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enel.com
Annual Report
2018
Annual
Report
2018
Annual Report 2018 Contents
Report on operations
7
Reports
449
> Enel organizational model | 8
> Corporate boards and powers | 10
> Letter to shareholders and other stakeholders | 13
> Summary of results | 18
> Overview of the Group’s operations,
performance and financial position | 30
> Results by business area | 44
> Performance and financial position
of Enel SpA | 87
> Significant events in 2018 | 93
> Reference scenario | 106
> Main risks and uncertainties | 146
> Outlook | 151
> Other information | 153
> Sustainability and the fight
against climate change | 157
> Related parties | 182
> Reconciliation of shareholders’ equity
and net income of Enel SpA and the
corresponding consolidated figures | 183
> Report of the Board of Statutory Auditors
to the Shareholders’ Meeting of Enel SpA | 450
> Report of the independent Audit Firm
on the 2018 financial statements
of Enel SpA | 464
> Report of the independent Audit Firm
on the 2018 consolidated financial statements
of the Enel Group | 472
> Summary of the resolutions of the Ordinary
Shareholders’ Meeting | 482
Attachments
485
> Subsidiaries, associates and other significant
equity investments of the Enel Group
at December 31, 2018 | 486
Corporate Governance
545
> Report on corporate governance and ownership
structure | 546
Consolidated financial statements
185
> Financial statements | 186
> Notes to the consolidated financial
statements | 193
> Declaration of the Chief Executive Officer
and the officer responsible for the preparation
of the corporate financial reports | 362
Financial statements of Enel SpA
365
> Financial statements | 366
> Notes to the separate financial statements | 373
> Declaration of the Chief Executive Officer
and the officer responsible for the preparation
of the corporate financial reports | 446
Enel is Open Power
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Report on operations
6
Annual Report 2018 01
Report on
operations
7
Report on operations Enel organizational model
The Enel Group structure is organized into a matrix that com-
America, Africa, Asia and Oceania), which are respon-
prises:
sible for managing relationships with institutional bodies
> Business Lines (Global Thermal Generation, Global Trad-
and regulatory authorities, as well as selling electricity
ing, Global Infrastructure and Networks, Enel Green
and gas, in each of the countries in which the Group op-
Power, Enel X), which are responsible for managing and
erates, while also providing staff and other service sup-
developing assets, optimizing their performance and the
port to the Business Lines.
return on capital employed in the various geographical
The following functions provide support to Enel’s business
areas in which the Group operates. The Business Lines
operations:
are also responsible for improving the efficiency of the
> Global service functions (Global Procurement and Global
processes they manage and sharing best practices at
Digital Solutions), which are responsible for managing in-
the global level. The Group will benefit from a central-
formation and communication technology activities and
ized industrial vision of projects in the various Business
procurement at the Group level;
Lines. Each project will be assessed not only on the ba-
> Holding company functions (Administration, Finance and
sis of its financial return but also in relation to the best
Control, People and Organization, Communications, Le-
technologies available at the Group level;
gal and Corporate Affairs, Audit and Innovability), which
> Regions and Countries (Italy, Iberia, South America, Eu-
are responsible for managing governance processes at
rope and Euro-Mediterranean Affairs, North and Central
the Group level.
8
Annual Report 2018 F i n a n c e a n d C o n t r o l
r m a n
G r i e c o
C h a i
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Chief Executive Officer
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People and Organization
F. Di Carlo
Legal and Corporate Affairs
G. Fazio
Audit
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G l o b a l P ro curement
S. Bernabei
G l o b a l Business Lines
Global Digital Solutions
C. Bozzoli
G l o bal Infrastructure and Networks | L. Gallo
Global Thermal Generation | E. Viale
Global Trading | C. M
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Report on operations
9
Corporate boards
and powers
Romina Guglielmetti
Auditor
Roberto Mazzei
Auditor
Alfredo Antoniozzi
Alberto Bianchi
Director
Director
Chief Executive Officer
The Chief Executive Officer is vested by the bylaws with
the powers to represent the company and to sign on its
behalf, and in addition is vested by a Board resolution of
May 5, 2017 with all powers for managing the
company, with the exception of those that
are otherwise assigned by law or the
bylaws or that the aforesaid
resolution reserves for the
Board of Directors.
Cesare C
Director
alari
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Director
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Board of
Statutory
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Board of
Directors
The Board is vested by the bylaws with the
broadest powers for the ordinary and
extraordinary management of the company,
and specifically has the power to carry out all
the actions it deems advisable to implement
and attain the corporate purpose.
Silvia Alessandra Fappani
Board Secretary
Audit
Firm
EY SpA
e r a
r t o P
D ir e
c t o r
e
A l b
Chairman
of the Board
of Directors
The Chairman is
vested by the bylaws
with the powers to represent
the company and to sign on its
behalf, presides over Shareholders’
Angelo Taraborrelli
Anna Chiara Svelto
Director
Director
Meetings, convenes and presides over the Board
of Directors, and ascertains that the Board’s resolutions
are carried out. Pursuant to a Board resolution of May 5, 2017, the Chairman
has been vested with a number of additional non-executive powers.
u
e r g i o D
air m a
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C
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ela Barbiero
Alternate auditor
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10
Annual Report 2018
ela Barbiero
Alternate auditor
Mich
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Romina Guglielmetti
Roberto Mazzei
Auditor
Auditor
Alfredo Antoniozzi
Director
Alberto Bianchi
Director
a
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n
u
e r g i o D
air m a
h
C
S
Chief Executive Officer
The Chief Executive Officer is vested by the bylaws with
the powers to represent the company and to sign on its
behalf, and in addition is vested by a Board resolution of
May 5, 2017 with all powers for managing the
company, with the exception of those that
are otherwise assigned by law or the
bylaws or that the aforesaid
resolution reserves for the
Board of Directors.
Cesare C
Director
alari
F
r
C
a
Board of
Statutory
Auditors
Board of
Directors
The Board is vested by the bylaws with the
broadest powers for the ordinary and
extraordinary management of the company,
and specifically has the power to carry out all
the actions it deems advisable to implement
and attain the corporate purpose.
E
s
G
x
e
e
c
n
c
o
e
u
r
a
l
t
i
S
v
e
t
M
a
O
r
a
n
a
f
fi
a
c
c
g
e
e
e
r
r
a
h
i
n
n
d
e
c
f
e
Silvia Alessandra Fappani
Board Secretary
Audit
Firm
i
r
m
a
n
Paola Girdinio
Director
C
h
a
P
a
t
r
i
z
i
a
G
r
i
e
c
o
EY SpA
e r a
r t o P
c t o r
D ir e
e
A l b
Chairman
of the Board
of Directors
The Chairman is
vested by the bylaws
with the powers to represent
the company and to sign on its
behalf, presides over Shareholders’
Angelo Taraborrelli
Director
Anna Chiara Svelto
Director
Meetings, convenes and presides over the Board
of Directors, and ascertains that the Board’s resolutions
are carried out. Pursuant to a Board resolution of May 5, 2017, the Chairman
has been vested with a number of additional non-executive powers.
Report on operations
11
Letter to shareholders
and other stakeholders
Dear shareholders and stakeholders,
the year 2018 was another year of impressive performance: we achieved all the goals we set ourselves. Today, we are
a company characterized by greater sustainability, efficiency, profitability and lower risk: all key factors in continuing
to attract and remunerate our investors appropriately and create lasting value for all stakeholders.
Among private operators in this industry, we remain leaders in the main areas of the energy transition: 73 million end
users, 43 GW of installed renewables capacity, 70 million retail customers (electricity and gas) and 6.2 GW in active
demand management.
Enel operates globally along the entire value chain. This strategic approach and operational capacity are key levers
that, once again in 2018, enabled the Group to seize opportunities and tackle new challenges in a context of increasing
volatility and complexity.
The Group’s effective strategic positioning was also reflected in the performance of the Enel stock, which outper-
formed the FTSE-MIB index and matched that of the EuroSTOXX Utilities index. This enabled us to close 2018 as the
largest utility by capitalization in Europe.
The macroeconomic environment
In 2018 the world economy expanded by around 3%, in line with the pace registered in 2017. The United States and
China continued to play a leading role, while growth in the euro area was more moderate. The normalization of
monetary policies in the advanced countries generated considerable pressures on emerging markets. Geopolitical
uncertainty has characterized the external environment, slowing trade and investment decisions.
The European Central Bank announced that it would end its extraordinary asset purchase program (quantitative eas-
ing) after December 2018, but it continued to maintain an accommodative stance.
The euro-area economies moved at different speeds. Italy was impacted by political uncertainty and discussions with
the European Union about the expansionary budget package, with the country entering a technical recession in the
2nd Half of 2018 (2018 GDP grew by 0.75% overall). Despite an unstable political situation, Spain continued to record
rapid growth (2018 GDP rose by 2.5%), driven by strong domestic demand.
The United States saw growth accelerate sharply (2018 GDP expanded by 2.9%), with unemployment at a historic low
and general inflation above the target of the central bank (the CPI rose by 2.4%). In Latin America, the deterioration in
the global macroeconomic situation has shone a light on the structural weaknesses of some countries (Argentina in par-
ticular), while other economies (Chile, Colombia, Peru) have displayed considerable resilience. More specifically, Argen-
tina experienced a severe recession (2018 GDP contracted by 2.6%), exacerbated by exceptional events, such as drought
and a stringent fiscal and monetary austerity plan. In Brazil, the uncertainty about the outcome of the elections and the
delay in implementing the necessary structural reforms slowed the economic recovery (2018 GDP grew by 1.1%).
In general, in almost all countries of interest to the Group (the only exception being Argentina and, partly, Mexico) in-
flation has remained low, which helps foster domestic consumption while ensuring compliance with fiscal constraints.
The first nine months of the year saw oil prices rise steadily, with Brent increasing to $86 a barrel, while in the 4th
Quarter prices plunged to $54 a barrel, reflecting the signs of a slowdown in global growth. The European gas market
also experienced periods of high volatility. The early months of 2018 were marked by strong demand, and unusual
price tensions were recorded during the summer. Starting in October, the situation reversed, driven by the sudden
drop in the price of oil, the large flow of LNG bound for Europe and less buoyant demand.
Report on operations
13
The dynamics of the coal market in Europe were characterized by the fuel’s competitiveness with gas, which was a
source of volatility. In the Pacific, China was again the main market mover, pushing the price of coal 20 percentage
points higher than the previous year.
Europe experienced a strong recovery in CO2 prices, which rose to €25/ton at the end of the year, mainly due to the
launch of the Market Stability Reserve, which is designed to absorb excess allowances in order to revive the CO2
market.
The positive trend in electricity demand in the countries in which the Enel Group operates, which began in 2017, con-
tinued last year. The increase in electricity consumption traveled at two different speeds: barely positive but steady
growth in Europe (about 1%) and more rapid expansion in Latin America (about 3%). After the broad decline that
characterized the last few years, 2018 saw an increase in energy prices in most of the countries in which the Group is
present, partly reflecting the average annual increase in the prices of the fossil fuels still used to varying degrees in
the electricity supply chain.
Performance
In a context characterized by the depreciation of currencies in South America and the normalization of market conditions for
conventional generation after a very favorable 2017, the Enel Group was able to achieve all the financial targets set for 2018.
In particular, the Group closed the year with ordinary EBITDA of €16.2 billion, an increase on the €15.6 billion
posted the previous year and in line with the guidance provided to investors. Ordinary net income, which is used to
calculate the dividend, reached €4.1 billion, an increase of 9% compared with the previous year. The 2018 dividend
amounts to €0.28 per share, an increase of 18% compared with the €0.237 distributed the previous year and in line
with the minimum dividend guaranteed to shareholders. Consistent with the interim dividend policy already ap-
plied last year, an interim dividend of €0.14 per share was distributed in January 2019. The ratio of FFO to net debt,
an indicator of financial soundness, reached 27%, better than the target set and in line with the value at the close of
2017. Net debt amounted to €41.1 billion and is at the lower end of the range announced to investors (between €41
billion and €42 billion). The figure increased compared with the previous year following extraordinary transactions
carried out in the period and investments in growth (equal to about €8.5 billion, in line with 2017).
Key developments
With regard to industrial growth, the expansion of renewable generation continued in 2018, with more than 3 GW
of new additional capacity. Thanks to this growth, for the first time in the Group’s history zero-emission technolo-
gies contributed more than 50% of annual output, supporting the goal of reducing CO2 emissions (down 11% com-
pared with 2017).
The digitalization effort also continued, with the Group increasing the number of new smart meters by 1.2 million,
thus reaching a total of almost 44 million smart meters installed globally (15% of which are second generation de-
vices). These activities are in line with the goal of developing high quality, reliable and resilient infrastructures and
making cities more sustainable, consistent with Sustainable Development Goals (SDG) 9 and 11.1
Our electric mobility strategy was supported by the acceleration of the public charging infrastructure installation
plan in Italy and the launch of two similar projects in Spain and Romania. This effort helped us exceed the annual
target, enabling us to close 2018 with a total of 49,000 public and private recharging points installed.
The Group also demonstrated that it can seize the opportunities generated by the growing need for flexible re-
sources for electrical systems, reaching 6.2 GW of active demand management and achieving 70 MW of battery
storage for both industrial customers and grid stabilization services.
Among extraordinary transactions, the acquisition of Eletropaulo, renamed Enel Distribuição São Paulo in Decem-
1 SDG 9 - Industry, Innovation and Infrastructure and SDG 11 - Sustainable Cities and Communities.
14
Annual Report 2018
ber, boosted the Group’s end users to 73 million, up 11% compared with 2017. In Mexico the sale of a majority stake
of 1.7 GW 2 of renewables capacity was finalized, while retaining responsibility for plant operation, in accordance
with the Build, Sell and Operate (BSO) business model. In addition, in Italy the sale to F2i of 50% of the EF Solare
Italia joint venture was completed for €214 million, while the Finale Emilia biomass plant was sold for €59 million
to F2i SGR. This latter operation forms part of an agreement between the Enel Group and F2i SGR for the sale of
the entire biomass portfolio in Italy. Finally, in Spain Enel Green Power signed an agreement for the acquisition of
five wind plants in Galicia and Catalonia with a total capacity of some 132 MW.
From a financial point of view, 2018 was an exciting year, characterized by major achievements: from the issue of
the second green bond, to receipt of the Yankee Bond Award 2017, the multi-tranche issue of euro-denominated
subordinated non-convertible hybrid bonds and the launch of a $4 billion bond issue on the US market.
These results were achieved also thanks to the continued rationalization of our organizational structure, which
included the corporate reorganization in Chile, the merger of Enel Green Power Latin America SA into Enel Chile
and the increase in Enel’s interests in Enel Américas.
Strategy and forecasts for 2019-2021
In recent years we have witnessed profound structural changes in many industrial sectors, leading to the emer-
gence of new markets and opportunities, but also to the need to renew consolidated business models and re-
think the methods of use of the resources available to us.
The energy sector is also experiencing a constant and inexorable evolution: the competitiveness of renewable
energy sources and the digitalization of assets, together with growing consumer awareness of sustainability
and respect for the environment, are opening up electricity to new uses, allowing the decarbonization of the
economy.
To meet these challenges, in November 2018 Enel presented its 2019-2021 Strategic Plan, which takes up and
strengthens the lines of development set out in recent years.
The path of growth outlined in the Plan shows a constant acceleration, with Group target for ordinary EBITDA of
€19.4 billion in 2021, compared with €16.2 billion in 2018 (+20%).
Over the next three years, the Group envisages total gross investment of around €27.5 billion, up 12% com-
pared with the previous plan. Out of a total of about €16.5 billion in growth investment, some €10.6 billion will
be dedicated to renewables, once again the driver of the Group’s growth. It will be directed not only at markets
where Enel has an integrated presence, such as Italy, Spain, Chile, Brazil, Colombia and Peru, but also at other
markets such as North and Central America, Africa, Asia and Oceania, thus taking on an increasingly clear global
dimension. This growth is in line with Enel’s commitment to combating climate change from a perspective that,
in addition to risk management, also seeks to identify new development opportunities. In this regard, this year’s
Report contains a section dedicated to implementing the recommendations of the Task force on Climate-related
Financial Disclosures (TCFD) of the Financial Stability Board.
Investments in grids will amount to around €11.1 billion, with the main objective of completing the integration of
recently acquired assets, in particular Eletropaulo in Brazil, as well as promoting, especially through digitaliza-
tion, the efficiency of grids and enhancing service quality in all countries in which the Group is present.
The Group also remains focused on achieving operational efficiencies of €1.2 billion over the next three years,
and the digitalization of all business sectors will be the main enabler of cost reduction.
Another pillar of future value creation is represented by the simplification of the corporate structure through the
reduction of non-controlling interests and the rotation of assets, with a view to improving the overall return on
capital employed and increasing the Group’s economic interest.
Enel’s strategy is explicitly sustainable, with an approach aimed at creating shared value with the people and
2 An additional 0.1 GW will be transferred in 2019, as provided for in the agreement with the counterparty.
15
Report on operations
communities with which the Group interacts, seeking to produce positive effects for the environment, society
and the economy in the long term. This is the motivation behind Enel’s support for the initiatives undertaken by
the countries in which it operates, aimed at achieving the objectives established in the Paris Agreement.
The commitment to the SDGs was strengthened by setting targets through 2030, strengthening the objective of
reducing specific CO2 emissions to 0.23 kg/kWheq (SDG 13) and increasing the level of interaction between the
Group and local communities, fostering their access to education (SDG 4), energy (SDG 7) and employment as
well as sustainable and inclusive economic growth (SDG 8).3
Specific targets were introduced for SDG 9 and SDG 11: the Group expects to install about 47 million smart me-
ters and 455 thousand charging points for electric mobility and to invest €5.4 billion in digitalization in 2019-2021.
The sustainability and the global dimension of the integrated business model over the entire value chain are at
the root of the Strategic Plan’s resilience and the demonstrated robustness of operating performance. In light
of this awareness, the dividend policy based on a 70% pay-out of the Group’s ordinary net income has been
confirmed until 2021, with the establishment, for the first time, of a minimum dividend per share for the entire
2019-2021 period. For 2019, Enel therefore expects to distribute the greater of: a) a dividend per share based on
the 70% pay-out indicated previously; and b) a minimum dividend per share of €0.32.
Patrizia Grieco
Chairman of the Board of Directors
Francesco Starace
Chief Executive Officer and General Manager
3 SDG 13 - Climate Action, SDG 4 - Quality Education, SDG 7 - Affordable and Clean Energy and SDG 8 - Decent Work and Economic Growth.
16
Annual Report 2018 17
Report on operations Summary of results
Abroad | 257.7
Abroad | 6.4
Abroad | 191.1
Abroad | 197.1
(MILLIONS OF EURO) | 8,152
Iberia | 1,433
Europe and Eu r o - M e d i t e r r a n e a n A f
3 9 0
|
f a i r s
Africa, Asia an d O c e a n i a | 1 4 2
Electricity transported (TWh) | 485.4
Italy | 227.7
Gas sales (billions of m3) | 11.2
Italy | 4.8
Electricity sales (TWh) | 295.4
Italy | 104.3
Total net generation (TWh) | 250.3
Italy | 53.2
CAPITAL EXPENDITURE BY COUNTRY/REGION
Italy | 2,479
South America | 2,246
North and Central America | 1,373
Other, eliminations and adjustments | 89
18
Annual Report 2018
e u r o a n d % ch a n ge on 2017)
| ( m illi o n s o f
8
1
0
r 2
e f o
c
n
e rf o r m a
P
r e s o u r c e | 2 5 0 .3 (TWh)
i o n b y
t
a
r
e
n
e
t g
e
o t a l n
T
9 9 . 0 (TWh)
|
r e s o u r c e
s
b l e
a
w
R
e
%
n
e
3 9
b l e
e w a
n
y r e
n b
72 (+1.4%)
ue
even
R
5,6
7
argin
g m
tin
%)
ra
e
p
4.5
s o
1 (+
5
s
o
r
G
3
,
6
1
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m
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i
)
%
1
1.
+
(
0
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O
)
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2
.
9
1
+
(
e
m
o
c
n
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,
6
al
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%
6
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r
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cle
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N
%
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1
Total net ge n eratio
ydroelectric
7%
6
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d
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%
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2
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a
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r
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%
6
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5
o
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t a l y
I
e r i a
I b
E m p l o y e e s b y b u s i n e s s a r e a
6 9 , 2 7 2
2 8 , 1 3 4
3
6
9 , 7
8
5
0 , 8
2
a
ri c
n A ff a ir s
h A m e
a
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n
a
e ric
m
t
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d it e rr a
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e
d C
n tr al A
A fric a, A sia a n d O c e a nia
O th er
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o rt h a
N
p
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E
3
2
4
8
5 , 6
2 , 2
2 4 1
2,3 6 0
Summary of results
Electricity transported (TWh) | 485.4
Italy | 227.7
Gas sales (billions of m3) | 11.2
Italy | 4.8
Electricity sales (TWh) | 295.4
Italy | 104.3
Total net generation (TWh) | 250.3
Italy | 53.2
Abroad | 257.7
Abroad | 6.4
Abroad | 191.1
Abroad | 197.1
CAPITAL EXPENDITURE BY COUNTRY/REGION
(MILLIONS OF EURO) | 8,152
Italy | 2,479
South America | 2,246
North and Central America | 1,373
Other, eliminations and adjustments | 89
Iberia | 1,433
Europe and Eu r o - M e d i t e r r a n e a n A f
3 9 0
|
f a i r s
Africa, Asia an d O c e a n i a | 1 4 2
e u r o a n d % ch a n ge on 2017)
| ( m illi o n s o f
8
1
0
r 2
e f o
c
n
e rf o r m a
P
r e s o u r c e | 2 5 0 .3 (TWh)
i o n b y
t
a
r
e
n
e
t g
e
o t a l n
T
9 9 . 0 (TWh)
|
r e s o u r c e
b l e
e w a
n
y r e
s
b l e
a
w
R
e
%
e
n
3 9
n b
Total net ge n eratio
ydroelectric
H
7%
6
d
Win
%
2
2
l
a
m
r
e
h
t
o
e
G
%
6
r
a
l
o
s
s
s
a
m
o
i
B
d
n
a
%
5
I
a
t a l y
e r i a
I b
ri c
h A m e
n A ff a ir s
a
e
e ric
n
m
n tr al A
a
S
t
u
o
d it e rr a
d C
u r o - M e
o rt h a
N
n
e
A fric a, A sia a n d O c e a nia
O th er
72 (+1.4%)
ue
even
5,6
7
R
argin
g m
tin
%)
ra
4.5
e
p
1 (+
s o
s
5
o
3
r
,
G
6
1
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%
1
1.
+
(
0
0
9
,
9
)
%
2
.
9
1
+
(
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m
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c
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0
5
3
,
6
t
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N
al
%
o
C
6
2
r
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cle
%
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N
0
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d
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n
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b
m
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C
s
a
g
d
n
a
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n
i
%
5
1
b
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u
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n
a
s
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l
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%
0
1
E m p l o y e e s b y b u s i n e s s a r e a
6 9 , 2 7 2
2 8 , 1 3 4
3
6
9 , 7
8
5
0 , 8
2
4
8
5 , 6
2 , 2
d E
n
e a
p
u r o
2
E
3
2 4 1
2,3 6 0
Report on operations
19
Performance data
Revenue
Revenue for 2018 amounted to €75,672 million, an in-
millions of euro
2018
2017
75,672
+1.4%
74,639
crease of €1,033 million (+1.4%) compared with 2017.
The rise is mainly due to an increase in revenue from the
Enel Green Power Business Line in Italy, Spain and South
America, an increase in sales on the free market in Italy
and changes in the scope of consolidation, in particular the
acquisition of Enel Distribuição São Paulo, as well as the
capital gain and fair value remeasurement from the partial
disposal with loss of control of eight companies in the Enel
Green Power Business Line in Mexico (€190 million).
These effects were partially offset by unfavorable ex-
change rate developments, mainly in South America.
Revenue in 2018 included the gain on the disposal of EF
Solare Italia (€65 million) and the indemnity connected
with the sale in 2009 of Enel Rete Gas (€128 million),
which do not form part of ordinary revenue.
In 2017, this item mainly included the gain on the sale of
the Chilean company Electrogas (€143 million).
Millions of euro
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other, eliminations and adjustments
Total
2018
38,398
19,492
14,742
2,361
1,438
101
(860)
75,672
2017
38,781
19,994
13,154
2,411
1,187
96
(984)
74,639
Change
(383)
(502)
1,588
(50)
251
5
124
1,033
-1.0%
-2.5%
12.1%
-2.1%
21.1%
5.2%
12.6%
1.4%
20
Annual Report 2018 16,351
15,653
+4.5%
Gross operating margin
The gross operating margin for 2018 amounted to
millions of euro
€16,351 million, increasing by €698 million (+4.5%) com-
pared with 2017 despite unfavorable exchange rate de-
velopments (€543 million). The increase in the operating
margin is mainly attributable to the Enel Green Power
2018
Business Line in Italy, Spain and South America and the
free market in Italy, plus the effect of the acquisition of
2017
Enel Distribuição São Paulo and the capitalization of cus-
tomer acquisition costs in the amount of €220 million in
accordance with the provisions of the new accounting
standard IFRS 15.
The gross operating margin also increased due to the
gains and the remeasurement at fair value, following par-
tial disposal with loss of control, of eight Mexican project
companies (€190 million) and the following items not con-
sidered in the determination of the ordinary gross operat-
ing margin:
> the capital gain on the sale of EF Solare Italia (€65 mil-
lion);
> the indemnity received by e-distribuzione in connection
with the 2009 sale of Enel Rete Gas (€128 million).
These increases are partly offset by the effect of the gain
recorded in the previous year on the sale of the Chilean
company Electrogas (€143 million), net of the loss recog-
nized in South America following the abandonment of hy-
droelectric projects in Chile and Colombia in the amount
of €45 million.
The following table shows the performance of the gross
operating margin by geographical area:
Millions of euro
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other
Total
2018
7,304
3,558
4,370
516
708
54
(159)
16,351
2017
Change
6,863
3,573
4,204
543
759
57
(346)
15,653
441
(15)
166
(27)
(51)
(3)
187
698
6.4%
-0.4%
3.9%
-5.0%
-6.7%
-5.3%
54.0%
4.5%
21
Report on operations
The ordinary gross operating margin amounted to
> the capital gain on the sale of EF Solare Italia of €65
€16,158 million, an increase of €603 million compared
million.
with 2017 (+3.9%). Items in 2018 that are not included
As noted above, the items excluded from the ordinary
in the ordinary gross operating margin amounted to €193
gross operating margin in 2017 were the gain of €143 mil-
million. They included:
lion on the sale of Electrogas and the loss recognized fol-
> the indemnity received in connection with the 2009 sale
lowing the abandonment of hydroelectric projects in Chile
of Enel Rete Gas (€128 million);
and Colombia in the amount of €45 million.
Millions of euro
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other
Total
2018
7,111
3,558
4,370
516
708
54
(159)
16,158
2017
Change
6,863
3,573
4,106
543
759
57
(346)
15,555
248
(15)
264
(27)
(51)
(3)
187
603
3.6%
-0.4%
6.4%
-5.0%
-6.7%
-5.3%
54.0%
3.9%
Operating income
Operating income in 2018 amounted to €9,900 million,
millions of euro
2018
2017
9,900
9,792
+1.1%
an increase of €108 million compared with 2017 (€9,792
million) despite an increase of €590 million in depreciation,
amortization and impairment. That rise is attributable to
the capitalization of customer acquisition costs, which in-
creased amortization by €166 million, the acquisition of Enel
Distribuição São Paulo (€93 million) and the effect of the
increase in impairment recognized in 2018 compared with
2017. In this regard, please note:
> the writedown of two generation units at the Spanish
generation plant at Alcúdia (€82 million);
> the writedown of the LNG regasification plant of Nuove
Energie (€24 million);
> the impairment of a number of conventional (€23 million)
and renewable (€94 million) generation plants in Italy;
> an increase in impairment on certain trade receivables
(€186 million), mainly in Italy.
These increases were partly offset by unfavorable ex-
change rate developments in South America, as well as by
the reversal of the impairment of the EGP Hellas CGU (€117
million) and the impairment recognized the previous year on
geothermal development activities in Germany through the
subsidiary Erdwärme Oberland GmbH (€42 million).
22
Annual Report 2018
Millions of euro
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other
Total
2018
4,498
1,724
2,976
420
454
10
(182)
9,900
2017
4,470
1,842
2,970
306
553
15
(364)
9,792
Change
28
(118)
6
114
(99)
(5)
182
108
0.6%
-6.4%
0.2%
37.3%
-17.9%
-33.3%
50.0%
1.1%
Ordinary operating income, which does not include the
biomass and solar operations in Italy, net of the reversal
items discussed above with reference to the ordinary gross
of the impairment on the EGP Hellas CGU), amounted to
operating margin and does not consider the effects of the
€9,793 million, an increase of €57 million (+0.6%) com-
impairment mentioned earlier (Alcúdia, Nuove Energie and
pared with 2017.
Millions of euro
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other
Total
2018
4,426
1,806
2,976
303
454
10
(182)
9,793
2017
4,470
1,842
2,872
348
553
15
(364)
9,736
Change
(44)
(36)
104
(45)
(99)
(5)
182
57
-1.0%
-2.0%
3.6%
-12.9%
-17.9%
-33.3%
50.0%
0.6%
23
Report on operations Net income
Net income attributable to shareholders of the Parent
millions of euro
Net income per
share attributable to
shareholders of the Parent
Company (euro) 0.47
Net income per
share attributable to
shareholders of the Parent
Company (euro) 0.37
2018
4,789
1,561
6,350
2017
3,779
1,550
5,329
Non-controlling interests
Parent Company
Company amounted to €4,789 million in 2018, compared
with €3,779 million the previous year. More specifically,
the increase in operating income was further improved by:
> the value adjustment of both the financial receivable
(€320 million) relating to the partial sale of Slovenské ele-
ktrárne and the investment, measured at equity, in Slo-
vak Power Holding (€362 million);
> the decrease in the tax burden, mainly due to the recog-
nition of deferred tax assets on prior-year losses at Enel
Distribuição Goiás (€274 million) and at Enel Green Power
SpA (€85 million in respect of 3Sun following its merger
with Enel Green Power SpA during the year).
These effects are partly mitigated by:
> the writedown of the assets of a number of equity invest-
ments measured at equity in Greece, associated with the
resizing of a wind farm development project in the Cy-
clades;
> the gain in 2017 on the disposal of Bayan Resources (€52
million) and the revaluation in 2017 of the investment in
Slovak Power Holding (€28 million);
> a decrease in taxes in the United States and Argentina
following the release of deferred taxes following the US
tax reform and the deferred tax assets recognized on
prior-year losses by Edesur.
