Results
JANUARY-SEPTEMBER
2007
Madrid,
15
November, 2007
CONTENTS
Consolidated
results 3
Results
by business line 12
Business
in Spain and Portugal 13
Business
in Europe 22
Business
in Latin America 28
Statistical
appendix 37
CONSOLIDATED
RESULTS
ENDESA
reports 9M07 net income of Euro 1,979 million
Endesa
reported net income of Euro 1,979 million in 9M07. This figure is Euro 529
million less than the year earlier figure.
To
effect
a comparison on a like-for-like basis, four significant non-recurring items
included in 9M06 need to be factored in:
|
-
|
Recognition
of stranded costs for non-mainland generation for 2001-2005, which
amounted to Euro 227 million, and for corresponding interest amounting
to
Euro 31 million, with a combined impact of Euro 197 million on
net
income.
|
|
-
|
The
tax effect relating to Endesa Italia’s revaluation of the tax bases of its
assets to their book values, as permitted by current legislation
in Italy.
The amount of this tax effect was Euro 148 million and its impact
on net
income after minority interests stood at Euro 118
million.
|
|
-
|
The
fiscal impact of the merger between Elesur and Chilectra, which
was Euro
170 million, with an impact on net income after minority interests
of Euro
101 million.
|
|
-
|
Income
generated from asset disposals, which amounted to Euro 453 million,
with
an impact of Euro 378 million on net income after taxes and minority
interests.
|
After
discounting the four effects mentioned above from 9M06 results, and net income
from asset disposals carried out in 9M07, net income in the first nine months
of
this year grew 13%.
References
to a like-for-like comparison of earnings in this document always refer to
variations produced after deducting the items mentioned above from the both
years’ results.
|
ENDESA
NET INCOME, 9M07
|
|
|
Euro
million
|
%
chg.
vs.
9M06
|
%
chg. vs. 9M06 l-f-l
|
%
contrib.
to
total net income
|
|
Spain
and Portugal
|
1,390
|
(7.5)
|
21.3
|
70.2
|
|
Europe
|
287
|
(32.6)
|
(5.8)
|
14.5
|
|
Latin
America
|
302
|
(26)
|
1
|
15.3
|
|
TOTAL
|
1,979
|
(21.1)
|
13
|
100
|
The
distribution of net income between the different electricity businesses is
balanced, reinforcing the Company’s multinational character and its
appropriately diversified risk profile.
Electricity
generation : 137,431 GWh
Electricity
generation stood at 137,431 GWh in 9M07, a drop of 2.6% compared to 9M06.
The
increased output in Spain and Portugal (1.5%) was not sufficient to offset
lower
output in Europe (-9.7%) and Latin America (-4.5%). In Europe this drop was
due
to lower demand for electricity in Italy and France during the early months
of
the year as a result of milder temperatures compared to 2006. In Latin America,
the drop in production owed to lower rainfall and gas supply
issues.
Electricity
sales totalled 168,865 GWh, an increase of 2.8% compared to 9M06.
|
GENERATION
AND ELECTRICITY SALES
|
|
|
Output
|
Sales
|
|
|
GWh
|
%
chg. vs. 9M06
|
GWh
|
%
chg. vs. 9M06
|
|
Spain
and Portugal
|
69,246
|
1.5
|
85,177
|
3.6
|
|
Europe
|
23,888
|
(9.7)
|
37,745
|
(3.0)
|
|
Latin
America
|
44,297
|
(4.5)
|
45,943
|
6.4
|
|
TOTAL
|
137,431
|
(2.6)
|
168,865
|
2.8
|
Output/sales
balance
ENDESA
met
81.4% of its total electricity sales in 9M07 from its own output.
This
output/sales balance allows the Company to significantly reduce the risk
relating to its electricity business, giving it an advantage over its
competitors which is particularly relevant in the Spanish market. In
9M07 the Company met 81.3% of its demand in Spain from its own
output.
Growth
in
gross profit (7.9%), EBITDA (6.9%) and EBIT (5.6%) on a like-for-like
basis
Revenues
were 3.5% higher on a like-for-like basis at Euro 16,042 million. Sales were
Euro 15,549 million, up 6.4%.
Variable
costs fell 0.8% mainly due to lower costs of greenhouse gas emission rights
as a
result of falling prices throughout the course of the year.
The
combination of trends in revenues and variable costs boosted gross profit
7.9%
higher on a like-for-like basis to Euro 8,189 million.
Meanwhile,
EBITDA was Euro 5,612 million and EBIT was Euro 4,100 million, growth of
6.9%
and 5.6%, respectively.
|
|
Gross
profit
|
EBITDA
|
EBIT
|
|
|
Euro
million
|
%
chg vs. 9M06
l-f-l
|
Euro
million
|
%
chg vs. 9M06
l-f-l
|
Euro
million
|
%
chg vs. 9M06
l-f-l
|
|
Spain
and Portugal
|
4,573
|
11.2
|
2,964
|
9.8
|
2.086
|
10.7
|
|
Europe
|
1,129
|
(0.7)
|
867
|
(2.6)
|
638
|
(7.9)
|
|
Latin
America
|
2,487
|
6.2
|
1,781
|
7.1
|
1.376
|
5.5
|
|
TOTAL
|
8,189
|
7.9
|
5,612
|
6.9
|
4.100
|
5.6
|
Net
financial losses: down 8% l-f-l
ENDESA
reported net financial losses of Euro 715 million in 9M07, a 4.8% improvement
on
9M06.
Net
interest expense totalled Euro 706 million, Euro 30 million less than in
9M06.
Net
financial expenses for the first nine months of 2007 were Euro 83 million
lower
as a consequence of the higher interest rate used to calculate present value
of
contingencies related to workforce reduction programs, which were recorded
as
provisions, compared to the one used in this calculation at the end of 2006,
due
to a rise in market interest rates.
Asset
disposals: stake in Red Eléctrica de España
In
September ENDESA sold 2,705,400 shares in Red Eléctrica de España, S.A.,
representing 2% of REE’s share capital, via a series of transactions carried out
over recent months, the largest being the sale of 1.35% to Citigroup, which
subsequently placed these shares on the market. Total proceed from
this 2% stake were Euro 96 million, generating gross capital gains of Euro
79
million.
Following
the sale, ENDESA now owns 1% of REE, in line to the maximum legal ownership
limit coming into effect at year-end 2007.
Cash
flow
from operating activities: up 24.8% l-f-l
The
Group
reported cash flow from operations of Euro 4,002 million in 9M07, a year-on-year
increase of 20.6%. Measured on a like-for-like basis, the increase was
24.8%.
|
CASH
FLOW FROM OPERATING ACTIVITIES
|
|
|
Euro
million
|
%
chg vs. 9M06
|
|
Spain
and Portugal
|
2,115
|
20.3
|
|
Europe
|
630
|
18.5
|
|
Latin
America
|
1,257
|
37
|
|
TOTAL
|
4,002
|
24.8
|
Investment: Euro
2,923 million
ENDESA
invested a total of Euro 2,923 million in 9M07, of which Euro 2,621 million
was
capex and the remaining Euro 302 million was deployed in financial
investments.
|
INVESTMENTS
|
|
|
Euro
million
|
|
Capex
and intangible assets
|
Financial
|
TOTAL
|
|
Spain
and Portugal
|
1,750
|
91
|
1,841
|
|
Europe
|
325
|
37
|
362
|
|
Latin
America
|
546
|
174
|
720
|
|
TOTAL
|
2,621
|
302
|
2,923
|
Financial
situation
ENDESA
had
net debt of Euro 21,183 million at September 30, 2007, 6.8% more than at
year-end 2006.
|
BREAKDOWN
OF NET DEBT BY BUSINESS LINE
|
|
|
Euro
million
|
|
|
|
30/09/07
|
31/12/06
|
Change
|
%
chg.
|
|
Business
in Spain and Portugal
|
13,720
|
12,548
|
1,172
|
9.3
|
|
Business
in Europe
-Endesa
Italia
-Other
|
1,716
596
1,120
|
1,674
748
926
|
42
(152)
194
|
2.5
(20.3)
21.0
|
|
Business
in Latin America
-Enersis
Group
-Other
|
5,747
5,080
667
|
5,618
4,749
869
|
129
331
(202)
|
2.3
7.0
(23.2)
|
|
TOTAL
|
21,183
|
19,840
|
1,343
|
6.8
|
We
would
point out that ENDESA had the recognised right on September 30, 2007 to collect
Euro 3,166 million in connection with two regulatory issues: Euro 1,516 million
for financing the revenue shortfall from regulated activities and Euro 1,650
million in compensation for stranded costs in non-mainland generation. Factoring
in these regulatory receivables, ENDESA’s net debt at 30 September 2007 was Euro
18,017 million.
The
average cost of ENDESA’s total debt was 5.79% in 9M07, while the average cost of
debt at the ENERSIS Group was 9.74%. Stripping out Enersis Group debt, the
average cost of ENDESA’s debt was 4.43% in 9M07.
The
average life of the ENDESA Group’s debt at September 30, 2007 was 5.1
years.
57%
of
total debt is either fixed-rate or hedged. If we include the regulatory
receivables in net debt, the percentage of total debt that is either fixed-rate
or hedged climbs to 67%.
|
STRUCTURE
OF ENDESA’S NET DEBT
|
|
|
ENDESA
and
direct subsidiaries
|
Enersis
Group
|
Total
ENDESA
Group
|
|
|
Euro million
|
%
of
total
|
Euro
million
|
%
of
total
|
Euro
million
|
%
of
total
|
|
Euro
|
16,038
|
100
|
-
|
-
|
16,038
|
100
|
|
Dollar
|
52
|
-
|
2,058
|
41
|
2,110
|
10
|
|
Other
currencies
|
13
|
-
|
3,022
|
59
|
3,035
|
14
|
|
TOTAL
|
16,103
|
100
|
5,080
|
100
|
21,183
|
100
|
|
Fixed
rate
|
6,415
|
40
|
3,801
|
75
|
10,216
|
48
|
|
Hedged
|
1,677
|
10
|
211
|
4
|
1,888
|
9
|
|
Floating
|
8,011
|
50
|
1,068
|
21
|
9,079
|
43
|
|
TOTAL
|
16,103
|
100
|
5,080
|
100
|
21,183
|
100
|
|
Avg.
life (years)
|
5.0
|
5.3
|
5.1
|
At
30
September 2007, ENDESA in Spain and its direct subsidiaries, excluding the
Enersis Group, had liquidity of Euro 5,705 million. Of this amount, Euro
5,312
million is related to undrawn sums on unconditional credit
lines. This liquidity is sufficient to cover maturities falling due
in the next 21 months for this group of companies.
