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ENEL 2016

Enel has become the European utility with the largest market capitalization.

Enel is an Italian multinational manufacturer and distributor of electricity and gas and was first established as a public company in 1962. In 1999 Enel was privatized following the liberalization of the electricity market in Italy. Nowadays, the Italian government is the owner of 25.5% of the company's shares. Enel employs about 62,000 people and operates in about 30 countries. 2016 was a very positive year for Enel. The Company ended 2016 with ordinary EBITDA of €15.2 billion, up 1.3% from €15 billion the previous year.

Ordinary net income increased by 12% to €3.2 billion, compared with €2.9 billion the previous year. The dividend for 2016 amounted to 18 eurocents per share, up 12% compared with 16 eurocents a year earlier. he positive performance of Enel shares is even more significant if compared with the Italian benchmark index FTSE-MIB, which fell by 10%, and the European sector index Euro STOXX Utilities EMU, which declined by 8% in 2016.

Regarding industrial growth, in 2016 Enel set a record for the installation of renewables capacity in a year, exceeding 2,000 MW. The Group also launched a new business model BSO (Build, Sell and Operate), which is less capital-intensive and intends to further accelerate the development of Enel’s global project pipeline in renewables. Enel plans to redevelop 23 thermal power stations that have come to the end of their useful life.

In December 2016 the Group won the tender for the acquisition of a major Brazilian distribution company, Celg Distribuição SA, which has about 3 million customers and a network of over 200,000 kilometers. In addition, Enel won major tenders for the construction of renewable generation capacity in Indonesia, Morocco, Mexico, Peru and Zambia. In 2016, the merger of Enel Green Power into Enel was completed. Enel also completed the second phase of the corporate restructuring process in Latin America, which was aimed at separating operations in Chile. This led to the listing of EnelAméricas shares on the New York Stock Exchange in December 2016.

According to the Annual Report, revenue of the Company in 2016 amounted to €70,592 million and represented a decrease of €5,066 million or 6.7% compared with 2015. The decline was mainly caused by losses in the exchange rate between the euro and currencies in other markets, particularly in Latin America, by a reduction in electricity trading and deconsolidation of Slovenské elektrárne following its sale at the end of July 2016. Note that the revenue of the Company in 2016 included extraordinary gains from the sale of GNL Quintero (Liquefied Natural Gas) and Hydro DolomitiEnel of €173 million and €124 million, respectively, while in 2015 it included the gain on the disposal of SE Hydropower of €141 million.

The gross operating margin in 2016 totaled €15,276 million and represented a slight decline of 0.1% or €21 million compared with 2015 due to exchange rate losses of €372 million and disposal of depleted nuclear fuel following the introduction of new regulations in Slovakia.
Operating income in 2016 amounted to €8,921 million and represented an increase of €1,236 million or 16% compared with the operating income in 2015 of €7,685 million.
Ordinary net income attributable to shareholders in 2016 amounted to €3,243 million (€2,887 million in 2015), an increase of €356 million on 2015.
Capital expenditure amounted to €8,552 million in 2016 (of which €7,637 million for the purchase of property, plant and equipment), an increase of €1,439 million on 2015, mainly concentrated in renewable energy plants in North America and Mexico.

Net electricity generated by Enel in 2016 decreased by 7.8% or 22.2 TWh on 2015, mainly due to the decrease in amounts of 7.6 TWh generated in Italy and 14.6 TWh generated abroad. The decline in generation in Italy is mainly caused by lower water availability and increased stoppages at thermal generation plants for maintenance. Abroad, the reduction of 8.6 TWh is caused by the deconsolidation of Slovenské elektrárne, drought conditions in Latin America caused by “El Niño”, and an increase in imported power into Spain, which reduced generation on the Iberian Peninsula.
Regarding technology mix, the change is mainly attributable to a decrease of 13.3 TWh in coal-fired generation, 6.4 TWh in nuclear generation and 5.9 TWh in hydroelectric generation. On the other hand, the Company achieved an increase of 2.1 TWh in wind generation and 0.5 TWh in solar generation. Finally, 33% of the electricity generated by Enel in 2016 came from renewable sources, compared with 31% in 2015.

In 2016, Enel Group employees numbered 62,080 and represented a decrease of 5,834 compared with 2015. The decrease was caused by the deconsolidation of Slovenské elektrárne, Enel France and Marcinelle Energie. In 2016 the revenue in Italy, by region, amounted to €36,957 million and represented a decrease of €3,770 million or 9.3% compared with the same period in 2015 as a result of the lower quantities generated.

Revenue in Spain decreased in 2016 by €1,531 million due to a reduction in average sales prices. Revenue in Latin America in 2016 posted a decrease of €60 million due mainly to the unfavourable trend in the exchange rate between the euro and the Chilean peso. Revenue in Europe and North Africa amounted to €3,798 million in 2016 and decreased by €1,192 million or 23.9% from the previous year. The performance was related to the following factors: the €1,041 million decrease in revenue in Slovakia due to deconsolidation following the sale at the end of July 2016 and a decrease of €77 million in revenue in Russia, mainly due to the weakening of the ruble against the euro.

Revenue in North and Central America in 2016 came to €1,125 million and increased by €243 million or 27.6% year on year. The performance was related to an increase of €240 million in revenue in the United States and Canada.
Revenue for 2016 in Sub-Saharan Africa and Asia came to €29 million and represented an increase of €11 million or 61% year on year. This increase was mainly due to the consolidation for the Indian companies. These six areas will continue to maintain a presence in both the conventional and renewable generation businesses and to develop all segments of the value chain.