Endesa S.a. · BME:ELE
Endesa — Investor Presentation (June 2007)
33 slides from Endesa's investor presentation, Jun 25, 2007
Slide 1: ENDESA's strategy in deregulated markets: New outlook
ENDESA's strategy in deregulated markets New outlook Valencia, 25 June 2007
Slide 2: Contents: Energy management
Energy management Contents 1. Energy management 2. Electricity portfolio management 3. Gas portfolio management 1
Slide 3: Energy management
Energy management Energy management Energy management Adapting to Profitability Operating the environment continuously Efficiency Searching Risk for and identifying management efficiencies 2
Slide 4: Alignment of all functions with value creation
Energy management Alignment of all functions with value creation New integrated organisation Energy management Back office Middle office Front office Gas business Income statement 3
Slide 5: Integration allows for management of the entire portfolio
Energy management Integration allows for management of the entire portfolio ENDESA enjoys arbitraging opportunities... Restrictions Energy management Inputs Back Office Middle Office Front Office Alternatives ...maximising margins and managing risk 4
Slide 6: Contents: Electricity portfolio management
Electricity portfolio management Contents 1. Energy management 2. Electricity portfolio management 3. Gas portfolio management 5
Slide 7: Steps in managing the portfolio
Electricity portfolio management Steps in managing the portfolio 1. Analysis of the portfolio and markets 2. Definition of the management strategy 3. Actions 6
Slide 8: Different alternatives for selling electricity
Electricity portfolio management There are different alternatives for selling electricity Restrictions Spot market Regulatory Strategic Other Energy Supply management Electricity Back office Middle office Front office Forward wholesale markets Power auctions Risk management Finding the optimal EBITD
Slide 9: Portfolio strategy
Portfolio management Portfolio strategy Target: Achieve the maximum EBITDA with a specific EaR Expected market price (ENDESA's view) The price gives the maximum expected EBITDA for the portfolio It also gives the EBITDA at risk (i.e. difference between expected EBITDA and the 5th percentile of expec
Slide 10: Actions based on EBITDA - Risk
Electricity portfolio management Actions based on EBITDA - Risk EXPECTED EBITDA Low . . . . . High Increase EBITDA Ensure EBITDA by High and reduce risk reducing risk . . . Maintain Low Increase EBITDA expectations of EBITDA at RISK EBITDA and risk 9
Slide 11: Implementing the strategy
Electricity portfolio management Implementing the strategy Year n+1 Year n+2 Year n+3 100 100 100 2006 2007 2008 80 80 80 60 60 60 62 70 72 40 80 40 80 40 80 20 20 20 18 10 8 Situation in Nov 05 0 0 0 Forecast output Sale/ Energy pending Forecast output Sale/ Energy pending Forecast output Sale/ Ene
Slide 12: Managing Margin - Risk (I)
Electricity portfolio management Managing Margin - Risk (I) Contracted sales and guaranteed margins for Electricity Management for 2007 in Spain and Portugal as of November 2006 Sales (TWh) Margin ((euro)M) 59% of the margin guaranteed 63 80 17 Forecast output Sale/Supply Energy pending Target margi
Slide 13: Managing Margin - Risk (II)
Electricity portfolio management Managing Margin - Risk (II) Contracted sales and guaranteed margins for Electricity Management for 2007 in Spain and Portugal forecasts by the end of June 2007 Sales (TWh) Margin ((euro)M) 92% of the margin guaranteed 0,5 3,1 11 27 80 38 VPP Forecast output Realised
Slide 14: Managing Margin - Risk (III)
Electricity portfolio management Managing Margin - Risk (III) Contracted sales and guaranteed margins for Electricity Management for 2008 in Spain and Portugal as of November 2006 Sales (TWh) Margin ((euro)M) 30% of the margin 71 guaranteed 80 9 Forecast output Sale/Supply Energy pending Target marg
Slide 15: Managing Margin - Risk (IV)
Electricity portfolio management Managing Margin - Risk (IV) Contracted sales and guaranteed margins for Electricity Management for 2008 in Spain and Portugal forecast by the end June 2007 Sales (TWh) Margin ((euro)M) 47% of the margin 59 guaranteed 80 0.17 21 Target margin Guaranteed marginMargen t
Slide 16: Impact on EBITDA - Risk in 2007
Portfolio management Impact on EBITDA - Risk in 2007 From January to June 2007, the Electricity Business in Spain and Portugal made forward power sales of 21 TWh The average forward sale price in 1H07 was (euro)51.3/MWh This strategy has: Increase in EBITDA Increased EBITDA by (euro)267M through for
Slide 17: VPPs (Virtual Power Plant Auctions)
