REG-International Endesa 3rd Quarter Results
04/11/2020 17:35
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3rd Quarter Results
ENDESA, S.A. and Subsidiaries
Consolidated Management Report for the period January-September 2020
(Translation from the original issued in Spanish. In the event of discrepancy,
the Spanish-language version prevails)
Madrid, 4 November 2020
(Translation from the original issued in Spanish. In the event of discrepancy,
the Spanish-language version prevails)
ENDESA, S.A. AND SUBSIDIARIES
CONSOLIDATED MANAGEMENT REPORT FOR THE PERIOD JANUARY-SEPTEMBER 2020
Contents.
1. Business Trends and Results in the period January-September
2020...........................3
1.1. Consolidated
results..........................................................3
1.2. Changes in Accounting
Principles.................................................4
1.3. Analysis of
results............................................................4
1.4. Results by
Segment..........................................................16
2. Other
information................................................................19
2.1. Scope of
Consolidation........................................................19
2.2.
Dividends.................................................................20
3. Regulatory
Framework............................................................20
4. Liquidity and Capital
resources......................................................28
4.1. Financial
management.........................................................28
4.2. Cash
flows................................................................31
4.3.
Investments.................................................................34
5. COVID-19 Health
Crisis............................................................35
APPENDIX I - Statistical
Appendix.....................................................38
APPENDIX II - Alternative Performance Measures
(APMs)....................................45
(Translation from the original issued in Spanish. In the event of discrepancy,
the Spanish-language version prevails)
ENDESA, S.A. AND SUBSIDIARIES
CONSOLIDATED MANAGEMENT REPORT
FOR THE PERIOD JANUARY-SEPTEMBER 2020
1. Business Trends and Results in the period January-September 2020.
1.1. Consolidated results.
ENDESA reported net ordinary income of Euros 1,700 million (+38.4%) for the
period January-September 2020.
ENDESA reported net ordinary income of Euros 1,700 million in the period
January-September 2020, representing an increase of 38.4% on the same period
of the previous year.
Net income attributable to the Parent Company amounted to Euros 1,511 million
in the period January-September 2020, as against the Euros 176 million
obtained in the same period of the previous year. To analyse the evolution,
the following effects must be taken into account:
* On 27 September 2019 the Board of Directors of ENDESA, S.A. resolved to
promote the discontinuation of the mainland coal-fired thermal power plants,
in accordance with the established legal procedures, and this decision
entailed bringing forward the planned closing date of these facilities, as
well as the recognition of a value impairment amounting to Euros 1,052
million, equal to their total carrying amount at 30 September 2019. In this
context, the reorganisation of the activities deriving from the Company's
Decarbonisation Plan has been carried out since then through a process
negotiated and agreed with the trade union representation, which, by means of
training measures, has allowed the internal relocation of some of the
personnel affected by the energy transition process. Within the framework of
these negotiations, on 31 July 2020 ENDESA and the trade union representation
signed a commitment that will allow the voluntary departure of a maximum of
577 employees affected by the change in the energy model, leading to the
recognition of a provision in the Consolidated Income Statement for the period
January-September 2020 in an amount of Euros 160 million.
* The “5(th) ENDESA Framework Collective Agreement”, effective from 23
January 2020, establishes a change in certain social benefits, basically that
corresponding to the employee's electric tariff including also the personnel
in non-active situation. As a result of the valuations of the previous
actuarial liability and of the new actuarial liability at the effective date
of the “5(th )ENDESA Framework Collective Agreement”, a positive impact of
Euros 386 million was recognised in the Consolidated Income Statement for the
period January- September 2020.
* Within the framework of the “Agreement on Voluntary Measures for the
Suspension or Termination of Employment Contracts” and the communication
made by ENDESA to the trade union representation on 23 January 2020 regarding
its decision not to exercise the power to terminate individual agreements on
suspension of the employment relationship for certain individual contracts
signed with employees, the Company recognised a provision in the amount of
Euros 119 million in the Consolidated Income Statement for the period
January-September 2020.
Additionally, in the current context of the COVID-19 health crisis and as part
of ENDESA's commitment to society, the company has designed a Public
Responsibility Plan for direct aid to purchase materials, special supply
conditions and donations to alleviate the main health and social needs caused
by the health crisis, as well as programs to support the relaunch of the
economy in the most negatively affected sectors. During the period
January-September 2020 the Company has recorded a cost for this concept
amounting to Euros 15 million in the Consolidated Income Statement.
The breakdown of net income and net ordinary income for the period
January-September 2020 among ENDESA's Businesses and their variation relative
to the same period of the previous year is presented hereunder (see Section
1.4. Results by Segment in this Consolidated Management Report):
Millions of euros
Net Income ((1)) Net Ordinary Income( (2))
January-September January-September % Var. % Contribution to Total January-September January-September % Var. % Contribution to Total
2020
2019
2020
2019
Generation and Supply 673 (565) (219.1) 44.5 842 487 72.9 49.5
Distribution 888 784 13.3 58.8 888 784 13.3 52.2
Structure and Others ((3)) (50) (43) 16.3 (3.3) (30) (43) (30.2) (1.7)
TOTAL 1,511 176 758.5 100.0 1,700 1,228 38.4 100.0
1. Net Income = Net Income of the Parent Company.
2. Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
3. Structure, Services and Adjustments.
1.2. Changes in Accounting Principles.
The accounting policies used to prepare this Consolidated Management Report
are the same as those applied in the consolidated financial statements for the
year ended 31 December 2019, except for the following amendments adopted by
the European Union applicable to financial years starting on 1 January 2020 or
later:
Standards, Amendments and Interpretations Mandatory Application:
Financial Years Starting on or after
Improvements to the references in the conceptual framework of International 1 January 2020
Financial Reporting Standards.
Amendments to IAS 1 “Presentation of Financial Statements” and IAS 8 1 January 2020
“Accounting Policies, Changes in Accounting Estimates and Errors”.
Amendments to IFRS 3 “Business Combinations”. 1 January 2020
Reform of the Reference Interest Tariff - Amendments to IFRS 9 “Financial 1 January 2020
Instruments”, IAS 39 “Financial Instruments: Recognition and Valuation”
and IFRS 7 “Financial Instruments: Disclosures.”
Amendment to IFRS 16 “Leases” - Covid-19-Related Rent Concessions. 1 June 2020
The application of these amendments had no significant impact on the
Consolidated Financial Statements for the period January-September 2020.
1.3. Analysis of results.
The table below presents the details of the most significant figures in
ENDESA's Consolidated Income Statement for the period January-September 2020
and changes in them compared with the same period of the previous year:
Millions of euros
Most Significant Figures
January-September January-September % Var.
2020 ((1))
2019 ((1))
Income 12,959 14,805 (12.5)
Procurements and Services (8,562) (10,415) (17.8)
Contribution Margin ((2)) 4,397 4,390 0.2
Self-constructed Assets 161 165 (2.4)
Personnel Expenses (516) (759) (32.0)
Other Fixed Operating Expenses (906) (898) 0.9
Gross Operating Profit (EBITDA) ((3)) 3,136 2,898 8.2
Depreciation, Amortisation and Impairment Losses (1,104) (2,563) (56.9)
Operating Profit (EBIT)( (4)) 2,032 335 506.6
Net Financial Income/(Expense) ((5)) (82) (139) (41.0)
Income before Tax 1,988 198 904.0
Net Income ((6)) 1,511 176 758.5
Net Ordinary Income ((7)) 1,700 1,228 38.4
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
2. Contribution margin = Income - Procurements and Services.
3. EBITDA = Income - Procurements and Services + Self-constructed Assets -
Personnel expenses - Other fixed operating expenses.
4. EBIT = EBITDA - Depreciation and Amortisation and Impairment Losses.
5. Net Financial Income/(Expense) = Financial Income - Financial Expense + Net
Exchange Differences.
6. Net Income = Net Income of the Parent Company.
7. Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
EBITDA amounted to Euros 3,136 million (+8.2%) in the first nine months of
2020.
Leaving aside the charges recognised under Personnel Expenses in the
Consolidated Income Statement for the period January-September 2020 relating
to the Company's Decarbonisation Plan and the “5(th) ENDESA Framework
Collective Agreement” for a total amount of Euros 143 million, positive,
EBITDA would have increased by 3.3% compared with the same period of the
previous year (see Section 1.3.2. Operating Expenses in this Consolidated
Management Report).
EBIT for the period January-September 2020 was Euros 2,032 million,
representing an increase of Euros 1,697 million or 506.6% compared with the
same period of the previous year.
Without taking into account the impacts described for EBITDA or the impairment
of the mainland coal-fired thermal power plants recognised in the period
January-September 2019 in an amount of Euros 1,356 million, EBIT for the
period January-September 2020 would have increased by 11.7% compared with the
same period of the previous year (see Section 1.3.2. Operating Expenses in
this Consolidated Management Report).
1.3.1. Income.
Income in the period January-September 2020 totalled Euros 12,959 million,
Euros 1,846 million (-12.5%) less than income posted in the same period of the
previous year.
The table below presents the details of income in the period January-September
2020 and its variation compared with the same period of the previous year:
Millions of euros
Income
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Sales 12,314 14,285 (1,971) (13.8)
Other Operating Income 645 520 125 24.0
TOTAL 12,959 14,805 (1,846) (12.5)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
Market situation.
The emergence of COVID-19 has caused a sharp decline in the demand for
electricity (see Section 5. COVID-19 Health Crisis in this Consolidated
Management Report). In the period January-September 2020, trends in
electricity demand were as follows:
* Total mainland electricity demand fell by 6.1% year-on-year (-6.4% adjusted
for working days and temperature).
* Cumulative electricity demand in Non-Mainland Territories (“TNP” for its
acronym in Spanish) ended the period January-September 2020 with a reduction
of 21.3% in the Balearic Islands and 10.1% in the Canary Islands compared with
the same period of the previous year (-20.4% and -10.2% respectively, adjusted
for working days and temperature).
The period January-September 2020 has been characterised by lower prices, with
the arithmetic average price in the wholesale electricity market standing at
€31.9/MWh (-36.1%), mainly as a consequence of the decrease in demand and
movements in commodity prices.
The contribution of energy from renewable sources to total mainland production
in the period January-September 2020 was 57.7% (50.4% in the period
January-September 2019).
In this context:
* ENDESA's electricity production for the period January-September 2020 was
42,150 GWh, 9.5% less than in the same period of the previous year, as per the
following details:
GWh
Electricity Generation ((1)) January-September January-September % Var.
2020
2019
Mainland 34,560 37,635 (8.2)
Renewables 9,943 6,857 45.0
Hydroelectric 6,042 3,981 51.8
Wind( (2)) 3,481 2,832 22.9
Photovoltaic 420 43 876.7
Biomass - 1 (100.0)
Nuclear 19,523 20,245 (3.6)
Coal 975 4,814 (79.7)
Combined Cycle (CCGT)( (3)) 4,119 5,719 (28.0)
Non-Mainland Territories (“TNP”) 7,590 8,953 (15.2)
Coal 55 1,539 (96.4)
Fuel-gas 3,184 3,031 5.0
Combined Cycle (CCGT)( (3)) 4,351 4,383 (0.7)
TOTAL 42,150 46,588 (9.5)
1. In power plant busbars.
2. In the period January-September 2020 it includes 92 GWh corresponding to
Non-Mainland Territories (“TNP”) (94 GWh in the period January-September
2019).
3. Corresponding to natural gas.
* Non-emitting, renewable and nuclear technologies represented 69.9% of
ENDESA’s generation mix in the period January-September 2020 (58.2% in the
period January-September 2019), compared with 80.8% for the rest of the sector
(74.0% in the period January-September 2019).
At 30 September 2020, ENDESA held the following electricity market shares:
* 18.2% in mainland electricity generation, including renewables.
* 43.3% in electricity distribution.
* 33.0% in electricity supply.
In the period January-September 2020, conventional gas demand was down by 7.1%
compared with the same period of the previous year, and at 30 September 2020
ENDESA had a market share of 15.6% in gas sales to customers in the
deregulated market.
Sales.
The table below presents the breakdown of ENDESA’s sales revenues in the
period January-September 2020 and its variation compared with the same period
of the previous year:
Millions of euros
Sales
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Electricity sales 8,879 10,404 (1,525) (14.7)
Deregulated market sales 6,175 7,028 (853) (12.1)
Deregulated market sales - Spain 5,399 6,254 (855) (13.7)
Deregulated market sales - other than Spain 776 774 2 0.3
Sales at regulated prices 1,368 1,567 (199) (12.7)
Wholesale market sales 410 698 (288) (41.3)
Compensation for Non-Mainland Territories (“TNP”) 811 1,020 (209) (20.5)
Remuneration for Renewable Energy Investment 100 77 23 29.9
Other electricity sales 15 14 1 7.1
Gas sales 1,393 1,714 (321) (18.7)
Deregulated market sales 1,351 1,658 (307) (18.5)
Sales at regulated prices 42 56 (14) (25.0)
Regulated income from electricity distribution 1,584 1,653 (69) (4.2)
Other sales and services rendered 458 514 (56) (10.9)
TOTAL 12,314 14,285 (1,971) (13.8)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
Electricity sales to customers in the deregulated market.
At 30 September 2020, ENDESA had 5,735,601 electricity customers in the
deregulated market, down by -1.6% from the number of customers at 31 December
2019, as per the following breakdown:
* 4,494,435 (-2.7%) in the Spanish mainland market.
* 843,954 (-1.7%) in the Non-Mainland Territories (“TNP”) market.
* 397,212 (+13.4%) in deregulated markets outside Spain.
ENDESA sold a net total of 52,062 GWh to these customers in the period
January-September 2020, a 11.0% decrease on the same period in 2019, as per
the following breakdown:
* 44,974 GWh (-11.7%) in the Spanish deregulated market.
* 7,088 GWh (-6.1%) in deregulated markets outside Spain.
In economic terms, sales on the deregulated market in the period
January-September 2020 totalled Euros 6,175 million (-12.1%), with the
following breakdown:
* Sales in the Spanish deregulated market totalled Euros 5,399 million, Euros
855 million or -13.7% down on the figure for the same period of the previous
year, due basically to the decline in the number of physical units sold.
* Income from sales to customers in deregulated markets outside of Spain
amounted to Euros 776 million (+0.3%), similar to the same period last year,
due mainly to movements in the unit price.
Sales of electricity at regulated prices.
In the period January-September 2020 ENDESA sold 8,523 GWh to customers to
whom the regulated price is applied, through its Supplier of Reference
company, in line with sales in the period January-September 2019.
These sales entailed revenues of Euros 1,368 million, which was 12.7% lower
than the figure for the first nine months of 2019, mainly as a result of the
decline in the price.
Gas sales.
At 30 September 2020, ENDESA had 1,668,338 gas customers, 1.2% more than at 31
December 2019, as per the following breakdown:
* 232,453 (+0.9%) in the regulated market.
* 1,435,885 (+1.2%) in the deregulated market.
In the period January-September 2020 ENDESA sold 48,762 GWh to customers in
the natural gas market, which represents a decrease of 12.2% compared with the
period January-September 2019.
Revenue from gas sales totalled Euros 1.393 million in the period
January-September 2020, down by Euros 321 million or -18.7% on the same period
of 2019, as per the following details:
* Gas sales in the deregulated market totalled Euros 1,351 million, Euros 307
million or -18.5% less than in the first nine months of 2019, due mainly to
the decrease in the number of physical units sold and the lower selling price
in the “Business to Business” (B2B) segment.
* Revenue from gas sales to customers at regulated prices amounted to Euros 42
million, Euros 14 million or -25.0% less than in the same period of 2019, due
basically to the decline in the price and the number of physical units sold.
Compensation for generation in Non-Mainland Territories (“TNP”).
In the period January-September 2020, compensation for the extra costs of
generation in Non-Mainland Territories (“TNP”), determined in accordance
with the new remuneration parameters that have come into force for the
2020-2025 regulatory period, amounted to Euros 811 million, representing a
decrease of Euros 209 million or -20.5% compared with the same period of the
previous year, basically as a consequence of lower production, due in turn to
the decrease in demand, and the evolution of commodity prices.
Electricity distribution.
ENDESA distributed 79,211 GWh in the Spanish market in the period
January-September 2020, a year-on-year decrease of 6.1%.
Regulated revenue from the distribution activity during the period
January-September 2020 amounted to Euros 1,584 million, which represents a
reduction of Euros 69 million or -4.2% compared with the same period of the
previous year, mainly due to the lower volume of electricity distributed and
to the application of the new remuneration parameters that have come into
force for the regulatory period 2020-2025.
Other Operating Income.
The table below shows the details of other operating income in the period
January-September 2020 and its variation compared with the same period of the
previous year:
Millions of euros
Other Operating Income
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Change in energy stocks derivatives 371 273 98 35.9
Grants released to income ((2)) 15 15 - -
Allocation to Profit and Loss of Liabilities under Contracts with Customers 121 117 4 3.4
Provision of Services in Facilities 2 1 1 100.0
Trading rights 30 43 (13) (30.2)
Third Party Indemnities 14 9 5 55.6
Others 92 62 30 48.4
TOTAL 645 520 125 24.0
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
2. For the period January-September 2020 this includes Euros 4 million relating
to capital grants and Euros 11 million of operating grants (Euros 1 million
and Euros 14 million respectively in the period January-September 2019).
