The following table summarizes the performance of Enel SpA in 2017 and 2016.
|Millions of euro|
|Revenue from services||120||197||(77)|
|Other revenue and income||13||10||3|
|Services, leases and rentals||165||152||13|
|Other operating expenses||20||17||3|
|Gross operating margin||(227)||(129)||(98)|
|Depreciation, amortization and impairment losses||15||448||(433)|
|Net financial income/(expense) and income from equity investments|
|Income from equity investments||3,033||2,882||151|
|Income before taxes||2,110||1,542||568|
|NET INCOME FOR THE YEAR||2,270||1,720||550|
Revenue from services amounted to €120 million (€197 million in 2016) and essentially regards services provided to subsidiaries as part of Enel SpA’s management and coordination functions and the rebilling of costs incurred by Enel SpA but pertaining to the subsidiaries.
The overall decrease of €77 million is primarily attributable to the decline in revenue from management fees and technical fees, which reflects the negative adjustments for years 2015 and 2016, and the application of the new remuneration model adopted by the Parent Company during the year.
Other revenue and income amounted to €13 million, up €3 million compared with the previous year. In both years, the item is essentially composed of the rebilling of costs for the personnel of Enel SpA seconded to other Group companies.
Costs for consumables amounted to €1 million in 2017, unchanged on the previous year.
Costs for services, leases and rentals amounted to €165 million in 2017 (€152 million in 2016), of which charges from third parties in the amount of €82 million and from Group companies in the amount of €83 million. The former mainly regarded communication services, technical and professional services as well as strategic, management and corporate organization consulting and IT services. Those in respect of services provided by Group companies regard IT and administrative services and purchasing, as well as rentals and personnel training received from Enel Italia, and costs for the personnel of a number of Group companies seconded to Enel SpA.
Personnel costs totaled €174 million in 2017, an increase of €8 million compared with the previous year. The change is mainly attributable to higher costs connected with the Long-Term Incentive Plans (€5 million) and to post-employment benefits relating to defined benefit plans (€2 million).
Other operating expenses amounted to €20 million in 2017, up €3 million compared with 2016, mainly as a result of higher representation expenses.
In the light of the foregoing, the gross operating margin was a negative €227 million, a deterioration of €98 million compared with the previous year, mainly attributable to the combined effect of the reduction in management fees and technical fees, and the concomitant increase in labor costs and services and leases and rentals.
Depreciation, amortization and impairment losses amounted to €15 million in 2017, attributable solely to depreciation and amortization. In 2016, the item also included the writedown of the interest in Enel Produzione SpA (€474 million) and the writeback of the interest in Enel Trade SpA (€42 million), which were recognized following impairment testing of the investments.
Accordingly, the operating result showed a loss of €242 million, an improvement of €335 million compared with 2016.
Income from equity investments amounted to €3,033 million (2,882 million in 2016). The item regards dividends and interim dividends approved in 2017 by subsidiaries and associates in the amount of €3,032 million and by other companies in the amount of €1 million and shows an increase of €151 million on the previous year, partly reflecting dividends received from the subsidiaries Enel Américas and Enel Chile following the corporate restructuring of the Group’s operations in South America.
Net financial expense amounted to €681 million and essentially reflects interest expense on financial debt (€860 million), partly offset by interest and other income on current and non-current financial assets (totaling €158 million). The decrease in net financial expense on the previous year, equal to €82 million, was essentially the result of lower interest expense on financial payables, which benefited from favorable interest rate developments and a decline in the average stock of net financial debt (€66 million), and the increase in other financial income on guarantees pledged in favor of Group companies (€30 million).
Income taxes showed a tax receivable of €160 million, mainly due to the reduction in taxable income for IRES purposes compared with statutory taxable income as a result of the exclusion of 95% of dividends received from subsidiaries and the deductibility of Enel SpA interest expense for the Group’s consolidated taxation mechanism in accordance with corporate income tax law (Article 96 of the Uniform Income Tax Code). Compared with 2016 (a tax receivable of €178 million), the decrease of €18 million is attributable to the increase in estimated taxable income for IRES purposes.
Net income for the year totaled €2,270 million, compared with €1,720 million the previous year.