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First Half 2006 Results: ENDESA Reports Net Income of Euro 1,756 Million, an Increase of 83.7% Compared to 1H05.

NEW YORK New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of

See: New York Stock Exchange

equine leukoencephalomalacia.

The main income statement lines supported the strong growth reported in the first quarter

--Gross operating profit Operating profit (or loss)

Revenue from a firm's regular activities less costs and expenses and before income deductions.

operating profit

See operating income.
 (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become ) rose 33.2% vs. 1H05 to Euro 3,762 million.

--Operating profit (EBIT EBIT

See: Earnings Before Interest and Taxes


See earnings before interest and taxes (EBIT).
) advanced 45.8% to Euro 2,871 million.

Excellent results in all businesses

--The Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river.  and Portuguese business reported net income of Euro 961 million, up 41.5% over 1H05, in an environment of regulatory reg·u·late  
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.


--Net income from the business in Europe Europe (yr`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000).  strengthened to Euro 322 million, an increase of 76.9% vs. 1H05.

--The Latin Lat·in  
a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century.

 American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of  business consolidated con·sol·i·date  
v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates
1. To unite into one system or whole; combine:
 its favorable fa·vor·a·ble  
1. Advantageous; helpful: favorable winds.

2. Encouraging; propitious: a favorable diagnosis.

 momentum, boosting net income by 164.9% to Euro 302 million.

ENDESA reinforces the commitments in its Strategic Plan

--The financial results achieved by the Company since October October: see month.  2005 demonstrate that the targets presented then to the market were surpassed.

--Based on the 1H06 results and current forecasts, ENDESA has decided to reinforce re·in·force
1. To give more force or effectiveness to something; strengthen.

2. To reward an individual, especially an experimental subject, with a reinforcer subsequent to a desired response or performance.

 the commitments of its Strategic Plan.

--EBITDA will reach Euro 8,330 million in 2009, vs. the initial Euro 7,500 million.

--The total dividend in the 2005-2009 period targets Euro 9,900 million, - i.e. Euro 9.35 per share, of which Euro 2.40 per share were paid against fiscal year 2005- up from the Euro 7,000 million announced in October.



--ENDESA reports net income of Euro 1,756 million, an increase of 83.7% compared to 1H05.

--The business in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe.  and Portugal Portugal (pôr`chəgəl), officially Portuguese Republic, republic (2005 est. pop. 10,566,000), 35,553 sq mi (92,082 sq km), SW Europe, on the western side of the Iberian Peninsula and including the Madeira Islands and the Azores in the  posted net income of Euro 961 million in the first half of 2006, an increase of 41.5%.

--Net income from the business in Europe rose 76.9% to Euro 322 million.

--Net income from the business in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies.  was Euro 302 million, an increase of 164.9% on 1H06.


--The gross margin in the first six months of the year was Euro 5,299 million, 25.6% higher than in 1H05.

--EBIDTA rose 33.2% to Euro 3,762 million.

--EBIT was Euro 2,871 million, a 45.8% increase.

--Cash flow from operations totalled Euro 2,275 million, 19.3% higher than in 1H05.


--The excellent results achieved by the Company have easily overcome the pace drawn by the targets of the Strategic Plan presented to the market last October in the document "ENDESA: stronger business, greater value". Therefore, the Company has decided to considerably reinforce its Plan's commitments.

--EBITDA will reach Euro 8,330 million in 2009, vs. the Euro 7,500 million announced last October.

--Net income for 2009 is planned to be Euro 3,000 million, up from the initial Euro 2,200 million.

--The total dividend targets Euro 9,900 million in the 2005-2009 period; i.e. Euro 2,900 million higher than the Euro 7,000 million committed in the former plan. This would mean a total payment of Euro 9.35 per share in the whole period, of which Euro 2.40 per share were already paid against fiscal year 2005.


Sharp growth in the key items of the income statement in an environment of regulatory change

--Net income from the business in Spain and Portugal increased by 41.5% to Euro 961 million and accounted for 54.7% of ENDESA's total net income.

--As compared to 1H05, EBITDA grew 31.4% to Euro 2,030 million and EBIT by 43.8% to Euro 1,503 million.

--These sharp increases reflect an even stronger performance of these items in 2Q06 compared to 1Q06. Specifically, EBITDA advanced 37.7% in 2Q06 and EBIT by 49.9%.

--The excellent performance by this business was achieved despite having to book generation sales to the Company's regulated reg·u·late  
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

 customers at a provisional Temporary; not permanent. Tentative, contingent, preliminary.

A provisional civil service appointment is a temporary position that fills a vacancy until a test can be properly administered and statutory requirements can be fulfilled to make a permanent appointment.
 price of Euro 42.35/MWh pursuant to Royal Decree decree, in law, decision of a suit in a court of equity. It is the counterpart in equity of the judgment in a court of law, although in those jurisdictions where law and equity have merged, judgment is sometimes used to include both.  Law 3/2006, a level which is significantly below market prices.

--The negative impact of this provisional price on EBITDA and net income was Euro 194 million and Euro 126 million, respectively.

--Since the regulation for the island and non-mainland electricity systems has been enacted, in 1H06 ENDESA booked Euro 197 million of higher compensation, net of tax, for non-mainland generation in 2001-2005 pursuant to the Ministerial Orders In Belgium, a Ministerial Order (Dutch: Ministerieel Besluit, French: Arrêté Ministériel) is a decision of a minister of the Federal Government.  passed on March 30, 2006.

--1H06 figures also include a Euro 572 million asset related to the revenue shortfall Shortfall

The amount by which the capital required to fulfill a financial obligation exceeds available capital.

Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual.
 from regulated activities in the period. Excluding this asset, the impact of the deficit on net income would have been Euro 372 million.

--On the other hand, the elimination of Competition Transition Costs (CTCs), pursuant to Royal Decree Law 7/2006 passed on June June: see month.  23, 2006, will not impact ENDESA, since it has not recorded in its financial statements any asset of pending CTCs. In addition, the new law empowers the government to set premiums for the consumption of domestic coal outside the scope of the CTCs. Thus, the elimination of the CTCs will not affect the Company's ability to continue to charge these premiums.

Spanish leading electric utility: generation and demand in suitable balance

--In 1H06, ENDESA maintained its leadership of the Spanish electricity market, both in generation in the ordinary regime (39.2%) and in total electricity sales to final customers (42.2%).

--The Company met 84.4% of its Spanish demand in 1H06 using its own output. This balance between generation and demand gives it a clear competitive advantage over its competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. .

--ENDESA's mainland Mainland.

1 Island (1991 pop. 14,150), 178 sq mi (461 sq km), N Scotland. The largest of the Orkney Islands, it is also called Pomona. Kirkwall, the seat of the Orkney Islands council area, is on the island.
 coal-fired Adj. 1. coal-fired - fueled by burning coal; "a coal-fired ship"

fueled - heated, driven, or produced by burning fuel
 plants achieved a 77.1% load factor in 1H06, underscoring the important role played by this fuel in securing electricity demand in Spain.

The largest investor of any Spanish utility

--ENDESA invested Euro 1,074 million in Spain and Portugal in 1H06, of which Euro 974 million, or 90.7%, was capex. This underscores its status as the largest investor among Spanish utilities.

--Euro 574 million of capex was spent on upgrading distribution facilities to increase quality and security of supply.

Record improvements in service quality in its markets

--In April, the indicator Indicator

Anything used to predict future financial or economic trends.

In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices.
 generally used to measure the reliability of supply, the system average interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's.
     2. Interruption of the use of a thing is natural or civil.
 duration index (SAIDI SAIDI System Average Interruption Duration Index
SAIDI Spaced Antenna Imaging Doppler Interferometer
 or TIEPI) was 6 minutes and 8 seconds overall in the distribution markets served by ENDESA, marking an all-time all-time
Exceeding all others up to the present time: an all-time speed skating record.


 monthly record in supply quality.

--In 1H06 the accumulated ac·cu·mu·late  
v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates
To gather or pile up; amass. See Synonyms at gather.

To mount up; increase.
 SAIDI was 55 minutes, while for the last 12 months the indicator is running 19% lower. These figures confirm the positive trend in ENDESA's quality and security of supply over the past four years as a result of the significant investments made in distribution facilities and operating enhancement programs.

760 MW of new installed capacity in 1H06

--ENDESA added 760 MW to its generation facilities in 1H06, representing 57.6% of new capacity planned for the full year and indicating a significant progress in the New Capacity Plan.

--Capacity adds included the completion of the 400 MW Cristobal Colon colon, in anatomy
colon, in anatomy: see intestine.
colon, in punctuation
colon, in writing: see punctuation.

Segment that makes up most of the large intestine.
 CCGT CCGT Combined Cycle Gas Turbine
CCGT Chicago Center for Green Technology
CCGT Combined-Cycle Generating Technology
CCGT catalytic combustion gas turbine
 in Huelva Huelva (wĕl`vä), city (1990 pop. 141,002), capital of Huelva prov., SW Spain, in Andalusia, on the Odiel River above its junction with the Río Tinto. , plus 246 MW of new capacity installed to meet the rapid growth in demand in the island and non-mainland systems, and 114 MW of new renewable energy New renewable energy is a relatively new term that is not used uniformly. Most commonly it refers to non-traditional renewable energy technologies such as solar energy, wind energy, small hydro and biomass.  capacity.

--In addition, work on the 800 MW As Pontes pon·tes  
Plural of pons.
 CCGT in La Coruna La Co·ru·ña  

A city of northwest Spain on the Atlantic Ocean west of Oviedo. Perhaps predating Roman times, it was the point of departure for the Spanish Armada (1588). Population: 224,000.
 is progressing according to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 schedule. This plant is scheduled to be commissioned in 2007.

Carbon credit purchases

--ENDESA has a broad portfolio of carbon credits derived de·rive  
v. de·rived, de·riv·ing, de·rives
1. To obtain or receive from a source.

 from Clean Development Mechanisms (CDM 1. CDM - Content Data Model
2. CDM - Code Division Multiplexing
) projects at an average price of less than Euro 7.5/tonne. This portfolio consists of 71.5 million tonnes of CO2 covered by Emissions emissions nplémissions fpl

emissions nplEmissionen pl 
 Reduction Purchase Agreements (ERPA ERPA European Research Papers Archive
ERPA Emission Reduction Purchase Agreement
ERPA Emergency Response Planning Area
ERPA End Racial Profiling Act of 2004
ERPA Enrolled Retirement Plan Agent
ERPA Estimated Relative Producing Ability
), 24.8 million tonnes of additional volume in projects covered by Letters of Intent (LOI LOI Letter of Indemnity (international trade and carriage business)
LOI Letter Of Intent
LOI Loss On Ignition
LOI Letter of Inquiry
LOI Lack Of Information
LOI Lack of Interest
LOI Letter of Invitation
LOI List Of Items
) and projects under analysis amounting to 82.4 million tonnes of CO2.

Strong growth in earnings from CHP CHP Chapter
CHP Combined Heat and Power
CHP California Highway Patrol
CHP Cumhuriyet Halk Partisi (Turkish: Republican People's Party)
CHP Chemical Hygiene Plan (OSHA)
CHP Community Health Plan
 and renewables renewables nplerneuerbare Energien pl 

--Revenues from sales of renewable/CHP energy generated by ENDESA's consolidated companies totalled Euro 142 million, 52.7% more than in the first half of 2005.

--EBITDA from this business increased by 49.2% to Euro 94 million, and EBIT by 52.4% to Euro 64 million.

Total market share of 11.4% in the natural gas market

--ENDESA sold a total of 13,531 GWh in the Spanish natural gas market in 1H06, 17.4% more than in 1H05. These sales, coupled with the 9,749 GWh supplied to its own plants, totalled 23,280 GWh and represent a market share of 11.4%.

--Revenues from gas sales in the liberalized market in the first half of 2006 totalled Euro 279 million, up 97.9% from 1H05, while revenues from regulated gas distribution were Euro 23 million, an increase of 15%. The two businesses contributed a combined gross margin of Euro 67 million.


Sharp increase in net income

--Net income from the business in Europe increased by 76.9% to Euro 322 million in 1H06 and accounted for 18.3% of ENDESA's total net income.

--This figure includes Euro 118 million after minorities due to the increase in value of this business caused by the restatement Restatement

A revision in a company's earlier financial statements.

The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error.
 of the tax base of Endesa Italia's fixed assets fixed assets nplactivo sg fijo

fixed assets nplimmobilisations fpl

fixed assets fix npl
 to their book values, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[]

As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh.
 with Italian financial act.

--EBITDA stood at Euro 587 million, up 29.6% versus 1H05, and EBIT at Euro 459 million, an increase of 38.7%.

Results underpinned by strong operating performance

--ENDESA's total generation in Europe in the first half of 2006 amounted to 18,671 GWh, an increase of 10% on the previous year.

--Electricity sales were up 11.3% to 26,635 GWh.

Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. : Sharp increases in main financial indicators plus new capacity and regasification projects

--EBITDA from Endesa Italia was Euro 485 million, 33.6% higher than in 1H05, while EBIT stood at Euro 409 million, a 38.6% increase.

--In line with planned growth in renewable energies Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. , in June the company added to its generation mix the Iardino 14 MW wind farm acquired by Endesa Europa Europa, in astronomy
Europa (yrō`pə), in astronomy, one of the 39 known moons, or natural satellites, of Jupiter.
 from Gamesa.

--Construction on the 2x 400MW Scandale Scandale is a comune and town in the province of Crotone, in Calabria, southern Italy. As of 2007 Scandale had an estimated population of 3,128. [1] Sources

1. ^ "The World Gazetteer". Retrieved on 2007-02-25.
 CCGTs in Calabria Calabria (kälä`brēä), region (1991 pop. 2,070,203), 5,822 sq mi (15,079 sq km), S Italy, a peninsula projecting between the Tyrrhenian Sea and the Ionian Sea, separated from Sicily by the narrow Strait of Messina. , in which Endesa Italia owns 50%, is proceeding according to schedule.

--In 1H06, preliminary work commenced on the offshore regasification terminal off Livorno Livorno (lē vôr`nô), Brit. Leghorn, city (1991 pop. 167,512), capital of Livorno prov., Tuscany, central Italy, on the Ligurian Sea and on the Aurelian Way. , which is scheduled to come on-stream on-stream
adv. & adj.
In or into operation or production.
 at the end of 2008.

