Gas Natural SDG SA
Gas Natural SDG SA — Endesa — Merger or Acquisition (November 2005)
68 slides from Gas Natural SDG SA's merger presentation, Nov 4, 2005
Slide 1: Filed by Gas Natural SDG pursuant to Rule 425
Filed by Gas Natural SDG, S.A. pursuant to Rule 425 of the Securities Act of 1933 Subject Company: Endesa, S.A. Commission File No.: 333-07654 This communication is not an offering document and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitati
Slide 2: Forward-looking statements and press release notice
• dividend policy; and • timing and benefits of the offer and the combined company. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forwarding-looking statements, including, but not
Slide 3: 2005 Third Quarter Performance Results
Communications Department 2005 THIRD QUARTER PERFORMANCE RESULTS NET PROFITS OF THE GAS NATURAL GROUP GREW 17.1% TO 528.9 MILLION EUROS • Consolidated EBITDA rose 18.3% during the third quarter, putting annual EBITDA at 1,120,800,000 euros, 12.9% more than in 2004. • Gas distribution activity in Spa
Slide 4: Net business turnover January-September 2005
Net business turnover for the period of January-September 2005 totaled 5,782,500,000 euros, an increase of 30.4% over the same period in 2004, basically due to the growth in business activity of the Gas Natural Group, and in particular, to increased gas supply due to greater consumption compared to
Slide 5: Gas distribution in Spain network and customers
The distribution network grew more than 2,500 kilometers in the last 12 months, for a total of 39,146 kilometers at September 30, 2005, reflecting a year over year increase of 6.9%. The Group maintains high growth rates for the number of customers, with an increase of 319,000 on a year to year basis
Slide 6: Distribution in Latin America
in the last 12 months, consistent with the strategic goal of increasing customer base in Latin America by more than 1.6 million in the 2004-2008 period. Principal statistics by country Argentina Brazil Colombia Mexico Total Gas activity sales (GWh): 52,098 30,981 8,184 30,709 121,972 Increase vs. 9M
Slide 7: Gas distribution in Italy and electricity in Spain
The Gas distribution business in Italy totaled 1,927 GWh, with a notable increase from the same period last year, thanks to the consolidation of operations in Italy following the acquisition of the Smedigas Group and the Nettis Group in second quarter of 2004. Electricity in Spain This activity incl
Slide 8: Gas supply: up+midstream
Gas supply: up+midstream This activity includes the execution of GNL integrated projects, management of ocean transport and operation of the Magreb-Europe gas pipeline. The EBITDA in the first nine months of the year was 125 million euros, a 5.3% increase from the prior year, despite reduced use of
Slide 9: Liberalized market sales and multiproduct business
Sales in the liberalized market were 149,631 GWh, an increase of 12.2%. Of these sales, the Gas Natural Group marketed 115,738 GWh to end customers, which were primarily intended for the industrial market (66%), combined cycle supply (26%) and the residential market (8%). The provisioning to the lib
