Slide 1: Endesa: Stronger business, greater value
Endesa: Stronger business, greater value 9M 2005 Results: Accomplishing Commitments 16 November 2005
Slide 2: Endesa: better project, more value
Endesa: better project, more value EBITDA Net Income 9M 05 Results: Strong growth in all lines of income statement and in all businesses +16% +33% 2005 Forecast: superior growth >20% >100% Growth clearly above committed trend 2
Slide 3: Substantial growth through all the P&L
Substantial growth through all the P&L (euro)M 9M04 9M05* Change Sales Gross margin EBITDA EBIT Net financial expenses Gains on asset disposals Net income Financial leverage * Includes recognition of tariff deficit 9,970 5,593 3,796 2,601 -836 157 1,172 01/01/05 1.50x 12,643 6,498 4,399 3,106 -814 2
Slide 4: Strong growth in all businesses
Strong growth in all businesses EBITDA: (euro)4,399M +16% Spain and Portugal Europe Latam +6% +16% +69% EBIT: (euro)3,106M +19% Spain and Portugal Latam Europe +13% +15% +62% Net income: (euro)1,556M +33% Others Latam Spain and Portugal Europe -54% +24% +71% +102% 2% 4
Slide 5: Sensitivity analysis to tariff deficit
SENSITIVITY ANALYSIS TO TARIFF DEFICIT EBITDA NET INCOME (EURO)M (EURO)M 4,399 4,124 (EURO)3,796M (9M04) 3,295 REST OF GROUP 1,556 1,377 (euro)1,172M (9M04) REST OF GROUP SPAIN AND PORTUGAL 100% recogn. deficit H+N at (euro)36/MWh 0% recogn. deficit 2380 2105 1276 2019 2019 2019 100% recogn. deficit
Slide 6: 9M 2005 Results Spain and Portugal
9M 2005 RESULTS SPAIN AND PORTUGAL
Slide 7: Positive results through all the P&L
POSITIVE RESULTS THROUGH ALL THE P&L (EURO)M 9M 04 9M 05* CHANGE SALES GROSS MARGIN EBITDA EBIT NET FINANCIAL EXPENSES NET INCOME 4,996 3,432 2,240 1,448 -397 845 6,175 3,659 2,380 1,634 -356 1,051 +24% +7% +6% +13% -10% +24% * Includes recognition of tariff deficit 7
Slide 8: Margins improvement despite stronger efforts to enhance quality
MARGINS IMPROVEMENT DESPITE STRONGER EFFORTS TO ENHANCE QUALITY EBITDA EBIT (EURO)M (EURO)M 2,240 +6% 2,380 1,448 +13% 1,634 1,470 1,617 953 1,181 9M 04 9M 05* 9M 04 9M 05* Distribution Distribution Generation + Supply Generation + Supply * Includes recognition of tariff deficit 8
Slide 9: Highlights of the period
HIGHLIGHTS OF THE PERIOD INDUSTRY TRENDS: o Sharp growth in demand (+6%) o High pool prices ((euro)59/MWh) - Low hydro production (-40%) - Plant unavailability - High fuel and CO2 costs o (euro)2,500M Tariff deficit as of September 2005 ENDESA SHOWED ITS STRENGTHS: o Lower exposure to hydro conditio
Slide 10: Thermal production diminishes impact of hydro output fall
SPAIN AND PORTUGAL Thermal production diminishes impact of hydro output fall Endesa Mainland ordinary regime Rest of industry ordinary regime generation (GWh) electricity generation (GWh) +8.8% 87,229 94,935 3,057 61,102 -5.4% 57,806 Fuel Oil 1,078 2,029 19,525 16,835 8,686 6,085 27,289 27,216 4,524
Slide 11: Highly competitive mainland fuel costs
SPAIN AND PORTUGAL Highly competitive mainland fuel costs Breakdown of MAINLAND Breakdown of fuel cost unit fuel costs effects ((euro)M) (euro)/MWh Nuclear 9M 04 9M 05 3.5 3.5 1.6% 26.4 28.0 (2) 6.2% 17.7 23.1 30.4% 14.8 19.3 30.7% 47.9 51.2 6.8% 14.5 18.1 24.8% 12.4 16.2 30.2% Increase 82 934 94 CC
Slide 12: Exceptionally high emission rights deficit due to low rainfall
