TIDMELEQ
2008 RESULTS
Madrid, 26 February 2009
CONTENTS
Consolidated results
Results by business line
Business in Spain and Portugal
Business in Latin America
Statistical appendix
CONSOLIDATED RESULTS
Net income: Euro 7,169 million
ENDESA reported net income of Euro 7,169 million in 2008, an increase of Euro 4,494 million compared to 2007. This figure includes income from discontinued operations; i.e. capital gains from the sale of the Company's entire shareholding in Endesa Europe, and Los Barrios and Tarragona thermal plants in Spain, to E.On, in addition to income generated by these assets during the period of the year in which they were owned by ENDESA.
Stripping out discontinued operations, income from continuing operations attributable to ENDESA shareholders was Euro 2,371 million, an increase of 5.8% on 2007.
The table below shows a breakdown of income from continuing operations attributable to ENDESA shareholders by business unit.
NET INCOME FROM CONTINUING ACTIVITIES ATTRIBUTABLE TO ENDESA SHAREHOLDERS
Euro million % chg. 2007 % contr. to total
net incomefrom
continuing operations
Spain and Portugal 1,873 7.8 79.0
Latin America 506 7.4 21.3
Rest (1) NA (0.3)
TOTAL 2,371 5.8 100.0
Generation and electricity sales
ENDESA generated 149,831 GWh of power in 2008, excluding power produced by plants sold to E.On, 0.2% higher than in 2007.
Electricity sales, excluding power sold by the companies and assets sold to E.On, amounted to 170,294 GWh, a decline of 0.9%.
ELECTRICITY OUTPUT AND SALES 2008
Output Sales
GWh % chg. 2007 GWh % chg. 2007
Spain and Portugal 88,190 0.2 106,538 (2.6)
Latin America 60,690 0.1 62,805 1.9
Rest 951 8.1 951 8.1
TOTAL 149,831 0.2 170,294 (0.9)
Higher revenue (+26.4%), EBITDA (+8.3%) and EBIT (+13.3%) growth, despite rising generation costs
Generation costs rose sharply in 2008, mainly due to increases in fuel prices, and this in turn caused sale prices to rise in both the Spanish wholesale market and in Latin America during this period. In Spain, the increase in costs was also affected by the rise in the price of CO2 emission rights.
As a result, in 2008 ENDESA's revenues grew 26.4% whilst variable expenses increased by 47%, leading to an 8% increase in gross margin.
Fixed costs rose 7.3%, putting EBITDA at Euro 6,895 million, up 8.3% on 2007.
EBIT rose to Euro 5,234 million (+13.3%), as a result of higher EBITDA and the 5% drop in the depreciation and amortization charge. This decrease was due to a Euro 82 million provision included in the 2007 charge, recognised to restate to fair value CO2 emission rights acquired by the Group from third parties to cover its emissions deficit (Euro 58 million in 2008), and a Euro 32 million provision for the amortization of renewable energy assets, which were not amortized this year as they are classified as held for sale.
Revenues EBITDA EBIT
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Euro % chg. Euro % chg. Euro % chg.
million vs. 2007 million vs. 2007 million vs. 2007
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Spain and 13,489 31.3 3,930 3.7 2,834 6.4
Portugal
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Latin America 8,354 14.3 2,968 16.8 2,408 25.5
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Rest 993 101.8 (3) NA (8) NA
=----------------------------------------------------------------------
TOTAL 22,836 26.4 6,895 8.3 5,234 13.3
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Financial expense
ENDESA reported a financial expense of Euro 1,009 million in 2008, an increase of 8.9%.
However, the following two factors should be taken into account when comparing the two periods:
-- In 2007, the increase in interest rates caused a Euro 76 million gain
in this heading, due to the reduction in the present value of
provisions recognised on balance sheet, particularly those related to
early retirement programs; in 2008, this caused a Euro 28 million loss
in this heading.
-- Lower capitalization of financial expense of Euro 60 million in 2008
compared to 2007.
Discounting the effect of these two factors, the financial expense fell by 8.2% in 2008, despite higher interest rates during the first nine months of the year, as a result of the significant reduction in net debt in 2008.
Income from discontinued operations: Euro 4,884 million
ENDESA reported income from discontinued activities of Euro 4,884 million in 2008.
Pursuant to the agreement signed on 2 April 2007 between Enel, S.p.A., Acciona, S.A. and E.On AG, on 26 June 2008 ENDESA sold E.On its entire shareholding in Endesa Europa - excluding the trading business and assets located outside Italy, France, Poland and Turkey - and Los Barrios and Tarragona thermal plants in Spain.
The sale price for Endesa Europa was Euro 7,126 million, subject to possible adjustments for changes in the debt incurred by the companies sold occurring between 31 May 2008 and 25 June 2008. Furthermore, the buyer will assume the intra-group net debt balance outstanding at Endesa Europa vis-à-vis Endesa Financiación Filiales to the amount of Euro 1,159 million.
The agreed sale price for the Los Barrios and Tarragona power stations was Euro 769 million.
ENDESA recognised a gross capital gain on these sales of Euro 4,564 million.
The remaining income from discontinued operations relates to income generated by other assets disposed from the start of the year to the time of their sale.
Cash flow from operating activities: Euro 5,214 million
Cash flow from operating activities in 2008 amounted to Euro 5,214 million, down 1.9% on 2007.
This decrease was due entirely to the decline in cash flow generated by the European subsidiaries sold to E.On in June, as cash flow from activities in Spain and Portugal and Latin America increased.
CASH FLOW FROM OPERATING ACTIVITIES
Euro million % chg vs. 2007
Spain and Portugal 3,007 12.0
Latin America 1,965 9.1
Rest 242 (70.9)
TOTAL 5,214 (1.9)
Investment: Euro 4,150 million, 63.3% in Spain and Portugal
ENDESA's invested a total of Euro 4,150 million in 2008, excluding investment in assets held for sale. Of this figure, Euro 3,613 million was capex and investment in intangible assets with the remaining Euro 537 million deployed in financial investments; of this latter amount, Euro 324 million was used to buy out minority shareholders in Peruvian companies Edegel and Edelnor as a result of the ex post facto takeover bids resulting from Enel and Acciona taking control of ENDESA.
INVESTMENT(*)
Euro million
Capex and intangibles Financial TOTAL
Spain and Portugal 2,460 168 2,628
Latin America 1,074 368 1,442
Rest 79 1 80
TOTAL 3,613 537 4,150
(*) Excludes investment of Euro 595 million in the renewable energy assets to be contributed to a joint venture with Acciona.
ENDESA has been awarded 20% of ESB's generation assets, namely four plants with operational capacity of 1,068 MW and two sites. These assets were acquired in January 2009 at a cost of Euro 440 million.
Financial position
ENDESA had net debt of Euro 14,003 million at 31 December 2008, a reduction of Euro 6,831 million vs. 31 December 2007.
BREAKDOWN OF NET DEBT BY BUSINESS LINE
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Euro million
=----------------------------------------------------------------------
31-12-08 31-12-07 Difference % chg.
