1st Quarter Results

LONDON--()--

ENDESA, S.A.
and Subsidiaries

Consolidated Management Report for the
three-month period ended 31 March 2017

Madrid, 9 May 2017

ENDESA, S.A. AND SUBSIDIARIES
CONSOLIDATED MANAGEMENT REPORT
FOR THE THREE-MONTH PERIOD ENDED
31 MARCH 2017

Index.

1. Business Trends and Results in the first quarter of 2017. 3

1.1. Consolidated results 3

1.2. Analysis of results. 3

2. Other information 10

2.1. Risk Management Policy 10

2.2. Scope of Consolidation. 10

2.3. Acquisition of a branch of systems and telecommunications business 11

2.4. Dividends. 11

2.5. Other information 12

3. Regulatory Framework. 12

4. Liquidity and Capital Resources 12

4.1. Financial Management. 12

4.2. Cash Flows. 14

4.3. Investments 15

Statistical Appendix. 17

ENDESA, S.A. AND SUBSIDIARIES
CONSOLIDATED MANAGEMENT REPORT FOR
THE THREE-MONTH PERIOD ENDED
31 MARCH 2017

1. Business Trends and Results in the first quarter of 2017.

1.1. Consolidated results.

ENDESA reports a first quarter 2017 net income of €253 million (-26.0%).

ENDESA reported a net income of €253 million in the first quarter of 2017, a 26.0% decrease compared to the €342 million posted in the first quarter of 2016.

The table below presents the distribution of the net income among ENDESA businesses during the first quarter 2017 and its variation compared with the same period in the previous year:

     
Millions of Euros                
Net Income
    January-March

2017

  January-March

2016

  % Var.   % Contribution to Total
Generation and Suppliy (1) 32   130   (75.4)   12.6
Distribution   221   217   1.8   87.4
Structure and Other (2) -   (5)   N/A   -
TOTAL   253   342   (26.0)   100.0
 

(1) Includes the net income generated by ENEL Green Power España, S.L.U. (EGPE) in the first quarter of 2017 and 2016 amounting respectively to €18 million and €4 million (refer to Section 2.2 of the present Consolidated Management Report).

(2) Structure, Services and Adjustments.

1.2. Analysis of results.

The table below presents the distribution of the EBITDA and EBIT among the ENDESA businesses and its variation compared with the same period in the previous year:

             
Millions of Euros                                
Gross Profit from Operations (EBITDA) (3)   Profit from Operations (EBIT) (4)
    January-March 2017   January-March 2016   % Var.   % Contribution to Total   January-March 2017   January-March 2016   % Var.   % Contribution to Total
Generation and Suppliy (1) 261   360   (27.5)   37.2   56   190   (70.5)   16.5
Distribution   452   479   (5.6)   64.4   311   323   (3.7)   91.5
Structure and Other (2) (11)   (38)   (71.1)   (1.6)   (27)   (45)   (40.0)   (8.0)
TOTAL   702   801   (12.4)   100.0   340   468   (27.4)   100.0

(1) The first quarter of 2017 includes the EBITDA and EBIT generated by ENEL Green Power España, S.L.U. (EGPE) amounting respectively to €57 million and €27 million (refer to Section 2.2 of the present Consolidated Management Report).

(2) Structure, Services and Adjustments.

(3) EBITDA = Income - Procurements and Services + Self-constructed assets - Personnel Expenses - Other Fixed Operating Expenses.

(4) EBIT = EBITDA - Depreciation and amortisation, and impairment losses.

The first quarter 2017 EBITDA includes the contribution of ENEL Green Power España, S.L.U. (EGPE) amounting to €57 million after assuming control on 27 July 2016. Additionally, the following effects should be considered to analyse EBITDA performance during the first quarter of 2017:

  • Higher cost of energy purchases (+35.3%) primarily resulting from increased electricity prices on the wholesale market, whose arithmetic mean prices were at 55.6 €/MWh (+81.3%).
  • Increased fuel consumption (+51.6%) arising from greater thermal production in the period and higher fuel prices, together with the consequentially increased tax on the value of electricity production.
  • Containment of other fixed operating expenses that, considering the incorporation of ENEL Green Power España, S.L.U. (EGPE) on 27 July 2016, went virtually unchanged.

The EBIT for January-March 2017 was €340 million, a 27.4% decrease (€128 million) compared with the same period in the previous year, primarily as a result of the 12.4% contraction in the EBITDA.

During the first quarter of 2017, the item "Depreciation and amortisation, and impairment losses" posted an increase of €29 million (+8.7%), amounting to €362 million, and includes yet not is not restricted to the contribution of the full consolidation of ENEL Green Power España, S.L.U. (EGPE) amounting to €30 million. During the period, ENDESA has also re-evaluated the useful service life of assets in operation, resulting in the modification of the depreciation policy for its hydropower, wind power and solar power facilities, which in turn reduced the depreciation expense for the first quarter 2017 by approximately €16 million.

1.2.1. Income.

Income in the first quarter of 2017 totalled €5,223 million, 345 million (+7.1%) higher than income posted in the first quarter last year. Of this amount, revenue from sales accounted for €5,120 million (+10.4%), while other operating income accounted for €103 million (-57.4%).

The table below presents the distribution of the sales and other operating income among ENDESA businesses and its variation compared with the same period in the previous year:

             
Millions of Euros                                
Sales   Other operating income
    January-March 2017   January-March 2016   % Var.   % Contribution to Total   January-March 2017   January-March 2016   % Var.   % Contribution to Total
Generation and Supply (1) 4,594   4,109   11.8   89.7   47   177   (73.4)   45.6
Distribution   565   557   1.4   11.1   68   75   (9.3)   66.0
Structure and Other (2) (39)   (30)   30.0   (0.8)   (12)   (10)   20.0   (11.6)
TOTAL   5,120   4,636   10.4   100.0   103   242   (57.4)   100.0

(1) The first quarter 2017 includes the sales of ENEL Green Power España, S.L.U. (EGPE) amounting to €82 million and other operating income of €1 million.

(2) Structure, Services and Adjustments.

 

The estimated mainland energy demand during the first quarter of 2017 is 0.2% greater than the demand for the same period in 2016. Correcting for the effect of working days and temperature, the electricity energy demand in January-March 2017 increased by 1.1% compared with the posted demand from the first quarter of the year before. The electricity demand in Non-mainland Territories closed out the first quarter 2017 with a 1.5% increase in the Balearic Islands and a 1.7% increase in the Canary Islands compared with January-March 2016 (-0.6% and +0.5% respectively, corrected for the effect of working days and temperature).

Higher prices characterised the first quarter in 2017, during which the arithmetic mean price in the wholesale electricity market was 55.6 €/MWh (+81.3%), primarily as a result of less wind and hydroelectric power production, in which regard the accumulated renewable generation during the period covered less than 40% of the mainland electricity demand (38.3%).