France: Snet combines good earnings momentum combined with increased supply activities

--In 1H06, French generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday.  Snet contributed Euro 102 million to the ENDESA's EBITDA, 17.2% more than in 1H05, and Euro 50 million to EBIT, an increase of 51.5%.

--Snet also made significant progress in its supply activity during the period. It signed an agreement with the French multinational multinational

Of, relating to, or being a company with subsidiaries or other operations in a number of countries. The diversity of operations of such companies subjects them to unique risks (for example, exchange rate changes or government nationalization)
 company Auchan Auchan SA is an international retail group and multinational corporation headquartered in Croix, France. It is one of the world's principal distribution groups . It is present in 12 countries and employs 175,000 employees.  to supply 400 GWh of power in 2006 and another with SNCF SNCF Société Nationale des Chemins de fer Français (French National Railways)
SNCF Sans Nous les Cafés Ferment (French) 
 (the French railway operator) to supply 6,600 GWh in the period 2007-2011.

First dividend by Energie Energie can refer to:
  • Energie (clothing), Italian brand of clothing
  • Énergie, a French-language brand of rhythmic top 40 in Quebec
  • The FC Energie Cottbus, a German football(soccer) club
 Electrique de Tahaddart

--On May 31, 2006, the Board of Directors of Tahaddart agreed on to pay its first dividend to shareholders. The dividend totalled Euro 6 million, of which Euro 1.9 million corresponded to Endesa Europe.


Sharp increases in main financial figures, underscoring the progress by this business

--ENDESA's Latin American operations posted a 164.9% increase in 1H06 net income to Euro 302 million, contributing 17.2% to the Company's total net income.

--EBITDA and EBIT rose 37.8% and 52.0% to Euro 1,145 million and Euro 909 million, respectively.

--Increases in EBITDA and EBIT were attained at·tain  
v. at·tained, at·tain·ing, at·tains
1. To gain as an objective; achieve: attain a diploma by hard work.

 in the generation and transmission business (+30.7% and +41.8%, respectively) and in the distribution business (+47.5% and +65.8%, respectively), highlighting the strong business momentum, underpinned by its operating performance.

Increased margins in generation and distribution

--The organic growth of the Latin American markets in which ENDESA operates drove total sales from its Latin American companies 5.3% higher in 1H06.

--The generation unit margin stood at US$26/MWh in 1H06, an increase of 31% compared to 1H05, and the distribution unit margin stood at US$36.9/MWh, an increase of 22%.

--Energy distribution losses were lower in all countries in 1H06, down 0.6 percentage points on 1H05. Improvements were most notable in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America.  and Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. , where the percentage of losses declined by 0.9 and 0.6 points, respectively.

Debt reduction

--Net debt in the Latin American business declined by 8.6%, or Euro 526 million, in 1H06 to Euro 5,583 million as of June 30, 2006.

Optimisation Noun 1. optimisation - the act of rendering optimal; "the simultaneous optimization of growth and profitability"; "in an optimization problem we seek values of the variables that lead to an optimal value of the function that is to be optimized"; "to promote the  of the ownership structure

--1H06 marked the completion of the ownership restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics).  in Brazil (incorporation of the Brazilian holding company, Endesa Brasil), Peru (the Etevensa-Edegel merger) and Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts.  (Chilectra-Elesur merger).

--The International Finance Corporation (IFC (Internet Foundation Classes) A class library from Netscape that provides an application framework and graphical user interface (GUI) routines for Java programmers. IFC was later made part of the Java Foundation Classes (JFC). See JFC, AFC and AWT. See also ICF. ) became shareholder in Endesa Brasil, the holding for all of ENDESA's investments in Brazil, acquiring a 2.7% equity stake.

--In May, the Boards of Directors of the Colombian companies List of Colombian companies:

Colombia is the third most populous country in Latin America. Major industries include textiles, food processing, petroleum, clothing and footwear, beverages, chemicals, cement, gold, coal, and emeralds.
, Emgesa and Betania Betania is a town and municipality in the Colombian department of Antioquia. Part of the subregion of Southwestern Antioquia.

, agreed to analyse an·a·lyse  
v. Chiefly British
Variant of analyze.

analyse or US -lyze

[-lysing, -lysed] or -lyzing,
 a potential merger. If the outcome of the analysis is favourable, the transaction will give rise to the largest generator in Colombian, with installed capacity of 2,288 MW.

Cash return target for 2009: 42% completed

--Cash returns from ENDESA's Latin American business to the parent company in the first six months of the year totalled US$ 107 million.

--This, coupled with the US$ 308 million achieved in 2005, means that 42% of the 2009 target of the Strategic Plan has now been achieved.

New generation capacity development

--Endesa Chile signed an agreement with electricity company Colbun -controlled by the Matte Group, one of Chile's leading business conglomerates- for its inclusion in the Aysen

The current title of this article, "Aysen," is disputed. An alternate proposed title is "Aysén."

Wikipedia articles may have only one unique title; the use of the current title does not imply an endorsement of that title.
 Project, which entails the construction of four hydro hy·dro  

n. pl. hy·dros
1. Hydroelectric power.

2. A hydroelectric power plant.
 plants with total installed capacity of 2,430 MW.

--Meanwhile, also in Chile, work continued on the construction of the 377 MW San Isidro San Isidro (sän ēsē`thrō), city (1991 pop. 299,022), Buenos Aires prov., E Argentina. It is a district administrative center in the Greater Buenos Aires area. San Isidro grew around a chapel built in 1706.  II CCGT and of the 32 MW Palmucho hydro facility.


--Pursuant to an agreement reached in December December: see month.  2005, in 1Q06 ENDESA sold its 5.01% stake in telecoms operator Auna to Deutsche Bank Deutsche Bank AG (IPA: /'dɔɪ.tʃə/[1]) (ISIN: DE0005140008, NYSE: DB) (English: German Bank .

--This deal, which generated net capital gains of Euro 171 million, marked the full disposal of the Company's telecom business - one of the main goals of the Strategic Plan.

--In the first six months of the year, Bolonia Real Estate, ENDESA's real estate management company, made disposals totalling Euro 20 million, generating capital gains of Euro 14 million.

--In May, ENDESA sold its 49% stake in the Portuguese company NQF NQF National Qualifications Framework
NQF National Quality Forum
NQF Norsk Quilteforbund (Norwegian Quilt Association)
NQF Neutron Quality Factor
 Gas for Euro 59 million, booking a net capital gain of Euro 21 million.

--In the second quarter, the generation business of Brazilian company Ampla -whose core business is the distribution and sale of electricity to over 2 million customers -was sold for Euro 39 million, generating a gross capital gain of Euro 30 million and a net capital gain after taxes and minorities of Euro 12 million.


--On July July: see month.  3, ENDESA paid its final dividend against 2005 results.

--As approved at the General Shareholders' Meeting shareholders' meeting n. a meeting, usually annual, of all shareholders of a corporation (although in large corporations only a small percentage attend) to elect the Board of Directors and hear reports on the company's business situation.  held on February February: see month.  25, the Company made a gross dividend payment of Euro 2.095 per share, bringing total shareholder remuneration REMUNERATION. Reward; recompense; salary. Dig. 17, 1, 7.  against last year's results, including the gross interim dividend of Euro 0.305 per share paid out on January January: see month.  2, 2006, to Euro 2,541 million.

--The results for the first half of 2006 confirm that the Company will be in a position to propose at the General Shareholders' Meeting the payment of a dividend of at least Euro 1.6 per share against this year fiscal earnings, of which Euro 1.27 will be determined by the net income of ordinary activities and the remainder from the capital gains of non-strategic assets.


Net income up 83.7%

ENDESA reported net income of Euro 1,756 million in 1H06, an 83.7% increase on 1H05. Second quarter results built on the momentum generated in the first three months of the year.

This increase includes the net impact of the Euro 225 million of capital gains obtained on asset sales made in the first six months of the year, of which Euro 171 million correspond to the sale of the 5.01% stake in Auna to Deutsche Bank.

Stripping out these capital gains from both periods, growth in net income in 1H06 vs. 1H05 was 79.5%.
                               Euro    % Chg vs. % of total % of total
                               million    1H05   NI 2005(*) NI 2006(*)
Spain and Portugal                  961      41.5      69.6(*)   60.6
Rest of Europe                      322      76.9      18.7      20.3
Latin America                       302     164.9      11.7      19.1
Capital gains from sale of
 5.01% stake in Auna                171        --        --        --
TOTAL                             1,756      83.7     100.0     100.0
(*) Total Net Income from electricity businesses.

Net income growth across all the Company's businesses.

The business in Spain and Portugal posted net income of Euro 961 million in 1H06, an increase of 41.5%. This includes Euro 197 million of higher compensation, net of tax, from non-mainland generation deficit for the period 2001-2005 pursuant to the Ministerial Orders passed on March 30, 2006.

In Europe, net income advanced 76.9% to Euro 322 million. This figure includes Euro 118 million, net of minority interests, related to a write-up Write-Up

An increase made to the book value of an asset because it is undervalued compared to market values.

A write-up will increase a company's accounting book value without any expenditures.
 in the valuation as Endesa Italia revalued the tax bases of its fixed assets to their book values, as allowed by current legislation in Italy.

Finally, net income for Latin America was Euro 302 million, 164.9% more than in 1H05. This figure includes Euro 101 million, net of minority interests, from a tax credit carryforward carryforward

1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years.
 derived from the Elesur-Electra merger.

Total electricity sales up significantly: +7.6%

Both electricity output (+1.4%) and electricity sales (+7.6%) rose in the first half compared to the same period last year.

The increases were particularly high for the business in Europe, where output rose by 10% -amply offsetting lower output in Spain- and electricity sales by 11.3%.
                             Output                    Sales
                       GWh    % Chg vs. 1H05    GWh    % Chg vs. 1H05
Spain and Portugal     44,875           (3.8)   53,176            7.1
Rest of Europe         18,671           10.0    26,635           11.3
Latin America          29,736            4.6    28,549            5.3
TOTAL                  93,282            1.4   108,360            7.6

Appropriate output/sales balance

ENDESA met 86.1% of its total electricity sales in 1H06 from its own output. This balanced situation between production and demand should considerably mitigate mit·i·gate
To moderate in force or intensity.

miti·gation n.
 the risk of its electricity business and provides ENDESA with a significant competitive advantage, especially in the Spanish market. In Spain, the Company met 84.4% of demand in the period from its own output.

Revenue growth outstrips costs

ENDESA's total sales in the first half of 2006 amounted Euro 9,946 million, an increase of 20.5% on the previous year.

This growth was greater than physical electricity sales growth. This was due to increase in electricity prices in the countries where ENDESA operates because of power generation costs.

The strong growth in sales outstripped the 20.3% increase in purchases and services expenses (variable costs), which were caused by increases in fuel costs, energy purchases and CO2 emission rights emission rights: see pollution allowance.  in the period.

Sharp growth in key income statement lines

As revenue growth offset the increase in costs, the Company reported significant rises in gross margin (+25.6%), EBITDA (+33.2%) and EBIT (+45.8%).

These growth rates Growth Rates

The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures.

Remember, historically high growth rates don't always mean a high rate of growth looking into the future.
 highlight how the Company's second quarter results built on the favorable momentum achieved in the first three months of the year.
Gross margin       EBITDA            EBIT
                     Euro    % Chg   Euro    % Chg   Euro   % Chg vs.
                     million  vs.    million  vs.    million   1H05
                              1H05            1H05
Spain and Portugal    2,953    22.5   2,030    31.4   1,503      43.8
Europe                  759    23.6     587    29.6     459      38.7
Latin America         1,587    32.9   1,145    37.8     909      52.0
TOTAL                 5,299    25.6   3,762    33.2   2,871      45.8

Net financial expenses: -10.5%

ENDESA reported net financial losses of Euro 469 million in 1H06, a 1.3% improvement over 1H05.

Net financial expenses totalled Euro 480 million, down by 10.5% over 1H05. This figure includes a financial income of Euro 31 million related to the portion not recorded as of December 31, 2005 of the interest accrued ac·crue  
v. ac·crued, ac·cru·ing, ac·crues

1. To come to one as a gain, addition, or increment: interest accruing in my savings account.

 on the compensations derived from the non-mainland generation deficit calculated in accordance with the Ministerial Orders passed in March 30.

Worth highlighting is the fact that the increase in net debt caused by financing the revenue deficit on regulated activities in Spain does not impact net financial expenses. Both the cumulative amount of the deficit financed and the amounts pending collection as compensation for the stranded strand 1  
The land bordering a body of water; a beach.

v. strand·ed, strand·ing, strands
1. To drive or run ashore or aground.

 costs on non-mainland generation deficit earn interest that offset the expenses.

Asset disposals

1Q06 marked the end of the period for Auna shareholders to exercise their pre-emptive rights Pre-Emptive Right

The right of a company's existing common shareholders to have the first chance to purchase shares in a company's future stock issue.

Also known as "pre-emption rights".
See also: Common Stock, No-Par-Value Stock, Stock
 on the 5.01% stake ENDESA sold to Deutsche Bank on December 30, 2005. After the end of this period, the sale of these shares was formalised Adj. 1. formalised - concerned with or characterized by rigorous adherence to recognized forms (especially in religion or art); "highly formalized plays like `Waiting for Godot'"
formalistic, formalized
 and all the conditions required under International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB).

Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS).
 (IFRS IFRS International Financial Reporting Standard(s)
IFRS Inter Frame Relay Service
IFRS Indiana Facilities Registry System
) regarding the removal of the shares from ENDESA's balance sheet and the recognition of the capital gains in its income statement have been met.

Therefore, as indicated in ENDESA's consolidated financial statements Consolidated Financial Statements

The combined financial statements of a parent company and its subsidiaries.

Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge
 for the year ended December 31, 2005, in 1H06 the Company recorded a capital of Euro 196 million (Euro 171 million after tax) for the sale of the aforementioned a·fore·men·tioned  
Mentioned previously.

The one or ones mentioned previously.


mentioned before

Adj. 1.
 investment. With this disposal, the "Other businesses" line has been removed from ENDESA's accounts, so for the rest of 2006, this capital gain will be the only entry under this caption.

In addition, in 2Q06, ENDESA sold its 49% holding in the Portuguese company NQF Gas for Euro 59 million, booking a capital gain of Euro 27 million (Euro 21 million net of taxes) and sold off the generation assets of Brazilian operator Ampla for Euro 39 million, recording a gain of Euro 30 million (Euro 12 million after taxes and minorities).

