Consolidated Results for ENDESA for the First Nine Months 2001.Business Editors NEW YORK--(BUSINESS WIRE)--Nov. 7, 2001 Net Income was Euro 1.05 Billion (US$ 0.96 Billion), 6.1% Higher Than in the First Nine Months 2000 - Capital gains of Euro 508 million (US$ 462 million) on disposals, which include Euro 494 million (US$ 450 million) from the sale of the direct and indirect shareholdings in the Argentinean Edenor. - Provisions for Euro 87 million (US$ 79 million) to cover risks on regulation and market evolution in Spain. ENDESA's (NYSE NYSE See: New York Stock Exchange : ELE ELE equine leukoencephalomalacia. ) net income for the first nine months 2001 was Euro 1,047 million (US$ 953 million), an increase of 6.1% against year 2000. Earnings per share also rose 6.1% to Euro 0.99 (US$ 0.90). ENDESA's operations in the first nine months 2001 have been carried out in an environment characterised by the following: -- The abnormally ab·nor·mal adj. Not typical, usual, or regular; not normal; deviant. [Alteration (influenced by ab-1) of obsolete anormal, from Medieval Latin high levels of hydro hy·dro adj. Hydroelectric. n. pl. hy·dros 1. Hydroelectric power. 2. A hydroelectric power plant. generation in the first quarter in Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , which continue to have a significant impact on the cumulative figures for the domestic electricity business, even though they have normalised normalised - normalisation in the second and third quarter. -- The strong devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the Chilean peso and the Brazilian real against both the Euro and the US dollar which resulted in a lower Euro amount in the conversion of the results. -- The effects of the drought drought, abnormally long period of insufficient rainfall. Drought cannot be defined in terms of inches of rainfall or number of days without rain, since it is determined by such variable factors as the distribution in time and area of precipitation during and before in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , which led to implement a programme of severe restrictions on the consumption of electricity. -- Argentina's delicate financial situation Despite these negative circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or ENDESA's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was Euro 2,445 million (US$ 2,225 million), a 2.1 % increase on 2000, under homogeneous The same. Contrast with heterogeneous. homogeneous - (Or "homogenous") Of uniform nature, similar in kind. 1. In the context of distributed systems, middleware makes heterogeneous systems appear as a homogeneous entity. For example see: interoperable network. accounting criteria criteria (krītēr´ē  ),n. for CTCs. It is worth mentioning the 23.1% increase in the operating income from the international business in the third quarter despite the above mentioned negative conditions. The improvement mainly arises from the good performance of the generation activity in Chile Chile (chĭl`ē, Span. chē`lā), officially Republic of Chile, republic (2005 est. pop. 15,981,000), 292,256 sq mi (756,945 sq km), S South America, west of the continental divide of the Andes Mts. , which showed a 236% improvement in the first nine months of 2001 against 2000. DEVELOPMENT OF THE 2001-2005 STRATEGIC PLAN ENDESA has been developing the 2001-2005 Strategic Plan that was released last March, making progress in the fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. of its objectives: -- A continued reduction of operating costs operating costs npl → gastos mpl operacionales in the domestic electricity business, highlighting the positive effect of the good performance of the CTC CTC - Cornell Theory Center mechanism and the end of the uncertainties on their recovery, after last July July: see month. EU authorities decided not to consider them as state aids incompatible incompatible adj. 1) inconsistent. 2) unmatching. 3) unable to live together as husband and wife due to irreconcilable differences. In no-fault divorce states, if one of the spouses desires to end the marriage, that fact proves incompatibility, and a divorce with EU regulations. -- An improvement of the efficiency and productivity ratios in the Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of electricity business. At the end of September September: see month. 2001 55% of the target for savings contemplated in project genesis In the fictional Star Trek universe, Project Genesis was a process of rapidly terraforming worlds to make them suitable for settlement and food production. The idea of Project Genesis was first introduced in . had been achieved. -- ENDESA has continued to develop its program of disposals through the sale of its holding in the Argentinean Edenor, thereby reducing its exposure to the country, and the disposal of the electricity assets in Viesgo, awarded to the Italian Enel through a public auction for Euro 2.15 billion (US$ 1.96 billion), and which will materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. once the approvals from Spanish Spanish, river, c.150 mi (240 km) long, issuing from Spanish Lake, S Ont., Canada, NW of Sudbury, and flowing generally S through Biskotasi and Agnew lakes to Lake Huron opposite Manitoulin island. There are several hydroelectric stations on the river. and EU authorities are obtained. -- ENDESA has achieved its targets in the electricity generation in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). after the acquisitions of 30% of the French SNET n. 1. The fat of a deer.v. t. 1. The clear of mucus; to blow. , with an option to purchase a controlling stake in the future, and the Italian Elettrogen. This is bringing a significant rebalancing Rebalancing The process of realigning the weightings of one's portfolio of assets. Notes: For example, if your portfolio's proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting of ENDESA's country risk profile. -- The telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business is fulfilling the economic and financial targets established in its business plan, as a consequence of which AUNA's operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. has remained positive since May. All of the participated companies have substantially increased their customer bases, especially the Chilean Smartcom An earlier family of communications programs for PCs and Macs from Hayes. Versions emulated several terminals and supported a variety of protocols, including the Hayes V-series. . Basis for the Comparison of the Information Two significant issues need to be considered in order to compare the financial information for the first nine months 2001 with the previous year: Royal Decree decree, in law, decision of a suit in a court of equity. It is the counterpart in equity of the judgment in a court of law, although in those jurisdictions where law and equity have merged, judgment is sometimes used to include both. 2/2001 of February February: see month. the 2nd has changed both the accounting treatment and the period for the recovery of CTCs. Under the new regulations CTC revenues are accounted on a cash basis and the amortization of CTC-recoverable assets is extended from year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. 2007 to year-end 2010. Therefore, and in order to facilitate the analysis of the financial information and a homogeneous comparison of the accounts year-on-year, this note includes a pro-forma income statement for the first nine months of year 2000 in which the same accounting criteria used in the income statement of the first nine months of 2001 are applied, and which actually corresponds to the restated income statement for the year 2000 which was released on February 28th, 2001.
