REG-International Endesa ENDESA, S.A.and SubsidiariesConsolidated Management Reportfor the Year Ended 31 December 2020
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ENDESA, S.A.
and Subsidiaries
Consolidated Management Report
for the Year Ended 31 December 2020
(Translation from the original issued in Spanish. In the event of discrepancy,
the Spanish-language version prevails)
(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 YEAR ENDED 31 DECEMBER 2020
ENDESA has prepared this Consolidated Management Report for the year ended 31
December 2020 in accordance with the “Guide for the Preparation of
Management Reports of Listed Companies” issued by the Group of Experts
appointed by the CNMV (National Securities Market Commission).
1. Position of the entity
1.1. Main areas of business
ENDESA, S.A. was established on 18 November 1944 and has its registered office
at Calle Ribera del Loira 60, Madrid.
Its corporate object is the electricity business in its various industrial and
commercial activities; the exploitation of primary energy resources of all
types; the provision of industrial services or services related to its main
business, particularly those relating to gas and those that are preparatory or
complementary to the activities included in the corporate object, and the
management of the business Group consisting of investments in other companies.
The Company carries out its corporate objects in Spain and abroad directly or
through its investments in other companies.
The main sector of the National Classification of Economic Activities
(“CNAE”) into which the corporate object of ENDESA fits is that
corresponding to section D, division 35.
ENDESA, S.A. and its subsidiaries (ENDESA or the Company) carry out their
activities in the electricity and gas business mainly in the market of Spain
and Portugal. To a lesser extent, they also sell electricity and gas in other
European markets as well as other products and services related to their main
business.
The organisation is divided into the generation, supply and distribution
businesses, each of which includes electricity and in some cases gas
activities and other products and services.
In view of the areas of business carried on by ENDESA subsidiaries,
transactions are not highly cyclical or seasonal.
1.2. Organisational structure
ENDESA, S.A. and its subsidiaries are part of the ENEL Group, which is headed
by ENEL Iberia, S.L.U. in Spain.
At 31 December 2020 the ENEL Group held 70.1% of the share capital of ENDESA,
S.A., through ENEL Iberia, S.L.U. (see Notes 1 and 14.1.1 of the Notes to the
Consolidated Financial Statements for the year ended 31 December 2020).
At the date on which this Consolidated Management Report was drawn up, the
composition of ENDESA S.A.'s Executive Management Committee, the functions of
which include the implementation of the strategies adopted by the Company, was
as follows:
Position Member
Chief Executive Officer José Damián Bogas Gálvez
General Manager - Communication Ignacio Jiménez Soler
General Manager - Energy Management Juan María Moreno Mellado
General Manager - People and Organisation Paolo Bondi
General Manager - Generation Rafael González Sánchez
General Manager - Infrastructure and Networks Gianluca Caccialupi
General Manager - Supply Javier Uriarte Monereo
General Manager - Institutional Relations and Regulation José Casas Marín
General Manager - Media Pablo Azcoitia Lorente
General Manager - ENDESA X Josep Trabado Farré
General Manager - Nuclear Power Gonzalo Carbó de Haya
General Manager - Audit Patricia Fernández Salís
General Manager - ICT Digital Solutions Manuel Fernando Marín Guzmán
General Manager - Sustainability María Malaxechevarría Grande
General Manager - Purchasing Ignacio Mateo Montoya
General Manager - Administration, Finance and Control Luca Passa
General Secretary to the Board of Directors and General Manager - Legal Francisco de Borja Acha Besga
Counsel and Corporate Affairs
The Annual Corporate Governance Report, which describes the organisation of
the Board of Directors of ENDESA, S.A. and of the bodies to which it delegates
its decisions, forms an integral part of this Consolidated Management Report.
The general principles relating to ENDESA's corporate governance strategy
establish that the internal corporate rules are set so as to ensure
transparency and the reconciliation of the interests of all shareholder
groups, as well as equal treatment of all shareholders of the same kind and in
the same situation.
1.3. Business Model.
ENDESA is making progress in its commitment to lead the energy transition, in
line with the United Nations Sustainable Development Goals (SDGs), and more
specifically, in developing a business model aligned with the objectives of
the Paris Agreement to achieve the decarbonization goal and thus contain the
average increase in global temperature to below 2 ºC compared to
pre-industrial levels (see Notes 2.2.2 and 39 of the Notes to the Consolidated
Financial Statements for the year ended 31 December 2020).
This business model is aligned with the strategic vision of becoming the
leading actor in the energy transformation that Spain is facing, and taking
advantage of such new opportunities as may arise deriving from this great
challenge.
1.3.1. Vision, Mission and Values.
Vision.
ENDESA strives to be at the forefront of developments in the energy sector in
order to bring safe, affordable and sustainable energy to millions of people.
ENDESA is acutely aware of the profound changes that the industry is going
through and is positioning itself in a new era of energy, which is more open,
participatory and digital.
This strategic positioning is summarised in the concept “Open Power”,
which constitutes ENDESA’s Mission, Vision and Values.
Mission.
ENDESA's mission is defined in the following pillars:
* Opening up access to safe and sustainable energy for a greater number of
people.
* Opening up the world of energy to new technologies to generate and distribute
more sustainable energy, with particular attention to renewable sources and
smart distribution networks.
* Opening up energy management to consumers to help them use energy more
efficiently, with particular attention to smart meters and digitisation.
* Opening up possibilities of new uses of energy to address global challenges,
with particular attention to connectivity and electric mobility.
* Opening ourselves up to a greater number of alliances to form a network of
collaborators in research, technology, product development and marketing to
build new solutions together.
Values.
ENDESA's values are the pillars of the company's behaviour and reflect the
focus on people:
* Responsibility: Every employee is responsible for the success of ENDESA, at
all levels, always acting within the framework of the social responsibility
strategy and compliance with tax regulations.
* Innovation: ENDESA works to open up energy to new uses, technologies and
people, taking into account both errors and successes.
* Trust: ENDESA acts competently, honestly and transparently, to gain the trust
of its employees, customers and external collaborators, valuing individual
differences.
* Proactiveness: ENDESA continuously analyses global scenarios and challenges in
order to anticipate changes, redefining priorities if the context so requires.
1.3.2. Business Lines and Main Markets.
In order to effectively face all risks and take advantage of all the
opportunities of an Energy Sector in constant change, ENDESA's business model
is structured in different Business Lines to act with agility in the markets
where it operates and take into account the needs of its clients in the
territories and businesses in which it is present.
These Business Lines correspond to the electricity and gas generation,
distribution and supply activities carried out by ENDESA, mainly in Spain and
Portugal, and to a lesser extent from its platform in Spain to other European
markets, in particular Germany, France and the Netherlands.
With the exception of the mainland coal-fired thermal power plants, ENDESA
manages its generation and supply businesses jointly, thus optimising this
integrated position compared with managing the two activities separately.
the current context, the activities relating to the supply of electricity
which ENDESA companies carry out have been confirmed as essential activities
and are carried out under specific frameworks.
Up to the date of approval of this Consolidated Management Report, ENDESA has
continued to provide its services without any particular problems other than
those existing prior to the emergence of COVID-19 and, although it has had to
adapt some processes to the circumstances deriving from the health crisis, its
ability to provide services has not been significantly compromised (see Notes
2.2.1 and 38 of the Notes to the Consolidated Financial Statements for the
year ended December 31, 2020 and Section 5. COVID-19 Health Crisis of this
Consolidated Management Report).
The markets in which ENDESA carries out its activities are described as
follows:
Spanish market
* Electricity generation ENDESA carries out its electricity generation
activities in the mainland system and in the Non-mainland Territories
(“TNP”), the latter comprising the Balearic and Canary Islands and the
autonomous cities of Ceuta and Melilla.
* On the mainland, conventional and renewable generation is a deregulated
business covered by a specific remuneration regime.
* On the other hand, conventional generation in the Non-mainland Territories
(“TNP”) is subject to specific regulations addressing the particularities
deriving from their geographical location, and remuneration is regulated.
There are incentives for investment in generation from renewable sources in
the Non-mainland Territories (“TNP”) to reduce costs.
* Supply of electricity, gas and other products and services: This activity
consists of supplying energy on the market and the sale of other products and
services to customers. The supply of energy is a deregulated activity.
* Electricity distribution: The purpose of the electricity distribution activity
is to distribute electricity to the consumption points. Electricity
distribution is a regulated activity.
Section 2.6. Statistical Appendix to this Consolidated Management Report
provides a breakdown of ENDESA’s key figures at 31 December 2020.
Portuguese market
* Electricity generation Electricity generation in Portugal is carried out in a
competitive environment.
* Supply of electricity and gas and other products and services: This activity
is deregulated in Portugal.
1.4. Corporate Map
ENDESA, S.A.'s activity is structured by Business Lines, giving the Company
flexibility and the ability to respond to the needs of its customers in the
territories and businesses in which it operates.
For the organisation of the various Business Lines, ENDESA, S.A. works
primarily through the following Companies:
Energy generation: ENDESA Generación, S.A.U.
This company was set up on 22 September 1999 with a view to concentrating
ENDESA's generation and mining assets in it.
ENDESA Generación, S.A.U. brings together, among others, the holdings in Gas
y Electricidad Generación, S.A.U. (100%), Unión Eléctrica de Canarias
Generación, S.A.U. (100%), which manage the generation assets located in the
Non-mainland Territories (“TNP”) and in ENEL Green Power España, S.L.U.
(EGPE) (100%), which manages assets generated from renewable sources.
At 31 December 2020, ENDESA’s total net installed capacity in Spain amounted
to 21,652 MW, of which 17,326 MW in the mainland electricity system and 4,326
MW in the Non-mainland Territories (“TNP”) of the Balearic and Canary
Islands, Ceuta and Melilla. At that date, net installed capacity in renewables
was 7,781 MW, of which 7,719 MW correspond to the mainland electricity system,
representing 45% of its net installed capacity (see Section 2.6. Statistical
Appendix to this Consolidated Management Report).
ENDESA's power plants reached a total net production of 56,269 GWh in 2020
(see Section 2.6. Statistical Appendix to this Consolidated Management
Report).
Energy Distribution: ENDESA Red, S.A.U.
This company was set up on 22 September 1999, marking the culmination of the
process of integrating ENDESA S.A.'s regional distribution companies in Spain.
This company holds, among others, Edistribución Redes Digitales, S.L.U.
(100%), which engages in regulated electricity distribution, and ENDESA
Ingeniería, S.L.U. (100%).
At 31 December 2020, ENDESA distributed electricity in 24 Spanish provinces
(La Coruña, Almería, Badajoz, Barcelona, Cádiz, Córdoba, Gerona, Granada,
Huelva, Huesca, Balearic Islands, Jaén, Las Palmas, León, Lérida, Málaga,
Ourense, Santa Cruz de Tenerife, Seville, Soria, Tarragona, Teruel, Zamora and
Zaragoza) of eight Autonomous Regions (Andalusia, Aragón, Canary Islands,
Castilla y León, Catalonia, Extremadura, Galicia and Balearic Islands) and in
the Autonomous City of Ceuta, with a total area of 195,488 km(2) and a
population of close to 21 million.
The number of clients with an access contract to ENDESA's distribution
networks exceeded 12 million at that date and the total energy distributed by
ENDESA's networks, reached 124,658 GWh in 2020 (see Section 2.6. Statistical
Appendix to this Consolidated Management Report).
Supply of energy and other products and services: ENDESA Energía, S.A.U. and
ENDESA X Servicios S.L.U.
ENDESA Energía, S.A.U. was established on 3 February 1998 to carry out supply
activities, responding to the demands deriving from the deregulation process
of the Spanish electricity sector. Its main business is the supply of energy
to customers wishing to exercise their right to choose their supplier and
receive the service on the deregulated market, and other products and services
related to the development of efficient energy infrastructures and maintenance
services.
In addition, ENDESA Energía, S.A.U. holds 100% of Energía XXI
Comercializadora de Referencia, S.L.U., a trading company in the regulated
market, ENDESA Operaciones y Servicios Comerciales, S.L.U., whose purpose is
to provide commercial services linked to the supply of energy and ENDESA
Energía Renovable, S.L.U., which is dedicated to the supply of electricity
and natural gas specifically from renewable sources.
ENDESA Energía, S.A.U. also supplies energy to the deregulated markets of
Germany, France, the Netherlands and Portugal.
On 1 September 2020, ENDESA X Servicios, S.L.U. was incorporated, through the
partial spin-off of ENDESA Energía, S.A.U. and ENDESA Ingeniería, S.L.U., to
carry out development and marketing activities for new services adapted to the
evolution of the energy market. Its activity is focused on four lines of
action: e-Home, e-Industries, e-City and e-Mobility (see Note 2.3.1 of the
Notes to the Consolidated Financial Statements for the year ended 31 December
2020 and Section 2.5. Scope of Consolidation of this Consolidated Management
Report).
In 2020, net electricity sales amounted to 80,772 GWh and at 31 December 2020,
the customer portfolio in the electricity market consisted of 10.4 million
supply points. The total volume of gas sold in 2020 amounted to 70,045 GWh and
at 31 December 2020 the customer portfolio in the conventional natural gas
market consisted of 1.7 million supply points (see Section 2.6. Statistical
Appendix to this Consolidated Management Report).
Appendix I to the Consolidated Financial Statements for the year ended 31
December 2020 lists ENDESA's subsidiaries and joint operations.
Appendix II to the Consolidated Financial Statements for the year ended 31
December 2020 lists ENDESA's associates and joint ventures.
There follows a corporate map of ENDESA showing in diagram form its main
investees at 31 December 2020:
Additions, removals and changes in ENDESA’s corporate map during 2020 are
described in Notes 2.3, 2.4 and 2.5 to the Consolidated Financial Statements
for the year ended 31 December 2020.
2. Business trends and results in 2020
2.1. Consolidated Results.
ENDESA reported net income of Euros 2,132 million (+36.5%) in 2020.
ENDESA reported net ordinary income of Euros 2,132 million in 2020,
representing an increase of 36.5% on the previous year.
Net income attributable to the Parent Company amounted to Euros 1,394 million
in 2020, as against the Euros 171 million obtained in the previous year.
To analyse the performance during the period, the following factors must be
taken into account:
* Signing of the “V ENDESA Framework Collective Agreement”:
The “V ENDESA Framework Collective Agreement”, effective from 23 January
2020, establishes a modification of certain social benefits, basically the
employee electricity tariff, which now also includes retired employees. As a
result of the valuations of the previous actuarial liability and the new
actuarial liability at the effective date of the “V ENDESA Framework
Collective Agreement”, a positive impact of Euros 386 million was recognised
in the Consolidated Income Statement for 2020.
* Impairment of the assets of the mainland coal-fired thermal power plants.
Recognition in 2019 of an impairment equal to the entire carrying amount of
the assets of the mainland coal-fired thermal power plants, namely Euros 1,105
million, in accordance with the decision adopted on 27 September 2019 to
decommission them. In 2020, a reversal of Euros 6 million of this impairment
was recognised.
* Impairment of the assets of the Cash Generating Units (CGUs) of the
Non-mainland Territories (“TNP”).
In 2020 and 2019, an impairment of the Cash Generating Units (CGUs) for each
of the Non-mainland Territories (“TNP”) of the Balearic Islands, Canary
Islands, Ceuta and Melilla for a total amount of Euros 253 million and Euros
304 million, respectively, in order to adjust the net book value of these
assets to their recoverable value.
* Provisions for workforce restructuring.
Recognition of a provision in the amount of Euros 569 million in the
Consolidated Income Statement for 2020 in the context of the “Agreement on
Voluntary Suspension or Termination of Employment Contracts” and the
communications made by ENDESA to the union representation regarding the
non-exercise of the right to terminate the individual employment suspension
agreements relating to certain contracts. This amount includes Euros 160
million in respect of ENDESA's commitment to decarbonisation, the decision
taken to decommission the mainland coal-fired power plants and the
reorganisation of activities deriving from the energy transition, and Euros
290 million relating to ENDESA's commitment in its Strategic Plan 2021-2023 to
improving efficiency by various means, particularly the digitisation of
processes.
* COVID-19 Health Crisis.
In the current context of the COVID-19 health crisis and as part of its
commitment to society, ENDESA has designed a Public Responsibility Plan,
endowed with Euros 25 million (Euros 22 million euros net of the tax effect)
for direct aid for the purchase of material, special supply conditions and
donations to alleviate the main health and social needs caused by the health
crisis, as well as programmes to support the relaunch of the economy in the
worst affected sectors. During the 2020 financial year, this Plan accrued in
its entirety.
The breakdown of net income and ordinary (recurring) net income for 2020 among
ENDESA's Businesses and their variation relative to the previous year is
presented hereunder (see Section 2.4. Results by Segment in this Consolidated
Management Report):
Millions of euros
Net Income ((1)) Net Ordinary Income( (2))
2020 2019 % Var. % 2020 2019 % Var. %
Contribution to Total
Contribution to Total
Generation and Supply 558 (823) (167.8) 40.0 1,035 586 76.6 48.5
Distribution 989 1,077 (8.2) 70.9 1,157 1,059 9.3 54.3
Structure and Others ((3)) (153) (83) 84.3 (11.0) (60) (83) (27.7) (2.8)
TOTAL 1,394 171 715.2 100.0 2,132 1,562 36.5 100.0
(1) Net Income = Net Income of the Parent Company.
(2) Net Ordinary Income = Net Income of the Parent Company - Net Gains and
Losses on Disposals of Non-Financial Assets (over Euros 10 million) - Net
Losses due to Impairment of Non-Financial Assets (over Euros 10 million) -
Initial Endowment Net of Personnel Expenses for Workforce Restructuring Plans
relating to the Decarbonisation Plan and the Digitisation of Processes - Net
Expenses corresponding to the Public Responsibility Plan for the COVID-19
Health Crisis.
(3) Structure, Services and Adjustments.
2.2. Changes in Accounting Principles.
The accounting policies used in drawing up this Consolidated Management Report
are described in Note 2.1 to the Consolidated Financial Statements for the
year ended 31 December 2020.
2.3. Analysis of Results.
The table below presents the details of the most significant figures in
ENDESA's Consolidated Income Statement for 2020 and their variation compared
with the previous year:
Millions of euros
Reference ((1)) Most Significant Figures
2020 2019 % Var.
Income 24 17,579 20,158 (12.8)
Procurements and Services 25 (11,573) (14,252) (18.8)
Contribution Margin ((2)) 6,006 5,906 1.7
Self-constructed Assets 3a.1 and 3d.2 275 295 (6.8)
Personnel Expenses 26 (1,147) (1,022) 12.2
Other Fixed Operating Expenses 27 (1,351) (1,338) 1.0
Gross Operating Profit (EBITDA) ((3)) 3,783 3,841 (1.5)
Depreciation, Amortisation and Impairment Losses 28 (1,897) (3,453) (45.1)
Operating Profit (EBIT)( (4)) 1,886 388 386.1
Net Financial Income/(Expense)( (5)) 29 (134) (184) (27.2)
Income before Tax 1,788 230 677.4
Net Income ((6)) 1,394 171 715.2
Net Ordinary Income ((7)) 2,132 1,562 36.5
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Contribution margin = Revenue - 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 finance income/(loss) = Finance 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 and
Losses on Disposals of Non-Financial Assets (over Euros 10 million) - Net
Losses due to Impairment of Non-Financial Assets (over Euros 10 million) -
Initial Endowment Net of Personnel Expenses for Workforce Restructuring Plans
relating to the Decarbonisation Plan and the Digitisation of Processes - Net
Expenses corresponding to the Public Responsibility Plan for the COVID-19
Health Crisis.
EBITDA for 2020 amounted to Euros 3,783 million, down by 1.5% on the previous
year.