The
Enersis Group held cash and cash equivalents totalling Euro 547 million at
September 30, 2007, as well as Euro 447 million in unconditional undrawn
credit
lines relating to two syndicated loan transactions. The total covers debt
maturities for the next 16 months.
As
of the
date of release of 9M07 earnings, ENDESA’s long-term debt ratings are A at
Standard & Poor's and A3 at Moody’s, both under review for a possible
downgrade, while Fitch’s current rating is A, on negative credit
watch.
Equity: Euro
17,080 million
ENDESA’s
equity was Euro 17,080 million at 30 September 2007, Euro 1,144 million higher
than at year-end 2006.
Of
this
amount, Euro 11,897 million was owned by ENDESA S.A. shareholders, and Euro
5,183 million corresponded to minority shareholders of Group
companies.
Total
equity corresponding to ENDESA S.A. shareholders increased by Euro 606 million
from 31 December 2006 as a result of net income reported in 9M07 of Euro
1,979
million, plus revenues and expenses recognised in equity, with a net positive
effect of Euro 130 million, less distribution of Euro 1,207 million to
shareholders in the form of a final dividend against 2006 results in addition
to
Euro 296 million in bonuses for attendance at shareholders’
meetings.
Financial
leverage: 124%
The
increase in Group equity offset the increase in net debt to leave leverage
at
124% on September 30, 2007, as compared to 124.5% on 31 December
2006.
If
we
factor regulatory receivables into net debt, leverage ratio for 9M07 would
be
105.5%.
Shareholder
remuneration
At
the
General Shareholders’ Meeting held on 20 June, the Company agreed to pay a gross
dividend of Euro 1.64 per share against 2006 results, entailing a total payment
of Euro 1,736 million. On 2 January 2007 a gross interim dividend of Euro
0.50
per share was paid out. Combined with the final gross dividend of Euro 1.14
per
share paid on 2 July, the total paid out comes to Euro 1,207
million.
In
addition, on 20 March ENDESA distributed an attendance bonus of Euro 0.15
per
share, or additional remuneration of Euro 148 million, for attending the
Extraordinary General Shareholders’ Meeting which was scheduled for 20
March.
The
public
takeover bid launched by Acciona, S.A. and Enel Energy Europe, S.r.L. for
100%
of ENDESA’s shares was conditional upon the modification of certain of ENDESA’s
bylaws. To enable its shareholders to decide whether or not to change the
bylaws, modification of which was a prerequisite to the Acciona, S.A. and
Enel
Energy Europe, S.r.L. bid, the Board of Directors of the Company convened
an
Extraordinary General Shareholders’ Meeting on 25 September 2007, again agreeing
to pay a Euro 0.15 per share attendance bonus, which entailed additional
shareholder remuneration of Euro 148 million.
In
all,
ENDESA paid its shareholders a total of Euro 4,573 million since
2005.
The
Public
Tender Offer for ENDESA shares
On
5
October 2007, in compliance with the provisions of article 27 of Royal Decree
1197 of 26 July 1991, the Spanish Securities Regulator (the “CNMV” for its
initials in Spanish) notified that the public takeover bid launched by Acciona,
S.A. and Enel Energy Europe, S.r.L. for 100% of ENDESA, S.A.’s shares, from
which 487,116,120 shares equivalent to 46.01% of share capital were immobilised
by their respective shareholders, as disclosed in the offer prospectus, was
accepted by shareholders owning 487,601,643 shares, or 85.30% of the shares
subject to the bid and equivalent to 46.05% of ENDESA’s share capital. Of this
amount, 4,541,626 shares corresponded to the US bid.
Now
that
the takeover bid has closed, Acciona and Enel own 92.1% of ENDESA’s share
capital. This stake enables the successful bidders to execute the joint
management agreement signed by both companies on 26 March 2007.
With
Acciona and Enel sharing management control of the Company, in the coming
months
ENDESA must complete certain transactions previously agreed between the
controlling shareholders or between the controlling shareholders and third
parties. Specifically, it must undertake the following
transactions:
|
-
|
The
contribution by Acciona and ENDESA of their renewable generation
assets to
a joint venture which will be 51%-owned by Acciona and 49%-owned
by
Endesa.
|
|
-
|
The
sale of the following assets to E.On
AG:
|
|
§
|
The
sale of Endesa Europa’s assets in Italy, France, Poland and
Turkey.
|
|
§
|
Certain
assets located in Spain comprising 10-year rights on 450 MW of
nuclear
energy capacity based on an energy supply contract and three thermal
stations with combined installed capacity of around 1,475
MW.
|
These
asset transfers will be undertaken at market value based on valuation analysis
to be prepared by several prestigious international banks.
RESULTS
BY
BUSINESS LINE
BUSINESS
IN SPAIN AND PORTUGAL
Net
income
- Spain and Portugal: Euro 1,390 million
The
Spanish and Portuguese electricity business posted net income of Euro 1,390
million in the first nine months of 2007, a l-f-l increase of 21.3%. This
figure
represents 70.2% of ENDESA’s total bottom line.
EBITDA
was
Euro 2,964 million and EBIT stood at Euro 2,086 million, l-f-l growth of
9.8%
and 10.7% respectively on 9M06.
Highlights
In
9M07,
the Spanish electricity market witnessed a 37% fall in wholesale market prices
compared to the first nine months of 2006 due to a slowdown in demand, a
sharp
slump in CO
2
prices
from Euro 21.88/tonne to Euro 0.08/tonne, and growth of
52.1% and 12.7% respectively in hydro generation and renewables/CHP,
particularly wind generation.
However,
this decline in prices had a limited impact on ENDESA’s margins thanks to the
Company’s focus on supplying the deregulated market, which acts as natural hedge
against the risk associated with generation activities and the fall in variable
costs, mostly CO
2
costs,
as we explain
above.
ENDESA
sold 54.6% of its output to end customers on the deregulated market in the
first
nine months of the year, a segment where sales prices increased by 19%. In
contrast, the rest of the sector sold only 19% of its output on the deregulated
market. This demonstrates that the Company’s supply strategy hedges better
against fluctuations in wholesale market prices on a comparative
basis.
We
would
also note that the negative impact of Royal Decree 3/2006 on results for
this
business was lower than in the same period last year. This year, the output
required to service distribution supply demands is not subsumed into bilateral
contracts; in 9M06 these contracts had a negative impact of Euro 254
million.
ENDESA
continues to apply the same accounting criteria in 2007 in terms of netting
the
value of emission rights from revenues. The fall in CO
2
prices
means a
deduction of only Euro 9 million, compared to Euro 121 million in the first
nine
months of 2006.
Meanwhile,
results in the gas supply business improved significantly in 9M07, contributing
gross profit of Euro 177 million. ENDESA commanded a share of 13.1% of the
deregulated gas market in 9M07.
Lastly,
revenues from the distribution business increased by Euro 202 million in
the
first nine months of the year. Recent regulatory changes, improving remuneration
for this activity drove this positive performance.
Key
operating highlights
Still
Spain’s leading electric utility
ENDESA
maintained its leading position in the Spanish electricity market in the
first
nine months of the year.
The
Company boasts a 35.5% market share in ordinary regime electricity generation,
a
43% share in distribution, 54% in sales to deregulated customers and 40.9%
in
total sales to end customers.
Competitive
advantages in generation relative to peers
In
Spain,
the Group produced a total of 69,246 GWh in 9M07. As total demand was 85,177
GWh, this output was sufficient to meet 81.3% of demand with its own
output.
Nuclear
and hydro powered energy accounted for 42.2% of the Company’s mainland
generation mix, compared to 35.5% for the rest of the sector. Furthermore,
the
load factor at its thermal facilities was also higher than the average of
its
competitors: 70% compared to 49%, respectively.
Growth
in
sales (3.6%) and customer base
Total
demand supplied by ENDESA, measured by its own sales, was 85,177 GWh in 9M07,
an
increase of 3.6% year-on-year.
At
30
September 2007, the number of customers supplied by the distribution business
was 11,398,954, an increase of 239,774 vs. 9M06. The number of customers
in the
deregulated market reached 1,147,755, growth of 5.8%.
In
terms
of customer services, ENDESA's retention rate for customers switching to
the
deregulated market is 107.7%, which implies that the net balance between
customers captured and customers lost is positive. This rate is higher than
that
of its peers and reflects strong loyalty to the Company.
Primary
energy emissions auctions
Under
Royal Decree 1634/2006, during the second and third quarters, ENDESA and
Iberdrola carried out two energy capacity auctions (VPPs) in Spain, auctioning
volume of 1.45 TWh and 2.50 TWh, respectively.
Progress
in the Capacity Plan
ENDESA
has
options for development of generation assets on the Spanish mainland for
an
equivalent of 15,600 MW in new, natural gas-fired CCGT plants, in addition
to
1,600 MW in new, highly critical, high-efficiency imported coal-fired generation
plants. Of the new CCGT capacity, 4,500 MW are projects which are on
course to begin operating in the short- and medium-term, on top of the 800
MW As
Pontes plant in Galicia, which began pilot operations in August.
Among
ENDESA’s projects underway, we would highlight the 800 MW Besós CCGT, which has
recently been granted environmental certification. Construction is due to
begin
at the beginning of next year. At the 1,200 MW Compostilla plant, 800 MW
is due
on stream in 2010. Meanwhile the 400 MW La Pereda plant, which stems from
an
agreement with HUNOSA, has obtained urban compatibility certification. We
would
also note the 400 MW Gerona facility.
The
remainder of the projects within the portfolio, at different stages of maturity,
and which have a high likelihood of being moved forward if circumstances
dictate, will be developed progressively depending on the market and
technological trends.
Additionally,
ENDESA has more than 1,000 MW of capacity in development at pumping stations
to
foster the efficient roll-out of renewable energies, in which, at the same
time,
it is developing new capacity of more than 2,500 MW in the next five
years.