In the period January-September 2020, other operating income amounted to Euros
645 million, representing an increase of Euros 125 million or 24.0% compared
with the amount posted in the same period of 2019, basically as a result of
the Euros 98 million increase (+35.9%) in income from the valuation and
settlement of energy derivatives, due mainly to the evolution of the valuation
and settlement of gas derivatives, which should be seen in conjunction with
the Euros 123 million (-41.0%) decrease in expenses for this same item,
recognised under Other Variable Procurements and Services in the Consolidated
Income Statement (see Section 1.3.2. Operating Expenses in this Consolidated
Management Report).
The derivatives and hedging transactions entered into by ENDESA basically
concern transactions arranged to hedge foreign currency rates or the price
risk on commodities such as electricity, fuel and CO(2) emission rights, and
their purpose is to eliminate or significantly reduce these risks in the
underlying hedged transactions. In the current context, ENDESA has checked to
make sure that they continue to meet the criteria established by the
regulations for applying hedge accounting.
1.3.2. Operating costs.
Operating expenses totalled Euros 10,927 million in the period
January-September 2020, 24.5% less than in the same period of the previous
year.
The table below shows the details of operating costs in the period
January-September 2020 and their variation compared with the same period the
previous year:
Millions of euros
Operating costs
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Procurements and Services 8,562 10,415 (1,853) (17.8)
Energy purchases 2,681 3,576 (895) (25.0)
Fuel consumption 853 1,364 (511) (37.5)
Transmission expenses 3,736 3,989 (253) (6.3)
Other Variable Procurements and Services 1,292 1,486 (194) (13.1)
Self-constructed Assets (161) (165) 4 (2.4)
Personnel Expenses 516 759 (243) (32.0)
Other Fixed Operating Expenses 906 898 8 0.9
Depreciation, Amortisation and Impairment Losses 1,104 2,563 (1,459) (56.9)
TOTAL 10,927 14,470 (3,543) (24.5)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
Procurements and services (variable costs).
Procurements and services (variable costs) totalled Euros 8,562 million in the
period January-September 2020, 17.8% less than in the same period of the
previous year.
Variations in these costs in the period January-September 2020 were as
follows:
* Energy purchases decreased by Euros 895 million (-25.0%) to Euros 2,681
million, basically as a result of the decrease in the number of physical units
and in the arithmetic average price in the wholesale electricity market, which
was €31.9/MWh (-36.1%).
This heading includes an amount of Euros 19 million (Eros 14 million net of
tax effect) corresponding to the impairment of the inventories of the mainland
coal-fired plants (Euros 21 million and Euros 16 million respectively in the
period January-September 2019) (see Section 1.3.7. Net Income in this
Consolidated Management Report).
* Fuel consumption amounted to Euros 853 million, with a decrease of Euros 511
million (-37.5%) due to lower thermal production in the period (-34.9%).
* Other Variable Procurements and Services in the Consolidated Income Statement
totalled Euros 1,292 million, down by Euros 194 million (-13.1%) on the period
January-September 2019, details being as follows:
Millions of euros
Other Variable Procurements and Services
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Change in energy stocks derivatives 177 300 (123) (41.0)
CO(2) emission rights 168 283 (115) (40.6)
Tax on Electricity Production 166 153 13 8.5
Radioactive Waste Treatment 160 140 20 14.3
Works licences/Street lighting 127 149 (22) (14.8)
Nuclear Taxes and Fees 94 65 29 44.6
“Social Bonus” discount 37 34 3 8.8
Catalan Environmental Tax 29 - 29 N/A
Water Tax 23 25 (2) (8.0)
Others 311 337 (26) (7.7)
TOTAL 1,292 1,486 (194) (13.1)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
This amount includes:
* The reduction of Euros 123 million (-41.0%) relative to the amount recognised
in the same period of the previous year in expense relating to the valuation
and settlement of energy derivatives, mainly due to the evolution of the
valuation and settlement of gas derivatives, which should be seen in
conjunction with the Euros 98 million (+35.9%) increase in income for this
same item, recognised under “Other Operating Income” in the Consolidated
Income Statement (see Section 1.3.1. Income in this Consolidated Management
Report).
* The decrease of Euros 115 million (-40.6%) in CO(2) emission rights due to the
lower thermal production in the period (-34.9%).
* The expenditure of Euros 29 million in the period January-September 2020
relating to the tax on facilities that affect the environment in the
Autonomous Region of Catalonia as a result of the publication of Law 5/2020 of
29 April of the “Generalitat” (regional government) of Catalonia (see
Section 3. Regulatory Framework in this Consolidated Management Report) and
the reversal of the Euros 27 million of Catalan nuclear tax recognised in the
period January-September 2019 as a result of its being declared
unconstitutional by the Constitutional Court in its ruling of 12 April 2019.
Fixed operating costs.
The table below shows the details of fixed operating costs in the period
January-September 2020 and their variation compared with the same period of
the previous year:
Millions of euros
Fixed Operating Costs
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Self-constructed Assets (161) (165) 4 (2.4)
Personnel Expenses 516 759 (243) (32.0)
Other Fixed Operating Expenses 906 898 8 0.9
TOTAL 1,261 1,492 (231) (15.5)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
Fixed operating costs amounted to Euros 1,261 million in the first nine months
of 2020, a year-on-year decrease of Euros 231 million (-15.5%). To analyse the
changes during the period January-September 2020, the following effects must
be taken into account:
* Decarbonisation Plan:
* On 27 September 2019 the Board of Directors of ENDESA, S.A. resolved to
promote the discontinuation of the mainland coal-fired thermal power plants,
in accordance with the established legal procedures and in the period
January-September 2019 an adjustment to the value of other materials relating
to these facilities was recognised in an amount of Euros 21 million (Euros 16
million, net of the tax effect) (see Sections 1.3.6 Income Tax and 1.3.7. Net
Income in this Consolidated Management Report).
* In this context, the reorganisation of the activities deriving from the energy
transition has been carried out through a process negotiated and agreed with
the trade union representation, which by means of training measures is
allowing the internal relocation of some of the personnel affected. Within the
framework of these negotiations, on 31 July 2020 ENDESA and the trade union
representation signed a commitment that will allow the voluntary departure of
a maximum of 577 employees affected by the change in the energy model with a
total estimated cost of Euros 213 million recognised in the Consolidated
Income Statement for the period January-September 2020 (Euros 160 million net
of the tax effect) (see Sections 1.1. Consolidated Results, 1.3.6 Income Tax
and 1.3.7. Net Income in this Consolidated Management Report).
* Signature of the “5(th) ENDESA Framework Collective Agreement”:
After more than two years of fruitless negotiations, on 4 December 2019, the
majority trade union in ENDESA, General Workers Union (UGT), and ENDESA agreed
to submit to a “binding equity arbitration” some of the most significant
aspects discussed in the negotiation of the “5(th) ENDESA Framework
Collective Agreement”.
ENDESA and the abovementioned majority union agreed before the Interconfederal
Mediation and Arbitration Service (“SIMA”) the procedure and matters
subject to arbitration, and that the terms of the decision of the arbitrator
would be incorporated into the Collective Agreement that was agreed upon.
Following the appointment by common accord of Mr Manuel Pimentel Siles as sole
arbitrator, the procedure was carried out during the months of December 2019
and January 2020 in the terms agreed by the parties, ending with the issue of
a mandatory Arbitration Award on 21 January 2020.
In accordance with the agreement between the parties, the content of the
Arbitration Award and other aspects resulting from the agreement at the
negotiating table, were incorporated into the “5(th )ENDESA Framework
Collective Agreement” which was approved and signed by the Company and the
Trade Union Section of the General Workers' Union (UGT), the majority trade
union, and came into effect on 23 January 2020. Also, on that date, the new
“Framework Agreement on Guarantees” and “Agreement on Voluntary Measures
for the Suspension or Termination of Employment Contracts” were signed, in
this case by all the unions represented in ENDESA.
The “5(th) ENDESA Framework Collective Agreement” establishes changes to
certain social benefits, basically the one corresponding to the electricity
tariff for employees, also including personnel in non-active situation, which
led to the following accounting entries:
* Valuation of the previous actuarial liability for the uninsured defined
benefit commitments at the effective date of the “5(th )ENDESA Framework
Collective Agreement”, which had a positive impact of Euros 10 million on
the Consolidated Statement of Other Comprehensive Income for the period
January-September 2020.
* Valuation of the new actuarial liability at the effective date of the “5(th)
ENDESA Framework Collective Agreement”, taking account of the new
commitments assumed, mainly in relation to electricity supply, which had a
positive impact of Euros 515 million on the Consolidated Income Statement for
the period January-September 2020 (Euros 386 million net of the tax effect)
(see Sections 1.1. Consolidated Results and 1.3.6 Income Tax in this
Consolidated Management Report).
Also, at 30 September 2020, ENDESA has updated the valuation of the actuarial
liability for defined benefit commitments with a positive net impact of Euros
7 million, in the Consolidated Statement of Other Comprehensive Income for the
period January-September 2020.
* Workforce restructuring plans:
* Recognition of a provision in an amount of Euros 159 million in the
Consolidated Income Statement for the period January-September 2020 (Euros 119
million net of the tax effect) as a result of the communication made to the
union representation on 23 January 2020 regarding the non-exercise of the
power to terminate the individual agreement on suspension of the employment
relationship for certain individual contracts signed with employees within the
framework of the "Agreement on Voluntary Measures for the Suspension or
Termination of Employment Contracts" (see Sections 1.1. Consolidated Results
and 1.3.6 Income Tax of this Consolidated Management Report).
* Update of the provisions for workforce restructuring plans in force, which had
a positive impact of Euros 47 million on the Consolidated Income Statement for
the period January-September 2020 (Euros 3 million, negative, in the period
January-September 2019).
* Within the framework of the Public Responsibility Plan and purchases of
supplies related to the COVID-19 health crisis, ENDESA recognised a cost of
Euros 17 million in the period January-September 2020 (Euros 15 million net of
the tax effect) (see Sections 1.3.7. Net Income and 5. COVID-19 Health Crisis
in this Consolidated Management Report).
Without taking into account the effects described in the foregoing paragraphs,
fixed operating costs for the period January-September 2020 would have
decreased by Euros 34 million or 2.3% compared with the same period of the
previous year as a consequence, mainly, of the Euros 19 million reduction in
sanctions expenses.
Depreciation and amortisation and impairment losses.
The table below shows the breakdown of depreciation and amortisation, and
impairment losses in the period January-September 2020 and its variation
compared with the same period of the previous year:
Millions of euros
Depreciation, Amortisation and Impairment Losses
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
AMORTISATIONS 1,062 1,146 (84) (7.3)
Provision for the depreciation of property, plant and equipment 902 976 (74) (7.6)
Provision for the amortisation of intangible assets 160 170 (10) (5.9)
IMPAIRMENT LOSSES 42 1,417 (1,375) (97.0)
Non-Financial Assets (29) 1,358 (1,387) (102.1)
Impairment of property, plant and equipment and investment property (27) 1,344 (1,371) (102.0)
Mainland coal-fired thermal power plants (27) ((2)) 1,342( (3)) (1,369) (102.0)
Other Property, Plant and Equipment and Investment Property - 2 (2) (100.0)
Impairment of intangible assets (2) - (2) N/A
Other Intangible Assets (2) - (2) N/A
Impairment Losses on Goodwill - 14( (3)) (14) (100.0)
Financial Assets 71 59 12 20.3
Addition to provision for Impairment of Accounts Receivable from Contracts 81 57 24 42.1
with Customers
Addition to provision for Impairment losses on other Financial Assets (10) 2 (12) (600.0)
TOTAL 1,104 2,563 (1,459) (56.9)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
2. Includes reversals of provisions for impairment of non-financial assets (Euros
1 million) and of provisions for dismantling, due to recalculation (Euros 26
million).
3. Euros 1,020 million net of tax effect (see Sections 1.3.6. Income Tax and
1.3.7. Net Income in this Consolidated Management Report).
Depreciation and amortisation, and impairment losses in the period
January-September 2020 totalled Euros 1,104 million, down by Euros 1,459
million or 56.9% on the same period of the previous year, mainly as a result
of the following aspects:
* The recognition in the period January-September 2019 of a am impairment of the
mainland coal-fired power plants in an amount of Euros 1,356 million in
accordance with the decision taken on 27 September 2019 to discontinue their
activity. In the period January-September 2020, the recalculation of this
provision led to the recognition of a reversal in the amount of Euros 26
million.
* A reduction of Euros 99 million in depreciation expense as a consequence on
the one hand of the decrease of Euros 121 million in relation to the
impairment described in the foregoing paragraph, and on the other, the
increase of Euros 22 million due to the commissioning of assets for energy
generation from renewable sources.
* An increase in provisions for impairment losses from customer contracts,
amounting to Euros 24 million, mainly related to the economic situation caused
by COVID-19 (see Section 5. COVID-19 Health Crisis in this Consolidated
Management Report).
Without taking into account the effects described in the foregoing paragraphs,
depreciation expense for the period January-September 2020 would be similar to
that of the same period of the previous year.
1.3.3. Net financial income/(expense).
The net financial result for the periods January-September 2020 and 2019 was
negative in the amount of Euros 82 million and Euros 139 million respectively.
The table below presents the details of the net financial result in the period
January-September 2020 and its variation compared with the same period of the
previous year:
Millions of euros
Net Financial Income/(Expense) ((1))
January-September January-September Difference % Var.
2020( (2))
2019( (2))
Net Financial Expense ((3)) (90) (138) 48 (34.8)
Financial Income 24 25 (1) (4.0)
Financial Expense (114) (163) 49 (30.1)
Net Exchange Differences 8 (1) 9 (900.0)
TOTAL (82) (139) 57 (41.0)
1. Net Financial Result = Financial Income - Financial Expense + Net Exchange
Differences.
2. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
3. Net Financial Expense = Financial Income - Financial Expense.
In the period January-September 2020, net financial expense totalled Euros 90
million, Euros 48 million (-34.8%) less than in the same period of the
previous year.
In the period January-September 2020, net exchange differences amounted to a
positive Euros 8 million, (Euros 1 million, negative, in the period
January-September 2019), basically as a consequence of financial debt in US
dollars (USD) associated with rights of use corresponding to charter contracts
for the transport of liquefied natural gas (LNG ).
In considering the evolution of net financial expense in the period
January-September 2020, the following factors need to be taken into account:
Millions of euros
Net Financial Expense ((1))
January - September 2020 ((2)) January - September 2019 ((2)) Difference % Var.
Expense in respect of Financial Liabilities at Amortised Cost (99) (100) 1 (1.0)
Income from Financial Assets at Amortised Cost 2 1 1 100.0
Update of Provisions for Workforce Restructuring Plans, Dismantling of 1 (43) 44 (102.3)
Facilities and Impairment of Financial Assets in accordance with IFRS 9
“Financial Instruments”
Interest on late payment of Income Tax 2016-2017 7 - 7 N/A
Others (1) 4 (5) (125.0)
TOTAL (90) (138) 48 (34.8)
1. Net Financial Expense = Financial Income - Financial Expense.
2. See the Consolidated Income Statements for the nine-month periods ended 30
September 2020 and 2019.
Expenses on financial liabilities at amortised cost amounted to Euros 99
million, Euros 1 million or 1.0% less than those recognised in the same period
of the previous year, due to a combination of the following effects (see
Section 4.1. Financial Management in this Consolidated Management Report):
* The lower average cost of gross financial debt, which fell from 1.8% in
January-September 2019 to 1.7% in January-September 2020.
* The increase in average gross financial debt, from Euros 7,610 million in the
period January-September 2019 to Euros 8,044 million in the period
January-September 2020.
As a result of the Constitutional Court Ruling on the unconstitutionality of
Royal Decree-Law 2/2016 of 30 September 2020, in the period January-September
2020 income of Euros 7 million was recognised in respect of delay interest on
the amounts of advance income tax for 2016 and 2017 for the difference between
the rate previously in force and the increased rate introduced by this Royal
Decree-Law, now annulled.
1.3.4. Net income of companies accounted for using the equity method.
In the periods January-September 2020 and 2019 net income of companies
accounted for using the equity method was Euros 39 million and Euros 16
million respectively, the breakdown being as follows:
Millions of euros
Net Income of Companies accounted for using the Equity Method( (1))
January-September January-September
2020 ((1))
2019 ((1))
Associates (2) 6
Tecnatom, S.A. (3) 2
Gorona del Viento El Hierro, S.A. - 1
Others 1 3
Joint Ventures 41 10
Tejo Energia - Produção e Distribuição de Energia Eléctrica, S.A. 5 (3)
Nuclenor, S.A. 25 -
Énergie Électrique de Tahaddart, S.A. 1 2
Suministradora Eléctrica de Cádiz, S.A. 2 3
Others 8 8
TOTAL 39 16
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
Nuclenor, S.A.
The results of the 50% stake in Nuclenor, S.A. for an amount of Euros 25
million reflect the effect of Ruling 84/2020 of the Constitutional Court dated
15 July 2020 declaring the unconstitutionality of the tax on the environmental
impact caused by certain uses of reservoir water, by wind farms and by high
voltage electric power transmission facilities regulated in the recast text of
the legal provisions of the Autonomous Region of Castile and León in terms of
its own taxes and those ceded to it by the state.
1.3.5. Gains/(losses) on disposal of assets.
In the periods January-September 2020 and 2019 net losses on the disposal of
assets amounted to Euros 1 million and Euros 14 million respectively, the
breakdown being as follows:
Millions of euros
Gains/(losses) on disposal of assets
January-September January-September
2020 ((1))
2019 ((1))
Non-Financial Assets 17 11
Transfer of Optical Fibre Use Rights 4 -
Other gains/losses 13 11
Disposals of Investments in Group Companies and Other stocks - 1( (2))
Disposals of Property, Plant and Equipment 13 10
Financial Assets (18) (25)
Factoring transaction fees (18) (25)
TOTAL (1) (14)
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
2. Corresponds to the gross result generated by the divestment of Eólica del
Noroeste, S.L. and Ufefys, S.L. (in Liquidation).
