Chevraux May 2010

SPAIN
FLASH NOTE 4 May 2010
Spanish Utilities
Regulatory risk increases SPANISH UTILITIES: TPs & UPSIDE POTENTIAL
Rating Price Target price Upside Market cap

Integrated players
Iberdrola 2/Outperform 6.0 7.1 18% 31 404
Q Tariff deficit out of control EDP 2/Outperform 2.7 3.6 32% 9 918
2009 ended with a EUR4.6bn tariff deficit, above the EUR3.5bn Endesa 3/Underperform 21.5 23.7 10% 22 737
Gas Natural 2/Outperform 12.9 16.6 29% 11 865
government limit, with renewable energy premiums accounting for the bulk
Regulated players
of the deviation. We expect a repeat this year despite the 14.5% hike in Enagas 2/Outperform 15.1 19.6 30% 3 595
access tariffs in January, with the deficit ballooning to EUR5.2bn (inc. 2009 Red Electrica 2/Outperform 35.9 44.9 25% 4 856
overrun), above the government's EUR3bn target in 2010. Renewables players

Iberdrola Renovables 3/Underperform 2.9 3.4 16% 12 389
Q An urgent solution is needed… Acciona 3/Underperform 74.5 83.4 12% 4 741
This situation is no longer sustainable, and an urgent solution is needed.

We see two lines of attack for the government: 1) sharply raising tariffs;
or 2) cutting the system's costs. In our view, a combination of the two is SPANISH UTILITIES: PERFORMANCE
the most reasonable solution: increasing access tariffs by 10% in July
and cutting cEUR1.3bn from the current cost base, which would leave
the deficit at EUR3bn, in line with the government's target.
Q …but we do not rule out the government ignoring the problem 100 100
That said, we do not rule out the government ignoring the problem, 90 90
lifting tariffs slightly and maintaining the growth in the cost of renewable
80 80
energy, which would clash with RD6/2009. We see this as a worst-case
scenario, as it would increase the sector's regulatory risk and instability, 70 70
diminishing investors' appetite for the sector. 60 60
Q The victims: renewable energy and regulated players 50 50
Renewables premiums have come under fire, especially those for PV 05/08 09/08 01/09 05/09 09/09 12/09 04/10
solar. We think lowering premiums for projects in operation is a possibility. Sector/DJ STOXX 50 Sector
By extension, other regulated costs –i.e. distribution and transmission–
are also at risk. Even if no cut is implemented, damage has already been
done, increasing regulatory risk and harming sector visibility. On our
estimates, the above cut in regulated costs would trigger, on average, a 4-
5% cut in our FY10E EBITDA (on an annual basis).
Q Acciona and Abengoa are the most negatively affected Sector focus
To reflect the risk in our valuations, we factor in discounts for assets in Sector Top Picks A2A, GDF Suez, RWE, TERNA
operation: 10% for wind and 20% for solar assets, and a further 10% Least favoured
for pipelines. This triggers cuts in our TPs ranging from 1-2% for ELE,
IBE and GAS, to 4% for EDP and FCC, 6% for IBR, 7% for ACS, 13%
for ANA and 15% for ABG, which leads us to reiterate our cautious view
on renewable energy stocks. We like REE and ENG fundamentally, but
the share prices are very sensitive to any reduction in remuneration,
which cannot be ruled out in this context. We would, therefore, not
touch the stocks until this regulatory uncertainty is cleared.
Fernando LAFUENTE
Research Analyst
flafuente@cheuvreux.com
(34) 91 495 16 28
www.cheuvreux.com
4 May 2010 SPAIN Spanish Utilities
I— Tariff deficit out of control

Q Government's deficit limits will be topped in 2009 and 2010E
EUR4.6bn tariff deficit Last week, the CNE (the Spanish Energy regulator) released its "liquidación 14"
in FY09… concerning the system's revenues and costs for 2009. Highlights are the following:
Q Revenues grew by 13% to EUR21.3bn, mainly driven by a c5% average increase
in tariffs plus a EUR1.5bn surplus in the cost of energy for regulated tariffs (triggered
by the decrease in pool prices), offsetting the 4.5% decline in electricity demand.
Q Costs increased by 6% to EUR25.9bn. Regulated costs grew by 24% on the
back of a c60% increase in renewable energy premiums (due to the solar PV boom in
2008) while energy costs dropped by 16% as a result of the 42% fall in pool prices
and the deterioration in electricity demand.
…above EUR3.5bn The above situation led to a tariff deficit of EUR4.6bn in 2009, lower than the EUR5.8bn
government target … seen in 2008, but well above the EUR3.5bn limit the government had set for the year.
And all the indicators for 2010 point to a similar situation. Since the sector was liberalised
in July 2009, deficits now arise when the system's regulated costs (i.e., transmission,
distribution, renewables premiums, etc.) outstrip the regulated revenues (those from
access tariffs), taking into account that the cost of energy does not generate a deficit as it
is now liberalised and is paid by the consumer directly to the utility at a negotiated price.
…and we expect a In light of this, we do not see regulated revenues being enough to finance the system's
EUR5.2bn deficit in FY10E regulated costs. Thus, we expect the deficit to balloon to over EUR5bn in 2010E, again
overrunning the government's EUR3bn target for 2010.
SPANISH UTILITIES: ELECTRICITY SYSTEM'S REVENUES & COSTS 2009-10E

(in EURm) 2009 % total Growth 2010E % total Growth 2011E % total
Regulated costs (1) 16,244 63% 12% 18,188 65% 13% 20,533 65%
o/w renewable premiums 6,521 25% 8% 7,037 25% 7% 7,532 24%
o/w distribution 4,528 17% 12% 5,069 18% 4% 5,272 17%
o/w transport 1,344 5% 4% 1,397 5% 9% 1,522 5%
o/w others (*) 3,851 15% 22% 4,685 17% 32% 6,207 20%
Cost of energy (2) 9,654 37% 3% 9,937 35% 11% 10,996 35%
Total costs (A=1+2) 25,898 100% 9% 28,125 100% 12% 31,529 100%
(in EURm) 2009 % total Growth 2010E % total Growth 2011E % total
Energy revenues (1) 9,679 45% 3% 9,937 43% 11% 10,996 48%
Access tariffs (2) (**) 11,012 52% 14% 12,533 55% 15% 14,437 63%
Other revenues (3) 591 3% (23%) 457 2% (62%) 173 1%
Total revenues (B=1+2+3) 21,282 100% 8% 22,927 100% 12% 25,606 112%
Tariff deficit (B-A) (4,616) 13% (5,198) 14% (5,923)

Govt.'s maximum limit (3,500) (3,000) (2,000)
Overrun (1,116) (2,198) (3,923)
Accumulated deficit 4,616 8,698 12,423

(*) Includes extra-Peninsular generation, recovery of past deficit, security of supply & energy efficiency; (**) Assumes 15% increase in access tariffs from Jan. 2011; Source: CA Cheuvreux
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The main reasons we see for the deficit limit being breached in 2010 again are as follows:
Q The 2009 deficit exceeded the government's EUR3.5bn target by EUR1.1bn,
which will have to be included as an increase in regulated costs in the bill for 2010.
Q The premium for renewable energies will keep increasing, although at a more
moderate rate given the significant decrease, on average, in new installations,
especially in solar PV, which tumbled from over 2.8GW in 2008 to less than 400MW
in 2009. Overall, the premium for renewable energies should reach EUR6.7bn (+3%).
Q On the revenue side, the average 14.5% increase in access tariffs at the
beginning of the year has boosted revenues by EUR1.5bn, although the extra deficit
for 2009 is set to absorb most of this inflow.
Excess deficit of In light of the above, we expect the tariff deficit to reach cEUR5.2bn in 2010E, 13% higher
EUR2.2bn in FY10E than that in 2009 and EUR2.2bn above the government's EUR3bn ceiling for 2010 (note
that the target was EUR500m higher in 2009).
SPANISH UTILITIES: RENEWABLES OUTPUT AND PREMIUMS BY TECHNOLOGY

2009 2010E 2011E
% premium Output % premium Output % premium Output
Wind 22% 48% 23% 51% 22% 52%
Solar 32% 9% 35% 8% 38% 9%
Rest of technologies 45% 44% 42% 41% 39% 39%
Source: CA Cheuvreux
Q Current situation is not sustainable. An urgent solution is needed

Tariffs would have to In light of the above, the government's plan to gradually curb the tariff deficit has clearly
be raised by >30% in not had the desired results. 2009 delivered an excess deficit of EUR1.1bn just eight
July to meet targets months after RD 6/2009 was published, with the above-mentioned targets, and we expect
a further EUR2.2bn overrun in 2010E, highlighting the problems with this system.
Moreover, looking ahead to 2011, assuming that access tariffs are not raised in July and
the government repeats the 14-15% hikes in January 2011, the deficit would widen to
EUR5.9bn by year-end, while the excess deficit would climb to cEUR3.9bn.
According to our estimates, for the government to solve this problem in 2010, access tariffs
would have to be increased by over 30% in July 2010, as we show in the next section.
Given the current economic environment in Spain, with unemployment at above 20%, this
seems pretty unlikely.
Having said this, we do not think this situation is sustainable any longer. We believe the
government will have to act quickly, probably by the end of the summer (coinciding with
the end of Spain's EU presidency) to at least keep the deficit within the proposed targets.
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II— How can the deficit be eliminated?

Current situation no It is clear that Spain's tariff deficit situation is no longer sustainable and we think the
longer sustainable government needs to act quickly to secure the stability of the system. In this context, we
see little room for manoeuvre given that the government can now only adjust regulated
revenues (EUR12.8bn, 55% of total revenues) or regulated costs (EUR17.9bn, 60-65% of
the total costs). In this context, we see three potential options:
1) Boosting regulated revenues by raising access tariffs, which would increase the
final tariff for end consumers;
2) Reducing the existing cost base, whether proportionally among reducible costs
(i.e., regulated activities: renewables, distribution and transportation), or directly
by cutting the premiums granted for renewable energies.
3) Lastly, a combination of higher tariffs and lower regulated costs.
The three options would be very good news for the electricity system's stability (although
negative for the shareholders of the players involved) and would reduce the regulatory risk
linked to the uncontrolled increase in the tariff deficit. Having said this, we think the last
option –combining higher tariffs and lower costs– is the most reasonable. However, we
cannot rule out the government doing nothing, ignoring the problem and only lifting tariffs
slightly while maintaining the growth in renewable energy. This would be the worst-case
scenario, in our view.
Q What action can the government take?

As commented above, we just see two areas where the government has room for
manoeuvre to solve the tariff deficit: 1) regulated revenues via the access tariff, and 2)
regulated costs. More concretely:
1) Increasing regulated revenues (through access tariffs)

Sharply raising tariffs As explained, since the electricity system's liberalization, deficits arise when regulated
would solve the revenues are insufficient to cover the system's regulated costs, and regulated revenues
problem… come from access tariffs paid by final consumers, which are decided by the government.
In light of the EUR1.1bn excess deficit in 2009, the government raised access tariffs by an
average of 14-15% at the beginning of the year. The problem is that this increase is not
enough to finance the excess deficit in 2009 plus the expected increase in pure regulated
costs. Accordingly, narrowing the gap between the expected deficit and the EUR3bn limit
via higher regulated revenues would require the government to increase access tariffs
significantly as of this July (when a revision is expected).
Q Raising access tariffs by 5-10% as of July 2010 would increase system revenues
by EUR0.3-0.6m, pushing the excess deficit down to EUR1.6-1.8bn (vs. our estimate of
EUR2.2bn). This would imply a 2.5-5.0% annualised increase in access tariffs, or 1-3%
of the total tariff paid (at stable energy costs). While we believe end-consumers could
easily absorb this increase, in itself, this would not be enough to solve the problem.
Q Raising access tariffs by 10-20% would definitely be more effective in reducing
the excess deficit as it would imply EUR0.9-1.3bn higher revenues, cutting the
excess deficit to EUR0.9-1.2bn. This would entail a 5-10% annualised hike in access
tariffs (on top of +14.5% in January), or +3-5% in terms of total tariff, which we think
consumers could still manage, although this would probably cause a stir.
…although this seems Q Lastly, a 30% hike in access tariffs should help to nearly solve the problem and
unlikely leave the excess deficit at EUR318m. However, we see this option as unlikely
considering the economic environment in Spain with unemployment at over 20%.
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SPANISH UTILITIES: POTENTIAL IMPACT OF INCREASING ACCESS TARIFFS IN JULY 2010
Increase in access tariffs Annualised increase (*) Increase in New annual Maximum New excess
from July 2010 Access tariffs Total tariffs revenues deficit limit deficit
5.0% 2.5% 1.3% 313 (4,885) 3,000 (1,885)

10.0% 5.0% 2.5% 627 (4,571) 3,000 (1,571)
15.0% 7.5% 3.8% 940 (4,258) 3,000 (1,258)
20.0% 10.0% 5.0% 1,253 (3,945) 3,000 (945)
25.0% 12.5% 6.3% 1,567 (3,631) 3,000 (631)
30.0% 15.0% 7.5% 1,880 (3,318) 3,000 (318)
(*) Assuming energy prices stay flat. Source: CA Cheuvreux
Looking ahead to 2011E the picture remains depressed. If the government finally decided
to keep tariffs unchanged in July (which seems unlikely despite the 14.5% hike in access
tariffs in January), the deficit would widen to EUR7.8bn (on top of the EUR3bn limit for
2010). Thus, meeting the deficit target for 2011 would require access tariffs to be raised at
least 40%. This is a clear trigger for the government to take action by July 2010.
SPANISH UTILITIES: POTENTIAL IMPACT OF INCREASING ACCESS TARIFFS IN JANUARY 2011
Increase in total Increase in New annual Maximum New excess

Increase in access tariffs
tariffs (*) revenues deficit limit deficit
0.0% 0.0% 0 (7,827) 2,000 (5,827)

10.0% 5.0% 1,253 (6,573) 2,000 (4,573)
20.0% 10.0% 2,507 (5,320) 2,000 (3,320)
30.0% 15.0% 3,760 (4,067) 2,000 (2,067)
40.0% 20.0% 5,013 (2,813) 2,000 (813)
50.0% 25.0% 6,267 (1,560) 2,000 440
(*) Assuming energy prices stay flat. Source: CA Cheuvreux
2) Reducing the existing regulated cost base

Cutting current cost Like revenues, costs are split between liberalised (those related to the cost of electricity
base also an option… sold) and regulated (including activities like distribution, transport and the premium for
renewables). Liberalised costs do not generate deficit, thus the government can only
modify the regulated ones.
In this context, to ensure the system's sustainability and bring the deficit within the limits
set by RD 6/2009, the government would need to reduce the existing cost base by at
least EUR2.2bn (12% of the total EUR18.2bn regulated costs we expect for 2010E) to
eliminate the excess deficit.
…though it would If such a decision were taken, it could be considered as retroactive, which could cause
mean retroactivity debate as to its legality. Having said this, the government has implemented measures
regardless of legality issues in the past, so we do not rule out this possibility, even if it
were to subsequently be repealed.
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SPANISH UTILITIES: ELECTRICITY SYSTEM'S COST STRUCTURE 2009-10E

2009 2010E
(in EURm) Costs % of total % of regulated Costs % of total % of regulated
Regulated costs (1) 16,244 63% 100% 18,188 65% 100%
o/w renewable energy premiums 6,521 25% 40% 7,037 25% 39%
o/w distribution 4,528 17% 28% 5,069 18% 28%
o/w transport 1,344 5% 8% 1,397 5% 8%
o/w others 3,851 15% 24% 4,685 17% 26%
Cost of energy (2) 9,654 37% 9,937 35%
Total costs (A=1+2) 25,898 100% 28,125 100%
Note that the Spanish courts recently ruled that the cost of energy-saving plans and
2 options to reduce efficiency measures must be removed from regulated costs and financed by the utilities.
current cost base: This represents cEUR300m, reducing the cut needed in regulated costs to cEUR1.9bn. To
achieve this, we see the following options:
1) Cutting the premium paid for renewable energies (25% of total costs, c40%
1) cutting the of regulated costs). This item grew the most in 2009 and deviated the most from
premiums paid for the government's initial assumption (EUR6.5bn vs. EUR4.1bn expected).
renewables; Moreover, the amount of premiums will increase further when all the PV and
thermo-solar projects approved recently (c1GW + 2GW respectively) come on
stream. The bulk of the cut would relate to photovoltaic generation assets,
although we do not rule out wind and other renewable technologies, especially
biomass & cogeneration, being affected. Having said this, assuming a
proportional reduction in premiums, EUR1.9bn lower costs would imply 25-30%
lower premiums, on average.
SPANISH UTILITIES: PREMIUMS FOR RENEWABLE ENERGIES 2009-2010E

