SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of November, 2006
Commission File Number: 333-132076
GAS NATURAL SDG, S.A.
(Translation of Registrant’s Name into English)
Av. Portal de L’Angel, 20-22
08002 Barcelona, Spain
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F:
Form 20-Fx Form 40-F¨
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes¨ Nox
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes¨ Nox
Indicate by check mark whether by furnishing the information
contained in this Form, the Registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes¨ Nox
If “Yes” is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): N/A
 7 November 2006 Third Quarter 2006 Results (9M 06) * * * * * * * * * |
 1 Disclaimer and Important Legal Information In connection with the offer by Gas Natural SDG, S.A. (Gas Natural) to acquire 100% of the share capital of Endesa, S.A. (Endesa), Gas Natural has filed with the United States Securities and Exchange Commission (SEC) a registration statement on Form F-4 (File No.: 333-132076), which includes a prospectus and related exchange offer materials to register the Gas Natural ordinary shares (including Gas Natural ordinary shares represented by Gas Natural American Depositary Shares (ADSs)) to be issued in exchange for Endesa ordinary shares held by U.S. persons and for Endesa ADSs held by holderswherever located. In addition, Gas Natural has filed a Statement on Schedule TO with the SEC in respect of the exchange offer. INVESTORS AND HOLDERS OF ENDESA SECURITIES ARE URGED TO READ THE REGISTRATION STATEMENT AND THE PROSPECTUS, THE STATEMENT ON SCHEDULE TO, AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS AND SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain free copies of the registration statement, the prospectus and related exchange offer materials and the Statement on Schedule TO, as well as other relevant documents filed with the SEC, at the SEC’s website at www.sec.gov. The prospectus and other transaction-related documents are being mailed to holders of Endesa securities eligible to participate in the U.S. offer and additional copies may be obtained for free from Georgeson Shareholder Communications, Inc., the information agent: 17 State Street, 10th Floor, New York, New York 10004, Toll Free (888) 206-0860, Banks and Brokers (212) 440-9800. This communication is not an offering document and does not constitute an offer to sell or the solicitation of an offer to buy securities or a solicitation of any vote or approval, nor shall there be any sale or exchange of securities in any jurisdiction in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The solicitation of offers to buy Gas Natural ordinary shares (including Gas Natural ordinary shares represented by Gas Natural ADSs) in the United States will only be made pursuant to a prospectus and related offering materials that will be mailed to holders of Endesa ADSs and U.S. holders of Endesa ordinary shares. Investors in ordinary shares of Endesa should not subscribe for any Gas Natural ordinary shares to be issued in the offer to be made by Gas Natural in Spain except on the basis of the final approved and published offer document in Spain that will contain information equivalent to that of a prospectus pursuant to Directive 2003/71/EC and Regulation (EC) No. 809/2004. These materials may contain forward-looking statements based on management’s current expectations or beliefs. These forward-looking statements may relate to, among other things: • management strategies; • synergies and cost savings; • integration of the businesses; • market position; • expected gas and electricity mix and volume increases; • planned asset disposals and capital expenditures; • net debt levels and EBITDA and earnings per share growth; • dividend policy; and • timing and benefits of the offer and the combined company. These forward-looking statements are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forwarding-looking statements, including, but not limited to, changes in regulation, the natural gas and electricity industries and economic conditions; the ability to integrate the businesses; obtaining any applicable governmental approvals and complying with any conditions