SPAIN AND PORTUGAL Exceptionally high emission rights deficit due to low rainfall Balance of emission rights in 9M 05 Mton CO2 Deficit Rights allocated 29.8 Emissions produced 9.4 9.4 5.9 23.9 Mainland Islands Economic impact in 9M 05 o Impact aggravated by adverse hydro conditions o CCGTs consumed
Slide 13: Fixed costs reduction in line with Efficiency Improvement Plan
SPAIN AND PORTUGAL Fixed costs reduction in line with the announced Efficiency Improvement Plan 451 449 479 463 424 398 -6% -3% 1Q04 2Q04 3Q04 1Q05 2Q05 3Q05 o Accumulated 9M 05 +7% (vs. +13% in 1S05) o Quarterly expenses affected by accrual of pension commitments, which in 2004 were recorded in 4Q
Slide 14: Significant progress in the 2004-2009 Strategic Plan
SPAIN AND PORTUGAL Significant progess in the accomplishment of the 2004-2009 Strategic Plan EBITDA forecast ((euro)M) CAGR 4,200 2004 Forecast for 2009year-end H+N at (euro)36/MWh 2,472 2,800 3,150 13-27% 10 -12% Target 2005 Forecast o Upbeat prospects for 4Q05, underpinned by: -Efficiency plan -Pe
Slide 15: Endesa Europa 9M 2005 Results
Endesa Europa 9M 2005 Results
Slide 16: Excellent results underscore strength of European electricity business
EUROPE Excellent results underscore strength of European electricity business 9M 04 9M 05 Change 416 318 140 -45 1,789 554 +69% +62% +102% -2% +56% +70% 702 515 283 -44 2,798 944 Sales Gross margin EBITDA EBIT Net financial expenses Net income (euro)M 16
Slide 17: Sharp increase in net income of the European business
EUROPE Sharp increase in net income of the European business EBITDA ((euro)M) EBIT ((euro)M) 5 -10 413 561 702 +69% 5 -10 324 456 515 Snet (*) +62% Snet (*) 54 136 318 416 4 13 +36% +41% ENDESA ENDESA Italia Italia Other Other 9M 04 9M 05 9M 04 9M 05 (*) Snet consolidation since September 2004. Grow
Slide 18: Europe: Highlights of the period
EUROPE Highlights of the period Italy o Strong growth in generation +9%, electricity sales +18% and progress in renewables plan o Sustained unit production margin (+3%) despite tougher competitive environment o Completion of Ostiglia and Tavazzano repowering (2,400 MW CCGT now on stream) o Recogniti
Slide 19: Italy: Increased activity and sustained unit margins
EUROPE Italy: Increased activity and sustained unit margins Electricity sales (GWh) +18% Capacity (MW) +11% Fuel Gas Coal Hydro CCGT 12% 15,872 35% 26% 9M 04 9M 05 28% +9% Sales Margin ((euro)/MWh) +3% O&M costs ((euro)/MWh) -10% Output (GWh) 17,329 48% 11% 25% 16% o 700 MW of new wind power project
Slide 20: France: Efficiency improvement and market risk management
EUROPE France: Efficiency improvement and market risk management Efficiency (employee/MW) Electricity sales (GWh) -13% -7% 0.46 0.43 Production margin ((euro)/MWh) +13% EBITDA ((euro)M) +18% O&M costs ((euro)/MWh) -19% 9M 04 9M 05 o EDF contracts: Energy sales optimization with better margins o Prog
Slide 21: Energy management
EUROPE Energy management Management of interconnections -RTE (France-Italy, 1,050 GWh) -GRTN (France-Italy, 50 GWh) -HSE (Slovenia-Italy, 168 GWh) Supply to customers: Portfolio of 10TWh in 2005 Trading operations in Europe that hedge rest of GEE activities: EEX (Germany), Powernext (France) and APX
Slide 22: Endesa Europe: Progress in the 2004-2009 Strategic Plan