(in EURm) 2009 % of total % Growth 2010E % of total
Wind 1,457 22% 11% 1,611 23%
Solar 2,559 39% 18% 2,482 35%
Rest of technologies 2,506 38% (1%) 2,943 42%
Total premium 6,521 100% 8% 7,037 100%
2) Proportionally cutting other reducible costs. Apart from premiums for

renewable energies, the government could also modify the cost of other
or 2) proportionally regulated activities such as electricity distribution and transmission, which also
cutting all regulated contribute to the cost base and receive high returns (though lower than for
costs renewables, but with no operational risks linked to volumes or prices). If the
EUR1.9bn excess deficit (discounting the EUR300m from energy efficiency) were
shared proportionally among the three activities, revenues would decrease by
cEUR1bn for renewable energies, EUR711m for distribution and EUR196m for
transportation.
SPANISH UTILITIES: PROPORTIONAL CUT IN REGULATED COSTS

Initial costs Cost reduction Final costs % cut
Excess tariff deficit to be eliminated (2,198)
o/w costs absorbed by the utilities 305
o/w cut in renewables premiums 7,037 987 6,050 (14%)
o/w cut in distribution revenues 5,069 711 4,358 (14%)
o/w cut in transportation 1,397 196 1,201 (14%)
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Q A mix of higher tariffs and lower costs makes more sense…

A combination would Being realistic, while any of the options mentioned above should solve the excess deficit,
be the most none, taken independently, would be positive for the sector incumbents:
reasonable solution… Q A retroactive cut in renewable premiums and/or a cut in the remaining regulated
costs (transportation and distribution). Apart from having a negative effect on the
players involved, this could dent regulatory stability and increase country risk, driving
foreign investments away and seriously damaging the country's image.
Q A big hike in tariffs. In the current economic and social climate, with
unemployment at above 20%, such a move would likely be fiercely criticised by
public opinion and entail a hefty political cost for the government ahead of the next
general elections in 2012.
In this context and assuming the deficit needs to be reduced by cEUR2.2bn (EUR5.2bn
expected deficit vs. the EUR3bn maximum), we think the most reasonable (and likely?)
solution is a combination of the two options outlined above: higher access tariffs and
lower regulated costs. Our assumptions as regards revenues are as follows:
1) Access tariffs being increased by a further 10% in July (after 14.5% in January),
generating EUR627m higher revenues (EUR1.2bn on a yearly basis); and
2) EUR305m corresponding to energy saving and efficiency measures will be
assumed by the utilities.
…and would leave the Accordingly, EUR1.3bn would have to be shaved off the electricity system's EUR18.2bn
excess deficit at zero cost base. Assuming a proportional cut for renewable energy, distribution and
transportation would result in the costs involved being cut by an average of 9%.
SPANISH UTILITIES: OPTION 1, ELIMINATING THE EXCESS DEFICIT

Initial costs Cost reduction Final costs % cut
2010 estimated tariff deficit (5,198)
Government target for deficit 3,000
Excess tariff deficit to be eliminated (2,198)
o/w increase in access tariffs 627
o/w costs absorbed by utilities 300
o/w cut in renewable energy premiums 7,037 660 6,377 (9%)
o/w cut in distribution revenues 5,069 475 4,594 (9%)
o/w cut in transportation revenues 1,397 131 1,266 (9%)
Remaining excess deficit 0
Obviously, these measures would have a negative direct impact on the players whose
revenues (or part of) are considered part of the system's regulated costs. By cost item, the
impact would be the following:
Q EUR660m lower renewable energy premiums, with solar (especially
photovoltaic) probably being the hardest hit technology (35% of premiums for just
8% of renewables output). By player, Acciona is the most exposed as c50% of its
EBITDA comes from renewables in Spain, followed by Iberdrola Renovables (and by
extension Iberdrola) with 40% of EBITDA and EDP with 15% of its EBITDA stemming
from renewables in Spain.
Q EUR475m lower distribution revenues, which would directly impact the big
utilities present in this business. Relatively speaking, the impact would not be so big,
with under 2% of total EBITDA being eroded. Endesa has the greatest exposure
(23% of group EBITDA), followed by Iberdrola (16%) and Gas Natural (14%).
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Q EUR131m lower transportation revenues, basically affecting Red Electrica,

which currently accounts for 84% of these revenues, eroding its EBITDA by c9%.
Other players like Endesa (12% market share) would also feel the effect, although
transport weighs much less in its EBITDA.
4-5% average impact Lastly, renewable energy plays a major role in the future growth plans of companies like
on FY10E EBITDA Abengoa, ACS and FCC, although this technology does not currently account for a
substantial part of their EBITDA. These players are developing thermosolar projects that
should be their growth drivers. Cutting thermosolar feed-in tariffs would surely limit their
development plans, burying most of the investment already made.
SPANISH UTILITIES: PLAYERS POTENTIALLY IMPACTED FROM A REDUCTION IN REGULATED COSTS IN SPAIN
Group's Exposure to Spain's regulated activities EBITDA % of total Potential % of total

(In EURm)
EBITDA Renewables Distribution Transportation at risk EBITDA impact EBITDA
Iberdrola 7,226 644 1,171 - 1,815 25% (163) (2%)

Iberdrola Renovables 1,567 644 - - 644 41% (58) (4%)
EDP 3,477 407 110 0 517 15% (47) (1%)
Endesa 6,718 - 1,539 122 1,662 25% (150) (2%)
Gas Natural 4,524 294 644 20 958 21% (86) (2%)
Acciona 1,291 590 - - 590 46% (62) (4%)
Red Electrica 926 - - 910 910 98% (82) (9%)

Enagas 789 - - - - 0% 0 0%
Abengoa 761 46 0 0 46 6% (4) (1%)

ACS 1,513 217 - - 217 14% (25) (4%)
FCC 1,503 72 - - 72 5% (10) (1%)
Q …but we do not rule out the government ignoring the problem

We do not rule out the Besides the options analysed above, there is another possibility that cannot be ruled out:
government ignoring the government ignoring the problem, lifting tariffs slightly and maintaining the growth in
the problem… the cost of renewable energy.
Although this option would clash with RD 6/2009 (published to eliminate the tariff deficit)
and the maximum annual limit for the deficit, it could be implemented through a new
Royal Decree establishing a new timeframe and limits to eradicate the deficit. In fact,
given the current government's track record, this could even be carried out without a new
legislation.
…which would be bad In our view, this would be very bad news for the sector. On the one hand, it would undo all
news for the sector… the progress achieved with RD6/2009. On the other hand, it would increase the sector's
regulatory risk and instability, putting at risk all the investments in production capacity in
recent years (both in thermal and renewables) and undoubtedly diminishing the foreign
investors' appetite for the sector.
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Snowball that could even bankrupt the electricity system

…and could even put Being more specific, a situation in which the government decided not to change any of
the system at risk the system's regulated costs and only moderately increase the tariff on a yearly basis
would trigger two possible scenarios, in our view. The key would be the action taken as
regards the future development of renewable energies, especially solar (both photovoltaic
and thermosolar) since the cost/output ratio for wind is more balanced. Moreover, wind is
a more mature technology and closest to becoming profitable without subsidies.
Q If the government maintained its plans to increase solar installed capacity (200-
300MW p.a. in PV and 500MW p.a. in thermosolar in 2010-13) and access tariffs
were increased yearly by 10-15%, we estimate the excess deficit at the end of 2013
would range from EUR6.3bn (access tariffs +15% p.a.) to EUR11bn (access tariffs
+10% p.a.), which would not be sustainable, in our view.
Q On the contrary, if the government decided to halt the growth in new solar
capacity and hold the current level of premiums flat for the next 3-4 years, the
outlook would be a bit brighter, although tariffs increases would still be needed, in
our opinion. According to our estimates, annual tariff increases of close to 15% (in
line with that decided in January 2010) would leave the deficit at EUR265m at the end
of 2013, nearing the target set by RD 6/2009.
Our conclusion in simple, if no real action is taken shortly, the viability of the electricity
system could be at risk. We believe the tariff deficit is clearly snowballing and could even
bankrupt the electricity system.
SPANISH UTILITIES: EXCESS DEFICIT EXPECTED 2010-2013E (*)

Excess deficit including expected growth in premiums for renewable energy
(in EURm) 2010E 2011E 2012E 2013E
Access tariffs raised by 10% p.a. (2,198) (4,447) (7,426) (11,048)
Excess deficit with flat premiums for renewable energy
(in EURm) 2010E 2011E 2012E 2013E
Access tariffs raised by 15% p.a. (1,682) (2,238) (1,921) (265)
(*) On top of RD6/2009's limits (EUR3.5bn in 2009, EUR3bn in 2010, EUR2bn in 2011 and EUR1bn in 2012); Source: CA Cheuvreux
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III— The victims: renewables & regulated players

Q Renewable energies: increased risk premium
FY09 renewables The whole situation regarding the sustainability, or otherwise, of the electricity system was
premiums were EUR2.5bn triggered by the CNE's (the Spanish energy regulator) figures on the 2009 tariff deficit,
higher than expected especially with the deviation triggered by renewable energy premiums. These premiums
were expected to be somewhere in the region of EUR4bn, but ended up at EUR6.5bn, a
deviation of over EUR2.5bn, accounting for more than 50% of the total deficit generated.
Hence, most of the criticism focused on these premiums.
It is not clear whether the Ministry of Industry will finally cut tariffs for assets already in
operation or for those projects that are under construction, or even if it will opt to halt the
increase in immature technologies (like solar PV and thermosolar), although it is clear that
the damage to the industry has been done. We see three clear and direct negative
consequences:
Q A higher cost of financing, with spreads widening due to the instability of cash
flows and the lack of visibility long term.
Q Less financing availability, which means that: 1) some projects will not be able to
obtain the financing they need for development; and 2) those that do obtain financing
will probably need a higher equity component, more in the region of 40/60 than the
previous 20/80.
This situation will impact Q Higher risk premiums as a result of the two issues above. Equity cash flows
RNW profitability should be less visible and more volatile, triggering an increase in the risk profile of
this kind of project, which has so far been considered as a high-yield bond.
In our view, the above will have a direct impact on project profitability, renewable energy
IRRs will come under pressure and, accordingly, the value of assets will be affected. More
concretely, we draw the following conclusions:
Wind tariffs could be Q Wind power: On our estimates, each 5% reduction in the remuneration floor for
cut by 3-5%... wind projects (assuming electricity prices remain depressed) would erode the equity
value of the project by 13% and the project IRR by 60bp. As we assume a 9.5% cost
of equity and a 30/70 equity/debt structure, with the current electricity price scenario
of projects receiving the minimum remuneration, the floor could not be lowered by
more than 5-10% if equity IRR is to remain above the cost of capital. Otherwise, we
think most developers would halt the installation of new projects.
SPANISH UTILITIES: EQUITY VALUATION SENSITIVITY TO CUTS IN WIND TARIFFS (*)

Cost of equity
Project IRR Equity IRR
9.50% 9.75% 10.00% 10.50%
0% (0%) (3%) (6%) (12%) 7.7% 10.3%
Tariff cut
5% (13%) (16%) (18%) (24%) 7.1% 9.3%

10% (26%) (29%) (31%) (36%) 6.5% 8.2%
15% (39%) (41%) (44%) (49%) 5.8% 7.2%
20% (52%) (54%) (57%) (61%) 5.1% 6.1%
(*) Base case: revenues of EUR75.4/MWh, 25% load factor; and EUR1.3m/MW cost of installation; Source: CA Cheuvreux
10 www.cheuvreux.com
…and those for PV

solar by 10-15%... Q Solar power: Solar PV projects currently receive EUR470/MWh, over 6X the
floor for wind projects. Assuming an equity/debt structure of 20/80 and a
EUR6.5m/MW cost of installation, we estimate a solar farm with 1,560h production is
currently obtaining IRRs of 9.8% on the project and 13.8% on the equity, 430bp
above the 9.5% cost of equity we are assuming. Accordingly, we see more room to
cut tariffs in solar photovoltaic than in wind (a 10-15% cut in tariffs would leave
equity IRR at >12%, still 250bp above the cost of equity).
SPANISH UTILITIES: EQUITY VALUATION SENSITIVITY TO CUTS IN PV TARIFFS (*)

Cost of equity
Project IRR Equity IRR
9.50% 9.75% 10.00% 10.50%
0% 0% (3%) (6%) (11%) 9.8% 13.8%
Tariff cut
5% (12%) (14%) (17%) (22%) 9.1% 13.3%

10% (23%) (26%) (28%) (33%) 8.4% 12.7%
15% (35%) (38%) (40%) (44%) 7.7% 12.1%
20% (48%) (50%) (52%) (56%) 6.9% 11.6%
(*) Base case: revenues of EUR470/MWh, 18% load factor; and EUR6.5m/MW cost of installation; Source: CA Cheuvreux
…despite the debt Despite the above, another factor should be taken into account when considering
service ratio solar projects. When the banks agreed loans to build projects they set average debt
service ratios (operating CF/financials+debt return) in the region of 1.2-1.3X. The
projects currently exceed this ratio slightly, but lowering the current tariffs by over
10% would drag the ratio below the required level. Note that, according to press
sources, banks (both national and international) have over EUR15bn in project
financing structures for solar farms.
Q Distribution & transportation: the contagion effect

Transportation and Regulated activities –i.e., transportation and distribution– are also under a cloud. The
distribution also at risk pretext is that these activities, especially transportation, obtain generous returns
considering that there is little volume risk linked to them (zero for transportation).
Looking at the relative weight of these activities in the system's costs and their returns, we
see limited room for manoeuvre considering that:
Q Distribution, despite representing 28% of total regulated costs, currently has a
return in the region of 7-7.5%. While this is attractive, it is not outrageous, limiting the
scope to cut it.
Q While returns for transportation are higher (8-8.5%) and there is zero exposure
to volume risk, the weight as a percentage of costs is low (c8% of regulated costs,
5% of total). Thus, reducing these revenues would not have a material impact as
regards solving the deficit problem.
SPANISH UTILITIES: WEIGHT OF TRANSPORT & DISTRIBUTION IN COSTS 2010E

% regulated costs % total costs Estimated return
Distribution 27.9% 18.0% 7.0-7.5%
Transportation 7.7% 5.0% 8.0-8.5%
Returns could come Overall, it seems clear that these activities are being hit more by the contagion effect
under pressure related to the potential reduction in renewable energy premiums than by the direct risk of
an effective cut in distribution and transportation revenues. Having said this, we think both
activities will remain under pressure until the government takes a final decision.
IV— Downside risk to valuations

Q We cut our valuations for renewable energy
We factor discounts into Although the government has not reached a decision yet, in this report we opt to factor a
our valuations discount into our valuations for Spanish renewable energy businesses to reflect the risk
associated to the possibility of premiums for renewables being cut. We distinguish
between wind and solar assets when considering the discount to be applied:
1) Wind assets: we use a 10% discount in our valuation of assets in operation to
reflect the risk of the floor of the current remuneration framework being lowered
by 3-5%.
2) Solar assets: our discount widens to 20% for assets in operation as we think
there is more room to cut tariffs for such projects, as they obtain higher returns
than wind projects. This reflects the risk of a 5-10% cut in tariffs.
Triggering a cut in our Additionally, we include a further 10% discount on top of those outlined above to the
target prices pipeline of projects in both technologies, basically to reflect the risk of: 1) a potential cut in
the remuneration of already pre-registered assets; and 2) the delay/cancelation of some of
these projects. The above results in the following:
SPANISH UTILITIES: CUT IN SPANISH RENEWABLE VALUATIONS

Total EV Wind Spain EV Solar Spain EV Target Price Upside
(in EURm) EV Operation Pipeline Operation Pipeline New Cut New Cut
I. Renovables 21,102 7,339 482 250 0 20,222 (4.2%) 3.39 (5.8%) 15.7%
Iberdrola 57,586 5,871 386 200 0 56,882 (1.2%) 7.06 (1.9%) 18.1%
EDP 32,492 3,745 591 0 0 31,999 (1.5%) 3.58 (3.6%) 31.9%
Gas Natural 33,526 1,394 38 0 0 33,380 (0.4%) 16.56 (1.0%) 28.6%
Endesa 46,470 1,397 227 0 0 46,285 (0.4%) 23.69 (0.7%) 10.4%
Acciona 15,372 5,798 77 736 73 14,608 (5.0%) 83.36 (12.6%) 11.8%

Abengoa 8,056 0 0 1,511 416 7,629 (5.3%) 22.93 (14.7%) 27.6%
ACS 23,253 1,622 302 1,207 853 22,533 (3.1%) 32.38 (6.9%) (5.5%)
FCC 9,489 696 4 174 0 9,384 (1.1%) 22.37 (3.6%) (8.8%)
Discount 10% 20% 20% 30%

