ENDESA, S.A. AND SUBSIDIARIES

MANAGEMENT REPORT JANUARY-SEPTEMBER 2010

Madrid, 3 November 2010

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CONTENTS

Analysis for the period January-September 2010 3

Consolidated results 4

Results by business line 12

Business in Spain, Portugal and Other 13

Business in Latin America 20

Statistical appendix 26

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ANALYISIS FOR THE PERIOD JANUARY-SEPTEMBER 2010

3

CONSOLIDATED RESULTS

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ENDESA reported net income of Euro 2,722 million for the period from January to September 2010.

ENDESA reported net income of Euro 2,722 million for the period from January to September 2010, Euro 326 million lower than in the same period last year. Euro 159 million of this decline was due to the fall in income from asset disposals for this amount during the period January-September 2010 compared to that generated in the same period in 2009.

The table below shows the breakdown of net income by region and the year-on-year change:

ENDESA NET INCOME, JANUARY-SEPTEMBER 2010

Euro million .

% change vs Jan-Sept 2009

% contribution to total net income

Spain, Portugal and Other 2,252 (13.7) 82.7 Latin America 470 7.3 17.3 TOTAL 2,722 (10.7) 100.0

Electricity generation and sales

ENDESA’s power output in January-September 2010 totalled 97,812 GWh, 7.2% less than in the same period of 2009. Electricity sales were 130,929 GWh, up 3.2%.

ELECTRICITY GENERATION AND SALES JANUARY- SEPTEMBER 2010

Output Sales

GWh % change vs Jan-Sept 2009 GWh % change

vs Jan-Sept 2009 Spain, Portugal and Other 51,592 (11.1) 80,866 1.4 Latin America 46,220 (2.3) 50,063 6.2 TOTAL 97,812 (7.2) 130,929 3.2

EBITDA remained stable (+0.1%), despite reduced output and lower prices in the wholesale markets

Despite the fall in output, the increase in energy sold and margins resulted in 9M10 EBITDA remaining stable (+0.1% year-on-year) at Euro 5,810 million.

This trend in EBITDA is the result of the 23.2% rise in revenue (to Euro 22,972 million), 41.4% growth in variable costs and the increase in fixed costs, up by just 3.6%. EBIT was Euro 4,196 million, down 2.4% year-on-year.

The table below shows the breakdown of EBITDA and EBIT by region and the year-on-year change:

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Revenues EBITDA EBIT Euro

million % change vs 9M09

Euro million

% change vs 9M09

Euro million

% change vs 9M09

Spain, Portugal and Other 15,739 27.9 3,337 (2.6) 2,294 (2.3)

Latin America 7,233 14.3 2,473 4.0 1,902 (2.6) TOTAL 22,972 23.2 5,810 0.1 4,196 (2.4)

Net financial result: Euro 836 million (+11.3%)

ENDESA reported a negative financial result of Euro 836 million in the period January-September 2010, Euro 85 million more than the same period last year.

Net financial expenses were Euro 824 million, up 17.4% year-on-year, while exchange differences generated a loss of Euro 12 million compared to the loss of Euro 49 million seen in the same period last year.

Euro 77 million of the increase in net financial expenses was the result of the restatement of finance revenues recorded in previous years resulting from the accrual of interest on the shortfall between the effective contribution date and the start of the following year, in accordance with the provisions of Royal Decree Law 6/2010.

Net gains from asset disposals

In March 2010 the Enel Group integrated the renewable energy activities of ENDESA and Enel Green Power (EGP) in Spain and Portugal into a single entity within the scope of EGP, a company 100% owned by Enel.

Prior to this integration ENDESA Cogeneración y Renovables (Ecyr) paid a dividend of Euro 366 million and reduced capital by Euro 128 million. Subsequently, ENDESA sold 30% of its Ecyr subsidiary to EGP for Euro 326 million, generating a gross capital gain of Euro 313 million and EGP subscribed to a capital increase in Ecyr which enabled it to obtain a shareholding of 60% in that company, diluting ENDESA’s holding to 40%. This capital increase was subscribed by EGP though a cash contribution of Euro 534 million and shares representing 50% of Enel Unión Fenosa Renovables (Eufer) valued at Euro 280 million.

As a result of this operation, ENDESA no longer exercises control over Ecyr (now EGP España). Therefore, in accordance with current accounting regulations, ENDESA has recorded its 40% holding in EGP España at fair value, recording income before tax of Euro 730 million under the “Net gain/(loss) from asset disposals” heading of the Consolidated Income Statement, as accounting regulations regard the loss of control of a subsidiary as a swap between the net assets retired from the Consolidated Balance Sheet and the shares added thereto.

In addition, during 2010 ENDESA has completed the disposal of its 1% stake in Red Eléctrica Corporación (REC) for Euro 51 million, reporting income before tax of Euro 36

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million in the Consolidated Income Statement for January-September 2010, in addition to the Euro 5 million recorded in 2009.

Lastly, on 1 July 2010 ENDESA completed the sale of its 50.01% stake in Endesa Hellas to the Mytilineos Group, as agreed on 16 March, for a price of Euro 140 million. This transaction did not generate a result.

Cash flow from operating activities: Euro 4,017 million

Cash flow from operating activities totalled Euro 4,017 million between January and September 2010, an increase of 0.2% year-on-year.

CASH FLOW FROM OPERATING ACTIVITIES Euro million % change vs 9M 09 Spain, Portugal and Other 2,341 1.8 Latin America 1,676 (2.0) TOTAL 4,017 0.2

Investment: Euro 1,739 million

ENDESA invested a total of Euro 1,739 million between January and September 2010. Euro 1,471 million of this figure was capex and investment in intangible assets, while the remaining Euro 268 million corresponded to financial investments.

INVESTMENTS Euro million

Capex and intangible assets Financial investments TOTAL

Spain, Portugal and Other 952 132 1,084 Latin America 519 136 655 TOTAL 1,471 268 1,739

Financial position

ENDESA had net financial debt of Euro 17,867 million at 30 September 2010, a reduction of Euro 677 million compared to 31 December 2009.