=----------------------------------------------------------------------
Business in Spain and Portugal 8,395 14,017 (5,622) (40.1)
=----------------------------------------------------------------------
Business in Latin America 5,271 5,570 (299) (5.4)
- Enersis Group 4,260 5,014 (754) (15.0)
- Other 1,011 556 455 81.8
=----------------------------------------------------------------------
Rest 337 1,247 (910) (73.0)
=----------------------------------------------------------------------
TOTAL 14,003 20,834 (6,831) (32.8)
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When assessing ENDESA's debt level, it must be remembered that at 31 December 2008, ENDESA had the recognised right to collect Euro 5,138 million in connection with several regulatory matters: Euro 3,034 million for financing the revenue shortfall from regulated activities and Euro 2,104 million in compensation for stranded costs in non-mainland generation. These receivables increased by Euro 1,753 million in 2008.
Stripping out these regulatory items, ENDESA's net debt at year-end 2008 was Euro 8,865 million.
The average cost of ENDESA's total debt was 6.37% in 2008, while the cost of the debt corresponding to the Enersis Group was an average 10.07%. Excluding Enersis Group debt, the average cost of ENDESA's debt was 4.87% in the period.
STRUCTURE OF ENDESA'S
NET DEBT
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ENDESA Enersis Total
and direct subsidiaries Group ENDESA Group
=----------------------------------------------------------------------------------------------------
Euro million % of total Euro million % of total Euro million % of total
=----------------------------------------------------------------------------------------------------
Euro 9,657 99 - - 9,657 69
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Dollar 67 1 1,917 45 1,984 14
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Other 19 - 2,343 55 2,362 17
currencies
=----------------------------------------------------------------------------------------------------
TOTAL 9,743 100 4,260 100 14,003 100
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Fixed rate 5,951 61 3,826 90 9,777 70
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Hedged 1,551 16 122 3 1,673 12
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Floating 2,241 23 312 7 2,553 18
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TOTAL 9,743 100 4,260 100 14,003 100
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Avg. life 4.3 5.1 4.6
(years)
=----------------------------------------------------------------------------------------------------
At 31 December 2008, ENDESA in Spain had liquidity of Euro 10,781 million, of which Euro 7,482 million corresponded to undrawn sums on unconditional credit lines. These balances are sufficient to cover the debt falling due over the next 39 months. However, at that date the Company's shareholders had not decided on the dividend to be paid against 2008 results. If we exclude from liquidity the Euro 6,243 million which the Company will use to pay the interim dividend on 2008 results approved by the Board of Directors on 20 February 2009, which includes distribution to shareholders of the entirety of the capital gains on the sale of assets to E.On, these balances are sufficient to cover the debt falling due over the next 14 months.
Meanwhile, the Enersis Group held cash and cash equivalents totalling Euro 1,488 million and Euro 610 million in undrawn, unconditional credit lines, covering debt maturities for the next 17 months.
As of the date of release of 2008 earnings, ENDESA's long-term debt ratings are A-, under review for a possible downgrade, at Standard & Poor's, A3 at Moody's and A at Fitch, all of them having a negative outlook.
Equity: Euro 20,764 million
ENDESA's consolidated equity was Euro 20,764 million at 31 December 2008, Euro 3,634 million more than at year-end 2007.
Of this amount, Euro 17,082 million was owned by ENDESA S.A. shareholders, and the remaining Euro 3,682 million corresponded to minority shareholders of Group companies.
Equity owned by ENDESA, S.A. shareholders has increased by Euro 5,093 million since 31 December 2007. This is mainly due to income obtained in 2008; the resolution adopted at the General Shareholders' meeting held on 30 June 2008 to pay a final dividend of Euro 1,091 million against 2007 results; exchange rate losses amounting to Euro 694 million in 2008 resulting from the depreciation of Latin American currencies against the Euro; and a Euro 291 million loss on the valuation of cash flow hedges and actuarial gains and losses on pension commitments generated in 2008.
Meanwhile, equity corresponding to minority shareholders of other Group companies has declined by Euro 1,459 million due to the effect of the factors detailed in the previous paragraph on these shareholders and the lower balance corresponding to them in the equity of the companies sold to E.On.
Financial leverage
At 31 December 2008, ENDESA had a leverage ratio of 67.4%, i.e. 54 percentage points lower than the ratio seen at year-end 2007, due mainly to the sale of assets to E.On.
Interim dividend against 2008 earnings
ENDESA's Board of Directors, at its meeting on 20 February 2009, agreed to pay shareholders an interim dividend charged against 2008 earnings of Euro 5.897 per share, bringing shareholder remuneration to Euro 6,243 million.
This interim dividend coincides with the total amount the Board of Directors will propose to the General Shareholders' Meeting as part of the agreement on the distribution of 2008 earnings.
This dividend includes the payment of 100% of the net capital gains obtained by the Group in 2008, which totalled Euro 4,556 million and Euro 1,687 million in dividends to be charged against ordinary profit. This represents a 12% increase on the total ordinary dividend paid to shareholders charged against 2007 earnings.
Accounting presentation criteria
As we have already mentioned, on 26 June ENDESA sold the bulk of its assets in Europe located outside the Iberian mainland, in addition to the Los Barrios and Tarragona power stations in Spain, to E.On.
In accordance with the commitments acquired by Acciona and Enel as shareholders of ENDESA, on 31 December 2008 Acciona and ENDESA were still working on the contribution of their renewable generation assets to a joint venture which was going to be at least 51%-owned by Acciona.
In accordance with IFRS 5, the renewable generation assets that on 31 December 2008 were included in this agreement and those sold to E.On are presented as follows:
-- The consolidated balance sheet recognises the renewable energy assets
that were going to be contributed to the joint venture with Acciona
(classified as assets held for sale) in a single heading called
"Assets held for sale and discontinued operations". The assets
classified under this heading are not depreciated.
The liabilities associated with these assets are also grouped under a single heading called "Liabilities associated with assets held for sale and discontinued operations".
The consolidated balance sheet at 31 December 2007 also recognises the assets and liabilities sold to E.On under these headings.
-- The consolidated income statement recognises the after-tax income
generated by the assets sold to E.On (classified as discontinued
operations) until the date of the sale, in addition to the net capital
gain generated in this operation, in a single heading called
"After-tax income from discontinued operations".
The consolidated income statement for 2007, which is presented here for comparative purposes, also records the income from the assets sold to E.On under this heading.
Income generated by the renewable energy assets to be contributed to the joint venture with Acciona are not included in this heading of the income statement as they are not considered to be discontinued operations, but are each included under their pertinent heading according to their nature.
-- In the cash flow statement each heading includes the cash flows from
assets reclassified as held for sale or discontinued operations.
Additionally, in 2008 ENDESA decided to change the accounting criteria used to consolidate jointly controlled investments. These investments were consolidated under the equity method until 31 December 2007. From 1 January 2008 they have been accounted for using proportionate consolidation.
The 2007 Consolidated Financial Statements presented for comparative purposes have been modified in relation to the originally issued statements, in order to restate these interests using proportionate consolidation.
RESULTS BY BUSINESS LINE
BUSINESS IN SPAIN AND PORTUGAL
Net income - Spain and Portugal: Euro 2,217 million
Net income from the business in Spain and Portugal was Euro 2,217 million in of 2008, Euro 432 million more than 2007. This figure includes income from discontinued activities, including both income from sale of Los Barrios and Tarragona plants to E.On and after-tax income from both of these plants until the date of their sale.