Ordinary net income attributable to shareholders of
the Parent Company in 2018 amounted to €4,060 million,
an increase of €351 million compared with 2017 (€3,709 mil-
lion). The following table provides a reconciliation of net in-
come and ordinary net income attributable to shareholders
of the Parent Company, reporting the non-ordinary items
and their respective impacts on net income, excluding the
associated tax effects and non-controlling interests.
Millions of euro
Net income attributable to shareholders of the Parent Company
Indemnity for the disposal of e-distribuzione’s investment in Enel Rete Gas
Writeback of assets of Slovenské elektrárne
Writedown of Alcúdia plant (Spain)
Reversal of impairment on the EGP Hellas CGU and impairment of wind projects (Cyclades)
Gain on disposal of EF Solare Italia
Writedown of the Nuove Energie CGU
Net writedown of biomass and solar plants in Italy
Ordinary net income attributable to shareholders of the Parent Company (1)
(1) Taking account of tax effect and non-controlling interests.
24
2018
4,789
(128)
(646)
43
(39)
(64)
20
85
4,060
Annual Report 2018 Millions of euro
Net income attributable to shareholders of the Parent Company
Gain on disposal of Bayan Resources
Impairment of Erdwärme geothermal assets
Abandonment of hydroelectric projects in Chile and Colombia
Gain on disposal of Electrogas
Revaluation of investment in Slovak Power Holding
Ordinary net income attributable to shareholders of the Parent Company (1)
(1) Taking account of tax effect and non-controlling interests.
Financial data
Net capital employed
Net capital employed, including net assets held for sale
millions of euro
2017
3,779
(52)
36
11
(37)
(28)
3,709
Group shareholders’
equity per share (euro)
3.12
Group shareholders’
equity per share (euro)
3.42
-0.7%
2018
41,089
47,852
88,941
2017
37,410
52,161
89,571
Total shareholders’
equity
Net financial
debt
of €281 million, amounted to €88,941 million at December
31, 2018 and was financed by equity attributable to share-
holders of the Parent Company and non-controlling inter-
ests of €47,852 million and net financial debt of €41,089
million. At December 31, 2018, the debt/equity ratio came
to 0.86 (0.72 at December 31, 2017).
The percentage increase in leverage is attributable to the
reduction of €3,704 million in the Group’s consolidate eq-
uity following the retrospective application of IFRS 9 and
IFRS 15 and to the increase in net financial debt.
Net financial debt amounted to €41,089 million, an increase
of €3,679 million compared with December 31, 2017. The in-
crease is mainly attributable to the acquisition of Enel Distri-
buição São Paulo, the public tender offer for all of the shares of
the subsidiary Enel Generación Chile held by non-controlling
interests, investments in the period and adverse exchange
rate developments.
25
Report on operations Cash flows
from operations
Cash flows from operations amounted to €11,075 million
millions of euro
in 2018, an increase of €950 million on the previous year
owing to the increase in the gross operating margin and
net current assets.
Capital expenditure
2018
2017
11,075
10,125
Capital expenditure amounted to €8,152 million in 2018 (of
millions of euro
which €6,530 million in respect of property, plant and equip-
ment), an increase of €22 million on 2017, with a concentra-
tion on renewables plants in Spain, South Africa and India as
well as greater work on grids operated on a concession ba-
sis in Italy and Brazil. In the latter case, part of the increase
is attributable to Enel Distribuição São Paulo following its
acquisition in June 2018. These increases were partly offset
by adverse exchange rate developments, mainly in South
America, and a reduction in capital expenditure on renew-
ables plants in Brazil as most of the plants entered service
during the year.
2018
2017
8,152
8,130
+9.4%
+0.3%
Millions of euro
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other, eliminations and adjustments
Total
2018
2,479 (1)
1,433
2,246
390
1,373 (2)
142
89
8,152
2017
1,812
1,105
3,002
307 (3)
1,802 (4)
30
72
8,130
Change
667
328
(756)
83
(429)
112
17
22
36.8%
29.7%
-25.2%
27.0%
-23.8%
-
23.6%
0.3%
(1) Does not include €3 million regarding units classified as “held for sale”.
(2) Does not include €375 million regarding units classified as “held for sale”.
(3) Does not include €44 million regarding units classified as “held for sale”.
(4) Does not include €325 million regarding units classified as “held for sale”.
.
26
Annual Report 2018 (% SUL TOTALE CONSIGLIERI)
Operations
Net electricity generated by Enel (TWh)
Electricity transported on the Enel distribution network (TWh) (1)
Electricity sold by Enel (TWh)
Gas sales to end users (billions of m3)
Italy
Abroad
Total
Italy
Abroad
Total
2018
197.1
257.7
191.1
6.4
53.2
227.7
104.3
4.8
250.3
485.4
295.4
11.2
53.5
228.5
103.2
4.8
2017
196.4
232.2
181.6
6.9
249.9
460.7
284.8
11.7
Employees at period-end (no.)
30,285
38,987
69,272
31,114
31,786
62,900
(1) The figure for 2017 reflects a more accurate measurement of amounts transported.
Net electricity generated by Enel in 2018 increased by
0.4 TWh on 2017 (+0.2%), due to the increase in genera-
tion abroad (+0.7 TWh), partly offset by a decline in output
in Italy (-0.3 TWh). More specifically, the increase in vol-
umes generated abroad primarily reflects greater renew-
ables generation:
NET ELECTRICITY GENERATION BY RESOURCE (2018)
Renewables
39%
> +6.0 TWh from the increase in hydroelectric generation
Coal
in Spain and South America;
> +4.0 TWh from the increase in wind generation in
South America and North and Central America.
These developments were partly offset by a decline in out-
put from conventional sources, in particular the decrease
in gas-fired generation.
In Italy, the increase in hydroelectric generation (+4.0
TWh) was offset by the contraction in generation from
coal and gas.
Finally, 39% of the net electricity generated by Enel in
2018 came from renewable resources.
Electricity transported on the Enel distribution net-
work amounted to 485.4 TWh in 2018, an increase of 24.7
TWh (+5.4%), essentially reflecting the acquisition of Enel
Distribuição São Paulo.
Electricity sold by Enel in 2018 amounted to 295.4 TWh,
an increase of 10.6 TWh (+3.7%) on the previous year,
mainly reflecting an increase in amounts sold on foreign
markets (+9.5 TWh). The increase in sales in South Ameri-
ca (+16.4 TWh) was only partly offset by a decline in sales
in Spain (-6.9 TWh). Sales on the domestic market also
increased, by 1.1 TWh.
Oil and gas turbine
Nuclear
Combined cycle and gas
ELECTRICITY SOLD BY REGION (2018)
Italy
Iberia
South America
Other countries
26%
10%
10%
15%
35%
30%
31%
4%
27
Report on operations At December 31, 2018, Enel Group employees numbered
of Enel Distribuição São Paulo in Brazil, the acquisition in
69,272 (an increase of 6,372 on the end of 2017). The rise
August of Empresa de Alumbrado Eléctrico de Ceuta and
reflects the net balance of new hires and terminations
Empresa de Alumbrado Eléctrico de Ceuta Distribución
(-1,332) and the change in the scope of consolidation (a
in Spain and the sale in December of Enel Green Power
total of +7,704), which reflected the acquisition in June
Uruguay.
No.
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Other
Total
at Dec. 31, 2018
at Dec. 31, 2017
28,134
9,763
20,858
5,684
2,232
241
2,360
69,272
28,684
9,711
13,903
5,733
2,050
198
2,621
62,900
28
Annual Report 2018 Environmental, social and governance indicators
Emission free production (% of total)
Total specific emissions of CO2
from net production (kgCO2/kWheq) (1)
Average thermal generation yield (%) (2)
Specific emissions of SO2 (g/kWheq) (1)
Specific emissions of NOx (g/kWheq) (1)
Specific emissions of dust (g/kWheq) (1)
ISO 14001-certified net efficient capacity (% of total)
Enel injury frequency rate (3)
Serious and fatal injuries at Enel (no.) (4)
Serious and fatal injuries at contractors (no.) (4)
Verified violations of the Code of Ethics (no.) (5)
2018
49.1
2017
43.3
Change
5.8
13.4%
0.369
0.411
(0.042)
40.1
0.75
0.72
0.17
99
40.7
0.84
0.79
0.27
99
(0.6)
(0.09)
(0.07)
(0.10)
-
0.943
1.199
(0.256)
7
17
30
6
20
31
1
(3)
(1)
-10.2%
-1.5%
-10.7%
-8.9%
-37.0%
-
-21.4%
16.7%
-15.0%
-3.2%
(1) Specific emissions are calculated as total emissions from simple thermal generation and co-generation of electricity and heat as a ratio of total renewables
generation, nuclear generation, simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh equivalent).
(2) Percentages calculated using a new method that does not include oil and gas plants in Italy that are in the process of decommissioning or are marginal
among thermal plants. The figures also do not consider consumption and generation for co-generation at Russian thermal plants. The average generation
yield is calculated on the basis of the number of plants and weighted by output.
(3) The indicator is calculated as the ratio between the total number of injuries and the number of hours worked, in millions.
(4) Serious injury: injuries with an initial prognosis, as reported on the medical certificate issued, of greater than 30 days, or with a confidential prognosis until
the actual prognosis is released, or with an unknown prognosis that, based on an initial assessment by the company concerned, is expected to exceed
30 days. Once the official prognosis is released, the related injury is considered serious only if said prognosis exceeds 30 days. Should a confidential
prognosis never be released or an unknown prognosis remain unknown, within 30 days of the event, the injury is to be deemed serious.
(5) The analysis of reports received in 2017 was completed in 2018. For that reason, the number of verified violations for 2017 was restated from 27 to 31.
The Enel Group has an environmental management system
The average thermal generation yield was virtually un-
that covers nearly all of its operations (generation plants, grids,
changed compared with 2017.
services, properties, sales, etc.). Preparatory activities for the
certification of new plants and installations have begun.
Injury frequency rate for employees of the Enel Group was
In line with the goal of decarbonization by 2050, the new
equal to 0.943 (down 21% on 2017). In 2018 there was 1 fa-
installed renewables capacity amounted to about 2.7 GW,
tal accident and 6 serious accidents involving Enel person-
mainly attributable to wind plants in the United States and
nel and 7 fatal accidents4 and 10 serious accidents involving
solar plants in Mexico. Emission free production in 2018
the employees of contractors working for Enel.
amounted to around 49% of total generation, an increase
compared with 2017 that was due to greater generation
Reports of violations of the Code of Ethics numbered 144
from hydroelectric sources thanks to an increase in water
last year. Following analysis, 30 have been classified as vio-
availability. Specific CO2 emissions declined by 10% from
the previous year, going from 0.411 to 0.369 kg/kWheq, re-
flecting a reduction in absolute emissions as a result of a
lations to date.
decline in thermal generation.
The values for other specific atmospheric emissions de-
creased compared with 2017 by about 11% for SO2 and 9%
for NOx, as well as dust (-37% on 2017) thanks to efficiency
enhancement works at the Reftinskaya plant in Russia.
4 Considering activities managed in all of the areas in which the Group operates, which include a number of companies accounted for using the equity
method or for which the Build, Sell and Operate approach has been adopted, the total number of fatal injuries was 8.
29
Report on operations Overview of the Group’s
operations, performance
and financial position
Definition of
performance indicators
In order to present the results of the Group and the Parent
or disposals of entities (e.g. capital gains and losses), with
Company and analyze its financial structure, Enel has pre-
the exception of those in the renewables development seg-
pared separate reclassified schedules that differ from those
ment, in line with the new “Build, Sell and Operate” busi-
envisaged under the IFRS-EU adopted by the Group and by
ness model launched in the 4th Quarter of 2016, in which
Enel SpA and presented in the consolidated and separate
the income from the disposal of projects in that sector is the
financial statements. These reclassified schedules contain
result of an ordinary activity for the Group.
different performance indicators from those obtained di-
rectly from the consolidated and separate financial state-
Ordinary operating income: this is calculated by correcting
ments, which management feels are useful in monitoring
“Operating income” for the effects of the non-recurring
the performance of the Group and the Parent Company and
transactions referred to with regard to the gross operating
representative of the financial performance of the business.
margin, as well as significant impairment losses on assets
As regards those indicators, on December 3, 2015, CONSOB
following impairment testing or classification under “Assets
issued Communication 92543/2015, which gives force to
held for sale”.
the Guidelines issued on October 5, 2015 by the European
Securities and Markets Authority (ESMA) concerning the
Group ordinary net income: this is defined as “Group net
presentation of alternative performance measures in regu-
income” generated by Enel’s core business and is equal to
lated information disclosed or prospectuses published as
“Group net income” less all items connected with the ex-
from July 3, 2016. These Guidelines, which update the previ-
traordinary items referred to in the comments on “Ordinary
ous CESR Recommendation (CESR/05-178b), are intended
gross operating margin (EBITDA)”, significant impairment
to promote the usefulness and transparency of alternative
losses or writebacks on assets (including equity invest-
performance indicators included in regulated information or
ments and financial assets) recognized following impair-
prospectuses within the scope of application of Directive
ment testing and any associated tax effects or non-control-
2003/71/EC in order to improve their comparability, reliabil-
ling interests.
ity and comprehensibility.
Accordingly, in line with the regulations cited above, the cri-
Gross global value added from continuing operations: this
teria used to construct these indicators are as follows.
is defined as value created for stakeholders and is equal to
“Revenue”, including “Net income/(expense) from com-
Gross operating margin: an operating performance indica-
modity management” net of external costs defined as the
tor, calculated as “Operating income” plus “Depreciation,
algebraic sum of “Cost of fuels”, “Cost of electricity pur-
amortization and impairment losses”.
chases”, “Costs of materials”, “Capitalized costs of inter-
Ordinary gross operating margin: an indicator calculated by
“Provisions for risks and charges”, and “Costs for services,
eliminating from the gross operating margin all items con-
rentals and leases”, net of “Costs for fixed water diversion
nected with non-recurring transactions such as acquisitions
fees” and “Costs for public land usage fees”.
nal projects”, “Other costs”, net of “Taxes and duties” and
30
Annual Report 2018 Net non-current assets: calculated as the difference be-
“Net non-current assets” and “Net current assets”, “Provi-
tween “Non-current assets” and “Non-current liabilities”
sions for risks and charges”, “Deferred tax liabilities” and
with the exception of:
> “Deferred tax assets”;
“Deferred tax assets”, as well as “Net assets held for sale”.
> “Securities” and “Other financial receivables” included in
Net financial debt: a financial structure indicator, calculated as:
“Other non-current financial assets”;
> “Long-term borrowings” and “Short-term borrowings
> “Long-term borrowings”;
> “Employee benefits”;
and the current portion of long-term borrowings”, taking
account of “Short-term financial payables” included in
> “Provisions for risks and charges (non-current portion)”;
“Other current liabilities”;
> “Deferred tax liabilities”.
> net of “Cash and cash equivalents”;
> net of the “Current portion of long-term financial receiv-
Net current assets: calculated as the difference between
ables”, “Factoring receivables”, “Cash collateral” and
“Current assets” and “Current liabilities” with the excep-
“Other financial receivables” included in “Other current
tion of:
financial assets”;
> “Long-term financial receivables (short-term portion)”,
> net of “Securities” and “Other financial receivables” in-
“Factoring receivables”, “Securities, “Cash collateral”
cluded in “Other non-current financial assets”.
and “Other financial receivables” included in “Other cur-
More generally, the net financial debt of the Enel Group
rent financial assets”;
> “Cash and cash equivalents”;
is calculated in conformity with paragraph 127 of Rec-
ommendation CESR/05-054b implementing Regulation
> “Short-term borrowings” and the “Current portion of
2004/809/EC and in line with the CONSOB instructions
long-term borrowings”;
of July 26, 2007, net of financial receivables and long-term
> “Provisions for risks and charges (current portion)”;
securities.
> “Other financial payables” included in “Other current li-
abilities”.
Net assets held for sale: calculated as the algebraic sum of
“Assets held for sale” and “Liabilities held for sale”.
Net capital employed: calculated as the algebraic sum of
Main changes in the scope
of consolidation
In the two periods under review, the scope of consolidation changed as a result of a number of transactions. For more
information, please see note 6 in the notes to the consolidated financial statements.
31
Report on operations Group performance
Millions of euro
Revenue
Costs
Net income/(expense) from commodity contracts measured at fair value
Gross operating margin
Depreciation, amortization and impairment losses
Operating income
Financial income
Financial expense
2018
75,672
59,804
483
2017
74,639
59,564
578
16,351
15,653
6,451
9,900
4,361
6,409
5,861
9,792
3,982
6,674
Total net financial income/(expense)
(2,048)
(2,692)
Share of income/(losses) of equity investments accounted
for using the equity method
Income before taxes
Income taxes
Income from continuing operations
Income from discontinued operations
Net income (attributable to the Group and minority interests)
Interest held by the Group
Minority interest
Revenue
Millions of euro
Sale of electricity
Transport of electricity
Fees from network operators
Transfers from institutional market operators
Sale of gas
Transport of gas
Sale of fuel
Connection fees to electricity and gas networks
Construction contracts
Gains on the disposal of subsidiaries, associates, joint ventures, joint operations and
non-current assets held for sale
Gains on the disposal of property, plant and equipment and intangible assets
349
8,201
1,851
6,350
-
6,350
4,789
1,561
111
7,211
1,882
5,329
-
5,329
3,779
1,550
2018
43,110
10,101
1,012
1,711
4,401
576
8,556
714
735
287
61
9,973
900
1,635
3,964
570
8,340
800
674
159
43
Other revenue and income
Total
4,408
75,672
4,148
74,639
Change
1,033
240
(95)
698
590
108
379
(265)
644
238
990
(31)
1,021
-
1,021
1,010
11
1.4%
0.4%
-16.4%
4.5%
10.1%
1.1%
9.5%
-4.0%
23.9%
-
13.7%
-1.6%
19.2%
-
19.2%
26.7%
0.7%
-0.7%
1.3%
12.4%
4.6%
11.0%
1.1%
2.6%
-10.8%
9.1%
80.5%
41.9%
6.3%
1.4%
128
112
76
437
6
216
(86)
61
128
18
260
1,033
2017
Change
43,433
(323)
In 2018, revenue from the sale of electricity amounted to
> a reduction of €543 million in revenue from wholesale
€43,110 million, a decrease of €323 million compared with
electricity sales, mainly due to the reduction in volumes
the previous year (-0.7%). The decrease can principally be
traded in Italy;
attributed to the following factors:
> a decrease of €858 million in revenue from electricity trad-
> a €1,078 million increase in revenue from end-user mar-
ing due to the reduction in volumes traded on the Italian
kets, mainly due to the change in the scope of consolida-
market.
tion following the addition of Enel Distribuição São Paulo
in June 2018;
32
Annual Report 2018
Revenue from the transport of electricity came to €10,101
Revenue from construction contracts in 2018 amounted
million in 2018, an increase of €128 million compared with
to €735 million, an increase of €61 million due mainly to the
2017. This increase was mainly concentrated in Brazil due to
change in the scope of consolidation with the acquisition of
the acquisition of Enel Distribuição São Paulo (€143 million).
Enel Distribuição São Paulo, which was partially offset by
the reduction of work carried out by the other distribution
Fees from network operators amounted to €1,012 million
companies in Brazil.
in 2018, up €112 million compared with the previous year.
This change reflects the increase in revenue in Italy, mainly
The item relating to gains on the disposal of entities
related to dispatching services and to unit margins essen-
came to €287 million in 2018, an increase of €128 million
tial to system security.
(+80.5%) compared with 2017, and mainly includes:
> the gain on the sale of eight companies involved in
Revenue from transfers from institutional market opera-
“Project Kino” in Mexico at the end of September 2018
tors in 2018 amounted to €1,711 million and increased by
and the re-measurement at fair value of the Group’s re-
€76 million. This increase in transfers was mainly due to the
maining 20% stake in the companies (€190 million);
greater costs of liquid fuels seen in the Spanish extra-pen-
> the gain on the sale of EF Solare Italia (€65 million);
insular area for which the Group is entitled to reimburse-
> the gain on the sale of a number of companies in the Enel
ment.
Green Power Business Line in Uruguay (€18 million).
In 2017, on the other hand, this item mainly included the
Revenue from the sale of gas for 2018, which totaled
gain of €143 million from the sale of the investment in the
€4,401 million, increased by €437 million (+11.0%) over the
Chilean company Electrogas.
previous year. This change was essentially due to the in-
crease in revenue recognized in Iberia, in Chile and in Italy,
Gains on the disposal of property, plant and equipment
mainly determined by rising average prices compared with
and intangible assets in 2018 amounted to €61 million
the previous year.
(€43 million in 2017) and refer to ordinary disposals for the
Revenue from the sale of fuel, amounting to €8,556 mil-
period.
lion, increased by €216 million, mainly as a result of the
Other revenue and income came to €4,408 million in 2018
increase in natural gas sales within Enel Global Trading.
(€4,148 million for the previous year), an increase of €260
million (+6.3%) compared with 2017.
Revenue from connection fees to electricity and gas net-
The change compared with 2017 is mainly due to:
works in 2018 amounted to €714 million, a decrease of €86
> an increase in revenue from the recognition of the income
million due to a decline in the number of connections and
connected with the agreement of e-distribuzione for the
the application of IFRS 15, which led to the deferred rec-
sale of Enel Rete Gas in 2009 (€128 million);
ognition over time of connection fees that had previously
> greater revenue due to the increase in sales volumes of
been recognized entirely through profit or loss at the time
value-added services.
of activation of the user.
33
Report on operations Costs
Millions of euro
Electricity purchases
Consumption of fuel for electricity generation
Fuel for trading and gas for sales to end users
Materials
Personnel costs
Services, leases and rentals (1)
Other operating expenses
Capitalized costs
Total
2018
19,584
4,922
11,463
2,375
4,581
16,254
2,889
(2,264)
59,804
2017
Change
20,011
5,342
10,906
1,880
4,504
15,882
2,886
(1,847)
59,564
(427)
(420)
557
495
77
372
3
(417)
240
-2.1%
-7.9%
5.1%
26.3%
1.7%
2.3%
0.1%
-22.6%
0.4%
(1) Of which, costs for fixed water diversion fees in the amount of €167 million in 2018 (€169 million in 2017) and costs for public land usage fees in the
amount of €24 million in 2018 (€24 million in 2017).
Costs for electricity purchases decreased by €427 mil-
for environmental certificates (€179 million) for power
lion in 2018 compared with 2017, a reduction of 2.1%.
generation in Italy and the sales companies in Romania.
This decrease is attributable to the reduction in purchases
made through bilateral agreements (€236 million), mainly
Personnel costs for 2018 totaled €4,581 million, an in-
relating to the reduction in volumes traded by Enel Global
crease of €77 million (+1.7%) compared with 2017. This
Trading, associated with a reduction in purchases both
change is essentially the result of:
on other local and foreign markets in the amount of €106
> higher costs associated with changes in the scope of
million and on the electricity exchanges in the amount of
consolidation, mainly due to the acquisitions of Enel
€85 million, mainly in Iberia. These effects were partially
Distribuição São Paulo in 2018 (€151 million) and Enel
offset by the increase in electricity purchases in South
X North America (formerly EnerNOC) in the 2nd Half of
America following the consolidation of Enel Distribuição
2017 (€56 million);
São Paulo.
> a decrease in costs for Enel Distribuição Goiás in the
amount of €63 million following the efficiency mea-
Costs for the consumption of fuel for electricity gen-
sures implemented during the 1st Half of 2017;
eration relating to 2018 amounted to €4,922 million, a
> a reduction in costs in Argentina following the devalu-
decrease of €420 million (7.9%) compared with the pre-
ation of the local currency due to hyperinflation (€93
vious year. This change was mainly due to lower ther-
million);
moelectric production, especially in Chile and Italy, and
> an increase in costs incurred for early-retirement incen-
partly due to the weakening of South American curren-
tives in the amount of €62 million, mainly in Italy and
cies against the euro.
Spain.
Costs for the purchase of fuel for trading and gas for
At December 31, 2018, the Enel Group’s workforce totaled
sales to end users came to €11,463 million, up €557
69,272 employees, 38,987 of whom employed abroad.
million over 2017. This change reflects the greater quanti-
The Group’s workforce increased by 6,372 in 2018. The
ties purchased and traded at increasing average prices,
negative balance between new hires and terminations for
particularly in Italy and Spain.
the period (1,332), mainly due to the early-retirement in-
centives noted above (about 35% of terminations were in
Costs for materials came to €2,375 million in 2018, an in-
Italy), was more than offset by changes in the scope of
crease of €495 million compared with the previous year,
consolidation (7,704) due to acquisitions made in 2018,
mainly due to the increase in purchases for materials and
and in particular of Enel Distribuição São Paulo, Empresa
equipment for infrastructure and networks, mainly in Italy
de Alumbrado Eléctrico de Ceuta, and Empresa de Alum-
and Spain (€261 million), as well as an increase in costs
brado Eléctrico de Ceuta Distribución.
34
Annual Report 2018
The change compared with December 31, 2018 breaks
use of hydroelectric generation, which was only partial-
down as follows:
ly offset by the increase in taxes on real estate in the
Balance at December 31, 2017
Hirings
Terminations
Change in scope of consolidation
Balance at December 31, 2018
62,900
3,414
(4,746)
7,704
69,272
Costs for services, leases and rentals totaled €16,254
million in 2018, up €372 million over 2017. The change
was essentially due to:
> an increase in costs for services connected with the
changes in the scope of consolidation, mainly attribut-
able to the acquisition of Enel Distribuição São Paulo
(€389 million);
> greater variable costs for value-added services provided,
particularly in the United States (€98 million) due to the
consolidation, starting in August 2017, of Enel X North
America (formerly EnerNOC);
> an increase in hydroelectric lease fees incurred in Spain
following the increased use of hydroelectric production
during the year (€52 million);
> an increase in charges for access to the power trans-
mission grid in the amount of €160 million, especially in
Spain for the reversal, last year, of the charges set aside
in the years 2011-2016 in relation to the payments made
by the generation companies for self-consumption;
> a reduction of €220 million in customer acquisition costs,
which were capitalized following the application of the
new IFRS 15;
> a decrease in costs for maintenance and repairs (€115
million).
Other operating expenses in 2018 came to €2,889 mil-
lion, an increase of €3 million compared with 2017, which
essentially reflects:
> higher charges, mainly for the “bono social” in Spain in
the amount of €229 million, after the issue of a favorable
ruling in 2017 that led to the reversal of costs incurred in
2015, 2016 and 2017;
> an increase in indemnities paid to customers and suppli-
ers in the amount of €22 million;
> lower environmental compliance costs in the amount of
€112 million, mainly in Italy and Spain;
> lower charges for taxes and duties in the amount of €71
million, essentially related to lower taxes on thermal gen-
eration in Spain (€109 million), due in part to the greater
amount of €25 million, particularly in Italy;
> a decrease of €89 million in costs related to the im-
provement of service quality, which decreased espe-
cially sharply in Argentina, only partially offset by an
increase in fines recognized in relation to distribution
in Italy;
> a decrease of costs in South America, reflecting the ef-
fect of the recognition in 2017 of capital losses of €45
million following the abandonment of hydroelectric proj-
ects in Chile and Colombia.
In 2018, capitalized costs amounted to €2,264 million, an
increase of €417 million compared with the previous year,
in correspondence with the increase in investments made
in particular in distribution and generation in Italy, as well as
in the construction of renewable energy plants in Mexico.
Net
income/(expense) from commodity contracts
measured at fair value showed net income of €483 mil-
lion in 2018 (€578 million for the previous year). In particular,
net income for 2018 is attributable to net income from the
management of cash flow hedge derivatives, in the amount
of €25 million (net income of €246 million in 2017), and of
derivatives at fair value through profit or loss, in the amount
of €458 million (net income of €332 million in 2017).
Depreciation, amortization and impairment losses in
2018 amounted to €6,451 million, an increase of €590 mil-
lion. This increase was mainly due to the following:
> a €270 million increase in amortization due to the acquisi-
tion of Enel Distribuição São Paulo (€93 million) and the
application, starting in 2018, of IFRS 15, which entailed
the capitalization of customer acquisition costs (€166
million);
> greater impairment of property, plant and equipment and
intangible assets (€194 million), in particular as a result of
the impairment of biomass and solar assets in Italy (€91
million), of the assets of Nuove Energie (€24 million), of
the Augusta and Bastardo power plants (€23 million), and
of the Alcúdia power plant in Spain (€82 million). These
increases were partially offset by the partial reversal of
the impairment of the EGP Hellas CGU (€117 million) and
the impairment of geothermal assets, recognized in 2017,
on Erdwärme (€42 million);
> an increase in the impairment of trade and other assets
net of reversals (€186 million), especially in Italy.
35
Report on operations Operating income amounted to €9,900 million in 2018,
The share of income/(losses) of equity investments
an increase of €108 million.
accounted for using the equity method for 2018
showed net income of €349 million, while in 2017 net in-
Net financial expense amounted to €2,048 million, down
come was €111 million. The change of €238 million was
€644 million in 2018, mainly due to:
essentially due to the writeback of the value of the 50%
> a €320 million increase in financial income related to the
stake in Slovak Power Holding (€362 million), which had
adjustment in the value of the financial receivable arising
been written down multiple times in previous years. The
as a result of the sale of the 50% stake in Slovak Power
writeback was due to changes in the reference parame-
Holding as a result of updating the pricing formula in-
ters used to determine the pricing formula included in the
cluded in the agreements with Energetický a Pr˚umyslový
agreements with EPH. This writeback was only partially
Holding (“EPH”);
offset by the pro-rated performance of associates and
> the recognition of net financial income of €168 million for
joint ventures, the impairment of certain assets related to
the Argentine companies following the application of IAS
the Greek project companies involved in the development
29 related to accounting for hyperinflationary economies
of wind farms in the Cyclades (€49 million) and biomass
(see note 2 of the consolidated financial statements for
development projects in Italy (€12 million).
the year ended December 31, 2018, for more informa-
tion);
Income taxes in 2018 amounted to €1,851 million, for a
> greater net gains on financial derivative instruments
tax rate of 22.6%, while income taxes for 2017 came to
(hedging both interest rates and exchange rates) in the
€1,882 million with a tax rate of 26.1%. The reduction in
amount of €1,616 million, which was almost entirely off-
income taxes was mainly attributable to the following fac-
set by an increase in net exchange rate losses as a result
tors:
of fluctuations in exchange rates in the amount of €1,500
> the recognition of deferred tax assets on prior-year loss-
million;
es by Enel Distribuição Goiás (€274 million) and by Enel
> a decrease in the financial expense recognized by Enel
Green Power SpA (€85 million in respect of 3Sun, which
Finance International of €108 million due to the early re-
was merged into Enel Green Power in 2018);
demption of bonds in 2019 under the “make-whole call
> the reduction in deferred tax liabilities (€61 million) fol-
option” allowed for under the original financing agree-
lowing the tax reform in Colombia, which led to a reduc-
ment;
tion in progressive tax rates from 33% to 30%.
