Auditor’s Report on Red
Eléctrica Corporación,
S.A. and subsidiaries
(Together with the consolidated annual accounts
and consolidated directors’ report of Red Eléctrica
Corporación, S.A. and subsidiaries for the year
ended 31 December 2020)
(Translation from the original in Spanish. In the event of
discrepancy, the Spanish-language version prevails.)
KPMG Auditores, S.L.
Pº. de la Castellana, 259 C
28046 Madrid
Independent Auditor’s Report
on the Consolidated Annual Accounts
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
To the Shareholders of Red Eléctrica Corporación, S.A.
Opinion __________________________________________________________________
We have audited the consolidated annual accounts of Red Eléctrica Corporación, S.A. (the “Parent”)
and subsidiaries (together the “Group”) which comprise the consolidated statement of financial
position at 31 December 2020, and the consolidated income statement, consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of
cash flows for the year then ended, and consolidated notes.
In our opinion, the accompanying consolidated annual accounts give a true and fair view, in all
material respects, of the consolidated equity and consolidated financial position of the Group at 31
December 2020 and of its consolidated financial performance and its consolidated cash flows for the
year then ended in accordance with International Financial Reporting Standards as adopted by the
European Union (IFRS-EU) and other provisions of the financial reporting framework applicable in
Spain.
Basis for Opinion _________________________________________________________
We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in
Spain. Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Consolidated Annual Accounts section of our report.
We are independent of the Group in accordance with the ethical requirements, including those
regarding independence, that are relevant to our audit of the consolidated annual accounts pursuant
to the legislation regulating the audit of accounts in Spain. We have not provided any non-audit
services, nor have any situations or circumstances arisen which, under the aforementioned
regulations, have affected the required independence such that this has been compromised.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters ________________________________________________________
Key audit matters are those matters that, in our professional judgement, were of most significance
in the audit of the consolidated annual accounts of the current period. These matters were
addressed in the context of our audit of the consolidated annual accounts as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
KPMG Auditores S.L., a limited liability Spanish company and a member firm of the KPMG
global organization of independent member firms affiliated with KPMG International Limited,
a private English company limited by guarantee.
All rights reserved.
Paseo de la Castellana, 259C 28046 Madrid
On the Spanish Official Register of Auditors (“ROAC”) with No. S0702, and the
Spanish Institute of Registered Auditors’ list of companies with No. 10.
Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9
N.I.F. B-78510153
2
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Additions to property, plant and equipment (Euros 388,261 thousand)
See note 8 to the consolidated annual accounts
Key audit matter
How the matter was addressed in our audit
Most of the Group's property, plant and
equipment pertain to Red Eléctrica de España,
S.A.U., the regulated activity of which mainly
consists of managing the transmission network
of the Spanish electricity system. Each year,
Red Eléctrica de España, S.A.U. makes
substantial investments in property, plant and
equipment in accordance with the Electricity
Transmission Network Development Plan for
2015 – 2020 approved by agreement of the
Council of Ministers on 16 October 2015. In
2020 additions to the Group’s property, plant
and equipment totalled Euros 488,398
thousand, of which Euros 388,261 thousand
pertains to the investee Red Eléctrica de
España, S.A.U.
Considering the nature of the business carried
out by this investee, the remuneration for these
services is set by the Spanish National Markets
and Competition Commission (CNMC) through
Circular 5/2019, which determines the method
for calculating the remuneration of the
transmission activity based on the costs
necessary to construct, operate and maintain
the technical electricity facilities, pursuant to the
powers bestowed upon this Commission by
Royal Decree-Law 1/2019. As the Parent’s
transmission revenues are directly related to the
recognised electricity transmission facilities, and
bearing in mind the significance of these
facilities, we have considered the additions to
property, plant and equipment to be a key audit
matter.
Our audit procedures included evaluating the
relevant controls associated with processes
involving fixed assets and acquisitions, as well
as performing substantive procedures on
property, plant and equipment. We also
assessed the consistency of the Group's
accounting policies on fixed assets and
acquisitions with the applicable accounting
framework.
Our procedures for evaluating and analysing
the control environment were focused on:
-
Testing the design, implementation and
operating effectiveness of key manual and
automated controls related to the cycles
of “additions and disposals of fixed
assets” and “acquisition of assets and
services, progress billings for
construction”.
Our substantive procedures on property, plant
and equipment mainly consisted of:
- Analysing additions during the year and
assessing the accuracy of their accounting
recognition.
- Analysing documentation supporting the
cost allocation for a sample of projects in
progress.
We also assessed whether the disclosures in
the consolidated annual accounts meet the
requirements of the applicable financial
reporting framework.
3
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Business combination and acquisition of a joint venture (Euros 933,000
thousand and Euros 374,300 thousand)
See notes 6 and 11 to the consolidated annual accounts
Key audit matter
How the matter was addressed in our audit
In 2019, the Group acquired a
telecommunications business in Spain from an
unrelated third party for Euros 933,000
thousand. Furthermore, in 2020, the Group
acquired an electricity transmission joint venture
in Brazil for Euros 374,300 thousand, which has
been accounted for in the consolidated annual
accounts using the equity method.
The accounting of these transactions was
complex and required the application of
judgements in identifying and determining the
fair value of the assets and liabilities acquired.
The valuations used for this purpose were
performed by an expert engaged by the Group,
using the discounted cash flow method.
In 2019, due to the complexity in determining
the fair value of certain assets of the business
combination involving the telecommunications
business, the Group carried out a provisional
purchase price allocation (PPA), making the final
allocation in 2020. As a result of the definitive
determination of the fair values of the assets
and liabilities acquired in the
telecommunications business, differences arose
with respect to the provisional initial values at
which they had been recognised in the
consolidated annual accounts for 2019. The
adjustments recognised to complete the initial
accounting were made retrospectively by
restating the figures for 2019, in accordance
with prevailing legislation.
We consider that these transactions are a key
audit matter due to their significance, and the
inherent judgement and complexity involved in
making fair value estimates.
-
-
-
-
-
Our audit procedures included the following:
-
performing audit procedures on the
balance sheets of the acquired companies
at their acquisition date;
determining the acquisition date and the
consideration paid, taking into account the
specific conditions of the purchase
agreement in each case;
obtaining, reading and analysing the
valuation report on the acquired assets
and liabilities of the joint venture, drawn
up by an independent expert engaged by
the Group;
obtaining, reading and analysing the final
valuation report on the acquired assets
and liabilities of the telecommunications
business, drawn up by an independent
expert engaged by the Group;
evaluating the independence and
professional competence of the
independent experts;
assessing the methodology and key
assumptions used to determine the fair
values of the assets and liabilities
acquired and their identification, involving
our valuation specialists for this purpose
and corroborating the Group's
explanations with market data and our
own knowledge.
In addition, we identified the assets and
liabilities of the joint venture whose valuation
was determined provisionally, evaluating the
reasons for the provisional nature of the
estimates and assessing whether the
investment was accounted for appropriately
on initial recognition. We also assessed
whether the disclosures in the consolidated
annual accounts regarding these two
operations meet the requirements of the
applicable financial reporting framework.
4
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Recoverable amount of goodwill and other non-current assets
See notes 7, 8, 11 and 19 to the consolidated annual accounts
Key audit matter
How the matter was addressed in our audit
As mentioned in notes 7 and 8 to the
consolidated annual accounts, at 31 December
2020, the Group’s property, plant and
equipment, intangible assets and goodwill
amount to Euros 9,511 million, Euros 460 million
and Euros 231 million, respectively, allocated to
the various cash-generating units (CGUs) or, in
the case of Hispasat, S.A. goodwill, to groups of
CGUs.
Furthermore, as mentioned in notes 11 and 19
to the consolidated annual accounts, the Group
holds an investment in Transmisora Eléctrica del
Norte, S.A., an equity-accounted investee,
amounting to Euros 174 million, and a loan of
Euros 17 million extended to the latter, both of
which the Group tested for impairment after
identifying indications thereof.
There is a risk that the carrying amount of the
CGUs may exceed their recoverable amount in
the case of CGUs or groups of CGUs that show
indications of impairment. The Group calculates
the recoverable amount of goodwill and
intangible assets with indefinite useful lives
annually and tests property, plant and
equipment and intangible assets for indications
of impairment, for the purposes of determining
their recoverable amount. These recoverable
amounts are calculated considering their value in
use or fair value less costs to sell, applying
valuation techniques which require the
exercising of judgement by the Directors and
management and the use of estimates. Due to
the high level of judgement, the uncertainty
associated with these estimates, and the
significance of the carrying amount of the non-
current assets subject to impairment testing and
of the impairment recognised by the Group, this
has been considered a key audit matter.
Our audit procedures included the following:
-
-
-
-
assessing the design and implementation
of key controls related to the process for
assessing the criteria used to identify
indications of impairment, and for
estimating the recoverable amount of
goodwill and other non-current assets;
evaluating the methodology and
reasonableness of the assumptions used
by management and the Directors to
estimate the recoverable amount using
the discounted cash flow method at cash-
generating unit level, as well as the
recoverable amount of the investment in
and the loan extended to Transmisora
Eléctrica del Norte, S.A., calculated by
discounting this entity’s cash flows, with
the involvement of our valuation
specialists and based on the reports
drawn up by the independent experts
engaged by the Group to contrast the
reasonableness of the assumptions used;
contrasting the information contained in
the model used to calculate the
recoverable amount with the business
plans of the companies;
analysing the sensitivity of the estimated
recoverable amount to changes in the
relevant assumptions and judgements.
- We also assessed whether the
disclosures in the consolidated annual
accounts meet the requirements of the
financial reporting framework applicable to
the Group.
5
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Other Information: Consolidated Directors’ Report __________________________
Other information solely comprises the 2020 consolidated directors' report, the preparation of which
is the responsibility of the Parent's Directors and which does not form an integral part of the
consolidated annual accounts.
Our audit opinion on the consolidated annual accounts does not encompass the consolidated
directors' report. Our responsibility regarding the information contained in the consolidated directors’
report is defined in the legislation regulating the audit of accounts, as follows:
a) Determine, solely, whether the consolidated non-financial information statement and certain
information included in the Annual Corporate Governance Report, as specified in the Spanish
Audit Law, have been provided in the manner stipulated in the applicable legislation, and if not,
to report on this matter.
b) Assess and report on the consistency of the rest of the information included in the consolidated
directors’ report with the consolidated annual accounts, based on knowledge of the Group
obtained during the audit of the aforementioned consolidated annual accounts. Also, assess and
report on whether the content and presentation of this part of the consolidated directors’ report
are in accordance with applicable legislation. If, based on the work we have performed, we
conclude that there are material misstatements, we are required to report them.
Based on the work carried out, as described above, we have observed that the information
mentioned in section a) above has been provided in the manner stipulated in the applicable
legislation, that the rest of the information contained in the consolidated directors' report is
consistent with that disclosed in the consolidated annual accounts for 2020, and that the content
and presentation of the report are in accordance with applicable legislation.
In accordance with the requirements set forth in article 540 of the Revised Spanish Companies Act
and Spanish National Securities Market Commission (CNMV) Circular 5/2013 of 12 June 2013,
subsequently amended by CNMV Circular 7/2015 of 22 December 2015 and by CNMV Circular
2/2018 of 12 June 2018 and which provides the models for the Annual Corporate Governance
Report for listed corporations, and for the purposes of the description of Internal Control over
Financial Reporting in Annual Corporate Governance Reports, and as mentioned in section F.7.1 of
the Annual Corporate Governance Report, which forms part of the accompanying consolidated
directors' report for 2020, on 23 February 2021, at the Parent’s request, we issued our Independent
Reasonable Assurance Report on the Internal Control over Financial Reporting (ICOFR) of the Red
Eléctrica Group for 2020, based on our examination, which was performed in accordance with ISAE
3000 (Revised) (International Standard on Assurance Engagements 3000, Assurance Engagements
Other than Audits or Reviews of Historical Financial Information) issued by the International Auditing
and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC) for the
issue of reasonable assurance reports.
6
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Directors’ and Audit Committee’s Responsibility for the Consolidated Annual
Accounts _________________________________________________________________
The Parent's Directors are responsible for the preparation of the accompanying consolidated annual
accounts in such a way that they give a true and fair view of the consolidated equity, consolidated
financial position and consolidated financial performance of the Group in accordance with IFRS-EU
and other provisions of the financial reporting framework applicable to the Group in Spain, and for
such internal control as they determine is necessary to enable the preparation of consolidated annual
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated annual accounts, the Parent's Directors are responsible for assessing
the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
The Parent’s Audit Committee is responsible for overseeing the preparation and presentation of the
consolidated annual accounts.
Auditor’s Responsibilities for the Audit of the Consolidated Annual Accounts
Our objectives are to obtain reasonable assurance about whether the consolidated annual accounts
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with prevailing legislation regulating the audit of accounts in Spain will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence economic decisions of users taken on the basis of these consolidated annual accounts.
As part of an audit in accordance with prevailing legislation regulating the audit of accounts in Spain,
we exercise professional judgement and maintain professional scepticism throughout the audit. We
also:
Identify and assess the risks of material misstatement of the consolidated annual accounts, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group's internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Parent's Directors.
7
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Conclude on the appropriateness of the Parent's Directors' use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists related
to events or conditions that may cast significant doubt on the Group's ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our
auditor's report to the related disclosures in the consolidated annual accounts or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor's report. However, future events or conditions may cause the Group to
cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated annual accounts,
including the disclosures, and whether the consolidated annual accounts represent the underlying
transactions and events in a manner that achieves a true and fair view.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated annual accounts. We
are responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the audit committee of the Parent regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the Parent's audit committee with a statement that we have complied with the
applicable ethical requirements, including those regarding independence, and to communicate with
them all matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated to the audit committee of the Parent, we determine those that
were of most significance in the audit of the consolidated annual accounts of the current period and
which are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter.
8
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional Report to the Audit Committee of the Parent ____________________
The opinion expressed in this report is consistent with our additional report to the Parent's Audit
Committee dated 23 February 2021.
Contract Period __________________________________________________________
We were appointed as auditor of the Group by the shareholders at the ordinary general meeting on
14 May 2020 for a period of one year, beginning after the year commenced 1 January 2020.
Previously, we had been appointed for a period of three years, by consensus of the shareholders at
their general meeting, and have been auditing the annual accounts since the year ended 31
December 2013.
KPMG Auditores, S.L.
On the Spanish Official Register of
Auditors (“ROAC”) with No. S0702
(Signed on original in Spanish)
Eduardo González Fernández
On the Spanish Official Register of Auditors (“ROAC”) with No. 20435
23 February 2021
Annual Accounts
2020
(Translation from the original in Spanish. In the event of dis-
crepancy, the Spanish-language version prevails.)
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Group
Consolidated Statement of Financial Position at 31 December 2020
Thousands of Euros
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investment property
Equity-accounted investees
Non-current financial assets
At fair value through other comprehensive income
At fair value through profit or loss
At amortised cost
Non-current derivatives
Deferred tax assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Trade receivables
Other receivables
Current tax assets
Other current financial assets
At fair value through other comprehensive income
At fair value through profit or loss
At amortised cost
Current derivatives
Cash and cash equivalents
Total current assets
Total assets
Note
31/12/2020
31/12/2019 (*)
7
8
10
11
19
20
23
12
13
23
19
20
690,850
9,511,245
1,325
519,312
116,205
79,363
7,973
28,869
146
88,015
737,142
9,673,135
1,345
259,594
112,571
91,206
2,542
18,823
14,732
66,009
2,442
10,929,540
3,869
10,868,397
34,875
1,342,099
43,054
1,288,342
10,703
35,812
-
-
35,812
19,991
481,772
42,720
1,346,007
74,396
1,261,607
10,004
58,200
-
-
58,200
11,311
328,570
1,914,549
12,844,089
1,786,808
12,655,205
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6)
Notes 1 to 35 and Appendix I form an integral part of these consolidated annual accounts.
Red Eléctrica Corporación and Subsidiaries Page 1 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Group
Consolidated Statement of Financial Position at 31 December 2020
Thousands of Euros
Equity and Liabilities
Equity
Capital and reserves
Capital
Reserves
Own shares (-)
Profit attributable to the Parent
Interim dividend (-)
Valuation adjustments
Financial assets at fair value through other comprehensive income
Hedging transactions
Translation differences
Equity attributable to the Parent
Non-controlling interests
Total equity
Non-current liabilities
Grants and other
Non-current provisions
Non-current financial liabilities
Loans and borrowings, bonds and other marketable securities
Other non-current financial liabilities
Deferred tax liabilities
Non-current derivatives
Other non-current liabilities
Total non-current liabilities
Current liabilities
Current provisions
Current financial liabilities
Loans and borrowings, bonds and other marketable securities
Other current financial liabilities
Trade and other payables
Suppliers
Other payables
Current tax liabilities
Current derivatives
Total current liabilities
Total equity and liabilities
Note
31/12/2020
31/12/2019 (*)
3,613,425
270,540
2,905,234
(36,550)
621,185
(146,984)
(177,823)
12,761
(93,559)
(97,025)
3,435,602
56,351
3,491,953
707,920
135,986
6,485,404
6,427,644
57,760
417,353
50,350
96,233
3,564,982
270,540
2,763,196
(36,504)
714,752
(147,002)
(52,466)
24,604
(82,699)
5,629
3,512,516
72,640
3,585,156
705,762
151,406
5,327,609
5,267,323
60,286
466,283
48,266
94,902
7,893,246
6,794,228
57,183
823,767
214,973
608,794
577,720
460,502
92,257
24,961
220
27,345
1,846,537
1,197,981
648,556
396,943
311,879
61,490
23,574
4,996
1,458,890
2,275,821
12,844,089
12,655,205
14
15
16
19
23
20
17
16
19
21
23
20
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3
October 2019 (see notes 2.f and 6)
Notes 1 to 35 and Appendix I form an integral part of these consolidated annual accounts.
Red Eléctrica Corporación and Subsidiaries Page 2 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Group
Consolidated Income Statement. 2020
Thousands of Euros
Revenue
Self-constructed assets
Share of profit of equity-accounted investees (with a similar activity to that of the Group)
Supplies
Other operating income
Personnel expenses
Other operating expenses
Depreciation and amortisation
Non-financial and other capital grants
Impairment and losses on disposal of fixed assets
Results from operating activities
Finance income
Finance costs
Exchange losses
Impairment and gains/(losses) on disposal of financial instruments
Net finance cost
Share of profit of equity-accounted investees
Profit before tax
Income tax
Consolidated profit for the year
A) Consolidated profit for the year attributable to the Parent
B) Consolidated profit/(loss) for the year attributable to non-controlling inter-
ests
Earnings per share in Euros
Basic earnings per share in Euros
Diluted earnings per share in Euros
Note
24.a
7 and 8
11
24.c
24.b
24.d
24.c
7, 8 and 10
15
8
24.e
24.e
11
23
14
33
33
31/12/2020 31/12/2019 (*)
1,985,751
57,690
27,980
(27,307)
17,189
(175,915)
(316,870)
(548,184)
30,248
(121,575)
2,007,240
60,083
7,606
(34,503)
19,771
(160,130)
(316,410)
(525,910)
25,724
(1,258)
929,007
1,082,213
16,014
(133,613)
(5,417)
-
12,817
(144,846)
(890)
1
(123,016)
(132,918)
-
805,991
(194,751)
611,240
621,185
1,369
950,664
(235,840)
714,824
714,752
(9,945)
72
1.15
1.15
1.33
1.33
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6)
Notes 1 to 35 and Appendix I form an integral part of these consolidated annual accounts.
Red Eléctrica Corporación and Subsidiaries Page 3 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Group
Consolidated Statement Of Comprehensive Income. 2020
Thousands of Euros
A) Consolidated profit for the year (income statement)
B) Other comprehensive income – Items that will not be reclassified to profit or
loss:
Actuarial gains and losses
Equity instruments through other comprehensive income
Tax effect
C) Other comprehensive income – Items that could be reclassified to profit or
loss:
Cash flow hedges:
a) Revaluation gains/(losses)
b) Amounts transferred to the income statement
Translation differences:
a) Revaluation gains/(losses)
Share of other comprehensive income from investments in joint ventures and associ-
ates:
a) Revaluation gains/(losses)
Tax effect
Total comprehensive income for the year (A + B + C)
a) Attributable to the Parent
b) Attributable to non-controlling interests
Note
31/12/2020
31/12/2019 (*)
611,240
714,824
16
18
11
(18,425)
(8,781)
(11,843)
2,199
(735)
(13,701)
9,541
3,425
(119,858)
(18,888)
1,233
(4,380)
5,613
(145,334)
(145,334)
(11,807)
(11,807)
36,050
472,957
489,246
(16,289)
(12,944)
(17,918)
4,974
2,188
2,188
(10,757)
(10,757)
2,625
695,201
696,081
(880)
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6).
Notes 1 to 35 and Appendix I form an integral part of these consolidated annual accounts.
Red Eléctrica Corporación and Subsidiaries Page 4 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Group
Consolidated Statement of Changes in Equity at 31 December 2020
Thousands of Euros
Equity
Balances at 1 January 2019
I. Comprehensive income for the year
II. Transactions with shareholders or owners
- Distribution of dividends
- Transactions with own shares
III. Other changes in equity
- Transfers between equity line items
- Other changes
Balances at 31 December 2019
Modifications due to the recognition of the Hispasat
business combination effective 3 October 2019 2.f
and 6
Balance at 31 December 2019 restated
I. Comprehensive income for the year
II. Transactions with shareholders or owners
- Distribution of dividends
- Transactions with own shares
III. Other changes in equity
- Transfers between equity line items
- Other changes
Balances at 31 December 2020
Note
Sub-
scribed
capital
Reserves
Interim div-
idend
Own
shares
Profit attribut-
able to the Par-
ent
Valuation
adjust-
ments
Equity at-
tributable to
the Parent
Non-controlling
interests
Total equity
270,540 2,598,060
(147,250)
(21,303)
704,558
(44,071)
3,360,534
832
3,361,366
13
13
-
-
-
-
-
-
-
(10,276)
(382,934)
(384,383)
1,449
558,346
557,556
790
-
248
248
-
-
-
-
-
(15,201)
-
(15,201)
-
-
-
718,040
(147,002)
(147,002)
-
(557,556)
(557,556)
-
(8,395)
-
-
-
-
-
-
699,369
(544,889)
(531,137)
(13,752)
790
-
790
(501)
-
-
-
98,299
-
98,299
698,868
(544,889)
(531,137)
(13,752)
99,089
-
99,089
270,540
2,763,196
(147,002)
(36,504)
718,040
(52,466)
3,515,804
98,630
3,614,434
-
-
-
-
(3,288)
-
(3,288)
(25,990)
(29,278)
13
13
-
-
-
-
-
-
(6,582)
(421,939)
(421,609)
(330)
570,559
567,768
-
18
18
-
-
-
-
(46)
-
(46)
-
-
621,185
(146,984)
(146,984)
-
(567,768)
(567,768)
(125,357)
-
-
-
-
-
13
2,791
-
270,540 2,905,234
-
(146,984)
-
(36,550)
-
621,185
-
(177,823)
2,791
3,435,602
3,512,516
3,512,516
489,246
(568,951)
(568,575)
(376)
2,791
-
72,640
72,640
(16,289)
-
-
-
-
-
-
56,351
3,585,156
3,585,156
472,957
(568,951)
(568,575)
(376)
2,791
-
2,791
3,491,953
Balances at 1 January 2020
270,540
2,763,196
(147,002)
(36,504)
714,752
(52,466)
270,540
2,763,196
(147,002)
(36,504)
714,752
(52,466)
Notes 1 to 35 and Appendix I form an integral part of these consolidated annual accounts.
Red Eléctrica Corporación and Subsidiaries Page 5 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Group
Consolidated Statement of Cash Flows. 2020
Thousands of Euros
Cash flows from operating activities
Profit before tax
Adjustments to profit
Depreciation and amortisation
Other adjustments
Equity-accounted investees
Losses on disposal/impairment of non-current assets and financial instruments
Accrued finance income
Accrued finance costs
Charge to/surplus provisions
Capital and other grants taken to income
Changes in operating assets and liabilities
Changes in inventories, receivables, current prepayments and other current assets
Changes in trade payables, current contract liabilities and other current liabilities
Other cash flows used in operating activities:
Interest paid
Dividends received
Interest received
Income tax received/(paid)
Other proceeds from and payments for operating activities
Cash flows used in investing activities
Payments for investments
Property, plant and equipment, intangible assets and investment property
Group companies, associates and business units
Other financial assets
Proceeds from sale of investments
Property, plant and equipment, intangible assets and investment property
Other financial assets
Other cash flows from investing activities
Other proceeds from investing activities
Cash flows used in financing activities
Proceeds from and payments for equity instruments
Acquisition
Disposal
Proceeds from and payments for financial liability instruments
Issue and drawdowns
Redemption and repayment
Dividends and interest on other equity instruments paid
Other cash flows used in financing activities
Interest paid
Other proceeds from and payments for financing activities
Effect of exchange rate fluctuations on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at year end
Note
31/12/2020 31/12/2019 (*)
6, 7 and 9
23.d
23.d
11, 13 and
15
14
23.d
6, 7 and 9
10
18
6, 7 and 9
18
14
14
13
18
13
1,380,422
805,991
745,792
548,184
197,608
(27,980)
121,575
(16,014)
133,613
16,662
(30,248)
173,528
8,821
1,045,157
950,664
647,240
525,910
121,330
(8,975)
1,257
(12,817)
144,846
22,743
(25,724)
(211,613)
(196,106)
164,707
(15,507)
(344,889)
(158,909)
4,848
7,907
(196,903)
(1,832)
(905,547)
(925,379)
(545,329)
(374,262)
(5,788)
(1,641)
755
(2,396)
21,473
21,473
(314,666)
(376)
(22,851)
22,475
276,095
2,590,079
(2,313,984)
(566,773)
(23,612)
(174)
(23,438)
(7,007)
153,202
328,570
481,772
(341,134)
(148,213)
4,848
6,827
(198,354)
(6,242)
(1,373,834)
(1,451,064)
(519,263)
(931,801)
-
23,651
1,121
22,530
53,579
53,579
(110,219)
(13,753)
(86,202)
72,449
451,238
2,138,358
(1,687,120)
(530,841)
(16,863)
(131)
(16,732)
314
(438,582)
767,152
328,570
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6)
Notes 1 to 35 and Appendix I form an integral part of these consolidated annual accounts.
Red Eléctrica Corporación and Subsidiaries Page 6 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Contents
1 Activities of the Group Companies ................................................................................................... 9
2 Basis of Presentation of the Consolidated Annual Accounts ............................................................ 9
3 Sector Regulation ........................................................................................................................... 17
4 Significant Accounting Policies ....................................................................................................... 21
5 Considerations Regarding COVID-19 in the Consolidated Annual Accounts .................................... 34
6 Business Combinations .................................................................................................................. 37
7
Intangible Assets ............................................................................................................................. 41
8 Property, Plant and Equipment ...................................................................................................... 46
9 Right-of-Use Assets and Lease Liabilities...................................................................................... 52
10 Investment Property ...................................................................................................................... 53
11 Equity-accounted Investees .......................................................................................................... 53
12 Inventories ..................................................................................................................................... 56
13 Trade and Other Receivables .......................................................................................................... 57
14 Equity ............................................................................................................................................. 57
15 Grants and Other Non-current Revenue Received in Advance ......................................................... 61
16 Non-current and Current Provisions .............................................................................................. 62
17 Other Non-current Liabilities ......................................................................................................... 64
18 Financial Risk Management Policy .................................................................................................. 64
19 Financial Assets and Financial Liabilities ....................................................................................... 67
20 Derivative Financial Instruments .................................................................................................... 73
21 Trade and Other Payables ............................................................................................................... 79
22 Average Supplier Payment Period. “Reporting Requirement”, Third Additional Provision of Law
15/2010 of 5 July 2010 ..................................................................................................................... 79
23 Taxation ......................................................................................................................................... 79
24 Income and Expenses .................................................................................................................... 84
25 Transactions with Equity-accounted Investees and Related Parties .............................................. 86
26 Remuneration of the Board of Directors......................................................................................... 87
27 Remuneration of Senior Management ............................................................................................ 90
Red Eléctrica Corporación and Subsidiaries Page 7 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
28 Segment Reporting ......................................................................................................................... 91
29 Interests in Joint Arrangements .................................................................................................... 93
30 Guarantees and Other Commitments with Third Parties and Other Contingent Assets and Liabilities
....................................................................................................................................................... 94
31 Environmental Information ............................................................................................................ 94
32 Other Information ........................................................................................................................... 95
33 Earnings per Share ......................................................................................................................... 96
34 Share-based Payments .................................................................................................................. 96
35 Events after 31 December 2019 ...................................................................................................... 96
Appendix I: Details of equity investments at 31 December 2020 and 2019 ........................................... 97
In order to facilitate comprehension of the information provided in this document, certain alternative performance
measures have been included. The definition of these measures can be found at www.ree.es.
Red Eléctrica Corporación and Subsidiaries Page 8 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
1 Activities of the Group Companies
Red Eléctrica Corporación, S.A. (hereinafter the Parent or the Company) is the Parent of a Group formed by subsid-
iaries. The Group is also involved in joint operations along with other operators. The Parent and its subsidiaries
form the Red Eléctrica Group (hereinafter the Group or Red Eléctrica Group). The Company's registered office is
located in Alcobendas (Madrid) and its shares are traded on the Spanish automated quotation system as part of the
selective IBEX 35 index.
The Group's principal activity is electricity transmission, system operation and management of the transmission
network for the Spanish electricity system. These regulated activities are carried out through Red Eléctrica de
España, S.A.U. (hereinafter REE).
The Group also conducts electricity transmission activities outside Spain through Red Eléctrica Internacional,
S.A.U. (hereinafter REI) and its investees. Furthermore, the Group provides telecommunications services to third
parties through Red Eléctrica Infraestructuras de Telecomunicación, S.A.U. (hereinafter REINTEL), essentially via
dark fibre backbone network rental, and through the HISPASAT subgroup (hereinafter HISPASAT), by means of sat-
ellite infrastructure operation.
In addition the Group carries out activities through its subsidiaries aimed at financing its operations and covering
risks by reinsuring its assets and activities. It also develops and builds electricity infrastructure and facilities
through its subsidiaries and/or investees, Red Eléctrica Infraestructuras en Canarias, S.A.U. (REINCAN) and Inter-
conexión Eléctrica Francia-España, S.A.S. (INELFE). Moreover, the Group carries out activities aimed at driving and
fostering technological innovation through its subsidiary Red Eléctrica y de Telecomunicaciones, Innovación y
Tecnología, S.A.U. (RETIT).
Appendix I provides details of the activities and registered offices of the Parent and its subsidiaries, as well as the
direct and indirect investments held by the Parent in the subsidiaries.
2 Basis of Presentation of the Consolidated Annual Accounts
General information
a)
The accompanying consolidated annual accounts have been prepared by the directors of the Parent to give a true
and fair view of the consolidated equity and consolidated financial position of the Company and its subsidiaries at
31 December 2020, as well as the consolidated results of operations and consolidated cash flows and changes in
consolidated equity for the year then ended.
The accompanying consolidated annual accounts, authorised for issue by the Company's directors at their board
meeting held on 23 February 2021, have been prepared on the basis of the individual accounting records of the
Company and the other Group companies, which together form the Red Eléctrica Group (see Appendix I). Each com-
pany prepares its annual accounts applying the accounting principles and criteria in force in its country of opera-
tions. Accordingly, the adjustments and reclassifications necessary to harmonise these principles and criteria with
International Financial Reporting Standards as adopted by the European Union (IFRS-EU) have been made on con-
solidation. The accounting policies of the consolidated companies are changed when necessary to ensure their
consistency with the principles adopted by the Company.
The consolidated annual accounts for 2019 were approved by the shareholders at their general meeting held on 14
May 2020. The consolidated annual accounts for 2020 are currently pending approval by the shareholders. However,
the directors of the Company consider that these consolidated annual accounts will be approved with no changes.
These consolidated annual accounts have been prepared on the historical cost basis, except in the case of financial
assets measured at fair value through other comprehensive income, financial assets at fair value through profit or
loss, financial instruments at fair value through profit or loss and business combinations.
The figures disclosed in the consolidated annual accounts are expressed in thousands of Euros, the Parent’s func-
tional and presentation currency, rounded off to the nearest thousand. The consolidated annual accounts have
been prepared in accordance with IFRS-EU, and other applicable provisions in the financial reporting framework.
Red Eléctrica Corporación and Subsidiaries Page 9 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Group has not omitted any mandatory accounting principle with a significant effect on the consolidated annual
accounts.
b) New IFRS-EU and IFRIC
The consolidated annual accounts have been prepared in accordance with IFRS-EU.
The following standards and amendments have been applied for the first time in 2020:
Effective from:
New requirements or amendments approved for use in the EU
1 January 2020
1 June 2020
•
•
•
•
•
Amendments regarding reference to the Conceptual Framework under IFRS
IAS 1 and IAS 8 – Definition of Material
IFRS 9, IFRS 7 and IAS 39 – Interest Rate Benchmark Reform (IBOR)
IFRS 3 – Definition of a Business
IFRS 16 – Covid-19-Related Rent Concessions
The new amendments issued are as follows:
• Amendments to IAS 1 and IAS 8 – Definition of Material
These amendments clarify the definition of “material”, which, in addition to omissions and misstatements that
could influence decisions made by users of the information, now also includes the concept of “obscure”. As a
result of these amendments, the IFRS are more consistent with the definition of “material” laid down in the con-
ceptual framework. This amendment has not had a significant impact on the preparation of the Group's consoli-
dated annual accounts.
• IFRS 9, IFRS 7 and IAS 39 – Interest Rate Benchmark Reform
These amendments provide for certain exceptions in relation to the interest rate benchmark reform (IBOR). The
exceptions pertain to hedge accounting and the outcome is that the IBOR reform should not generally give rise
to the discontinuation of hedge accounting. However, any hedge ineffectiveness must continue to be recognised
in the income statement.
With regard to the IBOR reform, the Group has various hedging relationships to hedge interest rate risk, using
derivatives and underlyings whose benchmark rate is generally the EURIBOR. No hedging relationships have been
affected, and moreover, the Group is only minimally exposed to intraday benchmark interest rates (EONIA). With
respect to the EURIBOR, in 2019 a new hybrid calculation methodology was developed based on actual market
transactions, which distinguishes between three levels of estimates, depending on the extent to which such
transactions are observable. This new methodology was approved by the authorities, and therefore no amend-
ments to existing or future contracts are expected to be required, on considering that these financial instru-
ments are not exposed to a high level of uncertainty at 31 December 2020.
The remaining benchmark interest rates are undergoing a reform on a global scale, although this is not expected
to affect the long-term hedging relationships currently in place. The Group has adopted a proactive stance with
respect to this process, carrying out its monitoring and analysis sufficiently in advance to prevent any negative
impacts that may arise. On this basis, the changes in benchmark interest rates have not had a significant impact
on the Group’s consolidated annual accounts.
• IFRS 3 – Definition of a Business
These amendments will help to determine whether a transaction is a business combination or an acquisition of
a set of assets. The amended definition emphasises that the output of a business consists of goods and services
provided to customers, whereas in the previous definition the focus was on providing a return in the form of
dividends, lower costs or other economic benefits directly to investors or other owners. Besides changing the
wording of the definition, additional guidance is now given. To be considered a business, an acquisition must
include an input and a process that together significantly contribute to the ability to create outputs. The new
guidance provides a framework for assessing whether both elements are present (even in the case of early-stage
entities that have not yet started to generate outputs). An entity that has not started generating revenue must
now have an organised workforce in order to be considered as a business.
Red Eléctrica Corporación and Subsidiaries Page 10 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
These amendments apply to business combinations and asset acquisitions carried out on or after 1 January 2020.
These amendments have not had an impact on the Group's consolidated annual accounts.
• IFRS 16 Leases – Rent concessions
The amendment to IFRS 16 Leases introduces an optional practical expedient that lessees may apply when de-
termining whether a Covid-19-related rent concession is a lease modification. This amendment is effective for
annual financial periods beginning on or after 1 June 2020. This amendment has not had an impact on the Group's
consolidated annual accounts.
• New requirements or amendments effective as of 1 January 2021
The new standards not yet adopted by the European Union for which application is not mandatory in 2020 but
which will enter into force for annual periods beginning on or after 1 January 2021 are as follows:
Effective from:
New requirements or amendments
1 January 2021
1 January 2022
1 January 2023
•
•
•
•
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate
Benchmark Reform - Phase 2
Amendment to IFRS 4 – Extension of the Temporary Exemption from Applying
IFRS 9
Amendment to IFRS 3 – Reference to the Conceptual Framework
Amendment to IAS 16 Property, Plant and Equipment – Proceeds before
Intended Use
Amendment to IAS 37 – Onerous Contracts - Cost of Fulfilling a Contract
Annual Improvements to IFRS. 2018-2020 Cycle
•
•
• New standard - IFRS 17 Insurance Contracts
•
Amendment to IAS 1 – Classification of Liabilities as Current or Non-current
Estimates and assumptions
c)
The preparation of the consolidated annual accounts in accordance with IFRS-EU requires Group management to
make judgements, estimates and assumptions that affect the application of accounting standards and the amounts
of assets, liabilities, income and expenses. Estimates and judgements are assessed continually and are based on
past experience and other factors, including expectations of future events that are considered reasonable given
the circumstances. Actual results could differ from these estimates.
The consolidated annual accounts for 2020 occasionally include estimates calculated by management of the Group
and of the consolidated companies, and subsequently endorsed by their directors, to quantify certain assets, lia-
bilities, income, expenses and commitments disclosed therein.
These estimates are essentially as follows:
• Estimated asset recovery, calculated by determining the recoverable amount thereof. The recoverable amount
is understood to be the higher of fair value less costs to sell and value in use. Asset impairment is generally
calculated using discounted cash flows based on financial projections used by the Group. The discount rate ap-
plied is the weighted average cost of capital, taking into account the country risk premium (see note 8).
• Estimated useful lives of property, plant and equipment (see note 4.b).
• The assumptions used in the actuarial calculations of liabilities and obligations to employees (see note 16).
• The assumptions used to calculate the fair value of derivatives (see note 20).
• Estimated revenue from electricity transmission facilities in Spain for periods prior to n+2 (see note 13).
• The assumptions used to calculate the fair value of assets and liabilities acquired in a business combination (see
note 6). The Company has taken out insurance policies to cover the risk of possible claims that might be lodged
by third parties in relation to its activities.
Red Eléctrica Corporación and Subsidiaries Page 11 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Liabilities are generally recognised when it is probable that an obligation will give rise to an indemnity or a payment.
The Group assesses and estimates amounts to be settled in the future, including additional amounts for income
tax, contractual obligations, pending lawsuit settlements and other liabilities. These estimates are subject to the
interpretation of existing facts and circumstances, projected future events and the estimated financial effect of
those events (see note 16). The Company has taken out insurance policies to cover the risk of possible claims that
might be lodged by third parties in relation to its activities.
In the absence of International Financial Reporting Standards (IFRSs) that give guidance on the accounting treat-
ment for a particular situation, in accordance with IAS 8, management uses its best judgement based on the eco-
nomic substance of the transaction and considering the most recent pronouncements of other standard-setting
bodies that use the same conceptual framework as IFRS. Accordingly, as tax credits for investments are not within
the scope of IAS 12 and IAS 20, after analysing the related facts and circumstances, Group management has con-
sidered that credits for investments granted to the Group by public entities are similar to capital grants. Therefore,
in these cases management has taken into account IAS 20 on government grants (see note 4j).
To facilitate comprehension of the consolidated annual accounts, details of the different estimates and assump-
tions are provided in each separate note.
Although estimates are based on the best information available at 31 December 2020, future events may require
increases or decreases in these estimates in subsequent years, which would be accounted for prospectively in the
corresponding consolidated income statement as a change in accounting estimates, as required by IFRS.
Consolidation principles
d)
The types of companies included in the consolidated Group and the consolidation method used in each case are as
follows:
• Subsidiaries
Subsidiaries are entities, including structured entities, over which the Company, either directly or indirectly
through subsidiaries, exercises control. The Company controls a subsidiary when it is exposed, or has rights, to
variable returns from its involvement with the subsidiary and has the ability to affect those returns through its
power over the subsidiary. The Company has power over a subsidiary when it has existing substantive rights that
give it the ability to direct the relevant activities. The Company is exposed, or has rights, to variable returns from
its involvement with the subsidiary when its returns from its involvement have the potential to vary as a result of
the subsidiary’s performance.
A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor
in deciding who controls the entity, such as when any voting rights relate to administrative tasks only and the
relevant activities are directed by means of contractual arrangements.
The income, expenses and cash flows of subsidiaries are included in the consolidated annual accounts from the
date of acquisition, which is when the Group takes control, until the date that control ceases.
Transactions and balances with Group companies and unrealised gains or losses have been eliminated on con-
solidation. Nevertheless, unrealised losses have been considered as an indicator of impairment of the assets
transferred.
• Joint arrangements
Joint arrangements are those in which there is a contractual agreement to share the control over an economic
activity, in such a way that decisions about the relevant activities require the unanimous consent of the Group
and the remaining venturers or operators. The existence of joint control is assessed considering the definition
of control over subsidiaries.
The Group assesses all the facts and circumstances relating to each joint arrangement for the purpose of its
classification as a joint venture or joint operation, including whether the arrangement contains rights over the
assets and obligations for liabilities.
Red Eléctrica Corporación and Subsidiaries Page 12 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In joint operations there is a joint arrangement whereby the parties that have joint control have rights to the
assets, and obligations for the liabilities, relating to the arrangement. For joint operations, the Group recognises
the assets, including its share of any assets held jointly, the liabilities, including its share of any liabilities incurred
jointly with the other operators, the revenue from the sale of its share of the output arising from the joint opera-
tion, and the expenses, including its share of any expenses incurred jointly, in the consolidated annual accounts.
Joint ventures are those in which there is a contractual agreement with a third party to share control over an
activity and the strategic financial and operating decisions relating to the activity require the unanimous consent
of all the venturers that share control. The Group's interests in jointly controlled entities are accounted for using
the equity method in accordance with IFRS 11.
The Group's acquisition of an initial and subsequent share in a joint operation that is a business is recognised
following the same criteria used for business combinations, at the percentage of ownership of each individual
asset and liability. However, in subsequent acquisitions of additional shares in a joint operation, the previous
share in each asset and liability is not subject to revaluation.
In sales or contributions by the Group to the joint operation, it recognises the resulting gains and losses only to
the extent of the other parties’ interests in the joint operation. When such transactions provide evidence of a
reduction in net realisable value or an impairment loss of the assets transferred, such losses are recognised in
full.
In purchases by the Group from a joint operation, it only recognises the resulting gains and losses when it resells
the acquired assets to a third party. However, when such transactions provide evidence of a reduction in net
realisable value or an impairment loss of the assets, the Group recognises its entire share of such losses.
• Associates
Associates are entities over which the Company, either directly or indirectly through subsidiaries, exercises sig-
nificant influence. Significant influence is the power to participate in the financial and operating policy decisions
of the investee but is not control or joint control over those policies. The existence of potential voting rights that
are exercisable or convertible at the end of each reporting period, including potential voting rights held by the
Group or other entities, are considered when assessing whether an entity has significant influence.
Investments in associates are accounted for using the equity method from the date that significant influence
commences until the date that significant influence ceases. However, if on the acquisition date all or part of the
investment qualifies for recognition as non-current assets or disposal groups held for sale, it is recognised at
fair value less costs of disposal.
Investments in associates are initially recognised at cost of acquisition, including any cost directly attributable
to the acquisition and any consideration receivable or payable contingent on future events or on compliance with
certain conditions. Any excess of the cost of the investment over the Group’s share of the net fair value of the
associate’s identifiable net assets at the acquisition date is recognised as goodwill under equity-accounted in-
vestees in the consolidated statement of financial position. Any excess of the Group’s share of the net fair value
of the associate’s identifiable net assets over the cost of the investment at the acquisition date (bargain pur-
chase) is recognised as income in the period in which the investment is acquired.
The Group classifies the profit or loss of these companies in results from operating activities when the entity’s
activity is similar to the Group’s operating activities. Conversely, when their activity is different, the profit or loss
of these companies is classified outside results from operating activities.
Appendix I provides details of the Company's subsidiaries, joint arrangements, joint ventures and associates, as
well as the consolidation or measurement method used in preparing the accompanying consolidated annual ac-
counts and other relevant information.
The financial statements of the subsidiaries, joint arrangements, joint ventures and associates used in the consol-
idation process have the same reporting date and refer to the same period as those of the Parent.
The operations of the Company and its subsidiaries have been consolidated applying the following basic principles:
• The accounting principles and criteria used by the Group companies have been harmonised with those applied
by the Parent.
• Translation of foreign operations:
Red Eléctrica Corporación and Subsidiaries Page 13 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
o Balances in the financial statements of foreign companies have been translated using the closing exchange
rate for assets and liabilities, the average exchange rate for income and expenses and the historical exchange
rate for capital and reserves.
o All resulting exchange differences are recognised as translation differences in other comprehensive income.
o These criteria are also applicable to the translation of the financial statements of equity-accounted investees,
with translation differences attributable to the Group recognised in other comprehensive income.
• All balances and transactions between fully consolidated companies have been eliminated on consolidation.
• Margins on invoices between Group companies for capitalisable goods or services were eliminated at the trans-
action date.
e) Non-controlling interests
For each business combination, the Group measures at the acquisition date components of non-controlling inter-
ests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation at either: (a) fair value; or (b) the present ownership instruments’ pro-
portionate share in the recognised amounts of the acquiree’s identifiable net assets. Non-controlling interests’
share in consolidated profit or loss for the year and in consolidated comprehensive income for the year is disclosed
separately.
Transactions with non-controlling interests are recognised as transactions with equity holders of the Group. As
such, the difference between the consideration paid in the acquisition of a non-controlling interest and the corre-
sponding proportion of the carrying amount of the subsidiary's net assets is recognised in equity. Similarly, the
gains or losses on disposal of non-controlling interests are also recognised in the Group's equity.
f)
Comparative information
The consolidated statement of financial position, consolidated income statement, consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows in
these consolidated annual accounts include comparative figures for the prior year, which differ from those
presented in the approved consolidated annual accounts for 2019 due to figures being restated for the following
reasons:
• Completion of the purchase price allocation relating to the acquisition of HISPASAT on 3 October 2019 (see note
6).
• Change in accounting criteria with respect to the recognition of non-controlling interests in the HISPASAT busi-
ness combination (see note 6). At 31 December 2019 the Group had recognised these interests at fair value,
whereas at 31 December 2020 non-controlling interests have been recognised in the amount of the proportionate
share of the net assets.
• In addition, the Group has classified the profit/loss for the period of the equity-accounted investee Hisdesat
Servicios Estratégicos, S.A. (hereinafter Hisdesat) under results from operating activities, in accordance with
Decision EECS/0114-06 “Change of Presentation of the Share in the Profit or Loss of Associates and Joint Ven-
tures Accounted for Using the Equity Method” issued by the European Securities and Markets Authority (ESMA).
The main differences in the consolidated statement of financial position, consolidated income statement and
consolidated statement of cash flows are as follows:
Red Eléctrica Corporación and Subsidiaries Page 14 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Consolidated statement of financial position
Thousands of Euros
Assets
Non-current assets
Intangible assets
Deferred tax assets
Current assets
Total assets
Equity and Liabilities
Equity
Profit attributable to the Parent
Non-controlling interests
Equity attributable to the Parent
Non-current liabilities
Non-current financial liabilities
Deferred tax liabilities
Current liabilities
Current financial liabilities
Total equity and liabilities
Consolidated income statement
Thousands of Euros
Other operating expenses
Depreciation and amortisation
Results from operating activities
Finance costs
Net finance cost
Profit before tax
Income tax
Consolidated profit for the year
A) Consolidated profit for the year attributable to the Parent
31/12/2019
restated
31/12/2019
Variation
10,868,397
10,875,152
737,142
66,009
765,599
44,307
1,786,808
1,786,808
12,655,205
12,661,960
3,585,156
3,614,434
714,752
72,640
3,512,516
6,794,228
5,327,609
466,283
718,040
98,630
3,515,804
6,775,351
5,318,760
456,255
2,275,821
2,272,175
1,846,537
12,655,205
1,842,891
12,661,960
(6,755)
(28,457)
21,702
-
(6,755)
(29,278)
(3,288)
(25,990)
(3,288)
18,877
8,849
10,028
3,646
3,646
(6,755)
31/12/2019
restated
(316,410)
(525,910)
1,082,213
(144,846)
(132,918)
950,664
(235,840)
714,824
31/12/2019 Variation
(317,649)
(525,529)
1,081,355
(145,927)
(133,999)
948,725
1,239
(381)
858
1,081
1,081
1,939
(230,234)
(5,606)
718,491
(3,667)
714,752
718,040
(3,288)
B) Consolidated profit for the year attributable to non-controlling inter-
ests
72
451
(379)
Earnings per share in Euros
Basic earnings per share in Euros
Diluted earnings per share in Euros
1.33
1.33
1.33
1.33
-
-
Red Eléctrica Corporación and Subsidiaries Page 15 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Consolidated statement of cash flows
Thousands of Euros
Cash flows from operating activities
Profit before tax
Adjustments to profit
Depreciation and amortisation
Other adjustments
Accrued finance costs
31/12/2019
restated
1,045,157
950,664
647,240
525,910
121,330
144,846
31/12/2019
Variation
1,045,157
948,725
647,940
525,529
122,411
145,927
-
1,939
(700)
381
(1,081)
(1,081)
(1,239)
Changes in operating assets and liabilities
(211,613)
(210,374)
Changes in inventories, receivables, current prepayments and other current assets
(196,106)
(194,867)
(1,239)
Cash flows used in investing activities
Cash flows used in financing activities
Effect of exchange rate fluctuations on cash and cash equivalents
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at year end
(1,373,834)
(110,219)
314
(438,582)
767,152
328,570
(1,373,834)
(110,219)
314
(438,582)
767,152
328,570
-
-
-
-
-
-
Changes in the consolidated Group
g)
The changes in the consolidated Group in 2020 are as follows:
• On 31 January 2020 the Brazilian company “Red Eléctrica Brasil Holding LTDA” (hereinafter REB) was incorpo-
rated. This company’s statutory activity mainly consists of the acquisition, holding, management and administra-
tion of securities. This company is wholly owned by Red Eléctrica Internacional, S.A.U.
• On 25 March 2020, once the conditions precedent laid down in the purchase agreement had been met, a 50%
interest was acquired in the Brazilian company “Energia Empreendimentos e Participações S.A.” and subsidiaries
(hereinafter ARGO Energia). This company’s statutory activity mainly consists of the acquisition, holding, man-
agement and administration of securities. This company is the parent of a group of electricity transmission con-
cession operator companies in Brazil. REB holds a 50% interest in this company. It is accounted for using the
equity method.
The changes in the consolidated Group in 2019 were as follows:
• Red Eléctrica del Norte Perú, S.A.C. (REDELNOR) was incorporated on 11 January 2019 and is wholly owned by REI.
The statutory activity of the new company consists of electricity transmission and maintenance activities on the
Carhuaquero - Cajamarca Norte - Caclic - Moyobamba line. This company is fully consolidated.
• On 6 June 2019 the Spanish company Red Eléctrica y de Telecomunicaciones, Innovación y Tecnología, S.A. (RE-
TIT) was incorporated. This company's statutory and principal activity consists of driving and fostering techno-
logical innovation. This company is wholly owned by Red Eléctrica Corporación and will be fully consolidated.
• On 18 July 2019 the Peruvian company Concesionaria Línea de Transmisión CCNCM, S.A. (hereinafter CCNCM) was
acquired. The company's statutory and principal activity consists of electricity transmission and maintenance
activities on the Carhuaquero - Cajamarca Norte - Caclic - Moyobamba line and related substations in Peru. This
company is wholly owned by REDELNOR and is fully consolidated (see note 6).
• On 3 October 2019 HISPASAT and its subsidiaries were acquired. The company’s statutory and principal activity
consists of commercialising and rendering satellite telecommunications services. Red Eléctrica Sistemas de
Telecomunicación, S.A. (RESTEL) holds an 89.68% interest in this company. All of the HISPASAT companies are
fully consolidated, except for Hisdesat Servicios Estratégicos, S.A. and Grupo de Navegación Sistemas y Ser-
vicios, S.L., which are accounted for using the equity method (see note 6).
Red Eléctrica Corporación and Subsidiaries Page 16 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
3 Sector Regulation
Electricity sector in Spain
a)
The sector liberalisation process in Spain began with Electricity Industry Law 54/1997 of 27 November 1997. This
Law prompted the start of a vertical disintegration of the different activities, whereby activities carried out under
a natural monopoly regime (transmission and distribution) were segregated from those operating on a free compe-
tition basis (generation and supply). A series of reforms was embarked upon in 2013, which culminated in the en-
actment of the current Electricity Industry Law 24/2013 of 26 December 2013. These reforms and the new Law were
introduced principally to address the imbalance between revenues and costs of the electricity system in previous
years, which in turn resulted from certain energy and tariff policy decisions and was aggravated by the impact of
the financial crisis on electricity demand. The Law lays down the following regulatory framework with respect to
the activities conducted by the Company:
• The Law acknowledges the natural monopoly in the transmission activity, arising from the economic efficiency
afforded by a sole grid. Transmission is liberalised by granting widespread third-party access to the network,
which is made available to the different electricity system agents and consumers in exchange for payment of an
access charge.
The remuneration for this activity is set by the government based on the general principles defined in the Law
and, until 2019, on the method set forth in Royal Decree 1047/2013 of 27 December 2013, which sets out the meth-
odology for calculating the remuneration for electricity transmission activities. However, due to the change in
remit introduced through Royal Decree-Law 1/2019, on urgent measures to adapt the powers of the Spanish Na-
tional Markets and Competition Commission (CNMC) to the requirements of Community law in respect of Direc-
tives 2009/72/EC and 2009/73/EC of the European Parliament and of the Council of 13 July 2009, concerning
common rules for the internal market in electricity and natural gas, respectively, for the new regulatory period
commencing in 2020 the CNMC has approved a new methodology, set forth in Circular 5/2019 of 5 December 2019,
which defines the methodology for calculating the remuneration for electricity transmission activities.
In addition to this Circular, for the 2020-2025 regulatory period certain other remuneration parameters have been
defined under the new model. Circular 2/2019 defines the methodology for calculating the financial rate of return
for electricity transmission and distribution, regasification, and natural gas transmission and distribution, and
Circular 7/2019 approves the standard facilities and reference unit values for operation and maintenance per
asset that are to be used in calculating the remuneration allocable to companies that own electricity transmis-
sion facilities. This Circular also provided that the reference unit values for investment that were in force in the
previous regulatory period, which were established by Ministry of Industry, Energy and Tourism Order
IET/2659/2015, were to be extended to cover the 2020-2025 period.
Regulated revenue for the transmission activity for the first year of application of Royal Decree 1047/2013 (i.e.
2016) was determined definitively in Ministry of Industry, Energy and Tourism Order IET/981/2016. Subsequently,
between 2017 and 2020, the regulated revenue for this activity was determined on a provisional basis and settled
on account. The regulators (the Ministry until 2019 and the CNMC for revenue pertaining to 2020) provisionally
opted to repeat what was stipulated for 2016 in terms of the amount of remuneration, and this has therefore
remained constant. This provisional approach (for the 2017-2020 period) stems from the “detriment proceedings”
brought by the Spanish State Attorney against the aforementioned Ministerial Order IET/981/2016, seeking that
the Spanish Supreme Court declare certain articles therein null and void, thus enabling the definitive revenue for
2016 to be corrected. The Supreme Court delivered its judgment on 29 June 2020, ruling in part for the State, and
thus requiring Ministerial Order IET/981/2016 and the revenue for 2016 to be corrected. This is expected to occur
in 2021, and will thus allow for the definitive transmission activity revenue for 2017-2020 to be established.
• As electricity system operator, the Company's main function is to guarantee the continuity and security of the
electricity supply, as well as to ensure the correct coordination of the production and transmission system, ex-
ercising its duties in cooperation with the operators and agents of the Spanish electricity market (MIBEL) while
observing the principles of transparency, objectivity and independence. Law 24/2013 also bestows upon the sys-
tem operator the role of transmission network manager.
As provided in article 31.1 of the aforementioned law, the Ministry shall assign the role of transmission network
manager for the Spanish electricity system to Red Eléctrica following certification by the CNMC, and the
Red Eléctrica Corporación and Subsidiaries Page 17 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
European Commission shall be notified in order for such assignment to be published in the Official Journal of the
European Union. In 2015 the certification process for Red Eléctrica as transmission network manager for the
Spanish electricity system, as envisaged in the law, was completed following publication in the Official Journal
of the European Union of 12 February 2015 of the Notification of the Spanish Government regarding the designa-
tion of Red Eléctrica de España, S.A.U. as transmission system operator in Spain. Under this assignment, Red
Eléctrica de España, S.A.U. operates on an ownership unbundling basis as stipulated in article 9 of the old Di-
rective 2009/72/EC, and reiterated in article 43 of the new Directive 2019/944 on common rules for the internal
market for electricity.
The Company is also responsible for the functions of settlement, notification of payments and receipts, and
management of guarantees relating to security of supply and the effective diversion of units generated and con-
sumed, as well as for short-term energy exchanges aimed at maintaining the quality and security of supply.
Furthermore, the Company manages the technical and economic dispatch for electricity supply from non-main-
land electricity systems (Balearic Islands, Canary Islands, Ceuta and Melilla), and is responsible for the settlement
of payments and receipts arising from the economic dispatch of electricity generated by these systems.
Following the enactment of Royal Decree-Law 1/2019, the CNMC assumed its new remit and published a number
of circulars in 2019 and 2020 defining the new remuneration methodologies for network activities (electricity and
gas alike) as well as the methodology for tolls. The CNMC also established the first ever remuneration model for
the system operation activity, through Circular 4/2019, which defines the remuneration methodology for the elec-
tricity system operator. The core principal of this remuneration model is that of providing suitable remuneration
for a low-risk activity, considering those costs prudently incurred by an efficient and well-managed company.
The CNMC has applied the remuneration methodology laid down in Circular 4/2019 to determine the remuneration
of the system operator for 2020 and 2021. With the publication of the new remuneration methodology, the regu-
lator should now proceed to estimate the definitive remuneration for 2014-2019, which previously was estimated
on a provisional basis in the absence of a calculation methodology.
Regarding the Company’s remit in the non-mainland electricity systems, in 2015 the Chira-Soria 200 MW reversible
hydroelectric power plant project in Gran Canaria was transferred to the system operator, as stipulated in Order
IET/728/2014 of 28 April 2014. Having taken ownership, in 2016 Red Eléctrica submitted a project amending the
initial project, which included technical and environmental improvements aimed at increasing the capacity for in-
tegrating renewable energy and reducing the impact of this new infrastructure on the environment. In 2016 the
Canary Islands government declared the new project to be of strategic interest and it has been subject to adminis-
trative consideration since then, before construction gets underway.
International electricity sector
b)
The Red Eléctrica Group has built and acquired electricity transmission facilities through REI. At international level,
it now operates and maintains these facilities in Peru, Chile and Brazil. Various electricity transmission facilities
were also under construction by subsidiaries of REI in these countries at the end of 2020.
Electricity sector in Peru
In Peru, the liberalisation of the electricity sector began in 1992 with the publication of the “Electricity Concessions
Law” (LCE). The shaping of the electricity sector was subsequently completed by the 2006 reform (Law 28832, “Law
for the Efficient Development of Electricity Generation”, LGE).
These two laws and certain amendments and/or extensions, together with the Regulation implementing the Elec-
tricity Concessions Law (Supreme Decree No. 009-93-EM enacted in 1993), make up the basic regulatory framework
for the electricity sector in Peru.
The basic regulatory framework for the transmission activity also includes the “Transmission Regulation” (Supreme
Decree No. 027-2007-EM). Certain major regulatory developments instituted by the regulatory agency OSINERGMIN
should also be highlighted, such as the Resolutions approving the annual settlement procedure for electricity trans-
mission service revenue (Resolutions No. 055-2020-OS/CD and No. 056-2020-OS/CD), as well as Resolution No. 217-
2013-OS/CD, regulating “Tariffs and Remuneration for Secondary Transmission Systems (STS) and Complementary
Transmission Systems (CTS)”.
Red Eléctrica Corporación and Subsidiaries Page 18 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
For the transmission activity, the 2006 reform (LGE) entailed the introduction of auctions as a mechanism for
awarding contracts to construct new facilities in the backbone transmission network. The auction procedure re-
quired an energy planning process to be developed, which did not exist prior to the publication of the LGE.
The Peruvian regulatory framework is currently open to discussion. On 20 June 2019 Supreme Resolution No. 006-
2019-EM was published, which created the CRSE (multi-sector power reform commission), for the purpose of re-
viewing and adjusting the existing legal and regulatory framework in order to optimise the efficient development
of the Peruvian electricity market while adhering to international standards and best practice, seeking to guarantee
the sustainability of the electricity subsector.
• A technical document is expected to be available in the first quarter of 2022 which will contain institutional leg-
islative proposals and regulatory reforms to foster modernisation and address the challenges arising in the elec-
tricity industry, so as to ensure sufficient generation, the incorporation of renewable energies, smart metering,
distributed generation, empowerment of demand, and harmonised development across the electricity and nat-
ural gas sectors.
• The following topics will be addressed in the specific case of the transmission subsector: (i) flexibility in the
expansion of the transmission system; (ii) efficacy and transparency in transmission network access; (iii) simpli-
fication of remuneration schemes; and (iv) international interconnections.
Electricity sector in Chile
The legal framework governing the electricity transmission business in Chile is contained in Decree with Force of
Law (DFL) No. 4/2006, which sets out the revised, coordinated and systematised text of Ministry of Mining Decree
with Force of Law (DFL) No. 1 of 1982, the General Electricity Services Law (DFL No. 1/1982) and subsequent
amendments thereto. Such amendments include Law 19,940 (Short Law I) enacted on 13 March 2004, Law 20,018
(Short Law II) enacted on 19 May 2005, and Law 20,257 (Generation through Non-conventional Renewable Energy
Sources) enacted on 1 April 2008. These regulations are supplemented by the Regulation of the General Electricity
Services Law of 1997 (Ministry of Mining Supreme Decree No. 327 of 1997) and respective amendments thereto, and
by the Technical Standard for Safety and Quality of Service (Exempt Ministerial Resolution No. 40 of 16 May 2005)
and subsequent amendments thereto.
The new Transmission Law was enacted on 11 July 2016. This law provides for a new independent coordinating body
for the National Electricity System, known as the National Electricity Coordinator (“CEN”), which combines the
former Economic Load Dispatch Centre - Central Interconnected System (“CDEC SIC”) and the Economic Load
Dispatch Centre - Far North Interconnection System (“CDEC SING”). It also defines a new electricity transmission
system wherein the facilities forming part of the Backbone, Sub-transmission and Additional Transmission
Systems were amalgamated into the National, Zonal and Dedicated Transmission Systems, respectively. The
remuneration received by the transmission agent is calculated by applying a variable post-tax discount rate that
ranges between a minimum of 7% and a maximum of 10%. The new law was effective immediately and application
thereof is gradual, culminating in full application from 2020 onwards.
Lastly, the most noteworthy developments in the last year include the publication, on 13 June, of the Regulation on
the Designation, Valuation, Pricing and Remuneration of Transmission Facilities, approved by the Ministry of En-
ergy’s Supreme Decree No. 10 of 1 February 2020. This Regulation governs relevant processes for the transmission
segment, such as the designation, valuation, pricing and remuneration of electricity transmission system facilities,
in addition to other aspects necessary for the adequate performance of such processes. Under the current frame-
work, the annual value of national and zonal transmission facilities and development hubs in the transmission sys-
tem is determined by the National Energy Commission (CNE) every four years. As such, revenue for the new tariff
period (2020-2023) has not been conclusively determined, inasmuch as the value of the assets not put out for ten-
der is under review.
Electricity sector in Brazil
The transmission model in Brazil is based on government concessions, for which the core principles of public
service are enshrined in the Constitution of 1988, and the principles that govern concessions in Law 8,987 and Law
9,974 of 1995, respectively.
Red Eléctrica Corporación and Subsidiaries Page 19 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
This framework provides that concession agreements are administrative contracts entered into with the federal
government (national), represented by the regulatory agency ANEEL, which cannot be amended or early terminated
by the government, except for duly supported reasons deemed to be in the public interest (very similar to the
Spanish model).
Under this model, concessions for backbone network facilities are put out for tender by ANEEL through auctions.
The auctions determine which transmission companies will build, maintain and operate the electricity assets during
the concession period. By way of remuneration for the service rendered during this period, transmission companies
receive the revenue specified in the auction, i.e. the Receita Anual Permitida (Annual Permitted Remuneration – RAP
as per the Portuguese acronym).
In terms of sector regulations, there are no laws that govern the transmission activity in general; rather, specific
aspects are regulated (e.g. extension of concession terms under Law 12,783 of 2013). There are also ministerial and
government orders, and specific rules are included in the concession agreements themselves.
Telecommunications
c)
Telecommunications in Spain
The telecommunications sector in Spain is regulated by General Telecommunications Law 9/2014 of 9 May 2014
(GTL), which mainly seeks to foster competition in the market and guarantee access to the networks, and by Royal
Decree 330/2016 of 9 September 2016, on measures to reduce the actual cost of deploying high-speed electronic
communications networks.
Aforementioned Law 9/2014 is developed by Royal Decree 123/2017 of 24 February 2017 approving the regulation on
the use of public domain radio, which in turn also regulates the award of the right to use the orbit and spectrum
resource and the permits for the satellite ground segment and the related spectrum. Accordingly, REINTEL and
HISPASAT have been entered on the Register of Electronic Communications Operators of the Spanish National Mar-
kets and Competition Commission (CNMC). HISPASAT, meanwhile, has been awarded the permits for the ground
segment and the concessions to use the related radio spectrum, as well as concessions to operate various orbit
and spectrum resources.
The European regulatory framework comprises Directive (EU) 2018/1972 establishing the European Electronic Com-
munications Code (Recast), Directive 2009/136/EC of the European Parliament and of the Council of 25 November
2009 (regarding users' rights), and Directive 2009/140/EC (regulatory improvements). Based on this legislation, the
General Telecommunications Law introduces measures aimed at creating an appropriate framework for investing
in the deployment of new generation networks, thereby enabling operators to offer innovative services that are
more technologically adapted to people's needs.
In line with the foregoing, special note should also be taken of Directive 2014/61/EU on measures to reduce the cost
of deploying high-speed electronic communications networks, which mainly seeks to expedite implementation of
the "Digital Agenda" of the European Union (EU), published in May 2010. This directive was transposed into Spanish
law by Royal Decree 330/2016, on measures to reduce the cost of deploying high-speed electronic communications
networks. The legislation (Directive 2014/61/EU and Royal Decree 330/2016) stipulates that access to infrastructure
that may be used to host public electronic communications networks must be guaranteed for operators of public
electronic communications networks. In this respect, the legislation requires owners and managers of infrastruc-
ture that may be used to host public high-speed electronic communications networks as well as parties to whom
rights-of-use for such infrastructure have been granted (including network operators that provide physical infra-
structure for the purpose of rendering electricity transmission services) to address all requests to access such
infrastructure applying fair and reasonable terms and conditions. This obligation is fulfilled in view of the nature of
the dark fibre business.
Telecommunications in Latin America
The Group provides services in different Latin American countries. In most Latin American countries, an entitle-
ment must be obtained in order to provide satellite capacity to telecommunications service providers. Such enti-
tlement may be in the form of permits, concessions, entry in a register or inclusion on a list of authorised satellites.
The satellites in the fleet are duly authorised in all countries where this is required, except where there is no com-
mercial interest or no satellite coverage.
Red Eléctrica Corporación and Subsidiaries Page 20 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In Brazil, the Group holds rights to operate various orbit and spectrum resources, as well as a multimedia commu-
nications permit that entitles it to provide electronic communications services. The applicable legislation in this
case is Resolution no. 220 of 5 April 2000 approving the Regulation on Satellite Operation Rights for the Transmis-
sion of Telecommunication Signals, Resolution no. 614 of 28 May 2013 approving the Multimedia Communications
Service Regulation, and General Telecommunications Law no. 9,472 of 16 July 1997.
In Mexico the Group is authorised to provide wholesale satellite internet services and satellite cellular backhaul
services. To this end, it holds the sole concession for commercial use, in accordance with the Federal Telecommu-
nications and Broadcasting Law of 14 July 2014.
In Colombia it renders satellite telecommunications services, for which it has been granted authorisation by the
ICT Single Register of providers of telecommunications networks and services. The applicable legislation is essen-
tially Law 1978 of 2019 on the modernisation of ICT, and Law 1341 of 2009 defining principles and concepts relating
to the information society and the organisation of information and communication technologies.
4 Significant Accounting Policies
The accounting principles used in preparing the accompanying consolidated annual accounts have been applied
consistently to the reported periods presented and are as follows:
Business combinations
a)
The Group accounts for business combinations by applying the acquisition method when control is transferred to
the Group. The acquisition date is the date on which the Group obtains control of the acquiree. The consideration
transferred in a business combination is calculated as the sum of the acquisition-date fair values of the assets
transferred, the liabilities incurred or assumed, the equity instruments issued and any consideration contingent on
future events or compliance with certain conditions in exchange for control of the acquiree. The consideration
transferred excludes any payment that does not form part of the exchange for the acquired business. Acquisition
costs are recognised as an expense when incurred.
For each business combination, the Group measures at the acquisition date components of non-controlling inter-
ests in the acquiree that are present ownership interests and entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation at either: (a) fair value; or (b) the present ownership instruments’ pro-
portionate share in the recognised amounts of the acquiree’s identifiable net assets.
At the acquisition date the Group recognises the assets acquired and liabilities assumed and any non-controlling
interest in the amount of the proportionate share of the net assets acquired. These criteria are only applicable for
non-controlling interests which grant entry into economic benefits and entitlement to the proportional part of net
assets of the acquiree in the event of liquidation. Otherwise, non-controlling interests are measured at fair value
or value based on market conditions. Liabilities assumed include any contingent liabilities that represent present
obligations arising from past events for which the fair value can be reliably measured. The Group also recognises
indemnification assets transferred by the seller at the same time and following the same measurement criteria as
the item that is subject to indemnification from the acquiree, taking into consideration, where applicable, the in-
solvency risk and any contractual limit on the indemnity amount.
Any excess of the consideration given, plus the value assigned to non-controlling interests, over the value of net
assets acquired and liabilities assumed is recognised as goodwill. Any shortfall, after evaluating the consideration
given, the value assigned to non-controlling interests, and after identifying and measuring the net assets acquired,
is recognised separately in the consolidated income statement.
If the business combination can only be determined provisionally the identifiable net assets are initially recognised
at their provisional values and adjustments made during the measurement period are recognised as if they had
been known at the acquisition date. Comparative figures for the previous year are restated where applicable. In any
event, adjustments to provisional amounts only reflect information obtained about facts and circumstances that
existed at the acquisition date and, if known, would have affected the measurement of the amounts recognised at
that date.
After a period of one year, the initial measurement is only adjusted when correcting errors.
Red Eléctrica Corporación and Subsidiaries Page 21 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Property, plant and equipment
b)
Property, plant and equipment primarily comprise technical electricity facilities and are measured at cost of pro-
duction or acquisition, as appropriate, less accumulated depreciation and impairment. Property, plant and equip-
ment acquired in a business combination are initially recognised at fair value.
This cost includes the following items, where applicable:
• Borrowing costs directly related to property, plant and equipment under construction accrued on external fi-
nancing solely during the construction period. Nevertheless, capitalisation of borrowing costs is suspended when
active development is interrupted for extended periods, except where a temporary delay is a necessary part of
the process of getting an asset ready for its intended use.
• Operating expenses directly related to property, plant and equipment under construction for projects executed
under the supervision and management of Group companies.
• The initial estimate of the costs of decommissioning and retiring items of property, plant and equipment.
Assets under construction (works underway) are capitalised as work in progress. Work in progress is transferred
to property, plant and equipment in use once these items come into service and provided that the assets are in
working condition. Property, plant and equipment under construction are not depreciated.
After initial recognition, items of property, plant and equipment are measured on a cost basis, and recognised at
cost less accumulated depreciation and any accumulated impairment.
Enlargement or improvement expenses which lead to an increase in productivity or capacity and lengthen the use-
ful life of the assets are stated as an increase in the carrying amount of the asset.
Repair and maintenance costs on property, plant and equipment that do not increase productivity or capacity and
which do not lengthen the useful life of the assets are charged directly as expenses when incurred.
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of the assets,
which is the period during which the assets are expected to be used, and in any case applying the following ranges
of depreciation rates:
Buildings
Technical electricity facilities
Technical telecommunications facilities (fibre optics)
Technical telecommunications facilities (satellite)
Other installations, machinery, equipment, furniture and other items
Annual depreciation rate
2% - 10%
2.5% - 8.5%
5% - 12.5%
As per depreciation schedule
4% - 33%
Property, plant and equipment primarily comprise technical electricity and telecommunications facilities. Most un-
depreciated items of property, plant and equipment are depreciated at a rate of 2.5%. The depreciation charge for
each period is recognised in profit or loss.
The residual values and useful lives of assets are reviewed at least annually and adjusted, if necessary, to reflect
actual circumstances. When the carrying amount of these assets exceeds their estimated recoverable amount, it
is immediately written down to the recoverable amount. The Group performs complementary analyses of these
indicators in view of the entry into force of the new remuneration regime applicable to electricity transmission
assets in Spain (see note 3).
With respect to property, plant and equipment, in 2020 the Group conducted a study on the useful life of
transmission assets that came into service before 1998, in view of the new remuneration model. This study was
based on internal and external sources and demonstrated that, if certain operating conditions and appropriate
operating and maintenance programmes were upheld, these facilities may have a longer useful life than that initially
determined, ensuring security of operations in accordance with legal requirements. Consequently, depreciation
and amortisation in the consolidated income statement at December 2020 includes the impact of this change in
estimate from 1 January 2020 onwards, which has entailed a reduction in the depreciation charge of approximately
Euros 50 million. The average remining useful life of these assets is now 14 years (see note 8).
Recoverable amount is understood to be the higher of:
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Fair value less costs to sell.
• Value in use, i.e. the present value of the estimated future cash flows from continued use of the asset and dis-
posal thereof.
Government grants received in relation to the acquisition of these assets are recognised as deferred income and
taken to the income statement over the useful lives of the assets.
Property, plant and equipment are derecognised when retired; or when no future economic benefits are expected
from their use or disposal. Gains or losses on disposal of an item are calculated based on the difference between
any net proceeds from selling the asset and its carrying amount (initial cost less depreciation and impairment). The
gains or losses are taken to profit or loss in the year when the item is derecognised. These gains and losses are not
included within results from ordinary activities.
The Group measures and determines impairment to be recognised or reversed in respect of the value of its cash-
generating units (CGUs) based on the criteria in section h) of this note.
Intangible assets
c)
Intangible assets are recognised at acquisition cost, which is periodically reviewed and adjusted in the event of a
decline in value. Amortisation for the year is expensed and determined on a straight-line basis over the estimated
useful life allocated to each item or type of intangible asset.
Intangible assets include the following:
• Goodwill
Goodwill is determined using the same criteria as for business combinations. Goodwill is not amortised but is
tested for impairment annually or more frequently where events or circumstances indicate that an asset may be
impaired. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Inter-
nally generated goodwill is not recognised as an asset.
• Computer software
This item includes computer software licences acquired, which are capitalised on the basis of the costs incurred
to acquire and bring the specific software to use.
