ENDESA First Half 2004 Consolidated Results; Net Profit Was Euro 789 Million in January-June 2004.MADRID Madrid (mədrĭd`, Span. mäthhrēth`), city (1990 pop. 3,120,732), capital of Spain and of Madrid prov., central Spain, and the focus of its own autonomous region, on the Manzanares River. , 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. -- ENDESA (NYSE NYSE See: New York Stock Exchange :ELE ELE equine leukoencephalomalacia. ):
-- OPERATING PROFIT TOTALLED EURO 1,790 MILLION, AN INCREASE OF
9% VS THE OPERATING PROFIT OBTAINED ON THE FIRST HALF OF 2003.
-- ORDINARY PROFIT ROSE 6.3% TO EURO 1,211 MILLION, CONFIRMING
THE HIGH QUALITY OF THE COMPANY'S EARNINGS
-- STRIPPING OUT EXTRAORDINARY RESULTS FROM BOTH PERIODS, NET
PROFIT INCREASED IN THE FIRST HALF OF 2004 BY 45.8% TO EUROS
205 MILLION.
-- EBITDA (OPERATING CASH FLOW) TOTALLED EURO 2,580 MILLION, AN
INCREASE OF 5% WITH RESPECT TO EBITDA ON THE SAME PERIOD OF
2003.
-- IN THE FIRST HALF OF 2004, ENDESA GENERATED A TOTAL OF 86,922
GWH OF ELECTRICITY IN ALL MARKETS IN WHICH IT OPERATES, AN
INCREASE OF 13.9% OVER THE SAME PERIOD OF 2003, WHILE
ELECTRICITY SALES WERE 86,360 GWH, 9.7% MORE THAN IN
JANUARY-JUNE 2003.
GOOD PERFORMANCES BY ALL THE COMPANY'S BUSINESS LINES --All ENDESA's businesses recorded net profit in the first half of 2004. --This included Euro 506 million from the 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. electricity business, Euro 100 million from 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). , Euro 47 million from 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. , and Euro 136 million from other businesses.--They also recorded growth in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. : --The Spanish electricity business showed growth of 8.5% compared to January-June 2003, the electricity business in the rest of Europe of 38.7%, 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 of 0.5% and other businesses of 58.3%. A STRONGER BALANCE SHEET --ENDESA's net debt at 30 June June: see month. 2004 stood at Euro 17,157 million, Euro 93 million less than at 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. 2003 and Euro 739 million less than at the end of the first quarter this year. --89% was at fixed or protected rates, thereby minimising risks from an interest-rate hike in coming years. --The leverage ratio ended the period at 121.8% vs. 125.5% as of 31 December December: see month. 2003, an improvement of 3.7 percentage points, in line with the targets of the Strategic Plan. SIGNIFICANT INCREASE IN ELECTRICITY GENERATION AND SALES --Through June ENDESA generated a total of 86,922 GWh of electricity in all the markets in which it operates in Spain, the rest of Europe and Latin America, an increase of 13.9% on the same period of 2003. --Total electricity sales totalled 86,360 GWh, a 9.7% increase over the same period of 2003. --ENDESA maintained its leadership of the Spanish electricity market in the first half of the year, with a 46.1% market share in ordinary regime electricity generation, 42.3% in distribution and 41.3% in sales to final customers. --ENDESA's coal plants generated 17,477 GWh in the peninsula A peninsula is a piece of land that is bordered on three sides by water. A peninsula can also be a headland, cape, island promontory, bill, point, or spit.[1] Europe
n. Abbr. Pen. A piece of land that projects into a body of water and is connected with the mainland by an isthmus. [Latin paen electricity generation under the ordinary regime of the whole Spanish electricity sector, or 1 out of every 5.5 GWhs generated in the peninsula, thereby making a significant contribution to guaranteeing coverage of demand. STRONGER PRESENCE IN EUROPE --Towards mid June, ENDESA completed the acquisition of another 34.3% of Endesa Italia from Santander Santander, city (1990 pop. 194,221), capital of Cantabria prov., N Spain, in Cantabria, on the Bay of Biscay. It is a seaport, fishing center, and a popular resort. On the nearby peninsula of Magdalena is a former royal summer palace. Central Hispano His·pa·no n. pl. His·pa·nos 1. A native or resident of Spanish descent living in the southwest United States. 2. A Hispanic. (SCH SCH School SCH Schedule SCH Search SCH Semester Credit Hours SCH Santander Central Hispano (bank in Spain) SCH Socket Head SCH Synchronization Channel SCH Succinylcholine SCH Space Center Houston ), taking its shareholding to 85.3%. --This purchase, exercising the call option included in the agreement reached between ENDESA and SCH on 13 June 2001, entailed a cost for ENDESA of Euro 817 million, which it had recorded as a liability in its balance sheet at 31 December 2003, so there is no impact on Company's 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: debt. --On July July: see month. 26, the French Privatisations and Transfers Committee authorised Adj. 1. authorised - endowed with authority authorized lawful - conformable to or allowed by law; "lawful methods of dissent" legitimate - of marriages and offspring; recognized as lawful ENDESA to acquire an additional 35% stake in the French generator generator, in electricity, machine used to change mechanical energy into electrical energy. It operates on the principle of electromagnetic induction, discovered (1831) by Michael Faraday. Snet from Charbonnages de France Charbonnages de France is a French enterprise created in 1946, as a result of the nationalization of the private mining companies. External links
--Since ENDESA already owns a 30% stake in this company, its final interest will reach 65%. As a result, Snet will be fully consolidated instead of equity accounted as has been the case to date. SHARP INCREASE IN CAPEX TO ENHANCE THE QUALITY OF THE SERVICE IN SPAIN --Capex on the Spanish distribution business from January January: see month. to June this year totalled Euro 337 million, 51.1% more than in the same period of 2003 due to ENDESA's efforts to improve the quality of its supply. GROWTH IN NATURAL GAS AND RENEWABLE ENERGIES Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. --Gas sales by companies in which ENDESA has a majority shareholding reached 7,255 GWh in the first half of 2004, an increase of 43.8% over the same period of 2003. Out of this figure, 4,984 GWh were sold to clients on the deregulated market and 2,271 GWh to those on the regulated market A regulated market is the provision of goods or services that is regulated by a government appointed body. The regulation may cover the terms and conditions of supplying the goods and services and in particular the price allowed to be charged. . --The 7,255 GWh sold, together with the 6,973 GWh consumed con·sume v. con·sumed, con·sum·ing, con·sumes v.tr. 1. To take in as food; eat or drink up. See Synonyms at eat. 2. a. by the Company's plants, amount to a total of 14,228 GWh, an 8.9% share of the Spanish natural gas market. --1,073 GWh were generated by installations under the special regime in which ENDESA has a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail , a 12.4% increase on the first half of 2003. Most of these plants exploit renewable energy. THE TELECOMS BUSINESS PRODUCES A PROFIT --The shareholding in AUNA AUNA Auditory Neuropathy, Autosomal Dominant 1 contributed Euro 2 million to ENDESA's net profits, while Chilean mobile company 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. made its first ever profit, of Euro 4 million. --These results led to a Euro 51 million increase in equity-consolidated earnings versus the same period of 2003. SPAIN'S NAP (1) See network access protection. (2) (Network Access Point) The first public Internet exchange points (IXPs). Established by the National Science Foundation in the early 1990s, they were set up to provide a standard way to exchange packets for , CONSISTENT WITH THE CRITERIA criteria (krītēr´ē  ),n. AND PRINCIPLES DEFENDED BY ENDESA --The National Allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as Plan (NAP) for Spain presented in July is based on historical emissions emissions npl → émissions fpl emissions npl → Emissionen pl , allocating sufficient rights to both non-mainland and islands generation plants, and the technological criteria does not imply a decrease in output from ENDESA's coal -fired plants excluding the closure of some plants that the Company had already considered. --Accordingly, broadly speaking Adv. 1. broadly speaking - without regard to specific details or exceptions; "he interprets the law broadly" broadly, generally, loosely the criteria defended by ENDESA is fully coherent A version of Unix developed by Mark Williams Co., Northbrook, IL, that was noted for its conservative use of resources on Intel-based PCs. with the principles of guarantee of supply and diversified diversified (di·verˑ·s energy sources long defended by the Company. 