Resultados 1S 2005 Fuerte crecimiento en todos los negocios IOSCO Annual Training Seminar: The Endesa perspective in adopting IFRS Javier Avila Endesa Chief Accounting Officer 17 October 2007

Contents Endesa Group: Accounting structure IFRS implementation process Differences in the first-time application of IFRS IFRS – US GAAP reconciliation Effects on the markets Experience of the first two years of application

Endesa Group: operating information The Endesa Group engages in all phases of the electricity business, namely generation, distribution and supply It has a presence through companies controlled by it in six European countries (Spain, Portugal, Italy, France, Poland and Greece and in five Latin American countries (Chile, Brazil, Colombia, Argentina and Peru) and, through other investees, in five other countries It leads the electricity market in Spain, Chile and Colombia in terms of market share In 2006 it had assets totalling EUR 54 billion, revenue of EUR 20.6 billion and a net profit of EUR 3 billion

Endesa: presence in the markets Endesa’s shares are listed on the Spanish Stock Exchanges, and have been listed on the New York Stock Exchange (NYSE) since 1988 and on the Santiago de Chile Stock Exchange Off-Shore Market since 2000. It was the first European electric utility to have its shares traded on the NYSE The Chilean subsidiaries Enersis and Endesa Chile are listed on the Santiago de Chile Stock Exchange, on the NYSE and in Spain (Latibex) Another seven Latin American companies are listed on the markets in their respective countries (Argentina, Brazil, Chile and Peru)

Endesa Group structure Rest of Europe CHILECTRA CHILE Chile Argentina Brazil Colombia Peru Latin America: Enersis Spain and Portugal

Financial information provided by the Endesa Group to the market LOCAL GAAP CHILEAN US GAAP CHILE SPAIN SPANISH COMPANIES IN ARGENTINA, BRAZIL, COLOMBIA AND PERU IN EUROPE ENERSIS ENDESA CHILE OTHER SUBSIDIARIES Public Presentation ENDESA AND OTHER Individual accounts US IFRS

Main differences between the various GAAP Provisions Foreign exchange differences Asset revaluations Adjustments for inflation Revenue recognition Measurement of financial instruments Capitalisation of expenses Business combinations Goodwill Classification of liabilities and equity Treasury stock Deferred tax assets and liabilities

Differences in the information provided by Endesa to the market Net Profit Equity Millions of euros

What information is reliable for investors?

Investors have become increasingly global IT IS ESSENTIAL TO UNIFY THE FINANCIAL INFORMATION AT WORLD LEVEL

Accounting Department Process of implementing IFRSs at Endesa SCOPE CONTENT PLANNING 1.1. Establishment of the work team Accounting Department April-2002 1.2. Training Work team May-November 2002 1.3. Analysis of differences between Spanish GAAP and IFRS – Quantification 2003 1.4. Adaptation of the procedures and systems for obtaining the information The whole Company 1.5. Selection of alternative to be used Board of Directors December 2003 2. EXECUTION 2.1. Preparation of financial statements under IFRS in parallel to the Spanish GAAP financial statements in 2004 The whole Group 2004 2.2. Presentation to analysts Market June 2004 2.3. Publication of the balance sheets and income statements for all the quarters of 2004 in accordance with IFRS April 2005 2.4. Quarterly publications using IFRS 2005 2.5. Publication of the first financial statements under IFRS at 31/12/05 January 2006

Difficulties involved in the process Difficulties in obtaining external training Need to have an in-house group of experts in IFRS Change of mentality within the Company: Accounting Department Other Departments Senior Management and Board of Directors Continual changes in the Standards during the implementation process: 16 of the 31 IAS were changed substantially and 5 IFRS were issued Difficulties in interpreting the Standards. In Spain the Spanish National Securities Market Commission (CNMV) set up a group of accounting experts made up of the CNMV, the big four audit firms and the leading Spanish listed companies to analyse doubts in the application of the Standards. The conclusions of this group constitute a safe harbour for companies

Changes that have had the greatest organisational impact Cash flow statement Recognition of deferred taxes Measurement of assets and intangible assets in business combinations Measurement of derivatives, determination of hedges and identification of embedded derivatives Classification of leases Content of the notes to the financial statements

Consolidated Balance Sheet of the Endesa Group at 12/31/04 SPANISH GAAP IFRS (*) DIFFERENCE Non-current assets 40.2 39.7 (0.5) Current assets 5.8 5.3 TOTAL ASSETS 46.0 45.0 (1.0) Equity: Of the Parent Company Of minority interests 9.5 -- 12.6 8.7 3.9 3.1 (0.8) Minority interests 5.7 (5.7) Deferred income 2.1 1.5 (0.6) Provisions 4.4 Net debt 16.5 18.7 2.2 Other liabilities 7.8 TOTAL EQUITY AND LIABILITIES Billionsof euros (*) Adjusted for the effects of IASs32 and 39 recognised at the beginning of 2005

Consolidated Income Statement of the Endesa Group for 2004 SPANISH GAAP IFRS DIFFERENCE Revenue 18.1 13.7 (4.4) Operating expenses (14.8) (10.9) 3.9 Operating Income 3.3 2.8 (0.5) Financial loss (0.9) (1.0) (0.1) Amortisation of goodwill (0.3) -- 0.3 Gains on asset disposals 0.1 0.2 Extraordinary items Profit before tax 2.2 2.0 (0.2) Income tax (0.4) Profit for the year 1.8 1.7 Profit of minority interests Profit of the Parent Company 1.4 1.3 Billions of euros

IFRS – US GAAP reconciliation The number of differences with respect to US GAAP has been reduced significantly The reconciliation involves 17 adjustments: 6 adjustments due to GAAP differences The other 11 adjustments relate to the effect of applying in IFRS the first-time application exceptions

Effects on the markets It was necessary to provide training for analysts There were no major surprises with an effect on the share price Positive effects on the analysis of rating agencies

Experience of the first two years of application Greater quality in the financial information provided to the market It is necessary to monitor closely all the changes and interpretations being made by IASB and the outcome of the meetings of the various groups of experts It is difficult to find a solution to the interpretations of the Standards

Resultados 1S 2005 Fuerte crecimiento en todos los negocios IOSCO Annual Training Seminar: The Endesa perspective in adopting IFRS Javier Avila Endesa Chief Accounting Officer 17 October 2007