1) Wind players: Iberdrola Renovables, EDP and Acciona

TP of EUR3.39 for IBR, Q Iberdrola Renovables (3/Underperform). We lower our target price by 6% to
16% upside EUR3.39 per share (from EUR3.6) mainly due to its Spanish wind assets in operation
(5.5GW) as the pipeline's weight is pretty limited. Moreover, if tariffs are cut for future
projects, we think Iberdrola Renovables would be able to divert certain projects to
other countries, providing some protection. Our new target price yields 16% upside,
which we find a bit limited to turn positive on the stock.
TP of EUR3.58 for Q EDP (2/Outperform). We trim our target price by 4% from EUR3.70 to EUR3.58.
EDP, 32% upside As for Iberdrola Renovables, this basically stems from the c3GW it has in operation in
the Iberian Peninsula as the bulk of new installations will be in countries other than
Spain. The stock offers 33% upside at market prices which, in our view, means that
all the bad news, not only from renewables but also from Portugal's sovereign debt
risk, is already priced in.
TP of EUR83.4 for Q Acciona (3/Underperform): Acciona is one of the most exposed to this
ANA, 13% upside underlying risk in relative terms as it is one of the leading companies in wind energy
in Spain (managing 4.6GW), as well as in solar, especially in thermosolar where it
manages one of the largest pipelines in Spain (it is to develop up to 250MW in this
technology by 2012). Accordingly, to factor in this risk we cut our target price by 13%
to EUR83.4 p.s. which is still 12% above current market prices.
2) Solar players: Abengoa, FCC and ACS

TP of EUR22.9 for IBR, Q Abengoa (2/Outperfrom) is one of the most exposed players to any regulatory
28% upside change as its presence in the thermosolar sector relies on the projects already
awarded by the pre-allocation register. If these projects were delayed or even
cancelled, the impact would be highly negative both in terms of money already
invested and of future operational growth. Accordingly, we reduce our target price by
15% to EUR22.93 per share (from EUR26.7), which is still 25% above market prices.
TP of EUR32.4 for
Q ACS (3/Underperform): ACS is also developing its own strategy in renewable
ACS, 6% downside energies with the aim of becoming a major player in wind energy (around 1GW under
management) and thermosolar generation (it plans to develop projects totalling
c300MW by 2013). Although this business area is still small in relative terms (17% of
its EV), we also include this risk in our target price and lower it by 7% to EUR32.4
p.s., which is 6% below current market prices.
TP of EUR22.4 for IBR, Q FCC (3/Underperform): FCC is one of the latest to enter the renewable energy
9% downside business in Spain: it now manages c420MW of wind energy and 20MW of
photovoltaic generation. It is also planning to develop some thermosolar plants (not
yet in our estimates). Since its two current technologies are exposed to the risk of a
change in the remuneration scheme, we decrease our target price for FCC by 4% to
EUR22.4 p.s., which is 9% below current market prices.
3) Integrated utilities: Gas Natural, Endesa and Iberdrola

The impact is limited for the integrated names in view of their low relative exposure to the
renewable energy business. This is borne out by the decrease of just 2% in our target
price for Iberdrola, the most exposed to renewables through Iberdrola Renovables, while
the adjustment for Endesa and Gas Natural is just c1% We thus keep our view on the
three:
TP of EUR16.7 for Q Gas Natural (2/Outperform) is the least exposed to renewable energies, limiting
GasNat, >30% upside the potential downside from any decision taken by the government in this area.
Moreover, the stock is attractive in itself (>30% upside, 9X P/E, 7% yield) and we see
some upside from higher synergies not yet in estimates.
TP of EUR7.06 for IBE, Q Iberdrola (2/Outperform). Part of Iberdrola's investment case relates to its
18% upside exposure to renewable energy, which has penalised the stock price in the current
context. However, as explained, its exposure to Spain in terms of new capacity is
limited and we think it has the ability to divert certain projects if Spanish regulation
becomes less attractive. We keep our positive view on the back of its diversified
business model, prospects for healthy growth given its exposure to renewables
outside Spain and strong CF generation. Moreover, we think that potential stake-
building by ACS could drive up the share price in the short term.
TP of EUR23.7 for Q Endesa (3/Underperform) is also one of the least exposed to renewable energy,
ELE, 10% upside especially after the deal with Enel, as the new renewables vehicle will contribute to
P&L through the equity results line. We keep our neutral stance as its strategic
targets are roughly in line with our estimates and the deal with Enel removed any
potential upside from investments in renewable energies.
Q Transmission business: Red Electrica and Enagas

We remain positive on As mentioned above, the increase in premiums for renewables also affected all the
both stocks… regulated activities in the electricity sector, especially transmission with generous returns
and no risk linked to prices or volumes. Red Electrica is the key player in the sector with
an 84% market share, which should rise to 100% by the end of the year.
We have decided to keep our valuations unchanged as we like both Red Electrica and
Enagas fundamentally, although their share prices are very sensitive to any reduction in
remuneration, which cannot be ruled out in the current context.
… but do not rule out We analysed the impact of a potential cut in revenues (for Enagas too, as, while it is not
a cut in revenues involved in the electricity system, its regulation for pipelines has also been linked to REE's
and vice versa) and reached the following conclusions:
Q A 5% decrease in revenues would lower the electricity system's costs by
EUR66m (of a total deficit of EUR5.2bn for 2010E), which is very limited in our view,
while it would impact Red Electrica's and Enagas' valuations by 10-12%.
Q Lowering revenues by a further 10% would mean EUR132m less costs for the
system (2.5% of the expected deficit), eroding the regulated players' valuations by
20-25%.
Q A 15% cut would reduce the deficit by EUR200m, (c4%) and slash 30-40% from
the regulated players' valuations, which seems excessive.
SPANISH UTILITIES: REE & ENAGAS SENSITIVITY TO A CUT IN REVENUES

5% cut in revenues 10% cut in revenues 15% cut in revenues
(in EURm) REE ENAG REE ENAG REE ENAG
FY10E revenues 1324 999 1324 999 1324 999
FY10E net profit 371 331 371 331 371 331
Reduction in revenues 66 50 132 100 199 150
Lower net of taxes 46 35 93 70 139 105
% of net profit (12.5%) (10.6%) (25.0%) (21.1%) (37.4%) (31.7%)
P/E (implied from our TP) 17.0 14.2 17.0 14.2 17.0 14.2
TP 46.72 19.63 46.72 19.63 46.72 19.63
New TP 40.89 17.56 35.06 15.48 29.23 13.41
% cut (12.5%) (10.6%) (25.0%) (21.1%) (37.4%) (31.7%)
Q Peer comparison
Looking at the multiples for the European sector, we draw the following conclusions for
our Spanish top picks:
Q Gas Natural is trading at 9.2X10E P/E and 7X10E EV/EBITDA, which, on average,
GasNat is our top pick:
implies a discount vs. both its Spanish and European peers. We do not see this as
9X10E P/E, sound reasonable, considering its sound EPS growth prospects and its 7% dividend yield.
growth plus 7% yield Q Iberdrola is trading at 11.5X10E P/E and 7.5X10E EV/EBITDA, or 8X and 6X,
respectively, adjusting for Iberdrola Renovables, which is in line with, or even at a
discount to, it European peers, while it has traditionally traded at a premium.
Q Relative to their respective Italian peers, both Red Electrica and Enagas are
trading at a discount in terms of both P/E and EV/EBITDA. On the one hand, this
does not seem justifiable given their significantly higher growth prospects but, on the
other, the Italian players entail lower regulatory risk and are less reliant on new
investments.
EUROPEAN UTILITIES: PEER COMPARISON

Company Rating Market Cap Debt/EBITDA EPS Div. Yield EV/EBITDA Adj. P/E
(EUR m) 2010E 2011E CAGR09-11E 2010E 2010E 2011E 2010E 2011E
Integrated utilities
Iberdrola 2 31,404 3.5 3.4 3.4% 5.4% 7.5 7.3 11.5 11.1
Endesa 3 22,737 1.7 1.5 2.8% 4.8% 5.7 5.5 10.5 10.5
EDP 2 9,918 4.3 4.1 1.9% 6.3% 8.0 7.5 9.8 9.3
Gas Natural 2 11,865 3.8 3.5 15.0% 6.8% 7.0 6.7 9.2 8.3
Regulated players
Enagas 2 3,595 4.2 4.2 10.4% 5.5% 8.7 8.4 10.9 9.9
Red Electrica 2 4,856 3.7 3.7 12.2% 4.5% 8.8 8.3 13.3 12.0
Renewable players
I. Renovables 3 12,389 3.6 3.6 20.1% 1.1% 11.5 10.3 26.8 23.1
Acciona 3 4,741 6.3 6.0 (6.0%) 2.1% 10.1 9.4 23.5 17.9
European players
RWE 1 35,655 1.8 1.9 5.4% 6.1% 6.1 6.0 8.5 8.4
Enel 2 37,220 3.1 3.0 (5.3%) 6.4% 6.1 5.9 8.6 8.6
GDF SUEZ 2 58,814 2.3 2.1 (3.6%) 6.1% 6.8 6.1 14.7 12.4
E.ON 3 53,689 2.8 2.9 (15.0%) 5.5% 7.2 7.2 10.0 10.4
EDF 3 75,816 2.6 2.6 8.1% 2.9% 7.7 7.4 18.9 16.5
Terna - 6,135 4.3 4.4 6.3% 6.2% 9.8 9.5 15.7 15.3
Snam rete gas 3 12,939 4.4 4.4 3.3% 5.6% 9.8 9.5 12.4 11.9
Key Financial Data