In this environment, ENDESA's mainland electricity production under the ordinary arrangement during the first quarter 2017 was 14,922 GWh, i.e., 20.2% higher than the first quarter 2016 as detailed below: coal-fired plants (+1,814 GWh, +54.6%), combined cycles plants (+824 GWh, +278.4%), nuclear power plants (+723 GWh, +11.2%) and hydroelectric power plants (-850 GWh, -36.4%). Nuclear and hydroelectric technologies accounted for 58.1% of Endesa's mainland generation mix under the ordinary arrangement, compared with 59.0% for the rest of the sector (70.9% and 72.4% respectively in the first quarter of 2016).

ENDESA production in the first quarter of 2017 through renewable technologies other than hydroelectric was 994 GWh, and production in Non-mainland Territories was 3,064 GWh (+112 GWh, +3.8%).

As of 31 March 2017, ENDESA's market share reached 35.6% for ordinary mainland generation, 43.3% for generation and 35.3% for sales to customers in the deregulated market.

During the first quarter of 2017, the gas demand was 8.4% higher than the previous period of the year before and, as of 31 March 2017, ENDESA's market share reached 17.6% for sales to customers in the deregulated market.

Sales.

The table below presents the detail of ENDESA sales in the first quarter 2017 and its variation compared with the same period in the previous year:

Millions of Euros                
    Sales
  January-March 2017 (1)   January-March 2016   Difference   % Var.
Electricity sales   3,710   3,295   415   12.6
Deregulated Market Sales   2,134   2,062   72   3.5
Supply to Deregulated Market Customers outside Spain   254   239   15   6.3
Sales at the Regulated Price   682   626   56   8.9
Wholesale market sales   297   154   143   92.9
Non-mainland Compensation   313   210   103   49.0
Other Electricity Sales   30   4   26   650.0
Gas sales   745   685   60   8.8
Regulated Revenue from Electricity Distribution   511   506   5   1.0
Other sales and services rendered   154   150   4   2.7
TOTAL   5,120   4,636   484   10.4

(1) The first quarter 2017 includes the sales of ENEL Green Power España, S.L.U. (EGPE) amounting to €82 million.

Electricity sales to deregulated market customers.

ENDESA had 5,440,079 customers in the deregulated market as of 31 March 2017, which is a 0.3% increase compared with the amount of customers at 31 December 2016.

ENDESA sold a total of 20,075 GWh to these customers in the first quarter 2017, an increase of 1.2% compared with the first quarter of 2016.

In economic terms, sales in the Spanish regulated market during the first quarter of 2017 rose to €2,134 million, an increase of €72 million (+3.5%) compared with the first quarter of 2016 because of the increase in the physical units sold and the average sale price to the end customer.

In turn, the revenues from sales to customers in deregulated markets outside Spain rose to €254 million, a €15 million (+6.3%) increase over the first quarter 2016.

Electricity sales at a regulated price.

ENDESA sold 3,561 GWh through its reference retailer company in the first quarter 2017, 7.3% less than the January-March period in 2016.

These sales entailed an income of €682 million in the first quarter 2017, which is 8.9% higher than the figure in the first quarter of 2016 as a result of the increased average sales price, which offset the reduction in units sold.

Gas sales

ENDESA had 1,289,491 customers in the deregulated market as of 31 March 2017, which is a 1.1% increase compared with the amount of customers at 31 December 2016.

ENDESA sold 24,503 GWh to customers in the natural gas market in the first quarter of 2017, which represents a 5.2% increase on the first quarter 2016 figure.

In economic terms, revenue from gas sales during the first quarter of 2017 rose to €745 million, an increase of €60 million (+8.8%) compared with the first quarter of 2016, primarily because of the increase in units sold.

Non-mainland Territories Compensations.

During the first quarter of 2017, the compensations for generation surcharges in Non-mainland Territories rose to €313 million, representing an increase of €103 million (+49.0%) compared to the first quarter of 2016, primarily because of the increase in production and sales, and fuel costs because of the performance of raw material prices.

Electricity distribution.

During the first quarter of 2017, ENDESA distributed 29,119 GWh in the Spanish market, which is a 1.8% increase compared with the first quarter of 2016.

Regulated revenue from distribution during the first quarter of 2017 rose to €511, which is €5 million higher (+1.0%) than the amount posted for the first quarter of 2016.

Other operating income.

In January-March 2017, the amount for other operating income was €103 million, which is €139 million (-57.4%) lower than the amount posted for the first quarter of 2016.

In the first quarter of 2017, there was a reduction of €144 (-95.3%) in revenue from the valuation and liquidation of fuel stock derivatives, which is offset with less expenses from the valuation and liquidation of fuel stock derivatives of €146 million (-71.2%) posted under “Other Variable Procurements and Services”.

1.2.2. Operating expenses.

Operating expenses for January-March 2017 amounted to €4,915 million, which is 10.9% compared to the same period the previous year.

The breakdown of operating expenses for the first quarter 2017 is as follows:

Millions of Euros                
    Operating Expenses
  January-March 2017 (1)   January-March 2016   Difference   % Var.
Procurements and services   3,987   3,568   419   11.7
Power Purchases   1,496   1,106   390   35.3
Cost of fuel consumed   511   337   174   51.6
Transmission costs   1,502   1,553   (51)   (3.3)
Other variable procurements and services   478   572   (94)   (16.4)
Personnel expenses   220   202   18   8.9
Other fixed operating expenses   346   330   16   4.8
Depreciation and amortisation, and impairment losses   362   333   29   8.7
TOTAL   4,915   4,433   482   10.9
(1) The first quarter 2017 includes the operating expenses of ENEL Green Power España, S.L.U. (EGPE) amounting to €56 million.
 

Procurements and services.

Procurements and services (variable costs) totalled €3,987 million in the first quarter of 2017, 11.7% more than in the same period last year.

The following table contains the breakdown by ENDESA businesses and their change compared with the same period last year:

Millions of Euros                
Procurements and Services (3)
    January-March

2017

  January-March

2016

  % chg   % Contribution to Total
Generation and Supply (1) 3,978   3,556   11.9   99.8
Distribution   31   30   3.3   0.8
Structure and Other (2) (22)   (18)   22.2   (0.6)
TOTAL   3,987   3,568   11.7   100.0

(1) The first quarter 2017 includes the procurements and services expenses of ENEL Green Power España, S.L.U. (EGPE) amounting to €7 million.

(2) Structure, Services and Adjustments.

(3) Procurements and Services = Power Purchases + Cost of Fuel Consumed + Transmission Costs + Other Variable Procurements and Services.