Computer software maintenance costs are charged as expenses when incurred. Computer software must be
amortised on a straight-line basis over a period of three to five years from the date on which each program comes
into use.
• Development expenses
Development expenses directly attributable to the design and execution of tests for new or improved computer
programs that are identifiable, unique and likely to be controlled by the Group are recognised as intangible assets
when it is probable that the project will be successful, based on its economic and commercial feasibility, and the
associated costs can be estimated reliably. Costs that do not meet these criteria are charged as expenses when
incurred. Development expenses are capitalised and amortised, from the date the associated asset comes into
service, on a straight-line basis over a period of no more than five years. Computer software maintenance costs
are charged as expenses when incurred.
• Licences and industrial property
Licences have a finite useful life and are recognised at acquisition cost, less accumulated amortisation and any
impairment. Licences are amortised on a straight-line basis to allocate the cost over their estimated useful lives
of five years.
Industrial property is initially measured at cost of acquisition or production and is subsequently carried at cost
less accumulated amortisation and any impairment. These assets are amortised over their useful lives of five
years.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Administrative concessions
The Group operates various assets, located mainly in Peru, under service concession contracts awarded by dif-
ferent public entities. Based on the characteristics of the contracts, the Group analyses whether they fall within
the scope of IFRIC 12 Service Concession Arrangements.
For concession arrangements subject to IFRIC 12, construction and other services rendered are recognised using
the criteria applicable to income and expenses.
The consideration received by the Group is recognised at the fair value of the service rendered, as a financial
asset or intangible asset, based on the contract clauses. The Group recognises the consideration received for
construction contracts as an intangible asset to the extent that it is entitled to pass on to users the cost of access
to or use of the public service, or it has no unconditional contractual right to receive cash or another financial
asset. Where it does have an unconditional right to receive cash or another financial asset from or at the direction
of the grantor, and the grantor has little, if any, discretion to avoid payment, the consideration for the service is
recognised as a financial asset applying a financial model.
Upon initial recognition, an intangible asset received as consideration for construction or upgrade services ren-
dered is recognised at fair value. The intangible asset is subsequently recognised at cost, including capitalised
borrowing costs, less accumulated amortisation and accumulated impairment.
The contractual obligations assumed by the Group to maintain the infrastructure during the operating period, or
to carry out renovation work prior to returning the infrastructure to the transferor upon expiry of the concession
arrangement, are recognised using the accounting policy described for provisions, to the extent that such activ-
ity does not generate revenue.
Concession arrangements not subject to IFRIC 12 are recognised using general criteria.
Administrative concessions have a finite useful life and are recognised at acquisition cost, less accumulated
amortisation and any impairment.
Concessions are amortised on a straight-line basis over the concession period, as detailed in note 7.
• Other intangible assets
These primarily comprise the perpetual rights to regulated tariffs arising from the business combination. In light
of the rights to receive perpetual income from the transmission line acquired as part of the Chilean National
Transmission System, this asset, which was initially measured at fair value, has an indefinite useful life and is
tested for impairment on an annual basis.
• Intangible assets under development
Administrative concessions at the construction stage are recognised as intangible assets under development
and measured in line with the amount to be disbursed until completion of the works, in accordance with IFRIC 12.
Investment property
d)
The Group companies measure their investment property at cost of acquisition. When the carrying amount of these
assets exceeds their estimated recoverable amount, it must be written down immediately. The market value of the
Group's investment property is disclosed in note 10 to the consolidated annual accounts.
Investment property, except land, is depreciated on a straight-line basis over the estimated useful life, which is the
period during which the companies expect to use the assets. Investment property is depreciated at a rate of 2%.
Leases
e)
Until the first-time application of IFRS 16 on 1 January 2019, the Group classified leases on the basis of whether the
risks and rewards of ownership were substantially transferred, distinguishing between operating leases, wherein
the lessor retained a significant portion of the risks and rewards of ownership of the leased asset, and finance
leases, wherein the significant risks and rewards of ownership of the assets were transferred to the Group. Assets
recognised as finance leases were presented in the consolidated statement of financial position based on the na-
ture of the leased asset.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
As a result of applying IFRS 16, the Group assesses at the inception of a contract whether that contract contains a
lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of
time in exchange for consideration. The period of time during which the Group uses an asset includes consecutive
and non-consecutive periods of time. The Group only reassesses the terms and conditions when the contract is
modified.
• Lessee
In contracts that contain one or more lease components or non-lease components, the Group assigns the con-
sideration of the contract to each lease component in accordance with the independent sale price of the lease
component and the aggregate individual price of the non-lease components.
Payments made by the Group that do not constitute a transfer of goods or services thereto by the lessor, do not
constitute a separate lease component, but form part of the total consideration of the contract.
At the commencement date of the lease the Group recognises a right-of-use asset and a lease liability. The right-
of-use asset comprises the amount of the lease liability; any lease payments made at or before the commence-
ment date, less incentives received; initial direct costs incurred; and an estimate of dismantling or restoration
costs to be incurred, pursuant to the criteria for provisions.
The Group measures the lease liability at the present value of the lease payments that are not paid at the com-
mencement date. The Group discounts lease payments at the appropriate incremental borrowing rate, unless
the implicit interest rate of the lessor can be determined reliably.
Outstanding lease payments comprise fixed payments, less any incentive receivable, variable payments that de-
pend on an index or rate, initially measured using the index or rate as at the commencement date, amounts ex-
pected to be payable by the lessee under residual value guarantees, the exercise price of purchase options if the
lessee is reasonably certain to exercise that option, and payments of penalties for terminating the lease, provid-
ing the lease term reflects the lessee exercising the option to terminate the lease.
The Group measures right-of-use assets at cost, less accumulated depreciation and accumulated impairment
losses, adjusted for any remeasurement of the lease liability.
If the contract transfers ownership of the underlying asset to the Group by the end of the lease term or if the cost
of the right-of-use asset reflects that the Group will exercise a purchase option, the Group depreciates the right-
of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, the
Group depreciates the right-of-use asset from the commencement date to the earlier of the end of the useful
life of the right-of-use asset or the end of the lease term.
The Group applies the impairment criteria for non-current assets described in section 4.3 to the right-of-use
asset.
The Group measures the lease liability by increasing the carrying amount to reflect interest on the lease liability,
reducing the carrying amount to reflect the lease payments made and remeasuring the carrying amount to reflect
any reassessment or lease modifications or to reflect revised in-substance fixed lease payments.
The Group recognises variable payments not included in the initial measurement of the lease liability in profit or
loss in the period in which the event or condition that triggers those payments occurs.
The Group recognises remeasurements of the lease liability as an adjustment to the right-of-use asset, until the
latter is reduced to zero, after which, it is taken to profit or loss.
The Group remeasures the lease liability by discounting the lease payments at a revised discount rate, if there
has been a change in the lease term or a change in the assessment of an option to purchase the underlying asset.
The Group remeasures the lease liability if there is a change in the amounts expected to be payable under a
residual value guarantee or a change in the index or rate used to determine those payments, including a change
to reflect changes in market rental rates following a market rent review.
The Group accounts for a lease modification as a separate lease if the modification increases the scope of the
lease by adding the right to use one or more underlying assets; and the consideration for the lease increases by
an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments
to that stand-alone price to reflect the circumstances of the particular contract.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
For a lease modification that is not accounted for as a separate lease, at the effective date of the lease modifi-
cation the Group allocates the consideration in the modified contract applying the criteria described above, de-
termines the lease term of the modified lease and remeasures the lease liability by discounting the revised lease
payments using a revised discount rate. The Group decreases the carrying amount of the right-of-use asset to
reflect the partial or full termination of the lease for lease modifications that decrease the scope of the lease.
The Group recognises in profit or loss any gain or loss relating to the partial or full termination of the lease. The
Group adjusts the carrying amount of the right-of-use asset for all other lease modifications.
The Group has elected not to apply the accounting policies indicated for short-term leases and leases in which
the value of the underlying asset is less than US Dollars 5,000 (approximately Euros 4,600).
• Lessor
Leases in which, upon inception, the Group transfers to third parties substantially all the risks and rewards inci-
dental to ownership of the assets are classified as finance leases, otherwise they are classified as operating
leases.
For finance leases, the Group recognises a receivable for an amount equal to the present value of the lease pay-
ments plus the unguaranteed residual value, discounted at the contractual interest rate implicit in the lease (net
investment in the lease). Initial direct costs are included in the initial measurement of the finance lease receiva-
ble and reduce the amount of income recognised over the lease term. Finance income is taken to the income
statement using the effective interest method.
The Group recognises operating lease income in income on a straight-line basis over the lease term, unless an-
other systematic basis is more representative of the pattern in which benefits deriving from the leased asset are
diminished.
Financial assets and financial liabilities
f)
Initial recognition and measurement
Financial instruments are classified on initial recognition as a financial asset, a financial liability or an equity in-
strument in accordance with the economic substance of the contractual arrangement and the definitions of a fi-
nancial asset, a financial liability and an equity instrument in IAS 32 Financial Instruments: Presentation.
The Group recognises financial instruments when it becomes party to the contract or legal transaction, in accord-
ance with the terms set out therein.
A financial asset or financial liability is initially measured at its fair value plus, in the case of an item not measured
at fair value through profit or loss, transaction costs that are directly attributable to the acquisition or issue of the
financial asset or financial liability. Trade receivables that do not contain a significant financing component are
initially measured at their transaction price.
Classification and subsequent measurement
• Financial assets:
Upon initial recognition, a financial asset is classified as measured at amortised cost, at fair value through other
comprehensive income or at fair value through profit or loss. Assets are classified on the basis of the business
model and contractual terms of the assets.
A financial asset shall be measured at amortised cost if both of the following conditions are met and it is not
measured at fair value through profit or loss:
o The financial asset is held within a business model whose objective is to hold financial assets in order to collect
contractual cash flows.
o The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
A financial asset shall be measured at fair value through other comprehensive income if both of the following
conditions are met and it is not measured at fair value through profit or loss:
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
♦ The financial asset is held within a business model whose objective is achieved by both collecting contrac-
tual cash flows and selling financial assets.
♦ The contractual terms of the financial asset give rise on specified dates to cash flows that are solely pay-
ments of principal and interest on the principal amount outstanding.
Upon initial recognition of an investment in an equity instrument that is not held for trading, the Group may make
an irrevocable election to present in other comprehensive income changes in the fair value. This election is made
on an instrument-by-instrument basis.
All financial assets not classified as measured at amortised cost or at fair value through other comprehensive
income as described above are measured at fair value through profit or loss.
Financial assets shall not be reclassified after initial recognition, unless the Group changes its business model
for managing financial assets.
The Group classifies financial assets, excluding equity-accounted investments, into the following categories:
o Amortised cost: financial assets classified under this category are subsequently measured at amortised cost
using the effective interest method. Amortised cost is reduced for impairment losses. Interest income, ex-
change gains and losses and impairment are recognised in profit or loss. Any gains or losses on derecognition
are recognised in the consolidated income statement.
o Fair value through other comprehensive income: these assets are subsequently measured at fair value. The
resulting net gain or loss is recognised in other comprehensive income. Cumulative gains or losses in other
comprehensive income are reclassified to profit or loss upon derecognition. In the case of equity instruments
classified in this category, gains or losses arising from changes in fair value at the reporting date are recog-
nised directly in other comprehensive income and are never reclassified to profit or loss.
Dividends from equity investments classified as at fair value through other comprehensive income are recog-
nised in the consolidated income statement when the Company's right to receive payment is established.
o Fair value through profit or loss: these assets are subsequently measured at fair value. Net gains or losses,
including any interest or dividend income, are recognised in profit or loss.
• Financial liabilities:
Financial liabilities, which include loans, payment obligations and similar commitments, are initially recognised
at fair value less any transaction costs incurred. Such debt is subsequently measured at amortised cost, using
the effective interest method, except in the case of transactions for which hedges have been arranged (see sec-
tion n).
Financial debt is classified under current liabilities unless the debt falls due more than 12 months after the re-
porting date, in which case it is classified as non-current.
Derecognition
• Financial assets:
The Group derecognises a financial asset when the contractual rights to receive cash flows from the asset expire
or are transferred in a transaction in which it transfers substantially all the risks and rewards of ownership of the
financial asset or it neither transfers nor retains substantially all the risks and rewards of ownership and it does
not retain control of the transferred assets.
• Financial liabilities:
The Group derecognises a financial liability when the obligation in the contract is discharged or cancelled or
expires. The Group also derecognises a financial liability when the terms are modified and the cash flows of the
modified liability are substantially different. In this case, a new financial liability is recognised at fair value, based
on the new terms. Upon derecognition of a financial liability, the difference between the carrying amount of a
financial liability extinguished and the consideration paid, including any non-cash assets transferred or liabilities
assumed, is recognised in profit or loss.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Inventories
g)
Inventories of materials and spare parts are measured at cost of acquisition, which is calculated as the lower of
weighted average price and net realisable value.
The cost of acquisition comprises the purchase price, import duties and other non-recoverable taxes, as well as
transport, handling and other costs directly attributable to the acquisition of the materials or services. Trade dis-
counts, rebates and other similar items are deducted in determining the cost of acquisition.
The cost of any financing used to acquire the inventories can be recognised as an increase in the cost of the inven-
tories until the assets are substantially ready for use or sale.
The Group assesses the net realisable value of inventories at the end of each reporting period, recognising impair-
ment in the consolidated income statement when the cost exceeds market value or when it is uncertain whether
the inventories will be used. When the circumstances that caused inventories to be written down no longer exist or
when there is clear evidence of an increase in net realisable value because of changed economic circumstances,
the previously recognised impairment is reversed and recognised as income.
h) Impairment
• Financial assets
Impairment is calculated by applying the general approach used to calculate expected credit losses on financial
assets; except trade receivables, for which the simplified approach set out in IFRS 9 is used, whereby impairment
is measured at an amount equal to the lifetime expected credit losses of the asset.
In order to determine whether there has been a significant increase in credit risk of a financial asset since its
initial recognition, or to estimate the lifetime expected credit losses of the asset, the Group considers all reason-
able and supportable information that is relevant and available without undue cost and effort. This includes quan-
titative and qualitative information based on the experience of the Group or of other entities of historical credit
losses, and observable market information about the credit risk of the specific financial instrument or similar
financial instruments. The Group assumes that the credit risk of a financial asset has increased significantly if it
is more than 30 days past due. The Group also considers that a financial asset is in default when it is more than
90 days past due, unless there is reasonable and supported information that demonstrates its recoverability.
The Group considers that a debt instrument presents a low level of risk when its credit rating is at least “invest-
ment grade” at one of the prestigious rating agencies. The maximum period over which expected credit losses
are measured is the maximum contractual period over which the Group is exposed to credit risk.
IFRS 9 defines expected credit losses as the weighted average of credit losses with the respective risks of a
default occurring as the weights. Credit losses are measured as the difference between all contractual cash
flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to
receive (i.e. all cash shortfalls), discounted at the original effective interest rate.
In broad terms, expected loss is calculated as follows:
EAD (exposure at default) x PD (probability of default) x LGD (loss given default) x DF (discount factor).
Where EAD is the exposure to risk and is measured based on the accounting balances (outstanding balances
receivable in the form of a cash flow or other financial asset) less any prepayments and any bank or other guar-
antees provided by the customer. PD is the probability of default. LGD is the loss that would be incurred in the
event of debtor default and is calculated as (1 – recovery rate). The recovery rate depends on the specific guar-
antees of the receivable or loan. DF is the time value of money.
Following a hierarchy in accordance with IFRS 13, i.e. from most observable inputs to least observable inputs, the
following methods are used:
o If the debtor has quoted credit default swaps (CDS), the probability of default is generally obtained from the
CDS, as this is the most objective market credit measure of the probability of default of a company at a specific
point in time.
o If the debtor does not have a quoted CDS, the company’s rating from each credit rating agency that has issued
a report is selected and used to calculate the probability of default.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
o If the debtor does not have a rating, a theoretical rating can be calculated by comparing the debtor's ratios
with those of other companies that do have a rating.
Provisions for impairment of financial assets measured at amortised cost are deducted from the gross carrying
amount of these assets.
Impairment related to trade and other receivables, including, where appropriate, contract assets under IFRS 15,
is presented in the consolidated income statement.
• Non-financial assets
The Group companies analyse the recoverability of their assets at each reporting date and whenever events or
changes in circumstances indicate that the carrying amount might not be recoverable. Impairment is deemed to
exist when the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised
in the consolidated income statement. An impairment loss is the difference between the carrying amount of an
asset and its recoverable amount. The recoverable amount of the assets is the higher of their fair value less costs
of disposal and their value in use. Value in use is calculated on the basis of expected future cash flows. Impair-
ment is calculated for individual assets. Where the recoverable amount of an individual asset cannot be deter-
mined, the recoverable amount of the cash-generating unit (CGU) to which that asset belongs is calculated. Any
reversals are recognised in the consolidated income statement. Impairment losses on goodwill are not reversed
in subsequent years (see notes 7, 8, 9 and 10).
Share capital, own shares and dividends
i)
Share capital is represented by ordinary shares. The cost of issuing new shares, net of taxes, is deducted from
equity.
Own shares are measured at cost of acquisition and recognised as a reduction in equity in the consolidated state-
ment of financial position. Any gains or losses on the purchase, sale, issue or redemption of own shares are recog-
nised directly in equity.
Interim dividends are recognised as a reduction in equity for the year in which the dividend is declared, based on
the consensus of the board of directors. Supplementary dividends are not deducted from equity until approved by
the shareholders at their general meeting.
Grants
j)
Non-repayable government capital grants awarded by different official bodies to finance the Group's fixed assets
are recognised once the corresponding investments have been made.
The Group recognises these grants under non-financial and other capital grants each year during the period in
which depreciation is charged on the assets for which the grants were received.
Government assistance provided in the form of income tax deductions and considered as government capital
grants is recognised applying the general criteria described in the preceding sections.
Contract liabilities
k)
Non-current contract liabilities, generally arising from long-term contracts or commitments, are recognised under
revenue or other operating income, as appropriate, over the term of the contract or commitment.
l)
Provisions
• Employee benefits
o Pension obligations
The Group has defined contribution plans, whereby the benefit receivable by an employee upon retirement –
usually based on one or more factors such as age, fund returns, years of service or remuneration – is deter-
mined by the contributions made. A defined contribution plan is a pension plan under which the Group pays
fixed contributions into a separate entity, and will have no legal or constructive obligation to pay further
Red Eléctrica Corporación and Subsidiaries Page 29 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee ser-
vice in the current and prior periods. The contributions are recognised under employee benefits when accrued.
o Other long-term employee benefits
Other long-term employee benefits include defined benefit plans for benefits other than pensions (such as
health insurance) for certain serving and retired personnel of the Group. The expected costs of these benefits
are recognised under provisions over the working life of the employees. These obligations are measured each
year by independent qualified actuaries. Changes in actuarial assumptions are recognised, net of taxes, in
reserves under equity in the year in which they arise, while the past service cost is recorded in the consolidated
income statement.
This item also includes deferred remuneration schemes, which are approved by the competent bodies in each
Group company (see note 16).
In 2015 the Group's Appointments and Remuneration Committee approved the implementation of a Structural
Management Plan (hereinafter the “Plan”) for certain members of the management team, with the aim of pro-
cessing, in an orderly and efficient manner, the replacement and administration of the management positions
covered in the Plan. Upon reaching the age stipulated in the Plan, the executives included in the Plan will be
entitled to receive an amount equal to a maximum of 3.5 times their annual salary, depending on their category
and annual fixed and variable remuneration at the date of leaving the Group. Participation in the Plan is subject
to meeting certain conditions, and the Plan may be modified or withdrawn by the Group under certain circum-
stances, including a prolonged decline in the Group's results (see note 16).
• Other provisions
The Group makes provision for present obligations (legal or constructive) arising as a result of a past event when-
ever it is probable that an outflow of resources will be required to settle that obligation and a reliable estimate
can be made of the amount of the obligation. Provision is made when the liability or obligation is recognised. No
provision is made for proceedings with a probability of occurrence of less than 50% as it is considered that their
future resolution will not have a significant impact on the Group’s consolidated annual accounts.
Provisions are measured at the present value of the estimated expenditure required to settle the obligation using
a pre-tax risk-free discount rate that reflects assessments of the time value of money. The increase in the pro-
vision due to the passage of time is recognised as a finance cost in the consolidated income statement.
m) Transactions in currency other than the Euro
• Foreign currency transactions
Foreign currency transactions are translated to the respective functional currency of the Group companies at
the transaction date. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
translated to the functional currency using the closing exchange rate. Exchange gains and losses arising during
the year due to balances being translated at the exchange rate at the transaction date rather than the exchange
rate prevailing on the date of collection or payment are recognised as income or expenses in the consolidated
income statement.
Fixed income securities and balances receivable and payable in currencies other than the Euro at 31 December
each year are translated at the closing exchange rate. Any exchange differences arising are recognised under
exchange gains/losses in consolidated profit or loss.
Transactions conducted in foreign currencies for which the Group has chosen to mitigate currency risk by ar-
ranging financial derivatives or other hedging instruments are recorded using the criteria for derivative financial
instruments and hedging transactions.
• Foreign operations
The assets and liabilities of foreign operations are translated to Euros using the exchange rates at the reporting
date. The income and expenses of foreign operations are translated to Euros using the exchange rates at the
transaction dates.
Translation differences are recognised in other comprehensive income and presented within equity.
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Derivative financial instruments and hedging transactions
n)
The Group holds derivative financial instruments to cover its exposure to currency risk and interest rate risk. The
Group designates certain derivatives as hedging instruments for covering variability in the cash flows associated
with highly probable forecast transactions as a result of fluctuations in interest rates and exchange rates.
At the inception of the hedge the Group formally designates and documents the hedging relationships and the ob-
jective and strategy for undertaking the hedges.
Hedge accounting is only applicable when the hedge is expected to be highly effective at the inception of the hedge
and in subsequent years in achieving offsetting changes in fair value or cash flows attributable to the hedged risk,
throughout the period for which the hedge was designated.
Derivative financial instruments are initially recognised in the consolidated statement of financial position at their
fair value on the date the arrangement is executed (acquisition cost) and this fair value is subsequently adjusted as
necessary. The criterion used to recognise the resulting gain or loss depends on whether the derivative is desig-
nated as a hedging instrument and, if so, the nature of the hedged item.
When a hedging instrument expires or is sold, or when it no longer qualifies for hedge accounting, any cumulative
gain or loss recorded in equity at that time remains in equity, and is immediately reclassified to the consolidated
income statement as and when changes in cash flows of the hedged item occur. Any cumulative gain or loss is also
reclassified from equity to the consolidated income statement if the forecast transaction is no longer expected to
occur.
The Group recognises the portion of the gain or loss on the measurement at fair value of a hedging instrument that
is determined to be an effective hedge in other comprehensive income. The ineffective portion and the specific
component of the gain or loss or cash flows on the hedging instrument, excluding the measurement of the hedge
effectiveness, are recognised with a debit or credit to finance costs or finance income.
The separate component of other comprehensive income associated with the hedged item is adjusted to the lesser
of the cumulative gain or loss on the hedging instrument from inception of the hedge and the cumulative change
in fair value or present value of the expected future cash flows on the hedged item from inception of the hedge.
However, if the Group expects that all or a portion of a loss recognised in other comprehensive income will not be
recovered in one or more future periods, it reclassifies into finance income or finance costs the amount that is not
expected to be recovered.
Details of the fair value of the hedging derivatives used are disclosed in note 20. Details of changes in equity are
provided in note 14.
Fair value measurement
o)
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, whether that price is directly observable or estimated using
another valuation technique.
The fair value measurements of financial assets and financial liabilities are classified on the basis of a hierarchy
that reflects the relevance of the inputs used in measuring the fair value. The hierarchy comprises three levels:
• Level 1: measurement is based on quoted prices for identical instruments in active markets.
• Level 2: measurement is based on inputs that are observable for the asset or liability.
• Level 3: measurement is based on inputs derived from unobservable market data.
If there is no quoted price in an active market, the Group uses valuation techniques that maximise the use of rele-
vant observable inputs and minimise the use of unobservable inputs. Specifically, the Group calculates the fair
value of derivative financial instruments that are not traded on organised markets using valuation techniques, in-
cluding recent arm’s length transactions between knowledgeable, willing parties, reference to other instruments
that are substantially the same, discounted cash flow analyses using the market interest rates and exchange rates
in force at the reporting date, and option pricing models enhanced to reflect the particular circumstances of the
issuer.
Red Eléctrica Corporación and Subsidiaries Page 31 of 100
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Trade payables
p)
Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effec-
tive interest method. Trade payables falling due in less than one year that have no contractual interest rate and are
expected to be settled in the short term are measured at their nominal amount.
Income and expenses
q)
Revenue is measured at the fair value of the consideration received or receivable. Revenue is recognised according
to the pattern of transfer of goods and services to the customer at an amount that reflects the consideration to
which the entity expects to be entitled in exchange for transferring these goods or services.
The majority of the Group's revenues are regulated revenues from transmission and system operation activities in
Spain (see notes 24 and 28). The Group subsidiary Red Eléctrica de España, S.A.U. has been designated by the
Spanish electricity sector regulator (currently the Ministry for the Ecological Transition, or MITECO) to carry out the
electricity transmission and system operation activities on an exclusive basis. Both of these activities are regulated
by Electricity Industry Law 24/2013. This legislation, which was subsequently enacted by Royal Decree 1047/2013,
provides that the amount of remuneration receivable is to be set annually by MITECO, at the proposal of the Spanish
National Markets and Competition Commission (CNMC), and should cover the services the Company renders to con-
sumers and other electricity sector agents on an uninterrupted basis throughout the year. The obligations to con-
struct, operate and maintain electricity transmission facilities set out in the law are considered to be a single per-
formance obligation, and the total price is therefore allocated in full to that performance obligation. Similarly, the
legal obligations included within the obligation of the electricity system operator are understood to comprise a
single performance obligation, identified as “providing the electricity system operation service”. As a result, reve-
nue from the performance obligations of transmission and system operation services is recognised over time, on
a straight-line basis, based on the remuneration set for each year.
Revenue associated with the telecommunications business essentially derives from the following:
• contracts whereby the rights to use the fibre optic backbone network and cables are granted to different cus-
tomers in the telecommunications sector, as well as services rendered to those customers, which are consid-
ered to be a single performance obligation.
• contracts to provide satellite capacity lease services to different customers in the telecommunications sector,
which are considered to be a single performance obligation for which the revenue is recognised on a straight-
line basis over time, as the service is rendered to the customer.
Initial estimates of revenue are reviewed where circumstances so require. These reviews may result in an increase
or reduction in revenue, which would be recognised in profit or loss for the period in which the circumstances giving
rise to the review become known to and are agreed upon by the parties.
Interest income is recognised using the effective interest method.
Dividends are recognised when the right to receive payment is established.
Taxation
r)
The income tax expense or tax income for the year comprises current tax and deferred tax. Current and deferred
taxes are recognised as income or an expense and included in profit or loss for the year, except to the extent that
the tax arises from a transaction or event that is recognised in the same year, directly in equity, or from a business
combination.
Current tax is the estimated tax payable for the year using the enacted tax rates applicable to the current year and
to any adjustment to tax payable in respect of previous years.
Tax credits and deductions arising from economic events occurring in the year are deducted from the income tax
expense, unless there are doubts as to whether they can be realised.
Deferred taxes and the income tax expense are calculated and recognised using the liability method, based on
temporary differences arising between the balances recognised in the financial information and those used for tax
purposes. This method entails calculating deferred tax assets and liabilities on the basis of the differences between
Red Eléctrica Corporación and Subsidiaries Page 32 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
the carrying amount of the assets and liabilities and their tax base, applying the tax rates that are objectively ex-
pected to apply to the years when the assets are realised and the liabilities settled.
Deferred tax assets are recognised provided that it is probable that sufficient taxable profits will be available
against which the deductible temporary differences can be utilised.
Deferred tax assets and liabilities are recognised in respect of the temporary differences that arise from invest-
ments in subsidiaries and associates, except where the Group is able to control the timing of the reversal of the
temporary differences and it is probable that they will reverse in the foreseeable future.
In addition to the factors to be considered for individual taxation, set out previously, the following factors are taken
into account when determining the accrued income tax expense for the companies forming the consolidated tax
group:
• Temporary and permanent differences arising from the elimination of profits and losses on transactions between
Group companies, derived from the process of determining consolidated taxable income.
• Deductions and credits corresponding to each company forming the consolidated tax group. For these purposes,
deductions and credits are allocated to the company that carried out the activity or generated the profit neces-
sary to obtain the right to the deduction or tax credit.
• Temporary differences arising from the elimination of profits and losses on transactions between tax group com-
panies are recognised by the company that generates the profit or loss, using the applicable tax rate.
• The Parent of the Group records the total consolidated income tax payable (recoverable) with a debit (credit) to
receivables (payables) from/to Group companies and associates.
• The amount of the debt (credit) relating to the subsidiaries is recognised with a credit (debit) to payables (receiv-
ables) to/from Group companies and associates.
If the Group considers that it is not probable that the taxation authorities will accept an uncertain tax treatment or
a group of uncertain tax treatments, this uncertainty is taken into account when determining taxable income, tax
bases, tax loss carryforwards, deductions or tax rates. Tax assets or tax liabilities calculated using these criteria
that exceed the amount presented in the self-assessments are presented in the consolidated statement of finan-
cial position. Changes in events or circumstances relating to tax uncertainties are recognised as a change in ac-
counting estimates.
The Group only offsets deferred tax assets and liabilities if it has a legally enforceable right to offset the recognised
amounts, and they relate to income taxes levied by the same taxation authority on the same taxable entity or on
different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred
tax liabilities or assets are expected to be settled or recovered.
Earnings per share
s)
Basic earnings per share are calculated by dividing the net profit for the year attributable to the Parent by the
weighted average number of ordinary shares outstanding during the year, excluding own shares.
According to the consolidated annual accounts of the Red Eléctrica Group at 31 December 2020 and 2019, basic
earnings per share are the same as diluted earnings per share, as no transactions that could have resulted in a
change in those figures were conducted during those years.
Insurance
t)
The Red Eléctrica Group companies have taken out various insurance policies to cover the risks to which the com-
panies are exposed through their activities. These risks mainly comprise damage that could be caused to the Group
companies' facilities and possible claims that might be lodged by third parties due to the companies’ activities.
Insurance premium expenses and income are recognised in the consolidated income statement on an accruals
basis. Payouts from insurance companies in respect of claims are recognised in the consolidated income state-
ment when they are receivable.
Red Eléctrica Corporación and Subsidiaries Page 33 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Environmental issues
u)
Costs derived from business activities intended to protect and improve the environment are charged as expenses
in the year in which they are incurred. Property, plant and equipment acquired to minimise environmental impact
and to protect and improve the environment are recognised as an increase in property, plant and equipment.
Share-based payments
v)
The Group has implemented share purchase schemes whereby employees can opt to receive part of their annual
remuneration in the form of shares in the Parent. This remuneration is measured based on the closing quotation of
these shares at the delivery date. The costs incurred on such schemes are recognised under personnel expenses
in the consolidated income statement. All shares delivered as payment are taken from the own shares held by the
Parent.
w) Contingent assets and liabilities
Contingent assets are not recognised in financial statements since this could result in the recognition of income
that may never be realised, except in business combinations to the extent that they represent indemnification as-
sets. Contingent assets are assessed continually to ensure that developments are appropriately reflected in the
financial statements. If it has become virtually certain that an inflow of economic benefits will arise, the asset and
the related income are recognised in the financial statements of the period in which the change occurs.
Contingent liabilities are not recognised in the financial statements, except in business combinations to the extent
that they represent present obligations arising from past events for which the fair value can be reliably measured.
Contingent liabilities are assessed continually and if it becomes probable that an outflow of future economic ben-
efits will be required for an item previously dealt with as a contingent liability, a provision is recognised in the fi-
nancial statements of the period in which the change in probability occurs.
5
Considerations Regarding COVID-19 in the Consolidated Annual Ac-
counts
The emergence of Coronavirus disease 2019 (COVID-19) in China early in the year and its rapid spread to a number
of countries across the globe led the World Health Organization (WHO) to declare the viral outbreak a pandemic by
mid-March.
Considering the complexity of the health crisis and the substantially global nature of the markets in this day and
age, the short- and medium-term outlook remains uncertain, and economic growth around the world could differ
depending on how the spread of infections and the roll-out of vaccines unfold. The pandemic is lingering beyond
initial expectations, and its consequences will largely depend on the amount of time needed to completely eradicate
the virus. The ability to move forward from the pandemic will largely depend on the rate at which vaccines are
authorised and produced, and the pace at which States and their healthcare systems roll out the vaccines to high
percentages of the population in a bid to achieve herd immunity. These are the pivotal factors in play if global
economic activity is to recover and resume pre-crisis levels.
In Spain, the healthcare predicament stemming from the pandemic called for the government to take exceptional
measures. It did so in March by publishing Royal Decree 463/2020 declaring a nationwide state of emergency, which
was subsequently extended on more than one occasion and ultimately lifted in June. At the end of the summer
season, new outbreaks occurring nationwide in Spain prompted the government to declare a new state of emer-
gency in October, through Royal Decree 926/2020, which was then extended until 9 May 2021. As highlighted by both
Royal Decrees and the accompanying regulations issued during this period, the need to guarantee the supply of
energy in general, and electricity in particular, continues to be a priority.
The Red Eléctrica Group and more specifically Red Eléctrica de España, as the electricity transmission
infrastructure owner and system manager, has remained fully committed to achieving the targets defined by the
Spanish authorities, having implemented a number of extraordinary measures in order to meet its obligations as
Red Eléctrica Corporación and Subsidiaries Page 34 of 100
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laid down in Law 24/2013, aimed at ensuring continuity and security of supply. These measures have been executed
in parallel with the priority of guaranteeing the health of the Company’s employees and observing the health
authorities’ policy to slow the spread of infections. Red Eléctrica de España has spared no efforts or resources
when it comes to deploying whatever measures have become necessary to ensure that the electricity system
remains up and running in these critical times. By way of example, the Company set up a third electricity control
centre in record time.
Once the toughest lockdown in the first half of the year was lifted, all facilities operation and maintenance activities
in Spain were fully resumed and the construction of new infrastructure is now underway again, while all measures
temporarily put in place to ensure network availability and to resolve incidents and faults have come to an end.
No incidents occurred in Spain in 2020 that posed a risk as regards meeting electricity demand and keeping the
system up and running correctly; neither were any transmission network incidents recorded that in any way
compromised the operation of the Spanish electricity system.
However, the decline in demand for electricity in Spain in 2020, by 5.1% in the mainland system and 13.7% in non-
mainland systems, has posed a significant challenge as regards system operation. In the first half of the year, drops
of up to 20% vis-à-vis equivalent periods in the prior year were seen in some cases. These fluctuations in demand
have required voltage controls to be implemented in the Spanish electricity system. Additional energy scheduling
in view of technical restrictions due to voltage controls and more intensive use of available resources in the
transmission network have enabled the exceptional situation stemming from COVID-19 to be managed with no
incidents.
Both the international electricity infrastructure business and the telecommunications business have been
providing essential services with no incidents arising. Specifically, as regards ensuring the continuity of the
satellite business, a contingency plan was drawn up for the control centres, ground stations and other facilities
related with satellite operations or telecommunications signals transmission, in order for skeleton operations to
remain ongoing and to provide continuous customer support to keep services up and running.
In international business, despite shrinking demand for electricity in Latin America, which suffered a steep decline
in March before picking up again in the months that followed, network availability has been maintained, thus helping
to guarantee security of supply through the continuity of operations as an essential service.
Within this context, Red Eléctrica has followed the guidelines adapted to the recommendations issued by the
different pertinent authorities in Spain as well as in each market of operations, with the priority of preserving the
health and safety of all of its employees, customers and suppliers.
With this in mind, measures were implemented at the onset of the health crisis to allow for flexibility and to enable
all staff whose physical presence in the workplace was not strictly necessary to work from home, so as to guarantee
security of supply for electricity and telecommunications. Implementation of this measure was only possible thanks
to the digitalisation process developed by the Group in recent years, which has entailed considerable efforts in
terms of employee training and to equip all staff with the IT and communications resources needed to address a
situation such as the present one. All people in the high-risk group continue to work from home, and office-based
work resumed in Spain in September.
From a financial and economic perspective, throughout this period the Group’s financial position has been robust,
enabling it to confront these trying times through measures aimed at bolstering its liquidity. In 2020 the Group
made two bond issues for a total amount of Euros 1,100 million, by way of Euros 700 million in January and Euros
400 million in April, and also entered into loan and credit facility agreements amounting to Euros 475 million (see
note 19). Following these transactions, and having already settled due debts and the payments arising from the
acquisition of Argo Energia in Brazil, the Group’s liquidity position at the end of 2020 stands at Euros 2,412 million,
specifically Euros 482 million in available cash and Euros 1,930 million in available credit facilities. This position
ensures the Group’s ability to meet its operating cash flow requirements, to honour debt maturities for the coming
years, and to address any adverse situations that could emerge in the financial markets over the coming months
as a result of developments in the current crisis (see note 18). In the next two years the Group will need to repay
debt amounting to Euros 1,206 million, on the basis of Euros 164 million in 2021 and Euros 1,042 million in 2022 (see
note 19).
The situation brought on by COVID-19 has not had a significant impact on the continuity of the Group’s operations.
Nonetheless, in early February the Group activated a monitoring committee, enabling the implementation of an
exhaustive contingency plan.
Red Eléctrica Corporación and Subsidiaries Page 35 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Since the onset of the crisis, the Group has been continuously monitoring the estimated impact that the situation
arising from management of the COVID-19 fall-out could have on its profits and its investments in projects under-
way. The main conclusions drawn from the analyses performed and from the impact assessment are as follows:
• Most of the sectors in which the Group has its operations in Spain and Latin America are regulated sectors. As
such, and despite lingering uncertainties as to the impact of the pandemic on the economies of the different
countries in which the Group operates, it has not had an effect on revenue from the Group’s regulated activities,
which makes up most of the overall revenue. However, the pandemic has had an impact on revenue from the
telecommunications activity, as will be explained later in this report.
• The construction of new electricity transmission and telecommunications infrastructure experienced temporary
delays due to the total or partial stoppage of economic activities imposed by the authorities. These activities
resumed practically in full in the closing months of the year. The impact of COVID-19 on the Red Eléctrica Group’s
investments as a whole is tantamount to approximately 5% of the initially envisaged volume of investment. This
impact, which is expected to be recovered in 2021, is mainly concentrated in transmission network development
in Spain, although Latin America has likewise seen slight delays in the development of the new HISPASAT Ama-
zonas Nexus satellite.
• The Group began to resume activity in both Spain and Latin America once the strictest lockdown was lifted, as
mentioned above, and at no point did it stop providing the essential services that are its remit. Therefore, the
Group’s operations were not interrupted to any great extent during the state of emergency, employment was
maintained, and it has not had to resort to furlough measures (see note 16).
• Likewise, considering the Group’s liquidity position, it has not been necessary to resort to the financial aid offered
by the different authorities (see note 18), and the financial covenants written into the contracts signed have been
met (see note 14).
• Neither have any lease agreements within the scope of IFRS 16 been amended (see note 9).
• During the year, the Group incurred extraordinary expenditure due to contributions made to the healthcare au-
thorities and other organisations, essentially for the purchase of healthcare supplies to fight the pandemic, and
also for purchases of personal protective equipment and additional cleaning of workplaces. At 31 December
these expenses amount to approximately Euros 5 million (see note 24).
• The satellite telecommunications activity has been affected both by the duration of the crisis, which is proving
far more protracted and severe than could have initially been foreseen, and the situation in the Latin American
markets where it operates. This situation was exacerbated in the second half of 2020 particularly. There have
been price renegotiations, contract rescissions, delays or cancellations of government projects, whether an-
nounced or already awarded and underway, and certain customers have filed for insolvency. This impact is ex-
pected to continue affecting revenue in the coming years. Another factor that could largely be attributed to the
COVID-19 crisis is the deterioration of exchange rates in terms of both the US Dollar and the Brazilian Real, cur-
rencies in which HISPASAT receives a substantial portion of its revenue.
These factors – price renegotiations, cancellations of contracts and projects, and the performance of the US
Dollar and the Brazilian Real – have had a negative impact of around Euros 20 million on revenue from the Group’s
satellite business in 2020. As a result of the changes in HISPASAT’s governing bodies in 2019 and 2020, and in
view of the situation generated by the pandemic in the first half of the year, the unexpected (at least in terms of
intensity) new outbreaks in the second half of the year, the faster pace of the satellite sector transformation
process recorded in the second half of the year, and the impacts on revenue mentioned earlier, HISPASAT en-
gaged in a strategic reflection process during the second half of 2020, with the assistance of an external con-
sultant specialised in the satellite business, and also supported by sector reports produced by prestigious firms
in the industry. This process led HISPASAT’s board of directors to define new strategies for the Group at the end
of 2020, aimed at repositioning HISPASAT as a benchmark operator in the provision of advanced satellite com-
munications services (new business), while also endeavouring to protect its traditional activity centred on the
operation of communications satellites and the wholesale lease of spatial capacity, maximising the useful life of
the existing fleet.
This new strategy brings in a particularly relevant change as regards the management of HISPASAT and its busi-
ness. In this respect, the assets of the traditional business (Legacy) continue to be allocated to the Legacy cash-
generating unit (CGU), while investments associated with new business are grouped in other CGUs, inasmuch as
Red Eléctrica Corporación and Subsidiaries Page 36 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
the new satellite assets are unlikely to be able to be operated in conjunction with those of the traditional (Legacy)
fleet in view of foreseeable differences in their technical characteristics and the different services they will pro-
vide, and because they will also generate inflows that are separate from those obtained from the traditional busi-
ness using the Legacy fleet.
In view of this situation and given the indications of impairment, at the 2020 year end the Group tested the assets
of the Legacy CGU for impairment, considering the cash flows obtained under the new 2021-2025 Business Plan
approved by HISPASAT’s board of directors on 17 December 2020. This Business Plan was drawn up using the
most probable of all the scenarios analysed. As a result of this exercise and the effects of the pandemic, the
Group has had to recognise a provision of approximately Euros 122 million for impairment of the intangible assets
and property, plant and equipment pertaining to the Legacy CGU.
The assumptions used to test non-financial assets for impairment are described in notes 7 and 8.
The Red Eléctrica Group is setting its sights on a green recovery as the only way out of the economic crisis brought
on by the COVID-19 pandemic. For the Group, the focal point of this model is to foster an inclusive and fair energy
transition. In this regard, the Red Eléctrica Group has joined forces with initiatives both in Spain and in the interna-
tional arena that endorse sustainability as a springboard to post-crisis economic recovery. These include the “Man-
ifesto for a Sustainable Recovery”, championed by representatives from the political, corporate, trade union, sci-
entific and third sector communities in Spain, and which is aligned with the Green Recovery Alliance in Europe, and
the “Uniting Business and Governments to Recover Better” statement, promoted by the prestigious Science Based
Targets initiative and supported by the United Nations. These two initiatives are seeking to pave a way forward out
of the COVID-19 crisis that places people, achievement of the United Nations 2030 Agenda, and an ambitious cli-
mate-related action plan at the very heart.
The Group’s management and directors will continue to assess the situation and closely monitor any incidents aris-
ing in the infrastructure it manages, as well as trends in other external factors and the impact such factors could
have on the financial statements.
6 Business Combinations
Business combinations carried out in 2019
• Acquisition of HISPASAT S.A.
On 12 February 2019 Red Eléctrica Corporación, S.A. announced the agreement reached with Abertis
Infraestructuras, S.A. (hereinafter Abertis) for Red Eléctrica Corporación, through Red Eléctrica Sistemas de
Telecomunicaciones, S.A.U. (hereinafter RESTEL), a wholly owned subsidiary of Red Eléctrica Corporación, S.A.,
to acquire an 89.68% interest in HISPASAT from Abertis. The purchase price for 89.68% of the share capital of
HISPASAT was Euros 933 million. In accordance with applicable legislation, the parties sought the pertinent
authorisation for the transaction, this being one of the conditions precedent for the agreement signed by the
two parties to come into effect. The transaction payment was made and the Red Eléctrica Group assumed
control of HISPASAT on 3 October 2019, once the conditions precedent had been fulfilled.
The acquiree’s statutory and principal activity consists of the operation of satellite telecommunications
systems.
The business combination was recognised provisionally in 2019, as indicated in note 6 to the consolidated annual
accounts for that year. After completing the purchase price allocation (PPA) in 2020, the Group recognised the
measurement period adjustments as if they had been known at the acquisition date, i.e. 3 October 2019, and
restated the comparative figures for the prior year. In any case, the adjustments only include information
relating to events and circumstances that existed at the acquisition date.
At the acquisition date the Group recognised the assets acquired and liabilities assumed at their fair value as
determined by an independent expert. The non-controlling interest in the acquiree was recognised in the
amount of the percentage interest in the fair value of the net assets acquired, inasmuch as a non-controlling
interest gives the holder a present entitlement to the economic benefits and the right to the proportionate share
of the net assets of the acquiree in the event of liquidation.
Red Eléctrica Corporación and Subsidiaries Page 37 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The total cost of the business combination was Euros 933 million, reflecting the purchase price for 89.68% of
the share capital of HISPASAT. Goodwill was calculated as the difference between the purchase price and the
share of the fair value of the identifiable assets and liabilities existing at the transaction date, i.e. Euros 228.1
million.
The table below summarises the net assets acquired at the acquisition date:
Thousands of Euros
Intangible assets
Property, plant and equipment
Other non-current assets
Other current assets
Cash and cash equivalents
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Total net assets
Price paid
Goodwill
03/10/2019
Adjustments
Fair value
Provisional fair
value
51,727
929,344
91,397
59,956
29,911
1,162,335
(274,394)
(118,957)
(393,351)
768,984
-
-
15,234
27,402
24,021
66,657
(19,897)
(29,061)
(48,958)
17,699
-
-
66,961
929,344
118,799
83,977
29,911
1,228,992
(294,291)
(148,018)
(442,309)
786,683
933,000
228,072
51,727
929,344
91,397
85,216
29,911
1,187,595
(274,394)
(144,217)
(418,611)
768,984
933,000
271,382
As a result of the purchase price allocation, a portion of the price paid in excess was not allocated to the property,
plant and equipment and intangible assets pertaining to the fleet being operated at the acquisition date, in view of
the maturity of the satellite market at that time, particularly the video business. The fair value of the assets was
analysed and the business projections allocable to these assets were adjusted, considering reductions in capacity
lease revenue. The outcome of the calculations does not differ significantly from the carrying amount of the assets
at the acquisition date.
The main fair value adjustments applied to the identifiable assets and liabilities of HISPASAT are as follows:
• Recognition of an intangible asset amounting to Euros 15.2 million, reflecting the value of the “HISPASAT” trade-
mark. This intangible asset has a finite useful life of 10 years. The intangible asset representing the HISPASAT
trademark was essentially measured using the following methodology:
o The businesses were measured using the income approach, and in particular using the discounted cash flow
method, based on Level 3 (i.e. unobservable) inputs.
o The main measurement parameters used were as follows:
♦ Post-tax discount rate for intangible assets: 8.5%
♦ Royalty rate: 1%
o The most sensitive assumptions included in the projections, which are based on sector forecasts and the anal-
ysis of HISPASAT’s historical data, are trends in royalties for use of the assets by the licensees, operating and
maintenance costs, and investments. In general terms the projections for the acquired businesses can be rea-
sonably estimated on the basis of the agreements in place.
• Recognition of non-current and current assets amounting to Euros 51.4 million, mainly comprising the following:
o Euros 23.7 million of deferred tax assets, primarily reflecting tax deductions available at the transaction date,
based on the Group’s assessment of their future recoverability. These deferred tax assets are expected to be
recovered within a period of no more than 10 years. In any case, most of the capitalised deductions would
qualify for monetisation.
o Euros 25.3 million of contingent assets as the balancing entry for the contingent liabilities arising from tax
litigation in Brazil, which are guaranteed by the seller under the sale-purchase agreement.
o Euros 3.7 million of deferred tax assets arising from the tax effect of fair value adjustments.
Red Eléctrica Corporación and Subsidiaries Page 38 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Increase of Euros 13.6 million in financial liabilities, reflecting the difference between the estimated market value
of financial debt and its carrying amount, of which Euros 9.8 million are non-current and Euros 3.8 million are
current.
• Recognition of Euros 25.3 million under current liabilities, reflecting the contingent liabilities arising from tax
litigation in Brazil related to the ICMS (Brazilian tax on the circulation of goods and services) as well as other
taxes, mainly of an indirect nature, which have been contested and which are in turn guaranteed by Abertis under
the sale-purchase agreement. As these contingencies are guaranteed by the seller, the corresponding indemni-
fication asset has been recognised for the same amount.
• Euros 10.1 million of deferred tax liabilities arising from the tax effect of fair value adjustments.
The goodwill resulting from this business combination is attributable to the benefits and synergies expected to
arise in the Red Eléctrica Group from the acquisition and integration of HISPASAT. Goodwill amounts to Euros 228.1
million.
As already mentioned, in accordance with IFRS 3 Business Combinations, at 31 December 2019 the Group recognised
the fair value adjustments provisionally. During 2020 the Group completed the fair value measurement of the net
assets of HISPASAT, whereby it has identified additional adjustments to those previously recognised in the consol-
idated annual accounts at 31 December 2019. The Company has therefore restated the comparative information
presented in the consolidated annual accounts for the year ended 31 December 2019. The main impacts on the
consolidated annual accounts for the year ended 31 December 2019 of recognising the business combination at the
acquisition date are as follows:
Thousands of Euros
Intangible assets
Goodwill
Trademark
Deferred tax assets
Total assets
Profit attributable to the Parent
Non-controlling interests
Total equity
Non-current loans and borrowings
Current loans and borrowings
Deferred tax liabilities
Total liabilities
Total equity and liabilities
31/12/2019
restated
737,142
231,724
14,853
66,009
12,655,205
714,752
72,641
3,585,156
5,267,323
1,197,980
466,283
9,070,049
12,655,205
31/12/2019
Variation
765,599
275,034
-
44,307
12,661,960
718,040
98,630
3,614,434
5,258,474
1,194,335
456,255
9,047,526
12,661,960
(28,457)
(I)
(43,310)
14,853 (II)
21,702 (III)
(6,755)
(3,288)
(25,989)
(29,277)
(IV)
(V)
8,849 (VI)
3,645 (VI)
10,028 (VII)
22,521
(6,755)
(I)
(II)
(III)
(IV)
(V)
The variation in goodwill relates to the recognition of the business combination described above and
to goodwill being recognised in the amount of the percentage interest in the net assets acquired
instead of the total amount which was recognised provisionally in 2019.
Trademark reflects the recognition of the aforementioned business combination, as well as the
amortisation accumulated over the three months from the acquisition date to the 2019 year end, based
on the useful life of the trademark.
The variation in deferred tax assets reflects the recognition of the tax credits related mainly to available
tax deductions and deferred tax assets arising from the tax effect of the adjustments to the business
combination.
The variation in profit attributable to the Parent is mainly due to the recognition of amortisation of the
trademark for the period from the acquisition date to the 2019 year end, the decrease in borrowing
costs for the same period, and the effect of the reduction in deferred tax assets.
Movement in non-controlling interests is primarily due to goodwill not being allocated and the impact
of the measurement of the net assets allocated thereto.
Red Eléctrica Corporación and Subsidiaries Page 39 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
(VI)
(VII)
Movement in non-current and current loans and borrowings reflects the recognition of the business
combination described above, as well as changes therein during the period from the acquisition date
to the 2019 year end.
Changes in deferred tax liabilities reflect the recognition of the business combination described above
and movement therein from the acquisition date to the 2019 year end.
Consolidated revenue and consolidated net profit for 2019, contributed since the date of acquisition, amount to
Euros 42.3 million and Euros 6.0 million, respectively. Had the acquisition taken place on 1 January 2019, the
consolidated revenue and consolidated net profit contributed would have amounted to Euros 173.7 million and
Euros 0.4 million, respectively.
The Group incurred acquisition costs of Euros 4.0 million, of which Euros 2.4 million were accrued in 2019 and
the rest was booked in prior years. These costs were included under other operating expenses in the
consolidated income statement.
• Acquisition of Concesionaria Línea de Transmisión CCNMC S.A.C.
On 18 July 2019 the Group, through Red Eléctrica del Norte Perú S.A.C. (hereinafter REDELNOR), a wholly owned
subsidiary of Red Eléctrica Internacional, S.A.U., acquired 100% of the shares held by Cajamarca LT Invest S.L.
and Bow Power S.L. in Concesionaria Línea de Transmisión CCNCM S.A.C. (hereinafter CCNCM) for US Dollars 34.3
million (Euros 30.6 million).
The statutory and principal activity of the acquired company consists of rendering transmission, operation and
maintenance services in Peru through the 220kV Carhuaquero – Cajamarca Norte – Caclic – Moyobamba trans-
mission line and related substations under the concession agreement entered into with the Peruvian state.
A summary of the amounts recognised for the assets acquired and liabilities assumed at the acquisition date,
the amounts resulting from their fair value measurements, and the exchange rate is as follows:
Thousands of US Dollars
Intangible assets - Concessions (note 6)
Concessions (note 6)
Goodwill
Property, plant and equipment
Other current assets
Cash and cash equivalents
Total assets
Non-current liabilities
Deferred tax liabilities
Other non-current liabilities
Current liabilities
Total liabilities
Total net assets
18/07/2019
Adjustments
Fair value
180,079
180,079
1
4,429
2,268
186,777
-167,431
-1,870
-165,561
-797
-168,228
18,549
19,832
15,729
4,103
19,832
-4,090
-4,090
-4,090
15,742
199,911
195,808
4,103
1
4,429
2,268
206,609
-171,521
-5,960
-165,561
-797
-172,318
34,291
Fair value in thousands
of Euros (*)
178,237
174,579
3,658
1
3,949
2,022
184,209
-152,925
-5,313
-147,611
-711
-153,635
30,574
(*) Calculated using the Euro-USD exchange rate at 18 July 2019
Within intangible assets, concessions comprise the agreement between CCNCM and the Peruvian state, whereby
the Company undertakes to design, finance, procure, construct, operate and maintain the Carhuaquero – Ca-
jamarca Norte – Moyomba transmission line and related substations. This intangible asset has been valued by
independent experts using the income approach. The income approach aims to define the market value of a
business based on the present value of foreseeable future cash flows by means of discounted cash flow (DCF).
The concession has been revalued at US Dollars 15.7 million (Euros 14.0 million).
Deferred tax liabilities arise from the revaluation of the above-mentioned concession, due to differences be-
tween accounting amortisation and tax amortisation.
This business combination entailed the recognition of goodwill, which is supported by the net recognition of de-
ferred taxes because the fair value assigned to the net assets acquired was higher than the tax values. Goodwill
was calculated as the difference between the cost of acquisition and fair value of the identifiable assets and
Red Eléctrica Corporación and Subsidiaries Page 40 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
liabilities existing at the transaction date, including the deferred taxes arising from the differences between the
new fair value of the assets acquired and their tax value. Goodwill amounts to US Dollars 4.1 million (Euros 3.6
million).
Consolidated revenue and the consolidated net loss for 2019 contributed since the date of acquisition amounted
to Euros 6.4 million and Euros 2.2 million, respectively. Had the acquisition taken place on 1 January 2019, the
consolidated revenue and net loss contributed would have amounted to Euros 14.9 million and Euros 4.7 million,
respectively.
The Group incurred acquisition costs of Euros 0.5 million. These costs were included under other operating ex-
penses in the consolidated income statement.
Intangible Assets
7
Movement in intangible assets and details of accumulated amortisation during 2020 and 2019 are as follows:
Red Eléctrica Corporación and Subsidiaries Page 41 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
31 December
2018
Exchange
differences
Changes in the
consolidated
Group (*)
Additions
31 December
2019 (*)
Exchange
differences
Additions
Transfers
31 December
2020
Administrative concessions, industrial property and trademark
171,367
3,429
227,176
290
402,262
(46,544)
673
47,233
403,624
Development expenses and computer software
Goodwill
Other intangible assets
Intangible assets under development
Total intangible assets
Accumulated amortisation of Administrative concessions, industrial
property and trademark
Accumulated amortisation of Development expenses and computer soft-
ware
Total accumulated amortisation
Impairment of administrative concessions, industrial property and trade-
mark
Impairment of development expenses and computer software
43,860
-
48,486
27,229
290,942
267
-
932
40
4,668
(27,762)
(1,207)
(20,621)
(9)
(48,383)
(1,216)
-
-
-
-
2,761
18,439
65,327
231,724
49,418
(602)
(309)
(4,176)
25,336
-
430
-
-
-
15,622
34,351
54,891
803,622
(2,443)
(54,074)
7,629
33,638
(47,064)
599
231,724
-
12,000
473,661
-
-
-
-
-
(11,584)
(40,553)
13,581
(19,329)
(5,297)
(25,927)
327
(15,355)
(16,881)
(66,480)
13,908 (34,684)
-
-
-
-
-
-
(5,357)
(322)
-
-
-
-
-
Total impairment
Carrying amount
-
242,559
-
3,452
-
473,661
-
17,470
-
737,142
-
(40,166)
(5,679)
(6,725)
-
599
90,491
231,415
45,242
13,013
783,785
(46,301)
(40,955)
(87,256)
(5,357)
(322)
(5,679)
690,850
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). An additional Euros 15,235 thousand related to the trademark and Euros 381 thousand for amortisation
thereof since 3 October, as well as a reduction of Euros 43,310 thousand in the amount of goodwill, have been included.
Red Eléctrica Corporación and Subsidiaries
Page 42 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Changes in the consolidated Group include the addition of CCNCM and the HISPASAT companies (see note 6).
Administrative concessions, industrial property and trademark mainly include the service concession agreements
awarded by different public entities to the Group companies for the construction and operation of technical elec-
tricity facilities in Peru, different bandwidth licences awarded to the Group for the use of orbital slots above Brazil-
ian territory, the renewal of satellite orbital rights at 61º west, and the HISPASAT trademark arising from the recog-
nition of the HISPASAT business combination in an amount of Euros 15,235 thousand (see note 6).
Details of agreements for concessions under operation and/or construction in Peru at 31 December 2020 are as
follows:
Thousands of Euros
Grantor
Activity
Country
Concession
period from start-
up of commercial
operations
Remaining useful
life
Tariff review fre-
quency
Carrying amount
at 31/12/2020
Carrying amount
at 31/12/2019
Revenue in 2020
Revenue in 2019
Profit/(loss) for
2020
Profit/(loss) for
2019
Renewal options
Redesur
Peruvian State
Tesur
Peruvian State
Tesur 2
Peruvian State
Tesur 3
Peruvian State
Tesur 4
Peruvian State
CCNCM (*)
Peruvian State
Electricity
transmission
Electricity
transmission
Electricity
transmission
Electricity
transmission
Electricity
transmission
Electricity
transmission
Peru
Peru
Peru
Peru
Peru
Peru
30 years
30 years
30 years
30 years
30 years
30 years
11 years
24 years
28 years
30 years
18 months con-
struction + 30
years operation
27 years
operation
Annual
Annual
Annual
Annual
Annual
Annual
33,480
48,822
43,534
26,302
13,014
139,359
39,585
55,607
49,286
28,877
6,012
157,879
16,375
27,168
5,337
6,047
6,266
6,380
3,061
(442)
5,116
5,213
799
405
1,895
-
103
(217)
9
-
(116)
(34)
15,123
6,362
(4,358)
(2,294)
Not stipulated in
contract
Not stipulated in
contract
Not stipulated in
contract
Not stipulated in
contract
Not stipulated in
contract
Not stipulated in
contract
(*) Concession added to the consolidated Group on 18 July 2019. The contribution to the Red Eléctrica Group in 2019 is indicated as from that date (see note
6).
At 31 December 2020, goodwill amounting to Euros 228 million and Euros 3 million derives from the HISPASAT and
CCNCM business combinations, respectively, carried out in 2019.
Intangible assets under development in 2020 correspond to the Peruvian company TESUR 4; in 2019 they mainly
pertained to the Peruvian companies TESUR 3 and TESUR 4. In both cases they relate to the construction of facili-
ties operated by these companies under a concession, and which came into service in 2020 in the case of TESUR
3.
Other intangible assets amounting to Euros 45,242 thousand reflect the perpetual right to regulated tariffs arising
from the acquisition of transmission facilities forming part of the Chilean National Transmission System, included
in REDENOR 2. This item is not amortised as it has an indefinite useful life, and is tested for impairment annually.
Red Eléctrica Corporación and Subsidiaries
Page 43 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Operating expenses of Euros 12,105 thousand incurred directly in connection with intangible assets were capitalised
in 2020 (Euros 15,572 thousand in 2019).
During 2020 the Group capitalised borrowing costs of Euros 388 thousand as an increase in intangible assets (Euros
843 thousand in 2019).
At 31 December 2020 the Group has fully amortised intangible assets amounting to Euros 17,788 thousand (Euros
18,550 thousand in 2019), most of which comprise development expenses and computer software.
At 31 December 2020 the carrying amount of intangible assets located outside of Spain is Euros 383,962 thousand
(Euros 436,742 thousand in 2019).
In addition, at the 2020 and 2019 year ends, the Group carried out impairment testing on intangible assets that
presented indications of impairment and those with an indefinite useful life.
In other intangible assets, impairment testing did not bring to light the need for any write-downs at 31 December
2020.
When testing for impairment, the Group considered projections of future cash flows.
The projections refer to the 2021-2069 period and consider a perpetuity growth rate thereafter. The most repre-
sentative assumptions included in the projections used, based on business forecasts and own past experience, are
as follows:
• Regulated remuneration: estimated based on the remuneration approved in legislation for the years available,
whilst the same update mechanisms as those set out in prevailing legislation have been used for subsequent
years.
• Investment: the best information available on the asset investment and maintenance plans for the infrastructure
throughout the estimated time period has been used.
• Operating and maintenance costs: projected in line with the growth expected to derive from the investment plan.
• Other costs: projected based on knowledge of the sector and past experience and in line with the growth ex-
pected to derive from the investment plan.
• Growth rate: a perpetuity growth rate of 2% has been estimated.
• Weighted average cost of capital (WACC) discount rate: a post-tax rate of 5.3% has been used.
The sensitivity analysis was performed considering reasonably possible changes in the main assumptions, such
that a 0.5% increase in the discount rate and a 0.5% decrease in the growth rate would not entail impairment. No
sensitivities have been applied to other assumptions, in view of the activity’s regulated nature.
In the case of intangible assets that present indications of impairment, these have been tested for impairment and
a write-down of Euros 5,679 thousand has been recognised, corresponding to the intangible assets allocated to the
traditional satellite business (Legacy) CGU. The assumptions used in the calculation thereof are explained in note
8.
At the 2020 reporting date, the Group has performed impairment testing to determine the recoverability of goodwill
arising on business combinations, and has not needed to recognise any impairment as a result.
The goodwill arising on the business combination entailing the acquisition of the Hispasat Group for Euros 228
million in October 2019, in the telecommunications segment, has been allocated to the group of CGUs pertaining to
the satellite business, more specifically the traditional satellite business (Legacy) CGU and the CGU(s) for new busi-
ness and satellite services, as this is the level of aggregation at which goodwill is controlled for internal manage-
ment purposes of the Red Eléctrica Group.
The Group first tested the traditional business (Legacy) CGU for impairment, without including any goodwill, and
recognised an impairment loss at CGU level of Euros 122 million, of which Euros 5.7 million and Euros 116.6 million
pertain to intangible assets and property, plant and equipment, respectively. The Group then tested the group of
Red Eléctrica Corporación and Subsidiaries
Page 44 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
CGUs to which the goodwill has been allocated (the Legacy CGU and the CGU(s) for new business and satellite ser-
vices) for impairment, and no impairment was detected at that level.
The key assumptions used in the calculations for the impairment test on the Group’s satellite business were as
follows:
• The test was performed estimating the fair value less costs to sell, taking an income approach for the purpose
of determining the recoverable amount of the satellite business. The income approach indicates the recoverable
amount of a business based on the present value of the future cash flows it is expected to generate, calculated
using a discounted cash flow (DCF) methodology. The DCF method is used to discount the future free cash flow
(FCF) to its estimated present value, applying a discount rate (weighted average cost of capital or WACC) that
reflects the time value of money and the risks associated with the expected cash flows. Costs to sell have been
estimated considering the costs incurred on previous transactions carried out by the Group. In terms of the fair
value hierarchy under IFRS 13, the fair value measurement has been entirely categorised within Level 3, without
consideration of whether the costs of disposal are observable.
• The latest projections considered in the Business Plan associated with the HISPASAT subgroup’s New Strategic
Plan approved in December 2020 by its board of directors have been applied. The cash flow projections used are
for the 2021-2040 period, which is consistent with the useful life of the existing satellites, as well as that of the
new satellite assets expected to be launched in the coming years and the HISPASAT subgroup’s expected adop-
tion of new business models and technologies. The terminal value associated with the traditional technology is
zero, given that the infrastructure supporting this business will cease to generate revenue and expenses once it
reaches the end of its useful life. For new business and services, a terminal value with a perpetuity growth rate
of 0.75% has been applied, which is in line with that considered by analysts for comparable companies and has
been contrasted by an independent consultant.
• The EBITDA margin considered for traditional business and new business jointly averages 58%. The Group has
determined the EBITDA margin based on past performance, forecast market development and market compara-
bles. The margins considered are consistent with external information sources and their reasonableness has
been contrasted by an independent consultant.
• The main exchange rates considered for foreign currency cash flows were 1.23 EUR/USD and 6.38 EUR/BRL.
• A discount rate based on the weighted average cost of capital (WACC) has been used to discount the cash flows,
specifically a post-tax rate of 5.9% has been applied for the traditional satellite business, and an additional risk
premium has been included for new business, giving a post-tax rate of 7.5%.
The Group has performed a sensitivity analysis considering reasonable variations in the main operating and finan-
cial assumptions used in the calculation. The following increases and decreases are assumed:
Revenue
Gross margin
USD exchange rate
BRL exchange rate
Discount rate
-2.5%
+2.5%
-130 b.p.
+130 b.p.
-5%
+5%
-15%
+15%
+40 b.p.
-40 b.p.
The range of variation for the sensitivity analysis of the main operating assumptions has been estimated by
weighting the relative weight of each one in the different CGUs to which goodwill was allocated.
For the revenue sensitivity range, the sensitivity analysis performed considers the impact of variations in revenue
on the recoverable amount, applying a baseline variation in revenue from services rendered of ± 4% and ± 2% for
Red Eléctrica Corporación and Subsidiaries
Page 45 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
the Legacy CGU and the new business CGU, respectively. For the new business CGU, this baseline was obtained
from the average variation in total forecast revenue for 2021-2025 identified in the sector reports produced by
independent experts in recent years, which reflect a variation of around 2%. Details of the baseline used for the
Legacy CGU are provided in note 8.
A sensitivity analysis was also performed on the EBITDA margin reflected in the projections supporting the recov-
erable amount, applying an increase/decrease in operating expenses that entails a variation in the annual EBITDA
margin over the time horizon of the projections of ± 200 b.p. and ±100 b.p. for the Legacy CGU and the new business
CGU, respectively. This range of variation for the EBITDA margin is deemed reasonable, considering that HISPASAT
has made a detailed estimate of the cost structure necessary to carry out the projects considered in the Strategic
Plan, and taking as a reference the variation used by other operators with a degree of verticalisation similar to that
which would be seen once the new strategies approved by the board of directors are put into action.
The currencies considered in the sensitivity analysis reflecting the impact of a variation in the exchange rate used
in the projections supporting the calculation of the recoverable amount are those which represent virtually the
entire currency risk, namely the US Dollar (USD) and the Brazilian Real (BRL). The variations included in the sensi-
tivity analysis are ± 5% for EUR/USD and ± 15% for EUR/BRL. These references were obtained on the basis of the
average annual daily variations, in absolute terms, in each exchange rate during the 2015-2020 period (see note 8).
For the discount rate sensitivity range, the sensitivity analysis performed considers the impact on the recoverable
amount of variations in the rate of ± 10 b.p. and ± 50 b.p. for the Legacy CGU and the new business CGU, respectively.
These variations consider the risk spread associated with these two CGUs.
The analysis performed reveals that at 31 December 2020 any reasonably possible variation in any of the key as-
sumptions considered, on which the recoverable amount of the Group’s satellite business is based, would not result
in the aggregate carrying amount of the group of CGUs (Euros 1,037 million), to which the goodwill has been allo-
cated, exceeding the aggregate recoverable amount of the CGUs. The recoverable amount at 31 December 2020 is
approximately 30% higher than the carrying amount.
The Group has contrasted the assumptions used in testing the Legacy CGU and the goodwill for impairment, and
the measurement performed, with prestigious independent experts.
8 Property, Plant and Equipment
Movement in property, plant and equipment in 2020 and 2019, and details of accumulated depreciation and impair-
ment, are as follows:
Red Eléctrica Corporación and Subsidiaries
Page 46 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Cost
Land and buildings
Technical telecommunications facilities
Technical electricity facilities
Other installations, machinery, equipment, furniture
and other items
Technical electricity facilities under construction
Under construction and advances
Total cost
Accumulated depreciation
Depreciation of buildings
Depreciation of technical telecommunications
facilities
Depreciation of technical electricity facilities
(6,455,065)
Depreciation of other installations, machinery, equip-
ment, furniture and other items
(195,333)
Total accumulated depreciation
(6,764,798)
(25)
Impairment
Impairment of land and buildings
Impairment of technical telecommunications
facilities
-
-
Impairment of technical electricity facilities
(95,544)
Impairment of other installations, machinery, equip-
ment, furniture and other items
Impairment
Carrying amount
-
(95,544)
(11)
-
(1)
(13)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31.12.2018
Exchange
differences
Changes in
the
consolidated
Group
First-time
application
of IFRS 16
Additions
and other
Transfers 31.12.2019
Exchange
differences
Additions
and other
Exits,
disposals,
reductions
and write-
downs
Transfers 31.12.2020
82,675
442,381
14,033,849
223,517
717,760
71,492
96
-
822
53
-
-
15,972
960,227
-
7,582
-
-
2,673
687
9,223
118,221
10,313
1,407,796
9,943
473,878
14,514,286
(3,667)
(8,436)
(4,522)
2,465
2,327
-
(2,658)
1,404
115,765
(242)
(334)
5,802
1,407,247
278,183
14,787,613
3,853
3,794
498
17,120
247,722
(592)
4,536
(213)
15,656
267,109
-
15,821
-
-
389,910
(487,991)
69,196
(22,543)
619,679
133,068
388,261
(271,076)
(2,887)
90,809
(800)
(30,568)
736,864
189,622
15,571,674
971
995,873
11,376
472,907
- 17,040,772
(20,104)
488,398
(4,247)
(599)
17,504,220
(24,448)
(89,952)
(1,630)
(52,933)
-
9
(142,876)
3,175
(132,936)
(25,785)
373
(5,551)
1,093
-
(29,870)
(438,975)
9,741
(6,881,674)
40
(358,522)
(15,463)
(9,750)
(220,556)
600
(16,471)
-
-
251
(272,637)
(7,240,156)
(236,176)
-
-
-
-
-
-
-
(509,001)
- (7,270,891)
3,712
(513,480)
1,820
- (7,778,839)
-
-
-
-
-
(1,202)
-
-
-
-
-
-
-
-
(1,091)
(1,202)
(60)
(104,832)
(95,544)
-
-
-
-
(11,407)
-
(1,202)
-
(96,746)
(60)
(117,330)
-
-
-
-
-
-
-
-
-
(1,091)
(106,094)
(95,544)
(11,407)
-
(214,136)
8,711,332
946
995,873
11,376 (37,296)
- 9,673,135
(16,452)
(24,358)
(2,427)
(599) 9,511,245
Red Eléctrica Corporación and Subsidiaries
Page 47 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Changes in the consolidated Group include the addition of CCNCM and the HISPASAT companies (see note 6).
Technical electricity facilities are assets that are subject to regulated remuneration (see note 3). The main addi-
tions to technical electricity facilities in 2020 and 2019 are investments in electricity transmission facilities in
Spain.
Technical telecommunications facilities essentially consist of the concession of the rights to use and manage the
operation of the fibre optic cable network and other related items, pursuant to the 20-year agreement entered
into by REINTEL with ADIF in 2014, as well as investments associated with the Group's fleet of satellites, which
comprise the HISPASAT 30W-4, HISPASAT 30W-5, HISPASAT 30W-6, HISPASAT 36W-1, Amazonas 2, Amazonas 3,
HISPASAT 74W-1, Amazonas 5 and HISPASAT 55W-2.
Property, plant and equipment are measured at cost of acquisition, less any accumulated depreciation and im-
pairment (except for assets acquired in business combinations, which are initially recognised at fair value). Cost
of acquisition includes the price paid for the asset, personnel expenses, operating expenses and any borrowing
costs directly attributable to the construction or manufacture of the asset.
At 31 December 2020 the amount presented in additions and other mainly reflects the investments made during
the year, as well as the technical facilities received under agreements with third parties.
As a result of first-time application of IFRS 16, right-of-use assets amounting to Euros 11,376 thousand arose in
2019 in relation to leases, of which Euros 3,794 thousand reflects vehicles and Euros 7,582 thousand reflects
buildings.
At 31 December 2019, the amount shown under exits, disposals, reductions and write-downs mainly reflects the
disposal of certain fully-depreciated assets.
During 2020, the Group companies capitalised construction-related borrowing costs of Euros 7,100 thousand as
an increase in property, plant and equipment (Euros 6,869 thousand in 2019). The weighted average rate used to
capitalise borrowing costs was 1.2% in 2020 (1.6% in 2019).
Operating expenses of Euros 45,585 thousand incurred directly in connection with property, plant and equipment
under construction were capitalised in 2020 (Euros 44,511 thousand in 2019). The Group's capitalised expenses
directly related to the construction of facilities include all operating expenses incurred to provide support to the
units directly involved in the activity.
At 31 December 2020 the Group has fully depreciated property, plant and equipment amounting to Euros 2,645,950
thousand, of which Euros 2,451,876 thousand comprises technical electricity facilities (Euros 2,516,967 thousand
in 2019, of which Euros 2,335,545 thousand comprised technical electricity facilities).
Details of capital grants and other non-current revenue received in advance, in relation to property, plant and
equipment, are provided in note 15.
The Group has taken out insurance policies to cover the risk of damage to its property, plant and equipment.
These policies provide adequate protection against the risks covered.
The Group has no firm commitments to purchase significant amounts of property, plant and equipment relative
to its present volume of assets, and to the investments it makes and plans to make. The Group periodically places
orders to cover needs related to its investment plans. The various amounts in the aforementioned orders will
normally materialise in the form of delivery orders as and when the different projects included in the plans are
capitalised. Therefore, they do not constitute firm purchase commitments at the time of issue.
The Group has cash-generating units (CGUs) that group together items of property, plant and equipment. CGUs
are the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash
inflows from other assets or groups of assets. The CGUs identified in property, plant and equipment are related
to electricity transmission in Spain and Chile, fibre optic telecommunications in Spain, the satellite business (tra-
ditional business (Legacy) CGU and new business CGUs) and certain individual assets. In the second half of 2020,
development of some of the assets that will make up the satellite business CGU(s) associated with new business
got underway. Specifically, at 31 December 2020 assets under construction pertaining to new business, whose
Red Eléctrica Corporación and Subsidiaries
Page 48 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
cash flows and operations are separate from those of the traditional satellite business (Legacy) CGU, amounted
to Euros 0.9 million, approximately.
