Endesa Chile IR Presentation As of December 2011
Our company Multinational electricity generation company based in Chile Vast experience, with over 68 years of history Leading position in most of the countries where it operates Efficient and diversified investment portfolio of generation assets Conservative commercial policy leading to revenue and margin stability Part of an important worldwide electricity group (Enel, Endesa S.A, Enersis) Among the most actively traded companies in Chilean stock markets 2
Ownership Structure 4% 92% 17% 4% 61% 60% 15% 60% ENERSIS ADR Holders Minority Shareholders Chilean Pension Funds Other Inst Shareholders PEHUENCHE, 93% PANGUE, 95% CELTA, 100% SAN ISIDRO, 100% ENDESA ECO, 100% CANELA, 75% EMGESA, 27% EDEGEL, 62% COSTANERA, 70% EL CHOCON, 65% ENDESA BRASIL, 39% AMPLA COELCE FORTALEZA CDSA CIEN 3
A unique portfolio in LATAM s Generation business Colombia No. 2 2,914 MW inst. capacity 20% market share Brazil 987 MW inst. capacity 1% market share in generation Peru No. 1 1,668 MW inst. capacity 26% market share Chile No. 1 5,611 MW inst. capacity 32% market share Argentina No. 1 3,652 MW inst. capacity 12% market share Market shares based on installed capacity Figures as of December 2011 Consolidated installed capacity: Capacity including Brazil: Consolidated energy sales 2010: Consolidated energy sales 2011: 13,845 MW 14,832 MW 56,641 GWh 58,012 GWh 4
Results from recent years US$ Millions 2009 2010 2011 Change Revenues 4,326 4,773 4,972 4% Gross margin 2,580 2,438 2,455 1% EBITDA 2,248 2,098 2,014 (4%) EBIT 1,819 1,746 1,629 (7%) Net finance expenses (305) (235) (251) 7% Net income 1,381 1,342 1,202 (10%) Net attibutable income 1,121 1,046 924 (12%) Amounts are expressed in US$, using the average exchange rate for each period Results 2011: Higher physical sales in Colombia and Peru Higher costs primarily as a consequence of the drought in Chile and higher fuel cost in Argentina One time effect of Colombian equity tax (US$ 83 million) 5
EBITDA Generation Total Installed Capacity: 13,845 MW Total Generation: 52,766 GWh Argentina 26% Chile 41% Argentina 21% Chile 39% Peru 12% Peru 17% Colombia 21% EBITDA 2011: US$ 2,014 millions Colombia 23% Argentina 5% Peru 14% Chile 51% Affiliate Company: Endesa Brasil Endesa Chile ownership: 39% Net Attributable Income: US$ 238.5 million Colombia 30% 6
Conservative Commercial Policy 30% Physical Sales as of December 2010 Chile Colombia Peru Argentina 7% 12% 19% 26% 63% 56% 64% 24% 18% 81% Regulated Unregulated Spot Physical Sales as of December 2011 Chile Colombia Peru Argentina 8% 9% 19% 31% 61% 30% 51% 27% 64% 81% 19% Regulated Unregulated Spot 7
Strong Financial Position US$ Millions 2009 2010 2011 Chg. Chg % Gross Debt 4,172 3,775 3,769 (5) (0.1%) Cash 880 712 811 99 13.9% Net Debt 3,291 3,062 2,958 (104) (3.4%) Leverage 1.09 0.94 0.91 (0.03) (3.2%) Financial Expenses Coverage 6.67 8.25 6.52 (1.73) (21.0%) Peru, 10% Argentina, 8% Debt by Country Debt by Type Others, 8% Bank Debt, 17% Debt by Currency UF-Ch, 11% Local Currency, 34% Chile, 53% Colombia, 29% Bonds, 75% US$, 55% Amounts are expressed in US$, using the average exchange rate for each period 8
Free Cash Flow 2.248 2.098 2.014 Free Cash Flow by year (2009-2011) 1.070 1.012 779 (305) (235) (251) (564) (499) (549) (308) (353) (435) EBITDA Net Financial Result CAPEX Income Tax FCF Amounts are expressed in US$, using the average exchange rate for each period 2009 2010 2011 9
