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

ENDESA (NYSE:ELE)
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Results
JANUARY-JUNE 2006
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   The main income statement lines supported the strong growth
reported in the first quarter

   --  Gross operating profit (EBITDA) rose 33.2% vs. 1H05 to Euro
        3,762 million.

   --  Operating profit (EBIT) advanced 45.8% to Euro 2,871 million.

   Excellent results in all businesses

   --  The Spanish and Portuguese business reported net income of
        Euro 961 million, up 41.5% over 1H05, in an environment of
        regulatory change.

   --  Net income from the business in Europe strengthened to Euro
        322 million, an increase of 76.9% vs. 1H05.

   --  The Latin American business consolidated its favorable
        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
        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 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.

   KEY FACTS AND FIGURES FOR 1H06

   SHARP GROWTH IN NET INCOME IN ALL BUSINESSES

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

   --  The business in Spain and Portugal 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 was Euro 302
        million, an increase of 164.9% on 1H06.

   INCOME STATEMENT: CONTINUING THE POSITIVE TREND OF 1Q06

   --  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.

   ENDESA REINFORCES THE COMMITMENTS IN ITS STRATEGIC PLANS

   --  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.

   BUSINESS IN SPAIN AND PORTUGAL

   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 customers at a provisional price of Euro 42.35/MWh
        pursuant to Royal Decree 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 passed on March 30, 2006.

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

   --  ENDESA's mainland coal-fired 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 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 markets served by ENDESA, marking
        an all-time monthly record in supply quality.

   --  In 1H06 the accumulated 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 CCGT in Huelva, 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 capacity.

   --  In addition, work on the 800 MW As Pontes CCGT in La Coruna is
        progressing according to schedule. This plant is scheduled to
        be commissioned in 2007.

   Carbon credit purchases

   --  ENDESA 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. This portfolio consists of
        71.5 million tonnes of CO2 covered by Emissions Reduction
        Purchase Agreements (ERPA), 24.8 million tonnes of additional
        volume in projects covered by Letters of Intent (LOI) and
        projects under analysis amounting to 82.4 million tonnes of
        CO2.

   Strong growth in earnings from CHP and renewables

   --  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.

   BUSINESS IN EUROPE

   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 of the tax base of Endesa Italia's fixed assets to
        their book values, in accordance 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: 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, in June the
        company added to its generation mix the Iardino 14 MW wind
        farm acquired by Endesa Europa from Gamesa.

   --  Construction on the 2x 400MW Scandale CCGTs in Calabria, in
        which Endesa Italia owns 50%, is proceeding according to
        schedule.

   --  In 1H06, preliminary work commenced on the offshore
        regasification terminal off Livorno, which is scheduled to
        come on-stream at the end of 2008.

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

   --  In 1H06, French generator 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 company Auchan to supply 400 GWh of power in
        2006 and another with SNCF (the French railway operator) to
        supply 6,600 GWh in the period 2007-2011.

   First dividend by Energie 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.

   BUSINESS IN LATIN AMERICA

   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 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 and Argentina, 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 of the ownership structure

   --  1H06 marked the completion of the ownership restructuring in
        Brazil (incorporation of the Brazilian holding company, Endesa
        Brasil), Peru (the Etevensa-Edegel merger) and Chile
        (Chilectra-Elesur merger).

   --  The International Finance Corporation (IFC) 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,
        Emgesa and Betania, agreed to analyse 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
        Project, which entails the construction of four hydro plants
        with total installed capacity of 2,430 MW.

   --  Meanwhile, also in Chile, work continued on the construction
        of the 377 MW San Isidro II CCGT and of the 32 MW Palmucho
        hydro facility.

   DISPOSALS

   --  Pursuant to an agreement reached in December 2005, in 1Q06
        ENDESA sold its 5.01% stake in telecoms operator Auna to
        Deutsche 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 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.

   DIVIDENDS

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

   --  As approved at the General Shareholders' Meeting held on
        February 25, the Company made a gross dividend payment of Euro
        2.095 per share, bringing total shareholder remuneration
        against last year's results, including the gross interim
        dividend of Euro 0.305 per share paid out on January 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.