Stripping out the result of discontinued operations, net income from continuing activities attributable to ENDESA shareholders corresponding to business in Spain and Portugal was Euro 1,873 million in 2008, a rise of 7.8% vs. 2007.
EBITDA rose 3.7% to Euro 3,930 million and EBITadvanced 6.4% to Euro 2,834 million.
Highlights
2008 was marked by increasing procurement generation costs as a result of more expensive CO2 emission rights and higher fuel prices, although these fell sharply in the last few months of the year. The increase in generation costs triggered a 58.2% rise in average wholesale prices.
ENDESA sold 67.8% of its mainland output under the ordinary regime to deregulated customers: 16% in regulatory stipulated auctions and the remainder on the wholesale market.
Nonetheless, the revenues booked by applying the corresponding tariffs were reduced by Euro 422 million under Royal Decree Law 11/2007, which stipulates that the cost of CO2 emission rights be netted from generation sale prices.
At the present date, the enacting regulations for Royal Decree Law 11/2007 have yet to be passed. Accordingly, in calculating this deduction, ENDESA used the same formula approved by the Spanish government to calculate the deduction applicable in 2006 and 2007 in accordance with Royal Decree Law 3/2006.
However, ENDESA has appealed against the Ministerial Order approving the calculation method for the discount put forward in the Royal Decree 3/2006. In ENDESA's view, the discount established in Royal Decree 11/2007 should be eliminated, and, in particular, it should not be applied to sales carried out via bilateral contracts aimed at deregulated customers as these sales do not generate a deficit for the electricity system.
Despite the significant rise in generation costs, the electricity tariff increase approved was only 3.3% from 1 January 2008 and 5.6% from 1 July 2008. As a result, it is estimated that the 2008 sector-wide tariff deficit amounted to Euro 4,864 million. ENDESA stands to finance Euro 2,148 million of this amount.
Lastly, mainland electricity demand grew 1.3% in 2008. This growth in demand was met from a 20.4% increase in energy generated from renewable sources, which accounted for 23.9% of the total, and a 1.5% decrease in ordinary regime output.
Key operating highlights
Maintaining a position of leadership in the sector
ENDESA maintained its leadingposition in the Spanish electricity market in the year. The Company boasts a market share in ordinary regime generation of 32.2%; a 42.8% share of distribution; and a 43.1% share of sales to deregulated customers.
Competitive advantages in the generation business compared to the rest of the sector
Nuclear and hydro-powered energy represented 49.3% of the Company's mainland generation mix in 2008, compared to 30.5% for the rest of the sector. Furthermore, the load factor at its thermal facilities was also higher than that of its competitors: 59.8% compared to 45.1%.
Further improvements in quality of supply
The Company made further significant improvements in quality of supply in 2008, thereby continuing the positive trend seen over the past few years.
ENDESA's system average interruption index (SAIDI) for 2008 was 94 minutes, an 11% improvement.
These results have been achieved thanks to technical enhancements to ENDESA's network, topology and management systems, and the investments made by the Company in recent years.
Investment in renewable energies
In 2008, ENDESA inaugurated the Alto Palencia I and II wind farms in the province of Castellón with a combined capacity of 74 MW. These wind farms, in addition to the Mazorral, Cerro Rajola, Casillas I & II and Alto Palancia III wind farms (in which ENDESA holds stakes), form part of a 203 MW area known as "Zone 6" of the Valencia region's wind energy plan, which entails aggregate investment of more than Euro 200 million.
ENDESA is participating in this project with 498 MW of wind plant capacity divided between three areas. The Plan will be rolled out over the next two years and will require a total investment of more than Euro 500 million by the Company.
The construction and development of the wind farms is being carried out through Proyectos Eólicos Valencianos S.A. (in which ENDESA is the controlling shareholder).
Carbon credit purchases
Under the umbrella of its strategy to acquire carbon credits through participation in Clean Development Mechanism (CDM) projects carried out in developing countries, ENDESA has agreed to purchase 100% of the certified reductions in greenhouse gas emissions through to 2012 in three projects to be carried out at the Chinese company Jiangsu Shagang; this will involve CO2 emissions reductions of over five million tonnes in this period.
The reductions obtained through these projects are measured and verified by UN-accredited bodies and may be used to meet the greenhouse gas reduction targets set by the Kyoto Protocol for European companies.
Meanwhile, in September 2008, ENDESA acquired the United States company AHL (Asin Holdings Limited) for Euro 14 million. AHL is involved in identifying clean development projects which generate carbon dioxide (CO2) emission rights for companies which are affected by the Kyoto Protocol targets. ENDESA then transferred this company to Endesa Carbono, which is 82.5% owned by ENDESA, with the remaining 17.5% being owned by the previous owners of AHL. The corporate purpose of Endesa Carbono is to promote and develop projects which contribute to the reduction of CO2 emissions.
Revenues: Euro 13,489 million
ENDESA reported revenues of Euro 13,489 million from its business in Spain and Portugal in 2008, an increase of 31.3%. Of this amount, sales accounted for Euro 12,632 million, year-on-year growth of 28%.
SPAIN AND PORTUGAL SALES
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Euro million
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2008 2007 Difference % chg.
=-----------------------------------------------------------------------
Mainland generation under 5,072 4,056 1,016 25.0
Ordinary Regime
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Sales to deregulated customers 3,292 2,499 793 31.7
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Sales in auctions 827 252 575 228.2
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Sales in the OMEL 1,375 1,060 315 29.7
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Deductions under RDL (422) (24) (398) n/a
11/2007 and 3/2006
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Bilateral contact with Endesa - 269 (269) n/a
Distribut. price
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Renewable/CHP generation 380 253 127 50.2
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Regulated revenues from distribution 2,115 2,034 81 4.0
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Non-mainland generation and supply 2,890 2,302 588 25.5
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Supply to deregulated customers 179 305 (126) (41.3)
outside Spain
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Gas supply 1,203 714 489 68.5
=-----------------------------------------------------------------------
Regulated revenues from 62 59 3 5.1
gas distribution
=-----------------------------------------------------------------------
Other sales and services rendered 731 148 583 393.9
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TOTAL 12,632 9,871 2,761 28.0
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Mainland generation
ENDESA's Spain and Portugal electricity output totalled 88,190 GWh in 2008, 0.2% more than in 2007. Of this amount, 68,241 GWh corresponded to ordinary regime generation output, 0.9% lower than in 2007. In this period, ENDESA generated 3,587 GWh of energy from renewable sources, a year-on-year increase of 24.7%.
The average pool price was Euro 70.81/MWh during the period, up 52.7% vs. 2007.
ENDESA sold 13,985 GWh of power in auctions held in the year. At these auctions, the average sales price was Euro 61.47/MWh.
These prices, in addition to the 14.3% increase in the price applied to deregulated market customers, triggered a 25.0% rise in mainland generation sales under the ordinary regime compared to 2007, even though the revenue figure includes a deduction of Euro 422 million as a result of the application of Royal Decree 11/2007, compared to a deduction of Euro 17 million in 2007 for the same concept.