related thereto; costs relating to the offer and the integration; litigation; and the effects of competition. Forward-looking statements may be identified bywords such as “believes,” “expects,” “anticipates,” “projects,” “intends,” “should,” “seeks,” “estimates,” “future” or similar expressions. These statements reflect our current expectations. In light of the many risks and uncertainties surrounding these industries and the offer, you should understand that we cannot assure you that the forward-looking statements contained in these materials will be realized. You are cautioned not to put undue reliance on any forward-looking information. This communication is not for publication, release or distribution in or into or from Australia, Canada or Japan or any other jurisdiction where it would otherwise be prohibited. |
 2 GAS NATURAL – 9M 06 Results Agenda 1. Highlights - Fulfilling our Strategic Plan 2. Analysis of 9M 06 Results 3. Conclusions |
 Highlights – Fulfilling our Strategic Plan |
 4 Our Strategic Plan outlined a clearly defined strategy, sustained by four basic pillars Strategic Priorities Leadership in LNG and positioning in upstream Leadership in Gas Distribution Developing Electricity Business Flexible and Well Diversified Gas Supply Leadership in Multiproduct Offer in Spain 4,800 MW installed CCGT capacity in Spain 13 million customers 2 contracts per customer Targets |
 5 Flexible and well diversified gas supply Gassi Touil project in progress GAS NATURAL and Repsol YPF sign a framework agreement to develop macro LNG project in Nigeria Incorporation of El Andalus LNG for the construction and operation of the Arzew LNG plant Balance between LNG and natural gas procurement provides greater flexibility and diversification Flexibility Natural gas: in volume LNG: destination (FOB/CIF) Transport Gas procurement Upstream GAS NATURAL has strengthened its leading position in LNG while continuing to invest in the upstream business Key competitive advantage Fleet optimisation thanks to the creation of Midstream JV with Repsol YPF (Stream) 11 tankers (1,110,000m³)¹ + 1 in 2007 (138,000m³) + 1 new tanker in 2009 (138,000m³) Overall utilisation of 97% in 9M 06 Tender launched by Stream for the construction of up to 11 tankers starting in 2009 Note: 1 8 Gas Natural tankers (702,000 m³), 3 Repsol YPF tankers (408,000m³) |
 6 Becoming a key player in electricity generation in Spain Electricity production (GWh) Doubling production in Spain, thanks to new capacity addition and competitive, secured gas supply c. 9% market share in ordinary regime production in Spain, in line with 10% objective by 2008 set in 2004–2008 Strategic Plan Developing our electricity business 2.1 x 6,712 14,294 9M 05 9M 06 Evolution of installed capacity (MW) 30-Sep-06 2005 2004 2003 3,169 1,902 874 815 74 800 302 1,600 369 2,800 CCGT Wind+Cogeneration 2006 results confirm success of CCGT strategy 15 800 |
 7 Solid growth and profitability from core distribution business in the regulated market 4,389 4,164 4,714 4,435 246 5,033 4,690 275 5,343 4,880 307 30-Sep-03 30-Sep-04 30-Sep-05 30-Sep-06 Spain LatAm Italy 612 724 822 918 9M 03 9M 04 9M 05 9M 06 Leadership in gas distribution Gas customer connections (000s) EBITDA (€ million) 1 CAGR: +15% 8,553 9,395 9,998 10,530 +659 ² Notes: 1 2004, 2005 and 2006 figures under IFRS 2 Average annual customer connections additions Continues to yield solid growth |
 8 30-Sep-05 30-Sep-06 30-Sep-05 30-Sep-06 Maintenance contracts (000s) Residential electricity customers (000s) 1,425 475 383 Multiproduct switched into profitability-driven strategy Optimising the electricity supply business due to market price being higher than the tariff Adapting electricity customer portfolio to market conditions whilst maintaining leadership in multiproduct 1,539 Solid volume of maintenance contracts and leadership in liberalised retail market (1.46 contracts/customer as of 30 September 2006) +114 |
 9 Performing in a difficult market GAS NATURAL is achieving its targets in an environment of high volatility Henry Hub volatility Strong performance in volatile markets underscores GAS NATURAL´S solid business fundamentals 0 1 2 3 4 5 6 7 8 9 10 25/07/06 08/08/06 22/08/06 05/09/06 19/09/06 03/10/06 17/10/06 Pool volatility 0 1 2 3 4 5 6 7 8 9 10 25/07/06 08/08/06 22/08/06 05/09/06 19/09/06 03/10/06 17/10/06 Source: Bloomberg Source: OMEL (Average daily price) |
