Endesa Announces 1999 First Half Results.

In the First Half ofm January 1St.

-- the Acquisition of Control 16,7% over the same period the previous year, in line with the anticipated objectives established by Endesa in its corporate consolidation process.

Operating income went up by 57.8% over the same period in 1998 and cash flow increas of Pta.249.75 billion ($1,55 billion); and (2) acquiring controlling interest in Enersis Group and Endesa Chile (EOC), through a Pta.557.44 billion ($3.45 billion) investment during the second quarter.

The fulfillment of these two obj effect from January 1st 1999. Therefore, as ofrease in Endesa's total

assets and 100% increase in its operating revenues.

We note the following actions that Endesa has undertaken in order to strengthen the Enersis Group and improve its economic and financial ratios:

o The renegotiation of Enersis Group debment of management and the

capture of value from Endesa's Latin American subsidiaries.

As a consequence of these and other actions detailed in this repe period are:

- Endesa's electricity generation in Spain increased by 9.1% over the first half 1998, reaching a market share of 46.2%.

- The sale of Endesa's stake ied a significant speed up of the agenda for libfect on the Group's financial expenses.

OPERATING BUSINESS EVOLUTION

Electric business in Spain

In the first half of 1999, electricity demand in Spain grew by 6.4%. Endesa Group's sales to the final consumer amounted to 38,441GWh, up 7.7% from the same period for the previous year. Distribution market share was 42.5% against 42.3% Endesa Group Total

1999 1998 1999 1998

Nuclear 29.3 33.8 31.9 16 -6.0% 36.4% 9.3% Argentina 4,150 35.7% 11.8% 5.4% Brazil 1,376 7.6% 0.9% 20.3% Colombia 5 The main country-by-country international operating for electricity distribution for the first half of 1999 were:

Distribution

% change Country GWh 1999/98unication, besides the set up of a Telecoms joint venture with Telecom Italia and Union Fenosa, Amena, the 3rd mobile DCS 1800 telephony operator (In which Endesa has a 23% interest), started operations in January. As of mid-July, Amena hercial operations in February and June respectigious Germanischer Lloyd certification for its 660 kW aero-generator AE-46.

Finally, its worth mentioning that Endesa's hidden capital gains in diversification, excluding capital gains obtained from the Airtel dispositionl in the firsth accounting and consolidation principles. The Latin American subsidiaries have been accounted for under the global consolidation method as of January 1, 1999, and such ad deferred taxes, as well as asset dollarizationmarket and all electricity sold to final customers is considered bought from the market, therefore increasing both figures.

In Spain, sales net from electricity purchase, and Endesa has increased its targets for cost reductions. Endesa now is targeting to achieve Pta.134 billion ($830 million) in lower cost in 2003 compared to 1996 cos end of June 1999, Endesa's international business workforce was 16,834 employees.

In order to continue the cost cutting process, the Endesa Group's consolidated balanents a 5.25 % return on international assets.

The following table sets forth assets and operating income by countries:

Billion Pta. Billion S$ Billion Pta. Billion US$ Country Fixed assets (A) Operating Annualized 

Income (B) ROI 

(% B*2/A)

Chile 84.5 9.7%

Peru 252.59 1998. This increase in the domestic business op0 million), include capital gains of Pta.135.96 billion ($842 million) arising from the disposal of AIRTEL. ince year-end 1998). The consolidated results include foreign exchange losses of Pta.53.19 billion ($330 million), of which Pta.40.88 billion ($253 million) (or 76.9%) correspond to the devaluation of the Latin American currencies.

Extion ($88 million) for the fine assessed against Edesur for the service interruption which took place in February 1999 -- prior to Endesa's becoming a major shareholder in reflected in the accounts originally formulated under local accounting criteria which reflected higher tax

1) Revenues in generation include Pta.52.34 billion ($324 million) of internal sales to distribution in offshore utilities

(2) Not including the net effect of Pta.88.52 billions ($548.5 million) extraordinary provisions

The per has a clear positive contribution to the Groupased by 43.2%.

Pta.375.97 billion ($2.33 billion) of total cash flow corresponds to domestic business (a 60.5% increase over 1998) and Pta.45.83 billion ($280 million) to international activities.

In the domestic business, cash flow for both 1998 and 1999 has been affected by capital gains. Not taking into account the capital gains, domestic business cash flow would have increased by 18.7% over the previous year.

Investments

Total investments for the period were Pta.842.59 billion ($5.22 billion), broken down into capital expenditure of Pta.126.36 billion ($780 million) and financial investments of Pta.716.23 billion ($4.44 billion).

The following table shows a breakdown:

Generation Distribution Other Total

Bn.Pta M $ Bn.Pta M $ Bn.Pta M $ Bn.Pta M $

Domestic 15.04 93.3 25.56 158.4 6.18 38.3 46.77 289.8

International 47.80 296.2 12.95 80.3 18.85 116.8 79.59 493.2

Total 62.84 389.4 38.51 238.6 25.03 155.1 126.36 764.4

Pta.604.29 billion ($3.74 billion) of financial investments correspond to Endesa's international business and Pta.43.67 billion ($270 million) to Endesa's business diversification.

The acquisitions of controlling interests in Enersis and Endesa-Chile account for Pta.224.61 billion ($1.39 billion) and Pta.332.84 billion ($2.06 billion), respectively of the financial investments relating to Endesa's international business.

Financial investments related to Endesa's business diversification include the acquisition of additional stakes in Retevision and Retevision Movil for Pta.28.77 billion ($178 million) and Pta.6.29 billion ($39 million), respectively.