Main magnitudes from ENDESA's income statement
(Euro Million)
2001 2000 % chge. Pro-forma 2000(a) % chge
JANUARY-SEPTEMBER
Revenues 11,327 11,163 1.5 10,966 3.3
EBITDA 3,790 3,923 -3.4 3,740 1.3
Operating Income 2,449 2,512 -2.5 2,396 2.2
Net Income 1,047 987 6.1 1,031 1.6
Cash Flow 2,971 2,750 8.0 2,750 8.0
JULY-SEPTEMBER
Revenues 3,908 3,905 0.1 3,813 2.5
EBITDA 1,192 1,250 -4.6 1,186 0.5
Operating Income 748 753 -0.7 708 5.7
Net Income 290 324 -10.5 337 -13.9
Cash Flow 990 827 19.7 827 19.7
- (a) Under homogeneous accounting criteria regarding CTCs, that is,
incorporating the changes brought by Royal Decree 2/2001
Main magnitudes from ENDESA's income statement
(US$ Million)
2001 2000 % chge. Pro-forma 2000(a) % chge
JANUARY-SEPTEMBER
Revenues 10,306 10,157 1.5 9,978 3.3
EBITDA 3,449 3,570 -3.4 3,403 1.3
Operating Income 2,228 2,286 -2.5 2,180 2.2
Net Income 953 898 6.1 938 1.6
Cash Flow 2,703 2,502 8.0 2,502 8.0
JULY-SEPTEMBER
Revenues 3,556 3,553 0.1 3,469 2.5
EBITDA 1,085 1,137 -4.6 1,079 0.5
Operating Income 681 685 -0.7 644 5.7
Net Income 264 295 -10.5 307 -13.9
Cash Flow 901 752 19.7 752 19.7
- (a) Under homogeneous accounting criteria regarding CTCs, that is,
incorporating the changes brought by Royal Decree 2/2001
In order to analyse the income statement of the first nine months
2001 and its comparison with same period of 2000, both are broken down
into domestic and international businesses, as well as international
electricity business and telecoms and other businesses. The financial
statements for the domestic business include ENDESA's corporate
structure.
Domestic electricity International electricity
business business
Euro % chge. on % on Euro % chge. on % on
Mill. 2000 total Mill. 2000 total
JANUARY-SEPTEMBER
Revenues 7,377 2.6 65.1 3,694 2.3 32.6
Operating Income 1,463 2.0 59.7 1,025 6.0 41.9
EBITDA 2,275 0.6 60.0 1,502 3.0 39.6
Telecommunications and
other businesses
Euro % chge. on % on
Mill. 2000 total
JANUARY-SEPTEMBER
Revenues 256 53.3 2.3
Operating Income (39) -680.0 -1.6
EBITDA 13 -35.0 0.4
Domestic electricity International electricity
business business
US$ % chge. on % on US$ % chge. on % on
Mill. 2000 total Mill. 2000 total
JANUARY-SEPTEMBER
Revenues 6,712 2.6 65.1 3,361 2.3 32.6
Operating Income 1,331 2 59.7 933 6 41.9
EBITDA 2,070 0.6 60 1,367 3 39.6
Telecommunications and
other businesses
US$ % chge. on % on
Mill. 2000 total
JANUARY-SEPTEMBER
Revenues 233 53.3 2.3
Operating Income -35 -680 -1.6
EBITDA 12 -35 0.4
ANALYSIS OF RESULTS In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the above criteria on homogeneity Homogeneity The degree to which items are similar. , the analysis of the results of ENDESA and its domestic electricity business carried out below is based on the comparison of the data for the first nine months of 2001 with the pro-forma income statement for the same period 2000. 1 Operating Income ENDESA's revenues were Euro 11.33 billion (US$ 10.31 billion) in the first nine months 2001, a 3.3% rise on 2000. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become was Euro 3.79 billion (US$ 3.45 billion), 1.3% higher than last year. On the other hand, operating income was Euro 2.45 billion (US$ 2.23 billion), an increase of 2.2% against the first nine months 2000. When comparing the third quarter 2001 with the third quarter 2000 the increase is 5.7%. 1.1 Domestic electricity business Operating income for the domestic electricity business was Euro 1.46 billion (US$1.33 billion) in January-September 2001, an increase of 2.0% against the first nine months 2000. This increase corresponds to the net effect of several factors of which the following are highlighted: - Capital gains of Euro 508 million (US$ 462 million) on disposals, which include Euro 494 million (US$ 450 million) from the sale of the direct and indirect shareholdings in the Argentinean Edenor. - Provisions for Euro 87 million (US$ 79 million) to cover risks on regulation and market evolution in Spain. It is worth noting that the evolution of the above factors, and especially the hydro generation, has not been constant along the first nine months, having evolved towards more normalised levels at the end of the year. The table below shows the evolution by quarter of the above factors.