 10 Delivering on the Strategic Plan GAS NATURAL is on-track to deliver the targets announced EBITDA (€m) Net Income (€m) 2006: In line with our growth objectives 1,202 1,335 1,519 1,416 2003 2004 2005 9M 06 568 642 749 647 2003 2004 2005 9M 06 Target 2008: ~ €2,500m Target 2004-2008: > 10% CAGR |
 11 Our unique position in gas procurement remains a key competitive advantage We have successfully become one of the key players in electricity generation in Spain Our regulated distribution business continues to yield solid growth We have continued to optimize our portfolio of gas and electricity supply We continue to meet our targets in 2006 Operational and financial performance in line with the targets set in our Strategic Plan 2004-08 +26% increase in EBITDA and +22% increase in Net Income in 9M 06 |
 Analysis of 9M 06 Results |
 13 Highlights of the period Net profit for 9M 06 of €646.9 million, +22% vs 9M 05 EBITDA growth of 26% in 9M 06, in line with trend observed in 1H06, boosted by electricity and gas supply Significant EBITDA growth in LatAm to €279.7 million (+27%), especially in Brazil and Argentina Cash flow growth supports investment plan and shareholder remuneration GAS NATURAL has adapted its organisation to the current business environment, to better participate in a fully liberalized gas market by 2008 |
 14 26% EBITDA growth, boosted by electricity and gas supply (€ million) 9M 05 Distribution Spain LatAm Italy Electricity Spain Puerto Rico Gas Supply Up + Midstream Wholesale & Retail Other Total EBITDA 9M 06 918.3 615.6 279.7 23.0 251.1 203.8 47.3 231.9 138.9 93.0 14.3 1,415.6 EBITDA breakdown % €m Change 96.6 32.3 59.8 4.5 129.8 127.0 2.8 68.8 13.9 54.9 (0.4) 294.8 11.8 5.5 27.2 24.3 107.0 165.4 6.3 42.2 11.1 144.1 (2.7) 26.3 821.7 583.3 219.9 18.5 121.3 76.8 44.5 163.1 125.0 38.1 14.7 1,120.8 By activity |
 15 393 508 334 426 394 481 398 1Q 2Q 3Q 4Q 2005 2006 EBITDA growth visibility Solid EBITDA growth, over 20% quarter-on-quarter Sustained growth on a quarterly basis +30% +28% +22% (€ million) Negative factors affecting 4Q 05 not expected to be recurrent in 4Q 06 |
 16 By Activity Investments in Mexico reduced due to a slowdown in the activity. Investments in 1,200 MW Cartagena CCGT included in 2005 (€ million) 9M 06 9M 05 Distribution Spain LatAm Italy Electricity Spain Puerto Rico Gas Supply Up + Midstream Wholesale & Retail Other Total 388.8 223.4 119.2 46.2 355.1 351.6 3.5 16.4 8.4 8.0 37.7 798.0 74% of investments in Euro Investment breakdown Gas Supply 10% Other 355.1 234.5 80.8 39.8 253.2 246.3 6.9 69.8 62.3 7.5 36.5 714.6 5% Distribution 50% Electricity 35% Investments (tangible and intangible) |
 17 3,677 1,627 1,869 2,650 3,615 3,222 2001 2002 2003 2004 2005 30-Sep-06 Leverage 49.0% 28.0% 29.3% 35.6% 38.5% 34.9% 30/09/06 30/09/05 Leverage² 34.9% 37.8% EBITDA/Net Interest 7.0x 6.8x Net Debt/EBITDA 1.8x 2.2x Financial ratios Net Debt and Leverage Notes: 1 2004, 2005 and 2006 figures under IFRS 2 Defined as Net Debt / (Net Debt + Total Equity) 3 Does not include any financing in relation to the offer for Endesa 4 Total gross debt €3,455 m Solid capital structure 1 215 590 474 573 654 949 2006 2007 2008 2009 2010 Post 2010 Debt 4 maturity (as of 30/09) |
 18 Distribution in Spain 5.3 million gas customer connections in Spain as of 30 September 2006 (+6%) Lower tariff sales compensated by customers switching to liberalised market Provision booked for estimated adjustment of 2006 remuneration, compensated by higher efficiency 9M 06 results analysis by activity Stable EBITDA growth (+6%) in 9M 06 and consistent with estimated increase in regulated activity Operating figures EBITDA (€ million) +6.2% 5,033 5,343 Connections (thousands) 186,046 193,467 36,834 149,212 31,505 161,962 9M 05 9M 06 Tariff Sales (GWh) TPA Sales (GWh) +4.0% +8.5% (14.5%) 583.3 615.6 9M 05 9M 06 +5.5% |