Abengoa
Acciona
ACS
EDP
Enagas
Endesa
FCC
Gas Natural
Iberdrola
Iberdrola Renovables
Red Electrica
Abengoa
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Profit & Loss Account
Sales 1,635.3 1,746.1 2,023.5 2,677.2 3,214.4 3,769.2 4,147.3 5,011.8 5,276.6
% Change 7.5% 6.8% 15.9% 32.3% 20.1% 17.3% 10.0% 21.3% 5.3%
Staff costs (243.3) (274.1) (325.9) (402.7) (450.1) (930.3) (309.2) (493.6) (501.3)
Other costs (1,206.8) (1,291.8) (1,481.2) (1,986.6) (2,380.6) (2,297.7) (3,087.7) (3,757.1) (3,848.9)
EBITDA 185.2 180.2 216.4 287.9 383.7 541.2 750.4 761.1 926.4
% Change 5.9% -2.7% 20.1% 33.0% 33.3% 41.0% 38.7% 14.8% 21.7%
Depreciation (70.3) (52.8) (52.9) (68.7) (97.4) (206.6) (319.4) (264.2) (293.5)
EBITA 114.9 127.4 163.5 219.2 286.3 334.6 431.0 496.9 632.9
% Change -2.9% 10.9% 28.3% 34.1% 30.6% 16.9% 18.8% 8.9% 27.4%
Goodwill amortisation before OP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Goodwill amortisation [impairment test] 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Non recurring operational items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
EBIT 114.9 127.4 163.5 219.2 286.3 334.6 431.0 496.9 632.9
Net financial items (31.6) (78.3) (58.8) (91.9) (140.5) (293.9) (170.2) (255.6) (293.6)
Non recurring financial items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other exceptional items (1.7) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Tax (16.7) 7.5 (31.6) (13.3) (14.3) 115.2 (58.1) (12.2) (58.1)
Associates [contribution] 2.3 3.6 5.4 7.5 4.2 9.4 2.3 2.5 2.6
Discontinuing activities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Goodwill amortisation (19.4) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net profit [loss] before minorities 47.8 60.2 78.5 121.6 135.8 165.4 202.7 231.6 283.8
Dividend to preferred shares 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Minorities (0.8) (7.8) (12.5) (21.2) (15.4) (25.4) (32.4) (35.9) (43.1)
Net attributable profit [loss] 47.0 52.4 66.0 100.4 120.4 140.0 170.3 195.7 240.7
Restatement [impairment test] 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adj. for exceptional items 0.0 0.0 0.0 0.0 0.0 (11.5) 5.3 0.0 0.0
Net attrib. profit [loss], restated 66.4 52.4 66.0 100.4 120.4 128.5 175.6 195.7 240.7
% Change -10.1% -21.1% 26.0% 52.1% 19.9% 6.7% 28.6% 9.5% 23.0%
Cash Flow Statement
Cash flow 135.2 107.4 140.3 187.7 557.5 362.5 407.7 493.3 574.6
% Change 4.8% -20.6% 30.6% 33.8% 197.0% -35.0% 12.5% 21.0% 16.5%
Change in WCR 22.8 29.3 102.6 104.7 166.9 340.8 79.6 37.4 (1.2)
Capex (85.0) (215.0) (544.3) (959.0) (992.6) (1,435.9) (1,163.5) (1,378.9) (1,140.6)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 73.0 (78.3) (301.4) (666.6) (268.2) (732.6) (676.2) (848.2) (567.2)
Financial investments 0.0 0.0 0.0 0.0 0.0 0.0 (24.0) 0.0 0.0
Net buyback of treasury shares 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Disposals 51.0 92.0 88.6 81.7 0.0 0.0 0.0 0.0 0.0
Dividend paid (12.7) (12.7) (13.6) (14.5) (15.4) (16.3) (18.9) (23.6) (25.9)
Capital increase 0.0 0.0 0.0 0.0 0.0 0.0 200.0 250.0 0.0
Other cash flow 26.2 (126.5) (43.8) (46.2) (18.9) (82.1) 0.0 0.0 0.0
Dec. [inc.] in net debt 137.5 (125.5) (270.2) (645.6) (302.5) (831.0) (519.1) (621.8) (593.1)
Balance Sheet
Shareholders' equity [group share] 330.8 304.1 395.1 390.1 617.0 406.8 761.3 1,183.4 1,398.2
Minority interests 47.1 109.1 131.1 151.0 180.5 220.7 250.6 286.5 329.6
Pension provisions 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Other provisions 377.3 169.6 224.4 434.3 454.4 1,477.7 1,477.7 1,477.7 1,477.7
Net debt [cash] 456.4 544.9 745.9 1,750.5 2,732.5 3,525.6 4,044.7 4,666.5 5,259.6
Gearing [%] 120.8 131.9 141.8 323.5 342.6 NS 399.7 317.5 304.4
Capital invested 1,211.5 1,127.6 1,496.4 2,725.0 3,984.4 5,630.8 6,534.5 7,614.1 8,465.1
Goodwill 319.4 297.3 303.4 595.5 1,114.4 967.7 967.7 967.7 967.7
Intangible assets 103.9 334.1 589.6 807.4 1,164.4 1,384.2 1,384.2 1,384.2 1,384.2
Tangible assets 760.9 647.8 817.0 1,007.1 1,647.7 3,431.5 4,388.3 5,502.9 6,350.1
Financial assets 75.3 95.4 134.2 374.1 226.0 356.4 382.8 385.2 387.8
Associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Working capital requirement (48.0) (247.0) (347.8) (58.1) (168.1) (509.0) (588.5) (625.9) (624.7)
WCR as a % of sales (2.9) (14.1) (17.2) (2.2) (5.2) (13.5) (14.2) (12.5) (11.8)
Capital employed 1,211.5 1,127.6 1,496.4 2,726.0 3,984.4 5,630.8 6,534.5 7,614.1 8,465.1
Abengoa
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Per Share Data (at 3/5/2010)
EPS before goodwill 0.73 0.58 0.73 1.11 1.33 1.42 1.88 1.81 2.23
% Change -10.2% -21.1% 26.1% 52.1% 19.9% 6.7% 32.2% -3.6% 23.0%
EPS, reported 0.52 0.58 0.73 1.11 1.33 1.55 1.82 1.81 2.23
% Change -17.7% 11.3% 26.1% 52.1% 19.9% 16.2% 17.7% -0.7% 23.0%
Goodwill per share 0.21 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Dividend per share 0.14 0.14 0.15 0.16 0.17 0.18 0.20 0.22 0.24
Cash flow per share 1.49 1.19 1.55 2.08 6.16 4.01 4.28 4.56 5.31
% Change 4.8% -20.5% 30.7% 33.8% 197.0% -35.0% 6.9% 6.4% 16.5%
Book value per share 3.5 3.2 4.2 4.2 6.7 4.3 7.8 10.7 12.7
No. of shares, adjusted 90.470 90.470 90.470 90.470 90.470 90.470 95.200 108.200 108.200
Av. number of shares, adjusted 90.470 90.470 90.470 90.470 90.470 90.470 95.200 108.200 108.200
Treasury stock, adjusted 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Share Price [Adjusted]
Latest price 5.77 7.27 12.41 27.81 24.18 11.80 22.60 17.97 17.97
High 6.21 7.81 15.20 29.96 37.50 24.45 23.15 24.34 -
Low 4.03 5.73 7.23 12.35 21.54 10.08 8.55 17.28 -
Average price 5.12 7.01 10.65 20.75 29.32 17.86 16.23 20.94 -
Market capitalisation 522.0 657.7 1,122.7 2,516.0 2,187.6 1,067.5 2,151.5 1,944.4 1,944.4
Enterprise value 986.9 1,300.9 2,080.9 4,796.5 5,201.5 4,786.0 6,567.0 6,967.5 7,552.5
Valuation
P/E 11.1 12.6 17.0 25.1 18.2 8.3 13.0 9.9 8.1
P/E before goodwill 7.9 12.6 17.0 25.1 18.2 8.3 12.6 9.9 8.1
P/CF 3.9 6.1 8.0 13.4 3.9 2.9 2.9 3.9 3.4
Attrib. FCF yield [%] 13.8 NS NS NS NS NS NS NS NS
P/BV 1.6 2.3 2.9 6.7 3.6 2.7 2.9 1.7 1.4
Enterprise value / Op CE 0.9 1.3 1.5 2.0 1.4 0.9 1.1 1.0 1.0
Yield [%] 2.4 1.9 1.2 0.6 0.7 1.5 0.9 1.2 1.3
EV/EBITDA, restated 5.3 7.2 9.6 16.7 13.6 8.8 9.9 9.2 8.2
EV/EBITA, restated 8.6 10.2 12.7 21.9 18.2 14.3 14.4 14.0 11.9
EV/Sales 0.60 0.75 1.03 1.79 1.62 1.3 1.6 1.4 1.4
EV/Debt-adjusted cash flow 6.2 6.1 10.3 15.8 7.2 3.5 9.3 9.0 8.8
Financial Ratios
Interest cover 5.9 2.3 3.7 3.1 2.7 1.8 2.6 3.0 3.2
Net debt/Cash flow 3.4 5.1 5.3 9.3 4.9 9.7 9.9 9.5 9.2
EBITDA margin [%] 11.3 10.3 10.7 10.8 11.9 14.4 16.0 15.2 17.6
EBITA margin [%] 7.0 7.3 8.1 8.2 8.9 8.9 11.0 9.9 12.0
Net margin [%] 2.9 3.4 3.9 4.5 4.2 4.4 4.9 4.6 5.4
Capital turn [Sales/ Op. CE] 1.4 1.7 1.5 1.1 0.9 0.7 0.7 0.7 0.7
Gearing [%] 120.8 131.9 141.8 323.5 342.6 NS 399.7 317.5 304.4
Payout ratio [%] 26.9 24.2 20.6 14.4 12.8 11.6 11.1 12.2 10.8
Return [%]
Pre-tax RoCE 10.1 12.3 12.0 9.3 7.6 6.3 7.4 6.9 7.8
RoCE after tax 7.5 14.1 8.6 8.4 6.9 20.9 7.4 6.5 6.5
ROE [%] 15.3 18.9 18.2 29.5 21.6 41.6 25.7 18.0 18.8
Return on equity, restated 15.3 18.9 18.2 29.5 21.6 37.5 26.6 18.0 18.8
Acciona
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 3,864.9 4,045.7 4,853.0 6,273.0 8,008.0 12,665.0 6,667.8 6,729.2 6,847.5
% Change 13.2% 4.7% 20.0% 29.3% 27.7% 58.2% -47.4% 0.9% 1.8%
Staff costs (661.7) (681.2) (856.0) (1,106.0) (1,342.2) (1,725.0) (1,247.0) (1,284.7) (1,307.9)
Other costs (2,791.8) (2,793.1) (3,254.0) (4,206.0) (5,203.8) (8,113.0) (4,378.8) (4,153.1) (4,106.0)
EBITDA 411.4 571.4 743.0 961.0 1,462.0 2,827.0 1,042.0 1,291.4 1,433.6
% Change 42.7% 38.9% 30.0% 29.3% 52.1% 93.4% -63.1% 23.9% 11.0%
Depreciation (147.3) (215.0) (231.0) (330.0) (471.8) (1,149.0) (595.0) (641.2) (656.0)
EBITA 264.1 356.4 512.0 631.0 990.2 1,678.0 447.0 650.2 777.6
% Change 39.9% 34.9% 43.7% 23.2% 56.9% 69.5% -73.4% 45.5% 19.6%
EBIT 264.1 356.4 512.0 631.0 990.2 1,678.0 447.0 650.2 777.6
Other exceptional items 2,123.5 (3.0) (10.3) 1,260.0 306.4 101.0 1,170.0 0.0 0.0
Tax (417.8) (87.9) (150.0) (368.0) (123.5) (178.0) (44.0) (97.5) (125.3)
Associates [contribution] 20.4 7.0 7.0 8.0 9.0 20.0 (2.0) 5.2 5.7
Net profit [loss] before minorities 193.0 254.5 343.0 1,389.0 1,098.7 655.0 1,288.0 232.6 297.9
Minorities (16.5) (24.0) (18.5) (19.0) (69.4) (191.0) (27.0) (31.0) (33.1)
Net attributable profit [loss] 176.5 230.5 324.5 1,370.0 1,029.3 464.0 1,261.0 201.6 264.8
Adj. for exceptional items (2,123.5) 3.0 10.3 (1,033.2) (251.2) (82.8) (959.4) 0.0 0.0
Net attrib. profit [loss], restated (1,937.6) 233.5 334.8 336.8 778.1 381.2 301.6 201.6 264.8
% Change NS 112.1% 43.4% 0.6% 131.0% -51.0% -20.9% -33.2% 31.3%
Cash Flow Statement
Cash flow 2,111.5 469.5 573.9 1,719.0 1,570.5 1,804.0 1,883.0 873.9 954.0
% Change NS -77.8% 22.2% 199.5% -8.6% 14.9% 4.4% -53.6% 9.2%
Change in WCR 61.2 (230.2) 366.5 40.0 (403.7) (390.3) (451.0) (261.0) (22.9)
Capex (1,447.8) (724.6) (692.0) (1,005.4) (1,406.7) (1,214.0) (4,221.0) (1,352.1) (1,250.7)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 724.9 (485.3) 248.4 753.6 (239.9) 199.7 (2,789.0) (739.2) (319.6)
Financial investments 0.0 0.0 0.0 (7,347.6) (1,707.3) 0.0 0.0 0.0 0.0
Disposals 0.0 0.0 0.0 0.0 123.9 2,090.3 9,055.0 0.0 0.0
Dividend paid (76.3) (87.7) (106.2) (147.4) (183.7) (232.0) (185.6) (126.1) (100.8)
Other cash flow 232.5 19.9 (208.6) 240.4 (6,667.3) (1,102.7) 4,551.6 (5.2) (5.7)
Dec. [inc.] in net debt 881.1 (553.1) (66.4) (6,501.0) (8,674.3) 955.3 10,632.0 (870.5) (426.1)
Balance Sheet
Shareholders' equity [group share] 2,639.8 2,736.1 3,198.0 4,324.0 4,860.2 4,390.0 5,758.0 5,833.5 5,997.6
Minority interests 266.5 277.5 233.0 309.0 1,596.2 1,929.0 306.0 337.0 370.1
Other provisions 68.8 750.6 1,041.0 1,390.0 1,569.4 5,111.0 1,921.0 1,937.8 1,954.6
Net debt [cash] (155.3) 594.7 1,108.0 9,129.0 17,803.2 17,897.0 7,265.0 8,135.5 8,561.6
Gearing [%] NS 19.7 32.3 197.0 275.7 283.2 119.8 131.8 134.5
Goodwill 49.1 396.9 602.0 1,162.0 8,105.5 3,962.0 1,047.0 1,047.0 1,047.0
Intangible assets 268.9 634.6 463.2 617.1 763.2 763.2 763.2 763.2 763.2
Tangible assets 1,496.3 2,244.6 3,152.8 5,233.9 14,242.3 20,941.8 11,181.8 11,914.6 12,531.7
Financial assets 1,216.6 850.2 1,496.0 8,313.0 2,488.3 3,040.0 1,187.0 1,187.0 1,187.0
Associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Working capital requirement (1.9) 232.5 (134.0) (174.0) 229.7 620.0 1,071.0 1,332.0 1,355.0
WCR as a % of sales (0.0) 5.7 (2.8) (2.8) 2.9 4.9 16.1 19.8 19.8
Acciona
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
EPS before goodwill (30.49) 3.67 5.27 5.30 12.24 6.00 4.75 3.17 4.17
% Change NS 112.1% 43.4% 0.6% 131.0% -51.0% -20.9% -33.2% 31.4%
EPS, reported 2.78 3.63 5.11 21.56 16.20 7.30 19.84 3.17 4.17
% Change 10.6% 30.6% 40.8% NS -24.9% -54.9% 171.8% -84.0% 31.4%
% Change NS -77.8% 22.2% 199.5% -8.6% 14.9% 4.4% -53.6% 9.2%
Latest price 48.25 65.10 94.45 141.10 216.85 89.00 91.10 74.54 74.54
High 48.81 65.90 100.50 149.75 249.00 218.90 101.00 97.49 -
Low 39.00 47.95 63.70 93.40 134.90 53.95 72.55 72.55 -
Average price 44.25 52.41 81.22 122.50 185.17 139.93 87.19 85.51 -
Market capitalisation 3,068.7 4,140.4 6,007.0 8,974.0 13,791.7 5,660.4 5,794.0 4,740.7 4,740.7
Enterprise value 2,272.7 4,196.5 6,035.8 10,137.8 30,942.6 23,346.6 13,400.5 13,095.5 13,521.6
Valuation
P/E NS 17.7 17.9 26.6 17.7 14.8 19.2 23.5 17.9
P/E before goodwill NS 17.7 17.9 26.6 17.7 14.8 19.2 23.5 17.9
P/CF 1.5 8.8 10.5 5.2 8.8 3.1 3.1 5.4 5.0
Attrib. FCF yield [%] 23.5 NS 4.0 8.3 NS 2.7 NS NS NS
P/BV 1.2 1.6 2.0 2.2 3.0 1.3 1.0 0.8 0.8
Yield [%] 2.9 2.6 2.5 2.0 1.7 3.3 2.2 2.1 2.8
EV/Sales 0.59 1.04 1.24 1.62 3.86 1.8 2.0 1.9 2.0
Financial Ratios
Interest cover NS NS NS 6.8 17.5 2.9 3.7 4.0 4.0
Net debt/Cash flow NS 1.3 1.9 5.3 11.3 9.9 3.9 9.3 9.0
EBITDA margin [%] 10.6 14.1 15.3 15.3 18.3 22.3 15.6 19.2 20.9
EBITA margin [%] 6.8 8.8 10.6 10.1 12.4 13.2 6.7 9.7 11.4
Net margin [%] 5.0 6.3 7.1 22.1 13.7 5.2 19.3 3.5 4.4
Gearing [%] NS 19.7 32.3 197.0 275.7 283.2 119.8 131.8 134.5
Payout ratio [%] 49.7 46.1 45.4 13.4 22.5 40.0 10.0 50.0 50.0
Return [%]
Pre-tax RoCE 14.6 10.2 12.5 9.2 4.2 6.4 3.2 4.3 5.0
RoCE after tax 12.0 7.5 8.7 7.3 3.8 5.0 3.1 3.0 3.5
ROE [%] 6.9 8.8 10.7 37.6 23.7 11.2 24.6 3.5 4.5
Return on equity, restated NS 8.9 11.0 8.1 17.4 9.1 5.4 3.5 4.5
ACS
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 10,733.6 10,817.9 12,114.0 14,067.2 15,344.9 15,276.1 15,605.9 15,513.4 15,760.1
% Change 7.7% 0.8% 12.0% 16.1% 9.1% -0.4% 2.2% -0.6% 1.6%
Staff costs (2,482.8) (2,641.9) (2,882.9) (3,229.3) (3,577.6) (3,895.0) (3,992.4) (4,132.1) (4,276.7)
Other costs (7,319.0) (7,194.9) (8,135.7) (9,567.6) (10,387.5) (9,997.8) (10,155.2) (9,868.7) (9,893.4)
EBITDA 931.8 981.1 1,095.4 1,270.3 1,379.8 1,383.3 1,458.3 1,512.6 1,590.0
% Change 16.0% 5.3% 11.7% 16.0% 8.6% 0.3% 5.4% 3.7% 5.1%
Depreciation (282.8) (257.2) (278.0) (298.7) (323.1) (340.4) (377.9) (382.3) (404.3)
EBITA 649.0 723.9 817.4 971.6 1,056.7 1,042.9 1,080.4 1,130.3 1,185.7
% Change 12.6% 11.5% 12.9% 18.9% 8.8% -1.3% 3.6% 4.6% 4.9%
EBIT 649.0 723.9 817.4 971.6 1,056.7 1,042.9 1,080.4 1,130.3 1,185.7
Net financial items (118.5) (96.2) (99.0) (240.0) (161.9) (1,017.0) (249.0) (265.7) (295.2)
Other exceptional items (38.5) (86.0) (66.2) (79.4) 12.1 852.0 (39.0) 0.0 0.0
Tax (109.7) (152.9) (171.3) (280.1) (160.0) (28.0) (120.0) (170.5) (186.4)
Discontinuing activities 0.0 0.0 0.0 0.0 654.0 815.7 1,114.0 0.0 0.0
Net profit [loss] before minorities 389.1 470.5 633.0 1,273.3 1,572.9 1,822.6 1,982.4 924.0 962.3
Minorities (8.8) (17.9) (24.3) (23.3) (21.9) (18.0) (29.0) (30.3) (31.8)
Net attributable profit [loss] 380.3 452.6 608.7 1,250.0 1,551.0 1,804.6 1,953.4 893.7 930.5
Adj. for exceptional items 0.0 0.0 0.0 (420.4) (736.5) (1,104.6) (1,111.4) 0.0 0.0
% Change 14.2% 2.6% 34.5% 36.3% -1.8% -14.1% 20.3% 6.1% 4.1%
Cash Flow Statement
Cash flow 732.9 700.2 831.1 1,416.5 1,216.8 1,210.6 1,191.5 1,225.3 1,260.6
% Change 18.9% -4.5% 18.7% 70.4% -14.1% -0.5% -1.6% 2.8% 2.9%
Change in WCR 121.8 465.1 567.2 603.9 304.1 (485.4) 508.4 (165.5) (12.3)
Capex (658.0) (326.6) (354.0) (1,189.2) (1,769.2) (1,684.0) (1,612.0) (1,148.0) (954.0)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 196.7 838.7 1,044.3 831.2 (248.3) (958.8) 87.9 (88.2) 294.3
Financial investments (294.5) (922.0) (3,365.6) (5,025.3) (1,335.8) (1,180.5) (2,649.5) 0.0 0.0
Net buyback of treasury shares 0.0 0.0 0.0 0.0 (328.2) (764.3) (227.3) 0.0 0.0
Disposals 150.7 52.2 59.6 266.0 1,506.4 2,686.4 3,438.5 0.0 0.0
Dividend paid (24.7) (79.5) (137.6) (211.7) (441.1) (617.6) (684.3) (631.7) (619.3)
Other cash flow (730.1) (65.5) (441.5) (342.0) 1,588.5 (516.3) 119.6 0.0 0.0
Dec. [inc.] in net debt (701.9) (176.1) (2,840.8) (4,481.8) 741.5 (1,351.1) 84.9 (719.9) (325.0)
Balance Sheet
Minority interests 99.3 113.8 154.6 140.7 5,787.0 6,511.0 288.0 318.3 350.2
Other provisions 405.7 509.4 512.9 523.9 (6,778.0) (6,944.0) 1,074.0 1,097.3 1,120.9
Net debt [cash] 1,699.6 1,423.9 4,264.7 8,746.5 8,005.0 9,356.0 9,271.0 9,990.9 10,315.8
Gearing [%] 89.7 70.5 161.8 268.6 76.7 94.4 201.9 204.6 197.4
Goodwill 1,039.9 1,010.8 1,047.6 1,086.6 1,469.0 1,467.0 1,575.0 1,575.0 1,575.0
Tangible assets 1,533.8 1,981.0 2,356.0 2,917.2 4,295.0 5,377.0 6,038.0 6,827.0 7,400.3
Financial assets 311.3 334.4 359.5 3,427.0 3,758.0 3,893.0 4,174.0 4,174.0 4,174.0
Associates 1,081.2 1,498.8 4,958.4 6,800.5 4,655.0 3,188.0 5,157.0 5,238.0 5,343.9
Working capital requirement (445.8) (1,304.8) (1,872.0) (2,475.9) (2,780.0) (2,294.6) (2,803.0) (2,637.5) (2,625.2)
WCR as a % of sales (4.2) (12.1) (15.5) (17.6) (18.1) (15.0) (18.0) (17.0) (16.7)
ACS
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change 14.2% 2.6% 34.5% 36.3% -1.8% -9.1% 30.3% 8.3% 4.1%
EPS, reported 1.08 1.28 1.73 3.54 4.40 5.41 6.21 2.84 2.96
% Change 16.5% 19.0% 34.5% 105.3% 24.1% 23.0% 14.8% -54.2% 4.1%
% Change 18.9% -4.5% 18.7% 70.4% -14.1% 5.2% 6.6% 4.9% 2.9%
Latest price 12.89 16.80 27.21 42.71 40.65 32.65 34.81 34.27 34.27
High 13.29 17.13 27.30 43.70 50.95 40.99 38.75 38.80 -
Low 9.81 12.53 16.80 26.62 32.10 24.03 27.67 30.92 -
Average price 11.79 14.16 22.22 34.20 43.34 32.73 34.64 34.51 -