   CONSOLIDATED RESULTS

   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%.
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NET INCOME IN 1H06
----------------------------------------------------------------------
                               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.
*T

   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 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 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%.
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ELECTRICITY OUTPUT AND SALES IN 1H06
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                             Output                    Sales
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                       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
----------------------------------------------------------------------
*T

   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 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 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 highlight how the Company's second quarter
results built on the favorable momentum achieved in the first three
months of the year.
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                      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
----------------------------------------------------------------------
*T

   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 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 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 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 and all the conditions required
under International Financial Reporting Standards (IFRS) 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 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 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 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.
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*T
CASH FLOW FROM OPERATING ACTIVITIES
----------------------------------------------------------------------
                                         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
----------------------------------------------------------------------
*T

   The decline in cash flow from operating activities in Rest of
Europe was due to the 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.
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INVESTMENTS
                                            Euro million
                                Capex and
                                intangible
                                   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.
*T

   Debt performance

   ENDESA's net debt was Euro 18,983 million as of June 30, 2006,
just 3.8% higher than at year-end 2005.
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*T
BREAKDOWN BY BUSINESS LINE OF ENDESA'S NET DEBT
----------------------------------------------------------------------
                                       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.
*T

   The increase in debt in Spain and Portugal was due to the need to
finance the tariff 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%.
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STRUCTURE OF ENDESA'S NET DEBT
----------------------------------------------------------------------
                         ENDESA
                      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
----------------------------------------------------------------------
*T

   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.
   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 undrawn 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 decided to place ENDESA's
credit rating under review for a possible downgrade, while Moody's
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 ratings are: Standard & Poor's, A, under review for a possible
downgrade; Moody's, A3, negative outlook, and Fitch, A+, under review
for a possible downgrade.

   REINFORCED COMMITMENTS IN THE STRATEGIC PLAN

   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
"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, 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:
-0-
*T
--  EBITDA of Euro 8,330 million in 2009, Euro 830 million more than
    the Euro 7,500 million included in the targets announced last
    October.

    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.
*T

   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 and a payout of 100% of capital gains obtained on the disposal
of non-strategic assets.
   Based on these earnings forecasts, this dividend policy, if
ratified 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 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.
-0-
*T
REINFORCED COMMITMENTS IN THE STRATEGIC PLAN
----------------------------------------------------------------------
                                            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
----------------------------------------------------------------------
*T

   RESULTS BY BUSINESS LINE

   BUSINESS IN SPAIN AND PORTUGAL

   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 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 once the final price is established based on objective
and transparent market 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 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 on Emissions Trading.
   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, Brazil and 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, to acquire 100% of its
emission reduction certificates, which are estimated to total 2
million tonnes between 2006 and 2012.

   NAP 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 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 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 plants in the island and non-mainland
        systems, the incremental costs 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 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 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 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 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
        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 has decreased from, thus,
increasing the system's regulated revenues. However, these adjustments
have been insufficient 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 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 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

   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 of the increase between the various
tariffs, the bulk was among medium- and high-voltage customers, whose
tariffs have risen by 6%. Conversely, the tolls approved by Royal
Decree 1556/2005 have not been modified.
   The Royal Decree removes the cap on the annual tariff increase
established in Royal Decree 1432/2002 governing the tariff
methodology. A 1.4% of the change in costs recorded during the year
and a further 0.6% increase due to revisions 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
recovery over a period of 14 and a half years of the NPV 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 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 provision of the
Electricity Industry Law 54/1997, of November 27, regarding CTCs
(stranded costs), thereby eliminating them.
   The elimination of the CTC 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, 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 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.
-0-
*T
SPAIN AND PORTUGAL SALES
----------------------------------------------------------------------
                                       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.
*T

   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 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 by these plants. Their load factor
was 77.1% proving that, in spite of the CCGT and wind farm capacity
additions, coal plants are still indispensable to meet the country's
electricity requirements.
-0-
*T
BREAKDOWN OF GENERATION SALES
                                                               GWh
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
*T

   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 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 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 shareholder return.
   A 12.4% increase in the average selling price 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
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.

   Distribution

   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 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

   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

   The breakdown of operating expenses in the Spanish and Portuguese
business is provided below:
-0-
*T
OPERATING EXPENSE IN SPAIN AND PORTUGAL
----------------------------------------------------------------------
                                       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
----------------------------------------------------------------------
*T

   Power purchases

   Power purchases in the period rose 15.7% to Euro 537 million.
These mainly entail 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 increase in raw materials
prices on international markets. These higher costs, however, were
offset by the Company's proactive fuel procurement 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 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 equivalent to the amount the Extremadura regional government
must reimburse 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 reduction, mainly related to the deviation in
the provision caused by the performance of inflation (CPI) and to the
provision for the early layoff 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 for
investments on the Canary Islands.
   Although this change implies 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.
-0-
*T
TOTAL INVESTMENT IN SPAIN AND PORTUGAL
----------------------------------------------------------------------
                                    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
----------------------------------------------------------------------

----------------------------------------------------------------------
CAPEX IN SPAIN AND PORTUGAL
----------------------------------------------------------------------
                                    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
----------------------------------------------------------------------
*T

   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.

