REG-International Endesa Final Results <Origin Href="QuoteRef">ELE.MC</Origin> - Part 2
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of the total
Generation and Supply ((1)) 785 756 3.8 53.5
Distribution 657 663 (0.9) 44.8
Structure and Others ((2)) 25 22 13.6 1.7
TOTAL 1,467 1,441 1.8 100.0
(1) In 2016 this includes the depreciation and impairment losses of
ENEL Green Power España, S.L.U. (EGPE) since the takeover date on 27
July 2016, in the amount of Euros 59 million.
(2) Structure, Services and Adjustments.
Net financial loss: Euros 182 million (-2.2%).
Net financial income reported for 2016 was a negative Euros 182 million, a
year-on-year decrease of Euros 4 million (-2.2%). The breakdown of net
financial income in 2016 was as follows:
Million Euros
Net financial profit/(loss)
2016 2015 % chg % Contribution
of the total
Financial Income 44 55 (20.0) (24.2)
Financial expenses (222) (229) (3.1) 122.0
Net Exchange Differences (4) (12) (66.7) 2.2
TOTAL ((1)) (182) (186) (2.2) 100.0
(1) The net financial income of ENEL Green Power España, S.L.U.
(EGPE) since the takeover date on 27 July 2016 was negligible.
In 2016 net financial expenses totalled Euros 178 million, up Euros 4 million
(+2.3%) year on year.
Movements in long-term interest rates in both 2016 and 2015 meant that
provisions had to be adjusted to account for obligations relating to ongoing
workforce restructuring plans and for contraction suspensions, entailing
higher costs in the amount of Euros 45 million in 2016.
Stripping out the impacts referred to in the preceding sections, net financial
expenses would have shed Euros 41 million (-23.6%) due to:
*Lower average gross financial debt in both periods, falling from Euros 5,946
million in 2015 to Euros 5,191 million in 2016.
*Lower average cost of gross financial debt, which fell from 2.7% in 2015 to
2.5% in 2016 (see section 4.1. Financial Management of this Consolidated
Management Report).
Net income of companies accounted for using the equity method.
In 2016, companies accounted for using the equity method contributed a net
income of Euros 59 million (negative), compared to Euros 15 million (negative)
in 2015.
In 2016 this included the net income of ENEL Green Power España, S.L.U.
(EGPE) since the takeover date on 27 July 2016, in the amount of Euros 69
million, broken down as follows:.
*A positive Euros 7 million in respect of net income generated by the previous
40% stake in the company up to the takeover.
*A negative Euros 72 million booked for impairment prior to the takeover, in
due consideration of the fact that the recovery value of the previous 40%
stake in the company was lower than the carrying amount.
*A negative Euros 4 million in respect of the net income obtained from the
appraisal of the previous 40% stake at fair value on the purchase date.
Following the takeover of ENEL Green Power España, S.L.U. (EGPE) (see Section
2.1. Acquisition of ENEL Green Power España, S.L.U. (EGPE) of this
Consolidated Management Report), after 27 July 2016 the equity method was no
longer used to book the results of ENEL Green Power España, S.L.U. (EGPE),
and the full consolidation method was used instead.
In 2015, this item included net income of Euros 10 million from the 40% stake
in ENEL Green Power España, S.L.U. (EGPE).
In addition, in 2016 and 2015, this heading also included a negative impact of
Euros 38 million and 58 million respectively for the 50% holding in Nuclenor,
S.A. due to the recognition of provision to be incurred by this company given
the additional timeframe for the Nuclear Safety Council (CSN) and the decision
by the Ministry of Energy, Tourism and Digital Agenda to issue its statutory
report on the request to renew the operating licence for the Santa María de
Garoña nuclear power plant.
Income from asset sales.
In 2016, this item mainly included expenditure on commissions on factoring
operations in the amount of Euros 25 million (Euros 23 million in 2015).
