8th May 2018 08:24
ENDESA, S.A.and Subsidiaries
Consolidated Management Report for the three-month period ended 31 March 2018
(Translation from the original issued in Spanish. In the event of discrepancy, the Spanish-language version prevails)
Madrid, 7 May 2018
ENDESA, S.A. AND SUBSIDIARIESCONSOLIDATED MANAGEMENT REPORT FORTHREE MONTHS ENDEDAS OF 31 MARCH 2018
| Contents | ||
| 1. Business Trends and Results in the first quarter of 2018. | 3 | |
| 1.1. Consolidated results. | 3 | |
| 1.2. Changes in accounting principles. | 3 | |
| 1.3. Analysis of results. | 4 | |
| 1.4. Segment Information. | 10 | |
| 2. Other information. | 15 | |
| 2.1. Risk Management Policy. | 15 | |
| 2.2. Scope of Consolidation. | 15 | |
| 2.3. Dividends. | 16 | |
| 2.4. Other information. | 16 | |
| 3. Regulatory Framework. | 16 | |
| 4. Liquidity and Capital Resources. | 17 | |
| 4.1. Financial Management. | 17 | |
| 4.2. Cash Flows. | 19 | |
| 4.3. Investments. | 21 | |
| Appendix I: Statistical. | 23 | |
| Appendix II: Alternative Performance Measures (APMs). | 29 | |
| Appendix III: Effect on the Consolidated Statement of Financial Position at 1 January 2018 due to Changes in Accounting Principles. | 31 |
ENDESA, S.A. AND SUBSIDIARIESCONSOLIDATED MANAGEMENT REPORT FORTHREE MONTHS ENDEDAS OF 31 MARCH 2018
1. Business Trends and Results in the first quarter of 2018.
1.1. Consolidated results.
ENDESA reported net income of Euros 372 million (+47.0%) in the first quarter of 2018
ENDESA reported net income of Euros 372 million in the first quarter of 2018, an increase of 47.0% from Euros 253 million reported in the first quarter of 2017.
The table below presents the distribution of net income amongst ENDESA's businesses during the first quarter 2018 and its variation compared with the same period in the previous year (see Section 1.4. Segment Information in this Consolidated Management Report):
| Millions of Euros | |||||
| Net Income | |||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 122 | 32 | 281.3 | 32.8 | |
| Distribution | 241 | 221 | 9.0 | 64.8 | |
| Structure and Other | (1) | 9 | - | - | 2.4 |
| TOTAL | 372 | 253 | 47.0 | 100.0 | |
| (1) Structure, Services and Adjustments. | |||||
1.2. Changes in Accounting Principles.
The policies used to prepare this Consolidated Management Report are the same as those applied in the Consolidated Financial Statements for the year ended 31 December 2017, except for the new rules adopted by the European Union applicable to financial years from 1 January 2018 onwards:
| Standards, amendments and interpretations | Mandatory application: Annual periods beginning on or after |
| IFRS 15 "Revenue from Contracts with Customers". | 1 January 2018 |
| Clarifications to the IFRS 15 "Revenue from Contracts with Customers". | 1 January 2018 |
| IFRS 9 “Financial Instruments” | 1 January 2018 |
| Amendments to IFRS 4 “Insurance Contracts”: Applying IFRS 9 “Financial Instruments” with IFRS 4 “Insurance Contracts”. | 1 January 2018 |
The impact of applying the aforementioned accounting standards is as follows.
IFRS 15 "Revenue from Contracts with Customers".
As a result of the first application of IFRS 15 "Revenue from Contracts with Customers", ENDESA has capitalised under Non-Current Assets the incremental costs of obtaining these contracts with customers that until 1 January 2018 had been recognized in the Consolidated Statement of Financial Position. This asset is depreciated systematically depending on the average expected useful life of the contracts with customers associated with these costs, which, until that date, varies anywhere between 1.4 years to 9 years.
With regard to the transition alternative adopted in the first-time application of this standard, ENDESA has opted for retroactive application with the accumulated impact of the initial application at 1 January 2018.
Based on the foregoing, the impact on ENDESA's Consolidated Financial Statement on the date of first application of IFRS 15 "Revenue from Contracts with Customers", is as follows:
Millions of euros
| Consolidated Statement of Financial Position | 1 January 2018 |
| Non-current assets | 95 |
| Intangible Assets | 95 |
| TOTAL ASSETS | 95 |
| Equity | 71 |
| Of the Parent | 71 |
| Of Non-Controlling Interests | - |
| Non-Current liabilities | 24 |
| Deferred Tax Liabilities | 24 |
| TOTAL EQUITY AND LIABILITIES | 95 |
During the first quarter of 2018, the capitalisation of these incremental costs has entailed a Euros 12 million decrease million under “Other Variable Procurements and Services” and a Euros 9 million increase under “Depreciation and amortisation, and impairment losses” on the Consolidated Income Statement (See Section 1.3.2. Operating expenses in this Consolidated Management Report).
IFRS 9 Financial Instruments
As a result of the entry into force of IFRS 9 “Financial instruments”, ENDESA has applied an impairment model based on the expected loss method.
With regard to the transition alternative adopted in the first-time application of this standard, ENDESA has opted for retroactive application with the accumulated impact of the initial application at 1 January 2018.
Based on the foregoing, the impact on ENDESA's Consolidated Financial Statement on the date of first application of IFRS 9 "Financial Instruments", is as follows:
Millions of euros
| Consolidated Statement of Financial Position | 1 January 2018 |
| Non-current assets | 12 |
| Non-current Financial Assets | (10) |
| Deferred Tax Assets | 22 |
| Current assets | (43) |
| Trade and other accounts receivable | (33) |
| Current Financial Assets | (10) |
| TOTAL ASSETS | (31) |
| Equity | (40) |
| Of the Parent | (40) |
| Of Non-Controlling Interests | - |
| Non-current liabilities | 9 |
| Deferred Tax Liabilities | 9 |
| TOTAL EQUITY AND LIABILITIES | (31) |
In terms of the classification of financial assets and liabilities provided for under IFRS 9 “Financial Instruments”, there has been no significant impact.
Appendix III includes the effect on the Consolidated Statement of Financial Position at 1 January 2018 of the changes due to the application of IFRS 15 “Income from Contracts with Customers” and IFRS 9 “Financial Instruments”.
1.3. Analysis of results.
The table below presents the detail of the most relevant figures in ENDESA's Consolidated Income Statement in the first quarter 2018 and its variation compared with the same period in the previous year:
| Millions of Euros | |||||
| Most significant figures | |||||
| January-March 2018 | January-March 2017 | Difference | % Var. | ||
| Revenue | 5,169 | 5,223 | (54) | (1.0) | |
| Contribution margin | 1,415 | 1,236 | 179 | 14.5 | |
| EBITDA (1) | 880 | 702 | 178 | 25.4 | |
| EBIT (2) | 508 | 340 | 168 | 49.4 | |
| Net financial profit/(loss) | (28) | (28) | - | - | |
| Profit/(loss) before tax | 485 | 322 | 163 | 50.6 | |
| Net profit/(loss) | 372 | 253 | 119 | 47.0 | |
| (1) Gross operating profit (EBITDA) = Revenue - Procurements and Services + Self-constructed assets - Personnel Expenses - Other Fixed Operating Expenses. (2) Operating profit (EBIT) = Gross operating profit (EBITDA) - Depreciation and impairment losses. | |||||
EBITDA amounted to Euros 880 million, (+25.4%) in the first quarter of 2018. To analyse its performance during the period, the following factors must be taken into account:
The improvement in the contribution margin of Euros 179 million (+14.5%) can be attributed, on the one hand, to the drop in power purchases (-16.0%) as a result, primarily, of the decrease in electricity prices on the wholesale market, the cumulative arithmetic price of which is €48.1/MWh (-13.5%) and, on the other hand, the drop in fuel consumption (-3.7%) due to the decrease in thermal output during the period, in addition to the subsequent reduction in average purchase price and in the tax on the value of electricity production. The performance of fixed operating costs has increased just Euros 1 million as a result, mainly, of the decrease in personnel expenses (-3.2%).EBIT for the first quarter of 2018 increase 49.4% year-on-year to Euros 508 million, mainly as a result of the 25.4% increase in EBITDA.
1.3.1. Revenue.
Revenues in the first quarter of 2018 totalled Euros 5,169 million, 54 million (+1.0%) lower than revenues posted in the first quarter of 2017.
The table below presents the detail of income in the first quarter 2018 and its variation compared with the same period in the previous year:
| Millions of Euros | |||||
| Revenue | |||||
| January-March 2018 | January-March 2017 | Difference | % Var. | ||
| Revenue from Sales | 5,023 | 5,120 | (97) | (1.9) | |
| Operating income | 146 | 103 | 43 | 41.7 | |
| TOTAL | 5,169 | 5,223 | (54) | (1.0) | |
Market situation.
In the first quarter of 2018, electricity demand trends were as follows:
Total mainland electricity demand rose by 2.9% year-on year (+2.0% adjusted for working days and temperature). The cumulative demand of electrical energy in Non-mainland Territories (TNP) closed out the first quarter of 2018 with a 3.2% increase in the Balearic Islands and a 1.5% increase in the Canary Islands compared with the same period the previous year (-0.6% and +0.0% respectively, adjusted for the effect of working days and temperature).The first quarter of 2018 saw lower prices, with the cumulative arithmetic price in the electricity wholesale market standing at €48.1/MWh (-13.5%) mainly due to higher wind and hydroelectric output. The cumulative contribution of renewable energies to total mainland production was 43.2% (38.3% in the first quarter of 2017).
In this environment:
ENDESA's mainland electricity production during the first quarter 2018 was 15,397 GWh, i.e., 3.1% lower than the first quarter of the previous year, as detailed below: combined cycle plants (874 GWh, -22.0%), coal-fired plants (4,683 GWh, -8.8%), nuclear power plants (6,650 GWh, -7.4%), renewable and cogeneration (1,184 GWh, +21.8%) and hydroelectric power plants (2,006 GWh, +35.3%). Non-mainland Territories (TNP) generation was 3,115 GWh (+0.9%). Nuclear and renewable, including hydroelectric, technologies accounted for 53.3% of Endesa's generation mix, compared with 84.2% for the rest of the sector (50.9% and 79.8% respectively in the first quarter of 2017).At 31 March 2018, ENDESA held the following electricity market shares:
22.9% in mainland generation. 43.0% in electricity distribution. 34.3% in electricity sales.In the first quarter of 2018 conventional gas demand was up by 6.5% year on year, and at 31 March 2018 ENDESA had secured a market share of 16.2% in gas sales to customers in the deregulated market.
