1. 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 October 2007

2. 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

3. 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

4. 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 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)

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

6. 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

7. 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

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

9. What information is reliable for investors?

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

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

19. 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 October 2007