1 Key highlights ENDESA recorded net profit in the first half of 2004 of Euro 789 million and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. of Euro 0.75. This net profit represented a 9.9% fall on the first half of 2003 as a result of lower extraordinary income in the January-June period this year than last. Remember, in the first half of 2003 the Company booked Euro 464 million of extraordinary income, with an impact on net profit of Euro 428 million. In the first half of 2004 extraordinary income came to Euro 183 million, with an impact on net profit of just Euro 136 million. So, stripping out the effect of extraordinaries on net profit in the comparison between the two periods, net profit rose Euro 205 million or 45.8%. All ENDESA's businesses recorded net profit in the first half of 2004. This included Euro 506 million from the Spanish electricity business, Euro 100 million from Europe, Euro 47 million from Latin America, and Euro 136 million from other businesses. Ordinary profit was Euro 1,211 million, an increase of 6.3% versus the same period 2003, underscoring the high quality of the Company's earnings. In production terms, ENDESA generated during the first six months of the year a total of 86,922GWh of electricity in all the markets in which it operates in Spain, the rest of Europe and Latin America, an increase of 13.9% on the first half of 2003, with electricity sales of 86,360 GWh, growth of 9.7%. Increase in operating profit The strong increase in generation and electricity sales are especially relevant in a mature market -as it is the case- and are the key factors in driving operating profit growth, which has increased to Euro 1,790 million in the first half of 2004, 9% higher than the same period of 2003. We must point out this growth has been achieved dealing with adverse factors such as "pool" price reductions in Spain, higher fuel prices, low hydro hy·dro adj. Hydroelectric. n. pl. hy·dros 1. Hydroelectric power. 2. A hydroelectric power plant. conditions in Spain and 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. , etc., which confirms the solid base of the company's core business. Operating profit grew for all ENDESA's electricity businesses in the year's first six months: --Euro 967 million for the Spanish electricity business, an advance of 8.5% compared to the first half of 2003 --Euro 222 million for the rest of Europe, an increase of 38.7%. --Euro 582 million for the Latin American business, an increase of 0.5%. --Euro 19 million for the rest of the businesses, a 58.3% increase. Underpinning un·der·pin·ning n. 1. Material or masonry used to support a structure, such as a wall. 2. A support or foundation. Often used in the plural. 3. Informal The human legs. Often used in the plural. the growth of operating profits in Spain and Latin America were the increases in demand and higher prices, which more than offset the rise in fuel costs. In Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. , the increase was due to the larger amount of energy sold, which more than offset the decline in the average price. Debt reduction ENDESA's net debt at 30 June 2004 was Euro 17,157 million, a reduction of Euro 93 million from 31 December 2003 and Euro 739 million from 31 March 2004. The decline in debt and increase of Euro 337 million in shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. and minority shareholdings to Euro 14,083 million at 30 June 2004 takes the leverage ratio to 121.8%, 3.7 percentage points below 31 December 2003. Others key figures Financial expenses totalled Euro 459 million, compared with Euro 347 million in the first half of 2003. These results include a slightly positive net currency effect of Euro 9 million, compared to a Euro 169 million gain in the first half of 2003. AUNA and Smartcom's results continued to perform well in the first half of 2004, with both companies contributing to ENDESA's profits. Their contribution totalled Euro 6 million, an improvement of Euro 51 million on the same period last year. Finally, extraordinary income came to Euro 183 million, including notably a Euro 102 million capital gain on the sale of the 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. stake, which had an Euro 87 million impact on net profit. The National Allocation Plan At the beginning of July, Spain's proposed National Allocation Plan (NAP) for emission rights emission rights: see pollution allowance. in compliance with the commitments acquired in relation to the Kyoto Protocol Kyoto Protocol: see global warming. was presented. The main features with regard to electricity companies are: --The basic criteria for the allocation of rights is based on real average historical emissions for the period 2000-2002, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. direct measuring reflected in the Greenhouse Emissions Noun 1. greenhouse emission - a gas that contributes to the greenhouse effect by absorbing infrared radiation greenhouse gas CFC, chlorofluorocarbon - a fluorocarbon with chlorine; formerly used as a refrigerant and as a propellant in aerosol cans; "the Inventory, GEI GEI - A German software engineering company. , for 1990-2002. --The proposed Plan allocates enough rights for the islands and other non-mainland facilities for which ENDESA is developing projects to introduce gas through CCGTs. --The technological criteria defined regarding the coverage of demand for the period 2005-2007 will not imply significant reduction in the output of ENDESA's coal plants excluding the closure of plants that were already considered. So, even though the Proposal does not establish specific criteria, but rather general guidelines guidelines, n.pl a set of standards, criteria, or specifications to be used or followed in the performance of certain tasks. -we will have to wait to see the definitive allocation by plant- broadly speaking it is fully coherent with the principles of guarantee of supply and diversified energy sources defended by ENDESA. Transactions carried out in Europe In the first half of the year ENDESA carried out two corporate transactions that significantly strengthened its presence in the European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. electricity business. In June, ENDESA completed the acquisition of another 34.3% of Endesa Italia from Santander Central Hispano (SCH), raising its shareholding in the Italian company to 85.3%. This purchase, exercising the call option included in the agreement reached between ENDESA and SCH on 13 June 2001, entailed a cost for ENDESA of Euro 817 million, which it recorded as a liability in its balance sheet at 31 December 2003, so it did not lead to any increase in the Company's consolidated debt. On the other hand, last July 27, 2004, the French Privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned and Transfers Committee approved the acquisition of an additional 35% interest of Snet from Charbonnages de France by ENDESA, which already owned 30% of the French generation company, thus increasing Endesa's total interest up to 65%. The conditions of the authorization The right or permission to use a system resource; the process of granting access. See access control. do not significantly differ from those set forth initially. The precise terms of the agreement will be public once the transaction is closed, which is expected by September September: see month. . Once this transaction is finalized See finalization. , the French company's financial statements will be fully consolidated with ENDESA and not equity accounted as has been the case until now. 2 Results analysis The table below shows the key figures from ENDESA's consolidated P&L for the first half of 2004 and 2003.
Endesa key P&L data (Euro million)
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%
06/30/04 06/30/03 var.
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Revenues 8,310 7,762 7.1
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Operating cash flow (EBITDA) 2,580 2,458 5.0
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Operating profit 1,790 1,642 9.0
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Ordinary profit 1,211 1,139 6.3
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Net profit 789 876 -9.9
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Cash flow 1,845 1,842 0.2
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2.1 Operating profit ENDESA posted revenue of Euro 8,310 million in the first half of 2004, an increase of 7.1% on the same period of 2003. 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. (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 ) increased 5% to Euro 2,580 million. Operating profit totalled Euro 1,790 million, 9% higher. 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. for ENDESA's markets and businesses by revenue, cash flow, operating cash flow (EBITDA) and operating profits.
