Enel SpA · MIL:ENEL
Enel SpA — FY2006 Earnings Presentation
89 slides from Enel SpA's earnings presentation, Mar 28, 2007
Slide 1: 2006 Results Presentation
6 Results Presentation n 28 March 2007
Slide 2: 2006 Results
2006 Results ® 2007-2011 plan *® Domestic Market *® Domestic Generation & Energy Management * Domestic Infrastructures & Networks ® International Activities ® Strategy and Targets ® Questions and Answers @ Annexes Enel SpA Luigi Ferraris Francesco Starace Sandro Fontecedro Livio Gallo Fulvio Conti F
Slide 3: 2007-2011 plan
2007-2011 plan ® Domestic Market * Domestic Generation & Energy Management ® Domestic Infrastructures & Networks ® International Activities Strategy and Targets Questions and Answers Annexes Francesco Starace Sandro Fontecedro Livio Gallo Fulvio Conti Fulvio Conti
Slide 4: 2006 Results
WG >) = Enel ENERGY IN TUNE WITH YOU i Ferraris Results London 28" March 2007
Slide 5: Financial highlights
2006 Results Investor Relations ncial highlights €mn 2005 2006 % Revenues 33,787 38,513 14.0% Ebitda 7,745 8,019 3.5% Group net income? 3,895 3,036 -22.1% Strong financial performance mM Enel JERERGY in TUNE WITH YOU: 1. Net of 400€ mn provisions for operating efficiency program (Zenith project) 2.
Slide 6: Operational data: Italian market overview
2006 Results Investor Relations tional data: Italian market overview 330.4 337.8 rT ere ee =e Beef eeeeeeeee Net production Pumped storage er ccceeerrerers Electricity Total demand! (TWh): +2.2% aM Pie th JERERGY in TUNE WITH YOU: 1. Source: Terna - December 2006 electricity statistical data
Slide 7: Operational data: Italian market overview (gas)
2006 Results tional data: Italian market overview 86.2 84.4 Industrial Residential & Commercial Gas Total market sales (bcm): -2.1% Source: Ministry of economic development and Enel estimates
Slide 8: Operational data: Enel's domestic market division (1/2)
2006 Results pastes tebeitene tional data: Enel’s domestic market division (1/2) Electricity - Total market sales! (TWh) Electricity - Enel free +2.1% market customers 309.8 316.2 (thousand) . sas ‘ — <x * Regulated = ae Zz es . 6 : peneasaeeeees® ven Market «= : s 1. Excluding losses on the grid. D
Slide 9: Operational data: Enel's domestic market division (2/2)
Enel SpA 2006 Results Investor Relations rational data: Enel’s domestic market division (2/2) Gas - Total volumes sold (bcm) Gas - Enel customers (thousand)
Slide 10: Operational data: Enel's domestic I&N division
2006 Results Electricity - Volumes distributed (TWh) 1. Net of 1.5TWh of energy dispatched in 2004 rational data: Enel’s domestic I&N division Gas - Volumes distributed (bcm) Enel SpA
Slide 11: Operational data: Group total production
2006 Results tional data: Group total production grrr Gtste orneeens, 125.7 131.4 @ Oil & Gas ST/OCGT & Gas CCGT @ Coal \. Nuclear @ Other renewables @ Hydro Back to volumes growth
Slide 12: Operational data: Enel's international activities
2006 Results Investor Relations rational data: Enel’s international activities Electricity sold to final customers Electricity distributed to end users (TWh) (TWh)
Slide 13: EBITDA evolution
2006 Results A evolution (€mn) sgrttrensecsnesocnessseseney 274 ecsessecnsssessensssoszony, 7,745 +23 -258 +20 +433 +56 8,019 Market Gen. & Infrastr. International Services & Energy Mgmt & Networks Holding International activities boost growth 1. Including intercompany adjustments
Slide 14: EBITDA evolution: domestic market division
2006 Results nescsten Raheitons a evolution: domestic market division (€mn) BSRESBRBBRERERBSRERBERBRERBeeee +23 BERBER ERBEREREREREREREREE SE & a 5 +40 -60 a 175 152
Slide 15: EBITDA evolution: domestic G&EM division