Sales.
The table below presents the detail of ENDESA sales in the first quarter 2018 and its variation compared with the same period in the previous year:
| Millions of Euros | ||||
| Sales | ||||
| January-March 2018 | January-March 2017 | Difference | % Var. | |
| Electricity Sales | 3,517 | 3,710 | (193) | (5.2) |
| Deregulated Market Sales | 2,124 | 2,134 | (10) | (0.5) |
| Supply to customers in deregulated markets outside Spain | 231 | 254 | (23) | (9.1) |
| Sales at the Regulated Price | 641 | 682 | (41) | (6.0) |
| Wholesale market sales | 223 | 297 | (74) | (24.9) |
| Non-mainland Territories (TNP) Compensations | 271 | 313 | (42) | (13.4) |
| Other Electricity Sales | 27 | 30 | (3) | (10.0) |
| Gas Sales | 798 | 745 | 53 | 7.1 |
| Regulated Revenue from Electricity Distribution | 543 | 511 | 32 | 6.3 |
| Other Sales and Services Rendered | 165 | 154 | 11 | 7.1 |
| TOTAL | 5,023 | 5,120 | (97) | (1.9) |
Electricity sales on the deregulated market.
At 31 March 2018, ENDESA had 5,617,292 electricity customers in the deregulated market, a 0.4% increase on numbers at 31 December 2017, as per the following breakdown:
4,614,108 (+0.3%) in the Spanish mainland market. 797,810 (+1.4%) in the non-mainland market. 205,374 (+0.0%) in deregulated markets outside Spain.ENDESA sold a net total of 19,880 GWh to these customers in the first quarter of 2018, a 1.0% decrease on the same period in 2017.
In economic terms, sales on the deregulated market in the first quarter of 2018 rose totalled Euros 2,355 million (-1.4%), with the following breakdown:
Sales in the Spanish deregulated market totalled Euros 2,124 million, Euros 10 million down on the figure for the previous year (-0.5%) due mainly to the lower number of physical units sold. Revenue from sales to deregulated European markets other than Spain totalled Euros 231 million, down by Euros 23 million (-9.1%) year on year, due mainly to the lower volume of electricity sold in Belgium, the Netherlands, France and Portugal.Electricity sales at a regulated price.
During the first quarter of 2018:
ENDESA sold 3,582 GWh to customers to whom the regulated price applies, through its supplier of reference company, which is up 0.6% on January-March 2017. These sales entailed an income of Euros 641 million, which is 6.0% lower than the figure in the first quarter of 2017, as a result of the decreased average sales price, despite the increase in physical units sold.Gas sales.
At 31 March 2018, ENDESA had 1,577,390 gas customers in the deregulated market, a 1.1% increase on numbers at 31 December 2017, as shown in the following breakdown:
241,637 (-1.6%) in the regulated market. 1,335,753 (+1.6%) in the deregulated market.ENDESA sold 25,457 GWh to customers in the natural gas market in the first quarter of 2018, which represents a 3.9% increase on the first quarter 2017 figure.
Revenue from gas sales totalled Euros 798 million in the first quarter of 2018, up Euros 53 million (+7.1%) on the figure for the first quarter of 2017, as follows:
Gas sales in the deregulated market totalled Euros 762 million, which is Euros 53 million more than the figure for the first quarter of 2017 (+7.5%) due mainly to the higher number of physical units sold. in international and wholesale markets. Revenue from gas sales at the regulated price totalled Euros 36 million, in line with the figure in the first quarter of 2017 and in line with the performance of physical units sold.Non-mainland Territories (TNP) Compensations.
Compensations in the first quarter of 2018 for the extra-costs of Non-mainland Territories generation (TNP) totalled Euros 271 million, down by Euros 42 million (-13.4%) compared to the same period the year before, due, amongst other aspects, to the fact that the compensation for the extra-costs in the first quarter of 2017 included reliquidations amounting to Euros 21 million.
Electricity distribution.
During the first quarter of 2018, ENDESA distributed 29,890 GWh in the Spanish market, which is a 2.6% increase compared with the first quarter of 2017.
Regulated revenue recognised for distribution in the first quarter of 2018 was Euros 543 million, Euros 32 million more than in the first quarter of 2017 (+6.3%) in accordance with the methodology derived from Royal Decree 1048/2013, of 27 December 2013.
Other operating income.
In January-March 2018, other operating income totalled Euros 146 million, up Euros 43 million (+41.7%), compared to the first quarter of 2017; this can be attributed, in large part, to the Euros 57 million increase in revenue from the valuation and liquidation of energy derivatives due to changes in the valuation and settlement of gas derivatives and CO2 emission allowances.
1.3.2. Operating expenses.
Operating expenses totalled Euros 4,693 million in the January-March 2018 period, 4.5% less than in the same period the previous year.
The table below shows the breakdown of operating expenses in the first quarter of 2018 and their variation compared with the previous year:
| Millions of Euros | ||||
| Operating expenses | ||||
| January-March 2018 | January-March 2017 | Difference | % Var. | |
| Procurements and Services | 3,754 | 3,987 | (233) | (5.8) |
| Power Purchases | 1,257 | 1,496 | (239) | (16.0) |
| Cost of Fuel Consumed | 492 | 511 | (19) | (3.7) |
| Transmission Costs | 1,514 | 1,502 | 12 | 0.8 |
| Other Variable Procurements and Services | 491 | 478 | 13 | 2.7 |
| Personnel Expenses | 213 | 220 | (7) | (3.2) |
| Other Fixed Operating Expenses | 354 | 346 | 8 | 2.3 |
| Depreciation and amortisation, and impairment losses | 372 | 362 | 10 | 2.8 |
| TOTAL | 4,693 | 4,915 | (222) | (4.5) |
Procurements and services (variable costs).
Procurements and services (variable costs) totalled Euros 3,754 million in the first quarter of 2018, 5.8% less than in the same period the previous year.
The performance of these costs for the first quarter of 2018 was:
Power purchases decreased by Euros 239 million (-16.0%) to Euros 1,257 million, primarily because of the decrease in the average arithmetic price in the wholesale electricity market (Euros 48.1/MWh, +13.5%) and price of gas acquired for its sale to the end customer. The cost of fuel consumed was Euros 492 million, down 3.7% (Euros 19 million) due to the drop in thermal output in the period and the fall in the average purchase price. “Other variable procurements and services” totalled Euros 491 million, up Euros 13 million (+2.7%) year-on-year. This change can be attributed in large part to: The Euros 12 million decrease as a result of the capitalisation, from 1 January 2018, of incremental costs incurred in acquiring customer contracts (see Section 1.2 Changes in Accounting Principles of this Consolidated Management Report). The Euros 7 million increase in the cost of CO2 emissions, despite the drop in thermal output, as a result of the increase in market prices. The Euros 11 million increase in the cost of value added services, as a result of the increased billing corresponding to these activities (Euros 16 million).Personnel and other fixed operating expenses.
Fixed costs in the first quarter of 2018 totalled Euros 567 million, Euros 1 million (+0.2%) higher compared to the first quarter of 2017.
The table below presents the breakdown of fixed costs in the first quarter of 2018 and their variation compared with the previous year:
| Millions of Euros | |||||
| Fixed Costs | |||||
| January-March 2018 | January-March 2017 | Difference | % Var. | ||
| Personnel Expenses | 213 | 220 | (7) | (3.2) | |
| Other Fixed Operating Expenses | 354 | 346 | 8 | 2.3 | |
| TOTAL | 567 | 566 | 1 | 0.2 | |
Personnel expenses
Personnel expenses in the first quarter of 2018 came to Euros 213 million, down by Euros 7 million (-3.2%) year-on-year, due mainly to the decrease in the average workforce to 224 employees (-2.3%).
During both periods, there were positive updates of the provisions under workforce restructuring in force and contract suspensions agreements, which amounted to Euros 7 million in the first quarter of 2018 and Euros 15 million in the first quarter of 2017.
Isolating this effect, personnel expenses in the first quarter of 2018 would have decreased by €15 million (-6.4%).
Other fixed operating expenses.
Other fixed operating expenses in the first quarter of 2018 stood at Euros 354 million, up by Euros 8 million quarter on quarter (+2.3%).
In the first quarter of 2018, a net cost of Euros 6 million for infringement proceedings was recognised, compared to a net reversal of Euros 8 million recognised in the first quarter of 2017.
Isolating these effects, other fixed operating expenses in the first quarter of 2018 would have decreased by Euros 6 million (-1.7%).
Depreciation/amortisation and impairment losses
Depreciation and amortisation and impairment losses totalled Euros 372 million in the first quarter of 2018, Euros 10 million (+2.8%) up on the same period the previous year.
From 1 January 2018, and as a result of the capitalisation of incremental costs incurred in the acquisition of customer contracts under the Non-Current Assets on the Consolidated Statement of Financial Position, in the first quarter of 2018, there was a Euros 9 million increase in depreciation and amortisation costs recognised under Depreciation and amortisation and impairment losses (see Section 1.2. Changes in Accounting Principles of this Consolidated Management Report).
Without considering the effect described in the paragraph above, depreciation and amortisation and impairment losses in the first quarter of 2018 would have increased by Euros 1 million (+0.3%) compared to the same period in the previous year.
1.3.3. Net financial profit/(loss).
Net financial loss in the first quarters of 2018 and 2017 amounted to Euros 28 million.
The table below presents the detail of net financial profit/(loss) in the first quarter 2018 and its variation compared with the same period in the previous year:
| Millions of Euros | |||||
| Net financial profit/(loss) (1) | |||||
| January-March 2018 | January-March 2017 | Difference | % Var. | ||
| Financial Income | 9 | 19 | (10) | (52.6) | |
| Financial Expenses | (42) | (47) | 5 | (10.6) | |
| Net Exchange Differences | 5 | - | 5 | N/A | |
| TOTAL | (28) | (28) | - | - | |
| (1) Net financial profit/(loss) = Financial Income - Financial Expense + Net Exchange Differences. | |||||
In the first quarter of 2018, net financial expenses totalled Euros 33 million, up Euros 5 million (+17.9%) year on year.
In the first quarter of 2018, net exchange income came to Euros 5 million, whereas in the first quarter of 2017, there were no net exchange differences.
In order to analyse the evolution of the net financial expense, it must be taken into account that in both periods there has been an update in the provisions associated with the obligations derived of the workforce restructuring in force and contract suspensions agreements, as well as the deterioration of value of financial assets according to IFRS 9 "Financial Instruments" (see Section 1.2. Changes in Accounting Principles of this Consolidated Management Report) for the sum of Euros 4 million, positive, in the first quarter of 2018, and Euros 12 million, positive, in the first quarter of 2017.