BREAKDOWN OF ENDESA’S NET DEBT BY BUSINESS LINE Euro million 30/09/10 31/12/09 Difference % change Business in Spain, Portugal and Other 12,767 13,865 (1,098) (7.9) Business in Latin America

- Enersis Group - Other

5,100 4,774

326

4,679 4,191

488

421 583

(162)

9.0 13.9

(33.2) TOTAL 17,867 18,544 (677) (3.7)

The average cost of ENDESA’s debt was 4.4% between January and September 2010. The average cost of debt corresponding to the Enersis Group was 8.2%. Excluding Enersis Group debt, the average cost of ENDESA’s debt was 2.7% in the period.

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On 7 July 2010, ENDESA notified the Deficit Securitisation Fund for the Electricity System of its irrevocable commitment to transfer all its deficit collection rights to finance the Electricity System Deficit. According to Royal Decree 437/2010, these rights must be securitised within a year from the notification date, as long as no exceptional circumstances arise in the markets. Where applicable, the Interministerial Commission must rule that such circumstances have arisen. Twelve months after notification, the initial holders can dissolve the commitment to transfer any collection rights that have not been securitised by the Fund.

When assessing ENDESA’s debt levels, it must be remembered that at 30 September 2010, the company had the recognised right to collect Euro 8,348 million in connection with several regulatory matters affecting the Spanish electricity business: Euro 5,681 million for financing the revenue shortfall from regulated activities and Euro 2,667 million in compensation for stranded costs in non-mainland generation. Stripping out these regulatory items, ENDESA’s net debt at 30 September 2010 was Euro 9,519 million.

On 26 July 2010, the General Directorate of Energy and Mining passed a resolution approving the final amount pending collection at 31 December 2009 resulting from the collection rights that can be transferred to the securitisation fund.

STRUCTURE OF ENDESA’S NET DEBT ENDESA

and direct subsidiaries Enersis Group

Total ENDESA Group

Euro million % of total Euro

million % of total Euro million % of total

Euro 13,010 99 - - 13,010 73 Dollar 65 1 1,622 34 1,687 9 Other currency 18 - 3,152 66 3,170 18 TOTAL 13,093 100 4,774 100 17,867 100 Fixed rate 4,716 36 2,180 46 6,896 38 Hedged 1,572 12 - - 1,572 9 Variable 6,805 52 2,594 54 9,399 53 TOTAL 13,093 100 4,774 100 17,867 100 Avg. life (years) 2.9 5.5 3.7

At 30 September 2010, ENDESA had liquidity in Spain of Euro 5,181 million at the end of January-September 2010, sufficient to meet the Group’s total debt repayments over the next 15 months. Euro 4,857 million of this amount comprised undrawn sums on unconditional credit lines.

Meanwhile, the Enersis Group held cash and cash equivalents totalling Euro 1,138 million and Euro 796 million in undrawn, unconditional credit lines, covering debt maturities for the next 20 months.

As of the date of release of earnings for January-September 2010, ENDESA’s long-term debt ratings are “A3” at Moody’s with a negative outlook; “A-" at Standard & Poor's; and “A" at Fitch, both with a stable outlook.

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Equity: Euro 21,967 million

ENDESA’s consolidated equity was Euro 21,967 million at 30 September 2010, Euro 3,007 million higher than at 31 December 2009.

Euro 16,696 million of this amount corresponded to ENDESA S.A. shareholders, and Euro 5,271 million to minority shareholders of group companies.

Net equity corresponding to shareholders of ENDESA, S.A. has increased by Euro 2,469 million compared to 31 December 2009, mainly as a result of:

- Earnings generated during the period.

- Net exchange gains of Euro 488 million in the period January-September 2010 as a result of converting the net assets of the Group’s LatAm companies to euros as a result of the appreciation of local currencies against the euro.

- The recognition of a Euro 559 million final dividend against 2009 earnings approved by shareholders at the General Meeting on 21 June 2010 and paid on 1 July 2010.

Financial leverage

The changes in group equity and net debt resulted in leverage of 81.3% at 30 September 2010, compared to 97.8% at 31 December 2009.

Assets held for sale

At 30 September 2010 ENDESA’s consolidated balance sheet included certain assets classified as held for sale because proceedings had started by that date for their disposal and are expected to be completed within a year. The main assets are:

- The assets making up the power transmission network in Spain currently owned by the ENDESA Group. On 1 July 2010 the agreement to sell these assets to Red Eléctrica de España, S.A.U. was signed. The transaction includes the sale of assets in operation that grant remuneration rights for power transmission in 2010, in addition to assets under construction, scheduled to come on stream in 2010 and conferring remuneration rights for power transmission in 2011. The transaction includes island power transmission networks (Canary and Balearic Islands) and mainland transmission assets. The price of the assets in operation to be sold totals Euro 1,270 million and the price of the assets under construction is Euro 142 million. ENDESA has received an advance payment of Euro 1,037 million. In addition, the two companies have signed a Technical Assistance Agreement for four years and a total amount of Euro 66 million. The contract is subject to the condition that both parties obtain approval from the corresponding regulatory authorities. The transaction is expected to generate a capital gain of approximately Euro 750 million.

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This is provisional as the final figure will depend on the how certain aspects of the agreement signed on 1 July develop.

- Gas distribution and transmission assets in Spain. With regard to these assets, on 24 September 2010, ENDESA agreed to sell an 80% stake in the company in which the majority of its gas distribution and transmission assets are incorporated to two Goldman Sachs infrastructure funds. ENDESA reserves the right to repurchase the sold stake during the period between the fifth and seventh anniversary of the transaction. This transaction involves assets valued at approximately Euro 1,000 million, and will reduce the ENDESA Group’s current net debt by approximately Euro 800 million. It will increase consolidated pre-tax income by approximately Euro 450 million. After receiving the necessary administrative authorizations, ENDESA expects to complete the transaction in 2010.

- The assets of the groups headed by the Chilean companies, Compañía Americana de Multiservicios (CAM) and (SYNAPSIS).

- The assets relating to the group’s stake in Iniciativas del Gas, including the 40% interest in this company, which holds a 50% stake in the Sagunto regasification plant. In April an agreement was reached with Osaka Gas for the sale of this interest, which is awaiting approval from the pertinent regulatory authorities. The sale price will be Euro 43 million, with a gross capital gain of approximately Euro 30 million.