Historic electricity demand growth 170% 160% 162% 161% 150% 146% Total Sales in GWh (%) 140% 130% 120% 110% 133% 118% 100% 90% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Year CHILE COLOMBIA PERU BRAZIL ARGENTINA 10
Direct relation between GDP and electricity demand 18.000 16.000 CANADA Electricity consumption, per cápita (Kwh) 14.000 12.000 10.000 8.000 6.000 4.000 2.000 - UNITED STATES AUSTRALIA JAPAN FRANCE AUSTRIA SPAIN GERMANY ITALY UNITED KINGDOM CHILE ARGENTINA MEXICO INDIA COLOMBIA PERU - 5.000 10.000 15.000 20.000 25.000 30.000 35.000 40.000 45.000 Income per person (Fixed PPP $) Data Source: World Energy Outlook 2010, IEA 11
US$/MWh 171 76 95 167 166 52 115 70 96 Competitive tariffs Final tariff to customers as of December 2010 148 30 118 98 36 62 38 17 21 131 47 84 Latam Average Distribution (average VAD) Generation, Transmission & others Taxes not included 158 26 132 179 25 154 12
Projects Under Construction BOCAMINA II Location: Next to the existing coal-fired plant Bocamina I in Bío-Bío Region Installed capacity: 370 MW, coal fired Estimated Investment: US$ 841 millions * Estimated start-up: June, 2012 EL QUIMBO Location: Huila Department, upstream of Emgesa s Betania plant Installed capacity: 400 MW, hydro Estimated investment: US$ 837 millions * In 2009 the environmental license and building permissions were granted Estimated start-up: December 2014 Casa de máquinas 400 MW Presa h = 151 m Río Magdalena Vertedero Conducción Bocatoma Túnel de desviación Dique * US$ 1 equals Ch$ 483.57 corresponding to the average exchange rate for the period Embalse 720 msnm 13
Portfolio Projects in Chile Los Cóndores, hydro power plant 150 MW Neltume, hydro Run-of-the-river plant 490 MW Piruquina, mini-hydro runof-the-river plant 7.6 MW Punta Alcalde, coal-steam power plant 740 MW Hydro Hydroaysen, hydro power plant 2,750 MW Thermal N.C.E.S. 14
Portfolio Projects in Peru & Colombia Peru Colombia Curibamba, hydro power plant 188 MW Hydro Thermal N.C.E.S. 15
HidroAysén One of the most efficient hydroelectric projects in the world. Renewable resources Installed capacity: 2,750 MW. Endesa Chile s owns 51% and Colbún 49%. CO 2 emissions: Reduction of 16.2 million tons/year Average load factor 77% May 9, 2011: EIA was approved. Energy / Flooded Surface June 2011: Puerto Montt Court of Appeals issued an injunction, leaving the resolution in state of abeyance. October 2011: The Court ruled in favor of HidroAysén, rejecting all seven protection requirements presented on June. GWh / year-km2 350 300 250 200 150 100 50 0 312 144 134 81 81 75 69 65 54 54 53 45 41 29 23 12 12 7 The Commission is preparing the Environmental Impact Study of the Aysén Transmission System, expected to be filed by the first half 2012. 16
Seasonal Streaming from Hidroaysen and SIC rivers 1,400 1,200 1,000 1,400 1,200 1,000 Water Flow [ m³/s] 800 600 400 200 800 600 400 200 - Apr-10 may jun jul ago sep oct nov dec Jan-11 feb mar Timeline MAIPO RIVER IN CABIMBAO BIOBIO RIVER IN RUCALHUE MAULE IN ARMERILLO (R.N.) CENTRAL BAKER 2 CENTRAL PASCUA 2.2 - Seasonal Variability Annual Variability SIC : 23% SIC : 21% SIC + Hidroaysen : 9% SIC + Hidroaysen : 12% 17
Hidroaysen Technical information 1.112 km Power Plants Zone HVDC Land Line HVDC Submarine Line 160 km 640 km 18