Without considering the effect indicated in the paragraph above, the net financial expenses would have decreased by Euros 3 million (-7.5%) due to the decrease in the average cost of gross financial debt, which dropped from 2.4% in January-March 2017 to 2.1% in January-March 2018 have offset in full the increase in the average gross financial from Euros 5,856 million in January-March 2017 to Euros 6,201 million in January-March 2018 (see Section 4.1. Financial Management of this Consolidated Management Report).
1.3.4. Net profit/(loss) of companies accounted for using the equity method.
In the first quarter of 2018, companies accounted for using the equity method contributed a net profit of Euros 13 million, compared to a net profit of Euros 15 million in the first quarter of 2017.
1.3.5. Profit/(loss) on asset divestments.
In the first quarter of 2018 and 2017, this heading primarily included the expense for factoring transaction commissions.
1.3.6. Income tax.
In the first quarter of 2018, the expense on Corporate Income Tax amounted to Euros 110 million, which is Euros 44 million (+66.7%) higher than the amount posted for the first quarter of 2017.
The effective rate in January-March 2018 was 22.7% (20.5% in January-March 2017).
1.3.7. Net profit/(loss).
Net profit attributable to the parent company in the first quarter of 2018 stood at Euros 372 million, an increase of Euros 119 million year on year (+47.0%).
1.4. Segment Information.
The table below shows the breakdown of the most important figures for ENDESA's businesses in the first quarter of 2018:
| Millions of Euros | |||||||||
| January-March 2018 | January-March 2017 | ||||||||
| Generation and Supply | Distribution | Structure and others (3) | TOTAL | Generation and Supply | Distribution | Structure and others (3) | TOTAL | ||
| Revenue | 4,538 | 681 | (50) | 5,169 | 4,641 | 633 | (51) | 5,223 | |
| Contribution margin | 815 | 630 | (30) | 1,415 | 663 | 602 | (29) | 1,236 | |
| EBITDA (1) | 406 | 481 | (7) | 880 | 261 | 452 | (11) | 702 | |
| EBIT (2) | 196 | 328 | (16) | 508 | 56 | 311 | (27) | 340 | |
| Net financial gain/(loss) | (33) | (18) | 23 | (28) | (32) | (23) | 27 | (28) | |
| Profit/(loss) before tax | 161 | 314 | 10 | 485 | 33 | 290 | (1) | 322 | |
| Net profit/(loss) | 122 | 241 | 9 | 372 | 32 | 221 | - | 253 | |
(1) EBITDA = Income - Procurements and Services + Self-constructed assets - Personnel Expenses - Other Fixed Operating Expenses.
(2) EBIT = EBITDA - Depreciation and amortisation, and impairment losses.
(3) Structure, Services and Adjustments.
1.4.1. Contribution margin.
The table below presents the distribution of the sales and other operating income among ENDESA businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | |||||||||
| Sales | Other operating income | ||||||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 4,443 | 4,594 | (3.3) | 88.5 | 95 | 47 | 102.1 | 65.1 | |
| Non-mainland Territories (TNP) generation | 468 | 477 | (1.9) | 9.4 | 1 | 3 | (66.7) | 0.7 | |
| Other Generation and Supply | 4,191 | 4,351 | (3.7) | 83.4 | 94 | 44 | 113.6 | 64.4 | |
| Adjustments | (216) | (234) | (7.7) | (4.3) | - | - | - | - | |
| Distribution | 619 | 565 | 9.6 | 12.3 | 62 | 68 | (8.8) | 42.5 | |
| Structure and Other | (1) | (39) | (39) | - | (0.8) | (11) | (12) | (8.3) | (7.6) |
| TOTAL | 5,023 | 5,120 | (1.9) | 100.0 | 146 | 103 | 41.7 | 100.0 | |
| (1) Structure, Services and Adjustments. | |||||||||
The following table contains the breakdown of procurements and services of ENDESA's businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | |||||
| Procurements and Services (2) | |||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 3,723 | 3,978 | (6.4) | 99.2 | |
| Non-mainland Territories (TNP) generation | 321 | 308 | 4.2 | 8.5 | |
| Other Generation and Supply | 3,617 | 3,903 | (7.3) | 96.4 | |
| Adjustments | (215) | (233) | N/A | (5.7) | |
| Distribution | 51 | 31 | 64.5 | 1.3 | |
| Structure and Other | (1) | (20) | (22) | (9.1) | (0.5) |
| TOTAL | 3,754 | 3,987 | (5.8) | 100.0 | |
| (1) Structure, Services and Adjustments. (2) Procurements and Services = Energy Purchases + Fuel Consumption + Transmission Expenses + Other Variable Procurements and Services. | |||||
The following table contains the breakdown of the contribution margin of ENDESA's businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | |||||
| Contribution Margin (2) | |||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 815 | 663 | 22.9 | 57.6 | |
| Non-mainland Territories (TNP) generation | 148 | 172 | (14.0) | 10.5 | |
| Other Generation and Supply | 668 | 492 | 35.8 | 47.2 | |
| Adjustments | (1) | (1) | - | (0.1) | |
| Distribution | 630 | 602 | 4.7 | 44.5 | |
| Structure and Other | (1) | (30) | (29) | 3.4 | (2.1) |
| TOTAL | 1,415 | 1,236 | 14.5 | 100.0 | |
| (1) Structure, Services and Adjustments. (2) Contribution Margin = Revenues - Procurements and Services. | |||||
Generation and Supply
The contribution margin in the Generation and Supply segment in the first quarter of 2018 totalled Euros 815 million, up Euros 152 million year on year (+22.9%), due mainly to the following factors:
Decrease in electricity prices on the wholesale market (€48.1/MWh; -13.5%) and the subsequent decrease in power purchase costs (-16.0%). The drop in thermal output and the decrease in fuel prices, resulting in a decrease in fuel consumed (-3.7%). The Euros 12 million decrease as a result of the capitalisation of incremental costs under Non-Current Assets of the Consolidated Statement of Financial Position incurred in acquiring customer contracts from 1 January 2018 onwards (see Section 1.2. Changes in Accounting Principles of this Consolidated Management Report). The Euros 7 million increase in the cost of CO2 emissions, despite the drop in thermal output, as a result of the increase in market prices. Changes in the valuation and settlement of derivatives, mainly gas derivatives and CO2 emission allowances was recognised, amounting to Euros 54 million.Distribution.
The contribution margin of the Distribution segment in the first quarter of 2018 increased to Euros 630 million, which represents an increase of Euros 28 million (+4.7%) year on year; this can mainly be attributed to the remuneration for the electricity distribution activity.
Structure and Other.
The contribution margin of Structures and Others in the first quarter of 2018 came to minus Euros 30 million and mainly includes the cost of the Social Bond pursuant to Royal Decree 897/2017, of 6 October (See section 3. Regulatory Framework in this Consolidated Management Report).
1.4.2. EBITDA.
The table below presents the distribution of the EBITDA amongst ENDESA businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | |||||
| EBITDA (2) | |||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 406 | 261 | 55.6 | 46.1 | |
| Non-mainland Territories (TNP) generation | 80 | 100 | (20.0) | 9.1 | |
| Other Generation and Supply | 326 | 161 | 102.5 | 37.0 | |
| Adjustments | - | - | - | - | |
| Distribution | 481 | 452 | 6.4 | 54.7 | |
| Structure and Other | (1) | (7) | (11) | (36.4) | (0.8) |
| TOTAL | 880 | 702 | 25.4 | 100.0 | |
| (1) Structure, Services and Adjustments. (2) Gross operating profit (EBITDA) = Income - Supplies and Services + Work carried out by the Group for its assets – Personnel Expenses - Other operating expenses. | |||||
The following table contains the breakdown of personnel expenses and other fixed operating costs for ENDESA's businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | ||||||||||
| Personnel Expenses | Other Fixed Operating Expenses | |||||||||
| January-March 2018 | January - March 2017 | % Var. | % contribution to total | January-March 2018 | January-March 2017 | % Var. | % contribution to total | |||
| Generation and Supply | 121 | 113 | 7.1 | 56.8 | 293 | 294 | (0.3) | 82.8 | ||
| Non-mainland Territories (TNP) generation | 21 | 21 | - | 9.9 | 47 | 52 | (9.6) | 13.3 | ||
| Other Generation and Supply | 100 | 92 | 8.7 | 46.9 | 247 | 243 | 1.6 | 69.8 | ||
| Adjustments | - | - | - | - | (1) | (1) | - | (0.3) | ||
| Distribution | 64 | 67 | (4.5) | 30.1 | 110 | 109 | 0.9 | 31.1 | ||
| Structure and Other (1) | 28 | 40 | (30.0) | 13.1 | (49) | (57) | (14.0) | (13.9) | ||
| TOTAL | 213 | 220 | (3.2) | 100.0 | 354 | 346 | 2.3 | 100.0 | ||
(1) Structure, Services and Adjustments.
Generation and Supply.
EBITDA for this segment amounted to Euros 406 million, (+55.6%) in the first quarter of 2018. The following factors must be taken into account when looking at EBITDA for the first quarter of 2018:
The 22.9% increase in the contribution margin. The updates of the provisions under workforce restructuring in force and contract suspensions agreements, which amounted to Euros 0 million in the first quarter of 2018 and Euros 9 million, positive, in the first quarter of 2017.Distribution.
For the first quarter of 2018, EBITDA for this segment was Euros 481 million (+6.4%), including:
The above-mentioned positive performance of the contribution margin (+4.7%). The drop in personnel expenses (-4.5%) due to decrease in the average workforce (-5.6%). The updates of the provisions under workforce restructuring and contract suspensions agreements, which amounted to minus Euros 3 million, positive, in the first quarter of 2018 and Euros 0 million in the first quarter of 2017.Structure and Other.
EBITDA for the first quarter of 2018 in Structure and Others came to Euros 7 million, negative, an improvement of Euros 4 million year-on-year (11 million, negative), including, among others:
The performance of the contribution margin, Euros 30 million, negative. The reduction in personnel expenses (-30.0%) due to the reduction of the average workforce (-4.3%) and the effects of the update of provisions for workforce restructuring in force and contract suspension agreements for the sum of Euros 4 million in the first quarter of 2018 and plus Euros 6 million in the first quarter of 2017, both positive.1.4.3. EBIT.