The Group tests for impairment when it observes indications, such as amendments to sector regulations, changes
in investment plans, or changes in business performance. In order to calculate impairment, the Group verifies
that the recoverable amount of each cash-generating unit with which the assets are associated, or of individual
assets, exceeds the carrying amount. Otherwise, an impairment loss is recognised in the consolidated income
statement for the difference between the two, with a charge to impairment and gains/losses on disposal of fixed
assets, up to the limit of the higher of: (i) its fair value less costs to sell and (ii) its value in use.
Impairment losses recognised for an asset in prior years are reversed when a change arises in the estimate of its
recoverable amount, increasing the value of the asset with a credit to results up to the limit of the carrying amount
that the asset would have had if no impairment loss had been recognised.
The recoverable amount is the higher of fair value less costs to sell and value in use, which is understood to be
the present value of estimated future cash flows. The Group considers an asset’s recoverable amount to be its
value in use, with the exception of the satellite business, for which fair value less costs to sell is used. Recoverable
amount is calculated using the methodology described below.
To estimate the recoverable amount, the Group prepares forecasts of future cash flows after tax based on the
best available estimates. These provisions include the best available estimates of income, expenses and invest-
ments, using past experience and future expectations in accordance with the prevailing regulatory framework.
The Group evaluates whether there are indications of possible impairment losses on non-financial assets subject
to amortisation or depreciation to verify whether the carrying amount of these assets exceeds the recoverable
amount. The recoverable amount is the higher of the fair value less costs to sell and the value in use.
At the 2020 year end the Group identified indications of impairment of the satellite business, specifically in the
traditional business (Legacy) CGU. It therefore tested the property, plant and equipment and intangible assets of
this CGU for impairment, calculating the CGU’s fair value less costs to sell. Costs to sell have been estimated
considering the costs incurred on previous transactions carried out by the Group.
The impairment test brought to light impairment of property, plant and equipment and intangible assets in an
amount of Euros 116.6 million and Euros 5.7 million, respectively, in the traditional satellite business (Legacy) CGU.
This calculation is based on discounted cash flow projections, the underlying assumption being the estimated
future performance of the traditional business (Legacy) contained in the new financial projections approved by
HISPASAT’s board of directors in December 2020. These projections cover a five-year period. After five years,
cash flows are extrapolated on the assumption that the cash flows of the traditional business (Legacy) will remain
constant, without growth, until the end of the re-estimated useful life of the satellites that make up the current
fleet. The cash flows take past experience into consideration and have been estimated based on the best con-
temporary information available with respect to the performance of the traditional business (Legacy) as well as
future market performance, contrasted with a specialised independent expert. The key assumptions used to cal-
culate the recoverable amount include estimates of sales, operating margins and exchange rates for the explicit
projection period and the weighted average cost of capital (WACC), which is corroborated by independent finan-
cial experts. The discount rates used are post-tax values and reflect the specific risks related to the markets and
currencies in which HISPASAT operates.
The Group has applied the following key assumptions in calculating the recoverable amount (fair value less costs
to sell) of the traditional satellite business (Legacy):
• Revenue estimated on the basis of the portfolio of existing contracts, the historical renewal rate, past experi-
ence from renegotiations of contracts executed in the second half of 2020 and new sales forecast for the ex-
panding vertical markets identified by sector market research and included in the Strategic Plan, drawn up in
conjunction with a specialised consultancy firm. The expanding vertical markets primarily stem from growth in
managed capacity services, essentially due to increased demand for data that can be provided by the Legacy
fleet, constituting the main stimulus for sector growth. Revenue after the five-year period is extrapolated on
the assumption that the cash flows of the traditional business (Legacy) will remain constant, without growth.
Red Eléctrica Corporación and Subsidiaries
Page 49 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Useful lives: 16.5 years as of the date of entry into commercial service for the fleet of satellites that make up
the CGU, with the exception of the Amazonas-2, H74W-1 and H55W-2 satellites, for which the estimated useful
life is 14.5, 13 and 15 years, respectively.
• Gross margin: the Group has determined the projected gross margin on the basis of current performance and
expected market development, which are consistent with the forecasts included in the industry reports ob-
tained in the closing months of 2020, and have been contrasted with a specialised external consultant. The
average gross margin for the projected period used in the analysis is 66%.
• Year-end exchange rate for sales in foreign currency: 1.23 USD/EUR, 6.38 BRL/EUR and 24.36 MXN/EUR.
• Post-tax discount rate: 5.89%
On the basis of this analysis, the present value of the projected future cash flows expected to be generated by
the CGU is Euros 121.5 million lower than the carrying amount of the assets in the CGU (Euros 769 million). Accord-
ingly, impairment was recognised in an amount of Euros 5.7 million for intangible assets (see note 7) and Euros
116.6 million for property, plant and equipment.
The events and circumstances that led to the recognition of these impairment losses are as follows:
• At the end of 2020, the traditional business – which essentially centres on video applications using wide beam
capacity – is gradually being replaced by new services and the developing vertical markets, primarily based on
big data consumption associated with new technical solutions, although these have yet to become consoli-
dated. This has a significant impact on the Group given the substantial contribution of video to its revenue. This
trend in the satellite market has substantially picked up the pace during the year due to COVID-19.
• In this context, the crisis brought on by the COVID-19 pandemic has aggravated the conditions in which the
commercial activity is carried out, accentuating the disequilibrium of supply and demand and having a signifi-
cant effect on the renegotiation of key contracts in the traditional business, sought by the Group’s main cus-
tomers, with a particular impact in the second half of 2020.
• Moreover, the unexpected persistence (at least in terms of intensity) of the COVID-19 crisis, with new outbreaks
in the second half of the year, has led to additional limitations as regards the fulfilment of certain projects or
commercial opportunities identified, which have in many cases been cancelled, resulting in the loss of forecast
revenue.
• Likewise, the deterioration of exchange rates triggered by COVID-19, in general as regards the currencies of the
Latin American countries in which the Group operates, but particularly with respect to the US Dollar and the
Brazilian Real, has had a sizeable impact on estimated future revenue inasmuch as the Group receives a con-
siderable portion of its earnings in those currencies.
• In consideration of these factors, HISPASAT redefined its strategy, the new approach being approved by its
board of directors in December 2020, for the purpose of repositioning HISPASAT as a benchmark operator in
the provision of advanced satellite communications services (new business), while also endeavouring to pro-
tect its traditional activity centred on the operation of communications satellites and the wholesale lease of
spatial capacity, maximising the useful life of the existing fleet. Highlights of this redefinition include the fol-
lowing:
o One of the more substantial changes in this new strategy is the abandonment of home broadband projects
in Brazil and Mexico, in view of market performance in these countries and the difficulties posed by the pro-
tracted COVID-19 lockdown in terms of the capacity for facilities roll-out in this user segment, thus placing a
large number of internet service providers (ISPs) in financial difficulty, and inhibiting the competitive envi-
ronment and market development in this segment. Other notable operators in the sector have likewise redi-
rected their home broadband strategy.
o The new strategies identify business levers that will enable the loss of traditional business to be offset while
also protecting the remaining business for the existing satellite fleet. The implementation and consolidation
of these business models calls for greater verticalisation with a wider operating cost structure and, there-
fore, tighter margins.
The Legacy CGU is not expected to return to pre-crisis cash flows in the time horizon considered in the Business
Plan.
Red Eléctrica Corporación and Subsidiaries
Page 50 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The fair value measurement of the asset (CGU) has been entirely categorised within Level 3 (in terms of the fair
value hierarchy under IFRS 13), without consideration of whether the costs of disposal are observable.
The sensitivity analysis reflecting the impact on the recoverable amount (in millions of Euros) of reasonable pos-
sible variations in the key assumptions used is presented below:
Revenue
Variation in recoverable amount
Gross margin
Variation in recoverable amount
USD exchange rate
Variation in recoverable amount
BRL exchange rate
Variation in recoverable amount
Discount rate
Variation in recoverable amount
-4.0%
-31.6
+4.0%
+31.6
-200 b.p.
+200 b.p.
-24.5
+24.5
-5%
42.9
-15%
10.9
+5%
-38.5
+15%
-7.8
-10 b.p.
+5.1
+10 b.p.
-5.1
A sensitivity analysis reflecting the impact on the recoverable amount of variations in revenue has been per-
formed, using a variation of ± 4% in revenue from services rendered as the baseline. This reference value was
obtained by identifying revenue that is subject to greater uncertainty depending on the past experience and es-
timates calculated using the most recent information available.
This variation has been contrasted with external sector reports. The baseline variation in revenue considered in
the sensitivity analysis of the recoverable amount exceeds the average variation in total forecast revenue for
2021-2025 identified in the sector reports produced by Euroconsult from 2016 to 2019, which reflect a variation of
around 2%.
The sensitivity analysis on the variation in revenue is based on the assumption that HISPASAT’s EBITDA margins
will remain the same as those considered in the approved financial projections.
A sensitivity analysis was also performed on the EBITDA margin reflected in the projections supporting the re-
coverable amount, applying an increase/decrease in operating expenses that entails a variation of ± 200 b.p. in
the annual EBITDA margin over the time horizon of the projections. This range of variation for the EBITDA margin
is deemed reasonable, considering that HISPASAT has made a detailed estimate of the cost structure necessary
to carry out the projects considered in the Strategic Plan, and taking as a reference the variation used by other
operators with a degree of verticalisation similar to that which would be seen once the new strategies approved
by the board of directors are put into action.
The currencies considered in the sensitivity analysis reflecting the impact of a variation in the exchange rate used
in the projections supporting the calculation of the recoverable amount are those which represent virtually the
entire currency risk, namely the US Dollar (USD) and the Brazilian Real (BRL). The variations included in the sensi-
tivity analysis are ± 5% for EUR/USD and ± 15% for EUR/BRL. These references were obtained on the basis of the
average annual daily variations, in absolute terms, in each exchange rate during the 2015-2020 period.
As regards EUR/USD, the range of variation in the average exchange rate used over the time horizon of the pro-
jections is between 1.17 and 1.29, taking into consideration the average exchange rate of 1.14 for the last 5 years
and 1.21 for the last 10 years.
Red Eléctrica Corporación and Subsidiaries
Page 51 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
With respect to EUR/BRL, the range of variation in the average exchange rate used over the time horizon of the
projections is between 5.42 and 7.33, taking into consideration the average exchange rate of 4.42 for the last 5
years and 3.66 for the last 10 years.
9 Right-of-Use Assets and Lease Liabilities
At the 2020 year end, the Group has recognised on its consolidated statement of financial position net leased
property, plant and equipment (finance lease) amounting to Euros 35 million (Euros 43.7 million in 2019) corre-
sponding to the HISPASAT 55W-2 satellite.
With regard to right-of-use assets and lease liabilities, the Group’s main assets to which IFRS 16 Leases applies
are as follows:
o Vehicles: primarily vehicles under operating leases.
o Buildings: offices, premises and land needed to carry out the Group’s activity.
• Right-of-use assets
Details of right-of-use assets and movement in 2020 and 2019 are as follows:
Thousands of Euros
Total at start of year
Additions to consolidated Group
Additions during the year
Derecognitions during the year
Depreciation for the year
Total at year end
2020
16,821
-
5,353
(1,132)
(5,989)
15,053
2019
11,376
5,266
4,846
(1,682)
(2,985)
16,821
• Amounts recognised in profit or loss
Details of the amounts recognised in the consolidated income statement for 2020 and 2019 in relation to the
application of IFRS 16 are as follows:
Thousands of Euros
Interest on lease liabilities
Depreciation charges
Total
2020
174
5,989
6,163
2019
131
2,985
3,116
Euros 3,662 thousand has been recognised as operating expenses in respect of leases not falling within the scope
of IFRS 16 (Euros 4,385 thousand in 2019).
• Amounts recognised in the statement of cash flows
Details of lease payments made in 2020 and 2019 are as follows:
Thousands of Euros
Lease payments
Interest paid on leases
Total
2020
4,392
174
4,566
2019
1,868
131
1,999
Red Eléctrica Corporación and Subsidiaries
Page 52 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Future minimum lease payments
Committed future minimum lease payments are as follows:
Thousands of Euros
Up to 1 year
2 to 5 years
More than 5 years
Total
2020
2,490
4,661
8,418
15,569
2019
4,095
6,569
13,009
23,674
10 Investment Property
Movement in the Group’s investment property in 2020 and 2019 is as follows:
Thousands of Euros
Cost
Investment property
Total cost
Accumulated depreciation
Investment property
Total accumulated deprecia-
tion
Impairment
Carrying amount
31
December
2018
Additions Disposals
31
December
2019
Additions Disposals
31 December
2020
2,838
2,838
(569)
(569)
(615)
1,654
-
-
(29)
(29)
(128)
(157)
(441)
(441)
99
99
190
(152)
2,397
2,397
(499)
(499)
(553)
1,345
-
-
(20)
(20)
(20)
2,397
2,397
(519)
(519)
(553)
1,325
-
-
-
Investment property disposals in 2019 reflected the sale of various premises in Spain.
At the 2020 year end, the analysis of the market value of investment property had not brought to light any impair-
ment losses. In 2019, Euros 128 thousand was recognised in the consolidated income statement in this respect.
Investment property has a market value of approximately Euros 1.9 million in 2020 (Euros 2 million in 2019) and
does not generate or incur significant operating income or expenses.
11 Equity-accounted Investees
This item includes the investments in Transmisora Eléctrica del Norte, S.A. (TEN), in which the Group holds a 50%
interest through Red Eléctrica Chile SpA, Hisdesat Servicios Estratégicos, S.A., in which the Red Eléctrica Group
holds a 38.56% interest, and Grupo de Navegación Sistemas y Servicios, S.L., in which the Red Eléctrica Group
holds a 12.82% interest (these latter two investments are both through HISPASAT S.A.), as well as Argo Energia
Empreendimentos e Participações S.A., which was acquired on 25 March 2020 (see note 2.g). As joint ventures,
these companies are included in the financial statements of the Group using the equity method (see note 2 d).
• TEN was incorporated on 1 March 2007 and undertook the project in Chile for the construction of a transmission
line spanning approximately 580 km and the corresponding substations. This project has connected the Far
North Interconnection System to the Central Interconnected System in Chile since 2018. TEN currently operates
and maintains the facilities constructed. The acquisition price was US Dollars 217,560 thousand (Euros 199,816
thousand).
• Hisdesat Servicios Estratégicos, S.A. engages in the commercialisation of spatial systems for government use.
Grupo de Navegación Sistemas y Servicios, S.L. engages in the operation of satellite systems. Both companies
form part of HISPASAT, which joined the Red Eléctrica Group on 3 October 2019, as indicated in note 6.
• Argo Energia Empreendimentos e Participações S.A. was incorporated in Brazil in 2016 and holds three 30-year
electricity concessions in that country, encompassing 1,460 km of 500 kV and 230 kV high-voltage lines and 11
substations, of which 1,150 km of lines and five substations have been operating since October 2019.
Red Eléctrica Corporación and Subsidiaries
Page 53 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
On 22 November 2019, Red Eléctrica Corporación, S.A. announced the agreement whereby Red Eléctrica Inter-
nacional, S.A.U., through its subsidiary Red Eléctrica Brasil, and Grupo Energía Bogotá jointly acquired, on a
fifty-fifty basis, all of the shares held by the funds managed by Patria Investments and Temasek in Argo Energia
Empreendimentos e Participações S.A. (“Argo Energia”).
In accordance with applicable legislation, the parties sought the pertinent authorisation for the transaction,
this being one of the conditions precedent for the agreement signed by the two parties to come into effect.
This condition precedent was fulfilled on 25 March 2020, the date on which payment of the transaction was
made, and on which Red Eléctrica Corporación and Grupo Energía Bogotá assumed effective control of the
board of directors of Argo Energia. Thus, on 25 March 2020 the Brazilian company in which the Group holds a
50% interest joined the Red Eléctrica consolidated Group. This company is the parent of a group of electricity
transmission concession operator companies in Brazil.
The purchase price for 50% of the share capital of Argo Energia was BRL 1,678.2 million (Euros 374.3 million).
The company has not distributed any dividends since the acquisition date.
The key financial indicators for this company at the acquisition date, measured at fair value, were as follows:
Thousands of Euros
25.03.2020
Adjustments
25.03.2020
Fair value
25.03.2020
Fair value
Brazilian Reais
Euros
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Total net assets
Gross operating profit
Loss after tax
4,336,659
660,194
4,996,853
3,602,395
324,101
3,926,496
1,070,357
46,086
(41,033)
775,101
-
775,101
349,340
-
349,340
425,761
(10,002)
(13,760)
5,111,760
660,194
5,771,954
3,951,735
324,101
4,275,836
1,496,118
36,084
(54,793)
930,798
120,214
1,051,013
719,570
59,015
778,585
272,428
6,571
(9,977)
The investment in Argo Energia is considered as a joint venture and has therefore been accounted for using the
equity method, in accordance with IAS 28. As a result of this transaction, and applying the criteria laid down in IAS
28, the Red Eléctrica Group is carrying out a purchase price allocation (PPA) through an independent expert, iden-
tifying the assets and liabilities of the joint venture that are measured at fair value. On a provisional basis, until
the necessary calculations are finalised, the Group has performed a preliminary PPA, giving rise to provisional
implicit goodwill of Brazilian Reais 930 million (Euros 238 million) which has been allocated to the concession as
an intangible asset. The definitive amounts will be determined within the 12-month period provided for by IFRS 3,
which ends on 25 March 2021, to reflect the information, facts and circumstances that existed at the acquisition
date.
Red Eléctrica Corporación and Subsidiaries
Page 54 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Movement in these investments in 2020 and 2019 was as follows:
Thousands of Euros
Company
Transmisora Eléctrica del Norte
S.A. (TEN)
Argo Energia Empreendimentos e
Participações S.A.
Hisdesat Servicios Estratégicos,
S.A.
Grupo de Navegación Sistemas y
Servicios S.L.
Company
Transmisora Eléctrica del Norte
S.A. (TEN)
Hisdesat Servicios Estratégicos,
S.A.
Grupo de Navegación Sistemas y
Servicios S.L.
31.12.2019
Exchange dif-
ferences
Changes in
the consoli-
dated Group
Profit attribut-
able to the in-
vestment
Valuation ad-
justments
31.12.2020
199,026
(18,065)
-
4,880
(11,807)
174,034
-
(112,652)
374,262
20,431
60,449
119
-
-
-
-
2,669
-
-
-
-
282,041
63,118
119
259,594
(130,717)
374,262
27,980
(11,807)
519,312
31.12.2018
Exchange differ-
ences
Changes in the
consolidated
Group
Profit attributa-
ble to the invest-
ment
Valuation ad-
justments
31.12.2019
198,377
3,799
-
7,606
(10,757)
199,026
-
-
-
-
59,080
1,369
119
-
-
-
60,449
119
198,377
3,799
59,199
8,975
(10,757)
259,594
The key indicators of these companies at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Year
Non-current assets
Current assets
Cash and cash equivalents
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Net assets
Revenue from ordinary activities
Gross operating profit
Net operating profit
Profit after tax
Comprehensive income
Dividends received by the Group
Transmisora
Eléctrica del Norte S.A.
(TEN)
Argo
Energia
Empreendimentos
e Participações
S.A. (*)
Hisdesat Servicios
Estratégicos, S.A. (*)
Grupo de Navegación
Sistemas y Servicios
S.L. (*)
2020
601,889
70,090
42,151
671,979
602,457
32,508
634,965
37,015
64,956
54,144
39,470
9,760
(17,598)
-
2019
666,557
77,425
43,117
743,982
654,904
36,371
691,275
52,707
75,895
66,147
50,962
15,212
5,866
-
2020
891,470
82,987
167
974,457
674,266
19,080
693,346
281,111
177,753
105,743
105,414
41,057
41,057
2020 2019 (**)
284,409
394,376
257,013
220,875
210,932
235,574
651,389 505,284
231,603
364,199
59,436
49,261
423,635 280,864
227,754 224,420
72,233
71,404
61,702
17,386
6,357
3,334
-
53,310
17,648
9,970
6,947
-
2020 2019 (**)
1,139
1,139
156
152
1,295
-
360
360
935
-
-
-
-
-
-
156
152
1,295
-
360
360
935
-
-
-
-
-
-
(*) Company added to the consolidated Group on 25 March 2020. Revenue and results shown are for the full year (see note 2.g).
(**) Company added to the consolidated Group on 3 October 2019. Revenue and results shown are for the full year (see note 2.g).
Red Eléctrica Corporación and Subsidiaries
Page 55 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
At 31 December 2020 and 2019 the balance of the loan extended by the Group to TEN was Euros 17,457 thousand
and Euros 24,677 thousand, respectively (see note 19).
The Group performs an impairment test whenever there are indications of impairment in order to verify the re-
coverability of its investment. When testing for impairment, the Group considers projections of future cash flows.
Such testing was performed on the investment in TEN in 2020 and the value in use exceeded the carrying amount.
Thus, the Group concluded that this investment is not impaired.
The most representative assumptions included in the projections used, based on business forecasts and own
past experience, are as follows:
• Regulated remuneration: estimated based on the remuneration approved in legislation for the years available,
whilst the same update mechanisms as those set out in prevailing legislation have been used for subsequent
years.
• Investment: the best information available on the asset investment and maintenance plans for the infrastruc-
ture throughout the estimated time period has been used.
• Operating and maintenance costs: projected in line with the growth expected to derive from the investment
plan.
• Other costs: projected based on knowledge of the sector and past experience and in line with the growth ex-
pected to derive from the investment plan.
In order to calculate present value, the projected cash flows are discounted using a post-tax rate that considers
the weighted average cost of capital (WACC) of the business and the geographical area in which it is carried out.
A discount rate of 5.3% has been estimated at 31 December 2020 based on the Group’s internal methodology for
calculating the WACC, with a residual value that assumes constant growth at 2% as the perpetuity variation rate
for the cash flows generated by the assets analysed; and an investment in fixed assets equal to the amount of
depreciation to stabilise net assets.
12 Inventories
Details of inventories at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Inventories
Write-downs
Total
2020
69,671
(34,796)
34,875
2019
76,124
(33,404)
42,720
Inventories mainly reflect materials and spare parts related to the technical electricity facilities.
The Group companies regularly test inventories for impairment based on the following assumptions:
• Impairment of old inventories, using inventory turnover ratios.
• Impairment for excess inventories, on the basis of estimated use in future years.
As a result, the Group recorded impairment losses of Euros 1,392 thousand in the consolidated income statement
for 2020 (Euros 510 thousand in 2019).
Red Eléctrica Corporación and Subsidiaries
Page 56 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
13 Trade and Other Receivables
Details of trade and other receivables at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Trade receivables
Other receivables
Current tax assets (note 23)
Total
2020
43,054
1,288,342
10,703
1,342,099
2019
74,396
1,261,607
10,004
1,346,007
Trade receivables primarily comprise balances receivable on the lease of satellite capacity and related services.
Other receivables at 31 December 2020 and 2019 mainly reflect the trend in settlements made by the CNMC in
those years for regulated activities in Spain as a result of changes in collections and payments. At 31 December
2020 and 2019 the balances mostly comprise amounts pending invoicing and/or collection for regulated trans-
mission and system operation activities. Under the settlement system set up by the Spanish regulator, some of
these receivables are settled and collected in the following year. These amounts also include the revenue receiv-
able derived from applying the methodology set forth in the remuneration model in force for transmission activi-
ties in Spain, which stipulates that facilities entering into service in year ‘n’ are to be remunerated from year ‘n+2’
onwards.
Fair value estimates reflect the assumptions of market participants based on the information available and mar-
ket conditions at the estimation date, and incorporate any risk premiums related to the COVID-19 crisis. There are
no significant differences between the fair value and the carrying amount at 31 December 2020 and 2019.
At 31 December 2020 and 2019 there are no significant amounts over 12 months past due (see note 19). In
connection with COVID-19, no communications concerning breach of a contract in its entirety and having a
significant impact on the Company have been received.
At 31 December 2020 no rights to trade receivables affected by COVID-19 and having a relevant impact on the
Group have been identified, other than those detailed in note 5, although provisions recognised during the year
are not significant.
In 2020, an impairment provision of Euros 423 thousand was recognised (an impairment reversal of Euros 650
thousand in 2019). Impairment of financial assets based on expected loss accumulated at 31 December 2020
amounts to Euros 1,170 thousand (Euros 747 thousand in 2019).
14 Equity
Capital risk management
a)
The Group’s management of its companies’ capital is aimed at safeguarding their capacity to continue operating
as a going concern, so as to provide shareholder remuneration while maintaining an optimum capital structure to
reduce the cost of capital.
To maintain and adjust the capital structure, the Group can adjust the amount of dividends payable to sharehold-
ers, reimburse capital or issue shares.
The Group controls its capital structure on a gearing ratio basis, in line with sector practice. This ratio is calculated
as net financial debt divided by the sum of the Group's equity and net financial debt. Net financial debt is calcu-
lated as follows:
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Non-current payables (*)
Current payables (*)
Foreign currency derivatives
Cash and cash equivalents
Net financial debt
Equity
Gearing ratio
2020
6,427,589
165,325
2,199
(481,772)
6,113,341
3,491,953
63.6%
2019 (**)
5,266,689
1,128,517
(28,566)
(328,570)
6,038,070
3,585,156
62.7%
(*) In both 2020 and 2019 interest payable has been excluded.
(**) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Loans and borrowings
include an additional Euros 8,849 thousand under non-current and Euros 3,645 thousand under current.
At 31 December 2020, the financial covenants stipulated in the contracts entered into have been met.
On 6 March 2020 the credit rating agency Standard & Poor’s issued a new report on the Company maintaining its
long-term rating of ‘A-’ and short-term rating of ‘A-2’, with a stable outlook.
On 6 April 2020 the credit rating agency Fitch Ratings gave the Company a short-term rating of ‘F1’, with a stable
outlook. Following this announcement, the Company and its subsidiary Red Eléctrica de España, S.A.U. maintain
long-term ratings of ‘A-’ and short-term ratings of ‘F1’, with a stable outlook.
b)
Equity attributable to the Parent
• Capital and reserves
o Share capital
At 31 December 2020 and 2019 the Company's share capital is divided into 541,080,000 shares of Euros 0.50
par value each represented by book entries, all subscribed and fully paid-in, and carrying the same voting
and profit-sharing rights (notwithstanding the limits stipulated in the following paragraph). The shares are
quoted on the four Spanish stock exchanges and traded through the SIBE (Spanish Stock Exchange Inter-
linking System).
The Company is subject to the shareholder limitations stipulated in the twenty-third additional provision of
Law 54/1997 of 27 November 1997 and article 30 of Electricity Industry Law 24/2013 of 26 December 2013.
Pursuant to this legislation, any individual or entity may hold investments in the Company, provided that the
sum of their direct or indirect interests in its share capital does not exceed 5% and their voting rights do not
surpass 3%. These shares may not be syndicated for any purpose. Voting rights at the Parent are limited to
1% in the case of entities that carry out activities in the electricity sector, and individuals and entities that
hold direct or indirect interests exceeding 5% of the share capital of such companies, without prejudice to
the limitations for generators and suppliers set forth in article 30 of the aforementioned Law 24/2013. The
shareholder limitations with regard to the Parent's share capital are not applicable to Sociedad Estatal de
Participaciones Industriales (SEPI), which in any event will continue to hold an interest of no less than 10%.
At 31 December 2020 and 2019 SEPI holds a 20% interest in the Company's share capital.
o Reserves
This item comprises the following:
♦ Legal reserve
Spanish companies are obliged to transfer 10% of the profits for the year to a legal reserve until such re-
serve reaches an amount equal to 20% of the share capital. Until this reserve exceeds this limit, it is not
distributable to shareholders and may only be used to offset losses, provided no other reserves are avail-
able. Under certain circumstances, it may also be used to increase share capital. At 31 December 2020 and
2019 the legal reserve amounts to 20% of the Parent's share capital (Euros 54,199 thousand).
♦ Other reserves
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
This heading includes voluntary reserves of the Parent, reserves in consolidated companies and first-time
application reserves. At 31 December 2020 they amount to Euros 2,513,953 thousand (Euros 2,371,688 thou-
sand in 2019).
In addition, this item includes statutory reserves amounting to Euros 337,081 thousand (Euros 337,081 thou-
sand in 2019), particularly the following:
∇ The property, plant and equipment revaluation reserve amounting to Euros 247,022 thousand created
by the Parent in 1996 (this reserve may be used, free of taxation, to offset accounting losses and increase
share capital or, ten years after its creation, it may be transferred to freely distributable reserves, in
accordance with Royal Decree-Law 2607/1996). Nonetheless, this balance may only be distributed, indi-
rectly or directly, when the revalued assets have been fully depreciated, transferred or derecognised.
∇ As provided for by article 25 of Law 27/2014 of 27 November 2014, the tax group headed by the Company
has appropriated a capitalisation reserve of Euros 92,203 thousand, which is held by REE and REC, as
permitted by article 62.1 d) of the aforementioned Law, corresponding to 2015 (Euros 29,110 thousand),
2016 (Euros 15,406 thousand), 2017 (Euros 11,312 thousand), 2018 (Euros 16,707 thousand) and 2019 (Euros
19,668 thousand). This reserve will be restricted for a period of five years. Pursuant article 62.1.d) of the
aforementioned Law, the proposed capitalisation reserve for the year ended 31 December 2020, in an
amount of Euros 8,160 thousand, will be appropriated in REC, as the parent of the tax group. Each com-
pany forming part of the tax group has adjusted income tax for 2019 in connection with this reserve (see
note 23).
♦ Own shares
At 31 December 2020 the Parent held 2,084,729 own shares representing 0.39% of its share capital, with a
par value of Euros 0.50 per share and a total par value of Euros 1,042 thousand, and an average acquisition
price of Euros 17.53 per share (at 31 December 2019 the Parent held 2,024,844 own shares representing
0.37% of its share capital, with a par value Euros 0.50 per share and a total par value of Euros 1,012 thou-
sand, and an average acquisition price of Euros 18.03 per share).
These shares have been recognised as a reduction in equity for an amount of Euros 36,550 thousand at 31
December 2020 (Euros 36,504 thousand in 2019).
The Parent has complied with the requirements of article 509 of the Spanish Companies Act, which pro-
vides, except in the case of freely acquired own shares, that in listed companies the par value of own
shares acquired directly or indirectly by the Company, plus the par value of the shares already held by the
Parent and its subsidiaries, must not exceed 10% of subscribed share capital. The subsidiaries do not hold
own shares or shares in the Parent.
o Profit attributable to the Parent
Upon finalisation of the purchase price allocation in the first half of 2020, profit for 2019 attributable to the
Parent at the completion date of the business combination was restated, from Euros 718,040 thousand to
Euros 714,752 thousand.
Profit for 2020 attributable to the Parent totals Euros 621,185 thousand (Euros 714,752 thousand at 31 Decem-
ber 2019, restated).
o Interim dividends and proposed distribution of dividends by the Parent
The interim dividend authorised by the board of directors in 2020 has been recognised as a Euros 146,984
thousand reduction in consolidated equity at 31 December 2020 (Euros 147,002 thousand at 31 December
2019) (see note 19).
On 27 October 2020 the Company's board of directors agreed to pay an interim dividend of Euros 0.2727
(gross) per share with a charge to 2020 profit, which was paid on 7 January 2020 (Euros 0.2727 (gross) per
share in 2019).
Details of the dividends paid during 2020 and 2019 are as follows:
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Ordinary shares
Total dividends paid
Dividends charged to profit
% of par
value
210.38%
210.38%
210.38%
2020
Euros per
share
1.0519
1.0519
1.0519
Amount
566,773
566,773
566,773
% of par
value
196.62%
196.62%
196.62%
2019
Euros per
share
0.9831
0.9831
0.9831
Amount
530,841
530,841
530,841
The cash flow forecast for the period from 30 September 2020 to 7 January 2021 indicated sufficient liquidity
to allow the distribution of this dividend. As such, the following provisional liquidity statement was drawn up
pursuant to article 277 section a) of the Spanish Companies Act:
Liquidity statement of Red Eléctrica Corporación, S.A.
Thousands of Euros
Available funds at 30/09/2020:
Non-current credit facilities available
Current credit facilities available
Current investments and cash
Forecast receipts:
Current transactions
Financial transactions
Forecast payments:
Current transactions
Financial transactions
Forecast available funds at 07/01/2021
466,979
55,000
229,730
-
254,340
(129,215)
-
876,834
The Parent's board of directors proposed to the shareholders at their general meeting the distribution of a
supplementary dividend of Euros 0.7273 per share, which would result in a total dividend for 2020 of Euros 1
per share (Euros 1.0519 in 2019).
In addition, given the Company’s cash generation capacity and the amount of undrawn credit facilities (see
note 18), the Company will have sufficient liquidity within one year after the interim dividend distribution has
been agreed.
• Valuation adjustments
o Financial assets at fair value through other comprehensive income
At 31 December 2020 and 2019 this item reflects valuation adjustments to equity instruments classified as
financial assets measured at fair value through other comprehensive income due to fluctuations in the share
price of the Group's 5% investment in the listed company Redes Energéticas Nacionais, S.G.P.S., S.A. (here-
inafter REN), the benchmark index for which is the Portuguese PSI 20. At 31 December 2020 this item totals
Euros 12,761 thousand (Euros 24,604 thousand in 2019).
o Hedging transactions
This line item reflects changes in the value of derivative financial instruments.
At 31 December 2020 this item totals a negative amount of Euros 93,559 thousand (a negative amount of
Euros 82,699 thousand in 2019).
o Translation differences
This line item mainly comprises the exchange gains and losses arising from translation of the financial state-
ments of foreign operations whose functional currency is not the Euro. At 31 December 2020 the balance of
this item was negative in an amount of Euros 97,025 thousand (a positive balance of Euros 5,629 thousand in
2019). This decrease is primarily due to the performance of the Brazilian Real against the Euro in 2020.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
c) Non-controlling interests
Non-controlling interests under equity in the consolidated statement of financial position reflect the non-con-
trolling interests in all the HISPASAT subgroup companies and in the Chilean company REDENOR in 2020 and 2019.
Movement in 2020 and 2019 is as follows:
31
December
2018
Changes in
consolidated
Group and
other (*)
Net
translation
differences
Profit for the
year (*)
31
December
2019 (*)
Changes in
consoli-
dated Group
and other
Net
translation
differences
Loss for the
year
31
December
2020
832
72,688
(952)
72
72,640
(6,344)
(9,945)
56,351
Thousands of Euros
Non-controlling
interests
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). The balance of
changes in consolidated Group and other has been reduced from Euros 98,299 thousand to Euros 72,688 thousand due to goodwill being recognised in
respect of the percentage interest in the net assets acquired instead of on the total amount of these assets, as was recognised provisionally in 2019.
Profit/loss attributable to non-controlling interests has likewise decreased, from Euros 451 thousand to Euros 72 thousand.
Regarding the main non-controlling interests referred to above, a summary of the financial information on assets,
liabilities and profit/loss at 31 December 2020 and 2019 of the investees is as follows:
Thousands of Euros
Non-current assets
Current assets
Assets
Non-current liabilities
Current liabilities
Liabilities
Equity
Revenue
Expenses
Gross operating profit
Profit/(loss) after tax
Profit/(loss) attributable to non-controlling interests
REDENOR
HISPASAT SUBGROUP
31/12/2020
103,908
8,262
112,170
81,207
5,289
86,496
25,674
1,194
1,464
(271)
(584)
(2)
31/12/2019
36,302
1,142
37,444
33,065
1,501
34,566
2,879
889
1,034
(144)
62
19
31/12/2020
916,569
127,654
1,044,223
242,432
117,028
359,459
684,764
157,528
41,393
116,135
(92,491)
(9,769)
31/12/2019 (*)
1,069,738
98,404
1,168,142
287,246
104,855
392,102
776,041
42,571
9,568
33,003
5,396
432
(*) Business combination added to the consolidated Group on 3 October 2019. The contribution to the Red Eléctrica Group is indicated as from that date (see
note 6).
15 Grants and Other Non-current Revenue Received in Advance
Movement in grants and other non-current revenue received in advance in 2020 and 2019 is as follows:
31.12.2018
Changes in the
consolidated
Group
Additions
Amounts
transferred
to the in-
come state-
ment
31.12.2019
Additions
Dispos-
als
Amounts
transferred
to the in-
come state-
ment
31.12.2020
Thousands of Euros
Capital grants
180,317
63,090
-
(7,888)
235,519
13,353
(57)
(18,360)
230,455
Other grants and reve-
nue received in advance
Total
451,093
293
36,693
(17,836)
470,243
19,110
-
(11,888)
477,465
631,410
63,383
36,693
(25,724) 705,762
32,463
(57)
(30,248) 707,920
Capital grants mainly include the amounts received by REE for the construction of electricity facilities and by
HISPASAT for the construction of satellite assets. Amounts transferred to the income statement reflect the
amounts taken to consolidated profit or loss on the basis of the useful life of the corresponding facilities and
recognised under non-financial and other capital grants in the consolidated income statement.
Other grants and other revenue received in advance mainly comprise amounts or technical facilities received by
the Group as a result of agreements with third parties as well as income tax deductions for investments in the
Canary Islands, which by their nature are similar to capital grants (see note 2 c). Applications principally reflect
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
the amounts taken to consolidated profit or loss each year on the basis of the useful life of the assets associated
with those deductions and recognised under non-financial and other capital grants in the consolidated income
statement.
16 Non-current and Current Provisions
Movement in 2020 and 2019 is as follows:
Thousands of Euros
Non-current provisions
Provisions for employee
benefits
Other provisions
Total non-current
Current provisions
Provisions for employee
benefits
Other provisions
Total current
Total provisions
Thousands of Euros
Non-current provisions
Provisions for employee bene-
fits
Other provisions
Total non-current
Current provisions
Other provisions
Total current
Total provisions
31.12.2019
Additions
Applications
Transfers
Actuarial
Exchange
differences
31.12.2020
72,625
3,908
(1,894)
(1,697)
78,781
151,406
13,556
17,464
(92)
(1,986)
(37,925)
(39,622)
-
-
(1,697)
1,697
27,345
27,345
178,751
-
-
17,464
-
(1,697)
(3,683)
37,925
39,622
-
8,781
-
8,781
-
-
-
8,781
81,723
54,263
135,986
(57)
(57)
-
-
(8,087)
(8,087)
(8,144)
57,183
57,183
193,169
31.12.2018
Changes in the
consolidated
Group
First-time
applica-
tion of
IFRIC 23
Additions
Applications
Transfers
Actuarial
31.12.2019
62,310
65,231
127,541
-
-
127,541
1,048
-
1,048
-
3,740
(1,857)
(6,317)
13,701
72,625
(4,367)
(4,367)
18,319
22,059
(402)
(2,259)
-
(6,317)
-
13,701
78,781
151,406
-
-
1,048
-
-
(4,367)
(150)
(150)
21,909
(606)
(606)
(2,865)
-
-
(6,317)
-
-
13,701
27,345
27,345
178,751
Provisions for employee benefits reflect defined benefit plans, which essentially include the future commitments
– specifically health insurance – undertaken by the Group vis-à-vis its personnel from the date of their retirement,
calculated using actuarial studies carried out by an independent expert. In 2020 and 2019 additions derive mainly
from the annual accrual of these commitments, as well as changes in the actuarial assumptions used. These
additions have been recognised as personnel expenses or finance costs, depending on their nature, and under
reserves when they derive from changes in the actuarial assumptions (mainly in the case of obligations related to
health insurance) or in consolidated profit or loss (in the case of past service obligations). The personnel expenses
and finance costs recognised in this connection in the consolidated income statement for 2020 amount to Euros
2,014 thousand and Euros 625 thousand, respectively (Euros 1,883 thousand and Euros 606 thousand, respectively,
in 2019), whilst the reserves recognised in 2020 totalled Euros 8,781 thousand (Euros 13,701 thousand in 2019).
The assumptions made with regard to 2020 and 2019 were as follows:
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Discount rate
Cost increase
Mortality table
Actuarial assumptions
2020
2019
0.87%
3.0%
1.05%
3.0%
PERM/F2020 1st rank
PERM/F 2000 new production
Details of the effect of an increase/decrease of one percentage point in the cost of health insurance are as fol-
lows:
Thousands of Euros
Current service cost
Interest cost of net post-employment medical costs
2020
+1%
621
5
-1%
(449)
(4)
Accumulated post-employment benefit obligation for health insurance
20,185
(14,981)
Conversely, the effect of a decrease of half a percentage point in the discount rate used in 2019 for health insur-
ance costs from 0.87% to 0.37%, in thousands of Euros, is as follows:
Thousands of Euros
Current service cost
Interest cost of net post-employment medical costs
Accumulated post-employment benefit obligation for health insurance
71,412
80,785
Discount rate
0.87%
0.37%
Sensitivity
1,843
554
2,130
237
287
(317)
9,373
Provisions for employee benefits also include deferred remuneration schemes (see note 4 l). Changes in the con-
solidated Group in 2019 included the long-term incentive corresponding to 2018-2020 as a result of the business
combination entailing the acquisition of HISPASAT (see note 6).
At 31 December 2020 personnel expenses recognised in the consolidated income statement in this regard amount
to Euros 1,269 thousand (Euros 1,347 thousand in 2019).
Other provisions basically include the amounts recorded by the Group every year to cover the potential unfavour-
able rulings relating to administrative proceedings, administrative disciplinary proceedings, judicial reviews, pri-
marily of expropriation proceedings, and out-of-court claims, among others. The provisions recognised to cover
these events are measured on the basis of the potential economic content of the ongoing appeals, litigation,
claims and general legal or out-of-court proceedings to which the Group companies are party. This item also
includes the provisions made to cover potential unfavourable rulings in relation to the application of the remu-
neration model for transmission activities in Spain (see note 3). Changes in the consolidated Group in 2019 pri-
marily reflected provisions in relation to the fair value of the contingent liabilities identified in the HISPASAT busi-
ness combination, mainly related to legal and tax contingencies in Brazil (see note 6).
In 2019, in view of the first-time application of IFRIC 23 Uncertainty over Income Tax Treatments, Euros 4,367
thousand was reclassified to income tax payable.
The Group has assessed the risks and does not expect any events to arise that would amount to liabilities not
considered in its financial statements or that would have a significant impact on its profits. At the 2020 reporting
date, the Group is involved in a number of ongoing proceedings, primarily judicial reviews and disciplinary pro-
ceedings.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
17 Other Non-current Liabilities
Other non-current liabilities basically include contract liabilities for the revenues received in advance from agree-
ments with various telecommunications operators for the use of the telecommunications network capacity, rec-
ognised in the consolidated income statement based on the duration of the agreements, with expiry dates up to
2038, and amounting to Euros 28,290 thousand at 31 December 2020 (Euros 32,934 thousand at 31 December
2019).At 31 December 2020 this item also includes Euros 22,293 thousand of revenue received in advance on ac-
count of future satellite capacity services to be rendered (Euros 10,354 thousand at 31 December 2019).
This item also includes the non-current liabilities arising from the compensation paid by Électricité de France
(hereinafter EDF) under the agreement signed in 1997 for the adaptation of electricity supply contracts, which
amounted to Euros 23,625 thousand at 31 December 2020 (Euros 23,625 thousand at 31 December 2019). These
are multi-year commitments and are therefore subject to the construction of facilities.
18 Financial Risk Management Policy
The Group’s financial risk management policy establishes principles and guidelines to ensure that any significant
risks that could affect the objectives and activities of the Red Eléctrica Group are identified, analysed, assessed,
managed and controlled, and that these processes are carried out systematically and adhering to uniform criteria.
The Group has continued to apply the risk management policies disclosed in note 17 to the consolidated annual
accounts for 2019. However, as a result of the health crisis stemming from COVID-19 a contingency plan was
launched with the primary objectives of protecting employee health, guaranteeing electricity supply and
connections through telecommunication assets at all times, and preserving the Group’s liquidity.
A summary of the main guidelines that comprise this policy is as follows:
• Risk management should be fundamentally proactive and directed towards the medium and long term, taking
into account possible scenarios in an increasingly global environment.
• Risk should generally be managed in accordance with consistent criteria, distinguishing between the im-
portance of the risk (probability/impact) and the investment and resources required to reduce it.
• Financial risk management should be focused on avoiding undesirable variations in the Group’s core value, ra-
ther than generating extraordinary profits.
The Group’s finance management is responsible for managing financial risk, ensuring consistency with the
Group’s strategy and coordinating risk management across the various Group companies, by identifying the main
financial risks and defining the initiatives to be taken, based on different financial scenarios.
The methodology for identifying, measuring, monitoring and controlling risk, as well as the management indica-
tors and measurement and control tools specific to each risk, are implemented through the Group’s Comprehen-
sive Risk Management System, which is set forth in the Comprehensive Risk Management Policy and in the General
Comprehensive Risk Management and Control Procedure.
The financial risks to which the Group is exposed are as follows:
a) Market risk
Market risk reflects variations in the financial markets in terms of prices, interest and exchange rates, credit
conditions and other variables that could affect short-, medium- and long-term finance costs.
Market risk is managed on the borrowings to be arranged (the currency, maturity and interest rates), and through
the use of hedging instruments that allow the financial structure to be modified. Market risk specifically includes:
• Interest rate risk
Interest rate fluctuations change the fair value of assets and liabilities that accrue interest at fixed rates and
the future cash flows from assets and liabilities indexed to floating interest rates. The financial debt structure
at 31 December 2020 and 2019 is as follows:
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
2020
2019 (*)
Thousands of Euros
Non-current issues
Non-current bank borrowings
Current issues
Current bank borrowings
Total gross financial debt
Percentage
Fixed rate Variable rate Fixed rate
2,669,621
1,485,771
702,898
131,083
1,186,860 4,989,373
78%
3,756,014
1,516,216
4,329
131,694
5,408,253
82%
14,940
1,142,618
-
29,303
18%
Variable rate
14,933
1,071,444
215,081
75,810
1,377,267
22%
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Non-current bank
borrowings include an additional Euros 12,494 thousand.
The financial debt structure is low risk with moderate exposure to fluctuations in interest rates, as a result of
the debt policy implemented, which aims to bring the cost of debt into line with the financial rate of return
applied to the Group's regulated assets, among other objectives.
The interest rate risk to which the Group is exposed at 31 December 2020 and 2019 derives from changes in the
fair value of derivative financial instruments and mostly affects equity, but not consolidated profit for the year.
A sensitivity analysis of this risk is as follows (in thousands of Euros):
Thousands of Euros
Interest rate hedges:
- Cash flow hedges. Interest rate swap
Interest rate and exchange rate hedges:
- Cash flow hedges. Cross-currency swap
Effect on consolidated equity of market interest rate
fluctuations
2020
2019
+0.10%
-0.10%
+0.10%
-0.10%
4,396
(4,431)
4,895
(4,940)
222
(226)
135
(137)
This rise or decline of 0.10% in interest rates would have decreased or increased consolidated profit by Euros
2,312 thousand in 2020 and by Euros 1,075 thousand in 2019.
The fair value sensitivity has been estimated using a valuation technique based on discounting future cash
flows at prevailing market rates at 31 December 2020 and 2019.
• Currency risk
Currency risk management considers transaction risk arising on cash inflows and outflows in currencies other
than the Euro (essentially USD and BRL), and translation risk, to which the Company is exposed when consoli-
dating its subsidiaries and/or assets located in countries where the functional currency is not the Euro.
With a view to reducing the currency risk on issues in the US private placements (USPP) market, the Group has
arranged cash flow hedges through US Dollar/Euro cross-currency swaps on the principal and interest, which
cover the amount and total term of the issue up to October 2035 (see notes 19 and 20).
With the spread of COVID-19, the US Dollar’s role as a safe-haven currency has gained strength, unlike the Latin
American currencies, which have depreciated in response to the flight of capital to safer locations and the
prospect of further economic decline. Brazil, Chile and Peru, where the Group has investments, are among the
countries most affected by currency devaluation. However, the US currency has been much weaker against the
Euro, feeling the pinch of plummeting interest rates and the growing uncertainty as to the tempo of economic
recovery.
To mitigate transaction risk, in 2020 the Group companies arranged forward cash flow hedges in the form of
forward derivatives to hedge highly probable cash flows of certain revenue in US Dollars and certain payment
commitments in Brazilian Reais (see note 20). Consequently, had the Euro strengthened or weakened by 10%
against the hedged currencies at year end, the market values of those derivatives would have changed, and
equity would have decreased or increased by approximately Euros 2.2 million at 31 December 2020 (Euros 25
million at 31 December 2019).
Red Eléctrica Corporación and Subsidiaries
Page 65 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In order to mitigate translation risk on assets located in countries whose functional currency is not the Euro,
the Group finances a portion of such investments in the functional currency. The Group has also arranged
hedges of net investments in US Dollars through cross-currency swaps that will be in place until January 2021
(see note 20). Consequently, had the Euro simultaneously strengthened or weakened by 10% against the cur-
rencies to which the Group is exposed at year end, equity attributable to the Parent would have decreased or
increased by approximately Euros 32 million at 31 December 2020 (Euros 14 million at 31 December 2019).
• Price risk
The Group is exposed to price risk relating to equity instruments classified as financial assets at fair value
through other comprehensive income in the consolidated statement of financial position. Equity investments
on quoted markets basically comprise the 5% interest held by the Group in REN. At 31 December 2020 had the
listed share price of the Portuguese company REN been 10% higher or lower, equity would have increased or
decreased, respectively, by approximately Euros 6 million (Euros 7 million in 2019).
Credit risk
a)
In light of the nature of revenues from electricity transmission and electricity system operation, and the solvency
of the electricity system agents, the Red Eléctrica Group’s principal activities are not significantly exposed to
credit risk. For the Group’s other activities, credit risk is mainly managed through instruments to reduce or limit
such risk.
In any event, credit risk is managed through policies that contain certain requirements regarding counterparty
credit quality, and further guarantees are requested when necessary.
At year end the Group's exposure to credit risk in connection with the fair value of its derivatives is insignificant,
having entered into collateral assignment agreements entailing collateral swaps with various counterparties
since 2015 in order to mitigate this risk.
At 31 December 2020, less than 2% of balances are past due (less than 1% in 2019), and the companies do not
consider there to be any risk as regards recoverability. The credit quality of the receivables is considered to be
high.
Liquidity risk
b)
Liquidity risk arises due to differences between the amounts or dates of collection and payment of the Group
companies' assets and liabilities.
Liquidity risk is mostly managed by controlling the timing of financial debt and maintaining a considerable volume
of available capital during the year, setting maximum limits of amounts falling due for each period defined. This
process is carried out at Group company level, in accordance with the practices and limits set by the Group. The
limits established vary according to the geographical area, so as to ensure that the liquidity of the market in which
the companies operate is taken into account. Furthermore, the liquidity risk management policy entails preparing
cash flow projections in the main currencies in which the Group operates, taking into consideration the level of
liquid assets and funds available according to these projections, and monitoring the liquidity indicators as per the
consolidated statement of financial position and comparing these with market requirements.
The Group's financial debt at 31 December 2020 has an average maturity of 5.3 years (5.2 years at 31 December
2019). Details of the maturities of issues and bank borrowings are provided in note 19.
The Group has a robust financial position which has been further strengthened to tackle the COVID-19 health
crisis. Liquidity has been bolstered through the issue of new bonds in 2020, amounting to Euros 1,100 million (see
note 19).
The Group's liquidity position for 2020 was based on its robust capacity to generate cash flows, supported by
undrawn credit facilities. At 31 December 2020 the undrawn amount of these credit facilities is Euros 1,930 million
(non-current balance of Euros 1,645 million and current balance of Euros 285 million). Following these transac-
tions, the Group's liquidity position ensures it will be able to meet operating cash flow requirements, honour debt
maturities in 2022 and 2023, and address any adverse situations that might arise in the financial markets in the
Red Eléctrica Corporación and Subsidiaries
Page 66 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
coming months as a result of the current crisis. Thanks to its solid financial position, the Group has not had to
request state aid to alleviate the economic effects of the COVID-19 crisis.
19 Financial Assets and Financial Liabilities
Financial assets
a)
Details of the Red Eléctrica Group's current and non-current financial assets at 31 December 2020 and 2019 are
as follows:
31/12/2020
At fair value
through other com-
prehensive income
At fair value
through profit or
loss
At amortised
cost
Hedging deriv-
atives
79,363
-
-
79,363
-
-
-
79,363
4,078
-
3,895
7,973
-
-
-
7,973
-
-
28,869
28,869
35,812
-
35,812
64,681
31/12/2019
-
146
-
146
-
19,991
19,991
20,137
At fair value through
other
comprehensive
income
91,206
-
-
91,206
-
-
-
91,206
At fair value through
profit or loss
At amortised
cost
Hedging deriv-
atives
-
-
2,542
2,542
-
-
-
2,542
-
-
18,823
18,823
58,200
-
58,200
77,023
-
14,732
-
14,732
-
11,311
11,311
26,043
Total
83,441
146
32,764
116,351
35,812
19,991
55,803
172,154
Total
91,206
14,732
21,365
127,303
58,200
11,311
69,511
196,814
Thousands of Euros
Equity instruments
Derivatives
Other financial assets
Non-current
Other financial assets
Derivatives
Current
Total
Thousands of Euros
Equity instruments
Derivatives
Other financial assets
Non-current
Other financial assets
Derivatives
Current
Total
• Equity instruments
Equity instruments essentially comprise the 5% interest held by the Group in REN, a holding company that en-
compasses the operation and use of electricity transmission assets and various gas infrastructure in Portugal.
This interest was acquired in 2007 for Euros 98,822 thousand. In 2017 the Group subscribed 6,659,563 new
shares in the share capital increase carried out by REN for an amount of Euros 12,500 thousand, thereby main-
taining its 5% interest in this company.
At 31 December 2019 REN's consolidated equity totalled Euros 1,446 thousand and the profit after tax amounted
to Euros 118,899 thousand.
These instruments were classified as financial assets measured at fair value through other comprehensive
income (see note 2 b). The value of this investment is subject to the listed share price (Level 1). In 2020 the fair
value of this equity instrument decreased and the corresponding valuation adjustment was recognised directly
under equity.
At 31 December 2020 the Group has quantified the decrease in value of this investment at Euros 11,843 thousand
(a Euros 9,541 thousand increase in 2019).
Red Eléctrica Corporación and Subsidiaries
Page 67 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In 2020 this item also includes the investments made by the Group company Red Eléctrica de Telecomunica-
ciones, Innovación y Tecnología, S.A.U. (hereinafter RETIT) in various innovative companies, primarily the in-
vestments in Zeleros Global S.L. and Capital Call - Adara Ventures III S.C.A., which are measured at fair value
through profit or loss. No gains or losses were recognised in the consolidated income statement in 2020 in
relation to these investments.
• Derivatives
Details of derivative financial instruments are provided in note 20.
• Other financial assets
The balance at 31 December 2020 mainly comprises the loan of Euros 17,457 thousand extended to TEN (Euros
24,677 thousand at 31 December 2019), which earns interest at a Libor-pegged rate plus 270 b.p., and guaran-
tees and loans extended by the Group to its personnel, which fall due in the long term. There are no significant
differences between the fair value and the carrying amount at 31 December 2020 and 2019.
This item also comprises the investment in economic interest groups (EIGs), measured at Euros 3,895 thousand
(Euros 2,542 thousand in 2019). These EIGs engage in the lease of assets operated by an unrelated party, which
retains most of the risks and rewards of the activity, while the Group only avails of the tax incentives pursuant
to Spanish legislation. The Group recognises the tax losses incurred by these EIGs against the investments,
together with the corresponding finance income (see note 24 e) reflecting the difference compared to income
tax payable to the taxation authorities.
• Fair value hierarchy levels
Details of the Group's financial assets measured at fair value using the inputs defined for this calculation at 31
December 2020 and 2019 are as follows:
Thousands of Euros
Equity instruments
Derivatives
Other financial assets
Thousands of Euros
Equity instruments
Derivatives
Other financial assets
Level 1
78,895
-
-
Level 1
90,738
-
-
31/12/2020
Level 2
-
20,137
3,895
31/12/2019
Level 2
-
26,043
2,542
Level 3
Total balance
4,546
-
-
83,441
20,137
3,895
Level 3
468
-
-
Total balance
91,206
26,043
2,542
Level 1 equity instruments reflect the 5% interest held by the Group in the listed company REN. Level 3 includes
the equity investments in ACEFAT and CORESO, and the investments made by RETIT in innovative companies.
Financial liabilities
b)
Details of the Red Eléctrica Group's current and non-current financial liabilities at 31 December 2020 and 2019 are
as follows:
Red Eléctrica Corporación and Subsidiaries
Page 68 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Loans and borrowings
Bonds and other marketable securities
Derivatives
Other financial liabilities (1)
Non-current
Loans and borrowings
Bonds and other marketable securities
Derivatives
Other financial liabilities
Current
Total
Thousands of Euros
Loans and borrowings
Bonds and other marketable securities
Derivatives
Other financial liabilities (1)
Non-current
Loans and borrowings
Bonds and other marketable securities
Derivatives
Other financial liabilities
Current
Total
Financial liabilities
31/12/2020
Hedging derivatives
2,658,888
3,768,756
-
57,760
6,485,404
171,799
43,174
-
608,794
823,767
7,309,171
-
-
50,350
-
50,350
-
-
220
-
220
50,571
31/12/2019 (*)
Financial liabilities
Hedging derivatives
Total
2,658,888
3,768,756
50,350
57,760
6,535,755
171,799
43,174
220
608,794
823,987
7,359,742
Total
2,554,203
2,713,120
48,266
60,286
2,554,203
2,713,120
-
60,286
5,327,609
224,852
973,129
-
648,556
1,846,537
7,174,146
-
-
48,266
-
48,266
5,375,875
-
-
4,996
-
4,996
53,262
224,852
973,129
4,996
648,556
1,851,533
7,227,408
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Loans and borrowings
include an additional Euros 8,849 thousand under non-current and Euros 3,645 thousand under current.
(1) Mainly reflects non-current payables to suppliers of fixed assets and non-current lease payables.
• Loans and borrowings, bonds and other marketable securities
The carrying amount and fair value of loans and borrowings and issues of bonds and other marketable securi-
ties at 31 December 2020 and 2019, excluding interest payable, are as follows:
Thousands of Euros
Issues in Euros
Issues in US Dollars
Bank borrowings in Euros
Bank borrowings in foreign currency
Total
Carrying amount
2020
3,422,760
350,324
2,458,241
361,589
6,592,914
2019 (*)
3,086,602
544,496
2,413,796
350,312
6,395,206
Fair value
2020
3,664,320
475,298
2,502,412
387,388
7,029,418
2019
3,310,737
653,965
2,441,959
367,612
6,774,273
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Non-current bank
borrowings include an additional Euros 12,494 thousand.
The fair value of all bank borrowings and issues has been estimated using valuation techniques based on dis-
counting future cash flows at the market rates in force at each date (Level 2 of the hierarchy).
At 31 December 2020 the accrued interest payable amounts to Euros 49,702 thousand (Euros 70,098 thousand
in 2019).
Red Eléctrica Corporación and Subsidiaries
Page 69 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Issues in Euros at 31 December 2020 reflect the Eurobonds issued by Red Eléctrica Financiaciones, S.A.U. (here-
inafter REF) and REC, totalling Euros 3,422,759 thousand (Euros 2,871,521 thousand in 2019). In 2020 bond issues
totalling Euros 1,100 million were carried out, while bonds amounting to Euros 550 million were redeemed.
Issues in US Dollars at 31 December 2020 amounted to Euros 350,324 thousand (Euros 544,496 thousand in
2019), comprising a US Dollars 500 million issue on the US private placement (USPP) market, of which US Dollars
250 million is payable, as well as three US Dollar bond issues made in Peru, of which Euros 147 million is payable
at 31 December 2020 (see note 18 for an analysis of currency risk).
Bank borrowings in Euros at 31 December 2020 include non-current loans and credit facilities totalling Euros
1,933,241 thousand (Euros 1,807,881 thousand in 2019) and syndicated credit facilities amounting to Euros
525,000 thousand (Euros 593,420 thousand in 2019).
Bank borrowings in foreign currency at 31 December 2020 mainly include non-current loans and credit facilities
in US Dollars amounting to Euros 361,589 thousand (Euros 350,312 thousand in 2019).
Details of the maturities of bond issues and bank borrowings at 31 December 2020 are as follows:
Maturities at 31 December 2020
2021
2022
2023
2024
2025
Thereafter
Amortised
cost and
other adjust-
ments
Total
-
400,000
300,000
-
900,000
1,890,000
(67,240)
3,422,760
4,459
4,797
5,153
5,530
128,164
205,712
(3,492)
350,324
134,592
442,189
318,783
328,853
612,192
616,053
5,579
2,458,241
24,645
195,078
86,037
559
669
58,026
(3,424)
361,589
Thousands of
Euros
Issues in Eu-
ros
Issues in US
Dollars
Bank borrow-
ings in Euros
Bank borrow-
ings in US
Dollars
Total
163,696 1,042,064
709,973
334,942
1,641,025
2,769,791
(68,577)
6,592,914
Red Eléctrica Corporación and Subsidiaries
Page 70 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Maturities at 31 December 2019 (*)
2020
2021
2022
2023
2024
Thereafter
Amortised
cost and
other ad-
justments
Total
765,096
- 400,000
300,000
-
1,690,000
(68,494)
3,086,602
164,714
4,870
5,240
5,629
6,041
364,696
(6,694)
544,496
160,716 209,353
387,188
117,189
825,665
705,931
7,754
2,413,796
46,924
26,407
154,641
58,354
610
64,113
(737)
350,312
Thousands of
Euros
Issues in Eu-
ros
Issues in US
Dollars
Bank bor-
rowings in
Euros
Bank bor-
rowings in
US Dollars
Total
1,137,450 240,630 947,069
481,172
832,316
2,824,740
(68,171)
6,395,206
(*) Maturities restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Bank borrowings
in Euros additionally include, under amortised cost and other adjustments, the maturities corresponding to the revaluation of Hispasat’s debt in an amount
of Euros 12,494 thousand.
The average interest rate of loans and borrowings and bond issues was 1.74% in 2020 (2.29% in 2019).
At 31 December 2020 Group companies have undrawn credit facilities amounting to Euros 1,930 million, of which
Euros 1,645 million expire in the long term (Euros 1,576 million at 31 December 2019) and Euros 285 million in the
short term (Euros 192 million at 31 December 2019).
Details of bonds and other marketable securities at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Debt securities requiring a prospectus
to be filed
Opening out-
standing bal-
ance at
31/12/2019
31/12/2020
(+) Issues
(-) Repurchases
or redemptions
(+/-) Exchange
rate and other
adjustments
Closing out-
standing
balance at
31/12/2020
3,086,602
2,165,356
(1,830,452)
1,254
3,422,760
Debt securities not requiring a prospec-
tus to be filed
-
Other debt securities issued outside EU
member states
544,496
-
-
-
-
-
(152,752)
(41,420)
350,324
Total
3,631,098
2,165,356
(1,983,204)
(40,166)
3,773,084
Red Eléctrica Corporación and Subsidiaries
Page 71 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
31/12/2019
Opening out-
standing bal-
ance at
31/12/2018
(+) Issues
(-) Repurchases or
redemptions
(+/-) Exchange
rate and other
adjustments
Closing out-
standing
balance at
31/12/2019
3,144,659
1,342,370
(1,411,377)
10,950
3,086,602
Thousands of Euros
Debt securities requiring a prospectus
to be filed
Debt securities not requiring a pro-
spectus to be filed
-
Other debt securities issued outside
EU member states
458,748
-
-
-
-
-
(8,606)
94,354
544,496
Total
3,603,407
1,342,370
(1,419,983)
105,304
3,631,098
In 2020 and 2019 changes in debt securities requiring a prospectus to be filed relate to issues registered in
Dublin and Luxembourg.
Details of changes in liabilities related to financing instruments during 2020, distinguishing between those that
entailed cash flows and those that did not, are as follows:
Thousands of Euros
Issues in Euros
Issues in US Dollars
Bank borrowings in Euros
Bank borrowings in foreign cur-
rency
Total debt
31/12/2019 (*)
Movements
entailing cash
flows
Movements not entailing cash flows
Exchange differ-
ences
Other changes
31/12/2020
3,086,602
544,496
2,413,796
334,904
(152,752)
46,620
350,312
47,323
6,395,206
276,095
(44,622)
(33,359)
(77,981)
1,254
3,202
(2,175)
3,422,760
350,324
2,458,241
(2,687)
361,589
(406)
6,592,914
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Bank borrowings in
Euros include an additional Euros 12,494 thousand.
• Derivatives
Details of derivative financial instruments are provided in note 20.
• Other non-current financial liabilities
Other non-current financial liabilities mainly comprise in-orbit incentives related to satellites, which form part
of the asset acquisition price and are paid over the useful life of the satellite. This price component is subject
to the correct functioning of the satellites during their useful life and the manufacturer is paid the amount plus
the contractually-stipulated interest, which is reflected in the consolidated income statement.
• Other current financial liabilities
Details of this item at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Dividend payable (note 14)
Suppliers of fixed assets and other payables
Other payables
Total
2020
146,984
310,901
150,909
608,794
2019
147,112
334,194
167,250
648,556
Red Eléctrica Corporación and Subsidiaries
Page 72 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Suppliers of fixed assets essentially reflect balances incurred on the construction of electricity facilities.
Other payables basically comprise items pending settlement with respect to the Spanish electricity system and
security deposits received. They also include current lease payables arising from the application of IFRS 16,
amounting to Euros 890 thousand.
• Fair value hierarchy levels
Details of Group financial liabilities not included under the headings of loans and borrowings or bonds and other
marketable securities measured at fair value using the inputs defined for this calculation at 31 December 2020
and 2019 are as follows:
Thousands of Euros
Derivatives
Thousands of Euros
Derivatives
31/12/2020
Level 1
-
Level 2
50,570
Level 3
-
Total balance
50,570
31/12/2019
Level 1
-
Level 2
53,262
Level 3
-
Total balance
53,262
Level 2 comprises foreign currency and interest rate derivatives. There are no significant differences between
the fair value and the carrying amount at 31 December 2020 and 2019. Liabilities at amortised cost are not
disclosed by fair value hierarchy level.
The Group’s fair value estimates reflect the assumptions of market participants based on the information avail-
able and market conditions at the date these financial statements were drawn up, incorporating, where appro-
priate, risk premiums arising from the increased uncertainty and other impacts caused by the COVID-19 crisis,
adjusting the estimates for own and counterparty credit risk and taking into consideration the fact that unob-
servable inputs have become significant.
20 Derivative Financial Instruments
In line with its financial risk management policy, the Red Eléctrica Group has arranged four types of derivative
financial instruments: interest rate swaps, forward interest rate swaps, cross-currency swaps and currency for-
wards. Interest rate swaps consist of exchanging debt at variable interest rates for debt at fixed rates, in a swap
where the future cash flows to be hedged are the interest payments. Forward interest rate swaps cover the fi-
nance cost of highly probable forecast future transactions. Similarly, cross-currency swaps allow fixed- or varia-
ble-rate debt in US Dollars to be exchanged for fixed- or variable-rate debt in Euros, thereby hedging future inter-
est and capital flows in US Dollars. Lastly, currency forwards hedge currency risk related with highly probably
forecast transactions denominated in a currency other than the Euro.
As regards the measurement of derivative financial instruments and hedging instruments disclosed in these
notes, the application of IFRS 13 (see note 4 n) entails an adjustment to the valuation techniques used to calculate
the fair value of derivative financial instruments. The Group has incorporated a credit risk adjustment to reflect
own and counterparty risk in the fair value of derivatives using generally accepted measurement models.
To eliminate the credit risk from the cross-currency swaps arranged to hedge the exchange rate for USPP issu-
ance, collateral assignment agreements entailing collateral swaps were entered into with the counterparties in
2015.
When determining the credit risk adjustment for other derivatives, the Group applied a technique based on cal-
culating total expected exposure (which considers current and potential exposure) through the use of simulations,
adjusted for the probability of default over time and for loss given default allocable to the Group and to each
counterparty.
Red Eléctrica Corporación and Subsidiaries
Page 73 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The total expected exposure of derivative financial instruments is determined using observable market inputs,
such as interest rate curves, exchange rates and volatilities based on market conditions at the measurement
date.
The inputs used to determine own and counterparty credit risk (probability of default) are mostly based on own
credit spreads and those of comparable companies currently traded on the market (credit default swap (CDS)
curves, IRR of debt issues, etc.).
Furthermore, adjustments of fair value for credit risk take into account credit enhancements for guarantees and
collateral when determining the loss given default to be used for each position. Loss given default is considered
to be constant over time. A minimum recovery rate of 40% has been used in cases where there is no credit en-
hancement for guarantees or collateral.
Based on the fair value hierarchy levels detailed in note 4, the Group has considered that the majority of the inputs
used to determine the fair value of derivative financial instruments are categorised within Level 2, including the
data used to calculate the own and counterparty credit risk adjustment.
The Group has observed that the impact of using Level 3 inputs for the overall measurement of derivative financial
instruments is not significant. Consequently, the Group has determined that the entire derivative financial instru-
ment portfolio can be categorised within Level 2 of the fair value hierarchy.
As regards observable inputs, the Group uses mid-market prices obtained from reputable external information
sources in the financial markets.
Details of hedges at 31 December 2020 and 2019 in thousands of Euros are as follows:
Euros 225,000 thousand
Euros 21,249 thousand
Up to 2022
Up to 2021
Euros 260,000 thousand
Up to 2027
Forward interest rate swap beginning in 2022
Euros 300,000 thousand
Up to 2028
Forward interest rate swap beginning in 2023
Euros 100,000 thousand
Up to 2029
Thousands of Euros
Interest rate hedges:
- Cash flow hedges:
Interest rate swap
Interest rate swap
- Forward cash flow hedges:
Forward interest rate swap beginning in 2021
Exchange rate hedges:
- Hedges of a net investment:
Cross-currency swap
- Forward cash flow hedges:
Currency forward
Currency forward
Interest rate and exchange rate hedges
- Cash flow hedges (cross-currency swaps):
Interest rate hedge
Exchange rate hedges
Total
2020
Non-current
Current
Principal Term to expiry
Assets
Liabilities
Assets
Liabilities
-
-
-
-
-
-
(3,597)
-
(17,523)
(15,096)
(3,639)
-
-
-
-
-
-
-
-
16,228
3,713
50
-
(220)
-
-
-
-
-
-
US Dollars 150,000 thousand
Up to 2021
US Dollars 40,833 thousand
Brazilian Reais 11,075
thousand
Up to 2021
Up to 2021
146
-
US Dollars 250,000 thousand
Up to 2035
-
146
(8,297)
(2,198)
(50,350)
-
-
19,991
-
-
(220)
Red Eléctrica Corporación and Subsidiaries
Page 74 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
2019
Non-current
Current
Principal
Term to ex-
piry
Assets
Liabilities
Assets
Liabilities
Thousands of Euros
Interest rate hedges:
- Cash flow hedges:
Interest rate swap
Interest rate swap
Interest rate swap
- Forward cash flow hedges:
Forward interest rate swap beginning in 2020
Euros 325,000 thousand
Up to 2022
Euros 47,460 thousand
Up to 2021
Euros 42,498 thousand
Up to 2021
Euros 450,000 thousand
Up to 2029
Forward interest rate swap beginning in 2021
Euros 200,000 thousand
Up to 2027
Forward interest rate swap beginning in 2022
Euros 300,000 thousand
Up to 2028
Forward interest rate swap beginning in 2023
Euros 100,000 thousand
Up to 2029
-
-
-
-
1,325
2,718
1,369
(4,030)
(743)
(742)
(24,677)
(6,016)
(8,352)
(1,346)
-
-
-
-
-
-
-
-
(4,384)
-
-
-
-
-
-
-
159
-
(93)
(519)
US Dollars 150,000 thou-
sand
Up to 2021
4,462
US Dollars 36,116 thousand
Brazilian Reais 1,775,000
thousand
Up to 2021
Up to 2020
24
-
-
-
-
US Dollars 430,000 thou-
sand
Up to 2035
(5,131)
9,965
14,732
(9,003)
6,643
(48,266)
(806)
11,958
11,311
-
-
(4,996)
Details of hedges at 31 December 2020 and 2019 in thousands of Euros are as follows:
2020
Non-current
Current
Principal Term to expiry
Assets
Liabilities
Assets
Liabilities
Euros 225,000 thousand
Euros 21,249 thousand
Up to 2022
Up to 2021
Euros 260,000 thousand
Up to 2027
Forward interest rate swap beginning in 2022
Euros 300,000 thousand
Up to 2028
Forward interest rate swap beginning in 2023
Euros 100,000 thousand
Up to 2029
-
-
-
-
-
-
(3,597)
-
(17,523)
(15,096)
(3,639)
-
-
-
-
-
-
-
-
16,228
3,713
50
-
(220)
-
-
-
-
-
-
US Dollars 150,000 thousand
Up to 2021
US Dollars 40,833 thousand
Brazilian Reais 11,075
thousand
Up to 2021
Up to 2021
146
-
US Dollars 250,000 thousand
Up to 2035
-
146
(8,297)
(2,198)
(50,350)
-
-
19,991
-
-
(220)
Exchange rate hedges:
- Hedges of a net investment:
Cross-currency swap
- Forward cash flow hedges:
Currency forward
Currency forward
Interest rate and exchange rate hedges
- Cash flow hedges (cross-currency swaps):
Interest rate hedge
Exchange rate hedges
Total
Thousands of Euros
Interest rate hedges:
- Cash flow hedges:
Interest rate swap
Interest rate swap
- Forward cash flow hedges:
Forward interest rate swap beginning in 2021
Exchange rate hedges:
- Hedges of a net investment:
Cross-currency swap
- Forward cash flow hedges:
Currency forward
Currency forward
Interest rate and exchange rate hedges
- Cash flow hedges (cross-currency swaps):
Interest rate hedge
Exchange rate hedges
Total
Red Eléctrica Corporación and Subsidiaries
Page 75 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
2019
Non-current
Current
Principal
Term to ex-
piry
Assets
Liabilities
Assets
Liabilities
Thousands of Euros
Interest rate hedges:
- Cash flow hedges:
Interest rate swap
Interest rate swap
Interest rate swap
- Forward cash flow hedges:
Forward interest rate swap beginning in 2020
Euros 325,000 thousand
Up to 2022
Euros 47,460 thousand
Up to 2021
Euros 42,498 thousand
Up to 2021
Euros 450,000 thousand
Up to 2029
Forward interest rate swap beginning in 2021
Euros 200,000 thousand
Up to 2027
Forward interest rate swap beginning in 2022
Euros 300,000 thousand
Up to 2028
Forward interest rate swap beginning in 2023
Euros 100,000 thousand
Up to 2029
-
-
-
-
1,325
2,718
1,369
(4,030)
(743)
(742)
(24,677)
(6,016)
(8,352)
(1,346)
Exchange rate hedges:
- Hedges of a net investment:
Cross-currency swap
- Forward cash flow hedges:
Currency forward
Currency forward
Interest rate and exchange rate hedges
- Cash flow hedges (cross-currency swaps):
Interest rate hedge
Exchange rate hedges
Total
US Dollars 150,000 thou-
sand
Up to 2021
4,462
US Dollars 36,116 thousand
Brazilian Reais 1,775,000
thousand
Up to 2021
Up to 2020
24
-
-
-
-
US Dollars 430,000 thou-
sand
Up to 2035
(5,131)
9,965
14,732
(9,003)
6,643
(48,266)
(806)
11,958
11,311
-
-
(4,996)
-
-
-
-
-
-
-
-
(4,384)
-
-
-
-
-
-
-
159
-
(93)
(519)
Details of expected cash flows from derivatives at 31 December 2020 and 2019, which are similar to the expected
impact on profit or loss, by year of occurrence, are as follows:
Red Eléctrica Corporación and Subsidiaries
Page 76 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Interest rate hedges:
- Cash flow hedges:
Interest rate swap
Interest rate swap
- Forward cash flow hedges:
Forward interest rate swap beginning in 2021
Forward interest rate swap beginning in 2022
Forward interest rate swap beginning in 2023
Exchange rate hedges:
- Hedges of a net investment:
Cross-currency swap
- Forward cash flow hedges:
Currency forward
Currency forward
Interest rate and exchange rate hedges
- Cash flow hedges (cross-currency swaps):
Interest rate hedge
Exchange rate hedges
Total
Maturities at 31 December 2020
Principal
Term to ex-
piry
2021
2022 2023 2024
2025
2026 and
thereafter
Total
Euros 225,000
thousand
Euros 21,249
thousand
Euros 260,000
thousand
Euros 300,000
thousand
Euros 100,000
thousand
Up to 2022
(3,597)
Up to 2021
(220)
Up to 2027
Up to 2028
Up to 2029
US Dollars 150,000
thousand
Up to 2021
16,228
US Dollars 40,833
thousand
Up to 2021
3,713
146
Brazilian Reais
11,075 thousand
Up to 2020
50
-
(3,597)
(220)
(17,523)
(17,523)
(15,096)
(15,096)
(3,639)
(3,639)
16,228
3,859
50
US Dollars
250,000 thousand
Up to 2035
379
(8,676)
(8,297)
(1,319)
(879)
(2,198)
19,771
(3,451)
-
-
(940)
(45,813)
(30,433)
Red Eléctrica Corporación and Subsidiaries
Page 77 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Maturities at 31 December 2019
Principal Term to expiry
2020
2021
2022
2023
2024
2025 and
thereafter
Total
Up to 2022
(4,384)
-
(4,030)
Up to 2021
Up to 2021
Up to 2029
Up to 2027
Up to 2028
Up to 2029
-
-
-
-
-
-
(743)
(742)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8,414)
-
-
(743)
(742)
(24,677)
(24,677)
(4,691)
(4,691)
(5,634)
(5,634)
23
23
Up to 2021
-
4,462
-
-
-
-
4,462
Thousands of Euros
Interest rate hedges:
- Cash flow hedges:
Interest rate swap
Interest rate swap
Interest rate swap
- Forward cash flow hedges:
Forward interest rate swap
beginning in 2020
Forward interest rate swap
beginning in 2021
Forward interest rate swap
beginning in 2022
Forward interest rate swap
beginning in 2023
Exchange rate hedges:
- Hedges of a net investment:
Cross-currency swap
- Forward cash flow hedges:
Currency forward
Currency forward
Euros 325,000
thousand
Euros 47,460
thousand
Euros 42,498
thousand
Euros 450,000
thousand
Euros 200,000
thousand
Euros 300,000
thousand
Euros 100,000
thousand
US Dollars
150,000
thousand
US Dollars
36,116 thousand
Brazilian Reais
1,775,000
thousand
Up to 2021
66
24
Up to 2020
(519)
-
Interest rate and exchange rate hedges
- Cash flow hedges (cross-currency swaps):
Interest rate hedge
Exchange rate hedges
Total
US Dollars
430,000
thousand
Up to 2035
(806)
11,958
-
-
6,315
3,001
(4,030)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
90
(519)
(14,134)
(14,940)
16,608
28,566
(32,505) (27,219)
Red Eléctrica Corporación and Subsidiaries
Page 78 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
21 Trade and Other Payables
Details of this item at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Suppliers
Other payables
Current tax liabilities (note 23)
Total
2020
460,502
92,257
24,961
577,720
2019
311,879
61,490
23,574
396,943
Suppliers comprise amounts not yet due for the purchase of goods and services in the course of the Group’s trade
operations, essentially payables arising from repairs and maintenance work and modifications to electricity fa-
cilities, as well as balances pending settlement vis-à-vis Spanish electricity system agents.