2006 Results Investor Relations DA evolution: domestic G&EM division (C€mn) cteenensununnnunnsnsesnaaae( -258 Pesceeeeeeeeeeeeceeeeeeeen & : +145 -146 & — — a -155 ———s 3,149 2005 Generation Fair value bilateral Zenith Non recurring 2006 margin contracts with SB project
Slide 16: EBITDA evolution: domestic I&N division
2006 Results Savas Oeteitoms ae. evolution: domestic I&N division (€mn) 3,398 +268 -26 -216 3,418 . 6 —— — Electricity Gas Lara Non recurring 2006 Me Enel pro, EREAGY is TUNE WITH TOU
Slide 17: EBITDA evolution: international division
2006 Results Investor Relations DA evolution: international division (€mn) quceeencccnencncncnsnenenans( +433 | BESBEBSBSESEBRSBESBESBRBSERBERBRBRBEBEEEH +35 ‘“ 918 +19 _ — +388 — $
Slide 18: EBITDA evolution: services & holding
2006 Results DA evolution: services & holding (Cmn)! BBB RSERBEBRBRBRBRERBERRERRERRERERESee BEBSEBSEBRBEBRBESERERSERBEEESES By a : & a é +38 -42 - _ aie —_— 2005 Import Non recurring Zenith Project Other 2006 1. including intercompany adjustment
Slide 19: Net debt evolution
-12,312 2006 Results debt evolution (€mn) Cash flow Capex Extra-ordinary Net financial from operations activities charges Taxes High releverage potential BESS SSSRBRBRBRSRBRBRBRRBRERBREREBeeees ee | Dividends -11,690
Slide 20: Dividend per share
2006 Results nd (€c/share) ‘ae ae | On results 2005 2006 A sound and high-yield investment 1. Excluding dividend paid out from capital gain of Terna disposal
Slide 21: Agenda
Enel SpA ® 2006 Results Luigi Ferraris * Domestic Generation & Energy Management Sandro Fontecedro ® Domestic Infrastructures & Networks Livio Gallo ® International Activities Fulvio Conti ® Strategy and Targets Fulvio Conti ® Questions and Answers @ Annexes
Slide 22: Domestic Market
Wy >) = Enel ENERGY IN TUNE WITH YOU London 28" March 2007
Slide 23: 2005-2011 electricity free market evolution
Domestic Market Investor Relations 5-2011 electricity free market evolution (TWh) Seeeeeeeeeeeeend +1.9% F&F SES B Bee eee ® . . . . (41.9% Jess . . e 6 Key Market Drivers . 369 ® Full market opening in 2007 ® New power generation ® Capability to reach and manage large masses of customers 2005 2006
Slide 24: Italian electricity market in 2006
Domestic Market Investor Relations ian electricity market in 2006 Electricity Consumption (TWh) Number of customers (mn) 295 35.4 Free market
Slide 25: 2006-2011 gas market evolution
Domestic Market 2011 Gas market evolution‘ (bcm) 53.2 53.8 Other uses Residential market Industrial market 2006 2008 1. Excluding gas burnt in thermal generation Source: Ministry of the Economic Development and Enel estimate 2011
Slide 26: Enel's targets in 2011
Domestic Market Investor Relations I's targets in 2011 Gas (bcm) Electricity free market! (TWh) Electricity regulated market (TWh) Expected market share: 15.3% Expected market share: 32% Expected market share: 84% i Retail & Large i 128 be Energy intensive. A aesn* 56.5..** 2006 2008 2011 2006 2008
Slide 27: Enel's domestic targets: electricity free market
Domestic Market pastes tebeitene I's domestic targets in 2011: electricity free market! 13.0 O TWh m Free Customers (mn) 6.6 Residential Micro & medium businesses (<1GWh/year) Large businesses (1-100GWh/ year) Energy intensive (>100GWh/ year) 2006 2008 2011 Strong penetration in SME and residential
Slide 28: Forward selling 2006-2009 free market
Domestic Market Investor Relations | Forward selling - 2006-2009 - free market! (TWh) 2006 2007 2008 2009 11.1 Industrial Customers GSaeDp ee Ga» Business and Microbusiness Industrial & Large Customer 1. Technical losses are included: ~8%
Slide 29: Cost-to-serve and dual energy evolution
