Letter from the President

Dear Shareholder,

I am pleased to present the ENDESA Activity Report. As with every year, this letter is an opportunity for me to address all ENDESA’s stakeholders, particularly its shareholders, whose support is extremely important to our company’s success.

One feature that very powerfully sums up our activities during recent years is a firm commitment to fulfilling our promises. Consistently and sustainably, each financial period, ENDESA has been able to announce that it has outperformed the objectives presented to the markets and contained in its Strategic Plans.

In 2018, this was no exception. Therefore, when presenting the Activity Report for the financial period, I am pleased to say that we have given continuity to this long trajectory that has made us a company widely recognised for its reliability, strength and accountability.

The figures that support the fulfilment of our commitments are clear and categorical: 1,417 million euros of net profit, 3,627 million euros of gross operating profit (EBITDA) and, above all, 1,470 million euros allocated to gross investments, confirming that ENDESA has invested in Spain more than any other electricity company in the last ten years.

The strength of these figures, firmly based on effective management, and the development of our businesses allow us to announce to our 200,000 shareholders that we are able to propose to the ENDESA General Meeting the payment of a gross dividend of 1,427 euros per share from net profit for 2018.

This amount represents an increase of 3% with respect to the dividend that was paid from the results of 2017 and 7% higher than the minimum dividend with which we had committed to satisfy our shareholders when we presented our new Strategic Plan 2019-2021 in November 2018.

I truly believe that these and other figures broken down in detail and transparently on the following pages, cannot be fully understood if they are not considered in the context of the attitude and commitment shown by the more than 9,000 people who work at ENDESA every day and the tens of thousands who do so through our partner companies. Without the attitude and commitment demonstrated over time, the company would be unable to continuously achieve the objectives it announces to its shareholders and other stakeholders.

ENDESA has an unbroken track record of faultless reliability in very adverse situations. To achieve this, constant, coherent work based on past achievements, and above all, a clear long-term vision, has been necessary.

There's no question that ENDESA has shown that it has such a vision. In fact, I think that the most important thing shown by these figures is not only the ability to properly manage the present, but that this must be done considering the future at all times.

Our company’s solid trajectory in the last ten years has allowed us to consider the new challenges facing our sector at all times and to prepare well in advance to overcome them. Today we can say, with absolute serenity, that this firm foundation has put ENDESA in an excellent position to address the most formidable challenges that our country has faced in the energy field: the orderly transition towards a model which is sustainable, just and emission free, which is able to ensure an exciting future for new generations.

ENDESA is well positioned in all its strategic areas. It has decided to focus most of its investment effort on the development of renewable energies and smart grids that enable the necessary integration of these facilities into the electricity system. It is the electric company with the greatest commitment to driving sustainable mobility, as evidenced by its extraordinary plan for electric charging infrastructures. It is making a great effort in the field of digitalisation in terms of asset management, processes and the training of its people. It has unreservedly assumed the principle that these days, customers are the main value of the company and, therefore, must be at the centre of our strategy and see their expectations and needs covered by new products and service. It must, in short, be very aware that the objectives of the energy transition cannot be achieved without the increasing electrification of the demand for energy, especially in terms of its consumption in cities.

All this is possible not only thanks to ENDESA's excellent business management in recent years, but also because it has been done with a long-term view that aims to ensure the company’s sustainability in the midst of our fast moving and uncertain times.

ENDESA has been able to perfectly plot its course for years and has the talent, dedication and commitment of more than 9,000 employees who are always willing to give their best. That’s why it is such a pleasure to be able to share this Activity Report with the shareholders who support ENDESA.

Borja Prado Eulate

Chairman of ENDESA