ENDESA EUROPE Significant progress in the accomplishment of the 2004-2009 Strategic Plan 535 850 1,050 +59% CAGR 13 -15% EBITDA forecast ((euro)M) o EBITDA 2005 includes (euro)58M of exceptional items o Positive outlook for 4Q 2005. 2004 2005 2009 Forecast Target 22
Slide 23: Poland: Dolna Odra opportunity in attractive market
EUROPE Poland: DOLNA ODRA provides an opportunity to penetrate a highly attractive market Strategic interest: o Large emerging market with limited risk o Scope to achieve critical mass and efficiency improvements Description: o Installed capacity: 1,960 MW o Production in 2004: 5.1 TWh o 100% coal f
Slide 24: Endesa Latin America 9M 2005 Results
Endesa Latin America 9M 2005 Results
Slide 25: Latin America: Solid growth in earnings
LATIN AMERICA Solid growth in earnings 9M 04 9M 05 Change 1,145 840 109 -347 3,183 1,602 +16% +15% +71% +4% +15% +18% 1,323 964 186 -362 3,670 1,893 (euro)M Sales Gross margin EBITDA EBIT Net financial expenses Net income 25
Slide 26: EBITDA growth in all businesses and countries
LATIN AMERICA EBITDA growth in all businesses and countries Generation and Distribution Transmission ((euro)M) ((euro)M) +8.1% +20.4% 736 96 114 160 171 188 250 139 13198 70 613 681 509 Argentina Brazil Chile Colombia Peru 146 177 130 139 123 20261 41 49 54 9M04 9M05 9M04 9M05 26
Slide 27: EBIT growth in all businesses and countries
LATIN AMERICA EBIT growth in all businesses and countries Generation and Distribution Transmission ((euro)M) ((euro)M) +5.0% +21.6% 548 444 522 127 117 80 365 171 104 51 Argentina Brazil Chile Colombia 152 20 69 87 129 135 115 121 84 42 Peru 96 119 28 32 9M 04 9M 05 9M 04 9M 05 27
Slide 28: Latin America: Highlights of the period
LATIN AMERICA Highlights of the period Favourable environment o Widespread growth in sales (+5.5%) and production (+5.4%) o Margin improvement -Increase in node prices in Chile -Improvement in rainfall from August -Tariff revisions at Coelce and Edelnor o General currency appreciation Shareholding &
Slide 29: Growth in unit margins above announced targets
LATIN AMERICA Growth in unit margins above announced targets Generation margin USD/MWh DAV distribution USD/MWh +20.3%(2) 20,2 23,2 27,9 +14.9% 18,1 18,5 20,6 +11.4%(1) +2.2% 9M 03 9M 04 9M 05 9M 03 9M 04 9M 05 (1) In euros +8.0% (2) In euros +16.7% Strategic Plan Growth CAGR +4.5%(3) CAGR +2.6%(4)
Slide 30: Cash returns in line with Strategic Plan
LATIN AMERICA Cash returns in line with Strategic Plan Dividends received Capital reductions Total 9M 04 9M 05 15.9 213.2 156.5 53.2 250 750 229.1 209.7 1,000 2005-2009 Strategic PlanUSD M USD M 30
Slide 31: Capital markets performance
LATIN AMERICA Capital markets performance Performance of ADRs (%) % EOC ENI Performance ADRs 2004 Cum. 1H05 Cum. 9M05 USD M 2003 90 100 110 120 130 140 150 160 170 180 Dec-04 Mar-05 Mar-05 Apr-05 Apr-05 May-05 May-05 Jun-05 Jun-05 July-05 July-05 July-05 Aug-05 Aug-05 Sept-05 Sept-05 Oct-05 ENI 15.6
Slide 32: Latin America: Progress with 2004-2009 Strategic Plan
LATIN AMERICA Significant progress with the 2004-2009 Strategic Plan EBITDA forecast ((euro)M) CAGR 7-9% 2,250 +15% 1,750 o Favourable macroeconomic conditions: 1,522 -Demand growth -Stable exchange rates o Regulatory management: -Margins improving 2004 2005 2009 Forecast Target 32
Slide 33: 9M 2005 Results Financial Analysis