In 2015, this item included gross capital gains of Euros 11 million on sales
of assets associated with the Chira-Soria hydro plant, 100% of the shares in
Compañía Transportista de Gas Canarias, S.A., the 22% holding in Ayesa
Advanced Technologies, S.A. and the 100% stake held by ENDESA in Gasificadora
Regional Canaria, S.A.
Income tax
Expenditure on income tax in 2016 stood at Euros 298 million, down by Euros 3
million against 2015 (-1.0%).
In 2016, following the takeover of ENEL Green Power España, S.L.U. (EGPE)
(see Section 2.1. Acquisition of ENEL Green Power España, S.L.U. (EGPE) in
this Consolidated Management Report), deferred tax liabilities were reversed
in the amount of Euros 81 million booked by ENDESA as a result of gains not
distributed by ENEL Green Power España, S.L.U. (EGPE) that were generated
after control of the company was lost in 2010, which met the requirements for
recognition.
Stripping out the impacts referred to in the preceding paragraph, expenditure
on income tax would be Euros 379 million (+25.9%).
2.4. Consolidation scope
On 30 March 2016, ENDESA made a purchase from EDP – Gestão de Produção de
Energia, S.A. of 48.854 shares representing 4.86% of the share capital of Tejo
Energia - Produção e Distribução de Energia Eléctrica, S.A., in which
ENDESA previously held a stake of 38.89%. As a result of the transaction, the
consideration of which amounted to Euros 7 million, ENDESA has increased its
investment in the share capital of Tejo Energia - Produção e Distribução
de Energia Eléctrica, S.A to 43.75%.
On 24 May 2016, ENDESA sold its entire stake in ENEL Insurance N.V.,
representing 50% of its share capital, to ENEL Investment Holding B.V. in a
deal worth a total of Euros 114 million. The transaction had no impact on the
2016 consolidated income statement.
On 27 July 2016, ENDESA Generación S.A.U. bought up 60% of ENEL Green Power
España, S.L.U. (EGPE), a company in which it had previously held a 40% stake
(see section 2.1. Acquisition of ENEL Green Power España, S.L.U. (EGPE) in
this Consolidated Management Report).
On 28 July 2016, ENDESA purchased all the shares of Eléctrica del Ebro, S.A.
for Euros 21 million. The purchase price was finally booked, on the basis of
the fair value of the assets acquired and the liabilities undertaken (Net
Assets Acquired) from Eléctrica del Ebro, S.A., under the following headings
in the Consolidated Financial Statements:
Million Euros
Non-current assets 27
Property, Plant and Equipment 26
Deferred Tax Assets 1
Current assets 6
Trade and other receivables 3
Current Financial Assets 1
Cash and Cash Equivalents 2
TOTAL ASSETS 33
Non-current liabilities 8
Deferred income 3
Deferred Tax Liabilities 5
Current liabilities 6
Current Provisions 2
Trade and other Payables 4
TOTAL LIABILITIES 14
Fair value of net assets acquired 19
The difference between the cost of the business combination and the fair value
of these assets and liabilities generated goodwill of Euros 2 million.
On 29 December 2016 an agreement was closed with ENCE Energía y Celulosa,
S.A. for the sale of a 64.07% holding in Energía de la Loma, S.A. and a
68.42% holding in Energías de la Mancha Eneman, S.A. The transaction had no
impact on the 2016 consolidated income statement.
2.5. Statistical Appendix
Key figures
GWh
Electricity generation 2016 2015 % chg
Mainland 55,985 60,686 (7.7)
Nuclear 25,921 25,756 0.6
Coal 19,033 24,277 (21.6)
Hydroelectric 7,173 7,176 -
Combined-cycle (CCGT) 3,858 3,477 11.0
Non-Mainland Territories 12,634 12,375 2.1
Renewables and cogeneration ((2)) 1,212 - N/A
TOTAL ((1)) 69,831 73,061 (4.4)
(1) At power plant busbars
(2) In 2016 corresponded to the energy generated by ENEL Green Power España,
S.L.U. (EGPE) since the date of the takeover, 27 July 2016.