Electricity
business Latin Other
Spain Europe America businesses
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Euro % Euro % Euro % Euro %
mill. total mill. total mill. total mill. total
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Revenues 5,188 62.4 1,122 13.5 1,934 23.3 66 0.8
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Operating cash
flow 1,471 57.0 281 10.9 791 30.7 37 1.4
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Operating profit 967 54.0 222 12.4 582 32.5 19 1.1
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Cash flow 1,077 58.4 258 14.0 464 25.1 46 2.5
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2.1.1 Electricity business in Spain ENDESA's Spanish electricity business made operating profits of Euro 967 million in the first six months of 2004, an increase of Euro 76 million in absolute terms (Alg.) such as are known, or which do not contain the unknown quantity. See also: Absolute or 8.5% in percentage terms on the same period last year. Euro 49 million of this increase came from the extension in the estimated useful life of the company's nuclear power plants from 30 to 40 years, resulting in smaller depreciation charges for these plants. Coinciding co·in·cide intr.v. co·in·cid·ed, co·in·cid·ing, co·in·cides 1. To occupy the same relative position or the same area in space. 2. To happen at the same time or during the same period. 3. with this change, ENDESA begun making provisions to cover the costs of dismantling dis·man·tle tr.v. dis·man·tled, dis·man·tling, dis·man·tles 1. a. To take apart; disassemble; tear down. b. these plants once their useful lives have concluded. In the first half of 2004, Euro 5 million was provided for in this respect. The changes in the main operating profit items were as follows:
Euro Million
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6/30/04 6/30/03 Chg %
----------------------------------------------------------------------
Net sales* 3,097 2,912 185 6.4
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Raw materials (778) (696) (82) 11.8
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Depreciation and provisions (519) (560) 41 -7.3
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Wages, salaries and others (833) (765) (68) 8.9
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Operating profit 967 891 76 8.5
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* Revenues (-) electricity purchased (-) electricity transmission and other external expenses A 6.4% increase in net income as a result of the 7% rise in output, the average 1.7% hike in the 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. 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 2004 compared to 2003 and the 7% increase in the average price levied on deregulated clients. Meanwhile, net income from distribution operations only rose 2%. Net income gains were Euro 35 million higher than the rise in fuel and fixed costs fixed costs, n.pl the costs that do not change to meet fluctuations in enrollment or in use of services (e.g., salaries, rent, business license fees, and depreciation). . This, coupled with the lower depreciation charge, enabled operating profit to increase by Euro 76 million, or 8.5%. Below we set out a detailed breakdown of the various items comprising ENDESA's electricity operating profits. 2.1.1.1. Revenues ENDESA's Revenues from the Spanish electricity business in the first half of 2004 were Euro 5,188 million, a 4.5% increase from the year earlier. The breakdown by item was as follows.
Euro million
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06/30/04 06/30/03 Chg %Chg
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Sales 4,857 4,682 175 3.7
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Technology CTC 158 129 29 22.5
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Coal CTC 46 39 7 18.0
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Services 127 116 11 9.5
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TOTAL 5,188 4,966 222 4.5
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Sales in the Spanish electricity market were Euro 4,857 million, as follows:
Euro million
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06/30/04 06/30/03 Chg %Chg
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Peninsular generation 1,368 1,341 27 2.0
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Distribution and supply at peninsular
tariff 1,867 1,901 (34) -1.8
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Supply to liberalized clients 861 667 194 29.1
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Non-peninsular systems 515 466 49 10.5
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Non-peninsular compensation 108 100 8 8.0
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Wholesale bilateral transactions 4 53 (49)-92.5
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Gas 110 88 22 25.0
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Others 24 66 (42)-63.6
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TOTAL 4,857 4,682 175 3.7
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In the first half of 2004, ENDESA maintained its leadership of the Spanish electricity market, with a 46.1% market share in ordinary regime electricity generation, 42.3% in distribution and 41.3% in sales to end customers. Peninsular generation In the first half of 2004, demand for electricity in the Spanish peninsular system grew by 4.7% compared to the first half 2003. But generation under the ordinary regime grew faster than this, by 5.9%, as a result of the decline in the balance of international exchanges and the 12.4% increase in special regime generation. ENDESA generated 41,642 GWh of all electricity sold on the wholesale market through June, representing a rise of 7% on the same period of 2003 and giving it a market share of 42.7%. Meanwhile, companies operating under the special regime -in which ENDESA has a controlling interest- generated 1,073 GWh during the first six months of this year , an increase of 12.4% over the same period of 2003. Moreover, ENDESA has interests in other companies that also produce renewable energy under the special regime by an additional amount of 1,823 GWh during the first six months of year 2004. ENDESA's 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. sales came to Euro 1,368 million, a 2% increase on the first half of 2003. The increase was due to the rise in production mentioned above and a 4.8% fall in average pool prices from last year. In absolute terms, the average pool price for the first half of 2004 was Euro 32 per MWh. With respect to the first half of the previous year, fuel-oil power plants were replaced by CCGT CCGT Combined Cycle Gas Turbine CCGT Chicago Center for Green Technology CCGT Combined-Cycle Generating Technology CCGT catalytic combustion gas turbine plants in considering marginal (jargon) marginal - 1. Extremely small. "A marginal increase in core can decrease GC time drastically." In everyday terms, this means that it is a lot easier to clean off your desk if you have a spare place to put some of the junk while you sort through it. 2. prices. Hence, electric power system marginal costs Marginal cost The increase or decrease in a firm's total cost of production as a result of changing production by one unit. marginal cost The additional cost needed to produce or purchase one more unit of a good or service. have changed from 40-50 euros/MWh for the fuel-oil power plants to 25-30 euros/MWh for CCGT. This along with the significant reserve margin increase (that is to say, the increase of the relation between available capacity and demand), yields a slight decrease in the pool average price, which has gone from 33,6 euros/MWh in January-June of 2003 to 32 euros/MWh previously mentioned during the first half of 2004. By technology, coal plants set the marginal price 20% of the time, compared to 76% by hydro plants. The table below shows the structure of peninsular electricity generation for ENDESA and the sector as a whole in the first halves of 2004 and 2003:
Peninsular electricity generation structure of Endesa and the Spanish
sector (%)
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ENDESA Sector
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1H 1H 1H 1H
2004 2003 2004 2003
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Nuclear 34.2 34.3 31.4 31.6
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Coal 42.0 42.9 36.2 34.8
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Hydro 15.7 17.7 18.4 25.6
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CCGT 7.0 3.5 12.2 5.5
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Fuel-gas 1.1 1.6 1.8 2.5
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Total 100.0 100.0 100.0 100.0