Without the items recognised under “Personnel Expenses” in the
Consolidated Income Statement for 2020 relating to the "V ENDESA Framework
Collective Agreement", the Decarbonisation Plan and the digitisation of
processes, for a total amount of Euros 244 million, gross operating profit
(EBITDA) would have increased by 4.8% compared with the previous year (see
Section 2.3.2. Operating Expenses in this Consolidated Management Report).
Operating profit (EBIT) for 2020 increased by Euros 1,498 million or 386.1%
compared with the previous year, coming in at Euros 1,886 million.
Without taking into account the impacts described for gross operating profit
(EBITDA), the provision for impairment of the coal-fired plants recognised in
2019 for Euros 1,366 million or its subsequent reversal in 2020 for Euros 17
million, operating profit (EBIT) would have increased by 20.5% compared with
the previous year (see Section 2.3.2. Operating Expenses in this Consolidated
Management Report).
Excluding the impacts described above on EBITDA, as well as the net impairment
charge recorded at the mainland coal-fired thermal power plants (reversal of
Euros 17 million in 2020 and impairment charge of Euros 1,366 million in 2019)
and at the Non-mainland Territories (“TNP”) Cash Generating Units (CGUs)
(Euros 338 million and Euros 404 million in 2020 and 2019, respectively),
operating income (EBIT) would have increased by Euros 293 million (+13.6%)
compared to the previous year (see Section 2.3.2. Operating Costs of this
Consolidated Management Report).
2.3.1. Income.
Income in 2020 totalled Euros 17,579 million, Euros 2,579 million or 12.8%
less than in 2019.
The following are the details of the “Income” heading in the Consolidated
Income Statement for 2020 and its variation relative to the previous year:
Millions of euros
Reference ((1)) Income
2020 2019 Difference % Var.
Sales 24.1 16,644 19,258 (2,614) (13.6)
Other Operating Income 24.2 935 900 35 3.9
TOTAL 24 17,579 20,158 (2,579) (12.8)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
Market situation.
Electricity demand trends in 2020, affected by the COVID-19 health crisis,
were as follows:
* Total mainland electricity demand fell by 5.1% compared with the previous year
(-5.1% adjusted for the effect of working days and temperature).
* Demand for electricity in the Non-mainland Territories (“TNP”) in 2020
decreased by 19.2% in the Balearic Islands and 10.5% in the Canary Islands
compared with the previous year (-18.0% and -10.5% respectively when adjusted
for the effect of working days and temperature).
2020 was characterised by lower prices, with the arithmetic mean price in the
wholesale electricity market standing at Euros 33.96 per MWh (down by -28.8%),
mainly as a consequence of the decrease in demand and trends in raw material
prices.
During 2020 there was also a narrowing of the “thermal gap” (the
percentage of demand not covered by renewables or nuclear and therefore met by
conventional coal-fired or CC plants) due to the weakness of electricity
demand, the increase in imports and the increase in renewable production. In
this regard the contribution of renewable energies to total mainland
production in 2019 was 45.5% (52.4% in 2019).
In this context:
* ENDESA's mainland electricity production in 2020 was 56,269 GWh, 8.4% less
than in the previous year, as per the following details:
GWh
Electricity Generation ((1)) 2020 2019 % Var.
Mainland 46,142 49,582 (6.9)
Renewables 13,415 10,090 33.0
Hydroelectric 7,681 5,861 31.1
Wind( (2)) 5,235 4,127 26.8
Photovoltaic ((3)) 498 101 393.1
Biomass 1 1 -
Nuclear 25,839 26,279 (1.7)
Coal 1,211 5,647 (78.6)
Combined Cycles (CCGTs)( (4)) 5,677 7,566 (25.0)
Non-mainland Territories (“TNP”) 10,127 11,820 (14.3)
Coal 222 1,996 (88.9)
Fuel-gas 4,217 5,703 (26.1)
Combined Cycles (CCGTs)( (4)) 5,688 4,121 38.0
TOTAL 56,269 61,402 (8.4)
(1) In power plant busbars.
(2) In 2020 it includes 112 GWh corresponding to Non-mainland Territories
(“TNP”) (123 GWh in 2019).
(3) In 2020, it includes 1 GWh corresponding to Non-mainland Territories
(“TNP”).
(4) Corresponding to natural gas.
* Non-emitting, renewable and nuclear technologies represented 69.8% of ENDESA's
generation mix in 2020, (59.2% in 2019) compared with 80.8% for the rest of
the sector (71.3% in 2019).
At 31 December 2020 ENDESA’s market shares for electricity were:
* 18.0% in mainland electricity generation, including renewables.
* 42.9% in electricity distribution.
* 32.4% in electricity supply.
In 2020 conventional gas demand was down by 5.3% compared with the previous
year, and at 31 December 2020 ENDESA had secured a market share of 14.3% in
gas sales to customers in the deregulated market.
Sales.
The table below presents the details of the heading “Sales” in the
Consolidated Income Statement for 2020 and the changes from the previous year:
Millions of euros
Reference( (1)) Sales
2020 2019 Difference % Var.
Electricity sales 11,969 13,801 (1,832) (13.3)
Deregulated market sales 8,245 9,404 (1,159) (12.3)
Deregulated market sales - Spain 7,201 8,320 (1,119) (13.4)
Deregulated market sales - other than Spain 1,044 1,084 (40) (3.7)
Sales at regulated prices 1,839 2,055 (216) (10.5)
Wholesale market sales 619 843 (224) (26.6)
Compensation for Non-mainland Territories (“TNP”) 1,111 1,376 (265) (19.3)
Remuneration for Renewable Energy Investment 135 105 30 28.6
Other electricity sales 20 18 2 11.1
Gas sales 1,865 2,450 (585) (23.9)
Deregulated market sales 1,812 2,369 (557) (23.5)
Sales at regulated prices 53 81 (28) (34.6)
Regulated income from electricity distribution 2,175 2,266 (91) (4.0)
Other sales and services rendered 635 741 (106) (14.3)
TOTAL 24.1 16,644 19,258 (2,614) (13.6)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
Electricity sales to customers in the deregulated market.
At 31 December 2020, ENDESA had 5,690,390 electricity customers in the
deregulated market, 2.4% fewer than at 31 December 2019, as per the following
breakdown:
* 4,444,091 (-3.8%) in the Spanish mainland market.
* 838,600 (-2.4%) in the Non-mainland Territories (“TNP”) market.
* 407,699 (+16.6%) in deregulated markets outside Spain.
ENDESA sold a net total of 69,430 GWh to these customers in 2020, 11.1% less
than in 2019, as per the following breakdown:
* 59,800 GWh (-11.9%) in the Spanish deregulated market.
* 9,630 GWh (-5.6%) in deregulated markets outside Spain.
In monetary terms, sales on the deregulated market in 2020 totalled Euros
8,245 million (-12.3%), as per the following breakdown:
* Sales in the Spanish deregulated market totalled Euros 7,201 million, Euros
1,119 million or -13.4% down on the previous year, due basically to the
decline in the number of physical units sold.
* Revenues from sales to customers in deregulated markets outside Spain amounted
to Euros 1,044 million, down slightly (-3.7%) on 2019, basically due to
movements in the unit price and the decrease in the number of physical units
sold.
Sales of electricity at regulated prices.
At 31 December 2020, ENDESA had 4,730,105 electricity customers in the
deregulated market, 1.6% fewer than at year-end 2019.
In 2020 ENDESA sold 11,342 GWh to customers to who regulated prices apply,
through its supplier of reference, in line with its 2019 sales (-0.4%).
These sales entailed revenues of Euros 1,839 million, which was 10.5% lower
than the figure for 2019, basically as a result of the decline in price.
Gas sales.
At 31 December 2020, ENDESA had 1,673,424 gas customers, 1.5% more than at 31
December 2019, as per the following breakdown:
* 233,066 (+1.3%) in the regulated market.
* 1,440,358 (+1.5%) in the deregulated market.
ENDESA sold 70,045 GWh to customers in the natural gas market in 2020, which
represents a decrease of 12.2% relative to 2019.
In monetary terms, revenue from gas sales totalled Euros 1,865 million in
2020, down by Euros 585 million or 23.9% on the figure for 2019, as per the
following breakdown:
* Gas sales in the deregulated market totalled Euros 1,812 million, Euros 557
million or 23.5% down on the figure for 2019, due basically to the decrease in
the number of physical units sold and the lower selling price in the B2B
segment.
* Revenue from gas sales to customers at regulated prices amounted to Euros 53
million, Euros 28 million or -34.6% less than in 2019, due basically to the
decline in the price.
Compensation for generation in Non-mainland Territories (“TNP”).
In 2020, compensation for the extra cost 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 1,111 million, Euros 265 million or -19.3% less than in
2019, mainly as a consequence of lower production due to the decrease in
demand and trends in commodity prices.
Electricity distribution.
ENDESA distributed 124,658 GWh in the Spanish market in 2020, 1.4% less than
in 2019.
Regulated income from the distribution activity in 2020 amounted to Euros
2,175 million, which was Euros 91 million or -4.0% down on the previous year,
mainly due to the application of the new remuneration parameters that have
come into effect for the 2020-2025 regulatory period (see Note 4 to the
Consolidated Financial Statements for 2020 and Section 3. Regulatory Framework
in this Consolidated Management Report).
Other Operating Income.
The table below presents the details of other operating income in 2020 and the
variations compared with the previous year:
Millions of euros
Reference( (1)) Other Operating Income
2020 2019 Difference % Var.
Change in energy derivatives 540 550 (10) (1.8)
Grants released to income ((2)) 15 and 24.2 28 23 5 21.7
Allocation to Profit and Loss of Customer Transferred Installations and Fees 22 and 24.2 164 158 6 3.8
for Extension Service Connections and Liabilities under Contracts with
Customers
Provision of Services in Facilities 4 4 - -
Third Party Indemnities 21 14 7 50.0
Others 178 151 27 17.9
TOTAL 935 900 35 3.9
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Includes Euros 16 million relating to capital grants and Euros 12 million
of operating grants in 2020 (Euros 18 million and Euros 5 million respectively
in 2019).
(3) Includes Euros 237 million relating to revenue from ordinary activities
from contracts with customers in 2020 (Euros 257 million 2019).
In 2020, other operating income amounted to Euros 935 million, representing an
increase of 3.9%, and includes the Euros 10 million decrease (-1.8%) in income
from the valuation and settlement of energy derivatives, due mainly to the
evolution of the valuation and settlement of gas derivatives, which is
considered together with the reduction of Euros 358 million (-54.7%) in
expenses for this same item recognised under “Other Variable Procurements
and Services” in the Consolidated Income Statement (see Section 2.3.2.
Operating Expenses in this Consolidated Management Report).
The derivatives and hedging transactions entered into by ENDESA basically
concern transactions arranged to hedge exchange rate risk or 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.
2.3.2. Operating expenses.
Operating expenses in 2020 amounted to Euros 15,693 million, down by 20.6%
compared with the previous year.
The table below presents the details of operating expenses in 2020 and their
variation compared with the previous year:
Millions of euros
Reference( (1)) Operating expenses
2020 2019 Difference % Var.
Procurements and Services 11,573 14,252 (2,679) (18.8)
Energy purchased 25.1 3,631 4,904 (1,273) (26.0)
Fuel consumption 25.2 1,100 1,780 (680) (38.2)
Transmission costs 5,000 5,302 (302) (5.7)
Other Variable Procurements and Services 25.3 1,842 2,266 (424) (18.7)
Self-constructed Assets 3a.1 and 3d.2 (275) (295) 20 (6.8)
Personnel Expenses 26 1,147 1,022 125 12.2
Other Fixed Operating Expenses 27 1,351 1,338 13 1.0
Depreciation, Amortisation and Impairment Losses 28 1,897 3,453 (1,556) (45.1)
TOTAL 15,693 19,770 (4,077) (20.6)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
Procurements and services (variable costs).
Procurements and services (variable costs) totalled Euros 11,573 million in
2020, 18.8% less than in the previous year.
Changes in these costs in 2020 were as follows:
* Energy purchases decreased by Euros 1,273 million (-26.0%) to Euros 3,631
million as a consequence, mainly, of the decrease in the number of physical
units and the arithmetic mean price in the wholesale electricity market, which
was Euros 33.96 per MWh (-28.8%).
This heading includes an amount of Euros 9 million (Euros 6 million net of the
tax effect) corresponding to the impairment of inventories of the mainland
coal-fired plants (Euros 82 million and Euros 62 million respectively in 2019)
(see Sections 2.3.6. Corporation Tax and 2.3.7. Net Income in this
Consolidated Management Report).
* Fuel consumption amounted to Euros 1,100 million, with a decrease of Euros 680
million (-38.2%) due to lower thermal production in the period (-32.0%).
* Items under Other Variable Procurements and Services in the Consolidated
Income Statement totalled Euros 1,842 million, down by Euros 424 million
(-18.7%) on 2019, details being as follows:
Millions of euros
Reference( (1)) Other Variable Procurements and Services
2020 2019 Difference % Var.
Change in energy derivatives 296 654 (358) (54.7)
Carbon dioxide (CO(2)) emission rights 229 372 (143) (38.4)
Tax on Electricity Production 234 225 9 4.0
Treatment of radioactive waste 213 181 32 17.7
Works licences/Street lighting 172 195 (23) (11.8)
Nuclear Taxes and Fees 125 97 28 28.9
“Bono Social” discount rate 51 51 - -
Catalan Environmental Tax 54 - 54 N/A
Water Tax 30 34 (4) (11.8)
Others 438 457 (19) (4.2)
TOTAL 25.3 1,842 2,266 (424) (18.7)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
This amount includes:
* The decrease of Euros 358 million (-54.7%) relative to the amount recognised
in 2019 for expenses in respect of the valuation and settlement of energy
derivatives, due mainly to developments in the valuation and settlement of gas
derivatives, which is considered together with the Euros 10 million (-1.8%)
decrease in income in respect of this same item, recognised under “Other
Operating Income” in the Consolidated Income Statement (see Section 2.3.1.
Income in this Consolidated Management Report).
* The decrease of Euros 143 million (-38.4%) in CO(2) emission rights due to the
lower thermal production in the period (-32.0%).
* The expenditure of Euros 54 million in 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” (Catalan
regional government) (see Section 3. Regulatory Framework of this Consolidated
Management Report) and the Euros 27 million reversal of the Catalan nuclear
tax recognised in 2019, as a result of its having been declared
unconstitutional by the Constitutional Court in its ruling of 12 April 2019.
Fixed operating costs.
The table below presents the details of fixed operating costs in 2020 and
their variation relative to the previous year:
Millions of euros
Reference( (1)) Fixed Operating Costs
2020 2019 Difference % Var.
Self-constructed Assets 3a.1 and 3d.2 (275) (295) 20 (6.8)
Personnel Expenses 26 1,147 1,022 125 12.2
Other Fixed Operating Expenses 27 1,351 1,338 13 1.0
TOTAL 2,223 2,065 158 7.7
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
Fixed operating costs amounted to Euros 2,223 million in 2020, representing an
increase of Euros 158 million (+7.7%) compared with the previous year. To
analyse the changes during 2020, the following factors must be taken into
account:
* Signing of the “V 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 “V ENDESA Framework Collective
Agreement”.
ENDESA and the aforesaid 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 not submitted to arbitration were incorporated into the “V
ENDESA Framework Collective Agreement” which was approved and signed by the
Company and the Trade Union Section of the General Workers' Union (UGT), and
has general effect since the UGT is the majority union in the Company, on 23
January 2020. On the same date, the new “Guarantee Framework Agreement”
and “Agreement on Voluntary Suspension or Termination of Employment
Contracts” were signed, in this case by all unions represented in ENDESA.
The “V ENDESA Framework Collective Agreement” establishes a modification
of certain social benefits, basically the employee electricity tariff, which
now also includes retired employees, 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 “V ENDESA Framework
Collective Agreement”, which had a positive impact of Euros 10 million on
the Consolidated Statement of Other Comprehensive Income for 2020.
* Valuation of the new actuarial liability at the effective date of the “V
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
2020 (Euros 386 million net of the tax effect) (see Sections 2.1. Consolidated
Results and 2.3.6. Corporate Income Tax in this Consolidated Management
Report).
Additionally, at 31 December 2020, ENDESA revalued the actuarial liability for
defined benefit commitments, with a net negative impact of Euros 70 million on
the Consolidated Statement of Other Comprehensive Income for 2020.
* Workforce restructuring plans:
* Recognition of a provision in the amount of Euros 159 million in the
Consolidated Income Statement for 2020 (Euros 119 million net of the tax
effect) as a result of the communication made to the union representation
regarding the non-exercise of the right to terminate individual suspension of
employment agreements in respect of certain contracts signed with employees in
the framework of the “Agreement on Voluntary Measures for Suspension or
Termination of Employment Contracts” (see Sections 2.1. Consolidated Results
and 2.3.6. Corporation Tax in this Consolidated Management Report).
* Recognition of a provision in the amount of Euros 213 million in the
Consolidated Income Statement for 2020 (Euros 160 million net of the tax
effect) in respect of the Decarbonisation Plan, the decision adopted on 27
September 2019 to decommission the coal-fired power plants and the
reorganisation of activities deriving from the energy transition (see Sections
2.1. Consolidated Results, 2.3.6. Corporation Tax and 2.3.7. Net Income in
this Consolidated Management Report).
This transition is being carried out through a process negotiated and agreed
with the union representation which envisages on the one hand the internal
relocation of part of the affected personnel with the aid of training
measures, and on the other hand the departure of approximately 577 employees
affected by the change of energy model.
* Provisioning of Euros 387 million in the Consolidated Income Statement for
2020 (Euros 290 million net of the tax effect) in respect of ENDESA's
commitment, in its Strategic Plan 2021-2023, to effecting improvements in
efficiency, which involves the departure of approximately 1,200 employees
affected, among other things, by the digitisation of processes (see Sections
2.1. Consolidated Results, 2.3.6. Corporation Tax, 2.3.7 and Net income in
this Consolidated Management Report).
* Update of the provisions for current workforce restructuring plans, which had
a positive impact of Euros 44 million on the Consolidated Income Statement for
2020 (Euros 1 million, positive, in 2019).
* Expense relating to sanctions and penalties in an amount of Euros 42 million
(Euros 57 million in 2019).
* Impairment of other materials related to the mainland coal-fired power plants
in 2019 amounting to Euros 21 million (Euros 16 million net of the tax effect)
(see Section 2.3.7. Net Income in this Consolidated Management Report).
* Within the framework of the Public Responsibility Plan and procurement of
supplies related to the COVID-19 health crisis, ENDESA recognised costs of
Euros 25 million in 2020 (Euros 22 million net of the tax effect) (see Notes
2.2.1, 33.2.1 and 38 of the Notes to the Consolidated Financial Statements for
the year ended 31 December 2020 and Sections 2.3.7. Net income and 5. COVID-19
Health Crisis in this Consolidated Management Report).
Excluding the effects described in the foregoing paragraphs, fixed operating
costs in 2020 would have decreased by Euros 32 million (-1.6%).
Depreciation and amortisation and impairment losses.
The table below presents the breakdown of depreciation and amortisation and
impairment losses in 2020 and the variations compared with the previous year:
Millions of euros
Reference( (1)) Depreciation, Amortisation and Impairment Losses
2020 2019 Difference % Var.