9M 2005 Results Financial Analysis Member of Dow Jones Sustainability Indexes 06
Slide 34: Moderate growth in consolidated debt
FINANCIAL ANALYSIS Moderate growth in consolidated debt despite financing of tariff deficit Financial Analysis (euro)M Spain & Portugal and other Italy Enersis Net debt at 1/1/05 Cash Flow Investments-Divestments FX WC and other Dividends Net debt at 09/30/05 FY05 forecast 18,698 4,081 1,293 13,324
Slide 35: Lower leverage and stable cost of debt
FINANCIAL ANALYSIS Lower leverage and stable cost of debt Financial leverage Cost of debt 2002 2003 2004 '1/1/05 1Q05 2Q05 3Q05 2.03 1.53 1.32 1.49 1.44 1.42 1.347 2002 2003 2004 1Q05 2Q05 3Q05 Endesa ex-Enersis 4.18% 4.30% 4.29% 0.0413 4.12% 4.06% Total cost 5.05% 5.17% 5.48% 0.0535 5.45% 5.41% Ene
Slide 36: Positive cash flow in all businesses, exceeding capex needs
FINANCIAL ANALYSIS 9M 05: Positive cash flow in all businesses, exceeding capex needs (euro)M Este 1669 502 766 Oeste 1550 139 388 + 13.5% + 34.2% + 15.2% o Free Cash Flow before dividends of (euro)570M o Total financial investments of (euro)342M
Slide 37: Disposal of telecoms business now completed
FINANCIAL ANALYSIS Disposal of telecoms business now completed (euro)M Equity value (100%) Stake sold Sale price Net capital gain Partial disposal of Auna Smartcom disposal 8,017 406 27.7% 100% 2,221 408 1,060 51 Endesa still holds 5.01% of Auna with a minimum gross capital gain of (euro)179M 37
Slide 38: Dividends plan in line with 2004-09 Strategic Plan
FINANCIAL ANALYSIS Dividends plan in line with targets in the 2004-09 Strategic Plan Dividends from ordinary activities CAGR > 12% Dividends from disposals 100% pay-out of capital gains Minimum of 2 (euro)/share minimum +12% 2004 dividend Dividend from ordinary activities Dividend from Auna Other di
Slide 39: 9M 2005 Results Conclusions
9M 2005 Results Conclusions Member of Dow Jones Sustainability Indexes 06
Slide 40: EBITDA growth above targets
CONCLUSIONS EBITDA growth above targets o Growth above targets: - 2004-2009 Targets: 10-11% - 2005 Forecast: 20-27% EBITDA (M(euro)) 2005E 2009 Target Forecast for year-end 2004 H+N at 36(euro)/MWh 20-27% CAGR 10-11% 5.750 7.500 4.521 5.400 40
Slide 41: Net Income growth above targets
CONCLUSIONS Net Income growth above targets o Growth above targets: - 2004-2009 Target: >12% - 2005 Forecast Excl. Auna: 15-35% Incl. Auna*: >100% 2004 2005E 2009 Target Forecast for H+N at year-end 36(euro)/MWh (M(euro)) CAGR >12% 2,200 15-35% 1,253 1,700 1,450 * 2.760 - 2.510 M(euro) 41
Slide 42: Accomplishing our commitments with shareholders
CONCLUSIONS Accomplishing our commitments with shareholders EBITDA Growth: Net Income Growth: Dividend from ordinary activities: Dividend from divestments: Financial Leverage: 05 Forecast Commitment Annual until 2009 Met >20% +10-11% 15-35%(*) +12% >12% >12% 100% capital gains 100% capital gains 1,2
Slide 43: Endesa: better project, more value
CONCLUSIONS Endesa: better project, more value Gas Natural's offer is unacceptable o Price clearly insufficient o Payment with overvalued shares o Project destroys value Endesa offers a stronger business and greater value o Shareholders' return: main priority o Strong organic growth o Management's t
Slide 44: 9M 2005 Results Appendix
