normal power supply as soon as possible. Enersis Group was the first company to donate to the National Fund for Reconstruction, contributing with the sum of US$10 million. Also, Fundación Endesa (Spain) created a special fund to help Chile, which has 1 million euros. These resources will be used to rebuild part of the infrastructure of schools and educational establishments damaged by the earthquake in the areas of influence of our companies. In 2010, the first decree to enforce part of the donation was issued, benefiting a total of 56 establishments throughout the country. The above, in line with our Sustainability Policy, where one of our main focuses is the support, promotion and development of activities related to education and its improvement. During the fourth quarter, our subsidiary Endesa Chile certified environmental management systems (EMS) to ISO 14,001 in thermoelectric plants Quintero (257 MW), Huasco TG (64 MW) and Diego de Almagro (24 MW), and therefore, at December 31, 2010, 100% of our installed capacity had its EMS certified by such standard. I am proud to say that the company presented this year it´s first sustainability report, a document that details our Sustainability Policy and that of the group in Chile. On the other hand, I would like to share with you the number of awards we received in 2010, awards that confirm our achievements and encourage us at the same time, to improve our policies and good practices every year. The awards include, among others, the second place of the Corporate Transparency Index 2010, being recognized as the fourth most profitable utility in the world, the eighth place in the ranking of the best companies for working mothers and fathers and the first place in the utilities category of the ranking of the top 100 best companies to invest in Chile. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 9 2010 Annual Report Chairman´s Letter to Shareholders World and regional leader Dear shareholders, we have a wide portfolio of projects to meet the needs of the countries where we operate and we have the support of one of the major energy groups in the world: I refer to ENEL-ENDESA. Our commitment, that of our companies and the more than 12,250 employees who work in Latin America on behalf of the Enersis Group, is to develop solutions tailored to the needs of 13 million customers we have and contribute to the development of the five countries in which we operate, cooperating with the energy supply, maintaining the quality standards of service and our leadership position. As president of Enersis, and on behalf of its board, I want to congratulate each of the workers and employees of our companies, for their work in 2010 and demonstrated commitment in such difficult situations, such as the earthquake of February 27, time in which teams of our subsidiaries Edesur, Ampla, Coelce, Codensa and Edelnor traveled to Santiago, Chile to assist in the work of restoration of the electricity. As I said in the annual report 2009, we are a multinational energy company, we have a diversified portfolio of assets in five countries, we have established permanent presence, knowledge and skills, and a solid financial structure and liquidity. In short, we have the tools necessary to make the Enersis Group, head of Endesa’s business in Latin America managed from Chile, “a regional and global example”. We have been able to implement a successful strategy to increase our shareholders return every year, creating value, applying increasingly stringent standards for our actions and behavior, establishing goals on health and safety constantly greater; in short, we have been capable of leading the electricity industry not only as a consequence of our installed capacity, number of customers or market capitalization, but we are also leaders in the electricity sector in Argentina, Brazil, Chile, Colombia and Peru because of our performance, our excellent work and due to the strong commitment we have with society and with each of the 50 million people we serve in Latin America. Sincerely, Pablo Yrarrázaval Valdés Chairman Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 2010 Highlight Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 12 Enersis 2010 Annual Report Fitch Ratings upgraded risk rating Fitch Ratings raised the Issuer Default Rating (IDR) in local and foreign currency rating of Enersis to BBB+ from BBB, and raised the long-term local rating from AA- to AA. Similarly, Fitch Ratings upgraded the national scale ratings from F1+/AA- to F1+/AA maintaining a stable outlook. HidroAysén receives second ICSARA On January 25 HidroAysén postponed the delivery of answers to such document until June 30. The deadline was later extended until October 29. Standard and Poor’s raises rating S&P raised the corporate credit rating and senior debt of Enersis to BBB+ from BBB, with a stable Outlook. Central San Isidro increases installed capacity to 399 MW San Isidro II thermal power plant, which operates in the Valparaíso region, increased capacity by 22 MW after implementing technological changes allowing it to operate in a dual manner (LNG and oil). Post-earthquake help After the earthquake and tsunami that hit south-central Chile on February 27, Enersis joined the telethon Chile helps Chile with the contribution of $ 550 million, and donated $ 10 million to the National Reconstruction Fund. These resources will be used for the reconstruction of schools damaged by the disaster. Endesa Foundation creates a special fund to help Chile The fund, that will have 1 million euros, will be invested in specific projects in line with the reconstruction of educational establishments damaged by the earthquake. Executive Vice-president takes office in HidroAysén On April 1, HidroAysén reported that Daniel Fernandez joined as executive vice president of the company, due to the resignation as general manager of the company submitted by Hernan Salazar Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 13 Memoria Anual 2010 2010 Highlight Telemanagement In late May, the subsidiary Chilectra launched the project Telemanaged Distribution Network (TD Network), a technological change that will allow us to take a qualitative leap in recording electricity consumption and reducing energy losses. Largest solar project launched in Chile Chilectra starts up a total of 264 thermal-solar collectors, which were installed in 740 m2 of Davila Clinic. Endesa Chile signs supply contract The subsidiary Endesa Chile and Minera Lumina Copper Chile S.A. formalized a contract to supply Project Caserones with electricity. Second Place in VI Ranking CSR 2010 The subsidiary Chilectra received this position in the ranking organized by the Foundation PROhumana along with the Confederation of Production and Trade (CPT), which showcases the best companies in the country in terms of social responsibility (CSR). LNG Quintero In September, LNG Quintero reached its final capacity, 9.6 MMm3/d. Massimo Tambosco assumed as deputy general manager of Enersis At its meeting on September 29, the company’s board approved the proposal of the CEO of Enersis, Ignacio Antoñanza, to appoint Massimo Tambosco as deputy general manager as of October 1, 2010 Enersis y Endesa Chile sign Iguala.cl agreement with the Sernam Both companies signed with the National Women’s Service SERNAM, the agreement “iguala.cl” initiative which aims to advance the incorporation of best practices to foster a workplace culture that includes women and men equally. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 14 Enersis 2010 Annual Report Most transparent companies in the Chilean market Enersis and Endesa Chile obtained a leading position in the Corporate Transparency Index (ITC) 2010, a study performed by Business Intelligence (idN) and the Communications School of the Universidad del Desarrollo. Enersis was second with 76.4 points, while Endesa Chile was ranked in third place with 74.3 points. Hydroelectric Plant El Quimbo Through Emgesa, a subsidiary of Endesa Chile, Enersis will invest U.S. $ 837 million in the construction of a plant that will have an installed capacity of 400 MW and will generate about 2,216 GWh per year in the Colombian market. EIA Central Hidroeléctrica Los Cóndores – Substation Ancoa electricity transmission line Endesa Chile submitted to the Service of Environmental Assessment (SEA), the environmental impact study of the LTE Central Hidroeléctrica Los Cóndores project, an initiative that will connect the future hydroelectric plant Central Hidroeléctrica Condores to the central interconnected system (SIC). HidroAysén Project After completion of the preparation of responses to comments received in the ICSARA n ° 2, on October 28, 2010 HidroAysén submitted the Addendum N° 2. Among the Best Companies for Working Mothers and Fathers For the first time the companies of the Enersis Group in Chile (Enersis, Endesa Chile and Chilectra) participated together in the ranking of the 10 Best Companies for Working Mothers and Fathers, and the outcome was more than positive, ranking in the eighth position. The ranking is performed by Fundación Futuro and the Ya magazine of the newspaper El Mercurio. Reentry of EIA of Central Hidroeléctrica Neltume Endesa Chile submitted the Environmental Impact Study of Neltume hydroelectric project (490 MW) to the Environmental Assessment Service again, incorporating the additional information requested by the various agencies involved in the evaluation process of the initiative. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 15 2010 Annual Report 2010 Highlight HidroAysén reduces questions in third ICSARA On November 25, 2010, HidroAysén received the ICSARA N°3, with a total of 199 observations from public parties. On that same date, HidroAysén requested the suspension of the assessment period until April 15, 2011. Bocamina operations start up Since December 13, the thermal power plant Central Termoeléctrica Bocamina is available to the Economic Dispatch Center of the Central Interconnected System (CDEC- SIC), after the company placed into operation the unit that had been affected by the February 27 earthquake. Enersis announces sale of subsidiaries Cam and Synapsis On December 20, the company accepted the bid submitted by the company Grana y Montero S.A.A., to acquire the entire stake it holds in its subsidiary Compañía Americana de Multiservicios Limitada, CAM, change, and likewise, accepted the offer made by Riverwood Capital L.P. to acquire the entire shareholding in its subsidiary Synapsis Soluciones y Servicios IT Ltda. High voltage power line Substation Neltume-Pullinque The subsidiary Endesa Chile submitted the EIA to the Environmental Assessment Service (EAS) of the Rivers Region. The initiative aims to build and operate the infrastructure needed to transport and inject energy from the future hydroelectric plant Neltume into the Central Interconnected System (SIC). Enersis and the municipality of Santiago are brought together to illuminate 1 kilometer of river Mapocho with art The companies of Enersis Group signed an agreement with the municipality of Santiago and the visual artist Catalina Rojas, initiating a public-private partnership that will give life to the project Museum Artedeluz: an emblematic cultural and artistic platform, free and permanent, based on projections of lighted works of art on the basin and the walls of this geographical landmark of the Metropolitan Region Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Main financial and operational indicators Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 18 Enersis 2010 Annual Report 1. Main financial and operational indicators Total Assets Total Accrued Liabilities Revenues EBITDA Net Income (3) Liquidity Index Indebtedness Coefficient (4) GENERATION BUSINESS ARGENTINA Number Employees Number of Generation Units Installed Capacity (MW) Generated Electric Energy (GWh) Energy Sales (GWh) BRAZIL Number Employees Number of Generation Units Installed Capacity (MW) Generated Electric Energy (GWh) Energy Sales (GWh) CHILE Number Employees Number of Generation Units Installed Capacity (MW) Generated Electric Energy (GWh) Energy Sales (GWh) COLOMBIA Number Employees Number of Generation Units Installed Capacity (MW) Generated Electric Energy (GWh) Energy Sales (GWh) PERU Number Employees Number of Generation Units Installed Capacity (MW) Generated Electric Energy (GWh) Energy Sales (GWh) As of December 31st of each year (Amounts in Million Chilean Pesos) 2005 (1) 10,253,592 4,857,680 3,215,797 1,181,269 68,017 0.88 0.90 2006 (1) 11,062,409 5,322,564 3,892,064 1,490,519 285,960 1.17 0.93 2007 (1) 11,437,767 5,792,790 4,686,676 1,680,994 188,376 1.30 1.03 2008 (2) 13,781,177 7,752,045 6,579,945 2,301,714 507,590 1.09 1.29 2009 (2) 13,210,140 6,833,137 6,472,056 2,467,101 660,231 1.17 1.07 2010 (2) 13,005,845 6,491,817 6,563,581 2,261,691 486,227 0.97 1.00 As of December 31st of each year 2005 2006 2007 2008 (2) 2009 (2) 2010 (2) 311 20 3,624 12,333 12,579 191 13 1,039 3,954 2,898 765 50 4,477 18,764 20,731 326 27 2,657 11,864 15,077 158 21 969 4,516 4,600 316 20 3,639 13,750 13,926 196 13 980 4,489 6,867 789 50 4,477 19,973 20,923 376 28 2,779 12,564 15,327 200 24 1,426 6,662 6,767 323 20 3,644 12,117 12,406 191 13 987 3,954 7,348 841 63 4,779 18,773 19,212 399 28 2,829 11,942 15,613 206 24 1,468 7,654 7,994 325 20 3,652 10,480 11,098 193 13 987 3,379 7,093 1,123 65 5,283 21,267 21,532 404 29 2,895 12,905 16,368 219 24 1,467 8,102 8,461 332 20 3,652 11,955 12,405 200 13 987 3,319 6,869 1,172 110 5,650 22,239 22,327 415 29 2,895 12,674 16,806 224 25 1,667 8,163 8,321 426 20 3,652 10,940 11,378 193 13 987 5,095 6,790 607 107 5,611 20,914 21,847 444 30 2,914 11,283 14,817 244 25 1,668 8,466 8,598 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 19 2010 Annual Report Main financial and operational indicators DISTRIBUTION BUSINESS ARGENTINA Energy Sales (GWh) Number of Clients Energy Losses Number of Employees Clients /Employees BRAZIL Energy Sales (GWh) Number of Clients Energy Losses Number of Employees Clients /Employees CHILE Energy Sales (GWh) Number of Clients Energy Losses Number of Employees Clients /Employees COLOMBIA Energy Sales (GWh) Number of Clients Energy Losses Number of Employees Clients /Employees PERU Energy Sales (GWh) Number of Clients Energy Losses Number of Employees Clients /Employees 2005(1) 2006(1) 2007(1) 2008 (2) 2009 (2) 2010 (2) As of December 31st of each year 14,018 2,165,101 11.4% 2,338 926 14,837 2,195,914 10.5% 2,407 912 15,833 2,227,742 10.7% 2,534 879 16,160 2,262,231 10.6% 2,590 873 16,026 2,305,060 10.5% 2,628 877 14,753 4,654,206 18.7% 2,645 1,760 15,438 4,859,491 18.0% 2,726 1,783 16,212 5,067,317 17.4% 2,682 1,889 16,689 5,308,306 16.4% 2,576 2,061 17,253 5,487,066 16.8% 2,533 2,166 16,759 2,352,720 10.5% 2,627 896 18,777 5,665,195 16.8% 2,484 2,281 11,851 1,404,224 5.5% 712 1,972 10,094 2,072,864 9.4% 926 2,239 4,530 924,729 8.6% 536 1,725 12,377 1,437,381 5.4% 708 2,030 10,755 2,138,497 8.9% 934 2,290 4,874 951,553 8.2% 548 1,736 12,923 1,483,239 5.9% 728 2,037 12,535 1,533,866 5.9% 717 2,139 12,585 1,579,069 6.1% 731 2,160 13,098 1,609,652 5.8% 719 2,239 11,441 2,208,559 8.7% 931 2,372 11,822 2,284,855 8.1% 932 2,452 12,114 2,473,747 8.4% 1,017 2,432 12,515 2,546,559 8.5% 1,083 2,351 5,201 986,451 8.1% 544 1,813 5,599 1,027,750 8.2% 571 1,800 5,716 1,060,508 8.1% 595 1,782 6,126 1,097,533 8.3% 553 1,985 (1) Financial statements prepared according to generally accepted accounting principles in Chile. (2) IFRS accounting figures. Until 2008, the annual financial statements were prepared in accordance with accounting principles generally accepted in Chile. Since 2009; the financial statements have been prepared in accordance with International Financial Reporting Standards, also presenting the 2008 financial statements under this new accounting standard. Due to this change, companies of joint control in which Enersis has participation, are consolidated according to the proportion Enersis represents of its social capital, therefore the figures in 2008, 2009 and 2010 include the percentage of power generation, energy sales and employees of these companies. (3) For 2008, 2009 and 2010, it is net profit attributable to parent company. (4) Total Liabilities/Equity plus Minority Interest. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Identification of the Company Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 22 Enersis 2010 Annual Report 1. Documents of incorporation Name Location Kind of Society Tax N° Address Telephones Fax P.O. Box Web Site Electronic Mail Securities Registry N° External Auditors Enersis S.A. Santiago, being able to establish agencies or branches in other parts of the country or abroad Publicly held limited liability stock company 94,271,000 - 3 Santa Rosa Nº 76, Santiago, Chile (56-2) 353 4400 - (56-2) 378 4400 (56-2) 378 4788 1557, Santiago www.enersis.cl informaciones@enersis.cl Nº 175 Deloitte Auditores y Consultores Limitada Subscribed and Paid Capital (M$) 2,824,882,835 Chilean Stock Exchanges Nick Name New York Stock Exchanges Nick Name Madrid Stock Exchanges Nick Name ADR Program Custodian Bank ADR Program Depositary Bank Latibex Custodian Bank Latibex Link Entity ENERSIS ENI XENI Banco de Chile Citibank N.A. Banco Santander Santander Central Hispano Investment S.A. Chilean Credit Rating Agencies Feller Rate y Fitch Ratings International Credit Rating Agencies Fitch Ratings, Moody´s y Standard & Poor´s 2. Constitution The company that gave rise to Enersis S.A. was formed initially with the name Compañía Chilena Metropolitana de Distribucion Electrica S.A. by public deed dated June 19, 1981 granted by the notary Patricio Zaldívar Mackenna in Santiago, and was modified by public deed dated July 13 the same year before the same notary. The company’s incorporation was authorized and its bylaws approved by Resolution 409-S of July 17, 1981 of the Securities and Insurance Commission (SVS). The extract of the incorporation authorization and approval of the bylaws was registered in the Santiago Trade Registry on page 13,099 Nº7, 269 for year 1981, and were published in the Official Gazette of July 23, 1981. The bylaws of Enersis have since undergone a number of modifications. On August 1, 1988, the company’s name was changed to Enersis S.A. The latest modification is that set out in public deed dated April 22, 2010, certified by the Santiago notary Patricio Zaldívar Mackenna, whose extract was registered in the Santiago Trade Register for 2010, page 27,937, Nº19,254 and published in the Official Gazette on June 5, 2010. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 23 2010 Annual Report Identification of the Company 3. Corporate object The company’s objectives are to explore, develop, operate, generate, distribute, transmit, transform and/or sell energy in any of its forms or nature, in the country or abroad, directly or through other companies, and telecommunications activities and the provision of engineering consultancy within the country and abroad. It may also invest and administer its subsidiaries and associate companies, whether generators, transmitters, distributors or traders of electricity or whose business is any of the following: (i) energy, in any of its forms or nature, (ii) the supply of public utilities or whose main raw material is energy, (iii) telecommunications and IT, and (iv) trading over internet. In complying with its main objects, the company will carry out the following functions: a) promote, organize, build, modify, dissolve or liquidate companies of any nature which have similar corporate objects to its own; b) propose investment, financing and business policies to subsidiary companies, as well as accounting criteria and systems that these should follow; c) supervise subsidiary management: d) provide subsidiary or associate companies with the necessary financing for their business development and provide management services; financial, technical, legal and auditing advice; and in general any type of service that appears necessary for their best performance. In addition to its main objects and always acting within the limits established by the Investment and Financing Policy approved by the shareholders meeting, the Company may invest in: i) the acquisition, operation, construction, rental, administration, intermediation, trading and disposal of all kinds of movable and immovable assets, either directly or through subsidiary or associate companies; ii) all kinds of financial assets, including shares, bonds and debentures, commercial paper and in general all kinds of titles or securities and company contributions, either directly or through subsidiary or associate companies Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Ownership and control Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 26 Enersis 2010 Annual Report 1. . Ownership structure The company capital is divided into 32,651,166,465 shares of no par value and of the same sole series. As of December 31, 2010, all the shares were subscribed and paid, distributed in the following manner: Shareholders Endesa Latinoamérica S.A. Pension Funds ADR´s (Citibank N.A.) Stock Brokers, Insurance Companies and Mutual Funds Banco de Chile (Third parties) Foreign Investment Funds Other Shareholders Number of Shares 19,794,583,473 4,674,519,060 4,116,020,300 1,746,516,863 744,345,981 104,941,282 1,470,239,506 Participation 60.62% 14.32% 12.61% 5.35% 2.28% 0.32% 4.50% Total shares 32,651,166,465 100.00% 2. Identification of the controllers According to Chapter XV of Law 18,045, the direct controller of the company is Endesa Latinoamérica S.A., a Spanish corporation that holds 60.62% of Enersis. Endesa Latinoamérica S.A., in turn is controlled 100% by ENDESA, S.A., a corporation located in the Kingdom of Spain and whose main shareholders as of December 31, 2010, and according to the CNMV (Spanish National Securities Market Commission) are: ENEL ENERGY EUROPE S.L. with a 92.063% shareholding (ENEL ENERGY EUROPE S.L) which in turn is controlled 100% by ENEL S.p.A. The free float of ENDESA S.A. as of December 31, 2010 was 7.937%. 3. The twelve largest shareholders of the company As of December 31, 2010, Enersis had 7,674 shareholders. The twelve largest were: Name RUT Número de Acciones Participación Endesa Latinoamérica, S.A. 59,072,610-9 19,794,583,473 Citibank N A (according to circular Nº 1.375 of the SVS) 97,008,000-7 AFP Provida S.A. AFP Habitat S.A . AFP Capital S.A . AFP Cuprum S.A . Banco de Chile (on behalf of third parties) Banco Itaú (on behalf of investors) Banchile Corredores de Bolsa S.A . Banco Santander (on behalf of foreign investors) AFP Planvital S.A . Larraín Vial S.A. Corredora de Bolsa Sub total 12 shareholders Other 7.662 shareholders TOTAL 7.674 SHAREHOLDERS 98,000,400-7 98,000,100-8 98,000,000-1 98,001,000-7 97,004,000-5 76,645,030-K 96,571,220-8 97,036,000-K 98,001,200-K 80,537,000-9 4,116,020,300 1,389,824,663 1,159,008,159 1,018,809,631 961,724,685 744,345,981 422,448,172 343,232,050 323,445,566 143,663,799 134,707,521 60.62% 12.61% 4.26% 3.55% 3.12% 2.95% 2.28% 1.29% 1.05% 0.99% 0.44% 0.41% 30,551,814,000 93.57% 2,099,352,465 32,651,166,465 6.43% 100.00% pages control previously next 1 Free float as the percentage of the stokes held by shareholders, different from controlling group. 27 2010 Annual Report Ownership and control 4. Most important changes in ownership The most important changes in the ownership of Enersis during 2010 were: Name Shares as of 31/12/2009 Shares as of 31/12/2010 Change in number of shares Citibank N.A. (according to circular Nº 1.375 of the SVS) 4,065,137,650 4,116,020,300 50,882,650 AFP Provida S.A. AFP Habitat S.A. AFP Capital S.A . AFP Cuprum S.A 1,606,241,032 1,389,824,663 -216,416,369 1,329,987,549 1,159,008,159 -170,979,390 1,197,500,900 1,018,809,631 -178,691,269 884,826,791 961,724,685 76,897,894 Banco de Chile (on behalf of third parties) 523,870,821 744,345,981 220,475,160 Banco Itaú (on behalf of investors) Banchile Corredores de Bolsa S.A. 291,557,546 422,448,172 130,890,626 377,680,117 343,232,050 -34,448,067 Banco Santander (on behalf of foreign investors) 203,635,787 323,445,566 119,809,779 AFP Planvital S.A. 171,591,689 143,663,799 -27,927,890 5. Stock exchange transactions by related parties Shareholder Marcos Cruz Sanhueza Buyer / Tax N° Seller 10,702,983-4 Seller Transaction date according with Shares Record 02/05/09 Inmobiliaria Inversiones y Asesorías Quantum Ltda 78,094,800-0 Seller 10,702,983-4 Seller Marcos Cruz Sanhueza 03/23/09 06/01/09 Inmobiliaria Inversiones y Asesorías Quantum Ltda 78,094,800-0 Seller Seller Jean Paul Zalaquett 8,668,933-2 07/14/09 12/30/10 N° of Shares Traded 20.000 307.902 66.000 307.901 570 Price per Share 185,00 Total Investment Ammount Type of Transaction Relationship with the Company 3.698.000 Financial Investment 185,00 194,99 56.961.870 Financial Investment 12.869.340 Financial Investment 200,19 215,00 61.638.957 Financial Investment 122.550 Financial Investment Tax Mananger Related with Eduardo López Miller Procurement Officer Tax Mananger Related with Eduardo López Miller Procurement Officer Chilectras's Sustainability Mananger Related with Leonidas Vial Echeverría Enersis' Director Santana S.A. 90,856,000-0 Buyer 12/30/10 2.000.000 216,67 433.338.122 Financial Investment 6. Summary of director´s committee and shareholders comments and proposals Enersis did not receive any comments or proposals on the progress of the business during 2010 from the Directors Committee or shareholders representing or holding 10% or more of the issued shares with voting rights, in accordance with the provisions of Article 74 of Law 18,046 and Articles 82 and 83 of the Corporations Law. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Administration Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 30 Enersis 2010 Annual Report 1. Board of Directors CHAIRMAN VICECHAIRMAN DIRECTOR DIRECTOR Pablo Yrarrázaval Valdés Chairman of the Santiago Stock Exchange Tax ID No.: 5,710,967-K Andrea Brentan Civil Mecanic Engineer Politecnico di Milano And Master in Applied Sciences New York University Tax ID No.: C832206 Rafael Miranda Robredo Industrial Engineer Instituto Católico de Artes e Industrias de Madrid Tax ID No.: 48,070,966-7 Hernán Somerville Senn Lawyer Universidad de Chile And Master of Comparative Jurisprudence New York University Tax ID No.: 4,132,185-7 DIRECTOR DIRECTOR DIRECTOR BOARD OF DIRECTORS SECRETARY Eugenio Tironi Barrios Sociologist School of Senior Studies in Social Sciences, Paris, France Tax ID No.: 5,715,860-3 Leonidas Vial Echeverría Vicechairman of the Santiago Stock Exchange Tax ID No.: 5,719,922-9 Rafael Fernández Morandé Civil Industrial Engineer Pontificia Universidad Católica de Chile Tax ID No.: 6,429,250-1 Domingo Valdés Prieto Lawyer Universidad de Chile and Master in Law University of Chicago Tax ID No.: 6,973,465-0 Enersis is managed by a 7-member board of directors each of who remains in office for a period of 3 years and may be reelected. The board of directors was elected at the ordinary shareholders meeting held on April 22, 2010. The chairman, vice-chairman and the secretary to the board were appointed at board meeting N°4 held on April 23, 2010. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 31 2010 Annual Report Administration 1.1. Directors’ compensation Pursuant ¨to article 33 of the Corporations Law 18,046, the Ordinary Shareholders Meeting held on April 22, 2010 approved the compensation of the board members for 2010. The amounts paid to the directors as of December 31, 2010 as members of the board as such, and as members of the Directors’ Committee and Audit Committee, are detailed below: Name Pablo Yrarrázaval Valdés Andrea Brentan (**) Eugenio Tironi Barrios Hernán Somerville Senn Leonidas Vial Echeverría (***) Patricio Claro Grez Rafael Fernández Morandé (***) Rafael Miranda Robredo TOTAL Title Chairman Exercise Period 01.01.10 to 31.12.10 Vicechairman 01.01.10 to 31.12.10 Director Director Director Director Director Director 01.01.10 to 31.12.10 01.01.10 to 31.12.10 22.04.10 to 31.12.10 01.01.10 to 22.04.10 22.04.10 to 31.12.10 01.01.10 to 31.12.10 As of December 31st, 2010 In Thousand Chilean Pesos Enersis Board (*) Subsidiaries Board Board Committee (*) Auditing Committee (*) 55,023 26,750 26,743 19,138 8,373 19,138 27,511 759 764 8,665 6,638 2,284 6,638 182,676 0 25,748 3,040 Variable on charge to 2009 Net Income 100,970 1,520 50,485 50,485 1,520 50,485 65,008 317,433 Total 156,752 0 77,999 87,413 25,776 62,662 25,776 92,519 528,897 Notes: (*) Gross Amounts (**) Director Andrea Brentan resigned to his compensation as member of the board of directors of the Company (***) Director since April 22, 2010 The directors Leonidas Vial Echeverría y Rafael Fernández Morandé were appointed members of the Directors Committee at board meeting N°4 held on April 23, 2010. The ordinary shareholders meeting held on April 22, approved to reformulate article five of bylaws in order to merge Directors Committee and Audit Committee. The Directors of the company did not and have not acted as director of any subsidiary of the Company during 2010. 1.2. Incentive plans It is considered an incentive plan to pay a variable annual remuneration equivalent to one thousandth of the net income from the current year. One monthly salary was paid in advance, a portion under all circumstances and a portion circumstantial, accounts for as the variable compensation in reference. 1.3. Board consultancy fees The board paid no consultancy fees during 2010. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 32 Enersis 2010 Annual Report 2. Directors committee According with Article 50 bis of the Corporations Law 18,046, Enersis has a 3-member Directors’ Committee whose powers and duties are set out in that article. As of January 1, 2010 the members of the board of directors of Enersis are Mr. Pablo Yrarrázaval Valdés (related to the controller), Mr. Hernán Somerville Senn (related to the controller) and Mr. Patricio Claro Grez (independent of controller), and its president Mr. Pablo Yrarrázaval Valdés and Secretary Mr. Domingo Valdés Prieto. Also, at a meeting held April 23, 2010 the board of the company appointed Hernán Somerville Senn, Leonidas Vial Echeverria and Rafael Fernandez Morande as members of the Directors Committee, who are its current members. In the same meeting, the board appointed Mr. Leonidas Vial Echeverria as the Financial Expert. The Directors Committee, meeting the same date, appointed Mr. Hernán Somerville Senn as president of the Committee and Mr. Domingo Valdés Prieto as secretary. 2.1. Annual management report The Directors’ Committee met 11 times during the year 2010. At its first meeting, held on January 27, 2010, the Directors Committee declared having examined the consolidated financial statements of the company at December 31, 2009, Notes, Income Statements and Relevant Facts, and also the reports of External Auditors and Accounts Inspectors. In addition, the Directors Committee formally noted the report prepared by External Auditors on bank transfers and money brokers, as set forth in Circular No. 960 of the Superintendence of Banks and Financial Institutions and Securities and Insurance, as well as the internal control letter of Enersis SA dated January 27, 2010, prepared by the external auditors Deloitte & Touche, according to Circular N°422 of the Superintendence of Securities and Insurance. The Directors Committee agreed to propose to the board so that it, in turn, propose to the ordinary shareholders the appointment of Independent External Auditing firm Deloitte & Touche for 2010. The Committee also agreed to propose to the ordinary shareholders’ meeting Feller Rate Risk Rating Limited and Fitch Ratings Limited Risk as National Rating Agencies and firms Fitch Ratings, Moody’s Investors Service and Standard & Poor’s International Rating Services as Private Rating Companies of International Risk of Enersis SA for the year 2010. A budget proposal of the Directors Committee for 2010 was approved and decided to submit this proposal to the board and the ordinary shareholders meeting of Enersis SA. The Directors Committee also approved the text of the report that should be submitted to the annual shareholders meeting of the company about the activities of the committee in 2009, as well as the costs incurred, including the cost of consultants, during this period. Finally, the procedure for requesting information from the board and the procedure to communicate board decisions was agreed under the provisions of Law N° 20,382, which introduces improvements to the rules governing corporate governance. Transactions engaged in by the company with related parties during December 2009 were declared as examined. At its second session, taken place on February 26, 2010, the Directors Committee declared the systems of remuneration and compensation plans for senior executives and managers of the company workers as examined. Transactions engaged in by the company with related parties during January 2010 were declared as examined. At its third session, taken place on March 31, 2010, transactions engaged in by the company with related parties during February 2010 were declared as examined. The extraordinary shareholders meeting on April 22, 2010 approved reformulating Title V of the Bylaws, in order to merge the Directors Committee to the Audit Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 33 2010 Annual Report Administration Committee so as to reflect changes and independence requirements introduced by Law of Corporate Governance Improvement to Article 50 bis of the Corporations Law and additionally require Committee members to meet the independence requirements prescribed by SOX, the SEC and the NYSE. Thus, the functions provided in SOX were assigned to the Directors Committee and the Directors Committee and Audit Committee would operate fused together to avoid unnecessary duplication in the exercise of the functions of such corporate bodies, and respecting the legal and regulatory requirements imposed on the company by domestic law and the law of the United States of America. Enersis SA, as issuer of American Depositary Shares (ADS), registered with the Securities and Exchange Commission (SEC), and as bond issuer also registered with the SEC of the United States of America, is subject to the laws of that country, especially the Sarbanes Oxley (SOX) and applicable regulations of the SEC and the NYSE, which require that the company has an Audit Committee in place, which was created by the board in July 2005, having assigned the duties required by U.S. regulations. On the other hand, current Article 50 Bis of the Corporations Law substantially assimilated the independence requirements required and the tasks and duties assigned to the Directors Committee by that Article, to the independence requirements and duties and functions that Sarbanes Oxley Act requires the Audit Committee. Therefore, and in response to the above, at its meeting on April 23, 2010, the Board agreed to merge the Audit Committee with the Directors Committee. In the regular Shareholders Meeting dated April 22, 2010 the Company’s Board was renewed, at the same meeting of April 23, 2010, the Board appointed Mr. Hernan Somerville Senn, Leonidas Vial Echeverria and Rafael Fernandez Morande, as members of the Directors Committee of Enersis, all independent of the controller. The Directors Committee of Enersis, in its session held on April 23, 2010, agreed to appoint Mr.Hernán Somerville Senn as Chairman Mr. Domingo Valdés Prieto as secretary of that corporate body. In that same meeting, the Directors Committee declared the Consolidated Financial Statements as of March 31, 2010, including its Notes, Income Statements and Relevant Facts as examined. The Annual Auditing Plan presented by the external auditor, Deloitte & Touche Sociedad de Auditores y Consultores Limitada, was examined and approved. In the aforementioned meeting there was a discussion about the services different from the external audit, to be provided by various external auditors, and agreed to declare that they do not compromise the technical suitability or independence of view of the external audit firms. The transactions engaged in by the company with related parties during March 2010 were declared examined. At its fifth session, taken place on May 26, 2010, the structure and procedures of Enersis S.A. internal control were declared examined by the Directors Committee, established for the issuer’s financial report , according to Section 404 of the Sarbanes Oxley Act The text of Form 20-F was approved and a proposal to obtain Board authorization to submit the form to the Securities and Exchange Commission of the United States of America (SEC), in order to comply with the standards and requirements of that authority related to the issuance of securities in that country. At the same meeting it was agreed to acknowledge the repeal of the Regulation of the Audit Committee and its replacement by the delegation of functions to the requirements of the Directors Committee made by Enersis’s Board on April 23, 2010, and to adapt the hiring policy of former employees of the external auditing firms, approved at the time by the Audit Committee. Various services to be rendered by external auditors, other than the external audit, were examined and it was agreed that they do not compromise the technical suitability or independence of view of the external audit firms. The complaints received through the Ethical Channel and the treatment or solutions given to them were analyzed. The transactions engaged in by the company with related parties during April 2010 were declared as examined. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 34 Enersis 2010 Annual Report At its sixth session, taken place on June 24, 2010, the transactions engaged in by the company with related parties during May 2010 were declared as examined. At its seventh session, taken place on July 27, 2010, the Directors Committee declared the Consolidated Financial Statements as of June 30, 2010, including its Notes, Income Statements and Relevant Facts, and also the External Auditor Report as examined. The transactions engaged in by the company with related parties during June 2010 were declared as examined. At its eighth session, taken place on September 29, 2010, various services rendered by external auditors, other than the external audit, were examined and it was agreed to declare that they do not compromise the technical suitability or independence of view of the external audit firms. At its ninth session, taken place on October 27, 2010, the Directors Committee declared the Consolidated Financial Statements as of September 30, 2010, including its Notes, Income Statements and Relevant Facts, and also the opinion issued by Deloitte on the note referring to balances and transactions with related companies, expressing themselves in accordance with them. They also discussed services to be rendered by external auditors and other the external audit and agreed that they do not compromise the technical suitability or independence of view of the external audit firms. At its tenth session, taken place on November 30, 2010, the Directors Committee agreed to place on record that it had taken formal and explicit knowledge of Enersis SA Internal Control Letter, dated November 19, 2010, prepared by the company’s external auditors, Deloitte & Touche referred to by Circular N°980 of the Superintendence of Securities and Insurance. The Directors Committee also agreed to propose hiring an outside firm to analyze the comments made by external auditors in that Internal Control Letter and to assist in resolving this matter promptly. The complaints received through the ethical channel and the treatment or solutions given to them were analyzed. At its eleventh session, taken place on December 17, 2010, the Directors Committee approved the wording of the report to be presented at the Company´s Ordinary Shareholders Meeting about the activities performed by the Committee during 2010, as well as the costs incurred, including the cost of consultants, during this period. The calendar of ordinary sessions of the Directors Committee for 2011 was also approved at this session. In conclusion, during 2010, the Directors Committee of Enersis SA fully addressed the matters stated in Article 50 bis of Law 18,046 on Corporations and reviewed and contributed to improve the development of the operations discussed above. 2.2. Audit Committee Expenses The Directors’ Committee did not make use of the operating expense budget approved by the company’s ordinary shareholders meeting held on April 22, 2010. The Committee has not had to hire the services of professional consultants for the performance of their duties. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 35 2010 Annual Report Administration 3. Senior Executives CHIEF EXECUTIVE OFFICER (1) DEPUTY CHIEF EXECUTIVE OFFICER (2) INTERNAL AUDIT OFFICER (3) Ignacio Antoñanzas Alvear Mining Engineer Universidad Politécnica de Madrid Tax No.: 22,298,662-1 Massimo Tambosco B.A. in Business Administration Università Commerciale Luigi Bocconi de Milán Tax No.: 23,535,550-7 Alba Marina Urrea Gómez Public Accountant Universidad Autónoma de Bucaramanga Tax No.: 23,363,734-3 LEGAL COUNSEL (4) REGIONAL CHIEF CHIEF HUMAN RESOURCES CHIEF REGIONAL FINANCE Domingo Valdés Prieto Lawyer Universidad de Chile and Master of Law University of Chicago Tax No.: 6,973,465-0 COMMUNICATIONS OFFICER (5) OFFICER (6) OFFICER (7) Juan Pablo Larraín Medina Journalist Universidad Finis Terrae Tax No.: 11,470,853-4 Carlos Niño Forero Lawyer Universidad Externado de Colombia Tax No.: 23,014,537-7 Alfredo Ergas Segal Commercial Engineer Universidad de Chile Tax No.: 9,574,296-3 GENERAL SERVICES OFFICER REGIONAL CHIEF PROCUREMENT OFFICER (10) REGIONAL CHIEF PLANNING & (8) Francisco Silva Bafalluy Public Administrator Universidad de Chile Tax No.: 7,006,337-9 ACCOUNTING OFFICER (9) Ángel Chocarro García B.A. in Economics and Business Administration Universidad del Pais Vasco Tax No.: 14,710,692-0 Eduardo López Miller Commercial Engineer Pontificia Universidad Católica de Valparaíso Tax No.: 7,706,387-0 CONTROL OFFICER (11) Ramiro Alfonsín Balza B.A. in Business Administration Pontificia Universidad Católica de Argentina Tax No.: 22,357,225-1 8 4 9 5 3 10 1 6 11 2 7 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 36 Enersis 2010 Annual Report 4. Organizational structure Chairman Pablo Yrarrázaval Valdés Chief Executive Officer Ignacio Antoñanzas Alvear Deputy Chief Executive Officer Massimo Tambosco Regional Chief Communications Officer Juan Pablo Larraín Medina Internal Audit Officer Alba Marina Urrea Gómez General Services Officer Francisco Silva Bafalluy Chief Human Resources Officer Carlos Niño Forero Regional Chief Accounting Officer Ángel Chocarro García Chief Regional Finance Officer Alfredo Ergas Segal Regional Chief Planning & Control Officer Ramiro Alfonsín Balza Legal Counsel Domingo Valdés Prieto Procurement Officer Eduardo López Miller 4.1. Compensation of Managers and Senior Executives The total compensation received by managers and main executives during 2010 amounted to de Ch$2,751 million. 4.2. Benefits for managers and Senior Executives The Company provides complementary health insurance and catastrophic insurance for its senior executives and their duly-accredited family members. The Company also provides life insurance for each of its senior executives. These benefits are granted according to the management level of each employee at the time. In 2010, the amount was Ch$20 million, which is included in the remuneration received by the managers and senior executives. 4.3. Incentive plans for Managers and Senior Executives Enersis has an annual bonus plan for its executives based on meeting objectives and the level of individual contributions to the company’s results. This plan includes a definition of ranges of bonuses according to the hierarchical level of the executives. The bonuses paid to the executives consist of a certain number of gross monthly remunerations. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 37 2010 Annual Report Administration 4.4. Severance payments to Managers and Senior Executives During 2010, Enersis made payments for compensation for years of service to senior executives of the company for Ch$ 8 million. 4.5. Administration of Main Subsidiaries Argentina ENDESA COSTANERA José Miguel Granged Bruñen Industrial Engineer Escuela Técnica Superior de Ingenieros Industriales de Zaragoza HIDROELÉCTRICA EL CHOCÓN Fernando Claudio Antognazza Public Accountant Universidad de Buenos Aires Chile ENDESA CHILE Joaquín Galindo Vélez Industrial Engineer Universidad de Sevilla CHILECTRA Cristián Fierro Montes ELECTRICAL CIVIL ENGINEER UNIVERSIDAD DE CHILE EDESUR José María Hidalgo Martín-Mateos B.A. in Economics and Business Administration Universidad Santiago de Compostela Colombia EMGESA Lucio Rubio Díaz Brazil ENDESA CACHOEIRA Guilherme Gomes Lencastre Civil Engineer B.A. in Economics and Business Administration Universidad Santiago de Compostela CODENSA Cristián Herrera Fernández Industrial Civil Engineer Pontificia Universidad Católica Río de Janeiro Pontificia Universidad Católica de Chile Peru EDEGEL Carlos Luna Cabrera Civil Engineer Escuela Colombiana de Ingeniería EDELNOR Ignacio Blanco Fernández Industrial Engineer Licenciado en Ciencias Económicas y Empresariales Universidad de Zaragoza ENDESA FORTALEZA Manuel Rigoberto Herrera Vargas Civil Industrial Engineer with minor in Electricity Pontificia Universidad Católica de Chile ENDESA CIEN Guilherme Gomes Lencastre Civil Engineer Pontificia Universidad Católica Río de Janeiro AMPLA Marcelo Llévenes Rebolledo Commercial Engineer Universidad de Chile COELCE Abel Alves Rochinha Mechanic Engineer Pontificia Universidad Católica Río de Janeiro Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Human resources Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 40 Enersis 2010 Annual Report 1. Distribution of human resources The personnel distribution of the Company, including information relating to subsidiaries in the five countries where the Enersis Group operates in Latin America, to December 31, 2010, was as follows: Company Enersis (1) Endesa Brasil (2) Endesa Chile (3) Chilectra (4) Edesur Edelnor Codensa (5) Synapsis (6) CAM (7) Manso de Velasco (8) Total Notes Managers & Senior Executives Professionals & Technicians Workers & Others 11 25 42 10 11 8 11 6 8 1 295 2,395 2,152 563 1,816 446 1,032 349 973 25 103 345 178 146 800 99 40 32 332 10 Total 409 2,765 2,372 719 2,627 553 1,083 387 1,313 36 133 10,046 2,085 12,264 (1) Includes: ICT Servicios Informáticos . (2) Includes: Ampla, Coelce, CIEN, Cachoeira Dourada, Fortaleza, En-Brasil Comercio e Serviços, CTM y TESA. (3) Includes: Ingendesa (Chile, Brazil y Peru), Pehuenche, Celta, El Chocón, Edegel, Emgesa, Costanera, Túnel el Melón, GasAtacama, Hidroaysén, Consorcio ARA-Ingendesa. (4) Includes: Chilectra, Empresa Eléctrica de Colina y Luz Andes. (5) Includes: Codensa y Empresa Electrica Cundinamarca. (6) Includes: Synapsis Chile, Synapsis Argentina, Synapsis Colombia, Synapsis Brasil y Synapsis Perú. (7) Includes: Cam Chile, Cam Argentina, Cam Brasil, Cam Colombia, Cam Perú y Sistemas SEC. (8) Includes: Aguas Santiago Poniente, Const. y Proyecto Los Maitenes . 2. Satisfaction of employees Given the amendment to the Labor Code and the enforcement of the Alcohol and Drugs Prevention Policy, in January 2010 a new version of the Internal Rules of Order, Health and Safety, which considers, among other things, job descriptions, came into force. As a consequence of the disaster caused by the February 27, 2010 earthquake, and with the purpose of cooperating with workers who were affected, the company disposed of an Aid Program consisting of measures to meet most urgent needs. As part of the commitment to the quality of life of workers and their families, a series of benefits under the framework of Fair Work Practices was launched this year, and were extended to all Group companies in Chile. Worth highlighting among these, the gradual return from postnatal care for mothers who work and shorter working hours for birthday, among others. Within the framework of better work practices, there were interesting seminars for parents and the employee’s children who have excellent school academic performance were honored. Similarly, more than 60 children participated in the first activity in which the children of employees get to know their parent´s workplace in an entertaining and fun way. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 41 2010 Annual Report Human resources In an event held at the stadium of the Enersis Group, the employees and their families celebrated Chile´s Bicentennial, in which they were able to enjoy a series of artistic and recreational activities. Within the framework of the Social Dialogue Policy, Endesa Chile signed the Collective Agreement with the Professional Employees´ Unions, which took effect on January 1, 2010. On December 21, CAM Chile signed the Collective Agreement with the Management Specialists Union, for a period of three years. During the month of November, the Group held the Olympics in Chile, with the purpose of having a competition to favor integration and friendship among employees. The group’s Christmas party in Chile was celebrated in December and was a magical event. Like every year, Summer and Winter Programs for children of employees were offered. As a way to recognize the effort and dedication of workers who have served a long career in the company, the traditional Years of Service Celebration was organized, which this year honored 90 employees who met between 20 and 45 year tenure with the organization. 3. Workforce health and safety In April, Chilectra made a tribute to its Partner Companies, a meeting convened to thank all workers Chilectra and its partner companies, the effort and enthusiasm they showed for a speedy replacement of electrical service in the metropolitan area after the earthquake that affected Chile in February. With the slogan ‘I take care of my heart’, the company, in August, celebrated this important organ. In the context of the third version of the International Week of Safety, the Preventive Program of Lifting Equipment took place from the eighth thru the twelfth of November. The Week of Safety and the Health Fair took place, which considered, among its activities, a meeting with the joint committees, with the purpose of reflecting on the importance of achieving the zero accidents goal in the workplace. Within the context of the 48th anniversary of the Annual National Safety Contest, the National Security Council awarded Endesa Chile and Ingendesa. Both companies were honored for their ongoing efforts in safety and risk prevention. The engineering subsidiary was also acknowledged for reaching one million man-hours accident free. Melon Tunnel was honored for receiving the Certification on Occupational Safety and Health. In order to develop the skills necessary to deal with workplace risk management, the First Edition of the Diploma in Safety Management and Occupational Health took place. Work Environment Management in Partner Companies is a very importance goal of Human Resources, and therefore, within the work programs developed with partner companies, the implementation of significant activities have been considered, namely through tools that have allowed continuous improvement in work practices to favor performance and the quality of life at work. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 42 Enersis 2010 Annual Report 4. People management The Project Payment in Chile, a system created to process our companies´ wages, was developed in order to provide a model of personnel and payroll management, to efficiently manage business processes, as well as consolidate information from all group companies. The human resource department promotes Internal Mobility in order to enhance professional development and open up new areas of growth to workers within the organization. In doing so, many actions have been implemented to make a change to the organizational culture. These include those designed to meet the needs of recruitment through internal candidates. Group companies took up the challenge of providing jobs for the integration of persons with disabilities. As a response to the above, in 2010 a pilot project that has the name “Entrance” began, which started with an initial sensitization phase aimed at those areas that play a greater role in hiring. The human resource department played a major role in Job Fairs 2010, confirming, the high level of admiration and reputation. As a strategy to generate interest among young talents and position the Company as an attractive place to work, we developed the program to Attraction of University Talent. This pioneering initiative, invites top students from each promotion to a gain profound knowledge of employment opportunities for professional development and the important advantages offered by the company in relation to other companies in the market. With the purpose of responding to the support needs of the different areas and managers of the company, the Process of Recruiting student interns was adopted, initiative that makes the best students selected for this process, available to the Company. In 2010, The project Certification of Job Skills was implemented. Its challenge is to provide the electricity industry with a catalog of job skills to establish the knowledge, skills and abilities that people should have to work in distribution systems with safety. The process of Building Individual Development Plans (IDP) concluded for the participants of the Management of Potential Process, which began in November 2009 and continued in 2010 with its materialization. During October and November, the evaluation of behavior based on the BARS Model (Behaviorally Anchored Rating Scales) was developed at a country level. This action is the first evaluation at country level and, therefore, of all members of the group under a single model. Fair Treatment is a relevant subject for the implementation of future actions and strategies oriented towards improving the working environment within the Company. Consequently, human resources organized “workshops” on Fair Treatment. The Deputy Manager of Development is responsible for collecting all information obtained and know what employees understand by fair treatment, the practices and benefits most Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 43 2010 Annual Report Human resources important to them, as well as ideas and proposals related to this area. Within the framework of the Sustainable Development Plan, in its social dimension, in which strategic objectives related to the commitment, diversity and reconciliation are already established, in late July, the team to work on the defining the Corporate Social Responsibility Plan in human resources (Path Plan) was formed. This plan will incorporate the definition of strategic orientation, goals and specific plans of action. Within the context of the Sustainability Policy of the Group and in line with one of the seven commitments for Sustainable Development, Enersis and Endesa Chile signed an agreement iguala.cl with the National Women’s Service, SERNAM. This agreement aims to advance the incorporation of best practices, to foster a workplace culture that includes men and women equally. The Ya magazine of the El Mercurio newspaper and the Foundation Chile Unido, published a ranking of the Best Companies for Working Fathers and Mothers, obtaining the Enersis Group, eighth place. The companies that have the best policies in terms of work and family conciliation, and at the same time, promote la adoption of these practices by their employees are distinguishes. 5. Educational actions With the objective of managing knowledge, the Latam Campus continues its implementation process in the region at good pace. This initiative is being led by Chile, enabling the continued flow of workers learning and capturing the electricity business know-how developed over the years. To boost technical know-how, aimed towards ongoing quality improvement and efficiency at work, a new Training Facility (TFC), used to enhance workforce skills and competencies, and to ensure quality of production processes opened. During the second half of 2010, the Training Program “Business Vision” for human resources employees was conducted. It was an innovative program that provided a global view of the activities of the different business segments, allowing knowing the main strategic lines in detail, thereby obtaining a comprehensive understanding of the central aspects of the Group companies business of power generation and distribution. This program contains three stages: e-learning modules, theory modules, and technical visits, with field trips. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Stock Exchange Transactions Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 46 Enersis 2010 Annual Report 1. Stock trading in the Stock Markets The quarterly transactions of the last three years on the stock exchanges where Enersis shares are traded, both in Chile, through the Bolsa de Comercio de Santiago, and the Bolsa Electronica de Chile, and the Bolsa de Valores de Valparaíso, and in the United States of America and Spain through the New York Stock Exchange (NYSE) and the Bolsa de Valores Latinoamericanos de la Bolsa de Madrid (LATIBEX) respectively, are detailed below: 1.1. Bolsa de Comercio de Santiago (BCS) During 2010, in the Bolsa de Comercio de Santiago 5,319 million shares were traded at the Santiago Stock Exchange, equivalent to Ch$1,169,653 million. As of December, the closing share price was Ch$217.42. Periods 1rst Quarter 2008 2nd Quarter 2008 3rd Quarter 2008 4th Quarter 2008 Total 2008 1rst Quarter 2009 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 Total 2009 1rst Quarter 2010 2nd Quarter 2010 3rd Quarter 2010 4th Quarter 2010 Total 2010 Units 2,629,967,374 2,353,763,372 1,810,012,396 2,815,324,441 9,609,067,583 1,545,399,629 1,541,427,522 1,241,014,789 1,483,184,289 5,811,026,229 1,696,301,261 1,563,696,617 1,022,597,744 1,036,873,297 5,319,468,919 Amounts (Chilean Pesos) 369,032,945,308 407,183,479,315 312,772,735,787 479,160,238,375 1,568,149,398,785 267,629,805,231 281,772,888,100 247,333,179,220 300,238,377,629 1,096,974,250,180 382,729,133,497 324,580,314,181 227,738,321,807 234,604,964,411 1,169,652,733,896 Average Price 140.32 172.99 172.80 170.20 173.18 182.80 199.30 202.43 225.63 207.57 222.71 226.26 1.2. Bolsa Electrónica de Chile 521 million shares were traded at the Chilean Electronic Stock Exchange during the year, the equivalent of Ch$137,352 million. The share closing price at December was Ch$216. Periods 1rst Quarter 2008 2nd Quarter 2008 3rd Quarter 2008 4th Quarter 2008 Total 2008 1rst Quarter 2009 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 Total 2009 1rst Quarter 2010 2nd Quarter 2010 3rd Quarter 2010 4th Quarter 2010 Total 2010 Units 528,349,339 281,269,910 222,175,773 277,018,070 1,308,813,092 172,950,412 176,269,604 161,882,338 185,534,126 696,636,480 210,199,356 202,242,321 107,290,041 101,357,298 621,089,016 Amounts (Chilean Pesos) 76,278,908,151 48,515,676,390 38,114,037,557 46,733,014,629 209,641,636,727 29,952,728,437 32,727,994,819 32,234,274,972 38,124,542,694 133,039,540,922 47,800,601,634 42,504,403,849 23,896,117,579 23,150,688,674 137,351,811,736 Average Price 144.37 172.49 171.55 168.70 173.19 185.67 199.12 205.49 227.41 210.17 222.72 228.41 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 47 2010 Annual Report Stock Exchange Transactions 1.3. Bolsa de Valores de Valparaíso During 2010, in the Bolsa de Valores de Valparaíso 19 million shares were traded, amounting to Ch$4,109 million. The share price closed at Ch$216.5 at December 2010. Periods 1rst Quarter 2008 2nd Quarter 2008 3rd Quarter 2008 4th Quarter 2008 Total 2008 1rst Quarter 2009 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 Total 2009 1rst Quarter 2010 2nd Quarter 2010 3rd Quarter 2010 4th Quarter 2010 Total 2010 Units 12,601,763 20,095,015 4,196,431 13,461,949 50,355,158 5,822,432 6,662,579 2,616,447 6,038,484 21,139,942 4,532,840 6,608,965 5,421,823 2,101,429 18,665,057 Amounts (Chilean Pesos) 1,826,943,424 3,470,065,340 727,400,548 2,310,726,034 8,335,135,346 1,057,600,328 1,203,183,215 523,394,087 1,200,161,606 3,984,339,236 1,014,160,886 1,399,175,523 1,219,393,783 475,974,287 4,108,704,479 Average Price 144.98 172.68 173.34 171.65 181.64 180.59 200.04 198.75 223.74 211.71 224.90 226.50 1.4. Bolsa de Comercio de Nueva York (NYSE) The shares of Enersis started trading on the New York Stock Exchange (NYSE) on October 20, 1993. One Enersis ADS (American Depositary Share) consists of 50 shares and its mnemonic is ENI. Citibank N.A. acts as the depositary bank and Banco de Chile as the custodian in Chile. During 2010, 82 million ADSs were traded in the United States of America amounting to US$1,773 million. The December ADS closing price was US$23.22. Periods 1rst Quarter 2008 2nd Quarter 2008 3rd Quarter 2008 4th Quarter 2008 Total 2008 1rst Quarter 2009 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 Total 2009 1rst Quarter 2010 2nd Quarter 2010 3rd Quarter 2010 4th Quarter 2010 Total 2010 Units 30,348,500 18,772,700 25,112,963 34,750,666 108,984,829 25,322,091 22,237,729 24,095,308 24,586,636 96,241,764 28,447,369 23,874,800 16,048,418 13,771,056 82,141,643 Amounts (Chilean Pesos) 459,142,457 344,723,090 418,886,734 467,921,193 1,690,673,474 369,537,941 357,624,325 438,059,222 478,617,884 1,643,839,372 623,592,343 469,157,995 352,556,358 327,469,831 1,772,776,527 Average Price 15.13 18.36 16.68 13.47 14.54 16.12 18.31 19.32 21.77 19.73 21.91 23.31 1.5. Bolsa de Valores Latinoamericanos de la Bolsa de Madrid (Latibex) The shares of Enersis began trading on the Latin American Securities Exchange of the Madrid Stock Exchange (Latibex) on December 17, 2001. The company’s dealing unit is 50 shares and its mnemonic is XENI. Santander Central Hispano Investment S.A. acts as the link agent and Banco Santander is the custodian in Chile. During 2010, 451 thousand units were traded, the equivalent of 7.2 million euros. The closing unit price as of December was 17.5 euros. Periods 1rst Quarter 2008 2nd Quarter 2008 3rd Quarter 2008 4th Quarter 2008 Total 2008 1rst Quarter 2009 2nd Quarter 2009 3rd Quarter 2009 4th Quarter 2009 Total 2009 1rst Quarter 2010 2nd Quarter 2010 3rd Quarter 2010 4th Quarter 2010 Total 2010 Units 574,208 317,115 349,868 243,642 1,484,833 108,066 153,129 168,606 133,850 563,651 76,706 270,788 60,113 43,513 451,120 Amounts (Chilean Pesos) 6,082,911 3,703,245 3,917,120 2,472,402 16,175,678 1,179,407 1,831,466 2,148,348 1,816,675 6,975,896 1,210,946 4,207,514 1,012,462 757,806 7,188,728 Average Price 10.59 11.68 11.20 10.15 10.91 11.96 12.74 13.57 15.79 15.54 16.84 17.42 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 48 Enersis 2010 Annual Report 2. Market information During 2010, the Chilean stock market performed well compared to other exchanges in the world because of local economic recovery after the global financial crisis, which was occurred in spite of the negative effects of the earthquake during the first months of 2010 in much of the territory, affecting multiple industries. In the last two years, Enersis shares have produced a good performance in the markets where they are traded, even in the complex economic environment which characterizing the period. 2.1. Santiago Stock Exchange (BCS) The graph shows the price trajectory of the Enersis share over the last two years compared to the Selective Stock Price Index (IPSA) in the local market: Variation Enersis IPSA 2009 40.2% 50.7% 2010 Accumulated 2009-2010 -5.8% 37.6% 32.0% 107.4% 120% 100% 80% 60% 40% 20% 0% -20% Ch$ 217.42 Ch$ 164.73 8 0 - c e d 9 0 - n a j 9 0 - r a m 9 0 - r p a 9 0 - y a m 9 0 - n u j 9 0 - l u j 9 0 - g u a 9 0 - p e s 9 0 - t c o 9 0 - v o n 9 0 - c e d 0 1 - n a j 0 1 - b e f 0 1 - r a m 0 1 - r p a 0 1 - y a m 0 1 - n u j 0 1 - l u j 0 1 - g u a 0 1 - p e s 0 1 - t c o 0 1 - v o n 0 1 - c e d Enersis IPSA Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 49 2010 Annual Report Stock Exchange Transactions 2.2. New York Stock Exchange (NYSE) The graph below shows the behavior of Enersis´ ADR listed on the NYSE (ENI) over the last two years compared to the Dow Jones Industrial and Dow Jones Utilities Indexes: 2009 79.4% 18.8% 7.3% 2010 1.6% 11.0% 1.8% Accumulated 2009-2010 82.3% 31.9% 9.2% US$ 23.22 Variation ENI Dow Jones Industrial Dow Jones Utilities 120% 100% 80% 60% 40% 20% 0% -20% -40% US$ 12.74 8 0 - c e d 9 0 - n a j 9 0 - r a m 9 0 - r p a 9 0 - y a m 9 0 - n u j 9 0 - l u j 9 0 - g u a 9 0 - p e s 9 0 - t c o 9 0 - v o n 9 0 - c e d 0 1 - n a j 0 1 - b e f 0 1 - r a m 0 1 - r p a 0 1 - y a m 0 1 - n u j 0 1 - l u j 0 1 - g u a 0 1 - p e s 0 1 - t c o 0 1 - v o n 0 1 - c e d ENI Dow Jones Industrial Dow Jones Utilities 2.3. Latin American Securities Exchange of the Madrid Stock Exchange (Latibex) The graph shows the performance of the Enersis share (XENI) listed in the Latin American Securities Exchange of the Madrid Stock Exchange (Latibex) over the last two years compared to the IBEX Index. 2009 77.1% 29.8% 2010 8.5% -17.4% Accumulated 2009-2010 92.1% 7.2% $ 17.50 Variation XENI IBEX 120% 100% 80% 60% 40% 20% $ 9.11 0% -20% -40% 8 0 - c e d 9 0 - n a j 9 0 - r a m 9 0 - r p a 9 0 - y a m 9 0 - n u j 9 0 - l u j 9 0 - g u a 9 0 - p e s 9 0 - t c o 9 0 - v o n 9 0 - c e d 0 1 - n a j 0 1 - b e f 0 1 - r a m 0 1 - r p a 0 1 - y a m 0 1 - n u j 0 1 - l u j 0 1 - g u a 0 1 - p e s 0 1 - t c o 0 1 - v o n 0 1 - c e d XENI IBEX Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Dividends Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 52 Enersis 2010 Annual Report In accordance with General Rule No.283, numeral 5), the following are the company’s dividend policies for the years 2011 and 2010. 1. Dividend policy year 2011 1.1. Generalities The company’s board, at its meeting on February 28, 2011, adopted the following dividend policy and the procedures for payment of Enersis S.A. dividends: 1.2. Dividend policy The board intends to propose to the Ordinary Shareholders Meeting, to take place during the first four month period of 2012, to distribute 55% of 2011 net income as final dividend. The board also has the intention to distribute an interim dividend against the net income for 2011 of 15% of the net income to September 30, 2011, as shown in the financial statements at that date, payable in January 2012. The final dividend will be defined by the ordinary shareholders meeting to be held during the first four months of 2012. Compliance with the above program will be subject, in terms of dividends, to the actual net income outcome and also the results of the projections made periodically by the company or the existence of certain conditions, as the case may be. 1.3. Dividend payment procedure Enersis SA provides the following methods for the payment of interim or final dividends, in order to avoid incorrect collection: 1. Deposit in a bank checking account whose holder is the shareholder. 2. Deposit in a bank savings account whose holder is the shareholder. 3. Dispatch of nominative check or bankers draft by registered mail to the address of the shareholder recorded in the shareholders register. 4. Pick up check or bankers draft at the offices of DCV Registros S.A., as the registrar of the shares of Enersis S.A. or at the bank and its branches nominated for this purpose and which will be stated in the notice published concerning the dividends payment. For these purposes, checking or savings accounts may be in any part of the country. It should be noted that the payment method chosen by each shareholder will be used by DCV Registros S.A. for all dividend payments unless the shareholder states in writing their intention to change and record a new method. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 53 2010 Annual Report Dividends For shareholders who have not recorded a payment method, dividends will be paid according to method N°4 above. Should checks or bankers drafts be returned by mail to DCV Registros S.A., these will be held in its custody until withdrawn or requested by the shareholder. In the case of deposits in bank checking accounts, Enersis S.A. may request, for security reasons, the checking of these by the corresponding banks. If the accounts indicated by the shareholder are objected to, whether in the checking process or for any other reason, the dividend will be paid by the method stated in point N°4 above. Moreover, the company has adopted and will continue to adopt in the future all security measures required by the dividend payment process so as to safeguard the interests of Enersis SA and its shareholders. 2. Dividend Policy 2010 (1) (2) 2.1. Generalities Pursuant to the stipulations of the Circular N° 687 as of February 13, 1987 of the Superintendence of Securities and Insurances, the dividend policy of the Society’s Board is exposed to Shareholders as described below. 2.2. Dividend policy The board intends to distribute an interim dividend against the net income for 2010 of up to 15% of the net income to September 30, 2010, as shown in the financial statements at that date, payable in December 2010. The board intends to propose to the ordinary shareholders meeting to be held in the first four months of 2011, the distribution of a final dividend of an amount equivalent to 60% of the net income for 2010. The final dividend will be defined by the ordinary shareholders meeting to be held during the first four months of 2011. Compliance with the above program will be subject, in terms of dividends, to the net income actually produced and also the results of the projections made periodically by the company or the existence of certain conditions, as the case may be. (1) Through the Material Information report entered the Superintendence of Securities and Insurance on October 27, 2010, Enersis SA, reported: “In accordance with clauses 9 and 10, subsection two, of Law 18,045 and General Rule N°30 of the SVS, and duly authorized, I inform you as material information that a board meeting of Enersis S.A. held today unanimously agreed the distribution of $ 1.57180 per share as interim dividend to be paid on January 27, 2011, September 30, 2010, equivalent to 15% of distributable net income calculated at September 30, 2010. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 54 Enersis 2010 Annual Report The above modifies the dividend policy in place for 2010, which determined the distribution of an interim during the month of December. Also, according to the provisions of the SVS in circular N° 660/86, I have the pleasure to send you Form N° 1 that includes the information on the agreed interim dividend, of which distribution and payment has been agreed by the board of Enersis SA, at its meeting held on this date”. (2) Through the Material Information report entered the Superintendence of Securities and Insurance on February 28,2011, Enersis SA, reported: “In accordance with clauses 9 and 10, subsection two, of Law 18,045 and the provisions set forth in the General Norm No. 30 issued by that Superintendence, and under the powers vested in me, I inform you, as a material event, that at the Board of Directors of Enersis S.A. at its meeting held today, unanimously agreed to propose to the Ordinary Shareholders Meeting of Enersis S.A. to be held on April 26, 2011, to distribute a final dividend of 50% of the Company´s distributable net income, which represents Ch$ 7.44578 per share. After deducting the interim dividend of Ch$ 1.57180 per share paid in January 2011, the amount to be distributed as definitive dividend to the shareholders of the company would be Ch$ 5.87398 per share. This would represent a total distribution of Ch$ 243,113,407,000 attributable to the net income as of December 31, 2010. The above modifies the current dividend policy, which determined the distribution of a final dividend of 60% of the distributable net income of the Company. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 55 2010 Annual Report Dividends 3. Distributable net income year 2010 Distributable earnings for the year 2010 are as follows: Net Income for the year* Distributable Earnings *Attributable to Owners of the Company 4. Dividends distributed Million Chilean Pesos 486,227 486,227 The following chart shows dividends per share paid during the last few years: N° Dividend Type Of Dividend Closing Date Payment Date Chilean Pesos per Share Charged to Year 72 73 74 75 76 77 78 79 80 81 Definitivo Definitivo Provisorio Definitivo Provisorio Definitivo Provisorio Definitivo Provisorio Definitivo 04/14/05 03/28/06 12/19/06 05/16/07 12/20/07 04/24/08 12/13/08 05/07/09 12/11/09 04/29/10 04/20/05 04/03/06 12/26/06 05/23/07 12/27/07 04/30/08 12/19/08 05/13/09 12/17/09 05/06/10 0.416540 1.000000 1.110000 4.890330 0.531190 3.412560 1.539310 4.560690 2.456770 4.643230 2004 2005 2006 2006 2007 2007 2008 2008 2009 2009 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Investment and financing policy 2010 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 58 Enersis 2010 Annual Report The ordinary shareholders meeting held on April 22, 2010 approved the Investment and Financial Policy described below: 1. Investments 1.1. AREAS OF INVESTMENT Enersis will invest, as authorized by its bylaws, in the following areas: • Contributions for investment in or for the formation of subsidiary or associate companies whose activity is aligned, related or linked to any forms or types of energy or the supply of public utilities or whose main raw material is energy. Investments related to the acquisition, exploitation, construction, rental, administration, trading and disposal of any class of fixed assets, whether directly or through subsidiary companies. • • Other investments in all kinds of financial assets, titles or securities. 1.2. Maximum Investment Limits The maximum investment limits for each area shall be the following: • • Investments in its subsidiaries in the electricity sector, the amounts needed for the subsidiaries to satisfy their respective corporate objects. Investments in other subsidiaries such that sum of the proportions of the fixed assets corresponding to the share in each of these other subsidiaries does not exceed the proportion of fixed assets corresponding to the shareholdings in the subsidiaries in the electricity sector and of Enersis. 1.3. Participation in the control of the areas of investment In order to control the investment areas and in accordance with Enersis’s corporate objects, the following procedure will be followed wherever possible: • At the shareholders meetings of the subsidiary and associate companies, the • • • appointment of directors corresponding to the Enersis shareholding in that company shall be proposed, these preferably being from among directors or executives of the company or its subsidiaries. Investment, financial and commercial policies will be proposed to subsidiary companies, as well as the accounting criteria and systems they should follow. The management of the company subsidiaries and associates will be supervised. Permanent control of debt limits will be maintained, so that the investments or contributions implemented or that are planned for implementation do not represent an unusual variation from the parameters defined by the maximum investment limits. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 59 2010 Annual Report Investment and financing policy 2010 2. Financing 2.1. Maximum level of debt The maximum level of debt of Enersis is a debt to equity plus minority interest ratio of 2.2 times, based on the consolidated balance sheet. 2.2. Management powers for agreeing dividend restrictions with creditors Dividend restrictions may only be agreed with creditors if previously approved by the shareholders meeting (ordinary or extraordinary). 2.3. Management powers for granting security to creditors The company’s management may agree with creditors the granting of tangible securities or guarantees in accordance with the law and the corporate bylaws. 2.4. Assets essential for the company’s functioning The shares representing Enersis’s shareholding in its subsidiary Chilectra S.A. are considered essential assets for the functioning of Enersis. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next The company´s businesses Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 62 Enersis 2010 Annual Report 1. Business structure Generation Endesa Chile Endesa Costanera Hidroeléctrica El Chocón Endesa Fortaleza Endesa Cachoeira Endesa CIEN* Emgesa Edegel * Transmission. Distribution Chilectra Edesur Ampla Coelce Codensa Edelnor Other Business CAM Synapsis Inmobiliaria Manso de Velasco ICT 2. Historical background On June 19, 1981, Compañía Chilena de Electricidad S.A. formed a new corporate structure which gave birth to a parent company and three subsidiaries. One of these was Compañía Chilena Metropolitana de Distribucion Electrica S.A. In 1985, under the Chilean government’s privatization policy, the process of transferring the share capital of Compañía Chilena Metropolitana de Distribucion Electrica S.A. to the private sector was begun, ending finally on August 10, 1987. In this process, the pension fund management companies (AFPs), company employees, institutional investors and thousands of small shareholders joined the Company. Its organizational structure was based on activities or operative functions whose results were evaluated functionally and its profitability was limited by a tariff structure as a result of the Company’s exclusive dedication to the electricity distribution business. In 1987, the company’s board proposed forming a division for each of the parent company’s activities. Four subsidiaries were therefore created to be managed as business units each with its own objectives, thus expanding the company’s activities toward other non-regulated activities but linked to the main business. This division was approved by the extraordinary shareholders meeting of November 25, 1987 which defined its new corporate objects. Compañía Chilena Metropolitana de Distribucion Electrica S.A. thus became an investment holding company. On August 1, 1988, as resolved at the extraordinary shareholders meeting of April 12, 1988, one of the companies born from the division changed its name to Enersis S.A. At the extraordinary shareholders meeting of April 11, 2002, the company’s objects were modified, introducing telecommunications activities and the investment and management of companies whose businesses are in telecommunications and information technology, and internet trading businesses. In 1988, and in order to successfully meet its development and growth, the company was split into 5 business units which in turn gave birth to five subsidiaries. Of these, Chilectra and Río Maipo were responsible for electricity; Manso de Velasco Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 63 2010 Annual Report The company´s businesses concentrated on electrical engineering and construction services, plus real-estate management, Synapsis in the area of information technology and data processing, while Diprel focused on providing procurement and commercialization of electrical product services. Today, Enersis is one of the largest private electricity groups in Latin America in terms of consolidated assets and operating revenue, achieved through steady and balanced growth in its electricity businesses: generation, transmission and distribution. The development of the electricity distribution business abroad has been implemented jointly with its subsidiary Chilectra, a company that distributes electricity in the Metropolitan Region, Chile. Its investments in electricity generation in Chile and abroad have been developed mainly through its subsidiary Empresa Nacional de Electricidad S.A. (Endesa Chile). In addition, it is involved in businesses that complement its principal ones through majority holdings in the following companies: Inmobiliaria Manso de Velasco Ltda. committed to the real-estate business through the integral development of real-estate projects and the administration, rental, purchase and sale of the property assets of Enersis and its subsidiaries in Chile. ICT Servicios Informáticos Limitada is a consulting services company in technology, information and computing, telecommunications and data transmission. 3. Expansion and development Enersis began its international expansion in 1992 through participating in different privatization processes in Latin America, thus developing a significant presence in the electricity sectors of Argentina, Brazil, Colombia and Peru. 1992 • On May 15, it acquired a 60% shareholding and control of the generator Central Costanera, currently Endesa Costanera, in Buenos Aires, Argentina. • On July 30, it was awarded 51% of Empresa Distribuidora Sur S.A., Edesur, a company that distributes electricity in the city of Buenos Aires, Argentina. • 1993 In July, it bought the generator Hidroeléctrica El Chocón, located in the province of Neuquén and Río Negro, Argentina. • 1994 In July, Enersis acquired for US$176 million 60% of the share capital of Empresa de Distribución Eléctrica de Lima Norte S.A., Edelnor, in Peru. It also acquired Edechancay, another electricity distributor in that country, which was later absorbed by the former. • At the end of the year, Enersis acquired an additional 1.9% of the share capital of Endesa Chile, increasing its shareholding to 17.2%. 1995 • On December 12, Enersis acquired an additional 39% in Edesur gaining control of the company. It also acquired the generator Edegel in Peru. • Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 64 Enersis 2010 Annual Report 1996 • On February 15, Enersis reached a 25.28% shareholding in Endesa Chile and, on April 15, Endesa Chile became a subsidiary of Enersis. It invests in the sanitation market with the acquisition of Agua Potable Lo Castillo S.A. • • On December 20, Enersis entered the Brazilian market with the acquisition of a large block of shares in the previously-called Companhia de Eletricidade do Río de Janeiro S.A., Cerj, a company that distributes electricity in the city of Río de Janeiro and Niteroi, Brazil. Its present name is Ampla Energía e Serviços S.A. • On December 20, it acquired a 99.9% shareholding in Central Hidroeléctrica de Betania S.A. E.S.P, in Colombia. 1997 • On September 5, it acquired for US$715 million a 78.9% shareholding in Centrais Elétricas Cachoeira Dourada, Brazil. • On September 15, Enersis successfully took part in the capitalization of Codensa S.A. E.S.P., acquiring a shareholding of 48.5% for US$1.226 million, company that distributes electricity in the city of Bogotá and the department of Cundinamarca, Colombia. It was also awarded 5.5% of Empresa Eléctrica de Bogotá. • On September 15, it acquired a 75% shareholding, for an amount of US$951 million, in Emgesa, a Colombian generator, and an additional 5.5% of Empresa Eléctrica de Bogotá S.A. • ENDESA S.A., (Spain), acquired 32% of Enersis. 1998 • On April 3, Enersis again entered the Brazilian market, this time being awarded 89% and control of Companhia Energética de Ceará S.A., Coelce, company distributes electricity in the north-east of the country, in the state of Ceará for US$868 million. • On April 22, Enersis reached 100% shareholding in Aguas Cordillera, Santiago, Chile. • On December 28, Enersis gained control of Esval, located in the Valparaiso region, through being awarded 40% of the share capital of the company. 1999 • ENDESA S.A., (Spain), took control of Enersis. Through a public share offering (OPA), the multinational company ENDESA S.A., acquired an additional holding of 32% in Enersis which, together with the 32% already acquired in August 1997, gave it a total holding of 64%. This transaction, completed on April 7, 1999, involved an investment of US$1,450 million. As a result of the capital increase made by Enersis in 2003, this shareholding reduced to the present 60.62% • On May 11, Enersis acquired 35% of Endesa Chile which, added to the 25%already held, enabled it to obtain a 60% shareholding in the generator. It therefore consolidated its position as one of the principal private-sector electricity groups in Latin America Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 65 2010 Annual Report The company´s businesses 2000 • As part of its Genesis Plan strategy, the subsidiaries Transelec, Esval, Aguas Cordillera and real-estate assets were sold for US$1,400 million. 2001 • Large investments were made: US$364 million for increasing its shareholding in Chilectra, in Chile; US$150 million in the acquisition of 10% of the share capital of Edesur, in Argentina, a percentage that was held by the company’s employees; US$132 million to increase its shareholding in Ampla, in Brazil; US$23 million to increase its shareholding by 15% in Río Maipo, in Chile, and US$1.6 million to increase its shareholding by 1.7% in Distrilima, in Peru. • 2002 In Brazil, Central Termoeléctrica Fortaleza in the state of Ceará was awarded to the Company. The commercial operation of the second phase of the electricity interconnection between Argentina and Brazil, CIEN, completing a transmission capacity of 2,100 MW between both countries, also began. 2003 • Assets amounting to US$757 million were sold, including the Canutillar generating plant and the distributor Río Maipo, both in Chile. 2004 • The Central Hidroelectrica Ralco hydroelectric plant located in the Bio Bio Region and contributes 690 MW of capacity, began operations. 2005 • On April 18, the subsidiary Endesa Eco was formed to promote and develop renewable energy projects like mini-hydro plants, wind farms, geothermal, solar and biomass plants, and to act as the depositary and trader of the emission reduction certificates produced by these projects. • The subsidiary Endesa Brasil S.A. was formed with all the assets held in Brazil by the Enersis Group and Endesa Internacional (now Endesa Latinoamérica): CIEN, Fortaleza, Cachoeira Dourada, Ampla, Investluz and Coelce. 2006 • During February, the Termocartagena (142 MW) plant in Colombia, which operates • • with fuel oil or gas, was bought for approximately US$17 million. In March, Enersis informed the SVS about the merger of Elesur and Chilectra by the absorption of the latter by the former. The legal effects of this merger were effective from April 1, 2006. In June, Edegel and Etevensa were merged, the latter a subsidiary of Endesa Internacional (now Endesa Latinoamérica S.A.) in Peru. • On September 29, Endesa Chile, ENAP, Metrogas and GNL Chile signed an agreement defining the structure of the liquefied natural gas (LNG) project in which Endesa Chile participates with a 20% holding. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 66 Enersis 2010 Annual Report • • • 2007 In March, the company Centrales Hidroeléctricas de Aysén S.A. (HidroAysén) was formed, to develop and exploit the hydroelectric project in the region of Aysén, called the “Aysén Project”, which will imply 2,750 MW of new installed capacity for Chile. In April, the first phase of the San Isidro combined-cycle thermal plant, second unit, with a capacity of 248 MW, was made available to Economic Load Dispatch Center (CDEC-SIC). In September, the merger of the Colombian generating companies, Emgesa and Betania was completed. • On October 11, ENEL S.p.A. and ACCIONA, S.A. took control of Enersis through ENDESA S.A. and Endesa Internacional, S.A. (now Endesa Latinoamérica S.A.). • During November, the Palmucho hydroelectric plant started up its commercial operations, located below the Ralco plant dam in the Upper Biobío area, supplying 32 MW of capacity to the Central Interconnected system SIC). • Canela was inaugurated on December 6, the first wind farm on the SIC. Canela is located in the village of that name in the Region of Coquimbo and contributes 18 MW to the SIC. 2008 • In January, the second phase of the San Isidro II combined-cycle thermal plant began its commercial operations, with an installed capacity of 353 MW. • On March 24, the dual operation of Unit Nº1 of the Tal-Tal thermal plant began operations, with an installed capacity of 245 MW. • In June 27, the Ojos de Agua mini-hydro plant began operations, contributing 9 MW of installed capacity to the SIC. 2009 • The companies ACCIONA, S.A. and ENEL S.p.A. announced an agreement whereby ACCIONA, S.A. will directly and indirectly transfer to ENEL ENERGY EUROPE S.L. a 25.01% shareholding in ENDESA, S.A. ENEL ENERGY EUROPE S.L., controlled 100% by ENEL S.p.A., will thus hold 92.06% of the share capital of ENDESA, S.A. • On June 25, the agreement between ENEL S.p.A. and ACCIONA, S.A. came into effect whereby the ENEL Group became the controller of 92.06% of the share capital of ENDESA, S.A. • On October 9, Endesa Chile acquired 29.3974% of its Peruvian generation subsidiary Edegel. The shares were acquired at market price from Generalima S.A.C., a company which in turn is a subsidiary of Endesa Latinoamérica S.A. Endesa Chile thus now holds directly and indirectly 62.46% of the shares of Edegel. • On October 15, Enersis S.A. acquired 153,255,366 shares, representing 24% of the share capital, of its Peruvian subsidiary, Edelnor, at a price of 2.72 soles per share. This was purchased from Generalima S.A.C., a Peruvian subsidiary of Endesa Latinoamérica S.A., the parent company of Enersis. With this transaction, the direct and indirect shareholding of Enersis S.A. in Edelnor rose from 33.53% to 57.53%. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 67 2010 Annual Report The company´s businesses • 2010 In February, the San Isidro plant increased its capacity to 399 MW; the combined cycle unit increased 22 MW of capacity after implementing technological changes that allowed him to operate in a dual manner (LNG and oil). • • • • On May 31 in the context of the ongoing effort to provide its customers with excellent service, Chilectra began the project distribution network remote management (DT) implemented by CAM, a technological change that will allow a qualitative leap in the registration of power consumption and reducing energy losses. In early June Chilectra and Clínica Dávila opened the largest solar Project in Chile. With a total of 264 solar thermal collectors, installed in 740 square meters, the solar electric technology will allow heating more than 70,000 liters of sanitary water a day, using two types of totally clean energy, uncontaminated and with savings of up to 85%. In July Endesa Chile and Minera Lumina Copper Chile S.A. formalized a supply contract to satisfy electricity needs of Caserones Project, located 162 kilometers southeast of Copiapo. The agreement considers supplying energy and capacity from September 1, 2012 until December 31, 2022. In October, 2010, the company submitted the Environmental Impact Study of the Project LTE Central Hidroeléctrica Los Cóndores to the Environmental Assessment Service (EAS), initiative that will allow connecting the future power plant Central Hidroeléctrica Los Cóndores to the Sistema Interconectado Central (SIC), main electricity grid in the country, and that services more than 90% of the population. In December 2010, Endesa Chile submitted the environmental impact assessment (EIA) of Central Hidroeléctrica Neltume again. The company submitted the environmental impact study to the Environmental Assessment Service (EAS), incorporating the additional information requested by the different organisms that participated in the evaluation process of the initiative. The 490 MW installed capacity intends to make use of the existing hydroelectric potential in the area, specifically in the River Fuy, natural drainage of the lake Pirehueico. In December Endesa Chile submitted the EIA of the Project named High Voltage S/E Neltume-Pullinque to the SEA of the Lake Region. The initiative’s purpose is to build and operate the necessary infrastructure to transport and inject the energy to come from the future Central Hidroeléctrica Neltume, into the Central Interconnected System (SIC). • • • Enersis accepted the offer presented by the company Grana y Montero S.A.A., to acquire the entire stake it holds, directly and indirectly, in its subsidiary Compañía Americana de Multiservicios Limitada, Cam; and likewise, accepted the offer by Riverwood Capital L.P to acquire the entire shareholding, both directly and indirectly, in its subsidiary Synapsis Soluciones y Servicios IT Ltda. The price offered for CAM and its subsidiaries in Argentina, Brazil, Colombia and Peru amounted to US$20 million. In the case of Synapsis, the price offered for the company and its subsidiaries in Argentina, Brazil, Colombia and Peru amounted to US$52 million. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Investments and financial activities Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 70 Enersis 2010 Annual Report 1. Investment plan We coordinate the overall financing strategy of our subsidiaries and intercompany advances to optimize debt management as well as the terms and conditions of our financing. Our subsidiaries independently plan capital expenditure financed by internally generated funds or direct financings. One of our goals is to focus on investments that will provide long-term benefits, such as energy loss reduction projects. Our investment plan is flexible enough so as to adapt to changing circumstances by giving different priorities to each project in accordance with profitability and strategic fit. Investment priorities are currently focused on developing the capacity plan in Chile, Peru and Colombia. 1.1. Generation Our capital expenditure in generation totaled US$194 billion in 2010, of which US $116 billion were invested in Chile and US$77 billion outside the country, while in 2009, these amounts totaled US$395 billion, of which US$313 billion were invested in Chile and the rest overseas. Our major investments in Chile during 2010 were concentrated on building Central Bocamina II power plant. In the region, our main investment project was beginning of the construction of El Quimbo Project, the construction of a 400 MW hydroelectric plant in Colombia. 1.2. Distribution Our capital expenditure in distribution in 2010 totaled US$440 billion, mainly to meet consumption needs resulting from population growth and new customers, as well as to help reduce energy losses. Of this amount, US$36 billion were invested in Chile and US$404 billion outside the country. On the other hand in 2009, capital expenditures totaled US$394 billion, to service new customers, reduce energy losses and maintain lines and equipment and improve service quality, of which US$46 billion were invested in Chile. In Chile, during 2010, Chilectra made investments totaling US$ 36 billion related primarily to meet growing energy demand, offering an increasingly reliable service to all its customers, and also in projects of service quality, safety and loss prevention projects. The company continued changing voltage from 12 kV to 23 kV, incorporating 24 MVA of medium voltage capacity. In 2010, four new substations were added to the network; Apoquindo, Andes, Club Hipico and La Reina. Chilectra also continued to develop Intelligent Connectivity plans, which aims to integrate new technology into electricity infrastructure, information and communication systems. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 71 2010 Annual Report Investments and financial activities In Argentina, our subsidiary Edesur carried out investments, mainly related to electrical infrastructure, including increasing the capacity of a high voltage power line between Costanera and the substation Bosques, and expanding of substations Quilmes and Don Bosco, benefiting more than 380,000 customers from the districts of Avellaneda, Quilmes, Florencio Varela and Berazategui. In Brasil, total investment reached US$239 billion, which represented a 28% increase when compared to the 2009 figure. In particular, Ampla invested a total of US$114 billion, mainly focused on the reduction of energy losses and on the improvement of distribution network quality. Coelce´s investment totaled US $125 billion, with a special focus on the program “Light for everyone”, supported by the Government of the State of Ceará to supply energy to customers in rural areas. This program continued in 2010, resulting in 16,865 new customers connected to the low voltage network, worth an estimated investment of 111 million reais. In Colombia, total investment reached US$79 billion in projects mainly focused on expansion, to serve new customers and satisfy growing demand and to incorporate equipment and renew distribution networks in order to improve continuity and quality of power supply. Among the investment developed by Codensa, we may highlight the construction of a new 120 MVA substation to serve the International Airport El Dorado area and the town Engativá, and the expansion of process capacity of substations Fontibón y Sesquilé. The investments of the company Empresa Eléctrica de Cundinamarca were mainly focused on improving the continuity and quality of supply, and reducing energy losses. In Peru, Edelnor conducted investments for a total amount of US$33 billion mainly focused on satisfying growing demand, improving service quality and reinforcing low and medium voltage lines. Investments were also developed in loss control programs. Edelnor also continued improving its service, the electrification of new building projects, reducing commercial losses and improving street lighting. 2. Financial activities The financial activities of the Enersis Group have always been an important and priority matter. Work has been carried out on improving the financial profile of both Enersis and its subsidiaries, with capital and debt issues carried out on the best conditions prevailing in the market. The following are among the most relevant financial events in the history of Enersis: Between 1988 and 1992, Enersis’s shares began to be traded on the local stock exchanges and, on October 20, 1993, on the New York Stock Exchange (NYSE), through ADSs with the ticker number ENI. In February 1996, Enersis made a second issue of shares on both the local and international markets. It also issued bonds in the United States for a total amount of US$800 million, with maturities in 2006, 2016 and 2026. In February 1998, Enersis again increased its capital and issued convertible bonds amounting to US$ 200 million. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 72 Enersis 2010 Annual Report In 2000, it made a further capital increase of US$525 million approximately. On December 17 the same year, the shares of Enersis began to be traded in the Latin American Securities Market (LATIBEX) of the Madrid Stock Exchange, with the ticker number XENI. Between June and December 2003, Enersis made a new capital increase which strengthened the Company’s equity base by more than US$2,000 million. Between November 2004 and December 2006, Enersis signed two committed and unsecured revolving lines of credit through its old branch in the Cayman Islands. In the same period, Endesa Chile, through its Cayman Islands branch, signed three committed revolving lines of credit without senior collateral. These credit agreements were structured with various banks for a total sum of US$ 550 million for Enersis and US$650 million for Endesa Chile, and have maturities falling between 2009 and 2011. Also, in June 2008, Endesa Chile signed a renewable unsecured syndicated credit agreement for US$200 million and a loan agreement for 6 years for US$200 million with the same banks. The latter facility was used to refinance part of the July 2008 maturities of the Yankee bonds for US$400 million. Finally, in October the same year, amendments were signed for the two lines of credit of Enersis and the three of Endesa Chile in order to significantly reduce the covenants in those agreements. The principal changes included: an increase in the level of materiality of cross defaults to US$50 million coupled with a requirement of a payment in penalty for that same amount; a reduction in the number of financial covenants; a more comfortable leverage covenant for Endesa Chile; a modification of the documentation to reflect the adoption of IFRS, and other changes in definitions and conditions that provide greater flexibility for both companies. During 2008 there were also financial transactions considering, refinancing as well as new issues and hedges, by the foreign subsidiary companies for a total equivalent to US$2,209million of which US$125 million were by Argentina, US$594 million by Brazil, US$793 million by Colombia and US$ 697 million by Peru. The revolving credit of US$ 200 million agreed by Enersis in 2006, with The Bank of New York as agent bank, in order to provide the Company with liquidity, expired in December 2009 without having been used. Enersis therefore replaced it by contracting two revolving lines of credit for a total amount equivalent to US$200 million, taken in equal parts from both the international and local banking markets. Regarding other transactions, Enersis and Chilectra received in October 2009 an approximate total of US$86 million from the sale of shares on the Bogotá Securities Exchange corresponding to 2.473% of Enersis Group’s shareholding in Empresa de Energía de Bogotá (EEB). Also, on October 9, 2009, Endesa Chile acquired on the Lima Stock Exchange a block of shares representing 29.3974% of the capital of its energy-generating subsidiary in Peru (Edegel). This transaction was worth US$ 375 million by means of which the direct and indirect shareholding of Endesa Chile in Edegel rose to 62.46% of its share capital. Additionally, on October 15, 2009 Enersis acquired on the Lima Stock Exchange a block of shares representing 24% of the capital of its electricity distribution subsidiary in Peru (Edelnor). This US$146 million transaction led to increase the direct and indirect shareholding of Enersis in Edelnor to 57.53% of its share capital. Financial transactions were carried out in 2009, both refinancing and new financing and hedges, in the foreign subsidiaries for a total equivalent in dollars to approximately Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 73 2010 Annual Report Investments and financial activities US$1,540 million, of which US$208 million came from Argentina, US$492 million from Brazil, US$633 million from Colombia and US$207 million from Peru. 2.1. Domestic finance Enersis and Endesa Chile, at year end 2010, have committed credit lines available for the equivalent of US$209 million and US$ 509 million, respectively. Enersis and Endesa Chile and subsidiaries in Chile have, at year end 2010, non- committed credit lines available in the domestic for the equivalent of US$262 million and US$219 million, respectively. During 2010, Enersis´s domestic bond program for 12.5 Unidades de Fomento remained open, which the Company registered in the Securities Register of the SVS in February 2008. At year-end 2010, commercial credit lines for an amount of up to US$200 million, for both Enersis and Endesa Chile, remained unused. These credit lines were registered in January 2009, in the Securities Register of the SVS for Enersis and Endesa Chile. In addition to the revolving credit facilities and bond programs mentioned, both Enersis and Endesa Chile along with their subsidiaries in Chile, ended the year with available cash of US$781million, US$89 million in Enersis and US$418 million in Endesa Chile. The consolidated financial debt of Enersis at December 2010 was US$7,579 million. Of this, US$3,704 million corresponded to Endesa Chile consolidated. This debt mainly consisted of bank debt, and domestic and foreign bonds. The consolidated cash position of Enersis closed at US$2,052 million, thus the net debt amounted to US$5,527 million. With respect to the financing of Endesa Chile, the company made prepayments of its revolving credits, whose agent banks are Caja de Madrid and The Bank of Tokyo Mitsubishi, for a total amount of US$ 450 million during 2010, which was fully drawn at year end 2009. The credit line with Caja Madrid for US$250 million expired in November 2010. This had been obtained by Endesa Chile in 2004 and was unused at the time of expiration. 2.2. International finance In 2010, the world economy continued recovering, supported by the strong dynamism of emerging economies, as opposed to developed nations that experienced limited growth and with certain doubts in terms of the sustainability of their recuperation. Similarly, foreign subsidiaries of Enersis continued refinancing their debt to longer term and even improving the level of interest rates. Refinancing, new financing and coverage financial transactions took place in foreign subsidiaries in 2010, for a total amount equivalent to US$1,578 million, of which US$190 million come from Argentina, US$157 million from Brazil, US$1,044 million from Colombia and US$187millon from Peru. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 74 Enersis 2010 Annual Report 2.3. Main financial transactions in 2010 2.3.1. Argentina Costanera refinanced 2010 maturities of approximately US$72 million with bank loans. These include refinancing US$28 million of maturities with Mitsubishi Corporation and US$8.6 million with Credit Suisse. Hidroeléctrica El Chocón signed a 3.5 year syndicated loan for US$22 million which enabled it to refinance its short-term debt ahead of time and extend the average life of its debt. They contracted exchange rate hedges through a forward for a total of US$ 29 million to transfer debt from dollars to local currency. Edesur, meanwhile, in advance refinanced two loans, for approximately US$ 8 million, which allowed lengthening the average life of its debt. 2.3.2. Brazil Coelce refinanced maturities for US$46 million. During 2010, IFC executed it´s put option on 2.7% of Endesa Brazil. During 2010, IFC requested to exercise the put option it had on 2.7% of Endesa Brasil. Payment was made in January 2011. 2.3.3. Colombia Codensa issued 3 and 6 year bonds for a total amount of US$116 million. The most important transaction in Emgesa was structuring an international bond forUS$400 million, the funds being partly used to finance the Quimbo Project. Four year committed credit lines were also obtained for a total amount of US$180 million. Also, commercial papers were issued amounting to US$39 million to refinance short term maturities and local bonds were issued, with terms between 5 and 15 years, for a total amount of US$309 million. 2.3.4. Peru Edelnor issued local bonds for approximately US$36 million, used to refinance debt maturities. Edegel issued bonds for US$20 million and contracted a seven year term bank debt for US$61 million, whose proceeds were used to refinance 2012 debt maturities, in advance. Exchange rate and interest rate hedging instruments were purchased for a total ofUS$39 million. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 75 2010 Annual Report Investments and financial activities 2.4. Hedging policy 2.4.1. Exchange rate The Group’s exchange rate hedging policy is based on cash flows and its objective is to keep a balance between flows indexed to foreign currency (dollar) and the levels of assets and liabilities in that currency. During 2010, Enersis’s financial transactions enabled it to maintain a level of dollar liabilities adjusted to the expected flows in that currency. As part of the policy, Endesa Chile contracted swaps for US$400 million to cover the exchange risk of a local bond issued in Unidades de Fomento (UF) and that were exchanged into dollars which is the currency in which the subsidiary’s revenues are denominated. It also contracted forwards for US$85 million to cover the exchange rate risk of future payments related to the construction of Bocamina II power plant, that were denominated in UF exchanging them into dollars which is the currency in which the subsidiary’s revenues are denominated. Additionally, in Chile, forwards were purchased for US$389 million to cover the different currency flows coming from different countries in Latinoamerica. The rest of the companies in the Group in the region contracted US$ 38 million worth of forwards and swaps in order to denominate debt according to the indexation of their inflows and outflows. 2.4.2. Interest rate The Group’s policy consists of maintaining hedge levels, total fixed-rate debt and/or hedge over total net debt, within a band of more or less 10% with respect to the hedging level established in the annual budget. During 2010, interest rate swaps were therefore contracted for US$30 million to fix libor (London Interbank Offering Rate). At year-end 2010, the consolidated fixed rate debt plus hedged debt to net debt was 51.4%. 3. Credit rating On November 9, 1994, Standard and Poor’s and Duff & Phelps rated Enersis for the first time as BBB+, i.e. an investment grade company. Later, in 1996, Moody’s rated the company’s foreign currency long-term debt as Baa1. Over time, most of the credit ratings have varied. All are now investment grade with stable outlook, based on the diversified asset portfolio, the liquidity and suitable debt service policies. The credit profile of Enersis has continued to strengthen in 2010, with progress in the liquidity position and reductions in leverage. The positive financial and operational profile perspective of Enersis has been reflected in an improvement in January 2010 by Fitch Ratings in our corporate rating for foreign and local currency debt, as well as for the Yankee bonds, from BBB to BBB+. There was a similar improvement in the domestic rating from AA- to AA. Along the same line, the rating agency Standard and Poor’s raised the corporate and senior debt credit rating of Enersis in February 2010 to BBB+ from BBB, with stable outlook. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 76 Enersis 2010 Annual Report It is also important to state that on September 29, 2010, Moody´s placed Enersis´ Baa3 corporate debt denominated in foreign currency rating under review for a possible upgrade. The ratings are supported by the Company’s diversified portfolio of assets, strong credit parameters, a satisfactory debt composition and ample liquidity. The geographic diversification of Enersis in Latin America provides a natural hedge against the different regulations and climatic conditions, and its operating subsidiaries remain financially strong and have a position of leadership. 3.1. International rating Enersis Corporate Nota: *Bajo revisión. 3.2. Local rating Enersis Shares Bonds S&P BBB+, Stable Moody’s Baa3, (+)* Fitch Ratings BBB+, Stable Feller Rate Fitch Ratings 1st Class Level 1 1st Class Level 1 AA, Stable AA, Stable Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 77 2010 Annual Report Investments and financial activities 4. Properties and insurance The company owns some equipment and substations in the Santiago Metropolitan Region. The company holds insurance against risks such as fire, lightning, explosions, malicious acts, earthquakes, floods, alluvium and others. 5. Trade names The corporation holds the following registered trade names: Enersis, EnersisPLC, Enersis. PLC and Internet a la velocidad de la luz Enersis PLC. 6. Suppliers, customers and relevant competitors As Enersis is a company operating mainly in the area of generation and distribution, it has opted to consider the suppliers, customers and important competitors of its principal subsidiaries in Chile, e.g. Endesa Chile and Chilectra. Consequently, it was established that the suppliers, customers and important competitors for the Company are: Metro, Cencosud, CGE Distribución, Colbún, AES Gener, Pacific Hidro, Saesa, Chilquinta, Minera Los Pelambres, Minera Lumina Copper, Compañía Minera Doña Inés de Collahuasi, Ingeniería y Construcción Tecnimont, Tecnimont S.P.A. and E-Cl Suez. There is no degree of significant dependence with respect to the different customers and suppliers mentioned above. . Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Risk factors Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 80 Enersis 2010 Annual Report 1. Risk factors The Group’s activities are subject to a broad range of governmental standards and any modification of such standards could affect the Group’s activities, economic situation and operating results. The operating subsidiaries of the Group are subject to a wide range of rules on tariffs and other regulations governing their activities, both in Chile and in other countries where they operate. Therefore, the introduction of new laws or regulations, including amendments to laws or rules may impact their activities, financial situation and results of operations. These new laws or regulations, in occasions, change aspects of regulation that may affect existing rights, which could cause an adverse effect on future accounts of the Company. The activities of the Group to are subject to extensive environmental regulations that Enersis complies with on a permanent basis. Any changes made in these areas could affect the activities, financial condition and results of operations. Enersis and its operating subsidiaries are subject to environmental regulations which, among other things, require the company to conduct environmental impact studies for future projects, obtaining permits, licenses and other authorizations and the fulfillment of all requirements of those licenses, permits and norms. As any other regulated company, Enersis cannot guarantee: • • The approval from regulators of environmental impact studies. That public opposition may not cause delays or modifications to any proposed project and That laws or regulations may not change or be interpreted in a manner that could increase the costs of compliance or that affect the operations, plants or the plans for companies in which the Group has been involved in. • Group’s commercial activity has been planned so as to mitigate any impacts of changes in hydrological conditions. The Company’s operations include hydroelectric generation, and therefore, the company depends on hydrological conditions that exist at each moment in the large geographical areas where its hydroelectric generation facilities are located. If hydrological conditions lead to a drought or other conditions that adversely affect hydro generation activity, the results could be adversely affected, and for this reason, Enersis has defined, as an essential part of its commercial policy, not to contract 100% of its capacity. The electricity business is also affected by atmospheric conditions such as average temperatures which determine consumption. Weather conditions can make a difference in the margin obtained by the business. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 81 2010 Annual Report Risk factors 1.1. Credit risk Given the current economic situation, the group has been conducting detailed monitoring of credit risk. 1.1.1. Commercial accounts receivables Credit risk in accounts receivable, corresponding to the accounts receivable originating from commercial activities, has been historically very limited given that the short term collection conditions with customers doesn’t allow them to individually accumulate significant amounts. This applies to both, our electricity generation and distribution business. Within our electricity generating business line, in the event of non-payment, some countries allow power supply cut-offs, and in almost all contracts a lack of payment is established as cause for contract termination. For this purpose, credit risks are constantly monitored and the maximum amounts exposed to payment risks are measured, and as mentioned, are limited. For our electricity distribution business line, the energy supply cut-off is a power held by our companies in case of default by our customers, and is applied in accordance with the applicable regulation in each country, making the credit risk evaluation and control process easier, which is also limited. 1.1.2. Financial assets Surplus cash flow investments are placed in prime domestic and foreign financial entities (with an investment grade equivalent risk rating) with limits set for each entity. In the selection of banks for investment, consideration is given to those that hold at least two “investment grade” ratings, according to the three main international rating agencies (Moody’s, S&P and Fitch). Positions are backed up by treasury bonds from the country of operations and/ or instruments issued by the most reputable banks, favoring, wherever possible, the number ones. Derivatives are engaged with highly solvent entities; and therefore about 90% of operations are conducted with entities that hold an A rating or higher. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 82 Enersis 2010 Annual Report 2. Risk measurement The Enersis Group measures the Value at Risk (VaR) of its debt and financial derivatives positions in order to guarantee that the risk taken by the company remains consistent with the risk exposure defined, thus restricting the volatility of its income statement. The positions portfolio used in the calculations of the current Value at Risk is comprised of: • Debt, and • Financial derivatives. The calculated Value at Risk represents the possible value loss of the aforementioned positions portfolio over one day time horizon with 95% of confidence. The volatility of the risk variables that affect the value of the positions portfolio has been studied, including: • • The U.S. dollar Libor interest rate. For debt, taking into account the different currencies our companies operate under, the local indexes usual used in banking, and The exchange rates of the different currencies involved in the calculation. • The calculation of VaR is based on generating possible future scenarios (one day) of market values (both spot and term) for the risk variables, using the Monte Carlo methodology. The number of scenarios generated ensures compliance with the simulation convergence criteria. A matrix of volatilities and correlations between the various risk variables calculated based on the historical values of the logarithmic price return, has been applied to simulate the future price scenario. Once the price scenarios have been obtained, the fair value of the portfolio is calculated using such scenarios, obtaining a distribution of possible values at one day. The one-day value at risk, with 95% confidence, is calculated as the 5% percentile of the potential increases in the fair value of the portfolio in one day. The various debt positions and financial derivatives included in the calculation have been valued consistently using the financial capital calculation methodology. Taking into consideration the hypothesis described, the Value at Risk of the positions previously discussed by type of position is shown in the table below: Financial Positions Million Chilean Pesos Type of Interest Type of Exchange Rate Correlation Total 31st December, 2010 31st December, 2009 38,847,459 29,778,643 539,575 (2,695,024) 3,860,371 (7,740,115) 36,692,010 25,898,899 The positions of Value at Risk during 2010 and 2009 have evolved according to maturity/operation beginning during the period. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 83 2010 Annual Report Risk factors 3. Other risk As is customary in bank loans and capital market operations, a portion of the indebtedness of Enersis and its subsidiary Endesa Chile, is subject to cross-default provisions. If certain defaults of relevant subsidiaries are not remedied, a cross default could affect Enersis and Endesa Chile and, and under this scenario, certain liabilities of these companies could be accelerated. Nonpayment, after any applicable grace period, of the debts of these companies, or their Relevant Subsidiaries, with an individual principal amount outstanding in excess of US$ 50 million, and with a past due amount also in excess of US$ 50 million, could lead to the acceleration of syndicated loans. Furthermore, these debt facilities also contain clauses which, in situations other than non-payment, in these companies or in one of their relevant subsidiaries, such as bankruptcy, insolvency, adverse judicial rulings for an amount in excess of US$ 50 million, expropriation of assets, among others, could cause declaring the acceleration of these debts. Similarly, nonpayment, after any given applicable grace period, of any debt of Enersis or its Chilean subsidiaries, with a principal in excess of US$ 30 million, could potentially give rise to the anticipated forced payment the Yankee bonds. There are no clauses in the credit agreements by which changes in the corporate or debt classification of these companies from risk classification agencies could trigger prepayments. Nevertheless, a modification in the Standard & Poor’s (S&P) debt risk classification in foreign currency could trigger a change in the margin applicable to determine the interest rate, in the syndicated loans executed in 2004 and 2006, and in local credit lines executed in 2009. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Regulatory framework of the electricity industry Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 86 Enersis 2010 Annual Report 1. Argentina 1.1. Industry structure Law No. 15,336 of 1960 and Law No. 24,065 of 1992 (together, the Argentine Electricity Act) set the regulatory framework for the electricity sector. Under the Argentine Electricity Act, the Federal Government: • Divided the electricity industry into three business segments: generation, transmission and distribution, to enable the electric market development under conditions of free competition for generation with reduced tariffs, requirements regarding quality standards, and restrictions to ownership concentration; • • Created the Mercado Eléctrico Mayorista (Wholesale Electricity Market) or “MEM” where four categories of agents (generators, transmitters, distributors and large customers) are allowed to buy and sell electricity as well as related products; Imposed the Compañía Administradora del Mercado Mayorista Eléctrico (Administrative Company for the Wholesale Electricity Market) or “Cammesa,” responsible for the dispatch coordination, the administration of the agent’s transactions in the MEM and the calculation of the spot prices. The agents participate in Cammesa as shareholders through their corresponding associations with the Secretariat of Energy, the owner of the remaining 20% of the capital stock. The Ministry of Federal Planning, Public Investment and Services appoints the Cammesa chairman; and • Created the Ente Nacional Regulador de la Electricidad (Electricity National Regulatory Agency) or “ENRE,” in charge of regulating public service activities in the electricity sector and imposing jurisdictional decisions. The Ministry of Federal Planning, Public Investment and Services, through the Secretariat of Energy, is primarily responsible for the implementation of the Argentine Electricity Act. Among the main tasks, the Secretariat regulates the system dispatch and the activities in the MEM, and grants the concessions or authorization for each activity in the electricity sector. The generation sector is organized on a competitive basis, with independent generators selling their output on the MEM’s spot market or through private contracts to purchasers on the MEM’s contract market or to the CAMMESA by means of special transactions such as the contracts under resolutions SE N°220/2007 and N°724/2008. Transmission works under monopoly conditions by several companies to whom the Federal Government grants concessions. The international interconnected transmission systems also require concessions granted by the Secretariat of Energy. Transmission companies are authorized to charge different tolls for their services. Distribution is a public service that works under monopoly conditions and is provided by companies who have also been granted concessions. Distribution companies may obtain electricity either in the MEM’s spot market at a price called “seasonal price,” or in the MEM’s term market through private contracts with generators. The seasonal price, defined by the Secretariat of Energy, is the cap for the costs of electricity bought by distributors and passed through to regulated customers. Regulated customers are supplied by distributors at regulated tariffs, unless they have a minimum capacity demand of 30 kW, in which case they can choose to contract their supply directly from generators in the MEM´s spot market, becoming “large customers” who may freely negotiate their prices with generating companies. Cammesa controls the coordination of dispatch operations, the spot prices Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 87 2010 Annual Report Regulatory framework of the electricity industry calculation and the administration of the MEM’s economic transactions. All generators that are MEM agents have to be connected to the Sistema Argentino de Interconexión (NIS) and are obliged to comply with the dispatch order to generate and deliver energy to the Argentine NIS, in order to be sold in the spot market or in the term market. The spot price is calculated on an hourly basis by Cammesa and must reflect the cost of the marginal kW to be dispatched in the Argentine NIS and is paid to generators and sellers of energy at the spot market. The Argentine Electricity Act sets that electricity prices in the spot market are determined on a marginal cost basis. Since 2002, the Secretariat of Energy started to modify several criteria regarding the spot prices and imposed, among other restrictions, caps for the spot prices to be paid to the generators and only recognized for calculations purposes the natural gas costs established by the Federal Government, even though additional costs are collected by the market and paid to the generator. 1.2. Changes to the regulatory framework Law No. 25,561, the Public Emergency Law, was enacted in 2002 to manage the public crisis which began that year. It forced the renegotiation of public service contracts (such as electricity transmission and distribution concession contracts) and imposed the conversion of dollar denominated obligations into Argentine pesos at a pegged rate of Ar$ 1 per $ 1. It also empowered the Federal Government to implement additional monetary, financial and exchange measures to overcome the economic crisis in the medium term. These measures have been periodically extended. In fact, Law No. 26,563, enacted in December 2009, extended the measures until December 31, 2010. The Secretariat of Energy introduced several regulatory measures aimed to correct the effects of the devaluation into the MEM’s costs and prices and to reduce the price to be paid by the final customers. The mandatory conversion of transmission and distribution tariffs from dollars to Argentine pesos at the pegged rate of $ 1 per Ar$ 1, when the market exchange rate was approximately $ 1 per Ar$ 3 and the regulatory measures to cap and reduce the spot and seasonal prices hindered the pass through of generation variable costs into the tariffs to final customers. Resolution SE No. 240/2003 changed the way to fix spot prices, decoupling the spot price calculation from the marginal costs of operation. Until this resolution, spot prices on the MEM were typically fixed by units operating with natural gas during the warm season (from September through April) and units operating with fuel/diesel in the winter (May-August). Then, due to restrictions on natural gas supply, winter prices were higher, and related to imported fuels priced in dollars. Resolution SE No. 240/2003 seeks to avoid the pegged price indexation to the dollar and, although generation dispatch is still based on actual fuels used, the calculation of the spot price under the Resolution is defined as if all dispatched generation units did not have the existing restrictions on natural gas supply. Water value is not considered if its opportunity cost is higher than the cost of generating with natural gas. The resolution also set a cap on the spot price at 120 Ar$/MWh, which was still in place during 2010. The real variable costs of thermal units that used liquid fuel were paid by CAMMESA through a Temporary Dispatch Over cost, plus a US$2.5/MWh margin, according to Note SE 6,866 of 2006 and 6,169 of 2010, in place since May 2010 and until December 2011. In this scenario, CAMMESA sells power to distributors who pay seasonal prices and buy power from generators at spot prices that recognize the rising gas prices and at a contract price set under the instructions of the secretariat of energy. In order to Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 88 Enersis 2010 Annual Report overcome the imbalance, the authority only allows payment to generators for amounts collected from the buyers on the sport market. This resolution sets a priority of payment for different services: capacity payment, fuel costs, energy sales margin, etc. CAMMESA accumulates debt with generators and the system gives an incorrect price signal to agents by failing to encourage electricity consumption savings and investments to meet growth in demand, including investments in transmission capacity. In order to enhance the energy supply the Secretariat of Energy created different schemes to sell more energy. Resolution 1,281/2006 created the Energy Plus Service, which is the offer of new electricity capacity to supply the growth in electricity demand, over the “Base Demand,” which was the demand for electricity in 2005. The Energy Plus Service is supplied by generators that install new capacity or that offer existing generation capacity not connected before to the NIS. All “large customers” that, as of November 1, 2006, had a higher demand than their Base Demand, had to contract excess demand with the Energy Plus Service. The consumption that exceeded the Base Demand without a contract to supply should pay additional amounts for the surplus energy. Resolutions SE No. 220/2007 and No. 724/2008 gives thermal generators the opportunity to reduce some of the adverse effects of Resolution SE No. 406/2003 by entering into MEM Supply Commitment Contract or “CCAM.” Generators can commit maintenance or repowering investments to improve their unit’s availability and add additional capacity to the system. After authorization, the generator can sign a CCAM at prices that permit the recovery of capital expenditures. Additionally, energy sales through a CCAM receive payment priority compared with spot energy sales (Res. No. 406/2003). Generators with a CCAM can supply energy to Cammesa for up to 36 months, renewable only for an additional period of six months. During 2009, Resolution SE No. 762 created the Hydroelectric National Program to promote the construction of new hydro plants. The program enables authorized generators to subscribe energy supply contracts with Cammesa for up to fifteen years, at prices that allow for an investment recovery. On November 25, 2010, the Secretariat of Energy signed an agreement with some generating companies, including subsidiaries of Enersis, with the purpose of (i) increasing the availability of thermoelectric units, increase prices and the capacity of electricity; and (ii) build new generation units by the contribution CAMMESA´s unpaid debt with generators. Through Resolution SE No. 712/2004 Foninvemem was created, a fund whose purpose is to increase electricity capacity/generation within the MEM. Pursuant to Resolution SE No. 406/2003, the Secretariat of Energy decided to pay the generators the spot prices up to the amount available at a stabilization fund, after collecting the funds from the purchasers in the spot market at seasonal prices, lower than spot prices for the same period. Pursuant to Resolution SE No. 1,193/2005 all private generators in the MEM were called to participate in the construction, operation and maintenance of the electric energy generation plants to be built with the Foninvemem, consisting of two combined cycle generation plants of 850 MW each. These power plants are powered by natural gas or alternative fuels, that were completed during 2010 as a combined cycle. These power plants are powered by natural gas or alternative fuels. Transmission and distribution companies have been renegotiating contracts since 2005 and although tariffs were partially and temporarily established, definitive tariffs Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 89 2010 Annual Report Regulatory framework of the electricity industry are still pending. As of the date of this report, ENRE has not defined new tariffs, and maintains in force the transitional tariff regime. Resolution Nº45/2010 eliminated from March 2010 the payment of bonuses to the Energy Efficiency Program (PUREE) for those customers whose demand is less than 1,000 kwh every two month period, these were the only customers to receive these bonuses. The puree was established in 2004 and set bonuses and penalties to customers, depending on your level of energy savings; the net difference between the bonuses and penalties were originally deposited in the stabilization fund, but then was changed at the request of Edesur and Edenor, which were approved by the secretary of energy to use 100% of the funds to compensate for the variation of costs that were not transferred to the repositioning of the tariff (cost monitoring mechanism – MCC). In order to give priority to the internal market supply, the Secretariat of Energy adopted additional measures that restricted electricity and gas exports. Resolution SE No. 949/2004 established measures that allowed agents to export and import electricity under very restricted conditions. These measures prevented generators from satisfying their export commitments. These restrictions are expected to continue, especially considering that during 2010, Resolution Enargas Nº 1410, modifying procedures for the dispatch of gas from October 2010. In accordance with that resolution, the priority of gas release is as follows: i) Residential and Commercial Users; ii) Compressed Natural Gas - CNG, iii) Large Customers; iv) Thermal Units, v) Exports. 1.3. Others Electricity facilities are subject to federal and local environmental laws and regulations, including Law No. 24,051, or the Hazardous Waste Law, and its ancillary regulations. Certain reporting and monitoring obligations and emission standards are imposed on the electricity sector. Failure to satisfy these requirements entitles the government to impose penalties, such as suspension of operations, which, in case of public services, could result in the cancellation of concessions. 2. Brazil 2.1. Industry structure Brazil’s electricity industry is organized into one large interconnected electricity system, which is known as the Sistema Interligado Nacional (the Brazilian NIS), which comprises most of the regions of Brazil and several other small, isolated systems. Generation, transmission and distribution are legally separated activities in Brazil. According to the specifications set forth in Law No. 9,427/96 unregulated customers in Brazil are currently those customers: (i) who demand at least 3,000 kW and choose to contract the energy supply directly with generators or retailers; or (ii) who demand at least 500 kW (and less than 3,000 kW) and choose to contract the energy supply directly with alternative generators or traders. The electricity industry in Brazil is regulated by the Federal Government, acting through the Ministry of Mines and Energy, or MME, which has exclusive authority over the electricity sector, and whose primary role is to establish the policies, guidelines Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 90 Enersis 2010 Annual Report and regulations for the sector. Regulatory policies are implemented by the Brazilian governmental agency for electric energy (ANEEL), whose main responsibilities include, among others: (1) supervision of the concessions for electricity sale, generation, transmission and distribution activities, and approval of electricity tariffs; (2) enactment of regulations for the electricity sector; (3) implementation and regulation of the exploitation of electricity resources, including the use of hydroelectricity; (4) promotion of a bidding process for new concessions; (5) resolution of administrative disputes between electricity sector agents; and (6) setting the criteria and methodology for determining distribution and transmission tariffs. Other regulatory authorities include: (i) the Brazilian Electricity System Operator (ONS), comprised of generation, transmission and distribution companies, and independent consumers, responsible for the coordination and control of the generation and transmission operations of the Brazilian NIS; (ii) the Electricity Trading Board (CCEE), a company in which agents are gathered in four categories: Generation, Distribution, Trading and Consumers and whose main purpose is to carry out the wholesale transactions and trading of electric power within the Brazilian NIS; and (iii) the Brazilian Energy Policy Council (CNPE) in charge of developing the national electricity policy. The market regulation established pursuant to Laws No. 10,847 and 10,848 seeks to provide cheaper tariffs for consumers and guarantees the expansion of the system, with the Power Research Company, (EPE), a governmental body, responsible for the planning of generation and transmission activities. This market regulation has defined an unregulated contracting environment and a regulated environment. In the unregulated contracting environment, the conditions for purchasing energy are negotiable between suppliers and their customers. Regarding the regulated environment, where distribution companies operate, the purchase of energy must be conducted executed pursuant to a bidding process coordinated by ANEEL. Pursuant to the market regulation, 100% of the energy demand from distributors must be satisfied through long term contracts in advance of the expiration of current contracts in the regulated environment. Another change imposed on the electricity sector is the separation of the bidding process for “existing power” and “new power project.” The government believes that “new power project” needs more favorable contractual conditions as long term power purchase agreement (15 years for thermal and 30 years for hydro) and certain price level for each technology. These agreements promote investment for the required expansion. On the other hand, “existing power” which considers depreciated power plants can sell their energy at lower prices in shorter term contracts. The Concessions Law establishes three kinds of revisions to final consumer tariffs: annual tariff resetting, ordinary tariff revision and extraordinary tariff revisions. Distribution companies’ pricing aims to maintain a concessionaire’s operating margins constant by allowing for tariff gains due to costs beyond management’s control and permitting the concessionaire to retain any efficiency gains achieved for defined periods of time. Tariffs to end users are also adjusted according to the variation of costs incurred in purchasing electricity. Ordinary tariff revision takes into account the entire tariff setting structure for the company, including the costs of providing services, the costs of purchasing energy and the return for the investor. Under their concessions, Coelce and Ampla are subject to tariff revisions every four and five years, respectively. The asset base consists of the market replacement value depreciated during their useful life from an accounting point of view and the rate of return for the assets is based on the Weighted Average Cost of Capital, or WACC, of a model company. The operating and maintenance costs reflected in the tariff are calculated based on the model company which considers the singular characteristics of the distribution concession area. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 91 2010 Annual Report Regulatory framework of the electricity industry The law guarantees an economic and financial equilibrium for a company in the event that there is a substantial change in its operating cost. In the event that the cost components over which management does not exert influence, such as energy purchases and taxes, increases significantly within the period between two annual tariff adjustments, the concessionaire may make a request to ANEEL to charge those costs to the final customers. Aneel is considering amendments to the existing regulations, third tariff review cycle, minimum technical requirements for electronic meters and tariff structure. For these three projects, ANEEL has held three public hearings in early 2011. The companies or consortia seeking to build or operate hydroelectric generation facilities with a capacity greater than 30 MW, or transmission facilities in Brazil, must use a competitive bidding process. Concessions granted to the holder give the right to generate, transmit or distribute electricity, as the case may be, in a given concession area for a certain period of time. That certain period of time is limited to 35 years for new generation concessions and 30 years for new transmission and distribution concessions. Existing concessions must be renewed at the discretion of the Brazilian government for a period equal to its initial period. In the regulated environment (ACR), electricity distribution companies buy the electricity through bids that are regulated by ANEEL and organized by the Chamber of Electricity Commercialization, CCEE. Distributors must buy electricity at public bids. There are three types of regulated bids: new energy bids, existing energy bids and adjustment bids. The government has also the right to call special bids for renewable electricity (biomass, small hydro, solar and wind). ANEEL and CCEE hold the bids annually. The contracting system is multilateral, with generating companies entering into contracts with all distributors who call for bids. Unregulated Environment, or ACL, include the sale of electricity between generation concessionaires, independent producers, self producers, sellers of electricity, importers of electricity, unregulated and special consumers. The ACL also includes contracts in place between generators and distributors until their expiration, at which point new contracts may be entered into under the terms of the new regulatory framework. Brazil created a special mechanism to share hydrological risk between all hydro generators, called Reallocating Energy Mechanism (MRE). Each hydro power plant has an assigned energy certificate which defines both the proportion of the total generated hydro energy owned by this plant and the maximum energy amount that this plant can sale through contracts. Differences between actual production and the assigned energy must be traded at a regulated fixed tariff (approximately $ 4/MWh). The spot price is used to value the purchase and sale of electric power in the short term market. According to the law, CCEE is responsible for the setting of the electricity price in the spot market. This price is calculated based on marginal costs, modeling future operating conditions and setting a curve based on merit, with variable costs of thermal units and opportunity costs for hydro plants, resulting in a price for each subsystem for the following week In 2010 there were four bidding processes for new generation projects, in which 99 plants were awarded for a total of 17,054 MW, distributed among 89 plants from alternative sources (2,892 MW), three large hydropower plants (13,353 MW) and seven medium sized hydro plants (809 MW). Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 92 Enersis 2010 Annual Report 3. Chile 3.1. Industry structure The electricity industry in Chile is divided into three business segments: generation, transmission and distribution. The generation segment consists of companies that produce electricity. They sell their production to distribution companies, unregulated customers, or to other generation companies. The transmission segment consists of companies that transmit at high voltage the electricity produced by generation companies. Finally, the distribution segment is defined for regulatory purposes to include all electricity supply to final customers at a voltage no higher than 23 kV. The electricity sector in Chile is regulated pursuant to the Chilean Electricity Law, contained in Decree with force of Law No. 4 of 2006 of the Ministry of Finance, published in the Official Gazette on February 5, 2007, which set the revised, coordinated and systematized text of the DFL No. 1/82 and its amendments, which is known as the Chilean Electricity Law and its respective rules included in the DS Nº327 of 1988. In Chile there are four separate interconnected electricity systems. The main systems that cover the most populated areas of Chile are the Sistema Interconectado Central, SIC, that services the central and south central part of the territory, where 93% of the Chilean population lives, and the Sistema Interconectado del Norte Grande, SING, which operates in the northern part of the country, where most of the mining industry is located. According to the 2002 census, 6.1% of the Chilean population lives in the territory serviced by the SING. In addition to the SIC and the SING, there are two isolated systems in southern Chile that provide electricity in remote areas. The operation of electricity generation companies in each of the two major interconnected electricity systems is coordinated by their respective dispatch center, (CDEC), an autonomous entity that involves industry groups, transmission companies and large customers. CDECs coordinate the operation of their system as efficient markets for the sale of electricity, in which the lowest marginal cost producer is usually used to satisfy demand. As a result, at any specific level of demand, the appropriate supply will be provided at the lowest possible cost of production available in the system at any moment. Twice a year (in April and October), the CNE calculates the Precio de Nudo (node price), or energy and capacity regulated prices that distribution companies pay to generators. In 2005, bid processes were introduced for distribution companies’ energy supply, and therefore after 2010 the energy “node price” will be necessary only to set the maximum offer price for each energy bid to regulated customers. The CNE also prepares the Indicative Plan, a ten year guide for the expansion of the generation and transmission system. Generation companies may sell to final unregulated customers or to other generation companies under contracts with freely determined terms. To balance their contractual obligations with their dispatch, generators have to trade deficit and surplus electricity at the spot market price, which is set hourly by each CDEC, based on the marginal cost of production of the next kWh to be dispatched. Regulated customers are those with a maximum consumption capacity not exceeding 0.5 MW. Customers between 0.5 and 2 MW may choose their status as regulated or unregulated. Customers with capacity needs over 2 MW are unregulated. Since 2005 all new contracts between generation and distribution companies for the supply to regulated customers must arise from international bids which have a maximum offer energy price based on the average price paid by the unregulated customers at the time that the bid is made, which is calculated twice a year by the CNE. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 93 2010 Annual Report Regulatory framework of the electricity industry During the life of the contract, the energy and capacity prices will be indexed according to formulas set forth in the bid documentation and linked to fuel, investment and other costs of energy generation. Under the bid system, all distribution companies will have electricity contracts from 2011 onwards. Distribution companies may also pay for their capacity consumption at the capacity node price determined by the CNE, and calculated based on the marginal cost of increasing the existing capacity of the electricity system with the least expensive dispatch by any generating facility. Since transmission assets are built pursuant to concessions granted by the government, the law requires a company to operate on an “open access” basis, in which users may obtain access to the system by contributing towards the costs of operating, maintaining and, if necessary, expanding the system. Sub transmission systems are high voltage lines over 23 kV, used mainly by customers. There are 7 sub-transmission systems defined by law. Chilectra has most of the SIC 3 system. Every four years a study to assess the optimal system adapted to demand is performed. On September 21, 2010, the study was submitted to the CNE and is currently being revised. Sub transmission systems are paid for mainly by customers based on the values determined by the Ministry of Finance Decree. Generators and non-regulated customers only pay for the lines they use in each system. The tariffs charged by distribution companies to final customers are determined by the sum of the cost of electricity purchased by the distribution company, a transmission charge and the “value added by the distribution network,” or VAD, which allows distribution companies to recover their operating costs. The VAD is based on a “model company” and includes: selling, general and administrative distribution costs; maintenance and operating costs of distribution assets; energy cost and losses; and an expected return on investment, before taxes, of 10% per year in real terms based on the replacement cost of assets used for distribution. With this purpose, the CNE selects a company, to which it applies efficiency guidelines which results in a cost structure for the “model company” for each Typical Distribution Area. The VAD is set every four years. The CNE classifies companies into groups, according to Typical Distribution Areas, based on economic factors that group companies with similar distribution costs due to population density, which determines equipment density in the network. Actual return on investment for a distribution company depends on its performance relative to the standards chosen by the CNE for the model company. The tariff system allows for a greater return to distribution companies that are more efficient than the model company. Tariff studies are performed by the CNE and distribution companies. Tariffs are estimated as a weighted average of the results of the CNE-commissioned study and the companies’ study, with the results of the CNE’s study bearing twice the weight of the companies’ results. Preliminary tariffs are tested to ensure that they provide an average actual annual internal rate of return between 6% and 14% on the replacement cost of electricity related assets for the entire distribution segment. The last process for setting distribution tariffs was held in 2008, and will be in effect until November 3, 2012. If a rationing decree is enacted in response to prolonged periods of electricity shortages, severe penalties may be imposed on generation companies that contravene the decree. A severe drought is not considered a force majeure event. Generation companies may also be required to pay fines to the regulatory authorities, related to system blackouts due to any generator’s operational mistake, including failures related to the coordination duties of all system agents as well as to make compensatory payments to electricity consumers affected by shortages of electricity. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 94 Enersis 2010 Annual Report 3.2. Others Chile has numerous laws, regulations, decrees and municipal ordinances that may raise environmental considerations. Among them are regulations relating to waste disposal (including the discharge of liquid industrial wastes), the establishment of industries in areas in which they may affect public health, and the protection of water for human consumption. Environmental Law No. 19,300 was enacted in 1994 and implemented by several rules, such as Environmental Impact Assessment System Rule issued in 1997 and modified in 2001. This law requires companies to conduct environmental impact study or declaration of any future generation or transmission projects. In January, 2010, Law No. 19,300 was modified by Law No. 20,417, introducing changes in the environmental assessment process and in the public institutions involved in it. Consequently, environmental assessment process is coordinated by the Environmental Assessment Service, and not by Chilean Environmental Commission, or Conama, that was repealed. On April 1, 2008, Law No. 20,257, which is an amendment to the General Services Law, was enacted. The purpose of the amendment is to promote the use of NCRE. This law defines the different types of technologies considered as NCRE, and establishes the obligation of generators between 2010 and 2014, to supply 5% of the total energy contracted from August 31, 2007, to be of such type, and to progressively increase this percentage 0.5 percentage points annually up to 10% as of 2024. Endesa Chile owns water rights, constitutionally and legally recognized, that allow a full and permanent use of water resources in the generation units of society. According to Chilean law, the owners of water rights must pay an annual fee for unused water rights. 4. Colombia 4.1. Industry structure In 1994, Colombia’s Congress approved major reforms to the utility industry. These reforms contained in Act 142 of 1994 (“LSPD”), known as the Residential Public Utilities Law, and the law 143 of 1994, were the result of constitutional amendments approved in 1991 and created the basic legal framework currently governing the electricity sector in Colombia. The most significant reforms include opening the electricity industry to private sector participation, functional segregation of the electricity sector in four different activities, namely generation, transmission, distribution and commercialization, the creation of a wholesale electricity market open and competitive, the regulation of transmission and distribution activities as regulated monopolies, and the adoption of universal access principles applicable to transmission and distribution grids. The Colombian Electricity Act sets out the principles for the electricity industry, which are implemented through the resolutions enacted by the Energy and Gas Regulatory Commission, or “CREG.” Such principles are: efficiency (the correct allocation and use of resources and the supply of electricity at minimum cost); quality (compliance with technical requirements); continuity (continuous electricity supply without unjustified interruptions); adaptability (the incorporation of modern technology and administrative systems to promote quality and efficiency); neutrality (impartial Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 95 2010 Annual Report Regulatory framework of the electricity industry treatment to all electricity consumers); solidarity (the provision of funds by high income consumers to subsidize the subsistence consumption of low income consumers); and fairness (an adequate and nondiscriminatory supply of electricity to all regions and sectors of the country). The market share for generators and traders is limited. The limit for generators is 25% of the Colombian system Firm Energy. Firm Energy refers to the maximum electric energy that a generation plant is able to deliver on a continuous basis during a year, in extremely dry conditions; for instance, in the case of the El Niño phenomenon. Similarly, a trader may not account for more than 25% of the trading activity in the Colombian NIS. Limitations for traders take into account international energy sales. Market share is calculated on a monthly basis and traders have up to six months to reduce their share when the limit is exceeded. Such limits are applied to economic groups, including companies that are controlled by, or under common control with, other companies. In addition, generators may not own more than a 25% interest in a distributor, and vice versa. However, this limitation only applies to individual companies and does not preclude cross ownership by companies of the same corporate group. A generator, distributor, trader or an integrated company, i.e. a firm combining generation, transmission and distribution activities, cannot own more than 15% of the equity in a transmission company if the latter represents more than 2% of the national transmission business in terms of revenues. A distribution company can have more than 25% of an integrated company’s equity if the market share of the last company is less than 2% of the national generation business. A company created before enactment of Law No. 143 is banned from merging with another company created after Law No. 143. The generation sector is organized on a competitive basis with companies selling their production on the electricity pool market, the wholesale market, at the spot price or by long-term private contracts with other participants and unregulated customers at freely negotiated prices. The Colombian NIS is the system formed by generation plants, the interconnection grid, regional transmission lines, distribution lines and consumer loads. The spot price is the price paid by the participant in the wholesale market for energy dispatched under the direction of the National Dispatch Center (CND). The hourly spot price paid for energy reflects prices offered by generators in the wholesale market and the respective supply and demand conditions. Generators connected to the Colombian NIS can also receive “reliability payments” which are a result of the Firm Energy Obligation that they provide to the system. The Firm Energy Obligation (OEF) is a commitment on the part of generation companies backed by its physical resource capable of producing firm energy during scarcity periods. The generator that acquires an OEF will receive a fixed compensation during the commitment period, whether or not the fulfillment of its obligation is required. To receive reliability payments, generators have to participate in firm energy bids by declaring and certifying their firm energy. Until November 2012, the transition period, the firm energy supply for reliability purposes will be assigned proportionally to the declared firm energy of each generator. Beyond the transition period, the additional firm energy required by the system will be allocated by bids. The only auction for this period took place on May 6, 2008, where existing generators participated with new generation projects while meeting the established market share limits. The purchase and sale of electricity can take place between generator and distributors acting in their capacity as traders, and unregulated customers. There are no restrictions for new entrants into the market as long as the participants comply with the applicable laws and regulations. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 96 Enersis 2010 Annual Report The wholesale market facilitates the sale of excess energy that has not been committed under contracts. In the wholesale market, an hourly spot price for all dispatched units is established based on the offer price of the highest priced generating dispatched unit for that period. The CND receives price bids each day from all the generators participating in the wholesale market. These bids indicate prices and the hourly available capacity for the following day. Based on this information, the CND guided by “optimal dispatch” principle (which assumes an infinite transmission capacity through the network), ranks the generators according to their offer price, starting with the lowest bid, and establishing the merit order, on an hourly basis, determining which generator will be dispatched the following day to satisfy expected demand. The price for all generators is set as the most expensive generator dispatched in each hourly period under the optimal dispatch. Additionally, the CND performs the “planned dispatch,” which takes into account the limitations of the network as well as every other condition necessary to satisfy the energy demands expected for the following day, in a safe, reliable and cost-efficient manner, based on costs. The cost differences between “planned dispatch” and” optimal dispatch” are called restriction costs. The net value of these restrictions is assigned proportionally to all the traders within the Colombian NIS, according to their demands of energy, who transfer these costs to the final customer. Some generators have initiated legal proceedings arguing that recognized prices do not cover the costs associated with these restrictions. Transmission companies which operate at least at 220 kV compose the National Transmission System, or NTS. They are required to provide access to third parties on equal conditions and are authorized to collect a tariff for their services. The transmission tariff includes a connection charge that underwrites the cost of operating the facilities, and a usage charge, which applies only to traders. CREG guarantees an annual fixed income to transmission companies. Income is determined by the new replacement value of the networks and equipment, and by the resulting value of bidding processes awarding new projects for the expansion of the NTS. This value is allocated among the traders of the NTS in proportion to their energy demand. Distribution is defined as the operation of local networks below 220 kV. Any user may have access to a distribution network for which it pays a connection charge. CREG regulates distribution prices that should permit distribution companies to recover costs, including operating, maintenance and capital costs operating efficiently. Distribution charges are set by CREG for each company based on the replacement cost of the existing distribution assets, cost of capital, as well as operational and maintenance costs that vary depending on the voltage level. A new remuneration methodology for the distribution was defined by CREG in 2008 which set the Weighted Average Cost of Capital (WACC) at 13.9% before taxes, for assets operating at 34.5 kV or less, and 13% before taxes for assets operating above 34.5 kV. CREG also defined a new methodology for the calculation of distribution charges, defining an incentive scheme for administrative, operational and maintenance costs, service quality and energy losses. During 2009, after auditing the information reported by the companies, CREG defined the new distribution charges applicable from 2009 until 2013. The retail market is divided into regulated and unregulated customers. Customers in the unregulated market may freely contract for electricity supply directly from a generator or a distributor, acting as traders, or from a pure trader. The unregulated customer market consists of customers with a peak demand of more than 0.1 MW or a minimum monthly consumption of 55 MWh. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 97 2010 Annual Report Regulatory framework of the electricity industry Trading is the resale to final customers of electricity purchased in the wholesale market. It may be conducted by generators, distributors or independent agents, which comply with certain requirements. Parties freely agree upon trading prices for unregulated customers. Trading to regulated customers is subject to the “regulated freedom regime” under which tariffs are set by each trader using a combination of general cost formulas given by CREG and individual trading costs approved by CREG for each trader. Since CREG approves limits on costs, traders in the regulated market may set lower tariffs for financial reasons. Tariffs include, among other things, energy procurement costs, transmission charges, distribution charges and a trading margin. 4.2. Others Law No. 99 of 1993 provided the framework for environmental regulation and established the Ministry of the Environment as the authority for determining environmental policies. The Ministry defines issues and executes policies and regulations that focus on the recovery, conservation, protection, organization, administration and use of renewable resources. According to Law No. 99, generators which have a total installed nominal capacity above 10 MW are required to contribute to the conservation of the environment through a payment for their activities. Hydroelectric power plants must pay 6% of their energy sales; thermoelectric plants must pay 4% of their energy sales. This payment is made monthly to the municipalities and environmental corporations where these facilities are located. 5. Peru 5.1. Industry structure The regulatory framework applicable to the Peruvian electricity industry is given by: the Law of Electricity Concessions (Decree Law No. 25,844) and its ancillary regulations, and the Supplementary Law No. 27,699 of Organismo Supervisor de la Inversión en Energía y Minería (Energy and Mining Investment Supervisor Authority) Osinergmin, the electricity sector regulatory authority, in charge of the resolution of controversies that arise within this institution. Some of the characteristics of the regulatory framework are (i) the separation of the three main activities: generation, transmission and distribution; (ii) freedom of prices for the supply of energy in competitive market conditions; (iii) a system of regulated prices based on the principle of efficiency shared with a bidding regime; and (iv) private operation of the interconnected electricity systems subject to the principles of efficiency and quality of service. There is one interconnected system, the Sistema Eléctrico Inteconectado Nacional (SEIN), and several isolated regional and smaller systems that provide electricity to specific areas. Service provided by electricity companies has to comply with technical standards, otherwise companies may be charged with fines imposed by Osinergmin. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 98 Enersis 2010 Annual Report The coordination of dispatch operations, the spot prices setting and the administration of the economic transactions in the SEIN are controlled by the Comité de Operación Económica del Sistema (COES). Generators can sell energy directly to large customers and transfer the deficit or surplus between contracted energy and actual production in the pool at spot price. Distribution companies and large customers that have entered into private supply contracts with generation companies pay the contractual price (which includes the tolls and compensation for the use of the transmission system), and also pay a toll to distribution companies for the use of their network. Customers with a capacity demand of less than 200 kW are considered regulated customers, and the supply of their energy is defined as a public service. Customers whose annual demand is within the range of 200 kW and 2,500 kW are free to choose to be considered regulated or unregulated customers. In 2008, due to gas transport and electricity transmission problems, Osinergmin defined a new rule to calculate spot prices. That will be in place until December 2013. Decree 049 2008 established two models, one theoretical dispatch without any restrictions and a real dispatch considering the restrictions. The spot price is obtained from the theoretical dispatch, and the additional cost of operation associated with the system restrictions are paid to the affected generators, through a mechanism established by the authority. Generators receive a capacity payment which main component is a resultant of an annual calculation of every power plant’s capacity. Every year, Osinergmin sets the power price that defines the total amount to assign to each generator. Transmission activities are divided into two categories: principal, that is for common use and allows the flow of energy through the national network and secondary, which is one of those lines that connect to a power plant with the system or a substation to a distribution company or end user. Law No. 28,832, enacted in 2006, also defined guaranteed systems. The principal and guaranteed system lines are accessible to all generators and allow electricity to be delivered to all customers. The transmission concessionaire receives an annual fixed income and receives tariff revenues and connection tolls reflecting a charge per kW. The secondary and complementary system lines are accessible to all generators, but are used to serve only certain customers who are responsible for making payments related to their use of the system. The Efficient Development Law (Law No. 28,832) establishes a bidding regime for the acquisition of energy and capacity by distributors establishing a mechanism to determine prices during the life of a contract. The approval of this mechanism is important to generators, because it establishes a mechanism for determining price for the duration of a contract that is not fixed by the regulator. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 99 2010 Annual Report Regulatory framework of the electricity industry The new contracts to sell energy to distribution companies for resale to regulated customers must be made at fixed prices determined by public bids. Only a small part of the electricity purchased by distribution companies, included in old contracts, is still maintained at bus bar prices. Bus bar prices are set annually by Osinergmin, and are the maximum prices for electricity purchased by distribution companies that can be transferred to regulated customers, in those contracts. The electricity tariff for regulated customers includes charges for capacity and energy for generation and transmission (bus bar prices) and for the VAD which considers a regulated return over capital investments, operating and maintenance fixed charges and a standard percentage for energy distribution losses. Generators that have a plant with an installed capacity greater than 500 KW, require a concession from the Ministry of Energy and Mining (MINEM). Similarly, the generators that operate power plants with an installed capacity exceeding 500 KW require an authorization from the MINEM. A concession for electricity generation activity is an agreement between the generator and MINEM, while an authorization is merely a unilateral permit granted by the Ministry. Authorizations are granted by the MINEM for an unlimited period of time, although their termination is subject to the same considerations and requirements as the termination of a concession under the procedures set forth in the Law of Electrical Concessions (Law No. 25,844) and related regulations. In 2009, MINEM performed studies that concluded that SEIN would not allow the unavailability of a larger power plant. It recommended the implementation of a cold reserve to ensure continuity. ProInversión called for bids on the first cold reserve, which offered 800 MW in three projects. Only two were awarded: Talara (200 MW to EEPSA, a company related to Enersis) and Llo (400 MW to Enersur). They will receive payments for capacity availability and payment of fuel costs when they must generate. 5.2. Others The environmental legal framework applicable to energy related activities in Peru is set forth in the Environmental Law (Law No. 28,611) and in the Regulation for Environmental Protection regarding Electricity Activities (Supreme Decree 029 94 EM). In 2008, MINEM enacted Decree 050-2008 to promote the generation of electricity through. Such Decree establishes that 5% of demand of the SEIN must be supplied by the use of NCRE. This 5% goal could increase every five years. The technologies considered renewable resources are: biomass, wind, tidal, geothermal, solar and mini hydro (less than 20 MW) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Description of the business by Country Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 102 Enersis 2010 Annual Report 1. Electricity generation Our electricity generation business is conducted primarily through our subsidiary Endesa Chile. In this segment, the Enersis Group has operating subsidiaries in Argentina, Brazil, Chile, Colombia and Peru. In all, the installed capacity amounted to 14,832.50 MW as of December 2010 and the consolidated electricity generation was 56,699 GWh, while energy sales totaled 63,431 GWh. In the electricity industry, the segmentation of the business between hydroelectric and thermal generation is natural as the variable costs of generation are different for each form of generation. Thermal generation requires the purchase of fossil fuels and hydroelectric generation needs water from reservoirs and rivers. 58% of our consolidated generating capacity comes from hydroelectric sources while 41% is thermal and 1% wind sources. Therefore, the commercial policy the generation company defines is relevant in terms of managing the business properly. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 103 2010 Annual Report Description of the business by Country 2. Electricity transmission For the Enersis Group, the electricity transmission business consists of the 2,100 MW interconnection line between Argentina and Brazil, through CIEN, a subsidiary of Endesa Brazil, with 2,100 MW transportation capacity. 3. Electricity distribution Our electricity distribution business is carried on through Edesur in Argentina, Ampla and Coelce (owned by Endesa Brasil) in Brazil, Chilectra in Chile, Codensa in Colombia and Edelnor in Peru. Our principal subsidiaries and related distribution companies sold 67,274 GWh during 2010. Currently, Edesur, Ampla, Coelce, Chilectra, Codensa and Edelnor serve the main Latin America cities, providing electricity to over 13.2 million customers. These companies face growing electricity demand, obliging them to invest on a permanent basis, responding to natural growth and the maintenance of their facilities. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 105 2010 Annual Report Description of the business by Country 4. Argentina 4.1. Electricity generation Enersis participates in electricity generation in Argentina through Endesa Costanera and Hidroelectrica El Chocón, in which it controls directly and indirectly, a 41.8% and 39.2% of ownership, respectively. These companies have a total of five power plants, with total installed capacity of 3,652 MW. This capacity represented in 2010, 13% of the installed capacity of the argentine SIN. Electricity generation of the Enersis Group reached 10,940 GWh, 9.5% of the country total generation, with hydroelectricity representing 27.2% of production. Physical sales of electricity reached 11,378 GWh, 10.3% of total sales. Endesa Costanera and El Chocón participate in companies in charge of the operation of two combined cycles, initiative coordinated by Fondo para Inversiones Necesarias que Permitan Incrementar la Oferta de Energía Eléctrica en el Mercado Eléctrico Mayorista (FONINVEMEM), with a 5.51% and 15.35% share of property, respectively. The commercial operation as combined cycles of Termoelectrica Manuel Belgrano and Termoelectrica San Martín began in 2010. The operation as a combined cycle determined the effective date of the Contract for the Operation and Management of Plant Maintenance and the Supply Contract. Consequently, the companies that participate in FONINVEMEM, among them, Endesa Costanera and El Chocón, began to recover their credits with the cash flows generated by the Project, through a ten year contract to sell its generation to the MEM, managed by CAMMESA. By December 31,2010, collections have responded to agreed plan. Other generators connected to the argentine SIN are: AES Alicura, SADESA, Capex, Petrobras, Pampa Generación and Pluspetrol. 4.1.1. Endesa Costanera Located in the city of Buenos Aires, it has an installed capacity of 1,138 MW using natural gas or fuel oil. It is the largest facility of its kind in Argentina. It also operates two combined-cycle plants of 859 MW and 327 MW each, with a total installed capacity of 2,324 MW. Net generation in 2010 was 7,965 GWh and total sales 8,018 GWh. Electricity demand in the Argentine system recorded a 5.9% increase when compared to 2009. The gas supply was 15% lower than the previous year, and therefore the greater thermal requirements were satisfied by an increase in the consumption of liquid fuels, both in conventional and combined cycle units. On the regulatory side, the MEM continued to be intervened by the authority in terms pricing of the hourly energy sale price and the payment for generators production. Due to these measures, the Company received only partial payment of its monthly credits. In 2010, the company´s financial priority was satisfying the operating cash flow needs of the power plant, being able to reprogram short term debt maturities. Operations were characterized by full dispatch of all Endesa Costanera units (maximum thermal requirement), from the beginning of the year until practically the third quarter of 2010, time in which, mainly due to temperature, dropped significantly, leaving the units available condition. Notwithstanding the foregoing, the total generating capacity of the plant available to the system was similar to that of 2009. In terms of maintenance, during 2010 the projected plans were achieved, performing all maintenance for both combined Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 106 Enersis 2010 Annual Report cycles, according to the provisions of existing long-term maintenance contracts. The conventional turbo gas units started their programmed maintenance in September, according to the denominated Winter Plan, intervening units Nº 7 and Nº 4. Maintenance was also performed on ancillary services. 4.1.2. Hidroeléctrica El Chocón It is located in the provinces of Neuquén and Río Negro, and operates one artificial reservoir hydroelectric plant of 1,200 MW and another of 128 MW that use the waters of the Limay and Collón Curá rivers, with a total installed capacity of 1,328 MW. During 2010, the hydrology of the Limay basin behaved below the historical average, and therefore, the operational criteria applied by the organism in charge of dispatch, was to limit the use of the accumulated strategic reserves. This method resulted in strengthening the energy reserves of Comahue. The resulting dispatch of the El Chocon reservoir at the end of the year led to 2,975 GWh net generation of El Chocon-Arroyito, leaving the level of the reservoir at 378.72 m.s.n.m. The energy reserve of the Comahue reservoirs was 6,224 GWh; of which 2,989 GWh correspond to El Chocon generation, both figures measured in terms of the minimum level condition of the Extraordinary Operation Range. Commercially, the company focused on assuring economic and financial sustainability, concentrating its attention on the diversification of its customer base, by commercialing in alternative markets at spot price. The study on the Mercado a Término continued, with the purpose of offering solid sand adapted solutions to its needs. In that sense, we tried to anticipate the detection of business opportunities from considering each client as part of company management, building alliances with each one of them, assuring the benefits of a long term relationship, keeping customers satisfied. Also, the sale of new energy backed by Central Arroyito was optimized, due to level elevation works. As a result of the administration, it was possible to strengthen term contract market share with physical back up. During the year, spot market sales reached 1,949 GWh and contract sales to customers reached 1,411 GWh. In order to do so, 385 GWh were purchased in the MEM, obtaining a variable margin of 318 million argentine pesos. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 107 2010 Annual Report Description of the business by Country 4.2. Electricity distribution Enersis participates in electricity distribution in Argentina through its subsidiary Edesur in which it has a 65.4% direct and indirect shareholding. Market share of our Argentine subsidiary, in terms of physical sales, was approximately 15%. Other distributors in the Argentine electricity system are Empresa Jujeña de Energía (EJESA), Empresa de Distribución de Energía de Tucumán (EDET), Empresa Distribuidora de Energía de Santiago del Estero (EDESE), Empresa Distribuidora y Comercializadora Norte (EDENOR) and Empresa de Distribución de la Plata (EDELAP). 4.2.1. Edesur The main objective of Edesur is to distribute and commercialize electricity in the southern part of the city of Buenos Aires, comprising two-thirds of the city of Buenos Aires and twelve districts of the province of Buenos Aires, covering 3,309 sq.km for 95 years from August 31, 1992. This period includes an initial one of 15 years and eight additional ones of 10 years each. On February 5, 2007, the electricity regulatory authority (ENRE) resolved to extend the initial period by five years, as of the completion of the tariff renegotiation process (RTI). The concession contract establishes the obligation of Edesur to supply electricity at the request of the owners or inhabitants of properties within its concession area, meet certain quality standards related to electricity supplied, and comply with operational requirements with respect to the maintenance of the distribution assets and bill customers on the basis of effective metering. In 2010, Edesur provided electricity to 2,352,720 customers, 2.1% more than the year before. Of the total, 87.2% are residential customers, 11.4% commercial, 1.0% industrial and 0.4% other users. Energy sales amounted to 16,759 GWh, representing 5.0% increase when compared to2009. This was distributed 41.1% to the residential sector, 25.9% to the commercial sector, 8.4% to industry and 24.6% to others. The energy loss index reached 10.5% in 2010. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 109 2010 Annual Report Description of the business by Country 5. Brazil 5.1. Electricity generation Enersis participates in Brazil through Endesa Brasil and its subsidiaries, Endesa Cachoeira and Endesa Fortaleza. These two power plants, one hydro and the other thermal, together have an installed capacity of 987 MW, representing close to 1% of the capacity of the Brazilian SIN. Electricity generation of the Enersis Group in Brazil reached 5,095 GWh, which represents 1% of the generated electricity in the country. Hydro generated energy represents a 67% of the electricity generation of the Enersis Group in Brazil. Physical sales reached 6,790 GWh, which represents 2% of the system’s total sales. Other generators connected to the Brazilian NIS are CHESF, Furnas, Cemig, Electronorte, Cesp, Copel, Eletrobras and Eletropaulo. 5.1.1. Endesa Cachoeira It has ten units with a total of 665 MW of installed capacity and is located in the state of Goias, 240 km. south of Goiania. It is a pass-through hydroelectric plant that uses the waters of the Paranaiba River. Net generation was 3,430 GWh in 2010, while sales were 3,833 GWh. 5.1.2. Endesa Fortaleza Located in the district of Caucaia, 50 km. from the state capital of Ceará, It is 322 MW combined-cycle thermal plant that uses natural gas and has the capacity to generate a third of the electricity needs of Ceará, which has a population of 8.2 million. Built on a 70 thousand square meters site, it forms part of the infrastructure of the Pecém Industrial and Port Complex in the municipality of Caucaia, and is a member of the federal government’s Thermal Electricity Priority Program (PPT). The location is strategic for promoting regional growth and making viable the installation of other industries. Its most important customers are Coelce, and Petrobras. Electricity generation in 2010 was 1,665 GWh, much higher than the 499 GWh generated in 2009, while its sales totaled 2,957 GWh. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 110 Enersis 2010 Annual Report 5.2. Electricity transmission The Enersis Group also participates in the transmission and trading of electricity in Brazil with the interconnection line between Argentina and Brazil, through the company, CIEN, in which it has a 54.3% holding. 5.2.1. Endesa CIEN Compañía de Interconexión Energética S.A. (CIEN) is a Brazilian energy transmission company. It is formed by two frequency conversion stations, Garabi I and Garabi II, which convert the frequencies of Brazil (60 Hertz) and Argentina (50 Hertz) in both directions, and transmission lines. On the Argentine side, they are managed by two subsidiaries: Compañía de Transmisión del Mercosur S.A. (CTM) and Transportadora de Energía S.A. (TESA). Endesa Cien has 99.99% shareholdings in each. The complete interconnection system consists of two transmission lines with a total length of 1,000 kilometers and the Garabi conversion station. In 2010, as in 2009, CIEN acted as exporter/importer of energy from Brazil to Argentina and exporter for Uruguay. This business generated revenues for making its lines available (transport). Although with the intention of long term stability for the business, the company has redefined its business focus towards a permanent remuneration model. ANEEL began a study in 2009 to re-define the company’s business model. In December 2010, ANEEL published the final definition of the “Receita Anual Permitida”, or RAP, which is the annual remuneration that CIEN would receive as a recognized operator of the Brazilian system. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 111 2010 Annual Report Description of the business by Country 5.3. Electricity distribution Enersis participates in distribution through Endesa Brasil and its subsidiaries Ampla and Coelce. Enersis directly and indirectly has 70.2% and 35.2% shareholdings in these companies, respectively. The market share of our subsidiaries in Brazil, in terms of physical sales, was approximately 5%. Other distributors in the Brazilian electricity system are CPFL, Brasiliana de Energía, AES Elpa, Cemig, Light, Coelba and Copel. 5.3.1. Ampla Ampla is an electricity distribution company that covers 70% of the territory of the state of Rio de Janeiro, corresponding to an area of 32,613 sq. km. The population is approximately eight million living in 66 districts, of which the most important ones are Niteroi, São Gonçalo, Petrópolis, Campos and Cabo Frio. In 2010, Ampla has provided electricity to 2,570,595 customers, 2% more than 2009. Of this amount, 90.1% are residential, 6.5% commercial, 0.2% industrial and 3.2% other customers. Energy losses declined 0.7% from de 21.2% a 20.5%. 5.3.2. Coelce Coelce is the electricity distribution company of the state of Ceará, in north-eastern Brazil, and covers a 148,825 sq.km concession area. The company serves a population of more than eight million people. At year-end 2010, Coelce had 3,094,600 customers, which represented a 4.4% increase compared to the number of customers at that date the previous year. Of the total amount, 75.2% are residential, 5.2% commercial, 0.2% industrial and 19.7% other customers. Electricity distributed reached 8,850 GWh, a 13% increase in volume. Of this total distributed, 33.7% went to residential customers, 18.7% to comercial users, 16.7% to industrial clients and 30.9% to other customers. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 113 2010 Annual Report Description of the business by Country 6. Chile 6.1. Electricity generation Enersis participates in electricity generation through Endesa Chile and its subsidiaries, the largest electricity generation company in the country in terms of installed capacity, in which Enersis has a direct 60% shareholding. Endesa Chile and its subsidiaries own and operate a total of twenty-eight generating plants, sixteen of them hydroelectric, ten thermal and two wind farms, adding up to a total installed capacity of 5,611 MW, representing 37% of Chile’s total capacity. Electricity generation by the Enersis Group reached 20,914 GWh in 2010, 67% hydroelectric, which represented 37% of the total amount generated by the company in the region. Physical energy sales in Chile amounted to 21,847 GWh, equivalent to 34% of the Group´s total sales in Latin America. Other generators in Chile are: AES Gener, Colbún, EC-L, and Noreen. 6.1.1. Endesa Chile Endesa Chile supplies electricity to the main distributors, large non-regulated industrial companies (mainly in the mining, wood pulp and steel-making sectors) and to other generators through the spot market. The most important supply contracts of Endesa Chile with regulated customers are those with Chilectra and CGE, the two largest distributors in Chile. With the purpose of maintaining its leadership position in the industry and a level of commitment that allows maximizing profit and limit the variability of operating margin, Endesa Chile signed new electricity supply contracts to boost its customer base. In 2010, new contracts were signed with the following customers: Codelco (for its Salvador division), CONAFE (to supply Enami), ESO La Silla, CGE Distribución (to supply its non-regulated customers), Lumina Copper (to supply Project Caserones), Emelat (to supply Kozán), Chilquinta (to supply its non-regulated customers), Minera Can Can and Angloamerican (to supply its Mantoverde division), among others. The contracted capacity reaches approximately 560 MW and terms extend, on average, roughly seven years. Also, a new electricity purchase contract was signed between Endesa Chile and its subsidiary Empresa Eléctrica Pangue S.A., through which the latter supplies a block of 1,210 GWh/year starting in 2011. The price and commercial conditions of the purchase are equal to the average awarding price of the distribution companies bidding processes during 2007, 2008 and 2009. The remaining conditions are those agreed to by Endesa Chile and CGE Distribución in the last bidding process. On the other hand, Endesa Chile has continued with its policy of intensifying its commercial relations with its customers, organizing a series of activities that have allowed these to strengthen. Within the framework of the Customer Integral Service Plan, a visit with customers to Central Pehuenche was organized in June 2010. In August, seminars took place in La Serena and Copiapó. In September seminars were Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 114 Enersis 2010 Annual Report given with customers in the regions of Concepción, Valdivia and Iquique. Also, in November, the “6th Seminar with Customers of Endesa Chile and subsidiaries” was organized, designed to provide a general vision of Endesa Chile´s activities in terms of non-conventional renewable energy, nuclear energy, and a revision of the supply conditions expectations for the following years. Additionally, the annual program of visits to their commercial offices or production facilities was also followed. 6.1.2. Pehuenche Operates in Chile’s Maule Region and owns 3 reservoir hydroelectric plants (Curillinque, Pehuenche and Loma Alta) with a total installed capacity of 699 MW. Curillinque is fed indirectly from the Maule and La Invernada lakes. Loma Alta uses the waters of the Colorado River, and Pehuenche uses the sources mentioned above sources plus the Melado reservoir and other minor tributaries. Enersis holds, directly and indirectly, 55.6% of the share capital of the company. In 2010, Net generation reached 2,970 GWh, while electricity sales were 2,969 GWh. 6.1.3. Pangue It is located in Chile’s Bio Bio Region, 100 km east of Los Angeles. It´s installed capacity of 467 MW is hydroelectric, with an reservoir that is fed by the waters of the Bío-Bío river. Enersis owns a 57% shareholding. In 2010, net generation of Pangue was 1,615 GWh and electricity sales reached 1,704 GWh. 6.1.4. San Isidro y San Isidro 2 It is located in Chile’s Valparaiso Region, 8 km from Quillota. It is a combined-cycle plant with dual technology which enables it to use natural gas and fuel oil for generation. It has a total installed capacity of 778 MW (San Isidro 379MW and San Isidro 2 399 MW). Enersis has a 60% shareholding. In 2010, the net generation and electricity sales of San Isidro were 2,157 GWh. 6.1.5. Celta Its two generation plants are located in Chile’s Tarapacá Region, 65 km south of Iquique. Its installed capacity is 182 MW using steam-gas thermal technology, using coal and oil for generation. Enersis has a 60% shareholding. In 2010, the net generation of Celta was 995 GWh and electricity sales amounted to 1,049 GWh. 6.1.6. Canela y Canela II Located in the Coquimbo Region, 80 km north of the town of Los Vilos, Canela and Canela II have an installed capacity of 78 MW and was the first wind farm on the SIC. Enersis has a 45% shareholding. It is estimated that the operation of the Canela wind farm annually substitutes the emission of approximately 110.9 thousand tons of CO2. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 115 2010 Annual Report Description of the business by Country 6.2. Projects under construction 6.2.1. Bocamina power plant expansion second unit The Project Bocamina 2, located in the Lo Rojas area of the Coronel district, province of Concepción, Bio Bio region consists of the construction of a 370 MW coal-fired thermal plant alongside the existing Bocamina plant which used pulverized bituminous coal as fuel. The power plant will be connected to the Central Interconnected System with a link at the Lagunillas substation that is being developed by Transelec. Start-up is expected for the end of 2010. As a consequence of the earthquake on February 27, 2010, that severely affected this region, the startup of Bocamina 2 power plant, in the middle of the construction phase, was postponed, originally programmed for December 2010. The severeness of the earthquake led to problems that required a perform a diligent inspection to assess the impacts of this event in the works of the plant, mainly in the boiler, the bridge crane of the turbine building and the works of the siphon. Due to the events indicated, startup is expected during the second semester of 2011. 6.3. Projects under study 6.3.1. Central Hidroeléctrica Los Cóndores The Project Los Condores will be located in the Maule region, Talca province, San Clemente district. It includes the construction of a pass through hydroelectric 150 MW of installed capacity power plant, with average annual generation of 560 GWh, that would use the water from the Maule Lake by means of a 12 km tunnel. The power plant will be connected to the SIC with a link at the Los Condores plant and the substation Ancoa. The Project is currently in the feasibility and alternative analysis stage. On October 5, 2010, the EIA of the transmission line Línea de Transmisión Eléctrica Central Hidroeléctrica Los Cóndores – Subestación Ancoa was officially filed with the Environmental Assessment Service of the Maule region. In November 2010, the field studies were reinitiated with drilling and gallery prospections. 6.3.2. Central Hidroeléctrica Neltume The Neltume project will be located in Rivers Region, Valdivia province, Panguipulli district. It includes the construction of a pass-through hydroelectric plant of 490 MW of installed capacity, with an average annual generation of 1,885 GWh that would take advantage of electricity potential of lakes Pirehueico and Neltume. It would be connected to the SIC through a link between the Neltume plant and the Pullinque substation. The EIA of the Central Hidroeléctrica Neltume Project was submitted to the Environmental Assessment Service of the Rivers Region on December 2010, and on Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 116 Enersis 2010 Annual Report December 10 was received for filing by the environmental authority. That same month, the environmental filing of the High Voltage Substation Neltume-Pullinque began. 6.3.3. Central Hidroeléctrica Choshuenco The Choshuenco will be located in Rivers Region, Valdivia province. The project consists of a pass-through hydroelectric plant with about 130 MW of capacity, with combined adduction (channel and tunnel) or only tunnel, depending on the alternatives that are being analyzed, and which would use the Llanquihue river waters between Panguipulli and Neltume lakes, resulting into a hydraulic series with hydroelectric Neltume, and using the transmission link provided for Neltume plant. The project is currently in the stage of evaluating alternatives, as the feasibility study has been completed. 6.3.4. Central Termoeléctrica Punta Alcalde The Punta Alcalde project will be located in the Atacama region province and district of Huasco, 15 kms. south of this town. It foresees the construction of thermal plant of two blocks of 370 MW of net capacity each. The power plant would be connected to the Maitencillo substation using a 220 kV transmission system. The Project is in its feasibility stage and field studies are being performed. The filing of the EIA of the Project continues, which was submitted on February 27, 2009. To December 2010, there has been progress in terms of preparing answers for the Consolidated Clarifications, Corrections, and Extensions Request Report (ICSARA) N°3, which is expected to be submitted by the end of July, 2011. The approval from Conaf of the Xerophytic Training Plan is pending and necessary in order to continue field jobs. 6.4. Proyectos en estudio de Endesa Eco 6.4.1. Mini power plant hidroeléctrica Piruquina The Piruquina Project will be located in the Lakes region, Chiloé province, district of Dalcahue, 17 kms. north of the city of Castro. The project consists of a mini hydro pass-through plant with 7.6 of installed capacity, with an annual average generation of 30.4 GWh, which would use the water from river Carihueico. The power plant would be connected to the SIC through a link between the Piruquina plant and the S/E Pid-Pid, located approximately 10 km from the unit. 6.5. Associate projects 6.5.1. HidroAysén HidroAysén, a company in which Endesa Chile has 51% of capital and Colbún S.A. the remaining 49%, consists of a construction and operation project of five hydroelectric plants in the Baker and Pascua rivers, in the Region of Aysén in the extreme south of Chile, totaling 2,750 MW which would be connected to the Central Interconnected System (SIC), which supplies more than 90% of the population. The HidroAysén Project is presented as the most important hydroelectric initiative that has ever been proposed in the country, due to its efficiency and contribution to the national energy matrix. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 117 2010 Annual Report Description of the business by Country The power plants will have an average annual generation capacity of 18,430 GWh, equivalent to almost 35% of Chile´s consumption, and the total area of the reservoir, considering the five plants, would cover 5,910 hectares, equivalent to 0.05% of the Aysen Region, whose total area is 108,494 sq.km. During the first half of 2010, the management of HidroAysén was focused on the preparation of its Addendum No.2, with responses to the 1,114 comments issued by the competent public services for the assessment of the environmental impact study (EIA), through ICSARA Nº2, received on January 18, 2010. Once the preparation of the responses to the observations received concluded, on October 28, 2010, the Addendum N°2 was presented to the corresponding environmental authority. On November 25, 2010, HidroAysén received ICSARA N°3, with a total of 199 comments from public services. On that date, HidroAysén requested the Environmental Assessment Service the suspension of the evaluation period until April 2011 in order to respond to ICSARA N°3. With respect to the Aysen-SIC Transmission System, to be used to transmit the energy generated by the power plants to the Central Interconnected System (SIC), on December 31, 2009, the service contract with Transelec, for the development of the preliminary project and the environmental studies related to the project, expired . Therefore, as of January 1, 2010, HidroAysén took over the administration of the contracts that were in place at that date, among which the most relevant are those related to the preparation of the Environmental Impact Study of the project. Also, the process of evaluating the requests from third parties, interested in using the capacity of the transmission line, concluded in February, complying with the Open Season process established in condition N°1 of ruling N° 022/2007 of Competition Jury (Tribunal de la Libre Competencia). With this, and having met the deadlines set within the rules, without any of the applicant companies presenting the payment of the value of the Preliminary Costs and Evaluation of the line, the company in charge of the evaluation declared the end of the process of analysis and evaluation of applications, thus, there was full compliance with the obligations and terms set out in condition N°1 of that resolution. On the other hand, different communication systems were maintained in the region the population about the Project and its benefits. On a national level, we continued working on presenting the Project, its characteristics and main advantages of hydroelectricity to the different parties interest ed. At this level, the organization of seminars and national and regional discussions, strengthening the communication strategy of the project and the start of an advertising campaign in newspapers, television, radio and online media may be emphasized. The company continued to promote a direct relationship with local communities and their representatives, by means of its Corporate Social Responsibility Plan (CSR), that is based on three pillars: development of human resources, productive development and social integration, for which, a series of activities were conducted. Hydrolyser’s commitment with the population of the region will be strongly supported by the management of the operations department, created in 2010 with this purpose. Within the main actions implemented in 2010, education, as a fundamental pillar Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 118 Enersis 2010 Annual Report for the development of the region, may be highlighted. For this reason, HidroAysén made available to the youth of Coyhaique and the province of Captain Prat, fifty annual scholarships for higher technical education and training courses developed in areas as diverse as gastronomy, construction, accounting and tourism. At December, 2010, this program has favored 104 young people. More than 300 grant s have been delivered which have allowed the development of productive and social innovative ventures in different towns and about 800 people have been trained, and also teachers have been offered training; support to culture and digital connectivity, among other advancements that have resulted from the dialogs with the communities and their representatives, through workshops that are performed in the towns in the areas affected by the Project. In the field of social integration, the company has supported cultural activities, preserving traditions and local identity, through the publication of books, folkloric festivals and working continuously with social organizations. Undoubtedly, one of the most important voluntary commitments that HidroAysén has made is to deliver cheaper energy to the Aysen region, which, at present, pays a one of the highest prices for electricity in the country. This project leads to increase the availability of energy in the region by 26.6 MW, mainly through mini- hydroelectricity plants. Also, the construction of HidroAysén project will allow for improvements in road infrastructure, coverage of telecommunications, the development of new services related to the construction of the project, especially hotels, food, transport and retail, in addition to the new job opportunities, which could reach a month average of 2,260, with a maximum of 5,000 in the stage of greatest demand. 6.6. Electricity distribution Enersis participates in electricity distribution in Chile through its subsidiary Chilectra in which it directly holds 99.1% of the share capital. According to Chile’s tariff regulations covering the activities of electricity distributors, the service area of Chilectra is defined as one of high density and includes all the residential, commercial, industrial, state customers and those that pay tolls, among others. The Santiago Metropolitan Region is the most densely-populated area in Chile and has the largest concentration of industries, industrial parks and commercial installations. Other distributors in the Chilean electricity system are Empresa Eléctrica de Arica, Chilquinta Energía, CGE Distribución, Sociedad Austral de Electricidad, Empresa Eléctrica de la Frontera and Luz Andes Limitada. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 119 2010 Annual Report Description of the business by Country 6.6.1. Chilectra Chilectra is the largest electricity distribution company in Chile in terms of energy sales. It covers 33 districts of the Metropolitan Region and its concession zone covers a 2,000 sq.km, area including that of its subsidiaries, Empresa Eléctrica Colina Ltda. and Luz Andes Ltda. It provided electricity to 1,609,652 customers, 1.94% more than in 2009. Of the total, 89.9% corresponds to residential customers, 7.7% commercial, 0.6% industrial and 1.8% other customers. In 2010, Chilectra sold 13,098 GWh to its end user customers, which represented a 4.1% increase when compared to 2009. Chilectra purchased 13,905 GWh/yr. of energy in 2010 from several generators in the country, including: Endesa Chile, AES Gener, Colbún and other suppliers. During the year, Chilectra´s energy losses were 5.8%, one of the lowest in Latin America. 6.6.1.1. Distribution tariff setting The variation of tariffs applied between December 2009 and December 2010, for an average residential consumption, was a 2% increase. This variation considers the beginning in January 2010 of the new energy and capacity supply contracts. 6.6.1.2. Setting the annual value of sub transmission systems On January 9, 2009, the Official Gazette published Decree N°320 that sets the tariff of sub transmission and its indexation formulas, and is effective from January 14 until 2010. On August 9, 2010, the report “Study for determining the annual value of the sub transmission system SIC-3” prepared by the consultant KEMA Inc. was presented to the CNE. This study will be the basis for the sub transmission tariff revision that the authority should set for the 2011-2014 period. On August 24, 2010, the consultant KEMA Inc. presented such study in a public hearing, attended by authority representatives, generators, transmission companies, subtransitters, and other interested parties. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 121 2010 Annual Report Description of the business by Country 7. Colombia 7.1. Electricity generation Enersis participates in electricity generation in Colombia through Endesa Chile and its subsidiary Emgesa, in which it indirectly controls 16.1% of ownership. This company has an installed capacity that represented in 2010, 22% of the country’s total generating capacity. The electricity generation of the Enersis Group in Colombia reached 23% of the total generated in that market. Its physical energy sales represented 21% of the total sold. Other generators connected to the Colombian electricity system are Empresa Pública de Medellín, Isagen, Corelca, EPSA and Chivor. 7.1.1. Emgesa On September 1, 2007 the Colombian companies Emgesa S.A. E.S.P. and Central Hidroeléctrica de Betania S.A. E.S.P. merged by the latter’s absorption by the former, which then changed its name to Emgesa S.A. E.S.P. It is the largest electricity generating company in Colombia, located close to the city of Bogotá. It has eleven plants with a total capacity of 2,914 MW, among which is included the 1,213 MW El Guavio plant, the largest hydroelectric plant in Colombia. Of the eleven plants, nine are hydroelectric and two thermal. Net generation was 11,283 GWh, 11% less than the electricity generated the previous year. Total sales were 14,817 GWh, an 11.8% reduction compared to the figure for 2009. The year 2010 was characterized by high revenues, due to higher spot sales prices caused by the reduced hydrology associated with the “El Niño” phenomenon during the first semester, which was compensated with the arrival of “La Niña”, during the beginning of the second semester of 2010. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 122 Enersis 2010 Annual Report 7.2. Projects under construction 7.2.1. Central Hidroeléctrica El Quimbo The Project El Quimbo will be located in the department of Huila, in southeast of Colombia and will mainly use the water form river Magdalena, the most important and extensive of the country. It considers the construction of a hydroelectric reservoir power plant with 400 MW of installed capacity, and with average annual generation of approximately 2,216 GWh. After completing the process of allocation of firm energy requirements for projects that come into operation from December 2014 to November 2019, the ministry of Mining and Energy selected Emgesa´s project Hidroeléctrica El Quimbo, de Emgesa, and allocated an energy supply commitment of up to 1,650 GWh/yr. The term of the contract is 20 years beginning December of year 2014. On September 20, 2010, Emgesa was formally notified of the administrative act issued by the ministry of Environment, Housing and Territorial Development, reviewing the environmental license in order to adjust the environmental compensations established for the Project. Later, on September 22, 2010, the extraordinary board meeting of Emgesa approved the Project, the procurement of major works, the financing and tax stability contract. Currently, the main contracts CEQ-21, corresponding to the civil Works, CEQ-70, corresponding to the manufacture, supply and installation of equipment, have been awarded to the consortium Imperil-OHL and consortium Alstom-Schrader Camargo (ASC), respectively, kicking off the construction. 7.3. Projects under study 7.3.1. Hydroelectric plants In 2010, there was progress in the development of three hydroelectric projects for a total of 1,023 MW. 7.3.2. Wind potential In 2010, three additional measuring towers were installed. The total potential prospected in Colombia amounted to 830 MW. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 123 2010 Annual Report Description of the business by Country 7.4. Electricity distribution Enersis participates in electricity distribution through its subsidiary Codensa, in which it directly and indirectly holds 21.7% of the share capital. The market share of our subsidiary in Colombia, in terms of physical sales, was approximately 24%. Other distributors participating in the Colombian electricity system are EEPP Medellín, Electrificadora de la Costa Atlántica and Electrificadora del Caribe. 7.4.1. Codensa Distributes and sells electricity in Bogotá and in 103 districts of the departments of Cundinamarca, Boyacá and Tolima, comprising an area of 14,087 sq. km. Since 2001, Codensa has only provided services to regulated customers. It provided electricity services to 2,546,599 customers, 2.9% more than the previous year. Of this total, 88.4% are residential, 9.87% commercial, 1.6% industrial and 0.2% other customers. Energy sales reached 12,515 GWh representing an increase of 3.3% compared to 2009. These were distributed as follows: 36% to residential customers, 16.5% commercial, 7% industrial and 40.5% to other sectors. In terms of energy losses, the index increased from 8.4% to 8.5%. Loss management has been focused on the incorporation of new technologies and techniques for identifying losses and also on strengthening the customer/company relationship based on technical knowledge and the transparency of our actions. As part of the tariff-revision process carried out every five years, CREG Resolution 093 of August 2008 published the rate of return that applies to the remuneration for the electricity distribution business, which was fixed as 13.0% for sub-transmission assets and 13.9% for medium and low voltage transmission assets. In October 2009, the CREG issued its Resolution Nº100 setting the distribution charges of Codensa for the period 2009-2013. This resolution defined a reduction in the distribution value added (VAD) of 4.2%. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 125 2010 Annual Report Description of the business by Country 8. Peru 8.1. Electricity generation Enersis participates in electricity generation in Peru through Endesa Chile and its subsidiary Edegel, in which it directly and indirectly controls 37% of ownership. Edegel has an installed capacity of 1,668 MW, figure which represented 26% of the Peru´s total installed capacity. The electricity generation of the Enersis Group was 26% of the total generated in the country, while its physical sales were 29% of the total sold. En Peru, other generators connected to the electricity system is Electroperú and Egenor. 8.1.1. Edegel This company is located in the surroundings of the city of Lima. It has nine plants with a total capacity of 1,668 MW. Only two units are thermal plants that use natural gas as fuel to generate. The net generation of Edegel was 8,466 GWh, 3.7% more than in 2009, and its physical sales reached 8,598 GWh, increasing 3.3% when compared to the previous year. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 126 Enersis 2010 Annual Report 8.2. Projects under study 8.2.1. Central Hidroeléctrica Curibamba It is a 188 MW power plant with hourly regulation, located in the department of Junín, using the waters of the rivers Comas and Uchubamba. In 2010, the progress on the Project studies continued, highlighting , among them, the laser topography of the temporary concession area, the bathymetry of the river areas of Uchubamba and Comas , the study of the titles of ownership in the surroundings affected by the Project. The bidding processes for the drilling and basic engineering are also finishing. On September 16, the environmental impact study (EIA) of the generation plant was presented to the envorinmental authority, Dirección General de Asuntos Ambientales Energéticos (DGAAE) EIA) By December, two workshops had been developed with the communities. The EIA of the transmission line began in October. 8.2.2. Other hydroelectric projects In 2010, the feasibility studies were completed for two projects totaling 60 MW. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 127 2010 Annual Report Description of the business by Country 8.3. Electricity distribution Enersis participates in electricity distribution through its subsidiary Edelnor in which it, directly and indirectly, controls 58% of ownership. The market share of our subsidiary in Peru, in terms of physical sales, was approximately 21%. In Peru, other distributors that participate in the electricity system are: Luz del Sur, Electro Sur, Electrocentro, ENOSA, Hidrandina and ENSA. 8.3.1. Edelnor The concession zone granted to Edelnor covers a total area of 2,440 sq. km, of which 1,838 sq. km relate to northern Lima and Callao. Edelnor is the electricity public-utility concession-holding company for the northern part of the Lima metropolitan area and the province of Callao, plus the provinces of Huaura, Huaral, Barranca and Oyón. It serves 52 districts exclusively and shares 5 additional districts with the southern zone distribution company. In the metropolitan area, Edelnor’s concession consists mainly of the industrial part of Lima and some populous districts of the city. Edelnor provided electricity services to 1,097,533 customers, a 3.5% increase compared to 2009. Of these, 93.9% are residential, 3.7% commercial, 0.1% industrial and 2.3% other customers. Physical energy sales in 2010 were 6,126 GWh, representing a 7.2% increase compared to 2009. The increase in sales is explained by the higher consumption of the residential and commercial sectors. Edelnor’s energy purchases amounted to 6,198 GWh, representing a 7.1% increase compared to the previous year. Energy losses at December 2010 were 8.3%, representing a slight of 0.2 percentage points increase. The distribution tariff setting process for 2009 through 2013 was reopened. Resolution Nº 030-2010-OS/CD (18-02-2010), the OSINERGMIN partially annulled the Resolutions OSINERGMIN Nº 181-2009-OS/CD y 298-2009- OS/CD that set the new Value Added by the Distribution Network (VAD) as of November 1, 2009, for Typical Sector 1, establishing a new one. The new process ended in October 2010, with the approval of Resolution OSINERGMIN Nº 234-2010-OS/CD (04-10-2010), that modified the tariff setting for 2009-2013. This modification represented a 0.1% increase when compared to the initial setting and applies retroactively from November 1, 2009. . Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Other businesses Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 130 Enersis 2010 Annual Report 1. Manso de Velasco Inmobiliaria Manso de Velasco Ltda., a company in which Enersis directly and indirectly has a 100% shareholding, focuses its business on real-estate development projects and on advising Group companies in Latin America in everything related the purchase, sale and development of real-estate. In 2010, activities developed to extend the urbanization and commercialization of the ENEA project for the industrial sector, and the activities related to selling properties in the district of Santiago, continued. The project has a complete infrastructure which has expanded in the last year with new equipment and green areas which offer better service conditions to the area and its users. Included in the ENEA project is the company Aguas Santiago Poniente S.A., a utility which provides sanitation services to this real-estate development. In addition, there is the Tapihue Project. The business of Manso de Velasco also manages a total of 24,030 m2 of construction corresponding to office buildings which are mainly rented to related companies and third parties. 2. CAM Enersis, directly and indirectly, holds 100% of Compañía Americana de Multiservicios Ltda. (CAM). Its business is to provide electrical and related business solutions in three lines of action: metering and energy efficiency, commercialization and logistics, and electrical works. The parent company in Chile and its subsidiaries in Argentina, Brazil, Colombia and Peru, have consolidated a regional presence, expanding their customer portfolio in the electrical, sanitation, gas, industrial, mining and telecommunications sectors. In 2010, CAM went through the process of divesture which ended when Enersis accepting the bid submitted by the company Graña y Montero SAA, to acquire the entire holding, both directly and indirectly, that Enersis had in the company and its subsidiaries. The purpose of the sale is part of the strategic definition of the Group, to concentrate organizational efforts in its “core business” which is the electricity business in generation and distribution of electricity. Along with this sale process, Cam continued the implementation of large rural electrification projects for the Ministry of Energy and Mines in Peru, and for Distriluz in the same country. They performed, in Colombia, new businesses related to the entire technical cycle of distribution (emergency service, civil works, substation maintenance and operations in medium and low voltage). In Argentina, the company received the homologation of type in INTI of the meters Complant models MTSE01 CE2 and MTSE01 CE3, that later were introduced in the market. In Chile, they received successful approval of compliance with the requirements of ISO 9,001:2008. In this respect, Colombia received the recertification of the three standards that form the integrated management system: ISO 14,001:2004, ISO 9,001:2008 and OHSAS 18,001:2007, that together satisfy the corporate goal of generating a culture focused on quality and continuous improvement. New strategic alliances and commercial agreements were also reached with a series of companies, among which we may mention Alkargo, MECM, APPLUS, SERINGEL, ABB and the Chinese manufacturer Kangxing, among others. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 131 2010 Annual Report Other businesses 3. Synapsis Synapsis Soluciones y Servicios IT Ltda is an information technology (IT) professional services company in which Enersis directly and indirectly has a 100% holding. Enersis decided to accept the offer submitted by Riverwood Capital LP to purchase the entire holding in Synapsis Soluciones y Servicios IT Ltda. The purpose of the sale is part of the strategic definition of the Group, to concentrate organizational efforts in its “core business” which is the electricity business in generation and distribution of electricity. With more than 22 years’ experience in the market, it has positioned itself as a Latin American leader in the field of IT solutions, mainly in the services, energy, telecommunications and public administration markets. Located in Santiago, Chile, it has offices in the main cities in the region: Buenos Aires, Argentina; Rio de Janeiro, Fortaleza and a commercial office in Sao Paulo, Brazil; Bogotá, Colombia, and Lima in Peru, in addition to a commercial office in Panama City, Panama. Thus, it is providing coverage within a large area of Latin America. The company offers a portfolio of services that range from outsourcing IT, data center, factory software, consulting and SAP solutions to development, integration and implementation of a wide range of IT solutions for different industries. It owns a network formed by 6 Data Centers located strategically in the countries where it is located, with advanced technology infrastructure, and highly reliable systems, in addition to several certifications and accreditations in ITIL and the range of ISO standards for processes, security (ISO 27,001) and IT services (ISO 20,000-1), and the certifications of its professionals and consultants (PMP, Microsoft, Oracle, among others). In 2010, 37 companies were added to their customer base in Latin America, in addition to renewing contracts and adding new businesses. In Colombia, the Ministry of Mines and Energy awarded Synapsis the contract for the administration and operation of the Distribution Chain of Liquid Fuels derived from oil Information System SICOM. Also, the Technical Systems for the Aqueduct to EMCALI was implemented, the Association of Directors of Real Estate Market Companies– ADEMI (Brazil) granted Synapsis the automation and remote control of waters of CEDAE And with AES Eletropaulo (Brazil) they began the implementation of the Meter Reading Management System. In Argentina, they worked with IMPSA on updating their Management System, ONCCA assigned the conceptualization and implementation of the support to Business Processes and CEAMSE awarded the Project to implement the integrated system of company resource planning for the administrative, economic and financial management of its departments. 4. ICT ICT Servicios Informáticos Limitada is a consulting services company in technology, of information and computing, telecommunications and data transmission, wholly owned subsidiary of Enersis. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Sustainability Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 134 Enersis 2010 Annual Report 1. Sustainability In Enersis, we assume our role as a corporate citizen from the perspective that our actions affect and are affected by a series of socio-economic and cultural relations in the surroundings in which we operate. We therefore promote a balanced development of our businesses, stimulating economic growth and promoting the social development of the communities, while contributing to the preservation and care of the environment. Due to the characteristics of the business, electricity companies are an indispensable player in stimulating economic growth and promoting the social development of the communities, while contributing to the preservation and care of the environment. Aware of the relevance of its operations, Enersis firmly assumes its role as a corporate citizen. For this reason, along with generating and delivering value in the markets where it operates, the company is committed to fulfill, in a balanced manner, its responsibilities in economic, social and environmental matters: supplying a providing quality service and under conditions of maximum safety to its customers; providing returns to shareholders, encouraging employees’ professional training, strengthening its leadership in governance, promoting technological innovation and efficiency in their operations; sustainably using natural resources necessary for its activity, and supporting the development of the environments which it relates to. This is done with the purpose of contributing to improve the competitiveness of the countries in which it operates and respond to the expectations of the parties to which it relates. In order to meet this challenge, Enersis has adopted a proactive stance in relation to its stakeholders, to better understand the specific needs of different audiences in the countries and territories where it is present and, thus providing tailored solutions to the challenges of sustainable development of those markets. 