Slide 10: Consolidated third quarter income statement
Consolidated third quarter income statement (figures not audited) 9M05 9M04 (€ millions) Net business turnover 5.782,5 4.434,6 Other revenue 60,0 46,2 Provisioning -4.017,2 -2.931,9 Employee expenses, net -187,5 -153,3 Other expenditures -517,0 -403,0 EBITDA 1.120,8 992,6 Amortization allowance -378
Slide 11: Consolidated Balance Sheet
Consolidated Balance Sheet (figures not audited) 09/30/05 09/30/04 (€ millions) Non-Current Assets - 9,819.2 8,585.1 Capital assets 7,298.6 6,284.1 Goodwill 452.1 379.8 Other intangible assets 1,281.9 1,017.1 Booked investments participation method 204.8 371.8 Other non current assets 581.8 532.3 Cu
Slide 12: Principal statistics
Principal statistics 3T05 3T04 % 9M05 9M04 % 95,487 87,364 9.3 Gas Distribution (GWh): 309,945 278,705 11.2 53,478 47,898 11.6 Spain: 186,046 163,511 13.8 7,801 8,664 -10.0 Gas sales by rate 36,834 37,725 -2.4 45,677 39,234 16.4 ATR 149,212 125,786 18.6 41,816 39,302 6.4 Latin America: 121,972 114,4
Slide 13: Third Quarter 2005 Results (9M05)
Third Quarter 2005 Results (9M05) November 3, 2005
Slide 14: GAS NATURAL disclaimer
GAS NATURAL This document may contain market assumptions, different sourced information and forward-looking statements with respect to the financial condition, results of operations, business, strategy and the plans of Gas Natural SDG, S.A. and its subsidiaries. Such forward-looking statements are n
Slide 15: Agenda
GAS NATURAL – 9M05 Results Agenda Highlights 9M05 Results Snapshot 9M05 Results Analysis by Activity Conclusions 3
Slide 16: Highlights
GAS NATURAL – 9M05 Results Highlights 9M05 Results Snapshot 9M05 Results Analysis by Activity Conclusions Considerations regarding the EU dimension of the Tender Offer for Endesa 4
Slide 17: Highlights (I)
GAS NATURAL – 9M05 Results Highlights (I) Moving towards a more solid and flexible Group, in line with Strategic Plan Strong franchise in gas distribution Improving operating business performance Adapting supply conditions to a more volatile environment despite difficult market and regulatory condit
Slide 18: Highlights (II)
GAS NATURAL – 9M05 Results Highlights (II) Consolidating overall performance… EBITDA Net Income + 12.9% + 17.1% 1,120.8 528.9 992.6 451.7 9M04 9M05 9M04 9M05 ( million) 6
Slide 19: Highlights (III)
GAS NATURAL – 9M05 Results Highlights (III) … backed by consistent organic growth from all lines of business… EBITDA EBITDA EBITDA Distribution Electricity Distribution Spain Spain LatAm + 7.6% + 144.6% + 35.6% 583.3 76.8 219.9 542.1 162.2 31.4 9M04 9M05 9M04 9M05 9M04 9M05 7
Slide 20: Highlights (IV)
GAS NATURAL – 9M05 Results Highlights (IV) … and supported by focused investment (1) in core business Distribution Electricity Distribution Spain Spain LatAm (28.0% of total) (44.1% of total) (14.9% of total) - 5.9% + 39.1% 351.6 + 45.2% 237.3 119.2 223.4 252.8 82.1 9M04 9M05 9M04 9M05 9M04 9M05 (1)
Slide 21: 9M05 Results Snapshot
GAS NATURAL – 9M05 Results Highlights 9M05 Results Snapshot 9M05 Results Analysis by Activity Conclusions Considerations regarding the EU dimension of the Tender Offer for Endesa 9
Slide 22: Main Aggregates