The table below presents the distribution of the EBIT amongst ENDESA businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | |||||
| EBIT (2) | |||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 196 | 56 | 250.0 | 38.6 | |
| Non-mainland Territories (TNP) generation | 39 | 58 | (32.8) | 7.7 | |
| Other Generation and Supply | 157 | (2) | (7,950.0) | 30.9 | |
| Adjustments | - | - | - | - | |
| Distribution | 328 | 311 | 5.5 | 64.6 | |
| Structure and Other | (1) | (16) | (27) | (40.7) | (3.2) |
| TOTAL | 508 | 340 | 49.4 | 100.0 | |
| (1) Structure, Services and Adjustments. (2) EBIT = EBITDA - Depreciation and impairment losses. | |||||
The following table contains the distribution of depreciation and amortisation and impairment losses between ENDESA's businesses in the first quarter of 2018 and variations compared with the same period of the previous year:
| Millions of Euros | |||||
| Depreciation and amortisation, and impairment losses | |||||
| January-March 2018 | January-March 2017 | % Var. | % contribution to total | ||
| Generation and Supply | 210 | 205 | 2.4 | 56.5 | |
| Non-mainland Territories (TNP) generation | 41 | 42 | (2.4) | 11.0 | |
| Other Generation and Supply | 169 | 163 | 3.7 | 45.5 | |
| Adjustments | - | - | - | - | |
| Distribution | 153 | 141 | 8.5 | 41.1 | |
| Structure and Other | (1) | 9 | 16 | (43.8) | 2.4 |
| TOTAL | 372 | 362 | 2.8 | 100.0 | |
| (1) Structure, Services and Adjustments. | |||||
Generation and Supply.
In the first quarter of 2018, EBIT for the Generation and Supply segment was Euros 196 million (+250.0%), including:
The 55.6% increase in EBITDA. The increase in the cost of depreciations and amortisations in the first quarter of 2018 to Euros 9 million as a result of the capitalisation of incremental costs incurred in the acquisition of customer contracts under the Non-Current Assets on the Consolidated Statement of Financial Position, from 1 January 2018 onwards (see Section 1.2. Changes in Accounting Principles of this Consolidated Management Report).Distribution.
EBIT for the Distribution segment in the first quarter of 2018 grew by Euros 17 million year-on-year (+5.5%), mainly as a result of the 6.4% rise in EBITDA.
Structure and Other.
EBIT in the Structure and Other segment totalled Euros 11 million in the first quarter of 2018, improved by Euros 11 million against the same period of the previous year.
2. Other information.
2.1. Risk Management Policy.
During the first quarter of 2018, ENDESA followed the same risk management policy described in its annual consolidated financial statements for the year ended 31 December 2017.
In this context, the financial instruments and types of hedges are the same as those described in these consolidated financial statements.
The risks that could affect ENDESA operations are also the same as those described in the consolidated management report for the fiscal year ending on 31 December 2017.
2.2. Scope of Consolidation.
As a result of the capacity auctions, which took place on 17 May 2017 and 26 July 2017, ENDESA, through ENEL Green Power España, S.L.U. (EGPE) was awarded 540 MW of wind capacity and 339 MW of photovoltaic capacity in the first quarter of 2018, respectively, formally arranged through the following corporate acquisitions:
| Acquisition Date | Technology | % Ownership As of 31 march 2018 | |
| Control | |||
| Valdecaballeros Solar S.L.U. | 9 January 2018 | Photovoltaic | 100.00 |
| Navalvillar Solar S.L.U. | 9 January 2018 | Photovoltaic | 100.00 |
| Castiblanco Solar S.L.U. | 9 January 2018 | Photovoltaic | 100.00 |
| Parque Eólico Muniesa, S.L.U. | 12 January 2018 | Wind | 100.00 |
| Parque Eólico Farlán, S.L.U. | 12 January 2018 | Wind | 100.00 |
| Aranort Desarrollos, S.L.U. | 19 January 2018 | Wind | 100.00 |
| Bosa del Ebro, S.L. | 21 February 2018 | Wind | 51.00 |
| Tauste Energía Distribuida, S.L. | 23 March 2018 | Wind | 51.00 |
| Eólica del Cierzo, S.L.U. | 23 March 2018 | Wind | 100.00 |
| San Francisco de Borja, S.A. | 23 March 2018 | Wind | 66.67 |
The price agreed for all the aforementioned transactions was less than Euros 0.4 million.
ENDESA has recognised the acquisition of these companies as a business combination, and using the acquisition method, has provisionally recognised the acquired assets and assumed liabilities (Net Assets Acquired) of each one at fair value on its acquisition date under the following income statement headings:
| Millions of Euros | |
| Fair Value | |
| Non-Current assets | 1.13 |
| Property, plant & equipment | 1.11 |
| Deferred Tax Assets | 0.02 |
| Current assets | 0.29 |
| Trade and other receivables | 0.12 |
| Cash and Cash Equivalents | 0.17 |
| TOTAL ASSETS | 1.42 |
| Non-Current liabilities | 0.11 |
| Deferred Tax Liabilities | 0.11 |
| Current Liabilities | 0.91 |
| Current Financial Debt | 0.91 |
| TOTAL LIABILITIES | 1.02 |
| Fair Value of Net Assets Acquired | 0.40 |
The companies acquired are currently applying for permits and licences to carry out their projects. Therefore, construction work has not yet started on the renewable power facilities, and therefore, no revenue has been generated since the acquisition date.
On 3 April 2018, an agreement was signed, through its subsidiary ENEL Green España, S.L.U. (EGPE), for the acquisition of Parques Eólicos Gestinver, S.L., for the sum of Euros 57 million, of which, Euros 42 million correspond to the price of the shareholding in the company and Euros 15 million to the subordinated debt held by the company's former shareholders. The acquired company has an installed wind power capacity of 132 MW, distributed across 5 wind farms located in the regions of Galicia and Catalonia.
2.3. Dividends.
At its session held on 21 November 2017, the Board of Directors of ENDESA, S.A. approved the following shareholder remuneration policy for 2017-2020:
2017 to 2020: the ordinary dividend per share distributed against these years will be the equivalent to 100% of ordinary net profit attributable to the Parent company set down in the Consolidated Financial Statements of the Group headed by this company, with a minimum of Euros 1.32 per share, gross, in 2017 and Euros 1.33 per share, gross in 2018. The intention of the Board of Directors of ENDESA, S.A. is that the ordinary dividend will 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.Notwithstanding 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, the Company cannot ensure that dividends will be paid out in future years or the amount of such dividends if paid.
The General Shareholders' Meeting of ENDESA, S.A. held on 23 April 2018 approved the distribution of a total dividend to its shareholders charged against the 2017 profit of a gross figure of Euros 1,382 per share, amounting to Euros 1,463 million, which is equal to the consolidated net profit of ENDESA for the year ending on 31 December 2017.
In consideration of the gross interim dividend of Euros 0.7 per share (Euros 741 million) paid out on 2 January 2018, the gross supplementary dividend (final dividend) charged against 2017 results is Euros 0,682 per share (Euros 722 million) and will be paid out on 2 July 2018.
2.4. Other information.
There were no one-off events involving significant amounts during the first quarter of 2018 other than those referred to herein.
Therefore, during the period ended 31 March 2018 no new significant contingent liabilities arose other than those described in the Consolidated Financial Statements for the year ended 31 December 2017.
3. Regulatory Framework.
From a regulatory perspective, the main highlights during the period were as follows:
2018 electricity tariff
On 27 December 2017 the Official State Gazette (BOE) published Order ETU/1282/2017 of 22 December, which establishes the access tariffs for 2018.
Access tariffs remained unchanged in the Order.
Natural gas tariff for 2018
Under Order ETU/1283/2017 of 22 December access tariffs in force in 2017 were largely maintained, having updated the Last Resort Tariffs with an average increase of 5% resulting from higher raw material costs.
Energy Efficiency.
Law 18/2014, of 15 October, approving urgent measures to boost growth, competitiveness and efficiency, with regard to energy efficiency, created the Energy Efficiency National Fund with the aim of achieving energy savings.
Order ETU/257/2018 of 16 March entailed a contribution by ENDESA to the Energy Efficiency National Fund of Euros 29 million, corresponding to its 2018 obligations.
Social Bonus (or Social Tariff).
In March 2018, the Energy, Tourism and Digital Agenda started processing a proposed Order that sets the financing distribution percentage of the 2018 Social Bonus, with the percentage proposed for ENDESA set at 37.15%, whereas the current percentage provided for under Royal Decree Law 7/2016, of 23 December, standing at 37.7%.
Furthermore, on 9 April 2018, Order ETU/381/2018 was published, amending the Social Bond application forms established in Order ETU/943/2017, of 6 October, which implements Royal Decree 897/2017, of 6 October, regulating the figure of the vulnerable consumers, the Social Bond and other protection measures for domestic consumers of electricity. In addition, this Order extends until 8 October 2018, the existing transitory term so that consumers of electricity that, at the date of entry into force of Order ETU/943/2017, were beneficiaries of the Social Bond, prove vulnerable consumer status in accordance with the provisions of Royal Decree 897/2017, of October 6.
4. Liquidity and Capital Resources.
4.1. Financial Management.
Financial debt.
As of 31 March 2018, ENDESA had net financial debt of Euro €6,047 million, an increase of €1,062 million (+21.3%) compared to the debt at 31 December 2017.
The reconciliation of ENDESA's gross and net financial debt at 31 March 2018 and 31 December 2017 is as follows:
| Millions of Euros | ||||
| Financial debt | ||||
| 31 March 2018 | 31 December 2017 | Difference | % Var. | |
| Non-current Financial Debt | 5,008 | 4,414 | 594 | 13.5 |
| Current Financial Debt | 1,286 | 978 | 308 | 31.5 |
| Gross Financial Debt (1) | 6,294 | 5,392 | 902 | 16.7 |
| Cash and Cash Equivalents | (240) | (399) | 159 | (39.8) |
| Financial Derivatives recognised as Financial Assets | (7) | (8) | 1 | (12.5) |
| Net Financial Debt | 6,047 | 4,985 | 1,062 | 21.3 |
| (1) At 31 March 2018, this includes Euros 7 million corresponding to financial derivatives recognised under financial liabilities (Euros 12 million at 31 December 2017). | ||||
When assessing net debt, it must be considered that on 2 January 2018 ENDESA paid shareholders an interim dividend against 2017 results of Euros 0.7 per share (gross), hence a pay-out of Euros 741 million (see Section 2.3. Dividends in this Consolidated Management Report).