2. SUSTAINABILITY REPORT 2010 Enersis has developed its first Sustainability Report 2010, a document that seeks to explain the commitments and actions that the company implements to meet the new challenges of sustainable development.to the stakeholders and the wider community. The report has been prepared using the Global Reporting Initiative (GRI) methodology, in its third (GRI-G3), incorporating the indicators of the Electricity Sector. It also incorporates subjects and fundamental issues of Social Responsibility ISO 26,000, approved in November 2010, based on the document “GRI and ISO 26,000: How to use the GRI Guidelines in combination with la ISO 26,000”, that can deliver on the performance of organizations on this standard through the indicators of the GRI G3 Guidelines. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 135 2010 Annual Report Sustainability 3. Sustainability policy: Seven commitments for sustainable In the field of sustainability, the principles relevant to economic, environmental and social performance are defined in the sustainability policy, developed by Endesa (Spain) in 2003, which is applicable to all its companies around the world. In line with these guidelines, Enersis´ Sustainability Policy identifies the major stakeholders of the company and the responsibilities it assumes with each of them resulting in the Seven Principals for Sustainable Development. These principles are consistent with the strategy, values, and corporate project of the company, and represent the foundation of its behavior in this subject. 4. Climate change and local roots Additionally, during the first semester of 2009, our parent company launched the Sustainability Plan 2008-2012, aimed towards every country in which the company has operations. With a five year span, PES determines the strategic priorities and action lines of the company in general terms. The company considered the strategic plan, vision, mission and corporate values in its preparation. The document is structured on the basis of complying with the Seven Principals for Sustainable Development that articulate the Sustainability Policy, and incorporates two challenges that respond to the demands identified among the different groups of interest: fight against climate change and local roots. PES 2008-2012 includes the development of Country Plans, by means of which the basic lines and the new challenges are moved to each one of the countries where it operates. Based on this, in 2010 the Enersis Group elaborated a Sustainability Plan Chile, which traces the path for all actions of the Enersis Group in the country. It establishes goals until 2014 on a national level, identifies the main actions to achieve them and mechanism to assure their compliance and evaluate the level of progress. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Diagram of shareholdings Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 138 Enersis 2010 Annual Report 1. Direct and indirect economic (*) ARGENTINA Costanera El Chocón Edesur CTM TESA CEMSA Gasoducto Atacama Argentina CHILE Endesa Chile Celta Endesa ECO Pangue Pehuenche Canela HidroAysén GasAtacama Chilectra Transquillota Ingendesa Túnel el Melón GasAtacama Chile Gasoducto Tal Tal Electrogas GNL Chile GNL Quintero Business Participation Gx Gx Dx Tx Tx Tx Ox 41.85% 39.21% 65.39% 54.30% 54.30% 26.99% 29.99% Business Participation Gx Gx Gx Gx Gx Gx Gx Gx Dx Tx Ox Ox Ox Ox Ox Ox Ox 59.98% 59.98% 59.98% 56.97% 55.57% 44.98% 30.59% 29.99% 99.09% 29.99% 59.98% 59.98% 29.99% 29.99% 25.49% 19.99% 12.00% Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 139 2010 Annual Report Diagram of shareholdings Business Gx, Dx, Tx Gx Gx Dx Dx Tx Participation 54.30% 54.30% 54.09% 70.22% 35.25% 54.30% Business Participation Gx Dx 16.12% 21.73% Business Participation Gx Dx 37.46% 57.54% BRAZIL Endesa Brasil Fortaleza Cachoeira Dourada Ampla Coelce CIEN COLOMBIA Emgesa Codensa PERU Edegel Edelnor Notas Gx: Generation Dx: Distribution Tx: Transmission / Commercialization Ox: Others (*) Consider as Enersis Group Operating Companies Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 140 Enersis 2010 Annual Report 2. Perimeter of Enersis´ shareholding 99.9588% 99.99997% 99.99% Compañia Americana de Multiservicios Ltda. Inmobiliaria Manso de Velasco Ltda. Synapsis Soluciones y Servicios IT Ltda. 0.01% 0.0412% 0.00003% 99.99993% 0.00007% CAM Perú Ltda. 0.000062% 57.50% Soc. Agrícola de Cameros Ltda. 99.999938% CAM Colombia Ltda. 25.82% Aguas Santiago Poniente S.A. 26.2% Konecta Chile S.A. 99.9998% 0.0002% 94.90% 2.4% Synapsis Perú Ltda. Synapsis Colombia Ltda. 0.2% 99.998243% 53.06% 2.5% 15.00% Endesa Market Place S.A. Chilectra Inversud S.A. 0.001757% 95.00% CAM Argentina Ltda. 4.9988% 55.00% 0.0012% Const. y Proyectos Los Maitenes S.A. 94.9999% Synapsis Argentina Ltda. 5.0001% 99.90% Luz Andes S.A. 0.10% 49.00% Sistemas SEC S.A 0.0002% 99.9998% Empresa Eléctrica de Colina S.A. 99.99985% CAM Brasil Multiservicios Ltda. 0.00017% 0.05% 99.95% Synapsis Brasil Ltda. Argentina Brazil Chile Colombia Peru Spain Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 0.012666% 99.0778566% 59.98% ICT Servicios Informaticos Ltda. 99% 1% 12.47% 9.35% Codensa S.A. 48.997% Deca S.A. EEC S.A. 82.34% Inversora 4.90% 100% Codensa S.A.S. Sociedad Portuaria Central Cartagena S.A. 27.1941% 23.4184% 16.0248% 20.8477% 0.8875% Distrilec Inversora S.A. 56.3577% Edesur S.A. 50.00% Sacme S.A. Edelnor S.A. 24.00% Inversiones Distrilima S.A. 35.0168% 51.684% 30.1544% 22.060295% 4.657017% Endesa Brasil S.A. (Holdco) 4.347304% Endesa Brasil 99.99% 99.95% Comercio e Serviços S.A. Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 13.679789% 13.679789% 10.344606% 21.022414% Investimentos S.A. Ampla 46.886283% 46.886% Ampla Energia S.A. 10.344606% 21.022% 36.430633% 63.569367% 2.273448% 100% Investluz S.A. Coelce S.A. CIEN S.A. 100% C.G.T Fortaleza S.A. 99.605880% Cachoeira Dourada S.A. 56.594007% 141 2010 Annual Report Diagram of shareholdings 0.012666% 99.0778566% 59.98% 99% ICT Servicios Informaticos Ltda. 1% 12.47% 9.35% Codensa S.A. 48.997% Deca S.A. EEC S.A. 82.34% 100% Inversora Codensa S.A.S. 4.90% Sociedad Portuaria Central Cartagena S.A. 27.1941% 23.4184% 16.0248% 20.8477% 0.8875% Distrilec Inversora S.A. 56.3577% Edesur S.A. 50.00% Sacme S.A. Edelnor S.A. 24.00% 51.684% Inversiones Distrilima S.A. 35.0168% 30.1544% 22.060295% 4.657017% Endesa Brasil S.A. (Holdco) 4.347304% Endesa Brasil Comercio e Serviços S.A. 99.99% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 13.679789% 13.679789% 10.344606% 21.022414% Ampla Investimentos S.A. 46.886283% 46.886% Ampla Energia S.A. 10.344606% 21.022% 36.430633% 63.569367% 2.273448% 100% Investluz S.A. Coelce S.A. CIEN S.A. 100% C.G.T Fortaleza S.A. 99.605880% Cachoeira Dourada S.A. 56.594007% 99.9588% 99.99997% Compañia Americana de Multiservicios Ltda. Inmobiliaria Manso de Velasco Ltda. 0.0412% 0.00003% Contents 1 2 4 10 16 Cover Resume Chairman’s Letter to Shareholders 2010 Highlight 15.00% Main financial and operational indicators Endesa Market Place S.A. 20 Identification of the Company 99.99% 24 Ownership and control Synapsis Soluciones y Servicios IT Ltda. 28 0.01% Administration 99.99993% 57.50% Soc. Agrícola de Cameros Ltda. 0.00007% CAM Perú Ltda. 0.000062% 99.999938% CAM Colombia Ltda. 25.82% Aguas Santiago Poniente S.A. 53.06% 26.2% 99.9998% 0.0002% 94.90% 2.4% 95.00% CAM Argentina Ltda. 4.9988% 55.00% 94.9999% Const. y Proyectos Los Maitenes S.A. 0.0012% 49.00% Sistemas SEC S.A 99.99985% CAM Brasil Multiservicios Ltda. 0.00017% 0.05% Argentina Brazil Chile Colombia Peru Spain 38 44 Konecta 50 Chile S.A. Human resources Stock Exchange Transactions Dividends 56 Investment and financing policy 2010 60 Synapsis Perú Ltda. 66 The company´s businesses Investments and financial activities 78 Risk factors Synapsis 84 Colombia Ltda. 2.5% 100 Synapsis Argentina Ltda. 128 132 136 144 154 99.95% Synapsis Brasil Ltda. 180 182 326 99.998243% Regulatory framework of the 0.2% electricity industry Chilectra Inversud S.A. 0.001757% Description of the business by Country 99.90% 0.10% Luz Andes S.A. 5.0001% Other businesses Sustainability 0.0002% Diagram of shareholdings Empresa Eléctrica de Colina S.A. 99.9998% Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next 142 Enersis 2010 Annual Report 3. Perimeter of Endesa Chile´s shareholding 59.98% 41.9411% Hidroinvest S.A. 54.1535% 2.4803% 59.00% Hidroeléctrica El Chocón S.A. 6.1938% Endesa Argentina S.A. 99.657366% 0.342634% Southern Cone Power Argentina S.A. 5.5% 98% 2.0% 15.35% Termoeléctrica Manuel Belgrano S.A. 5.5055% 51.932539% Endesa Costanera S.A. 12.3325533% 94.97519% 0.01382% Pangue S.A. 15.35% Termoeléctrica José de San Martín S.A. 5.5055% Distrilec S.A. 0.887466% 99.9911% 0.00886% Túnel el Melón S.A. Endesa Cemsa S.A. 45.00% 1.00% Ingendesa do Brasil Ltda. 99.00% 36.268461% 26.873987% Chinango S.A.C 80.00% 4.184465% Endesa Brasil S.A. (Holdco) Emgesa S.A. 94.95% Ampla S.A. 46.886283% 46.886283% Ampla Investimentos Sociedad Portuaria Central Cartagena S.A. 36.430633% 4.90% 60.99845% Generandes Perú S.A. 54.19961% 29.3974% Edegel S.A. CIEN S.A. Investluz S.A. 100.00% 63.569367% Inversora Codensa S.A. Endesa Brasil Comercio e Serviços S.A. 99.99% 2.273448% Coelce S.A. 56.594007% C.G.T Fortaleza S.A. 100.00% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 99.605880% Cachoeira Dourada S.A. 99.999982% Transportadora de Energía del Mercosur S.A. (Tesa) 99.99% Cía. de Transmisión del Mercosur S.A. (CTM) 0.0000018% Argentina Brazil Chile Colombia Peru Cayman Island 99.51% Enigesa 0.49% 92.65% Pehuenche S.A. 98.75% 33.33% 20.00% 1.25% Ingendesa GNL Chile S.A. GNL Quintero S.A. 100.00% Compañía Eléctrica San Isidro S.A. 0.057198% 99.942802% Compañia Eléctrica Tarapacá S.A. 42.50% Inversiones Electrogas S.A. 0.01% 99.99% Inversiones Endesa Norte S.A. 50.00% Inversiones Gas Atacama Holding Ltda. 0.05% Gas Atacama Chile S.A. 99.877% Gasoducto Taltal S.A. 99.90% 0.03% Gasoducto Atacama Argentina S.A. 42.71% 57.23% 100.00% 0.1226% Energex Co. 99.997706% 99.90% 0.001147% Gas Atacama S.A. Atacama Finance Co. 0.1% 100.00% Gasoducto Atacama Argentina S.A. Sucursal Argentina Central Eólica Canela S.A. 75.00% 99.99% 0.01% Endesa Eco S.A. 50.99995% Centrales Hidroeléctricas de Aysén S.A. 0.00005% 0.51% Aysén Energia S.A. 99.00% 0.51% Aysén Transmisión S.A. 99.00% 50.00% Consorcio Ingendesa Minmetal ltda. 50.00% Consorcio Ingendesa-Ara Ltda. 50.00% Consorcio Ara-Ingendesa Ltda. 33.33% Consorcio Ara-Ingendesa Sener Ltda. 50.00% Transquillota Ltda. 0.02125% 99.95% 0.1% 99.9% Electrogas S.A. Progas S.A. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents 1 2 4 10 16 20 24 Cover Resume Chairman’s Letter to Shareholders 59.98% 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control 28 38 Administration 99.657366% Endesa Argentina S.A. 0.342634% Human resources Stock Exchange Transactions 98% 44 Southern Cone Power 50 Argentina S.A. Dividends 2.0% 56 5.5% Investment and financing policy 2010 60 Endesa Costanera S.A. The company´s businesses 12.3325533% 66 Investments and financial activities Distrilec S.A. Risk factors 0.887466% 78 84 Ingendesa do Brasil Ltda. 100 Regulatory framework of the electricity industry 1.00% Description of the business by Country 99.00% 41.9411% 54.1535% Hidroinvest S.A. 2.4803% 59.00% Hidroeléctrica El Chocón S.A. 6.1938% 15.35% Termoeléctrica 5.5055% José de San Martín S.A. Endesa Cemsa S.A. 45.00% 15.35% Termoeléctrica Manuel Belgrano S.A. 5.5055% 51.932539% 60.99845% Generandes Perú S.A. 54.19961% 29.3974% Edegel S.A. 99.999982% Transportadora de Energía del Mercosur S.A. (Tesa) 99.99% Cía. de Transmisión del Mercosur S.A. (CTM) Argentina Brazil Chile Colombia Peru Cayman Island 128 Other businesses 132 36.268461% Sustainability 26.873987% Chinango S.A.C 80.00% 4.184465% Endesa Brasil S.A. (Holdco) 136 Diagram of shareholdings Emgesa S.A. 144 Consolidated relevant facts 46.886283% 154 46.886283% Ampla S.A. Identification of subsidiaries and Ampla related companies Investimentos Sociedad Portuaria Central Cartagena S.A. 94.95% 180 CIEN S.A. 100.00% 182 63.569367% 326 Declaration of responsibility 36.430633% 4.90% Consolidated Financial Statements Investluz S.A. Summarized Financial Information for Subsidiaries Inversora Codensa S.A. 56.594007% Endesa Brasil 99.99% 2.273448% Comercio e Serviços S.A. Coelce S.A. 0.0000018% C.G.T Fortaleza S.A. 100.00% 99.95% Eólica Fazenda Nova Geraçao e Comercializaçao de Energia S.A. 99.605880% Cachoeira Dourada S.A. pages control previously next 143 2010 Annual Report Diagram of shareholdings Central Eólica Canela S.A. 75.00% 99.99% 0.01% Endesa Eco S.A. 50.99995% Centrales Hidroeléctricas de Aysén S.A. 0.00005% 0.51% Aysén Energia S.A. 99.00% 0.51% Aysén Transmisión S.A. 99.00% 50.00% Consorcio Ingendesa Minmetal ltda. 50.00% Consorcio Ingendesa-Ara Ltda. 50.00% Consorcio Ara-Ingendesa Ltda. 33.33% Consorcio Ara-Ingendesa Sener Ltda. 50.00% Transquillota Ltda. 0.02125% 99.95% 0.1% 99.9% Electrogas S.A. Progas S.A. 0.05% Gas Atacama Chile S.A. 99.877% Gasoducto Taltal S.A. 99.90% 0.03% Gasoducto Atacama Argentina S.A. 42.71% 57.23% 100.00% 0.1226% Energex Co. 99.51% Enigesa 0.49% 92.65% Pehuenche S.A. 94.97519% 0.01382% Pangue S.A. 99.9911% 0.00886% Túnel el Melón S.A. 98.75% 33.33% 20.00% 1.25% Ingendesa GNL Chile S.A. GNL Quintero S.A. 100.00% Compañía Eléctrica San Isidro S.A. 0.057198% 99.942802% Compañia Eléctrica Tarapacá S.A. 42.50% Inversiones Electrogas S.A. 0.01% 99.99% Inversiones Endesa Norte S.A. 50.00% Inversiones Gas Atacama Holding Ltda. 99.997706% 99.90% 0.001147% Gas Atacama S.A. Atacama Finance Co. 0.1% 100.00% Gasoducto Atacama Argentina S.A. Sucursal Argentina Consolidated relevant facts Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 146 Enersis 2010 Annual Report 1. Enersis • On April 23, 2010 and in accordance with clauses 9 and 10.2 of the Securities Market Law 18,045 and General Rules N° 30 of the Superintendence of Securities and Insurance, and in the use of the faculties conferred upon me, I inform as Essential Fact: 1. In the Ordinary Shareholders Meeting of Enersis S.A. held yesterday, April 22, 2010, was elected the new Board of Directors of the Company, for a period of three years. The Board of Directors is as follows: Mr. Pablo Yrarrázaval Valdés Mr. Andrea Brentan Mr. Rafael Miranda Robredo Mr. Hernán Somerville Senn Mr. Eugenio Tironi Barrios Mr. Leonidas Vial Echeverría Mr. Rafael Fernández Morandé 2. In the Board Meeting celebrated today, was elected as Chairman of the Board and the Company, Mr. Pablo Yrarrázaval Valdés, as Vice-Chairman, Mr. Andrea Brentan, and as Secretary, Mr. Domingo Valdés Prieto. 3. Likewise, the mentioned Board Meeting agreed the designation of the Directors’ Committee established by Law 18,046 on Public Companies, which is composed by the Directors, Mr. Hernán Somerville Senn, Mr. Leonidas Vial Echeverría and Mr. Rafael Fernández Morandé. In accordance with the Circular N° 1,956 of that Superintendence, we inform that the three Directors above mentioned are independent. 4. The Board of Directors of Enersis S.A. appointed Mr. Leonidas Vial Echeverría as Financial Expert of the mentioned Directors’ Committee. 2. Chilectra 2.1. Answer to circular n°574 • On March 3, 2010, the following was communicated: We inform you about the three aspects therein, in the same order they were raised. It should be noted that the information we provide is evolving in time due to the dynamics of events. 1.- From Monday, March 1 our offices provide their services (collection, customer service, etc.) in the regular schedule, with full staff and all systems in operation. The call center has operated continuously since early in the morning on Saturday February 27, providing telephone service with full staff as of Monday March 1. The meter reading system, billing process and bill distribution system are in place and operational. The power supply that Chilectra receives from the central interconnected system was completely interrupted as a result of the earthquake. The electricity service to customers was reestablished to a great extent after the first few hours and the rest gradually, reaching 91% of them by last March 2. 2.- There are installations and equipment (transformers, connections, substations, lines and others) that suffered some degree of damage, total or partial, as Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 147 2010 Annual Report Consolidated relevant facts a result of the earthquake that has affected the supply to our customers, according to the mentioned above. 3.- Chilectra S.A. has insurance with the necessary coverage for these types of outstanding claims, in terms of both physical damage, and business interruptions. On this issue, we can inform that we have begun gathering information on the damage, in order to provide it when it is required. 2.2. Dividends a) b) c) In the ordinary shareholders meeting held on April 22, 2010, it was agreed to distribute as of May 20, 2010, $14.00 per share as definitive dividend attributable to 2009 profits. In meeting held July 27, 2010, the Board of directors agreed to distribute $17 per share, as of August 30, 2010, as provisional dividend attributable to 2010 profits, In meeting held October 26, 2010, the Board of Directors agreed to distribute $12 per share, as of November 30, 2010, as provisional dividend attributable to 2010 profits, 2.3. Renewal of the board and appointment of Vice Chairman In the Ordinary Shareholders Meeting held on April 22, 2010, the following Directors of the Company were appointed: 1.- Macarena Lama Carmona 2.- Massimo Tambosco 3.- Hernán Felipe Errázuriz Correa 4.- Álvaro Pérez de Lema de la Mata 5.- Marcelo Llévenes Rebolledo In the Ordinary Shareholders Meeting N°04/2010 held on April 23, 2010, Mr. Massimo Tambosco was appointed Vice Chairman of the Board. In the Ordinary Shareholders Meeting held on September 30, 2010, Mr. Massimo Tambosco submitted his resignation as Director and Vice Chairman, which became effective after the conclusion of this session. 2.4 Others In the Ordinary Shareholders Meeting N°04/2010 held on April 23, 2010, it was agreed to set the general habitualness policy according to dispositions in article 147 letter b) of Law N°18,046. The above policy, whose summary we will explain below, includes those operations that are ordinary in terms of the social objective, and have a relationship with the main activity of Chilectra S.A., that is, the supply of electricity to its customers. Therefore, the operations that relate to ordinary and habitual activities that correspond to Chilectra´s social objective are, among others, the following: Purchase and sales contracts of electricity capacity and energy with generation; commercial accounts receivables and payables between Chilectra S.A. and Enersis S.A.; logistics and material supply contracts; minor materials purchase contracts; engineering Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 148 Enersis 2010 Annual Report services contacts including studies and projects of high voltage lines, power substations, medium and low voltage networks, and street lighting; meter reading and bill delivery contracts; building and maintenance contracts of household connections; IT service contracts, data center, software and hardware, and meter rental contracts. Finally, the full text of the agreement will be made available to shareholders in the main office and the website of the Company. 3. Endesa Chile • On February 26, 2010, in accordance with clauses 9 and 10.2 of the Securities Market Law 18,045 and General Rule No.30, and duly authorized by the board of the Company for this purpose, I inform the Superintendence of the following material information: The board of the Company, at its ordinary meeting, agreed today to amend the Dividend Policy for 2009 informed at the General Shareholders’ Meeting held on April 15, 2009. The amendment consists in reducing from 60% to 35.11% the percentage of the distributable net income as dividends attributable to the annual period ended on December 31st, 2009. Accordingly, the board will propose to the General Shareholders’ Meeting of Endesa Chile, to be held in April, 2010, to distribute a total dividend of Ch$26.84285 per share, which would represent a total distribution of Ch$220,158,467,928. From this amount, the interim dividend of Ch$9.31235 per share, paid in December 2009, would be deducted. Consequently, if this amendment is approved by the General Shareholders’ Meeting, the final dividend to be distributed to the shareholders will amount to Ch$17.53050 per share, which will be paid at a date yet to be determined by the Company. • On March 11, 2010, in accordance with article 63 of Law N° 18,046, I inform you that the Board of Directors of Empresa Nacional de Electricidad S.A. agreed to call for a General and Extraordinary Shareholders’ Meeting for April 22, 2010 at 10 a.m. at the Espacio Riesco convention center, Avda. El Salto 5,000, Huechuraba, Santiago. The General Shareholders’ Meeting will have the purpose to acknowledge and resolve the following matters: 1. Approval of the Annual Report, Financial Statements and Report of the External Auditors and Inspectors of Accounts for the year ended December 31, 2009; 2. Information regarding the policy agreed by the Board of Directors for the calculation of the distributable profit corresponding to the annual financial statements; and the option determined by the Board for the treatment of the first- time adjustments, according to Rule N° 1945 of the Superintendence of Securities and Insurance; 3. Approval of the distribution of Profits and Dividends; 4. Information of the Company’s dividends policy and of the procedures for the dividends distribution; 5. Approval of the Investment and Financing Policy proposed by the Board of Directors; 6. Election of the Board of Directors; 7. Setting the compensation of the Board of Directors; 8. Setting the compensation of the Directors’ Committee and the approval of their budget for year 2010; 9. Information contained in the Directors’ Committee and Audit Committee annual Reports; Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 149 2010 Annual Report Consolidated relevant facts 10. Appointment of an External Auditor for 2010 period, subject to Chapter XXVIII of the Chilean Securities Market Law; 11. Election of two Accounts Inspectors and their alternates, and the fixing of their compensation; 12. Information regarding agreements adopted by the Board of Directors to approve related-party transactions for year 2010, according to article 147 of the Chilean Companies Act; 13. Other matters of social interest and competence of the Meeting. The purpose of the Extraordinary Shareholders’ Meeting shall be to acknowledge and resolve on the following matters: 1. Modification of the company’s bylaws by adapting the following articles of the bylaws to the new provisions of the Chilean Companies Act and the Chilean Securities Market Law; and to the provisions of the Chilean Companies Act Regulations: article 6, first paragraph, relating to notes in the shareholders register to adapt it to article 13 of those Regulations; article 14, final paragraph, relating to the calling of extraordinary board meetings, to adapt it to article 40 of the said Regulation; article 16, relating to transactions with related parties entered into by the company, to adapt it to article 147 of the Chilean Companies Act; article 16 bis to eliminate the reference to article 44 of the Law 18,046; article 17, second paragraph, relating to the moment when board resolutions may come into effect, to adapt it to article 48 of the Chilean Companies Act; article 21, second paragraph, relating to the persons to whom the board may delegate part of its powers, to adapt it to article 40 of the Chilean Companies Act; and final paragraph, relating to the public register of chairmen, directors, managers or liquidators that the company should keep, to adapt it to article 135 of the Chilean Companies Act; modification of Chapter IV of the bylaws “Directors’ Committee and Audit Committee”, articles 22, 23, 24, 25, 26, 27, 28 and 29, in order to merge both committees, reflecting the changes and requirements of independence introduced by Law 20,382 on improving Corporate Governance to article 50 bis of the Chilean Companies Act and additionally requiring members of the Committee to comply with the requirements of independence required by the Sarbanes Oxley Act of the United States of America, as well as the Securities and Exchange Commission and New York Stock Exchange; article 33, first paragraph, relating to the obligation to report to the Superintendence of Securities and Insurance the appointment, vacancy or replacement of chairman, directors, managers, senior executives, administrators and liquidators, to adapt it to article 68 of the Chilean Securities Market Law; article 36, d), relating to matters for extraordinary shareholders meetings, to adapt it to No.4 of article 57 of the Chilean Companies Act; article 38, second paragraph, relating to the calling of shareholders meetings that should be sent by mail to every shareholder; and final paragraph, relating to the validity of shareholders’ meetings when the formalities for their calling are omitted, to adapt it to article 59 of the Chilean Companies Act; article 43, relating to the appointment of external auditors, to adapt it to Chapter XXVIII of the Chilean Securities Market Law; article 44, fifth paragraph, relating to the publication of the balance sheet, to adapt it to article 76 of the Chilean Companies Act; and final paragraph, relating to copies of the corporate bylaws and lists of shareholders that the company should maintain at its corporate office, to adapt it to article 7 of the Chilean Companies Act; article 44 bis to eliminate the obligation to send to the shareholders the accounts inspectors’ report and the proposition of the investment and financing policy and article 49, relating to arbitration, to adapt it to article 125 of the Chilean Companies Act. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 150 Enersis 2010 Annual Report 2. Approval of the restated text of the company’s bylaws. 3. Authorization for the constitution of one or more pledges and the granting of one or more concessions of rights over the credits corresponding to current and/or future subordinated debts of GNL Quintero S.A. with Empresa Nacional de Electricidad S.A., in favor of the lenders of GNL Quintero S.A., in order to guarantee compliance with full, integral and timely performance of each and every one of the obligations contracted in favor of such lenders under the Loan Agreement dated July 25, 2008, signed with a syndicate of foreign banks and with its foreign shareholder, British Gas, in order to finance the construction of the re- gasification terminal of GNL Quintero S. A. 4. Adoption of the resolutions necessary for the legalization of the bylaw amendments approved in number 1 above mentioned and the due compliance and carrying out of the resolutions and agreements adopted by the meeting. In due time, a copy of the calling of the General and Extraordinary Shareholders’ Meeting and the rest of the corresponding documents will be sent to the Superintendence. • On April 23, 2010, according with clauses 9 and 10.2 of the Securities Market Law 18,045 and General Rule No.30, and duly authorized by the board of the Company for this purpose, I inform the Superintendence of the following material information: The Shareholder’s Meeting held on April 22, 2010, agreed to distribute a final dividend amounting to Ch$17.53050 per share payable on May 5, 2010. Shareholders registered in the Shareholders Registry as of April 28, 2010 are entitled to this dividend. Considering the interim dividend of Ch$9.31235 per share, paid in December 2009, the total dividend attributable to the annual period ended on December 31st, 2009 was Ch$26.84285 per share. • On April 23, 2010, In accordance with articles 9 and 10 of Law 18,045 and the administrative regulations of the Superintendence of Securities and Insurance, I wish to inform you the following Material Information: The Shareholders’ Meeting of Empresa Nacional de Electricidad S.A., held yesterday, appointed a new Board of Directors of the Company for a period of three years from the date of the meeting. The members of the Board as of April 22, 2010 are: Jaime Bauzá Bauzá Paolo Bondi Francesco Buresti José María Calvo-Sotelo Ibáñez-Martín Vittorio Corbo Lioi Jaime Estévez Valencia Luis de Guindos Jurado Felipe Lamarca Claro Jorge Rosenblut The Board of the company at its ordinary meeting held on April 23, 2010, agreed to appoint Jorge Rosenblut as Chairman of the Board and the Company and Paolo Bondi as the Vice-Chairman of the Board. During the same meeting, the Board agreed to appoint Jaime Bauzá Bauzá, Jaime Estévez Valencia and Felipe Lamarca Claro as members of the Directors’ Committee. • On April 23, 2010 in accordance with articles 9 and 10 of Law 18,045 and the administrative regulations of the Superintendence of Securities and Insurance reported the following material information: Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 151 2010 Annual Report Consolidated relevant facts The board of the Company at its meeting held on April 23, 2010, has adopted the following policy with respect to habitual transactions related to the ordinary course of business, effective today, and allows the transactions with related parties without complying with the requirements and procedures set out in Nos. 1 to 7 of article 147 of Law 18,046: Policy on habitual transactions Considered as habitual transactions are those financial transactions between companies belonging to the same Economic Group and which are classified as trading current accounts and/or structured financial loans, carried out for the cash management optimization of the companies. Considered as habitual are those transactions between related parties that are related to electricity supply contracts subject to regulated prices or that derive from electricity supply tenders. Considered as habitual are those transactions of a financial nature or financial intermediation made by the Company in a normal and permanent way with banking companies and their subsidiaries, such as fixed-income financial investments, currency trading, financial derivatives, repurchase agreements, time deposits, overdraft lines, loans against promissory notes, letters of credit, performance bonds, stand-by letters of credit, etc. and which are booked as transactions between related parties, when they may be subject to confrontation of market prices in an auditable way. • On October 27, duly authorized for the purpose by the Board of Directors of the Company, we inform you of the following material information, in accordance with articles 9 and 10.2 of Law 18,045 and General Rule No.30 of the Superintendence: The Board of the Company, at its ordinary meeting held today, agreed to amend in advance the dividend policy for the year 2010, which was explained at the last ordinary shareholders meeting held on April 22, 2010. The amendment changes the date of payment of the interim dividend agreed to be distributed in accordance with the current dividend policy, from December 2010 to January 2011. At the same meeting, the Board agreed to distribute, in accordance with the dividend policy, an interim dividend of Ch$6.42895 per share, as a charge to the net earnings for the year 2010 and which corresponds to 15% of the net earnings as of September 30, 2010. This interim dividend will be paid to shareholders with effect from January 26, 2011. 4. Pehuenche • On march 1, 2010, the Superintendence of Securities and Insurance was informed that the board of the Company at its meeting held on February 23, 2010 agreed in accordance with the current dividend policy approved, to propose to the company´s ordinary shareholders meeting, to take place in the first four month period of this year, the payment of a definitive dividend of $ 86.181507 per share. With this proposition, 100% of the distributable income of the year ended December 31, 2009, thus giving full effect to the dividend policy informed by the board at the annual meeting of shareholders held on April 14, 2009. • On march 30, 2010 in accordance with articles 9 and 10 of Law 18,045 of the securities market and under General Rule No.30, of the Superintendence Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 152 Enersis 2010 Annual Report of Securities and Insurance reported, as an essential fact, that the board of Pehuenche S.A., at its meeting held today, agree to set the following general policies with respect to habitual transactions, which allows transactions with related parties without complying with the requirements and procedures set out in Nos. 1 to 7 of article 147 of Law 18,046: 1. Considered as habitual transactions are those financial transactions between companies belonging to the same Economic Group and which are classified as trading current accounts and/or structured financial loans, carried out for the cash management optimization of the companies. 2. Also, considered as habitual are those transactions between related parties that are related to operation and maintenance of the generation installation of the Company, and also the administrative and general services such as accounting, IT, financial reporting, fixed assets, cash management, banking operations, tax advice, insurance, provisioning and other similar. • On April 22, 2010 the Company reported that the purpose of the ordinary shareholders meeting held on April 21, 2010, was to examine and rule on the following subjects: 1. Approve the Annual Report, Balance sheet, Financial Statements and External Auditors Report corresponding to the year ended December 31, 2009. 2. Distribution of income y dividends. 3. Present the dividend policy of the company and information on the procedures to be used in their distribution. 4. Director´s Committee Report 5. Appointment of external auditors 6. Other matters of social concern and responsibility of the board and information on the transactions referred to in Article 44 of Law No. 18,046. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 153 2010 Annual Report Consolidated relevant facts At that time the shareholder´s meeting approved the proposal of the board of the Company to pay a definitive dividend of 2009, representing a total dividend payable of $ 86.181507 per share. Such dividend was paid as of April 29, 2010 to the shareholders of the Company, entered in the register of shareholders on the fifth business day prior to the date fixed for payment. The publication of the notice was made on April 22 in the journal El Mercurio de Santiago. • On June 25, 2010, the Company informed that the Board of Directors, in its meeting held June 24, 2010, approved the distribution of the first interim dividend for the year 2010, amounting to $ 40.02 per share. Such interim dividend will be paid as of July 28, 2010, to shareholders on the register of shareholders within five working days prior to the date specified above. The publication of the notice was made on July 19 in the journal El Mercurio de Santiago. • On September 30, 2010, the Company informed that the Board of Directors, in its meeting held September 30 2010, approved the distribution of a second interim dividend for the year 2010, amounting to $ 63.79 per share. Such interim dividend will be paid as of October 27, 2010, to shareholders on the register of shareholders within five working days prior to the date specified above. The publication of the notice was made on October 18 in the journal El Mercurio de Santiago. • On December 15, 2010, the Company informed that the Board of Directors, in its meeting held December 15 2010, approved the distribution of a third interim dividend for the year 2010, amounting to $ 79.78 per share. Such interim dividend will be paid as of January 19, 2011, to shareholders on the register of shareholders within five working days prior to the date specified above. The publication of the notice was made on January 10, 2011 in the journal El Mercurio de Santiago. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Identification of subsidiaries and related companies Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 156 Enersis 2010 Annual Report AGRÍCOLA DE CAMEROS Name Sociedad Agrícola de Cameros Limitada Kind of company Limited partnership Tax No. 77,047,280-6 Address Camino Polpaico a Til-Til, S/N Til-Til Telephone (56 2) 378 4700 Subscribed and paid capital (ThCh$) 5,738,046 Corporate Purpose The exploitation of agricultural land. Business Agriculture and real estate. Principal executive Hugo Ayala Espinoza Chief Executive Officer Enersis stake (direct and indirect) 57.50% - Unchanged. AGUAS SANTIAGO PONIENTE Name Aguas Santiago Poniente S.A. Kind of company Private company, subject to the regulations for publicly-held companies Tax No. 96,773,290-7 Address Américo Vespucio 100, Pudahuel, Santiago, Chile Telephone (56 2) 601 0601 Subscribed and paid capital (ThCh$) 6,601,121 Corporate Purpose Exclusively to establish, construct and exploit public utilities for water production and distribution; sewage collection, treatment and disposal, and other functions expressly authorized by Law 382 of 1988 and its amendments. Business Water and related services. Board of directors Víctor M. Jarpa Riveros Andrés Salas Estrades Luis F. Edwards Mery José M. Guzmán Nieto (There is currently a vacancy) Principal executive Claudio Henriquez Soto Chief Executive Officer Enersis stake (direct and indirect) 55.00% - Unchanged. AMPLA ENERGÍA Name Ampla Energia e Serviços S.A. Kind of company Publicly-held company Address Praça Leoni Ramos, N° 01 – São Domingos, Niteroi, Río de Janeiro, Brazil Telephone (55 21) 2613 7000 Subscribed and paid capital (ThCh$) 279,961,754 Corporate Purpose Study, plan, project, construct and explore electricity production, transmission, transformation, distribution and sale systems, and provide related services that have been or may be conceded; carry out research in the energy sector and participate as a shareholder in othercompanies in the energy sector. Business Distribution of electricity. Board of directors Mario F. de Melo Santos Antonio B. Pires e Albuquerque Nelson Ribas Visconti Eduardo dos Santos Machado José Tavora Batista José Alves de Mello Franco Cristián Fierro Montes Ramón Francisco Castañeda Ponce Luiz Felipe Palmeira Lampreia Principal executives Marcelo Llévenes Rebolledo (Chairman) José Alves de Mello Franco Luciano Alberto Galasso Samaria Carlos Ewandro Naegele Moreira Claudio Rivera Moya Luiz Carlos Laurens Ortins de Bettencourt Déborah Meirelles Rosa Brasil Albino Motta da Cruz André Moragas da Costa Aurelio Ricardo Bustilho Oliveira Enersis stake (direct and indirect) 70.22% - Unchanged Proportion of Enersis’s assets 1.81% AMPLA INVESTIMENTOS Name Ampla Investimentos e Serviços S.A. Type of company Publicly-held company Address Praça Leoni Ramos, N° 01 – parte São Domingos, Niterói, Río de Janeiro, Brazil Telephone (55 21) 2613 7071 Corporate Purpose Study, plan, project, construct and explore electricity production, transmission, transformation, distribution and sale systems, and provide related services that have been or may be conceded; provide services of any kind to concessionaires, permits or authorizations of electricity services and their customers and participate as shareholder in other energy sector companies. Business Investments. Board of directors Mario Fernando de Melo Santos Antonio Basilio Pires e Albuquerque Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) Cristián Eduardo Ferro Montes Nelson Ribas Visconti Luiz Felipe Palmeira Lampreia José Alves de Mello Franco José Távora Batista Marcelo Llévenes Rebolledo Principal executives Marcelo Llévenes Rebolledo Chairman Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 157 2010 Annual Report Identification of subsidiaries and related companies Luiz Carlos Bettencourt José Alves de Mello Franco Subscribed and paid capital (ThCh$) 33,662,736 Enersis stake (direct and indirect) 70.22% - Unchanged Proportion of Enersis’s assets 0.17% ARA – INGENDESA Name Consorcio Ara - Ingendesa Ltda. Type of company Limited partnership Tax No. 77,625,850-4 Deputy representatives Elías Arce Cyr Cristián Araneda Valdivieso Joaquín Botella Malagón Angel Ares Montes (There are currently two vacancy) Enersis stake (direct and indirect) 19.99% - Unchanged. ATACAMA FINANCE Name Atacama Finance Co. Type of company Exempt company Address Caledonian House P.O. Box 265 G, George Town, Grand Cayman, Cayman Islands Address Santa Rosa 76, piso 10, Santiago, Chile Telephone (562) 630 9000 Telephone (562) 630 9000 Subscribe and paid capital (ThCh$) 1.000 Corporate Purpose Engineering services supply, including the projection, planning and implementation of engineering studies and projects, advice and consultancy, assistance and technical supply and management information, inspection and development of projects and works. Also, for its own or third party’s account, all kinds of works, assemble and start up all kinds of establishments, industrial or not, selling the goods or services produced. Business Engineering services. Representatives Alejandro Santolaya de Pablo (Vacancy) Deputy representatives Elías Arce Cyr Cristián Araneda Valdivieso (There are currently two vacancy) Enersis stake (direct and indirect) 29.99%- Unchanged. ARA INGENDESA SENER Name Consorcio Ara - Ingendesa - Sener Ltda. Type of company Limited partnership Tax No. 76.738.990-6 Address Santa Rosa 76, piso 10, Santiago, Chile Telephone (562) 630 9000 Subscribed and paid capital (ThCh$) 1,000 Corporate Purpose The special purpose of the company is the implementation and compliance of contracts that the company is awarded and signs with the passenger transportation company Empresa de Transporte de Pasajeros Metro SA. Business Engineering services. Representatives Alejandro Santolaya de Pablo Ernesto Ferrandiz Doménech (There are currently two vacancy) Subscribed and paid capital (ThCh$) 2,948,643 Corporate Purpose Money borrowing in the financial market through loans or bonds or other instruments issuance, and cash loans to other companies, particularly those related to the Atacama project. Business Financial services. Board of directors Horacio Reyser Daniel Bortnik Ricardo Rodríguez Eduardo Escaffi Johnson Enersis stake (direct and indirect) 29.99% - unchanged AYSÉN TRANSMISIÓN Name Aysén Transmisión S.A. Type of company Privately owned company incorporated in the city of Santiago, Chile, registered in the Securities Register of the Superintendence of Securities and Insurance. On February 2, 2009 the extraordinary shareholders meeting of the company replaced the former name of the company “HidroAysén Transmisión S.A.” by the current “Aysén Transmisión S.A .” Tax No. 76.041.891-9 Address Miraflores 383, Of. 1302, Santiago, Chile Telephone (562) 713 5000 Paid capital (ThCh$) 22,368 Corporate Purpose Develop and, alternatively or additionally, manage the electricity transmission systems required by the hydroelectric project that HidroAysén is planning to build In the Region of Aysén, at General Carlos Ibáñez del Campo. Its business therefore includes: a) the design, development, construction, operation, ownership, maintenance and exploitation of electricity transmission systems, b) the transportation of electricity, and c) the provision of related services. In meeting its purpose, the company may act for its own or third party’s account, and may obtain, acquire and enjoy the required concessions In carrying out its purpose, the corporation may act on its own or on behalf of third parties. In order to fulfill its objective, the Company may obtain, acquire and make use of concessions and permits that are required. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 158 Enersis 2010 Annual Report Business Electricity generation (project). Board of directors Antonio Albarrán Ruiz-Clavijo Joaquín Galindo Vélez Juan Benabarre Benaiges Bernardo Larraín Matte Luis Felipe Gazitúa Achondo Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) CACHOEIRA DOURADA Name Centrais Elétricas Cachoeira Dourada S.A.- CDSA Type of company Corporation Address Rodovia GO 206, Km 0, Cachoeira Dourada Goiania, Goiás, Brazil Deputy directors Carlos Martín Vergara Sebastián Fernández Cox Claudio Iglesis Guillard Eduardo Morel Montes Juan Eduardo Vásquez Cristián Morales Jaureguiberry Principal executives José Andrés Taboada Chief Executive Officer Enersis stake (direct and indirect) 30.59% - Unchanged AYSÉN ENERGÍA Name Aysén Energía S.A. Type of company Private company Tax No. 76,091,595-5 Address Miraflores 383, Of. 1302, Santiago, Chile Telephone (562) 713 5000 Paid capital (ThCh$) 4,900 Corporate Purpose The main objects of the involved companies are the following: (I)Fulfill the orders of the Court Defense of the Free Competition in the first Amendment of the 30th Resolution in 26 of May, 2009. (II)To fulfill the commitment assumed by Centrales Hidroeléctricas Aysén S.A. with the community of the XI region of Aysén in context of the development of Hydro Aysén Project, in order to provide the XI region with cheaper electric energy compared to the actual one. In order to achieve this commitment the involved companies could develop, among others, the following activities: a) production of energy using any medium of generation, its supply and trading, b) Electric energy transport, c) Services related to its social issue, d) Request, acquire and joy the concessions, rights and permits that are required. Business Electricity generation (project). Board of directors Antonio Albarrán Ruiz-Clavijo Joaquín Galindo Vélez Juan Benabarre Benaiges Bernardo Larraín Matte Luis Felipe Gazitúa Achondo Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) Deputy directors Carlos Martín Vergara Sebastián Fernández Cox Claudio Iglesis Guillard Eduardo Morel Montes Juan Eduardo Vásquez Cristián Morales Jaureguiberry Principal executives Daniel Fernandez Koprich Chief Executive Officer Enersis stake (direct and indirect) 30.59% (new). Telephone (55 62) 3434 9000 Subscribed and paid capital (ThCh$) 81,071,089 Corporate Purpose Studies, projections, construction, installation, operation and exploration of electricity generating plants, plus the related commercial activity. Promote or participate in other companies constituted to produce electricity, in or outside the state of Goiás, by the subscription of any number of shares or quotas. Business Electricity generation. Board of directors Guilherme Gomes Lencastre Luis Larumbe Aragón Marcelo Llévenes Rebolledo Principal executives Guilherme Gomes Lencastre Chief Executive Officer Manuel Herrera Vargas José Ignacio Pires Medeiros Carlos Ewandro Naegele Moreira Eugenio Cabanes Durán Luiz Carlos Laurens Ortins de Bettencourt José Alves de Mello Franco Ana Claudia Gonçalves Rebello Aurélio Ricardo Bustilho de Oliveira Nelson Ribas Visconti Enersis stake (direct and indirect) 54.09% - Unchanged CAM Name Compañía Americana de Multiservicios Ltda. Type of company Limited partnership Tax No. 96,543,670-7 Address Tarapacá 934, Santiago, Chile Telephone (56 2) 389 7300 Subscribed and paid capital (ThCh$) 2,572,038 Corporate Purpose Provide for its own or third party’s account and/or associated with other parties, in Chile or abroad, services in general, real estate and construction of real estate, import, export and products distribution of any kind. Business General services. Representatives Klaus Winkler Speringer Eduardo López Miller (Procurement Officer, Enersis) Deputy Representatives Gonzalo Mardones Pantoja Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 159 2010 Annual Report Identification of subsidiaries and related companies Principal executives Klaus Winkler Speringer Corporate Chief Executive Officer Gonzalo Mardones Pantoja Chief Executive Officer, Chile Fernando Foix Iñiguez Alfredo Herrera Carrasco Tomás Casanegra Rivera Cristian Gamarra Camus Carlos Abarca Vargas Commercial relations Civil works management services and supply of financial administration, management, corporate and general services. Trading current account. Enersis stake (direct and indirect) 100% - Unchanged. Proportion of Enersis’s assets 0.00% CAM ARGENTINA Name Compañía Americana deMultiservicios (CAM) S.R.L. Type of company Limited partnership Address Avda. Vélez Sarsfield 1160, Capital Federal, Argentina Telephone (54 11) 4302 2951/58 Subscribed and paid capital (ThCh$) 2,481,302 Corporate Purpose Professional and technical services supply to national and international, public and private companies and organisms, advice, technical assistance, assembly, process control, start- up and maintenance of systems, machinery and apparatus, maintenance of transport and distribution networks, all related to the production, transport and distribution of electricity. Business General services. Principal executive Pablo Calderón Pacheco Chief Executive Officer Enersis stake (direct and indirect) 100% - Unchanged. CAM BRASIL Name Cam Brasil Multiserviços Ltda. Type of company Limited partnership Address Avda. José Mendonça de Campos, 680 São Gonçalo – RJ, Brazil Telephone (55 21) 2702 8000 Subscribed and paid capital (ThCh$) 3,927,319 CAM COLOMBIA Name Compañía Americana de Multiservicios Ltda. Colombia Type of company Limited partnership Address Avda. Carrera 68 N° 5-21, Bogotá, Colombia Telephone (57 1) 417 3000 Subscribed and paid capital (ThCh$) 398,546 Corporate Purpose Provide for its own or third party’s account and/or associated with other parties, in Colombia or abroad,the following activities: a) Services: professional and technical services supply to national and international, public and private companies and organisms; b) Construction and real estate, through the construction and renovation of all kind of properties and projects implementation; c) Import and export of all kind of materials; d) Trading, through the purchase, sale, barter, fractioning, consignment and distribution of all kind of materials; e) Industrial, through the production, assembly or manufacture in any of their stages of all kind of materials or machinery; f) Design, creation, exploitation and sale of services and information and communication technology (hardware and/or software); g) Investments through participation in other companies. Business General services. Principal executives Carlos Alberto Zarruk Gómez Chief Executive Officer Enersis stake (direct and indirect) 100% - Unchanged. CAM PERÚ Name Compañía Americana de Multiservicios del Perú S.R.L. Type of company Limited partnership Address Jr. Teniente César López Rojas 201, piso 3, Maranga, San Miguel, Lima, Peru Telephone (51 1) 561 1604 Subscribed and paid capital (ThCh$) 829,256 Corporate Purpose Carry out for its own or third party’s account professional and technical services in the management and purchase of materials or equipment for services including those related to electricity, water, gas and communications; the administration of warehouses and materials, control and performing of works, metering and calibration, advice, technical assistance, assembly, process control, start up and maintenance of systems, machinery and apparatus, maintenance of transport and distribution networks; all related to the production, transport and distribution of water, gas, telecommunications and energy in any of its forms. Construction and real estate: construction and renovation of all kind of properties and the carrying out of all kind of property management and project execution, direction and carrying out of engineering and/or architectural works in general. Corporate Purpose Electricity engineering services supply, construction of networks and large works, retail services in utilities. Business General services. Business General services. Principal executive Pablo Edmundo Calderón Pacheco Chief ExecutiveOfficer Braulio Luiz Correa Machado Ana Paula de Castro Regal Enersis stake (direct and indirect) 100% - Unchanged. Principal executive Ramón Gonzalo Cubillos Garay Enersis stake (direct and indirect) 100% - Unchanged. 160 Enersis 2010 Annual Report CANELA Name Central Eólica Canela S.A. Type of company Private company Tax No. 76,003,204-3 CEMSA Name Endesa Cemsa S.A. Type of company Corporation Address Pasaje Ing. E. Butty 220, piso 16, Buenos Aires, Argentina. Address Santa Rosa 76, piso 12, Santiago, Chile Telephone (5411) 4875 0600 Telephone (562) 630 9000 Subscribed and paid capital (ThCh$) 12,284,743 Corporate Purpose Promote and develop renewable energy projects, mainly wind energy, identify and develop clean development mechanism (CDM) projects and act as depository and trader in emission reduction certificates originated from these projects. The generation, transport, distribution, supply and sale of electricity, for which it may acquire and exploit the respective concessions and grants. Business Wind energy generation. Board of directors Juan Benabarre Benaiges Claudio Iglesis Guillard Sebastián Fernández Cox Cristóbal García-Huidobro Ramírez (There is currently a vacancy) Deputy directors Alan Fisher Hill Julio Montero Montegú Claudio Betti Pruzo Juan Cristóbal Pavéz Recart (There is currently a vacancy) Principal executive Wilfredo Jara Tirapegui Chief Executive Officer Enersis stake (direct and indirect) 44.99% - Unchanged. CELTA Name Compañía Eléctrica Tarapacá S.A. Type of company Private company Tax No. 96,770,940-9 Address Santa Rosa 76, Santiago, Chile Telephone (562) 630 9000 Subscribed and paid capital (ThCh$) 103,099,643 Subscribed and paid capital (ThCh$) 2,210,996 Corporate Purpose For its own and/or for the account and on behalf of third parties and/ or associated with other parties, the wholesale purchase and sale of electricity power and energy produced and/or consumed by third parties, including but not limited to the import and export of electricity power and energy and the marketing of royalties, and the supply and/or performing of services related to the above activity, both in the country as well as abroad of data processing services and/or of control of the operation and/or of telecommunications, all of it pursuant to the regulation and other current norms. Likewise, the Company, acting on behalf of itself or on account and order of third parties and/or in partnership with third parties shall be entitled to execute buy/sell operations or to purchase and sell natural gas, and/or its transportation, including the importation and/or exportation of natural gas and/or the marketing of regalia/privileges, as well as to provide and/or execute services related to the above- mentioned activity; all of it pursuant to the regulations and other norms currently in effect. Likewise, the Company, acting on behalf of itself or on account and order of third parties and/or in partnership with third parties shall be entitled to execute buy/sell operations or to purchase and sell crude petroleum, and/or lubricants and/or to transport such elements, including the importation and/or exportation of liquid fuels and the marketing of regalia/privileges, as well as to provide and/or execute services related to the above- mentioned activity; all of it pursuant to the regulations and other norms currently in effect. The Company shall be entitled to execute to that effe3ct all such complementary and subsidiary activities that might be linked to the activity that comprise its business purpose, to that effect remaining legally empowered to acquire rights and undertake obligations and exercise all kinds of acts not forbidden by law of y these bylaws. Business Energy trading. Board of directors José María Hidalgo Martín-Mateos José Venegas Maluenda Fernando Antognazza Deputy directors Arturo Pappalardo Roberto José Fagan Pedro Cruz Viné Principal executive Juan Carlos Blanco Chief Executive Officer Enersis stake (direct and indirect) 26.99% - Unchanged. Corporate Purpose Mainly the production, transport, distribution and supply of electricity, in Chile and internationally, for which it may obtain, acquire and exploit the respective concessions and grants. CENTRALES HIDROELÉCTRICAS DE AYSÉN Name Centrales Hidroeléctricas de Aysén S.A. Business Energy generation. Board of directors Alejandro García Chacón Alan Fischer Hill Lionel Roa Burgos Principal executive Eduardo Soto Trincado Chief Executive Officer Enersis stake (direct and indirect) 59.98%- Unchanged. Type of company Private company Tax No. 76,652,400-1 Address Miraflores 383, Of. 1302, Santiago, Chile Telephone (562) 713 5000 Subscribed and paid capital (ThCh$) 120,975,665 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 161 2010 Annual Report Identification of subsidiaries and related companies Corporate Purpose The development, financing, ownership and exploitation of a hydroelectric project, the “Aysén Project”, in the 11th Region of Aysén, which contemplates an estimated capacity of 2,355 MW distributed between five hydroelectric plants. The following activities form part of its purposes: a) the production and transport of electricity; b) the supply and sale of electricity to its shareholders; c) the administration, operation and maintenance of hydraulic works, electrical systems and hydroelectric generating plants; d) services supply related to its purposes. The above activities may be carried out for its own or third party’s account. The company may obtain, acquire and exploit the required concessions and permits for this purpose. Business Energy generation (project). Board of directors Antonio Albarrán Ruiz-Clavijo Joaquín Galindo Vásquez Juan Benabarre Benaiges Bernardo Larraín Matte Luis Felipe Gazitúa Achondo Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) Deputy directors Carlos Martín Vergara Sebastián Fernández Cox Claudio Iglesis Guillard Eduardo Morel Montes Juan Eduardo Vásquez Cristián Morales Jaureguiberry Principal executive Daniel Fernandez Koprich Chief Executive Officer Enersis stake (direct and indirect) 30.59% - Unchanged CHILECTRA Name Chilectra S.A. Type of company Publicly-held company Tax No. 96,800,570-7 Address Santa Rosa 76, piso 8, Santiago, Chile Telephone (56 2) 675 2000 Subscribed and paid capital (ThCh$) 368,494,984 Corporate Purpose Exploit in Chile or abroad the distribution and sale of hydraulic, thermal, heat or any kind of electricity, and the distribution, transport and sale of fuels of any kind, supplying this energy or fuel to most consumers directly or through other companies. Business Energy distribution. Board of directors Macarena Lama Carmona Álvaro Pérez de Lema de la Matta Hernán F. Errázuriz Correa Marcelo Llévenes Rebolledo (There is currently a vacancy in the Board) Principal ejecutives Cristián Fierro Montes Chief Executive Officer Gonzalo Vial Vial Guillermo Pérez del Río Andreas Gebhardt Strobel Enrique Fernández Pérez Ramón Castañeda Ponce Christián Mosqueira Vargas Jean Paul Zalaquet Falaha Gonzalo Labbé Reyes Mauricio Daza Espinoza Commercial relations Structured loans; rentals of transmission and substation lines; risk-prevention services supply; legal and professional advice in business administration and engineering, financial management in general, corporate and others. Enersis stake (direct and indirect) 99.09% - Unchanged. Proportion Enersis’s assets 12.44% CHILECTRA INVERSUD Name Chilectra Inversud S.A. Tax No. 99,573,910-0 Type of company Private company Address Santa Rosa 76, piso 8, Santiago, Chile Telephone (56 2) 675 2000 Subscribed and paid capital (ThCh$) 390,008,060 Corporate Purpose Exploit abroad, for its own or through third parties, the distribution and sale of electricity. It may make investments in foreign companies and make all kind of investments in all kind of financial instruments like bonds, debentures, debt titles, credits, negotiable securities or other financial or commercial documents, all with to the objective of obtaining their natural and civil returns. It may constitute, amend, dissolve and liquidate foreign companies and develop all other activities that are complementary and/or related to the above business. Business Investments. Board of directors Ramón Castañeda Ponce Francisco Miqueles Ruz Principal executives Francisco Miqueles Ruz Chief Executive Officer Enersis stake (direct and indirect) 99.09% - Unchanged. CHINANGO Name Chinango S.A.C. Type of company Private company Address Avda. Víctor Andrés Belaúnde 147, edificio real 4, piso 7, Centro Empresarial Camino Real, San Isidro, Lima, Peru Paid capital (ThCh$) 45,086,557 Corporate Purpose The main purpose of the society is the power generation, marketing and transmission, being able to perform all acts and hold all contracts that the Peruvian law allows for such purposes. Business Generation, commercialization and transmission of energy. Representative Julio Cabello Young Enersis stake (direct and indirect) 29,97% - Unchanged. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 162 Enersis 2010 Annual Report CHOCÓN Name Hidroeléctrica El Chocón S.A. Type of company Corporation Address Avda. España 3301, Buenos Aires, Argentina Paid capital (ThCh$) 47,114,465 Corporate Purpose Production of electricity and its block commercialization. Business Energy generation. Board of directors Joaquín Galindo Vélez José Miguel Granged Bruñen José María Hidalgo MartínMateos Alfredo Ergas Segal (Chief Regional Finance Officer, Enersis S.A.) Carlos Martín Vergara Alex Daniel Horacio Valdez Juan Carlos Nayar Orlando Alberto Díaz Deputy directors Jorge Raúl Burlando Bonino Francisco Domingo Monteleone Juan Carlos Blanco Roberto José Fagan Fernando Carlos Boggini Héctor Osvaldo Mendiberri Alejandro Nagel José Luis Mazzone Principal executive Fernando Claudio Antognazza Chief Executive Officer Enersis stake (direct and indirect) 39.21% - Unchanged. CIEN Name Compañía de Interconexión Energética S.A. Type of company Corporation Address Praça Leoni Ramos, N° 1, piso 6, Bloco 2, São Domingos, Niterói, Río de Janeiro, Brazil Telephone (55 21) 3607 9500 Paid capital (ThCh$) 79,948,998 Corporate Purpose The company has as purpose the production, industrialization, distribution and commercialization of electric power, including the import and export activities. In view of achieving the purposes mentioned above, the company will promote the study, planning and construction of facilities for production systems, transmission, conversion and distribution of electricity by capturing the necessary investment to the development of the activities and by providing services. Beyond the purposes referred to, the company will promote the implementation of associated products, as well as inherent, ancillary or complementary activities to services and jobs that cometh to provide. To carry out the activities necessary to achieve its goals, the company may participate in other societies. Business Energy transmission. Board of directors Marcelo Andrés Llévenes Rebolledo Guilherme Gomes Lencastre José Augustín Venegas Maluenda Principal executives Guilherme Gomes Lencastre Chief Executive Officer Manuel Herrera Vargas José Ignácio Pires Medeiros Carlos Ewandro Naegale Moreira Eugenio Cabanes Durán Luiz Carlos Laurens Ortins de Bettencourt José Alves de Mello Franco Ana Claudia Gonçalves Rebello Aurelio Ricardo Bustillo de Oliveira Marcelo Smicht Enersis stake (direct and indirect) 54.30% - Unchanged. CODENSA Name Codensa S.A. E.S.P. Type of company Private company Address Carrera 13 A #93-66, Bogotá, Colombia Telephone (57 1) 601 6060 Subscribed and paid capital (ThCh$) 3,934,010 Corporate Purpose Distribution and sale of electricity and the performing of all linked, complementary and related activities to the distribution and sale of electricity, carrying out of works, designs and consultancy in electrical engineering and the sale of products to the benefit of its customers. The company shall be also entitled to execute other activities related to providing public utility services, in general, manage and operate other public utility companies, sign and execute special management contracts with other public utility companies and sell or lend assets or services to other economic agents in and out of the country in relation to public utility services. The Company shall be also entitled to become a partner or shareholder of another public utility company, directly or in partnership with other persons, or setting up a consortium with them. While pursuing the above-indicated main business purpose, the Company shall be entitled to promote and establish entities or agencies in Colombia or abroad; acquire under any concept whatsoever any kind of personal or real estate properties, lease them, sell them, encumber and pledge them as guarantee; assume any form of associative or collaborative enterprise with natural or juridical third parties to advance activities related, connected and complementary to its main business purpose; develop brand names, commercial names, patents, inventions or any other intangible good, provided that they are consistent with its main business purpose; draw, accept, endorse, collect and pay all kind of value certificates, negotiable instruments, shares, executive titles and others; participate in public and private bidding contests; give to, or receive money on loan from its shareholders, parent/matrix companies, subsidiaries, and third parties; execute insurance policy contracts, transportation, participation accounts, and contracts with banks and/or financial institutions. Business Energy distribution. Board of directors José Antonio Vargas Lleras Cristian Fierro Montes Orlando Cabrales Martínez Lucio Rubio Díaz Mónica De Greiff Lindo Juan Ricardo Ortega López Carlos Eduardo Bello Vargas Deputy directors Juan Manuel Prado Gómez Leonardo López Vergara Antonio Sedán Murra Cristián Herrera Fernández Henry Navarro Sánchez Héctor Zambrano Rodríguez Yazmit Consuelo Beltrán Rojas Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 163 2010 Annual Report Identification of subsidiaries and related companies Principal executives Cristián Herrera Fernández Chief Executive Mananger Andrés Caldas Rico Jaime A. Vargas Barrera Margarita Olano Olano Juan Manuel Prado Gómez María Celina Restrepo Leonardo López Vergara Rafael Carbonell Blanco Omar Serrano Rueda Pablo Andrés Aguayo González Soledad Pizarro Moreno Enersis stake (direct and indirect) 21.73% - Unchanged. Proportion of Enersis’s assets 2.28% COELCE COELCE Name Companhia Energética do Ceará Type of company Foreign publicly-held company Address Rua Padre Valdevino, 150 - Centro, Fortaleza, Ceará, Brazil Telephone (55 85) 3453-4082 Subscribed and paid capital (ThCh$) 121,465,440 Corporate Purpose The distribution of electricity and related services in the state of Ceará. The distribution of electricity and related services in the state of Ceará: (a) The production, transmission, distribution and marketing of electric energy, execution of correlated services that might be granted upon them or authorized under any concept or entitlement, and the development of activities associated to such services, as well as the execution of recurring acts of commerce pertaining to such activities; (b) To carry out studies, plans, projects, the construction and operation of systems of production, transformation, transportation and storage, the distribution and marketing of energy of any origin or nature whatsoever in the form of concessions, authorizations and permits that might be granted upon them, with jurisdiction over the territorial area of the State of Ceará and other areas defined by the Concession or Franchising Power; (c) To carry out studies, projects and execute research & development plans and programs, to find new sources of energy, especially renewable ones; activities that the Company shall be entitled to develop directly or in cooperation with other institutions; (d) To study, prepare and execute –in the energy sector- economic & social development plans and programs in regions of interest to the community and to the Company, directly or in collaboration with state or private entities, whereas it shall be also entitled to supply data, information and technical assistance to public or private initiatives showing effort and determination in introducing economic & social activities necessary for development; (e) To carry other activities that might become necessary to the Company’s social objective, such as an equity participation in other companies in Brazil or abroad, whose goals and objectives are consistent with the development of public electric energy services, including those linked to its production, generation, transmission and distribution. Business Energy distribution. Board of directors Mario Fernando de Melo Santos Marcelo Llévenes Rebolledo Albino Motta da Cruz Gonzalo Vial Vial José Alves de Mello Franco Aurélio Ricardo Bustilho de Oliveira Jorge Parente Frota Júnior Cristián Eduardo Fierro Montes Fernando de Moura Avelino Renato Soares Sacramento Francisco Honório Pinheiro Alvez Alternative Directors Antonio Basilio Pires e Albuquerque Luciano Alberto Galasso Samaria Nelson Ribas Visconti Teobaldo José Cavalcanti Leal José Caminha Araripe Júnior Luiz Carlos Laurens Ortins Bettencourt José Távora Batista Juarez Ferreira de Paula Vladia Viana Regis José Nunes de Almeida Neto Principal executives Abel Alves Rochinha Chief Executive Officer José Nunes de Almeida Neto Olga Jovanna Carranza Salazar José Távora Batista Marcelo Schmidt Aurélio Ricardo Bustilho de Oliveira Carlos Ewandro Naegele Moreira Luiz Carlos Laurens Ortins Bettencourt Cristine de Magalhães Marcondes José Alves de Mello Franco Nelson Rivas Visconti Enersis stake (direct and indirect) 35.25% - Unchanged. CONSTRUCCIONES Y PROYECTOS LOS MAITENES Name Construcciones y Proyectos Los Maitenes S.A. Type of company Private company Tax No. 96,764,840-K Address Américo Vespucio 100, Pudahuel, Santiago, Chile Telephone (56 2) 601 0601 Subscribed and paid capital (ThCh$) 40,139,443 Corporate Purpose a) The construction for its own or third parties’ account, on its own or other land, urbanized or not, of all kind of civil works, installations, buildings, housing, offices and others; b) the sale or disposal in any form of such building works; c) the study and development of projects for such buildings, including engineering, architecture, financing, commercialization, etc. For this, it may act for its own or third party’s account, either directly or forming part of associations, communities, companies and legal entities of any kind, in which it may also assume the management. Business Real estate. Board of directors Victor Jarpa Riveros Andrés Salas Estrades Luis Felipe Edwards Mery José Manuel Guzmán Nieto (There is currently a vacancy in the Board) Principal executive Alfonso Salgado Menchaca Enersis stake (direct and indirect) 55.00% - Unchanged. *It is stated that on December 30, 2010 this entity merged with Agrícola e Inmobiliaria Pastos Verdes Limitada, which was dissolved at the time of the merger, being the legal successor Construcciones y Proyectos Los Maitenes S.A. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 164 Enersis 2010 Annual Report COSTANERA Name Endesa Costanera S.A. Type of company Corporation Address Avda. España 3301, Buenos Aires, Argentina Telephone (5411) 4307 3040 Paid capital (ThCh$) 27,031,045 Corporate Purpose The production of electricity and its block sale. Business Energy generation. Board of directors Joaquín Galindo Vélez Máximo Bomchil José María Hidalgo Martín- Mateos Alfredo Ergas Segal (Chief Regional Finance Officer, Enersis S.A.) César F. Amuchástegui Eduardo J. Romero Simón Dasensich Carlos Martín Vergara Alternative Directors Roberto José Fagan Damián Camacho Francisco Monteleon Miguel Ortiz Fuentes Fernando Carlos Boggini Bernardo Iriberri Jorge Raúl Burlando Bonino Alfredo Mauricio Vítolo Fernando Claudio Antognazza (There are currently two vacancies in the Board) Principal executives José Miguel Granged Bruñen Chief Executive Officer Fernando Carlos Luis Boggini Rodolfo Silvio Bettinsoli Jorge Burlando Bonino Francisco Domingo Monteleone Enersis stake (direct and indirect) 41.85% - Unchanged. CTM Name Compañía de Transmisión del Mercosur S.A. Type of company Corporation Principal executive Guilherme Gomes Lencastre Chief Executive Officer Enersis stake (direct and indirect) 54.30% - Unchanged. DISTRIBUIDORA ELÉCTRICA DE CUNDINAMARCA Name Distribuidora Eléctrica de Cundinamarca S.A. E.S.P. Type of society Private company Tax No. 900,265,917-0 Address Carrera 9 N° 73-44 Piso 5 Subscribed and paid capital (ThCh$) 48,457,902 Corporate Purpose The company’s main purpose is the distribution and commercialization of energy, and the execution of all linked, complementary and related activities to distribution and commercialization of energy, public works, designs and electrical engineering consulting, and the commercialization of products for the benefit of its customers. Business Distribution and commercialization of electric energy Board of directors Jorege Armando Pinzon Barragan Cristian Herrera Fernández Mario Acevedo Trujillo Deputy directors Ernesto Moreno Restrepo Roberto Ospina Pulido Jaime Herrera Rodriguez Principal executives Henry Navarro Sánchez Chief Executive Officer Mario Trujillo Hernández Enersis stake (direct and indirect) 10.65% - Unchanged. DISTRILEC INVERSORA Name Distrilec Inversora S.A. Type of company Private company Address San José 140, Buenos Aires, Argentina Address Bartolomé Mitre 797, piso 13, Buenos Aires, Argentina Telephone (54 11) 4370 3700 Subscribed and paid capital (ThCh$) 2,236,873 Corporate Purpose Provide high-tension electricity transmission services both in relation to national and international electricity systems, in accordance with current legislation, for which it may participate in national or international tenders, become a public-utility electricity concessionholder in local or international high tension transport systems and carry out all activities necessary for meeting its purposes. Business Energy transmission. Board of directors José María Hidalgo Martín-Mateos Guilherme Lencastre Arturo Miguel Pappalardo Deputy directors José Venegas Maluenda Juan Carlos Blanco Roberto José Fagan Subscribed and paid capital (ThCh$) 93,172,557 Corporate Purpose Exclusively to invest in companies constituted or to be constituted whose main activity is the distribution of electricity or that directly or indirectly participate in companies with that principal business through all kind of financial and investment activities, except those in the laws of financial entities, the purchase and sale of public and private debt paper, bonds, shares, negotiable instruments and the granting of loans, and the placement of its funds in bank deposits of any kind. Business Investments. Board of directors Clovis correa de Queiroz Cristian Fierro Montes Gonzalo Vial Vial María Inés Justo Santiago Daireaux Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) Daniel Casal 165 2010 Annual Report Identification of subsidiaries and related companies Jorge Subijana Rigoberto Mejía Aravena Martín Mandarano Deputy Directors Mónica Diskin Roberto José Fagan Manuel María Benites Pedro Eugenio Aramburu Benjamín Guzmán Fernando Caratti Alberto Sagesse Claudio Díaz Jean Yatim Morillas (There are currently two vacancies in the Board) Principal executive José María Hidalgo Martín-Mateos Chief Executive Officer Enersis stake (direct and indirect) 50.93% - Unchanged. Proportion of Enersis’s assets 2.27% EDEGEL Name Edegel S.A.A. Type of company Publicly-held company Address Avda. Víctor Andrés Belaúnde 147, edificio real 4, piso 7, Centro Empresarial Camino Real, San Isidro, Lima, Peru Paid capital (ThCh$) 374,326,011 Corporate Purpose Mainly, and in general, electricity generation activities, also the civil, industrial, commercial and any other act or operation relating or leading to the principal purposes. Business Energy generation. Board of directors Ignacio Blanco Fernández Alberto Briand Rebaza Torres Joaquín Galindo Vélez Rafael Fauquie Bernal Reynaldo Llosa Barber Francisco García Calderón Portugal Gerardo Rafael Sepúlveda Quezada Deputy Directors Milagros Noriega Cerna Juan Benabarre Benaigues Julián Cabello Yong Teobaldo José Cavalcante Leal Arrate Gorostidi Aguirresarobe Claudio Herzka Buchdahl Alberto Triulzi Mora Principal executives Carlos Luna Cabrera Chief Executive Officer Christian Schroder Romero Milagros Noriega Cerna Julián Cabello Yong Carlos Rosas Cedillo Enersis stake (direct and indirect) 37.46% - Unchanged. EDELNOR Name Empresa de Distribución Eléctrica de Lima Norte S.A.A. Type of company Foreign publicly-held company Address Jr. Teniente Cesar López Rojas 201 Urb. Maranga, San Miguel, Lima, Peru Telephone (51 1) 561 2001 Subscribed and paid capital (ThCh$) 88,232,785 Corporate Purpose Engage in the activities of distribution, transmission and generation of electricity in accordance with the provisions of current legislation. Additionally, the company may engage in the sale of goods in any form, as well as providing consulting and financial services, among others, except those services which require specific authorization in accordance with current law. Business Energy distribution Board of directors Reynaldo Llosa Baber Ignacio Blanco Fernández Juris Agüero Carocca Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) Teobaldo José Cavalcante Leal Alfredo Santiago Carlos Ferrero Diez Canseco Cristian Eduardo Fierro Montes Fernando Fort Marie Principal executives Ignacio Blanco Fernández Chief Executive Officer Carlos Solís Pino Walter Sciutto Brattoli Rocío Pachas Soto Teobaldo Leal Cavalcante Luis Salem Hone Pamela Gutiérrez Damiani Alfonso Valle Cisneros Enersis stake (direct and indirect) 57.54% - Unchanged. Propotion of Enersis’ assets 2.80% EDESUR Name Empresa Distribuidora Sur S.A. Type of company Corporation Address San José 140 (1076), Capital Federal, Argentina Telephone (54 11) 4370 3700 Subscribed and paid capital (ThCh$) 135,477,599 Corporate Purpose Distribution and commercialization of electricity and related operations. Business Energy distribution. Board of directors Cristian Fierro Montes Clovis Correa de Queiroz Marcelo Silva Iribarne Juan Carlos Blanco Rigoberto Mejía Aravena Juan Pablo Larraín Medina (Regional Chief Communications Officer, Enersis) Gonzalo Vial Vial Ramiro Alfonsín Balza (Regional Chief Planning and Control Officer, Enersis) Ernesto P. Badaraco Deputy Directors Santiago Daireaux Manuel María Benites Roberto Fagan Daniel Casal Fernando Caratti Pablo Martín Lepiane Alan Arntsen Pedro Eugenio Aramburu María Inés Justo Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 166 Enersis 2010 Annual Report Principal executives José María Hidalgo Martín-Mateos Chief Executive Officer Juan Eduardo Verbitsky Sandro Ariel Rollan Osvaldo Rolando Juan Garade Daniel Roberto Alasia Héctor Ruiz Moreno Silvia Migone Díaz José María Gottig Daniel Horacio Martini Jorge Lukaszczuk Enersis stake (direct and indirect) 65.39% - Unchanged Proportion of Enersis’s assets 2.90% ELECTROGAS Name Electrogas S.A. Type of company Private company Tax No. 96,806,130-5 Address Alonso de Córdova 5900, Oficina 401, Comuna de las Condes Santiago, Chile Telephone (562) 299 3400 Corporate Purpose Transport services supply for natural gas and other fuels, for its own or third party’s account, for which it may construct, operate and maintain gas, oil and multi-use pipelines and complementary installations. Business Gas transportation. Subscribed and paid capital (ThCh$) 9,934,053 Board of directors Claudio Iglesis Guillard Juan Eduardo Vásquez Moya Enrique Donoso Moscoso Pedro Gatica Kerr Rafael Soltil Bidart Deputy directors Rosa Herrera Martínez Jorge Bernardo Larraín Matte Cristián Morales Jaureguiberry Juan Oliva Vásquez Ricardo Santibáñez Zamorano Principal executive Carlos Andreani Luco Chief Executive Officer Enersis stake (direct and indirect) 25.49% - Unchanged. EMGESA Name Emgesa S.A. E.S.P. Type of company Public utility Address Carrera 11 82-76, piso 4, Santa Fe de Bogotá, D.C. Colombia Paid capital (ThCh$) 142,906,410 Corporate Purpose The generation and sale of electricity and the performing of all similar, connected, complementary and related activities. Business Energy generation. Board of directors José A. Vargas Lleras Joaquin Galindo Vélez Lucio Rubio Díaz Luisa Fernanda Lafourie Mónica De Greiff Beatriz Helena Arbeláez José Iván Velásquez Deputy directors Sebastián Fernandez Fernando Gutiérrez Medina Gustavo Gómez Cerón Andrés López Valderrama Henry Navarro Sánchez María Camila Uribe Manuel Jiménez Castillo Principal executives Lucio Rubio Díaz Chief Executive Officer Andrés Caldas Rico Juan Manuel Pardo Fernando Gutiérrez Medina Gustavo Gómez Cerón María Celina Restrepo Leonardo López Rafael Carbonell Blanco Omar Serrano Soledad Pizarro Enersis stake (direct and indirect) 16.12% - Unchanged EMPRESA DE ENERGÍA DE CUNDINAMARCA Name Empresa de Energía de Cundinamarca S.A. Type of Society Private company Tax N° 860,007,638-0 Address Carrera 11 N° 93-52 Bogotá D.C., Colombia. Telephone (571) 7051800 Subscribed and paid capital (ThCh$) 9,304,652 Corporate Purpose The company’s purpose is the generation, transmission, distribution and commercialization of electricity and the implementation of all linked, complementary and related activities to distribution and commercialization of energy, public works, design and electrical engineering consulting, and products and services commercialization that benefit its customers. Business Generation, transmission, distribution and sale of electricity. Board of directors Mario Trujillo Hernández Jorge Armando Pinzón Barragan Ernesto Moreno Restrepo Andrés Gonzáles Días Paulo Jairo Orozco Días David Felipe Acosta Correa Manuel Enrique Agamez Hernández Deputy directors Fabiola Leal Castro Juan Manuel Bernal Crespo Heliodoro Mayorga Moncada Carlos Hernán Valdivieso Laverde Davis Feferbaum Gutfraind Javier Blanco Fernández Ricardo Lozano Forero Principal executives David Felipe Acosta Correa Chief Executive Officer Carlos Mario Restrepo Molina Javier Blanco Fernández Fernando Alonso Rivera Martínez Alberto Duque Ramirez Olga Cecilia Perez Rodriguez Enersis stake (direct and indirect) 8,77% - Unchanged. 167 2010 Annual Report Identification of subsidiaries and related companies EMPRESA ELÉCTRICA DE COLINA Name Empresa Eléctrica de Colina Ltda. Type of company Limited partnership Tax No. 96.783.910-8 Address Chacabuco 31, Colina, Santiago, Chile Telephone (56 2) 844 4280 Subscribed and paid capital (ThCh$) 82,222 Corporate Purpose Distribution and sale of electricity and home, sports, entertainment and computer electrical appliances. Business Energy distribution. Principal executive Leonel Martínez Garrido Chief Executive Officer Enersis stake (direct and indirect) 99.09% - Unchanged ENDESA ARGENTINA Name Endesa Argentina S.A. Type of company Corporation Address Suipacha 268, piso 12, Buenos Aires, Argentina Telephone (5411) 4307 3040 Corporate Purpose Investments in companies for the production, transport and distribution of electricity and its sale, and financial activities except for those reserved by the law of banks. Business Investments. Subscribed and paid capital (ThCh$) 81,188,759 Board of directors José Miguel Granged Bruñen Néstor José Belgrano Francisco Martín Gutiérrez Deputy directors José María Hidalgo Martín Mateos María Inés Corrá Marcelo A. Den Toom Enersis stake (direct and indirect) 59.98% - Unchanged. EN - BRASIL COMÉRCIO E SERVIÇOS S.A. Name En- Brasil Comércio e Serviços S.A. Type of Society Private company Address Praça Leoni Ramos nº 01 – parte, São Domingos, Niterói, Rio de Janeiro, Brazil. Telephone (55 21) 2613 7000 Paid capital (R$) 10.000 products, and to provide general services for the electric sector and others. Business Investments Principal executives Ricardo da Silva Correa Chief Executive Officer Leonardo de Paula Freitas Guimaraes Enersis stake (direct and indirect) 54.30% - Unchanged. ENDESA BRASIL Name Endesa Brasil S.A. Type of company Corporation Adddress Praça Leoni Ramos, 1 – 7 andar – bloco 02 - Parte, Niterói, Río de Janeiro, Brazil Telephone (5521) 3607 9500 Subscribed and paid capital (ThCh$) 226,099,641 Corporate Purpose Participation in the capital of other companies that act or become constituted to act directly or indirectly in any segment of the electricity sector, including companies that provide services to companies in that sector, in Brazil or elsewhere, as partner or shareholder, within the legally permitted limits and, where necessary, subject to obtaining the necessary governmental approvals; transmission, distribution, generation or selling of electricity and related activities and participation, individually or through joint ventures, consortia or other similar forms of association, in tenders, projects and enterprises for the supply of services and activities mentioned above. Business Investments. Board of directors Mario Fernando de Melo Santos Ignacio Antoñanzas Alvear (Chief Executive Officer, Enersis) Massimo Tambosco (Deputy Chief executive Officer, Enersis) Antonio Basilio Pires de Carvalho e Albuquerque Ramiro Alfonsín Balza (Regional Chief Planning and Control Officer, Enersis) Cristián Eduardo Fierro Montes Principal executives Marcelo Llévenes Rebolledo Chief Executive Officer Luiz Carlos Laurens Ortins de Bettencourt Aurelio De Oliveira Eugenio Cabanes Antonio Basilio Pires de Carvalho e Albuquerque José Alves de Mello Franco Carlos Ewandro Naegele Moreira Enrique de las Morenas Enersis stake (direct and indirect) 54.30% - Unchanged. Proportion of Enersis’s assets 6.31% ENDESA CHILE Name Empresa Nacional de Electricidad S.A. Type of company Publicly-held company Tax No. 91,081,000-6 Address Santa Rosa 76, Santiago, Chile Corporate Purpose The company aims to participate in the capital of other companies in Brazil or abroad, trade in general, even imports and exports, by retail or wholesale transactions of various Telephone (56 2) 630 9000 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 168 Enersis 2010 Annual Report Subscribed and paid capital (ThCh$) 1,537,722,642 ENDESA FORTALEZA Corporate Purpose Generation and supply of electricity, sale of consultancy and engineering services in Chile and elsewhere and the construction and exploitation of infrastructure works. Business Energy generation Board of directors Jorge Rosenblut Paolo Bondi Luis de Guindos Jurado José María Calvo-Sotelo Francesco Buresti Jaime Estévez Valencia Vitorio Corbo Loi Felipe Lamarca Claro Jaime Bauzá Bauzá Principal executives Joaquín Galindo Vélez Chief Executive Officer Renato Fernández Baeza Carlos Martín Vergara Eduardo Escaffi Johnson Pietro Corsi Misle Luis Larumbe Aragón José Venegas Maluenda Sebastián Fernández Cox Juan Benabarre Benaiges Claudio Iglesis Guillard Commercial relations Trading current accounts, accounting, trading desk and treasury services supply. Enersis stake (direct and indirect) 59.98% - Unchanged. Proportion of Enersis’s assets 56.07% ENDESA ECO Name Endesa Eco S.A. Type of company Private company Tax No. 76,313,310-9 Address Santa Rosa 76, piso 12, Santiago, Chile Telephone (56 2) 630 9000 Subscribed and paid capital (ThCh$) 681,845 Corporate Purpose Promote and develop renewable energy projects like mini hydroelectric, wind, geothermal, solar, biomass and others; identify and develop clean development mechanism (CDM) projects and act as depositary and trader of emission reduction certificates generated by these projects. Business Energy generation. Board of directors Juan Benabarre Benaiges Sebastián Fernández Cox Renato Fernández Baeza Principal executive Wilfredo Jara Tirapegui Chief Executive Officer Enersis stake (direct and indirect) 59.98% - Unchanged. Name CGTF - Central Geradora Termeléctrica Fortaleza S.A. Type of company Private company Address Rodovia 422, Km 1 s/n, Complexo Industrial e Portuário de Pecém Caucaia – Ceará, Brazil Telephone (55 85) 3464-4100 Subscribed and paid capital (ThCh$) 42,639,466 Corporate Purpose Study, project, construct and explore systems of production, transmission, distribution and commercialization of electricity under concessions, permits or authorizations under any title, and other activities related to services supply of any kind related to the above activities; the acquisition, obtaining and exploration of any right, concession or privilege related to the above activities and the carrying out of all the other acts and business necessary for achieving its purposes; and participation in the capital of other companies as shareholder or partner, whatever their purposes. Business Energy generation. Board of directors Guilherme Gomes Lencastre Marcelo Andrés Llévenes Rebolledo Luciano Galasso Samaria Principal executives Manuel Rigoberto Herrera Vargas Chief Executive Officer Raimundo Câmara Filho Luiz Carlos Laurens Ortins de Bettencourt José Ignácio Pires Medeiros Aurélio Ricardo Bustilho de Oliveira Eugenio Cabanes José Alves de Mello Franco Ana Claudia Gonçalves Rebello Manuel Rigoberto Herrera Vargas Enersis stake (direct and indirect) 54.30% - Unchanged. ENDESA MARKET PLACE Name Endesa Market Place (in liquidation) Type of company Foreign corporation Address Ribera de Loira, 60 CP 28042, Madrid, Spain Telephone (3491) 213 1000 Subscribed and paid capital (euros) 6,743,800 Corporate Purpose B2B and new technologies. Liquidator Ramón Cabezas Navas Enersis stake (direct and indirect) 15% - Unchanged. Proportion of Enersis’ assets 0.04% Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 169 2010 Annual Report Identification of subsidiaries and related companies ENERGEX Name Energex Co. Type of company Exempt company Corporate Purpose (i)Generation, transmission, distribution and commercialization of energy, (ii) Participation in other companies as a partner, shareholder, or quota holders and (iii) Import machinery and equipment for generation, transmission, distribution and commercialization of wind energy. Address Caledonian House P.O. Box 265 G, George Town, Grand Cayman, Cayman Islands Subscribed and paid capital (ThCh$) 4,680 Corporate Purpose Any business or activity according to the laws of the Cayman Islands. In the case of businesses or activities in the financial area, those reserved for banks are excepted. It is also forbidden to do business with firms or persons domiciled in the Cayman Islands. Business Investments. Board of directors Horacio Reyser Daniel Bortnik Ventura Ricardo Rodríguez Eduardo Escaffi Johnson Enersis stake (direct and indirect) 29.99% - Unchanged. ENIGESA Name Endesa Inversiones Generales S.A. Type of company Private company Tax No. 96,526,450-7 Address Santa Rosa 76, Santiago, Chile Telephone (56 2) 630 9000 Paid capital (ThCh$) 3,055,838 Corporate Purpose The acquisition, sale, administration and exploitation, for its own or third party’s account, of all kind of real estate, movable assets, securities and other commercial paper; carry out studies and consultancy; provide all kind of services; participate in all kind of investments and especially those related to the electricity business; participate in all kind of companies and carry out all operations, acts and contracts related to the above purposes. Business Real estate. Board of directors Eduardo Escaffi Johnson Luis Larumbe Aragón Pietro Corsi Misle Principal executive Pietro Corsi Misle Chief Executive Manager Commercial relations Rental of properties. Enersis stake (direct and indirect) 59.96% - Unchanged. EÓLICA FAZENDA NOVA Name Eólica Fazenda Nova o Geraçãoa e Comercialização de Energia S.A. Type of Society Private company Address Rua Felipe Camarão, nº 507, sala 104, Ciudad de Natal, Rio Grande do Norte, Brazil Telephone (5521) 3607 9500 Paid capital (R$) 1,839,000 Management Marcelo Llévenes Rebolledo Guilherme Gomes Lencastre Enrique de las Morenas Principal executives Marcelo Llévenes Rebolledo Chairman Guilherme Gomes Lencastre Enrique de las Morenas Enersis stake (direct and indirect) 54.28% - Unchanged. GASATACAMA Name GasAtacama S.A. Type of company Private company Tax No. 96,830,980-3 Address Isidora Goyenechea 3365, piso 8, Santiago, Chile Telephone (562) 366 3800 Paid capital (ThCh$) 136,417,468 Corporate Purpose a) The administration and management of the companies Gasoducto Atacama Chile Limitada, Gasoducto Atacama Argentina Limitada, GasAtacama Generación Limitada and other companies agreed to by the shareholders; b) investment of its own or third party’s resources, in all kind of assets, corporeal or incorporeal, securities, shares and commercial paper. Business Investments. Board of directors Raúl Sotomayor Valenzuela Joaquín Galindo Vélez Gonzalo Dulanto Letelier Claudio Iglesias Guillard Deputy directors Juan Pablo Errázuriz Domínguez Juan Benabarre Benaiges Eduardo Ojea Quintana Eduardo Escaffi Johnson Principal executive Rudolf Araneda Kauert Chief Executive Officer Enersis stake (direct and indirect) 29.99% - Unchange. GASATACAMA CHILE Name GasAtacama Chile S.A. Type of company Private company Tax No. 78,932,860-9 Address Isidora Goyenechea 3365, piso 8, Las Condes, Santiago, Chile Telephone (562) 366 3800 Paid capital (ThCh$) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 170 Enersis 2010 Annual Report 85,593,637 Corporate Purpose a) Exploit the generation, transmission, purchase, distribution and sale of electric or any other nature energy; b) the purchase, extraction, exploitation, processing, distribution, commercialization and sale of solids, liquids and gas fuels; c) the sale and engineering services supply; d) the obtaining, purchase, transfer, rental, charging and exploitation in any way of the concessions referred to in the General Electrical Services Law, maritime concessions and waterusage rights of any kind; e) the transport of natural gas, through its own means or together with other parties within Chile or other countries, including the construction, location and exploitation of gas pipelines and other activities related directly or indirectly to it; f) invest in all kind of assets, corporeal or incorporeal, movable or fixed; g) the organization and constitution of all kind of companies whose purposes are related or linked to energy in any of its forms or that have electricity as their principal input, or correspond to any of the activities mentioned above. Business Electricity generation and transportation of gas. Board of directors Raúl Sotomayor Valenzuela Joaquín Galindo Vélez Gonzalo Dulanto Letelier Claudio Iglesias Guillard Deputy directors Pedro Pablo Errázuriz Domínguez Juan Benabarre Benaiges Eduardo Ojea Quintana Eduardo Escaffi Johnson Principal executive Rudolf Araneda Kauert Chief Executive Officer Enersis stake (direct and indirect) 29.99% - Unchanged. GASODUCTO ATACAMA ARGENTINA Name Gasoducto Atacama Argentina S.A. Type of company Private company Tax No. 78,952,420-3 GASODUCTO TALTAL Name Gasoducto Taltal S.A. Type of company Private company Tax No. 77.032.280-4 Address Santa Rosa 76, Santiago, Chile Telephone (562) 630 9000 Corporate Purpose The transport, commercialization and distribution of natural gas, through its own means or together with other parties within Chile, especially in the towns of Mejillones and Paposo in the 2nd Region, including the construction, location and exploitation of gas pipelines and other activities related directly or indirectly to it Business Gas transportation. Paid capital (ThCh$) 17,596,936 Board of directors Gustavo Venegas Castro Luis Vergara Aguilar Rafael Zamorano Chaparro Deputy directors Luis Cerda Ahumada Mario Guevara Esturillo Alejandro Sáez Carreño Principal executive Rudolf Araneda Chief Executive Officer Enersis stake (direct and indirect) 29.99% - Unchanged. GENERANDES PERÚ Name Generandes Perú S.A. Type of company Corporation Address Isidora Goyenechea 3365, piso 8, Las Condes, Santiago, Chile Address Avda. Víctor Andrés Belaúnde 147, Torre Real, piso 7, San Isidro, Lima, Peru Telephone (562) 366 3800 Paid capital (ThCh$) 92,427,104 Corporate Purpose The transport of natural gas, through its own means or together with other parties within Chile or other countries, including the construction, location and exploitation of gas pipelines and other activities related directly or indirectly to it. With respect to its Agency based in Argentina, mentioned above, its purpose is the execution of a pipeline between the town of Cornejo, Province of Salta and the Argentine- Chilean border in the vicinity of the Jama border crossong located in the second región of Chile. Business Gas transportation. Board of directors Gdutavo Venegas Castro Luis Vergara Aguilar Rafael Zamorano Chaparro Deputy directors Luis Cerda Ahumada Mario Guevara Esturillo Alejandro Sáez Carreño Principal executives Rudolf Araneda Kauert Chief Executive Officer Enersis stake (direct and indirect) 29.99% - Unchanged. Telephone (511) 215 6300 Paid capital (ThCh$) 164,297,758 Corporate Purpose Activities related to electricity generation, directly and/or through companies constituted for this purpose. Business Investments. Board of directors Ignacio Blanco Fernández Alberto Briand Rebaza Torres Joaquín Galindo Vélez Teobaldo José Calvacante Leal Jose Agustín Venegas Maluenda Rafael Fauquie Bernal Gerardo Rafael Sepúlveda Quezada Alberto Triulzi Mora Deputy directors Guillermo Lozada Pozo Rafael Alcázar Uzátegui Julián Cabello Yong Carlos Rosas Cedillo Juan Benabarre Benaiges José María Hidalgo Martín-Mateos Gonzalo Adolfo de las Casas Salinas Milagros Noriega Cerna Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 171 2010 Annual Report Identification of subsidiaries and related companies Principal executives Carlos Luna Cabrera Chief Executive Officer Milagros Noriega Cerna Enersis stake (direct and indirect) 36.59% (unchanged). GNL CHILE Name GNL Chile S.A. Type of company Private company Tax No. 76,418,940-K Address Rosario Norte 530, oficina 1303, Las Condes, Santiago, Chile Telephone (562) 499 0920 Paid capital (ThCh$) 1,416,213 Corporate Purpose a)Contract the services of the liquefied natural gas (LNG) regasification company GNL Quintero S.A. and use all the LNG storage, processing and re-gasification capacity of its re-gasification terminal, including its expansions if any and any other matter stated in the contract that the Company signs for the use of the re-gasification terminal; b) import LNG under the Delivered ex Ship (DES) mode from LNG suppliers under purchase agreements; c) the sale and delivery of natural gas under contracts signed by the company with its customers; d) administer and coordinate the programming and nominations of LNG loads, and the delivery of natural gas among the different customers; e) comply with all its obligations and demand compliance with all its rights under the contracts mentioned and coordinate all the activities covered by them, and in general carry out any type of act or contract that may be necessary, useful or convenient for meeting its purposes. Business Sale of LNG. Board of directors José Agustín Venegas Maluenda Eduardo Morandé Montt Rafael Sotil Bidart Deputy directors Juan Oliva Vásquez Gonzalo Palacios Vásquez Rosa Herrera Martinez Principal executive Eric Ahumada Gómez Chief Executive Maneger Enersis stake (direct and indirect) 19.99% - Unchanged. GNL QUINTERO Name GNL Quintero S.A. Type of company Private company Tax No. 76,788,080-4 Address Rosario Norte 532,oficina 1604, Las Condes, Santiago, Chile Telephone (562) 499 0900 Paid capital (ThChM$) 91,674,900 Corporate Purpose a) The development, financing, design, engineering, supply, construction, start up, operation and maintenance of an LNG storage and re-gasification plant and its corresponding sea terminal for loading and unloading LNG and its expansions, if any, including the installations and connections necessary for the delivery of LNG through a truck-loading yard and/ or one or more LNG pipeline delivery points; and any other activity leading or related to such purpose; and b) the provision of management and administrative advice services in general, necessary for the correct operation of the company to GNL Chile S.A. The company may carry out all kinds of acts or contracts that are necessary, useful or convenient for meeting this purpose. Business LNG re-gasification. Board of directors William Jude Way Eduardo Morandé Montt Rodrigo Azócar Hidalgo Elizabeth Grace Spomer Deputy directors Patricio Silva Barroilhet Francisco Gazmuri Schleyer Rosa Herrera Martinez Diego Hollweck Claudio Iglesis Guillard Principal executive Antonio Bacigalupo Gittins Chief Executive Officer Enersis stake (direct and indirect) 12% - Unchanged. HIDROINVEST Name Hidroinvest S.A. Type of company Corporation Address Avda. España 3301, Buenos Aires, Argentina Telephone (5411) 4307 3040 Paid capital (ThCh$) 33,021,025 Corporate Purpose Acquire and maintain a majority shareholding in Hidroeléctrica El Chocón S.A. Business Investments. Board of directors Joaquín Galindo Vélez José Miguel Granged Bruñen José María Hidalgo Martín-Mateos Fernando Claudio Antognazza Alfredo Ergas Segal (Chief Regional Finance Officer, Enersis S.A.) Juan Carlos Blanco Roberto José Fagan Carlos Martín Vergara Deputy directors Fancisco Monteleone Jorge Raúl Burlando Bonino Daniel Garrido Rodolfo Bettinsoli Fernando Boggini Rodrigo Quesada Sergio Camps Orcar Rigueiro José María Hidalgo Martín-Mateos Enersis stake (direct and indirect) 57.64% - Unchanged. ICT Name ICT Servicios de Informática Limitada Type of company Limited partnership Tax No. 76.107.186-6 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 172 Enersis 2010 Annual Report Adress Santa Rosa 76, piso 9, Santiago, Chile Telephone (562) 353 4606 Paid Capital (ThCh$) 500,000 Corporate Purpose The provision of consulting services in matters related to information technology and computing, telecommunications and data transmission. Business Consulting services in information and computing technology, telecommunications, data transmission; acquire and dispose of all assets related to the company´s business. Principal executive Rocío Niño Guerra Chief Executive Officer Enersis stake (directa e indirecta) 99,99% (new) Proportion of Enersis’ assets 0,02% INGENDESA representation of local and foreign engineering companies, and other services that the legal powers permit in the practice of the professions of engineering, architecture, agronomy, geology and meteorology in all their specialties. Business Engineering services. Representative Sergio Ribeiro Campos Enersis stake (direct and indirect) 59.98% - Unchanged. INMOBILIARIA MANSO DE VELASCO Name Inmobiliaria Manso de Velasco Ltda. Type of company Limited partnership Tax No. 79,913,810-7 Address Miraflores 383, piso 29, Santiago, Chile Telephone (562) 378 4700 Name Empresa de Ingeniería Ingendesa S.A. Corporate Purpose Acquisition, disposal, commercialization and exploitation of real estate and investment companies. Type of company Private company Tax No. 96,588,800-4 Address Santa Rosa 76, Santiago, Chile Telephone (562) 630 9000 Paid capital (ThCh$) 2,600,176 Corporate Purpose Engineering services supply, inspection of works, inspection and reception of materials and equipment, laboratory, appraisals, management of companies in different fields, environmental advice, including the developing environmental impact studies and in general consultancy services in every specialty, in Chile and abroad. Business Engineering services. Board of directors Juan Benabarre Benaiges Rafael de Cea Chicano (There is currently a vacancy in the Board) Principal executive (There is currently a vacancy) Enersis stake (direct and indirect) 59.98% - Unchanged. INGENDESA BRASIL Name Ingendesa do Brasil Ltda. Type of company Limited partnership Address Praça Leoni Ramos, n°1, parte São Domingos, Niterói Río de Janeiro, Brasil Telephone (5521) 2232 9039 Paid capital (ThCh$) 133,845 Corporate Purpose Services of engineering, studies, projects, technical consultancy, administration, inspection and supervision of works supply, inspection and reception of materials and equipment, laboratory, appraisals, commercial Business Real estate. Subscribed and paid capital (ThCh$) 25,916,800 Representative Andrés Salas Estrades Principal executives Andrés Salas Estrades Chief Executive Officer Alfonso Salgado Menchaca Hugo Ayala Espinoza Commercial relations Rental of properties, trading desk, accounting, tax and other services supply. Trading current account. Enersis stake 100% - Unchanged. Proportion of Enersis’s assets 0.22% INVERSIONES DISTRILIMA Name Inversiones Distrilima S.A. Type of company Corporation Address Jr. Teniente César López Rojas 201, Maranga, San Miguel, Lima, Peru. Telephone (511) 561 1604 Subscribed and paid capital (ThCh$) 32,841,625 Corporate Purpose Make investments in other companies, most preferably in exploitation of natural resources, and especially those related to the distribution, tramission and generation of electricity. In order to perform according to its purpose and practice the activities related to it, the company may perform all actions and enter into all contracts that the Peruvian laws allow to corporations. The company may also make equity investments in any kind of property including stocks, bonds and any other class of transferable securities, as well as the administration of such investments within the limits set by the board and general shareholders meeting (GSM). The activities that are considered within the purpose of the company may be carried out in Peru and abroad. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 173 2010 Annual Report Identification of subsidiaries and related companies Business Investments. Board of directors Ignacio Blanco Fernández Juris Agüero Caroca Ramiro Alfonsín Balza (Chief Regional Planning and Control Officer, Enersis) Teobaldo José Cavalcante Leal Cristian Eduardo Fierro Montes Deputy directors Manuel Muñoz Laguna Patricia Mascaro Díaz Walter Sciutto Brattoli Ricardo Camezzana Leo Pamela Gutierrez Damani Principal executive Ignacio Blanco Fernández Chief Executive Officer Enersis stake (direct and indirect) 64.90% - Unchanged. Proportion of Enersis’s assets 0.51% INVERSIONES ELECTROGAS Name Inversiones Electrogas S.A. Type of company Private company Tax No. 96,889,570-2 Corporate Purpose Make investments in energy projects in the north of Chile related to the companies of the GasAtacama project. Business Investments. Paid capital (ThCh$) 92,571,642 Board of directors Claudio Iglesis Guillard Daniel Bortnik Ventura Eduardo Escaffi Johnson Deputy directors Juan Benabarre Benaiges Raúl Arteaga Errázuriz (Corporate Treasurer, Enersis S.A.) Luis Larumbe Aragón Principal executives Juan Benabarre Benaiges Enersis stake (direct and indirect) 59.98% - Unchanged INVERSIONES GASATACAMA HOLDING Name Inversiones Gasatacama Holding Limitada Type of company Limited partnership Tax No. 76,014,570-K Address Isidora Goyenechea 3365, piso 8, Santiago, Chile Address Alonso de Córdova 5900, Oficina 401, Las Condes, Santiago Telephone (562) 366 3800 Telephone (562) 299 3400 Corporate Purpose To buy, sell, invest and hold shares in the private company Electrogas S.A. Business Investments. Paid capital (ThCh$) 12,892,914 Board of directors Claudio Iglesis Guillard Juan Eduardo Vásquez Moya Enrique Donoso Moscoso Pedro Gatica Kerr Rafael Sotil Bidart Deputy directors Rosa Herrera Martínez Jorge B. Larraín Matte Cristian Morales Jaureguiberry Juan Oliva Vásquez Ricardo Santibáñez Zamora Principal executives Carlos Andreani Luco Chief Executive Officer Enersis stake (direct and indirect) 25.49% - Unchanged. INVERSIONES ENDESA NORTE Name Inversiones Endesa Norte S.A. Type of company Private company Tax No. 96,887,060-2 Address Santa Rosa 76, Santiago, Chile Telephone (562) 630 9000 Corporate Purpose a) The direct or indirect participation through any kind of association in companies whose purposes are one or more of the following: i) the transport of natural gas in any of its forms; ii) The generation, transmission, purchase, distribution and sale of energy, and iii) financing of the activities stated in i) and ii) above managed by third parties. b) The perception and investment of the assets invested in. The purposes include all lucrative activities related to the above and other businesses that the partners agree. Business Investments. Paid capital (ThCh$) 156,090,227 Board of directors Raúl Sotomayor Valenzuela Gonzalo Dulanto Letelier (There is currently a vacancy in the Board). Deputy directors Juan Benabarre Benaiges Claudio Iglesis Guillard Pedro Pablo Errázuriz Domínguez Eduardo Ojea Quintana Principal executive Rudolf Araneda Kauert Chief Executive Officer Enersis stake (direct and indirect) 29.99% - Unchanged. INVERSORA CODENSA S.A.S. Name Inversora Codensa S.A.S. Type of company Stock simplified company Address Carrera 11 N°82-76, Piso 4, Bogotá, Colombia Telephone (571) 601 6060 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 174 Enersis 2010 Annual Report Capital (Colombian $) 5,000,000 Corporate Purpose Investment in residential energy public utility services, especially the acquisition of shares in any company in that business or in any other company that also invests in utilities whose main purpose is residential electricity service according to the definition in Act 142 of 1994, or in any other company that in turn invests in utilities whose main purpose is the residential electricity supply. Business Investments. Legal representative Cristian Herrera Fernández Enersis stake (direct and indirect) 21.73% - Unchanged INVESTLUZ Name Investluz S.A. Type of company Foregin corporation Adress Rua Padre Valdevino, N° 150-Parte, Fortaleza, Ceará, Brasil Telphone (5585) 3216 1350 Paid capital (ThCh$) 267,899,274 Corporate Purpose Participate in the social capital of Companhia Energética do Ceará and in other companies in Brazil and abroad, as a partner or shareholder. Business Investments. Board of directors Society with no board Managers Committee Abel Alves Rochinha Luiz Carlos Ortins de Bettencourt Olga Jovanna Carranza Salazar Carlos Ewandro Naegele Moreira Cristine de Magalhães Marcondes Enersis stake (direct and indirect) 61,10% - Unchanged KONECTA CHILE Name Konecta Chile S.A. Type of company Private company Tax No. 76,583,350-7 Address Miraflores 383, piso 26, Santiago, Chile Telephone (56 2) 447 8687 Paid capital (ThCh$) 300 Corporate Purpose Contact center, outsourcing, organization of events, IT services, collections, movable assets trading, investments. Business Call center. Board of directors Miguel Fernández Robledo Leonardo Covalschi Buono Jesús Vidal Barrio Riva Enrique García Guillón Juan Seco Sousa Principal executive Patricio Martínez Sola Enersis stake (direct and indirect) 26.20% - Unchanged. LUZ ANDES Name Luz Andes Limitada Type of company Limited partnership Tax No. 96,800,460-3 Address Santa Rosa 76, piso 5, Santiago, Chile Telephone (56 2) 634 6310 Paid capital (ThCh$) 1,224 Corporate Purpose Distribution and sale of electricity and sale of home, sports, entertainment and computers electrical appliances. Business Distribution of electricity. Principal executive Claudio Inzunza Díaz Chief Executive Officer Enersis stake (direct and indirect) 99.09% - Unchanged. PANGUE Name Empresa Eléctrica Pangue S.A. Type of company Private company Tax No. 96,589,170-6 Address Santa Rosa 76, Santiago, Chile Telephone (562) 630 9000 Corporate Purpose The production, transport, distribution and supply of electricity from the Pangue plant in the valley of the Biobío river. Business Electricity generation. Paid capital (ThCh$) 91,041,497 Board of directors Claudio Iglesis Guillard Alan Fischer Hill Alejandro García Chacón Principal executive Lionel Roa Burgos Chief Executive Officer Enersis stake (direct and indirect) 56.97% - Unchanged. PEHUENCHE Name Empresa Eléctrica Pehuenche S.A. Type of company Publicly-held company Tax No. 96,504,980-0 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 175 2010 Annual Report Identification of subsidiaries and related companies Address Santa Rosa 76, Santiago, Chile Telephone (562) 630 9000 Corporate Purpose The generation, transport, distribution and supply of electricity for which it may acquire and use the respective concessions and grants. Business Electricity generation. Paid capital (ThCh$) 200,319,020 Board of directors Claudio Iglesis Guillard Alan Fischer Hill Daniel Bortnik Ventura Alejandro García Chacón Pedro Gatica Kerr Enrique Lozán Jiménez Osvaldo Muñoz Díaz Principal executive Lucio Castro Márquez Chief Executive Officer Enersis stake (direct and indirect) 55.57% - Unchanged. PROGAS Name Progas S.A. Type of company Private company Tax No. 77,625,850-4 Address Isidora Goyenechea 3356, 8 piso, Santiago, Chile Corporate Purpose Develop the following businesses in the 1st, 2nd and 3rd Regions of Chile: a) the acquisition, production, storage, transport, distribution, transformation and commercialization of natural gas; b) the acquisition, production, storage, transport, distribution, transformation and commercialization of other oil derivatives and fuels in general; c) the supply of services, manufacture, commercialization of equipment and materials, and carrying out works related to the above purposes or those necessary for their execution and development; and d) any other activity necessary or leading to compliance with the above purposes. Business Gass supply Paid capital (ThCh$) 1,439 Board of directors Rudolf Araneda Kauert Luis Cerda Ahumada Pedro De La Sotta Sánchez Principal executive Alejandro Sáez Carreño Chief Executive Officer Enersis stake (direct and indirect) 29.99% - Unchanged. SACME Name Sacme S.A. Type of company Private company Address Avda. España 3251, Ciudad Autónoma de Buenos Aires, Argentina Telephone (5411) 4361 5107 Subscribed and paid capital (Argentine $) 12,000 Corporate Purpose Conduct, supervise and control the operation of the electricity generation, transmission and subtransmission system of the Capital Federal and Greater Buenos Aires, and the interconnections with the Argentine Interconnection System (SADI). Represent the companies Distribuidora Edenor S.A. and Edesur S.A. in the operating management before the Compañía Administradora del Mercado Mayorista Eléctrico (CAMMESA) (the wholesale market administrator). In general, take all kind of actions for satisfactorily carrying out its management, as being constituted for this purpose by the concessionaire companies of the electricity distribution and commercialization services in the Capital Federal and Greater Buenos Aires, all in accordance with the international public tender for the sale of Class A shares in Edenor S.A. and Edesur S.A. and applicable regulations. Business Conduction, supervision and control of the operation of part of the Argentine electricity system. Board of directors Ricardo Héctor Sericano Osvaldo Ernesto Rolando Leandro Ostuni Eduardo Maggi Deputy directors Abel Cresta Leonardo Félix Druker José Luis Marinelly Pedro Rosenfeld Representatives Héctor Ruiz Moreno Clemente Alonso Hidalgo Jaime Javier Barba Deputy representatives Juan Antonio Garade Gabriela Leoncini Daniel Peraudo Principal executive Francisco Cerar Enersis stake (direct and indirect) 32.69% - Unchanged. SAN ISIDRO Name Compañía Eléctrica San Isidro S.A. Type of company Private company Tax No. 96,783,220-0 Address Santa Rosa 76, Santiago, Chile Telephone (56 2) 630 9000 Corporate Purpose The generation, transport, distribution and supply of electricity. Business Electricity generation Paid capital (ThCh$) 39,005,904 Board of directors Alejandro García Chacón Alan Fischer Hill Pedro Gatica Kerr Claudio Iglesis Guillard Ricardo Santibáñez Zamorano Deputy directors Osvaldo Muñoz Díaz Carlo Carvallo Artiga Claudio Betti Pruzo Rodrigo Naranjo Martorell Enrique Lozán Jiménez Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 176 Enersis 2010 Annual Report Principal executive Claudio Iglesis Guillard Chief Executive Officer Enersis stake (direct and indirect) 59.98% - Unchanged. SISTEMAS SEC Name Sistema SEC S.A. Type of company Private company Tax No. 99,584,600-4 Address Miraflores 383, piso 10, Of. 1004,Santiago, Chile Corporate Purpose The company’s purpose is the engineering, supply, installation and maintenance of signaling, electrical and communications systems for all types of works and services, especially transport lines, and the planning, design, engineering, management, construction, installation, rehabilitation, implementation, operation, preservation and maintenance of all, industrial, infrastructure, civil or engineering types of works, in Chile or abroad. Business Develop and maintain signaling, electrification and communications systems. Paid capital (ThCh$) 2,037,480 Board of directors Ángel Aguilar Bueno Klaus Winkler Speringer Jaime Godoy Cifuentes Francisco Fernández Ávila de Inza Principal executives Mauricio Correa Chief Executive Officer Enersis stake (direct and indirect) 49% - Unchanged. SOCIEDAD PORTUARIA CENTRAL CARTAGENA Name Sociedad Portuaria Central Cartagena S.A. Type of Society Corporation Adderss Carrera 13 A Nº 93-.66, piso 2 Bogotá, D.C. Colombia. Paid capital (ThCh$) 1,439 Corporate Purpose The company’s purpose is the investment, construction and maintenance of ports, port management, the load and unloading service supply, storage in ports and other services directly related to port activities, development and operation of a multipurpose port. Board of Directors Fernando Gutiérrez Medina Juan Manuel Pardo Leonardo López Vergara Deputy directors Gustavo Gómez Cerón Alba Luisa Salcedo Luis Fernando Salamanca Principal executives Fernando Gutiérrez Medina Chief Executive Officer Enersis stake (direct and indirect) 16.37% SOUTHERN CONE POWER ARGENTINA Name Southern Cone Power Argentina S.A. Type of company Corporation Address Avda. España 3301, Buenos Aires, Argentina Telephone (54 11) 4307 3040 Subscribed and paid capital (ThCh$) 3,135,978 Corporate Purpose For its own or third party’s account, usual purchase and sale of electricity in the wholesale market produced by other parties and to be consumed by others. It may also hold participations in companies dedicated to electricity generation. Board of directors José Miguel Granged Bruñen Roberto José Fagan Fernando Claudio Antognazza Deputy director Juan Carlos Blanco Enersis stake (direct and indirect) 59.98% - Unchanged. SYNAPSIS Name Synapsis Soluciones y Servicios IT Limitada Type of company Limited partnership Tax No. 96,529,420-1 Address Miraflores 383, piso 27, Santiago Telephone (562) 397 6600 Subscribed and paid capital (ThCh$) 3,943,580 Corporate Purpose Supply and sell services and equipment related to computation and data processing for public utilities and other Chilean and foreign companies. Sell and supply in Chile and abroad services, equipment and training related to computation and data processing. Invest in companies whose purposes are similar, related or linked to energy or computers in all their forms or the supply of public utilities or whose principal input is electricity. Business IT services. Representatives Leonardo Covalschi Buono Deputy representatives Eduardo López Miller (Procurement Officer, Enersis) Raúl Mella Varas Principal executives Leonardo Covalschi Buono Chief Executive Officer Raúl Mella Varas Jorge Orozco Ospina Gonzalo Lago Fernández Jesús Vallejo Gómez Humberto Ghirardelli Donoso Fracncisco López Balart Claudio Escudero Alzamora Héctor Contreras Alba Comercial relations Trading current account, financial management services, data center and support services supply. Maintenance of systems, micro IT and electronic mail. Telecommunications and tax consultancy. Services supply. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 177 2010 Annual Report Identification of subsidiaries and related companies Enersis stake (direct and indirect) 100% - Unchanged Proportion of Enersis’s assets 0.19% SYNAPSIS ARGENTINA Name Synapsis Argentina S.R.L. Type of company Limited partnership Enersis stake (direct and indirect) 100% - Unchanged Participación de Enersis (directa e indirecta) 100% - Sin variación SYNAPSIS COLOMBIA Name Synapsis Colombia Limitada Type of company Limited partnership Address Azopardo 1335, e/ Juan de Garay y Cochabamba, Cod. Postal 1064, Capital Federal, Buenos Aires, Argentina Telephone (5411) 4021 8300 Subscribed and paid capital (ThCh$) 175,466 Address Carrera 14 85-68, piso 5, Edificio Torres Bogotá, D.C. Telephone (571) 607 6000 Subscribed and paid capital (ThCh$) 58,691 Corporate Purpose Mainly supply of services related to computation, data processing and other IT services in telecommunications and control, as well as training in the activities related to the services provided, among others. Corporate Purpose Supply and sell services and equipment related to computation and data processing for public utility and other national and foreign companies. Business IT services. Principal executives Leonardo Covalschi Buono Fernando Mayorano Leandro Carelli Alfredro Cachafeiro Enrique Torlaschi Enersis stake (direct and indirect) 100% - Unchanged Proportion of Enersis’s assets 0.01% SYNAPSIS BRASIL Name Synapsis Brasil Limitada Type of company Limited partnership Address Avda. das Américas 3434, Bloco 2, Sala 403, Barra da Tijuca, Río Janeiro, Brazil - Cep: 22640-102 Telephone (5521) 2674 3856 Business IT services. Representatives Leonardo Covalschi Buono Chief Executive Officer Edgar Enrique Martínez Niño Robin Barquin Pardo Principal executives Robin Barquín Pardo Edgar Martínez Niño Rodrigo Buzeta Araya Sonia Rodríguez García Ricardo Célis Cadena Miguel Alvarado Melo Enersis stake (direct and indirect) 100% - Unchanged. Proportion of Enersis’s assets 0.00% SYNAPSIS PERÚ Name Synapsis del Perú S.R.L. Type of company Limited partnership Subscribed and paid capital (ThCh$) 1,122,091 Address Calle Miguel Dasso N°104,piso 9, San Isidro, Lima, Peru Corporate Purpose Supply of consultancy services and technical assistance related to the IT sector and data processing for Brazilian and foreign companies; the development of software and systems; the sale of computer and data processing equipment; the manufacture, purchase, sale, import, export, representation, consignment and distribution of all types of assets, mobile and fixed, connected to purposes stated above and participations in other civil or commercial, national or foreign, companies that operate in the sectors of IT, electricity or the management and/or operation of public utilities in electricity, telecommunications, water for domestic or industrial use and sewage, as shareholder or partner; and participations in joint ventures, consortia and partnerships. Business IT services. Representative Carlos Alberto Acero Principal executives Carlos Alberto Acero Marcia Caporazzo Almeida José Roberto Galdino Enrique Scarnati María Teles Acevedo Eduardo Ruiz Telephone (511) 202 1230 Subscribed and paid capital (ThCh$) 165,851 Corporate Purpose The purpose of the company is to provide computer services, telecommunications and control, and training services related to the above activities as well as manufacture and sell all kinds of products related to the purpose stated above, including the purchase, sale, distribution, import and export. Business IT services. Principal executives Jesús Vallejo Gómez Chief Executive Officer Carlos Castillo Prada Ismael Ayala Falcón Angélica Cárdenas Carla Paola Gutiérrez Corzo Enersis stake (direct and indirect) 100% - Unchanged. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 178 Enersis 2010 Annual Report TERMOELÉCTRICA JOSÉ DE SAN MARTÍN TERMOELÉCTRICA MANUEL BELGRANO Name Termoeléctrica José de San Martín S.A. Name Termoeléctrica Manuel Belgrano S.A. Type of company Corporation Type of company Corporation Address Elvira Rawson de Dellepiane 150, Buenos Aires, Argentina Address Suipacha 268, piso 12, Buenos Aires, Argentina Telephone (511) 561 0386 Telephone (511) 561 0386 Subscribed and paid capital (ThCh$) 58,855 Subscribed and paid capital (ThCh$) 58,855 Corporate Purpose The production of electricity and its block commercialization, particularly the management of the equipment, construction, operation and maintenance of a thermal plant in accordance with the “Definitive agreement for the management and operation of the projects for the re-adaptation of the MEM in the terms of Resolution SE 1427/2004”, approved by Resolution SE 1193/2005 (“the Agreement”). Corporate Purpose The production of electricity and its block commercialization, particularly the management of the equipment, construction, operation and maintenance of a thermal plant in accordance with the “Definitive agreement for the management and operation of the projects for the re-adaptation of the MEM in the terms of Resolution SE 1427/2004”, approved by Resolution SE 1193/2005 (“the Agreement”). Business Electricity generation. Board of directors José María Vásquez Claudio O. Majul José Miguel Granged Bruñen Fernando Claudio Antognazza Milton Gustavo Tomás Pérez Jorge Aníbal Rauber Gerardo Carlos Paz Guillermo Luis Fiad Martin Mandarano Deputy directors Juan Carlos Blanco Roberto José Fagan Adrián Gustavo Salvatore Leonardo Pablo Kast Patricio Ricardo Testotelli Omar Ramiro Algacibiur Luis Agustín León Longobardo Sergio Raúl Sánchez Rigoberto Orlando Mejía Aravena Principal executives Claudio Omar Majul Chief Executive Officer Alberto Garmendia Rodriguez Armando Federico Duvo Claudio Majul Marcelo Walter Holmgren Enersis stake (direct and indirect) 8.32%- Unchanged. Business Electricity generation. Board of directors José Miguel Granged Bruñen Fernando Claudio Antognazza Adrian Salvatore José María Vásquez Milton Gustavo Tomás Pérez Jorge Aníbal Rauber Gerardo Carlos Paz Guillermo Luis Fiad Hector Martín Mandarano Deputy directors Juan Carlos Blanco Roberto José Fagan Leonardo Marinaro Leonardo Pablo Kast Patricio Testorelli Omar Ramiro Algacibiur Luis Agustín León Longobardo Sergio Raúl Sánchez Roberto Mejía Aravena Principal executives Daniel Garrido Chief Executive Officer Gustavo Manifesto Óscar Zapiola Sergio Gusta Schmois Enersis stake (direct and indirect) 8.32% - Unchanged. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 179 2010 Annual Report Identification of subsidiaries and related companies TÚNEL EL MELÓN Name Sociedad Concesionaria Túnel El Melón S.A. Type of company Private company Tax No. 96,671,360-7 Address Santa Rosa 76, Santiago, Chile Telephone (562) 690 5081 Paid capital (ThCh$) 46,709,460 Corporate Purpose Execution, construction and exploitation of the public works called Túnerl El Melón and complementary services supply, authorized by the Ministry of Public Works. Business Infrastructure. Board of directors Luis Larumbe Aragón Renato Fernández Baeza (There is currently a vacancy in the Board). Principal executive Maximiliano Ruiz Ortiz Notes: 1. There are no acts or contracts entered into by Enersis S.A. with subsidiaries or affiliates that significantly influence the operations of Enersis S.A. 2. Enersis has no direct investment in the subsidiaries and affiliates which do not include the heading Proportion of Enersis’s assets. 3. Enersis has no commercial relations with the subsidiaries and affiliates which do not include the heading Commercial relations. TESA Name Transportadora de Energía S.A. Type of company Corporation Address Bartolomé Mitre 797, piso 11, Buenos Aires, Argentina Telephone (5411) 4394 1161 Paid capital (ThCh$) 8,759,405 Corporate Purpose Supply of electricity transport services in high tension in relation to national and international electricity systems, according to current legislation, for which it may take part in national or international tenders, become a public- utility concessionaire in local or international high-tension electricity transmission, and perform all activities necessary for these purposes. Are excluded all those activities covered by the Financial Institutions Act and any other that requires the assistance of public savings. Business Energy service. Board of directors José María Hidalgo Martín-Mateos Guilherme Lencastre Arturo Miguel Pappalardo Deputy directors José Venegas Maluenda Juan Carlos Blanco Roberto José Fagan Principal executive Guilherme Gomes Lencastre Chief Executive Officer Enersis stake (direct and indirect) 54.30% - Unchanged. TRANSQUILLOTA Name Transmisora Eléctrica de Quillota Ltda. Type of company Limited partnership Tax No. 77,017,930-0 Address Ruta 60, km 25, Lo Venecia, Comuna de Quillota, V Región de Valparaíso Telephone (562) 630 9000 Paid capital (ThCh$) 4,404,446 Corporate Purpose The transport, distribution and supply of electricity for its own or third party’s account. Business Electricity transmission. Representatives Juan Eduardo Vásquez Moya Gabriel Carvajal Menególlez Enrique Donoso Moscoso Ricardo Santibáñez Zamorano Deputy representatives Eduardo Calderón Avilés Carlos Ferruz Bunster Enrique Sánchez Novoa Ricardo Sáez Sánchez Enersis stake (direct and indirect) 29.99% - Unchanged. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Declaration of responsibility Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 181 2010 Annual Report Declaration of responsibility The directors and chief executive officer of Enersis, the signatories to this declaration, swear to accept responsibility for the accuracy of all the information contained in this document, in compliance with general rule N°30 of the Superintendence of Securities and Insurance. CHAIRMAN VICECHAIRMAN DIRECTOR DIRECTOR Pablo Yrarrázaval Valdés Tax ID N°: 5,710,967-K Andrea Brentan Tax ID N°: YA0688158 Rafael Miranda Robredo Tax ID N°: 48,070,966-7 Hernán Somerville Senn Tax ID N°: 4,132,185-7 DIRECTOR DIRECTOR DIRECTOR CHIEF EXECUTIVE OFFICER Eugenio Tironi Barrios Tax ID N°: 5,715,860-3 Leonidas Vial Echeverría Tax ID N°: 5,719,922-9 Rafael Fernández Morandé Tax ID N°: 6,429,250-1 Ignacio Antoñanzas Alvear Tax ID N°: 22,298,662-1 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 182 Enersis 2010 Annual Report Consolidated Financial Statements Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Ch$ US$ UF ThCh$ ThUS$ Chilean pesos United States dollars The UF is a Chilean inflation-indexed, peso-denominated monetary unit that is set daily in advance based on the previous month’s inflation rate. Thousand of Chilean pesos Thousand of United States dollars The above translation of the auditors’ report is provided as a free translation from the Spanish language original, which is the official and binding version. Such translation has been made solely for the convenience of non-Spanish readers. 184 Enersis 2010 Annual Report Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 185 Financial Statements Consolidated Deloitte Auditores y Consultores Ltda. RUT: 80.276.200-3 Av. Providencia 1760 Pisos 6, 7, 8, 9 y 13 Providencia, Santiago Chile Fono: (56-2) 729 7000 Fax: (56-2) 374 9177 e-mail: deloittechile@deloitte.com www.deloitte.cl INDEPENDENT AUDITORS’ REPORT To the Shareholders of Enersis S.A. We have audited the accompanying consolidated statements of financial position of Enersis S.A. and subsidiaries as of December 31, 2010 and 2009, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2010, 2009 and 2008. These consolidated financial statements (including the related notes) are the responsibility of Enersis S.A.’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements as of December 31, 2010 and 2009 of certain subsidiaries, which statements reflect total assets constituting 42.46% and 41.27%, respectively, of consolidated total assets as of those dates, and total revenues constituting 42.45%, 45.68% and 47.59%, respectively, of consolidated total revenues for the years ended December 31, 2010, 2009 and 2008. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for those certain subsidiaries, is based solely on the report of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in Chile. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of the other auditors, such consolidated financial statements present fairly, in all material respects, the financial position of Enersis S.A. and subsidiaries as of December 31, 2010 and 2009 and the results of their operations and their cash flows for the years ended December 31, 2010, 2009 and 2008 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. The translation of these consolidated financial statements into English has been made solely for the convenience of readers outside Chile. January 26, 2011 pages control previously next 186 Enersis 2010 Annual Report Consolidated Statements of Financial Position As of December 31, 2010 and 2009 (In thousands of Chilean pesos - ThCh$) ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets Trade and other current receivables Accounts receivable from related companies Inventories Current tax assets Total current assets other than assets classified as held for sale and discontinued operations Non-current assets classified as held for sale and discontinued operation TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other non-current financial assets Other non-current non-financial assets Non-current receivables Investment accounted for using equity method Intangible assets other than goodwill Goodwill Property, plant and equipment, net Investment property Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS Note 12-31-2010 12-31-2009 ThCh$ ThCh$ 5 6 7 8 9 10 11 6 7 12 13 14 15 16 17 961,355,037 1,134,900,821 7,817,509 35,993,248 1,536,149 35,181,784 1,038,098,240 1,141,966,600 20,471,607 62,651,704 19,014,232 56,319,268 137,987,341 112,175,952 2,264,374,686 2,501,094,806 73,893,290 70,360,851 2,338,267,976 2,571,455,657 62,968,722 103,736,295 319,567,960 14,101,652 30,496,757 94,255,253 194,977,413 21,281,461 1,452,586,405 1,446,122,245 1,477,021,924 1,501,351,933 6,751,940,655 6,864,071,242 33,019,154 31,231,839 452,634,364 454,896,521 10,667,577,131 10,638,684,664 13,005,845,107 13,210,140,321 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 187 Financial Statements Consolidated LIABILITIES AND EQUITY CURRENT LIABILITIES Other current financial liabilities Trade and other current payables Accounts payable to related companies Other short-term provisions Current tax liabilities Current provisions for employee benefits Other current non-financial liabilities Total current liabilities other than liabilities associated with non-current assets classified as held for sale and discontinued operations Liabilities associated with non-current assets classified as held for sale and discontinued operations TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Other non-current financial liabilities Other non-current payables Accounts payable to related companies Other-long term provisions Deferred tax liabilities Non-current provisions for employee benefits Other non-current non-financial liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES EQUITY Issued capital Retained earnings Share premium Other reserves Equity attributable to owners of parent Non-controlling interests TOTAL EQUITY TOTAL LIABILITIES AND EQUITY The attached notes are an integral part of these consolidated financial statements Note 12-31-2010 12-31-2009 ThCh$ ThCh$ 18 21 8 22 10 23 11 18 21 8 22 17 23 24 24 24 24.5 24.6 665,598,018 1,224,489,998 148,202,260 115,449,236 147,666,655 5,450,382 35,790,548 729,028,195 979,906,352 111,955,779 100,024,455 185,285,671 4,915,167 33,621,553 2,342,647,097 2,144,737,172 64,630,389 50,650,366 2,407,277,486 2,195,387,538 3,014,956,447 3,533,443,820 37,236,712 1,084,290 225,522,329 555,923,578 215,818,975 33,997,334 68,909,402 3,556,672 250,286,912 573,049,297 182,688,990 25,814,046 4,084,539,665 4,637,749,139 6,491,817,151 6,833,136,677 2,824,882,835 2,824,882,835 2,103,689,509 1,817,613,206 158,759,648 158,759,648 (1,351,787,356) (1,282,776,134) 3,735,544,636 3,518,479,555 2,778,483,320 2,858,524,089 6,514,027,956 6,377,003,644 13,005,845,107 13,210,140,321 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 188 Enersis 2010 Annual Report Consolidated Statements of Comprehensive Income For the years ended December 31, 2010, 2009 and 2008 (In thousands of Chilean pesos - ThCh$, except share data) STATEMENT OF COMPREHENSIVE INCOME Sales Other operating income Total Revenues Raw materials and consumable used Contribution Margin Other work performed by entity and capitalized Employee benefits expense Depreciation and amortization expense Reversal of impairment loss (impairment loss) recognized in profit or loss Other expenses Operating Income Other gains (losses) Financial income Financial costs Share of the profit (loss) of associates accounted for using the equity method Foreign currency exchange differences Gain (loss) for indexed assets and liabilities Net Income Before Tax Income tax Net Income from continuing operations Net Income from discontinued operations Net Income Attributable to: Owners of parent Non-controlling interests Net Income Basic earnings per share Basic earnings per share from continuing operations Basic earnings per share Diluted earnings per share Diluted earnings per share from continuing operations Diluted earnings per share The attached notes are an integral part of these consolidated financial statements Note 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ 25 25 26 27 28 28 29 30 31 31 12 31 31 32 6,179,229,824 6,113,283,615 6,100,864,285 384,351,289 358,772,038 479,080,416 6,563,581,113 6,472,055,653 6,579,944,701 (3,521,646,254) (3,210,593,577) (3,547,990,286) 3,041,934,859 3,261,462,076 3,031,954,415 44,869,365 33,730,519 32,599,560 (374,678,013) (370,402,445) (322,628,433) (449,017,275) (454,369,959) (417,710,326) (108,373,429) (85,285,525) (20,353,265) (450,434,769) (457,689,197) (440,211,323) 1,704,300,738 1,927,445,469 1,863,650,628 11,983,434 50,640,278 2,538,961 171,236,948 159,670,405 181,753,335 (438,358,251) (482,472,627) (515,108,257) 1,015,739 11,572,474 2,235,579 (8,235,253) (15,055,706) 21,781,329 3,261,180 (23,632,778) (62,378,252) 1,446,695,376 1,671,065,180 1,450,084,817 (346,006,968) (359,737,610) (415,902,784) 1,100,688,408 1,311,327,570 1,034,182,033 — — — 1,100,688,408 1,311,327,570 1,034,182,033 486,226,814 614,461,594 660,231,043 651,096,527 507,589,633 526,592,400 1,100,688,408 1,311,327,570 1,034,182,033 Ch$/share Ch$/share Ch$/share Ch$/share 14.89 14.89 14.89 14.89 20.22 20.22 20.22 20.22 15.55 15.55 15.55 15.55 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 189 Financial Statements Consolidated Consolidated Statements of Comprehensive Income For the years ended December 31, 2010, 2009 and 2008 (In thousands of Chilean pesos - ThCh$) STATEMENT OF COMPREHENSIVE INCOME Net income Components of other comprehensive income, before tax Exchange differences on translation Foreign currency translation gains (losses) Available-for-sale financial assets Gain (losses) on exchange differences on translation, before tax Cash flow hedge Gains (losses) on cash flow hedge, before tax Reclassification adjustments on cash flow hedge, before tax Total cash flow hedge Note 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ 1,100,688,408 1,311,327,570 1,034,182,033 (138,554,045) (246,854,956) 191,370,521 (179) 61,031 436 50,576,145 201,567,024 (278,888,089) (19,664,842) (8,765,356) (22,119,660) 30,911,303 192,801,668 (301,007,749) Actuarial gains (losses) on defined benefit plans Total other Components of other comprehensive income, before tax (48,495,375) (15,599,453) (34,060,925) (156,138,296) (69,591,710) (143,697,717) Income tax relating to components of other comprehensive income Income tax relating to available-for-sale financial assets of other comprehensive income 31 (10,528) (3) Income tax relating to cash flow hedge of other comprehensive income Income tax relating to defined benefit plans of other comprehensive income Total income tax Other Comprehensive Income Total Comprehensive Income Comprehensive income attributable to Owners of parent Non-controlling interests Total Comprehensive Income The attached notes are an integral part of these consolidated financial statements (5,301,050) (33,917,966) 16,515,279 11,214,260 1,369,374 (32,559,120) 46,849,978 11,439,369 58,289,344 (144,924,036) (102,150,830) (85,408,373) 955,764,372 1,209,176,740 948,773,660 396,687,094 655,007,019 433,164,534 559,077,278 554,169,721 515,609,126 955,764,372 1,209,176,740 948,773,660 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 190 Enersis 2010 Annual Report Consolidated Statements of Changes in Equity For the years ended December 31, 2010, 2009 and 2008. (In thousands of Chilean pesos - ThCh$) Changes in other reserves Statement of changes in Equity, Net Issued capital Share premium Reserve of exchange differences on translation Reserve of cash flow hedge Reserve of actuarial gains or losses on defined benefit plans Equity at beginning of period 1/01/2010 2,824,882,835 158,759,648 196,973,210 (188,691,145) Changes in equity Comprehensive income Net income Other comprehensive income Comprehensive income Dividends Increase (decrease) through transfers and other changes Total changes in equity - - - - - - - - - - - - - - - - - - - (83,694,320) 14,682,972 (20,528,498) - - - 20,528,498 - (83,694,320) 14,682,972 Equity at end of period 12/31/2010 2,824,882,835 158,759,648 113,278,890 (174,008,173) Changes in other reserves Statement of changes in Equity, Net Issued capital Share premium Reserve of exchange differences on translation Reserve of cash flow hedge Reserve of actuarial gains or losses on defined benefit plans Equity at beginning of period 01/01/2009 2,824,882,835 158,759,648 283,959,611 (276,767,607) Changes in equity Comprehensive income Net income Other comprehensive income Comprehensive income Dividends Increase (decrease) through transfers and other changes Total changes in equity - - - - - - - - - - - - - - - - - - - - - - - - - - (86,986,401) 88,076,462 Equity at end of period 12/31/2009 2,824,882,835 158,759,648 196,973,210 (188,691,145) The attached notes are an integral part of these consolidated financial statements Changes in other reserves - - 6,346,219 - - Statement of changes in Equity, Net Issued capital Share premium Reserve of exchange differences on translation Reserve of cash flow hedge Reserve of actuarial gains or losses on defined benefit plans Equity at beginning of period 01/01/2008 2,594,015,459 158,759,648 199,615,814 (44,390,168) Changes in equity Comprehensive income Net income Other comprehensive income Comprehensive income Dividends - - - - - - Increase (decrease) through transfers and other changes Total changes in equity 230,867,376 230,867,376 - - - - - - - - - - - - - - 84,343,797 (232,377,439) Equity at end of period 12/31/2008 2,824,882,835 158,759,648 283,959,611 (276,767,607) The attached notes are an integral part of these consolidated financial statements - - - - - - - - - - - - - - - - Reserve of gains and losses on remeasuring available-for-sale miscellaneous Other financial assets reserves Other reserves Retained earnings to owners of parent interest Total Equity 41,699 (1,291,099,898) (1,282,776,134) 1,817,613,206 3,518,479,555 2,858,524,089 6,377,003,644 Equity attributable Non-controlling 486,226,814 (89,539,720) 486,226,814 (89,539,720) 396,687,094 614,461,594 1,100,688,408 (55,384,316) (144,924,036) 559,077,278 (179,622,013) (179,622,013) 20,528,498 (20,528,498) (639,118,047) (69,011,222) 286,076,303 217,065,081 (80,040,769) 137,024,312 955,764,372 (179,622,013) (639,118,047) 41,825 (1,291,099,898) (1,351,787,356) 2,103,689,509 3,735,544,636 2,778,483,320 6,514,027,956 Reserve of gains and losses on remeasuring available-for-sale miscellaneous Other financial assets reserves Other reserves Retained earnings to owners of parent interest Total Equity 9,565 (1,291,099,898) (1,283,898,329) 1,391,570,726 3,091,314,880 2,937,816,340 6,029,131,220 Equity attributable Non-controlling 32,134 426,042,480 427,164,675 (79,292,251) 347,872,424 6,346,219 1,122,195 660,231,043 660,231,043 651,096,527 1,311,327,570 655,007,019 554,169,721 1,209,176,740 (227,842,344) (227,842,344) (6,346,219) (633,461,972) (227,842,344) (633,461,972) 41,699 (1,291,099,898) (1,282,776,134) 1,817,613,206 3,518,479,555 2,858,524,089 6,377,003,644 Reserve of gains and losses on remeasuring available-for-sale miscellaneous Other financial assets reserves Other reserves Retained earnings to owners of parent interest Total Equity 9,108 (841,137,396) (685,902,642) 834,258,472 2,901,130,937 2,604,433,149 5,505,564,086 Equity attributable Non-controlling 507,589,633 526,592,400 1,034,182,033 507,589,633 (74,425,099) 433,164,534 (242,980,591) (242,980,591) (10,983,274) 515,609,126 (85,408,373) 948,773,660 (242,980,591) 457 (449,962,502) (597,995,687) 190,183,943 333,383,191 523,567,134 292,703,212 557,312,254 9,565 (1,291,099,898) (1,283,898,329) 1,391,570,726 3,091,314,880 2,937,816,340 6,029,131,220 126 126 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 84,591,396 (145,917,895) (13,099,057) 457 (74,425,099) - - - - (247,599) (86,459,544) 13,099,057 (449,962,502) (523,570,588) (182,225,935) (182,225,935) (86,986,401) 88,076,462 (6,346,219) 32,134 (5,224,024) (5,224,024) (96,926,806) (102,150,830) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 191 Financial Statements Consolidated Contents Cover Equity at end of period 12/31/2010 2,824,882,835 158,759,648 44 Stock Exchange Transactions 113,278,890 (174,008,173) Consolidated Statements of Changes in Equity For the years ended December 31, 2010, 2009 and 2008. (In thousands of Chilean pesos - ThCh$) Changes in other reserves 1 2 4 Issued capital 2,824,882,835 Share premium 10 158,759,648 16 - - - 20 - 24 - 28 - - 38 Statement of changes in Equity, Net Equity at beginning of period 1/01/2010 Changes in equity Comprehensive income Net income Other comprehensive income Comprehensive income Dividends Increase (decrease) through transfers and other changes Total changes in equity Changes in other reserves - - - - - - - - - - - - - - - - - - - - - Statement of changes in Equity, Net Equity at beginning of period 01/01/2009 Issued capital 2,824,882,835 Changes in equity Comprehensive income Net income Other comprehensive income Comprehensive income Dividends Increase (decrease) through transfers and other changes Total changes in equity Equity at end of period 12/31/2009 2,824,882,835 The attached notes are an integral part of these consolidated financial statements Changes in other reserves Statement of changes in Equity, Net Equity at beginning of period 01/01/2008 Issued capital 2,594,015,459 Changes in equity Comprehensive income Net income Other comprehensive income Comprehensive income Dividends Increase (decrease) through transfers and other changes Total changes in equity 230,867,376 230,867,376 50 56 60 Share premium 66 158,759,648 78 - 84 - - - 100 - - - 128 - 132 158,759,648 136 144 154 180 Share premium 158,759,648 182 - 326 - - - - - - - Resume Reserve of Chairman’s Letter to Shareholders exchange differences on 2010 Highlight translation 196,973,210 Main financial and operational indicators Reserve of cash flow hedge Reserve of actuarial gains or losses on defined benefit plans (188,691,145) - - - - Identification of the Company (83,694,320) 14,682,972 Ownership and control (20,528,498) - Administration - - 20,528,498 - (83,694,320) Human resources 14,682,972 Dividends Investment and financing policy 2010 Reserve of actuarial gains or losses on defined benefit plans Reserve of The company´s businesses exchange differences on Reserve of cash Investments and financial activities translation flow hedge 283,959,611 Risk factors (276,767,607) - - - - - 88,076,462 Regulatory framework of the electricity industry (86,986,401) Description of the business by - Country - - Other businesses (86,986,401) Sustainability 196,973,210 Diagram of shareholdings (188,691,145) 88,076,462 - - (6,346,219) - - 6,346,219 - - Consolidated relevant facts Identification of subsidiaries and related companies Reserve of exchange differences on Declaration of responsibility translation Reserve of actuarial gains or losses on defined benefit plans Reserve of cash flow hedge Consolidated Financial Statements 199,615,814 (44,390,168) Summarized Financial Information - for Subsidiaries - - - 84,591,396 (145,917,895) (13,099,057) - - - - (247,599) (86,459,544) 13,099,057 84,343,797 (232,377,439) - - - - - - - - - - - - - - - - - - - Equity at end of period 12/31/2008 2,824,882,835 158,759,648 283,959,611 (276,767,607) The attached notes are an integral part of these consolidated financial statements pages control previously next Reserve of gains and losses on remeasuring available-for-sale financial assets Other miscellaneous reserves Other reserves Retained earnings Equity attributable to owners of parent Non-controlling interest Total Equity 41,699 (1,291,099,898) (1,282,776,134) 1,817,613,206 3,518,479,555 2,858,524,089 6,377,003,644 - - 126 - 126 - - - - - - - - - (89,539,720) - - 486,226,814 - - - 486,226,814 (89,539,720) 396,687,094 (179,622,013) (179,622,013) - - - - 614,461,594 1,100,688,408 (55,384,316) (144,924,036) 559,077,278 - 955,764,372 (179,622,013) (639,118,047) 20,528,498 (20,528,498) - (639,118,047) (69,011,222) 286,076,303 217,065,081 (80,040,769) 137,024,312 41,825 (1,291,099,898) (1,351,787,356) 2,103,689,509 3,735,544,636 2,778,483,320 6,514,027,956 Reserve of gains and losses on remeasuring available-for-sale financial assets Other miscellaneous reserves Other reserves Retained earnings Equity attributable to owners of parent Non-controlling interest Total Equity 9,565 (1,291,099,898) (1,283,898,329) 1,391,570,726 3,091,314,880 2,937,816,340 6,029,131,220 - - 32,134 - - 32,134 - - - - - - - - - - (5,224,024) - 6,346,219 1,122,195 - - - - - - - - 660,231,043 660,231,043 651,096,527 1,311,327,570 - - (5,224,024) (96,926,806) (102,150,830) 655,007,019 554,169,721 1,209,176,740 (227,842,344) (227,842,344) - (6,346,219) - (633,461,972) (227,842,344) (633,461,972) 426,042,480 427,164,675 (79,292,251) 347,872,424 41,699 (1,291,099,898) (1,282,776,134) 1,817,613,206 3,518,479,555 2,858,524,089 6,377,003,644 Reserve of gains and losses on remeasuring available-for-sale financial assets Other miscellaneous reserves Other reserves Retained earnings Equity attributable to owners of parent Non-controlling interest Total Equity 9,108 (841,137,396) (685,902,642) 834,258,472 2,901,130,937 2,604,433,149 5,505,564,086 - - - 457 - 457 - - - - - - - - - (74,425,099) - - 507,589,633 - - - - 507,589,633 (74,425,099) 433,164,534 - - - - 526,592,400 1,034,182,033 (10,983,274) 515,609,126 (85,408,373) 948,773,660 (242,980,591) (242,980,591) - (242,980,591) (449,962,502) (523,570,588) (449,962,502) (597,995,687) 292,703,212 557,312,254 - (182,225,935) (182,225,935) 190,183,943 333,383,191 523,567,134 9,565 (1,291,099,898) (1,283,898,329) 1,391,570,726 3,091,314,880 2,937,816,340 6,029,131,220 192 Enersis 2010 Annual Report Consolidated Statements of Cash Flows For the years ended December 31, 2010, 2009 and 2008 (In thousands of Chilean pesos - ThCh$) Indirect Statement of Cash Flow Cash flows from (used in) operating activities Net income Adjustments to reconcile net income Adjustments for income tax expense Adjustments for decrease (increase) in inventories Adjustments for decrease (increase) in trade accounts receivable Adjustments for decrease (increase) in other operating receivables Adjustments for increase (decrease) in trade accounts payable Adjustments for increase (decrease) in other operating payables Adjustments for depreciation and amortization expense Adjustments for impairment loss (reversal of impairment loss) recognised in profit or loss Adjustments for provisions Adjustments for unrealized foreign exchange losses (gains) Adjustments for undistributed profits of associates Other adjustments for non-cash items Total adjustments to reconcile net income Income taxes refund (paid) Other inflows (outflows) of cash Net cash flows from (used in) operating activities Cash flows from (used in) investing activities Cash flows used to acquire non-controlling interests Other cash payments to acquire interests in joint ventures Loans to related companies Proceeds from sales of property, plant and equipment Purchase of property, plant and equipment Proceeds from sales of intangible assets Purchase of intangible assets Proceeds from other long-term assets Purchase of other long-term assets Dividends received Interest received Other inflows (outflows) of cash Net cash flows from (used in) investing activities Cash flows from (used in) financing activities Proceeds from borrowings Proceeds from loans from related companies Repayments of borrowings Payments of finance lease liabilities Repayment of loans to related companies Dividends paid Interest paid Other inflows (outflows) of cash Net cash flows from (used in) financing activities Note 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ 1,100,688,408 1,311,327,570 1,034,182,033 32 346,006,968 359,737,610 415,902,784 28 28 31 13,375,040 31,682,662 8,248,778 (164,046,056) 112,512,315 (168,319,588) (171,236,948) (159,670,405) (181,753,335) 128,804,617 (218,629,211) (55,137,025) 453,413,957 449,017,275 108,373,429 (29,193,303) (11,572,474) (1,015,739) 460,691,298 454,369,959 85,285,525 16,436,304 8,235,523 (2,235,579) 71,286,149 (53,398,066) 577,486,509 417,710,326 20,353,265 (22,406,116) 23,632,778 (3,261,180) 5,959,027 1,193,212,915 1,095,017,935 1,038,416,223 (349,296,688) (367,981,146) (160,176,953) (1,189,488) (34,668) (1,224,517) 1,943,415,147 2,038,329,691 1,911,196,786 — — — (290,471,658) (19,912,162) — — (8,615,091) (27,298,838) 8,889,879 7,559,368 14,139,478 (473,921,829) (526,521,933) (496,750,943) 1,424,691 5,292,416 — (227,418,842) (209,939,738) (284,740,824) — — 3,278,931 6,807,678 190,166,892 (12,641) 2,675,741 4,346,438 (94,841,624 ) (21,834,208) 7,730,911 (50,359) 5,826,418 11,043,445 62,999,998 (775,781,116) (867,266,576) (707,100,714) 263,124,754 826,440,011 1,424,250,917 821,636 — 412,223 (740,286,720) (1,283,351,536) (1,223,027,402) (24,129,963) (3,171,884) (6,996,069) — (16,986,597) (14,159,571) (556,087,040) (578,607,484) (460,210,179) (244,595,847) (252,736,851) (230,036,860) 18,132,411 8,350 470,255 (1,283,020,769) (1,308,405,991) (509,296,686) Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes (115,386,738) (137,342,876) (694,799,386) Effect of exchange rate changes on cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period The attached notes are an integral part of these consolidated financial statements (58,159,046) (45,818,128) 34,385,374 (173,545,784) (183,161,004) 729,184,760 1,134,900,821 1,318,061,825 588,877,065 961,355,037 1,134,900,821 1,318,061,825 5 5 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 193 Financial Statements Consolidated CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2010 (In thousands of Chilean pesos - ThCh$) Note 1. Financial Statements and Activities of the Group Enersis S.A. (hereinafter the “Parent Company” or the “Company”) and its subsidiaries the Enersis Group (hereinafter, Enersis or the Group). Enersis S.A. is a publicly-traded corporation with registered address and head office located at Avenida Santa Rosa, No. 76, Santiago, Chile. The Company was registered in the securities register of the Superintendency of Securities and Insurance of Chile (Superintendencia de Valores y Seguros or “SVS”), under number 175. In addition, the Company is registered with the Securities and Exchange Commission of the United States of America (hereinafter “U.S. SEC”), and with Spain’s “Comisión Nacional del Mercado de Valores.” The Company’s shares are listed in the New York Stock Exchange since 1993, and in Latibex since 2001. Enersis S.A. is a subsidiary of ENDESA, S.A., a Spanish entity controlled by Enel S.p.A. (hereinafter, “Enel”). Initially, the Company was created under the corporate name of “Compañía Chilena Metropolitana de Distribución Eléctrica S.A.” back in 1981. Later on, the Company changed its by-laws and its name to Enersis S.A. effective August 1, 1988. For tax purposes, the Company operates under Chilean tax identification number 94,271,000-3. As of December 31, 2010, the Group had 12,264 employees. During 2010, the Group’s average total employees were 12,261. See Note 35 for additional information regarding employee distribution by class and country. The Company’s corporate purpose consists in engaging, whether in Chile or abroad, in exploration, development, operation, generation, distribution, transmission, and transformation and/or sale of energy in any form or nature, either directly or through another company; and also performing telecommunication activities, and providing engineering advice in Chile or abroad. The Company’s corporate purpose also includes investing in, and the management of investments made in, subsidiaries and associates that are generators, transmitters, distributors, or traders of electricity, or whose corporate purpose includes anyone of the following: (i) (ii) (iii) (iv) energy in any form or nature, supply of public services or of services whose main component is energy, telecommunications and computer services, and intermediation businesses on the internet. The Company’s 2009 consolidated financial statements were approved by the Board of Directors at a meeting held on January 27, 2010. Subsequently, the consolidated financial statements were submitted to the consideration of a General Shareholders Meeting held on April 22, 2010, which provided the final approval on the consolidated financial statements. These consolidated financial statements are presented in thousands of Chilean pesos (unless expressly stated otherwise), as the Chilean peso is the functional currency of the main economic environment in which the Company operates. Foreign operations are recorded, in accordance with the accounting policies set forth in footnotes 2.5 and 3m. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 194 Enersis 2010 Annual Report Note 2. Basis Of Presentation of the Consolidated Financial Statements 2.1. Accounting Principles The consolidated financial statements of Enersis and subsidiaries as of December 31, 2010 have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and approved by its Board of Directors’ at its meeting held on January 26, 2011. These consolidated financial statements present fairly the financial position of Enersis and subsidiaries as of December 31, 2010 and 2009, as well as the results of operations, the changes in equity and the cash flows for each of the three years in the period ended December 31, 2010. The consolidated financial statements included herein have been prepared from accounting records maintained by the Company and its subsidiaries. Each entity prepares its financial statements according to the accounting principles and standards in force in each country, and through the consolidation process, the corresponding adjustments and reclassifications have been made in order to present the consolidated financial statements in accordance with IFRS. 2.2. New accounting pronouncements a) Accounting pronouncement effective from January 1, 2010 Standards, Interpretations and Amendments Mandatory application for: IFRS 3 revised: Business Combinations Amendment to IAS 39: Eligible Hedged Items Amendment to IAS 27: Annual periods beginning on or after July 1, 2009. Annual periods beginning on or after July 1, 2009. Consolidated and Separate Financial Statements Annual periods beginning on or after July 1, 2009. Improvements to IFRS (issued in 2009): Amendment to IFRS 2: Share-Based Payments IFRIC 17: The majority of annual periods beginning on or after July 1, 2009. Annual periods beginning on or after January 1, 2010. Distributions of Non-cash Assets to Owners Annual periods beginning on or after July 1, 2009. The application of these accounting pronouncements has not had any significant effects for the Group. The remaining accounting criteria applied in 2010 are consistent with those applied in 2009. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 195 Financial Statements Consolidated b) Accounting pronouncements effective January 1, 2011 and after: As of the issuance date of the consolidated financial statements presented herein, the following accounting pronouncements have been issued by the IASB but their application was not yet mandatory. Standards, Interpretations and Amendments Mandatory application for: Amendment to IAS 32: Classification of Rights Issues IFRS 9: Annual periods beginning on or after February 1, 2010. Financial Instruments: Classification and Measurement Annual periods beginning on or after January 1, 2013. IAS 24 Revised: Related Party Disclosures IFRIC 19: Annual periods beginning on or after January 1, 2011. Extinguishing Financial Liabilities with Equity Instruments Annual periods beginning on or after July 1, 2010. Amendment to IFRIC 14: Prepayments of a Minimum Funding Requirement Annual periods beginning on or after January 1, 2011. Improvements to IFRS (issued in 2010): The majority of annual periods beginning on or after January 1, 2011. Amendment to IFRS 7: Financial Instruments: Disclosures Annual periods beginning on or after July 1, 2011. Amendment to IAS 12: Income Taxes Annual periods beginning on or after January 1, 2012. The Group is assessing the impact of the application of IFRS 9 from its effective date. In Management’s opinion, the application of other standards, interpretations and amendments pending application will not have a significant effect on the consolidated financial statements of Enersis and subsidiaries. 2.3. Responsibility for the information and estimates made. The Company’s Board is responsible for the information contained in these consolidated financial statements and expressly states that all IFRS principles and standards that are applicable to the Group have been fully implemented. In preparing the consolidated financial statements, certain estimates made by the Company’s Management have been used in order to quantify some of the assets, liabilities, income, expenses and commitments recorded in such statements. These estimates basically refer to: • The valuation of assets and goodwill to determine the existence of impairment losses (see Note 3.e). The assumptions used to calculate the actuarial liabilities and obligations to employees (see Note 23). The useful life of property, plant and equipment and intangible assets (see Notes 3.a and 3.d). The assumptions used to calculate the fair value of financial instruments (see Notes 3.g.5. and 20). Energy supplied to customers and not invoiced at the end of each year. Certain assumptions inherent in the electricity system affecting transactions with other companies, such as production, customer billings, energy consumption, etc. used on the estimations of electricity system settlements. These settlements must occur in the corresponding final settlement dates, which have not occurred as of the date of issuance of the consolidated financial statements, and could affect the balances of assets, liabilities, income and expenses recorded in such statements. The probability that uncertain or contingent liabilities will be incurred and their related amounts (see Note 3.l). Future disbursement for the closure of facilities and restoration of land (see Note 3.a). • • • • • • • Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 196 Enersis 2010 Annual Report • The tax results of the various subsidiaries of the Group that will be reported to the respective tax authorities in the future, which have served as the basis for recording different balances related to income taxes in the current consolidated financial statements (see Note 3.o). Although these estimates have been based on the best information available at the date of issuance of the consolidated financial statements presented herein, it is possible that events may occur in the future that will require a change (increase or decrease) to these estimates in subsequent years, which would be done prospectively, recognizing the effects of such estimation change in the corresponding future consolidated financial statements. 2.4. Subsidiaries and jointly-controlled entities Subsidiaries are defined as entities in which the Parent Company controls the majority of the voting rights or, should that not be the case, is authorized to direct the financial and operating policies of such entities. Jointly-controlled entities are entities in which the situation described in the preceding paragraph exists as a result of an agreement with other shareholders and control is exercised jointly with them. Appendix No. 1 of these consolidated financial statements, titled “Enersis Group Companies,” described Enersis relationship with each of its subsidiaries and jointly- controlled entities. 2.4.1. Changes in the scope of consolidation During 2010 there were no significant changes in Enersis Group’s scope of consolidation. In 2009 the following transactions occurred that changed the Group’s scope of consolidation: On February 25, 2009, our subsidiary Compañía Distribuidora y Comercializadora de Energía S.A. (“Codensa S.A.”) made a capital contribution amounting to ThCh$ 23,744,357 in Distribuidora Eléctrica de Cundinamarca S.A. (“DECA”), that was used to subscribe and pay 489,997 shares, that represents a 48.997% of DECA’s ownership interest. The remaining 51.003% ownership interest in DECA was subscribed and paid by Empresa Eléctrica de Bogotá, a company that has entered into an agreement with Codensa S.A. for the joint control of DECA. Subsequently, on March 13, 2009, DECA acquired an 82.34% ownership interest in Empresa de Energía de Cundinamarca for ThCh$ 48,460,838. As a result of this acquisition DECA recognized goodwill amounting to ThCh$ 14,457,069 (see Notes 5.c and 14). The section titled “Changes in the scope of consolidation,” included as Appendix No. 2 to the consolidated financial statements, shows the companies included within the scope of the Group’s consolidation, together with a detail of the Group’s respective ownership interest percentages. 2.4.2. Companies consolidated with less than 50% share. Although Enersis Group holds less than a 50% share in Codensa and in Empresa Generadora de Energía Eléctrica S.A. (“Emgesa”), they are deemed to be subsidiaries since the Group exercises control over the entity, directly or indirectly, through contracts or agreements with shareholders, or as a consequence of its structure, composition and shareholder classes. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 197 Financial Statements Consolidated 2.4.3. Companies not consolidated with greater 50% share. Although Enersis Group holds more than 50% interest in Centrales Hidroeléctricas de Aysén, S.A. (hereinafter “Hidroaysén”), Hydroaysén is considered to be a jointly- controlled entity because the Group, through contracts and agreements with shareholders, exercises joint control of the entity. 2.5. Basis of consolidation and business combinations The subsidiaries are consolidated and all their assets, liabilities, income, expenses and cash flows are included in the consolidated financial statements after making the adjustments and eliminations related to intra-Group transactions. Jointly-controlled entities are consolidated by using the proportional consolidation method. The Group recognizes, line by line, its share of the assets, liabilities, income and expenses of such entities, so that the aggregation of balances and subsequent eliminations, takes place only in the proportion of Group’s ownership interest in them. The results of subsidiaries and jointly-controlled entities are included in the consolidated comprehensive income statement, from the effective date of acquisition until the effective date of disposal or termination of joint control, as appropriate. The consolidation of the operations of the Parent Company and its subsidiaries, as well as the jointly-controlled entities, was performed applying the following basic principles: 1. At the date of acquisition, the assets, liabilities and contingent liabilities of the subsidiary or jointly-controlled entity are recorded at market value. In the event that there is a positive difference between the acquisition cost and the fair value of the assets and liabilities of the acquired entity, including contingent liabilities, corresponding to the parent’s share, this difference is recorded as goodwill. In the event that the difference is negative, it is recorded with a credit to income. 2. Non-controlling interests in equity and in the financial results of the 3. consolidated subsidiaries are presented, respectively, under the line items “Non-controlling interests” in the consolidated statement of financial position and “Net Income attributable to non-controlling interests” and “Other comprehensive income attributable to non controlling interests” in the consolidated statement of comprehensive income. Translation of financial statements of foreign companies with functional currencies other than the Chilean peso is performed as follows: a. For assets and liabilities, the prevailing exchange rate on the closing date of the financial statements is used. For items in the comprehensive income statement, the average exchange rate for the year is used. Equity remains at the historical exchange rate from the date of acquisition or contribution, and for retained earnings at the average exchange rate at the date of generation. b. c. Exchange differences arising in the conversion of the financial statements are recognized within the heading “Exchange difference on translation” within the consolidated statement of comprehensive income: Other comprehensive income. (see Note 24.2). Translation adjustments that existed at the Group’s transition date to IFRS, January 1, 2004, were deemed to be zero and transferred to reserves, using the exemption for that purpose in IFRS 1 “First time Adoption of IFRS” (see Note 24.5). Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 198 Enersis 2010 Annual Report All balances and transactions between consolidated companies, as well as the share of the proportionally consolidated companies, were eliminated in the consolidation process. 2.6. Reclassifications The Group has made certain reclassifications to the consolidated financial statements as of December 31, 2009 and 2008, as a result of new instructions issued on March 25, 2010 by the SVS through Circular No. 1975. These reclassifications relate mainly to regrouping of financial assets and liabilities within current or non-current, as applicable, and regrouping items under the statements of comprehensive income, but they do not affect the operating income Note 3. Accounting Principles Applied The main accounting policies used in preparing the accompanying consolidated financial statements were as follows: a) Property, plant and equipment Property, plant and equipment are valued at acquisition cost, net of accumulated depreciation and any impairment losses it may have experienced. In addition to the price paid to acquire each item, the cost also includes, where appropriate, the following concepts: • Finance expenses accrued during the construction period that are directly attributable to the acquisition, construction or production of qualified assets, which require substantial period of time before being ready for use such as, for example, electricity generating or distribution facilities. The interest rate used is that of the specific financing or, if none exists, the mean financing rate of the company carrying out the investment. The mean financing rate depends principally on the geographic area and ranges between 5.19% and 7.46%. The amount capitalized for this concept amounted to ThCh$ 15,137,380, ThCh$ 9,173,217 and ThCh$ 9,470,558 for the years ended December 31, 2010, 2009 and 2008, respectively. Capitalized employee expenses directly related to work in progress for the years ended December 31, 2010, 2009 and 2008, were ThCh$ 26,741,111, ThCh$ 16,723,291 and ThCh$ 18,611,427, respectively. Future disbursements that the Group must make to close their facilities are incorporated into the value of the asset at present value, recording the corresponding provision in accounting. On a yearly basis, the Group reviews their estimate of these future disbursements, increasing or decreasing the value of the asset based on the results of this estimate. (see Note 22). Items acquired before the Group’s date of transtion to IFRS, January 1, 2004, include, where appropriate, asset reappraisals permitted in various countries to adjust the value of the property, plant and equipment for inflation as of that date. (see Note 24.5). • • • pages control previously next Construction work in progress items are transferred to operating assets once the testing period has been completed when they are available for use, at which time depreciation begins. 199 Financial Statements Consolidated Expansion, modernization or improvement costs that represent an increase in productivity, capacity or efficiency or a longer useful life are capitalized as a greater cost for the corresponding assets. The replacement or overhaul of whole components that increase the asset’s useful life, or its economic capacity, are recorded as an increase in value for the respective assets, derecognizing the replaced or overhauled components. Periodic maintenance, conservation and repair expenses are recorded directly in income as an expense for the year in which they are incurred. The Company, based on the outcome of impairment testing explained in Note 3.e, believes that the book value of these assets does not exceed their net recoverable value. Property, plant and equipment, net of its residual value, is depreciated by distributing the cost of the different items that compose it on a straight-line basis over its estimated useful life, which is the period during which the companies expect to use such assets. Useful life estimates are periodically reviewed and, if appropriate, adjusted prospectively. The following are the main classes of property, plant and equipment with their respective estimated useful lives Classes of Property, Plant and Equipment Years of estimated useful life Buildings Plant and Equipment IT Equipment Fixtures and Fittings Motor Vehicles Other 22 – 100 3 – 65 3 – 15 5 – 21 5 – 10 2 – 33 Additionally, and for more information, there is a greater opening of the useful lives for plant and equipment class: Years of estimated useful life Generating facilities: Hydroelectric power plants Civil engineering work Electromechanical equipment Coal-fired/fuel-oil power plants Combined cycle plants Renewable energy power plants Transmission and distribution facilities: High-voltage network Low- and medium-voltage network Measuring and remote control equipment Other facilities 35-65 10-40 25-40 10-25 35 10-60 10-60 3-50 4-25 In relation to the administrative concessions held by the Group companies, following is a detail of the years to maturity period for concessions that do not have an indefinite term: Concession holder and operator Empresa Distribuidora Sur S.A.Edesur (Distribution) Hidroeléctrica El Chocón S.A. (Generation) Transportadora de Energía S.A. (Transmission) Compañía de Transmisión del Mercosur S.A. (Transmission) Central Electrica Cachoeira Dourada S.A. (Generation) Central Generadora Termeléctrica Fortaleza S.A (Generation) Compañía de Interconexión Energética S.A.Cien (Transmission, Line 1) Compañía de Interconexión Energética S.A.Cien (Transmission, Line 2) Country Argentina Argentina Argentina Argentina Brazil Brazil Brazil Brazil Concession 95 years 30 years 85 years 87 years 30 years 30 years 20 years 20 years Period remaining term until expiration 77 years 13 years 77 years 77 years 17 years 21 years 10 years 12 years Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 200 Enersis 2010 Annual Report Management of the Group evaluated the specific contract term of each of the aforementioned concessions, which vary by country, business or legal jurisprudence, and concluded that no determining factors exist to indicate that the grantor, which in each case is a government entity, controls the infrastructure and, at the same time, can continuously set the price to be charged for services. Those requirements are essential for applying IFRIC 12 “Service Concession Arrangements,” which establishes how to record and value certain types of concessions (see Note 3.d.1 for concession arrangement within the scope of IFRIC 12). Gains or losses that arise from the sale or disposal of items of property, plant and equipment are recognized in income for the period and calculated as the difference between the sale value and the net book value. b) Investment property Investment property includes land and buildings held for the purpose to earn rentals and/or for capital appreciation. Investment property is measured initially at its cost. Subsequent to initial recognition, investment property is measured at cost less any accumulated depreciation and any accumulated impairment losses. Investment property, excluding land, is depreciated on a straight-line basis over the useful lives of the related assets. The fair value of the investment property is disclosed in Note 16. c) Goodwill Goodwill generated upon consolidation represents the difference between the acquisition cost and the Group share of the fair value of assets and liabilities, including identifiable contingent assets and liabilities of a subsidiary as of the acquisition date. Acquired assets and liabilities are temporarily valued as of the date the company takes control and reviewed within no more than a year after the acquisition date. Until the fair value of assets and liabilities is ultimately determined, the difference between the acquisition price and the book value of the acquired company is temporarily recorded as goodwill. If goodwill is finally determined to exist in the financial statements the year following the acquisition, the prior year accounts presented for comparison purposes, are modified to include the value of acquired assets and liabilities and final goodwill from the acquisition date. Goodwill generated from acquiring companies with functional currencies other than the Chilean peso is valued at the functional currency of the acquired company and converted to Chilean pesos using the exchange rate in effect as of the date of the statement of financial position. Goodwill generated before the date of transition to IFRS, January 1, 2004, is maintained at its net value recorded as of that date, while goodwill originated afterwards is valued at acquisition cost (see Notes 14 and 24.5). Goodwill is not amortized, instead, at each period end the Company estimates whether any impairment has reduced its recoverable value to an amount less than the net recorded cost and, if appropriate, immediately adjusts for impairment (see Note 3.e). Until December 31, 2009, in those cases where the Group acquired an additional ownership interest in a company already controlled and consolidated, the difference between the price of the additional ownership interest and the balance of “Equity Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 201 Financial Statements Consolidated attributable to non-controlling interests” that was derecognized as a result of the acquisition was recorded as goodwill. In those cases where the Group sold part of its interest in a controlled company that did not result in loss of control, the difference between the sale price and the balance of “Equity attributable to non-controlling interests” was recognized in net income for the year. Beginning in 2010, as part of the adoption of the amendments related to IAS 27 (Revised 2008) “Consolidated and Separate Financial Statements,” any change in ownership interests in subsidiaries that do not result in loss of control are recognized within Equity attributable to owners of parent. During 2010, there were no transactions with non-controlling interests. d) Intangible assets other than goodwill d.1) Concessions IFRIC 12 “Service Concession Arrangements” provides accounting guidance operators for public-to-private service concession arrangements. This accounting interpretation applies if: a) b) The grantor controls or regulates which services the operator should provide with the infrastructure, to whom it must provide them and at what price; and The grantor controls - through ownership, beneficial entitlement or otherwise-any significant residual interest in the infrastructure at the end of the term of the arrangement. If both of the above conditions are met, the consideration received by the Group for the infrastructure construction is recognized at its fair value, as either, an intangible asset to the extent that the Group receives the right to charge users of the public service/facility as long as those charges are conditional on usage of the facility, or as a financial asset to the extent that the Group has an unconditional contractual right to receive cash or another financial asset from the grantor or a third party. The Group recognizes the contractual obligations assumed for the infrastructure maintenance during the infrastructure’s use, or for its return to the grantor at the end of the concession agreement within the conditions specified in such concession agreement, as long as it does not relate to an activity that generates income, in accordance with the Group’s provision accounting policy. Finance expenses attributable to the concession arrangement are capitalized based on criteria established in Note 3 a) above, to the extent that the Group has a contractual right to receive an intangible asset. The median financing rate in Brazil, where the concession arrangements that require capital expenditures are located, ranges between 9.5% and 12.5% in prior periods. During 2010, we did not capitalize finance expenses. Note that the finance expenses capitalized in 2009 and 2008 were ThCh$ 1,992,733 and ThCh$ 2,648,915, respectively. Additionally, during the years ended December 31, 2010, 2009, and 2008 we capitalized employee expenses attributable to construction in progress in the amount of ThCh$ 18,128,254, ThCh$ 17,007,228 and ThCh$ 13,988,133, respectively. Intangible assets from concession arrangements are amortized over the term of the concessions. The subsidiaries that have recognized an intangible asset from their service Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 202 Enersis 2010 Annual Report concession agreements are the following: Concession hoder and operator Country Term Remaining period to maturity Ampla Energía e Serviços S.A. (*) (Distribution) Companhia Energética do Ceará S.A. (*) (Distribution) Sociedad Concesionaria Túnel El Melón S.A. (Highway infrastructure) Brazil Brazil Chile 30 years 16 years 30 years 17 years 23 years 6 years (*) Considering that part of the rights acquired by our subsidiaries are unconditional, a financial asset at amortized cost has also been recognized (see Notes 3.g.1 and 7). d.2) Research and development expenses The Group follows the policy of recording as intangible assets in the statement of financial position, the costs incurred in a project’s development phase as long as its technical viability and economic returns are reasonably assured. Expenditures on research activities are recognized as an expense in the period in which they are incurred. In 2010, 2009 and 2008 no research and development expenses were recognized. d.3) Other intangible assets These intangible assets correspond primarily to computer software, water rights, and easements. They are initially recognized at acquisition or production cost and, subsequently, are measured at cost less accumulated amortization and impairment losses, if any. Computer softwares are amortized, on an average, in five years. Certain easements and water rights have indefinite useful lives, as such, they are not amortized. Easements and water rights in some cases have indefinite useful live, as thus, are not amortized. In others cases, they have a useful live that, depending on their own characteristics, range between 40 and 60 years, term which is used to amortize the asset. The criteria for recognizing impairment losses or, if appropriate, recoveries of impairment losses recorded in prior periods are explained in letter e) of this Note. e) Asset impairment During the period, and principally at period end, the Company evaluates whether there is any indication that an asset has been impaired. Should any such indication exist, the company estimates the recoverable amount of that asset to determine, where appropriate, the amount of impairment. In the case of identifiable assets that do not independently generate cash flows, the company estimates the recoverability of the Cash Generating Unit to which the asset belongs, which is understood to be the smallest identifiable group of assets that generates independent cash inflows. Notwithstanding the preceding paragraph, in the case of Cash Generating Units to which goodwill or intangible assets with an indefinite useful life have been allocated, a recoverability analysis is performed routinely at each period end. The recoverable amount is the greater between the fair value less the cost needed to sell and the value in use, which is defined as the present value of the estimated future cash flows. In order to calculate the recoverable value of property, plant and equipment, goodwill and intangible assets, value in use criteria is used by the Group in practically all cases. To estimate the value in use, the Group prepares future cash flow projections, before tax, based on the most recently available budgets. These budgets incorporate management’s best estimates of revenue and costs of Cash Generating Units using sector projections, past experience and future expectations. In general, these projections cover the next ten years, estimating cash flows for Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 203 Financial Statements Consolidated subsequent years by applying reasonable growth rates between 3.3% and 6.7% that, in no case, are increasing nor exceed the average long-term growth rates for the particular sector and country. These cash flows are discounted at a given pre-tax rate in order to calculate their present value. This rate reflects the cost of capital of the business and the geographical area in which the business is carried on. In order to calculate the discount rate, the current time value of money and the risk premiums generally used by analysts for the business and the geographical area are taken into account. The discount rates, before tax, expressed in nominal terms and applied in 2010 and 2009 are the following: Country Chile Currency Chilean peso Argentina Argentine peso Brazil Peru Brazilian reais Peruvian sol Colombia Colombian peso 2010 2009 Minimum Maximum Minimum Maximum 7.5% 15.0% 9.6% 7.9% 9.6% 8.8% 16.9% 10.8% 8.1% 9.8% 9.2% 9.5% 19.5% 11.3% 9.1% 11.5% If the recoverable amount is less than the net carrying amount of the asset, the corresponding provision for impairment loss is recorded for the difference, and charged to “Reversal of impairment loss (impairment loss) recognized in profit or loss” in the consolidated statement of comprehensive income. Impairment losses recognized for an asset in prior periods are reversed when its estimated recoverable amount changes, increasing the asset’s value with a credit to earnings, limited to the asset’s carrying amount if no adjustment had occurred. In the case of goodwill, adjustments that would have been made are not reversible. The following procedure is used to determine the need to adjust financial assets for impairment: • In the case of commercial assets, the Group has a policy to record impairment through an allowance account determined based on the age of past-due balances, which is generally applied except in those cases where a specific collectability analysis is recommended, such as the case for receivables from public-related companies. In the case of receivables of a financial nature, impairment is determined on case-by-case basis. As of the date of issuance of these consolidated financial statements, the Company had no significant past due non commercial financial assets. • f) Leases Leases that transfer to the lessee substantially all of the risks and rewards incidental to ownership are classified as finance leases. All other leases are classified as operating leases. Finance leases in which the Group acts as a lessee are recognized when the agreement begins. At that point, the Group records an asset based on the nature of the lease and a liability for the same amount, equal to the lower of the fair value of the leased asset or the present value of the minimum lease payments. Subsequently, the minimum lease payments are divided between finance expense and principal reduction. The finance expense is recorded in the income statement and distributed over the lease term, so as to obtain a constant interest rate for each period over the balance of the debt pending amortization. The asset is amortized in the same terms as other similar depreciable assets, as long as there is reasonable certainty that the lessee will acquire Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 204 Enersis 2010 Annual Report ownership of the asset at the end of the lease. If no such certainty exists, the asset will be amortized over the lesser term between the useful life of the asset and the term of the lease. Operating lease payments are expensed on a straight-line basis over the term of the lease unless another type of systematic basis of distribution is deemed more representative. g) Financial instruments Financial instruments are contracts that give rise to both a financial asset in one company and a financial liability or equity instrument in another company. g.1) Financial assets other than derivatives The Group classifies its financial assets other than derivatives, whether permanent or temporary, and excluding equity method investments (see Note 12) and investments held for sale (see Note 11), into four categories: • Trade and other current receivables and Accounts receivable from related companies: These are recorded at amortized cost, which corresponds to initial fair value less principal repayments made, plus accrued and uncharged interest, calculated using the effective interest method. The effective interest method is used to calculate the amortized cost of a financial asset or liability (or group of financial assets or financial liabilities) and is charged to finance income or cost over the relevant period. The effective interest rate is the discount rate that matches the estimated cash flows to be received or paid over the expected life of the financial instrument (or, when appropriate, over a shorter period) to the net carrying amount of the financial asset or financial liability. • • • Held-to-maturity investments: Investments that Enersis intends to hold and is capable of holding until their maturity are accounted for at amortized cost as defined in the preceding paragraph. Financial assets at fair value with changes in net income: This includes the trading portfolio and those financial assets that have been designated as such upon initial recognition and that are managed and evaluated using fair value criteria. They are valued in the consolidated statement of financial position at fair value, with changes in value recorded directly in income when they occur. Available-for-sale financial assets: These are financial assets specifically designated as available for sale or that do not fit within any of the three preceding categories and consist almost entirely of financial investments in equity instruments (see Note 6). These investments are recorded in the consolidated statement of financial position at fair value when it can be reliably determined. Changes in fair value, net of taxes, are recorded with a charge or credit to an equity reserve known as “Gains (losses) on remeasuring available-for-sale financial assets” until the investment is disposed of, at which time the amount accumulated in this account for that investment is fully charged to the comprehensive income statement. Should the fair value be less than the acquisition cost and if there is objective evidence that the asset has been more than temporarily impaired, the difference is recorded directly in the comprehensive income statement. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 205 Financial Statements Consolidated In the case of interests in unlisted companies or companies with very little liquidity, normally the market value cannot be reliably determined. When this occurs, those interests are valued at acquisition cost or a lesser amount if evidence of impairment exists. Purchases and sales of financial assets are accounted for using their trade date. g.2) Cash and cash equivalents This account within the statement of consolidated financial position includes cash and in banks, time deposits and other highly liquid short-term investments readily convertible to cash and which are subject to insignificant risk of changes in value. g.3) Financial liabilities other than derivatives Financial liabilities are generally recorded based on cash received, net of any costs incurred in the transaction. In subsequent periods, these obligations are valued at their amortized cost, using the effective interest rate method (see Note 3.g.1). In the particular case that a liability is the underlying item of a fair value hedge derivative, as an exception, such liability will be valued at its fair value for the portion of the hedged risk. In order to calculate the fair value of debt, both in the cases when it is recorded in the statement of financial position and for fair value disclosure purposes as seen in Note 20, debt has been divided into fixed interest rate debt (hereinafter “fixed-rate debt”) and variable interest rate debt (hereinafter “floating-rate debt”). Fixed-rate debt is that on which fixed-interest coupons established at the beginning of the transaction are paid explicitly or implicitly over its term. Floating-rate debt is that issued at a floating interest rate, i.e., each coupon is established at the beginning of each period based on the reference interest rate. All debt has been valued by discounting expected future cash flows with a market-interest rate curve based on the payment’s currency. g.4) Derivative financial instruments and hedge accounting Derivatives held by the Group correspond primarily to transactions entered into to hedge interest and/or exchange rate risk, intended to eliminate or significantly reduce these risks in the underlying transactions being hedged. Derivatives are recorded at fair value as of the date of the statement of financial position as follows; if their fair value is positive, they are recorded within “Other financial assets”; and if their fair value is negative, they are recorded within “Other financial liabilities.” Changes in fair value are recorded directly in income except when the derivative has been designated for accounting purposes as a hedge instrument and all of the conditions established under IFRS for applying hedge accounting are met, including that the hedge is highly effective. In this case, changes are recorded as follows: • • Fair value hedges: The underlying portion for which the risk is being hedged is valued at its fair value as is the hedge instrument, recording any changes in the value of both in the comprehensive income statement by netting the effects in the same comprehensive income statement account. Cash flow hedges: Changes in the fair value of the effective portion of derivatives are recorded in an equity reserve known as “Reserve of cash flow hedges.” The cumulative loss or gain in this account is transferred to the comprehensive income statement to the extent that the underlying item impacts the comprehensive income statement because of the hedged risk, netting the effect in the same comprehensive income statement account. Gains or losses from the ineffective portion of the hedge are recorded directly in the comprehensive income statement. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 206 Enersis 2010 Annual Report A hedge is considered highly effective when changes in the fair value or the cash flows of the underlying item directly attributable to the hedged risk, are offset by changes in the fair value or the cash flows of the hedging instrument, with effectiveness ranging from 80% to 125%. The Company does not apply hedge accounting to its investments abroad. As a general rule, long-term commodity purchase or sale agreements are recorded in the consolidated statement of financial position at their fair value as of period end, recording any differences in value directly in income, except when all of the following conditions are met: • • The sole purpose of the agreement is for the own use. The Group’s futures projections justify the existence of these agreements with the purpose of own use. • Past experience with agreements shows that they have been utilized for own use, except in certain isolated cases in which they had to be used for exceptional reasons or reasons associated with logistical management issues outside the control and projection of the Group. • The agreement does not stipulate settlement by differences and the parties do not make it a practice to settle similar contracts by differences in the past. The long-term commodity purchase or sale agreements maintained by the Group, which are mainly for electricity, fuel and other supplies, meet the conditions described above. Thus, the purpose of fuel purchase agreements is to be used to generate electricity, the electricity purchase contracts are used to materialize sales to end- customers and the electricity sale contracts are used to sell the company’s own product. The Company also evaluates the existence of embedded derivatives in contracts or financial instruments to determine if their characteristics and risk are closely related to the principal contract as long as the set is not being accounted for at fair value. If they are not closely related, they are recorded separately and changes in value are accounted for directly in the comprehensive income statement. g.5) Fair value measurement and classification of financial instruments The fair value of the various derivative financial instruments is calculated as follows: • • For derivatives traded on a formal market, by its quoted price as of year end. Enersis and subsidiaries value derivatives not traded on formal markets, using discounted expected cash flows and generally accepted options valuation models, based on current and future market conditions as of year-end. Based on the described procedures, the Group classifies financial instruments in the different levels: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3: Inputs for assets or liabilities that are not based on observable market data (unobservable inputs). g.6) Derecognition of financial assets Financial assets are derecognized when: • The contractual rights to receive the financial asset’s cash flows expire or have been transferred, or if the contractual rights are retained, the Group has assumed a contractual obligation to pay the financial asset’s cash flows to one or more receiver. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 207 Financial Statements Consolidated • The Group has transferred substantially all the risks and rewards of ownership of the financial asset, or, when it neither transfers nor retains substantially all the risks and rewards but does not retain control over the asset. Where the Group retains substantially all the inherent risks and rewards of ownership of the tranferred asset, it continues recognizing the transferred asset in its entirety and recognizes a financial liability for the consideration received. Transactions costs are recognized in profit and loss by using the effective interest method (see Note 3.g.1.) h) Investments accounted for using equity method Investments in associates in which the Group has significant influence are recorded using the equity method. In general, significant influence is assumed in cases in which the Group has more than 20% interest. The equity method consists of recording the investment in the statement of financial position based on the share of its equity that the Group’s interest represents in its capital, adjusted for, if appropriate, the effect of transactions with subsidiaries plus any goodwill generated in acquiring the company. If the resulting amount were negative, zero is recorded for that investment in the statement of financial position, unless there is a commitment from the Group to support the company’s negative equity situation, in which case a provision is recorded. Dividends received from these companies are deducted from the value of the investment and any profit or loss obtained from them to which the Group is entitled based on its interest is recorded within “Share of profit (loss) of associates accounted for using equity method.” Appendix No. 3 “Enersis Group Associated Companies,” included in these consolidated financial statements, provides information about Enersis’s relation with each of its associates. i) Inventories Inventories are valued at the lesser of their weighted average acquisition price or net realizable value. j) Non-current assets held for sale and discontinued operations The Group classifies as “Non-current assets held for sale,” property, plant and equipment; intangible assets; investments accounted for using the equity method; and disposals groups (group of assets to be disposed of and liabilities directly associated with those assets), if as of the date of the consolidated financial statements, the Group has taken active measures for their sale and estimates that such sale is highly probable These held-for-sale assets or disposal groups are measured at the lower of their carrying amount and fair value less costs to sell. Depreciation and amortization on these assets cease when they meet the criteria to be classified as held for sale. Non-current assets held for sale and the components of the disposal groups classified as held for sale are presented in the accompanying consolidated statement of financial position as a single line item within assets called “Non-current assets or disposal groups classified as held for sale” and the respective liabilities are presented as a single line item within liabilities called “Liabilities included in disposal groups classified as held for sale.” Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 208 Enersis 2010 Annual Report The Group classifies as “Discontinued operations” those which represent separate major lines of business or are part of a single coordinated plan to dispose of a separate major line of business that either has been disposed of, or are classified as held for sale. Additionally, the Group classifies as “Discontinued operations” subsidiaries that have been acquired exclusively for resale. The components of profit or loss after taxes from discontinued operations are presented as a single line item in the consolidated comprehensive income statement as “Net income from discontinued operations.” k) Treasury shares Treasury shares are deducted from equity in the consolidated statement of financial position and valued at acquisition cost. The gains and losses from the disposal of treasury shares are recorded under the heading Total equity: treasury shares. As of December 31, 2010, there are no treasury shares and no transactions with equity share were made during 2010, 2009 and 2008. l) Provisions Obligations existing as of the date of the consolidated financial statements resulting from past events which may negatively impact the Group’s equity and whose amount and timing of payment are uncertain, are recorded as provisions in the consolidated statement of financial position at the present value of the most likely amount that it is believed that the Group will have to disburse to settle the obligation. Provisions are quantified using the best information available as of the date of issuance of the consolidated financial statements regarding the consequences of the event causing the provision and are re-estimated at each subsequent accounting close. l.1) Provisions for post-employment benefit and similar obligations Some of the Group’s subsidiaries have pension and similar obligations to their employees. Such obligations, which combine defined benefits and defined contributions, are basically formalized through pension plans, except for certain non- monetary benefits, mainly electricity supply obligations, which, due to their nature, have not been externalized, and are covered by the related in-house provisions. For defined benefit plans, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each reporting period. Past service costs relating to changes in benefits are recognized immediately to the extent that the benefits are already vested, and otherwise are amortized on a straight-line basis over the average period until the benefits become vested. The defined benefit plan obligations in the statement of financial position represent the present value of the defined benefit obligations a adjusted for unrecognized actuarial gains and losses and unrecognized past service costs, and reduced by the fair value of plan assets. For each of the plans, any positive difference between the actuarial liability for past services and the plan assets is recognized under line item “Provisions for employee benefits” within current and non-current liabilities in the consolidated statement of financial position and any negative difference is recognized under line item “Other financial assets” within non-current assets in the consolidated statement of financial position, provided that such negative difference is recoverable by the Group, usually through a reduction in future contributions and taking into consideration the limit Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 209 Financial Statements Consolidated established in IFRIC 14, “IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction.” Contributions to defined contribution benefit plans are recognized as an expense in the consolidated statement of comprehensive income when the employees have rendered their services. Actuarial gains and losses arising in the measurement of both the plan liabilities and the plan assets, including the limit in IFRIC 14, are recognized directly under “Equity — Retained earnings.” m) Conversion of balances in foreign currency Transactions carried out by each company in a currency other than its functional currency are recorded using the exchange rates in effect as of the date of each transaction. During the year, any differences that arise between the exchange rate recorded in accounting and the rate prevailing as of the date of collection or payment are recorded as “Foreign currency exchange differences” in the comprehensive income statement. Likewise, as of each year end, balances receivable or payable in a currency other than each company’s functional currency are converted using the period-end exchange rate. Any valuation differences are recorded as “Foreign currency exchange differences” in the comprehensive income statement. The Group has established a policy to hedge the portion of its revenue that is directly linked to the US dollar by obtaining financing in this currency. Exchange differences related to this debt, as they are cash flow hedge transactions, are charged, net of taxes, to a reserve account in equity and recorded in income during the period in which the hedged cash flows are realized. This term has been estimated at ten years. n) Current/Non-Current Classification In the accompanying consolidated statement of financial position, assets and liabilities expected to be recovered or settled within twelve months are presented as current items and those assets and liabilities expected to be recovered or settled in more than twelve months are presented as non-current items. Should the Company have any obligations that mature in less than twelve months but can be refinanced over the long term at the Company’s discretion, through unconditionally available credit agreements with long-term maturities, such obligations may be classified as long-term liabilities. o) Income tax Income taxes for the year are determined as the sum of current taxes from the Group numerous subsidiaries and result from applying the tax rate to the taxable base for the year, after allowable deductions have been made, plus any changes in deferred tax assets and liabilities and tax credits, both for tax losses and deductions. Differences between the book value and tax basis of assets and liabilities generate deferred tax asset and liability balances, which are calculated using tax rates expected to be in effect when the assets and liabilities are realized. Current taxes and changes in deferred tax assets and liabilities not arising from business combinations are recorded in income or in equity in the statement of financial position, based on where the gains or losses originating them were recorded. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 210 Enersis 2010 Annual Report Any fluctuations from business combinations that are not recorded upon taking control because their recovery is not assured are recognized by reductions, if appropriate, to the value of goodwill accounted for in the business combination. Deferred tax assets and tax credits are recognized only when it is likely that there will be future tax gains sufficient enough to recover deductions for temporary differences and make use of tax losses. Deferred tax liabilities are recognized for all temporary differences, except those derived from the initial recognition of goodwill and those that arose from valuing investments in subsidiaries, associates and jointly-controlled companies in which the Group can control their reversal and where it is likely that they will not be reversed in the foreseeable future. Any deductions that can be applied at a given moment to current tax liabilities are credited to earnings within the income tax account, except when doubts exist about their tax realization, in which case they are not recognized until they are effectively realized, or when they correspond to specific tax incentives, in which case they are recorded as grants. At each accounting period close, the Company reviews the deferred taxes it has recorded, both assets and liabilities, in order to ensure they remain current and otherwise make any necessary corrections based on the results of this analysis. p) Revenue and expense recognition Revenue and expense are recognized on an accrual basis. Revenue is recognized when the gross inflow of economic benefits arising in the course of the Group’s ordinary activities in the year occurs, provided that this inflow of economic benefits results in an increase in total equity that is not related to contributions from equity participants and that these benefits can be measured reliably. Revenue is measured at the fair value of the consideration received or receivable arising there from. Revenue associated with the rendering of services is only recognized if it can be estimated reliably, by reference to the stage of completion of the transaction at the date of the statement of financial position. The Group excludes from the revenue figure gross inflows of economic benefits received by it when it acts as an agent or commission agent on behalf of third parties, and only recognizes as revenue economic benefits received for its own account. When goods or services are exchanged or swapped for goods or services which are of a similar nature, the exchange is not regarded as a transaction which generates revenue. The Group records for the net amount non-financial asset purchase or sale contracts settled for the net amount of cash or through some other financial instruments. Contracts entered into and maintained for the purpose of receiving or delivering these non-financial assets are recognized on the basis of the contractual terms of the purchase, sale or usage requirements expected by the entity. Interest income (expense) is recognized by reference to the effective interest rate applicable to the principal outstanding over the related repayment period. q) Earnings per share Basic earnings per share are calculated by dividing net income attributable to owners of the Parent (the numerator) by the weighted average number of ordinary shares outstanding (the denominator) during the year, excluding, if any, the average number of shares of the Parent held by the Group. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 211 Financial Statements Consolidated During 2010, 2009 and 2008, the Group did not engage in any transaction of any kind that have potential dilutive effects leading to diluted earnings per share that could differ from basic earnings per share. r) Dividends Article No. 79 of Chilean Companies Act establishes that, except if unanimously agreed otherwise by shareholders of all issued shares, listed corporations should distribute a cash dividend to its shareholders on a yearly basis, prorated based on their shares or the proportion established in the company’s by laws if there are preferred shares, of at least 30% of net income for each period, except when accumulated losses from prior years must be absorbed. As it is practically impossible to achieve a unanimous agreement given Enersis’s highly fragmented share capital, as of the end of each year the amount of the dividend obligation to its shareholders, net of interim dividends approved during the year, is determined and accounted for in “Trade and other current payables” or “Accounts payable to related companies,” as appropriate, and charged to Equity. Interim and final dividends are deducted from equity as soon as they are approved by the competent body, which in the first case is normally the Company’s Board of Directors and in the second case is the Ordinary Shareholders’ Meeting. s) Cash flow statement The cash flow statement reflects the changes in cash that took place during the year in relation to both continuing and discontinued operations, calculated using the indirect method. The following terms are used in the consolidated cash flow statements: • • • • Cash flows: inflows and outflows of cash or cash equivalents, which are defined as highly-liquid investments maturing in less than three months with a low risk of changes in value. Operating activities are the principal revenue-producing activities of the Group and other activities that are not investing or financing activities. Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash and cash equivalents. Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the Group. Note 4. Sector Regulation and Electricity System Operations There are different regulations in the Latin American countries in which the Group operates. We discuss below the main characteristics of each business. 4.1. Generation: Chile In Chile the electricity sector is regulated by the General Law of Electrical Services (Chilean Electricity Law), also known as DFL No. 1 of 1982, of the Ministry of Mining —whose compiled and coordinated text was established by DFL No. 4 issued in 2006 by the Ministry of Economy (“Electricity Law”)— as well as by an associated Regulation (D.S. No. 327 issued in 1998). Three government bodies are primarily responsible for Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 212 Enersis 2010 Annual Report enforcing this law: The National Energy Commission (“CNE”), which has the authority for proposing regulated tariffs (node prices), which require the final approval of the Ministry of Economy and prepares the indicative plan, a ten-year guide for the expansion of the system that must be consistent with the calculated node prices; the Superintendency of Electricity and Fuels ( “SEF”), which sets and enforces the technical standards of the system and the proper compliance with the law; and, the recently created Ministry of Energy, which will be responsible for proposing and guiding public policies on energy matters, and it combines together the SEF, the CNE and the Chilean Commission for Nuclear Energy (“ChCNE”), thus strengthening coordination and allowing an integrated view of the energy sector. The Ministry of Energy also includes an Agency for Energy Efficiency and a Center for Renewable Energy. The Chilean Electricity Law has established an “Experts Panel” whose main task is to resolve potential discrepancies among all participants in the electricity market such as electricity companies, system operator, regulator, etc. The Chilean electrical sector is divided into four interconnected electrical systems: the Sistema Interconectado Central (SIC), the Sistema Interconectado del Norte Grande ( “SING”), and two separate medium-size systems located in southern Chile, one in Aysén and the other in Magallanes. The SIC is the main electrical system covering 2,400 km, connecting Taltal in the northern part with Quellon, located on the island of Chiloe, in the southern part of the country . The SING covers the northern part of the country, from Arica down to Coloso, covering approximately 700 km. The electricity industry is divided into three business segments: generation, transmission, and distribution, operating in an interconnected and coordinated manner, and whose main purpose is to supply electrical energy to the market at minimum cost while maintaining quality and safety service standards required by the electrical regulations. Given their characteristics, Transmission and Distribution businesses are natural monopolies, and are segments regulated as such by the electricity low, requiring free access to networks and establishing regulated tariffs. Under the Chilean Electricity Law, companies engaged in generation and transmission on an interconnected electrical system must coordinate their operations in a centralized manner through an operating agent, the Centro de Despacho Económico de Carga (“CDEC”), in order to operate the system at minimum cost while maintaining service safety. For this reason, the CDEC plans and operates the system, including the calculation of the so called “marginal cost,” which is the price at which energy transfers among generators performed through the CDEC are valued. Therefore, a company’s decision to generate electricity is subject to CDEC’s operation plan. On the other hand, a company is free to decide whether to sell its energy to regulated or unregulated customers. Any surplus or deficit between sales to customers and energy supply, is sold to, or purchased from, other generators at the spot market price. An electricity generator company may have the following types of clients: (i) Regulated customers: Corresponds to those residential and commercial consumers and small and medium size businesses with a connected maximum capacity equal to or less than, 2,000 KW that are located in the concession area of a distribution company. Until 2009, the transfer prices between generators and distribution companies were capped at a maximum value called node price, which is regulated by the Ministry of Economy. Node prices are determined every six months, in April and October, based on a report prepared by the CNE that takes into account projections of expected marginal costs in the system over the next 48 months for the SIC and 24 months for the SING. Beginning on 2010, the transfer prices between generators and distributors will be established in regulated bidding processes carried out by these companies. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 213 Financial Statements Consolidated (ii) Unregulated customers: Corresponds to those customers, mainly industrial and mining companies, with a connected maximum capacity over 2,000 KW. These consumers can freely negotiate prices for electrical supply with generators and/or distributors. Customers with capacity between 500 and 2,000 KW have the option to contract energy at prices agreed upon with their suppliers or be subject to regulated prices, with a minimum stay of at least four years under each price regime. (iii) Spot market: Represents the energy and capacity transactions among generators that result from the CDEC coordination to achieve the economical operation of the system, where the excess (surpluses/deficits) between the energy supply and the energy to comply with business commitments is transferred through sale (purchase) to (from) other generators in the CDEC. In the case of energy, transfers are valued at the marginal cost; in the case of capacity, at the node prices set every semester by the regulators. In Chile, the capacity that must be paid back to each generator depends on an annual calculation performed by the CDEC, which yields the final capacity of each power plant, that is independent from the dispatched capacity. Beginning in 2010 with the enactment of Law 20,018 distribution companies must have permanently available supply to cover their entire demand projected for a period of three years; as such they have to undertake long-term public bids. Regarding renewable energy, in April of 2008 Law 20,257 was enacted, which encourages the use of Non-Conventional Renewable Energies (“ERNC”). This law requires generators to provide at least 5% of their energy from renewable sources between years 2010 and 2014. This requirement progressively increases by 0.5% from years 2015 until 2024, where a 10% renewable energy requirement would be reached. Rest of Latin America In the other Latin American countries where the Group operates, different regulations are enforced. In general, regulations in Brazil, Argentina, Peru and Colombia allow participation of private capital in the electricity sector, uphold free competition in electricity generation, and define criteria to avoid certain levels of economic concentration and/or market practices that may cause a decline in this activity. Unlike Chile, state-owned companies participate in the electricity sector together with private companies in the electricity generation, transmission and distribution activities The participation of companies in different activities (generation, distribution, and commercial), is allowed, as long as these activities are properly separated, both from an accounting and corporate point of view. Nevertheless, the transmission sector is where the strictest restrictions are usually imposed, mainly due to its nature and the need to assure adequate access to all players. In regards to the main characteristics of the electricity generation business, one can indicate that in general these are open markets in which private players are free to make their own investment decisions. The exceptions are Brazil, a country which, based on the contractual needs of the distribution companies, the Ministry of Energy actively participates in the electricity system’s expansion by establishing capacity quotas by technology (separate bids for thermal, hydraulic, or renewable energies) or participates directly by organizing public bids for specific projects; and Argentina where despite the government has promoted initiatives to encourage electricity investments, such as “Energia Plus,” the increase in installed capacity has not been as expected. On November 25, 2010, the Ministry of Energy of Argentina and the participants in the electricity generation market signed an agreement that, among other aspects, seeks to increase new generation project developments financed with funds that make up part of the outstanding debt that the Argentine government has with electricity companies. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 214 Enersis 2010 Annual Report The operation in these countries is coordinated in a centralized manner in which an independent operator coordinates the dispatch of electrical charges. Except for Colombia, where charge dispatched is based on prices offered by the players, in the other countries charge dispatched is centralized, based on variable production costs that seeks to assure the fulfillment of the demand at a minimum cost for the system. From that dispatch, the marginal cost, which defines the price for spot transactions, is determined. Nevertheless, Argentina and Peru currently intervene to some extent in the formation of price in these marginal generation markets. This occurs in Argentina after the 2002 crisis, and in Peru as a result of a recent Emergency Law enacted in 2008 that defines a marginal idealized cost, considering that no actual restrictions exist on the transportation system for gas and electricity. In Colombia, Brazil, Peru and Argentina generation players are able to sell energy through contracts in the regulated market or in the unregulated market, and trade their surplus/deficit on the spot market. The unregulated market is focused on the segment of large users, although the limits that define such a status vary in each market. The principal differences among the markets involve the way of regulating the sale of energy among generators and distributors and how regulated prices are established for the determination of the tariffs charged to end users. Initially, Argentine law contemplated that the selling price charged by generators to distributors would have to be obtained from a centralized calculation of the average spot price expected for the next six months. However, after the 2002 crisis, Argentine authorities have established the price arbitrarily, forcing intervention in the marginal system and provoking a mismatch between actual generation costs and payment of the demand through distributors. Additionally, energy that can be sold by generators is limited to the demand that each generator had sold via energy contracts during the May - June 2005 period. In Brazil, the regulated purchase price used in the determination of tariffs to end users is based on average prices of open bids, and there are separate bidding processes for existing and new energy. Bidding processes for new energy contemplate long- term generation contracts in which new generation projects must cover the growth of demand foreseen by distributors. The open bids for existing energy consider shorter contractual terms and seek to cover the distributors’ contractual needs arising from the expiry of prior contracts. Each bidding process is coordinated centrally. Authorities define maximum prices and, as a result, contracts are signed where all distributors participating in the process buy pro rata from each offering generator. In Colombia distributors are free to decide their supply, being able to define the conditions of public bidding processes where they acquire energy for the regulated market and are able to buy energy in the spot market. Prices paid by end users reflect an average of the purchase price. Since 2004, the CREG (the Colombian energy and gas regulation commission) is working in a proposal to modify the energy contracting system in the Colombian market. Under the proposal, the existing contracting system will be modified into an electronic contract system. This mechanism will replace the current bidding process for energy auctions with standardized commercial conditions, where contractual demand will be treated as one aggregate demand. In Peru, similar to Chile, distributors are obligated to enter into contracts, and the legislation was amended so that the public bids for energy would be based on distributor requirements. Currently, there are only a few contracts between generators and distributors that are in force at “bar price,” which is defined based on a centralized calculation. Nevertheless, since 2007 contracts are based on public bids. Authorities approve bidding bases and define the maximum price for each bid. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 215 Financial Statements Consolidated With the exception of Colombia, in all the other countries there is some statute in force that promotes use of renewable energy. In practical terms, there are no incentives or obligations similar to those in Chile that would push these renewable energy technologies to be competitive on a greater scale. Authorities are responsible for promoting specific bidding processes benefiting from special conditions in order to make these projects viable. 4.2 Distribution: In the five countries where the Group operates, selling prices charged to clients are based on the purchase price paid to generators plus a component associated with the value added in distribution. Regulators set this value periodically through reviews of distribution tariffs. As a result, distribution is an essentially regulated activity. Chile In Chile, the distribution value added (“VAD”) is established every four years. For this, the local regulator, (i.e. the CNE) classifies companies in accordance with typical areas that group companies with similar distribution costs. A distribution company’s return on investment is dependent on the company’s performance in relation to model company standards defined by the regulator. In April 2009, the regulator published tariff formulas which are effective for the period November 2008 through November 2012. Rest of Latin America In Peru, the VAD is calculated every 4 years, also using a model company method based on a typical area. In October 2009 the tariffs for the 2009-2013 period were published In Brazil there are three types of tariff adjustments: (i) Ordinary Tariff Reviews (“RTO”) which are conducted periodically in accordance with the provisions in the concession contracts (in Coelce every 4 years and in Ampla every 5 years). (ii) Annual adjustment (IRT); and (iii) Extraordinary Reviews. The latest RTO for Ampla is applicable for the 2009-2014 periods and for Coelce for the 2007-2011 periods. The most recent annual adjustments made by Aneel were in March 2010 for Ampla and April 2010 for Coelce. In Colombia, the CREG established in 2008 a new methodology for calculating the rate of return applicable to the compensation of the distribution, and a new methodology for establishing the charges for regional transmission and local distribution systems use. In October 2009 the CREG published the distribution charges for Codensa for the period 2009-2013. In Argentina, tariffs were frozen after the country’s debt default in 2001. Edesur’s tariff restructuring started in 2007 with the enforcement of the “acta de acuerdo.” In the current year, tariff adjustments (positive impact in the VAD) and inflation readjustments (via the cost monitoring mechanism, “MMC”) have been made. In July 2008 increases were authorized for clients with consumption in excess of 650kWh quarterly, and in October 2008 the government approved an increase for consumption in excess of 1,000kWh per month; this last increase is a pass-through to the generators and was suspended between June and September 2010 but restarted in October 2010. The RTI (comprehensive tariff review) related to Edesur’s concession contract is still pending. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 216 Enersis 2010 Annual Report • Market for unregulated customers In the countries where the Group operates, distributors can supply their customers under a regulated or freely-agreed conditions. The supply limitations imposed on the unregulated market are as follows: Country Argentina Brazil Chile Colombia Peru kW Threshold > 30 kW > 3,000 kW > 500 kW > 100 kW o 55 MWh-month (**) > 200 kW (*) (*) In April 2009, Peru established that clients between 200 and 2,500 kW could choose between regulated or unregulated market. (**) Colombia wants to decrease this threshold to 65kW or 35 MWh per month starting in January 2011. However, this decision has not been ratified. • Limits on integration and concentration In general, current legislation defends free competition and defines criteria to avoid certain levels of economic concentration and/or market practices that would lead to a deterioration of the market. In principle, the regulators allow the participation of companies in different activities (e.g. generation, distribution, and commercialization) as long as there is an adequate separation of each activity, for both accounting and company purposes. Nevertheless, most of the restrictions imposed involve the transport sector mainly because of its nature and the need to guarantee adequate access to all agents. In Argentina and Colombia there are specific restrictions if generation or distribution companies want to become majority shareholders in transportation companies. Additionally, in Colombia, companies that were created subsequent to 1994 cannot be vertically integrated. Furthermore, generation companies cannot participate in a distribution company if the participation rate is greater than 25% and vice versa. Moreover, companies in Peru need a permit from the local authority if they have a interest stake greater than 5% in a business and want to participate in another business. Regarding concentration in a specific sector, in Argentina and Chile, there are no specific limits that affect the vertical or horizontal integration of a company. On the other hand, in Peru, integrations are subject to authorization if such integration is 5% vertical and 15% horizontal. In Colombia, for the generation and commercialization sectors, companies cannot have a market participation that exceeds 25%. Finally in Brazil, since 2007 there have been no restrictions to generation integration. As for distribution, there are concentration limits, both on a national and electric subsystem level. On a national level, the authorities allow a 20% concentration in both segments. As for the electric subsystem, the limit is 35% of the North and Northeast subsystems and 25% of the South, Southeast, and Midwest subsystems. With regard to consolidations and mergers between agents of the same segment, current regulation requires authorization from the local regulator. • Access to the Network. In the countries where the Group operates, the right of access and toll or access price is regulated by the local authority. In Peru, the toll setting process that recognizes investments in Secondary and Complementary Transmission Systems for the period July 2006 through April 2013, and which are effective starting November 1, 2009 concluded back in 2009. In Chile, during 2010, local authorities developed part of the tariff process for the determination of the Subtransmission System Annual Value for the period 2011 through 2014. The CNE is preparing the respective technical report, which should be published Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 217 Financial Statements Consolidated on January 21. In case there are any discrepancies, companies can present them to the Experts Panel. Subsequently, the CNE will incorporate such report and create a final technical report, which the Ministry of Energy will use to publish its subtransmission tariff decreed. Note 5. Cash and Cash Equivalents a) The detail of cash and cash equivalents as of December 31, 2010, 2009 and 2008 is as follows: Cash and Cash Equivalents Cash balances Bank balances Time Deposits Other fixed-income investments Balance at 12-31-2010 12-31-2009 12-31-2008 ThCh$ 279,960 186,975,512 518,742,837 255,356,728 ThCh$ ThCh$ 2,033,228 280,296,850 631,827,134 220,743,609 3,141,215 186,008,671 671,273,838 457,638,101 Total 961,355,037 1,134,900,821 1,318,061,825 Time deposits have a maturity of three months or less from their date of acquisition and accrue the market interest for this type of investments. The other short-term investments debt securities mainly comprise of resale agreements with maturity of 30 days or less. There are no amounts of cash and cash equivalents balances held by the Group that are not available for its use. b) The detail of cash and cash equivalents by currency is as follows: Currency Chilean peso Argentine peso Colombian peso Brazilian reais Peruvian sol U.S. dollar Total 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 322,190,328 171,799,777 462,051,789 45,357,753 150,964,209 309,896,646 39,467,666 93,478,435 28,624,735 395,598,094 370,793,677 21,485,345 34,431,374 237,747,307 318,762,025 17,347,852 146,599,193 247,721,478 961,355,037 1,134,900,821 1,318,061,825 c) The following table sets forth the amounts paid for the acquisition of associates, jointly controlled entities and other entities, during 2010, 2009 and 2008: Acquisitions of Associates and Other Entities ThCh$ ThCh$ ThCh$ 12-31-2010 12-31-2009 12-31-2008 Amounts Paid for Acquisitions in Cash and Cash Equivalents Amount of Cash and Cash Equivalents in Entities Acquired Assets and Liabilities Other than Cash or Cash Equivalents in Entities Acquired — — — (23,744,357) 3,832,195 12,828,632 — — — Total Purchase Consideration Paid to Acquired Entities, Net (*) (*) Corresponds to a 48.997% of goodwill recognized by DECA in the acquisition of Empresa de Energía de Cundinamarca. As DECA is a jointly controlled entity, is reported by our subsidiary Codensa S.A. using proportionate consolidation (see Notes 2.4.2 and 14). (7,083,530) — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 218 Enersis 2010 Annual Report Note 6. Other Financial Assets The detail of other financial assets as of December 31, 2010 and 2009 is as follows: Other Financial Assets Available-for-sale financial investments - unquoted equity securities Available-for-sale financial investments - quoted equity securities Post-employment benefit (Surplus) (*) Financial assets held-to-maturity Hedging derivatives (**) Non-hedging derivatives (***) Other assets Total (*) See Note 23.2 (**) See Note 20.2.a (***) See Note 20.2.b Balance at 12-31-2010 12-31-2009 Current Non- Current Current Non-Current ThCh$ ThCh$ ThCh$ ThCh$ — — — 2,422,288 88,909 3,352,698 7,735,440 29,461,230 64,518 27,212,944 — — — — — 17,551 91,262 1,536,089 — 339,391 60 2,423,878 88,838 — 24,548,711 2,238,039 732,253 465,038 7,817,509 62,968,722 1,536,149 30,496,757 Note 7. Trade and other Receivables a) The detail of trade and other receivables as of December 31, 2010 and 2009, is as follows: Trade and other receivables, Gross Balance as of 12-31-2010 12-31-2009 Current ThCh$ Non-Current ThCh$ Current ThCh$ Trade and Other Receivables, Gross 1,216,533,291 335,892,068 1,303,666,808 Trade Receivables, Gross Other Receivables, Gross 1,124,250,876 206,462,719 1,254,497,316 92,282,415 129,429,349 49,169,492 Trade and other receivables, Net Balance as of 12-31-2010 12-31-2009 Current ThCh$ Non-Current ThCh$ Current ThCh$ Trade and Other Receivables, Net 1,038,098,240 319,567,960 1,141,966,600 Trade Receivables, Net (1) Other Receivables, Net (2) 953,663,462 190,617,091 1,097,562,493 84,434,778 128,950,869 44,404,107 Non-Current ThCh$ 198,609,866 128,738,890 69,870,976 Non-Current ThCh$ 194,977,413 126,907,444 68,069,969 (1) Includes ThCh$ 40,268,000 corresponding to receivables due to our subsidiary Cachoeira Dourada S.A. from Compañía de Electricidade de Goiás (CELG). CELG a state-owned entity of the State of Goiás has recognized its outstanding debt and is negotiating the best financing alternative to obtain the proceeds to pay its debt. The Group anticipates a favorable outcome as a result of such negotiations and expects to at least recover the carrying amount recognized. (2) The non-current portion includes the financial asset classified as loans and receivables measured at amortized cost arising from application of IFRIC 12, Service Concession Arrangement totaling ThCh$ 122,301,426 and ThCh$ 34,203,618 as of December 31, 2010 and 2009, respectively. In general, no interest is charged on trade and other receivables. There are no trade and other receivables balances held by the Group that are not available for its use. There are no significant balance transactions with single external customers in relation to the Group’s total revenues or receivables. Refer to Note 8.1 for detail information about amounts, terms and conditions associated with accounts receivable from related companies. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 219 Financial Statements Consolidated b) As of December 31, 2010 and December 31, 2009, the balance of unimpaired past due trade receivables is as follows: Trade accounts receivable past due and unpaid but not impaired 12-31-2010 12-31-2009 Balance as of Less than three months Between three and six months Between six and twelve months Greater than twelve months Total ThCh$ ThCh$ 249,377,836 170,338,640 38,107,825 29,162,945 173,268,810 489,917,416 29,491,746 67,272,982 108,528,471 375,631,839 c) The reconciliation of changes in the allowance for impairment of trade receivables is as follows: Trade Receivables Past Due Impaired Balance at January 1, 2009 Increases (decreases) for the year (*) Amounts written-off Foreign Currency Translation Differences Balance at December 31, 2009 Increases (Decreases) for the year (*) Amounts Written-off Foreign Currency Translation Differences Balance at December 31, 2010 (*) See Note 28 for impairment of financial assets Current and Non-Current ThCh$ 163,511,186 22,179,120 (23,420,721) 3,063,076 165,332,661 95,391,111 (60,563,032) (5,401,581) 194,759,159 Note 8. Balances and Transactions with Related Companies Related party transactions are performed at current market conditions. Balances and transactions between the Company and its subsidiaries and jointly- controlled entities have been eliminated on consolidation and are not disclosed in this note. As of the date of these financial statements, no guarantees have been given or received nor has any allowance for bad or doubtful accounts been recorded in respect of the receivable balances for related party transactions Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 220 Enersis 2010 Annual Report 8.1. Balances and transactions with related companies The detail of the amounts receivable and payable between the Company and its related companies is as follows: a) Receivables from related companies: Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Term Nature 12/31/2010 12/31/2009 12/31/2010 12/31/2009 of transaction of relationship Currency Country ThCh$ ThCh$ ThCh$ ThCh$ Balance as of Current Non-Current Taxpayer Company ID Number Term E. E. Piura E. E. Piura Endesa Energía S.A. Description of transaction Other services Other services Other services Less than 90 days Common Immediate Parent Soles Less than 90 days Common Immediate Parent Less than 90 days Common Immediate Parent Ch$ CPs Endesa Latinoamérica S.A.U Expenses Less than 90 days Related to Immediate Parent US$ Endesa Latinoamérica S.A.U Other services Less than 90 days Related to Immediate Parent CPs Endesa Latinoamérica S.A.U Other services Less than 90 days Related to Immediate Parent Ar$ Endesa España Endesa España Other services Other services Less than 90 days Related to Immediate Parent US$ Less than 90 days Related to Immediate Parent Ch$ Eléctrica Cabo Blanco S.A. Other services Less than 90 days Common Immediate Parent Soles Generalima S.A. Enel SACME Other services Other services Other services Less than 90 days Common Immediate Parent Less than 90 days Ultimate Controlling Party Less than 90 days Associate Endesa CEMSA S.A. Commercial Current Account Less than 90 days Associate Endesa CEMSA S.A. Commercial Current Account Less than 90 days Associate Endesa Servicios S.L.U. Other services Less than 90 days Common Immediate Parent Ch$ Ch$ Ar$ Ar$ Ch$ US$ Endesa Servicios S.L.U. Other services Less than 90 days Common Immediate Parent Euros Endesa Servicios S.L.U. Other services Less than 90 days Common Immediate Parent 76,788,080-4 GNL Quintero S.A. 76,418,940-k GNL Chile S.A. Other services Other services 76,418,940-k GNL Chile S.A. Loans Less than 90 days Associate Less than 90 days Associate Less than 90 days Associate 76,583,350-7 Konecta Chile S.A. Other services Less than 90 days Associate b) Payables to related companies: Peru Peru Spain Spain Spain Spain Spain Spain Peru Peru Italy 144,144 187,654 — 57,725 26,166 27,787 — 4230 47,229 — 134,482 — 5,199 23,575 245,659 — 52,688 — — 1,579 1,579 219,278 154,115 Argentina 312,951 Argentina 18,413,497 16,241,814 Argentina Spain Spain Spain Chile Chile Chile Chile Total — — — — 458,094 533,218 312,084 — 3,121 15,586 26,98 424,958 — 577,755 285,024 547,668 20,471,607 19,014,232 Ch$ US$ US$ Ch$ Ch$ — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Term Nature 12/31/2010 12/31/2009 12/31/2010 12/31/2009 of transaction of relationship Currency Country ThCh$ ThCh$ ThCh$ ThCh$ Balance as of Current Non-Current Taxpayer Company ID Number Term E E Piura Description of transaction Other services Less than 90 days Common Parent Soles Endesa Latinoamérica S.A.U. Dividends Less than 90 days Related to immediate Parent Ar$ Endesa Latinoamérica S.A.U. Dividends Less than 90 days Related to Immediate Parent Ch$ Endesa Latinoamérica S.A.U. Dividends Less than 90 days Related to Immediate Parent R$ Endesa Latinoamérica S.A.U. (1) Loans More than one year Related to Immediate Parent US$ SACME 96,806,130-5 Electrogas S.A. Other services Other services Less than 90 days Associate Less than 90 days Associate Foreign Foreign Foreign Foreign Endesa CEMSA S.A. Commercial Current Account Less than 90 days Associate Endesa CEMSA S.A. Endesa CEMSA S.A. Other services Other services Less than 90 days Associate Less than 90 days Associate Endesa Servicios S.L.U. Other services Less than 90 days Common Immediate Parent 76,418,940-k GNL Chile S.A. Foreign Carboex S.A. Other services Other services Less than 90 days Associate Less than 90 days Common Parent Peru Spain Spain Spain Spain 858,345 127,669 718,613 144,655 89,382,016 72,313,821 — 582 — — — — — — — — 2,428,068 2,644,130 1,084,290 3,556,672 Ar$ Ch$ Ar$ R$ Ar$ US$ Ch$ Ch$ Argentina Chile 139,826 217,889 99,036 263,041 Argentina 15,953,845 16,763,778 Argentina 15,658,298 19,000,085 Argentina Spain Chile Spain 3,006 — 23,427,988 5,310 — 8,038 — — — — — — — — — — — — — — — — — — 148,202,260 111,955,779 1,084,290 3,556,672 (1) The balance payable to Endesa Latinoamérica S.A.U. relates to a loan granted to Compañía Interconexao Energética S.A. (“Cien”) to purchase machinery and equipment necessary to complete the construction of its second transmission line. The loan is denominated in US dollars, bears an annual interest rate of 3.49% and matures in May 2012. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 221 Financial Statements Consolidated c) Significant transactions and income/expense effects: Transactions with related companies and their effects in profit or loss for the years ended December 31, 2010, 2009 and 2008 are as follows: Taxpayer Description of 12-31-2010 12-31-2009 12-31-2008 ID Number Company Country Nature of the Relationship the Transaction ThCh$ ThCh$ ThCh$ Common Immediate Parent Energy Purchases (14,267,877) (9,528,999) (9,935,134) Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign E E Piura E E Piura E E Piura E E Piura E E Piura Endesa Energía S.A. Endesa Latinoamérica S.A Endesa Servicios Endesa Servicios Endesa Servicios Peru Peru Peru Peru Peru Spain Spain Spain Spain Spain Common Immediate Parent Other Services Rendered Common Immediate Parent Energy Sales Common Immediate Parent Other Operating Expenses Common Immediate Parent Other Operating Income Common Immediate Parent Other Services Rendered 191,034 3,512 (56,482) 162,670 39,585 243,809 968,848 — — 35,352 Immediate Parent Financial Interest (178,114) 1,533,007 Common Immediate Parent Other Services Rendered Common Immediate Parent Other Sales Common Immediate Parent Other Operating Expenses 70,331 127,091 (7,380) 2,705 480,584 — — — Eléctrica Cabo Blanco S.A. Colombia Common Immediate Parent Other Services Rendered Generalima S.A. 76,418,940-k GNL Chile S.A. 76,788,080-4 GNL Quinteros S.A. 76,788,080-4 GNL Quinteros S.A. 76,788,080-4 GNL Quinteros S.A. Peru Chile Chile Chile Chile Common Immediate Parent Other Services Rendered 395,480 113,001 Associate Associate Associate Associate Gas Consumption (157,412,913) Energy Sales Loans Other Services Rendered 418,290 — 86,563 — 398,267 (247,192) 37,651 Foreign SACME Argentina Associate Other Services Rendered (759,389) (759,968) 96,880,800-1 Empresa Eléctrica Puyehue S.A. 96,880,800-2 Empresa Eléctrica Puyehue S.A. 96.524.140-K Empresa Eléctrica Panguipulli S.A. 96,524,140-K Empresa Eléctrica Panguipulli S.A. Foreign Foreign Enel S.P.A. Enel 96,806,130-5 Electrogas S.A. 76,583,350-7 Konecta Chile S.A. 76,583,350-8 Konecta Chile S.A. 76,583,350-7 Konecta Chile S.A. Chile Chile Chile Chile Italy Italy Chile Chile Chile Chile Associate Associate Associate Associate Energy Purchases Energy Sales Energy Purchases Energy Sales Ultimate Controlling Party Other Services Rendered Ultimate Controlling Party Other sales (1,919,788) 48,042 (3,554,055) 8,876 — 175,358 — — — — 688,898 — Associate Associate Associate Associate Gas TransportationTolls (2,814,618) (1,239,471) Loans Other Variable Expenses Other Services Rendered — (22,179) 170,762 49,992 — 3,028 5,176 — — — — (797,186) 909,196 — — — — — — — 11,256 — — — — — — — — — — 12,120 Total (179,092,496) (7,223,193) (9,794,572) Transfers of short-term funds between related companies are treated as current cash transactions, with associated variable interest rates based on market conditions. The resulting amounts receivable or payable are usually at 30 days term, with automatic rollover for the same term and amortization in line with cash flows. 8.2. Board of directors and key management personnel Enersis is managed by Board of Directors which consists of seven members. Each director serves for a three-year term after which they can be reelected. The Board of Directors was elected at the Ordinary Shareholders Meeting held on April 22, 2010. The Chairman, Vice Chairman, and Secretary were designated at the same Meeting. a) Accounts receivable and payable and other transactions • Accounts receivable and payable There are no outstanding amounts receivable or payable between the Company and the members of the Board of Directors and Key Management Personnel. • Other transactions No other transactions have been performed between the Company and the members of the Board of Directors and Key Management Personnel. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 222 Enersis 2010 Annual Report b) Compensation of Directors In accordance with article 33 of Law No. 18,046, which governs stock corporations, the compensation of Directors is established each year at the Ordinary Shareholders Meeting of Enersis S.A. The remuneration consists of paying a variable annual compensation equal to one-thousandth portion of the profit for the year (attributable to Shareholders of the company). Also, each member of the Board will be paid a monthly compensation determined as follows: • • UF 72.00 as monthly fee fixed; and UF 36.00 as per diem for Board meetings attendance. The amounts paid for the monthly fee will be treated as payment in advance of the variable annual compensation described above. The remuneration for the Chairman of the Board will be twice than that for a director, and the compensation of the Vice Chairman will be 50% higher than that for a director. Any payment in advance received will be deducted from the annual variable compensation with no reimbursement if the annual variable compensation is lower than the aggregated payment in advances. The variable compensation will be paid after the Ordinary Shareholders’ Meeting approves the Annual Report, Balance Sheet and Financial Statements, and the Independent Auditors’ Reports and Account Inspectors’ Reports relating to a corresponding year. If any Director of Enersis S.A. is a member of more than one Board in any Chilean or foreign subsidiaries and/or associates, or holds the position of director or advisor in other Chilean or foreign companies or legal entities in which Enersis S.A. has a direct or indirect ownership interest, such Director can be compensated for his/her participation in only one of those Boards. The Executive Officers of Enersis S.A. and/or any of its Chilean or foreign subsidiaries or associates will not receive any compensation or per diem if they hold the position of director in any of the Chilean or foreign subsidiaries or associates of Enersis S.A. Nevertheless, the executives can receive such compensation or per diem provided they are authorized as payment in advance over the variable portion of their remuneration received from the respective companies for which the executives are employed. Directors Committee: Each member of the Directors Committee shall receive a variable remuneration equal to 0.11765 thousandth of the profit for the year (attributable to owners of parent). Also each member will be paid a monthly compensation determined as follows: • UF 24.00 as monthly fixed fee, and • UF 12.00 as per diem for meetings attendance. The amounts paid for the monthly fee will be treated as payment in advance of the variable annual compensation described above. Any payment in advance received will be deducted from the annual variable compensation with no reimbursement if the annual variable compensation is lower than the aggregated payments in advance. The variable compensation will be paid after the Ordinary Shareholders’ Meeting approves the Annual Report, Financial Statements, and the Independent Auditors’ Reports and Account Inspectors’ Reports relating to the corresponding year. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 223 Financial Statements Consolidated Contents Cover Resume The following tables set forth the compensation paid to the members of the Board of Directors, Directors Committee and Audit Committee as of December 31, 2010 and 2009: 12-31-2010 Board of Subsidiaries Directors Audit ID Name Position Period in position Enersis Board or Associates Committee Committee 5,710,967-k Pablo Yrarrázaval Valdés Chairman January to December 2010 Foreing Andrea Bentran (1) Vice Chairman January to December 2010 48,070,966-7 Rafael Miranda Robredo (2) 5,719,922-9 Leonidas Vial Echeverría (3) 6,429,250-1 Rafael Fernández Morandé (3) 4,132,185-7 Hernán Somerville Senn 5,715,860-3 Eugenio Tironi Barrios 5,206,994-7 Patricio Claro Grez (4) Director Director Director Director Director Director January to December 2010 April to December 2010 April to December 2010 January to December 2010 January to December 2010 January to April 2010 Total 12-31-2009 ThCh$ 55,023 — 27,511 19,138 19,138 26,743 26,750 8,373 182,676 ThCh$ ThCh$ ThCh$ — — — — — — — — — 759 — — 6,638 6,638 8,665 764 2,284 25,748 — — — — — 1,520 — 1,520 3,040 Board of Subsidiaries Directors Audit ID Name Position Period in position Enersis Board or Associates Committee Committee 5,710,967-k Pablo Yrarrázaval Valdés Chairman January to December 2009 Foreing Andrea Brentan Vice Chairman August to December 2009 48,070,966-7 Rafael Miranda Robredo (2) 48,077,275-k Pedro Larrea Paguaga 4,132,185-7 Hernán Somerville Senn 5,715,860-3 Eugenio Tironi Barrios 5,206,994-7 Patricio Claro Grez 4,108,103-1 Juan Eduardo Errázuriz Ossa (5) Director Director Director Director Director Director January to December 2009 January to July 2009 January to December 2009 January to December 2009 January to December 2009 January to October 2009 Total 12-31-2008 ThCh$ 55,012 — 35,855 16,856 28,280 28,279 28,280 23,698 216,260 ThCh$ — — — — — — — — — Board of ThCh$ 8,388 — — — 9,163 — 9,163 — 26,714 ThCh$ — — — — 3,824 — 3,824 3,061 10,709 ID Name Position Period in position Enersis Board or Associates Committee Committee Subsidiaries Directors Audit ThCh$ ThCh$ 5,710,967-k Pablo Yrarrázaval Valdés Chairman January to December 2008 48,070,966-7 Rafael Miranda Robredo Vice Chairman January to December 2008 48,077,275-k Pedro Larrea Paguaga 4,132,185-7 Hernán Somerville Senn 5,715,860-3 Eugenio Tironi Barrios 5,206,994-7 Patricio Claro Grez 4,108,103-1 Juan Eduardo Errázuriz Ossa Director Director Director Director Director January to December 2008 January to December 2008 January to December 2008 January to December 2008 April to December 2008 48,101,910-9 Juan Ignacio de la Mata Gorostizaga Director January to March 2008 Total 53,446 40,335 25,951 26,722 26,721 26,722 19,539 6,458 225,894 — — — — — — — — — ThCh$ 8,939 — — 8,939 — 8,939 — — ThCh$ — — — 5,863 — 5,863 2,982 2,156 26,817 16,864 (1) Andrea Brentan has resigned to receive his compensation as member of the Board of Directors. (2) Vice Chairman until July 31, 2009 and Director since August 1, 2009. (3) Director beginning on April 27, 2010. (4) Director until April 27 2010. (5) Director until October 28, 2009. c) Guarantees established by the Company in favor of the Directors. No guarantees have been given to or received from Directors. Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next 224 Enersis 2010 Annual Report 8.3. Compensation of Key Management Personnel a) Compensation received by Key Management personnel Key Management Personnel ID 22,298,662-1 23,535,550-7 9,574,296-3 14,710,692-0 22,357,225-1 23,363,734-3 7,006,337-9 11,470,853-4 23,014,537-7 7,706,387-0 6,973,465-0 Name Ignacio Antoñanzas Alvear Massimo Tambosco (1) Alfredo Ergas Segal Angel Chocarro García (2) Ramiro Alfonsín Balza Urrea Gómez Alba Marina (3) Francisco Silva Bafalluy (4) Juan Pablo Larraín Medina (2) Carlos Niño Forero (5) Eduardo Lopez Miller (3) Domingo Valdés Prieto Position Chief Executive Officer Deputy Chief Executive Officer Chief Financial Officer Accounting Officer Planning and Control Officer Internal Audit Officer General Services Officer Communications Officer Human Resources Officer Procurement Officer General Counsel (1) Beginning on October 1, 2010. (2) Beginning on November 1, 2009. (3) Beginning on April 1, 2010. (4) Until November 2010 he was the Human Resources Officer and since December 1, 2010 he is General Services Officer. (5) Beginning on December 1, 2010. The compensation paid to key management personnel totaled ThCh$ 2,695,060 as of December 31, 2010 (ThCh$ 2,399,672 and ThCh$ 2,230,137 as of December 31, 2009 and 2008, respectively). Such compensation includes the remunerations paid and the accrued short-term (annual bonuses) and long-term (severance indemnities payment) benefits. Incentive plans for principal executives and managers Enersis has implemented for its executives an annual bonuses plan based on meeting company-wide objetives and on the level of their individual contribution in achieving the overall goals of the Group. The plan provides for a range of bonuses amounts according to seniority level. The bonuses eventually paid to the executives consist of a certain number of monthly gross remunerations. b) Guarantees established by the Company in favor of the management No guarantees have been given to or received from key management personnel. 8.4. Compensation plans linked to share price There are no share-based payments granted to the Directors or key management personnel. Note 9. Inventories The detail of inventories as of December 31, 2010 and 2009 is as follows: Classes of Inventory Raw materials Goods Supplies for production Other inventories (*) Total (*) Other Inventories Supplies for Projects and for Spare Parts Electric Supplies Total Balance at 12-31-2010 12-31-2009 ThCh$ ThCh$ 10,889,721 691,241 30,931,763 20,138,979 62,651,704 3,461,372 1,467,734 42,152,882 9,237,280 56,319,268 Balance at 12-31-2010 12-31-2009 ThCh$ ThCh$ 2,222,761 17,916,218 20,138,979 3,399,724 5,837,556 9,237,280 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 225 Financial Statements Consolidated There are no inventories pledged as security for liabilities. The cost of inventories recognized as an expense as of December 31, 2010 was ThCh$ 672,038,103 (ThCh$ 580,237,613 and ThCh$ 847,411,384 as of December 31, 2009 and 2008, respectively). See Note 26. As of December 31, 2010, 2009, and 2008 no inventories have been written-down. Note 10. Current Tax Receivables and Payables The detail of current tax receivables as of December 31, 2010 and 2009 is as follows: Monthly provisional tax payments VAT tax credit Tax credit for absorbed profits Tax credit for training expenses Other Total Balance at 12-31-2010 12-31-2009 ThCh$ ThCh$ 72,580,350 29,618,364 14,672,543 242,796 20,644,496 51,159,855 17,116,026 251,365 20,873,288 23,004,210 137,987,341 112,175,952 The detail of current tax payables as of December 31, 2010 and 2009 is as follows: Income tax payable VAT Tax Charge Stamp Taxes Provision for taxes Other Total Balance at 12-31-2010 12-31-2009 ThCh$ ThCh$ 72,454,199 36,856,368 733 1,583,669 36,771,686 118,845,936 37,272,870 — 3,963,860 25,203,005 147,666,655 185,285,671 Note 11. Non-Current Assets and Disposal Groups Held for Sale During the fourth quarter of 2009, the Board of Directors of Enersis authorized the sale of the subsidiaries Compañía Americana de Multiservicios (“CAM”) and Synapsis Soluciones y Servicios IT Ltda. (“Synapsis”) as they were considered “non-core” businesses. The sale process included at first an internal verification of the market and the hiring of a financial advisor to provide assistance in the sale process, so that, once offers were received, they were submitted to the Board so that it can make the final decision about the sale and its specific conditions. The potential sale of CAM was considered to be highly probable as of the end of 2009. As for Synapsis, such consideration was taken into account as of the September 2010. After those dates, the Company applied IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (“IFRS 5”) to account for those transactions. CAM and Synapsis provide services in the five countries where Enersis operates in Latin America, i.e. Chile, Argentina, Brazil, Colombia and Peru. CAM is present with its products and services in the complete electric cycle such as provision, materials logistics, construction and startup of electric projects, certification of equipment, and measurement of final consumption. On the other hand, Synapsis is a company that provides information technolog services. It specializes in defining strategies companies can use and software selection that satisfies current business needs. Synapsis also designs the infrastructure of the services that will be provided and the methodology that should be used among other services. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 226 Enersis 2010 Annual Report On December 20, 2010, the Board of Directors of Enersis accepted the offers received to purchase its entire interests in CAM and Synapsis. The CAM offer was presented by Graña y Montero S.A.A, a Peruvian company that offered US$ 20 million, which will be paid in cash, subjet to price adjustments at the closing of the sale transaction. As for Synapsis, Riverwood Capital L.P., a company domiciled in the United States of America, presented a US$ 52 million offer to purchase Synapsis, that will be paid upon closing of the sales transaction. The Company foresees that both operations will be finalized during the first months of 2011. As described in Note 3 j) non-current assets and disposal groups held for sale have been recorded at the lesser of book value or fair value less costs to sell. The impact of this treatment was to record an additional impairment on CAM’s net assets as of December 31, 2010 in the amount of ThCh$ 14,881,960, which accumulates to a total impairment related to CAM in the amount of ThCh$ 36,797,809 as of December 31, 2010 (ThCh$ 21,915,849 as of December 31, 2009), which was calculated based on the sales price received (see Note 28 for additional information regarding asset impairment). The detail of the assets and liabilities classified as held for sale as of December 31, 2010 and 2009, is as follows: ASSETS CURRENT ASSETS Cash and cash equivalents Other Current non-financial assets Trade and other receivables Inventories Current tax assets NON-CURRENT ASSETS Other non-current financial assets Other non-current non-financial assets Non-current receivables Intangible assets other tan goodwill Property, plant and equipment, net Deferred taxes TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Other current financial liabilities Trade and other payables Other short term provisions Other current non-financial liabilities NON-CURRENT LIABILITIES Other non-current financial liabilities Deferred taxes Non-current provisions for employee benefits Other non-current non-financial liabilities 12-31-2010 12-31-2009 ThCh$ ThCh$ 47,201,981 9,495,181 1,250,133 22,976,361 7,439,747 6,040,559 50,431,921 4,011,638 — 28,831,795 14,764,600 2,823,888 26,691,309 19,928,930 53,909 547,349 2,367,103 1,461,938 19,130,668 3,130,342 — 170,776 3,968,937 1,358,619 10,817,749 3,612,849 73,893,290 70,360,851 12-31-2010 12-31-2009 ThCh$ ThCh$ 56,007,440 6,210,788 28,912,663 11,739,296 9,144,693 8,622,949 837,446 4,171,839 2,582,969 1,030,695 42,058,254 7,013,861 21,981,684 6,856,461 6,206,248 8,592,112 1,108,759 4,727,164 2,108,280 647,909 TOTAL LIABILITIES 64,630,389 50,650,366 As of December 31, 2010, the foreign currency translation difference from CAM and Synapsis recognized as other comprehensive income was ThCh$ (3,236,883). (see Note 24.2). Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 227 Financial Statements Consolidated Note 12. Investments Accounted for Using Equity Method and Jointly- Controlled Companies 12.1 Equity method accounted investments a) The following tables set forth the changes in the shareholders’ equity of the Group’s equity method investments during the years ended December 31, 2010 and 2009: ID Movements in investments Country of Functional Ownership Balance as of of Profit Dividends Currency comprehensive Balance at Share Foreign Other in associates 96,806,130-5 Electrogas S.A. (1) origin Chile currency US Dollar interest 01/01/2010 0.02% 3,775 (Loss) 1,867 (1,635) (180) declared Translation income 12/31/2010 96,889,570-2 Inversiones Electrogas S.A. Chile Chilean Peso 42.50% 7,818,937 3,352,867 (3,186,199) 104,080 76,788,080-4 GNL Quintero S.A. Chile US Dollar 20.00% 10,127,465 (2,542,879) Foreign Foreign Endesa CEMSA S.A. Argentina Argentine Peso 45.00% 3,297,780 202,973 Sacme S.A. Argentina Argentine Peso 50.00% 33,226 76,583,350-7 Konecta Chile S.A. Chile Chilean Peso 26.20% 278 911 — — — — — (569,597) (406,675) (3,986) — — — 3,827 8,089,685 (4,131,356) 2,883,633 — — — 3,094,078 30,151 278 ID Movements in investments Country of Functional Ownership Balance as of of Profit Dividends Currency comprehensive Balance at Share Foreign Other TOTAL 21,281,461 1,015,739 (3,187,834) (876,358) (4,131,356) 14,101,652 in associates 96,806,130-5 Electrogas S.A. (1) origin Chile currency US Dollar interest 01/01/2009 0.02% 4,275 (Loss) 1,632 (1,291) (841) declared Translation income 12/31/2009 96,889,570-2 Inversiones Electrogas S.A. Chile Chilean Peso 42.50% 9,065,667 2,871,709 (3,202,586) (915,853) — — 3,775 7,818,937 76,788,080-4 GNL Quintero S.A. Chile US Dollar 20.00% 24,126,683 (825,889) Foreign Foreign Endesa CEMSA S.A. Argentina Argentine Peso 45.00% 4,592,900 186,494 Sacme S.A. Argentina Argentine Peso 50.00% 43,868 76,583,350-7 Konecta Chile S.A. Chile Chilean Peso 26.20% 278 1,633 — — — — — (4,508,852) (8,664,477) 10,127,465 (1,481,614) (12,275) — — — — 3,297,780 33,226 278 (1) The Group exercises significant influence indirectly through the 42.5% ownership held in Inversiones Electrogas S.A. which is the immediate parent of Electrogas S.A. with a 99.95% of ownership interest. b) As of December 31, 2010 and 2009 no changes in ownership interest in our investment associates have occurred. c) Additional financial information about the investments in associates • Significant influence investments TOTAL 37,833,671 2,235,579 (3,203,877) (6,919,435) (8,664,477) 21,281,461 Significant influence Investments Endesa CEMSA S.A. Inversiones Electrogas S.A. GNL Quintero S.A. Electrogas S.A. (1) Significant influence Investments Endesa CEMSA S.A. Inversiones Electrogas S.A. GNL Quintero S.A. Electrogas S.A. (1) Ownership interest % 45.00% 42.50% 20.00% Ownership interest % 45.00% 42.50% 20.00% The following tables set forth summarized information of the main investment in associates where the group has significant influence, including the aggregated amounts of assets, liabilities, revenues, expenses and profit or loss as of December 31, 2010 and 2009: Current Non-Current Current Non-Current December 31, 2010 assets ThCh$ assets ThCh$ liabilities ThCh$ liabilities Revenues Expenses Profit (Loss) ThCh$ ThCh$ ThCh$ 42,063,375 710,433 35,898,080 — 19,034,552 — — — 3,631,967 8,053,180 (3,180,916) (164,082) 7,889,098 43,182,432 548,261,034 15,642,419 561,382,881 46,342,847 (59,057,243) (12,714,396) ThCh$ 451,051 0.02125% 6,145,145 36,271,189 8,307,494 16,098,755 15,575,506 (6,788,817) 8,786,689 Current Non-Current Current Non-Current December 31, 2009 assets ThCh$ assets ThCh$ liabilities ThCh$ 54,486,842 168,678 47,327,120 — 18,471,729 74,230 — — liabilities Revenues Expenses Profit (Loss) ThCh$ ThCh$ ThCh$ 19,339,396 (18,924,965) ThCh$ 414,431 6,940,967 (184,004) 6,756,963 28,098,229 562,965,213 205,586,895 334,839,224 12,893,075 (17,022,519) (4,129,444) 0.02125% 5,606,476 41,393,766 8,210,466 21,027,132 13,510,320 (5,830,170) 7,680,150 Appendix No. 3 to these consolidated financial statements provides information about the principal activities and ownership interest of the Group’s investment in associates. All of our associates do not have published price quotations. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 228 Enersis 2010 Annual Report 12.2. Jointly controlled companies The following tables set forth summarized information of jointly controlled companies that are reported using proportional consolidation as of December 31, 2010 and 2009. Hidroaysén S.A. Transmisora Eléctrica de Quillota Ltda GasAtacama S.A. Sistemas Sec S.A. Ownership Current Non-Current Current Non-Current December 31, 2010 Interest % 51.00% 50.00% Assets ThCh$ Assets ThCh$ 7,609,649 99,469,947 3,226,372 9,502,126 Liabilities Liabilities Revenues Expenses Profit (Loss) ThCh$ 7,655,622 1,730,150 ThCh$ 642,418 943,702 ThCh$ ThCh$ ThCh$ — (7,186,862) (7,186,862) 2,122,132 (1,196,978) 925,154 50.00% 111,484,190 291,968,048 138,310,532 43,440,220 334,321,296 (294,331,806) 39,989,490 49.00% 4,948,616 6,402,040 4,057,366 3,793,979 5,420,246 (5,074,838) 345,408 Distribuidora Eléctrica de Cundinamarca S.A. 48.99% 22,106,093 95,012,672 25,746,539 29,366,858 71,377,710 (63,501,842) 7,875,868 Ownership Current Non-Current Current Non-Current December 31, 2009 Hidroaysén S.A. Transmisora Eléctrica de Quillota Ltda. GasAtacama S.A. Sistemas Sec S.A. Interest % 51.00% 50.00% Assets ThCh$ Assets ThCh$ ThCh$ 8,111,503 86,908,393 37,110,402 Liabilities Liabilities Revenues Expenses Profit (Loss) ThCh$ — ThCh$ ThCh$ ThCh$ — (5,994,070) (5,994,070) 1,288,870 10,198,482 1,480,132 876,728 2,327,365 (1,207,963) 1,119,402 50.00% 114,435,232 316,349,774 187,877,000 42,467,600 343,304,368 (319,108,438) 24,195,930 49.00% 6,640,078 6,667,086 4,893,676 5,059,582 7,814,302 (7,063,659) 750,643 Distribuidora Eléctrica de Cundinamarca S.A. 48.99% 29,898,954 91,606,547 25,873,650 33,287,228 68,128,403 (66,239,227) 1,889,176 Note 13. Intangible Assets Other than Goodwill Intangible asset as of December 31, 2010 and 2009 are detailed as follows: Intangible Assets, Net Intangible Assets, Net Easements Water Rights Concessions Development Costs Patents, Registered Trademarks and Other Rights Computer Software Other Identifiable Intangible Assets Intangible Assets, Gross Intangible Assets, Gross Easements Water Rights Concessions Development Costs Patents, Registered Trademarks and Other Rights Computer Software Other Identifiable Intangible Assets Accumulated Amortization and Impairment Accumulated Amortization and Impairment, Total Easements Water Rights Concessions Development Costs Patents, Registered Trademarks and Other Rights Computer Software Other Identifiable Intangible Assets 12-31-2010 12-31-2009 ThCh$ ThCh$ 1,452,586,405 1,446,122,245 10,698,674 13,745,590 11,786,094 12,291,780 1,362,756,775 1,357,976,679 2,262,982 23,121 58,255,724 4,843,539 12,330 6,844,249 52,003,080 5,208,033 12-31-2010 12-31-2009 ThCh$ ThCh$ 2,257,171,663 2,147,973,843 14,216,582 17,263,434 15,269,989 15,232,158 2,052,188,016 1,950,821,927 3,875,653 25,123 25,522 8,541,903 158,061,864 145,952,298 11,540,991 12,130,046 12-31-2010 12-31-2009 ThCh$ ThCh$ (804,585,258) (701,851,598) (3,517,908) (3,517,844) (3,483,895) (2,940,378) (689,431,241) (592,845,248) (1,612,671) (13,192) (2,002) (1,697,654) (99,806,140) (93,949,218) (6,697,452) (6,922,013) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 229 Financial Statements Consolidated The reconciliation of the carrying amounts of intangible assets for the years ended December 31, 2010 and 2009 is as follows: Year ended December 31, 2010 Movements in intangible assets Patents registered trademarks Other identifiable Development Easements, net Water Concessions, and other Computer intangible Intangible costs, net ThCh$ 12,33 rights, net net rights, net software, net assets, net assets, net ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 11,786,094 12,291,780 1,357,976,679 6,844,249 52,003,080 5,208,033 1,446,122,245 854,638 878,399 378,822 250,062,078 — — (1,322) (243,935) — — (21,426) 67,799 — — — (13,311,084) (349,391) (94,009,562) — — — — 19,185,187 3,201,990 274,561,114 (2,176,053) (216,865) (2,392,918) 45,607,881 — 32,296,797 (12,177,319) (4,417,989) (110,977,009) 1,641,271 (2,012,192) 1,812,536 (71,904,389) (6,819,196) 2,132,458 1,068,116 (74,081,396) (388,157) (66,056,947) (1,932) (46,319,510) 254 (112,942,428) Opening Balance at 01/01/2010 Movements in Identifiable Intangible Assets Additions Transfers to (from) Non-Current Assets and Disposal Groups Held for Sale Disposals Amortization (*) Foreign Currency Translation Differences Other Increases (Decreases) Movements in Identifiable Intangible Assets, Total 2,250,652 (1,087,420) 1,453,810 4,780,096 (6,821,128) 6,252,644 -364,494 6,464,160 Closing Balance Identifiable Intangible Assets at 12/31/2010 2,262,982 10,698,674 13,745,590 1,362,756,775 23,121 58,255,724 4,843,539 1,452,586,405 (*) See Note 28 depreciation, amortization and impairment losses. Year ended as of December 31, 2009 Movements in intangible assets Development Easements, net Water Concessions, and other Computer intangible Intangible Patents registered trademarks Other identifiable rights, net net rights, net software, net assets, net assets, net ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 8,357,393 10,503,656 1,186,692,686 5,316,837 53,667,078 1,055,864 1,265,610,637 Opening Balance at 01/01/2009 Movements Additions from Internal Developments Additions Transfers to (from) Non-Current Assets and Disposal Groups Held for Sale Amortization Foreign Currency Translation Differences Other Increases (Decreases) Movements, Total costs, net ThCh$ 17,123 — — — (1,333) (3,460) — 922,067 — (24,159) (62,423) — — — — — 805,735 — 805,735 201,622,235 394,063 11,036,515 4,987,412 218,962,292 — — (1,547,852) (233,741) (1,781,593) (346,002) (94,784,374) (226,916) (11,499,590) (900,038) (107,782,412) — 2,593,216 3,647,682 (17,608,877) 2,267,929 (1,513,556) 82,055,009 (907,664) 452,281 (911,087) (391,739) 79,628,448 690,275 (9,320,862) (4,793) 3,428,701 171,283,993 1,527,412 1,788,124 (1,663,998) 4,152,169 180,511,608 Closing Balance Identifiable Intangible Assets at 12/31/2009 12,33 11,786,094 12,291,780 1,357,976,679 6,844,249 52,003,080 5,208,033 1,446,122,245 In accordance with estimates and projections of the management of the Group, the expected future cash flows attributable to intangible assets allow recovering the carrying amount of these assets recorded as of December 31, 2010 (see Note 3.e). As of December 31, 2010 and 2009 the Company does not have significant intangible assets with indefinite useful life. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 230 Enersis 2010 Annual Report Note 14. Goodwill The following table sets forth goodwill by cash-generating-unit or group of them to which it belongs and their movements for the years ended December 31, 2010 and 2009: Compañía Distribuidora y Comercializadora de Energía S.A. 12,291,649 Distrilec Inversora S.A. Empresa Distribuidora Sur S.A. Ampla Energía e Serviços S.A. Investluz S.A. Empresa Eléctrica de Colina Ltda. Empresa Eléctrica Pangue S.A. Endesa Costanera S.A. Southern Cone Power Argentina S.A. Hidroeléctrica el Chocón S.A. Compañía Eléctrica San Isidro S.A. Empresa de Energía de Cundinamarca S.A. (1) Empresa de Distribución Eléctrica de Lima Norte S.A. (2) Cachoeira Dourada S.A. Edegel S.A. (2) Emgesa S.A. E.S.P. Chilectra S.A. Empresa Nacional de Electricidad S.A. Inversiones Distrilima S.A. Total Opening Balance at 01-01-2009 ThCh$ 7,383,186 6,255,347 231,535,198 117,678,473 2,240,478 3,139,337 4,556,780 3,779,030 19,586,941 1,516,768 — — 85,140,100 553,603 5,455,951 128,374,362 731,782,459 13,925 Foreign Currency Closing Balance Foreign Currency Balance at Additions Translation at 12/31/2009 Translation 12/31/2010 Closing ThCh$ — — — — — — — — — — — 7,083,530 43,662,944 — 81,370,212 — — — — ThCh$ (2,037,713) (1,726,437) ThCh$ 5,345,473 4,528,910 ThCh$ (628,562) (532,544) ThCh$ 4,716,911 3,996,366 16,093,387 247,628,585 (7,897,598) 239,730,987 8,123,310 125,801,783 (4,012,172) 121,789,611 — 2,240,478 — 2,240,478 (1,543,016) 10,748,633 (212,190) 10,536,443 — (1,266,688) (1,045,539) (5,410,532) — 414,012 (3,146,697) 6,189,928 (6,003,555) (686,926) — — 3,139,337 3,290,092 2,733,491 — (386,875) (321,426) 3,139,337 2,903,217 2,412,065 14,176,409 (1,666,976) 12,509,433 1,516,768 7,497,542 40,516,247 91,330,028 75,920,260 4,769,025 128,374,362 731,782,459 — (149,075) (2,010,631) (3,426,563) (2,989,192) (95,607) — — (598) 1,516,768 7,348,467 38,505,616 87,903,465 72,931,068 4,673,418 128,374,362 731,782,459 11,453 1,361,283,587 132,116,686 7,951,660 1,501,351,933 (24,330,009) 1,477,021,924 (1,874) 12,051 In accordance with the Group’s management estimates and projections, the future cash flows projections used to determined the recoverable amount of the Cash Generating Units (or groups of Cash-Generating Units), to which the acquired goodwill has been allocated, exceeds its carrying amount, as such no impairment losses have been recognized as of December 31, 2010 and 2009 (see Note 3.e). (1) The addition corresponds to DECA’s purchase of Empresa de Energía de Cundinamarca’s 48.997% ownership interest in March of 2009. As DECA is jointly controlled by our subsidiary Codensa S.A., it is reported by Codensa S.A. using proportionate consolidation (see Notes 2.4.1 and 5.c). (2) The additions in Edegel and Edelnor originated as a result of the acquisitions that took place in October of 2009, as per the detail in Note 24.6. Both Edegel and Edelnor were already being consolidated. Contents Cover Resume Chairman’s Letter to Shareholders Company 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next 231 Financial Statements Consolidated Note 15. Property, Plant and Equipment Property, plant and equipment as of December 31, 2010 and 2009 are as follows: Classes of Property, Plant and Equipment, Net Property, Plant and Equipment, Net Construction in Progress Land Buildings Plant and Equipment IT Equipment Fixtures and Fittings Motor Vehicles Other Classes of Property, Plant and Equipment, Gross Property, Plant and Equipment, Gross Construction in Progress Land Buildings Plant and Equipment IT Equipment Fixtures and Fittings Motor Vehicles Other 12-31-2010 12-31-2009 ThCh$ ThCh$ 6,751,940,655 6,864,071,242 810,013,619 122,864,336 477,500,896 710,996,813 105,539,626 537,134,153 5,242,469,609 5,290,412,998 6,929,468 9,513,233 1,892,193 14,165,508 9,551,749 1,702,512 80,757,301 194,567,883 12-31-2010 12-31-2009 ThCh$ ThCh$ 11,520,970,856 11,449,077,029 810,013,619 122,864,336 669,526,026 710,996,813 105,539,626 729,774,296 9,723,445,293 9,471,762,740 28,566,533 46,408,473 7,212,430 44,699,294 51,720,215 8,117,546 112,934,146 326,466,499 Classes of Accumulated Depreciation and Impairment, Property, 12-31-2010 12-31-2009 Plant and Equipment ThCh$ ThCh$ Accumulated Depreciation and Impairment, Property, Plant and Equipment, Total (4,769,030,201) (4,585,005,787) Buildings Plant and Equipment IT Equipment Fixtures and Fittings Motor Vehicles Other (192,025,130) (192,640,143) (4,480,975,684) (4,181,349,742) (21,637,065) (36,895,240) (5,320,237) (30,533,786) (42,168,466) (6,415,034) (32,176,845) (131,898,616) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources 232 Enersis 2010 Annual Report The reconciliation of the carrying amounts of property, plant and equipment for the years ended December 31, 2010 and 2009 is as follows: Changes in 2010 Construction in Progress ThCh$ Plant and IT Buildings, Equipment, Equipment, Fixtures and Motor Other Property, Plant and Land ThCh$ Net ThCh$ Net ThCh$ Net ThCh$ Fittings, Net Vehicles, Net Equipment, ThCh$ ThCh$ Net ThCh$ Property, Plant and Equipment, Net ThCh$ Opening Balance at January 1, 2010 710,996,813 105,539,626 537,134,153 5,290,412,998 14,165,508 9,551,749 1,702,512 194,567,883 6,864,071,242 Changes Additions Disposals Transfers to (from) Non-Current Assets and Disposal Groups Held for Sale Depreciation Expense Impairment Loss Recognized in profit or loss (*) — — — — 396,969,270 — — — (56,851) (386,262) (43,444) (1,366,863) — (36,068) — (270) — (16,026) — 396,969,270 (59,964) (1,965,748) (3,390,701) (172,020) (1,442,144) (3,863,098) (17,163,012) (306,759,286) (4,573,105) (5,642,316) (7,257,038) (3,851,776) (957,760) (1,179,076) (22,834,942) (1,017,273) (3,606,603) (338,040,266) Foreign Currency Translation Differences (12,614,659) (3,009,524) (27,306,886) (112,716,613) Other Increases (Decreases) Total Changes (281,890,253) 99,016,806 20,892,516 17,324,710 (13,677,771) 378,102,706 (59,633,257) (47,943,389) Closing Balance at December 31, 2010 810,013,619 122,864,336 477,500,896 5,242,469,609 163,184 2,852,265 (7,236,040) 6,929,468 (633,677) (105,158) (5,798,019) (162,021,352) 11,704,245 2,285,898 (103,166,920) 17,102,686 (38,516) 9,513,233 189,681 (113,810,582) (112,130,587) 1,892,193 80,757,301 6,751,940,655 — (1,340,235) — — — — (1,340,235) Stock Exchange Transactions Changes in 2009 Construction in Progress ThCh$ Plant and IT Buildings, Equipment, Equipment, Fixtures and Motor Other Property, Plant and Land ThCh$ Net ThCh$ Net ThCh$ Net ThCh$ Fittings, Net Vehicles, Net Equipment, ThCh$ ThCh$ Net ThCh$ Property, Plant and Equipment, Net ThCh$ Opening Balance at January 1, 2009 704,106,532 107,263,181 635,062,398 5,645,814,015 17,959,471 24,495,712 4,152,102 76,938,720 7,215,792,131 Changes Additions Acquisitions Through Business Combinations Disposals Transfers to (from) Non-Current Assets and Disposal Groups Held for Sale Depreciation Expense Impairment Loss Recognized in profit or loss (*) 614,263,886 738,56 (5,566,491) (2,604,574) — — — 321,713 (172,005) — 162,902 (28,910) — 31,858,508 14,737,550 — — — (153,130) (768,227) (17,141,091) (305,897,443) — (43,999,600) — 119,254 (32,472) (1,445,215) (5,723,356) — — 144,707 (16,548) (7,121,974) (3,317,429) — — 25,407 — 32,58 (254,650) (11,661,348) 614,263,886 33,403,631 (2,994,874) (1,113,818) (981,469) (14,188,407) (1,144,121) (13,364,107) (346,587,547) — — (43,999,600) Foreign Currency Translation Differences (21,558,720) (22,245,010) (80,797,075) (365,052,553) (5,358,344) (12,300,921) (1,465,393) (33,890,366) (542,668,382) Other Increases (Decreases) (578,382,380) 20,371,747 29,059 313,720,748 8,646,170 7,668,202 1,502,985 177,493,873 (48,949,596) Total Changes 6,890,281 (1,723,555) (97,928,245) (355,401,017) (3,793,963) (14,943,963) (2,449,590) 117,629,163 (351,720,889) Closing Balance at December 31, 2009 (*) See Note 28, for impairment loss information. 710,996,813 105,539,626 537,134,153 5,290,412,998 14,165,508 9,551,749 1,702,512 194,567,883 6,864,071,242 Additional information in Property, Plant and Equipment: a) Main Investments Material investments in the electricity generation business include developments in the program to create new capacity. In Chile, the construction of the Bocamina II Coal-fired Thermal Power Plant with capacity of 370 MW stands out among other projects. The project Central Térmica Quintero, consisting primarily of an open-cycle plant that operates both with LNG (liquid natural gas) and with diesel with capacity of 257 MW, was completed and started operations on September 2009. The Canela II Wind Farm Expansion project with 40 wind generators with 60 MW capacity has been finalized and put in operation on December 2009, reinforcing Endesa Chile’s commitment witer the environment by developing non-conventional renewable energies (NCREs). In Colombia, the Central Hidráulica El Quimbo, a hydroelectric dam with 400W of installed capacity and average anual generation around 2,216 GWH, is currently under construction. In Peru, the Santa Rosa Open Cycle Thermoelectric Power Plant with a capacity of 189 MW was completed and placed in service in September 2009. This plant is currently operating using natural gas from Camisea. 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next 233 Financial Statements Consolidated b) Finance leases As of December 31, 2010 and 2009, property, plant and equipment includes ThCh$ 129,749,447 and ThCh$ 137,586,941, respectively, in leased assets classified as finance leases. The present value of future minimum lease payments derived from these finance leases is as follows: 12-31-2010 12-31-2009 Gross ThCh$ 12,311,927 40,900,311 32,304,929 85,517,167 Interest Present Value ThCh$ 2,117,942 8,856,066 3,209,115 14,183,123 ThCh$ 10,193,985 32,044,245 29,095,814 71,334,044 Gross ThCh$ 14,573,470 57,745,294 48,383,017 120,701,781 Interest Present Value ThCh$ ThCh$ 3,253,227 12,162,349 7,089,994 22,505,570 11,320,243 45,582,945 41,293,023 98,196,211 Less than one year Between 1 and 5 years More than 5 years Total Leased assets relate to: 1. 2. Endesa Chile S.A.: lease agreement for Electric Transmission Lines and Installations (Ralco-Charrúa 2X220 KV) entered into between Endesa Chile and Abengoa Chile S.A. The lease agreement has a 20-year maturity and bears interest at an annual rate of 6.5%. Edegel S.A.: lease agreements to finance the project of converting the Ventanilla thermoelectrical plant to a combined cycle plant. The agreements were entered between Edegel S.A. and the financial institutions Banco de Crédito del Perú and BBVA - Banco Continental. These agreements have an 8-year maturity and bear interest at an annual rate of Libor + 2.0% and Libor +3.0% as of December 31, 2010 and 2009, respectively. c) Operating leases As of December 31, 2010, 2009 and 2008 total payments recognized as expense from operating leases totaled ThCh$ 16,980,825, ThCh$ 19,969,187 and ThCh$ 15,312,905, respectively. As of December 31, 2010, 2009 and 2008 the total future minimum lease payments under those contracts are as follows: Less than one year Between 1 and 5 years More than 5 years Total 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 13,309,401 20,500,145 7,954,802 41,764,348 14,046,981 22,922,219 8,952,380 45,921,580 14,910,341 3,982,855 14,376,703 33,269,899 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 234 Enersis 2010 Annual Report d) Other information i) As of December 31, 2010 and 2009, the Group had contractual commitments for the acquisition of property, plant and equipment amounting to ThCh$ 205,979,469 and ThCh$ 334,581,961, respectively. ii) As of December 31, 2010 and 2009, the Group had property, plant and iii) equipment pledged as security for liabilities amounting to ThCh$ 305,655,772 and ThCh$ 462,772,688, respectively (see Note 34). The Company and its foreign subsidiaries have insurance policies for risk, earthquake, machinery breakdown and damages for business interruption with a US$ 300 million limit in the case of generating companies and a US$ 30 million limit for distribution companies, including business interruption coverage, The premiums associated with these policies are presented under line item “Prepayments” within assets, iv) GasAtacama, in which Endesa Chile has a 50% interest consolidated using the proportional integration method, has, among other assets, a combined- cycle electricity generation plant in northern Chile. As importing natural gas from neighboring countries was not possible, GasAtacama has been forced to generate electricity using alternative fuels, the cost of which significantly increased during the last months of 2007 due to increases in oil prices. As a result, the company filed lawsuits for early termination of a contract with distributor Emel. On January 25, 2008, a ruling was issued in arbitration proceedings on this matter to deny early termination. This situation significantly reduced the recoverable value of the aforementioned plant and, therefore, as of December 31, 2007, an impairment provision of US$ 110 million was recorded. The current situation regarding long-lived assets, mostly plants and infrastructure constructed with the purpose of providing energy resources for the SIC system from year 1998, has changed, principally due to the installation of new thermal plants in the SIC, the arrival of LNG, and the estimated development of new projects. This situation has created an environment of excess supply for future years resulting in the expectation that some of these assets will not be used. Accordingly, at December 31, 2009 the Company has recorded an impairment provision for these assets for ThCh$ 43,999,600, v) vi) As a result of the February 27, 2010 earthquake in Chile, some of our plant and equipment were partially or totally impaired. The impact on our total assets, however, is minor as the only facilities that suffered some damage in infrastructure were the Bocamina and Bocamina II plants, the latter under construction, as well as a few other assets from our distribution business. Due to the aforementioned impairments, we have written down ThCh$ 395,153 in assets. Additionally, the Group had to incur expenditures related to repairment and capital improvements totaling ThCh$ 13,043,744, primarily in the Bocamina plant. All of the disbursements incurred are covered by insurance, which contain a US$ 2.5 million policy deductible. The Group has the necessary insurance coverage for these types of exceptional claims, which provide coverage for material damage, as well as business interruption. See Note 25 for additional information. vii) Companhia De Interconexão Energética (‘CIEN’) sells electricity in Argentina and Brazil. Because of the reduction in the maximum availability of the generation and physical guarantee of energy and its associated power, the Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 235 Financial Statements Consolidated Company is focusing its business on a different compensation structure that is not based on the purchase and sale of energy between the countries. Given the strategic importance of the Company’s assets in the relations between Brazil and Argentina, the Brazilian government has been presented with a new business plan model changing its selling activity to an electricity transmission activity with payment of a fixed compensation, which is in the process of being approved. This new plan involves integrating its transmission lines with the Brazilian transmission grid operated by the Brazilian Government. In prior periods, the Argentinean and Uruguayan governments, formalized toll payments with the Company to transport energy between the two countries. Management considers that this situation further emphasizes the importance of the application made to the Brazilian Government to approve the new business plan and considers that it will probably be approved. In addition, on July 4, 2010 the Company signed a new transmission contract for a six-month period for a total of US$ 155 million to cover the energy transmission required by the Argentinean government. Based on its estimates on the different business alternatives, CIEN’s management considers that it will not have any problems in recovering all its net assets. It is expected that CIEN’s new business model will start operating during the next year. Note 16. Investment Property The detail of the composition of, and changes in, investment property during 2010 and 2009 is as follows: Investment Properties Opening Balance at January 1, 2009 Additions Disposals Depreciation Expense Impairment Losses Reversed Recognized in Consolidated Statement of Comprehensive Income(*) Balance at December 31, 2009 Additions Disposals Depreciation Expense Impairment Losses Reversed Recognized in Consolidated Statement of Comprehensive Income(*) Closing Balance Investment Property at December 31, 2010 ThCh$ 26,368,681 5,063,418 (2,985,275) (24,029) 2,809,044 31,231,839 1,303,676 (2,732,209) (24,029) 3,239,877 33,019,154 (*) Impairment losses reversed are presented in line item Reversal of impairment loss (impairment loss) recognized in profit or loss in the consolidated statements of comprehensive income, see Note 28. The fair value of the Group’s investment properties as of December 31, 2010 and 2009 determined on the basis of valuations carried out internally was ThCh$ 34,099,993 and ThCh$ 34,921,883, respectively. The selling price of investment properties disposed of in 2010 and 2009 was ThCh$ 8,015,891 and ThCh$ 7,369,162, respectively. The amounts recognized in profit or loss during 2010, 2009, and 2008 as direct operating expenses arising from investment properties were not significant. The Group has insurance policies to cover operational risks of its investment properties, as well as to cover legal claims against the Group that could potentially arise from exercising its business activity. The Group’s management considers that the insurance policy coverage is sufficient against the risks involved. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 236 Enersis 2010 Annual Report Note 17. Deferred Tax a) The deferred taxes recognized by temporary differences as of December 31, 2010 and 2009 are as follows: Temporary Differences 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Deferred Tax Assets Deferred Tax Liabilities Deferred Tax Relating to Depreciation Deferred Tax Relating to Amortization Deferred Tax Relating to Accruals Deferred Tax Relating to Provisions Deferred Tax Relating to Foreign Exchange Contracts ThCh$ ThCh$ ThCh$ ThCh$ 124,814,250 112,732,337 474,063,238 511,370,845 — — 8,292,149 8,226,527 9,031,226 7,805,157 26,142,262 27,169,053 130,298,290 143,783,859 7,494,432 5,799,412 46,746,028 29,199,072 1,155,119 2,919,974 Deferred Tax Relating to Post-employment Benefit Obligations 38,073,254 27,080,973 3,674,593 1,391,382 Deferred Tax Relating to Revaluations of Financial Instruments 39,794,055 34,574,100 4,324,798 293,219 Deferred Tax Relating to Tax Losses Deferred Tax Relating to Other items 36,399,383 64,935,086 — — 27,477,878 34,785,937 30,776,987 15,878,885 Total 452,634,364 454,896,521 555,923,578 573,049,297 b) The following table sets forth the changes in deferred taxes in the Consolidated Statement of Financial Position during 2010 and 2009: Deferred Tax Movements Balance at January 01, 2009 Increase (Decrease) in Profit or Loss Increase (Decrease) in Equity Foreign Currency Translation Other Increase (Decrease) Balance at December 31, 2009 Increase (Decrease) in Profit or Loss Increase (Decrease) in Equity Foreign Currency Translation Other Increase (Decrease) Balance at December 31, 2010 Assets ThCh$ Liabilities ThCh$ 511,300,668 635,013,331 (41,820,393) (20,683,609) 6,628,427 9,440,909 (16,112,600) (47,324,914) (5,099,581) (3,396,420) 454,896,521 573,049,297 (9,615,881) 13,742,269 (2,995,918) 2,870,641 (12,073,361) (17,943,096) 5,684,816 942,654 452,634,364 555,923,578 Recovery of deferred tax assets will depend on whether sufficient tax profits are obtained in the future. The Company believes that the future profit projections for its numerous subsidiaries will allow these assets to be recovered. c) As of December 31, 2010 and 2009, the Group has not recognized deferred tax assets related to tax losses totaling ThCh$ 16,551,349 and ThCh$ 24,643,223, respectively. The unrecognized tax losses can be carried forward indefinitely. The Group has not recognized deferred tax liabilities for taxable temporary differences associated with investment in subsidiaries, associates, and jointly controlled entities, as it is able to control the timing of the reversal of the temporary differences and considers that it is probable that such temporary differences will not reverse in the foreseeable future. The aggregate amount of taxable temporary differences associated with investments in subsidiaries, associates, and jointly controlled entities, for which deferred tax liabilities have not been recognized totaled ThCh$ 1,995,679,814 as of December 31, 2010 (Ch$ 931,081,512 as of December 31, 2009). Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 237 Financial Statements Consolidated The Group is potentially subject to income tax audits by the tax authorities of each country in which the Group operates. Such tax audits can be performed until the applicable statute of limitation expire. Tax audits by their nature are often complex and could require several years to complete. The following table sets forth a summary of tax years, potentially subject to examination, in the significant tax jurisdictions in which the Group operates: Country Chile Argentina Brazil Colombia Peru Period 2007-2010 2006-2010 2006-2010 2008-2010 2007-2010 Given the range of possible interpretations of tax standards, the results of any future inspections carried out by tax authorities for the years subject to audit can give rise to tax liabilities that cannot currently be quantified. Nevertheless, Enersis’s Management estimates that the liabilities, if any, that may arise from such audits, would not significantly impact the companies’ future results. The deferred tax effects of the components of other comprehensive income for the years 2010 and 2009 are as follows: Deferred tax effects of components of other comprehensive Income Available-for-Sale Financial Assets Balance at 12-31-2010 Balance at 12-31-2009 Balance at 12-31-2008 Income Tax Expense (Benefit) ThCh$ 31 Amount Before Tax ThCh$ (179) Amount Amount After Tax Before Tax ThCh$ (148) ThCh$ 61,031 Income Tax Expense (Benefit) ThCh$ (10,528) Amount Amount After Tax Before Tax ThCh$ 50,503 ThCh$ 436 Income Tax Expense (Benefit) ThCh$ (3) Amount After Tax ThCh$ 433 Cash Flow Hedge 30,911,303 (5,301,050) 25,610,253 192,801,668 (33,917,966) 158,883,702 (301,007,749) 46,849,978 (254,157,771) Foreign currency translation (138,554,045) — (138,554,045) (246,854,956 — (246,854,956 191,370,521 — 191,370,521 Actuarial income on defined benefit pension plans (48,495,375) 16,515,279 (31,980,096) (15,599,453) 1,369,374 (14,230,079) (34,060,925) 11,439,369 (22,621,556) Total (156,138,296) 11,214,260 (144,924,036) (69,591,710) (32,559,120) (102,150,830) (143,697,717) 58,289,344 (85,408,373) Note 18. Other Financial Liabilities The balance of other financial liabilities as of December 31, 2010 and 2009 is as follows: Classes of financial liabilities Interest bearing loans Hedging derivatives (*) Non-hedging derivatives (**) Obligation for concession of Túnel El Melón Other financial liabilities Total (*) See Note 20.2.a (**) See Note 20.2.b 12-31-2010 12-31-2009 Current ThCh$ Non-Current ThCh$ Current ThCh$ Non-Current ThCh$ 652,979,492 2,763,822,330 718,111,432 3,313,724,298 10,002,909 240,113,443 8,441,901 206,931,247 — 1,967,333 648,284 — 11,020,674 — 420,822 1,778,071 275,969 — 12,788,275 — 665,598,018 3,014,956,447 729,028,195 3,533,443,820 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 238 Enersis 2010 Annual Report 18.1 Breakdown of interest-bearing liabilities The current and non-current detail of interest-bearing borrowings as of December 31, 2010, and 31, 2009 are as follows: Bank loans Unsecured obligations Secured obligations Finance leases Other loans Total 12-31-2010 12-31-2009 Current ThCh$ Non-current ThCh$ Current ThCh$ Non-current ThCh$ 244,503,010 566,764,624 345,447,781 832,837,904 281,652,334 2,039,070,748 230,892,915 2,277,447,381 9,522,288 10,193,985 107,107,875 17,703,710 61,140,059 79,143,189 11,023,415 11,320,243 119,427,078 28,559,670 86,875,968 88,003,375 652,979,492 2,763,822,330 718,111,432 3,313,724,298 Bank Loans by currency and contractual maturity as of December 31, 2010 and December 31, 2009, is as follows: Country Currency Nominal Secured/ One toThree Three to twelve Current as of One to Three Three to Five More than five Current as of Total Total Non- a) Summary of Bank Loans by currency and maturity Current Non-Current Rate Unsecured Chile Peru Peru US$ US$ Soles 2.75% Unsecured 2.95% Unsecured 3.96% Unsecured Argentina US$ 5.24% Unsecured Months ThCh$ 381,532 999,046 1,839,538 5,085,358 Months 12/31/2010 ThCh$ ThCh$ Years ThCh$ Years ThCh$ years ThCh$ 12/31/2010 ThCh$ 18,915,156 19,296,688 2,871,499 95,144,820 — 98,016,319 16,410,407 17,409,453 11,694,152 6,908,207 21,661,326 40,263,685 — 1,839,538 31,245,764 17,057,145 22,142,503 4,013,854 — — Argentina Ar$ 17.27% Unsecured 14,760,009 16,463,487 31,223,496 27,395,848 706,664 Colombia Brazil Brazil CPs US$ R$ 6.91% Unsecured 6.35% Unsecured — 262,048 5,041,882 9,294,804 5,041,882 9,556,852 — 74,201,702 15,760,620 13,466,382 10,628,347 39,855,349 10.17% Unsecured 20,644,352 117,348,246 137,992,598 210,069,710 31,928,737 9,066,992 251,065,439 Total 43,971,883 200,531,127 244,503,010 303,051,447 222,356,512 41,356,665 566,764,624 — — — — 31,245,764 4,013,854 28,102,512 74,201,702 Country Currency Nominal Secured/ One toThree Three to twelve Current as of One to Three Three to Five More than Current as of Current Non-Current Total Total Non- Chile Peru Peru US$ US$ Soles 4.38% Unsecured Argentina US$ 8.7% Unsecured Argentina Ar$ 15.94% Unsecured Colombia Brazil Brazil CPs US$ R$ 12.92% Unsecured 6.04% Unsecured Rate Unsecurd Months ThCh$ Months 12/31/2009 ThCh$ ThCh$ Years ThCh$ Years ThCh$ five years 12/31/2009 ThCh$ ThCh$ 2.22% Unsecured 370,984 163,384,485 163,755,469 104,732,133 103,684,532 829,651 209,246,316 5.12% Unsecured 11,446,321 6,188,337 17,634,658 13,297,208 11,561,913 8,715,418 8,324,583 3,963,387 744,192 2,111,064 6,873,342 9,592,842 4,375,237 — 8,715,418 42,167,699 13,621,109 21,945,692 36,113,536 10,836,729 18,960,874 10,337,034 — 75,661,785 — — — — — — — — 24,859,121 42,167,699 36,113,536 18,960,874 75,661,785 11.21% Unsecured 194,837 105,541,643 105,736,480 196,029,381 175,869,835 — 371,899,216 Total 35,870,786 309,576,995 345,447,781 423,128,155 390,520,277 19,189,472 832,837,904 6,486,301 11,827,324 23,742,212 18,359,821 53,929,357 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Foreign CIEN (Companhía Interconexao Energética S.A.) Brazil 239 Financial Statements Consolidated The fair value of current and non-current bank borrowings totaled ThCh$ 844,554,823 and ThCh$ 1,307,770,461 as of December 31, 2010 and 2009, respectively. * Identification of Bank Borrowings by Companies ID Number Country Financial Effective Institution Financial Institution Country Currency interest rate Company ID Number Company Foreign Foreign Foreign Foreign Foreign Foreign Ampla Ampla Ampla Ampla Ampla Ampla Foreign CGTF Fortaleza Foreign CGTF Fortaleza Foreign CGTF Fortaleza Foreign Chinango Foreign Chinango Foreign Chinango Foreign Chinango Foreign Chinango Foreign Chinango S.A.C. Foreign Chinango S.A.C. Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Coelce Coelce Coelce Coelce Coelce Coelce Coelce Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edelnor Foreign Edesur S.A. Foreign Edesur S.A. Foreign Edesur S.A. Foreign Edesur S.A. Foreign Edesur S.A. Foreign Edesur S.A. Foreign Edesur S.A. Foreign Edesur S.A. Foreign Emgesa Foreign Emgesa Foreign Emgesa Foreign Emgesa Foreign Emgesa Foreign Endesa Costanera S.A. Foreign Endesa Costanera S.A. Foreign Endesa Costanera S.A. Foreign Endesa Costanera S.A. Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Brazil Brazil Brazil Brazil Brazil Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 0-E 0-E Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 0-E Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Banco Itaú Unibanco Banco Alfa Brasdesco Banco do Brasil BANCO HSBC IFC - A IFC - B IFC - C BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO DE CREDITO BANCO DE CREDITO Banco Santander Central Hispano Banco do Brasil Banco Europeo de Investimentos Eletrobras Banco do Brasil Bndes Banco do Nordeste Banco ABN Amro BANCO DE CREDITO BANCO DE CREDITO BANCO CONTINENTAL BANCO CONTINENTAL BANCO SCOTIABANK BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco Continental Scotiabank Scotiabank Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Argentina Foreign BBVA Argentina Argentina Foreign Banco de la Ciudad de Buenos Aires Argentina Argentina Foreign Standard Bank Argentina Foreign Banco Santander Rio Argentina Foreign BBVA Argentina Foreign Standard Bank Argentina Foreign Banco Santander Rio Argentina Argentina Argentina Argentina Argentina Argentina Foreign Banco de la Ciudad de Buenos Aires Argentina Colombia Foreign Davivienda Colombia Foreign Bancolombia Colombia Foreign Bancolombia Colombia Foreign BBVA Colombia Colombia Foreign Banco Santander Argentina Foreign Banco Santander Río Argentina Foreign Banco Provincia de Buenos Aires Argentina Foreign Banco Galicia Argentina Foreign Banco Ciudad Colombia Colombia Colombia Colombia Colombia Argentina Argentina Argentina Argentina Reais Reais Reais Reais Reais Reais US$ US$ US$ Soles US$ US$ US$ Soles US$ US$ Reais US$ US$ Reais Reais Reais Reais Reais US$ US$ US$ US$ US$ Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ CPs CPs CPs CPs CPs US$ US$ US$ US$ Nominal interest rate 9,88% 9,76% 9,53% 6,92% 9,63% 9,63% 7,89% 2,98% 9,88% 9,76% 9,53% 6,92% 9,63% 9,63% 7,93% 2,78% 11,95% 11,96% 4,60% 3,21% 3,52% 4,12% 3,80% 1,63% 1,63% 1,70% 6,67% 6,58% 6,58% 4,52% 3,21% 3,52% 4,12% 3,75% 1,63% 1,63% 1,70% 4,64% 5,49% 6,35% 10,75% 10,75% 9,95% 8,50% 7,00% 5,70% 9,95% 7,67% 7,00% 5,70% L3M+2,5% L3M+2,5% L3M+3% L3M+3% L3M+3% L3M+3% L6M+1,25% L6M+1,25% 4,28% 4,40% 4,30% 2,60% 4,00% 4,00% 4,00% 4,00% 2,60% 4,00% 4,00% 4,40% 4,35% 4,35% 20,00% 14,85% 17,43% 15,98% 20,00% 16,75% 15,17% 15,19% 6,99% 6,99% 6,99% 6,99% 6,99% 4,67% 5,86% 4,21% 4,33% 4,23% 2,60% 4,00% 4,00% 4,00% 4,00% 2,60% 4,00% 4,00% 4,40% 4,35% 4,35% 20,00% 14,61% 16,05% 15,84% 20,00% 16,05% 15,84% 14,52% 6,99% 6,99% 6,99% 6,99% 6,99% 4,67% 5,86% Libor+3% Libor+3% 5,70% 5,70% Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 240 Enersis 2010 Annual Report December 31,2010 December 31,2009 Current M$ Non- Current M$ Current M$ Non Current M$ Company Type ID of Less than More tan Total Number Amortization 90 days 90 days Current, 1 to 3 years 3 to 5 years Foreign Semi-annually 4,887 1,882,368 1,887,255 1,882,350 Foreign Semi-annually 48,591 1,500,240 1,548,831 1,500,240 Foreign Semi-annually 2,321,766 1,410,000 3,731,766 14,100,000 Foreign Semi-annually 7,117,655 7,145,880 14,263,535 18,425,880 Foreign At Maturity 286,544 — 286,544 28,200,000 Foreign Semi-annually 369,719 21,150,000 21,519,719 21,150,000 — — — — — — Over 5 Total Non- Less than More than Total years Current, 90 days 90 days Current, 1 to 3 years — 1,882,350 — 1,500,240 — 14,100,000 — 18,425,880 — 28,200,000 — 21,150,000 — — — — — — 780,505 780,505 2,319,872 821,168 821,168 2,311,183 774,687 3,822,187 3,822,187 13,032,988 4,368,539 — 17,401,527 2,419,186 2,419,186 24,041,519 8,058,497 — 32,100,016 235,626 235,626 — 29,002,545 — 29,002,545 270,019 270,019 32,582,471 10,921,346 — 43,503,817 3 to 5 years 777,6 Over 5 Total Non- years Current, — — 3,097,472 3,085,870 Foreign Semi-annually — 2,034,087 2,034,087 4,532,161 5,229,685 6,034,564 15,796,410 2,134,813 — 2,134,813 4,238,891 5,254,214 10,230,260 19,723,365 Foreign Semi-annually — 3,219,291 3,219,291 7,145,677 8,204,039 — 15,349,716 3,270,587 — 3,270,587 6,717,015 8,263,288 4,579,861 19,560,164 — — — 3,289,176 3,289,176 18,869 — — 3,549,700 3,549,700 Foreign Semi-annually — Foreign At Maturity 27,549 Foreign At Maturity Foreign At Maturity Foreign At Maturity — — — Foreign At Maturity 1,936 — — — — — — 27,549 4,901,950 — — — — — — 1,936 1,333,864 Foreign At Maturity — 3,524,902 3,524,902 Foreign At Maturity — 6,579,812 6,579,812 — — Foreign Semi-annually — 56,558,766 56,558,766 56,400,000 18,869 19,996 — — — 4,901,950 19,996 5,156,948 — — — — 1,028,759 — 1,028,759 — — 15,962 1,014,199 1,030,161 1,521,300 1,549,190 — — — — 1,333,864 — — — — 27,89 1,228 — — — — — 1,228 1,403,251 — — — — — 56,400,000 — 58,453,666 58,453,666 116,494,360 — — — — — — — — — — — — — — — 5,156,948 — — — 1,403,251 — — — 116,494,360 Foreign Semi-annually 28,592 125,856 154,448 167,212 32,658 1,304,607 1,504,477 Foreign Semi-annually 233,456 3,915,570 4,149,026 3,915,570 — — 3,915,570 Foreign Semi-annually 1,106,146 3,547,766 4,653,912 7,202,141 4,305,798 9,066,992 20,574,931 Foreign Semi-annually 967,059 2,757,153 3,724,212 8,054,776 976,09 — 9,030,866 Foreign Semi-annually 6,439,374 15,673,356 22,112,730 35,333,122 13,847,857 — 49,180,979 — — — — — 170,373 170,373 — 1,773,044 — 1,773,044 4,254,934 4,254,934 18,929,356 2,333,260 — 21,262,616 6,964,706 6,964,706 — 21,634,459 — 21,634,459 3,499,199 3,499,199 — 11,672,734 — 11,672,734 9,165,296 9,165,296 — 37,630,530 — 37,630,530 Foreign Semi-annually 1,982,611 5,722,717 7,705,328 17,821,201 12,798,992 — 30,620,193 — 11,815,731 11,815,731 — 37,047,536 — 37,047,536 — — — — — — 7,294,354 7,294,354 — 19,228,350 — 19,228,350 — 8,430,354 1,920,085 3,152,668 5,072,753 — — — — — — 3,681,430 — 3,681,430 — 11,561,913 — 11,561,913 — 6,908,207 21,661,326 28,569,533 — — — — Foreign Semi-annually — — — — Foreign At Maturity 583,558 1,686,071 2,269,629 8,430,354 Foreign Quartely Foreign Quartely — — — — — — — Foreign Quartely 415,488 1,246,464 1,661,952 1,577,727 Foreign Semi-annually — 3,373,158 3,373,158 1,686,071 Foreign At Maturity Foreign At Maturity Foreign At Maturity Foreign At Maturity Foreign Semi-annually Foreign Semi-annually Foreign Semi-annually Foreign Semi-annually Foreign Semi-annually Foreign Semi-annually — — — 101,81 10,102 10,102 4,255 4,041 16,837 10,102 — — — — — — — — — — — — — — — — 101,81 3,501,393 10,102 2,500,995 10,102 2,500,995 4,255 2,167,529 4,041 1,000,398 16,837 4,168,325 10,102 2,500,995 Foreign Semi-annually 1,544,238 — 1,544,238 — Foreign Semi-annually 108,566 Foreign At Maturity Foreign At Maturity — — — — — — — 108,566 6,669,320 — 1,577,727 1,619,527 — 1,619,527 7,820,494 — 1,686,071 — 3,652,838 3,652,838 5,476,714 — — — — — — 13,155 25,609 27,189 — — — 13,155 2,631,096 25,609 5,262,192 27,189 5,086,786 — 3,501,393 5,252,955 — 5,252,955 — — 2,500,995 — 2,500,995 — 2,167,529 — 1,000,398 — 4,168,325 — 2,500,995 — — 8,901 8,901 3,481 3,56 10,613 14,835 8,901 — 6,669,320 109,098 — — — — — — — — 8,901 8,901 3,481 2,631,096 2,631,096 2,280,283 3,56 1,052,438 10,613 — 14,835 4,385,160 8,901 2,631,096 109,098 7,016,257 1,334,474 1,334,474 — — — — — — — — — — — — — — — — — 1,601,369 2,001,711 3,336,185 5,337,896 2,001,711 2,668,948 1,040,890 — — — — — — — 1,603,498 — 1,603,498 — 1,603,498 — 1,603,498 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 7,820,494 5,476,714 2,631,096 5,262,192 5,086,786 — 2,631,096 2,631,096 2,280,283 1,052,438 — 4,385,160 2,631,096 7,016,257 — — — 1,601,369 2,001,711 3,336,185 5,337,896 2,001,711 2,668,948 1,040,890 7,826,033 5,606,000 992,23 992,23 — 7,826,033 710,761 710,761 — 5,606,000 2,340,613 2,340,613 — 18,461,158 — 18,461,158 2,594,904 2,594,904 — 20,466,830 — 20,466,830 2,954,334 2,954,334 — 23,301,764 — 23,301,764 Foreign Semi-annually — 1,177,774 1,177,774 — Foreign At Maturity Foreign Quartely Foreign Quartely — — — — — — — 1,413,329 — 1,413,329 — 1,413,328 353,332 — 1,766,660 — 1,943,328 Foreign Semi-annually — 1,177,774 1,177,774 2,355,548 Foreign Quartely — — — 1,413,328 — — — — 1,943,328 — 2,355,548 — 1,413,328 Foreign Semi-annually — 1,001,108 1,001,108 2,355,548 353,332 — 2,708,880 Foreign At Maturity Foreign Annual Foreign Annual Foreign Annual Foreign Annual — — — — — 918,665 — — 918,665 521,504 521,504 — 7,675,010 — 7,675,010 373,568 373,568 — 5,497,818 — 5,497,818 — 1,230,198 1,230,198 — 18,104,904 — 18,104,904 — 1,363,850 1,363,852 — 20,071,871 — 20,071,871 Foreign Semi-annually — 1,552,762 1,552,764 — 22,852,099 — 22,852,099 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Foreign At Maturity — Foreign At Maturity 602,549 Foreign At Maturity 713,26 Foreign At Maturity — — — — — — 602,549 713,26 — — — — — — — — — — — — — — — — 706,604 685,119 385,93 — — — 706,604 685,119 385,93 — 1,034,484 — 1,034,484 — — — — — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 241 Financial Statements Consolidated Company ID Number Company ID Number Financial Institution Country Financial Institution Country Currency Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S,A, Endesa Costanera S.A. Endesa Costanera S.A. 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Argentina Foreign Credit Suisse International Argentina Foreign Citibank Argentina Foreign Banco Nación Argentina Argentina Foreign Mediocredito Italiano Argentina Foreign Banco Santander Río Argentina Foreign Banco Comafi Argentina Foreign Banco Itau Argentina Foreign Citibank Argentina Foreign Banco Galicia Argentina Foreign Citibank Argentina Foreign Banco Galicia Argentina Foreign Banco Supervielle Argentina Foreign Banco Macro Argentina Foreign Banco Ciudad Argentina Foreign Banco Standard Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign B,N,P, Paribas Export Development Corpotation Loan Banco Bilbao Vizcaya Argentaria S.A. The Bank of Tokyo-Mitsubishi. Ltd. Caja Madrid, Caja Madrid Miami Agency Banco Santander Central Hispano S,A, N.Y.B. U.S. Citibank NA. Nassau, Bahamas Branch Ing Bank N.V. San Paolo IMI S.p.A HSBC Bank pic Spanish Branch ABN AMRO Bank Instituto de Credito Oficial Deutsche Bank AG New York Branch The Royal Bank of Scotland PLC Export Development Corpotation Loan B.N.P. Paribas Panama Branch Banco Español de crédito S.A. N.Y.B. Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile 97,030,000-7 Banco Estado Foreign The Bank of Nova Scotia Argentina Foreign Deutsche Bank Argentina Foreign Standard Bank Argentina Foreign ITAU - Sindicado Argentina Foreign STANDARD - Sindicado Argentina Foreign SANTANDER - Sindicado Argentina Foreign HIPOTECARIO - Sindicado Argentina Foreign GALICIA - Sindicado Argentina Foreign ITAU - Sindicado Argentina Foreign SANTANDER - Sindicado Argentina Foreign Ciudad Argentina Foreign Argentina Foreign CITIBANK FRANCES Argentina Foreign INDUSTRIAL Argentina Foreign MACRO Argentina Foreign ITAU - Nuevo Sindicado Argentina Foreign STANDARD - Nuevo Sindicado Argentina Foreign SANTANDER - Nuevo Sindicado Argentina Foreign HIPOTECARIO - Nuevo Sindicado Argentina Foreign GALICIA - Nuevo Sindicado Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. U.S. Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina U.S. Chile Canadá Brazil US$ US$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ US$ US$ Ar$ Ar$ Ar$ Ar$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ US$ US$ US$ Reais Effective interest rate Nominal interest rate Libor+12% Libor+12% Libor+4,8% Libor+4,8% BAIBOR+5% BAIBOR+5% 1,75% 16,07% 15,00% 1,75% 16,07% 15,00% BAIBOR+5% BAIBOR+5% 13,80% 15,50% 5,32% 6,39% 13,80% 16,00% 15,80% 17,14% 6,32% 13,80% 15,50% 5,32% 6,39% 13,80% 16,00% 15,80% 17,14% 5,98% Libor+1,0 Libor+1,0 Libor+0,750 Libor+0,750 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,301Q Libor+0,301 Libor+0,750 Libor+0,750 Libor+0,750 Libor+0,750 Libor+0,750 Libor+0,750 Libor+0,750 Libor+0,750 Libor+0,300 Libor+0,300 Libor+0,750 Libor+0,750 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,300 Libor+0,750 Libor+0,750 Libor+3,5% Libor+3,5% Libor+3,5% Libor+3,5% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% BPC + 5,75% 15,84% 15,22% 14,93% 17,20% 17,75% 19,12% 19,12% 19,12% 19,12% 19,12% 3,09% 7,50% 1,63% 11,30% 11,50% 15,84% 15,22% 14,93% 17,20% 17,75% 19,12% 19,12% 19,12% 19,12% 19,12% 3,09% 7,50% 1,63% 11,30% 11,50% 96,830,980-3 Inversiones Gas Atacama Holding Ltda, Chile Foreign PNC BANK 96,830,980-3 Inversiones Gas Atacama Holding Ltda, Chile 96,963,440-6 SC GROUP 96,589,170-6 Pangue Synapsis Brazil Ltda, Chile Brazil Foreign Foreign Export Development Corporation BNB Synapsis Colombia Ltda, Colombia Foreign Banco de Bogotá Colombia CPs Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 Foreign Foreign pages control previously next 242 Enersis 2010 Annual Report Current M$ Non- Current M$ Current M$ Non Current M$ December 31,2010 December 31,2009 Non- 3 to 5 years Over 5 years Current, Less than More than Current, Total 90 days 90 days Total 1 to 3 years 3 to 5 years Over 5 years Company ID Type of Less than More tan 90 Current days — — Total 6,596 614,327 1 to 3 years 4,013,854 — 1,815,068 1,815,068 2,077,593 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 4,013,854 2,176,661 — 2,176,661 2,173,458 — — 407,548 407,548 2,077,593 686,987 2,668,948 3,355,935 — — — 1,951,134 1,951,134 972,164 — — — — — — — — — — — — 3,062,791 2,010,156 306,929 404,479 — — 306,929 404,479 1,730,145 918,786 2,648,931 562,347 257,554 — — 562,347 257,554 — 1,136,571 1,136,571 158,669 — — — — — — — — — 901,716 759,503 158,669 — — — — Non- Current, Total 2,173,458 — — 972,164 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 821,662 335,088 821,662 1,531,395 1,531,396 691,984 1,340,104 670,052 901,716 1,659,304 1,659,304 829,651 4,148,259 759,503 1,452,034 1,452,035 — 27,418,295 — 15,335,657 — 23,235,843 — 15,335,656 — 27,418,295 — 15,335,657 — 23,235,843 — 15,335,656 — 15,815,933 15,815,933 — 30,540,510 — 12,675,768 12,675,768 17,110,472 16,594,577 — 8,241,742 8,241,742 — 25,143,298 — 10,771,619 10,771,619 17,110,472 16,594,577 — — — — — — — — — — — — — — — — — — — — — — — — — 11,617,921 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 11,617,921 — — — — 1,095,330 1,095,330 1,177,774 989,33 471,11 412,221 412,221 — — — — — 1,226,886 2,699,066 1,962,957 981,478 981,478 — — — — — 15,840,616 15,840,616 17,110,473 — 20,326,059 20,326,059 — 12,672,493 12,672,493 — 10,560,411 10,560,411 5,280,206 5,280,206 5,280,206 5,280,206 10,139,549 4,224,164 4,224,164 — — — — — — — 5,069,769 — 12,674,424 — 10,139,539 — — 6,970,933 5,069,769 12,571,649 — — — — — — — — 5,068,997 5,068,997 — 1,508,290 4,437,126 5,945,416 10,564,564 1,508,290 4,437,126 5,945,416 10,564,564 — — — — — — — 14,946 — — — — — — — — — — — — — — — — — 14,946 — — — — — — — — — — — — — — — — — — — — — — 34,965,052 34,965,052 — — — 370,984 194,837 744,192 370,984 194,837 744,192 — — — — — — — — — — — — — — — — 225,406 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 2,904,069 — 30,540,510 33,705,049 25,143,298 33,705,049 17,110,472 — — — — 10,139,539 — 5,069,769 12,674,424 10,139,539 17,641,418 6,970,933 — 10,564,564 10,564,564 — — — — — — — — — — — — — — — — — 225,406 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 963,655 — — — 963,655 882,153 — 2,679,318 — 3,705,866 3,705,866 — 1,778,439 — 277,01 1,779,852 357,808 — — — 954,115 381,952 277,01 1,779,852 357,808 954,115 1,159,754 — 1,159,754 — — — — — — — — — — — — — — — — — 24,636 — — — — — — — — — — — — — — — — Number Amortization Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity 91,081,000-6 Semi-annually 91,081,000-6 Semi-annually 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity 91,081,000-6 At Maturity Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity At Maturity 90 days 6,596 614,327 — — 882,153 — 2,679,318 1,778,439 381,952 — 356,896 24,636 — — — — — — — — — — — — — — — — 22,071 22,071 23,732 19,936 9,493 8,307 8,307 10,029 729,446 596,14 711,729 2,391,059 245,369 539,813 392,591 196,296 196,296 1,383,337 8,390,068 9,773,405 1,383,337 8,390,068 9,773,405 1,095,330 1,117,401 1,095,330 1,095,330 1,117,401 1,095,330 1,177,774 1,201,506 1,177,774 989,33 471,11 412,221 412,221 — — — — — 2,314 5,092 3,703 1,851 1,851 1,009,266 480,603 420,528 420,528 10,029 729,446 596,14 711,729 2,391,059 989,33 471,11 412,221 412,221 — — — — — 247,683 1,226,886 544,905 2,699,066 396,294 1,962,957 198,147 198,147 208,031 981,478 981,478 — — — — — 96,830,980-3 Semi-annually — 208,031 96,830,980-3 Annual — 17,550,375 17,550,375 96,589,170-6 Semi-annually Foreign Foreign Annual Semi-annually — — — — — — — — — Total 43,971,883 200,531,127 244,503,010 303,051,447 222,356,512 41,356,665 566,764,624 35,870,786 309,576,995 345,447,781 423,128,155 390,520,277 19,189,472 832,837,904 Appendix No. 4, letter a), presents additional information on financial debt which includes a projection of future cash flows (undiscounted) that the Group will have to disburse to settle the bank loans detailed above. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 243 Financial Statements Consolidated 18.2 Unsecured liabilities detailed by currency and maturity • Summary of unsecured obligations by currency and maturity as of December 31, 2010 and 2009 Current Maturity Non- Current Maturity Current Non-Current Country Currency Nominal Secured/ One to three Three to twelve Portion at One to three Three to five Five years or Portion at Annual Rate Unsecured months ThCh$ months 12/31/2010 ThCh$ ThCh$ years ThCh$ years ThCh$ more ThCh$ 12/31/2010 ThCh$ Chile Chile Peru Peru US$ UF US$ Soles Argentina Ar$ Colombia CPs 8.10% Unsecured 20,226,869 722,956 20,949,825 185,675,099 263,691,199 261,884,873 711,251,171 5.32% Unsecured 1,091,599 9,114,072 10,205,671 14,544,226 15,984,434 396,428,448 426,957,108 6.88% Unsecured 870,099 3,801,453 4,671,552 7,528,779 27,242,221 34,771,000 7.35% Unsecured 19,784,574 49,456 19,834,030 57,933,048 51,988,516 39,215,602 149,137,166 12.28% Unsecured — 7,736,090 7,736,090 3,862,274 — 3,862,274 7.88% Unsecured 1,586,797 131,473,631 133,060,428 89,822,752 37,829,581 414,522,034 542,174,367 Brazil Reais 11.29% Unsecured 7,503,875 77,690,863 85,194,738 128,445,480 42,472,182 170,917,662 Total 51,063,813 230,588,521 281,652,334 480,282,879 419,494,691 1,139,293,178 2,039,070,748 Current Non- Current Maturity Current Maturity Non-Current Country Currency Nominal Secured/ One to three Three to twelve Portion at One to three Three to five Five years or Portion at Annual Rate Unsecured months ThCh$ months 12/31/2009 ThCh$ ThCh$ years ThCh$ years ThCh$ more ThCh$ 12/31/2009 ThCh$ Chile Chile Peru Peru US$ CH$ US$ Soles Argentina Ar$ Colombia CPs 7.88% Unsecured 15,916,932 6,782,703 22,699,635 — 374,659,229 396,512,189 771,171,418 5.01% Unsecured 1,081,503 8,843,672 9,925,175 9,968,809 10,597,098 414,087,715 434,653,622 6.97% Unsecured — 7.23% Unsecured 7,806,462 789,504 314,504 789,504 4,056,799 10,795,915 28,443,379 43,296,093 8,120,966 40,135,949 72,592,833 43,870,894 156,599,676 11.75% Unsecured — 8,807,528 8,807,528 13,211,293 — — 13,211,293 9.94% Unsecured 1,446,813 130,251,384 131,698,197 57,977,534 101,954,329 447,119,273 607,051,136 Brazil Reais 12.94% Unsecured — 48,851,910 48,851,910 154,419,099 97,045,044 — 251,464,143 Total 26,251,710 204,641,205 230,892,915 279,769,483 667,644,448 1,330,033,450 2,277,447,381 18.3 Secured liabilities breakdown by currency and maturity • Summary of secured obligations by currency and maturity as of December 31, 2010 and 2009 Current Maturity Non-Current Maturity Non-Current Country Currency Nominal Secured/ One to three Three to twelve Current Total One to three Three to five Five years or Total at Annual Rate Unsecured Peru Peru US$ Soles 6.15% 6.26% Secured Secured Total months ThCh$ — 4,373,389 4,373,389 months at 12/31/2010 ThCh$ 66,252 5,082,647 5,148,899 ThCh$ 66,252 9,456,036 years ThCh$ 9,367,060 4,168,325 years ThCh$ — 4,168,325 4,168,325 more ThCh$ — — — 12/31/2010 ThCh$ 9,367,060 8,336,650 17,703,710 9,522,288 13,535,385 Current Maturity Non-Current Maturity Non-Current Country Currency Nominal Secured/ One to three Three to twelve Current Total One to three Three to five Five years or Total at Annual Rate Unsecured Peru Peru US$ Soles 6.06% 6.28% Secured Secured Total months ThCh$ — — — months at 12/31/2009 ThCh$ 72,618 ThCh$ 72,618 years ThCh$ 10,141,998 years ThCh$ — 10,950,797 11,023,415 10,950,797 9,647,352 11,023,415 19,789,350 8,770,320 8,770,320 more ThCh$ — — — 12/31/2009 ThCh$ 10,141,998 18,417,672 28,559,670 The fair value of current and non-current secured and unsecured obligations totaled ThCh$ 2,753,493,822 and ThCh$ 2,957,767,022 as of December 31, 2010 and 2009, respectively. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 244 Enersis 2010 Annual Report • Secured and unsecured obligations by Company Company ID Number Company Country Foreign Chinango Foreign Foreign Foreign Chinango Chinango Chinango Foreign Chinango Foreign Foreign Foreign Foreign Foreign Chinango Chinango Ampla Ampla Ampla Foreign Codensa Foreign Codensa Foreign Codensa Foreign Codensa Foreign Codensa Foreign Codensa Foreign Codensa Foreign Codensa Foreign Codensa Financial Institution ID Number Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Peru Peru Peru Peru Peru Peru Peru Brazil Brazil Brazil Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Financial Institution BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BONOS BONOS BONOS B5 B8 B302 B102 B52 B203 B503 B503 B102 Country Currency Interest effective rate Nominal interest rate Secured Peru Peru Peru Peru Peru Peru Peru Brazil Brazil Brazil Soles Soles Soles Soles Soles Soles US$ Reais Reais Reais 6.72% 6.47% 6.09% 6.16% 6.16% 5.91% 6.57% 6.72% 6.47% 6.09% 6.16% 6.16% 5.91% 6.06% SI SI SI SI SI SI SI CDI+0.85%aa CDI+0.85%aa No CDI+1.10%aa CDI+1.10%aa No CDI+6.58%aa CDI+6.58%aa No Colombia CPs IPC+6.14% IPC+6.14% Colombia CPs IPC+6.34% IPC+6.34% Colombia CPs IPC+4.60% IPC+4.60% Colombia CPs IPC+5.3% IPC+5.3% Colombia CPs DTF+2.40% DTF+2.40% Colombia CPs DTF+2.11% DTF+2.11% Colombia CPs DTF+2.58% DTF+2.58% Colombia CPs IPC+5.99% IPC+5.99% Colombia CPs IPC+5.55% IPC+5.55% Foreign Compañía Distribuidora y Comercializadora de Energía S,A, Colombia Foreign B304 Colombia CPs IPC+3.92% IPC+3.92% Investments and financial activities Foreign Codensa Colombia Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Coelce Coelce Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Foreign Edegel Foreign Foreign Foreign Foreign Foreign Edelnor Edelnor Edelnor Edelnor Edelnor Foreign Edelnor Foreign Foreign Foreign Foreign Foreign Foreign Foreign Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next B304 Itaú Santander BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO SCOTIABANK BANCO SCOTIABANK BANCO SCOTIABANK BANCO SCOTIABANK Caja de Pensiones Militar Policial FCR - Macrofondo Rimac Internacional Cia de Seguros Rimac Internacional Cia de Seguros AFP Integra Fondo de Seguro de Retiro de Suboficiales y Especialistas Fosersoe AFP Integra Seguro Social de Salud - Essalud AFP Profuturo AFP Integra AFP Horizonte AFP Integra AFP Integra Colombia CPs IPC+3.92% IPC+3.92% Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Reais Reais Soles Soles Soles Soles Soles Soles Soles US$ US$ US$ US$ US$ US$ US$ US$ US$ Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles 12.00% 12.00% 12.00% 12.00% 6.28% 6.28% 6.75% 6.50% 6.44% 6.63% 6.59% 6.28% 6.34% 9.00% 7.78% 7.13% 6.63% 6.00% 6.00% 6.00% 7.38% 1.27% 8.67% 9.92% 9.92% 8.94% 7.45% 8.00% 7.71% 8.32% 7.35% 7.19% 8.16% 6.28% 6.28% 6.63% 6.50% 6.44% 6.63% 6.47% 5.97% 5.97% 6.34% 7.78% 7.13% 6.63% 6.00% 6.00% 6.00% 7.38% 0.54% 5.44% 6.50% 6.50% 8.75% 7.31% 7.84% 7.56% 8.16% 7.22% 7.06% 8.00% No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No 245 Financial Statements Consolidated Company ID Number Less than 90 days Current More than 90 days December 2010 Non-Current Total Current, 1 to 3 years 3 to 5 years Over 5 years Current Less than 90 days Total Non- Current, More than 90 days December-2009 Non- Current total Current, 1 to 3 years 3 to 5 years Over 5 years Total Non- current, Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 4,373,389 5,148,899 9,522,288 13,535,385 4,168,325 — 11,023,415 11,023,415 19,789,350 8,770,320 — — — — — — — — — — — — — — — — — — — — 52,430 52,430 4,168,325 — 5,030,217 5,030,217 — 4,255,775 — — 4,255,775 117,614 — — 117,614 — 4,168,325 — — — — 66,252 66,252 9,367,060 4,686,546 52,169,863 56,856,409 52,170,000 174,000 153,269 — — 174,000 32,523,060 153,269 13,096,397 26,860,183 240,683 48,655,410 48,896,093 — 307,948 353,650 — 22,810 — 69,066 89,400 90,029 132,693 280,518 — — — — — — — — — — 307,948 60,819,262 353,650 — — — 22,810 8,203,302 — — 69,066 20,800,188 89,400 90,029 132,693 280,518 890,856 25,521,000 26,411,856 1,599,204 — 1,599,204 30,656,023 15,611,999 — 6,578 6,578 128,730 75,030 76,767 — — — — — 29,070 13,808 128,730 75,030 — 3,334,660 76,767 4,168,325 29,070 4,168,325 13,808 4,168,325 — — — — 4,718,544 97,660 127,919 — — 97,660 127,919 100,637 3,746,824 3,847,461 127,923 — 127,923 — — — 6,218,332 6,218,332 — — — 4,168,325 — 55,078 55,078 — 4,385,160 — 4,431,993 4,431,993 — 29,644 29,644 5,262,192 — — 123,662 123,662 — 4,385,160 92,088 72,618 92,088 4,385,160 72,618 10,141,998 — — — — — — — — — — — 4,168,325 — — — 9,367,060 — 17,703,710 — 52,170,000 — 32,523,060 — 39,956,580 — — — — — — — — — — — — — — 46,910,823 46,910,823 154,419,099 26,147,159 — — 239,630 — 60,819,262 306,773 — — 239,630 49,612,813 — 306,773 — 62,016,015 — — 173,600 55,667,344 55,840,944 — 94,695,348 94,695,348 350,428 350,428 — — — — — — 96,558,689 96,558,689 — 8,203,302 89,286 89,286 8,364,721 — — 25,907 27,038,982 27,064,889 — — — — 4,385,160 — — — 5,262,192 — 4,385,160 — 4,385,160 — 10,141,998 — 28,559,670 — 180,566,258 — 49,612,813 — 62,016,015 — 8,364,721 — — — 18,728,836 — 21,209,478 — — — — — — — 78,909 93,489 88,791 — — — — — 18,728,836 — 21,209,478 — — — — 19,845,125 19,845,125 — — — — — — 970,543 970,543 — 35,448,942 — 35,448,942 970,544 970,544 — 35,448,943 — 35,448,943 6,920 — 78,933 80,760 30,582 14,526 6,920 — 78,933 80,760 30,582 14,526 102,783 102,783 — — — 4,385,160 4,385,160 — 4,385,160 4,385,160 — 3,508,128 — 4,385,160 — 4,385,160 — 4,385,160 — 4,964,001 — 3,508,128 — 4,385,160 — 4,385,160 — 4,385,160 — 4,964,001 108,963 108,963 4,056,799 4,995,402 5,866,821 14,919,022 138,506 138,506 — — 5,070,999 5,070,999 59,148 59,148 — 4,929,095 — 4,929,095 — 54,629 54,629 — 4,552,391 — 4,552,391 132,266 94,171 142,213 77,278 67,692 3,465,734 819,886 40,394 14,881 8,489 24,315 25,430 19,965 118,993 60,180 — — — — — 132,266 94,171 142,213 77,278 67,692 — 3,465,734 — — — — — — — — — 819,886 40,394 14,881 8,489 24,315 25,430 118,993 60,180 150,163 — 5,317,877 — 5,317,877 4,485 858,071 — — — — — — — — — — — 4,047,701 — 4,039,254 — 8,064,483 — 701,626 — 2,631,096 — 4,140,994 4,140,994 — 3,222,567 3,222,567 — 5,070,999 5,070,999 — 5,070,999 5,070,999 — — — — — — — 858,071 — 4,047,701 — 4,039,254 — 8,064,483 — 3,508,128 — 701,626 — 2,631,096 — — 5,262,192 5,262,192 143,209 143,209 102,050 102,050 153,978 153,978 83,650 83,650 — — — — 41,573 15,316 8,737 25,580 26,753 21,003 125,183 63,311 — — — — — — — — — — — — 666,932 — 666,932 124,703 124,703 3,508,128 — 19,965 2,500,995 — 2,500,995 — — 3,432,135 — 3,432,135 150,163 38,844 — — 38,844 2,500,995 — — 2,500,995 157,975 — 3,001,194 3,001,194 — 2,500,995 2,500,995 125,183 — — — 63,311 — 4,535,138 4,535,138 102,546 — — — 3,157,315 3,157,315 — 2,631,096 2,631,096 102,546 3,508,128 — — 3,508,128 157,975 — — 4,771,054 4,771,054 — 20,800,188 — 18,367,417 — 18,367,417 — — 19,462,164 19,462,164 — 19,462,164 — 19,462,164 — 35,275,172 35,275,172 — — — 4,168,325 4,168,325 — 4,168,325 4,168,325 — — — 46,268,022 — 3,334,660 — 4,168,325 — 4,168,325 — 4,168,325 — 4,718,544 — — — — 4,683,530 4,683,530 — — — — 4,683,530 4,683,530 — — 3,824,571 3,824,571 — 2,976,388 — 2,976,388 — 4,683,530 4,683,530 — 4,683,530 4,683,530 — 4,683,530 4,683,530 — — — — — — 3,932,869 — 3,924,661 — 7,835,713 — 5,001,990 — 3,932,869 — 3,924,661 — 7,835,713 — 5,001,990 — — — — — — — — — — — 78,909 93,489 88,791 — — — — — — — — — — — — — — — — — — — — 4,485 41,573 15,316 8,737 25,580 26,753 21,003 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 246 Enersis 2010 Annual Report • Secured and unsecured obligations by Company (continuation) Company ID Finncial Number Company Country Institution ID Number Financial Institution Country Currency Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign FCR - Macrofondo AFP Profuturo AFP Integra AFP Horizonte AFP Prima AFP Prima AFP Prima AFP Integra Mapfre Perú Cia de Seguros AFP Prima AFP Prima AFP Prima AFP Prima AFP Profuturo AFP Profuturo AFP Profuturo AFP Profuturo AFP Profuturo Fondo Mi Vivienda Rimac Internacional Cia de Seguros AFP Prima quinta serie A Edesur S.A. Edesur S.A. Argentina Foreign Argentina Foreign oeds7 oeds7 Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Colombia Foreign Bonos A-10 Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Colombia Foreign Bonos B-103 Bonos B-103 Bonos A102 Bonos A5 Bonos B10 Bonos B15 Bonos A5 Bonos B9 Bonos B12 Bonos B7 Bonos B72 Colombia Foreign Bonos Comerciales 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 94,271,000-3 Enersis S.A. 94,271,000-3 Enersis S.A. 94,271,000-3 Enersis S.A. 94,271,000-3 Enersis S.A. Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Foreign Foreign Foreign The Bank of New York Mellon - Primera Emisión S-1 The Bank of New York Mellon - Primera Emisión S-2 The Bank of New York Mellon - Primera Emisión S-3 97,004,000-5 Banco Santander Chile – 264 Serie-F Foreign Foreign The Bank of New York Mellon - 144 - A The Bank of New York Mellon - 144 - A 97,004,000-5 Banco Santander Chile – 317 Serie-H 97,004,000-5 Banco Santander Chile – 318 Serie-K 97,004,000-5 Banco Santander Chile – 522 Serie-M Foreign Foreign Foreign Foreign Yankee bonos 2016 Yankee bonos 2026 Yankee bonos 2014 Bonos UF 269 Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Argentina Ar$ Argentina Ar$ Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs Colombia CPs U.S. U.S. U.S. Chile U.S. U.S. Chile Chile Chile U.S. U.S. U.S. Chile US$ US$ US$ Ch$ US$ US$ Ch$ Ch$ Ch$ US$ US$ US$ Ch$ Interest Nominal effective interest rate 6.77% 5.77% 5.99% 6.06% 7.06% 6.67% 6.96% 6.03% 6.38% 6.93% 7.25% 7.64% 7.87% 8.49% 8.42% 7.97% 8.06% 8.23% 6.67% 7.06% 6.63% 7.44% rate Secured 6.66% No 5.69% No 5.91% No 5.97% No 6.94% No 6.56% No 6.84% No 5.94% No 6.28% No 6.81% No 7.13% No 7.50% No 7.72% No 8.31% No 8.25% No 7.81% No 7.91% No 8.06% No 6.56% No 7.06% No 6.63% No 7.44% No 12.28% 11.75% No 12.28% 11.75% No 7.97% 7.21% 7.33% 8.39% 5.32% 8.39% 8.29% 9.27% 8.09% 8.30% 8.00% 8.55% 4.20% 7.96% 7.40% 8.26% 6.44% 8.50% 8.83% 7.17% 3.86% 4.82% 7.40% 6.60% 7.38% 5.75% 7.74% No 7.03% No 7.33% No 8.14% No 5.22% No 8.14% No 8.04% No 9.27% No 7.86% No 8.05% No 8.00% No 8.55% No 4.20% No 7.88% No 7.33% No 8.13% No 6.20% No 8.35% No 8.63% No 6.20% No 3.80% No 4.75% No 7.40% No 6.60% No 7.38% No 5.75% No Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 247 Financial Statements Consolidated December-2010 December-2009 Current Non-Current Current Non-Current Company ID Number Less than 90 days More than 90 days Current, Total 1 to 3 years Less than 90 days More than 90 days Current, Total 40,864 1 to 3 years 3 to 5 years Over 5 years Non- current, Total 37,405 3,334,660 38,844 — 3,334,660 192,403 6,669,320 — 155,513 — 6,669,320 — — — — — — — — — — — — — — — — — — — — — — 98,477 5,001,990 161,653 5,001,990 3,401,208 — 70,401 3,334,660 13,410 14,025 3,452,068 — — — 181,248 5,001,990 9,509 2,167,529 2,589,753 — 152,924 4,245,022 182,356 5,001,990 99,528 42,106 73,597 36,820 148,809 34,921 3,886,654 3,886,654 3,849,436 3,849,436 3,862,274 3 to 5 years — — — — — 4,168,325 — — — — — — — 4,153,319 4,914,455 Over 5 years — — — — — — — — — Non- Current, Total 3,334,660 3,334,660 6,669,320 6,669,320 5,001,990 5,001,990 — 3,334,660 4,168,325 4,168,325 4,168,325 — — — — — — — — — 5,001,990 2,167,529 — 4,245,022 5,001,990 4,153,319 4,914,455 — — — — — — 5,001,990 5,001,990 3,334,660 3,334,660 5,001,990 5,001,990 3,334,660 3,334,660 — — — 3,862,274 — 51,088,180 51,088,180 — 42,837,829 42,837,829 9,384,105 9,384,105 — — 40,864 39,351 40,864 202,412 163,603 103,599 170,062 70,010 74,064 14,107 14,754 123,515 190,677 10,004 11,811 160,879 191,842 104,706 44,296 — — — — — — — 37,405 38,844 192,403 155,513 98,477 161,653 3,401,208 70,401 13,410 14,025 3,452,068 181,248 9,509 2,589,753 152,924 182,356 99,528 42,106 73,597 36,820 148,809 34,921 — — — — — — — — — — — — Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 411,850 411,850 2,810,154 2,810,154 78,448 78,448 — 83,357 449,458 161,483 — 83,357 449,458 161,483 1,042,712 1,042,712 1,108,613 1,108,613 465,607 465,607 — 44,319,708 44,319,708 — 14,773,236 14,773,236 — 17,113,595 17,113,595 91,081,000-6 3,161,628 91,081,000-6 1,011,025 91,081,000-6 640,355 — — — 3,161,628 1,011,025 640,355 — — — — — — — — — — — — — — — — — — — — — — — — — — 41,039,701 41,039,701 — 12,027,617 12,027,617 — 38,938,924 38,938,924 — 13,501,876 13,501,876 — 22,435,009 22,435,009 — 53,083,052 53,083,052 — 21,792,758 21,792,758 — — — — — — — — — — — — — — — — — — — 94,921,874 94,921,874 3,425,699 — 32,652,675 32,652,675 1,095,470 — 13,515,600 13,515,600 693,840 98,880 446,152 160,448 98,880 446,152 160,448 1,063,229 1,063,229 1,101,083 1,101,083 462,733 462,733 — — — — — — — — — 3,425,699 1,095,470 693,840 — — 2,631,096 3,508,128 3,508,128 3,508,128 — 7,016,256 7,016,256 7,016,256 — — — — — 5,262,192 5,262,192 3,508,128 3,508,128 4,385,160 4,385,160 4,385,160 — — — — — — 3,508,128 5,262,192 2,280,283 2,712,660 4,465,847 5,262,192 — — — — — — — — — — — — — — — — — — — — — — — 2,631,096 39,351 3,508,128 40,864 — 202,412 7,016,256 163,603 — 103,599 5,262,192 — — — — — 170,062 — 5,262,192 70,010 3,508,128 — 74,064 14,107 14,754 — — — 123,515 3,508,128 3,508,128 4,385,160 — — 190,677 — 5,262,192 — — — 5,262,192 10,004 2,280,283 11,811 2,712,660 160,879 4,465,847 191,842 104,706 44,296 — — — — — — — — — — 4,369,373 4,369,373 5,170,104 — — — — — — — — — 5,170,104 — — — — 13,211,293 — — — 54,124,027 54,124,027 — 42,170,891 42,170,891 — 9,922,563 9,922,563 — 59,535,375 59,535,375 — 12,264,287 12,264,287 — 39,705,134 39,705,134 — 13,767,556 13,767,556 — 22,876,468 22,876,468 — 54,127,579 54,127,579 — 22,221,579 22,221,579 — — — — — — — — — — 102,917,226 102,917,226 — 35,440,766 35,440,766 — 15,095,048 15,095,048 — — — — — — — — — — — — — — — — — 8,807,528 8,807,528 13,211,293 — — 77,674 77,674 313,888 313,888 2,781,270 2,781,270 91,081,000-6 1,091,599 321,834 1,413,433 1,609,167 2,252,833 25,121,867 28,983,867 1,081,503 314,143 1,395,646 1,256,571 1,884,860 25,832,339 28,973,770 91,081,000-6 6,513,139 91,081,000-6 3,363,822 — — 6,513,139 185,675,099 — — 185,675,099 7,057,142 3,363,822 — 92,366,575 — 92,366,575 3,644,781 — — 7,057,142 3,644,781 — 195,594,900 — 195,594,900 — — 99,962,409 99,962,409 91,081,000-6 91,081,000-6 91,081,000-6 94,271,000-3 94,271,000-3 — — — — — 5,497,845 5,497,845 8,925,508 8,925,508 54,281,364 72,132,380 673,096 419,706 720,747 2,209 673,096 419,706 720,747 2,209 — — — — — 85,561,441 85,561,441 — 210,717,524 210,717,524 — 120,393,171 120,393,171 — 401,553 401,553 94,271,000-3 5,536,900 — 5,536,900 — 171,324,624 — 171,324,624 94,271,000-3 — 2,201,591 2,201,591 4,009,551 4,806,093 20,746,252 29,561,896 — — — — — — — 5,421,895 5,421,895 8,712,238 8,712,238 57,413,607 74,838,083 657,013 409,678 780,947 2,393 657,013 409,678 780,947 2,393 — — — — — 83,760,687 83,760,687 — 214,572,642 214,572,642 — 142,661,648 142,661,648 — 435,092 435,092 5,999,363 5,999,363 — 179,935,747 — 179,935,747 2,040,943 2,040,943 — — 32,508,440 32,508,440 51,063,813 230,588,521 281,652,334 480,282,879 419,494,691 1,139,293,178 2,039,070,748 26,251,710 204,641,205 230,892,915 279,769,483 667,644,4481,330,033,450 2,277,447,381 Appendix No,4, letter b) presents additional information on financial debt which includes a projection of future cash flows (undiscounted) that the Group will have to disburse to settle the secured and unsecured obligations detailed above. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 248 Enersis 2010 Annual Report - Detail of financial lease obligations Company ID Company ID Interest Number Company Country Number Financial Institution Country Currency effective rate 91,081,000-6 Endesa S,A, (Chile) Foreign Edegel 96,830,980-3 Gas Atacama S.A. Foreign Foreign Foreign Edelnor Edesur S.A. Chile Peru Chile Peru Argentina 87,509,100-K Leasing Abengoa Chile Foreign Banco Scotiabank 96,976,410-5 Gasred S,A, Foreign Foreign Foreign BBVA COMAFI Leasing — IBM Chile Peru Chile Peru Argentina Brazil US$ US$ US$ Soles Ar$ Reais Synapsis Brazil Ltda, Brazil December - 2010 December - 2009 Current Non-Current Current Non-Current Company ID Number Less than 90 days More than 90 days Current, Total 1 to 3 years 3 to 5 years Over 5 years Non- Current, Total Lees than 90 days Current, Total 1 to 3 years 3 to 5 years Over 5 years 6.40% 2.03% 8.27% 6.30% 21.19% 10.00% Non- Current, Total 91,081,000-6 — 881,720 881,720 3,004,174 2,342,336 12,408,341 17,754,851 897,056 897,056 3,056,426 2,383,077 14,753,667 20,193,170 Foreign 1,877,853 5,562,774 7,440,627 12,096,296 11,246,668 16,687,463 40,030,427 8,485,635 8,485,635 28,873,973 9,844,821 24,156,332 62,875,126 96,830,980-3 — 249,450 249,450 — Foreign Foreign Foreign Total 448,208 713,588 1,161,796 2,406,791 — — 460,392 460,392 947,990 — — — — — — — — — 249,240 249,240 — 2,406,791 1,204,165 1,204,165 270,538 941,406 — — 947,990 484,147 484,147 1,574,946 — — — 1,020,782 — — — — — — 270,538 941,406 — 1,574,946 — 1,020,782 Leasing 2,326,061 7,867,924 10,193,985 18,455,251 13,589,004 29,095,804 61,140,059 11,320,243 11,320,243 35,738,071 12,227,898 38,909,999 86,875,968 Appendix No.4 letter c) presents additional information on financial lease obligations which includes a projection of future cash flows (undiscounted) that the Group will have to disburse to settle these obligations. Company ID Number Foreign Foreign Foreign Company Endesa Costanera S,A, Endesa Costanera S,A, Endesa Costanera S,A, Country Argentina Argentina Argentina 91,081,000-6 Endesa S.A. (Chile) 96,830,980-3 Gas Atacama S.A. 96,827,970-K Endesa Eco S.A. 94,271,000-3 Enersis S.A. 96,800,570-7 Chilectra S.A. Foreign Foreign Foreign Foreign Ampla Ampla Ampla Endesa Brasil S.A. Chile Chile Chile Chile Chile Brazil Brazil Brazil Brazil Company ID Number Foreign Foreign Foreign N/A N/A Financial Institution Mitsubishi (deuda garantizada) Mitsubishi (deuda no garantizada) Otros Otros Otros 96,601,250-1 Inversiones Centinela S,A, N/A N/A Foreign Foreign Foreign Foreign Otros Otros Eletrobrás Otros Bndes IFC Country Argentina Argentina Argentina Chile Chile Chile Chile Chile Brazil Brazil Brazil Brazil Currency US$ US$ Ar$ Ch$ Ch$ US$ Ch$ Ch$ Reais Reais Reais US$ - Detail of other obligations Current Non-Current Current Non-Current December-2010 December-2009 Less than 90 days More than 90 days Current, Total 17,408,628 8,223,739 25,632,367 — — — 1 to 3 years 3 to 5 years Over 5 years Non- Current, Total Less than 90 days Current Total 1 to 3 years 3 to 5 years Over 5 years — — 37,523,997 12,332,589 37,523,997 11,158,204 11,158,204 8,788,901 7,591,100 12,332,589 11,158,205 11,158,205 22,261,205 19,227,325 1,542,295 1,517,680 3,059,975 1,011,826 — — — — — 894 — — 821 1,180 894 — — 821 1,180 — 792,809 — — — — — — 12,395,250 — — — — — — — — — — 1,011,826 7,414,204 7,414,204 3,002,567 — 1,661 1,661 — 792,809 12,395,250 — — — — 32 — — 32 115,477 115,477 894,018 11,953,000 — — — — — — — — — — — — — — — — — — — — — 96,367 410,814 507,181 1,190,260 1,190,260 1,775,735 4,156,255 — — 8,353,041 17,646,086 25,999,127 10,399,296 531,167 — 10,930,463 597,908 597,908 — — — — 51,906,330 51,906,330 — — — — — 33,543,177 33,543,177 9,462,684 55,438,210 55,438,210 — 4,822,575 4,822,575 — — — 9,462,684 — 27,400,331 79,707,544 107,107,875 13,394,191 63,973,263 1,775,735 79,143,189 119,427,078 119,427,078 56,362,375 26,818,425 4,822,575 88,003,375 Company ID Number Foreign Foreign Foreign 91,081,000-6 96,830,980-3 96,827,970-K 94,271,000-3 96,800,570-7 Foreign Foreign Foreign Foreign Total Interest effective rate 7.42% 7.42% N/A% 1.58% N/A N/A N/A N/A 7.75% 10.95% 10.13% N/A Non- Current, Total 16,380,001 41,488,530 3,002,567 — 894,018 11,953,000 — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 249 Financial Statements Consolidated Appendix No.4 letter d) presents additional information on other obligations which includes a projection of future cash flows (undiscounted) that the Group will have to disburse to settle these obligations. 18.4. Hedged debt Of Enersis’s US dollar denominated debt, as of December 31, 2010, ThCh$ 679,999,810 is related to future cash flow hedges for the Group’s US dollar linked operating income (see Note 3.m.). As of December 31, 2009, this amount totals ThCh$ 964,291,218. The following table details movements in “Reserve of cash flow hedges” during 2010, 2009 and 2008 due to exchange differences of this debt: Balance in hedging at the beginning of year 60,346,205 (61,905,837) 128,332,092 Foreign currency differences exchange recorded in net equity 15,654,909 126,579,938 (179,193,798) Recognition of foreign currency exchange differences in profit or loss (8,252,587) (4,327,896) (11,044,131) Balance in hedging 67,748,527 60,346,205 (61,905,837) 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 18.5 Other information As of December 31, 2010 and 2009, the Enersis Group has long term lines of credit available for use amounting to ThCh$ 242,750,000 and ThCh$ 253,550,000, respectively. Various credit facilities of the Company and various of its subsidiaries contain certain financial covenant ratios, customary on these types of arrangements. Those credit facilities also include affirmative and negative covenants that require ongoing monitoring. Additionally, there are certain restriction in the events of default sections that also require compliance. Some of Enersis’s and Endesa Chile’s credit facilities include cross default provisions. Regarding the provision affecting Enersis, the loan subscribed on December 2009 under the New York jurisdiction that matures December 2012, points out that a cross default arises when Enersis, Chilectra or Endesa Chile become due with any one of its debt repayments. A similar provision applies to Endesa Chile with its loan syndicated under the State of New York law that matures in July 2011. According to that loan’s stipulations, a cross default can arise due to lack of payment of either interest or principal by Endesa Chile or its “Relevant Subsidiaries” as defined in the credit facility. Note that there have been no disbursements under either of these credit facilities as of December 2010. As for Endesa Chile’s loan that is syndicated the State of New York law, subscribed in 2008 and expiring in 2014, and which contains a disbursed balance of US$ 200 million as of December 31, 2010, the loan does not make reference to Endesa Chile’s subsidiaries, as a result, a cross default can only originate if Endesa Chile defaults on other of its own debt. For debt repayments to become accelerated due to cross default, the amount in default must exceed US$ 50 million, or its equivalent in other currencies. Additionally, other conditions must be met before debt repayments can be accelerated, including expiration of the grace period (if any) and a formal notice documenting intention to accelerate debt repayment from the lenders that represent more than 50% of the balance owed under the credit facility. Additionally, in December 2009, both Enersis and Endesa Chile subsribed loans under Chilean law that stipulate that a cross default will arise only by the debtor’s default. In these loans, the amount in default must also exceed the US$ 50 million threshold aforementioned or its equivalent in foreign currency. Note that since their subscription, these credit facilities have not been disbursed. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 250 Enersis 2010 Annual Report Regarding Enersis and Endesa Chile’s bonds registered with the U.S. SEC, commonly known as “Yankee Bonds,” the cross default for nonpayment can arise from other debt affecting the same company, or from any of its Chilean subsidiaries, regardless of the amount, as long as the principal that originated the cross default exceeds US$ 30 million, or its equivalent in other currency. The acceleration of the debt repayment caused by the cross default provision does not happen automatically, instead, bondholders of at least 25% of a certain series of the Yankee Bonds must demand this. Additionally, the bankruptcy or insolvency of a foreign subsidiary does not have a contractual impact on Enersis’s and Endesa Chile’s Yankee Bonds. Enersis’s and Endesa Chile’s Chilean bonds stipulate that a cross default can only arise if the “Issuer” of the debt instrument (as defined in the debt agreement) is in default. Furthermore, the acceleration of the debt repayment must be requested by at least 50% of the bondholders of a particular series As of December 31, 2010 and 2009, Enersis S.A, Endesa Chile, and their respective subsidiaries were in full compliance with all above described financial and other covenants and restrictions. Note 19. Risk Management Policy The Group’s companies are exposed to certain risks that are managed by systems that identify, measure, limit concentration and supervise. Among the main basic principles defined by the Group are: Compliance with corporate governance standards. • Strict compliance with all of the Group’s internal policies. • Each business and corporate area defines: • I. Markets and products to operate based on its knowledge and ability to ensure an effective risk management. II. Criteria regarding counterparts. III. Authorized operators. • • • Business and corporate areas establish their risk tolerance in a manner consistent with the defined strategy for each market in which they operate. All of the operations of the businesses and corporate areas are performed within limits approved by the corresponding internal authorities. Businesses, corporate areas, lines of business and companies design risk management controls that are necessary to ensure that transactions in the markets are conducted in accordance with Enersis’ policies, standards and procedures. 19.1 Interest rate risk Changes in interest rates affect the fair value of assets and liabilities bearing fixed interest rates, as well as, the expected future cash flows of assets and liabilities subject to floating interest rates. The objective of managing interest rate risk exposure is to achieve a balance in the debt structure to minimize the cost of debt with reduced volatility in profit or loss. In compliance with the current interest rate hedging policy, the proportion of fixed debt and/or hedged debt over the net total debt was 51% as of December 31, 2010. Depending on the Group’s estimates and on the objectives of the debt structure, hedging transactions are performed by entering into derivatives contracts to mitigate interest rate risk. Derivative instruments currently used to comply with the risk Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 251 Financial Statements Consolidated management policy are interest rate swaps to set floating rate to fixed rate. The financial debt structure of the Group detailed by fixed, hedged and floating rate debt net of hedging derivatives instruments is as follows: Net position: Fixed Interest Rate Hedged Interest Rate Floating Interest Rate Total 12-31-2010 12-31-2009 % 51% 0% 49% 100% % 35% 1% 64% 100% 19.2 Exchange rate risk Exchange rate risks involve basically the following transactions: • • • • Debt contracted by the Group’s companies that is denominated in a foreign currency, when the Company’s contribution margin is not highly indexed to such foreign currency. Payments to be made in international markets for the acquisition of project related materials. Group company income directly linked to dollar changes. Cash flows from foreign subsidiaries to the Chilean parent company, exposed to exchange rate fluctuations. In order to mitigate the foreign currency risk, the Group’s foreign currency risk management policy is based on cash flows and considers maintaining a balance between U.S. dollar flows and the levels of assets and liabilities denominated in such currency. The objective is to minimize the exposure to variability in cash flows that are attributable to foreign exchange risk. The hedging instruments currently being used to comply with the policy are currency swaps and forward exchange contracts. In addition, the policy seeks to refinance the debt in the functional currency of each of the companies of the Group. 19.3 Commodities risk The Group has a risk exposure to price changes in certain commodities, basically due to: • • Purchases of fuel used to generate electricity. Energy purchase/sale transactions performed in local markets. The company has not entered into commodity derivative instruments to manage fluctuations in fuel prices; however, it is permanently analyzing and verifying the appropriateness of using this type of instruments, as such has not discarded its use in the future. In order to reduce the risk in situations of extreme drought, the company has designed a commercial policy by defining the levels of sales commitments in line with the capacity of its generating power plants in a dry year and including risk mitigation terms in certain contracts with unregulated customers. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 252 Enersis 2010 Annual Report 19.4 Liquidity risk The Group maintains a liquidity risk management policy consisting of entering into long- term committed banking facilities and temporary financial investments for amounts matching the projected needs over a period of time subject to the situation and expectations of debt and capital markets. The projected needs above include maturities of financial debt, net of financial derivatives. For further details regarding the features and conditions of financial obligations and financial derivatives, see Notes 18, 20 and Appendix No. 4 As of December 31, 2010, the Group has cash and cash equivalent totaling ThCh$ 961,355,037 and unconditional available lines of credits totaling ThCh$ 242,750,000. As of December 31, 2009, the Group had ThCh$ 1,134,900,821 in cash and cash equivalents and ThCh$ 253,550,000 in unconditional available lines of credit. 19.5 Credit risk Given the current economic situation, the Group has been conducting detailed monitoring of its credit risk. Trade receivables: The credit risk for receivables from the Group’s commercial activity has historically been very low, due to the short term period of collections from customers, resulting in non significant cumulative amounts of receivables. The above trend applies to our electricity generating and distribution lines of business. In our electricity generating line of business, the regulations in certain countries, allow the suspension of the energy service to customers with outstanding payments, and most of the contracts have termination clauses for payment default. The Company monitors on an ongoing basis its credit risk and measures quantitatively its maximum exposure to the payment default risk, which as stated above, is very low. In our electricity distribution line of business, the suspension of the energy service for payment default of our customers is permitted in all cases, in accordance with current regulations in each country, which facilitates our credit risk management, which is also very low. Financial assets: Cash surpluses are invested in highest rated local and foreign financial entities (with risk rating equivalent to investment grade) with established thresholds for each entity. In order to select the banks where to invest, those banks with at least two investment grade ratings received from the three major international rating agencies (Moody’s, S&P y Fitch), are selected to make the investments. Investments are supported with treasury bonds from the countries where the company operates and/or with commercial paper issued by highest rated banks, where depending on the circumstances and market conditions treasury bonds are preferred. Derivative instruments are entered into with entities with solid creditworthiness, where approximately 90% of the derivative transactions performed are with A or higher rated entities. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 253 Financial Statements Consolidated 19.6 Risk measurement The Enersis Group measures the Value at Risk (VaR) of its debt positions and financial derivatives, in order to ensure that the risk assumed by the company remains consistent with the risk exposure defined by Management, thereby reducing the volatility in the income statement. The portfolio of positions included in order to calculate the current Value at Risk consists of the following: Debt Financial derivatives • • The VaR determined represents the potential loss in value of the portfolio of positions described above in one-day with a 95% confidence level. To determine the VaR, we take into account the volatility of the risk variables affecting the value of the portfolio of positions including: • • U.S. dollar Libor interest rate. The customary local indices used in the banking industry for the debt, considering the various currencies in which our companies operate • The exchange rates of the various currencies included in the calculation. The calculation of VaR is based on generating possible future scenarios (at one day) of market values (both spot and term) for the risk variables, using Monte Carlo simulations. The number of scenarios generated ensures compliance with the simulation convergence criteria. The table of volatilities and correlations between the various risk variables calculated based on the historical values of the logarithmic price return has been applied to simulate the future price scenario. Once the price scenarios have been obtained, the fair value of the portfolio is calculated using such scenarios, thereby obtaining a distribution of possible values at one day. The one-day 95% VaR number is calculated as the 5% percentile of the potential increases in the fair value of the portfolio in one day. The various debt positions and financial derivatives included in the calculation have been valued consistently using the financial capital calculation methodology reported to Management. Taking into account the assumptions described above, the Value at Risk of the previously discussed positions, broken down by type of position, is shown in the following table: Financial Positions Interest Rate Exchange Rate Correlation Total 12-31-2010 12-31-2009 ThCh$ ThCh$ 38,847,459 539,575 (2,695,024) 36,692,010 29,778,643 3,860,371 (7,740,115) 25,898,899 The VaR positions have evolved during 2010 and 2009 based on the maturity/ initiation of operations throughout the year. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 254 Enersis 2010 Annual Report Note 20. Financial Instruments 20.1 Financial instruments, classified by nature and category a) The detail of financial assets, classified by nature and category, as of December 31, 2010, and 2009, is as follows: Financial Assets Held for Trading ThCh$ Financial Assets at Fair Value With Change in Net Income ThCh$ Equity Instruments Derivative Instruments Other Financial Assets Total Current Equity Instruments Derivative Instruments Other Financial Assets Total Non-Current — 17,551 — 17,551 — 91,262 — 91,262 Total 108,813 Financial Assets Held for Trading ThCh$ — Equity Instruments Derivative Instruments 1,536,149 Other Financial Assets Total Current — 1,536,149 Equity Instruments — Derivative Instruments 732,253 Other Financial Assets Total Non-Current — 732,253 Total 2,268,402 — — — — — — — — — Financial Assets at Fair Value With Change in Net Income ThCh$ — — — — — — — — — December 31, 2010 Held-to- Maturity Investments ThCh$ Loans and Receivables ThCh$ Available-for- Sale Financial Assets ThCh$ — — — — 7,735,440 1,058,569,847 7,735,440 1,058,569,847 — — — — Hedge Derivatives ThCh$ — 64,518 — 64,518 — — — — 29,461,230 323,260,049 2,511,197 — — — 27,212,944 — 29,461,230 323,260,049 2,511,197 27,212,944 37,196,670 1,381,829,896 2,511,197 27,277,462 December 31, 2009 Held-to- Maturity Investments ThCh$ Loans and Receivables ThCh$ Available-for- Sale Financial Assets ThCh$ Hedge Derivatives ThCh$ — — — — — 1,160,980,832 — 1,160,980,832 — — — — 24,548,711 195,442,451 — — — — 2,512,716 — — — — — — — 2,238,039 — 24,548,711 195,442,451 2,512,716 2,238,039 24,548,711 1,356,423,283 2,512,716 2,238,039 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 255 Financial Statements Consolidated b) The detail of financial liabilities, classified by nature and category, as of December 31, 2010, and 2009, is as follows: December 31, 2010 Financial Liabilities Held for Trading ThCh$ 6,509,732 — — 6,509,732 Financial Liabilities at Fair Value With Change in Net Income ThCh$ — — — — Loans and Payables ThCh$ 646,469,760 Hedge Derivatives ThCh$ — — 10,002,909 1,375,307,875 2,021,777,635 — 10,002,909 15,171,516 12,395,250 2,736,255,564 — — — — — — 240,113,443 49,341,676 — 15,171,516 12,395,250 2,785,597,240 240,113,443 Interest-Bearing Loans Derivative Instruments Other Financial Liabilities Total Current Interest-Bearing Loans Derivative Instruments Other Financial Liabilities Total Non-Current Total 21,681,248 12,395,250 4,807,374,875 250,116,352 December 31, 2009 Financial Liabilities Held for Trading ThCh$ 6,582,907 420,822 — 7,003,729 Financial Liabilities at Fair Value With Change in Net Income ThCh$ — — — — Loans and Payables ThCh$ 711,528,525 Hedge Derivatives ThCh$ — — 8,441,901 1,093,916,171 1,805,444,696 — 8,441,901 22,673,861 11,953,000 3,279,097,437 — — — — — — 206,931,247 85,254,349 — 22,673,861 11,953,000 3,364,351,786 206,931,247 Interest-Bearing Loans Derivative Instruments Other Financial Liabilities Total Current Interest-Bearing Loans Derivative Instruments Other Financial Liabilities Total Non-Current Total 29,677,590 11,953,000 5,169,796,482 215,373,148 20.2 Derivative instruments The risk management policy of the Group establishes using interest rate and foreign exchange rate derivatives to hedge its exposure to interest rate and foreign currency risks. The Company classifies its hedging relationships as follows: • Cash flow hedges: Those that hedge the cash flows of the hedged underlying item. Fair value hedges: Those that hedge the fair value of the hedged underlying item. Non-hedge derivatives: Financial derivatives that do not meet the requirements established by IFRS to be designated as hedge instruments are recorded at fair value with changes in net income (assets held for trading). • • Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 256 Enersis 2010 Annual Report a) Assets and liabilities for hedge derivative instruments As of December 31, 2010, and 2009, financial derivative transactions that qualify as hedge instruments resulted in recognition of the following assets and liabilities in the statement of financial position: 12-31-2010 12-31-2009 Assets Liabilities Assets Liabilities Current ThCh$ Non- Current ThCh$ Current ThCh$ Non- Current ThCh$ Current ThCh$ Non- Current ThCh$ Current ThCh$ Non- Current ThCh$ Interest Rate Hedge: 64,518 1,825,059 661,966 4,878,454 — 2,157,177 1,122,388 3,328,432 64,518 1,825,059 661,966 4,878,454 — 2,157,177 1,122,388 3,328,432 Interest Rate Hedge: — 25,387,885 9,340,943 235,234,989 — — 25,387,885 3,867,323 229,257,717 — — 5,473,620 5,977,272 — — — — — — — 80,862 7,319,513 203,602,815 80,862 2,537,129 196,123,295 — 4,782,384 7,479,520 Cash Flow Hedge Fair Value Hedge Cash Flow Hedge Fair Value Hedge TOTAL 64,518 27,212,944 10,002,909 240,113,443 — 2,238,039 8,441,901 206,931,247 • General Information relating to hedge derivative instruments Hedging derivative instruments and their corresponding hedged instruments are shown in the following table: 12-31-2010 12-31-2009 Detail of Hedge Description of Hedge Description of Hedged Fair Value of Hedge Fair Value of Hedge Nature of Risks Instruments Instrument Instruments Instruments Instruments Being ThCh$ ThCh$ Hedged SWAP SWAP SWAP SWAP SWAP Interest Rate Bank Borrowings (3,715,361) (3,225,872) Cash flow Interest Rate Unsecured obligations, (Bonds) — 1,617,247 Cash flow Exchange Rate Bank Borrowings (509,567) 80,862 Cash flow Exchange Rate Bank Borrowings (11,450,892) (12,261,904) Fair value Exchange Rate Unsecured obligations, (Bonds) (207,163,070) (198,660,424) Cash flow COLLAR Interest Rate Bank Borrowings (685,018) Cash flow For years 2010, 2009 and 2008, the Group had not recognized significant gains or losses for ineffective cash flow hedges. The following table details the gain or losses recognized on the hedging instrument and on the hedged item attributable to t 12-31-2009 he hedged risk: Hedging Instrument Hedged Item TOTAL 12-31-2010 12-31-2009 12-31-2008 Gain ThCh$ 3,788,165 Loss ThCh$ — Gain ThCh$ Loss ThCh$ Gain ThCh$ Loss ThCh$ — 9,435,859 — 4,329,485 — 6,749,098 7,893,882 — 4,948,720 — 3,788,165 6,749,098 7,893,882 9,435,859 4,948,720 4,329,485 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 257 Financial Statements Consolidated b) Financial derivative instrument assets and liabilities at fair value with changes in net income As of December 31, 2010, and 2009, financial derivative transactions recorded at fair value with changes in net income, resulted in the recognition of the following assets and liabilities in the statement of financial position: December 31, 2010 December 31, 2009 Current Assets ThCh$ Current Liabilities ThCh$ Non- Current Assets ThCh$ Non- Current Liabilities ThCh$ Current Assets ThCh$ Current Liabilities ThCh$ Non- Current Assets ThCh$ Non- Current Liabilities ThCh$ 17,551 — 91,262 — 1,536,089 420,822 732,253 — Non-hedging derivative instruments c) Other information on derivatives The following tables set forth the fair value of hedging and non-hedging derivatives entered into by the Group as well as the remaining contractual maturities as of December 31, 2010 and 2009: December 31, 2010 Notional Value Financial Derivatives Fair Value ThCh$ Less than 1 year ThCh$ 1-2 Years 2-3 Years 3-4 Years 4-5 Years ThCh$ ThCh$ ThCh$ ThCh$ Subsequent Years ThCh$ Total ThCh$ Interest Rate Hedge: Cash Flow Hedge (3,650,843) 16,841,269 (3,650,843) 16,841,269 — — 10,670,628 107,488,844 6,314,801 13,385,086 154,700,628 10,670,628 107,488,844 6,314,801 13,385,086 154,700,628 Exchange Rate Hedge: (219,188,046) 7,219,945 13,573,114 Cash Flow Hedge Fair Value Hedge Derivatives not designated for (207,737,155) 7,219,945 (11,450,892) — 4,680,100 8,893,014 hedge accounting 108,813 72,537 — — — — — 462,159,584 9,023,829 203,222,043 695,198,515 462,159,584 — 203,222,043 677,281,672 — — 9,023,829 — — — 17,916,843 72,537 Total (222,730,077) 24,133,751 13,573,114 10,670,628 569,648,428 15,338,630 216,607,129 849,971,680 December 31, 2009 Notional Value Financial Derivatives Interest Rate Hedge: Cash Flow Hedge Fair Value ThCh$ Less than 1 year ThCh$ 1-2 Years 2-3 Years 3-4 Years 4-5 Years ThCh$ ThCh$ ThCh$ ThCh$ Subsequent Years ThCh$ Total ThCh$ (2,293,643) 39,094,718 26,127,883 26,392,796 3,187,503 117,499,266 1,563,664 213,865,830 (2,293,643) 39,094,718 26,127,883 26,392,796 3,187,503 117,499,266 1,563,664 213,865,830 Exchange Rate Hedge: (210,841,466) 6,791,682 6,431,553 11,188,708 1,857,687 268,355,058 200,498,983 495,123,671 Cash Flow Hedge Fair Value Hedge Derivatives not designated for (198,579,562) — — (12,261,904) 6,791,682 6,431,553 5,071,000 6,117,708 — 266,364,546 198,366,150 469,801,696 1,857,687 1,990,512 2,132,833 25,321,975 hedge accounting 1,847,520 91,970,309 31,945,255 — — — — 123,915,564 Total (211,287,589) 137,856,709 64,504,691 37,581,504 5,045,190 385,854,324 202,062,647 832,905,065 The hedging and non-hedging derivatives contractual maturities do not represent the total Group’s risks exposure, as the amounts set forth in the above tables have been drawn up based on undiscounted contractual cash inflows and outflows for their settlement. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 258 Enersis 2010 Annual Report 20.3 Fair value hierarchies Financial instruments recognized at fair value in the consolidated statement of financial position are classified based on the hierarchies described in Note 3.g.5. The following table details financial assets and liabilities measured at fair value as of December 31, 2010 and 2009. Financial Instruments Measured at Fair Value Financial Assets Cash Flow Hedge Derivatives Fair Value Hedge Derivatives Derivatives not Designated for Hedge Accounting Available-for-Sale Financial Assets, Non-Current Total Financial Liabilities Cash Flow Hedging Derivatives Fair Value Hedging Derivatives Derivatives not Designated for Hedge Accounting Interest-Bearing Borrowings, Short-Term Interest-Bearing Borrowings, Long-Term Other non-current financial liabilities Total Financial Instruments Measured at Fair Value Financial Assets Cash Flow Hedge Derivatives Fair Value Hedge Derivatives Derivatives not Designated for Hedge Accounting Available-for-Sale Financial Assets, Non-Current Total Financial Liabilities Cash Flow Hedging Derivatives Fair Value Hedging Derivatives Derivatives not Designated for Hedge Accounting Other current financial liabilities Other non-current financial liabilities Total 12-31-2010 ThCh$ 27,277,462 — 108,813 88,909 27,475,184 238,665,460 11,450,892 — 6,509,732 15,171,516 12,395,250 284,192,850 12-31-2009 ThCh$ 2,238,039 — 2,268,342 88,838 4,595,219 203,111,244 12,261,904 420,822 6,582,907 34,626,861 257,003,738 Fair Value Measured at End of Reporting Period using: Level 1 ThCh$ — — — 88,909 88,909 — — — — — — Level 2 ThCh$ Level 3 ThCh$ 27,277,462 — 108,813 — 27,386,275 238,665,460 11,450,892 — 6,509,732 15,171,516 — 271,797,600 — — — — — — — — — 12,395,250 12,395,250 Fair Value Measured at End of Reporting Period using: Level 1 ThCh$ — — — 88,838 88,838 — — — — — Level 2 ThCh$ Level 3 ThCh$ 2,238,039 — 2,268,342 — 4,506,381 203,111,244 12,261,904 420,822 6,582,907 22,673,861 245,050,738 — — — — — — — — — 11,953,000 11,953,000 20.3.1 The following is the reconciliation between opening and closing balances for Level 3 fair value measurement of financial instruments: Non-current interest-bearing loans Balance at December 31, 2008 Total losses recognized in Finance Profit or Loss Balance at December 31, 2009 Total losses recognized in Finance Profit or Loss Balance at December 31, 2010 ThCh$ 2,429,372 9,523,628 11,953,000 442,250 12,395,250 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 259 Financial Statements Consolidated Note 21. Trade and Other Payables Trade and other payables as of December 31, 2010, and 2009, is as follows: Trade and other payables 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Current Non-Current Trade payables Other payables Total ThCh$ 305,079,295 919,410,703 1,224,489,998 ThCh$ 341,167,159 638,739,193 979,906,352 ThCh$ 4,477,313 32,759,399 37,236,712 ThCh$ — 68,909,402 68,909,402 The detail of Trade Accounts and other Payables as of December 31, 2010, and 2009 is as follows: Trade and Other Payables 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Current Non-Current One to Five Years Energy Suppliers Fuel and Gas Suppliers Payables for Goods and Services Dividends Payable to Third Parties Fines and Claims Research and Development Payables to Tax Institutions Mitsubishi Contract Social Programs Obligations Other accounts payable Total ThCh$ 417,786,845 110,816,084 385,380,841 154,811,729 53,729,963 33,202,794 32,851,967 3,397,620 1,122,119 ThCh$ 326,840,301 69,218,546 380,805,716 116,022,795 42,549,570 10,815,336 13,726,011 — — 31,390,036 19,928,077 1,224,489,998 979,906,352 ThCh$ 5,565,832 — ThCh$ — — 13,410,089 12,945,147 — — 1,895,349 11,216,940 3,288,535 — 1,859,967 37,236,712 — — 7,427,918 23,292,682 7,361,867 5,348,256 12,533,532 68,909,402 See Note 19.4 for the description of the liquidity risk management policy. Note 22. Provisions 22.1 Provisions a) The detail of provisions as of December 31, 2010, and 2009 is as follows: Provisions 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Current Non-Current Provision for Warranty Legal Proceedings Provision ThCh$ — ThCh$ ThCh$ ThCh$ — 2,821,692 2,875,372 44,903,128 23,013,945 209,740,117 235,390,414 Decommissioning, Restoration and Rehabilitation Costs — 10,779,096 10,234,267 Energy and Capacity Purchases Provision Supplier and Services Provision Employee Benefits Provision Other provisions Total 4,318,563 20,226,885 26,183,409 9,716,326 — — — — 31,935,562 33,739,527 1,201,357 1,128,270 8,108,574 13,327,772 980,067 658,589 115,449,236 100,024,455 225,522,329 250,286,912 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 260 Enersis 2010 Annual Report Movements in Provisions Balance at January 1, 2010 Movements in Provisions Additional Provisions Increase (Decrease) in Existing Provisions Provisions Used Unused Provisions Reversed Increase from Time Value of Money Adjustment Foreign Currency Translation Other Increases (Decreases) Total Movements in Provisions Balance at December 31, 2010 Movements in Provisions Balance at January 1, 2009 Movements in Provisions Additional Provisions Increase (Decrease) in Existing Provisions Acquisitions Through Business Combinations Provisions Used Unused Provisions Reversed Increase from Time Value of Money Adjustment Foreign Currency Translation Other Increases (Decreases) Total Movements in Provisions Balance at December 31, 2009 b) Movements in provisions as of December 31, 2010 and 2009 are as follows: Decommissioning, Legal Restoration and Warranty ThCh$ Proceedings Rehabilitation Costs ThCh$ ThCh$ Other Provisions ThCh$ Total ThCh$ 2,875,372 258,404,359 10,234,267 78,797,369 350,311,367 — 37,506 — — — (91,186) — (53,680) 2,821,692 30,017,390 26,663,407 (21,169,685) (32,025,516) — (7,644,162) 397,452 (3,761,114) 254,643,245 — 563,12 — — 56,434 (74,726) 1 544,829 10,779,096 8,668,661 5,321,740 (16,888,613) -121,367 53,791 38,686,051 32,585,773 (38,058,298) (32,146,883) 110,225 (3,995,350) (11,805,424) 891,301 (6,069,837) 72,727,532 1,288,754 (9,339,802) 340,971,565 Decommissioning, Legal Restoration and Warranty ThCh$ Proceedings Rehabilitation Costs ThCh$ ThCh$ Other Provisions ThCh$ Total ThCh$ 9,259,434 190,451,554 2,319,202 120,461,202 322,491,392 906,083 -360,598 — — — — 151,197 (7,080,744) (6,384,062) 2,875,372 83,456,936 16,068,663 (204,714) (18,558,588) (18,722,980) 26,94 7,869,827 (1,983,279) 67,952,805 258,404,359 8,145,666 -64,827 — — — 91,233 (257,007) — 7,915,065 10,234,267 6,800,178 5,428,891 (2,728,637) (19,728,719) (30,725,462) 37,887 (7,603,706) 6,855,735 (41,663,833) 78,797,369 99,308,863 21,072,129 (2,933,351) (38,287,307) (49,448,442) 156,06 160,311 (2,208,288) 27,819,975 350,311,367 22.2 Lawsuits and arbitration proceedings As of the date of preparation of these consolidated financial statements, the following are the most relevant lawsuits involving Enersis S.A. and its subsidiaries: 1. Law 25,561, known as Public Emergency and Reformation of Exchange Regime, enacted on January 6, 2002 by the Argentine authorities, rendered ineffective certain terms and conditions of the concession contract entered into by the subsidiary Edesur. In addition, this Law provided that concession contracts involving public services would have to be renegotiated over a reasonable term in order to adapt them to the new circumstances. However, the fact that the concession contract entered into by Edesur was not renegotiated prompted Enersis S.A., Chilectra S.A., Endesa Chile and Elesur S.A. (currently, Chilectra S.A.) to submit in 2003 a petition for arbitration in accordance with the Chilean-Argentine Treaty for Promotion and Protection of Investments, with the International Center for Resolution of Disputes involving Investments (known as CIADI). The filing put forward as main petition that the involved investments would be declared expropriated, with ensuing payment of damages totaling US$1,306,875,960. In the alternative, a payment of damages was requested, totaling US$318,780,600, based on the negative effects on claimants’ investments caused by a lack of fair and equal treatment; in both cases, subject to a compounded interest of 6.9% a year. In addition, the petition sought payment of the damages generated Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 261 Financial Statements Consolidated starting on July 1, 2004. Finally, it requested payment of US$102,164,683 to Elesur S.A. (currently, Chilectra S.A) for the loss it suffered in the sale of its shares. On June 15, 2005, the Argentine authorities and Edesur signed the documentation underlying a so-called “Acta de Acuerdo” (Written Agreement), which was not rejected by the Argentine parliament, and which was later ratified by the Executive branch of the Republic of Argentina. The Written Agreement sets forth terms and conditions that modify and supplement the concession contract, and establish changes in rates, first during a transitory period and then through a thorough rate review process aimed at laying down the conditions for rates for a 5-year period. Arbitration was suspended in March of 2006 in compliance with the Written Agreement. When suspended, arbitration had reached a stage at which the arbitral tribunal was required to notify the parties of its ruling on the matter of jurisdiction raised by the Republic of Argentina. The current suspension is the result of several extensions requested by the plaintiffs. Regarding the most recent extension, dated August 6, 2009, the arbitral tribunal had requested the parties to report on the status of the negotiation process envisaged in the Written Agreement. On August 12, 2009, the claimants answered this request and filed a petition seeking to extend the suspension of the arbitration process for an additional 12 months, beginning on the date of that filing. The Argentine Republic indicated that it did not oppose the extension of the suspension period requested by the claimants. On August 25, 2009, the Company received a communication from the arbitral tribunal, which agreed to maintain the suspension of the arbitration proceeding until August 12, 2010 at which time, the arbitral tribunal indicated it will request the parties to report on the status of the negotiation process in conformity with the Written Agreement. In a communication dated September 30, 2010, the arbitral tribunal requested a status report, which the claimants responded to by requesting a new 12 month extension on the suspension period. On October 13, 2010, the arbitral tribunal communicated its approval of the suspension of the proceeding until October 6, 2011. At the end of this period, the arbitral tribunal will request the parties involved to inform it regarding the status of negotiations in accordance with the Written Agreement. On October 15, 2010, Robert Volterra, one of the arbitrators, submitted his resignation, which was accepted by the other two arbitrators. According to applicable law, plaintiffs must now assign a replacement for Mr. Volterra within a 45 day period starting with the date when the resignation was communicated. Nevertheless, on November 10, 2010, the plaintiffs requested the suspension of the proceeding with regard to the designation of the substitute for Robert Volterra, with which request the Argentine Republic agreed. 2. Meridional Servicios, Emprendimientos y Participaciones (hereinafter, “Meridional”) is a company whose only assets are the rights derived from litigation that it acquired from the construction companies Mistral and CIVEL, which had entered into a contract with Centrais Elétricas Fluminense S.A. (“CELF”) for the construction of civil works. This contract was cancelled by CELF prior to the privatization that gave rise to the Brazilian distribution subsidiary called Ampla. Since CELF’s assets were transferred to Ampla in the privatization process, in 1998 Meridional sued Ampla, alleging that such assets were transferred in violation of Meridional’s rights. It should be pointed out that Ampla only acquired assets from CELF, but is not CELF’s legal successor, because CELF, a State-run company, continues to exist as a separate legal entity. The plaintiff seeks payment of outstanding invoices and contractual damages arising from the cancellation of civil construction Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 262 Enersis 2010 Annual Report contracts. The plaintiff is seeking payment in an amount estimated at US$430.31 million. The lower court ruling was in favor of Ampla and appealed by the plaintiff, which was granted. Ampla filed a new petition (“embargos de declaración”) with the objective of negating the previous decision and obtaining a new trial. On June 2, 2009, the courts ruled in favor of Ampla and annulled the resolutions issued in past proceedings dating back to April 4, 2009. According to the resolutions dated December 1, 2009 and December 15, 2009, the ruling that granted the relief sought by Meridional was amended and reformulated thereby maintaining the first ruling in favor of Ampla and the State of Rio de Janeiro. Against that decision, Meridional appealed again (via a embargo de declaracíon), which was ruled inadmissible on February 23, 2010. In May 2010, Meridional presented a new petition (embargo de declaracíon), against the aforementioned agreement, which was also declared inadmissible and Meridional was issued a warning that it would be penalized if it filed any future frivolous appeals. On May 28, 2010, Meridional presented a new petition (grievance procedure), which was unanimously rejected on June 8, 2010 and Meridional was assessed a fine equal to 1% of the value of the claim, since the petition was deemed groundless and delayed the trial. In July 2010, Meridional presented a new petition (embargo de declaracíon), which was not recognized. Against such decision, Meridional filed a new petition (regimental tort). On August 30, 2010, the Rapporteur decided to not admit the petition and determined that the petition be removed from the process. Moreover, the Rapporteur asked the tribunal secretary to discourage the admission of new petitions from Meridional as well as to issue a certificate called “transito em julgado” (res judicata) indicating that the matter has already been settled in court. Based on this decision, on September 13, 2010, Meridional filed a new petition (mandado de segurança (injunction). 3. During 2002 the Brazilian distribution subsidiary Ampla signed with Enertrade Comercializadora de Energía S.A. (“Enertrade”) a contract for the purchase of electricity lasting 20 years effective December 31, 2002. This contract was sent for evaluation and approval to Agencia Nacional de Energía Eléctrica (“ANEEL”), and ANEEL indicated that the price for energy would have to be lower. Based on that decision, Ampla paid for the contract the price authorized by ANEEL. However, in December 2005 Enertrade initiated an arbitration proceeding against Ampla with Cámara de Conciliación y Arbitraje de la Fundación Getúlio Vargas/RJ. On March 19, 2009 the arbitral tribunal issued a ruling that ordered Ampla: i) to pay the difference between the price set forth in the contract and the amount actually paid in the period from January 1, 2004 to August 28, 2006, adjusted and with interest; ii) to pay for October to December 2003 an updated price plus interest and a 2% penalty. In addition, the arbitral tribunal ruled that the contract had ended on August 28, 2006 and that Ampla owes nothing to Enertrade after that date. Ampla filed a petition seeking the annulment of the arbitration ruling, including a petition (“anticipación de tutela”) asking that execution of the arbitration ruling be suspended until a final ruling be passed in a pending trial of Enertrade vs. ANEEL (“mandato de seguridad”), where administrative approval of the same energy purchase contract taken to arbitration is being discussed. The amount involved is estimated at US$41.3 million. On May 22, 2009 the “anticipación de tutela” was granted, which suspended the effects of the arbitration ruling. On June 30, 2009 an Enertrade petition was rejected and the suspension was upheld. On July 9, 2009 an Enertrade petition (agravo de instrumento) against the ruling was rejected. On July 20, 2009 Enertrade filed another petition (agravo regimental) against the resolution that rejected the Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 263 Financial Statements Consolidated previous petition. On August 25, 2009 the petition (agravo regimental) filed by Enertrade was rejected. Ampla filed a response that included the lower court ruling passed in the trial (“mandado de seguranca”) of Enertrade vs. ANEEL (on July 7, 2009 a lower court ruling rejected Enertrade’s allegations). On September 2, 2009 a court order was sent to the CCEE (Cámara de Comercialización de Energía Eléctrica) informing it of the “anticipación de tutela” so that the CCEE would suspend the execution of the arbitration ruling until a final decision is passed on the annulment petition. On September 28, 2009 the ruling passed in the trial between Enertrade vs. ANEEL became final —a ruling that indicated that the parties were obligated to add to the contract the conditions imposed by ANEEL (the price reduction). On November 11, 2009 both parties filed a joint petition requesting suspension of proceedings for 30 days and in December they requested the continuation of that suspension. On March 17, 2010, the parties requested the termination of the suspension period as the parties could not reach an agreement. On June 2, 2010, the courts ruled favorably towards Ampla on the petition filed by Enertrade (“Agravo de Instrumento”) (instrumental grievance). As a result of the arbitration, ANEEL approved the agreement (“Termo Aditivo”) between Ampla and Enertrade that adjusts the power purchase agreement. The lower court judge convened a conciliation hearing on September 13, 2010. On August 2, 2010, Enertrade filed a new petition (embargo de declaración) with the Court of Justice seeking reversal of the lower court ruling. On August 26, 2010, the Court of Justice confirmed the lower court ruling in favor of Ampla. However, Enertrade can present an appeal to the Superior Courts of Brasilia. On September 10, 2010, Ampla and Enertrade requested a new suspension of the process for 90 days to resume negotiations and implement the agreement. The Court adjourned, without setting a date, the conciliation hearing previously set for September 13, 2010. 4. Companhia Brasileira de Antibióticos (“CIBRAN”) sued the Brazilian distribution subsidiary Ampla seeking payment of damages for loss of products and raw materials and break-down of machinery, among other things, which allegedly was caused by Ampla’s poor service between 1987 and May 1994. CIBRAN is also seeking payment of punitive damages. The amount involved is estimated at approximately US$45.7 million. The lawsuit was added to six other proceedings whose foundation is disruption of energy. On June 21, 2010, the judge required the parties and their technical advisors to comment on the expert’s report and granted a 30 (thirty) day period for this event. The expert’s report was unfavorable towards Ampla. Consequently, on August 27, 2010, Ampla challenged the report pointing out contradictions in the report and requesting the annulment of the expert’s report or questioning of the expert by the Company’s technical advisors. 5. On October 26, 2009 Tractebel Energía S.A. sued CIEN for alleged failure to perform the agreement called “Purchase and Sale of 300 MW of firm capacity with associated energy from Argentina” (Contrato de Compra y Venta de 300 MW de Potencia firme con energia asociada proveniente de Argentina) entered into in 1999 by and between CIEN and Centrais Geradoras do Sul do Brazil S.A (Gerasul — currently, Tractebel Energia S.A.). Tractebel Energia S.A. is asking the court to order CIEN to pay a penalty of R$ 117,666,976.00 (US$ 70,880,000) plus other fines, for non-availability of “firm capacity and associated energy”, and it asks the court to determine those other fines in the ruling. Non-performance by CIEN was alleged to occur because of the failure of CIEN to guarantee to Tractebel the availability of the firm energy power capacity that was contractually guaranteed to Tractebel, which would allegedly have occurred since March of 2005. On November 27, 2009 CIEN Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 264 Enersis 2010 Annual Report 6. 7. answered the lawsuit, arguing that the non-availability of energy was caused by the “Argentine crisis”, since Argentina is the country from which CIEN imports all the energy that it delivers, when needed, to Tractebel Energia S.A. The defendant also alleges that the “Argentine crisis” was an unexpected event, for which CIEN has no responsibility, and that this situation was even acknowledged by the Brazilian authorities of that period. On April 9, 2010, CIEN presented to the court a written statement regarding the reply submitted by Tractebel. The lawsuit is currently in the lower court and at an initial stage. On September 1, 2010, the lawsuit was sent to the judge for him to decide whether to grant a motion (despacho saneador) to conclude the parties’ pleadings and initiate the investigation/production of evidence. Lawsuit filed by Fumas Centrais Eletricas S.A. (“Fumas”) and notified on June 15, 2010 based on alleged breach of CIEN’s power purchase Agreement N° 12,399 for the purchase of 700MW of capacity with energy originating from Argentina. Under the agreement, which was signed on May 5, 1998, CIEN commits itself to purchase energy from the Argentina’s electricity wholesale market (Mercado Eléctrico Mayorista de la República Argentina hereinafter “MEM”) and transport it from the Argentine electric system (Sistema Eléctrico Argentino) to the Brazilian transmission interconnection system (Sistema de Transmissao de Interligacao) at the Itá substation. The contract has a 20 year term effective June 21, 2000. On April 11, 2005, CIEN informed Fumas that it will not be able to fulfill the agreement due to events beyond its control, regarded as force majeure. On April 14, 2005, Fumas notified CIEN that it would reject CIEN’s force majeure claim. Fumas is requesting the courts order CIEN to pay a R$520,280,659 (US$313.42 million) fine contemplated in the contract in case of rescission, as adjusted plus interest from the date of filing of the claim until actual payment, as well as other penalties based on the lack of availability of the contracted capacity, and other charges to be determined upon the issuance of the final verdict. CIEN replied on July 28, 2010. Fumas answered on August 26, 2010. On October 4, 2010, the judge ruled that the trial is at a stage when the parties need to present their evidence. On October 25, 2010, CIEN proposed the courts the production of additional documentary proof without any need at this time to specify what documents would be presented, which will occur during a future phase. In December, 2001 the article of the Federal Constitution, on which our Brazilian distribution subsidiary, Ampla, relied to argue it was not required to pay certain taxes (COFINS, Contribuição para o Financiamento da Seguridade Social) and pursuant to which Ampla did not pay tax, was amended. There is an article of the Constitution stating that legislative changes come into force 90 days after their publication. Based on that, Ampla began to pay the COFINS only as of April, 2002. However, the Brazilian Tax Authorities argue that this article of the Constitution only applies to changes in laws, but not to the Constitution itself, whose changes come into force immediately. Furthermore, the Tax Authorities argue that, by reason of the change in Ampla’s tax status (from earned to accrued) the taxable amount of the COFINS increased during the first semester of 2002. Notice was given of the proceedings in July 2003. The first appealable decision was decided against Ampla, and it filed an appeal in October, 2003. In November 2007, the appeal was ruled on by the court of appeals and the decision was partly favorable to the Treasury in terms of the period in which a change in the Constitution comes into force and partly favorable to Ampla in terms of the change in the tax status from earned to accrued. In April, 2008, the Ministry of the Treasury filed an appeal against this decision in the Higher Court of Appeals. In October, 2008, Ampla filed its answer to the appeal and also filed an appeal Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 265 Financial Statements Consolidated with the Higher Court to attempt to change that part of the decision that was not favorable to Ampla. In May, 2009, the Federal Treasury (Hacienda Pública Federal) applied interest to the fine imposed. This new interest arises from an internal administrative act (addressed to the tax authorities but for general application) of the tax authorities and has started to be applied uniformly by the Federal Treasury (SRF). The interest on the fine has been calculated by applying the Selic (Special System of Liquidation and Custody: an adjustment index set by the federal government based on the referential interest rate of the Brazilian Central Bank), as of the month after receiving the Record of Infringement. Consequently, since the Record was received in July, 2003, the Selic corresponds to the interest accumulated as of August 2003, which is 81.42%. In August, 2009, Ampla was notified that the Special Appeal filed by the company had not been admitted to be heard. Ampla filed another appeal against this resolution with the President of the Higher Court for hearing Tax Issues. The purpose of this appeal is for the Special Appeal to be received. The decision on the Special Appeal filed by the SRF is pending. The appeal filed by Ampla with the President of the Higher Court for Tax Issues is also pending resolution. The amount involved is US$95.63 million. In 1998, our Brazilian distribution subsidiary Ampla issued FRNs (bonds) for US$350 million maturing in 2008 in order to finance its investment in Coelce. Such bonds were purchased by Cerj Overseas (a foreign subsidiary of Ampla). The bonds had a special tax treatment according to which no withholding tax (15% or 25%) would be applied to payments of interest abroad, provided that, among other requirements, there was no advanced amortization before the average 96 month amortization deadline. Cerj Overseas obtained financing through a 6-month loan outside Brazil to acquire the bonds. At the end of that period (October 1998), due to problems in obtaining other sources of financing, Cerj Overseas had to obtain re-financing from Ampla, which provided Cerj Overseas with loans in reales. The Brazilian tax authorities argue that the special tax treatment was lost in 1998 because the loans in reales made by Ampla to Cerj Overseas were the equivalent of an advanced amortization of the debt before the 96 month amortization deadline. A Record of Infringement was notified in July 2005. In August, 2005, Ampla filed an appeal with the lower administrative court of appeal and such appeal was rejected. In April 2006, an appeal was filed with the Council of Taxpayers, the intermediate administrative court (Consejo de Contribuyentes). In December, 2007, the Council of Taxpayers ruled completely in favor of Ampla. In January of 2010, Ampla was notified of this favorable decision by the Council of Taxpayers as well as the appeal filed by Hacienda Pública. In February 2010, Ampla presented its arguments against the appeal filed by the tax authorities. The amount of this lawsuit is US$430.35 million. In 2002, the State of Rio de Janeiro (“RJ”) issued a decree stipulating that the ICMS (Imposto sobre operações relativas à circulação de mercadorias e sobre prestações de serviços de transporte interestadual, intermunicipal e de comunicação) should be calculated and paid on the 10th, 20th, and 30th days of the same month of the accrual. Due to cash problems, our Brazilian distribution subsidiary Ampla continued to pay the ICMS in accordance with the previous system (payment on the 5th of the month following its accrual). In October 2004, and notwithstanding the existence of an informal agreement with RJ and two separate amnesty laws, RJ notified Ampla of a resolution to collect a fine on late payments. Such resolution was appealed by Ampla in that same year. In February 2007, Ampla was notified of the administrative decision that ratified the fine imposed by RJ. In March 2007, Ampla filed an appeal with the Council of Taxpayers, the intermediate 8. 9. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 266 Enersis 2010 Annual Report administrative court (Consejo de Contribuyentes). Ampla obtained a temporary ruling (liminar) in its favor, allowing it to file the appeal without the need to make a deposit or post a bond to guarantee 30% of the adjusted amount of the fine. On August 26, 2010, Ampla received notification that the Council of Taxpayers decided against it. Afterwards, on September 1, 2010, Ampla presented a new appeal to the Full Council (Consejo Pleno, special body of the Council of Taxpayers) to reverse the decision of the Council of Taxpayers. Ampla is currently awaiting the decision from the Full Council. The amount of the lawsuit is US$ 97.67 million. 10. Towards the end of 2002, our Brazilian generating subsidiary CGTF filed a petition against the Federal Union seeking to classify the goods imported for the turbo-generator units as corresponding to the item “Other Generating Sets”, in order to be able to avail itself of the 0% rate for Import Tax (II) and for the Tax on Industrialized Products (IPI). The Federal Union argues that the imported goods do not correspond to “Other Generating Sets”. CGTF obtained an incidental resolution in its favor allowing it to clear the goods through customs with a 0% rate, subject to a prior legal deposit of R$56 million (US$35.72 million, updated at July 2009). Also, to avoid expiration of the taxes, the Brazilian federal tax authorities issued a record of tax enforcement that was suspended until the pending lawsuit against the Federal Union is resolved. In September of 2008, the lower court issued a ruling favorable to CGTF. The ruling recognized the classification of the turbo-generator units in accordance with CGTF’s original classification and determined that the judicial deposit should remain as a guarantee until a final decision is reached. In February 2009, the Brazilian federal tax authorities filed an appeal with the Regional Federal Court (Tribunal Regional Federal or “TRF”). In May of 2010, the TRF also ruled in favor of CGTF thereby confirming the decision of the lower court in favor of CGTF and rejecting the appeal filed by the Brazilian tax authorities. This decision became final as the Brazilian tax authorities did not file any appeal with the superior courts. In September 2009, the temporary resolution that allowed CGTF to clear the goods through customs with a 0% tax rate subject to a legal deposit was confirmed. In October 2009, the decision which confirmed the first ruling in favor of CGTF was published. In November 2009, the Brazilian tax authorities presented a special petition (embargos de declaracion) against such resolution which was resolved in favor of CGTF. In March 2010, the Brazilian tax authorities filed a special petition against such decision in the Supreme Court of Justice in Brazilia. In administrative proceedings regarding the tax enforcement issued by the Brazilian tax authorities to avoid expiration of the taxes, the lower administrative court ruled in favor of CGTF because the record of enforcement (Acta) was declared null and void. The decision is based on the fact that the record of enforcement was issued without taking into consideration the proper legal requirements and formalities. As this resolution was based on formalities (rather than on substantive matters), there is the theoretical possibility for the Brazilian tax authorities to issue another record that meets the formal requirements, for which there is no specific deadline. In October 2008, the Council of Taxpayers, the intermediate court of administrative appeal, completely ratified the decision by the lower court confirming that the record of enforcement issued by the Brazilian federal tax authorities was null and void due to formal flaws. In April 2009, such decision became final and therefore the record is now extinct. The lawsuit is currently pending resolution of a petition submitted by the Brazilian tax authorities to the Supreme Court of Justice in Brasilia. The amount involved is US$43.92 million. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 267 Financial Statements Consolidated 11. In 2005, three lawsuits were filed against Endesa Chile, the Treasury (Fisco) and the General Water Board (Direccion General de Aguas or DGA), which are currently being treated as a single proceeding. The lawsuits request the annulment of DGA Resolution 134 that gave Endesa the right to non- consumptive use of water for the Neltume Hydroelectric Power Plant project. The lawsuits also request compensation for damages. Alternatively, the lawsuit requests compensation for damages allegedly caused to the plaintiffs by the loss of quality of their properties on the shores of Lake Pirehueico and by the loss in value of their properties. The defendants, including Endesa Chile, have rejected these allegations on the grounds that, among other arguments, the DGA Resolution 134 meets all legal requirements and the exercise by Endesa Chile of this right does not cause any damages to the plaintiffs. At this date, the proceeding is at the stage of receiving evidence by the parties. The amount related to these lawsuits is undetermined. 12. There were five proceedings initiated between 2008 and 2009 against Pangue S.A., a subsidiary of Endesa Chile, where the plaintiffs seek compensation for losses incurred by flooding that, according to the plaintiffs, was caused by the operation of the Pangue S.A. hydroelectric power plant during July 2006. Pangue S.A. responded to such lawsuits arguing that it was in compliance with existing regulations in the operation of the power plant and that it acted with due diligence and care. Consequently, Pangue S.A. claims that there is no causal relationship between the flooding and the operation of the power plant during the relevant period. These proceedings were filed in various courts and currently one of them is close to being resolved and two of them are at the discovery stage. In one of the two remaining proceedings, the courts ruled in favor of Pangue S.A., and currently there are pending appeals filed with the court of appeals by the plaintiffs. The remaining proceeding is no longer in effect due to inactivity by the plaintiffs. The amount claimed in the four proceedings that are still in effect is equal to ThCh$ 17,718,704 (US$ 37.86 million) in the aggregate. As for the proceeding that was closed, it entailed ThCh$ 1,916,466 (US$ 4 million) and is not covered in terms of equity risk by an insurance company. The potential damages arising from the four proceedings that are in effect are covered by insurance. 13. During 2010, several plaintiffs initiated four judicial proceedings against Endesa Chile seeking compensation for flooding of the Bio Bio river in the VIII Region. In these proceedings, the plaintiffs blame the company for losses attributed to the poor operation of the Ralco hydroelectric power plant during the flooding. In one of the proceedings, the lawsuit also includes the Public Works Ministry (“MOP”). In November 2010, the plaintiff withdrew the claim against Endesa but decided to continue it against MOP. The remaining lawsuits are currently in evidentiary hearing. The plaintiff has the burden to prove causation between the operation of the Ralco hydroelectric plant and the flooding during the period in question (i.e., that the flooding was caused by poor operation of the plant). The amount of the three proceedings that are currently in effect against Endesa Chile equals ThCh $ 14,610,043 (US$ 31.21 million). The proceeding against Endesa Chile that was dismissed by the plaintiff amounted to ThCh$33,751,490 (US$72.11 million). All of the risks arising from these proceedings are covered by an insurance policy. In July and September of 2010, Ingeniería y Construcción Madrid S.A. and Transportes Silva y Silva Limitada, filed separate lawsuits against Endesa Chile and the Dirección General de Aguas (“DGA”), to nullify and void the administrative resolution that granted to Endesa Chile use of the water rights for the Neltume hydroelectric plant, and the administrative resolution that authorized the transfer of the collection point of such rights. The goal of the 14. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 268 Enersis 2010 Annual Report 15. 16. plaintiffs is to obtain payment for their water rights that are located in an area of the hydraulic works of the future Neltume hydroelectric power plant. Endesa Chile has rejected the claims, arguing that the plaintiffs are attempting to unlawfully litigate to prevent the construction of the plant in order to obtain compensation. The discussion period in the proceeding initiated by Ingeniería y Construcción Madrid S.A has expired and Endesa Chile has responded to the lawsuit in the proceeding initiated by Transportes Silva y Silva Limitada. The amount involved in these proceedings are undetermined. In 2001, the inhabitants of Sibaté, Department of Cundinamarca filed a claim against the Colombian generating subsidiary Emgesa S.A. ESP., Empresa de Energía de Bogotá S.A. ESP. and the Corporación Autónoma Regional seeking joint and several damages caused by the pollution of the El Muña reservoir by pumping of polluted water from the Bogotá river by Emgesa S.A. ESP. Emgesa responded that it is not liable for these damages, arguing, among other things, that it receives already polluted water. The total amount of the lawsuit equals ThCPs 3,000,000,000 (US$1,547.72 million). Emgesa S.A. ESP. petitioned to have approximately 80 public and private entities that discharge into the Bogotá River and that have responsibility for the environmental management of this river basin to be brought into the lawsuit. Therefore, the case file (expediente) was sent to the State Council (Consejo de Estado) and the public and private entities have filed petitions in opposition. On June 29, 2010 the parties were notified of a motion filed by one of the plaintiffs that seeks to declare the Cundinamarca Administrative Court’s rulings for the period after August 1, 2006 null and void. This request is based on the argument that the court lacks jurisdiction over this proceeding since according to Law 472 of 1998, the Administrative Circuit Courts are the relevant courts to hear class actions. Emgesa rejected such annulment request. The proceedings will be reassigned to Magistrate Olga Valle de la Hoz who is among the new magistrates that are in compliance with Law 1285. In 2001, the tax authority in Peru, SUNAT, issued certain tax and penalty resolutions questioning the depreciation of Edegel’s revalued assets. In January of 2002, Edegel filed a petition (recurso de reclamacion) against these resolutions, which was declared without merit by the SUNAT. Edegel filed an appeal before the Tribunal Fiscal de la Nación (National Tax Tribunal), which ruled in favor of Edegel in 2004, confirming (i) Edegel’s right to depreciate the greater value of the asset based on the fact that Edegel had an agreement for legal stability (convenio de estabilidad jurídica), and (ii) the non-application of Rule VIII of the Internal Revenue Code as there was no fraud. The resolution provided that SUNAT must ensure that the revaluation of the assets was not done at an amount greater than market value. From that date, Edegel has received several notices from SUNAT for determination of the revaluation surplus and the tax amount owed. In January 2006, a complaint and appeal were filed against the resolution of SUNAT before the Tribunal Fiscal de la Nación, the ruling of which is pending. The amount of these claims equals approximately US$ 45.43 million. The Management of Enersis S.A. considers that the provisions recorded in the Consolidated Financial Statements adequately cover the risks of the litigation described in this note, so such litigation is not expected to give rise to any additional liabilities to those recorded. Given the characteristics of the risks covered by these provisions, a reasonable schedule of dates of payment, if any, cannot possibly be determined. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 269 Financial Statements Consolidated Note 23. Provisions for Employee Benefits 23.1 General information: Enersis S.A. and certain of its subsidiaries in Chile, Brazil, Colombia, and Argentina sponsor various post-employment benefits for all qualifying employees. These benefits are calculated and recorded in the financial statements according to the criteria described in Note 3.l.1., and include the following employee benefits: a) Defined benefits plans: • • • • Complementary pension: The beneficiary is entitled to receive a monthly amount that supplements the pension obtained from the respective social security system. Staff severance indemnities: The beneficiary receives a certain number of contractual salaries upon retirement. Such benefit is subject to a vesting minimum service requirement period, which depending on the company, varies within a range between 5 to 15 years. Electric supply: The beneficiary receives a monthly amount to cover a portion of his/her billed residential electricity consumption. Health benefit: The beneficiary receives additional health coverage to that entitled by his/her social security regime. b) Defined contribution benefits: The Group makes contributions to a retirement benefit plan where the beneficiary receives additional pension supplements for his/her retirement, disability, or death. 23.2 Details, movements and financial statement presentation: a) The post-employment obligations associated with defined benefits plans and the related assets plan as of December 31, 2010 and 2009 is detailed as follows: The amounts included in the consolidated statement of financial position are the following: Post-Employment Benefit Obligation, Current Post-Employment Benefit Obligation, Non-Current Total (-) Surplus of plan assets (*) Balance at 12-31-2010 12-31-2009 ThCh$ ThCh$ 5,450,382 215,818,975 221,269,357 (3,352,698) 4,915,167 182,688,990 187,604,157 — Total post-employment obligations, net 217,916,659 187,604,157 (*) Corresponds to the excess of the fair value of plan assets over the present value of the defined benefit obligation in the subsidiary Coelce. This amount has been presented within “Other financial assets” (see Note 6). Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 270 Enersis 2010 Annual Report The amount included in the statement of financial position arising from the Group´s obligation in respect of its defined benefit plans were as follows: Present value of defined benefit obligations (-) Fair value of Plan Assets (*) Total Amount Not Recognised as an Asset Minimum Funding Requirement (IFRIC 14) (**) Transfer to Disposal Groups Held for Sale (***) Post-Employment Benefit Obligations Total 12-31-2010 12-31-2009 ThCh$ ThCh$ 554,990,745 510,334,175 (377,239,859) (362,690,337) 177,750,886 147,643,838 31,425,234 11,527,032 31,876,650 10,233,447 (2,786,493) (2,149,778) 217,916,659 187,604,157 (*) Plan assets to fund defined benefit plans in our Brazilian subsidiaries (Ampla and Coelce) the remaining defined benefit plans in our other subsidiaries are unfunded. (**) The Brazilian subsidiaries are subject to minimum funding requirements of contributions that must be made to a plan over a given period, in accordance with IFRIC 14. The administration has estimated that only 26.75% will be recovered. (***) Corresponds to defined benefit obligations in our subsidiaries CAM and Synapsis classified as held for sale (see Note 11). b) The reconciliation of opening and closing balances of the present value of the defined benefit obligation as of December 31, 2010 and 2009 is as follow: Present Value of Post-Employment Benefit Obligations Opening Balance at January 1, 2009 Current Service Cost Interest Cost Actuarial (Gains) Losses Foreign Currency Translation Benefits Paid Business Combinations (*) Balance at December 31, 2009 Current Service Cost Interest Cost Contributions by plan participants Actuarial (Gains) Losses Foreign Currency Translation Benefits Paid Closing Balance at December 31, 2010 ThCh$ 443,320,261 5,138,692 51,679,594 35,705,096 11,423,745 (44,397,635) 7,464,422 510,334,175 4,455,159 52,703,379 1,461,694 48,675,226 (15,843,247) (46,795,641) 554,990,745 (*) Balance arising on business combination occurred on February 25, 2009 (see Note 14.1). As of December 31, 2010, out of the total amount of post-employment benefit obligations a 6.4% (7.1% in 2009) relates to defined benefit plans from Chilean companies; a 79.1% (76.3% in 2009) relates to defined benefit plans from Brazilian companies; a 14.1% (16.2% in 2009) relates to defined benefit plans from Colombian companies and; a 0.4% (0.4% in 2009) relates to defined benefit plans from one Argentine companies. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 271 Financial Statements Consolidated c) Movements in the present value of the plan assets in the periods presented were as follows: Fair Value of Plan Assets Balance at January 1, 2009 Expected Return Actuarial (Gains) Losses Foreign Currency Translation Contributions Benefits Paid Balance at December 31, 2009 Expected Return Actuarial (Gains) Losses Foreign Currency Translation Contributions Benefits Paid Balance at December 31, 2010 ThCh$ (264,762,082) (32,050,585) (60,896,738) (21,040,531) (15,488,990) 31,548,589 (362,690,337) (41,253,550) (2,416,269) 12,205,535 (15,530,103) 32,444,865 (377,239,859) The amounts included in the fair value of plan assets for equity instruments of the Group’s own financial instruments and for property occupied by the Group are as follows: Equity instruments Real estate Total 12-31-2010 12-31-2009 ThCh$ 7,526,454 2,044,062 9,570,516 ThCh$ 8,448,047 1,722,538 10,170,585 d) The major categories of plan assets at the end of each reporting period are as follows: Category of Plan Assets Equity instruments (variable income) Fixed Income Assets Real Estate Investments Other Total 12-31-2010 ThCh$ 65,913,747 283,356,040 23,748,294 4,221,778 377,239,859 % 18% 75% 6% 1% 12-31-2009 ThCh$ 67,097,712 264,763,946 25,388,324 5,440,355 100% 362,690,337 % 19% 73% 7% 1% 100% The expected rate of return of the plan assets has been estimated considering the projections for financial markets of fixed and variable income instruments, and assuming that asset categories will have a similar weighing from that of the prior year. The return on plan assets was 12.90% and 19.77% as of December 31, 2010 and 2009, respectively. e) The total expense recognized in profit or loss in respect of the defined benefit plans as of December 31, 2010, 2009 and 2008, are as follows: Expense Recognized in Profit or Loss 12-31-2010 12-31-2009 12-31-2008 Current Service Cost Interest Cost ThCh$ ThCh$ ThCh$ 4,455,159 52,703,379 5,138,692 51,679,594 4,072,922 47,749,152 Expected Return on Plan Assets (41,253,550) (32,050,585) (33,741,755) Expense Recognized in Profit or Loss Actuarial (Gains) and Losses Total Expense Recognized in Profit or Loss 15,904,988 48,495,375 64,400,363 24,767,701 15,599,453 40,367,154 18,080,319 34,060,925 52,141,244 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 272 Enersis 2010 Annual Report 23.3 Other disclosures: • Actuarial Assumptions: As of December 31, 2010 and 2009 the following assumptions were used in the actuarial calculation of defined benefits: Chile Brazil Colombia Argentina 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Discount Rates Used Expected Return on Plan Assets Expected Rate of Salary Increases 6.50% N/A 3.00% 6.50% 10.50% 10.80% / 11.50% N/A 12.90% / 13.41% 11.28% / 13.02% 3.00% 4.50% 5.77% / 6.59% 9.52% N/A 4.51% 11.59% N/A 6.48% 16.80% 13.94% N/A 11.30% N/A 8.00% Mortality Tables RV-2004 / RV-85 RV-2004 / RV-85 AT 2000 AT-83/AT-49 RV- 08 ISS 1980-1989 CSO 1980 CSO 1980 • Sensitivity: As of December 31, 2010, the sensitivity of the value of the actuarial liability for post- employment benefits to variations of 100 basis points in the discount rate assumes a decrease of ThCh$ 48,202,624 (ThCh$ 40,456,334 as of December 31, 2009) if the rate rises and an increase of ThCh$ 56,462,882 (ThCh$ 47,466,911 as of December 31, 2009) if the rate falls. • Future disbursements: The Group expects to make a contribution of ThCh$ 5,450,382 to the defined benefit plans during the next financial year. • Defined contribution: The total expense recognized in the consolidated statement of comprehensive income within line item “Employee expenses” represents contributions payables to the defined contribution plans by the Group. As December 31, 2010, 2009 and 2008 the amounts recognized as expenses were ThCh$ 1,382,818, ThCh$ 2,132,317 and ThCh$ 1,697,800 respectively. Note 24. Equity 24.1 Equity attributable to the parent company´s owners Subscribed and paid capital and number of shares 24.1.1 The share capital as of December 31, 2010 and 2009 was ThCh$ 2,824,882,835 and is divided into 32,651,166,465 fully subscribed and paid no par value shares listed at the Bolsa de Comercio de Santiago de Chile, Bolsa Electrónica de Chile, Bolsa de Valores de Valparaíso, New York Stock Exchange (NYSE), and Bolsa de Valores Latinoamericanos de la Bolsa de Madrid (LATIBEX). There has been no change in the numbers of shares during the years 2010 and 2009. Capital contributions made in 1995 and 2003 resulted in share premiums amounting to ThCh$ 125,881,577 and ThCh$ 32,878,071, respectively. The Chilean Companies Law permits the use of the share premium account balance to increase capital and does not establish any specific restrictions as to its use. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 273 Financial Statements Consolidated 24.1.2 Dividends The Company’s Board of Directors, at the Board Meeting held on March 25, 2009 agreed to propose to the General Shareholders Meeting the distribution of a final dividend equivalent to 35.27% of the net income of year 2008, at Ch$ 6.1 per share. The proposal above modified the dividends policy for the year 2008 which considered a proposed final dividend distribution equivalent to 70% out of the total net income, which was reported as a Material Event on March 25, 2009. At the Board Meeting held on February 26, 2010 , the Board agreed to propose to the General Ordinary Shareholders’ Meeting to be held on April 22, 2010, the distribution of a final dividend in the amount of 35,11% of the Company’s net income corresponding to 2009. This equals a dividend of Ch$ 7.1 per share. The aforementioned proposal modified the Company’s Dividend Policy for 2009, which allowed for an expected final dividend of 60% of the Company’s net income. This was disclosed as an Essential Event dated February 26, 2010. In the General Ordinary Shareholders’ Meeting held on April 22, 2010, the shareholders agreed to distribute the minimum mandatory dividend and an additional dividend amounting to Ch$ 7.1 per share. Such dividend was partially paid during 2009 (Interim Dividend No. 80) and the Ch$ 4.64323 per share surplus was paid on May 6, 2010 (Final Dividend No. 81). The Board agreed to establish a dividend policy for 2010 in the amount of 60% of 2010 net income. The Enersis Board in its Ordinary Session dated October 27, 2010 unanimously agreed to pay an interim dividend on January 27, 2011 equal to Ch$ 1.57180 per share out of 2010 net income and corresponding to 15% of the Company’s net income as of September 30, 2010. The aforementioned information constitutes a modification in the Company’s 2010 dividend policy, which provided for the December interim dividend The compliance of the aforementioned dividend plan is conditional on the actual net income earned by the Company during the current year, as well as the results the Company’s periodic projections indicate. The following table details the dividends paid in the last six years: Dividend No. Type of Dividend Date of Payment Pesos per Share Charged to Period 72 73 74 75 76 77 78 79 80 81 Final Final Interim Final Interim Final Interim Final Interim Final 04-20-2005 04-03-2006 12-26-2006 05-23-2007 12-27-2007 04-30-2008 12-19-2008 05-12-2009 12-17-2009 05-06-2010 0.41654 1.00000 1.11000 4.89033 0.53119 3.41256 1.53931 4.56069 2.45677 4.64323 2004 2005 2006 2006 2007 2007 2008 2008 2009 2009 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 274 Enersis 2010 Annual Report 24.2 Foreign currency translation reserves The following table details translation adjustments net of taxes in the consolidated statement of financial position and the consolidated statement of change in equity for the three years in the period ended December 31, 2010: Foreign currency translation December 31, 2010 December 31, 2009 December 31, 2008 Distrilec Inversora S.A. Edesur S.A. Ampla Energía S.A. Ampla Investimentos S.A. Codensa S.A. Distrilima S.A. Investluz S.A. Endesa Brasil S.A. Central Costanera S.A. Endesa Argentina S.A. Gas Atacama S.A. Emgesa Hidroeléctrica El Chocón S.A. Generandes Perú S.A. Grupo Synapsis Grupo CAM Other Total ThCh$ (31,997,882) (39,533,598) ThCh$ (25,140,985) (30,917,314) ThCh$ (3,123,655) (3,519,749) 131,368,333 145,683,499 115,076,940 2,457,495 6,372,677 (8,023,006) 3,645,236 32,580,194 (7,112,768) 286,480 (2,013,576) 38,858,582 (10,306,187) 766,900 (1,148,937) (2,087,946) (833,107) 3,558,280 8,666,552 (3,620,410) 3,681,834 55,686,633 (3,495,910) 286,480 2,261,348 40,494,477 (7,744,971) 9,417,649 (339,801) (1,259,460) (244,691) 1,445,939 28,716,101 10,412,874 3,644,801 14,166,519 (4,619,633) 9,403,155 13,277,982 62,314,686 (677,259) 31,521,222 2,370,640 3,423,263 125,785 113,278,890 196,973,210 283,959,611 24.3 Capital management The objective of the Company is to maintain an adequate level of capitalization in order to be able to secure its access to the financial markets, so as to fulfill its medium and long-term goals while maximizing the return to its shareholders and maintaining a robust financial position. 24.4 Restrictions on the ability of subsidiaries to transfer funds to the parent Certain subsidiaries of the Group must meet certain financial ratio covenants which require them to have a minimum level of equity or other requirements that restrict the transferring of assets to the parent company. The Group’s restricted net assets as of December 31, 2010 from its subsidiaries Endesa Chile, Endesa Brasil, Ampla Energía, Coelce and Edelnor totaled ThCh$ 1,021,823,880, ThCh$ 99,763,921, ThCh$ 390,800,750, ThCh$ 48,782,665 and ThCh$ 68,032,153 respectively. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 275 Financial Statements Consolidated 24.5 Other reserves Other reserves within Equity as of December 31, 2010, 2009 and 2008 are as follows: Balance at Balance at January 01, Movements December 31, 2010 ThCh$ 2010 ThCh$ 2010 ThCh$ Exchange differences on translation 196,973,210 (83,694,320) 113,278,890 Cash flow hedges Remeasurement of Available-for-sale financial assets Miscellaneous Other Reserve TOTAL (188,691,145) 14,682,972 (174,008,173) 41,699 (1,291,099,898) 126 — 41,825 (1,291,099,898) (1,282,776,134) (69,011,222) (1,351,787,356) Balance at Balance at January 01, Movements December 31, 2009 ThCh$ 2009 ThCh$ 2009 ThCh$ Exchange differences on translation 283,959,611 (86,986,401) 196,973,210 Cash flow hedges (276,767,607) 88,076,462 (188,691,145) Available-for-sale financial assets Miscellaneous Other Reserve TOTAL 9,565 32,134 41,699 (1,291,099,898) — (1,291,099,898) (1,283,898,329) 1,122,195 (1,282,776,134) Balance at Balance at January 01, Movements December 31, 2008 ThCh$ 2008 ThCh$ 2008 ThCh$ Exchange differences on translation 199,615,814 84,343,797 283,959,611 Cash flow hedges (44,390,168) (232,377,439) (276,767,607) Available-for-sale financial assets Miscellaneous Other Reserve TOTAL 9,108 457 9,565 (841,137,396) (449,962,502) (1,291,099,898) (685,902,642) (597,995,687) (1,283,898,329) • • • • • Translation reserve arises from exchange differences relating to : Translation of the financial statements of our foreign operations from their functional currencies to our presentation currency (i.e. Chilean peso) (see Note 2.5.3); and Translation of goodwill arising on the acquisition of foreign operations with a functional currency other than the Chilean peso (Note 3.c). Hedging reserve represents the cumulative portion of gains and losses on hedging instruments deemed effective in cash flow hedges (Note 3.g.4. and 3.m). Other miscellaneous reserves Other miscellaneous reserves include the following: (I) In accordance with Oficio Circular No. 456 of the SVS, accumulated price level restatements related to paid-in capital since our transition to IFRS 1 on January 1, 2004 through December 31, 2008. Note that despite the Company adopted IFRS as its accounting standards as of January 1, 2009, the January 1, 2004 transition date disclosed previously was the same date used by the our Parent Company ENDESA, S.A. in its transition to IFRS. (II) Translation differences existing at the date of transition to IFRS (exemption IFRS 1 “First-time adoption”). (III) Reserve arising from transactions between entities under common control, mainly explained by the creation of the Endesa Brasil Holding in 2005 and the merger of our Colombian subsidiaries Emgesa and Betania in 2007. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 276 Enersis 2010 Annual Report 24.6 Non-controlling interests The main changes in minority interests during the years ended December 31, 2010 and 2009 are described below. a) On October 9, 2009, our subsidiary Endesa Chile acquired an additional 29.3974% ownership interest of Edegel S.A.A. for a total consideration US$ 375 million, resulting in a reduction amounting to ThCh$ 127,551,963 in the equity attributable to minority interests in such entity. • Likewise, on October 15, 2009, Enersis acquired an additional 24% ownership interest of Empresa de Distribución Eléctrica de Lima Norte S.A.A. (“Edelnor”) for a total consideration of US$ 145.7 million, resulting in a reduction amounting to ThCh$ 37,886,392 in the equity attributable to minority interests in such entity. The Boards of Directors of Endesa Chile and Enersis authorized both transactions described above after reviewing external valuations performed by investment banks hired for this purpose, as well as internal valuations performed by the executive management of each company. These acquisitions were made from Generalima S.A.C., a Peruvian company fully owned by Endesa Latinoamérica S.A.U., the direct parent company of Enersis. • b) On the other hand, the negative fluctuation reflected in the line item “Increase (decrease) through transfers and other changes” of the consolidated statements of changes in equity is explained primarily by the following: (i) the amount corresponding to the non-controlling interests in dividends declared by the consolidated subsidiaries the amount corresponding to the non-controlling interests in the Emgesa S.A. E.S.P. return of capital. That balance amounts to ThCh$ 85,231,132 as of December 31, 2010 (ThCh$ 0 as of December 31, 2009 and 2008). (ii) Note 25. Revenues The detail of revenues presented in the Statement of Comprehensive income for the years ended December 31, 2010, 2009 and 2008 is as follows: Revenues Energy Sales Other Sales Sale of Measuring Equipment Sale of Electronic Supplies Sale of Products and Services Other Revenue from Services Tolls and Transmission Lease of Measuring Equipment Public Lighting Verifications and Connections Engineering Services Advisory Services Other Services Total Revenue For the year ended 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ 5,653,724,917 5,579,145,884 5,561,463,872 50,570,774 2,621,293 31,263,834 16,685,647 474,934,133 182,638,100 9,646,546 31,092,463 14,106,659 15,871,319 23,442,524 56,489,259 2,822,658 39,840,661 13,825,940 477,648,472 229,183,380 8,327,754 30,603,007 14,869,456 19,960,120 26,976,336 45,682,484 3,798,709 31,760,232 10,123,543 493,717,929 250,583,706 9,966,455 36,640,855 22,801,523 18,460,358 23,528,236 198,136,522 147,728,419 131,736,796 6,179,229,824 6,113,283,615 6,100,864,285 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 277 Financial Statements Consolidated Other operating income For the year ended 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ Revenue from Construction Contracts 252,401,048 200,493,636 275,584,358 Mutual Supports Third Party Services to own and Third Party Fixtures Income from Leases Sale of New Businesses Other Income Total other operating income 23,287,510 10,611,783 699,787 11,380,343 85,970,818 384,351,289 17,809,432 24,832,249 841,083 9,238,121 105,557,517 358,772,038 16,614,018 18,887,136 3,112,862 13,226,000 151,656,042 479,080,416 1) During the current year, the Company recognized Ch$ 22,226 million related to the Bocamina power plant business interruption insurance policy. Note that as a result of the February 27, 2010 earthquake, the Bocamina Power Plant activities were affected. Consequently, this is why the Company received the proceeds noted herein. (see Note No.15 d) vi). Note 26. Raw Materials And Consumables Used Raw materials and consumables used presented in profit or loss for the 2010, 2009 and 2008 period are detailed as follows: Raw materials and consumable used Energy Purchases Cost Fuel Consumed Transportation Costs Costs from Construction Contracts Other Variable Supplies and Services For the year ended 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ (1,554,714,636) (1,520,198,225) (1,624,238,985) (672,038,103) (580,237,613) (847,411,384) (405,983,092) (316,287,883) (294,860,018) (252,401,048) (200,493,636) (275,584,358) (636,509,375) (593,376,220) (505,895,541) Total (3,521,646,254) (3,210,593,577) (3,547,990,286) Note 27. Employee Benefits Expenses Employee expenses recognized in profit or loss for the 2010, 2009 and 2008 period are detailed as follows: Employee Benefits expenses 12-31-2010 12-31-2009 12-31-2008 For the year ended Wages and Salaries Post-Employment Benefit Obligation Expense Social Security and Other Contributions Other Employee Expenses Total ThCh$ ThCh$ ThCh$ (295,339,462) (296,862,091) (269,904,674) (5,837,977) (63,391,743) (10,108,831) (7,271,009) (52,252,408) (14,016,937) (5,770,722) (40,925,405) (6,027,632) (374,678,013) (370,402,445) (322,628,433) Note 28. Depreciation, Amortization and Impairment Losses Depreciation, amortization and impairment losses recognized in profit or loss for the 2010, 2009 and 2008 period are detailed as follows: Depreciation Amortization Subtotal Impairment Losses (*) Total For the year ended 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ (338,040,266) (346,587,547) (330,545,457) (110,977,009) (107,782,412) (87,164,869) (449,017,275) (454,369,959) (417,710,326) (108,373,429) (85,285,525) (20,353,265) (557,390,704) (539,655,484) (438,063,591) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 278 Enersis 2010 Annual Report (*) Impairment losses Financial assets (see Note 7c) Assets and disposal groups held for sale (see Note 11) Property, plant and equipment (see Note 15) Reversal of impairment loss — investment property (see Note 16) Total For the year ended 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ (95,391,111) (14,881,960) (1,340,235) 3,239,877 (22,179,120) (21,915,849) (43,999,600) 2,809,044 (19,755,884) — — (597,381) (108,373,429) (85,285,525) (20,353,265) Note 29. Other Expenses Other miscellaneous operating expenses for the 2010, 2009 and 2008 period are detailed as follows: Other expenses For the year ended 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ Other Supplies and Services (130,232,972) (146,952,970) (156,589,606) Professional, outsourcing and other services (113,944,110) (117,604,978) (108,338,771) Repairs and Maintenance Indemnities and Fines Taxes and Charges Insurance Premiums Leases and Rental Cost Marketing, Public Relations and Advertising Other Supplies Travel Expense Environmental Expenses Total (69,199,458) (41,316,694) (26,456,298) (19,147,361) (16,980,825) (16,207,055) (11,701,238) (4,306,510) (942,248) (53,933,371) (20,934,632) (33,891,117) (19,866,916) (19,969,187) (16,338,026) (19,372,298) (4,966,691) (3,859,011) (57,359,157) (11,474,146) (34,795,817) (14,076,198) (22,103,036) (10,949,704) (15,665,284) (5,192,877) (3,666,727) (450,434,769) (457,689,197) (440,211,323) Note 30. Other Gains (Losses) The detail of other gain (loss) for the 2010, 2009 and 2008 period are detailed as follows: Other gains (losses) 12-31-2010 12-31-2009 12-31-2008 For the year ended Investment Sales Sale of receivables portfolio - Codensa Hogar Land Sales Other Assets Total ThCh$ 272,686 — 8,381,710 3,329,038 ThCh$ 28,113,548 12,784,152 9,253,010 489,568 11,983,434 50,640,278 ThCh$ 964,000 — — 1,574,961 2,538,961 Note 31. Financial Costs The detail of financial income and costs for the 2010, 2009 and 2008 period are detailed as follows: Financial income Income from cash and cash equivalents Income from expected return on plan assets (Brazil) Other finance income Incomo from other financial assets Total For the year ended 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 68,144,673 41,253,550 56,962,380 4,876,345 79,364,437 32,050,585 41,884,708 6,370,675 77,155,433 33,741,755 61,502,064 9,354,083 171,236,948 159,670,405 181,753,335 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 279 Financial Statements Consolidated Financial Costs For the year ended 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ (438,358,251) (482,472,627) (515,108,257) Bank Loans (127,921,732) (137,274,372) (161,830,097) Secured and unsecured obligations (150,777,160) (171,723,898) (200,639,335) Finance Leasing Valuation of Financial Derivative Financial Provision Post-Employment Benefit Obligation Capitalized borrowing costs Other Financial Costs (3,056,546) (19,034,198) (73,709,974) (52,703,379) 15,137,380 (3,733,454) (19,307,617) (12,105,233) (51,679,594) 11,165,950 (4,696,187) (18,723,566) (18,121,169) (47,749,152) 12,119,473 (26,292,642) (97,814,409) (75,468,224) Gain (Loss) for Indexed Assets and Liabilities (15,055,706) 21,781,329 (62,378,252) Foreign Currency Exchange Differences, Net 11,572,474 (8,235,253) (23,632,778) Positive Negative Total Financial Costs Total Financial Results 83,236,540 82,015,125 74,524,243 (71,664,066) (90,250,378) (98,157,021) (441,841,483) (468,926,551) (601,119,287) (270,604,535) (309,256,146) (419,365,952) Note 32. Income Tax Income tax as presented in the accompanying consolidated statements of comprehensive income for the 2010 and 2009 periods are detailed herein. Also, the following table reconciles income taxes resulting from applying the general current tax rate to “Net income before taxes” to the income tax expense recorded in the accompanying consolidated statement of comprehensive income for 2010, 2009 and 2008: Income Tax Current Tax Expense Tax Benefit Effect from Tax Assets Not Previously Recognized Adjustments to Current Tax of Prior Period Other Current Tax Expense For the year ended 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ (397,519,578) (422,830,225) (308,467,764) 51,094,799 (2,869,081) (2,597,705) 39,752,182 12,569,886 (4,276,209) 19,021,973 2,842,103 (6,191,896) Current Tax Expense, Net (351,891,565) (374,784,366) (292,795,584) Deferred Tax Income (Expense) Relating to Origination and Reversal of Temporary Differences Deferred Tax Income (Expense) Relating toTax Rate Changes or Imposition of New Taxes Tax Benefit Effect from Tax Assets Not Previously Recognized Other Deferred Tax Income (Expense) (5,841,500) 7,274,742 (115,182,582) (1,450,689) — 13,176,786 — 1,700,625 6,071,389 — — (7,924,618) Deferred Tax Income (Expense), Net 5,884,597 15,046,756 (123,107,200) Tax Effect of Changes in the Tax Status of the Entity or its Shareholders — — — Income tax Expense (346,006,968) (359,737,610) (415,902,784) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 280 Enersis 2010 Annual Report The principal temporary differences are detailed in Note 17 a. Reconciliation of Tax Expense Tax Expense Using Statutory Rate Tax Effect of Rates in Other Jurisdictions Tax Effect of Non-Taxable Revenues 2010 ThCh$ 2009 ThCh$ 2008 ThCh$ (245,938,215) (284,081,079) (246,514,420) (159,695,526) (166,163,264) (135,494,792) 44,357,904 40,858,030 67,957,672) Tax Effect of Non-Tax-Deductible Expenses (9,065,332) (29,309,173) (67,703,775) Tax Effect of Utilization of Previously Unrecognised Tax Losses Tax Effect of Tax Benefit Not Previously Recognized in Income Statement — — (489,108) (1,098,324) — — Tax Effect from Change in Tax Rate (1,450,689) — Tax Effect from Under or Over Provided Tax in Prior Periods (2,869,081) 12,569,886 2,842,103) Price-Level Restatement for Tax Purposes (Investments and Equity) 28,653,971 67,975,422 (36,989,572) Total Adjustments to Tax Expense Using Statutory Rate (100,068,753) (75,656,531) (169,388,364) Income Tax (346,006,968) (359,737,610) (415,902,784) On July 29, 2010, Chile Law Nº 20,455 “Modifica diversos cuerpos legales para obtener recursos destinados al financiamiento de la reconstrucción del país” (modifies tax entities to obtain resources towards financing the reconstruction of the country) was enacted and published in the Diario Oficial on July 31, 2010. This law, among other things temporarily increases tax rates for commercial years 2011 and 2012 (20% and 18.5%, respectively), and returns back to 17% in 2013. As a result, as of December 31, 2010 the Company has recognized a greater deferred income tax expense in the amount of ThCh$ 1,069,481 Note 33. Segment Information 33.1 Segmentation criteria In performing its activities the Group is organized primarily around its core businesses that are electric energy generation, transmission and distribution. On that basis the Group has established two major business lines. In addition, segment information has been organized considering geographical areas in which the Group operates, as follows: • • • • • Chile Argentina Brazil Peru Colombia Given the Group’s corporate organization basically matches the business organization and therefore the segments organization, the segment information reported is based on the financial information of the companies forming each segment. The following tables detail the segment information for years 2010 and 2009. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 281 Financial Statements Consolidated Note 33.2 Generation, distribution and other Line of Business Generation Distribution Eliminations and Others Total ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,064,310,315 1,251,419,545 1,156,629,416 1,216,399,232 117,328,245 103,636,879 2,338,267,976 2,571,455,656 410,734,005 619,035,609 308,918,527 431,604,221 241,702,505 84,260,991 961,355,037 1,134,900,821 5,535,951 7,342,281 1,536,089 9,669,785 2,281,558 — — 60 7,817,509 1,536,149 27,188,821 22,454,464 1,462,146 3,057,535 35,993,248 35,181,784 Trade and other current receivables 321,074,432 396,480,263 690,037,361 719,323,724 26,986,447 26,162,612 1,038,098,240 1,141,966,599 Accounts receivables from related companies 186,356,762 120,472,782 87,128,995 4,072,112 (253,014,150) (105,530,662) 20,471,607 19,014,232 Inventories Current tax assets 42,162,603 40,201,722 15,560,743 16,117,546 4,928,358 — 62,651,704 56,319,268 91,104,281 64,023,295 25,513,411 22,827,165 21,369,649 25,325,492 137,987,341 112,175,952 Non-current assets classified as held for sale and discontinued operations — — — — 73,893,290 70,360,851 73,893,290 70,360,851 NON-CURRENT ASSETS 5,808,436,926 5,853,309,145 4,743,201,791 4,640,589,157 115,938,414 144,786,363 10,667,577,132 10,638,684,665 Other non-current financial assets 28,295,886 4,141,795 5,211,606 1,673,211 29,461,230 24,681,751 62,968,722 30,496,757 Other non-current non-financial assets 31,459,012 32,513,871 70,535,341 60,321,995 Non-current receivables 139,301,288 87,673,729 179,381,740 105,909,541 1,741,942 884,932 1,419,387 103,736,295 94,255,253 1,394,143 319,567,960 194,977,413 Non-current account receivables from related companies 764,220 10,958,042 324,864 210,855 (1,089,084) (11,168,897) — — Investment accounted for using equity method 591,361,178 584,075,094 683,656,485 683,579,189 (1,260,916,011) (1,246,372,822) 14,101,652 21,281,461 Intangible assets other than goodwill 31,398,642 30,060,644 1,405,434,608 1,392,815,685 15,753,155 23,245,916 1,452,586,405 1,446,122,245 Goodwill 97,673,241 102,811,891 130,262,504 134,386,985 1,249,086,179 1,264,153,057 1,477,021,924 1,501,351,933 Property, plant and equipment, net 4,739,297,094 4,859,937,779 2,017,266,712 1,996,440,599 (4,623,151) 7,692,864 6,751,940,655 6,864,071,242 Investment property Deferred tax assets — — — — 33,019,154 31,231,839 33,019,154 31,231,839 148,886,365 141,136,300 251,127,931 265,251,097 52,620,068 48,509,124 452,634,364 454,896,521 TOTAL ASSETS 6,872,747,241 7,104,728,690 5,899,831,207 5,856,988,389 233,266,659 248,423,242 13,005,845,107 13,210,140,321 Line of Business Generation Distribution Eliminations and Others Total LIABILITIES AND EQUITY CURRENT LIABILITIES 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,143,674,971 1,133,935,750 1,359,242,371 1,071,289,696 (95,639,857) (9,837,908) 2,407,277,486 2,195,387,538 Other current financial liabilities 315,103,380 412,941,840 284,864,090 246,570,238 65,630,548 69,516,117 665,598,018 729,028,195 Trade and other current payables 417,077,978 413,827,992 714,678,936 490,784,193 92,733,084 75,294,167 1,224,489,998 979,906,352 Accounts payables to related companies 288,461,159 133,099,350 202,751,731 212,446,858 (343,010,631) (233,590,429) 148,202,260 111,955,779 Other short-term provisions Current tax liabilities 43,331,481 31,787,013 51,478,884 46,641,813 20,638,871 21,595,629 115,449,236 100,024,455 69,759,646 132,249,173 75,509,768 49,105,703 2,397,241 3,930,795 147,666,655 185,285,671 Current provisions for employee benefits Other current non-financial liabilities 2,703,107 7,238,220 3,448,733 6,581,649 2,690,108 1,359,124 57,167 107,310 5,450,382 4,915,167 27,268,854 24,381,767 1,283,474 2,658,137 35,790,548 33,621,553 Liabilities associated with non-current assets classified as held for sale and discontinued operations — — — — 64,630,389 50,650,366 64,630,389 50,650,366 NON-CURRENT LIABILITIES 2,110,719,491 2,487,255,434 1,545,885,669 1,804,820,750 427,934,505 345,672,955 4,084,539,665 4,637,749,139 Other non-current financial liabilities 1,621,961,525 1,957,137,539 831,035,287 1,021,187,352 561,959,635 555,118,929 3,014,956,447 3,533,443,820 Other non-current payables 13,548,800 24,082,594 23,380,657 44,618,834 307,255 207,974 37,236,712 68,909,402 Accounts payables to related companies 1,163,160 46,997,128 147,930,726 181,853,843 (148,009,596) (225,294,299) 1,084,290 3,556,672 Other-long term provisions Deferred tax liabilities 67,038,203 58,292,397 158,484,126 191,993,937 349,429,640 352,011,147 200,477,944 213,169,128 Non-current provisions for employee benefits 27,147,186 26,576,882 181,236,136 148,308,890 Other non-current non-financial liabilities 30,430,977 22,157,747 3,340,793 3,688,766 — 6,015,994 7,435,653 225,564 578 225,522,329 250,286,912 7,869,022 555,923,578 573,049,297 7,803,218 215,818,975 182,688,990 (32,467) 33,997,334 25,814,046 EQUITY 3,618,352,778 3,483,537,506 2,994,703,167 2,980,877,943 (99,027,989) (87,411,805) 6,514,027,956 6,377,003,644 Equity attributable to owners of parent 3,618,352,778 3,483,537,506 2,994,703,167 2,980,877,943 (99,027,989) (87,411,805) 3,735,544,636 3,518,479,555 Issued capital Retained earnings Share premium Other reserves 1,830,431,254 1,752,378,473 1,122,271,982 1,122,271,981 (127,820,401) (49,767,619) 2,824,882,835 2,824,882,835 1,566,278,776 1,423,967,654 1,339,970,908 1,310,880,528 (802,560,175) (917,234,976) 2,103,689,509 1,817,613,206 — — 158,759,648 158,759,648 158,759,648 158,759,648 221,642,748 307,191,379 532,460,277 547,725,434 672,592,939 720,831,142 (1,351,787,356) (1,282,776,134) Non-controlling interests — — — — — — 2,778,783,320 2,858,524,089 TOTAL LIABILITIES AND EQUITY 6,872,747,241 7,104,728,690 5,899,831,207 5,856,988,389 233,266,659 248,423,242 13,005,845,107 13,210,140,321 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 282 Enersis 2010 Annual Report Line of Business Generation Distribution Eliminations and Others Total STATEMENT OF COMPREHENSIVE INCOME ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 REVENUES Sales Energy sales Other sales Other services rendered Other operating income 2,780,593,331 2,708,357,655 2,833,397,146 4,392,625,917 4,240,401,202 4,071,303,190 (609,638,135) (476,703,204) (324,755,635) 6,563,581,113 6,472,055,653 6,579,944,701 2,735,326,188 2,692,140,931 2,828,078,633 4,053,333,247 3,892,291,952 3,624,951,955 (609,429,611) (471,149,268) (352,166,303) 6,179,229,824 6,113,283,615 6,100,864,285 2,599,487,673 2,570,529,382 2,697,746,885 3,754,753,999 3,642,828,755 3,359,696,230 (700,516,755) (634,212,253) (495,979,243) 5,653,724,917 5,579,145,884 5,561,463,872 15,262,308 6,009,988 14,564,928 9,220,770 12,431,451 15,718,375 120,576,207 115,601,561 115,766,820 289,358,478 237,031,746 249,537,350 26,087,696 64,999,448 38,047,820 15,308,562 50,570,774 56,489,259 45,591,865 125,015,165 128,504,378 474,934,133 477,648,472 493,808,548 45,267,143 16,216,724 5,318,513 339,292,670 348,109,250 446,351,235 (208,524) (5,553,936) 27,410,668 384,351,289 358,772,038 479,080,416 RAW MATERIALS AND CONSUMABLE USED (1,300,677,879) (1,058,410,593) (1,409,584,454) (2,861,855,754) (2,687,937,114) (2,541,144,864) 640,887,379 535,754,130 402,739,032 (3,521,646,254) (3,210,593,577) (3,547,990,286) Energy purchases Fuel consumption Transport expenses (264,194,654) (197,058,728) (292,347,152) (1,988,241,950) (1,958,392,871) (1,826,983,648) 697,721,968 635,253,374 495,091,815 (1,554,714,636) (1,520,198,225) (1,624,238,985) (672,030,596) (580,234,432) (847,407,262) — — — (7,507) (3,181) (4,122) (672,038,103) (580,237,613) (847,411,384) (233,134,592) (177,886,470) (191,958,097) (216,929,666) (158,940,229) (121,232,612) 44,081,166 20,538,816 18,330,691 (405,983,092) (316,287,883) (294,860,018) Other variable supplies and services (131,318,037) (103,230,963) (77,871,943) (656,684,138) (570,604,014) (592,928,604) (100,908,248) (120,034,879) (110,679,352) (888,910,423) (793,869,856) (781,479,899) CONTRIBUTION MARGIN 1,479,915,452 1,649,947,062 1,423,812,692 1,530,770,163 1,552,464,088 1,530,158,326 31,249,244 59,050,926 77,983,397 3,041,934,859 3,261,462,076 3,031,954,415 Other work performed by entity and capitalized 688,024 731,901 500,315 34,742,737 32,998,618 32,099,245 9,438,604 — — 44,869,365 33,730,519 32,599,560 Employee benefits expense Other expenses (76,018,545) (69,577,977) (57,198,723) (215,810,871) (216,622,884) (187,917,987) (82,848,597) (84,201,584) (77,511,723) (374,678,013) (370,402,445) (322,628,433) (109,579,510) (118,108,486) (107,836,118) (368,445,516) (367,766,183) (338,627,214) 27,590,256 28,185,472 6,252,009 (450,434,770) (457,689,197) (440,211,323) GROSS OPERATING RESULT 1,295,005,421 1,462,992,500 1,259,278,166 981,256,513 1,001,073,639 1,035,712,370 (14,570,493) 3,034,814 6,723,683 2,261,691,441 2,467,100,953 2,301,714,219 Depreciation, amortization and impairment losses (244,856,745) (270,584,246) (215,544,370) 291,545,799 (239,656,554) (212,130,213) (20,988,160) (29,414,684) (10,389,008) (557,390,704) (539,655,484) (438,063,591) OPERATING INCOME 1,050,148,676 1,192,408,254 1,043,733,796 689,710,714 761,417,085 823,582,157 (35,558,653) (26,379,870) (3,665,325) 1,704,300,737 1,927,445,469 1,863,650,628 FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses (139,218,164) (186,313,678) (243,706,955) (102,247,567) (99,796,594) (159,078,864) (29,138,804) (23,145,874) (16,580,133) 270,604,535 (309,256,146) (419,365,952) 27,877,778 40,841,166 54,086,804 133,877,625 117,121,114 125,109,709 9,481,545 1,708,125 2,556,822 171,236,948 159,670,405 181,753,335 (178,040,606) (239,569,394) (251,422,396) (236,239,696) (226,454,904) (249,354,432) (24,077,949) (16,448,329) (14,331,429) (438,358,251) (482,472,627) (515,108,257) (2,885,747) 13,830,411 59,335,473 9,009,669 3,404,881 71,795,866 (16,686,361) (29,685,002) 48,055,032 (45,505,062) (68,390,985) (77,740,034) 153,805 (39,301) 7,262,527 (7,301,828) 458,162 9,079,034 (3,048,824) (31,785,317) 18,584,732 53,858,472 (9,505,698) (85,643,789) (12,323,764) 12,313,498 (42,643,067) (15,055,706) 21,781,329 (62,378,252) (2,218,636) (20,719,168) 37,837,541 24,733,368 (8,365,473) (27,389,261) 11,572,474 91,331,368 (8,235,253) (23,632,778) 82,015,125 74,524,243 (26,952,004) (12,353,695) 65,226,802 (79,758,894) (90,250,378) (98,157,021) Share of the profit (loss) of associates accounted for using the equity method Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment 811,855 2,233,946 2,567,160 234,251 1,631,416 (55,494) 64,430 1,016,336 (274,282) 911 — 82,758,254 74,875,698 82,850 — 1,365,276 24,938,953 2,879,810 202,973 (82,756,621) (74,181,678) 1,015,739 2,235,579 3,261,180 38,435 110,587 8,714,057 28,498,952 (980,654) (102,249) 272,686 137,943 11,710,749 50,502,335 35,682 2,503,279 NET INCOME BEFORE TAX 913,608,034 1,008,337,458 803,336,055 588,829,334 769,400,548 742,258,801 (55,741,992) (106,672,826) (95,510,039) 1,446,695,376 1,671,065,180 1,450,084,818 Income tax (197,506,450) (201,746,950) (221,991,980) (144,802,540) (178,201,978) (169,399,898) (3,697,978) 20,211,318 (24,510,906) (346,006,968) (359,737,610) (415,902,784) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 716,101,584 806,590,508 581,344,075 444,026,794 591,198,570 572,858,903 (59,439,970) (86,461,508) (120,020,945) 1,100,688,408 1,311,327,570 1,034,182,033 Net income from discontinued operations — — — — — — — — — NET INCOME 716,101,584 806,590,508 581,344,075 444,026,794 591,198,570 572,858,903 (59,439,970) (86,461,508) (120,020,945) 1,100,688,408 1,311,327,570 1,034,182,033 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 716,101,584 806,590,508 581,344,075 444,026,794 591,198,570 572,858,903 (59,439,970) (86,461,508) (120,020,945) 1,100,688,408 1,311,327,570 1,034,182,033 — — — — — — — — — — — — 486,226,814 660,231,043 507,589,633 614,461,594 651,096,527 526,592,399 — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 2,780,593,331 2,708,357,655 2,833,397,146 4,392,625,917 4,240,401,202 4,071,303,190 (609,638,135) (476,703,204) (324,755,635) 6,563,581,113 6,472,055,653 6,579,944,701 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 15,262,308 6,009,988 14,564,928 120,576,207 115,601,561 115,766,820 45,267,143 16,216,724 5,318,513 2 4 Line of Business Generation STATEMENT OF COMPREHENSIVE INCOME ThCh$ ThCh$ ThCh$ 12-31-2010 12-31-2009 12-31-2008 2,735,326,188 2,692,140,931 2,828,078,633 2,599,487,673 2,570,529,382 2,697,746,885 RAW MATERIALS AND CONSUMABLE USED (1,300,677,879) (1,058,410,593) (1,409,584,454) (264,194,654) (197,058,728) (292,347,152) (672,030,596) (580,234,432) (847,407,262) (233,134,592) (177,886,470) (191,958,097) Other variable supplies and services (131,318,037) (103,230,963) (77,871,943) CONTRIBUTION MARGIN 1,479,915,452 1,649,947,062 1,423,812,692 Other work performed by entity and capitalized 688,024 731,901 500,315 Employee benefits expense Other expenses (76,018,545) (69,577,977) (57,198,723) (109,579,510) (118,108,486) (107,836,118) GROSS OPERATING RESULT 1,295,005,421 1,462,992,500 1,259,278,166 Depreciation, amortization and impairment losses (244,856,745) (270,584,246) (215,544,370) OPERATING INCOME 1,050,148,676 1,192,408,254 1,043,733,796 (139,218,164) (186,313,678) (243,706,955) 27,877,778 40,841,166 54,086,804 (178,040,606) (239,569,394) (251,422,396) (2,885,747) 13,830,411 59,335,473 9,009,669 3,404,881 71,795,866 (16,686,361) (29,685,002) 48,055,032 REVENUES Sales Energy sales Other sales Other services rendered Other operating income Energy purchases Fuel consumption Transport expenses FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses OPERATIONS NET INCOME RESULT FOR THE PERIOD Owners of parent Non-controlling interests — — — — — — Share of the profit (loss) of associates accounted for using the equity method Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment 811,855 2,233,946 2,567,160 234,251 1,631,416 (55,494) 64,430 1,016,336 (274,282) NET INCOME BEFORE TAX 913,608,034 1,008,337,458 803,336,055 Income tax (197,506,450) (201,746,950) (221,991,980) NET INCOME AFTER TAX FROM CONTINUING 716,101,584 806,590,508 581,344,075 Net income from discontinued operations — 716,101,584 806,590,508 581,344,075 12-31-2010 Distribution Contents 12-31-2009 ThCh$ ThCh$ 12-31-2008 4,053,333,247 3,892,291,952 1 Cover 3,754,753,999 3,642,828,755 9,220,770 Resume 12,431,451 3,624,951,955 3,359,696,230 15,718,375 289,358,478 237,031,746 249,537,350 339,292,670 Chairman’s Letter to Shareholders 348,109,250 446,351,235 10 (2,861,855,754) 16 (1,988,241,950) 2010 Highlight (2,687,937,114) (1,958,392,871) Main financial and operational indicators — (1,826,983,648) — — 20 (216,929,666) (158,940,229) (121,232,612) Identification of the Company (656,684,138) (570,604,014) (592,928,604) 24 Ownership and control 1,530,770,163 1,552,464,088 Administration 28 38 34,742,737 Human resources 32,998,618 (215,810,871) (216,622,884) 1,530,158,326 32,099,245 (187,917,987) 44 (368,445,516) Stock Exchange Transactions (367,766,183) (338,627,214) 283 Financial Statements Consolidated Eliminations and Others Total 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 (609,429,611) (471,149,268) (352,166,303) 6,179,229,824 6,113,283,615 6,100,864,285 (700,516,755) (634,212,253) (495,979,243) 5,653,724,917 5,579,145,884 5,561,463,872 26,087,696 64,999,448 38,047,820 15,308,562 50,570,774 56,489,259 45,591,865 125,015,165 128,504,378 474,934,133 477,648,472 493,808,548 (208,524) (5,553,936) 27,410,668 384,351,289 358,772,038 479,080,416 697,721,968 635,253,374 495,091,815 (1,554,714,636) (1,520,198,225) (1,624,238,985) (7,507) (3,181) (4,122) (672,038,103) (580,237,613) (847,411,384) 44,081,166 20,538,816 18,330,691 (405,983,092) (316,287,883) (294,860,018) (100,908,248) (120,034,879) (110,679,352) (888,910,423) (793,869,856) (781,479,899) 31,249,244 59,050,926 77,983,397 3,041,934,859 3,261,462,076 3,031,954,415 9,438,604 — — 44,869,365 33,730,519 32,599,560 (82,848,597) (84,201,584) (77,511,723) (374,678,013) (370,402,445) (322,628,433) 27,590,256 28,185,472 6,252,009 (450,434,770) (457,689,197) (440,211,323) (2,541,144,864) 640,887,379 535,754,130 402,739,032 (3,521,646,254) (3,210,593,577) (3,547,990,286) 50 Dividends 981,256,513 1,001,073,639 1,035,712,370 (14,570,493) 3,034,814 6,723,683 2,261,691,441 2,467,100,953 2,301,714,219 56 Investment and financing policy 2010 291,545,799 (239,656,554) (212,130,213) The company´s businesses 60 66 689,710,714 Investments and financial activities 761,417,085 823,582,157 (20,988,160) (29,414,684) (10,389,008) (557,390,704) (539,655,484) (438,063,591) (35,558,653) (26,379,870) (3,665,325) 1,704,300,737 1,927,445,469 1,863,650,628 78 (102,247,567) Risk factors (99,796,594) (159,078,864) (29,138,804) (23,145,874) (16,580,133) 270,604,535 (309,256,146) (419,365,952) 133,877,625 84 (236,239,696) 117,121,114 Regulatory framework of the (226,454,904) electricity industry (249,354,432) 125,109,709 458,162 (3,048,824) 100 153,805 (39,301) 7,262,527 9,079,034 Description of the business by Country (31,785,317) 53,858,472 18,584,732 9,481,545 1,708,125 2,556,822 171,236,948 159,670,405 181,753,335 (24,077,949) (16,448,329) (14,331,429) (438,358,251) (482,472,627) (515,108,257) (12,323,764) 12,313,498 (42,643,067) (15,055,706) 21,781,329 (62,378,252) (2,218,636) (20,719,168) 37,837,541 24,733,368 (8,365,473) (27,389,261) 11,572,474 91,331,368 (8,235,253) (23,632,778) 82,015,125 74,524,243 128 132 Other businesses Sustainability 911 82,758,254 74,875,698 136 — 82,850 — Diagram of shareholdings 2,879,810 24,938,953 1,365,276 144 Consolidated relevant facts 154 588,829,334 769,400,548 742,258,801 Identification of subsidiaries and related companies (178,201,978) (169,399,898) (144,802,540) 180 Declaration of responsibility 182 326 444,026,794 591,198,570 572,858,903 Consolidated Financial Statements — Summarized Financial Information for Subsidiaries 591,198,570 572,858,903 — — 444,026,794 202,973 (82,756,621) (74,181,678) 1,015,739 2,235,579 3,261,180 38,435 110,587 8,714,057 28,498,952 (980,654) (102,249) 272,686 137,943 11,710,749 50,502,335 35,682 2,503,279 (55,741,992) (106,672,826) (95,510,039) 1,446,695,376 1,671,065,180 1,450,084,818 (3,697,978) 20,211,318 (24,510,906) (346,006,968) (359,737,610) (415,902,784) (59,439,970) (86,461,508) (120,020,945) 1,100,688,408 1,311,327,570 1,034,182,033 — — — — — — (59,439,970) (86,461,508) (120,020,945) 1,100,688,408 1,311,327,570 1,034,182,033 (45,505,062) (68,390,985) (77,740,034) (7,301,828) (9,505,698) (85,643,789) (26,952,004) (12,353,695) 65,226,802 (79,758,894) (90,250,378) (98,157,021) 716,101,584 806,590,508 581,344,075 444,026,794 591,198,570 572,858,903 (59,439,970) (86,461,508) (120,020,945) 1,100,688,408 1,311,327,570 1,034,182,033 — — — — — — — — — — — — — — 486,226,814 660,231,043 507,589,633 614,461,594 651,096,527 526,592,399 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 284 Enersis 2010 Annual Report 33.3 Countries Country ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets Trade and other current receivables Accounts receivables from related companies Inventories Current tax assets Chile Argentina Brazil Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 958,252,718 843,756,651 206,682,679 238,697,969 773,987,829 867,294,187 396,117,160 285,514,616 64,001,651 53,307,697 309,608,364 370,493,421 17,551 2,823,979 1,536,149 7,146,069 2,271,690 3,453,937 — 5,463,750 — 7,152,112 24,929,082 14,426,954 424,328,700 453,263,074 105,722,882 148,041,880 399,849,969 435,142,404 134,933,800 154,237,487 (82,066,624) (107,648,217) 1,038,098,240 1,141,966,599 9,118,913 31,508,007 94,338,408 12,683,334 20,148,347 63,465,062 20,580,614 21,301,343 4,012,205 6,639,700 7,295,836 1,599,101 — 1,329,912 168,850 1,512,096 32,806,752 45,550,462 Non-current assets classified as held for sale and discontinued operations — — — — — — — — — 73,893,290 70,360,851 73,893,290 70,360,851 NON-CURRENT ASSETS Other non-current financial assets Other non-current non-financial assets Non-current receivables Non-current account receivables from related companies Investment accounted for using equity method 4,728,577,212 4,767,024,721 Intangible assets other than goodwill Goodwil 43,574,579 44,867,672 2,311,244 2,312,300 1,327,410 9,751,497 5,570,592 1,953,655 10,897,471 11,592,175 89,288,250 79,129,668 13,413,378 123,872,850 70,806,123 177,122,226 101,549,009 — — 4,360,892 3,394,462 2,453,791 — 36,381,275 36,839,087 7,966,302 1,231,117,115 1,234,083,877 3,150,025 1,362,506,970 1,359,418,701 2,780,777 120,673,559 124,648,965 7,882,741,067 7,901,624,978 612,376,604 574,512,830 3,724,836,639 3,670,419,041 2,089,588,249 2,113,095,226 1,087,290,030 1,150,463,047 (4,729,255,458) (4,771,430,457) 10,667,577,131 10,638,684,665 57,422,721 28,767,604 — — 3,352,698 — 874 2,185,036 1,728,279 Property, plant and equipment, net 2,907,392,986 2,904,691,507 435,556,490 449,530,241 502,536,126 548,867,547 1,908,861,856 1,933,700,358 1,021,665,793 1,083,269,232 (24,072,596) (55,987,643) 6,751,940,655 6,864,071,242 Investment property Deferred tax assets TOTAL ASSETS 33,019,154 31,231,839 — — — — — — 33,019,154 31,231,839 93,793,672 107,362,302 31,840,648 28,687,187 201,858,420 185,882,187 122,950,107 127,066,216 818,659 2,172,935 1,372,858 3,725,694 452,634,364 454,896,521 8,840,993,785 8,745,381,629 819,059,283 813,210,799 4,498,824,468 4,537,713,228 2,388,025,004 2,680,069,179 1,205,809,292 1,257,701,515 (4,746,866,725) (4,823,936,029) 13,005,845,107 13,210,140,321 Country Chile Argentina Brazil Colombia Peru Eliminations Total LIABILITIES AND EQUITY CURRENT LIABILITIES Other current financial liabilities Trade and other current payables 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 647,462,363 903,928,510 368,365,266 315,322,679 749,685,522 577,406,981 57,353,811 203,071,576 91,305,044 72,071,471 316,931,058 255,852,777 397,291,875 412,036,076 188,824,968 145,853,738 350,493,006 262,836,323 Accounts payables to related companies 95,959,740 156,069,449 Other short-term provisions Current tax liabilities Current provisions for employee benefits Other current non-financial liabilities 61,952,297 26,985,525 1,341,781 6,577,334 52,152,629 71,611,640 1,714,434 7,272,706 21,522,018 31,334,089 18,739,444 591,831 31,800,330 23,007,266 27,624,545 119,702 22,670,347 31,040,271 9,290,490 9,409,249 45,603,630 15,799,839 — — 16,047,872 14,845,627 4,696,991 2,468,522 Liabilities associated with non-current assets classified as held for sale and discontinued operations — — — — — — — — — 64,630,389 50,650,366 64,630,389 50,650,366 NON-CURRENT LIABILITIES 1,798,546,677 1,929,817,486 182,056,288 214,399,921 866,894,226 1,140,582,690 749,238,211 817,235,201 525,104,242 572,081,308 (37,299,979) (36,367,467) 4,084,539,665 4,637,749,139 Other non-current financial liabilities Other non-current payables Accounts payables to related companies Other-long term provisions Deferred tax liabilities Non-current provisions for employee benefits Other non-current non-financial liabilities 1,511,148,690 1,643,950,501 87,795,042 131,351,744 483,293,292 725,623,564 616,376,069 682,712,921 316,343,354 349,805,090 3,014,956,447 3,533,443,820 3,595,790 7,570,291 — — 17,164,654 16,062,212 222,646,728 216,277,536 33,170,562 10,820,253 32,408,576 13,548,370 325,183 36,634,177 11,451,261 21,549,260 1,400,727 478,409 33,173,070 60,139,340 37,218,338 1,750,092 3,556,672 7,703,251 183,780,246 213,128,470 24,538,307 61,907,742 1,915,904 102,989,784 22,900,638 11,193,968 — 69,347,637 68,787,007 — EQUITY 6,394,984,745 5,911,635,633 268,637,728 283,488,199 2,882,244,720 2,819,723,557 Equity Attributable to owners of parent 6,394,984,745 5,911,635,633 268,637,728 283,488,199 2,882,244,720 2,819,723,557 Issued capital Retained earnings Share premium Other reserves 5,504,650,136 5,486,091,755 233,455,382 231,131,872 1,016,335,188 1,016,332,368 2,687,545,567 2,779,151,819 77,431,069 42,103,877 466,813,310 441,729,773 158,759,648 158,759,648 — — (1,955,970,606) (2,512,367,589) (42,248,723) 10,252,450 1,419,096,222 1,361,661,416 784,673,143 999,364,778 303,390,219 311,012,438 917,755,709 1,405,824,462 (1,351,787,356) (1,282,776,134) pages control Non-controlling interests — — — — — — — — — — 2,778,483,320 2,858,524,089 TOTAL LIABILITIES AND EQUITY 8,840,993,785 8,745,381,629 819,059,283 813,210,799 4,498,824,468 4,537,713,228 2,388,025,004 2,680,069,179 1,205,809,292 1,257,701,515 (4,746,866,725) (4,823,936,029) 13,005,845,017 13,210,140,321 previously next 298,436,755 150,969,852 64,518 1,741,706 85,521 10,639,048 2,310 8,267 1,111,481 8,821,387 40,486,684 7,348,467 — — — 566,973,953 395,571,472 — 3,440,009 (117,203) 12,448,709 1,393,479 1,124,049 8,893,522 — 1,370 34,811,295 7,497,542 — 118,519,262 107,238,468 (17,611,267) (52,505,572) 2,338,267,976 2,571,455,656 40,658,010 30,013,615 961,355,037 1,134,900,821 — 3,044,544 55,329,513 124,492 15,162,532 4,200,171 — 3,016,640 58,929,971 14,914,280 249,780 7,817,509 35,993,248 20,471,607 62,651,704 1,536,149 35,181,784 19,014,232 56,319,268 (81,932) 137,987,341 112,175,952 114,182 (9,437,933) (15,136,274) 455,706 315,381 1,111,683 62,968,722 103,736,295 319,567,960 30,496,757 94,255,253 194,977,413 — — (41,951,867) (36,839,087) — 49,494,618 2,623,710 10,502,214 47,596,359 (5,999,448,185) (6,035,391,168) 14,101,652 21,281,461 3,874,552 0 1,452,586,405 1,446,122,245 11,050,603 1,333,732,649 1,353,061,746 1,477,021,924 1,501,351,933 122,675,915 122,026,286 86,571,381 (56,631,510) 2,407,277,486 2,195,387,538 432,517,038 138,102,310 242,087,064 (8,763,202) 1,498,668 333,334,592 142,035,231 121,147,948 120,530 3,592,400 50,694,810 57,901,052 3,516,770 5,380,618 3,081,031 5,456,400 61,905,795 46,211,217 (5,545,768) 11,373,692 5,643,246 56,003,931 38,025,476 11,862,911 12,430,527 — 3,087,733 3,578,298 (418,132) (6,791) 6,791 665,598,018 1,224,489,998 125,143 22,359,124 (107,199,944) 148,202,260 (81,932) 147,666,655 115,449,236 5,450,382 35,790,548 729,028,195 979,906,352 111,955,779 100,024,455 185,285,671 4,915,167 33,621,553 142,669 — 2,198,153 52,263,418 78,257,902 — 721,362 — 2,725,990 51,497,425 79,577,503 10,928,015 10,666,989 197,556,430 211,388,392 — — — — 276,443 220,837 850,871 (37,299,979) (37,218,338) 37,236,712 1,084,290 225,522,329 555,923,578 215,818,975 33,997,334 68,909,402 3,556,672 250,286,912 573,049,297 182,688,990 25,814,046 1,206,269,755 1,529,499,386 1,206,269,755 1,529,499,386 147,297,657 274,298,955 263,851,437 266,283,171 558,029,135 558,029,135 198,134,490 56,504,426 563,593,921 (4,796,138,127) (4,730,937,052) 6,514,027,956 6,377,003,644 563,593,921 (4,796,138,127) (4,730,937,052) 3,735,544,636 3,518,479,555 198,134,490 (4,274,990,018) (4,370,659,087) 2,824,882,835 2,824,882,835 54,446,993 (1,438,903,818) (1,766,102,427) 2,103,689,509 1,817,613,206 — 158,759,648 158,759,648 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Contents Brazil Argentina 12-31-2010 12-31-2009 ThCh$ ThCh$ 12-31-2010 1 ThCh$ 958,252,718 843,756,651 396,117,160 285,514,616 17,551 2,823,979 1,536,149 7,146,069 424,328,700 453,263,074 9,118,913 31,508,007 94,338,408 12,683,334 20,148,347 63,465,062 Non-current assets classified as held for sale and discontinued operations — — NON-CURRENT ASSETS Other non-current financial assets Other non-current non-financial assets Non-current receivables Non-current account receivables from related companies 7,882,741,067 7,901,624,978 57,422,721 28,767,604 1,327,410 9,751,497 5,570,592 1,953,655 13,413,378 — Investment accounted for using equity method 4,728,577,212 4,767,024,721 43,574,579 44,867,672 2,311,244 2,312,300 2,907,392,986 2,904,691,507 33,019,154 31,231,839 93,793,672 107,362,302 8,840,993,785 8,745,381,629 Chile 12-31-2010 12-31-2009 ThCh$ ThCh$ 647,462,363 903,928,510 57,353,811 203,071,576 397,291,875 412,036,076 95,959,740 156,069,449 61,952,297 26,985,525 1,341,781 6,577,334 52,152,629 71,611,640 1,714,434 7,272,706 Liabilities associated with non-current assets classified as held for sale and discontinued operations NON-CURRENT LIABILITIES — — 1,798,546,677 1,929,817,486 33.3 Countries Chile Country ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets Trade and other current receivables Accounts receivables from related companies Inventories Current tax assets Intangible assets other than goodwill Goodwil Property, plant and equipment, net Investment property Deferred tax assets TOTAL ASSETS Country LIABILITIES AND EQUITY CURRENT LIABILITIES Other current financial liabilities Trade and other current payables Accounts payables to related companies Other short-term provisions Current tax liabilities Current provisions for employee benefits Other current non-financial liabilities Other non-current financial liabilities Other non-current payables Accounts payables to related companies Other-long term provisions Deferred tax liabilities Non-current provisions for employee benefits Other non-current non-financial liabilities EQUITY Issued capital Retained earnings Share premium Other reserves 3,595,790 7,570,291 — — 17,164,654 16,062,212 222,646,728 216,277,536 33,170,562 10,820,253 32,408,576 13,548,370 206,682,679 2 64,001,651 4 2,271,690 3,453,937 10 105,722,882 20,580,614 16 4,012,205 6,639,700 20 — 24 612,376,604 28 — 38 10,897,471 123,872,850 44 — 50 4,360,892 3,394,462 56 2,453,791 60 435,556,490 — 66 31,840,648 78 819,059,283 84 12-31-2010 128 ThCh$ 368,365,266 132 91,305,044 136 188,824,968 21,522,018 144 31,334,089 154 18,739,444 591,831 16,047,872 180 182 — 182,056,288 326 325,183 36,634,177 11,451,261 21,549,260 1,400,727 ThCh$ ThCh$ ThCh$ 12-31-2009 12-31-2010 773,987,829 12-31-2009 Cover 238,697,969 Resume 53,307,697 Chairman’s Letter to Shareholders 7,152,112 2010 Highlight 148,041,880 399,849,969 435,142,404 867,294,187 309,608,364 370,493,421 24,929,082 14,426,954 5,463,750 — — — 21,301,343 168,850 Main financial and operational 7,295,836 1,329,912 1,512,096 indicators 45,550,462 32,806,752 1,599,101 Identification of the Company — — — Ownership and control 574,512,830 Administration 3,724,836,639 — 3,352,698 Human resources 11,592,175 89,288,250 3,670,419,041 — 79,129,668 70,806,123 177,122,226 Stock Exchange Transactions 36,381,275 101,549,009 36,839,087 — 1,231,117,115 Dividends 7,966,302 3,150,025 Investment and financing policy 2010 2,780,777 The company´s businesses 449,530,241 1,362,506,970 1,234,083,877 1,359,418,701 502,536,126 548,867,547 124,648,965 120,673,559 — — Investments and financial activities 28,687,187 185,882,187 201,858,420 — Risk factors 813,210,799 4,498,824,468 4,537,713,228 Regulatory framework of the electricity industry 100 Argentina Description of the business by Country 12-31-2009 Other businesses 12-31-2010 12-31-2009 Brazil ThCh$ ThCh$ ThCh$ 315,322,679 145,853,738 577,406,981 749,685,522 22,670,347 316,931,058 262,836,323 255,852,777 350,493,006 Sustainability 72,071,471 Diagram of shareholdings 31,800,330 Consolidated relevant facts 23,007,266 Identification of subsidiaries and 27,624,545 45,603,630 — related companies 14,845,627 4,696,991 Declaration of responsibility 31,040,271 15,799,839 9,409,249 9,290,490 2,468,522 119,702 — Consolidated Financial Statements — — — 214,399,921 Summarized Financial Information for Subsidiaries 1,140,582,690 866,894,226 478,409 33,173,070 60,139,340 37,218,338 1,750,092 3,556,672 7,703,251 183,780,246 213,128,470 24,538,307 61,907,742 1,915,904 102,989,784 69,347,637 68,787,007 — 22,900,638 11,193,968 — Equity Attributable to owners of parent 6,394,984,745 5,911,635,633 268,637,728 283,488,199 2,882,244,720 2,819,723,557 6,394,984,745 5,911,635,633 268,637,728 283,488,199 2,882,244,720 2,819,723,557 5,504,650,136 5,486,091,755 233,455,382 231,131,872 1,016,335,188 1,016,332,368 2,687,545,567 2,779,151,819 77,431,069 42,103,877 466,813,310 441,729,773 158,759,648 158,759,648 — — 1,511,148,690 1,643,950,501 87,795,042 131,351,744 483,293,292 725,623,564 285 Financial Statements Consolidated Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 298,436,755 150,969,852 64,518 1,741,706 566,973,953 395,571,472 — 3,440,009 134,933,800 154,237,487 85,521 10,639,048 2,310 (117,203) 12,448,709 1,393,479 — 3,044,544 55,329,513 124,492 15,162,532 4,200,171 118,519,262 107,238,468 (17,611,267) (52,505,572) 2,338,267,976 2,571,455,656 40,658,010 30,013,615 — 3,016,640 58,929,971 — — — — — — 961,355,037 1,134,900,821 7,817,509 35,993,248 1,536,149 35,181,784 (82,066,624) (107,648,217) 1,038,098,240 1,141,966,599 114,182 (9,437,933) (15,136,274) 14,914,280 249,780 — — — 20,471,607 62,651,704 19,014,232 56,319,268 (81,932) 137,987,341 112,175,952 — — — — 73,893,290 70,360,851 73,893,290 70,360,851 2,089,588,249 2,113,095,226 1,087,290,030 1,150,463,047 (4,729,255,458) (4,771,430,457) 10,667,577,131 10,638,684,665 874 2,185,036 1,728,279 8,267 1,111,481 8,821,387 — — 40,486,684 7,348,467 1,124,049 8,893,522 — 1,370 34,811,295 7,497,542 — — — 49,494,618 2,623,710 10,502,214 455,706 315,381 — 1,111,683 — — — — 62,968,722 103,736,295 319,567,960 — (41,951,867) (36,839,087) — 30,496,757 94,255,253 194,977,413 — 47,596,359 (5,999,448,185) (6,035,391,168) 14,101,652 21,281,461 3,874,552 — 0 1,452,586,405 1,446,122,245 11,050,603 1,333,732,649 1,353,061,746 1,477,021,924 1,501,351,933 1,908,861,856 1,933,700,358 1,021,665,793 1,083,269,232 (24,072,596) (55,987,643) 6,751,940,655 6,864,071,242 — — — — — — 33,019,154 31,231,839 122,950,107 127,066,216 818,659 2,172,935 1,372,858 3,725,694 452,634,364 454,896,521 2,388,025,004 2,680,069,179 1,205,809,292 1,257,701,515 (4,746,866,725) (4,823,936,029) 13,005,845,107 13,210,140,321 Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 122,675,915 122,026,286 86,571,381 (56,631,510) 2,407,277,486 2,195,387,538 432,517,038 138,102,310 242,087,064 (8,763,202) 1,498,668 50,694,810 3,516,770 5,380,618 333,334,592 142,035,231 121,147,948 120,530 3,592,400 57,901,052 3,081,031 5,456,400 61,905,795 46,211,217 (5,545,768) 11,373,692 5,643,246 — 11,862,911 12,430,527 — 3,087,733 3,578,298 56,003,931 38,025,476 — (418,132) (6,791) 6,791 665,598,018 1,224,489,998 125,143 22,359,124 (107,199,944) 148,202,260 — — — — — 115,449,236 (81,932) 147,666,655 — — 5,450,382 35,790,548 729,028,195 979,906,352 111,955,779 100,024,455 185,285,671 4,915,167 33,621,553 — — — — 64,630,389 50,650,366 64,630,389 50,650,366 749,238,211 817,235,201 525,104,242 572,081,308 (37,299,979) (36,367,467) 4,084,539,665 4,637,749,139 616,376,069 682,712,921 316,343,354 349,805,090 142,669 — 2,198,153 52,263,418 78,257,902 — 721,362 — 2,725,990 51,497,425 79,577,503 — — — — — 10,928,015 10,666,989 197,556,430 211,388,392 — 276,443 — 220,837 — — — — (37,299,979) (37,218,338) — — — — — — — 850,871 3,014,956,447 3,533,443,820 37,236,712 1,084,290 225,522,329 555,923,578 215,818,975 33,997,334 68,909,402 3,556,672 250,286,912 573,049,297 182,688,990 25,814,046 1,206,269,755 1,529,499,386 1,206,269,755 1,529,499,386 147,297,657 274,298,955 — 263,851,437 266,283,171 558,029,135 558,029,135 198,134,490 56,504,426 — 563,593,921 (4,796,138,127) (4,730,937,052) 6,514,027,956 6,377,003,644 563,593,921 (4,796,138,127) (4,730,937,052) 3,735,544,636 3,518,479,555 198,134,490 (4,274,990,018) (4,370,659,087) 2,824,882,835 2,824,882,835 54,446,993 (1,438,903,818) (1,766,102,427) 2,103,689,509 1,817,613,206 — 158,759,648 158,759,648 Non-controlling interests — — — — — pages control — — — — — — — 2,778,483,320 2,858,524,089 TOTAL LIABILITIES AND EQUITY 8,840,993,785 8,745,381,629 819,059,283 813,210,799 4,498,824,468 4,537,713,228 2,388,025,004 2,680,069,179 1,205,809,292 1,257,701,515 (4,746,866,725) (4,823,936,029) 13,005,845,017 13,210,140,321 (1,955,970,606) (2,512,367,589) (42,248,723) 10,252,450 1,419,096,222 1,361,661,416 784,673,143 999,364,778 303,390,219 311,012,438 917,755,709 1,405,824,462 (1,351,787,356) (1,282,776,134) previously next 286 Enersis 2010 Annual Report Country STATEMENT OF COMPREHENSIVE INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income Chile Argentina Brazil Colombia 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 2,085,557,501 2,283,457,941 2,561,381,944 658,417,051 637,839,445 632,637,111 2,230,116,193 1,979,203,998 1,975,106,500 1,163,978,952 1,096,256,547 974,880,849 2,041,203,346 2,260,373,406 2,491,246,815 644,085,670 624,398,698 624,490,495 1,953,154,510 1,732,004,318 1,654,781,654 1,135,970,285 1,040,262,693 921,815,437 1,868,868,808 2,071,597,022 2,264,007,672 614,505,180 590,796,228 588,450,892 1,778,434,279 1,564,412,704 1,507,602,436 1,019,682,987 948,485,479 802,743,947 37,515,316 42,402,319 39,123,276 134,819,222 146,374,065 188,115,867 44,354,155 23,084,535 70,135,129 — 29,580,490 14,331,381 -49,808 33,652,278 13,440,747 -26,17 36,065,773 8,146,616 3,332,080 4,180,089 3,629,769 6,557,919 6,515,455 6,773,311 171,388,151 163,411,525 143,549,449 109,729,379 85,261,759 112,298,179 276,961,683 247,199,680 320,324,846 28,008,667 55,993,854 53,065,412 RAW MATERIALS AND CONSUMABLE USED (1,157,432,602) (1,131,384,329) (1,446,959,418) (413,059,847) (365,964,562) (370,813,615) (1,308,455,877) (1,074,015,467) (1,139,232,970) (463,847,068) (428,527,683) (369,319,650) Energy purchases Final consumption Transport expenses (542,253,232) (581,492,020) (624,048,664) (148,902,836) (160,131,967) (167,266,666) (543,260,558) (443,577,232) (534,060,340) (246,229,847) (229,843,920) (170,730,018) (318,644,651) (345,815,766) (606,488,766) (242,853,893) (180,160,003) (179,081,276) (37,260,897) 6,826,322 (1,475,184) (27,780,401) (20,572,023) (10,740,338) (183,181,403) (107,329,158) (122,589,953) (4,875,869) (6,886,114) (5,941,477) (93,660,230) (82,792,555) (42,309,186) (111,637,522) (105,632,478) (109,761,926) Other variable supplies and services (113,353,316) (96,747,385) (93,832,035) (16,427,249) (18,786,478) (18,524,196) (634,274,192) (554,472,002) (561,388,260) (78,199,298) (72,479,262) (78,087,368) CONTRIBUTION MARGIN 928,124,899 1,152,073,612 1,114,422,526 245,357,204 271,874,883 261,823,496 921,660,316 905,188,531 835,873,530 700,131,884 667,728,864 605,561,199 Other work performed by entity and capitalized 11,962,653 2,666,652 2,786,572 8,296,765 8,057,055 9,659,647 18,128,254 17,007,228 13,988,133 4,423,015 3,003,205 3,403,751 Employee benefits expense Other expenses (113,164,815) (110,843,668) (98,809,277) (79,533,998) (79,385,952) (68,432,786) (109,354,257) (108,515,145) (102,600,391) (51,541,615) (47,341,752) (32,556,642) (100,976,501) (106,575,741) (118,795,022) (89,055,759) (77,076,137) (77,646,187) (148,686,023) (158,794,504) (160,441,991) (78,880,441) (75,624,710) (67,934,089) GROSS OPERATING RESULT 725,946,236 937,320,855 899,604,799 85,064,212 123,469,849 125,404,170 681,748,290 654,886,110 586,819,281 574,132,843 547,765,607 508,474,219 Depreciation, amortization and impairment losses (119,048,628) (194,587,688) (127,972,346) (34,724,330) (42,541,505) (39,515,793) (229,368,429) (145,172,290) (127,709,024) (102,190,376) (96,735,454) (85,664,439) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses 606,897,608 742,733,167 771,632,453 50,339,882 80,928,344 85,888,377 452,379,861 509,713,820 459,110,257 471,942,467 451,030,153 422,809,780 (106,356,565) (114,219,912) (100,582,441) (15,788,028) (40,008,868) (33,991,662) (64,838,758) (69,697,374) (116,872,511) (62,523,560) (72,011,415) (81,020,937) 15,604,598 26,321,994 65,133,484 10,926,110 9,381,341 13,252,883 132,197,987 103,326,143 121,819,505 11,883,669 20,075,886 11,831,792 (109,360,408) (135,713,458) (182,620,847) (34,924,333) (32,076,508) (28,731,330) (193,320,965) (187,048,645) (204,079,510) (74,211,667) (92,155,200) (92,660,863) (15,055,706) 21,781,329 (62,378,252) — — — 2,454,951 (26,609,777) 79,283,174 8,209,526 (17,313,701) (18,513,215) 38,536,192 34,338,086 271,371,140 20,715,091 3,564,040 6,412,116 (3,715,780) 30,931,909 14,025,128 47,716,990 — (34,612,506) 59,112,491 — -195,562 963,52 — 67,899 1,887,294 — -191,866 1,922,331 (36,081,241) (60,947,863) (192,087,966) (12,505,565) (20,877,741) (24,925,331) (34,647,689) (33,691,862) (93,724,997) (1,159,082) (1,819,395) (2,114,197) Share of the profit (loss) of associates accounted for using the equity method 811,657 (8,074,230) 6,515,223 Negative consolidation difference Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment — 1,626,786 8,825,168 — 172,804 37,360,860 — -980,654 745,342 203,884 — 374,621 3,309,096 — 1,596,643 2,683,755 — — — — — NET INCOME BEFORE TAX 511,804,654 657,972,689 677,329,923 36,351,712 43,977,852 55,205,811 387,535,600 440,503,280 342,573,263 411,933,925 391,835,380 342,115,435 Income tax (91,503,756) (68,971,765) (189,164,031) (13,131,879) (15,197,010) (19,940,788) (66,998,716) (107,407,226) (67,172,932) (134,315,662) (127,250,804) (108,259,160) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 420,300,898 589,000,924 488,165,892 23,219,833 28,780,842 35,265,023 320,536,884 333,096,054 275,400,331 277,618,263 264,584,576 233,856,275 Net income from discontinued operations — — — — — — NET INCOME 420,300,898 589,000,924 488,165,892 23,219,833 28,780,842 35,265,023 320,536,884 333,096,054 275,400,331 277,618,263 264,584,576 233,856,275 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 420,300,898 589,000,924 488,165,892 23,219,833 28,780,842 35,265,023 320,536,884 333,096,054 275,400,331 277,618,263 264,584,576 233,856,275 — — — — — — — — — — — — — — — — — — 29,251 -34,755 486,834 291,052 2,515,018 12,851,414 — — -34,772 — — 252,022 74,57 — — — — — — — — — — — — — 44,465 — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 2,085,557,501 2,283,457,941 2,561,381,944 658,417,051 637,839,445 632,637,111 2,230,116,193 1,979,203,998 1,975,106,500 1,163,978,952 1,096,256,547 974,880,849 ThCh$ 12-31-2008 39,123,276 70,135,129 10 2,491,246,815 1 2,264,007,672 2 188,115,867 4 Chile 12-31-2010 12-31-2009 ThCh$ ThCh$ 2,041,203,346 2,260,373,406 1,868,868,808 2,071,597,022 37,515,316 42,402,319 134,819,222 146,374,065 44,354,155 23,084,535 Country STATEMENT OF COMPREHENSIVE INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income RAW MATERIALS AND CONSUMABLE USED Energy purchases Final consumption Transport expenses Other variable supplies and services — — — (1,157,432,602) (1,131,384,329) (542,253,232) (581,492,020) (1,446,959,418) 16 (624,048,664) (318,644,651) (345,815,766) (606,488,766) (183,181,403) (107,329,158) (113,353,316) (96,747,385) CONTRIBUTION MARGIN 928,124,899 1,152,073,612 Other work performed by entity and capitalized Employee benefits expense Other expenses 11,962,653 2,666,652 (113,164,815) (110,843,668) (100,976,501) (106,575,741) GROSS OPERATING RESULT 725,946,236 937,320,855 Depreciation, amortization and impairment losses (119,048,628) (194,587,688) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses 606,897,608 742,733,167 (106,356,565) (114,219,912) 15,604,598 26,321,994 (109,360,408) (135,713,458) (15,055,706) 21,781,329 2,454,951 (26,609,777) 38,536,192 34,338,086 (36,081,241) (60,947,863) Share of the profit (loss) of associates accounted for using the equity method 811,657 (8,074,230) Negative consolidation difference Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment — 1,626,786 8,825,168 — 172,804 37,360,860 (122,589,953) 20 (93,832,035) 24 1,114,422,526 28 38 2,786,572 (98,809,277) 44 (118,795,022) 50 899,604,799 56 (127,972,346) 60 66 771,632,453 78 (100,582,441) 84 65,133,484 (182,620,847) (62,378,252) 100 79,283,174 271,371,140 (192,087,966) 128 6,515,223 132 — 136 -980,654 745,342 144 NET INCOME BEFORE TAX 511,804,654 657,972,689 154 677,329,923 Income tax (91,503,756) (68,971,765) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 420,300,898 589,000,924 Net income from discontinued operations NET INCOME 420,300,898 589,000,924 — (189,164,031) 180 488,165,892 182 — 326 488,165,892 287 Financial Statements Consolidated 12-31-2008 ThCh$ 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ Brazil Colombia Contents 12-31-2009 12-31-2010 Argentina ThCh$ ThCh$ 644,085,670 Cover 614,505,180 Resume — 624,398,698 624,490,495 590,796,228 588,450,892 -49,808 -26,17 29,580,490 36,065,773 Chairman’s Letter to Shareholders 8,146,616 13,440,747 33,652,278 14,331,381 2010 Highlight (413,059,847) (365,964,562) Main financial and operational (148,902,836) indicators (242,853,893) (160,131,967) (180,160,003) (167,266,666) (179,081,276) (370,813,615) (4,875,869) Identification of the Company (6,886,114) (5,941,477) (18,524,196) (16,427,249) (18,786,478) Ownership and control 271,874,883 245,357,204 Administration Human resources 8,296,765 8,057,055 261,823,496 9,659,647 (79,533,998) (79,385,952) (68,432,786) Stock Exchange Transactions (77,076,137) (89,055,759) (77,646,187) Dividends 85,064,212 123,469,849 Investment and financing policy 2010 125,404,170 1,953,154,510 1,732,004,318 1,654,781,654 1,135,970,285 1,040,262,693 921,815,437 1,778,434,279 1,564,412,704 1,507,602,436 1,019,682,987 948,485,479 802,743,947 3,332,080 4,180,089 3,629,769 6,557,919 6,515,455 6,773,311 171,388,151 163,411,525 143,549,449 109,729,379 85,261,759 112,298,179 276,961,683 247,199,680 320,324,846 28,008,667 55,993,854 53,065,412 (1,308,455,877) (1,074,015,467) (1,139,232,970) (463,847,068) (428,527,683) (369,319,650) (543,260,558) (443,577,232) (534,060,340) (246,229,847) (229,843,920) (170,730,018) (37,260,897) 6,826,322 (1,475,184) (27,780,401) (20,572,023) (10,740,338) (93,660,230) (82,792,555) (42,309,186) (111,637,522) (105,632,478) (109,761,926) (634,274,192) (554,472,002) (561,388,260) (78,199,298) (72,479,262) (78,087,368) 921,660,316 905,188,531 835,873,530 700,131,884 667,728,864 605,561,199 18,128,254 17,007,228 13,988,133 4,423,015 3,003,205 3,403,751 (109,354,257) (108,515,145) (102,600,391) (51,541,615) (47,341,752) (32,556,642) (148,686,023) (158,794,504) (160,441,991) (78,880,441) (75,624,710) (67,934,089) 681,748,290 654,886,110 586,819,281 574,132,843 547,765,607 508,474,219 (34,724,330) The company´s businesses (42,541,505) (39,515,793) (229,368,429) (145,172,290) (127,709,024) (102,190,376) (96,735,454) (85,664,439) Investments and financial activities 85,888,377 50,339,882 80,928,344 452,379,861 509,713,820 459,110,257 471,942,467 451,030,153 422,809,780 Risk factors (15,788,028) (40,008,868) (33,991,662) (64,838,758) (69,697,374) (116,872,511) (62,523,560) (72,011,415) (81,020,937) 10,926,110 Regulatory framework of the electricity industry — (34,924,333) (32,076,508) 9,381,341 — 13,252,883 (28,731,330) — 8,209,526 Description of the business by Country (17,313,701) 20,715,091 3,564,040 (18,513,215) 6,412,116 132,197,987 103,326,143 121,819,505 11,883,669 20,075,886 11,831,792 (193,320,965) (187,048,645) (204,079,510) (74,211,667) (92,155,200) (92,660,863) — (3,715,780) 30,931,909 — 14,025,128 47,716,990 — (34,612,506) 59,112,491 — -195,562 963,52 — 67,899 1,887,294 — -191,866 1,922,331 (12,505,565) (20,877,741) (24,925,331) (34,647,689) (33,691,862) (93,724,997) (1,159,082) (1,819,395) (2,114,197) Other businesses 203,884 Sustainability 374,621 3,309,096 — — Diagram of shareholdings 2,683,755 1,596,643 Consolidated relevant facts — — — — — 36,351,712 Identification of subsidiaries and related companies 43,977,852 55,205,811 (13,131,879) (15,197,010) (19,940,788) Declaration of responsibility 28,780,842 23,219,833 35,265,023 Consolidated Financial Statements — Summarized Financial Information 35,265,023 for Subsidiaries 23,219,833 28,780,842 — — — — 29,251 -34,755 — — — 44,465 — — — — — — — -34,772 486,834 291,052 2,515,018 12,851,414 — — 252,022 74,57 387,535,600 440,503,280 342,573,263 411,933,925 391,835,380 342,115,435 (66,998,716) (107,407,226) (67,172,932) (134,315,662) (127,250,804) (108,259,160) 320,536,884 333,096,054 275,400,331 277,618,263 264,584,576 233,856,275 — — — — — — 320,536,884 333,096,054 275,400,331 277,618,263 264,584,576 233,856,275 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 420,300,898 589,000,924 488,165,892 23,219,833 28,780,842 35,265,023 320,536,884 333,096,054 275,400,331 277,618,263 264,584,576 233,856,275 — — — — — — — — — — — — — — — — — — — — — — pages control previously next 288 Enersis 2010 Annual Report Country STATEMENT OF COMPREHENSIVE INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income RAW MATERIALS AND CONSUMABLE USED Energy purchases Final consumption Transport expenses Other variable supplies and services CONTRIBUTION MARGIN Other work performed by entity and capitalized Employee benefits expense Other expenses GROSS OPERATING RESULT Peru 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 429,229,748 408,534,345 372,233,663 4,375,367 31,925,315 20,695,403 479,144,395 460,091,173 403,854,451 5,012,398 51,224,324 19,053,222 439,343,346 411,934,933 398,658,925 (2,533,699) 15,809,707 27,408,413 (180,533,345) (213,585,176) (224,934,369) (74,068,163) (105,153,086) (128,133,297) (45,498,261) (12,628,068) (48,338,853) (40,516,143) (13,647,578) (54,268,369) (49,625,820) (14,257,476) (32,917,776) Eliminations Total 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ (3,718,332) (3,718,332) ThCh$ (3,846,673) (3,846,673) ThCh$ ThCh$ ThCh$ ThCh$ (3,405,049) 6,563,581,113 6,472,055,653 6,579,944,701 (3,405,049) 6,179,229,824 6,113,283,615 6,100,864,285 — 5,653,724,917 5,579,145,884 5,561,463,872 (1,209,908) (2,508,424) (1,571,194) (2,275,479) (1,374,622) (2,030,427) 50,570,774 474,934,133 384,351,289 56,489,259 477,648,472 358,772,038 45,591,865 493,808,548 479,080,416 1,682,485 2,883,640 3,269,736 (3,521,646,254) (3,210,593,577) (3,547,990,286) 1,682,485 2,883,640 3,269,736 (888,910,423) (793,869,856) (781,479,899) (1,554,714,636) (1,520,198,225) (1,624,238,985) (672,038,103) (580,237,613) (847,411,384) (405,983,092) (316,287,883) (294,860,018) 248,696,403 265,559,219 214,408,977 (2,035,847) (963,033) (135,313) 3,041,934,859 3,261,462,076 3,031,954,415 2,058,678 (21,083,328) (33,890,176) 2,996,379 (24,315,928) (40,566,405) 2,761,457 (20,229,337) (33,173,638) 1,054,130 948,3 17,779,604 (450,434,770) (457,689,197) (440,211,323) 44,869,365 33,730,519 32,599,560 (374,678,013) (370,402,445) (322,628,433) 195,781,577 203,673,265 163,767,459 (981,717) (14,733) 17,644,291 2,261,691,441 2,467,100,953 2,301,714,219 Depreciation, amortization and impairment losses (60,339,333) (60,618,547) (57,201,989) (11,719,608) — (557,390,704) (539,655,484) (438,063,591) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment NET INCOME BEFORE TAX Income tax 135,442,244 143,054,718 106,565,470 (12,701,325) -14,733 17,644,291 1,704,300,737 1,927,445,469 1,863,650,628 (25,742,132) (34,167,002) (27,550,531) 2,116,913 3,631,106 2,318,379 (28,154,018) (38,544,881) (30,040,734) — 294,973 1,553,835 — 746,773 2,333,966 — 171,824 2,087,857 (1,258,862) (1,587,193) (1,916,033) — — — 9,935,172 — — 405,317 -196,773 — — 764,314 1,469,753 4,645,177 (1,492,329) 1,613,140 — 4,524,366 (1,369,179) 5,893,545 20,848,425 (59,347,870) (270,604,535) (309,256,146) (419,365,952) (3,066,065) (32,602,708) 171,236,948 159,670,405 181,753,335 3,066,065 23,025,027 (438,358,251) (482,472,627) (515,108,257) — (15,055,706) 21,781,329 20,848,425 (49,770,189) (7,825,251) (266,381,692) 11,572,474 91,331,368 (8,235,253) 82,015,125 (62,378,252) (23,632,778) 74,524,243 28,673,676 216,611,503 (79,758,894) (90,250,378) (98,157,021) (2,979,994) (2,683,844) (6,607,604) 1,015,739 2,235,579 3,261,180 — 272,686 — 137,943 — 35,682 -77,438 11,710,749 50,502,335 2,503,279 110,105,429 118,626,115 81,249,006 (11,035,944) 18,149,864 (48,388,621) 1,446,695,376 1,671,065,180 1,450,084,818 (40,056,955) (40,910,805) (31,365,873) — (346,006,968) (359,737,610) (415,902,784) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS Net income from discontinued operations NET INCOME 70,048,474 77,715,310 49,883,133 — — — 70,048,474 77,715,310 49,883,133 (11,035,944) 18,149,864 (48,388,621) 1,100,688,408 1,311,327,570 1,034,182,033 — — — (11,035,944) 18,149,864 (48,388,621) 1,100,688,408 1,311,327,570 1,034,182,033 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 70,048,474 77,715,310 49,883,133 (11,035,944) 18,149,864 (48,388,621) 1,100,688,408 1,311,327,570 1,034,182,033 — — — — — — 486,226,814 614,461,594 660,231,043 651,096,527 507,589,633 526,592,399 — — — — — — — 198 — — — — — — — — — — — — — — — 16 — — — — — — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Country STATEMENT OF COMPREHENSIVE INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income RAW MATERIALS AND CONSUMABLE USED Energy purchases Final consumption Transport expenses Other variable supplies and services CONTRIBUTION MARGIN Other work performed by entity and capitalized Employee benefits expense Other expenses GROSS OPERATING RESULT Depreciation, amortization and impairment losses OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment NET INCOME AFTER TAX FROM CONTINUING OPERATIONS Net income from discontinued operations NET INCOME NET INCOME BEFORE TAX Income tax RESULT FOR THE PERIOD Owners of parent Non-controlling interests 10 (180,533,345) 16 (74,068,163) (45,498,261) (12,628,068) 20 (48,338,853) 24 248,696,403 28 2010 Highlight (105,153,086) Main financial and operational indicators (128,133,297) (40,516,143) (49,625,820) Identification of the Company (13,647,578) (54,268,369) (14,257,476) (32,917,776) Ownership and control Administration Dividends 50 195,781,577 56 (60,339,333) 60 Investment and financing policy 2010 (57,201,989) The company´s businesses (60,618,547) 135,442,244 66 Investments and financial activities 143,054,718 106,565,470 78 (25,742,132) Risk factors (34,167,002) (27,550,531) 2,116,913 84 (28,154,018) 3,631,106 Regulatory framework of the (38,544,881) electricity industry (30,040,734) 2,318,379 — — — 100 294,973 1,553,835 746,773 Description of the business by Country 2,333,966 2,087,857 171,824 (1,258,862) (1,587,193) (1,916,033) Other businesses 128 132 136 144 — — — 9,935,172 Sustainability — — Diagram of shareholdings — 764,314 1,469,753 -196,773 — Consolidated relevant facts 405,317 154 110,105,429 (40,056,955) 118,626,115 Identification of subsidiaries and related companies (40,910,805) (31,365,873) 81,249,006 180 Declaration of responsibility 70,048,474 182 — 77,715,310 49,883,133 Consolidated Financial Statements — — 326 70,048,474 77,715,310 Summarized Financial Information for Subsidiaries 49,883,133 12-31-2010 Peru Contents 12-31-2009 ThCh$ ThCh$ 12-31-2008 ThCh$ 429,229,748 479,144,395 408,534,345 1 372,233,663 2 4,375,367 31,925,315 Cover 460,091,173 403,854,451 Resume 5,012,398 439,343,346 411,934,933 398,658,925 (2,533,699) 4 20,695,403 Chairman’s Letter to Shareholders 27,408,413 19,053,222 51,224,324 15,809,707 289 Financial Statements Consolidated Eliminations Total 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ (3,718,332) (3,718,332) — (1,209,908) (2,508,424) — ThCh$ (3,846,673) (3,846,673) — (1,571,194) (2,275,479) — ThCh$ ThCh$ ThCh$ ThCh$ (3,405,049) 6,563,581,113 6,472,055,653 6,579,944,701 (3,405,049) 6,179,229,824 6,113,283,615 6,100,864,285 — 5,653,724,917 5,579,145,884 5,561,463,872 (1,374,622) (2,030,427) — 50,570,774 474,934,133 384,351,289 56,489,259 477,648,472 358,772,038 45,591,865 493,808,548 479,080,416 (213,585,176) (224,934,369) 1,682,485 2,883,640 3,269,736 (3,521,646,254) (3,210,593,577) (3,547,990,286) — — — — — — — — — (1,554,714,636) (1,520,198,225) (1,624,238,985) (672,038,103) (580,237,613) (847,411,384) (405,983,092) (316,287,883) (294,860,018) 1,682,485 2,883,640 3,269,736 (888,910,423) (793,869,856) (781,479,899) 265,559,219 214,408,977 (2,035,847) (963,033) (135,313) 3,041,934,859 3,261,462,076 3,031,954,415 2,058,678 38 Human resources 2,996,379 (21,083,328) (24,315,928) 2,761,457 (20,229,337) 44 (33,890,176) Stock Exchange Transactions (40,566,405) (33,173,638) — — — — — — 44,869,365 33,730,519 32,599,560 (374,678,013) (370,402,445) (322,628,433) 1,054,130 948,3 17,779,604 (450,434,770) (457,689,197) (440,211,323) 203,673,265 163,767,459 (981,717) (14,733) 17,644,291 2,261,691,441 2,467,100,953 2,301,714,219 4,645,177 (1,492,329) 1,613,140 — 4,524,366 (1,369,179) 5,893,545 198 — (11,719,608) — — (557,390,704) (539,655,484) (438,063,591) (12,701,325) -14,733 17,644,291 1,704,300,737 1,927,445,469 1,863,650,628 20,848,425 (59,347,870) (270,604,535) (309,256,146) (419,365,952) (3,066,065) (32,602,708) 171,236,948 159,670,405 181,753,335 3,066,065 23,025,027 (438,358,251) (482,472,627) (515,108,257) — — (15,055,706) 21,781,329 20,848,425 (49,770,189) (7,825,251) (266,381,692) 11,572,474 91,331,368 (8,235,253) 82,015,125 (62,378,252) (23,632,778) 74,524,243 28,673,676 216,611,503 (79,758,894) (90,250,378) (98,157,021) (2,979,994) (2,683,844) 16 — (6,607,604) 1,015,739 2,235,579 3,261,180 — — — 272,686 — 137,943 — 35,682 — — -77,438 11,710,749 50,502,335 2,503,279 (11,035,944) 18,149,864 (48,388,621) 1,446,695,376 1,671,065,180 1,450,084,818 — — — (346,006,968) (359,737,610) (415,902,784) (11,035,944) 18,149,864 (48,388,621) 1,100,688,408 1,311,327,570 1,034,182,033 — — — — — — (11,035,944) 18,149,864 (48,388,621) 1,100,688,408 1,311,327,570 1,034,182,033 70,048,474 77,715,310 49,883,133 (11,035,944) 18,149,864 (48,388,621) 1,100,688,408 1,311,327,570 1,034,182,033 — — — — — — — — — — — — 486,226,814 614,461,594 660,231,043 651,096,527 507,589,633 526,592,399 pages control previously next 290 Enersis 2010 Annual Report Line of Business Country OTHER COMPREHENSIVE INCOME TOTAL REVENUE Sales Energy sales Other sales Other services rendered Other operating income Chile Argentina Brazil Colombia Distribution Distribution 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,016,997,495 1,089,515,077 1,083,673,527 295,538,314 327,087,549 334,163,433 1,987,041,550 1,780,335,633 1,737,351,383 785,889,588 741,167,816 661,474,041 1,003,001,004 1,066,239,632 1,029,231,804 287,867,341 318,293,459 326,185,382 1,717,875,184 1,536,790,709 1,417,506,289 757,935,491 684,930,692 608,621,511 900,798,434 1,007,550,579 957,408,717 268,829,105 297,441,695 304,372,978 1,648,205,624 1,473,905,923 1,366,406,783 657,681,311 585,665,734 495,404,370 7,166,927 95,035,643 13,996,491 10,418,293 48,270,760 23,275,445 14,144,725 57,678,362 54,441,723 — — — 19,038,236 20,851,764 21,812,404 7,670,973 8,794,090 7,978,051 — — — 69,669,560 62,884,786 51,099,506 269,166,366 243,544,924 319,845,094 2,035,272 98,218,908 27,954,097 1,999,965 1,561,021 97,264,993 111,656,120 56,237,124 52,852,530 RAW MATERIALS AND CONSUMABLE USED (788,044,087) (845,396,679) (767,639,080) (142,565,611) (153,916,681) (159,168,886) (1,310,974,462) (1,109,711,167) (1,130,171,924) (426,625,508) (393,206,055) (334,348,884) Energy purchases Final consumption Transport expenses Other variable supplies and services (23,611,704) (29,532,885) (34,299,203) (718,972,828) (815,863,794) (733,339,877) (139,626,236) (150,780,462) (155,199,248) (644,017,840) (544,826,586) (581,737,614) (317,529,068) (275,176,733) (216,843,446) — (45,459,555) — — — — — (1,239,345) (1,700,030) — (1,522,314) (1,613,905) — (1,251,828) (2,717,810) — — — — — — (88,561,822) (77,941,315) (37,664,618) (81,668,944) (79,476,600) (82,316,166) (578,394,800) (486,943,266) (510,769,692) (27,427,496) (38,552,722) (35,189,272) CONTRIBUTION MARGIN 228,953,408 244,118,398 316,034,447 152,972,703 173,170,868 174,994,547 676,067,088 670,624,466 607,179,459 359,264,080 347,961,761 327,125,157 Other work performed by entity and capitalized 2,524,049 2,666,652 2,786,572 8,296,765 8,057,055 9,659,647 18,128,254 17,007,228 13,988,133 3,734,991 2,485,358 3,072,770 Employee benefits expense Other expenses (24,818,903) (24,641,080) (22,379,909) (63,168,597) (66,048,079) (57,132,352) (86,726,523) (84,491,569) (79,763,096) (30,266,521) (29,972,265) (18,866,451) (64,729,067) (64,826,993) (58,294,743) (77,589,301) (64,218,481) (63,964,619) (146,667,574) (153,761,807) (138,155,164) (61,109,969) (60,815,070) (54,306,942) GROSS OPERATING RESULT 141,929,487 157,316,977 238,146,367 20,511,570 50,961,363 63,557,223 460,801,245 449,378,318 403,249,332 271,622,581 259,659,784 257,024,534 Depreciation, amortization and impairment losses (30,162,735) (28,284,945) (24,523,395) (16,567,619) (19,085,702) (17,930,213) (158,955,423) (111,178,295) (94,840,968) (64,400,224) (59,775,278) (54,044,759) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses 111,766,752 129,032,032 213,622,972 3,943,951 31,875,661 45,627,010 301,845,822 338,200,023 308,408,364 207,222,357 199,884,506 202,979,775 2,470,113 2,906,811 (24,720,995) (6,198,811) (5,626,845) (2,207,707) (61,918,267) (57,393,403) (82,562,607) (26,452,173) (29,268,297) (37,367,598) 10,576,373 14,891,938 15,332,306 9,324,258 6,866,221 9,850,439 103,066,394 83,232,583 91,971,784 9,289,334 9,885,040 7,413,288 (8,048,514) (17,384,760) (23,194,285) (16,070,345) (12,048,619) (11,419,883) (163,934,510) (145,101,661) (157,038,747) (35,637,190) (39,051,936) (44,767,844) 153,805 (211,551) 2,679,429 458,162 4,941,471 8,283,203 (3,048,824) (13,810,192) 54,746 (2,890,980) (3,341,732) (13,864,938) Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments — — — 82,756,621 74,874,562 — 82,850 — — Gains (losses) on sale of property, land and equipment (3,349) 12,050,737 (303,324) NET INCOME BEFORE TAX 114,233,516 226,829,051 263,473,215 (2,253,949) 26,250,449 43,420,439 239,927,555 281,056,904 226,131,229 182,159,904 183,371,945 165,510,034 Income tax (23,402,198) (21,064,399) (37,443,250) 635,038 (9,357,145) (15,723,362) (46,763,793) (72,619,778) (50,427,526) (56,459,150) (56,364,261) (49,651,639) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 Net income from discontinued operations — — — — — — NET INCOME 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 — — — — — — — — — — — — — 547,276 617,720 (70,444) 911 — — — — (444,447) 1,287,472 — (638,263) 4,141,772 (1,731,919) (4,780,035) (4,299,937) (1,944,252) (63,362,064) (1,662,982) (1,720,719) (1,050,151) 3,249,786 — 4,475,675 6,419,927 (17,495,644) 45,866,420 — (104,317) 604,900 (709,217) — (101,401) 1,561,581 — (13,042) 1,707,677 1,633 1,136 — — — — — — 250,284 285,472 1,389,720 12,755,736 (102,143) — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Distribution Contents 12-31-2009 12-31-2010 Argentina 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 12-31-2008 ThCh$ 1,083,673,527 1 1,029,231,804 2 957,408,717 14,144,725 4 57,678,362 295,538,314 Cover 287,867,341 Resume 268,829,105 327,087,549 334,163,433 318,293,459 326,185,382 297,441,695 304,372,978 — Chairman’s Letter to Shareholders 21,812,404 20,851,764 19,038,236 — — 54,441,723 10 7,670,973 2010 Highlight 8,794,090 7,978,051 Main financial and operational (142,565,611) indicators (139,626,236) — (153,916,681) (150,780,462) Identification of the Company — (159,168,886) (155,199,248) (1,239,345) (1,522,314) (1,613,905) Ownership and control (1,700,030) Administration 152,972,703 173,170,868 Human resources 8,296,765 8,057,055 Stock Exchange Transactions (66,048,079) (63,168,597) (57,132,352) (1,251,828) (2,717,810) 174,994,547 9,659,647 291 Financial Statements Consolidated Brazil Colombia Distribution 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,987,041,550 1,780,335,633 1,737,351,383 785,889,588 741,167,816 661,474,041 1,717,875,184 1,536,790,709 1,417,506,289 757,935,491 684,930,692 608,621,511 1,648,205,624 1,473,905,923 1,366,406,783 657,681,311 585,665,734 495,404,370 — — — 69,669,560 62,884,786 51,099,506 269,166,366 243,544,924 319,845,094 2,035,272 98,218,908 27,954,097 1,999,965 1,561,021 97,264,993 111,656,120 56,237,124 52,852,530 (1,310,974,462) (1,109,711,167) (1,130,171,924) (426,625,508) (393,206,055) (334,348,884) (644,017,840) (544,826,586) (581,737,614) (317,529,068) (275,176,733) (216,843,446) (88,561,822) (77,941,315) (37,664,618) (81,668,944) (79,476,600) (82,316,166) (578,394,800) (486,943,266) (510,769,692) (27,427,496) (38,552,722) (35,189,272) 676,067,088 670,624,466 607,179,459 359,264,080 347,961,761 327,125,157 18,128,254 17,007,228 13,988,133 3,734,991 2,485,358 3,072,770 (86,726,523) (84,491,569) (79,763,096) (30,266,521) (29,972,265) (18,866,451) — — — — — — — (77,589,301) Dividends (64,218,481) (63,964,619) (146,667,574) (153,761,807) (138,155,164) (61,109,969) (60,815,070) (54,306,942) Investment and financing policy 2010 50,961,363 63,557,223 20,511,570 460,801,245 449,378,318 403,249,332 271,622,581 259,659,784 257,024,534 The company´s businesses (19,085,702) (16,567,619) (17,930,213) (158,955,423) (111,178,295) (94,840,968) (64,400,224) (59,775,278) (54,044,759) Investments and financial activities 45,627,010 31,875,661 3,943,951 Risk factors (6,198,811) Regulatory framework of the electricity industry 9,324,258 6,866,221 (5,626,845) (2,207,707) 9,850,439 (16,070,345) (12,048,619) (11,419,883) 301,845,822 338,200,023 308,408,364 207,222,357 199,884,506 202,979,775 (61,918,267) (57,393,403) (82,562,607) (26,452,173) (29,268,297) (37,367,598) 103,066,394 83,232,583 91,971,784 9,289,334 9,885,040 7,413,288 (163,934,510) (145,101,661) (157,038,747) (35,637,190) (39,051,936) (44,767,844) — Description of the business by Country (444,447) 547,276 — — (638,263) 617,720 1,287,472 Other businesses (70,444) (1,731,919) 4,141,772 (4,780,035) Sustainability 911 1,633 1,136 Diagram of shareholdings — — Consolidated relevant facts — — — — — — — — (1,050,151) 3,249,786 — 4,475,675 6,419,927 — (17,495,644) 45,866,420 (4,299,937) (1,944,252) (63,362,064) — — — — — — — — — — — (104,317) 604,900 (709,217) — — — — (101,401) 1,561,581 — (13,042) 1,707,677 (1,662,982) (1,720,719) — — — — — — 250,284 285,472 1,389,720 12,755,736 (102,143) Identification of subsidiaries and related companies (2,253,949) 26,250,449 43,420,439 Declaration of responsibility (9,357,145) 635,038 (15,723,362) (1,618,911) Consolidated Financial Statements 27,697,077 Summarized Financial Information — 27,697,077 for Subsidiaries (1,618,911) 16,893,304 16,893,304 — — 239,927,555 281,056,904 226,131,229 182,159,904 183,371,945 165,510,034 (46,763,793) (72,619,778) (50,427,526) (56,459,150) (56,364,261) (49,651,639) 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 — — — — — — 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 RAW MATERIALS AND CONSUMABLE USED (788,044,087) (845,396,679) (718,972,828) (815,863,794) 16 (767,639,080) (733,339,877) Chile 12-31-2010 12-31-2009 1,016,997,495 1,089,515,077 1,003,001,004 1,066,239,632 900,798,434 1,007,550,579 7,166,927 95,035,643 13,996,491 10,418,293 48,270,760 23,275,445 OTHER COMPREHENSIVE Line of Business Country INCOME TOTAL REVENUE Sales Energy sales Other sales Other services rendered Other operating income Energy purchases Final consumption Transport expenses — — — — — — — (45,459,555) — — Other variable supplies and services (23,611,704) (29,532,885) CONTRIBUTION MARGIN 228,953,408 244,118,398 Other work performed by entity and capitalized Employee benefits expense Other expenses 2,524,049 2,666,652 (24,818,903) (24,641,080) (64,729,067) (64,826,993) GROSS OPERATING RESULT 141,929,487 157,316,977 Depreciation, amortization and impairment losses (30,162,735) (28,284,945) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses 111,766,752 129,032,032 2,470,113 2,906,811 10,576,373 14,891,938 (8,048,514) (17,384,760) 153,805 (211,551) 2,679,429 458,162 4,941,471 8,283,203 (2,890,980) (3,341,732) Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments 82,756,621 — 82,850 Gains (losses) on sale of property, land and equipment (3,349) 12,050,737 NET INCOME BEFORE TAX 114,233,516 226,829,051 Income tax (23,402,198) (21,064,399) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 90,831,318 205,764,652 Net income from discontinued operations NET INCOME 90,831,318 205,764,652 — 20 — — (34,299,203) 24 28 316,034,447 38 2,786,572 44 (22,379,909) (58,294,743) 50 56 238,146,367 60 (24,523,395) 66 213,622,972 78 (24,720,995) 84 15,332,306 (23,194,285) 100 (3,048,824) (13,810,192) 54,746 128 (13,864,938) 132 74,874,562 136 — — 144 (303,324) 154 263,473,215 180 (37,443,250) 182 226,029,965 326 226,029,965 — RESULT FOR THE PERIOD Owners of parent Non-controlling interests 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 — — — — — — — — — — — — — — — — — — — — — — pages control previously next 292 Enersis 2010 Annual Report Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Line of Business Country OTHER COMPREHENSIVE INCOME TOTAL REVENUE Sales Energy sales Other sales Other services rendered Other operating income RAW MATERIALS AND CONSUMABLE USED Energy purchases Final consumption Transport expenses Other variable supplies and services CONTRIBUTION MARGIN Other work performed by entity and capitalized Employee benefits expense Other expenses Distribution Peru 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 307,158,970 286,654,227 279,239,525 18,571 7,396,131 20,504,743 302,295,127 286,037,460 278,264,824 13,193 7,759,443 16,257,667 254,640,806 243,406,969 236,103,382 12,629 7,290,958 11,233,837 (193,646,086) (185,706,532) (149,816,090) (168,095,978) (171,745,296) (139,863,463) — — — — — — (25,550,108) (13,961,236) (9,952,627) 113,512,884 116,588,595 104,824,716 1,530,770,163 1,552,464,088 1,530,158,326 2,058,678 (10,830,327) (18,349,605) 2,782,325 (11,469,891) (24,143,832) 2,592,123 (9,776,179) (23,905,746) Investment and financing policy 2010 GROSS OPERATING RESULT 86,391,630 83,757,197 73,734,914 981,256,513 1,001,073,639 1,035,712,370 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Depreciation, amortization and impairment losses (21,459,798) (21,332,334) (20,790,878) (291,545,799) (239,656,554) (212,130,213) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments 64,931,832 62,424,863 52,944,036 689,710,714 761,417,085 823,582,157 (10,890,729) (10,414,860) (12,219,957) 1,621,266 2,245,332 2,069,892 (12,549,137) (12,867,928) (14,461,673) — 37,142 315,166 (278,024) — — — — 207,736 1,032,549 — 171,824 2,087,857 (824,813) (1,916,033) — — — — — — Gains (losses) on sale of property, plant and equipment (21,095) (117,804) 2,999,805 1,365,276 24,938,953 2,879,810 NET INCOME BEFORE TAX 54,020,008 51,892,199 43,723,884 588,829,334 769,400,548 742,258,801 Declaration of responsibility Income tax (18,812,437) (18,796,395) (16,154,121) (144,802,540) (178,201,978) (169,399,898) Consolidated Financial Statements Summarized Financial Information for Subsidiaries NET INCOME AFTER TAX FROM CONTINUING OPERATIONS Net income from discontinued operations NET INCOME RESULT FOR THE PERIOD Owners of parent Non-controlling interests 35,207,571 33,095,804 27,569,763 — — — 35,207,571 33,095,804 27,569,763 35,207,571 33,095,804 27,569,763 — — — — — — Eliminations Total Distribution 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 742,300 (204,474) 946,774 742,300 742,300 742,300 742,300 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 4,392,625,917 4,240,401,202 4,071,303,190 4,053,333,247 3,892,291,952 3,624,951,955 3,754,753,999 3,642,828,755 3,359,696,230 9,220,770 289,358,478 339,292,670 12,431,451 237,031,746 348,109,250 15,718,375 249,537,350 446,351,235 (2,861,855,754) (2,687,937,114) (2,541,144,864) (1,988,241,950) (1,958,392,871) (1,826,983,648) — — — (216,929,666) (158,940,229) (121,232,612) (656,684,138) (570,604,014) (592,928,604) 34,742,737 32,998,618 32,099,245 (215,810,871) (216,622,884) (187,917,987) (368,445,516) (367,766,183) (338,627,214) (1,528,000) 133,877,625 117,121,114 125,109,709 1,528,000 (236,239,696) (226,454,904) (249,354,432) 153,805 (39,301) 7,262,527 (7,301,828) 458,162 9,079,034 18,584,732 (3,048,824) (31,785,317) 53,858,472 (9,505,698) (85,643,789) 82,758,254 74,875,698 — 82,850 911 — — — — — — — — — — 444,026,794 591,198,570 572,858,903 444,026,794 591,198,570 572,858,903 444,026,794 591,198,570 572,858,903 — — — 742,300 (102,247,567) (99,796,594) (159,078,864) 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 293 Financial Statements Consolidated Eliminations Total Distribution 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ — — — — — — — — — — — — — — — — — — 742,300 — — — 742,300 (204,474) 946,774 — — — — 742,300 — 742,300 — 742,300 742,300 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 4,392,625,917 4,240,401,202 4,071,303,190 4,053,333,247 3,892,291,952 3,624,951,955 3,754,753,999 3,642,828,755 3,359,696,230 9,220,770 289,358,478 339,292,670 12,431,451 237,031,746 348,109,250 15,718,375 249,537,350 446,351,235 (2,861,855,754) (2,687,937,114) (2,541,144,864) (1,988,241,950) (1,958,392,871) (1,826,983,648) — — — (216,929,666) (158,940,229) (121,232,612) (656,684,138) (570,604,014) (592,928,604) 1,530,770,163 1,552,464,088 1,530,158,326 34,742,737 32,998,618 32,099,245 (215,810,871) (216,622,884) (187,917,987) (368,445,516) (367,766,183) (338,627,214) 981,256,513 1,001,073,639 1,035,712,370 (291,545,799) (239,656,554) (212,130,213) 689,710,714 761,417,085 823,582,157 (102,247,567) (99,796,594) (159,078,864) (1,528,000) 133,877,625 117,121,114 125,109,709 1,528,000 (236,239,696) (226,454,904) (249,354,432) — — — — — — — — — — — — — — — — 153,805 (39,301) 7,262,527 (7,301,828) 458,162 9,079,034 18,584,732 (3,048,824) (31,785,317) 53,858,472 (9,505,698) (85,643,789) 911 — — 82,758,254 74,875,698 — 82,850 — — 1,365,276 24,938,953 2,879,810 588,829,334 769,400,548 742,258,801 (144,802,540) (178,201,978) (169,399,898) 444,026,794 591,198,570 572,858,903 — — — 444,026,794 591,198,570 572,858,903 444,026,794 591,198,570 572,858,903 — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 294 Enersis 2010 Annual Report 33.4 Generation and distribution by countries a) Generation Chile Generation Argentina Brazil Colombia Peru Eliminations Total Generation 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ 581,919,944 225,658,998 17,551 1,073,419 150,897,103 103,058,701 24,443,037 76,771,135 ThCh$ 507,744,040 239,557,586 1,536,089 3,006,861 165,592,963 35,218,885 18,778,149 44,053,507 ThCh$ 96,454,500 18,626,377 — 2,254,847 53,364,468 20,203,295 1,750,879 254,634 ThCh$ ThCh$ 140,991,440 206,821,621 24,950,525 77,999,226 — 2,376,964 91,453,569 18,151,446 3,803,384 255,552 5,463,750 808,494 83,976,499 28,663,608 22,842 ThCh$ 306,278,528 172,292,830 — 714,402 80,628,076 32,909,657 22,134 9,887,202 19,711,429 — — — — — — Line of Business Country ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets Trade and other current receivables Accounts receivables from related companies Inventories Current tax assets Non-current assets classified as held for sale and discontinued operations NON-CURRENT ASSETS 3,989,974,642 3,993,095,099 290,297,224 249,643,009 614,488,434 676,395,960 1,203,713,202 1,228,326,578 730,619,632 785,935,394 (1,020,656,208) (1,080,086,895) 5,808,436,926 5,853,309,145 Other non-current financial assets Other non-current non-financial assets Non-current receivables Non-current account receivables from related companies 27,935,909 146,349 1,820,235 5,570,592 4,060,933 550,079 — 10,203,998 2,378,486 123,377,243 — Investment accounted for using equity method 1,591,313,598 1,598,184,456 Intangible assets other than goodwill Goodwill 9,638,098 12,636 8,007,620 13,692 — 10,805,636 62,959,282 — 3,297,780 246,210 2,780,777 — 19,997,184 11,129,694 37,063,260 10,950,060 972,900 — — 19,728,902 19,307,193 47,710,556 11,308,690 4,055,751 — 359,977 80,862 336,605 1,111,481 2,974,116 1,092,649 3,028,768 — 1,366 49,494,618 47,596,359 (1,063,491,176) (1,076,313,557) 591,361,178 584,075,094 (41,869,632) (36,752,514) 764,220 20,247,206 17,245,016 349,639 506,047 10,502,214 11,050,603 84,704,600 88,966,819 — 3,094,078 190,799 2,453,791 Property, plant and equipment, net 2,328,158,165 2,359,882,964 136,585,507 154,533,019 480,313,680 528,479,286 1,125,145,217 1,148,817,647 669,094,525 724,212,506 (55,987,643) 4,739,297,094 4,859,937,779 — — — — — — 25,379,060 20,016,869 14,391,808 15,020,305 54,061,656 45,805,582 54,235,182 58,141,132 818,659 2,152,412 4,571,894,586 4,500,839,139 386,751,724 390,634,449 821,310,055 982,674,488 1,358,710,485 1,485,140,372 780,949,989 840,278,401 (1,046,869,597) (1,094,838,159) 6,872,747,241 7,104,728,690 Chile Generation Argentina Brazil Colombia Peru Eliminations Total Generation 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ 151,057,167 143,720,453 182,940,166 180,531,897 ThCh$ ThCh$ 286,630,051 130,634,275 ThCh$ ThCh$ ThCh$ ThCh$ (418,133) (18,229,801) 1,143,674,971 1,133,935,750 410,734,005 619,035,609 5,535,951 7,342,281 321,074,432 186,356,762 42,162,603 91,104,281 1,536,089 9,669,785 396,480,263 120,472,782 40,201,722 64,023,295 — — 28,295,886 31,459,012 139,301,288 4,141,795 32,513,871 87,673,729 10,958,042 31,398,642 97,673,241 30,060,644 102,811,891 — — 148,886,365 141,136,300 ThCh$ 154,997,283 74,583,887 54,650 1,370,458 41,680,862 32,368,651 4,936,465 2,310 ThCh$ 256,813,794 160,939,980 1,554,560 55,169,859 32,526,869 6,622,526 ThCh$ 50,330,357 13,865,517 — 1,835,063 11,027,554 8,403,843 11,009,380 4,189,000 ThCh$ 54,343,007 21,294,688 — 2,016,998 11,073,405 8,979,580 10,975,529 2,807 (19,872,054) (6,341,335) (7,437,609) (7,313,655) ThCh$ ThCh$ ThCh$ ThCh$ (26,213,389) (14,751,264) 1,064,310,315 1,251,419,545 — — — — — — — — — — — — — — — — — — — — — — — — 87,860,103 86,644,371 80,508,993 22,520 2,703,107 2,286,637 356,958,221 339,291,052 142,669 — — — — — — — — — — — — — — — — — — — — — — — — ThCh$ 61,493,965 39,501,048 16,970,251 218,586 3,097,899 692,609 ThCh$ 71,313,577 38,334,893 20,319,427 262,056 2,790,365 8,066,064 1,013,572 1,540,772 57,137,900 28,526,181 2,477,464 26,684 3,081,031 2,086,648 26,604,320 37,298,367 (418,133) (18,229,801) 288,461,159 315,103,380 417,077,978 43,331,481 69,759,646 2,703,107 7,238,220 412,941,840 413,827,992 133,099,350 31,787,013 132,249,173 3,448,733 6,581,649 — — 424,071,893 406,377,244 319,926,947 168,684,276 358,335,279 200,034,511 (36,634,177) (36,367,467) 2,110,719,491 2,487,255,434 1,621,961,525 1,957,137,539 348,770 430,975 10,772,286 10,482,637 17,175,730 17,263,674 140,470,385 147,818,131 349,429,640 352,011,147 (36,634,177) (37,218,338) 13,548,800 1,163,160 67,038,203 27,147,186 30,430,977 24,082,594 46,997,128 58,292,397 26,576,882 22,157,747 850,871 715,122,213 715,122,213 142,906,410 149,784,385 930,434,204 930,434,204 259,460,190 138,029,796 399,529,077 399,529,077 164,297,758 23,141,069 410,629,545 (1,009,817,287) (1,040,240,891) 3,618,352,778 3,483,537,506 410,629,545 (1,009,817,287) (1,040,240,891) 3,618,352,778 3,483,537,506 164,297,758 (905,021,922) (1,081,547,390) 1,830,431,254 1,752,378,473 21,916,044 107,147,811 2,101,411 1,566,278,776 1,423,967,654 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Investment property Deferred tax assets TOTAL ASSETS Line of Business Country LIABILITIES AND EQUITY CURRENT LIABILITIES Other current financial liabilities Trade and other current payables Accounts payables to related companies Other short-term provisions Current tax liabilities Current provisions for employee benefits Other current non-financial liabilities ThCh$ 461,971,755 43,626,925 221,957,794 142,252,923 35,783,147 14,656,865 — 3,694,101 ThCh$ 625,965,349 189,810,430 279,642,827 70,031,934 25,922,905 57,461,125 367,702 2,728,426 79,751,906 28,920,947 28,374,815 2,553,179 11,212,408 — 243,912 61,487,491 30,014,055 29,317,861 1,163,928 21,511,319 — 225,799 Liabilities associated with non-current assets classified as held for sale and discontinued operations — — — — NON-CURRENT LIABILITIES 1,172,214,180 1,310,207,063 141,817,640 160,157,823 156,436,680 Other non-current financial liabilities 949,189,055 1,089,852,354 70,465,040 98,646,588 Other non-current payables Accounts payables to related companies Other-long term provisions Deferred tax liabilities 3,288,535 78,870 9,797,457 7,361,867 — — 76,986 36,634,177 37,218,338 9,246,395 — — 192,358,468 184,228,532 11,817,785 13,113,742 Non-current provisions for employee benefits Other non-current non-financial liabilities 9,971,456 7,530,339 9,313,208 10,127,721 — — 22,900,638 11,179,155 EQUITY 2,937,708,650 2,564,666,727 Equity Attributable to owners of parent 2,937,708,650 2,564,666,727 2,132,404,418 2,114,323,325 1,152,825,041 1,133,764,178 — 93,876,916 93,876,916 92,185,037 10,088,706 — 86,756,173 86,756,173 92,185,037 3,698,891 Issued capital Retained earnings Share premium Other reserves 64,363,398 63,002,748 37,105,842 1,874,736 16,593,444 — (2) — 94,332,102 10,117,596 1,084,290 46,119,690 4,783,002 — — 481,933,209 481,933,209 203,659,553 123,291,764 — 66,171,126 55,325,502 49,239,836 1,883,131 7,912,298 — 4 — 270,850,843 162,226,842 16,720,727 46,920,142 38,132,390 6,850,742 — — 531,291,748 531,291,748 203,659,553 124,457,334 (347,520,809) (683,420,776) (8,396,827) (9,127,755) 154,981,892 203,174,861 422,431,418 532,944,218 212,090,250 224,415,743 (211,943,176) 39,205,088 221,642,748 307,191,379 Non-controlling intersts — — — — — — TOTAL LIABILITIES AND EQUITY 4,571,894,585 4,500,839,139 386,751,724 390,634,449 821,310,055 982,674,488 1,358,710,485 1,485,140,372 780,949,989 840,278,401 (1,046,869,597) (1,094,838,159) 6,872,747,241 7,104,728,690 33.4 Generation and distribution by countries Contents a) Generation 1 Generation 2 Argentina Cover Resume Brazil 12-31-2010 12-31-2009 12-31-2010 ThCh$ 96,454,500 18,626,377 12-31-2009 12-31-2010 12-31-2009 Chairman’s Letter to Shareholders 4 ThCh$ ThCh$ ThCh$ 140,991,440 10 24,950,525 206,821,621 2010 Highlight 77,999,226 306,278,528 172,292,830 2,254,847 53,364,468 20,203,295 1,750,879 254,634 — 16 Main financial and operational — indicators 5,463,750 714,402 808,494 — 2,376,964 20 24 28 91,453,569 18,151,446 Identification of the Company 83,976,499 3,803,384 255,552 28,663,608 Ownership and control 9,887,202 Administration 22,842 80,628,076 32,909,657 22,134 19,711,429 Non-current assets classified as held for sale and discontinued operations — — — 38 Human resources — — — NON-CURRENT ASSETS 3,989,974,642 3,993,095,099 290,297,224 4,060,933 550,079 — 10,203,998 2,378,486 123,377,243 44 50 Stock Exchange Transactions 676,395,960 614,488,434 249,643,009 Dividends — — — 56 10,805,636 Investment and financing policy 2010 19,997,184 19,728,902 62,959,282 11,129,694 19,307,193 Investment accounted for using equity method 1,591,313,598 1,598,184,456 3,094,078 190,799 2,453,791 Property, plant and equipment, net 2,328,158,165 2,359,882,964 136,585,507 25,379,060 20,016,869 14,391,808 — 4,571,894,586 4,500,839,139 386,751,724 66 3,297,780 246,210 Investments and financial activities 10,950,060 972,900 11,308,690 4,055,751 78 2,780,777 Risk factors — — 84 154,533,019 480,313,680 528,479,286 Regulatory framework of the — — electricity industry 54,061,656 45,805,582 — 15,020,305 100 390,634,449 Description of the business by Country 821,310,055 982,674,488 — 60 The company´s businesses — 37,063,260 47,710,556 295 Financial Statements Consolidated Generation Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ 154,997,283 74,583,887 54,650 1,370,458 41,680,862 32,368,651 4,936,465 2,310 — ThCh$ 256,813,794 160,939,980 — 1,554,560 55,169,859 32,526,869 6,622,526 — — ThCh$ 50,330,357 13,865,517 — 1,835,063 11,027,554 8,403,843 11,009,380 4,189,000 ThCh$ 54,343,007 21,294,688 — 2,016,998 11,073,405 8,979,580 10,975,529 2,807 — — ThCh$ ThCh$ ThCh$ ThCh$ (26,213,389) (14,751,264) 1,064,310,315 1,251,419,545 — — — — — — (19,872,054) (6,341,335) (7,437,609) (7,313,655) — — — — — — 410,734,005 619,035,609 5,535,951 7,342,281 321,074,432 186,356,762 42,162,603 91,104,281 1,536,089 9,669,785 396,480,263 120,472,782 40,201,722 64,023,295 — — 1,203,713,202 1,228,326,578 730,619,632 785,935,394 (1,020,656,208) (1,080,086,895) 5,808,436,926 5,853,309,145 — 1,111,481 2,974,116 — — 1,092,649 3,028,768 — 1,366 — 359,977 — — — 80,862 336,605 — — — — — — — — 28,295,886 31,459,012 139,301,288 (41,869,632) (36,752,514) 764,220 4,141,795 32,513,871 87,673,729 10,958,042 49,494,618 47,596,359 (1,063,491,176) (1,076,313,557) 591,361,178 584,075,094 20,247,206 17,245,016 349,639 506,047 — — — — 10,502,214 11,050,603 84,704,600 88,966,819 31,398,642 97,673,241 30,060,644 102,811,891 1,125,145,217 1,148,817,647 669,094,525 724,212,506 — — — — 54,235,182 58,141,132 818,659 2,152,412 — — — (55,987,643) 4,739,297,094 4,859,937,779 — — — — 148,886,365 141,136,300 1,358,710,485 1,485,140,372 780,949,989 840,278,401 (1,046,869,597) (1,094,838,159) 6,872,747,241 7,104,728,690 Generation 128 Other businesses Generation Argentina Brazil Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 132 12-31-2009 Sustainability 12-31-2010 ThCh$ 136 ThCh$ ThCh$ Diagram of shareholdings ThCh$ 143,720,453 144 61,487,491 180,531,897 Consolidated relevant facts 66,171,126 182,940,166 64,363,398 154 30,014,055 29,317,861 1,163,928 180 21,511,319 63,002,748 55,325,502 49,239,836 37,105,842 Identification of subsidiaries and related companies 1,883,131 Declaration of responsibility 7,912,298 — — — Consolidated Financial Statements 16,593,444 1,874,736 (2) 4 225,799 Summarized Financial Information for Subsidiaries — — — 182 326 ThCh$ ThCh$ 286,630,051 130,634,275 87,860,103 86,644,371 80,508,993 22,520 57,137,900 28,526,181 2,477,464 26,684 26,604,320 37,298,367 2,703,107 2,286,637 3,081,031 2,086,648 ThCh$ 61,493,965 39,501,048 16,970,251 218,586 3,097,899 692,609 — ThCh$ 71,313,577 38,334,893 20,319,427 262,056 2,790,365 8,066,064 — 1,013,572 1,540,772 — — — — ThCh$ ThCh$ ThCh$ ThCh$ (418,133) (18,229,801) 1,143,674,971 1,133,935,750 — (418,133) — — — — — — — — 315,103,380 417,077,978 (18,229,801) 288,461,159 43,331,481 69,759,646 2,703,107 7,238,220 — — — — — 412,941,840 413,827,992 133,099,350 31,787,013 132,249,173 3,448,733 6,581,649 — — Line of Business Country ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets Trade and other current receivables Accounts receivables from related companies Inventories Current tax assets Other non-current financial assets Other non-current non-financial assets Non-current receivables Non-current account receivables from related companies Intangible assets other than goodwill Goodwill Investment property Deferred tax assets TOTAL ASSETS Line of Business Country LIABILITIES AND EQUITY CURRENT LIABILITIES Other current financial liabilities Trade and other current payables Accounts payables to related companies Other short-term provisions Current tax liabilities Current provisions for employee benefits Chile ThCh$ 581,919,944 225,658,998 17,551 1,073,419 150,897,103 103,058,701 24,443,037 76,771,135 ThCh$ 507,744,040 239,557,586 1,536,089 3,006,861 165,592,963 35,218,885 18,778,149 44,053,507 27,935,909 146,349 1,820,235 5,570,592 9,638,098 12,636 — 8,007,620 13,692 — — Chile ThCh$ 461,971,755 43,626,925 221,957,794 142,252,923 35,783,147 14,656,865 ThCh$ 625,965,349 189,810,430 279,642,827 70,031,934 25,922,905 57,461,125 367,702 2,728,426 Other current non-financial liabilities 3,694,101 — — — — 151,057,167 79,751,906 28,920,947 28,374,815 2,553,179 11,212,408 — 243,912 Liabilities associated with non-current assets classified as held for sale and discontinued operations — — NON-CURRENT LIABILITIES 1,172,214,180 1,310,207,063 141,817,640 160,157,823 156,436,680 Other non-current financial liabilities 949,189,055 1,089,852,354 70,465,040 98,646,588 Other non-current payables Accounts payables to related companies Other-long term provisions Deferred tax liabilities Non-current provisions for employee benefits Other non-current non-financial liabilities 7,361,867 — — 76,986 36,634,177 37,218,338 9,246,395 — — 192,358,468 184,228,532 11,817,785 13,113,742 9,313,208 10,127,721 — — 22,900,638 11,179,155 3,288,535 78,870 9,797,457 9,971,456 7,530,339 Equity Attributable to owners of parent 2,937,708,650 2,564,666,727 EQUITY Issued capital Retained earnings Share premium Other reserves 2,937,708,650 2,564,666,727 2,132,404,418 2,114,323,325 1,152,825,041 1,133,764,178 93,876,916 93,876,916 92,185,037 10,088,706 — 86,756,173 86,756,173 92,185,037 3,698,891 (347,520,809) (683,420,776) (8,396,827) (9,127,755) 94,332,102 10,117,596 1,084,290 46,119,690 4,783,002 — — 481,933,209 481,933,209 203,659,553 123,291,764 — pages control 154,981,892 270,850,843 162,226,842 16,720,727 46,920,142 38,132,390 6,850,742 — — 531,291,748 531,291,748 203,659,553 124,457,334 203,174,861 356,958,221 339,291,052 424,071,893 406,377,244 319,926,947 168,684,276 358,335,279 200,034,511 142,669 — 348,770 — — — — — — — 430,975 10,772,286 10,482,637 — 140,470,385 147,818,131 17,175,730 17,263,674 — — — — — — (36,634,177) (36,367,467) 2,110,719,491 2,487,255,434 — — — — (36,634,177) (37,218,338) — — — — — — — 850,871 1,621,961,525 1,957,137,539 13,548,800 1,163,160 67,038,203 24,082,594 46,997,128 58,292,397 349,429,640 352,011,147 27,147,186 30,430,977 26,576,882 22,157,747 715,122,213 715,122,213 142,906,410 149,784,385 — 930,434,204 930,434,204 259,460,190 138,029,796 399,529,077 399,529,077 164,297,758 23,141,069 — 410,629,545 (1,009,817,287) (1,040,240,891) 3,618,352,778 3,483,537,506 410,629,545 (1,009,817,287) (1,040,240,891) 3,618,352,778 3,483,537,506 164,297,758 (905,021,922) (1,081,547,390) 1,830,431,254 1,752,378,473 21,916,044 107,147,811 2,101,411 1,566,278,776 1,423,967,654 — — — 422,431,418 532,944,218 212,090,250 224,415,743 (211,943,176) 39,205,088 221,642,748 307,191,379 Non-controlling intersts — — — — — — — — — — — — — TOTAL LIABILITIES AND EQUITY 4,571,894,585 4,500,839,139 386,751,724 390,634,449 821,310,055 982,674,488 1,358,710,485 1,485,140,372 780,949,989 840,278,401 (1,046,869,597) (1,094,838,159) 6,872,747,241 7,104,728,690 previously next 296 Enersis 2010 Annual Report Line of Business Country Chile Argentina Brazil Colombia Generation Generation STATEMENT OF COMPREHENSIVE 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,345,370,795 1,373,230,894 1,609,158,073 358,089,711 303,112,035 291,376,414 359,211,026 318,321,960 322,895,567 507,515,749 500,964,413 401,470,271 1,315,430,658 1,367,051,056 1,607,534,965 351,429,303 299,912,430 291,207,849 351,386,168 314,667,204 322,415,815 507,137,563 500,829,922 401,257,389 1,286,727,887 1,349,609,938 1,551,715,509 345,706,935 293,388,675 284,077,914 258,243,192 224,502,356 256,787,667 506,194,881 500,175,971 400,576,991 15,262,308 13,440,463 29,940,137 6,009,988 11,431,130 6,179,838 14,564,928 41,254,528 1,623,108 — 5,722,368 6,660,408 — 6,523,755 3,199,605 — 7,129,935 168,565 — — — 93,142,976 90,164,848 65,628,148 7,824,858 3,654,756 479,752 — 942,682 378,186 — 653,951 134,491 — 680,398 212,882 RAW MATERIALS AND CONSUMABLE USED (666,388,433) (511,521,900) (871,056,362) (267,824,397) (208,539,466) (206,239,901) (109,560,464) (82,267,885) (105,146,536) (176,663,972) (184,067,482) (128,688,480) Energy purchases Final consumption Transport expenses (139,373,210) (52,310,897) (134,937,913) (9,296,132) (9,375,553) (12,067,418) (27,257,255) (32,746,221) (67,914,740) (72,764,711) (91,955,452) (47,123,986) (318,637,144) (345,812,585) (606,484,644) (242,853,893) (180,160,003) (179,081,276) (37,260,897) 6,826,322 (1,475,184) (27,780,401) (20,572,023) (10,740,338) (161,189,862) (107,314,035) (122,578,858) (3,636,524) (5,363,800) (4,689,649) (5,098,408) (4,851,240) (4,644,568) (50,431,204) (46,663,960) (45,787,546) Other variable supplies and services (47,188,217) (6,084,383) (7,054,947) (12,037,848) (13,640,110) (10,401,558) (39,943,904) (51,496,746) (31,112,044) (25,687,656) (24,876,047) (25,036,610) CONTRIBUTION MARGIN 678,982,362 861,708,994 738,101,711 90,265,314 94,572,569 85,136,513 249,650,562 236,054,075 217,749,031 330,851,777 316,896,931 272,781,791 Other work performed by entity and capitalized — — — — — — — — — 688,024 517,847 330,981 Employee benefits expense Other expenses (31,556,880) (29,654,313) (25,162,701) (14,457,685) (11,009,053) (9,040,946) (11,622,887) (11,417,189) (9,425,455) (12,219,664) (10,959,497) (7,918,996) (50,276,801) (51,829,666) (49,242,289) (11,003,847) (12,461,750) (11,769,971) (11,621,153) (14,560,167) (13,389,523) (21,201,983) (19,127,781) (17,815,369) GROSS OPERATING RESULT 597,148,681 780,225,015 663,696,721 64,803,782 71,101,766 64,325,596 226,406,522 210,076,719 194,934,053 298,118,154 287,327,500 247,378,407 Depreciation, amortization and impairment losses (84,379,198) (140,184,964) (95,960,199) (18,093,428) (23,365,251) (21,474,934) (67,594,458) (32,305,072) (31,315,802) (36,580,792) (36,516,121) (30,560,196) OPERATING INCOME 512,769,483 640,040,051 567,736,522 46,710,354 47,736,515 42,850,662 158,812,064 177,771,647 163,618,251 261,537,362 250,811,379 216,818,211 FINANCIAL RESULT Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses (62,503,182) (89,797,956) (103,738,107) (9,499,131) (33,772,058) (32,325,027) (20,035,955) (25,088,330) (39,128,021) (35,915,163) (42,513,775) (43,391,504) 4,880,575 9,495,037 16,185,633 1,504,063 2,507,846 3,255,124 19,217,791 18,523,222 32,285,675 3,440,657 11,968,380 5,364,390 (70,389,036) (90,931,585) (120,459,878) (18,112,699) (19,226,132) (16,877,948) (36,376,407) (52,183,133) (53,210,680) (39,278,398) (54,646,985) (48,548,045) (2,885,747) 9,009,669 (16,686,361) — — — 5,891,026 (17,371,077) 17,222,499 7,109,505 (17,053,772) (18,702,203) 12,258,950 28,981,945 47,547,505 19,544,626 2,092,050 1,443,093 (6,367,924) (46,353,022) (30,325,006) (12,435,121) (19,145,822) (20,145,296) (2,877,339) 8,571,581 (18,203,016) 27,014,846 39,823,108 12,692,663 (29,892,185) (31,251,527) (30,895,679) — (77,422) 188,272 (265,694) Share of the profit (loss) of associates accounted for using the equity method 811,855 (8,074,214) 2,567,160 Negative consolidation difference Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment — 234,251 24,894 — (20,722) 34,186 — — (336,047) — — — — 372,988 — — — — — — — NET INCOME BEFORE TAX 451,337,301 542,181,345 466,229,528 37,211,223 14,337,445 10,525,635 138,799,278 152,708,822 124,487,817 226,749,931 208,346,540 173,846,428 Income tax (70,628,343) (76,281,986) (131,655,968) (13,781,110) (5,927,003) (4,381,628) (15,507,514) (28,251,488) (14,003,436) (76,652,558) (69,788,953) (57,450,682) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 380,708,958 465,899,359 334,573,560 23,430,113 8,410,442 6,144,007 123,291,764 124,457,334 110,484,381 150,097,373 138,557,587 116,395,746 Net income from discontinued operations — — — — — — NET INCOME 380,708,958 465,899,359 334,573,560 23,430,113 8,410,442 6,144,007 123,291,764 124,457,334 110,484,381 150,097,373 138,557,587 116,395,746 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 380,708,958 465,899,359 334,573,560 23,430,113 8,410,442 6,144,007 123,291,764 124,457,334 110,484,381 150,097,373 138,557,587 116,395,746 — — — — — — — — — — — — 23,169 25,505 (2,413) 1,127,732 — — — — — — — — — — — — — — — — — — — — — — 164,830 263,663 (98,833) — — (34,772) 83,708 — (207,849) 128,111 (335,960) — — 252,022 167,699 — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 297 Financial Statements Consolidated 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 Brazil Colombia Generation 359,211,026 318,321,960 322,895,567 507,515,749 500,964,413 401,470,271 351,386,168 314,667,204 322,415,815 507,137,563 500,829,922 401,257,389 258,243,192 224,502,356 256,787,667 506,194,881 500,175,971 400,576,991 — — — 93,142,976 90,164,848 65,628,148 7,824,858 3,654,756 479,752 — 942,682 378,186 — 653,951 134,491 — 680,398 212,882 (109,560,464) (82,267,885) (105,146,536) (176,663,972) (184,067,482) (128,688,480) (27,257,255) (32,746,221) (67,914,740) (72,764,711) (91,955,452) (47,123,986) (37,260,897) 6,826,322 (1,475,184) (27,780,401) (20,572,023) (10,740,338) (5,098,408) (4,851,240) (4,644,568) (50,431,204) (46,663,960) (45,787,546) (39,943,904) (51,496,746) (31,112,044) (25,687,656) (24,876,047) (25,036,610) Generation Contents 12-31-2009 12-31-2010 Argentina 1,551,715,509 2 345,706,935 Resume 358,089,711 Cover 351,429,303 303,112,035 291,376,414 299,912,430 291,207,849 293,388,675 284,077,914 — — Chairman’s Letter to Shareholders 5,722,368 6,523,755 7,129,935 — 1,623,108 10 6,660,408 2010 Highlight 3,199,605 168,565 (267,824,397) Main financial and operational (206,239,901) (208,539,466) indicators (9,296,132) (9,375,553) (12,067,418) (242,853,893) (180,160,003) (179,081,276) Identification of the Company (3,636,524) (5,363,800) (4,689,649) (12,037,848) Ownership and control (13,640,110) (10,401,558) 678,982,362 861,708,994 28 738,101,711 Administration 90,265,314 94,572,569 85,136,513 249,650,562 236,054,075 217,749,031 330,851,777 316,896,931 272,781,791 Human resources — — — — — — 688,024 517,847 330,981 Stock Exchange Transactions (14,457,685) (11,009,053) (11,003,847) (12,461,750) Dividends (11,769,971) (9,040,946) Investment and financing policy 2010 64,803,782 64,325,596 71,101,766 The company´s businesses (18,093,428) (23,365,251) (21,474,934) Investments and financial activities 46,710,354 Risk factors 42,850,662 47,736,515 (32,325,027) (9,499,131) (33,772,058) Regulatory framework of the 1,504,063 3,255,124 2,507,846 electricity industry (18,112,699) (19,226,132) (16,877,948) Description of the business by — 7,109,505 (18,702,203) (17,053,772) Country 19,544,626 Other businesses (12,435,121) (20,145,296) (19,145,822) 1,443,093 2,092,050 — — Sustainability — 372,988 Diagram of shareholdings — — Consolidated relevant facts — — — — — — — — Identification of subsidiaries and 37,211,223 14,337,445 related companies 10,525,635 Declaration of responsibility (13,781,110) (5,927,003) (4,381,628) Consolidated Financial Statements 23,430,113 Summarized Financial Information — 23,430,113 for Subsidiaries 6,144,007 8,410,442 8,410,442 6,144,007 — — (11,622,887) (11,417,189) (9,425,455) (12,219,664) (10,959,497) (7,918,996) (11,621,153) (14,560,167) (13,389,523) (21,201,983) (19,127,781) (17,815,369) 226,406,522 210,076,719 194,934,053 298,118,154 287,327,500 247,378,407 (67,594,458) (32,305,072) (31,315,802) (36,580,792) (36,516,121) (30,560,196) 158,812,064 177,771,647 163,618,251 261,537,362 250,811,379 216,818,211 (20,035,955) (25,088,330) (39,128,021) (35,915,163) (42,513,775) (43,391,504) 19,217,791 18,523,222 32,285,675 3,440,657 11,968,380 5,364,390 (36,376,407) (52,183,133) (53,210,680) (39,278,398) (54,646,985) (48,548,045) — — — (2,877,339) 8,571,581 (18,203,016) 27,014,846 39,823,108 12,692,663 (29,892,185) (31,251,527) (30,895,679) — — — — — — — — — — (77,422) 188,272 (265,694) — — — 23,169 25,505 (2,413) 1,127,732 — 164,830 263,663 (98,833) — — (34,772) 83,708 — (207,849) 128,111 (335,960) — — 252,022 167,699 138,799,278 152,708,822 124,487,817 226,749,931 208,346,540 173,846,428 (15,507,514) (28,251,488) (14,003,436) (76,652,558) (69,788,953) (57,450,682) 123,291,764 124,457,334 110,484,381 150,097,373 138,557,587 116,395,746 — — — — — — 123,291,764 124,457,334 110,484,381 150,097,373 138,557,587 116,395,746 1 4 14,564,928 41,254,528 1,607,534,965 1,609,158,073 1,345,370,795 1,373,230,894 1,315,430,658 1,367,051,056 1,286,727,887 1,349,609,938 15,262,308 13,440,463 29,940,137 6,009,988 11,431,130 6,179,838 STATEMENT OF COMPREHENSIVE 12-31-2010 12-31-2009 12-31-2008 Chile (666,388,433) (511,521,900) (139,373,210) (52,310,897) (318,637,144) (345,812,585) (161,189,862) (107,314,035) (47,188,217) (6,084,383) 16 (871,056,362) (134,937,913) (606,484,644) 20 (122,578,858) (7,054,947) 24 Line of Business Country INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income RAW MATERIALS AND CONSUMABLE USED Energy purchases Final consumption Transport expenses Other variable supplies and services CONTRIBUTION MARGIN — — — Other work performed by entity and capitalized Employee benefits expense Other expenses — — (31,556,880) (29,654,313) (50,276,801) (51,829,666) GROSS OPERATING RESULT 597,148,681 780,225,015 Depreciation, amortization and impairment losses (84,379,198) (140,184,964) OPERATING INCOME 512,769,483 640,040,051 FINANCIAL RESULT Financial income Financial costs Gains Losses Gain (loss) for indexed assets and liabilities Foreign currency exchange differences (62,503,182) (89,797,956) 4,880,575 9,495,037 (70,389,036) (90,931,585) (2,885,747) 9,009,669 5,891,026 (17,371,077) 12,258,950 28,981,945 (6,367,924) (46,353,022) Share of the profit (loss) of associates accounted for using the equity method 811,855 (8,074,214) Negative consolidation difference Gains (losses) from other investments Gains (losses) on sale of property, plant and equipment — 234,251 24,894 — (20,722) 34,186 NET INCOME BEFORE TAX 451,337,301 542,181,345 Income tax (70,628,343) (76,281,986) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 380,708,958 465,899,359 Net income from discontinued operations NET INCOME 380,708,958 465,899,359 — 38 — 44 (25,162,701) (49,242,289) 50 56 663,696,721 60 (95,960,199) 66 567,736,522 78 (103,738,107) 84 16,185,633 (120,459,878) 100 (16,686,361) 17,222,499 47,547,505 128 (30,325,006) 132 2,567,160 136 — — 144 (336,047) 154 466,229,528 180 (131,655,968) 182 334,573,560 326 — 334,573,560 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 380,708,958 465,899,359 334,573,560 23,430,113 8,410,442 6,144,007 123,291,764 124,457,334 110,484,381 150,097,373 138,557,587 116,395,746 — — — — — — — — — — — — — — — — — — — — — — pages control previously next 298 Enersis 2010 Annual Report Line of Business Country Peru Eliminations Generation STATEMENT OF COMPREHENSIVE 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income ThCh$ ThCh$ ThCh$ 211,263,618 213,624,981 208,496,821 210,800,064 210,576,947 205,662,615 202,614,778 202,852,442 204,588,804 — 8,185,286 463,554 — 7,724,505 3,048,034 — 1,073,811 2,834,206 RAW MATERIALS AND CONSUMABLE USED (80,240,613) (72,013,860) (98,453,175) Energy purchases Final consumption Transport expenses Other variable supplies and services (15,503,346) (10,670,605) (30,303,095) (45,498,261) (40,516,143) (49,625,820) (12,778,594) (13,693,435) (14,257,476) (6,460,412) (7,133,677) (4,266,784) ThCh$ (857,568) (857,568) — — ThCh$ (896,628) (896,628) — — (857,568) (896,628) — — — — — — — — — — — — CONTRIBUTION MARGIN 131,023,005 141,611,121 110,043,646 (857,568) (896,628) Other work performed by entity and capitalized — 214,054 169,334 (6,161,429) (6,537,925) (5,650,625) — — — — Employee benefits expense Other expenses (16,333,294) (21,025,750) (16,383,207) 857,568 896,628 764,241 ThCh$ — — — — — — — — — — — — — — GROSS OPERATING RESULT 108,528,282 114,261,500 88,179,148 Depreciation, amortization and impairment losses (38,208,869) (38,212,838) (36,233,239) OPERATING INCOME 70,319,413 76,048,662 51,945,909 — — — — — — 764,241 — 764,241 FINANCIAL RESULT Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments (14,738,535) (23,600,707) (15,329,863) 3,473,802 28,459,148 (9,794,433) 455,981 1,341,180 248,487 (1,621,289) (2,994,499) (3,252,505) (15,505,355) (25,576,058) (15,578,350) 1,621,289 2,994,499 3,252,505 — 310,839 805,044 (494,205) — — — — 634,171 635,100 (929) 9,935,172 — — — — — — — — 764,314 (103,521) — — — 3,473,802 28,459,148 (9,794,433) (476,265) — (13,756,340) 3,950,067 28,459,148 3,961,907 — — — — — — — — — — — — Gains (losses) on sale of property, plant and equipment 455,621 (78,969) NET INCOME BEFORE TAX 56,036,499 62,304,158 37,276,839 3,473,802 28,459,148 (9,030,192) 913,608,034 1,008,337,458 803,336,055 Income tax (20,936,925) (21,497,520) (14,500,266) — — — (197,506,450) (201,746,950) (221,991,980) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 35,099,574 40,806,638 22,776,573 3,473,802 28,459,148 (9,030,192) 716,101,584 806,590,508 581,344,075 Net income from discontinued operations — — — — — — NET INCOME 35,099,574 40,806,638 22,776,573 3,473,802 28,459,148 (9,030,192) 716,101,584 806,590,508 581,344,075 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 35,099,574 40,806,638 22,776,573 3,473,802 28,459,148 (9,030,192) 716,101,584 806,590,508 581,344,075 — — — — — — — — — — — — — — — — — — — — — Generation Total 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 2,780,593,331 2,708,357,655 2,833,397,146 2,735,326,188 2,692,140,931 2,828,078,633 2,599,487,673 2,570,529,382 2,697,746,885 15,262,308 6,009,988 14,564,928 120,576,207 115,601,561 115,766,820 45,267,143 16,216,724 5,318,513 (1,300,677,879) (1,058,410,593) (1,409,584,454) (264,194,654) (197,058,728) (292,347,152) (672,030,596) (580,234,432) (847,407,262) (233,134,592) (177,886,470) (191,958,097) (131,318,037) (103,230,963) (77,871,943) 1,479,915,452 1,649,947,062 1,423,812,692 688,024 731,901 500,315 (76,018,545) (69,577,977) (57,198,723) (109,579,510) (118,108,486) (107,836,118) 1,295,005,421 1,462,992,500 1,259,278,166 (244,856,745) (270,584,246) (215,544,370) 1,050,148,676 1,192,408,254 1,043,733,796 (139,218,164) (186,313,678) (243,706,955) 27,877,778 40,841,166 54,086,804 (178,040,606) (239,569,394) (251,422,396) (2,885,747) 13,830,411 59,335,473 9,009,669 3,404,881 (16,686,361) (29,685,002) 71,795,866 48,055,032 (45,505,062) (68,390,985) (77,740,034) 811,855 2,233,946 2,567,160 — 234,251 1,631,415 — (55,494) 64,430 — 1,016,336 (274,282) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 299 Financial Statements Consolidated Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Generation Total 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 2,780,593,331 2,708,357,655 2,833,397,146 2,735,326,188 2,692,140,931 2,828,078,633 2,599,487,673 2,570,529,382 2,697,746,885 15,262,308 6,009,988 14,564,928 120,576,207 115,601,561 115,766,820 45,267,143 16,216,724 5,318,513 (1,300,677,879) (1,058,410,593) (1,409,584,454) (264,194,654) (197,058,728) (292,347,152) (672,030,596) (580,234,432) (847,407,262) (233,134,592) (177,886,470) (191,958,097) (131,318,037) (103,230,963) (77,871,943) 1,479,915,452 1,649,947,062 1,423,812,692 688,024 731,901 500,315 (76,018,545) (69,577,977) (57,198,723) (109,579,510) (118,108,486) (107,836,118) Investment and financing policy 2010 1,295,005,421 1,462,992,500 1,259,278,166 (244,856,745) (270,584,246) (215,544,370) 1,050,148,676 1,192,408,254 1,043,733,796 (139,218,164) (186,313,678) (243,706,955) 27,877,778 40,841,166 54,086,804 (178,040,606) (239,569,394) (251,422,396) (2,885,747) 13,830,411 59,335,473 9,009,669 3,404,881 (16,686,361) (29,685,002) 71,795,866 48,055,032 (45,505,062) (68,390,985) (77,740,034) 811,855 2,233,946 2,567,160 — 234,251 1,631,415 — (55,494) 64,430 — 1,016,336 (274,282) 913,608,034 1,008,337,458 803,336,055 (197,506,450) (201,746,950) (221,991,980) 716,101,584 806,590,508 581,344,075 — — — 716,101,584 806,590,508 581,344,075 716,101,584 806,590,508 581,344,075 — — — — — — The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 300 Enersis 2010 Annual Report b) Distribution Line of Business Country ASSETS CURRENT ASSETS Cash and cash equivalents Other current financial assets Other current non-financial assets Trade and other current receivables Accounts receivables from related companies Inventories Current tax assets Chile Distribution Argentina Brazil Colombia Peru Eliminations Total Distribution 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 308,282,584 201,194,118 110,182,639 93,131,605 406,074,360 533,785,021 106,822,082 17,933,851 45,328,399 28,163,140 53,589,588 145,450,780 — — 1,422,618 3,508,628 2,271,690 1,199,090 — — — 4,765,940 22,986,384 12,292,485 185,002,586 169,492,117 52,358,414 55,933,943 326,401,464 358,989,786 93,045,071 44,301,959 41,842,319 20,488 690,037,361 719,323,724 6,640,662 2,136,612 6,258,024 1,726,640 1,370,198 7,162,684 379,832 2,261,326 6,383,888 208,445 3,492,452 209,526 1,307,070 465,212 1,489,962 567,685 12,860,328 15,096,796 1,874,539 5,826,183 340,135 4,153,152 11,171 307,839 3,938,751 (698,797) (510,563) 87,128,995 ThCh$ ThCh$ 255,980,239 333,863,028 76,385,965 232,157,724 ThCh$ 76,808,391 26,792,493 — ThCh$ 54,915,535 7,898,726 — 959,511 1,209,481 927,900 9,868 371,248 93,252,938 80,257,637 5,702,583 ThCh$ ThCh$ ThCh$ ThCh$ (698,797) (490,075) 1,156,629,416 1,216,399,232 Non-current assets classified as held for sale and discontinued operations — — — — — — NON-CURRENT ASSETS Other non-current financial assets Other non-current non-financial assets Non-current receivables Non-current account receivables from related companies Investment accounted for using equity method Intangible assets other than goodwill 1,153,691,583 1,194,415,123 320,842,717 320,067,184 2,026,122,046 1,879,491,174 885,875,047 882,909,627 356,670,398 363,706,049 25,582 550,802 24,920 491,799 7,046,330 9,640,749 — — 546,854,493 578,500,084 — 693,473 495,607 — 30,151 — 3,352,698 786,539 69,291,066 7,846,841 165,992,532 — 324,864 — 59,012,257 82,241,816 210,855 33,228 136,771,841 105,045,877 8,267 1,825,059 1,647,417 874 31,400 5,847,271 5,864,754 315,381 18,189,812 16,104,398 3,203,663 2,903,815 1,361,527,584 1,353,856,678 20,239,478 17,026,418 2,274,071 2,924,376 Goodwill 2,240,478 2,240,478 — — 120,673,559 124,648,965 7,348,467 7,497,542 Property, plant and equipment, net 561,616,684 544,647,596 298,970,983 294,838,019 20,391,138 14,398,121 783,716,639 783,737,988 352,571,268 358,818,875 Investment property Deferred tax assets TOTAL ASSETS Line of Business Country LIABILITIES AND EQUITY CURRENT LIABILITIES Other current financial liabilities Trade and other current payables Accounts payables to related companies Other short-term provisions Current tax liabilities Current provisions for employee benefits Other current non-financial liabilities Liabilities associated with non-current assets classified as held for sale — — — — — — 17,167,402 42,765,099 17,448,840 13,658,742 147,796,764 140,076,605 68,714,925 68,750,651 1,461,974,167 1,395,609,241 431,025,356 413,198,789 2,432,196,406 2,413,276,195 1,141,855,286 1,216,772,655 433,478,789 418,621,584 (698,797) (490,075) 5,899,831,207 5,856,988,389 Chile Distribution Argentina Brazil Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 171,286,364 147,471,992 226,189,613 170,584,075 614,669,478 456,935,441 2,668 115,477 11,553,138 10,583,980 200,661,330 134,048,604 ThCh$ ThCh$ 269,331,660 235,651,234 ThCh$ ThCh$ ThCh$ ThCh$ (698,797) (490,075) 1,359,242,371 1,071,289,696 64,754,414 159,903,785 115,839,550 283,143,792 202,959,678 59,694,812 2,212,567 2,451,028 91,625,748 104,779,978 (698,797) (490,075) 202,751,731 212,446,858 86,947,700 63,921,986 6,792,229 10,039,050 11,275,178 1,284,614 2,298,117 1,239,422 3,131,913 7,260,776 28,780,910 21,138,602 6,153,804 7,526,565 591,831 6,040,230 28,903,026 119,702 — 6,106,634 7,005,679 — — — — — — — 15,620,817 14,410,983 4,181,778 2,034,868 2,961,707 2,074,161 1,842,296 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Distribution ThCh$ 78,464,053 22,404,747 29,240,966 11,517,749 8,275,793 4,950,637 ThCh$ 61,137,029 17,669,038 17,175,620 11,448,425 8,672,619 4,329,031 84,153,139 90,054,931 34,562,690 3,463,182 24,090,490 20,455,585 50,242,207 155,442,693 34,172,478 1,476,148 813,663 3,093,981 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 308,918,527 431,604,221 2,281,558 — 27,188,821 22,454,464 15,560,743 25,513,411 4,072,112 16,117,546 22,827,165 — — 4,743,201,791 4,640,589,157 5,211,606 1,673,211 70,535,341 60,321,995 179,381,740 105,909,541 324,864 210,855 683,656,485 683,579,189 1,405,434,608 1,392,815,685 130,262,504 134,386,985 2,017,266,712 1,996,440,599 — — 251,127,931 265,251,097 284,864,090 246,570,238 714,678,936 490,784,193 51,478,884 75,509,768 2,690,108 46,641,813 49,105,703 1,359,124 27,268,854 24,381,767 — — 831,035,287 1,021,187,352 23,380,657 44,618,834 147,930,726 181,853,843 158,484,126 191,993,937 200,477,944 213,169,128 181,236,136 148,308,890 3,340,793 3,688,766 2,994,703,167 2,980,877,943 2,994,703,167 2,980,877,943 1,122,271,982 1,122,271,981 1,339,970,908 1,310,880,528 — — — — Consolidated Financial Statements and discontinued operations Summarized Financial Information for Subsidiaries pages control previously next NON-CURRENT LIABILITIES Other non-current financial liabilities Other non-current payables 196,967,970 219,826,811 — — — 450 Accounts payables to related companies 146,500,704 170,085,874 40,238,648 17,330,002 325,183 — 54,242,098 711,221,766 923,842,504 32,705,156 388,961,190 562,375,940 478,409 23,055,474 — 1,430,022 43,418,613 11,767,969 Other-long term provisions Deferred tax liabilities Non-current provisions for employee benefits Other non-current non-financial liabilities 7,367,197 24,272,266 15,763,453 3,064,350 6,815,239 11,451,261 7,703,251 137,660,556 174,996,080 24,179,982 15,292,150 3,453,116 9,731,475 1,400,727 11,424,565 57,124,740 1,915,904 102,989,784 — 14,813 — 62,496,895 68,787,007 — 277,085,017 276,335,677 147,659,078 149,770,579 721,362 — 2,295,015 51,497,425 62,313,829 1,849,383 52,263,418 61,082,172 155,729 184,352 57,086,045 63,570,261 — 276,443 220,837 392,279,990 393,163,308 205,177,295 213,746,029 1,545,885,669 1,804,820,750 EQUITY 1,093,719,833 1,028,310,438 164,597,095 188,372,616 1,106,305,162 1,032,498,250 480,243,636 587,958,113 149,837,441 143,738,526 Equity Attributable to owners of parent 1,093,719,833 1,028,310,438 164,597,095 188,372,616 1,106,305,162 1,032,498,250 480,243,636 587,958,113 149,837,441 143,738,526 Issued capital Retained earnings Share premium Other reserves 368,494,984 368,494,984 135,477,599 135,477,598 581,523,764 581,523,764 998,431,191 953,527,838 66,482,841 34,889,191 126,556,216 171,869,360 — — — 3,934,010 3,934,010 123,200,147 126,241,783 32,841,625 25,300,513 32,841,625 24,352,356 (273,206,342) (293,712,384) (37,363,345) 18,005,827 398,225,182 279,105,126 353,109,479 457,782,320 91,695,303 86,544,545 532,460,277 547,725,434 Non-Controlling Interests — — — — — — TOTAL LIABILITIES AND EQUITY 1,461,974,167 1,395,609,241 431,025,356 413,198,789 2,432,196,406 2,413,276,195 1,141,855,286 1,216,772,655 433,478,789 418,621,584 (698,797) (490,075) 5,899,831,207 5,856,988,389 b) Distribution Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 301 Financial Statements Consolidated Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Distribution ThCh$ ThCh$ 255,980,239 333,863,028 76,385,965 232,157,724 — ThCh$ 76,808,391 26,792,493 — ThCh$ 54,915,535 7,898,726 — 9,868 371,248 93,252,938 80,257,637 5,702,583 — — 959,511 1,209,481 927,900 93,045,071 44,301,959 41,842,319 1,874,539 5,826,183 — — 340,135 4,153,152 11,171 — 307,839 3,938,751 — — 885,875,047 882,909,627 356,670,398 363,706,049 8,267 — 874 31,400 5,847,271 5,864,754 — — — — 1,825,059 1,647,417 — — — — — 315,381 — — 20,239,478 17,026,418 2,274,071 2,924,376 7,348,467 7,497,542 — — 783,716,639 783,737,988 352,571,268 358,818,875 — — 68,714,925 68,750,651 — — — — ThCh$ ThCh$ ThCh$ ThCh$ (698,797) (490,075) 1,156,629,416 1,216,399,232 — — — — — — — 308,918,527 431,604,221 2,281,558 — 27,188,821 22,454,464 20,488 690,037,361 719,323,724 (698,797) (510,563) 87,128,995 15,560,743 25,513,411 4,072,112 16,117,546 22,827,165 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 4,743,201,791 4,640,589,157 5,211,606 1,673,211 70,535,341 60,321,995 179,381,740 105,909,541 324,864 210,855 683,656,485 683,579,189 1,405,434,608 1,392,815,685 130,262,504 134,386,985 2,017,266,712 1,996,440,599 — — 251,127,931 265,251,097 1,141,855,286 1,216,772,655 433,478,789 418,621,584 (698,797) (490,075) 5,899,831,207 5,856,988,389 Colombia Peru Eliminations Total 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 12-31-2010 12-31-2009 Distribution ThCh$ ThCh$ 269,331,660 235,651,234 50,242,207 155,442,693 34,172,478 1,476,148 84,153,139 90,054,931 34,562,690 3,463,182 24,090,490 20,455,585 813,663 3,093,981 — ThCh$ 78,464,053 22,404,747 29,240,966 11,517,749 8,275,793 4,950,637 — ThCh$ 61,137,029 17,669,038 17,175,620 11,448,425 8,672,619 4,329,031 — 2,961,707 2,074,161 1,842,296 — — — — 392,279,990 393,163,308 205,177,295 213,746,029 277,085,017 276,335,677 147,659,078 149,770,579 — — 1,849,383 52,263,418 61,082,172 — 721,362 — 2,295,015 51,497,425 62,313,829 — — — — 155,729 184,352 57,086,045 63,570,261 — — — 276,443 220,837 480,243,636 587,958,113 149,837,441 143,738,526 480,243,636 587,958,113 149,837,441 143,738,526 3,934,010 3,934,010 123,200,147 126,241,783 — 32,841,625 25,300,513 — 32,841,625 24,352,356 353,109,479 457,782,320 91,695,303 86,544,545 — — — — ThCh$ ThCh$ ThCh$ ThCh$ (698,797) (490,075) 1,359,242,371 1,071,289,696 — — — — 284,864,090 246,570,238 714,678,936 490,784,193 (698,797) (490,075) 202,751,731 212,446,858 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 51,478,884 75,509,768 2,690,108 46,641,813 49,105,703 1,359,124 27,268,854 24,381,767 — — 1,545,885,669 1,804,820,750 831,035,287 1,021,187,352 23,380,657 44,618,834 147,930,726 181,853,843 158,484,126 191,993,937 200,477,944 213,169,128 181,236,136 148,308,890 3,340,793 3,688,766 2,994,703,167 2,980,877,943 2,994,703,167 2,980,877,943 1,122,271,982 1,122,271,981 1,339,970,908 1,310,880,528 — — 532,460,277 547,725,434 — — pages control 1,141,855,286 1,216,772,655 433,478,789 418,621,584 (698,797) (490,075) 5,899,831,207 5,856,988,389 previously next 302 Enersis 2010 Annual Report Line of Business Country Chile Argentina Brazil Colombia Distribution Distribution STATEMENT OF COMPREHENSIVE 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,016,997,495 1,089,515,077 1,083,673,527 295,538,314 327,087,549 334,163,433 1,987,041,550 1,780,335,633 1,737,351,383 785,889,588 741,167,816 661,474,041 1,003,001,004 1,066,239,632 1,029,231,804 287,867,341 318,293,459 326,185,382 1,717,875,184 1,536,790,709 1,417,506,289 757,935,491 684,930,692 608,621,511 900,798,434 1,007,550,579 957,408,717 268,829,105 297,441,695 304,372,978 1,648,205,624 1,473,905,923 1,366,406,783 657,681,311 585,665,734 495,404,370 7,166,927 95,035,643 13,996,491 10,418,293 48,270,760 23,275,445 14,144,725 57,678,362 54,441,723 — — — 19,038,236 20,851,764 21,812,404 7,670,973 8,794,090 7,978,051 — — — 69,669,560 62,884,786 51,099,506 269,166,366 243,544,924 319,845,094 2,035,272 98,218,908 27,954,097 1,999,965 1,561,021 97,264,993 111,656,120 56,237,124 52,852,530 RAW MATERIALS AND CONSUMABLE USED (788,044,087) (845,396,679) (767,639,080) (142,565,611) (153,916,681) (159,168,886) (1,310,974,462) (1,109,711,167) (1,130,171,924) (426,625,508) (393,206,055) (334,348,884) Energy purchases Final consumption Transport expenses Other variable supplies and services (23,611,704) (29,532,885) (34,299,203) (718,972,828) (815,863,794) (733,339,877) (139,626,236) (150,780,462) (155,199,248) (644,017,840) (544,826,586) (581,737,614) (317,529,068) (275,176,733) (216,843,446) — (45,459,555) — — — — — (1,239,345) (1,700,030) — (1,522,314) (1,613,905) — (1,251,828) (2,717,810) — — — — — — (88,561,822) (77,941,315) (37,664,618) (81,668,944) (79,476,600) (82,316,166) (578,394,800) (486,943,266) (510,769,692) (27,427,496) (38,552,722) (35,189,272) CONTRIBUTION MARGIN 228,953,408 244,118,398 316,034,447 152,972,703 173,170,868 174,994,547 676,067,088 670,624,466 607,179,459 359,264,080 347,961,761 327,125,157 Other work performed by entity and capitalized 2,524,049 2,666,652 2,786,572 8,296,765 8,057,055 9,659,647 18,128,254 17,007,228 13,988,133 3,734,991 2,485,358 3,072,770 Employee benefits expense Other expenses (24,818,903) (24,641,080) (22,379,909) (63,168,597) (66,048,079) (57,132,352) (86,726,523) (84,491,569) (79,763,096) (30,266,521) (29,972,265) (18,866,451) (64,729,067) (64,826,993) (58,294,743) (77,589,301) (64,218,481) (63,964,619) (146,667,574) (153,761,807) (138,155,164) (61,109,969) (60,815,070) (54,306,942) GROSS OPERATING RESULT 141,929,487 157,316,977 238,146,367 20,511,570 50,961,363 63,557,223 460,801,245 449,378,318 403,249,332 271,622,581 259,659,784 257,024,534 Depreciation, amortization and impairment losses (30,162,735) (28,284,945) (24,523,395) (16,567,619) (19,085,702) (17,930,213) (158,955,423) (111,178,295) (94,840,968) (64,400,224) (59,775,278) (54,044,759) OPERATING INCOME 111,766,752 129,032,032 213,622,972 3,943,951 31,875,661 45,627,010 301,845,822 338,200,023 308,408,364 207,222,357 199,884,506 202,979,775 FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses 2,470,113 2,906,811 (24,720,995) (6,198,811) (5,626,845) (2,207,707) (61,918,267) (57,393,403) (82,562,607) (26,452,173) (29,268,297) (37,367,598) 10,576,373 14,891,938 15,332,306 9,324,258 6,866,221 9,850,439 103,066,394 83,232,583 91,971,784 9,289,334 9,885,040 7,413,288 (8,048,514) (17,384,760) (23,194,285) (16,070,345) (12,048,619) (11,419,883) (163,934,510) (145,101,661) (157,038,747) (35,637,190) (39,051,936) (44,767,844) 153,805 (211,551) 2,679,429 458,162 (3,048,824) 4,941,471 8,283,203 (13,810,192) 54,746 — 547,276 617,720 — — (444,447) (638,263) 1,287,472 4,141,772 (2,890,980) (3,341,732) (13,864,938) (70,444) (1,731,919) (4,780,035) (4,299,937) (1,944,252) (63,362,064) (1,050,151) 3,249,786 — 4,475,675 6,419,927 (17,495,644) 45,866,420 — (104,317) 604,900 (709,217) (101,401) (13,042) 1,561,581 1,707,677 (1,662,982) (1,720,719) Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments — — — 82,756,621 74,874,562 — 82,850 — — Gains (losses) on sale of property, plant and equipment (3,349) 12,050,737 (303,324) 911 — — — 1,633 1,136 — — — — — — NET INCOME BEFORE TAX 114,233,516 226,829,051 263,473,215 (2,253,949) 26,250,449 43,420,439 239,927,555 281,056,904 226,131,229 182,159,904 183,371,945 165,510,034 Income tax (23,402,198) (21,064,399) (37,443,250) 635,038 (9,357,145) (15,723,362) (46,763,793) (72,619,778) (50,427,526) (56,459,150) (56,364,261) (49,651,639) NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 Net income from discontinued operations — — — — — — NET INCOME 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 90,831,318 205,764,652 226,029,965 (1,618,911) 16,893,304 27,697,077 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 — — — — — — — — — — — — — — — — — — — — 250,284 285,472 1,389,720 12,755,736 (102,143) — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 303 Financial Statements Consolidated Brazil Colombia Distribution 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ 1,987,041,550 1,780,335,633 1,737,351,383 785,889,588 741,167,816 661,474,041 1,717,875,184 1,536,790,709 1,417,506,289 757,935,491 684,930,692 608,621,511 1,648,205,624 1,473,905,923 1,366,406,783 657,681,311 585,665,734 495,404,370 — — — 69,669,560 62,884,786 51,099,506 269,166,366 243,544,924 319,845,094 2,035,272 98,218,908 27,954,097 1,999,965 1,561,021 97,264,993 111,656,120 56,237,124 52,852,530 (1,310,974,462) (1,109,711,167) (1,130,171,924) (426,625,508) (393,206,055) (334,348,884) (644,017,840) (544,826,586) (581,737,614) (317,529,068) (275,176,733) (216,843,446) — — — — — — (88,561,822) (77,941,315) (37,664,618) (81,668,944) (79,476,600) (82,316,166) (578,394,800) (486,943,266) (510,769,692) (27,427,496) (38,552,722) (35,189,272) 676,067,088 670,624,466 607,179,459 359,264,080 347,961,761 327,125,157 18,128,254 17,007,228 13,988,133 3,734,991 2,485,358 3,072,770 (86,726,523) (84,491,569) (79,763,096) (30,266,521) (29,972,265) (18,866,451) (146,667,574) (153,761,807) (138,155,164) (61,109,969) (60,815,070) (54,306,942) 460,801,245 449,378,318 403,249,332 271,622,581 259,659,784 257,024,534 (158,955,423) (111,178,295) (94,840,968) (64,400,224) (59,775,278) (54,044,759) 301,845,822 338,200,023 308,408,364 207,222,357 199,884,506 202,979,775 (61,918,267) (57,393,403) (82,562,607) (26,452,173) (29,268,297) (37,367,598) 103,066,394 83,232,583 91,971,784 9,289,334 9,885,040 7,413,288 (163,934,510) (145,101,661) (157,038,747) (35,637,190) (39,051,936) (44,767,844) — (1,050,151) 3,249,786 — 4,475,675 6,419,927 — (17,495,644) 45,866,420 (4,299,937) (1,944,252) (63,362,064) — (104,317) 604,900 (709,217) — — (101,401) (13,042) 1,561,581 1,707,677 (1,662,982) (1,720,719) — — — — — — — — — — — — — — — — — — — 250,284 285,472 1,389,720 12,755,736 (102,143) 239,927,555 281,056,904 226,131,229 182,159,904 183,371,945 165,510,034 (46,763,793) (72,619,778) (50,427,526) (56,459,150) (56,364,261) (49,651,639) 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 — — — — — — 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 193,163,762 208,437,126 175,703,703 125,700,754 127,007,684 115,858,395 — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 304 Enersis 2010 Annual Report Line of Business Country Peru Eliminations Distribution STATEMENT OF COMPREHENSIVE 12-31-2010 12-31-2009 12-31-2008 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ INCOME REVENUES Sales Energy sales Other sales Other services rendered Other operating income 307,158,970 302,295,127 254,640,806 286,654,227 286,037,460 243,406,969 279,239,525 278,264,824 236,103,382 18,571 13,193 12,629 7,396,131 7,759,443 7,290,958 20,504,743 16,257,667 11,233,837 RAW MATERIALS AND CONSUMABLE USED (193,646,086) (185,706,532) (149,816,090) Energy purchases Final consumption Transport expenses (168,095,978) (171,745,296) (139,863,463) — — — — — — Other variable supplies and services (25,550,108) (13,961,236) (9,952,627) CONTRIBUTION MARGIN 113,512,884 116,588,595 104,824,716 Other work performed by entity and capitalized 2,058,678 2,782,325 2,592,123 Employee benefits expense Other expenses (10,830,327) (11,469,891) (9,776,179) (18,349,605) (24,143,832) (23,905,746) GROSS OPERATING RESULT 86,391,630 83,757,197 73,734,914 Depreciation, amortization and impairment losses (21,459,798) (21,332,334) (20,790,878) OPERATING INCOME FINANCIAL RESULTS Financial income Financial costs Gain (loss) for indexed assets and liabilities Foreign currency exchange differences Gains Losses 64,931,832 62,424,863 52,944,036 (10,890,729) (10,414,860) (12,219,957) 742,300 1,621,266 2,245,332 2,069,892 (12,549,137) (12,867,928) (14,461,673) — 37,142 315,166 — 207,736 1,032,549 — 171,824 2,087,857 (278,024) (824,813) (1,916,033) Share of the profit (loss) of associates accounted for using the equity method Negative consolidation difference Gains (losses) from other investments — — — — — — — — — Gains (losses) on sale of property, plant and equipment (21,095) (117,804) 2,999,805 NET INCOME BEFORE TAX 54,020,008 51,892,199 43,723,884 742,300 Income tax (18,812,437) (18,796,395) (16,154,121) — NET INCOME AFTER TAX FROM CONTINUING OPERATIONS 35,207,571 33,095,804 27,569,763 742,300 Net income from discontinued operations — — — — NET INCOME 35,207,571 33,095,804 27,569,763 742,300 RESULT FOR THE PERIOD Owners of parent Non-controlling interests 35,207,571 33,095,804 27,569,763 742,300 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 742,300 (204,474) 946,774 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — (1,528,000) 1,528,000 — — — — — — — — — — — — — — — — Distribution Total 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 4,392,625,917 4,240,401,202 4,071,303,190 4,053,333,247 3,892,291,952 3,624,951,955 3,754,753,999 3,642,828,755 3,359,696,230 9,220,770 12,431,451 15,718,375 289,358,478 237,031,746 249,537,350 339,292,670 348,109,250 446,351,235 (2,861,855,754) (2,687,937,114) (2,541,144,864) (1,988,241,950) (1,958,392,871) (1,826,983,648) — — — (216,929,666) (158,940,229) (121,232,612) (656,684,138) (570,604,014) (592,928,604) 1,530,770,163 1,552,464,088 1,530,158,326 34,742,737 32,998,618 32,099,245 (215,810,871) (216,622,884) (187,917,987) (368,445,516) (367,766,183) (338,627,214) 981,256,513 1,001,073,639 1,035,712,370 (291,545,799) (239,656,554) (212,130,213) 689,710,714 761,417,085 823,582,157 (102,247,567) (99,796,594) (159,078,864) 133,877,625 117,121,114 125,109,709 (236,239,696) (226,454,904) (249,354,432) 153,805 (39,301) 458,162 (3,048,824) 9,079,034 (31,785,317) 7,262,527 18,584,732 53,858,472 (7,301,828) (9,505,698) (85,643,789) 911 82,758,254 74,875,698 1,365,276 24,938,953 2,879,810 588,829,334 769,400,548 742,258,801 (144,802,540) (178,201,978) (169,399,898) 444,026,794 591,198,570 572,858,903 444,026,794 591,198,570 572,858,903 444,026,794 591,198,570 572,858,903 — 82,850 — — — — — — — — — — — — — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 305 Financial Statements Consolidated Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Distribution Total 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ 4,392,625,917 4,240,401,202 4,071,303,190 4,053,333,247 3,892,291,952 3,624,951,955 3,754,753,999 3,642,828,755 3,359,696,230 9,220,770 12,431,451 15,718,375 289,358,478 237,031,746 249,537,350 339,292,670 348,109,250 446,351,235 (2,861,855,754) (2,687,937,114) (2,541,144,864) (1,988,241,950) (1,958,392,871) (1,826,983,648) — — — (216,929,666) (158,940,229) (121,232,612) (656,684,138) (570,604,014) (592,928,604) 1,530,770,163 1,552,464,088 1,530,158,326 34,742,737 32,998,618 32,099,245 (215,810,871) (216,622,884) (187,917,987) (368,445,516) (367,766,183) (338,627,214) Investment and financing policy 2010 981,256,513 1,001,073,639 1,035,712,370 (291,545,799) (239,656,554) (212,130,213) 689,710,714 761,417,085 823,582,157 (102,247,567) (99,796,594) (159,078,864) 133,877,625 117,121,114 125,109,709 (236,239,696) (226,454,904) (249,354,432) 153,805 (39,301) 458,162 (3,048,824) 9,079,034 (31,785,317) 7,262,527 18,584,732 53,858,472 (7,301,828) (9,505,698) (85,643,789) 911 — — 82,758,254 74,875,698 — 82,850 — — 1,365,276 24,938,953 2,879,810 588,829,334 769,400,548 742,258,801 (144,802,540) (178,201,978) (169,399,898) 444,026,794 591,198,570 572,858,903 — — — 444,026,794 591,198,570 572,858,903 444,026,794 591,198,570 572,858,903 — — — — — — The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next 306 Enersis 2010 Annual Report Note 34 Third Party Guarantee, Other Contingent Assets and Liabilities and Other Commitments 34.1 Direct guarantees Creditor of Guarantee Debtor Name Relation Type of Guarantee Type Currency Accounting Assets Committed Balance Pending At December 31, Guarantee Released Value Currency 2010 2009 2011 Assets 2012 Assets 2013 Assets Various creditors Pangue S.A. Creditor Mortage and Pledge Real Estate and Equipment Soc, de Energía de la República Argentina Endesa Argentina, Endesa Costanera Creditor Pledge Shares ThCh$ ThCh$ — ThCh$ — 370,984 664,311 ThCh$ 963,655 2,923,298 Mitsubishi Credit Suisse First Boston Various creditors Various creditors Endesa Costanera Endesa Costanera Endesa Matriz Edegel Banco Santander (Agente de garantía) G.N.L. Quintero Deutsche Bank (*) / Santander Benelux Various creditors Various creditors Enersis S.A. Ampla S.A. Coelce S.A. Creditor Pledge Creditor Pledge Creditor Pledge Creditor Pledge Investee Pledge Combined Cycle ThCh$ 41,642,467 ThCh$ 66,236,055 72,279,911 Combined Cycle ThCh$ 12,875,127 ThCh$ 4,011,514 4,346,571 — Real Estate Shares ThCh$ ThCh$ ThCh$ ThCh$ 228,156 2,728,493 96,211,278 ThCh$ 13,008,383 39,780,681 — ThCh$ 94,071,116 93,151,966 Creditor Deposit Account Deposit Accounts ThCh$ 29,461,230 ThCh$ 62,720,234 108,091,723 Creditor Pledge on Collections and Others Creditor Pledge on Collections and Others — — ThCh$ 14,033,299 ThCh$ 84,993,209 135,611,919 ThCh$ 11,281,150 ThCh$ 102,571,290 124,589,138 International Finance Corporation CGT Fortaleza S.A. Creditor Mortage and Pledge Real Estate and Equipment ThCh$ 154,926,900 ThCh$ 17,867,290 48,053,928 Various creditors Various creditors Sinapsis Brazil Cam Argentina Creditor Mortage and Pledge Real Estate ThCh$ — ThCh$ — 337,403 Creditor Pledge Government Bonds ThCh$ 55,222 ThCh$ 49,673 101,367 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — As of December 31, 2010, 2009 and 2008 Enersis and its subsidiaries had commitments for future purchases of energy amounting to ThCh$ 26,115,482,639, ThCh$ 27,957,381,822 and ThCh$ 37,345,298,398, respectively. 