Other payables mainly reflect VAT payable to the taxation authorities, salaries payable and other amounts not yet
due for the purchase of goods and services.
22 Average Supplier Payment Period. “Reporting Requirement”, Third Addi-
tional Provision of Law 15/2010 of 5 July 2010
The Spanish Accounting and Auditing Institute (ICAC) resolution of 29 January 2016, concerning the information
that must be disclosed in the notes to the annual accounts in relation to the average supplier payment period in
commercial transactions, clarifies and systematises the information that trading companies must include in the
notes to individual and consolidated annual accounts, in compliance with the reporting requirement of the third
additional provision of Law 15/2010 of 5 July 2010, which amends Law 3/2004 of 29 December 2004, establishing
measures to combat late payments in commercial transactions.
The scope of this resolution also extends to trading companies that prepare consolidated annual accounts, alt-
hough only with respect to fully consolidated subsidiaries or equity-accounted investees registered in Spain, ir-
respective of the financial reporting framework under which the accounts are prepared.
The information on the average supplier payment period for 2020 and 2019 is as follows:
Days
Average supplier payment period
Transactions paid ratio
Transactions payable ratio
Thousands of Euros
Total payments made
Total payments outstanding
2020
45.9
47.2
12.9
2020
372,430
14,187
2019
47.6
48.4
22.4
2019
401,252
12,901
23 Taxation
The tax group headed by Red Eléctrica Corporación, S.A. has filed consolidated tax returns in Spain since 2002
(tax group No. 57/02). At 31 December 2020 the tax group includes the Parent, REE, REI, REF, REINTEL, REINCAN,
RESTEL, RETIT, HISPASAT S.A. and Hispasat Canarias S.L.
Red Eléctrica Corporación and Subsidiaries
Page 79 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In 2019, HISPASAT S.A., Hispasat Canarias, S.L. and Hispamar Exterior, S.L., subsidiaries of REC, filed consolidated
tax returns in Spain as part of a separate tax group, the parent of which was HISPASAT S.A. This group was
dissolved with effect from 31 December 2019, and in 2020 HISPASAT S.A. and Hispasat Canarias, S.L. joined the
tax group headed by REC as subsidiaries, while Hispamar Exterior S.L. now files individual tax returns.
Companies that do not form part of the tax group are subject to the legislation applicable in their respective
countries.
A reconciliation of the prevailing tax rate in Spain with the tax rate applicable to the Group is as follows:
Thousands of Euros
Consolidated accounting profit for the year before tax
Permanent differences and consolidation adjustments
Consolidated taxable accounting income
Tax rate
Consolidated taxable accounting income multiplied by tax rate
Effect of applying different tax rates
Tax calculated at the tax rate of each country
Deductions
Other adjustments
Income tax
Current income tax
Deferred income tax
Effective tax rate
2020
805,991
(41,651)
764,340
25%
2019 (*)
950,664
(31,328)
917,397
25%
191,085
229,349
6,667
3,660
197,752
233,010
(8,115)
5,114
194,751
225,669
(30,918)
24.16%
(1,612)
4,442
235,840
254,474
(18,633)
24.27%
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6), resulting in an increase
of Euros 5,606 thousand in income tax for 2019.
The effective rate of income tax is primarily influenced by permanent differences and by deductions in tax
payable. The effective tax rate in 2020 is 24.16% (24.27% in 2019).
Permanent differences in 2020 and 2019 mainly arise from the capitalisation reserve adjustment resulting from
the increase in equity in accordance with article 25 of Income Tax Law 27/2014 of 27 November 2014. As permitted
by article 62.1 d) of Law 27/2014, the capitalisation reserve for 2020 will be appropriated by the Company (see note
14).
Deductions mainly comprise those for research, development and technological innovation expenditure, as well
as relief for international double taxation and donations.
Given the financial nature of the deduction for investments in fixed assets in the Canary Islands, it is treated as a
grant, and its impact on the consolidated income statement is deferred over several years based on the useful
lives of the assets for which it was awarded (see note 4 j).
Deductions recognised as grants in 2020 amount to Euros 4,500 thousand (Euros 3,969 thousand in 2019) and the
amount still to be recognised at 31 December 2020 is Euros 113,798 thousand (Euros 106,746 thousand in 2019).
Current receivables from and payables to public entities at 31 December 2020 and 2019 are as follows:
Red Eléctrica Corporación and Subsidiaries
Page 80 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Current receivables
Recoverable VAT
Recoverable income tax (note 12)
Other recoverable taxes
Current payables
VAT payable (note 20)
Income tax payable (note 20)
Other taxes payable
2020
2019
13,416
10,703
2,152
64,391
24,961
6,071
10,873
10,004
3,524
30,284
23,574
6,923
In 2020 and 2019, adjustments were made to taxable income to reflect recognition of the EIGs in which the Group
has interests, amounting to Euros 73,008 thousand and Euros 77,822 thousand, respectively.
Temporary differences in the recognition of income and expenses for accounting and tax purposes in the Red
Eléctrica Group at 31 December 2020 and 2019, and the corresponding cumulative tax effect (assets and liabilities)
are as follows:
2020
2019 (*)
Income statement,
Business combina-
tions and other
Income and ex-
pense recognised
directly in equity
Income
statement
Total
Income and ex-
pense recognised
directly in equity
Thousands of Euros
Variation
Variation
Variation
Variation
Business combina-
tions, first-time
application of IFRS
and other
Variation
Total
Deferred tax assets:
Originating in prior
years
Movement in the
year
Total gross de-
ferred tax assets
107,845
33,411
141,256
78,088
11,044
39,134
50,178
(4,562)
26,677
6,734
269
105,034
34,050
36,222
118,889
72,545
191,433
73,526
33,411
34,319
141,256
Offsetting of deferred taxes from the tax group in Spain
(103,418)
88,015
(75,247)
66,009
Total net deferred tax assets
Deferred tax liabilities:
Originating in prior
years
Movement in the
year
Total gross de-
ferred tax liabili-
ties
525,395
(19,874)
505,521
16,134
541,530
520,915
(885)
(20,759)
(23,195)
16,818
(684)
12,441
550,174
15,235
(8,644)
15,249
520,771
497,720
16,134
27,676
541,530
Offsetting of deferred taxes from the tax group in Spain
(103,418)
Total net deferred tax liabilities
417,353
(75,247)
466,283
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6), resulting in an increase
of Euros 21,702 thousand in deferred tax assets and Euros 10,028 thousand in deferred tax liabilities.
The column reflecting business combinations, first-time application of IFRS and other for 2019 mainly reflected
the deferred tax assets and liabilities from the HISPASAT subgroup and CCNCM (see note 5).
Deferred tax assets and liabilities at 31 December 2020 and 2019 are as follows:
Red Eléctrica Corporación and Subsidiaries
Page 81 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Commitments with personnel
Impairment of fixed assets
Financial derivatives
Unused deductions
Translation differences
Balance sheet revaluations - Law 16/2012
Limit on deductible depreciation/amortisation - Law 16/2012
Other
Offsetting of deferred assets and liabilities
Total deferred tax assets
Accelerated depreciation and amortisation
Non-deductible assets
Other
Offsetting of deferred assets and liabilities
Total deferred tax liabilities
2020
24,944
30,942
24,763
22,842
32,279
18,715
17,302
19,646
(103,418)
88,015
473,717
13,251
33,803
(103,418)
417,353
2019 (*)
23,130
136
24,275
32,985
-
19,707
21,259
19,764
(75,247)
66,009
492,235
14,070
35,225
(75,247)
466,283
(*) Figures restated as a result of the recognition of the business combination, effective 3 October 2019 (see notes 2.f and 6), resulting in an increase of
Euros 21,702 thousand in deferred tax assets and Euros 10,028 thousand in deferred tax liabilities.
In the consolidated statement of financial position the Group has offset deferred tax assets and deferred tax
liabilities arising from the Spanish tax group in an amount of Euros 103,418 thousand, as permitted by IAS 12 (Euros
75,247 thousand in 2019).
At 31 December 2020, deferred tax assets and liabilities are expected to be recovered and settled as follows:
Gross total
More than 1
year
Less than 1
year
Deferred tax assets
Deferred tax liabilities
191,433
520,771
189,392
500,779
2,041
19,992
Adjustment for
offsetting of
assets and lia-
bilities
(103,418)
(103,418)
Net total
88,015
417,353
The recovery/settlement of the Group's deferred tax assets/liabilities is dependent on certain assumptions, which
could change.
Deferred tax assets include reversals of tax prepaid in 2013 and 2014 as a result of applying the limitation on the
tax deductibility of depreciation and amortisation charges stipulated in article 7 of Law 16/2012 of 27 December
2012, which introduced several fiscal measures to consolidate public finances and boost economic activity, and
those arising as a result of the commencement, in 2015, of depreciation and amortisation for tax purposes of the
net increase in value resulting from the revaluations applied to the balance sheet at 31 December 2012, pursuant
to article 9 of the same Law. This item also comprises amounts relating to changes in value of cash flow hedges,
long-term employee benefits, asset impairment and unused tax deductions.
At 31 December 2020 the Group has unrecognised deferred tax assets amounting to Euros 10,365 thousand in
respect of unused deductions for R&D&i expenditure (Euros 12,978 thousand in 2019). These assets were
generated in 2011-2019 and are available until 2030-2038.
Red Eléctrica Corporación and Subsidiaries
Page 82 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In 2020, the Group applied for monetisation of the unused deductions of Euros 10,565 thousand in respect of R&D
expenditure. Moreover, the Group has deferred tax assets totalling Euros 8,226 thousand for R&D deductions, for
which it may request a refund from the taxation authorities in future tax returns.
Deferred tax liabilities essentially relate to the accelerated depreciation for tax purposes of certain fixed assets
and the inclusion of the assets and liabilities of REDALTA and INALTA, the companies absorbed by REC in 2006.
In 2020, deferred tax liabilities due to accelerated depreciation/amortisation as provided for in the 11th additional
provision of Royal Legislative Decree 4/2004, and the 34th transitional provision of Income Tax Law 27/2014,
amounted to Euros 415,377 thousand (Euros 433,881 thousand in 2019).
The notes to REC's annual accounts for 2006 contain disclosures on the merger by absorption of REDALTA and
INALTA, as required by article 86 of Law 27/2014. The notes to the 2008 annual accounts include disclosures on
REC's contribution to REE of the branch of activities encompassing the duties of the system operator,
transmission network manager and transmission agent of the Spanish electricity system.
The notes to the annual accounts of REC and REINTEL for 2015 also include the disclosures stipulated in article
86 of Law 27/2014 regarding the spin-off of the telecommunications services business from REI to REINTEL, while
the notes to the annual accounts of REC and REI for 2015 contain the disclosures regarding the non-monetary
contribution of shares in REN.
In accordance with current legislation, taxes cannot be considered definitive until they have been inspected and
agreed by the taxation authorities or before the inspection period has elapsed.
Therefore, in general, Group companies in Spain have open to inspection by the taxation authorities all main
applicable taxes since 2017, except income tax, which is open to inspection since 2016. However, this period may
be different for Group companies that are subject to other tax legislation.
In Spain, the Group has certain tax proceedings ongoing in respect of income tax for 2011 to 2016, which are
currently being heard either at economic-administrative level or in court proceedings. The Company considers
that its conduct was lawful based on reasonable interpretations of the applicable legislation, and does not expect
that any penalties will be imposed or that any significant tax liabilities will arise for the Group.
In addition, in 2020 the tax group applied for rectification of the instalments for 2016 to 2020. The Constitutional
Court ruled that Royal Decree-Law 2/2016, which approved an amendment to the instalment calculation method,
among other measures, was unconstitutional.
At the end of 2020, the taxation authorities resolved the request and refunded the late payment interest related
to the instalments for 2016 and 2017. The resolution delivered with respect to the remaining years has been
appealed (see note 24.e).
On an international level, at the 2020 reporting date the tax proceedings entailing the review of income tax in Peru
for 2009 to 2011 have concluded, finding in favour of the Group’s interests.
As a result of the HISPASAT acquisition, the Group has open tax proceedings in Brazil relating to ICMS (Brazilian
tax on the circulation of goods and services), as well as other taxes, mainly of an indirect nature. These
proceedings stem from inspection assessments, which the Group companies have appealed. Moreover, the Group
has specific guarantees to cover this contingency (see note 16.)
With effect from 1 January 2021, Law 11/2020 setting the General State Budgets has introduced a limit of 95% on
the exemption of dividends and capital gains arising from Spanish and foreign subsidiaries. This change has
entailed the recognition of a deferred tax liability in 2020 amounting to Euros 804 thousand.
Due to the different possible interpretations of tax legislation, additional tax liabilities could arise as a result of
future inspections, which cannot be objectively quantified at present. Nevertheless, any additional liabilities that
could eventually arise in the event of inspection are not expected to significantly affect the Company’s future
results.
Red Eléctrica Corporación and Subsidiaries
Page 83 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
24 Income and Expenses
a)
Revenue
Details of this item in 2020 and 2019, by geographical area, are as follows:
Thousands of Euros
Domestic market
International market
a) European Union
a.1) Eurozone
b) Other countries
Total
2020
1,860,663
125,088
21,951
21,951
103,137
2019
1,919,266
87,974
20,050
20,050
67,924
1,985,751
2,007,240
Domestic market primarily includes transmission and system operation services rendered, essentially reflecting
the regulated revenue (see note 3) for electricity transmission and electricity system operation services. The re-
muneration for these services is set by the CNMC through Circulars that determine the methods and parameters
for calculating the remuneration of the transmission activity based on the costs necessary to construct, operate
and maintain the technical electricity facilities, and the remuneration for the system operator, pursuant to the
powers bestowed upon this Commission by Royal Decree-Law 1/2019 (see note 3.a).
International market in 2020 and 2019 primarily includes revenue from reinsurance services, presented under
European Union; and revenue from the rendering of transmission services in the Peruvian and Chilean companies,
and satellite telecommunications services mainly in Brazil, presented under other countries.
b)
Other operating income
At 31 December 2020 and 2019 other operating income mostly includes insurance payouts for accidents and
breakdowns covered by the policies arranged and other non-trading income of the Group.
c)
Supplies and other operating expenses
Details of these items in 2020 and 2019 are as follows:
Thousands of Euros
Supplies
Other operating expenses
Total
2020
27,307
316,870
344,177
2019 (*)
34,503
316,410
350,913
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6). Other operating
expenses have been reduced by Euros 1,239 thousand.
Supplies and other operating expenses mainly comprise repair and maintenance costs incurred at facilities as
well as IT, advisory, lease and other service costs.
d)
Personnel expenses
Details of this item in 2020 and 2019 are as follows:
Thousands of Euros
Salaries, wages and other remuneration
Social security
Contributions to pension funds and similar obligations
Other items and employee benefits
Total
2020
135,451
29,762
2,375
8,327
175,915
2019
123,016
27,627
2,201
7,286
160,130
Red Eléctrica Corporación and Subsidiaries
Page 84 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Salaries, wages and other remuneration include employee remuneration, termination benefits and the accrual of
deferred remuneration. This item also includes the remuneration of the Company’s board of directors.
The Group companies have capitalised personnel expenses (see notes 7 and 8) totalling Euros 42,904 thousand at
31 December 2020 (Euros 40,150 thousand at 31 December 2019).
The Group has not applied for any furlough schemes (“ERTEs” per the Spanish acronym) or carried out any dismis-
sals or personnel restructuring as a result of the COVID-19 crisis. Moreover, it has not changed any employee
remuneration policies due to the crisis.
Workforce
The average headcount of the Group in 2020 and 2019, distributed by professional category, is as follows:
Management team
Senior technicians and middle management
Technicians
Specialist and administrative staff
Total
2020
152
627
740
522
2019
137
568
641
511
2,041
1,857
The distribution of the Group's employees at 31 December, by gender and category, is as follows:
Management team
Senior technicians and middle management
Technicians
Specialist and administrative staff
Total
2020
Female
49
220
146
131
546
Male
101
435
579
390
1,505
Total
150
655
725
521
2,051
2019
Female
47
200
158
127
Total
148
599
774
535
532
2,056
Male
101
399
616
408
1,524
The average number of employees with a disability rating of 33% or higher in 2020 and 2019, distributed by gender
and category, is as follows:
Management team
Senior technicians and middle management
Technicians
Specialist and administrative staff
Total
2020
2019
Male
Female
Total
Male
Female
Total
-
3
10
3
16
-
2
1
1
4
-
5
11
4
20
-
3
11
1
15
-
2
1
1
4
-
5
12
2
19
At 31 December 2020 the Parent’s board of directors, which is not included in the employees of the Group, com-
prises 12 members (12 members in 2019), of which 6 are men and 6 are women (7 men and 5 women in 2019).
e)
Finance income and costs
Finance income mainly comprises the dividends received on the Group's 5% interest in REN, amounting to Euros
5,704 thousand (Euros 5,704 thousand in 2019).
In 2020 this item also includes finance income of Euros 3,977 thousand arising from late payment interest relating
to tax instalments settled in prior years, Euros 2,918 thousand (Euros 3,433 thousand in 2019) arising on the in-
vestments in the EIGs (see notes 19 and 23), and Euros 759 thousand of finance income (Euros 1,439 thousand in
2019) on the loans extended to TEN (see note 24), as well as income accrued on fixed-term deposits.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Finance costs basically reflect those incurred on loans and borrowings, net of any amounts capitalised, and on
bonds and other marketable securities for an amount of Euros 141,101 thousand (see note 19) (Euros 153,670 thou-
sand in 2019).
Capitalised borrowing costs (see notes 7 and 8) totalled Euros 7,488 thousand in 2020 (Euros 7,742 thousand in
2019).
f)
Extraordinary expenses resulting from the COVID-19 crisis
The Group has spent an additional Euros 5 million, approximately, as a result of the pandemic triggered by COVID-
19, mainly on donations and the acquisition of personal protective equipment, as well as for additional cleaning of
workplaces.
25 Transactions with Equity-accounted Investees and Related Parties
a)
Balances and transactions with equity-accounted investees
These balances and transactions reflect operations carried out with TEN and Hisdesat. All transactions have been
carried out at market prices. The main transactions carried out by Group companies with TEN and Hisdesat in
2020 and 2019 were as follows:
2020
2019
Balances
Transactions
Balances
Transactions
Receiva-
bles
Payables
Expenses
Revenue
Receiva-
bles
Payables
Expenses
Revenue
17,706
12
(91)
777
25,321
294
(568)
1,439
540
18,246
40
52
-
1,594
-
-
-
(91)
2,371
25,321
294
(568)
298
1,737
Transmisora
Eléctrica del Norte
S.A. (TEN)
Hisdesat Servicios
Estratégicos, S.A.
Total
b)
Transactions with related parties
Related party transactions are carried out under normal market conditions. Details are as follows:
Thousands of Euros
Expenses and income:
Leases
Other expenses
Expenses
Services rendered
Finance income
Revenue
Other transactions:
Financing agreements, loans and capital contribu-
tions (lender)
Other transactions
2020
Directors and manage-
ment
Other related parties
-
-
-
-
-
-
4
87
91
1,612
759
2,371
17,457
17,457
Total
4
87
91
1,612
759
2,371
17,457
17,457
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Expenses and income:
Leases
Other expenses
Expenses
Services rendered
Finance income
Revenue
Other transactions:
Financing agreements, loans and capital contributions
(lender)
Other transactions
Directors and manage-
ment
2019
Other related par-
ties
-
-
-
-
-
123
123
83
485
568
374
1,364
1,738
24,677
24,677
Total
83
485
568
374
1,364
1,738
24,800
24,800
Transactions with other related parties comprise those with TEN and Hisdesat described in section a) of this note.
The balance under financing agreements, loans and capital contributions (lender) at 31 December 2020 and 2019
(see note 19) reflects the amount receivable in respect of the credit facility extended to TEN. The maximum
amount drawn down on this facility in 2020 was Euros 28,474 thousand (maximum drawdown of Euros 25,236
thousand in 2019).
There were no transactions with directors and management in 2020. Transactions with these parties in 2019 are
detailed in note 27.
26 Remuneration of the Board of Directors
At the proposal of the board of directors and in accordance with the articles of association, the annual report on
the remuneration of directors, which includes the remuneration of the board of directors for 2020, was approved
by the shareholders at their general meeting on 14 May 2020.
The approved remuneration of the board of directors, including the remuneration of the board members, the
chairwoman and the CEO, has not changed vis-à-vis 2019.
The chairwoman receives fixed annual remuneration in respect of the non-executive chairwoman duties
associated with this position, in addition to remuneration for being a member of the board of directors. The
remuneration scheme for this position consists solely of fixed amounts, with no annual or multi-year variable
remuneration and no termination benefit. In 2020 both remuneration components are under the same terms as
in 2019.
At its meeting held on 28 January 2020, the board of directors took note of the irrevocable resignation tendered
by Mr. Jordi Sevilla Segura from his position as a director, and therefore as non-executive chairman of the board
of directors and of the Company.
Further, in its meeting held on 25 February 2020 the board of directors approved, inter alia, the appointment of
Ms. Beatriz Corredor Sierra as a director of the Company, in the category of “other external directors”, until the
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
next general shareholders’ meeting, and her appointment as non-executive chairwoman of the board of directors
and of the Company.
Subsequently, at their general meeting held on 14 May 2020, the shareholders ratified the appointment of Ms.
Beatriz Corredor Sierra as a director of the Company.
As regards Mr. Jordi Sevilla Segura, in accordance with his contract approved by the board of directors on 31 July
2018, he has not received any termination benefit as a result of the end of his legal and labour relations with the
Company as chairman of the board of directors and of the Company.
The remuneration allocated to the CEO includes the fixed and variable annual and multi-year components
corresponding to executive duties and the fixed remuneration for being a member of the board of directors.
Employee benefits form part of the remuneration for this position. A portion of the annual variable remuneration
is paid through the delivery of Company shares.
Moreover, the CEO has been included in a defined contribution benefit scheme. This scheme covers the
retirement, death and permanent disability contingencies. Red Eléctrica's obligation is limited to an annual
contribution equal to 20% of the CEO's fixed annual remuneration.
The annual variable remuneration of the CEO is set by the Appointments and Remuneration Committee of the
Parent at the start of each year, using predetermined quantifiable and objective criteria. The targets are in line
with the strategies and actions established in the Company's Strategic Plan and the degree of fulfilment is
assessed by the Committee.
Pursuant to the remunerations policy and in line with standard market practices, the CEO’s contract provides for
a termination benefit equal to one year’s salary in the event that labour relations are terminated due to dismissal
by the Parent or changes of control.
As regards the CEO, at its meeting held on 27 May 2019, the board of directors adopted, among others, the
following agreements:
• To dismiss Mr. Juan Francisco Lasala Bernad as CEO and to accept his resignation from the position of execu-
tive director of the Company.
• To appoint Mr. Roberto García Merino as executive director and, subsequently, as CEO of the Company, until the
following general shareholders’ meeting.
At their general meeting held on 14 May 2020, the shareholders ratified the appointment of Mr. Roberto García
Merino as executive director of the Company.
In line with market practices in such cases, as a result of the appointment of the new CEO, the existing
employment contract has been suspended. Should the employment contract be terminated, he would accrue the
remuneration due at the date of suspension as an indemnity. For this purpose, his tenure at Red Eléctrica de
España, S.A.U. up to the date he was appointed CEO (15 years), plus the period in which he rendered services – if
any – following his termination as CEO, would be taken into consideration, in accordance with employment
legislation in force. Both the economic regime and the suspension of the employment relationship of the new CEO
are in line with those applied to the previous CEO. Following the corporatisation carried out in 2020, this obligation
was taken on by Red Eléctrica Corporación, S.A.
In line with standard market practices, Mr. Juan Francisco Lasala Bernad was entitled to a settlement in respect
of his labour relations and an indemnity as CEO equal to one year’s salary in the event that labour relations were
terminated due to dismissal by the Parent or changes of control. The amount associated with his termination as
CEO, which included the indemnity paid, was settled when his relationship with the Company was terminated.
The remuneration of the board of directors includes fixed annual remuneration, remuneration for attending board
meetings, remuneration for work on the board of directors’ committees and specific annual remuneration both
for the chairs of the committees and the coordinating independent director. The components and amounts of
this remuneration have not changed in 2020.
Reasonable and duly supported expenses incurred as a result of their attendance at meetings and other tasks
directly related to carrying out their duties, such as travel expenses, accommodation, meals and any other such
costs that may be incurred, will also be paid or reimbursed to the directors.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish‐language version prevails.)
The total amounts accrued by the members of the Parent's board of directors in 2020 and 2019 are as follows:
Thousands of Euros
Total remuneration of the board of directors
Directors' remuneration in respect of executive duties (1)
Total
2020
2,463
743
3,206
2019
2,505
784
3,289
(1) Includes annual fixed and variable remuneration accrued during the year and does not include the indemnity amounting to Euros 818 thousand for the
termination of the CEO in 2019.
The decrease in total remuneration of the board of directors with respect to the prior year is primarily because
during a certain period in 2020 there was no chair of the board.
The year-on-year decrease in directors' remuneration in respect of executive duties is because the amount
accrued for the position of executive director was lower in 2020 than in 2019.
A breakdown of remuneration by type of director at 31 December 2020 and 2019 is as follows:
Thousands of Euros
Executive directors
External proprietary directors
External independent directors
Other external directors
Total remuneration
2020
890
525
1,285
506
3,206
2019
931
525
1,287
546
3,289
The remuneration accrued by individual members of the Company's board of directors in 2020 and 2019, by
components and director, is as follows:
Thousands of Euros
Ms. Beatriz Corredor Sierra (1)
Mr. Roberto García Merino
Mr. Jordi Sevilla Segura (2)
Ms. Carmen Gómez de Barreda Tous de Monsalve
Ms. María José García Beato
Ms. Socorro Fernández Larrea
Mr. Antonio Gómez Ciria
Mr. Arsenio Fernández de Mesa y Díaz del Río
Mr. Alberto Francisco Carbajo Josa
Ms. Mercedes Real Rodrigálvarez (3)
Ms. María Teresa Costa Campi
Mr. Antonio Gómez Expósito (4)
Mr. José Juan Ruiz Gómez
Mr. Ricardo García Herrera (5)
Other board members (6)
Fixed
Variable
remuneration
remuneration
Allowances
for
attending
board
meetings
Committee
work
449
481
40
131
131
131
131
131
131
131
131
129
131
3
-
-
263
-
-
-
-
-
-
-
-
-
-
-
-
-
15
16
2
16
16
16
16
16
16
16
16
16
16
-
-
-
-
-
28
28
28
28
28
28
28
28
27
28
-
-
Chair of
committee/board
Other
and coordinating
remuneration
independent
director
-
-
-
30
-
15
14
-
-
-
-
-
1
-
-
(7)
-
130
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
Total
2020
2019 (8)
464
890
42
205
175
190
189
175
175
175
175
172
176
3
-
-
531
546
205
175
187
190
175
175
175
175
175
137
-
443
Total remuneration accrued
2,281
263
193
279
60
130
3,206
3,289
(1) New director since the board meeting held on 25 February 2020.
(2) Stepped down from the board of directors at the board meeting held on 28 January 2020.
(3) Amounts received by Sociedad Estatal de Participaciones Industriales (SEPI).
(4) Stepped down from the board of directors at the board meeting held on 22 December 2020.
(5) New director since the board meeting held on 22 December 2020.
(6) Board members who stepped down from the board in 2019.
(7) Includes the employee benefits that form part of the CEO's remuneration.
(8) Does not include the indemnity for the termination of the CEO in 2019.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish‐language version prevails.)
In addition to the foregoing, on 31 December 2019 the directors' remuneration scheme for 2014-2019, which
encompassed the CEO, drew to a close. The amount paid to the CEO under this plan, for his duties as CEO from 27
May 2019, was Euros 59 thousand.
At the end of 2020, the board of directors began the process of updating the current 2018-2022 Strategic Plan.
This enabled it to approve, in November 2020, the structure of the new Long-Term Incentive Plan for Promoting
the Energy Transition, Reducing the Digital Divide and for Diversification, the objectives of which are linked to the
objectives set out in the Group’s new Strategic Plan. This Long-Term Incentive Plan covers a period of six years,
until 31 December 2025.
At 31 December 2020 and 2019 no loans or advances have been granted to the members of the board of directors,
nor have any guarantees been extended on their behalf. The Group has no pension or life insurance obligations
with the members of the board of directors at those dates, other than those previously mentioned, nor have any
loans or advances been extended to board members.
At 31 December 2020 and 2019 the Group has taken out public liability insurance to cover claims from third parties
in respect of possible damage and loss caused by actions or omissions in performing duties as Group directors.
These policies cover the Group's directors and senior management and the annual premiums amount to Euros
328 thousand, inclusive of tax, in 2020 (Euros 142 thousand at 31 December 2019). These premiums are calculated
based on the nature of the Group's activity and its financial indicators, thus they cannot be broken down
individually or allocated to directors and senior management separately.
In 2020 and 2019 the members of the board of directors did not engage in transactions with the Company or Group
companies, either directly or through intermediaries, other than ordinary operations under market conditions.
27 Remuneration of Senior Management
In 2020 total remuneration accrued by senior management personnel amounted to Euros 662 thousand (Euros
664 thousand in 2019) and is recognised as personnel expenses in the consolidated income statement. These
amounts include the accrual of variable annual remuneration, on the assumption that the objectives set each year
will be met. After the fulfilment of these objectives has been assessed, the variable remuneration, adjusted to the
actual fulfilment rate, is paid in the first few months of the following year.
The senior management personnel who have rendered services for the Group during 2020 and 2019 are as follows:
Name
Eva Pagán Díaz
Miguel Duvison García
Position
General Manager of Transmission
General Manager of Operations
Euros 15 thousand of the total remuneration accrued by these senior managers consisted of contributions to life
insurance and pension plans (Euros 14 thousand in 2019).
No advances or loans have been extended to these senior managers at 31 December 2020. The outstanding
balance on loans granted to these senior managers at 31 December 2019 is Euros 123 thousand and they are
subject to the same terms and conditions as loans granted to personnel under the collective bargaining
agreement. The equivalent interest rate applicable to these loans is 0.7%.
On 31 December the directors’ remuneration plan for 2014-2019 drew to a close. The amount paid to the senior
management personnel included in this plan was Euros 665 thousand.
At the end of 2020, the board of directors began the process of updating the current 2018-2022 Strategic Plan.
This enabled it to approve, in November 2020, the structure of the new Long-Term Incentive Plan for Promoting
the Energy Transition, Reducing the Digital Divide and for Diversification, the objectives of which are linked to the
objectives set out in the Group’s new Strategic Plan. This Long-Term Incentive Plan covers a period of six years,
until 31 December 2025.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The contracts in place with serving senior management personnel do not include guarantee or golden parachute
clauses, in the event of dismissal. In the event the employment relationship were terminated, the indemnity to
which senior management personnel would be entitled would be calculated in accordance with applicable
legislation. The contracts for these executives have been approved by the Appointments and Remuneration
Committee and the board of directors has received notice thereof.
Senior management personnel who rendered services in the Group as at 31 December 2020 are included in the
Structural Management Plan implemented by the Company in 2015.
At 31 December 2020 and 2019 the Group has taken out public liability insurance to cover claims from third parties
in respect of possible damage and loss caused by actions or omissions in performing duties as senior
management of the Group. These policies cover all the Group's directors and senior management and the annual
premiums amount to Euros 328 thousand, inclusive of tax, in 2020 (Euros 142 thousand in 2019). These premiums
are calculated based on the nature of the Group's activity and its financial indicators, thus they cannot be broken
down individually or allocated to directors and senior management separately.
28 Segment Reporting
The Red Eléctrica Group segments its business activities based on their nature, reflecting the main branches of
activity used by the Group in its management and decision-making.
At 31 December 2020, the Group’s operating segments and their main products, services and operations are as
follows:
• Management and operation of domestic electricity infrastructure:
This segment comprises the Group’s principal activity, as sole transmission agent and system operator for the
Spanish electricity system (TSO). Its mission is to guarantee the security and continuity of the electricity supply
at all times and manage high-voltage electricity transmission.
The Group engages in the high-voltage transmission of electricity, through REE. To this end, it manages the
electricity transmission network infrastructure that connects the power plants to the consumer distribution
points. As transmission network manager, REE is responsible for the development and expansion of the net-
work, its maintenance, managing the transfer of electricity between external systems and the mainland, and
guaranteeing third-party access to the transmission network under equal conditions.
In addition, REE operates the mainland Spanish electricity system and the non-mainland systems in the Canary
Islands, Balearic Islands, Ceuta and Melilla, guaranteeing the security and continuity of the electricity supply at
all times. Operation of the system encompasses the necessary activities to guarantee such security and con-
tinuity, as well as proper coordination between the generation system and transmission network, ensuring that
the energy produced by generators is transmitted to the distribution networks with the requisite quality under
applicable legislation.
• Management and operation of international electricity infrastructure:
This segment comprises activities related to international business development as a natural form of growth,
mainly focused on the construction and operation of electricity transmission networks outside Spain; at 31 De-
cember 2020, in Peru, Chile and Brazil specifically.
• Telecommunications (satellites and fibre optics):
The telecommunications segment comprises the operation of satellite infrastructure in Spain, Portugal and
South America, as well as the lease in Spain of a broad dark fibre backbone network, and technical sites and
spaces for housing customers’ telecommunications equipment. The main services rendered are the lease and
concession of fibre optics, the lease of sites, maintenance of telecommunications and other facilities, and in-
tegrated telecommunications infrastructure solutions (towers, fibre optics, technical spaces and electricity
supply) for telecom operators to render mobile telephone voice and data services on high-speed train (AVE)
lines, as well as the provision of satellite capacity and telecommunications services in the wholesale satellite
internet services market.
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Group also carries out reinsurance activities and fosters innovation in the electricity and telecommunications
sectors. These activities do not meet the quantitative thresholds to be presented separately.
Inter-segment sales prices are established based on the normal commercial terms and conditions with unrelated
third parties.
HISPASAT is only included in the telecommunications segment from October 2019 onwards, the date on which
control thereof was assumed.
The key indicators of the operating segments identified are as follows:
Business segments at 31 December 2020
Management and
operation of do-
mestic electricity
infrastructure
Management and
operation of do-
mestic electricity
infrastructure
Telecommunications
(fibre optics and sat-
ellites)
Other, corpo-
rate and ad-
justments
Total
(Thousands of Euros)
Revenue
External customers
Inter-segment revenue
Investments in equity-accounted associates
(similar activity)
1,668,263
1,661,902
6,361
-
50,926
50,591
335
25,311
292,306
249,768
(25,744)
1,985,751
23,491
1,985,751
42,538
(49,234)
-
2,669
-
27,980
Depreciation and amortisation
(385,385)
(16,522)
(143,615)
(2,663)
(548,184)
Impairment and gains/(losses) on disposal of
fixed assets
Results from operating activities
Interest income
Interest expense
Income tax
164
915,474
3,398
(100,502)
(205,646)
534
45,592
8,488
(23,305)
(2,005)
(122,273)
(38,307)
1,215
(10,309)
19,299
(0)
6,248
2,914
503
(6,399)
(121,575)
929,007
16,014
(133,613)
(194,751)
Profit/(loss) of the Parent after tax
612,779
27,954
(22,705)
3,157
621,185
Segment assets
9,686,711
1,172,871
1,790,691
193,817
12,844,089
Equity-accounted investees
-
456,075
63,237
(0)
519,312
Segment liabilities
7,539,289
669,242
1,187,439
(43,835)
9,352,136
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Business segments at 31 December 2019
Management and
operation of do-
mestic electricity
infrastructure
Management and
operation of do-
mestic electricity
infrastructure
Telecommunica-
tions
(fibre optics)*
Other, corporate
and adjustments
Thousands of Euros
Revenue
External customers
Inter-segment revenue
Investments in equity-accounted associates
(similar activity)
Depreciation and amortisation
Results from operating activities
Interest income
Interest expense
Investments in equity-accounted associates
Income tax
Profit/(loss) of the Parent after tax
Segment assets
Equity-accounted investees
Segment liabilities
1,806,997
1,799,904
7,093
-
(463,670)
967,974
97
(119,701)
-
(211,453)
636,921
9,679,797
-
7,637,115
51,640
51,310
331
7,606
(11,551)
24,744
8,081
(23,399)
-
(885)
8,101
895,299
199,026
685,965
175,417
134,548
40,869
-
(52,230)
83,309
1,215
(6,945)
1,369
(11,657)
56,106
483,034
60,568
246,684
Total*
2,007,240
2,007,240
-
7,606
(525,910)
1,082,213
12,817
(144,846)
1,369
(235,840)
(26,814)
21,478
(48,292)
-
1,542
7,540
3,424
7,334
-
(4,600)
13,624
714,752
86,294
12,655,205
-
259,594
(385,961)
9,070,049
(*) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019
(see notes 2.f and 6).
Details of revenue and non-current assets, by geographical area, are as follows:
Thousands of Euros
Revenue
Spain
Other
Total
Thousands of Euros
Fixed assets (*)
Spain
Other
Total
2020
1,860,663
125,089
1,985,751
2020
9,737,164
989,545
10,726,709
2019
1,919,266
87,974
2,007,240
2019**
9,904,965
766,251
10,671,216
(*) Excludes non-current investments, deferred tax assets, and non-current trade and other receivables.
(**) Figures restated as a result of the recognition of the Hispasat business combination, effective 3 October 2019 (see notes 2.f and 6).
29 Interests in Joint Arrangements
The Group (through REE) and Réseau de Transport d’Électricité (RTE), the French transmission system operator,
each hold a 50% investment in the INELFE joint arrangement, which has its registered office in Paris. Its statutory
activity is the study and execution of interconnections between Spain and France that will increase the electricity
exchange capacity between the two countries. Decisions are taken with the unanimous consent of the parties.
RTE and REE both have rights to the assets and obligations for the liabilities of INELFE. The joint arrangement has
therefore been classified as a joint operation. The Group recognises the assets, including its interest in the jointly
Red Eléctrica Corporación and Subsidiaries
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(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
controlled assets, and the liabilities, including its share of the liabilities that have been incurred jointly in INELFE,
in its consolidated annual accounts (see note 2 d).
The Group has an interest in a joint arrangement through Red Eléctrica Chile S.P.A., which holds a 50% stake in
the Chilean company TEN, alongside Engie Energía Chile, S.A. (E.C.L. S.A.). The Group has classified this joint ar-
rangement as a joint venture, inasmuch as the parties have rights to the net assets (see note 11).
In 2020, the Group also has a stake – through Red Eléctrica Brasil Holding Ltda., which holds a 50% interest along-
side Grupo Energía Bogotá S.A E.S.P. – in the Brazilian company Argo Energia Emprendimientos y Participaciones
S.A. (Argo), which in turn owns Argo Transmisión de Energia S.A. (“Argo I”), Argo II Transmisión de Energia S.A.
(“Argo II”) and Argo III Transmisión de Energia S.A. (“Argo III”). The Group has likewise classified this joint arrange-
ment as a joint venture, inasmuch as the parties have rights to the net assets (see note 11).
Due to the existence of contractual arrangements under which decisions on relevant activities require the unan-
imous consent of both parties, the Group has joint control of several “UTEs” (Unión Temporal de Empresas – a
form of temporary business association). The Group has classified the investments as joint operations because
the parties have rights to the assets and obligations for the liabilities. The UTE has been formed to provide dark
fibre services, with an availability guarantee, between the Balearic Islands and the Mediterranean Coast of the
Spanish mainland.
30 Guarantees and Other Commitments with Third Parties and Other
Contingent Assets and Liabilities
The Company, together with REE, has jointly and severally guaranteed the private issue in the United States of
bonds totalling US Dollars 250 million (US Dollars 430 million in 2019) carried out by the Group company RBV, and
REF's Eurobonds programme for an amount of up to Euros 5,000 million at 31 December 2020 (Euros 5,000 million
at 31 December 2019). At 31 December 2020, Eurobonds issued under this programme total Euros 3,090 million
(Euros 2,940 million in 2019).
Furthermore, at 31 December 2020 and 2019 the Company and REE have jointly and severally guaranteed the
promissory notes issued under the Euro Commercial Paper Programme (ECP Programme) by REF for an amount
of up to Euros 1,000 million. At 31 December 2020 no amounts have been drawn down under this programme (Euros
215,096 thousand at 31 December 2019).
On 19 February 2015, REDESUR, TESUR and Scotia Sociedad Titulizadora S.A. created a securitisation trust to hold
the REDESUR-TESUR trust assets, in order to back the obligations arising from the bond issues amounting to US
Dollars 87 million at 31 December 2020 (US Dollars 91 million at 31 December 2019).
At 31 December 2020 the Group has extended bank guarantees to third parties in relation to its normal business
operations, amounting to Euros 212,019 thousand (Euros 233,830 thousand in 2019).
31 Environmental Information
In 2020 Group companies incurred ordinary expenses of Euros 23,702 thousand in protecting and improving the
environment (Euros 26,149 thousand in 2019), essentially due to the implementation of environmental initiatives
aimed at protecting biodiversity, fire prevention, landscape integration, climate change, and prevention of pollu-
tion.
In 2020 a total of Euros 5,448 thousand (Euros 3,217 thousand in 2019) was spent on environmental issues associ-
ated with investment projects (including environmental impact studies, environmental oversight of work, and the
adoption of preventive, corrective and accompanying measures).
The Group companies are not involved in any litigation relating to environmental protection or improvement that
could give rise to significant contingencies. The Group companies received no significant environment-related
grants in 2020 or 2019.
Red Eléctrica Corporación and Subsidiaries
Page 94 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
32 Other Information
The main auditor of the accounts of the Group companies is KPMG. The total fees accrued for audit services ren-
dered to the Group companies in 2020 amounted to Euros 657.5 thousand (Euros 562.9 thousand in 2019).
Details of the contractual fees for services provided to the Red Eléctrica Group by the audit firm KPMG Auditores,
S.L. in the years ended 31 December 2020 and 2019 are as follows:
Thousands of Euros
Audit services
Other assurance services
Other services
Total
2020
362.8
122.5
72.9
558.2
2019
319.5
69.5
30.9
419.9
The amounts detailed in the above table include the total fees for services rendered in 2020 and 2019, irrespective
of the date of invoice.
Audit services include the fees for the audit of the individual and consolidated annual accounts of Red Eléctrica
Corporación and of certain Group companies.
Other assurance services primarily include the limited review of the Group’s consolidated interim financial state-
ments, assurance services related to the issuance of comfort letters, and the reasonable assurance audit report
on the effectiveness of the Group’s ICOFR under ISAE 3000.
Other services include translations and agreed-upon procedures performed for certain Group companies.
Details of the contractual fees for services provided to the Red Eléctrica Group by other entities affiliated with
KPMG in the years ended 31 December 2020 and 2019, both in Spain and abroad, are as follows:
Thousands of Euros
Audit services
Other services
Total
2020
289.8
24.2
314.0
2019
238.5
40.0
278.5
Details of the contractual fees for audit services provided to the Group by PwC for the audit of INELFE in the years
ended 31 December 2020 and 2019 are as follows:
Thousands of Euros
Audit services
Total
2020
4.9
4.9
2019
4.9
4.9
In addition, the auditors of the equity-accounted investees are KPMG in the case of HISDESAT and ARGO, and EY
with regard to TEN.
Red Eléctrica Corporación and Subsidiaries
Page 95 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
33 Earnings per Share
Details of earnings per share in 2020 and 2019 are as follows:
Net profit (thousands of Euros)
Number of shares
Average number of own shares
Basic earnings per share (Euros)
Diluted earnings per share (Euros)
2020
621,185
2019
718,040
541,080,000
541,080,000
2,239,931
1,558,846
1.15
1.15
1.33
1.33
At 31 December 2020 and 2019 the Group has not conducted any operations that would result in any difference
between basic earnings per share and diluted earnings per share.
34 Share-based Payments
Details of share-based payments for management and employees at 31 December 2020 and 2019 are as follows:
2020
2019
Number of
shares
Average price
(Euros)
Amount in
thousands
of Euros
Number of
shares
Average price
(Euros)
Amount in
thousands
of Euros
Senior management personnel
Employees
1,456
272,641
16.480
16.480
24
1,390
4,493
240,829
17.255
17.255
24
4,156
Total
16.480
These shares have been valued at the listed price on the delivery date. All shares delivered were approved by the
Parent's shareholders at the general meeting, and the related costs incurred have been recognised under person-
nel expenses in the consolidated income statement.
274,097
242,219
17.255
4,517
4,179
35 Events after 31 December 2019
No significant events have occurred between the reporting date and the date on which these consolidated annual
accounts were authorised for issue.
Red Eléctrica Corporación and Subsidiaries
Page 96 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Appendix I: Details of equity investments at 31 December 2020 and 2019
Red Eléctrica Group
Details of equity investments at 31 December 2020 and 2019
- Company
- Registered office
- Principal activity
2020
Percentage owner-
ship (1)
2019
Percentage owner-
ship (1)
Direct
Indirect
Direct
Indirect
Red Eléctrica Corporación, S.A., Parent, incorporated in 1985.
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Management of the business group, rendering of assistance or support services to investees and operation of the property owned by
the Company.
A) Fully consolidated subsidiaries
Red Eléctrica de España, S.A.U. (REE)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Transmission, operation of the Spanish electricity system and management of the
transmission network.
Red Eléctrica Internacional, S.A.U. (REI)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Acquisition and holding of international equity investments. Rendering of advisory, engi-
neering and construction services. Performance of electricity activities outside the Span-
ish electricity system.
Red Eléctrica Infraestructuras de Telecomunicación, S.A.U. (REINTEL)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Rendering of advisory, engineering, construction and telecommunications services.
Red Eléctrica Infraestructuras en Canarias, S.A.U (REINCAN)
- Calle Juan de Quesada, 9. Las Palmas de Gran Canaria. (Spain).
- Construction of energy storage facilities in non-mainland and isolated systems.
Red Eléctrica de España Finance, B.V. (RBV)
- Hoogoorddreef 15. Amsterdam (Netherlands).
- Financing activities. Incorporated in 2003 in the Netherlands for the purpose of issuing
debt to finance the Red Eléctrica Group.
Red Eléctrica Financiaciones, S.A.U. (REF)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Financing activities.
Red Eléctrica Sistemas de Telecomunicaciones, S.A.U. (RESTEL)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Acquisition, holding, management and administration of Spanish and foreign equity se-
curities.
Red Eléctrica y de Telecomunicaciones, Innovación y Tecnología, S.A.U. (RETIT)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Activities geared towards driving and accelerating technological innovation.
Redcor Reaseguros, S.A (REDCOR)
- 26, Rue Louvigny. (Luxembourg).
- Reinsurance activities. Incorporated in 2010 in Luxembourg in order to reinsure the
risks of the Group companies, thereby guaranteeing better access to international rein-
surance markets.
Red Eléctrica Andina, S.A.C. (REA)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Rendering of line and substation maintenance services.
100%
-
100%
100%
-
100%
100%
100%
-
-
100%
100%
100%
-
100%
100%
100%
-
-
100%
100%
100%
-
100%
100%
-
100%
-
-
-
-
-
-
-
-
-
-
100%(a)
-
100%(a)
Red Eléctrica Corporación and Subsidiaries
Page 97 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
- Company
- Registered office
- Principal activity
Red Eléctrica del Sur, S.A. (REDESUR)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Transmisora Eléctrica del Sur , S.A.C. (TESUR)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Transmisora Eléctrica del Sur 2 , S.A.C. (TESUR 2)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Transmisora Eléctrica del Sur 3 , S.A.C. (TESUR 3)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Transmisora Eléctrica del Sur 4 , S.A.C. (TESUR 4)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Red Eléctrica del Norte Perú, S.A.C. (REDELNOR)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Concesionaria Línea de Transmisión CCNCM, S.A.C. (CCNCM)
-Av. Javier Prado Este Of. 1001 Urb. Jardín San Isidro. Lima (Peru)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Red Eléctrica Chile S.P.A. (RECH)
- Avenida El Golf nº 40, piso 20. Comuna de Las Condes, Santiago (Chile)
- Acquisition, holding, management and administration of securities.
Red Eléctrica del Norte S.A. (REDENOR)
- Avenida El Golf nº 40, piso 20. Comuna de Las Condes, Santiago (Chile)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Red Eléctrica del Norte 2 S.A. (REDENOR 2)
- Avenida El Golf nº 40, piso 20. Comuna de Las Condes, Santiago (Chile)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Red Eléctrica Brasil Holding Ltda. (REB)
-Calle Libero Badaró, 293. Sao Paulo. (Brazil)
- Acquisition, holding, management and administration of securities.
HISPASAT S.A.
- Calle de Anabel Segura, 11. Alcobendas. Madrid. (Spain).
- Parent of HISPASAT. Operation of the satellite communications system and
rendering of space segment services for the geostationary orbital slots allo-
cated to the Spanish state.
Hispasat Canarias, S.L.U.
-Calle Pacticante Ignacio Rodriguez s/n Edificio Polivalente IV. Las Palmas de
Gran Canaria (Spain)
- Sale and lease of satellites and spatial capacity.
2020
2019
Percentage ownership (1) Percentage ownership (1)
Indirect
Indirect
Direct
Direct
-
-
-
-
-
-
-
-
-
-
100%(a)
100%(c)
100%(c)
100%(c)
100%(j)
100%(a)
100%(d)
100%(a)
69.9%(e)
100%(e)
100%(a)
-
89.68%(f) (2)
-
-
-
-
-
-
-
-
-
-
-
-
100%(a)
100%(c)
100%(c)
100%(c)
100%(j)
100%(a)
100%(d)
100%(a)
69.9%(e)
100%(e)
-
89.68%(f) (2)
-
89.68%(g) (2)
-
89.68%(g) (2)
- Company
Red Eléctrica Corporación and Subsidiaries
Page 98 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
- Registered office
- Principal activity
Hispasat Brasil, Ltda.
- Praia do Flamengo, 200 Rio de Janeiro (Brazil)
- Commercialisation of satellite capacity.
Hispamar Satélites, S.A.
- Praia do Flamengo, 200 Rio de Janeiro (Brazil)
- Commercialisation of satellite capacity.
Hispamar Exterior, S.L.U.
- Paseo de la Castellana 39, 28046 Madrid (Spain).
- Commercialisation of satellite capacity.
Hispasat de México, S.A. de C.V.
- Agustín Manuel Chávez 1-001 Col. Centro de Ciudad Santa Fe, México D.F. (Me-
xico)
- Use of radio spectrum, telecommunications networks and satellite communi-
cation.
Consultek Inc.
- 1036 Country Club Drive, Suite 202, Moraga, CA 94556. (United States of Amer-
ica)
- Technical consultancy services
Hispamar Satélites, S.A. (Venezuela)
- Torre Phelps, piso 10 ofic. 10, Caracas (Venezuela)
- Commercialisation and rendering of satellite telecommunications services
Hispasat UK, LTD.
30 Finsbury Square, London. (England)
- Commercialisation and rendering of satellite telecommunications services
B) Proportionately consolidated companies
Interconexión Eléctrica Francia-España, S.A.S. (INELFE)
- Inmueble Window, 7 C Place du Dôme. Paris. (France)
- Study and execution of Spain-France interconnections
C) Equity-accounted investees
Transmisora Eléctrica del Norte S.A. (TEN)
- Avenida Apoquindo N°3721, piso 6, Las Condes, Santiago (Chile)
- Electricity transmission and operation and maintenance of electricity trans-
mission networks.
Hisdesat Servicios Estratégicos, S.A.
- Paseo de la Castellana 143, 28046 Madrid (Spain)
- Commercialisation of spatial systems for government use.
Grupo de Navegación Sistemas y Servicios, S.L.
- Calle Isaac Newton 1, Madrid (Spain)
- Operation of satellite systems
2020
Percentage ownership (1)
Direct
Indirect
2019
Percentage owner-
ship (1)
Indirect
Direct
-
89.68%(g) (2)
- 89.68%(g)
-
72.60% (h) (2)
-
72.60%
-
72.60%(i) (2)
-
72.60%(i)
-
89.68%(g) (2)
-
89.68%(g)
(2)
-
89.68%(g) (2)
-
89.68%(g)
(2)
-
72.60%(i) (2)
-
72.60%(i)
-
89.68%(g) (2)
- 89.68%(g)
-
-
50%(b)
-
50%(b)
50%(e)
-
50%(e)
-
38.56%(g) (2)
- 38.56%(g)
-
12.82%(g) (2)
-
12.82%(g)
Red Eléctrica Corporación and Subsidiaries
Page 99 of 100
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
2020
2019
Percentage owner-
ship (1)
Indirect
Direct
Percentage owner-
ship (1)
Indirect
Direct
-
-
-
-
50% (k)
50% (l)
50% (l)
50% (l)
-
-
-
-
50% (k)
50% (l)
50% (l)
50% (l)
- Company
- Registered office
- Principal activity
Argo Energía Emprendimientos y Participaciones S.A.
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Acquisition, holding, management and administration of securities.
Argo Transmisión de Energia S.A. (“Argo I”)
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Electricity transmission and operation and maintenance of electricity transmission
Argo II Transmisión de Energia S.A. (“Argo II”)
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Electricity transmission and operation and maintenance of electricity transmission
Argo III Transmisión de Energia S.A. (“Argo III”)
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Electricity transmission and operation and maintenance of electricity transmission
networks.
(1) Equivalent to voting rights.
(2) Company forming part of the Hispasat subgroup.
(a) Investment through Red Eléctrica Internacional, S.A.U.
(b) Investment through Red Eléctrica de España, S.A.U.
(c) Investment through Red Eléctrica del Sur, S.A.
(d) Investment through Red Eléctrica del Norte Perú, S.A.C.
(e) Investment through Red Eléctrica Chile SpA.
(f) Investment through Red Eléctrica Sistemas de Telecomunicaciones, S.A.U.
(g) Investment through Hispasat, S.A.
(h) Investment through Hispasat, S.A. and Hispasat Brasil, Ltda.
(i) Investment through Hispamar Satélites, S.A.
(j) Investment through Red Eléctrica del Sur, S.A. and Red Eléctrica Internacional, S.A.U.
(k) Investment through Red Eléctrica Brasil Holding Ltda.
(l) Investment through Argo Energia Empreendimentos y Participaciones S.A.
Red Eléctrica Corporación and Subsidiaries
Page 100 of 100
Consolidated Directors’
Report
2020
(Free translation from the original in Spanish. In the event of discrep-
ancy, the Spanish-language version prevails.)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Contents
1 Position of the entity ......................................................................................................................... 1
1.1 Organisational structure ............................................................................................................ 1
1.2 Activities and business performance ........................................................................................ 5
2 Business performance .................................................................................................................... 11
2.1 Key financial indicators ............................................................................................................ 11
3 Liquidity and capital ........................................................................................................................ 12
4 Risk management ........................................................................................................................... 13
5 Average supplier payment period. "Reporting Requirement". Third Additional Provision of Law
15/2010 of 5 July 2010 ...................................................................................................................... 16
6 Events after 31 December 2020 ....................................................................................................... 16
7 Outlook ............................................................................................................................................ 16
8
Innovation ....................................................................................................................................... 18
9 Own shares ...................................................................................................................................... 21
10 Other relevant information .............................................................................................................. 21
10.1 Stock market performance and shareholder returns ............................................................... 21
10.2 Dividend policy ........................................................................................................................ 23
10.3 Credit rating ............................................................................................................................ 23
10.4 Excellence............................................................................................................................... 23
11 Non-financial Information Statement in compliance with Law 11/2018 of 28 December 2018 ......... 24
11.1 About the Non-financial Information Statement ..................................................................... 24
11.2 Description of the Group’s business model.............................................................................. 28
11.3 Information regarding environmental issues ............................................................................ 31
11.4 Information on social and employee-related issues ................................................................ 34
11.5 Information about respect for human rights ........................................................................... 50
11.6 Information about the fight against corruption and bribery ..................................................... 50
11.7 Information regarding society ................................................................................................. 53
11.8 Index of content required by Law 11/2018 of 28 December 2018 on non-financial and diversity
information ............................................................................................................................. 63
12 Annual Corporate Governance Report ............................................................................................ 66
Red Eléctrica Corporación and Subsidiaries
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The various sections of this consolidated directors' report contain certain prospective information that reflects projections and estimates
based on underlying assumptions, statements referring to plans, objectives and expectations associated with future transactions,
investments, synergies, products and services, as well as statements concerning results or future dividends, or estimates calculated by the
directors and based on assumptions that those directors consider reasonable.
While the Group considers the expectations reflected in those statements to be reasonable, investors and holders of shares in the Parent
are advised that the information and statements containing future projections are subject to risks and uncertainties, many of which are
difficult to foresee and generally beyond the Group's control. As a result of such risks, actual results and developments could differ
substantially from those expressed, implied or forecast in the information and statements containing future projections.
The affirmations and statements containing future projections do not provide any guarantee as to future results and have not been reviewed
by auditors outside the Group or by other independent third parties. It is recommended that no decisions be made on the basis of the
affirmations and statements containing future projections that refer exclusively to the information available at the date of this report. All of
the affirmations and statements containing future projections that are reflected in this report are expressly subject to the warnings given.
The affirmations and statements containing future projections included in this document are based on the information available at the date
of this directors' report. Except as required by applicable legislation, the Group is not obligated to publicly update its statements or review
the information containing future projections, even where new data is published or new events arise.
Red Eléctrica Corporación and Subsidiaries
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
1 Position of the entity
1.1 Organisational structure
Corporate bodies
The board of directors and the shareholders are responsible for governing and managing the Red Eléctrica Group
and its Parent, Red Eléctrica Corporación, S.A. (hereinafter REC).
The shareholders' general meeting is governed by the articles of association and the general meeting regulations,
in accordance with the Spanish Companies Act.
The ownership structure at the date of the 2020 shareholders' ordinary general meeting was as follows:
Ownership structure
(2020 shareholders' general meeting data)
66
Foreign institutions
Spanish institutions
20
SEPI
4
10
Non-controlling
investors
The Company has three board committees, namely: the Sustainability Committee, the Audit Committee and the
Appointments and Remuneration Committee. These three essentially technical committees created by the board
of directors to support it in its duties are designed to enhance efficiency and transparency.
The structure, composition, roles and responsibilities of the committees (legal committees) are specified in articles
22 to 24 of the articles of association and are implemented in articles 14 to 18 TER of the regulations of the board
of directors. Both sets of corporate regulations have been fully brought into line with the latest reforms of the
Spanish Companies Act, the Good Governance Code of Listed Companies and the most up-to-date international
practices and recommendations on committee composition and committee member independence and qualifica-
tions. At the board meeting held on 19 February 2019, the directors approved an amendment to the regulations of
the board of directors through the restructuring of the board committees, specifically by creating a new Sustaina-
bility Committee and updating the duties of the other two board committees, i.e. the Audit Committee and the Ap-
pointments and Remuneration Committee. Among other amendments, the responsibilities of this latter committee
were reinforced by creating a new relationship framework between the board of directors and the working envi-
ronment of the Group companies, while the general oversight function to be carried out by the Audit Committee, in
coordination with the specific oversight duties assigned individually to the other board committees within the
scope of their respective responsibilities, was revised.
Furthermore, at its meeting held on 30 April 2019, the Company’s board of directors approved a further amendment
to the regulations of the board of directors, essentially with a view to reinforcing the role of the Company’s board
of directors as the supervisor and guarantor of the functional independence of the electricity system operator – a
role that has been legally attributed to Red Eléctrica de España, S.A.U. as regards the assignments and responsi-
bilities required by current legislation.
At its meeting held on 31 March 2020, the board of directors approved a voluntary amendment to the regulations of
the board with a view, amongst other aspects, to making the pertinent adaptations pursuant to Law 11/2018 of 28
December 2018 on non-financial and diversity information, updating the duties (enterprise-wide in some cases) of
the board and its committees in terms of sustainability, with the formal and material scope agreed by the three
board committees, and reinforcing the mechanisms for coordination between these three committees.
At 31 December 2020 the board of directors of REC has 12 members.
At its meeting held on 28 January 2020, the board of directors took note of the resignation tendered that same day
by Mr. Jordi Sevilla Segura from his position as a director of Red Eléctrica Corporación, S.A., in the category of
“other external directors”, and therefore as non-executive chairman of the Company’s board of directors.
Red Eléctrica Corporación y Sociedades Dependientes
Page 1 of 66
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
At that same meeting the board of directors set in motion the Contingency Plan to replace the chairman, whereby:
The coordinating independent director assumed the management of the board of directors and temporarily
chaired the board meetings, and the CEO, in addition to his own duties, took on the management and represen-
tation of the Company vis-à-vis the government and the state administration. The CEO was also tasked with
conveying information to the media, investors and shareholders.
The chair of the Audit Committee temporarily assumed the oversight of the internal audit and risk control func-
tions.
The process to appoint a new chairman/woman was set in motion. This person was to be appointed by the board
of directors, convened by the coordinating independent director, on the basis of a favourable report received
from the Appointments and Remuneration Committee.
At its meeting on 25 February 2020, the board of directors appointed Ms. Beatriz Corredor Sierra as a director of
Red Eléctrica Corporación, S.A. in the category of “other external directors”, at the proposal of the Appointments
and Remuneration Committee, in order to cover the vacancy on the board of directors until the first shareholders’
general meeting.
Pursuant to article 21 of its articles of association and article 9 of the board of directors regulations, and on the
basis of a favourable report received from the Appointments and Remuneration Committee, the board appointed
Ms. Beatriz Corredor Sierra as chairwoman of the board of directors and non-executive chairwoman of the Com-
pany.
On 28 April 2020, the board of directors also agreed to re-appoint independent director Mr. Arsenio Fernández de
Mesa y Díaz del Río as member of the Audit Committee for a term of three years.
At their general meeting on 14 May 2020 the shareholders adopted the following agreements regarding appoint-
ments to the board of directors:
Ratification of the appointment of Ms. Beatriz Corredor Sierra as a director of Red Eléctrica Corporación, S.A. in
the category of “other external directors”, as agreed by the board of directors at their meeting held on 25 February
2020, thus appointing her as a director in the “other external directors” category for a term of four years as es-
tablished in the articles of association and as per the requirements of article 529 decies of the Spanish Compa-
nies Act.
Ratification of the appointment of Mr. Roberto García Merino as executive director of Red Eléctrica Corporación,
S.A. as agreed by the board of directors at their meeting held on 27 May 2019, thus appointing him as executive
director for a term of four years as established in the articles of association and as per the requirements of
article 529 decies of the Spanish Companies Act.
Re-appointment of Ms. Carmen Gómez de Barreda Tous de Monsalve, at the proposal of the Appointments and
Remuneration Committee, as an independent director of Red Eléctrica Corporación, S.A. for a term of four years
as established in the articles of association and as per the requirements of article 529 decies of the Spanish
Companies Act.
At its meeting held on 26 May 2020, the board of directors agreed to accept the resignation tendered by Mr. Rafael
García de Diego Barber as secretary of the board of directors of Red Eléctrica Corporación S.A. and to appoint in
his place Mr. Carlos Mendez-Trelles García.
At its meeting held on 27 October 2020, the board agreed to re-appoint independent director Mr. Antonio Gómez
Ciria to the Audit Committee for a term of three years.
Subsequently, at its meeting held on 24 November 2020, the board of directors agreed to appoint independent
director Ms. Carmen Gómez de Barreda Tous de Monsalve to the Audit Committee for a term of three years and to
remove her from the Sustainability Committee; to appoint independent director Ms. María José García Beato to the
Appointments and Remuneration Committee for a term of three years and to remove her from the Audit Committee;
and to appoint independent director Mr. José Juan Ruiz Gómez to the Sustainability Committee for a term of three
years and to remove him from the Appointments and Remuneration Committee. Later that same day, the Sustain-
ability Committee and the Audit Committee both convened to agree the appointment of independent directors Mr.
José Juan Ruiz Gómez and Ms. Carmen Gómez de Barreda Tous de Monsalve as chairman and chairwoman of the
Sustainability Committee and Audit Committee, respectively, both for a term of three years, as established in the
articles of association and the regulations of the board of directors.
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Lastly, at its meeting held on 22 December 2020, the board agreed to appoint Mr. Ricardo García Herrera as a pro-
prietary director representing Sociedad Estatal de Participaciones Industriales (SEPI) in order to cover the vacancy
on the board of directors until the first shareholders’ general meeting, following the resignation tendered by Mr.
Antonio Gómez Expósito, who stepped down as a proprietary director representing SEPI, pursuant to the proposal
made by SEPI itself and the report issued by the Appointments and Remuneration Committee.
The composition of the board committees at 31 December 2020 was as follows:
Sustainability Committee:
o José Juan Ruiz Gómez (chairman)
o María Teresa Costa Campi (proprietary director)
o Alberto Francisco Carbajo Josa (independent director)
Audit Committee:
o Carmen Gómez de Barreda Tous de Monsalve (chairwoman)
o Antonio Gómez Ciria (independent director)
o Arsenio Fernández de Mesa y Díaz del Río (independent director)
o Mercedes Real Rodrigálvarez (proprietary director)
Appointments and Remuneration Committee:
o Socorro Fernández Larrea (chairwoman)
o María José García Beato (independent director)
o Vacant proprietary director position at 31 December 2020 (on 26 January 2021, the board of directors agreed
to appoint proprietary director Mr. Ricardo García Herrera to the Appointments and Remuneration Committee
for a term of three years to cover the above-mentioned vacant position)
The composition and powers of the board of directors and the various committees are as follows:
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BOARD OF DIRECTORS
58.33% independent directors
50% women (54.54% external directors)
Segregation of the positions of Chair of the Board of Di-
rectors and CEO
Coordinating independent director
MAIN REMIT
Approval of the general strategies and policies of both the Com-
pany and the Group.
Group and Company risk control.
Authorisation for issue of the annual accounts and presentation
thereof to the shareholders at their general meeting.
Annual assessment of the quality and efficiency of the Board and
functioning of its Committees.
AUDIT COMMITTEE
APPOINTMENTS AND REMUNERATION COMMITTEE
75% independent
members
25% proprietary
members
50% women
Chair:
Independent
director
Powers relating to:
The process to prepare the Company's
and the Group’s financial-economic and
non-financial information.
The effectiveness of the internal con-
trol and risk management systems.
External auditor independence.
Compliance with legal provisions and
internal regulations on aspects within
its remit.
Company shareholders.
independent
66.7%
members
33.3% proprietary
members
100% women (*)
Chair:
Independent direc-
tor
Powers relating to:
Appointments and dismissals of direc-
tors and certain members of manage-
ment.
The remuneration policy for directors.
Directors’ compliance with their duties.
Management of the process of as-
sessing the board and its committees.
The diversity report.
SUSTAINABILITY COMMITTEE
66.7% independent members
33.3% proprietary members
33.3% women
Chair: independent director
Powers relating to:
Ethical leadership, compliance with the Group’s sustainability pol-
icy, the 2030 Sustainability Commitment, the sustainability policy
and its relationship with the Strategic Plan, the Group’s Annual Re-
port on Ethical Management and oversight of compliance with the
Code of Ethics.
(*) At 31 December 2020, the Appointments and Remuneration Committee included two women, as well as a vacant position for an external
proprietary director.
In view of the commitment undertaken by the Company chairman at the shareholders’ general meeting held in April
2012, and considering international best practice in the field of corporate governance, at the extraordinary meeting
held on 17 July 2015, called specifically for this purpose, the board of directors of Red Eléctrica Corporación, S.A.
(REC) submitted for the approval of the shareholders a proposal to segregate the positions of chair of the board of
directors and chief executive of the Company, and to appoint an executive director. The two motions were passed,
with votes in favour from 99% of the shareholders, compared to the required quorum of 58%. At its meeting held
on 28 July 2015, the board of directors appointed the new executive director as CEO of the Company.
Since 2016, following the specified transition period, the position of chair of the board of directors has only had the
responsibilities inherent in that position.
Moreover, the position of coordinating independent director created in 2013 has been maintained, since the share-
holders and proxy advisors consider that this position embodies an efficient corporate governance practice
through the responsibilities attributed to it.
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The Annual Corporate Governance Report, which is attached hereto, contains detailed information regarding the
composition and operation of the governing bodies of the Parent.
Composition of the Red Eléctrica Group
The structure of the Group at 31 December 2020 is as follows:
1.2 Activities and business performance
The Group carries out activities both in Spain and abroad. Most notably, its principal activities comprise the man-
agement and operation of electricity infrastructure in Spain, Peru, Chile and Brazil, and the rendering of telecom-
munications services (fibre optics and satellites) to third parties.
Management and operation of domestic electricity infrastructure
The mission of REE, as transmission agent and system operator for the Spanish electricity system, is that of guar-
anteeing the security and continuity of the electricity supply at all times and managing high voltage electricity
transmission. To this end, it oversees and coordinates the generation and transmission system and manages the
development of the transmission network. The Company seeks to fulfil its mission while adhering to the principles
of neutrality, transparency, independence and economic efficiency, so as to offer a secure, efficient and high qual-
ity electricity service to society as a whole.
The Group has executed its Investment Plan in Spain, entailing investments in the transmission network, as per the
2015-2020 Planning.
A new remuneration model for the 2020-2025 regulatory period was approved in 2019.
Investments in transmission network facilities in 2020 totalled Euros 383.1 million and were basically to address
security of supply issues, to resolve technical restrictions, to execute specific projects for international intercon-
nections and inter-island submarine connections, to supply the high-speed rail system and to provide access for
the evacuation of wind power.
During the year, approximately 116 km of new lines came into service, bringing the total transmission network in
terms of domestic electricity infrastructure to 44,468 km. Transformation capacity was also increased by 1,080
MVA to a total of 93,545 MVA.
In 2020 the most significant initiatives in terms of development of the transmission network, by major axes, were
as follows:
Mallorca - Menorca interconnection 2. 132 kV underground - submarine transmission line to interconnect the
islands of Mallorca and Menorca and to integrate renewable energy. The entire axis entered service in 2020.
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Caparacena - Baza - Ribina Axis. The purpose of this axis is to facilitate the evacuation of energy from the ordi-
nary regime, renewable sources, co-generation and waste, as well as to improve the transmission network mesh
and support distribution in the province of Granada.
Leones Axis The purpose of this axis is to bolster the 220 kV mesh in the area surrounding Zaragoza, to improve
the stability of the electricity system and to guarantee distribution supply.
North - East Axis. The purpose of this axis is to improve the evacuation of electricity from Asturias to supply
Cantabria and the Basque Country. The initiatives in progress are the expansion of the Itxaso substation and the
Güeñes - Itxaso line.
Beniferri - La Eliana Axis. The purpose of this axis is to reduce the intensity of the short circuit current in Valencia
and expand the network mesh, improving transmission efficiency and supporting supply for demand in adjacent
nodes. Part of this axis entered service in 2020, specifically the expansion of the Beniferri substation.
Oriol Axis. The purpose of this axis is to guarantee the electricity supply, support distribution, and resolve tech-
nical restrictions in Caceres. The axis is related to the Navalmoral - Badajoz high-speed rail line, which forms
part of the connection envisaged between Madrid and Lisbon.
Caletillas - El Rosario Axis. The purpose of this axis it to increase the security of supply and transmission network
reliability in the Santa Cruz de Tenerife metropolitan area, as well as to make the transmission grid more robust
and reduce its vulnerabilities to incidents.
Lanzarote - Fuerteventura Interconnection. This axis involves the laying of a 132 kV underground-submarine
transmission line to interconnect the islands of Lanzarote and Fuerteventura, thus strengthening the inter-island
transmission grid.
Lousame – Tibo – Mazaricos Axis. The purpose of this axis is to reinforce the network, evacuate electricity gen-
erated, and support distribution in the northeast of Galicia. Part of this axis entered service in 2019 (the Mazaricos
and Lousame substations and the Lousame 220 kV input/output line). Construction of the Lousame-Mazaricos
line continued in 2020.
Tías – Playa Blanca Axis. The purpose of this axis is to guarantee electricity supply in the south of Lanzarote and
to reinforce the connection with Fuerteventura. These measures, together with the 132 kV submarine cable in-
terconnecting Lanzarote and Fuerteventura, will increase security of supply in the Lanzarote electricity system.
Part of this axis came into service in 2020, specifically the Tías 132/66 kV substation and the associated Tías
input/output line of the 66kV Mácher-Punta Grande line.