Meanwhile,
ENDESA has 380 MW of projects under development for the co-combustion of
biomass
and coal at its in-service thermal stations, to further reduce CO
2
emissions.
Finally,
also within the Company’s Capacity Plan, ENDESA added the third converted As
Pontes group to the network in October under the umbrella of the project
to
convert the entire facility to imported coal.
July
1,
2007 tariff revision
On
30
June, the Spanish cabinet passed Royal Decree Law 871/2007 revising the
electricity tariff from 1 July 2007. It set an average increase of 1.81%
over
the previous tariff which had come into effect on 1 January 2007 for
non-domestic users.
The
Royal
Decree recognises, ex ante, a Euro 750 million deficit in revenues from
regulated activities between 1 July and 30 September 2007.
Currently
the Spanish energy watchdog, CNE, is auctioning the revenue deficit collection
rights recognised ex ante for the first and third quarter of 2007. It is
expected to conclude during this month. The funds received from this
auction will cover the FY07 deficit, so that it will not have to be financed
by
electric utilities.
Royal
Decree 871/2007 also sets the definitive price provided for in Royal Decree
Law
3/2006 at Euro 49.23/MWh for sales to the wholesale generation market carried
out between the introduction of said regulation and 31 December 2006 in
connection with matched purchases by a distributor belonging to the same
group
for sale to the regulated market. These transactions had been settled at
a
provisional tariff of Euro 42.35/MWh under Royal Decree Law 3/2006.
The
measures included in Royal Decree 3/2006 with the aim of reducing the
deficit in revenues from regulated activities include (i) determining the
price
to be applied to sales between generation and distribution companies belonging
to the same group under a bilateral contract – as mentioned above, this price
has been set at Euro 49.23/MWh, and (ii) the manner for accounting - netting
from revenues - for the internalisation by generators of cost of CO
2
emission
rights into
wholesale prices.
At
the
time of writing this report, the definitive legislation to enact the method
to
be used for calculating the revenue discount corresponding to the
internalisation of the cost of greenhouse emission gases, was still pending
development.
ENDESA
believes that the revenue estimate reported in the 2006 annual accounts
continues to reflect the best estimate of the amount to be finally settled.
Therefore, the Company has not amended recorded revenues as the implementing
legislation is still under development.
Once
this
legislation is finalised, any difference will be recorded in the set of accounts
subsequent to implementation. In any event, based on the contents of Royal
Decree Law 2/2006, management does not believe that the difference, if any,
will
have a material impact on ENDESA’s consolidated results.
The
tariff
deficit
Despite
the 4.3% increase in the electricity tariff in 2007, regulated revenues were
not
sufficient to fully cover system costs in 9M07. This led to an estimated
deficit
in revenues from regulated activities in the sector of Euro 694 million,
of
which Euro 307 million corresponds to ENDESA.
As
we have
mentioned above, Article 2 of Royal Decree 3/2006 states that the cost of
CO
2
rights
should be netted from regulated revenues via the internationalisation of
CO
2
rights
into the
sales price of energy matched in the wholesale market. The application of
this
concept reduces the estimated net tariff shortfall by Euro 9 million to Euro
298
million.
In
accordance with Royal Decree 1634/2006, this deficit will be recovered in
2007
by securitising the collection rights with third parties via the auction
held
this November.
Meanwhile
the 2006 deficit receivable was updated in 9M07. The change, which was based
on
information made available in the last provisional settlement made by the
National Energy Commission (CNE), does not affect the Company’s net
income.
Non-mainland
system regulation
On
2
October 2007, the General Directorate of Energy and Mining resolution which
determined the definitive specific costs to be remunerated in island and
non-mainland generation systems for 2001 to 2005 was approved. The published
figures do not represent significant changes with respect to Endesa’s estimates
previously accounted, although it represents the elimination of any uncertainty
related to these rights.
Revenues:
Euro 7,658 million
Revenues
at business in Spain and Portugal totalled Euro 7,658 million in 9M07, a
l-f-l
increase of 1% on 9M06, despite netting freely allocated CO
2
rights
from
revenues.
Sales
advanced 5.6% (l-f-l) to Euro 7,400 million vs. 9M06.
|
SPAIN
AND PORTUGAL SALES
|
|
|
Euro
million
|
|
|
|
9M07
|
9M06
|
Chg.
|
%
chg.
|
|
Mainland
generation under Ordinary Regime
|
2,988
|
3,175
|
(187)
|
(5.9)
|
|
Sales
to deregulated customers
|
1,768
|
1,334
|
434
|
32.5
|
|
Other
sales in the OMEL
|
1,220
|
1,841
|
(621)
|
(33.7)
|
|
Renewable/CHP
generation
|
187
|
195
|
(8)
|
(4.1)
|
|
Regulated
revenues from distribution
|
1,541
|
1,363
|
178
|
13.1
|
|
Non-mainland
generation and supply
|
1,645
|
1,614
|
31
|
1.9
|
|
Supply
to deregulated customers outside Spain
|
250
|
224
|
26
|
11.6
|
|
Gas
supply
|
519
|
458
|
61
|
13.3
|
|
Regulated
revenues from gas distribution
|
43
|
33
|
10
|
30.3
|
|
Other
sales and services rendered
|
227
|
173
|
54
|
31.2
|
|
TOTAL
|
7,400
|
7,235
|
165
|
2.3
|
Mainland
generation
Demand
for
electricity in the Spanish mainland system as a whole grew by 1.4% in 9M07.
Ordinary regime generation was 12.7% higher while renewable/CHP generation
fell
1.5%.
ENDESA’s
mainland electricity output was 58,153 GWh, up 1.5%.
Of
this
amount, 55,942 GWh corresponded to power generated under the ordinary regime,
a
rise of 0.7% vs. 9M06, outperforming this type of generation in Spain as
a
whole. 2,211 Gwh corresponded to renewables/CHP generation. This marked an
increase of 24.9%, which was much higher than the rise in this type of
generation in the overall system.
The
average pool price fell 38.2% to Euro 39.85/MWh in 9M07.
The
increase in mainland output and the higher prices charged to deregulated
customers were not enough to offset the lower pool price, triggering a 5.9%
decrease in mainland electricity generation revenues under the ordinary regime
vs. 9M06. However, this decline was offset by lower variable costs.
ENDESA’s
CHP/renewables generation
Renewable
and CHP companies fully consolidated by ENDESA generated 2,211 GWh in the
first
nine months, a year-on-year increase of 24.9%.
Revenues
from sales of renewable/CHP energy generated by consolidated companies totalled
Euro 187 million, down 4.1%.
This
decline was due to the cessation of renewable energy supply activities by
Endesa
Cogeneración y Renovables (ECyR) in May 2006 which entailed greater electricity
purchases and sales. Discounting this factor, sales figures would have remained
stable as the negative impact of the lower sales price was offset by higher
output.
Despite
this fall in revenues, gross profit at ENDESA's renewables/CHP generation
business rose 2.9% to Euro 175 million.
Supply
to
deregulated customers
ENDESA
had
1,147,755 customers on the deregulated market at the end of 9M07: 1,073,531
in
the Spanish mainland market, 71,502 in the non-mainland market and 2,722
in
deregulated European markets other than Spain.
ENDESA’s
sales to these customers as a whole rose 5.9% to 30,490 GWh. Of this amount,
27,225 GWh was sold to the Spanish deregulated market, an increase of 6.4%,
and
3,265 GWh to other deregulated European markets, growth of 1.3%.
Revenues
from sales to deregulated customers in Spain (excluding the tolls payable
to
Endesa Distribución) totalled Euro 1,883 million, a 30.8% increase on 9M06. Of
this amount, Euro 1,768 million corresponded to the mainland deregulated
market
and Euro 115 million to the non-mainland market.
Revenues
from supply to deregulated European markets other than Spain rose 11.6% to
Euro
250 million.
Lastly,
the average selling price to end customers rose 19% vs. 9M07 thanks to the
Company’s stringent and selective sales policy.
Distribution
ENDESA
distributed 88,187 GWh of electricity in the Spanish market in the first
half of
2007, a 1.6% increase on the same period of 2006.
Revenues
from regulated distribution activities totalled Euro 1,541 million, up 13.1%
on
9M06, due mainly to the increase in remuneration stipulated in the Royal
Decree
setting 2007 tariffs.
ENDESA
supplied 54,687 GWh of electricity to its regulated customers during 9M07,
2.3%
higher than the same period in 2006.
Non-mainland
generation
ENDESA’s
output in non-peninsular systems was 11,093 GWh in 9M07, up 1.6%.
Like-for-like
revenues were 18.6% higher, at Euro 1,645 million. Of this amount, Euro 1,520
million was accounted for by sales to regulated clients and Euro 115 million
to
regulated clients.
Gas
distribution and supply
ENDESA
sold a total of 23,090 GWh of natural gas in Spain in the first nine months,
24.2% more than in 9M06.
Of
this,
20,860 GWh were sold to customers on the deregulated market, an increase
of
23.6%, and 2,230 GWh to customers on the regulated market, 29.3%
higher.
The
23,090
GWh sold in both the regulated and deregulated markets, together with the
gas
consumed in ENDESA’s own generation plants, amount to a total of 36,526 GWh,
implying a market share of 12.6%.
Revenues
from gas sales in the deregulated market rose 13.3% to Euro 519 million in
9M07.
Topline growth boosted gross profit 85.5% higher to Euro 128
million.
Revenues
from regulated gas distribution totalled Euro 43 million, Euro 10 million
more
than the same period last year.
Other
operating revenues
Other
operating revenues in Spain and Portugal in 9M07 came to Euro 258 million,
Euro
317 million less than in 9M06.
This
item
includes only Euro 3 million corresponding to the 9M07 portion of CO
2
emission
rights
allocated to ENDESA within the scope of the Spanish National Allocation Plan
for
emissions (NAP), which are recorded under revenues.
This
figure is Euro 388 million lower than the figure recorded under revenues
in
9M06, due mainly to a strong fall in the market price for these rights. However,
this drop in revenues was offset by the lower expense recorded for use of
these
emission rights.
