endesachileirpresentation AS OF DECEMBER 31st, 2010
whoisendesachile? whoisendesachile? We are part of Enel Group Ownership structure 92% 61% Chilean Pension Other Inst. Minority ADR Holders Funds Shareholders Shareholders 60% 16% 4% 16% 4% San Isidro Emgesa Edegel Costanera Endesa Brasil Pehuenche 100% 27% 62% 70% 39% 92% Endesa Eco Pangue El Chocón Ampla 100% 95% 65% Coelce Fortaleza Celta Canela CDSA 100% 75% CIEN Figures as of December 2010 2 2 endesachileirpresentation
whoisendesachile? A unique portfolio in Latam’s Generation business Colombia N 1 Brazil 2,914 MW inst. capacity 987 MW inst. capacity 22% market share 1% market share in generation N 1 Peru 1,668 MW inst. capacity 26% market share Argentina N 1 N 1 Chile 3,652 MW inst. capacity 13% market share 5,611 MW inst. capacity 35% market share Consolidated installed capacity: 13,846 MW Capacity including Brazil: 14,832 MW Consolidated energy sales 2009: 59,859 GWh Market shares based on installed capacity Consolidated energy sales 2010: 56,641 GWh 3 Figures as of December 2010
Operationalaspects in the SIC Greater predictability and stability in prices Range of Range of US$/MWh US$/MWh Demand Demand Supply Supply Peak Turbine Peak Turbine Marginal hourly cost Marginal hourly cost 230-290 US$/ - MWh MWh Diesel-Fuel Diesel-Fuel 130-230 US$/ MWh MWh LNG Combined Cycle LNG Combined Cycle 80- -130 US$/MWh Biomass Biomass 60 US$/MWh 60 US$/MWh Coal Coal 30-60 US$/ - MWh MWh Wind Power Wind Power Hydro Hydro MW MW 8 US$/MWh 8 US$/MWh Hydro, Wind Hydro, Coal, LNG Coal, LNG Diesel-Fuel Diesel-Fuel 6,000 MW 4,300 MW 1,900 MW The regulator audits all the fuel contracts The regulator measures the efficiency of the plants The companies report their technical availability 4
operationalaspects Integrated risk management capability Target output and sales in future years Risk variables affecting margins Rainfall 100% Growth in demand Extreme Fuel prices hydro Spot Exchange rates volatility Inflation Hydro 75% Regulated Risk limit and free Real margin ≥ 0.9x expected margin contracts Thermal Target Target sales Our aim is to ensure a 95% reliability with a output margin of at least 90% of budget even in the following scenarios: Results Relative Frequency Lower rainfall than historical levels Increases in fuel prices MaR 95% Lower growth in demand MMUS$ 5% 5
Commercialpolicy Conservative management » Hydrology risk » Evolution of fuel » Minimize margin Electricity demand growth prices variation » Portfolio of generation » Exchange rate risk assets Physical sales as of December 2010 Chile Colombia Peru Argentina 19% 7% 12% 26% 30% 24% 56% 81% 64% 63% 18% Regulated Unregulated Spot 6
operationalaspects Figures by country as of December 2010 Total Installed Capacity: 13,846 MW Total Generation: 51,603 GWh Peru Peru 12% 16% Chile 41% Chile Colombia 41% 21% Colombia 22% Total Ebitda 2010: US$ 2,098 million Argentina Argentina 21% 26% Peru 10% Colombia 28% Chile 56% Argentina Affiliate Company: Endesa Brasil 6% Endesa Chile ownership: 38.9% Equity Gains (Dec. 2010): US$ 178 million 7
operationalaspects Summary of consolidated results Var. % 2010/2009 US$ Million FY09 FY10 (a) 4,322 10.4% Revenues 4,773 1,746 1,817 Operating income (3.9%) 42% 37% Operating margin (12.9) 2,246 2,098 (6.6%) Ebitda 1,120 (6.6%) Net income (b) 1,046 56,641 59,859 (5.4%) Physical sales (GWh) Main drivers: higher costs of energy purchases and greater use of fuel for thermal generation due to lower hydrology mainly in Chile a) Throughout this presentation, variations may not coincide due to rounding Attributable to Endesa Chile’s shareholders b) c) Figures are translated into US dollars using the average exchange rate for each year, or Ch$559.15 / dollar for 2009 YE and Ch$510.22 / dollar for 2010 YE. 8 8
financialaspects Strong financial position Debt by Type (Million US$) Net Debt Evolution 5000 Others, Banks, 455 694 3,833 3,719 4000 3,612 3,292 3,239 3,065 3000 US$ millon Yankee Bonds, 917 Local 2000 Bonds, 1,708 1000 Total gross debt: US$3,775 million 0 2005 2006 2007 2008 2009 2010 Debt by Currency As of December 2010: US$ 710 million of cash and cash Local equivalents on a consolidated basis currency 31% Liquidity position enhanced with US$ 509 million of committed US$ 57% Revolving Credit Lines, both locally and abroad and US$ 220 million of uncommitted short term credit lines in the Chilean capital market UF-Ch$ Endesa Chile ring- fenced its Yankee Bonds’ and Local Bonds’ cross 12% default clauses do not refer to non-Chilean subsidiaries Figures as of December 2010 9