Finally, also in 1H06, ENDESA disposed dis·pose  
v. dis·posed, dis·pos·ing, dis·pos·es
1. To place or set in a particular order; arrange.

 of Euro 20 million worth of real estate assets in Spain through Bolonia Real Estate.

Cash flow from operating activities: +19.3%

Cash flow from operating activities in 1H06 was Euro 2,275 million, a 19.3% increase compared to 1H05.
                                         Euro million  % Chg vs. 1H05
Spain and Portugal                               1,257           20.1
Rest of Europe                                     340           (2.0)
Latin America                                      678           25.1
TOTAL                                            2,275           19.3

The decline in cash flow from operating activities in Rest of Europe was due to the one-off (1) One at a time. CD-ROM recorders (CD-R drives) are commonly called one-off machines because they write one CD-ROM at a time.

(2) Only once. Software that is written to solve a specific problem only one time is sometimes called a one-off.
 payment of taxes by Endesa Italia in 2Q06 to generate a tax credit. Stripping out this effect, cash flow from operating activities would have increased by 19.6%.

Investment: Euro 1,616 million

ENDESA invested a total of Euro 1,616 million in 1H06, of which Euro 1,476 million was invested in capex and the remaining Euro 140 million in financial investments.
                                            Euro million
                                Capex and
                                   assets    Financial      TOTAL
Spain and Portugal(1)                  1,017        57          1,074
Rest of Europe                            85        47            132
Latin America                            374        36            410
TOTAL                                  1,476       140          1,616

(1) Additionally, a financial investment of Euro 572 million for the
    revenue deficit from regulated activities in 1H06 and Euro101
    million from the restatement of the 2005 deficit was booked.

Debt performance

ENDESA's net debt was Euro 18,983 million as of June 30, 2006, just 3.8% higher than at year-end year-end also year·end
The end of a year.

Occurring or done at the end of the year: a year-end audit.

Noun 1.
                                       Euro million
                                30-6-06  31-12-05    Change   % Chg
Business in Spain and Portugal   11,860    11,461       399       3,5
Business in Europe                1,540     1,286       254      19,8
-Endesa Italia                      993       815       178      21,8
-Other                              547       471        76      16,1
Business in Latin America         5,583     6,109      (526)     (8,6)
-Enersis Group                    4,675     5,207      (532)    (10,2)
-Other                              908       902         6       0,7
Other businesses (1)                 --      (575)      575        NA
TOTAL                            18,983    18,281       702       3,8

(1) At June 30, 2006, there was no debt assigned to "Other
    businesses", as this business line disappeared as such with the
    sale of the 5.01% stake in Auna completed in February 2006. The
    remaining debt balance was included in the electricity business in
    Spain and Portugal.

The increase in debt in Spain and Portugal was due to the need to finance the tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic  deficit in 2005 and the first half of 2006. In 1H06, ENDESA paid 1,207 million in this regard.

In Europe, the Company had to make a corporate income tax payment in the second quarter. However, between June 30, 2005 and June 30, 2006, debt at this business was cut by Euro 175 million.

In Latin America, debt was reduced by Euro 526 million in the first six months of 2006.

When assessing ENDESA's debt level, it must be remembered that at June 30, 2006, ENDESA had the recognised right to collect Euro 3,469 million: Euro 2,275 million for financing the revenue deficit from regulated activities, Euro 1,092 million in compensation for the non-mainland generation deficit and Euro 102 million of stranded costs in Italy. Stripping out the amounts from these regulatory items, ENDESA's net debt at June 30, 2006 was Euro 15,514 million.

The average cost of ENDESA's total debt was 5.59% in 1H06, while the cost of the debt corresponding to the Enersis Group was 9.39%. Stripping out Enersis Group debt, the average cost of ENDESA's debt in 1H06 was 4.18%.
                      and direct        Enersis           Total
                      subsidiaries       Group         ENDESA group
                     Euro    % of    Euro    % of    Euro   % of total
                     million  total  million  total  million
Euro                 14,241    99.5       -       -  14,241      75.0
Dollar                   67     0.5   2,360    50.5   2,427      12.8
Other currencies          -       -   2,315    49.5   2,315      12.2
Total                14,308   100.0   4,675   100.0  18,983     100.0
Fixed rate            8,861    61.9   4,199    89.8  13,060      68.8
Hedged                1,798    12.6      89     1.9   1,887       9.9
Variable              3,649    25.5     387     8.3   4,036      21.3
TOTAL                14,308   100.0   4,675   100.0  18,983     100.0
Avg. life (years)          5.2             5.2             5.2

The average life of the ENDESA Group's debt at June 30, 2006 was 5.2 years.

ENDESA enjoys a high degree of protection against interest-rate risk, since 78.7% of its total debt is either fixed-rate or hedged hedge  
1. A row of closely planted shrubs or low-growing trees forming a fence or boundary.

2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk.

As of June 30, 2006, ENDESA in Spain and its direct subsidiaries, excluding the Enersis Group, had liquidity of Euro 7,433 million, of which Euro 7,100 million corresponded to unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878.

 undrawn un·draw  
tr.v. un·drew , un·drawn , un·draw·ing, un·draws
To draw to one side, as a curtain.

Adj. 1. undrawn - not represented in a drawing
undelineated - not represented accurately or precisely
 credit lines. These balances were sufficient to cover the dividend paid against 2005 earnings on July 3, 2006 and debt maturities falling due over one year.

Additionally, the Enersis Group had liquidity of Euro 1,227 million, of which Euro 447 million corresponded to unconditional undrawn credit lines. The total amount covers debt maturities for the next 17 months.

Financial leverage stood at 124.8% at June 30, 2006, 17.6 percentage points below the level a year earlier.

As a result of Gas Natural's take over bid for ENDESA, the ratings agencies Standard & Poor's and Fitch Ratings Fitch Ratings

An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris.
 decided to place ENDESA's credit rating under review for a possible downgrade Downgrade

A negative change in the rating of a security.

For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA.
, while Moody's Moody's Corporation (NYSE: MCO) is the holding company for Moody's Investors Service which performs financial research and analysis on commercial and government entities. The company also ranks the credit-worthiness of borrowers using a standardized ratings scale.  changed its rating outlook from stable to negative.

In all three cases, the changes were due to the negative impact the transaction would have, were it to go ahead, on the new company's financial position. As a result, at July 25, 2006, ENDESA's long-term debt Long-Term Debt

Loans and financial obligations lasting over one year.

For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt.
 ratings are: Standard & Poor's, A, under review for a possible downgrade; Moody's, A3, negative outlook, and Fitch fitch: see polecat. , A+, under review for a possible downgrade.

REINFORCED re·in·force also re-en·force or re·en·force  
tr.v. re·in·forced, re·in·forc·ing, re·in·forc·es
1. To give more force or effectiveness to; strengthen: The news reinforced her hopes.

The excellent results achieved by ENDESA is recent quarters have easily overcome the pace drawn by the targets of the Strategic Plan presented to the market on October 3, 2005, in the document entitled en·ti·tle  
tr.v. en·ti·tled, en·ti·tling, en·ti·tles
1. To give a name or title to.

2. To furnish with a right or claim to something:
 "ENDESA: stronger business, greater value".

EBITDA and net income growth have clearly surpassed the pace envisaged in the plan. Similarly, the dividend paid and charged to 2005 results and that the Company will propose to the General Shareholder's Meeting for payment out of 2006 income together amount to more than Euro 4,200 million, meaning that in the first two years of the plan, 60% of the total dividend targeted for the period 2005-2009 will have been met.

Moreover, current outlook for the Company's business environment is favorable, underpinned primarily by ENDESA's ability to leverage regulatory developments in Spain, expectations of rising energy prices in Europe and the consolidation of operating growth in its business in Latin America.

As a result, ENDESA believes -based on the project on progress considered in its organic growth strategy- it is in a good position to set more ambitious strategic goals for the coming years regarding earnings growth and shareholder 's return.

This favorable trend will be shown in fiscal year 2006. According to the Company's current estimates and assuming that final price on the energy affected by the Royal Decree Law 3/2006 will be set around Euro 54/MWh by objective market criteria criteria (krītēr´ē),
, the EBITDA will reach Euro 6.930 millions, Euro 205 million more than the Euro 6,725 million guidance presented to the market last October. At the same time, net income will reach Euro 2,900, a Euro 500 million increase on the previous estimate.

As for targets for the entire 2005-2009 period, based on current estimates the Company forecasts the following:
--  EBITDA of Euro 8,330 million in 2009, Euro 830 million more than
    the Euro 7,500 million included in the targets announced last

    The breakdown of this increase by business line is as follows:

    --  Euro 390 million increase to Euro 4,590 million from the
        business in Spain and Portugal, driven by wider margins,
        efficiency improvements and favorable regulatory updates.

    --  Euro 320 million increase to Euro 1,370 million from the
        business in Europe, driven by increases in generations
        margins, efficiency improvements and the addition of new
        assets in Poland.

    --  Euro 120 million increase to Euro 2,370 million from the
        business in Latin America, underpinned by operating
        improvements of its subsidiaries under the new macroeconomic
        outlook of this region.

--  Net income also looks set to grow higher than previously
    estimated, reaching Euro 3,000 million in 2009 vs. the target
    announced in October of Euro 2,200 million.

--  Targeted financial leverage below 140% is unchanged.

The Company will continue to follow the shareholder remuneration policy submitted for approval at the latest General Shareholders' Meeting; i.e. dividend growth from ordinary activities over 12% per annum Per annum

 and a payout pay·out  
1. The act or an instance of paying out.

2. A percentage of corporate earnings that is paid as dividends to shareholders.
 of 100% of capital gains obtained on the disposal of non-strategic assets.

Based on these earnings forecasts, this dividend policy, if ratified rat·i·fy  
tr.v. rat·i·fied, rat·i·fy·ing, rat·i·fies
To approve and give formal sanction to; confirm. See Synonyms at approve.
 by shareholders in the General Meeting, equates to a total payment of Euro 9,900 million in dividends in the 2005-2009 period; i.e. Euro 2,900 million more than the figure announced last October. This would mean a total payment of Euro 9.35 per share in the whole period, of which Euro 2.40 per share were already paid against fiscal year 2005.

Of this amount, around Euro 7,600 million will derive de·rive
1. To obtain or receive from a source.

2. To produce or obtain a chemical compound from another substance by chemical reaction.
 from income from ordinary activities and around Euro 2,300 million from capital gains from disposals of non-strategic assets.

In sum, these new projects demonstrate that the strategic targets presented by the Company to the markets last October were not only reasonable, but achievable, confirming ENDESA's greater value.
                                            Euro million
                              Target announced to
                                 the market in
                                  October 2005         New target
EBITDA in 2006                          6,725             6,930
EBITDA in 2009                          7,500             8,330
Net income in 2006                      2,400             2,900
Net Income in 2009                      2,200             3,000
Dividend from net income
 from ordinary activities
 2005-2009                    (approx.) 5,000   (approx.) 7,600
Dividends from disposals
 of non-strategic assets
 2005- 2009                   (approx.) 2,000   (approx.) 2,300
Total shareholder
 remuneration via
 dividends                    (approx.) 7,000   (approx.) 9,900
Financial leverage (%)             less than 140       less than 140



Net income up 41.5% to Euro 961 million

Net income from this business was Euro 961 million in 1H06, an increase of 41.5% on 1H05 and equivalent to 54.7% to the Company's overall bottom line.

EBITDA rose 31.4% to Euro 2,030 million and EBIT by 43.8% to Euro 1,503 million. Furthermore, both EBITDA and EBIT grew faster in 2Q06 (37.7% and 49.9%, respectively) than in 1Q06.

The excellent performance recorded by ENDESA in its business in Spain and Portugal in the first half came in a environment of significant regulatory changes throughout the period and was underpinned by solid fundamentals and competitive advantages: balance between output and sales, high load factors at its generation facilities, lower fuel costs compared to its peers, sharp increases in the quality of supply, ongoing supply activity to hedge against changes in wholesale prices, execution of the efficiency improvement plan, and intense action in the CDM arena to yield enough emission rights certificates to meet its commitments on emission EMISSION, med. jur. The act by which any matter whatever is thrown from the body; thus it is usual to say, emission of urine, emission of semen, &c.
 reductions in Spain and the rest of Europe.

Also worth highlighting was the Euro 194 million negative impact on 1H06 figures from booking the electricity sold to regulated customers in the areas where ENDESA acts as distributor at the provisional price of Euro 42.35/MWh as established in Royal Decree Law 3/2006. This effect is only temporary, so the negative impact should be neutralized neu·tral·ize  
tr.v. neu·tral·ized, neu·tral·iz·ing, neu·tral·iz·es
1. To make neutral.

2. To counterbalance or counteract the effect of; render ineffective.

 once the final price is established based on objective and transparent market transparent market

A market in which current quotation and trade information is readily available to the public.
 criteria, as detailed in the same Royal Decree Law.

In 1H06, ENDESA recorded under revenues the amount corresponding to compensation for the non-mainland generation historical deficit calculated in accordance with the Ministerial Orders passed on March 30, 2006, which was above the amounts booked at March 31, 2006. This concept amounted to Euro 227 million and was booked as revenues. At 31 December 2005, these compensations earned Euro 31 million of interest, recognised as financial revenue. The impact of these amounts on ENDESA's net income is Euro 197 million.

Key operating highlights

ENDESA: Largest share of the Spanish electricity market

ENDESA maintained its leading position in the Spanish electricity market in the first half. The Company reached a 39.2% market share in ordinary regime electricity generation, a 42.4% share in energy distributed, 52.2% in sales to liberalized customers and 41.6% in total sales to final customers.

760 MW of new installed capacity in 1H06

ENDESA added 760 MW of new capacity to its generation facilities in 1H06, making significant progress in the New Capacity Plan.

The breakdown breakdown /break·down/ (brak´doun)
1. the act or process of ceasing to function.

2. an often sudden collapse in health.

3. loss of self-control.
 of this new capacity is as follows:

--The completion and connection to the network of the 400 MW Cristobal Colon CCGT in Huelva. When the CCGT begins commercial operations it will replace the capacity of the plant's existing fuel and fuel-oil/gas groups.

--New installed capacity on the mainland and non-mainland systems of 246 MW.

--114 MW in renewables/CHP.