On 31 July 2020 ENDESA Energía, S.A.U. sold assets and customer contracts
relating to a photovoltaic facility located in the Paraje El Acebuche-Retamar
(Almería) to ENDESA Soluciones, S.L. for Euros 17 million, generating a gross
capital gain of Euros 7 million.
1.3.6. Income tax.
In the period January-September 2020, income tax expense amounted to Euros 473
million, Euros 459 million more than the amount recognised in the same period
of 2019, mainly as a result of:
* The impacts recognised in the heading Personnel Expenses in the Consolidated
Statement of Income for the period January-September 2020 related to the
Company’s Decarbonisation Plan, the “5(th) ENDESA Framework Collective
Agreement”, for an amount of Euros 143 million, positive, the tax effect of
which was Euros 36 million (see Section 1.3.2. Operating Expenses in this
Consolidated Management Report).
* The impairment recognised in the period January-September 2019 relating to the
mainland coal-fired thermal power plants for a total amount of Euros 1,398
million, the tax effect of which amounted to Euros 346 million (see Section
1.3.2. Operating Expenses in this Consolidated Management Report).
Without taking into consideration the effects described in the previous
paragraphs, the expense for Income Tax in the period January-September 2020
would have increased by Euros 249 million (+15.6%) in comparison with the same
period of the previous year and the effective rate would have been 23.7%
(22.6% in the period January-September 2019) as a result, fundamentally, of a
lower materialisation of bonuses and deductions in tax liability attributed to
results, the regularisation of negative taxable bases in the Portuguese branch
of ENDESA Energía, S.A.U. following the closure of the General Inspection, as
well as the regularisation of the 2019 tax return of the aforementioned branch
and other non-deductible expenses.
At the date of approval of this Consolidated Management Report, the recovery
of deferred tax assets is not affected by the current context and the
effective rate does not register impacts due to legislative changes affecting
Income Tax.
1.3.7. Net Income.
Net income attributable to the Parent in the first nine months of 2020
amounted to Euros 1,511 million, an increase of Euros 1,335 million relative
to the same period of the previous year.
Net ordinary income attributable to the Parent in the first nine months of
2020 amounted to Euros 1,700 million (+38.4%), as per the following breakdown:
Millions of euros
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Sections
Net Income( (2)) 1,511 176 1,335 758.5
Net Impairment Losses on Non-Financial Assets ((3)) 14 1,052 (1,038) (98.7)
Mainland coal-fired thermal plants, inventories and other materials 1.3.2 14 1,052 (1,038) (98.7)
Net Initial Endowment of the Decarbonisation Plan 1.3.2 160 - 160 N/A
Net Expenditure Corresponding to the Public Responsibility Plan for the 1.3.2 15 - 15 N/A
COVID-19 Health Crisis
Net Ordinary Income( (4)) 1,700 1,228 472 38.4
1. See the Consolidated Income Statements for the periods January-September 2020
and 2019.
2. Net Income = Net Income of the Parent Company.
3. Greater than Euros 10 million.
4. Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
1.4. Results by Segment.
The following is a breakdown of the most significant figures of the
Consolidated Income Statement among ENDESA's Businesses in the first nine
months of 2020 and 2019:
Millions of euros
January – September 2020
Generation and Supply Distribution Structure and Others( (1)) Total
Generation in Non-Mainland Territories (“TNP”) Other Generation and Supply Adjustments Total
Income 1,156 10,412 (443) 11,125 1,971 (137) 12,959
Sales 1,151 9,931 (443) 10,639 1,789 (114) 12,314
Other Operating Income 5 481 - 486 182 (23) 645
Procurements and Services (833) (8,130) 439 (8,524) (122) 84 (8,562)
Contribution Margin( (2)) 323 2,282 (4) 2,601 1,849 (53) 4,397
Self-constructed Assets - 52 - 52 94 15 161
Personnel Expenses (75) (290) - (365) (7) (144) (516)
Other Fixed Operating Expenses (132) (648) 4 (776) (287) 157 (906)
Gross Operating Profit (EBITDA)( (3)) 116 1,396 ((8)) - 1,512 1,649 (25) 3,136
Depreciation, Amortisation and Impairment Losses (75) (524) - (599) (464) (41) (1,104)
Operating Profit (EBIT)( (4)) 41 872 - 913 1,185 (66) 2,032
Net Financial Income/(Expense)( (5)) (14) (41) - (55) (32) 5 (82)
Income before Tax 27 856 - 883 1,166 (61) 1,988
Net Income( (6)) 33 640 - 673 888 (50) 1,511
Net Ordinary Income( (7)) 54 788 - 842 888 (30) 1,700
1. Structure, Services and Adjustments.
2. Contribution margin = Income - Procurements and Services.
3. EBITDA = Income - Procurements and Services + Self-constructed Assets -
Personnel expenses - Other fixed operating expenses.
4. EBIT = EBITDA - Depreciation and Amortisation and Impairment Losses.
5. Net Financial Income/(Expense) = Financial Income - Financial Expense + Net
Exchange Differences.
6. Net Income = Net Income of the Parent Company.
7. Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
8. Includes the EBITDA of ENEL Green Power España, S.L.U. (EGPE) amounting to
Euros 133 million.
Millions of euros
January – September 2019
Generation and Supply Distribution Structure and Others( (1)) Total
Generation in Non-Mainland Territories (“TNP”) Other Generation and Supply Adjustments Total
Income 1,530 12,089 (714) 12,905 2,057 (157) 14,805
Sales 1,527 11,725 (713) 12,539 1,862 (116) 14,285
Other Operating Income 3 364 (1) 366 195 (41) 520
Procurements and Services (1,114) (9,987) 709 (10,392) (126) 103 (10,415)
Contribution Margin( (2)) 416 2,102 (5) 2,513 1,931 (54) 4,390
Self-constructed Assets 2 48 - 50 102 13 165
Personnel Expenses (68) (336) - (404) (211) (144) (759)
Other Fixed Operating Expenses (138) (658) 5 (791) (296) 189 (898)
Gross Operating Profit (EBITDA)( (3)) 212 1,156 ((8)) - 1,368 1,526 4 2,898
Depreciation, Amortisation and Impairment Losses (103) (1,961) - (2,064) (454) (45) (2,563)
Operating Profit (EBIT)( (4)) 109 (805) - (696) 1,072 (41) 335
Net Financial Income/(Expense)( (5)) (18) (64) - (82) (51) (6) (139)
Income before Tax 91 (854) (17) (780) 1,025 (47) 198
Net Income( (6)) 90 (638) (17) (565) 784 (43) 176
Net Ordinary Income( (7)) 90 414 (17) 487 784 (43) 1,228
1. Structure, Services and Adjustments.
2. Contribution margin = Income - Procurements and Services.
3. EBITDA = Income - Procurements and Services + Self-constructed Assets -
Personnel expenses - Other fixed operating expenses.
4. EBIT = EBITDA - Depreciation and Amortisation and Impairment Losses.
5. Net Financial Income/(Expense) = Financial Income - Financial Expense + Net
Exchange Differences.
6. Net Income = Net Income of the Parent Company.
7. Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
8. Includes the EBITDA of ENEL Green Power España, S.L.U. (EGPE) amounting to
Euros 160 million.
1.4.1. Contribution Margin.
Generation and Supply Segment.
The contribution margin of the Generation and Supply segment in the first nine
months of 2020 totalled Euros 2,601 million, up by Euros 88 million year on
year (+3.5%), basically due to the decline in variable costs as a result of
the reduced thermal production in the period (-34.9%).
Distribution Segment.
The contribution margin of the Distribution Segment in the first nine months
of 2020 amounted to Euros 1,849 million, representing a decrease of Euros 82
million (-4.2%) compared with the same period of the previous year, due mainly
to the reduction of Euros 69 million (-4.2%) in regulated revenues from the
distribution activity as a result of the decline in energy distributed and the
application of the new remuneration parameters that come into force for the
regulatory period 2020-2025.
Structure and Others.
The contribution margin of Structure and Others in the period
January-September 2020 was a negative Euros 53 million, in line with the
amount for the same period of 2019.
1.4.2. EBITDA.
Generation and Supply Segment.
The gross operating profit (EBITDA) of this segment amounted to Euros 1,512
million, (+10.5%) in the first nine months of 2020. The following factors must
be taken into account when looking at EBITDA for the first nine months of
2020:
* The increase of 3.5% in the contribution margin.
* The income recognised as a consequence of the changes in social benefits due
to the entry into force of the “5(th )ENDESA Framework Collective
Agreement”, for an amount of Euros 215 million.
* Recognition of endowments for workforce restructuring plans relating to the
Decarbonisation Plan and other plans within the framework of the “Agreement
on Voluntary Measures for the Suspension or Termination of Employment
Contracts” for amounts of Euros 206 million and Euros 29 million
respectively.
* The update of the provisions for current workforce restructuring plans (Euros
18 million, positive, in the first nine months of 2020 and Euros 6 million,
negative, in the first nine months of 2019).
Distribution Segment.
For the first nine months of 2020, EBITDA of this segment was Euros 1,649
million (+8.1%), including:
* The negative evolution of the contribution margin (-4.2%).
* The income recognised as a consequence of the changes in social benefits due
to the entry into force of the “5(th )ENDESA Framework Collective
Agreement”, for an amount of Euros 269 million.
* The provisioning for workforce restructuring of Euros 91 million within the
framework of the “Agreement on Voluntary Measures for the Suspension or
Termination of Employment Contracts”.
* The update of the provisions for current workforce restructuring plans (Euros
9 million, positive, in the first nine months of 2020 and Euros 1 million,
negative, in the first nine months of 2019).
Structure and Others.
In the first nine months of 2020, EBITDA of this segment came to a negative
Euros 25 million and included:
* The income recognised as a consequence of the changes in social benefits due
to the entry into force of the “5(th )ENDESA Framework Collective
Agreement”, for an amount of Euros 31 million.
* Recognition of provisions for workforce restructuring plans relating to the
Decarbonisation Plan and other plans within the framework of the “Agreement
on Voluntary Measures for the Suspension or Termination of Employment
Contracts” for amounts of Euros 7 million and Euros 39 million respectively.
* The update of the provisions for current workforce restructuring plans (Euros
20 million positive in the period January-September 2020 and Euros 4 million
positive in the same period of 2019).
* The expenditure on donations corresponding to the Public Responsibility Plan
and purchases of supplies related to COVID-19 for an amount of Euros 17
million (Euros 15 million net of the tax effect) (see Section 1.3.7. Net
Income and 5. COVID-19 Health Crisis in this Consolidated Management Report).
1.4.3. EBIT.
Generation and Supply Segment.
In the period January-September 2020, EBIT of the Generation and Supply
Segment came to Euros 913 million, representing an increase of Euros 1,609
million, mainly as a result of:
* A 10.5% increase in EBITDA.
* The recognition in the period January-September 2019 of an impairment of the
mainland coal-fired plants in an amount of Euros 1,356 million in accordance
with the decision taken on 27 September 2019 to discontinue their activity
(Euros 26 million reversal of impairment in the period January-September
2020).
* A reduction of Euros 99 million in depreciation expense as a consequence on
the one hand of the decrease of Euros 121 million in relation to the
impairment described in the foregoing paragraph, and on the other, the
increase of Euros 22 million due to the commissioning of assets for energy
generation from renewable sources.
* An increase in provisions for impairment losses from customer contracts,
amounting to Euros 15 million, mainly related to the economic situation caused
by COVID-19 (see Section 5. COVID-19 Health Crisis in this Consolidated
Management Report).
Distribution Segment.
EBIT for the Distribution Segment in the first nine months of 2020 grew by
Euros 113 million year on year (+10.5%), mainly as a result of the 8.1%
increase in EBITDA.
Structure and Others.
The operating profit (EBIT) for the first nine months of 2020 of Structure and
Others amounted to a negative figure of Euros 66 million.
2. Other information.
2.1. Scope of Consolidation.
During the period January-September 2020, the following transactions were
concluded:
Transaction Date Activity Stake Stake
at 30 September at 31 December
2020 (%) 2019 (%)
Control Ownership Control Ownership
Empresa de Alumbrado Eléctrico de Ceuta, S.A. ((1)) Acquisition 18 February 2020 Supply and Distribution 96.37 96.37 96.29 96.29
Energía Ceuta XXI Comercializadora de Referencia, S.A.U.( (1)) Acquisition 18 February 2020 Supply 100.00 96.37 100.00 96.29
Empresa de Alumbrado Eléctrico de Ceuta Distribución, S.A.U.( (1)) Acquisition 18 February 2020 Distribution 100.00 96.37 100.00 96.29
Hidromondego - Hidroeléctrica do Mondego, Lda.( (2)) Final winding up 12 March 2020 Electricity Production and Supply - - 100.00 100.00
ENDESA Soluciones, S.L.( (3)) Sale 11 May 2020 Supply of Energy Products and Services 20.00 20.00 100.00 100.00
Parque Eólico Tico, S.L.U.( (4)) Acquisition 7 July 2020 Wind 100.00 100.00 - -
Tico Solar 1, S.L.U.( (4)) Acquisition 7 July 2020 Photovoltaic 100.00 100.00 - -
Tico Solar 2, S.L.U.( (4)) Acquisition 7 July 2020 Photovoltaic 100.00 100.00 - -
Centrales Nucleares Almaraz-Trillo, A.I.E.( (5)) Acquisition 29 July 2020 Nuclear Power Plant Management 24.18 24.18 24.26 23.92
Parque Eólico Farlán, S.L.U.( (6)) Merger 5 August 2020 Wind - - 100.00 100.00
ENDESA X Servicios, S.L.( (7)) Incorporation 1 September 2020 Supply of Energy Products and Services 100.00 100.00 - -
Suggestion Power, Unipessoal, Lda.( (8)) Acquisition 14 September 2020 Photovoltaic 100.00 100.00 - -
Sistemas Energéticos Alcohujate, S.A.U.( (6)) Merger 22 September 2020 Wind - - 100.00 100.00
Sistemas Energéticos Campoliva, S.A.U.( (6)) Merger 22 September 2020 Wind - - 100.00 100.00
Sistemas Energéticos Sierra del Carazo, S.L.U.( (6)) Merger 22 September 2020 Wind - - 100.00 100.00
1. Interest acquired by ENDESA Red, S.A.U. for an amount of less than Euros 1
million.
2. The gross profit generated amounted to Euros 2 million.
3. Holding sold by ENDESA Energía, S.A.U. for an amount of Euros 21 million, net
of the cash existing in the company sold (see Section 4.2. Cash Flows in this
Consolidated Management Report). The gross capital loss was less than Euros 1
million.
4. Companies acquired by ENEL Green Power España, S.L.U. (EGPE) for an amount of
Euros 40 million, the effective cash outflow being Euros 14 million at 30
September 2020 (see Section 4.2. Cash Flows in this Consolidated Management
Report).
5. Shareholding acquired by ENDESA Generación, S.A.U. for a non-material amount.
6. Companies absorbed by ENEL Green Power España, S.L.U. (EGPE) by means of
merger.
7. Company constituted by ENDESA, S.A. (99.525%) and ENDESA Red, S.A.U. (0.475%)
through the partial spin-off of a branch of activity of ENDESA Energía,
S.A.U. and of ENDESA Ingeniería, S.L.U., respectively.
8. Company acquired by ENDESA Generación Portugal, S.A. for an amount of Euros 6
million, the effective cash outflow being Euros 3 million at 30 September 2020
(see Section 4.2. Cash Flows in this Consolidated Management Report).
Corporate acquisitions in the renewables business.
On 7 July 2020 ENDESA, through ENEL Green Power España, S.L.U. (EGPE),
formalised the acquisition of a 100% stake in Parque Eólico Tico, S.L.U.,
Tico Solar 1, S.L.U. and Tico Solar 2, S.L.U. Likewise, on 14 September 2020,
ENDESA, through ENDESA Generación Portugal, S.A., formalised the acquisition
of a 100% stake in Suggestion Power, Unipessoal, Lda.
The total price of these transactions amounted to Euros 46 million, of which,
at 30 September 2020, Euros 29 million were pending disbursement, subject to
compliance with certain contractual stipulations (see Section 4.2. Cash Flows
in this Consolidated Management Report).
The acquisition of these companies led to the recognition under Intangible
Assets in the Consolidated Statement of Financial Position of Euros 46 million
corresponding practically entirely to the value of licences for the
development of wind farm projects and photovoltaic plants (see the
Consolidated Financial Statements corresponding to the period
January-September 2020).
The companies acquired are currently applying for the permits and licences to
carry out their projects, so construction of the renewable energy facilities
has not yet started, and no ordinary revenue has been generated since
acquisition date.
Through the acquisition of wind and solar projects in the course of
development, ENDESA will reinforce its presence in the Iberian Peninsula
generation market, expanding the portfolio of renewable assets in its
production mix.
2.2. Dividends.
At its meeting held on 26 November 2019, the Board of Directors of ENDESA,
S.A. approved the following shareholder remuneration policy for 2019-2022:
* Financial years 2019 to 2020: The ordinary dividend per share to be
distributed in respect of these years will be equivalent to 100% of ordinary
net income attributable to the Parent as per the Consolidated Financial
Statements of the Group headed by the Company.
