Group performance

Millions of euro     
 2013 2012 restated Change 
Total revenues  80,535  84,949  (4,414)  -5.2% 
Total costs  63,146  69,178  (6,032)  -8.7% 
Net income/(charges) from commodity risk management  (378)  38  (416)  -
GROSS OPERATING MARGIN  17,011  15,809  1,202  7.6% 
Depreciation, amortization and impairment losses  7,067  9,003  (1,936)  -21.5% 
OPERATING INCOME  9,944  6,806  3,138  46.1% 
Financial income  2,453  2,185  268  12.3% 
Financial expense  5,266  5,197  69  1.3% 
Total financial income/(expense)  (2,813)  (3,012)  199  6.6% 
Share of income/(expense) from investments accounted for using the equity method  86  88  (2)  -2.3% 
INCOME BEFORE TAXES  7,217  3,882  3,335  85.9% 
Income taxes  2,437  2,440  (3)  -0.1% 
NET INCOME FROM CONTINUING OPERATIONS  4,780  1,442  3,338  -
NET INCOME FROM DISCONTINUED OPERATIONS  - - - -
NET INCOME (Group and non-controlling interests)  4,780  1,442  3,338  -
Net income pertaining to shareholders of Parent Company  3,235  238  2,997  -
Net income pertaining to non-controlling interests  1,545  1,204  341  28.3% 
Enel Open Data

Revenues

Millions of euro     
 2013 2012 restated Change 
Electricity sales and transport and contributions from Electricity Equalization Fund and similar bodies  67,285  71,322  (4,037)  -5.7% 
Gas sold and transported to end users  4,451  4,402  49  1.1% 
Gains on the disposal of assets  944  938  -
Remeasurement at fair value after changes in control  21  16  31.2% 
Other services, sales and revenues  7,834  9,203  (1,369)  -14.9% 
Total  80,535  84,949  (4,414)  -5.2% 
Enel Open Data

Revenues from electricity sales and transport and contributions from Electricity Equalization Fund and similar bodies in 2013 amounted to €67,285 million, down €4,037 million compared with 2012 (-5.7%). The decrease is attributable to the following factors:

  • a decline of €3,621 million in revenues from the sale of electricity to end users, of which €2,111 million on regulated markets and €1,510 million on free markets. The decrease is essentially due to the decline in quantities of electricity sold as a result of weakening demand, partly offset by a rise in revenues from the wholesale electricity business (€648 million); the latter is mainly attributable to an increase in revenues from sales on electricity exchanges, which more than offset the decline in sales under bilateral contracts entered into by the generation company;
  • a decline of €1,243 million in revenues from electricity trading, reflecting a decline in volumes handled;
  • a decrease of €401 million in revenues from contributions from the Electricity Equalization Fund and similar bodies, essentially attributable to the fall in revenues from extrapeninsular generation in Spain, reflecting lower volumes generated and the negative effects of the entry into force of Royal Decree Law 20/2012 starting from the 2nd Half of 2012;
  • an increase of €580 millions in revenues from the transport of electricity, due essentially to the increase in revenues from the transport of electricity for other operators.

Revenues from gas sold and transported to end users amounted to €4,451 million, up €49 million (1.1%) compared with the previous year. This performance essentially reflects both the increase in quantities sold and the increase in average sales prices in Spain and Portugal due to developments in the international energy market and the revision of a number of rate components.

Gains on the disposal of assets amounted to €944 million in 2013 and mainly regard the gain on the disposal of Artic Russia and, indirectly, the stake held in SeverEnergia (€964 million), and the sale of 51% of the Buffalo Dunes Wind Project (€20 million). These gains were partly offset by a partial adjustment (€43 million) of the result of the disposal of certain renewable generation assets to Acciona in 2009, as part of Enel’s acquisition of an additional 25.01% of Endesa.

The gain from remeasurement at fair value after changes in control amounted to €21 million in 2013 (€16 million in 2012). The gain is mainly attributable to the remeasurement at fair value of the net assets attributable to the Group (totaling 49% of the company) following the loss of control of the Buffalo Dunes Wind Project, in accordance with the provisions of IFRS 3 Revised. In 2012, the gains included €11 million in respect of Trade Wind Energy, €4 million in respect of Sociedad Eólica de los Lances and €1 million in respect of Enel Stoccaggi. In all three of these cases, the gain refers to the remeasurement of the net assets already held by the Group prior to acquiring additional interests giving the Group full control of those companies.