In addition, construction of the 800MW CCGT and upgrade of current group 3 to domestic coal the As Pontes site in La Coruna continued on schedule.

ENDESA's territories market evolution

In 1H06, ENDESA's distribution territories total demand was 56,323 GWh. This figure represents growth of 2.3% vs. 1H05, compared to an average increase of 0.9% for the Spanish electricity market.

The number of customers served by ENDESA in the regulated business increased by 254,902 from a year earlier.

In the liberalized market, ENDESA ended June with 1,071,872 customers, up 17.9% on the previous year. The Company's position in this market provides a hedge against both regulatory and market risks.

All-time record in supply quality

In April, the indicator generally used to measure the reliability of supply, the system average interruption duration index (SAIDI or TIEPI) was 6 minutes and 8 seconds overall in the distribution territories served by ENDESA, marking an all-time monthly record in supply quality. Four of the five mainland markets served by the Company beated their respective records that month, outdoing their previous monthly records by between 6 and 22%.

In 1H06 the cumulative SAIDI was 55 minutes, an improvement of 19% vs. 1H05.

These figures confirm the solid and positive trend in the quality of supply by ENDESA across all the Spanish territories it serves and is primarily due to the significant investments made in recent years and the efficiency enhancement programs in its distribution activity within the framework of its Quality Plan.

Carbon credit purchases

ENDESA presently has a broad portfolio of carbon credits derived from Clean Development Mechanisms (CDM) projects at an average price of less than Euro 7.5/tonne.

Specifically, it has locked in 71.5 million tonnes of CO2 under Emissions Reduction Purchase Agreements (ERPA) with a further 24.8 million tonnes covered by Letters of Intent (LOI) and projects under analysis amounting 82.4 million tonnes.

The emission rights acquired under these agreements will permit ENDESA to meet to its CO2 emission reduction commitments for its operations in Spain, Portugal, France and Italy required by the Directive Directive may refer to:
  • European Union directive, a legislative act of the European Union
  • Directive (poem), a highly-acclaimed poem by Robert Frost
  • Directives, used by United States Government agencies (particularly the Department of Defense) to convey policies,
 on Emissions Trading Emissions trading (or cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. .

Within the range of activities under development in this area, it is worth highlighting the "ENDESA Climate Initiative", a pioneering program for acquiring carbon credits that has been launched in China, India India, officially Republic of India, republic (2005 est pop. 1,080,264,000), 1,261,810 sq mi (3,268,090 sq km), S Asia. The second most populous country in the world, it is also sometimes called Bharat, its ancient name. India's land frontier (c. , Brazil and Mexico Mexico, city, Mexico
Mexico or Mexico City, Span. Ciudad de México (Méjico), city (1990 pop. 8,236,960; 1991 met. area est. 20,899,000), central Mexico, capital and largest city of Mexico.
 and will be initiated in Chile in 2H06. The plan envisages the acquisition of 15 million tonnes of credits by 2012. In addition, ENDESA recently reached an agreement with the Chilean company, Consorcio de Santa Marta Santa Marta (sän`tä mär`tä), city (1993 pop. 270,253), capital of Magdalena dept., N Colombia, a port on the Caribbean Sea. , to acquire 100% of its emission reduction certificates, which are estimated to total 2 million tonnes between 2006 and 2012.

NAP (1) See network access protection.

(2) (Network Access Point) The first public Internet exchange points (IXPs). Established by the National Science Foundation in the early 1990s, they were set up to provide a standard way to exchange packets for
 2008-2012: compatible with the Company's competitive generation portfolio

On July 12, 2006, the government unveiled the details of its 2008-2012 National Allocation The apportionment or designation of an item for a specific purpose or to a particular place.

In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as
 Plan for emission rights proposal.

After a preliminary analysis, ENDESA believes that the allocation that will be made based on the methodology set out, together with its portfolio of carbon credits, guarantees that the Company's generation assets will operate on a fully efficient and competitive basis. All these have been already factored in the increases in the targets contained in the Strategic Plan, as detailed previously.

We would highlight that:

--In terms of allocation of rights to coal plants, preference is granted, in accordance with the provisions of the National Mining Plan, to those using domestic coal and plants that have made technological modifications to comply with the Community Directive on Large Combustion combustion, rapid chemical reaction of two or more substances with a characteristic liberation of heat and light; it is commonly called burning. The burning of a fuel (e.g., wood, coal, oil, or natural gas) in air is a familiar example of combustion.  Plants (desulphurisation scrapers, conversion to imported coal, etc.), which means that all of ENDESA's coal plants would be under this criteria.

--In relation to thermal thermal /ther·mal/ (ther´m'l) pertaining to or characterized by heat.

1. Of, relating to, using, producing, or caused by heat.

 plants in the island and non-mainland systems, the incremental costs Costs which are additional costs to the Service appropriations that would not have been incurred absent support of the contingency operation. See also financial management.  that could arise from an emission rights deficit would be fully recognized for purposes of remuneration of generation activities, pursuant to the provisions of Royal Decree 1,747/2003 and the Ministerial Orders dated March 30, 2006.

--Finally, the inevitable internalisation Noun 1. internalisation - learning (of values or attitudes etc.) that is incorporated within yourself
internalization, incorporation

learning, acquisition - the cognitive process of acquiring skill or knowledge; "the child's acquisition of language"
 in wholesale electricity prices derived from implementing the emission rights system and as a result of any potential deficit in rights will increase the income accruing to other generation technologies, especially hydro and nuclear plants.

Regulatory update

Real Decree Law 3/2006

Royal Decree Law 3/2006, enacted towards the end of February, entailed material changes that affected power generation revenues in the first half of the year.

--Since March 3, 2006, sales to the wholesale generation market that match purchases by a distributor belonging to the same group for sale to the regulated market A regulated market is the provision of goods or services that is regulated by a government appointed body. The regulation may cover the terms and conditions of supplying the goods and services and in particular the price allowed to be charged.  are settled at the provisional price of Euro 42.35/MWh. ENDESA's account since that date were drawn up based on this price. However, the Royal Decree Law stipulates that the government will set the definitive price based on objective and transparent market prices. Therefore, if generation costs remain at 1H06 levels during the rest of the year, the final price will be significantly higher, meaning that ENDESA's reported revenues and income will be higher than those appearing in these accounts.

--The amount finally recognised for each business group for financing the deficit in regulated revenues in 2006 will be deducted de·duct  
v. de·duct·ed, de·duct·ing, de·ducts
1. To take away (a quantity) from another; subtract.

2. To derive by deduction; deduce.

 by the value of the free CO2 emission rights received during the period from January 1 and March 2, 2006. As the norm for making this calculation has not been fully defined, ENDESA has opted to be conservative, calculating the proportional proportional

values expressed as a proportion of the total number of values in a series.

proportional dwarf
the patient is a miniature without disproportionate reductions or enlargements of body parts.
 part of the period of freely allocated emission rights received in 2006 and assessing the value taking the average market price in the first two months of 2006. This methodology gives an amount of Euro 121 million, recognised as a decrease in revenues from generation sales and a decrease in the amount receivable to be recouped from the tariff deficit.

--Since March 3, 2006, revenues from power sales on the OMEL OMEL ONGC Mittal Energy Ltd
OMEL Operador del Mercado Ibérico de Energia
OMEL Oficina Mecânica E Elétrica Ltda (Brasil) 
 organised market at the established price for the market are reduced by the value of the freely allocated emission rights related to those revenues.

Since some aspects of the new legislation are provisional, as indicated, the accounting entries at June 30, 2006 related to its application are likewise provisional until the detailed norms are enacted and the corresponding settlements are made.

The tariff deficit

The 1H06 electricity tariff was 4.48% higher and the amount allocated to the nuclear moratorium A suspension of activity or an authorized period of delay or waiting. A moratorium is sometimes agreed upon by the interested parties, or it may be authorized or imposed by operation of law.  has decreased from, thus, increasing the system's regulated revenues. However, these adjustments have been insufficient in·suf·fi·cient
1. Not sufficient.

2. Incapable of proper functioning.
 to cover the system's entire costs, particularly generation costs. This led to a deficit in revenues from regulated activities, estimated at Euro 1,569 million, of which Euro 693 million corresponds to ENDESA.

Of this amount, Euro 121 million corresponding to the provisional valuation of the free CO2 emission rights allocated to ENDESA in the first two months of the year as established by Royal Decree 3/2006 have been deducted from the generation revenues and the remaining Euro 572 million have been booked as a financial investment. This accounting methodology is consistent with the recognized right to recoup recoup

To sell an asset at a price sufficient to recover the original outlay or to offset a previous loss.
 the amount, even though the manner in which it will be recovered will not be regulated until the end of the fiscal year.

Had this Euro 572 million of recoverable revenue shortfall on regulated activities not been booked as a financial asset, revenues, EBITDA and EBIT would be lower by that exact amount and net income by Euro 372 million.

Completion of the regulatory framework for non-mainland systems

On March 30, 2006 the Ministry of Industry, Tourism and Trade approved the Ministerial Orders which fully develops the Royal Decree 1747/2003, which rules Spain island and non-mainland systems. These orders establish the methodology for calculating regulated remuneration on generation in these systems and, accordingly, the compensation to be received by the utilities operating in them.

Application of the orders gives rise to compensation of Euro 902 million to ENDESA for the 2001-2005 period above the provisional amounts envisaged in the subsequent Royal Decree tariffs This is a list of tariffs and trade legislation:
  • List of tariffs in Canada
  • List of tariffs in United States
  • List of tariffs in India
  • List of tariffs in China
  • List of tariffs in Russia
 of each year. To December 31, 2005, ENDESA's financial statements recognised revenues for this concept of Euro 644 million, recording the remaining Euro 258 million in 1H06. Of this amount, Euro 227 million were booked as revenues and the remainder, i.e. Euro 31 million, as financial revenues as they correspond to interest accrued.

With the regulatory framework in place, the island and non-mainland generation business is guaranteed sufficient revenues going forward to meet the costs of the business and allow for appropriate fuel price hedges, while ensuring a reasonable return.

July 1, 2006 tariff revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features.

On June 30, the Spanish cabinet passed Royal Decree 809/2006 revising the electricity tariff from July 1, 2006. This decree establishes an average increase of 1.38% in the average tariff for the sale of electricity that came into effect on January 1, 2006. It also regulates the application of the tariff increase to the existing tariff structure. In the share-out Noun 1. share-out - a distribution in shares

distribution - the act of distributing or spreading or apportioning

generosity, unselfishness - acting generously

giving, gift - the act of giving
 of the increase between the various tariffs, the bulk was among medium- and high-voltage adj. 1. having, operating on, or powered by high voltage; as, a high-voltage generator; a high-voltage line s>.
2. same as high-powered.

Adj. 1.
 customers, whose tariffs have risen by 6%. Conversely con·verse 1  
intr.v. con·versed, con·vers·ing, con·vers·es
1. To engage in a spoken exchange of thoughts, ideas, or feelings; talk. See Synonyms at speak.

, the tolls approved by Royal Decree 1556/2005 have not been modified mod·i·fy  
v. mod·i·fied, mod·i·fy·ing, mod·i·fies
1. To change in form or character; alter.


The Royal Decree removes the cap on the annual tariff increase established in Royal Decree 1432/2002 governing gov·ern  
v. gov·erned, gov·ern·ing, gov·erns
1. To make and administer the public policy and affairs of; exercise sovereign authority in.

 the tariff methodology. A 1.4% of the change in costs recorded during the year and a further 0.6% increase due to revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents

Title Author
The Resonance of Light James Alan Gardner
Out of China Julie E.
 to estimates made in the previous two years was in place.

It also stipulates that from July 1, 2006, the amount corresponding to the annual payment calculated for the straight-line straight-line
1. Lying in a straight line.

2. Relating to a device whose linkage produces or copies motion in straight lines.

 recovery over a period of 14 and a half years of the NPV NPV

See: Net present value
 of the deficit from regulated activities arising in Euro 3,810 million to be included in the tariff as an expense. The amount at December 31 of each year will be calculated by updating the pending balance at that date of the previous year applying an interest rate equivalent to the 3M Euribor and subtracting the payments of the current year. The Royal Decree allows the companies entitled to these reimbursements to transfer to third parties and securitize Securitize

The practice of a company selling accounts receivables or other debts owed to it. The third party that buys the debt assumes ownership of it and the responsibility for collecting the debts, and keeps the repayments when made.
 the collection rights.

Prior to the enactment of Royal Decree 809/2006, Royal Decree 470/2006 was passed, which modified the percentage of the electricity tariff allocated to the nuclear moratorium. This norm reduced the percentage form 1.724% to 0.33%, thereby freeing up resources to the system. This reduction comes on top of the one approved in the electricity tariff for 2006, which established the percentage for the nuclear moratorium at 1.724% mentioned previously, vs. the 3,04% applied in 2005.

Elimination of Competition Transition Costs (CTCs)

On June 23, the Spanish cabinet passed Royal Decree Law 7/2006, adopting emergency measures for the energy sector. Among other measures, this law repealed the sixth transitory TRANSITORY. That which lasts but a short time, as transitory facts that which may be laid in different places, as a transitory action.  provision of the Electricity Industry Law 54/1997, of November November: see month.  27, regarding CTCs (stranded costs), thereby eliminating them.

The elimination of the CTC CTC - Cornell Theory Center  mechanism has no impact whatsoever on ENDESA's financial statements, as the Company has no future CTCs pending to recover, nor does it expect any future collections as, under current circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.
     2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or
, the estimated amounts will be recovered through the market.

In addition, the Royal Decree Law empowers the government to set premiums on domestic coal consumption outside the framework of the CTCs, so their elimination does not affect the future collection of these premiums by ENDESA.

Sharp growth in sales: +19.5%

Sales from the business in Spain and Portugal totalled Euro 4,826 million in 1H06, a 19.5% increase compared to 1H05. Growth was primarily due to the increase in demand, the rise in final prices and volume sales to liberalized customers, to higher prices in the wholesale electricity market in January and February (i.e. before Royal Decree Law 3/2006 came into effect) and to the application of the Ministerial Orders regulating reg·u·late  
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

 the calculation of remuneration of island and non-mainland generation.

The increase in sales was enough to offset the rise in costs, mainly fuel (15.2%) and energy purchases (15.7%).