The structure of ENDESA's gross financial debt at 31 March 2018 and 31 December 2017 was as follows:
| Millions of Euros | ||||
| Structure of Gross Financial Debt | ||||
| 31 March 2018 | 31 December 2017 | Difference | % Var. | |
| Euro | 6,294 | 5,392 | 902 | 16.7 |
| TOTAL | 6,294 | 5,392 | 902 | 16.7 |
| Fixed rate | 3,563 | 3,611 | (48) | (1.3) |
| Floating rate | 2,731 | 1,781 | 950 | 53.3 |
| TOTAL | 6,294 | 5,392 | 902 | 16.7 |
| Average lifespan (years) (1) | 5.5 | 6.1 | - | - |
| Average cost (%) (2) | 2.1 | 2.1 | - | - |
(1) Lifespan of gross financial debt (years) = (principal * number of days of term) / (principal in force at closing period * No. days of the period).
(2) Average cost of gross financial debt (%) = (cost of gross financial debt) / gross average financial debt.
As of 31 March 2018, the gross financial debt at fixed interest rates accounted for 57% while 43% was at floating rates. At this date, 100% of the Company's gross financial debt is denominated in euros.
At 31 March 2018, the breakdown of gross financial debt without derivatives by maturity was as follows:
| Millions of Euros | ||||||||
| Maturity of Gross Financial Debt (without Derivatives) | ||||||||
| Carrying amount at 31 March 2018 (1) | Current | Non-Current | Maturity | |||||
| 2018 | 2019 | 2020 | 2021 | Subsequent | ||||
| Bonds and other marketable securities | 1,235 | 1,200 | 35 | 1,200 | 16 | - | - | 19 |
| Bank Borrowings | 1,114 | 15 | 1,099 | 14 | 120 | 58 | 301 | 621 |
| Other Borrowings | 3,938 | 71 | 3,867 | 42 | 47 | 433 | 23 | 3,393 |
| TOTAL | 6,287 | 1,286 | 5,001 | 1,256 | 183 | 491 | 324 | 4,033 |
(1) Excludes Euros 7 million corresponding to financial derivatives.
Main financial transactions.
In the first quarter of 2018, ENDESA extended the credit facilities arranged with various financial institutions maturing in September 2019 (Euros 160 million) and March 2021 (Euros 1,825 million).
In the same period, ENDESA maintained the Euro Commercial Paper (ECP) emissions programme through International ENDESA, B.V., and the active balance thereof as of 31 March 2018 is Euros 1,200 million, and its renewal is backed by irrevocable bank credit facilities.
During the first quarter of 2018, ENDESA has also cancelled the Project Finance bank financing held by some subsidiaries of ENEL Green Power España, S.L.U. (EGPE) amounting to €44 million (refer to Section 4.2. Cash Flows of this Consolidated Management Report).
Liquidity.
As of 31 March 2018, ENDESA's liquidity came to Euros 2,987 million (Euros 3,495 million at 31 December 2017) as detailed below:
| Millions of Euros | ||||
| Liquidity | ||||
| 31 March 2018 | 31 December 2017 | Difference | % Var. | |
| Cash and Cash Equivalents | 240 | 399 | (159) | (39.8) |
| Unconditional availability in Credit Facilities(1) | 2,747 | 3,096 | (349) | (11.3) |
| TOTAL | 2,987 | 3,495 | (508) | (14.5) |
| Coverage of Maturities (number of months) (2) | 26 | 29 | - | - |
| (1) As of 31 March 2018 and 31 December 2017, Euros 1,000 million correspond to the committed and irrevocable credit facility available with ENEL Finance International, N.V. | ||||
| (2) Coverage of debt maturities (number of months) = maturity period (number of months) for vegetative debt that could be covered with the liquidity available. | ||||
Treasury investments considered as “Cash and Cash Equivalents” are high liquidity and entail no risk of changes in value, mature within 3 months from their contract date and accrue interest at the market rates for such instruments.
Leverage ratio.
The consolidated leverage ratio at 31 March 2018 and 31 December 2017 is:
| Millions of Euros | |||
| Leverage ratio (1) | |||
| 31 March 2018 | 31 December 2017 | ||
| Net Financial Debt: | 6,047 | 4,985 | |
| Non-current Liabilities | 5,008 | 4,414 | |
| Current Liabilities | 1,286 | 978 | |
| Cash and Cash Equivalents | (240) | (399) | |
| Financial Derivatives recognised as financial assets | (7) | (8) | |
| Equity: | 9,619 | 9,233 | |
| of the Parent Company | 9,480 | 9,096 | |
| of Non-controlling Interests | 139 | 137 | |
| Leverage (%) | 62.87 | 53.99 | |
| (1) Leverage = Net financial debt / Equity. | |||
Credit rating
ENDESA's credit ratings are as follows:
| Credit rating | ||||||
| 31 March 2018 (1) | 31 December 2017 (1) | |||||
| Long Term | Short Term | Outlook | Long Term | Short Term | Outlook | |
| Standard & Poor’s | BBB+ | A-2 | Stable | BBB+ | A-2 | Stable |
| Moody’s | Baa2 | P-2 | Stable | Baa2 | P-2 | Stable |
| Fitch Ratings | BBB+ | F2 | Stable | BBB+ | F2 | Stable |
| (1) At the respective dates of authorisation of the Consolidated Management Report. | ||||||
ENDESA's credit rating is restricted to the rating of its parent company ENEL according to the methods employed by rating agencies and, at the date of authorisation of this Consolidated Management Report, has been classified as “investment grade” by all the rating agencies.
ENDESA works to maintain its investment grade credit rating to be able to efficiently access money markets and bank funding, and to obtain preferential terms from its main suppliers.
4.2. Cash Flows.
At 31 March 2018, cash and cash equivalents stood at Euros 240 million (Euros 398 million at 31 March 2017).
ENDESA's net cash flows in the first quarters of 2018 and 2017, classified by activities (operation, investment and financing) were:
| Million Euros | ||||||
| Net Cash Flows | ||||||
| January-March 2018 | January-March 2017 | Difference | %Var. | |||
| Net Cash Flows from / (used in) Operating Activities | 24 | 536 | (512) | (95.5) | ||
| Net Cash Flows from / (used in) Investing Activities | (354) | (356) | 2 | (0.6) | ||
| Net Cash Flows from / (used in) Financing Activities | 171 | (200) | 371 | (185.5) | ||
Cash flow from / (used in) operating activities.
In the first quarter of 2018, net cash flows from operating activities amounted to Euros 24 million, Euros 512 million down (-95.5%) on the same period in 2017 (Euros 536 million), broken down as follows:
| Millions of euros | |||
| January-March 2018 | January-March 2017 | ||
| Profit before Tax and Non-Controlling Interests | 485 | 322 | |
| Adjustments for: | 385 | 351 | |
| Depreciation and amortisation, and impairment losses | 372 | 362 | |
| Other Adjustments (Net) | 13 | (11) | |
| Changes in working capital: | (893) | (149) | |
| Trade and other accounts receivable | (219) | (152) | |
| Inventories | (8) | (101) | |
| Current Financial Assets | (106) | (145) | |
| Trade Payables and Other Current Liabilities | (560) | 249 | |
| Other cash flows from/(used in) operating activities: | 47 | 12 | |
| Interest Received | 3 | 16 | |
| Dividends Received | 5 | 1 | |
| Interest Paid | (16) | (14) | |
| Income Tax Paid | 119 | 73 | |
| Other Receipts from and Payments for Operating Activities | (64) | (64) | |
| NET CASH FLOWS FROM OPERATING ACTIVITIES | 24 | 536 |
Concerning the variations in the different items determining the net cash flows from operating activities, during the first quarter of 2018, we must emphasize:
The higher profit before tax and non-controlling interests for the period (Euros 163 million). The changes in working capital between the two years for the sum of Euros 744 million, mainly as a result of an increase in payments corresponding to trade payables for the sum of Euros 809 million. The variation in the payment of the Income Tax in both periods for an amount of Euros 46 million.As of 31 March 2018 and 31 December 2017, the working capital comprised the following items:
| Million Euros | |||
| Working Capital | |||
| 31 March 2018 | 31 December 2017 | ||
| Current Assets (1) | 5,308 | 5,131 | |
| Inventories | 1,283 | 1,267 | |
| Trade and other accounts receivable | 3,255 | 3,100 | |
| Current Financial Assets | 770 (2) | 764 (3) | |
| Current Liabilities (4) | 5,294 | 6,557 | |
| Current provisions | 474 | 425 | |
| Trade Payables and other Current Liabilities | 4,820 | 6,132 (5) | |
| (1) Excluding "Cash and Cash Equivalents" and Financial Derivative Assets corresponding to financial debt. (2) Includes Euros 228 million corresponding to collection rights for financing of the deficit from regulated activities, Euros 78 million concerning remuneration for the electricity distribution activity and Euros 400 million corresponding to extra costs in Non-Mainland Territories (TNP) generation. | |||
| (3) Includes Euros 222 million corresponding to collection rights for financing of the deficit from regulated activities, Euros 70 million concerning remuneration for the electricity distribution activity and Euros 304 million corresponding to extra costs in Non-Mainland Territories (TNP) generation. | |||
| (4) Excluding "Current Financial Debt" and Financial Derivative Liabilities corresponding to financial debt. | |||
| (5) Includes the interim dividend with a charge against 2017 profits of Euros 741 million, paid on 2 January 2018 (see Section 2.3. Dividends of this Consolidated Management Report). | |||
Net cash flows in investment activities.
During the first quarter in 2018 net cash flows applied to investing activities totalled Euros 354 million and includes:
Net payments in cash used in the acquisition of property, plant and equipment and intangible assets in the amount of Euros 342 million (Euros 321 million in the first quarter of 2017) (see Section 4.3. Investments of this Consolidated Management Report). The receipt of the amount obtained on the sale of the shareholding in Nueva Marina Real Estate, S.L., formalized on December 28, 2017, for the sum of Euros 20 million.Net cash flows in financing activities.
In the first quarter of 2018 the cash flows used in financing activities came to Euros 171 million, positive, (Euros 200 million, in the first quarter of 2017), mainly including the following aspects:
Proceeds from borrowings, non-current:Millions of euros
| January-March 2018 | January-March 2017 | ||
| Drawdowns from Tranches B and C with European Investment Bank (EIB) | - | 300 | |
| Drawdowns from Credit Facilities | 251 | 24 | |
| New Borrowings | 23 | 2 |
Millions of euros
| Sections | January-March 2018 | January-March 2017 | |
| Amortisation bank loan Productor Regional de Energía Renovable, S.A.U. | 4.1 | 44 | - |
| Other charges | 9 | 6 |
Millions of euros
| Sections | January-March 2018 | January-March 2017 | |
| Parent Dividends Paid | 2.3 | 741 | 741 |
4.3. Investments.
In the first quarter of 2018, ENDESA made gross investments of Euros 197 million. Of this amount, Euros 181 million were related to investments in property, plant and equipment and intangible assets, and the remaining Euros 16 million to financial investments, as follows:
| Million Euros | |||
| Investments (1) | |||
| January-March 2018 | January-March 2017 | % Var. | |
| Generation and Supply | 33 | 41 | (19.5) |
| Distribution | 124 | 90 | 37.8 |
| Other | - | - | - |
| TOTAL PP&E | 157 | 131 | 19.8 |
| Generation and Supply | 17 | 8 | 112.5 |
| Distribution | 6 | 4 | 50.0 |
| Other | 1 | 3 | (66.7) |
| TOTAL INTANGIBLE ASSETS | 24 | 15 | 60.0 |
| FINANCIAL INVESTMENTS | 16 | 20 | (20.0) |
| TOTAL GROSS INVESTMENTS | 197 | 166 | 18.7 |
| TOTAL NET INVESTMENTS (2) | 165 | 131 | 26.0 |
| (1) Does not include business combinations made during the period (see Section 2.2. Consolidation Scope of this Consolidated Management Report). (2) Net investments = Gross investments - Capital grants and transferred facilities. | |||
Investments in property, plant and equipment.