34.2 Indirect guarantees Creditor of Guarantee Debtor Assets Committed Balance Pending At December 31, Guarantee Released Name Relation Type of Accounting Guarantee Currency Value Currency 2010 2009 2011 Assets 2012 Assets 2013 Bank Credit Notes CIEN Subsidiary Guarantee ThCh$ 140,797,232 ThCh$ 140,797,232 174,741,558 Bonds and Loans Bank Chinango Subsidiary Guarantee ThCh$ 34,817,262 ThCh$ 34,817,262 26,349,554 — — — — — — — — — — 34.3 Other information The Ministry of Economy of Chile, from May 19, 2005 to December 31, 2009, established that regulated energy supply for non-contracted distribution companies must be provided by all electricity generating companies on a pro rata basis of their established capacity. Subsequent regulations stated that electricity generating companies will receive for supplying energy to non-contracted distribution companies the node price effective at that time and that they would be credited or charged the positive or negative differences, respectively, arising in respect to the marginal cost. In addition, it was also stated that such differences may not be more than 20% of the node price, if so, the remaining balances will be incorporated in subsequents node prices’ calculations, until such differences be fully settled. The estimated recoverable balance of our subsidiary Endesa Chile totaled Ch$ 66,000 million as of December 31, 2010. Such remaining balance will be recovered by the distributions companies through increases in the tariff rate that will be applied and billed from future energy consumptions by the regulated customers in the Energy System. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 307 Financial Statements Consolidated Note 35 Personnel Figures Enersis’s personnel, including information regarding subsidiaries and jointly-controlled companies in the five Latin American countries where the Group is present, is distributed as follows as of December 31, 2010 and 2009: Country Managers and 12-31-2010 Chile Argentina Brazil Peru Colombia Total Principal Professionals Executives and Technicians Worker and Other Total Average (*) for the Period 106 33 45 18 27 229 2,397 2,276 2,514 944 1,819 9,950 546 850 387 177 125 3,049 3,159 2,946 1,139 1,971 3,152 3,115 2,940 1,131 1,923 2,085 12,264 12,261 (*) Include 387 employees from Synapsis and 1,313 employees from Cam (see Note 11). Country Managers and 12-31-2009 Principal Professionals Executives and Technicians Worker and Other Chile Argentina Brazil Peru Colombia Total 120 33 50 22 29 254 2,485 2,233 2,261 972 1,746 9,697 Note 36 Subsequent Events Total 3,225 3,112 3,030 1,187 1,916 Average for the Period 3,317 3,129 3,135 1,208 1,970 620 846 719 193 141 2,519 12,470 12,759 Due to the electric service interruptions during December 22, 2010 through December 29, 2010 in the south of Buenos Aires, our subsidiary, Edesur was notified of Disposition No. 01/2011 by the Ente Nacional Regulador de la Electricidad en Argentina (E.N.R.E.), the local regulator in Argentina, which orders a comprehensive technical, legal, economic, and financial audit be performed on the company for a period of thirty days. The main purpose of this audit is to verify Edesur’s compliance with its obligations and acquired commitments. The comprehensive audit under consideration started on January 5, 2011. As of the issuance of the financial statements, E.N.R.E.’s comprehensive audit is ongoing in accordance with the terms and conditions defined by E.N.R.E.. Edesur continues with its activities in the ordinary course of business and continues providing electric distribution services to the public in a regular and continuous manner, thereby meeting its current legal obligations. Management estimates that the results of the audit will not have a significant impact in Enersis’s consolidated financial statements. No other significant events have occurred between December 31, 2010 and date of issuance of these financial statements that could materially affect the presentation of the financial statements. Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 308 Enersis 2010 Annual Report Note 37. Environment The detail of environmental expenses as of December 31, 2010, 2009 and 2008 is as follows: Company incurring the cast Project Endesa Chile S.A. Gasatacama S.A. Hidroaysén S.A. Pehuenche Endesa Costanera S.A. Edegel S.A. Codensa Coelce Ampla Energía Edesur S.A. CIEN CDSA CGTF Studies, monitoring, lab analysis, removal and final disposal of solid waste in hydroelectric power stations (HPS) and thermoelectric power stations Environmental monitoring (air quality, marine monitoring, etc.) Educational and Tourism Expenses Environmental Expenses Certification of management system, Quality control and fuel quality, Disposal of dangerous waste, Environmental impact study, Environmental leaflets, Hose inspection and tests, Maintenance ISO14,001/9.001, Liquid waste monitoring, Drilling to monitor water tables and other Environmental monitoring, waste management, mitigations and restorations. Environmental management of PCB transformers. Environmental monitoring, waste management, ISO 14,001 Audit. Environmental license and environmental management equipment Final disposal of residues and contaminating elements. Environmental compensation, facility improvement and environmental control, setting up the landscaping project Repopulation of deposits Purchase of environmental monitoring equipment. 12-31-2010 12-31-2009 12-31-2008 ThCh$ ThCh$ ThCh$ — 2,416,053 2,159,245 72,984 294,327 65,481 116,820 57,394 — — 39,056 — — 373,796 444,983 69,820 4,344 17,377 10,287 667,059 53,926 212,166 8,688 151,563 11,491 50,449 25,505 10,837 633,621 — 229,805 25,646 88,095 38,144 37,707 23,858 9,715 Compañía de Transmisión del Mercosur S.A. ISO 14,001 Audit, Resolution ENRE 57/2003 (Public Safety), environmental monitoring and environmental standards update. 13,412 Transportadora de Energía S.A. Total ISO 14,001 Audit, Resolution ENRE 57/2003 (Public Safety), environmental monitoring and environmental standards update. 14,714 11,579 8,039 942,248 3,859,011 3,666,727 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 309 Financial Statements Consolidated Note 38. Summarized Financial Information of Principal Subsidiaries and Jointly-Controlled Entities As of December 31, 2010 and 2009, the summarized financial information under IFRS is as follows: Type of Financial Statements Current Assets ThCh$ Non-Current Assets ThCh$ Total Assets ThCh$ Current Liabilities Non-Current Liabilities Total Liabilities ThCh$ ThCh$ ThCh$ Revenue ThCh$ Costs Profit (Loss) ThCh$ ThCh$ 12-31-2010 Chilectra S.A. consolidated 308,282,584 1,153,691,583 1,461,974,167 (171,286,364) (196,967,970) (368,254,334) 1,003,001,004 (852,052,652) 150,948,352 Synapsis Soluc. y Serv. IT Ltda. consolidated 27,547,119 10,385,607 37,932,726 (15,618,790) (1,915,098) (17,533,888) 66,028,200 (70,214,530) (4,186,330) Inmobiliaria Manso de Velasco Ltda. consolidated 32,323,759 35,782,164 68,105,923 (3,422,178) (1,623,485) (5,045,663) 10,546,195 (2,729,975) 7,816,220 Compañía Americana de Multiservicios de Chile Ltda. consolidated 71,769,555 25,904,845 97,674,400 (45,136,731) (6,707,851) (51,844,582) 131,410,554 (133,224,067) (1,813,513) ICT Servicios Informáticos Ltda. Inversiones Distrilima S.A. separate separate 4,077,868 233,684 4,311,552 (3,372,931) (456,919) (3,829,850) 2,174,853 (2,193,935) (19,082) 368,480 46,340,936 46,709,416 (3,835) — (3,835) 11,116,825 (18,031) 11,098,794 Empresa de Distribución Eléctrica de Lima Norte S.A.A. separate 76,439,911 356,670,398 433,110,309 (78,460,218) (205,177,295) (283,637,513) 286,654,227 (251,428,625) 35,225,602 Empresa Nacional de Electricidad S.A. Endesa Eco S.A. Empresa Eléctrica Pehuenche S.A. Compañía Eléctrica San Isidro S.A. Empresa Eléctrica Pangue S.A. Compañía Eléctrica Tarapacá S.A. Inversiones Endesa Norte S.A. Inversiones Gasatacama Holding Ltda. Sociedad Concesionaria Túnel el Melón S.A. Endesa Argentina S.A. Endesa Costanera S.A. Hidroeléctrica El Chocón S.A. Emgesa S.A. E.S.P. Generandes Perú S.A. Edegel S.A.A. Chinango S.A. Centrales Hidroeléctricas de Aysén S.A. Endesa Brasil S.A. Central Generadora Termoeléctrica Fortaleza S.A. Centrais Elétricas Cachoeira Dourada S.A. Compañía de Interconexión Energética S.A. Compañía de Transmisión del Mercosur S.A. Compañía Energética Do Ceará S.A. EN-Brazil Comercio e servicios S.A. Ampla Energía e Serviços S.A. Ampla Investimentos e Serviços S.A. separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate separate 693,166,827 3,171,595,808 3,864,762,635 (464,147,067) (1,057,670,971) (1,521,818,038) 1,173,423,692 (654,190,040) 519,233,652 6,327,207 138,782,297 145,109,504 (137,123,791) (20,442,170) (157,565,961) 13,515,877 (16,056,170) (2,540,293) 54,209,408 242,417,018 296,626,426 (60,865,292) (41,020,747) (101,886,039) 234,534,178 (57,265,757) 177,268,421 43,642,004 81,215,943 124,857,947 (55,987,180) (11,948,576) (67,935,756) 167,998,478 (154,961,416) 13,037,062 26,348,540 135,422,607 161,771,147 (48,954,765) (13,940,056) (62,894,821) 99,324,285 (35,590,926) 63,733,359 28,342,554 77,234,443 105,576,997 (7,312,647) (7,839,404) (15,152,051) 45,280,244 (41,788,042) 3,492,202 — 25,157,716 25,157,716 (3,370,464) — (3,370,464) — (146,130) (146,130) 55,742,095 145,984,024 201,726,119 (69,155,266) (21,720,110) (90,875,376) 167,160,648 (147,165,903) 19,994,745 21,178,870 17,552,855 38,731,725 (2,391,836) (13,674,875) (16,066,711) 6,701,752 (2,364,828) 4,336,924 7,852,572 33,753,943 41,606,515 (44,284) — (44,284) 5,641,118 151,175 5,792,293 45,572,669 128,841,292 174,413,961 (107,230,903) (65,903,875) (173,134,778) 288,534,151 (290,157,746) (1,623,595) 18,399,302 144,894,940 163,294,242 (43,781,981) (38,683,634) (82,465,615) 57,172,784 (32,791,612) 24,381,172 154,997,283 1,203,713,202 1,358,710,485 (286,630,051) (356,958,221) (643,588,272) 507,137,563 (357,040,190) 150,097,373 54,688 180,174,348 180,229,036 (21,008) — (21,008) 21,122,454 (214,017) 20,908,437 44,851,844 643,944,854 688,796,698 (40,685,019) (282,540,573) (323,225,592) 188,755,959 (152,380,933) 36,375,026 5,717,609 98,861,331 104,578,940 (21,081,723) (49,460,678) (70,542,401) 23,636,752 (19,685,636) 3,951,116 3,880,921 50,729,673 54,610,594 (3,904,367) (327,633) (4,232,000) — (3,665,300) (3,665,300) 269,141,082 1,085,178,300 1,354,319,382 (58,046,034) — (58,046,034) 200,739,840 6,041,979 206,781,819 67,892,629 162,438,204 230,330,833 (32,581,434) (39,966,450) (72,547,884) 142,546,333 (93,304,291) 49,242,042 94,488,048 134,422,068 228,910,116 (13,765,546) (7,521,222) (21,286,768) 115,662,684 (40,215,273) 75,447,411 44,440,944 317,628,162 362,069,106 (136,593,186) (108,949,008) (245,542,194) 93,177,151 (94,574,840) (1,397,689) 14,503,105 3,826,350 18,329,455 (449,321) (15,233,324) (15,682,645) 2,983,647 (2,420,226) 563,421 177,267,456 737,234,010 914,501,466 (244,318,033) (226,036,818) (470,354,851) 788,759,176 (634,806,589) 153,952,587 1,033,812 54,708 1,088,520 (489,835) — (489,835) 1,879,321 (1,267,362) 611,959 218,527,158 1,031,433,894 1,249,961,052 (307,918,902) (484,006,188) (789,274,854) 929,116,008 (877,038,622) 52,077,386 1,579,764 136,771,841 138,351,605 (60,967,554) — (60,967,554) — 22,325,366 22,325,366 Compañía Distribuidora y Comercializadora de Energía S.A. separate 251,294,158 865,089,733 1,116,383,891 (262,861,871) (377,891,111) (640,752,982) 723,345,987 (599,569,993) 123,775,994 Empresa de Energía de Cundinamarca S.A. Empresa Distribuidora Sur S.A. separate separate 10,831,321 46,553,360 57,384,681 (12,615,030) (14,388,879) (27,003,909) 36,621,778 (31,864,753) 4,757,025 110,182,639 320,842,717 431,025,356 (226,189,613) (40,238,648) (266,428,261) 287,867,341 (289,486,252) (1,618,911) Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 310 Enersis 2010 Annual Report Financial Statements Current Assets ThCh$ Non-Current Assets ThCh$ Total Assets ThCh$ Current Liabilities ThCh$ Non-Current Liabilities ThCh$ Total Liabilities ThCh$ Revenue ThCh$ Costs ThCh$ Profit (Loss) ThCh$ 12-31-2009 Chilectra S.A. consolidated 201,194,118 1,194,415,123 1,395,609,241 (147,471,992) (219,826,811) (367,298,803) 1,061,070,988 (855,306,336) 205,764,652 Synapsis Soluc. y Serv. It Ltda. consolidated 28,912,134 16,922,968 45,835,102 (17,358,762) (3,154,269) (20,513,031) 74,219,655 (68,902,742) 5,316,913 Inmobiliaria Manso de Velasco Ltda. consolidated 29,801,117 35,598,877 65,399,994 (3,722,228) (1,924,456) (5,646,684) 9,871,348 (2,731,187) 7,140,161 Compañía Americana de Multiservicios de Chile Ltda. consolidated 80,290,795 26,207,497 106,498,292 (45,563,544) (8,592,112) (54,155,656) 136,535,810 (137,832,037) (1,296,227) Inversiones Distrilima S.A. consolidated 54,918,692 363,706,049 418,624,741 (61,140,186) (213,746,029) (274,886,215) 285,214,506 (252,118,702) 33,095,804 Empresa de Distribución Eléctrica de Lima Norte S.A.A. separate 54,913,605 363,706,049 418,619,654 (61,137,905) (213,746,029) (274,883,934) 285,214,506 (252,452,604) 32,761,902 Empresa Nacional de Electricidad S.A. consolidated 942,361,242 5,226,991,370 6,169,352,612 (981,101,681) (2,233,249,079) (3,214,350,760) 2,408,239,446 (1,636,139,092) 772,100,354 Endesa Eco S.A. Empresa Eléctrica Pehuenche S.A. Compañía Eléctrica San Isidro S.A. Empresa Eléctrica Pangue S.A. Compañía Eléctrica Tarapacá S.A. Inversiones Endesa Norte S.A. Inversiones Gasatacama Holding LTDA. Sociedad Concesionaria Túnel el Melón S.A. Endesa Argentina S.A. Endesa Costanera S.A. Hidroeléctrica El Chocón S.A. Emgesa S.A. E.S.P. Generandes Perú S.A. Edegel S.A.A. Chinango S.A. Centrales Hidroeléctricas de Aysén S.A. separate separate separate separate separate separate separate separate 20,342,545 141,348,885 161,691,430 (151,709,864) (19,897,730) (171,607,594) 5,363,817 (13,478,980) (8,115,163) 66,918,651 250,679,247 317,597,898 (93,120,578) (41,741,967) (134,862,545) 199,025,325 (44,152,639) 154,872,686 53,986,693 85,953,344 139,940,037 (34,584,533) (16,770,373) (51,354,906) 119,444,441 (107,229,856) 12,214,585 64,692,377 139,047,187 203,739,564 (77,357,564) (14,588,592) (91,946,156) 102,435,170 (27,600,506) 74,834,664 18,895,799 79,166,484 98,062,283 (4,768,430) (6,362,133) (11,130,563) 59,026,738 (52,369,255) 6,657,483 — 25,157,716 25,157,716 (3,224,334) — (3,224,334) — (166,553) (166,553) 114,435,229 316,349,769 430,784,998 (187,876,998) (42,467,597) (230,344,595) 343,304,368 (319,083,247) 24,221,121 17,507,583 18,587,880 36,095,463 (2,090,726) (15,675,501) (17,766,227) 6,092,068 (1,160,459) 4,931,609 consolidated 118,381,851 236,958,705 355,340,556 (143,599,544) (122,228,745) (265,828,289) 293,388,675 (284,129,957) 9,258,718 separate separate separate 46,132,764 139,465,744 185,598,508 (108,896,949) (73,587,167) (182,484,116) 228,090,396 (238,967,631) (10,877,235) 59,552,103 91,442,295 150,994,398 (35,636,058) (48,641,578) (84,277,636) 65,298,279 (46,084,169) 19,214,110 256,813,794 1,228,326,578 1,485,140,372 (130,634,275) (424,071,893) (554,706,168) 500,829,922 (362,272,335) 138,557,587 consolidated 54,343,007 785,935,394 840,278,401 (71,313,577) (358,335,279) (429,648,856) 212,448,615 (171,641,977) 40,806,638 separate separate separate 50,563,350 699,489,852 750,053,202 (55,480,341) (309,812,958) (365,293,299) 197,723,819 (162,768,423) 34,955,396 3,874,902 103,736,922 107,611,824 (16,093,363) (61,224,726) (77,318,089) 15,511,080 (14,352,555) 1,158,525 8,111,503 86,908,393 95,019,896 (37,110,402) — (37,110,402) — (5,994,071) (5,994,071) Endesa Brasil S.A. consolidated 893,078,804 2,406,346,709 3,299,425,513 (577,155,133) (1,141,081,701) (1,718,236,834) 1,711,404,371 (1,364,089,971) 347,314,400 Central Generadora Termoeléctrica Fortaleza S.A. Centrais Elétricas Cachoeira Dourada S.A. Compañía de Interconexión Energética S.A. Compañía Energética Do Ceará S.A. Ampla Energía e Serviços S.A. Ampla Investimentos e Serviços S.A. separate separate separate separate separate separate 87,928,488 182,920,900 270,849,388 (25,278,405) (49,516,510) (74,794,915) 134,940,094 (63,564,728) 71,375,366 91,279,739 142,472,021 233,751,760 (11,003,768) (9,298,289) (20,302,057) 88,299,914 (37,997,130) 50,302,784 127,070,301 351,003,039 478,073,340 (144,249,724) (212,036,044) (356,285,768) 91,427,196 (88,648,012) 2,779,184 191,087,737 792,573,748 983,661,485 (168,439,779) (307,791,206) (476,230,985) 640,026,534 (522,045,742) 117,980,792 341,853,282 981,871,549 1,323,724,831 (222,039,416) (616,051,298) (838,090,714) 884,182,453 (785,368,668) 98,813,785 844,002 105,045,877 105,889,879 (66,456,246) — (66,456,246) 18,119,070 (8,357,451) 9,761,619 Compañía Distribuidora y Comercializadora de Energía S.A. consolidated 333,863,028 882,909,627 1,216,772,655 (235,651,234) (393,163,308) (628,814,542) 684,122,654 (556,287,367) 127,835,287 Empresa de Energía de Cundinamarca S.A. Empresa Distribuidora Sur S.A. separate separate 29,937,971 76,304,505 106,242,476 (25,954,531) (31,814,970) (57,769,501) 80,777,391 (76,030,326) 4,747,065 93,131,605 320,067,184 413,198,789 (170,584,075) (54,242,098) (224,826,173) 315,723,562 (298,830,258) 16,893,304 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 311 Financial Statements Consolidated APPENDIX No.1 Enersis Group Companies Contents Cover Resume 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 Rut Company Functional Currency This appendix is part of Note 2.4 “Subsidiaries and jointly-controlled entities.” % Ownership Interest as of % Ownership Interest as of 12/31/2010 12/31/2009 Company Direct Indirect Total Direct 0.00% Indirect Total Relation Address Activity 78.88% 78.88% Subsidiary Chile Sanitation Services Chairman’s Letter to Shareholders 96,773,290-7 Aguas Santiago Poniente S.A. Chilean peso 0.00% 78.88% 78.88% 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries Foreign Ampla Energía E Serviços S.A. Brazilian reais 13.68% 78.25% 91.93% 13.68% 78.25% 91.93% Subsidiary Brazil Foreign Ampla Investimentos E Serviços S.A. Brazilian real 13.68% 78.25% 91.93% 13.68% 78.25% 91.93% Subsidiary Brazil Electric Energy Production, Transportation And Distribution Electric Energy Production, Transportation,Distribution and Commerce Foreign Atacama Finance Co US dollar 0.00% 50.00% 50.00% 0.00% 50.00% 50.00% Joint control Islas Caimán Portfolio Company Foreign Compañía Americana de Multiservicios de Brasil Ltda. Brazilian reais 0.00% 99.99% 99.99% 0.00% 99.99% 99.99% Subsidiary Brazil Purchase and Sale of Electric Products Foreign Centrais Elétricas Cachoeira Dourada S.A. Brazilian reais 0.00% 99.61% 99.61% 0.00% 99.61% 99.61% Subsidiary Brazil Electric Energy Generation and Marketing 76,003,204-2 Central Eólica Canela S.A. Chilean peso 0.00% 75.00% 75.00% 0.00% 75.00% 75.00% Subsidiary Chile Promotion and Development of Renewable Energy Projects Foreign Central Generadora Termoeléctrica Fortaleza S.A. Brazilian reais 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Brazil Development of a Thermoelectric Project 76,652,400-1 Centrales Hidroeléctricas De Aysén S.A. Chilean peso 0.00% 51.00% 51.00% 0.00% 51.00% 51.00% Joint control Chile Development and Running of a Hydroelectric Project 99,573,910-0 Chilectra Inversud S.A. Chilean peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary 96,800,570-7 Chilectra S.A. Chilean peso 99.08% 0.01% 99.09% 99.08% 0.01% 99.09% Subsidiary Foreign Chinango S.A.C. Peruvian sol 0.00% 80.00% 80.00% 0.00% 80.00% 80.00% Subsidiary Chile Chile Peru Argentine peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Argentina Portfolio Company Participate in companies of any nature Electric energy generation, Marketing and Distribution Electric Network Meters, Postal, Energy Meter Calibration Chilean peso 99.99% 0.00% 99.99% 99.99% 0.00% 99.99% Subsidiary Chile Purchase and Sale of Electric Products Foreign Compañía Americana de Multiservicios de Argentina Ltda. 96,543,670-1 Compañía Americana de Multiservicios de Chile Ltda. Foreign Foreign Foreign Foreign Foreign Compañía Americana de Multiservicios de Colombia Ltda. Compañía Americana de Multiservicios Del Perú Ltda. Colombian peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Colombia Calibration and Measurement Technical Services Peruvian sol 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Peru Purchase, Sale and Distribution of Electric Products Compañía de Interconexión Energética S.A. Brazilian reais 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Brazil Electric Energy Production, Transportation and Distribution Compañía de Transmisión del Mercosur S.A. Argentine peso 0.00% 99.99% 99.99% 0.00% 99.99% 99.99% Subsidiary Argentina Electric Energy Production, Transportation and Distribution Compañía Distribuidora y Comercializadora de energía S.A. Colombian peso 12.47% 9.35% 21.82% 12.47% 9.35% 21.82% Subsidiary Colombia Electric Energy Distribution and Marketing 96,783,220-0 Compañía Eléctrica San Isidro S.A. 96,770,940-9 Compañía Eléctrica Tarapacá S.A. Chilean peso Chilean peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Chile Chile Brazil Complete Electric Energy Cycle Complete Electric Energy Cycle Complete Electric Energy Cycle Foreign Compañía Energética Do Ceará S.A. Brazilian reais 77,625,850-4 Consorcio Ara- Ingendesa Ltda. Chilean peso 0.00% 0.00% 58.87% 58.87% 50.00% 50.00% 0.00% 0.00% 58.87% 58.87% Subsidiary 50.00% 50.00% Joint Control Chile Project Engineering Consulting 76,738,990-6 Consorcio Ara- Ingendesa Sener Ltda. Chilean peso 0.00% 33.33% 33.33% 0.00% 33.33% 33.33% Joint Control Chile Execution and Compliance Contract of Ingeníeria Básica Linea Maipu 77,573,910-K Consorcio Ingendesa Minimetal Ltda. Chilean peso 0.00% 50.00% 50.00% 0.00% 50.00% 50.00% Joint Control Chile Engineering Services Rut Company Functional Currency 96,764,840-K Constructora y Proyectos Los Maitenes S.A. Chilean peso Distribuidora Eléctrica de Cundinamarca S.A. Colombian peso % Ownership Interest as of % Ownership Interest as of 12/31/2010 12/31/2009 Company Direct Indirect Total 0.00% 0.00% 55.00% 55.00% 49.00% 49.00% Direct 0.00% 0.00% Indirect Total Relation Address Activity 55.00% 55.00% Subsidiary Chile Construction and Facilities 49.00% 49.00% Joint Control Colombia Electric Energy Distribution and Marketing Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Distrilec Inversora S.A. Argentine peso 27.19% 24.31% 51.50% 27.19% 24.31% 51.50% Subsidiary Argentina Portfolio Company Edegel S.A.A Emgesa S.A. E.S.P. Peruvian sol Peruvian sol 0.00% 0.00% 83.60% 83.60% 26.87% 26.87% 0.00% 0.00% 83.60% 83.60% Subsidiary Peru Electric Energy Generation, Marketing and Distribution 26.87% 26.87% Subsidiary Colombia Electric Energy Generation Empresa de Distribución Eléctrica de Lima Norte S.A.A Peruvian sol 35.02% 30.15% 65.17% 24.00% 51.68% 75.68% Subsidiary Peru Electric Energy Distribution and Marketing Foreign Empresa de Energía de Cundinamarca S.A. Colombian peso 0.00% 49.00% 49.00% 0.00% 49.00% 49.00% Joint Control Colombia Electric Energy Distribution and Marketing 96,588,800-4 Empresa de Ingeniería Ingendesa S.A. Chilean peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Chile Engineering Services Foreign Empresa Distribuidora Sur S.A. Argentine peso 16.02% 77.21% 93.23% 16.02% 77.21% 93.23% Subsidiary Argentina Electric Energy Distribution and Marketing 96,783,910-8 Empresa Eléctrica de Colina Ltda. 96,589,170-6 Empresa Eléctrica Pangue S.A. 96,504,980-0 Empresa Eléctrica Pehuenche S.A. Chilean peso Chilean peso Chilean peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary 0.00% 0.00% 94.99% 94.99% 92.65% 92.65% 0.00% 0.00% 94.99% 94.99% Subsidiary 92.65% 92.65% Subsidiary 91,081,000-6 Empresa Nacional de Electricidad S.A Chilean peso 59.98% 0.00% 59.98% 59.98% 0.00% 59.98% Subsidiary Chile Chile Chile Chile Complete Energy Cycle and Related Supplies Complete Energy Cycle Complete Energy Cycle Complete Energy Cycle Foreign Foreign Foreign Endesa Argentina S.A. Argentine peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Argentina Portfolio Company Endesa Brasil S.A. Brazilian reais 22.06% 49.46% 71.52% 22.06% 49.46% 71.52% Subsidiary Brazil Portfolio Company Endesa Costanera S.A. Argentine peso 0.00% 69.76% 69.76% 0.00% 69.76% 69.76% Subsidiary Argentina Electricity Generation and Marketing 96,827,970-K Endesa Eco S.A. 96,526,450-7 Endesa Inversiones Generales S.A. Energex Co. Chilean peso Chilean peso US dollar EN-Brasil Comercio e Servicos S.A. Brazilian reais 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidiary Chile Chile Renewable Energy Projects Portfolio Company 0.00% 0.00% 50.00% 50.00% 99.99% 99.99% 0.00% 0.00% 50.00% 50.00% Joint Control Islas Caimán Portfolio Company 0.00% 0.00% Associate Brazil Portfolio Company Eólica Fanzenda Nova-Geracao e Comercializacao de Energía S.A. Brazilian reais 0.00% 99.95% 99.95% 0.00% 0.00% 0.00% Associate Brazil Promotion and Development of Renewable Energy Projects pages control previously next 96,830,980-3 Gas Atacama S.A. Foreign Gasoducto Atacama Argentina S.A. 78,882,820-9 Gasoducto Atacama Chile S.A. 77,032,280-4 Gasoducto Taltal Ltda. Foreign Generandes Perú S.A. 76,041,891-9 Hidroaysén Transmisión S.A. Foreign Foreign Hidroeléctrica El Chocón S.A. Hidroinvest S.A. US dollar US dollar US dollar Chilean peso Peruvian sol Chilean peso Argentine peso Argentine peso 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 50.00% 50.00% 49.99% 49.99% 50.00% 50.00% 50.00% 50.00% 61.00% 61.00% 51.00% 51.00% 67.67% 67.67% 96.09% 96.09% 76,107,186-6 ICT Servicios Informáticos Ltda. Chilean peso 99.00% 1.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 50.00% 50.00% Joint Control Chile Administration and Management of Companies 49.99% 49.99% Joint Control Argentina Transportation of Natural Gas 50.00% 50.00% Joint Control Chile Transportation of Natural Gas 50.00% 50.00% Joint Control Chile Transportation of Natural Gas 61.00% 61.00% Subsidary Peru Portfolio Company 51.00% 51.00% Joint Control Chile Development of Electric Transmission Systems 67.67% 67.67% Subsidary Argentina Electric Energy Production and Marketing 96.09% 96.09% Subsidary Argentina Portfolio Company 0.00% 0.00% Subsidary Chile Information and Technology Services 312 Enersis 2010 Annual Report Rut Company Functional Currency % Participation 12/31/2010 % Participation 12/31/2009 Company Direct Indirect Total Direct Indirect Total Relation Adress Activity Foreign Ingendesa do Brasil Ltda. Brazilian reais 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary 79,913,810-7 Inmobiliaria Manso de Velasco Ltda. Chilean peso 99.99% 0.00% 99.99% 99.99% 0.00% 99.99% Subsidary Foreign Inversiones Distrilima S.A. Peruvian sol 34.99% 15.38% 50.37% 34.99% 15.38% 50.37% Subsidary 96,887,060-2 Inversiones Endesa Norte S.A. Chilean peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary Brazil Chile Peru Chile Project Engineering Consulting Construction and Works Portfolio Company Investment in Energy Projects North of Chile 76,014,570-K Inversiones Gas Atacama Holding Ltda. US dollar 0.00% 50.00% 50.00% 0.00% 50.00% 50.00% Joint Control Chile Transportation of Natural Gas Foreign Inversora Codensa S.A.S. Colombian peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary Colombia Investment in Dometic Public Energy Services Activities and Portfolio Company Foreign Investluz S.A. 96,800,460-3 Luz Andes Ltda. 96,905,700-K Progas S.A. Chilean peso Chilean peso Brazilian reais 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary Brazil Chile Portfolio Company Transport, Distribution and Sale of Energy and Fuel 0.00% 50.00% 50.00% 0.00% 50.00% 50.00% Joint Control Chile Gas Distribution 99,584,600-4 Sistema Sec S.A. Chilean peso 0.00% 49.00% 49.00% 0.00% 49.00% 49.00% Joint control Chile Supply of Signaling, Electrification and Communication Systems 77,047,280-6 Sociedad Agrícola de Cameros Ltda. Chilean peso 0.00% 57.50% 57.50% 0.00% 57.50% 57.50% Subsidary Chile Financial Investments 78,970,360-4 Sociedad Agrícola e Inmobiliaria Pastos Verdes Ltda. Chilean peso 0.00% 55.00% 55.00% 0.00% 55.00% 55.00% Subsidary Chile Financial Investments 96,671,360-7 Sociedad Concesionaria Túnel El Melón S.A. Chilean peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary Chile Execution, Construction and Operation of the El Melon Tunnel 79,197,570-6 Sociedad Consorcio Ingendesa-Ara Limitada Chilean peso 0.00% 50.00% 50.00% 0.00% 50.00% 50.00% Joint Control Santiago de Chile (Chile) Engineering Services Foreign Foreign Foreign Foreign Foreign Foreign Sociedad Portuaria Central Cartagena S.A. Colombian peso 0.00% 99.85% 99.85% 0.00% 4.90% 4.90% Associate Colombia Port Administration Southern Cone Power Argentina S.A. Argentine peso 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary Argentina Portfolio Company Synapsis Argentina S.R.I. Argentine peso 5.00% 95.00% 100.00% 5.00% 95.00% 100.00% Subsidary Argentina Computer Services Synapsis Brasil Ltda. Brazilian reais 0.00% 100.00% 100.00% 0.00% 100.00% 100.00% Subsidary Brazil Computer Services Synapsis Colombia Ltda. Colombian peso 0.20% 99.80% 100.00% 0.20% 99.80% 100.00% Subsidary Colombia Computer Services Synapsis Perú S.R.I. Peruvian sol 0.00% 100.00% 100,00% 0,00% 100,00% 100,00% Subsidary 96,529,420-1 Synapsis Soluciones Y Servicios It Ltda. Chilean peso 99,99% 0,01% 100,00% 99,99% 0,01% 100,00% Subsidary Peru Chile Computer and Communication Services and Products Supply and Market Computer Services and Equipment Foreign Foreign Termoeléctrica José de San Martín S.A. Argentine peso Termoeléctrica Manuel Belgrano S.A. Argentine peso 77,017,930-0 Transmisora Eléctrica de Quillota Ltda. Chilean peso 0,00% 0,00% 0,00% 20,86% 20,86% 20,86% 20,86% 50,00% 50,00% 0,00% 0,00% 0,00% 20,86% 20,86% Associate Argentina Construction and Operation of Combined Cycle Plant 20,86% 20,86% Associate Argentina Electric Energy Generation, Transport and Distribution 50,00% 50,00% Joint Control Chile Electric Energy Transportation and Distribution Foreign Transportadora de Energía S.A. Argentine peso 0,00% 100,00% 100,00% 0,00% 100,00% 100,00% Subsidary Argentina Electric Energy Generation, Transport and Distribution APPENDIX No.2 Changes in the Scope of Consolidation: This appendix is part of Note 2.4.1 “Changes in the scope of consolidation.” % Participation at December 31, 2010 % Participation % Participation at December 31, 2009 at December 31, 2008 Consolidation Consolidation Company Direct Indirect Total Method Direct Indirect Total Method Total Distribuidora Eléctrica de Cundinamarca S.A. Sociedad Portuaria Central Cartagena S.A. — — — — — — ICT Servicios informáticos ltda. 99.00% 1.00% 100.00% Consolidation — — — 49.00% 49.00% Proportionate Consolidation 99.85% 99.85% Consolidation 0.00% 0.00% Consolidation 0% 0% 0% APPENDIX No.3 Enersis Group Associated Companies: This appendix is part of Note 3. h) “Investments in associates accounted for using the equity method.” Company Functional 12/31/2010 12/31/2009 % Participation at % Participation at Rut (In alphabetical order) currency Direct Indirect Total Direct Indirect Total Country Activity 96,806,130-5 Electrogas S.A US dollar 0.00% 25.49% 25.49% 0.00% 25.49% 25.49% Chile Portfolio Company Foreign Foreign Endesa Cemsa S.A. Argentine peso 0.00% 45.00% 45.00% 0.00% 45.00% 45.00% Argentina Electric Energy Wholesaler Endesa Market Place US dollar 15.00% 0.00% 15.00% 15.00% 0.00% 15.00% Spain B2B (New Technologies) 76,418,940-K GNL Chile.S.A. Chilean peso 0.00% 33.33% 33.33% 0.00% 33.33% 33.33% Chile Promote liquified gas supply project 76,788,080-4 GNL Quintero S.A. US dollar 0.00% 20.00% 20.00% 0.00% 20.00% 20.00% Chile Development, Design, Supply of a Liquid Natural Gas Regasifying Terminal 96,889,570-2 Inversiones Electrogas S.A. Chilean peso 0.00% 42.50% 42.50% 0.00% 42.50% 42.50% Chile Portfolio Company 76,583,350-7 Konecta Chile S.A. Chilean peso 0.00% 26.20% 26.20% 0.00% 26.20% 26.20% Chile Services Foreign Sacme S.A. US dollar 0.00% 50.00% 50.00% 0.00% 50.00% 50.00% Argentina Electric System Supervision and Control Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 313 Financial Statements Consolidated APPEDIX No.4 Additional Information on Financial Debt: This appendix is part of Note 18 “Other financial liabilities” The following tables set forth the contractual undiscounted cash flows by type of financial debt: A) Bank Loans a) Summary of Bank Loans by currency and maturity Nominal Interest Country Currency Rate One to Three Months ThCh$ Current Maturity Total Current Non-Current Maturity Current Maturity Total Non- Three to as of One to Three to More Current as of Three to Total Current As of Non-Current Maturity Three to Total Non- Current as Twelve December Months 31, 2010 ThCh$ ThCh$ Three Years ThCh$ Years ThCh$ Five Than Five December 31, Twelve December One to Three Five More Than of December Months ThCh$ 31, 2009 ThCh$ Years ThCh$ Years Five Years 31, 2009 ThCh$ ThCh$ ThCh$ One to Three Months ThCh$ 2010 ThCh$ 2.41% 816,706 18,915,156 19,731,862 3,202,593 83,824,641 — — — — — 87,027,234 1,860,644 132,415,089 134,275,733 110,879,501 109,023,058 1,257,552 221,160,111 — 770,828 126,775 897,603 236,372 — — 236,372 1,458,040 17,809,137 19,267,177 14,419,663 14,145,757 21,661,326 50,226,746 6,879,846 12,043,084 18,922,930 24,300,608 1,839,338 — 26,139,946 Years ThCh$ — — 1,839,538 1,031,134 2,870,672 32,616,930 5,085,358 18,145,263 23,230,621 4,013,855 — — Argentina Ar$ 13.12% 14,760,009 24,845,072 39,605,081 29,992,159 2,424,007 744,241 5,091,793 5,836,034 — 75,664,686 — — — — 32,616,930 959,816 11,120,797 12,080,613 45,433,352 4,013,855 6,253,151 12,774,805 19,027,956 23,974,767 32,416,166 8,684,708 13,360,954 22,045,662 37,917,438 75,664,686 2,474,692 7,561,559 10,036,251 88,421,279 — — — — — 45,433,352 — 23,974,767 — 37,917,438 — 88,421,279 765,141 11,617,821 12,382,962 19,990,693 18,600,098 10,681,077 49,271,868 1,018,392 12,357,474 13,375,866 26,976,832 14,097,354 25,725,061 66,799,247 10.25% 34,521,334 175,760,765 210,282,099 235,737,812 41,010,710 9,066,992 285,815,514 21,450,497 133,322,807 154,773,304 343,375,204 95,700,545 16,831,450 455,907,199 59,990,367 273,216,141 333,206,508 339,973,705 235,669,899 41,409,395 617,052,999 50,352,574 335,083,344 385,435,918 701,515,353 220,660,295 43,814,063 965,989,711 Chile Chile Peru Peru US$ Ch$ US$ Soles Argentina US$ Colombia CPs Brazil Brazil US$ Reais — 3.40% 4.14% 8.00% 7.21% 6.17% Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 314 Enersis 2010 Annual Report b) Identification of Bank Borrowings by Companies As of December 31, 2010 Current Non-Current Company ID Number Company Country Financial Institution Currency Effective Interest Rate Nominal Interest Rate One to Three Months Three to Twelve Months Total Current One to Three Years Three to Five Years Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Ampla Ampla Ampla Ampla Ampla Ampla Ampla Ampla CGTF Fortaleza CGTF Fortaleza CGTF Fortaleza CIEN (Companhía Interconexao Energética S.A.) Coelce Coelce Coelce Coelce Coelce Coelce Coelce Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edesur S.A. Edesur S.A. Edesur S.A. Edesur S.A. Edesur S.A. Edesur S.A. Emgesa Emgesa Emgesa Emgesa Emgesa Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Banco Itaú Unibanco Banco Alfa Brasdesco Banco do Brasil BANCO HSBC Electrobras Bndes IFC - A IFC - B IFC - C Banco Santander Central Hispano Banco Europeo de Investimentos Eletrobras Banco do Brasil Bndes Banco do Nordeste Banco Europeo de Investimentos Dívida Previdenciária Banco de Crédito Banco de Crédito Banco Continental Banco Scotiabank Banco Continental Banco Continental Banco Continental Banco Scotiabank Banco Westlb Banco Continental Banco de Crédito Banco Scotiabank Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito Banco de Crédito BBVA Scotiabank Scotiabank Interbank Argentina BBVA Argentina Banco de la Ciudad de Buenos Aires Argentina Standard Bank Argentina Banco Santander Rio Argentina Banco Santander Rio Argentina Banco de la Ciudad de Buenos Aires Colombia Davivienda Colombia Bancolombia Colombia Bancolombia Colombia BBVA Colombia Colombia Banco Santander Central Hispano Endesa Costanera S.A. Argentina Banco Provincia de Buenos Aires Endesa Costanera S.A. Argentina Banco Galicia Endesa Costanera S.A. Argentina Credit Suisse International Reais Reais Reais Reais Reais Reais Reais Reais US$ US$ US$ Reais US$ Reais Reais Reais Reais US$ Reais US$ US$ US$ US$ Soles Soles Soles US$ US$ Soles US$ Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ CPs CPs CPs CPs CPs US$ US$ US$ More than Five Years — — Total Non- Current 2,014,313 1,585,020 — 13,333,407 — 13,641,743 — 33,485,566 — 22,599,517 — — — — — — 10.72% 10.07% 101,554 2,149,535 2,251,089 2,014,313 10.67% 10.00% 80,587 1,698,892 1,779,479 1,585,020 10.41% 9.75% 1,826,981 4,094,262 5,921,243 13,333,407 8.87% 8.87% 6,269,083 14,432,333 20,701,416 13,641,743 10.75% 9.76% 763,245 2,538,618 3,301,863 33,485,566 9.73% 1,116,014 24,085,514 25,201,528 22,599,517 9.73% 7.23% 7.23% 183,646 738,057 921,703 1,731,933 3,074,414 589,902 5,396,249 11.02% 11.02% 9,075,941 20,796,621 29,872,562 9,181,709 488,855 — 9,670,564 8.61% 3.11% 7.89% 2.98% 386,442 3,258,351 3,644,793 6,938,582 5,647,394 7,977,977 20,563,953 145,163 3,664,317 3,809,480 7,911,466 8,527,661 — 16,439,127 12.87% 11.96% 106,304 353,577 459,881 848,122 4,123,071 1,072,731 6,043,924 11.15% 11.15% 3,166,878 64,735,216 67,902,094 60,518,449 — — 60,518,449 6.58% 6.58% 6.58% 18,857 197,806 216,663 293,057 301,972 1,630,369 2,225,398 6.58% 1,521,161 5,224,999 6,746,160 9,147,592 12,618,603 3,906,314 25,672,509 10.75% 10.75% 1,412,753 4,535,398 5,948,151 9,770,813 628,983 — 10,399,796 9.95% 9,003,491 30,731,320 39,734,811 58,727,750 24,199,855 4,570,776 87,498,381 8.50% 5.49% — — — — 108,375 4,143,770 4,252,145 3,999,466 30.01% -30.01% — — — — 653,107 1,953,825 2,606,932 4,307,956 438,997 1,302,348 1,741,345 1,603,280 — — — — — — — — — 3,999,466 — 4,307,955 8,615,911 — 1,603,280 245,345 816,040 1,061,385 1,957,430 14,145,757 17,353,371 33,456,558 9.95% 8.50% 5.49% 3.97% 3.97% 7.19% 5.70% 4.59% 3.80% 4.30% 5.95% 5.50% 6.60% 9.59% 6.55% 11.99% 11.99% 4.00% 4.00% 4.00% 11.99% 2.63% 2.64% 2.64% 4.41% 4.35% 4.35% 5.72% 3.97% 3.97% 7.19% 5.70% 4.28% 3.80% 4.30% 5.95% 5.50% 6.60% 9.59% 6.55% 2.60% 4.00% 4.00% 4.00% 4.00% 2.60% 23,655 3,427,268 3,450,923 1,697,864 — 12,762 77,109 — — — — — 42,449 55,211 1,379,498 167,805 244,914 5,030,048 — — — — — — — — — 96,936 10,309,656 10,406,592 4,853,133 — 25,172 25,172 21,816 10,069 41,953 25,172 — 83,723 83,723 72,561 33,489 — — 108,895 2,658,128 108,895 2,658,128 94,377 2,310,826 43,558 1,063,251 139,539 181,492 4,430,213 83,723 108,895 2,658,128 2.63% 1,502,865 — 1,502,865 — 2.64% 2.64% 4.40% 4.35% 4.35% 5.72% 23,313 77,542 100,855 3,591,829 — — — — 74,135 246,580 320,715 6,836,881 — — — — — — — — — — — — 22.90% 20.00% 271,817 3,031,502 3,303,319 2,534,402 15.40% 14.85% 54,835 17.61% -17.61% 156,756 182,384 521,383 237,219 1,466,744 678,139 3,845,625 727,040 16.28% 15.98% 120,727 1,374,409 1,495,136 2,008,017 17.97% 15.17% 106,623 17.08% 17.08% 39,530 354,637 131,479 603,337 432,186 461,260 2,530,914 957,228 171,009 603,337 432,186 — — 7,812,518 5,729,883 — — 6.99% 6.99% 6.99% 6.99% 6.99% 6.00% 5.44% 6.99% 6.99% 6.99% 6.99% 6.99% 6.00% 5.44% 328,989 1,094,247 1,423,236 — 18,429,277 — 18,429,277 — 1,580,860 1,580,860 — 20,431,485 — 20,431,485 415,252 1,381,163 1,796,415 — 23,261,523 — 23,261,523 600,038 634,568 — 351,529 600,038 986,097 — — 13.88% 12.26% 648,599 2,010,220 2,658,819 2,055,803 — — — — — — — — 2,055,803 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 1,697,864 — 1,379,498 5,030,048 — — — 4,853,133 — 2,658,128 2,658,128 2,310,826 1,063,251 4,430,213 2,658,128 — 3,591,829 — 6,836,881 — — — 2,534,402 1,466,744 4,572,665 2,008,017 2,530,914 957,228 7,812,518 5,729,883 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 315 Financial Statements Consolidated Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Company ID Number Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign As of December 31, 2009 Company Total Current One to Three Three to Five 1,243,686 1,227,816 4,985,649 4,764,896 3,466,246 5,148,074 — 6,792,445 3,662,414 4,256,339 436,188 Years 3,552,065 3,504,099 20,236,886 31,973,976 6,932,491 49,342,293 — 2,606,603 7,785,583 9,004,830 872,377 78,249,865 133,977,433 10,492,763 1,839,338 ID Three to Twelve Months 1,126,775 1,112,222 3,030,536 3,779,758 2,611,555 3,878,686 — 6,792,445 3,206,151 3,993,950 328,635 72,696,422 235,418 10,352,999 1,347,354 15,386,699 11,207,356 4,593,320 — — 4,118,468 1,519,062 3,854,157 113,730 180,114 170,218 — 1,014,200 433,518 1,537,197 40,439 135,296 135,296 117,285 54,118 225,493 135,296 One to Three Months 116,911 115,594 1,955,113 985,138 854,691 1,269,388 — — 456,263 262,389 107,553 5,553,443 29,795 3,186,809 245,398 3,334,992 3,833,020 162,392 — 5,071,000 175,139 513,959 80,855 37,221 58,946 55,708 1,014,200 8,970 141,879 15,723 13,235 44,279 44,279 38,384 17,711 73,798 44,279 265,213 13,539,808 1,592,752 18,721,691 15,040,376 4,755,712 — 5,071,000 4,293,607 2,033,021 3,935,012 150,951 239,060 225,926 1,014,200 1,023,170 575,397 1,552,920 53,674 179,575 179,575 155,669 71,829 299,291 179,575 223,057 5,792,572 6,015,629 — — — 22,251 24,982 119,807 336,907 60,820 192,756 157,987 119,289 39,533 255,968 183,357 603,814 669,415 762,138 — — — — — 1,608,821 1,612,523 366,078 2,318,241 185,840 588,978 482,738 364,494 120,796 782,125 560,258 1,844,989 2,045,433 2,328,754 — — — — — 1,631,072 1,637,505 485,885 2,655,148 246,660 781,734 640,725 483,783 160,329 1,038,093 743,615 2,448,803 2,714,848 3,090,892 — — 88,632 2,428,842 2,517,474 2,202,337 Years — — — 7,201,106 31,716,155 — — — 6,004,096 7,072,136 762,434 — 258,688 13,075,933 1,611,851 27,764,499 14,331,001 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — More than Five Years — — — 2,901,540 — — — — 12,618,618 6,350,778 4,583,845 Total Non- Current 3,552,065 3,504,099 20,236,886 42,076,622 38,648,646 49,342,293 — 2,606,603 26,408,297 22,427,744 6,218,656 — 133,977,433 2,171,820 10,317,174 — 3,612,736 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 2,891,716 47,015,248 4,816,454 68,430,917 41,699,933 8,852,834 — — 12,332,101 8,387,679 5,420,166 2,819,269 5,640,104 5,386,989 — — 6,066,548 — 1,506,041 2,735,397 2,735,397 2,370,700 1,094,159 4,558,995 2,735,397 — — — — — — 7,784,356 6,381,557 1,908,848 4,490,131 3,816,535 3,352,871 1,240,752 9,120,095 6,781,522 21,513,776 23,851,093 27,154,793 — — 2,202,337 461,208 23,622,141 3,204,603 37,053,682 27,368,932 8,852,834 — — 8,387,679 5,420,166 2,819,269 5,640,104 5,386,989 — — 6,066,548 — 1,506,041 2,735,397 2,735,397 2,370,700 1,094,159 4,558,995 2,735,397 — — — — — — 7,784,356 6,381,557 1,908,848 4,490,131 3,816,535 3,352,871 1,240,752 9,120,095 6,781,522 21,513,776 23,851,093 27,154,793 — — 316 Enersis 2010 Annual Report Copmany ID Number Company Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. Endesa Costanera S.A. 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) 91,081,000-6 Endesa S.A. (Chile) Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Hidroeléctrica El Chocón Country Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Chile Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Argentina Financial Institution Citibank Banco Nación Argentina Mediocredito Italiano Banco Santander Río Banco Itau Citibank Banco Galicia Citibank Banco de la Ciudad de Buenos Aires Macro Standard Bank Superville B,N,P, Paribas Export Development Corpotation Loan Banco Bilbao Vizcaya Argentaria S,A, The Bank of Tokyo-Mitsubishi, Ltd, Caja Madrid, Caja Madrid Miami Agency Banco Santander Central Hispano S,A, N,Y,B, Citibank NA ,Nassau, Bahamas Branch Ing Bank N,V, San Paolo IMI S,p,A HSBC Bank pic Spanish Branch ABN AMRO Bank Instituto de Credito Oficial Deutsche Bank AG New York Branch The Bank of Nova Scotia Banco Bilbao Vizcaya Argentaria S,A, Caja Madrid, Caja Madrid Miami Agency Deutsche Bank Standard Bank ITAU - Sindicado STANDARD - Sindicado SANTANDER - Sindicado HIPOTECARIO - Sindicado GALICIA - Sindicado Citibank BBVA Macro Banco de la Ciudad de Buenos Aires Banco Santander Rio - Sindicado Citibank Banco Industrial de Azul Banco Supervielle BBVA Banco Francés 96,830,980-3 Inversiones Gas Atacama Holding Ltda, Chile PNC BANK 99,584,600-4 Sistemas Sec S.A. Synapsis Brasil Ltda, Foreign Foreign Chile Brazil BBVA BNB Synapsis Colombia Ltda, Colombia Banco de Bogotá Effective Interest Nominal Interest Rate 6.30% 15.82% 14.00% 15.00% 18.12% 13.00% 15.00% 10.28% 6.70% 14.75% 15.40% 13.00% 5.96% 2.50% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 1.65% 2.28% 1.77% 3.80% 3.80% 18.67% 18.67% 18.67% 18.67% 18.67% 14.30% 14.50% 17.75% 21.50% 17.44% 17.44% 17.14% 17.52% 14.00% 3.09% 4.68% 9.57% Rate 5.00% 15.82% 1.75% 15.00% 18.12% 13.00% 15.00% 5.32% 6.70% 14.75% 15.40% 13.00% 5.96% 2.50% 1.65% 1.65% 1.65% 1.65% 1.65% 1.60% 1.60% 1.60% 1.60% 1.65% 1.60% 1.60% 2.28% 1.77% 3.80% 3.80% 18.67% 18.67% 18.67% 18.67% 18.67% 14.30% 14.50% 17.75% 21.50% 17.44% 17.44% 17.14% 17.52% 14.00% 3.09% 4.68% 9.57% 11.50% 11.50% Currency US$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ US$ Ar$ Ar$ Ar$ Ar$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ US$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ Ar$ US$ US$ Ch$ Ch$ Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 317 Financial Statements Consolidated Current Non-current As of December 31, 2010 One to Three Three to Five More than Five Years Years Company ID Number Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 96,830,980-3 99,584,600-4 Foreign Foreign Total One to Three Months 238,978 184,556 4,198 881,772 1,853,593 3,807,821 1,808,418 6,489 35,128 357,550 1,159,080 1,788,875 60,946 345,404 408,841 — — — — — — — — — — — — — 1,479,285 1,477,401 136,513 106,749 760,895 88,490 41,985 25,459 21,510 105,325 — 463,089 — 378,715 — — 1,515 — — — Three to Twelve Months 188,868 2,497,668 954,555 — 895,623 146,831 — 426,386 1,011,545 — — — 944,030 700,155 Total Current 427,846 2,682,224 958,753 881,772 2,749,216 3,954,652 1,808,418 432,875 1,046,673 357,550 1,159,080 1,788,875 1,004,976 1,045,559 17,060,873 17,469,714 — — — — — — — — — — — — — 7,585,610 7,582,650 1,869,470 1,460,783 1,245,088 1,223,925 582,414 714,554 595,558 — — — — — — — — — — — — — 9,064,895 9,060,051 2,005,983 1,567,532 2,005,983 1,312,415 624,399 740,013 617,068 2,599,171 2,704,496 — 3,083,714 — 368,379 — — — 3,546,803 — 747,094 — — 210,098 211,613 — — — — — — Years — 1,994,435 — — — — — — — — — — 1,823,007 1,379,586 — — — — — — — — — — — — — — 979,026 979,026 1,687,700 1,318,645 1,687,700 1,106,099 526,511 — — — — — — — — — — — — — — — — 1,648,517 337,839 81,838,285 — — — — — — — — — — — — — — — — — — — — — — — — 8,328,139 1,696,967 — — — — — — — — — — — — — — — — Total Non- Current — 1,994,435 — — — — — — — — — — 3,471,524 1,717,425 81,838,285 — — — — — — — — — — — — — 979,026 979,026 1,687,700 1,318,645 1,687,700 1,106,099 526,511 — — — — 10,025,106 — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — 59,990,367 273,216,141 333,206,508 339,973,705 235,669,899 41,409,395 617,052,999 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 318 Enersis 2010 Annual Report As of December 31, 2009 Non-current Total Current One to Three Three to Five More than Five Years Years One to Three Months 2,771,743 — 12,760 4,453,137 1,674,866 858,964 — 6,417 — — — — — — 76,659 76,659 76,659 76,659 76,659 12,790 12,790 12,790 12,790 350,939 12,790 12,790 580,915 439,829 1,691,369 1,694,990 199,352 155,744 130,825 62,298 229,470 — — — — — — — — — Current Three to Twelve Months — — 1,968,909 — 1,015,968 789,556 — 404,266 — — — — — — 84,077 84,077 84,077 84,078 84,078 173,010 173,010 173,010 173,010 1,052,816 173,010 173,010 1,775,019 2,771,743 — 1,981,669 4,453,137 2,690,834 1,648,520 — 410,683 — — — — — — 160,736 160,736 160,736 160,737 160,737 185,800 185,800 185,800 185,800 Years — — 977,862 — — — — — — — — — — — 310,503 310,503 310,503 310,503 310,503 345,665 345,665 345,665 345,665 1,403,755 102,121,878 185,800 185,800 2,355,934 345,665 345,665 4,711,868 104,750,582 127,820,814 128,260,643 4,966,337 4,975,360 1,449,462 1,132,392 951,209 452,957 1,539,414 — — — — — — — — — 6,657,706 6,670,350 1,648,814 1,288,136 1,082,034 515,255 1,768,884 — — — — — — — — — — 10,883,496 10,888,934 4,169,361 3,257,313 2,736,143 1,302,925 4,283,140 — — — — — — — — — — — — — — — — — — — — — — — 295,877 295,877 295,877 295,877 295,876 239,767 239,767 239,767 239,767 — 239,767 239,768 — — — — — — — — — — — — — — — — — — 1,354,489 — — Total Non- Current — — 977,862 — — — — — — — — — — — 606,380 606,380 606,380 606,380 606,379 795,024 795,024 795,024 795,024 — — — — — — — — — — — — — — — — — — — 209,592 209,592 209,592 209,592 — 102,121,878 209,592 209,592 — — — — — — — — — — — — — — — — — — — — — — 795,024 795,025 109,462,450 — 10,883,496 10,888,934 4,169,361 3,257,313 2,736,143 1,302,925 4,283,140 — — — — — — — — — 231,267 1,542,472 236,372 — 5,750 23,176 54,395 716,433 237,177 70,816 126,775 — 242,927 93,992 181,170 716,433 231,267 187,983 236,372 — 50,352,574 335,083,344 385,435,918 701,515,353 220,660,295 43,814,063 965,989,711 Company ID Number Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 96,830,980-3 99,584,600-4 Foreign Foreign Total Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 319 Financial Statements Consolidated B) Secured and unsecured liabilities a) Secured and unsecured liabilities detailed by currency and maturity Current Non-Current Maturity Total Maturity As of December 31, 2010 One to Three Months ThCh$ Three to Current as Twelve of December One to Months ThCh$ 31, 2010 Three Years ThCh$ ThCh$ Three to Five Years ThCh$ Total Non- Current as of More Than December 31, Five Years ThCh$ 2010 ThCh$ 20,226,869 44,237,144 64,464,013 299,076,238 429,205,042 515,592,354 1,243,873,634 8,474,004 33,742,901 42,216,905 77,732,304 187,444,894 542,172,671 807,349,869 870,099 6,351,625 7,221,724 18,968,745 8,678,373 38,097,741 65,744,859 19,784,574 22,667,166 42,451,740 64,109,539 68,651,225 59,006,695 191,767,459 510,018 9,010,562 9,520,580 4,165,269 — — 4,165,269 47,619,509 131,473,631 179,093,140 152,631,795 183,051,591 442,910,408 778,593,794 7,503,875 97,708,841 105,212,716 155,008,143 48,941,503 — 203,949,646 104,988,948 345,191,870 450,180,818 771,692,033 925,972,628 1,597,779,869 3,295,444,530 Current Non-Current Maturity Total Maturity As of December 31, 2009 One to Three Months ThCh$ Three to Current as Twelve of December One to Months ThCh$ 31, 2009 Three Years ThCh$ ThCh$ Three to Five Years ThCh$ Total Non- Current as of More Than December 31, Five Years ThCh$ 2009 ThCh$ 15,628,041 47,752,347 63,380,388 126,760,775 460,199,594 530,676,061 1,117,636,430 3,106,823 15,050,387 18,157,210 35,877,886 29,967,675 487,997,370 553,842,931 724,841 2,214,792 2,939,633 19,585,709 3,563,753 34,273,976 57,423,438 3,273,694 25,385,026 28,658,720 70,360,662 91,399,182 48,895,891 210,655,735 657,735 10,459,172 11,116,907 14,674,385 — — 14,674,385 72,170,887 113,532,030 185,702,917 213,568,835 206,774,272 439,859,884 860,202,991 48,826,017 22,466,550 71,292,567 223,769,344 54,505,883 26,865,685 305,140,912 144,388,038 236,860,304 381,248,342 704,597,596 846,410,359 1,568,568,867 3,119,576,822 Nominal Interest Rate 8.15% 7.82% 6.43% 6.77% 17.36% 8.31% 12.12% Nominal Interest Rate 8.15% 7.82% 6.43% 6.77% 17.36% 8.31% 12.12% Country Currency Chile Chile Peru Peru Argentina Colombia Brazil US$ Ch$ US$ Soles Ar$ CPs Reais Country Currency Chile Chile Peru Peru Argentina Colombia Brazil US$ Ch$ US$ Soles Ar$ CPs Reais Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 320 Enersis 2010 Annual Report b) Secured and unsecured liabilities detailed by Companies Company ID Number Company Country Financial Institution Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Ampla Codensa Codensa Codensa Codensa Codensa Codensa Codensa Codensa Codensa Codensa Codensa Codensa Codensa Coelce Coelce Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edegel Edelnor Edelnor Edelnor Edelnor Edelnor Foreign Edelnor Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Brazil BONOS Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru B3 B5 B8 B302 B102 B502 B203 B503 B503 B102 B103 B304 B604 Itaú Santander BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO SCOTIABANK BANCO SCOTIABANK BANCO SCOTIABANK BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL BANCO CONTINENTAL Caja de Pensiones Militar Policial FCR - Macrofondo Rimac Internacional Cia de Seguros Rimac Internacional Cia de Seguros AFP Integra Fondo de Seguro de Retiro de Suboficiales y Especialistas - Fosersoe AFP Integra Seguro Social de Salud - Essalud AFP Profuturo AFP Integra AFP Horizonte AFP Integra AFP Integra FCR - Macrofondo AFP Profuturo AFP Integra AFP Horizonte AFP Prima AFP Prima AFP Prima Country Brazil Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Colombia Brazil Brazil Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Currency Reais CPs CPs CPs CPs CPs CPs CPs CPs CPs CPs CPs CPs CPs Reais Reais Soles Soles Soles Soles Soles Soles Soles US$ US$ US$ US$ US$ US$ US$ US$ Soles Soles Soles Soles Soles Soles US$ Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Effective Interest Rate 9.56% 13.12% 8.32% 8.51% 11.85% 7.77% 6.21% 10.85% 6.37% 8.17% 7.50% 7.75% 5.13% 6.03% 10.47% 13.57% 6.74% 6.49% 6.17% 6.11% 5.92% 6.17% 6.33% 6.16% 6.06% 6.44% 9.14% 7.90% 7.24% 6.73% 6.10% 6.23% 6.77% 6.52% 6.46% 6.64% 6.61% 6.06% 5.44% 6.48% 6.48% 0.48% 8.75% 7.31% 7.84% 7.56% 8.16% 7.22% 7.06% 8.00% 6.66% 5.69% 5.91% 5.97% 6.94% 6.95% 6.84% 5.94% Nominal Interest Rate 9.56% 13.12% 8.32% 8.51% 11.85% 7.77% 6.21% 10.85% 6.37% 8.17% 7.50% 7.75% 5.13% 6.03% 10.47% 13.57% 6.31% 6.28% 6.17% 6.11% 5.92% 6.17% 6.33% 5.97% 6.06% 6.44% 7.78% 7.13% 6.63% 6.00% 6.10% 6.23% 6.47% 6.09% 6.16% 6.16% 5.91% 6.06% 5.44% 1.27% 6.48% 0.48% 8.75% 7.31% 7.31% 7.56% 7.56% 7.22% 7.06% 7.06% 6.66% 5.69% 5.69% 5.91% 5.97% 6.94% 6.56% 5.94% Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 321 Financial Statements Consolidated Copmany ID Number One to Three Months Current Three to Twelve Months As of December 31, 2010 Non-Current Total Current One to Three Years Three to Five Years More than Five Years Total Non- Current Current Three to Twelve Months One to Three Months As of December 31, 2009 Non-Current Total Current One to Three Months Three to Twelve Months More than Five Years Total Non- Current 5,058,194 66,186,606 71,244,800 115,328,463 32,291,490 — 147,619,953 44,876,908 16,330,926 61,207,834 171,569,196 20,634,513 26,865,685 219,069,394 Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign — — — — 717,058 2,191,011 2,908,069 27,411,098 — 56,329,693 3,232,051 3,944,613 7,176,664 24,789,050 33,871,370 — 103,120 6,348,902 6,452,022 — — 528,747 1,293,774 5,217,004 7,039,525 521,745 1,276,641 4,424,723 6,223,109 216,689 206,221 287,605 273,711 575,210 4,600,274 547,422 4,658,872 452,314 3,464,092 4,520,998 4,587,803 — 269,406 4,353,667 4,623,073 5,590,323 6,217,062 159,078 3,383,243 3,811,539 600,026 1,468,183 7,663,880 9,732,089 601,038 1,470,659 4,120,651 6,192,348 115,983 532,248 567,661 608,863 846,573 5,665,215 7,044,036 — — 5,504,523 6,072,184 6,169,906 6,778,769 827,616 4,892,958 625,209 4,767,047 — — — 34,864,627 14,808,827 49,673,454 — — 1,305,256 4,341,394 5,646,650 10,413,670 — — — — 700,056 2,328,447 3,028,503 5,585,228 128,474 427,314 555,788 8,288,014 — — — — 333,765 1,110,132 1,443,897 23,349,393 378,323 1,258,334 1,636,657 21,257,241 1,124,031 3,738,624 4,862,655 8,967,810 380,204 1,264,592 1,644,796 3,033,368 251,482 836,452 1,087,934 20,546,246 536,552 1,784,618 2,321,170 4,280,751 846,422 26,202,959 27,049,381 — — — — — — — — — — — — — — — 1,599,259 5,319,276 6,918,535 39,679,680 16,650,013 4,162,360 — 4,162,360 — — — — — — — — — — — — — — — 295,221 4,482,746 292,382 4,524,506 300,898 4,557,650 626,739 428,296 286,704 282,908 245,260 325,355 448,762 325,903 232,237 339,840 307,805 330,146 339,010 — — 66,273 65,396 56,693 68,242 67,586 69,554 220,431 217,512 188,567 226,979 224,796 231,344 75,208 103,734 75,334 53,683 78,556 71,151 76,315 78,364 67,914 64,633 77,560 — — 66,712 53,845 64,056 127,846 815,693 110,243 250,147 345,028 250,569 178,554 261,284 236,654 253,831 260,646 225,888 214,975 — — 221,891 179,094 213,056 425,227 — 366,678 293,802 4,639,193 279,608 164,402 5,057,591 5,135,151 — — — 288,603 14,176,258 232,939 277,112 429,592 3,983,249 511,056 4,027,619 553,073 1,019,989 8,041,180 815,693 476,921 — — 879,547 5,838,330 13,176 47,638 61,654 45,473 43,824 158,449 205,067 151,246 57,000 719,004 206,087 266,721 196,719 — 2,752,371 491,892 3,713,379 362,794 3,026,055 3,371,548 — 3,371,548 — — 91,381 41,929 47,769 49,607 100,263 116,536 82,678 86,221 303,942 139,461 158,885 164,996 333,484 387,610 274,994 286,779 395,323 181,390 729,064 5,590,647 — 2,791,758 206,654 3,379,468 — 214,603 395,775 3,710,199 433,747 6,863,872 — 504,146 357,672 929,757 7,552,392 — 373,000 5,342,274 3,382,087 — 3,382,087 — — — — — 15,340,703 — 15,340,703 — 1,224,568 3,741,736 4,966,304 50,415,585 — — 61,681,208 72,094,878 1,560,426 4,767,969 6,328,395 12,656,791 69,367,358 — — 19,819,236 — 19,819,236 — — — — — — — 50,415,585 82,024,149 — 46,648,583 52,233,811 852,057 2,603,507 3,455,564 6,911,128 6,040,136 44,152,863 57,104,127 — — — — 8,288,014 196,193 599,478 795,671 9,289,007 — 609,435 28,691,230 29,300,665 — — — 23,349,393 504,234 1,540,715 2,044,949 4,089,898 23,080,746 21,257,241 455,283 1,391,144 1,846,427 3,692,854 20,418,444 — — — — 9,289,007 — 27,170,644 24,111,298 76,961,384 85,929,194 1,376,910 4,207,224 5,584,134 11,168,268 9,760,760 73,074,449 94,003,477 26,883,291 29,916,659 — — 20,546,246 21,393,402 — — — 21,393,402 — — — — — — — — 41,490,148 45,770,899 403,189 1,231,967 1,635,156 3,270,312 2,858,163 25,095,544 31,224,019 262,596 4,407,463 328,453 5,535,754 — — — 280,658 561,316 490,575 6,393,595 7,445,486 645,151 11,324,482 255,658 4,183,579 — — — — 11,324,482 4,183,579 679,302 940,751 679,283 484,285 677,480 616,547 563,191 593,691 9,511,585 10,784,578 822,191 4,968,962 6,731,904 593,675 5,566,542 6,839,500 423,252 3,283,654 4,191,191 592,099 5,490,481 6,760,060 538,845 5,452,752 6,608,144 492,214 5,567,091 6,622,496 480,175 3,887,664 577,989 4,431,875 572,431 4,479,259 589,104 4,507,017 663,720 5,349,505 — — 447,047 4,326,341 526,938 4,411,721 — — — — — — — — 27,411,098 58,660,420 — 5,175,484 5,206,294 — 4,407,463 5,535,754 — — — — — — — — — — — 4,367,839 5,009,864 5,051,690 5,096,121 6,013,225 — 4,773,388 4,938,659 9,883,425 858,552 — — — — 3,508,129 813,784 3,100,951 522,610 385,215 456,747 3,480,904 4,460,261 336,667 2,869,613 3,591,495 250,642 3,529,416 — — 3,529,416 771,990 674,698 5,249,054 6,695,742 355,339 2,763,983 202,371 3,760,399 — — — 3,119,322 3,760,399 280,165 560,329 489,712 3,578,745 4,628,786 424,683 7,651,537 — — 7,651,537 493,830 987,661 863,189 49,311,621 8,991,580 354,480 5,852,670 — 365,300 730,601 5,262,193 — — 5,852,670 5,992,794 339,651 470,376 339,641 242,142 338,740 308,274 281,596 240,088 288,994 286,216 294,552 331,859 — 223,523 263,469 201,761 261,305 192,607 385,995 177,669 70,916 67,490 66,805 64,750 80,988 69,203 63,039 83,750 83,747 59,706 83,525 76,013 69,435 59,200 71,259 70,574 72,629 81,828 — 55,115 64,965 64,238 13,828 49,749 64,431 47,492 61,802 95,177 43,809 49,900 69,082 104,716 121,766 87,406 90,074 197,846 247,465 211,455 486,073 192,619 255,901 354,393 255,894 182,436 255,215 232,261 212,161 180,888 217,735 215,642 221,923 250,031 — 168,408 198,504 401,452 4,267 351,806 196,281 42,251 152,012 196,874 145,115 188,840 290,818 133,860 152,471 211,083 319,967 372,064 267,074 275,226 9,061,169 131,384 — 1,396 6,717,877 97,070 5,327,985 5,425,055 — 532,836 1,065,671 8,817,754 5,663 858,552 — — 260,519 3,508,129 — 56,079 112,158 701,626 403,522 2,697,429 — — — — 3,916,406 4,482,746 4,524,506 4,557,650 — — — — — — — — — — — — — — — — — — — — — — — — — 5,720,574 5,392,256 4,639,193 164,402 — — — 14,176,258 4,412,841 4,538,675 719,004 2,752,371 4,205,271 3,388,849 — 6,319,711 2,791,758 3,379,468 4,105,974 6,863,872 8,482,149 3,352,913 — 3,352,913 — — 115,137 466,943 933,886 816,191 5,379,888 7,129,965 — — — 5,217,603 5,217,603 — — 5,342,274 — Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Company ID Number Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 322 Enersis 2010 Annual Report As of December 31, 2010 Current Non-Current Company Country Financial institution Country Currency Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Edelnor Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru AFP Integra Mapfre Perú Cia de Seguros AFP Prima AFP Prima AFP Prima AFP Prima AFP Profuturo AFP Profuturo AFP Profuturo AFP Profuturo AFP Profuturo Fondo Mi Vivienda Atlantic Security Bank AFP Integra Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Peru Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Soles Effective Interest Rate Nominal Interest Rate 6.28% 5.94% 6.81% 6.28% 7.13% 6.81% One to Three Months 52,756 71,523 74,804 Three to Twelve Months Total Current One to Three Years Three to Five Years More Than Five Years Total Non- Current 175,472 228,228 3,577,649 — 237,891 309,414 570,628 4,283,441 248,804 323,608 596,804 7.50% 7.13% 62,993 3,415,752 3,478,745 — 7.72% 7.50% 8.31% 7.72% 97,245 45,381 323,445 420,690 5,579,682 150,941 196,322 2,331,681 8.25% 8.25% 1,850,054 940,321 2,790,375 7.81% 7.81% 83,531 4,519,744 4,603,275 — — 331,302 430,909 5,395,672 280,527 364,869 672,899 7.91% 7.81% 8.06% 7.91% 6.56% 6.56% 7.03% 6.56% 6.59% 6.16% 99,607 84,342 81,231 88,558 55,355 270,181 351,412 648,082 — 10,037,150 10,685,232 294,551 383,109 706,538 184,114 239,469 441,633 — — 6,375,788 7,082,326 3,753,995 4,195,628 — — 3,577,649 4,854,069 5,032,020 5,628,824 — — — — — — — 5,579,682 2,331,681 — — 5,395,672 9,585,848 10,258,747 — — — — — — — — Edesur S.A. Argentina oeds7 Argentina Ar$ 8.00% 8.00% 510,018 9,010,562 9,520,580 4,165,269 Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Emgesa Colombia Bonos B10 Colombia Bonos A-10 Colombia Bonos B-103 Colombia Bonos A102 Colombia Bonos A5 Colombia Bonos B10 Colombia Bonos B15 Colombia Bonos A5 Colombia Bonos B9 Colombia Bonos B12 Colombia Bonos B104 Colombia Bonos C10 Colombia Bonos C10 0.00% 0.00% 130,063 432,600 562,663 1,037,675 2,539,051 9,362,564 12,939,290 — — — — 4,165,269 — Colombia CPs 7.05% 7.05% 925,274 46,241,341 47,166,615 — Colombia CPs 7.21% 7.21% 928,950 3,089,767 4,018,717 7,411,403 — 58,531,760 65,943,163 Colombia CPs 5.11% 5.11% 789,965 2,627,492 3,417,457 6,302,546 32,953,942 41,376,336 80,632,824 Colombia CPs 6.34% 6.34% 127,910 425,441 553,351 1,020,502 10,705,143 Colombia CPs 4.83% 4.83% 920,115 3,060,381 3,980,496 7,340,914 12,326,963 Colombia CPs 4.83% 4.83% 631,089 16,269,543 16,900,632 — — Colombia CPs 5.33% 5.33% 525,615 1,748,240 2,273,855 4,193,491 23,479,236 Colombia CPs 7.77% 7.77% 1,080,324 3,593,253 4,673,577 8,619,110 74,169,812 — — — — — 11,725,645 19,667,877 — 27,672,727 82,788,922 Colombia CPs 6.07% 6.07% 454,112 1,510,415 1,964,527 3,623,022 8,865,052 27,196,423 39,684,497 Colombia CPs 9.27% 8.07% — — — — — — — Colombia CPs 7.94% 7.94% 774,134 2,574,836 3,348,970 6,176,240 15,112,435 42,007,978 63,296,653 Colombia CPs 8.14% 8.14% 278,613 926,691 1,205,304 2,222,846 5,439,008 20,133,297 27,795,151 Colombia Papeles comerciales Colombia CPs 4.21% 4.00% 180,638 17,507,497 17,688,135 Colombia CPs 7.00% 7.00% — — — — — — — — — — — 91,081,000-6 Endesa S.A. (Chile) Chile 91,081,000-6 Endesa S.A. (Chile) Chile 91,081,000-6 Endesa S.A. (Chile) Chile The Bank of New York Mellon - Primera Emisión S-1 The Bank of New York Mellon - Primera Emisión S-2 The Bank of New York Mellon - Primera Emisión S-3 91,081,000-6 Endesa S.A. (Chile) Chile Banco Santander Chile — 264 Serie-F 91,081,000-6 Endesa S.A. (Chile) Chile The Bank of New York Mellon - 144 - A 91,081,000-6 Endesa S.A. (Chile) Chile The Bank of New York Mellon - 144 - A 91,081,000-6 Endesa S.A. (Chile) Chile Banco Santander Chile — 317 Serie-H 91,081,000-6 Endesa S.A. (Chile) Chile Banco Santander Chile — 318 Serie-K 91,081,000-6 Endesa S.A. (Chile) Chile Banco Santander Chile — 522 Serie-M 94,271,000-3 Enersis S.A. 94,271,000-3 Enersis S.A. 94,271,000-3 Enersis S.A. 94,271,000-3 Enersis S.A. Chile Chile Chile Chile Yankee bonos 2016 Yankee bonos 2026 Yankee bonos 2014 Bonos UF 269 USA US$ 7.88% 7.88% 416,214 1,384,363 1,800,577 3,320,662 8,125,215 207,932,292 219,378,169 USA US$ 7.33% 7.33% 652,512 2,170,311 2,822,823 5,205,909 12,738,165 79,957,654 97,901,728 USA Chile USA USA Chile Chile Chile USA USA USA Chile US$ Ch$ US$ US$ Ch$ Ch$ Ch$ US$ US$ US$ Ch$ 8.13% 8.13% 1,995,692 6,637,844 8,633,536 15,922,148 38,959,371 167,613,573 222,495,092 6.20% 6.20% 956,132 2,405,370 3,361,502 6,435,714 19,069,273 23,877,508 49,382,495 8.35% 8.35% 9,543,000 8,701,669 18,244,669 213,837,549 — — 213,837,549 8.63% 8.63% 2,169,821 7,217,013 9,386,834 17,311,397 50,668,664 59,466,428 127,446,489 6.20% 6.20% 1,758,444 10,118,583 11,877,027 21,414,704 47,005,622 67,587,558 136,007,884 3.80% 3.80% 1,284,413 4,272,071 5,556,484 10,247,385 25,073,983 131,684,135 167,005,503 4.75% 4.75% 3,759,700 12,505,089 16,264,789 29,995,867 73,395,881 304,052,705 407,444,453 7.71% 7.40% 2,270,849 7,553,041 9,823,890 18,117,426 143,190,238 — 161,307,664 6.88% 6.60% 6,958 23,144 30,102 55,516 135,840 622,407 813,763 7.68% 7.38% 3,171,823 10,549,759 13,721,582 25,305,631 175,387,549 — 200,693,180 8.52% 5.75% 715,315 4,441,788 5,157,103 9,638,634 22,900,135 14,970,765 47,509,534 Total 104.988.948 345.191.870 450.180.818 771.692.033 925,972,628 1,597,779,869 3,295,444,530 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 323 Financial Statements Consolidated Company ID Number One to Three Months Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign Foreign 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 91,081,000-6 94,271,000-3 94,271,000-3 94,271,000-3 94,271,000-3 52,117 55,115 74,695 78,118 69,273 101,564 47,388 55,950 87,175 103,953 87,465 84,147 — — 657,735 1,184,467 177,434 822,066 1,272,041 848,027 293,884 195,923 241,092 916,023 327,907 527,539 1,147,564 481,284 — 443,752 696,742 2,134,683 587,547 4,433,373 2,297,667 748,281 235,793 1,204,131 2,342,842 6,602 3,272,380 331,071 Current As of December 31, 2009 Three to Twelve Months 159,248 168,406 228,234 238,695 211,668 310,335 144,797 170,957 266,369 317,634 267,254 257,115 — — Total Current 211,365 223,521 302,929 316,813 280,941 411,899 192,185 226,907 353,544 421,587 354,719 341,262 — — One to Three Years 3,542,295 447,042 605,858 633,626 3,647,445 823,799 2,648,330 2,920,296 4,819,392 843,174 709,437 682,523 — — 10,459,172 11,116,907 14,674,385 3,619,205 542,158 2,511,868 3,886,791 31,784,107 897,979 10,388,423 736,669 2,798,961 1,001,939 1,611,923 3,506,446 1,470,591 — 1,355,909 2,128,935 6,522,643 1,141,652 4,803,672 719,592 3,333,934 5,158,832 32,632,134 1,191,863 10,584,346 977,761 3,714,984 1,329,846 2,139,462 4,654,010 1,951,875 — 1,799,661 2,825,677 8,657,326 1,729,199 13,546,417 17,979,790 7,020,648 6,563,199 720,479 3,679,288 7,158,684 20,173 9,998,938 2,945,769 9,318,315 7,311,480 956,272 4,883,419 9,501,526 26,775 13,271,318 3,276,840 9,607,344 1,439,184 6,667,867 48,948,202 — 15,876,519 — 1,955,521 7,429,968 2,659,692 4,278,924 9,308,021 3,903,750 — 3,599,322 5,651,354 17,314,652 3,388,622 35.959.581 18.636.629 14.149.547 1.912.545 9.766.837 19.003.052 53.550 26.542.635 6.660.335 Non-Current Three to Five Years — 3,544,259 4,813,411 553,772 — 5,466,450 — — — 5,262,193 620,029 5,623,562 — — — 8,396,555 1,257,807 5,827,533 — — — — 13,325,090 6,493,589 2,324,498 26,076,868 8,134,955 3,411,770 — 3,145,709 4,939,128 15,132,532 3,650,500 213.283.056 16.287.903 10.774.238 1.671.512 8.535.948 16.608.147 46.801 190.756.318 5.335.477 More Than Five Years — — — 4,777,488 — — — — — — 4,458,783 — — — — 53,304,242 10,103,939 7,416,861 — — — — — 55,297,889 25,907,411 — 69,071,416 34,264,379 — 30,628,753 48,090,698 209,049,168 31,153,499 — 103.768.726 79.365.405 95.330.628 254.008.392 138.406.385 732.331 — 28.139.446 Total Non- Current 3,542,295 3,991,301 5,419,269 5,964,886 3,647,445 6,290,249 2,648,330 2,920,296 4,819,392 6,105,367 5,788,249 6,306,085 — — 14,674,385 71,308,141 12,800,930 62,083,152 48,948,202 — 15,876,519 — 15,280,611 69,221,446 30,891,601 30,355,792 86,514,392 41,579,899 — 37,373,784 58,681,180 241,496,352 38,192,621 249.242.637 138.693.258 104.289.190 98.914.685 272.311.177 174.017.584 832.682 217.298.953 40.135.258 144,388,038 236,860,304 381,248,342 704,597,596 846,410,359 1,568,568,867 3,119,576,822 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 324 Enersis 2010 Annual Report C) Finance Lease obligations by company: Company ID Number Company Country Financial Institution ID Number Institution Financial Country Currency Nominal Interest Rate One to Three Months Current Three to Twelve Years As of December 31, 2010 Non-Current Total Current One to Three Years Three to Five Years More than Five Years Total Non- Current 87,509,100-K Leasing Abengoa Chile Chile 91,081,000-6 Endesa S.A. (Chile) Foreign Edegel 96,830,980-3 Gas Atacama S.A. Chile Peru Chile Peru Edelnor Foreign Foreign Scotiabank 96,976,410-5 Gasred S.A. BBVA COMAFI US$ US$ US$ Soles Peru Chile Peru Edesur S.A. Argentina Foreign Argentina Ar$ Synapsis Brasil Ltda. Brazil Foreign Leasing - IBM Brazil Reais Foreign Foreign Foreign 6.40% 5.16% 8.64% 6.40% 3.54% 2.60% 514,759 1,713,147 2,227,906 4,107,030 10,200,414 11,875,674 26,183,118 2,204,779 6,628,821 8,833,600 14,084,254 30,098,142 — 44,182,396 65,489 195,946 261,435 — 909,184 1,359,341 2,470,766 — — 581,159 756,068 917,985 225,762 — — — — 450,157 174,909 — — — — — — 2,470,766 1,143,747 — Total 3.410.093 10.028.257 13.438.350 21.580.035 40,524,318 11,875,674 73,980,027 Current Non-Current One to Three Three to Twelve Total Current One to Three Three to Five As of December 31, 2009 Months 554,228 2,200,935 70,737 324,545 204,234 — Years 1,680,476 8,439,132 212,201 971,217 609,693 — 2,234,704 10,640,067 282,938 1,295,762 813,927 — Years 4.463.401 32.300.512 281.357 774.627 1.411.773 — Years 3.896.027 10.101.808 — — 748.771 — More than Five Years 21.420.167 26.354.524 — — — — Total Non- Current 29.779.595 68.756.844 281.357 774.627 2.160.544 — 3,354,679 11,912,719 15,267,398 39,231,670 14,746,606 47,774,691 101,752,967 Company ID Number 91,081,000-6 Foreign 96,830,980-3 Foreign Foreign Foreign Total D) Other Liabilities by company: As of December 31, 2010 Current Non-Current Company Country Institution Financial Institution Country Currency Interest Financial Nominal One to Three to Company ID Number Foreign Foreign Foreign Foreign Foreign Foreign ID Number Endesa Costanera S.A. Argentina Foreign Mitsubishi (deuda garantizada) Argentina US$ Endesa Costanera S.A. Argentina Foreign Mitsubishi (deuda no garantizada) Argentina US$ Endesa Costanera S.A. Argentina Foreign Otros Argentina Ar$ 96,827,970-K Endesa Eco S.A. Endesa Brasil S.A. Ampla Energía E Servicios S.A. Compañía Energética Do Ceará S.A. Brazil Chile Brazil Brazil 96601250-1 Inversiones Centinela S.A. Foreign Foreign Foreign IFC Bndes Otros US$ US$ Reais Reais Chile Brazil Brazil Brazil Total Rate 16.08% 16.08% 17.17% 9.90% Three Months Twelve Years Total Current One to Three Years Three to More than Total Non- Five Years Five Years Current 9,372,718 10,439,827 19,812,545 28,222,904 26,997,497 — 55,220,401 56,194 1,181,656 1,237,850 1,164,650 1,117,531 — 2,282,181 968,330 1,855,135 2,823,465 866,537 — 24.09% 51,831,581 11.02% 10.75% — — — — — — — 12,395,250 — — — — — — — — — — 866,537 — 12,395,250 — — 62,228,823 13,476,618 23,873,860 42,649,341 28,115,028 — 70,764,369 Company ID Number Foreign Foreign Foreign 96,827,970-K Foreign Foreign Foreign Total Current One to As of December 31, 2009 Non-Current Three Three to Twelve Total Current One to Three Three to Five Months 4,181,796 4,181,796 77,062 — — 10,712,128 1,941,087 Years 5,441,296 5,441,296 235,468 — 55,497,068 23,336,844 — 9,623,092 9,623,092 312,530 — 55,497,068 34,048,972 1,941,087 Years 18,442,282 18,442,282 3,223,239 11,688,452 — 35,333,322 — Years 14,377,659 14,377,658 — — — — — 21,093,869 89,951,972 111,045,841 87,129,577 28,755,317 More than Five Years — — — — — — Total Non- Current 32,819,941 32,819,940 3,223,239 11,688,452 — 35,333,322 — 115,884,894 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Investments and financial activities Total Current Assets Total current assets other than assets or disposal groups classified as held for sale or as held for distribution to owners 325 Financial Statements Consolidated APPENDIX No.5 Assets And Liabilities in Foreign Currencies: The detail of assets and liabilities denominated in foreign currencies is the following: Functional 12-31-2010 12-31-2009 Foreign Currency Currency ThCh$ ThCh$ ASSETS Current Assets Cash and Cash Equivalent Trade and Other Current Receivables Account Receivable from Related Companies Investment accounted for using equity method Goodwill Total Non-Current Assets Total Assets U.S. dollar U.S. dollar U.S. dollar U.S. dollar Chilean pesos Colombian Pesos Peruvian Soles Argentine Pesos U.S. dollar Chilean Pesos U.S. dollar Euros Chilean Pesos Chilean Pesos U.S. dollar Chilean pesos 66,329,098 46,804,371 6,004 1,234,825 18,283,898 116,551,541 83,606,901 2,381 8,287,053 24,655,206 17,592,080 17,592,080 35,725,419 35,725,419 563,614 563,614 — 288,225 261,245 26,980 84,484,792 152,565,185 84,484,792 152,565,185 2,887,460 2,887,460 10,131,240 10,131,240 488,403,515 483,812,158 Brazilian Reais Peruvian Soles 10,502,214 11,050,603 Brazilian Reais Chilean pesos 327,477,479 318,282,817 Colombian Pesos Chilean pesos 7,348,467 10,748,633 Soles Chilean pesos 118,949,428 116,436,507 Argentine Pesos Chilean pesos 24,125,927 27,293,598 491,290,975 493,943,398 575,775,767 646,508,583 Current Liabilities Non-Current Liabilities Current Liabilities Non-Current Liabilities 12-31-2010 12-31-2009 Foreign Functional One to Three to One to Three to Currency Currency Three Twelve Total One to Three to More tan Total Non- Three Twelve Total One to Three to More tan Total Non- LIABILITIES Months Months Current Three Years Five Years Five Years Current Months Months Current Three Years Five Years Five Years Current Other Financial Liabilities U.S. dollar 93,267,733 137,235,543 230,503,276 419,645,875 622,867,495 537,908,172 1,580,421,542 43,554,407 296,269,060 339,823,467 418,096,478 631,476,249 639,707,341 1,689,280,068 ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ ThCh$ U.S. dollar Chilean pesos 21,623,823 65,061,393 86,685,216 318,781,111 523,230,097 467,468,028 1,309,479,236 18,113,650 182,060,113 200,173,763 254,073,486 573,118,679 553,353,780 1,380,545,945 U.S. dollar Brazilian Reais 52,596,722 11,617,821 64,214,543 19,990,693 18,600,098 10,681,077 49,271,868 1,018,392 67,854,542 68,872,934 26,976,832 14,097,354 25,725,061 66,799,247 U.S. dollar Peruvian Soles 4,532,918 30,789,583 35,322,501 47,472,662 52,922,272 59,759,067 160,154,001 18,169,214 33,579,600 51,748,814 113,071,393 44,260,216 60,628,500 217,960,109 U.S. dollar Argentine Pesos 14,514,270 29,766,746 44,281,016 33,401,409 28,115,028 — 61,516,437 6,253,151 12,774,805 19,027,956 23,974,767 — — 23,974,767 TOTAL Liabilities 93,267,733 137,235,543 230,503,276 419,645,875 622,867,495 537,908,172 1,580,421,542 43,554,407 296,269,060 339,823,467 418,096,478 631,476,249 639,707,341 1,689,280,068 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries pages control previously next Summarized Financial Information for Subsidiaries Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next 328 Enersis 2010 Annual Report Summarized Financial Information for Subsidiaries As of December 31, 2010 and 2009, in thousands of Chilean pesos - ThCh$) Chilectra Synapsis IM Velasco Cam ICT Distrilima Edesur Endesa Chile Codensa Endesa Brasil 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, SUMMARIZED BY SUBSIDIARY Assets Current Assets Non-Current Assets Total Assets Liabilities and Shareholders’ Equity Current Liabilities Non-Current Liabilities Shareholders’ Equity 308,282,584 201,194,118 27,547,119 28,912,134 32,323,759 29,801,117 71,769,555 80,290,795 76,808,391 54,918,692 110,182,639 93,131,605 793,026,723 942,361,242 255,980,239 333,863,028 799,250,363 893,078,804 1,153,691,583 1,194,415,123 10,385,607 16,922,968 35,782,164 35,598,877 25,904,845 26,207,497 356,670,398 363,706,049 320,842,717 320,067,184 5,241,845,082 5,226,991,370 885,875,047 882,909,627 2,469,692,998 2,406,346,709 1,461,974,167 1,395,609,241 37,932,726 45,835,102 68,105,923 65,399,994 97,674,400 106,498,292 433,478,789 418,624,741 431,025,356 413,198,789 6,034,871,805 6,169,352,612 1,141,855,286 1,216,772,655 3,268,943,361 3,299,425,513 171,286,364 147,471,992 15,618,790 17,358,762 196,967,970 219,826,811 1,915,098 3,154,269 3,422,178 1,623,485 3,722,228 45,136,731 45,563,544 1,924,456 6,707,851 8,592,112 78,464,053 61,140,186 226,189,613 170,584,075 960,989,752 981,101,681 269,331,660 235,651,234 748,074,888 577,155,133 205,177,295 213,746,029 40,238,648 54,242,098 1,969,054,861 2,233,249,079 392,279,990 393,163,308 867,490,180 1,141,081,701 1,093,719,833 1,028,310,438 20,398,838 25,322,071 63,060,260 59,753,310 45,829,818 52,342,636 149,837,441 143,738,526 164,597,095 188,372,616 3,104,827,192 2,955,001,852 480,243,636 587,958,113 1,653,378,293 1,581,188,679 Equity Attributable to Shareholders of the Company 1,093,717,171 1,017,715,435 19,877,774 24,844,652 34,819,876 31,685,739 45,792,157 52,358,012 77,618,165 74,291,176 164,597,095 188,372,616 2,376,486,878 2,069,085,642 476,201,237 583,763,809 1,184,081,767 1,138,668,877 Minority Interest 2,662 10,595,003 521,064 477,419 28,240,384 28,067,571 37,661 (15,376) 72,219,276 69,447,350 - - 728,340,314 885,916,210 4,042,399 4,194,304 469,296,526 442,519,802 Total Liabilities and Shareholders’ Equity 1,461,974,167 1,395,609,241 37,932,726 45,835,102 68,105,923 65,399,994 97,674,400 106,498,292 433,478,789 418,624,741 431,025,356 413,198,789 6,034,871,805 6,169,352,612 1,141,855,286 1,216,772,655 3,268,943,361 3,299,425,513 STATEMENT OF COMPREHENSIVE INCOME, SUMMARIZED BY SUBSIDIARY Sales Other operating income Total Revenues Raw materials and consumable used Contribution Margin 1,003,001,004 1,066,239,632 66,028,200 74,415,264 10,546,195 9,871,348 131,410,554 153,436,664 286,654,227 286,037,460 287,867,341 318,293,459 2,397,944,527 2,406,367,778 757,935,491 684,930,692 1,948,848,504 1,723,986,093 13,996,491 23,275,445 41,442 92,500 288,828 592,667 783,509 2,319,945 20,504,743 16,257,667 7,670,973 8,794,090 37,437,927 12,551,577 27,954,097 56,237,124 277,000,339 247,210,071 1,016,997,495 1,089,515,077 66,069,642 74,507,764 10,835,023 10,464,015 132,194,063 155,756,609 307,158,970 302,295,127 295,538,314 327,087,549 2,435,382,454 2,418,919,355 785,889,588 741,167,816 2,225,848,843 1,971,196,164 (788,044,087) (845,396,679) (36,528,597) (34,896,170) (2,518,052) (417,152) (92,335,883) (115,501,837) (193,646,086) (185,706,532) (142,565,611) (153,916,681) (1,191,327,819) (976,145,889) (426,625,508) (393,206,055) (1,292,520,389) (1,057,983,477) 228,953,408 244,118,398 29,541,045 39,611,594 8,316,971 10,046,863 39,858,180 40,254,772 113,512,884 116,588,595 152,972,703 173,170,868 1,244,054,635 1,442,773,466 359,264,080 347,961,761 933,328,454 913,212,687 Other work performed by entity and capitalized 2,524,049 2,666,652 - - - - - - 2,058,678 2,782,325 8,296,765 8,057,055 10,126,628 731,901 3,734,991 2,485,358 18,128,254 17,007,228 Employee benefits expenses Depreciation and amortization expense (24,818,903) (24,641,080) (19,401,450) (21,778,199) (1,296,220) (1,310,816) (23,447,840) (25,105,331) (1,631,762) (10,830,327) (11,469,891) (63,168,597) (66,048,079) (80,066,349) (75,564,322) (30,266,521) (29,972,265) (103,250,507) (100,639,738) (24,622,792) (23,116,301) (7,483,169) (3,868,491) (297,687) (261,271) (2,066,081) (1,994,224) (20,685,044) (20,509,380) (14,796,493) (16,515,805) (179,007,900) (196,142,075) (61,869,543) (58,955,335) (142,719,200) (131,888,428) Reversal of impairment loss (impairment loss) recognized in profit or loss (5,539,943) (5,168,644) 77,915 (195,609) 3,239,877 - (712,025) (20,351) (774,754) (822,954) (1,771,126) (2,569,897) (706,125) (43,999,600) (2,530,681) (819,943) (84,774,798) (12,581,722) (64,729,067) (64,826,993) (5,807,464) (5,976,859) (2,064,675) (2,114,021) (14,363,023) (10,845,892) (18,349,605) (24,143,832) (77,589,301) (64,218,481) (103,677,256) (110,868,779) (61,109,969) (60,815,070) (162,819,132) (171,518,051) 4,077,868 233,684 4,311,552 3,372,931 456,919 481,702 481,702 - 4,311,552 2,174,853 222,758 2,397,611 (584,834) 1,812,777 (262,289) (81,274) 1,709 (4,205) (83,761) 64,679 (19,082) (19,082) (19,082) (19,082) 784 (18,298) (18,298) (18,298) 500,000 (18,298) 481,702 481,702 - - - - - 9 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 64,931,832 62,424,863 3,943,951 31,875,661 890,723,633 1,016,930,591 207,222,357 199,884,506 457,893,071 513,591,976 (21,095) (117,804) 1,894,099 (25,294) 1,389,720 13,583,339 23,169 275,789 1,621,266 2,245,332 9,324,258 6,866,221 10,083,190 25,315,918 9,289,334 9,885,040 130,698,904 100,508,792 (12,549,137) (12,867,928) (16,070,345) (12,048,619) (142,256,150) (188,368,384) (35,637,190) (39,051,936) (191,832,046) (185,207,858) 37,142 207,736 547,276 (444,447) 15,618,964 (17,017,325) (104,317) (101,401) (2,092,696) 24,730,268 911 1,633 91,673,758 98,457,836 (3,162,695) 9,275,308 54,020,008 51,892,199 (2,253,949) 26,250,449 864,574,799 944,568,650 182,159,904 184,199,548 394,690,402 453,898,967 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (23,402,198) (21,064,399) (325,508) (1,624,036) (1,091,872) (1,637,274) 72,547 (1,417,445) (18,812,437) (18,796,395) 635,038 (9,357,145) (179,964,192) (172,468,296) (56,459,150) (56,364,261) (67,395,323) (106,584,567) 150,948,352 205,764,652 (4,186,330) 5,316,913 7,816,220 7,140,161 (1,813,513) (1,296,227) 35,207,571 33,095,804 (1,618,911) 16,893,304 684,610,607 772,100,354 125,700,754 127,835,287 327,295,079 347,314,400 - - - - - - - - - - 150,948,352 205,764,652 (4,186,330) 5,316,913 7,816,220 7,140,161 (1,813,513) (1,296,227) 35,207,571 33,095,804 (1,618,911) 16,893,304 684,610,607 772,100,354 125,700,754 127,835,287 327,295,079 347,314,400 150,948,050 203,309,227 (4,205,761) 5,287,505 302 2,455,425 19,431 29,408 150,948,352 205,764,652 (4,186,330) 5,316,913 5,595,574 2,220,646 7,816,220 4,915,357 (1,759,128) (1,312,131) 2,224,804 (54,385) 15,904 7,140,161 (1,813,513) (1,296,227) 18,187,969 17,266,563 (1,618,911) 16,893,304 533,555,794 627,053,406 124,802,668 127,667,675 224,154,924 237,683,532 17,019,602 15,829,241 151,054,813 145,046,948 898,086 167,612 103,140,155 109,630,868 35,207,571 33,095,804 (1,618,911) 16,893,304 684,610,607 772,100,354 125,700,754 127,835,287 327,295,079 347,314,400 (29,661,899) 31,174,259 41,476 (2,919,928) 26,769 (20,708) (589,482) (1,604,067) (7,345,419) (25,748,978) (22,156,639) (69,561,194) (40,031,369) (49,118,348) 2,180,172 (92,745,582) (86,901,887) 89,815,762 121,286,151 236,283,506 (4,164,285) 2,367,577 302 655,405 19,431 29,408 121,286,453 236,938,911 (4,144,854) 2,396,985 7,842,989 5,622,101 2,220,888 7,842,989 7,119,453 (2,402,995) (2,900,294) 4,894,649 (2,339,855) (2,884,390) 2,224,804 (63,140) (15,904) 7,119,453 (2,402,995) (2,900,294) 27,862,152 7,346,826 (23,775,550) (52,667,890) 644,579,238 722,982,006 127,880,926 35,089,705 240,393,192 437,130,162 14,492,580 2,774,540 (23,775,550) (52,667,890) 499,510,421 703,772,844 127,080,341 34,922,093 168,810,333 299,680,872 13,369,572 4,572,286 - 145,068,817 19,209,162 800,585 167,612 71,582,859 137,449,290 27,862,152 7,346,826 (23,775,550) (52,667,890) 644,579,238 722,982,006 127,880,926 35,089,705 240,393,192 437,130,162 Total Other Comprehensive Income Attributable to: 121,286,453 236,938,911 (4,144,854) 2,396,985 367,928,682 367,928,682 3,943,580 3,943,580 25,916,800 25,916,800 2,572,038 2,572,038 32,841,625 32,841,625 135,477,599 135,477,598 1,331,714,085 1,331,714,085 3,934,010 3,934,010 226,099,641 226,099,641 998,431,191 892,535,070 18,679,450 22,837,271 18,553,488 15,419,351 59,328,371 65,065,739 25,300,513 24,352,356 65,200,918 34,889,191 1,442,314,476 1,106,819,324 123,200,147 124,556,248 17,373,121 67,280,713 566,302 566,302 - - - - - - - - 206,008,557 206,008,557 - - - - (273,209,004) (243,314,619) (2,745,256) (1,936,199) (9,650,412) (9,650,412) (16,108,252) (15,279,765) 19,476,027 17,097,195 (36,081,421) 18,005,827 (603,550,240) (575,456,324) 349,067,080 455,273,551 940,609,005 845,288,523 Changes in Equity Attributable to Parent 1,093,717,171 1,017,715,435 19,877,774 24,844,652 34,819,876 31,685,739 45,792,157 52,358,012 77,618,165 74,291,176 164,597,096 188,372,616 2,376,486,878 2,069,085,642 476,201,237 583,763,809 1,184,081,767 1,138,668,877 Changes in Minority Interest Changes in Equity, Total 2,662 10,595,003 521,064 477,419 28,240,384 28,067,571 37,661 (15,376) 72,219,276 69,447,350 728,340,314 885,916,210 4,042,399 4,194,304 469,296,526 442,519,802 1,093,719,833 1,028,310,438 20,398,838 25,322,071 63,060,260 59,753,310 45,829,818 52,342,636 149,837,441 143,738,526 164,597,096 188,372,616 3,104,827,192 2,955,001,852 480,243,636 587,958,113 1,653,378,293 1,581,188,679 CONSOLIDATED STATEMENTS OF CASH FLOWS, SUMMARIZED BY SUBSIDIARY Cash Flows provided by (used in) Operations 145,181,978 148,178,407 10,924,401 3,853,359 3,599,257 10,054,514 8,272,471 1,529,884 (1,402,392) 63,622,889 47,591,800 91,143,636 56,253,825 855,694,121 995,569,962 208,631,668 193,011,008 475,979,401 446,620,847 Net Cash Flows provided by (used in) Investing Activities 14,624,865 40,447,558 (6,249,529) (4,334,504) (1,441,169) (10,058,730) (1,149,429) 3,623,033 (31,541,579) (37,948,391) (58,350,279) (45,766,514) (416,493,151) (441,455,387) (117,143,354) 38,446,134 (228,890,675) (203,348,891) Net Cash Flows provided by (used in) Financing Activities (70,908,087) (190,246,223) (2,152,974) 1,592,028 (2,150,550) - (7,684,616) (1,756,659) 1,402,392 (11,151,423) (7,908,274) (10,306,994) (2,805,945) (547,890,436) (800,353,454) (238,038,033) (105,556,698) (267,394,924) (178,114,823) Net Increase (Decrease) in Cash and Cash Equivalents 88,898,756 (1,620,258) 2,521,898 1,110,883 Effects of foreign exchange rate variations on cash and cash equivalents (10,525) (2,608) (1,593,531) (457,602) Beginning balance of cash and cash equivalents, statement of cash flows 17,933,851 19,556,717 Ending Balance of Cash and Cash Equivalents, Statement of Cash Flows 106,822,082 17,933,851 4,635,250 5,563,617 3,981,969 4,635,250 7,538 - 13,936 21,474 (4,216) (561,574) 3,396,258 - (767,703) (655,872) 18,152 13,936 5,260,841 3,931,564 2,520,455 5,260,841 20,929,887 1,735,135 22,486,363 7,681,366 (108,689,466) (246,238,879) (146,549,719) 125,900,444 (20,306,198) 65,157,133 (2,036,120) (806,535) (5,321,104) (5,626,500) (4,479,612) (26,540,872) (9,221,751) 4,276,464 (39,989,960) (16,004,742) 7,898,726 6,970,126 28,163,140 26,108,274 446,438,229 719,217,980 232,157,435 101,980,816 370,334,645 321,182,254 26,792,493 7,898,726 45,328,399 28,163,140 333,269,859 446,438,229 76,385,965 232,157,724 310,038,487 370,334,645 Share of the profit (loss) of associates accounted for using the equity method 60,117,034 82,756,621 198 111,766,752 129,032,032 (3,073,123) 7,792,436 7,898,266 (3,349) 12,133,587 10,576,373 14,891,938 (118,994) 264,180 (1,307) 271,110 (8,048,514) (17,384,760) (1,113,645) (1,178,678) (211,551) 4,941,471 181,042 153,805 458,162 (480) 16 56,182 1,190 436,380 550,470 (20,163) (34,432) 1,141 76,430 6,360,755 1,986,752 491,953 (730,789) 2,288,974 1,795 743,474 223,748 775,384 (28,648) (2,152,624) (2,255,356) 39,383 (1,146) (71,614) - 179,493 72,591 - (837,111) (74,421) 121,218 174,350,550 226,829,051 (3,860,822) 6,940,949 8,908,092 8,777,435 (1,886,060) Other expenses Operating income Other gains (losses) Financial income Financial costs Foreign currency exchange differences Gain (loss) for indexed assets and liabilities Net income before tax Income tax Net income from continuing operations Net Income from discontinued operations Net income (loss) Net income (loss) attributable to: Owners of parent Non-controlling interests Net Income (loss) Statement of Other Comprehensive Income: Other Comprehensive Income Shareholders of the Company Minority interest Total Comprehensive Income SUMMARIZED STATEMENTS OF CHANGES IN EQUITY Issued capital Retained earnings (losses) Share premium Reserves 329 Financial Statements Consolidated Chilectra Synapsis IM Velasco Cam ICT Distrilima Edesur Endesa Chile Codensa Endesa Brasil Contents 2010 Cover 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION, SUMMARIZED BY SUBSIDIARY 2010 2009 2010 2009 308,282,584 201,194,118 27,547,119 1,153,691,583 1,194,415,123 10,385,607 1,461,974,167 1,395,609,241 37,932,726 171,286,364 147,471,992 15,618,790 1 2 28,912,134 4 16,922,968 45,835,102 10 16 17,358,762 196,967,970 219,826,811 1,915,098 3,154,269 Equity Attributable to Shareholders of the Company 1,093,717,171 1,017,715,435 19,877,774 1,093,719,833 1,028,310,438 20,398,838 Total Liabilities and Shareholders’ Equity 1,461,974,167 1,395,609,241 37,932,726 2,662 10,595,003 521,064 STATEMENT OF COMPREHENSIVE INCOME, SUMMARIZED BY SUBSIDIARY 1,003,001,004 1,066,239,632 66,028,200 13,996,491 23,275,445 41,442 1,016,997,495 1,089,515,077 66,069,642 (788,044,087) (845,396,679) (36,528,597) 228,953,408 244,118,398 29,541,045 2,524,049 2,666,652 - (24,818,903) (24,641,080) (19,401,450) (24,622,792) (23,116,301) (7,483,169) Reversal of impairment loss (impairment loss) recognized in profit or loss (5,539,943) (5,168,644) 77,915 Share of the profit (loss) of associates accounted for using the equity method 60,117,034 82,756,621 198 (64,729,067) (64,826,993) (5,807,464) 111,766,752 129,032,032 (3,073,123) (3,349) 12,133,587 10,576,373 14,891,938 (118,994) 264,180 (8,048,514) (17,384,760) (1,113,645) 25,322,071 20 24,844,652 24 45,835,102 28 477,419 38 74,415,264 44 92,500 74,507,764 50 (34,896,170) 56 39,611,594 - 60 (21,778,199) (3,868,491) 66 (195,609) 78 (5,976,859) 7,792,436 84 (1,307) 271,110 (1,178,678) 100 16 (211,551) 4,941,471 181,042 56,182 153,805 458,162 (480) 174,350,550 226,829,051 (3,860,822) (23,402,198) (21,064,399) (325,508) 150,948,352 205,764,652 (4,186,330) - - - 150,948,352 205,764,652 (4,186,330) 150,948,050 203,309,227 (4,205,761) 1,190 128 6,940,949 132 (1,624,036) 5,316,913 136 - 5,316,913 144 154 5,287,505 150,948,352 205,764,652 (4,186,330) Total Other Comprehensive Income Attributable to: 121,286,453 236,938,911 (4,144,854) 121,286,151 236,283,506 (4,164,285) (29,661,899) 31,174,259 41,476 5,316,913 180 182 (2,919,928) 326 2,396,985 2,367,577 302 2,455,425 19,431 29,408 302 655,405 19,431 29,408 Liabilities and Shareholders’ Equity Assets Current Assets Non-Current Assets Total Assets Current Liabilities Non-Current Liabilities Shareholders’ Equity Minority Interest Sales Other operating income Total Revenues Raw materials and consumable used Contribution Margin Other work performed by entity and capitalized Employee benefits expenses Depreciation and amortization expense Other expenses Operating income Other gains (losses) Financial income Financial costs Foreign currency exchange differences Gain (loss) for indexed assets and liabilities Net income before tax Income tax Net income from continuing operations Net Income from discontinued operations Net income (loss) Net income (loss) attributable to: Owners of parent Non-controlling interests Net Income (loss) Statement of Other Comprehensive Income: Other Comprehensive Income Shareholders of the Company Minority interest Total Comprehensive Income Issued capital Retained earnings (losses) Share premium Reserves Changes in Minority Interest Changes in Equity, Total SUMMARIZED STATEMENTS OF CHANGES IN EQUITY 29,801,117 Resume 32,323,759 80,290,795 Chairman’s Letter to Shareholders 35,782,164 26,207,497 68,105,923 106,498,292 65,399,994 2010 Highlight 71,769,555 35,598,877 25,904,845 97,674,400 Main financial and operational indicators 45,136,731 3,422,178 3,722,228 1,623,485 1,924,456 6,707,851 31,685,739 45,829,818 59,753,310 63,060,260 Identification of the Company 34,819,876 Ownership and control 28,240,384 68,105,923 65,399,994 Administration 28,067,571 97,674,400 45,792,157 37,661 45,563,544 8,592,112 52,342,636 52,358,012 (15,376) 106,498,292 Human resources 10,546,195 Stock Exchange Transactions 131,410,554 9,871,348 288,828 592,667 783,509 153,436,664 2,319,945 10,464,015 10,835,023 Dividends (2,518,052) Investment and financing policy 2010 (115,501,837) (92,335,883) 132,194,063 155,756,609 10,046,863 39,858,180 40,254,772 8,316,971 (417,152) - - - The company´s businesses (1,296,220) (1,310,816) (23,447,840) - (25,105,331) (297,687) (1,994,224) Investments and financial activities (20,351) (2,066,081) 3,239,877 (261,271) (712,025) - Risk factors (2,064,675) (2,114,021) (14,363,023) (10,845,892) 7,898,266 6,360,755 (730,789) 2,288,974 436,380 Regulatory framework of the electricity industry 1,986,752 550,470 491,953 743,474 1,795 223,748 775,384 (20,163) (28,648) (2,152,624) Description of the business by (34,432) Country 1,141 179,493 39,383 (1,146) - - (837,111) (2,255,356) 76,430 Other businesses (71,614) 8,908,092 8,777,435 Sustainability (1,091,872) (1,637,274) 72,591 (1,886,060) (74,421) 121,218 72,547 (1,417,445) 7,816,220 7,140,161 (1,813,513) Diagram of shareholdings - - - 7,816,220 7,140,161 Consolidated relevant facts (1,813,513) (1,296,227) - (1,296,227) 5,595,574 Identification of subsidiaries and (1,312,131) related companies 15,904 (1,759,128) 2,220,646 4,915,357 2,224,804 (54,385) 7,816,220 7,140,161 (1,813,513) (1,296,227) Declaration of responsibility 26,769 (20,708) Consolidated Financial Statements (1,604,067) Summarized Financial Information (2,900,294) 7,119,453 (2,884,390) 4,894,649 for Subsidiaries 2,224,804 (2,402,995) (2,339,855) 7,842,989 5,622,101 2,220,888 (589,482) (63,140) (15,904) 121,286,453 236,938,911 (4,144,854) 2,396,985 7,842,989 7,119,453 (2,402,995) (2,900,294) 367,928,682 367,928,682 3,943,580 3,943,580 25,916,800 25,916,800 2,572,038 2,572,038 998,431,191 892,535,070 18,679,450 22,837,271 18,553,488 15,419,351 59,328,371 65,065,739 566,302 566,302 - - - - - - (273,209,004) (243,314,619) (2,745,256) (1,936,199) (9,650,412) (9,650,412) (16,108,252) (15,279,765) Changes in Equity Attributable to Parent 1,093,717,171 1,017,715,435 19,877,774 24,844,652 34,819,876 31,685,739 45,792,157 52,358,012 2,662 10,595,003 521,064 477,419 28,240,384 28,067,571 37,661 (15,376) 1,093,719,833 1,028,310,438 20,398,838 25,322,071 63,060,260 59,753,310 45,829,818 52,342,636 CONSOLIDATED STATEMENTS OF CASH FLOWS, SUMMARIZED BY SUBSIDIARY Cash Flows provided by (used in) Operations 145,181,978 148,178,407 10,924,401 3,853,359 3,599,257 10,054,514 8,272,471 1,529,884 Net Cash Flows provided by (used in) Investing Activities 14,624,865 40,447,558 (6,249,529) (4,334,504) (1,441,169) (10,058,730) (1,149,429) 3,623,033 Net Cash Flows provided by (used in) Financing Activities (70,908,087) (190,246,223) (2,152,974) 1,592,028 (2,150,550) - (7,684,616) (1,756,659) pages control Net Increase (Decrease) in Cash and Cash Equivalents 88,898,756 (1,620,258) 2,521,898 1,110,883 Effects of foreign exchange rate variations on cash and cash equivalents (10,525) (2,608) (1,593,531) (457,602) Beginning balance of cash and cash equivalents, statement of cash flows 17,933,851 19,556,717 Ending Balance of Cash and Cash Equivalents, Statement of Cash Flows 106,822,082 17,933,851 4,635,250 5,563,617 3,981,969 4,635,250 7,538 - 13,936 21,474 previously (4,216) (561,574) 3,396,258 - (767,703) (655,872) 18,152 13,936 5,260,841 3,931,564 next 2,520,455 5,260,841 4,077,868 233,684 4,311,552 3,372,931 456,919 481,702 481,702 - 4,311,552 2,174,853 222,758 2,397,611 (584,834) 1,812,777 - (1,631,762) - - (262,289) (81,274) - 1,709 (4,205) - 9 - (83,761) 64,679 (19,082) - (19,082) (19,082) - (19,082) 784 (18,298) (18,298) - (18,298) 500,000 (18,298) - - 481,702 - 481,702 (1,402,392) - 1,402,392 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 76,808,391 54,918,692 110,182,639 93,131,605 793,026,723 942,361,242 255,980,239 333,863,028 799,250,363 893,078,804 356,670,398 363,706,049 320,842,717 320,067,184 5,241,845,082 5,226,991,370 885,875,047 882,909,627 2,469,692,998 2,406,346,709 433,478,789 418,624,741 431,025,356 413,198,789 6,034,871,805 6,169,352,612 1,141,855,286 1,216,772,655 3,268,943,361 3,299,425,513 78,464,053 61,140,186 226,189,613 170,584,075 960,989,752 981,101,681 269,331,660 235,651,234 748,074,888 577,155,133 205,177,295 213,746,029 40,238,648 54,242,098 1,969,054,861 2,233,249,079 392,279,990 393,163,308 867,490,180 1,141,081,701 149,837,441 143,738,526 164,597,095 188,372,616 3,104,827,192 2,955,001,852 480,243,636 587,958,113 1,653,378,293 1,581,188,679 77,618,165 74,291,176 164,597,095 188,372,616 2,376,486,878 2,069,085,642 476,201,237 583,763,809 1,184,081,767 1,138,668,877 72,219,276 69,447,350 - - 728,340,314 885,916,210 4,042,399 4,194,304 469,296,526 442,519,802 433,478,789 418,624,741 431,025,356 413,198,789 6,034,871,805 6,169,352,612 1,141,855,286 1,216,772,655 3,268,943,361 3,299,425,513 286,654,227 286,037,460 287,867,341 318,293,459 2,397,944,527 2,406,367,778 757,935,491 684,930,692 1,948,848,504 1,723,986,093 20,504,743 16,257,667 7,670,973 8,794,090 37,437,927 12,551,577 27,954,097 56,237,124 277,000,339 247,210,071 307,158,970 302,295,127 295,538,314 327,087,549 2,435,382,454 2,418,919,355 785,889,588 741,167,816 2,225,848,843 1,971,196,164 (193,646,086) (185,706,532) (142,565,611) (153,916,681) (1,191,327,819) (976,145,889) (426,625,508) (393,206,055) (1,292,520,389) (1,057,983,477) 113,512,884 116,588,595 152,972,703 173,170,868 1,244,054,635 1,442,773,466 359,264,080 347,961,761 933,328,454 913,212,687 2,058,678 2,782,325 8,296,765 8,057,055 10,126,628 731,901 3,734,991 2,485,358 18,128,254 17,007,228 (10,830,327) (11,469,891) (63,168,597) (66,048,079) (80,066,349) (75,564,322) (30,266,521) (29,972,265) (103,250,507) (100,639,738) (20,685,044) (20,509,380) (14,796,493) (16,515,805) (179,007,900) (196,142,075) (61,869,543) (58,955,335) (142,719,200) (131,888,428) (774,754) (822,954) (1,771,126) (2,569,897) (706,125) (43,999,600) (2,530,681) (819,943) (84,774,798) (12,581,722) (18,349,605) (24,143,832) (77,589,301) (64,218,481) (103,677,256) (110,868,779) (61,109,969) (60,815,070) (162,819,132) (171,518,051) 64,931,832 62,424,863 3,943,951 31,875,661 890,723,633 1,016,930,591 207,222,357 199,884,506 457,893,071 513,591,976 (21,095) (117,804) - - 1,894,099 (25,294) 1,389,720 13,583,339 23,169 275,789 1,621,266 2,245,332 9,324,258 6,866,221 10,083,190 25,315,918 9,289,334 9,885,040 130,698,904 100,508,792 (12,549,137) (12,867,928) (16,070,345) (12,048,619) (142,256,150) (188,368,384) (35,637,190) (39,051,936) (191,832,046) (185,207,858) - - 911 1,633 91,673,758 98,457,836 - - - - 37,142 207,736 547,276 (444,447) 15,618,964 (17,017,325) (104,317) (101,401) (2,092,696) 24,730,268 - - - - (3,162,695) 9,275,308 - - - - 54,020,008 51,892,199 (2,253,949) 26,250,449 864,574,799 944,568,650 182,159,904 184,199,548 394,690,402 453,898,967 (18,812,437) (18,796,395) 635,038 (9,357,145) (179,964,192) (172,468,296) (56,459,150) (56,364,261) (67,395,323) (106,584,567) 35,207,571 33,095,804 (1,618,911) 16,893,304 684,610,607 772,100,354 125,700,754 127,835,287 327,295,079 347,314,400 - - - - - - - - - - 35,207,571 33,095,804 (1,618,911) 16,893,304 684,610,607 772,100,354 125,700,754 127,835,287 327,295,079 347,314,400 18,187,969 17,266,563 (1,618,911) 16,893,304 533,555,794 627,053,406 124,802,668 127,667,675 224,154,924 237,683,532 17,019,602 15,829,241 - - 151,054,813 145,046,948 898,086 167,612 103,140,155 109,630,868 35,207,571 33,095,804 (1,618,911) 16,893,304 684,610,607 772,100,354 125,700,754 127,835,287 327,295,079 347,314,400 (7,345,419) (25,748,978) (22,156,639) (69,561,194) (40,031,369) (49,118,348) 2,180,172 (92,745,582) (86,901,887) 89,815,762 27,862,152 7,346,826 (23,775,550) (52,667,890) 644,579,238 722,982,006 127,880,926 35,089,705 240,393,192 437,130,162 14,492,580 2,774,540 (23,775,550) (52,667,890) 499,510,421 703,772,844 127,080,341 34,922,093 168,810,333 299,680,872 13,369,572 4,572,286 - - 145,068,817 19,209,162 800,585 167,612 71,582,859 137,449,290 27,862,152 7,346,826 (23,775,550) (52,667,890) 644,579,238 722,982,006 127,880,926 35,089,705 240,393,192 437,130,162 32,841,625 32,841,625 135,477,599 135,477,598 1,331,714,085 1,331,714,085 3,934,010 3,934,010 226,099,641 226,099,641 25,300,513 24,352,356 65,200,918 34,889,191 1,442,314,476 1,106,819,324 123,200,147 124,556,248 17,373,121 67,280,713 - - - - 206,008,557 206,008,557 - - - - 19,476,027 17,097,195 (36,081,421) 18,005,827 (603,550,240) (575,456,324) 349,067,080 455,273,551 940,609,005 845,288,523 77,618,165 74,291,176 164,597,096 188,372,616 2,376,486,878 2,069,085,642 476,201,237 583,763,809 1,184,081,767 1,138,668,877 72,219,276 69,447,350 - - 728,340,314 885,916,210 4,042,399 4,194,304 469,296,526 442,519,802 149,837,441 143,738,526 164,597,096 188,372,616 3,104,827,192 2,955,001,852 480,243,636 587,958,113 1,653,378,293 1,581,188,679 63,622,889 47,591,800 91,143,636 56,253,825 855,694,121 995,569,962 208,631,668 193,011,008 475,979,401 446,620,847 (31,541,579) (37,948,391) (58,350,279) (45,766,514) (416,493,151) (441,455,387) (117,143,354) 38,446,134 (228,890,675) (203,348,891) (11,151,423) (7,908,274) (10,306,994) (2,805,945) (547,890,436) (800,353,454) (238,038,033) (105,556,698) (267,394,924) (178,114,823) 20,929,887 1,735,135 22,486,363 7,681,366 (108,689,466) (246,238,879) (146,549,719) 125,900,444 (20,306,198) 65,157,133 (2,036,120) (806,535) (5,321,104) (5,626,500) (4,479,612) (26,540,872) (9,221,751) 4,276,464 (39,989,960) (16,004,742) 7,898,726 6,970,126 28,163,140 26,108,274 446,438,229 719,217,980 232,157,435 101,980,816 370,334,645 321,182,254 26,792,493 7,898,726 45,328,399 28,163,140 333,269,859 446,438,229 76,385,965 232,157,724 310,038,487 370,334,645 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Design & Production: LEADERS S.A. Administration and Senior Executives CHAIRMAN Pablo Yrarrázaval Valdés PHONE (56-2) 353 4663 VICECHAIRMAN Andrea Brentan PHONE (56-2) 353 4631 DIRECTOR Rafael Miranda Robredo PHONE (56-2) 353 4631 DIRECTOR Hernán Somerville Senn PHONE (56-2) 353 4631 DIRECTOR Eugenio Tironi Barrios PHONE (56-2) 353 4631 DIRECTOR Leonidas Vial Echeverría PHONE (56-2) 353 4631 DIRECTOR Rafael Fernández Morandé PHONE (56-2) 353 4631 CHIEF EXECUTIVE OFFICER Ignacio Antoñanzas Alvear PHONE (56-2) 353 4510 DEPUTY CHIEF EXECUTIVE OFFICER Massimo Tambosco PHONE (56-2) 353 4613 REGIONAL CHIEF COMMUNICATIONS OFFICER Juan Pablo Larraín Medina PHONE (56-2) 353 4666 INTERNAL AUDIT OFFICER Alba Marina Urrea Gómez PHONE (56-2) 353 4647 CHIEF HUMAN RESOURCES OFFICER Carlos Niño Forero PHONE (56-2) 675 2780 REGIONAL CHIEF ACCOUNTING OFFICER Ángel Chocarro García PHONE (56-2) 353 4685 CHIEF REGIONAL FINANCE OFFICER Alfredo Ergas Segal PHONE (56-2) 630 9130 REGIONAL CHIEF PLANNING & CONTROL OFFICER Ramiro Alfonsín Balza PHONE (56-2) 353 4684 GENERAL SERVICES OFFICER Francisco Silva Bafalluy PHONE (56-2) 353 4610 PROCUREMENT OFFICER Eduardo López Miller PHONE (56-2) 353 4635 LEGAL COUNSEL Domingo Valdés Prieto PHONE (56-2) 353 4631 Investor Relation and Shareholders INVESTMENT AND RISKS DIRECTOR Ricardo Alvial Muñoz PHONE (56-2) 353 4682 CITIBANK NY Teresa Loureiro-Stein PHONE (1-212) 816 6814 SANTANDER CENTRAL HISPANO INVESTMENT Enrique Romero PHONE (34-91) 289 3943 Contents Cover Resume Chairman’s Letter to Shareholders 2010 Highlight Main financial and operational indicators Identification of the Company Ownership and control Administration Human resources Stock Exchange Transactions Dividends Investment and financing policy 2010 The company´s businesses Investments and financial activities Risk factors Regulatory framework of the electricity industry Description of the business by Country Other businesses Sustainability Diagram of shareholdings Consolidated relevant facts Identification of subsidiaries and related companies Declaration of responsibility Consolidated Financial Statements Summarized Financial Information for Subsidiaries 1 2 4 10 16 20 24 28 38 44 50 56 60 66 78 84 100 128 132 136 144 154 180 182 326 pages control previously next Communications Office Santa Rosa 76 Santiago, Chile Tel (56 2) 353 4400 www.enersis.cl 

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