Revenues: up 21.9%

Revenues for the electricity business in Spain and Portugal reached Euro 5,268 million in the first half of 2006, up 21.9% on 1H05. Of this amount, sales accounted for Euro 4,826 million, 19.5% higher than in 1H05.
                                       Euro million
                                 1H06      1H05     Change    % Chg
Mainland generation under
 Ordinary Regime                  2,126     2,175       (49)     (2.3)
   Sales to deregulated
    customers                       879       698       181      25.9
   Other sales in the OMEL        1,247     1,477      (230)    (15.6)
Renewable/CHP generation            142        93        49      52.7
Regulated revenues from
 distribution                       890       802        88      11.0
Non-mainland generation and
 supply(*)                        1,088       592       496      83.8
Coal CTC                             19        10         9      90.0
Supply to deregulated
 customers outside Spain            147       113        34      30.1
Regulated revenues from gas
 distribution                        23        20         3      15.0
Unregulated gas supply              279       141       138      97.9
Other sales and services
 rendered                           112        94        18      19.1
TOTAL                             4,826     4,040       786      19.5

(*) The figure for 1H06 includes Euro 227 million corresponding to
    compensation for non-mainland generation deficit calculated in
    accordance with the Ministerial Orders passed on March 30, 2006,
    which was above the amounts recorded at December 31, 2005.

Mainland generation

ENDESA's mainland electricity output totalled 38,025 GWh in the first six months of the year, 5% less than in 1H05.

Of this amount, 36,789 GWh corresponded to electricity generated under the ordinary regime (-5.7%) and 1,236 GWh under renewables /CHP (+22.6%).

The fall in ordinary regime generation was mostly due to higher hydro output by the system as a whole, to scheduled maintenance downtimes of certain important fossil fuel fossil fuel: see energy, sources of; fuel.
fossil fuel

Any of a class of materials of biologic origin occurring within the Earth's crust that can be used as a source of energy. Fossil fuels include coal, petroleum, and natural gas.
 groups and ENDESA's prioritisation of margins over market share.

ENDESA's coal plants continued to play an important role in meeting Spanish electricity demand in 1H06. Actually, 13.4% of the total mainland demand was fulfilled ful·fill also ful·fil  
tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils
1. To bring into actuality; effect: fulfilled their promises.

 by these plants. Their load factor was 77.1% proving that, in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding.

See also: Spite
 the CCGT and wind farm capacity additions, coal plants are still indispensable to meet the country's electricity requirements.
Sales to supply through bilateral contracts                    15,356
Sales to distribution from March 3, 2006 (Euro 42.35/MWh)      10,230
Sales at pool price                                            11,203
TOTAL                                                          36,789

Sales to the ordinary regime totalled Euro 2,126 million through June, Euro 49 million or 2.3% lower than in the same period last year. This amount includes sales made after March 3 to ENDESA Distribution to supply regulated customers in ENDESA's distribution territories, which were recognised at a provisional price of Euro 42.35/MWh in accordance with Royal Decree Law 3/2006.

Worth highlight is that the average pool price in 1H06 was Euro 70.5/MWh, 21.8% higher than in 1H05.

The negative impact on the 1H06 accounts from selling to regulated customers the 10,230 GWh of electricity produced from March to June at the provisional price of Euro 42.35/MWh, pursuant to the Royal Decree Law 3/2006, was Euro 194 million. This effect is temporary, so the negative impact should be recovered once the definitive price is established based on objective and transparent market criteria, as detailed in the same Royal Decree Law.

Moreover, in accordance with Royal Decree Law 3/2006, the sales figure was deducted by Euro 121 million corresponding to the provisional market value of certain CO2 emission rights allocated freely from the settlement by OMEL.

ENDESA renewable/CHP generation: +22.6%

Renewable and CHP generation companies fully consolidated by ENDESA produced 1,236 GWh in 1H06, 22.6% more than in 1H05. In addition, ENDESA has holdings in other renewable/CHP companies, which generated 1,948 GWh in the same period.

Revenues from sales of renewable/CHP energy generated by consolidated companies totalled Euro 142 million, 52.7% more than in 1H05. This underpinned a 49.2% increase in EBITDA to Euro 94 million and a 52.4% increase in EBIT to Euro 64 million.

Supply to liberalized customers

In the supply to deregulated customers business, we would highlight that contrary to the decisions made by other operators in light of the pool prices and related regulatory updates, ENDESA has opted to pursue a selective supply strategy.

This strategy, which targets higher value added Value Added

The enhancement a company gives its product or service before offering the product to customers.

This can either increase the products price or value.
 customers, enables ENDESA to leverage the advantages of its vertical integration in generation-supply and its highly competitive generation mix, providing the Company with an appropriate hedge against regulatory risk and volatility Volatility

1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time.

2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the
 in wholesale market prices. This policy will allow ENDESA to achieve reasonable, guaranteed returns over the medium and long run from the generation business, thus maximising Adj. 1. maximising - making as great as possible

increasing - becoming greater or larger; "increasing prices"
 shareholder return.

A 12.4% increase in the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution.  to ENDESA's final liberalized customers in 1H06 vs. 1H05 was attained as a consequence of this selective policy.

ENDESA had 1,071,872 liberalized customers at June 30, 2006. Of these, 1,006,225 corresponded to the mainland deregulated market, 62,254 to the non-mainland systems and 3,393 to other European European

emanating from or pertaining to Europe.

European bat lyssavirus
see lyssavirus.

European beech tree

European blastomycosis
see cryptococcosis.
 deregulated markets.

ENDESA's sales to these customers totalled 18,886 GWh in the first six months of 2006, 7.7% more than in the same period of 2005. Of this amount, 16,756 GWh were sold on the Spanish liberalized market, an increase of 8.3%, and 2,130 GWh on other deregulated European markets, up 3.3%.

Revenues from supply to liberalized customers in Spain (excluding tolls

paid to ENDESA Distribution), totalled Euro 943 million, a 26.6% increase on 1H05. Of this amount, Euro 879 million corresponded to the mainland deregulated market and Euro 64 million to the non-mainland market.

Revenues from supply to liberalized European markets other than Spain rose 30.1% to Euro 147 million.

As for customer service, ENDESA's retention rate for customers switching to the deregulated market was 99.2%, outperforming all its competitors and reflecting a high degree of loyalty towards the Company.


ENDESA distributed 56,323 GWh of electricity in the Spanish market through June, 2.3% more than in the first six months of last year.

Revenues from regulated distribution activities totalled Euro 890 million, up 11% on 1H05. This included Euro 43 million in settlements from prior years, mostly from incentives for energy losses. Stripping out this effect, revenues from regulated distribution activities would have increased by 5.6%.

ENDESA supplied 34,290 GWh to customers on the regulated Spanish market in the period, 6.8% more than in the first six months of last year.

Non-mainland generation

ENDESA's output in non-mainland systems rose 3.7% in 1H06 vs. 1H05 to 6,850 GWh. Sales were 83.8% higher, at Euro 1,088 million.

As indicated previously, these sales include Euro 227 million of additional compensation above that already recorded at December 31, 2005 for deficits in the non-mainland systems in 2001-2005 as recognised in the Ministerial Orders of March 30.

Gas distribution and supply: total market share of 11.4%

ENDESA sold a total of 13,531 GWh of natural gas in 1H06, 17.4% more than in the same period last year.

Of this amount, 13,214 GWh were sold through fully consolidated companies, representing a 22.2% increase. And of these sales, 11,753 GWh were on the liberalized market (+28.5%) and 1,461 GWh on the regulated market (-4.5%).

The 13,531 GWh sold in both the regulated and deregulated markets, together with the 9,749 GWh consumed con·sume  
v. con·sumed, con·sum·ing, con·sumes
1. To take in as food; eat or drink up. See Synonyms at eat.

 in ENDESA's own generation plants, amount to a total of 23,280 GWh, implying an 11.4% market share.

Revenues from gas sales in the liberalized market rose 97.9% in 1H06 vs. 1H05 to Euro 279 million.

Revenues from regulated gas distribution totalled Euro 23 million, an increase of 15% on the figure for the same period last year. The two businesses contributed a combined gross margin of Euro 67 million.

Other operating revenues operating revenue

Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue.

Other operating revenues in 1H06 came to Euro 442 million, Euro 160 million more than in 1H05.

This item includes Euro 336 million corresponding to the 1H06 portion of CO2 emission rights allocated to ENDESA within the scope of the Spanish National Allocation Plan for emissions, which are recorded under revenues.

This figure is Euro 139 million higher than in 1H05, mostly because of the higher value of the rights received in 2006. The higher revenue is offset by the higher expense recorded for use of the emission rights.

Operating expenses Operating expenses

The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted.

The breakdown of operating expenses in the Spanish and Portuguese business is provided below:
                                       Euro million
                                 1H06      1H05     Change    % Chg
Purchases and services            2,315     1,911       404      21.1
 Power purchases                    537       464        73      15.7
 Fuel consumption                 1,061       921       140      15.2
 Power transmission expenses        173       109        64      58.7
 Other supplies and services        544       417       127      30.5
Personnel expenses                  500       442        58      13.1
Other operating expenses            499       488        11       2.3
Depreciation and amortisation       527       500        27       5.4
TOTAL                             3,841     3,341       500      15.0

Power purchases

Power purchases in the period rose 15.7% to Euro 537 million. These mainly entail entail, in law, restriction of inheritance to a limited class of descendants for at least several generations. The object of entail is to preserve large estates in land from the disintegration that is caused by equal inheritance by all the heirs and by the ordinary  transactions on the wholesale generation market. This increase in power purchases was due to the 21.8% rise in the average pool price and higher purchases on the market.

The remainder relates to gas purchases to supply deregulated customers, which rose as a result of the increase in sales to these customers and in gas prices.

Fuel consumption

Fuel consumption through June this year amounted to Euro 1,061 million, an increase of 15.2% on the same period in 2005.

This increase was due to the generalised Adj. 1. generalised - not biologically differentiated or adapted to a specific function or environment; "the hedgehog is a primitive and generalized mammal"

biological science, biology - the science that studies living organisms
 increase in raw materials prices on international markets. These higher costs, however, were offset by the Company's proactive fuel procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases.  policy, which resulted in below-market purchasing prices.

Compared to the estimated 7.3% increase in fuel costs by the rest of the utilities in the mainland system, ENDESA's rose only by 0.1%. This has considerably strengthened the Company's competitive position with respect to price and generation mix.

Other supplies and services

Expenses under this item totalled Euro 544 million, Euro 127 million higher than in 1H05.

This increase reflects the recognition of Euro 392 million of expenses in connection with rights acquired to cover the CO2 emissions made throughout the first six months of the year, which totalled 24.4 million tonnes: 18.1 million tonnes for the mainland and 6.2 million for non-mainland production. This cost was Euro 96 million higher than in 1H05, mostly because of the higher value assigned as·sign  
tr.v. as·signed, as·sign·ing, as·signs
1. To set apart for a particular purpose; designate: assigned a day for the inspection.

 to the freely allocated emission rights in 2006 vs. 2005, as mentioned in the section "Other operating expenses".

The net effect of revenues and expenses booked in 1H06 to cover CO2 emissions was Euro 56 million, corresponding to an estimated rights deficit of 3.5 million tonnes.

"Other supplies and services" item includes a Euro 51 million reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its  equivalent to the amount the Extremadura Extremadura (ĕstrəməd`rə), autonomous region (1990 pop. 1,102,319), W central Spain, on the border with Portugal.  regional government must reimburse re·im·burse  
tr.v. re·im·bursed, re·im·burs·ing, re·im·burs·es
1. To repay (money spent); refund.

2. To pay back or compensate (another party) for money spent or losses incurred.
 ENDESA in connection with the environmental tax on its plants paid by the Company from 1998 to 2005 after the Constitutional Court ruled this to be against the Spanish Constitution on June 13.

Personnel and other fixed operating expenses

At June 30, 2006, the workforce in Spain and Portugal totalled 12,725 employees, 41 fewer employees at June 30, 2005.

Personnel expenses rose 13.1% vs. 1H05 to Euro 500 million.

These expenses include Euro 39 million corresponding to a provision for headcount head count or head·count
1. The act of counting people in a particular group.

2. The number of people counted in this way.

Noun 1.
 reduction, mainly related to the deviation DEVIATION, insurance, contracts. A voluntary departure, without necessity, or any reasonable cause, from the regular and usual course of the voyage insured.
 in the provision caused by the performance of inflation (CPI (1) (Characters Per Inch) The measurement of the density of characters per inch on tape or paper. A printer's CPI button switches character pitch.

(2) (Counts Per I
) and to the provision for the early layoff Layoff

1. When a company eliminates jobs regardless of how good the employees' performance. 2. A risk reduction, made by investment bankers, that minimizes the potential downside associated with a commitment to purchase and sell a stock issue unsubscribed by stockholders holding
 of specific workforce groups, which will help the Company to achieve part of the cost reductions envisaged in the Strategic Plan.

Other operating expenses rose just 2.3%, to Euro 499 million.

Net financial expenses: down 16.2%

ENDESA reported net financial expenses for the first half of 2006 of Euro 200 million, 15.6% lower than in 1H05. Of this amount, Euro 192 million corresponded to net financial expenses, 16.2% less than in the same period last year, and Euro 8 million to exchange-rate losses.

Net financial expenses included Euro 31 million of revenue corresponding to the interest accrued to December 31, 2005 on the higher compensations derived from the non-mainland generation deficit calculated in accordance with the Ministerial Orders passed on March 30, 2006, and Euro 11 million of revenue corresponding to interest accrued to June 30, 2006 for the environmental tax paid by ENDESA from 1998 to 2005, which, as pointed out previously, must be reimbursed to the Company by the Extremadura regional government.

When assessing financial results, the financial asset corresponding to the tariff deficit and non-mainland compensation, both of which bear financial interest, must be considered.

Net financial debt at the Spain and Portugal business at June 30, 2006 stood at Euro 11,860 million vs. Euro 11,461 million at December 31, 2005. This slight increase is due to the Euro 1,207 million paid in 1H06 to finance the revenue shortfall from regulated activities.

Equity-accounted income

Equity-accounted income in the business in Spain and Portugal totalled Euro 42 million, a 100% increase vs. 1H05. This amount includes, among others, the contribution from Nuclenor.

Sale of NQF Gas

In the second quarter of 2006, ENDESA sold its 49% holding in NQF Gas for Euro 59 million, booking a net capital gain of Euro 21 million.