Gross generation investments in the first quarter of 2018 mostly correspond to investments made on plants that were already operating at 31 December 2017, prominently including the sum of less than Euros 1 million investment in the Litoral power plant to adapt it to European environmental legislation and in the As Pontes power plant for the sum of Euros 4 million in line with the Industrial Emissions Directive (IED) to extend its useful life. It also includes investment in upgrading major components of renewable technology assets.
Gross distribution investments related to grid extensions and expenditure aimed at optimising the grid to improve the efficiency and quality of service. It also included investment for the widespread installation of remote management smart meters and their operating systems.
Investment in Intangible Assets.
Gross investments in intangible assets in the first quarter of 2018 correspond to IT applications and ongoing investments in ICT activities for the sum of Euros 12 million and the capitalisation of incremental costs incurred corresponding to the acquisition of customer contracts for the sum of Euros 12 million (see Section 1.2 Changes in Accounting Principles of this Consolidated Management Report).
APPENDIX I
Statistical Appendix
Industrial data.
| GWh | ||||
| Electricity Generation | (1) | January-March 2018 | January-March 2017 | % Var. |
| Mainland | 15,397 | 15,894 | (3.1) | |
| Nuclear | 6,650 | 7,184 | (7.4) | |
| Coal | 4,683 | 5,135 | (8.8) | |
| Hydroelectric | 2,006 | 1,483 | 35.3 | |
| Combined cycle (CCGT) | 874 | 1,120 | (22.0) | |
| Renewables and cogeneration | 1.184 | 972 | 21,8 | |
| Non-Mainland Territories (TNP) | 3,115 | 3,086 | 0.9 | |
| Coal | 590 | 588 | 0.3 | |
| Combined cycle (CCGT) | 2.495 | 2.476 | 0.8 | |
| Renewables and Cogeneration | 30 | 22 | 36.4 | |
| TOTAL | 18,512 | 18,980 | (2.5) | |
| (1) At power plant busbars. | ||||
| MW | ||||
| Gross installed capacity | 31 March 2018 | 31 December 2017 | % Var. | |
| Hydroelectric | 4,763 | 4,752 | 0.2 | |
| Conventional thermal | 8,130 | 8,130 | - | |
| Nuclear | 3,443 | 3,443 | - | |
| Combined cycle | 5,678 | 5,678 | - | |
| Renewables and cogeneration | 1,680 | 1,675 | 0.3 | |
| TOTAL | 23,694 | 23,678 | 0.1 |
| MW | ||||
| Net installed capacity | 31 March 2018 | 31 December 2017 | % Var. | |
| Hydroelectric | 4,710 | 4,709 | - | |
| Conventional thermal | 7,545 | 7,585 | (0.5) | |
| Nuclear | 3,318 | 3,318 | - | |
| Combined cycles | 5,445 | 5,445 | - | |
| Renewables and cogeneration | 1,680 | 1,675 | 0.3 | |
| TOTAL | 22,698 | 22,732 | (0.1) |
| GWh | ||||
| Gross electricity sales | (1) | January-March 2018 | January-March 2017 | % Var. |
| Regulated Price | 4,267 | 4,307 | (0.9) | |
| Deregulated market | 21,968 | 22,320 | (1.6) | |
| TOTAL | 26,235 | 26,627 | (1.5) | |
| (1) At power plant busbars. |
| GWh | ||||
| Net electricity sales | (1) | January-March 2018 | January-March 2017 | % Var. |
| Regulated Price | 3,582 | 3,561 | 0.6 | |
| Deregulated market | 19,880 | 20,075 | (1.0) | |
| TOTAL | 23,462 | 23,636 | (0.7) | |
| (1) Sales to end customers. |
| Thousands | ||||
| Number of customers (electricity) | (1) | 31 March 2018 | 31 December 2017 | % Var. |
| Regulated market | 5,176 | 5,255 | (1.5) | |
| Mainland Spain | 4,353 | 4,416 | (1.4) | |
| Non-Mainland Territories (TNP) | 823 | 839 | (1.9) | |
| Deregulated market | 5,617 | 5,593 | 0.4 | |
| Mainland Spain | 4,614 | 4,601 | 0.3 | |
| Non-Mainland Territories (TNP) | 798 | 787 | 1.4 | |
| Outside Spain | 205 | 205 | - | |
| TOTAL | 10,793 | 10,848 | (0.5) | |
| (1) Supply points. |
| Percentage (%) | |||
| Trends in demand for electricity | (1) | January-March 2018 | January-March 2017 |
| Mainland | (2) | 2.9 | 0.2 |
| Non-Mainland Territories (TNP) | (3) | 3.1 | 1.6 |
| (1) Source: Red Eléctrica de España, S.A. (REE). | |||
| (2) Adjusted for working days and temperature: +2.0% in the first quarter of 2018 and +1.1% in the first quarter of 2017. | |||
| (3) Adjusted for working days and temperature: +5.7% in the first quarter of 2018 and +0.8% in the first quarter of 2017. | |||
| GWh | ||||
| Energy distributed | (1) | January-March 2018 | January-March 2017 | % Var. |
| Spain and Portugal | 29,890 | 29,119 | 2.6 | |
| (1) At power plant busbars. |
| km | ||||
| Distribution and transmission networks | 31 March 2018 | 31 December 2017 | % Var. | |
| Spain and Portugal | 318,000 | 317,782 | 0.1 |
| Percentage (%) | |||
| Energy losses | (1) | January – March 2018 | January – March 2017 |
| Spain and Portugal | 12.4 | 12.9 | |
| (1) Source: Endesa data. | |||
| Minutes | |||
| Installed Capacity Equivalent Interruption Time (ICEIT) | January-March 2018 | January – March 2017 | |
| Spain and Portugal (avg) | (1) (2) | 18.8 | 18.4 |
| (1) Corresponds to Spain. | |||
| (2) According to the calculation procedure set down by Royal Decree 1995/2000, of 1 December. | |||
| Percentage (%) | |||
| Market share (electricity) | (1) | 31 March 2018 | 31 December 2017 |
| Mainland Generation | 22.9 | 23.6 | |
| Distribution | 43.0 | 44.1 | |
| Supply | 34.3 | 35.4 | |
| (1) Source: Endesa data. | |||
| GWh | ||||
| Gas Sales | January-March 2018 | January-March 2017 | % Var. | |
| Deregulated market | 14,010 | 15,001 | (6.6) | |
| Regulated market | 683 | 677 | 0.9 | |
| International market | 7,813 | 7,507 | 4.1 | |
| Wholesale business | 2,951 | 1,318 | 123.9 | |
| TOTAL | (1) | 25,457 | 24,503 | 3.9 |
| (1) Excluding own generation consumption. | ||||
| Thousands | ||||
| Number of customers (gas) | (1) | 31 March 2018 | 31 December 2017 | % Var. |
| Regulated market | 242 | 246 | (1.6) | |
| Mainland Spain | 215 | 219 | (1.8) | |
| Non-Mainland Territories (TNP) | 27 | 27 | - | |
| Deregulated market | 1,335 | 1,314 | 1.6 | |
| Mainland Spain | 1,214 | 1,205 | 0.7 | |
| Non-Mainland Territories (TNP) | 65 | 63 | 3.2 | |
| Outside Spain | 56 | 46 | 21.7 | |
| TOTAL | 1,577 | 1,560 | 1.1 | |
| (1) Supply points. |
| Percentage (%) | |||
| Trends in demand for gas | (1) | January-March 2018 | January – March 2017 |
| Domestic Market (Spain) | 5.2 | 8.4 | |
| Domestic Conventional (Spain) | 6.5 | 7.2 | |
| Electricity Sector | (2.9) | 16.5 | |
| (1) Source: Enagás, S.A. |
| Percentage (%) | |||
| Market share (gas) | (1) | 31 March 2018 | 31 December 2017 |
| Deregulated market | 16.2 | 16.1 | |
| (1) Source: Endesa data. | |||
Workforce.
| Number of Employees | |||||||
| Final Headcount | % Var. | ||||||
| 31 March 2018 | 31 December 2017 | ||||||
| Male | Female | Total | Male | Female | Total | ||
| Generation and Supply | 4,053 | 1,035 | 5,088 | 4,083 | 1,024 | 5,107 | (0.4) |
| Distribution | 2,470 | 426 | 2,896 | 2,491 | 429 | 2,920 | (0.8) |
| Structure and Others (1) | 850 | 759 | 1,609 | 884 | 795 | 1,679 | (4.2) |
| TOTAL EMPLOYEES | 7,373 | 2,220 | 9,593 | 7,458 | 2,248 | 9,706 | (1.2) |
| (1) Structure and services. | |||||||
| Number of Employees | |||||||
| Average Headcount | % Var. | ||||||
| January-March 2018 | January-March 2017 | ||||||
| Male | Female | Total | Male | Female | Total | ||
| Generation and Supply | 4,076 | 1,031 | 5,107 | 4,105 | 979 | 5,084 | 0.5 |
| Distribution | 2,482 | 427 | 2,909 | 2,632 | 449 | 3,081 | (5.6) |
| Structure and Others (1) | 873 | 785 | 1,658 | 915 | 818 | 1,733 | (4.3) |
| TOTAL | 7,431 | 2,243 | 9,674 | 7,652 | 2,246 | 9,898 | (2.3) |
| (1) Structure and services. | |||||||
Financial Data.