The most notable occurrences in 2020 in terms of electricity system operation were as follows:
Mainland system
Mainland electricity demand closed the year at 236,525 GWh, down 5.1% on 2019, mainly due to the COVID-19
pandemic, which slowed down economic activity. This decline in some cases was by up to 20% with respect to
equivalent periods in the previous year. Having corrected for the effect of working patterns and temperatures,
demand attributable primarily to economic activity was also down by 5.1%.
Maximum instantaneous power was recorded on Wednesday 22 January at 20:22 hours, at a rate of 40,423 MW.
This is down 0.1% on the maximum for the prior year, and down 11.1% compared with the record 45,450 MW doc-
umented on 17 December 2007. Peak demand in terms of time was posted on 20 January (between 20:00 and
21:00 hours) at 39,997 MWh, 10.9% below the all-time high obtained in 2007.
Installed capacity on the mainland has risen slightly compared to the prior year, ending 2020 at 105,224 MW, which
is 229 MW more than at December 2019 (up 0.2%). In terms of additions, the increase was driven by the incorpo-
ration of solar photovoltaic and wind power to the system’s installed capacity, with the former increasing by 30%
with respect to the prior year, while the latter posted year-on-year growth of 5.4%. On the decommissioning side,
there was a sharp drop in coal-fired installed capacity in the wake of the closure of various electrical generators
that supplied a total of 3,723 MW. The capacity of other technologies either did not vary or changed only insignif-
icantly.
Hydropower capacity stood at 30,512 GWh at the end of December 2020, up 2.6% on the historical average and
17.4% higher than in 2019. Reserves of hydroelectric power represented a fill level of 50.8% of total capacity
across all reservoirs at the end of 2020, compared with 51.0% in the prior year.
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In 2020, 23.3% of demand was met by nuclear technology (22.6% in 2019), 22.5% by wind power (21.5% in 2019),
16.0% by combined cycle generation (20.7% in 2019), 12.8% by hydroelectric power (10.0% in 2019) and 11.2% by
cogeneration (12.0% in 2019). With a contribution of less than 10%, coal, solar technologies, other renewable
sources, waste and pump-as-turbine jointly covered the remaining 14.2% of demand.
Renewable energy's percentage contribution to total energy generation in the electricity system rose to 45.5%
(38.9% in 2019).
In absolute terms, renewable generation is up 13.1% on the prior year, essentially due to the 23.6% rise in hydro-
power output and the 68.2% growth in solar photovoltaic output.
With respect to CO2 emissions by the mainland electricity industry, the decline in nuclear, coal, cogeneration and
waste-based generation and, conversely, the increase in generation from renewable sources, except solar ther-
mal and renewable waste, place emission levels for 2020 at 29.5 million tonnes, down 27.9% on the 40.9 million
tonnes recorded in 2019. 2020 was the year with the cleanest energy since Red Eléctrica de España’s records
began.
Electricity exchanges through the mainland-Balearic Islands link resulted in a net balance of exports to the is-
lands of 1,427 GWh (down 15.8% compared to 2019), covering 28.9% of their demand.
International electricity exchanges resulted in a net import balance for the fifth year running, totalling 3,280 GWh
in 2020.
Exports amounted to 14,649 GWh (11,859 GWh in 2019) and imports totalled 17,097 GWh (18,721 GWh in 2019).
Non-mainland systems
At the 2020 year end, total annual demand for electricity in non-mainland systems had declined by 13.7% vis-à-
vis the prior year. Per individual system, demand declined by 19.2% in the Balearic Islands and by 10.5% in the
Canary Islands, dropping by 3.3% in Ceuta and 1.4% in Melilla.
The installed capacity of the non-mainland systems slid by 3.5%, due primarily to the closure of two coal-fired
generators in the Balearic Islands, which led to a drop of 227 MW.
Pursuant to Law 17/2013 the Group, through REE, is tasked with developing hydroelectric pumping power plants in
the Canary Islands, geared towards security of supply, system security and the integration of unmanageable re-
newable energies.
Red Eléctrica Infraestructuras en Canarias, S.A.U. (hereinafter REINCAN) is, in turn, the Red Eléctrica Group com-
pany responsible for executing the development of those hydroelectric pumping power plants in the Canary Islands.
The feedback received during the public consultation stage of the project submitted in 2019 (Modified Project I),
primarily the request to bury the 220 kV DC line that evacuates power from the generating plant, led Red Eléctrica
to present a new project for submission (Modified Project II).
Modified Project II was prepared during the first half of 2020, as was the new associated environmental impact
study. They were both submitted on 13 July 2020 to set the administrative procedure in motion once again. The
public information and consultation process was completed in the second half of 2020, with all objections and que-
ries duly answered in a timely manner. The file was then submitted for assessment by the environmental authorities
on 14 December with a view to obtaining the pertinent Environmental Impact Statement.
Major headway was also made as regards the requirements for goods and services. The tender process for the
Seawater Desalination Plant (“EDAM” per the Spanish acronym) was launched and the consultation phase with bid-
ders in now underway. Progress was also made on adapting the main contracts (equipment and civil engineering
works) with a view to these being put out for tender in 2021.
With respect to the possible project to establish a hydroelectric pumping plant in Tenerife, work continued in 2020
to find a suitable location and on possible design configurations, to which end preliminary implementation and
feasibility studies were carried out.
Management and operation of international electricity infrastructure
In addition to its principal activity as the transmission agent and system operator in Spain, the Red Eléctrica Group
has been engaged for over 20 years now in other business as a way to create value for shareholders through
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expansion into the infrastructure management field and the provision of new services to the Group. This vision saw
the Group expand internationally into Peru in 1999 and Portugal in 2007, through its ownership interest in Redes
Energéticas Nacionais, SGPS, S.A. (hereinafter REN), before moving into the Chilean market in 2016 and Brazil in
2020.
The Group's international business is conducted through its subsidiary Red Eléctrica Internacional, S.A.U. (herein-
after REI) with a presence in Peru, Chile, Brazil and Portugal.
The start-up of operations in Peru, Chile and, more recently, in Brazil is the outcome of an ongoing analysis of
business opportunities, and meets the Group’s criterion of undertaking investments in countries with a favourable
economic situation and a stable regulatory framework that ensures an appropriate return on the investments.
Overall, the Group manages a network spanning more than 4,800 km in Peru, Chile and Brazil, of which 4,459 km are
up and running at present.
Activity in Peru
The Group is the main transmission agent in the south of Peru, and through the acquisition of CCNCM in 2019 the
Group now also has operations in the north of the country.
In 2020, the management excellence of REDESUR, TESUR, TESUR 2 and TESUR 3, which all manage electricity trans-
mission infrastructure on a commercial operation basis, enabled them to offer an energy transmission service with
maximum availability, while supporting development in their operating environment.
During 2020, the average voltage levels remained within the limits set out in the Technical Standard for Quality of
Electricity Services, no incidents were recorded in quality of service during the period, and network availability
stood at 99.735% in REDESUR, 99.865% in TESUR, 100% in TESUR 2, 99.757% in TESUR 3 and 99.916% in CCNCM.
TESUR 3, the concession holder for the 220 kV Montalvo-Los Héroes transmission line in southern Peru, success-
fully completed its project with commercial operations commencing in March 2020.
March 2020 also saw the expanded section of the Puno substation come into commercial service.
The project awarded in 2018 to TESUR 4 to design, build, operate and maintain the 220 kV Tintaya-Azángaro trans-
mission line, as well as the extension of the Tintaya and Azángaro substations (both 220 kV), is progressing as
planned.
REA, meanwhile, renders maintenance services for the concessions under operation, namely REDESUR, TESUR,
TESUR 2, TESUR 3 and CCNCM. Furthermore, in 2020 this company completed all of the necessary tasks to develop
and implement the special projects undertaken by REDESUR, and also engaged in work for TESUR 3 and TESUR 4.
REA also carries out facilities maintenance and supervises works for other clients, strengthening its position in
southern Peru as a leading provider of such services.
Activity in Chile
The transmission business in Chile comes under the umbrella of the parent company in that country, Red Eléctrica
Chile (RECH). This company was incorporated by REI in 2015 and its principal activities comprise the acquisition,
holding and management of the Group’s equity investments in Chile, and the provision of commercial advisory,
financial and business services to the Group’s investees. RECH holds a 50% interest in Transmisora Eléctrica del
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Norte (TEN), a 69.9% interest in Red Eléctrica del Norte (REDENOR) and 100% of Red Eléctrica del Norte 2 (REDENOR
2).
TEN constructed and operates the 500 kV Changos – Cumbre – Nueva Cardones axis, which forms part of the Na-
tional Transmission System, as well as the 220 kV Mejillones – Changos dedicated line. Completion of the 500 kV
axis enabled the creation of the National Transmission System in 2017, through the interconnection of the systems
existing at that time, namely the Central Interconnected System (“SIC”) and the Far North Interconnection System
(“SING”). In 2020, TEN completed its third full year of commercial operation, and with a high availability factor for
its facilities (99.70%), on a par with prior years' availability.
REDENOR has continued its construction of the transmission facilities in northern Chile, awarded in 2017. In 2020
the first stage of the project entered service (Nuevo Pozo Almonte 220 kV substation, Stage 1 of the project). At the
2020 year end the availability of the facilities stood at 100%. REDENOR has also forged ahead with Stage 2 of the
project, which involves the construction of 258 km of 220 kV power lines to the Pozo Almonte, Cóndores and Pari-
nacota substations, which is scheduled for completion in 2022.
REDENOR2 has continued with commercial operation of the facilities in 2020, reaching an availability of 99.90%. It
is also immersed in the extension works of its facilities encompassed in the Transmission System Expansion Plan,
entailing the construction of the new Centinela 220 kV substation.
Activity in Brazil
On 25 March 2020, Red Eléctrica, through its subsidiary Red Eléctrica Brasil (REB), and Grupo Energía Bogotá (GEB)
acquired 50% of the Brazilian holding company Argo, which in turn owns the Argo I, Argo II and Argo III concessions.
This acquisition enabled Red Eléctrica to kick off operations in Brazil where it jointly manages, with GEB, three 30-
year concessions encompassing high-voltage power lines (500 kV and 230 kV) spanning a total of 1,430 km and 11
electricity substations.
Argo I operates 1,110 km of 500 kV power lines and five substations in the northeast of Brazil. It constitutes 80% of
Argo’s revenues and has been in service since the end of 2019. The availability of the Transmission System in 2020
stands at 99.34%.
Argo II is executing a project to expand a substation that is currently under construction in the State of Minas Gerais.
Argo III operates 320 km of 230 kV power lines and three substations in the State of Rondonia (the facilities came
into commercial service between the end of May and mid-July 2020 and represent 87% of revenues; it has a Trans-
mission System availability in 2020 of 98.79%). The expansion of a further two substations in this Brazilian State is
currently under construction.
Telecommunications
Satellite business
On 3 October 2019, once the conditions precedent for the contract signed on 12 February 2019 had been met, Red
Eléctrica Sistemas de Telecomunicaciones, S.A. (RESTEL) acquired 89.68% of the shares of the HISPASAT Sub-
group (hereinafter HISPASAT). The other HISPASAT shareholders are SEPI, with a 7.41% interest, and the CDTI,
which holds 2.91%.
HISPASAT is the leading satellite infrastructure operator in Spain and Portugal by volume of business, and also
ranks as the fourth operator in Latin America and the eighth operator worldwide. It is the leading distributor of
content in Spanish and Portuguese.
HISPASAT’s principal activity consists of leasing spatial capacity and providing broadband managed services,
through the operation and commercial exploitation of its fleet of satellites in orbit and the related ground segment.
These activities are conducted through the Subgroup’s parent, HISPASAT, S.A., which operates and commercialises
the Subgroup’s satellites that are not located in orbit over Brazilian territory, and through Hispasat Canarias, S.L.,
Sociedad Unipersonal, Hispamar Satélites, S.A., Hispamar Exterior, S.L., Sociedad Unipersonal, and Hispasat
México, S.A. de C.V., which jointly operate and commercialise the satellites that are in orbit over Brazilian territory.
The corporate structure of HISPASAT is as follows:
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HISPASAT has a corporate presence in five countries: Spain, Brazil, Mexico, Argentina and Colombia.
Last year (2020) was full of challenges for the satellite communication market. The sizeable supply of capacity,
coupled with the expansive roll-out of terrestrial networks (fibre and 4G) in certain regions, have continued to put
downward pressure on spatial capacity prices. Likewise, the emergence of the COVID-19 pandemic has impacted
demand, especially in the second half of the year. The pandemic has not only primarily affected the mobility market
due to the drastic decline in travel, but also other market segments, such as government-backed connectivity pro-
jects (whose roll-outs have been hit by significant delays) and DTH and audiovisual activities due to the reduced
number of sporting fixtures and cultural events.
Moreover, 2020 also saw the consolidation of certain trends that had already surfaced in the market, such as the
verticalisation of certain satellite operators, which are increasingly taking on the role of service providers in some
segments and/or geographical areas. This trend also affected HISPASAT. In addition to pressing ahead with the
development of value-added solutions and services, it has also positioned itself as a provider of turnkey solutions,
especially in the mobile backhaul segment for telcos, netting a major contract in Mexico to connect over 700 base
stations with a data consumption rate in excess of 4 Gbps.
In view of the situation triggered by the COVID-19 pandemic, the transformation process in which the satellite sector
is immersed, the renegotiation of prices and contract cancellations, the evolution of government projects and the
worsening US Dollar and Brazilian Reais forex environment, HISPASAT embarked upon a strategic rethink, which
led to the approval of a new 2021-2025 Strategic Plan at the end of 2020. The new strategy aims to reposition HIS-
PASAT and shift it from an infrastructure operator to a provider of satellite services.
Fibre optics business
The Group's telecommunications business primarily operates in Spain, doing so through the subsidiary Red Eléc-
trica Infraestructuras de Telecomunicación, S.A.U. (hereinafter REINTEL).
REINTEL is the Group company responsible for operating telecommunications networks and rendering telecom-
munications services to third parties.
REINTEL is a neutral provider of telecommunications infrastructure. Its principal activity is leasing dark fibre and
associated infrastructure. REINTEL also provides maintenance services for fibre optic cables and telecommunica-
tions equipment. At present, the company operates a fibre optic network in excess of 50,600 km rolled out over the
electricity transmission grid and the railway network, guaranteeing transparent access on equal terms to its cus-
tomers and to telecommunications sector players.
REINTEL has been awarded, for a period of 20 years until November 2034, the rights to use and operate the fibre
optic network not used for railway services, and the related infrastructure, owned by Adif-Alta Velocidad.
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2 Business performance
2.1 Key financial indicators
Revenues in 2020 stood at Euros 1,985.8 million, which reflects the decline in transmission income in Spain follow-
ing the application of new remuneration parameters. This effect was partially offset by greater revenues from the
operation of the system in Spain given the entry into force of Circular 4/2019, and the increase in telecommunica-
tions activity, thanks to the incorporation of HISPASAT, which contributed Euros 155 million during the year.
EBITDA totalled Euros 1,568.5 million, down by 1.0% on the figure for 2019. This amount includes Euros 118.8 million
contributed by HISPASAT. EBITDA also includes the results of ownership interests held in investees, such as the
50% held in electricity transmission companies TEN (Chile) and Argo (Brazil), in a total amount of Euros 25.3 million.
Operating expenses were as follows:
Supplies and other operating expenses amounted to Euros 344.2 million, down 1.9% on the previous year despite
including the expenses of Euros 25 million corresponding to HISPASAT. The figure for 2019 only included the
expenses of this company for the last quarter.
The year-end headcount was 2,051 employees, down 5 on the 2019 year end and including 199 HISPASAT workers.
The average headcount was 2,041 employees, up 184 on 2019, which reflects the Group’s incorporation of HISPA-
SAT in its figures for the entire year.
Personnel expenses are therefore up 9.9% on the prior year. This growth would have been 1.9% were it not for
HISPASAT-related expenses.
EBIT amounted to Euros 929.0 million, down 14.2% on 2019. This decline is largely due to the impairment of HISPA-
SAT assets amounting to Euros 122.3 million. EBIT would have dropped by 2.9% were it not for this impact.
The net finance cost amounted to Euros 123.0 million, an improvement of Euros 9.9 million compared with the prior
year. The average gross financial debt totalled Euros 6,953 million, up by Euros 1,017 million on the previous year;
this increase in debt was offset by lower average borrowing costs, which slid from 2.29% in 2019 to 1.74% in 2020.
Lastly, profit for the year totalled Euros 621.2 million, down 13.1% on the same period of the previous year. In recur-
ring terms, net profit would have stood at Euros 703.0 million, i.e. down 1.8% on 2019, had it not been for the HIS-
PASAT-related impairment provision. The tax rate stood at 24.2%.
Operating cash flows after tax stood at Euros 1,232.2 million, reflecting a decline of 2.1% with respect to the prior
year. The 15.2% drop in profit before tax was largely offset by the 23.0% rise in depreciation and amortisation,
impairment and other adjustments.
Working capital at 31 December 2020 stood at Euros 173.5 million, in stark contrast to the negative figure of Euros
211.6 million in the prior year. This rise in working capital is mainly due to the positive changes recorded in amounts
collected from electricity system payments.
The Group’s investments during the year amounted to Euros 895.0 million. Euros 383.1 million of this amount were
used to develop the national transmission network. Moreover, Euros 417.5 million were channelled into developing
the international electricity transmission business, of which Euros 374.3 million went to the acquisition of a 50%
interest in the Brazilian business Argo. Lastly, Euros 60.1 million were channelled into the development of the tele-
communications business, Euros 16.8 million to operation of the system and the rest to other projects, including
most notably the Euros 4.1 million invested by Elewit, the Group’s technology subsidiary.
Dividends paid with a charge to the prior year's profit totalled Euros 566.8 million, equivalent to Euros 1.0519 per
share.
Net financial debt stood at Euros 6,113.3 million at 31 December, up 1.2% on the Euros 6,038.1 million at the 2019 year
end.
At 31 December 2020, all of the Group's financial debt is non-current. In terms of interest, 82% of the Group's debt
is fixed-rate and the remaining 18% is variable-rate.
In 2020, the average cost of the Group's financial debt was 1.74%, compared to 2.29% in the prior year. Average
gross debt was Euros 6,953 million, compared with Euros 5,936 million in the previous year.
At 31 December 2020, the Red Eléctrica Group's equity stood at Euros 3,487.2 million.
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Financial indicators (millions of Euros)
Revenue
EBITDA
EBIT
Net profit
ROE (post-tax profit/Equity)
Cash flows from operating activities
Dividends paid
Equity
Gearing (Net financial debt / Net financial debt+Equity)
Total assets
Debt service coverage ratio (Net debt / EBITDA)
2020
1,985.8
1,568.5
929.0
621.2
17.8%
1,380.4
566.8
3,492.0
63.6%
12,844.1
3.90
2019 (*)
2,007.2
1,583.7
1,082.2
714.8
19.9%
1,045.2
530.8
3,585.2
62.7%
12,655.2
3.81
-1.1%
-1.0%
-14.2%
-13.1%
-10.6%
32.1%
7.0%
-2.6%
1.4%
1.5%
2.5%
(*) Figures restated as a result of the recognition of the HISPASAT business combination, effective 3 October 2019.
3 Liquidity and capital
The Group's liquidity policy has been designed to ensure payment obligations are met, by diversifying how financing
requirements are covered and when debt matures.
The Group’s robust liquidity position allows for prudent liquidity risk management. This position is essentially based
on cash flow generation, primarily through regulated activities; appropriate management of collection and payment
periods; and the financial capacity obtained through short- and long-term credit facilities.
At 31 December 2020 the undrawn balance on credit facilities amounts to Euros 1,930 million and cash surpluses of
Euros 482 million are available.
The average maturity of the debt drawn down at the end of the year is 5.3 years.
The Group's financial strategy has aimed to reflect the nature of its businesses, at all times adhering to the legisla-
tion in force. The activities conducted by the Group are very capital-intensive, wherein a major portion of invest-
ments mature over extensive periods. In addition, these assets are remunerated over long periods of time, meaning
that financial debt is primarily long-term and fixed-rate. The Group’s strategic commitment to long-term, enter-
prise-wide sustainability is also present in its responsible and transparent management style, which promotes sus-
tainable sources of financing.
Financial debt structure: Fixed vs. Variable
18%
82%
Fixed rate
Variable rate
The Group's capital structure policy ensures a financial structure that optimises the cost of capital through a sound
financial position, which balances the generation of value for shareholders with competitive costs of financing.
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Capital is periodically monitored through the gearing ratio, which in 2020 stood at 63.7%, compared to 62.7% in
2019. This ratio is calculated as net financial debt divided by equity plus net financial debt.
To maintain and adjust the capital structure, the Company can adjust the amount of dividends payable to share-
holders, reimburse capital or issue shares.
4 Risk management
The Group has implemented a Comprehensive Risk Management System, which aims to ensure that any risks that
might affect its strategies and objectives are systematically identified, analysed, assessed, managed and con-
trolled, according to uniform criteria and within the established risk levels, in order to facilitate compliance with
the strategies and objectives of the Group. The Comprehensive Risk Management Policy was approved by the board
of directors of the Parent company of the Group. This Comprehensive Risk Management System, the Policy and the
General Procedure regulating it are based on the COSO ERM 2017 (Committee of Sponsoring Organizations of the
Treadway Commission) Enterprise Risk Management – Integrated Framework.
The risk management system is implemented in accordance with ISO 31000 on risk management principles and
guidelines, which is comprehensive and ongoing in nature. Risk management is also strengthened at the business
unit, subsidiary, support area and corporate level.
The comprehensive risk management and control policy and procedure define the various duties of the governing
bodies and those of each organisational unit, as well as the information flow and activities to be performed, as per
the following flowchart:
The types of risk to which the Group is exposed as regards the achievement of its strategies and objectives can be
classified as follows:
Strategic
Risks related to the regulatory framework in which the Group operates.
Business risks associated with the business context itself or with decisions of a strategic nature.
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Risks related to sustainability and good governance.
Operational
Risks associated with planned assets and/or those in progress.
Risks associated with assets currently in service.
Risks related to information systems.
Risks related to personnel and the organisation thereof.
Compliance risks.
Financial
Market risk.
Risks related to the solvency of the Company.
Counterparty risk.
Assurance risks.
The Corporate Risk Map depicts the Group's most significant risks and is prepared applying a bottom-up method-
ology, whereby the risks are identified, analysed and assessed by the different organisational units before being
escalated for validation by Directors, General Managers and Corporate Directors, until their final presentation to
the Chair of the Group, the Executive Committee, the Audit Committee and the Board of Directors.
The main risks to which the Group is exposed and that could affect achievement of its objectives are regulatory
risk, including tax risks, inasmuch as the Group's principal business lines are subject to regulations, operational
risk, primarily arising from the activity carried out in the electricity and telecommunications sectors, financial risk
and environmental risk.
The Comprehensive Risk Management Policy includes the policy for controlling and managing tax risks. It also co-
vers financial risk management, as detailed in the note to the consolidated annual accounts on the Financial Risk
Management Policy.
The Company’s Sustainability Report provides further details of the Group’s main risks at present, as well as risks
which could emerge in the future.
Information on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
The Red Eléctrica Group has taken various steps to adapt the management of climate change risks and opportuni-
ties to the TCFD recommendations. In addition to reviewing the governance criteria, the Group has a specific meth-
odology to prioritise these criteria and quantify their economic impact, which was implemented by taking into ac-
count different scenarios.
Governance
Significant risks relating to climate change have been included in the Corporate Risk Map, adopting the governance
model described above. Moreover, the information on climate change risks and opportunities has been passed on
to the Sustainability Committee for supervision, in collaboration with the Audit Committee, as part of its oversight
role over the comprehensive risk control system. The Sustainability Committee also supervises the corporate re-
sponsibility and climate change policies in order to integrate the results of the climate change risks and opportu-
nities analysis into the Group's decision-making.
The Group's strategic plans reflect the climate change strategy, considering the risks and opportunities identified,
detailing the lines of action, setting out the objectives and defining high-level responsibilities.
Based on the strategic guidelines, the business areas will establish specific climate change initiatives within their
operational plans with a view to keeping the exposure to these risks below acceptable levels. Such plans will include
specific objectives and responsibilities.
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Identification and quantification of risks and opportunities
Climate change risks and opportunities comprise both physical risks and opportunities related to changes in cli-
mate variables (which could directly affect the facilities or impact the services rendered by the Group) and transi-
tion risks and opportunities (related to changes stemming from the fight against climate change: regulatory, tech-
nological, market and reputational).
The risks and opportunities have been identified and assessed considering different scenarios:
For physical risks, AEMET's projections for the most important scenarios of the IPCC AR5 1 (RCP 4.5 and RCP 8.5)
have been considered.
The regulatory and transition scenarios are based on the proposed National Integrated Energy and Climate Plan
sent to the European Commission, having considered the trend scenario and the target scenario.
The transition risks and opportunities analysis focuses on the 2020-2030 horizon, while the physical risks and op-
portunities analysis focuses on a longer time frame (2030-2050-2070). The economic impact has been quantified
for a period of ten years in both cases.
The risks and opportunities identified are assessed considering variables such as exposure, sensitivity and capac-
ity to adapt. They can thus be prioritised based on their importance.
Significant risks and opportunities are scrutinised in order to quantify the Group’s exposure based on economic
variables and/or business indicators.
The process to identify and quantify risks and opportunities is reviewed and updated at least annually.
Conclusions: risks and opportunities
High-priority risks are as follows:
Physical:
Impact of extreme events (wind) on outdoor facilities (power lines).
Fires beneath the lines and near substations.
The economic impact of physical risks is reduced considerably by insurance policies. The estimated annual impact
is no more than 2% of the Group's profit.
Transition:
Stricter legal requirements related to the use of fluorinated gases (SF6).
Claims due to limitations on renewable energy production and incidents that may affect the security of supply in
the Canary Islands.
Difficulties in bringing into service the necessary infrastructure for the energy transition (this risk is identified
and analysed specifically for international interconnections).
The latter has been identified as the most significant climate change transition risk for the Group. In order to meet
the objectives of the energy transition, the transmission network must be developed, mainly in respect of the evac-
uation and integration of renewable power generation. However, due to social aversion to this type of infrastructure
and the long waits to obtain the necessary authorisations for its development, there could be difficulties in bringing
the required facilities into service.
The annual economic impact estimated for these transition risks would be less than 2% of the Group’s profit.
Meanwhile, energy transition policies provide huge opportunities for the Group, connected to the development of
infrastructure to make the transition possible: integration of new renewable energy capacity, interconnections,
high-speed trains and support for an increased electrification of society. Investment opportunities have been iden-
tified in the transmission network (lines and substations), storage and other technical solutions to address the en-
ergy transition challenges (protection systems, FACTS equipment, and other control and monitoring equipment).
1 IPCC Fifth Assessment Report (2014) drawn up by scientists from various countries. RCP 4.5 is a target scenario and RCP 8.5 is a trend
scenario contemplating greater changes in climate parameters.
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To a lesser extent, the Group’s improved performance in respect of mitigating and adapting to climate change could
be a boon for its reputation, leading to better financing opportunities or higher stock prices.
5 Average supplier payment period. "Reporting Requirement". Third Addi-
tional Provision of Law 15/2010 of 5 July 2010
In accordance with the Spanish Accounting and Auditing Institute (ICAC) resolution of 29 January 2016 regarding
the information that must be disclosed in the notes to annual accounts on average payment periods to suppliers in
commercial transactions, the average supplier payment period in the case of Spanish Group companies was 45.9
days at the 2020 year end.
The disclosures required by this resolution are contained in note 22 to the Group's annual accounts for 2020.
6 Events after 31 December 2020
No significant events have occurred between the reporting date and the date on which these consolidated annual
accounts were authorised for issue.
7 Outlook
As regards the management of the different businesses, the Group will continue to undertake its activities, imple-
menting a model encompassing two major lines of action in equal proportion: operations subject to market risk
which offset the concentration of regulatory risk, and regulated operations which offset market risk. To this end,
the Group will: continue to develop the role of the Spanish TSO, helping to make the energy transition a reality in
Spain; continue to foster connectivity as a leading operator of both fibre optic and satellite telecommunications
infrastructure; consolidate its international business; and invest in technological acceleration and innovation.
Executing the strategy, underpinned by efficiency, digital transformation and personnel development, will enable
the Group to adapt to the new, stricter regulatory and remuneration environment, and to generate more ways of
creating value.
The Group will uphold its commitment to maximising value for its shareholders, offering an attractive return in the
form of dividends and generating value through efficient management of its activities, analysing alternatives for
expanding its core business, maintaining a robust capital structure and working to guarantee supply with the ut-
most level of quality.
The Group will therefore continue to seek the generation of long-term value, creating lasting, competitive ad-
vantages and improving our corporate reputation, whilst focusing on providing optimum service to society – the
differentiating feature of the Group's management.
Lastly, the Group will concentrate on unlocking shared value by working in collaboration with stakeholders and re-
sponding to growing societal demands.
The Group is determined to forge ahead with its fulfilment of the 2030 Sustainability Commitment and to leverage
the contribution of all Group companies in order to meet the global targets, noteworthy among which are the United
Nations Sustainable Development Goals (SDGs).
Outlook for the management and operation of domestic electricity infrastructure
The regulated activities of the TSO, aimed at making the energy transition in Spain a reality, are primarily sustained
by the following lines of action:
The integration of more renewable sources of energy generation in the electricity system, supporting the change
to zero emission carriers and greater energy efficiency.
Making the user the centre of the electricity system, providing new services for an increasingly demanding and
discerning user in terms of data and information.
Development of storage based on the management needs of the system in order to implement a more flexible
electricity system.
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The digitalisation and roll-out of smart networks, committing to technology.
A higher degree of interconnection, furthering integration with the European market and improving the function-
ing of non-mainland systems.
All of these challenges will require a significant level of investment in the transmission network in the coming years,
with a considerable technological component, which will be rolled out in a new, stricter regulatory and remuneration
environment
The Group will ensure its financial policy is in line with the new remuneration regime for transmission activities,
which involves maintaining a suitable financial structure to safeguard the Group’s financial solvency, its compliance
with the ratios laid down by the Spanish National Markets and Competition Commission (CNMC) and its credit rating.
Outlook for the management and operation of international electricity infrastructure
The Group will continue to focus its international business activity on strengthening its outreach in countries where
it has a presence, specifically Peru, Chile and Brazil, as a way to diversify business.
Moreover, as a way of expanding the core business, efforts will centre on executing projects or acquisitions that
meet a number of geographical, strategic and financial criteria, so as to increase the Group’s international pres-
ence.
Outlook for telecommunication activities
The satellite sector is currently undergoing transformation. The traditional business, based on the wholesale lease
of satellite capacity, especially for video services, is now a highly mature segment. Most satellite operators are now
shifting towards the provision of data transmission services, such as extending telecommunication networks or
connectivity in the mobility sector, which offer better growth prospects. This shift in focus goes hand in hand with
more vertical business models, where the provision of higher value-added services is proving to be the springboard
strategy to harness the new growth trends in the market.
HISPASAT approved a new 2021-2025 Strategic Plan at the end of 2020. Aligned with the market forecast for the
coming years, this plan is based on shifting HISPASAT’s commercial activity away from the traditional business in
an orderly and measured fashion, while gradually and simultaneously bringing on board a new focus and direction
towards vertical business models with greater future growth potential. The lines of action laid down in the plan
include the following:
Protection of the core businesses, such as the provision of video distribution services, through steps designed
to enhance efficiencies, strengthen relationships with key customers and extend the maturity period of satellite
television.
Positioning HISPASAT as the turn-to player on the Iberian Peninsula for the provision of connectivity services via
satellite in residential and professional contexts, as well as for the provision of services to public authorities.
This line of action implies a gradual verticalisation of HISPASAT across the value chain and the implementation
of new integrated operational and business models capable of setting it apart from the competition.
Investment in new satellite infrastructure to participate in the forecast growth in the air, maritime and land-
based mobility market.
Development of capacities for new nascent business niches, such as the Internet of Things in rural areas or the
expansion of 5G connectivity.
Over the course of 2020, HISPASAT had to rise to the challenge posed by COVID-19, which impacted the provision
of services via satellite, as it did other sectors of the economy, especially in the second half of the year.
In addition, the telecommunications activities carried out by REINTEL, as a provider of telecommunications infra-
structure, will focus on the backbone fibre network market, specifically the lease of dark fibre in the infrastructure
associated with telecommunications sector players. To this end, REINTEL will continue to implement its commer-
cial plan and undertake the investments requested by customers, as well as broadening its portfolio of fibre prod-
ucts, in order to generate greater revenues.
Furthermore, REINTEL will keep making progress on interconnecting rail and electrical fibre networks with the aim
of offering new solutions to customers, such as new redundant sources and access points, whilst continuing to
uphold the high standard of service quality offered to its customers.
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As regards innovation, RETIT will help the Group to capitalise on its commitment to innovative initiatives, entrepre-
neurship and technological development, which are the cornerstones of sustainability against a changing backdrop
in both the energy and telco sectors.
Through RETIT, the Group will harness the potential of technology to further the Group’s business and activity, as
well as to explore new value-added business segments. Initiatives focused on new tech niches will be explored,
such as cybersecurity, energy, AI and advanced analytics, industry X.0, the Internet of Thing (IoT), new communi-
cation technology and satellites, platforms and networks of the future, and any other potential technology detected
by the Group while it is constantly scanning and interacting with the tech ecosystem.
RETIT will thus enable the Group to forge stronger ties with society, to increase the availability of its infrastructure,
to enhance system security, to maximise the integration of renewables and the use of its assets, to improve the
efficiency and sustainable management of its assets, and to improve the health and safety of people.
8
Innovation
Since its incorporation in 2019, Red Eléctrica y de Telecomunicaciones, Innovación y Tecnología (RETIT) has
strengthened its position, under the Elewit brand, as the Group’s tech platform and transformation engine. Elewit
fosters the transition of the energy and telecommunications sectors through innovation and technological devel-
opment, as well as the conceptualisation, incubation and acceleration of tech-based initiatives, and by attracting
and incorporating internal and external talent.
To meet its objectives, Elewit has deployed a number of capabilities, such as the Venture Client and Corporate
Venture Capital (CVC) programmes, the creation of an ecosystem, the technology labs, a tech factory, its project
management office and its team, all of which are designed to underscore the value offered by the Group’s tech
solutions.
The Venture Client programmes establish mechanisms to contact, interact, identify and explore innovative busi-
ness opportunities. In the current climate of innovation and change, the acceleration programmes for start-ups
and investment in venture capital are pivotal tools to strengthen the presence and impact within the innovation
and entrepreneurship ecosystem. Elewit launched the following programmes in 2020:
o 1st Venture Client Programme:
The first accelerator programme concluded in June, the feedback from which has been very positive. The
value proposal revolved around exploring a business idea with the Group in order to launch a pilot scheme.
On the back of the first programme, six pilot projects were launched through four startups.
Sigma Rail - Track inspection and maintenance using computer vision.
Onirix - Digitalisation of engineering processes based on additional augmented reality data; and visualisation
of electricity-related risks using augmented reality.
Neurodigital - Training on a local site that entails an electricity risk using virtual reality; and training on jobs
carried out at height with the aid of virtual reality.
FlexiDAO - Visualisation of self-supply investor data <1MW.
o 2nd Venture Client Programme
The call to participate in the 2nd Venture Client Programme was announced at the end of 2020. Over 120 startups
in more than 10 countries that could potentially respond to the needs of the Group’s business units were iden-
tified. Eight startups were selected to take part in the programme, exploring the proposed use cases and
launching pilot projects with various business areas in 2021.
Corporate Venture Capital (CVC) to invest in tech-based venture capital funds or to acquire a stake in a tech
startup, whose activity could potentially be used as a launchpad to explore new digital businesses that are a
strategic fit for the energy and telco transition process.
The main activities performed by Elewit in this field in 2020 are as follows:
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o Investment in funds
Adara: a fund with over Euros 180 million in capital under management. Its activity is concentrated in Spain,
Portugal, the UK, France and Ireland, especially in the fields of cybersecurity, cloud infrastructure, intensive
data use solutions and applied AI.
Cardumen: a Spanish venture capital fund that specialises in investment in early-stage, B2B tech compa-
nies; its sights are mainly set on Israel and on the cornerstones of the digital transformation: AI, cybersecu-
rity and Big Data.
o Direct investments
Zeleros: investment aligned with the energy transition and the electrification of society, as it facilitates a
comprehensive panorama of the new transport modes based on electric-powered mobility, the development
of which will shape the needs and challenges for the operation and transmission of the electricity system.
The activity of Zeleros is focused on the development of the Hyperloop. This terrestrial electric mode of
transport is expected to reach speeds of up to 1,000 km/h, on low energy consumption, thanks to a combi-
nation of propulsion and levitation technology.
Countercraft: strategic investment for the RE Group from an innovation perspective, given its role as the
operator of critical infrastructure. Countercraft is a cybersecurity company.
Nearby Computing: investment aligned with the Group’s innovation strategy in the field of telecommunica-
tions. It involves fostering and supporting the development of connectivity, an area in which Edge Compu-
ting is shaping up as a key enabling technology. Nearby Computing is engaged in the deployment of IoT and
5G corporate solutions, offering processing power to users to improve their response times.
Creation of an ecosystem
The launch in July 2020 of the Elewit trading name (a portmanteau of “elevate” and “wit”) has served to endorse
the Group’s footprint in the innovation ecosystem, increase awareness and visibility around the Group’s innova-
tion activity, and to provide greater clarity as regards its presence at the various innovation fora. Testament to
this key positioning, Elewit held its first edition of the Innovation Sessions in December 2020.
As part of the open innovation strategy, several agreements were finalised in 2020 with a view to driving innova-
tion through cooperation with key players in the ecosystem, including:
Spain’s BIDA Observatory
An observatory backed by AECA (the Spanish Accounting and Business Administration As-
sociation), alongside other Spanish companies and public and private institutions, to share
experiences in the BIDA field (Big Data, AI and data analytics).
Startup OLÉ
ENDEAVOR
SPAIN
Mentoring of projects designed to mitigate the effects of COVID-19 from an energy, sustain-
ability and social impact perspective.
Collaborative effort aimed at driving awareness and dissemination of the Elewit mission.
Tech labs to explore new technologies and provide over-arching support to initiatives.
A technology factory to industrialise minimal viable products swiftly and to put into practice opportunities for
the Group that stem from technological innovation.
Project management office to plan and manage innovation projects and programmes.
Team to highlight the value of the technological solutions resulting from the innovation process.
Elewit commenced roll-out in 2020 of a joint marketing plan with IBM for the sale of an Advanced Asset Manage-
ment Solution (SAGA per its Spanish acronym) to companies around the world.
A sample of the most significant projects carried out during the year is briefly described below:
5G Project: the objective of the project is twofold. On the one hand, to gain experience in the installation of 5G
systems, while analysing the possible impact of the electricity transmission grid environment on electronic and
5G equipment, and, on the other, to conduct a technical and economic analysis of the possibility of installing
mobile/5G infrastructure on transmission pylons
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The call for bids under RED.es’s 5G National Plan banner: initiative that seeks to develop and assess various use
cases for 5G technology. Analysis will be undertaken to verify that electrical safeguards still function correctly if
stretches of fibre optic cable were replaced with 5G links; functions within the electricity substation will be au-
tomated using SO2 and SF6 sensors, which aid the predictive maintenance of transmission assets, among others.
Centre for Construction Knowledge, the C3 Project: this new platform will enable the digital transformation of
the Group’s construction activities in areas such as health and safety, control and monitoring of employees, pro-
ject control, quality management, control of assets, materials and machinery, and sustainability.
Project EPICS (Edge Protection and Intelligent Control Solution): this project consists of integrating, on a single
piece of hardware, the safeguard and control functions of an electricity substation, securing major efficiencies
and new functionalities.
Project for robotic installation of spacers on overhead cables: use of robotics to install spacers on overhead
cables as an alternative to traditional installation techniques and to improve employee efficiency and their health
and safety.
Project DALIA: improvements to the overhead cable maintenance process through the use of drone imagery, AI
to analyse the images captured and an integrated management platform for the entire inspection process.
Positive Energy: against the backdrop of the pandemic, Elewit, in conjunction with other energy corporates,
opened a process to get other companies and institutions on board to look for ways to mitigate the economic
and social impact of COVID-19 through innovation and from an energy perspective.
As regards the satellite telecommunications business, HISPASAT continued to dedicate time and effort in 2020 to
innovation activities. Work continued on the new two-yearly innovation plan, which will act as a lever to execute
the company's new Strategic Plan approved in 2020.
The Innovation Plan defines the lines of action and establishes the guidelines for innovation standardisation, tar-
gets, management and its innovation ecosystem in order to improve processes, foster an innovation culture and,
ultimately, to bring them into line with the targets of the new Strategic Plan.
Highlights of the main projects and activities carried out in 2020 include:
o GOVSATCOM: awarding of the GOVSATCOM & EuroQCI study. The aim of the study is to analyse a possible Eu-
ropean satellite constellation made up of multi-orbit space vehicles to facilitate secure and efficient govern-
ment communications to protect critical infrastructure, surveillance work, external actions and crisis man-
agement, among other uses; EU-wide universal high-speed broadband services; and the integration of 5G
standards in various use cases (including the direct provision of 5G in remote areas).
o In the security and emergency field, HISPASAT has also participated and continues to participate in the Hori-
zon 2020 UNICRINF project, which employs HISPASAT telecommunications infrastructure in catastrophe sce-
narios. In addition, work is ongoing to find solutions for the prevention and early detection of forest fires.
o Mobility: work is progressing with the leading operators to analyse and possibly develop a “universal modem”
via satellite for the purposes of aerial mobility; the aim is to develop a solution whose software can be updated
without having to replace the hardware.
o 5G: satellites are expected to play an important role in the development of new 5G infrastructure, supporting
terrestrial networks.
o IoT (Internet of Things) remained the focus in 2020. Work was undertaken with a view to a possible tie-up with
one of the most promising smallsat IoT initiatives; work is also ongoing to integrate satellite IoT solutions.
o Rural Spain Solutions: these consist of internet connectivity adapted to a rural setting; telemedicine and tele-
education, as well as solutions to digitalise the agri-food sector.
o Imagery and Data Analytics: a data analytics pilot study was carried out. Using satellite imagery, the aim was
to build an inventory of self-supply photovoltaic panels in order to estimate electricity demand more accu-
rately.
o New infrastructure is being pursued to provide a competitive advantage vis-à-vis costs and performance for
HISPASAT.
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Innovation investment
The Group’s investment in innovation and technological development in 2020 amounts to Euros 17 million, which
mainly includes the investment of Euros 8 million in commitments mobilised with two venture capital funds and
Euros 3 million of investments made directly. The following graph depicts investment in innovation in recent years.
Trends in innovation expenditure
Innovation expenditure (€ millions)
9 Own shares
At their meeting on 31 March 2020, the board of directors of Red Eléctrica agreed to suspend own share transac-
tions as of 14 April 2020, except where such transactions are associated with employee remuneration.
Until that date, a total of 1,356,421 own shares had been acquired, with an overall par value of Euros 0.68 million and
a cash value of Euros 22.84 million. A total of 1,296,536 shares were sold, with an overall par value of Euros 0.65
million and a cash value of Euros 22.49 million.
At 31 December 2020 the Company held 2,084,729 own shares, with a par value of Euros 0.50 per share, representing
0.39% of its share capital. These shares had an overall par value of Euros 1.04 million and an acquisition price of
Euros 17.53 per share (see note 14 to the consolidated annual accounts), and the market value was Euros 34.97
million.
The Parent has complied with the requirements of article 509 of the Spanish Companies Act, which provides that
the par value of acquired shares listed on official secondary markets, together with those already held by the Parent
and its subsidiaries, must not exceed 10% of the share capital. The subsidiaries do not hold own shares or shares
in the Parent.
10 Other relevant information
10.1 Stock market performance and shareholder returns
All of the shares in REC, the Group's listed company, are quoted on the four Spanish stock exchanges and are traded
through the Spanish automated quotation system.
REC also forms part of the IBEX 35 index, of which it represented 2.14% at the end of 2020.
At 31 December 2020 and 2019, the share capital of REC amounted to Euros 270.5 million and was represented by
541,080,000 shares with a par value of Euros 0.50 each, subscribed and fully paid.
During the year REC's free float was 80%.
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Shareholder structure
20%
80%
Free-float
At the date of the last shareholders' meeting – 14 May 2020 – the free float comprised 432,864,000 shares, of which
an estimated 13% is held by non-controlling shareholders, 7% by Spanish institutional investors and 80% by foreign
institutional investors, primarily in the United Kingdom and the United States.
Foreign institutional investor
Spanish institutional investors
Non-controlling share holders
In 2020, the performance of the stock market has also been affected by COVID-19. The first few months saw a
continuation of the prior year’s trends. However, by the end of the first quarter of 2020 equity markets were shaken
by the pandemic, causing them to retrace to levels from several years earlier. The expansionary monetary policies
implemented with greater intensity by the main central banks, the announcements of strong support for economic
recovery through the creation of new incentives and an increase in public spending have since made a gradual
recovery of stock market indices possible.
This recovery has enabled Wall Street to end the year on a positive note, with its main indices setting new all-time
highs in the final days of 2020. Most notable is the 43.6% rise in the Nasdaq. Conversely, leading European markets
have closed the year in the red. Most notable are the drop in the UK FTSE and the Spanish IBEX. The 14.3% slide in
the former was possibly as a result of Brexit-related uncertainty. Spain's selective index saw the biggest drop of
the major European stock markets after losing 15.5% in the year, reflecting the serious effects of the pandemic on
our economy, which is highly dependent on the services sector and especially on tourism. The exception among
the European indices was the German DAX, which gained 3.5% for the year as a whole and also ended the year at
record highs. In the Asian stock markets, most notable is the Japanese Nikkei, which gained more than 15%.
In addition to this performance by geographical location, there was a clear differentiation by sector in 2020. Stocks
related to the technology and pharmaceutical sectors and companies linked to renewable energies have been fa-
voured by investors. Conversely, sectors such as finance, oil and gas suffered severe setbacks during the year.
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Red Eléctrica’s shares performed similarly to the Spanish stock market throughout 2020, although their decline in
the year was less pronounced. The share hit its annual high in the first weeks of the year, reaching Euros 19.74 on
19 February. Its low point occurred in mid-March, coinciding with the major market backslide, which pushed the
share down to its minimum for the year of Euros 13.105 on 12 March. The closing price was Euros 16.775, representing
a 6.4% decline in 2020 as a whole.
A total of 535.1 million shares were traded on the Madrid Stock Exchange during the year as a whole, which is 1%
more than in the previous year and equivalent to 99% of the company’s shares. The total volume traded on the spot
market was Euros 8,882.3 million, down 9% on 2019.
10.2 Dividend policy
Red Eléctrica shall apply the dividend policy in force at any given moment, described in the Strategic Plan.
The dividend paid in 2020 with a charge to the prior year’s profit amounted to Euros 566.8 million, which is 7% more
than that paid out in 2019.
The dividend with a charge to 2020 profit proposed by the board of directors and pending approval by the share-
holders at their annual general meeting is Euros 1 per share.
The dividend will be paid in two instalments – an interim dividend in January and a supplementary dividend halfway
through the year following approval of the annual accounts by the shareholders at their general meeting.
10.3 Credit rating
On 11 June 2020 the credit rating agency Standard & Poor’s issued a new report maintaining the same rating and
outlook. Following this announcement, REC and its subsidiary REE maintain long-term ratings of 'A-' and short-term
ratings of 'A-2', with a stable outlook.
On 23 April 2020 the credit rating agency Fitch Ratings gave the Company a long-term rating of 'A-' with a stable
outlook. Following this announcement, REC and REE maintain long-term ratings of 'A-' and short-term ratings of
'F1', with a stable outlook.
10.4 Excellence
In 1999 Red Eléctrica adopted the EFQM (European Foundation for Quality Management) excellence management
model as a tool to improve management, to which end external assessments are performed periodically in accord-
ance with the model. Until 2020, Red Eléctrica retained its EFQM 500+ European Seal of Excellence, following the
external assessment carried out in 2017, with a score of more than 700 points.
Following the publication of the EFQM 2020 model, Red Eléctrica developed a project to assess the degree of ad-
herence to the new model in 2020 as a benchmark framework in the process of transforming the organisation, prior
to the external assessment that is scheduled to take place in 2021.
Red Eléctrica’s commitment to excellence is corroborated through external certifications from prestigious certify-
ing entities, which guarantee that the organisation successfully implements certifiable management systems in
the performance of its activities. The Group has quality systems in place in its main subsidiaries that are certified
in accordance with the ISO 9001 standard.
Of the actions carried out in 2020 in this area, the stand-out initiatives include the development of a pioneering
project for the implementation and certification of the international standard UNE-ISO 19650-1 and two projects for
information management systems in building and civil engineering works, which use the collaborative work meth-
odology BIM (Building Information Modelling). This initiative was carried out in relation to the project for the con-
struction of the Chira-Soria pumped-storage hydroelectric power plant in Gran Canaria; it complements the imple-
mentation and certification of the project management systems carried out in 2019, in accordance with interna-
tional standards ISO 10006 for quality management in projects and ISO 21500 for project management.
Also noteworthy is the certification carried out in 2020 of Red Eléctrica’s criminal and anti-bribery compliance sys-
tem, in accordance with the standards UNE 19601 for criminal compliance management systems and UNE 37001 for
anti-bribery management systems.
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11 Non-financial Information Statement in compliance with Law 11/2018 of 28
December 2018
11.1 About the Non-financial Information Statement
Scope of the NFIS
The Non-financial Information Statement (hereinafter “NFIS”) responds to the reporting requirements established
in Law 11/2018 of 28 December 2018 on non-financial and diversity information, which are reported in accordance
with the Global Reporting Initiative's (GRI) Sustainability Reporting Guidelines.
Section 11.8 of this document, “Index of content required by Law 11/2018 of 28 December 2018 on non-financial and
diversity information”, details the specific reporting framework for each item required by the Law.
The scope of the NFIS encompasses the entire consolidated Group formed by Red Eléctrica Corporación, S.A. and
Subsidiaries. Law 11/2018 of 28 December 2018 stipulates that the Group’s subsidiaries are not required to prepare
a NFIS as their information is included in the Group's Consolidated NFIS.
Materiality Study
In 2019, with a view to advancing the 2030 Sustainability Commitment, the Group updated its Materiality Study in
accordance with the Global Reporting Initiative (GRI) standards for the purpose of identifying relevant issues.
The Materiality Study is based on an analysis of the Group’s sustainability context in order to build an overall picture
of the environment in which the organisation operates. This then allows the Group to review sustainability planning
for the 2019-2022 period. To define the context, the Group considers all the business activities and the geographical
areas where it operates.
The sustainability context includes: a trend analysis that defines and/or will define the overall sustainability,
industry and geographical framework in which the Group carries out its activity; the identification of good practices
to ascertain the level of maturity of the Group’s sustainability performance with respect to comparable benchmark
companies; and an analysis of internal data to identify the requirements and expectations of stakeholders and
other issues of relevance with a view to their incorporation in the commitments and corporate planning. Please
note that the Group’s stakeholders were involved in this study in order to gauge their requirements and
expectations. In this respect, strategic interviews were conducted with Group management, key technical
personnel and representatives of external stakeholders in order to collect knowledge on the challenges, risks and
opportunities regarding sustainability from both an internal and external perspective. Specifically, representatives
of the following stakeholder groups were involved in the 2019 analysis of the sustainability context: business
partners, suppliers, technology research and development centres, social agents and associations, environmental
groups, consumer associations and end consumers, rating agencies, the media, industry associations, professional
and business bodies and associations, other companies in the sector and competitors.
This analysis led to the identification of a total of 16 relevant issues. In order to prioritise issues, an internal and
external assessment of the criticality of the identified issues for the achievement of long-term objectives, and thus
for long-term continuity, was carried out. The prioritisation matrix provides a dual analysis of the issues, revealing
both their internal importance, assigned by the top-level managers and key technical personnel who took part in
the analysis of the sustainability context, and their external importance, based on the value assigned by the external
stakeholders who were consulted. Linking the prioritisation of issues with the 2018-2022 Strategic Plan and the
United Nations Sustainable Development Goals (SDGs) is absolutely fundamental.
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Relevant issue prioritisation matrix
The impact of the COVID-19 pandemic on the business model of the Red Eléctrica Group has not necessitated a
review of the materiality study results, although it is clear that management of certain issues, especially “Safety,
health and well-being” and “Digital Transformation”, includes new aspects.
The Red Eléctrica Group's response to COVID-19
The Group provides services that are essential for the safety and well-being of the general public. To this end,
ensuring the health and safety of employees and guaranteeing the proper functioning of the electricity system in
Spain, as well as that of the electricity, telecom and satellite infrastructure in the countries where it operates, are
the primary concerns of the Group during this pandemic.
Ensuring security of supply and the proper functioning of our infrastructure
The Group and more specifically REE, as the electricity transmission infrastructure owner and system manager,
has remained fully committed to achieving the targets defined by the Spanish authorities, having implemented a
number of extraordinary measures in order to meet its obligations as laid down in Law 24/2013, aimed at ensuring
continuity and security of supply. These measures have been executed in parallel with the priority of guaranteeing
the health of the Company’s employees and observing the health authorities’ policy to slow the spread.
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Electricity demand fell by 8% in the first six months of the year with respect to the prior year. Specifically, it fell by
13.3% during the state of emergency in Spain from 15 March 2020 to 21 June 2020. Despite this anomalous situation,
REE guaranteed the electricity supply to all households and essential services across the country at all times.
The scenario triggered by COVID-19 has not hindered the progress of the energy transition. Renewables were up by
10.3% in terms of GWh output in the first four months of 2020 with respect to the same period in 2019. In fact,
renewables accounted for 47.3% of the entire electricity generation mix at the April 2020 close. The boom in re-
newables, together with the 11.8% decline in electricity generation with respect to the same month in 2019, made
April the cleanest month in terms of greenhouse gas emissions: equivalent to 2,154,465.2 tCO2, almost halving the
level of ten years ago.
In order to bolster security of supply even further, the company brought a third control centre into service. Like the
first two, it operates entirely autonomously and is manned by independent teams working around the clock, seven
days a week.
Additional prevention measures were also implemented for staff operating the Telecommunications Supervision
Centre and the Facilities Maintenance Centre, as well as for professional teams on call to respond to possible inci-
dents on the grid.
The development of new electricity transmission and telecommunications infrastructure experienced temporary
delays, due to the total or partial stoppage of economic activities imposed by the authorities. These activities re-
sumed in part in the closing months of the year. The impact on the Group as a whole amounts to 5% of the initially
envisaged volume of investment. This impact is mainly concentrated in transmission network development in
Spain, although Chile has likewise seen delays in the development of the new HISPASAT Amazonas Nexus satellite.
In international business, despite the decline in demand for electricity in Peru and Chile, security of supply has been
guaranteed since operations remained ongoing as an essential service through the following activities:
Contingency Plan to respond to COVID-19 consisting of four execution phases. The contingency plan had to be
adapted to the legislative changes in the country.
ManTop project, which ensured a response at substations, made up of local operations and maintenance per-
sonnel.
“Essential Activities COVID-19” programme, which set out the minimum and vital tasks that had to be undertaken
at the outset of the pandemic.
Changes to shift patterns at mining facilities in Chile from 9x5 to 14x14 and to modes of transport to reduce the
number of trips required.
The telecommunications business (fibre and satellite) provided essential services throughout the year without in-
cident.
Looking after the health of our professionals
At the outset of the pandemic, the Group put in place safeguard measures to protect the health of all its profes-
sionals and applied action protocols in each case. Red Eléctrica has followed guidelines that have been adapted to
the recommendations issued by the various pertinent authorities in Spain, as well as in each market of operations;
the priority in all cases was to safeguard the health and safety of all of its employees:
Working from home was implemented for all Group employees whose duties allowed for it. This encompasses
80% of the workforce in Spain and in Latin America. The remaining 20% work on-site at the electricity and tele-
communications control centres where the Group operates and at the worksites that respond to the various
needs of the grid.
All people in high-risk groups continue to work from home. These include people who are vulnerable to COVID-
19, people over 60 years old, those who share their home with a pregnant woman or family members that work in
the healthcare field, as well as those coming to work by public transport.
Office-based work resumed in September in Spain and later in Peru and Chile, albeit in the mornings only, and
with the following measures in place:
o Antibody tests for all employees.
o Mandatory use of masks throughout the working day, even when safe distancing of 2 metres can be respected.
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o A rotating shift pattern to ensure 2-metre safe distancing between staff at the office.
o Provision of protective equipment for all employees, including surgical masks, hand sanitizer gel and gloves.
o All meetings still have to be conducted online, even though attendees may physically be at the office.
o Suspension of services such as the staff canteen, vending machines, physiotherapy, and sporting and volun-
teering activities that require a physical presence.
o Restrictions on international travel, except where deemed absolutely essential and only after approval from
the area head.
Strengthening the commitment to digitalisation
The digital transformation of the company has been ongoing for some time now. For example, infrastructure is now
widely in place to allow staff that need to work from home to do so. The spotlight has also remained squarely fo-
cused on cybersecurity, through strengthening the security measures already in place to protect equipment and to
roll out remote access. This has all contributed to the following:
Over 2,100 users connected (employees and associates) at any given time via VPN (Virtual Private Network).
Over 3,125 active channels on shared working platforms.
Over 40,000 virtual meetings held.
Over 10,000 incidents, requests and queries resolved remotely.
Actively cooperating with those most affected
The Group has been working on various fronts to help those most impacted by the healthcare crisis and its social
and economic collateral effects. Activities carried out in this regard include the following:
The Group has joined the Cruz Roja Responde initiative to help cover the basic needs of 25,000 families at risk of
poverty and social exclusion, especially to cover their needs in terms of food and companionship.
Backing for rural environments through the following initiatives:
o #Alimentos_Solidarios alongside the Federation of Rural Women's Associations (FADEMUR per its Spanish ac-
ronym), which consists of buying food from 70 family-run farms in rural areas for distribution to social organ-
isations to cover the basic needs of families at risk of exclusion. A total of 135,300 basic food parcels have
been donated.
o “Huerta Próxima", which has fostered cooperation among more than 300 smallholder farmers across Spain,
providing access to local markets for their products.
Financial assistance for the production of healthcare material:
o Open Ventilator pilot project to design a ventilator accredited by the Ministry of Health; the initiative is pro-
moted by the Celera Foundation.
o Donation of protective equipment to 19 health centres in Cajamarca, Amazonas and San Martín, regions in Peru
where the Group has a direct presence.
o The acquisition of 36 oxygen cylinders and flowmeters for the Moquegua Hospital and the Health Centres lo-
cated in the Salinas y Aguada Blanca National Reserve in Peru.
o Awareness-raising and provision of protective equipment for 6 communities in the Peruvian city of Puno.
Provision of a 3D printer to the Makerspace at the Universidad de Las Palmas de Gran Canaria Library to make
over 800 pieces of protective healthcare equipment.
Donation of bluetooth earphones so that those in hospital could stay in touch with family members.
Involvement of employees in the corporate volunteering project based on the writing of letters for those in hos-
pital (Solidarity Letters).
Active involvement in the Positive Energy+ initiative; endorsement of startups capable of projects that could
come to fruition in the short term to help mitigate the economic and social impact of the crisis.
Joining the campaign launched by the Ministry for Equality and the Institute for Women and Equal Opportunities
(IMIO per its Spanish acronym) to support victims of gender violence during the lockdown.
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Impact on the financial statements
From a financial and economic perspective, throughout this period the Group’s financial position has been robust,
enabling it to confront these difficult times through measures aimed at bolstering its liquidity. In 2020 the Group
made two bond issues for a total amount of Euros 1,100 million, by way of Euros 700 million in January and Euros
400 million in April, and also entered into loan and credit facility agreements amounting to Euros 475 million. Fol-
lowing these transactions, and having already settled due debts and the payments arising from the acquisition of
Argo Energia in Brazil, the Group’s liquidity position at the end of 2020 stands at Euros 2,412 million, specifically
Euros 482 million in available cash and Euros 1,930 million in available credit facilities. This position ensures the
Group’s ability to meet its operating cash flow requirements, to honour debt maturities for the coming years, and
to address any adverse situations that could emerge in the financial markets over the coming months as a result
of developments in the current crisis. In the next two years the Group will need to repay debt amounting to Euros
1,206 million, on the basis of Euros 164 million in 2021 and Euros 1,042 million in 2022.
The situation brought on by COVID-19 has not had a significant impact on the Group’s activity. Nonetheless, in early
February the Company activated a monitoring committee, enabling the implementation of an exhaustive contin-
gency plan.
The Red Eléctrica Group is setting its sights on a green recovery as the only way out of the economic crisis brought
on by the COVID-19 pandemic. For the Group, the focal point of this model is to foster an inclusive and fair energy
transition. In this regard, the Red Eléctrica Group has joined forces with initiatives both in Spain and in the interna-
tional arena that endorse sustainability as a springboard to post-crisis economic recovery. These include the “Man-
ifesto for a Sustainable Recovery”, championed by representatives from the political, corporate, trade union, sci-
entific and third sector communities in Spain, and which is aligned with the Green Recovery Alliance in Europe, and
the “Uniting Business and Governments to Recover Better” statement, promoted by the prestigious Science Based
Targets initiative and supported by the United Nations. These two initiatives are seeking to pave a way forward out
of the COVID-19 crisis that places people, achievement of the United Nations 2030 Agenda, and an ambitious cli-
mate-related action plan at the very heart.
The Group’s management and directors will continue to assess the situation and closely monitor any incidents aris-
ing in the infrastructure it manages, as well as trends in other external factors and the impact such factors could
have on the financial statements.
11.2 Description of the Group’s business model
The Group has consolidated itself as a global operator of essential infrastructure, managing electricity transmission
networks in Spain and Latin America, and telecommunications networks (fibre optics and satellites).
Management and operation of domestic electricity infrastructure
Construction and maintenance of power lines and electricity substations forming part of the transmission network
(including international and inter-island interconnections) that match generation with consumption and operation
in real-time in the Spanish electricity system, guaranteeing continuity of supply and the safe integration of
renewable energy.
It also includes the design and construction of storage infrastructure in the Canary Islands, which serves as a tool
for the operation of the electricity system to improve the integration of renewable energy and the safety of supply
on the islands.
Management and operation of international electricity infrastructure
Construction and operation of energy transmission infrastructure in Peru, Chile and Brazil, and provision of
electricity infrastructure maintenance services in Peru.
Telecommunications (satellites and fibre optics)
Satellite communications services for video, data transmission and mobility services through satellites in
operation. HISPASAT has a corporate presence in five countries: Spain, Brazil, Mexico, Argentina and Colombia.
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Commercial operation of the excess fibre optic network capacity associated with both the electricity transmission
network and the rail network, as well as technical spaces for storing telecommunications equipment in Spain.
The Group is committed to innovation and technology, based on the acceleration of technological innovation, the
generation of competitive advantages and business opportunities to turn the Group into a technological benchmark
in the energy transition, the traceability and accessibility of information, as well as the provision of innovation and
technological development services to third parties.
2030 Sustainability Commitment
The Group has made a strategic commitment to long-term, enterprise-wide sustainability. In 2017, the board of
directors approved the Group’s 2030 Sustainability Commitment. Through this commitment, the Group aims to
achieve long-term continuity through a business model that is capable of responding to the challenges of the future
and putting the principles set out in the Sustainability Policy into practice.
The 2030 Sustainability Commitment is backed by the board of directors and the Group's management team, whose
message is transmitted to the entire organisation with a view to encouraging a proactive attitude that incorporates
sustainability into day-to-day decision making. It is worth noting the creation of the Sustainability Committee within
the board of directors in 2018 as a result of the strategic importance of sustainability for the Group. The key role of
the Sustainability Steering Committee and the Corporate Division for Sustainability and External Relations, which
reinforce the involvement of the highest decision-making levels and the involvement of all areas of the organisation
in the implementation, supervision and monitoring of the 2030 Sustainability Commitment.
In 2019, the board of directors approved the Group’s 2030 sustainability objectives, which lay out eleven proposals
to measure compliance with the commitments established in the four sustainability priorities, focusing on those
aspects that provide answers to the great global challenges on the horizon for 2030. The objectives, which are
defined by the Sustainability Steering Committee and validated by the Sustainability Committee of the board of
directors, are aligned with the priorities of the 2030 Sustainability Commitment, the Group's 2018-2022 Strategic
Plan and the United Nations Sustainable Development Goals (SDGs).
Sustainability priorities and objectives for 2030 of the Red Eléctrica Group
DECARBONISATION OF THE ECONOMY
Act as a proactive agent in the energy transition towards an emissions-free model, based on the electrification of the
economy and the efficient integration of renewable energy through a robust and better-connected network and the
development and operation of energy storage systems.
2 Empower 100% of society to be actively involved in the energy transition process.
1 Reduce our Greenhouse Gas emissions by over 40%.
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3 Safely integrate 100% of the renewable energy available in the electricity system,
minimising waste and accelerating progress towards meeting the energy transition
objectives.
RESPONSIBLE VALUE CHAIN
Extend our responsibility commitment to all the links in the value chain, from our employees to our suppliers and cus-
tomers, by forging alliances, all underpinned by our model of good governance and integrity.
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4 Drive change in our suppliers.
5 Receive (socially responsible) ESG financing in 2030.
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CONTRIBUTION TO THE DEVELOPMENT OF THE ENVIRONMENT
Contribute to economic, environmental and social progress in the environment, by providing an essential service in a
secure and efficient way, fostering environmental conservation, enhancing people’s quality of life and social welfare
and involving communities in the development of our activities so as to generate mutual rewards that are tangible to
that community.
6 Benchmark in gender equality: parity in the management team by 2030.
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7 Benchmark in diversity: inclusion of collectives at risk of social and workplace
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8 Have a net positive impact on the natural capital of the area surrounding our fa-
cilities.
9 Fully eradicate the digital divide: 100% connection rate for people in the areas
surrounding our facilities.
ANTICIPATION AND ACTION FOR CHANGE
Foster a corporate culture of innovation and flexibility that enables us to identify growth opportunities and tackle future
challenges by staying ahead of and adapting to global trends and to the regulatory environment emerging from the new
energy model.
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10 Become a benchmark technological player, pushing at least 120 technological
innovation initiatives that contribute to the energy transition and telecommunica-
tions, making the world a more connected, intelligent and sustainable place.
11 Become a leading company in the circular economy.
The Group's main objective is to achieve a lasting and trusting relationship with its stakeholders.
The Red Eléctrica Group's stakeholder management model incorporates the requirements of regulations and
benchmark standards in the field, such as AA1000, IQNet SR10, ISO26000 or Global Reporting Initiative. This model
ensures adequate management of the significant economic, social and environmental impacts of the activities and
services of the Red Eléctrica Group on its stakeholders, avoiding the risk of not rapidly identifying any problem that
may affect the relationship with them. This model is composed of the following stages: identification and
segmentation of stakeholders, prioritisation and definition of the framework and relationship channels.
The Group undertakes an annual programme of perception studies aimed at assessing stakeholders’ satisfaction
with its performance and ascertaining their requirements and expectations. As well as being a tool to foster
dialogue and closer relationships with stakeholders, the studies are also an important driver of ongoing
improvement for the Group.
The review of the perception studies continued in 2020 and improvements identified in 2019 were brought into the
studies carried out during the year. Of note are the following improvements that were incorporated:
Improvement to the structure of the studies, adapting them to the 2030 Sustainability Commitment and seeking
synergies among target issues and audience.
Inclusion of relevant identified issues, alongside an assessment of their importance for each stakeholder group.
Identification and reporting of overall indices, both in terms of perception and reputation.
The thorough review of the stakeholder management model, which began in 2020, is expected to continue through
2021. The aim is to build an up-to-date and prioritised inventory for each Red Eléctrica Group company, which will
serve as the starting point to define new stakeholder relationship frameworks that are tailored to each subsidiary
and in line with the Group’s actual situation.
The Group currently classifies its stakeholders into the following categories: investors, shareholders and business
partners, regulatory bodies and the administration, customers, people, suppliers, surrounding environment,
opinion makers, business sector and professional associations and innovation agents.
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11.3 Information regarding environmental issues
The Red Eléctrica Group’s commitment to the environment stems from management and is based on environmental
policy, which includes the explicit commitment to the prevention of pollution and to precautionary principles. The
involvement of all of the organisational units and the commitment of all of the Group's employees are essential to
the implementation of this commitment.
REE and REA have an Environmental Management System in place (ISO 14001 certified) to facilitate the ongoing
improvement of their environmental performance. REE also meets the requirements established by the EU Eco-
Management and Audit Scheme (EMAS).
In 2020 Group companies incurred ordinary expenses of Euros 23.7 million in protecting and improving the
environment (Euros 26.1 million in 2019), essentially due to the implementation of environmental initiatives aimed
at protecting biodiversity, fire prevention, landscape integration, climate change, and prevention of pollution.
In 2020 a total of Euros 5.4 million (Euros 3.2 million in 2019) was spent on environmental issues associated with
investment projects (including environmental impact studies, environmental oversight of work, and the adoption
of preventive, corrective and accompanying measures).
Specifically, in the case of management and operation of the domestic electricity infrastructure business, ordinary
expenses for the protection and improvement of the environment amounted to Euros 23.3 million (Euros 25 million
in 2019) due to the implementation of environmental initiatives aimed at biodiversity protection, fire prevention,
landscape integration, climate change, and prevention of pollution. The amount allocated to environmental aspects
associated with investment projects exceeded Euros 4.9 million, significantly more than in prior years (Euros 1.7
million in 2019), due to work carried out on future submarine links.
The Red Eléctrica Group’s main environmental impacts are those associated with the presence of the facilities in
the area and, therefore, the Company is working to ensure they are compatible with the environment, considering
their entire life cycle and paying special attention to the protection of biodiversity. In view of its role as a leading
player in the transition towards a carbon-free energy model, the Red Eléctrica Group has taken on board a specific
commitment in relation to the fight against climate change. The Group’s environmental commitment is based on
three pillars: environmental management and the integration of electricity facilities into the environment; the
protection of biodiversity; and climate change.
Environmental management and integration of electricity facilities into the environment.
The main route to make facilities compatible with the environment is the selection of routes and sites so that the
environmental impact is as low as possible. Additionally, the application of preventive and corrective measures and
the monitoring of strict environmental criteria, make it possible for potential effects on the environment to be
reduced significantly. The best tool to guarantee this process is an Environmental Impact Assessment. By law, most
Red Eléctrica Group projects are subject to this procedure.
The measures implemented include those carried out during the construction of facilities to minimise land
excavation and the impact on vegetation, fauna and the socio-economic environment (infrastructure, crops and
archaeological heritage), and those related to the prevention of pollution. Actions aimed at mitigating the noise
generated by certain electrical substations (plans for measuring and adjusting the operating parameters of certain
power equipment to reduce noise levels) and reducing light pollution are also noteworthy. To address the latter
issue, in recent years the Company has worked on implementing the necessary measures to enable facilities to be
shut down at night, thereby limiting light pollution as much as possible while also achieving significant energy
savings.
In addition, visual impact assessment methodologies and tools have been improved, areas affected by works have
been restored and specific landscape integration projects have been undertaken so as to reduce the visual impact
of the facilities.
Lastly, we should highlight the importance for the Group of working towards and making significant headway on
the sustainable use of resources. The Group’s sustainability ambitions with a view to 2030 is to become a leading
player in the circular economy. The goals to be achieved and the actions to be carried out are enshrined in the
Circular Economy Roadmap, which focuses on improvement in various dimensions:
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Materials: reduction in raw material consumption, promoting the use of materials that are or can be recycled.
This notion includes action related to eco-design, which entails close cooperation with suppliers.
Waste: a target of 0% landfill waste has been set for 2030.
Land: steps aimed at minimising the risk of land or groundwater contamination due to hydrocarbon leaks or spills,
as well as the cleaning up of land affected by accidents using sustainable techniques.
Water: seeking solutions to improve efficiency and optimise the use of water.
Actions undertaken in 2020 include the development of a methodology for monetising the measures set out in the
Roadmap, and Project DIN2020, the purpose of which is to optimise electrical equipment design and increase the
efficiency of processes applicable to electricity infrastructure, applying circular economy criteria to raw material
consumption, water and energy, waste production and land.
Protecting biodiversity
Protecting and preserving biodiversity has always had a high priority in the Group’s environmental management
strategy. The specific commitment to biodiversity management was revised in 2020 and now includes the goal of
having a positive impact on biodiversity wherever the Group is present.
To meet this ambitious goal, the Group has set out a series of strategic steps, which include the “Development of
the 2030 biodiversity roadmap”. The goal of this project is to develop a strategy and a number of action steps aimed
at improving the relationship with natural capital, and to strengthen the commitment to protect, preserve and
improve biodiversity.
The main effects on biodiversity are associated with the presence of facilities in the area. Most notable is the risk
of birds colliding with earth wires in power lines and the effect on vegetation of felling and pruning to open up
firebreaks.
Biodiversity management is carried out taking into account the impact mitigation hierarchy. Avoiding areas that
are protected or highly biodiverse is a fundamental criterion when deciding on the location of facilities (in energy
transmission infrastructure, only 15.5% of lines and 5.73% of substations are located in protected areas). The
second step is to minimise possible affects and is achieved through the application of the corresponding preventive
and corrective measures, including the restoration of habitats wherever possible. Lastly, different environmental
improvement initiatives and projects are implemented, aimed at offsetting any impacts that may occur.
The multiannual Action Plan (2017-2021) currently in force contains the main activities to be executed in this period.
The initiatives relating to the following areas are noteworthy:
Protection of birdlife, the primary objective being to minimise the risk of birds colliding with earth wires, as men-
tioned above. A plan to use bird-saving devices in sections with the greatest potential impact for birds (more
than 760 km of lines) has been devised and is due to be completed in 2023. Flagging of 66.5% of critical priority
areas was completed in 2020.
Prevention of forest fires, through appropriate design and maintenance of firebreaks and the joint efforts of the
pertinent authorities in this field. There are currently 12 fire prevention agreements in place and two are being
renewed. These agreements have an overall associated budget of more than Euros 960,000 which is allocated
for a four-year period and channelled into cleaning up forest land, acquiring fire extinguishing and fire-fighting
equipment, training and awareness.
Implementation of conservation projects in cooperation with the government, NGOs and other bodies, notably
including projects relating to birdlife conservation or those devised for the restoration of degraded areas. The
latter include the “Red Eléctrica Marine Forest” project to restore posidonia oceanica seagrass (planting of 2
hectares in the bay of Pollensa, Mallorca was completed in 2020), and the “Red Eléctrica Forest”, with an invest-
ment of over Euros 2 million, through which more than 860 hectares have been restored since 2009.
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Climate change
The Group, mainly through its activities in the electricity sector, is a key and proactive agent in the energy transition
towards a zero emissions model, the main elements of which should be: the electrification of the economy, the full
integration of renewable energy into the energy mix and efficiency, while always ensuring the security of supply.
Taking on this role, in 2011 the Group decided to formalise a voluntary commitment in the fight against climate
change, which materialised into a Climate Change Action Plan, the latest version of which was approved in 2015.
The plan includes the objectives for Horizon 2020 and Horizon 2030, as well as the main initiatives that will be
undertaken to achieve them.
As a general objective, the Group is committed to reducing Scope 1 and 2 emissions per MWh transported by 40%
in 2030 with respect to 2015. This objective was approved in 2018 by the Science Based Targets (SBTi) initiative and
is equivalent to a net reduction of Scope 1 and 2 emissions of 30% by 2030.