Supply to deregulated customers
ENDESA had 1,353,372 deregulated customers at year end: 1,236,781 in the Spanish mainland market, 116,212 in the non-mainland market and 379 in European deregulated markets other than Spain.
ENDESA sold a total of 47,705 GWh to these customers in 2008, an increase of 17.4%. Of this amount, 45,211 GWh was sold to the Spanish deregulated market, an increase of 23.5%, whilst 2,494 GWh was sold to other deregulated European markets, a decline of 37.9%.
Sales to deregulated customers in Spain (excluding tolls paid to Endesa Distribución) totalled Euro 3,582 million, a 34.8% increase on 2007. Of this amount, Euro 3,292 million corresponded to the mainland deregulated market and Euro 290 million to the non-mainland system.
Revenues from supply to deregulated European markets other than Spain amounted to Euro 179 million.
As stated earlier, the average selling price to end customers rose 14.3% in 2008.
CHP/renewables generation
Renewable and CHP generation companies fully consolidated by ENDESA produced 3,587 GWh in 2008. As stated earlier, this is an increase of 24.7%.
Revenues from sales of renewable/CHP energy generated by consolidated companies totalled Euro 380 million, 50.2% more than in 2007. EBITDA in this segment rose 70.2% to Euro 291 million.
Non-mainland generation
ENDESA's output in non-mainland systems was 15,002 GWh in 2008, representing year-on-year growth of 0.9%.
Related sales rose 16.0% to Euro 2,600 million, as sales prices internalised higher generation costs.
Distribution
ENDESA distributed 119,529 GWh of electricity in the Spanish market in 2008, growth of 1.2% on 2007.
Revenues from regulated distribution activities totalled Euro 2,115 million, up 4%.
Gas distribution and supply
ENDESA sold a total of 39,653 GWh of natural gas in Spain in 2008, up 19.3%. Of this amount, 37,744 GWh were sold on the deregulated market, an increase of 25.5%, whilst 1,909 GWh were sold on the regulated market, 39.5% lower than in 2007.
The 39,653 GWh sold in both the regulated and deregulated markets, together with the 26,258 GWh of gas consumed in ENDESA's own generation plants, amount to a total of 65,912 GWh, implying a market share of 14.7%.
Revenues from gas sales in the deregulated market rose to Euro 1,203 million. 68.5% up on 2007.
Other operating revenues
Other operating revenues in 2008 totalled Euro 857 million, up Euro 455 million on 2007.
This item includes Euro 605 million corresponding to the 2008 portion of CO2 emission rights allocated to ENDESA within the scope of the Spanish National Allocation Plan for emissions (NAP), which are recorded under revenues.
This figure is Euro 603 million higher than that recognised under revenues in 2007, due mainly to the sharp increase in the market price of these rights. However, this jump in revenues was fully offset by the higher expense recognised for the use of the emission rights allocated under the NAP.
Operating expense
The breakdown of operating expenses in the Spanish and Portuguese business in 2008 is provided below:
OPERATING EXPENSE IN
SPAIN AND PORTUGAL
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Euro million
=------------------------------------------------------------------------
Jan-Dec 2008 Jan-Dec 2007 Difference % chg.
=------------------------------------------------------------------------
Supplies and services 7,188 4,229 2,959 70.0
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Power purchases 2,044 1,032 1,012 98.1
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Fuel consumption 3,058 2,206 852 38.6
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Power transmission 623 517 106 20.5
expenses
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Other supplies 1,463 474 989 208.6
and services
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Personnel expenses 1,230 1,187 43 3.6
=------------------------------------------------------------------------
Other operating expenses 1,313 1,239 74 6.0
=------------------------------------------------------------------------
Depreciation and 1,096 1,127 (31) (2.8)
amortisation
charges
=------------------------------------------------------------------------
TOTAL 10,827 7,782 3,045 39.1
=------------------------------------------------------------------------
Power purchases
Power purchasesrose 98.1% year-on-year to Euro 2,044 million.
This growth reflects the impact of the increased cost of operating in the wholesale generation market as a result of the higher average pool price, as well as increased gas purchases for supply to the deregulated market, compounded by higher gas prices.
Fuel consumption
Despite the lower thermal output during the period, fuel consumption was Euro 3,058 million in 2008, an increase of 38.6%, as a result of the higher average cost of commodities over the year on the international markets.
Other supplies and services
Expenses under this heading totalled Euro 1,463 million in 2008, up Euro 989 million.
Of this amount, Euro 675 million relates to higher costs for CO2 emission rights for 2008 compared to the costs for 2007, basically as a result of the increased market price of such rights.
It should be noted that ENDESA has started to apply CERs relating to CDM projects to cover its emissions deficit. These rights are already in the Company's accounts in the pertinent international organisms and have triggered a substantial reduction in emission costs, in a context where the price of emission rights is rising.
Personnel and other fixed operating expenses
Fixed costs stood at Euro 2,543 million in 2008, an increase of 4.8% on 2007.
Personnel expenses rose 3.6% to Euro 1,230 million, with "Other fixed operating expenses" increasing 6% to Euro 1,313 million.
Depreciation and amortisation charges
Depreciation and amortisation charges amounted to Euro 1,096 million, Euro 31 million lower than in 2007. This decrease was the result of the recognition in 2007 of a Euro 82 million charge to restate the value of CO2 emission rights acquired from third parties to fair value at current market prices (Euro 58 million in 2008) and the fact that the renewable assets to be contributed to a joint venture in which Acciona will hold at least a 51% stake were not depreciated; in 2007, this amounted to Euro 32 million.
Financial expense: Euro 442 million
The financial expense in 2008 was Euro 442 million, 2% down on 2007.
This expense consists of net finance expenses of Euro 488 million, Euro 71 million higher than 2007, and net exchange-rate gains of Euro 46 million, compared to a net exchange-rate loss of Euro 34 million in 2007.
The exchange-rate differences relate mostly to the valuation of derivatives contracted by the Group to hedge exchange-rate risks relating to fuel purchases denominated in dollars, which do not meet IFRS requirements to be accounted for as hedges.
The Euro 71 million increase in the net finance expense is due to the Euro 76 million gain recorded under this heading in 2007 as a result of the reduction in the present value of provisions recognised, mainly to cover commitments under employment restructuring programs, as a result of the increase in the adjustment rate used between 31 December 2006 and 31 December 2007. However, the adjustment rate for these provisions at 31 December 2008 was lower than that at 31 December 2007, resulting in a negative impact on the net finance expense of Euro 28 million. Stripping out this effect, the net finance expense decreased by Euro 33 million (6.7%) despite the higher average costs of debt in 2008, due to the significant decrease in net debt during the year.
Net financial debt for the Spain and Portugal business at 31 December 2008 stood at Euro 8,395 million, down from Euro 14,015 million at year-end 2007. Of this amount, Euro 5,138 million was incurred to finance regulatory receivables: Euro 3,034 million to finance the revenue shortfall from regulated activities and Euro 2,104 million to fund the non-mainland generation deficit.
Cash flow from operating activities: Euro 3,007 million
Cash flow from the operating activities of the Spanish and Portuguese electricity business totalled Euro 3,007 million in 2008, an increase of 12%.