| Million Euros | ||||
| Consolidated income statement (5) | ||||
| January-March 2018 | January-March 2017 | % Var. | ||
| Sales | 5,023 | 5,120 | (1.9) | |
| Contribution margin | (1) | 1,415 | 1,236 | 14.5 |
| EBITDA | (2) | 880 | 702 | 25.4 |
| EBIT | (3) | 508 | 340 | 49.4 |
| Net Income | (4) | 372 | 253 | 47.0 |
| (1) Contribution Margin = Revenues - 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 Income: Profit/(loss) of the Parent. | ||||
| (5) See the Consolidated Income Statements for the quarters ending 31 March 2018 and 2017. | ||||
|
Euros | ||||
| Valuation Key figures | January-March 2018 | January-March 2017 | % Var. | |
| Net Earnings per Share | (1) | 0.35 | 0.24 | 47.0 |
| Cash flow per share | (2) | 0.02 | 0.51 | (95.5) |
| Book value of equity per share | (3) | 8.95 | 8.59 (4) | 4.2 |
| (1) Net Earnings per Share = Parent Company Period Result / No. Shares. | ||||
| (2) Cash Flow per Share = Net Cash Flow from Operating Activities / No. Shares. | ||||
| (3) Equity attributable to equity holders of the parent / No. shares. | ||||
| (4) At 31 December 2017 | ||||
| Million Euros | ||||
| Consolidated Statement of Financial Position (2) | ||||
| 31 March 2018 | 31 December 2017 | % Var. | ||
| Total assets | 30,999 | 31,037 | (0.1) | |
| Equity | 9,619 | 9,233 | 4.2 | |
| Net Financial Debt | (1) | 6,047 | 4,985 | 21.3 |
| (1) Net financial debt = Non-current financial liabilities + Current financial liabilities – Cash and cash equivalents – Financial derivatives recognised under financial assets. | ||||
| (2) See the Statements of Financial Position at 31 March 2018 and 31 December 2017. | ||||
| Profitability indicators (%) | 31 March 2018 | 31 December 2017 | |
| Return on equity | (1) | 16.02 | 16.21 |
| Return on assets | (2) | 4.80 | 4.72 |
| Economic profitability | (3) | 9.39 | 9.31 |
| Return on capital employed (ROCE) | (4) | 5.07 | 5.08 |
| (1) Return on equity = profit for the year by parent / average equity of the Parent. | |||
| (2) Return on assets = profit for the year by parent / average total assets. | |||
| (3) Economic profitability = operating profit (EBIT) / average property, plant and equipment. | |||
| (4) Return on capital employed = operating profit after tax / (average non-current assets + average current assets). | |||
| Financial indicators | 31 March 2018 | 31 December 2017 | |
| Liquidity Ratio | (1) | 0.84 | 0.73 |
| Solvency Ratio | (2) | 0.96 | 0.92 |
| Debt Ratio | (3) | 38.60 | 35.06 |
| Debt Hedge Ratio | (4) | 27.49 | 1.41 |
| (1) Liquidity = Current Assets / Current Liabilities. | |||
| (2) Solvency = (Equity + Noncurrent Liabilities) / Noncurrent Assets. | |||
| (3) Debt = Net Financial Debt / (Equity + Net Financial Debt) (%). | |||
| (4) Debt Hedge = Net Financial Debt / EBITDA. | |||
Rating.
| Credit Rating | ||||||||
| 31 March 2018 (1) | 31 December 2017 (1) | |||||||
| Long Term | Short Term | Outlook | Long Term | Short Term | Outlook | |||
| Standard & Poor’s | BBB+ | A-2 | Stable | BBB+ | A-2 | Stable | ||
| Moody’s | Baa2 | P-2 | Stable | Baa2 | P-2 | Stable | ||
| Fitch Ratings | BBB+ | F2 | Stable | BBB+ | F2 | Stable | ||
| (1) At the respective dates of authorisation of the Consolidated Management Report. | ||||||||
| Stock market information.
Percentage (%) | ||||||||
| Share price trend | January-March 2018 | January-March 2017 | ||||||
| ENDESA, S.A. | 0.2 | 9.5 | ||||||
| Ibex-35 | (4.4) | 11.9 | ||||||
| Euro Stoxx 50 | (4.1) | 6.4 | ||||||
| Euro Stoxx Utilities | (2.8) | 7.9 | ||||||
|
| ||||
| Stock Market Data | 31 March 2018 | 31 December 2017 | % Var. | |
| Market Cap | Millions of Euros (1) | 18,936 | 18,904 | 0.2 |
| Number of shares outstanding | 1,058,752,117 | 1,058,752,117 | - | |
| Nominal share value | Euros | 1.2 | 1.2 | - |
| Cash | Millions of Euros (2) | 2,489 | 10,866 | (77.1) |
| Continuous Market | Shares | |||
| Trading volume | (3) | 140,802,583 | 536,793,866 | (73.8) |
| Average daily trading volume | (4) | 2,234,962 | 2,105,074 | 6.2 |
| Price to Earnings Ratio (P.E.R.) | (5) | 12.73 | 12.92 | - |
| Price / Carrying amount | (6) | 2.00 | 2.08 | - |
| (1) Market Cap = Number of Shares at the Close of the Period * Listing Price at the Close of the Period. | ||||
| (2) Cash = Sum of all the operations made over the value in the reference period (Source: Madrid Stock Exchange). | ||||
| (3) Trading Volume = Total volume of stock in ENDESA, S.A. traded in the period (Source: Madrid Stock Exchange). | ||||
| (4) Average Daily Trading Volume = Arithmetic mean of stock in ENDESA, S.A. traded per session during the period (Source: Madrid Stock Exchange). | ||||
| (5) Price to Earnings Ratio (P.E.R.) = Listing Price at the Close of the Period / Earnings per Share. | ||||
| (6) Price / Carrying amount = Market capitalisation / Equity of the Parent. | ||||
| Euros | |||
| ENDESA share price( (1) | January-March 2018 | January-December 2017 | % Var. |
| High | 18.830 | 22.760 | (17.3) |
| Low | 16.600 | 17.855 | (7.0) |
| Average in the period | 17.692 | 20.234 | (12.6) |
| Closing price | 17.885 | 17.855 | 0.2 |
| (1) Source: Madrid Stock Exchange. | |||
Dividends.
| 2017 | 2016 | % Var. | ||
| Share capital | Millions of euros | 1,270.50 | 1,270.50 | - |
| Number of shares | 1,058,752,117 | 1,058,752,117 | - | |
| Consolidated Net Profit | Millions of euros | 1,463 | 1,411 | 3.7 |
| Individual Net Profit | Millions of euros | 1,491 | 1,419 | 5.1 |
| Earnings per Share | Euros (1) | 1.382 | 1.333 | 3.7 |
| Gross Dividend per Share | Euros | 1.382 (2) | 1.333 (3) | 3.7 |
| Consolidated Pay-Out | (%) (4) | 100.0 | 100.0 | - |
| Individual Pay-Out | (%) (5) | 98.1 | 99.4 | - |
| (1) Earnings per Share (Euros) = Parent Company Period Result / No. Shares. | ||||
| (2) Gross interim dividend of Euros 0.7 per share, paid out on 2 January 2018 plus the gross supplementary dividend of Euros 0,682 per share, which will paid out on 2 July 2018. | ||||
| (3) Gross interim dividend of Euros 0.7 per share, paid out on 2 January 2017 plus the gross supplementary dividend of Euros 0,633 per share paid out on 3 July 2017. | ||||
| (4) Consolidated Pay-out (%) = (Gross Dividend per Share * No. Shares) / Parent Company Period Result. | ||||
| (5) Individual Pay-out (%) = (Gross Dividend per Share * No. Shares) / Period Result of ENDESA, S.A. | ||||
APPENDIX II
Alternative Performance Measures
| Alternative Performance Measures (APMs) | Unit | Definition | Reconciliation of Alternative Performance Measures (APMs) | Relevance of use | |
| 31 March 2018 | 31 March 2017 | ||||
| EBITDA | Millions of euros | Income - Procurements and Services + Self-constructed assets - Personnel Expenses - Other Fixed Operating Expenses. | 880 MM€ = 5,169 MM€ - 3,754 MM€ + 32 MM€ - 213 MM€ – 354 MM€ | 702 MM€ = 5,223 MM€ - 3,987 MM€ + 32 MM€ - 220 MM€ – 346 MM€ | Measure of operating return excluding interest, taxes, provisions and amortisation |
| EBIT | Millions of euros | EBITDA - Depreciation and amortisation, and impairment losses. | 508 MM€ = 880 MM€ – 372 MM€ | 340 MM€ = 702 MM€ – 362 MM€ | Measure of operating return excluding interest and taxes |
| Contribution margin | Millions of euros | Revenue - Procurements and services | 1,415 MM€ = 5,169 MM€ – 3,754 MM€ | 1,236 MM€ = 5,223 MM€ – 3,987 MM€ | Measure of operating return including direct variable production costs |
| Procurements and services | Millions of euros | Energy Purchases + Fuel Consumption + Transmission Expenses + Other Variable Procurements and Services | 3,754 MM€ = 1,257 MM€ + 492 MM€ + 1,514 MM€ + 491 MM€ | 3,987 MM€ = 1,496 MM€ + 511 MM€ + 1,502 MM€ + 478 MM€ | Goods and services for production |
| Net financial gain/(loss) | Millions of euros | Financial Income - Financial Expense + Net Exchange Differences. | (28) MM€ = 9 MM€ - 42 MM€ + 5 MM€ | (28) MM€ = 19 MM€ - 47 MM€ - 0 MM€ | Measure of financial cost |
| Net investment | Millions of euros | Gross investments - Capital grants and transferred facilities | 165 MM€ = 197 MM€ – 32 MM€ | 131 MM€ = 166 MM€ – 35 MM€ | Measure of investment activity |
| Net Financial Debt | Millions of euros | Non-current financial liabilities + Current financial liabilities – Cash and cash equivalents – Financial derivatives recognised under assets | 6,047 MM€ = 5,008 MM€ + 1,286 MM€ - 240 MM€ - 7 MM€ | 5,495 MM€ = 4,524 MM€ + 1,378 MM€ - 398 MM€ - 9 MM€ | Short and long-term financial debt, less cash and financial investment cash equivalents |
| Leverage | % | Net financial debt / Equity | 62.87% = 6,047 MM€ / 9,619 MM€ | 58.85% = 5,495 MM€ / 9,337 MM€ | Measure of the weighting of external funds in the financing of business activities |
| Debt | % | Net financial debt / (Equity + Net financial debt) | 38.60% = 6,047 MM€ / (9,619 MM€ + 6,047 MM€) | 37.05% = 5,495 MM€ / (9,337 MM€ + 5,495 MM€) | Measure of the weighting of external funds in the financing of business activities |
| Average Life of Gross Financial Debt | Number of years | (Principal * Number of Valid Days) / (Valid Principal at the Close of the Period * Number of Days in the Period) | 5.5 years = 34,558 / 6,287 | 6.4 years = 37,809 / 5,879 | Measure of the duration of financial debt to maturity |
| Average Cost of Gross Financial Debt | % | (Cost of Gross Financial Debt) / Gross Average Financial Debt | 2.1% = (31 MM€ * (365/90) + 1 MM€) / 6,201 MM€ | 2.4% = (33 MM€ * (365/90) + 4 MM€) / 5,856 MM€ | Measure of the effective rate of financial debt |
| Debt Coverage Ratio | Number of months | Maturity period (months) for vegetative debt that could be covered with the liquidity available | 26 months | 35 months | Measure of the capacity to meet debt maturities |