The performance regarding these costs for the first quarter 2017 was:

  • Power purchases increased by €390 million (+35.3%) to €1,496 million, primarily because of the increase in the arithmetic mean price in the wholesale electricity market (55.6 €/MWh, +81.3%) and gas acquired for its sale to the end customer.
  • Cost of Fuel consumed amounted to €511 million, with an increase of 51.6% (€174 million) because of higher thermal production in the period and an increase in the average acquisition price.
  • The heading “Other Variable Procurements and Services” amounted to €478 million, a decrease of 94 million (-16.4%) compared with the same period in 2016. This variation primarily entails:
    • The €146 million decrease (-71.2%) in expenses for fuel stock derivatives, offset by a €144 million reduction in revenue because of this same concept (-95.3%), which are recorded under “Other Operating Income”.
    • The €15 million increase in the costs of carbon dioxide (CO2) emission rights, mostly because of greater thermal production.
    • The €42 million increase in the electricity production tax because of the increased production during the period, of which €6 million correspond to ENEL Green Power España, S.L.U. (EGPE).

The following table contains the breakdown of the contribution margin by ENDESA businesses and their variation compared with the same period last year:

Millions of Euros                
Contribution Margin (3)
    January-March

2017

  January-March

2016

  % Var.   % Contribution to Total
Generation and Supply (1) 663   730   (9.2)   53.6
Distribution   602   602   -   48.7
Structure and Other (2) (29)   (22)   31.8   (2.3)
TOTAL   1,236   1,310   (5.6)   100.0

(1) The first quarter 2017 includes the contribution margin of ENEL Green Power España, S.L.U. (EGPE) amounting to €76 million.

(2) Structure, Services and Adjustments.

(3) Contribution Margin = Income - Procurements and Services.

Personnel and other fixed operating expenses.

Fixed costs in the first quarter of 2017 totalled €566 million, thus €34 million (+6.4%) higher compared to the first quarter of 2016.

Personnel expenses during January-March 2017 amounted to €220 million, which is €18 million (+8.9%) higher than the same period in 2016.

The following table contains the breakdown by ENDESA businesses and their change compared with the same period last year:

Millions of Euros                
Personnel expenses
    January-March

2017

  January-March

2016

  % chg   % Contribution to Total
Generation and Supply (1) 113   108   4.6   51.4
Distribution   67   64   4.6   30.4
Structure and Other (2) 40   30   33.3   18.2
TOTAL   220   202   8.9   100.0

(1) The first quarter 2017 includes the personnel expenses of ENEL Green Power España, S.L.U. (EGPE) amounting to €4 million and for the staff corresponding to the ICT activities amounting to €7 million.

(2) Structure, Services and Adjustments.

The following effects should be considered when examining personnel expenses during the first quarter of 2017:

  • Personnel expenses during the first quarter in 2017 and 2016 were affected by the positive updates of the provisions under workforce restructuring and contract suspensions, which respectively amounted to €12 million and €19 million.
  • The period comprising January-March 2017 includes the personnel expenses arising upon the incorporation of ENEL Green Power España, S.L.U. (EGPE) and for the staff corresponding to the ICT activities amounting to €4 million and €7 million respectively.
  • There was also a net reversion of €3 million in the first quarter of 2016 corresponding to provisions for indemnities and occupational risks.

Isolating these effects, personnel expenses in the first quarter of 2017 would have decreased by €3 million (-1.3%).

Other fixed operating expenses in January-March 2017 stood at €346 million, up by €16 million (+4.8%). The following table contains the breakdown by ENDESA businesses and their change compared with the same period last year:

Millions of Euros                
Other fixed operating expenses
    January-March

2017

  January-March

2016

  % chg   % Contribution to Total
Generation and Supply (1) 294   262   12.2   85.0
Distribution   109   82   32.9   31.5
Structure and Other (2) (57)   (14)   307.1   (16.5)
TOTAL   346   330   4.8   100.0

(1) The first quarter 2017 includes the Other Fixed Operating Expenses of ENEL Green Power España, S.L.U. (EGPE) amounting to €15 million.

(2) Structure, Services and Adjustments.

Isolating the effect of the first quarter 2017 incorporation of ENEL Green Power España, S.L.U. (EGPE), other fixed operating expenses remained virtually unchanged (+0.3%) compared with the first quarter of 2016.

Depreciation and amortisation, and impairment losses.

The following table contains the breakdown of the "Depreciation and amortisation, and impairment losses" by ENDESA businesses and their change compared with the same period last year:

Millions of Euros                
Depreciation and amortisation, and impairment losses
    January-March

2017

  January-March

2016

  % chg   % Contribution to Total
Generation and Supply (1) 205   170   20.6   56.6
Distribution   141   156   (9.6)   39.0
Structure and Other (2) 16   7   128.6   4.4
TOTAL   362   333   8.7   100.0

(1) The first quarter 2017 includes the Depreciation and amortisation, and impairment losses of ENEL Green Power España, S.L.U. (EGPE) amounting to €30 million.

(2) Structure, Services and Adjustments.

Depreciation and amortisation, and impairment losses totalled €362 million in the first quarter of 2017, €29 million (+8.7%) higher than the first quarter in 2016.

In the first quarter of 2017, ENDESA concluded its analysis on the useful service life of its assets in operation. As a result thereof and in light of the current circumstances, the depreciation policy has been amended as follows:

  • The best current useful service life estimate of wind and solar power facilities was extended to 30 years from the previously considered 25 years.
  • Regarding hydroelectric power plants, depreciation of the civil engineering cost will now be over a term of 100 years (initially 65 years), and the electromechanical equipment thereof will be over 50 years (initially 35 years), both with the limit on the concession term.

Effective as of 1 January 2017, both measures have had a favourable impact on the first quarter depreciation expense in 2017 of €5 million and €11 million, respectively.

Without considering the reduction in the depreciation expense due to the extended useful service lives of the assets, depreciation and amortisation, and impairment losses in the first quarter of 2017 would have increased by 13.5% (€45 million) primarily as a result of the integration of ENEL Green Power España, S.L.U. (€30 million) and the incorporation of the assets in the ICT branch (€8 million).

1.2.3. Net financial result.

The net financial loss of the first quarter of 2017 was €28 million, thus a €23 million (-45.1%) reduction compared with the same period in the previous year.

The breakdown of the net financial result is:

Millions of Euros                
  Net Financial Results
    January-March

2017 (1)

  January-March

2016

  Difference   % chg
Financial income   19   18   1   5.6
Financial expenses   (47)   (68)   21   (30.9)
Net exchange differences   -   (1)   1   N/A
TOTAL   (28)   (51)   23   (45.1)
(1) The first quarter 2017 includes the Net Financial Results of ENEL Green Power España, S.L.U. (EGPE) amounting to negative €2 million.
 