Corporate Taxes

The corporate tax charge at June 30, 2006 amounted to 30% of net income, compared with 21.5% in 1Q06. This increase was mainly due to the decision that Unelco ENDESA not to avail the fiscal regimen regimen /reg·i·men/ (rej´i-men) a strictly regulated scheme of diet, exercise, or other activity designed to achieve certain ends.

 for investments on the Canary Islands Canary Islands, Span. Islas Canarias, group of seven islands (1990 pop. 1,589,403), 2,808 sq mi (7,273 sq km), autonomous region of Spain, in the Atlantic Ocean off Western Sahara. They constitute two provinces of Spain. Santa Cruz de Tenerife (1990 pop. .

Although this change implies (logic) implies - (=> or a thin right arrow) A binary Boolean function and logical connective. A => B is true unless A is true and B is false. The truth table is

A B | A => B ----+------- F F | T F T | T T F | F T T | T

It is surprising at first that A =>
 a higher tax charge in the 2006 accounts, it increases the Company's value, as it will be able to apply deductions on investments in future years. This decision was taken to place value creation before posting higher income.

Cash flow from operating activities: Euro 1,257 million

Cash flow from operating activities from the Spanish and Portuguese business totalled Euro 1,257 million in 1H06, an increase of 20.1% on the same period last year.

Investments: Euro 1,074 million (+12.3%)

Investments in Spain and Portugal in 1H06 totalled Euro 1,074 million, 12.3% more than in the same period last year.
                                    Euro million
                                 1H06          1H05         % Chg
Capex                                  974          891           9.3
Intangibles                             43           32          34.4
Financial                               57           33          72.7
Total investments                    1,074          956          12.3

                                    Euro million
                                 1H06          1H05         % Chg
Generation                             374          304          23.0
 Ordinary regime                       325          283          14.8
 Renewables/CHP                         49           21         133.3
Distribution                           584          575           1.6
Others                                  16           12          33.3
Total                                  974          891           9.3

90.7% of total investment was spent on capex to develop or enhance electricity generation and distribution facilities.

The breakdown of capex reflects the considerable effort the Company has been making to improve service quality in Spain, with investment in distribution facilities accounting for 60.0% of the total.

The significant increase in capital expenditure to expand ENDESA's generation capacity, above all on the construction of the Cristobol Colon (400 MW) and As Pontes (800 MW) CCGTs and capacity increases in renewables/CHP, should be also highlighted.


Net income of Euro 322 million (+76.9%)

Net income from the business in Europe totalled Euro 322 million in the first half of 2006, an increase of 76.9%.

This figure includes Euro 118 million after minorities due to the increase in value of the business caused by the restatement of the tax base of Endesa Italia's fixed assets to their book values, in accordance with Italian law

These results confirm the steady improvement in this business line, largely driven by the positive performance of its operating indicators, efficiency gains, and ENDESA's ability to take advantage of growth opportunities in its markets by developing new projects and operations.

Growth projects

In 1H06, ENDESA's business in Europe focused on achieving its two main strategic targets: consolidating its position and seeking new growth opportunities.

Gas infrastructure

In the second quarter of the year, preliminary work began on the offshore regasification terminal to be built off the coast of Livorno. Estimated investment amounts to around Euro 400 million and authorised Adj. 1. authorised - endowed with authority

lawful - conformable to or allowed by law; "lawful methods of dissent"

legitimate - of marriages and offspring; recognized as lawful
 regasification capacity is close to 4 billion cubic metres Noun 1. cubic metre - a metric unit of volume or capacity equal to 1000 liters
cubic meter, kiloliter, kilolitre

metric capacity unit - a capacity unit defined in metric terms
 (bcm) per annum of which, under the terms of the agreements negotiated, ENDESA Europa will control approximately ap·prox·i·mate  
1. Almost exact or correct: the approximate time of the accident.

 2 bcm per annum.

This capacity will be used to feed the CCGTs it operates in Italy and those planned for the coming years. Construction is scheduled to take around 24 months, with the terminal expected to come on stream by the end of 2008.

This project, together with the one in the Gulf of Trieste The Gulf of Trieste (Italian: Golfo di Trieste, Slovene: Tržaški zaliv, Croatian: Tršćanski zaljev, German: Golf von Triest ) is a shallow bay of the Adriatic Sea, in the extreme northern part of the Mediterranean Sea. , guarantees competitive gas supplies for the Italian market and increases the flexibility of ENDESA's fuel mix at its different sites.

New generation capacity

At ENDESA Italia, construction on the 2x 400MW Scandale CCGTs in Calabria is proceeding according to schedule.

In line with planned growth in renewable energies, in June the company added the 14 MW Iardino wind plant acquired by ENDESA Europa from Gamesa to its generation mix.

Meanwhile, the French generating company Snet has undertaken a number of initiatives in line with its Industrial Plan, aimed at developing new capacity by means of the future optimisation of its current sites in order to bring total new capacity of 2,000 MW in CCGTs and 200 MW in renewables/CHP on-stream. Noteworthy was the tender won to build a 10MW Lehaucour wind farm which will imply an estimated investment of Euro 10 million.


In June, ENDESA Europa and the Italian group, Merloni, began selling electricity to the Italian retail market through MPE MPE
Master of Public Education
 Energia Energia
 also called RKK Energia formerly OKB-1

Russian aerospace company that is a major producer of spacecraft, rockets, and missiles. Energia originated in 1946 as a department within a Soviet institute conducting work on long-range missiles.
, a 50/50 joint venture. Merloni brings to the JV a portfolio of more than 5,000 points of supply across all Italian regions, and up to 2 TWh of sales volume.

Snet also made significant progress in its supply activities during the period. It signed an agreement with the French multinational company Auchan to supply 400 GWh of power in 2006 and an agreement with SNCF (the French railway operator) to supply 6,600 GWh in the period 2007-2011.


ENDESA's investees in Europe paid dividends to their parent companies 1H06.

ENDESA Italia paid shareholders Euro 176 million of dividends, of which Euro 140.8 million corresponded to ENDESA Europa.

Meanwhile, an agreement was reached at Snet's General Shareholders' Meeting held on March 1, 2006 to pay shareholders Euro 59.7 million in dividends. After the Euro 21.2 million interim dividend paid on March 9, Snet paid out a final dividend of Euro 38.5 million, of which Euro 25 million corresponded to ENDESA Europa.

Finally, at its meeting of May 31, the Board of Directors of Moroccan utility Energie Electrique de Tahaddart approved the payment of Euro 6 million of dividends to shareholders, of which Euro 1.9 million corresponded to ENDESA Europa for its 32% holding.

Sharp increase in output and sales

ENDESA's total output in Europe in the first half of 2006 amounted to 18,671 GWh, an increase of 10% on the year before. Electricity sales rose 11.3% to 26,635 GWh.
              Output (GWh)                  Sales (GWh)
             1H06      1H05     % Chg      1H06      1H05     % Chg
Italy        13,065    11,571      12.9    16,778    15,877       5.7
France        4,606     4,418       4.3     8,857     7,066      25.3
Poland*       1,000       978       2.2     1,000       978       2.2
Total        18,671    16,967      10.0    26,635    23,921      11.3

(*) ENDESA is present in the generation business in Poland through the
    Bialystock CHP, which is controlled by Snet.

EBIT: up 38.7%

ENDESA Europa's EBITDA stood at Euro 587 million, up 29.6% versus 1H05, while EBIT totalled Euro 459 million, an increase of 38.7%.
                             EBITDA                    EBIT
                         (Euro million)           (Euro million)
                      1H06    1H05   % Chg    1H06    1H05    % Chg
ENDESA Italia           485     363    33.6     409     295      38.6
Snet                    102      87    17.2      50      33      51.5
Trading                  21      14    50.0      21      14      50.0
Holding & others        (21)    (11)     NA     (21)    (11)       NA
Total                   587     453    29.6     459     331      38.7

Worth highlight is the Euro 21 million contribution to EBIT from trading operations. ENDESA can conduct these operations risk-free Adj. 1. risk-free - thought to be devoid of risk
riskless, unhazardous

safe - free from danger or the risk of harm; "a safe trip"; "you will be safe here"; "a safe place"; "a safe bet"
 thanks to its solid generation base in Italy and France.

ENDESA Italia continues to improve

ENDESA Italia's revenues totalled Euro 1,503 million in 1H06, up 38.7% on the same period last year. This growth was mainly the result of a 5.7% increase in electricity sold, the 25.2% increase in average electricity prices in the Italian market and the fact that the Delibera 254 for unfair trade practices was not levied on the Company, allowing it to release a Euro 26 million provision made in previous years.
                                       Euro million
                                 1H06      1H05     Change    % Chg
Revenues                          1,503     1,084       419      38.7
Gross margin                        562       439       123      28.0
EBITDA                              485       363       122      33.6
EBIT                                409       295       114      38.6

ENDESA Italia generated a total of 13,065 GWh of electricity, an increase of 1,494 GWh or 12.9% vs. the first half of 2005. Its market share in Italy at the end of June stood at 8.7%.

The generation structure of ENDESA Italy in 1H06 reflects a higher percentage of fuel-oil production than last year (19.9% vs. 17.6%), as a result of the application of extraordinary measures to reduce gas consumption through March in order to guarantee supply.

Although ENDESA Italia's fuel costs increased by Euro 185 million in 1H06, this was less than the increase in revenues due to higher electricity prices.

On February 23, the Italian government approved the National Allocation Plan (NAP) for greenhouse gas greenhouse gas
Any of the atmospheric gases that contribute to the greenhouse effect.

greenhouse gas 
 emission rights, which was subsequently ratified by the EU authorities. This NAP allocates ENDESA Italia 33.9 million tonnes for the period 2005-2007.

On May 4, the Italian national CO2 emission rights register was formally set up for the rights allocated in the NAP and those acquired. In 1H06, ENDESA Italia booked Euro 76 million of revenues from the free allocation and use of emission rights and Euro 106 million of expenses for the cost of emissions. Accordingly, the net cost of emission rights in the income statement was Euro 30 million, corresponding to an estimated deficit of 1.9 million tonnes of CO2.

Finally, ENDESA Italia restated the tax bases of its fixed assets to their book value, in accordance with the Italian 2006 Financial Act. Therefore, it recorded a Euro 148 million lower corporate tax charge (Euro 118 million after minorities) corresponding to the tax savings provided for in this norm.

Earnings growth at Snet is sustained

Earnings at Snet continued to improve in 1H06, with EBITDA rising 17.2% to Euro 102 million and EBIT by 51.5% to Euro 50 million vs. 1H05.
                                           Euro million
                                1H06      1H05     Change     % Chg
Revenues                           569       431       138       32.0
Gross margin                       174       160        14        8.8
EBITDA                             102        87        15       17.2
EBIT                                50        33        17       51.5

Revenues in the period rose 32.0% to Euro 569 million, mostly driven by the 22.5% growth in energy sales to 9,857 GWh.

Variables costs increased Euro 124 million, basically as a result of the Euro 101 million increase in energy purchases and the Euro 30 million increase in the expense associated with emission rights, due to their higher unit cost in 1H06. However, the latter impact is offset by a similar increase in revenues from the free allocation of emission rights.

Finally, in 1H06 Snet completed the headcount reduction plan, resulting in a 22% decrease in the total workforce; Snet had 1,373 employees on staff when ENDESA Europa took control of the company. These layoffs came after negotiations with union representatives.

European debt: Euro 1,540 million

ENDESA's business in Europe had net financial debt at June 30, 2006 of Euro 1,540 million, Euro 254 million higher than at the end of 2005. This increase was due to the payment of 2005 corporate income tax in the second quarter this year. However, since June 30, 2005, debt for the business in Europe has declined by Euro 175 million.

Net financial results amounted to an expense of Euro 25 million in 1H06, Euro 5 million less than in 1H05.

Cash flow from operating activities: Euro 340 million

Operating cash flow Operating cash flow

Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements.
 generated by this business stood at Euro 340 million, compared to Euro 347 million in the first half of 2005. This decrease was the result of the one-off tax payment made by ENDESA Italia to avail itself of Italian legislation regarding future tax credits. Stripping out this effect, cash flow from operating activities would have increased by 19.6%.

Investments: Euro 132 million

Investments in 1H06 in the European business totalled Euro 132 million. Of this amount, Euro 84 million were capex, Euro 21 million were accounted for by ENDESA Italia and Euro 63 million by Snet.


Sharp growth in net income: +164.9%

Net income at ENDESA's Latin American business totalled Euro 302 million in 1H06, an increase of Euro 188 million, or 164.9%, on 1H05 and equivalent to 17.2% of ENDESA's total net income.

This sharp growth reflects the consolidation of the favourable economic trends witnessed in the region since 2005, marked by higher growth and more stable exchange rates in ENDESA's operating markets, as well as the subsidiaries' ability to leverage the improved environment and continue reaping positive results from ongoing operational efficiency efforts.


Growth in volume sales in generation and distribution

Under favourable economic environment, demand rose sharply in 1H06 in the countries where ENDESA has subsidiaries, all of which posted growth above 3.2%. We highlight the increase in demand in Argentina (9.3%), Peru (6.9%) and Chile (5.7%).

Higher demand led ENDESA's subsidiaries to record total electricity sales of 28,549 GWh, up 5.3% vs. 1H05, with particularly significant increases in Peru (+7.1%) and Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city.  (+5.7%).

Regarding output, ENDESA generated 29,736 GWh in the region in 1H06, a 4.6% increase vs. 1H05, or 5.3% in like-for-like terms, i.e. stripping out the generation output from the plants sold by Brazilian company Ampla in 2006. The largest increases were in Brazil (+9.3%, after deducting this output), Chile (+8.4%) and Peru (+4.6%).
                             Output (GWh)        Sales (GWh)
                            1H06   % Chg vs.    1H06   % Chg vs.
                                      1H05                1H05
Chile                        9,147       8.4     6,088       4.8
Argentina                    9,018       4.0     7,274       5.1
Peru                         3,339       4.6     2,398       7.1
Colombia                     6,058       1.9     5,193       5.7
Brazil                       2,174      (0.1)    7,596       5.3
TOTAL                       29,736       4.6    28,549       5.3

Improvement in generation and distribution margins

Growth in demand, tighter reserve margins and the favourable generation mix at ENDESA's subsidiaries caused the unit margin of generation companies to increase by 31% in 1H06 vs. 1H05 to US$ 26/MWh produced.