Q1 Q2 Q3 Total
Percentage of hydro
generation (%) 25.1 19.1 10.3 17.7
Market share of
generation in the
mainland (%) 39.2 47.7 47.5 44.8
Average revenue from
generation in mainland
(Euro cents / kWh) 2.93 3.46 4.09 3.53
CTC by technology
(Euro million) 149 78 (89) 138
Fuel costs (Euro million) 272 350 427 1,049
1.1.1 Revenues
Revenues for the domestic electricity business were Euro 7.38
billion (US$ 6.72 billion), an increase of 2.6% against the first nine
months of 2000. This figure is broken down as follows:
Euro million
30-9-01 30-9-00 Change % chge.
Sales 6,965 6,808 157 2.3
CTCs 201 198 3 1.5
Services 211 181 30 16.6
TOTAL 7,377 7,187 190 2.6
US$ million
30-9-01 30-9-00 Change % chge.
Sales 6,337 6,195 143 2.3
CTCs 183 180 3 1.5
Services 192 165 27 16.6
TOTAL 6,712 6,539 173 2.6
1.1.1.1 Sales
Sales were Euro 6.97 billion (US$ 6.34 billion), broken down as
follows:
Euro million
30-9-01 30-9-00 Change % chge.
Generation, mainland 2,280 2,409 (129) -5.3
Distribution and
transport, mainland 2,812 2,990 (178) -5.9
Supply 810 692 118 17.1
Trading 116 7 109 1,557.1
Extrapeninsular
systems(a) 628 595 33 5.6
Compensations for
extra costs in
extrapeninsular systems 265 92 173 188.0
Resettlements and others 54 23 31 134.8
TOTAL 6,965 6,808 157 2.3
(a) For a higher transparency and due to the particularities of
production and generation in the extrapeninsular systems, the
information on these activities is shown separately.
US$ million
0-9-01 30-9-00 Change % chge.
Generation, mainland 2,075 2,192 -117 -5.3
Distribution and
transport, mainland 2,559 2,721 -162 -5.9
Supply 737 630 107 17.1
Trading 106 6 99 1,557.10
Extrapeninsular
systems(a) 571 541 30 5.6
Compensations for
extra costs in
extrapeninsular systems 241 84 157 188
Resettlements and others 49 21 28 134.8
TOTAL 6,337 6,195 143 2.3
(a) For a higher transparency and due to the particularities of
production and generation in the extrapeninsular systems, the
information on these activities is shown separately.
