Endesa S.a. · BME:ELE
Endesa — Investor Presentation (March 2006)
80 slides from Endesa's investor presentation, Mar 3, 2006
Slide 1: AS, EIA SOOT
AS, EIA SOOT
Slide 2: Agenda
1 Energy Sector Environment 2 Excellent Results 2005 3 Shareholder Return 4 Takeover Bids 5 Endesa: stronger business, greater value
Slide 3: Energy Sector Environment
Yi _ | x ‘ Energy Sector Environment
Slide 4: Macroeconomic Environment
Macroeconomic Environment Europe Deregulation of the energy market Growing integration of wholesale markets Concern for security of supply High fuel and CO2 prices Latin America Currency stability Economic recovery Change of the energy matrix
Slide 5: Growth of Electricity Demand
Growth of Electricity Demand D emand in our markets (Increases vs. 2004) Spain 5.3% Europe 1.5% Latin America 4.5%
Slide 6: Summary of regulatory improvements in Spain 2005
Summary of regulatory improvements in Spain 2005 Rate Increase + 1.71% vs. 2004 2006 rate increase + 4.48% Development of electricity prices 1996 2006 Current terms -8.8% Constant terms -33.1%
Slide 7: Summary of regulatory improvements in Spain 2005
Summary of regulatory improvements in Spain 2005 Generation deficit Deficit recognition Technologies at market price Progress toward additive rate Extra- Peninsular Increase of recognized generation costs Recognition of deficits 2001–2004
Slide 8: Regulatory Improvements in Europe and Latin America
Regulatory Improvements in Europe and Latin America Latin America Rate revisions in Brazil, Chile and Peru Rate agreement for distribution and generation in Argentina Europe Recognition of CTCs in Italy Fiscal revaluation of assets in Italy Opening of wholesale market
Slide 9: Excellent Results in 2005
Excellent Results in 2005 2 5 er | te wre :
Slide 10: Endesa has achieved the greatest profits in its history
Endesa has achieved the greatest profits in its history (M€) 2004 2005 Variation Sales 13,509 17,508 +30% Net Profit without sales of assets 1,149 1,841 +60% Net Profit 1,253 3,182 +154% Dividends 782 2,541 +225%
Slide 11: Company with a recognizable multinational character
Company with a recognizable multinational character EBITDA: 6,020 M€ +33% Diversified portfolio Latin America 31% Spain and Portugal 54% Europe 15% Growth of all businesses Spain and Portugal + 32% Europe + 66% Latin America + 23%
Slide 12: Company with a recognizable multinational character
Company with a recognizable multinational character EBITDA: 6,020 M€ +33% Diversified portfolio Rest of world 46% Spain and portugal 54% Growth of all businesses Spain and Portugal +32% Europe +66% Latin America +23%
Slide 13: Spain and Portugal
Spain and Portugal
Slide 14: Endesa has achieved the greatest profits in its history
Endesa has achieved the greatest profits in its history Spain and Portugal Excellent Results Strengths (M€) 2004 2005 Variation Sales 6,648 8,761 +32% EBITDA 2,472 3,266 +32% Net Profit 888 1,358 +53%
Slide 15: Excellent Results in 2005 Spain and Portugal
Excellent Results in 2005 Spain and Portugal Excellent results Strengths Net Profit (M€) 888 2004 1,358 2005 +53% Increase in activity Containment of operating costs Competitive cost of fuel
Slide 16: Endesa is a leader in the national market
Endesa is a leader in the national market Spain and Portugal Excellent results Strengths No.1 in Spain 22,400 MW Sales: 101 TWh 12 million customers Balanced generation mix Generation-sales balance
Slide 17: Improvement in quality of service
Improvement in quality of service Spain and Portugal Excellent results Strengths TIEPI total (Hours*) 2h54’ 2004 2h14’ 2005 -23% * Does not include force majeure 1,389 M€ of investment in distribution
Slide 18: Hurricane Delta
Hurricane Delta Spain and Portugal Excellent results Strengths
Slide 19: Hurricane Delta
Hurricane Delta Spain and Portugal Excellent results Strengths
Slide 20: Hurricane Delta
Hurricane Delta Spain and Portugal Excellent results Strengths Winds of up to 250 km/h 190,000 customers affected More than 700 people mobilized 99.4% of service restored in 4 days
Slide 21: Well positioned in the gas market
Well positioned in the gas market Spain and Portugal Excellent results Strengths Contracted consumption (TWh) 18.5 2004 24.9 2005 +34% Gas provision Diversified by origin and destination Flexible and competitive Largest future buyer of Spanish gas 12% share in gas consumption
Slide 22: Advances in capacity plan