Income from other services, sales and revenues in 2013 amounted to €7,834 million (€9,203 million in 2012), a decrease of €1,369 million (-14.9%) compared with the previous year. The fall is essentially attributable to the following factors:

  • a decrease of €1,651 million in revenues from the sale of other goods, mainly due to lower sales of CO2 emissions allowances and other environmental certificates;
  • the recognition in 2012 by the Authority for Electricity and Gas (Resolution 157/2012) of the right to be reimbursed for charges incurred by the Group as a result of the termination of the Electrical Worker Pension Fund (FPE) as from January 1, 2000, in the amount of €615 million;
  • the payment of a government grant of €381 million to the Argentine distribution company Edesur under the provisions of Resolución 250/2013 concerning the Mecanismo de Monitoreo de Costos;
  • an increase of €696 million in revenues from the sale of fuels for trading, including revenues for shipping services, essentially due to an increase in volumes handled in Italy.

Costs

Millions of euro     
 2013 2012 restated Change 
Electricity purchases  28,297  30,080  (1,783)  -5.9% 
Consumption of fuel for electricity generation  6,883  8,653  (1,770)  -20.5% 
Fuel for trading and natural gas for sale to end users  5,096  4,840  256  5.3% 
Materials  1,577  3,123  (1,546)  -49.5% 
Personnel  4,596  5,789  (1,193)  -20.6% 
Services, leases and rentals  15,310  15,666  (356)  -2.3% 
Other operating expenses  2,837  2,774  63  2.3% 
Capitalized costs  (1,450)  (1,747)  297  -17.0% 
Total  63,146  69,178  (6,032)  -8.7% 
Enel Open Data

Costs for electricity purchases in 2013 amounted to €28,297 million, a decrease of €1,783 million (-5.9%). The decrease is essentially attributable to the combined effect of a decline in costs purchases of electricity through bilateral contracts (€1,166 million) and lower costs for electricity purchases on domestic and foreign markets (€1,228 million), largely connected with the decrease in demand. These factors were partially offset by an increase in purchases on electricity exchanges (€608 million).

Costs for the consumption of fuel for electricity generation in 2013 amounted to €6,883 million, a decrease of €1,770 million on the previous year (-20.5%). The decrease reflects the decline in volumes of electricity from thermal generation and an improvement in the fuel mix, associated with a decrease in the unit prices of raw materials.

Costs for the purchase of fuel for trading and natural gas for sale to end users came to €5,096 million, an increase of €256 million (5.3%) compared with 2012. The rise is largely attributable to natural gas and developments in its average purchase price, which is correlated with changes in the prices of petroleum products.

Costs for materials amounted to €1,577 million in 2013, a decrease of €1,546 million compared with 2012, mainly as a result of a decline in costs for provisioning CO2 emissions allowances and environmental certificates.

Personnel costs in 2013 totaled €4,596 million, a decrease of €1,193 million (-20.6%) compared with 2012.

More specifically, the decline reflected the recognition in 2012 – partly as a result of the restatement carried out for comparative purposes only in the first-time application of IAS 19 Revised – of charges in the amount of €970 million in respect of the transition-to-retirement plan established for certain employees in Italy at the end of 2012, as well as lower personnel costs associated to the decline in the average workforce for the year. In addition, the agreements signed on September 6, 2013 implementing the framework agreement of May 9, 2013, laying out the approach to be taken in activating the measures provided for in Article 4, paragraphs 1-7-ter, of Law 92/2012 (the Fornero Act) led to the recognition of a net expense of €858 million (taking account of the partial reversal of certain liabilities in respect of other benefits previously awarded such employees in the amount of €38 million). These charges, however, were more than offset by the positive effect (€1,028 million) of the termination of the transition-to-retirement plan after no employees opted to participate and the fact that a significant number of those entitled to participate in that plan instead have opted to participate in the mechanism provided for under Article 4 of the Fornero Act, as the latter offers better financial and organizational conditions, making the earlier plan unattractive.