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These figures confirm the stability of ENDESA's generation mix in respect of fluctuations in rainfall levels, indicating that the company is not so exposed to the unstable unstable, adj 1. not firm or fixed in one place; likely to move. 2. capable of undergoing spontaneous change. A nuclide in an unstable state is called radioactive. An atom in an unstable state is called excited. regime of hydro contributions, which is a characteristic feature on the peninsula, as other utilities. Meanwhile, ENDESA's coal-fired Adj. 1. coal-fired - fueled by burning coal; "a coal-fired ship" coal-burning fueled - heated, driven, or produced by burning fuel plants achieved an 84.1% availability rate in the first quarter of 2004, a much higher level than the CCGTs, with power from these covering 17.9% of the increase in demand registered in the period. In sum, ENDESA's position in the generation market, underpinned by a balanced mix and appropriate size relative to demand, goes a long way to ensuring supply and the competitiveness of generation costs. Distribution and supply at peninsular tariff ENDESA distributed 40,938 GWh of electricity in the peninsular market in the first half of 2004, of which 27,287 GWh were sold at the regulated tariff. ENDESA's distribution fees and energy sales on the peninsular market fell by 1.8% compared to the same period of 2003. This fall was mainly the result of a 1% drop in energy supplied at tariff and the 5.2% reduction in the price of energy acquired from the pool, which automatically feeds through to revenue billed to customers on the regulated market. The gross distribution margin, measured as the difference between energy sales, purchases and costs in this activity, amounted to Euro 667 million, an increase of 2% on the first half of 2003. Supply to deregulated clients ENDESA sold 14,499 GWh to clients on the deregulated market in the first half of 2004, an increase of 21% from 2003. This increase breaks down as follows: 15.4% in areas in which ENDESA acts as distributor, 11.6% in other areas and 90% to clients in other European countries. The rise in energy sold on the deregulated market, together with the 7% increase in the average price, allowed for growth of 29.1% in sales from this activity, to Euro 861 million. We would also underline underline an animal's ventral profile; the shape of the belly when viewed from the side, e.g. pendulous, pot-belly, tucked up, gaunt. that ENDESA ended June with 253,000 clients in Spain's deregulated market. Non-peninsular systems ENDESA's output in non-peninsular systems was 6,200 GWh in the first half of 2004, 6.7% more than in the same period of 2003. Demand rose 6.4% in all these markets as a whole. Sales on these markets in the period were Euro 515 million, representing growth of 10.5% from the first half of 2003, basically as a result of this rise in demand. In addition, the company received Euro 108 million in compensation, Euro 8 million more than in the first half of 2003. Under 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. 1747/2003, fuel costs for extra-peninsular generation must be included in the sale price, as a pass-through pass-through n. 1. An opening between two rooms, especially a shelved space between a kitchen and dining room that is used for passing food. 2. A route through which something is permitted to pass. 3. . The corresponding settlements are to be made when the Decree comes into effect. Given the costs of fuels used in non-peninsular generation, which have risen in recent months, compensation for excessive costs on non-peninsular generation will be higher than that paid recently. However, ENDESA has not included this increase in revenues as it is unable to quantify Quantify - A performance analysis tool from Pure Software. it. Gas Gas sales amounted to Euro 110 million in the first half of 2004, an increase of 25% compared to the same period of last year. In energy terms, sales from companies in which ENDESA has a majority stake amount to 7,255 GWh, an increase of 43.8% over the same period of 2003. Out of this figure, 4,984 GWh were sold on the deregulated market and 2,271 GWh on the regulated market. On the other hand, 600 GWh, included in total sales, correspond to companies that are not globally consolidated. The 7,255 GWh sold, together with the 6,973 GWh consumed by ENDESA's generation plants, amount to a total of 14,228 GWh, implying an 8.9% share of the Spanish natural gas market. CTC CTC - Cornell Theory Center In the first half of 2004, system revenues were sufficient to cover all the system's recognized costs, allowing for the payment of Euro 299 million in stranded strand 1 n. The land bordering a body of water; a beach. v. strand·ed, strand·ing, strands v.tr. 1. To drive or run ashore or aground. 2. costs (CTC). Of this amount, Euro 158 million correspond to ENDESA, Euro 29 million more than in the first half of 2003. 2.1.1.2. Operating costs operating costs npl → gastos mpl operacionales . The following table shows the breakdown of operating costs for ENDESA's Spanish electricity business in the first half of 2004 and 2003.
Euro million
----------------------------------------------------------------------
06/30/04 06/30/03 Chg %Chg
----------------------------------------------------------------------
Purchases 2,981 2,858 123 4.3
----------------------------------------------------------------------
Energy purchases 1,900 1,910 (10) -0.5
----------------------------------------------------------------------
Raw materials 778 696 82 11.8
----------------------------------------------------------------------
Transmission and other external costs 303 252 51 20.2
----------------------------------------------------------------------
Depreciation 504 536 (32) -6.0
----------------------------------------------------------------------
Provisions 15 24 (9) -37.5
----------------------------------------------------------------------
Personnel 439 415 24 5.8
----------------------------------------------------------------------
Other operating expenses 394 350 44 12.6
----------------------------------------------------------------------
TOTAL 4,333 4,183 150 3.6
----------------------------------------------------------------------
Purchases. Purchases from January to June 2004 in the Spanish electricity business were Euro 2,981 million, an increase of Euro 123 million or 4.3% on the first half of 2003. This was due mainly to the following factors: --Energy purchases basically made by ENDESA's distributor and supplier for client sales decreased by Euro 10 million or 0.5%. This reduction was mainly the result of a 3.7% rise in energy supplied to both tariff and deregulated clients in the peninsula and the 5.2% decrease in the average price of the energy acquired. --Gas purchases for client sales increased by Euro 18 million or 29% due to the 25% increase in gas sales. --Fuel costs for electricity generation increased by Euro 64 million due to higher international prices, higher production, and lower hydro conditions. This figure accounts for 10.1% of the cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold in the first half of 2003. We would also underline that Spanish coal acquired by ENDESA from its own mines is not exposed to international prices, unlike with the gas used at the CCGTs, whose price is linked to oil prices. Accordingly, ENDESA's production mix helps make the generation costs of the peninsular electricity generation system more competitive. Depreciation Depreciation in the first half 2004 was Euro 504 million, a reduction of Euro 32 million on the same period 2003. The extension in the estimated useful life of the company's nuclear power stations This is a list of major nuclear power plants in all countries in the world. This is an incomplete list. You can help Name of power station Installed capacity in MW Country Atucha I nuclear power plant 357 Argentina , from 30 to 40 years, with effect from 1 January 2004, resulted in a Euro 49 million smaller depreciation charge than would have been the case otherwise. Excluding this impact, the depreciation charge for ENDESA's Spanish electricity business increased by Euro 17 million due to the depreciation of the investments made in 2003 and in the first half of 2004. Personnel At 30 June 2004, ENDESA's Spanish electricity business employed 13,550 employees, a reduction of 101 with respect to 31 December 2003. In the first half of 2004, personnel expenses totalled Euro 439 million, an increase of 5.8% on 2003. This increase in personnel costs is the result of the salary rise for year 2004 and the deviation DEVIATION, insurance, contracts. A voluntary departure, without necessity, or any reasonable cause, from the regular and usual course of the voyage insured. 2. between the projected and the real CPI (1) (Characters Per Inch) The measurement of the density of characters per inch on tape or paper. A printer's CPI button switches character pitch. (2) (Counts Per I for the first half of year 2003. In May 2004 the company signed a collective employment agreement covering most of the workers in ENDESA's electricity business in Spain. This agreement comes into effect from 1 January 2003 and runs until 31 December 2007. 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. Other operating expenses totalled Euro 394 million in the first half of 2004, an increase of Euro 44 million with respect to 2003. This increase was due mainly to the Euro 16 million increase in operation and maintenance of the Company's electricity networks as a result of plans aimed at enhancing the quality of supply in operation and the Euro 15 million increase in tax, mostly from the increase in the public thoroughfare THOROUGHFARE. A street or way so open that one can go through and get out of it without returning. It differs from a cul de sac, (q.v.) which is open only at one end. 2. Whether a street which is not a thoroughfare is a highway, seems not fully settled. levy To assess; raise; execute; exact; tax; collect; gather; take up; seize. Thus, to levy a tax; to levy a Nuisance; to levy a fine; to levy war; to levy an execution, i.e., to levy or collect a sum of money on an execution. A seizure. because of higher sales and the environmental tax which has begun to be levied in Andalusia Andalusia, city, United States Andalusia (ăndəl  `shə, –zhə), city (1990 pop. 9,269), seat of Covington co., S Ala., in a farming and forestry area; inc. .2.1.2 Electricity business in Europe Operating profit from the electricity business in Europe totalled Euro 222 million in the first half of 2004, an increase of 38.7% with respect to 2003. In both the first half of 2004 and in 2003, almost all these earnings came from ENDESA Italia. Figures for energy sales and purchases of this business include bilateral bilateral /bi·lat·er·al/ (-lat´er-al) having two sides, or pertaining to both sides. bi·lat·er·al adj. 1. Having or formed of two sides; two-sided. 2. wholesale agreements reached on the European market, whose results were neutral. These operations declined Euro 7 million compared to the same period of 2003. Operating cash flow (EBITDA) from this business was Euro 281 million in the January-June 2004 period, an increase of 30.7% on the same period last year. Endesa Italia's results The following table shows changes in ENDESA Italia's operating profit between the first half of 2004 and the first half of 2003.