AMORTISATIONS 1,464 1,553 (89) (5.7)
Provision for the depreciation of property, plant and equipment 6 1,221 1,302 (81) (6.2)
Provision for the amortisation of intangible assets 8 243 251 (8) (3.2)
IMPAIRMENT LOSSES 433 1,900 (1,467) (77.2)
Non-Financial Assets 323 1,769 (1,446) (81.7)
Impairment of property, plant and equipment and investment property 33.2 325 1,757 (1,432) (81.5)
Mainland coal-fired thermal power plants 3e.4 and 6 (17) ((2)) 1,352( (3)) (1,369) (101.3)
CGUs of the Non-mainland Territories (“TNP”) 3e.4 and 6 338 401( (3) (4)) (63) (15.7)
Other Property, Plant and Equipment and Investment Property 6 and 7 4 4 - -
Impairment of intangible assets 8 and 33.2 (2) (5) 3 (60.0)
Other Intangible Assets (2) (5) 3 (60.0)
Impairment Losses on Goodwill 9 and 33.2 - 17 (17) (100.0)
Iberian Peninsula Generation CGU 3e.4 - 14( (3)) (14) (100.0)
Canary Islands CGU 3e.4 - 3( (3)) (3) (100.0)
Financial Assets 18.4.1 and 33.2 110 131 (21) (16.0)
Addition to provision for Impairment of Accounts Receivable from Contracts 12.1 120 ((5)) 128 (8) (6.3)
with Customers
Addition to provision for Impairment losses on other Financial Assets 18.1.1 (10) 3 (13) (433.3)
TOTAL 1,897 3,453 (1,556) (45.1)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Includes the provision for impairment of the Los Barrios Port Terminal
(Cádiz) (Euros 10 million), as well the reversal of impairment of
non-financial assets (Euros 1 million) and the update of provisions for
dismantling (Euros 26 million).
(3) Euros 1,332 million net of the tax effect (see Section 2.3.7. Net Income
in this Consolidated Management Report)
(4) Euros 14 million were allocated to the Alcudia Thermal Power Plant
(Balearic Islands).
(5) Includes impairment losses on trade receivables related to the impact of
COVID-19 of Euros 50 million.
Depreciation and amortisation, and impairment losses in 2020 totalled Euros
1,897 million, down by Euros 1,556 million (-45.1%) on 2019, mainly as a
result of the following aspects:
* Impairment of the mainland coal-fired thermal power plants.
Recognition in 2019 of an impairment of the mainland coal-fired thermal power
plants in the amount of Euros 1,366 million, in accordance with the decision
adopted on 27 September 2019 to decommission them. In 2020 the net provision
recognised under this head involved a reversal of Euros 17 million euros (see
Notes 3c, 3e.4, 6.4, 9 and 28 to the Consolidated Financial Statements for the
year ended 31 December 2020 and Sections 2.3.6. Corporation Tax and 2.3.7. Net
Income in this Consolidated Management Report).
* Impairment of the CGUs of each of the Non-mainland Territories (“TNP”) -
the Balearic Islands, the Canary Islands, Ceuta and Melilla.
On 28 December 2019, Order TEC/1260/2019 of 26 December was published. It
establishes the technical and economic parameters to be used in calculating
remuneration for electricity production in Non-mainland Territories
(“TNP”) with additional remuneration regimes during the 2020-2025
regulatory period (see Note 4 to the Consolidated Financial Statements for the
year ended 31 December 2020). This revision of technical and economic
parameters implied for ENDESA, among other things, a decrease in the
remuneration of operating and maintenance costs for the 2020-2025 regulatory
period, and as a consequence, the recoverable amount of the CGUs for each of
the Non-mainland Territories (“TNP”) of the Balearic Islands, Canary
Islands and Ceuta and Melilla is lower than its carrying amount, for which
reason an impairment loss has been recognised in the Consolidated Income
Statement for a total amount of Euros 404 million (see Notes 3c, 3e.4, 9 and
28 to the Consolidated Financial Statements for the year ended 31 December
2020 and Sections 2.3.6. Corporation Tax and 2.3.7. Net Income in this
Consolidated Management Report).
At 31 December 2020 a re-estimate of the recoverable value of the assets of
the Non-mainland Territories (“TNP”) was carried out, taking into account,
among other aspects, the publication on 7 August 2020 in the Official State
Gazette (“BOE”), of Order TED/776/2020 of 4 August revising the product
and logistics prices to be used in determining the price of fuel and
establishing a maximum value for the start-up settlement time per standard
facility applicable to production facilities located in Non-mainland
Territories (“TNP”) (TNP) covered by the additional remuneration regime
(see Note 4 to the Consolidated Financial Statements for the year ended 31
December 2020 and Section 3. Regulatory Framework of this Consolidated
Management Report). As a consequence of this re-estimation, an impairment of
the CGUs was recognised for each of the Non-mainland Territories (“TNP”) -
the Balearic Islands, the Canary Islands, Ceuta and Melilla - for a total
amount of Euros 338 million (see Notes 3e.4, 6.4 and 28 to the Consolidated
Financial Statements for the year ended 31 December 2020 and Sections 2.3.6.
Corporation Tax and 2.3.7. Net Income in this Consolidated Management Report).
* Depreciation and amortisation charges.
Depreciation and amortisation charges decreased by Euros 89 million in 2020,
reflecting on the one hand the decrease of Euros 156 million as a result of
the impairments described in the foregoing paragraphs, and on the other the
increase of Euros 29 million due to the commissioning of power generation
assets from renewable sources.
* Loss due to impairment of accounts receivable.
Lower impairment losses from customer contracts of Euros 8 million, mainly as
a result of lower electricity and gas sales to customers, especially in the
Business to Business (B2B) segment, due to lower demand and prices in 2020,
better payment behaviour of public administrations and other factors,
including intensified collection management in the Business to Business (B2B)
segment, with a favourable impact on the allowance of Euros 21 million, Euros
8 million and Euros 29 million, respectively, which were partially offset, in
the opposite direction, by the Euros 50 million impairment losses from
contracts with customers in the Business to Customer (B2C) segment, as a
result of the increase in bad debts due to the ban on supply cut-off for a
large part of 2020 due to the extraordinary measures related to the economic
situation caused by COVID-19 (see Notes 2. 2.1, 3g.3, 4, 19.5, 28 and 38 of
the Notes to the Consolidated Financial Statements for the year ended 31
December 2020 and Sections 3. Regulatory Framework and 5. COVID-19 Health
Crisis of this Consolidated Management Report).
Without taking into account the effects described in the foregoing paragraphs,
the depreciation and amortisation charge for 2020 would have increased Euros
27 million (+1.7%) compared with 2019.
2.3.3. Net finance income/(expense).
Net finance income/(expense) in 2020 and 2019 was negative in the amounts of
Euros 134 million and Euros 184 million respectively.
The table below presents the details of net finance income/(expense) in 2020
and its variations compared with the previous year:
Millions of euros
Reference( (1)) Net Finance Income/(Expense)( (2))
2020 2019 Difference % Var.
Net Financial Expense ((3)) (146) (185) 39 (21.1)
Finance Income 28 27 1 3.7
Financial Expense (174) (212) 38 (17.9)
Net Exchange Differences 12 1 11 1,100.0
TOTAL 29 (134) (184) 50 (27.2)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Net finance income/(loss) = Finance income - Financial Expense + Net
exchange differences.
(3) Net Financial Expense = Finance Income - Financial Expense.
In 2020, net Financial Expense totalled Euros 146 million, Euros 39 million
(-21.1%) less than in the previous year.
In 2020, net exchange differences amounted to Euros 12 million, positive
(Euros 1 million, positive, in 2019), mainly due to the financial debt in US
dollars (USD) associated with rights of use corresponding to charter contracts
for the transport of LNG.
In considering the evolution of net Financial Expense in 2020 the following
factors need to be taken into account:
Millions of euros
Net Financial Expense ((1))
2020 2019 Difference % Var.
Net Expense in respect of Financial Liabilities at Amortised Cost (132) (133) 1 (0.8)
Income from Financial Assets at Amortised Cost 1 2 (1) (50.0)
Update of Provisions for Workforce Restructuring Plans, Dismantling of (6) (49) 43 (87.8)
Facilities and Impairment of Financial Assets in accordance with IFRS 9
“Financial Instruments”
Interest on late payment of Corporate Income Tax 2016-2017 7 - 7 N/A
Others (16) (5) (11) 220.0
TOTAL (146) (185) 39 (21.1)
(1) Net Financial Expense = Finance Income - Financial Expense.
Net expenses for financial liabilities at amortised cost amounted to Euros 132
million, Euros 1 million (-0.8%) less than in the previous year, due to the
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 declined from 1.8% in
2019 to 1.7% in 2020.
* The increase in average gross financial debt, from Euros 7,431 million in 2019
to Euros 8,104 million in 2020.
As a result of the Constitutional Court’s ruling Royal Decree Law 2/2016 of
30 September unconstitutional, income of Euros 7 million was recognised in
2020 in respect of the delay interest on the amounts of fractional payments
for Corporation Tax for 2016 and 2017, for the difference between the
previously effective rate and the increased rate introduced by this Royal
Decree Law which has now been annulled.
Apart from this, as a consequence of the decommissioning of the Litoral
thermal power plant in Almería, in 2019 this heading included an impairment
loss of Euros 21 million corresponding to the compensation due to ENDESA
Generación, S.A. by the Port Authority of Almeria in the context of the
partial termination of its concession for the Port of Carboneras.
2.3.4. Net Profit/(Loss) of Companies accounted for using the equity method.
In 2020 and 2019 net income of companies accounted for using the equity method
amounted to Euros 34 million and Euros 15 million respectively, the breakdown
being as follows:
Millions of euros
Reference( (1)) Net Profit/(Loss) of Companies accounted for using the equity method
2020 2019
Associates 1 5
Tecnatom, S.A. (2) 1
Gorona del Viento El Hierro, S.A. - 1
Boiro Energía, S.A. 1 -
Compañía Eólica Tierras Altas, S.A. - -
Others 2 3
Joint Ventures 33 10
Tejo Energia - Produção e Distribuição de Energia Eléctrica, S.A. (3) (7)
Front Marítim del Besòs, S.L. (4) -
Nuclenor, S.A. 25 -
Énergie Électrique de Tahaddart, S.A. 1 2
Suministradora Eléctrica de Cádiz, S.A. 5 4
Others 9 11
TOTAL 10 34 15
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
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 a regional tax unconstitutional. The tax in question
was the tax on the environmental impact caused by certain uses of dammed water
by wind farms and high voltage electric power transport facilities regulated
in the revised text of the legal provisions of the Autonomous Region of
Castilla y León regarding own and assigned taxes.
Tejo Energia - Produção e Distribuição de Energia Eléctrica, S.A.
In 2020 and 2019 the results of the 43.75% holding in Tejo Energia -
Produção e Distribuição de Energia Eléctrica, S.A. include the provisions
made for the termination in November 2021 of the long-term electricity sale
contract with Rede Eléctrica Nacional, S.A. (REN).
2.3.5. Gains/(losses) on disposal of assets
Net gains on disposal of assets in 2020 and 2019 amounted to Euros 2 million
and Euros 11 million respectively, broken down as follows:
Millions of euros
Reference( (1)) Net gains/(losses) on disposal of assets
2020 2019
Non-Financial Assets 26 40
Transfer of Optical Fibre Use Rights 6 24( (3))
Other gains/losses 20 16
Disposals of Investments in Group Companies and Other - 1( (4))
Disposals of property, plant and equipment( (2)) 20 15
Financial Assets (24) (29)
Factoring transaction fees 12.1 (24) (29)
TOTAL 30 2 11
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Corresponds to capital gains generated by the sale of land and buildings.
(3) Euros 18 million net of the tax effect (see Section 2.3.7. Net Income in
this Consolidated Management Report).
(4) Corresponds to the gross result generated by the divestment of Eólica del
Noroeste, S.L. and Ufefys, S.L. (in liquidation) (see Notes 2.3 and 2.4 to the
Consolidated Financial Statements for the year ended 31 December 2020).
On 31 July 2020, ENDESA Energía, S.A.U. sold assets and contracts with
customers to ENDESA Soluciones, S.L. relating to a photovoltaic plant located
in El Acebuche–Retamar (Almería) for Euros 17 million. Subsequently, on 30
November 2020, ENDESA Soluciones, S.L. sold these assets to a third party,
generating a total gross capital gain of Euros 9 million.
On 19 December 2019 ENDESA Ingeniería, S.L.U. and Empresa de Alumbrado
Eléctrico de Ceuta Distribución, S.A.U. signed an agreement with a third
party assigning exclusive long-term usage rights for their surplus dark fibre
optic network for an amount of Euros 132 million, generating a gross capital
gain of Euros 24 million. During the year 2020 there was an update of this
capital gain in accordance with the events that finally occurred.
2.3.6. Corporate income tax.
Corporate income tax expense for 2020 amounted to Euros 388 million, Euros 338
million more than the amount recognised for 2019, mainly as a result of:
* The impacts recognised under “Personnel Expenses” in the Consolidated
Income Statement for 2020 relating to the Company's Decarbonisation Plan, the
digitisation of processes and the “V ENDESA Framework Collective
Agreement” for a total amount of Euros 244 million, the tax effect of which
was Euros 61 million (see Section 2.3.2. Operating Expenses in this
Consolidated Management Report).
* The impairment recognised in 2019 relating to the assets of the mainland
coal-fired thermal power plants for a total of Euros 1,469, the tax effect of
which amounted to Euros 364 million, and its subsequent net reversal in 2020
in an amount of Euros 8 million, the tax effect of which was Euros 2 million
(see Section 2.3.2. Operating Expenses in this Consolidated Management
Report).
* The impairment recognised in 2020 and 2019 relating to the Cash Generating
Units (CGUs) for each of the Non-mainland Territories (“TNP”) of the
Balearic Islands, Canary Islands, Ceuta and Melilla for a total amount of
Euros 338 million and Euros 404 million, respectively, whose tax effects
amounted to Euros 85 million and Euros 100 million, respectively (see Section
2.3.2. Operating costs of this Consolidated Management Report).
Without taking into account the effects described in the foregoing paragraphs,
Corporation Tax expense for 2020 would have increased by Euros 18 million or
3.5% compared with the previous year and the effective rate would have been
22.5% (24.4% in 2019) as a consequence, basically, of greater deductions for
investments in the Canary Islands recognised in profit and loss and the
regularisation of the declaration for 2019 recognised in 2020.
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 reflect any legislative changes affecting Corporate
Income Tax.
2.3.7. Net Income
Net income attributable to the Parent company in 2020 came to Euros 1,394
million, representing an increase of Euros 1,223 million relative to 2019
(+715.2%).
Net ordinary income attributable to the Parent in 2020 amounted to Euros 2,132
million (+36.5%), as per the following breakdown:
Millions of euros
Sections 2020 2019 Difference % Var.
Net Income( (1)) 1,394 171 1,223 715.2
Net Gains/(Losses) on Disposal of Non-Financial Assets ((2)) 2.3.5 - (18) 18 (100.0)
Transfer of Optical Fibre Use Rights - (18) 18 (100.0)
Net Impairment Losses on Non-Financial Assets ((2)) 2.3.2 266 1,409 (1,143) (81.1)
Mainland coal-fired thermal plants, inventories and other materials 13 1,105 (1,092) (98.8)
CGUs of the Non-mainland Territories (“TNP”) 253 304 (51) (16.8)
Net Initial Provisioning of Personnel Expenses in respect of Workforce 2.3.2 450 - 450 N/A
Restructuring Plans relating to the Decarbonisation Plan and the Digitisation
of Processes
Net Expenditure Corresponding to the Public Responsibility Plan for the 2.3.2 22 - 22 N/A
COVID-19 Health Crisis
Net Ordinary Income( (3)) 2,132 1,562 570 36.5
(1) Net Income = Net Income of the Parent Company.
(2) Greater than Euros 10 million.
(3) Net Ordinary Income = Net Income of the Parent Company - Net Gains and
Losses on Disposals of Non-Financial Assets (over Euros 10 million) - Net
Losses due to Impairment of Non-Financial Assets (over Euros 10 million) -
Initial Endowment Net of Personnel Expenses for Workforce Restructuring Plans
relating to the Decarbonisation Plan and the Digitisation of Processes - Net
Expenses corresponding to the Public Responsibility Plan for the COVID-19
Health Crisis.
2.4. Results by Segment.
Segment information is provided in Note 33 to the Consolidated Financial
Statements for the year ended 31 December 2020.
The following is a breakdown of the most significant figures in the
Consolidated Income Statement among ENDESA's Businesses for the years 2020 and
2019:
Millions of euros
2020
Generation and Supply Distribution Structure and Others( (1)) Total
Generation in Non-mainland Territories (“TNP”) Other Generation and Supply Adjustments Total
Income 1,612 14,158 (555) 15,215 2,720 (356) 17,579
Sales 1,606 13,460 (556) 14,510 2,461 (327) 16,644
Other Operating Income 6 698 1 705 259 (29) 935
Procurements and Services (1,078) (11,155) 547 (11,686) (174) 287 (11,573)
Contribution Margin( (2)) 534 3,003 (8) 3,529 2,546 (69) 6,006
Self-constructed Assets 6 101 - 107 148 20 275
Personnel Expenses (109) (459) 2 (566) (302) (279) (1,147)
Other Fixed Operating Expenses (220) (915) 6 (1,129) (420) 198 (1,351)
Gross Operating Profit (EBITDA)( (3)) 211 1,730 ((8)) - 1,941 1,972 (130) 3,783
Depreciation, Amortisation and Impairment Losses (431) (857) 89 (1,199) (635) (63) (1,897)
Operating Profit (EBIT)( (4)) (220) 873 89 742 1,337 (193) 1,886
Net Financial Income/(Expense)( (5)) (18) (53) - (71) (56) (7) (134)
Income before Tax (238) 833 89 684 1,304 (200) 1,788
Net Income( (6)) (136) 605 89 558 989 (153) 1,394
Net Ordinary Income( (7)) 145 801 89 1,035 1,157 (60) 2,132
(1) Structure, Services and Adjustments.
(2) Contribution margin = Revenue - 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 finance income/(loss) = Finance 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 and
Losses on Disposals of Non-Financial Assets (over Euros 10 million) - Net
Losses due to Impairment of Non-Financial Assets (over Euros 10 million) -
Initial Endowment Net of Personnel Expenses for Workforce Restructuring Plans
relating to the Decarbonisation Plan and the Digitisation of Processes - 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 209 million.
Millions of euros
2019
Generation and Supply Distribution Structure and Others( (1)) Total
Generation in Non-mainland Territories (“TNP”) Other Generation and Supply Adjustments Total
Income 2,034 16,405 (902) 17,537 2,828 (207) 20,158
Sales 2,030 15,718 (902) 16,846 2,566 (154) 19,258
Other Operating Income 4 687 - 691 262 (53) 900
Procurements and Services (1,496) (13,603) 895 (14,204) (182) 134 (14,252)
Contribution Margin( (2)) 538 2,802 (7) 3,333 2,646 (73) 5,906
Self-constructed Assets 8 88 - 96 175 24 295
Personnel Expenses (93) (450) 1 (542) (280) (200) (1,022)
Other Fixed Operating Expenses (186) (937) 6 (1,117) (442) 221 (1,338)
Gross Operating Profit (EBITDA)( (3)) 267 1,503 ((8)) - 1,770 2,099 (28) 3,841
Depreciation, Amortisation and Impairment Losses (543) (2,216) - (2,759) (626) (68) (3,453)
Operating Profit (EBIT)( (4)) (276) (713) - (989) 1,473 (96) 388
Net Financial Income/(Expense)( (5)) (23) (92) - (115) (63) (6) (184)
Income before Tax (298) (684) (130) (1,112) 1,444 (102) 230
Net Income( (6)) (202) (491) (130) (823) 1,077 (83) 171
Net Ordinary Income( (7)) 102 614 (130) 586 1,059 (83) 1,562
(1) Structure, Services and Adjustments.