Valuation
P/E 12.0 13.1 15.8 18.2 17.6 15.6 12.7 11.6 11.1
P/CF 6.2 8.5 11.6 10.6 11.8 9.0 9.0 8.4 8.2
Attrib. FCF yield [%] 4.2 13.7 10.5 5.4 NS NS 0.8 NS 2.6
P/BV 2.7 3.4 4.2 5.6 3.6 3.7 3.0 2.8 2.6
Yield [%] 1.8 2.3 2.2 2.9 4.3 6.3 5.9 6.0 6.2
EV/Sales 0.46 0.53 0.73 0.98 0.93 0.6 0.7 0.7 0.7
Financial Ratios
Interest cover 7.9 10.2 11.1 5.3 8.5 1.4 5.9 5.7 5.4
EBITDA margin [%] 8.7 9.1 9.0 9.0 9.0 9.1 9.3 9.8 10.1
EBITA margin [%] 6.0 6.7 6.7 6.9 6.9 6.8 6.9 7.3 7.5
Net margin [%] 3.6 4.3 5.2 9.1 10.3 11.9 12.7 6.0 6.1
Gearing [%] 89.7 70.5 161.8 268.6 76.7 94.4 201.9 204.6 197.4
Payout ratio [%] 21.3 30.4 34.8 35.3 39.8 37.9 33.0 72.2 72.0
Return [%]
Pre-tax RoCE 24.9 34.2 39.0 42.3 32.5 19.9 19.3 17.2 16.6
RoCE after tax 19.4 24.3 28.9 32.6 26.2 16.7 16.4 12.8 12.1
ROE [%] 23.7 27.0 28.0 50.2 40.0 72.2 58.7 21.7 21.1
EDP
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 6 977.7 7 310.7 9 677.0 10 349.9 11 010.9 13 894.1 12 198.2 11 314.9 15 638.0
% Change 9.3% 4.8% 32.4% 7.0% 6.4% 26.2% -12.2% -7.2% 38.2%
Staff costs (646.6) (527.7) (546.0) (585.1) (577.0) (573.7) (540.0) (564.3) (589.7)
Other costs (4 503.9) (5 390.9) (7 083.5) (7 459.4) (7 805.6) (10 165.5) (8 295.2) (7 273.7) (11 355.7)
EBITDA 1 827.2 1 392.1 2 047.5 2 305.4 2 628.3 3 154.9 3 363.0 3 476.9 3 692.6
% Change 23.1% -23.8% 47.1% 12.6% 14.0% 20.0% 6.6% 3.4% 6.2%
Depreciation (921.2) (705.4) (911.5) (1 052.4) (1 068.0) (1 224.1) (1 394.0) (1 425.3) (1 474.3)
EBITA 906.0 686.7 1 136.0 1 253.0 1 560.3 1 930.8 1 969.0 2 051.6 2 218.3
% Change 40.4% -24.2% 65.4% 10.3% 24.5% 23.7% 2.0% 4.2% 8.1%
EBIT 906.0 686.7 1 136.0 1 253.0 1 560.3 1 930.8 1 969.0 2 051.6 2 218.3
Other exceptional items (14.4) 0.0 492.0 (8.0) 262.6 490.1 60.0 0.0 0.0
Tax (195.5) (103.2) (152.2) (265.9) (280.8) (283.8) (400.0) (404.2) (427.6)
Net profit [loss] before minorities 425.1 274.8 1 111.8 1 017.0 1 020.0 1 229.1 1 167.0 1 179.3 1 247.5
Minorities (44.0) (3.3) (40.9) (76.3) (112.7) (120.5) (144.0) (165.6) (182.2)
Net attributable profit [loss] 381.1 271.5 1 070.9 940.7 907.3 1 108.6 1 023.0 1 013.7 1 065.3
Adj. for exceptional items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net attrib. profit [loss], restated 470.6 271.5 1 070.9 940.7 907.3 1 108.6 1 023.0 1 013.7 1 065.3
% Change 19.8% -42.3% NS -12.2% -3.6% 22.2% -7.7% -0.9% 5.1%
Cash Flow Statement
Cash flow 1 084.0 993.7 1 988.0 1 824.1 2 064.3 2 418.5 2 536.0 2 578.9 2 695.5
% Change 21.3% -8.3% 100.1% -8.2% 13.2% 17.2% 4.9% 1.7% 4.5%
Change in WCR 241.0 803.0 (2 095.5) 688.5 785.0 (3 874.8) (1 176.7) (59.8) 142.2
Capex (842.4) (1 028.8) (1 427.2) (1 456.5) (2 700.2) (3 618.2) (3 390.8) (2 859.3) (2 511.8)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 482.6 767.9 (1 534.7) 1 056.1 149.1 (5 074.5) (2 031.5) (340.2) 325.9
Financial investments (90.0) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Disposals 387.5 0.0 0.0 0.0 0.0 0.0 1 575.0 (179.0) 0.0
Dividend paid (266.8) (336.4) (336.4) (365.6) (402.2) (457.1) (511.9) (566.8) (621.6)
Other cash flow (13.0) 0.0 1 726.3 858.7 2 325.3 3 258.7 1 395.7 0.0 0.0
Dec. [inc.] in net debt 500.3 431.5 (144.8) 1 549.2 2 072.2 (2 272.4) 427.3 (1 086.0) (295.7)
Balance Sheet
Shareholders' equity [group share] 5 298.0 4 037.8 4 823.4 5 589.2 6 264.1 6 346.0 7 291.0 7 738.0 8 181.7
Minority interests 236.5 743.9 1 287.8 945.7 986.6 2 201.0 2 688.0 2 853.6 3 035.8
Pension provisions 580.7 1 985.2 1 843.2 1 770.6 1 715.4 1 834.0 1 879.0 1 879.0 1 879.0
Other provisions 1 176.1 955.6 2 707.2 3 571.5 5 685.8 8 797.2 10 313.9 10 313.9 10 313.9
Net debt [cash] 7 205.2 8 870.9 9 723.2 9 283.2 11 698.9 13 889.0 14 090.0 14 952.0 15 023.7
Gearing [%] 130.2 185.5 159.1 142.1 161.3 162.5 141.2 141.2 133.9
Capital invested 14 496.5 16 593.4 20 384.8 21 160.2 26 350.8 33 067.2 36 261.9 37 736.5 38 434.1
Goodwill 0.0 0.0 1 995.4 2 470.5 3 048.7 3 048.7 3 048.7 3 048.7 3 048.7
Intangible assets 1 849.7 3 854.9 2 757.4 2 351.6 2 860.4 5 138.3 4 175.3 4 640.2 4 891.4
Tangible assets 11 651.6 12 628.0 13 864.1 15 081.7 18 669.5 21 250.0 24 094.0 25 018.2 25 580.6
Associates 1 508.6 1 501.2 1 063.0 1 239.8 2 540.8 524.0 661.0 686.6 712.9
Working capital requirement (587.6) (1 390.6) 704.9 16.4 (768.6) 3 106.2 4 282.9 4 342.7 4 200.5
WCR as a % of sales (8.4) (19.0) 7.3 0.2 (7.0) 22.4 35.1 38.4 26.9
Capital employed 14 422.3 16 593.5 20 384.8 21 160.0 26 350.8 33 067.2 36 261.9 37 736.4 38 434.1
EDP
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change 19.8% -52.9% NS -12.3% -3.5% 22.2% -7.6% -1.1% 5.1%
EPS, reported 0.13 0.07 0.29 0.26 0.25 0.30 0.28 0.28 0.29
% Change 13.4% -41.7% NS -12.3% -3.5% 22.2% -7.6% -1.1% 5.1%
% Change 21.1% -24.7% 100.0% -8.3% 13.2% 17.0% 5.0% 1.6% 4.5%
Latest price 2.09 2.23 2.60 3.84 4.47 2.70 3.11 2.71 2.71
High 2.14 2.49 2.68 3.86 5.00 4.76 3.22 3.19 -
Low 1.38 2.01 2.04 2.58 3.79 2.06 2.34 2.47 -
Average price 1.83 2.28 2.25 3.15 4.17 3.47 2.86 2.88 -
Market capitalisation 6 270.0 6 690.0 9 508.2 14 039.0 16 269.2 9 855.6 11 366.0 9 917.8 9 917.8
Enterprise value 13 200.9 16 126.2 20 376.9 24 991.3 29 153.5 26 125.4 28 268.0 27 676.7 27 803.1
Valuation
P/E 16.5 30.0 8.9 14.9 18.0 8.9 11.1 9.8 9.3
P/CF 5.8 8.2 4.8 7.7 7.9 4.1 4.5 3.8 3.7
Attrib. FCF yield [%] 6.9 11.3 NS 7.0 0.8 NS NS NS 2.8
P/BV 1.2 2.2 2.1 2.7 2.8 1.7 1.7 1.4 1.3
Yield [%] 4.3 4.0 3.8 2.9 2.9 5.2 5.1 6.3 7.0
EV/Sales 1.89 2.21 2.11 2.42 2.65 1.9 2.3 2.4 1.8
Financial Ratios
Interest cover 5.1 4.7 5.1 11.1 4.8 3.3 6.9 7.0 6.5
EBITDA margin [%] 26.2 19.0 21.2 22.3 23.9 22.7 27.6 30.7 23.6
EBITA margin [%] 13.0 9.4 11.7 12.1 14.2 13.9 16.1 18.1 14.2
Net margin [%] 6.1 3.8 11.5 9.8 9.3 8.8 9.6 10.4 8.0
Gearing [%] 130.2 185.5 159.1 142.1 161.3 162.5 141.2 141.2 133.9
Payout ratio [%] 70.8 121.2 34.1 42.8 52.4 46.2 57.2 61.3 65.2
Return [%]
Pre-tax RoCE 7.0 4.6 5.9 6.3 6.6 5.9 5.5 5.5 5.9
RoCE after tax 7.0 4.6 5.9 6.3 6.6 5.9 5.5 5.5 5.9
ROE [%] 7.5 7.0 25.0 18.4 15.6 19.1 15.1 14.0 13.9
Enagas
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 561.2 598.9 680.9 778.0 816.5 860.2 901.5 998.7 1,078.0
% Change 9.3% 6.7% 13.7% 14.3% 4.9% 5.4% 4.8% 10.8% 7.9%
Staff costs (58.0) (63.0) (58.2) (54.3) (62.0) (69.0) (60.8) (63.5) (66.1)
Other costs (120.9) (136.8) (144.3) (160.0) (159.1) (155.1) (139.4) (146.4) (150.7)
EBITDA 382.3 399.1 478.4 563.7 595.4 636.1 701.3 788.8 861.2
% Change 13.8% 4.4% 19.9% 17.8% 5.6% 6.8% 10.2% 12.5% 9.2%
Depreciation (133.5) (144.8) (166.3) (184.9) (187.2) (203.1) (216.6) (239.2) (251.7)
EBITA 248.8 254.3 312.1 378.8 408.2 433.0 484.7 549.6 609.5
% Change 18.8% 2.2% 22.7% 21.4% 7.8% 6.1% 11.9% 13.4% 10.9%
EBIT 248.8 254.3 312.1 378.8 408.2 433.0 484.7 549.6 609.5
Tax (75.4) (84.5) (101.5) (115.3) (112.4) (107.2) (125.5) (141.9) (155.6)
Goodwill amortisation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
% Change 27.0% -3.0% 23.9% 27.2% 10.0% 8.6% 15.1% 11.1% 9.6%
Cash Flow Statement
Cash flow 274.8 282.2 336.5 401.4 425.4 461.9 514.6 570.3 614.7
% Change 15.1% 2.7% 19.2% 19.3% 6.0% 8.6% 11.4% 10.8% 7.8%
Change in WCR 198.9 70.9 (29.0) (78.3) 15.7 33.2 (98.5) 28.3 (22.3)
Capex (426.3) (462.9) (358.7) (433.2) (508.6) (776.9) (901.6) (700.0) (700.0)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 47.4 (109.8) (51.2) (110.1) (67.5) (281.8) (485.5) (101.4) (107.6)
Financial investments 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Disposals 0.0 0.0 0.0 0.0 0.0 0.0 0.0 (65.0) 0.0
Dividend paid (55.0) (71.0) (79.1) (95.5) (112.6) (143.0) (155.3) (178.8) (198.7)
Other cash flow (21.6) (23.5) 15.6 (10.0) (44.1) (25.1) 143.8 0.0 0.0
Dec. [inc.] in net debt (29.2) (204.3) (114.7) (215.6) (224.2) (449.9) (497.0) (345.2) (306.3)
Balance Sheet
Shareholders' equity [group share] 932.4 998.9 1,110.4 1,235.2 1,343.9 1,440.4 1,581.3 1,733.6 1,897.9
Other provisions 455.9 63.6 60.9 69.8 96.5 102.7 282.6 282.6 282.6
Net debt [cash] 1,239.9 1,444.2 1,558.9 1,774.5 1,998.7 2,448.6 2,945.6 3,290.8 3,597.1
Gearing [%] 133.0 144.6 140.4 143.7 148.7 170.0 186.3 189.8 189.5
Goodwill 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Tangible assets 2,603.2 2,543.8 2,737.8 3,015.5 3,390.7 3,975.0 4,655.0 5,180.8 5,629.1
Associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Working capital requirement (41.4) (112.3) (83.3) (5.0) (20.7) (53.9) 44.6 16.3 38.6
WCR as a % of sales (7.4) (18.8) (12.2) (0.6) (2.5) (6.3) 4.9 1.6 3.6
Enagas
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change 27.0% -2.9% 23.8% 27.2% 10.0% 8.6% 15.1% 11.1% 9.7%
EPS, reported 0.59 0.58 0.71 0.91 1.00 1.08 1.25 1.39 1.52
% Change 26.0% -2.7% 23.8% 27.2% 10.0% 8.6% 15.1% 11.1% 9.7%
% Change 15.1% 2.7% 19.3% 19.3% 5.9% 8.6% 11.4% 10.8% 7.8%
Latest price 8.60 12.20 15.80 17.62 19.99 15.56 15.43 15.06 15.06
High 8.68 12.20 16.09 21.14 21.67 21.25 15.90 16.73 -
Low 5.79 8.19 11.40 15.16 15.86 10.32 10.43 14.14 -
Average price 7.12 9.44 13.61 17.42 18.29 17.26 13.53 15.64 -
Valuation
P/E 14.5 21.2 22.2 19.4 20.0 14.4 12.4 10.9 9.9
P/CF 7.5 10.3 11.2 10.5 11.2 8.0 7.2 6.3 5.8
Attrib. FCF yield [%] 2.3 NS NS NS NS NS NS NS NS
P/BV 2.4 3.2 3.7 3.7 4.0 2.9 2.6 2.3 2.1
Yield [%] 3.5 2.7 2.5 2.7 3.0 4.2 4.9 5.5 6.0
EV/Sales 5.87 7.27 7.83 7.69 8.29 7.2 7.4 6.9 6.7
Financial Ratios
Interest cover 12.1 12.3 11.8 12.0 10.3 9.5 11.5 10.3 9.5
EBITDA margin [%] 68.1 66.6 70.3 72.5 72.9 73.9 77.8 79.0 79.9
EBITA margin [%] 44.3 42.5 45.8 48.7 50.0 50.3 53.8 55.0 56.5
Net margin [%] 25.2 22.9 25.0 27.8 29.2 30.1 33.1 33.2 33.7
Gearing [%] 133.0 144.6 140.4 143.7 148.7 170.0 186.3 189.8 189.5
Payout ratio [%] 50.7 57.3 56.1 51.8 60.1 60.0 60.1 59.8 59.8
Return [%]
Pre-tax RoCE 9.6 10.3 11.6 12.4 12.0 10.9 10.2 10.5 10.7
RoCE after tax 5.9 6.5 7.6 8.5 8.5 7.7 7.2 7.3 7.5
ROE [%] 16.4 14.8 16.6 19.2 19.4 19.7 20.8 21.1 21.1
Endesa
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 11,297.0 13,665.0 18,229.0 20,580.0 21,931.0 22,836.0 22,836.0 22,945.0 23,499.0
% Change -2.8% 21.0% 33.4% 12.9% 6.6% 4.1% 0.0% 0.5% 2.4%
Staff costs (1,186.0) (1,383.0) (1,537.0) (1,598.0) (1,644.0) (1,693.0) (1,994.0) (2,054.0) (2,115.0)
Other costs (5,361.0) (7,761.0) (10,672.0) (11,843.0) (12,802.0) (14,248.0) (13,614.0) (14,173.0) (14,623.0)
EBITDA 4,750.0 4,521.0 6,020.0 7,139.0 7,485.0 6,895.0 7,228.0 6,718.0 6,761.0
% Change -10.0% -4.8% 33.2% 18.6% 4.8% -7.9% 4.8% -7.1% 0.6%
Depreciation (1,606.0) (1,675.0) (1,776.0) (1,900.0) (1,889.0) (1,661.0) (2,176.0) (2,185.0) (2,186.0)
EBITA 3,144.0 2,846.0 4,244.0 5,239.0 5,596.0 5,234.0 5,052.0 4,533.0 4,575.0
% Change -12.2% -9.5% 49.1% 23.4% 6.8% -6.5% -3.5% -10.3% 0.9%
EBIT 3,144.0 2,846.0 4,244.0 5,239.0 5,596.0 5,234.0 5,052.0 4,533.0 4,575.0
Net financial items (735.0) (1,147.0) (1,252.0) (939.0) (993.0) (1,009.0) (1,018.0) (608.0) (523.0)
Other exceptional items 277.0 235.0 1,488.0 442.0 146.0 4,916.0 1,511.0 0.0 0.0
Tax (550.0) (352.0) (790.0) (1,007.0) (1,243.0) (1,082.0) (1,230.0) (1,100.0) (1,143.0)
Associates [contribution] 30.0 79.0 67.0 63.0 (23.0) 51.0 45.0 149.0 180.0
Net profit [loss] before minorities 1,877.0 1,661.0 3,757.0 3,798.0 3,483.0 8,110.0 4,360.0 2,973.0 3,090.0
Minorities (565.0) (408.0) (575.0) (829.0) (808.0) (941.0) (930.0) (809.0) (927.0)
Net attributable profit [loss] 1,312.0 1,253.0 3,182.0 2,969.0 2,675.0 7,169.0 3,430.0 2,164.0 2,163.0
Adj. for exceptional items (227.0) (193.0) (1,220.0) (376.0) (140.0) (4,989.0) (1,382.0) 0.0 0.0
Net attrib. profit [loss], restated 1,374.0 1,060.0 1,962.0 2,593.0 2,535.0 2,180.0 2,048.0 2,164.0 2,163.0
% Change -12.3% -22.9% 85.1% 32.2% -2.2% -14.0% -6.1% 5.7% 0.0%
Cash Flow Statement
Cash flow 3,371.0 3,257.0 5,466.0 5,635.0 5,395.0 9,720.0 6,491.0 5,110.0 5,047.0
% Change 186.2% -3.4% 67.8% 3.1% -4.3% 80.2% -33.2% -21.3% -1.2%
Change in WCR 173.0 (2,381.0) (991.0) 195.0 1,413.0 (1,452.0) (1,295.0) (50.0) 24.0
Capex (2,218.0) (3,449.0) (3,640.0) (4,336.0) (4,746.0) (3,687.0) (4,043.0) (1,924.0) (2,316.0)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 1,326.0 (2,573.0) 835.0 1,494.0 2,062.0 4,581.0 1,153.0 3,136.0 2,755.0
Disposals 2,266.4 0.0 0.0 0.0 0.0 6,603.0 1,384.0 0.0 0.0
Dividend paid (722.6) (744.0) (782.0) (2,541.0) (1,736.0) (1,621.0) (6,243.0) (1,088.0) (1,082.0)
Other cash flow (163.0) 0.0 0.0 0.0 0.0 (3,152.0) (2,768.0) 5,097.0 0.0
Dec. [inc.] in net debt 3,504.8 (3,317.0) 53.0 (1,047.0) 326.0 6,411.0 (6,474.0) 7,145.0 1,673.0
Balance Sheet
Minority interests 3,445.0 3,831.0 4,737.0 4,645.0 5,141.0 3,682.0 4,739.0 5,548.0 6,475.0
Pension provisions 2,407.0 2,433.0 2,962.0 2,639.0 2,354.0 2,421.0 2,665.0 2,665.0 2,665.0
Other provisions 8,436.0 6,271.0 7,082.0 6,881.0 6,364.0 7,030.0 7,832.0 7,832.0 7,832.0
Net debt [cash] 18,262.0 18,852.0 18,401.0 20,148.0 24,263.0 15,010.0 18,809.0 11,665.0 9,991.0
Gearing [%] 149.1 152.4 112.7 126.4 141.6 72.3 99.2 55.9 43.7
Goodwill 4,571.0 3,556.0 4,278.0 3,986.0 2,291.0 2,053.0 2,815.0 2,815.0 2,815.0
Intangible assets 1,217.0 4,048.0 6,603.0 4,117.0 3,184.0 3,388.0 3,127.0 3,127.0 3,127.0
Tangible assets 26,962.0 28,968.0 32,384.0 33,795.0 39,943.0 34,126.0 35,711.0 35,450.0 35,581.0
Financial assets 1,898.0 1,157.0 1,854.0 3,833.0 3,559.0 6,276.0 8,440.0 3,343.0 3,343.0
Associates 1,519.0 2,173.0 623.0 649.0 497.0 196.0 293.0 442.0 622.0
Working capital requirement 355.0 20.0 (971.0) (776.0) 637.0 (815.0) (2,110.0) (2,160.0) (2,136.0)
WCR as a % of sales 3.1 0.1 (5.3) (3.8) 2.9 (3.6) (9.2) (9.4) (9.1)
Endesa
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change -12.4% -22.8% 85.1% 32.2% -2.2% -14.0% -6.1% 5.6% 0.0%
EPS, reported 1.24 1.18 3.01 2.80 2.53 6.77 3.24 2.04 2.04
% Change 3.3% -4.5% 154.0% -6.7% -9.9% 168.0% -52.2% -36.9% 0.0%
% Change 186.2% -3.4% 67.8% 3.1% -4.3% 80.2% -33.2% -21.3% -1.2%
Latest price 15.25 17.29 22.22 35.83 36.35 28.60 23.95 21.47 21.47
High 15.50 17.35 22.83 36.44 41.00 37.82 30.00 24.20 -
Low 10.00 13.98 16.30 21.68 34.57 18.01 13.80 20.21 -
Average price 13.13 15.49 18.93 28.44 38.73 29.70 20.31 22.14 -
Valuation
P/E 14.9 17.3 12.0 14.6 15.2 13.9 12.4 10.5 10.5
P/CF 4.8 5.6 4.3 6.7 7.1 3.1 3.9 4.4 4.5
Attrib. FCF yield [%] 6.6 NS 3.2 3.4 4.5 14.0 3.9 11.4 9.8
P/BV 2.0 2.4 2.6 4.0 3.7 2.8 1.9 1.6 1.5
Yield [%] 4.6 4.3 10.8 4.6 4.2 20.6 4.3 4.8 4.8
EV/Sales 3.61 2.91 2.47 3.04 3.10 1.9 1.8 1.7 1.6
Financial Ratios
Interest cover 6.5 3.9 4.8 7.6 7.5 6.8 7.1 11.0 12.9
EBITDA margin [%] 42.0 33.1 33.0 34.7 34.1 30.2 31.7 29.3 28.8
EBITA margin [%] 27.8 20.8 23.3 25.5 25.5 22.9 22.1 19.8 19.5
Net margin [%] 16.6 12.2 20.6 18.5 15.9 35.5 19.1 13.0 13.1
Gearing [%] 149.1 152.4 112.7 126.4 141.6 72.3 99.2 55.9 43.7
Payout ratio [%] 56.7 62.5 79.9 58.5 60.6 87.2 31.8 49.9 49.9
Return [%]
Pre-tax RoCE 9.5 7.8 10.0 12.7 12.2 13.5 12.8 11.6 11.6
RoCE after tax 7.3 6.4 8.3 10.1 9.0 11.9 10.0 8.4 8.5
ROE [%] 16.1 15.8 31.8 30.3 25.1 53.1 27.4 15.2 14.1
FCC
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 6,050.5 6,348.8 7,089.8 9,480.7 13,520.2 14,016.3 12,699.5 12,684.6 12,704.9
% Change 10.1% 4.9% 11.7% 33.7% 42.6% 3.7% -9.4% -0.1% 0.2%
Staff costs (1,625.9) (1,714.7) (1,863.6) (2,180.0) (1,863.6) (2,180.0) (2,644.4) (2,741.5) (2,483.9)
Other costs (3,620.5) (3,792.0) (4,237.3) (5,913.4) (9,681.1) (10,075.6) (8,594.5) (8,440.4) (8,684.5)
EBITDA 804.1 842.1 988.9 1,387.3 1,975.5 1,760.7 1,460.6 1,502.7 1,536.5
% Change 8.5% 4.7% 17.4% 40.3% 42.4% -10.9% -17.0% 2.9% 2.2%
Depreciation (285.1) (276.9) (332.8) (506.0) (710.1) (814.2) (729.6) (717.5) (738.0)
EBITA 519.0 565.2 656.1 881.3 1,265.4 946.5 731.0 785.2 798.5
% Change 4.2% 8.9% 16.1% 34.3% 43.6% -25.2% -22.8% 7.4% 1.7%
EBIT 519.0 565.2 656.1 881.3 1,265.4 946.5 731.0 785.2 798.5
Other exceptional items (24.8) (17.3) (9.7) 2.0 319.6 15.8 16.0 0.0 0.0
Tax (126.3) (166.9) (217.2) (278.0) (332.2) (94.3) (114.9) (127.6) (141.4)
Associates [contribution] 66.4 71.7 78.3 89.1 63.0 12.6 (6.1) 1.2 2.0
Minorities (61.4) (61.1) (57.9) (73.1) (182.6) (58.9) (27.8) (26.6) (27.7)
Adj. for exceptional items 24.8 17.3 9.7 (2.0) (262.1) (13.0) (13.1) 0.0 0.0
% Change 14.8% 7.8% 13.3% 24.0% -9.7% -32.7% -9.3% 1.3% 2.1%
Cash Flow Statement
Cash flow 607.7 628.9 733.0 1,025.6 1,573.4 1,197.6 1,070.6 1,040.7 1,067.8