Accounting presentation criteria

In accordance with the provisions of European accounting regulations, from 2010 the Group has adopted IFRIC 12 “Service Concession Arrangements”. This is mainly applicable to electricity distribution concessions in Brazil, and entails a modification to the consolidated balance sheet for 31 December 2009 (presented here for comparative purposes) with a Euro 2,146 million reduction in Fixed Assets and a Euro 1,818 million increase in Intangible Assets.

Adopting IFRIC 12 has had no significant impact on Consolidated Income or Equity.

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RESULTS BY BUSINESS LINE

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BUSINESS IN SPAIN, PORTUGAL AND OTHER Net income – Spain, Portugal and Other: Euro 2,252 million

Net income from ENDESA’s business in Spain, Portugal and Other was Euro 2,252 million for the period January-September 2010, Euro 358 million lower than the same period in 2009, contributing 82.7% of the company’s total net income. This decline was partly due to the fall in net income from asset disposals, recorded in 9M10 results. Specifically, this income is down Euro 165 million compared with the same period in 2009.

EBITDA totalled Euro 3,337 million, down 2.6% year-on-year, while EBIT fell 2.3% to Euro 2,294 million. These decreases are primarily due to the impact of disposing of renewable energy assets to Acciona and EGP in 2009 and 2010, respectively.

Highlights

Following the fall in 2009, electricity demand recovered by 3.4% during the first nine months of 2010 compared to the same period a year earlier (3.0% corrected for working days and temperatures).

Also, in the first nine months of 2010 wholesale electricity prices were 5.5% lower than in the same period in 2009.

Against this backdrop, ENDESA’s gross margin only shrank by 2.8% between January and September 2010, due, among other factors, to the sharp increase in electricity sold to customers and an improved generation mix, with increased hydro and nuclear output and lower thermal output.

During this period, ENDESA obtained a market share in ordinary regime generation of 28.3%, a 43.1% share in distribution and a 40.3% share in sales to deregulated customers.

In December 2009 the access tolls to be implemented from 1 January 2010 were definitively revised, with an average increase of 14.5%. Access tolls for customers eligible for the tariff of last resort (TLR) with no limit on times were revised upwards by 9% on average. Furthermore, the period during which customers not eligible for the TLR with no supply contract can continue to be supplied by Suppliers of Last Resort (SLRs) has been extended until 31 December 2010. In December 2009, a resolution was also published establishing the TLR for the first nine months of 2010, with an average increase in the TLR with no time restrictions of 2.6%.

Ministerial order ITC 1732/2010, of 28 June, revising access tariffs from 1 July 2010 and the tariffs and premiums for specific CHP/renewables facilities, establishes that the access tariffs in force from 1 January 2010 shall remain unchanged, except for tariffs for customers eligible for tariff of last resort, which shall be reduced to offset the rise in energy costs recognised in the TLR. Specifically, access tariffs for customers eligible for the TLR with no time restrictions will fall by 3%.

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Ministerial order ITC 1601/2010 of 11 July, which regulates CESUR auctions (power contracts for supply of last resort), also modified the formulae for calculating the energy cost recognised in the TLR.

The General Directorate of Energy and Mining resolution of 28 June 2010 establishing the cost of electricity production and the TLR to be applied in the third quarter of 2010 specifies that the TLR with no time restrictions will remain unchanged in the third quarter of the year.

The shortfall between the access tariffs collected during the first nine months of 2010 and the system costs during the same period has led to a revenue deficit in regulated activities of approximately Euro 2,899 million for the entire sector for the period January to September 2010. ENDESA must finance Euro 1,280 million of this deficit.

The General Directorate of Energy and Mining resolution of 29 September 2010 has established the cost of electricity production and the TLR to be applied in the fourth quarter of 2010. The TLR will rise by 4.8% on average as a result of the increase in the cost of energy subsequent to the CESUR auction on 21 September. Access tolls remain unchanged after being revised in July.

After approval by the European Commission, the new Royal Decree 1221/2010 amending Royal Decree 134/2010 has been published as part of the open notification process. The most important changes enacted by the new regulation comprise the elimination of compensation for lost earnings and possible damages for the owners of plants with a reduced programme and the remuneration scheme for plants using domestic (Spanish) coal. This compensation will now be based on audited costs, from which a percentage of the value of rights assigned in the National Allocation Plan (NAP) in 2011 and 2012 will be deducted.

In short, the approved Royal Decree establishes that plants using domestic coal are obliged to sell their output at their recognised variable cost, whereby that not sold on the market will be handled by the System Operator due to restrictions on supply. Affected plants will be selected in descending order based on their CO2 emissions.

The regulation will not enter force until publication of the Secretary of State for Energy’s resolution establishing maximum volumes and prices for the last quarter of the year, system operation procedures, and the order determining the method for calculating the rights assigned in the NAP affected by supply guarantee restrictions.

The Secretary of State for Energy’s resolution of 26 October 2010 stipulates the prices for 2010 for remunerating energy and the maximum production volumes for each of the participating plants, as well as the annual amounts of indigenous coal to be acquired by the plant owners.

ENDESA has filed appeals with the Spanish Supreme Court against both Royal Decree 134/2010 and Royal Decree 1221/2010. The Company has also lodged an appeal with the Spanish National Court of Appeals against the Secretary of State for Energy’s Resolution of 26 October 2010. In this latter appeal, in response to the petition for highly preventative measures, in an order dated 29 October 2010, the National Court of Appeals suspended the

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obligation imposed on the owners of power plants fired with indigenous coal whereby they were required to submit, within three days, a document to the National Energy Commission (Comisión Nacional de Energía, CNE) undertaking to acquire this type of coal until 2012. This suspension will be in effect until the hearing scheduled to take place before the Court on 3 November 2010. At that point, the Court will decide whether or not to maintain this suspension (and the corresponding coal purchase requirements) as well as its scope during the processing of the appeal. ENDESA has also lodged an appeal with the General Court of the European Union against the European Commission’s Decision of 29 September 2010 approving the state aid scheme for the sector in Spain. The company has asked the Court to suspend the execution of the decision, as a precautionary measure.

