The following table summarizes the performance of Enel SpA in 2018 and 2017:
|Milions of euro|
|Revenue from sales and services||38||120||(82)|
|Other revenue and income||15||13||2|
|Services, leases and rentals||127||165||(38)|
|Other operating expenses||39||20||19|
|Gross operating margin||(223)||(227)||4|
|Depreciation, amortization and impairment losses||(331)||15||(346)|
|Net financial income/(expense) and income from equity investments|
|Income from equity investments||3,567||3,033||534|
|Income before taxes||3,272||2,110||1,162|
|NET INCOME FOR THE YEAR||3,456||2,270||1,186|
Revenue from sales and services amounted to €38 million (€120 million in 2017) 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 €82 million, was essentially due to the reduction in revenue deriving from the provision of technical and management services following both the reorganization of the global units at the beginning of 2018, within the scope of which the Global Business Lines Infrastructure & Networks and Thermal Generation, as well as Global Service Procurement, were transferred to the wholly owned subsidiaries Enel Global Infrastructure & Networks Srl, Enel Global Thermal Generation Srl, and Enel Italia Srl, and negative adjustments related to previous years
Other revenue and income amounted to €15 million, up €2 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 2018, unchanged on the previous year
Costs for services, leases and rentals amounted to €127 million in 2018 (€165 million at December 31, 2017), of Performance and financial position of Enel SpA 88 Annual Report 2018 which charges from third parties in the amount of €54 million and from Group companies in the amount of €73 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 came to €109 million in 2018, a decrease of €65 million compared with the previous year. This change is mainly attributable to the transfers described above, which led to a consequent reduction in salaries and wages and related social security costs.
Other operating expenses amounted to €39 million in 2018, an increase of €19 million compared with 2017, mainly due to allocations to provisions for risks and charges in the amount of €15 million. In the light of the above, the gross operating margin was a negative €223 million, an improvement of €4 million compared with the previous year, mainly attributable to the combined effect of the reduction in revenue and in personnel costs and costs for services, leases and rentals.
Depreciation, amortization and impairment losses amounted to €331 million in 2018, an increase of €346 million compared with 2017, due essentially to the writeback of the equity investment held in Enel Produzione SpA (€403 million), which was partially offset by the impairment losses on the investments in Enel Investment Holding BV (€15 million) and Enel Russia PJSC (€40 million).
Accordingly, operating income of €108 million improved by €350 million compared with 2017.
Income from equity investments amounted to €3,567 million (€3,033 million in 2017) and regards dividends and interim dividends approved in 2018 by subsidiaries and associates in the amount of €3,557 million and by other entities in the amount of €10 million. This is an increase of €534 million over the previous year.
Net financial expense amounted to €403 million and essentially reflects interest expense on financial debt (€666 million), offset by interest and other income on current and non-current financial assets (€288 million). The decrease in net financial expense on the previous year, equal to €278 million, was essentially the result of lower interest expense on financial payables (€194 million), which benefited from favorable interest rate developments, and the increase in other financial income on guarantees pledged in favor of Group companies (€78 million).
Income taxes showed a tax receivable of €184 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 the previous year (a tax receivable of €160 million), the increase of €24 million was mainly due to nonrecurring items.
Net income for the year totaled €3,456 million, compared with €2,270 million the previous year.