Advances in capacity plan Spain and Portugal Excellent results Strengths Conversion of As Pontes to imported coal As Pontes 1,400 MW Construction of new CCGTs Colón 400 MW 2006 As Pontes 800 MW 2007 Besós 800 MW 2008 Growth of Special Regime 149 MW more installed capacity 462 MW under construction 4
Slide 23: Europe
Europe
Slide 24: Endesa has achieved the greatest profits in its history
Endesa has achieved the greatest profits in its history Europe Excellent results Strengths (M€) 2004 2005 Variation Sales 2,557 3,598 +41% EBITDA 535 887 +66% Net Profit 169 425 +151%
Slide 25: Excellent Results in the European Business
Excellent Results in the European Business Europe Excellent Results Strengths Net Profit (M€) 169 2004 425 2005 +151% In Italy: Strong increase in activity and improvement of unit margin Fiscal revaluation of assets Operational improvements in France
Slide 26: Endesa: a great leader in the European market
Endesa: a great leader in the European market Europe Excellent results Strengths Italy
Slide 27: Endesa: a great leader in the European market
Endesa: a great leader in the European market Europe Excellent results Strengths France Italy No. 3 in Italy 6,590 MW
Slide 28: Endesa: a great leader in the European market
Endesa: a great leader in the European market Europe Excellent results Strengths Poland France No. 3 in France 2,477 MW Italy No. 3 in Italy 6,590 MW
Slide 29: Endesa: a great leader in the European market
Endesa: a great leader in the European market Europe Excellent results Strengths Poland 330 MW Dolna Odra Agreement France No. 3 in France 2,477 MW Italy No. 3 in Italy 6,590 MW 9,400 MW Sales 47 TWh
Slide 30: Integrated management of the European asset portfolio
Integrated management of the European asset portfolio Europe Excellent results Strengths Endex Powernext Gielda E. EEX Snet Endesa Italia Maximizing the value of European assets
Slide 31: Stake in renewables and gas
Stake in renewables and gas Europe Excellent results Strengths Italy Repowering of Monfalcone (Groups 3–4) Start of Scandale projects (800MW) Portfolio of wind projects: 700MW Livorno and Monfalcone LNG regas terminals France Wind projects: 55MW Additional opportunities: 2,000MW CCGTs + 200MW renewa
Slide 32: Endesa: among the five largest European electric companies
Endesa: among the five largest European electric companies Europe Excellent results Strengths Spain and Portugal Italy United Kingdom Central Europe Endesa EDF E.ON ENEL RWE
Slide 33: Latin America
Latin America
Slide 34: Endesa has achieved the greatest profits in its history
Endesa has achieved the greatest profits in its history Latin America Excellent results Strengths (M€) 2004 2005 Variation Sales 4,297 5,149 +20% EBITDA 1,522 1,878 +23% Profit before minority interests 431 710 +65% Net Profit 127 262 +106%
Slide 35: Strong growth in earnings
Strong growth in earnings Latin America Excellent results Strengths Net profit before minority interests (M€) 431 2004 710 2005 +65% Generalized increase by businesses and countries Improvement of unit margins
Slide 36: Improvement of returns for the matrix
Improvement of returns for the matrix Latin America Excellent results Strengths (M USD) 2004 2005 Dividends and interest received 46 86 Capital reductions 221 195 (1) Disinvestments 8 27 (2) Total 275 308 (3) 1 Includes Elesur payments for 41 M USD 2 Sale of CEPM for 24 M USD and repurchase of EEB s
Slide 37: Good stock market performance
Good stock market performance Latin America Excellent results Strengths Endesa Chile +55.1% Enersis +18.7%
Slide 38: First private company in Latin America
First private company in Latin America Latin America Excellent results Strengths Colombia Peru Brazil Argentina Chile 14,100 MW Sales 55 TWh 11 million customers Production increase: +5.1% Growth in sales: +5,6% Advances in capacity plan
Slide 39: Shareholder Return
Shareholder Return
Slide 40: Excellent results in 2005
Excellent results in 2005 Net Earnings (M€) 3,182 +154% Net Earnings without sale of assets 1,841 +60% Endesa has achieved the greatest profits in its history
Slide 41: Divestment of non-strategic assets
Divestment of non-strategic assets Grupo Auna 3,184 M€ in divestments 1,341 M€ net capital gains Sale of 27.7% Amount: 2,221 M€ Net Capital Gain: 1,115 M€ Profitability of 17% on our telecommunications investments in Spain * * Includes the Auna sale of 5.01%
Slide 42: Dividend proposal: payout 79.9%