In the first quarter of 2017, the net financial expenses amounted to €28 million, i.e., €22 million (-44.0%) less than the same period in the previous year, but there was no net exchange differences compared with the €1 million exchange loss generated in the first quarter of 2016.

The following effects should be considered when examining net financial expense during the first quarter of 2017:

  • The performance in the long-term interest rates during the first quarter of 2017 and 2016 entailed an adjustment in the provisions to account for obligations arising from the ongoing workforce restructuring and contract suspension provisions, which had a positive impact of €12 million and negative impact of €25 million respectively.
  • In the first quarter 2017, net financial expenses also include the effect of incorporating ENEL Green Power España, S.L.U. (EGPE) amounting to €2 million.
  • In the first quarter of 2016, €12 million was recognised for revenues associated with the adjustment of interests for financing the deficit of income in regulated activities in Spain.

Without considering the effects indicated in the paragraphs above, the net financial expenses would have increased by €1 million (+2.7%) because of the increase in the average gross financial debt in both periods, which grew from €5,060 million in January-March 2016 to €5,856 million in January-March 2017, has been offset by the lower average cost of the gross financial debt, wich dropped from 2.6% in January-March 2016 to 2.4% in January-March 2017.

1.2.4. Net profit (loss) of companies accounted for using the equity method.

In the first quarter of 2017, companies accounted for using the equity method contributed a net profit of €15 million, compared to a net profit of €28 million in the first quarter of 2016.

In January-March 2016, this heading included the net result contributed by the 40% holding in ENEL Green Power España, S.L.U. (EGPE) and the 50% holding in ENEL Insurance, N.V., amounting to respective profits of €4 million and €6 million.

On 24 May 2016, ENDESA sold its stake in ENEL Insurance, N.V. and, on 27 July 2016, ENDESA acquired 60% of ENEL Green Power España, S.L.U. (EGPE), which is now consolidated through global integration.

1.2.5. Gains (loss) on the sale of assets.

In the first quarter of 2017 and 2016, this heading primarily included the expense for factoring transaction commissions.

1.2.6. Income Tax.

In the first quarter of 2017, the expense for Income Tax amounted to €66 million, which is €31 million (-32.0%) lower than the amount posted for the first quarter of 2016.

The effective rate in January-March 2017 was 20.5% (22.1% in January-March 2016).

2. Other information.

2.1. Risk Management Policy.

During the first quarter of 2017, ENDESA followed the same general risk policy described in its annual consolidated financial statements for the year ended 31 December 2016.

In this context, the financial instruments and types of hedges are the same as those described in these consolidated financial statements.

The risks that could affect ENDESA operations are also the same as those described in the consolidated management report for the fiscal year ending on 31 December 2016.

2.2. Scope of Consolidation.

On 27 July 2016, ENDESA Generación S.A.U., a fully owned subsidiary of ENDESA S.A. (ENDESA), acquired ENEL Green Power International B.V, 60% of the share capital of ENEL Green Power España, S.L.U. (EGPE), thus increasing its previous stake in share capital from 40%.

On the date of execution of the purchase, ENDESA assumed control over ENEL Green Power España, S.L.U. (EGPE) compared to the significant influence that it had previously held as a result of holding 40% of the latter's share capital.

As a result thereof, the Consolidated Income Statement for the first quarter of 2017 includes the income and expenses corresponding to the consolidation of 100% of the stake in ENEL Green Power España, S.L.U. (EGPE).

The contribution of ENEL Green Power España, S.L.U. (EGPE) to the net result of the first quarter of 2017 rose to €18 million is as follows:

Millions of Euros        
    Contribution of ENEL Green Power España, S.L.U. (EGPE)
  January-March

2017

  January-March

2016

Net Result of the prior interest of 40% (1)   N/A   4
Net Result of the Interest of 100%   18   N/A
Revenues   83   N/A
Contribution Margin   76   N/A
EBITDA (2)   57   N/A
EBIT (3)   27   N/A
Net Financial Results   (2)   N/A
Net profit (loss) of companies according to the equity method and other investments   1   N/A
Income Tax   (5)   -
Non-controlling interests   (3)   -
TOTAL   18   4

(1) Corresponding to the 40% stake that ENDESA, S.A. held through ENDESA Generación, S.A.U. until the date when it assumed control.

(2) EBITDA = Income - Procurements and Services + Self-constructed assets - Personnel Expenses - Other Fixed Operating Expenses.

(3) EBIT = EBITDA - Depreciation and amortisation, and impairment losses.

In the first quarter of 2017, the key operational data of ENEL Green Power España, S.L.U. (EGPE) are as follows:

    January-March

2017

Electricity Generation (GWh)   994
Net Installed Capacity (MW) (1)   1,675
Electricity sales (GWh)   994

(1) As of 31 March 2017.

2.3. Acquisition of a branch of systems and telecommunications business.

On 29 December 2016, ENDESA, S.A., acting through its fully owned subsidiary ENDESA Servicios, S.L.U., and ENEL Iberoamérica, S.L.U. entered into an Assignment Contract for the Branch of the IT and Telecommunications Activity so that the latter may acquire the ICT activities within the ENDESA sphere.

The operation entailed the transfer of materials, human resources and contracts with third parties affected in the implementation of these activities.

The effective date of the transaction was 1 January 2017 and entailed a reorganisation of systems and telecommunications support activities at ENDESA with a view to rendering them more adaptable to the needs of its corporate perimeter, simplifying internal and administrative management procedures.

The price stipulated for purchasing this activity branch was €246 million and payment thereof was settled on the date when the contract was formalised. The transaction was recognised through the acquisition method and assigned to the following items in the Consolidated Financial Statements:

Millions of Euros    
Non-current assets   95
Property, plant and equipment   64
Intangible assets   31
TOTAL ASSETS   95
     
Non-current liabilities   8
Non-current provisions   8
Current Liabilities   2
Trade and other current liabilities   2
TOTAL LIABILITIES   10
     
Fair Value of Net Assets Acquired   85
 

The difference between the cost of combining the businesses and the fair value of the recognised assets and liabilities indicated above generated a provisional goodwill of €161 million because of the synergies to secure in transactions based on aspects such as the prospects of greater autonomy for ENDESA in the future management of ICT activities, simplification and improvement of operations and management and a reduction in expected costs.

2.4. Dividends.

In its session held on 22 November 2016, the Board of Directors of ENDESA, S.A. approved the following shareholder remuneration policy for 2016-2019:

  • 2016: the ordinary dividend per share distributed against the year will be the equivalent to 100% of net profit attributable to the parent company set down in the consolidated annual financial statements provided that this amount is higher than the result of applying a minimum 5% increase to the ordinary dividend paid with a charge to the prior year.
  • 2017 to 2019: the ordinary dividend per share to be distributed in these years will be the equivalent to 100% of ordinary net profit attributable to the parent company set down in the consolidated annual financial statements of the Group headed by this company. Specifically, for 2017, this ordinary dividend will be at least the same as €1.32 gross per share.