MW
Gross installed capacity 31 December 2016 31 December 2015 % chg
Hydroelectric 4,765 4,765 -
Conventional thermal 8,130 8,278 (1.8)
Nuclear 3,443 3,443 -
Combined cycle (CCGT) 5,678 5,678 -
Renewables and cogeneration ((1)) 1,675 - N/A
TOTAL 23,691 22,164 6.9
(1) At 31 December 2016 this corresponded to the gross installed
capacity of ENEL Green Power España, S.L.U. (EGPE).
MW
Net installed capacity 31 December 2016 31 December 2015 % chg
Hydroelectric 4,721 4,721 -
Conventional thermal 7,585 7,723 (1.8)
Nuclear 3,318 3,318 -
Combined cycle (CCGT) 5,445 5,445 -
Renewables and cogeneration ((1)) 1,675 - N/A
TOTAL 22,744 21,207 7.2
(1) At 31 December 2016 this corresponded to the net installed
capacity of ENEL Green Power España, S.L.U. (EGPE).
GWh
Electricity sales 2016 2015 % chg
Regulated Price 13,815 14,934 (7.5)
Deregulated market 79,675 77,965 2.2
TOTAL 93,490 92,899 0.6
Thousands
Number of customers (electricity) ((1)) 31 December 2016 31 December 2015 % chg
Regulated market customers 5,593 6,029 (7.2)
Mainland Spain 4,692 5,053 (7.1)
Non-Mainland Territories 901 976 (7.7)
Supply on the deregulated market 5,423 5,083 6.7
Mainland Spain 4,505 4,212 7.0
Non-Mainland Territories 744 693 7.4
Outside Spain 174 178 (2.2)
TOTAL 11,016 11,112 (0.9)
(1) Supply points.
Percentage (%)
Trends in demand for electricity ((1)) 2016 2015
Mainland ((2)) 0.6 1.8
(1) Source: Red Eléctrica de España, S.A. (REE).
(2) Adjusted for working days and temperature, trends in mainland
electricity demand fell by -0.1% in 2016 (+1.6% in 2015).
Percentage (%)
Market share (electricity) ((1)) 31 December 2016 31 December 2015
Ordinary mainland generation 35.1 38.8
Renewable generation ((2)) 3.5 N/A
Distribution 43.7 43.5
Supply 35.3 35.7
(1) Source: In-house.
(2) Does not include hydro.
GWh
Gas Sales 2016 2015 % chg
Deregulated market 48,270 47,034 2.6
Regulated market 1,464 1,039 40.9
International market 19,474 14,926 30.5
Wholesale business 8,921 8,588 3.9
TOTAL ((1)) 78,129 71,587 9.1
(1) Excluding own generation consumption
Thousands
Number of customers (gas) ((1)) 2016 2015 % chg
Regulated market 262 288 (9.0)
Mainland Spain 233 259 (10.0)
Non-Mainland Territories 29 29 -
Deregulated market 1,276 1,173 8.8
Mainland Spain 1,167 1,082 7.9
Non-Mainland Territories 86 86 -
Outside Spain 23 5 360.0
TOTAL 1,538 1,461 5.3
(1) Supply points.
Percentage (%)
Trends in demand for gas ((1)) 2016 2015
Spain 2.1 4.4
(1) Source: Enagás, S.A.
Percentage (%)
Market share (gas) ((1)) 31 December 2016 31 December 2015
Deregulated market 16.9 16.5
TOTAL 16.9 16.5
(1) Source: In-house.