Financial Structure

The increase in the Endesa Group's balance sheet has brought a change in the financial structure. Total assets for the Group increased by Pta.4,092.89 billion ($25.36 billion), an 88% increase from year-end 1998. This increase in assets is compensated by an increase in both shareholders' equity and minority interest for Pta.780.64 billion ($4.84 billion) arising from the new companies acquired.

At the same time, Pta.239.73 billion ($1.49 billion) was transferred from minority interest to shareholders' equity as a result of the merger of Endesa's Spanish electric subsidiaries with and into Endesa.

Indebtedness rose by Pta.1,671.65 billion ($10.36 billion) from Pta.1,721.28 billion ($10.66 billion) as of December 31, 1998 to a total Pta.3,392.93 billion ($21.02 billion) as of June 30, 1999. Approximately 68% in the increase is attributable to the Enersis Group and Pta.534.46 billion ($3.31 billion) from the increase in Endesa's debt mainly as a result of its new investments.

This has led the Endesa Group's financial structure to be modified as follows:

Dec.31.'98 Jun30.'99

Bn. Pta. Bn.$ % Bn. Pta. Bn.$ %

Shareholders' Equity 1,258.84 7.80 38.7 1,492.23 9.25 26.1

Minority Interest 275.99 1.71 8.5 823.25 5.10 14.4

Total 1,534.84 9.51 47.1 2,315.48 14.35 40.6

Debt 1,721.28 10.67 52.9 3,392.93 21.02 59.4

TOTAL capital 3,256.12 20.18 100.0 5.708.41 35.37 100.0

The rise in debt levels shows the effect of the full consolidation of both the Enersis Group and Endesa Chile. Notwithstanding the latter, the proportion of debt over total capital is under 60%. On the other hand, the Endesa Group's cash flow levels allow, within normal investment levels, for a progressive reduction of debt.

ACTIONS TAKEN AND PROJECTED IN LATIN AMERICA 

First half results show the impact on the electricity business of the recession in some of the countries in which the Endesa Group operates, the effects of the severe drought on the Chilean business and the devaluation of the Latin American currencies against the United States dollar.

Refinancing of the Debt of the Enersis Group

One of the most important actions being undertaken is the renegotiation of Enersis Group's prepayable debt, for which Endesa has received offers to refinancing more than $3.5 billion from financial institutions, which represents one of the largest refinancing transactions in Latin American.

Enersis debt refinancing was undertaken immediately after Endesa acquired control of Enersis and it consists of the replacement of Enersis and Endesa- Chile debt with new bilateral loans, under more favorable conditions, from eight financing institutions: 3 in the United States, and 5 Europe (of which 2 are Spanish).

New loans have two years maturity terms and their cost are Libor + 0.75%. The loans have a single initial commission of 0.15% that includes all charges. The average total cost for the loans is Libor + 0.83%. Prior to the refinancing, for example, Enersis's most recent loan comissions, was for a term of approximately four years, bore interest at Libor + 2.25% and had an initial fee of 1.25%.

The debt refinancing will allow an annual reduction in financial expenses of $75 million, and reflects the market perceptions of Enersis of having the advantages of belonging to the Endesa Group.

The new loans provide reduced interim financing costs and will afford Enersis time to plan for deeper financial restructuring.

In that regard, as part of the strategy designed to strengthen the Enersis Group, the Endesa Group plans to undertake both capital increase in Enersis and Endesa-Chile for a total amount of $1.0 billion and $600 million respectively.

This reflects Endesa's strong commitment towards its Latin American affiliates and will allow them to obtain economical and financial advantages derived from being part of the Endesa Group.

Project Genesis 

Last June Endesa launched Project Genesis, consisting of a wide array of measures aimed at optimizing the Latin American companies in which it participates. Over a hundred executives, both Latin American and Spanish, are taking part in this project with the aim of defining and implementing such measures beginning in September.

This project will be implemented along four main lines:

o Operational improvements in order to reach international

efficiency parameters, which are expected to result in annual

contributions of $295 million to the Enersis Group's operating

profits starting in 2003.

o Redesign of the Enersis Group concept, in order to define a new

structure which will allow for a maximization of value, with an

expected annual contribution to operating income of $130 million

starting in 2003.

o Financial restructuring to achieve lower financial expenses in

the amount of $85 million per year starting in 2003.

In total, the above actions are expected to contribute $510 million - or 25% - in annual improvements starting in 2003 to the Enersis Group's EBITDA.

o Finally Project Genesis contemplates the disposal of non-core

assets in order to capture value in the short term and allow the

Enersis Group to concentrate on its core activities for the

interest of its shareholders.

The improvements in management promoted by Project Genesis will be articulated through individual projects in the areas of distribution, trading, generation, communication, organization, human resources, systems, procurement, regulation, administration and finance, corporate restructuring and cost reductions.

Y2K 

During the first half of 1999 Endesa has undertaken all actions contained in its Y2K Project in order to make all its facilities in Spain compliant with Year 2000 standards, especially in those matters related to customer service safety.

Current compliance level for the systems on an overall basis is 92%, which, broken down by areas, is as follows:

- Generation: 87% - Distribution: 98% - Auxiliary equipment: 88%

Total project costs will be Pta.14.10 billion ($87.4 million), as initially budgeted.

Endesa's target date for completing Y2K certification of all systems and facilities continues to be the end of September 1999.

Consolidated statements are unaudited and prepared in accordance with Spanish GAAP. Conversion of pesetas (Pta) into dollars ($) has been made at the Federal Reserve Bank noon-buying rate on June 30, 1999, of $1.00 = Pta 161.38

For further information, contact Miguel Temboury, North America Investor Relations, [phone]

http://www.endesa.es