Annual Report 2010 - Enel.com

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Millions of euro -10% Scenario +10% 178 Enel Annual Report 2010 Consolidated financial statements at Dec. 31, 2010 Fair value of two-way contracts for differences in trading transactions 123 38 (47) Fair value of derivatives on energy commodities in trading transactions (dependent on the price of oil commodities) 88 93 97 Fair value of derivatives on coal in trading transactions 46 31 14 Fair value of derivatives on energy in trading transactions (296) (93) 97 Fair value of derivatives on other commodities in trading transactions 13 21 28 Embedded derivatives relate to contracts for the purchase and sale of energy entered into by Slovenské elektrárne in Slovakia. The market value at December 31, 2010 came to a negative €356 million, of which: a. a positive €8 million in respect of an embedded derivative whose fair value depends on the US inflation rate, the price of aluminum on the London Metal Exchange and the euro/dollar (EUR/USD) exchange rate; Fair value embedded derivative (a) b. a negative €206 million in respect of an embedded derivative on the EUR/USD exchange rate; c. a negative €158 million in respect of a derivative on the price of gas. The following tables show the fair value at December 31, 2010, as well as the value expected from a 10% increase and a 10% decrease in the underlying risk factors. Spot price of EUR/USD Millions of euro US inflation rate aluminum exchange rate Decrease of 10% 10 2 7 Scenario at Dec. 31, 2010 8 8 8 Increase of 10% 7 18 9 Fair value embedded derivative (b) Millions of euro EUR/USD exchange rate Decrease of 10% (221) Scenario at Dec. 31, 2010 (206) Increase of 10% (192) Fair value embedded derivative (c) Millions of euro Gas price Decrease of 10% (141) Scenario at Dec. 31, 2010 (158) Increase of 10% (173) The following table reports the cash flows expected in coming years from these financial derivatives on commodities. Millions of euro Fair value Stratification of expected cash flows at Dec. 31, 2010 2011 2012 2013 2014 2015 Beyond Cash flow hedge derivatives: - Positive fair value 299 253 36 2 2 2 4 - Negative fair value Trading derivatives: (24) (19) (5) - - - - - Positive fair value 567 502 53 11 1 - - - Negative fair value (833) (552) (151) (130)
Credit risk Enel manages credit risk by operating solely with counterparties considered solvent by the market, i.e. those with high credit standing, and does not have any significant concentration of credit risk. The credit risk in respect of the derivatives portfolio is considered negligible since transactions are conducted solely with leading Italian and international banks, diversifying the exposure among different institutions and constantly monitoring their credit ratings. In addition, during the year Enel entered into margin agreements with the leading financial institutions with which it operates that call for the exchange of cash collateral, which significantly mitigates the exposure to counterparty risk. As part of activities related to purchasing fuels for thermal generation and the sale and distribution of electricity, the distribution of gas and the sale of gas to eligible customers, Enel grants trade credit to external counterparties. The counterparties selected are carefully monitored through the assessment of the related credit risk and the pledge of suitable guarantees and/or security deposits to ensure adequate protection from default risk. Liquidity risk Enel SpA (directly and through its subsidiary Enel Finance International NV) is responsible for the centralized Group Treasury function (with the exception of the Endesa Group, where that function is performed by Endesa SA and its subsidiaries International Endesa BV and Endesa Capital SA), meeting liquidity requirements primarily through cash flows generated by ordinary operations and drawing on a range of sources of financing. In addition, it manages any excess liquidity as appropriate. The Enel Group’s access to the credit market despite the recent financial crisis was confirmed by the successful placement during the period of bonds on the European retail market totaling €3 billion and the 5-year €10 billion revolving credit line obtained by Enel SpA and Enel Finance International NV that can be used to manage working capital (unconnected with the refinancing program for existing debt). At December 31, 2010, the Enel Group had a total of about €5.2 billion in cash or cash equivalents, of which €1.8 billion held by Endesa, as well as total committed credit lines of €20.2 billion, of which €6.7 billion held by Endesa. The committed credit lines amounted to €29.2 billion (€9 billion drawn), of which €8.6 billion held by Endesa (€1.8 billion drawn). In addition, the Group had uncommitted credit lines totaling €2.7 billion (€0.5 billion drawn), of which €1.6 billion held by Endesa (€0.4 billion drawn). Finally, the Group has outstanding commercial paper programs with a maximum ceiling of €11 billion (€7.4 billion drawn), of which €5 billion held by Endesa through its subsidiaries (€2 billion drawn). 6 Main changes in the scope of consolidation In the two periods examined here, the scope of consolidation changed as a result of the following main transactions: 2009 > acquisition, on January 9, 2009, of 100% of KJWB (now Endesa Ireland), which operates in Ireland in the electricity generation sector. As it is controlled by Endesa, the company was consolidated on a proportionate basis until June 25, 2009, and on a full line-by-line basis thereafter; > disposal, on April 1, 2009, of the entire share capital of Enel Linee Alta Tensione (ELAT), the company to which Enel Distribuzione transferred, with effect from January 1, 2009, a business unit consisting of high-voltage power lines and the related legal relationships; > acquisition, on June 25, 2009, by Enel, acting through its subsidiary Enel Energy Europe, of the 25.01% of Endesa held, directly and indirectly, by Acciona. Following the acquisition, Enel holds 92.06% of Endesa and exercises full control over the company. As a result, as from that date, Endesa is consolidated in the Enel Group on a full, line-by-line basis rather than proportionately, with separate reporting of the minority interest of 7.94%; 179
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Annual Report 2010
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Contents Enel Annual Report 2010 Re
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Report on operations
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Iberia and Latin America Endesa Int
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operates in the end-user market for
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Powers Board of Directors The Board
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The contribution of the operating D
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The Spanish market saw a turnaround
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30.8% of its shares are listed on t
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of 21.4%). More specifically, the p
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Millions of euro Operating assets O
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21 10 January Acquisition of Padoma
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19 April €10 billion revolving li
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1 July Sale of power transmission n
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11 10 November Enel and Kepco sign
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of industrial economies (such as Ge
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inventories at their highest level
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Italy The electricity market Domest
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gradually increasing use, as from 2
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information on customers who have f
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Following the hearing of February 1
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With Resolution ARG/elt no. 211/10,
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Gas transport and metering rates Wi
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With Resolution VIS no. 162/10, the
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Developments in prices in the main
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lished on January 26, 2011, the Min
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On July 2, 2010, the CNC had undert
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ANEEL resolution also provides for
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daily wholesale market. Specificall
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the ARENH price will be set with a
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leading to a final 2010 system cost
