Slide 1: 9M07 Results
15 November, 2007 9M07 Results
Slide 2: 9M07 Results Highlights
1 Solid earnings… - Net income up 13% in a like-for-like basis … in a challenging operating environment - Moderate demand and wholesale prices in Spain and other European countries where Endesa operates - Low rainfall and scarcity of gas in Latin America Growth in line with our commitment 9M07 resul
Slide 3: Positive earnings in a challenging operating environment
2 Change +7% +6% +13% Change +2% 0% -4% +5% +5% 5,612 4,100 -706 1.24x 15,549 8,189 1,979 -21% 9M 2006 5,479 4,109 -736 1.24x 14,847 7,819 2,508 9M 2007 Positive earnings in a challenging operating environment CONSOLIDATED RESULTS Revenues Gross profit EBITDA EBIT Net financial expense Leverage euro
Slide 4: Operating growth in line with targets
3 Operating growth in line with targets CONSOLIDATED RESULTS euroM EBITDA 7,440 (1) Recognition of revenues from non-mainland generation deficit in 2001-2005 2005 2006 2007 Target +8% 6,020 7,139 +7% 5,252 4,399 9M 5,612 227(1) 227(1)
Slide 5: Net Income up 13% (like-for-like)
4 360 7 36 -19 -142 -107 1,937 1,714 227 31 -19 42 794 388 213 Net Income up 13% (like-for-like) CONSOLIDATED RESULTS Net Income change euroM 2,508 1,979 Net income 9M06 Net income 9M07 EBITDA Amort. Financial Income Other income Taxes Minorities Like-for-like change Non-recurrent adjustments +13%(1
Slide 6: Positive cash flow generation
5 CONSOLIDATED RESULTS Positive cash flow generation euroM Spain and Portugal After-tax operating cash flow (1) Total net investment (2) Europe Latam Group Cash flow before dividends 3,187 2,424 763 (1) Equivalent to“Net cash flows from operating activities”; (2) (2) Equivalent to “Net cash flows us
Slide 7: Improved financial leverage
6 Improved financial leverage CONSOLIDATED RESULTS Europe Spain and Portugal Enersis E. Italia Spain, Portugal and other euroM Net debt at 30/09/07 by business Net debt at 30/09/07 by company Net debt stripping out regulatory receivables pending collection at 30/09/07 18,017(1) Net debt stripping ou
Slide 8: Spain and Portugal
7 1H07 Results Strong growth across all businesses Spain and Portugal 9M07 Results
Slide 9: Spain and Portugal: Positive operating performance
8 SPAIN AND PORTUGAL Positive operating performance Highlights Moderate growth in demand and lower pool prices Lower CO2 cost Leadership and margin enhancement in deregulated business Significant earnings jump in Distribution and Gas activities Regulatory update EBITDA Generation + Supply Distributi
Slide 10: Leadership and revenues enhancement in deregulated business
9 Leadership and revenues enhancement in deregulated business SPAIN AND PORTUGAL euro/MWh (1) Includes -euro121M in 9M06 and -euro9M in 9M07 following application of Article 2 of RDL 3/2006 Average revenue from mainland generation(1) and pool price Forward sales have acted as a hedge from the fall i
Slide 11: Significant improvement in Distribution and gas activities
10 SPAIN AND PORTUGAL Significant improvement in earnings in Distribution and gas activities Gas business Gross Margin Distribution business EBITDA 9M07 9M06 +22% euroM Improved remuneration euroM 177 109 9M07 9M06 +62% Total gas sales: up 24% Gas market share: 14% Quality continues to improve: inte
Slide 12: Regulatory update
11 Regulatory update SPAIN AND PORTUGAL Renewables Solar capacity meet current target RD proposal to revise PV remuneration and adjust it to existing capacity Capacity Payments Subsitute existing system for two incentives: Investment incentive: 10 years capacity payment for generation assets commiss
Slide 13: Europe
12 1H07 Results Strong growth across all businesses Europe 9M07 Results
Slide 14: Europe: Stable business in an unfavourable environment