> a reduction in charges related to medium and long-term
revolving credit lines in the amount of €52 million, above
all for Enel SpA and Enel Finance International;
> the recognition by Enel SpA of financial income in the
amount of €54 million related to rebates of direct taxes.
These effects were only partially offset by:
> a €89 million decrease in capitalized interest, mainly for
Enel Green Power Brazil and Enel Green Power Chile;
> a €62 million increase in charges for the assignment of
receivables, mainly attributable to Enel Energia (€23 mil-
lion), the Enel Américas Group (€21 million), and Servizio
Elettrico Nazionale (€14 million);
> a decrease in income from equity investments due to the
effect of the recognition in 2017 of the gain on the sale of
the investment in Bayan Resources (€52 million).
36
Annual Report 2018 Analysis of the Group’s
financial position
Millions of euro
Net non-current assets:
- property, plant and equipment and intangible assets
- goodwill
- equity investments accounted for using the equity method
- other net non-current assets/(liabilities)
Total net non-current assets
Net current assets:
- trade receivables
- inventories
- net receivables due from institutional market operators
- other net current assets/(liabilities)
- trade payables
Total net current assets
Gross capital employed
Sundry provisions:
- employee benefits
- provisions for risks and charges and net deferred taxes
Total sundry provisions
Net assets held for sale
Net capital employed
Total shareholders’ equity
Net financial debt
at Dec. 31, 2018
at Dec. 31, 2017
Change
95,780
14,273
2,099
(5,696)
91,738
13,746
1,598
4,042
527
501
(1,677)
(4,019)
4.4%
3.8%
31.4%
-
106,456
105,405
1,051
1.0%
13,587
2,818
(3,200)
(7,589)
(13,387)
(7,771)
98,685
(3,187)
(6,838)
(10,025)
281
88,941
47,852
41,089
14,529
2,722
(3,912)
(6,311)
(942)
96
712
-6.5%
3.5%
18.2%
(1,278)
-20.3%
(12,671)
(716)
-5.7%
(5,643)
99,762
(2,128)
-37.7%
(1,077)
-1.1%
(2,407)
(8,025)
(10,432)
241
89,571
52,161
37,410
(780)
1,187
407
40
(630)
(4,309)
3,679
-32.4%
14.8%
3.9%
16.6%
-0.7%
-8.3%
9.8%
Property, plant and equipment and
intangible assets
2018, of Enel Green Power Uruguay and the related special
amounted to €95,780 million as at December 31, 2018 (in-
purpose vehicle, Estrellada.
cluding investment property), an increase of €4,042 million.
Other changes, totaling €1,465 million, mainly include the
This increase originated essentially from capital expenditure
effects of applying IAS 29 to the opening balance of prop-
for the period (€7,881 million), the change in the scope of
erty and machinery at January 1, 2018, and the cumulative
consolidation (€2,603 million), mainly attributable to the
effects of hyperinflation as at December 31, 2018, which
acquisition of the Brazilian distribution company Enel Distri-
were not present in 2017.
buição São Paulo, of Parques Eólicos Gestinver, a company
operating in the production of wind energy, and of Empresa
Goodwill amounted to €14,273 million, an increase of €527
de Alumbrado Eléctrico de Ceuta, a company operating in
million from December 31, 2017. This change was mainly
the distribution and sale of electricity in the autonomous city
due to the change in the scope of consolidation (a positive
of Ceuta, in North Africa. These effects were partially offset
€489 million) connected with the acquisition of the Brazilian
by unfavorable developments in exchange rates, mainly in
distribution company Enel Distribuição São Paulo, as well
South America, by the depreciation, amortization and im-
as the acquisition of Empresa de Alumbrado Eléctrico de
pairment losses recognized during the year in the amount of
Ceuta. These effects were partially offset by the reclassifi-
€5,344 million, by the reclassification to assets held for sale
cation to assets held for the sale of goodwill relating to three
following the application of IFRS 5, in the amount of €505
solar plants in Brazil, which, following the decisions made
million, mainly reflecting the carrying amount of three solar
by management, meet the requirements of IFRS 5 for clas-
plants in Brazil, as well as to the sales, on December 14,
sification as such (€23 million).
37
Report on operations
Equity investments accounted for using the equity method
The balance of the net current assets was a net liability of
amounted to €2,099 million, an increase of €501 million
€7,771 million at December 31, 2018, an increase of €2,128
from December 31, 2017.
million compared with December 31, 2017. This change is
This increase was mainly the result of:
due to the following factors:
> the share of net income attributable to shareholders of
> a decrease in trade receivables, in the amount of €942
the Parent Company, net of dividends paid and the ad-
million, mainly attributable to a reduction in receivables
justment of the investment in Slovak Power Holding fol-
for the sale and transport of energy and for the sale of
lowing the adjustment of the pricing formula defined in
gas, as well as an increase in the assignment of receiv-
the sale agreement with EPH;
ables;
> changes in the scope of consolidation related to:
> an increase in inventories, in the amount of €96 million,
-
-
the acquisition of Ufinet International (€150 million); and
mainly due to the increase in materials and equipment
the partial sale, with loss of control, of the Mexican re-
used for the operation, maintenance and construction of
newables companies (the “Project Kino” companies),
power generation plants and distribution networks, as
which resulted in the valuation at equity of the remain-
well as the increase in gas inventories;
ing interests held by the Group.
> an increase in net receivables due from institutional mar-
This increase was partially offset by the sale of the joint
ket operators in the amount of €712 million, mainly in
venture EF Solare Italia on December 27, 2018.
Italy and related to the rate components of the Italian
electrical system to cover system charges, as well as the
The balance of other net non-current assets/(liabilities) as at
effects of the consolidation, in South America, of Enel
December 31, 2018 showed a net liability of €5,696 million,
Distribuição São Paulo and the increase in system charg-
up €4,019 million from December 31, 2017 (€1,677 million).
es in Argentina, associated with rate increases;
This change is due primarily to the following:
> a decrease of €1,278 million in other current assets net
> the recognition of €6,306 million in liabilities deriving
of associated liabilities. This change is due to the follow-
from contracts for connection to the electricity grid fol-
ing factors:
lowing the application of IFRS 15;
-
an increase of €1,446 million in other net current liabili-
> the increase in payables due to tax partnerships rec-
ties, mainly due to: the acquisition of Enel Distribuição
ognized by the renewable-energy companies in North
São Paulo; the increase in payables for dividends to
America in the amount of €325 million as a result of the
be disbursed in view of the Group’s dividend policy,
start of operations at the Diamond Vista, HillTopper and
which calls for the payment of an interim dividend in
Rattlesnake plants;
2018 greater than that of 2017; and the recognition
> the increase in service concession arrangements in the
of payables for the additional increase in the interest
amount of €939 million, mainly due to the acquisition of
(2.43%) in Enel Américas by Enel SpA;
Enel Distribuição São Paulo (€855 million);
-
a €369 million increase in net income tax receivables,
> the increase in assets deriving from contracts with cus-
which is essentially attributable to the reduction in
tomers in the amount of €346 million, mainly relating to
taxes payable mainly due to offsetting with payments
assets under construction under public-to-private service
on account during the previous year;
concession arrangements recognized in accordance with
-
a €282 million decrease in net current financial assets,
IFRIC 12 in Brazil. It should be noted that the value as at
essentially attributable to the negative change in the
December 31, 2018, includes capital expenditure for the
fair value of derivative instruments, mainly related to
period in the amount of €271 million;
cash flow hedging on exchange rates and commodity
> an increase of €208 million in other non-current receiv-
prices;
ables as a result of the consolidation of Enel Distribuição
> an increase in trade payables, in the amount of €716 mil-
São Paulo, as well as of non-current assets for contin-
lion, which was particularly concentrated in Italy, South
gent consideration recognized in North America (€91 mil-
America and North America.
lion) in relation to projects in progress;
> a reduction of €445 million in liabilities, mainly attribut-
Sundry provisions amounted to €10,025 million, a de-
able to the release to profit or loss of fees received from
crease of €407 million compared with the previous year.
customers for the amounts related to the period.
This change was primarily due to the following factors:
38
Annual Report 2018 > a €780 million increase in employee benefits, mainly due
mainly refer to the carrying amount of three solar plants in
to changes in the scope of consolidation; a €463 million
Brazil, which, following decisions taken by management,
increase in provisions for risks and charges, mainly re-
meet the requirements of IFRS 5 for classification in this
lated to the decommissioning provision and the provision
aggregate.
for litigation. The increase in the latter item is mainly due
The change for the period essentially concerns the sale of
to the change in the scope of consolidation with the ac-
an 80% stake in eight Mexican project companies (“Project
quisition of Enel Distribuição São Paulo and provisions
Kino”) classified as held for sale as of December 31, 2017,
made for disputes with employees, which were partly
and now accounted for using the equity method, and the
offset by releases and uses, especially in Iberia and in
reclassification of the project companies relating to the Kaf-
Italy and South America;
ireas wind farm as they are no longer available for sale as
> a decrease in net deferred tax liabilities in the amount
the conditions for the sale were no longer met.
of €1,648 million, mainly relating to the recognition of
deferred tax assets on the deferral of connections fees in
Net capital employed came to €88,941 million as at De-
Italy due to the application of the new IFRS 15 and to the
cember 31, 2018, and was funded by €47,852 million in
changes in the scope of consolidation due to the acquisi-
shareholders’ equity attributable to shareholders of the
tion of Enel Distribuição São Paulo.
Parent Company and non-controlling interests and €41,089
million in net financial debt. With regard to the latter figure,
Net assets held for sale amounted to €281 million at De-
the debt-to-equity ratio as at December 31, 2018 was 0.86
cember 31, 2018 (€241 million at December 31, 2017), and
(compared with 0.72 as at December 31, 2017).
39
Report on operations Analysis of the
financial structure
Net financial debt
The following table shows the composition of and changes in net financial debt:
Millions of euro
Long-term debt:
- bank borrowings
- bonds
- other borrowings
Long-term debt
Long-term financial receivables and securities
Net long-term debt
Short-term debt:
Bank borrowings:
- short-term portion of long-term bank borrowings
- other short-term bank debt
Short-term bank debt
Bonds (short-term portion)
Other loans (short-term portion)
Commercial paper
Cash collateral and other financing on derivatives
Other short-term financial payables (1)
Other short-term debt
Long-term financial receivables (short-term portion)
Factoring receivables
Financial receivables - cash collateral
Other short-term financial receivables
Cash and cash equivalents with banks and short-term securities
at Dec. 31, 2018 at Dec. 31, 2017
Change
8,819
38,633
1,531
48,983
(3,272)
45,711
1,830
512
2,342
1,341
196
2,393
301
438
4,669
(1,522)
-
(2,559)
(859)
(6,693)
8,310
32,285
1,844
42,439
(2,444)
39,995
1,346
249
1,595
5,429
225
889
449
307
7,299
(1,094)
(42)
(2,664)
(589)
(7,090)
509
6,348
(313)
6,544
(828)
5,716
484
263
747
(4,088)
(29)
1,504
(148)
131
(2,630)
(428)
42
105
(270)
397
(154)
6.1%
19.7%
-17.0%
15.4%
-33.9%
14.3%
36.0%
-
46.8%
-75.3%
-12.9%
-
-33.0%
42.7%
-36.0%
-39.1%
-
-3.9%
45.8%
5.6%
-1.3%
78.8%
9.8%
Cash and cash equivalents and short-term financial receivables
(11,633)
(11,479)
Net short-term debt
NET FINANCIAL DEBT
Net financial debt of “Assets held for sale”
(4,622)
41,089
362
(1) Includes current financial payables that are included in “Other current financial liabilities”.
(2,585)
37,410
(2,037)
3,679
1,364
(1,002)
-73.5%
Net financial debt was equal to €41,089 million at Decem-
and Enel X Mobility and drawings on bank financing
ber 31, 2018, an increase of €3,679 million over December
by the South American companies, the effect of which
31, 2017.
was partially offset by the reclassification of the short-
Specifically, net long-term debt increased by €5,716 million,
term portion of amounts falling due within 12 months
the combined effect of the increase in long-term financial
and by the positive exchange differences during the year
receivables of €828 million and the increase in gross long-
amounting to €81 million (which also includes the ex-
term debt in the amount of €6,544 million.
change differences in respect of the short-term portion
With regard to the latter aggregate:
of borrowings);
> bank borrowings amounted to €8,819 million, an increase
> bonds amounted to €38,633 million, an increase of
of €509 million mainly due to new soft lending by the Eu-
€6,348 million compared with the end of 2017, mainly
ropean Investment Bank to Endesa SA, e-distribuzione
due to:
40
Annual Report 2018
-
new issues of bonds in 2018, including:
to maturity within 12 months for a total of €1,341 million.
- €1,250 million in respect of a fixed-rate green bond
The balance of cash collateral paid to counterparties on
maturing in 2026, issued by Enel Finance Interna-
over-the-counter interest-rate, exchange rate and commod-
tional in January 2018;
ity contracts came to €2,559 million, while the value of
- €1,250 million in respect of two fixed-rate hybrid
cash collateral received from said counterparties came to
bonds, with call dates in 2023 and 2026, issued by
€301 million.
Enel SpA in May 2018;
- $4,000 million (equivalent to €3,492 million) in re-
Cash and cash equivalents and short-term financial receiv-
spect of a multi-tranche bond with maturities in
ables came to €11,633 million, an increase of €154 million
2023, 2025 and 2029, issued by Enel Finance Inter-
compared with the end of 2017, mainly due to the increase
national in September 2018;
in the short-term portion of long-term financial receivables
- €1,875 million in respect of local issues by South
and other short-term financial receivables in the amount
American companies, including a fixed-rate bond of
of €428 million and €270 million, respectively, the effect
$1,000 million (equivalent to €873 million) maturing
of which was only partially offset by the decrease in cash
in 2028, issued by Enel Chile in June 2018;
held at banks and short-term securities in the amount of
- negative exchange differences during the year of €447
€397 million and cash collateral paid to counterparties in
million (which also includes the exchange differences
the amount of €105 million.
in respect of the short-term portion of bonds);
-
the repurchase by Enel SpA of a hybrid bond in euros
The main transactions in 2018 included the following:
in the amount of €732 million;
> the receipt, on June 19, 2018, of financing of approxi-
-
reclassifications of the short-term portion of bonds
mately $34 million (equivalent to €30 million) granted by
maturing in the next 12 months, including a bond in
the International Financial Corporation and the European
pounds sterling issued by Enel SpA maturing in June
Investment Bank to Ngonye Power Company Limited for
2019 in the amount of €614 million, a bond in euros
the construction of a solar plant in Zambia; at December
issued by Enel Finance International in the amount of
31, 2018, this financing was not used;
€125 million maturing in November 2019, and local-
> a 15 billion South African rand (equivalent to €913 mil-
currency bonds issued by South American companies
lion) financing agreement, signed on July 31, 2018, with
in the amount of €395 million.
Nedbank Limited and ABSA and granted to Enel Green
Power RSA for the construction of new wind farms in
Net short-term debt shows a creditor position of €4,622
South Africa; at December 31, 2018, €149 million of this
million at December 31, 2018, an increase of €2,037 million
line of credit was used;
compared with December 31, 2017, due to the €2,630 mil-
> the following redemptions of bonds:
lion decrease in other borrowings, which was only partially
- €3,000 million in respect of two retail bonds, one
offset by the increase of €747 million in short-term bank
fixed-rate and one floating-rate, issued by Enel SpA,
borrowings.
which matured in February 2018;
- €591 million in respect of a fixed-rate bond issued by
Other short-term debt amounted to €4,669 million, includ-
Enel SpA, which matured in June 2018;
ing the commercial paper issued by Enel Finance Interna-
- €544 million in respect of a fixed-rate bond issued by
tional, International Endesa BV and South American com-
Enel Finance International, which matured in October
panies for a total of €2,393 million and the bonds coming
2018.
41
Report on operations Cash flows
Millions of euro
Cash and cash equivalents at the start of the year (1)
Cash flows from operating activities
Cash flows from investing/disinvesting activities
Cash flows from financing activities
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at year end (2)
2018
7,121
11,075
(9,661)
(1,636)
(185)
6,714
2017
8,326
10,125
(9,294)
(1,646)
(390)
7,121
Change
(1,205)
950
(367)
10
(205)
(407)
(1) Of which, cash and cash equivalents in the amount of €7,021 million at January 1, 2018 (€8,290 million at January 1, 2017), short-term securities in the
amount of €69 million at January 1, 2018 (€36 million at January 1, 2017), and cash and cash equivalents of assets held for sale in the amount of €31 mil-
lion at January 1, 2018.
(2) Of which, cash and cash equivalents in the amount of €6,630 million at December 31, 2018 (€7,021 million at December 31, 2017), short-term securities in
the amount of €63 million at December 31, 2018 (€69 million at December 31, 2017), and cash and cash equivalents of assets held for sale in the amount
of €21 million at December 31, 2018 (€31 million at December 31, 2017).
Cash flows from operating activities for 2018 came to
> the sale of Enel Green Power Uruguay, owner of the
a net inflow of €11,075 million, an increase of €950 mil-
Melowind wind farm;
lion compared with the previous year, mainly due to an in-
> the sale of Enel Green Power Finale Emilia to F2i.
crease in gross operating margin and net current assets.
The same aggregate in 2017 came to €900 million and in-
cluded the sale of the Caney River and Rocky Ridge wind
Cash flows from investing/disinvesting activities for
farms in North America.
2018 absorbed liquidity for €9,661 million, compared with
Liquidity absorbed by other investing/disinvesting activi-
a net outflow of €9,294 million in 2017.
ties in 2018 amounted to €83 million, essentially regarding:
In particular, capital expenditure and investments in prop-
> the acquisition of a 21% stake in Zacapa Topco Sàrl, a
erty, plant and equipment and in intangible assets and
special purpose vehicle to which 100% of Ufinet Interna-
non-current assets deriving from contracts with customers
tional was transferred (€150 million);
amounted to €8,530 million in 2018 and increased by €31
> the capital contribution in favor of OpEn Fiber;
million compared with the previous year, mainly due to the
> the sale to F2i SGR of a 50% stake in the joint venture EF
increase in capital expenditure for the electricity distribu-
Solare Italia (€214 million).
tion network in Italy, which was only partially offset by a
decrease in expenditure in the renewable energy sector in
Cash flows from financing activities for 2018 absorbed
South America and in North and Central America.
liquidity of €1,636 million, compared with a net outflow of
Investments in companies or business units, expressed
€1,646 million in 2017. Cash flows for 2018 were essen-
net of the cash and cash equivalents acquired, amounted
tially related to the €3,210 million increase in net financial
to €1,472 million and refer mainly to the acquisition of the
debt (as the net balance between repayments and new
Brazilian electricity distribution company Enel Distribuição
financing) and the payment of dividends in the amount of
São Paulo, of the Spanish electricity distribution company
€3,444 million.
Empresa de Alumbrado Eléctrico de Ceuta in North Africa,
To these effects we can also add the greater outflows
and of two wind farms in Spain.
relating to transactions in non-controlling interests in the
Disposals of companies or business units, expressed net
amount of €1,402 million related essentially to the tender
of the cash and cash equivalents sold, totaled €424 million
offer issued by Enel Chile on all the shares of the subsid-
and mainly included:
iary Enel Generación Chile held by minority shareholders.
> the early, lump-sum payment of the indemnity related to
the sale of e-distribuzione’s investment in Enel Rete Gas;
Accordingly, in 2018 cash flows generated by operating
> the sale of an 80% stake in the Mexican companies in-
activities in the amount of €11,075 million were sufficient
cluded in “Project Kino”;
to meet only part of the funding needs for financing ac-
42
Annual Report 2018 tivities in the amount of €1,636 million and for investing
million at the end of 2017. This change also reflects the ef-
activities in the amount of €9,661 million. The difference
fects related to the downward trend in the exchange rates
is reflected in a decrease of €407 million in cash and cash
of the various local currencies with respect to the euro in
equivalents at December 31, 2018, compared with €1,205
the amount of €185 million.
43
Report on operations Results by business area
The representation of performance by business area pre-
account was taken of the possibilities for the simplification
sented here is based on the approach used by manage-
of disclosures associated with the materiality thresholds
ment in monitoring Group performance for the two periods
also established under IFRS 8 and, therefore:
under review, taking account of the operational model ad-
> “Thermal Generation” and “Trading & Upstream” are
opted by the Group as described above.
presented together given the considerable interaction
Taking account of the provisions of IFRS 8 regarding the
and interdependence between them;
management approach, the new “Enel X” Business Line
> the item “Other, eliminations and adjustments” includes
modified the structure of reporting, as well as the repre-
not only the effects from the elimination of interseg-
sentation and analysis of Group performance and financial
ment transactions, but also the figures for the Parent
position, as from March 31, 2018. More specifically, per-
Company, Enel SpA.
formance by business area reported in this Annual Report
The following chart outlines these organizational arrange-
was determined by designating the Regions and Countries
ments.
perspective as the primary reporting segment. In addition,
Global Business Lines
Local businesses
Infrastructure
& Networks
Thermal
Generation
Trading &
Upstream
Enel Green
Power
Enel X
End-user
markets
Services
Holding
Regions
& Countries
Italy
Iberia
Iberia
Europa and Euro-
Mediterranean Affairs
Africa, Asia and
Oceania
North and Central
America
South America
The new organization, which continues to be based on a
the various Business Lines by geographical area, function-
matrix of Business Lines, now calls for the integration of
ally including the “Large Hydro” businesses, which for-
the various companies of the Enel Green Power Group in
mally remain under the thermal power generation compa-
44
Annual Report 2018 Global Business Lines
Local businesses
Infrastructure
Thermal
& Networks
Generation
Trading &
Upstream
Enel Green
Enel X
Power
End-user
markets
Services
Holding
Regions
& Countries
Italy
Iberia
Iberia
Europa and Euro-
Mediterranean Affairs
Africa, Asia and
Oceania
North and Central
America
South America
nies, and a new configuration for the geographical areas
structure is divided as follows: Thermal Generation, Trad-
(i.e. Italy, Iberia, Europe and Euro-Mediterranean Affairs,
ing, Infrastructure and Networks, Enel Green Power, Enel
South America, North and Central America, Africa, Asia and
X, Retail, Services and Holding.
Oceania, Central/Holding). In addition, the new business
Results by business area for 2018 and 2017
Results for 2018 (1)
Millions of euro
Italy
Iberia
Europe
and Euro-
Mediterranean
Affairs
South
America
North and
Central
America
Africa, Asia
and Oceania
Other,
eliminations
and
adjustments
Total
Revenue from third parties
37,411
19,413
14,687
2,349
1,438
100
274
75,672
Revenue from transactions with
other segments
987
79
55
12
-
1
(1,134)
-
Total revenue
38,398
19,492
14,742
2,361
1,438
101
(860)
75,672
Net income/(expense) from
commodity contracts measured
at fair value
410
64
2
Gross operating margin
7,304
3,558
4,370
Depreciation, amortization,
and impairment losses
2,806
1,834
1,394
Operating income
4,498
1,724
2,976
Capital expenditure
2,479 (2)
1,433
2,246
(1)
516
96
420
390
8
708
254
454
-
54
44
10
1,373 (3)
142
-
483
(159)
16,351
23
(182)
89
6,451
9,900
8,152
(1) Segment revenue include both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the year.
(2) Does not include €3 million regarding units classified as “held for sale”.
(3) Does not include €375 million regarding units classified as “held for sale”.
Results for 2017 (1)
Millions of euro
Italy
Iberia
Europe
and Euro-
Mediterranean
Affairs
North and
Central
America
South
America
Other,
eliminations
and
adjustments
Africa, Asia
and Oceania
Total
Revenue from third parties
37,900
19,940
13,126
2,374
1,185
Revenue from transactions with
other segments
881
54
28
37
2
Total revenue
38,781
19,994
13,154
2,411
1,187
Net income/(expense) from
commodity contracts measured
at fair value
537
13
26
-
2
Gross operating margin
6,863
3,573
4,204
543
759
Depreciation, amortization and
impairment losses
2,393
1,731
Operating income
4,470
1,842
Capital expenditure
1,812
1,105
1,234
2,970
3,002
237
306
206
553
307 (2)
1,802 (3)
96
-
96
-
57
42
15
30
18
74,639
(1,002)
-
(984)
74,639
-
578
(346)
15,653
18
5,861
(364)
9,792
72
8,130
(1) Segment revenue include both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the year.
(2) Does not include €44 million regarding units classified as “held for sale”.
(3) Does not include €325 million regarding units classified as “held for sale”.
45
Report on operations In addition
to
the
foregoing,
the Group monitors
gross operating margin for the two periods under review,
performance at the Global Business Line level, classifying
offering visibility of performance not only from a Region/
results by Business Line. The following table presents the
Country perspective but also by Business Line.
Gross operating margin
Local businesses
Millions of euro
End-user markets
Services
Thermal Generation
and Trading
Infrastructure and Networks
Enel Green Power
Enel X
Other
Total
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2,233 2,007
676
467
226
209
119
80
96
38
23
42
(217)
3,679
3,467
212
(358)
1,965
2,086
(121)
(104)
(87)
(17)
(14)
124
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12
12
(42)
(42)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
54
54
-
-
-
(8)
(8)
-
-
-
-
-
-
-
-
(1)
(42)
(61)
(1)
(39)
(47)
-
-
-
1
1
-
-
-
-
-
-
-
-
-
-
-
-
(11)
-
-
-
5
2
3
-
-
-
-
-
-
-
-
-
-
-
-
22
425
469
142
7
51
239
783
687
116
119
281
43
145
128
-
-
233
269
-
2
233
267
-
-
(6)
(6)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3)
-
-
-
(4)
(1)
(3)
-
-
-
-
-
-
-
-
-
-
-
(218)
1,921
1,687
26
(112)
(157)
8
17
-
(36)
(2)
(34)
-
-
(6)
(6)
-
-
-
-
-
-
-
157
915
247
406
196
-
152
152
-
-
-
-
-
-
-
-
-
-
-
-
140
644
237
461
205
-
166
166
-
-
-
-
-
-
-
-
-
-
-
-
234
17
271
10
(55)
(9)
-
(14)
(14)
-
-
-
-
-
-
-
-
-
-
-
-
8
319
2,921 2,440
481
85
52
33
1,117
1,963
(846)
7,697
7,378
(11)
(26)
(15)
(11)
(20)
(28)
Italy
Iberia
South America
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Europe and Euro-
Mediterranean
Affairs
Romania
Russia
Slovakia
Other countries
North and Central
America
United States and
Canada
Mexico
Panama
Other countries
Africa, Asia and
Oceania
South Africa
India
Other countries
Other
Total
46
Global Business Lines
1,220
1,054
361
199
2,028
1,917
46
395
877
544
156
10
115
62
(1)
-
54
398
140
113
60
58
54
9
(5)
32
284
888
557
147
9
145
104
-
-
41
400
98
101
152
57
53
8
(4)
166
162
111
14
111
(11)
(13)
9
1
(30)
(42)
(1)
-
13
(2)
42
12
(92)
1
1
1
(1)
191
561
31
51
56
19
37
-
-
-
-
3
3
-
-
-
3
3
-
-
-
-
-
(4)
(4)
(16)
124
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
51
56
19
37
-
-
-
-
3
3
-
-
-
3
3
-
-
-
-
-
(4)
(4)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,304
6,863
3,558
3,573
4,370
4,204
344
287
1,275
1,008
1,206
1,359
1,038
1,061
497
10
516
230
232
-
54
395
140
113
60
54
50
9
(5)
480
9
543
232
270
-
41
408
98
101
152
57
53
8
(4)
441
(15)
166
57
267
(153)
(23)
17
1
(27)
(2)
(38)
-
13
(13)
42
12
(92)
(3)
(3)
1
(1)
187
698
115
(76)
4,608
4,047
(16)
124
(201)
(201)
(227)
(227)
26
26
(159)
(346)
16,351
15,653
711
751
(40)
708
759
(51)
Annual Report 2018 Local businesses
Global Business Lines
Thermal Generation
Millions of euro
End-user markets
Services
and Trading
Infrastructure and Networks
Enel Green Power
Enel X
Other
Total
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2018
2017
Change
2,233 2,007
676
467
226
209
(217)
3,679
3,467
212
(358)
1,965
2,086
(121)
South America
(104)
(87)
(17)
(218)
1,921
1,687
Other countries
Europe and Euro-
Mediterranean
12
12
(42)
(42)
Italy
Iberia
Argentina
Brazil
Chile
Colombia
Peru
Affairs
Romania
Russia
Slovakia
Other countries
North and Central
America
United States and
Canada
Mexico
Panama
Other countries
Africa, Asia and
Oceania
South Africa
Other countries
India
Other
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
8
-
-
-
-
-
-
-
-
119
80
(1)
(42)
(61)
96
38
(1)
(39)
(47)
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
2
3
-
-
-
-
-
-
-
-
-
-
-
-
54
54
(8)
(8)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(14)
124
145
128
233
269
233
267
22
425
469
142
7
51
-
-
-
-
-
-
-
-
-
-
-
(6)
(6)
239
783
687
116
119
281
43
2
-
-
-
-
-
-
-
-
-
-
-
-
23
42
(3)
(4)
(1)
(3)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26
(112)
(157)
8
17
-
(36)
(2)
(34)
(6)
(6)
-
-
-
-
-
-
-
-
-
157
915
247
406
196
140
644
237
461
205
152
152
166
166
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
234
17
271
10
(55)
(9)
-
(14)
(14)
-
-
-
-
-
-
-
-
-
-
-
-
8
319
2,921 2,440
481
85
52
33
1,117
1,963
(846)
7,697
7,378
(11)
(11)
(26)
(15)
(11)
(20)
(28)
1,220
1,054
361
199
2,028
1,917
46
395
877
544
156
10
115
62
(1)
-
54
32
284
888
557
147
9
145
104
-
-
41
166
162
111
14
111
(11)
(13)
9
1
(30)
(42)
(1)
-
13
711
751
(40)
398
140
113
60
58
54
9
(5)
400
98
101
152
57
53
8
(4)
115
(76)
4,608
4,047
(2)
42
12
(92)
1
1
1
(1)
191
561
31
51
56
-
-
19
37
-
-
3
3
-
-
-
3
3
-
-
-
(4)
(4)
-
-
(16)
124
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31
51
56
-
-
19
37
-
-
3
3
-
-
-
3
3
-
-
-
(4)
(4)
-
-
(16)
124
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,304
6,863
3,558
3,573
4,370
4,204
344
287
1,275
1,008
1,206
1,359
1,038
1,061
497
10
516
230
232
-
54
480
9
543
232
270
-
41
441
(15)
166
57
267
(153)
(23)
17
1
(27)
(2)
(38)
-
13
708
759
(51)
395
140
113
60
54
50
9
(5)
408
98
101
152
57
53
8
(4)
(201)
(201)
(227)
(227)
26
26
(159)
(346)
16,351
15,653
(13)
42
12
(92)
(3)
(3)
1
(1)
187
698
47
Report on operations Italy
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 27,624
Thermal plants1
13,613
Hydroelectric plants
12,411
Geothermal plants
762
Wind farms
772
Other
66
2017 | 27,652
13,613
12,425
761
772
81
(1) 741 MW of which unavailable due t o l o n g - t e r m t e c h n i c a l
2 0 1 7 a n d 2 0 1 8 .
i s s u e s a t D e c e m b e r 3 1 ,
ELECTRICITY DISTRIBUTION AND TRANSPORT NETWORKS (km)
2018 | 1,153,323
High-voltage lines at year end
Low-voltage lines at year end
798,426
13
Medium-volta g e l i n e s a t y e a r e n d
354,884
48
Annual Report 2018
A V E R A G E N U M B E R O F C U S T O M E R S
2 5 , 6 0 2 , 0 9 6
t o c o n s u m e r
t o b u s i n e s s
|
2 0 1 8
F R E E M A R K E T
B u s i n e s s
6 , 5 3 9 , 0 1 0
B u s i n e s s
1 , 6 6 6 , 2 6 1
3 9 , 0 6 1
S a f e g u a r d - m a r k e t c u s t o m e r s
R E G U L A T E D M A R K E T
E n h a n c e d - p r o t e c t i o n - m a r k e t c u s t o m ers
1 7 , 3 5 7 , 7 6 4
|
2 0 1 8
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
e
n
u
8
9
e
v
8 , 3
e
u
R
e
3
n
al G
T h e r m
a n d Tr a din
e
v
e
R
t u r e a n d
7 , 6 7 2
s
c
k
r
r u
t
s
t w o
I n
a
f r
N e
r g i n
c
r
k
r u
t
s
t w o
g m a
I n
n
a
e
f r
N
t u r e a n d
3 , 6 7 9
s
n
4
4
n
e
e r a ti o
9 , 0
g 1
a
n
t i n
e r a ti o
2
g 2
r
e
p
s s o
G r o
al G
e
din
T h er m
a n d Tra
d i t u r e
t
s
r u c t u r e
d N e t w o r k s
I n
n
a
n
f r
a
5
1 , 6
8
e
s n o t
o
e d
r
u
g
n
e
p
n
e ra tio
g
x
e
p it a l e
a
C
T h er m al G
a n d Tra din
1 7 2
e fi
h
(2 ) T
2017 | 26,420,058
2 018 | 8,244,332 2017 | 7,552,217
5,938,899
1,580,305
33,013
2017 | 18,867,841
E n e l
G r e e n
P o w e r 2 , 0 8 4
End-user
markets 16,367
Enel X
247
E n e l
G r e e n
P o w e r 1 , 2 2 0
End-user
markets 2,233
Enel X
31
Gross operating
margin 7,304
Services
1,388
Capital
expenditure
2,4792
Eliminations
and
adjustm
(8,404)
ents
Services
119
E n e l G r e en
P o w e r 2522 markets 248
End-user
Enel X
54
Services
68
i n c l u d e € 3 m i l l i o n regarding units classified as “held for sale”.