GWh
Energy distributed 2016 2015 % chg
Business in Spain and Portugal 115,602 114,190 1.2
TOTAL 115,602 114,190 1.2
(1) At power plant busbars
Km
Distribution and transmission networks 31 December 2016 31 December 2015 % chg
Business in Spain and Portugal 316,562 317,675 (0.4)
Percentage (%)
Energy losses 2016 2015
Business in Spain and Portugal 11.0 11.3
Minutes
System Average Interruption Duration Index (SAIDI) 2016 2015
Business in Spain and Portugal (average) (1) ((2)) 45 49
(1) Corresponds to Spain.
(2) In accordance with the calculation procedure set out in Royal Decree
1995/2000, of 1 December 2000.
Financial Data
Euros
Key figures 2016 2015 % chg
Net earnings per share ((1)) 1.33 1.03 29.9
Cash flow per share ((2)) 2.83 2.51 12.8
Book value per share ((3)) 8.46 8.53 (0.9)
(1) Net profit per share = profit for the year of the parent / Nº
shares.
(2) Cash flow per share = Net cash flows from operating activities /
Nº of shares.
(3) Carrying amount per share = Equity of parent / Nº of shares.
Profitability indicators (%) 2016 2015
Return on equity ((1)) 15.69 12.33
Return on assets ((2)) 4.69 3.62
Economic profitability ((3)) 9.20 7.62
Return on capital employed (ROCE) ((4)) 5,92 5,12
(1) Return on equity = profit for the year of the parent / average
equity of the parent
(2) Return on assets = profit for the year of the parent / average
total assets.
(3) Economic profitability = operating profit / average property,
plant and equipment.
(4) Return on capital employed (ROCE) = operating profit after tax / (average
non-current assets + average current assets).
Million Euros
Leverage ratio
31 December 31 December
2016 2015
Net financial debt: 4,938 4,323
Non-current financial debt 4,223 4,680
Current financial debt 1,144 -
Cash and cash equivalents (418) (346)
Derivatives recognised as financial assets (11) (11)
Equity: 9,088 9,039
Of the parent 8,952 9,036
Of non-controlling interests 136 3
Leverage ratio (%) ((*)) 54.3 47.8
(*) Leverage = Net financial debt /equity.
Financial indicators 2016 2015
Liquidity ratio ((1)) 0.72 0.85
Solvency ratio ((2)) 0.92 0.96
Debt ratio ((3)) 35.21 32.35
Debt coverage ratio ((4)) 1.44 1.42
(1) Liquidity = current assets / current liabilities.
(2) Solvency = (equity + non-current liabilities) / non-current
assets.
(3) Debt = net financial debt / (equity + net financial debt) (%).
(4) Debt coverage = net financial debt / gross operating profit
(EBITDA).
3. Regulatory Framework
Information on Spain's regulatory framework is set out in Note 4 to the
Consolidated Financial Statements for the year ended 31 December 2016.
There follows an update of the Spanish regulatory framework - regulations that
either were approved in 2016 or had a major effect on the Consolidated
Financial Statements for that year.
Remuneration of the distribution activity
On 28 November 2015, the Official State Gazette published Royal Decree
1073/2015, of 27 November 2015, which modifies certain provisions in the Royal
Decrees on the remuneration of electricity networks (Royal Decree 1047/2013,
of 27 December 2013, for transmission, and Royal Decree 1048/2013, of 27
December 2013, for distribution). Among other aspects, the Royal Decree
eliminates the yearly update of unitary values based on the CPI, in accordance
with Law 2/2015, of 30 March 2015, on de-indexing the economy.
On 12 December 2015, Ministerial Order IET/2660/2015, of 11 December 2015, was
published, establishing the types of installations and unitary value to be
used in calculating distribution remuneration. This Order set the beginning of
the first regulatory period as at 1 January 2016.
On 17 June 2016, Ministerial Order IET/980/2016, of 10 June 2016, was
published in the Official State Gazette, setting remuneration on distribution
activity for 2016 and awarding ENDESA Euros 2,014 million in remuneration for
this activity. ENDESA has also been awarded quality and anti-fraud incentives
of Euros 7 million and Euros 2 million, respectively.