Operating
expenses
The
breakdown of operating expenses in the Spanish and Portuguese business
is:
|
OPERATING
EXPENSE IN SPAIN AND PORTUGAL
|
|
|
Euro
million
|
|
|
|
9M07
|
9M06
|
Change
|
%
chg.
|
|
Purchases
and services
|
3,085
|
3,471
|
(386)
|
(11.1)
|
|
Power
purchases
|
726
|
767
|
(41)
|
(5.3)
|
|
Fuel
consumption
|
1,667
|
1,695
|
(28)
|
(1.7)
|
|
Power
transmission expenses
|
393
|
272
|
121
|
44.5
|
|
Other
supplies and services
|
299
|
737
|
(438)
|
(59.4)
|
|
Personnel
expenses
|
827
|
758
|
69
|
9.1
|
|
Other
operating expenses
|
911
|
760
|
151
|
19.9
|
|
Depreciation
and amortisation
|
878
|
814
|
64
|
7.9
|
|
TOTAL
|
5,701
|
5,803
|
(102)
|
(1.8)
|
Power
purchases
Power
purchases in the period fell 5.3% to Euro 726 million.
This
fall
reflects the net impact of lower costs associated with operations in the
wholesale generation market as a result of the lower average pool price,
partially offset by higher gas purchases for supply to the deregulated
market.
Fuel
consumption
Fuel
consumption totalled Euro 1,667 million in 9M07, 1.7% less year-on-year due
to
efficient management of supply contracts against a backdrop of rising fuel
costs.
Other
supplies and services
Other
supplies and service expenses totalled Euro 299 million, some Euro 438 million
less than in 9M06.
Of
this
amount, Euro 388 million is due to lower value assigned to the freely allocated
emission rights which offset lower revenues under the same concept, as described
in “Other operating revenues”, and Euro 81 million correspond to the lower cost
recognised in connection with 2007 emissions not covered by the freely allocated
emission rights.
Personnel
expenses
Personnel
expenses amounted to Euro 827 million in 9M07, an increase of 9.1% vs. 9M06.
Excluding provisions for labour force restructuring costs, which totalled
Euro
112 millions in 9M07 and Euro 65 million in 9M06, these expenses increased
3.2%.
Net
interest expense: down 11.8% (like-for-like)
Net
financial losses in 9M07 stood at Euro 310 million, 12.9% lower than the
figure
reported in 9M06 on a like-for-like basis.
Of
this
amount, Euro 313 million corresponded to net interest expense, 11.8% less
(l-f-l) than in the same period last year, and Euro 3 million to exchange-rate
gains.
When
assessing financial results, the Euro 3,166 million financial asset
corresponding to the tariff deficit receivable and compensation for stranded
costs on non-mainland generation, both of which bear financial interest,
must be
considered.
Net
financial expenses in 9M07 include revenue of Euro 83 million corresponding
to
the higher interest rate applied to calculate the net present value, at 30
September, 2007, of commitments under workforce reduction programs existing
at
that date compared to the rate used to make this calculation at year end
2006.
The difference is due to higher market interest rates.
Net
financial debt in the Spanish and Portuguese business at 31 September, 2007
stood at Euro 12,548 million vs. Euro 12,548 million at year-end
2006.
Cash
flow
from operating activities: Euro 2,115 million
Cash
flow
from operations from the Spanish and Portuguese business totalled Euro 2,115
million in 9M07, a l-f-l increase of 20.3%.
Investment: Euro
1,841 million
In
9M07,
investments in Spain and Portugal totalled Euro 1,841 million, 6.7% higher
than
in the same period in 2006.
|
TOTAL
INVESTMENT IN SPAIN AND PORTUGAL
|
|
|
Euro
million
|
|
|
|
9M07
|
9M06
|
%
chg.
|
|
Capex
|
1,699
|
1,549
|
9.7
|
|
Intangible
|
51
|
71
|
(28.2)
|
|
Financial
|
91
|
105
|
(13.3)
|
|
TOTAL
INVESTMENT
|
1,841
|
1,725
|
6.7
|
|
92.3%
of total investment was capex, i.e., money spent on developing
or
enhancing electricity generation and distribution facilities. We
would
highlight the increase in investment at renewable/CHP
facilities.
|
|
CAPEX
IN SPAIN AND PORTUGAL
|
|
|
Euro
million
|
|
|
|
9M07
|
9M06
|
%
chg.
|
|
Generation
|
867
|
652
|
33.0
|
|
Ordinary
regime
|
617
|
507
|
21.7
|
|
Renewables/CHP
|
250
|
145
|
72.4
|
|
Distribution
|
810
|
869
|
(6.8)
|
|
Other
|
22
|
28
|
(21.4)
|
|
TOTAL
|
1,699
|
1,549
|
9.7
|
BUSINESS
IN EUROPE
Net
income
in Europe: Euro 287 million
Net
income
in Europe totalled Euro 287 million in the first nine months of 2007, down
5.8%
on the same period in the previous year (like-for-like).
Highlights
Gradual
pick-up in demand in second and third quarter s
During
9M07 the electricity business in Europe was affected by weak demand for
electricity in Italy and France largely due to warmer temperatures in both
countries during the first three months of the year.
However,
demand has picked up in both countries in recent months. Demand rebounded
1.6%
in Italy between April and September, offsetting the decline in the first
quarter, to leave demand flat year-on-year in 9M07 vs. 9M06.
Meanwhile,
recovery in demand in the third quarter left demand down 4.3% during the
first
nine months of the year. While a significant drop, this figure marks a
considerable improvement on the 10% and 6% declines recorded in the first
and
second quarters, respectively.
The
price
differential between France and Italy resulting from the sharp fall in prices
in
France prompted Italy to replace its own production with imports. As a result,
output fell 2% in Italy. On the other hand, the fall in production in
France (-1.9%) was narrower than the fall in demand (-4.3%), mitigated by
increased export activity.
As
a
result of the above, overall generation at ENDESA’s business in Europe totalled
23,888 GWh in 9M07, 9.7% less than in 9M06. Also, electricity sales fell
3% to
37,745 GWh.
Gross
profit and EBITDA in Europe declined 0.7% and 2.6%, respectively in 9M07.
In
Endesa Italia, production costs fell due to an improved mix, while CO
2
costs
were lower and
self-supply of green certificates was higher. On the other hand, at Endesa
France sales in the forward market were made at prices set in 2006 which
are
higher than 2007 prices while fixed costs were cut following the implementation
of Efficiency Improvement Plan.
|
BREAKDOWN
OF ENDESA’S OUTPUT AND SALES IN EUROPE
|
|
|
Output
(GWh)
|
|
Sales
(GWh)
|
|
|
|
9M07
|
9M06
|
%
chg.
|
9M07
|
9M06
|
%
chg.
|
|
Italy
|
17,999
|
19,420
|
(7.3)
|
24,014
|
25,025
|
(4)
|
|
France
|
4,859
|
5,857
|
(17.7)
|
12,701
|
12,722
|
(0.2)
|
|
Poland*
|
1,024
|
1,166
|
(8.2)
|
1,024
|
1,166
|
(12.2)
|
|
Greece
|
6
|
-
|
NA
|
6
|
-
|
NA
|
|
TOTAL
|
23,888
|
26,443
|
(9.7)
|
37,745
|
38,913
|
(3)
|
|
(*)
ENDESA is present in the generation business in Poland through
the
Bialystock CHP, which is controlled by
Snet.
|
ENDESA
enters the Greek market
On
27 June
ENDESA presented Endesa Hellas. This company is the result of a
strategic alliance signed in March between ENDESA and Mytilineos Holding,
S.A.
resulting in the largest independent operator in the Greek market with the
potential to expand into other markets in southeast Europe. ENDESA holds
a
50.01% stake in the company while the Mytilineos group holds
49.99%.
Mytilineos
contributed all its thermal and renewable energy assets in addition to the
licences it currently holds making Endesa Hellas the operator with the largest
order book of projects under construction and in development in the Greek
market
which should allow it to obtain a 10% market share by 2010.
Of
particular note are the 334 MW CHP plant due to come on stream shortly, the
430
MW CCGT currently under construction and other projects relating to a new
600 MW
coal fired plant as well as other renewable energy facilities with over 1,000
MW
of installed capacity. The company has also been awarded licences to build
another CCGT and coal-fired plant as well as 310 MW in trading
activities.
ENDESA
will contribute Euro 485 million, plus an additional amount of up to Euro
115
million, payable on the basis of the success of some of the wind farm projects
currently in the process of obtaining authorisation. On 31 July the first
asset
contribution by Mytilineos was successfully completed and Endesa Europa made
a
Euro 169 million payment.
Through
its holding in Endesa Hellas, which has already begun operations, ENDESA
has
acquired an important stronghold in one of Europe’s most attractive electricity
markets both strategically, given its growth prospects, and in terms of its
pricing structure and interconnections with Italy, Bulgaria, Macedonia and
Albania.
New
installations in Italy and France
During
the
first nine months of 2007, Endesa Europa continued construction as scheduled
on
the two 400 MW CCGTs at Scandale (Calabria) and successfully completed an
agreement with Gamesa for the acquisition of wind assets in
Italy. The two last companies to be included in this agreement,
acquired in February this year, own the construction and operation rights
for
the 54 MW Piano di Corda wind farm and the 58 MW Serra Pelata farm.
In
July
Endesa Europa acquired the 24 MW Alcamo wind farm in Sicily which is expected
to
be commissioned in 2010.
In
9M07
the Montecute (42 MW), Trapani (32 MW) and Poggi Alti (20 MW) wind farms
went on
stream. These completions bring total wind power in Italy to 152
MW.
Meanwhile,
in France, in the first nine months of the year Endesa France’s first wind farm
(Lehaucourt 10 MW) started up and construction of the Les Vents de Cernon
farm
commenced. The latter will have installed capacity of 18 MW and is expected
to
start operating in 2008.
Also,
on
12 July, Endesa France obtained the construction permit for a 430 MW CCGT
at the
Lucy site. With this authorisation, Endesa France now has the required permits
to construct four combined cycle plants with a total installed capacity of
2,580
MW.
We
should
also include the tender won to build the 10 MW Muzillac wind farm which will
bring the company’s total wind assets to 75 MW.
Lastly,
in
September Endesa France awarded construction of the two French CCGTs to be
built
on the Émile Huchet site owned by Endesa’s French subsidiary to Siemens.
Construction of these two facilities, which will have combined installed
capacity of 860 MW, entails investment of Euro 470 million.