(2) Contribution margin = Revenue - 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 finance income/(loss) = Finance 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 and
Losses on Disposals of Non-Financial Assets (over Euros 10 million) - Net
Losses due to Impairment of Non-Financial Assets (over Euros 10 million).
(8) Includes the EBITDA of ENEL Green Power España, S.L.U. (EGPE) amounting
to Euros 223 million.
2.4.1. Contribution Margin
Generation and Supply Segment.
The contribution margin in 2020 amounted to Euros 3,529 million, representing
an increase of Euros 196 million (+5.9%) compared with the previous year,
basically as a result of the decrease in variable costs (-17.7%) which in turn
was due to the lower thermal production of the period (-32.0%).
Distribution Segment.
In 2020 the contribution margin amounted to Euros 2,546 million, Euros 100
million or 3.8% less than the previous year, mainly due to the Euros 91
million (-4.0%) reduction in regulated income of the distribution activity due
to the application of the new remuneration parameters that have come into
force for the 2020-2025 regulatory period (see Note 4 to the Consolidated
Financial Statements for the year ended 31 December 2020 and Section 3.
Regulatory Framework in this Consolidated Management Report).
Structure and Others.
In 2020 the contribution margin was a negative Euros 69 million, in line with
the amount of the previous year.
2.4.2. EBITDA
Generation and Supply Segment.
In 2020, EBITDA amounted to Euros 1,941 million (+9.7%), mainly as a result
of:
* The 5.9% increase in the contribution margin.
* The income recognised as a consequence of the changes in employee benefits,
due to the entry into force of the “V ENDESA Framework Collective
Agreement”, for an amount of Euros 215 million.
* Recognition of a provision workforce restructuring plans relating to the
Company's Decarbonisation Plan, the digitisation of processes and other plans
within the framework of the “Agreement on Voluntary Measures of Suspension
or Termination of Employment Contracts” for a total amount of Euros 310
million.
* The updating of provisions for workforce restructuring plans in place (Euros
17 million, positive, in 2020 and Euros 4 million, negative, in 2019).
* Impairment of other materials related to the mainland coal-fired power plants
in 2019 amounting to Euros 21 million (Euros 16 million net of the tax
effect).
Distribution Segment.
In 2020, EBITDA amounted to Euros 1,972 million (-6.1%), including, inter
alia:
* The -3.8% decline in the contribution margin.
* The income recognised as a consequence of the changes in employee benefits,
due to the entry into force of the “V ENDESA Framework Collective
Agreement”, for an amount of Euros 269 million.
* Recognition of a provision for workforce restructuring plans relating, mainly,
to the digitisation of processes and other plans within the framework of the
“Agreement on Voluntary Measures of Suspension or Termination of Employment
Contracts” for a total amount of Euros 315 million.
* The updating of provisions for workforce restructuring plans in place (Euros 5
million, positive, in 2020 and Euros 1 million, positive, in 2019).
Structure and Others.
In 2020, EBITDA amounted to a negative Euros 130 million, including, inter
alia:
* The income recognised as a consequence of the changes in employee benefits,
due to the entry into force of the “V ENDESA Framework Collective
Agreement”, for an amount of Euros 31 million.
* Recognition of a provision workforce restructuring plans within the framework
of the “Agreement on Voluntary Measures of Suspension or Termination of
Employment Contracts” for Euros 134 million.
* The updating of provisions for workforce restructuring plans in place (Euros
22 million, positive, in 2020 and Euros 4 million, positive, in 2019).
* The expenditure by way of donations corresponding to the Public Responsibility
Plan and purchases of supplies related to COVID-19 for an amount of Euros 25
million (Euros 22 million net of the tax effect).
2.4.3. EBIT
Generation and Supply Segment.
Operating profit (EBIT) for 2020 was Euros 742 million, which was Euros 1,731
million more than in 2019, mainly as a result of:
* A 9.7% increase in EBITDA.
* Recognition in 2019 of an impairment of the mainland coal-fired thermal power
plants in the amount of Euros 1,366 million, in accordance with the decision
adopted on 27 September 2019 to decommission them, and its subsequent net
reversal in 2020 for Euros 17 million.
* Recognition in 2020 of an impairment of the CGUs of the Non-mainland
Territories (“TNP”) of Balearic Islands, Canary Islands, Ceuta and Melilla
for a total amount of Euros 338 million (Euros 404 million in 2019).
Distribution Segment.
EBIT in 2020 amounted to Euros 1,337 million, -9.2% down on the previous year,
mainly as a result of the 6.1% decrease in EBITDA.
Structure and Others.
Operating profit (EBIT) for 2020 amounted to a negative Euros 193 million.
2.5. Scope of Consolidation.
The following transactions were carried out in 2020:
Reference( (1)) Transaction Date Activity Equity stake at 31 December 2020 (%) Equity stake at 31 December 2019 (%)
Control Economic Control Economic
Empresa de Alumbrado Eléctrico de Ceuta, S.A. ((2)) 2.3.1 Acquisition 18 February 2020 Supply and Distribution 96.37 96.37 96.29 96.29
Energía Ceuta XXI Comercializadora de Referencia, S.A.U.( (2)) 2.3.1 Acquisition 18 February 2020 Supply 100.00 96.37 100.00 96.29
Empresa de Alumbrado Eléctrico de Ceuta Distribución, S.A.U.( (2)) 2.3.1 Acquisition 18 February 2020 Distribution 100.00 96.37 100.00 96.29
Hidromondego - Hidroeléctrica do Mondego, Lda.( (3)) 2.3.1 Winding up 12 March 2020 Electricity Production and Supply - - 100.00 100.00
ENDESA Soluciones, S.L.( (4)) 2.3.1, 2.4 and 10.1 Sale 11 May 2020 Supply of Energy Products and Services 20.00 20.00 100.00 100.00
Parque Eólico Tico, S.L.U.( (5)) 2.3.1 and 5 Acquisition 7 July 2020 Wind 100.00 100.00 - -
Tico Solar 1, S.L.U.( (5)) 2.3.1 and 5 Acquisition 7 July 2020 Photovoltaic 100.00 100.00 - -
Tico Solar 2, S.L. U.( (5)) 2.3.1 and 5 Acquisition 7 July 2020 Photovoltaic 100.00 100.00 - -
Centrales Nucleares Almaraz-Trillo, A.I.E.( (6)) 2.5.1 Acquisition 29 July 2020 Nuclear Power Plant Management 24.18 24.18 24.26 23.92
Parque Eólico Farlán, S.L.U.( (7)) 2.3.1 Merger 5 August 2020 Wind - - 100.00 100.00
ENDESA X Servicios, S.L.U.( (8)) 2.3.1 Incorporation 1 September 2020 Supply of Energy Products and Services 100.00 100.00 - -
Suggestion Power, Unipessoal, Lda.( (9)) 2.3.1 and 5 Acquisition 14 September 2020 Photovoltaic 100.00 100.00 - -
Sistemas Energéticos Alcohujate, S.A.U.( (7)) 2.3.1 Merger 22 September 2020 Wind - - 100.00 100.00
Sistemas Energéticos Campoliva, S.A.U. ((7)) 2.3.1 Merger 22 September 2020 Wind - - 100.00 100.00
Sistemas Energéticos Sierra del Carazo, S.L.U.( (7)) 2.3.1 Merger 22 September 2020 Wind - - 100.00 100.00
ENDESA X, S.A.U. (in liquidation) ((10)) 2.3.1 Winding up 10 November 2020 Supply of Energy Products and Services - - 100.00 100.00
Trévago Renovables, S.L.( (11)) 2.4 and 10.1 Incorporation 18 November 2020 Photovoltaic 35.50 35.50 - -
Almussafes Servicios Energéticos, S.A.U.( (7)) 2.3.1 Merger 18 November 2020 Wind - - 100.00 100.00
International ENDESA B.V. (in liquidation) ((12)) 2.3.1 Winding up 30 December 2020 International financial transaction company - - 100.00 100.00
1. Notes to the Consolidated Financial Statements for the year ended 31 December
2020.
2. Interest acquired by ENDESA Red, S.A.U. for an amount of less than Euros 1
million.
3. The gross gain amounted to Euros 2 million.
4. Holding sold by ENDESA Energía, S.A.U. for Euros 21 million, net of the cash
available in the company sold (see Note 32.2 to the Consolidated Financial
Statements for the year ended 31 December 2020 and Section 4.4. Cash Flows in
this Consolidated Management Report). The gross loss on the divestment
transaction was less than Euros 1 million. Subsequently, on 21 December 2020,
ENDESA Energía, S.A.U. sold its stake in this company to ENDESA X Servicios,
S.L.U.
5. Companies acquired by ENEL Green Power España, S.L.U. (EGPE) for Euros 40
million the actual cash outflow being Euros 14 million in the year to 31
December 2020 (see Note 32.2 to the Consolidated Financial Statements for the
year ended 31 December 2020 and Section 4.4. Cash Flows in this Consolidated
Management Report).
6. Shareholding acquired by ENDESA Generación, S.A.U. for a non-material amount.
7. Companies acquired by ENEL Green Power España, S.L.U. (EGPE) by means of
merger.
8. Company incorporated by ENDESA, S.A. (99.525% stake) and ENDESA Red, S.A.U.
(0.475% stake) through the partial spin-off of ENDESA Energía, S.A.U. and
ENDESA Ingeniería, S.L.U., respectively. Subsequently, on 15 October 2020,
ENDESA Red, S.A.U. sold its stake in the newly incorporated company to ENDESA,
S.A.
9. Company acquired by ENDESA Generación Portugal, S.A. for Euros 6 million, the
effective cash outflow being Euros 3 million at 30 December 2020 (see Note
32.2 to the Consolidated Financial Statements for the year ended 31 December
2020 and Section 4.4. Cash Flows in this Consolidated Management Report).
10. The figures for this company were not material.
11. Company in which ENEL Green Power España, S.L.U. (EGPE) has a 35.50% stake,
through Furatena Solar 1, S.L.U. (17.73%) and Seguidores Solares Planta 2,
S.L.U. (17.77%).
12. The gross loss amounted to Euros 8 million.
Corporate acquisitions in the renewables business.
On 7 July 2020, an agreement was signed, through ENEL Green España, S.L.U.
(EGPE) for the acquisition of 100% stakes 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 was Euros 46 million, of which, at 31
December 2020, Euros 29 million were pending disbursement, subject to certain
contractual stipulations being fulfilled (see Notes 2.3.1, 5 and 8 to the
Consolidated Financial Statements for the year ended 31 December 2020 and
Section 4.4. Cash Flows in this Consolidated Management Report).
The acquisition of these companies led to the recognition, under the heading
“Intangible Assets” in the Consolidated Statement of Financial Position
for 2020 of an amount of Euros 46 million corresponding almost entirely to the
value of licences for the development of the wind farm and photovoltaic plant
projects.
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.
These transactions are aimed at strengthening ENDESA's presence in the Iberian
generation market by expanding the portfolio of renewable assets in its
production mix.
2.6. Statistical appendix
Industrial Data
Electricity Generation ((1)) 2020 2019 % Var.
GWh Percentage (%) GWh Percentage (%)
Mainland 46,142 82.0 49,582 80.7 (6.9)
Renewables 13,415 23.8 10,090 16.4 33.0
Hydroelectric 7,681 13.6 5,861 9.5 31.1
Wind( (2)) 5,235 9.3 4,127 6.7 26.8
Photovoltaic ((3)) 498 0.9 101 0.2 393.1
Others 1 0.0 1 0.0 -
Nuclear 25,839 45.9 26,279 42.8 (1.7)
Coal 1,211 2.2 5,647 9.2 (78.6)
Combined Cycles (CCGTs)( (4)) 5,677 10.1 7,566 12.3 (25.0)
Non-mainland Territories (“TNP”) 10,127 18.0 11,820 19.3 (14.3)
Coal 222 0.4 1,996 3.3 (88.9)
Fuel-gas 4,217 7.5 5,703 9.3 (26.1)
Combined Cycles (CCGTs)( (4)) 5,688 10.1 4,121 6.7 38.0
TOTAL 56,269 100.0 61,402 100.0 (8.4)
(1) In power plant busbars.
(2) In 2020 it includes 112 GWh corresponding to Non-mainland Territories
(“TNP”) (123 GWh in 2019).
(3) In 2020, it includes 1 GWh corresponding to Non-mainland Territories
(“TNP”).
(4) Corresponding to natural gas.
Gross Installed Capacity 31 December 2020 31 December 2019 % Var.
MW Percentage (%) MW Percentage (%)
Mainland 17,729 78.9 19,498 80.5 (9.1)
Renewables ((1)) 7,825 34.8 7,452 30.8 5.0
Hydroelectric 4,793 21.3 4,792 19.8 0.0
Wind( (2)) 2,423 10.8 2,308 9.5 5.0
Photovoltaic ((3)) 609 2.7 352 1.5 73.0
Nuclear 3,453 15.4 3,443 14.2 0.3
Coal 2,627 11.7 4,780 19.7 (45.0)
Combined Cycles (CCGTs)( (4)) 3,824 17.0 3,823 15.8 0.0
Non-mainland Territories (“TNP”) 4,736 21.1 4,733 19.5 0.1
Coal 260 1.2 260 1.1 -
Fuel-gas 2,619 11.7 2,619 10.8 -
Combined Cycles (CCGTs)( (4)) 1,857 8.3 1,854 7.7 0.2
TOTAL 22,465 100.0 24,231 100.0 (7.3)
(1) At 31 December 2020 and 2019 the additional capacity was 391 MW and 926 MW
respectively.
(2) At 31 December 2020 and 2019 it includes 40 MW corresponding to
Non-mainland Territories (“TNP”).
(3) At 31 December 2020 it includes 22 MW corresponding to Non-mainland
Territories (“TNP”).
(4) Corresponding to natural gas.
Net Installed Capacity 31 December 2020 31 December 2019 % Var.
MW Percentage (%) MW Percentage (%)
Mainland 17,388 80.3 19,066 81.6 (8.8)
Renewables ((1)) 7,781 35.9 7,408 31.7 5.0
Hydroelectric 4,749 21.9 4,748 20.3 0.0
Wind( (2)) 2,423 11.2 2,308 9.9 5.0
Photovoltaic ((3)) 609 2.8 352 1.5 73.0
Nuclear 3,328 15.4 3,318 14.2 0.3
Coal 2,523 11.7 4,584 19.6 (45.0)
Combined Cycles (CCGTs)( (4)) 3,756 17.3 3,756 16.1 -
Non-mainland Territories (“TNP”) 4,264 19.7 4,299 18.4 (0.8)
Coal 241 1.1 241 1.0 -
Fuel-gas 2,334 10.8 2,334 10.0 -
Combined Cycles (CCGTs)( (4)) 1,689 7.8 1,724 7.4 (2.0)
TOTAL 21,652 100.0 23,365 100.0 (7.3)
(1) At 31 December 2020 and 2019 the additional capacity was 391 MW and 926 MW
respectively.
(2) At 31 December 2020 and 2019 it includes 40 MW corresponding to
Non-mainland Territories (“TNP”).
(3) At 31 December 2020 it includes 22 MW corresponding to Non-mainland
Territories (“TNP”).
(4) Corresponding to natural gas.
GWh
Gross electricity sales ((1)) 2020 2019 % Var.
Regulated Price 13,258 13,335 (0.6)
Deregulated market 75,665 85,117 (11.1)
Spanish 65,471 74,367 (12.0)
Outside Spain 10,194 10,750 (5.2)
TOTAL 88,923 98,452 (9.7)
(1) In power plant busbars.
GWh
Net electricity sales ((1)) 2020 2019 % Var.
Regulated Price 11,342 11,385 (0.4)
Deregulated market 69,430 78,056 (11.1)
Spanish 59,800 67,860 (11.9)
Outside Spain 9,630 10,196 (5.6)
TOTAL 80,772 89,441 (9.7)
(1) Sales to end customers.
Thousands
Number of customers (Electricity)( (1) (2)) 31 December 2020 31 December 2019 % Var.
Regulated market 4,730 4,807 (1.6)
Mainland Spain 4,020 4,074 (1.3)
Non-mainland Territories (“TNP”) 710 733 (3.1)
Deregulated market 5,690 5,828 (2.4)
Mainland Spain 4,444 4,619 (3.8)
Non-mainland Territories (“TNP”) 838 859 (2.4)
Outside Spain 408 350 16.6
TOTAL 10,420 10,635 (2.0)
Income / Supply Points( (3)) 1.1 1.3 -
(1) Supply points.
(2) Customers of the supply companies.
(3) Ratio of revenues from electricity sales to the number of electricity
supply points (Thousands of euros / Supply Points).
Percentage (%)
Trends in electricity demand ((1)) 2020 2019
Mainland ((2)) (5.1) (1.7)
Non-mainland Territories (“TNP”) ((3)) (13.7) 0.6
(1) Source: Red Eléctrica de España, S.A.U. (REE) (the national grid). In
power plant busbars.
(2) Corrected labour and temperature effects: -5.1% in 2020 and -2.7% in 2019.
(3) Corrected labour and temperature effects: -13.3% in 2020 and +1.3% in
2019.
Percentage (%)
Market share (electricity) ((1)) 31 December 2020 31 December 2019
Mainland Generation( (2)) 18.0 19.1
Distribution 42.9 44.1
Supply 32.4 34.1
(1) Source: In-house.
(2) Includes renewables.
GWh
Gas sales 2020 2019 % Var.
Deregulated market 39,665 45,584 (13.0)
Regulated market 1,225 1,295 (5.4)
International market 17,440 19,968 (12.7)
Wholesale business 11,715 12,937 (9.4)
TOTAL( (1)) 70,045 79,784 (12.2)
(1) Excluding own generation consumption.
Thousands
Number of customers (gas) ((1)) 31 December 2020 31 December 2019 % Var.
Regulated market 233 230 1.3
Mainland Spain 209 206 1.5
Non-mainland Territories (“TNP”) 24 24 -
Deregulated market 1,440 1,419 1.5
Mainland Spain 1,252 1,255 (0.2)
Non-mainland Territories (“TNP”) 71 72 (1.4)
Outside Spain 117 92 27.2
TOTAL 1,673 1,649 1.5
Income / Supply Points( (2)) 1.1 1.5 -
(1) Supply points.
(2) Ratio of revenues from gas sales to the number of gas supply points
(Thousands of euros / Supply Points).
Percentage (%)
Trend in demand for gas ((1)) 2020 2019
Domestic market (9.6) 14.0
Domestic - conventional (5.3) (0.2)
Electricity sector (20.7) 80.0
(1) Source: Enagás, S.A.
Percentage (%)
Market share (gas) ((1)) 31 December 2020 31 December 2019
Deregulated market 14.3 15.6
(1) Source: In-house.
Distribution Business 31 December 2020 31 December 2019 % Var.
Distribution and Transmission Networks (km.) 315,365 316,320 (0.3)
Digitised Customers( (1)) 12,389 12,178 1.7
End Users( (2)) 12,291 12,235 0.5
Ratio of Digitised Customers ((3)) 100.8 99.5 -
Public and Private Electric Recharging Points (Units) 7,072 5,000 41.4
(1) Smart meters activated (Thousands).
(2) Customers of distribution companies (Thousands).
(3) Number of Digitised Customers / End Users (%).
Supply Quality Measures 2020 2019 % Var.
Energy Distributed (GWh)( (1)) 124,658 126,454 (1.4)
Energy Losses (%)( (2)) 7.1 7.5 -
Installed Capacity Equivalent Interruption Time (Average) – ICEIT (Minutes)( 46.9 60.6 (22.6)
(3))
System Average Interruption Duration Index – SAIDI (Minutes)( (2)) 74.5 75.8 (1.7)
System Average Interruption Frequency Index – SAIFI( (2)) 1.4 1.4 -
(1) Energy supplied to customers, with or without a contract, auxiliary
consumption of generators and outflows to other grids (transmission or
distributors).