Revenue: Euro 15,739 million (+27.9%)

ENDESA reported revenues of Euro 15,739 million from the business in Spain, Portugal and Other in January-September 2010, an increase of 27.9% compared to 9M09. Of this amount, Euro 15,031 million corresponded to sales, up 31.6% year-on-year, due mainly to SLR sales, as explained later in this report. SPAIN, PORTUGAL AND OTHER SALES Euro million

Jan-Sept 2010

Jan-Sept 2009 Difference %

change Electricity sales 12,059 8,781 3,278 37.3 Sales on the deregulated market 5,094 4,020 1,074 26.7 Sales to Suppliers of Last Resort 3,974 1,542 2,432 157.7 Sales in auctions - 90 (90) (100.0) Wholesale market sales 460 810 (350) (43.2) Deductions under Royal Decree Law 11/2007 - (128) 128 (100.0)

CHP/renewable energy sales 29 223 (194) (87.0) Supply to deregulated customers outside

Spain 273 191 82 42.9

Non-mainland compensation 1,309 871 438 50.3 Power trading 776 968 (192) (19.8) Other sales 144 194 (50) (25.8) Regulated revenue from electricity distribution 1,667 1,693 (26) (1.5) Regulated revenue from gas distribution 55 44 11 25.0 Gas supply 1,061 684 377 55.1 Other sales and services rendered 191 222 (33) (14.9) TOTAL 15,031 11,424 3,607 31.6

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ENDESA Ordinary regime mainland generationTotal: 39,156 GWh (-7.8%)

Rest of the sector ordinary regime mainland generationTotal: 99,043 GWh (+1.1%)

99,043 98,000

42,455 39,156

10,66923,424

21,165

23,556

7,681

13,02848

65

53,09044,317

9M 2010 9M 2009G

Wh

6,8357,591

17,64420,278

8,154 12,798

165635,0133,070

9M 2010 9M 2009

GW

h

Electricity sales

ENDESA’s output in Spain, Portugal and Other was 51,592 GWh in the first nine months of 2010, a drop of 11.1% compared to the same period in 2009. 50,378 GWh of this amount corresponded to Spain (-9.4%), 521 GWh to Portugal (-55.9%) and 693 GWh to the rest of the segment (-45.4%)

ENDESA’s mainland electricity output stood at 39,615 GWh, 11.0% lower than during the period January to September 2009. 39,156 GWh of this amount corresponded to ordinary regime generation in Spain, down 7.8% year on year.

ENDESA's CHP and renewable energy output was 459 GWh, down 77.7% as a result of the sale of renewable energy assets to Acciona in June 2009 and to EGP in March 2010.

Nuclear and hydro energy accounted for 71.2% of ENDESA's mainland generation mix under the ordinary regime, compared with 47.4% for the rest of the sector.

ENDESA’s output from non-mainland facilities was 10,763 GWh, a decrease of 2.9% compared to January-September 2009.

Despite the 11.1% drop in generation in 9M10, revenues from electricity sales grew by 37.3% due to higher sales to deregulated customers and, above all, to the regulatory changes that came into force on 1 July 2009 with the start of supply of last resort.

Hydro Nuclear Coal Fuel-gas CCGT

+16,5%

Hydro Nuclear Coal Fuel-gas CCGT

+16,5%

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Supply to deregulated customers

ENDESA had 1,881,101 customers in the deregulated market at the end of September 2010: 1,665,494 in the Spanish mainland market, 184,363 in the non-mainland market, and 31,244 in European deregulated markets other than Spain.

ENDESA sold a total of 52,843 GWh to these customers in January-September 2010, an increase of 19.8%.

Sales in the Spanish deregulated market totalled Euro 5,094 million, up 26.7% on the period January to September 2009. In turn, revenues from sales to customers in deregulated European markets other than Spain rose 42.9% year-on-year to Euro 273 million.

Sales to suppliers of last resort

From 1 July 2009, the integrated regulated tariff applied by distributors to consumers who had not signed a power supply contract with any sales company was eliminated. Under the previous system, the cost of energy supply was a pass through cost for the distributor. From 1 July, customers who had not signed a supply contract with a distributor went on to be supplied by suppliers of last resort (SLR), providing power to their customers at the tariff of last resort (TLR) periodically set by the government, with the previous pass through cost having disappeared.

This regulatory change has had an accounting impact which involves recording both the amounts invoiced to customers and the expenses of such supplies in the income statement, whereas previously these were not shown.

ENDESA sold 27,330 GWh through its last resort supplier between January and September 2010, reporting revenues of Euro 3,974 million.

Electricity Distribution

ENDESA distributed 88,593 GWh of electricity in the Spanish market during the first nine months of 2010, an increase of 1.9%.

Revenues from regulated distribution activities totalled Euro 1,667 million, down 1.5% on the 9M09 figure.

Gas distribution and supply

ENDESA’s group of investees sold a total of 36,231 GWh of natural gas in 9M10, an increase of 6.4%.

36,126 GWh of this amount were sold to customers on the deregulated market, an increase of 7.5%, and 105 GWh were sold to customers on the regulated market, 77.8% less than in 9M09.

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Revenues from gas sales in the deregulated market increased 55.1% to Euro 1,061 million.

Electricity generation in the rest of the segment

Electricity sales generated in the rest of the segment totalled Euro 144 million, down 25.8% on 9M09. Euro 81 million of this amount corresponded to Ireland (-27.7%), Euro 46 million to Portugal (-25.8%), Euro 6 million to Greece (-33.3%) and Euro 11 million to Morocco (+0.0%).