Generation margins, measured in dollars, increased sharply, above all in Chile (+83.3%), thanks to a generation mix with a stronger weight towards hydro and to higher prices; in Brazil (+22.5%), owing to owing to
Because of; on account of: I couldn't attend, owing to illness.

owing to prepdebido a, por causa de 
 higher prices; and in Argentina (+14.1%) for the improved generation mix and higher prices due to the pass-through pass-through
1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food.

2. A route through which something is permitted to pass.

 of greater fuel costs to the wholesale electricity market (MEM (MicroElectroMechanical) See MEMS. ). Conversely, margins in Colombia shrunk shrunk  
A past tense and a past participle of shrink.


a past tense and past participle of shrink

shrunk, shrunken shrink
 on the back of lower wholesale prices caused by the increase in rainfall compared to the same period last year.

In distribution, operating margins Operating Margin

A ratio used to measure a company's pricing strategy and operating efficiency.

Calculated by:
 were considerably boosted by improved pass-through of generation costs in Brazil and operating efficiency improvements at the companies, leading to a considerable improvement in their operating indicators. The unit margin stood at US$ 36.2/MWh distributed, an increase of 22% vs. 1H05.

Reduction in distribution losses

Energy distribution losses were 11.4% in 1H06, 0.6% below the level in recorded in 1H05. Improvements were made in all countries, especially Argentina and Brazil, where the percentage of losses declined by 0.6 and 0.9 percentage points, respectively.

These improvements in the distribution network management are the result of an ongoing technological innovation policy, as demonstrated by the positive progress made in Brazil through the development and rollout of the new Ampla grid grid: see electron tube.

(1) Any interconnected set of nodes such as the electric power network or a communications network.

(2) "The Grid" is a nickname for Internet2. See Internet2.

Generation projects

ENDESA Chile has signed an agreement with electricity provider Colbun -controlled by the Matte Group, one of Chile's leading business conglomerates- for its inclusion in the Aysen Project, which entails the construction starting in 2008 of four hydro plants with total installed capacity of 2,430 MW.

The project will require an estimated investment of US$4bn, of which US$2.5bn corresponds to generation and the remaining US$1.5bn to transmission lines.

The agreement states that two companies will create a limited liability company in which ENDESA Chile will hold 51% and Colbun 49%. It also states that, given its contribution to the project, ENDESA Chile will receive 12.3% of the energy produced by the project over a 30-year period starting from when each of the plants envisaged by the project begin operating commercially. The remaining energy output will be divided between the companies in accordance with their holding; i.e. 51% to ENDESA Chile and 49% output to Colbun.

In 1H06, ENDESA Chile continued work on 377MW San Isidro II CCGT as well as the 32MW Palmucho hydro plant, both in Chile.

On May 16, the first stone was laid on the regasification plant included in the liquefied natural gas liquefied natural gas: see under natural gas.
Liquefied natural gas (LNG)

A product of natural gas which consists primarily of methane. Its properties are those of liquid methane, slightly modified by minor constituents.
 (LNG LNG (liquefied natural gas): see under natural gas. ) project being carried out in Quintero Quintero is a Chilean city and commune in Valparaíso Province, Valparaíso Region. Pop. 18,719 (2002 census).  (Chile). ENDESA is involved in the project alongside British Gas British Gas is the name of several companies
  • British Gas plc the former gas monopoly in the United Kingdom and its successor companies.
  • Centrica plc which has the rights to the British Gas
, Metrogas and ENAP ENAP École Nationale d'Administration Publique (Université du Québec)
ENAP Empresa Nacional del Petróleo (National Petroleum Company, Chile)
ENAP Excisional New Attachment Procedure
. This plant will ensure fuel supply to the capacity addition undertaken in the country.

ENDESA Eco continued to work in 1H06 on the 9MW Canela
For the municipality in Chile, see Canela, Chile.
Canela (pop. 38,152, est. 2004), meaning Cinnamon in Portuguese, is a town located in the Serra Gaúcha of Rio Grande do Sul, Brazil.
 wind farm, and began construction of the 9MW Ojos de Agua Ojos de Agua is a municipality in the Chalatenango department of El Salvador.

Ojos de Agua is a village in the department of Chalatenango. There are about 250 families in the town which is so named "water's eye" due to its many steams that begin nearby.
 mini See minicomputer.  hydro station. Both projects were started in the year's first quarter.

In Peru, construction on Etevensa CCGT -the first combined cycle A combined cycle is characteristic of a power producing engine or plant that employs more than one thermodynamic cycle. Heat engines are only able to use a portion of the energy their fuel generates (usually less than 50%). The remaining heat from combustion is generally wasted.  in this site- was completed. Commercial operation began towards mid July. Meanwhile, construction continued on Etevensa II CCGT - the second one- which is slated completion before the end of this year. The start-up Start-up

The earliest stage of a new business venture.
 of both CCGTs will bring an additional 172 MW of new capacity on-stream and make the company's generation mix much more competitive.

Finally, in Colombia, Emgesa completed the acquisition of the 186 MW Termocartagena thermal plant.

Optimisation of ownership structure

In 1H06, ENDESA completed the organisational restructuring underway in Brazil, Peru and Chile:

--In Brazil, the company incorporated the Endesa Brasil holding company, contributing all the assets it held directly and indirectly in Brazil. This holding company will streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid.  the ownership structure in Brazil, lead to the generation of more stable local cash flows, improve third-party financing and bolster This article is about the pillow called a bolster. For other meanings of the word "bolster", see bolster (disambiguation).

A bolster (etymology: Middle English, derived from Old English, and before that the Germanic word bulgstraz
 ENDESA's position in Brazil vis-a-vis new growth opportunities.

--In Peru, on April 12 the local antitrust Antitrust

The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade.
 authorities cleared the merger and takeover To assume control or management of a corporation without necessarily obtaining actual title to it.

A takeover bid or tender offer is a proposal made by one company to purchase shares of stock of another company, in order to acquire control thereof.
 of Etevensa by Edegel; the move was approved by the companies' respective Boards in November 2005 and ratified by shareholders on January 17, 2006. This transaction results in a more balanced overall generation mix (51% hydro and 49% thermal), which will reduce earnings volatility as a result of variations in rainfall, create synergies from overlapping overhead costs overhead costs

see fixed costs.
, strengthen its financial structure, generate economies of scale and increase shareholder liquidity. On June 1, the two companies were merged.

--In Chile, the Boards of Directors of Chilectra and Elesur approved the merger of the two companies on March 31. This transaction will eliminate holding companies, reduce overhead costs and optimise optimise - To perform optimisation.  tax charges. Worth noting is that the merger has led to a lower tax charge, for a total recognised amount of Euro 170 million (Euro 101 million after minority interests).

Meanwhile, in May, the Boards of the Colombian companies Emgesa and Betania agreed to begin analysing a potential merger. If the analysis is favourable, the transaction could give rise to the largest generator in Colombia, with installed capacity of 2,288 MW.

New partner in Endesa Brasil

In the third quarter this year, the International Finance Corporation (IFC) acquired 2.7% of Endesa Brasil. The transaction will be carried out via subscription to a US$50 million capital increase by Endesa Brasil. IFC is the only shareholder in Endesa Brasil not belonging to the Endesa Group.

The transaction values Endesa Brasil equity at a total of US$1.8 billion, equivalent to an EV/EBITDA EV/EBITDA is one of the most widely used valuation multiples. The main advantage of EV/EBITDA over the P/E ratio is that it is unaffected by a company's capital structure and taxes. Therefore, this multiple can be used for direct cross-companies application.  2005 multiple of 6.65x.

The terms of the agreement are typical for this type of transaction. They call for the listing of Endesa Brasil in the next three years and stipulate stip·u·late 1  
v. stip·u·lat·ed, stip·u·lat·ing, stip·u·lates
a. To lay down as a condition of an agreement; require by contract.

 that ENDESA will provide IFC with an exit clause at market prices if the IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard.  does not take place. It also includes a price adjustment mechanism to compensate IFC via the delivery of free shares if the listing price is lower than what it initially paid.

This transaction is aligned with ENDESA's goal of enhancing the value of its investments by attracting strategic shareholders to its Latin American subsidiaries. In this regard, IFC investment ratifies the quality and the strength of Endesa's business in Brazil. The institutional and credit reputation of the new partner will improve the profile of Endesa Brasil when facing a potential IPO.

Start on construction on the transmission line of the SIEPAC SIEPAC Proyecto del Sistema de Interconexion Electrica de los Paises de America Central (Spanish: Central American Electrical Interconnection System)  project

On July 11 (i.e. already in the year's third quarter), construction officially began in Panama Panama, country, Central America
Panama (păn`əmä'), Span. Panamá, officially Republic of Panama, republic (2005 est. pop.
 on the transmission line of the SIEPAC project.

This project's objective is twofold:
--  Construction and maintenance of a regional transmission system
        interconnecting the electricity grids of the six Central
        American countries, known as SIEPAC. The network owner
        (Empresa Propietaria de la Red, or EPR) is responsible for
        achieving this goal. Partners include the six Central American
        countries, Colombian company ISA and ENDESA, (12.5% interest).

        This project entails an investment of US$ 340 million and is
        expected to be completed some time in the third quarter of

    --  Creation of the Regional Electricity Market (REM), an
        additional market overlapped with the six existing national
        systems, where qualified agents will carry out international
        power trades.

Regulatory update

Regulatory highlights in 1H06:

--  The tariffs applied to Brazilian companies, Ampla and Coelce, were
    increased by 2.9% and 10.01%, respectively.

--  Regarding the bilateral agreement between Argentina and Brazil,
    the Argentine Secretary for Energy issued a resolution on February
    3 permitting companies with export contracts to renegotiate them.
    The aim of the resolution is to encourage imports to meet demand.

--  On February 15, the Argentine Senate ratified the agreement
    between UNIREN and Edesur establishing the framework for an
    integral tariff review to be completed through October 2006. A
    presidential decree, ratifying this process and increasing the DCV
    (distribution cumulative value) by 28%, retroactively from
    November 2005, is pending.

--  A trust has been set up to enable the Argentine companies under
    the Foninvemem agreement -awarded 1,600 MW of CCGTS- to obtain the
    necessary administrative and operating resources.

--  In January the Colombian electricity regulator passed a resolution
    modifying the calculation to limit generation market share,
    providing ENDESA's subsidiaries with access to higher market

--  On July 5, the Peruvian Congress passed an amendment to the
    Electricity Concession Law, whose main features are as follows:

    --  The establishment of a mechanism for tenders at fixed prices
        over a period of 10 years to encourage investment and
        contracting with distributions, with guaranteed pass-through

    --  The establishment of a new regulation, with 30-year
        concessions and guaranteed payment centrally planned.

    --  Greater involvement by generators, distributors, transmission
        companies and deregulated customers in the domestic
        electricity system operator.

    --  The option of spot purchase for deregulated demand of
        distributors and large deregulated customers (10 MW).

Summarizing, the new law unlocks the value of the Peruvian generation
assets at rising prices via long-term contracts.

--  In Brazil, on June 22 a court ruling lifted the suspension on the
    retroactive collection of amounts related to the 2005 tariff
    revision. Coelce resumed changing this amounts on June 26.

EBITDA: growth of 37.8%

EBITDA in the Latin American business totalled Euro 1,145 million in 1H06, a 37.8% increase on 1H05. EBIT rose 52% to Euro 909 million. It is noteworthy that both EBITDA and EBIT grew faster in 2Q06 than in 1Q06, at 39.6% and 63.5%, respectively.
                                       Euro million
                             EBITDA                    EBIT
                      1H06    1H05   % Chg    1H06    1H05     % Chg
Generation and
 transmission           613     469    30.7     492      347     41.8
Distribution            556     377    47.5     446      269     65.8
Others                  (24)    (15)     NA     (29)     (18)      NA
TOTAL                 1,145     831    37.8     909      598     52.0

The table below shows the breakdown of EBITDA and EBIT of ENDESA's fully consolidated subsidiaries by business line and country:
Generation and transmission
Euro million                 EBITDA                    EBIT
                      1H06    1H05   % Chg    1H06    1H05     % Chg
Chile                   291     137   112.4     248       86    188.4
Colombia                107     111    (3.6)     85       88     (3.4)
Brazil - Generation      65      54    20.4      55       46     19.6
Brazil -
 Transmission             4      36   (88.9)     (5)      28   (117.9)
Peru                     79      74     6.8      59       55      7.3
Argentina -
 Generation              66      50    32.0      49       39     25.6
Argentina -
 Transmission             1       7   (85.7)      1        5    (80.0)
TOTAL                   613     469    30.7     492      347     41.8

Euro million                 EBITDA                    EBIT
                      1H06    1H05   % Chg    1H06    1H05     % Chg
Chile                   102      81    25.9      89       71     25.4
Colombia                129     111    16.2      98       73     34.2
Brazil                  232     118    96.6     195       87    124.1
Peru                     42      35    20.0      27       20     35.0
Argentina                51      32    59.4      37       18    105.6
TOTAL                   556     377    47.5     446      269     65.8

Generation and transmission


Energy generated in 1H06 rose 8.4% to 9,147 GWh. The generation mix improved, thanks to higher hydro generation that protected the Company from increases in fuel prices, like natural gas.

This, together with the favourable trend in the Chilean peso vis-a-vis the euro and higher wholesale prices, drove a 112.4% increase in EBITDA and a 188.4% increase in EBIT vs. 1H05, to Euro 291 million and Euro 248 million, respectively.


The 1.9% increase in electricity generation output was not enough to offset the adverse performance of prices due to high hydro conditions in 1H06. EBITDA fell by Euro 4 million to Euro 107 million and EBIT by Euro 3 million to Euro 85 million.

Brazil - Generation

Despite the gas supply problems affecting Endesa Fortaleza Fortaleza (frtəlĕ`zə), city (1996 pop. 1,967,365), capital of Ceará state, NE Brazil, a port on the Atlantic Ocean. , total output by ENDESA's subsidiaries in Brazil in 1H06 was 2,174 GWh.

Stripping out from the 2005 figures the power generated at the plants sold by Ampla in 2Q06 (187 GWh), total output in the first six months in 2006 would have risen 9,3%, mainly driven by the growth in activity at Cachoeira Dourada Cachoeira Dourada is a small town and municipality in south-central Goiás state, Brazil. The population was 8,539 (2005 estimate) in a total area of 732 km².
  • Elevation: 459 meters
  • Became a city: 1982
  • Postal code: 75560-000

This, coupled with favourable exchange-rates, helped to offset the impact of the increase in fuel consumption, to give EBITDA in 1H06 of Euro 65 million and EBIT of 29 million, increases of 20.4% and 19.6%, respectively, vs. 1H05.