Investment: Euro 2,628 million
Investments in Spain and Portugal totalled Euro 2,628 million in 2008, 0.9% higher than in 2007. Of this figure, 90.7% corresponds to capex for the development or improvement of electricity generation and distribution facilities. ENDESA also invested Euro 595 million in renewable energy assets, which on 31 December 2008 were going to be contributed to the joint venture with Acciona in which the latter will hold a stake of at least 51%.
TOTAL INVESTMENT IN SPAIN AND PORTUGAL
Euro million
Jan-Dec 2008 Jan-Dec 2007 % chg.
Capex 2,384 2,352 1.4
Intangible 76 86 (11.6)
Financial 168 166 1.2
Total investments 2,628 2,604 0.9
CAPEX IN SPAIN AND PORTUGAL
Euro million
Jan-Dec 2008 Jan-Dec 2007 % chg.
Generation 1,012 1,007 0.5
Distribution 1,296 1,312 (1.2)
Other 76 33 130.3%
Total 2,384 2,352 1.4
(*) Excludes investment in the renewable energy assets that were going to be contributed to a joint venture with Acciona.
The breakdown of capex reflects the substantial effort the Company is making to improve service quality in Spain and to increase generation capacity.
BUSINESS IN LATIN AMERICA
Net income in Latin America: Euro 506 million
ENDESA's Latin America business reported a 7.4% year-on-year rise in net income in 2008 to Euro 506 million euros.
Highlights
In 2008, electricity demand in the countries where ENDESA operates varied unevenly, growing 9.2% in Peru, 2.9% in Argentina, 2.8 % in Brazil, 1.9% in Colombia, and 0.4% in Chile.
In total, ENDESA companies reported distribution sales of 62,805 GWh, up 1.9% on 2007. By country, there were especially significant increases in the markets of these companies in Peru (+7.7%) Colombia (+3.3%), and Brazil (+2.9%). These increases offset the drop in sales in the Chilean market (-3 %) caused by the unfavourable scenario for energy affecting this country in early 2008, which prompted the government to implement measures aimed at encouraging energy saving.
The generation business was still affected by natural gas supply problems and by high fuel costs in 2008, resulting in a sharp rise in the cost of thermal generation.
Accumulated output at ENDESA's subsidiaries was 60,690 GWh, an increase of 0.1% vs. 2007. Growth in Chile (+6.9%), Colombia (+8.1%) and Peru (+6.6%) offset the decline in output in Argentina (-13.6%) and Brazil (-14.3%).
OUTPUT AND SALES IN THE LATIN AMERICAN BUSINESS
=----------------------------------------------------------------
Output (GWh) Sales (GWh)
=----------------------------------------------------------------
Jan-Dec % chg vs. 2007 Jan-Dec 2008 % chg vs. 2007
2008
=----------------------------------------------------------------
Chile 21,266 6.9 12,535 (3.0)
=----------------------------------------------------------------
Argentina 14,350 (13.6) 16,159 2.1
=----------------------------------------------------------------
Peru 8,780 6.6 5,599 7.7
=----------------------------------------------------------------
Colombia 12,905 8.1 11,822 3.3
=----------------------------------------------------------------
Brazil 3,389 (14.3) 16,690 2.9
=----------------------------------------------------------------
TOTAL 60,690 0.1 62,805 1.9
=----------------------------------------------------------------
Improvement in generation and distribution margins
Lower rainfall in part of the year triggered higher load factors at the thermal plant. Continuing gas supply problems an increased use of liquid fuels which in turn pushed generation costs up.
Nonetheless, ENDESA's favourable generation mix in Latin America and higher sales prices in most of the markets where its subsidiaries operate led to a 34.8% increase in the unit margin to US$39/MWh. Significant increases in US$ were made in most countries: Chile (+53.2%), Brazil (+24.9%), Argentina (+19.9%) and Colombia (+18.8%). In contrast, in Peru, the higher thermal output, the backlog in the Camisea pipeline and the drop in the average sales price, due to changes in the customer mix, led to a 3.1% drop in the average unit margin for generation.
The unit margin for distribution stood at US$46.4/MWh, an increase of 13.4% on 2007. This rise is due to the improvement in unit margins in all countries, except Argentina, where the distribution company Edesur booked the retroactive impact of the tariff hike in 2007.
Reduction in distribution losses
Energy distribution losses were 10.8% to 31 December 2008, an improvement of 0.4 pp on the same period last year. Energy distribution losses in Brazil and Colombia improved compared to previous figures (up 1.2 pp and 0.6 pp, respectively).
New capacity development
In 2008 Endesa Chile made progress on the construction of the San Isidro II CCGT power plant which will have installed capacity of 377 MW. In January 2008, work on the second phase of the project was completed, adding 105 MW of new capacity and putting total installed capacity at 353 MW. The project is slated for completion in 2009.
Work also continued on the Aysén project, which entails the construction, starting in 2009, of five hydro plants with total installed capacity of 2,750 MW, the last of which is currently estimated to come on stream in 2023. Endesa Chile and Colbún hold stakes of 51% and 49%, respectively, in this project.
Construction work also began on two new power stations in Chile: the Bocamina II coal-fired plant, with an estimated installed capacity of 370 MW and slated to be commissioned in 2010, and the 250 MW open cycle TG Quintero gas plant, expected to come on stream in 2009.
Also in Chile, in June 2008 Endesa Eco opened the 9MW Ojos de Agua mini-hydro plant, and continued work on the 60MW Canela II wind farm project, both are scheduled for completion in 2009.
In Peru, in January 2008 a contract was won to expand the Santa Rosa plant by constructing a 187 MW open cycle. This is expected to come on stream in 2010.
In Colombia, the upgrade of the second unit of the Termocartagena plant was completed, adding 66 MW to the plant's current 142 MW capacity. In addition, through an auction, ENDESA secured payment of a reliability charge of US$13.998/MWh for the Quimbo hydro plant project, expected to come on stream at the end of 2013.
In Argentina, the raising of the Arroyito dam height allowed this hydraulic plant to increase its installed capacity by 8 MW.
Takeover bids for Peruvian subsidiaries
Subsequent to Enel and Acciona taking control of ENDESA in October 2007, ENDESA was required under Peruvian law to launch compulsory ex post facto takeover bids for the percentage of its three listed Peruvian subsidiaries that it did not control.
The operation was carried out through Generalima, a 100% owned ENDESA Group company, which acquired 23.78% of Edegel and 24% of Edelnor for an investment of Euro 324 million.
Regarding the takeover bid for Empresa Eléctrica de Piura, in December 2008 was stated a final price which values 24% of the company at Euro 26 million. At this time the company is analyzing different alternatives that Peruvian exchange rules offers in relation with the stakeholder position in that company.
Regulatory update
Brazil
On 15 March 2008, Ampla completed its annual tariff adjustment, implementing an average increase of 10.95% on the final price for customers, implying a 6.5% rise in DVA.
In April 2008, the tariff review for Coelce was completed with an average increase of 8.43% in the sales price for final customers, or a 7.4% rise in DVA.
Chile
The Unconventional Renewable Energy Law came into effect on 1 April. This legislation stipulates that 5% of total power must be generated from renewable sources between 2010 and 2014. This mandatory threshold will be increased by 0.5% per annum from 2015 to a maximum of 10% in 2024. This level will be maintained in subsequent years.