Electricity portfolio management VPPs (Virtual Power Plan Auctions) The resolution of 19 April 2007 of the Ministry of Industry, Tourism and Commerce regulates auctions of primary energy emissions VPPs VPPs are allocated through call options on power up to a certain capacity, which can be exercised
Slide 18: VPP capacity and products auctioned
Electricity portfolio management VPP capacity and products auctioned Auction Delivery period Capacity auctioned Start of delivery period Quarter 150 MW Auction no. 1 Half-year 150 MW 1 July 2007 Year 100 MW 30% Peak - 70% Base Quarter 200 MW Auction no. 2 Half-year 175 MW 1 October 2007 Year 175 MW
Slide 19: Result of first VPP auction
Electricity portfolio management Result of first VPP auction 94% of capacity auctioned was awarded at prices near market levels BASE output Quarterly Half-yearly Annual Hours of operation hours2,208 4,417 8,784 BASE Strike price (euro)/MWh17 17 17 Close in Premium (euro)/MW - month 20,000 20,115 21,
Slide 20: Distribution auctions
Electricity portfolio management Distribution auctions The Ministry of Industry, Tourism and Commerce Order of 26 February 2006 regulates auctions for the supply of power by distributors To regulate bilateral contracts by distributors for supply at the tariff in the mainland market Objectives To pro
Slide 21: Capacity and products sold at distribution auctions
Electricity portfolio management Capacity and products sold at distribution auctions BASE and MODULATED loads will be auctioned, with delivery up to one year established through physical bilateral contracts between the seller and each distributor Product: The seller agrees to supply constant capacit
Slide 22: Result of first Distribution Auction
Electricity portfolio management Result of first Distribution Auction The first Distribution Auction, held on June 19 2007, was closed in the 25th round, at a price of 46.27 (euro)/MWh Evolution of the first Distribution Auction 70,0 Product base Load for Q32007 25000 70 66,9 64,0 65 61,3 20000 58,8
Slide 23: Result of first Distribution Auction for Q3 2007
Electricity portfolio management Result of first Distribution Auction for the Q32007 6,500 MW of total auctioned and matched capacity, equivalent to 14.35 TWh. Price 46.27 (euro)/MWh Results Endesa's sold capacity:1,420 MW (22% of market share), with an equivalent energy of 3.14 TWh. Associated reve
Slide 24: Contents: Gas portfolio management
Gas portfolio management Contents 1. Energy management 2. Electricity portfolio management 3. Gas portfolio management 23
Slide 25: The gas market and functions of Energy Management
Gas portfolio management The gas market and functions of Energy Management Negotiate, unlock value and manage the LP contracts Restrictions Single Manager for Commitments entire Group (not Strategic Other assumed local) Energy management Generation Portfolio of gas Back office Middle office Front of
Slide 26: Adapting the organisation to the environment
Gas portfolio management Adapting the organisation to the environment Energy Energy management management Procurement of Gas business raw materials Trading and Logistics and Gas business wholesale development markets 25
Slide 27: ENDESA's strategy and positioning in gas
Gas portfolio management ENDESA's strategy and positioning in gas The development of gas supply and timely action in the wholesale Strategy markets enable us to manage our gas portfolio profitably and securely Cornerstones of the Strategy Wholesale Supply Generation markets Valuation of the portfoli
Slide 28: Conclusion
Conclusion Contents Conclusion 27
Slide 29: Conclusion
Conclusion Conclusion Market Energy management Objectives Back office Middle office Front office RESULTS Restrictions Significant progress in deregulation, which ENDESA faces with highly competitive assets and a strategy that should enable the company to achieve its guidance for 2009 28
Slide 30: Contents
EI a E Contents = endesa 29
Slide 31: Value of gas contracts
Gas portfolio management Value of gas contracts $/ mmbtu Generation Alternatives for gas Supply sales Wholesale markets Contract 3 Contract 2 Contract 1 Marginal cost curve for ENDESA gas contracts bcm 30
Slide 32: Legal Information
Legal Information This document was made available to shareholders of Endesa, S.A.. In relation with the announced joint offer by ENEL SpA and Acciona, S.A., Endesa shareholders are urged to read the report of Endesa's board of directors when it is filed by the Company with the Comision Nacional del
Slide 33: ENDESA's strategy in deregulated markets: Signatures
ENDESA's strategy in deregulated markets New outlook Valencia, 25 June 2007 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ENDESA, S.A. Dated: June 25