* For the 2021 financial year, the Board of Directors of ENDESA, S.A. will
ensure that the ordinary dividend per share that is agreed to be distributed
for the year is equal to 80% of the net ordinary income attributable to the
Parent Company as per the Group's Consolidated Financial Statements.
* For the 2022 financial year, the Board of Directors of ENDESA, S.A. will
ensure that the ordinary dividend per share that is agreed to be distributed
for the year is equal to 70% of the net ordinary income attributable to the
Parent Company as per the Group's Consolidated Financial Statements.
Without prejudice to the foregoing, ENDESA's capacity to pay out dividends to
its shareholders depends on numerous factors, including the generation of
profit and the availability of unrestricted reserves, and therefore no
assurance can be given that dividends will be paid out in future years or as
to the amount of such dividends if paid.
Approval was given at ENDESA, S.A.’s General Shareholders’ Meeting of 5
May 2020 to pay shareholders a total dividend for 2019 in a gross amount of
€1.475 per share, representing a total of Euros 1,562 million. The breakdown
of these dividends is as follows:
Millions of euros
Sections Approval date Euros per share, gross Amount Payment date
Interim dividend 26 November 2019 0.700 741 2 January 2020
Final dividend 5 May 2020 0.775 821 1 July 2020
Total Dividend paid against 2019 Profit 4.2 1.475 1,562
3. Regulatory Framework.
From a regulatory perspective, the main highlights during the period were as
follows:
Electricity tariff for 2020.
Order TEC/1258/2019 of 20 December 2019 establishing access tariffs for 2020
was published in the Official State Gazette on 28 December 2019. In accordance
with said Order, the access tariffs remain unchanged until the entry into
force of the tariffs set by the Spanish National Commission on Markets and
Competition (“CNMC”).
On the other hand, on 14 October 2020, Order TED/952/2020, dated 5 October,
was published, applying the surplus of the Electric System to cover temporary
imbalances and transitory deviations between revenues and costs for the years
2019 and 2020. This Order establishes that the Spanish National Commission of
Markets and Competition (“CNMC”), as the body in charge of the System's
settlements, will transfer from the specific electricity surplus account to
the settlements account the amount required to cover temporary mismatches
between revenues and costs of the Electric System for the 2019 financial year
that may occur, in accordance with the best available forecast at the time of
preparing the closing settlement proposal and with the aim of ending the
financial year in balance. Likewise, if there are any funds remaining after
the approval of the 2019 year-end settlement, the Spanish National Commission
of Markets and Competition (“CNMC”) will use them until they are exhausted
in the successive provisional settlements on account of the 2020 year-end
settlement, as well as, if appropriate, the closing settlement itself, in
order to cover any deviations or imbalances that may occur.
Natural gas tariff for 2020.
On 28 December 2019, Order TEC/1259/2019, of 20 December 2019, was published
in the Official State Gazette (“BOE” for its acronym in Spanish),
establishing access tariffs for gas for 2020, which remain unchanged, and on
30 December 2019 the Resolution of 23 December of the General Directorate for
Energy Policy and Mines was published in the “BOE”, establishing the Last
Resort Tariff (LRT, or “TUR” in the Spanish abbreviation) for natural gas
applicable from 1 January 2020, implying an average reduction of 3.3% for LRT1
and 4.2% for LRT2, due to lower raw material costs.
On 30 June 2020 the Official State Gazette (“BOE”) published the
Resolution of 23 June 2020 of the General Directorate for Energy Policy and
Mines, establishing new last resort tariffs for natural gas with effect from 1
July 2020, which represented average reductions of 4.5% and 6.0% for the Last
Resort Tariff 1 (LRT1) and the Last Resort Tariff 2 (LRT2) respectively, due
to the reduction in the cost of the raw material.
On 29 September 2020, Order TED/902/2020 of 25 September 2020 was published in
the Official State Gazette (“BOE”), changing the way the last resort
tariff for natural gas is calculated. This Order adapts gas tolls and fees to
the new toll structure of the Gas System of “CNMC” Circular 6/2020 of 22
July 2020, applicable from 1 October 2021, with the exception of some access
tolls to regasification facilities, which are applicable with effect from 1
October 2020.
On 30 September 2020 the Official State Gazette (“BOE”) published the
Resolution of 29 September 2020 of the General Directorate for Energy Policy
and Mines, establishing the new “last resort” (regulated) tariffs for
natural gas with effect from 1 October 2020, which represent average
reductions of 2.4% and 5.5% for the Last Resort Tariff 1 (LRT1) and the Last
Resort Tariff 2 (LRT2) respectively, due to the reduction in the cost of the
raw material.
Energy Efficiency.
Order TED/287/2020, of 23 March 2020, establishes a contribution by ENDESA to
the Spanish National Fund for Energy Efficiency of Euros 27 million in respect
of its 2020 obligations.
“Bono Social” (“Social Bonus” discount tariff).
On 13 August 2020, Order TEC/788/2020, of 24 July 2020 was published in the
Official State Gazette (“BOE”), setting the distribution percentage of the
financing of the 2020 Social Bonus, ENDESA S.A.’s percentage being 35.57%.
Strategic Framework for Energy and Climate.
On 23 January 2020 the Ministry for the Ecological Transition and the
Demographic Challenge published the Strategic Environmental Study of the Draft
of the Integrated National Energy and Climate Plan (“PNIEC” for its
acronym in Spanish) 2021-2030, opening a period of public consultation.
The Government has also sent the Draft Law on Climate Change and Energy
Transition to the Cortes Generales, Spain’s Parliament, which is currently
being processed, and which includes the following aspects, among others:
* It sets two time paths: by 2030, objectives of reducing GHG emissions by at
least 20% compared with 1990, generating 70% of electricity from renewable
sources, and improving energy efficiency by at least 35% compared with the
trend scenario; and by 2050, achieving climate-neutrality and a 100% renewable
electric system.
* Renewable energy promotion measures through a remuneration framework based on
the long-term recognition of a fixed energy price.
* New hydro-electric concessions will be aimed at supporting the integration of
energy from non-manageable renewable sources.
* Introduction of new parties in the Electricity Sector as owners of storage
facilities or independent aggregators.
* Limits are established on the exploitation of hydrocarbons, restricting fossil
fuel subsidies and revising their tax treatment.
* Promotion of energy efficiency measures and use of renewables in the field of
building.
* Boosting of electric mobility with the aim of having a fleet of vehicles
without direct CO(2) emissions by 2050, with new passenger cars and LCVs
having no direct emissions from 2040. It also calls for the establishment by
2023 at the latest of low-emission areas in municipalities with more than
50,000 inhabitants and island territories and the obligation to develop
recharging facilities at service stations.
* Mobilisation of resources for the fight against climate change: at least Euros
450 million of the proceeds from auctions of CO(2) emission rights will be
used annually to cover costs of the Electric System.
Finally, on 22 September 2020, the National Plan for Adaptation to Climate
Change (“PNACC” for its acronym in Spanish) was approved by the Council of
Ministers for the 2021-2030 time horizon, constituting the basic planning
framework for promoting coordinated action to confront the effects of climate
change.
The National Plan for Adaptation to Climate Change (“PNACC”) defines
various objectives, criteria, areas of work and lines of action with
compliance indicators with the common objective of avoiding or reducing
vulnerability to climate change and its potential impacts on social, economic
and environmental systems, as well as improving these systems’ ability to
recover from climate events and re-establish themselves. In the field of
energy, the aim is to bring about an energy system that can withstand the
effects of climate change in a scenario of rapid decarbonisation, through
lines of action focused on:
* Improving knowledge about the impacts of climate change on the potential for
renewable energy production.
* The functionality and resilience of energy generation, distribution and
storage.
* The effect on demand, with a view to avoiding or limiting demand peaks.
* The identification of risks deriving from extreme events in critical
infrastructures to avoid their loss of functionality.
Order revising the remuneration parameters for facilities under specific
remuneration regimes.
Order TED/171/2020 of 24 February 2020, published in the Official State
Gazette on 28 February 2020, updates the remuneration parameters for standard
facilities applicable to certain facilities producing electricity from
renewable energy sources, cogeneration and waste, for application to the
regulatory period starting on 1 January 2020. This Order updates the values
that will be applicable in the second regulatory period (2020-2025) for the
various parameters that determine the remuneration of these facilities, in
accordance with the methodology established in the relevant general
regulations, and without prejudice to the periodic update mechanisms
established therein. The values of the different parameters are applicable
from 1 January 2020, in accordance with the provisions of Royal Decree Law
17/2019, of 22 November 2019. The Order also approves the market price
provided for each year of the 2020-2022 semi-period.
Draft of the Seventh General Radioactive Waste Plan.
The Ministry for the Ecological Transition and the Demographic Challenge has
started the ordinary environmental strategic evaluation procedure of the
Seventh General Radioactive Waste Plan (PGRR). The procedure includes the
environmental assessment, the public information process to receive input from
civil society and the mandatory consultations with the Nuclear Safety Council
and the Autonomous Regions. Subsequently, the Ministry for the Ecological
Transition and the Demographic Challenge will carry out a technical analysis
of the complete file to formulate the Strategic Environmental Declaration of
the General Radioactive Waste Plan, a step prior to its approval by the
Council of Ministers. Subsequently, it must be reported to Parliament and will
also be forwarded to the European Commission, in compliance with the EU
directive on radioactive waste management.
Declaration of the state of alarm as a consequence of the advance of COVID-19
and regulatory measures approved.
On 11 March 2020, the World Health Organisation (WHO) raised the level of the
public health emergency caused by COVID-19 to that of a pandemic. The rapid
evolution of events, at the national and international levels, required the
adoption of immediate and effective measures to face this situation. The
extraordinary circumstances constitute without a doubt an unprecedented health
crisis of enormous magnitude, due both to the large number of citizens
affected and the risk to their rights. As a consequence, on 14 March 2020,
Royal Decree 463/2020, of 14 March 2020, was published in the Official State
Gazette, declaring a state of alarm for the management of the health crisis
situation caused by COVID-19.
At the same time, and in order to counteract the economic and social impact of
this exceptional situation, the Spanish government approved a series of
legislative provisions encompassing various measures on all fronts to face
this impact. Specifically, and among others, 18 March 2020 saw the publication
of Royal Decree-Law 8/2020, of 17 March 2020, on extraordinary urgent measures
to face the economic and social impact of COVID-19, and on 1 April 2020, Royal
Decree-Law 11/2020, of 31 March 2020, was published, adopting urgent
complementary measures in the social and economic fields to deal with COVID-19
and on 8 July 2020, Royal Decree-Law 26/2020, of 7 July 2020, on economic
recovery measures to address the impact of COVID-19 in the areas of transport
and housing was published, and finally, on 30 September 2020, Royal Decree Law
30/2020 of 29 September 2020 on social measures in defence of employment was
published.
With regard to the Electricity Sector, the most significant urgent measures
adopted were the following:
* “Bono Social” (Social Bonus or discount tariff): The validity of the
“Bono Social” (special reduced tariff for electricity) was extended until
30 September 2020 for beneficiaries for whom the 2-year period of validity
established in Royal Decree 897/2017 of 6 October 2017 expired before that
date. At the same time, the right to the “Bono Social” discount tariff was
extended to customers with supply points in their name, or any member of their
family unit, with the status of self-employed or self-employed professionals,
and who were entitled to benefit because they had had to cease their activity
or had seen their billings significantly reduced, and met certain income
levels in the immediately preceding year, this right being limited to the
period for which these circumstances persisted, with a maximum of 6 months.
Likewise, as a result of Royal Decree Law 30/2020 of 29 September 2020, the
beneficiary group was expanded to include those who can show that upon the
entry into force of this law, the holder of the electricity supply point or a
member of the family unit is unemployed, furloughed or has had their working
hours reduced in order to be able to care for a family member, in the case of
being an entrepreneur, or other similar circumstances that involve a
substantial loss of income in the month prior to the filing of the application
for the Social Bonus, as a result of which the combined income of the members
of the family unit do not reach certain thresholds. This right will expire
when the circumstances for its granting cease, and, in any case, on 30 June
2021, without prejudice to the possibility of benefiting from the status of
beneficiary of the Social Bonus in accordance with the general regulations.
* Guarantee of supply: Prohibition of suspension of the supply of electricity,
water and natural gas, during the month following the entry into force of
Royal Decree-Law 8/2020, of 17 March 2020, to consumers who had the status of
vulnerable, highly vulnerable or at risk of social exclusion in accordance
with the criteria laid down in Royal Decree 897/2017, of 6 October 2017, may
not be cut off. This term, initially one month in force and extended during
the state of alarm, was extended, by Royal Decree-Law 26/2020, of 7 July 2020,
until 30 September 2020, establishing that the supply of electricity, water,
natural gas and other petroleum derivatives to natural persons in their
habitual residence, except for reasons of security of supply, people and
facilities.
* Flexibility of electricity supply contracts for the self-employed and
companies: Possibility, during the state of alarm, of suspending or modifying
their contracts to contract another alternative offer with their supplier to
adapt to new consumption patterns, without charge or penalty, as well as
changing power or access tolls. A period of 3 months was set, after the end of
the alarm state, for the reactivation of the contract or modification of the
power, without any cost, except for certain situations. The future General
State Budget Laws approved after the entry into force of Royal Decree-Law
11/2020, of 31 March 2020, will include the corresponding items to compensate
the Electricity Sector for the reduction in income that these measures entail.
Similar measures are contemplated for the Natural Gas Sector.
* Suspension of supply invoices: Possibility for the points of supply owned by
self-employed and small and medium enterprises, and during the state of alarm,
to ask their supplier (or, where appropriate, their distributor), by means
that do not require physical travel, the suspension of payment of invoices for
billing periods that contain days integrated into the state of alarm. In this
case, the supplier will be exempt from paying transmission and distribution
tolls to the distributor until such time as the customer pays the bill in
full. The supplier will also be exempt from paying VAT, the special tax on
electricity, and, where applicable, the special tax on hydrocarbons for
electricity generation until the customer pays the full invoice or until 6
months have elapsed from the end of the state of alarm. However, the option to
delay the payment of these taxes has not been exercised in any case by ENDESA.
Once the state of alarm is over, the debt will be regularised in equal parts
in the invoices of the billing periods that make up the following 6 months.
Likewise, suppliers who see their income reduced, or distributors whose toll
income is reduced, may request the guarantees defined in Royal Decree Law
8/2020 of 17 March 2020 or any other line created for this purpose.
* Rights of access: Extension of the term for those access rights that expired
on 31 March 2020 and the new term is set at 2 months after the end of the
state of alarm or its extensions.
In this context, likewise, through Order SND/260/2020, of 19 March 2020,
activation of the interruptibility demand management service for economic
reasons was suspended while the state of alarm was in force.
Finally, it should be noted that after the end of June 2020 of the initial
state of alarm declared through Royal Decree 463/2020 of March 14, the
negative evolution of the pandemic since then has caused the Government to
declare a new state of alarm through Royal Decree 926/2020 of October 25,
which declared the state of alarm to contain the spread of infections caused
by COVID-19.
Plan for the Recovery, Transformation and Resilience of the Economy
On 7 October 2020, the Government presented the Plan for Economic Recovery,
Transformation and Resilience to respond to the challenges of the next decade,
focusing on four transformations needed to modernise and boost Spain's
economy: the ecological transition, the digital transformation, gender
equality and social and territorial cohesion.
The Recovery Plan will involve a significant volume of public and private
investment in the coming years, which will be financed with funds from the
Next Generation EU Plan, allowing Spain to obtain up to Euros 140,000 million,
of which Euros 72,000 million will be non-refundable subsidies and the rest
will be loans. The Government, in order to speed up the calendar for the
execution of this Plan, plans to include Euros 27,000 Million in the next
General State Budget (“PGE” for its acronym in Spanish).
The Plan includes 10 key policies which are considered to be tractors as they
directly affect the productive sectors with the greatest capacity for
transforming the economic and social network, and which are the following:
1. Urban and rural agenda, the fight against rural depopulation and agricultural
development.
2. Resilient infrastructures and ecosystems.
3. A just and inclusive energy transition.
4. An Administration for the 21(st )century.
5. Modernisation and digitisation of the industrial network and SMEs, recovery of
the tourism sector and promotion of Spain as an entrepreneurial nation.
6. Pledge for science and innovation and strengthening the capabilities of the
National Health System.
7. Education and knowledge, lifelong learning and capacity building.
8. The new care economy and employment policies.
9. Promotion of the culture and sports industries.
10. Modernisation of the tax system for inclusive and sustainable growth.
The investment in ecological transition will represent more than 37% of the
total of the Plan and the digitalisation 33%.
In the field of energy, the above policies include actions such as: the
massive deployment of renewable generation, smart grids and electrical
infrastructures; the development of a roadmap for renewable hydrogen and its
sectoral integration; the development of a Just Transition Strategy to
guarantee the employment in the areas affected by the energy transition; and
the promotion of sustainable mobility and the rehabilitation of buildings as
well as the promotion of energy efficiency measures.
Finally, in order to guarantee the correct execution of the funds, the Plan
provides a Governance model for the selection, evaluation and coordination of
the different projects. A specific collaboration with the Autonomous
Communities and Cities will be implemented and an Interministerial Commission
and a Monitoring Unit will be created. The Government also intends to
eliminate the obstacles that hinder the implementation of projects, so that
bureaucracy will not be a brake on the development of the Plan.
Decision of the European Commission C (2020) 3401 on the activity of
electricity production in Non-Mainland Territories (“TNP”).