Capacity
auctions
At
the end
of September Endesa Trading acquired 30 MW in the virtual generation capacity
auction carried out by E.ON in Germany, the first of its kind to be held
in that
country.
This
new
product will increase ENDESA’s flexibility in the supply of energy and service
of its customers in Germany, where the Group has no generation assets.
Furthermore, the new capacity will enable the Group to optimise management
of
all operations carried out by ENDESA at interconnections throughout
Europe.
Dividends
paid by Endesa Italia, Snet and Tahaddart
In
9M07
Endesa Italia paid shareholders Euro 216 million against 2006 earnings, of
which
Euro 173 million corresponded to Endesa Europa.
Snet
also
paid a dividend of Euro 33 million to its shareholders, of which Euro 21
million
corresponded to Endesa Europa.
Finally,
Tahaddart paid out Euro 9 million against 2006 earnings, of which Euro 3
million
corresponded to Endesa Europa.
EBITDA: Euro
867 million
ENDESA’s
business in Europe generated EBITDA of Euro 867 million in 9M07, a drop of
2.6%
vs. 9M06 and EBIT of Euro 638 million, down 7.9%.
|
EBITDA
& EBIT IN EUROPE
|
|
|
|
EBITDA (Euro
million)
|
EBIT
(Euro million)
|
|
|
9M07
|
9M06
|
%
chg.
|
9M07
|
9M06
|
%
chg.
|
|
Italy
|
718
|
746
|
(3.8)
|
565
|
627
|
(9.9)
|
|
Endesa
France
|
165
|
147
|
12.2
|
90
|
70
|
28.6
|
|
Trading
|
27
|
26
|
3.9
|
27
|
26
|
3.9
|
|
Holding
& others
|
(43)
|
(29)
|
(48.3)
|
(44)
|
(30)
|
(46.7)
|
|
TOTAL
|
867
|
890
|
(2.6)
|
638
|
693
|
(7.9)
|
High
margins in Italy
As
mentioned above, in 9M07 demand for electricity in Italy was virtually flat
year-over-year and there was a significant increase in imports in the north
of
the country due to a price differential with France.
These
factors, coupled with lower rainfall during the first nine months of the
year,
meant that the load factor at ENDESA’s plants in Italy fell. As a result,
electricity output fell 7.3% to 17,999 GWh. Furthermore, these two factors
triggered a significant fall in electricity prices on the wholesale market
and a
4% drop in sales in Italy to 24,014 GWh, which led to a 8.3% drop in revenues.
This was offset by a 12.2% reduction in supply and service costs due to
lower
fuel consumption and lower CO
2
costs
due to a sharp
drop in emission rights prices, which mitigated the impact on EBITDA, which
narrowed by 3.8%.
|
ENDESA
ITALIA KEY DATA
|
|
|
Euro
million
|
|
|
|
9M07
|
9M07
|
Change
|
%
chg.
|
|
Revenues
|
2,079
|
2,267
|
(188)
|
(8.3)
|
|
Gross
profit
|
844
|
861
|
(17)
|
(2)
|
|
EBITDA
|
718
|
746
|
(28)
|
(3.8)
|
|
EBIT
|
565
|
627
|
(62)
|
(9.9)
|
Earnings
higher at Endesa France
Despite
lower output, triggered by unfavourable weather conditions as in the case
of
Italy, Endesa France’s earnings grew in 9M07, largely due to lower fixed and
variable costs.
EBITDA
jumped 12.2% to Euro 165 million in 9M07 and EBIT by 28.6% to Euro 90
million.
|
ENDESA
FRANCE KEY DATA
|
|
|
Euro
million
|
|
|
|
9M07
|
9M06
|
Change
|
%
chg
|
|
Revenues
|
786
|
801
|
(15)
|
(1.9)
|
|
Gross
profit
|
257
|
248
|
9
|
3.6
|
|
EBITDA
|
165
|
147
|
18
|
12.2
|
|
EBIT
|
90
|
70
|
20
|
28.6
|
Revenues
narrowed 1.9% to Euro 786 million in the first nine months of the year, due
to a
17.0% fall in electricity generation (the utility’s output fell by more than
overall system generation; production at the company in France is measured
by
mid and peak hours) and to lower wholesale prices. However, as we have seen
above, this fall was partially offset by a high percentage of sales in the
forward market at favourable prices agreed the year before.
In
Poland,
output at Bialystock also fell (-12.2%) due to mild weather although the
fall in
revenues was mitigated by higher tariffs.
Variable
costs fell 4.3% to Euro 24 million in 9M07 largely due to lower output. Fixed
costs fell 8.9% as a result of the progress made on the company’s efficiency
plan.
Lower
fixed and variable costs allowed the company to fully offset the fall in
revenues, leading to a 12.2% increase in EBITDA and a 28.6% rise in EBIT
to Euro
165 million and Euro 90 million, respectively.
European
debt: Euro 1,716 million
Net
debt
at ENDESA’s electricity business in Europe stood at Euro 1,716 million at the
close of 9M07, an increase of Euro 42 million, or 2.5%, over the debt balance
at
year-end 2006.
Net
interest expense amounted to Euro 58 million in 9M07, Euro 22 million more
than
in 9M06.
We
would
recall that in 2H06 the European business increased its debt to finance capex,
leading to an increase in interest expense.
Cash
flow
from operating activities: Euro 630 million
ENDESA’s
business in Europe generated Euro 630 million of cash in 9M07, an increase
of
18.6% with respect to 9M06.
Investment: Euro
362 million
Investment
in this business area totalled Euro 362 million in 9M07. Of this amount,
Euro
320 million was capex (Euro 165 million at Endesa Italy, Euro 109 million
at
Endesa France and Euro 46 million at Endesa Hellas).
Financial
investment totalled Euro 37 million and included the acquisition of Serra
Pelata
(Euro 14 million), Piano di Corda (Euro 8 million) and Merwind (Euro 8 million)
wind farms.
BUSINESS
IN LATIN AMERICA
Net
income
in Latin America: Euro 302 million
In
9M07
net income at ENDESA’s Latin American businesses totalled Euro 302 million, an
increase of 1% on the same period the previous year (l-f-l).
Operating
momentum was strong, as reflected by the performance of EBITDA and EBIT.
EBITDA
was Euro 1,781 million, up 7.1% year-on-year and EBIT was Euro 1,376 million,
growth of 5.5%. Measured in local currency, EBITDA rose 9.3% and EBIT
7.6%.
We
would
point out that these increases occurred despite a challenging operating
environment marked by lower rainfall and gas supply issues.
Highlights
Lower
output; higher sales
The
continued positive macroeconomic environment in the countries where ENDESA
operates led to sharp increases in demand during 9M07, especially in Peru
(10.5%), Argentina (6.1%) and Chile (5.3%).
As
a
result, total distribution sales at these companies rose 6.4% to 45,943 GWh,
with Argentina (+8.6%), Peru (+7.3%) and Colombia (+7.0%) performing
particularly well.
During
the
third quarter the generation business was affected by gas supply problems
and
also lower rainfall in Chile and Argentina. This led to a fall in hydro output
and an increase in liquid fuel output.
ENDESA
produced 42,869 GWh of power in Latin America through September, 4.5% less
than
in 9M06. Growth in output in Peru (+16.8%) due to the commissioning of the
Ventanilla CCGTs was not enough to offset lower output elsewhere, mainly
due to
lower rainfall and gas supply shortages.
|
OUTPUT
AND SALES IN THE LATIN AMERICAN BUSINESS
|
|
|
Output
(GWh)
|
Sales
(GWh)
|
|
|
9M07
|
%
chg.
vs.
9M06
|
9M07
|
%
chg.
vs.
9M06
|
|
Chile
|
13,992
|
(4.8)
|
9,695
|
5
|
|
Argentina
|
12,501
|
(7)
|
11,973
|
8.6
|
|
Peru
|
6,156
|
16.8
|
3,868
|
7.3
|
|
Colombia
|
8,778
|
(8.3)
|
8,474
|
7
|
|
Brazil
|
2,870
|
(15.1)
|
11,933
|
4.7
|
|
TOTAL
|
44,297
|
(4.5)
|
45,943
|
6.4
|
Improvement
in generation, transmission and distribution margins
Lower
rainfall in the region during second and third quarters, together with gas
supply issues, led to higher load factors at the Group’s thermal plants and
greater use of traditionally more expensive liquid fuels. Despite these factors,
ENDESA’s strong generation mix in Latin America led to a 10% increase in the
unit margin to USD27.6/MWh during 9M07.
Generation
margins, measured in dollars, rose sharply in Colombia (+28.2%) due to higher
average sales prices as well as higher capacity remuneration as a result
of the
application of the new reliability charge. Meanwhile, in Brazil margins rose
28%
due to a higher average sales price and an improved generation mix while
in
Argentina the 12.5% increase was due higher spot prices. In Chile, increase
in
sales prices also drove a 1.3% increase in the average margin despite a worse
production mix shaped by lower hydro output and higher thermal output using
diesel. In Peru, production mix, with a larger thermal component, and lower
end
customer sales prices triggered a 7.8% reduction in the average margin vs.
9M06.
In
the
distribution business, rising demand, application of a new tariff regime
in
Argentina and operating efficiency improvements all led to an improvement
in
operating indicators. The unit margin stood at $39.9/MWh distributed
($38.6/MWh eliminating the retroactive application of the Argentine tariff),
an
increase of 6.9% vs. 9M06, after factoring in the retroactive application
of the
Argentine tariff hike. This overall increase came despite a 4.8% drop in
the
unit margin in Chile on the back of the new subtransmission tariffs at
Chilectra, although this effect was offset by higher sales.
Distribution
losses: 11.3%
Energy
distribution losses were 11.3% in 9M07, in line with the same period in 2006.
We
would highlight the 0.2 percentage point improvement in both Brazil and Colombia
due to the development and application of highly innovative and technical
initiatives to fight against fraud.
New
capacity development
In
9M07
Endesa Chile continued with construction of the San Isidro II (Chile) CCGT
power
plant which will ultimately have installed capacity of 379 MW. In 2Q07, within
the established time frame, the open cycle of this plant came on stream with
capacity of 249 MW. This capacity is 29 MW greater than initially projected
thanks to technical improvements introduced during project
development.
The
company also continued work on construction of the 32 MW Palmucho hydro
plant.