The plan covers the following lines of action:
Contribution to a low-emissions energy model, taking the necessary actions to achieve European objectives for
2020 and 2030:
o Ongoing investor involvement to develop a robust, intelligent and interconnected transmission network that
enables the electrification and connection of new renewable energy capacity.
o Maximum integration of renewables by optimising the operation of the electricity system and progressing with
storage systems.
o Furthering efficient network management by applying new measures for managing demand, incorporating
new elements and services and encouraging technological innovation.
Reduction in greenhouse gas emissions resulting from the Group’s activities. The main measures implemented
apply to the following areas of action:
o Reduction in SF6 gas emissions (mainly by renewing switchgear and improving the detection and control of
leaks).
o Reduction in electricity consumption (energy-efficiency measures for buildings, such as the renovation of the
La Lomba building in 2020) and associated emissions (acquisition of 100% renewable energy).
o Sustainable mobility: reduction in emissions associated with the Group’s vehicles, business trips and employee
travel.
o Involvement of the supply chain in the Group’s commitments. A programme has been started in this regard
with the Group’s main suppliers to include their data in the overall scope 3 emissions calculation and to set an
ambitious target to reduce them.
o Progress in including efficiency criteria and reducing materials when designing facilities.
o Offsetting of emissions, primarily through the Red Eléctrica Forest project.
Positioning and outreach: dissemination of knowledge of the electricity system and demand management
measures, and promotion of other energy efficiency measures.
Adaptation: the Group regularly identifies and evaluates the risks and opportunities arising from climate change
and applies various measures defined within the framework of this analysis. In 2018 work began on the imple-
mentation of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which
gave rise to a thorough review of the assessment, considering different scenarios and intensifying the economic
quantification of risks and opportunities identified. Details of the TCFD recommendations are provided in note 4
on risk management in this consolidated directors’ report.
In 2019 the Red Eléctrica Group joined the United Nations Business Ambition for 1.5º, through which it champions
the commitment to review its targets and scale up its ambitions. Work to set new targets will continue through
2021, as will work on a new version of the Climate Change Action Plan to meet these new goals.
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Environmental indicators
Indicators of a non-financial character
2020
2019
%
Direct greenhouse gas emissions (scope 1) (tCO2 eq.) (1)
Indirect greenhouse gas emissions (scope 2) (tCO2 eq.) (1)
Power consumption (MWh) (1) (2)
Fuel consumption (MWh) (1) (3)
Consumption of energy from renewable sources as a percentage of total en-
ergy consumption (%)(1)(4)
Water consumption (m3) (5)
Hazardous waste (kg) (6)
Non-hazardous waste (kg) (6)
Number of environmental accidents (7)
25,557
600,824
18,255
9,438
52
27,195
236,654
794,664
10
23,614
781,452
14,051
6,854
58
20,347
547,100
718,987
5
Lines marked with bird-saving devices in critical priority areas (accumulated
kilometres at the end of each year).
508.4 (66.5%
of the total to mark)
459.7 (60.72%
of the total to mark)
8.23
-23.14
29.92
37.7
-10.34
33.6
-56.74
10.53
100
11
(5)
(3)
(4)
The data on emissions and energy consumption includes information for all Group companies (Peru, Chile and HISPASAT are included in 2020).
(1)
(2) Most of the energy supply contracts managed by the company are for green energy or offer guarantees of the renewable origin of the energy, which
represents 79% of the electricity consumed in 2020 (the remaining consumption corresponds to workplaces that are leased, workplaces in Latin America
or that do not have electrical hook-ups and therefore receive their supply from the transmission network).
Fuel consumption of fleet vehicles, electrical generators and heating. The increase is due to the inclusion of Peru, Chile and HISPASAT and to a change in
the methodology employed to calculate the amount of fuel consumed by electrical generators.
Includes renewable energy as a percentage of total energy consumed (electricity and fuels). It does not include the percentage of renewable energy
corresponding to the energy mix of each country (only that acquired contractually) or the percentage of biofuel contained in vehicles fuels.
The data has a coverage of 83.5% in terms of personnel, including collaborators. The water consumed comes from the municipal supply network (68.6%),
wells (14.07%), cistern (17.32%). In some centres there are reservoirs for accumulation of rainwater for sanitary use, fire prevention and irrigation. The
reservoirs do not have mechanisms to record the stored water so it is not possible to calculate the percentage usage of rainwater.
The 2020 data refers to the generation of waste by various Group companies (REE, Peru, Chile and HISPASAT), whereas the 2019 figure only refers to REE.
To analyse and compare the waste generation data against the prior year, it must be borne in mind that REE generates over 95% of hazardous waste and
over 70% of non-hazardous waste. The major decline in the generation of hazardous waste is due to the fall in maintenance, renovation and improvement
activities in the wake of the pandemic. 63% of all the waste generated (hazardous and non-hazardous) has been recycled (this generic category includes
reuse, recycling, composting, anaerobic digestion and regeneration).
Relevant accidents are considered to be those categorised as significant, severe or major in the internal classification (level 3 accidents and above on a
scale of 1 to 5). Does not include collisions.
(6)
(7)
11.4 Information on social and employee-related issues
Our people
Red Eléctrica is fully committed to the professional development of our personnel and to maintaining their internal
employability during their tenure, through integration, development and mobility programmes.
Consequently, in 2020 the Red Eléctrica Group continued to work on its talent management model, an essential
part of its Human Resources Master Plan, which uses a systematic approach to attract, discover, develop, train,
transform and retain talent and exchange knowledge. Through the deployment of five lines of action, the model
seeks to pursue excellence in these processes, thus ensuring that the company retains a foremost position both at
home and abroad, as follows:
Employment: recruitment, selection and internal mobility.
Training: technical training and skills.
Development: professional development programmes.
Knowledge management and leadership.
Assessment of contribution and key skills.
In 2020, work has been carried out on several key actions such as reviewing the selection process, rolling out an
efficiency plan for learning and development activities, conducting workforce strategic planning and identifying
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new professional profiles, and defining and implementing steps for professional recognition linked to employees’
performance reviews.
The Impúlsate project, which began in 2019, continued to roll out its functionality in 2020 as scheduled, promoting
the transformation of the people management function so as to add value to the Group, as a strategic lever for
change and to facilitate the achievement of objectives through its various projects: the implementation of a digital
mailroom, digital signatures, the introduction of the Agile Mindset in several of the Group’s areas, and the definition
and implementation of the Transformational Leadership Model.
In this context, in keeping with its strategic objectives, the Group has encouraged the adaptation of its human
capital to orient its companies towards greater efficiency and digitalisation.
Employment
At the end of 2020, the Group’s workforce consisted of 2,051 professionals. Of these, 92.5% (1,897 employees) work
in Spain, 7.5% work in Latin America (153 employees) and 1 person in Luxembourg. Staff enjoy stable, high-quality
employment (98% of jobs are on a permanent contract), with the focus on employability and functional mobility as
a lever for growth and professional development (5% mobility in 2020).
Our commitment to stable, high-quality employment is also reflected in our low overall external turnover (0.5%) and
the average seniority of our employees (16 years).
Structure of the workforce by country where the Group is present
2020
Female
Male
Spain
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
39
0
39
30
247
38
315
19
63
59
141
0
52
0
52
2020
Female
48
399
20
467
43
836
4
883
Male
Peru
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
14
3
17
0
1
0
1
0
2
0
2
2020
Female
3
6
0
9
3
42
0
45
Male
Chile
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
6
2
8
0
0
0
0
0
2
0
2
3
12
0
15
0
1
0
1
Total
140
1,636
121
1,897
Total
6
65
3
74
Total
3
21
2
26
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2020
Female
Male
Luxembourg
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
2020
Female
0
0
0
0
0
0
0
0
Male
Argentina
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
2020
Brazil
Management team
Technicians
Administrative personnel
Total
0
1
0
1
0
1
0
1
Female
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Male
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
0
6
6
12
0
4
2
6
0
3
1
4
0
1
3
4
0
3
4
7
1
12
4
17
Male
2020
Female
Colombia
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
The information for 2019 was as follows:
2019
Spain
Management team
Technicians
Administrative personnel
Total
Peru
Female
Male
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
0
38
0
38
34
244
43
321
13
55
60
128
0
56
0
56
45
395
24
464
47
847
6
900
Male
2019
Female
Management team
Technicians
Administrative personnel
Total
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
0
1
0
1
0
12
3
15
0
1
1
2
0
3
0
3
4
47
0
51
1
5
0
6
Total
0
1
0
1
Total
0
2
0
2
Total
1
29
20
50
Total
0
1
0
1
Total
139
1,635
133
1,907
Total
5
69
4
78
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2019
Chile
Management team
Technicians
Administrative personnel
Total
Female
Male
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
0
0
0
0
0
2
2
4
0
0
0
0
0
2
0
2
0
1
0
1
3
7
0
10
Male
2019
Female
Luxembourg
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
2019
Female
0
0
0
0
0
0
0
0
Male
Argentina
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
1
0
1
0
0
0
0
0
0
0
0
2019
Female
0
0
0
0
0
1
0
1
Male
Brazil
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
13
0
13
0
5
1
6
0
1
1
2
0
6
0
6
2019
Female
0
8
0
8
1
14
0
15
Male
Colombia
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Management team
Technicians
Administrative personnel
Total
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
1
0
0
0
0
Total
3
12
2
17
Total
0
0
0
1
Total
0
2
0
2
Total
1
47
2
50
Total
0
1
0
1
Details of the Group’s total workforce in 2020 and 2019 by age, gender and professional category are as follows:
By age
Under 30
30 to 50
Over 50
Total
2020
112
1,308
631
2,051
2019
119
1,325
612
2,056
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By gender
Female
Male
Total
By professional category
Management team
Technicians
Administrative personnel
Total
Workforce by contract type
By age
Under 30
30 to 50
Over 50
Total
By gender
Female
Male
Total
2020
546
1,505
2,051
2020
150
1,755
146
2,051
2019
532
1,524
2,056
2019
148
1,767
141
2,056
Permanent contracts
Temporary contracts
2020
82
1.298
631
2.011
2019
79
1.300
610
1.989
2020
2019
30
10
0
40
40
25
2
67
Permanent contracts
Temporary contracts
2020
527
1.484
2.011
2019
505
1.484
1.989
2020
2019
19
21
40
27
40
67
By professional category
Management team
Technicians
Administrative personnel
Total
Permanent contracts
Temporary contracts
2020
150
1.715
146
2.011
2019
148
1.703
138
1.989
2020
2019
0
40
0
40
0
64
3
67
The average number of permanent and temporary contracts by gender and professional category in 2020, and a
comparison with the previous year, is as follows:
Gender
Female
Male
2020
2019
Average per-
manent con-
tracts
521.8
1,479.5
Average tempo-
rary contracts
Average perma-
nent contracts
Average tem-
porary con-
tracts
18.8
20.9
433.0
1,357.0
24.4
42.6
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2020
2019
Professional category
Average per-
manent con-
tracts
Average tem-
porary con-
tracts
Average per-
manent con-
tracts
Average tem-
porary con-
tracts
Management team
Technicians
Administrative personnel
149.3
1,706.9
145.3
0
39.8
0
139.2
1,531.4
119.4
0.0
64.5
2.5
With regard to the average number of permanent and temporary contracts, in 2020 work has been carried out on
improving the information systems, which has led to the use of a different age range breakdown from that of the
other indicators. In 2019 the same age range is used as in the information provided in the previous year. As shown
by the indicators of the workforce, Group personnel is very stable throughout the year, with an extremely low
turnover.
Under 25
26 to 35
36 to 45
46 to 55
Over 55
Under 30
30 to 50
Over 50
2020
Average per-
manent con-
tracts
Average tem-
porary con-
tracts
13.4
201.5
847.6
548.7
394.5
7.5
23.8
4.0
1.0
0.0
2019
Average per-
manent con-
tracts
Average tempo-
rary contracts
69.6
1160.1
560.3
40.7
24.5
1.8
In 2020 and 2019, the Group’s workforce does not include any part-time personnel.
Details of dismissals2 in the year
By age
Under 30
30 to 50
Over 50
Total
2020
0
15
7
22
2019
0
4
3
7
2 Information pertaining to Group employees: including employees who have an employment relationship with a Group company under the provisions of Article
1 of the Workers’ Statute, and excluding those engaged under a service contract.
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By gender
Female
Male
Total
By professional category
Management team
Technicians
Administrative personnel
Total
2020
5
17
22
2020
6
16
0
22
2019
2
5
7
2019
2
3
2
7
Remuneration in the Red Eléctrica Group
The Group is working to consolidate a remuneration model across every company in the Group, which reflects the
following common principles:
Internal fairness and external competitiveness.
Consistency with the organisational and development model.
Opportunity for salary progression.
Differentiating recognition of superior performance.
Salary equality between men and women.
Red Eléctrica’s remuneration model for non-management personnel comprises a fixed portion with broad pay
bands that enable wage differentiation and a variable portion or extraordinary bonus that allows for outstanding
contributions to be recognised.
The Group has a flexible remuneration system that can be configured to provide personalised employee remuner-
ation. The Group offers its personnel products such as medical insurance, training, life insurance, travel cards,
luncheon vouchers and childcare vouchers, as well as REC stock option programmes.
The remuneration model for the management team includes a variable annual element which considers the contri-
bution made to the achievement of individual objectives regarding efficiency, quality and other factors such as
security and sustainability. As part of this model, members of senior management have a deferred variable element
of remuneration, the purpose of which is to strengthen their motivation and commitment to achieving the Group’s
Strategic Plan.
Furthermore, the Group continues to foster its leadership goals, which promote and link variable remuneration with
the leadership model for the management team and with the Group’s strategy.
In 2020 the use of a results-based remuneration model for non-management personnel, based on a system of set-
ting and monitoring challenges and deploying management team goals, was consolidated.
The Group therefore continues to make progress with the “total remuneration” model, which consists of different
elements (economic, financial, intangible and emotional), and which enables and supports new ways of working and
the organisational and cultural transformation of the Group.
This approach includes recognition programmes linked to the development of innovative and efficient ideas, as
well as revenue generation, in order to encourage the participation of all of the Group’s professionals.
Details of the average remuneration of the Red Eléctrica Group’s workforce
When calculating the average remuneration, the Red Eléctrica Group includes all elements of employee remunera-
tion, as follows:
Fixed remuneration
Annual variable remuneration
Red Eléctrica Corporación y Sociedades Dependientes
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Remuneration in kind
Personal supplements
Job-related supplements
Benefits
Compensation
Contributions to long-term benefit schemes
Long-term variable remuneration
Overtime
Allowances
Details of the average remuneration of the Group’s workforce for 2020 (in Euros):
Female
Male
Average total sal-
ary for 2020
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Average
total for
women
Average
total for
men
Average to-
tal
Management team
0
121,550
199,155
0
144,021
176,098
151,642
160,218
157,417
Technicians
Administrative
personnel
Total
33,711
55,321
62,861
36,408
56,169
69,949
54,104
59,447
58,277
11,774
36,571
44,247
13,698
34,511
46,811
39,380
41,161
39,807
31,130
58,616
72,948
35,291
60,560
79,987
59,886
65,780
64,216
The information for 2019 is as follows:
Female
Male
Average total sal-
ary for 2019
Under 30
30 to 50
Over 50
Under 30
30 to 50
Over 50
Average
total for
women
Average
total for
men
Average to-
tal
Management team
0
126,743
169,385
0
140,204
174,450
139,445
157,868
30,239
55,227
64,310
33,391
55,809
69,096
53,314
58,939
151,770
57,753
0
37,512
43,718
0
37,624
44,806
41,203
43,184
41,635
30,239
59,797
65,116
33,391
59,692
78,292
58,406
64,793
63,141
Technicians
Administrative
personnel
Total
The Red Eléctrica Group rewards its professionals under principles of fairness based on their level of responsibility
and professional experience, and its annual salary review processes differentiate on the basis of the contribution
made over the year and the results of their achievements, never on the basis of gender.
The elements of remuneration used to calculate the gross wage gap are the same as those used to calculate the
average remuneration using the following formula:
Average salary for men – Average salary for women
Average salary for women
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The gross wage gap in the Red Eléctrica Group in 2019 and 2020 is shown in the following table:
Red Eléctrica Group
Gross wage gap
2020
9.84%
2019
10.94%
The Group takes great care as regards equal pay for men and women, which has enabled it to reduce the gross
wage gap by one percentage point this year.
With a view to promoting transparency and complying with market recommendations and best practices, the Group
includes all elements of remuneration and all amounts received by its employees when calculating the gross wage
gap. This year, for the first time, it has also included allowances, overtime and supplements for expatriate assign-
ments. The results of recalculating the wage gap for 2019 in accordance with these new criteria are shown in the
above table.
Over the coming years, the Group will continue working to develop initiatives that enable us to make further pro-
gress in improving these values.
Details of the average remuneration in 2019 and 2020 by gender and age are as follows:
By gender
Female
Male
Total
By age
Under 30
30 to 50
Over 50
Total
2020
59,886
65,780
64,216
2020
33,397
60,044
78,356
64,216
2019
58,406
64,793
63,141
2019
31,918
59,720
75,417
63,141
The remuneration of personnel who did not form part of the Group for the full year in 2020 has been extrapolated
to 100% in all calculations.
The average remuneration of the members of the board of directors, including variable remuneration and
allowances, according to note 26 to the consolidated annual accounts of the Group, is as follows:
Thousands of Euros
Average remuneration for men (*)
Average remuneration for women (**)
2020
303.7
230.7
2019
263.6
183.4
(*) Includes the CEO. If the CEO were not included, average remuneration for men in 2020 would be Euros 186.4 thousand.
(**) Includes the chairwoman. If the chairwoman were not included, average remuneration for women in 2020 would be Euros 184.0
thousand.
With regard to senior management, according to note 27 to the consolidated annual accounts of the Group,
remuneration for 2020 totalled Euros 662 thousand3 (Euros 664 thousand in 2019). The difference between the
average salary for men and women is less than 1%.
Implementation of workplace disconnection policies
3Data is not broken down by gender as there is only one woman at senior management level, which would render data privacy an impossibility.
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Article 88, the Right to Digital Disconnection from the Working Environment, of the Spanish Data Protection and
Digital Rights Act (Organic Law 3/2018 of 5 December 2018), includes an obligation for companies to meet with
employees’ representatives and draft an internal policy for employees (including those in management positions)
that defines how this right to disconnect can be exercised and the actions taken to train employees and raise
awareness about the reasonable use of technology to prevent the risk of IT fatigue.
Furthermore, according to this law, the right to digital disconnection must also be upheld in cases where employees
are working from home part or all of the time, as well as in employees’ homes with regard to the use of technology
tools for work purposes.
In 2020 the Group endeavoured to meet the requirements enshrined in the aforementioned Law by introducing a
Digital Disconnection Protocol that will go into effect in the first quarter of 2021. It defines how this right to
disconnect can be exercised and the actions taken to train employees and raise awareness about the reasonable
use of technology to prevent the risk of IT fatigue.
Organisation of working hours
The actual effective working day established for employees complies with legal standards of minimum required
rights and with the conventional framework applicable at the corresponding Group company.
A real and effective timetable of 1,690 hours per annum has been established for 81% of the Group’s workforce. This
is distributed according to circumstances at each work centre, with a basic 7-hour day schedule on every working
day of the year.
Number of hours of absenteeism
The number of working hours lost due to common illness or occupational accident are shown in the table below:
Hours lost due to occupational accidents
Hours lost due to common illness
Hours lost due to health and safety
2020
Male
1,207
64,724
Female
TOTAL
884
22,932
2,091
87,656
65,931
23,816
89,747
In Peru, the number of hours lost due to common illness was 1,071.2, while in Chile it was 171.6 hours.
For the Group as a whole, 87,656 hours were lost due to common illness. Zero hours were lost due to occupational accidents in HISPASAT and the Latin
American companies.
Hours of absence due to occupational accidents include occupational accidents + commuting accidents
Hours lost due to common illness is the sum of days of temporary disability due to common illness + Illness < 3 days.
Hours lost due to health and safety is the sum of days of common temporary disability + illness < 3 days + commuting accidents.
Information on Group companies in Spain in 2019 was as follows:
Spain
Hours lost due to occupational accidents
2019
Male
2,371
Female
TOTAL
650
3,021
Hours lost due to common illness
61,532
32,547
94,079
Hours lost due to health and safety
63,903
32,197
97,100
The number of hours lost due to common illness is 2,031 hours in Peru and 167 in Chile
For the Group as a whole, the number of hours lost due to common illness is 94,079 hours, with zero hours lost due to occupational accidents (calculation
performed using an annual base and extrapolating the period from 1 October to 31 December).
Hours of absence due to occupational accidents include occupational accidents + commuting accidents
Hours lost due to common illness is the sum of days of common temporary disability + illness < 3 days
Hours lost due to health and safety is the sum of days of common temporary disability + illness < 3 days + commuting accidents.
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When calculating this data, the number of calendar days of absence was multiplied by 5.20, which is the coefficient
deemed to take into account all days of absence without considering whether they are working days or not in order
to make them equivalent to the number of days actually lost.
Absences of less than 3 days’ duration are accounted for by the number of hours lost (those in which the employee
has been temporarily disabled due to a commuting accident, occupational accident and common illness).
Management of work-life balance
Regarding the domestic electricity infrastructure operation and management and Telecommunications (fibre
optics) businesses, following the approval in 2019 of the third Comprehensive Work-Life Balance Plan, 2020 saw
the roll-out of objectives defined for the year and the extension of a flexible working culture.
This management model is one of the fundamental pillars of the Healthy Company model and the Diversity model
and includes over 70 work-life balance measures, structured into different blocks:
Leadership and management styles
Quality of employment
Flexibility of time and location
Family support
Personal and professional development
Equal opportunities
Health and safety
Through the commitment and leadership of the management team, the Red Eléctrica Group promotes best prac-
tices in safety, health and well-being. Its healthy company management model, deployed through a multi-year plan,
is aligned with the Group’s Strategic Plan, the Human Resources Master Plan and the 2030 Sustainability Commit-
ment of the Red Eléctrica Group.
Within this framework, the healthy company model revolves around four main lines of action:
Physical work environment: within the definition of the future energy model, identifying opportunities to gener-
ate value in the services offered.
Participation in the community: through actions performed by the company that have an impact on improving
the state of health and well-being of its employees’ families and the communities in which it operates.
Health resources: providing the workforce with tools to improve their physical and mental health, contributing
to their well-being and quality of life.
Psychosocial work environment: implementing management and work organisation tools and resources that fa-
vour the physical and psychosocial well-being of workers.
The model is deployed through annual programmes that aim to facilitate the continuity of the management model
through continuous improvement and to consolidate the Group as a leader in best practices for safety, health and
well-being, prevention, and promoting health.
The Group has a strategy and a specific action plan that promotes best practices in relation to occupational risk
during activities and work carried out at its facilities. The objective is to go beyond mere legal compliance, by train-
ing, informing and raising awareness about the obligations and responsibilities that exist and to commit the whole
Group to this goal.
In this context, higher risk tasks and activities are monitored on an ongoing basis by means of safety inspection
programmes, which are essential to achieving the high levels of safety required. Accordingly, in 2020, 10,285 safety
inspections were carried out on works and facilities, incidents having been detected in 11.26% of cases. As a result
of all the activities performed to control and monitor works, over 1,700 corrective actions were required, of which
85.34% were resolved while the rest are in the process of being resolved.
To minimise the risks associated with construction and maintenance tasks at electricity facilities, the Group places
special emphasis on training, awareness, consultation and participation (through the Health & Safety Committee,
internal audits and working groups), improving safe conduct and the safety measures employed while work is being
carried out by internal and external (contractors) personnel. In recent years, several initiatives aimed at reducing
accidents during the works execution phases have been implemented.
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In 2020 the Action Plan to improve health and safety was updated, establishing 2020-2023 as the new timeline in
order to address the strategic challenge of being a Zero Accidents group. Two main lines of work have been estab-
lished: Culture of Prevention and Innovation.
Culture of Prevention: to instil a culture of prevention focused on the well-being of the people working at Red
Eléctrica’s facilities, promoting a safe working environment, strengthening the communication of all the aspects
that contribute to increased safety when performing an activity.
Innovation: the Red Eléctrica Group is focusing on innovation as a driver of digital transformation in the field of
occupational safety. We manage innovation in health and safety, putting technology to work for people.
Through innovation management, we seek to make an impact on health and safety processes and promote the use
of technology, with the help of Elewit, the Group’s technology company. In 2020 pilot projects were undertaken with
several startups specialising in different enabling technologies such as virtual and mixed reality, data analytics (big
data), IoT (internet of things, which provides connected workers with sensors), and blockchain, applied to different
use cases and proofs of concept.
In 2020, the key accident rates for Group employees were 2.87 (frequency rate) and 0.10 (severity index). In 2019,
the rates were 4.13 (frequency rate) and 0.14 (severity index).
Workplace accidents and occupational illnesses
Red Eléctrica conducts preventive monitoring of the health of its employees on an ongoing basis through its in-
house medical service, which is responsible for checking employees’ health through periodic medical examinations
and consultations. As a result of the preventive measures applied, no incidents or risks of specific illnesses asso-
ciated with the professional activities carried out or related to the workplace were identified.
Red Eléctrica Group
Accidents with leave
Fatal accidents
Work days lost due to accidents (5)
Accident frequency index
Accident severity index
2020
2019
Male
Female
Total
Male
Female
Total
9
0
173
3.52
0.07
1
0
170
1.08
0.18
10
0
343
2.87
0.10
10
0
324
4.28
0.14
3
0
109
3.69
0.13
0
0
433
4.13
0.14
Frequency rate: number of work-related accidents resulting in leave per million hours worked.
Severity index: number of working days lost due to occupational accidents + incapacity scale, per thousand hours worked.
Moreover, there were no occupational illnesses in either 2020 or 2019.
Red Eléctrica implemented measures at the first news of the spread of COVID-19, which has allowed the contin-
gency plans to be rolled out promptly and effectively.
Since the start of the pandemic alert, reported cases have been monitored both in terms of illness and possible
contact, and essential personnel, system operators and technical maintenance specialists have been identified and
are subject to special monitoring.
In addition, personnel have been provided with the necessary protective health and safety equipment to carry out
their duties and adhere to all requisite safety protocols (masks, gloves and sanitiser gels).
In the specific area of health and health promotion, in addition to the basic actions of individual health monitoring,
different campaigns aimed at guaranteeing physical, psychological and social well-being have continued with the
aim of improving the overall well-being of people who have been forced to adapt to the circumstances of the
pandemic, offering various services through digital platforms in lieu of face-to-face: consultations on nutrition and
physical fitness, access to yoga classes, Pilates and mindfulness workshops.
The result of the 2020 audit of the Healthy Company model has been satisfactory.
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Social relationships
Red Eléctrica considers internal communication a key factor for sharing its mission and goals, involving employees
in the organisation’s various projects and improving the work climate, thus helping to boost pride in membership.
The main focus of internal communications was as an adjunct to the introduction of new, more agile, flexible and
collaborative working methods that would enable the company to achieve the challenges set out in the new Stra-
tegic Plan.
New intranet tools continue to be promoted through various internal channels, including the corporate Twitter feed
and the new Innovation channel, which aims to foster digital capabilities and co-creation among users.
In 2020, the company continued to increase communication cascading, giving it a closer, more personal touch and
designing new listening channels between managers and associates.
In October 2019, the Red Eléctrica Group conducted a Climate Survey to learn about how employees perceived dif-
ferent aspects of the company (commitment, leadership, development, communication, etc.) and to identify op-
portunities for improvement.
The methodology and the questionnaire have been maintained to provide continuity when tracking results, although
new items and categories have been incorporated in response to current needs, for example cultural or digital
transformation and innovation.
The Group published its results through the intranet (miRED) and the results for each area were presented by the
management team in face-to-face sessions during which constructive dialogue was encouraged.
Throughout 2020, work continued apace on the design, development and communication of action plans for Group
areas needing improvement, whether the area as a whole or the area leader.
Employees covered by a collective bargaining agreement
The Group guarantees its employees the right to trade union membership, association and collective bargaining
within the framework of the provisions of the International Labour Organisation, current labour laws and the appli-
cable collective bargaining agreement. This involves having workers’ representatives at several Group companies
as well as collective bargaining agreements, and holding talks and meetings on this topic.
Employees covered by a collective bargaining agreement
Employees in Spain
Employees in Brazil
2020
91%
98%
2019
91%
96%
In 2020, the aggregate figure for the other countries where the Group is present (Peru, Chile, Argentina, Colombia
and Luxembourg) is as follows:
Employees covered by a collective bargaining agreement (Peru + Chile + Argentina
+ Colombia + Luxembourg)
2020
3%
2019
0%
During the first half of 2020, negotiations were held on REINTEL’s 1st Collective Bargaining Agreement. The
negotiations concluded successfully and the 1st Collective Bargaining Agreement went into effect on 14 September
2020.
Consequently, relations with employees’ representatives were defined by the negotiation of a new agreement
through the Negotiating Committee created for the purpose.
During 2020, various meetings were held by Red Eléctrica de España’s Intercentre Committee and other
committees in which employees’ representatives are involved.
Summary of the collective bargaining agreements in the area of health and safety
Red Eléctrica de España has an occupational health and safety committee whose composition and functions are
set out in Chapter 7 of the 11th Collective Bargaining Agreement.
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This committee is a collegiate body with equal representation intended to provide regular and periodic consultation
regarding the company’s occupational health and safety actions. The committee consists of six representatives
nominated by the company and six health and safety delegates chosen from among the employees’ representatives,
who represent 100% of the employees. Specialists from the company’s health and safety service also attend the
committee’s meetings.
The committee meets every quarter (in accordance with Occupational Risk Prevention Law 31/1995) although it may
also meet at the request of any of the parties. In 2020, the committee met four times in regular sessions in
accordance with its objectives.
These meetings serve to monitor all health and safety activities, any new applicable legislation, the reviews of
processes and internal regulations, as well as analysing and tracking the results and the occupational health &
safety programmes and monitoring safety equipment and materials. The minutes of these meetings are available
to all employees under a dedicated section of the miRED corporate intranet. This committee also receives the
results of the internal and external audits that are carried out and any improvement actions that are implemented.
As a result of the health emergency triggered by the spread of Coronavirus disease 2019 (COVID-19), four special
meetings were held during the year to report on the actions and measures taken by the company, particularly with
regard to the work activities of essential personnel.
Training
In 2020, the Red Eléctrica Group's Campus was the main hub of Learning and Professional Development within the
Red Eléctrica Group.
The Group's transformation continues to be promoted through the new leadership approach and the development
of employees’ capacities through specific programmes developed by the three institutions (business knowledge
and technical training, strategy and leadership, and transformation and innovation).
As a result of the “push yourself” (Impúlsate) philosophy, a high component of self-development is encouraged in
training, with the launch of programmes and learning spaces wherein the employees themselves decide how and
when to participate based on their own interests. This new direction has translated into a new training catalogue
composed of more than 200 online courses on different technical, management and skills-based subjects, as part
of the “Digital by Campus” programme aimed at the acquisition of skills and knowledge related to digital
transformation and the “Self-development Ecosystem” designed to improve the personal and professional skills of
all employees.
Employees received 136,748 hours of training, equivalent to 67 hours per employee, at an investment of Euros
3,041.91 per person.
Training hours by professional category and gender:
Red Eléctrica Group
Management team
Technicians
Administrative personnel
Total
Male
8,708
94,164
1,995
104,867
2020
Female
4,987
23,178
3,716
31,881
Total
13,695
117,342
5,711
136,748
Male
4,763
108,452
635
113,850
2019
Female
2,351
24,046
3,083
Total
7,114
132,498
3,718
29,480
143,330
All employees are continuously assessed. The new appraisal model launched in 2019 continued to be used in 2020,
effectively individualising the evaluation of an employee’s contribution in order to increase objectivity and help
align employees with the Group’s strategy and encourage a culture of development and recognition.
In 2020 the Group consolidated the implementation of the challenge-based management model, which has
contributed towards giving each professional clearer guidance about their work, with greater autonomy and
flexibility, allowing employees to work when, where and how they require and with whoever needs them.
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The voluntary and proactive internal mobility plan has become well established, together with the use of the
LinkRED tool that can be accessed by all employees to share their experiences and interests in relation to
development and mobility.
In addition, to help students on higher vocational training courses to obtain qualifications, the Group has been
actively involved in creating a vocational training programme with theoretical and practical content, as part of the
dual vocational training system leading to the qualification of Senior Power Plant Technician. In 2020, the second
graduating class completed their training.
The aim of this initiative is to produce professionals who are qualified in this field and available to immediately take
up maintenance specialist technician positions; to furnish the sector with trained professionals equipped with Red
Eléctrica know-how; and to enhance the employability of young people, with a view to their becoming part of the
domestic industrial fabric.
Due to the preventive measures implemented by the Red Eléctrica Group as a result of the COVID-19 crisis, the
programme for the second graduating class had to be redesigned, adapting it to a mixed format. This format
combined a wide range of online technical and safety content using remote training via the TEAMS and FORMS
corporate applications to teach the theory portion of the programme, with face-to-face practical training in which
the participants were divided into several classrooms. This ensured that they attained the minimum required level
of proficiency in protection while also acquiring agility and skill in the handling of equipment and tools and receiving
the necessary safety training. The 20 students were thus able to complete their traineeships at their assigned work
centres in the 8 transmission districts having gained sufficient knowledge of health and safety.
Lastly, every two years the Red Eléctrica Group runs a nine-month theoretical and practical programme led by the
company’s operators, that enables young engineering graduates to qualify as Electricity Control Centre Operators.
Integration and universal accessibility for people with disabilities
Disabilities are one of the main areas of focus of the Comprehensive Diversity Plan approved at the start of 2019.
The General Law on the Rights of People with Disabilities (LGD) is applicable to three of the Group’s companies, of
which two comply with the law through direct employment: REINTEL (3.33%) and HISPASAT (2.05%). The company
that does not comply through direct employment (REE) goes beyond legal compliance with exceptional alternative
measures, achieving a rate of 2.47%. Of this percentage, 0.86% corresponds to direct employment and the
remainder to the application of exceptional alternative measures within the framework of the LGD, consisting of
contracting goods and services from Special Employment Centres and making donations to entities whose mission
is the social and labour integration of people with disabilities, and which support the Group in carrying out actions
related to disabilities as part of the annual diversity programme and contribute to its social initiatives.
The number of Group employees with disabilities is as follows:
People with disabilities
2020
20
2019
19
The corporate website of Red Eléctrica was developed using website accessibility criteria with Level AA
Conformance to Web Content Accessibility Guidelines 2.0 (WCAG 2.0) of the World Wide Web Consortium (W3C) Web
Accessibility Initiative (WAI).
One of the most valuable disability projects is the Family Plan, consisting of personalised assistance to improve
social and labour integration of any Group employees’ family members with disabilities.
In September 2020 Red Eléctrica took part in the Carrera de las Capacidades, a race event organised to raise
disability awareness.
Equality and diversity
The Group’s commitment to diversity, inclusion and non-discrimination has materialised in the form of its 2019-
2022 Comprehensive Diversity Plan, which is aligned with the Group’s Strategic Plan and the 2030 Sustainability
Commitment. It seeks to inspire and become a benchmark for the Group itself and in the wider social, labour and
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human environment, through the Group’s commitment to talent diversity, social inclusion, employment and non-
discrimination, breaking down stereotypes and cultural barriers. The goals of the Comprehensive Diversity Plan
are:
Create a corporate culture that encourages diversity among employees and other stakeholders.
Integrate diversity into all of the Group’s processes, especially people management.
Involve, raise awareness and promote the Group’s mission and approach to diversity among collaborators and
suppliers.
Participate with official organisations, academic institutions and other social agents in campaigns and projects
that enable the Group to become a leading social agent that will contribute to building a more diverse society.
The Comprehensive Diversity Plan has the following specific objectives:
o Ensure that at least 35% of the management team are women.
o 0% wage gap.
o Family-Friendly Company (EFR) classification - A+
o LGD compliance of 70% through direct employment
Gender equality is one of the vectors included in the new Comprehensive Diversity Plan and refers to the principles
of equal employment opportunities, the promotion of women to positions of responsibility, salary equivalence
between men and women, the promotion of shared family responsibility, the prevention of harassment on moral,
sexual and gender grounds and the prevention of gender violence. These aspects are monitored through indicators
that enable the Group to measure the progress of the objectives defined.
The percentage of women in the Group’s workforce in 2020 was 26.62% (25.88% in 2019). The number of women in
management positions has once again increased, totalling 32.67% in 2020 (31.76% in 2019). These results are
nearing the targets set for 2022.
The Red Eléctrica Group is committed to equality. The significant female presence on the Executive Committee is
notable, with 55.56% women, as well as on the board of directors, where women have a 50% representation, the
highest among the IBEX 35 companies.
We continue working on gender equality as shown by the indicators achieved in 2020 for equal opportunities in
training: 0.97%, contracts: 1.1%, promotion: 1.38% and promotion to the management team: 1.57%.
During 2020 the Group collaborated with entities and participated in various observatories and academic forums in
relation to diversity, including:
Collaboration in working roundtables and forums on diversity, equality and inclusion promoted by institutions
such as IE Business School and the Spanish Association of Women Executives and Directors (EJE&CON), the Real
Instituto Elcano and the Spanish Royal Academy of Engineering (participation in the Women and Engineering
project to foster the involvement of women in STEM careers).
Woman Forward event. Presentation of the 1st Report to promote the creation of value and equality in companies:
Proposals to move forward.
Women Action Sustainability (WAS) event related to the European funds and green recovery.
Women In A Legal World (WLW) first event: forum for women on boards of directors.
Celebration of the second “Mujer en Red” (Women in Red Eléctrica) week (March 2020), with daily initiatives to
raise awareness of the importance of women in society at large and more specifically in organisations.
Campaigns to raise awareness against gender-based violence, of communication on the International LGBTI
Pride Day, on the International Day of Persons with Disabilities and the 2020 International Day of Rural Women.
In 2020, various commitments and agreements were signed in relation to diversity, including:
Signing of the protocol “More women, better companies”, an agreement to foster equal participation of men and
women on boards of directors.
Collaboration agreement called “Red de Empresas por una Sociedad Libre de Violencia de Género” (Network of
Companies for a Society Free from Gender-based Violence).
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Participation in the Observatory on Work-Life Balance and Co-responsibility promoted by Universidad de Comil-
las.
Signing of the #CEOPORLADIVERSIDAD commitment with CEOE and Fundación Adecco to promote the De&I
strategy (Diversity, equity and Inclusion).
11.5 Information about respect for human rights
Respect for human rights
The Group has an explicit and public commitment to respecting and promoting human rights in every country in
which it operates, with special emphasis on the freedoms and rights of vulnerable groups such as indigenous
people, women, children and ethnic minorities, among others. This commitment is included in the rules of conduct
and guidelines established in the Code of Ethics and the Sustainability Policy, and applies to the whole supply chain
through the Code of Conduct for Group Suppliers. Lastly, as a member of the Spanish network of the United Nations
Global Compact, Red Eléctrica has strengthened its commitment to human rights by signing up to the ten principles
of the Global Compact.
In 2017 the company formalised a human rights management model, approved by the Sustainability Steering
Committee, which applies to all of the Group’s activities and is based on the United Nations’ Guiding Principles on
Business and Human Rights.
The Group takes an approach based on control and continuous improvement, implementing actions that help to
prevent potential human rights violations, while seeking solutions to redress such violations in the event that they
arise. In 2020 a total of 45 social audits were performed and 38 action plans were designed to redress major non-
compliances, which apply to 18 suppliers. As regards human rights commitments, improvements aimed at fostering
supplier development are agreed, and changes are measured so as to verify whether such improvements have been
made, and otherwise to ban the supplier temporarily or permanently. In 2020 the Group did not identify any supplier
contracts which have generated human rights incidents and there is no record of any such complaints being
received.
In order to continue making progress in human rights management and to strengthen its commitment to upholding
them, the company is working on improving the due diligence mechanisms to identify and evaluate actual or
potential negative implications on human rights, specifically those affecting local communities in the areas of
activity.
The Group has set up a whistleblowing channel that is available to all stakeholders as a formal mechanism for
addressing any human rights-related enquiries or complaints. The Group also has the DÍGAME Service and ASA (the
Procurement Support Service), through which stakeholders can express their concerns about any grievances in
this area. In 2020, the DÍGAME Service received five human rights-related complaints (two in 2019). 100% of these
complaints have been resolved.
The whistleblowing channels available to stakeholders have not received any human rights-related complaints in
respect of HISPASAT. None were received in 2019 either.
11.6 Information about the fight against corruption and bribery
Ethics and Compliance in the Red Eléctrica Group
Ethics and Compliance are fundamental pillars of the proper course of business at the Group. This means acting
with the utmost integrity in discharging the Group’s obligations and commitments, and in relations and cooperation
with its stakeholders.
The Group has a series of corporate rules of conduct establishing the values, principles and standards of conduct
that must be adhered to by all persons in the Group in the performance of their professional activities.
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Code of Ethics and Conduct
The Group’s Code of Ethics and Conduct applies to all Red Eléctrica Group personnel. It establishes and facilitates
commitment to the ethical values, principles and standards of conduct that must govern our professional activity
within the organisation.
In 2018 the company embarked upon a process of reviewing and updating the Code of Ethics in order to bring it into
line with best practices for ethical management and compliance, as well as the structural changes in the Red Eléc-
trica Group. This process was completed on 26 May 2020 when the board of directors approved the Red Eléctrica
Group's Code of Ethics and Conduct.
Ethics and Compliance Channel
The Red Eléctrica Group has set up an Ethics and Compliance Channel available to all the organisation’s members
and stakeholders, through which they can:
Raise any queries regarding interpretation of the ethical values, principles and standards of conduct laid down
in the Code, or propose improvements.
Report any violations of the Code, legislation, internal regulations or commitments taken on by the organisation.
Report any potential irregularities or violations related to financial, accounting or business malpractice.
The Red Eléctrica Group's Ethics and Compliance Channel is managed by the Ethics Office in coordination with the
Compliance area and its activity is governed by guidelines on the channel’s management.
On 1 December 2020 the Red Eléctrica Group’s Executive Committee approved the “Guidelines for managing the
Ethics and Compliance Channel”, comprising the internal regulations for management of said channel. The new
guidelines have been approved to bring the channel's activity into line with: the criteria of the Code of Ethics and
Conduct; the Spanish Data Protection and Digital Rights Act (article 24 of which regulates whistleblowing systems);
and Directive (EU) 2019/1937 of 23 October 2019 on the protection of persons who report breaches of Union law.
Enquiries and complaints processed in 2020
A total of 10 enquiries were made to the Ethics Officer via the Ethics and Compliance Channel in 2020. Three com-
plaints were received in relation to compliance with the Code of Ethics and Conduct in 2020, all of which were
resolved by year end (three complaints in 2019, one of which was unresolved at the 2019 year end). None of the
complaints were about non-compliance linked to the organisation’s criminal risks.
The chart below shows the number of queries and complaints made in each of the last five years.
Enquiries
Complaints
Compliance system
The Group’s Compliance System is aligned with the best practices in this area, so as to support the organisation in
fulfilling its obligations and commitments.
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The Red Eléctrica Group's Compliance Policy expresses the organisation's commitment to the prevention and de-
tection of and response to any conduct that contravenes the legal obligations and commitments assumed volun-
tarily, in accordance with the values, principles and behaviour guidelines of the Code of Ethics and Conduct.
The Group has a Compliance area that is entrusted with the design, development, implementation and monitoring
of the organisation's compliance system.
The main goals of the compliance system are:
Establish a control and supervision system to mitigate compliance risks, optimising and improving their man-
agement.
Make available to the entire organisation the content of the principles and rules that should govern their perfor-
mance within the Group and the instruments required to this end.
Raise awareness among Group members of the importance of the Compliance System and the necessary adap-
tation of their conduct to the values and behaviour guidelines of the Code of Ethics and Conduct.
Formalise the Group's commitment to the prevention of any conduct that is contrary to the applicable legislation
and to the commitments assumed voluntarily.
Inform the persons subject to the Compliance System that violation of the principles and guidelines of the System
will lead to disciplinary measures.
Establish appropriate control measures to mitigate the Group's compliance risk, as well as reaction and correc-
tion when a breach is detected.
Maintain supporting evidence of compliance with the Group’s obligations and commitments.
Criminal and anti-bribery compliance system
The Group has a criminal and anti-bribery compliance system that aims to identify the rules, procedures and tools
in place in the Group to prevent non-compliance with the criminal legislation applicable to the Group and its per-
sonnel. The management and prevention of criminal risks that could affect the Group, based on its activities and
business sectors, are thus incorporated into the Group's control processes.
The board of directors, as the ultimate body in charge of the Group's risk management, in accordance with appli-
cable regulations, has designated the Criminal Compliance Committee as the specific body in control of the Group's
Criminal Compliance System. The Criminal Compliance Committee is responsible for the supervision and monitor-
ing of the Group's Criminal Compliance System and its objective is for the main criminal risks to be properly identi-
fied and managed, and to raise awareness of such risks within the organisation.
In 2020 the criminal and anti-bribery compliance system of the Parent of the Red Eléctrica Group (REC) and its
subsidiary Red Eléctrica de España (REE) was certified under UNE 19601 and ISO 37001. The certification process
for this system was carried out by AENOR in December 2020.
In 2020, none of the Group’s companies were investigated or found guilty of acts of non-compliance linked to the
organisation’s criminal risks. Likewise, no complaints were filed in connection with potential cases of corruption
and no Group company was investigated or found guilty by any court in connection with non-compliances linked to
corruption cases.
Prevention of corruption and money laundering
The Code of Ethics and Conduct and the criminal and anti-bribery compliance system, which include aspects re-
lated to the fight against corruption and money laundering, constitute an effective mechanism for the detection
and treatment of possible cases of corruption and fraud. The Group has a guide for the prevention of corruption,
“zero tolerance”, which was approved by the board of directors in 2015 and sets out conduct guidelines and com-
mitments, as well as the performance criteria and main controls in place at the company associated with corrup-
tion, including money laundering.
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11.7 Information regarding society
Impact of the activity on employment and local development
The activities carried out by the Red Eléctrica Group undoubtedly have benefits for society, notably that they main-
tain the continuity and security of electricity supply in conditions of high quality.
Once again this year, the Red Eléctrica Group’s investment in the transmission network has benefitted society due
to its dynamic effect on economic activity because by encouraging production it leads to an increase in wealth (as
measured by GDP), in jobs and in tax revenue, which can be used to improve the general well-being of society. All
this is the result not only of the Group's direct investments but also of the increase in activity driven by the circular
flows of the economy.
Since 2017, the Red Eléctrica Group has used a methodology based on multipliers computed using Input-Output
Tables to estimate the level of general activity generated as a result of an initial investment. Calculations are per-
formed taking into account three main effects:
Effects of investments
Direct effect
Indirect effect
Induced effect
Estimation and valuation of
the production chain and
job and income creation
generated in the economic
system by an initial
investment.
Income and jobs created when the
beneficiaries of the initial investments
acquire other goods and services
(intermediate consumption) from other
production systems, which in turn
acquire goods and services from their
own suppliers.
Impact arising from all the income generated
in the previous stages. This effect thus
incorporates the effect of the final
consumption arising from the wage income
generated and the tax revenue obtained by
governments when taxing the different
economic activities and the income they
generate.
Socio-economic contribution in Spain
In 2020, the Red Eléctrica Group’s total investment in the transmission network in Spain amounted to Euros 383.1
million, of which an estimated Euros 71 million was spent on importing the products needed to carry out the activity.
The remainder, totalling around Euros 312 million, consisted of direct investment in Spain, the effect of which, after
applying the chosen methodology, is broken down in the following table:
Production (millions of Euros)
Income - GDP (millions of Euros)
Employment (no. of jobs)
Tax revenue (millions of Euros)
Direct
Indirect
Induced
312
129
2,350
50
296
126
2,250
48
31
10
316
4
Total
639
265
4,916
102
The investment made in Spain has generated Euros 639 million of output in the business sectors concerned, which
is more than double the investment made (Euros 312 million). This represents a contribution of Euros 266 million to
Spanish GDP (around 14% of the Group’s revenues in 2020), generating activity equivalent to 4,916 jobs. All of this
combined has generated tax revenue of Euros 102 million (approximately 9.2 % of the amount provisionally col-
lected in 2020 in respect of the special electricity tax).
Socio-economic contribution in Chile
In 2020, through its subsidiary Red Eléctrica Chile, the Red Eléctrica Group invested a total of US Dollars 42 million
in the transmission network, reflecting direct investment in Chile the effect of which, after applying the chosen
methodology, is broken down in the following table:
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Production (millions of US$)
Income - GDP (millions of US$)
Employment (no. of jobs)
Tax revenue (millions of US$)
Direct
Indirect
Induced
42
22
572
6
30
14
407
2
6
3
92
1
Total
78
39
1,071
9
The investment made in Chile has generated US Dollars 78 million of output in the business sectors concerned,
which is almost double the investment made (US Dollars 42 million). This represents a contribution of US Dollars 39
million to GDP, generating activity equivalent to 1,071 jobs. All of this combined has generated tax revenue of US
Dollars 9 million.
Socio-economic contribution in Peru
In 2020, through its subsidiaries in Peru, the Red Eléctrica Group invested a total of US Dollars 11 million in the
transmission network, reflecting direct investment in Peru the effect of which, after applying the chosen method-
ology, is broken down in the following table:
Production (millions of US$)
Income - GDP (millions of US$)
Employment (no. of jobs)
Tax revenue (millions of US$)
Direct
Indirect
Induced
Total
11
5
265
1
7
4
357
1
2
1
90
0
20
10
712
2
The investment made in Peru has generated US Dollars 20 million of output in the business sectors concerned,
which is almost double the investment made (US Dollars 11 million). This represents a contribution of US Dollars 10
million to GDP, generating activity equivalent to 712 jobs. All of this combined has generated tax revenue of US
Dollars 2 million.
Impact of the activity on local communities and the local area
The Group focuses its socio-environmental commitment towards unlocking shared value with society by pursuing
actions and investments that are aligned with its business goals and, while generating value for the Group, also
have a positive impact on society, the local area and its inhabitants. It also contributes to the attainment of various
challenges, such as the UN’s Sustainable Development Goals or those envisaged as part of the European 2020 en-
ergy strategy.
Shared value is created by the Group both in the way it develops and builds infrastructure and in the way it operates
and delivers services to the effective systems it operates in and to its customers. This activity generates opportu-
nities to unlock shared value throughout the infrastructure life cycle.
In addition, the Group supplements its projects in the area with collaboration schemes to nurture institutional and
social relationships, transparently seeking collaboration agreements, disseminating information about the elec-
tricity network's performance and fostering involvement in projects and initiatives that boost socio-economic de-
velopment, education, social well-being and the conservation, protection and enhancement of natural and cultural
heritage in the countries and regions in which it operates.
In 2020, the Group contributed over Euros 9 million (amount calculated using the London Benchmarking Group
methodology) to social initiatives (over Euros 8 million in 2019). Of particular note is the contribution of more than
Euros 2.4 million to mitigate the social and economic impacts of the global pandemic triggered by COVID-19. Con-
tributions to foundations and non-profit organisations, totalling Euros 1.4 million (Euros 1.7 million in 2019), ac-
counted for 53 (62 in 2019) of all the social initiatives carried out by the Group in 2020.
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Sectorial
Institutional
and organism
5%
General
Costs
7%
Reputational
2%
Institutional
4%
SOCIAL CONTRIBUTION 2020
Biodiversity
12%
Climatic Change
13%
Cooperation and
volunteering
services
30% (*)
Development,
education and
social well-
being 15%
Local Development
11%
Culture and heritage
1%
(*) Including extraordinary initiatives for COVID-19 contributions
In 2020, the company signed 89 agreements with public and social entities, mainly to cooperate on socio-economic,
environmental, educational and cultural development projects.
Among the 377 social initiatives undertaken, special attention has been paid to those focused on a rapid and effec-
tive response to needs arising as a result of COVID-19, the mitigation of population drift, and the conservation of
biodiversity.
With regard to knowledge-sharing, the Group has always played an important role through activities that seek to
enhance knowledge of the Spanish electricity system. This now takes on even greater importance given the sizea-
ble challenge posed by the new energy transition model through the decarbonisation of the economy, since a better
informed society has greater capacity to develop and maintain a new sustainable energy model.
On this front, the company overcame the restrictions on movement and the social distancing rules imposed as a
result of the healthcare crisis by offering virtual tours of its facilities. This allowed 1,100 people (in 53 tours) to see
them.
The Group has rolled out initiatives to reduce the impact of the COVID-19 pandemic and the resulting economic and
social crisis, particularly on more vulnerable areas of society.
Corporate volunteering
Corporate volunteering actions have had to be adapted to the conditions imposed as a result of the pandemic.
Those actions that required in-person participation have been replaced by remote actions, which help to mitigate
the effects of the pandemic on different social groups and the environment.
This change did not stop the volunteering actions carried out in 2020 reaching a level of participation of individual
volunteers of 26.48%, which is higher than the target set at the beginning of the year (20%).
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Main corporate volunteering actions in 2020
Food bank donations
campaign
Event with CREATICA during
the second “Mujer en Red”
(Women in Red Eléctrica)
week
Letters Against Loneliness
in collaboration with
HandsOn Spain
Cruz Roja donations
campaign
Christmas activities with
Cruz Roja
Christmas activities with
FDI (Development and
Integration Foundation)
and care homes for the
elderly.
#Plantemos (Let’s plant) a
new world with Fundación
Juan XXIII
STAY IN YOUR NEST with
SEO/BirdLife
Nest boxes with
SEO/BirdLife
Social volunteering
Virtual campaign to gather basic goods (food) to mitigate the effects of the pandemic
59 volunteers
Euros 2,670 collected by the volunteers, equivalent to 2,519 kg of food
Promoting higher education, particularly in STEM, among adolescents in vulnerable
circumstances
Practical workshop on programming involving six volunteer employees
Sending of letters and drawings to the elderly in care homes
25 volunteers
25 letters sent
Virtual campaign to gather basic goods (food, hygiene products and school material) to
mitigate the effects of the pandemic
106 volunteers
Euros 5,000 collected
Collection of a total of 175 new books for children aged 0 to 9 in all regions of Spain
175 volunteers
Sending of Christmas cards to the elderly in care homes
9 volunteers
13 cards sent
Environmental volunteering
Environmental and social project where participants receive a kit of seeds and sustainable and com-
postable material (prepared by people with disabilities) to plant at home
368 volunteers
Insight into urban birds to highlight their importance to biodiversity. Virtual training workshop and use
of the e-bird app
6 volunteers
Raising awareness about the importance of caring for urban biodiversity and engaging different
players (citizens, governments, businesses, associations) in conservation
8 volunteers
Participation in organisations
The Group is a member of and is active in various international organisations and associations, particularly within
the European Union, with a view to raising awareness of its stance on fundamental aspects of its activity, building
strong alliances and contributing to the achievement of common objectives.
The Group participates in international electricity-related organisations such as ENTSO-E (European Network of
Transmission System Operators for Electricity), RGI (Renewable Grid Initiative), IESOE (Electricity Interconnection
in South-Western Europe), Med-TSO (Mediterranean Transmission System Operators), EASE (European Association
for the Storage of Energy), and CIGRE (International Council on Large Electric Systems). Regarding the satellite
business, HISPASAT participates in the International Telecommunications Union (ITU), the Brazilian National
Telecommunications Agency (ANATEL), the Inter-American Telecommunications Commission (CITEL), the
European Satellite Operators' Association (ESOA), and the Inter-American Association of Telecommunications
Companies (ASIET).
The Group participates in organisations or domestic associations that seek different objectives:
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Share and extend best business practices
Spanish Quality Association
(AEC)
An association aimed at defending and promoting quality as a driver of competitiveness
in business and improvement in society.
Spanish Compliance
Association (ASCOM)
The first association created to professionalise the compliance function and facilitate
the exchange of ideas and best practices.
Spanish Association for
Standardisation and
Certification (AENOR)
An association that contributes to improving the quality and competitiveness of
companies by developing technical standards and certifications.
Spanish Issuers (Emisores
Españoles)
An association that fosters measures to reinforce legal certainty in the issue of listed
securities and contributes to the development of high standards of corporate
governance.
Enhance knowledge of the Group’s activities
o Electricity sector
Spanish Energy
Association (ENERCLUB)
An association that contributes to a better understanding of various energy-related
issues among interested parties in society.
Madrid Energy Foundation
(Fundación de la Energía
de la Comunidad de
Madrid)
Energy Cluster (Clúster de
la Energía) of various
autonomous regions
The foundation drives initiatives and research programmes for the development and
application of energy technologies.
A group that promotes the development and competitiveness of energy companies in
Spain.
o Telecommunications and aerospace sector
Madrid aerospace cluster
(Clúster aeroespacial)
An association that fosters and contributes to development and innovation in the
aerospace industry in the Madrid Region.
Spanish Association of
Technology Companies for
Defence, Aeronautics and
Space (TEDAE)
This Spanish association brings together technology companies in the fields of defence,
security, aeronautics and space, encompassing the Spanish tech industries in these
domains, and makes a meaningful contribution to the national objective of changing the
Spanish economy’s production model.
Spanish Aerospace
Technological Platform
A group which furthers aeronautics and space research consultancy in Spain, currently
charged with updating the Strategic Aerospace Research Agenda.
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Promote the Group’s commitment to sustainability
Sustainability Excellence
Club (Club de Excelencia en
Sostenibilidad)
Forética
Association for Excellence
in Management and
Innovation (Club Excelencia
en Gestión e Innovación)
Integrity Forum (Foro de
Integridad) of Transparency
International Spain
A business association aimed at driving sustainability by sharing and building awareness
of good practices.
An association of companies and sustainability professionals promoting the integration
of environmental, social and good governance issues in companies’ strategy and
management.
A business association aimed at strengthening the global competitiveness of
organisations and professionals through the values of excellence.
A think tank for improving compliance and ethical management in companies.
Voluntare Foundation
A global corporate volunteering network that helps to connect companies with third
sector organisations.
Subcontracting and suppliers
The globalisation of markets has extended the limits of companies’ responsibilities and triggered a change in the
role of suppliers, which have become a pivotal element. The Group extends its responsibility over the supply chain
and adheres to a responsible management model, based on the principles of non-discrimination, mutual
recognition, proportionality, equal treatment and transparency, as well as a framework of legislation and internal
Group codes, policies and rules.
In 2020 the Red Eléctrica Group worked with 1,292 suppliers in transactions worth Euros 599.6 million. Of that
amount, 85.4% relates to services and works, while the remaining 14.6% pertains to materials and equipment.
Besides the aforementioned suppliers, an additional 718 subcontractors also did work on electricity network
facilities, bringing the total number of companies that worked within the framework of the Group’s contracts to
2,010.
The local purchases indicator (purchases from suppliers based in the same country) was 88.2% for Red Eléctrica
Group companies in Spain, 97.5% for those in Chile and 97.0% for those in Peru; which means the Group acts as a
driver of growth, favouring business, industrial and social development by creating employment throughout the
supply chain.
The Group verifies that approved suppliers meet the minimum requirements, which vary depending on the supply
contract: they must have accepted the Code of Conduct for Suppliers, show evidence of a stable financial position,
fulfil certain minimum quality guarantee criteria, have adequate public liability insurance, and provide references
and records of previous work.
Should more specific environmental and social criteria be needed (in addition to those required for approval), these
are conveyed by the Group’s technical areas as part of the technical specifications that will form part of the tender
process. Their evaluation would form part of the technical assessment of the tender bids received.
The monitoring process verifies the suppliers’ performance in the context of the contracts with the company and
the ongoing fulfilment of the requirements made upon approval. The main areas screened are: (1) business
(monitoring of the financial solvency of all approved suppliers and application of mitigating measures, continuous
oversight of legal matters such as being up-to-date with payments to the Spanish taxation authorities, Social
Security, public liability insurance, etc.), (2) technical, and (3) social responsibility (verification of proper adherence
to the Code of Conduct for Suppliers through social audits).
Social audits were conducted at 45 suppliers during 2020 (53 in 2019) to verify compliance with the Code of Conduct
for Suppliers. As a result of the audits, 38 action plans have been agreed with 18 suppliers, so that supplier
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development can be monitored and improvements recorded. The results of these audits and their findings are
shared internally, placing special emphasis on the detection of major non-compliances.
Consumers
In the fourth quarter of 2020 the Group launched a project to analyse the way in which each Group company deals
with stakeholder interactions. The aim is to draw conclusions to establish a procedure defining common grounds
for managing such interactions from a Group perspective, allowing the company to consolidate existing information
and function as a single corporate system that improves interactions with external stakeholders. Once defined, the
Group will apply this master procedure to each company and iron out the specifics which could not be regulated in
the general procedure.
Red Eléctrica de España
Since 2008 the “Dígame” service has provided a professional response to requests from external stakeholders, who
have several channels of communication at their disposal (telephone, email, online contact form, post or certified
fax), regarding REE’s electricity system operation and transmission network management services. The service is
manned by employees of Fundación Juan XXIII Roncalli, a non-profit entity that facilitates the workplace integration
of people with disabilities.
Interactions through the Dígame service in 2020
In 2020 a total of 3,559 interactions were received and managed through the Dígame service (4), with stakeholders
from the surrounding environment accounting for the highest number (1,560), followed by investors and
shareholders (573), and then customers and business sectors and associations (572 each). To a lesser extent the
Group has recorded interactions with regulatory bodies and governments, suppliers and other stakeholders.
4.2%
3.5%
0.3%
43.8%
16.1%
16.1%
16.1%
Surrounding environment
Investors and shareholders
Customers
Business sectors and associations
Regulatory bodies and administration
Technological suppliers and providers
Other (opinion makers and employees)
Claims handled through the Dígame service in 2020
Of the 260 claims received, 219 fell under Red Eléctrica’s remit and were admitted. Of these, 58 were upheld
(accepted on correct and reasonable grounds, whether fully or partially).
(4) “Interactions” comprise any communication between Red Eléctrica de España and a stakeholder. Interactions are classified into: queries, case
files, notifications, requests, grievances, claims, recognitions and suggestions.
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Most claims received fall into two categories: quality and continuity of supply and impacts of the facilities. The first
type primarily consists of claims related to the incidents in Tenerife in September 2019 and August 2020, while the
second type mainly comprises claims concerning tree felling and clearing of vegetation.
By type
Quality and continuity of supply
Impacts of facilities
Measures
Other
Total
By stakeholder complainant
Surrounding environment
Business sectors and professional associations
Customers
Total
2020
173
41
2
3
219
187
28
4
219
2019
196
47
0
3
246
198
46
2
246
While some claims remain open, 95% of the claims accepted have been closed. Of the 21 claims that remained open
at the end of 2019, 19 were fully closed in 2020 and the other two more complex claims, relating to the Tenerife
incident, are in the process of being resolved.
International business
In 2020 the Group consolidated the channel for queries, requests, grievances and claims through a Latin America-
wide procedure that establishes the response times and prioritisation of communications received from external
stakeholders (bodies, entities, communities, associations, customers or the general public).
Moreover, the Dígame channel was opened for the business in Chile and an application was developed to record
cases in the field, for direct use by community relations personnel and maintenance workers.
By type
Claims
Grievances
Queries
Requests
Total
Peru
Chile
4
12
2
401
419
0
1
0
15
16
Most of the claims received in Peru relate to the CCNCM concession and one pertains to TESUR 2, while the griev-
ance made in Chile refers to REDENOR. All such claimants seek compensation for the impact of facilities.
In Peru, 53 of the interactions are in the process of being resolved, whereas all cases in Chile were closed during
the year.
REINTEL
REINTEL has its own 24/7 service and supervision centre, which controls and monitors the status of the network
and handles incidents and scheduled work of customers, with the aim of offering a reliable service of the utmost
quality. In 2020 a total of 533 network incidents affecting customers were handled. Of these, 63% stemmed from
power failures, third party works and natural causes, while the remaining 37% were due to scheduled network work.
These incidents were handled and resolved as part of normal business within the timeframes established in the
customers’ contracts.
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HISPASAT
HISPASAT also maintains an ongoing dialogue with its customers, providing them with various tools for direct
communication: 24/7 customer service call centre offered in three languages (Spanish, Portuguese and English)
with local phone numbers, a support centre and a web portal, allowing customers to open service incidents or
request information.
HISPASAT classifies such interactions into queries, incidents, grievances or suggestions. In 2020 it received a total
of 3,769 interactions, primarily queries (58.6%).
By type
Queries (6)
Incidents (7)
Grievances (8)
Total
2020
2019 (5)
2,207
1,558
4
3,769
393
343
0
736
HISPASAT surveys customer satisfaction every two years. The overall net satisfaction rate was 83.6% in 2017 and
82.1% in 2019.
Lastly, it is worth highlighting that the activity of the Group companies has no impact on the health and safety of
consumers. In the case of the electricity transmission activity, it should be noted that due to the criteria applied in
the design of the facilities, the levels of the electric and magnetic fields (EMFs) remain below those recommended
by the Council of the European Union (Official Journal of the European Communities 1999/519/EC: limitation of
exposure of the general public in areas where they spend significant time – 5 kV/m for the electric field and 100 µt
for the magnetic field). The main criteria applied are as follows:
Construction of double circuits and phased translocation in lines.
Raising the height of supports, thereby increasing the safety distances.
Minimum distances from the lines to population centres and isolated homes.
To verify compliance with recommendations, the Group has a tool that uses certain line parameters to accurately
gauge the maximum levels of EMFs that the facilities can generate.
Tax information
The Group is committed to compliance with tax laws and the fulfilment of its tax obligations, seeks a cooperative
relationship with the taxation authorities and considers it important to contribute to economic and social develop-
ment by paying taxes in all the countries in which it operates.
The Red Eléctrica Group was recognised by the Commitment and Transparency Foundation for topping the rankings
in the Tax Responsibility Transparency Report on the IBEX 35 in 2019. This analyses the voluntary transparency of
content related to the tax obligations of IBEX 35 companies. The Red Eléctrica Group scored maximum points and
led the transparent companies category.
The Group’s tax strategy was approved by the board of directors on 30 June 2015 and is intended to define a con-
sistent approach to tax matters in line with the Group’s strategy. It embodies the Group’s vision and objectives in
tax matters and is based on three core values: transparency, good governance and responsibility.
(5) As HISPASAT was acquired in October 2019, the total only includes interactions in October, November and December.
(6) Includes operational matters, information requests, non-operational incidents and others.
(7) Includes operational incidents, incidents, problems, terminal-related incidents, platform-related incidents, provision of service, alignment,
service incidents, scheduled work and changes.
(8) Includes complaints and claims.
Red Eléctrica Corporación y Sociedades Dependientes
Page 61 of 66
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
On 29 September 2015, the board of directors approved the Group’s Tax Risk Control and Management Policy and
its inclusion in the Comprehensive Risk Management Policy. The tax risk control and management systems are
described in the corporate governance report.
The Group’s Tax Strategy and Comprehensive Risk Management Policy may be consulted on the corporate website.
Both the Code of Ethics and Conduct and the Tax Strategy state the Group’s commitment not to create companies
in countries considered tax havens in order to evade tax.
The Group has no presence and carries out no activity in countries considered tax havens under applicable laws
and regulations (9).
Profits obtained, broken down by country
Millions of Euros
Profit before corporate income tax (*)
Spain
Peru
Chile
Brazil
Argentina
Others (**)
2020
726
10
-5
-2
-1
-
2019
930
7
-7
3
-
-
(*) Comprises the pre-tax income and expenses of each company, excluding dividends received from Group entities, aggregated at country
level.
(**) Includes France, the Netherlands, Luxembourg and the United Kingdom in Europe and other countries in the Americas, with amounts
under Euros 1 million.
Corporate income tax paid
With a view to following best practices in sustainability and voluntarily providing greater transparency in tax mat-
ters for its various stakeholders, since 2014 the Group has calculated and published its total tax contribution, high-
lighting the significant economic and social importance of its tax contribution.
The Group’s total 2020 tax contribution in all the countries in which it operates amounted to Euros 743 million,
consisting of Euros 259 million paid and Euros 484 million collected.
The corporate income tax paid in each country in 2020 and 2019 is as follows:
Millions of Euros
Corporate income tax paid
Spain
Peru
Chile
Mexico
Other (*)
Total
2020
192
3
-
2
-
197
2019
195
4
1
-
-
200
(*) Includes France, the Netherlands, Luxembourg and the United Kingdom in Europe and other countries in the Americas, with
amounts under Euros 1 million.
Corporate income tax in 2020 accounts for 76% of the taxes paid by the Group to public entities, mainly the Spanish
taxation authorities.
(9) Royal Decree 1080/91 of 5 July 1991, subsequently amended by Royal Decree 116/2003 of 31 January 2003; EU list of non-cooperative countries
and jurisdictions in taxation matters and list of non-cooperative tax havens drawn up by the OECD.
Red Eléctrica Corporación y Sociedades Dependientes
Page 62 of 66
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Government grants received
In 2020 Euros 1.8 million was received in grants from official bodies (Euros 0.3 million in 2019). The grants received
in 2020 and 2019 broken down by country, are as follows:
Millions of Euros
Government grants received
Spain
Total
2020
1.8
1.8
2019
0.3
0.3
11.8 Index of content required by Law 11/2018 of 28 December 2018 on non-financial and
diversity information
CONTENTS
Description of the business model:
Business environment
Organisation and structure
Markets in which the Group operates
Objectives and strategies
Key factors and trends that may affect future developments
I. Information regarding environmental issues
Management approach
Present and foreseeable impact of the company’s activities on the environment, health and
safety
Environmental assessment or certification procedures
Resources allocated to preventing environmental risks
Application of the precautionary principle
Provisions and guarantees for environmental risks
Pollution
Measures for the prevention, reduction or remediation of the effects of carbon emissions
(also includes noise and light pollution)
Circular economy and waste prevention and management
Measures for the prevention, recycling, reuse and other recovery and disposal of waste
Page
Reporting framework
(1) 102-1, 102-2, 102-4, 102-6, 102-7, 102-
40, 102-43, 102-44, 102-46, 102-47,
102-49
(1) 103-1, 103-2.103-3
Internal framework. Description of
the impact of the activity on the envi-
ronment, health and safety
Internal framework. Certified Envi-
ronmental Management System
Internal framework. Ordinary ex-
penses incurred for environmental
protection and improvement
(1) 102-11
Internal framework. Amount allocated
to environmental aspects associated
with investment projects
Internal framework. Measures for the
prevention of noise, light and atmos-
pheric pollution, as well as measures
for the reduction of carbon emissions
Internal framework. Circular economy
measures
30
32
32
32
32
32
32
34
33
Actions to combat food waste
Sustainable use of resources
Water consumption and supply
Consumption of raw materials and measures to improve efficiency
Direct and indirect energy consumption
Not significant
These types of actions are not carried
out due to the nature of our activities
36
(1) 303-1
Not significant
The company’s activities do not entail
direct consumption of raw materials
36
(1) 302-1 / 302-2
Red Eléctrica Corporación y Sociedades Dependientes
Page 63 of 66
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Measures taken to improve energy efficiency
Use of renewable energies
Climate change
Key elements of the greenhouse gas emissions generated
Measures taken to adapt to the consequences of climate change
Voluntary medium and long-term emission reduction targets set and steps taken
Protection of biodiversity
Measures taken to preserve or restore biodiversity
Impacts caused by activities or operations in protected areas
II. Information on social and employee-related issues
Management approach
Employment
Total number and distribution of employees by gender, age, country and professional quali-
fications
Total number and distribution of employment contract types by gender, age and job category
Average annual number of permanent, temporary and part-time contracts, by gender, age
and professional category
Number of dismissals by gender, age and professional classification
Wage gap
Average pay by gender, age and professional classification
Remuneration of like positions or average remuneration in the company
Average remuneration of directors by gender
Average remuneration of management personnel by gender
Implementation of workplace disconnection policies
Employees with disabilities
Organisation of work
Organisation of working hours
Number of hours of absenteeism
Measures aimed at facilitating a work-life balance and encouraging the joint and responsible
sharing thereof by both parents
Health and safety
Occupational health and safety conditions
Number of workplace accidents and occupational illnesses by gender, frequency and sever-
ity
35
36
32
32
32
34
33
36
37
40
41
41
43
43
43
44
44
44
50
45
45
46
46
47
Internal framework. Initiatives to
combat climate change and energy
efficiency measures
Internal framework. Qualitative/quan-
titative information on the use of re-
newable energy
(1) 305-1 / 305-2 / 305-3 / 305-4
(1) 305-5
Internal framework. Objective for re-
ducing emissions and combating cli-
mate change
(1) 304-1 / 304-3
(1) 304-2
(1) 103-1, 103-2.103-3
(1) 102-8
(1) 102-8
Internal framework. Average annual
number of contracts by type, broken
down by gender, age and professional
category
Internal framework. Details of dismis-
sals for the year by gender, age and
professional classification
(1) 405-2
Internal framework. Average total sal-
ary by gender, age and professional
classification
(1) 405-2
Internal framework. Average remu-
neration of members of the board of
directors by gender
Internal framework. Average remu-
neration of senior management per-
sonnel by gender
Internal framework. Workplace dis-
connection measures
Internal framework. Percentage of
employees with disabilities
Internal framework. Real and effec-
tive working day
Internal framework. Number of hours
of absenteeism
(1) 401-2
(1) 403-10 / 404-1 / 404-2
Related regulations per Ministry of
Work standards
https://herramientasprl.insst.es/Acci-
dentesdetrabajo/RecursosAdicion-
ales.aspx
Red Eléctrica Corporación y Sociedades Dependientes
Page 64 of 66
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Social relationships
Organisation of social dialogue, including procedures on worker communication, consulta-
tion and negotiation
Percentage of employees covered by collective bargaining agreements by country
Summary of collective bargaining agreements, particularly in the field of health and safety
Training
Policies implemented
Total hours of training by professional category
Universal accessibility for people with disabilities
Universal accessibility for people with disabilities
Equality
Measures taken to promote equal treatment and equal opportunities for women and men
Equality plans: job stimulation measures, protocols against sexual harassment and gender
bias
Integration and universal accessibility for people with disabilities
Policies against all kinds of discrimination and, as the case may be, diversity management
III. Information about respect for human rights
Management approach
Implementation of due diligence procedures in relation to human rights
Prevention of risks of human rights abuses and, where appropriate, measures to mitigate,
manage and redress any potential abuses committed
Reporting of human rights infringements
Promotion of and compliance with the provisions of the conventions of the International La-
bour Organisation with regard to respect for freedom of association and the right to collec-
tive bargaining; elimination of discrimination in employment and occupation; elimination of
forced or compulsory labour; effective abolition of child labour
IV. Information about the fight against corruption and bribery
Management approach
Measures to prevent corruption and bribery
Measures to combat money laundering
Contributions to foundations and non-profit organisations
V. Information regarding society
Management approach
The company’s commitments to sustainable development
Impact of the company’s activity on employment and local development
Impact of the company’s activity on local populations and the local area
Relations with local community actors and types of dialogue
Association and sponsorship actions
Subcontracting and suppliers
Inclusion of social, gender equality and environmental issues in the purchasing policy
Attention given to social and environmental responsibility in relations with suppliers and
subcontractors
Supervision systems and audits and results
47
48
48
49
49
50
50
51
50
50
52
52
52
52
47
52
52
55
57
55
56
56
56
56
60
60
60
(1) 402-1
(1) 102-41
(1) 403-4 / 403-8
(1) 404-2
(1) 404-1
Internal framework. Accessibility
measures
Internal framework. Measures
adopted to promote diversity
Internal framework. Diversity plan
Internal framework. Hiring of people
with disabilities and integration and
accessibility measures
Internal framework. Anti-discrimina-
tion policy
(1) 103-1, 103-2.103-3
(1) 407-1 / 408-1 / 409-1
(1) 411-1 / 412-1 / 412-3
(1) 102-17
Internal framework. Compliance with
ILO provisions
(1) 103-1, 103-2.103-3
(1) 102-16 / 102-17 / 406-1
(1) 102-16 / 102-17 / 406-1
Internal framework. Contributions to
foundations and non-profit organisa-
tions
(1) 103-1, 103-2.103-3
(1) 413-1
(1) 413-1
(1) 413-1
(1) 102-13
(1) 414-1
(1) 414-1
(1) 308-1 / 308-2
Red Eléctrica Corporación y Sociedades Dependientes
Page 65 of 66
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Consumers
Measures to protect consumer health and safety
Grievance mechanisms in place
Complaints received and resolution thereof
Tax information
Profits obtained, broken down by country
Corporate income tax paid
Government grants received
61
61
62
64
65
65
(1) 416-1
(1) 102-43 / 102-44
(1) 102-43 / 102-44
(1) 207-4
(1) 207-4
Internal framework. Government
grants received
(1)
This table shows the equivalence between the requirements of Law 11/2018 and the GRI indicators. Red Eléctrica
has published non-financial information since 2003 in accordance with successive versions of the Sustainability
Reporting Guidelines of the Global Reporting Initiative (GRI).
