Endesa S.a. · BME:ELE
Endesa — Merger or Acquisition (October 2005)
43 slides from Endesa's merger presentation, Oct 4, 2005
Slide 1: Endesa: stronger business, greater value
By endesa Endesa: stronger business, greater value 3rd October 2005
Slide 2: Gas Natural's offer is unacceptable
endesa Gas Natural’s offer is unacceptable = Clearly insufficient price = Payment with over-valued stock * Value destructive Endesa offers greater value * Maximum priority on shareholder returns * Strong organic growth * Management commitment reinforced
Slide 3: Endesa is worth much more than Gas Natural's offer
E y Endesa is worth much more than = endesa Gas Natural’s offer Endesa’s implied share price based on Offer by Gas Natural latest comparable transactions (€/share) (€/share) 37,7 35,1 28,4 Electrabel ‘Aug 05 Sep 05 {ode L006 CASH CASH EV/EBITDA multiple 5
Slide 4: Gas Natural offer: just paper
ay 7 Gas Natural offer: “just paper” endesa (€ billion) Little cash ..which is paid by Endesa itself! Cash Disposal of financing valuable and strate! assets of Endesa Shares
Slide 5: Gas Natural shares: overvalued and illiquid
endesa Gas Natural shares: overvalued and illiquid Analysts value Gas Natural below its Gas Natural’s stock has very current market capitalisation little liquidity ‘Average target price 22,17 €)share 1 Average daily volume 2005 8 23,70 eee million) Fortis Bank 24,70 23,80 2N hee TT 23,34 i TT 23,00
Slide 6: The offer premium is absolutely inadequate
ay | 7 The offer premium is absolutely inadequate = endesa Day one Prior 4 weeks 45% 27% 15% 49% 27% 16% Successful Failed GN offer for hostile hostile Endesa tender tender offers offers Successful Failed GN offer for hostile hostile Endesa tender tender offers offers Note: Bazed on hastletander off
Slide 7: La Caixa would gain control of Endesa without paying a control premium
EI y * La Caixa would gain control of Endesa without = endesa paying a control premium Sharehol g structure * The combined entity would have a lower free-float both in euros and percentage terms = Corporate governance issues | | | — + Shareholders denied a control 89% Float/others premium today. + w
Slide 8: Gas Natural: a troubled future
Eval 4 Gas Natural: a troubled future endesa Sane giret lenmeiin een nike Me nee the future for the company is nothing other than a constant reduction in its market share”. ‘sidre Faing, CEO Lo Caixa, ElConfidendial.com, 14 Sep 2005 Spain has among the highest gas Gas Natural’s market share has decl
Slide 9: Endesa is already a global leader
ay | 7 Endesa is already a global leader endesa Gas Natural brings no fundamental .-and loss of leadership in electricity EV (€ billion) Global installed capacity 2004 (GW) EDF | >a EDE | azs E.On E.0n RWE Endesa Enel nal Endesa + GN —_ (21%) suez BE ice Endesa+GN loshi Therdrola cor Scottish Power
Slide 10: Creating a leading, fully integrated global energy company
Creating aessing, fly integrated Y gleba Snergy company | Y gasNatural 4 Geographic presence WE Endesa EMME New presence provided by a Gas Natural Gas Natural substitutes Italy and France with Puerto Rico and Mexico EBITDA 2004 Spain and +©P-P Portugal Qi Endesa_Endesa + GN 10
Slide 11: Gas Natural brings no value to Endesa's gas procurement business
ay | end © Gas Natural brings no value to Endesa’s gas = procurement business ceasing slesine Natasa i Sicbd enety toner | gasNatural upstream and * Gas Natural with no gas reserves and in a captive JV with Repsol midstream gas provides na advantages * Endesa already enjoys significant purchasing po
Slide 12: Creating a leading, fully integrated global energy company: no synergies
Creating alesding, fuly tegrated) globa enera) by gasNatural Electricity distribution = No synergies in joint network operations ~ Different skills (wires vs. pipes) = No overlap in equipment suppliers ~ Already sufficient scale in service providers Gas commercialisation Electricity commercialisatio
Slide 13: New entity would lose Spanish market leadership to main competitor
New entity would lose Spanish market leadership endesa to main competitor ity generation in Spain 2004 ibution in Spain 2004 (Market share) (Market share) Endesa 13
Slide 14: Generation / supply balance severely damaged
Generation / supply balance severely damaged endesa Net position 2004 Pre-transaction: 4. _Post-transaction: Endesa balanced, Endesa + GN short, Therdrola short Therdroia balanced 1% is “22% 21% Iberdrola Endesa Iberdrola_Endesa + GN Moreover, the combined group would suffer from Gas Natural’s decli
Slide 15: Destruction of Endesa's European platform