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 27,624
Italy
Thermal plants1
13,613
Hydroelectric plants
12,411
Geothermal plants
762
Wind farms
772
Other
66
2017 | 27,652
13,613
12,425
761
772
81
(1) 741 MW of which unavailable due t o l o n g - t e r m t e c h n i c a l
2 0 1 7 a n d 2 0 1 8 .
i s s u e s a t D e c e m b e r 3 1 ,
ELECTRICITY DISTRIBUTION AND TRANSPORT NETWORKS (km)
2018 | 1,153,323
High-voltage lines at year end
13
Low-voltage lines at year end
798,426
Medium-volta g e l i n e s a t y e a r e n d
354,884
A V E R A G E N U M B E R O F C U S T O M E R S
2 5 , 6 0 2 , 0 9 6
|
t o c o n s u m e r
2 0 1 8
F R E E M A R K E T
B u s i n e s s
6 , 5 3 9 , 0 1 0
B u s i n e s s
1 , 6 6 6 , 2 6 1
S a f e g u a r d - m a r k e t c u s t o m e r s
t o b u s i n e s s
3 9 , 0 6 1
R E G U L A T E D M A R K E T
E n h a n c e d - p r o t e c t i o n - m a r k e t c u s t o m ers
1 7 , 3 5 7 , 7 6 4
|
2 0 1 8
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
e
n
u
8
9
v
e
8 , 3
R
e
3
v
e
R
e r a ti o
9 , 0
g 1
e
u
n
n
e
e
al G
T h e r m
a n d Tr a din
G r o
c
k
r
r u
t
s
t w o
I n
a
f r
N e
n
4
4
g m a
I n
n
f r
N
t i n
e r a ti o
2
g 2
a
n
r
e
din
e
p
s s o
al G
T h er m
a n d Tra
2017 | 26,420,058
2 018 | 8,244,332 2017 | 7,552,217
5,938,899
1,580,305
33,013
2017 | 18,867,841
Gross operating
margin 7,304
Capital
expenditure
2,4792
Services
1,388
Eliminations
and
adjustm
(8,404)
ents
Services
119
G r e e n
E n e l
P o w e r 2 , 0 8 4
End-user
markets 16,367
Enel X
247
t u r e a n d
7 , 6 7 2
s
r g i n
c
r
k
r u
t
s
t w o
a
e
t u r e a n d
3 , 6 7 9
s
G r e e n
E n e l
P o w e r 1 , 2 2 0
End-user
markets 2,233
Enel X
31
d i t u r e
I n
n
f r
a
t
a
s
r u c t u r e
d N e t w o r k s
n
1 , 6
5
8
s n o t
e
o
e d
r
u
g
a
C
n
e
p
x
p it a l e
e ra tio
T h er m al G
g
a n d Tra din
1 7 2
e
n
e fi
h
(2 ) T
E n e l G r e en
P o w e r 2522 markets 248
End-user
Enel X
54
Services
68
i n c l u d e € 3 m i l l i o n regarding units classified as “held for sale”.
Report on operations
49
Operations
Net electricity generation
Millions of kWh
Thermal
Hydroelectric
Geothermal
Wind
Other sources
2018
27,757
18,395
5,667
1,289
124
2017
Change
32,421
(4,664)
-14.4%
14,025
4,370
31.2%
5,758
1,188
126
(91)
101
(2)
-1.6%
8.5%
-1.6%
-0.5%
Total net generation
53,232
53,518
(286)
In 2018, net electricity generation totaled 53,232 million
panied by an increase in wind generation of 101 million
kWh, a decline of 0.5%, or 286 million kWh, from 2017.
kWh. These factors resulted in a decrease thermal genera-
The increase in hydroelectric generation (of 4,370 million
tion (of 4,664 million kWh) and a decrease in geothermal
kWh) was essentially attributable to the improvement of
generation of 91 million kWh.
water availability compared with the previous year, accom-
Contribution to gross thermal generation
Millions of kWh
Fuel oil
Natural gas
Coal
Other fuels
Total
2018
2017
Change
-
-
10
-
(10)
-
7,097
22,534
555
23.5%
74.7%
1.8%
8,396
23.9%
(1,299)
-15.5%
26,139
74.5%
(3,605)
-13.8%
534
1.6%
21
3.9%
30,186
100.0%
35,079
100.0%
(4,893)
-13.9%
Gross thermal generation for 2018 amounted to 30,186 mil-
was due to the reduced competitiveness of coal and gas,
lion kWh, a reduction of 4,893 million kWh (-13.9%) compared
as well as to the increase in hydroelectric production, which
with 2017. The decrease involving the entire mix of fuels used
made the use of thermal generation less advantageous.
Net efficient generation capacity
MW
Thermal plants (1)
Hydroelectric plants
Geothermal plants
Wind farms
Other
at Dec. 31, 2018
at Dec. 31, 2017
Change
13,613
12,411
762
772
66
13,613
12,425
761
772
81
-
(14)
1
-
(15)
(28)
-
-0.1%
-
-
-18.5%
-0.1%
Total net efficient capacity
27,624
27,652
(1) 741 MW of which unavailable due to long-term technical issues at December 31, 2017 and 2018.
50
Annual Report 2018 Net efficient capacity in 2018 came to 27,624 MW, a de-
mainly reflects the transfer of the Tirso 1 and Tirso 2 hy-
crease of 28 MW from the previous year. The change
droelectric plants to the Region of Sardinia.
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
2018
13
2017
13
354,884
353,808
798,426
795,397
Total electricity distribution network (km)
1,153,323
1,149,218
Electricity transported on Enel’s distribution network (millions of kWh) (1)
227,660
228,461
(1) The figure for 2017 reflects a more accurate measurement of amounts transported.
Change
-
1,076
3,029
4,105
(801)
-
0.3%
0.4%
0.4%
-0.4%
Electricity transported on the Enel network in Italy for 2018 decreased by 801 million kWh (-0.4%), going from 228,461
million kWh in 2017 to 227,660 million kWh in 2018.
Electricity sales
Millions of kWh
Free market:
- business to consumer
- business to business
- safeguard-market customers
Total free market
Regulated market:
- enhanced-protection-market customers
TOTAL
2018
2017
Change
13,331
49,141
2,028
64,500
12,475
44,735
2,052
59,262
856
4,406
(24)
5,238
39,818
104,318
43,958
(4,140)
103,220
1,098
6.9%
9.8%
-1.2%
8.8%
-9.4%
1.1%
Energy sold in 2018 came to 104,318 million kWh for
the free market, with a particular emphasis on business
an overall increase of 1,098 million kWh compared with
customers, as a result of the commercial strategy imple-
the prior year. This trend reflects the increase in sales on
mented.
Average number of customers
Free market:
- business to consumer
- business to business
- safeguard-market customers
Total free market
Regulated market:
2018
2017
Change
6,539,010
5,938,899
600,111
1,666,261
1,580,305
85,956
39,061
33,013
6,048
8,244,332
7,552,217
692,115
- enhanced-protection-market customers
17,357,764
18,867,841
(1,510,077)
TOTAL
25,602,096
26,420,058
(817,962)
10.1%
5.4%
18.3%
9.2%
-8.0%
-3.1%
51
Report on operations Natural gas sales
Millions of m3
Business to consumer
Business to business
Total
2018
2,947
1,814
4,761
2017
2,910
1,901
4,811
Change
37
(87)
(50)
1.3%
-4.6%
-1.0%
Gas sales in 2018 came to 4,761 million cubic meters, a decrease of 50 million cubic meters compared with the previous
year, essentially attributable to sales to business customers.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
2018
38,398
7,304
4,498
2,479 (1)
2017
38,781
6,863
4,470
1,812
Change
(383)
441
28
667
-1.0%
6.4%
0.6%
36.8%
(1) The figure does not include €3 million regarding units classified as “held for sale”.
The following tables break down performance by type of business in 2018.
Revenue
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Eliminations and adjustments
Total
2017
Change
19,919
(875)
2018
19,044
7,672
2,084
7,584
1,822
16,367
16,256
247
1,388
(8,404)
38,398
-
1,314
(8,114)
38,781
-4.4%
1.2%
14.4%
0.7%
-
5.6%
-3.6%
-1.0%
88
262
111
247
74
(290)
(383)
Revenue in 2018 amounted to €38,398 million, a decrease
spite a background of increasing prices;
of €383 million compared with 2017 (-1.0%), the result of
- a €333 million decline in revenue from the sale of
the following main factors:
electricity essentially related to the lower quantities
> a €875 million decline (-4.4%) in revenue from Thermal
generated. More specifically, the change is mainly
Generation and Trading compared with 2017. This re-
attributable to the decrease in revenue from the sale
duction is mainly attributable to:
of electricity under bilateral agreements with other
- a €863 million decline in revenue from trading on
national resellers (€952 million), only partially offset
international energy markets due, essentially, to a
by the increase in revenue from sales on the Power
reduction in quantities handled (-42.5 TWh) in propri-
Exchange (€188 million) and increased sales on end-
etary trading conducted on the European electricity
user markets in Italy;
exchanges (particularly in France and Germany) de-
52
Annual Report 2018 - a €353 million increase in revenue from the sale of fu-
(in the amount of €196 million) due to lower volumes
els, mainly gas, on domestic and international whole-
purchased and the reduction in the unit contribution
sale markets;
compared with 2017;
- a €103 million increase in revenue related to fees rec-
- a reduction in revenue from the sale of electricity me-
ognized by the Regulatory Authority for Energy, Net-
ters to other companies of the Group (€60 million);
works and Environment (ARERA) in transactions on
> an increase in revenue from generation by the Enel
the Power Exchange, mainly attributable to the reim-
Green Power Business Line of €262 million (+14.4%)
bursement of costs of essential plants;
due to higher average sales prices and greater quantities
- a €26 million increase in revenue from the sale of CO2
emission rights as a result of rising prices of allow-
ances;
produced;
> an increase of €111 million (+0.7%) in revenue from
End-user markets for electricity, essentially reflecting:
> an increase of €88 million (+1.2%) in revenue from Infra-
- an increase of €765 million in revenue on the free
structure and Networks operations, largely reflecting:
energy market related to the increase in quantities
-
recognition of a gain of €146 million, pursuant to
sold (+5.2 TWh), mainly to business customers;
ARERA Resolution 50/2018/R/eel, related to the reim-
- a €52 million increase in revenue from the sale of
bursement by the Energy and Environmental Services
natural gas to end users related to an increase in av-
Fund for the system charges paid and not collected;
erage prices;
-
recognition of the payment of €128 million related to
- a decrease of €318 million in revenue on the regulated
the agreement e-distribuzione reached with F2i and
electricity market, following a decrease in rate reve-
2i Rete Gas;
nue connected to the decrease in quantities sold (-4.1
- an increase of €92 million in connection fees;
TWh) and in number of customers, as well as to the
- an increase of €60 million in revenue related to ARE-
reduction in revenue recognized for sales services;
RA amendment 654/2015 (the “regulatory lag”),
- a decrease of €205 million in connection fees due
which was offset by a decline in rate revenue (€27
to application of the new IFRS 15, which led to the
million) following the reduction in distribution and me-
recognition only of fees attributable to the seller;
tering rates and the negative effect of prior-year items
- a reduction in revenue (€198 million) related to the
(€72 million) related to the publication of the rates for
sale of Enel Sole and Enel.si to the new Business
the years 2016 and 2017, as well as to the equalization
Line dedicated to developing value-added services;
of network losses;
> a €247 million increase in revenue for value-added ser-
-
the decrease in contributions from the Energy and
vices, essentially due to the aforementioned change in
Environmental Services Fund for white certificates
the consolidation of the new Enel X Business Line.
Gross operating margin
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Total
2018
22
3,679
1,220
2,233
31
119
2017
239
3,467
1,054
2,007
-
96
7,304
6,863
Change
(217)
-90.8%
212
166
226
31
23
441
6.1%
15.7%
11.3%
-
24.0%
6.4%
The gross operating margin amounted to €7,304 million in
thermal power generation and to the increase in costs for
2018, an increase of €441 million (+6.4%) compared with
gas purchases following an increase in average prices;
2017. This change was essentially due to the following factors:
> an increase of €212 million in the margin from Infrastruc-
> a decrease of €217 million in the margin on Thermal Gen-
ture and Networks operations (+6.1%), largely due to:
eration and Trading due essentially to the reduction in
-
recognition of a gain of €146 million, pursuant to
53
Report on operations ARERA Resolution 50/2018/R/eel, related to the re-
Green Power Business Line of €166 million due to the
imbursement by the Energy and Environmental Ser-
greater quantities produced and sold at higher average
vices Fund for system charges paid and not collected;
prices than for the previous year;
-
recognition of the payment of €128 million related
> an increase of €226 million in the margin from End-user
to the agreement e-distribuzione reached with F2i
markets (+11.3%), mainly attributable to:
and 2i Rete Gas as mentioned above in relation to
- an increase of €282 million in the margin on the free
revenue;
electricity and gas market, mainly related to the re-
- a decrease of €11 million in the margin on electricity
duction in costs for agencies and telesellers due to
transport, primarily reflecting the reduction in rates
application of IFRS 15, which provides for their capital-
and the negative effect of past items as noted earlier
ization when the customer base is increased;
in relation to revenue;
- a decrease of €20 million in the margin on the regu-
- a decline of €27 million in the margin on white cer-
lated electricity market, essentially attributable to a
tificates;
decrease in quantities sold, as well as to a decrease in
- an increase in operating costs related mainly to the
revenue recognized for sales services;
purchase of materials to be used for implementa-
- a reduction of €41 million in margin due to the afore-
tion of the Resilience project connected with the im-
mentioned change in the scope of consolidation;
provement or maintenance of service quality;
> an increase of €31 million in the margin for value-added
> an increase in the margin on generation by the Enel
services of the Enel X Business Line.
Operating income
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Total
2018
(247)
2,508
828
1,379
(9)
39
2017
-
2,319
745
1,361
-
45
4,498
4,470
Change
(247)
189
83
18
(9)
(6)
28
-
8.2%
11.1%
1.3%
-
-13.3%
0.6%
Operating income came to €4,498 million, an increase
These effects were partially offset by a reduction in de-
of €28 million, including an increase of €413 million in de-
preciation, mainly at e-distribuzione (€94 million) follow-
preciation, amortization and impairment losses, compared
ing a study of the operating performance of distribution
with the €4,470 million recognized in 2017.
plants, supported by technical advisors, following which
The increase in depreciation, amortization and impairment
it was considered reasonable to extend the economic-
losses refers largely to:
technical life of certain components of distribution plants
> an increase in amortization and depreciation from the
compared with forecasts made in previous years.
application of IFRS 15 in consideration of the capitaliza-
tion of contract costs (€103 million);
> the impairment losses on the LNG regasification plant
of Nuove Energie (€24 million), the Bastardo thermo-
electric plant (€20 million), and the CIS Interporto Cam-
pano solar plant (€55 million);
> the impairment loss on intangible assets related to the
termination of the Bioenergy Casei Gerola project;
> the impairment of trade receivables, mainly on end-
user markets.
54
Annual Report 2018 Capital expenditure
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Total
2018
172
1,685
252 (1)
248
54
68
2017
115
1,275
227
139
-
56
2,479
1,812
Change
57
410
25
109
54
12
667
49.6%
32.2%
11.0%
78.4%
-
21.4%
36.8%
(1) The figure does not include €3 million regarding units classified as “held for sale”.
Capital expenditure in 2018 amounted to €2,479 million,
and teleseller costs as contract costs;
up €667 million compared with the previous year. More
> an increase of €57 million in capital expenditure in
specifically, the change is attributable to:
Thermal Generation and Trading;
> an increase of €410 million in capital expenditure in Infra-
> an increase of €25 million in capital expenditure in the
structure and Networks related mainly to the replace-
Enel Green Power Business Line, mainly related to so-
ment of electronic meters for the Open Meter plan;
lar plants;
> an increase of €109 million in capital expenditure in End-
> an increase of €54 million in capital expenditure for the
user markets as a result of the capitalization of agency
Enel X Business Line.
55
Report on operations Iberia
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 22,717
Thermal plants
12,874
2017 | 22,732
E L E C T R I C I T Y D I S T R I B U T I O N A N D T R A N S PORT NETWORKS (km)
3 1 9 , 6 1 3
t a g e
l
i n e s a t y e a r e n d
i n e s a t y e a r e n d
t a g e
l
|
2 0 1 8
H i g h - v o l
1 9 , 6 2 5
L o w - v o l
1 8 1 , 4 5 7
Medium-voltage lines at year end
118,531
13,030
3,318
4,752
1,618
14
Nuclear plants
3,318
Hydroelectric plants
4,761
Wind farms
1,750
Other
14
56
Annual Report 2018
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
Gross operating
margin 3,558
Capital
expenditure
1,433
Services
514
Eliminations
and adjustm
(5,895)
ents
Services
80
e
u
2
n
9
e
v
9 , 4
e
u
R
e
1
n
al G
T h e r m
a n d Tr a din
e
v
e
R
n
9
n
e
e r a ti o
1
g 6 , 3
G r o
a
n
r
e
din
e
p
s s o
al G
T h er m
a n d Tra
t u r e
k
t w o r
c
r u
t
s
a
d N e
I n
f r
n
a
s 2 , 6 7 1
r g i n
g m a
I n
f r
n
a
r u
s
a
d N e
5
t
6
1 , 9
t i n
n
5
e r a ti o
g 4
2
n
e
p
x
p it a l e
a
C
g
T h e r m
n
G
e
a n
n
d i n
al
e r a ti o
d Tr a
5
3 4
c
t u r e
t w o r k s
d i t u r e
t
s
r u c t u r e
d N e t w o r k s
a
I n
f
a
r
n
6
8
6
E n e l G r e e n
P o w e r 7 1 6
End-user
markets 14,920
Enel X
247
E n e l G r e e n
P o w e r 3 6 1
End-user
markets 676
Enel X
51
E n e l G r een
P o w e r 246
End-user
markets 107
Enel X
39
Services
28
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 22,717
2017 | 22,732
Iberia
Thermal plants
12,874
Nuclear plants
3,318
Hydroelectric plants
4,761
Wind farms
1,750
Other
14
13,030
3,318
4,752
1,618
14
E L E C T R I C I T Y D I S T R I B U T I O N A N D T R A N S PORT NETWORKS (km)
3 1 9 , 6 1 3
t a g e
l
i n e s a t y e a r e n d
i n e s a t y e a r e n d
t a g e
l
|
2 0 1 8
H i g h - v o l
1 9 , 6 2 5
L o w - v o l
1 8 1 , 4 5 7
Medium-voltage lines at year end
118,531
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
e
u
2
n
9
v
e
9 , 4
R
e
1
Gross operating
margin 3,558
Capital
expenditure
1,433
Services
514
Eliminations
and adjustm
(5,895)
ents
Services
80
E n e l G r e e n
P o w e r 7 1 6
End-user
markets 14,920
Enel X
247
t u r e
c
k
t w o r
s 2 , 6 7 1
E n e l G r e e n
P o w e r 3 6 1
End-user
markets 676
Enel X
51
t u r e
c
t w o r k s
v
e
R
e r a ti o
1
g 6 , 3
e
u
n
n
e
e
al G
T h e r m
a n d Tr a din
G r o
a
r u
t
s
d N e
I n
f r
n
a
n
9
t i n
e r a ti o
2
g 4
a
r
n
e
din
e
p
s s o
al G
T h er m
a n d Tra
r g i n
g m a
r u
t
s
f r
I n
d N e
n
5
6
1 , 9
n
5
a
a
d i t u r e
n
e
I n
a
f
a
r
n
6
g
8
6
t
s
r u c t u r e
d N e t w o r k s
a
C
p
x
p it a l e
al
n
T h e r m
e r a ti o
d i n
n
d Tr a
e
G
a n
5
3 4
E n e l G r een
P o w e r 246
End-user
markets 107
Enel X
39
Services
28
Report on operations
57
Operations
Net electricity generation
Millions of kWh
Thermal
Nuclear
Hydroelectric
Wind
Other sources
2018
37,954
24,067
8,459
3,688
25
2017
Change
43,754
(5,800)
-13.3%
26,448
(2,381)
-9.0%
5,038
3,351
27
3,421
67.9%
337
(2)
10.1%
-7.4%
-5.6%
Total net generation
74,193
78,618
(4,425)
In 2018, net electricity generation totaled 74,193 million
production, which was partly offset by the increase in hy-
kWh, a reduction of 4,425 million kWh from 2017. This
droelectric and wind production, and in the reduction in
decrease is reflected in the lower thermal and nuclear
demand for electricity.
Contribution to gross thermal generation
Millions of kWh
Fuel oil
Natural gas
Coal
Nuclear fuel
Other fuels
Total
2018
2017
Change
5,770
6,907
8.9%
10.6%
6,319
9,750
8.6%
(549)
-8.7%
13.2%
(2,843)
-29.2%
23,340
35.9%
26,156
35.5%
(2,816)
-10.8%
25,031
38.5%
27,542
37.4%
(2,511)
-9.1%
3,947
6.1%
3,865
5.3%
82
2.1%
64,995
100.0%
73,632
100.0%
(8,637)
-11.7%
Gross thermal generation in 2018 totaled 64,995 million
decrease across all types of fuels, especially in natural gas
kWh, a decrease of 8,637 million kWh compared with the
and coal.
previous year. With regard to the mix used, there was a
Net efficient generation capacity
MW
Thermal plants
Nuclear plants
Hydroelectric plants
Wind farms
Other
at Dec. 31, 2018
at Dec. 31, 2017
Change
12,874
13,030
(156)
-1.2%
3,318
4,761
1,750
14
3,318
4,752
1,618
14
-
9
132
-
(15)
-
0.2%
8.2%
-
-0.1%
Total net efficient capacity
22,717
22,732
Net efficient capacity in 2018 amounted to 22,717 MW,
tilla and Alcúdia, which was largely offset by an increase in
a decrease of 15 MW compared with the previous year,
installed capacity in wind farms following the acquisition of
mainly due to the disposal of the combined-cycle and coal/
Parques Eólicos Gestinver.
fuel-oil plants (or parts of those plants) at Teruel, Compos-
58
Annual Report 2018
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
Total electricity distribution network (km)
Electricity transported on Enel’s distribution network (millions of kWh) (1)
(1) The figure for 2017 reflects a more accurate measurement of amounts transported.
2018
19,625
118,531
181,457
319,613
124,714
2017
19,560
117,886
180,336
317,782
126,360
Change
65
645
1,121
1,831
(1,646)
0.3%
0.5%
0.6%
0.6%
-1.3%
Electricity transported in 2018 totaled 124,714 million kWh, a decrease of 1,646 million kWh, which is essentially in line
with the trend in demand.
Electricity sales
Millions of kWh
Free market
Regulated market
Total electricity sold by Enel
2018
76,772
12,867
89,639
2017
83,036
13,477
96,513
Change
(6,264)
(610)
(6,874)
-7.5%
-4.5%
-7.7%
Electricity sales to end users in 2018 totaled 89,639 million kWh, a decrease of 6,874 million kWh compared with 2017.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
2018
19,492
3,558
1,724
1,433
The following tables break down performance by type of business in 2018.
2017
19,994
3,573
1,842
1,105
2017
6,233
2,786
497
2018
6,319
2,671
716
14,920
15,798
247
514
(5,895)
19,492
-
475
(5,795)
19,994
Change
(502)
(15)
(118)
328
-2.5%
-0.4%
-6.4%
29.7%
Change
86
(115)
219
(878)
247
39
(100)
(502)
1.4%
-4.1%
44.1%
-5.6%
-
8.2%
1.7%
-2.5%
Revenue
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Eliminations and adjustments
Total
Revenue in 2018 decreased by €502 million due to:
market (-€123 million) and on the free market (-€747 mil-
> a decrease of €878 million in revenue on End-user mar-
lion), as well as to a reduction in sales of value-added
kets due to lower volumes sold both on the regulated
services of €235 million, which were transferred to the
59
Report on operations new Enel X Business Line. These reductions were partly
the Enel Green Power Business Line, connected with
offset by an increase of €229 million in revenue from gas
greater quantities sold, which were consistent with the
commodity sales, which is reflected in the increase in
increase in production from hydroelectric sources, due
quantities sold;
above all to greater water availability compared with 2017,
> an increase of €86 million in revenue from Thermal Gen-
as well as to changes in the scope of consolidation due
eration and Trading, mainly related to the increase in
to the acquisitions of Parques Eólicos Gestinver and oth-
gas sales, largely to the electricity distribution companies
er smaller wind power companies. Here, too, a portion of
in the country and which are therefore also reflected in
this revenue was from electricity marketing companies
eliminations. Accompanying these effects were an in-
and is therefore reflected in eliminations;
crease in reimbursements for costs incurred in the gen-
> a decrease of €115 million in revenue from Infrastruc-
eration of electricity in the extra-peninsular area and the
ture and Networks operations, essentially due to lower
capital gain generated by the contribution in kind to the
fees for connections to the grid as a result of the applica-
capital increase of Front Marítim del Besòs SL. The re-
tion of IFRS 15;
duction in revenue from the sale of electricity partially
> an increase of €247 million in the revenue of Enel X,
offset these positive effects;
mainly related to sales of value-added services, which in
> an increase of €219 million in revenue from generation by
2017 were the prerogative of marketing companies.
Gross operating margin
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Total
2018
425
1,965
361
676
51
80
2017
783
2,086
199
467
-
38
3,558
3,573
Change
-45.7%
-5.8%
81.4%
44.8%
-
-
-0.4%
(358)
(121)
162
209
51
42
(15)
The gross operating margin amounted to €3,558 million,
> a decrease of €358 million in gross operating margin
a decrease of €15 million compared with 2017, reflecting:
recognized in Thermal Generation and Trading, which
> a decrease in the margin on Infrastructure and Net-
reflected the effect of the reimbursement of costs for
works operations, in the amount of €121 million, which
the “bono social” in 2017 (€222 million) and an increase
was affected by the aforementioned decrease in rev-
in costs for the provisioning of fuel;
enue for connections accompanied by a slight increase
> an increase of €162 million in the margin on generation
in costs for services and materials;
by the Enel Green Power Business Line, where the
> an increase of €209 million in gross operating margin
higher revenue mentioned above was partially offset by
on End-user markets, essentially due to the significant
the increase in operating costs, particularly for water di-
decrease in the costs for provisioning and transport of
version fees and charges for access to the transmission
energy, which more than compensated for the sharp re-
network (in line with the greater quantities produced);
duction in revenue, to which we can add a reduction in
> an increase of €51 million in revenue from value-added
costs for trading fees negotiated following the applica-
services related to the new Enel X Business Line.
tion of IFRS 15 (€70 million) and costs for value-added
services attributed to the Enel X Business Line starting
from 2018;
60
Annual Report 2018
Operating income
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Total
2018
(274)
1,220
208
494
37
39
2017
191
1,367
12
286
-
(14)
Change
(465)
(147)
196
208
37
53
-
-10.8%
-
72.7%
-
-
1,724
1,842
(118)
-6.4%
Operating income in 2018, including depreciation, amortiza-
fects mentioned above, to the impairment of certain assets
tion and impairment losses in the amount of €1,834 million
at the Alcúdia power plant (€82 million), and an increase in
(€1,731 million in 2017), came to €1,724 million, a decrease
depreciation and amortization, particularly for contract costs
of €118 million compared with 2017 due, in addition to the ef-
in application of IFRS 15 (€54 million).