The Enel Group’s workforce at December 31, 2013 numbered 71,394 employees (73,702 at December 31, 2012), about 52% of whom were employed abroad.

The Group’s workforce decreased by 2,308 during the year, reflecting the balance between new hirings and terminations (a decrease of 2,336) and the change in the scope of consolidation, essentially attributable to the acquisition of PowerCrop (28 employees). At December 31, 2013, the number of employees in units classified as asset held for sale, comprising the Belgian company Marcinelle Energie, was 37.

The change, compared with December 31, 2012, breaks down as follows:

Balance at December 31, 2012 73,702 
Change in scope of consolidation  28 
Hirings  2,612 
Terminations  (4,948) 
Balance at December 31, 2013 (1)  71,394 
Enel Open Data

(1) Includes 37 in units classified as “held for sale” (37 at December 31, 2012).

Costs for services, leases and rentals in 2013 amounted to €15,310 million, a decrease of €356 million (-2.3%) compared with 2012. The change is essentially attributable to the decrease in electricity transport costs (€218 million), related to the decline in consumption in the main markets in which the Group operates. Another factor was the decrease in operating costs of electrical systems (€93 million), including fees for transport capacity use rights in respect of the Energy Markets Operator (EMO).

Other operating expenses in 2013 amounted to €2,837 million, an increase of €63 million compared with the previous year (2.3%). More specifically, the rise is mainly attributable to an increase in taxes and duties, largely associated with taxes on emissions in Spain, following the entry into force of Law 15/2012 in that country, and greater charges for emissions, mainly offset by the reduction in provisions for risks and charges (€383 million).

Capitalized costs amounted to €1,450 million in 2013 (€1,747 million in 2012), with the decrease mainly attributable to a decline in investments.

Net income/(charges) from commodity risk management showed net charges of €378 million in 2013 (net income of €38 million in the previous year). More specifically, the net charges for 2013 include €264 million of net realized charges for the period (€219 million of net income in 2012) and net unrealized charges from the fair value measurement of derivatives positions open at the end of the year in the amount of €114 million (€181 million in 2012).

Depreciation, amortization and impairment losses totaled €7,067 million in 2013, a decrease of €1,936 million (-21.5%). The decrease is attributable to a decrease in impairment losses on assets, net of any writebacks, in the amount of €1,817 million, a decline in depreciation and amortization of €187 million, partially offset by an increase of €68 million in net impairment losses on receivables. More specifically, the decrease in impairment losses is essentially attributable to the effect of the impairment recognized in the two years examined here on goodwill. In 2012, impairment losses, net of any writebacks, were recognized in the total amount of €2,819 million, essentially in respect of the impairment of goodwill of the cash generating units Endesa- Iberia (€2,392 million), Enel OGK-5 (€112 million) and Endesa Ireland (€67 million), as well as the adjustment to estimated realizable value of the net assets of Marcinelle Energie (€145 million). Impairment losses in 2013 amounted to €1,002 million and include €744 million in respect of the partial writedown of the goodwill of the Enel OGK-5 cash generating unit.

Operating income in 2013 amounted to €9,944 million, an increase of €3,138 million compared with the previous year (46.1%), taking account of the decrease in depreciation, amortization and impairment losses noted above.

Net financial expense in 2013 totaled €2,813 million, a decrease of €199 million compared with the previous year (€3,012 million). The fall is mainly attributable to a decrease in financial expense in respect of the accretion of provisions for employee benefits and the positive impact of exchange rate differences. These factors were partly offset by a decrease in income from equity investments, which in 2012 included the gain on the disposal of the interest in Terna, as well as by an increase in net charges on derivatives transactions.

The share of income/(expense) from investments accounted for using the equity method showed net income of €86 million in 2013, largely in line with the previous year.

Income taxes for 2013 amounted to €2,437 million (€2,440 million in 2012) equal to 33.8% of taxable income, compared with 62.9% in 2012. More specifically, the change in the tax burden in 2013 reflects the recognition in 2012 of the impairment losses on goodwill with no corresponding tax benefit and the effect of greater essentially tax-exempt capital gains in 2013.