endesa Destruction of Endesa’s European platform Pre-transaction: only Iberian utility Post-transaction: with relevant position in Europe Break-up Installed capacity in Europe 2004 Installed capacity in Europe 2004 ora} nw) Enedesa ont endesa + 3.670 GN Iberdrola | Iberdrola sar Gas Natural 0 EBITDA
Slide 16: The transaction adds no value in Latam
ay endesa The transaction adds no value in Latam Latam EBITDA 2004 by country (€ million) | Argentina Peru * Limited geographic overlap Moice «No synergies * Very limited additional , <= geographic presence Puerto Rico mEndesa mGas Natural Note: Spanish GAAP fgures for commparcon purposes a6
Slide 17: Exaggerated synergies
ay | Commercial Information Technology Corporate Distribution Lata Total synergies by Gas Natural 175 | Exaggerated synergies (€ million) Rationale + Endesa’s cost base: €188 milion + Call centres already surpass economies of scale + Joint billing of regulated costumers not allowed in Spain Endesa’s
Slide 18: Gas Natural's plan destroys value
EI ¥ 4 Gas Natural’s plan destroys value = endesa (€ million) Estimated Negative Negative Negative Negative achievable integration synergies synergies synergies synergies from asset from 80-140 disposals regulatory synergies | al we Note: Non-optimal organization (120) + Pre-agreed asset disposals I
Slide 19: Gas Natural has no experience managing, acquiring and integrating large companies
E C/O ~ Gas Natural has no experience in managing, = endesa acquiring and integrating large companies Acquisition track record (€ million - enterprise value) ndesabid 47,450 wets sas 2 Iberdrola assets in Grupo We Gracland Coorrbia—‘Ecoeéctica CEG. Brant Smedgas ates + + te um we Ly epg ge, ne ee ee
Slide 20: Gas Natural destroys value for Endesa shareholders
ay | value for Endesa shareholders = endesa Spain and * Leadership given to main competitor with HANDS OVER Portugal —_generation-supply balance severely PEADERSHIE damaged * Loss of strategic growth platform in Europe geen DISINTEGRATION Italy and France Latam + No additional contribution nor syner
Slide 21: Gas Natural's offer is unacceptable
endesa Gas Natural’s offer is unacceptable = Clearly insufficient price = Payment with over-valued stock * Value destructive Endesa offers greater value «Maximum priority on shareholder returns * Strong organic growth = Management commitment reinforced au
Slide 22: Endesa is committed to dividends in excess of €7 billion over the next 5 years
d to lends in excess of = = Endesa is committe €7 billion over the next 5 years Dividends from ordinary Dividends from disposals business >12% growth per year 100% pay-out of capital gains Net income growth Auna ~ €1/share >120 per year Additional non-strategic Leverage always < 1.4% disposals 22 Pe
Slide 23: The disposal of non-strategic assets will generate future additional dividends
EI | The disposal of non-strategic assets will generate = endesa future additional dividends Assets sold in 2005 Assets in excess of €1 billon to be disposed (excluding Auna) te mite) REAL ESTATE ASSETS smartcom 408 " + Endesa’s total real estate assets in Spain > 43 Real estate million m? assets 11
Slide 24: Strong organic EBITDA growth
endesa Strong organic EBITDA growth Investment Plan CAGR 2004-2009 (%) 2005-2009 (€ bi in) o——_— i —_~ tot “10-11% @) Total: 14.6 a Latam Europe 25 18 | Europe 13-15% @j Spain and Spain & Portugal eeainga 10-12% 10.3 2004 Target 2009, ore: Al figuras ported in TRS Maladies “68 mallen of ther Businas
Slide 25: EBITDA growth reinforced by efficiency plan
ay | 7 EBITDA growth reinforced by efficiency plan = endesa launched in 1H2005 Margin improvement in 2009 vs. 2004 (€ million) In 2007, 70% of the targets ‘achieved 525 Improvement 285 in contribution margin Improvement in fixed costs Spain and Portugal Europe Lata Total ‘Nove: In adden, corporate p
Slide 26: Growth through a unique and valuable portfolio
2,472 in: growth through a unique and valuable = portfolio EBITDA 2004-2009 (€ million) +10-1200 cace @ 250 320 4,158 Operating Regulatory efficiency review improvements 26
Slide 27: Spain: growth in demand and installed capacity
endesa Spain: growth in demand and installed capacity New installed capacity (MW) Impact of increased activity on EBITDA 09 vs. 04 (€ million) 12,400 * Higher production under ordinary 480 regime (20,000 GWh) * Higher production under special 310 5,000 +4,000 iste: regime (4,000 GWh) wh * Increase i
Slide 28: Spain: efficiency plan based on specific initiatives already in progress
E | ~~ Spain: efficiency plan based on specific = endesa initiatives already in progress 60x5 Plan already in Efficiency plan breakdown in 2009 plore (€ million) Distribution MARGRET) 110 caunched maa 2005 {dented 60 I biases | arrerteu “bottom-up” approach Biren: atrendy hes an tlorentation pla, a