Dividend proposal: payout 79.9% (€/share) 0.74 Dividend 2004 1.13 Ordinary activities 1.27 Sales of assets 2.4 2.095 Complementary 0.305 Interim Total 2005 Dividend 2005
Slide 43: A history of profitability
A history of profitability Revaluation of the Endesa share * (Annual Average 1996–2006) Endesa 10.6% IBEX35 7.4% 5.6% Eurostoxx Utilities 5.6% Total profitability including dividends * Total shareholder return 262% 13.7% annual average * From 31/12/1996 to 23/2/2006
Slide 44: Takeover Bids
Takeover Bids
Slide 45: Endesa Shareholders
Endesa Shareholders Endesa Shareholder Structure * (February 2006) Minority 26% Foreign 48% Spanish Institutional 26% Half of our capital stock is held by foreign investors Our stock is listed in Spain, the U.S. and Chile Millions of direct and indirect shareholders, through investment funds, deposi
Slide 46: Endesa's Action
Endesa’s Action Objective of Endesa’s Board of Directors and Management Team: To defend the interests of shareholders To defend the company’s value To defend the business project
Slide 47: Description of the Gas Natural Bid
Description of the Gas Natural Bid Terms Takeover bid on 100% of the capital For each Endesa share 7.34 €/share + 0.569 Gas Natural shares 21.3 Euros per share as of 2 September 2005 Total Equity: 22,500 M€ Conditions Acceptance of 75% of Endesa’s capital Amendment of the bylaws
Slide 48: Preliminary Evaluation of the Gas Natural Bid
Preliminary Evaluation of the Gas Natural Bid Bid proposed in a hostile manner Insufficient price Inadequate method of payment Industrial project that destroys value No commitment to shareholders
Slide 49: Insufficient Price
Insufficient Price (€/share) Endesa Quote Gas Natural Bid 6 September ‘05 24 February ‘06 Endesa quote over the initial Gas Natural bid: +33% Almost 7,500 M€ more than the initial bid
Slide 50: Inadequate Method of Payment
Inadequate Method of Payment 2/3 in shares of Gas Natural Legal Action Need to clarify all the regulatory and jurisdictional uncertainties that may affect the action of the merged company in the future so that shareholders can make a decision with the best information possible
Slide 51: Endesa is already a global leader
Endesa is already a global leader Enterprise Value (MM€) EDF 125 E.On 92 RWE 75 Suez 62 Endesa 57 Enel 57 Gas Natural 14 EBITDA 2005 (M€) EDF 13,010 E.On 10,300 RWE 8,324 Enel 8,075 Suez 6,274 Endesa 6,020 Gas Natural 1,538 NOTE: Enterprise Value as of 22 February 2006; EBITDA 2005 IBES except compa
Slide 52: Gas Natural does not contribute additional size
Gas Natural does not contribute additional size Enterprise Value (MM€) 57 Endesa 62 Merged * +8% EBITDA 2005 (M€) 6,020 Endesa 6,160 Merged * +2% * Merged after divestments, based on actual 2005 data for Endesa and IBES consensus for Gas Natural 1+1 equals 1
Slide 53: Significantly reduces position in generation and gas distribution
Significantly reduces position in electricity generation and gas distribution Installed capacity (GW) 46.4 Endesa 36.8 Merged * -21% Gas Customers 1 (Millions) 4.9 Gas Natural 3.7 Merged * -25% * After divestments 1 Customers in Spain 1+1 is less than 1
Slide 54: Handing Over of Leadership in Spain to the Principal Competitor
Handing Over of Leadership in Spain to the Principal Competitor Peninsular Production Share * Other 30% 34% Iberdrola 27% 36% Gas Natural 4% Endesa 39% 30% Pre-operation Post-operation * Ordinary System 2005 The agreement does not maximize the value of the assets, favoring Iberdrola shareholders
Slide 55: Loss of a Unique Asset Portfolio
Loss of a Unique Asset Portfolio Generation Portfolio in Europe in 2005 (MW) 9,397 Endesa 3,990 Merged * -58% Growth project in Europe is sacrificed In Europe, size and an important source of future growth is lost
Slide 56: In Latin America, the operation does not contribute anything
In Latin America, the operation does not contribute anything EBITDA of Latin America Gas Natural 13% Endesa 87% Little geographic overlap No synergy Reduced additional presence
Slide 57: The industrial project destroys value
The industrial project destroys value Endesa No. 1 in the electric sector in Spain No. 3 in the electric sector in Italy No. 3 in the electric sector in France Generation park with great potential Gas Natural Project No. 2 in the electric sector in Spain No. 5 in the electric sector in Italy No pres
Slide 58: No commitment to shareholders
No commitment to shareholders Strategic plan? Growth of EBITDA and Net Earnings? Return for shareholders? How can the bid be valued?