Generation In the first nine months 2001, demand for electricity in the Spanish mainland Mainland. 1 Island (1991 pop. 14,150), 178 sq mi (461 sq km), N Scotland. The largest of the Orkney Islands, it is also called Pomona. Kirkwall, the seat of the Orkney Islands council area, is on the island. grew 5.9% against 2000. Still, the increase in production from the generation under the ordinary regime was only 3.7% as a result of the 22.6% rise in production from generators under the special regime. Despite the above rise, ENDESA's generation sales in the mainland were 5.3% lower as a consequence of the following: - Capital gains of Euro 508 million (US$ 462 million) on disposals, which include Euro 494 million (US$ 450 million) from the sale of the direct and indirect shareholdings in the Argentinean Edenor. - Provisions for Euro 87 million (US$ 79 million) to cover risks on regulation and market evolution in Spain. The following table shows the structure of the generation in the mainland for both ENDESA and the whole of the industry during the period:
Structure of electricity generation in the mainland in the first nine
months (%)
ENDESA Total industry
2001 2000 2001 2000
Nuclear 35.1 34.2 34.9 35.3
Coal 43.1 50.7 35.2 44.9
Hydro 17.7 10.9 25.5 14.6
Oil Gas 4.1 4.2 4.4 5.2
Total 100.0 100.0 100.0 100.0
Distribution and Transmission ENDESA distributed 56,502 GWh in the mainland in the first nine months 2001, a 4.2% rise on the same period 2000. Despite this increase, revenues from transmission and distribution in the mainland decreased by Euro 178 million (US$ 162 million), mainly as a consequence of the following: - Capital gains of Euro 508 million (US$ 462 million) on disposals, which include Euro 494 million (US$ 450 million) from the sale of the direct and indirect shareholdings in the Argentinean Edenor. - Provisions for Euro 87 million (US$ 79 million) to cover risks on regulation and market evolution in Spain. Supply In the first nine months of 2001, ENDESA sold 16,572 GWh to eligible customers, an increase of 10.6% against 2000. Revenues from the supply activity were Euro 810 million (US$ 737 million), an increase of 17.1% against 2000, as a result of both higher physical sales and a higher average price of electricity sold. Extrapeninsular Systems ENDESA's production in the extrapeninsular systems for the period was 8,069 GWh. Total distribution volume was 8,440 GWh, 6.8% higher than in 2000. The difference between generation and distribution figures is due to the purchases of electricity from special regime generators. Revenues from these markets were Euro 628 million (US$ 571 million), an increase of 5.6% against 2000. Besides, Euro 265 million (US$ 241 million) were accounted as compensations. This amount includes an additional Euro 174 million (US$ 158 million) which were provisionally pro·vi·sion·al adj. Provided or serving only for the time being. See Synonyms at temporary. n. 1. A person hired temporarily for a job, typically before having taken an examination qualifying the person for permanent included in the tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic for the year 2001, and which correspond to the company's estimate for the higher fuel costs incurred in the period and whose recovery is expected during the year. Of the latter amount, 50% has been offset in the income statement by an operating provision, as its collection would imply a lower CTC revenue for 50% of its amount. The remaining 50% have been offset by an extraordinary provision following a criterion
1.1.1.2 CTC CTC revenues for the period were Euro 201 million as shown below:
Euro million
30-9-01 30-9-00 Change
Technology 138 107 31
Coal 63 91 (28)
Total 201 198 3
US$ million
30-9-01 30-9-00 Change
Technology 126 97 28
Coal 57 83 -25
Total 183 180 3
The higher amount of technology CTCs, as defined by Royal Decree 2/2001 is due to the fact that, because of a settlement system by differences, lower pool prices bring higher CTC revenues. The lower amount of coal CTCs is due to a smaller amount of generation using domestic coal in the first nine months 2001 as a consequence of the higher levels of hydro generation in the first quarter. 1.1.2 Operating Costs Operating costs for the period rose 2.4% against last year, as shown below:
Euro million
30-9-01 30-9-00 Change % chge.
Purchases 4,079 3,908 171 4.4
Purchases of energy 2,801 2,702 99 3.7
Fuel 1,049 995 54 5.4
Transmission and other
external expenses 229 211 18 8.5
Depreciation 812 827 (15) (1.8)
Provisions 48 74 (26) (35.1)
Personnel and other
operating costs 1,071 1,059 12 1.1
TOTAL 6,010 5,868 142 2.4
US$ million
30-9-01 30-9-00 Change % chge.
Purchases 3,711 3,556 156 4.4
Purchases of energy 2,549 2,459 90 3.7
Fuel 954 905 49 5.4
Transmission and other
external expenses 208 192 16 8.5
Depreciation 739 752 (14) (1.8)
Provisions 44 67 (24) (35.1)
Personnel and other
operating costs 975 964 11 1.1
TOTAL 5,468 5,339 129 2.4
Purchases Purchases showed an increase of Euro 171 million (US$ 155 million) in absolute and 4.4% in relative terms against last year, mainly as a consequence of the following: -- Purchases of energy were higher by Euro 99 million (US$ 90 million), representing 3.7% above last year. The reasons for this increase were: - Capital gains of Euro 508 million (US$ 462 million) on disposals, which include Euro 494 million (US$ 450 million) from the sale of the direct and indirect shareholdings in the Argentinean Edenor. - Provisions for Euro 87 million (US$ 79 million) to cover risks on regulation and market evolution in Spain. Once the above effects have been discounted, the purchases of energy decreased by Euro 111 million (US$ 101 million) in the period against last year, as the 11% lower pool price for the electricity purchased for distribution and supply was partially offset by the increase of the amount of energy sold to eligible and regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. customers and by the higher cost brought by the higher proportion of energy purchased from generators under the special regime. It is important to highlight that these generators, who receive a substantially higher price for their electricity, accounted for 15.5% of sales to the system in the period against 13.4% last year. -- The amount for fuel purchases rose by Euro 54 million (US$ 49 million), a 5.4% increase over 2000. The amount would remain similar to previous year levels if the effect of the purchases from CARBOEX - not consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: in the third quarter 2000 - and ENDESA Energia Energia also called RKK Energia formerly OKB-1 Russian aerospace company that is a major producer of spacecraft, rockets, and missiles. Energia originated in 1946 as a department within a Soviet institute conducting work on long-range missiles. , for the amount of Euro 56 million (US$ 51 million), is disregarded dis·re·gard tr.v. dis·re·gard·ed, dis·re·gard·ing, dis·re·gards 1. To pay no attention or heed to; ignore. 