Operating expenses

The breakdown of operating expenses in the Spanish, Portuguese and Other business for January - September 2010 is provided below:

OPERATING EXPENSES FOR SPAIN, PORTUGAL AND OTHER BUSINESS Euro million

Jan-Sept 2010

Jan-Sept 2009 Difference %

change Procurements and services 10,699 7,125 3,574 50.2

Power purchases 3,978 2,635 1,343 51.0 Fuel consumption 1,448 1,545 (97) (6.3) Transmission expenses 4,148 2,021 2,127 105.2

Other supplies and services 1,125 924 201 21.8 Personnel expenses 852 865 (13) (1.5) Other operating expenses 980 1,008 (28) (2.8) Depreciation & amortisation and impairment losses 1,043 1,076 (33) (3.1)

TOTAL 13,574 10,074 3,500 34.7

Procurements and services

Power purchases stood at Euro 3,978 million, an increase of 51.0% on the same period in 2009. This rise was due to power purchases in 2010 to supply SLR customers in excess of the group's own production. To 30 June 2009 power purchases made to supply regulated customers were not recognised on the income statement as they were considered to be a pass through cost.

Fuel consumption fell 6.3% to Euro 1,448 million in 9M10, due mainly to lower thermal plant output during the period.

Power transmission costs were Euro 4,148 million, Euro 2,127 million higher than that registered for 9M09. This increase was due mainly to the recognition of the cost of access tolls paid by the SLR and higher toll payments for supply to deregulated customers due to the significant rise in the volume of power sold to these customers and the increase in the tolls themselves.

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Personnel and other fixed operating expenses

Fixed costs in 9M10 totalled Euro 1,832 million, Euro 41 million lower (-2.2%) than in January-September 2009.

This change relates to the net effect of a Euro 13 million decrease in “Personnel expenses” to Euro 852 million, and a Euro 28 million drop in “Other operating expenses” to Euro 980 million.

Depreciation & amortisation charges and impairment losses

Depreciation and amortisation charges and impairment losses totalled Euro 1,043 million, Euro 33 million less than in 9M09.

For comparison purposes, it should be noted that extraordinary depreciation and amortisation charges in January-September 2009 amounted to Euro 124 million.

Financial results: Euro 486 million (+17.7%)

The financial result in 9M10 totalled Euro 486 million, an increase of Euro 73 million on January-September 2009.

This change was the result of a Euro 13 million rise in exchange losses from Euro 5 million for the period January to September 2009 to Euro 18 million for the first nine months of 2010, and a Euro 60 million increase in net financial expenses.

Net financial expenses for January-September 2010 included Euro 77 million as a result of the restatement of finance revenues recorded in previous years from the accrual of interest on the shortfall between the effective contribution date and the start of the following year, in accordance with the provisions of Royal Decree Law 6/2010.

Net financial debt in the Spain, Portugal and Other business at 30 September 2010 stood at Euro 12,767 million, compared to Euro 13,865 million at the end of 2009. Euro 8,348 million of this amount was incurred to finance regulatory receivables: Euro 5,681 million to finance the revenue shortfall from regulated activities, and Euro 2,667 million to fund the non-mainland generation deficit.

Cash flow from operating activities: Euro 2,341 million

Cash flow from operating activities from the Spain, Portugal and Other business totalled Euro 2,341 million in 9M10, an increase of 1.8% on the same period in 2009.

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Investment: Euro 1,084 million

Investments in the Spain, Portugal and Other business in 9M10 totalled Euro 1,084 million, as detailed in the following table.

TOTAL INVESTMENT IN SPAIN, PORTUGAL AND OTHER Euro million

Jan-Sept 2010

Jan-Sept 2009 % change

Capex 872 1,368 (36.3) Intangible 80 57 40.4 Financial investments 132 528 (75.0) TOTAL 1,084 1,953 (44.5) CAPEX INVESTMENT IN SPAIN, PORTUGAL AND OTHER Euro million

Jan-Sept 2010

Jan-Sept 2009 % change

Generation 380 670 (43.3) Distribution 478 677 (29.4) Other 14 21 (33.3) TOTAL 872 1,368 (36.3)

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BUSINESS IN LATIN AMERICA Net income of Euro 470 million

In Latin America, ENDESA’s 9M10 net income rose 7.3% year-on-year to Euro 470 million.

EBITDA increased by 4.0% compared to 9M09 to Euro 2,473 million.

Highlights

The economic environment in ENDESA’s Latin American operating markets was positive. Demand for the period from January to September 2010 increased in all countries, particularly in Peru where it grew 8.5% and Brazil which saw a rise of 8.4%, but also in Chile (+2.3%), Colombia (+3.5%) and Argentina (+5.7%).

In this context, distribution sales by ENDESA companies totalled 50,063 GWh, an increase of 6.2% on 9M09, with rises recorded in all countries: Brazil (+10.0%), Peru (+7.3%), Colombia (+5.3%), Argentina (+4.3%), and Chile (+3.8%).

ENDESA’s generation business was affected by extraordinary events in 2010 that caused output to fall during the period by 2.3% to 46,220 GWh. Output fell in Colombia (-14.1%) due to the drought caused by the “El Niño” phenomenon in the first quarter. It also fell in Argentina (-4.2%) as a result of lower thermal generation and programmed maintenance work, and in Chile (-4.0%) as a result of the earthquake on 27 February and the drought during the third quarter of the year. In contrast, output in Brazil rose by 47.7% on the back of increased availability of gas and better rainfall conditions.

ELECTRICITY GENERATION AND SALES IN THE LATIN AMERICAN BUSINESS

Output (GWh) Sales (GWh)

Jan-Sept 2010

% change vs Jan-Sept 2009

Jan-Sept 2010

% change vs Jan-Sept 2009

Chile 15,431 (4.0) 9,749 3.8 Argentina 11,956 (4.2) 12,623 4.3 Peru 6,703 4.6 4,550 7.3 Colombia 8,519 (14.1) 9,277 5.3 Brazil 3,611 47.7 13,864 10.0 TOTAL 46,220 (2.3) 50,063 6.2

Changes in unit margins

The unit margin in the generation business increased by 4.2% to Euro 30.2/MWh. The significant rise in the generation margin in Brazil (+43.9%), Colombia (+30.3%), Argentina (+16.2%) and Peru (+12.7%), measured in euros, offset the lower unit margin in Chile (-15.2%).

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The unit margin on distribution activities in 9M10 was Euro 34.0/MWh, an increase of 11.7% compared to the same period in 2009. This was mainly due to the better unit margins in Brazil (+21.6%), Colombia (+11.4%) and Peru (+7.2%).