(2) Energy inputs to the distribution grid (or energy injected into the
distribution grid) minus distributed energy divided by energy inputs to the
distributor (or energy injected into the distribution grid).
(3) In accordance with the calculation procedure of Royal Decree 1995/2000, of
1 December 2000.
(4) Source: In-house on the basis of supplier busbars.
Financial Data.
Millions of euros
Consolidated Income Statement
2020 2019 % Var.
Sales 16,644 19,258 (13.6)
Procurements and Services (11,573) (14,252) (18.8)
Contribution margin ((1)) 6,006 5,906 1.7
EBITDA ((2)) 3,783 3,841 (1.5)
EBIT ((3)) 1,886 388 386.1
Net Financial Income/(Expense) ((4)) (134) (184) (27.2)
Income before Tax 1,788 230 677.4
Net Income( (5)) 1,394 171 715.2
Net Ordinary Income ((6)) 2,132 1,562 36.5
(1) Contribution margin = Revenue - 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 finance income/(loss) = Finance income - Financial Expense + Net
exchange differences.
(5) Net income: Profit of the Parent.
(6) Net Ordinary Income = Net Income of the Parent Company - Net Gains and
Losses on Disposals of Non-Financial Assets (over Euros 10 million) - Net
Losses due to Impairment of Non-Financial Assets (over Euros 10 million) -
Initial Endowment Net of Personnel Expenses for Workforce Restructuring Plans
relating to the Decarbonisation Plan and the Digitisation of Processes - Net
Expenses corresponding to the Public Responsibility Plan for the COVID-19
Health Crisis.
Euros
Valuation parameters 2020 2019 % Var.
Ordinary Earnings per Share( (1)) 2.0136 1.475 36.5
Earnings per Share( (2)) 1.317 0.162 715.2
Cash Flow per Share( (3)) 2.787 3.004 (7.2)
Book Value per Share( (4)) 6.909 ((5)) 7.261( (6)) (4.9)
(1) Net Ordinary Earnings per Share = Net Income of the Parent / Number of
shares at year-end.
(2) Net Result per Share = Net Result of the Parent Company / Number of Shares
at year-end.
(3) Cash Flow per Share = Net cash flow from operating activities / Number of
shares at year-end.
(4) Book value per share = Equity of the Parent / No. of shares at year-end.
(5) At 31 December 2020.
(6) At 31 December 2019.
Millions of euros
Reference ((1)) Consolidated Statement of Financial Position
31 December 2020 31 December 2019 % Var.
Total assets 32,062 31,981 0.3
Equity 14 7,465 7,837 (4.7)
Net Financial Debt( (2)) 17 6,899 6,377 8.2
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Net financial debt = Non-current financial debt + Current financial debt
– Cash and cash equivalents – Derivatives recognised as financial assets.
Profitability Indicators (%) 2020 2019
Return on equity ((1)) 28.42 18.68
Return on assets ((2)) 6.66 4.91
Economic profitability( (3)) 8.84 1.80
Return on capital employed (ROCE)( (4)) 4.61 0.95
Return on Capital Invested (RCI)( (5)) 10.39 2.14
(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 = Operating Income (EBIT) / Average Property, plant
and equipment.
(4) Return on Capital Employed = Operating Result After Taxes / (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 31 December 2020 31 December 2019
Liquidity ratio( (1)) 0.73 0.72
Solvency ratio( (2)) 0.91 0.91
Debt Ratio( (3) )(%) 48.03 44.86
Debt coverage ratio( (4)) 1.82 1.66
Net Financial Debt( (5) )/ Fixed Assets( (6)) (%) 29.64 27.46
Net Financial Debt( (5) )/ Funds from Operations( (7)) 2.23 2.05
2020 2019
(Funds from Operations( (7) )+ Interest Expense( (8))) / Interest Expense( (8) 21.32 23.91
)
(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 financial liabilities + Current financial
liabilities – Cash and cash equivalents – Financial derivatives recognised
under 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 Expense = Interest Payments (see Section 4.4. Cash Flows in this
Consolidated Management Report).
3. Regulatory Framework.
Information on the regulatory framework is set out in Note 4 to the
Consolidated Financial Statements for the year ended 31 December 2020.
The main changes in the Spanish regulatory framework either approved in 2020
or with a material impact on the Consolidated Financial Statements for that
year are described below.
Electricity tariff for 2020.
Order TEC/1258/2019 of 20 December 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 National Commission on Markets and Competition
(CNMC).
On 14 October 2020, Order TED/952/2020 of 5 October was published in the
Official State Gazette, whereby the surplus of the Electricity System is
applied to cover temporary imbalances and mismatches between income and costs
for the years 2019 and 2020. This Order establishes that the National
Commission of Markets and Competition (CNMC), as the body in charge of
settlements of the System, will transfer from the specific electricity surplus
account to the settlement account the amount needed to cover such temporary
imbalances between Income and costs of the Electricity System for 2019 as may
occur, in accordance with the best forecast available at the time of preparing
the closing settlement proposal and with the aim of closing the year in
balance. Also, if there are any funds remaining after the approval of the
settlement at the close of 2019, the CNMC will use them until they are
exhausted in the successive provisional settlements for 2020 as well as, if
still available, the closing settlement itself, in order to cover any
deviations or imbalances that may occur. By virtue of this, in the definitive
settlement for 2019, Euros 528 million were applied to compensate the deficit
for an equivalent amount that occurred in the final settlement of 2019. The
remaining balance of the accumulated surplus, amounting to Euros 506 million,
has been included in the settlements of regulated activities for the year
2020.
Electricity tariff for 2021.
Ministerial Order TEC/1271/2020 of 22 December establishing access tariffs for
2021 was published in the Official State Gazette on 29 December 2020.
Electricity access tariffs remain unchanged until the tariffs to be set by the
CNMC come into force.
Natural gas tariff for 2020.
On 28 December 2019 Order TEC/1259/2019 of 20 December was published in the
Official State Gazette (“BOE”), establishing the gas access tariffs for
2020, which were maintained unchanged, and on 30 December 2019 the Resolution
of 23 December of the General Directorate of Energy Policy and Mines was
published, with the “Last Resort” Rates (“TUR”) for natural gas to be
applied from 1 January 2020, resulting in an average reduction of between 3.3%
and 4.2% depending on whether “TUR1” or “TUR2” is concerned,
respectively, due to the reduction in the cost of the raw material.
On 30 June 2020, the Resolution of 23 June 2020, of the General Directorate
for Energy Policy and Mines was published in the Official State Gazette
(“BOE”), publishing the new last resort tariff (“TUR”) for natural gas
that came into effect on 1 July 2020, resulting in an average reduction of
4.5% and 6.0% depending on whether it “TUR1” or “TUR2” is concerned,
respectively, due to the reduction in the cost of the raw material.
On 29 September 2020 the “BOE” published Order TED/902/2020 of 25
September, modifying the methodology for calculating the rate of last resort
for natural gas. This Order adapts gas tolls and fees to the new toll
structure of the Gas System of Circular 6/2020 of 22 July, being applicable
from 1 October 2021, with the exception of some access tolls to regasification
facilities, application of which began on 1 October 2020.
On 30 September 2020, the Resolution of 29 September 2020, of the General
Directorate for Energy Policy and Mines was published in the Official State
Gazette (“BOE”), publishing the new last resort tariff for natural gas
that came into effect on 1 October 2020, resulting in an average reduction of
2.4% and 5.5% depending on whether it is the Last Resort Tariff 1 (“TUR1”)
or the Last Resort Tariff 2 (“TUR2”), respectively, due to the reduction
in the cost of the raw material.
Natural gas tariff for 2021.
CNMC Circular 6/2020 of 22 July approved the methodology for the calculation
of transmission tolls, local networks and natural gas regasification and among
other aspects established that the CNMC must set the values of the access
tolls to the regasification facilities and, where appropriate, the billing
terms of the term of conduction of the transport and distribution tolls,
applicable from 1 October 2020.
On 29 December 2020 the “BOE” published the Resolution of 23 June 2020 of
the General Directorate for Energy Policy and Mines, establishing the Last
Resort Tariff (“TUR) for natural gas to be applied from 1 January 2021,
resulting in an average increase of 4.6% or 6.3% depending on whether
“TUR1” or “TUR2” is concerned, due to the increase in the cost of the
raw material.
Energy Efficiency.
Order TED/287/2020 of 23 March establishes a contribution by ENDESA to the
National Fund for Energy Efficiency of Euros 27.5 million in respect of its
2020 obligations.
In December 2020, the Ministry for the Ecological Transition (now the Ministry
for the Ecological Transition and the Demographic Challenge) began processing
a proposed Order establishing the contribution to the National Fund for Energy
Efficiency for 2021, ENDESA's proposed share in which is Euros 26.6 million.
“Bono Social” discount rate.
On 13 August 2020, Order TEC/788/2020 of 24 July was published in the Official
State Gazette (“BOE”), establishing the distribution of the financing of
the 2020 Social Bonus, ENDESA’s percentage being 35.57%.
Strategic Framework for Energy and Climate.
On 11 January 2021 the Resolution of 30 December 2020 of the General
Directorate of Environmental Quality and Assessment was published in the
Official State Gazette (“BOE”), formulating the strategic environmental
statement of the National Integrated Energy and Climate Plan (“PNIEC”)
2021-2030. This must be approved by the European Commission through a
structured process of dialogue culminating in its definitive approval (see
Notes 2.2.2 and 39 of the Notes to the Consolidated Financial Statements for
the year ended 31 December 2020).
Likewise, the Government has sent the Draft Law on Climate Change and Energy
Transition to parliament. It includes the following aspects, among others:
* It would set 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
electricity system.
* Renewable energy promotion measures through a remuneration framework based on
the long-term recognition of a fixed energy price.
* The new hydro concessions will be aimed at supporting the integration of
non-manageable renewables.
* Introduction of new parties in the Electricity Sector as owners of storage
facilities or independent aggregators.
* Limits are established in the exploitation of hydrocarbons, restricting fossil
fuel subsidies and reviewing their taxation.
* 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 emissions of carbon dioxide (CO(2)) in 2050 and that since 2040
the new passenger cars/light commercial vehicles have no direct emissions.
Likewise, the establishment of low-emission areas in municipalities with more
than 50,000 inhabitants and island territories and the obligation to develop
recharging infrastructures at petrol stations are pursued no later than 2023.
* Mobilisation of resources for the fight against climate change: at least Euros
450 million of the proceeds from auctions of CO(2) rights will be used
annually to cover costs of the Electric System.
Lastly, on 22 September 2020 the National Plan for Adaptation to Climate
Change (“PNACC”) for 2021-2030 was approved by the Council of Ministers.
It constitutes the basic planning framework for promoting coordinated action
to cope with 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
attainment indicators, with the common objective of avoiding or reducing
vulnerability and potential impacts on social, economic and environmental
systems facing climate change, as well as improving their ability to recover
from climate change events and re-establish themselves. In the field of
energy, the aim is to guarantee an energy system that is resilient to 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, to avoid or limit peaks in demand.
* 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, 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.
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 prevailing 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 was published in the
“BOE”, declaring a State of alarm for the management of the COVID-19
health crisis.
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 on extraordinary urgent measures to
face the economic and social impact of COVID-19; on 1 April 2020 Royal
Decree-Law 11/2020 of 31 March was published, adopting urgent complementary
measures in the social and economic fields to deal with COVID-19; 8 July 2020
saw the publication of Royal Decree Law 26/2020 of 7 July on economic recovery
measures to address the impact of COVID-19 in the areas of transport and
housing, and lastly on 30 September 2020 Royal Decree Law 30/2020 of 29
September 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” discount rate: The validity of the ‘Bono Social’
(special reduced rate 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 expired before that date. At the same time, the
right to the “Bono Social” discount rate was extended to customers with
supply points in their name, or any member of their family unit, with the
status of self-employed or sole proprietor 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, the beneficiary group was expanded
to include those who could prove, upon the entry into force of this law, that
the holder of the supply point or a member of the family unit was unemployed,
furloughed or had had his or her working hours reduced due to care, in the
case of entrepreneurs, or other similar circumstances that involved 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 total household income did 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, to consumers who had the status of vulnerable
or severely vulnerable consumers or consumers at risk of social exclusion
according to the criteria of Royal Decree 897/2017 of 6 October. This term,
initially valid for one month and extended during the State of alarm, was
extended by Royal Decree Law 26/2020 of 7 July until 30 September 2020,
establishing that the supply of electricity, water, natural gas and other
petroleum derivatives to natural persons in their habitual residence, could
not be cut off except for reasons of safety of supply, people and facilities.
Finally, by means of Royal Decree Law 37/2020 of 22 December on urgent
measures to face situations of social and economic vulnerability in the field
of housing and in the field of transport, during the State of alarm prohibited
the suspension of supply to consumers who were vulnerable, severely vulnerable
or at risk of social exclusion, and this prohibition was extended to consumers
who, without being able to prove ownership of the supply contract, comply with
the requirements established in Royal Decree 897/2017 of 6 October.
* Flexibility measures for electricity supply contracts of self-employed and
businesses: Possibility, during the State of alarm, for consumers to suspend
or modify their contracts to contract another alternative offer with their
supplier to adapt to new consumption patterns, without any charge or penalty,
as well as to change power or access toll. A period of 3 months was set, after
the end of the State of alarm, for the reactivation of the contract or
modification of the power, at no cost, except in certain situations. Future
General State Budget Laws approved after the entry into force of Royal Decree
Law 11/2020 of 31 March will include the corresponding items to compensate the
Electricity Sector for the reduction in income that these measures entail.
Similar measures are provided for the Natural Gas Sector.
* Suspension of supply invoices: Possibility during the State of alarm for
self-employed persons and SMEs with supply points in their name to ask their
supplier, or distributor as the case may be, by remote (non-physical) means,
to suspend payment of bills corresponding to billing periods that contain days
covered by 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 or any other line
created for this purpose.
* Rights of access: The term was extended for access rights that expired on 31
March 2020 and the new term was set at two months after the end of the State
of alarm or its extensions.
In this context, likewise, through Order SND/260/2020 of 19 March, the
activation of the interruptibility demand management service was suspended for
economic reasons while the state of alarm was in force.
Finally, it should be noted that after the end last June of the initial State
of alarm declared through Royal Decree 463/2020 of 14 March, the subsequent
negative evolution of the pandemic led the Government to declare a new State
of alarm through Royal Decree 926/2020 of 25 October declaring the State of
alarm to contain the spread of COVID-19 infections.
Plan for the Recovery, Transformation and Resilience of the Economy.
On 7 October 2020 the Government presented the Plan for the Recovery,
Transformation and Resilience of the Economy to respond to the challenges of
the next decade, focusing on four necessary transformations 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
European Union Recovery Plan (“Next Generation EU”), which will allow
Spain to obtain up to Euros 140,000 million, of which Euros 72,000 million
will be non-refundable grants and the rest loans. The Government, in order to
speed up the timetable for the execution of this Plan, plans to incorporate
Euros 27,000 million in the next General State Budget.
The Plan includes ten key policies that are considered driving forces because
they have a direct impact on the productive sectors with the greatest capacity
to transform the economic and social fabric, namely:
1. Urban and rural agenda, fight against depopulation and development of
agriculture.
2. Resilient infrastructures and ecosystems.
3. Fair and inclusive energy transition.
4. An Administration for the twenty-first century.
5. Modernisation and digitisation of the industrial fabric and of SMEs, recovery
of tourism and promotion of an entrepreneurial nation.
6. Pact for science and innovation. Strengthening the capacities of the National
Health System.
7. Education and knowledge, continuous training and capacity building.
8. New economics of care and employment policies.
9. Boosting culture and sports.
10. Modernisation of the tax system for inclusive and sustainable growth.
Investment in ecological transition will represent more than 37% of the total
Plan and digitisation 33%.
In the field of energy, the foregoing policies include actions such as the
massive deployment of renewable generation, smart grids and electrical
infrastructures; the development of a renewable hydrogen roadmap and its
sectoral integration; the development of a Just Transition Strategy to
guarantee employment in areas affected by the energy transition; and the
promotion of sustainable mobility and the refurbishment of buildings as well
as the promotion of energy efficiency measures.
Finally, in order to ensure the proper execution of the funds, the Plan
provides a Governance model for the selection, evaluation and coordination of
the various projects. A specific collaboration will be implemented with the
Autonomous Regions and Cities and an Interministerial Commission and a
Monitoring Unit will be created. The Government also intends to eliminate the
obstacles that hinder the execution of projects, so that the bureaucracy is
not a brake on the development of the Plan.
Under the framework of the Recovery, Transformation and Resilience Plan,
various consultations have been launched from different Ministries to collect
information on expressions of interest from the various agents regarding
possible projects in certain areas of action of the Plan, with a view to
preparing the Plan to present to the European authorities.
Likewise, on 31 December 2020, Royal Decree Law 36/2020 of 30 December was
published, approving urgent measures for the modernisation of the Public
Administration and for the execution of the Recovery, Transformation and
Resilience Plan, including a series of measures to facilitate the management
of the Next Generation EU funds, such as streamlining procedures, improving
public-private collaboration, through introduction of such new concepts as the
Strategic Projects for Economic Recovery and Transformation (“PERTE”), as
a key element for the execution of the various driving projects of the Plan;
and the development of specific governance mechanisms.
European Commission Decision C(2020)3401 on electricity production activity in
Spanish Non-mainland Territories (“TNP”).
On 28 May 2020 the European Commission approved the regulatory scheme
established in Royal Decree 738/2015 of 31 July relating to electricity
production in Non-mainland Territories (“TNP”), concluding that It meets
the criteria of the Services of General Economic Interest and that it 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 Spain may ask before
those dates for the measures to be kept in place.
Order for the revision of fuel prices in the Non-mainland Territories
(“TNP”).
Order TEC/1260/2019, of 26 December, revises the technical and economic
parameters for the remuneration of generation facilities in the Electricity
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 three months, product and logistics prices will be
reviewed by Ministerial Order, with effect from 1 January 2020. Order
TEC/776/2020 of 4 August 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”) of 2015.
1 October 2020 saw the publication of the Resolution of the General
Directorate of Energy Policy and Mines of 19 September approving the
definitive amount of the generation costs of the production activity in the
Non-mainland Territories (“TNP”) for the year 2015 corresponding to the
facilities owned by ENDESA.
Royal Decree-Law 23/2020, of 23 June, which approves measures in the field of
energy and in other areas for economic recovery.
On 24 June 2020, Royal Decree-Law 23/2020, of 23 June, was published,
approving measures in the field of energy and in 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.
* 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.
Royal Decree 960/2020 of 3 November regulating the economic remuneration
regime for renewable energy for electrical energy production facilities.
On 24 June 2020, Royal Decree Law 23/2020 of 23 June was published, approving
measures in the field of energy and in other areas for economic recovery. This
is dealt with later in this document. Among other things, this Royal Decree
Law introduces a new model for auctions of future renewable energy
developments, based on the long-term recognition of a fixed price for energy,
distinguishing among different technologies.
Subsequently, on 4 November 2020, Royal Decree 960/2020 of 3 November was
published in the Official State Gazette (“BOE”), regulating the
development of the new remuneration scheme for future developments of
renewable energies, calling it the Renewable Energy Economic Regime (REER).
This economic regime will be granted by means of auctions regulated by
Ministerial Order, which will set a maximum volume of energy or power to be
suctioned and may distinguish among 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 euros per MWh.
Regarding the remuneration of energy, the price to be received for each unit
sold in the daily or intraday market will be the bid price (for adjustment and
balance services, it will be the price of the respective markets).
Alternatively, incentives for participation or exposure in the market may be
established, through a market adjustment percentage to be applied to the daily
market price, the correction percentage of which on the price set in the
auction will be defined in each call.
