Annual Report 2010 - Enel.com

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failure to make payment, breach of contract, false statements, insolvency or declaration of insolvency by the borrower or its significant subsidiaries, business closure, government intervention or nationalization, administrative proceeding with potential negative impact, illegal conduct, nationalization and government expropriation or compulsory acquisition of the borrower or one of its significant subsidiaries) constitutes a default. Unless remedied within a specified period of time, such default will trigger an obligation to make immediate repayment of the loan under an acceleration clause; > under cross-default clauses, the occurrence of a default event in respect of any financial liability (above a threshold level) of the issuer or “significant” subsidiaries (i.e. consolidated companies whose gross revenues or total assets are at least equal to a specified percentage (10% of gross consolidated revenues or total consolidated assets)) constitutes a default in respect of the liability in question, which becomes immediately repayable; > periodic reporting requirements. The Credit Agreement 2007 and the Credit Agreement 2009 also provide for the following covenants: > mandatory early repayment clauses, under which the occurrence of a specified event (e.g. the issue of instruments on the capital market, new bank loans, stock issues or asset disposals) obliges the borrower to repay the related funds in advance at specific declining percentages based on the extent to which the line of credit has been drawn; > a gearing clause, under which, at the end of each measurement period (half yearly), Enel’s consolidated net financial debt shall not exceed 6 times annual consolidated EBITDA; > a “subsidiary financial indebtedness” clause, under which the net aggregate amount of the financial debt of Enel’s subsidiaries (with the exception of the debt of “permitted subsidiaries”) must not exceed 20% of total gross consolidated assets. For the Credit Agreement 2009 only, as from 2012, at the end of each measurement period (half yearly): (i) the gearing clause requires that Enel’s net financial debt shall not exceed 4.5 times annual consolidated EBITDA; and (ii) the ratio of annual consolidated EBITDA to net consolidated interest expense shall not be less than 4. The undertakings in respect of the bond issues carried out by Endesa Capital SA under the Global Medium-Term 216 Enel Annual Report 2010 Consolidated financial statements Notes can be summarized as follows: > cross-default clauses under which debt repayment would be accelerated in the case of failure to make payment (above a specified amount) on any financial liability of Endesa SA or Endesa Capital SA that is listed or could be listed on a regulated market; > negative pledge clauses under which the issuer may not establish mortgages, liens or other encumbrances on all or part of its assets to secure any financial liability that is listed or could be listed on a regulated market, unless an equivalent guarantee is extended equally or pro rata to the bonds in question; > pari passu clauses, under which the securities and guarantees have at least the same seniority as all other present and future unsecured and unsubordinated securities issued by Endesa Capital or Endesa SA. Finally, the loans granted to Endesa, International Endesa BV and Endesa Capital do not contain cross-default clauses regarding the debt of subsidiaries in Latin America. Undertakings in respect of project financing granted to subsidiaries regarding renewables and other subsidiaries in Latin America contain covenants commonly adopted in international business practice. The main commitments regard clauses pledging all the assets assigned to the projects in favor of the creditors. A residual portion of the debt of Enersis and Endesa Chile (both controlled indirectly by Endesa) is subject to crossdefault clauses under which the occurrence of a default event (failure to make payment or breach of other obligations) in respect of any financial liability of a subsidiary of Enersis or Endesa Chile constitutes a default in respect of the liability in question, which becomes immediately repayable. In addition, many of these agreements also contain crossacceleration clauses that are triggered by specific circumstances, certain government actions, insolvency or judicial expropriation of assets. In addition to the foregoing, the May 4, 2009 loan provides for a change of control clause that will be activated if Enel’s stake in Endesa should fall below 51% of Endesa’s share capital. Pursuant to the CONSOB instructions of July 28, 2006, the following table reports the net financial position at December 31, 2010, and December 31, 2009, reconciled with net financial debt.