12 Annual Corporate Governance Report
The Annual Corporate Governance Report forms an integral part of the directors' report and can be viewed at the
following address:
http://www.cnmv.es/Portal/consultas/EE/InformacionGobCorp.aspx?nif=A-78003662
Red Eléctrica Corporación y Sociedades Dependientes
Page 66 of 66
Independent Limited Assurance Report of the Consolidated Non-
Financial Statement for the year ended December 31, 2020
RED ELÉCTRICA CORPORACIÓN, S.A. and SUBSIDIARIES
INDEPENDENT LIMITED ASSURANCE REPORT OF THE CONSOLIDATED NON-FINANCIAL
STATEMENT
Translation of a report originally issued in Spanish. In the event of discrepancy,
the Spanish-language version prevails
To the Shareholders of RED ELÉCTRICA CORPORACIÓN, S.A.:
Pursuant to article 49 of the Code of Commerce we have performed a verification, with a limited
assurance scope, of the accompanying Non-Financial Statement (hereinafter NFS) for the year ended
December 31, 2020, of RED ELÉCTRICA CORPORACIÓN, S.A. and subsidiaries (hereinafter, the
Group), which is part of the Group's accompanying Consolidated Management Report.
The content of the NFS includes additional information to that required by prevailing mercantile
regulations in relation to non-financial information that has not been subject to our verification. In
this regard, our assignment has been exclusively limited to the verification of the information shown
in section “11.8. Index of content required by Law 11/2018 of 28 December on disclosure of non-
financial and diversity information” of the aforementioned Statement.
Responsibility of the Board of Directors
The Board of Directors of the Group are responsible for the approval and content of the NFS included
in the Group's accompanying Consolidated Management Report Consolidated of RED ELÉCTRICA
CORPORACIÓN, S.A. The NFS has been prepared in accordance with the content established in
prevailing mercantile regulations and the criteria of the selected Global Reporting Initiative
Sustainability Reporting Standards, as well as other criteria described in accordance with that
indicated for each subject in section “11.8. Index of content required by Law 11/2018 of 28
December on disclosure of non-financial and diversity information” from the aforementioned NFS.
The directors are also responsible for the design, implementation and maintenance of such internal
control as they determine is necessary to enable the preparation of a NFS that is free from material
misstatement, whether due to fraud or error.
They are further responsible for defining, implementing, adapting and maintaining the management
systems from which the information necessary for the preparation of the NFS is obtained.
Our independence and quality control procedures
We have complied with the independence and other Code of Ethics requirements for accounting
professionals issued by the International Ethics Standards Board for Accountants (IESBA), which is
based on the fundamental principles of professional integrity, objectivity, competence, diligence as
well as confidentiality and professional behavior.
Our Firm complies with the International Standard on Quality Control No. 1 and thus maintains a
global quality control system that includes documented policies and procedures related to
compliance with ethical requirements, professional standards, as well as applicable legal provisions
and regulations.
2
The engagement team consisted of experts in the review of Non-Financial Information and,
specifically, in information about economic, social and environmental performance.
Our responsibility
Our responsibility is to express our conclusions in an independent limited verification report based on
the work performed, that refers exclusively to 2020. Our review has been performed in accordance
with the requirements established in prevailing International Standard on Assurance Engagements
3000 “Assurance Engagements Other than Audits or Reviews of Historical Financial Information”
(ISAE 3000 Revised) issued by the International Auditing and Assurance Standards Board (IAASB) of
the International Federation of Accountants (IFAC) and the guidelines for verifying Non-Financial
Statement, issued by the Spanish Official Register of Auditors of Accounts (ICJCE).
The procedures carried out in a limited assurance engagement vary in nature and execution timing
and are smaller in scope than reasonable assurance engagements, and therefore, the level of
assurance provided is likewise lower.
Our work consisted in requesting information from Management and the various Group units
participating in the preparation of the NFS, reviewing the process for gathering and validating the
information included in the NFS, and applying certain analytical procedures and sampling review
tests as described below:
Meeting with Group personnel to know the business model, policies and management
approaches applied, the main risks related to these matters and obtain the necessary
information for our external review.
Analyzing the scope, relevance and integrity of the content included in the NFS for the year
2020 based on the materiality analysis made by the Group and described in section
“Materiality Analysis”, considering the content required by prevailing mercantile regulations.
Analyzing the processes for gathering and validating the data included in the 2020 Non-
Financial Statement.
Reviewing the information on the risks, policies and management approaches applied in
relation to the material aspects included in the 2020 NFS.
Checking, through tests, based on a selection of a sample, the information related to the
content of the 2020 NFS and its correct compilation from the data provided by the
information sources.
Obtaining a representation letter from the Directors and Management.
3
Conclusion
Based on the procedures performed in our verification and the evidence obtained, no matter came to
our attention that would lead us to believe that the 2020 NFS of the Group for the year ended
December 31, 2020 has not been prepared, in all material respects, in accordance with the content
established in prevailing mercantile regulations and the criteria of the selected GRI standards, as well
as other criteria described in accordance with that indicated for each subject in section “11.8. Index
of content required by Law 11/2018 of 28 December on disclosure of non-financial and diversity
information” of the aforementioned Statement.
Use and distribution
This report has been prepared as required by prevailing mercantile regulations in Spain and may not
be suitable for any other purpose or jurisdiction.
ERNST & YOUNG, S.L.
(Signature on the original in Spanish)
_____________________
Alberto Castilla Vida
February 23, 2021
Auditor’s Report on
Red Eléctrica
Corporación, S.A.
(Together with the annual accounts and directors’
report of Red Eléctrica Corporación, S.A. for the
year ended 31 December 2020)
(Translation from the original in Spanish. In the
event of discrepancy, the Spanish-language version
prevails.)
KPMG Auditores, S.L.
Paseo de la Castellana, 259 C
28046 Madrid
Independent Auditor's Report on the Annual Accounts
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
To the Shareholders of Red Eléctrica Corporación, S.A.
REPORT ON THE ANNUAL ACCOUNTS
Opinion __________________________________________________________________
We have audited the annual accounts of Red Eléctrica Corporación, S.A. (the “Company”), which
comprise the balance sheet at 31 December 2020, and the income statement, statement of changes
in equity and statement of cash flows for the year then ended, and notes.
In our opinion, the accompanying annual accounts give a true and fair view, in all material respects,
of the equity and financial position of the Company at 31 December 2020, and of its financial
performance and its cash flows for the year then ended in accordance with the applicable financial
reporting framework (specified in note 2 to the accompanying annual accounts) and, in particular,
with the accounting principles and criteria set forth therein.
Basis for Opinion _________________________________________________________
We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in
Spain. Our responsibilities under those standards are further described in the Auditor's
Responsibilities for the Audit of the Annual Accounts section of our report.
We are independent of the Company in accordance with the ethical requirements, including those
regarding independence, that are relevant to our audit of the annual accounts pursuant to the
legislation regulating the audit of accounts in Spain. We have not provided any non-audit services,
nor have any situations or circumstances arisen which, under the aforementioned regulations, have
affected the required independence such that this has been compromised.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key Audit Matters ________________________________________________________
Key audit matters are those matters that, in our professional judgement, were of most significance
in the audit of the annual accounts of the current period. These matters were addressed in the
context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
KPMG Auditores S.L., a limited liability Spanish company and a member firm of the
KPMG global organization of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights
reserved.
Paseo de la Castellana, 259C 28046 Madrid
On the Spanish Official Register of Auditors (“ROAC”) with No. S0702, and the
Spanish Institute of Registered Auditors’ list of companies with No. 10.
Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9
N.I.F. B-78510153
2
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Recoverability of current and non-current investments in Group companies
and associates: Euros 2,646,582 thousand and Euros 1,333,654 thousand,
respectively
See notes 4 e), 4 f), 8 and 21 to the annual accounts
Key audit matter
How the matter was addressed in our audit
As mentioned in notes 8 and 21 to the annual
accounts, the Company holds investments in
Group companies and has extended loans to
these companies, Euros 2,646,582 thousand
of which are recognised in the balance sheet
under non-current investments in Group
companies and associates, and Euros
1,333,654 thousand under current investments
in Group companies and associates. As
required by the applicable financial reporting
framework, each year the Company assesses
whether there are indications of impairment of
these investments, and if this is the case,
calculates the recoverable amount of these
investments.
The Company calculates the recoverable
amount by applying valuation techniques that
often require the exercising of judgement by
the Directors and the use of assumptions and
estimates.
Due to the uncertainty associated with these
estimates, this has been considered a key
audit matter.
Our audit procedures included the following:
-
-
-
evaluating the design and
implementation of key controls related
to the process of measuring
investments;
assessing the criteria used by the
Company's Directors and management
to identify indications of impairment of
the investments;
evaluating the methodology and
reasonableness of the assumptions
used by management and the Directors
and considered in the testing of
impairment of the investments in Group
companies, with the involvement of our
valuation specialists, and based on the
reports drawn up by the independent
experts engaged by the Company to
contrast the reasonableness of the
assumptions used.
We also assessed whether the disclosures in
the annual accounts meet the requirements of
the financial reporting framework applicable to
the Company.
3
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Other Information: Directors’ Report _______________________________________
Other information solely comprises the 2020 directors' report, the preparation of which is the
responsibility of the Company's Directors and which does not form an integral part of the annual
accounts.
Our audit opinion on the annual accounts does not encompass the directors' report. Our
responsibility as regards the content of the directors' report is defined in the legislation regulating
the audit of accounts, which establishes two different levels:
a) Determine, solely, whether the non-financial information statement and certain information
included in the Annual Corporate Governance Report, as specified in the Spanish Audit Law,
have been provided in the manner stipulated in the applicable legislation, and if not, to report on
this matter.
b) Assess and report on the consistency of the rest of the information included in the directors’
report with the annual accounts, based on knowledge of the entity obtained during the audit of
the aforementioned annual accounts. Also, assess and report on whether the content and
presentation of this part of the directors’ report are in accordance with applicable legislation. If,
based on the work we have performed, we conclude that there are material misstatements, we
are required to report them.
Based on the work carried out, as described above, we have verified that the specific information
mentioned in section a) above has been provided in the directors' report, that the rest of the
information contained in the directors' report is consistent with that disclosed in the annual accounts
for 2020, and that the content and presentation of the report are in accordance with applicable
legislation.
Directors' and Audit Committee's Responsibility for the Annual Accounts ____
The Directors are responsible for the preparation of the accompanying annual accounts in such a
way that they give a true and fair view of the equity, financial position and financial performance of
the Company in accordance with the financial reporting framework applicable to the entity in Spain,
and for such internal control as they determine is necessary to enable the preparation of annual
accounts that are free from material misstatement, whether due to fraud or error.
In preparing the annual accounts, the Directors are responsible for assessing the Company's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the Directors either intend to liquidate the Company or
to cease operations, or have no realistic alternative but to do so.
The Audit Committee is responsible for overseeing the preparation and presentation of the annual
accounts.
4
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Auditor's Responsibilities for the Audit of the Annual Accounts ______________
Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with prevailing legislation regulating the audit of accounts in Spain will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence economic decisions of users taken on the basis of these annual accounts.
As part of an audit in accordance with prevailing legislation regulating the audit of accounts in Spain,
we exercise professional judgement and maintain professional scepticism throughout the audit. We
also:
Identify and assess the risks of material misstatement of the annual accounts, whether due to fraud
or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Company's ability to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
report to the related disclosures in the annual accounts or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern.
Evaluate the overall presentation, structure and content of the annual accounts, including the
disclosures, and whether the annual accounts represent the underlying transactions and events in a
manner that achieves a true and fair view.
We communicate with the Audit Committee of Red Eléctrica Corporación, S.A. regarding, among
other matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
5
(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
We also provide the entity's Audit Committee with a statement that we have complied with the
applicable ethical requirements, including those regarding independence, and to communicate with
them all matters that may reasonably be thought to bear on our independence and, where
applicable, related safeguards.
From the matters communicated to the Audit Committee of the entity, we determine those that
were of most significance in the audit of the annual accounts of the current period and which are
therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional Report to the Audit Committee _________________________________
The opinion expressed in this report is consistent with our additional report to the Company's Audit
Committee dated 23 February 2021.
Contract Period __________________________________________________________
We were appointed as auditor by the shareholders at the ordinary general meeting on 14 May 2020
for a period of one year, beginning after the year commenced 1 January 2020.
Previously, we had been appointed for a period of three years, by consensus of the shareholders at
their general meeting, and have been auditing the annual accounts since the year ended 31
December 2013.
KPMG Auditores, S.L.
On the Spanish Official Register of
Auditors (“ROAC”) with No. S0702
(Signed on original in Spanish)
Eduardo González Fernández
On the Spanish Official Register of Auditors (“ROAC”) with No. 20,435
23 February 2021
Annual Accounts
2020
(Free translation from the original in Spanish. In
the event of discrepancy, the Spanish-language
version prevails.)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Balance Sheet at 31 December 2020
Thousands of Euros
Non-current assets
Intangible assets
Computer software
Property, plant and equipment
Land and buildings
Other installations, machinery, equipment, furniture and other items
Under construction and advances
Investment property
Land
Buildings
Non-current investments in Group companies and associates
Equity instruments
Loans to companies
Non-current interest on loans to companies
Non-current investments
Equity instruments
Loans to third parties
Derivatives
Other financial assets
Deferred tax assets
Current assets
Trade and other receivables
Trade receivables from Group companies and associates
Other receivables
Personnel
Public entities, other
Current investments in Group companies and associates
Equity instruments
Loans to companies
Current investments
Derivatives
Other financial assets
Prepayments for current assets
Cash and cash equivalents
Cash
Total assets
Notes 1 to 29 form an integral part of the accompanying annual accounts.
Note
5
5
6
8
21
12
11
17
13
21
21
8
12
11
31.12.2020
2,733,406
3,312
3,312
70,059
64,955
1,157
3,947
1,325
558
767
2,646,582
2,196,905
449,677
-
5,109
3,895
1,192
-
22
7,019
31.12.2019
2,613,657
-
-
71,205
65,709
892
4,604
1,346
558
788
2,531,544
1,818,405
687,739
25,400
7,043
2,542
25
4,462
14
2,519
1,648,399
915,777
1,118
873
30
215
-
1,333,654
-
1,333,654
16,229
16,228
1
1,488
295,910
295,910
608
16
89
4
499
763,747
(750)
764,497
1
-
1
1,506
149,915
149,915
4,381,805
3,529,434
Red Eléctrica Corporación, S.A.
Page 1 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Balance Sheet at 31 December 2020
Thousands of Euros
Equity
Capital and reserves
Capital
Reserves
(Own shares)
Profit for the year
(Interim dividend)
Valuation adjustments
Non-current liabilities
Non-current provisions
Non-current payables
Bonds and other marketable securities
Loans and borrowings
Other liabilities
Group companies and associates, non-current
Deferred tax liabilities
Current liabilities
Current payables
Bonds and other marketable securities
Loans and borrowings
Other current payables
Group companies and associates, current
Trade and other payables
Payables to Group companies
Other payables
Personnel
Current tax liabilities
Public entities, other
Note
14
15
16
21
17
16
21
18
21
31.12.2020
2,886,471
2,867,472
270,540
2,050,203
(36,550)
730,263
(146,984)
18,999
1,290,244
20,118
1,266,796
397,699
869,081
16
1,565
1,765
205,090
161,975
2,512
811
158,652
7,380
35,735
726
9,641
5,968
16,413
2,987
31.12.2019
2,735,386
2,716,387
270,540
2,058,684
(36,504)
570,669
(147,002)
18,999
609,136
4,605
601,156
-
601,140
16
1,565
1,810
184,912
160,261
-
2,116
158,145
303
24,348
87
10,777
682
12,704
98
Total equity and liabilities
4,381,805
3,529,434
Notes 1 to 29 form an integral part of the accompanying annual accounts.
Red Eléctrica Corporación, S.A.
Page 2 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Income Statement 2020
Thousands of Euros
Revenue
Services rendered
Finance income on investments in equity instruments
Group companies and associates
Note
20.a
2020
2019
758,382
591,951
20,708
10,141
727,926
565,103
727,926
565,103
Finance income on securities and other financial instruments of Group companies and associates
9,748
16,707
Self-constructed assets
Supplies
Raw materials and other consumables used
Personnel expenses
Salaries and wages
Employee benefits expense
Other items and employee benefits
Other operating expenses
External services
Taxes
Depreciation and amortisation
Impairment and gains/(losses) on disposal of fixed assets
Impairment and losses
Gains/(losses) on disposal and other
Results from operating activities
Finance income
Marketable securities and other financial instruments
Other
Finance costs
Other
Provision adjustments
Change in fair value of financial instruments
Trading portfolio and other
Exchange (gains)/losses
Net finance cost
Profit before tax
Income tax
Profit from continuing operations
Profit for the year
Notes 1 to 29 form an integral part of the accompanying annual accounts.
5
69
(69)
(69)
-
-
-
20.b
(10,858)
(4,625)
(8,117)
(1,119)
(1,622)
(4,363)
(104)
(158)
(11,104)
(12,664)
(10,584)
(12,118)
(520)
(546)
5 and 6
(1,887)
(1,449)
20.d
20.c
20.c
11
-
-
-
(111)
(128)
17
734,533
573,102
2,919
2,919
2,919
(9,841)
(9,840)
(1)
482
482
3,433
3,433
3,433
(7,555)
(7,554)
(1)
499
499
2,602
(149)
(3,838)
(3,772)
730,695
569,330
17
(432)
1,339
730,263
570,669
730,263 570,669
Red Eléctrica Corporación, S.A.
Page 3 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Statement of Total Changes in Equity at 31 December 2020
Thousands of Euros
Subscribed
capital
Reserves
(Own shares)
Profit
for the year
(Interim
dividend)
Subtotal capital
and reserves
Valuation
adjustments
Total equity
Balance at 31 December 2018
270,540
1,942,465
(21,303)
Total recognised income and expense
Transactions with shareholders or owners
(-) Distribution of dividends
Transactions with own shares (net)
Other changes in equity
Distribution of prior year’s profit
Other
-
-
-
-
-
14
-
1,449
114,756
-
Balance at 31 December 2019
270,540
2,058,684
(36,504)
Total recognised income and expense
Transactions with shareholders or owners
(-) Distribution of dividends
Transactions with own shares (net)
Other changes in equity
Distribution of prior year’s profit
Other (Note 14-b)
-
-
-
-
-
(1,759)
(419,772)
(330)
423,667
(10,287)
-
-
(46)
-
-
-
(15,201)
(531,634)
-
-
-
-
645,597
570,669
(113,963)
-
570,669
730,263
(147,250)
2,690,049
18,999
2,709,048
-
570,683
248
-
-
-
(531,386)
(13,752)
793
-
-
-
-
-
-
570,683
(531,386)
(13,752)
793
-
(147,002)
2,716,387
18,999
2,735,386
-
728,504
-
-
(146,984)
-
(570,669)
-
147,002
-
(566,756)
(376)
-
(10,287)
-
-
-
-
-
728,504
(566,756)
(376)
-
(10,287)
Balance at 31 December 2020
270,540
2,050,203
(36,550)
730,263
(146,984)
2,867,472
18,999
2,886,471
Notes 1 to 29 form an integral part of the accompanying annual accounts.
Red Eléctrica Corporación, S.A.
Page 4 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Statement of Recognised Income and Expense 2020
Thousands of Euros
Profit for the year
Actuarial gains and losses and other adjustments
Tax effect
Income and expense recognised directly in equity
Amounts transferred to the income statement
Total recognised income and expense
Notes 1 to 29 form an integral part of the accompanying annual accounts.
2020
2019
730,263
570,669
(2,345)
586
(1,759)
-
19
(5)
14
-
728,504
570,683
Red Eléctrica Corporación, S.A.
Page 5 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Statement of Cash Flows. 2020
Thousands of Euros
Cash flows from operating activities
Profit for the year before tax
Adjustments to profit
Depreciation and amortisation
Change in provisions
(Gains)/losses on disposals of fixed assets
Finance income
Finance costs
Exchange (gains)/losses
Fair value measurement of financial instruments
Other income and expenses
Changes in operating assets and liabilities
Trade and other receivables
Other current assets
Other current assets – Group companies and associates
Trade and other payables
Other cash flows from operating activities
Interest paid
Dividends received
Interest received
Income tax paid
Other payments/receipts
Cash flows used in investing activities
Payments for investments
Group companies and associates
Property, plant and equipment, intangible assets and investment property
Other financial assets
Other assets
Proceeds from sale of investments
Group companies and associates
Property, plant and equipment, intangible assets and investment property
Other assets
Cash flows from (used in) financing activities
Proceeds from and payments for equity instruments
Acquisition and sale of own equity instruments
Proceeds from and payments for financial liability instruments
Bonds and other marketable securities
Loans and borrowings
Dividends and interest on other equity instruments paid
Dividends
Effect of exchange rate fluctuations
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at year end
Notes 1 to 29 form an integral part of the accompanying annual accounts.
2020
750,191
730,695
(731,193)
1,887
756
-
(740,593)
9,841
(2,602)
(482)
-
2,000
(297)
18
-
2,279
748,689
(7,616)
727,926
6,822
21,632
(75)
(710,342)
(810,558)
(792,898)
(1,539)
(15,857)
(264)
100,216
100,150
-
66
106,159
(376)
(376)
673,308
397,324
275,984
(566,773)
(566,773)
(13)
145,995
149,915
295,910
2019
582,219
569,330
(576,234)
1,449
244
(17)
(585,243)
7,555
149
(499)
128
7,828
(171)
(734)
1,426
7,307
581,295
(6,429)
565,103
6,626
16,244
(249)
(882,992)
(1,379,062)
(1,361,187)
(8,836)
(9,038)
(1)
496,070
495,880
188
2
(117,663)
(13,752)
(13,752)
426,930
-
426,930
(530,841)
(530,841)
(53)
(418,489)
568,404
149,915
Red Eléctrica Corporación, S.A.
Page 6 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Contents
1 Company Activity ............................................................................................................................. 9
2 Basis of Presentation of the Annual Accounts ................................................................................. 9
3 Proposed Distribution of Profit ....................................................................................................... 11
4 Significant Accounting Policies ....................................................................................................... 11
5
Intangible Assets and Property, Plant and Equipment ..................................................................... 17
5.1
Intangible assets ...................................................................................................................... 17
5.2 Property, plant and equipment ................................................................................................. 17
6
Investment Property ....................................................................................................................... 18
7 Operating Leases ............................................................................................................................ 19
8
Investments in Group Companies and Associates ........................................................................... 19
9 Financial Risk Management Policy .................................................................................................. 25
10 Analysis of Financial Instruments ................................................................................................... 26
11 Derivative Financial Instruments .................................................................................................... 30
12 Non-current and Current Investments ............................................................................................ 31
13 Trade and Other Receivables ........................................................................................................... 31
14 Equity ............................................................................................................................................. 32
15 Non-current Provisions .................................................................................................................. 34
16 Non-current and Current Payables ................................................................................................. 36
17 Taxation ......................................................................................................................................... 37
18 Trade and Other Payables ............................................................................................................... 39
19 Average Supplier Payment Period. “Reporting Requirement”. Third Additional Provision of Law
15/2010 of 5 July 2010 ..................................................................................................................... 39
20 Income and Expenses .................................................................................................................... 40
21 Balances and Transactions with Group Companies, Associates and Related Parties ..................... 42
22 Remuneration of the Board of Directors......................................................................................... 43
23 Remuneration of Senior Management ............................................................................................ 47
24 Segment Reporting ........................................................................................................................ 47
25 Guarantees and Other Commitments with Third Parties and Other Contingent Liabilities .............. 47
26 Environmental Information ............................................................................................................ 47
Red Eléctrica Corporación, S.A.
Page 7 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
27 Other Information ........................................................................................................................... 47
28 Share-based Payments .................................................................................................................. 48
29 Events after 31 December 2020 ...................................................................................................... 48
Red Eléctrica Corporación, S.A.
Page 8 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
1 Company Activity
Red Eléctrica Corporación, S.A. (hereinafter the Company) was incorporated in 1985 and its registered office is lo-
cated in Alcobendas (Madrid). The Company's principal activities are as follows:
• Managing the corporate Group, which comprises investments in the share capital of its Group companies and
investees.
• Rendering assistance and support services to its investees.
• Operating the buildings owned by the Company.
2 Basis of Presentation of the Annual Accounts
True and fair view
a)
The accompanying annual accounts were authorised for issue by the Company's directors at their board meeting
held on 23 February 2021 and have been prepared to give a true and fair view of the Company’s equity and financial
position at 31 December 2020, as well as the results of its operations, changes in equity and cash flows for the year
then ended.
The figures disclosed in the annual accounts are expressed in thousands of Euros, the Company’s functional and
presentation currency, rounded off to the nearest thousand. The annual accounts have been prepared on the basis
of the accounting records of the Company in accordance with prevailing legislation and the Spanish General Chart
of Accounts approved by Royal Decree 1514/2007 and the amendments thereto contained in Royal Decree-Law
1159/2010 and Royal Decree 602/2016.
The Company holds investments in subsidiaries. Consequently, in accordance with prevailing legislation, the Com-
pany is the parent of a group of companies. In accordance with generally accepted accounting principles in Spain,
annual accounts must be prepared to give a true and fair view of the financial position of the Company, the results
of operations and changes in its equity and cash flows. Details of investments in Group companies are provided in
note 8.
The Company files separate consolidated annual accounts in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRS-EU) through Regulation (EC) No 1606/2002/EC of the European
Parliament and of the Council, and the related interpretations (IFRIC) adopted by the European Union.
The annual accounts for 2019 were approved by the shareholders at their general meeting held on 14 May 2020. The
annual accounts for 2020 are currently pending approval by the shareholders. However, the board of directors of
the Company consider that these annual accounts will be approved with no changes.
b) Mandatory accounting principles
The Company has not omitted any mandatory accounting principle with a significant effect on the annual accounts.
Estimates and assumptions
c)
The preparation of the annual accounts requires Company management to make judgements, estimates and as-
sumptions that affect the application of accounting standards and the amounts of assets, liabilities, income and
expenses. Estimates and assumptions are based on past experience and other factors that are considered reason-
able under the circumstances. Actual results could differ from these estimates.
Red Eléctrica Corporación, S.A.
Page 9 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The annual accounts for 2020 occasionally include estimates calculated by management of the Company, and sub-
sequently endorsed by its directors, to quantify certain assets, liabilities, income, expenses and commitments dis-
closed therein. These estimates are essentially as follows:
• Estimated recoverable amount of real estate assets. Asset impairment testing has brought to light insignificant
impairment, as defined by prevailing legislation, reflecting adjustments to the carrying amount of facilities in-
cluded under property, plant and equipment that are not expected to generate sufficient cash flows in the future
to enable the recovery of their value.
• Estimates and assumptions used to assess the recoverability of investments in Group companies and associates.
• Estimated useful lives of property, plant and equipment.
• Assumptions used in the actuarial calculations.
• Assumptions and estimates used in measuring the fair value of derivative financial instruments.
• Liabilities are generally recognised when it is probable that an obligation will give rise to an indemnity or a pay-
ment. The Company assesses and estimates amounts to be settled in the future, including additional amounts
for income tax, contractual obligations, pending lawsuit settlements and other liabilities. These estimates are
subject to the interpretation of existing facts and circumstances, projected future events and the estimated
financial effect of those events.
To facilitate comprehension of the annual accounts, details of the different estimates and assumptions are pro-
vided in each separate note.
The Company has taken out insurance policies to cover the risk of possible claims that might be lodged by third
parties in relation to its activities.
Although estimates are based on the best information available at 31 December 2020, future events may require
increases or decreases in these estimates in subsequent years, which would be accounted for prospectively in the
corresponding income statement as a change in accounting estimates, as required by the Spanish General Chart
of Accounts.
Comparative information
d)
The balance sheet, income statement, statement of changes in equity, statement of cash flows and the notes
thereto for 2020 include comparative figures for 2019, which formed part of the annual accounts for that year,
except for lease income, which has been classified as revenue (see note 4-m).
Considerations regarding COVID-19
e)
The emergence of Coronavirus disease 2019 (COVID-19) in China early in the year and its rapid spread to a number
of countries across the globe led the World Health Organization (WHO) to declare the viral outbreak a pandemic by
mid-March.
In this context, the Company has acted in coordination with the other companies in the RED ELÉCTRICA Group, and
has followed the guidelines that have been adapted to the recommendations issued by the various pertinent au-
thorities. The priority in all cases was to safeguard the health and safety of all of its workers, customers and sup-
pliers. The following measures have been taken by way of a guarantee:
• A focus on the health of its professionals, applying the action protocols adapted to the recommendations issued
by the various competent authorities.
• A heightened commitment to digitalisation, ensuring the infrastructure is now widely in place to allow staff that
need to work from home to do so, while maintaining the focus on cybersecurity.
• Active collaboration with the groups most affected by the healthcare crisis and its collateral effects, through
various initiatives.
From a financial and economic perspective, throughout this period the Group’s financial position has been robust,
enabling it to confront these trying times through measures aimed at bolstering its liquidity.
Red Eléctrica Corporación, S.A.
Page 10 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The situation brought on by COVID-19 has not had a significant impact on the continuity of the Company’s opera-
tions. Based on the most up-to-date estimates and on the cash position and availability of financing, the directors
consider that the situation caused by COVID-19 does not compromise the application of the going concern principle.
3 Proposed Distribution of Profit
The proposed distribution of profit for the year ended 31 December 2020, prepared by the directors and pending
approval by the shareholders at the general meeting, is as follows:
Thousands of Euros
Profit for the year
Total
Distribution
Voluntary reserves
Capitalisation reserve
Dividends:
Interim dividend
Supplementary dividend
Total
730,263
730,263
181,592
8,160
146,984
393,527
730,263
This proposed distribution entails a supplementary dividend of Euros 0.7273 per share, which would result in a total
dividend for the year of Euros 1 per share, calculated on the basis of total shares.
The interim dividend for the year is explained in note 14.
4 Significant Accounting Policies
The accounting principles used in preparing the accompanying annual accounts are as follows:
Intangible Assets
a)
Intangible assets are recognised at cost of acquisition or production, as appropriate, which is periodically reviewed
and adjusted in the event of a decline in value. Intangible assets include the following:
• Computer software: Computer software licences are capitalised at cost of acquisition or cost of preparation for
use. Computer software maintenance costs are charged as expenses when incurred. Computer software is
amortised on a straight-line basis over a period of three to five years from the date on which each program comes
into use.
• Development: Development expenses directly attributable to the design and execution of tests for new or im-
proved computer programs that are identifiable, unique and likely to be controlled by the Company are recog-
nised as intangible assets when it is probable that the project will be successful, based on its economic and
commercial feasibility, and the associated costs can be estimated reliably. Costs that do not meet these criteria
are charged as expenses when incurred. Development expenses are capitalised and amortised, from the date
the associated asset comes into service, on a straight-line basis over a period of no more than five years. Com-
puter software maintenance costs are charged as expenses when incurred.
Property, plant and equipment
b)
Property, plant and equipment primarily comprise land and buildings and are measured at cost of construction or
acquisition, as appropriate, less accumulated depreciation and impairment. Cost of construction includes the fol-
lowing items, where applicable:
• Borrowing costs accrued on external financing during the construction period.
Red Eléctrica Corporación, S.A.
Page 11 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Operating expenses directly related to property, plant and equipment constructed for projects executed under
the supervision and management of the Company.
The Company transfers work in progress to property, plant and equipment in use provided that the assets are in
working condition.
Costs incurred to enlarge or improve items of property, plant and equipment which increase capacity or productiv-
ity or extend the useful life of the asset are capitalised as an increase in the cost of the related asset.
Repair and maintenance costs on property, plant and equipment that do not increase productivity or capacity and
which do not lengthen the useful life of the assets are charged as expenses when incurred.
Property, plant and equipment are depreciated on a straight-line basis over the estimated useful life of the assets,
which is the period during which the Company expects to use the assets, applying the following rates:
Buildings
Other installations
Annual depreciation rate
2%-10%
4%-25%
The Company periodically assesses the depreciation criteria taking into account the useful life of its assets. There
have been no significant changes in the depreciation criteria compared to the prior year.
The Company reviews the residual values and useful lives of assets and adjusts them, if necessary, at the end of
each reporting period.
Investment property
c)
The Company measures its investment property at cost of acquisition. The market value of the Company's invest-
ment property is disclosed in note 6.
Investment property, except land, is depreciated on a straight-line basis over the estimated useful life, which is the
period during which the Company expects to use the assets (annual depreciation rate of 2%).
Leases
d)
The Company classifies leases on the basis of whether substantially all the risks and rewards incidental to owner-
ship of the leased asset are transferred.
Leases under which the lessor maintains a significant part of the risks and rewards of ownership are classified as
operating leases.
Leases under which the significant risks and rewards of ownership of the goods are transferred to the Company
are classified as finance leases. Assets recognised as finance leases are presented in the balance sheet based on
the nature of the leased asset.
Financial assets
e)
The Company classifies its financial assets into the following categories:
• Loans and receivables: non-derivative financial assets with fixed or determinable payments that are not quoted
in an active market and which are not intended for trading in the near term. These assets are classified as cur-
rent, except those maturing in over 12 months after the reporting date, which are classified as non-current.
Loans are initially recognised at fair value, including transaction costs incurred in arranging the loan, and are
subsequently measured at amortised cost, which is basically the amount granted, less repayments of the princi-
pal, plus accrued interest receivable.
Receivables are initially recognised at fair value and subsequently measured at amortised cost using the effec-
tive interest method.
Red Eléctrica Corporación, S.A.
Page 12 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Available-for-sale financial assets: investments that the Company intends to hold for an unspecified period of
time which are likely to be disposed of to meet one-off liquidity needs or in response to interest rate fluctuations.
They are classified as non-current, unless they are expected to be disposed of in less than one year and such
disposal is feasible. These financial assets are measured at fair value, which is the quoted price at the reporting
date in the case of securities quoted in an active market. Any gains or losses arising from changes in the fair
value of these assets at the reporting date are recognised directly in equity until the assets are disposed of or
impaired, whereupon the accumulated gains and losses are recognised in profit or loss. Impairment, where ap-
plicable, is calculated on the basis of discounted expected future cash flows. A significant or prolonged decline
in the fair value of the asset below its cost is also objective evidence of impairment. Dividends from equity in-
vestments classified as available-for-sale are recognised in the income statement when the Company's right to
receive payment is established.
In the case of share capital increases by a subsidiary that are fully subscribed through a non-monetary contribu-
tion consisting of a portfolio of securities classified under available-for sale financial assets, the Company
adopts the response to query 1, published in the Spanish Accounting and Auditing Institute's Official Gazette (BO-
ICAC) no. 77/2009, and any gains or losses arising from changes in the fair value at the date of the non-monetary
contribution therefore continue to be recognised in the Company's equity. As provided for in Recognition and
Measurement Standard 9.2.5.3. of the Spanish General Chart of Accounts, when an investment was made in a
Group company, jointly controlled entity or associate before it was classified as such, and valuation adjustments
for the investment were recognised directly in equity prior to this classification, these adjustments shall be main-
tained after classification until disposal or derecognition of the investment, at which point they shall be recog-
nised in the income statement.
• Equity investments in Group companies and associates: these investments are measured at cost less any ac-
cumulated impairment. If there is objective evidence that the carrying amount is not recoverable, the amount of
the impairment loss is measured as the difference between the carrying amount and the recoverable amount,
the latter of which is understood as the higher of the fair value less costs to sell and the present value of esti-
mated future cash flows from the investment. Unless better evidence of the recoverable amount is available,
when estimating impairment of such investments, the investee’s equity is taken into consideration, corrected
for any net unrealised gains existing at the measurement date. Impairment losses are recognised and reversed
in the corresponding income statement. The Company performs impairment testing to verify the recoverability
of its investments for which it has identified indications of impairment.
• Cash and cash equivalents: including cash on hand, demand deposits in financial institutions and other short-
term, highly liquid investments.
Impairment
f)
The Company analyses the recoverability of its assets at each reporting date and whenever events or changes in
circumstances indicate that the carrying amount might not be recoverable. Impairment is deemed to exist when
the carrying amount of an asset exceeds its recoverable amount. Impairment losses are recognised immediately
in the income statement. An impairment loss is the difference between the carrying amount of an asset and its
recoverable amount.
Recoverable amount is the higher of:
• Fair value less costs to sell
• Value in use
Recoverable amount is calculated on the basis of expected cash flows. Impairment is calculated for individual as-
sets. Where the recoverable amount of an individual asset cannot be determined, the recoverable amount of the
cash-generating unit (CGU) to which that asset belongs is calculated. Any reversals are recognised in the income
statement.
In its analyses carried out in 2019, the Company identified indications of impairment of certain buildings classified
as investment property (see note 6).
The amount of the impairment loss of financial assets carried at amortised cost is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset’s original effective interest rate. For variable
Red Eléctrica Corporación, S.A.
Page 13 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
income financial assets, the effective interest rate corresponding to the measurement date under the contractual
conditions is used. For held-to-maturity debt instruments the Company uses the market value, providing this is
sufficiently reliable to be considered representative of the recoverable amount.
The impairment loss is recognised in profit and loss and may be reversed in subsequent periods if the decrease can
be objectively related to an event occurring after the impairment has been recognised. The loss can only be re-
versed to the limit of the amortised cost of the assets had the impairment loss not been recognised.
The Company has not identified any indications of impairment of loans extended to Group companies in its analysis.
Capital and reserves
g)
Share capital is represented by ordinary shares.
Interim dividends are recognised as a reduction in equity for the year in which the dividend is declared, based on
the consensus of the board of directors. Supplementary dividends are not deducted from equity until approved by
the shareholders at their general meeting.
For a dividend in kind in the form of a business received from a Group company, recognition and measurement
standards 19 and 21 of the Spanish General Chart of Accounts approved through Royal Decree 1514/2007 are appli-
cable. This entails the business received being recognised at its carrying amount, while the difference with respect
to the fair value of the dividend received is recorded against reserves (see notes 5, 14-b, 15 and 17).
Own shares are measured at cost of acquisition and recognised as a reduction in equity. Any gains or losses on the
purchase, sale, issue or redemption of own shares are recognised directly in equity.
Provisions
h)
• Employee benefits
o Pension obligations
The Company has defined contribution plans, whereby the benefit receivable by an employee upon retirement
– based on one or more factors such as age, fund returns, years of service or remuneration – is determined by
the contributions made. A defined contribution plan is a pension plan under which the Company pays fixed
contributions into a separate entity, and will have no legal or constructive obligation to pay further contribu-
tions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in
the current and prior periods.
o Other long-term employee benefits
Other long-term employee benefits include defined benefit plans for benefits other than pensions (such as
health insurance) for the Company's serving personnel. The expected costs of these benefits are recognised
over the working life of the employees. These obligations are measured each year by independent qualified
actuaries. Changes in actuarial assumptions are recognised, net of taxes, in reserves under equity in the year
in which they arise, while the past service cost is recorded in the income statement.
Defined benefit liabilities recognised in the balance sheet reflect the present value of obligations at the re-
porting date, minus the fair value at that date of plan assets, minus any past service cost not yet recognised.
The Company records actuarial gains and losses in recognised income and expense for the year in which they
arise.
This item also includes deferred remuneration schemes and the Structural Management Plan, (hereinafter the
“Plan”), which are measured each year.
• Other provisions
The Company makes provision for present obligations (legal or constructive) arising as a result of a past event
whenever it is probable that an outflow of resources will be required to settle that obligation and a reliable esti-
mate can be made of the amount of the obligation. Provision is made when the liability or obligation is recognised.
No provision is made for proceedings with a probability of occurrence of less than 50% as it is considered that
their future resolution will not have a significant impact on the Company’s financial statements.
Red Eléctrica Corporación, S.A.
Page 14 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Provisions are measured at the present value of the estimated expenditure required to settle the obligation using
a pre-tax interest rate that reflects the current market assessment of the time value of money and the specific
risks of the obligation. The increase in the provision due to the passage of time is recognised as an interest ex-
pense.
Financial debt
i)
Loans, payment obligations and similar commitments are initially recognised at the cash amount received, less
transaction costs. Such debt is subsequently measured at amortised cost, using the effective interest method.
Financial debt is classified under current liabilities unless the debt falls due more than 12 months after the reporting
date, in which case it is classified under non-current liabilities.
Transactions in currency other than the Euro
j)
Transactions in currency other than the Euro are translated by applying the exchange rate in force at the transac-
tion date. Exchange gains and losses arising during the year due to balances being translated at the exchange rate
at the transaction date rather than the exchange rate prevailing on the date of collection or payment are recognised
as income or expenses in the income statement.
Fixed income securities and balances receivable and payable in currencies other than the Euro at 31 December
each year are translated at the closing exchange rate. Any exchange differences arising are recognised under ex-
change gains/losses in profit or loss.
Transactions conducted in foreign currencies for which the Company has chosen to mitigate currency risk by ar-
ranging financial derivatives or other hedging instruments are recorded using the criteria for derivative financial
instruments and hedging transactions.
Derivative financial instruments and hedging transactions
k)
Derivative financial instruments are initially recognised in the balance sheet at their fair value on the date the ar-
rangement is executed (acquisition cost) and this fair value is subsequently adjusted as necessary. The criterion
used to recognise the resulting gain or loss depends on whether the derivative financial instrument is designated
as a hedging instrument and, if so, the nature of the hedged item.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, whether that price is directly observable or
estimated using another valuation technique.
The Company documents the relationship between the hedging instruments and the hedged assets or liabilities, its
risk management objectives and its hedging strategy at the inception of the hedge. The Company also documents
its assessment, at inception and on an ongoing basis, of whether the hedging derivatives used are highly effective
in offsetting changes in the hedged item's fair value or cash flows.
Details of the fair value of the derivatives used to hedge currency risk are disclosed in note 11.
Trade payables
l)
Trade payables are initially recognised at fair value and subsequently measured at amortised cost using the effec-
tive interest method. However, trade payables falling due in less than one year that have no contractual interest
rate and are expected to be settled in the short term are measured at their nominal amount.
Income and expenses
m)
Income and expenses are recognised on an accruals basis, irrespective of payments and receipts.
Interest income is recognised using the effective interest method. Dividends are recognised when the right to re-
ceive payment is established.
Red Eléctrica Corporación, S.A.
Page 15 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Company, as the Parent of the Red Eléctrica Group, has adopted the Spanish Accounting and Auditing Institute's
(ICAC) response to the query (Ref: 546/09) of 23 July 2009, regarding the classification for accounting purposes of
a holding company's income and expenses in individual accounts and the method for determining revenues, and
classifies dividends from investments held in investees and interest on loans extended to these companies as rev-
enues.
In addition, lease income is also included as revenue, as the operation of the properties owned by the Company is
one of its principal activities. For comparison purposes, this income has also been included as revenue in the 2019
figures.
Taxation
n)
The income tax expense or tax income for the year comprises current tax and deferred tax. Current and deferred
taxes are recognised as income or an expense and included in profit or loss for the year, except to the extent that
the tax arises from a transaction or event that is recognised in the same year, directly in equity, or from a business
combination.
Current tax is the estimated tax payable for the year using the enacted tax rates applicable to the current year and
to any adjustment to tax payable in respect of previous years.
Tax credits and deductions arising from economic events occurring in the year are deducted from the income tax
expense, unless there are doubts as to whether they can be realised.
Deferred taxes and the income tax expense are calculated and recognised using the liability method, based on
temporary differences arising between the balances recognised in the financial information and those used for tax
purposes. This method entails calculating deferred tax assets and liabilities on the basis of the differences between
the carrying amount of the assets and liabilities and their tax base, applying the tax rates that are objectively ex-
pected to apply to the years when the assets are realised and the liabilities settled.
Deferred tax assets are recognised provided that it is probable that sufficient taxable profits will be available
against which the deductible temporary differences can be utilised.
As the parent of the tax group, the Company records the total consolidated income tax payable (recoverable) with
a debit (credit) to receivables from (payables to) Group companies and associates.
Insurance
o)
The Company has taken out various insurance policies to cover the risks to which it is exposed through its activities.
These risks mainly comprise damage that could be caused to its facilities and possible claims that might be lodged
by third parties due to the Company's activities. Insurance premium expenses are recognised in the income state-
ment on an accruals basis. Payouts from insurance companies in respect of claims are recognised in the income
statement applying the matching of income and expenses principle.
Share-based payments
p)
The Company has implemented share purchase schemes whereby employees can opt to receive part of their annual
remuneration in the form of shares in the Company. This remuneration is measured based on the closing quotation
of these Company shares at the delivery date. The costs incurred on such schemes are recognised under personnel
expenses in the income statement. All shares delivered as payment are taken from the own shares held by the
Company.
Transactions between Group companies
q)
Transactions between Group companies are recognised at the fair value of the consideration given or received. The
difference between this value and the amount agreed is recognised in line with the underlying economic substance
of the transaction.
Red Eléctrica Corporación, S.A.
Page 16 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
5
Intangible Assets and Property, Plant and Equipment
5.1
Intangible assets
Movement in intangible assets in 2020 and details of accumulated amortisation and impairment are as follows:
Thousands of Euros
Cost
Computer software
Total cost
Accumulated amortisation
Computer software
Total accumulated amortisation
Carrying amount
31 December 2019
Additions
Disposals
Dividend
in kind
31 December 2020
-
-
-
-
-
1,649
1,649
(163)
(163)
1,486
-
-
-
-
-
3,892
3,892
(2,066)
(2,066)
1,826
5,541
5,541
(2,229)
(2,229)
3,312
In 2020 the additions of computer software are due to the Company's acquisition and development of corporate
software.
In 2020, the dividend in kind consists of intangible assets received by the Company in the form of a business (see
notes 4-g and 14-b).
The Company has fully amortised intangible assets totalling Euros 826 thousand at 31 December 2020.
In 2020, operating expenses of Euros 61 thousand directly related to intangible assets were capitalised.
5.2 Property, plant and equipment
Movement in property, plant and equipment in 2020 and 2019 and details of accumulated depreciation and impair-
ment are as follows:
Thousands of Euros
Cost
31
December
2018
Additions Disposals
Transfers
31
December
2019
Additions Disposals
Dividend
in kind
Transfers
31
December
2020
Land and buildings
78,285
Other installations, machinery,
equipment, furniture and other
items
14,944
-
-
Under construction and advances
4,495
9,852
Total cost
Accumulated depreciation
Buildings
Other installations, machinery,
equipment, furniture and other
items
97,724
9,852
(20,217)
(1,397)
(14,734)
(23)
Total accumulated depreciation
(34,951)
(1,420)
Carrying amount
62,773
8,432
-
-
-
-
-
-
-
-
9,038
87,323
705
15,649
(9,743)
4,604
107,576
-
-
-
-
233
233
(21,614)
(1,575)
-
-
821
88,144
-
1,850
69
17,568
-
-
-
-
(890)
3,947
1,850
-
109,659
-
-
(23,189)
-
(14,757)
(128)
-
(1,526)
-
(16,411)
-
(36,371)
(1,703)
-
(1,526)
-
(39,600)
-
71,205
(1,470)
-
324
-
70,059
Land and buildings correspond to buildings owned by the Company and used mainly for its principal activity as
detailed in note 1.
Red Eléctrica Corporación, S.A.
Page 17 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Additions to property, plant and equipment under construction in 2020 and 2019 mainly reflect the adaptation of
the buildings owned by the Company in the autonomous region of Madrid.
In 2020 and 2019, transfers from property, plant and equipment under construction to land and buildings and to
other installations, machinery, equipment, furniture and other items primarily relate to the foregoing buildings in
the autonomous region of Madrid.
In 2020, the dividend in kind consists of property, plant and equipment received by the Company in the form of a
business (see notes 4-g and 14-b).
At 31 December 2020 the Company has fully depreciated property, plant and equipment with a cost of Euros 16,704
thousand (Euros 15,548 thousand in 2019), Euros 14,683 thousand of which are other installations (Euros 14,683 thou-
sand in 2019).
In 2020, operating expenses of Euros 8 thousand directly related to property, plant and equipment were capitalised.
Law 16/2012, which introduced several tax measures to consolidate public finances and boost economic activity,
provided for the revaluation of property, plant and equipment and/or investment property using the ratios set forth
in this Law, with a credit to a revaluation reserve under equity. According to the Spanish Accounting and Auditing
Institute Resolution of 31 January 2013, any revaluation of balances should be recognised in the annual accounts
for 2013. Pursuant to this Law, the Company revalued its property, plant and equipment on 1 January 2013, making
a single tax payment of 5% of the revalued amount.
The amount resulting from the revaluation, net of the single tax payment of 5%, was credited to reserves (see note
14). The balancing entries were recognised under the pertinent revalued asset items, with no changes to the accu-
mulated depreciation recorded at that date (Euros 6,304 thousand under land and buildings and Euros 56 thousand
under other installations).
The net increase in value deriving from the revaluation is depreciated over the remaining useful life of the revalued
assets. The revaluation has led to an increase of Euros 182 thousand in the depreciation charge for 2020 (Euros 177
thousand in 2019).
Investment Property
6
Movement in investment property in 2020 and 2019 is as follows:
Thousands of Euros
Investment property
Total cost
Accumulated depreciation
Total accumulated depreciation
Impairment of
investment property
Total impairment
Carrying amount
31
December
2018
2,839
2,839
(569)
(569)
(615)
(615)
1,655
Additions Disposals
-
-
(29)
(29)
(128)
(128)
(157)
(441)
(441)
99
99
190
190
(152)
31
December
2019
2,398
2,398
(499)
(499)
(553)
(553)
1,346
Additions Disposals
-
-
(21)
(21)
-
-
(21)
-
-
-
-
-
-
31
December
2020
2,398
2,398
(520)
(520)
(553)
(553)
1,325
Disposals of investment property in 2019 reflected the sale of various premises (see note 20-d).
At the 2020 year end, the analysis of the market value of investment property had not brought to light any impair-
ment losses. In 2019, Euros 128 thousand was recognised in the income statement in this respect (see note 20-d).
Investment property has a market value of approximately Euros 1.9 million in 2020 (Euros 2 million in 2019) and does
not generate or incur significant operating income or expenses.
Red Eléctrica Corporación, S.A.
Page 18 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
7 Operating Leases
The Company has leased certain assets to Group companies. The types of assets fully or partially leased under
operating leases are as follows:
Thousands of Euros
Cost
Land and buildings
Other installations, machinery, equipment, furniture and other items
Total cost
Accumulated depreciation
Buildings
Other installations, machinery, equipment, furniture and other items
Total accumulated depreciation
Carrying amount
31 December 2020 31 December 2019
86,358
17,568
103,926
(23,189)
(16,411)
(39,600)
64,326
85,538
15,649
101,187
(21,614)
(14,757)
(36,371)
64,816
The Company has entered into operating lease agreements with Red Eléctrica de España, S.A.U. (REE), Red Eléc-
trica Infraestructuras de Telecomunicación, S.A.U. (REINTEL), Red Eléctrica Internacional, S.A.U. (REI), Red Eléc-
trica Infraestructuras en Canarias, S.A.U. (REINCAN), Red Eléctrica y de Telecomunicaciones, Innovación y Tecno-
lógica, S.A.U. (RETIT) and HISPASAT, S.A. (HISPASAT), whereby it leases areas inside the buildings it owns to these
Group companies.
These lease agreements are renewed periodically and generated lease income of Euros 10,843 thousand in 2020
(Euros 9,988 thousand in 2019). In 2020 and 2019, approximately 95% of this lease income is from REE and 5% from
the remaining Group companies.
Investments in Group Companies and Associates
8
At 31 December 2020 and 2019, none of the Group companies in which the Company holds a direct or indirect inter-
est are listed on the stock exchange.
Details of investments in Group companies and associates at 31 December 2020 are as follows:
Red Eléctrica Corporación, S.A.
Page 19 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Red Eléctrica Corporación, S.A.
Details of equity investments at 31 December 2020
- Company
- Registered office
- Principal activity
Thousands of Euros
Red Eléctrica de España, S.A.U. (REE)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Transmission, operation of the Spanish electricity system and management of the transmission network.
Red Eléctrica Internacional, S.A.U. (REI)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Acquisition and holding of international equity investments. Rendering of advisory, engineering and construc-
tion services. Performance of electricity activities outside the Spanish electricity system.
Red Eléctrica Infraestructuras de Telecomunicación, S.A.U. (REINTEL)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Rendering of advisory, engineering, construction and telecommunications services.
Red Eléctrica Infraestructuras en Canarias, S.A.U. (REINCAN)
- Calle Juan de Quesada, 9. Las Palmas de Gran Canaria. (Spain).
- Construction of energy storage facilities in non-mainland and isolated systems.
Red Eléctrica de España Finance, B.V. (RBV)
- Hoogoorddreef 15. Amsterdam. (Netherlands).
- Financing activities. Incorporated in 2003 in the Netherlands for the purpose of issuing debt to finance the Red
Eléctrica Group.
Red Eléctrica Financiaciones, S.A.U. (REF)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Financing activities.
Red Eléctrica Sistemas de Telecomunicaciones, S.A.U. (RESTEL)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Acquisition, holding, management and administration of Spanish and foreign equity securities.
Red Eléctrica y de Telecomunicaciones, Innovación y Tecnológica, S.A.U. (RETIT)
- Paseo Conde de los Gaitanes, 177. Alcobendas. Madrid. (Spain).
- Activities geared towards driving and accelerating technological innovation.
Redcor Reaseguros, S.A (REDCOR)
- 26, Rue Louvigny. (Luxembourg).
- Reinsurance activities. Incorporated in 2010 in Luxembourg in order to reinsure the risks of the Group compa-
nies, thereby guaranteeing better access to international reinsurance markets.
Red Eléctrica Andina, S.A.C. (REA)
Percentage
ownership (1)
Direct
Indirect
Carrying
amount
Equity of
investees (2)
Paid-in share
capital
Share
premium
Reserves
Other
items
Profit/(loss)
for
the year (3)
Results from
operating
activities (3)
Dividends
received
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
-
-
-
-
-
-
1,014,326
800,006
54,319
701,192
(20,875)
612,779
915,474
517,812
542,542
186,037
356,505
40,265
(6,238)
2,345
3,745
-
74,417
30,000
44,417
5,541
(53,144)
60,017
80,500
209,946
5,000
5,000
-
45
2,000
18
1,982
-
-
-
89
115
-
94
172
168
60
60
549,060
549,060
-
-
10,474
2,430
205
(391)
-
(1,361)
(69)
5,000
1,000
4,000
(511)
4,500
4,500
-
49,481
-
-
-
(1,371)
(1,809)
3,379
4,117
1,415
2,008
-
-
-
-
-
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (a)
-
1,488
-
1,503
- Rendering of line and substation maintenance services.
Red Eléctrica Corporación, S.A.
Page 20 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Red Eléctrica del Sur, S.A. (REDESUR)
Percentage ownership
(1)
Direct
Indirect
Carrying
amount
Equity of investees (2)
Paid-in share
capital
Share
premium
Reserves
Other items
Profit/(loss)
for
the year (3)
Results from
operating
activities (3)
Dividends
received
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (a)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Transmisora Eléctrica del Sur , S.A.C. (TESUR)
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (c)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Transmisora Eléctrica del Sur 2 , S.A.C. (TESUR 2)
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (c)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Transmisora Eléctrica del Sur 3 , S.A.C. (TESUR 3)
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (c)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Transmisora Eléctrica del Sur 4 , S.A.C. (TESUR 4)
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (j)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Red Eléctrica del Norte Perú, S.A.C. (REDELNOR)
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (a)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Concesionaria Línea de Transmisión CCNCM S.A.C. (CCNCM)
- Av. Javier Prado Este Nº 492 Int. 1001 Urb. Jardín San Isidro. Lima. (Peru).
-
100% (d)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Red Eléctrica Chile S.P.A (RECH)
- Avenida El Golf nº 40, piso 20. Comuna de Las Condes, Santiago. (Chile).
- Acquisition, holding, management and administration of securities.
Red Eléctrica del Norte S.A. (REDENOR)
-
100% (a)
- Avenida El Golf nº 40, piso 20. Comuna de Las Condes, Santiago. (Chile).
-
69.9% (e)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Red Eléctrica del Norte 2, S.A. (REDENOR 2)
- Avenida El Golf nº 40, piso 20. Comuna de Las Condes, Santiago. (Chile).
-
100% (e)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Red Eléctrica Brasil Holding Ltda. (REB)
-Calle Libero Badaró, 293. Sao Paulo (Brazil).
- Acquisition, holding, management and administration of securities.
-
100% (a)
-
-
-
-
-
-
-
-
-
-
-
10,593
31,621
18,480
4,075
1,238
28,523
22,687
-
-
-
-
-
-
-
27,806
(1,860)
256
(281)
(13)
(78)
(9,555)
115,528
-
(14,526)
2,852
25,887
265,012
-
-
-
(216)
(582)
-
-
-
-
-
-
-
-
-
-
-
-
5,337
8,191
3,061
5,296
799
1,992
103
510
(116)
(29)
(44)
(42)
(3,998)
5,143
(4,045)
(545)
(584)
(432)
397
1,723
-
-
-
-
-
-
-
-
-
-
(1,112)
(26)
-
Red Eléctrica Corporación, S.A.
Page 21 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Hispasat S.A.
Percentage ownership (1)
Equity of investees (2)
Direct
Indirect
Carrying
amount
Paid-in share
capital
Share
premium
Reserves
Other items
Profit/(loss)
for
the year (3)
Results from
operating
activities (3)
Dividends
received
- Calle de Anabel Segura, 11. Alcobendas. Madrid. (Spain).
-
89.68% (f) (4)
-
121,946
76,265
323,921
22,270
(8,.615)
(172,909)
- Parent of the Hispasat Group. Operation of the satellite communications system and rendering of space seg-
ment services for the geostationary orbital slots allocated to the Spanish state.
Hispasat Canarias, S.L.U.
-Calle Pacticante Ignacio Rodriguez s/n Edificio Polivalente IV, Fundación Canarias Parque Científico Tecnoló-
gico ULGPC, Planta 3, oficinas 304-305, 35017 Las Palmas de Gran Canaria. (Spain).
- 89.68% (g) (4)
-
102,003
-
197,801
(6,273)
6,817
5,877
- Sale and lease of satellites and spatial capacity.
Hispasat Brasil, Ltda.
- Praia do Flamengo, 200 Rio de Janeiro. (Brazil).
- Commercialisation of satellite capacity.
Hispamar Satélites, S.A.
- Praia do Flamengo, 200 Rio de Janeiro. (Brazil).
- Commercialisation of satellite capacity.
Hispamar Exterior, S.L.U.
- 89.68% (g) (4)
-
72.6% (h) (4)
Calle de Anabel Segura, 11. Alcobendas. Madrid. (Spain).
-
72.6% (i) (4)
- Commercialisation of satellite capacity.
Hispasat de México, S.A. de C.V.
- Agustín Manuel Chávez 1-001 Col. Centro de Ciudad Santa Fe, 01210 México D.F. (Mexico).
- 89.68% (g) (4)
- Use of radio spectrum, telecommunications networks and satellite communication.
Consultek, Inc (*)
- 1036 Country Club Drive, Suite 202, Moraga, CA 94556. (United States of America)
- 89.68% (g) (4)
- Technical consultancy services.
Hispamar Satélites, S.A. (*) (Venezuela)
- Torre Phelps, piso 10 ofic. 10. Caracas. (Venezuela).
-
72.60% (i) (4)
- Commercialisation and rendering of satellite telecommunications services.
Hispasat UK, LTD. (*)
30 Finsbury Square, London. (England)
- Commercialisation and rendering of satellite telecommunications services.
Interconexión Eléctrica Francia-España, S.A.S. (INELFE)
- 89.68% (g) (4)
-
-
-
-
-
-
-
16,663
-
10,315
-
121
79
17,751
-
16,365
-
(1,502)
1,434
800
7,131
16
-
-
-
-
-
-
-
5,117
1,561
221
1,442
2,070
30
-
-
-
-
-
-
16
98
2
3
-
-
-
-
-
-
-
-
-
-
-
-
-
- Inmueble Window, 7 C Place du Dôme, 92073 La Défense Cedex, Paris (France)
-
50% (b)
-
2,000
-
14,638
-
80
106
-
- Study and execution of Spain-France interconnections.
Red Eléctrica Corporación, S.A.
Page 22 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Transmisora Eléctrica del Norte S.A. (TEN)
- Avenida Apoquindo N°3721, piso 6, Las Condes, Santiago. (Chile)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Hisdesat Servicios Estratégicos, S.A.
- Paseo de la Castellana 143, 28046 Madrid. (Spain).
- Commercialisation of spatial systems for government use.
Grupo de Navegación Sistemas y Servicios, S.L. (*)
- Calle Isaac Newton 1, Madrid. (Spain).
- Operation of satellite systems
Argo Energía Emprendimientos y Participaciones S.A.
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Acquisition, holding, management and administration of securities.
Argo Transmisión de Energia S.A. (“Argo I”)
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Argo II Transmisión de Energia S.A. (“Argo II”)
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Electricity transmission and operation and maintenance of electricity transmission networks.
Argo III Transmisión de Energia S.A. (“Argo III”)
- Calle Tabapuã, 841 – 5º andar – Itaim Bibi – São Paulo/SP (Brazil)
- Electricity transmission and operation and maintenance of electricity transmission networks.
(*) Unaudited
Percentage ownership (1)
Equity of investees (2)
Direct
Indirect
Carrying
amount
Paid-in share
capital
Share
premium
Reserves
Other
items
Profit/(loss)
for
the year (3)
Results
from
operating
activities
(3)
Dividends
received
-
50% (e)
-
38.56% (g) (4)
-
12.82% (g) (4)
-
-
-
-
50% (k)
50% (l)
50% (l)
50% (l)
-
-
-
-
-
-
-
59,389
108,174
1,026
82,862
78,366
5,965
18,227
-
-
-
-
-
-
-
17,026
(48,465)
9,760
39,470
100,837
12,386
6,357
17,386
(91)
160,165
-
-
-
-
41,057
42,009
133,417
5,121
40,276
89,984
8,684
7,464
-
-
14,211
17,268
1,415
12,055
-
-
-
-
-
-
-
(1) Equivalent to voting rights.
(2) As per the audited financial statements harmonised with the Company's accounting criteria and translated to Euros at the closing exchange rate.
(3) As per the audited financial statements harmonised with the Company's accounting criteria and translated to Euros at the average exchange rate.
(4) Company forming part of the Hispasat subgroup.
(a) Investment through Red Eléctrica Internacional, S.A.U.
(b) Investment through Red Eléctrica de España, S.A.U.
(c) Investment through Red Eléctrica del Sur, S.A.
(d) Investment through Red Eléctrica del Norte Perú, S.A.C.
(e) Investment through Red Eléctrica Chile SpA.
(f) Investment through Red Eléctrica Sistemas de Telecomunicaciones, S.A.U.
(g) Investment through Hispasat, S.A.
(h) Investment through Hispasat, S.A. and Hispasat Brasil, Ltda.
(i) Investment through Hispamar Satélites, S.A.
(j) Investment through Red Eléctrica del Sur, S.A. and Red Eléctrica Internacional S.A.U.
(k) Investment through Red Eléctrica Brasil Holding Ltda.
(l) Investment through Argo Energía Empreendimentos y Participaciones S.A.
Red Eléctrica Corporación, S.A.
Page 23 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Company holds all of the share capital of REE, the company that performs the functions of transmission agent,
system operator and transmission network manager of the Spanish electricity system subject to the provisions of
Electricity Industry Law 24/2013 and related provisions having regard to the system operator, transmission network
manager and transmission agent. The Company may not transfer the shares of this subsidiary, which conducts
regulated activities in Spain, to third parties.
Furthermore, the Company holds all of the share capital of REINTEL, which renders telecommunications services
to third parties in Spain, essentially through the rental of the dark fibre backbone network of both electricity trans-
mission infrastructure and railway infrastructure.
In 2019, RESTEL acquired 89.68% of the share capital of Hispasat, S.A. for Euros 933 million. The company’s statu-
tory and principal activity consists of commercialising and rendering satellite telecommunications services.
RESTEL was incorporated in 2018 and its statutory activity includes the acquisition, holding, management and ad-
ministration of securities. In 2019, RESTEL’s share capital was increased by Euros 549 million.
Moreover, in 2019, Red Eléctrica y de Telecomunicaciones, Innovación y Tecnología, S.A.U. (RETIT) was incorporated
with share capital of Euros 1,000 thousand and a share premium of Euros 4,000 thousand, which has been paid in
full at 31 December 2020 (Euros 750 thousand had not yet been paid in at 31 December 2019). This company's stat-
utory and principal activity consists of driving and fostering technological innovation.
International activity is conducted by REI (a wholly owned subsidiary). In 2020, REI’s share capital was increased by
Euros 378.5 million (in 2019 it was increased by Euros 31.4 million).
Details of the main transactions performed in 2020 and 2019 are as follows:
• In Brazil:
o In 2020, through its subsidiary Red Eléctrica Brasil, REI acquired 50% of Argo Energia Empreendimentos e
Participações S.A. (ARGO ENERGIA), a Brazilian company that heads a group of electricity transmission con-
cession operators in Brazil. Argo Energia was incorporated in Brazil in 2016 and holds three 30-year electricity
concessions in that country, encompassing 1,460 km of 500 kV and 230 kV high-voltage lines and 11 substa-
tions, of which 1,150 km of lines and five substations have been operating since October 2019. The purchase
price for 50% of the share capital of Argo Energia was BRL 1,678.2 million (Euros 374.3 million).
• In Peru:
o In 2019, REI incorporated Red Eléctrica del Norte Perú S.A.C. (REDELNOR). The statutory activity of the new
company consists of electricity transmission and maintenance activities on the Carhuaquero - Cajamarca
Norte - Caclic - Moyobamba line.
o In addition, in 2019 REDELNOR acquired the Peruvian company Concesionaria Línea de Transmisión CCNCM,
S.A. (CCNCM). The company's statutory and principal activity consists of electricity transmission and mainte-
nance activities on the Carhuaquero - Cajamarca Norte - Caclic - Moyobamba line and related substations in
Peru.
The Company performs an impairment test each year to verify the recoverability of its investments for which there
are indications of impairment. When testing for impairment, the Company considers projections of future cash
flows. Such tests were performed in 2020 and 2019 and in all instances the value in use exceeded the carrying
amount. Thus, the Company concluded that no impairment of investments exists.
The most representative assumptions regarding the recoverable amount of REI included in the projections of its
investee businesses, based on business forecasts and own past experience, are as follows:
• Regulated remuneration: estimated based on the remuneration approved by the regulations governing each
business for the years available, whilst the same update mechanisms as those set out in prevailing legislation
have been used for subsequent years.
• Investment: the best information available on the asset investment and maintenance plans for the infrastructure
throughout the estimated time period has been used.
• Operating and maintenance costs: projected in line with the growth expected to derive from the investment plan.
• Other costs: projected based on knowledge of the sector and past experience and in line with the growth ex-
pected to derive from the investment plan.
Red Eléctrica Corporación, S.A.
Page 24 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In order to calculate present value, the projected cash flows are discounted using a post-tax rate that considers
the weighted average cost of capital (WACC) of the business and the geographical area in which it is carried out.
The estimate performed reveals that the recoverable amount is higher than the value of the investment plus the
loan granted to TEN, a subsidiary of REI.
Regarding the recoverable amount of RESTEL, the key assumptions used in the calculations for the impairment
test of the investment in Hispasat were as follows:
• The test was performed estimating the fair value less costs to sell, taking an income approach for the purpose
of determining the recoverable amount of the satellite business. The income approach indicates the recoverable
amount of a business based on the present value of the future cash flows it is expected to generate, calculated
using a discounted cash flow (DCF) methodology. The DCF method is used to discount the future free cash flow
(FCF) to its estimated present value, applying a discount rate (weighted average cost of capital or WACC) that
reflects the time value of money and the risks associated with the expected cash flows. The value of the equity-
accounted investees of the HISPASAT subgroup has been added to this fair value less cost to sell.
• The latest projections considered in the Business Plan associated with the HISPASAT subgroup’s New Strategic
Plan approved in December 2020 by its board of directors have been applied. The cash flow projections used are
for the 2021-2040 period, which is consistent with the useful life of the existing satellites, as well as that of the
new satellite assets expected to be launched in the coming years and the HISPASAT subgroup’s expected adop-
tion of new business models and technologies. The terminal value associated with the traditional technology is
zero, given that the infrastructure supporting this business will cease to generate revenue and expenses once it
reaches the end of its useful life. For new business and services, a terminal value with a perpetuity growth rate
of 0.75% has been applied, which is in line with that considered by analysts for comparable companies and has
been contrasted by an independent consultant.
• The EBITDA margin considered for traditional business and new business jointly averages 58%. HISPASAT’s man-
agement has determined the budgeted EBITDA margin based on past performance, expected market develop-
ment and market comparables, which are consistent with external sources of information, the reasonableness
of which has been contrasted with an independent consultant.
• The main exchange rates considered were 1.23 EUR/USD and 6.38 EUR/BRL.
• A discount rate based on the weighted average cost of capital (WACC) has been used to discount the cash flows,
specifically a post-tax rate of 5.9% has been applied for the traditional satellite business, and an additional risk
premium has been included for new business, giving a post-tax rate of 7.5%.
• In addition, the fair value less costs to sell plus the value of the HISPASAT subgroup’s equity-accounted investees
has been reduced by the fair value of the net financial position of the HISPASAT subgroup to calculate the equity
value of the investment in RESTEL.
The aforementioned testing was performed on the investment in RESTEL in 2020 and the recoverable amount ex-
ceeded the carrying amount of the investment. Thus, the Company concluded that the investment in RESTEL plus
the loan granted is not impaired.
9 Financial Risk Management Policy
The Company’s financial risk management policy establishes principles and guidelines to ensure that any signifi-
cant risks that could affect its objectives and activities are identified, analysed, assessed, managed and controlled,
and that these processes are carried out systematically and adhering to uniform criteria.
A summary of the main guidelines that comprise this policy is as follows:
• Risk management should be fundamentally proactive and directed towards the medium and long term, taking
into account possible scenarios in an increasingly global environment.
• Risk should generally be managed in accordance with consistent criteria, distinguishing between the importance
of the risk (probability/impact) and the investment and resources required to reduce it.
• Financial risk management should be focused on avoiding undesirable variations in the Company’s core value,
rather than generating extraordinary profits.
Red Eléctrica Corporación, S.A.
Page 25 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Company’s finance management is responsible for managing financial risk, ensuring consistency with the
strategy and coordinating the risk management process, by identifying the main financial risks and defining the
initiatives to be taken, based on different financial scenarios.
The methodology for identifying, measuring, monitoring and controlling risk, as well as the management indicators
and measurement and control tools specific to each risk, are implemented through the Group’s Comprehensive
Risk Management System, which is set forth in the General Comprehensive Risk Management Policy and in the Gen-
eral Comprehensive Risk Management and Control Procedure.
The financial risks to which the Company is exposed are as follows:
a) Market risk
Market risk reflects variations in the financial markets in terms of prices, interest and exchange rates, credit con-
ditions and other variables that could affect short-, medium- and long-term finance costs.
Market risk is managed on the borrowings to be arranged (the currency, maturity and interest rates), and through
the use of hedging instruments that allow the financial structure to be modified. Market risk specifically includes:
• Interest rate risk
The interest rate risk to which the Company is exposed at 31 December 2020 and 2019 mostly affects profit for
the year, but not equity.
Interest rate fluctuations change the fair value of assets and liabilities that accrue interest at fixed rates and the
future cash flows from assets and liabilities indexed to floating interest rates. The rise or decline of 0.10% in
2020 interest rates would have increased or decreased profit by Euros 264 thousand (Euros 553 thousand in
2019).
• Currency risk
Management of this risk encompasses translation risk, to which the Company is exposed when consolidating its
subsidiaries and/or assets located in countries where the functional currency is not the Euro, and payables de-
nominated in currencies other than the Euro; and transaction risk, arising from cash inflows and outflows in
currencies other than the Euro.
The Company has arranged derivative financial instruments (cross-currency swaps) to reduce the currency risk
on loans extended to the Group company RECH. These instruments allow variable-rate debt in Euros to be ex-
changed for variable-rate debt in US Dollars, thereby hedging future receipts in US Dollars.
• Credit risk
The main risk to which the Company is exposed is credit risk, inasmuch as its main debt transactions are carried
out by the other Group companies, which assume the market and liquidity risks. Credit risk is managed through
policies that contain certain requirements regarding counterparty credit quality, and further guarantees are re-
quested when necessary. At 31 December 2020 the Company does not consider there to be any risk as regards
the recoverability of receivables.
10 Analysis of Financial Instruments
Analysis by category
a)
At 31 December 2020 and 2019 the carrying amounts of each category of financial instruments, except investments
in Group companies, are as follows:
Red Eléctrica Corporación, S.A.
Page 26 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Financial assets
Thousands of Euros
Loans to third parties
Loans to Group companies and associates
Equity instruments of a special nature
Other financial assets
Non-current
Trade receivables and loans to
Group companies and associates
Derivative financial instruments
Other financial assets
Trade and other receivables
Current
Total
Thousands of Euros
Loans to third parties
Loans to Group companies and associates
Equity instruments of a special nature
Derivative financial instruments
Other financial assets
Non-current
Trade receivables and loans to
Group companies and associates
Other financial assets
Trade and other receivables
Current
Total
Financial instruments by category at 31.12.2020
Available-
for-sale
financial
assets
-
-
3,895
-
3,895
-
-
-
-
-
3,895
Loans and
receivables
Hedging
derivatives
1,192
449,677
-
22
450,891
1,334,527
-
1
245
1,334,773
1,785,664
-
-
-
-
-
-
16,228
-
-
-
16,228
Financial instruments by category at 31.12.2019
Loans and
receivables
Hedging
derivatives
Available-
for-sale
financial
assets
-
-
2,542
-
-
2,542
-
-
-
-
2,542
25
713,139
-
-
14
713,178
764,513
1
592
765,106
1,478,284
Total
1,192
449,677
3,895
22
454,786
1,334,527
16,228
1
245
1,351,001
1,805,787
Total
25
713,139
2,542
4,462
14
720,182
764,513
1
592
765,106
-
-
-
4,462
-
4,462
-
-
-
-
4,462
1,485,288
Red Eléctrica Corporación, S.A.