All the facilities of this Scheme will participate in the market and the
Iberian Energy Market Operator - Spanish Division (“OMIE”) will make a
settlement for the differences between the prices of the daily or intraday
market and the award price of the facilities.
An auction calendar will be established by Ministerial Order for a minimum
period of 5 years, updateable at least annually, and which may include
deadlines, frequency, capacity and technologies. This calendar was published
on 5 December 2020 by means of Order TED/1161/2020 of 4 December regulating
the first auction mechanism for the granting of the economic regime of
renewable energies and establishing the indicative calendar for the period
2020-2025. This calendar will be updated annually and will be aimed at
achieving the renewable production objectives established in the National
Integrated Energy and Climate Plan (“PNIEC”). The auctions will be called
by means of a Resolution of the Secretary of State for Energy.
Renewables auctions in the Iberian Peninsula.
On 5 August 2020, Orders TED/765/2020 and TED/766/2020 of 3 August, were
published in the Official State Gazette (“BOE”), establishing the
regulatory bases of auctions for investment aid for facilities for the
production of thermal energy and electricity, respectively, from renewable
sources, all of which may be co-financed with European Union funds. The aid
will be granted by means of non-refundable grants through competitive bidding
procedures applicable to the entire national territory, the applicable
geographical scope being specified in each call for tenders. The actions must
be completely finished before 30 June 2023, unless a more restrictive period
is expressly established in the calls. The Institute for Diversification and
Saving of Energy (“IDAE”) has already issued several calls for tenders for
aid for investment in facilities through competitive bidding procedures for
various regions of the country.
In this regard, on 12 December the Resolution of 10 December 2020, of the
Secretariat of State for Energy was published in the Official State Gazette
(“BOE”), calling the first auction for the granting of the economic regime
for renewable energies under the aforementioned Order TED/1161/2020,
envisaging a minimum of 3,000 MW, of which at least 1,000 MW will be from wind
energy and 1,000 MW from photovoltaic energy. The schedule set for receiving
offers ended on 26 January 2021. On 27 January 2021 the Ministry for the
Ecological Transition and the Demographic Challenge published the Resolution
that resolves said auction and approves the list of successful bidders, among
which ENDESA, through ENEL Green Power España, S.L.U. (EGPE), has been
awarded 50 MW of capacity at an award price of Euros 28.90 per MWh for a
photovoltaic technology facility.
Auctions for renewables in the non-mainland electricity systems.
During 2020, the Institute for the Diversification and Saving of Energy (IDAE)
approved three Resolutions calling auctions of investment aid for renewable
energy facilities co-financed with European Regional Development Funds (ERDF)
in the Non-mainland Territories (“TNP”), as shown below:
Date Facility Location Amount of aid Deadline for Submission of Applications Deadline for Completion of Actions
(Millions of Euros)
24 June 2020 Photovoltaic Canary Islands 20 5 October 2020 (Completed) 30 December 2022
4 December 2020 Wind Canary Islands 54 15 March 2021 31 December 2022
17 December 2020 Photovoltaic Balearic Islands 21 24 March 2021 20 March 2023
Law 5/2020, of 29 April, of the “Generalitat” of Catalonia.
On 2 June 2020, Law 5/2020, of 29 April, of the “Generalitat” (regional
government) of Catalonia, on fiscal, financial, administrative and public
sector measures and creation, has been published in the Official State Gazette
(“BOE”) tax on facilities that affect the environment.
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 Region of
Catalonia. Specifically, this new tax is imposed on the production, storage,
transformation and transport of electrical energy in Catalonia. In the field
of generation, energy production is taxed at a general rate of Euros 5 per
MWh, which will be Euros 1 per MWh for combined cycles, excluding in any case
hydroelectric generation and generation from renewable sources, as well as
from biomass, biogas, high-efficiency cogeneration or 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.
Electro-intensive consumers.
During 2018, and as a result of Royal Decree-Law 20/2018, of 7 December, 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 electro-intensive 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, 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 Electro-intensive 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 electro-intensive 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.
Also, on 17 December 2020 the “BOE” published Royal Decree 1106/2020 of 15
December which regulated the statute of electro-intensive consumers.
Specifically, this Royal Decree regulates electro-intensive consumers, their
obligations and the compensation mechanisms available to them, among which:
* A compensation mechanism of up to 85% of the costs attributable to electricity
charges for financing the costs of renewable energy, high-efficiency
cogeneration and the extra cost of Non-mainland Territories (“TNP”).
* A mechanism for hedging risks deriving from the acquisition of electricity in
the medium and long term to promote the long-term contracting of electricity
by these consumers, through the aforementioned Spanish Reserve Fund for
Guarantees of Electro-intensive Entities (“FERGEI”).
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 National Commission of Markets and Competition (CNMC). At the
date of approval of this Consolidated Management Report, the methodology for
the Electricity System is still pending approval, while that for the Gas
System was approved by Royal Decree 1184/2020 of 29 December.
Royal Decree 647/2020, of 7 July, on network codes.
On 8 July 2020, Royal Decree 647/2020, of 7 July, 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 Regulations
(EU) 2016/631, 2016/1388 and 2016/1447 of the European Commission, 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
amendments to other provisions, such as Royal Decree 413/2014 of 6 June
regulating the production of electricity from renewable energy sources,
cogeneration and waste and Royal Decree 738/2015 of 31 July regulating
generation in the Non-mainland Territories (“TNP”) electrical systems.
Orders executing certain rulings of the Supreme Court in relation to the
remuneration of electricity distribution.
On 21 September 2020 Orders TED/865/2020 and TED/866/2020 of 15 September were
published in the Official State Gazette (“BOE”), executing various rulings
of the Supreme Court in relation to the remuneration of electricity
distribution, establishing new values for certain parameters.
Regulations on permits for access and connection to electricity transmission
and distribution networks.
In accordance with the new responsibilities entrusted to the CNMC by Royal
Decree Law 1/2019 of 11 January, the specific regulations on permits for
access and connection must be developed by both the Government, through Royal
Decree, and the CNMC, through a Circular, in accordance with their respective
competences.
On 23 November 2019, Royal Decree Law 17/2019 of 22 November was published in
the Official State Gazette (“BOE”), adopting urgent measures for the
necessary adaptation of remuneration parameters affecting the electricity
system (financial remuneration rate) and responding to the rapid process of
cessation of activity of thermal power plants, in order to boost the
industrial reactivation of the areas affected. As regards the process of
closures of coal-fired or nuclear power plants, in granting access and
connection permits account may be taken of environmental and social criteria
in addition to the current technical and economic requirements. Similarly, the
granting of water concessions may involve the assessment of economic, social
and environmental criteria, which do not figure in the current regulations.
On 30 December 2020 Royal Decree 1183/2020 of 29 December on access and
connection to the electricity transmission and distribution networks was
published in the Official State Gazette (“BOE”). This Royal Decree
regulates the criteria and procedure for granting access and connection
permits for both producers and consumers. The general criterion will be
“first come first served”. However, in order to boost the penetration of
energy from renewable sources, exceptions to this general criterion are
established in cases of hybridisation of existing generation facilities and of
competitive bidding processes for access capacity in new nodes of the
transmission network or at those nodes where power capacity is deregulated or
increases substantially.
The possibility is established that, through Ministerial Order, calls for
tenders for capacity may be issued only applicable in new nodes that are
introduced through a new planning process, or those in which a certain volume
of access capacity is released. Participants must be operators of renewable
generation facilities, which may also include storage.
Aspects relating to storage and hybridisation of facilities are also
regulated, as well as the guarantee regime.
Finally, exemptions are introduced for permits for access and connection to
self-consumption facilities, and the single node interlocutor, until now in
charge of processing permits for access and connection when there were
connection requests from multiple actors for the same node, is eliminated, so
that from now on each promoter will talk directly to the network manager.
Also, on 22 January 2021, CNMC Circular 1/2021 of 20 January was published in
the “BOE”, establishing the methodology and conditions of electricity
production facilities’ access and connection to the transmission and
distribution networks. This Circular regulates the procedures, deadlines and
criteria for the evaluation of the access capacity and the granting of
permits.
Royal Decree Law 34/2020 of 17 November on urgent measures to support business
solvency and the energy sector, and in tax matters.
On 18 November the “BOE” published Royal Decree Law 34/2020 of 17 November
on urgent measures to support business solvency and the energy sector, and in
tax matters, by means of which the transfers of the income from the auctions
of GHG emission rights to the Electricity Sector were extended for 2020,
depending on the amount actually collected, and up to a maximum of Euros 1,000
million. For the year 2021, Law 11/2020 of 30 December on General State
Budgets provides an equivalent measure.
Draft Bill of Law creating the National Fund for the Sustainability of the
Electricity System.
On 16 December 2020 the Ministry for the Ecological Transition and the
Demographic Challenge initiated a process of public consultation on a Draft
Law creating the National Fund for the Sustainability of the Electricity
System, whose purpose is to finance, total or partially, the costs associated
with the specific remuneration scheme for renewable energies, cogeneration and
waste, currently included in electricity access tolls. This Fund will be
endowed with the contributions of the operators of the various energy sectors,
not only electricity, the taxes deriving from Law 15/2012 of 27 December, the
income from the auctions of CO(2) emission rights, as well as other
contributions, with a limit of 10% of the annual income of the Fund, from
items of the General State Budget or from community funds. In this way, this
Preliminary Draft envisages a mechanism aimed at redistributing the cost
associated with meeting the existing renewable objectives at country level
among all energy sectors. The Preliminary Draft envisages a gradual process of
assumption over a five-year period.
4. Liquidity and Capital Resources.
4.1. Financial Management
Within the framework of an efficient cost management and optimisation policy,
the finance function in Spain is centralised in ENDESA, S.A.
At the date of approval in this Consolidated Management Report, the Company
had the necessary liquidity and access to medium/long-term financial resources
to ensure the availability of the funds required to meet its future investment
obligations and debt maturities.
ENDESA uses principles of prudence that are similar to those applied until now
in its level of indebtedness and financing structure by obtaining long-term
financing that enables it to adjust its maturity schedule to its capacity to
generate cash flow envisaged in the business plan. To do this, it:
* Uses external financing, especially through the banking and capital markets.
* Obtains funds from public authorities that offer attractive terms for very
long-term loans.
* Has short-term financing in place that helps optimise the management of its
working capital requirements and improve the overall cost of debt. This
financing is obtained through bank credit lines with leading financial
institutions or through the issue of Euro Commercial Paper (ECP).
ENDESA, S.A. also carries out transactions with ENEL Group companies in which
the applicable transfer pricing regulations are followed.
Financial position
The year 2020 will be remembered as the year of the COVID-19 health crisis and
its devastating consequences in the economic sphere, which could have been
even more dramatic had it not been for the rapid and forceful reaction of both
Governments and Central Banks and other institutions.
The year began with Brexit, which meant the break, on 31 January 2020, of the
link between the United Kingdom and the European Union, which marked the
beginning of a complicated transition period that ended on 31 December 2020.
However, the most significant event of the year at all levels was the
declaration by the World Health Organisation (WHO) on 11 March 2020 raising
the public health emergency situation caused by COVID-19 to that of a pandemic
(see Notes 2.2.1 and 38 of the Notes to the Consolidated Annual Accounts for
the year ended 31 December 2020 and Section 5. COVID-19 Health Crisis of this
Consolidated Management Report) and the consequences that this has caused in
the world economy.
The European Central Bank (ECB), in its meeting of 12 March 2020, announced a
first package of measures to strengthen liquidity and increased asset
purchases to face the health and economic crisis. Additionally, on 18 March
2020, the Pandemic Emergency Purchasing Programme (PEPP) was launched, with an
amount of Euros 750,000 million to improve the financial markets of the euro
area. At the June meeting, the volume of the Programme was increased by Euros
600,000 million. In December, in view of the severity of the second wave of
the pandemic, the ECB extended this Programme to March 2022 and endowed it
with an additional Euros 500,000 million, making a total of Euros 1,850,000
million.
Additionally, on 21 July 2020, the European Council agreed to an exceptional
temporary recovery instrument known as the European Union Recovery Plan
(“Next Generation EU”) for an amount of Euros 750,000 million, which has
ensured a coordinated EU response among Member States to deal with the
economic and social consequences of the pandemic.
For its part, the US Federal Reserve cut its reference interest rate by 50 bps
in the first week of March, bringing it to a range of between 1.00% and 1.25%,
to counteract the impact of COVID-19 on markets and the economy. Two weeks
later, in coordination with other central banks, the Federal Reserve again cut
interest rates, by 100 bps to a range of 0.00% to 0.25%.
During 2020 we saw financial markets struggling to recover from a major
stoppage. The yield on Spanish 10-year bonds began the year at 0.46%, rose to
a maximum of 1.22% on 18 March 2020, returning later to minimum levels of
0.04% at the end of 2020. German bonds started the year with a negative yield
of -0.19%, which increased to the minimum of -0.86% in March before starting a
moderate recovery to -0.57% at the end of the year. As a consequence, risk
premiums (spreads relative to German 10-year bonds) in EU countries increased
considerably. Risk premiums in Spain and Italy, which at the worst moments of
the health and economic crisis reached 154 bps and 279 bps respectively, stood
at 62 bps and 111 bps respectively at the end of the year.
During 2020 the long-term euro interest rate (10-year swap) decreased by 47
bps to -0.26% at the end of the year. The short-term interest rate (3-month
Euribor) declined by 17 bps to end the year at -0.55%. Long-term US dollar
interest rates fell in 2020 from 1.90% to 0.92%, while the 3-month rate fell
from 1.91% at the beginning of the year to 0.24% at year-end.
As for the exchange rate, in 2020 the euro appreciated by 9.3% against the US
dollar, the EUR/USD exchange rate going from 1.1231 at the beginning of the
year to 1.2270 at year-end.
The following table presents the changes during 2020 in some of the indicators
listed in the foregoing paragraphs:
31 December 2020 31 December 2019 Difference % Var.
Exchange Rate (EUR/USD) 1.2270 1.1231 0.1039 9.3
Long-Term Euro Interest Rate (10-year Swap) (%) (0.26) 0.21 (0.47) (223.8)
Short-Term Euro Interest Rate (3-month Euribor) (%) (0.55) (0.38) (0.17) 44.7
Long-Term US Dollar Interest Rate (10-year swap) (%) 0.92 1.90 (0.98) (51.6)
Short-term US Dollar Interest Rate (3-month LIBOR) (%) 0.24 1.91 (1.67) (87.4)
German 10-Year Bond (%)( (1)) (0.57) (0.19) (0.38) 200.0
German 30-Year Bond (%)( (2)) (0.16) 0.35 (0.51) (145.7)
Spanish 10-Year Bond (%) 0.04 0.46 (0.42) (91.3)
Spain’s Country Risk Premium (bps)( (3)) 62 65 (3) (4.6)
Italy’s Country Risk Premium (bps)( (3)) 111 160 (49) (30.6)
European Central Bank (ECB) Reference Rates (%) 0.00 0.00 - -
European Central Bank (ECB) Deposit Facility (%)( (4)) (0.50) (0.50) - -
Federal Reserve Reference Rates (%) 0.00 - 0.25 1.50 - 1.75 (1.5) (100.0) - (85.7)
(1) All-Time Low in March 2020: -0.86%
(2) Quoted negative yields from July 2020.
(3) Differential with the German 10-year bond.
(4) Rate that the European Central Bank (ECB) charges banks for their
deposits.
bps = basis points.
Financial debt.
At 31 December 2020, ENDESA had net financial debt of Euros 6,899 million, an
increase of Euros 522 million (+8.2%) compared with 31 December 2019.
The reconciliation of ENDESA's gross and net financial debt at 31 December
2020 and 2019 is as follows:
Millions of euros
Reference( (1)) Reconciliation of Financial Debt
31 December 2020 31 December 2019 Difference % Var.
Non-current Financial Debt 17.1 5,937 5,652 285 5.0
Current Financial Debt 17.1 1,372 955 417 43.7
Gross Financial Debt( (2)) 7,309 6,607 702 10.6
Cash and Cash Equivalents 13 (403) (223) (180) 80.7
Financial Derivatives Recognised in Financial Assets 18.6.1 (7) (7) - -
Net Financial Debt 6,899 6,377 522 8.2
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) At 31 December 2020, this includes Euros 36 million corresponding to
financial derivatives recognised under financial liabilities (Euros 21 million
at 31 December 2019).
When analysing the changes in net financial debt, it must be borne in mind
that in 2020 ENDESA, S.A. paid its shareholders dividends of gross Euros 1.475
per share, with a pay-out of Euros 1,562 million (see Sections 4.4. Cash flows
and 6. Dividend Policy in this Consolidated Management Report).
The structure of ENDESA's gross financial debt at 31 December 2020 and 2019,
is shown hereunder:
Millions of euros
Structure of Gross Financial Debt
31 December 2020 31 December 2019 Difference % Var.
Euros 7,222 6,498 724 11.1
US dollar (USD) 87 109 (22) (20.2)
TOTAL 7,309 6,607 702 10.6
Fixed rate 4,716 4,639 77 1.7
Floating rate 2,593 1,968 625 31.8
TOTAL 7,309 6,607 702 10.6
Average Life (years) ((1)) 4.6 5.2 - -
Average Cost (%) ((2)) 1.7 1.8 - -
(1) Average Life of Gross Financial Debt (number of years) = (Principal *
Number of Days of Validity) / (Principal Outstanding at the Close of the
Period * Number of Days in the Period).
(2) Average Cost of Gross Financial Debt (%) = Cost of Gross Financial Debt /
Average Gross Financial Debt.
At 31 December 2020, 65% of gross financial debt was at fixed interest rates
and the remaining 35% at floating rates. At this date, 99% of the gross
financial debt was denominated in euros.
In line with its Strategic Plan, ENDESA promotes innovative financial
solutions on competitive terms and encourages its partners and stakeholders to
share a long-term sustainable vision. Thus, at 31 December 2020, sustainable
financing represented 45% 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 formulation 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 (see Note 17.2.3 to
the Consolidated Financial Statements for the year ended 31 December 2020).
At 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, in the current context ENDESA has not amended, renegotiated or
cancelled any clauses contained in lease agreements in which it acts as
lessee, and therefore neither right-of-use assets nor liabilities representing
the present value of the obligation to make lease payments over the term of
the leases have been modified.
Information concerning the maturities of gross financial debt is set out in
Note 17 to the Consolidated Financial Statements for the year ended 31
December 2020.
Main financial transactions.
In 2020 ENDESA S.A. registered a new Euro Commercial Paper (ECP) SDG7 issue
programme for Euros 4,000 million, the outstanding balance at 31 December 2020
being Euros 1,162 million, renewable with the backing of irrevocable bank
credit lines. This Programme incorporates, for the first time, sustainability
objectives, in line with ENDESA's Strategic Plan.
The following financial transactions were also concluded in 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 Line of Credit ((2)) ENEL Finance International, N.V. 03 June 2020 03 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) Financial transactions carried out to strengthen the liquidity position
and ensure the continuity of business activity in the current context.
(3) Financial transaction carried out to promote ENDESA's electric mobility
plan and partly finance more than 8,500 electric recharging points in Spain.
It was disbursed on 1 September 2020. This drawdown is at a variable rate of
interest, 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, until now
issued by International ENDESA B.V. (in liquidation) With this transaction,
the financial activity of International ENDESA, B.V. (in liquidation) came to
an end, and the company was liquidated on 30 December 2020 (see Note 2.3.1 of
the Notes to the Consolidated Annual Accounts for the year ended 31 December
2020 and Section 2.5. Scope of Consolidation in this Consolidated Management
Report).
Liquidity.