Work
also
continued on the Aysén project which entails the construction, starting in 2008,
of five hydro plants with total installed capacity of 2,750 MW, the last
of
which is currently estimated to come on stream towards the end of 2021. Endesa
Chile and Colbún hold 51% and 49% stakes, respectively, in this
project.
Once
all
pertinent permits were obtained in 2007, the construction tenders were awarded
for two new power stations in Chile: the Bocamina II coal-fired plant which
will
have an estimated installed capacity of 345 MW and is due to begin operations
in
2010 and the 250 MW open cycle gas TG Quinero gas plant, expected to be
commissioned in 2009.
Also,
in
May the necessary commercial agreements were signed to give the definitive
boost
to the Quintero (Chile) liquefied natural gas plant, in which Endesa Chile
will
hold a 20% stake. Its partners in the project are British Gas, Metrogas and
ENAP.
Also,
Endesa Eco continued work on construction of the Canela wind farm the first
phase of which will have capacity of 9 MW (out of a total of 18 MW) and
Ojos de Agua mini hydro station, also with capacity of 9 MW.
Lastly,
in
Colombia the improvements introduced to the five turbines at the El Guavio
hydro
plant boosted installed capacity by 50 MW. Also in Colombia, work on the
second
unit of the Termocartagena plant is slated to commence in the fourth quarter,
adding an additional 68 MW to the plant’s current 142 MW capacity.
Regulatory
update
In
Argentina, Edesur began implementing the first distribution tariff increase
since the economic crisis of 2001 following publication of the corresponding
resolution by the electricity sector regulator (ENRE).
The
application of this increase, which is effective from November 2005, will
enable
Edesur to regain appropriate levels of profitability and make necessary
investments to meet increasing demand in its market and continue to improve
its
service quality while simultaneously enhancing service quality.
Meanwhile,
a resolution by the sector watchdog published on 18 July granted an extension
of
Edesur’s concession contract until 2013. The 95 year concession agreement is
broken down into several management periods. In this connection, the
aforementioned ENRE Resolution establishes that the initial management period
“will be considered to have concluded upon termination of the five-year tariff
period which will commence when the Integral Tariff Revision set forth in
the
concession agreement, signed by the state and EDESUR, comes into force”. This
tariff revision comes into force on 1 February 2008, so that if the deadlines
established by the Argentine government are met, EDESUR’s initial management
period will end on 1 February 2013.
Also
in
Argentina, in light of the existing deficit, the Secretary of Energy proposed
an
extension of Foninvemem financing during 2007. On 15 September, ENDESA’s
affiliates subscribed to the official tender (entailing a 50% withholding
in
2007), without committing to increasing their participation in the
financing.
In
Brazil
on 2 April Coelce’s tariffs began to factor in the tariff overhaul which is
carried out every four years, entailing on this occasion a 6.35% reduction
in
the VAD. This is only provisional and the definitive tariff is due to be
set in
2008 once ANEEL outlines sets prescribes the calculation methodology for
all of
Brazil’s distributors.
Lastly,
the node price report for the April-October half year was published in Chile.
The price increased by 6% over the preceding 6-month period to
USD73.3/MWh.
In
addition, prevailing market conditions in Chile have subsequently triggered
two
further increases to node prices in the Chilean Central Interconnection System:
in July the price was raised to USD80.1/MWh (+9.3%) and in September to
USD89.52/MWh (+11.8%). The latest tariff increase is applicable from 16
September until the next regularly scheduled tariff setting in November.
As a
result, its positive impact on revenues will be reflected in the last quarter
of
the year. Further, the definitive node price to be applicable from November
through March 2008 has been set at USD104.05/MWh, 16.2% higher than prevailing
prices.
Optimisation
of ownership structure
In
9M07
ENDESA completed the organisational restructuring underway in
Colombia.
In
December 2006 the boards of Emgesa and Betania in Colombia approved the merger
of the two utilities. This merger, effective since 1 September 2007, has
given
rise to the largest generator in Colombia, with installed capacity of 2,789
MW.
Gas
Atacama
Gas
Atacama’s financial situation was seriously affected by the lack of availability
of gas from Argentina. ENDESA holds a 18.2% stake in this company via
its 50% stake in Endesa Chile.
At
the
same time, CMS, holder of 50% of Gas Atacama, decided to sell its stake along
with the loans granted to the company. Endesa Chile exercised its pre-emptive
acquisition rights and agreed to simultaneously sell both the stake and the
related loans to Southern Cross for the same amount.
Gas
Atacama has signed various framework agreements and endorsements to change
electricity supply contracts to more advantageous ones which will improve
its
operating and financial situation.
The
agreements signed by Gas Atacama were stipulated upon the exercise by Endesa
Chile of its pre-emptive acquisition right over CMS’s stake in and loans to Gas
Atacama and their subsequent sale to Southern Cross, as indeed
occurred.
On
14
September, Law 20,220 was published in the Official Gazette establishing
the
rules applicable in the event of bankruptcy of a generator or early resolution
of power supply contracts. In the event of a favourable ruling in the
arbitration proceedings filed together with Emel, this legislation means
that
Gas Atacama would have to continue to supply on current conditions for the
next
18 months.
Given
the
current situation, the Group carried out an impairment test at September
30,
2007, taking into account the value of the above-mentioned agreements. The
test
results suggest that a value adjustment is not necessary.
EBITDA:
up
7.1%
EBITDA
in
the Latin American business totalled Euro 1,781 million in 9M07, a 7.1% increase
year-on-year. EBIT rose 5.5% to Euro 1,376 million.
|
EBITDA
& EBIT IN LATIN AMERICA
|
|
|
EBITDA (Euro
million)
|
EBIT
(€ m)
|
|
|
9M07
|
9M06
|
%
chg.
|
9M07
|
9M06
|
%
chg.
|
|
Generation
and transmission
|
920
|
898
|
2.4
|
701
|
709
|
(1.1)
|
|
Distribution
|
924
|
815
|
13.4
|
744
|
651
|
14.3
|
|
Other
|
(63)
|
(50)
|
NA
|
(69)
|
(56)
|
NA
|
|
TOTAL
|
1,781
|
1,663
|
7.1
|
1,376
|
1,304
|
5.5
|
Measured
in local currency, EBITDA rose 9.3% and EBIT 7.6%.
The
table
below depicts the breakdown of EBITDA and EBIT of ENDESA’s fully consolidated
subsidiaries by business line and country in 9M07:
|
BREAKDOWN
OF EBITDA AND EBIT IN LATAM BY BUSINESS LINE AND
COUNTRY
|
|
Generation
and transmission
|
|
|
EBITDA (Euro
million)
|
EBIT
(Euro million)
|
|
|
9M07
|
9M06
|
%
chg.
|
9M07
|
9M06
|
%
chg.
|
|
Chile
|
366
|
435
|
(15.9)
|
280
|
362
|
(22.7)
|
|
Colombia
|
191
|
168
|
13.7
|
155
|
135
|
14.8
|
|
Brazil
- Generation
|
125
|
92
|
35.9
|
112
|
78
|
43.6
|
|
Peru
|
113
|
111
|
1.8
|
77
|
80
|
(3.8)
|
|
Argentina
- Generation
|
89
|
96
|
(7.3)
|
55
|
73
|
(24.7)
|
|
TOTAL
Generation
|
|
|
|
|
|
|
|
Interconnection
Brazil-Argent.
|
36
|
(4)
|
NA
|
22
|
(19)
|
NA
|
|
TOTAL
Generation and transmission
|
920
|
898
|
2.4
|
701
|
709
|
(1.1)
|
|
Distribution
|
|
|
EBITDA (Euro
million)
|
EBIT
(€ m)
|
|
|
9M07
|
9M06
|
%
chg.
|
9M07
|
9M06
|
%
chg.
|
|
Chile
|
144
|
160
|
(10)
|
125
|
142
|
(12)
|
|
Colombia
|
218
|
213
|
2.3
|
164
|
165
|
(0.6)
|
|
Brazil
|
389
|
344
|
13.1
|
321
|
289
|
11.1
|
|
Peru
|
67
|
63
|
6.3
|
45
|
40
|
12.5
|
|
Argentina
|
106
|
35
|
202.9
|
89
|
15
|
493.3
|
|
TOTAL
Distribution
|
924
|
815
|
13.4
|
744
|
651
|
14.3
|
Generation
and transmission
Chile
Output
in
Chile was 13,992 GWh in 9M07, down 4.8%. Continued weak rainfall and low
reservoir levels in Chile led to lower hydro powered output. This was offset
by
higher thermal fuelled generation, resulting in a significant increase in
generation costs. Fuel costs rose 305.6% while power purchases jumped
81.5%.
As
a
result, EBITDA fell 15.9% in 9M07 to Euro 366 million while EBIT dropped
22.7%
to Euro 280 million compared to 9M06.
Colombia
Both
generation EBITDA and EBIT in Colombia rose significantly despite being affected
by the corporation asset tax levied at 31 December 2006 as part of a tax
reform,
which totalled Euro 18 million.
This
positive performance was due to higher capacity payments at Emgesa following
introduction of the new reliability charge and higher sales prices as a result
of the change in the generation mix (lower hydro).
Consequently,
EBITDA rose 13.7% to Euro 191 million while EBIT totalled Euro 155 million
(14.8%).
Brazil
-
Generation
ENDESA’s
subsidiaries in Brazil generated 2,870 GWh in 9M07, 15.1% less than in 9M06.
This drop reflects lower output at the Fortaleza station, as a result of
gas
supply problems, and lower production at Cachoeira, due to lower rainfall.
Lower
thermal generation was offset by higher purchases on the spot market at lower
prices to meet contractual electricity supply obligations. Lower hydro output
was offset by higher sales prices to deregulated customers. These factors
combined triggered a 28% jump in unit margins.
Consequently,
EBITDA rose 35.9% to Euro 125 million while EBIT increased 43.6% to Euro
112
million.
Peru
ENDESA’s
subsidiaries in Peru generated total output in 9M07 of 6,156 GWh, 16.8% more
than in 9M06.
This
growth was due to the company’s higher thermal and hydro output resulting from
incorporation of the gas units of the 142 MW Ventanilla CCGT and the increased
contribution of the Piura power station, which was off stream for two and
a half
months last year.