Capital expenditure
Millions of euro
Thermal Generation and Trading
Infrastructure and Networks
Enel Green Power
End-user markets
Enel X
Services
Total
2018
345
668
246
107
39
28
2017
295
657
65
55
-
33
1,433
1,105
Change
16.9%
1.7%
-
94.5%
-
-15.2%
29.7%
50
11
181
52
39
(5)
328
Capital expenditure came to €1,433 million, up €328 mil-
on the line and replacement of the metering devices and
lion year on year. More specifically, capital expenditure
the capitalization of contract costs (€70 million) in end-
in 2018 mainly concerned the construction of new wind
user markets. Greater capital expenditure by the Thermal
farms and photovoltaic plants following the awarding of
Generation and Trading Business Line included the nuclear
projects in 2017. In addition, there was work on the dis-
plants at Ascó, Vandellòs and Almaraz.
tribution network for substations and transformers, work
61
Report on operations South America
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 20,997
Thermal plants
7,734
Hydroelectric plants
10,031
Wind farms
1,616
Other
1,616
2017 | 20,544
7,733
9,980
1,392
1,429
ELECTRICITY DISTRIBUTION AND TRANSPORT NETWORKS (km)
2018 | 624,653
High-voltage lines at year end
Low-voltage lines at year end
223,326
20,112
Medium-volta g e l i n e s a t y e a r e n d
381,214
62
Annual Report 2018
O F W H I C H
i n a
2 0 1 8
A r g e n t
4 , 4 1 9
l
B r a z i
3 , 2 5 0
l e
C h i
7 , 4 4 8
C o l o m b i a
3 , 5 8 3
P e r u
2 , 2 9 7
O t h e r
–
c o u n t r i e s
2017
4,419
2,975
7,475
3,467
2,158
50
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
e
u
2
n
4
e
v
4 , 7
R
e
1
n
e
v
e
R
u
e
e
a
n tin
3
2
A r g
1,3
z il
9
a
B r
6 , 5
2
t i n
a
r
e
p
r g i n
g m a
z il
7
5
B r
1 , 2
a
x
n
e
p
d i t u r e
z il
6
a
3
B r
9
a
C
p it a l e
a
n ti n
A r g
e
8
2 1
G r o
s s o
a
n tin
e
A r g
3 4 4
Gross operating
margin 4,370
Capital
expenditure
2,246
11
Other countries
l e
C h i
3 , 2 5 5
Colombia
2,261
Peru
1,300
l e
C h i
1 , 2 0 6
Colombia
1,038
Peru
497
10
Other countries
C h i l e
4 8 3
Colombia
397
Peru
211
South America
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 20,997
Thermal plants
7,734
Hydroelectric plants
10,031
Wind farms
1,616
Other
1,616
2017 | 20,544
7,733
9,980
1,392
1,429
ELECTRICITY DISTRIBUTION AND TRANSPORT NETWORKS (km)
2018 | 624,653
High-voltage lines at year end
20,112
Low-voltage lines at year end
223,326
Medium-volta g e l i n e s a t y e a r e n d
381,214
2017
4,419
2,975
7,475
3,467
2,158
50
O F W H I C H
2 0 1 8
A r g e n t
4 , 4 1 9
i n a
l
B r a z i
3 , 2 5 0
l e
C h i
7 , 4 4 8
C o l o m b i a
3 , 5 8 3
P e r u
2 , 2 9 7
O t h e r
–
c o u n t r i e s
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
Gross operating
margin 4,370
Capital
expenditure
2,246
11
Other countries
e
u
2
n
4
v
e
4 , 7
e
u
R
e
1
n
z il
a
B r
9
6 , 5
2
l e
C h i
3 , 2 5 5
Colombia
2,261
Peru
1,300
e
v
e
R
e
A r g
1,3
a
n tin
3
2
G r o
t i n
a
r
e
p
s s o
a
n tin
e
A r g
3 4 4
r g i n
z il
7
5
g m a
a
B r
1 , 2
l e
C h i
1 , 2 0 6
Colombia
1,038
Peru
497
10
Other countries
d i t u r e
z il
6
B r
9
3
a
n
e
a
C
p
a
x
p it a l e
n ti n
e
A r g
8
2 1
C h i l e
4 8 3
Colombia
397
Peru
211
Report on operations
63
Operations
Net electricity generation
Millions of kWh
Thermal
Hydroelectric
Wind
Other sources
Total net generation
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
- of which other countries
2018
22,441
36,135
6,138
3,183
67,897
13,949
9,840
20,885
14,054
8,999
170
2017
Change
25,727
(3,286)
-12.8%
33,597
3,661
1,642
64,627
14,825
7,161
20,231
14,766
7,493
151
2,538
2,477
1,541
3,270
(876)
2,679
654
(712)
7.6%
67.7%
93.8%
5.1%
-5.9%
37.4%
3.2%
-4.8%
1,506
20.1%
19
12.6%
Net generation in 2018 totaled 67,897 million kWh, an
and the start of operations of various plants in Brazil in
increase of 3,270 million kWh compared with 2017. This
early 2018;
increase is mainly attributable to:
> increased solar production in Brazil, Chile and Peru,
> increased wind power production in Brazil and Peru, due
which also reflects the increase in net efficient capacity.
mainly to the start of operations of new plants;
The reduction in thermal power generation, which was
> increased hydroelectric production, particularly concen-
particularly evident in Chile, Argentina and Brazil due to the
trated in Chile, Brazil and Argentina as a result of the
unavailability of the plants in Tarapacá (Chile), Costanera
more favorable water availability that characterized these
(Argentina), and Fortaleza (Brazil), was partially offset by
countries during the period under review and the acquisi-
an increase in production in Peru.
tion, at the end of 2017, of the Volta Grande plant in Brazil
Contribution to gross thermal generation
Millions of kWh
Fuel oil
Natural gas
Coal
Other fuels
Total
2018
2017
Change
316
1.4%
723
2.7%
(407)
-56.3%
19,656
83.9%
21,669
81.2%
(2,013)
-9.3%
2,986
12.7%
468
2.0%
3,134
1,144
11.8%
(148)
-4.7%
4.3%
(676)
-59.1%
23,426
100.0%
26,670
100.0%
(3,244)
-12.2%
Gross thermal generation in 2018 totaled 23,426 million
use of traditional fuels, particularly in Argentina, Brazil,
kWh, a decrease of 3,244 million kWh compared with the
and Chile.
previous year. This was essentially due to the decreased
64
Annual Report 2018
Net efficient generation capacity
MW
Thermal plants
Hydroelectric plants
Wind farms
Other
Total net efficient capacity
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
- of which other countries
at Dec. 31, 2018
at Dec. 31, 2017
Change
7,734
10,031
1,616
1,616
20,997
4,419
3,250
7,448
3,583
2,297
-
7,773
9,980
1,362
1,429
20,544
4,419
2,975
7,475
3,467
2,158
50
(39)
51
254
187
453
-
275
(27)
116
139
(50)
-0.5%
0.5%
18.6%
13.1%
2.2%
-
9.2%
-0.4%
3.3%
6.4%
-
Net efficient generation capacity in 2018 came to 20,997
Power São Abraão Eólica SA (28 MW), of the photovoltaic
MW, an increase of 453 MW compared with the previous
solar park Enel Green Power Horizonte MP Solar SA (103
year, essentially due to the greater installed capacity as a
MW), in Peru of the Wayra I wind farm (132 MW) and in
result of capital expenditure by the Group.
Colombia of the El Paso photovoltaic solar plant (86 MW).
The increase in generation capacity depends mainly on the
The 50 MW decrease in other countries was due to the
start of operations in Brazil of the Enel Green Power wind
sale in December of Enel Green Power Uruguay SA, which
farms Boa Vista Eólica SA (30 MW), Enel Green Power
held the Melowind wind farm through the subsidiary Es-
Morro do Chapéu Eólica SA (114 MW), and Enel Green
trellada SA.
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
2018
2017
Change
20,112
18,308
1,804
381,214
350,376
30,839
9.9%
8.8%
223,326
197,326
25,999
13.2%
Total electricity distribution network (km)
624,653
566,010
58,643
Electricity transported on Enel’s distribution network (millions of kWh) (1)
117,412
90,655
26,757
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
17,548
61,310
16,485
14,024
8,045
17,737
(189)
34,876
26,434
75.8%
16,318
13,790
7,934
167
234
111
1.0%
1.7%
1.4%
10.4%
29.5%
-1.1%
(1) The figure for 2017 reflects a more accurate measurement of amounts transported.
Energy transported in 2018 amounted to 117,412 million
sition of Enel Distribuição São Paulo, a Brazilian electricity
kWh, an increase of 26,757 million kWh compared with
distribution company.
2017, concentrated mainly in Brazil as a result of the acqui-
65
Report on operations
Electricity sales
Millions of kWh
Electricity sold by Enel
- of which Argentina
- of which Brazil
- of which Chile
- of which Colombia
- of which Peru
2018
91,075
14,515
48,061
12,808
8,884
6,807
2017
Change
74,672
16,403
14,877
(362)
22.0%
-2.4%
30,497
17,564
57.6%
13,232
9,389
6,677
(424)
(505)
130
-3.2%
-5.4%
1.9%
Electricity sales in 2018 totaled 91,075 million kWh, in-
to the growth in sales in Brazil following the acquisition
creasing by 16,403 million kWh compared with the previ-
of Enel Distribuição São Paulo, which was partly offset by
ous year. Similarly to the above, this increase is attributable
reductions in other countries.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
The following tables show a breakdown of performance by country in 2018.
Revenue
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2018
2017
Change
14,742
13,154
1,588
12.1%
4,370
2,976
2,246
4,204
2,970
3,002
166
6
3.9%
0.2%
(756)
-25.2%
2018
1,323
6,592
3,255
2,261
1,300
11
2017
1,393
4,763
3,667
2,116
1,202
13
Change
(70)
-5.0%
1,829
38.4%
(412)
145
98
(2)
-11.2%
6.9%
8.2%
-15.4%
14,742
13,154
1,588
12.1%
Revenue in 2018 posted an increase of €1,588 million. The
droelectric plant since September 28, 2017 (€61 million).
rise was primarily attributable to:
Compared with the previous year, this increase was par-
> an increase of €1,829 million in revenue in Brazil, of which
tially offset by the reduction in revenue from sales and
€2,076 million due to the acquisition, on June 7, 2018,
services of Enel Distribuição Rio (€193 million), Enel Dis-
of Enel Distribuição São Paulo as well as an increase in
tribuição Goiás (€58 million), Enel Geração Fortaleza (€51
revenue recognized by Enel Green Power Projetos I, the
million), and Enel Distribuição Ceará (€55 million), and by
holder of a thirty-year contract for the Volta Grande hy-
adverse exchange rate developments (€728 million);
66
Annual Report 2018 > a decrease of €70 million in revenue in Argentina, essen-
> a decrease of €412 million in revenue in Chile, essentially
tially due to the highly negative exchange rate effect deriv-
due to the reduction in sales to end users as a result of the
ing from the depreciation of the Argentine peso against
shift of customers from the regulated market to the free
the euro (€746 million), which was largely offset by revalu-
market (€150 million), the capital gain recognized in the 1st
ation due to hyperinflation (IAS 29) and by the distribu-
Quarter of 2017 on the sale of Electrogas (€143 million),
tion rate increases as a result of the application of ENRE
and adverse exchange rate developments (€94 million);
Resolution 64;
> an increase of €98 million in revenue in Peru, mainly due
> an increase of €145 million in revenue in Colombia, mainly
to greater electricity sales as a result of the increase in
due to the increase in rates, which was partly offset by
demand, which was only partly offset by adverse ex-
adverse exchange rate developments (€97 million);
change rate developments (€64 million).
Gross operating margin
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2018
344
1,275
1,206
1,038
497
10
2017
287
1,008
1,359
1,061
480
9
4,370
4,204
Change
19.9%
26.5%
-11.3%
-2.2%
3.5%
11.1%
3.9%
57
267
(153)
(23)
17
1
166
The gross operating margin amounted to €4,370 million,
> a decrease of €23 million in the margin in Colombia, es-
an increase of €166 million (+3.9%) compared with 2017, re-
sentially attributable to the increase in costs for energy
flecting:
purchases and adverse exchange rate developments;
> an increase of €267 million in the margin in Brazil, essen-
> an increase of €17 million in the gross operating margin in
tially due to the performance in renewables (€95 million,
Peru, mainly due to the increase in revenue from renew-
of which €51 million attributable to Enel Green Power Pro-
able resources due to the greater production of energy
jetos I, consolidated beginning in November 2017), the ac-
from solar and wind, which was partly offset by higher
quisition of Enel Distribuição São Paulo (€206 million), and
provisioning costs;
the increased margin of Enel Distribuição Goiás (€88 mil-
> an increase of €57 million in the gross operating margin
lion). These effects were only partially offset by the reduc-
in Argentina, due to the decrease in personnel costs and
tion in margins at Enel Geração Fortaleza (€97 million), due
a reduction in costs for fines following improvements in
to greater provisioning costs and Enel Distribuição Ceará
service quality. These increases were partially offset by
(€52 million), due to a decrease in revenue from the sale
adverse exchange rate developments resulting from the
of electricity, as well as adverse exchange rate develop-
depreciation of the Argentine peso against the euro.
ments in the amount of €174 million;
> a decrease of €153 million in the gross operating margin in
Chile, which was mainly affected by adverse exchange rate
developments (€32 million) and the effect of extraordinary
items in 2017, notably the capital gain noted earlier, net of
capital losses of €36 million on the abandonment of hy-
droelectric projects (primarily Neltume and Choshuenco);
67
Report on operations Operating income
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Other countries
Total
2018
210
679
879
851
350
7
2017
231
483
1,027
890
333
6
2,976
2,970
Change
-9.1%
40.6%
-14.4%
-4.4%
5.1%
16.7%
0.2%
(21)
196
(148)
(39)
17
1
6
Operating income in 2018 totaled €2,976 million, includ-
es of €160 million reflects the greater depreciation of wind
ing €1,394 million in depreciation, amortization and impair-
farms and photovoltaic plants operating in Brazil, Peru and
ment losses (€1,234 million in 2017), an increase of €6
Colombia, and changes in the scope of consolidation due
million over the previous year. More specifically, the in-
to the consolidation, starting in June 2018, of Enel Distri-
crease in depreciation, amortization and impairment loss-
buição São Paulo.
Capital expenditure
Millions of euro
Argentina
Brazil
Chile
Colombia
Peru
Total
2018
218
936
483
397
211
2017
259
1,475
543
309
416
2,246
3,002
Change
-15.8%
-36.5%
-11.0%
28.5%
-49.3%
-25.2%
(41)
(539)
(60)
88
(205)
(756)
Capital expenditure came to €2,246 million, down €756
above all, to the newly acquired Enel Distribuição São Pau-
million year on year. Capital expenditure in 2018 refers pri-
lo. The decrease compared with 2017 is attributable to the
marily to work on the distribution networks in Colombia,
completion of a number of wind farms and solar plants in
Argentina, Peru and Brazil, the latter of which attributable,
Brazil and Peru.
68
Annual Report 2018 69
Report on operations O F W H I C H
2 0 1 8
R u s s i a
8 , 8 7 8
O t h e r
8 8 3
c o u n t r i e s
2017
8,878
883
Europe and Euro-Mediterranean
Affairs
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 9,761
Thermal plants
8,878
Hydroelectric plants
19
Wind farms
741
Other
123
2017 | 9,761
8,878
19
741
123
ELECTRICITY DISTRIBUTION AND TRANSPORT NETWORKS (km)
2018 | 128,508
High-voltage lines at year end
Low-voltage lines at year end
86,935
6,511
Medium-volta g e l i n e s a t y e a r e n d
35,062
70
Annual Report 2018
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
e
u
n
1
R
e
v
2 , 3
6
e
e
n
u
m
a nia
1
8
o
R
1,2
e
v
e
R
Gross operating
margin 516
Capital
expenditure 390
R u s s i a
9 9 7
Other countries
83
r g i n
g m a
t i n
a
r
e
p
R u s s i a
2 3 2
Other countries
54
d i t u r e
n
e
p
x
R u s s i a
8 6
Other countries
122
G r o
s s o
o
R
m
2 3 0
a nia
a
C
p it a l e
n ia
a
2
R
o
m
1 8
Europe and Euro-Mediterranean
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 9,761
Affairs
Thermal plants
8,878
Hydroelectric plants
19
Wind farms
741
Other
123
2017 | 9,761
8,878
19
741
123
O F W H I C H
2 0 1 8
R u s s i a
8 , 8 7 8
O t h e r
8 8 3
c o u n t r i e s
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
ELECTRICITY DISTRIBUTION AND TRANSPORT NETWORKS (km)
2018 | 128,508
High-voltage lines at year end
6,511
Low-voltage lines at year end
86,935
Medium-volta g e l i n e s a t y e a r e n d
35,062
e
u
1
n
e
6
e
e
v
2 , 3
u
a nia
1
8
m
1,2
R
e
R
n
o
v
e
R
G r o
2017
8,878
883
Gross operating
margin 516
R u s s i a
9 9 7
Other countries
83
Capital
expenditure 390
r g i n
g m a
R u s s i a
2 3 2
t i n
a
r
e
p
s s o
Other countries
54
a nia
m
2 3 0
o
R
a
C
d i t u r e
n
e
p
x
p it a l e
n ia
a
2
R
o
m
1 8
R u s s i a
8 6
Other countries
122
Report on operations
71
Operations
Net electricity generation
Millions of kWh
Thermal
Hydroelectric
Wind
Other sources
Total net generation
- of which Russia
- of which other countries
2018
39,181
32
1,700
163
41,076
39,182
1,894
2017
39,830
22
1,814
173
41,839
39,830
2,009
Change
(649)
10
(114)
(10)
(763)
(648)
(115)
-1.6%
45.5%
-6.3%
-5.8%
-1.8%
-1.6%
-5.7%
In 2018, net electricity generation amounted to 41,076
This change was mainly due to a decrease in generation
million kWh, a decrease of 763 million kWh on the same
in Russia.
period of 2017.
Contribution to gross thermal generation
Millions of kWh
Natural gas
Coal
Total
2018
21,712
19,592
41,304
52.6%
47.4%
100.0%
2017
Change
22,384
19,647
42,031
53.3%
46.7%
100.0%
(672)
(55)
(727)
-3.0%
-0.3%
-1.7%
Gross thermal generation for 2018 posted a decrease of
production in Russia and shows a reduced use of com-
727 million kWh to settle at 41,304 million kWh. The de-
bined-cycle, coal and gas generation.
crease for the period reflects the aforementioned drop in
Net efficient generation capacity
MW
Thermal plants
Hydroelectric plants
Wind farms
Other
Total net efficient capacity
- of which Russia
- of which other countries
at Dec. 31, 2018
at Dec. 31, 2017
Change
8,878
19
741
123
9,761
8,878
883
8,878
19
741
123
9,761
8,878
883
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The net efficient capacity of 2018 was equal to 9,761 MW and was in line with that of the previous year.
72
Annual Report 2018
Electricity distribution and transport networks
High-voltage lines at year end (km)
Medium-voltage lines at year end (km)
Low-voltage lines at year end (km)
2018
6,511
35,062
86,935
2017
6,505
35,016
86,027
Total electricity distribution network (km) (1)
128,508
127,548
Electricity transported on Enel’s distribution network (millions of kWh)
15,640
15,206
(1) The figure for 2017 reflects a more accurate measurement of amounts transported.
Change
5
46
909
960
434
0.1%
0.1%
1.1%
0.8%
2.9%
Electricity transport, which was concentrated entirely in
2018. The increase derives mainly from the trend in de-
Romania, posted an increase of 434 million kWh (+2.9%),
mand in the Romanian market, and in particular in the re-
going from 15,206 million kWh to 15,640 million kWh in
gions served by Enel.
Electricity sales
Millions of kWh
Free market
Regulated market
2018
7,519
2,881
2017
6,318
4,029
Change
1,201
19.0%
(1,148)
-28.5%
Total electricity sold by Enel
10,400
10,347
53
0.5%
Electricity sales in 2018 increased by 53 million kWh, go-
increase was due to greater electricity sales in Romania
ing from 10,347 million kWh to 10,400 million kWh. This
due to the gradual liberalization of the market.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
(1) Does not include €44 million regarding units classified as “held for sale”.
2018
2,361
516
420
390
2017
2,411
543
306
307 (1)
Change
(50)
(27)
114
83
-2.1%
-5.0%
37.3%
27.0%
73
Report on operations
The following tables shows a breakdown of performance by country in 2018.
Revenue
Millions of euro
Romania
Russia
Other countries
Total
2018
1,281
997
83
2,361
2017
1,180
1,135
96
2,411
Change
101
(138)
(13)
(50)
8.6%
-12.2%
-13.5%
-2.1%
Revenue for 2018 amounted to €2,361 million, a decrease
> an increase of €101 million in revenue in Romania, es-
of €50 million (-2.1%) from the previous year. The perfor-
sentially connected to the greater volumes transported
mance was related to the following factors:
and sold, which more than offset the reduction in elec-
> a decrease of €138 million in revenue in Russia related
tricity distribution rates and the negative impact of the
mainly to the weakening of the ruble against the euro
application of IFRS 15. Revenue for new connections to
(€123 million) and the decrease in unit prices and in
the grid are deferred over the duration of the contract;
output;
> a decrease of €13 million in revenue in other countries.
Gross operating margin
Millions of euro
Romania
Russia
Other countries
Total
2018
2017
Change
230
232
54
516
232
270
41
543
(2)
(38)
13
(27)
-0.9%
-14.1%
31.7%
-5.0%
The gross operating margin amounted to €516 million, a
reflects the impact of IFRS 15 as discussed above, which
decrease of €27 million compared with 2017. This perfor-
was only partially offset by a decrease in customer acqui-
mance was mainly due to:
sition costs, which, with application of the new standard,
> a decrease of €38 million in the operating margin in Rus-
are now capitalized under intangible assets. This factor
sia due to adverse exchange rate developments and the
was accompanied by a decline in the margin for environ-
decrease in the generation margin;
mental certificates.
> a reduction of €2 million in the margin in Romania, which
Operating income
Millions of euro
Romania
Russia
Other countries
Total
2018
2017
Change
95
169
156
420
114
210
(18)
306
(19)
(41)
174
114
-16.7%
-19.5%
-
37.3%
Operating income amounted to €420 million in 2018, an
ing to property, plant and equipment and intangible assets
increase of €114 million. This increase, in addition to being
in Greece in the amount of €117 million and of the impair-
influenced by the changes described above, was signifi-
ment losses recognized in 2017 on geothermal assets in
cantly affected by the reversal of impairment losses relat-
Germany (€42 million).
74
Annual Report 2018 Capital expenditure
Millions of euro
Romania
Russia
Other countries
Total
2018
182
86
122
390
2017
134
109
64
307 (1)
Change
48
(23)
58
83
35.8%
-21.1%
90.6%
27.0%
(1) Does not include €44 million regarding units classified as “held for sale”.
Capital expenditure came to €390 million, an increase
utable to electricity distribution grids. These factors were
of €83 million compared with the previous year. The rise
only partially offset by a decline in investment in Russia
mainly reflected the investments in wind farms in Greece
and Germany.
and an increase in investment in Romania, primarily attrib-
75
Report on operations North and Central America
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 3,827
Hydroelectric plants
623
Wind farms
2,940
Other
264
2017 | 3,533
623
2,566
344
76
Annual Report 2018
t e d S t a t e s a n d C a n a d a
O F W H I C H
2 0 1 8
U n i
2 , 9 2 1
M e x i c o
2 9 9
P a n a m a
3 6 2
O t h e r
2 4 5
c o u n t r i e s
2017
2,092
843
354
244
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
Gross operating
margin 708
Capital expenditure
1 3731
e
u
n
6
R
U
e
v
1 , 4
3
e
u
e
n
nit e
9 0 3
e
v
e
R
d S t a t e
a
d
a
n
a
d C
n
s a
a
r
e
p
d S t a t e
G r o
s s o
U
nit e
3 9 5
M e x i c o
2 9 7
r g i n
g m a
t i n
d C
n
s a
a
d
a
n
a
M e x i c o
1 4 0
d i t u r e
n
e
p
x
d C a
n
s a
M e x i c o
2 0 6 1
a d a
n
a
C
p it a l e
d S t a t e
U
nit e
1,1
4
5
€
e
d
c l u
o t i n
s n
e
o
(1 ) D
Panama
151
Panama
113
Panama
7
6
Other countries
i o n r e g a r d i ng units classified as “held for sale”.
l
l
3 7 5 m i
87
Other countries
Other countries
60
North and Central America
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 3,827
Hydroelectric plants
623
Wind farms
2,940
Other
264
2017 | 3,533
623
2,566
344
O F W H I C H
2 0 1 8
t e d S t a t e s a n d C a n a d a
U n i
2 , 9 2 1
M e x i c o
2 9 9
P a n a m a
3 6 2
c o u n t r i e s
O t h e r
2 4 5
2017
2,092
843
354
244
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
Gross operating
margin 708
Capital expenditure
1 3731
R
U
e
v
e
R
e
u
6
n
e
3
e
e
v
1 , 4
u
n
d S t a t e
nit e
9 0 3
a
d
a
n
a
d C
n
s a
g m a
d C
a
n
t i n
s a
a
r
e
p
d S t a t e
G r o
s s o
nit e
3 9 5
U
M e x i c o
2 9 7
r g i n
a
d
a
n
M e x i c o
1 4 0
Panama
151
Panama
113
87
Other countries
Other countries
60
a
C
p
x
p it a l e
nit e
1,1
5
U
4
d S t a t e
d i t u r e
a d a
d C a
n
n
n
e
s a
€
e
d
c l u
o t i n
s n
e
o
(1 ) D
M e x i c o
2 0 6 1
Panama
7
6
Other countries
i o n r e g a r d i ng units classified as “held for sale”.
l
l
3 7 5 m i
Report on operations
77
Operations
Net electricity generation
Millions of kWh
Hydroelectric
Wind
Other sources
Total net generation
- of which United States and Canada
- of which Mexico
- of which Panama
- of which other countries
2018
2,871
8,413
1,149
12,433
7,133
2,619
1,808
873
2017
2,681
6,920
192
9,793
5,313
2,025
1,528
927
Change
190
7.1%
1,493
21.6%
957
2,640
1,820
594
280
(54)
-
27.0%
34.3%
29.3%
18.3%
-5.8%
In 2018, net electricity generation totaled 12,433 million
due to the start of operations of the Villanueva and Don
kWh, an increase of 2,640 million kWh from 2017. This
José plants, which was partially offset by the lower quanti-
increase is attributable to the increase in generation in
ties produced by wind power (253 million kWh), following
the United States and Canada (1,820 million kWh) mainly
the sale of eight wind farms (“Project Kino”), and greater
related to wind power (1,753 million kWh) following the
quantities produced by hydroelectric (260 million kWh) and
start of operations of the Rock Creek, Thunder Ranch and
solar plants (20 million kWh) in Panama. These increases
Red Dirt wind farms at the end of 2017. This was accom-
were partly offset by the lower quantities produced from
panied by an increase in quantities produced in Mexico
hydroelectric sources in Guatemala (40 million kWh) and
(594 million kWh), predominantly solar (838 million kWh),
Costa Rica (14 million kWh).
Net efficient generation capacity
MW
Hydroelectric plants
Wind farms
Other
Total net efficient capacity
- of which United States and Canada
- of which Mexico
- of which Panama
- of which other countries
at Dec. 31, 2018
at Dec. 31, 2017
Change
623
2,940
264
3,827
2,921
299
362
245
623
2,566
344
3,533
2,092
843
354
244
-
374
(80)
294
829
-
14.6%
-
8.3%
39.6%
(544)
-64.5%
8
1
2.3%
0.4%
Net efficient capacity for 2018 came to 3,827 MW, an in-
to the new HillTopper, Rattlesnake Creek, Diamond Vista,
crease of 294 MW compared with the previous year, mainly
and High Lonesome plants, partially offset by the decrease
due to the increase in net efficient power for wind farms
in net installed capacity in Mexico following the sale of the
in the United States and Canada (802 million MW) related
eight wind and solar plants there.
78
Annual Report 2018
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
(1) Does not include €375 million regarding units classified as “held for sale”.
(2) Does not include €325 million regarding units classified as “held for sale”.
The table below shows performance by geographical area in 2018.
Revenue
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2018
1,438
708
454
2017
1,187
759
553
Change
251
(51)
(99)
21.1%
-6.7%
-17.9%
1,373 (1)
1,802 (2)
(429)
-23.8%
2018
2017
Change
903
297
151
87
716
142
149
180
1,438
1,187
187
155
2
(93)
251
26.1%
-
1.3%
-51.7%
21.1%
Revenue for 2018 came to €1,438 million, up €251 million
for services provided to the eight Mexican project compa-
(21.1%) year on year. The performance was related to the
nies, which were partially sold with loss of control on Sep-
following factors:
tember 30, 2018 (€82 million), and an increase in revenue
> an increase of €187 million in revenue in the United States
from the sale of green certificates (€8 million);
and Canada, essentially due to greater revenue earned by
> an increase of €2 million in revenue in Panama, mainly
the Enel X Business Line, in particular by Enel X North
due to the greater quantities produced by hydroelectric
America (formerly EnerNOC) (€181 million) and eMotor-
sources as described in relation to operations;
Werks (€5 million);
> a decrease of €93 million in revenue in other countries,
> an increase of €155 million in revenue in Mexico, mainly
mainly due to the indemnities for losses recognized
due to the increase in revenue from electricity sales (€61
in 2017 related to the Chucas wind farm in Costa Rica,
million) related to the greater quantities produced by solar
which were granted to the Group by the Instituto Costar-
sources, as described in relation to operations, to revenue
ricense de Electricidad (ICE).
Gross operating margin
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2018
2017
Change
395
140
113
60
708
408
98
101
152
759
(13)
42
12
(92)
(51)
-3.2%
42.9%
11.9%
-60.5%
-6.7%
79
Report on operations The gross operating margin amounted to €708 million,
> an increase of €12 million in the margin achieved in
down €51 million (-6.7%) compared with 2017. The de-
Panama, attributable to the greater quantities produced
crease is attributable to the following factors:
and to a reduction in electricity provisioning costs;
> a decrease of €13 million in the margin achieved in the
> a reduction in the margin posted in other countries, es-
United States and Canada due to an increase in person-
sentially due to the decline in revenue recognized by
nel and operating costs;
PH Chucas in reflection of the indemnities received in
> an increase of €42 million in the margin in Mexico,
2017.
which benefited from the increase in volumes pro-
duced as described above, which was partially offset
by higher operating costs;
Operating income
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2018
233
94
98
29
454
2017
293
52
87
121
553
Change
(60)
42
11
(92)
(99)
-20.5%
80.8%
12.6%
-76.0%
-17.9%
Operating income in 2018 amounted to €454 million, a
losses, mainly reflecting greater depreciation relating to
decrease of €99 million, taking account of an increase of
the start of operations of new plants in the United States.
€48 million in depreciation, amortization and impairment
Capital expenditure
Millions of euro
United States and Canada
Mexico
Panama
Other countries
Total
2018
1,154
206 (1)
7
6
2017
1,305
454 (2)
10
33
1,373
1,802
Change
(151)
(248)
(3)
(27)
(429)
-11.6%
-54.6%
-30.0%
-81.8%
-23.8%
(1) Does not include €375 million regarding units classified as “held for sale”.