At 31 December 2020, ENDESA had liquidity of Euros 4,493 million (Euros 3,300
million at 31 December 2019) and is detailed as follows:
Millions of euros
Reference( (1)) Liquidity
31 December 2020 31 December 2019 Difference % Var.
Cash and Cash Equivalents 13 403 223 180 80.7
Unconditional availability in credit lines ((2)) 19.4 and 34.1.2 4,090 3,077 1,013 32.9
TOTAL 17.2.1 4,493 3,300 1,193 36.2
Debt Maturity Coverage (number of months) ((3)) 17 26 - -
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) At 31 December 2020 and 2019, Euros 1.000 million were accounted for by
the committed and irrevocable credit line arranged with ENEL Finance
International, N.V. In addition, at 31 December 2020, Euros 700 million
correspond to the credit line available with ENEL Finance International, N.V.
(3) Coverage of debt maturities (number of months) = maturity period (number
of months) for long-term debt that could be covered with the liquidity
available.
ENDESA has a solid financial situation and unconditional credit lines
contracted with first-tier entities available for significant amounts. This,
together with the implementation in the current context of specific plans to
strengthen and improve the liquidity position and ensure the continuity of the
business activity, is estimated to enable it to face the impact caused by the
difficulties of the economic situation (see Notes 2.2.1 and 38 of the Notes to
the Consolidated Annual Accounts for the year ended 31 December 2020 and
Section 5. COVID-19 Health Crisis of this Consolidated Management Report).
At 31 December 2020, ENDESA had negative working capital of Euros 2,321
million. The undrawn amount under the Company's long-term credit lines
provides assurance that ENDESA can obtain sufficient financial resources to
continue its operations, realise its assets and settle its liabilities for the
amounts shown in the statement of financial position.
The undrawn credit lines also guarantee the refinancing of the short-term debt
presented under "Non-Current Financial Debt" in the Consolidated Statement of
Financial Position, the amount of which totals Euro 33 million at 31 December
2020 (Euros 29 million at 31 December 2019).
The amount of these lines, together with current assets, sufficiently covers
ENDESA's short-term payment obligations.
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.
Any restrictions that might affect the availability of funds to ENDESA, S.A.
are set out in Notes 13 and 14.1.13 to the Consolidated Financial Statements
for the year ended 31 December 2020.
4.2. Capital management
ENDESA's capital management focuses on maintaining a solid financial structure
that optimises the cost of capital and the availability of financial resources
to guarantee business continuity over the long term. This policy of financial
prudence makes it possible to maintain an adequate level of value creation for
shareholders while guaranteeing ENDESA S.A.'s liquidity and solvency.
The level of consolidated leverage is defined as an indicator for monitoring
the financial situation, data at 31 December 2020 and 2019 being as follows:
Millions of euros
Reference ((1)) Leverage % Var.
31 December 2020 31 December 2019
Net Financial Debt: 6,899 6,377 8.2
Non-current Financial Debt 17.1 5,937 5,652 5.0
Current Financial Debt 17.1 1,372 955 43.7
Cash and Cash Equivalents 13 (403) (223) 80.7
Financial Derivatives Recognised in Financial Assets 18.3 (7) (7) -
Equity: 14 7,465 7,837 (4.7)
Of the Parent 14.1 7,315 7,688 (4.9)
Of Non-Controlling Interests 14.2 150 149 0.7
Leverage (%) ((2)) 92.42 81.37 N/A
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Leverage (%) = Net financial debt / equity.
The Company's Directors consider that its leverage will enable it to optimise
the cost of capital while maintaining a high solvency ratio. Therefore, in due
consideration of expectations of earnings and the investment plan, the future
dividend policy will maintain a leverage ratio to achieve the aforementioned
capital management target.
At the date on which this Consolidated Management Report was drawn up, ENDESA,
S.A. had no commitments to obtain funds through its own sources of finance.
Information on capital management is provided in Note 14.1.12 to the
Consolidated Financial Statements for the year ended 31 December 2020.
Information on the shareholder remuneration is provided in Section 6. Dividend
Policy in this Consolidated Management Report.
4.3. Management of Credit Ratings.
During 2020 the rating agencies kept the sovereign rating of the Kingdom of
Spain unchanged. The only change that occurred was in Standard & Poor's
outlook, which went from Stable to Negative, announced in September. This
change was justified by the economic weakness caused by the COVID-19 crisis
and the possibility at that time that an agreement would not be reached to
approve the General State Budget for 2021, which finally happened at the end
of the year.
The Standard & Poor's rating thus ended the year at A, with a Negative
outlook, while those of Moody's and Fitch remained unchanged at Baa1 and A-,
both with a stable outlook.
As regards ENDESA, the situation was very similar, with no changes in various
agencies’ ratings in 2020.
On 14 January 2021, Moody's announced an upgrade of ENDESA's credit rating
from Baa2 to Baa1, with a stable outlook. In its statement, Moody's
highlighted the solid business and financial profile of the Company and its
position within the ENEL Group. In this regard, the large proportion of
regulated activities within the business combination, resulting in stable
income, was seen as a positive factor, as was the low level of leverage.
As for the other agencies, Standard & Poor's has kept its rating unchanged
since 2017 at the BBB + level / Stable outlook, last confirmed in a report
published in November. For its part, on 17 February 2021, Fitch has reaffirmed
the A- rating / Stable outlook that had been communicated in February 2019.
In its latest reports on the Sector, published in July 2020, Fitch considers
that the integrated electricity companies in the Iberian market show
reasonable resistance to the economic crisis generated by COVID-19, thanks to
the defensive nature of their business mix, with a percentage of regulated
income above the European average, their solid liquidity positions, the
hedging of energy sales already carried out and the stability provided by the
recently revised regulatory framework.
Moody's, in its report published in November 2020, highlights the fact that
its outlook for the Electricity Sector for 2021 remains stable, reflecting its
forecast that companies will continue to be resistant to the pandemic and
improve their results, while at the same time maintaining the uncertainty that
exists about the pace of economic recovery and electricity demand in the
current situation.
The evolution of ENDESA's credit ratings in 2020 can be summarised as follows:
Credit Rating
31 December 2020 ((1)) 31 December 2019 ((1))
Long-term Short-term Outlook Date of Last Report Long-term Short-term Outlook
Standard & Poor’s BBB+ A-2 Stable 26 November 2020 BBB+ A-2 Stable
Moody’s Baa1 P-2 Stable 14 January 2021 Baa2 P-2 Positive
Fitch A- F2 Stable 17 February 2021 A- F2 Stable
(1) At the respective dates of formulation of the Consolidated Management
Report.
ENDESA's credit rating is conditioned by that of its parent company ENEL in
accordance with the methods used by the rating agencies, and at 31 December
2020 it was classed 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.
4.4. Cash Flows
At 31 December 2020 and 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
Reference( (1)) Cash and Cash Equivalents
31 December 2020 31 December 2019 Difference % Var.
Cash in hand and at banks 403 223 180 80.7
Other Cash Equivalents - - - N/A
TOTAL 13 403 223 180 80.7
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
In 2020 and 2019 ENDESA's net cash flows, broken down into operating,
investing and financing activities, were as follows:
Millions of euros
Statement of cash flows
2020 2019 Difference % Var.
Net cash flows from operating activities 2,951 3,181 (230) (7.2)
Net cash flows from investing activities (1,726) (1,951) 225 (11.5)
Net cash flows from financing activities (1,045) (1,251) 206 (16.5)
In financial year 2020, the net cash flows generated by operating activities
(Euros 2,951 million) made it possible to meet net payments for investment
activities (Euros 1,726 million) and financing activities (Euros 1,045
million).
Information on ENDESA's Consolidated Statement of Cash Flows is set out in
Note 32 to the Consolidated Financial Statements for the year ended 31
December 2020.
Net cash flows from operating activities
In 2020, net cash flows from operating activities amounted to Euros 2,951
million, down by 7.2% compared with the previous year (Euros 3,181 million in
2019), the breakdown being as follows:
Millions of euros
Reference ((1)) 2020 2019 Difference % Var.
Gross Profit Before Taxes and Non-Controlling Interests 1,788 230 1,558 677.4
Adjustments for: 2,153 3,981 (1,828) (45.9)
Depreciation and amortisation and impairment losses 28 1,897 3,453 (1,556) (45.1)
Other adjustments (net) 256 528 (272) (51.5)
Changes in working capital: (413) (230) (183) 79.6
Trade and other receivables 31 (157) 188 (119.7)
Inventories (225) (296) 71 (24.0)
Current financial assets 28 (85) 113 (132.9)
Trade payables and other current liabilities( (2)) (247) 308 (555) (180.2)
Other cash flows from/(used in) operating activities: (577) (800) 223 (27.9)
Interest received 34 27 7 25.9
Dividends received 28 26 2 7.7
Interest paid( (3)) (152) (136) (16) 11.8
Corporation tax paid (229) (440) 211 (48.0)
Other proceeds from/(payments for) operating activities ((4)) (258) (277) 19 (6.9)
NET CASH FLOWS FROM OPERATING ACTIVITIES 2,951 3,181 (230) (7.2)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) ENDESA, as part of its commitment to society, has designed a Public
Responsibility Plan 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. The amount disbursed under this head was Euros
25 million (Euros 22 million, net of the tax effect) (see Notes 2.2.1, 27,
32.1, 33.2.1 and 38 of the Notes to the Consolidated Financial Statements for
the year ended 31 December 2020 and Section 5. COVID-19 Health Crisis in this
Consolidated Management Report).
(3) Includes payment of interest on financial liabilities for rights of use
amounting to Euros 33 million and Euros 30 million respectively (see Note 6.1
to the Consolidated Financial Statements for the year ended 31 December 2020).
(4) Corresponding to provisions payments.
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 270
million).
* Changes in working capital between the two years amounting to Euros 183
million as a consequence, mainly, of the increase in trade payables (Euros 555
million), the positive evolution of trade and other receivables (Euros 188
million), lower payments for inventories (Euros 71 million) and the positive
evolution of regulatory items receivable amounting to Euros 113 million (Euros
264 million, positive, in respect of the tariff deficit, Euros 90 million,
negative, for compensation for the extra costs of generation in Non-mainland
Territories (“TNP”) and Euros 61 million euros, negative, for the
remuneration for investment in renewable energy).
* The variation in corporation tax in both years amounting to Euros 211 million.
In 2020, the company also continued its active policy of managing current
assets and liabilities, focusing among other aspects on improving processes,
factoring accounts receivable and reaching agreement to extend payment terms
with suppliers (see Notes 12 and 22 to the Consolidated Financial Statements
corresponding to the year ending 31 December 2020).
At 31 December 2020 and 2019, working capital broke down as follows:
Millions of euros
Reference( (1)) Working Capital
31 December 2020 31 December 2019
Current Assets( (2)) 5,831 5,877
Inventories 11 1,077 1,177
Trade and other receivables 12 3,577 3,485
Current financial assets 18 1,177 1,215
Compensation for Extra Costs of Generation in Non-mainland Territories 602 561
(“TNP”)
Collection Rights for the Financing of the Deficit of Regulated Activities 277 389
Remuneration of Distribution Activity 246 178
Others 52 87
Current Liabilities ((3)) 7,183 7,510
Current provisions 23 477 576
Trade Payables and Other Current Liabilities 22 6,706 6,934
Parent Company Dividend ((4)) 14.1.10 and 14.1.12 741 741
Others 5,965 6,193
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Does not include “Cash and cash equivalents” or “Financial Asset
Derivatives” corresponding to financial debt.
(3) Does not include “Current Financial Debt” or “Financial Liability
Derivatives” corresponding to financial debt.
(4) See Section 6. Dividend Policy in this Consolidated Management Report.
Net cash flows used in investing activities
During 2020, net cash flows used in investing activities amounted to Euros
1,726 million (Euros 1,951 million in 2019) and included, inter alia:
* Net cash payments used to acquire property, plant and equipment and intangible
assets:
Millions of euros
Reference ((1)) Sections 2020 2019
Acquisition of Property, Plant and Equipment and Intangible Assets (1,704) (1,821)
Acquisition of Property, Plant and Equipment( (2)) 6.2 4.5 (1,407) (1,791)
Acquisition of intangible assets 8.1 4.5 (234) (234)
Facilities transferred from customers 29 45
Suppliers of property, plant and equipment (92) 159
Proceeds from sales of property, plant and equipment and intangible assets 49 94( (3))
Grants and other deferred income 106 137( (4))
TOTAL (1,549) (1,590)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Not including recognition of right-of-use assets amounting to Euros 182
million
(3) Includes Euros 70 million corresponding to the transaction assigning the
rights of use for the surplus fibre optics (see Section 2.3.5. Net
Gains/(Losses) on Disposal of Assets of this Consolidated Management Report).
(4) Included Euros 50 million corresponding to advance receipt in respect of
the obligation to transfer the rights of use relating to the surplus optical
fibre (see Section 2.3.5 Net Gains/(Losses) on Disposal of Assets of this
Consolidated Management Report).
* Net cash payments for investments and/or receipts from disposals of holdings
in Group companies:
Millions of euros
Reference ((1)) Sections 2020 2019
Equity investments in Group Companies (17) (37)
Companies acquired by ENEL Green Power España, S.L.U. (EGPE) 2.3.1, 5 and 8 2.5 (14) (37)
Suggestion Power, Unipessoal, Lda. 2.3.1, 5 and 8 2.5 (3) -
Disposals of investments in Group Companies 21 -
ENDESA Soluciones, S.L. 2.3.1, 2.4 and 10.1 2.5 21 -
TOTAL 4 (37)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
Net cash flows used in financing activities.
During 2020, net cash flows used in financing activities amounted to Euros
1,045 million (Euros 1,251 million in 2019) and mainly included the following
items:
* Cash flows in respect of equity instruments:
Millions of euros
Reference ((1)) 2020 2019
Treasury shares 14.1.8 (2) -
Contribution of Funds, San Francisco de Borja, S.A. 14.2 3 -
Capital reduction of Énergie Électrique de Tahhadart, S.A. 10.1 3
Funds contribution by Bosa del Ebro, S.L. 14.2 - 10
TOTAL 4 10
(1) Reference to the Notes to the Consolidated Financial Statements for the
year ended 31 December 2020.
* Drawdowns of non-current financial debt:
Reference ((1)) 2020 2019
Drawdowns on the loan from Caixabank, S.A., Bankia, S.A. and Kutxabank, S.A. 17.2.2 300 -
Drawdowns on credit lines with ENEL Finance International, N.V. 17.2.2 500 -
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 - -
Others 8 35
TOTAL 17.1 843 670
(1) Reference to the Notes to the Consolidated Financial Statements for the
year ended 31 December 2020.
* Reimbursements of non-current financial debt:
Millions of euros
Reference ((1)) 2020 2019
Repayments of ENEL Finance International N.V. credit lines (500) -
Repayment of other credit lines (68) (172)
Repayments of European Investment Bank (EIB) Green Loan - (6)
Others (7) (19)
TOTAL 17.1 (575) (197)
(1) Reference to the Notes to the Consolidated Financial Statements for the
year ended 31 December 2020.
* Amortisation and drawdowns of current financial debt:
Millions of euros
Reference ((1)) Sections 2020 2019
Drawdowns
Euro Commercial Paper (ECP) issues 17.2.2 4.1 13,913 10,848
Others 67 77
Amortisation
Amortisation of Euro Commercial Paper (ECP) 17.2.2 4.1 (13,548) (10,956)
Payments of Right-of-Use Contracts 2.2 (73) (57)
Amortisation of European Investment Bank (EIB) Green Loan (46) -
Others (58) (126)
TOTAL 17.1 255 (214)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
* Dividends paid:
Millions of euros
Reference ((1)) 2020 2019
Dividends of the Parent paid 14.1.10 and 14.1.12 (1,562) (1,511)
Dividends paid to non-controlling interests( (2)) 14.2 (10) (9)
TOTAL (1,572) (1,520)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Corresponding to companies of ENEL Green Power España, S.L.U. (EGPE).
4.5. Investments.
In 2020 ENDESA made gross investments of Euros 1,846 million. Of this amount,
Euros 1,823 million were related to investments in property, plant and
equipment and intangible assets, and the remaining Euros 23 million to
financial investments, as follows:
Millions of euros
Reference ((1)) Investments( (2))
2020 2019 % Var.
Generation and Supply 897 1,290 (30.5)
Generation in Non-mainland Territories (“TNP”) 102 80 27.5
Other Generation and Supply 795 1,210 (34.3)
Distribution 614 609 0.8
Structure and Others( (3)) 78 26 200.0
TOTAL PROPERTY, PLANT AND EQUIPMENT( (4) (5)) 6.2 1,589 1,925 (17.5)
Generation and Supply 185 160 15.6
Generation in Non-mainland Territories (“TNP”) 3 5 (40.0)
Other Generation and Supply 182 155 17.4
Distribution 22 40 (45.0)
Structure and Others( (3)) 27 34 (20.6)
TOTAL INTANGIBLE ASSETS( (5)) 8.1 234 234 -
FINANCIAL INVESTMENTS 23 43 (46.5)
TOTAL GROSS INVESTMENTS 1,846 2,202 (16.2)
Capital grants and Facilities Sold (135) (133) 1.5
Generation and Supply (7) (4) 75.0
Distribution (128) (129) (0.8)
TOTAL NET INVESTMENTS ((6)) 1,711 2,069 (17.3)
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Does not include corporate acquisitions made during the year (see Note 5
to the Consolidated Financial Statements for the year ended 31 December 2020
and Section 2.5. Scope of Consolidation in this Consolidated Management
Report).
(3) Structure, Services and Adjustments.
(4) Includes recognition of rights of use amounting to Euros 182 million
(Euros 138 million in 2019) (see Note 6.1 to the Consolidated Financial
Statements for the year ended 31 December 2020).
(5) In 2020 it includes Euros 1,647 million relating to investments for
low-carbon products, services and technologies (Euros 1,931 million in 2019).
(6) Net investments = Gross investments – Capital grants and facilities
sold.
Investments in property, plant and equipment.
Gross investments in generation in 2020 related mainly to investments for the
construction of power plants based on renewable sources for an amount of Euros
394 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 97 million.
The reduction in gross investments in generation and supply (-30.5%) compared
with 2019 was mainly due to the fact that in 2019 the investments mainly
concerned the construction of wind and photovoltaic power awarded in the
auctions held in 2017, commissioning of which took place in 2019.
Gross investments in supply correspond mainly to the development of activity
related to new products and services amounting to Euros 24 million.
Gross investments in distribution related to grid extensions and expenditure
aimed at optimising the functioning of the grid to ensure greater efficiency
and service quality.
With regard to gross structural and other investments, they include the
recognition of a right-of-use asset for the amount of Euros 57 million
corresponding to the renewal of the lease contract for ENDESA's headquarters.
Investments in intangible assets.
Gross investments in intangible assets in 2020 corresponded mainly to IT
applications and ongoing investments in ICT activities for Euros 130 million,
prominent among which were those associated with the strategic objective of
digitisation and the capitalisation of the incremental costs incurred in
obtaining customer contracts for an amount of Euros 98 million.
Financial investments.
Gross investments in 2020 consisted mainly of various financial credits.
4.6. Contractual obligations and off-balance sheet transactions
Details of future purchase commitments at 31 December 2020 and 2019 are as
follows:
Millions of euros
Reference ((1)) Future purchase commitments
31 December 2020 31 December 2019
Property, plant and equipment 6.3 1,020 636
Intangible assets 8.2 19 27
Financial investments - -
Provision of Services and Rights of Use 6.3 and 12 219 235
Purchases of fuel stocks and others 11.2 14,722 19,578
Purchases of fuel stocks 14,606 19,559
Electricity purchases 20 -
Purchases of CO(2) emission rights, Certified Emission Reductions (CERs) and 34.1.2 96 19
Emission Reduction Units (ERUs) ((2))
TOTAL 15,980 20,476
(1) Notes to the Consolidated Financial Statements for the year ended 31
December 2020.