Social Bonus
Law 24/2013, of 26 December 2013, required that the subsidised electricity
tariff cost must be assumed, as a public service obligation, by parent
companies or vertically-integrated groups of companies carrying out
electricity generation, distribution and marketing activities, to assume the
cost of the subsidised electricity tariff in proportion to a percentage based
on both their number of supply connections to distribution grids and the
number of customers supplied. For 2016, this percentage was established at
41.10% for Endesa through Ministerial order IET/1451/2016, of 8 September
2016.
Despite the foregoing, in a ruling on 24 October 2016 the
Contentious-Administrative Section of the Supreme Court declared the Social
Bonus financing system established by article 45.4 of Law 24/2013 of 26
December inapplicable, since it was incompatible with Directive 2009/72/EC of
the European Parliament and of the Council of 13 July 2009 concerning common
rules for the internal market in electricity, and acknowledged the right of
companies to recover the amounts paid. The State authorities submitted an
application for dismissal of the Supreme Court ruling, which was overruled
through a ruling of 14 December 2016, and, on 2 February 2017, an appeal was
submitted against this to the Constitutional Court (see Note 16.3 to the
Consolidated Financial Statements for the year ended 31 December 2016).
On 24 December 2016, Royal Decree-Law 7/2016 of 23 December was published to
regulate the financing of the costs of the Social Bonus and other measures to
protect vulnerable electricity consumers.
By virtue of this Royal Decree Law, the Social Bonus will cover the difference
between the Small Consumer Voluntary Price (SCVP or “PVPC” in Spanish) and
a base value, which may vary depending on the categories of vulnerable
consumers established, to be known as the last-resort tariff, which will be
applied by the supplier of reference concerned on the bills of consumers on
the scheme.
The Social Bonus will be funded by group parents with supply activities, or by
companies acting directly. The CNMC will calculate the funding percentage
annually, and it will be proportional to the number of customers. The Royal
Decree Law establishes transitory funding percentages, and 37.67% was
established for ENDESA.
Also, with the upper limit established by an order issued by the Ministry of
Energy, Tourism and Digital Agenda, following an Agreement by the Government's
Delegated Committee for Economic Affairs, these companies or groups of
companies would undertake the amount they have to pay to co-fund along with
public authorities the cost of supply to consumers deemed to be severely
vulnerable in accordance with the criteria established in regulations. This
will make them essential supplies, and supplies cannot be suspended for
consumers deemed to be severely vulnerable using last-resort tariffs who, for
the purposes of these supplies, are covered by social services since their
income makes them vulnerable to social exclusion, and the measure is confined
to individuals in their habitual residence. The above will be accredited in a
document issued by social services.
Regulations will also establish the categories of vulnerable consumers in
respect of whom, 4 months after the first payment request (as opposed to 2
months at present), to no avail, the supply may be curtailed.
The Royal Decree Law contemplates that in the maximum term of 3 months from
its validation, which took place on 31 January 2017, its development will be
approved by Royal Decree.
Royal Decree on the methodology for calculating the trading margin to be added
to the Small Consumer Voluntary Price.
On 25 November 2016 the Official State Gazette (BOE) published Royal Decree
469/2016 of 18 November establishing the methodology for calculating the
trading margin on the Small Consumer Voluntary Price, thus complying with
various rulings handed down by the Supreme Court that annulled the trading
margin contained in Royal Decree 216/2014 of 28 March establishing the
procedure for calculating Small Consumer Voluntary Prices for electricity and
the legal framework for contracting power.
On 24 December 2016 Ministerial Order ETU/1948/2016 was published - this came
into force on 1 January 2017, and establishes the trading margin on the Small
Consumer Voluntary Price.
2016 electricity tariff
On 18 December 2015, Ministerial Order IET/2735/2015, of 17 December 2015,
establishing access charges for 2016 was published in the Official State
Gazette.
Pursuant to this Order, tariffs remained unchanged, except for high-voltage
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