9M 2005 Results Appendix Member of Dow Jones Sustainability Indexes 06
Slide 45: 2005-2009 Investment Plan
RESULTS SUMMARY 2005-2009 Investment Plan (1) Investments net of subsidies and surrenders of distribution business Total investment plan: (euro)14,600M(1) Spain and Portugal 71% Latam business 17% European business 12% (euro) bn 2005 2005-09 Spain and Portugal 2.5 10.3 New capacity 0.9 4.6 Maintenan
Slide 46: Diversified portfolio provides steady growth in operating indicators
RESULTS SUMMARY Diversified portfolio provides steady growth in operating indicators Generation (TWh) Sales (TWh) +5% +14% 130.0 137.0 Latam +5% 40.6 42.9 17.0 24.4 72.4 69.7 Latam +5% Europe +43% Spain and Portugal -4% Sales (TWh) +14% 132.4 150.7 38.9 41.0 20.8 34.3 72.7 75.4 9M04 9M05 Latam +6% E
Slide 47: Growth in Renewables/CHP
SPAIN AND PORTUGAL Growth in Renewables/CHP Capacity (MW)+ Production (GWh)* Cogen Wind Mini Hydro Other Sales ((euro)M) EBIT ((euro)M) *100% of projects that Endesa consolidates via global consolidation 47
Slide 48: The new pricing context means no CTCs are generated
SPAIN AND PORTUGAL The new pricing context means no CTCs are generated GWh/month Tariff deficit 2002 Tariff deficit 9M05 25,000 20,000 15,000 10,000 5,000 0 Jan-00 Jun-00 Nov-00 Apr-01 Sep-01 Feb-02 Jul-02 Dec-02 May-03 Oct-03 Mar-04 Aug-04 Jan-05 Jun-05 No CTCs generated (euro)36.0 Expected scenari
Slide 49: Insufficient tariff to contain the deficit
SPAIN AND PORTUGAL Insufficient tariff to contain the deficit which is reaching an unsustainable level 2005 tariff: Main components Includes (euro)0.2bn 2000-2002 deficit and (euro)0.5bn Nuclear Moratorium Endesa's share 44%: (euro)1,104M Deficit reduction of (euro)1,300M (-47%), if cap applied to h
Slide 50: Positive outlook in front of regulatory problems in the sector
SPAIN AND PORTUGAL Positive outlook in front of regulatory problems in the sector Diagnosis of the regulatory situation (consensus) o Absence of effective deregulation due to tariff cap o Inefficiencies in the wholesale market (e.g. CTCs and restrictions) o Regulator suspicious about the credibility
Slide 51: Fixed costs evolution
SPAIN AND PORTUGAL Fixed costs evolution o Higher costs for new capacity in the islands (euro)19M o No growth of O&M costs in Distribution o Absorption of activity increase in ECYR without increasing costs o Pensions and employment regulation +(euro)37M due to accrual (euro)M (euro)M Disco Genco + C
Slide 52: 60x5 efficiency plan partially compensates cost increase
SPAIN AND PORTUGAL 60x5 efficiency plan partially compensates the cost increase derived from growth 80 CCGT 40 Islands 40 Rest of Spain 90 Distribution 50 Commercialization (euro)M 2,013 +300 -155 2,158 2004 Activity increase 60x5 Plan 2005 52
Slide 53: Spain: EBITDA Growth 2004-2009
SPAIN AND PORTUGAL Spain: EBITDA Growth 2004-2009 Increased activity and margins: +(euro)1,158M Increased EBITDA generation activity: (euro)+948M See next page Distribution: Islands generation Limited revenues from nuclear and hydro: Regulatory Improvement: EBITDA Growth 04-09 (euro) 1,728M Increase
Slide 54: Higher contribution margins in ordinary mainland regime