13 EUROPE Stable business in an unfavourable environment Highlights Higher margins despite falling prices and demand Progress made on capacity plan Energy management: extracting additional value from its European asset portfolio Progress made on contributions to Endesa Hellas EBITDA euroM 890 867 -3
Slide 15: Italy: higher margins
14 9M07 32.2 euro/MWh Italy: higher margins EUROPE Low level of activity: stagnant demand, higher imports and low rainfall Increase in unit margin due to: - Hedged by bilateral contracts and contracts with Acquiriente Unico - Fall in CO2 prices - Greater self-sufficency from Green Certificates (60%
Slide 16: Endesa France: EBITDA growth in a scenario of low prices
15 EUROPE Endesa France: EBITDA growth in a scenario of low prices Activity maintained despite lower demand (-4%) Increase in unit margin despite lower prices: output hedged with forward energy sales and EDF contract Increasing contribution from non- EDF sales Lower fixed costs (-9%) Industrial Plan
Slide 17: Latin America
16 1H07 Results Strong growth across all businesses Latin America 9M07 Results
Slide 18: Latin America: Strong growth in distribution
17 LATIN AMERICA Strong growth in distribution offsets challenging generation environment Highlights Demand growth in all countries In Generation, increased unit margins offset lower output Sharp growth in Distribution activity and margins Emgesa-Betania merger effective on September 1 Cash returns
Slide 19: Higher unit margins despite low hydro production
18 Higher unit margins despite low hydro production Fall in hydro output (down 15%) and greater use of liquid fuels due to gas restrictions 55% rise in node price in Chile (four rises in 2007) High energy prices pushed up unit margin LATIN AMERICA 44,297 -4% 9M07 9M06 Argentina Brazil Chile Colombia
Slide 20: Strong growth in Distribution
19 Strong growth in Distribution Application of new tariffs in Argentina Better margins in Brazil due to lower sector surcharges LATIN AMERICA +8% 38.6(1) 35.9 9M06 9M07 Sales (GWh) Distribution margin (USD/MWh) USD/MWh (1) Does not include retroactive effect of increased tariffs at Edesur (Nov 05 t
Slide 21: Conclusions
20 Conclusions Solid earnings against a challenging backdrop Optimum position to meet new challenges Unique assets portfolio Financial strength Contribution from new shareholders An experienced and committed team CONCLUSIONS
Slide 22: Back Up
21 1H07 Results Strong growth across all businesses Back Up 9M07 Results
Slide 23: Income Statement Spain and Portugal
22 Income Statement Spain and Portugal ( 1 ) Stripping out the non-recurrent effects of: (a) non-mainland deficit in 9M06: euro227M at the EBITDA level, euro31M in net financial expenses and euro197M impact on net income; and (b) asset disposals which had an impact on net income of euro190M in 9M06
Slide 24: Income Statement Europe
23 Income Statement Europe Revenues Gross profit EBITDA EBIT Net financial expense euroM 9M 2007 Change 867 638 -58 3,027 1,129 Net income 287 890 693 -38 3,113 1,137 426 9M 2006 -3% -8% -6% -3% -8% +53% -3% -1% -33% -3% -1% +53% (1) Stripping out effects from extraordinaries: (a) revaluation of the
Slide 25: Income Statement Latin America
24 (1) Stripping out effects from extraordinaries: (a) non-recurring tax credit due to the Elesur/Chilectra merger, with an impact on Net Income of euro101M in 9M06 and (b) asset disposals with an impact of on net income of euro17M in 9M06 and euro8M in 9M07 Note: EBITDA growth in local currency was
Slide 26: Recognised regulatory items pending collection
25 1,218 1,650 298 Recognised regulatory items pending collection APPENDIX: ENDESA Mainland deficit 2006 Historical nonmainland deficit Total euroM Mainland 2007 3,166
Slide 27: Debt structure