2. To treat without proper respect or attentiveness. n. . Still, it is important to point out that a significant difference took place in the evolution of fuel costs in the mainland against those in extrapeninsular systems. Fuel costs for the extrapeninsular generation rose by Euro 46 million (US$ 42 million), 15.0%, as a result of higher oil prices, while, for the generation in the mainland, fuel costs dropped by Euro 53 million (US$ 48 million) due to a lower thermal thermal /ther·mal/ (ther´m'l) pertaining to or characterized by heat. ther·mal adj. 1. Of, relating to, using, producing, or caused by heat. 2. generation activity. -- Energy transmission and other external costs rose 8.5% mainly as a consequence of accounting for the access charges paid by ENDESA Energia for the sales to eligible customers, as well as other costs from trading and services to third parties, all of which are on the other hand reflected as higher revenues. b) Provisions In the year 2000, the industry's revenues from regulated activities were not sufficient to pay the CTCs linked to the consumption of domestic coal. As a consequence, ENDESA accounted revenues for these CTCs, but, at the same time, and following a prudent accounting policy, created a provision for Euro 65 million (US$ 59 million) to cover the amount that had not been collected. In the first nine months of 2001 an amount of Euro 54 million (US$ 49 million) was collected, that is, practically all of the coal premia Premia is a comune (municipality) in the Province of Verbano-Cusio-Ossola in the Italian region Piedmont, located about 140 km northeast of Turin and about 40 km northwest of Verbania, on the border with Switzerland. not collected in the year 2000. Therefore a reversion reversion: see atavism. of the above provision was made. On the other hand, a provision charge for Euro 87 million (US$ 79 million) was made to cover 50% of the revenues as higher compensations to extrapeninsular affiliates against the ones contemplated in the tariff, since their recognition and collection might imply lower CTC revenues in the amount of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 50% of the recognised amount, as stated above. 1.1.2.1 Personnel and other Operating Expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. As of 30 September 2001, workforce in the domestic electricity business was 15,432 employees, a decrease of 1,307 against the end of 2000. Personnel costs for the period amounted to Euro 660 million (US$ 600 million), 1.1% higher than last year. This increase was caused by the salary review of the current year and the impact of the salary review for the year 2000 to compensate for the higher than expected inflation. On the other hand, other operating expenses were Euro 411 million (US$ 374 million), an increase of Euro 5 million (US$ 5 million) or 1.2%, against the first nine months 2000. The balance of this account in 2001 includes Euro 22 million (US$ 20 million) corresponding to the increase in costs from other activities, mainly from services to third parties. Disregarding dis·re·gard tr.v. dis·re·gard·ed, dis·re·gard·ing, dis·re·gards 1. To pay no attention or heed to; ignore. 2. To treat without proper respect or attentiveness. n. this effect, the balance of other operating expenses would be lower by Euro 17 million (US$ 16 million), a decrease of 4.2% against last year. 1.1.3 Operating Income by Line of Business The table below shows the breakdown breakdown /break·down/ (brak´doun) 1. the act or process of ceasing to function. 2. an often sudden collapse in health. 3. loss of self-control. of the operating income for the domestic electricity business by its different activities. Figures below include the result from the corporate structure.
Euro million
Change
30-9-01 30-9-00 Amount %
Generation 935 971 (36) -3.7%
Distribution 537 530 7 1.3%
Supply (9) (67) 58 86.6%
Operating Income 1,463 1,434 29 2.0%
US$ million
Change
30-9-01 30-9-00 Amount %
Generation 851 884 (33) -3.70%
Distribution 489 482 6 1.30%
Supply -8 -61 53 86.60%
Operating Income 1,331 1,305 26 2.00%
The table above shows a slight 1.3% increase in the operating income for distribution and a 3.7% drop in generation as a result of lower average revenues and output levels. On the contrary, operating income for supply shows a considerable improvement as a consequence of the higher end Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. prices for eligible customers and the lower cost of energy purchased in the pool. 1.2 International Electricity Business Operating income for the international electricity business in the period was Euro 1,03 billion (US$ 0.94 billion), an increase of 6.0% against last year. In the year 2000, ENDESA sold all of its holdings in the Chilean company Transelec, which was fully consolidated in the first nine months 2000 with an operating income of Euro 64 million (US$ 58 million). On the other hand, the operating income was impacted by an additional Euro 64 million (US$ 58 million) from the effect of the lower equivalent in Euro of the operating income from the foreign affiliates as a result of the devaluation of their local currencies. Should the effect of the above two factors be discounted to allow a homogeneous year-on-year comparison, the increase in operating income would have been 19.2%. The table below shows the performance of the EBITDA and operating income broken down by activity and their comparison against the previous year:
Euro million
EBITDA Operating income
30-9-01 30-9-00 % chge. 30-9-01 30-9-00 %chge.