On 28 May 2020 the European Commission approved the regulatory scheme
established in Royal Decree 738/2015 of 31 July 2015 in relation to the
activity of electricity production in Non-Mainland Territories (“TNP”),
concluding that it met the criteria of a Service of General Economic Interest
and is compatible with the internal market. The scheme is initially approved
until 31 December 2025 in the case of the Balearic Islands and until 31
December 2029 in the case of the Canary Islands, Ceuta and Melilla, and the
Kingdom of Spain may request its extension in advance of those dates.
Order for the revision of fuel prices in the Non-Mainland Territories
(“TNP”).
Order TEC/1260/2019, of 26 December 2019, reviews the technical and economic
parameters for the remuneration of generation facilities in the Electric
Systems of the Non-Mainland Territories (“TNP”) for the second regulatory
period (2020- 2025). In relation to fuel prices, the aforementioned Order
established that within 3 months, product and logistics prices would be
reviewed by Ministerial Order, with effect from 1 January 2020. In this
regard, Order TED/776/2020 of 4 August 2020, revising these references, was
published in the Official State Gazette on 7 August 2020.
Definitive costs of the generation facilities of the Non-Mainland Territories
(“TNP”) for 2015.
On 1 October 2020 the Resolution of the General Directorate of Energy Policy
and Mines of 19 September was published, approving the final amount of the
generation costs of the production activity in Non-Mainland Territories
(“TNP”) for 2015 financial year corresponding to facilities owned by
ENDESA.
Royal Decree-Law 23/2020 of 23 June 2020, approving measures in the field of
energy and other areas for economic recovery.
On 24 June 2020, Royal Decree-Law 23/2020 of 23 June 2020 was published,
approving measures in the field of energy and other areas for economic
reactivation. The most relevant aspects of this Royal Decree-Law are the
following:
* Improvement of the regulation of access permits and connection to the grid of
renewable energies, to avoid speculation, considering specific mechanisms to
grant access capacity in network nodes affected by just transition processes.
In relation to this matter, it should be noted that the Ministry for the
Ecological Transition and the Demographic Challenge has initiated the
processing of a Draft Royal Decree on access and connection to the electricity
transmission and distribution networks.
* New auction model for future renewable energy developments, based on the
long-term recognition of a fixed price for energy, distinguishing between
different technologies. Small projects and demonstrators may be exempted from
auctions.
* Introduction of new figures: storage owners, independent aggregators and
renewable energy communities.
* Simplification of procedures for renewable installations and their electrical
infrastructure, rapid recharge infrastructures (250 kW) and demonstrations or
R&D and innovation projects.
* The accumulated surplus of the Electric System may be used to cover imbalances
in 2019 and 2020.
* Increase of the maximum limit of remunerative investment in distribution in
2020-2022, going from 0.13% to 0.14% of Gross Domestic Product (GDP).
* The purpose of the Institute for the Just Transition is defined, which will
seek to reduce the impacts on employment and the depopulation of areas
affected by the transition process.
Proposal for a Royal Decree on the remuneration regime for renewable energy.
On 26 June 2020, the processing of a Royal Decree Project that develops the
new remuneration scheme for future renewable energy developments foreseen in
Royal Decree-Law 23/2020, of 23 June 2020, has begun. This remuneration regime
(called the Economic Renewable Energy Regime “REER” for its acronym in
Spanish) will be based on the long-term recognition of the price of energy.
The Renewable Energy Economic Regime (“REER” for its acronym in Spanish)
will be granted through auctions regulated by Ministerial Order, which may
distinguish between different technologies according to their technical
characteristics, size, manageability, location or technological maturity. The
product to be auctioned will be the installed power, electrical energy or a
combination of both, and the price per unit of electrical energy will be
offered in €/MWh.
Regarding the remuneration of energy, the price to be received for each unit
sold in the daily or intraday market will be the award price (for adjustment
and balance services, it will be the price of the respective markets).
Alternatively, it can be established that up to 50% of the energy sold in the
daily or intraday market is sold directly at the market price and is not
subject to the award price.
All the facilities of this Regime will participate in the market and the
Operador del Mercado Ibérico de Energía - Polo Español (OMIE) will carry
out a settlement for differences between the daily or intraday market prices
and the award price of the facilities, the difference being adjusted against
the national purchasing units of the market.
On the other hand, penalties are provided for energy commitments that are not
delivered.
An auction calendar will be approved for a minimum period of 5 years,
updateable at least annually, and which may include deadlines, frequency,
capacity and technologies.
Orders establishing the bases for conducting auctions of aid for renewable
investment.
On 5 August 2020, Orders TED/765/2020 and TED/766/2020, both of 3 August 2020,
were published in the Official State Gazette (“BOE”), establishing the
regulatory bases of auctions for investment aid in thermal energy production
facilities with renewable sources and in electrical energy generation
facilities with renewable sources, respectively, all of which may be
co-financed with funds from the European Union. The aid will be granted
through non-refundable grants through competitive procedures applicable to the
entire national territory, the geographical scope of application being
specified in each call for tender. The actions must be completely finished
before 30 June 2023, unless a more restrictive period is expressly established
in the calls. The Institute for Energy Diversification and Saving (“IDAE”)
has already launched several calls for aid for investment in facilities
through competitive procedures for different regions of the country.
Auctions for renewables in non-mainland electric systems.
On 24 June 2020, the Institute for Energy Diversification and Savings
(“IDAE”) passed a Resolution convening auctions of subsidies for
investment in photovoltaic facilities in the Canary Islands, co-financed with
the ERDF with an allocation of Euros 20 million. The deadline for submitting
applications was 3 October. The actions must be completed before 30 December
2022.
Law 5/2020 of 29 April of the Generalitat de Catalunya.
On 2 June 2020, Law 5/2020 of 29 April 2020, of the Generalitat de Catalunya
(Catalonia Regional Government), on fiscal, financial, administrative and
public sector measures and creation of a tax on facilities affecting the
environment, was published in the Official State Gazette (“BOE”).
Among other aspects, this Law includes the creation and regulation of a tax on
facilities that affect the environment in the area of the Autonomous Community
of Catalonia. Specifically, this new tax is imposed on the production,
storage, transformation and transmission of electrical energy in Catalonia. In
the field of generation, energy production is taxed at a general tariff of
€5/MWh, which will be €1/MWh for combined cycles, excluding in any case
hydro-electric generation and generation from renewable sources, as well as
from biomass, biogas, high-efficiency cogeneration or with slurry. In the
field of transport, a quota is established based on the voltage level of the
facilities, with those with a voltage lower than 30 kV and evacuation
facilities of renewable production being exempt.
Spanish Reserve Fund for Guarantees of Electrointensive Entities (“FERGEI”
for its acronym in Spanish).
During 2018, and as a result of Royal Decree-Law 20/2018, of 7 December 2018,
on urgent measures to boost economic competitiveness in the sector of industry
and commerce in Spain, the Government announced the preparation of a Statute
for electrointensive industrial consumers, that collect their peculiarities.
In 2019, the processing of a draft Royal Decree was initiated in this regard,
which regulates the figure of the electro-intensive consumer, the potential
compensation mechanisms that they could avail themselves of, as well as their
obligations. Likewise, said project regulates the possibility of granting
guarantees to the subscription by electro-intensive consumers of long-term
contracts with electricity suppliers, especially from renewable installations
that do not receive specific remuneration, and which was completed with a
Draft Law that regulated a fund to cover the risks of these contracts.
In this sense, on 27 June 2020, Royal Decree-Law 24/2020, of 26 June 2020, on
social measures to reactivate employment and protect self-employment and
competitiveness of the industrial sector, in which the Spanish Reserve Fund
for Guarantees of Electrointensive Entities (“FERGEI”) is created, for the
coverage by the State of the risks derived from medium and long-term purchase
and sale operations of subscribed electricity supply by consumers who have the
status of electrointensive consumers. This Fund will be endowed with Euros 200
million per year, to cover a maximum of Euros 600 million of investment in 3
years.
Methodology for calculating the charges of the Electric and Gas Systems.
On 7 July 2020, the Ministry for the Ecological Transition and the Demographic
Challenge began the hearing of two Royal Decree projects with the
methodologies for calculating the charges of the Electric and Gas Systems,
which will complement the methodologies for calculating the Access tolls to be
approved by the Spanish National Commission of Markets and Competition
(“CNMC”).
Royal Decree 647/2020, of 7 July 2020, on network codes.
On 8 July 2020, Royal Decree 647/2020, of 7 July 2020, which regulates aspects
necessary for the implementation of the connection network codes of certain
electrical installations.
This Royal Decree includes certain elements associated with the adaptation of
Spanish regulations to the European network codes set forth in Commission
Regulations (EU) 2016/631, (EU) 2016/1388 and (EU) 2016/1447 of 14 April, 17
August and 26 August respectively, which establish the framework of minimum
technical requirements for design and operation that generation facilities,
demand and high-voltage systems connected to direct current must comply with
for connection to the electricity grid. It also includes other modifications
on other provisions, such as Royal Decree 413/2014 of 6 June 2014 regulating
the activity of electrical energy production from renewable energy sources,
cogeneration and waste, and Royal Decree 738/2015 of 31 July 2015, regulating
the generation activity in the Electrical Systems of Non-Mainland Territories
(“TNP”).
Orders executing certain Rulings of the Supreme Court in relation to the
remuneration of the electricity distribution activity.
On 21 September 2020, Orders TED/865/2020 and TED/866/2020, both of 15
September 2020, were published in the Official State Gazette (“BOE”),
executing various Rulings of the Supreme Court in relation to the remuneration
of the electricity distribution activity, establishing new values for certain
parameters.
4. Liquidity and Capital Resources.
4.1. Financial management.
Financial debt.
At 30 September 2020, ENDESA had net financial debt of Euros 7,407 million, an
increase of Euros 1,030 million (+16.2%) compared with 31 December 2019.
The reconciliation of ENDESA's gross and net financial debt at 30 September
2020 and 31 December 2019 is as follows:
Millions of euros
Reconciliation of Financial Debt
30 September 31 December Difference % Var.
2020 ((1))
2019( (1))
Non-current Financial Debt 5,970 5,652 318 5.6
Current Financial Debt 1,714 955 759 79.5
Gross Financial Debt( (2)) 7,684 6,607 1,077 16.3
Cash and Cash Equivalents (270) (223) (47) 21.1
Financial Derivatives Recognised in Financial Assets (7) (7) - -
Net Financial Debt 7,407 6,377 1,030 16.2
1. See the Consolidated Statements of Financial Position at 30 September 2020 and
31 December 2019.
2. At 30 September 2020, this included Euros 31 million corresponding to
financial derivatives recognised under financial liabilities (Euros 21 million
at 31 December 2019).
In analysing the evolution of net financial debt, it must be borne in mind
that in the period January-September 2020 ENDESA, S.A. paid its shareholders
dividends in a gross amount of Euros 1.475 per share, for a pay-out of Euros
1,562 million (see Sections 2.2. Dividends and 4.2. Cash Flows in this
Consolidated Management Report).
The structure of ENDESA's gross financial debt at 30 September 2020 and 31
December 2019 was as follows:
Millions of euros
Structure of Gross Financial Debt
30 September 31 December Difference % Var.
2020
2019
Euro 7,585 6,498 1,087 16.7
U.S. Dollar (USD) 99 109 (10) (9.2)
TOTAL 7,684 6,607 1,077 16.3
Fixed rate 4,691 4,639 52 1.1
Floating rate 2,993 1,968 1,025 52.1
TOTAL 7,684 6,607 1,077 16.3
Average life (years)( (1)) 4.6 5.2 - -
Average cost( (2)) 1.7 1.8 - -
1. Average life of gross financial debt (years) = (Principal 2. Number of valid
days) / (Valid principal at the close of the period 3. Number of days in the
period).
4. Average cost of gross financial debt (%) = (Cost of gross financial debt) /
Average gross financial debt.
At 30 September 2020, 61% of the gross financial debt was at fixed interest
rates, while 39% was at floating rates. At this date, 99% of the gross
financial debt was denominated in euros.
In line with the 2020-2022 Strategic Plan, ENDESA promotes innovative
financial solutions on competitive conditions and encourages its partners and
stakeholders to share a long-term sustainable vision. Thus, at 30 September
2020, sustainable financing represented 47% of ENDESA's gross financial debt.
Certain ENDESA companies' loans and borrowings contain the usual covenants in
this type of agreement. At the date of approval of this Consolidated
Management Report, neither ENDESA, S.A. nor any of its subsidiaries were in
breach of their financial obligations or of any type of obligation that might
give rise to early maturity of their financial commitments.
As of the date of approval of this Consolidated Management Report, ENDESA has
not had to resort to refinancing processes for its financial debt as a
consequence of the health crisis caused by COVID-19.
Similarly, during the nine-month period ended 30 September 2020, ENDESA did
not amend, renegotiate or cancel any clauses contained in lease agreements in
which it acts as lessee, and therefore neither the right-of-use asset nor the
liability represented by the present value of the obligation to make the lease
payments during the term thereof has been modified.
Main financial transactions.
In the first nine months of 2020, ENDESA S.A. registered a new Euro Commercial
Paper (ECP) SDG7 issue programme for Euros 4,000 million, the outstanding
balance at 30 September 2020 being Euros 1,512 million, renewable with the
backing of irrevocable credit lines. This Programme incorporates, for the
first time, sustainability objectives, in line with ENDESA's Strategic Plan.
Also, the following financial transactions were formalised during the first
nine months of 2020:
Millions of Euros
Counterparty Date of Signing Expiry Date Amount
Loan ((1) (2)) Caixabank, S.A., Bankia, S.A. and Kutxabank, S.A. 17 April 2020 19 April 2022 300
Credit Line ((1) (2)) Caixabank, S.A., Bankia, S.A. and Kutxabank, S.A. 17 April 2020 19 April 2022 250
Intercompany Credit Line ENEL Finance International, N.V. 3 June 2020 3 June 2022 700
Loan ((3)) European Investment Bank (EIB) 30 July 2020 3 September 2035 35
TOTAL 1,285
1. They include sustainability clauses.
2. Formalized financial operations to strengthen the liquidity position and
ensure business continuity in the current context.
3. Financial operation formalized to promote ENDESA's electric mobility plan and
partially finance more than 8,500 recharge points in Spain. It was paid out on
1 September 2020. This provision is at a floating rate, repayable from
September 2024.
On 30 September 2020 ENDESA, S.A. formalised the novation of a bond, together
with the associated derivative, for an amount of Euros 12 million, the issuer
until then being International ENDESA B.V. With this transaction the financial
activity of International ENDESA B.V. came to an end, leaving the company
pending liquidation.
Other transactions: Temporary share buyback programme.
The Board of Directors of ENDESA, S.A., in a meeting held on 28 September
2020, agreed to carry out a Temporary Share Buyback Programme in accordance
with the authorisation granted by the General Shareholders' Meeting held on
September 5 May 2020, in relation to the long-term variable remuneration plan
called Strategic Incentive 2020-2022, which includes the delivery of shares as
part of the payment of said incentive.
The Buy-Back Programme, managed and implemented by Exane, S.A. (“Exane BNP
Paribas”), and lasting from 30 September to 13 October 2020, was subject to
the provisions of Commission Delegated Regulation (EU) 2016/1052 of 8 March
2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and
of the Council of 16 April 2014, and its purpose was to allow the Company to
comply with the obligations to deliver shares to its managers deriving from
the “Strategic Incentive 2020-2022” remuneration scheme. In the execution
thereof, 82,799 shares, representing 0.00782% of the Company's share capital,
were acquired.
Liquidity.
At 30 September 2020, ENDESA had liquidity of Euros 4,326 million (Euros 3,300
million at 31 December 2019) as detailed below:
Millions of Euros
Liquidity
30 September 31 December Difference % Var.
2020
2019
Cash and Cash Equivalents 270 223 47 21.1
Unconditional availability in credit lines ((1)) 4,056 3,077 979 31.8
TOTAL 4,326 3,300 1,026 31.1
Debt Maturity Coverage (number of months) ((2)) 18 26 - -
1. At 30 September 2020 and 31 December 2019, Euros 1,000 million correspond to
the credit line available with ENEL Finance International, N.V. In addition,
at 30 September 2020, Euros 700 million correspond to the credit line
available with ENEL Finance International, N.V.
2. Coverage of debt maturities (number of months) = Maturity period (number of
months) for vegetative debt that could be covered with the liquidity
available.
ENDESA has a solid financial situation and unconditional credit lines
contracted with first-rate entities available for significant amounts. This,
together with the implementation of specific plans for the improvement and
efficient management of liquidity, it is estimated that it will allow to face
the impact caused by the difficulties of the economic situation.
The undrawn credit lines guarantee the refinancing of current borrowings
presented under the item Non-Current Borrowings in the accompanying
Consolidated Statement of Financial Position, which amounted to Euros 32
million at 30 September 2020 (Euros 29 million at 31 December 2019).
Treasury investments considered as cash and cash equivalents are highly liquid
and entail no risk of changes in value, mature within 3 months of their
contract date and accrue interest at the market rates for such instruments.
At 30 September 2020, the breakdown of the nominal value of gross financial
debt without derivatives by maturity was as follows:
Millions of Euros
Carrying amount Nominal Value Maturities
30 September 2020
Current Non-current 2020 2021 2022 2023 Subsequent
Bonds and other negotiable securities 1,532 1,512 12 1,487 25 - - 12
Bank Borrowings 2,269 102 2,170 25 87 524 190 1,446
Other financial liabilities 3,852 100 3,752 27 91 64 59 3,611
TOTAL 7,653 1,714 5,934 1,539 203 588 249 5,069
Leverage.
