A Word From Our Chairman

Dear Shareholders:

It is my pleasure to present, on behalf of the Board of Directors of Enaex S.A., the 2018 Integrated Report and Financial Statements. This Integrated Report once again includes significant activities from all areas of our operations. It is written in accordance with the International Integrated Reporting Council (IIRC) framework, a model which aims to provide a more thorough, precise and comprehensive representation of how our Company’s resources create value.

The Company and its board of directors have an ongoing interest in achieving our best performance—in the economic realm and in every other area that enables Enaex to project itself in an innovative, sustainable manner. This year, we focused on our role as an integrated rock fragmentation services provider offering high-value, customer-focused solutions. We continue developing cutting-edge products and solutions for global mining with programs that address some of the aspects most relevant to the organization: human resource management, efficiency, safety, synergy between subsidiaries, robotics, emissions control and energy efficiency.

In the three years since we acquired 100% of Enaex Britanite, Brazil’s largest explosives company, and 96% of France’s Davey Bickford Enaex, one of the world’s leading manufacturers and distributors of electronic detonators for the explosives industry, we have undoubtedly achieved the objective of constantly improving our value proposition for customers. We have done so by offering cutting-edge initiation systems and technology as well as more efficient logistics and supply processes, which has strengthened our global position. A survey published in Minérios, a Brazilian mining journal, places Enaex Britanite at the forefront of the Brazilian blasting market in terms of market share and customer satisfaction. Enaex was recognized by the French-Chilean Chamber of Commerce as the Best Performer in French-Chilean Commercial Relations of 2018, reflecting the successful integration process and significant results recorded since acquiring the French company.

As of December 2018, Enaex recorded US$783.1 million in revenue and US$78.7 million in profit, representing an 11% increase and a 2% drop, respectively, relative to the prior year. The difference is attributable to the tax reform that began in 2014, raising the Chilean tax rate from 25.5% to 27% between 2017 and 2018. However, this was offset by higher sales in Chile, Brazil and Peru thanks to increased growth in the mining sector. On international markets, exports reached 192,000 tons, primarily to the destination markets of Bolivia, Peru and Australia. Similarly, sales of initiation systems were also up worldwide.

In keeping with the Company’s strategic plan, which aims to optimize international development and harness its strengths at the regional level, on May 15 Enaex acquired 70% ownership in Cuzco-based Industrias Cachimayo S.A., which was owned by Yura S.A., a subsidiary of the Gloria group and Perú’s only producer of ammonium nitrate.

The mining sector faces problems that require timely solutions and non-traditional insights. Joint innovation efforts involving mining companies and their suppliers have become fundamental to the industry’s sustainability. That is why it is an honor to have been recognized in May by the School of Science and Engineering at Universidad Adolfo Ibáñez with the Technological Innovation in Engineering award for Enaex’s contributions to the mining industry in recent years.

In the environmental realm, Enaex continued work on the 2006 Clean Development Mechanism (CDM) efforts to reduce nitrous oxide emissions at the Prillex America complex in Mejillones. Energy efficiency projects were also implemented, translating into significant energy savings. The Company has the capacity to cogenerate nearly 60% of its electricity consumption, reducing annual CO2 equivalent emissions by approximately 30,000 tons. This progress positioned the Company, for the third straight year, among the 29 companies on the Dow Jones Sustainability Index Chile (DJSI Chile) developed by Santiago Exchange, S&P Dow Jones Indices and RobecoSAM.

In closing, I would like to express special gratitude to our employees in all the countries where we operate: Chile, Argentina, Australia, Brazil, Canada, Colombia, the United States, France, Mexico and Peru. Their efforts and dedication are what has enabled us to become leaders in production, quality, sustainability and innovation. I would also like to thank our customers, suppliers, financial institutions, investment funds and bondholders. They have accompanied us throughout the years as we set challenges and goals for ourselves. Likewise, I am grateful to the shareholders who have placed their trust in us and to the directors who have contributed to this endeavor.

Juan Eduardo Errázuriz O.
Chairman