Slide 59: Description of the E.ON bid
Description of the E.ON bid Terms Takeover bid on 100% of the capital 100% in cash 27.5 euros per share as of 20 February 2006 Total Equity : 29,100 M€ Conditions Acceptance of 50.01% of Endesa’s capital Amendment of the bylaws
Slide 60: Preliminary evaluation of the E.ON bid
Preliminary evaluation of the E.ON bid Discussions have been held with all interested companies, with no commitment for any of the parties Because it is formulated in cash, the bid makes the shareholders’ decision easy Improves the price although it still does not reflect the actual value Positive e
Slide 61: Endesa Stronger business Greater value
Endesa Stronger business Greater value
Slide 62: Committed Management Team
Committed Management Team Annual Commitment Until 2009 EBITDA Growth +10–11% Growth Net Earnings >12% Dividend growth ordinary activities ≥12% Dividend for divestments 100% capital gains More than 7,000 M€ in dividends Commitment of the management team
Slide 63: With clearly surpassable commitments
With clearly surpassable commitments Annual commitment until 2009 2005 Fulfillment EBITDA Growth +10–11% +33% ü Growth Net Earnings >12% 60–154% ü Dividend growth ordinary activities ≥12% 54% ü Dividend for divestments 100% capital gains 1,341 M€ü ü
Slide 64: With clearly surpassable commitments
With clearly surpassable commitments Distribution of dividends from the 2005 fiscal year 2,541 M€ 36% of the more than 7,000 M€ committed
Slide 65: Excellent Prospects for 2006
Excellent Prospects for 2006 EBITDA (M€) 4,521 2004 6,020 2005 +33% 6,725 +12% 2006 E 2009 Estimate: +7,500 M€ Net Profit (M€) Excess Profit 1,253 2004 3,182 2005 +60% 2,400 2006 E +12% 2009 Estimate: +2,200 M€
Slide 66: Endesa is worth more
Endesa is worth more Ambitious commitments + Excellent results 2005 + Good prospects 2006 + Maximizing of shareholder return Endesa is worth more 28.35 € as of 24 February 2006
Slide 67: Endesa is already a global leader
Endesa is already a global leader No. 1 in the electric sector in Spain
Slide 68: Endesa is already a global leader
Endesa is already a global leader No. 3 in the electric sector in Italy
Slide 69: Endesa is already a global leader
Endesa is already a global leader No. 3 in the electric sector in France
Slide 70: Endesa is already a global leader
Endesa is already a global leader No. 1 in Latin America
Slide 71: Endesa is already a global leader
Endesa is already a global leader Unique asset portfolio in Spain and Europe
Slide 72: Endesa is already a global leader
Endesa is already a global leader Market capitalization of 30,000 million €
Slide 73: Endesa is already a global leader
Endesa is already a global leader No. 1 in the electric sector in Spain No. 3 in the electric sector in Italy No. 3 in the electric sector in France SS oe. No. 1 in Latin America Unique asset portfolio in Spain and Europe Market capitalization of 30,000 million € Lay | endesa
Slide 74: Endesa's Action
Endesa’s Action Objective of Endesa’s Board of Directors and Management Team: shareholders
Slide 75: Endesa's Action
Endesa’s Action Objective of Endesa’s Board of Directors and Management Team: Defend the interests of shareholders value
Slide 76: Endesa's Action
Endesa’s Action Objective of Endesa’s Board of Directors and Management Team: Defend the interests of shareholders Defend the company’s value project
Slide 77: Endesa's Action: Defend the business project
Endesa’s Action Defend the business project
Slide 78: Endesa Stronger business Greater value
Endesa Stronger business Greater value
Slide 79: Important Legal Information
Important Legal Information Investors are urged to read Endesa’s Solicitation/Recommendation Statement on Schedule 14D-9 when it is filed with the U.S. Securities and Exchange Commission (the “SEC”), as it will contain important information. The Solicitation/Recommendation Statement and other public
Slide 80: Signatures
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: March 3 th , 2006 By: /s/ Álvaro Pérez de Lema Name: Álvaro Pérez de Lema Title: Ma