| Return on equity | % | Profit/loss attributable to the Parent / Average equity of the Parent | 16.02% = (372 MM€ * 12/3) / 9,288 MM€ | 11.15% = (253 MM€ * 12/3) / 9,075 MM€ | Measure of the capacity to generate profits on shareholder investments |
| Return on assets | % | Profit/loss attributable to the Parent / Average total assets | 4.80% = (372 MM€ * 12/3) / 31,018 MM€ | 3.27% = (253 MM€ * 12/3) / 30,929.5 MM€ | Measure of business profitability |
| Economic profitability | % | EBIT / Average PP&E. | 9.39% = (508 MM€ * 12/3) / 21,646.5 MM€ | 6.23% = (340 MM€ * 12/3) / 21,831.5 MM€ | Measure of the capacity to generate income from invested assets and capital |
| Return on capital employed (ROCE) | % | Operating profit after tax / (Average non-current assets + Average current assets) | 5.07% = (393 MM€ * 12/3) / 31,018 MM€ | 3.50% = (270 MM€ * 12/3) / 30,929.5 MM€30,002 MM€ | Measure of the return on invested capital |
| Liquidity | N/A | Current assets / Current liabilities. | 0.84 = 5,548 MM€ / 6,580 MM€ | 0.76 = 5,323 MM€ / 7,018 MM€ | Measure of the capacity to meet short term commitments |
| Solvency | N/A | (Equity + Non-Current liabilities) / Non-current assets | 0.96 = (9,619 MM€ + 14,800 MM€) / 25,451 MM€ | 0.93 = (9,337 MM€ + 14,544 MM€) / 25,576 MM€ | Measure of the capacity to meet obligations |
| Debt coverage | N/A | Net financial debt / EBITDA | 1.72= (6,047 MM€) / (880 MM€ * 12/3) | 1.96= (5,495 MM€) / 702 MM€* 12/3) | Measure of the amount of available cash flow to meet payments of principal on financial debt |
| Earnings per share | Euros | Parent Company Period Result / Shares at the close of the period | 0.35 € = 372 MM€ / 1,058,752,117 shares | 0.24 € = 253 MM€ / 1,058,752,117 shares | Measure of the portion of net profit corresponding to each share outstanding |
| Cash flow per share | Euros | Net Cash Flow of the Operating Activities / Shares at the close of the period | 0.02 € = 24 MM€ / 1,058,752,117 shares | 0.51 € = 536 MM€ / 1,058,752,117 shares | Measure of the portion of funds corresponding to each share outstanding |
| Book value per share | Euros | Parent Company equity / Shares at the close of the period | 8.95 € = 9,480 MM€ / 1,058,752,117 shares | 8.69 € = 9,198 MM€ / 1,058,752,117 shares | Measure of the portion of own funds corresponding to each share outstanding |
| Market capitalisation | Millions of euros | Number of Shares at the Close of the Period * Listing Price at the Close of the Period | 18,936 MM€ = 1,058,752,117 shares * 17.885 € | 23,324 MM€ = 1,058,752,117 shares * 22.030 € | Measure of the total enterprise value according to the share price |
| Price to Earnings Ratio (P.E.R.) | N/A | Listing Price at the Close of the Period / Earnings per Share | 12.73 = 17,885 € / (0.35 * 12/3) € | 23.05 = 22,030 € / (0.24 * 12/3) € | Measure indicating the number of times the earnings per share is contained in the market price of the company |
| Price / Carrying amount | N/A | Market capitalisation / Equity of the Parent | 2.00 = 18,936 MM€ / 9,480 MM€ | 2.54 = 23,324 MM€ / 9,198 MM€ | Measure comparing the total enterprise value according to the share price with the carrying amount |
| Consolidated Pay-Out | % | Gross dividend per share * Nº shares at the close of the period / Profit for the year of the parent | 100.0% = (1,382 € * 1,058,752,117 shares) / 1,463 MM€ | 100.0% = (1,333 € * 1,058,752,117 shares) / 1,411 MM€ | Measure of the part of profits obtained used to remunerate shareholders through the payment of dividends (consolidated Group) |
| Individual Pay-Out | % | (Gross dividend per share * No. shares at the close of the period / Profit for the year of the ENDESA, S.A. | 98.1% = (1,382 € * 1,058,752,117 shares) / 1,491 MM€ | 99.4% = (1,333 € * 1,058,752,117 shares) / 1,419 MM€ | Measure of the part of profits obtained used to remunerate shareholders through the payment of dividends (individual company) |
| MM€ = millions of euros; € = euros. | |||||
APPENDIX III
Effect on the Consolidated Statement of Financial Position at 1 January 2018 due to Changes in Accounting Principles
ENDESA, S.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAT 1 JANUARY 2018
Millions of Euros
| 1 January 2018 | IFRS 15 "Revenue from Contracts with Customers" | IFRS 9 “Financial Instruments” | 1 January 2018 (Adjusted) (1) | |
| ASSETS | ||||
| NON-CURRENT ASSETS | 25,507 | 95 | 12 | 25,614 |
| Property, Plant and Equipment | 21,727 | - | - | 21,727 |
| Investment Property | 9 | - | - | 9 |
| Intangible assets | 1,196 | 95 | - | 1,291 |
| Goodwill | 459 | - | - | 459 |
| Investments Accounted for using the Equity Method | 205 | - | - | 205 |
| Non-current Financial Assets | 769 | - | (10) | 759 |
| Deferred Tax Assets | 1,142 | - | 22 | 1,164 |
| CURRENT ASSETS | 5,530 | - | (43) | 5,487 |
| Inventories | 1,267 | - | - | 1,267 |
| Trade and other accounts receivable | 3,100 | - | (33) | 3,067 |
| Trade Receivables | 2,877 | - | (33) | 2,844 |
| Current Income Tax Assets | 223 | - | - | 223 |
| Current Financial Assets | 764 | - | (10) | 754 |
| Cash and Cash Equivalents | 399 | - | - | 399 |
| Non-current Assets Held for Sale and Discontinued Operations | - | - | - | - |
| TOTAL ASSETS | 31,037 | 95 | (31) | 31,101 |
| EQUITY AND LIABILITIES | ||||
| EQUITY | 9,233 | 71 | (40) | 9,264 |
| Of the Parent Company | 9,096 | 71 | (40) | 9,127 |
| Share capital | 1,271 | - | - | 1,271 |
| Share premium and reserves | 7,155 | 71 | (40) | 7,186 |
| Profit for the period of the Parent | 1,463 | - | - | 1,463 |
| Interim dividend | (741) | - | - | (741) |
| Valuation adjustments | (52) | - | - | (52) |
| Of Non-Controlling Interests | 137 | - | - | 137 |
| NON-CURRENT LIABILITIES | 14,269 | 24 | 9 | 14,302 |
| Deferred Income | 4,730 | - | - | 4,730 |
| Non-current provisions | 3,382 | - | - | 3,382 |
| Provisions for Pensions and Similar Obligations | 951 | - | - | 951 |
| Other non-current provisions | 2,431 | - | - | 2,431 |
| Non-current Financial Debt | 4,414 | - | - | 4,414 |
| Other Non-current Liabilities | 646 | - | - | 646 |
| Deferred Tax Liabilities | 1,097 | 24 | 9 | 1,130 |
| CURRENT LIABILITIES | 7,535 | - | - | 7,535 |
| Current Financial Debt | 978 | - | - | 978 |
| Current provisions | 425 | - | - | 425 |
| Provisions for Pensions and Similar Obligations | - | - | - | - |
| Other Current Provisions | 425 | - | - | 425 |
| Trade Payables and Other Current Liabilities | 6,132 | - | - | 6,132 |
| Suppliers and other Payables | 5,962 | - | - | 5,962 |
| Current Income Tax Liabilities | 170 | - | - | 170 |
| Liabilities Associated with Non-current Assets Classified as held for Sale and Discontinued Operations | - | - | - | - |
| TOTAL EQUITY AND LIABILITIES | 31,037 | 95 | (31) | 31,101 |
(1) Adjusted at 1 January 2018 as explained in Section 1.2. Changes in Accounting Principles of this Consolidated Management Report.
Disclaimer.
This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements constitute no guarantee on any future performance and are subject to material risks, uncertainties, changes and other factors that may be beyond ENDESA’s control or difficult to predict.
Forward-looking statements include yet are not limited to information regarding: estimated future earnings; electricity production variations of the different technologies; market share; expected variations in the gas demand and supply; management strategy and objectives; estimated cost reductions; tariffs and pricing structure; expected investments; estimated asset disposals; expected variations in generation capacity and changes in capacity mix; repowering of capacity and macroeconomic conditions. The outlooks and objectives included in this document are based on assumptions drawn from an examination of the regulatory environment, exchange rates, commodities, divestments, increases in production and installed capacity in markets where ENDESA operates, increased demand in these markets, assignment of production across different technologies, increased costs associated with higher activity yet not exceeding certain limits, electricity prices no less than certain levels, costs of combined cycle plants, availability and cost of raw materials and emission rights necessary to run our business at the desired levels.
In these statements, ENDESA is availed of the protection provided by the Private Securities Litigation Reform Act of 1995 of the United States of America with respect to forward-looking statements.
The following factors, in addition to those discussed elsewhere herein, could cause actual financial and operating results and statistics to differ materially from those expressed in our forward-looking statements: economic and industry conditions; liquidity and finance-related factors; operational factors; strategic, regulatory, legal, taxation, environmental, governmental and political factors; reputational factors; commercial or transactional factors.
Further details on the factors that may cause actual results and other developments to differ significantly from the expectations implied or explicitly contained herein are given in the Risk Factors chapter of ENDESA's regulated information filed with the Spanish Securities Exchange Commission (CNMV).
ENDESA cannot guarantee that the forward-looking statements herein will be fulfilled. Except as may be required by applicable law, neither ENDESA nor any of its subsidiaries intends to update these forward-looking statements.
You will find additional information on our 1Q 2018 Results on our website
www.endesa.com
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