Disclosure on Management Approach - Consolidation of the international dimension and value creation

Enel’s economic performance aims to preserve and increase the Company’s value with regard to all its stakeholders.
To this end, it has established all the procedures necessary to carefully control operating and financial risks and has carried out all the activities that enable the Company to maintain its international rating at the highest level.Enel’s concern for the issues raised by CSR is reflected in the Group’s shareholder base.
According to the data as of February 2010, 67 ethical funds hold 18.6% of the shares owned by institutional investors.
In particular, the geographical areas traditionally sensitive to the issues of socially responsible investment (SRI) are well represented among Enel’s shareholders.
SRI funds pay close attention to how they invest, doing so in companies that act sustainably and excluding those whose behavior is disrespectful of, or even harmful, to the environment and local communities.
The growing interest of SRI funds in Enel highlights the fact that about ten years ago the Company initiated policies to achieve the highest standards of sustainability and its reporting. For this reason, Enel set up the CSR and Relations with Associations Unit as part of its External Relations Department. This unit is a dedicated channel for communicating with sustainability analysts and ethical funds and, in cooperation with the Investor Relations Unit of the Accounting, Finance, and Control Department, handles relations with investors.
Even though the consequences of the financial crisis continue to influence the global economy, 2009 was an important year for Enel. First of all, it finalized the largest acquisition ever made abroad by an Italian firm and fully consolidated the Spanish Company Endesa, one of the largest electricity companies in the world and a leading one in Spain and Latin America. Enel also continued the integration process through numerous initiatives to create value thanks to synergy and the exchange of best practices, which are already contributing to the achievement of challenging financial objectives.
Revenue in 2009 amounted to 64,035 million euro, an increase of 2,851 million euro (+4.7%) with respect to 2008. The growth was essentially due to the increase in revenue earned abroad because of the effect of the change in the method of consolidating Endesa – from proportional to full, line-by-line – adopted at the end of June following the acquisition of the additional shareholding of 25.01%, as well as the different period of consolidation of Enel OGK-5, Enel Distributie Muntenia, and Enel Energie Muntenia, net of the deconsolidation of the Viesgo group, which was sold in June 2008.
The 2009 Ebitda (gross operating margin) amounted to 16,044 million euro, an increase of 1,726 million euro (+12.1%) stemming from the different consolidation of Endesa and an improvement in operating efficiency.The 2009 Ebit (operating income) amounted to 10,755 million euro, an increase of 12.7% with respect to 9,541 million euro in 2008 and a performance that is essentially in line with that of the gross operating margin.
Group net income for the year amounted to 5,395 million euro, compared to the 5,293 million euro of the previous year, an increase of 1.9%.

Ten years ago, it would have been difficult to imagine the great transformation that has led to today’s Enel. The change regards not only the absolute figures, but also the distribution of business between Italy and abroad. In effect, more than half of the Group’s EBITDA is now generated outside Italy, more than half of its installed capacity is abroad, and more than half of its employees are citizens of foreign countries.
In consequence of the acquisition of Endesa, Enel is now present in 23 countries, with about 81,000 employees and 95.3 GW of installed capacity, including more than 34 GW from renewable energy sources.
About 50% of the Group’s electricity is now produced with zero CO₂ emissions, a characteristic that makes Enel competitive in the markets where it is present and able to fulfill the expectations of both its shareholders and its customers.
Having completed in two years its international growth and transformation, Enel now has the size necessary to be a leader in the European market during the coming years. This is also due to its high level of geographical diversification, which enables it to enrich and share knowledge and experiences in all the countries within the boundary. Even though the growth of some energy markets is slowed down by numerous disparities (asymmetry in the degree of openness of national markets, differences in regulatory systems, protectionism, and lack of coordination among network operators), thanks to its geographical diversification, sharing of best practices, and knowledge management, Enel is able to play a leading role in the global energy market by diversifying regulatory risk and ensuring the profitability of investments and energy security in the markets in which it does business.

Enel is focusing on vertical integration in strategic markets, from fuel exploration – through joint ventures in producer countries such as Russia, Algeria, Egypt, and Indonesia – to the dissemination of innovative technologies for end customers, such as smart meters and the smart grids of the future.
Competitiveness and supply security and flexibility constitute strategic priorities.
To satisfy the requirements of local markets in Spain and Portugal, Enel extracts coal in mines owned by Endesa. Enel also participates in the extraction of gas in Russia and Indonesia. Another very important factor from the point of view of supply security is the availability of a diversified and balanced production mix with a significant contribution from renewable and nuclear energy.
Furthermore, its increased size allows the Company to also capture synergy in the R&D field. Enel strongly promotes technological innovation for smart meters and smart grids, renewable energy, e-mobility, and CO₂ capture and storage (CCS), where, together with Endesa, it is testing the most promising technologies for reducing greenhouse-gas emissions.
Finally, this position – which is also balanced from the geographical point of view – constitutes an important strong point for attracting capital. In spite of the debt accumulated because of its acquisitions, Enel maintains an “A” financial rating by strengthening its capital structure and continually improving its cash flow.

Enel is progressing towards consolidation and integration – one of the main priorities of its international strategy – throughout the world. In addition to Latin America – where the acquisition of Endesa has enabled us to obtain a leading position in production and a greater presence in distribution – in Russia Enel is the leading foreign company in the energy industry and a vertically integrated presence, from the extraction of natural gas to electricity generation and distribution, and is engaged in the development of the internal market, with significant prospects for growth following the gradual opening of the market decided by the Russian government in January 2009.
In Slovakia, Enel is the country’s largest energy company and is continuing its investment for the construction of units 3 and 4 of the Mochovce nuclear power plant. In Eastern Europe, Romania, Bulgaria and the Balkans, Enel is in the generation and distribution business, and is investing large sums in the field of renewable energy, which will continue to be very important in the years to come.
From North America to the Mediterranean area, every day wind, solar, hydro, and geothermal plants produce “green” energy for thousands of families, making the business more sustainable.
As it grows, Enel continues to produce all the value that the market expects, while giving its customers accessible, secure, and sustainable energy.