ENDESA Italia key data
----------------------------------------------------------------------
Euro million
----------------------------------------------------------------------
06/30/04 06/30/03 Chg Chg%
----------------------------------------------------------------------
Revenues 800 623 177 28.4
----------------------------------------------------------------------
Capitalized expenses 9 8 1 12.5
----------------------------------------------------------------------
Other revenues 5 27 (22) -81.5
----------------------------------------------------------------------
Energy purchases (96) (42) (54) 128.6
----------------------------------------------------------------------
Raw materials (347) (329) (18) 5.5
----------------------------------------------------------------------
Electricity (13) (2) (11) 550.0
----------------------------------------------------------------------
Personnel expenses (32) (32) - 0
----------------------------------------------------------------------
Depreciation (59) (55) (4) 7.3
----------------------------------------------------------------------
Other expenses (40) (33) (7) 21.2
----------------------------------------------------------------------
Operating profit 227 165 62 37.6
----------------------------------------------------------------------
ENDESA Italia's revenue was 28.4% higher in the first six months of 2004 than in the same period of 2003, reflecting a 39% increase in electricity sold mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by a 10.7% decrease in the average sale price due to the tariff revision (programming) revision - A release of a piece of software which is not a major release or a bugfix, but only introduces small changes or new features. approved by the local Electricity and Gas Authority. This tariff revision has gone to appeal and obtained a successful ruling. If this tariff reduction is ultimately cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. , it will boost ENDESA Italia's operating profit by Euro 30 million, already charged but not booked as income. Meanwhile, the Electricity and Gas Authority have passed resolution 8/04 of 5 February February: see month. , approving the compensation for the purchase of "Green certificates" in previous years. This has boosted the company's revenues by Euro 18 million. ENDESA Italy sold 12,940 GWh of electricity in the first half of 2004, of which 2,059 GWh was bought from third parties, at a cost of Euro 96 million. ENDESA Italia's electricity output was 10,880 GWh, an increase of 2,283 GWh or 26.6% on the same period of 2003. This increase was due to a 459 GWh rise in hydro and a 1,824 GWh rise in 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. output. The latter, together with higher fuel prices, led to an Euro 18 million increase in fuel costs. 2.1.3 Electricity business in Latin America Operating profit from ENDESA's electricity business in Latin America totalled Euro 582 million in the first half of 2004, an increase of 0.5% with respect to 2003. Note that operating profit in this business rose in euros even though the average value of the euro versus the dollar was 9.8% higher in the first half 2004 than the first half 2003 and that much of the business, mainly generation and Brazil-Argentina interconnections, is sensitive to the performance of the dollar. Measured in dollars, the operating profit of the Latin American electricity business in the first half of 2004 increased by 11.6%. This performance demonstrates the basic strength of ENDESA's Latin American electricity business and the favourable operating performance of its subsidiaries in the region. The table below shows the generation and distribution figures of ENDESA's Latin American subsidiaries in the first half of 2004 compared to the same period in 2003.
Generation(GWh) Distribution(GWh)
----------------------------------------------------------------------
1H % Chg 1H % Chg
2004 vs 1H 2004 vs 1H
2003 2003
----------------------------------------------------------------------
Chile 7,788 -8.7 5,539 8.5
----------------------------------------------------------------------
Colombia 6,088 19.9 4,754 5.2
----------------------------------------------------------------------
Argentina 8,060 65.8 6,726 7.8
----------------------------------------------------------------------
Brazil 2,623 123.8 6,711 4.1
----------------------------------------------------------------------
Peru 2,568 6.5 2,097 6.1
----------------------------------------------------------------------
TOTAL 27,127 23.0 25,827 6.4
----------------------------------------------------------------------
All ENDESA's generation and distribution subsidiaries recorded substantial growth except those in Chile, which sustained a decline mainly due to the sale of the Canutillar plant. The table below sets out the operating cash flow (EBITDA) and operating profit of ENDESA's Latin American electricity business, broken down by activity:
Euro million
----------------------------------------------------------------------
Operating cash Operating
flow profit
----------------------------------------------------------------------
1H 1H % Chg 1H 1H %Chg
2004 2003 2004 2003
----------------------------------------------------------------------
Genco and transmission 473 498 -5.0 362 382 -5.2
----------------------------------------------------------------------
Distribution 344 310 11.0 248 219 13.2
----------------------------------------------------------------------
Others (26) (19)-36.8 (28) (22)-27.3
----------------------------------------------------------------------
Total 791 789 0.3 582 579 0.5
----------------------------------------------------------------------
Noteworthy were the sharp increases in both Operating cash flow (EBITDA) and operating profit from the distribution business, of 11% and 13.2%, respectively. The declines in both from generation were mainly due to the contribution decrease from the interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. between Argentina Argentina (ärjəntē`nə, Span. ärhāntē`nä), officially Argentine Republic, republic (2005 est. pop. 39,538,000), 1,072,157 sq mi (2,776,889 sq km), S South America. and 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. . The following table shows the operating cash flow (EBITDA) and operating profit of Latin American power generation and distribution firms in the first half of 2004 compared to the same period in 2003, broken down by the countries where ENDESA operates through fully consolidated subsidiaries.
Operating Operating
cash flow profit
----------------------------------------------------------------------
1H 1H % Chg 1H 1H % Chg
2004 2003 2004 2003
----------------------------------------------------------------------
Genco and transmission
----------------------------------------------------------------------
Chile 144 147 -2.0 104 100 4.0
----------------------------------------------------------------------
Colombia 109 91 19.8 88 71 23.9
----------------------------------------------------------------------
Brazil - Generation 39 23 69.6 32 19 68.4
----------------------------------------------------------------------
Brazil - Transmision 46 100 -54.0 38 92 -58.7
----------------------------------------------------------------------
Peru 70 71 -1.4 50 50 -
----------------------------------------------------------------------
Argentina - Generation 58 60 -3.3 43 45 -4.4
----------------------------------------------------------------------
Argentina - Transmission 7 6 16.7 7 5 40.0
----------------------------------------------------------------------
TOTAL Genco and transco 473 498 -5.0 362 382 -5.2
----------------------------------------------------------------------
Operating Operating
cash flow profit
----------------------------------------------------------------------
1H 1H % Chg 1H 1H % Chg
2004 2003 2004 2003
----------------------------------------------------------------------
Distribution
----------------------------------------------------------------------
Chile 80 75 6.7 71 67 6.0
----------------------------------------------------------------------
Colombia 100 58 72.4 67 27 148.1
----------------------------------------------------------------------
Brazil 93 103 -9.7 66 78 -15.4
----------------------------------------------------------------------
Peru 34 37 -8.1 20 24 -16.7
----------------------------------------------------------------------
Argentina 37 37 - 24 23 4.3
----------------------------------------------------------------------
TOTAL Distribution 344 310 11.0 248 219 13.2
----------------------------------------------------------------------
The main factors responsible for the performance of these items by country are explained below. Chile Operating profit from the Chilean generation business totalled Euro 104 million, a 4.0% increase on the first half of 2003. This was achieved despite the inclusion of results from the Canutillar plant in figures for the first half of 2003 before it was sold last year. Then this plant contributed 234 GWh of output and Euro 3 million of operating profit. In like-for-like terms; i.e. excluding earnings from the Canutillar plant, the operating profit of ENDESA's generation business in Chile grew 7.2%. The increase in sales obtained in the first half of 2004 was offset by a similar increase in energy purchases. The operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: has had to absorb absorb To offset sell orders or a new security offering with buy orders. Euro 20 million in higher fuel and energy transmission costs. Meanwhile, the depreciation of the Chilean peso against the dollar allowed for a Euro 20 million increase in capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. expenses compared to the same period last year. Lastly, Euro 7 million less were allocated to depreciation and amortization than in the first half of 2003. Operating profit in the Chilean distribution business totalled Euro 71 million, a 6% increase from the same period last year. This rise was fuelled by an Euro 11 million increase in the contribution margin (measured as the difference between revenues and energy purchases), which however was accompanied ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. by a Euro 8 million increase in fixed costs. Endesa Chile has begun filling the reservoir reservoir (rĕz`əvôr, -vwär), storage tank or wholly or partly artificial lake for storing water. Building an embankment or dam to preserve a supply of water for irrigation is an ancient practice; India and Egypt have many old and of the hydro plant at Ralco, a 570 MW installation accounting for 15% of the company's total capacity. The plant will begin operating in the third quarter of this year and will meet 9% of the country's requirements. Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city. Operating profit in the Colombian generation business amounted to Euro 88 million, a 23.9% increase from the first six months of 2003. The entire increase was due to the higher gross margin, thanks to a Euro 19 million increase in revenues, a Euro 7 million decrease in energy purchases and raw materials and a Euro 8 million increase in electricity transmission costs. Operating profit from the Colombian distribution business was Euro 67 million, Euro 40 million higher than in the first half of 2003. This improvement was driven mainly by a 19.6% increase in the electricity tariff, which, coupled with the increase in energy sales led to a Euro 56 million rise in revenues, while energy purchases increased by only Euro 16 million. Brazil The Brazilian generation business recorded operating profit of Euro 32 million, Euro 13 million more than in the first half of 2003. The increase derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. mostly from the start-up Start-up The earliest stage of a new business venture. of the Fortaleza Fortaleza (f rtəlĕ`zə), city (1996 pop. 1,967,365), capital of Ceará state, NE Brazil, a port on the Atlantic Ocean. thermal plant, which contributed operating profits of Euro 18 million.Meanwhile, the Cachoeira Dourada Cachoeira Dourada is a small town and municipality in south-central Goiás state, Brazil. The population was 8,539 (2005 estimate) in a total area of 732 km².