9M05 Results Snapshot Main Aggregates 9M05 9M04 Change (%) Net Sales 5,782.5 4,434.6 30.4 EBITDA 1,120.8 992.6 12.9 Operating Income 722.1 652.3 10.7 Net Income 528.9 451.7 17.1 Average no. of Shares (million) 447.8 447.8 - EBITDA per Share 2.5 2.2 12.9 Net Income per Share 1.2 1.0 17.1 Investments:
Slide 23: Income Statement
9M05 Results Snapshot Income Statement 9M05 9M04 Net Sales 5,782.5 4,434.6 Purchases -4,017.2 -2,931.9 Gross Margin 1,765.3 1,502.7 Personnel, net -187.5 -153.3 Other Expenses, net -457.0 -356.8 EBITDA 1,120.8 992.6 Depreciation -378.3 -323.4 Provisions -20.4 -16.9 Operating Income 722.1 652.3 Finan
Slide 24: EBITDA Breakdown
9M05 Results Snapshot EBITDA Breakdown 9M05 9M04 % Gas Distribution: 821.7 719.0 14.3 Spain 583.3 542.1 7.6 LatAm 219.9 162.2 35.6 Italy 18.5 14.7 25.9 Electricity: 121.3 72.6 67.1 Spain 76.8 31.4 144.6 Puerto Rico 44.5 41.2 8.0 Gas Supply: 163.1 184.5 -11.6 Up + Midstream 125.0 118.7 5.3 Wholesale
Slide 25: Investments
9M05 Results Snapshot Investments Investments (Tangible & Intangible) By Activity 9M05 9M04 223.4 237.3 2% Distribution Spain 44% Distribution LatAm 119.2 82.1 Distribution Italy 46.2 8.9 Electricity Spain 351.6 252.8 49% Electricity Puerto Rico 3.5 6.2 5% Up + Midstream 8.4 29.2 Wholesale & Retail
Slide 26: Capital Structure
9M05 Results Snapshot Capital Structure Debt Facilities Financial Ratios as of September 30, 2005 ( million) 30/09/05 31/12/04 Drawn Undrawn 6.8x 8.7x Lines of Credit 298 860 EBITDA/Net Interest Loans 2,582 - Net Debt/EBITDA 2.2x 2.0x Capital Markets 656 2,375 Leverage 37.8% 35.7% Cash Placements -
Slide 27: Debt Structure
9M05 Results Snapshot Debt Structure Total Gross Debt: 3,536 million Breakdown by Currency Fixed vs Floating Rate 2% 11% 11% 50% 43% 1% 57% 25% EUR USD USD-Argentina Fixed Floating BRL COP MXN Debt Repayment Schedule ( million) 421 475 379 Rest 273 56% of Total 2005 2006 2007 2008 Post 2008 15
Slide 28: 9M05 Results Analysis by Activity
GAS NATURAL – 9M05 Results Highlights 9M05 Results Snapshot 9M05 Results Analysis by Activity Conclusions Considerations regarding the EU dimension of the Tender Offer for Endesa 16
Slide 29: Our Commitment (2004-2008)
9M05 Results Analysis by Activity Our Commitment (2004-2008) Integrated Global Energy Company Leadership Flexible and Leadership Developing in Well in Gas Electricity Multiproduct Diversified Distribution Business Offer in Gas Supply Spain Availability Spain, Spain and Customer of Equity LatAm Puert
Slide 30: Our Commitment (2004-2008) – Gas Supply
9M05 Results Analysis by Activity Our Commitment (2004-2008) – Gas Supply Integrated Global Energy Company Leadership Flexible and Leadership Developing in Well in Gas Electricity Multiproduct Diversified Distribution Business Offer in Gas Supply Spain Availability Spain, Spain and Customer of Equit
Slide 31: Gas Supply – Up + Midstream
9M05 Results Analysis by Activity Gas Supply – Up + Midstream Transportation through EMPL (GWh) 31.7% 82,801 109,085 26,356 Establishment of Repsol-Gas Natural 21,150 LNG, S.L. 82,729 61,651 The key step to the 9M04 9M05 fulfillment of objective Spain Portugal in Midstream EBITDA: 125.0 million, +5.