The rationing decree was repealed with effect from 1 September 2008. This move is expected to at least partially mitigate the fall in demand that occurred while the decree was in force.
"Nudo" (node) price applied from April through October 2008 was US$118.28/MWh implying an increase of 13.7% versus a year before.
On 1 August 2008, the "nudo" (node) price in pesos was increased by 10% (+5.2 pesos/kWh to 57.62 pesos/kWh), an extraordinary indexation due to exchange-rate trends. The node price in US$ fell by 3% to US$114.72/MWh.
Furthermore, the definitive node price report was published in October. This applies from November, with a monomial price of US$119.31/MWh on the 220kW Alto Jahuel node, up 4.9% on the extraordinary price set in August.
Peru
On 11 April 2008, Peruvian regulator released its proposed 'barra' price for setting tariffs in Peru between May 2008 and April 2009 of US$38.93/Mwh, an increase of 9.82% over the prevailing average benchmark price. Later, this price has been adjusted by US$/Peruvian Sol and fuel prices evolution. The average 'barra' price for 2008 was US$41.25/Mwh, 8% higher than 2007.
Similarly, on 2 May 2008, the Decree Law was passed setting the bases for efficient generation with renewable energy resources. This law establishes, among other issues, that renewable resources shall represent 5% of the country's total energy consumption in the next five years.
In June 2008, the decree law was passed temporarily limiting marginal costs arising from the backlog in the Camisea pipeline, as if this backlog did not exist. It is estimated that this backlog could be cleared during 2010.
Argentina
In August 2008, a new tariff structure was approved for Edesur effective from 1 July 2008. It marks the first increase for residential customers since 2002, when a tariff freeze was announced, and will only affect customers with a bi-monthly consumption of more than 650 KWh (24% of the total). Increases will range between 13% and 30% based on consumption. There will also be average tariff increases of 10% for industrial and business customers. For Edesur, this new tariff structure implies an 18% rise in DVA.
Colombia
The definitive WACC to be applied in the next tariff review was set in September. This will stand at 13.9% for distribution and 13% for transmission.
Also in September 2008, the resolution setting the methodology and prices for estimating unit distribution costs in the review of Codensa's tariffs was adopted.
EBITDA: Euro 2,968 million
EBITDA in ENDESA's Latin American business totalled Euro 2,968 million in 2008, a 16.8% increase on 2007. EBIT rose 25.5% to Euro 2,408 million.
EBITDA
& EBIT
IN THE LATIN
AMERICAN
BUSINESS
=----------------------------------------------------------------------
EBITDA (Euro million) EBIT (Euro million)
=----------------------------------------------------------------------
Jan-Dec Jan-Dec % chg. Jan-Dec Jan-Dec 2007 % chg.
2008 2007 2008
=----------------------------------------------------------------------
Generation 1,705 1,359 25.5 1,408 988 42.5
and
transmission
=----------------------------------------------------------------------
Distribution 1,314 1,236 6.3 1,065 994 7.1
=----------------------------------------------------------------------
Other (51) (54) n/a (65) (63) n/a
=----------------------------------------------------------------------
TOTAL 2,968 2,541 16.8% 2,408 1.919 25.5%
=----------------------------------------------------------------------
Earnings performance in the generation and distribution businesses reflect the risk mitigation and earnings stability created as a result of ENDESA's portfolio of holdings in the region.
BREAKDOWN OF EBITDA AND EBIT IN LATAM BY BUSINESS LINE
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Generation and transmission
=----------------------------------------------------------------------------------------------------------------------------------------------------------
EBITDA (Euro million) EBIT (Euro million)
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Jan-Dec 08 Jan-Dec 07 % chg. Jan-Dec 08 Jan-Dec 07 % chg.
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Chile 863 592 45.8 742 399 86.0
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Colombia 321 260 23.5 281 213 31.9
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Brazil 184 163 12.9 165 145 13.8
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Peru 134 145 (7.6) 83 96 (13.5)
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Argentina 118 120 (1.7) 75 73 2.7
=----------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL Generation 1,620 1,280 26.6 1,346 926 45.4
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Brazil-Argentina interconnection 85 79 7.6 62 62 -
=----------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL Generation and Transmission 1,705 1,359 25.5 1,408 988 42.5
=----------------------------------------------------------------------------------------------------------------------------------------------------------
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Distribution
=----------------------------------------------------------------------------------------------------------------------------------------------------------
EBITDA (Euro million) EBIT (Euro million)
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Jan-Dec 08 Jan-Dec 07 % chg. Jan-Dec 08 Jan-Dec 07 % chg.
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Chile 306 191 60.2 281 165 70.3
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Colombia 328 295 11.2 258 224 15.2
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Brazil 504 531 (5.1) 397 436 (8.9)
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Peru 95 88 8.0 70 60 16.7
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Argentina 81 131 (38.2) 59 109 (45.9)
=----------------------------------------------------------------------------------------------------------------------------------------------------------
TOTAL Distribution 1,314 1,236 6.3 1,065 994 7.1
=----------------------------------------------------------------------------------------------------------------------------------------------------------
Generation and transmission
Chile
Rising prices have pushed up fuel costs by 52.4%. However, the higher sales, node and spot prices and the heavier rainfall during the second half of the year boosted EBITDA and EBIT by 45.8% and 86% year-on-year, to Euro 863 million and Euro 742 million, respectively.
Colombia
The Colombian generation business reported EBITDA of Euro 321 million and EBIT of Euro 281 million in 2008, a year-on-year increase of 23.5% and 31.9%, respectively, due mainly to the higher gross margin on electricity sales resulting from the 8.1% increase in power generated and the higher sales prices in the system.
Brazil
ENDESA's subsidiaries in Brazil generated a total of 3,389 GWh in 2008, 14.3% less than in 2007. This was due to the lower rainfall in the first few months of the year and the drop in output at the Fortaleza plant as a result of gas supply problems.
However, high spot prices in the early months of the year provided a very significant boost to ENDESA's revenues from hydro generation in Brazil, driving EBITDA to Euro 184 million and EBIT to Euro 165 million in 2008, year-on-year growth of 12.9% and 13.8%, respectively.
Peru
ENDESA's subsidiaries in Peru generated total output of 8,780 GWh in 2008, 6.6% more than in 2007.
However, higher use of liquid fuels due to backlog at the Camisea pipeline with its higher price increased a 44.6% in global fuel costs, vs. a 6.2% increase in sales, resulted in a 7.6% drop in EBITDA to Euro 134 million and a 13.5% decline in EBIT to Euro 83 million.
Argentina
Output at ENDESA's subsidiaries in Argentina stood at 14,350 GWh in 2008, down 13.6% year-on-year, resulting in a 8.8% drop in sales.
This drop in sales due to lower rainfalls, in addition to the negative performance marked by the Argentine peso against the euro, triggered a drop in the gross margin. This stood at Euro 151 million, -0.7% year-on-year. EBITDA fell 1.7% to Euro 118 million and EBIT rose 2.7% to Euro 75 million.
The Argentina - Brazil interconnection
In the second quarter of 2008, Cien and Camesa signed an agreement to export power from Brazil to Argentina. The exports were made between May and August at a rate of up to 1,500 MW/month, with commitment of returning to Argentina the power imported between September and November at a rate of up to 2,000 MW/month.