26 Debt by interest rate structure Debt by currency Debt structure: - Fixed-rate or hedged: 57% (1) - Debt in currency in which cash flow is generated Average cost of debt: 5.79% - Endesa excl. Enersis: 4.43% - Enersis: 9.74% Leverage(1): - Net debt/equity: 1.24x Average life of debt: 5.1 years Liqu
Slide 28: Installed capacity and output
27 Spain and Portugal Installed capacity and output(1) Installed capacity Spain and Portugal Europe Total 9,896 - 3,783 179 1,014 2,740 2,180 MW at 30/09/07 Total Hydro Nuclear Coal Renewables and CHP Natural Gas Fuel oil Output Europe Latam Total TWh 9M07 (% chg vs. 9M06) Total Hydro Nuclear Coal R
Slide 29: Progress on capacity plans
28 Progress on capacity plans APPENDIX: ENDESA Spain and Portugal CCGTs: +800 MW Non-mainland: +154 MW Renewables: +327 MW Europe Latin America CCGTs Italy: Renewables Italy: +138 MW CCGTs France: Renewables France: +10 MW Hydro: +82 MW Thermal: +347 MW Renewables: +18 MW Progress on planned capacit
Slide 30: Endesa CO2 emissions in the EU
29 Endesa CO2 emissions in the EU APPENDIX: ENDESA Total Spain(1) Italy France Poland 9M07 Allocation (MTon CO2) 40.3 9M07 Emissions (MTon CO2) 9M07 Deficit (MTon CO2) Portugal (1) Mainland + island and non-mainland systems. The deficit from the island and non-mainland systems is recognised in reven
Slide 31: Endesa's CDM portfolio
30 APPENDIX: ENDESA ERPA signed LOI signed *Each fund is accounted for as a discrete project Biomass Methane capture Energy efficiency Wind HFC23 Hydro Landfill methane recovery Multiple* Other 0.8 0.2 5.4 6.5 41.8 13.2 3.6 15.3 6.2 MtCO2 1.1 70.2 15.3 6.4 MtCO2 Technological breakdown (42 projects)
Slide 32: Generation output in Spain
31 Generation output in Spain Endesa's mainland generation output Nuclear Hydro CCGT Coal Fuel +1% +0% 58,153 57,303 1% Renew./CHP Hydro and nuclear: Conventional thermal: +25% Renewables/ CHP: +4% -6% Hydro and nuclear: Conventional thermal: +12% Renewables/ CHP: Change for rest of sector Change EN
Slide 33: Competitive mainland fuel costs
32 Competitive mainland fuel costs thanks to a balanced generation portfolio (1) (1) Estimates (2) (2) Conventional thermal facilities ex fuel-oil Cost of mainland fuel in Ordinary Regime Load factor of thermal plants(2) vs. rest of the sector Even against a backdrop of higher rainfall, Endesa still
Slide 34: Competitive mainland fuel costs breakdown
33 Competitive mainland fuel costs Fuel costs impact breakdown (1) euro32.0/MWh in 9M07 and euro29.4 in 9M06 ex-ATR. (2) Net of coal premiums. Gross cost was euro25.2/MWh in 2007 and euro23.6/MWh in 2006. Includes imported coal consumed by national coal plants. Mainland unit fuel costs breakdown eur
Slide 35: Renewables and CHP affected by drop in pool prices
34 Renewables and CHP technologies have been strongly affected by drop in pool prices (1) Accounting output (corresponding to booked sales) EBITDA (euroM) -5% 132 9M07 9M06 126 Sale price Renewable & CHP 95.4 euro/MWh 83.3 euro/MWh -13% Output(1) 1,770 GWh 2,211 GWh +25% APPENDIX: SPAIN AND PORTUGAL
Slide 36: Renewables/CHP: operating indicators
35 APPENDIX: SPAIN AND PORTUGAL Renewables/CHP: operating indicators Installed capacity Output MW Total CHP Wind Mini-hydro Other Net 1,454 969 194 46 245 Account. 1,106 865 185 22 34 Gross 2,253 1,356 238 140 519 9M 2006 Net Account. Gross 9M 2007 GWh Total CHP Wind Mini-hydro Other Net 2,701 1,418
Slide 37: Lower CO2 cost
36 Lower CO2 cost (1) Also, the updated value of CO2 rights in the 2006 deficit included in the balance sheet until April due to falling prices had a positive impact on EBITDA of euro41M and -euro41M on depreciation and amortisation. (2) Due to an adjustment in the market value of rights consumed in
Slide 38: Integrated management of asset portfolio