   BUSINESS IN EUROPE

   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
regasification capacity is close to 4 billion cubic metres (bcm) per
annum of which, under the terms of the agreements negotiated, ENDESA
Europa will control approximately 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,
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.

   Supply

   In June, ENDESA Europa and the Italian group, Merloni, began
selling electricity to the Italian retail market through MPE Energia,
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.

   Dividends

   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.
-0-
*T
BREAKDOWN OF ENDESA'S OUTPUT AND SALES IN EUROPE
----------------------------------------------------------------------
              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.
*T

   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%.
-0-
*T
EBITDA & EBIT IN EUROPE
----------------------------------------------------------------------
                             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
----------------------------------------------------------------------
*T

   Worth highlight is the Euro 21 million contribution to EBIT from
trading operations. ENDESA can conduct these operations risk-free
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.
-0-
*T
ENDESA ITALIA KEY DATA
----------------------------------------------------------------------
                                       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
----------------------------------------------------------------------
*T

   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 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.
-0-
*T
SNET KEY DATA
----------------------------------------------------------------------
                                           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
----------------------------------------------------------------------
*T

   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 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.

   BUSINESS IN LATIN AMERICA

   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.

   Highlights

   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 (+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%).
-0-
*T
OUTPUT AND SALES IN THE LATIN AMERICAN BUSINESS
-----------------------------------------------------------------
                             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
-----------------------------------------------------------------
*T

   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 higher prices; and in Argentina (+14.1%) for the improved
generation mix and higher prices due to the pass-through of greater
fuel costs to the wholesale electricity market (MEM). Conversely,
margins in Colombia shrunk on the back of lower wholesale prices
caused by the increase in rainfall compared to the same period last
year.
   In distribution, operating margins 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.

   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 (LNG) project being carried out
in Quintero (Chile). ENDESA is involved in the project alongside
British Gas, Metrogas and ENAP. 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 wind farm,
and began construction of the 9MW Ojos de Agua mini hydro station.
Both projects were started in the year's first quarter.
   In Peru, construction on Etevensa CCGT -the first combined cycle
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 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 the
        ownership structure in Brazil, lead to the generation of more
        stable local cash flows, improve third-party financing and
        bolster ENDESA's position in Brazil vis-a-vis new growth
        opportunities.

   --  In Peru, on April 12 the local antitrust authorities cleared
        the merger and takeover 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, 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 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 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 that ENDESA will provide IFC with an exit
clause at market prices if the IPO 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
project

   On July 11 (i.e. already in the year's third quarter),
construction officially began in Panama on the transmission line of
the SIEPAC project.

   This project's objective is twofold:
-0-
*T
    --  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
        2008.

    --  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
    volume.

--  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.
*T

   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.
-0-
*T
EBITDA & EBIT IN LATIN AMERICA
----------------------------------------------------------------------
                                       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
----------------------------------------------------------------------
*T

   The table below shows the breakdown of EBITDA and EBIT of ENDESA's
fully consolidated subsidiaries by business line and country:
-0-
*T
BREAKDOWN OF EBITDA AND EBIT IN LATAM 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
----------------------------------------------------------------------

----------------------------------------------------------------------
Distribution
----------------------------------------------------------------------
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
----------------------------------------------------------------------
*T

   Generation and transmission

   Chile

   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.

   Colombia

   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, 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.
   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. 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.

   Peru

   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 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.

   Distribution

   Chile

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

   Colombia

   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.

   Brazil

   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.

   Peru

   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.

   Argentina

   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, 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.
-0-
*T
CAPITAL EXPENDITURE IN LATIN AMERICA
----------------------------------------------------------------------
                                  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
----------------------------------------------------------------------
*T

   STATISTICAL APPENDIX

   KEY FIGURES

-0-
*T
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
 (GWh)
----------------------------------------------------------------------
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)
----------------------------------------------------------------------


FINANCIAL DATA


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
 (shares)
----------------------------------------------------------------------
     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
----------------------------------------------------------------------

NOTE: THE RESULTS PRESENTATION IS AVAILABLE FOR DOWNLOAD FROM ENDESA'S
WEBSITE (WWW.ENDESA.ES).

 For additional information please contact Alvaro Perez de Lema, North
      America Investor Relations Office, telephone # [phone]
                         http://www.endesa.es
*T

   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 www.sec.gov and at
ENDESA's principal executive offices in Madrid, Spain.
   This presentation contains certain "forward-looking statements"
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 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 our business operations; 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
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 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 or explicitly 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.
   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.