(2) Does not include €325 million regarding units classified as “held for sale”.
Capital expenditure came to €1,373 million in 2018,
and High Lonesome (€81 million) wind farms in the United
down €429 million year on year. Capital expenditure in
States and to the Dolores (€69 million) and Parque Amistad
2018 mainly refers to the HillTopper (€229 million), Rattle-
(€90 million) wind farms and the Magdalena photovoltaic
snake Creek (€332 million), Diamond Vista (€320 million)
plant (€38 million) in Mexico.
80
Annual Report 2018 81
Report on operations Africa, Asia and Oceania
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 694
Wind farms
371
Other
323
2017 | 694
371
323
82
Annual Report 2018
O F W H I C H
2 0 1 8
S o u t h A f
5 2 2
i c a
r
I n d i a
1 7 2
2017
522
172
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
G ro s s operating
m a rgin 54
Capital expenditure
142
e
u
n
e
1
e
v
0
u
e
1
n
a
o u t h A fric
8 3
R
e
S
v
e
R
I n d i a
1 5
r g i n
g m a
I n d i a
9
t i n
a
r
e
p
G r o
s s o
S
5 0
a
o u t h A fric
a
C
p
x
e
a
p it a l e
u t h A fri c
o
S
4
1 0
Other countries
3
Other countries
(5)
d i t u r e
n
I n d i a
2 7
Other countries
11
Africa, Asia and Oceania
NET EFFICIENT GENERATION CAPACITY (MW)
2018 | 694
Wind farms
371
Other
323
2017 | 694
371
323
O F W H I C H
2 0 1 8
S o u t h A f
5 2 2
r
i c a
I n d i a
1 7 2
2017
522
172
e u r o )
( m i l l i o n s o f
0 1 8
e i n 2
c
n
r m a
e r f o
P
G ro s s operating
m a rgin 54
Capital expenditure
142
e
u
n
e
1
e
v
0
u
e
1
n
a
o u t h A fric
8 3
R
e
S
v
e
R
G r o
r
e
p
s s o
o u t h A fric
S
5 0
I n d i a
1 5
r g i n
g m a
I n d i a
9
t i n
a
a
Other countries
3
Other countries
(5)
a
C
p
x
p it a l e
u t h A fri c
o
S
4
1 0
d i t u r e
n
e
a
I n d i a
2 7
Other countries
11
Report on operations
83
Operations
Net electricity generation
Millions of kWh
Wind
Other sources
Total net generation
- of which South Africa
- of which India
2018
933
574
1,507
1,192
315
2017
892
589
1,481
1,156
325
Change
41
(15)
26
36
(10)
4.6%
-2.5%
1.8%
3.1%
-3.1%
Net generation in 2018 totaled 1,507 million kWh for an
plant, which went into operation in February 2017. Com-
increase of 26 million kWh compared with 2017. This in-
pared with the previous year, adverse weather conditions
crease is mainly attributable to the greater production of
resulted in a decrease in solar generation in South Africa
wind energy (41 million kWh), particularly in South Africa
(15 million kWh) and wind generation in India (10 million
(51 million kWh) and mainly attributable to the Gibson Bay
kWh).
Net efficient generation capacity
MW
Wind farms
Other
Total net efficient capacity
- of which South Africa
- of which India
at Dec. 31, 2018 at Dec. 31, 2017
Change
371
323
694
522
172
371
323
694
522
172
-
-
-
-
-
-
-
-
-
-
Net efficient capacity in 2018 came to 694 MW, in line with the previous year.
Performance
Millions of euro
Revenue
Gross operating margin
Operating income
Capital expenditure
The tables below show financial performance by geographical area in 2018.
2018
101
54
10
142
2017
Change
96
57
15
30
5
(3)
(5)
112
5.2%
-5.3%
-33.3%
-
84
Annual Report 2018
Revenue
Millions of euro
South Africa
India
Other countries
Total
2018
2017
Change
83
15
3
101
80
16
-
96
3
(1)
3
5
3.8%
-6.3%
-
5.2%
Revenue for 2018 came to €101 million, up €5 million year
duction and sale of electricity by the Pulida and Gibson Bay
on year. This increase was mainly due to the increased pro-
plants in South Africa.
Gross operating margin
Millions of euro
South Africa
India
Other countries
Total
2018
2017
Change
50
9
(5)
54
53
8
(4)
57
(3)
1
(1)
(3)
-5.7%
12.5%
-25.0%
-5.3%
The gross operating margin amounted to €54 million in
flects the greater costs recognized in South Africa, Austra-
2018, down €3 million compared with 2017. The change re-
lia and Morocco.
Operating income
Millions of euro
South Africa
India
Other countries
Total
2018
2017
Change
13
4
(7)
10
18
-
(3)
15
(5)
4
(4)
(5)
-27.8%
-
-
-33.3%
Operating income totaled €10 million in 2018, a decline of €5 million taking account of an increase of €2 million in
depreciation, amortization and impairment losses.
Capital expenditure
Millions of euro
South Africa
India
Other countries
Total
2018
104
27
11
142
2017
Change
27
3
-
30
77
24
11
112
-
-
-
-
Capital expenditure came to €142 million in 2018, up
photovoltaic plants in South Africa (Round 4), India (Coral)
€112 million year on year. Investments mainly concerned
and Zambia (Scaling Solar).
85
Report on operations Other, eliminations and adjustments
Performance
Millions of euro
Revenue (net of eliminations)
Gross operating margin
Operating income
Capital expenditure
2018
704
(159)
(182)
89
2017
389
(346)
(364)
72
Change
315
187
182
17
81.0%
54.0%
50.0%
23.6%
Revenue net of eliminations for 2018 amounted to €704
The operating loss for 2018 was €182 million, an im-
million, an increase of €315 million from the previous year.
provement of €182 million compared with the previous
The change is essentially attributable to:
year, taking account of an increase of €5 million in de-
> the capital gain of €150 million recognized by Enel Green
preciation, amortization, and impairment, in line with the
Power SpA following the partial sale, with loss of control,
change in the margin.
of eight special purpose vehicles (SPVs), owners of the
same number of plants in operation and under construc-
tion in Mexico (“Project Kino”), as well as the income
recognized following that sale due to the remeasure-
Capital expenditure
ment at fair value of the remaining 20% owned by the
Capital expenditure for 2018 came to €89 million, an
Group (€40 million);
increase of €17 million compared with 2017, and mainly
> the capital gain of €18 million on the sale by Enel Green
concerned the new Enel X Business Line and investments
Power SpA of 100% of the subsidiary Enel Green Power
in software by Enel SpA.
Uruguay;
> the inclusion in the Central area of the Global functions of
certain companies in the Italy area.
The gross operating margin for 2018, a negative €159
million, represents an improvement of €187 million com-
pared with the previous year. This trend was positively
affected by the capital gains and remeasurement at fair
value noted earlier. In the absence of these factors, the
performance of this margin would have worsened by €21
million.
86
Annual Report 2018 Performance and financial
position of Enel SpA
Performance
The following table summarizes the performance of Enel SpA in 2018 and 2017:
Millions of euro
Revenue
Revenue from sales and services
Other revenue and income
Total
Costs
Consumables
Services, leases and rentals
Personnel costs
Other operating expenses
Total
Gross operating margin
Depreciation, amortization and impairment losses
Operating income
Net financial income/(expense) and income from equity investments
Income from equity investments
Financial income
Financial expense
Total
Income before taxes
Income taxes
NET INCOME FOR THE YEAR
2018
2017
Change
38
15
53
1
127
109
39
276
(223)
(331)
108
3,567
1,946
2,349
3,164
3,272
(184)
3,456
120
13
133
1
165
174
20
360
(227)
15
(242)
3,033
3,093
3,774
2,352
2,110
(160)
2,270
(82)
2
(80)
-
(38)
(65)
19
(84)
4
(346)
350
534
(1,147)
(1,425)
812
1,162
(24)
1,186
Revenue from sales and services amounted to €38 mil-
Thermal Generation Srl, and Enel Italia Srl, and negative ad-
lion (€120 million in 2017) and essentially regards services
justments related to previous years.
provided to subsidiaries as part of Enel SpA’s management
Other revenue and income amounted to €15 million, up
and coordination functions and the rebilling of costs incurred
€2 million compared with the previous year. In both years,
by Enel SpA but pertaining to the subsidiaries.
the item is essentially composed of the rebilling of costs for
The overall decrease, of €82 million, was essentially due to
the personnel of Enel SpA seconded to other Group com-
the reduction in revenue deriving from the provision of tech-
panies.
nical and management services following both the reorgani-
zation of the global units at the beginning of 2018, within the
Costs for consumables amounted to €1 million in 2018,
scope of which the Global Business Lines Infrastructure &
unchanged on the previous year.
Networks and Thermal Generation, as well as Global Service
Procurement, were transferred to the wholly owned subsid-
Costs for services, leases and rentals amounted to €127
iaries Enel Global Infrastructure & Networks Srl, Enel Global
million in 2018 (€165 million at December 31, 2017), of
87
Report on operations
which charges from third parties in the amount of €54 mil-
Accordingly, operating income of €108 million improved
lion and from Group companies in the amount of €73 mil-
by €350 million compared with 2017.
lion. The former mainly regarded communication services,
Income from equity investments amounted to €3,567
technical and professional services as well as strategic,
million (€3,033 million in 2017) and regards dividends and
management and corporate organization consulting and IT
interim dividends approved in 2018 by subsidiaries and as-
services. Those in respect of services provided by Group
sociates in the amount of €3,557 million and by other enti-
companies regard IT and administrative services and pur-
ties in the amount of €10 million. This is an increase of €534
chasing, as well as rentals and personnel training received
million over the previous year.
from Enel Italia, and costs for the personnel of a number of
Group companies seconded to Enel SpA.
Net financial expense amounted to €403 million and es-
sentially reflects interest expense on financial debt (€666
Personnel costs came to €109 million in 2018, a decrease
million), offset by interest and other income on current and
of €65 million compared with the previous year. This change
non-current financial assets (€288 million).
is mainly attributable to the transfers described above,
The decrease in net financial expense on the previous
which led to a consequent reduction in salaries and wages
year, equal to €278 million, was essentially the result of
and related social security costs.
lower interest expense on financial payables (€194 million),
which benefited from favorable interest rate developments,
Other operating expenses amounted to €39 million in
and the increase in other financial income on guarantees
2018, an increase of €19 million compared with 2017, main-
pledged in favor of Group companies (€78 million).
ly due to allocations to provisions for risks and charges in
the amount of €15 million.
Income taxes showed a tax receivable of €184 million,
mainly due to the reduction in taxable income for IRES
In the light of the above, the gross operating margin
purposes compared with statutory taxable income as a re-
was a negative €223 million, an improvement of €4 million
sult of the exclusion of 95% of dividends received from
compared with the previous year, mainly attributable to the
subsidiaries and the deductibility of Enel SpA interest ex-
combined effect of the reduction in revenue and in person-
pense for the Group’s consolidated taxation mechanism in
nel costs and costs for services, leases and rentals.
accordance with corporate income tax law (Article 96 of the
Depreciation, amortization and
impairment
losses
Compared with the previous year (a tax receivable of €160
amounted to €331 million in 2018, an increase of €346 mil-
million), the increase of €24 million was mainly due to non-
Uniform Income Tax Code).
lion compared with 2017, due essentially to the writeback
recurring items.
of the equity investment held in Enel Produzione SpA (€403
million), which was partially offset by the impairment losses
Net income for the year totaled €3,456 million, compared
on the investments in Enel Investment Holding BV (€15 mil-
with €2,270 million the previous year.
lion) and Enel Russia PJSC (€40 million).
88
Annual Report 2018 Analysis of the financial position
Millions of euro
Net non-current assets:
- property, plant and equipment and intangible assets
- equity investments
- net other non-current assets/(liabilities)
Total
Net current assets:
- trade receivables
- net other current assets/(liabilities)
- trade payables
Total
Gross capital employed
Sundry provisions:
- employee benefits
- provisions for risks and charges and net deferred taxes
Total
Net capital employed
Shareholders’ equity
NET FINANCIAL DEBT
at Dec. 31, 2018
at Dec. 31, 2017
Change
56
45,715
(472)
45,299
191
(1,853)
(82)
(1,744)
43,555
(231)
109
(122)
43,433
27,943
15,490
41
42,811
(667)
42,185
237
(1,612)
(137)
(1,512)
40,673
(273)
87
(186)
40,487
27,236
13,251
15
2,904
195
3,114
(46)
(241)
55
(232)
2,882
42
22
64
2,946
707
2,239
Net non-current assets amounted to €45,299, an increase
> an increase of €195 million in net other non-current as-
of €3,114 million. This was attributable to:
sets/(liabilities), which at December 31, 2018 showed a
> an increase of €2,904 million in the value of equity invest-
net liability of €472 million (net other non-current liabili-
ments, which were essentially affected by the following
ties of €667 million at December 31, 2017). The change
transactions: the recapitalization of the subsidiaries e-dis-
is essentially attributable to the decrease in the value
tribuzione SpA (€2,275 million) and Enel X Srl (€518 mil-
of non-current derivative liabilities (€875 million), which
lion); the payment on capital account to the joint venture
was partially offset by the decrease in the value of non-
OpEn Fiber SpA (€125 million); the acquisition of the in-
current derivative assets (€662 million);
vestments held by Enel Investment Holding BV, a wholly
> the €15 million change in property, plant and equipment
owned Dutch subsidiary, in the Russian companies Enel
and intangible assets resulting from capital expenditure
Russia PSJC and RusEnergoSbyt LLC, and in the Roma-
(totaling €34 million), depreciation and amortization (€17
nian companies Enel Romania SA, E-Distribuţie Banat SA,
million) for the year, and the transfer of intangible assets
E-Distribuţie Dobrogea SA, E-Distribuţie Muntenia SA,
to Enel Global Infrastructure & Networks Srl, Enel Global
Enel Energie SA, and Enel Energie Muntenia SA, as well
Thermal Generation Srl, and Enel Italia Srl (€2 million).
as in the Dutch company Enel Insurance NV for a total
value of €2,922 million; the reduction in the value of the
Net current assets came to a negative €1,744 million, an
equity investment in Enel Investment Holding BV (€4,002
increase of €232 million on December 31, 2017. The change
million) following the reduction of its share capital (€1,592
is attributable to:
million) and the distribution of the share premium reserve
> an increase of €241 million in net other current liabilities,
(€2,410 million). The adjustments to the value of the in-
mainly reflecting the liability to shareholders for the in-
vestments held in Enel Produzione SpA, Enel Investment
terim dividend on 2018 earnings approved by the Board
Holding BV and Enel Russia PJSC also had an effect;
of Directors of Enel SpA on November 6, 2018, and to be
89
Report on operations
paid as from January 23, 2019 (equal to €1,432 million in
Shareholders’ equity came to €27,943 million at Decem-
2018 and €1,068 million in 2017);
ber 31, 2018, an increase of €707 million on the previous
> a decrease of €46 million in trade receivables, mainly in
year. More specifically, the change is attributable to the
respect of Group companies for management and coor-
recognition of net income for 2018 (€3,478 million), the dis-
dination services from Enel SpA;
tribution of the balance of the dividend for 2017 (totaling
> a decrease of €55 million in trade payables.
€1,342 million), and the interim dividend for 2018 (totaling
Net capital employed came to €43,433 million as at De-
€1,423 million).
cember 31, 2018, and was funded by €27,943 million in
Net financial debt amounted to €15,490 million at the end
shareholders’ equity and €15,490 million in net financial
of the year, with a debt/equity ratio of 55.4% (48.7% at the
debt.
end of 2017).
90
Annual Report 2018 Analysis of the financial structure
The following table shows the composition of and changes in net financial debt:
Millions of euro
Long-term debt:
- bank borrowings
- bonds
- debt assumed and loans from subsidiaries
Long-term debt
- financial receivables due from others
Net long-term debt
Short-term debt/(liquidity):
- short-term portion of long-term borrowings
- short-term bank borrowings
- cash collateral received
Short-term debt
- short-term portion of long-term financial receivables
- short-term portion of loans assumed/granted
- other short-term financial receivables
- cash collateral paid
- net short-term financial position with Group companies
- cash and cash equivalents and short-term securities
Net short-term debt/(liquidity)
NET FINANCIAL DEBT
at Dec. 31, 2018
at Dec. 31, 2017
Change
1,048
8,208
4,141
13,397
(128)
13,269
806
45
240
1,091
(1)
-
(12)
(1,253)
4,403
(2,007)
2,221
15,490
1,039
8,541
1,200
10,780
(6)
10,774
3,654
245
256
4,155
(1)
(27)
1
(2,074)
2,912
(2,489)
2,477
13,251
9
(333)
2,941
2,617
(122)
2,495
(2,848)
(200)
(16)
(3,064)
-
27
(13)
821
1,491
482
(256)
2,239
Net financial debt at December 31, 2018, amounted
the subsidiary Enel Holding Chile Srl in the amount of
to €15,490 million, an increase of €2,239 million, the re-
€691 million;
sult of an increase in the net long-term debtor position of
> the decrease of €2,848 million in the short-term portion
€2,495 million, partly offset by a decrease of €256 million
of long-term loans due to redemptions of bonds matur-
in net short-term financial debt.
ing during the year, partially offset by new issues that
matured;
The main transactions in 2018 impacting financial debt can
> a decrease of €200 million in short-term bank borrow-
be summarized as follows:
ings;
> a net decrease of €333 million in bonds due to imple-
> a decrease in cash collateral paid to banks in the amount
mentation of the bond portfolio restructuring program,
of €821 million;
by way of the renegotiation and concomitant new issue
> an increase of €1,491 million in the net debtor position
of hybrid bonds in May;
with Group companies on the intercompany current ac-
> the increase, compared with the amount recognized at
count.
December 31, 2017, of long-term loans from subsidiar-
ies, in particular the loan agreements between Enel SpA
Cash and cash equivalents amounted to €2,007 million,
and Enel Finance International NV signed in June and
a decrease of €482 million compared with December 31,
December for a total of €2,250 million, as well as the
2017, reflecting normal operations related to the central-
loan from the same company following the merger of
ized treasury functions performed by the Parent Company.
91
Report on operations
Cash flows
Millions of euro
Cash and cash equivalents at the start of the year
Cash flows from operating activities
Cash flows from investing/disinvesting activities
Cash flows from financing activities
Cash and cash equivalents at year end
2018
2,489
3,449
(2,587)
(1,344)
2,007
2017
3,038
2,465
(48)
(2,966)
2,489
Change
(549)
984
(2,539)
1,622
(482)
Cash flows from financing activities came to a negative
the recapitalization of the subsidiaries e-distribuzione SpA
€1,344 million (€2,966 million in 2017). They reflected the
and Enel X Srl.
repayment of bonds and the payment of dividends for 2017
(€2,410 million).
The cash requirements generated by financing and invest-
ing activities were funded by cash flows generated by op-
Cash flows from investing activities were a negative
erating activities (a positive €3,449 million, compared with
€2,587 million (€48 million in 2017), and were essentially
€2,465 million in 2017), essentially reflecting dividends re-
generated by the net effect of the operation involving Enel
ceived from subsidiaries (€3,510 million) and the use of
SpA’s acquisition of the investments held by Enel Invest-
cash and cash equivalents, which at December 31, 2018
ment Holding BV, a wholly owned Dutch subsidiary, in the
consequently amounted to €2,007 million (€2,489 million
Romanian companies, in Enel Russia and RusEnergoSbyt
at the start of the year).
and in the Dutch company Enel Insurance NV, as well as
92
Annual Report 2018
Significant
events in 2018
Issue of new green bond
in Europe for €1,250
million
Enel has been included in four of ECPI’s indices:
> ECPI Global Renewable Energy Equity Index, which se-
lects the 40 highest ESG-rated companies active in the
production or trading of energy from renewable sources;
> ECPI Global Climate Change Equity Index, which offers
On January 9, 2018, Enel Finance International success-
investors exposure to companies that are best placed to
fully placed its second green bond on the European mar-
seize the opportunities presented by the challenge of cli-
ket. It is reserved for institutional investors and is backed
mate change;
by a guarantee issued by Enel.
> ECPI Euro ESG Equity Index, which is composed of the
The issue amounts to a total of €1,250 million and pro-
320 companies with the largest market capitalization in
vides for repayment in a single instalment at maturity on
the Eurozone market that meet ECPI ESG criteria;
September 16, 2026 and the payment of a fixed-rate cou-
> ECPI World ESG Equity Index, a broad benchmark rep-
pon equal to 1.125%, payable annually in arrears in the
resentative of developed market companies that meet
month of September as from September 2018. The issue
ECPI ESG criteria.
price was set at 99.184% and the effective yield at matu-
The ECPI Index series provides an essential tool to analyze
rity is equal to 1.225%.
companies’ risk and performance regarding their ESG-relat-
The transaction has received orders amounting to ap-
ed activities and to assess the performance of sustainabil-
proximately €3 billion, with the significant participation of
ity-driven asset managers. The socially responsible criteria
Socially Responsible Investors (“SRI”), enabling the Enel
used to select the indices’ constituents enable investors to
Group to continue to diversify its investor base. The net
express their interest in sustainability issues and to move
financial resources raised by the issue – carried out under
them up the corporate agenda.
the “€35,000,000,000 Euro Medium-Term Notes Pro-
gram” – will be used to finance and/or refinance, in whole
or in part, the eligible green projects of the Enel Group
identified and/or to be identified in accordance with the
“Green Bond Principles” published by the International
Capital Market Association (ICMA).
Memorandum
of understanding
with PwC
Enel confirmed in ECPI
sustainability indices
On January 23, 2018, Enel was confirmed for the tenth
time in the ECPI Sustainability Index series, which assess
companies on the basis of their environmental, social and
governance (ESG) performance. Enel’s inclusion in the in-
dex was recognition of its clear long-term strategic view,
sound operational management practices and positive work
in tackling social and environmental needs. Enel’s Spanish
subsidiary Endesa has also been included in ECPI indices.
On January 25, 2018, Enel X and PwC signed a memoran-
dum of understanding for the development of corporate
electric mobility with a program of testing and experimen-
tal projects. The agreement has a term of about three
years and provides for a preliminary phase of studies and
analysis, followed by the implementation of pilot projects
in the field.
The objective is to foster the sustainable development of
the transport sector, in particular the business sector, ex-
ploiting the potential offered by electric mobility in terms
of reducing atmospheric pollution and fleet management
costs. The test will be carried out with the PwC fleet
with the aim of overturning the idea that electric vehicles
93
Report on operations can only be used by private individuals and in urban ar-
eas. PwC will also provide Enel X with its expertise in
the field of electric mobility and fleet management for
the development of innovative solutions in managing cor-
porate fleets. In fact, e-cars could easily become part of
the corporate world, given that almost half of company
vehicles travel less than 100 kilometers a day, well below
the average range of electric models on the market. The
agreement between Enel X and PwC will therefore en-
able them to share their respective know-how and spread
the culture of electric cars in corporate fleets among the
companies in the PwC network in Italy.
Agreement to supply
ower in Nevada
Partnership agreement
in Canada
On February 7, 2018, Enel Green Power North America
(“EGPNA”) signed a partnership agreement with Alberta In-
vestment Management Corporation under which the Group
will sell 49% of the shares in the 115 MW Riverview Wind
and the 30.6 MW Phase 2 of Castle Rock Ridge wind farms,
both to be built in Alberta, Canada. The total price for the
transaction, which will be paid upon closing of the deal, will
be determined at commercial operation of the wind farms,
which is expected by the end of 2019. Following the closing
of the transaction, EGPNA will manage, operate and main-
tain both wind farms while retaining a 51% majority owner-
ship of the interest in the projects.
Riverview Wind and Phase 2 of Castle Rock Ridge, which
On January 25, 2018, Enel Green Power North America
is an expansion of EGPNA’s existing 76.2 MW Castle Rock
(“EGPNA”) signed a Power Purchase Agreement (PPA)
Ridge wind farm, are both located in Pincher Creek, Alberta.
with Wynn Las Vegas whereby the resort, located on the
The overall investment in the construction of the two wind
world-famous Las Vegas Strip, will buy the energy pro-
farms, which are due to enter into service by the end of
duced by EGPNA’s new 27 MW Wynn Solar Facility at
2019, amounts to about $170 million. Once operational, the
Stillwater.
two facilities are expected to generate around 555 GWh per
The investment in the construction of the new, 160-acre
year, more than doubling the Group’s capacity in Canada,
solar PV facility amounts to approximately $40 million, in
which currently stands at more than 103 MW.
line with the investment outlined in Enel’s current Stra-
The two wind farms will supply their power and renew-
tegic Plan. The total output that will be produced by the
able energy credits to the Alberta Electric System Operator
photovoltaic plant and sold under the PPA with the Las
(“AESO”) under two 20-year Renewable Energy Support
Vegas resort is expected to amount to over 43,900 MWh
Agreements that were awarded to Enel in December 2017
annually.
in the first tender under the province’s Renewable Electric-
ity Program.
Agreement for
acquisition of Parques
Eólicos Gestinver
On February 2, 2018, Enel Green Power España (“EGPE”)
Contract to supply
demand response
services in Japan
signed an agreement to purchase 100% of Parques Eóli-
On February 8, 2018, Enel X, acting through its US demand
cos Gestinver, a company that owns five wind plants in
response services company EnerNOC, was awarded the
Galicia and Catalonia with a total capacity of about 132
delivery of 165 MW of demand response resources in Ja-
MW, from the Spanish companies Elawan Energy and
pan following the completion of a tender for balancing re-
Genera Avante for a total price of €178 million.
serves launched by a group of Japanese utilities.
Following the acquisition of Parques Eólicos Gestinver,
As a result of this award, which confirms Enel as the larg-
the installed capacity of EGPE in Spain will exceed 1,806
est independent demand response aggregator in Japan,
MW, of which 1,749 MW of wind power (about 8% of to-
the Group will nearly triple its virtual power plant in the
tal installed wind capacity in Spain), 43 MW of mini-hydro
Japanese market, reaching approximately 165 MW from
and 14 MW from other renewable resources.
the current 60 MW, equivalent to a market share of 17%,
as from July 2018.
94
Annual Report 2018 Memorandum of
understanding for
sustainable mobility
in the tourist
industry in Italy
e-distribuzione wins
tender of Ministry for
Economic Development
for the construction
of smart grids
On February 15, 2018, Enel and the Ministry for Cultural
e-distribuzione has won a national call for tenders for elec-
Heritage signed a memorandum of understanding for the
tricity infrastructure for the construction of smart grids for
promotion and development of the use of electricity for sus-
the distribution of electricity in the less developed regions,
tainable mobility in the tourism sector.
for which the Ministry for Economic Development has al-
The memorandum is a strategic lever for increasing public
located €80 million to the National Operational Program
awareness of the benefits of electric mobility. It will also
(NOP) on “Enterprises and Competitiveness” 2014-2020.
permit the creation of an institutional framework for subse-
The tender calls for the construction, upgrading, efficien-
quent commercial agreements with trade associations for
cy enhancement and strengthening of electricity distri-
the installation of electric charging infrastructure at tourist
bution infrastructure, or smart grids, in order to directly
facilities and the launch of projects in the main tourist cities.
increase the share of electricity demand met by distrib-
Enel, through Enel X, the Group company dedicated to
uted generation from renewables. To reach this goal, e-
the development of innovative products and services, will
distribuzione was awarded all of the resources currently
collaborate with trade associations and tourism industry
allocated by the Ministry for Economic Development to
bodies to install electric charging stations at tourist ac-
finance the initiative, with 21 projects admitted for fund-
commodations using tailored commercial solutions and
ing (grants for 100% of costs) totaling €80 million, with
on research and design for replicable solutions to be ex-
two projects worth €7 million in Basilicata, seven projects
tended to other areas of the Italian peninsula.
worth €29 million in Campania and 12 projects worth €44
Enel will also experiment with electric mobility systems
million in Sicily.
in metropolitan areas and in the main tourist cities, includ-
ing arrangements in partnership with other operators in the
industry.
Construction of
new wind farm in
the United States
Entry into service of
largest photovoltaic
plant in Peru
On March 21, 2018, Enel, acting through the Peruvian re-
newable energy subsidiary Enel Green Power Peru, began
operations at the 180 MW Rubí photovoltaic plant, Peru’s
Enel, acting through its US renewable energy company Enel
largest solar plant and Enel’s first solar facility in the country.
Green Power North America, has started construction of Dia-
Enel invested about $170 million in the construction of
mond Vista wind farm, which will have an installed capacity
Rubí, as part of the investments outlined in the compa-
of around 300 MW and will be located in Marion and Dickin-
ny’s current Strategic Plan. The project, which is located
son Counties, in Kansas. Once completed, Diamond Vista will
in Peru’s Mariscal Nieto province, was financed in part
further secure Enel’s position as the largest wind operator in
through Enel Group’s own resources and in part by the
the state with some 1,400 MW of operational wind capacity.
European Investment Bank. The power will be sold under
The planned investment in the construction of Diamond
a 20-year Power Purchase Agreement signed with Peru’s
Vista amounts to about $400 million and is part of the in-
Ministry of Energy and Mines. Once fully operational,
vestment outlined in the Enel Group’s current Strategic Plan.
Rubí will be able to generate around 440 GWh per year,
The plant is being financed with the Group’s own resources
which will be delivered to the Peru’s National Intercon-
and will be able to generate around 1,300 GWh annually.
nected Electricity System (SEIN).
95
Report on operations Enel: successful
outcome of corporate
reorganization in Chile
On March 26, 2018, Enel successfully completed the pub-
lic tender offer (the “Offer”) launched by Enel Chile for all
of the shares of the subsidiary Enel Generación Chile held
by the non-controlling shareholders of the latter. The ef-
fectiveness of the Offer was subject to the acquisition of
a total number of shares that would enable Enel Chile to
increase its holding in Enel Generación Chile to more than
75% of share capital from the previous 60%. The Offer
was accepted by holders of shares equal to about 33.6%
of the share capital of Enel Generación Chile, thereby en-
abling Enel Chile to increase its interest in Enel Gener-
ación Chile to 93.55% of the share capital. The operation
was part of the simplification of the Group, one of the five
key pillars of the Strategic Plan. Enel intends to continue
reducing the number of operating companies in South
America, with the goal of reaching fewer than 30 operat-
ing companies in the region by 2020, compared with the
53 present in the area at the end of 2017.
On March 25, 2018, the date of publication of the notice
of the outcome of the Offer (aviso de resultado), the ac-
ceptance of the Offer of Enel Chile by the non-control-
ling shareholders of Enel Generación Chile who partici-
pated took effect. Following the reorganization described
Renewables tender
won in India
On April 6, 2018, Enel, acting through its Indian renew-
ables subsidiary BLP Energy Private Limited, won the
first ever renewable energy tender in India, acquiring the
right to sign a 25-year energy supply contract for a 285
MW wind farm in the state of Gujarat. The project was
awarded under a 2 GW national wind power tender orga-
nized by the government company Solar Energy Corpora-
tion of India (“SECI”).