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electricity from hydroelectric plan
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National renewable energy action pl
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were held in 2010. Plants with a to
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USA Carbon regulation On May 12, 20
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cial receivables in respect of the
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The performance and balance sheet f
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Costs Millions of euro 2010 2009 re
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Analysis of the Group’s financial
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Sundry provisions, totaling €17,2
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in long-term financial receivables
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eceivable in respect of the sale to
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(1) (2) 2009 results restated Milli
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1 Sales The Sales Division is respo
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the free market, which benefited fr
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Revenues for 2010 totaled €17,540
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of the International Division, rela
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Capital expenditure Millions of eur
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Net efficient generation capacity M
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an increase of €971 million in th
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Contribution to gross thermal gener
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The table below shows performance b
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Operations Net electricity generati
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prior-year items recognized in 2009
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Services and Other Activities The p
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its generation mix towards the use
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Country risk By now, some 50% of th
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Sustainability
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Sustainability in Enel Providing su
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Sustainability reporting Since 2002
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which is needed in order to rationa
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project, which resulted in hiring a
Page 127 and 128: The Nine Points project was one of
Page 129 and 130: well as in light of the recent reca
Page 131 and 132: sustainability by following the Blu
Page 133 and 134: tainability and governance help bus
Page 135 and 136: mapping of production sites located
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Page 139 and 140: developing low-cost distributed pow
Page 141 and 142: Electric mobility The “Electric M
Page 143: Reconciliation of shareholders’ e
Page 146 and 147: Consolidated Income Statement Milli
Page 148 and 149: Consolidated Balance Sheet Millions
Page 150 and 151: Statement of Changes in Consolidate
Page 152 and 153: Consolidated Statement of Cash Flow
Page 154 and 155: 2 Accounting policies and measureme
Page 156 and 157: esposibilities, and their close rel
Page 158 and 159: and completed before that date are
Page 160 and 161: Investment property Investment prop
Page 162 and 163: Financial liabilities Financial lia
Page 164 and 165: For more information on the estimat
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Page 168 and 169: classified as equity if (and only i
Page 170 and 171: Millions of euro LIABILITIES AND SH
Page 172 and 173: are conducted within the framework
Page 174 and 175: Expected cash flows from interest r
Page 176 and 177: The following table reports the cas
Page 180 and 181: disposal, on September 23, 2009, of
Page 182 and 183: Segment information for 2010 and 20
Page 184 and 185: The following table reconciles segm
Page 186 and 187: The table below gives a breakdown o
Page 188 and 189: 9.c Personnel - €4,907 million Mi
Page 190 and 191: Net income/(charges) from commodity
Page 192 and 193: Financial expense Millions of euro
Page 194 and 195: Information on the Consolidated Bal
Page 196 and 197: subsequently sold in December 2010;
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Page 200 and 201: 18. Equity investments accounted fo
Page 202 and 203: Equity investments in other compani
Page 204 and 205: 20. Other non-current assets - €1
Page 206 and 207: addition to direct reimbursement) b
Page 208 and 209: Assets held for sale 27. Assets hel
Page 210 and 211: Non-current liabilities 29. Long-te
Page 212 and 213: issue of bonds for retail investors
Page 214 and 215: Current portion of long-term loans
Page 216 and 217: failure to make payment, breach of
Page 218 and 219: Millions of euro Pension benefits O
Page 220 and 221: 31. Provisions for risks and charge
Page 222 and 223: Commodity derivatives mainly relate
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Page 226 and 227: Liabilities held for sale 38. Liabi
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40. Contractual commitments and gua
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Developments in the inquiries of th
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provisionally enforceable, held the
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creditor rights in respect of CELF
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43. Stock incentive plans Between 2
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of the dividend (for 2004) of €0.
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that of a specific benchmark index
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Compensation of Directors, members
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Corporate governance
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Major shareholdings and shareholder
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prescribed by the Unified Financial
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C) The revolving credit facility ag
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structure, internal auditing system
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listed companies), distinctly menti
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University, in Syracuse, New York (
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The Directors perform their duties
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letter b) above, have assets exceed
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sufficient to ensure that their jud
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compensation of the Chief Executive
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the power - which may also be exerc
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Conte is concerned, the Board of St
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in December 2006, the Board of Dire
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“independent” monitoring, entru
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conditions, and those whose conside
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of the Company’s website (www.ene
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Ethics consists of: > general princ
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“Zero Tolerance of Corruption”
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In principle, unless there are spec
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Internal control Has the Company ap
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Declaration of the Chief Executive
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Attachments
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Subsidiaries consolidated on a line
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Company name Registered office Coun
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Company name International Endesa B
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Enel SpA companies consolidated on
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Company name Companhia Térmica Rib
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Endesa SA companies consolidated on
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Associated companies accounted for
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Company name P.N. Endesa SA Central
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Other significant equity investment
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Reports
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Concept design Inarea - Rome Publis
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