As a result of this agreement, the interconnection registered a year-on-year increase of 7.6% in EBITDA to Euro 85 million in 2008, while EBIT was unchanged vs 2007 at Euro 62 million.
Distribution
Chile
The distribution business in Chile reported EBITDA of Euro 306 million, an increase of 60.2% year-on-year. Meanwhile, EBIT grew 70.3% to Euro 281 million.
A significant part of this growth is due to the approval of the Decree establishing substransmission tariffs in Chile with no retroactive effect. This led to a reversal of the Euro 55 million provision allocated to cover the potential application of this measure to years preceding 2008. Excluding the reversal of this provision and its allocation in 2007, EBITDA reported by the Chilean distribution business would have risen by 2% and EBIT by 2.7%.
Energy sales fell by 3% in 2008. This drop was due mainly to the rationing decree in effect between March and August designed to foster energy savings. The aim of this decree was to mitigate potential problems affecting energy production in the country.
However, the higher unit margin led to the aforementioned rises in EBITDA and EBIT.
Colombia
EBITDA and EBIT in the distribution business rose 11.2% and 15.2%, respectively, due mainly to higher sales volumes (+3.3%), and a more favourable indexation of tariffs to power purchase prices and revenues from ancillary services.
Brazil
The higher spot electricity price and increase in energy sales prompted a 17.3% rise in the cost of energy acquired. This higher cost was only partially passed on to the customer tariff, resulting in a 10.4% increase in sales. As a result EBITDA dropped 5.1% year-on-year to Euro 504 million, and EBIT fell 8.9% to Euro 397 million.
Peru
The unit margin in the distribution business remained virtually unchanged from 2007, with the 7.7% increase in electricity sold resulting in an 8.0% jump in EBITDA to Euro 95 million. EBIT totalled Euro 70 million, a rise of 16.7% year-on-year.
Argentina
EBITDA and EBIT both fell by Euro 50 million year-on-year. These decreases reflect the recognition in 2007 of Euro 40 million of prior year revenues in connection with the retroactive application to November 2005 of the tariff hike finally enacted that year.
Stripping out this effect, 2008 EBITDA and EBIT fell by 11% and 14.5% year-on-year, respectively. These declines are due to the inflation-linked increase in fixed costs, which was not offset by the corresponding tariff increase.
Financial expense: Euro 557 million
ENDESA's Latin American business generated a financial expense of Euro 557 million in 2008, Euro 80 million more than in 2007. Euro 27 million of this increase correspond to the higher negative exchange differences recorded in 2008 vs 2007 and the remaining Euro 53 million correspond to a higher net finance expense resulting from the higher average cost of debt.
Net debt at ENDESA's Latin American business stood at Euro 5,271 million at 31 December 2008, a reduction of Euro 299 million since year-end 2007.
Cash flow from operating activities: +9.1%
Cash flow generated by ENDESA's business in Latin America totalled Euro 1,965 million in 2008, an increase of 9.1% year-on-year.
Cash returns: Euro 269 million
Cash returns from ENDESA's Latin American business to the parent company in 2008 totalled Euro 269 million.
Investment: Euro 1,442 million
Investment in Latin America in 2008 totalled Euro 1,442 million, of which Euro 1,058 million corresponded to capex.
CAPITAL EXPENDITURE IN LATIN AMERICA
Euro million
Jan-Dec 2008 Jan-Dec 2007 % chg.
Generation 361 295 22.4
Distribution and Transmission 599 539 11.1
Other 98 41 141.5
TOTAL 1,058 875 20.9
The investment figure includes Euro 324 million corresponding to the acquisition of minority stakes in Peruvian subsidiaries as a consequence of the ex post facto takeover bids required after Acciona and Enel took control of ENDESA. Of this amount Euro 228 million corresponds to the acquisition of 23.78% of Edegel and the remaining Euro 96 million to the acquisition of 24% of Edelnor.
STATISTICAL APPENDIX
KEY FIGURES
Electricity Generation Output (GWh) Jan-Dec 2008 Jan-Dec 2007 % chg.
=-----------------------------------------------------------------------
Business in Spain and Portugal 88,190 88,006 0.2
=-----------------------------------------------------------------------
Business in Latin America 60,690 60,631 0.1
=-----------------------------------------------------------------------
Rest 951 880 8.1
=-----------------------------------------------------------------------
TOTAL 149,831 149,517 0.2
=-----------------------------------------------------------------------
Electricity Generation Output Jan-Dec 2008 Jan-Dec 2007 % chg.
in Spain and Portugal (GWh)
=-----------------------------------------------------------------
Mainland 71,828 71,736 0.1
=-----------------------------------------------------------------
Nuclear 26,112 24,652 5.9
=-----------------------------------------------------------------
Coal 24,256 30,703 (21.0)
=-----------------------------------------------------------------
Hydro 7,548 7,149 5.6
=-----------------------------------------------------------------
Combined cycle (CCGT) 9,897 5,975 65.6
=-----------------------------------------------------------------
Fuel oil 427 380 12.4
=-----------------------------------------------------------------
Renewables/CHP 3,587 2,877 24.7
=-----------------------------------------------------------------
Non-mainland 15,002 14,864 0.9
=-----------------------------------------------------------------
Portugal 1,360 1,406 (3.3)
=-----------------------------------------------------------------
TOTAL 88,190 88,006 0.2
=-----------------------------------------------------------------
Electricity Generation Output Jan-Dec 2008 Jan-Dec 2007 % chg.
in Latin America (GWh)
=-----------------------------------------------------------------
Chile 21,266 19,892 6.9
=-----------------------------------------------------------------
Argentina 14,350 16,606 (13.6)
=-----------------------------------------------------------------
Peru 8,780 8,237 6.6
=-----------------------------------------------------------------
Colombia 12,905 11,942 8.1
=-----------------------------------------------------------------
Brazil 3,389 3,954 (14.3)
=-----------------------------------------------------------------
TOTAL 60,690 60,631 0.1
=-----------------------------------------------------------------
Electricity sales (GWh) Jan-Dec 2008 Jan-Dec 2007 % chg.
=------------------------------------------------------------------
Business in Spain and Portugal 106,538 109,357 (2.6)
=------------------------------------------------------------------
Regulated market 61,327 72,746 (15.7)
=------------------------------------------------------------------
Deregulated market 45,211 36,611 23.5
=------------------------------------------------------------------
Business in Latin America 62,805 61,610 1.9
=------------------------------------------------------------------
Chile 12,535 12,923 (3.0)
=------------------------------------------------------------------
Argentina 16,159 15,833 2.1
=------------------------------------------------------------------
Peru 5,599 5,201 7.7
=------------------------------------------------------------------
Colombia 11,822 11,441 3.3
=------------------------------------------------------------------
Brazil 16,690 16,212 2.9
=------------------------------------------------------------------
Rest 951 880 8.1
=------------------------------------------------------------------
TOTAL 170,294 171,847 (0.9)
=------------------------------------------------------------------
Gas sales (GWh) Jan-Dec 2008 Jan-Dec 2007 % chg.