The level of consolidated leverage is defined as an indicator for monitoring
the financial situation, data at 30 September 2020 and 31 December 2019 being
as follows:
Millions of Euros
Leverage % Var.
30 September 31 December
2020( (1))
2019( (1))
Net Financial Debt: 7,407 6,377 16.2
Non-current Financial Debt 5,970 5,652 5.6
Current Financial Debt 1,714 955 79.5
Cash and Cash Equivalents (270) (223) 21.1
Financial Derivatives Recognised in Financial Assets (7) (7) -
Equity: 8,534 7,837 8.9
Of the Parent 8,380 7,688 9.0
Of Non-Controlling Interests 154 149 3.4
Leverage (%) ((2)) 86.79 81.37 NA
1. See the Consolidated Statements of Financial Position at 30 September 2020 and
31 December 2019.
2. Leverage (%) = Net Financial Debt/Equity.
Credit Rating.
ENDESA's credit ratings are as follows:
Credit Rating
30 September 2020 ((1)) 31
Dec
emb
er
201
9
((1
))
Long-term Short-term Outlook Long-term Short-term Outlook
Standard & Poor’s BBB+ A-2 Stable BBB+ A-2 Stable
Moody’s Baa2 P-2 Positive Baa2 P-2 Positive
Fitch A- F2 Stable A- F2 Stable
1. At the respective dates of approval of the Consolidated Management Report.
ENDESA's credit rating is strongly influenced by the rating of its parent
company ENEL in accordance with the methods used by the rating agencies, and
at the date of approval of this Consolidated Management Report it is
classified as Investment grade by all the rating agencies.
ENDESA works to maintain its investment grade credit rating in order to
efficiently access money markets and bank financing, and to obtain
preferential terms from its main suppliers.
4.2. Cash flows.
At 30 September 2020 and 31 December 2019, the amount of cash and cash
equivalents breaks down as follows (see Section 4.1. Financial Management in
this Consolidated Management Report):
Millions of Euros
Cash and Cash Equivalents
30 September 31 December Difference % Var.
2020( (1))
2019( (1))
Cash in hand and at banks 270 223 47 21.1
Other Cash Equivalents - - - -
TOTAL 270 223 47 21.1
1. See the Consolidated Statements of Financial Position at 30 September 2020 and
31 December 2019.
ENDESA's net cash flows in the period January-September 2020 and 2019,
classified by activities (operating, investing and financing) were as follows:
Millions of Euros
Statement of cash flows
January-September January-September Difference % Var.
2020 ((1))
2019 ((1))
Net cash flows from operating activities 1,969 1,810 159 8.8
Net cash flows from investing activities (1,297) (1,427) 130 (9.1)
Net cash flows from financing activities (625) (190) (435) 228.9
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
In the period January-September 2020, net cash flows generated by operating
activities (Euros 1,969 million) made it possible to attend the net payments
of the investing activities (Euros 1,297 million) and financing (Euros 625
million).
Net cash flows from operating activities.
In the period January-September 2020, net cash flows from operating activities
amounted to Euros 1,969 million, 8.8% more than in the same period of the
previous year (Euros 1,810 million in the period January-September 2019), as
follows:
Millions of Euros
January - September 2020 ((1)) January - September 2019 ((1)) Difference % Var.
Gross Profit Before Taxes and Non-Controlling Interests 1,988 198 1,790 904.0
Adjustments for: 897 2,877 (1,980) (68.8)
Depreciation and amortisation and impairment losses 1,104 2,563 (1,459) (56.9)
Other adjustments (net) (207) 314 (521) (165.9)
Changes in working capital: (530) (835) 305 (36.5)
Trade and other receivables 104 86 18 20.9
Inventories (241) (115) (126) 109.6
Current financial assets (39) (361) 322 (89.2)
Trade payables and other current liabilities( (2)) (354) (445) 91 (20.4)
Other cash flows from/(used in) operating activities: (386) (430) 44 (10.2)
Interest received 23 21 2 9.5
Dividends received 22 24 (2) (8.3)
Interest paid( (3)) (84) (75) (9) 12.0
Income tax paid (164) (177) 13 (7.3)
Other proceeds from/(payments for) operating activities ((4)) (183) (223) 40 (17.9)
NET CASH FLOWS FROM OPERATING ACTIVITIES 1,969 1,810 159 8.8
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
2. In the January-September 2020 period, they include Euros 17 million
corresponding to the Public Responsibility Plan and purchases of supplies
related to COVID-19 (see Sections 1.3.2. Operating Costs and 5. COVID-19
Health Crisis in this Consolidated Management Report).
3. Includes interest paid on financial liabilities and for rights of use for
Euros 25 million and Euros 21 million respectively.
4. Corresponding to payments of provisions.
The variations in the various items determining the net cash flows from
operating activities include:
* The lower gross profit before tax and non-controlling interests net of
depreciation and amortisation and other adjustments for the period (Euros 190
million).
* Changes in working capital between the two periods amounting to Euros 305
million, mainly as a result of the decrease in payments to trade creditors
(Euros 91 million), the positive evolution of trade and other receivables
(Euros 18 million), increased payments for inventories (Euros 126 million) and
the positive evolution of the items to be collected for compensations for
extra costs of generation in Non-Mainland Territories (“TNP”) (Euros 274
million).
* The decrease in other net payments from operating activities amounting to
Euros 40 million.
At 30 September 2020, 31 December 2019 and 30 September 2019, working capital
comprised the following items:
Millions of Euros
Working Capital
30 September 31 December 30 September
2020
2019
2019
Current Assets( (1)) 5,735 5,877 5,516
Inventories 917 1,177 1,055
Trade and other receivables 3,560 3,485 3,037
Current financial assets 1,258 1,215 1,424
Compensation for Extra Costs of Generation in Non-Mainland Territories 501 561 824
(“TNP”)
Collection Rights for the Financing of the Deficit of Regulated Activities 458 389 400
Remuneration of Distribution Activity 221 178 142
Others 78 87 58
Current Liabilities ((2)) 5,986 7,510 5,588
Current provisions 399 576 474
Trade Payables and Other Current Liabilities 5,587 6,934 5,114
Parent Company Dividend - 741 -
Others 5,587 6,193 5,114
1. Excluding Cash and cash equivalents and Financial Derivative Assets
corresponding to financial debt.
2. Excluding Current Financial Debt and financial derivative liabilities
corresponding to financial debt.
In the January-September period of 2020, the Company also continued with its
active management policy for current assets and liabilities, focusing on,
among other aspects, the improvement of processes, the factoring of
receivables and agreements extending payment periods with suppliers.
Net cash flows used in investing activities.
In the period January-September 2020, net cash flows used in investment
activities amounted to Euros 1,297 million (Euros 1,427 million in the period
January-September 2019) and included:
* Net cash payments used to acquire property, plant and equipment and intangible
assets:
Millions of Euros
Sections January-September January-September
2020 ((1))
2019 ((1))
Acquisition of Property, Plant and Equipment and Intangible Assets (1,234) (1,323)
Acquisition of Property, Plant and Equipment( (2)) 4.3 (883) (1,208)
Acquisition of intangible assets 4.3 (137) (136)
Facilities transferred from customers 29 20
Suppliers of property, plant and equipment (243) 1
Proceeds from sales of property, plant and equipment and intangible assets 18 14
Grants and other deferred income 68 49
TOTAL (1,148) (1,260)
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
2. In the January-September 2020 period it does not include recognition of
right-of-use assets amounting to Euros 141 million.
* Net cash payments for investments and/or receipts from disposals of holdings
in Group companies:
Millions of Euros
Sections January-September January-September
2020 ((1))
2019 ((1))
Equity investments in Group Companies (17) (2)
Companies acquired by ENEL Green Power España, S.L.U. (EGPE) 2.1 (14) (2)
Suggestion Power, Unipessoal, Lda. 2.1 (3) -
Disposals of investments in Group Companies 21 -
ENDESA Soluciones, S.L. 2.1 21 -
TOTAL 4 (2)
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
Net cash flows used in financing activities.
In the first nine months of 2020, net cash flows of financing activities
amounted to Euros 625 million (Euros 190 million in the first nine months of
2019), including mainly:
* Cash flows in respect of equity instruments:
Millions of Euros
January-September January-September
2020 ((1))
2019 ((1))
Contribution of Funds from San Francisco de Borja, S.A. 3 -
Contribution of Funds from Bosa del Ebro, S.L. - 10
TOTAL 3 10
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
* Drawdowns of non-current financial debt:
Millions of Euros
Sections January-September January-September
2020 ((1))
2019 ((1))
Drawdowns on the loan from Caixabank, S.A., Bankia, S.A. and Kutxabank, S.A. 4.1 300 -
Drawdowns on credit lines with ENEL Finance International, N.V. 4.1 500 -
Drawdowns of the European Investment Bank (EIB) Green Loan 35 335
Drawdowns of the Official Credit Institute (ICO) Green Loan - 300
Drawdowns of other credit lines 7 19
Others 12 2
TOTAL 854 656
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
* Reimbursements from non-current financial debt:
Millions of Euros
January-September January-September
2020 ((1))
2019 ((1))
Repayments of ENEL Finance International N.V. credit lines. (500) -
Repayment of other credit lines (41) (208)
Others (6) (10)
TOTAL (547) (218)
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
* Drawdowns and repayments of current financial debt:
Millions of Euros
Sections January-September January-September
2020 ((1))
2019 ((1))
Drawdowns
Euro Commercial Paper (ECP) issues 4.1 11,875 8,622
Others 34 43
Amortisations
Euro Commercial Paper (ECP) repayments 4.1 (11,160) (7,636)
Payments of Right-of-Use Contracts (49) (43)
European Investment Bank (EIB) Green Loan Repayments (40) (40)
Others (28) (64)
TOTAL 632 882
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
2. Corresponding to companies of ENEL Green Power España, S.L.U. (EGPE).
* Dividends payments:
Millions of Euros
Sections January-September January-September
2020 ((1))
2019 ((1))
Dividends of the Parent paid 2.2 and 4.1 (1,562) (1,511)
Dividends paid to non-controlling interests( (2)) (5) (9)
TOTAL (1,567) (1,520)
1. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
2. Corresponding to companies of ENEL Green Power España, S.L.U. (EGPE).
4.3. Investments.
In the period January-September 2020, ENDESA made gross investments of Euros
1,173 million. Of this amount, Euros 1,161 million related to investments in
property, plant and equipment and intangible assets, and the remaining Euros
12 million to financial investments, as per the following details:
Millions of Euros
Investments( (1))
January-September January-September % Var.
2020
2019
Generation and Supply 573 988 (42.0)
Generation in Non-Mainland Territories (“TNP”) 54 40 35.0
Other Generation and Supply 519 948 (45.3)
Distribution 386 334 15.6
Structure and Others( (2)) 65 7 828.6.
TOTAL PROPERTY, PLANT & EQUIPMENT( (3) (4)) 1,024 1,329 (22.9)
Generation and Supply 100 89 12.4
Generation in Non-Mainland Territories (“TNP”) - - -
Other Generation and Supply 100 89 12.4
Distribution 19 27 (29.6)
Structure and Others( (2)) 18 20 (10.0)
TOTAL INTANGIBLE ASSETS( (4)) 137 136 0.7
FINANCIAL INVESTMENTS 12 37 (67.6)
TOTAL GROSS INVESTMENTS 1,173 1,502 (21.9)
Capital grants and Facilities transferred (97) (62) 56.5
Generation and Supply (5) (61) (91.8)
Distribution (92) (1) 9.100.0.
TOTAL NET INVESTMENTS ((5)) 1,076 1,440 (25.3)
1. Does not include company acquisitions carried out during the period (see
Section 2.1 Scope of Consolidation in this Consolidated Management Report).
2. Structure, Services and Adjustments.
3. In the January-September 2020 period it includes recognition of right-of-use
assets amounting to Euros 141 million.
4. In the period January-September 2020 it includes Euros 1,016 million relating
to investments for low-carbon products, services and technologies (Euros 1,309
million in the same period of 2019).
5. Net investments = Gross investments - Capital grants and facilities sold.
Investments in property, plant and equipment.
Gross investments in generation in the period January-September 2020 related
mainly to investments for the construction of power plants based on renewable
sources for an amount of Euros 267 million. They also include the recognition
of a right-of-use asset, corresponding to the land where certain renewable
generation facilities are located, for an amount of Euros 72 million.
The reduction in gross investments in generation and supply (-42.0%) compared
with the period January-September 2019 is basically due to the fact that in
said period the investments mainly included the construction of the wind and
photovoltaic power awarded in the auctions held in 2017 and which were put
into operation during 2019.
Gross investments in supply correspond mainly to the development of activity
related to new products and services amounting to Euros 13 million.
Gross investments in distribution relate to grid extensions and expenditure
aimed at optimising the functioning of grid to ensure greater efficiency and
service quality.
As for gross investments in structure and other, they include the recognition
of a right-of-use asset in an amount of Euros 58 million corresponding to the
renewal of the lease contract for ENDESA's headquarters.
Investments in intangible assets.
Gross investments in intangible assets in the first nine months of 2020
correspond mainly to IT applications and ongoing investments in ICT activities
for the sum of Euros 72 million and the capitalisation of incremental costs
incurred in acquiring customer contracts for the sum of Euros 60 million.
Financial investments.
Gross investments for the January-September 2020 period mainly consisted of
various financial credits.
5. COVID-19 Health Crisis.
The coronavirus epidemic (COVID-19) was first reported to the World Health
Organisation (WHO) in late December 2019.
On 11 March 2020, the World Health Organisation (WHO) confirmed that the
COVID-19 health emergency had reached the level of a pandemic.
In order to contain the effects of the infection, while waiting for an
available vaccine, the governments of the different countries have adopted
numerous containment measures, essentially aimed at restricting the free
movement of people, which have been maintained or modified, depending on its
effectiveness and the spread of the virus.
In Spain, on 14 March 2020, the Government declared a first nationwide state
of alarm to deal with the health emergency situation caused by the COVID-19
which, after successive extensions, finished on 21 June 2020. From that moment
on, a series of protocols for prevention, containment and coordination were
adopted, oriented to face and control the pandemic until the health crisis
situation ends. consistent with the various regulatory provisions that have
been issued by both the Autonomous Communities and the central Government
since that time. In this sense, on 25 October 2020 the Government has declared
a new state of alarm throughout the national territory to contain the spread
of the disease, with initial validity until 9 November 2020, without prejudice
to the extensions that may be approved and the different application of the
measures provided for in the regulations to be made in the various Autonomous
Communities. ENDESA constantly reviews the adaptation of these protocols to
the new provisions issued by national, regional or local authorities depending
on the evolution of the aforementioned health crisis.
ENDESA carries out a large part of its activities under regulated frameworks
and during the state of health alarm deriving from COVID-19, its activities
have been classified as essential, which is why it has continued to develop
them, adjusting its protocols when necessary.
During this period, business continuity management has relied on teleworking
for non-critical positions, which has been in place in the organisation for
some years and was recommended in Royal Decree Law 8/2020 of 17 March 2020,
which stressed the preference for remote working for all situations in which
it was possible, and which, thanks to investments in digitalisation, has made
it possible to work remotely with the same level of efficiency and
productivity. Generalised use has been made of digitised infrastructures that
contribute to the normal operation of production assets, the continuity of the
electricity supply and the remote management of all activities relating to the
market and customer relations. Likewise, measures and procedures have been
applied that are helping our people to work safely and reduce the risks of
infection. Although the preferential nature of distance work over face-to-face
work, based on the aforementioned Royal Decree Law, ended on 21 September
2020, ENDESA employees who were working from home are currently still doing
so.
In this context, ENDESA, as part of its commitment to society, has designed a
Public Responsibility Plan, for Euros 25 million, for direct aid to the
purchase of material, special supply conditions and donations to alleviate the
main health and social needs caused by the COVID-19 health crisis, as well as
programs to support the re-launching of the economy in the most negatively
affected segments. During the period January-September 2020 the amount accrued
for this concept amounted to Euros 17 million (Euros 15 million, net of the
tax effect) (see Sections 1.3.2. Operating Costs and 1.3.7. Net Income).
Taking into account the complexity of the markets due to their globalisation
and the absence, for the moment, of an effective medical treatment of the
virus, the current context has changed the probability and impact of some of
the risks to which ENDESA is exposed, although the consequences for ENDESA’s
operations are uncertain and will depend to a large extent on how the pandemic
evolves and spreads in the coming months, as well as on the reaction and
ability to adapt of all the economic agents affected.
Based on this, and in compliance with the recent European Securities and
Markets Authority (ESMA) recommendations of 11 March 2020, ENDESA launched an
internal analysis to evaluate the actual and potential impacts of COVID-19 on
business activities, on the financial situation and on economic performance,
fundamentally concerning the following dimensions of analysis:
* Forecast of potential macroeconomic impacts.
* Forecast of the potential prices of electricity and gas in the energy markets
and other commodities.
* Estimation of the impacts on the demand for electricity and gas.
* Analysis of possible delays in supplies and fulfilment of contracts, at the
supply chain level.
* Monitoring of financial markets and liquidity situation.
Among the risk factors that affect ENDESA and that could be exacerbated by a
virus resurgence or by the extension of the economic crisis, the following
stand out:
* Adverse economic conditions due to the crisis following the COVID-19 pandemic
may prolong the negative impact on electricity and gas demand in the last
quarter of 2020. In this regard, during the first nine months of 2020, the
accumulated mainland demand for electrical energy decreased by 6.1% compared
with the same period of the previous year, the accumulated demand for
electrical energy in the Non-Mainland Territories (“TNP”) fell by 14.3%
and conventional gas demand by 7.1%.