Domestic Market Investor Relations to-serve and dual energy evolution Cost to serve (€/Customer) nd Dual energy 2007 2008 2009 2011 Strong focus on cost-to-serve reduction
Slide 30: Agenda
Enel SpA Investor Relations nda ® 2006 Results Luigi Ferraris ® Domestic Market Francesco Starace ® Domestic Infrastructures & Networks Livio Gallo ® International Activities Fulvio Conti ® Strategy and Targets Fulvio Conti ® Questions and Answers ® Annexes
Slide 31: Domestic Generation & Energy Management
NG >) = Enel ENERGY IN TUNE WITH YOU London 28" March 2007
Slide 32: Fuel price scenario
Domestic Generation & Energy Management | price scenario Brent ($/bbl) Coal? ($/ton) 4Q 2006 Jan-Feb 2007 Long-term (2011) 4Q 2006 Jan-Feb 2007 Long-term (2011) 1. CIF ARA (Rotterdam) Me Enel JERERGY in TUNE WITH YOU:
Slide 33: Market scenario
Domestic Generation & Energy Management Investor Relations et scenario Italian energy mix! (2006) Further new CCGT Capacity (GW) ® Greenfield im Repowering 0,5 2.3 @ Gas @ Oi &Others @ Renewables @ Coal 2006 2007 2008-09 Total under costruction Italian wholesale electricity price driven by gas ME En
Slide 34: Emission Trading Scheme: trial period
Domestic Generation & Energy Management Invector Ratations Emission Trading Scheme: trial period Enel Shortage (Mton) @ 2005-06 already hedged through EUAs acquired on the market @ 2007 expected shortage, already largely hedged
Slide 35: Emission Trading Scheme: 2008-12
Domestic Generation & Energy Management Savas Oeteitoms Emission Trading Scheme: 2008-12 Variable costs! @CO2 = 20€/ton NAP 2: Italy's Draft 55 Based on 2005 production Best available technology benchmark differentiated by fuel Coal allowances partially sold CERs 25% limit Sourcing initiatives 43 ER
Slide 36: Gas supply development
Domestic Generation & Energy Management Savas Oeteitoms supply development i Pipeline/LNG projects ; of interest to Enel Achievements @ 1 bn additional imported in TTPC from 2008 @ 2 bn additional imported in GALSI expected by 2011 §) other pipeline/LNG Further developments in progress @ Porto Emped
Slide 37: Highly efficient CCGTs and coal re-powering
Domestic Generation & Energy Management Investor Relations Highly efficient CCGTs ® 11 in operation ® 1 under construction Enel’s Production Mix eres Coal re-powering @ Torre Nord on track for 2008 start up @ Porto Tolle @ regional EIA! obtained @ national EIA‘ submitted and Commission on-side visit
Slide 38: Coal supply and logistics
| supply and logistics Coal @ 50% of next 3 years volumes already secured through mid-term contracts ® Diversified portfolio Domestic Generation & Energy Management Shipping r ® 8 vessels contracted ona long-term basis @ Other on-going negotiations to hedge at least 50% of projected coal needs Suppo
Slide 39: Renewables investments
Domestic Generation & Energy Management Investor Relations Investments (€bn) ® 13 plants started up in 2006 @ 44 MW additional renewable capacity achieved in 2006 @ 400 MW of additional domestic capacity in 2007 - 2011 2003 - 2006 2007 - 2011 Delivering Enel’s strategy in renewables ——
Slide 40: Environment and innovation
Domestic Generation & Energy Management ironment and innovation 1,500 MW in wind 100 MW in hydro 100 MW in geo Innovative solutions for renewable energy Energy efficiency and distributed generation Towards “zero emissions’ and the hydrogen frontier An ambitious plan built on solid projects € 3.3bn €
Slide 41: Agenda
Enel SpA nda ® 2006 Results ® Domestic Market Luigi Ferraris Francesco Starace ® Domestic Generation & Energy Management Sandro Fontecedro ® International Activities Fulvio Conti ® Strategy and Targets Fulvio Conti ® Questions and Answers ® Annexes