Slide 32: Gas Supply – Wholesale & Retail
9M05 Results Analysis by Activity Gas Supply – Wholesale & Retail Total (GWh) Spain (GWh) 7.4% 9.4% 208,060 223,557 177,322 193,919 65.9% 8,437 5,086 2.9% 33,893 32,937 -17.4% 21,201 25,652 15.2% 115,738 100,428 177,322 9.4% 193,919 0.8% 43,957 44,288 9M04 9M05 9M04 9M05 Spain USA Europe Regulated m
Slide 33: Our Commitment – Gas Distribution
9M05 Results Analysis by Activity Our Commitment (2004-2008) – Gas Distribution Integrated Global Energy Company Leadership Flexible and Leadership Developing in Well in Gas Electricity Multiproduct Diversified Distribution Business Offer in Gas Supply Spain Availability Spain, Spain and Customer of
Slide 34: Gas Distribution in Spain
9M05 Results Analysis by Activity Gas Distribution in Spain Sales (GWh) Operating Figures 13.8% 39,146 163,511 186,046 +6.9% 36,617 18.6% 149,212 125,786 +6.8% 5,033 4,714 -2.4% +319 37,725 36,834 30/09/2004 30/09/2005 9M04 9M05 Connections (thousands) Tariff Sales TPA Network (km) Non-tariff market
Slide 35: Gas Distribution in Argentina
9M05 Results Analysis by Activity Gas Distribution in Argentina Sales (GWh) Operating Figures 6.8% 48,772 52,098 21,161 +1.8% 12.9% 20,792 26,176 29,562 5.3% +2.5% 5,379 -14.6% 5,663 1,251 1,282 4,138 3,533 +31 13,079 2.0% 13,340 30/09/2004 30/09/2005 9M04 9M05 Connections (thousands) Residential/Co
Slide 36: Gas Distribution in Brazil
9M05 Results Analysis by Activity Gas Distribution in Brazil Sales (GWh) Operating Figures 12.9% 27,445 30,981 4,723 23.1% +15.3% 6,208 5,045 4,095 11.5% 8,515 7,638 +6.8% 10.9% 679 +46 725 13,339 14,794 2.9% 1,423 1,464 30/09/2004 30/09/2005 9M04 9M05 Connections (thousands) Residential/Commercial
Slide 37: Gas Distribution in Colombia
9M05 Results Analysis by Activity Gas Distribution in Colombia Sales (GWh) Operating Figures 15.0% 7,118 8,184 +5.4% 15,176 87.4% 868 463 14,402 15.1% 3,249 2,823 +7.6% 1,469 1,580 6.1% +111 3,832 4,067 30/09/2004 30/09/2005 9M04 9M05 Connections (thousands) Residential/Commercial Network (km) Indus
Slide 38: Gas Distribution in Mexico
9M05 Results Analysis by Activity Gas Distribution in Mexico Sales (GWh) Operating Figures -1,4% 31,157 30,709 14,808 74 -7.3% +2.9% 69 14,384 18,641 -2.4% 18,192 +6.4% 3.2% 1,037 +66 1,103 6,620 6,831 -3.5% 5,822 5,617 30/09/2004 30/09/2005 9M04 9M05 Connections (thousands) Residential/Commercial N
Slide 39: Gas Distribution in Italy
9M05 Results Analysis by Activity Gas Distribution in Italy Sales (GWh) Operating Figures 174.5% 702 1,927 60 +7.7% 3,709 33.3% 3,443 45 184.2% 1,867 +11.8% 246 275 +29 657 30/09/2004 30/09/2005 9M04 9M05 Connections (thousands) Network (km) Sales TPA EBITDA: €18.5m (+25.9%) showing consolidation of
Slide 40: Our Commitment – Electricity
9M05 Results Analysis by Activity Our Commitment (2004-2008) – Electricity Integrated Global Energy Company Leadership Flexible and Leadership Developing in Well in Gas Electricity Multiproduct Diversified Distribution Business Offer in Gas Supply Spain Availability Spain, Spain and Customer of Equi
Slide 41: Electricity in Spain
9M05 Results Analysis by Activity Electricity in Spain 30/09/04 30/09/05 1,902 1,600 821 800 23 21 279 Wind Cogen CCGT 9M04 9M05 6,712 4,160 CCGTs: Cartagena (1,200 MW) synchronised to the grid and Plana del Vent (800 MW) in progress 119% coverage of supply in 9M05 EBITDA: €76.8 +144.6% 4.1% market
Slide 42: Electricity in Puerto Rico
9M05 Results Analysis by Activity Electricity in Puerto Rico Electricity Generation through EcoEléctrica (50%) +3.7% 1,139 1,098 9M04 9M05 Attributable generation capacity: 271 MW New CCGT at Mayagüez in early development phase Load factor in 9M05: EBITDA: € 44.5m, 68% vs 66% in 9M04 +8.0% 30
Slide 43: Our Commitment – Multiproduct Offer in Spain
9M05 Results Analysis by Activity Our Commitment (2004-2008) – Multiproduct Offer in Spain Integrated Global Energy Company Leadership Flexible and Developing Leadership in Well Electricity in Gas Multiproduct Diversified Business Distribution Offer in Gas Supply Spain Availability Spain, Spain and
