Income statement

Solid top-line performance

In 2011, EDPR kept delivering a solid operating performance that has been translated into a 13% top-line year-on-year growth. The strong increase in electricity output and the stability of the average selling price led to 1.1 billion euros of Revenues.

EBITDA was up 12% YoY to 801 million euros following the Revenues growth and reflecting the maintenance of high efficiency levels, although negatively impacted by a weaker US Dollar and Zloty on average vs. 2010 (-16 million euros).

Depreciation and amortization charges (including comp. of subsidized asset’s depreciation) increased by 7% in 2011 to 453 million euros. In the 2Q11, EDPR concluded a joint technical study with an industry independent expert on the expectable operating period turbines are expected to be economically in operation, and accordingly adjusted the useful life of its fleet to 25 years. The extension had a +55 million euros impact on the bottom line in 2011, mainly as a result of lower depreciation charges.

The net financial expenses increased 40% year-on-year to 244 million euros explained by: i) the 14% growth of the interest costs, at a slower pace than the average financial debt; and ii) a negative 22 million euros forex difference related to assets and liabilities in Polish Zloty, Romania Leu and US Dollar.

Non-recurrent events

All in all, some non-recurrent items impacted the company’s Pre-tax profit in -16 million euros: I) +11 million euros as a result of the revaluation of some of EDPR’s European Assets and Liabilities (+52 million euros in EBITDA; -41 million euros in Depreciations and Amortizations); II) -15 million euros of write-offs and other costs related to pipeline rationalisation (impact in EBITDA); III) -22 million euros of negative forex differences (impact in Financial Costs); and IV) +10 million euros of capital gains.

Pre-tax profit totalled 119 million euros and income tax totalled 28 million euros – reflecting an effective tax rate of 24%. In 2011, EDPR obtained higher fiscal efficiency in its Spanish operations through the full control of Genesa and introduced the deferred tax accounting in EDPR NA by starting to recognize net liabilities (against profits before taxes) vs. previous null income taxes (of which current taxes are presently zero given the tax incentives schemes in place) – this had a negative 6 million euros impact on the 2011 net income.

Net Income attributable to EDPR shareholders increased 10% YoY to 89 million euros, reflecting the operating performance in the period, the extension of the projects’ useful life, the tax accounting policy in EDPR NA and non recurrent items (-16 million euros). Earnings attributable to non-controlling interests decrease 29% from 2010.