Page 27 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Financial liabilities
Thousands of Euros
Bonds and other marketable securities
Loans and borrowings
Payables to Group companies and associates
Other financial liabilities
Non-current
Bonds and other marketable securities
Loans and borrowings
Trade payables and payables to Group companies and associ-
ates
Current payables
Trade and other payables
Current
Total
Financial instruments by category at 31.12.2020
Debts
and payables
Hedging
derivatives
397,699
869,081
1,565
16
1,268,361
2,512
811
8,106
158,652
35,009
205,090
1,473,451
-
-
-
-
-
-
-
-
-
-
-
Total
397,699
869,081
1,565
16
1,268,361
2,512
811
8,106
158,652
35,009
205,090
1,473,451
Financial instruments by category at 31.12.2019
Thousands of Euros
Loans and borrowings
Payables to Group companies and associates
Other financial liabilities
Non-current
Loans and borrowings
Trade payables and payables to Group companies and associ-
ates
Current payables
Trade and other payables
Current
Total
Debts
and payables
601,140
1,565
16
602,721
2,116
Hedging
derivatives
-
-
-
-
-
390
158,145
24,261
184,912
787,633
-
-
-
-
-
Analysis by maturity
b)
• Financial assets
Thousands of Euros
Loans to third parties
Loans to Group companies and
associates
Equity instruments of a special nature
Other financial assets
Trade and other
receivables
Total
31.12.2020
Maturity of financial assets
2021
2022
2023
2024
2025 Thereafter
-
1,334,527
-
1
245
1,334,773
-
-
-
-
-
-
-
-
65,677 384,000
-
-
-
-
-
-
65,677 384,000
-
-
-
-
-
-
1,192
-
1,784,204
3,895
3,895
22
-
23
245
5,109
1,789,559
Red Eléctrica Corporación, S.A.
Page 28 of 48
Total
601,140
1,565
16
602,721
2,116
390
158,145
24,261
184,912
787,633
Total
1,192
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
31.12.2019
Maturity of financial assets
2020
2021
2022
2023
2024 Thereafter
-
-
-
-
-
25
Total
25
764,513
158,923
100,150
70,066 384,000
-
1,477,652
-
1
592
-
-
-
-
-
-
-
-
-
-
-
-
2,542
2,542
14
-
15
592
765,106
158,923
100,150
70,066 384,000
2,581
1,480,826
Thousands of Euros
Loans to third parties
Loans to Group companies and
associates
Equity instruments of a special nature
Other financial assets
Trade and other
receivables
Total
• Financial liabilities
Thousands of Euros
Bonds and other
marketable securities
Loans and borrowings in
Euros
Loans and borrowings in
foreign currency
31.12.2020
Maturity of financial liabilities
2021
2022
2023
2024
2025 Thereafter
2,512
-
-
390
100,000
175,000
421
40,476
53,785
-
-
-
-
-
400,000
500,000
-
-
-
Payables to Group
companies and associates
8,106
Trade and other payables
193,661
-
-
-
-
Other financial liabilities
Total
-
205,090
-
140,476
-
228,785
-
-
- 900,000
31.12.2019
Maturity of financial liabilities
2020
2021
2022
2023
2024 Thereafter
390
-
-
-
500,000
1,726
-
43,280
57,860
Thousands of Euros
Loans and borrowings in
Euros
Loans and borrowings in
foreign currency
Payables to Group
companies and associates
390
Trade and other payables
182,406
Other financial liabilities
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
184,912
- 43,280
57,860 500,000
1,581
An analysis by maturity of derivative financial instruments is provided in note 11.
Valuation
adjustments
Total
(2,301)
400,211
(180)
775,210
-
-
-
94,682
9,671
193,661
-
16
(2,481) 1,473,451
Valuation
adjustments
-
-
-
-
-
-
Total
500,390
102,866
1,955
182,406
16
787,633
-
-
-
1,565
-
16
1,581
-
-
1,565
-
16
Red Eléctrica Corporación, S.A.
Page 29 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
11 Derivative Financial Instruments
In line with its financial risk management policy, the Company has arranged derivative financial instruments (cross-
currency swaps). These instruments allow variable-rate debt in Euros to be exchanged for variable-rate debt in US
Dollars, thereby hedging future receipts in US Dollars. The Company has no formal hedging relationships reflected
in the balance sheet. Variations due to exchange rate fluctuations in derivative financial instruments are offset in
the income statement against the corresponding variations arising from the non-current loan extended to the
Group company RECH (see note 21). However, the formal hedging relationship is disclosed in the Group's consoli-
dated annual accounts as hedges of net investments in US Dollars.
The Company has incorporated a credit risk adjustment to reflect own and counterparty risk in the fair value of
derivatives using generally accepted measurement models.
When determining the credit risk adjustment, the Company applied a technique based on calculating total expected
exposure (which considers current and potential exposure) through the use of simulations, adjusted for the proba-
bility of default over time and for loss given default allocable to the Company and to each counterparty.
The total expected exposure of derivative financial instruments is determined using observable market inputs,
such as interest rate curves, exchange rates and volatilities based on market conditions at the measurement date.
The inputs used to determine own and counterparty credit risk (probability of default) are mostly based on own
credit spreads and those of comparable companies currently traded on the market (credit default swap (CDS)
curves, IRR of debt issues, etc.).
Furthermore, adjustments of fair value for credit risk take into account credit enhancements for guarantees and
collateral when determining the loss given default to be used for each position. Loss given default is considered to
be constant over time. A minimum recovery rate of 40% has been used in cases where there is no credit enhance-
ment for guarantees or collateral.
As regards observable inputs, the Company uses mid-market prices obtained from reputable external information
sources in the financial markets.
Details of derivative financial instruments by type at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Exchange rate hedges
- Hedges of a net investment:
Cross-currency swap
Thousands of Euros
Exchange rate hedges
- Hedges of a net investment:
Cross-currency swap
31.12.2020
Hedged principal
Term to
expiry
Non-current
Current
Assets
Liabilities
Assets
Liabilities
USD 150,000
thousand
Up to 2021
-
-
16,228
-
31.12.2019
Hedged principal
Term to
expiry
Non-current
Current
Assets
Liabilities
Assets
Liabilities
USD 150,000
thousand
Up to 2021
4,462
-
-
-
Details of these derivative financial instruments by expiry date are as follows:
Thousands of Euros
Exchange rate hedges
- Hedges of a net investment:
Cross-currency swap
Hedged principal
Term to
expiry
2021
2022
2023
2024
2025 and
thereafter
Total
31.12.2020
USD 150,000
thousand
Up to 2021
16,228
-
-
-
-
16,228
Red Eléctrica Corporación, S.A.
Page 30 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Exchange rate hedges
- Hedges of a net investment:
Cross-currency swap
Hedged principal
Term to
expiry
2020
2021
2022
2023
2024 and
thereafter
Total
31.12.2019
USD 150,000
thousand
Up to 2021
-
4,462
-
-
-
4,462
In 2020, the Company recognised income of Euros 482 thousand (Euros 499 thousand in 2019).
12 Non-current and Current Investments
Details of non-current investments at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Equity instruments
Loans to third parties
Derivative financial instruments
Other financial assets
Total non-current investments
Thousands of Euros
Derivative financial instruments
Other financial assets
Total current investments
31 December
2020
3,895
1,192
-
22
5,109
31 December
2019
2,542
25
4,462
14
7,043
31 December
2020
31 December
2019
16,228
1
16,229
-
1
1
Equity instruments reflect the Euros 3,895 thousand investment in economic interest groups (EIGs) (Euros 2,542
thousand in 2019) engaged in the lease of assets managed by an unrelated company, which retains most of the risks
and rewards of the activity, while the Company only avails of the tax incentives regulated in Spanish legislation. The
Company recognises the finance income generated due to the difference between income tax payable to the tax-
ation authorities in respect of recognised tax losses incurred by the EIGs and the investments in those EIGs (see
notes 17 and 20-c).
At 31 December 2020 and 2019, loans to third parties reflect those extended by the Company to its personnel, which
fall due in the long term. These loans earn interest at floating rates indexed to Euribor plus a spread, in accordance
with the conditions laid down in the collective bargaining agreement.
At 31 December 2020 and 2019, non-current and current derivative financial instruments reflect the value thereof
and have been reclassified to short term as they expire in 2021. Details thereof and an analysis by expiry is provided
in note 11.
13 Trade and Other Receivables
Details at 31 December 2020 and 2019 are as follows:
Red Eléctrica Corporación, S.A.
Page 31 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Trade receivables from Group companies and associates
Other receivables
Personnel
Public entities, other
Total
31 December
2020
31 December
2019
873
30
215
-
1,118
16
89
4
499
608
At 31 December 2020 and 2019, trade receivables from Group companies and associates comprise amounts receiv-
able from Group companies and associates.
At 31 December 2019 public entities, other included the value added tax (VAT) recoverable by the Company.
14 Equity
Capital risk management
a)
The Group’s management of its companies’ capital is aimed at safeguarding their capacity to continue operating as
a going concern, so as to provide shareholder remuneration while maintaining an optimum capital structure to
reduce the cost of capital.
To maintain and adjust the capital structure, the Company can adjust the amount of dividends payable to share-
holders, reimburse capital or issue shares.
Given the Company's activity and its investees' capacity to generate funds, the Company is not significantly exposed
to capital risk.
Capital and reserves
b)
• Share capital
At 31 December 2020 and 2019 the Company's share capital is divided into 541,080,000 shares of Euros 0.50 par
value each represented by book entries, all subscribed and fully paid-in, and carrying the same voting and profit-
sharing rights (notwithstanding the limits stipulated in the following paragraph). The shares are quoted on the
four Spanish stock exchanges and traded through the SIBE (Spanish Stock Exchange Interlinking System).
The Company is subject to the shareholder limitations stipulated in the twenty-third additional provision of Law
54/1997 of 27 November 1997 and article 30 of Electricity Industry Law 24/2013 of 26 December 2013.
Pursuant to this legislation, any individual or entity may hold investments in the Company, provided that the sum
of their direct or indirect interests in its share capital does not exceed 5% and their voting rights do not surpass
3%. These shares may not be syndicated for any purpose. Voting rights at the Parent are limited to 1% in the case
of entities that carry out activities in the electricity sector, and individuals and entities that hold direct or indirect
interests exceeding 5% of the share capital of such companies, without prejudice to the limitations for genera-
tors and suppliers set forth in article 30 of Electricity Industry Law 24/2013 of 26 December 2013. The shareholder
limitations with regard to the Parent's share capital are not applicable to Sociedad Estatal de Participaciones
Industriales (SEPI), which in any event will continue to hold an interest of no less than 10%. At 31 December 2020
and 2019 SEPI holds a 20% interest in the Company's share capital.
• Reserves
This item includes:
o Legal reserve
Spanish companies are obliged to transfer 10% of the profits for the year to a legal reserve until such reserve
reaches an amount equal to 20% of the share capital. Until this reserve exceeds this limit, it is not distributable
Red Eléctrica Corporación, S.A.
Page 32 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
to shareholders and may only be used to offset losses, provided no other reserves are available. Under certain
circumstances, it may also be used to increase share capital. At 31 December 2020 and 2019 the legal reserve
amounts to 20% of share capital (Euros 54,199 thousand).
o Revaluation reserve under Law 16/2012 of 27 December 2012
In accordance with Law 16/2012 of 27 December 2012, which introduced several tax measures to consolidate
public finances and boost economic activity, the Company revalued its property, plant and equipment. The
associated revaluation reserve amounted to Euros 6,042 thousand, net of the 5% capital gains tax. There were
no movements in the revaluation reserve during 2020.
The revaluation is open to inspection by the Spanish taxation authorities for a three-year period from the date
of filing the 2012 income tax return. Once this three-year period has elapsed, the balance may be used to offset
losses or increase the Company's capital. Once a period of ten years has elapsed this balance may be released
to freely distributable reserves. Nonetheless, this balance may only be distributed, indirectly or directly, when
the revalued assets have been fully depreciated, transferred or derecognised.
o Other reserves
Other reserves primarily include voluntary reserves of the Company and first-time application reserves,
amounting to Euros 1,587,688 thousand and Euros 19,895 thousand, respectively, at 31 December 2020 (Euros
1,596,169 thousand and Euros 19,895 thousand, respectively, at 31 December 2019). Both of these reserves are
freely distributable.
In 2020, the Company recorded a decrease in voluntary reserves of Euros 10,287 thousand due to the difference
between the assets and liabilities received as a dividend in kind from REE (see note 4-g).
The business received as payment of the dividend in kind consisted of the transfer of the business unit making
up the corporate services that REE provided to the various Group companies. The transfer encompassed the
employees, assets and liabilities associated with the business.
At 31 December 2020 and 2019 this item also comprises statutory reserves totalling Euros 264,547 thousand,
notably including the property, plant and equipment revaluation reserve amounting to Euros 247,022 thousand
created by the Parent in 1996. This reserve may be used, free of taxation, to offset accounting losses and in-
crease share capital or, ten years after its creation and when the associated assets have been fully depreci-
ated, it may be transferred to freely distributable reserves. Nonetheless, this balance may only be distributed,
indirectly or directly, when the revalued assets have been fully depreciated, transferred or derecognised.
Moreover, following the spin-off of the Telecommunications activity from REI to REINTEL, through a split-off,
a reserve was generated in an amount of Euros 74,407 thousand in 2015, reflecting the difference between the
value of the net assets spun off to REINTEL (Euros 74,417 thousand) and the value of the Company's investment
in this business through REI. There was no change in the balance of this reserve in 2020.
As provided for by article 25 of Law 27/2014 of 27 November 2014, in 2019 the tax group headed by the Company
created a capitalisation reserve of Euros 16,707 thousand, corresponding to 2018, pursuant to article 62.1 d) of
the aforementioned Law. This reserve will be restricted for a period of five years. Accordingly, each tax group
company adjusted income tax for the year in connection with this reserve. The capitalisation reserve for 2019
was appropriated in 2020 in the Group company REE.
• Own shares
At 31 December 2020, the Company held 2,084,729 own shares representing 0.39% of its share capital with a total
par value of Euros 1,042 thousand and an average acquisition price of Euros 17.53 per share. At 31 December 2019,
the Company held 2,024,844 own shares representing 0.37% of its share capital with a total par value of Euros
1,012 thousand and an average acquisition price of Euros 18.03 per share.
These shares have been recognised as a reduction in equity for an amount of Euros 36,550 thousand at 31 De-
cember 2020 (Euros 36,504 thousand in 2019).
The Company has complied with the requirements of article 509 of the Spanish Companies Act, which provides,
except in the case of freely acquired own shares, that in listed companies the par value of own shares acquired
directly or indirectly by the Company, plus the par value of the shares already held by the Parent and its subsidi-
aries, must not exceed 10% of subscribed share capital. The subsidiaries do not hold own shares or shares in the
Company.
Red Eléctrica Corporación, S.A.
Page 33 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
• Profit for the year
Profit for the year totals Euros 730,263 thousand (Euros 570,669 thousand in 2019).
• Interim dividends and proposed distribution of dividends by the Company
The interim dividend authorised by the board of directors in 2020 has been recognised as a Euros 146,984 thou-
sand reduction in equity at 31 December 2020 (Euros 147,002 thousand at 31 December 2019).
On 27 October 2020, the Company’s board of directors agreed to pay an interim dividend of Euros 0.2727 (gross)
per share with a charge to 2020 profit, which was paid on 7 January 2021.
The cash flow forecast for the period from 30 September 2020 to 7 January 2021 indicated sufficient liquidity to
allow the distribution of this dividend. The amount to be distributed did not exceed the profits generated by the
Company since the end of the previous reporting period, after deducting the estimated income tax payable on
these profits, as required by article 277 of the Revised Spanish Companies Act.
As such, the following provisional liquidity statement was drawn up pursuant to article 277 section a) of the Span-
ish Companies Act:
Liquidity statement of Red Eléctrica Corporación, S.A.
Thousands of Euros
Available funds at 30/09/2020:
Non-current credit facilities available
Current credit facilities available
Current investments and cash
Forecast receipts:
Current transactions
Financial transactions
Forecast payments:
Current transactions
Financial transactions
Forecast available funds at 07/01/2021
466,979
55,000
229,730
-
254,340
(129,215)
-
876,834
Based on the cash flow forecast at the approval date, no limitation on the availability of funds was or is expected
to arise. In addition, given the Company’s cash generation capacity and undrawn credit facilities, the Company
will have sufficient liquidity within one year after the interim dividend distribution has been agreed.
Furthermore, as reflected in the accompanying annual accounts, and as foreseen at the distribution date, profit
for 2020 allows for the distribution of this interim dividend.
Valuation adjustments
c)
At 31 December 2020 and 2019 this item reflects the gains arising from the increase in the fair value of the invest-
ment held by the Company in Redes Energéticas Nacionais, SGPS, S.A. (REN) until 2015, when it transferred this
investment as a non-monetary contribution to subscribe the capital increase in the Group company REI.
These gains are recorded in equity until the disposal or derecognition of the investment, whereupon they are taken
to profit and loss (see note 4-e).
15 Non-current Provisions
Movement in 2020 and 2019 is as follows:
Red Eléctrica Corporación, S.A.
Page 34 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
31.12.2018
Additions Applications
Actuarial
gains and
losses
Transfers
31.12.2019
Additions Applications
Actuarial
gains and
losses
Transfers
31.12.2020
Thousands of Euros
Provisions for employee
benefits
Other provisions
630
4,467
129
115
(249)
(19)
(468)
23
-
-
-
4,582
Total
5,097
244
(249)
(19)
(468)
4,605
346
410
756
(75)
2,345
12,487
15,126
-
-
-
4,992
(75)
2,345
12,487
20,118
Provisions for employee benefits include future commitments (health insurance) undertaken by the Company on
behalf of its employees for their retirement, calculated based on actuarial studies conducted by an independent
expert. The following assumptions were used for 2020 and 2019:
Discount rate
Cost increase
Mortality table
Actuarial assumptions
2020
0.87%
3.00%
2019
1.05%
3.00%
PERM/F 2020 1st rank
PERM/F 2000 new pro-
duction
The effect of a one percentage point increase or decrease in the assumed health insurance cost trend rates is as
follows:
Thousands of Euros
Current service cost
Interest cost of net post-employment health insurance
costs
Accumulated post-employment benefit obligation for
health insurance
2020
1%
163
1
-1%
(119)
(1)
4,537
(3,339)
2019
1%
1.4
-
9.4
-1%
(1.0)
-
(6.5)
Conversely, the effect of a decrease of half a percentage point in the discount rate used in the actuarial assumption
for health insurance costs from 0.87% to 0.37% in 2020, is as follows:
Thousands of Euros
Current service cost
Interest cost of net post-employment
health insurance costs
Accumulated post-employment benefit
obligation for health insurance
2020
Discount rate
0.87%
84
0.37%
159
1
1
Sensitivity
75
-
2019
Discount rate
1.05%
3.5
0.55%
4.1
0.9
0.5
14,400
16,507
2,107
22.8
27.2
Sensitivity
0.6
(0.4)
4.4
The accrued amounts are recognised as personnel expenses or finance costs, depending on their nature. Personnel
expenses and finance costs recognised in the income statement for 2020 amount to Euros 84 thousand and Euros
0.9 thousand, respectively (Euros 3.5 thousand and Euros 0.9 thousand, respectively, in 2019). Any variations in the
calculation of the present value of these obligations due to actuarial gains and losses are recognised as reserves
under equity. The gross amount recognised during the year in this connection totalled Euros 2,345 thousand
Red Eléctrica Corporación, S.A.
Page 35 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
(negative amount of Euros 19 thousand in 2019), which has been recorded under actuarial gains and losses in the
statement of changes in equity.
Provisions for employee benefits also include commitments undertaken by the Company as part of the deferred
remuneration scheme for employees.
In 2020, provisions for employee benefits under the transfers column include the commitments to personnel re-
ceived from REE amounting to Euros 12,987 thousand as a result of the dividend in kind (see notes 4-g and 14-b). In
2020 and 2019, this item also includes the commitments to employees that have been transferred in the short term,
amounting to Euros 500 thousand and Euros 468 thousand, respectively.
Other provisions reflect the amounts recorded by the Company every year to cover potential unfavourable rulings
handed down in relation to third-party claims.
16 Non-current and Current Payables
Details at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Bonds and other marketable securities
Loans and borrowings
Other liabilities
Non-current payables
Thousands of Euros
Bonds and other marketable securities
Loans and borrowings
Other current payables
Current payables
31 December
2020
397,699
869,081
16
1,266,796
31 December
2020
2,512
811
158,652
161,975
31 December
2019
-
601,140
16
601,156
31 December
2019
-
2,116
158,145
160,261
At 31 December 2020, bonds and other marketable securities reflect the Euros 400 million bond issue carried out
by the Company in 2020 on the Euromarket in accordance with a specific stand-alone issuance prospectus regis-
tered on the Luxembourg Stock Exchange. This bond issue matures in 2025. The fair value of these payables at 31
December 2020 is Euros 416,182 thousand. The average interest rate on these payables in the year was 1.01%.
At 31 December 2020, the accrued interest payable on this bond issue amounts to Euros 2,512 thousand, which is
recognised under current bonds and other marketable securities.
Non-current loans and borrowings at 31 December 2020 reflect long-term loans and credit facilities in Euros total-
ling Euros 774,820 thousand (Euros 500,000 thousand in 2019). They also include Euros 94,261 thousand drawn down
from credit facilities arranged by the Company in US Dollars (Euros 101,140 thousand at 31 December 2019).
At 31 December 2020 and 2019 other liabilities comprise non-current security deposits received amounting to Euros
16 thousand.
At 31 December 2020 the accrued interest payable amounts to Euros 416 thousand (Euros 623 thousand in 2019) and
has been recognised under current loans and borrowings. This item also reflects the interest accrued but not yet
payable on derivative financial instruments.
These loans and borrowings have a fair value of Euros 872,097 thousand at 31 December 2020 (Euros 604,976 thou-
sand in 2019) and accrued interest at an average rate of 0.30% in 2020 (0.97% in 2019).
The fair value of all non-current and current payables has been estimated using valuation techniques based on
discounting future cash flows at the market rates in force at each date.
Details of other current payables are as follows:
Red Eléctrica Corporación, S.A.
Page 36 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Dividends
Suppliers of fixed assets and other payables
Total
31 December
2020
31 December
2019
146,984
11,668
158,652
147,002
11,143
158,145
17 Taxation
The Company files consolidated tax returns as the parent of the tax group 57/2002.
Reconciliation of accounting profit and the tax loss
a)
Due to the treatment permitted by fiscal legislation of certain transactions, accounting profit differs from the tax
base. A reconciliation of accounting profit for 2020 and 2019 with the tax loss that the Company expects to declare
after approval of the annual accounts is as follows:
Thousands of Euros
Accounting profit for the year before tax
Permanent differences
Taxable accounting income/(loss)
Temporary differences:
Originating in current year
Reversals during the year
Total
EIG charges
Tax loss
2020
730,695
(725,988)
4,707
1,340
(28)
1,312
(73,008)
(66,989)
2019
569,330
(574,746)
(5,416)
115
(201)
(86)
(77,822)
(83,324)
In 2020 and 2019, adjustments were made to the tax base to reflect recognition of the EIGs in which the Company
has interests, amounting to Euros 73,008 thousand and Euros 77,822 thousand, respectively (see note 12).
Effective income tax rate and reconciliation of accounting profit with the income tax expense/income
b)
The income tax expense/income for the year is calculated as follows:
Thousands of Euros
Accounting profit for the year before tax
Permanent differences
Taxable accounting income/(loss)
Tax rate
Tax at the current rate
Deductions
Expense/(income) for the year
Foreign income tax
Other adjustments
Income tax expense/(income)
Effective income tax rate
Breakdown of income tax:
Current income tax
Deferred income tax
Other adjustments
Income tax expense/(income)
2020
730,695
(725,988)
4,707
25%
1,177
(745)
432
-
-
432
0.06%
757
(325)
-
432
2019
569,330
(574,746)
(5,416)
25%
(1,354)
(96)
(1,450)
110
1
(1,339)
-
(1,365)
25
1
(1,339)
Red Eléctrica Corporación, S.A.
Page 37 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The effective rate of income tax is influenced by permanent differences and by deductions in tax payable. The
difference between the effective tax rate and the actual tax rate is primarily due to application of the exemption to
prevent double taxation of dividends from significant interests in resident entities.
Permanent differences in 2020 and 2019 primarily arise from dividends received from subsidiaries (essentially REE
and REINTEL) and due to the capitalisation reserve adjustment resulting from the increase in equity in accordance
with article 25 of Income Tax Law 27/2014 of 27 November 2014.
As permitted by article 62.1 d) of Law 27/2014, the capitalisation reserve for 2020 will be held in the Company, as
head of the tax group (see note 14).
Deferred tax assets and liabilities
c)
Temporary differences in the recognition of income and expenses for accounting and tax purposes at 31 December
2020 and 2019, and the corresponding cumulative tax effect (assets and liabilities) are as follows:
Thousands of Euros
Deferred tax assets:
Originating in prior years
Dividend in kind (notes 4-g and 14-b)
Originating in current year
Reversals of prior years
Prior year adjustments
Total deferred tax assets
Deferred tax liabilities:
Originating in prior years
Reversals of prior years
Total deferred tax liabilities
2020
2019
Income statement
Income and expense
recognised directly
in equity
Income statement
Income and expense
recognised directly
in equity
2,518
-
335
(56)
21
2,818
(1,810)
45
(1,765)
1
3,739
461
-
4,201
-
-
-
2,589
-
28
(99)
2,518
(1,856)
46
(1,810)
6
-
-
(5)
1
-
-
-
In 2020 and 2019, deferred tax assets include reversals of tax prepaid in 2013 and 2014 as a result of applying the
limitation on the tax deductibility of depreciation and amortisation charges stipulated in article 7 of Law 16/2012 of
27 December 2012, which introduced several fiscal measures to consolidate public finances and boost economic
activity, and as a result of the commencement, in 2015, of depreciation and amortisation for tax purposes of the
net increase in value resulting from the revaluations applied to the balance sheet at 31 December 2012, pursuant to
article 9 of the same Law, as well as long-term employee benefits.
Deferred tax liabilities essentially relate to the accelerated depreciation for tax purposes of certain fixed assets.
The notes to the Company's annual accounts for 2006 contain disclosures on the merger by absorption of Red de
Alta Tensión, S.A.U. (REDALTA) and Infraestructuras de Alta Tensión S.A.U. (INALTA), as required by article 86 of
Law 27/2014. The notes to the 2008 annual accounts include disclosures on the contribution to REE of the branch
of activities encompassing the duties of the system operator, transmission network manager and transmission
agent of the Spanish electricity system. The notes to the annual accounts for 2015 include disclosures regarding
the spin-off of the telecommunications services business to REINTEL, and the non-monetary contribution to REI
of shares in REN.
d)
Years open to inspection
In accordance with current legislation, taxes cannot be considered definitive until they have been inspected and
agreed by the taxation authorities or before the inspection period has elapsed.
The Company has open to inspection by the taxation authorities all the main applicable taxes since 2017, except
income tax, which is open to inspection since 2016.
Red Eléctrica Corporación, S.A.
Page 38 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The Company has certain tax proceedings ongoing in respect of income tax for 2011 to 2015, which are currently
being heard either at economic-administrative level or in court proceedings. The Company considers that its
conduct was lawful based on reasonable interpretations of the applicable legislation, and that no penalties will be
imposed and no significant tax liabilities will arise for the Company.
In addition, in 2020 the tax group applied for rectification of the instalments for 2016 to 2020. The Constitutional
Court ruled that Royal Decree-Law 2/2016, which approved an amendment to the instalment calculation method,
among other measures, was unconstitutional.
At the end of 2020, the taxation authorities resolved the request and refunded the late payment interest related to
the instalments for 2016 and 2017 amounting to Euros 3,298 thousand. The resolution delivered with respect to the
remaining years has been appealed.
Due to the different possible interpretations of tax legislation, additional tax liabilities could arise as a result of
future inspections, which cannot be objectively quantified at present. Nevertheless, the Company's board of
directors does not expect that any additional liabilities that could eventually arise in the event of inspection would
significantly affect the Company’s future results.
18 Trade and Other Payables
Details at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Payables to Group companies
Other payables
Personnel
Current tax liabilities
Public entities
Total
31 December
2020
726
9,641
5,968
16,413
2,987
35,735
31 December
2019
87
10,777
682
12,704
98
24,348
At 31 December 2020 and 2019, current tax liabilities comprise Euros 16,413 thousand and Euros 12,704 thousand,
respectively, for income tax payable, which has been recognised by the Company, as parent of the tax group.
19 Average Supplier Payment Period. “Reporting Requirement”. Third Addi-
tional Provision of Law 15/2010 of 5 July 2010
The Spanish Accounting and Auditing Institute (ICAC) resolution of 29 January 2016, concerning the information
that must be disclosed in the notes to the annual accounts in relation to the average supplier payment period in
commercial transactions, clarifies and systematises the information that trading companies must include in the
notes to individual and consolidated annual accounts, in compliance with the reporting requirement of the third
additional provision of Law 15/2010 of 5 July 2010, which amends Law 3/2004 of 29 December 2004, establishing
measures to combat late payments in commercial transactions.
Pursuant to the resolution, the information on the average supplier payment period for 2020 and 2019 is as follows
Days
Average supplier payment period
Transactions paid ratio
Transactions payable ratio
Thousands of Euros
Total payments made
Total payments outstanding
2020
42.3
45.8
16.5
2020
10,333
1,440
2019
43.5
40.2
51.4
2019
4,795
2,015
Red Eléctrica Corporación, S.A.
Page 39 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
20 Income and Expenses
Revenue
a)
Details at 31 December 2020 and 2019 are as follows:
Thousands of Euros
Services rendered
Finance income on investments in equity instruments of Group companies
and associates
Finance income on securities and other financial instruments of Group companies
and associates
Total
31 December
2020
20,708
31 December
2019
10,141
727,926
565,103
9,748
758,382
16,707
591,951
Services rendered correspond to the provision of management support services to Group companies since Novem-
ber 2020, following the distribution of the dividend in kind (see notes 4-g and 14-b). At 31 December 2019 and until
October 2020, this service was provided by the Group company REE. This line item also includes building lease
income, mainly from Group companies (see note 7).
In 2020, finance income from investments in equity instruments of Group companies and associates reflects the
dividends received from REE, REINTEL and RBV (from REE, REF and RBV in 2019).
At 31 December 2020, finance income from securities and other financial instruments of Group companies and
associates comprises income from loan and credit facility agreements entered into with REE, REINTEL, RESTEL,
REI, RECH and RETIT (REE, REINTEL, RESTEL, RECH and REI at 31 December 2019) (see note 21).
Details of this item in 2020 and 2019, by geographical area, are as follows:
Thousands of Euros
Domestic market
European Union
Other countries
Total
Personnel expenses
b)
In 2020 and 2019 this item comprises the following:
Thousands of Euros
Salaries and wages
Social Security
Contributions to pension funds and similar obligations
Other items and employee benefits
Total
2020
755,139
168
3,075
758,382
2019
583,911
179
7,861
591,951
31 December
2020
8,117
1,046
73
1,622
10,858
31 December
2019
4,363
99
5
158
4,625
Personnel expenses include the remuneration of the board of directors (see note 22).
Workforce
The average headcount of the Company (including the chairwoman and CEO) in 2020 and 2019, distributed by pro-
fessional category, is as follows:
Red Eléctrica Corporación, S.A.
Page 40 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Management team
Senior technicians and middle management
Technicians
Specialist and administrative staff
Total
2020
2019
21
23
9
18
71
2
1
-
4
7
The distribution of the Company’s employees (including the chairwoman and CEO) at 31 December 2020 and 2019,
by gender and category, is as follows:
Management team
Senior technicians and middle management
Technicians
Specialist and administrative staff
Total
2020
Female
31
113
14
51
209
Male
39
109
19
15
182
Total
70
222
33
66
391
2019
Female
-
1
-
4
5
Male
2
-
-
-
2
Total
2
1
-
4
7
The increase in the headcount at 31 December 2020 is due to the transfer of employees from the Group company
REE as a result of the dividend in kind received in the form of a business, as explained in note 14-b.
At 31 December 2020 and 2019, the breakdown of the Company’s employees with a disability rating of 33% or more
is as follows:
Senior technicians and middle management
Technicians
Specialist and administrative staff
Total
2020
2019
Male
Female
Total
Male
Female
Total
-
1
1
2
2
1
-
3
2
2
1
5
-
-
-
-
-
-
-
-
-
-
-
-
At 31 December 2020, there are 12 directors, of which 6 are men and 6 are women (7 men and 5 women at 31 De-
cember 2019).
Finance income and costs
c)
In 2020 and 2019 finance costs primarily reflect those incurred on loans and borrowings and derivative financial
instruments. In 2020, this item also includes costs derived from the bond issue described in note 16.
In 2020 and 2019 finance income essentially comprises returns on the investments in the EIGs (see note 12).
Impairment and gains/losses on disposal of fixed assets
d)
In 2019, this item reflected impairment and losses on certain disposals of investment property (see note 6).
Red Eléctrica Corporación, S.A.
Page 41 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
21 Balances and Transactions with Group Companies, Associates and Related
Parties
Balances and transactions with Group companies and associates
All transactions with Group companies and associates have been carried out at market prices.
Details of receivables from and payables to Group companies and associates in 2020 and 2019 are as follows:
Thousands of Euros
Red Eléctrica de España, S.A.U. (REE)
Red Eléctrica Internacional, S.A.U. (REI)
Red Eléctrica Financiaciones, S.A.U. (REF)
Red Eléctrica Infraestructuras de Telecomunicación,
S.A.U. (REINTEL)
Red Eléctrica Infraestructuras en Canarias, S.A.U.
(REINCAN)
Red Eléctrica Sistemas de Telecomunicaciones,
S.A.U. (RESTEL)
Red Eléctrica y de Telecomunicaciones, Innovación y
Tecnología, S.A.U. (RETIT)
Red Eléctrica Chile SpA (RECH)
Red Eléctrica Andina, S.A. (REA)
Hispasat, S.A.
Hispasat Canarias S.L.
Total Group companies
2020
Loans and
dividends
873,459
65,867
71
306,446
-
385,891
1,755
150,715
-
-
-
1,784,204
Payables
1,528
324
-
30
3
57
777
-
-
216
6,736
9,671
2019
Loans and
dividends
760,624
70,601
16
102,943
-
384,529
16
158,923
-
-
-
Payables
1,528
176
-
30
2
45
87
-
87
-
-
1,477,652
1,955
In 2020 and 2019, loans and dividends receivable from REE include the current credit facility arranged with this
company for Euros 850 million, of which Euros 848,825 thousand had been drawn down at 31 December 2020 (Euros
743,543 thousand at 31 December 2019). The average interest rate for the period was 0.41% (0.41% in 2019). The
non-current loan arranged with REE in 2016 remained in force during part of 2019. This loan amounted to Euros 425
million and was due to mature in 2021, but was repaid early at 31 December 2019. The average interest rate for the
period was 0.83%
Loans and dividends receivable from REINTEL reflect the short-term credit facility arranged with this company in
2020 amounting to Euros 400 million, from which Euros 305,177 thousand have been drawn down. The average
interest rate for the period was 0.41%. At 31 December 2019, this item mainly included the loan originally arranged
in 2014 with REI, which was subrogated to REINTEL in 2015, with initial maturity in 2022 although it was early repaid
in 2020. The amount of the loan at 31 December 2019 was Euros 100,150 thousand and the average interest rate for
the period was 2.95% (2.94% in 2019). The fair value of this loan at 31 December 2019 was Euros 108,076 thousand.
Loans receivable from RECH essentially include the US Dollars 150 million loan arranged with this company in 2016,
which falls due in 2021 and had been fully drawn down in an amount of Euros 122,239 thousand at 31 December 2020
(Euros 133,523 thousand at 31 December 2019). The average interest rate for the period was 0.35% (2.55% in 2019).
With a view to reducing the currency risk on this US Dollar loan, the Company has arranged US Dollar/Euro cross-
currency swaps on the principal and interest (see note 11).
Loans receivable from REI primarily include the credit facility arranged with this company in 2018 for an amount of
US Dollars 215 million, of which Euros 65,677 thousand had been drawn down at 31 December 2020 (Euros 70,066
Red Eléctrica Corporación, S.A.
Page 42 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
thousand at 31 December 2019). This facility expires in 2023 and the average interest rate for the period was 1.91%
(3.39% in 2019).
Loans receivable from RESTEL include the credit facility arranged with this company in 2019 for an amount of Euros
435 million, of which a non-current amount of Euros 384,000 thousand and a current amount of Euros 1,491 thou-
sand had been drawn down at 31 December 2020 (Euros 384,000 thousand and Euros 50 thousand, respectively, at
31 December 2019). This facility expires in 2024 and the average interest rate for the period was 0.5% (0.49% in
2019). The fair value of this loan is Euros 391,017 thousand at 31 December 2020 (Euros 394,527 thousand at 31 De-
cember 2019).
Loans receivable from RETIT at 31 December 2020 include the credit facility arranged with this company in 2019
amounting to Euros 25 million, of which Euros 1,748 thousand had been drawn down at 31 December 2020 (no
amount drawn down at 31 December 2019). The average interest rate for the period was 0.41%.
Transactions with Group companies and associates are as follows:
Thousands of Euros
2020
2019
Services
rendered
Finance
income
Operating
expenses
Services
rendered
Finance
income
Operating
expenses
Red Eléctrica de España, S.A.U. (REE)
18,881
520,481
943
9,550
564,971
1,122
Red Eléctrica Internacional S.A.U (REI)
Red Eléctrica Infraestructuras de Te-
lecomunicación, S.A.U. (REINTEL)
Red Eléctrica de España Finance, B.V.
(RBV)
Red Eléctrica Infraestructuras en Ca-
narias, S.A.U. (REINCAN)
Red Eléctrica Financiaciones, S.A.U.
(REF)
Red Eléctrica Sistemas de Telecomu-
nicaciones, S.A.U. (RESTEL)
Red Eléctrica y de Telecomunicacio-
nes, Innovación y Tecnología, S.A.U.
(RETIT)
Red Eléctrica Chile SpA (RECH)
Red Eléctrica Andina, S.A. (REA)
Hispasat, S.A.
424
695
-
117
9
1,341
210,684
168
-
-
132
1,909
-
-
-
-
-
-
197
-
-
88
17
725
3,074
-
-
-
2
-
32
378
-
11
-
-
16
-
-
-
2,352
3,969
179
-
2,000
479
-
7,860
-
-
-
6
-
-
-
-
-
-
87
-
Total Group companies
20,543
737,674
1,670
9,987
581,810
1,215
At 31 December 2020, services rendered correspond to the provision of management support services to Group
companies since November 2020. This service was previously provided by the Group company REE.
At 31 December 2020, services rendered also include the lease agreements with REE, REINTEL, REI, REINCAN, RETIT
and HISPASAT (REE, REINTEL, REI, REINCAN and RETIT in 2019) (see note 7).
In 2020, finance income primarily reflects the dividends received from REE, REINTEL and RBV, (REE, REF and RBV
in 2019), and interest earned on the loans and credit facilities extended to REE, REINTEL, RECH, REI, RESTEL and
RETIT (REE, REINTEL, RECH, REI and RESTEL in 2019).
Related party balances and transactions
In 2020 and 2019 no balances or transactions with related parties were identified.
22 Remuneration of the Board of Directors
At the proposal of the board of directors and in accordance with the articles of association, the annual report on
the remuneration of directors, which includes the remuneration of the board of directors for 2020, was approved
by the shareholders at their general meeting on 14 May 2020.
Red Eléctrica Corporación, S.A.
Page 43 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The approved remuneration of the board of directors for 2020, including the remuneration of the board members,
the chairwoman and the CEO, was unchanged vis-à-vis 2019.
The chairwoman receives fixed annual remuneration in respect of the non-executive chairwoman duties
associated with this position, in addition to remuneration for being a member of the board of directors. The
remuneration scheme for this position consists solely of fixed amounts, with no annual or multi-year variable
remuneration and no termination benefit. In 2020 both remuneration components are under the same terms as in
2019.
At its meeting held on 28 January 2020, the board of directors took note of the irrevocable resignation tendered by
Mr. Jordi Sevilla Segura from his position as a director, and therefore as non-executive chairman of the board of
directors and of the Company.
Further, in its meeting held on 25 February 2020 the board of directors approved, inter alia, the appointment of Ms.
Beatriz Corredor Sierra as a director of the Company, in the category of “other external directors”, until the next
general shareholders’ meeting, and her appointment as non-executive chairwoman of the board of directors and of
the Company.
Subsequently, at their general meeting held on 14 May 2020, the shareholders ratified the appointment of Ms.
Beatriz Corredor Sierra as a director of the Company.
As regards Mr. Jordi Sevilla Segura, in accordance with his contract approved by the board of directors on 31 July
2018, he has not received any termination benefit as a result of the end of his legal and labour relations with the
Company as chairman of the board of directors and of the Company.
The remuneration allocated to the CEO includes the fixed and variable annual and multi-year components
corresponding to executive duties and the fixed remuneration for being a member of the board of directors.
Employee benefits form part of the remuneration for this position. A portion of the annual variable remuneration is
paid through the delivery of Company shares.
Moreover, the CEO has been included in a defined contribution benefit scheme. This scheme covers the retirement,
death and permanent disability contingencies. Red Eléctrica's obligation is limited to an annual contribution equal
to 20% of the CEO's fixed annual remuneration.
The annual variable remuneration of the CEO is set by the Appointments and Remuneration Committee of the Parent
at the start of each year, using predetermined quantifiable and objective criteria. The targets are in line with the
strategies and actions established in the Company's Strategic Plan and the degree of fulfilment is assessed by the
Committee.
Pursuant to the remunerations policy and in line with standard market practices, the CEO’s contract provides for a
termination benefit equal to one year’s salary in the event that labour relations are terminated due to dismissal by
the Parent or changes of control.
As regards the CEO, at its meeting held on 27 May 2019, the board of directors adopted, among others, the following
agreements:
• To dismiss Mr. Juan Francisco Lasala Bernad as CEO and to accept his resignation from the position of executive
director of the Company.
• To appoint Mr. Roberto García Merino as executive director and, subsequently, as CEO of the Company, until the
following general shareholders’ meeting.
At their general meeting held on 14 May 2020, the shareholders ratified the appointment of Mr. Roberto García
Merino as executive director of the Company.
In line with market practices in such cases, as a result of the appointment of the new CEO, the existing employment
contract has been suspended. Should the employment contract be terminated, he would accrue the remuneration
due at the date of suspension as an indemnity. For this purpose, his tenure at Red Eléctrica de España, S.A.U. up to
the date he was appointed CEO (15 years), plus the period in which he rendered services – if any – following his
termination as CEO, would be taken into consideration, in accordance with employment legislation in force. Both
the economic regime and the suspension of the employment relationship of the new CEO are in line with those
applied to the previous CEO. Following the corporatisation carried out in 2020, this obligation was taken on by Red
Eléctrica Corporación, S.A.
Red Eléctrica Corporación, S.A.
Page 44 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In line with standard market practices, Mr. Juan Francisco Lasala Bernad was entitled to a settlement in respect of
his labour relations and an indemnity as CEO equal to one year’s salary in the event that labour relations were
terminated due to dismissal by the Parent or changes of control. The amount associated with his termination as
CEO, which included the indemnity paid, was settled when his relationship with the Company was terminated.
The remuneration of the board of directors includes fixed annual remuneration, remuneration for attending board
meetings, remuneration for work on the board of directors’ committees and specific annual remuneration both for
the chairs of the committees and the coordinating independent director. The components and amounts of this
remuneration have not changed in 2020.
Reasonable and duly supported expenses incurred as a result of their attendance at meetings and other tasks
directly related to carrying out their duties, such as travel expenses, accommodation, meals and any other such
costs that may be incurred, will also be paid or reimbursed to the directors.
The total amounts accrued by the members of the Company’s board of directors in 2020 and 2019 are as follows:
Thousands of Euros
Total remuneration of the board of directors
Directors’ remuneration in respect of executive duties (1)
Total
2020
2,463
743
3,206
2019
2,505
784
3,289
(1) This includes annual fixed and variable remuneration accrued during the year and does not include the indemnity amounting to Euros 818 thousand for the
termination of the CEO that year.
The decrease in total remuneration of the board of directors with respect to the prior year is primarily because
during a certain period in 2020 there was no chair of the board.
The year-on-year decrease in directors' remuneration in respect of executive duties is because the amount accrued
for the position of executive director was lower in 2020 than in 2019.
A breakdown of remuneration by type of director at 31 December 2020 and 2019 is as follows:
Thousands of Euros
Executive directors
External proprietary directors
External independent directors
Other external directors
Total remuneration
2020
890
525
1,285
506
3,206
2019
931
525
1,287
546
3,289
The remuneration accrued by individual members of the Company's board of directors in 2020 and 2019, by
components and director, is as follows:
Red Eléctrica Corporación, S.A.
Page 45 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Thousands of Euros
Ms. Beatriz Corredor Sierra (1)
Mr. Roberto García Merino
Mr. Jordi Sevilla Segura (2)
Ms. Carmen Gómez de Barreda Tous de Monsalve
Ms. María José García Beato
Ms. Socorro Fernández Larrea
Mr. Antonio Gómez Ciria
Mr. Arsenio Fernández de Mesa y Díaz del Río
Mr. Alberto Francisco Carbajo Josa
Ms. Mercedes Real Rodrigálvarez (3)
Ms. María Teresa Costa Campi
Mr. Antonio Gómez Expósito (4)
Mr. José Juan Ruiz Gómez
Mr. Ricardo García Herrera (5)
Other board members (6)
Fixed
remuneration
Variable
remuneration
Allowances
for attending
board
meetings
Committee
work
Chair of
committee/board
and coordinating
independent
director
Other
Remuneration
(7)
Total 2020
Total 2019 (8)
449
481
40
131
131
131
131
131
131
131
131
129
131
3
-
-
263
-
-
-
-
-
-
-
-
-
-
-
-
-
15
16
2
16
16
16
16
16
16
16
16
16
16
-
-
-
-
-
28
28
28
28
28
28
28
28
27
28
-
-
-
-
-
30
-
15
14
-
-
-
-
-
1
-
-
-
130
-
-
-
-
-
-
-
-
-
-
-
-
-
464
890
42
205
175
190
189
175
175
175
175
172
176
3
-
-
531
546
205
175
187
190
175
175
175
175
175
137
-
443
Total remuneration accrued
2,281
263
193
279
60
130
3,206
3,289
(1) New director since the board meeting held on 25 February 2020.
(2) Stepped down from the board of directors at the board meeting held on 28 January 2020.
(3) Amounts received by the Sociedad Estatal de Participaciones Industriales (SEPI).
(4) Stepped down from the board of directors at the board meeting held on 22 December 2020.
(5) New director since the board meeting held on 22 December 2020.
(6) Board members who stepped down from the board in 2019.
(7) Includes the employee benefits that form part of the CEO's remuneration.
(8) Does not include the indemnity for the termination of the CEO in 2019.
In addition to the foregoing, on 31 December 2019 the directors' remuneration scheme for 2014-2019, which
encompassed the CEO, drew to a close. The amount paid to the CEO under this plan, for his duties as CEO from 27
May 2019, was Euros 59 thousand.
At the end of 2020, the board of directors began the process of updating the current 2018-2022 Strategic Plan. This
enabled it to approve, in November 2020, the structure of the new Long-Term Incentive Plan for Promoting the
Energy Transition, Reducing the Digital Divide and for Diversification, the objectives of which are linked to the
objectives set out in the Group’s new Strategic Plan. This Long-Term Incentive Plan covers a period of six years,
until 31 December 2025.
At 31 December 2020 and 2019 no loans or advances have been granted to the members of the board of directors,
nor have any guarantees been extended on their behalf. The Company has no pension or life insurance obligations
with the members of the board of directors at those dates, other than those previously mentioned, nor have any
loans or advances been extended to board members.
At 31 December 2020 and 2019 the Company has taken out public liability insurance to cover claims from third par-
ties in respect of possible damage or loss caused by actions or omissions in performing duties as directors of the
Company. These policies cover the Company's directors and senior management and the annual premiums amount
to Euros 135 thousand, inclusive of tax, in 2020 (Euros 60 thousand at 31 December 2019). These premiums are
calculated based on the nature of the Company's activity and its financial indicators, thus they cannot be broken
down individually or allocated to directors and senior management separately.
Red Eléctrica Corporación, S.A.
Page 46 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In 2020 and 2019 the members of the board of directors did not engage in transactions with the Company, either
directly or through intermediaries, other than ordinary operations under market conditions.
23 Remuneration of Senior Management
Senior management duties are carried out by the CEO and, therefore, at 31 December 2020 and 2019, with the ex-
ception of the CEO, the Company has no other senior executives.
24 Segment Reporting
The Company does not consider it relevant to disclose the distribution of revenue by category of activity, given that
such categories are not structured very differently from the Company's activities on the basis of which it renders
its services. Following the contribution of the branch of activities in 2008 pursuant to Law 17/2007, these activities
are not regulated electricity activities. As such, the Company is not subject to the requirement to give separate
disclosures by activity provided for in Royal Decree 437/1998 of 20 March 1998, which approves the standards adapt-
ing the Spanish General Chart of Accounts to electricity sector companies.
25 Guarantees and Other Commitments with Third Parties and Other Contin-
gent Liabilities
The Company, together with REE, has jointly and severally guaranteed the private issue in the United States of
bonds totalling US Dollars 250 million (US Dollars 430 million in 2019) carried out by the Group company RBV, and
REF's Eurobonds programme for an amount of up to Euros 5,000 million at 31 December 2020 (Euros 5,000 million
at 31 December 2019). At 31 December 2020, Eurobonds issued under this programme total Euros 3,090 million (Eu-
ros 2,940 million in 2019).
Furthermore, at 31 December 2020 and 2019 the Company and REE have jointly and severally guaranteed the prom-
issory notes issued under the Euro Commercial Paper Programme (ECP Programme) by REF for an amount of up to
Euros 1,000 million. At 31 December 2020 no amounts have been drawn down under this programme (Euros 215,096
thousand at 31 December 2019).
At 31 December 2020, the Company has extended bank guarantees to third parties in an amount of Euros 3,584
thousand (Euros 3,584 thousand in 2019).
26 Environmental Information
At 31 December 2020 and 2019 the Company has no assets for the protection and improvement of the environment,
nor did it incur any environmental costs during the year.
The Company is not involved in any litigation relating to environmental protection or improvement that could give
rise to significant contingencies. No environment-related grants were received in the year.
27 Other Information
KPMG Auditores, S.L., the auditor of the Company’s annual accounts, accrued the following fees and expenses for
professional services during the years ended 31 December 2020 and 2019:
Thousands of Euros
Audit services
Audit-related services
Other services
Total
2020
119
93
13
225
2019
65
37
10
112
Red Eléctrica Corporación, S.A.
Page 47 of 48
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The amounts detailed in the above table include the total fees for services rendered in 2020 and 2019, irrespective
of the date of invoice.
28 Share-based Payments
In 2020, a total of 58,658 Parent shares were delivered to employees, with a fair value of Euros 16.480 each, resulting
in an expense for the year of Euros 967 thousand.
In 2019, a total of 668 Parent shares were delivered to employees, with a fair value of Euros 17.255 each, resulting
in an expense for the year of Euros 12 thousand.
This remuneration is measured based on the quotation of these Company shares on the day they were delivered.
The shares delivered were approved by the Company's shareholders at their general meeting, and the related costs
incurred have been recognised under personnel expenses in the income statement.
29 Events after 31 December 2020
30 January 2021 saw the publication of Royal Decree 1/2021 of 12 January 2021, amending the Spanish General Chart
of Accounts approved by Royal Decree 1514/2007 of 16 November 2007; the Spanish General Chart of Accounts for
small and medium-sized enterprises approved by Royal Decree 1515/2007 of 16 November 2007; the standards for
the preparation of consolidated annual accounts approved by Royal Decree 1159/2010 of 17 September 2010; and the
standards for the adaptation of the Spanish General Chart of Accounts for non-profit entities approved by Royal
Decree 1491/2011 of 24 October 2011.
The changes to the Spanish General Chart of Accounts are applicable to accounting periods beginning on or after 1
January 2021 and focus on the criteria for recognition, measurement and disclosure of revenues from the delivery
of goods and services, financial instruments, hedge accounting, valuation by intermediaries of inventories of listed
commodities traded by them, and the definition of fair value.
The annual accounts for the first accounting period beginning on or after 1 January 2021 shall be presented includ-
ing comparative information, although there is no obligation to restate the information from the previous period.
Comparative information need only be restated if all the criteria approved by the Royal Decree can be applied with-
out incurring a retrospective bias, without prejudice to the exceptions established in the transitional provisions.
The application of the standard is generally retrospective, albeit with alternative practical expedients. However,
the application of hedge accounting is prospective, the classification criteria for financial instruments can be ap-
plied prospectively and the sales and service revenue criteria can be applied prospectively to contracts executed
on or after 1 January 2021.
The directors of the Company are in the process of assessing the applicable transition options and the accounting
impacts of these changes, although at the date of authorising these annual accounts for issue they do not yet have
sufficient information to conclude on the results of this analysis.
Red Eléctrica Corporación, S.A.
Page 48 of 48
Directors’ Report 2020
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Contents
1 Business performance. Most significant events ................................................................................ 1
2 Key financial indicators ..................................................................................................................... 1
3 Stock market performance and shareholder returns ........................................................................ 1
4 Own shares ....................................................................................................................................... 3
5 Risk management ............................................................................................................................ 3
6 Environmental issues ....................................................................................................................... 4
7 Research, development and innovation (R&D&i)............................................................................... 4
8 Our people ........................................................................................................................................ 4
9 Excellence and corporate responsibility .......................................................................................... 6
10 Average Supplier Payment Period. “Reporting Requirement”, Third Additional Provision of Law
15/2010 of 5 July 2010 ....................................................................................................................... 7
11 Events after 31 December 2020 ........................................................................................................ 7
12 Dividend policy ................................................................................................................................. 7
13 Outlook ............................................................................................................................................. 7
14 Non-financial Information Statement in compliance with Law 11/2018 of 28 December 2018 ........... 8
15 Annual Corporate Governance Report .............................................................................................. 8
The various sections of this directors' report contain certain prospective information that reflects projections and estimates based on un-
derlying assumptions, statements referring to plans, objectives and expectations associated with future transactions, investments, syner-
gies, products and services, as well as statements concerning results or future dividends, or estimates calculated by the directors and based
on assumptions that those directors consider reasonable.
While the Company considers the expectations reflected in those statements to be reasonable, investors and holders of shares in the Com-
pany are advised that the information and statements containing future projections are subject to risks and uncertainties, many of which
are difficult to foresee and generally beyond the Company's control. As a result of such risks, actual results and developments could differ
substantially from those expressed, implied or forecast in the information and statements containing future projections.
The affirmations and statements containing future projections do not provide any guarantee as to future results and have not been reviewed
by auditors outside the Company or by other independent third parties. It is recommended that no decisions be made on the basis of the
affirmations and statements containing future projections that refer exclusively to the information available at the date of this report. All of
the affirmations and statements containing future projections that are reflected in this report are expressly subject to the warnings given.
The affirmations and statements containing future projections included in this document are based on the information available at the date
of this directors' report. Except as required by applicable legislation, the Company is not obligated to publicly update its statements or review
the information containing future projections, even where new data is published or new events arise.
Red Eléctrica Corporación, S.A.
(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
1 Business performance. Most significant events
Since July 2008, Red Eléctrica Corporación, S.A. (hereinafter REC) has been operating as the Parent of the Red
Eléctrica Group (hereinafter the Group) by holding equity investments in the Group companies and rendering assis-
tance and support services to these companies.
The commitments that the Company undertakes in carrying out these activities drive it towards the ongoing gen-
eration of value for its shareholders and stakeholders.
2 Key financial indicators
In 2020, the Company posted profit after tax of Euros 730.3 million, up 28.0% compared to 2019. Details of the key
components are as follows:
• Revenue amounted to Euros 758.4 million, up 28.1% on 2019. This figure includes Euros 727.9 million of dividends
from Group companies, given that one of the Company's activities as Parent of the Group is holding shares in
Group companies.
• EBITDA 1 totalled Euros 736.4 million, a rise of 28.1% vis-à-vis 2019.
• EBIT 2 amounted to Euros 734.5 million, climbing 28.2% compared to 2019.
The dividends paid in 2020 amounted to Euros 566.8 million, which is 7% more than in 2019.
REC’s equity was Euros 2,886.5 million, up 5.5% on 2019.
3 Stock market performance and shareholder returns
All of the shares in REC, the Group's listed company, are quoted on the four Spanish stock exchanges and are traded
through the Spanish automated quotation system.
REC also forms part of the IBEX 35 index, of which it represented 2.14% at the end of 2020.
At 31 December 2019, the share capital of REC amounted to Euros 270.5 million and was represented by 541,080,000
shares with a par value of Euros 0.50 each, subscribed and fully paid.
During the year REC's free float was 80%.
1 EBITDA is calculated as the sum of revenue, self-constructed assets and other operating income less personnel expenses, supplies and
other operating expenses.
2 EBIT is calculated as EBITDA plus any non-financial capital grants recognised and gains/losses or impairment on asset disposals, less
depreciation and amortisation.
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Shareholder structure
20%
80%
Free float
Strategic investors
At the date of the last shareholders' meeting – 14 May 2020 – the free float comprised 432,864,000 shares, of which
an estimated 13% is held by non-controlling shareholders, 7% by Spanish institutional investors and 80% by foreign
institutional investors, primarily in the United Kingdom and the United States.
Free float distribution
7%
13%
80%
Foreign institutional investors
Spanish institutional investors
Non-controlling shareholders
In 2020, the performance of the stock market has also been affected by COVID-19. The first few months saw a
continuation of the prior year’s trends. However, by the end of the first quarter of 2020 equity markets were shaken
by the pandemic, causing them to retrace to levels from several years earlier. The expansionary monetary policies
implemented with greater intensity by the main central banks, the announcements of strong support for economic
recovery through the creation of new incentives and an increase in public spending have since made a gradual
recovery of stock market indices possible.
This recovery has enabled Wall Street to end the year on a positive note, with its main indices setting new all-time
highs in the final days of 2020. Most notable is the 43.6% rise in the Nasdaq. Conversely, leading European markets
have closed the year in the red. Most notable are the drops in the UK FTSE and the Spanish IBEX. The 14.3% slide in
the former was possibly as a result of Brexit-related uncertainty. Spain's selective index saw the biggest drop of
the major European stock markets after losing 15.5% in the year, reflecting the serious effects of the pandemic on
our economy, which is highly dependent on the services sector and especially on tourism. The exception among
the European indices was the German DAX, which gained 3.5% for the year as a whole and also ended the year at
record highs. In the Asian stock markets, most notable is the Japanese Nikkei, which gained more than 15%.
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In addition to this performance by geographical location, there was a clear differentiation by sector in 2020. Stocks
related to the technology and pharmaceutical sectors and companies linked to renewable energies have been fa-
voured by investors. Conversely, sectors such as finance, oil and gas suffered severe setbacks during the year.
Red Eléctrica’s shares performed similarly to the Spanish stock market throughout 2020, although their decline in
the year was less pronounced. The share hit its annual high in the first weeks of the year, reaching Euros 19.74 on
19 February. Its low point occurred in mid-March, coinciding with the major market backslide, which pushed the
share down to its minimum for the year of Euros 13.105 on 12 March. The closing price was Euros 16.775, representing
a 6.4% decline in 2020 as a whole.
A total of 535.1 million shares were traded on the Madrid Stock Exchange during the year as a whole, which is 1%
more than in the previous year and equivalent to 99% of the company’s shares. The total volume traded on the spot
market was Euros 8,882.3 million, down 9% on 2019.
Own shares
4
At their meeting on 31 March 2020, the board of directors of Red Eléctrica agreed to suspend own share transac-
tions as of 14 April 2020, except where such transactions are associated with employee remuneration.
Until that date, a total of 1,356,421 own shares had been acquired, with an overall par value of Euros 0.68 million and
a cash value of Euros 22.84 million. A total of 1,296,536 shares were sold, with an overall par value of Euros 0.65
million and a cash value of Euros 22.49 million.
At 31 December 2020 the Company held 2,084,729 own shares, with a par value of Euros 0.50 per share, representing
0.39% of its share capital. These shares had an overall par value of Euros 1.04 million and an acquisition price of
Euros 17.53 per share, and the market value was Euros 34.97 million.
The Parent has complied with the requirements of article 509 of the Spanish Companies Act, which provides that
the par value of acquired shares listed on official secondary markets, together with those already held by the Parent
and its subsidiaries, must not exceed 10% of the share capital. The subsidiaries do not hold own shares or shares
in the Parent.
5 Risk management
REC is the Parent of the Group and has implemented a Comprehensive Risk Management System, which aims to
ensure that any risks that might affect its strategies and objectives are systematically identified, analysed, as-
sessed, managed and controlled, according to uniform criteria and within the established risk levels, in order to
facilitate compliance with the strategies and objectives of the Group. The Comprehensive Risk Management Policy
of the Group was approved by the board of directors of REC, as its Parent.
This Comprehensive Risk Management System, the Policy and the General Procedure regulating it are based on the
COSO ERM 2017 (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Manage-
ment – Integrated Framework.
The Corporate Risk Map depicts the Group’s most significant risks, including those of REC, and is prepared applying
a bottom-up methodology, whereby the risks are identified, analysed and assessed by the different organisational
units before being escalated for validation by Directors, General Managers and Corporate Directors, until their final
presentation to the Chair's Office of the Red Eléctrica Group, the Executive Committee, the Audit Committee and
the Board of Directors.
The Board of Directors is responsible for approving the Comprehensive Risk Management Policy and an acceptable
level of risk of the Group, while the Audit Committee is tasked with overseeing the effectiveness of the Compre-
hensive Risk Management System. The Executive Committee is responsible for implementing adequate monitoring
of the Group’s significant risks and the action plans to mitigate these risks.
The Comprehensive Risk Management Policy also covers financial risk management, as detailed in the note to the
consolidated annual accounts on the Financial Risk Management Policy. The Company’s Sustainability Report pro-
vides further details of the Group’s main risks at present, as well as risks which could emerge in the future.
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
The main risks to which REC is exposed, as the Parent of the Group, are the main risks to which the Group is exposed
and that could affect achievement of its objectives, namely regulatory risk, including tax risks, inasmuch as the
Group's principal business lines are subject to regulations, operational risk, primarily arising from the activity car-
ried out in the electricity and telecommunications sectors, financial risk and environmental risk.
6 Environmental issues
At 31 December 2020, REC has no assets specifically for the protection and improvement of the environment. In
2020 the Company incurred no expenses in protecting and improving the environment.
REC is not involved in any litigation relating to environmental protection or improvement that could give rise to
significant contingencies. No environment-related grants were received in the year.
7 Research, development and innovation (R&D&i)
REC does not carry out research, development or innovation activities (R&D&i).
8 Our people
In 2020, work continued on the objectives set out in the Human Resources Master Plan linked to the Strategic Plan.
In this context, moving forward with the Group’s strategic objectives, this year we should highlight the corporatisa-
tion process, whereby part of the workforce of Red Eléctrica de España, S.A.U. has been transferred to Red Eléc-
trica Corporación, S.A. to provide corporate services to all the Group’s subsidiaries, thereby strengthening the in-
dependence of the TSO and optimising the operational and economic structure of the Red Eléctrica Group as a
whole, taking advantage of the synergies and know-how of all the subsidiaries that comprise it.
The Imagina project continued to roll out its functionality in 2020, promoting the transformation of the people man-
agement function so as to add value to the Company, as a strategic lever for change and to facilitate the achieve-
ment of objectives through its various projects: the implementation of a digital mailroom, digital signatures, the
introduction of the Agile Mindset and the definition and implementation of the Transformational Leadership Model.
In this context, in keeping with its strategic objectives, the Company has encouraged the adaptation of its human
capital, with a view to becoming a more digitalised and efficient operation.
A stable, committed and highly qualified team.
At the end of 2020, the Company's workforce consisted of 391 professionals. Its commitment to stable employment
is reflected in the high levels of permanent employment contracts (nearly 100%), prioritising employability and
functional mobility as levers for growth and professional development.
Diversity
Promoting a quality working environment, founded on ethical behaviour, respect, diversity and equality, is a priority
for Red Eléctrica.
The Company’s commitment to diversity, inclusion and non-discrimination has materialised in the form of its 2018-
2022 Comprehensive Diversity Plan, which is aligned with the Strategic Plan and the 2030 Sustainability Commit-
ment. It seeks to inspire and become a benchmark for the Group itself and in the wider social, labour and human
environment, through the Group’s commitment to talent diversity, social inclusion, employment and non-discrimi-
nation, breaking down stereotypes and cultural barriers.
Gender equality is one of the vectors included in the new Comprehensive Diversity Plan and refers to the principles
of equal employment opportunities, the promotion of women to positions of responsibility, salary equivalence be-
tween men and women, the promotion of shared family responsibility, the prevention of harassment on moral, sex-
ual and gender grounds and the prevention of gender violence. These aspects are monitored through indicators
that enable the Group to measure the progress of the objectives defined.
At the end of 2020, the percentage of women in the Company’s workforce was 53%. The percentage of women in
management positions at the end of 2020 was 44%.
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
Talent management
In 2020, the Red Eléctrica Group's Campus was the main hub of Learning and Professional Development within the
Group.
The Company’s transformation continues to be promoted through the new leadership approach and the develop-
ment of employees’ capacities through specific programmes developed by the three institutions (business
knowledge and technical training, strategy and leadership, and transformation and innovation).
As a result of the “push yourself” (Impúlsate) philosophy, a high component of self-development is encouraged in
training, with the launch of programmes and learning spaces wherein the employees themselves decide how and
when to participate based on their own interests. This new direction has translated into a new training catalogue
composed of more than 200 online courses on different technical, management and skills-based subjects, as part
of the “Digital by Campus” programme aimed at the acquisition of skills and knowledge related to digital transfor-
mation and the “Self-development Ecosystem” designed to improve the personal and professional skills of all em-
ployees.
In 2020 the Group consolidated the implementation of the challenge-based management model, which has con-
tributed towards giving each professional clearer guidance about their work, with greater autonomy and flexibility,
allowing employees to work when, where and how they require and with whoever needs them.
The voluntary and proactive internal mobility plan has become well established, together with the use of the
LinkRED tool that can be accessed by all employees to share their experiences and interests in relation to develop-
ment and mobility.
Social relationships
At the beginning of 2020, the general results of the Climate Survey were shared with the workforce via the intranet,
and results by area were communicated through the management team in face-to-face sessions, thus encouraging
constructive dialogue.
Throughout 2020, work has been carried out to devise improvement plans for each area and for the company as a
whole.
In addition, during 2020, two surveys were carried out to gauge employees’ experiences in view of the situation
caused by the pandemic.
They represent a barometer that enables the Company to make decisions quickly against a backdrop of uncertainty
in which most employees are working off-site from home and those who perform critical functions for the business
are also doing so in an exceptional context.
Health and safety
Through the commitment and leadership of the management team, the Company promotes best practices in safety,
health and well-being. Its healthy company management model, deployed through a multi-year plan, is aligned with
the Group’s Strategic Plan, the Human Resources Master Plan and the 2030 Commitment to Sustainability.
Within this framework, the healthy company model revolves around four main lines of action:
• Physical work environment: within the definition of the future energy model, identifying opportunities to gener-
ate value in the services offered.
• Participation in the community: through actions performed by the company that have an impact on improving
the state of health and well-being of its employees’ families and the communities in which it operates.
• Health resources: providing the workforce with tools to improve their physical and mental health, contributing
to their well-being and quality of life.
• Psychosocial work environment: implementing management and work organisation tools and resources that fa-
vour the physical and psychosocial well-being of workers.
The model is deployed through annual programmes that aim to facilitate the continuity of the management model
through continuous improvement and to consolidate the Red Eléctrica Group as a leader in best practices for
safety, health and well-being, prevention, and promoting health.
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
In 2020, measures were taken at the first news of the spread of COVID-19, which has allowed the contingency plans
to be rolled out promptly and effectively.
Since the start of the pandemic alert, reported cases have been monitored both in terms of illness and possible
contact.
In addition, personnel have been provided with the necessary protective health and safety equipment to carry out
their duties and adhere to all requisite safety protocols (masks, gloves and sanitiser gels).
In the specific area of health and health promotion, in addition to the basic actions of individual health monitoring,
different campaigns aimed at guaranteeing physical, psychological and social well-being have continued with the
aim of improving the overall well-being of people who have been forced to adapt to the circumstances of the pan-
demic, offering various services through digital platforms in lieu of face-to-face: consultations on nutrition and
physical fitness, access to yoga classes, Pilates and mindfulness workshops.
Furthermore, the result of the 2020 audit of the Healthy Company model was satisfactory.
Work-life balance
2020 saw the roll-out of objectives defined for the year and the extension of a flexible working culture.
This management model is one of the fundamental pillars of the Healthy Company model and the Diversity model
and includes over 70 work-life balance measures, structured into different blocks:
1. Leadership and management styles
2. Quality of employment
3. Flexibility of time and location
4. Family support
5. Personal and professional development
6. Equal opportunities
The satisfactory result of the audit of the Family-Responsible Company Model in 2020 was noteworthy, and a survey
was conducted to gauge familiarity with the model, as well as use and satisfaction.
9 Excellence and corporate responsibility
In 1999 Red Eléctrica adopted the EFQM (European Foundation for Quality Management) excellence management
model as a tool to improve management, to which end external assessments are performed periodically in accord-
ance with the model. Until 2020, Red Eléctrica retained its EFQM 500+ European Seal of Excellence, following the
external assessment carried out in 2017, with a score of more than 700 points.
Following the publication of the EFQM 2020 model, Red Eléctrica developed a project to assess the degree of ad-
herence to the new model in 2020 as a benchmark framework in the process of transforming the organisation, prior
to the external assessment that is scheduled to take place in 2021.
Red Eléctrica’s commitment to excellence is corroborated through external certifications from prestigious certify-
ing entities, which guarantee that the organisation successfully implements certifiable management systems in
the performance of its activities. Red Eléctrica has quality systems in place in its main subsidiaries that are certi-
fied in accordance with the ISO 9001 standard.
Of the actions carried out in 2020 in this area, the stand-out initiatives include the development of a pioneering
project for the implementation and certification of the international standard UNE-ISO 19650-1 and two projects for
information management systems in building and civil engineering works, which use the collaborative work meth-
odology BIM (Building Information Modelling). This initiative was carried out in relation to the project for the con-
struction of the Chira-Soria pumped-storage hydroelectric power plant in Gran Canaria; it complements the imple-
mentation and certification of the project management systems carried out in 2019, in accordance with interna-
tional standards ISO 10006 for quality management in projects and ISO 21500 for project management.
Also noteworthy is the certification carried out in 2020 of Red Eléctrica’s criminal and anti-bribery compliance sys-
tem, in accordance with the standards UNE 19601 for criminal compliance management systems and UNE 37001 for
anti-bribery management systems.
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
10 Average Supplier Payment Period. “Reporting Requirement”, Third Addi-
tional Provision of Law 15/2010 of 5 July 2010
In accordance with the Spanish Accounting and Auditing Institute (ICAC) resolution of 29 January 2016 regarding
the information that must be disclosed in the notes to annual accounts on average payment periods to suppliers in
commercial transactions, the average supplier payment period was 42.3 days at the 2020 year end.
The disclosures required by this resolution are contained in note 19 to the Company's annual accounts for 2020.
11 Events after 31 December 2020
30 January 2021 saw the publication of Royal Decree 1/2021 of 12 January 2021, amending the Spanish General Chart
of Accounts approved by Royal Decree 1514/2007 of 16 November 2007; the Spanish General Chart of Accounts for
small and medium-sized enterprises approved by Royal Decree 1515/2007 of 16 November 2007; the standards for
the preparation of consolidated annual accounts approved by Royal Decree 1159/2010 of 17 September 2010; and the
standards for the adaptation of the Spanish General Chart of Accounts for non-profit entities approved by Royal
Decree 1491/2011 of 24 October 2011.
The changes to the Spanish General Chart of Accounts are applicable to accounting periods beginning on or after 1
January 2021 and focus on the criteria for recognition, measurement and disclosure of revenues from the delivery
of goods and services, financial instruments, hedge accounting, valuation by intermediaries of inventories of listed
commodities traded by them, and the definition of fair value.
The annual accounts for the first accounting period beginning on or after 1 January 2021 shall be presented includ-
ing comparative information, although there is no obligation to restate the information from the previous period.
Comparative information need only be restated if all the criteria approved by the Royal Decree can be applied with-
out incurring a retrospective bias, without prejudice to the exceptions established in the transitional provisions.
The application of the standard is generally retrospective, albeit with alternative practical expedients. However,
the application of hedge accounting is prospective, the classification criteria for financial instruments can be ap-
plied prospectively and the sales and service revenue criteria can be applied prospectively to contracts executed
on or after 1 January 2021.
The directors of the Company are in the process of assessing the applicable transition options and the accounting
impacts of these changes, although at the date of authorising these annual accounts for issue they do not yet have
sufficient information to conclude on the results of this analysis.
12 Dividend policy
Red Eléctrica shall apply the dividend policy in force at any given moment, which is described in the Strategic Plan.
The dividend paid in 2020 with a charge to the prior year’s profit amounted to Euros 566.8 million, which is 7% more
than that paid out in 2019.
The dividend with a charge to 2020 profit proposed by the board of directors and pending approval by the share-
holders at their annual general meeting is Euros 1 per share.
The dividend will be paid in two instalments – an interim dividend in January and a supplementary dividend halfway
through the year following approval of the annual accounts by the shareholders at their general meeting.
13 Outlook
As regards the management of the different businesses, REC, as the head of the Red Eléctrica Group, will continue
to undertake its activities, implementing a model encompassing two major lines of action in equal proportion: op-
erations subject to market risk which offset the concentration of regulatory risk, and regulated operations which
offset market risk. To this end, the Group will continue to carry out the role of Spanish TSO, helping to make the
energy transition in Spain a reality; continue to foster connectivity as a leading operator of both fibre optic and
Red Eléctrica Corporación, S.A.
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(Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)
satellite telecommunications infrastructure; consolidate its international business; and invest in technological ac-
celeration and innovation.
Executing the strategy, underpinned by efficiency, digital transformation and personnel development, will enable
the Company to adapt to the new, stricter regulatory and remuneration environment, and to generate more ways
of creating value.
The Company will uphold its commitment to maximising value for its shareholders, offering an attractive return in
the form of dividends and generating value through efficient management of its activities, analysing alternatives
for expanding its core business, maintaining a robust capital structure and working to guarantee supply with the
utmost level of quality.
The Company will therefore continue to seek the generation of long-term value, creating lasting, competitive ad-
vantages and improving our corporate reputation, whilst focusing on providing optimum service to society – the
differentiating feature of the Company’s management.
Lastly, the Company will concentrate on unlocking shared value by working in collaboration with stakeholders and
responding to growing societal demands.
The Group is determined to forge ahead with its fulfilment of the 2030 Sustainability Commitment and to leverage
the contribution of all Red Eléctrica Group companies in order to meet the global targets, noteworthy among which
are the United Nations Sustainable Development Goals (SDGs).
14 Non-financial Information Statement in compliance with Law 11/2018 of 28
December 2018
In relation to Law 11/2018 of 28 December 2018, amending the Spanish Code of Commerce, the Revised Spanish
Companies Act approved by Royal Legislative Decree 1/2010 of 2 July 2010, and Audit Law 22/2015 of 20 July 2015,
as regards non-financial information and diversity, the information relating to the Company’s non-financial infor-
mation statement is included in the Consolidated Director’s Report of the Red Eléctrica Group for 2020, which is
filed at the Madrid Mercantile Registry.
15 Annual Corporate Governance Report
The Annual Corporate Governance Report forms an integral part of the directors' report and can be viewed at the
following address:
http://www.cnmv.es/Portal/consultas/EE/InformacionGobCorp.aspx?nif=A-78003662l
Red Eléctrica Corporación, S.A.
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