% Change 10.8% 3.5% 16.6% 39.9% 53.4% -23.9% -10.6% -2.8% 2.6%
Change in WCR 0.0 315.7 297.7 725.6 (1,280.0) 190.7 433.6 (118.9) (250.9)
Capex (550.0) (281.6) (350.0) (350.0) (708.5) (910.0) (727.3) (433.8) (425.9)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 57.7 663.0 680.7 1,401.2 (415.1) 478.3 776.9 488.0 391.0
Financial investments 0.0 15.7 (400.0) (5,832.9) (341.3) (618.5) (780.0) (26.0) 0.0
Net buyback of treasury shares 0.0 0.0 0.0 0.0 0.0 0.0 (196.4) (38.4) 0.0
Disposals 0.0 0.0 0.0 0.0 113.2 0.0 597.3 0.0 0.0
Dividend paid (71.9) (139.3) (177.7) (210.7) (267.7) (278.1) (199.9) (154.4) (149.8)
Other cash flow 135.2 (573.8) (251.5) (634.0) (1,760.2) 1,426.6 (720.9) 0.0 (4.5)
Dec. [inc.] in net debt 121.0 (34.4) (148.5) (5,276.4) (2,671.1) 1,008.3 (523.0) 269.2 236.7
Balance Sheet
Minority interests 387.8 415.7 376.2 804.0 1,605.0 649.2 652.7 675.6 698.8
Other provisions 407.1 358.4 445.6 1,015.0 993.0 913.3 1,017.3 1,009.1 1,017.4
Net debt [cash] 350.7 385.1 533.6 5,810.0 8,481.0 7,472.7 7,995.6 7,726.4 7,489.6
Gearing [%] 15.7 15.7 21.1 170.0 197.6 233.8 254.9 236.4 217.4
Goodwill 191.4 306.7 306.7 2,349.7 2,349.7 2,349.7 2,349.7 2,349.7 2,349.7
Intangible assets 584.7 347.1 572.3 908.3 963.3 950.5 2,112.4 2,112.4 2,112.4
Tangible assets 1,731.5 1,929.2 2,181.6 6,718.0 8,979.0 6,373.4 6,221.6 5,955.7 5,651.9
Financial assets 638.8 626.5 696.1 1,189.0 1,033.0 1,566.9 1,549.8 1,551.0 1,553.0
Associates 10.5 296.7 367.4 416.0 499.0 591.3 599.2 599.2 599.2
Working capital requirement (165.8) (315.7) (613.4) (1,339.0) (59.0) (249.7) (683.3) (564.4) (313.5)
WCR as a % of sales (2.7) (5.0) (8.7) (14.1) (0.4) (1.8) (5.4) (4.4) (2.5)
FCC
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change 14.8% 7.8% 13.3% 24.0% -9.7% -29.6% -4.1% -6.1% 2.2%
EPS, reported 2.36 2.78 3.22 4.10 5.69 2.65 2.41 2.34 2.39
% Change 13.1% 17.5% 16.0% 27.3% 38.8% -53.5% -8.9% -3.0% 2.2%
% Change 10.8% 3.5% 16.6% 39.9% 53.4% -20.3% -5.5% -9.9% 2.6%
Latest price 29.24 35.43 47.90 77.20 51.40 23.33 29.45 24.55 24.55
High 29.77 35.52 50.50 83.00 84.30 52.00 33.45 32.00 -
Low 20.85 27.28 34.27 47.75 50.05 22.50 18.21 23.14 -
Average price 25.01 30.17 44.03 62.13 67.87 37.19 26.60 26.95 -
Valuation
P/E 11.5 12.2 14.5 18.9 13.9 9.0 11.8 10.5 10.3
P/CF 6.3 7.4 8.5 9.8 4.3 2.4 3.2 3.0 2.9
Attrib. FCF yield [%] 1.3 12.9 9.8 12.8 NS 12.9 17.0 12.8 10.3
P/BV 2.2 2.5 3.2 4.3 2.8 1.3 1.6 1.3 1.2
Yield [%] 3.7 3.8 3.4 2.7 4.2 6.7 4.1 4.8 4.9
EV/Sales 0.52 0.62 0.83 1.55 1.03 0.7 0.9 0.8 0.8
Financial Ratios
Interest cover 17.8 NS NS 16.2 5.1 3.6 5.0 4.5 4.7
EBITDA margin [%] 13.3 13.3 13.9 14.6 14.6 12.6 11.5 11.8 12.1
EBITA margin [%] 8.6 8.9 9.3 9.3 9.4 6.8 5.8 6.2 6.3
Net margin [%] 6.1 6.7 6.7 6.4 6.9 2.8 2.6 2.6 2.6
Gearing [%] 15.7 15.7 21.1 170.0 197.6 233.8 254.9 236.4 217.4
Payout ratio [%] 45.3 49.0 50.0 50.0 38.3 59.3 50.2 50.4 50.2
Return [%]
Pre-tax RoCE 22.2 24.9 26.8 10.2 10.3 10.0 7.3 8.0 8.1
RoCE after tax 15.6 16.9 17.4 6.6 7.5 8.1 5.5 5.7 5.7
ROE [%] 18.2 19.6 21.6 22.8 32.1 14.2 13.2 12.2 11.7
Gas Natural
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 5,628.0 6,266.2 8,526.6 10,348.3 10,093.0 13,544.0 14,879.0 15,627.1 16,263.0
% Change 6.8% 11.3% 36.1% 21.4% -2.5% 34.2% 9.9% 5.0% 4.1%
Staff costs (227.7) (205.1) (251.5) (277.1) (307.9) (338.0) (600.0) (540.0) (486.0)
Other costs (4,221.1) (4,762.1) (6,756.3) (8,158.8) (7,508.5) (10,642.0) (10,342.0) (10,563.1) (11,122.7)
EBITDA 1,179.2 1,299.0 1,518.8 1,912.4 2,276.6 2,564.0 3,937.0 4,524.0 4,654.3
% Change -11.4% 10.2% 16.9% 25.9% 19.0% 12.6% 53.5% 14.9% 2.9%
Depreciation (380.2) (437.4) (550.2) (649.3) (709.6) (770.0) (1,489.0) (1,690.7) (1,734.2)
EBITA 799.0 861.6 968.6 1,263.1 1,567.0 1,794.0 2,448.0 2,833.3 2,920.1
% Change -11.9% 7.8% 12.4% 30.4% 24.1% 14.5% 36.5% 15.7% 3.1%
EBIT 799.0 861.6 968.6 1,263.1 1,567.0 1,794.0 2,448.0 2,833.3 2,920.1
Tax (177.5) (230.9) (241.3) (302.5) (359.0) (379.0) (440.0) (612.7) (580.2)
Net profit [loss] before minorities 612.5 695.1 826.9 928.9 1,055.6 1,172.0 1,390.0 1,812.0 1,643.8
Minorities (44.0) (53.0) (77.7) (74.4) (97.1) (115.0) (195.0) (204.8) (215.0)
Net attributable profit [loss] 568.5 642.1 749.2 854.5 958.5 1,057.0 1,195.0 1,607.2 1,428.8
Adj. for exceptional items 10.4 (112.2) (214.8) (195.8) (54.7) (11.9) (114.8) (311.6) 0.0
Net attrib. profit [loss], restated 584.2 529.9 534.4 658.7 903.8 1,045.1 1,080.2 1,295.6 1,428.8
% Change -10.1% -9.3% 0.8% 23.3% 37.2% 15.6% 3.4% 19.9% 10.3%
Cash Flow Statement
Cash flow 969.8 1,172.2 1,377.1 1,578.2 1,473.5 1,942.3 7,237.7 3,429.6 3,297.6
% Change -24.6% 20.9% 17.5% 14.6% -6.6% 31.8% NS -52.6% -3.8%
Change in WCR 938.4 (88.1) (99.2) 267.5 497.4 1,075.8 846.4 (57.7) (171.0)
Capex (1,625.3) (946.3) (1,125.4) (1,113.6) (2,323.0) (1,068.0) (1,767.0) (1,584.8) (1,542.1)
o/w Growth capex 0.0 (899.0) (1,069.1) (1,057.9) (2,206.9) (1,014.6) (1,678.7) (1,505.6) (1,465.0)
Net cash flow 282.9 137.8 152.5 732.1 (352.1) 1,950.1 6,317.1 1,787.1 1,584.5
Disposals 0.0 (557.2) (358.3) (106.9) (223.0) (102.5) 0.0 0.0 0.0
Dividend paid (147.8) (179.1) (268.7) (317.9) (376.1) (517.6) (663.0) (730.0) (803.0)
Other cash flow (377.6) (183.0) (490.0) 216.9 115.4 (2,538.9) (21,436.2) 2,728.7 0.0
Dec. [inc.] in net debt (242.5) (781.5) (964.5) 524.2 (835.8) (1,208.9) (15,782.1) 3,785.8 781.5
Balance Sheet
Minority interests 211.8 219.5 355.0 344.1 357.2 345.0 1,496.5 1,701.2 1,916.2
Pension provisions 0.0 0.0 0.0 0.0 0.0 0.0 1,881.3 1,881.3 1,881.3
Net debt [cash] 1,869.6 2,651.0 3,615.5 3,091.3 3,927.1 5,136.0 20,918.0 17,132.1 16,350.6
Gearing [%] 41.4 55.3 62.7 51.6 61.1 76.4 171.8 129.9 117.2
Goodwill 208.0 334.0 456.0 440.9 541.3 541.0 6,056.2 6,056.2 6,056.2
Intangible assets 1,170.0 1,019.7 1,480.8 2,066.6 2,149.2 4,600.0 6,650.4 5,383.4 5,383.4
Tangible assets 5,568.5 7,026.0 8,432.0 8,106.3 9,705.3 9,988.0 25,893.5 24,325.9 24,133.8
Associates 435.2 181.0 32.0 34.1 37.5 42.0 140.9 140.9 140.9
Working capital requirement (1,035.6) (947.5) (848.3) (1,115.8) (1,613.2) (2,689.0) (3,535.4) (3,477.8) (3,306.8)
WCR as a % of sales (18.4) (15.1) (9.9) (10.8) (16.0) (19.9) (23.8) (22.3) (20.3)
Gas Natural
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change -10.0% -9.3% 0.8% 23.3% 37.2% 15.7% -49.8% 19.9% 10.3%
EPS, reported 1.27 1.43 1.67 1.91 2.14 2.36 1.30 1.74 1.55
% Change -29.4% 12.9% 16.7% 14.0% 12.2% 10.3% -45.1% 34.5% -11.1%
% Change -24.6% 20.9% 17.5% 14.6% -6.6% 31.8% 81.0% -52.6% -3.8%
Latest price 18.55 22.76 23.66 29.99 40.02 19.29 15.09 12.87 12.87
High 19.85 22.99 24.88 32.88 45.76 42.45 22.28 15.67 -
Low 14.92 18.18 21.33 21.74 29.00 18.51 8.39 12.20 -
Average price 17.23 20.11 23.13 26.09 38.85 32.48 13.97 13.93 -
Valuation
P/E 14.3 19.2 19.8 20.4 19.8 8.3 12.9 9.2 8.3
P/CF 8.6 8.7 7.7 8.5 12.2 4.4 1.9 3.5 3.6
Attrib. FCF yield [%] 3.4 1.4 1.4 5.5 NS 22.6 45.4 15.1 13.4
P/BV 2.1 2.4 2.1 2.6 3.2 1.5 1.4 1.1 1.1
Yield [%] 3.2 3.1 3.6 3.3 2.9 6.6 5.2 6.8 7.5
EV/Sales 1.72 2.04 1.68 1.63 2.20 1.0 2.5 2.0 1.9
Financial Ratios
Interest cover NS 8.5 6.9 7.2 10.2 9.7 4.8 5.3 6.1
EBITDA margin [%] 21.0 20.7 17.8 18.5 22.6 18.9 26.5 29.0 28.6
EBITA margin [%] 14.2 13.8 11.4 12.2 15.5 13.2 16.5 18.1 18.0
Net margin [%] 10.9 11.1 9.7 9.0 10.5 8.7 9.3 11.6 10.1
Gearing [%] 41.4 55.3 62.7 51.6 61.1 76.4 171.8 129.9 117.2
Payout ratio [%] 47.3 49.5 50.2 51.9 54.2 54.2 60.9 49.9 61.9
Return [%]
Pre-tax RoCE 13.5 11.6 10.2 13.3 14.5 14.4 7.0 8.8 9.1
RoCE after tax 10.5 8.7 7.8 10.0 10.9 11.0 5.3 6.6 6.7
ROE [%] 14.1 15.1 14.9 16.4 17.1 18.1 11.9 15.0 12.6
Iberdrola
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 9 681.0 8 724.7 11 783.0 11 017.4 17 467.7 25 196.1 24 558.9 24 573.6 25 445.0
% Change -0.6% -9.9% 35.1% -6.5% 58.5% 44.2% -2.5% 0.1% 3.5%
Staff costs 771.9 960.0 979.8 1 173.7 1 455.0 1 842.5 1 888.6 1 954.7 2 023.1
Other costs (7 840.2) (6 772.1) (9 385.2) (8 301.4) (13 384.7) (20 626.2) (19 632.2) (19 302.6) (19 905.0)
EBITDA 2 612.7 2 912.6 3 377.6 3 889.7 5 538.0 6 412.4 6 815.3 7 225.7 7 563.1
% Change 10.8% 11.5% 16.0% 15.2% 42.4% 15.8% 6.3% 6.0% 4.7%
Depreciation (789.2) (922.5) (1 115.4) (1 235.2) (1 840.6) (2 150.9) (2 306.1) (2 375.5) (2 529.7)
EBITA 1 823.5 1 990.1 2 262.2 2 654.5 3 697.4 4 261.5 4 509.2 4 850.2 5 033.4
% Change 16.6% 9.1% 13.7% 17.3% 39.3% 15.3% 5.8% 7.6% 3.8%
EBIT 1 823.5 1 990.1 2 262.2 2 654.5 3 697.4 4 261.5 4 509.2 4 850.2 5 033.4
Net financial items (430.8) (394.6) (455.6) (519.0) (900.9) (1 026.1) (1 109.4) (1 091.1) (1 039.9)
Tax (207.1) (520.6) (553.3) (695.3) (702.8) (895.3) (718.8) (952.0) (1 058.3)
Net profit [loss] before minorities 1 087.2 1 207.8 1 404.5 1 690.9 2 395.8 2 968.7 2 938.7 2 909.9 2 972.7
Minorities (7.9) (12.2) (22.5) (30.6) (42.3) (108.1) (114.4) (131.8) (146.8)
Net attributable profit [loss] 1 079.3 1 195.6 1 382.0 1 660.3 2 353.5 2 860.6 2 824.3 2 778.1 2 825.9
Adj. for exceptional items 186.1 (76.1) (99.3) (154.4) (214.6) (455.3) (184.8) (55.8) 0.0
Net attrib. profit [loss], restated 1 286.7 1 119.5 1 282.7 1 505.9 2 138.9 2 405.3 2 639.6 2 722.3 2 825.9
% Change 51.8% -13.0% 14.6% 17.4% 42.0% 12.5% 9.7% 3.1% 3.8%
Cash Flow Statement
Cash flow 1 707.2 1 988.0 2 211.3 2 722.4 4 236.4 5 119.6 5 244.8 5 285.4 5 502.3
% Change 2.0% 16.4% 11.2% 23.1% 55.6% 20.8% 2.4% 0.8% 4.1%
Change in WCR 465.8 1 583.4 664.0 (575.8) 4 215.0 9 449.8 (2 537.3) 601.6 (4.6)
Capex 2 433.1 2 676.6 (1 967.2) (2 899.0) (4 711.0) (6 678.5) (4 114.9) (4 140.2) (4 085.1)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 4 606.1 6 248.0 908.1 (752.4) 3 740.4 7 890.9 (1 407.4) 1 746.8 1 412.6
Financial investments 0.0 0.0 0.0 0.0 (16 234.1) (7 754.6) 687.2 3 848.0 0.0
Disposals 134.6 80.0 70.0 0.0 138.0 643.0 0.0 298.0 0.0
Dividend paid (549.9) (604.0) (694.2) (797.9) (958.3) (1 353.2) (1 657.9) (1 740.8) (1 666.9)
Capital increase 0.0 0.0 0.0 0.0 13 723.9 0.0 0.0 0.0 0.0
Other cash flow (1 434.7) (395.7) (1 667.1) 451.4 (7 892.9) (7 207.4) 1 681.9 (68.0) 0.0
Dec. [inc.] in net debt 2 756.1 5 328.3 (1 383.2) (1 098.9) (7 483.0) (7 781.3) (696.2) 4 084.0 (254.3)
Balance Sheet
Shareholders' equity [group share] 8 225.4 8 427.0 9 268.0 10 418.2 25 537.2 23 363.6 26 636.5 27 673.8 28 832.9
Minority interests 80.9 93.0 147.0 148.8 2 294.5 2 344.5 2 393.2 2 525.0 2 671.8
Pension provisions 672.6 943.8 1 233.8 1 717.8 2 066.1 3 544.4 3 461.8 3 461.8 3 461.8
Other provisions 740.3 796.2 1 004.2 684.4 1 464.8 1 921.9 3 116.3 3 116.3 3 116.3
Net debt [cash] 10 581.7 10 643.0 12 260.0 13 358.8 20 841.9 28 623.1 29 319.2 25 235.2 25 489.4
Gearing [%] 127.4 124.9 130.2 126.4 74.9 111.3 101.0 83.6 80.9
Capital invested 20 300.9 20 903.0 23 913.0 26 328.0 52 204.5 59 797.5 64 927.0 62 012.1 63 572.2
Goodwill 23.8 0.0 0.0 55.6 8 063.5 7 255.0 7 588.7 7 588.7 7 588.7
Intangible assets 813.4 565.0 2 108.0 1 677.3 7 563.6 10 953.4 10 941.0 10 941.0 10 941.0
Tangible assets 16 981.9 18 523.0 20 493.0 21 565.8 35 437.3 43 787.2 47 017.9 48 552.6 50 108.0
Financial assets 1 268.5 2 276.5 2 379.5 2 584.9 3 054.6 4 183.9 3 778.2 3 548.2 3 548.2
Associates 1 059.7 968.5 1 026.5 1 962.5 3 818.8 8 801.1 8 247.0 4 629.0 4 629.0
Working capital requirement 153.4 (1 430.0) (2 094.0) (1 518.2) (5 733.2) (15 183.0) (12 645.7) (13 247.4) (13 242.7)
WCR as a % of sales 1.6 (16.4) (17.8) (13.8) (32.8) (60.3) (51.5) (53.9) (52.0)
Capital employed 20 300.7 20 903.0 23 913.0 26 327.9 52 204.6 59 797.6 64 927.1 62 012.1 63 572.2
Iberdrola
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change 51.9% -13.2% 14.8% 17.4% 14.4% 0.6% 4.6% 3.0% 3.9%
EPS, reported 0.30 0.33 0.38 0.46 0.53 0.57 0.54 0.53 0.54
% Change 9.5% 11.0% 15.4% 20.1% 14.3% 8.7% -5.9% -1.7% 1.7%
% Change 1.9% 16.5% 11.3% 23.2% 25.4% 8.0% -2.3% 0.7% 4.2%
Latest price 3.92 4.67 5.77 8.28 10.40 6.54 6.67 5.98 5.98
High 3.99 4.71 5.95 9.67 12.03 10.85 6.91 6.78 -
Low 3.21 3.79 4.56 5.58 7.90 4.85 4.36 5.74 -
Average price 3.68 4.21 5.27 7.11 9.85 8.30 6.01 6.25 -
Market capitalisation 14 126.5 16 858.1 20 815.6 29 857.7 51 934.5 32 658.8 35 032.8 31 403.5 31 403.5
Enterprise value 23 133.5 25 292.9 31 050.4 40 535.7 70 263.6 54 185.8 58 181.9 54 448.4 54 849.3
Valuation
P/E 11.2 15.0 16.2 19.8 21.8 13.6 13.3 11.5 11.1
P/CF 8.3 8.5 9.4 11.0 11.0 6.4 6.7 5.9 5.7
Attrib. FCF yield [%] 32.6 37.1 4.4 NS 7.2 24.2 NS 5.6 4.5
P/BV 1.9 2.2 2.5 3.2 1.9 1.5 1.4 1.2 1.2
Yield [%] 4.3 4.1 3.8 3.3 2.6 5.0 4.9 5.4 5.4
EV/Sales 2.39 2.90 2.64 3.68 4.02 2.2 2.4 2.2 2.2
Financial Ratios
Interest cover 6.1 7.4 7.4 7.5 6.1 6.2 6.1 6.6 7.3
EBITDA margin [%] 27.0 33.4 28.7 35.3 31.7 25.5 27.8 29.4 29.7
EBITA margin [%] 18.8 22.8 19.2 24.1 21.2 16.9 18.4 19.7 19.8
Net margin [%] 11.2 13.8 11.9 15.3 13.7 11.8 12.0 11.8 11.7
Gearing [%] 127.4 124.9 130.2 126.4 74.9 111.3 101.0 83.6 80.9
Payout ratio [%] 56.8 57.3 57.4 58.6 51.3 57.7 61.4 60.5 59.5
Return [%]
Pre-tax RoCE 10.1 11.3 11.0 12.2 8.2 9.1 8.5 9.0 9.1
RoCE after tax 8.5 7.9 7.9 8.7 6.3 7.0 6.8 6.8 6.7
ROE [%] 14.0 15.3 16.1 17.3 9.7 13.0 11.2 10.6 10.3
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 0.0 0.0 0.0 1 537.0 953.0 2 030.3 2 009.1 2 287.5 2 660.2
% Change -38.0% 113.0% -1.0% 13.9% 16.3%
Staff costs 0.0 0.0 0.0 (69.4) (38.9) (84.5) (68.4) (72.1) (80.4)
Other costs 0.0 0.0 0.0 (624.8) (350.2) (760.3) (615.4) (648.8) (723.6)
EBITDA 0.0 0.0 0.0 842.8 563.9 1 185.5 1 325.3 1 566.6 1 856.2
% Change -33.1% 110.2% 11.8% 18.2% 18.5%
Depreciation 0.0 0.0 0.0 (357.3) (217.0) (475.9) (639.6) (725.3) (828.4)
EBITA 0.0 0.0 0.0 485.5 346.9 709.6 685.7 841.3 1 027.8
% Change -28.5% 104.6% -3.4% 22.7% 22.2%
EBIT 0.0 0.0 0.0 485.5 346.9 709.6 685.7 841.3 1 027.8
Net financial items 0.0 0.0 0.0 (116.8) (151.8) (121.8) (170.5) (191.6) (255.2)
Other exceptional items 0.0 0.0 0.0 16.1 1.5 (5.6) 3.1 0.0 0.0
Tax 0.0 0.0 0.0 (119.1) (67.2) (184.9) (141.4) (182.0) (231.8)
Associates [contribution] 0.0 0.0 0.0 (10.0) (11.2) (7.2) (5.9) (4.9) (5.0)
Goodwill amortisation 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Minorities 0.0 0.0 0.0 (10.0) (11.2) (7.2) (5.9) (4.9) (5.0)
% Change -54.0% NS -4.9% 24.8% 15.7%
Cash Flow Statement
Cash flow 0.0 0.0 0.0 623.0 346.4 873.2 1 016.5 1 193.1 1 369.2
% Change -44.4% 152.1% 16.4% 17.4% 14.8%
Change in WCR 0.0 0.0 0.0 501.7 (1 788.0) 834.0 (254.3) 33.4 83.1
Capex 0.0 0.0 0.0 (1 429.9) (2 975.5) (3 803.5) (2 282.9) (2 682.5) (2 657.6)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 0.0 0.0 0.0 (305.2) (4 417.1) (2 096.3) (1 520.7) (1 456.1) (1 205.4)
Disposals 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Dividend paid 0.0 0.0 0.0 0.0 0.0 0.0 (105.6) (105.6) (138.9)
Capital increase 0.0 0.0 0.0 0.0 4 477.6 0.0 0.0 0.0 0.0
Other cash flow 0.0 0.0 0.0 (133.9) (1 077.1) (112.7) 1 247.4 334.4 356.9
Dec. [inc.] in net debt 0.0 0.0 0.0 (439.1) (1 016.6) (2 209.0) (378.9) (1 227.3) (987.4)
Balance Sheet
Shareholders' equity [group share] 0.0 0.0 0.0 718.9 10 783.9 11 114.8 11 309.4 11 666.8 12 063.8
Other provisions 0.0 0.0 0.0 53.4 1 119.4 826.2 2 049.7 2 049.7 2 049.7
Net debt [cash] 0.0 0.0 0.0 822.8 1 839.4 4 048.4 4 427.3 5 654.6 6 641.9
Gearing [%] NS NS NS 103.5 16.8 36.2 38.8 48.0 54.5
Capital invested 0.0 0.0 0.0 1 670.9 13 877.3 16 062.9 17 894.7 19 484.3 20 873.6
Goodwill 0.0 0.0 0.0 44.3 4 672.8 4 492.9 4 382.6 4 382.6 4 382.6
Tangible assets 0.0 0.0 0.0 4 135.3 9 695.5 12 874.8 14 653.1 16 275.9 17 748.3
Associates 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Working capital requirement 0.0 0.0 0.0 (2 579.7) (791.7) (1 625.7) (1 371.4) (1 404.8) (1 487.8)
WCR as a % of sales 0.0 0.0 0.0 NS (83.1) (80.1) (68.3) (61.4) (55.9)
Capital employed 0.0 0.0 0.0 1 670.9 13 877.3 16 062.9 17 894.7 19 484.3 20 873.6
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change -54.1% NS -4.3% 25.0% 15.5%
EPS, reported 0.00 0.00 0.00 0.06 0.03 0.09 0.09 0.11 0.13
% Change -54.1% NS -4.3% 25.0% 15.5%
% Change -44.2% 152.4% 16.4% 17.0% 14.9%
Latest price - - - - 5.65 3.05 3.32 2.93 2.93
High - - - - 5.65 6.20 3.58 3.53 -
Low - - - - 5.15 2.00 2.78 2.81 -
Average price - - - - 5.41 3.99 3.19 3.17 -
Market capitalisation - - - 3 000.0 0.0 12 883.7 14 024.2 12 389.4 12 389.4