financialaspects Comfortable debt maturity Financial Debt (US$ million) 2011 2012 2013 2014 2015 Balance TOTAL Chile 61 47 422 159 222 1,172 2,084 Argentina 148 60 31 31 27 0 298 Peru 80 70 49 48 32 158 438 Colombia 231 159 0 74 131 360 954 Total 520 336 503 313 413 1,691 3,775 Financial Debt by Country Credit Risk Ratings Recognition Colombia 25% Date: Jan. 2010 Date: Dec. 2006 Date: Feb. 2010 BBB+ BBB+ Baa3 Chile 55% Peru 12% BBB BBB Ba1 Argentina 8% 10 10 Figures as of December 2010
financialaspects Strong financial ratios Net debt/EBITDA Endesa Chile‘s investment grade status restored EBITDA/Net financial expenses Endesa Chile’s investment grade status restored 11 11
financialaspects Dividends: sustained growth to shareholders Dividends CAGR = 47% 434 1,235 (US$ m) 274 227 207 93 2005 2006 2007 2008 2009 Total Payout ratio 35.11% 50% 50% 60% 40% 15,365 Market Cap CAGR = 13% 13,954 (US$ m) (1) 10,072 10,393 8,322 9,428 2005 2006 2007 2008 2009 Dec-10 Values calculated in dollars at the end of each period. (1) Source: Bloomberg 12 12
liquidityleaders One of the most liquid shares in the local stock exchange 2010 Recurrent Operations Santiago Stock Exchange US$ 10 million trading time Traded volume Company Million US$ 1 SQM 17,464 NYSE: 2 days 2 LAN 16,732 3 CENCOSUD 15,138 4 ENDESA 11,203 Santiago: 1 day 5 FALABELLA 11,073 IPSA * Leaders Year 2010 Index breakdown Average Yearly Float Rotation: 0.8 (**) Index Added Company Weigth Weigth 1 COPEC 10.95% 11.0% 2 CENCOSUD 6.89% 17.8% 3 ENDESA 6.88% 24.7% 4 LAN 6.84% 31.6% 5 ENERSIS 6.68% 38.2% 13 (*) IPSA: Selected Shares Price Index (Chile) (**) Takes into account the three Stock Exchange markets where we are listed: Chilean stock exchanges, NYSE and Latibex.
whereareweheadingto? Direct relation between GDP and electricity demand Real GDP vs. Electricity Demand Per capita 18 Finland 16 Sweden 14 Electricity demand per capita (Gwh) 12 United States 10 Spain France 8 Germany Russia Slovakia Italy Denmark 6 United Kingdom Portugal Greece 4 Chile Argentina 2 Mexico Brazil Peru Colombia 0 0 5 10 15 20 25 30 35 40 45 50 GDP per capita (Thousand US$) 14
whereareweheadingto? Important contribution to growing demand Chile: Colombia: Chile: Chile: San Isidro II +46 MW San Isidro II (2 nd stage) +105 MW Cartagena +142 MW San Isidro II (1 st stage) +248 MW Quintero +257 MW Peru: Ojos de Agua +9 MW Palmucho +32 MW Canela II: +60 MW Ventanilla +457 MW Colombia: Canela I +18 MW Peru: Cartagena: +66 MW Santa Rosa +200 MW Amounts are in MW. 1.8 GW of new installed capacity in the past 5 years Close collaboration with authorities to develop new capacity Committed to energy efficiency policies and promotion of NCRE 15 15
whereareweheadingto? Projects under construction Bocamina II, coal-steam, Chile Location: next to the existing coal-fired plant Bocamina I Installed capacity: 370 MW Fuel type: imported coal Estimated start-up: by the end of 2011 El Quimbo, hydro power plant Installed capacity: 400 MW Investment: US$837 million Location: Magdalena River Reliability payment: up to 1,650 GWh/ year for 20 years. Estimated start-up: December 2014 16 16
whereareweheadingto? Projects under study Neltume, hydro Los Cóndores, hydro power plant run-of-the-river plant Installed capacity: Installed capacity: 150 MW 490 MW Piruquina, mini-hydro Choshuenco, hydro run-of-the-river plant power plant Installed capacity: Installed capacity: 7.6 MW 128 MW Punta Alcalde, coal- Curibamba, hydro steam power plant power plant Installed capacity: Installed capacity: 740 MW 188 MW 17 17
whereareweheadingto? Projects under study Aysen Hydroelectric Project, Chile Installed capacity: 2,750 MW Endesa Chile’s owns 51% and Colbún 49%. Takes advantage of water: natural resource, renewable and clean CO2 emissions: Reduction of 16.2 million tons/year 1st half 2009: first set of answers to EIA was completed January 2010: additional observations were received October 28, 2010: Answers to the second set of questions of the EIA were submitted November 25, 2010: Third set of questions . The period to answer was extended to April 15, 2011 18 18
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