Generation 719 584 23.1 491 360 36.4
Distribution and
transmission 784 769 2.0 541 537 0.7
Other (a) (1) 106 N/A (7) 70 NIA
Total 1,502 1,459 3.0 1,025 967 6.0
(a) Figures for 2000 include ENERSIS's holding in Transelec, which was
later sold.
US$ million
EBITDA Operating income
30-9-01 30-9-00 % chge. 30-9-01 30-9-00 %chge.
Generation 654 531 23.1 447 328 36.4
Distribution and
transmission 713 700 2 492 489 0.7
Other (a) (1) 96 N/A -6 64 NIA
Total 1,367 1,328 3 933 880 6
(a) Figures for 2000 include ENERSIS's holding in Transelec, which was
later sold.
It is important to highlight the good performance of the generation business with an operating income of Euro 491 million (US$ 447 million), 36.4% higher than in 2000. The table below shows EBITDA, operating income for the activities of generation, transmission and distribution in the first nine months 2001 and their comparison against 2000, broken down by country where ENDESA has fully consolidated affiliates.
Euro million
EBITDA Operating income
30-9-01 30-9-00 % chge 30-9-01 30-9-00 % chge
Generation
Chile 286 157 82.2 205 61 236.1
Colombia 143 143 0.0 98 99 -1.0
Argentina 135 120 12.5 64 67 -4.5
Brazil 50 62 -19.4 41 51 -19.6
Peru 105 102 2.9 83 82 1.2
TOTAL Generation 719 584 23.1 491 360 36.4
Distribution and
Transmission
Chile 165 167 -1.2 147 150 -2.0
Colombia 113 117 -3.4 53 58 -8.6
Argentina 267 233 14.6 178 152 17.1
Brazil 167 186 -10.2 113 132 -14.4
Peru 72 66 9.1 50 45 11.1
TOTAL
Distribution
and
Transmission 784 769 2.0 541 537 0.7
US$ million
EBITDA Operating income
30-9-01 30-9-00 % chge 30-9-01 30-9-00 % chge
Generation
Chile 260 143 82.2 187 56 236.1
Colombia 130 130 0 89 90 -1
Argentina 123 109 12.5 58 61 -4.5
Brazil 45 56 -19.4 37 46 -19.6
Peru 96 93 2.9 76 75 1.2
TOTAL Generation 654 531 23.1 447 328 36.4
Distribution and
Transmission
Chile 150 152 -1.2 134 136 -2
Colombia 103 106 -3.4 48 53 -8.6
Argentina 243 212 14.6 162 138 17.1
Brazil 152 169 -10.2 103 120 -14.4
Peru 66 60 9.1 45 41 11.1
TOTAL
Distribution
and
Transmission 713 700 2 492 489 0.7
The above figures show the impact that the drought and the subsequent rationing rationing, allotment of scarce supplies, usually by governmental decree, to provide equitable distribution. It may be employed also to conserve economic resources and to reinforce price and production controls. , together with the depreciation of the Brazilian Real The real (IPA: [xe'aw] or [ʁe'aɫ], symbol: R$, ISO 4217 code: BRL, plural: reais) is the currency of Brazil. It is also the name of the earliest Brazilian currency (see from the Colonial period to 1942. , have had on ENDESA's results in Brazil, with a 19.6% drop in the operating income for generation and 14.4% for distribution. Still the above negative impacts have been greatly compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. by the higher operating income from generation in Chile as a result of higher production levels, higher selling prices and the improvement in efficiency. On the other hand, independently from the specific effects which the situation in each country has on the development of the business, it is important to point out that in general, in all of the countries and businesses where ENDESA has a presence in Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , the development of Project Genesis is leading to an improvement in the efficiency which compensates the effects of an economic situation that is less favourable than expected. This is highlighted by the fact that total workforce for the international electricity business as of 30 September 2001 was 10,766 employees, a decrease of 404 against 31 December December: see month. 2000. The measures which have been implemented within the framework of Plan Genesis have allowed savings in costs and investments in annual terms of US$ 463 million (US$ 421 million) as of 30th September, representing 55% of the final target. The table below shows the physical magnitudes for generation and distribution by country and their comparison against 2000.