Enterprise value - - - 3 826.0 1 839.4 16 933.0 18 452.9 18 045.2 19 032.6
Valuation
P/E NS NS NS NS NS 33.0 37.8 26.8 23.1
P/E before goodwill NS NS NS NS NS 33.0 37.8 26.8 23.1
P/CF NS NS NS NS 68.9 14.8 13.8 10.4 9.0
Attrib. FCF yield [%] - - - NS NS NS NS NS NS
P/BV NS NS NS NS 2.2 1.2 1.3 1.1 1.0
Enterprise value / Op CE NS NS NS NS 0.1 1.1 1.0 1.0 1.0
Yield [%] - 0.0 0.0 0.0 0.0 0.8 0.8 1.1 1.5
EV/EBITDA, restated NS NS NS NS 3.3 14.3 13.9 11.5 10.3

EV/EBITA, restated NS NS NS NS 5.3 23.9 26.9 21.4 18.5
EV/Sales NS NS NS NS 1.93 8.3 9.2 7.9 7.2
EV/Debt-adjusted cash flow NS NS NS NS 4.1 17.7 16.2 13.6 12.3
Financial Ratios
Interest cover NS NS NS 7.2 3.7 9.7 7.8 8.2 7.3
Net debt/Cash flow NS NS NS 1.3 5.3 4.6 4.4 4.7 4.9
EBITDA margin [%] NS NS NS 54.8 59.2 58.4 66.0 68.5 69.8
EBITA margin [%] NS NS NS 31.6 36.4 35.0 34.1 36.8 38.6
Net margin [%] NS NS NS 17.3 13.5 19.6 18.8 20.5 20.3
Capital turn [Sales/ Op. CE] NS NS NS 1.0 0.1 0.1 0.1 0.1 0.1
Gearing [%] NS NS NS 103.5 16.8 36.2 38.8 48.0 54.5
Payout ratio [%] 0.0 0.0 0.0 0.0 0.0 27.1 28.5 30.1 34.7
Return [%]
Pre-tax RoCE NS NS NS 30.3 2.6 4.5 3.9 4.4 5.0
RoCE after tax NS NS NS 20.5 1.7 3.1 2.8 3.1 3.5
ROE [%] NS NS NS 43.3 1.1 3.6 3.3 4.0 4.5
Return on equity, restated NS NS NS 43.3 1.1 3.6 3.3 4.0 4.5
Red Electrica
FY to 31/12 (Euro m) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
Sales 907.3 738.8 860.2 949.3 1,030.9 1,125.9 1,194.9 1,313.9 1,432.0
% Change 30.5% -18.6% 16.4% 10.4% 8.6% 9.2% 6.1% 10.0% 9.0%
Staff costs (66.9) (82.4) (85.9) (92.5) (92.7) (93.9) (96.6) (103.1) (109.9)
Other costs (394.9) (160.1) (183.1) (205.2) (215.7) (260.4) (266.0) (285.0) (304.4)
EBITDA 445.5 496.3 591.2 651.6 722.5 771.6 832.3 925.8 1,017.7
% Change 59.0% 11.4% 19.1% 10.2% 10.9% 6.8% 7.9% 11.2% 9.9%
Depreciation (195.5) (189.1) (259.0) (249.8) (251.5) (255.2) (258.5) (276.0) (293.5)
EBITA 250.0 307.2 332.2 401.8 471.0 516.4 573.8 649.8 724.2
% Change 54.1% 22.9% 8.1% 21.0% 17.2% 9.6% 11.1% 13.2% 11.4%
EBIT 250.0 307.2 332.2 401.8 471.0 516.4 573.8 649.8 724.2
Other exceptional items 1.2 (17.6) 14.4 (25.2) (2.9) 8.2 0.0 0.0 0.0
Tax (60.3) (81.2) (85.3) (80.7) (118.5) (128.9) (137.8) (156.2) (173.3)
Associates [contribution] (1.6) 0.7 0.6 0.8 0.7 0.6 0.0 0.0 0.0
Minorities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Adj. for exceptional items 1.1 18.5 (10.1) 16.4 1.9 (7.0) 0.0 0.0 0.0
% Change 24.0% 29.7% -1.3% 42.2% 13.1% 14.0% 15.2% 13.3% 11.0%
Cash Flow Statement
Cash flow 300.0 336.0 429.5 443.8 490.7 548.5 577.4 638.8 697.3
% Change 44.9% 12.0% 27.8% 3.3% 10.6% 11.8% 5.3% 10.6% 9.2%
Change in WCR 53.2 (55.5) (14.5) 318.3 129.2 53.8 60.3 (46.8) (42.7)
Capex (243.1) (281.2) (463.1) (523.6) (628.9) (635.1) (707.2) (703.9) (703.9)
o/w Growth capex 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net cash flow 110.1 (0.7) (48.1) 238.5 (9.0) (32.8) (69.5) (111.9) (49.3)
Financial investments 0.0 0.0 0.0 0.0 (98.8) 0.0 0.0 0.0 0.0
Disposals 0.0 0.0 61.5 0.0 0.0 0.0 0.0 0.0 0.0
Dividend paid (64.9) (74.1) (83.0) (98.8) (121.5) (147.1) (173.1) (194.5) (220.5)
Other cash flow (463.2) 139.5 (883.0) 28.1 179.5 (17.9) 0.0 0.0 0.0
Dec. [inc.] in net debt (418.0) 64.7 (952.6) 167.8 (49.8) (197.8) (242.6) (306.4) (269.8)
Balance Sheet
Shareholders' equity [group share] 849.1 876.2 962.8 1,022.0 1,202.8 1,336.5 1,484.9 1,654.8 1,838.8
Net debt [cash] 1,933.4 1,868.7 2,821.4 2,653.6 2,703.5 2,901.3 3,143.8 3,450.2 3,720.0
Gearing [%] 227.7 213.2 293.0 259.6 224.7 217.1 211.7 208.5 202.3
Goodwill 17.8 13.0 15.1 0.0 0.0 0.0 0.0 0.0 0.0
Tangible assets 3,018.6 3,023.3 4,178.1 4,436.4 4,791.1 5,176.5 5,629.6 6,061.0 6,474.3
Associates 8.6 4.0 7.1 7.2 5.5 4.9 4.9 4.9 4.9
Working capital requirement (89.8) (34.3) (81.2) (399.5) (528.7) (582.5) (642.9) (596.1) (553.4)
WCR as a % of sales (9.9) (4.6) (9.4) (42.1) (51.3) (51.7) (53.8) (45.4) (38.6)
Red Electrica
FY to 31/12 (Euro) 2003 2004 2005 2006 2007 2008 2009 2010E 2011E
% Change 23.9% 29.5% -1.2% 42.2% 13.1% 14.0% 15.2% 13.3% 11.0%
EPS, reported 0.86 1.00 1.20 1.48 1.80 2.12 2.38 2.69 2.99
% Change 16.0% 17.3% 19.5% 23.3% 21.4% 17.8% 12.3% 13.3% 11.0%
% Change 44.8% 12.0% 27.8% 3.3% 10.6% 11.8% 5.3% 10.6% 9.2%
Latest price 13.00 16.50 26.16 32.49 43.24 36.00 38.82 35.90 35.90
High 13.34 16.75 26.40 37.09 45.14 46.00 39.80 40.76 -
Low 9.54 12.75 15.95 24.70 27.81 26.80 26.85 33.82 -
Average price 11.11 14.03 20.97 28.81 35.20 38.54 33.14 37.67 -
Valuation
P/E 15.0 14.5 23.2 20.3 23.9 17.5 16.3 13.3 12.0
P/CF 5.9 6.6 8.2 9.9 11.9 8.9 9.1 7.6 7.0
Attrib. FCF yield [%] 6.3 NS NS 5.4 NS NS NS NS NS
P/BV 2.3 2.8 4.1 4.9 5.5 4.2 4.1 3.4 3.0
Yield [%] 4.2 3.7 2.8 2.8 2.5 3.6 3.7 4.5 5.0
EV/Sales 4.03 5.54 7.40 7.42 8.19 6.8 6.9 6.2 5.9
Financial Ratios
Interest cover 6.2 6.8 6.0 6.7 6.7 7.0 7.3 7.2 7.0
EBITDA margin [%] 49.1 67.2 68.7 68.6 70.1 68.5 69.7 70.5 71.1
EBITA margin [%] 27.6 41.6 38.6 42.3 45.7 45.9 48.0 49.5 50.6
Net margin [%] 12.8 18.4 18.9 21.1 23.6 25.4 26.9 27.7 28.2
Gearing [%] 227.7 213.2 293.0 259.6 224.7 217.1 211.7 208.5 202.3
Payout ratio [%] 64.3 60.8 60.8 60.8 60.7 60.5 60.6 60.5 60.5
Return [%]
Pre-tax RoCE 8.3 10.2 8.1 9.9 11.0 11.2 11.5 11.9 12.2
RoCE after tax 5.5 6.8 5.4 6.5 7.4 7.7 8.1 8.3 12.2
ROE [%] 14.6 16.8 18.4 21.7 22.5 24.0 24.3 24.7 24.7
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SPAIN