The General Shareholders' Meeting of ENDESA, S.A. held on 26 April 2017 approved the distribution of a total dividend to its shareholders charged against the 2016 profit of a gross figure of €1.333 per share, amounting to €1,411 million, which is equal to the consolidated net profit of ENDESA for the year ending on 31 December 2016.

In consideration of the gross interim dividend of €0.7 per share (€741 million) paid out on 2 January 2017, the gross supplementary dividend (final dividend) charged against 2016 results is €0.633 per share (€670 million) and will be paid out on 3 July 2017.

2.5. Other information.

There were no one-off events involving significant amounts during the first quarter of 2017 other than those referred to herein.

Therefore, no new significant contingent liabilities arose during the period ended 31 March 2017 other than those described in the Consolidated Financial Statements for the year ended 31 December 2016.

3. Regulatory Framework.

From a regulatory perspective, the main highlights during the period were as follows:

2017 electricity tariff

On 29 December 2016 the Official State Gazette (BOE) published Order ETU/1976/2016 of 23 December, which establishes the access tariffs for 2017.

In accordance with this Order, the access tariffs remained unchanged.

Natural gas tariff for 2017

Order ETU/1977/2016 of 23 December kept the access tariffs virtually unchanged in comparison with the 2016 tariffs, and updated the last resort tariffs with an average reduction of 9% as a result of lower raw material costs.

Energy efficiency

Law 18/2014 of 15 October, approving urgent measures to boost growth, competitiveness and efficiency, with regard to energy efficiency, created the Energy Efficiency National Fund with the aim of achieving energy savings.

Order IET/258/2017 of 24 March entailed a contribution by ENDESA to the Energy Efficiency National Fund of €29.3 million, corresponding to its 2017 obligations.

Renewable energy auction.

On 1 April 2017 the Official State Gazette (BOE) published Royal Decree 359/2017 of 31 March, establishing a call for assigning the specific remuneration system for new renewable energy production facilities through an auction with a maximum installed power limit of 3,000 MW. This is a technology neutral auction.

In turn, Order ETU/315/2017 of 6 April, which was published in the Official State Gazette (BOE) on 8 April 2017, regulates the specific remuneration system's assignment procedure for the auction, the remuneration parameters of the reference standard facility and standard facilities, and characteristics of the auction.

Finally, the Resolutions on 10 April 2017 of the Secretary of State for Energy, published in the Official State Gazette (BOE) on 12 April 2017, approved the call for an auction of up to 2,000 MW, which is scheduled for 17 May 2017, and the rules and procedures thereof.

4. Liquidity and Capital Resources

4.1. Financial Management.

Financial debt

The reconciliation of ENDESA's gross and net financial debt at 31 March 2017 and 31 December 2016 is as follows:

Millions of Euros                
    Financial debt
  31 March

2017

  31 December 2016   Difference   % chg
Non-current Financial debt   4,524   4,223   301   7.1
Current Financial debt   1,378   1,144   234   20.5
Gross Financial Debt   5,902   5,367   535   10.0
Cash and cash equivalents   (398)   (418)   20   (4.8)
Derivatives recognised as financial assets   (9)   (11)   2   (18.2)
Net financial debt   5,495   4,938   557   11.3
     

As of 31 March 2017, ENDESA had net financial debt of Euro €5,495 million, an increase of €557 million compared to the debt at 31 December 2016.

When assessing net debt, it must be borne in mind that on 2 January 2017 ENDESA paid shareholders an interim dividend against 2016 results of €0.7 per share (gross), hence a payout of €741 million.

The structure of ENDESA's gross financial debt at 31 March 2017 and December 2016 was as follows:

Millions of Euros                
  Gross Financial Debt
  31 March

2017

  31 December

2016

  Difference   % chg
Euro   5,902   5,367   535   10,0
TOTAL   5,902   5,367   535   10.0
Fixed rate   3,654   3,661   (7)   (0.2)
Floating rate   2,248   1,706   542   31.8
TOTAL   5,902   5,367   535   10.0
Average life (years) (1) 6.4   6.5   -   -
Average Cost (%) (2) 2.4   2.5   -   -

(1) Average life (years) = (Principal * Number of Valid Days) / (Valid Principal at the Close of the Period * Number of Days in the Period).

(2) Average Cost (%) = (Cost of the Financial Debt) / Average Gross Financial Debt.

 

As of 31 March 2017, the gross financial debt at fixed interest rates accounted for 62% while 38% was at floating rates.

As of this date, the entire gross financial debt is in euros.

Main financial transactions.

Within the framework of the financial transaction (ENDESA Network Modernisation) concluded with the European Investment Bank (EIB) in 2014, Tranches B and C (each one of €150 million) were available on 18 January 2017 and 20 February 2017, thus completing the provision of the transaction for a total amount of €600 million. Both provisions are at floating rate, with a 12-year maturity which may be repaid from 2021.

During January-March 2017, ENDESA in turn concluded agreements with different financial institutions for the extension to 3 years with a possibility of extending to 5 years of most of its credit lines for €1,985 million.

In the first quarter of 2017, ENDESA maintained the Euro Commercial Paper (EPC) emissions programme through International ENDESA, B.V., and the active balance thereof as of 31 March 2017 is €1,200 million, and its renewal is backed by irrevocable bank credit lines.

Liquidity.

As of 31 March 2017, ENDESA liquidity rose to €3,464 million (€3,620 million at 31 December 2016) as detailed below:

Millions of Euros            
    Liquidity
  31 March

2017

  31 December

2016

  Difference   % chg
Cash and cash equivalents   398   418   (20)   (4.8)
Unconditional availability in lines of credit (1)   3,066   3,202   (136)   (4.2)
TOTAL   3,464   3,620   (156)   (4.3)
Coverage of Maturities (months) (2)   35   17   -   -

(1) As of 31 March 2017 and 31 December 2016, €1,000 million correspond to the credit line available with ENEL Finance International, N.V.

(2) Coverage of maturities = maturity period (months) for vegetative debt that could be covered with the liquidity available

Treasury investments considered as “Cash and Cash Equivalents” are high liquidity and entail no risk of changes in value, mature within 3 months from their contract date and accrue interest at the market rates for such instruments.

Leverage.