Slide 44: Multiproduct Offer in Spain
9M05 Results Analysis by Activity Multiproduct Offer in Spain Commercial network: 875 points of sale (own, franchised and associated) GAS NATURAL continues to enjoy the benefits from a strong and well-established brand all over Spain 1.5 million eligible 1.3 million maintenance residential gas custo
Slide 45: Conclusions
GAS NATURAL – 9M05 Results Highlights 9M05 Results Snapshot 9M05 Results Analysis by Activity Conclusions Considerations regarding the EU dimension of the Tender Offer for Endesa 33
Slide 46: GAS NATURAL – Conclusions
GAS NATURAL – Conclusions Consistent organic growth in all business lines: Strong performance in Distribution, both in Spain and LatAm Increased contribution from electricity, driven by new and efficient CCGT and Wind Sustained growth in worldwide total end connections to 10.0 million Focused and gr
Slide 47: Considerations regarding the EU dimension of the Tender Offer for Endesa
Considerations regarding the EU dimension of the Tender Offer for Endesa November 3, 2005
Slide 48: Disclaimer and Important Legal Information
Disclaimer and Important Legal Information This communication is not an offering document and does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The exchange offer will commence only (1) following approval of a final
Slide 49: Disclaimer and Important Legal Information
Disclaimer and Important Legal Information These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements, including, but not limited to, changes in regulation, the natu
Slide 50: Gas Natural considers that the transaction does not have EU dimension
Gas Natural considers that the transaction does not have EU dimension 2/3 rule calculation with official information as of September 5th, 2005 2004 audited accounts approved by Endesa’s 2004 audited and certified accounts filed AGSM (Spanish GAAP) with the SEC by Endesa (US GAAP) 20,000 80.5% 19.5%
Slide 51: Endesa proposes to use provisional financial statements
Endesa proposes to use financial statements which as of today are still provisional Endesa´ s IFRS presentation of April 5th, 2005 recognises the provisional nature of such IFRS criteria “The failure of the EC to endorse some of these standards and interpretations could result in the need to make ch
Slide 52: Endesa's claims are unprecedented and against European Commission principles
Endesa’s claims are unprecedented and against the European Commission’s established principles Gas Natural’s position regarding Gas Natural’s position regarding Endesa’s adjustments the European Commission review Endesa has adopted an “ad hoc” position in The European Commission must follow the orde
Slide 53: Reality check
Reality check Real dimension of Spanish vs. European business Spain Rest of Europe Total Assets 80% 20% Utility plant 83% 17% Financial Shareholders’ equity 75% 25% metrics EBITDA 83% 17% (2004) EBIT 81% 19% Funds generated in operations 82% 18% Total investments 82% 18% Operating Headcount 85% 15%
Slide 54: Endesa has proposed several types of adjustments to claim EU jurisdiction
Endesa has proposed several types of adjustments to claim EU jurisdiction Main adjustments Overview Revenue from jointly controlled Adjustments according to Art. 5Reg. Type I companies CE Nº 139/2004 (technical) Adjustment for purchases or sales Conceptually acceptable to Gas Natural adjustments of
Slide 55: Summary impact of Art. 5 adjustments proposed by Endesa
Summary impact of Art. 5 adjustments proposed by Endesa 80% 77.0% 80.5% 171 11,243 NA 11,075 Adjustments (3) to Spanish revenues 2004 (€M) Spanish Acquisition Jointly- Spanish Acquisition Jointly- Spanish GAAP sale/of controlled GAAP sale/of controlled GAAP companies companies adjusted companies com
Slide 56: Endesa's proposed Art. 5 adjustments
Endesa’s proposed Art. 5 adjustments Correction of revenues from purchases or sales of companies Revenue impact (€M) Spain Rest of Europe Proposed by (3) 564 Endesa Adjustment to reflect the acquisition of control of SNET on September 2004 However, the SNET revenue figure considered by Endesa (€815M