SPAIN AND PORTUGAL Spain: EBITDA Growth 2004-2009 Higher contribution margins in ordinary mainland regime Ordinary +598 M(euro) mainland regime: +518 M(euro) Incr. Product Higher O&M costs: -80 M(euro) Increased acFtivity and generation (1): margin: Ordinary +(euro)160M +(euro)948M islands Higher O&
Slide 55: Key assumptions to calculate increased EBITDA are conservative
SPAIN AND PORTUGAL The key assumptions to calculate the increased EBITDA are "conservative" Hypothesis regarding increased activity o Increase in mainland output in ordinary regime of only 2,000 GWh with 3,200 MW of new installed capacity: o 16,000* GWh increase in CCGTs o 14,000* GWh reduction in c
Slide 56: Increase in gross margin in mainland generation business
SPAIN AND PORTUGAL Increase in gross margin in mainland generation business Performance of production and fuel and CO2 production costs Gross margin performance 2004 Unit gross margin: (euro)21.3/MWh -Market revenue: (euro)34.8/MWh -Variable cost -(euro)13.5/MWh Production: 80,756 GWh Gross margin:
Slide 57: Strong growth in production and sales
LATIN AMERICA Strong growth in production and sales Generation (GWh) Distribution (GWh) +5.5% +5.4% 42,870 4,108 5,061 9,019 8,855 3,786 3,130 11,666 12,046 13,778 12,086 41,033 40,665 38,905 Argentina +3% 3,356 3,150 7,469 7,165 8,847 8,449 10,863 10,127 10,014 10,498 +5% -17% Brazil +7% +14% Chile
Slide 58: Currency recovery and stability vs. US$
LATIN AMERICA Currency recovery and stability vs. US$ 0 0,5 1 1,5 2 2,5 3 3,5 4 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Argentina 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May
Slide 59: Advance in shareholding restructuring
LATIN AMERICA Advance in the previously announced shareholding restructuring 1) Brazil (creation of a holding company) Chilectra Endesa Chile 99.6%110.4% 55.0%45.0% Enersis 35.1%51.2% 36.4% 15.6%37.6% 48.8%46.1%10.7% Investluz Endesa International 56.6% 2.3% Endesa Brasil Holding 100.0% 100.0% 99.6%
Slide 60: Debt structure aligned with needs and business risk
FINANCIAL ANALYSIS Debt structure aligned with needs and business risk Currency hedging Interest rate hedging By Currency Debt (euro) M By Interest rates Debt (euro) M 15,356 5,063 20,419 15,356 5,063 20,419 3% 97% 27% 48% 25% 6% 7% 14% 73% Euro US Dollar Chilean Peso Others Fixed Hedged Floating 66
Slide 61: Endesa Spain debt maturities
FINANCIAL ANALYSIS Endesa Spain debt maturities Gross balance of maturities outstanding at 30 September 2005: (euro)15,652M(*) (*) NOTE: This gross balance differs from the total financial debt figure as it does not include outstanding execution costs nor the market value of derivatives which do not
Slide 62: Enersis debt maturities
FINANCIAL ANALYSIS Enersis debt maturities Gross balance of maturities outstanding at 30 September 2005: (euro)5,527M(*) (euro) M 2,506 Bonds Bank debt 815 712 718 181 310 606106 285 176 164 145 109 17 165 480 238 699 116 439 2,067 4Q05 1H06 2H06 2007 2008 2009 2010+ o Enersis has liquidity of (euro
Slide 63: Disclaimer
Disclaimer Cautionary Statement for Purposes of the "Safe Harbor" Provisions of the United States Private Securities Litigation Reform Act of 1995. The U.S. Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This presentation contains certain "for
Slide 64: Endesa: Stronger business, greater value
16 November 2005 Endesa: Stronger business, greater value 9M 2005 Results: Accomplishing Commitments