* Variations in demand as a result of a resurgence of COVID-19 could affect
electricity and natural gas supply contracts, or associated hedges, since
these are signed on the basis of certain assumptions regarding future market
prices for electricity and natural gas.
* ENDESA's business activities are carried out in an environment of fierce
competition. ENDESA's ability to contract new customers and sign contracts for
added value services could continue to be affected after a flare-up due to the
limitations imposed by the management of the health crisis that limits
physical visits to customers. At 30 September 2020, ENDESA had 5,735,601
electricity customers in the deregulated market, a 1.6% decrease on the number
of customers at 31 December 2019. At that same date, the number of ENDESA’s
gas customers in the deregulated market was 1,435,885, 1.2% more than at 31
December 2019.
* The adverse economic conditions due to the crisis after the COVID-19 pandemic
may have a negative impact on the ability of ENDESA’s customers to meet
their payment commitments. In this regard, Royal Decree Law 26/2020 of 7 July
on economic reactivation measures to face the impact of COVID-19 in the areas
of transport and housing, which entered into force on 9 July, extended to 30
September 2020 the period in which, exceptionally, the supply of electricity
and gas to the principal residence of private individual customers could not
be cut off for reasons other than security of supply.
During the period January-September 2020, the larger provisions recognised for
trade customers related to COVID-19 amounted to Euros 23 million.
* A new mass contagion of the population by COVID-19 and, consequently, the
approval of regulations related with a limitation of the mobility of people or
a new lockdown, could be limiting factors for ENDESA, due to its need to have
contractors to carry out work. In this sense, the actions carried out on the
supply chain have enabled ENDESA to continue with the investment effort that
ENDESA is carrying out without significant incidents. Gross material
investments in the period January-September 2020 amounted to Euros 1,024
million and no material impacts are expected with respect to start-up dates of
projects caused by the pandemic.
* The prolongation of the current health situation derived from COVID-19 in the
coming months could limit ENDESA's access to capital markets and change the
terms on which it obtains financing, consequently affecting its activity,
results, financial position and cash flows. To this end, ENDESA has a solid
financial position and unconditional credit lines contracted with first-rate
entities available for significant amounts. This, together with the
implementation of specific plans for the improvement and efficient management
of liquidity, is expected to allow the impact caused by the difficulties of
the economic situation to be faced (see Section 4.1. Financial Management in
this Consolidated Management Report).
Overall, during the period January-September 2020 the effects described above
have led to a reduction in the gross operating profit (EBITDA) and in the
operating profit (EBIT) of approximately Euros 81 million and Euros 104
million, respectively, in addition to the expenses accrued by the Public
Responsibility Plan amounting to Euros 17 million.
At the date of issue of this Consolidated Management Report it is not possible
to make a precise estimate of the possible future impact of COVID-19 on the
company's results during the next few months due, among other things, to the
uncertain future evolution of the macroeconomic, financial and commercial
variables and their impact on the recovery of the economy, as well as the
regulatory measures currently in force and the additional measures which might
be adopted in the future by the competent authorities.
As has been done to date, in the coming months, a constant watch on
developments and continuous monitoring of changes in macroeconomic, financial
and trade variables will continue in order to update the estimate of possible
impacts in real time, as well as allowing them to be mitigated with reaction
and contingency plans if they materialise.
APPENDIX I
Statistical Appendix
Industrial Data.
Electricity Generation ((1)) January – September 2020 January – September 2019 % Var.
GWh Percentage (%) GWh Percentage (%)
Mainland 34,560 82.0 37,635 80.8 (8.2)
Renewables 9,943 23.6 6,857 14.7 45.0
Hydroelectric 6,042 14.3 3,981 8.5 51.8
Wind( (2)) 3,481 8.3 2,832 6.1 22.9
Photovoltaic 420 1.0 43 0.1 876.7
Biomass - - 1 - (100.0)
Nuclear 19,523 46.3 20,245 43.5 (3.6)
Coal 975 2.3 4,814 10.3 (79.7)
Combined Cycle (CCGT)( (3)) 4,119 9.8 5,719 12.3 (28.0)
Non-Mainland Territories (“TNP”) 7,590 18.0 8,953 19.2 (15.2)
Coal 55 0.1 1,539 3.3 (96.4)
Fuel-gas 3,184 7.6 3,031 6.5 5.0
Combined Cycle (CCGT)( (3)) 4,351 10.3 4,383 9.4 (0.7)
TOTAL 42,150 100.0 46,588 100.0 (9.5)
1. In power plant busbars.
2. In the period January-September 2020 it includes 92 GWh corresponding to
Non-Mainland Territories (“TNP”) (94 GWh in the period January-September
2019).
3. Corresponding to natural gas.
Gross Installed Capacity 30 September 2020 31 December 2019 % Var.
MW Percentage (%) MW Percentage (%)
Mainland 17,465 78.7 19,498 80.5 (10.4)
Renewables( (1) (2)) 7,572 34.1 7,452 30.8 1.6
Hydroelectric 4,843 21.8 4,792 19.8 1.1
Wind( (3)) 2,377 10.7 2,308 9.5 3.0
Photovoltaic 352 1.6 352 1.5 -
Nuclear 3,443 15.5 3,443 14.2 -
Coal 2,627 11.9 4,780 19.7 (45.0)
Combined Cycle (CCGT)( (4)) 3,823 17.2 3,823 15.8 -
Non-Mainland Territories (“TNP”) 4,733 21.3 4,733 19.5 -
Coal 260 1.2 260 1.1 -
Fuel-gas 2,619 11.8 2,619 10.8 -
Combined Cycle (CCGT)( (4)) 1,854 8.3 1,854 7.6 -
TOTAL 22,198 100.0 24,231 100.0 (8.4)
1. At 30 September 2020 and 31 December 2019, the additional capacity was 88 MW
and 926 MW respectively.
2. At 30 September 2020, gross mainland installed capacity based on renewable
sources represented 43.1% of total gross mainland installed capacity (38.0% at
31 December 2019).
3. At 30 September 2020 and 31 December 2019, it includes 40 MW corresponding to
Non-Mainland Territories (“TNP”).
4. Corresponding to natural gas.
Net Installed Capacity 30 September 2020 31 December 2019 % Var.
MW Percentage (%) MW Percentage (%)
Mainland 17,075 80.0 19,066 81.6 (10.4)
Renewables( (1) (2)) 7,478 35.0 7,408 31.7 0.9
Hydroelectric 4,749 22.3 4,748 20.3 -
Wind( (3)) 2,377 11.1 2,308 9.9 3.0
Photovoltaic 352 1.6 352 1.5 -
Nuclear 3,318 15.6 3,318 14.2 -
Coal 2,523 11.8 4,584 19.6 (45.0)
Combined Cycle (CCGT)( (4)) 3,756 17.6 3,756 16.1 -
Non-Mainland Territories (“TNP”) 4,263 20.0 4,299 18.4 (0.8)
Coal 241 1.1 241 1.0 -
Fuel-gas 2,334 10.9 2,334 10.0 -
Combined Cycle (CCGT)( (4)) 1,688 8.0 1,724 7.4 (2.1)
TOTAL 21,338 100.0 23,365 100.0 (8.7)
1. At 30 September 2020 and 31 December 2019, the additional capacity was 88 MW
and 926 MW respectively.
2. At 30 September 2020, net mainland installed capacity based on renewable
sources represented 43.6% of total net mainland installed capacity (38.6% at
31 December 2019).
3. At 30 September 2020 and 31 December 2019, it includes 40 MW corresponding to
Non-Mainland Territories (“TNP”).
4. Corresponding to natural gas.
GWh
Gross electricity sales ((1)) January-September January-September % Var.
2020
2019
Regulated Price 9,886 9,961 (0.8)
Deregulated market 56,528 63,733 (11.3)
Spanish 49,022 55,775 (12.1)
Outside Spain 7,506 7,958 (5.7)
TOTAL 66,414 73,694 (9.9)
1. In power plant busbars.
GWh
Net electricity sales ((1)) January-September January-September % Var.
2020
2019
Regulated Price 8,523 8,521 0.0
Deregulated market 52,062 58,497 (11.0)
Spanish 44,974 50,949 (11.7)
Outside Spain 7,088 7,548 (6.1)
TOTAL 60,585 67,018 (9.6)
1. Sales to end customers.
Thousands
Number of customers (Electricity)( (1) (2)) 30 September 31 December % Var.
2020
2019
Regulated market 4,763 4,807 (0.9)
Mainland Spain 4,045 4,074 (0.7)
Non-Mainland Territories (“TNP”) 718 733 (2.0)
Deregulated market 5,736 5,828 (1.6)
Mainland Spain 4,495 4,619 (2.7)
Non-Mainland Territories (“TNP”) 844 859 (1.7)
Outside Spain 397 350 13.4
TOTAL 10,499 10,635 (1.3)
Income / Supply Points( (3)) 0.8 1.3 -
1. Supply points.
2. Customers of the supply companies.
3. Ratio of income from electricity sales to the number of electricity supply
points (Thousands of euros / Supply Point) for the period from January to
September 2020 and the 2019 financial year, respectively.
Percentage (%)
Trends in electricity demand ((1)) January-September January-September
2020
2019
Mainland ((2)) (6.1) (2.0)
Non-Mainland Territories (“TNP”) ((3)) (14.3) 0.3
1. Source: Red Eléctrica de España, S.A. (REE). In power plant busbars.
1. Adjusted for working days and temperature: -6.4% in the period
January-September 2020 and -3.0% in the same period of 2019.
1. Adjusted for working days and temperature: -26.2% in the period
January-September 2020 and +0.6% in the same period of 2019.
Percentage (%)
Market share (electricity) ((1)) 30 September 31 December
2020
2019
Mainland Generation( (2)) 18.2 19.1
Distribution 43.3 44.1
Supply 33.0 34.1
1. Source: In-house.
2. Includes renewables.
GWh
Gas sales January-September January-September % Var.
2020
2019
Deregulated market 28,037 33,386 (16.0)
Regulated market 722 848 (14.9)
International market 12,279 14,512 (15.4)
Wholesale business 7,724 6,783 13.9
TOTAL( (1)) 48,762 55,529 (12.2)
1. Excluding own generation consumption.
Thousands
Number of customers (gas) ((1)) 30 September 31 December % Var.
2020
2019
Regulated market 232 230 0.9
Mainland Spain 208 206 1.0
Non-Mainland Territories (“TNP”) 24 24 -
Deregulated market 1,436 1,419 1.2
Mainland Spain 1,253 1,255 (0.2)
Non-Mainland Territories (“TNP”) 72 72 -
Outside Spain 111 92 20.7
TOTAL 1,668 1,649 1.2
Income / Supply Points( (2)) 0.8 1.5 -
1. Supply points.
2. Ratio of income from gas sales to the number of gas supply points (Thousands
of euros / Supply Point) for the period from January to September 2020 and the
2019 financial year, respectively.
Percentage (%)
Trend in demand for gas ((1)) January-September January-September
2020
2019
Domestic market (10.6) 16.9
Domestic - conventional (7.1) 0.2
Electricity sector (19.4) 98.8
1. Source: Enagás, S.A.
Percentage (%)
Market share (gas) ((1)) 30 September 31 December
2020
2019
Deregulated market 15.6 15.6
1. Source: In-house.
Distribution Business 30 September 31 December % Var.
2020
2019
Distribution and Transmission Networks (km) 317,232 316,320 0.3
Digitalised Customers( (1)) 12,342 12,178 1.3
End Users( (2)) 12,272 12,235 0.3
Ratio of Digitalised Customers( (3)) 100.6 99.5 1.1
Public and Private Recharging Points (Units) 6,141 5,000 22.8
1. Smart meters activated (Thousands).
2. Customers of distribution companies (Thousands).
3. Number of Digitalised Customers / End Users (%).
Supply Quality Measures January-September January-September % Var.
2020
2019
Energy Distributed (GWh)( (1)) 79,211 84,367 (6.1)
Energy Losses (%)( (2)) 9.6 9.4 2.1
Installed Capacity Equivalent Interruption Time (Average) – (ICEIT) 33.0 38.4 (14.1)
((Minutes) (3))
System Average Interruption Duration Index – SAIDI (Minutes)( (2)) 76.5 74.4 2.8
System Average Interruption Frequency Index – SAIFI( (2)) 1.4 1.3 7.7
1. In supplier busbars.
2. Source: ENDESA, in accordance with the criteria used by the National
Commission on Markets and Competition (“CNMC”) to calculate the incentives
and penalties corresponding to the reduction of losses in the distribution
networks.
3. In accordance with the calculation procedure set down by Royal Decree
1995/2000 of 1 December 2000.
Workforce.
Number of Employees
Headcount at end of period
30 September 2020 31 December 2019 % Var.
Men Women Total Men Women Total
Generation and Supply 3,877 1,131 5,008 4,153 1,143 5,296 (5.4)
Distribution 2,516 440 2,956 2,527 442 2,969 (0.4)
Structure and Others( (1)) 918 806 1,724 893 794 1,687 2.2
TOTAL 7,311 2,377 9,688 7,573 2,379 9,952 (2.7)
1. Structure and Services.
Number of Employees
Average headcount
January – September 2020 January – September 2019 % Var.
Men Women Total Men Women Total
Generation and Supply 4,046 1,112 5,158 4,089 1,074 5,163 (0.1)
Distribution 2,502 434 2,936 2,504 436 2,940 (0.1)
Structure and Others( (1)) 893 785 1,678 870 767 1,637 2.5
TOTAL 7,441 2,331 9,772 7,463 2,277 9,740 0.3
1. Structure and Services.
Financial Data.
Millions of Euros
Consolidated Income Statement
January-September January-September % Var.
2020
2019
Sales 12,314 14,285 (13.8)
Procurements and Services (8,562) (10,415) (17.8)
Contribution margin ((1)) 4,397 4,390 0.2
Gross Operating Profit EBITDA ((2)) 3,136 2,898 8.2
Operating Profit (EBIT)( (3)) 2,032 335 506.6
Net Financial Income/(Expense) ((4)) (82) (139) (41.0)
Income before Tax 1,988 198 904.0
Net Income( (5)) 1,511 176 758.5
Net Ordinary Income ((6)) 1,700 1,228 38.4
1. Contribution margin = Income - Procurements and Services.
2. EBITDA = Income - Procurements and Services + Self-constructed Assets -
Personnel expenses - Other fixed operating expenses.
3. EBIT = EBITDA - Depreciation and Amortisation and Impairment Losses.
4. Net Financial Income/(Expense) = Financial Income - Financial Expense + Net
Exchange Differences.
5. Net income/(loss): Profit/(loss) of the Parent.
6. Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
Euros
Valuation parameters January-September January-September % Var.
2020
2019
Net Ordinary Earnings per Share( (1)) 1.606 1.160 38.4
Net Earnings per Share( (2)) 1.427 0.166 758.5
Cash Flow per Share( (3)) 1.860 1.710 8.8
Book Value per Share( (4)) 7.915 ((5)) 7.873( (6)) 9.0
1. Net Ordinary Income per Share = Net Ordinary Income of the Parent / No. of
shares at the end of the period.
2. Net earnings per share = Net income of the Parent/ No. of shares at the end of
the period.
3. Cash flow per share = Net cash flows from operating activities / No. of shares
at the end of the period.
4. Book value per share = Equity of the Parent / No. of shares at the end of the
period.
5. At 30 September 2020.
6. At 31 December 2019.
Millions of Euros
Consolidated Statement of Financial Position
30 September 31 December % Var.
2020( (1))
2019( (1))
Total assets 31,661 31,981 (1.0)
Equity 8,534 7,837 8.9
Net Financial Debt( (2)) 7,407 6,377 16.2
1. See the Consolidated Statements of Financial Position at 30 September 2020 and
31 December 2019.
2. Net financial debt = Non-current borrowings + Current borrowings – Cash and
cash equivalents – Financial derivatives recognised as financial assets.
Profitability Indicators (%) January-September January-September
2020
2019
Return on equity ((1)) 27.77 18.85
Return on assets ((2)) 7.01 5.15
Economic profitability( (3)) 12.49 2.06
Return on capital employed (ROCE)( (4)) 6.38 1.31
Return on Capital Invested (RCI)( (5)) 12.85 2.64
1. Return on Equity = Net Ordinary Income of the Parent / Average Equity of the
Parent.
2. Return on Assets = Ordinary Income of the Parent / Average Total Assets.
3. Economic Profitability = EBIT / Average Property, Plant and Equipment.
4. Return on Capital Employed (ROCE) = Operating Profit After Tax / (Average
Non-Current Assets + Average Current Assets).
5. Return on Capital Invested (RCI) = Operating Income After Taxes / (Net Equity
of the Parent Company + Net Financial Debt).
Financial Indicators 30 September 31 December
2020
2019
Liquidity ratio( (1)) 0.78 0.72
Solvency ratio( (2)) 0.93 0.91
Debt Ratio( (3) )(%) 46.47 44.86
Debt coverage ratio( (4)) 1.79 1.66
Net Financial Debt( (5) )/ Fixed Assets( (6)) (%) 31.91 27.46
Net Financial Debt( (5) )/ Funds from Operations( (7)) 2.38 2.05
January-September January-September
2020
2019
(Funds from Operations( (7) )+ Interest Expense( (8))) / 28.83 34.07
Interest Expense( (8) )
1. Liquidity = Current assets / Current liabilities.
2. Solvency = (Equity + Non-current liabilities) / Non-current assets.
3. Debt ratio = Net financial debt / (Equity + Net financial debt) (%).
4. Debt coverage = Net financial debt / EBITDA.
5. Net financial debt = Non-current borrowings + Current borrowings – Cash and
cash equivalents – Financial derivatives recognised as financial assets.