adj. Of, relating to, or constituting a precaution: taking precautionary measures; gave precautionary advice. Adj. 1. Measure enforced en·force tr.v. en·forced, en·forc·ing, en·forc·es 1. To compel observance of or obedience to: enforce a law. 2. by the authorities which obliged o·blige v. o·bliged, o·blig·ing, o·blig·es v.tr. 1. To constrain by physical, legal, social, or moral means. 2. the company to record a lower sum than that stipulated by the contract has been lifted. Operating profit from the Brazilian distribution business totalled Euro 66 million, a 15.4% increase on the same period last year. Revenues advanced Euro 72 million or 20.1% thanks to the 31% increase in tariffs This is a list of tariffs and trade legislation:
Finally, operating profit deriving de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from the interconnection between Brazil and Argentina was Euro 38 million in the first half of 2004, 58% lower than the figure obtained in the same period last year. This decline derives from the impact on revenues of the dollar's depreciation against the euro with respect to the first half of 2003 and 2004, as interconnection revenues are expressed in dollars, and the renegotiation of the contract with Argentine Argentine having some relationship with the country Argentina. Argentine tick margaropuswinthemi. Argentine tortoise geochelonechilensis. company COPEL COPEL Companhia Paranaense de Eletricidade . Peru Operating profit from the generation business in Peru totalled Euro 50 million, the same as in the first half of 2003. The Euro 3 million decrease in the gross margin was offset by similar reduction in fixed costs. Operating profit from the generation business in Peru in euros was broadly flat, as the Peruvian sol's 9.7% depreciation vis-a-vis the euro between the periods was offset by the 10% increase in operating profit in local currency. Operating profit from Peruvian distribution amounted to Euro 20 million, a 16.7% decrease from the first half of 2003. This decline was due to the Euro 5 million lower gross margin caused by the sol's depreciation, whereas in local currency the gross margin was unchanged. Argentina Argentine generation produced operating profit of Euro 43 million, 4.4% less than in the same period last year. The fall was the result of a Euro 2 million increase in fixed costs in euros. The gross margin in euros was unchanged, as the 8% increase in local currency was enough to offset the Argentine peso's fall against the euro. In distribution, operating profit in Argentina totalled Euro 24 million in the first half of 2004, 4.3% more than in the same period of 2003. The increase was the result of a decrease in fixed costs. The gross margin was similar to that of the first half of 2003. 2.2 Financial results ENDESA reported financial losses of Euro 459 million in the first half of 2004 compared to losses of Euro 347 million in the same period of 2003. These break down as follows:
Euro million
----------------------------------------------------------------------
1H 1H Chg % Chg
2004 2003
----------------------------------------------------------------------
Financial revenues 86 138 (52)-37.7
----------------------------------------------------------------------
Financial expenses (691)(737) 46 -6.2
----------------------------------------------------------------------
Foreign exchange differences 9 169 (160) N/A
----------------------------------------------------------------------
Monetary correction 142 87 55 63.2
----------------------------------------------------------------------
Change in provisions (5) (4) (1)-25.0
----------------------------------------------------------------------
Total financial result (459)(347)(112)-32.3
----------------------------------------------------------------------
Net debt at 30 June 2004 was Euro 17,157 million, Euro 93 million less that at 31 December 2003 and Euro 739 million less than at the end of the first quarter this year. The breakdown by business area and its average cost in the first half of 2004 was as follows:
Average
cost
1H
Debt Debt 2004
(Euro million) 06/30/04 06/30/03 Chg (%)
-------------------------------------------------------------------
Spanish electricity business 6,131 6,429 (298) 5.15
-------------------------------------------------------------------
European electricity business 2,546 2,437 109 2.69
-------------------------------------------------------------------
Latin America electricity business 6,452 6,560 (108) 7.51
-------------------------------------------------------------------
ENERSIS 4,610 4,630 (20) 8.67
-------------------------------------------------------------------
Others 1,842 1,930 (88) 4.30
-------------------------------------------------------------------
Other businesses 2,028 1,824 204 3.60
-------------------------------------------------------------------
TOTAL 17,157 17,250 (93) 5.52
-------------------------------------------------------------------
2.2.1 Financial expenses Financial expenses totalled Euro 691 million, Euro 46 million less than in the first half of 2003. Of this amount, Euro 599 million correspond to debt interest, compared to Euro 652 million in the first half of 2003, an 8.1% reduction. The rest corresponds to the financial updating of provisions. ENDESA's total debt for the first six months of this year had an average cost of 5.52% versus 5.18% in the first half of 2003. For the Enersis Group, the average cost rose from 7.54% to 8.67%. The average cost of ENDESA's debt ex Enersis Group was 4.36%, versus 4.27% in the first half of 2003. The higher average cost of debt was due to the 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 followed in 2003, which enabled the ENDESA Group to have 89% of its consolidated debt at a fixed or protected interest rate for an average period of 5 years, to the extension of the average life of its debt to 5.3 years and to the conversion of part of Enersis's dollar debt into Chilean peso. In this way, the company reduces significantly the risk of the potential impact of a rise in interest rates on the P&L and diminishes refinancing risk In banking and finance, refinancing risk is the possibility that a borrower cannot refinance by borrowing to repay existing debt. Many types of commercial lending incorporate bullet payments at the point of final maturity; often, the intention or assumption is that the borrower by extending the average life of its debt in exchange for bearing slightly higher cost of debt. 2.2.2 Foreign exchange differences Net forex differences in the first half of 2004 produced a gain of Euro 9 million. The repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan of dollar-denominated debt in Spain produced a positive result of Euro 77 million. Meanwhile, the Chilean peso's 6.7% depreciation against the dollar led to negative forex differences in the P&L of Euro 58 million. We would point out that from 1 January 2004, ENDESA has adapted its dollar debt hedging policies, both financial and accounting, to IAS See iPlanet Application Server. 1. (computer) IAS - The first modern computer. It had main registers, processing circuits, information paths within the central processing unit, and used Von Neumann's fetch-execute cycle. . 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 this criteria, debt in US$ to finance assets that produce revenues in dollars or indexed to the dollar are considered debt hedges. Exchange differences arising from this debt, both positive and negative, are directly recorded against equity and then taken to the P&L as the dollar revenues it covers are obtained. This situation is mostly evidenced in the generation business and interconnection between Brazil and Argentina. In order to adapt to this policy, ENDESA cancelled a total of US$ 296 million of debt held in Spain in the first half of 2004. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , Enersis converted US$ 650 million of debt in Unidades de Fomento (Chilean pesos indexed to inflation). 2.3 Equity income The main highlight of the first half of 2004 involving equity-accounted companies is the improvement in results of the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. business. 2.3.1 Telecommunications Spanish operator AUNA contributed Euro 2 million in profits from ENDESA's shareholding, while the Chilean mobile company Smartcom contributed to ENDESA's profits for the first time ever, with Euro 4 million, signalling improvements of Euro 30 million and Euro 21 million, respectively, versus their contributions in the first half of 2003. At 30 June 2004, Auna had 8,690,000 mobile phone clients (530,000 more than at the end of 2003) and more than 680,000 cable network clients (45,500 more than at the end of 2003). At that date, ENDESA's 32.89% stake in AUNA had a book value of Euro 1,266 million, that is well below its market value in accordance with the analyst's market consensus. Smartcom had a total customer base of 1,320,000 at 30 June 2004, 150,000 more than at the end of 2003. 