. . .
4.6.1 ›

RESULTS IN 2016

REN’s net income decreased by 15.9 million euros (-13.7%) to 100.2 million euros, reflecting last year’s non-recurring gains with the sale of Enagás stake (16.1 million euros on net income) and the impairment/revaluation tax recovery (9.9 million euros). Excluding non-recurring effects, net income grew by 6.8% (+ 8.1 million euros), mainly driven by the positive performance of financial results. 

Similarly to the past two years, the results for 2016 reflect the continuation of the Extraordinary Levy on the Energy Sector (25.9 million euros in 2016 and 25.4 million euros in 2015).

Investment fell 68.9 million euros (-28.7%), while transfers to RAB decreased 77.4 million euros (-33.4%), both influenced by the acquisition of natural gas underground storage assets from Galp in May 2015 (71.4 million euros in investment and 70.5 million euros in transfers to RAB). Similarly, average RAB was 48.7 million euros lower than prior year (-1.4%), reaching 3,537.1 million euros.

 Financing conditions improved, with the average cost of debt at 3.2% (-0.8 p.p. year-on-year). Net debt stabilized at 2,477.7 million euros, 0.5% above last year (+12.2 million euros).

MAIN INDICATORS
(MILLION EUROS)
  '16 '15
Var.%
EBITDA

476,0

489,7

-2,8%

Financial income5

-79,9

-98,8

19,2%

Net income

100,2

116,1

-13,7%

Recurrent net income

126,1

118,1

6,8%

Total Capex 

171,5

240,4

-28,7%

Transfers to RAB6 (at historic costs)

154,2

231,6

-33,4%

Average RAB (at reference costs)

3.537,1

3.585,8

-1,4%

Net debt

2.477,7

2.465,5

0,5% 

Average cost of debt

3,2%

4,1%

-0,8p.p.

OPERATION INCOME– EBITDA

EBITDA was 476.0 million euros, a decrease of 2.8% (-13.6 million euros) from the previous year.

EBITDA
(MILLION EUROS)
  '16 '15 VAR.%
1) REVENUES FROM ASSETS
451,7
446,0
1,3%

    RAB remuneration

214,9

219,9

-2,3%

    Smoothing differences (gas)

-0,9

-3,5

74,3%

    Hydro land remuneration

0,3

0,3

-4,5%

    Lease revenues from hydro protection zone

0,7

0,7

-1,2%

    Remuneration of fully amortized assets

20,8

18,5

12,1%

    Recovery of amortizations (net of investment subsidies)

197,8

192,1

3,0%

    Amortization of investment subsidies

18,1

18,0

0,6%

2) REVENUES FROM OPEX
98,6
94,2
4,6%
3) OTHER REVENUES

17,4

39,0

55,2%

4) OWN WORKS (CAPITALISED IN INVESTMENT)

16,0

17,4

-7,9%

5) EARNINGS ON CONSTRUCTION (EXCL. OWN WORKS CAPITALISED IN INVESTMENT) – CONCESSION ASSETS 155,2 222,6 -30,3%
6) OPEX
107,5
106,1  1,4%

    Personnel costs7

50,5

 51,4

1,6%

    External costs

57,0 54,7

4,2%

7) CONSTRUCTION COSTS – CONCESSION ASSETS
 155,2 222,6  -30,3% 
8) PROVISIONS  0,0 0,2  n.m 
9) IMPAIRMENTS
 0,3 0,7 -62,3% 
10) EBITDA (1+2+3+4+5-6-7-8-9)
476,0 489,7 -2,8%  

The main downward pressure of this reduction in EBITDA came from: 

    • A non-recurring gain in 2015 with the sale of REN's 1% stake in Enagás (- 20.1 million euros in EBITDA);
    • Lower remuneration on regulated assets8 (-2.4 million euros), mainly in the natural gas sector (-5.8 million euros), where the average rate of return (RoR) fell from 7.34% to 6.70%, essentially due to an update to the RoR starting point (which went from 8.0% to 5.9%) as a result of the new regulatory period which started in July 2016. This effect was partially offset by the increase in electricity sector asset remuneration (+3.4 million euros), due to an increase in the base rate of return from 5.99% to 6.13%, which is indexed to the average daily quotes for 10-year Portuguese Government Bonds, and the slight increase in average RAB.

 

These effects were mitigated by a positive performance in the following:

    • Higher revenues from amortizations recovery (+5.8 million euros) due to an increase in the regulated asset base
    • Improve in the incentive to keep fully depreciated assets in operation avoiding replacement investment (+2.2 million euros)

Furthermore, Opex increased 1.4 million euros driven by the increase of 3.2 million euros in pass-through costs (non-core costs), partially offset by the reduction of 0.8 million euros in personnel costs (-1.6%) and -1.0 million euros (-2.5%) in core external costs, as a result of continued efforts to increase the Group's operating efficiency. 

EBITDA EVOLUTION 2015-2016

8 Includes gas smoothing effect (gas) and remuneration on hydro land and fully depreciated assets.

NET INCOME

Net income decreased 15.9 million euros (-13.7%) over the previous year to 100.2 million euros, mainly affected by 2015 non-recurring gains with the sale of Enagás stake (- 20.1 million euros on EBITDA; -16.1 million euros on net income) and with the tax recovery from impairment/revaluation of assets generated when REN split from the EDP Group (9.9 million euros). Excluding non-recurrent effects, recurrent net income grew by 8.1 million euros (+6.8%). This evolution was mainly driven by higher financial income (+19.0 million euros, +19.2%), reflecting the reduction of 0.8 p.p. in the average cost of debt from 4.1% to 3.2%. Net debt remained stable at 2 477,7 million euros, an increase of 0.5% over the previous year (+12.2 million euros).

 

Non-recurring items considered in 2016 and 2015 are as follows:

    i) In 2016: i) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2016 (25.9 million euros)

    ii) In 2015: i) cost of carry of the European Investment Bank escrow account (3.2 million euros; 2.3 million euros after tax); ii) Extraordinary Levy on the Energy Sector laid down in the State Budget for 2015 (25.4 million euros); iii) capital gains generated through the sale of the stake in Enagás (-20.1 million euros; 16.1 million euros after tax); iv) tax recovery related to the impairment/revaluation of assets resulting from the split of REN and EDP (9.9 million euros; 9.7 million euros net of associated costs and after tax)

NET INCOME
(MILLION EUROS)
  '16 '15
VAR.%
EBITDA
476,0
489,7
-2,8%

   Depreciations and amortizations

214,8

209,3

2,6%

   Financial income

-79,9

-98,8

19,2%

   Income tax expenses

55,3

40,0

38,3%

   Extraordinary levy on the energy sector

25,9

25,4

1,9%

NET INCOME
100,2
116,1
-13,7%

   Non-recurring items

25,9 

2,0  
RECURRENT NET INCOME
126,1
118,1
6,8%