6. Fixed Assets = Property, Plant and Equipment + Investment Property +
Intangible Assets + Goodwill.
7. Funds from Operations = Cash Flows from Operating Activities + Changes in
Working Capital - Work carried out by the Group for its Assets.
8. Interest Expenses = Interest Payments (see Section 4.2. Cash Flows in this
Consolidated Management Report).
Rating.
Credit Rating
30 September 2020 ((1)) 31
Dec
emb
er
201
9
((1
))
Long-term Short-term Outlook Long-term Short-term Outlook
Standard & Poor’s BBB+ A-2 Stable BBB+ A-2 Stable
Moody’s Baa2 P-2 Positive Baa2 P-2 Positive
Fitch A- F2 Stable A- F2 Stable
1. At the respective dates of approval of the Consolidated Management Report.
Stock Market Information.
Percentage (%)
Share price performance( (1)) January-September January-September
2020 2019
ENDESA, S.A. (4.0) 19.9
Ibex-35 (29.7) 8.3
Euro Stoxx 50 (14.7) 18.9
Euro Stoxx Utilities (0.3) 22.8
1. Source: Madrid Stock Exchange.
Euros
ENDESA share price ((1)) January-September 2019 % Var.
2020
High 26.120 25.490 2.5
Low 15.500 20.070 (22.8)
Period average 22.402 22.948 (2.4)
Closing Price 22.830 23.790 (4.0)
1. Source: Madrid Stock Exchange.
Stock market information 30 September 31 December % Var.
2020
2019
Market capitalisation( (1)) Millions of Euros 24,171 25,188 (4.0)
Number of Shares Outstanding 1,058,752,117 1,058,752,117 -
Nominal Share Value Euros 1.2 1.2 -
Cash( (2)) Millions of Euros 7,460 9,280 (19.6)
Madrid stock exchange Shares
Trading volume( (3)) 335,095,477 404,075,920 (17.1)
Average daily trading volume( (4)) 1,745,289 1,584,611 10.1
Price to Earnings Ratio (P.E.R.) Ordinary( (5)) 10.83 16.13 -
Price to Earnings Ratio (P.E.R.)( (6)) 12.21 147.30 -
Price / Carrying amount( (7)) 2.88 3.28 -
1. Market Cap = No. of shares at the end of the period 2. Share price at the end
of the period.
3. Cash = Sum of all the operations made over the value in the reference period
(Source: Madrid Stock Exchange).
4. Trading Volume = Total volume of stock of ENDESA, S.A. traded in the period
(Source: Madrid Stock Exchange).
5. Average daily trading volume = Arithmetic mean of shares in ENDESA, S.A.
traded per session during the period (Source: Madrid Stock Exchange).
6. Price to Earnings Ratio (P.E.R.) Ordinary = Share price at the end of the
period / Net ordinary earnings per share (discounting the effects, net of tax
effect, amounting to Euros 107 million, described in Section 1.3.2. Operating
Expenses in this Consolidated Management Report).
7. Price to Earnings Ratio (P.E.R.) = Share price at the end of the period / Net
earnings per share (discounting the effects, net of tax effect, amounting to
Euros 107 million, described in Section 1.3.2. Operating Expenses in this
Consolidated Management Report).
8. Price to Book Value = Market capitalisation / Equity of the Parent.
Dividends.
2019 2018 % Var.
Share capital Millions of Euros 1,270.5 1,270.5 -
Number of Shares 1,058,752,117 1,058,752,117 -
Consolidated Net Ordinary Income Millions of Euros 1,562 1,511 3.4
Consolidated Net Income Millions of Euros 171 1,417 (87.9)
Individual Net Income Millions of Euros 1,642 1,511 8.7
Net Ordinary Earnings per Share( (1)) Euros 1.475 1.427 3.4
Net Earnings per Share( (2)) Euros 0.162 1.338 (87.9)
Gross Dividend per Share Euros 1.475( (3)) 1.427( (4)) 3.4
Consolidated Ordinary Pay-Out ((5)) % 100.0 100.0 -
Consolidated pay-out( (6)) % 913.3 106.6 -
Individual pay-out( (7)) % 95.1 100.0 -
1. Net Ordinary earnings per share = Net ordinary income of the Parent/ No. of
Shares at the end of the period.
2. Net Earnings per Share = Profit/(loss) of the Parent/ No. of Shares at the end
of the period.
3. Gross interim dividend of €0.70 per share paid on 2 January 2020, plus a
complementary gross dividend of €0.775 per share pending approval by the
ENDESA, S.A. General Shareholders' Meeting.
4. Gross interim dividend of €0.70 per share, paid out on 2 January 2019 plus
the gross final dividend of €0.727 per share paid out on 2 July 2019.
5. Consolidated ordinary pay-out (%) = (Gross dividend per share 6. Shares at the
end of the reporting period) / Net ordinary income of the Parent.
7. Consolidated pay-out (%) = (Gross dividend per share 8. Number of shares at the
end of the reporting period) / Profit/loss) of the Parent.
9. Individual pay-out (%) = (Gross dividend per share 10. Number of shares at the
end of the reporting period) / Profit/(loss) of ENDESA, S.A.
APPENDIX II
Alternative Performance Measures (APMs)
Alternative Performance Measures (APMs) Unit Definition Reconciliation of Alternative Performance Measures (APMs) Relevance of Use
January – September 2020 January – September 2019
EBITDA( (1)) € M Income - Procurements and services + Work carried out by the Group for its €3,136 M = €12,959 M - €8,562 M + €161 M - €516 M - €906 M €2,898 M = €14,805 M - €10,415 M + €165 M - €759 M - €898 M Measure of operating return excluding interest, taxes, provisions and
assets - Personnel expenses - Other fixed operating expenses amortisation
EBIT( (1)) € M EBITDA - Depreciation and amortisation and impairment losses €2,032 M = €3,136 M - €1,104 M €335 M = €2,898 M - €2,563 M Measure of operating return excluding interest and taxes
Net ordinary income € M Net Ordinary Income = Net Income of the Parent Company - Net Gains/(Losses) on €1,700 M = €1,511 M + €0 M + €14 M + €160 M + €15 M €1,228 M = €176 M + €0 M + €1,052 M + €0 M + €0 M Measurement of profit for the period isolating non-recurring effects of more
Disposals of Non-Financial Assets (over Euros 10 million) - Net Impairment than Euros 10 million
Losses on Non-Financial Assets (over Euros 10 million) - Initial Provision Net
of Personnel Expenses for Workforce Restructuring Plans relating to the
Decarbonisation Plan - Net Expenses corresponding to the Public Responsibility
Plan for the COVID-19 Health Crisis.
Contribution Margin( (1)) € M Income - Procurements and services €4,397 M = €12,959 M - €8,562 M €4,390 M = €14,805 M - €10,415 M Measurement of operating profitability taking account of direct variable
production costs
Procurements and Services( (1)) € M Energy purchases + Fuel consumption + Transport expenses + Other variable €8,562 M = €2,681 M + €853 M + €3,736 M + €1,292 M €10,415 M = €3,576 M + €1,364 M + €3,989 M + €1,486 M Goods and services for production
procurements and services
Net Financial Result( (1)) € M Financial income - Financial expense +- Net exchange differences (€82 M) = €24 M - €114 M + €8 M (€139 M) = €25 M - €163 M - €1 M Measure of financial costs
Net Financial Expense( (1)) € M Financial income - Financial expense (€90 M) = €24 M - €114 M (€138 M) = €25 M - €163 M Measure of financial costs
Net investments € M Gross investments - Capital grants and facilities transferred €1,076 M = €1,173 M - €97 M €1,440 M = €1,502 M - €62 M Measure of investment activity
Return on equity % Net Ordinary Income of the Parent / ((Equity of the Parent (n) + Equity of the 27.77% = €(((1,700 - 107) * 12 months / 9 months) M + €107 M)( (4)) / 18.85% = (€1,228 M * 12 months / 9 months) / €((8,336 + 9,037) / 2) M Measure of the capacity to generate profits on shareholder investments
Parent (n-1)) / 2) €((8,380 + 7,688) / 2) M
Return on assets % Net Ordinary Income of the Parent / ((Total assets (n) + Total assets (n-1)) / 7.01% = €(((1,700 - 107) * 12 months / 9 months) M + €107 M)( (4) )/ 5.15% = (€1,228 M * 12 months / 9 months) / €((31,958 + 31,656) / 2) M Measure of business profitability
2) €((31,661 + 31,981) / 2) M
Economic profitability % EBIT / (PP&E (n) + PP&E (n) + PP&E (n-1) / 2) 12.49% = €(((2,032 - 143) * 12 months / 9 months) M + €143 M)( (5)) / 2.06% = (€335 M * 12 months / 9 months) / €((21,469 + 21,840) / 2) M Measure of the capacity
€((21,286 + 21,329) / 2) M (https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.economia48.com%2Fspa%2Fd%2Fcapacidad%2Fcapacidad.htm&esheet=52320259&newsitemid=20201104005548&lan=en
-US&anchor=capacity&index=1&md5=b4a384d84d08487f4abca1d5c12e0ed7)
of the assets and
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.economia48.com%2Fspa%2Fd%2Frenta%2Frenta.htm&esheet=52320259&newsitemid=20201104005548&lan=en
-US&anchor=and&index=2&md5=0f71bcbaab0467b35d71253208d1214c)
capital invested to generate income
Return on capital employed (ROCE) % Operating profit after tax / ((Non-current assets (n) + Non-current assets 6.38% = €(((1,548.5 - 107) * 12 months / 9 months) M + €107 M)( (4)) / 1.31% = (€311.3 M * 12 months / 9 months) / €((26,005 + 26,001) / 2 + Measure of return on capital employee
(n-1) / 2) + (Current assets (n) + Current assets (n-1) / 2)) €((25,656 + 25,881) / 2 + (6,005 + 6,100) / 2)) M (5,953 + 5,655) / 2) M
Return on Capital Invested (RCI) % Operating Income After Taxes / (Net Equity of the Parent Company + Net 12.85% = €(((1,548,5 - 107) * 12 months / 9 months) M + €107 M)( (4)) / 2.67% = €(311.3 * 12 months / 9 months) M / (€8,336 M + €7,225 M) Measure of return on capital invested
Financial Debt) €(8,380 M€ + 7,407 M)
Funds from Operations € M Cash Flows from Operating Activities + Changes in Working Capital - Work €2,338 M = €1,969 M + €530 M - €161 M €2,480 M = €1,810 M + €835 M - €165 M Measure of cash generated by the company’s business available to make
carried out by the Group for its Assets investments, amortise debt and distribute dividends to shareholders
Interest expenses € M Interest paid €84 M €75 M Measure of interest payments
Ordinary Earnings per Share € Net Ordinary Income of the Parent company / Number of shares at the end of the €1.606 = €1,700 M / 1,058,752,117 shares €1.160 = €1,228 M / 1,058,752,117 shares Measure of the portion of net income corresponding to each share outstanding
period
Earnings per Share( (1)) € Net Income of the Parent / Number of shares at the end of the period €1.427 = €1,511 M / 1,058,752,117 shares € 0.166 = €176 M / 1,058,752,117 shares Measurement of the portion of net income corresponding to each share
outstanding
Cash flow per share( (3)) € Net cash flow from operating activities / Number of shares at the end of the €1.860 = €1,969 M / 1,058,752,117 shares €1.710 = €1,810 M / 1,058,752,117 shares Measurement of the portion of funds generated corresponding to each share
reporting period outstanding
30 September 2020 31 December 2019
Net Financial Debt( (2)) € M Non-current borrowings + Current borrowings – Cash and cash equivalents – €7,407 M = €5,970 M + €1,714 M - €270 M - €7 M €6,377 M = €5,652 M + €955 M - €223 M - €7 M Short- and long-term financial debt, less cash and financial investment
Financial derivatives recognised under financial assets equivalent to cash
Leverage( (2)) % Net financial debt / Equity 86.79% = €7,407 M / €8,534 M 81.37% = €6,377 M / €7,837 M Measurement of the weight of external funds in the financing of business
activities
Debt Ratio( (2)) % Net financial debt / (Equity + Net financial debt) 46.47 = €7,407 M / 44.86% = €6,377 M / Measurement of the weight of external funds in the financing of business
activities
(€8,534 M + €7,407 M) (€7,837 M + €6,377 M)
Average Life of Gross Financial Debt No. of Years (Principal * Number of days validity) / (Principal outstanding at the end of 4.6 years = 35,159 / 7,647 5.2 years = 34,031 / 6,581 Measurement of the duration of financial debt to maturity
the period * Number of days in the period)
Average Cost of Gross Financial Debt % (Cost of gross financial debt) / Gross average financial debt 1.7% = €(104 * 12 months / 9 months) M / €8,044 M 1.8% = €135 M / €7,431 M Measurement of the effective rate of financial debt
Debt maturity coverage No. of Months Maturity period (months) of core debt that could be covered with the liquidity 18 months 26 months Measure of the capacity to meet debt maturities
available
Liquidity Ratio( (2)) N/A Current assets / Current liabilities 0.78 = €6,005 M / €7,700 M 0.72 = €6,100 M / €8,465 M Measurement of the capacity to meet short-term commitments
Solvency Ratio( (2)) N/A (Equity + Non-current liabilities) / Non-current assets 0.93 = (€8,534 M + 15,427 M) / €25,656 M 0.91 = (€7,837 M + 15,679 M) / €25,881 M Measurement of the capacity to meet obligations
Debt Coverage Ratio( (1) (2)) N/A Net financial debt / EBITDA 1.79 = €7,407 M / €(((3,136 - 143) * (12 months / 9 months + 143)( (5)) M 1.66 = €6,377 M / €3,841 M Measurement of the amount of available cash flow to meet payments of principal
on financial debt
Fixed assets € M Property, Plant and Equipment + Real Estate Investments + Intangible Assets + €23,207 M = €21,286 M + €60 M + €1,399 M + €462 M €23,227 M = €21,329 M + €61 M + €1,375 M + €462 M Assets of the Company, whether tangible or intangible, not convertible into
Goodwill short-term liquidity, necessary for the Company to operate and not intended
for sale
Book Value per Share ((2)) € Equity of the Parent / Number of shares at the end of the reporting period €7.915 = €8,380 M / 1,058,752,117 shares €7.261 = €7,688 M / 1,058,752,117 shares Measure of the portion of equity corresponding to each share outstanding
Market Capitalisation € M Number of shares at the end of the period * Share price at the end of the €24,171 M = 1,058,752,117 shares * €22.830 €25,188 M = 1,058,752,117 shares * €23.790 Measurement of market enterprise value according to the share price
period
Price to Earnings Ratio (P.E.R.) Ordinary N/A Share price at the end of the reporting period / Net earnings per share 10.83 = €22.830 / €(((1.606 - 0.101) * 12 months / 9 months) + 0.101)( 16.13 = €23.790 / €1.475 Measure indicating the number of times earnings per share can be divided into
(4)) the market price of the shares
Price to Earnings Ratio (P.E.R.) N/A Share price at the end of the reporting period / Net earnings per share 12.21 = €22.830 / €(((1.427 - 0.101) * 12 months / 9 months) + 0.101)( 147.30 = €23.790 / €0.162 Measure indicating the number of times earnings per share can be divided into
(4)) the market price of the shares
Price / Book Value N/A Market Capitalisation / Equity of the Parent 2.88 = €24,171 M / €8,380 M 3.28 = €25,188 M / €7,688 M Measurement comparing market enterprise value according to the share price
with the carrying amount
2019 2018
Consolidated ordinary pay-out % (Gross dividend per share * Number of shares at the end of the reporting 100.0% = (€1.475 * 1,058,752,117 shares) / €1,562 M 100.0% = (€1.427 * 1,058,752,117 shares) / €1,511 M Measure of the portion of ordinary net income obtained used to remunerate
period) / Net ordinary income of the Parent. shareholders through the payment of dividends (Consolidated Group)
Consolidated pay-out % (Gross dividend per share * No. of shares at the close of the period) / Profit 913.3% = (€1.475 * 1,058,752,117 shares) / €171 M 106.6% = (€1.427 * 1,058,752,117 shares) / €1,417 M Measure of the part of profits obtained used to remunerate shareholders
for the year of the parent through the payment of dividends (consolidated Group)
Individual pay-out % (Gross dividend per share * Number of shares at the end of the period / Net 95.1% = (€1.475 * 1,058,752,117 shares) / €1,642 M 100.0% = (€1.427 * 1,058,752,117 shares) / €1,511 M Measure of the part of profits obtained used to remunerate shareholders
Income for the year of ENDESA, S.A. through the payment of dividends (individual company)
M = millions; € = Euros.
n = 30 September of the year being calculated.
n-1 = 31 December of the year before the year being calculated.
1. See the Consolidated Income Statements for the nine-month periods ended 30
September 2020 and 2019.
2. See the Consolidated Statements of Financial Position at 30 September 2020 and
31 December 2019.
3. See the Consolidated Statements of Cash Flows for the nine-month periods ended
30 September 2020 and 2019.
4. Annualised income discounting the effects, net of tax effect, amounting to
Euros 107 million, described in Section 1.3.2. Operating Expenses in this
Consolidated Management Report.
5. Annualised income discounting the effects, amounting to Euros 143 million,
described in Section 1.3.2. Operating Expenses in this Consolidated Management
Report.
You will find additional information on our 9M 2020 Results on our website
www.endesa.com
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