However,
the increase in sales (7.2%) failed to fully offset the 7.8% fall in sale
unit
margins as a result of lower spot prices, the effect on costs of higher thermal
powered output and higher energy purchases. In all, EBITDA rose 1.8% to Euro
113
million while EBIT fell 3.8% to Euro 77 million.
Argentina
ENDESA’s
subsidiaries in Argentina generated total output in 9M07 of 12,501 GWh, 7%
less
year-on-year, largely due to lower hydro output. However, higher sales prices
drove revenues 33.1% higher.
Low
rainfall and ongoing gas supply difficulties continued to trigger increases
in
fuel costs due to the need to generate power using liquid fuels and higher
prices were not sufficient to offset spiralling costs. EBITDA fell 7.3% to
Euro
89 million in 9M07, while EBIT fell 24.7% on 9M06 to Euro 55
million.
Interconnection
between Argentina and Brazil
Given
the
problems in exporting electricity from Argentina to Brazil arising from the
gas
supply issues affecting use of the interconnection line, Cien, the line
operator, is in the process of changing its business model so that it becomes
profitable again.
As
part of
this new strategic approach, at the beginning of June the company signed
an
agreement with CAMMESA to export up to 700 MW of energy to Argentina between
June and September 2007 in exchange for a fixed toll of USD5 million/month
plus
a variable toll of USD5.5/MWh depending on the energy transmitted.
This
strategy has enabled use of the transmission line to carry electricity from
Brazil to Argentina, charging the corresponding toll.
As
a
result, EBITDA at the interconnection totalled Euro 36 million in 9M07, Euro
40
million more than in 9M06. EBIT amounted to Euro 22 million, some Euro 41
million more than during the first nine months of 2006.
Distribution
Chile
Sales
in
Chile rose 3.9% largely due to the 5% increase in electricity sold.
However,
this growth did not offset the 4.8% drop in unit margins as a result of the
application of the new subtransmission tariff implemented during the period
which triggered a 10% drop in EBITDA to Euro 144 million and a 12% decline
in
EBIT to Euro 125 million.
Colombia
Both
EBITDA and EBIT at the Colombian distribution business were affected by the
one-off impact of the above-mentioned tax levied on corporate assets at 31
December 2006, which totalled Euro 11 million.
Nevertheless,
the 7% jump in sales volume drove EBITDA 2.3% higher to Euro 218 million.
EBIT
amounted to Euro 164 million, Euro 1 million lower than in 9M06.
Brazil
The
increase in sales volume in Brazil (up 4.7%), coupled with a significant
decline
in energy losses and higher margins led to increases in EBITDA and EBIT of
13.1%
and 11.1%, respectively, to Euro 389 million and Euro 321 million.
Peru
EBITDA
from distribution in Peru came to Euro 67 million in 9M07, growth of 6.3%,
largely due higher sales (up 7.3%).
Meanwhile,
EBIT rose 12.5% to Euro 45 million.
Argentina
Sales
at
the Argentine distribution business increased by 33.9% as a result of a
significant increase in distribution activity (volumes up 8.6%) and the booking
of Euro 40 million in 1Q07 in connection with the tariff increase approved
retroactively from November 2005. This was applied following publication
of the
corresponding resolution by ENRE, the sector regulator.
This
led
to a 202.9% increase in EBITDA to Euro 106 million, and a 493.3% rise in
EBIT to
Euro 89 million.
Net
financial losses: Euro 347 million
ENDESA’s
Latin American business generated net financial losses of Euro 347 million
in
9M07, Euro 12 million less than in 9M06.
The
business reported net exchange losses of Euro 12 million compared to net
gains
of Euro 15 million in 9M06.
Net
interest expense was Euro 335 million, down 10.4% or Euro 39
million.
Net
debt
at ENDESA’s Latin American business stood at Euro 5,747 million at 30 September,
2007, an increase of Euro 129 since the start of the year.
Rating
upgrade
On
3 July,
the rating agency Standard & Poor´s upgraded its rating for Enersis and
Endesa Chile by one notch from BBB- to BBB, both with a stable
outlook.
These
new
ratings reflect the improved financial profile of both companies and the
agency’s expectations for a benign macroeconomic backdrop in Latin
America.
Cash
flow
from operating activities: +38.0%
Cash
flow
generated by ENDESA’s business in Latin America totalled Euro 1,257 million
euros in 9M07, an increase of 38% with respect to the same period in
2006.
Cash
returns: USD 375 million
In
May
Enersis paid a final dividend against 2006 results representing an income
of USD
184 million for Endesa Internacional. This dividend made a significant
contribution to total cash returns from ENDESA’s Latin American business in 9M07
which amounted to USD375 million.
This,
coupled with the USD561 million received in 2005 and 2006, brings total returns
between since 2005 to USD561 million.
Investment: Euro
720 million
Investment
in Latin America totalled Euro 720 million, of which Euro 534 million was
capex.
The
breakdown of capex is as follows:
|
CAPITAL
EXPENDITURE IN LATIN AMERICA
|
|
|
Euro
million
|
|
|
|
9M07
|
9M06
|
%
chg.
|
|
Generation
|
171
|
240
|
(28.9)
|
|
Distribution
and Transmission
|
295
|
348
|
(15.2)
|
|
Other
|
68
|
13
|
423.6
|
|
TOTAL
|
534
|
601
|
(11.1)
|
The
financial investments undertaken in the period include acquisitions by Endesa
Chile in February and March of third-party stakes in Costanera (5.5%),
Hidroinvest (25%) and Hidroeléctrica El Chocón (2.48%), entailing aggregate
investment of Euro 46 million.
STATISTICAL
APPENDIX
KEY
FIGURES
|
Electricity
Generation Output (GWh)
|
|
9M07
|
|
|
9M06
|
|
|
%
chg.
|
|
|
Business
in Spain and Portugal
|
|
|
69,246
|
|
|
|
68,222
|
|
|
|
1.5
|
|
|
Business
in Europe
|
|
|
23,888
|
|
|
|
26,443
|
|
|
|
(9.7
|
)
|
|
Business
in Latin America
|
|
|
44,297
|
|
|
|
46,364
|
|
|
|
(4.5
|
)
|
|
TOTAL
|
|
|
137,431
|
|
|
|
141,029
|
|
|
|
(2.6
|
)
|
|
Electricity
Generation Output in Spain&Portugal(GWh)
|
|
9M07
|
|
|
9M06
|
|
|
%
chg,
|
|
|
Mainland
|
|
|
58,153
|
|
|
|
57,303
|
|
|
|
1.5
|
|
|
Nuclear
|
|
|
17,374
|
|
|
|
17,806
|
|
|
|
(2.4
|
)
|
|
Coal
|
|
|
26,320
|
|
|
|
25,700
|
|
|
|
2.4
|
|
|
Hydro
|
|
|
6,227
|
|
|
|
5,541
|
|
|
|
12.4
|
|
|
Combined
cycle (CCGT)
|
|
|
5,709
|
|
|
|
5,605
|
|
|
|
1.9
|
|
|
Fuel
oil
|
|
|
312
|
|
|
|
881
|
|
|
|
(64.6
|
)
|
|
Renewables/CHP
|
|
|
2,211
|
|
|
|
1,770
|
|
|
|
24.9
|
|
|
Non-mainland
|
|
|
11,093
|
|
|
|
10,919
|
|
|
|
1.6
|
|
|
TOTAL
|
|
|
69,246
|
|
|
|
68,222
|
|
|
|
1.5
|
|
|
Electricity
Generation Output in Europe (GWh)
|
|
9M07
|
|
|
9M06
|
|
|
%
chg,
|
|
|
Coal
|
|
|
10,420
|
|
|
|
11,806
|
|
|
|
(11.7
|
)
|
|
Hydro
|
|
|
1,086
|
|
|
|
1,817
|
|
|
|
(40.2
|
)
|
|
Combined
cycle (CCGT)
|
|
|
10,097
|
|
|
|
9,084
|
|
|
|
11.2
|
|
|
Fuel
oil
|
|
|
2,135
|
|
|
|
3,714
|
|
|
|
(42.5
|
)
|
|
Wind
|
|
|
150
|
|
|
|
22
|
|
|
|
581.8
|
|
|
TOTAL
|
|
|
23,888
|
|
|
|
26,443
|
|
|
|
(9.7
|
)
|
|
Electricity
Generation Output in Latin America (GWh)
|
|
9M07
|
|
|
9M06
|
|
|
%
chg,
|
|
|
Chile
|
|
|
13,992
|
|
|
|
14,693
|
|
|
|
(4.8
|
)
|
|
Argentina
|
|
|
12,501
|
|
|
|
13,444
|
|
|
|
(7
|
)
|
|
Peru
|
|
|
6,156
|
|
|
|
5,271
|
|
|
|
16.8
|
|
|
Colombia
|
|
|
8,778
|
|
|
|
9,577
|
|
|
|
(8.3
|
)
|
|
Brazil
|
|
|
2,870
|
|
|
|
3,379
|
|
|
|
(15.1
|
)
|
|
TOTAL
|
|
|
44,297
|
|
|
|
46,364
|
|
|
|
(4.5
|
)
|
|
Electricity
sales (GWh)
|
|
9M07
|
|
|
9M06
|
|
|
%
chg,
|
|
|
Business
in Spain and Portugal
|
|
|
85,177
|
|
|
|
82,236
|
|
|
|
3.6
|
|
|
Regulated
market
|
|
|
54,687
|
|
|
|
53,434
|
|
|
|
2.3
|
|
|
Deregulated
market
|
|
|
30,490
|
|
|
|
28,802
|
|
|
|
5.9
|
|
|
Business
in Europe
|
|
|
37,745
|
|
|
|
38,913
|
|
|
|
(3
|
)
|
|
Endesa
Italia
|
|
|
22,528
|
|
|
|
24,914
|
|
|
|
(9.6
|
)
|
|
Rest
of Italy
|
|
|
1,486
|
|
|
|
111
|
|
|
|
1,238.7
|
|
|
Endesa
France
|
|
|
13,725
|
|
|
|
13,888
|
|
|
|
(1.2
|
)
|
|
Endesa
Hellas
|
|
|
6
|
|
|
|
--
|
|
|
NA
|
|
|
Business
in Latin America
|
|
|
45,943
|
|
|
|
43,175
|
|
|
|
6.4
|
|
|
Chile
|
|
|
9,695
|
|
|
|
9,235
|
|
|
|
5
|
|
|
Argentina
|
|
|
11,973
|
|
|
|
11,022
|
|
|
|
8.6
|
|
|
Peru
|
|
|
3,868
|
|
|
|
3,605
|
|
|
|
7.3
|
|
|
Colombia
|
|
|
8,474
|
|
|
|
7,917
|
|
|
|
7
|
|
|
Brazil
|
|
|
11,933
|
|
|
|
11,396
|
|
|
|
4.7
|
|
|
TOTAL