New capacity development

Between January and September 2010, construction continued on the 370 MW Bocamina II coal-fired plant in Chile, although start up will be delayed until 2H 2011 due to the effects of the earthquake.

Highlights at the Quintero regasification terminal in Chile, in which ENDESA holds at 20% stake, include the start of commercial operations corresponding to the second stage of the project in April (second LNG tank with a net capacity of 151,000 m3). The last stage of the programme is scheduled for 15 November 2010.

Regulatory update

Chile

In March 2010, the node price was revised downwards (-6.8%) due to the dollar indexation clause, to USD 86.8/MWh compared to the previous price set in November 2009 (USD 93.2/MWh),

The node price applied from 1 May 2010 (six months) has been set at USD 94.9/MWh, an increase of 1.8% on the price set in November 2009 (USD 93.2/MWh) and up 9.3% on the prevailing price associated with the last indexation made in March 2010 (USD 86.8/MWh).

Brazil

Between January and September 2010, the ordinary tariff review for Ampla took place for the period March 2010-March 2011. Under this new tariff, which came into force on 15 March 2010, the price adjustment for Parcel B (DAV) is +1.3%.

On 19 April 2010, Aneel announced the tariff adjustment for Coelce, to be applied from 22 April and involving an adjustment of 3.95% for the consumer and an increase of 2.98% for Parcel B (DAV).

The enactment of Law 12.111 in December 2009 means that international interconnections may be treated as part of the Brazilian transmission grid and therefore receive a regulated fixed tariff. Aneel and Cien are currently negotiating a regulated tariff that will adequately remunerate the latter entity’s interconnection line. It is expected that this new tariff will be fixed during 2010.

Additionally, on 4 June a power supply agreement was signed between Cien and the Argentinean operator, Cammesa.

Peru

The new “barra prices” have been in force in Peru since 1 May 2010, an average monomial price (excl. tolls) of USD 40/MWh, implying a reduction of 5% on current prices.

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On 29 April 2010, Emergency Decree 032-2010 was published, establishing the measures to speed up investment and facilitate financing for the execution of electricity projects. In general terms, this Emergency Decree establishes the process of rural electrification, based on the "Universalization” and “Power for all” projects in Brazil.

Lastly, in 2010 new measures were approved for power remuneration and for cold reserve tenders (Supreme Decree 001/2010), extending their scope.

On 4 October 2010, the Peruvian regulator, Osinergmin, finally decided to reconsider the Edelnor’s DAV, setting it at +0.1% (previously -0.1%).

Colombia

In the first half of 2010, the Colombian electricity wholesale market was highly intervened, with various temporary measures rolled out by the regulator (CREG) aimed at alleviating the impact of the drought caused by the “El Niño” phenomenon. Most of these measures were withdrawn in June once “El Niño” had been officially declared over.

EBITDA: Euro 2,473 million (+4.0%)

EBITDA in the Latin American business totalled Euro 2,473 million in 9M10, a 4.0% increase year-on-year. EBIT, meanwhile, fell 2.6% from the 9M09 figure to Euro 1,902 million.

EBITDA AND EBIT IN THE LATIN AMERICAN BUSINESS EBITDA (Euro million) EBIT (Euro million)

Jan-Sept 2010

Jan-Sept 2009

% change

Jan-Sept 2010

Jan-Sept 2009

% change

Generation and transmission 1,403 1,479 (5.1) 1,123 1,255 (10.5)

Distribution 1,089 921 18.2 811 722 12.3 Other (19) (21) n/a (32) (25) n/a TOTAL 2,473 2,379 4.0 1,902 1,952 (2.6)

The breakdown of these results by country is shown below:

BREAKDOWN OF EBITDA AND EBIT IN LATIN AMERICA BY BUSINESS LINE GENERATION AND TRANSMISSION EBITDA (Euro million) EBIT (Euro million)

Jan-Sept 2010

Jan-Sept 2009

% change

Jan-Sept 2010

Jan-Sept 2009 % change

Chile 619 776 (20.2) 510 683 (25.3) Colombia 327 290 12.8 282 255 10.6 Brazil 165 110 50.0 149 96 55.2 Peru 146 120 21.7 100 81 23.5 Argentina 95 85 11.8 69 58 19.0 TOTAL GENERATION 1,352 1,381 (2.1) 1,110 1,173 (5.4) Brazil-Argentina interconnection 51 98 (48.0) 13 82 (84.1) TOTAL GENERATION AND TRANSMISSION 1,403 1,479 (5.1) 1,123 1,255 (10.5)

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DISTRIBUTION EBITDA (Euro million) EBIT (Euro million)

Jan-Sept 2010

Jan-Sept 2009

% change

Jan-Sept 2010

Jan-Sept 2009

% change

Chile 147 164 (10.4) 114 142 (19.7) Colombia 296 257 15.2 225 203 10.8 Brazil 513 362 41.7 381 275 38.5 Peru 96 82 17.1 72 62 16.1 Argentina 37 56 (33.9) 19 40 (52.5) TOTAL DISTRIBUTION 1,089 921 18.2 811 722 12.3

Generation and transmission

Chile

EBITDA and EBIT in the Chilean generation business stood at Euro 619 million and Euro 510 million, respectively for January-September 2010, down 20.2% and 25.3%. This was due mainly to lower output in the period (-4%), lower sale prices to regulated customers and higher power purchase prices as a result of the rise in spot prices due to lower rainfall.

Colombia

In Colombia, the lower output (-14.1%) during the period was offset by a favourable exchange rate leading to a rise in sales prices. This enabled EBITDA and EBIT to increase by 12.8% and 10.6%, respectively, to Euro 327 million and Euro 282 million for the period January-September 2010.

Brazil

ENDESA’s investees in Brazil generated a total of 3,611 GWh in 9M10, up 47.7% year-on-year, with increases at the Fortaleza (thermal) plant primarily due to higher gas availability and the Cachoeira (hydro) plant as a result of higher rainfall levels. This, coupled with higher sales prices, pushed EBITDA up by 50.0% to Euro 165 million and EBIT up by 55.2% to Euro 149 million.