Brazil - Transmission

The difficulties in exporting electricity from Argentina to Brazil due to gas supply restrictions continued, undermining results at this interconnection in·ter·con·nect  
v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects

To be connected with each other: The two buildings interconnect.
. EBITDA in 1H06 was Euro 4 million, Euro 32 million less than in 1H05, while EBIT was a negative Euro 5 million, Euro 33 million less.


Generation sales in 1H06 rose 8.1% vs. 1H05 to Euro 147 million, mainly thanks to higher prices, which clearly offset the Euro 15 million increase in fuel costs. EBITDA was Euro 79 million, 6.8% higher than in 1H05, while EBIT stood at Euro 59 million, up 7.3%.

Argentina - Generation

Although gas supply difficulties continued to trigger (1) A mechanism that initiates an action when an event occurs such as reaching a certain time or date or upon receiving some type of input. A trigger generally causes a program routine to be executed.  increases in fuel costs (40.3%) due to the need to generate power using liquid fuels, higher sales due to increased output (+4%), coupled with improvements in prices, boosted margins. EBITDA in 1H06 rose 32% vs. 1H05 to Euro 66 million and EBIT by 25.6% to Euro 49 million.



The 40.6% increase in revenues, boosted by exchange rates and higher volume sales (4.8%), offset the squeeze Squeeze

1. In financial terms, a period of time when borrowing is difficult.

2. In general business terms, times when increasing costs cannot be passed onto consumers. The decrease in profits is said to be caused by a "squeeze" on profit margins.
 on margins caused by the latest tariff revision. EBITDA rose 25.9% to Euro 102 million and EBIT by 25.6% to Euro 89 million.


EBITDA at the Colombian distribution business was Euro 129 million, 16.2% higher than in 1H05, while EBIT stood at Euro 98 million, up 34.2%.

These rises were due to a 7.3% increase in revenues to Euro 308 million, enough to cover the higher costs of buying electricity.


Distribution sales in Brazil came to Euro 815 million in 1H06, a 41.2% increase on 1H05. The rise resulted from wider margins as consequence of the enhanced pass-through of generation prices to customers and, to a lesser extent, higher volume sales (5.3%). This led to increases in EBITDA and EBIT of 96.6% and 124.1%, respectively, to Euro 232 million and Euro 195 million.


EBITDA from distribution in Peru amounted Euro 42 million in 1H06, up 20% on 1H05, due to higher sales (+9.1%), which offset the increase in costs. EBIT advanced 35% to Euro 27 million.


Revenues from distribution stood at Euro 196 million in 1H06, up 18.1% vs. 1H05, outpacing the 10.4% increase in procurement costs to give EBITDA of Euro 51 million and EBIT of Euro 37 million, increases of 59.4% and 105.6%, respectively.

Financial results: Euro 244 million

Financial results for the business in Latin America reflected a loss of Euro 244 million in the first half of 2006, Euro 76 million higher than in 1H05.

Net exchange-rate gains were Euro 54 million lower, down from Euro 73 million in 1H05 to Euro 19 million this half.

Net interest expense totalled Euro 263 million, Euro 22 million or 9.1% higher than in 1H05. This increase was mainly due to higher expenses driven by readjusted pension funds, the early pay off of loans and the exchange rate effect on financial expenses. The financial expenses in local currencies decreased compare to the previous year driven by lower debt levels as well as lower average interest rates.

Net debt at ENDESA's Latin American business stood at Euro 5,583 million as of June 30, 2006, representing a reduction of Euro 526 million since the start of the year. This decrease is fundamentally due to the performance of the euro against the currencies in which ENDESA's Latin American subsidiaries' debt is denominated, accounting for Euro 435 million of the reduction.

In May, the rating agency Fitch upgraded its ratings for Enersis and Endesa Chile from BBB- to BBB BBB

A medium grade assigned to a debt obligation by a rating agency to indicate an adequate ability to pay interest and repay principal. However, adverse developments are more likely to impair this ability than would be the case for bonds rated A and above.
, with a stable outlook.

Asset disposals: Euro 34 million of capital gains

In the second quarter of 2006, ENDESA booked, among other transactions, the sale of Brazilian company Ampla's generation business, which produced a gross capital gain of Euro 30 million (Euro 12 million after tax and minorities). The gross capital gains derived from this transactions totalled Euro 34 million.

Cash flow from operation: up 25.1%

Cash flow generated by ENDESA's business in Latin America totalled Euro 678 million in 1H06, an increase of 25.1% with respect to 1H05.

Investments: Euro 410 million

Investments in Latin America in the first six months of the year totalled Euro 410 million, of which Euro 368 million corresponded to capex.
                                  Euro million
                              1H06           1H05           % Chg
Generation                          140             95           47.4
Distribution and
 Transmission                       220            147           49.7
Others                                8              8             NA
TOTAL                               368            250           47.2

STATISTICAL APPENDIX appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity.

Electricity Generation Output (GWh)        1H06      1H05     % Chg
Business in Spain and Portugal             44,875    46,642      (3.8)
Business in Europe                         18,671    16,967      10.0
Business in Latin America                  29,736    28,416       4.6
TOTAL                                      93,282    92,025       1.4

Electricity Generation Output in Spain     1H06      1H05     % Chg
 and Portugal (GWh)
Nuclear                                    38,025    40,038      (5.0)
Coal                                       11,609    11,218       3.5
Hydro                                      16,821    18,279      (8.0)
Combined cycle - CCGT                       4,001     4,444     (10.0)
Fuel oil                                    3,882     3,581       8.4
Renewables/CHP                                476     1,508     (68.4)
Non-mainland                                1,236     1,008      22.6
TOTAL                                       6,850     6,604       3.7
Nuclear                                    44,875    46,642      (3.8)

Electricity Generation Output in Europe    1H06      1H05     % Chg
Coal                                        8,796     8,296       6.0
Hydro                                       1,358     1,370      (0.9)
Combined cycle - CCGT                       5,898     5,256      12.2
Fuel oil                                    2,605     2,032      28.2
Wind                                           14        13       7.7
TOTAL                                      18,671    16,967      10.0

Electricity Generation Output in Latin     1H06      1H05     % Chg
 America (GWh)
Chile                                       9,147     8,437       8.4
Argentina                                   9,018     8,667       4.0
Peru                                        3,339     3,192       4.6
Colombia                                    6,058     5,944       1.9
Brazil                                      2,174     2,176      (0.1)
TOTAL                                      29,736    28,416       4.6

Electricity sales (GWh)                    1H06      1H05     % Chg
Business in Spain and Portugal             53,176    49,655       7.1
Regulated market                           34,290    32,120       6.8
Liberalized market                         18,886    17,535       7.7
Business in Europe                         26,635    23,921      11.3
Italy                                      16,778    15,877       5.7
France                                      9,857     8,044      22.5
Business in Latin America                  28,549    27,101       5.3
Chile                                       6,088     5,809       4.8
Argentina                                   7,274     6,921       5.1
Peru                                        2,398     2,240       7.1
Colombia                                    5,193     4,914       5.7
Brazil                                      7,596     7,217       5.3
TOTAL                                     108,360   100,677       7.6

Gas sales (GWh)                            1H06      1H05     % Chg
Regulated market                            1,461     1,669     (12.5)
Liberalized market                         11,753     9,145      28.5
TOTAL                                      13,214    10,814      22.2

Workforce                                30-06-06  30-06-05   % Chg
Business in Spain and Portugal             12,725    12,766      (0.3)
Business in Europe                          2,114     2,330      (9.2)
Business in Latin America                  11,974    12,256      (2.3)
Other businesses                                -        77        NA
TOTAL                                      26,813    27,429      (2.2)


Key figures                                1H06      1H05     % Chg
EPS (Euro)                                   1.66      0.90      83.7
CFPS (Euro)                                  2.15      1.80      19.4
BVPS (Euro)                                  9.98      8.89      12.3

Net financial debt (Euro million)        30-06-06  31-12-05   % Chg
Business in Spain and Portugal             11,860    11,461       3.5
Business in Europe                          1,540     1,286      19.8
     Endesa Italia                            993       815      21.8
     Other                                    547       471      16.1
Business in Latin America                   5,583     6,109      (8.6)
     Enersis                                4,675     5,207     (10.2)
     Other                                    908       902       0.7
Other businesses (1)                           --      (575)       NA
TOTAL                                      18,983    18,281       3.8

Financial leverage (%)                      124.8     112.0        NA
Net Debt / Operating cash flow (times)        2.5       3.0        NA
Interest coverage with operating cash
 flow (times)                                 9.0       5.7         -
(1) At June 30, 2006, there was no debt assigned to "Other
    businesses", as it disappeared as such with the sale of the 5.01%
    stake in Auna carried out in February 2006 and was allocated to
    the electricity business in Spain and Portugal.

Rating (25/07/06)                  Long term Short term    Outlook
Standard & Poor's                      A        A-1    Creditwatch (-)
Moody's                                A3       P-2    Negative
Fitch                                  A+       F1     Creditwatch (-)

Main fixed income issues                          Spread over IRS (bp)
                                                   30-06-06  31-12-05
3.0Y Euro 700M 4.375% Mat. June 2009                      3         5
6.0Y GBP 400M 6.125% Mat. July 2012                      22        28
6.7Y Euro 700M 5.375% Mat. Feb 2013                      29        18

Stock market data                   30-06-06       31-12-05   % Chg
Market cap (Euro million)             28,787         23,525      22.4
Number of shares outstanding   1,058,752,117  1,058,752,117        --
Nominal share value (Euro)               1.2            1.2        --

Stock market data                  1H06           1H05        % Chg
Trading volumes (shares)
     Madrid stock exchange     1,382,592,695  1,456,648,699      (5.1)
     NYSE                         12,133,200     12,503,000      (3.0)
Average daily trading volume
     Madrid stock exchange        10,792,958     11,560,703      (5.1)
     NYSE                             97,066        100,024      (3.0)

Share price                   1H06 high  1H06 low  30-06-06  31-12-05
Madrid stock exchange (Euro)      28.35     21.70     27.19     22.22
NYSE (USD)                        34.33     26.30     32.12     26.01

Dividends (Euro cents/share)          Payable against 2005 results
Interim dividend (02/01/06)                                     30.50
Final dividend (03/07/06)                                      209.50
Total DPS                                                      240.00
Pay-out (%)                                                      79.9
Dividend yield (%)                                               10.8


 For additional information please contact Alvaro Perez de Lema, North
      America Investor Relations Office, telephone # 212 750 7200

Information memo (forward looking statements)

Investors are urged to read ENDESA's Solicitation/Recommendation Statement on Schedule 14D-9 when it is filed with the U.S. Securities and Exchange Commission (the "SEC"), as it will contain important information. The Solicitation/Recommendation Statement and other public filings made from time to time by ENDESA with the SEC are available without charge from the SEC's website at See .gov and GovNet.

(networking) gov - The top-level domain for US government bodies.
 and at ENDESA's principal executive offices in Madrid Madrid (mədrĭd`, Span. mäthhrēth`), city (1990 pop. 3,120,732), capital of Spain and of Madrid prov., central Spain, and the focus of its own autonomous region, on the Manzanares River. , Spain.

This presentation contains certain "forward-looking statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.
" regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and are subject to material risks, uncertainties, changes and other factors which 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; expected asset disposals; estimated increases in capacity and output and changes in capacity mix; repowering of capacity and macroeconomic mac·ro·ec·o·nom·ics  
n. (used with a sing. verb)
The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors.
 conditions. For example, the EBITDA and dividends targets for 2004 to 2009 included in this presentation are forward-looking statements and are based on certain assumptions which may or may not prove correct. The principal assumptions underlying these forecasts and targets relate to regulatory environment, exchange rates, divestments, increases in production and installed capacity in the various markets where ENDESA operates, increases in demand in these markets, allocation of production among different technologies increased costs associated with higher activity levels not exceeding certain levels, the market price of electricity not falling below certain levels, the cost of CCGT and the availability and cost of gas, fuel, coal and emission rights necessary to operate our business at desired levels.

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: materially adverse changes in economic or industry conditions generally or in our markets; the effect of existing regulations and regulatory changes; tariff reductions; the impact of any fluctuations in interest rates; the impact of fluctuations in exchange rates; natural disasters; the impact of more stringent environmental regulations and the inherent environmental risks relating to relating to relate prepconcernant

relating to relate prepbezüglich +gen, mit Bezug auf +acc 
 our business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets ; the 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 di·vert  
v. di·vert·ed, di·vert·ing, di·verts
1. To turn aside from a course or direction: Traffic was diverted around the scene of the accident.

 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. Any delays in or failure to obtain necessary regulatory approvals, including environmental to construct new facilities, repowering or enhancement of existing facilities; shortages or changes in the price of equipment, materials or labour; opposition of political and ethnic groups; adverse changes in the political and regulatory environment in the countries where we and our related companies operate; adverse weather conditions, which may delay the completion of power plants or substations, or natural disasters, accidents or other unforeseen events; and the inability to obtain financing at rates that are satisfactory to us.

Political/Governmental Factors: political conditions in Latin America; changes in Spanish, European and foreign laws, regulations and taxes.

Operating Factors: technical difficulties; changes in operating conditions and costs; the ability to implement cost reduction plans; the ability to maintain a stable supply of coal, fuel and gas and the impact of fluctuations on fuel and gas prices; acquisitions or restructurings; the ability to implement an international and diversification Diversification

A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance.

Diversification is possibly the greatest way to reduce the risk.
 strategy successfully.

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 Inferred from circumstances; known indirectly.

In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated.
 or explicitly ex·plic·it  
a. Fully and clearly expressed; leaving nothing implied.

b. Fully and clearly defined or formulated: "generalizations that are powerful, precise, and explicit" 
 contained in the presentation are given in the Risk Factors section of Form 20-F for the first quarter of 2005 filed with the SEC and in the Registration Document of ENDESA Stock filed with the CNMV CNMV Comisión Nacional del Mercado de Valores
CNMV Colegiul National Mihai Viteazul (Romania) 

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.
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Date:Jul 25, 2006
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