|
|
|
168,865
|
|
|
|
164,318
|
|
|
|
2.8
|
|
|
Gas
sales (GWh)
|
|
9M07
|
|
|
9M06
|
|
|
%
chg,
|
|
|
Regulated
market
|
|
|
2,230
|
|
|
|
1,725
|
|
|
|
29.3
|
|
|
Deregulated
market
|
|
|
20,860
|
|
|
|
16,871
|
|
|
|
23.6
|
|
|
TOTAL
|
|
|
23,090
|
|
|
|
18,596
|
|
|
|
24.2
|
|
|
Workforce
|
|
30/09/07
|
|
|
30/09/06
|
|
|
%
chg,
|
|
|
Business
in Spain and Portugal
|
|
|
12,746
|
|
|
|
12,700
|
|
|
|
0.4
|
|
|
Business
in Europe
|
|
|
2,161
|
|
|
|
2,154
|
|
|
|
0.3
|
|
|
Business
in Latin America
|
|
|
12,188
|
|
|
|
11,964
|
|
|
|
1.9
|
|
|
TOTAL
|
|
|
27,095
|
|
|
|
26,818
|
|
|
|
1
|
|
FINANCIAL
DATA
|
Key
figures
|
|
9M07
|
|
|
9M07
|
|
|
%
chg,
|
|
|
EPS
(Euro)
|
|
|
1.87
|
|
|
|
2.37
|
|
|
|
(21.1
|
)
|
|
CFPS
(Euro)
|
|
|
3.78
|
|
|
|
3.13
|
|
|
|
20.6
|
|
|
BVPS
(Euro)
|
|
|
11.24
|
|
|
|
10.80
|
|
|
|
4.1
|
|
|
Net
financial debt (Euro million)
|
|
30/09/07
|
|
|
31/12/06
|
|
|
%
chg,
|
|
|
Business
in Spain and Portugal
|
|
|
13,720
|
|
|
|
12,548
|
|
|
|
9.3
|
|
|
Business
in Europe
|
|
|
1,716
|
|
|
|
1,674
|
|
|
|
2.5
|
|
|
Endesa
Italia
|
|
|
596
|
|
|
|
748
|
|
|
|
(20.3
|
)
|
|
Rest
of Europe
|
|
|
1,120
|
|
|
|
926
|
|
|
|
21
|
|
|
Business
in Latin America
|
|
|
5,747
|
|
|
|
5,618
|
|
|
|
2.3
|
|
|
Enersis
|
|
|
5,080
|
|
|
|
4,749
|
|
|
|
7
|
|
|
Other
|
|
|
667
|
|
|
|
869
|
|
|
|
(23.2
|
)
|
|
TOTAL
|
|
|
21,183
|
|
|
|
19,840
|
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
leverage (%)
|
|
|
124.0
|
|
|
|
124.5
|
|
|
|
-
|
|
|
Net
debt/operating cash flow (times)
|
|
|
2.8
|
|
|
|
2.8
|
|
|
|
-
|
|
|
Interest
coverage by operating cash flow (times)
|
|
|
7.7
|
|
|
|
7.4
|
|
|
|
-
|
|
|
Ratings
(15/11/07)
|
Long
term
|
Short
term
|
Outlook
|
|
Standard
& Poor’s
|
A
|
A
-1
|
U/R
(-)
|
|
Moody’s
|
A3
|
P-2
|
U/R
(-)
|
|
Fitch
|
A
|
F2
|
Negative
|
|
ENDESA’s
main fixed/income issues
|
|
Spread
over IRS (bp)
|
|
|
|
|
30/09/07
|
|
|
31/12/06
|
|
|
5.2Y
GBP 400M 6.125% Mat. September 2012
|
|
|
48
|
|
|
|
25
|
|
|
5.97Y
Euro 700M 5.375% Mat. Feb 2013
|
|
|
49
|
|
|
|
24
|
|
|
Stock
market data
|
|
28/09/07
|
|
|
29/12/06
|
|
|
%
chg.
|
|
|
Market
cap (Euro million)
|
|
|
42,445
|
|
|
|
37,935
|
|
|
|
11.9
|
|
|
Number
of shares outstanding
|
|
|
1,058,752,117
|
|
|
|
1,058,752,117
|
|
|
//
|
|
|
Nominal
share value (Euro)
|
|
|
1.2
|
|
|
|
1.2
|
|
|
//
|
|
|
Stock
market data
|
|
9M07
|
|
|
9M06
|
|
|
%
chg,
|
|
|
Trading
volumes (shares)
|
|
|
|
|
Madrid
stock exchange
|
|
|
2,555,772,226
|
|
|
|
2,327,950,930
|
|
|
|
9.8
|
|
|
NYSE
|
|
|
18,650,804
|
|
|
|
19,554,600
|
|
|
|
(4.6
|
)
|
|
Average
daily trading volume (shares)
|
|
|
|
|
Madrid
stock exchange
|
|
|
13,451,433
|
|
|
|
12,188,225
|
|
|
|
10.4
|
|
|
NYSE
|
|
|
100,273
|
|
|
|
104,014
|
|
|
|
(3.6
|
)
|
|
Share
price
|
|
9M07
high
|
|
|
9M07
low
|
|
|
28/09/07
|
|
|
29/12/06
|
|
|
Madrid
stock exchange (Euro)
|
|
|
40.64
|
|
|
|
35.21
|
|
|
|
40.09
|
|
|
|
35.83
|
|
|
NYSE
(USD)
|
|
|
57.10
|
|
|
|
45.75
|
|
|
|
57.10
|
|
|
|
46.52
|
|
|
Dividends
(Euro cents/share)
|
|
Against
2006 results
|
|
|
Interim
dividend (02/01/07)
|
|
|
50.00
|
|
|
Final
dividend (02/07/07)
|
|
|
114.00
|
|
|
Total
DPS
|
|
|
164.00
|
|
|
Pay-out
(%)
|
|
|
58.48
|
|
|
Dividend
yield (%)
|
|
|
4.58
|
|
Important
legal 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 other factors that may be beyond
ENDESA’s control or may be difficult to predict.
Forward-looking
statements include, but are not limited to, information regarding: estimated
future earnings; anticipated increases in wind and CCGTs generation and market
share; expected increases in demand for gas and gas sourcing; management
strategy and goals; estimated cost reductions; tariffs and pricing structure;
estimated capital expenditures and other investments; estimated asset disposals;
estimated increases in capacity and output and changes in capacity mix;
repowering of capacity and macroeconomic conditions. For example, the EBITDA
(gross operating profit as per ENDESA’s consolidated income statement) target
for 2007-2009 included in this presentation are forward-looking statements
and
are based on certain assumptions which may or may not prove correct. The
main
assumptions on which these expectations and targets are based are related
to the
regulatory setting, exchange rates, divestments, increases in production
and
installed capacity in markets where ENDESA operates, increases in demand
in
these markets, assigning of production amongst different technologies, increases
in costs associated with higher activity that do not exceed certain limits,
electricity prices not below certain levels, the cost of CCGT plants, and
the
availability and cost of the gas, coal, fuel oil and emission rights necessary
to run our business at the desired levels.
In
these
statements we avail ourselves of the protection provided by the Private
Securities Litigation Reform Act of 1995 of the United States of America
with
respect to forward-looking statements.
The
following important factors, in addition to those discussed elsewhere in
this
presentation, could cause actual financial and operating results and statistics
to differ materially from those expressed in our forward-looking
statements:
Economic
and industry conditions: significant adverse changes in the conditions of
the
industry, the general economy or our markets; the effect of the prevailing
regulations or changes in them; tariff reductions; the impact of interest
rate
fluctuations; the impact of exchange rate fluctuations; natural disasters;
the
impact of more restrictive environmental regulations and the environmental
risks
inherent to our activity; potential liabilities relating to our nuclear
facilities.
Transaction
or commercial factors: any delays in or failure to obtain necessary regulatory,
antitrust and other approvals for our proposed acquisitions or asset disposals,
or any conditions imposed in connection with such approvals; our ability
to
integrate acquired businesses successfully; the challenges inherent in diverting
management's focus and resources from other strategic opportunities and from
operational matters during the process of integrating acquired businesses;
the
outcome of any negotiations with partners and governments. Delays in or
impossibility of obtaining the pertinent permits and rezoning orders in relation
to real estate assets. Delays in or impossibility of obtaining regulatory
authorisation, including that related to the environment, for the construction
of new facilities, repowering or improvement of existing facilities; shortage
of
or changes in the price of equipment, material or labour; opposition of
political or ethnic groups; adverse changes of a political or regulatory
nature
in the countries where we or our companies operate; adverse weather conditions,
natural disasters, accidents or other unforeseen events, and the impossibility
of obtaining financing at what we consider satisfactory interest
rates.
Political/governmental
factors: political conditions in Latin America; changes in Spanish, European
and
foreign laws, regulations and taxes.
Operating
factors: technical problems; changes in operating conditions and costs; capacity
to execute cost-reduction plans; capacity to maintain a stable supply of
coal,
fuel and gas and the impact of the price fluctuations of coal, fuel and gas;
acquisitions or restructuring; capacity to successfully execute a strategy
of
internationalisation and diversification.
Competitive
factors: the actions of competitors; changes in competition and pricing
environments; the entry of new competitors in our markets.
Further
details on the factors that may cause actual results and other developments
to
differ significantly from the expectations implied or explicitly contained
in
the presentation are given in the Risk Factors section of Form 20-F filed
with
the SEC and in the ENDESA Share Registration Statement filed with the Comisión
Nacional del Mercado de Valores (the Spanish securities regulator or the
“CNMV”
for its initials in Spanish).
No
assurance can be given that the forward-looking statements in this document
will
be realised. Except as may be required by applicable law, neither Endesa
nor any
of its affiliates intends to update these forward-looking
statements.