Millions of euro at Dec. 31, at Dec. 31, 2009 2010 restated 2010-2009 Cash and cash equivalents on hand 6 6 - Bank and post office deposits 5,158 4,164 994 Securities 95 97 (2) Liquidity 5,259 4,267 992 Short-term financial receivables 1,289 2,049 (760) Factoring receivables 319 304 15 Short-term portion of long-term financial receivables 9,290 767 8,523 Current financial receivables 10,898 3,120 7,778 Short-term bank debt (231) (927) 696 Commercial paper (7,405) (6,573) (832) Short-term portion of long-term bank debt (949) (1,438) 489 Drawings on revolving credit lines (50) (20) (30) Bonds (short-term portion) (1,854) (1,096) (758) Other loans (short-term portion) (196) (375) 179 Other short-term financial payables (523) (22) (501) Total short-term financial debt (11,208) (10,451) (757) Net short-term financial position 4,949 (3,064) 8,013 Debt to banks and financing entities (15,584) (21,632) 6,048 Bonds (34,401) (31,889) (2,512) Preference shares (1,474) (1,463) (11) Other loans (981) (866) (115) Long-term financial position (52,440) (55,850) 3,410 NET FINANCIAL POSITION as per CONSOB communication (47,491) (58,914) 11,423 Long-term financial receivables and securities 2,567 8,044 (5,477) NET FINANCIAL DEBT (44,924) (50,870) 5,946 30. Post-employment and other employee benefits - €3,069 million The Group provides its employees with a variety of benefits, including termination benefits, additional months’ pay for having reached age limits or eligibility for old-age pension, loyalty bonuses for achievement of seniority milestones, supplementary pension and healthcare plans, residential electricity discounts and similar benefits. For Italy, the item “pension benefits” regards estimated accruals made to cover benefits due under the supplementary pension schemes of retired executives, while for companies abroad it covers post-employment benefits. “Other benefits” comprise liabilities in respect of definedbenefit plans not included in the previous item. The table below reports the change for the year in actuarial liabilities and the fair value of plan assets, as well as a reconciliation of the actuarial liabilities, net of assets, with the carrying amount of liabilities recognized as at December 31, 2010 and December 31, 2009. 217
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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
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The Nine Points project was one of
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well as in light of the recent reca
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sustainability by following the Blu
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tainability and governance help bus
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mapping of production sites located
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Zero-emission thermal power generat
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developing low-cost distributed pow
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Electric mobility The “Electric M
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Reconciliation of shareholders’ e
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Consolidated Income Statement Milli
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Consolidated Balance Sheet Millions
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Statement of Changes in Consolidate
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Consolidated Statement of Cash Flow
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2 Accounting policies and measureme
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esposibilities, and their close rel
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and completed before that date are
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Investment property Investment prop
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Financial liabilities Financial lia
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For more information on the estimat
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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 178 and 179: Millions of euro -10% Scenario +10%
Page 180 and 181: disposal, on September 23, 2009, of
Page 182 and 183: Segment information for 2010 and 20
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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
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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 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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Page 230 and 231: Developments in the inquiries of th
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Page 234 and 235: creditor rights in respect of CELF
Page 236 and 237: 43. Stock incentive plans Between 2
Page 238 and 239: of the dividend (for 2004) of €0.
Page 240 and 241: that of a specific benchmark index
Page 242 and 243: Compensation of Directors, members
Page 245 and 246: Corporate governance
Page 247 and 248: Major shareholdings and shareholder
Page 249 and 250: prescribed by the Unified Financial
Page 251 and 252: C) The revolving credit facility ag
Page 253 and 254: structure, internal auditing system
Page 255 and 256: listed companies), distinctly menti
Page 257 and 258: University, in Syracuse, New York (
Page 259 and 260: The Directors perform their duties
Page 261 and 262: letter b) above, have assets exceed
Page 263 and 264: sufficient to ensure that their jud
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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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Annual Report 2010 - Enel.com

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