The consolidated leverage level at 31 March 2017 and 31 December 2016 is:

Millions of Euros        
Leverage
    31 March

2017

  31 December

2016

Net Financial Debt:   5,495   4,938
Non-current Financial debt   4,524   4,223
Current Financial Debt   1,378   1,144
Cash and cash equivalents   (398)   (418)
Derivatives recognised as financial assets   (9)   (11)
Equity:   9,337   9,088
Of the Parent Company   9,198   8,952
Of non-controlling interests   139   136
Leverage (%) (*) 58.9   54.3

(*) Leverage = Net Financial Debt / Equity.

Credit rating.

On the date of the present Consolidated Management Report, ENDESA's credit ratings were as follows:

    Credit rating
31 March

2017 (*)

  31 December

2016 (*)

  Long term   Short term   Outlook   Long term   Short term   Outlook
Standard & Poor’s   BBB   A-2   Positive   BBB   A-2   Stable
Moody’s   Baa2   P-2   Stable   Baa2   P-2   Stable
Fitch Ratings   BBB+   F2   Stable   BBB+   F2   Stable
(*) On the respective presentation dates of the Consolidated Management Report.
 

ENDESA's credit rating is restricted to the rating of its parent company ENEL according to the methods employed by rating agencies and, as of 31 March 2017, has been classified as “investment grade” by all the rating agencies.

4.2. Cash Flows.

As of 31 March 2017, the amount for cash and cash equivalents stood at €398 million.

ENDESA's net cash flows in the first quarters of 2017 and 2016, classified by activities (operation, investment and financing) were:

Millions of Euros        
    Net Cash Flows
  January-March

2017 (1)

  January-March

2016

Net cash flows from/(used in) operating activities   536   665
Net cash flows from/(used in) investment activities   (356)   (405)
Net cash flows from/(used in) financing activities   (200)   (393)

(1) The first quarters of 2017 includes net cash flows from/(used in) operating, investment and financing activities of ENEL Green Power España, S.L.U. (EGPE) amounting to €63 million, €55 million (negative) and €2 million (negative), respectively.

In the first quarter of 2017, the net investments necessary for developing ENDESA businesses and the payment of dividends to shareholders were covered with the net cash flows from operating activities and an increase in the net financial debt.

Cash flow from operating activities.

In January-March 2017, net cash flow from operating activities stood at €536 million, €129 million less than the same period in 2016 (€665 million in January-March 2016) primarily because of the downturn in gross profit during the period (€117 million).

As of 31 March 2017 and 31 December 2016, the working capital comprised the following items:

Millions of Euros        
    Working Capital
  31 March

2017

  31 December

2016

Current Assets (1)   4,924   5,015
Inventories   1,308   1,202
Trade and other accounts receivable   3,254   3,452 (3)
Current financial assets   362   361
         
Current Liabilities (2)   5,640   6,377
Current provisions   565   567
Trade and other current liabilities   5,075   5,810(4)

(1) Excluding "Cash and Cash Equivalents" and Financial Derivative Assets corresponding to financial debt.

(2) Excluding "Current Financial Debt" and Financial Derivative Liabilities corresponding to financial debt.

(3) As of 31 December 2016, including the acquisition price of the ICT activities branch, paid on 29 December 2016, i.e., €246 million.

(4) As of 31 December 2016, including the interim dividend of the 2016 result of €741 million. This amount was paid on 2 January 2017.

 

Net cash flows in investment activities.

During the first quarter of 2017, the net cash flows applied to investment activities were €356 million (compared with €405 million in the first quarter of 2016) and mainly include net cash payments applied to the acquisition of property, plant and equipment amounting to €321 million (compared with €324 million in January-March 2016) (Refer to section 4.3 Investments in the present Consolidated Management Report).

Net cash flows in financing activities.

In the first quarter of 2017, the net cash flows applied to financing activities amounted to €200 million (compared with €393 million in the first quarter of 2016) and primarily include the payment of €741 million corresponding to the interim dividend against 2016 (€424 million in January-March 2016) (refer to Section 2.4 Dividends in the present Consolidated Management Report).

4.3. Investments.

In the first quarter of 2017, ENDESA made gross investments of €261 million, of which €241 million were related to property, plant and equipment and intangible assets, and the remaining €20 million to financial investments, as follows:

Millions of Euros            
    Gross investment
  January-March

2017 (1)

  January-March

2016

  % chg
Generation and Supply   41   58   (29.3)
Distribution   90   105   (14.3)
Others   64   -   N/A
TOTAL PROPERTY, PLANT AND EQUIPMENT   195   163   19.6
Generation and Supply   8   6   33.3
Distribution   4   5   (20.0)
Others   34   3   1,033.3
TOTAL INTANGIBLE ASSETS   46   14   228.6
FINANCIAL   20   58   (65.5)
TOTAL INVESTMENTS   261   235   11.1

(1) The first quarter 2017 includes investments made by ENEL Green Power España, S.L.U. (EGPE) amounting to €3 million.

Property, plant and equipment

Gross investments in generation in the first quarter of 2017 mostly correspond to investments made on plants that were already operating at 31 December 2016, prominently including the €7 million investment in the Litoral power plant to adapt it to European environmental legislation and also entailed extending its useful service life.

Gross investments in distribution related to grid extensions and expenditure aimed at optimising the grid to improve the efficiency and quality of service. It also included investment for the widespread installation of remote management smart meters and their operating systems.

Gross investments in supply correspond primarily to the development of the activity concerning Value Added Products and Services (VAPS).

In the first quarter of 2017, there were also gross investments of €64 million corresponding to ICT activities.

Investment in Intangible Assets.

The gross investments in the first quarter of 2017 primarily correspond to computer software and ongoing investments in ICT activities.

Financial investments.

The gross investments in the first quarter of 2017 include, primarily, the contribution of €7 million to Nuclenor, S.A.

Appendix Statistics.

Industrial data.

   
GWh            
Electricity Generation   January-March

2017

  January-March

2016

  % chg
Mainland   14,922   12,411   20.2
Nuclear   7,184   6,461   11.2
Coal   5,135   3,321   54.6
Hydroelectric   1,483   2,333   (36.4)
Combined cycle (CCGT)   1,120   296   278.4
Non-Mainland Territories   3,064   2,952   3.8
Renewables and Cogeneration (1) 994   -   N/A
TOTAL (2) 18,980   15,363   23.5

(1) Corresponding to the first quarter 2017 energy generated by ENEL Green Power España, S.L.U. (EGPE).

(2) At busbar cost.