2.3.2. Total result for equity-consolidated companies Earnings of equity-consolidated companies attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to ENDESA in the first half of 2004 were Euro 35 million, an improvement of Euro 49 million versus the first half of 2003. The main items of this amount, aside from that which corresponds to the telecommunications investments already mentioned, correspond to the assets of the European electricity business in which ENDESA currently has an interest of less than 50% and whose results, accordingly, are recorded by the equity method. Specifically, earnings from these assets totalled Euro 15 million in the first half of 2004, of which Euro 9 million correspond to the Portuguese generator Tejo Energia Tejo Energia is a utility that operates the Pego Power Station. Tejo Energia is also one of the largest private sector companies in Portugal by asset value. It's headquarted in Paço de Arcos, near Oeiras. and Euro 6 million to SNET. 2.4 Extraordinaries Extraordinary results for the first half of 2004 were Euro 183 million. Of this amount, Euro 102 million corresponded to capital gains from the sale of ENDESA's 11.64% stake in Aguas de Barcelona, Euro 8 million to proceeds from the disposal of the NETCO Redes shareholding and Euro 11 million to capital gains from the sale of real estate assets. Extraordinaries also included a Euro 19 million charge against earnings from grants and plants awarded, which offset depreciation charges recorded under operating profit. The rest corresponds mostly to changes in provisions. These include an additional allocation of Euro 18 million for the full write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of ENDESA's investments and loans granted to subsidiaries in Argentina. Allocations made for the year cover the increase in equity of these companies in the first half of 2004 caused by the Argentine peso's 3.9% appreciation against the euro and the positive results obtained by these companies in the period. With the additional allocation, the provision amounts to Euro 199 million. 3 Information by business line ENDESA's main P&L and balance sheet figures in the first half of 2004, with a breakdown by business line, are as follows.
Euro million
----------------------------------------------------------------------
Fixed
Operating Net tangible
Revenues profit profit assets
----------------------------------------------------------------------
Generation in Spain 2,126 508 283 8,059
----------------------------------------------------------------------
Distribution in Spain 2,619 321 189 6,939
----------------------------------------------------------------------
Supply in Spain 951 63 47 5
----------------------------------------------------------------------
Europe 1,122 222 100 2,625
----------------------------------------------------------------------
Latin America 1,934 582 47 8,908
----------------------------------------------------------------------
Other businesses 66 19 136 463
----------------------------------------------------------------------
Services 87 9 12 63
----------------------------------------------------------------------
Corporate structure 166 62 (25) 11
----------------------------------------------------------------------
4 Cash flow and investments Total investments in the first half of 2004 were Euro 1,437 million, broken down as follows:
Euro million
----------------------------------------------------------------------
06/30/04 06/30/03 Chg
----------------------------------------------------------------------
Tangibles 874 822 52
----------------------------------------------------------------------
Intangibles 10 26 (16)
----------------------------------------------------------------------
Financial 553 113 440
----------------------------------------------------------------------
Total investments 1,437 961 476
----------------------------------------------------------------------
By business line, tangible investments In contrast to stocks, bonds, and real estate (see equity investment), tangible investments are objects; there is a wide variety, including:
Euro million
----------------------------------------------------------------------
Electricity
business Others Total
----------------------------------------------------------------------
Spain Europe Latin
America
----------------------------------------------------------------------
Generation 132 79 107 52 370
----------------------------------------------------------------------
Distribution 337 109 446
----------------------------------------------------------------------
Others 46 5 7 58
----------------------------------------------------------------------
Total 515 79 221 59 874
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Capex on distribution in Spain increased by 51.1% in January-June 2004 compared to the same period in 2003. This increase is part of the effort being made by the Company to enhance the quality of its service. We would point out that, in accordance with information provided by the utility companies to the financial markets, ENDESA will cover 52% of the total investments in generation and distribution businesses for the period 2004-2008, a much higher percentage than its current market share in both business lines. On the other hand, the main financial investments already made during the first half of the year, were the acquisition of an additional 3% stake in AUNA for Euro 261 million and the Euro 187 million capital increase at Smartcom - this was made by converting existing loans into capital and therefore did not requiring any further outflow of funds. Meanwhile, divestments totalled Euro 332 million, of which Euro 238 million were from the sale of the Aguas de Barcelona shareholding and Euro 51 million from the NETCO Redes stake. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses came to Euro 1,845 million in the first half of 2004, 0.2% higher than the same period in 2003. Euro 107 million were also obtained from the change in working capital after deducting the impact of dividend payments. This cash flow covered net investments (Euro 1,105 million), the interim dividend paid to ENDESA shareholders on 2 January 2004 (Euro 280 million), the dividends paid to minority shareholders in subsidiaries (Euro 98 million) and the payment of obligations already provisioned, mostly for headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reduction programs (Euro 299 million). Cash flow in the period was enough to reduce debt by Euro 229 million. Debt also declined by Euro 42 million as a result of changes to the consolidation perimeter The boundary of a system or network, which defines the inside and outside. It is typically determined by firewalls and addresses. See DMZ. , mostly owing to owing to prep. Because of; on account of: I couldn't attend, owing to illness. owing to prep → debido a, por causa de the disposal of NETCO Redes. Lastly, the fluctuation Fluctuation A price or interest rate change. of the euro's exchange rate vis-a-vis currencies in which subsidiaries have denominated debt led to a Euro 178 million increase in debt. The combined effect was a reduction of Euro 93 million in net debt in the first half of 2004. 5 Financial structure At 30 June 2004, ENDESA's shareholder equity was Euro 8,975 million, an increase of Euro 174 million compared to 31 December 2003. Deducted de·duct v. de·duct·ed, de·duct·ing, de·ducts v.tr. 1. To take away (a quantity) from another; subtract. 2. To derive by deduction; deduce. v.intr. from this amount is the Euro 464 million final dividend paid on 1 July 2004. Equity of subsidiaries attributable to minority shareholders at that date stood at Euro 5,108 million, an advance of Euro 163 million compared to the end of 2003. Therefore, equity increased by Euro 337 million in the first quarter of 2004, to Euro 14,083 million. The increase in equity and Euro 93 million decline in net debt left a leverage ratio at 30 June 2004 of 121.8%, compared to 125.5% at 31 December 2003, indicating the Company continues to meet the debt-reduction targets included in the Strategic Plan for 2004-2008. The breakdown of this debt at 30 June 2004 is as follows:
Euro million
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ENDESA in Spain ENERSIS Total
and direct group ENDESA
subsidiaries group
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Euro 11,916 4 11,920
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Dollar 572 2,913 3,485
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Other currencies 59 1,693 1,752
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Total 12,547 4,610 17,157
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Fixed rate 9,360 3,633 12,993
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Hedged rate 1,662 563 2,225
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Variable rate 1,525 414 1,939
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TOTAL 12,547 4,610 17,157
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Average life (years) 4.9 6.2 5.3