=------------------------------------------------------
Regulated market 1,909 3,153 (39.5)
=------------------------------------------------------
Deregulated market 37,744 30,085 25.5
=------------------------------------------------------
TOTAL 39,653 33,238 19.3
=------------------------------------------------------
Workforce 31-12-08 31-12-07 % chg.
=----------------------------------------------------------
Business in Spain and Portugal 13,590 13,627 (0.3)
=----------------------------------------------------------
Business in Latin America 12,896 12,256 5.2
=----------------------------------------------------------
Rest 101 2,124 (95.3)
=----------------------------------------------------------
TOTAL 26,587 28,037 (5.2)
=----------------------------------------------------------
FINANCIAL DATA
Key figures Jan-Dec 2008 Jan-Dec 2007 % chg.
=-----------------------------------------------
EPS (Euro) 6.8 2.5 168.0
=-----------------------------------------------
CFPS (Euro) 4.9 5.0 (1.9)
=-----------------------------------------------
BVPS (Euro) 16.1 11.3 42.5
=-----------------------------------------------
Net financial debt (Euro million) 31-12-08 31-12-07 % chg.
=-------------------------------------------------------------
Business in Spain and Portugal 8,395 14,015 (40.1)
=-------------------------------------------------------------
Business in Latin America 5,271 5,570 (5.4)
=-------------------------------------------------------------
Enersis 4,260 5,014 (13.5)
=-------------------------------------------------------------
Rest 1,011 556 81.8
=-------------------------------------------------------------
Rest 337 1,247 (73.0)
=-------------------------------------------------------------
TOTAL 14,003 20,832 (32.8)
=-------------------------------------------------------------
Financial leverage (%) 67.4 121.6 -
=-------------------------------------------------------------
"Rating" (25-02-09) Long term Short term Outlook
=-----------------------------------------------------------
Standard & Poor's A- A -2 Negative Review
=-----------------------------------------------------------
Moody's A3 P-2 Negative Review
=-----------------------------------------------------------
ENDESA's main fixed-income issues Spread over IRS (bp)
=------------------------------------------------------------
31-12-08 31-12-07
=------------------------------------------------------------
4.3Y GBP 400M 6.125% Mat June 2012 228 54
=------------------------------------------------------------
4.9Y Euro 700M 5.375% Mat. Feb. 2013 176 66
=------------------------------------------------------------
Stock market data 31-12-08 31-12-07 % chg.
=------------------------------------------------------------------
Market cap (Euro million) 30,280 38,486 (21.3)
=------------------------------------------------------------------
Number of shares outstanding 1,058,752,117 1,058,752,117 --
=------------------------------------------------------------------
Nominal share value (Euro) 1.2 1,2 --
=------------------------------------------------------------------
Stock market data Jan-Dec 2008 Jan-Dec 2007 % chg.
=--------------------------------------------------------------------------
Trading volumes (shares)
=--------------------------------------------------------------------------
Madrid stock exchange 235,640,055 3,149,755,082 (92.5)
=--------------------------------------------------------------------------
Average daily trading volume (shares)
=--------------------------------------------------------------------------
Madrid stock exchange 927,717 12,499,028 (92.6)
=--------------------------------------------------------------------------
Share price Jan-Dec 2008 high Jan-Dec 2008 low 31-12-08 31-12-07
=---------------------------------------------------------------------
Madrid stock 37.20 18.63 28.60 36.35
exchange
(Euro)
=---------------------------------------------------------------------
Dividends (Euros/share) Against 2008 earnings
=------------------------------------------------------
Interim dividend (16/03/09) (1) 5.897
=------------------------------------------------------
Final dividend (2)
=------------------------------------------------------
Total DPS (2) 5.897
=------------------------------------------------------
Pay-out (%) 87.1
=------------------------------------------------------
Dividend yield (%) 20.6
=------------------------------------------------------
(1)Approved by the Board of Directors on 20 February 2009
(2) Pending approval by the General Shareholders Meeting
Important legal disclaimer
This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements are not guarantees of future performance and they are subject to material risks, uncertainties, changes and other factors that may be beyond ENDESA's control or may be difficult to predict.
Forward-looking statements include, but are not limited to, information regarding: estimated future earnings; anticipated increases in wind and CCGTs generation and market share; expected increases in demand for gas and gas sourcing; management strategy and goals; estimated cost reductions; tariffs and pricing structure; estimated capital expenditures and other investments; estimated asset disposals; estimated increases in capacity and output and changes in capacity mix; repowering of capacity and macroeconomic conditions. The main assumptions on which these expectations and targets are based are related to the regulatory setting, exchange rates, divestments, increases in production and installed capacity in markets where ENDESA operates, increases in demand in these markets, assigning of production amongst different technologies, increases in costs associated with higher activity that do not exceed certain limits, electricity prices not below certain levels, the cost of CCGT plants, and the availability and cost of the gas, coal, fuel oil and emission rights necessary to run our business at the desired levels.
In these statements we avail ourselves 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 important factors, in addition to those discussed elsewhere in this document, could cause actual financial and operating results and statistics to differ materially from those expressed in our forward-looking statements:
Economic and industry conditions: materially adverse changes in economic or industry conditions generally or in our markets; the effect of existing regulations and regulatory changes; tariff reductions; the impact of any fluctuations in interest rates; the impact of fluctuations in exchange rates; natural disasters; the impact of more stringent environmental regulations and the inherent environmental risks relating to our business operations; the potential liabilities relating to our nuclear facilities.
Transaction or commercial factors: any delays in or failure to obtain necessary regulatory, antitrust, internal and other approvals for our proposed acquisitions, investments or asset disposals, or any conditions imposed in connection with such approvals; our ability to integrate acquired businesses successfully; the challenges inherent in diverting management's focus and resources from other strategic opportunities and from operational matters during the process of integrating acquired businesses; the outcome of any negotiations with partners and governments. Delays in or impossibility of obtaining the pertinent permits and rezoning orders in relation to real estate assets. Any delays in or failure to obtain necessary regulatory approvals, including environmental to construct new facilities, repowering or enhancement of existing facilities; shortages or changes in the price of equipment, materials or labour; opposition of political and ethnic groups; adverse changes in the political and regulatory environment in the countries where we and our related companies operate; adverse weather conditions, which may delay the completion of power plants or substations, or natural disasters, accidents or other unforeseen events; and the inability to obtain financing at rates that are satisfactory to us.
Political/governmental factors: political conditions in Latin America; changes in Spanish, European and foreign laws, regulations and taxes.
Operating factors: technical difficulties; changes in operating conditions and costs; the ability to implement cost reduction plans; the ability to maintain a stable supply of coal, fuel and gas and the impact of fluctuations on fuel and gas prices; acquisitions or restructurings; the ability to implement an international and diversification strategy successfully.
Competitive factors: the actions of competitors; changes in competition and pricing environments; the entry of new competitors in our markets.
Further details on the factors that may cause actual results and other developments to differ significantly from the expectations implied or explicitly contained in this document are given in the Risk Factors section of the current ENDESA Share Registration Statement filed with the Comisión Nacional del Mercado de Valores (the Spanish securities regulator or the "CNMV" for its initials in Spanish).
No assurance can be given that the forward-looking statements in this document will be realised. Except as may be required by applicable law, neither ENDESA nor any of its subsidiaries intends to update these forward-looking statements.
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