Enel will be investing more than $290 million in the con-
struction of this wind farm, which will be supported by a
contract for the sale of specified volumes of power over
a 25-year period to SECI. The plant, which is scheduled
to start operations in the 2nd Half of 2019, will be able to
generate more than 1,000 GWh of renewable energy ev-
ery year, making a significant contribution to both India’s
need for new generation capacity and achieving the coun-
try’s environmental goals. The current Indian government
has set a target of installing 100 GW of solar capacity and
60 GW of wind capacity by 2022, increasing the current
capacity by 20 GW of solar and 33 GW of wind.
Public tender offer
for Eletropaulo
above, Enel’s direct and indirect interest in Enel Chile is
On April 17, 2018, Enel announced that Enel Brasil Inves-
equal to about 62% of the share capital of the latter, com-
timentos Sudeste SA (“Enel Sudeste”), a company fully
pared with 60.6% previously held.
owned by Enel’s Brazilian subsidiary Enel Brasil SA (“Enel
Merger of Enel Green
Power Latin America
SA in Enel Chile
Brasil”), had launched a voluntary tender offer (the “Of-
fer”) for the acquisition of the entire share capital of the
Brazilian power distribution company Eletropaulo Metro-
politana Eletricidade de São Paulo SA (“Eletropaulo”), for
a price per share of 28.0 Brazilian reais, subject to the
acquisition of a total number of shares representing more
On April 2, 2018, the merger of the renewable company
than 50% of the company’s share capital.
Enel Green Power Latin America SA into Enel Chile and
the capital increase of the latter serving the merger took
effect. On the same date, the shareholders of Enel Chile
who had exercised their right of withdrawal in response
to the merger were paid the value of their shares.
On May 31, 2018, Enel Sudeste announced that it had im-
proved the terms and conditions of the Offer, increasing
the Offer price to 45.22 Brazilian reais per share.
On June 5, 2018, Enel Sudeste received confirmation from
the Brazilian authorities of the tendering of 122,799,289
shares, equal to 73.38% of the company’s share capital,
the price of which was paid on June 7, 2018.
On July 16, 2018, Enel announced that Enel Sudeste, an
Enel subsidiary, had received confirmation that between
June 5 and July 4, 2018, as required under Brazilian stock
96
Annual Report 2018 exchange regulations, the shareholders of Eletropaulo
24, 2031, and a further 75 basis points as from November
had sold an additional 33,359,292 shares of the company,
24, 2046. The fixed coupon is payable each year in arrears
equal to 19.9% of the share capital, at the same price of
in the month of November, as from November 24, 2018.
45.22 Brazilian reais per share provided for in the tender
The issue price has been set at 99.108% and the effective
offer launched by Enel Sudeste to acquire the entire share
yield at the first early redemption date is equal to 3.500%.
capital of the company. The overall interest held by Enel
The transaction was completed on May 24, 2018.
Sudeste thus increased to 93.31% of Eletropaulo’s share
In addition, other transactions were carried out in May
capital from the previous 73.38%. Taking account of
2018:
treasury shares already held by the company, that stake
> a non-binding voluntary exchange offer was launched from
rises to 95.05% and in September 2018 rose further to
May 14, 2018 to May 18, 2018, with which Enel acquired
95.88% as a result of Enel Sudeste’s subscription of the
€250.019 million of the hybrid bond of €1,000 million is-
Eletropaulo capital increase.
sued by Enel in January 2014 and maturing January 15,
The overall investment of Enel Sudeste to acquire the
2075. The consideration for the purchase consisted of:
holding totals about €1,541 million.
- an increase of €250.019 million in the value of the
Restructuring of
hybrid bond portfolio
On May 15, 2018, Enel successfully launched a non-con-
vertible multitranche bond for institutional investors on
the European market in the form of subordinated hybrid
securities with an average maturity of about seven years,
denominated in euros and amounting to €1.250 billion.
The operation received orders in excess of €3 billion.
The operation was undertaken in execution of the Enel
Board resolution of May 9, 2018, which authorized Enel to
issue, by December 31, 2019, one or more non-convert-
ible subordinated hybrid bonds in the maximum amount
of €3.5 billion.
The issue was structured in the following tranches:
> €500 million, maturing on November 24, 2078 with an an-
nual fixed coupon of 2.500% until the first early redemp-
tion date of November 24, 2023. As from that date and
until maturity, the rate will be equal to the Euro Mid Swap
rate plus a spread of 209.6 basis points, increased by an
additional spread of 25 basis points as from November
24, 2028, and a further 75 basis points as from November
24, 2043. The fixed coupon is payable each year in arrears
in the month of November as from November 24, 2018.
The issue price has been set at 99.375% and the effective
yield at the first early redemption date is equal to 2.625%;
> €750 million, maturing on November 24, 2081 with an an-
nual fixed coupon of 3.375%, until the first early redemp-
tion date of November 24, 2026. As from that date and
until maturity, the rate will be equal to the Euro Mid Swap
rate plus a spread of 258 basis points, increased by an
additional spread of 25 basis points as from November
tranche described above maturing on November 24,
2078, which increases from €500 million to €750.019
million;
- a cash payment totaling €20,909,088.97;
> a non-binding voluntary tender offer launched from May
14, 2018 to May 18, 2018, with which Enel acquired, in
cash, €731.744 million of the hybrid bond of €1,250 mil-
lion issued by Enel in September 2013 and maturing on
January 10, 2074.
The above transactions are consistent with the Group fi-
nance strategy outlined in the 2018-2020 Strategic Plan.
Enel closes acquisition
of 21% of Ufinet
International
On July 3, 2018, Enel, acting through Enel X International,
wholly owned by Enel X, the Enel Group’s advanced en-
ergy solutions company, finalized the acquisition from a
holding company controlled by Sixth Cinven Fund (which
is operated by the international private equity firm Cinven),
for €150 million, of about 21% of the share capital of a
vehicle company (“NewCo”) to which 100% of Ufinet In-
ternational was transferred. The latter is a leading whole-
sale operator of fiber-optic networks in Latin America. In
turn, Sixth Cinven Fund owns around 79% of NewCo’s
share capital.
Enel X International and Sixth Civen Fund have joint con-
trol of Ufinet International, each exercising 50% of voting
rights in the shareholders’ meeting of NewCo. Under the
agreements between the parties, with the closing of the
transaction, Enel X International has a call option to ac-
quire Sixth Cinven Fund’s stake between December 31,
97
Report on operations 2020 and December 31, 2021 for an additional investment
of between €1,320 million and €2,100 million depending
upon developments in various performance indicators.
Should Enel X International not exercise its call option
by December 31, 2021, its joint control over NewCo will
lapse. In this case, Sixth Cinven Fund would then have
the right to sell its stake with a “drag along” right over
Enel X International’s stake, while the latter would have
the right to exercise a “tag along” right if Sixth Cinven
Fund reduces its holding in NewCo to below 50%.
On the grounds of its size, business model and geograph-
ic footprint, Ufinet International represents a significant
opportunity for the Enel Group to accelerate growth in
Latin America in the ultra-broadband sector, which is part
of the business objectives of Enel X as envisaged in Enel
Group’s 2018-2020 Strategic Plan. Through this transac-
tion, the Group has immediately positioned itself in the
Latin American value-added services market, accelerat-
ing its development through skills and technologies al-
ready consolidated by Ufinet International and gaining ac-
cess to a vast customer base in a region with high growth
and urbanization rates.
Merger of Enel Holding
Chile and Hydromac
Energy into Enel
Enel Green Power
agrees loan of €950
million for 700 MW
of new wind plants
in South Africa
On August 1, 2018, Enel Green Power RSA (“EGP RSA”),
the Enel Group’s South African renewables subsidiary,
signed with senior lenders Nedbank Limited and Absa
all project financing agreements for up to €950 million,
namely up to 80% of the overall investment of around
€1.2 billion in a portfolio of five new wind projects with
a total of about 700 MW of capacity. The five facilities -
Nxuba, Oyster Bay, Garob, Karusa and Soetwater - have
a capacity of around 140 MW each. The Enel Group is
contributing around €230 million of capital for the con-
struction of the five wind farms. Following the signing of
the agreements, termed the “financial close”, construc-
tion of the first project, Nxuba, is expected to start by the
end of 2018. Following the start of construction of Nxuba,
construction of Oyster Bay and Garob is expected to start
by the 1st Half of 2019 and construction of Soetwater as
well as Karusa is expected to start in the 2nd Half of the
same year. Nxuba is expected to begin operations in the
2nd Half of 2020, Oyster Bay in the 1st Half of 2021 and
Garob, Soetwater and Karusa in the 2nd Half of 2021. All
On July 16, 2018, Enel announced that the plan for the
five new wind farms are due to enter service by 2021.
merger into Enel of Enel Holding Chile Srl (“Enel Holding
Chile”), a company wholly owned directly by Enel, and
Hydromac Energy Srl (“Hydromac Energy”), a company
wholly owned by Enel through Enel Holding Chile, which
was approved by the administrative bodies of those com-
panies, had been filed with the Company Register of
Rome.
The transaction is part of the Group’s effort to simplify its
corporate structure, one of the key pillars of Enel’s 2018-
2020 Strategic Plan. Specifically, the transaction will al-
low for the consolidation into Enel of the Group’s 61.93%
interest in Enel Chile SA, of which 43.03% is currently
held directly by Enel itself, while 18.88% is indirectly held
through Hydromac Energy and 0.02% through Enel Hold-
ing Chile.
On September 20, 2018, the Enel Board of Directors ap-
proved the merger of the wholly owned subsidiaries Enel
Holding Chile Srl and Hydromac Energy Srl into Enel.
Enel starts construction
of Ngonye solar plant,
its first facility in Zambia
On August 22, 2018, the Enel Group’s global renewable
energy Business Line Enel Green Power (“EGP”) started
construction on the 34 MW Ngonye photovoltaic plant.
This facility is part of the World Bank Group’s Scaling
Solar program carried out by Zambia’s Industrial Devel-
opment Corporation (IDC), which in June 2016 awarded
Enel the right to develop, finance, construct, own and op-
erate the plant.
Enel will be investing around $40 million in the construc-
tion of Ngonye, which is expected to be completed in
the 1st Quarter of 2019. The Ngonye solar plant, which
will be owned by a special purpose vehicle 80% held by
98
Annual Report 2018 EGP and 20% by IDC, is supported by a 25-year Power
Stop Date,5 and, in either case, only once the additional
Purchase Agreement signed with Zambia’s state owned
condition above is satisfied.
utility ZESCO. Once fully up and running, the facility is
On the basis of the current work program and in line with
expected to produce around 70 GWh per year, avoiding
the amendments to the Contract, the put and call options
the annual emission of over 45 thousand metric tons of
are expected to become exercisable by the 1st Half of
CO2 into the atmosphere.
Updating of contract
terms for disposal
of investment in
Slovenské elektrárne
On September 4, 2018, Enel Produzione SpA, a wholly
owned subsidiary of Enel SpA, and the Czech company
Energetický a Pr˚umyslový Holding AS (“EPH”) signed an
agreement that modifies certain terms and conditions of
the contract (the “Contract”) signed on December 18,
2015 regarding the sale of the stake held by Enel Produzi-
one in Slovenské elektrárne a.s. (“Slovenské elektrárne”),
in line with the Term Sheet signed by the parties in May
2017. The agreement came into force once the condi-
tions envisaged in the terms of the subordinated loan de-
scribed below were met.
As a result of the amendments agreed between Enel Pro-
duzione and EPH in the above agreement, the Contract
also governs relations between the parties with regard to
the financial support they have to provide to Slovenské
elektrárne for the completion of units 3 and 4 of the Mo-
chovce nuclear power plant. Specifically, the Term Sheet
provides for Enel Produzione to grant, directly or through
another company of the Enel Group, a subordinated loan
to the HoldCo, which is in turn expected to make it avail-
able to Slovenské elektrárne, for a total of up to €700
million falling due in January 2027. Moreover, the Con-
tract – which provides for the sale by Enel Produzione
to EP Slovakia of its remaining 50% stake in the HoldCo
through the exercise of put or call options by the respec-
tive parties – has been updated to include also the ad-
vance repayment of the Loan (or its final maturity date) as
an additional condition for the exercise of the respective
options. This update means that the exercise date of the
options can take place at the earlier of a) 12 months after
obtaining the Trial Operation Permit for unit 4 of the Mo-
chovce nuclear power plant; or b) upon reaching the Long
2021. In addition, the Long Stop Date, initially set as of
June 30, 2022, has been postponed by 12 months be-
yond the original deadline.
Finally, the Contract now provides for the existing mecha-
nism for adjusting the total price of the two phases of
the transaction, which will be applied upon the close of
the second phase based on various criteria, to be com-
plemented by an additional mechanism that ensures the
offsetting of any amount due from Enel Produzione to EP
Slovakia with any amount due from EPH or EP Slovakia
to Enel Group companies in respect of principal and/or
interest of the Loan if EPH or EP Slovakia take it over from
Enel Group on the closing date of the second phase.
Enel Green Power wins
contract for 34 MW of
new solar capacity
in renewables tender
in Australia
On September 11, 2018, the Enel Group, acting through
its renewable energy subsidiary Enel Green Power Aus-
tralia (Pty) Ltd (“Enel Green Power Australia”), was
awarded a 15-year agreement with the Australian state
of Victoria for the production of electricity and green cer-
tificates by the 34 MW Cohuna Solar Farm. The agree-
ment was awarded through a renewable energy reverse
auction launched last year by the state of Victoria. Enel is
expected to invest around $42 million in the solar facility,
whose construction is set to begin in the 1st Half of 2019.
The plant is due to enter commercial operation by the end
of 2019 and will be backed by a 15-year support agree-
ment with the state of Victoria. The tender held by the
state of Victoria was launched in November 2017 for 650
MW of renewable capacity, of which 100 MW was ear-
marked for solar. The tender is part of Victoria’s Renew-
able Energy Target (VRET) to source 25% of its electricity
production from renewables by 2020 and 40% by 2025.
5 The date as of which Enel Produzione and EP Slovakia can exercise their put and call options respectively, regardless the completion of units 3 and 4 of
Mochovce nuclear power plant.
99
Report on operations Enel Finance
International issues
$4 billion bond
on US market
On September 12, 2018, Enel Finance International NV
(“EFI”), an Enel SpA (“Enel”) finance subsidiary serving the
Enel Group, placed a multi-tranche bond for institutional in-
vestors on the US and international markets totaling $4 bil-
lion, the equivalent of about €3.5 billion. The issue, which is
guaranteed by Enel, was oversubscribed by about 3 times,
with total orders of some $11 billion. The bond issue is part
of the Enel Group’s strategy to raise financing and refinance
its maturing consolidated debt. The strong investor demand
for Enel’s third Yankee Bond issued since 2017 once again
confirms the financial markets’ appreciation for Enel’s solid
fundamentals, performance and financial structure.
The transaction is structured in the following tranches:
> $1,250 million at 4.250% fixed rate maturing in 2023;
> $1,500 million at 4.625% fixed rate maturing in 2025;
> $1,250 million at 4.875% fixed rate maturing in 2029.
In view of their characteristics, the above tranches have
been assigned a provisional rating of BBB+ by Standard &
Poor’s, Baa2 by Moody’s and BBB+ by Fitch. Enel’s rating
is BBB+ (stable) for Standard & Poor’s, Baa2 (stable) for
Moody’s and BBB+ (stable) for Fitch.
Seizure of Brindisi plant
On September 28, 2017, Enel Produzione was notified of
the decision issued by the investigating magistrate of Lecce
ordering the seizure of the thermoelectric power plant of
Brindisi-Cerano.
The measure is part of a criminal investigation initiated by
the Public Prosecutor’s Office of the Court of Lecce con-
cerning the use of fly ash, i.e. that produced by the combus-
tion of coal and captured by the smoke abatement systems
of the plant, in the cement industry. The investigation also
involves Cementir, a cement company to which the ash was
sent for cement production, and ILVA, which provided Ce-
mentir with other residues for cement production.
Within the scope of the enquiry, a number of executives/
employees of the company are being investigated for illegal
waste disposal and unauthorized blending of waste.
In order to enable plant operations to continue, the seizure
order authorized the Brindisi power station to continue
100
generation for 60 days (subsequently extended until Feb-
ruary 24, 2018), subject to certain technical requirements
intended, according to the accusations, to remove the al-
leged ash management deficiencies. Enel Produzione has
been charged under the provisions of Legislative Decree
231/2001 with the same offenses of which the company’s
executives/employees are accused. Following the charges,
as provided for by law, the investigating magistrate of Lec-
ce also ordered the seizure of approximately €523 million,
equivalent to the profit that the Lecce Public Prosecutor
conducting the investigation alleges was generated through
the illegal handling of the ash.
The seizure order appointed two custodians in order to moni-
tor compliance with the technical measures mentioned earlier.
Enel Produzione has informed the investigating magistrate
that the plant is operated in accordance with industry regula-
tions and the highest international technology standards, as
well as with a cycle for the production and reuse of residues
that is identical to that adopted in the most efficient power
plants in Europe and the world, in compliance with the most
modern environmental requirements intended to promote a
circular economy. Analyses of the ash prior to seizure and
those conducted afterwards have consistently confirmed
the non-hazardous nature of the material and therefore the
legitimacy of the manner in which they have been handled.
Enel Produzione, although not agreeing with the allegations,
has nevertheless expressed its full willingness, in agree-
ment with the investigating magistrate and the custodians,
to rapidly implement technical solutions for the execution of
the requirements imposed with the seizure order that take
account of the operational and logistical complexities asso-
ciated with their implementation and the associated risks to
the national electricity system.
In this regard, with the request for an extension of the use
of the power station on November 15, 2017, Enel Produzi-
one asked for authorization to test a management approach
that would separate the ash by operational stage, thereby
enabling the implementation of the provisions of the order.
Subsequently, following the testing, the company obtained
an extension of another 90 days until February 24, 2018.
In the meantime, the Public Prosecutor, in view of the need
to proceed with evidence gathering with a technical enquiry
into the facts of the case, asked the investigating magistrate
to move ahead with this stage. At the hearing of February 2,
2018, the magistrate assigned the engagement to the tech-
nical experts, giving them 150 days as from February 13,
2018, to file their report.
In the meantime, following the petition filed by Enel Produzi-
Annual Report 2018 one on April 19, 2018 and taking account of the need to en-
Spain. The overall investment in the construction of the
sure the continued operation of the plant, the investigating
facility amounts to about €59 million. The Totana facility,
magistrate authorized the company to use the management
located in the region of Murcia, is scheduled to start op-
approach referred to earlier, which separates the ash by op-
eration in the 3rd Quarter of 2019. Once fully operational,
erational stage, thereby implementing the requirements of
the photovoltaic facility, composed of 248,000 photovol-
the seizure order. Following that authorization and pending
taic modules, will be able to generate around 150 GWh
completion of the evidentiary phase, the investigating magis-
per year, avoiding the annual emission of around 105
trate subsequently issued, at the request of Enel Produzione,
a new 90-day temporary authorization as from May 24, 2018.
thousand metric tons of CO2 into the atmosphere. Totana
is the first of the seven solar projects, with a total capac-
On July 16, 2018, the experts appointed by the investigat-
ity of 339 MW, that were awarded to Enel Green Power
ing magistrate filed their preliminary technical report, the
España in the Spanish government’s third renewables
findings of which confirm the validity of Enel Produzione’s
tender held in July 2017.
classification of the ash as “non-hazardous waste” and its
suitability for use in second manufacturing processes, such
as the production of cement.
On July 19, 2018, Enel Produzione therefore filed a petition
with the Court to lift the seizure of the plant and the funds.
On July 23, 2018, Enel Produzione also filed a request for a
further extension of 90 days as from August 22, 2018, for
the operation of the plant.
On August 1, 2018, the Lecce Public Prosecutor lifted its sei-
zure of the plant, with the termination of the judicial custody/
administration of the facility and the restitution of the €523
Enel closes sale of a
majority stake in 1.8
GW of renewables
capacity in Mexico
while continuing to
operate the plants
million to Enel Produzione. However, the preliminary inves-
On September 28, 2018, Enel SpA (“Enel”), acting through
tigation is continuing against both the accused individuals
its renewables subsidiary Enel Green Power SpA (“EGP”),
and the company pursuant to Legislative Decree 231/2001.
closed the deal with the Caisse de dépôt et placement du
On October 10, 2018, the Definitive Technical Report was
Québec (“CDPQ”), a long-term institutional investor, and
filed, with supplemental information concerning part of the
the investment vehicle of the leading Mexican pension
analytical findings which were not yet available in July when
funds CKD Infraestructura México SA de Cv (“CKD IM”) for
the preliminary report was filed.
the sale of 80% of the share capital of eight special purpose
On December 6, 2018, the investigating magistrate of the
vehicles (“SPVs”), which own eight plants in operation and
Court of Lecce, at the request of the Public Prosecutor,
under construction in Mexico with a total capacity of 1.8
scheduled a hearing for January 22, 2019, to receive tes-
GW. Following the closing of the deal, EGP and CDPQ own
timony from the experts on the report. The investigating
a 20% and a 40.8% stake respectively in the SPVs through
magistrate then postponed the hearing until April 15, 2019.
a newly-formed holding company (“Kino Holding”), while
Enel Green Power
España starts
construction of
its largest solar
farm in Spain
Endesa’s renewable company Enel Green Power España
(“EGPE”) began construction of the 84.7 MW Totana
photovoltaic facility, the company’s largest solar plant in
CKD IM owns a 39.2% stake in the same SPVs, through
newly-formed sub-holdings (“Mini HoldCos”). EGP will
continue to operate the plants owned by the SPVs and will
complete those still under construction through two newly-
formed subsidiaries. In addition, starting from January 1,
2020, EGP may contribute or transfer additional projects,
increasing its indirect interest in the SPVs and becoming
majority shareholder.
The enterprise value of 100% of the SPVs is equal to about
$2.6 billion, with an equity value of about $0.3 billion, proj-
ect financing of about $0.8 billion and related-party loans
totaling $1.5 billion. As a result of the transaction, CDPQ
and CKD IM paid $1.4 billion, of which about $0.2 billion for
101
Report on operations the majority interest in the SPVs and around $1.2 billion for
related-party loans to the SPVs. The price paid is subject
to adjustments typical of this type of transaction, primarily
based on variations in the net working capital of the SPVs.
The transaction was carried out using the Build, Sell and Op-
erate (“BSO”) model, in line with the Group’s Strategic Plan.
Enel Green Power
España begins
construction of three
wind farms in Spain
Fortaleza - Brazil
Petroleo Brasileiro SA - Petrobras, as gas supplier for the
Fortaleza plant (Central Geradora Termélectrica Fortaleza
“CGTF”) in Brazil, announced its intention to terminate the
contract between the parties on the grounds that the agree-
ment was allegedly imbalanced financially in consideration
of current market conditions. The contract was signed in
2003 as part of the “Priority Thermal Generation Program”
established by the Brazilian government in order to increase
thermoelectric generation and the security of supply in the
On October 9, 2018, Enel Green Power España (“EGPE”)
began construction of three wind farms with a total ca-
pacity of 128 MW in the municipalities of Muniesa and
Alacón, in the region of Aragon’s Teruel province. The
three projects are the 46.8 MW Muniesa, the 41.4 MW
Farlán and the 39.9 MW San Pedro de Alacón wind farms.
The new facilities will involve a total investment of about
€130 million. The three facilities are expected to begin
operation by the end of 2019. Once fully operational, the
wind farms will be able to generate 412 GWh annually,
avoiding the emission of over 270 thousand metric tons
country. The program established that the Brazilian govern-
of CO2 into the atmosphere.
ment would act as the guarantor of the supply of gas at
regulated prices defined by the Brazil’s Ministry of Finance,
Mines and Energy.
In order to guarantee the security of electricity supply in
Brazil, CGTF initiated legal action in the ordinary courts
against Petrobras with a request for precautionary pro-
tection, obtaining, at the end of 2017, a Court injunction
suspending the termination of the contract, which was de-
clared still in force.
Subsequently, on February 27, 2018, the Court decided to
extinguish the action initiated by CGTF before the ordinary
courts and, consequently, to revoke the precautionary mea-
sure that had permitted the supply of gas. CGTF filed ap-
peals against these latest decisions on both a precautionary
and ordinary basis, obtaining a second favorable ruling that
enabled the plant to operate for some time but which was
subsequently revoked. CGTF has challenged this decision,
confident that the courts will recognize Petrobras’ obligation
to perform the contract.
At the end of January 2018, CGTF received an arbitration
request from Petrobras in relation to the disputes described
above and this procedure is in the preliminary stages.
Subsequently, a precautionary measure was obtained in
favor of CGTF, ordering the suspension of the payment of
certain amounts by CGTF to Enel Distribuiçao Ceará (the
purchaser of the electricity).
On October 25, 2018, another precautionary measure was
obtained in favor of CGTF, ordering the restoration of Petro-
bras’ obligation to supply gas.
102
Enel prepares to
increase its stake in
Enel Américas by a
maximum of 5%
On October 16, 2018, Enel announced that it had entered
into two “Share Swap Transactions” with a financial in-
stitution to increase its equity stake in its listed Chilean
subsidiary Enel Américas SA (“Enel Américas”). Based
on these Share Swap Transactions, Enel may acquire, on
dates that are expected to occur no later than the 4th
Quarter of 2019: (i) up to 1,895,936,970 shares of Enel
Américas’ common stock, and (ii) up to 19,533,894 of
Enel Américas’ American Depositary Shares (“ADSs”),
each representing 50 shares of Enel Américas’ common
stock.
All of the above shares total up to 5.0% of Enel Américas’
entire capital.
The number of shares of Enel Américas’ common stock
and Enel Américas’ ADSs actually acquired by Enel pur-
suant to the Share Swap Transactions will depend on the
ability of the financial institution acting as the counter-
party to establish its hedge positions as part of the trans-
actions.
The increase in Enel’s interest in Enel Américas is in line
with Enel Group’s 2018-2020 Strategic Plan announced to
Annual Report 2018 the markets, which remains focused on reducing minority
sphere. Of São Gonçalo’s 475 MW of installed capacity,
shareholders in the Group companies operating in South
388 MW were awarded to the Enel Group in Brazil’s A-4
America. At December 31, 2018, the additional stake of
public tender in December 2017 and are supported by 20-
the Group in Enel Américas amounted to 2.43%.
year power supply contracts with a pool of distribution
Disposal of Enel Finale
Emilia
On October 18, 2018 Enel Green Power finalized the sale
of the biomass generation plant at Finale Emilia for a price
of €59 million.
The sale is part of an agreement between the Enel Group
and F2i SGR for the sale of the entire portfolio of bio-
mass generation plants in Italy with a total net installed
capacity of about 108 MW. More specifically, the agree-
ment involves the plants in operation at Mercure and
Finale Emilia, located respectively in Calabria and Emilia
Romagna, 50% of PowerCrop – the Enel Maccaferri joint
venture – which owns the plants under construction of
Russi and Macchiareddu, located respectively in Emilia
Romagna and Sardinia, and the project for the construc-
tion of the plant at Casei Gerola, in Lombardy, which is
currently waiting for authorization.
The transaction, which is part of the Group’s strategy for
the active management and turnover of assets, provided
for a price for the sale of the entire portfolio of plants of
about €335 million.
companies operating in the country’s regulated market.
The remaining 87 MW will generate power for the free
market.
Enel Green Power
España starts
construction of 127
MW of new solar
capacity in Spain
On October 23, 2018, Enel Green Power España
(“EGPE”) started construction of three solar plants with
an overall capacity of around 127 MW in the municipality
of Logrosán. The three photovoltaic plants of Baylio, De-
hesa de los Guadalupes and Furatena will involve a total
investment of about €100 million and will each have an
installed capacity of over 42 MW. The three solar plants,
which will be composed of around 372,000 photovoltaic
modules, are slated to enter into service by the end of
2019. Construction will adopt Enel Green Power’s “Sus-
tainable Construction Site” approach.
Enel Green Power
begins construction of
a 475 MW photovoltaic
plant in Brazil
Enel signs strategic
cooperation agreement
with Russian railways
On October 24, 2018, Enel SpA, acting through RusEn-
ergoSbyt, the Russian joint venture between Enel and
On October 22, 2018, Enel Green Power Brasil Participa-
ESN, signed an agreement for strategic cooperation and
ções Ltda (“EGPB”) started construction of the 475 MW
partnership expansion with the Russian Railways, which
São Gonçalo solar park at São Gonçalo do Gurguéia, in
also includes an extension of the 2008 electricity supply
Brazil’s northeastern state of Piauí. São Gonçalo, which
contract between the two companies.
is expected to start operations in 2020, is the largest
photovoltaic facility currently under construction in South
America. The Enel Group will be investing around 1.4 bil-
lion Brazilian reais, equivalent to about €390 million, in
the construction of the São Gonçalo photovoltaic plant.
Once fully up and running, the plant will be able to gener-
ate over 1,200 GWh per year while avoiding the emission
of over 600 thousand metric tons of CO2 into the atmo-
103
Report on operations Enel Green Power
and Nareva sign loan
agreements to start
construction of the
180 MW Midelt wind
farm in Morocco
Enel Green Power
España starts
construction of three
new photovoltaic plants
in the Estremadura
region in Spain
On November 5, 2018, the Moroccan utility ONEE (Office
On November 28, 2018, Enel Green Power España
National de l’Electricité et de l’Eau Potable), the Moroc-
(“EGPE”), Endesa’s renewable energy division, began
can Agency for Sustainable Energy (MASEN) and Midelt
construction of three solar plants with an overall capac-
Wind Farm SA, a vehicle company owned by ONEE and
ity of around 127 MW in the municipalities of Casas de
a consortium formed by Enel Green Power (“EGP”) and
Don Pedro and Talarrubias, representing the company’s
Nareva, the leading Moroccan independent power pro-
first solar parks in the province of Badajoz, in the Spanish
ducer, signed the financial close to start construction of
region of Extremadura. The three photovoltaic facilities
the first of the wind farms included in the 850 MW Pro-
of Navalvillar, Valdecaballero and Castilblanco will have
jet Eolien Intégré, which will be built in Midelt. The new
an installed capacity of more than 42 MW each and will
wind farm, with a capacity of 180 MW, is expected to
involve an overall investment of about €100 million. The
be completed in 24 months. The 850 MW Projet Eolien
three solar parks are slated to enter service by the end of
Intégré was awarded to the consortium formed by EGP
2019. Once fully operational, these solar facilities, which
and Nareva, following an international tender. The total
are composed of more than 372,000 photovoltaic mod-
investment in the Midelt wind farm amounts to 2.5 billion
ules, will be able to generate approximately 250 GWh a
Moroccan dirhams, equivalent to about €230 million, and
year, avoiding the emission of over 165 thousand metric
is financed through equity investments from sharehold-
ers and debt financing from ONEE.
