Annual Report - EDP

: financial report :5.1. edp group’sbusinessevolutionIn 2012, the EDP Group’s net profit reached EUR1,012 million, compared with EUR 1,125 million in2011. Net profit decreased 10%, supported by a 3%decrease in EBITDA.5.1.1. INCOME STATEMENT– EDP GROUPEUR Million 2012 2011 ∆ % ∆ Abs.Gross Profit 5,428 5,436 -0% -8Supplies and services 928 901 3% +27Personnel costs 582 574 1% +9Costs with social benefits 89 61 46% +28Other operating costs (net) 201 144 39% +56Net Operating costs 1,800 1,680 7% +120EBITDA 3,628 3,756 -3% -128Provisions 16 1 - +15Net Depreciation and amortisation 1,469 1,488 -1% -19EBIT 2,143 2,267 -5% -125Capital gains/(losses) 3 21 -87% -18Financial Results (705) (715) 1% +10Results from associated companies 24 19 22% +4Pre-tax profit 1,465 1,592 -8% -128Income taxes 283 260 9% +22Net Profit for the period 1,182 1,332 -11% -151Net Profit attribut. to EDP shareholders 1,012 1,125 -10% -112Non-controlling interests 170 207 -18% -38EDP consolidated EBITDA fell by 3% year-onyear,to EUR 3,628 million in 2012, penalised bya 22% fall in Brazil (-EUR 147 million) mainlydue to tariff deviations (-EUR 67 million due tobe recovered in the coming years) and to thedelay in the start up of Porto Pecém plant, whichoriginated costs for none fulfilment of energysupply contracted (-EUR 41million). EBITDAfrom wind operations rose by 17% (+EUR 137million), backed by portfolio expansion, strongerwind resources and higher prices. EBITDA fromoperations in Iberia (ex-wind) fell 6% (-EUR131 million), penalised by regulatory changes inPortugal (-EUR 39 million from interruption ofcapacity payments) and in Spain (-EUR 18 million);past year’s gain from disposal of some gas assets(-EUR 27 million) and restructuring and othercosts in long-term contracted generation activity(-EUR 21 million of restructuring costs for thedecommissioning of Setubal thermal plant).Forex impact on EBITDA totalled -EUR 19 millionreflecting 7% depreciation of BRL and an 8%appreciation of USD versus Euro.EDP continues to diversify its portfoliogeographically: in 2012, Portugal accountedfor 46% of the group’s EBITDA, Spain for 25%,Brazil for 15%, US for 9% and the Rest of Europe(excluding Iberia) accounted for 5% of EBITDA.1525.1.2. EBITDA – EDP GROUPEUR Million 2012 2011 ∆ % ∆ Abs.Long-Term Contracted Generation Iberia 802.1 838.0 -4% -36Liberalised Activities Iberia 316.3 368.5 -14% -52Regulated Networks Iberia 1,057.4 1,100.5 -4% -43Wind Power 937.6 800.7 17% +137Brazil 534.7 681.7 -22% -147Other (19.6) (33.9) 42% +14Consolidated 3,628.5 3,755.5 -3% -127EBITDA from long-term contracted generation,related to Costs for the Maintenance of theEquilibrium System (CMEC) and special regimewas 4% lower year-on-year at EUR 802 million in2012, due to: (i) lower output from our mini-hydroplants (-EUR 17 million on gross profit); (ii) lowerresults with fuel and CO 2procurement (-EUR21 million year-on-year); and (iii) EUR 21 millioncurtailment.Gross profit from PPA/CMEC was flat at EUR 900million in 2012, as the positive impact from higherinflation, higher-than-contracted availability atour CMEC plants and by the commissioning ofSines DeNOx facilities was offset by lower resultswith fuel and CO 2procurement costs (EUR 0.8million in 2011, -EUR 20 million in 2012).The annual deviation between market grossprofit under CMECs assumptions and gross profitunder actual market conditions (‘revisibility’)amounted EUR 491 million in 2012, propelled bya very dry weather (hydro production factor fell52% short of an average year). The deviation atour hydro plants amounted EUR 272 million in2012 driven by an output 54% below the CMEC’sreference, average realised price in line with theCMEC’s reference and availability rates at ourplants 4% above contracted level. The deviationat thermal plants in 2012 (EUR 219 million mostlyrelated to Sines coal plant) derived from anaverage clean dark spread 48% short of CMEC’sreference, while availability rates and outputexceeded the CMEC reference by 7% and 2%respectively.Gross profit from special regime fell 19% yearon-year,to EUR 88 million in 2012, penalised byhigher gas costs in cogeneration and very lowoutput at our mini-hydro plants: -42% year-onyeardue to scarce hydro resources, particularlyin nine months of 2012.EBITDA from liberalised activities in Iberiawas 14% lower year-on-year, at EUR 316 millionin 2012, supported by (i) +EUR 13 million ofelectricity gross profit (ii) -EUR 20 million ofgross profit in the gas supply business and (iii)+EUR 33 million of operating costs.In December 2012, EDP started up operationsat Alqueva II, a 256MW repowering with pumping.In fourth quarter of 2011, EDP kicked-offoperations at Picote II and Bemposta II, tworepowerings totalling 437MW.In the electricity business, gross profit was 1.7%higher year-on-year, at EUR 743 million in 2012,as higher average unit margin earned beforehedging (+€5/MWh to €12.8/MWh) offset by theimpact from lower total volumes (-8%) and lowerresults from hedging. As from 1 June of 2012,capacity payments in Portugal were interrupted,confining its contribution to 2012 gross profitto EUR 7 million in first five months of 2012compared with EUR 45 million in 2011.Volumes sold totalled 44TWh in 2012 (-7.8%year-on-year), reflecting a lower contributionfrom wholesale market (-17%) and lower sales toretail clients (-1.5% year-on-year despite an 8%increase in Portugal).A World Full Of Energy