Peru

ENDESA’s investees in Peru generated a total output of 6,703 GWh in 9M10, 4.6% higher year-on-year, despite decreased availability due to maintenance work at the Ventanilla combined cycle plant during the first half of the year. Given the higher spot prices in the north of the country, exports to Ecuador and the containment of fixed costs triggered a 21.7% rise in EBITDA to Euro 146 million and EBIT climbed 23.5% to Euro 100 million.

Argentina

Output fell by 4.2% during the period from January to September 2010 as a result of lower output at the Costanera plant due to maintenance work on the combined cycle units. Nevertheless, improved margins on sales led EBITDA to rise by 11.8% to Euro 95 million compared to 9M09, while EBIT rose 19.0% to Euro 69 million.

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Brazil - Argentina interconnection

EBITDA for this interconnection stood at Euro 51 million for the January-September 2010, with EBIT of Euro 13 million, compared to Euro 98 million and Euro 82 million, respectively, in the same period of 2009. The drop in results is due to the decreased utilisation of interconnection lines in 9M10 compared to the same period in 2009 as a consequence of the extraordinary contract signed with Uruguay in 2009.

Significant advances in the proceedings to establish regulated remuneration for these lines in order to ensure their future profitability were made in 2010.

Distribution

Chile

EBITDA dropped 10.4% to Euro 147 million and EBIT fell 19.7% to Euro 114 million as a result of the lower unit power sales price due to the imperfection of the pass-through during 2009, and the application of the new sub-transmission tariff.

Colombia

The 5.3% rise in sales volumes, among other factors, pushed up EBITDA and EBIT in the Colombian distribution business by 15.2% and 10.8%, respectively, to Euro 296 million and Euro 225 million.

Brazil

EBITDA stood at Euro 513 million for January-September 2010 and EBIT was Euro 381 million, up 41.7% and 38.5% respectively, year-on-year. This increase was due mainly to higher energy sales (+10.0%) due to the temperatures registered and increased economic activity.

Peru

Financial indicators in the Peruvian distribution business marked a good performance during the period on the back of a 7.3% rise in sales volumes. EBITDA rose 17.1% year on year to Euro 96 million, while EBIT was 16.1% higher than in 9M09 at Euro 72 million.

Argentina

EBITDA and EBIT for the distribution business in Argentina fell by Euro 19 million and Euro 21 million, respectively, year-on-year, mainly due to higher fixed costs resulting from the rise in inflation in the country.

Financial results: Euro 350 million (+3.6%)

The net financial loss reported by ENDESA’s Latin American business was Euro 350 million for January-September 2010, a year-on-year increase of 3.6%.

The exchange losses of Euro 44 million in 9M09 have been reversed and a net exchange gain of Euro 6 million has been recorded for the period from January to September 2010. This latter figure includes Euro 30 million corresponding to exchange differences affecting

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the company's generation subsidiaries in Argentina resulting from the dollarisation of the amounts to be collected for the contributions made to Foninvemem.

Net financial expenses totalled Euro 356 million in 9M10, up Euro 62 million or 21.1%, as a result of the increase in net debt and a higher average cost of debt due, inter alia, to an inflation rate hike in Chile that boosts the value of the “unidad de fomento” (Chilean pesos indexed to inflation).

Net debt in ENDESA’s Latin American business stood at Euro 5,100 million at 30 September 2010; an increase of Euro 421 million from year-end 2009. Fluctuations in exchange rates have increased the Group’s debt by Euro 476 million, whereby the total rise in net debt is due to this effect.

Cash flow from operating activities: Euro 1,676 million

Cash flow generated by ENDESA’s business in Latin America totalled Euro 1,676 million in the first nine months of 2010, a reduction of 2.0% on 9M09.

Investment: Euro 655 million

In 9M10, investments in this business totalled Euro 655 million, Euro 136 million of which comprised financial investments and Euro 519 million capex and investments in intangible assets, as shown in the following table:

CAPEX AND INVESTMENT IN INTANGIBLE ASSETS IN LATIN AMERICA Euro million

Jan-Sept 2010

Jan-Sept 2009 % change

Generation 143 204 (29.9) Distribution and Transmission 184 332 (44.6) Other Capex 9 34 (73.5) TOTAL CAPEX 336 570 (41.1) Intangible assets 183 3 n/a TOTAL CAPEX AND INVESTMENT IN INTANGIBLE ASSETS

519 573 (9.4)

Of this investment in intangible and financial assets, Euro 174 million and Euro 26 million, respectively, comprises investments in the Brazilian distribution business as, given the nature of the concession, the associated assets are classified partly as intangible and partly as financial under IFRIC 12.

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STATISTICAL APPENDIX

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KEY FIGURES Electricity Generation Output (GWh) Jan-Sept

2010 Jan-Sept

2009 % change

Business in Spain, Portugal and Other 51,592 58,050 (11.1) Business in Latin America 46,220 47,319 (2.3) TOTAL 97,812 105,369 (7.2) Electricity Generation Output in Spain and Portugal and Other (GWh)

Jan-Sept 2010

Jan-Sept 2009 % change

Mainland 39,615 44,513 (11.0) Nuclear 20,278 17,644 14.9 Coal 8,154 12,798 (36.3) Hydro 7,591 6,835 11.1 Combined cycle (CCGT) 3,070 5,013 (38.8) Fuel oil 63 165 (61.8) CHP/Renewables 459 2,058 (77.7) Non-mainland 10,763 11,086 (2.9) Portugal 521 1,182 (55.9) Other 693 1,269 (45.4) TOTAL 51,592 58,050 (11.1)

Electricity Generation Output in Latin America (GWh) Jan-Sept 2010

Jan-Sept 2009 % change

Chile 15,431 16,068 (4.0) Argentina 11,956 12,476 (4.2) Peru 6,703 6,408 4.6 Colombia 8,519 9,922 (14.1) Brazil 3,611 2,445 47.7 TOTAL 46,220 47,319 (2.3)

Electricity Sales (GWh) Jan-Sept 2010

Jan-Sept 2009 % change

Business in Spain, Portugal and Other 80,866 79,763 1.4 Regulated market - 23,084 n/a SLR 27,330 11,259 142.7 Deregulated market 52,843 44,112 19.8 Other 693 1,308 (47.0) Business in Latin America 50,063 47,142 6.2 Chile 9,749 9,390 3.8 Argentina 12,623 12,099 4.3 Peru 4,550 4,239 7.3 Colombia 9,277 8,813 5.3 Brazil 13,864 12,601 10.0 TOTAL 130,929 126,905 3.2