MW            
Gross Installed Capacity   31 March:

2017

  31 December

2016

  % chg
Hydroelectric   4,765   4,765   -
Conventional Thermal   8,094   8,130   (0.4)
Thermal Nuclear   3,443   3,443   -
Combined Cycle   5,678   5,678   -
Renewables and Cogeneration   1,675   1,675   -
TOTAL   23,655   23,691   (0.2)
     
MW            
Net Installed Capacity   31 March:

2017

  31 December

2016

  % chg
Hydroelectric   4,721   4,721   -
Conventional Thermal   7,585   7,585   -
Thermal Nuclear   3,318   3,318   -
Combined Cycle   5,445   5,445   -
Renewables and Cogeneration   1,675   1,675   -
TOTAL   22,744   22,744   -
     
GWh              
Electricity sales     January-March

2017

  January-March

2016

  % chg
Regulated price     3,561   3,842   (7.3)
Deregulated market     20,075   19,835   1.2
TOTAL     23,636   23,677   (0.2)
       
Thousands            
Number of Customers (Electricity) (1)   31 March:

2017

  31 December

2016

  % chg
Regulated Market Customers   5,484   5,593   (1.9)
Mainland Spain   4,601   4,692   (1.9)
Non-Mainland Territories   883   901   (2.0)
Deregulated Market Customers   5,440   5,423   0.3
Mainland Spain   4,503   4,505   -
Non-Mainland Territories   749   744   0.7
Outside Spain   188   174   8.1
TOTAL   10,924   11,016   (0.8)

(1) Supply points.

 
Percentage (%)        
Electricity Demand Trend (1) January-March

2017

  January-March

2016

Mainland (2) 0.2   (1.3)
Non-Mainland Territories (3) 1.6   (1.0)

(1) Source: Red Eléctrica de España, S.A. (REE).

(2) Corrected for working days and temperature effects, the mainland demand trend is +1.1% in the first quarter of 2017 and -0.6% in the first quarter of 2016

(3) Corrected for working days and temperature effects, the evolution of global demand in the Non-Peninsular Territories (NPT) is +0.2% in the first quarter of 2017 and +0.3% in the first quarter of 2016.

 
Percentage (%)        
Market Share (Electricity) (1) 31 March

2017

  31 December

2016

Ordinary Mainland Generation   35.6   35.1
Renewable Generation (2) 3.9   3.5
Distribution   43.3   43.7
Retail   35.3   35.3
(1) Source: Endesa data.
(2) Excluding hydroelectric.
 

GWh

           
Gas sales   January-March

2017

  January-March

2016

  % chg
Deregulated market   15,001   14,859   1.0
Regulated Market   677   687   (1.5)
International Market   7,507   5,594   34.2
Wholesale   1,318   2,141   (38.4)
TOTAL (1) 24,503   23,281   5.2
(1) Excluding own generation consumption.
 
Thousands            
Customers (Gas) (1) 31 March

2017

  31 December

2016

  % chg
Regulated Market Customers   257   262   (1.9)
Mainland Spain   228   233   (2.1)
Non-Mainland Territories   29   29   -
Deregulated Market Customers   1,290   1,276   1.1
Mainland Spain   1,199   1,167   2.7
Non-Mainland Territories   60   86   (30.2)
Outside Spain   31   23   34.8
TOTAL   1,547   1,538   0.6
(1) Supply points.
 
Percentage (%)        
Gas Demand Trend (1) January-March

2017

  January-March

2016

Domestic market   8.4   (4.3)
Domestic Conventional   7.2   (2.5)
Electricity sector   16.5   (5.1)
(1) Source: Enagás, S.A.
 
Percentage (%)        
Market Share (Gas) (1) 31 March

2017

  31 December 2016
Deregulated market   17.6   16.9
(1) Source: Endesa data.
 

 

GWh

           
Distributed Energy (1) January-March

2017

  January-March

2016

  % chg
Business in Spain and Portugal   29,119   28,602   1.8
TOTAL   29,119   28,602   1.8
(1) At busbar cost.    
 
km            
Distribution and Transmission Grids   31 March

2017

  31 December

2016

  % chg
Business in Spain and Portugal   316,890   316,562   0.1
     
Percentage (%)        
Energy losses   January-March

2017

  January-March

2016

Business in Spain and Portugal   12.9   12.8
   

Workforce.

Number of employees                          
  Period-end headcount
31 March

2017

  31 December

2016

    Men   Women     Total   Men   Women   Total
Generation and Supply   4,087   982     5,069   4,140   989   5,129
Distribution   2,612   446     3,058   2,707   467   3,174
Structure and Other (1)   920   816     1,736   679   712   1,391
TOTAL EMPLOYEES   7,619   2,244     9,863   7,526   2,168   9,694
(1) Structure and Services.
 
Number of employees                          
  Average headcount
January-March

2017 (1)

  January-March

2016

    Men   Women     Total   Men   Women   Total
Generation and Supply   4,105   979     5,084   4,127   965   5,092
Distribution   2,632   449     3,081   2,962   481   3,443
Structure and Other (2)   915   818     1,733   697   696   1,393
TOTAL EMPLOYEES   7,652   2,246     9,898   7,786   2,142   9,928

(1) The first quarter 2017 includes the average workforce of ENEL Green Power España, S.L.U. (EGPE) (169 employees) and Eléctrica del Ebro, S.A. (20 employees).

(2) Structure and Services.

 

Financial Data.

Millions of Euros

    Consolidated Income Statement
  January-March

2017

  January-March

2016

  % chg
Revenue   5,120   4,636   10.4
Contribution Margin (1) 1,236   1,310   (5.6)
EBITDA (2) 702   801   (12.4)
EBIT (3) 340   468   (27.4)
Net Income (4) 253   342   (26.0)

(1) Contribution Margin = Income - Procurements and Services.

(2) EBITDA = Income - Procurements and Services + Self-constructed assets - Personnel Expenses - Other Fixed Operating Expenses.

(3) EBIT = EBITDA - Depreciation and amortisation, and impairment losses.

(4) Net Income: Parent Company Period Result.

   
Euros            
Assessment Parameters   January-March

2017

  January-March

2016

  % chg
Earnings per Share (1) 0.24   0.32   (26.0)
Cash Flow per Share (2) 0.51   0.63   (19.4)
Book value of equity per share (3) 8.69   8.46 (4)   2.7

(1) Earnings per Share = Parent Company Period Result / No. Shares.

(2) Cash Flow per Share = Net Cash Flow of the Operating Activities / No. Shares.

(3) Equity attributable to shareholders of the Parent Company/ No. shares.

(4) As of 31 December 2016.
 

Millions of Euros

    Consolidated Statement of Financial Position
  31 March

2017

  31 December

2016

  % chg
Total assets   30,899   30,964   (0.2)
Equity   9,337   9,088   2.7
Net financial debt (1) 5,495   4,938   11.3

(1) Net financial debt = Non-current financial liabilities + Current financial liabilities – Cash and cash equivalents – Financial derivatives recognised as financial assets.