Market Value and Dividends Operating Income (US$ Millions) EBITDA (US$ Millions) 1.022 1.189 1.674 1.819 1.746 1.629 1.503 1.671 2.031 2.248 2.098 2.014 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Market Value (US$ Millions) Dividends (Ch$xShare) 32.5 10.112 9.901 11.524 12.663 14.093 12.993 13.4 13.8 21.3 26.8 5.1* 2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011 Intern Definitive Amounts are expressed in US$, using the average exchange rate for each period *Year 2011, includes only the intern dividend paid on January 2012 19
Endesa Chile s Investor Relations Team Susana Rey Investor Relations Director (56-2) 630 96 06 susana.rey@endesa.cl Catalina González Head of Investor Relations (56-2) 630 96 03 cbgs@endesa.cl Juan Pablo Vicuña Investor Relations Executive (56-2) 630 5585 jpvp@endesa.cl Guillermo Berguecio Investor Relations Executive (56-2) 630 9506 gabb@endesa.cl Contact us at: ir@endesa.cl 20
EXHIBITS 21
Highlights in 2011 Growth of 3% in electricity demand in the region Growth of 2% in physical sales, primarily in Peru and Colombia Growth of 4% in physical energy purchases primarily in Chile, due lower water availability Growth of 11% in fuel costs primarily in Chile and Argentina One-off net worth tax in Colombia US$83 millions* Better margins in generation in Peru and Colombia Growth of 34% in related companies results primarily due Endesa Brasil and GNL Quintero * US$ 1 equals Ch$ 483.57 corresponding to the average exchange rate for the period 22
Analysis by country Argentina Installed Capacity: 3,652 MW Market Share: 12% El Chocón: 1,328 MW EL CHOCON 36% Hydro 1,328 MW US$ Millions 2010 2011 Change Revenues 118 100 (15.3%) EBITDA 72 55 (23.6%) EBITDA Margin 60.8% 54.9% (9.6%) Physical Sales 3,361 2,888 (14.1%) CIEN Line (2x1.050 MW) Interconnection with Brazil Costanera: 2,324 MW COSTANERA 64% Thermal 2,324 MW El Chocon Costanera US$ Millions 2010 2011 Change Revenues 611 707 15.8% EBITDA 52 41 (21.7%) EBITDA Margin 8.5% 5.8% (32.3%) Physical Sales 8,018 8,493 5.9% 23
Analysis by country Colombia Installed Capacity: 2,914 MW Market Share: 20% Guavio: 1.213 MW Betania: 541 MW Río Bogotá: 716 MW Cartagena: 208 MW Termozipa: 236 MW EMGESA 85% Hydro 2,471 MW 15% Thermal 444 MW Cartagena Bogota US$ Millions 2010 2011 Change Revenues 1,050 1,031 (1.8%) EBITDA 616 601 (2.4%) EBITDA Margin 58.7% 58.3% (0.7%) Physical Sales 14,817 15,112 2% 24
Analysis by country Peru Installed Capacity: 1,668 MW Market Share: 26% EDEGEL Cuenca Río Rímac: 552 MW Yanango: 43 MW Chimay: 151 MW 45% Hydro 747 MW Ventanilla: 493 MW Santa Rosa: 429 MW 55% Thermal 922 MW US$ Millions 2010 2011 Change Revenues 437 496 13.5% Lima: Edegel (Gx) EBITDA 224 292 30.3% EBITDA Margin 51.4% 58.9% 14.7% Physical Sales 8,598 9,450 9.9% 25
Analysis by country Chile Installed Capacity: 5,611 MW Market Share: 32% ENDESA CHILE Tarapacá Los Molles: 18 MW Rapel-Sauzal: Maule: Laja: 466 MW 884 MW 940 MW 61% Hydro 3,465 MW D. Almagro Taltal Huasco Ralco-Pangue: 1,157 MW Los Molles Tarapacá-G.Atacama: 572 MW D. Almagro Taltal: 269 MW Huasco: 64 MW San Isidro 1 and 2: 778 MW 37% Thermal 2,068 MW San Isidro Santiago Cachapoal Bocamina: TG Quintero: Canela: Canela II: 128 MW 257 MW 18 MW 60 MW 1% Wind 78 MW Bocamina Maule Laja Bio Bio US$ Millions 2010 2011 Change Revenues 2,782 2,601 (6.5%) EBITDA 1,235 1,007 (18.5%) EBITDA Margin 44.4% 38.7% (12.8%) Physical Sales 21,847 22,070 1.0% 26