Generation (GWh) Distribution (GWh)
2001 % chge. on 2000 2001 % chge. on 2000
Chile 11,924 8.8 7,105 5.5
Colombia 7,782 2.9 6,438 -1.8
Argentina 8,409 6.8 9,853 3.5
Brazil 1,827 -28.8 9,267 -7.2
Peru 3,189 19.1 2,760 3.3
TOTAL 33,131 4.7 35,424 -0.1
1.3. Telecommunications and Other Businesses Telecommunications and new businesses showed an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of Euro 25 million (US$ 23 million) in the first nine months of 2001. The first nine months of 2000 showed an operating loss of Euro 5 million (US$ 5 million). Still, it is not possible to compare both results as this line of business incorporates, since 1st January January: see month. 2001, the result of the Chilean mobile telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. operator Smartcom, while financial statements for the year 2000 incorporated its results since the month of July. On the other hand, this company has achieved a growing penetration The successful unauthorized breach of a security perimeter. See penetration test. in the Chilean market reaching a market share of 10.9% at the end of September 2001, against 6.5% at the end of September 2000, and a customer base of 670,000, an amount 235% higher than one year ago. As for the new businesses, a negative result of Euro 15 million (US$ 14 million) is mainly due to the fact that these are activities in a maturing phase. The results for telecommunications and new businesses are broken down as follows:
Euro million
Telecommunications (42)
Gas 13
Cogeneration and
renewables 8
New businesses (15)
Structure costs and others (3)
TOTAL (39)
Euro million
Telecommunications -38
Gas 12
Cogeneration and renewables 7
New businesses -14
Structure costs and others -3
TOTAL -35
2 FINANCIAL RESULTS
The first nine months of 2001 show a net financial loss of Euro
1.09 billion (US$ 0.99 billion) as shown below:
Euro million
2001 2000 Change % change
Financial expenses (1,237) (1,254) 17 -1.4
Financial income 139 173 (34) -19.6
FX differences (100) 39 (139) N/A
Monetary correction 110 150 (40) -26.7
Change in provisions 3 (32) 35 N/A
Total financial results (1,085) (924) (161) 17.4
US$ million
2001 2000 Change % change
Financial expenses -1,126 -1,141 15 -1.4
Financial income 126 157 -31 -19.6
FX differences -91 35 -126 N/A
Monetary correction 100 136 -36 -26.7
Change in provisions 3 -29 32 N/A
Total financial results -987 -841 -146 17.4
2.1 Financial Expenses Financial debt as of 30th September 2001 was Euro 24.22 billion (US$ 22.04 billion), an increase of 2.29 billion (US$ 2.08 billion) against 31st December 2000. This increase was mainly due to the important investments made by ENDESA in Europe during the period. On the other hand, this increase is similar to the amount of debt reduction that will take place once the sale of Viesgo to Enel materialises. This will place the debt at similar levels as at the end of 2000. Despite the increase in debt, financial expenses for the period decreased by Euro 17 million (US$ 16 million), that is, 1.4% against the first nine months 2000. This reduction comes as a consequence of the lower average cost of debt, which has gone down from 6.36% in January-September 2000 to 5.94% for the same period this year. The decrease in interest rates over the last months both for the Euro and the US dollar, and taking into account ENDESA's hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. policy, may ensure that the average cost of debt for both the years 2001 and 2002 will be lower than for the first nine months 2001. The following table shows a breakdown of debt and its average cost by line of business:
Debt as of Avg.cost Jan-
30-9-01 Sep. 2001
Domestic electricity
business 11,767 4.58%
International
electricity business 10,884 7.24%
Telecommunications and
other businesses 1,573 6.13%
TOTAL Group 24,224 5.94%
US$ Million Debt as of Avg. cost Jan-
30-9-01 Sep. 2001
Domestic electricity business 10,707 4.58%
International electricity business 9,903 7.24%
Telecommunications and
other businesses 1,431 6.13%
TOTAL Group 22,041 5.94%
2.2 Foreign Exchange Differences
The following table shows the strong deprecations that the Chilean
peso and the Brazilian real suffered against the Euro and the US
dollar during the period:
% depreciation
US dollar Euro
Chilean peso 21.2 18.9
Brazilian real 36.5 34.0
The devaluation against the US dollar has a negative impact on the financial statements in local currencies of the affiliates in their countries, as it increases the balance of their dollar-denominated debt; also, the devaluation against the Euro has an impact on ENDESA's consolidated statements by reducing the value in Euro of both their assets and their results. The above effects have had a negative impact of Euro 804 million (US$ 732 million) on ENDESA's equity through the "Foreign exchange differences" account. Additionally, the impact on the income statement was Euro 100 million (US$ 91 million), with an effect on net income after taxes and minorities of Euro 30 million (US$ 27 million). 3 Equity Income Losses attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to ENDESA under the equity method were Euro 83 million (US$ 76 million) for the period. The largest component of the equity losses is the one corresponding to AUNA AUNA Auditory Neuropathy, Autosomal Dominant 1 , with a loss of Euro 120 million (US$ 109 million), although it should be noted that the loss for the third quarter was 36% lower than the previous two quarters. This positive performance is due to a significant improvement of its magnitudes, in line with the objectives set by the 2001-2005 Strategic Plan, to the point that it has remained EBITDA positive since May, with a cumulative positive EBITDA of Euro 26 million (US$ 24 million) to 30th September 2001. Besides, it is important to point out the growth in the customer bases of the companies that integrate the holding. On the other hand, ENDESA has increased its holding in REPSOL REPSOL Refinería Española de Petróleo, Sociedad Limitada (Spain Petroleum Refinery) to 3%, thereby accounting the company under the equity method, with a positive result of Euro 18 million (US$ 16 million). The rest of the equity income attributable to ENDESA corresponds mainly to the positive results from Aguas de Barcelona Barcelona (bär'səlō`nə, Catalan bär'səlō`nə, Span. bär'thālō`nä), city (1990 pop. 4,738,354), capital of Barcelona prov. and chief city of Catalonia, NE Spain, on the Mediterranean Sea. and Red Electrica de Espana. 4 Extraordinary Results Extraordinary results for the period were Euro 426 million (US$ 388 million). Its main components were: - Capital gains of Euro 508 million (US$ 462 million) on disposals, which include Euro 494 million (US$ 450 million) from the sale of the direct and indirect shareholdings in the Argentinean Edenor. - Provisions for Euro 87 million (US$ 79 million) to cover risks on regulation and market evolution in Spain. 5 Information by Line of Business The table below shows the main parameters of the income statement and balance sheet of the first nine months 2001 by line of business.