FLASH NOTE 4 May 2010

Rating Price Target price Upside Market cap

overrun), above the government's EUR3bn target in 2010. Renewables players

This situation is no longer sustainable, and an urgent solution is needed.

I— Tariff deficit out of control

SPANISH UTILITIES: ELECTRICITY SYSTEM'S REVENUES & COSTS 2009-10E

Tariff deficit (B-A) (4,616) 13% (5,198) 14% (5,923)

Accumulated deficit 4,616 8,698 12,423

SPANISH UTILITIES: RENEWABLES OUTPUT AND PREMIUMS BY TECHNOLOGY

Q Current situation is not sustainable. An urgent solution is needed

II— How can the deficit be eliminated?

Q What action can the government take?

1) Increasing regulated revenues (through access tariffs)

SPANISH UTILITIES: POTENTIAL IMPACT OF INCREASING ACCESS TARIFFS IN JULY 2010

5.0% 2.5% 1.3% 313 (4,885) 3,000 (1,885)

SPANISH UTILITIES: POTENTIAL IMPACT OF INCREASING ACCESS TARIFFS IN JANUARY 2011

Increase in total Increase in New annual Maximum New excess

0.0% 0.0% 0 (7,827) 2,000 (5,827)

2) Reducing the existing regulated cost base

SPANISH UTILITIES: ELECTRICITY SYSTEM'S COST STRUCTURE 2009-10E

SPANISH UTILITIES: PREMIUMS FOR RENEWABLE ENERGIES 2009-2010E

2) Proportionally cutting other reducible costs. Apart from premiums for

SPANISH UTILITIES: PROPORTIONAL CUT IN REGULATED COSTS

Q A mix of higher tariffs and lower costs makes more sense…

SPANISH UTILITIES: OPTION 1, ELIMINATING THE EXCESS DEFICIT

Q EUR131m lower transportation revenues, basically affecting Red Electrica,

Group's Exposure to Spain's regulated activities EBITDA % of total Potential % of total

Iberdrola 7,226 644 1,171 - 1,815 25% (163) (2%)

Red Electrica 926 - - 910 910 98% (82) (9%)

Abengoa 761 46 0 0 46 6% (4) (1%)

Q …but we do not rule out the government ignoring the problem

Snowball that could even bankrupt the electricity system

SPANISH UTILITIES: EXCESS DEFICIT EXPECTED 2010-2013E (*)

III— The victims: renewables & regulated players

SPANISH UTILITIES: EQUITY VALUATION SENSITIVITY TO CUTS IN WIND TARIFFS (*)

5% (13%) (16%) (18%) (24%) 7.1% 9.3%

…and those for PV

SPANISH UTILITIES: EQUITY VALUATION SENSITIVITY TO CUTS IN PV TARIFFS (*)

5% (12%) (14%) (17%) (22%) 9.1% 13.3%

Q Distribution & transportation: the contagion effect

SPANISH UTILITIES: WEIGHT OF TRANSPORT & DISTRIBUTION IN COSTS 2010E

IV— Downside risk to valuations

SPANISH UTILITIES: CUT IN SPANISH RENEWABLE VALUATIONS

Acciona 15,372 5,798 77 736 73 14,608 (5.0%) 83.36 (12.6%) 11.8%

Discount 10% 20% 20% 30%

1) Wind players: Iberdrola Renovables, EDP and Acciona

2) Solar players: Abengoa, FCC and ACS

3) Integrated utilities: Gas Natural, Endesa and Iberdrola

Q Transmission business: Red Electrica and Enagas

SPANISH UTILITIES: REE & ENAGAS SENSITIVITY TO A CUT IN REVENUES

EUROPEAN UTILITIES: PEER COMPARISON

Key Financial Data

Market capitalisation - - - 3 000.0 0.0 12 883.7 14 024.2 12 389.4 12 389.4

EV/EBITDA, restated NS NS NS NS 3.3 14.3 13.9 11.5 10.3

FRANCE UNITED ARAB EMIRATES

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