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Gas sales (GWh) Jan-Sept 2010

Jan-Sept 2009 % change

Regulated market 105 472 (77.8) Deregulated market 36,126 33,592 7.5 TOTAL 36,231 34,064 6.4 Closing workforce (number of employees) 30/09/10 31/12/09 % change Business in Spain, Portugal and Other 12.782 13.629 (6.2) Business in Latin America 12.275 12.676 (3.2) TOTAL 25.057 26.305 (4.7)

FINANCIAL DATA Key figures Jan-Sept

2010 Jan-Sept

2009 % change

EPS (Euro) 2.57 2.88 (10.7) CFPS (Euro) 3.79 3.78 0.2 BVPS (Euro) 15.8 (1) 13.4 (2) 17.4 (1) BVPS at 30 September 2010.

(2) BVPS at 31 December 2009.

Net financial debt (Euro million) 30/09/10 31/12/09 % change Business in Spain, Portugal and Other 12,767 13,865 (7.9) Business in Latin America 5,100 4,679 9.0 TOTAL 17,867 18,544 (3.7) Financial leverage (%) 81.3 97.8 - Ratings (03.11.10) Long-term Short-term Outlook Standard & Poor’s A- A-2 Stable Moody’s A3 P-2 Negative ENDESA’s main fixed-income issues Spread over IRS (bp) 30-09-10 31-12-09 2Y GBP 400M 6.125% Mat. June 2012 131 28 2.6Y Euro 700M 5.375% Mat. February 2013 76 45 Stock market data 30/09/10 31/12/09 % change Market cap (Euro million) 20,789 25,352 (18.0) Number of shares outstanding 1,058,752,117 1,058,752,117 - Nominal share value (Euro) 1.2 1.2 -

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Stock market data Jan-Sept 2010

Jan-Sept 2009 % change

Trading volumes (shares) Madrid stock exchange 120,661,528 444,156,395 (72.8) Average daily trading volume (shares) Madrid stock exchange 628,445 2,325,426 (73.0) Share price 9M10 high 9M10 low 30/09/10 31/12/09 Madrid stock exchange (Euro) 24.000 16.930 19.635 23.945 Dividends (€/share) Against 2009 earnings Interim dividend (04/01/10) 0.500 Final dividend (01/07/10) 0.528 Total DPS 1.028 Pay-out (%) 31.7 Dividend yield (%) 4.3

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Important legal disclaimer This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and they are subject to material risks, uncertainties, changes and other factors that may be beyond ENDESA’s control or may be difficult to predict.

Forward-looking statements include, but are not limited to, information regarding: estimated future earnings; anticipated increases in wind and CCGT generation and market share; expected increases in demand for gas and gas sourcing; management strategy and goals; estimated cost reductions; tariffs and pricing structure; estimated capital expenditures and other investments; estimated asset disposals; estimated increases in capacity and output and changes in capacity mix; repowering of capacity and macroeconomic conditions. The main assumptions on which these expectations and targets are based are related to the regulatory setting, exchange rates, divestments, increases in production and installed capacity in markets where ENDESA operates, increases in demand in these markets, assigning of production amongst different technologies, increases in costs associated with higher activity that do not exceed certain limits, electricity prices not below certain levels, the cost of CCGT plants, and the availability and cost of the gas, coal, fuel oil and emission rights necessary to run our business at the desired levels.

In these statements we avail ourselves of the protection provided by the Private Securities Litigation Reform Act of 1995 of the United States of America with respect to forward-looking statements.

The following important factors, in addition to those discussed elsewhere in this document, could cause actual financial and operating results and statistics to differ materially from those expressed in our forward-looking statements:

Economic and industry conditions: materially adverse changes in economic or industry conditions generally or in our markets; the effect of existing regulations and regulatory changes; tariff reductions; the impact of any fluctuations in interest rates; the impact of fluctuations in exchange rates; natural disasters; the impact of more stringent environmental regulations and the inherent environmental risks relating to our business operations; the potential liabilities relating to our nuclear facilities.

Transaction or commercial factors: any delays in or failure to obtain necessary regulatory, antitrust, internal and other approvals for our proposed acquisitions, investments or asset disposals, or any conditions imposed in connection with such approvals; our ability to integrate acquired businesses successfully; the challenges inherent in diverting management's focus and resources from other strategic opportunities and from operational matters during the process of integrating acquired businesses; the outcome of any negotiations with partners and governments. Delays in or impossibility of obtaining the pertinent permits and rezoning orders in relation to real estate assets. Any delays in or failure to obtain necessary regulatory approvals, including environmental approval, to construct new facilities, repowering or enhancement of existing facilities; shortages or changes in the price of equipment, materials or labour; opposition of political and ethnic groups; adverse changes in the political and regulatory environment in the countries where we and our related companies operate; adverse weather conditions, which may delay the completion of power plants or substations, or natural disasters, accidents or other unforeseen events; and the inability to obtain financing at rates that are satisfactory to us.

Political/governmental factors: political conditions in Latin America; changes in Spanish, European and foreign laws, regulations and taxes.

Operating factors: technical difficulties; changes in operating conditions and costs; the ability to implement cost reduction plans; the ability to maintain a stable supply of coal, fuel and gas and the impact of fluctuations on fuel and gas prices; acquisitions or restructurings; the ability to implement an international and diversification strategy successfully.

Competitive factors: the actions of competitors; changes in competition and pricing environments; the entry of new competitors in our markets.

Further details on the factors that may cause actual results and other developments to differ significantly from the expectations implied or explicitly contained in this document are given in the Risk Factors section of the current ENDESA Share Registration Statement filed with the Comisión Nacional del Mercado de Valores (the Spanish securities regulator or the “CNMV” for its initials in Spanish).

No assurance can be given that the forward-looking statements in this document will be realised. Except as may be required by applicable law, neither ENDESA nor any of its subsidiaries intends to update these forward-looking statements.