Slide 29: Spain: conservative regulatory assumptions
CA endesa Distribution Generation on the islands Revenue cap Spain: conservative regulatory assumptions = EBITDA impact 2009 vs. 2004 (€ million) Return on network expansion investments vs. current revenue model based on demand growth and efficiency factor (impact on Endesa proportional to its marke
Slide 30: Europe: a strong growth platform
E ‘| 4 Europe: a strong growth platform = EBITDA 2004-2009 (€ million) +13-15% @) ” CAGR Q 195 320 1,0. 2004 Italy France “> 2009 (2) nclides €105 milbon due to SET? concaldston 30
Slide 31: Operational improvements and growth opportunities
operational improvements and growth opportunities endesa Fue) Organic growth Market entty improvements Q * Attractive market due to size, growth potential and location * Market knowledge due to Endesa’s current presence * Endesa able to achieve significant efficiency improvements © Project IRR ~ 12%
Slide 32: Italy: growth is driven by new generation capacity
sO... be Italy: growth is driven by new endesa generation capacity Installed capacity (MW) (41,755 Mw @) | » % 7475 6,590 mmm | Renewables 5,720 . ccats Radical change in mix 32
Slide 33: Italy: unit margins maintained in a market with declining prices
hy | 7 Italy: unit margins maintained in a market with = endesa Renewables plan covers green certificate needs Margin improvement due to change in mix and access to more competitive gas Improved operating efficiencies of €95 million in 2009 declining prices Increase of 425MW in 2005-2009 Net positio
Slide 34: France: continued efficiency gains and increased capacity
E! ._ =e France: continued efficiency gains and = endesa increased capacity Continuous efficiency improvements Capacity growth (Employees MW) = 55 MW of wind energy under development O59 oe — Leahocourt “18% 0.45 — Infinivent ‘aa 0.37 * Additional developrnent opportunities — 2,000MW of CCGTs in cur
Slide 35: Latam: increasing contribution to net income, cash flow and value
E | * Latam: increasing contribution to net income, = endesa cash flow and value EBITDA 2004-2009 (€ million) r CAGR @ 65 340 32a 1,522 2004 Increase in Improved Improved 2009 ti operating margins ote: Al figures in € using Forward exchange rites in each loca avency 38
Slide 36: Latam: increased volumes driven by new capacity and demand growth
ay endesa New capacity construction in Chile and Peru (MW) San Isidro 11 Etevensa Palmucho San Isidro 11 2006 = 2007, «2008» 2009 Sota Latam: increased volumes driven by new capacity = and demand growth Activity increase Generation con 548 2004 2009 Distribution sales coy 2004 2009 36
Slide 37: Latam: margin improvement based on efficient asset management
ay 7 Latam: margin improvement based on efficient = endesa asset management Improvement in unit margins Distribution Generation = Tariff established at Codensa and * Thin reserve margins in the region Chilectra = Readaptation of prices in argentina * Annual readjustment in Ampla’s and (FONINVEMEN) C
Slide 38: Latam: continued increase in cash generation
endesa Recent past (2000-2004) Cash flow to Spain: US$1,422 mi Significant unrealised capital gains US$ million 5,700 300, Rest of porto | 1,200 4,300 1,200 Enersis 4,200 3,100 Market value * Book value _—— = Latam: continued increase in cash generation Future commitments (2005-2009) (US$ million) |
Slide 39: A reinforced commitment to specific targets
EI | Areinforced commitment to specific targets = endesa =EBITDA: 10-11% annual growth =Net income: >12% annual growth =Dividend growth: - Annual growth >12% in dividends - Distribution of 100% of capital gains =Leverage: <1.4x 39
Slide 40: New alignment of compensation to stock performance
EI | New alignment of compensation to stock = endesa performance by the Board and Senior Management = 100% of variable compensation from 2005 to 2009 linked to share price performance* «Initial reference price €22.27/share (30 Sept 05 closing price) «No bonus if share price drops to €18.56/share (2
Slide 41: Endesa's business is clearly superior to that of Gas Natural
EI a 7 Endesa’s business is clearly superior to that of = endesa Gas Natural 41 in Spanish electricity sector Tndustrial #3 in Italian electricity sector project #3 in French electricity sector #1 in Lata Market capitalization of €24 billion Strategic assets give Maintaining unique assets in Spanish
Slide 42: Important legal information
IMPORTANT LEGAL INFORMATION Investors are urged to read Endesa's Soliciation/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 43: 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: October 3 rd , 2005 By: By: /s/ Álvaro Pérez de Lema Name: Álvaro Pérez de Lema Tit