Slide 57: Endesa's proposed Art. 5 adjustments
Endesa’s proposed Art. 5 adjustments Revenues from jointly-controlled companies Revenue impact (€M) Spain Rest of Europe Proposed by Endesa 171 104 Adjustment to include the portion of the revenue of certain subsidiaries in which Endesa has joint-control. This includes 25 companies in Spain and 3 in
Slide 58: Endesa's "Other Adjustments" cannot be justified
Endesa’s “Other Adjustments” cannot be justified Endesa uses internal information, which is not publicly available and cannot be independently verified to make the majority of the “Other Adjustments” The use of non-public information allows Endesa to revise it for its own benefit so that all the adj
Slide 59: Summary impact of "Other Adjustments" proposed by Endesa
Summary impact of “Other Adjustments” proposed by Endesa Concept Spain Rest of Europe % Spanish revenue IFRS adjustments 67.1% - Consistent with US GAAP¹ (4,401) NA - Inconsistent with US GAAP¹ (49) (8) 67.0% Adjustments for subsidies (143) NA 66.5% Compensation relating to prior (51) NA 66.3% years
Slide 60: Endesa's proposed "Other Adjustments"
Endesa’s proposed “Other Adjustments” Adjustment for IFRS Revenue impact (€M) Spain Rest of Europe Proposed by Endesa - Consistent with US GAAP¹ (4,401) N/A - Inconsistent with US GAAP¹ (49) N/A IFRS accounts presented to CNMV by Endesa have no official nature, have not been audited, and the informa
Slide 61: Endesa's proposed "Other Adjustments"
Endesa’s proposed “Other Adjustments” Adjustment for subsidies Revenue impact (€M) Spain Rest of Europe Proposed by Endesa (143) N/A Includes the elimination of the “premium for the use of Spanish coal” • This adjustment is unacceptable given that the premium is not a public aid but rather a specifi
Slide 62: Endesa's proposed "Other Adjustments"
Endesa’s proposed “Other Adjustments” Compensation relating to prior years Revenue impact (€M) Spain Rest of Europe Proposed by Endesa (51) N/A Elimination of €51M compensation corresponding to the extra-peninsular systems costs for the years 2001-2003 No mention is made in the Annual Report, which,
Slide 63: Endesa's proposed "Other Adjustments"
Endesa’s proposed “Other Adjustments” Additional revenues of Endesa Italia Revenue impact (€M) Spain Rest of Europe Proposed by Endesa N/A 199 €169M adjustment corresponding to stranded costs at Endesa Italia relating to 2000-2003 which are not registered in its accounts, Endesa 2004 Annual Report (
Slide 64: Endesa's proposed "Other Adjustments"
Endesa’s proposed “Other Adjustments” Deduction of duties, taxes and levies Revenue impact (€M) Spain Rest of Europe Proposed by Endesa (104) N/A Endesa proposes to subtract the duty for the use of public domain (“tasa por aprovechamiento del dominio público”) of € 104Mfrom the revenues generated in
Slide 65: Additional generally acceptable adjustments not proposed by Endesa
Additional generally acceptable adjustments not proposed by Endesa Endesa has selectively omitted several clear adjustments which, based on public information, would be required as well for consistency In the previous pages we have detailed a number of voluntary omissions by Endesa in its partial an
Slide 66: Endesa's latest potential misleading actions
Endesa’s latest potential misleading actions On October 28, 2005 Endesa filed a new set of accounts with the SEC reducing its consolidated US GAAP revenue figure by 25% (Euro 4.4 billion) Endesa has filed an Amended 20-F form with the SEC disclosing a reduction in its 2004 Spanish net sales figure u
Slide 67: Conclusions
Conclusions Using Endesa’ s complete, official, public and audited 2004 financial statements, as approved by Endesa’s Board and shareholders, the transaction does not have EU dimension In fact the 2/3 rule is not satisfied under any financial or operating metric Endesa’s claim for EU dimension goes
Slide 68: Thank you
Thank you INVESTOR RELATIONS Av. Portal de l’Àngel, 20 08002 BARCELONA (Spain) telf. 34 934 025 891 fax 34 934 025 896 e-mail: relinversor@gasnatural.com website: www.gasnatural.com