 
Millions of Euros        
Leverage
    31 March

2017

  31 December

2016

Net Financial Debt:   5,495   4,938
Non-current Financial Debt:   4,524   4,223
Current Financial Debt   1,378   1,144
Cash and cash equivalents   (398)   (418)
Fianncial Derivatives recognised as financial assets   (9)   (11)
Equity:   9,337   9,088
Of the Parent Company   9,198   8,952
Of non-controlling interests   139   136
Leverage (%) (*) 58.9   54.3

(*) Leverage = Net Financial Debt / Equity

 
Financial Indicators   31 March

2017

  31 December

2016

Liquidity Ratio (1) 0.76   0.72
Solvency Ratio (2) 0.93   0.92
Debt Ratio (3) 37.05   35.21
Debt Coverage Ratio (4) 1.96   1.44

(1) Liquidity = Current Assets / Current Liabilities.

(2) Solvency = (Equity + Non-current Liabilities) / Non-current Assets.

(3) Debt = Net Financial Debt / (Equity + Net Financial Debt) (%).

(4) Debt Coverage = Net Financial Debt / EBITDA.
 

Rating.

  31 March 2017 (*)   31 December 2016 (*)
    Long term   Short term   Outlook     Long term   Short term   Outlook
Standard & Poor’s   BBB   A-2   Positive     BBB   A-2   Stable
Moody’s   Baa2   P-2   Stable     Baa2   P-2   Stable
Fitch Ratings   BBB+   F2   Stable     BBB+   F2   Stable
(*) On the respective presentation dates of the Consolidated Management Report.
 

Stock market information.

Percentage (%)        
Listing price trend compared to the previous period   January-March

2017

  January-March

2016

ENDESA, S.A.   9.5   (8.9)
IBEX-35   11.9   (8.6)
Euro Stoxx 50   6.4   (8.0)
Euro Stoxx Utilities   7.9   (5.5)
   
Stock market data       31 March

2017

  31 December

2016

  % chg
Market cap   (Millions of Euros) (1)   23,324   21,307   9.5
Number of Outstanding Shares       1,058,752.117   1,058,752.117   -
Nominal share value   (Euros)   1.2   1.2   -
Cash   (Thousands of Euros) (2)   2,226,766   10,783,803   (79.4)
Continuous Market   (shares)            
Trading volume   (3)   111,215,914   596,186,291   (81.3)
Average daily trading volume   (4)   1,711,014   2,319,791   (26.2)
PER   (5)   23.1   15.1   -
Price / Book value   (6)   2.5   2.3   -

(1) Market Cap = Number of Shares at the Close of the Period * Listing Price at the Close of the Period.

(2) Cash = Sum of all the operations made over the value in the reference period. (Source: Madrid Stock Exchange).

(3) Trading Volume = Total volume of shares of ENDESA, S.A. traded in the period (Source: Madrid Stock Exchange).

(4) Average Daily Trading Volume = Arithmetic mean of shares of ENDESA, S.A. traded per session during the period (Source: Madrid Stock Exchange).

(5) Price to Earning Ratio (PER) = Listing Price at the Close of the Period / Earnings per Share.

(6) Market Cap / Equity

       
Euros              
Listing price for ENDESA     January-March

2017

  January-December

2016

  % Var.
High     22.030   20.975   5.0
Low     18.950   15.735   20.4
Period Average     20.035   18.151   10.4
Period Close     22.030   20.125   9.5
 

Dividends.

    2016   2015   % Var.
Share capital (1) 1,270.50   1,270.50   -
Number of shares   1,058,752,117   1,058,752,117   -
Consolidated Net Profit (1) 1,411   1,086   29.9
Individual Net Profit (1) 1,419   1,135   25.0
Earnings per Share (2)(3)(4) 1.333   1.026   29.9
Gross Dividend per Share (2) 1.333 (5)   1.026 (6)   29.9
Consolidated Pay-Out (%)(7) 100.0   100.0   -
Individual Pay-Out (%)(8) 99.4   95.7   -

(1) Millions of euros.

(2) Data in euros

(3) Corresponding to the Consolidated Financial Statements.

(4) Earnings per Share = Profit for the year of the Parent Company / No. Shares.

(5) Gross interim dividend of €0.7 per share, paid out on 2 January 2017 plus the gross supplementary dividend of €0.633 per share, which will paid out on 3 July 2017.

(6) Gross interim dividend of €0.4 per share, paid out on 4 January 2016 plus the gross supplementary dividend of €0.626 per share paid out on 1 July 2016.

(7) Consolidated Payout = (Gross Dividend per Share * No. Shares) / profit for the year of the Parent Company

(8) Individual Payout = (Gross Dividend per Share * No. Shares) / profit for the year of ENDESA, S.A.

Disclaimer.

This document contains certain "forward-looking" statements regarding anticipated financial and operating results and statistics and other future events. These statements constitute no guarantee on any future performance and are subject to material risks, uncertainties, changes and other factors that may be beyond ENDESA’s control or difficult to predict.

Forward-looking statements include yet are not limited to information regarding: estimated future earnings; electricity production variations of the different technologies; market share; expected variations in the gas demand and supply; management strategy and objectives; estimated cost reductions; tariffs and pricing structure; expected investments; estimated asset disposals; expected variations in generation capacity and changes in capacity mix; repowering of capacity and macroeconomic conditions. The outlooks and objectives included in this document are based on assumptions drawn from an examination of the regulatory environment, exchange rates, commodities, divestments, increases in production and installed capacity in markets where ENDESA operates, increased demand in these markets, assignment of production across different technologies, increased costs associated with higher activity yet not exceeding certain limits, electricity prices no less than certain levels, costs of combined cycle plants, availability and cost of raw materials and emission rights necessary to run our business at the desired levels.

In these statements, ENDESA is availed of the protection provided by the Private Securities Litigation Reform Act of 1995 of the United States of America with respect to forward-looking statements.

The following factors, in addition to those discussed elsewhere herein, could cause actual financial and operating results and statistics to differ materially from those expressed in our forward-looking statements: economic and industry conditions; liquidity and finance-related factors; operational factors; strategic, regulatory, legal, taxation, environmental, governmental and political factors; reputational factors; commercial or transactional factors.

Further details on the factors that may cause actual results and other developments to differ significantly from the expectations implied or explicitly contained herein are given in the Risk Factors chapter of ENDESA's regulated information filed with the Spanish Securities Exchange Commission (CNMV).

ENDESA cannot guarantee that the forward-looking statements herein will be fulfilled. Except as may be required by applicable law, neither ENDESA nor any of its subsidiaries intends to update these forward-looking statements.

You will find additional information on our 1Q 2017 Results on our website

www.endesa.com

Short Name: International Endesa
Category Code: QRF
Sequence Number: 582986
Time of Receipt (offset from UTC): 20170509T084706+0100

Contacts

International Endesa

Contacts

International Endesa