(2) Committed to Group companies.
ENDESA has no special purpose entities, understood as entities which, without
necessarily holding a controlling interest in them, it effectively controls,
meaning that it substantially obtains most of the profits earned by the entity
and retains most of the risks involved.
5. COVID-19 Health Crisis.
The coronavirus epidemic (COVID-19) was first reported to the World Health
Organization (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 various countries adopted numerous
containment measures, essentially aimed at restricting the free movement of
people, which were modified depending on their effectiveness and the spread of
the virus.
In Spain, on 14 March 2020, the Government declared a first State of alarm
throughout the national territory to face the health emergency situation
caused by COVID-19. After successive extensions, the state of alarm ended on
21 June 2020. From that moment on, a series of prevention, containment and
coordination protocols have been adopted, aimed at dealing with and
controlling the pandemic as long as the health crisis situation does not end,
consistent with the different regulatory provisions that have been dictated by
both the autonomous regional governments and the Central government. In this
regard, on 25 October 2020 the Government declared a new State of alarm
throughout the national territory to contain the spread of the disease, with
initial validity until 9 November 2020, which was extended until 9. May 2021.
ENDESA constantly reviews the adaptation of the mentioned protocols to the new
provisions issued by national, regional or local authorities based on the
evolution of the health crisis.
ENDESA carries out a large part of its activities under regulated frameworks
and during the health State of 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 working from
home for non-critical positions, as recommended in Royal Decree Law 8/2020 of
17 March for all situations in which it was possible. Working from home was in
fact introduced some years ago in the organisation and thanks to investments
in digitisation it has proved possible to work remotely with the same level of
efficiency and productivity. The use 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 have all become standard. Likewise, measures and
procedures have been applied that are helping to work safely and reduce the
risks of infection. Although the official preference for remote work over
face-to-face work based on the aforementioned Royal Decree Law ended on 21
September 2020, At the date of formulation of this Consolidated Management
Report, ENDESA's employees who were working outside the office (“TFO”)
continue to do so.
Financial and economic impacts of COVID-19.
In this context, ENDESA as part of its commitment to society, designed a
Public Responsibility Plan, endowed with Euros 25 million, for direct aid for
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 programmes to support the relaunch of the economy in the worst affected
segments. During the 2020 financial year, this Plan accrued in and paid its
entirety (See Notes 27, 32.1, 33.2.1 and 38 of the Notes to the Consolidated
Financial Statements for the year ended 31 December 2020 and Sections 2.3.2.
Operating Costs, 2.3.7. Net Income and 4.4. Cash Flows of this Consolidated
Management Report).)
Taking into account the complexity of the markets due to their globalisation
and the time needed for vaccines to reach a substantial proportion of the
population, 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 still uncertain and will depend to a large extent on
how the pandemic evolves in the coming months, as well as on the
responsiveness and adaptability of all the economic agents affected.
Based on this, and in compliance with the recent recommendations by the
European Securities and Markets Authority (ESMA) of 11 March 2020, ENDESA,
launched an internal analysis to assess the actual and potential impact of
COVID-19 on its business activities, financial situation and economic
performance, basically 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
present and future resurgences of the virus 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 demand for electricity and gas in the
coming months. In this respect, during 2020, cumulative mainland demand for
electricity decreased by 5.1% compared with the same period of the previous
year, cumulative demand for electricity in the Non-mainland Territories
(“TNP”) fell by 13.7% and demand for conventional gas fell by 5.3%.
* Variations in demand as a result of possible resurgences 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 clients and to sign value-added
service contracts could continue to be affected by the limitations imposed by
the management of the health crisis which limits physical visits to clients.
At 31 December 2020, ENDESA had 5,690,390 electricity customers in the
deregulated market, 2.4% fewer than at 31 December 2019. On that same date,
the number of ENDESA’s gas customers in the deregulated market was
1,440,358, 1.5% more than at 31 December 2019.
* The adverse economic conditions due to the crisis caused by the COVID-19
pandemic may have a negative impact on the ability of ENDESA’s customers to
meet their payment commitments. Along these lines, 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 safety. Finally, by means of Royal
Decree Law 37/2020 of 22 December on urgent measures to face situations of
social and economic vulnerability in the field of housing and in the field of
transport, during the State of alarm prohibited the suspension of supply to
consumers who were vulnerable severely vulnerable or at risk of social
exclusion, and this prohibition was extended to consumers who, without being
able to prove ownership of the supply contract, comply with the requirements
established in Royal Decree 897/2017 of 6 October.
During 2020, the largest provisions recorded in trade customers related to the
impact of COVID-19 amounted to Euros 50 million.
* Greater impact of the virus on the population and, consequently, the approval
of regulations referring to a limitation of people's mobility or a new
confinement, 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 made it possible to continue with the investment effort that
ENDESA is carrying out without significant incidents. Gross material
investments in 2020 amounted to Euros 1,589 million and no material impacts
are expected to be caused by the pandemic with respect to start dates of
projects.
* The prolongation of the current health situation deriving from COVID-19 in the
coming months could limit ENDESA's access to the financial markets and change
the terms on which it obtains financing, consequently affecting its business
activities, 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 it to confront the impact caused by the
difficulties of the economic situation (see Section 4.1 Financial Management
in this Consolidated Management Report).
Overall, during the 2020 financial year, the effects described above have
meant a reduction in the gross operating profit (EBITDA) and in the operating
profit (EBIT) of approximately Euros 120 million and Euros 170 million
respectively, in addition to the expenses accrued by the Public Responsibility
Plan amounting to Euros 25 million.
At the date of formulation of this Consolidated Management Report, it is not
possible to make a precise estimate of the possible future impacts of COVID-19
on ENDESA's results during the coming months due, among other aspects, to the
uncertain future evolution of macroeconomic variables, financial and
commercial measures and their impact on the recovery of the economy, as well
as the regulatory measures currently in force and any additional measures that
may be adopted in the future by the competent authorities.
In the same way that has been done to date, in the coming months, constant
monitoring of 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, where
appropriate, their mitigation with reaction and contingency plans.
6. Dividend policy
The Board of Directors of ENDESA, S.A. operates an economic-financial strategy
to generate a significant amount of cash to maintain Company debt levels and
maximise shareholder remuneration. This also achieves the objective of
ensuring the sustainability of the business project undertaken.
As a result of this economic-financial strategy, unless any exceptional
circumstances arise, which will be duly announced, at a meeting on 25 November
2020 the Board of Directors of ENDESA, S.A. approved the following shareholder
remuneration policy for 2020-2023:
* For financial year 2020: The ordinary dividend per share to be distributed in
respect of these years will be equivalent to 100% of net ordinary income
attributable to the Parent as per the Consolidated Financial Statements of the
Group headed by the Company.
* For financial year 2021, the Board of Directors 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 and 2023 financial years, 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.
The intention of the Board of Directors is that the ordinary dividend be paid
solely in cash in two instalments (January and July) on a given date to be
determined in each case, which will be duly notified.
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.
With regard to the year 2020, in its meeting of 25 November 2020, the Board of
Directors of ENDESA, S.A. resolved to distribute to its shareholders an
interim dividend from 2020 profit for a gross amount of Euros 0.70 per share,
for a total of Euros 741 million paid on 4 January 2021.
The proposed distribution of profit in 2020 to be presented for approval at
the General Shareholders' Meeting by ENDESA's Board of Directors will be a
total gross dividend of Euros 2.0136 per share. Taking into account the
interim dividend referred to in the foregoing paragraph, the complementary
dividend in respect of 2020 will be a gross amount of Euro 1.3136 per share.
Details of ENDESA, S.A.'s per-share dividends in 2020 and 2019 are as follows:
2020 2019 % 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 2,132 1,562 36.5
Consolidated Net Income Millions of euros 1,394 171 715.2
Individual Net Income Millions of euros 2,330 1,642 41.9
Ordinary Earnings per Share( (1)) Euros 2.0136 1.475 36.5
Earnings per Share( (2)) Euros 1.317 0.162 715.2
Gross Dividend per Share Euros 2.0136 ((3)) 1.475( (4)) -
Consolidated Ordinary Pay-Out((5)) % 100.0 100.0 -
Consolidated pay-out( (6)) % 152.9 913.3 -
Individual pay-out( (7)) % 91.5 95.1 -
(1) Net ordinary earnings per share (euros) = Net ordinary income of the
Parent/ No. of Shares at the end of the year.
(2) Net earnings per Share (euros) = Net Income of the Parent/ No. of Shares
at the end of the year.
(3) Gross interim dividend of Euros 0.7 per share paid on 4 January 2021, plus
a complementary gross dividend of Euros 1.3136 per share pending approval by
the ENDESA, S.A. General Shareholders' Meeting.
(4) Gross interim dividend of Euros 0.7 per share, paid out on 2 January 2020
plus the final dividend of Euros 0.775 per share (gross) paid out on 1 July
2020.
(5) Consolidated ordinary pay-out (%) = (Gross dividend per share * Shares at
the end of the reporting period excl. treasury shares) / Net ordinary income
of the Parent.
(6) Consolidated pay-out (%) = (Gross dividend per share * Number of shares at
the end of year) / Net Income of the Parent.
(7) Individual pay-out (%) = (Gross dividend per share * Number of shares at
the end of the year) / Net Income of ENDESA, S.A.
APPENDIX I
Alternative Performance Measures (APMs)
Alternative performance measures (APMs) Unit Definition Reconciliation of Alternative Performance Measures (APMs) Relevance of Use
2020 2019
EBITDA( (1)) M€ Income - Procurements and services + Work carried out by the Group for its 3,783 M€ = 17,579 M€ - 11,573 M€ + 275 M€ - 1,147 M€ - 1,351 M€ 3,841 M€ = 20,158 M€ - 14,252 M€ + 295 M€ - 1,022 M€ - 1,338 M€ Measure of operating return excluding interest, taxes, provisions and
assets - Personnel expenses - Other fixed operating expenses depreciation and amortisation.
EBIT( (1)) M€ EBITDA - Depreciation and amortisation and impairment losses. 1,886 M€ = 3,783 M€ - 1,897 M€ 388 M€ = 3,841 M€ - 3,453 M€ Measure of operating return excluding interest and taxes.
Net ordinary income M€ Net Ordinary Result = Net Result of the Parent Company - Net Result on Sales 2,132 M€ = 1,394 M€ 1,562 M€ = 171 M€ Measurement of profit for the period isolating non-recurring effects of more
of Non-Financial Assets (greater than 10 million euros) - Net Impairment
than Euros 10 million.
Losses of Non-Financial Assets (greater than 10 million euros) - Initial Net - 0 M€ + 266 M€ + 450 M€ + 22 M€ - 18 M€ + 1,409 M€ + 0 M€ + 0 M€
Expenses of Personnel by Staff Restructuring Plans related to the
Decarbonisation Plan and the Digitalization of Processes - Net Expenses
corresponding to the Public Responsibility Plan for the COVID-19 Health
Crisis.
Contribution Margin( (1)) M€ Income - Procurements and services 6,006 M€ = 17,579 M€ - 11,573 M€ 5,906 M€ = 20,158 M€ - 14,252 M€ Measurement of operating profitability taking account of direct variable
production costs
Procurements and Services( (1)) M€ Power purchases + Fuel consumption + Transport costs + Other variable 11,573 M€ = 3,631 M€ + 1,100 M€ + 5,000 M€ + 1,842 M€ 14,252 M€ = 4,904 M€ + 1,780 M€ + 5,302 M€ + 2,266 M€ Goods and services for production
procurements and services
Net Financial Income/(Expense)( (1)) M€ Financial income - Financial expense +- Net exchange differences (134) M€ = 28 M€ - 174 M€ + 12 M€ (184) M€ = 27 M€ - 212 M€ + 1 M€ Measure of financial cost
Net Financial Expense( (1)) M€ Financial income - Financial expense (146) M€ = 28 M€ - 174 M€ (185) M€ = 27 M€ - 212 M€ Measure of financial cost
Net investments M€ Gross investments - Capital grants and facilities disposed of 1,711 M€ = 1,846 M€ - 135 M€ 2,069 M€ = 2,202 M€ - 133 M€ Measure of investment activity
Return on equity % Net Ordinary Income of the Parent / ((Equity of the Parent (n) + Equity of the 28.42% = 2,132 M€ / (7,315+ 7,688 / 2) M€ 18.68% = 1,562 M€ / (7,688 + 9,037 / 2) M€ Measure of the capacity to generate profits on shareholder investments
Parent (n-1)) / 2)
Return on assets % Net Ordinary Income of the Parent / ((Total assets (n) + Total assets (n-1)) / 6.66% = 2,132 M€ / (32,062 + 31,981 / 2) M€ 4.91% = 1,562 M€ / (31,981 + 31,656 / 2) M€ Measure of business profitability
2)
Economic profitability % EBIT / (PP&E (n) + PP&E (n) + PP&E (n-1) / 2) 8.84% = 1,886 M€ / (21,354 + 21,329 / 2) M€ 1.80% = 388 M€ / (21,329 + 21,840 / 2) M€ Measure of the capacity of the assets and capital invested to generate income
Return on capital employed (ROCE) % Operating profit after tax / ((Non-current assets (n) + Non-current assets 4.61% = 1,476.7 M€ / (25,828 + 25,881 / 2) + (6,234 + 6,100 / 2) M€ 0.95% = 303.7 M€ / (25,881 + 26,001 / 2) + (6,100 + 5,655 / 2) M€ Measure of return on capital employee
(n-1) / 2) + (Current assets (n) + Current assets (n-1) / 2))
Return on Capital Invested (RCI) % Operating Income After Taxes / (Net Equity of the Parent Company + Net 10.39% = 1,476.7 M€ / (7,315 + 6,899) M€ 2.16% = 303.7 M€ / (7,688 + 6,377) M€ Measure of return on capital invested
Financial Debt)
Funds from Operations M€ Cash Flows from Operating Activities + Changes in Working Capital - Work 3,089 M€ = 2,951 M€ + 413 M€ - 275 M€ 3,116 M€ = 3,181 M€ + 230 M€ - 295 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 152 M€ 136 M€ Measure of interest payments
Ordinary Earnings per Share € Net Ordinary Income of the Parent company / Number of shares at the end of the 2.0136 € = 2,132 M€ / 1,058,752,117 shares 1.475 € = 1,562 M€ / 1,058,752,117 shares Measure of the portion of net income corresponding to each share at the end of
year the year.
Earnings per Share( (1)) € Net Ordinary Income of the Parent company / Number of shares at the end of the 1.317 € = 1,394 M€ / 1,058,752,117 shares 0.162 € = 171 M€ / 1,058,752,117 shares Measurement of the portion of net income corresponding to each share at the
year end of the year.
Cash flow per share( (2)) € Net cash flow from operating activities / Number of shares at the end of the 2.787 € = 2,951 M€ / 1,058,752,117 shares 3.004 € = 3,181 M€ / 1,058,752,117 shares Measurement of the portion of funds generated corresponding to each share at
reporting year the end of the year.
Total shareholder return (TSR) % (Quotation at the end of the year - Quotation at the beginning of the year + 0.15% = (22.350 € - 23.790 € + 1.475 €) / 22.350 € 25.27% = (23.790 € - 20.130 € + 1.427 €) / 20.130 € Measurement of the relationship between the amount invested in a share and the
Gross Dividend paid in the year) / Quotation at the beginning of the year economic result provided, which includes both the effect of the increase in
the share price and that of the gross dividend received in cash (without
considering its reinvestment)
Consolidated ordinary pay-out % (Gross dividend per share * No. of shares at the end of the year) / Net 100.0% = (2.0136 € * 1,058,752,117 shares) / 2,132 M€ 100.0% = (1.475 € * 1,058,752,117 shares) / 1,562 M€ Measure of the portion of net ordinary income obtained used to remunerate
Ordinary income for the year of the Parent. shareholders through the payment of dividends (Consolidated Group).
Consolidated pay-out % (Gross dividend per share * No. of shares at the end of the year) / Net income 152.9% = (2.0136 € * 1,058,752,117 shares) / 1,394 M€ 913.3% = (1.475 € * 1,058,752,117 shares) / 171 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 Year) / Net 91.5% = (2.0136 € * (1,058,752,117) shares) / 2,330 M€ 95.1% = (1.475 € * 1,058,752,117 shares) / 1,642 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 of euros; € = euros.
n = 31 December of the year being calculated.
n-1 = 31 December of the year before the year being calculated.
1. See Consolidated Income Statements for the years ended 31 December 2020 and
2019.
2. See Consolidated Statements of Cash Flows for the years ended 31 December 2020
and 2019.
Alternative Performance Measures (APMs) Unit Definition Reconciliation of Alternative Performance Measures (APMs) Relevance of Use
31 December 31 December
2020 2019
Net Financial Debt( (1)) M€ Non-current borrowings + Current borrowings – Cash and cash equivalents – 6,899 M€ = 5,937 M€ + 1,372 M€ - 403 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( (1)) % Net financial debt / Equity 92.42% = 6,899 M€ / 7,465 M€ 81.37% = 6,377 M€ / 7,837 M€ Measurement of the weight of external funds in the financing of business
activities.
Debt Ratio( (1)) % Net financial debt / (Equity + Net financial debt) 48.03% = 6,899 M€ / 44.86% = 6,377 M€ / Measurement of the weight of external funds in the financing of business
activities.
(7,465 M€ + 6,899 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 = 33,484 / 7,268 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% = 139 M€ / 8,104 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 17 months 26 months Measure of the capacity to meet debt maturities
available
Liquidity Ratio( (1)) N/A Current assets / Current liabilities. 0.73 = 6,234 M€ / 8,555 M€ 0.72 = 6,100 M€ / 8,465 M€ Measurement of the capacity to meet short-term commitments.
Solvency Ratio( (1)) N/A (Equity + Non-current liabilities) / Non-current assets 0.91 = (7,465 M€ + 16,042 M€) / 25,828 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 1.82 = 6,899 M€ / 3,783 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 + 23,273 M€ = 21,354 M€ + 58 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 year 6.909 € = 7,315 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 at the end of the
year.
Market Capitalisation M€ Number of shares at the end of the period * Share price at the end of the year 23,663 M€ = 1,058,752,117 shares * 22.350 € 25,188 M€ = 1,058,752,117 shares * 23.790 € Measurement of total enterprise value according to the share price.
Price to Earnings Ratio (P.E.R.) Ordinary N/A Share price at the end of the year / Net ordinary earnings per share 11.10 = 22.350 € / 2.0136 € 16.13 = 23.790 € / 1.475 € Measure indicating the number of times earnings per share can be divided into
the market price of the shares.
Price to Earnings Ratio (P.E.R.) N/A Share price at the end of the year / Net earnings per share 16.97 = 22.350 € / 1.317 € 147.30 = 23.790 € / 0.162 € Measure indicating the number of times earnings per share can be divided into
the market price of the shares.
Price / Book Value N/A Market Capitalisation / Equity of the Parent 3.23 = 23,663 M€ / 7,315 M€ 3.28 = 25,188 M€ / 7,688 M€ Measurement comparing total enterprise value according to the share price with
the carrying amount.
M€ = Millions of Euros; € = Euros.
1. See Consolidated Statements of Financial Position at 31 December 2020 and
2019.
2. See Consolidated Income Statements for the years ended 31 December 2020 and
2019.
You will find additional information on our FY 2020 Results on our website
www.endesa.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.endesa.com&esheet=52384548&newsitemid=20210224005413&lan=en-US&anchor=www.endesa.com&index=1&md5=0d9edd050c8825ba7edde87ae04f6614)
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