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Lastly, we would point out that at 30 June 2004 the liquidity of ENDESA in Spain and its direct subsidiaries stood at Euro 3,937 million, of which Euro 3,708 million corresponded to undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely credit lines. This sum covers maturities falling due in the next 19 months for this group of companies. Also at that date, the Enersis Group had a cash position of Euro 474 million, which is sufficient to cover debt maturities for the next 11 months, excluding debt maturities for the Argentine subsidiaries. As has become usual practice, given the economic situation of that country all their debt is short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. and rolled over on a recurrent recurrent /re·cur·rent/ (re-kur´ent) [L. recurrens returning] 1. running back, or toward the source. 2. returning after remissions. re·cur·rent adj. 1. basis. Finally, we would point out that during July 2004, ENDESA has reached a preliminary agreement on the terms and conditions for its first private placement of long term debt in the US for an amount US$ 575 million, at terms from 7 to 15 years (average life of 10 years). ENDESA, S.A. acts as a supporter of the issuer, International ENDESA B.V. .The transaction is conditioned to the signing of the definitive documents and the completion of other customary market conditions. Final closing and the disbursement DISBURSEMENT. Literally, to take money out of a purse. Figuratively, to pay out money; to expend money; and sometimes it signifies to advance money. 2. are expected by September 2004. 6. Statistical appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. 6.1 Physical data
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Electricity generation in Spain (GWh) 1H 04 1H 03 Chg %
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Peninsular generation 42,715 39,863 7.2
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Nuclear 14,240 13,350 6.7
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Coal 17,477 16,708 4.6
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Hydro 6,534 6,864 (4.8)
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CCGT 2,907 1,366 112.8
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Fuel-oil 484 620 (21.9)
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Special regime 1,073 955 12.4
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Non-peninsular generation 6,200 5,808 6.7
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TOTAL 48,915 45,671 7.1
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Electricity generation in Europe (GWh) 1H 04 1H 03 Chg %
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Coal 2,892 1,227 135.7
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Hydro 1,351 893 51.3
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CCGT 2,823 na na
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Fuel-oil 3,814 6,477 (41.1)
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TOTAL 10,880 8,597 26.6
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Electricity generation in Latin
America (GWh) 1H 04 1H 03 Chg %
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Chile 7,788 8,534 (8.7)
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Argentina 8,060 4,860 65.8
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Peru 2,568 2,412 6.5
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Colombia 6,088 5,077 19.9
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Brazil 2,623 1,172 123.8
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TOTAL 27,127 22,055 23.0
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Electricity Sales (GWh) 1H 04 1H 03 Chg %
----------------------------------------------------------------------
Electricity business in Spain 47,593 45,123 5.5
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Regulated market 33,094 33,140 (0.1)
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Deregulated market 14,499 11,983 21.0
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Electricity business in Europe 12,940 9,310 39.0
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Electricity business in Latin America 25,827 24,284 6.4
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Chile 5,539 5,103 8.5
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Argentina 6,726 6,240 7.8
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Peru 2,097 1,977 6.1
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Colombia 4,754 4,517 5.2
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Brazil 6,711 6,447 4.1
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TOTAL 86,360 78,717 9.7
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Ventas de gas (GWh) 1H 04 1H 03 Chg %
----------------------------------------------------------------------
Regulated market 2,271 2,097 8.3
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Deregulated market 4,984 2,949 69.0
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TOTAL 7,255 5,046 43.8
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Plantilla 06/30/04 06/30/03 Chg %
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Electricity business in Spain 13,550 13,568 (0.1)
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Electricity business in Europe 1,105 1,160 (4.7)
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Electricity business in Latin America 11,639 11,617 0.2
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Other businesses 186 347 (46.4)
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TOTAL 26,480 26,692 (0.8)
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6.2 Financial data
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Valuation parameters 1H 04 1H 03 Chg %
----------------------------------------------------------------------
Earnings per share (EPS) (EUR) 0.75 0.83 (9.9)
----------------------------------------------------------------------
Cash-flow per share (EUR) 1.74 1.74 0.2
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Book value per share (EUR) 8.48 8.14 4.1
----------------------------------------------------------------------
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Net financial debt (EUR million) 06/30/04 12/31/03 Chg %
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Electricity business in Spain 6,131 6,429 (4.6)
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Electricity business in Europe 2,546 2,437 4.5
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Electricity business in Latin America 6,452 5,560 (1.6)
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Enersis 4,610 4,630 (0.4)
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Rest 1,842 1,930 (4.6)
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Other businesses 2,028 1,824 11.2
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TOTAL 17,157 17,250 (0.5)
----------------------------------------------------------------------
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Leverage ratio 121.8% 125.5% na
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Net financial debt/ Operating cash-flow 3.3 3.6 na
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Operating cash-flow /Financial expenses 5.0 4.6 na
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Rating (07-28-04) Long term Short term Outlook
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Standard & Poor's A A-1 Negative
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Moody's Baa1 P-2 Positive
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Fitch A F1 Stable
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Main debt placements Spread over IRS (b.p.)
----------------------------------------------------------------------
06/30/04 12/31/03
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1,6 yrs 750M(EUR) 5.25% Maturity Feb. 2006 17 26
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5,0 yrs 700M(EUR) 4.375% Maturity June 2009 35 35
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8,0 yrs 400M GBP 6.125% Maturity June 2012 55 47
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8,7 yrs 700M(EUR) 5.375% Maturity Feb. 2013 46 45
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Stock data 06/30/04 06/30/03 Chg %
----------------------------------------------------------------------
Market cap (EUR million) 16,771 15,437 8.6
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Outstanding number of shares (million) 1,058.752 1,058.752 --
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Nominal value (EUR) 1.2 1.2 --
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Stock exchange data 1H 04 1H 03 Chg %
----------------------------------------------------------------------
Volume (shares)
----------------------------------------------------------------------
Madrid Stock Exchange 1,226,950,297 1,317,278,750 (6.9)
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NYSE 14,506,800 16,103,400 (9.9)
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Daily average transactions (shares)
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Madrid Stock Exchange 9,737,700 10,623,215 (8.3)
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NYSE 116,990 129,866 (10.0)
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Stock price Max Min
1H 04 1H 04 06/30/04 06/30/03
----------------------------------------------------------------------
Madrid Stock Exchange (EUR) 16.18 14.01 15.84 14.58
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NYSE (USD) 20.44 17.28 18.93 16.30
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Dividends ((EUR)/share) Against 2003 results
----------------------------------------------------------------------
Interim dividend (01/02/04) 0.264
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Final dividend (07/01/04) 0.439
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Total dividend per share 0.703
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Pay-out 56.7%
----------------------------------------------------------------------
Dividend yield (06/30/04) 4.44%
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