Slide 42: Domestic Infrastructures & Networks
Wy >) = Enel ENERGY IN TUNE WITH YOU London 28" March 2007
Slide 43: Evolution of electricity and gas distributed
Electricity distributed (TWh) Market Share! 81% 263 251 a5 2006-2011 CAGR 2. ss (4.7% }> “ 4 1. a 31 million end-users connected by 2011 Net of network losses, including self-generation including gas for generation units Domestic Infrastructures & Networks lution of electricity and gas 81% Gas distr
Slide 44: Results delivered: electricity
Domestic Infrastructures & Networks Investor Relations delivered: electricity Customer minutes lost? (min/customer) Quality of service premiums (€mn) Efficiency - Cash cost (€/customer)! qnenawen( 3396 Jpessenny Gaps 63 51 i ~Premiums (Cmn) © Minutes Lost 2001 2005 2006 2001 2005 2006 1,300€ mn savi
Slide 45: Results delivered: gas
Domestic Infrastructures & Networks Investor Relations Its delivered: gas Efficiency - Cash cost (€/customer)! End-users (n/000) goesesend -255 Poseseney greneennd 41706 Jeneenen ; ; ¥ 2 * - 2,023 e- Sal | N N 2002 2005 2006 2002 2005 2006 58 € mn savings’ per year M&A and organic growth WE Enel 1.
Slide 46: Automatic Meter Management
Domestic Infrastructures & Networks Enel Spa tic Meter Management AMM system diffusion in Italy @ 2 million meters sold in Italy to other utilities Remote readings and operations (mn) @ Italian de facto standard « 175 142 Installations and pilot tests © Remote readings in Spain, Netherlands, &@ Remo
Slide 47: Drivers for growth in gas business
Domestic Infrastructures & Networks aesceten Reabeitons Drivers for growth End-users in 2011 in Gas Business (n./000) Target Areas @ Acquisitions of gas 300 distributors Companies End-users (n/000) Seeeeaae Beene eae CAGR 7.2% 2, @ New gas distribution licenses granted by tenders @ New connections t
Slide 48: The way to excellence: Zenith Project
Domestic Infrastructures & Networks e way to excellence: Zenith Project Enel SpA q Work force management | @ Real-time management of operating crews @ Optimization of field activities _ 20 €mn opex reduction i Lean organization @ New organization shaped on processes @ Productivity alignment to inter
Slide 49: Network cash-cost per customer
Domestic Infrastructures & Networks ee... network cash-cost per customer Euros per customer! Opex efficiency Increase of network capex sanenan, comparable to EU b best practice in order to b invest in network assets, innovation and systems 2006 2008 2011 1,400€ mn savings per year by 20117 1. Exludi
Slide 50: Agenda
Enel SpA Investor Relations ® 2006 Results Luigi Ferraris ® Domestic Market Francesco Starace ® Domestic Generation & Energy Management Sandro Fontecedro ® Domestic Infrastructures & Networks Livio Gallo ® Strategy and Targets Fulvio Conti ® Questions and Answers @ Annexes
Slide 51: International Activities
WG A Enel ENERGY IN TUNE WITH YOU nti Activities London 28" March 2007
Slide 52: Enel moves towards Endesa
International Activities moves towards Endesa | ® 9.99% of share capital purchased on the market | ® Share swap transaction underlying Endesa shares representing 14.98% of the company’s share capital | ® Agreement with Acciona | Ready to launch a joint public tender offer
Slide 53: Agreement between Enel and Acciona
International Activities Investor Relations nt between Enel and Acciona Co-management at two levels Newco Endesa | ® Equal representation in the BOD } (@ Acciona and Enel equally represented in the BOD via Newco ® General assembly decision with voting ® 50% + 1 share ® 2/3 for certain “Reserved matt
Slide 54: Endesa assets overview