Analysis by country - Brazil Installed Capacity: 987 MW Market Share: 1% Cachoeira: 665 MW CACHOEIRA 67% Hydro 665 MW US$ Millions 2010 2011 Change Revenues 239 262 9.5% EBITDA 172 194 12.6% Fortaleza Cachoeira Rio de Janeiro EBITDA Margin 72.0% 74.0% 2.8% Physical Sales 3,833 3,986 4.0% FORTALEZA CIEN: Transmission Brazil-Argentina Interconnection Fortaleza: 322 MW 33% Thermal 322 MW Two 500 Km lines Total interconnection capacity: 2,100 MW US$ Millions 2010 2011 Change Revenues 311 268 (13.9%) EBITDA 139 119 (14.7%) EBITDA Margin 44.7% 44.3% (0.9%) US$ Millions 2010 2011 Change Revenues 205 124 (39.5%) EBITDA 167 175 4.8% EBITDA Margin 81.7% 141.6% 73.3% Physical Sales 2,957 2,842 (3.9%) 27
Customers Installed Capacity, Output Installed Capacity MW as of FY2011 Chile Colombia Brasil Perú Argentina Total Total 5,611 2,914 987 1,668 3,652 14,832 Hydro 3,456 2,471 665 746 1,328 8,666 Nuclear - - - - - - Coal 286 236 - - - 522 Oil-Gas 1,782 208 322 922 2,324 5,557 CHP / Renewables 87 - - - - 87 Output GWh as of FY 2011 chg. Vs. FY2010 Chile Colombia Brasil Peru Argentina Total Total 20,722 (0.9%) 12,090 7.2% 4,155(18.5%) 9,153 8.1% 10,801 (1.3%) 56,921 0.4% Hydro 11,874 (5.6%) 11,620 13.3% 3,121 (9.0%) 4,615 4.8% 2,404 (19.2%) 33,635 0% Nuclear - 0% - 0% - 0% - 0% - 0% - 0% Coal 1,820 53.2% 264 (66.7%) - 0% - 0% - 0% 2,084 5.3% Oil-Gas 6,854 (1.5%) 206 (3.7%) 1,033(37.9%) 4,538 11.8% 8,397 5.4% 21,028 0.7% CHP / Renewables 173 (10%) - 0% - 0% - 0% - 0% 173 (0.0%) 28
Healthy Debt Profile Financial Debt US$ Millions 2012 2013 2014 2015 2016 2017 Balance TOTAL Chile 104 419 185 218 14 12 1,042 1,995 Argentina 129 63 53 35 17 - - 297 Perú 60 52 50 34 57 47 82 382 Colombia 157-73 129-88 649 1,095 TOTAL 450 534 362 416 89 146 1,773 3,769 Since: Credit Risk Ratings Recognition Jan. 2010 Apr. 2011 Feb. 2010 BBB+ Baa2 BBB+ BBB Baa3 BBB Affirmed: Jan 2012 Nov 2011 29
Principal Financial Ratios Net debt/ebitda EBITDA/Net financial expenses 2,0 1,5 1,5 1,5 5,6 7,4 8,9 8,0 2008 2009 2010 2011 2008 2009 2010 2011 Endesa Chile 2010 2011 Net Debt/ EBITDA 1.5 1.5 P/U 13.5 14.1 EPS* 65.1 54.5 ROE (%) 24% 18.1% ROA (%) 11.2% 9.2% *Net attributable income /Total shares 30
Integrated risk management capability Risk variables affecting margins Target output and sales in future years Rainfall Growth in demand Fuel prices Exchange rates Inflation Extreme hydro volatility 100% Spot Hydro Risk limit Real margin 0.9x expected margin Thermal 75% Regulated and unregulated contracts Our aim is to ensure a 95% reliability with a margin of at least 90% of budget even in the following scenarios: Lower rainfall than historical levels Increases in fuel prices Higher growth in demand Relative Frequency Target output 5% Results MaR 95% Target sales MMUS$ 31
32 Stable Results, Long Play Company Consolidated EBITDA (Quarterly) 2001-2010 vs. Chilean SIC Hydrology 2,5 35.000 US$ Mllions 2,0 1,5 1,0 0,5 30.000 25.000 20.000 15.000 10.000 5.000-2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011-1Q EBITDA 2Q EBITDA 3Q EBITDA 4Q EBITDA SIC Hydrology (GWh) Amounts are expressed in US$, using the average exchange rate for each period
Relevant Stock Presence USA Stock Market NYSE (US$) Price 2011 (Avg) 51.0 Max 2011 57.6 Min 2011 40.6 Daily Avg Trans Vol (million shares) 120.7 Avg Daily Trans (US$ millions traded) 6.08 Spain Stock Market LATIBEX ( ) Price 2011 (Avg) 1.2 Max 2011 1.4 Min 2011 1.0 Daily Avg Trans Vol (million shares) 17.9 Avg Daily Trans ( millions traded) 0.02 Chilean Stock Market BOLSA DE SANTIAGO (CLP) Price 2011 (Avg) 819.2 Max 2011 899.9 Min 2011 700.5 Daily Avg Trans Vol (million shares) 5.6 Avg Daily Trans (CLP millions traded) 4,723.1 33