Euro million
Revenues Operating Net Fixed Assets
Income Income
Generation 3,083 788 394 8,463
Distribution 3,670 540 212 6,790
Supply 831 31 15 25
International 3,694 1,025 535 13,130
Telecommunications and
other businesses 256 (39) (133) 666
Services 156 24 12 48
Corporate Structure 358 96 12 90
US$ million
Revenues Operating Net Fixed Assets
Income Income
Generation 2,805 717 359 7,700
Distribution 3 491 193 6,178
Supply 756 28 14 23
International 3,361 933 487 11,947
Telecommunications and
other businesses 233 -35 -121 606
Services 142 22 11 44
Corporate Structure 326 87 11 82
6 Cash Flow and Investments Cash flow for the period was Euro 2.97 billion (US$ 2.70 billion), 8.0% higher than in 2000. Cash flow, together with the Euro 948 million (US$ 863 million) obtained from disposals, covered all of the investments made for an amount of Euro 3.92 billion (US$ 3.60 billion). Dividends paid against results from year 2000 were Euro 687 million (US$ 625 million). Payments of provisions, mainly from externalisation n. 1. embodying in an outward form. Noun 1. externalisation - attributing to outside causes externalization ascription, attribution - assigning to a cause or source; "the attribution of lighting to an expression of God's wrath"; "he of pension and workforce restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). liabilities, for Euro 1.23 billion (US$ 1.12 billion), of which Euro 539 million (US$ 490 million) wee financed through a delayed payment to the pension funds. The table below shows a breakdown of investments:
Euro million
Capital expenditures 1,402
Intangibles 72
Financial 2,428
Acquisition of shares in
participated companies 14
Total investments 3,916
US$ million
Capital expenditures 1,276
Intangibles 66
Financial 2,209
Acquisition of shares in participated
companies 13
Total investments 3,563
Financial investments include the acquisitions of 45% of Elettrogen for Euro 996 million (US$ 906 million) and 30% of the French SNET for Euro 452 million (US$ 411 million); the capital increase of AUNA subscribed Subscribed Newly issued securities that an investor has agree to, or stated his intent to, buy in a public offering prior to the issue date. When an investor uses rights, he expects to own the designated number of shares they have subscribed to once the offering is completed. by ENDESA for Euro 405 million (US$ 369 million), of which Euro 171 million (US$ 156 million) were disbursed through the cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. of loans; and the additional acquisition of REPSOL shares for Euro 190 million (US$ 173 million). On the other hand, ENDESA has acquired treasury stock during the period, mainly in the third quarter, with a net cost of Euro 132 million (US$ 120 million). This has brought treasury stock up from 0.3% as of 31st December 2000 to 1.1% as of 30th September 2001. The following table shows a breakdown of capital expenditures by line of business:
Million Euro
Domestic International Telecommunications Total
Electricity Electricity and Other
Generation 279 180 - 459
Distribution 339 438 - 777
Other 30 18 118 166
Total 648 636 118 1,402
US$ Million
Domestic International Telecommunications Total
Electricity Electricity and Other
Generation 254 164 - 418
Distribution 308 399 - 707
Other 27 16 107 151
Total 590 579 107 1,276
55.4% of capital expenditures were made in the distribution business, with the subsequent positive effect on the quality of service. The investment in the domestic generation business was also significant, and mainly directed to the construction of CCGTs. For further information please contact Jacinto Jacinto is a Spanish and Portuguese name meaning Hyacinth, which can refer to Saint Hyacinth, a Roman martyr (Hyacinth and Protus), or the flower itself. See also
The process by which the corporation communicates with its investors. Office. 212 750 7200 --30--jeh/nf/mem/bp/ny*
CONTACT: Endesa North America Investor Relations Office, New York
Jacinto Pariente, 212/750-7200
KEYWORD: NEW YORK
INDUSTRY KEYWORD: ENERGY UTILITIES EARNINGS
SOURCE: ENDESA
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