Internationa! Activities Investor Relations esa assets overview © Generation A Network & Sales Latin America 11,2 milion Number of clients EE* Number of chents EE 12.2 milion Network EE* 297,133 km Number of clients Gas* 0.6 mifion Network Gas* 2,874 km Hydro Wind Other Renew Cogeneration cocT Coal
Slide 55: Transaction benefits
International Activities on benefits ® Strong contribution to industrial and financial growth | ® Wider European footprint mitigates regulatory risk | ‘ @ Potential for industrial sinergies and combination of skills and best practices ® Scale benefits on procurement activities | Best fit with Enel s
Slide 56: Enel's international strategy
Internationa! Activities I's international strategy A solid international player ®@ Growth in all technologies & upstream gas in Europe and Russia Growth in renewables worldwide
Slide 57: Iberian Peninsula
Internationa! Activities Investor Relations Market fundamentals @ Attractive market size (~250 TWh) ® High demand growth (3.2% per year) ® M&A wave ® Progressive integration of Spain and Portugal Growth 0 es — , ws Planned Investments: Enel's current position @ New generation capacity by 2011: CCGT,
Slide 58: France and Belgium
Internationa! Activities Investor Relations and Belgium Market fundamentals Significant market size (~550 TWh) Decreasing reserve margins Price convergence with Germany Perspective integration with Germany and Benelux Te Enel’s current position Growth @ MoU with EdF to develop EPR! nuclear projects
Slide 59: South-Eastern Europe
Internationa! Activities Investor Relations th-Eastern Europe Market fundamentals @ Significant market size (~350 TWh) @ Demand growth potential ® Market tightness ® High interregional interconnectivity ® New capacity requirements ® Privatization and liberalization ‘ iti Romania: Bulgaria: Balkans &
Slide 60: Central Europe
Internationa! Activities Investor Relations trel Market fundamentals @ High demand growth ® New capacity requirements ® Interconnections with continental Europe Growth ea # _ Slovakia: Enel’s current position ® Construction of 2 nuclear plants groups - EMO 3&4 Stovekin: ® Uprating of existing power
Slide 61: Russia
Internationa! Activities Investor Relations Market fundamentals Large market size (~1,000 TWh) High demand growth (4%) Needs for new capacity and plants rehabilitation Liberalization and privatization of thermal generation Significant gas reserves $$ , Enel’s current position Growth @ NWTPP: Managem
Slide 62: Americas
Internationa! Activities Investor Relations Americas Current renewables scenario @ USA: favourable regulatory framework ® Latin America: untapped resources potential Growth Planned investments Enel’s current position @ S580MW of new generation capacity, of ~~ @ Only renewables which: @ Installed cap
Slide 63: Agenda
Enel SpA ® 2006 Results Luigi Ferraris ® 2007-2011 plan ® Domestic Market Francesco Starace ® Domestic Generation & Energy Management Sandro Fontecedro ® Domestic Infrastructures & Networks Livio Gallo ® International Activities Fulvio Conti ® Questions and Answers @ Annexes
Slide 64: Strategy and Targets
NVA A= = Enel ENERGY IN TUNE WITH YOU London 28" March 2007
Slide 65: Strategy: four clear priorities (1)
Strategy and Targets tegy: four clear priorities Retain our market leadership in Italy in a liberalising market Wy 3 Enel JEREAGY in TUNE WITH YOU:
Slide 66: Strategy: four clear priorities (2)
Strategy and Targets Revccteny Nabaitone tegy: four clear priorities @ Retain our market leadership in Italy in a liberalising market Improve customer value through continued investment program and cost leadership Wy 3 Enel JEREAGY in TUNE WITH YOU:
Slide 67: Strategy: four clear priorities (3)