37 APPENDIX: EUROPE Integrated management of asset portfolio Trading EBITDA: euro27M Additional contributions: -Endesa Italia: euro18M -Endesa France: euro10M 16 GWh 1.879 GWh 128 GWh 68 GWh 5 GWh 81 GWh 15 GWh Physical assets Virtual assets Interconnection 342 GWh 132 GWh 83 GWh
Slide 39: Conventional electric capacity plan in Italy
38 Scandale(1): Tavazzano 9: Monfalcone 3 and 4: 800 MW CCGT Under construction Start up in 2008 4000 MW CCGT EPC awarded Start up in 2010 800 MW repowering Authorization process Start up in 2010 Fiume Santo 5: (1) 50% Endesa- 50% ASM Brescia 410 MW coal plant Under agreement with Cerdeña Region Sta
Slide 40: Regasification capacity plan in Italy
39 Livorno: Monfalcone: Porto Torres: Regasification capacity plan in Italy Capacity around 8 bcm (100% assigned to Endesa) Off-shore terminal Project in an advanced stage in the authorization process Strategic project according to Italian authorities Start up in 2012 Capacity around 4 bcm (50% asss
Slide 41: CCGTs capacity plan in France
40 CCGTs capacity plan in France 860 430 430 860 2 ,58 0 430 Emile Huchet •EPC awarded. Under construction Lucy •Project proposals solicited Lacq •Project proposals solicited Authorized capacity Provence •Advanced stage in the authorization process TOTAL CCGTs France Authorized CCGT: 2,580 MW 3,010
Slide 42: Renewables in Europe: wind projects
41 Renewables in Europe: wind projects APPENDIX: EUROPE Start-up 3Q05 3Q06 1Q07 1Q04 1Q07 1Q07 Gross capacity 179 14 24 42 20 10 10 20 Operational wind output in Europe MW Total Italy Iardino Vizzini Montecute Total France Lehaucourt Poggi Alti Trapani 2Q07 32 Florinas 17 17 Total Greece Sidirokastr
Slide 43: Cash returns from Latin America
42 Cash returns from Latin America LATIN AMERICA 59% of the USD1,600M committed for the period 2005-09 fulfilled USD184M from Enersis dividend against 2006 earnings S&P upgraded Enersis and Endesa Chile to BBB stable 9M07 (USDM) Dividends and interest Capital reductions & others Disposals Total 13 3
Slide 44: Highlights by country: Argentina and Brazil
43 Sharp sales growth (+9%) Application of new distribution tariffs (+38% in dist. cum. value/VAD) and retroactive recognition to Nov 2005 Gas and electricity supply restrictions during winter. The situation has improved since mid-September. Fall in electricity output (lower rainfall and low availab
Slide 45: Highlights by country: Colombia, Chile and Peru
44 Highlights by country APPENDIX: LATIN AMERICA 9M07 EBITDA (euroM) Highlights Colombia Sharp growth in demand (7%) Emgesa-Betania merger effective 1 September Fall in output (8%) due to lower rainfall and increased maintenance work (Guavio hydro plant) Increase in output at Guavio hydro plant (+50
Slide 46: Direct stakes held by Endesa Internacional
45 Direct stakes held by Endesa Internacional APPENDIX: LATIN AMERICA Direct 60.6% 60% Generation business Operating companies Distribution business euroM Codensa: 27% 213 218 386 Emgesa: 23% 143 191 402 EEB: 5% n/a n/a n/a E. Brasil: 28% 428 544 1.127 Edesur: 6% 35 106 35 DockSud: 40% 19 22 128 Ede
Slide 47: Significant unrealised capital gains in Latin America
46 Significant unrealised capital gains in Latin America APPENDIX: LATIN AMERICA * Market value of stake in Enersis + and book value for rest of portfolio (plus an estimated euro700M in additional market value) Group Other stakes 6,500 3,900 euroM 4,900 3,000 900 900 700 Market value 30/09/07* Book
Slide 48: Disclaimer
47 Disclaimer This presentation contains certain “forward-looking” statements regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and they are subject to material risks, uncertainties, changes and oth
Slide 49: 9M07 Results
48 1H07 Results Strong growth across all businesses 15 November 2007 9M07 Results