 19 Slowdown in operating activity in Mexico 27% tariff increase in Argentina pending implementation In local currency, EBITDA grows by 21% 9M 06 results analysis by activity Distribution in LatAm Mexico €56.2 million (+9%) 9M 06 EBITDA contribution and growth by country (Total €279.7 million) Argentina €34.4 million (+39%) Colombia €72.4 million (+16%) Brazil €116.7 million (+44%) 4,690 4,880 9M 05 9M 06 Connections (thousands) Operating figures Gas activity sales (GWh) +4.0% +3.8% 121,972 126,611 Growth favoured by regulation and higher activity in each region |
 20 18.5 23.0 9M 05 9M 06 9M 06 results analysis by activity EBITDA (€ million) 275 307 9M 05 9M 06 Connections (thousands) Operating figures Gas activity sales (GWh) (7.0%) 1,927 1,792 Distribution in Italy +11.6% +24.3% 307,000 connections (+12%) as of 30 September 2006 Lower overall sales due to milder winter compared with 2005 Double digit organic growth, as expected, after applying our know-how on distribution |
 21 9M 06 results analysis by activity Electricity production (GWh) Electricity Installed capacity in Spain of 3,169 MW (+67%), in line with 2004–2008 Strategic Plan Continued progress in commercial portfolio optimisation Very significant EBITDA growth of €129.8 million (+107%), doubling its contribution to total EBITDA Electricity EBITDA (€ million) Spain Puerto Rico 9M 05 9M 06 • • 76.8 • 44.5 • 203.8 • 47.3 251.1 121.3 +107.0% +165.4% +6.3% 15,523 9M 05 9M 06 6,279 13,707 475 112 1,229 331 102 1,139 7,851 Wind Cogeneration CCGT (Puerto Rico) CCGT (Spain) +97.7% +118.3% |
 22 CCGTs to represent c. 43% of peninsular ordinary regime installed capacity by 2011² 9M 06 results analysis by activity Maintaining high efficiency in CCGT production 9M 06 CCGT electricity production 1 9M 06 average CCGT operating hours 1 4,907 4,639 3,705 2,917 2,841 Source: REE, Ministry of Industry Notes: 1 Attributable production in the peninsular system 2 As per the Review of the Plan for Electricity and Gas Sectors for 2002-2011 GAS NATURAL 28% Competitor 1 24% Competitor 2 16% Competitor 3 12% Competitor 4 5% Other 15% Leading and most efficient producer of CCGT electricity in Spain, supported by competitive gas supply |
 23 125.0 138.9 9M 05 9M 06 9M 06 results analysis by activity Up + Midstream EBITDA (€ million) Greater fleet utilisation in the period (97% in 9M 06 vs. 76% in 9M 05) Greater contribution from EMPL Gassi Touil in development phase: Exploration costs prior to drilling booked as expenses Development costs capitalised during life of project Regasification plants in Italy in permitting phase +11.1% Solid EBITDA benefits from higher fleet efficiency |
 24 38.1 93.0 9M 05 9M 06 9M 06 results analysis by activity EBITDA (€ million) Continued optimisation of gas wholesale and retail industrial portfolio Competitive gas supply Continuing renegotiation of contracts with industrial customers: Formulas that allow inclusion of real gas procurement cost Pricing structure more suited to clients’ needs +144.1% Wholesale market conditions becoming normalized Wholesale & Retail |
 Conclusions |
 26 Conclusions Growth of 26% in EBITDA and 22% in Net Income based on real cash generation, confirming outlook announced for 2006 Performance to date confirms solidity of GAS NATURAL’s business model Integrated projects under development Significant optimisation of fleet utilisation during the period Significant increase in electricity production in Spain (+113%) resulting from new capacity additions and competitive gas supply Results achieved confirm successful entry strategy in the electricity sector Solid growth and profitability from core distribution business, reaching 10.5 million gas customer connections in 9M 06 1 Electricity Distribution Up + Midstream Wholesale Continued optimisation of gas and electricity customer portfolios resulting in greater contribution to profitability Note: 1 Includes Spain, Latam and Italy connections |
 INVESTOR RELATIONS DEPARTMENT telf. 34 934 025 891 fax 34 934 025 896 e-mail: relinversor@gasnatural.com website: www.gasnatural.com Thank you * * * * * * * * * * * * * * ********************************************** ***************** |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GAS NATURAL SDG, S.A. | ||||||||||
Date: November 7, 2006 | By: | /s/ Carlos J. Álvarez Fernández | ||||||||
Name: | Carlos J. Álvarez Fernández | |||||||||
Title: | Chief Financial Officer | |||||||||