Strategy and Targets Sasuoner Deaeiionn tegy: four clear priorities @ Retain our market leadership in Italy in a liberalising market @ Improve customer value through continued investment program and cost leadership Continue to invest in and grow our European energy and International renewables activ
Slide 68: Strategy: four clear priorities (4)
Strategy and Targets Investor Relations tegy: four clear priorities @ Retain our market leadership in Italy in a liberalising market @ Improve customer value through continued investment program and cost leadership ® Continue to invest in and grow our European energy and Internatational renewables a
Slide 69: Progress on the old targets
Strategy and Targets Investor Relations ress on the old targets Annual OPEX reduction 2007 vs 2005 EBITDA CAGR 2007 vs 2005 EBITDA 2007 International (%) total ROACE 2007 Well ahead in pursuing our targets
Slide 70: Our overall financial targets
Strategy and Targets Investor Relations overall financial targets ——_ - ® Dividends ®@ DPS to be paid in 2007 2Jec/share in June = 20€c/share in November ® Ongoing DPS = 49 €c/share A new story of growth and value 1. Excluding Endesa 2. Excluding the impact of the new regulatory period on distributi
Slide 71: 2006 Results
2006 Results ® 2007-2011 plan *® Domestic Market * Domestic Generation & Energy Management *® Domestic Infrastructures & Networks * International Activities ® Strategy and Targets ® Questions and Answers Enel SpA Luigi Ferraris Francesco Starace Sandro Fontecedro Livio Gallo Fulvio Conti Fulvio Cont
Slide 72: Operational data: Enel's domestic G&EM division
Annexes tional data: Enel’s domestic G&EM division Domestic net production mix 112.1 103.9 ™j Oil & Gas ST/ ©) Gas cGT \) Coal | Other i Hydro
Slide 73: Operational data: Enel's international activities
Annexes tional data: Enel’s international activities International production mix 13.6 (TWh) 27.5 (TWh) eet © oil & Gas “. Coal i Nuclear li Renewables
Slide 74: Income statement
Annexes e statement € mn 2005 2006 % Operating revenues 33,787 38,513 14.0% Operating costs 26,314 29,880 13.6% EBITDA 7,745 8,019 3.5% EBIT 5,538 5,819 5.1%
Slide 75: EBIT to EPS
Annexes EBIT to EPS €mn 2005 2006 % EBIT 5,538 5,819 5.1% Net financial charges -744 -651 +12.5% EBT 4,794 5,168 7.8% Net income continuing operations 2,860 3,101 8.4% Net income discontinued operations 1,272 oO Net income (including third parties) 4,132 3,101 -25.0% Group net income 3,895 3,036 -22
Slide 76: Balance sheet
Annexes € mn 2005 2006 % Net financial debt 12,312 11,690 -5.1% Shareholders' equity 19,416 19,025 -2.0% Net capital employed 31,728 30,715 -3.2%
Slide 77: Non-recurring items
Annexes -recurring items (€mn) € mn 2005 2006 Green certificates reimbursement 100 Reserve capacity reimbursement 338 Deliberation 20/04 (206) Terna 41 Siemens litigation 51 Terna bonus share 23 Modena capital gain 85 Trento capital gain 91 Energy adjustment 71 Gas adjustment 12 Maritza 33
Slide 78: EBIT by business area
Annexes by business area (C€mn) 5,538 5,819 Wi Market a li G&EM © Infrastructures and networks |. International Lo Services & Holding* 1. Including intercompany adjustments
Slide 79: Annexes
Annexes et
Slide 80: Generation & Energy Management
Annexes ration & Energy Management €mn 2005 Revenues 12,995 EBITDA 3,407 EBIT 2,398 Capex 798 Headcount 9,006 2006 15,661 3,149 2,197 897 9,573
Slide 81: Infrastructures & Networks
Slide 82: International Activities
Slide 83: Services & Holding
Slide 84: Services & Holding - Continued
Slide 85: Capex by business area (€mn)
Slide 86: Debt structure
Slide 87: Zenith Project
Slide 88: Disclaimer
Slide 89: Contact us