Enel and Sapienza
join forces for “Smart
Solar House”, the
smart sustainable
house for the future
On November 15, 2018, the Smart Solar House, a prototype
house of the future, developed by the Enel Group in col-
laboration with a team of about 50 students and PhD stu-
dents from Rome’s Sapienza University, was presented in
Dubai, for the “Solar Decathlon Middle East 2018” interna-
tional architecture competition. This smart and sustainable
house design, powered only by solar energy, uses the most
advanced technological systems, including the Internet of
Things (IoT), home automation and Enel’s infrastructure for
charging electric vehicles, and is made entirely of wood and
other materials with low environmental impact.
tons of CO2 into the atmosphere. The building phase of
the three projects will adopt Enel Green Power’s “Sus-
tainable Construction Site” approach, including the use
of renewable energy to meet the energy needs of con-
struction works through a 20 kW photovoltaic system
powering the three sites, in addition to initiatives aimed
at involving the local population in this phase.
Enel Green Power
starts construction of
a new 244 MW wind
farm in Mexico
On December 11, 2018, the Enel Group, through its renew-
able subsidiary Enel Green Power México (“EGPM”), be-
gan construction of the 244 MW Dolores wind farm in the
municipality of China, its first project in the state of Nuevo
León. The overall investment in the construction of the facil-
ity amounts to about $280 million, as part of the investment
outlined in Enel’s Strategic Plan. The Dolores wind farm is
scheduled to start operation in the 1st Half of 2020.
104
Annual Report 2018 Enel Green Power
starts operations at
HillTopper, its first wind
farm in Illinois, USA
On December 12, 2018, Enel, through its US renew-
ables company Enel Green Power North America Inc.
(“EGPNA”), began operations at the 185 MW HillTopper
wind farm, its first wind facility in the US state of Illinois.
The construction of HillTopper required an investment of
about $325 million.
Enel Green Power
exits Uruguay with the
sale of 50 MW of wind
capacity for $120 million
Endesa industrial
relations
After a series of meetings of the Comisión Negociadora
del V Convenio Colectivo de Endesa (Comisión Nego-
ciadora) which began in October 2017 and continued
throughout 2018, in view of the impossibility of reach-
ing an agreement, Endesa notified the workers and their
union representatives that, with effect from January 1,
2019, the 4th Collective Bargaining Agreement must be
considered terminated in the same way as the “frame-
work guarantee contract” and the “agreement on the
voluntary suspension or resolution of employment con-
tracts in the period 2013-2018”, applying from that date
the provisions of general labor law, as well as the legal
criteria established in the matter.
Despite the resumption of negotiations within the Comis-
ión Negociadora in February 2019, the interpretative dif-
ferences between Endesa and the trade union represen-
tatives regarding the effects of the resolution of the 4th
On December 14, 2018, Enel Green Power SpA closed
Collective Bargaining Agreement with regard, in particu-
the sale to the power company Atlantica Yield of its wholly
lar, to the social benefits granted to retired personnel led
owned subsidiary Enel Green Power Uruguay SA (“EGP
to the initiation of a suit by the unions having representa-
Uruguay”), which through its project company Estrellada
tion in the company. At December 31, 2018, the case
SA owns the 50 MW Melowind wind farm located at Cer-
was still pending in the Court of first instance.
ro Largo, around 320 km from Montevideo. Enel Green
Power has sold its Uruguay subsidiary for around $120 mil-
lion, equal to the company’s enterprise value.
Funac
Enel Green Power sells
F2i 50% of the EF
Solare Italia joint venture
With Law 20416 of February 5, 2019, the state of Goiás
reduced from April 25, 2015 to April 24, 2012 the period
of validity of the tax relief that allowed Enel Distribuição
Goiás to offset ICMS (VAT) against the tax credit for Enel
Distribuição Goiás investments to develop and maintain
its grid.
On December 21, 2018, Enel SpA, acting through its
On February 25, 2019, Enel Distribuição Goiás appealed
subsidiary Enel Green Power SpA (“EGP”) sold its 50%
against the provisions of the law on a precautionary ba-
stake in the joint venture EF Solare Italia SpA (“EFSI”),
held through EGP’s fully-owned company Marte Srl, for
sis (writ of mandamus) before the Court of the state of
Goiás, which denied the appeal on February 26, 2019.
€214 million to its existing partner in the venture, F2i SGR
Enel Distribuição Goiás will appeal this ruling.
SpA (“F2i”). In line with the sale agreement, EFSI, which
manages and acquires operating solar plants in Italy, has
an enterprise value of about €1.3 billion, of which around
€430 million of equity and some €900 million of third-
party debt.
105
Report on operations Reference
scenario
Enel and the financial markets
Gross operating margin per share (euro)
Operating income per share (euro)
Group net earnings per share (euro)
Group net ordinary earnings per share (euro)
Dividend per share (1) (euro)
Group shareholders’ equity per share (euro)
Share price - 12-month high (euro)
Share price - 12-month low (euro)
Average share price in December (euro)
Market capitalization (2) (millions of euro)
No. of shares outstanding at December 31 (millions)
(1) Dividend resolved by the Shareholders’ Meeting of May 16, 2019.
(2) Calculated on average share price in December.
Enel stock weighting in:
- FTSE-MIB index
- Bloomberg World Electric index
Rating:
Standard & Poor’s
Outlook
Medium/long-term
Short-term
Outlook
Medium/long-term
Short-term
Outlook
Medium/long-term
Short-term
Moody’s
Fitch
(1) Figures updated to February 15, 2019.
2018
1.61
0.97
0.47
0.40
0.28
3.12
5.39
4.24
4.94
50,254
10,167
2017
1.54
0.96
0.37
0.36
0.237
3.42
5.58
3.84
5.39
54,761
10,167
Current (1) at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2016
13.04%
3.71%
13.86%
3.78%
11.68%
3.92%
11.41%
3.26%
Stable
BBB+
A-2
Stable
Baa2
-
Stable
A-
F2
Stable
BBB+
A-2
Stable
Baa2
-
Stable
BBB+
F2
Stable
BBB+
A-2
Stable
Baa2
P2
Stable
BBB+
F2
Stable
BBB
A-2
Stable
Baa2
P2
Stable
BBB+
F2
In 2018, the world economy grew by around 3%, in line with
pressures on emerging markets (especially those that are
the pace registered in 2017. The United States and China
structurally weaker). Geopolitical uncertainty (mainly deriv-
continue to pull the global locomotive, helped by the effects
ing from the tariff war) is persistently affecting the external
of expansionary fiscal policies, while the euro area grew at
enivironment. In Europe, Brexit negotiations continue with-
a slower rate.
out significant progress, with the British parliament again
The normalization of monetary policies in the advanced coun-
postponing the preliminary agreement reached between
tries (especially in the United States) has generated strong
the Prime Minister, Theresa May, and the European Union.
106
Annual Report 2018
Strains continue between Italy and the European Union
The number of Environmental, Social and Governance
over the country’s fiscal policy and its consistency with
(ESG) investors is increasing steadily and at December
forecasts for economic growth. More specifically, growth
31, 2018 they represent about 10.5% of the share capital
in Italy in 2018 is estimated at 0.9%, down from the 1.6%
(against 8.6% at December 31, 2017).
posted in 2017.
The increase in ESG investors in Enel’s stock reflects the
greater attention being paid by the financial market to the
In this economic environment, the main European equity
non-financial elements that contribute to the creation of
indices closed 2018 with losses. Spain’s Ibex35 posted
long-term sustainable value.
a loss of 15%, while France’s CAC40 fell 12% and Ger-
The energy transition now under way, with the trends in
many’s DAX30 declined by 18%. The FTSE Italy All Share
urbanization, the electrification of demand and decarbon-
registered a loss of 17%.
ization, is impacting the entire electricity value chain in dif-
ferent ways and with different speeds.
The euro-area utilities segment closed the year with a
Thanks to its business and positioning, Enel maximises op-
small decline of 1%.
portunites created by that transition for creating sustain-
able value over the long term, taking the lead in this area
As regards Enel shares, 2018 ended with the stock price at
with its strategy.
€5.044, down 1.7% on the previous year, moderatly under-
Enel’s leadership in the ESG field is strengthened by the
performing the sector index for the euro area.
close link between stategy and a focus on human capital,
which fosters the economic and social growth of the local
On January 24, 2018, Enel paid an interim dividend of
communities with whom Enel interacts.
€0.105 per share from 2017 profits and on July 25, 2018, it
paid the balance of the dividend for that year in the amount
For further information we invite you to visit the Investor Re-
of €0.132. Total dividends distributed in 2018 amounted to
lations section of our corporate website (http://www.enel.
€0.237 per share, about 32% higher than the €0.18 per
com/en/investors) and download the Enel Investor Relations
share distributed in 2017.
app, which provides financial data, presentations, real-time
With regard to 2018, on January 23, 2019 an interim divi-
updates of the share price, information on corporate bodies
dend of €0.14 was paid, while the balance of the dividend
and the rules of Shareholders’ Meetings, as well as periodic
is scheduled for payment on July 24, 2019.
updates on corporate governance issues.
At December 31, 2018, the Ministry for the Economy and
We have also created contact centers for private investors
Finance held 23.6% of Enel, while institutional investors
(which can be reached by phone at +39-0683054000 or
held 57.6% (compared with 57.5% at December 31, 2017)
by e-mail at azionisti.retail@enel.com) and for institutional
and individual investors held the remaining 18.8% (com-
investors (phone: +39-0683051;
pared with 18.9% at December 31, 2017).
e-mail: investor.relations@enel.com).
107
Report on operations Performance of Enel share price and the Bloomberg World Electric, Euro STOXX Utilities and FTSE Italy All Share indices
from January 1, 2018 to January 31, 2019
€ 6.0
€ 5.5
€ 5.0
€ 4.5
€ 4.0
€ 3.5
€ 3.0
Jan
18
Feb
18
Mar
18
Apr
18
May
18
Jun
18
Jul
18
Aug
18
Sep
18
Oct
18
Nov
18
Dec
18
Jan
19
Enel
Bloomberg World Electric
Euro STOXX Utilities
FTSE Italy All Share
Source: Bloomberg.
108
Annual Report 2018 Consumer price indices (CPI)
%
Italy
Spain
Russia
Romania
Slovakia
India
South Africa
Argentina
Brazil
Chile
Colombia
Mexico
Peru
United States
Canada
Exchange rates
Euro/US dollar
Euro/British pound
Euro/Swiss franc
US dollar/Japanese yen
US dollar/Canadian dollar
US dollar/Australian dollar
US dollar/Russian ruble
US dollar/Argentine peso
US dollar/Brazilian real
US dollar/Chilean peso
US dollar/Colombian peso
US dollar/Peruvian nuevo sol
US dollar/Mexican peso
US dollar/Turkish lira
US dollar/Indian rupee
US dollar/South African rand
2018
2017
Change
1.1
1.7
2.9
4.6
1.9
4.0
4.6
33.8
3.7
2.7
3.2
4.9
1.3
2.4
2.3
2018
1.181
0.88
1.15
110.44
1.30
1.34
62.80
28.11
3.66
642.04
2,958.13
3.29
19.23
4.84
68.40
13.25
1.2
2.0
3.7
1.3
1.1
3.3
5.3
25.7
3.5
2.2
4.3
6.0
2.8
2.1
1.6
2017
1.1297
0.88
1.11
112.15
1.30
1.30
58.32
16.56
3.19
648.70
2,951.36
3.26
18.92
3.65
65.11
13.31
(0.1)
(0.3)
(0.8)
3.3
0.8
0.7
(0.7)
8.1
0.2
0.5
(1.1)
(1.1)
(1.5)
0.3
0.7
Change
4.36%
0.97%
3.73%
-1.55%
-0.13%
2.59%
7.13%
41.11%
12.68%
-1.04%
0.23%
0.78%
1.64%
24.63%
4.81%
-0.45%
109
Report on operations Economic and energy conditions in 2018
Economic developments
In 2018 the world economy grew by around 3%,6 in line
point, bringing it to a range between 2.25% and 2.5%.
with the pace of 2017. The United States and China con-
The euro area expanded by 1.8%, but showed signs of
tinue to drive the world locomotive, boosted by the ef-
slowing down, as indicators of real activity and confidence
fects of expansionary fiscal policies, while euro-area
declined (Purchasing Manager Index and the EC’s Eco-
growth moved at a slower rate. The normalization of mon-
nomic Sentiment Indicator). Consumer prices increased
etary policy in the advanced countries (especially in the
by 1.7%, boosted by developments in energy prices; core
United States) is imposing strong pressures on emerging
inflation (the main reference for monetary policy decisions)
markets (especially the structurally weaker economies).
was still modest at 1%, although it is rising. The labor mar-
Geopolitical uncertainty was a persistent feature of the
ket is improving: in the first eleven months of the year, the
external environment. Protectionist policies, although
unemployment rate was 8.2% (down compared with the
they represent a threat to global growth, as underscored
previous year) and real wages rose compared with 2017.
repeatedly by major institutions such as the International
The European Central Bank (ECB) announced that its pro-
Monetary Fund (IMF), are increasingly being seen as an
gram of extraordinary asset purchases (quantitative eas-
option for reviving national economies. However, despite
ing) would end at the end of 2018, but the central bank said
the trade war waged by the United States, in 2018 Chi-
it would continue to reinvest the principal amounts gen-
na will post its largest trade surplus with Washington in
erated by redemptions of maturing securities in order to
over a decade, expanding by 17% compared with 2017. In
ensure favorable liquidity conditions. Interest rates should
Europe, Brexit negotiations continue without significant
remain unchanged at least until the summer of 2019.
progress, with the the British parliament again postponing
approval of the preliminary agreement reached between
In 2018, the Italian economy grew by 0.9% year on year.
the Prime Minister, Theresa May, and the European
The annual unemployment rate was 10.6% and real wages
Union, while the threat of an infringement procedure and
rose, while inflation was 1.1%, with prices accelerating the
the strains between Italy and the European Union over
most in the 2nd Half of the year. The coming months will
the country’s fiscal policy strategies seem to have abated
be particularly important to understand the impact of the
for the moment.
fiscal strategy and economic policies on reviving the coun-
try’s economic productivity.
The United States entered the ninth year of its expansion.
In 2018 the economy grew by 2.2%, buoyed by the re-
Spain continued to expand faster than the euro-area av-
cent tax reform approved by the Trump administration.
erage (2.5% in 2018), sustained above all by especially
The labor market is solid, with the unemployment rate
strong growth in private consumption (2.3%) and invest-
having fallen continuously since 2009 to its current 3.9%,
ment (5.8%). The improvement in labor market conditions
about 40 basis points lower than the structural rate. The
(the unemployment rate is now 15.4%, compared with
strengthening of the economy beyond its potential has
around 26% in 2013) and low inflation (1.7% on average
sustained inflation. On average, consumer prices since
since the beginning of the year) contributed to expanding
the beginning of the year have grown by 2.4%, a rate now
the purchasing power of households, improving their con-
above the 2% target set by the Federal Reserve (Fed). In
fidence in the outlook.
order to avoid excessive overheating, the US central bank
continued the process of normalizing monetary policy, re-
Russia grew by 2.3% in 2018. The low level of inflation (as
peatedly raising the benchmark rate (the Fed Funds rate
well as boosting real income) made it possible to lower
target); the last increase in December was a quarter of a
the cost of credit and consequently increase the volume of
6 Source: Oxford Economics.
110
Annual Report 2018 lending, fueling private consumption. In the final part of the
the demand side, the low level of inflation (2.7% on average
year, due to a slowdown in demand and a slight uptick in in-
since the beginning of the year) helped increase household
flationary pressure, the central bank intervened to increase
purchasing power, while the improvement in confidence
the official interest rate (+0.25%) on a purely precautionary
buoyed investment (6.1%). These economic developments
basis.
prompted the central bank to raise its reference rate by 25
basis points, bringing it to 2.75% in October.
Romania continues to expand at a rapid pace (4.2%), main-
Colombia posted growth of 2.5%, thanks to the contri-
ly thanks to the growth in consumption. Owing to the pres-
bution of private consumption and investment. Inflation
sure of strong domestic demand, inflation is still very high
(3.2% on average since the beginning of the year) is stable
(4.6%), exceeding the central bank target range of 1.0%-
around the central bank’s average target (3%). The mon-
2.5%. The monetary policy reference rate was raised by
etary policy reference rate was held at 4.25%, thereby
75 basis points from the beginning of the year (currently
leaving the liquidity conditions unchanged. The program
at 2.5%) in an attempt to prevent the economy from over-
announced by the Colombian central bank to increase its
heating excessively.
foreign reserves denominated in US dollars does not ap-
pear to have had any impact on the markets.
In Latin America, the deterioration in the global macroeco-
In Peru, accommodative monetary conditions (the interest
nomic situation has shone a light on the structural weak-
rate was reduced by 150 basis points compared with the
nesses of some countries (i.e. Argentina and Brazil), while
1st Quarter of 2017 and has been unchanged at 2.75% for
other economies (Chile, Colombia, Peru) have displayed
months) and the implementation of a countercyclical fiscal
considerable resilience. In general, in almost all countries
policy (government spending was increased by 3% com-
of interest to the Group (the only exception is Argentina
pared with the 1st Half of 2017) have enabled the economy
and, partly, Mexico) inflation has remained low, which
to recover strongly, growing by 3.7%. Inflationary pressure
helps foster domestic consumption while ensuring compli-
was slight at 1.3%. From the point of view of the public
ance with fiscal constraints.
finances, the low level of debt (the debt/GDP ratio is about
In Argentina, the robust expansion of the 1st Quarter
26%) gives the country room to prolong the fiscal stimulus,
(3.6% year on year) was followed by an equally strong
although the government has set ambitious deficit reduc-
contraction, with an overall decrease of 2.6%. On the de-
tion targets for the coming years.
mand side, high inflation (about 33.8%) compressed real
Mexico grew by around 2.1% compared with 2017. Con-
household income, while gloomy expectations dampened
sumption continues to drive expansion, although inflation
enthusiasm for new investments.
remained high (4.9% on average since the beginning of
The crisis of confidence contributed to the depreciation of
the year). The victory of Andres Manuel Lopez Obrador in
the currency, pushing inflation well beyond the target level
the parliamentary elections last July, and the signing of a
and forcing the central bank to raise its benchmark interest
new trade agreement reached with the United States and
rate during the year.
Canada (USMCA) have reduced the climate of uncertainty
In an attempt to reassure the markets and to meet its fund-
that impacted the economic context in the first part of the
ing needs, the government reached an agreement with
year. This could boost expectations for the economy and
the International Monetary Fund (IMF) for an aid plan of
investment.
over $55 billion, subject to eliminating the primary deficit
by 2019 and achieving a primary surplus of 1% of GDP in
2020.
The Brazilian economy grew by 1.3% in 2018 compared
with 2017, sustained by investment, which represented
the main component with an expansion of 4.4%, and an
increase in private consumption (favored by modest infla-
tion of 3.7% from the beginning of 2018) and exports, both
of which outperformed expectations.
Chile continued to expand (4.0% in 2018 compared with
2017), driven by private consumption and investment. On
111
Report on operations The following table shows the GDP growth rates in the main countries in which Enel operates.
Annual real GDP growth
%
Italy
Spain
Portugal
Greece
Argentina
Romania
Russia
Brazil
Chile
Colombia
Mexico
Peru
Canada
United States
South Africa
2018
2017
0.9
2.5
2.1
2.2
-2.6
4.2
2.3
1.3
4.0
2.5
2.1
3.7
2.1
2.9
0.7
1.6
3.0
2.8
1.4
2.9
6.8
1.5
1.1
1.6
1.8
2.3
2.5
3.0
2.2
1.3
Source: National statistical institutes and Enel based on data from ISTAT, INE, EUROSTAT, IMF, OECD and Global Insight.
112
Annual Report 2018 International commodity prices
During 2018 the oil market was characterized by two dis-
during the summer were generated by two main factors:
tinct phases. The first nine months of the year saw a con-
1) robust demand for injected storage to restore inventory
tinuous and generalized rise in prices, with Brent increas-
levels; and 2) strong demand in Asia, which diverted flows
ing to $86 a barrel in early October, a level not seen since
of LNG to the Far East.
the end of 2014. By contrast, the 4th Quarter saw prices
From October the situation was completely reversed. The
plunge 40% to $54 a barrel towards the end of the year.
sudden drop in the price of oil and the large flow of LNG
From the point of view of the fundamentals, the trend in
bound for Europe (in November imports reached 8 bil-
the first three quarters of 2018 was driven by several fac-
lion cubic meters, a level not seen since 2011), together
tors: 1) growing world demand, accompanied by deeper-
with less than buoyant demand, contributed to a slow and
than-expected cuts in production, which at the end of
steady decline in prices.
March drove OECD inventories below the average of the
last five years; 2) concerns about the sharp drop in Iranian
Develpments in the coal market in 2018 reflected the spe-
output after the US administration withdrew from the nu-
cific characteristics of the two main basins, the Atlantic
clear agreement; and 3) the continuous decline in output
and the Pacific.
in Venezuela; and 4) outside of OPEC, the cuts imposed
In Europe, the competition between gas and coal for use
by the Canadian province of Alberta.
in electricity generation was the main source of volatility
During the 4th Quarter of the year, despite the production
that affected the European market. The sharp rise in gas
difficulties within the OPEC countries, the now unstop-
pable growth of American shale oil and worrying signals
prices during the 1st Quarter and the sudden rise in CO2
prices not accompanied by an equally strong rise in coal
of a slowdown in global growth, with obvious negative
prices made coal plants more competitive than CCGTs,
repercussions for oil demand (in October OECD inven-
leading to a rise in demand in Europe. The weak perfor-
tories returned above the average of the last five years)
mance of prices during the 4th Quarter was mainly due to
contributed to the sharp fall in prices. The production cuts
the fall in demand and the low levels of the Rhine (owing
announced by the OPEC countries and Russia during their
to the severe drought in the previous summer in Northern
last meeting in Vienna appear insufficient to stabilize the
Europe) which limited coal traffic.
market for the moment.
In the Pacific, China was again the main market mover.
While during the 1st Half of the year Chinese demand was
The European gas market also experienced periods of
sustained by cold winter temperatures and an expecially
considerable volatility during the year. While the early
hot summer, in the final part of the year the strains on
months of 2018 were characterized by strong demand,
market fundamentals eased, with a consequent drop in
sustained by especially harsh temperatures, which sharp-
prices as the Chinese authorities again intervened to curb
ly depleted stocks and pushed them below their average
volumes of imported coal.
level of recent years, the unusual price tensions registered
113
Report on operations Electricity markets
Electricity demand
Developments in electricity demand
GWh
Italy
Spain
Romania
Russia (1)
Argentina
Brazil (2)
Chile (2) (3)
Colombia
(1) Europe/Urals.
(2) Figure for the SIC - Sistema Interconectado Central.
(3) Gross of grid losses.
Source: Enel based on TSO figures.
2018
321,910
253,495
62,044
805,916
137,262
583,025
76,175
69,176
2017
320,548
252,506
60,816
795,690
136,730
574,526
74,140
66,861
Change
0.4%
0.4%
2.0%
1.3%
0.4%
1.5%
2.7%
3.5%
The positive trend in electricity demand in the countries
(both 0.4%), mainly due to weather developments and a
in which the Enel Group operates, which began in 2017,
slowdown in economic growth in the last part of the year.
continued last year. The increase in electricity consumption
Russia and Romania registered the largest gains in 2018,
again differed by country, with slower growth in mature
expanding by 1.3% and 2% respectively.
economies such as Italy and Spain and faster expansion in
By contrast, in the main South American countries electric-
South America.
ity demand grew by an average of almost 3%. More spe-
In Europe, temperatures outside seasonal averages caused
cifically: Argentina posted growth of 0.4%, Brazil expanded
demand to expand by an average of 1% compared with
by 1.5%, Chile by 2.7% and Colombia by 3.5%.
the previous year. Italy and Spain posted smaller increases
Italy
Electricity generation and demand in Italy
Millions of kWh
Net electricity generation:
- thermal
- hydroelectric
- wind
- geothermal
- photovoltaic
Total net electricity generation
Net electricity imports
Electricity delivered to the network
Consumption for pumping
Electricity demand
2018
2017
Change l
185,046
49,275
17,318
5,708
22,887
280,234
43,909
324,143
(2,233)
321,910
200,305
37,557
17,565
5,821
24,017
285,265
37,761
323,026
(2,478)
320,548
(15,259)
11,718
(247)
(113)
(1,130)
(5,031)
6,148
1,117
245
1,362
-7.6%
31.2%
-1.4%
-1.9%
-4.7%
-1.8%
16.3%
0.3%
-9.9%
0.4%
Source: Terna - Rete Elettrica Nazionale (monthly report - December 2018).
114
Annual Report 2018
In 2018 electricity demand in Italy increased by 0.4% com-
Net electricity generation decreased by 1.8% in 2018
pared with 2017, reaching 321,910 million kWh. Of total
(-5,031 million kWh), reaching 280,234 million kWh. More
electricity demand, 86.4% was met by net domestic elec-
specifically, greater hydroelectric generation (+11,718 mil-
tricity generation for consumption (88.2% in 2017) with
lion kWh) was more than offset by lower thermal genera-
the remaining 13.6% being met by net electricity imports
tion (a decrease of 15,259 million kWh) and the contraction
(11.8% in 2017).
in photovoltaic generation (-1,130 million kWh).
In 2018, net electricity imports increased by 6,148 million
kWh, essentially reflecting the increase in demand in the
national market.
Spain
Electricity generation and demand in the peninsular market
Millions of kWh
Net electricity generation
Consumption for pumping
Net electricity imports (1)
Electricity demand
2018
246,827
(3,201)
9,869
253,495
2017
248,124
(3,608)
7,990
252,506
Change
(1,297)
407
1,879
989
0.5%
11.3%
23.5%
0.4%
(1) Includes the balance of trade with the extra-peninsular system.
Source: Red Eléctrica de España (Series estadísticas nacionales - Balance eléctrico - December 2018 report). Volumes for 2017 are updated to February 28, 2018.
Electricity demand in the peninsular market in 2018 increased
the previous year. This growth essentially reflected devel-
by 0.4% compared with 2017 reaching 253,495 million kWh.
opments in demand.
Demand was only partially met by net domestic generation.
Net electricity imports in 2018 increased compared with
lion kWh to 246,827 million kWh.
Net electricity generation in 2018 decreased by 1,297 mil-
Electricity generation and demand in the extra-peninsular market
Millions of kWh
Net electricity generation
Net electricity imports
Electricity demand
2018
14,079
1,233
15,312
2017
14,181
1,179
15,361
Change
(102)
54
(49)
-0.7%
4.6%
-0.3%
Source: Red Eléctrica de España (Series estadísticas nacionales - Balance eléctrico - December 2018 report). Volumes for 2017 are updated to February 28, 2018.
Electricity demand in the extra-peninsular market in 2018
ports, all from the peninsular system. The latter totaled
decreased by 0.3% compared with 2017, reaching 15,312
1,233 million kWh in 2019.
million kWh. Of total electricity demand, 92.0% was met
Net electricity generation in 2018 fell by 0.7% or 102 million
by net electricity generation in the extra-peninsular area,
kWh as a result of lower demand for electricity in the extra-
with the remaining 8.0% being met by net electricity im-
peninsular market.
115
Report on operations
Electricity prices
Electricity prices
Average baseload price
2018 (€/MWh)
Change in average
baseload price
Average peakload
price 2018 (€/MWh)
Change in average
peakload price
Italy
Spain
Russia
Brazil
Chile
Colombia
Price developments in the main markets
Eurocents/kWh
Final market (residential) (1)
Italy
France
Portugal
Romania
Spain
Final market (industrial) (2)
Italy
France
Portugal
Romania
Spain
61.3
57.3
15.8
61.7
54.9
32.0
13.6%
9.7%
-8.2%
-26.8%
4.6%
2.4%
68.0
61.5
18.1
68.6
104.2
41.8
2018
0.2067
0.1754
0.2246
0.1333
0.2383
0.0775
0.0686
0.1004
0.0794
0.0880
2017
0.2106
0.1723
0.2257
0.1244
0.2237
0.0943
0.0614
0.1006
0.0751
0.0870
10.1%
7.8%
-9.2%
-44.6%
0.9%
-14.1%
Change
-1.9%
1.8%
-0.5%
7.2%
6.5%
-17.8%
11.7%
-0.2%
5.7%
1.1%
(1) Annual price net of taxes - annual consumption of between 2,500 kWh and 5,000 kWh.
(2) Annual price net of taxes - annual consumption of between 70,000 MWh and 150,000 MWh.
Source: Eurostat.
Electricity price developments in Italy
Power Exchange - PUN IPEX
(€/MWh)
Residential user with annual consumption
of more than 1,800 kWh (€/kWh): price net
of taxes
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
2018
2017
54.3
53.4
68.9
68.6
57.4
44.9
51.6
61.8
0.2
0.2
0.2
0.2
0.1
0.1
0.2
0.1
Source: EMO (Energy Markets Operator) and ARERA (Regulatory Authority for Energy, Networks and Environment).
In 2018, in Italy the uniform national sales price (PUN) re-
driven by tensions in the fundamentals, and to a strong and
turned to its 2013 levels, increasing by 13.6% compared
constant increase in the price of CO2.
with 2017, thanks to the increase in the price of PSV gas,
116
Annual Report 2018
Natural gas markets
Natural gas demand
Millions of m3
Italy
Spain
2018
71,514
30,062
2017
73,973
30,180
Change
(2,459)
(118)
-3.3%
-0.4%
Last year experienced a sharp decline in demand for natural gas in Italy (-3.3%), while in Spain demand was virtually un-
changed on 2017 (-0.4%).
Italy
Gas demand in Italy
Millions of m3
Distribution networks
Industry
Thermal generation
Other (1)
Total
2018
32,355
14,266
23,361
1,532
71,514
2017
32,630
14,365
25,442
1,536
73,973
Change
-0.8%
-0.7%
-8.2%
-0.3%
-3.3%
(275)
(99)
(2,081)
(4)
(2,459)
(1) Includes other consumption and losses.
Source: Enel based on data from the Ministry for Economic Development and Snam Rete Gas.
In 2018, natural gas demand in Italy totaled 71,514 billion
in renewables generation, while mild temperatures in No-
cubic meters, a decrease of 3.3% on the previous year.
vember and December caused residential demand to fall
All segments saw demand decrease in 2018: thermal gen-
by 1%.
eration was the hardest hit (-8.2%) owing to an increase
Price developments
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
1st
Quarter
2nd
Quarter
3rd
Quarter
4th
Quarter
2018
2017
Average residential user with annual
consumption of between 481 and 1,560
m3 (€/Sm3): price net of taxes
0.47
0.43
0.48
0.52
0.45
0.44
0.42
0.44
Source: ARERA (Regulatory Authority for Energy, Networks and Environment).
The annual average sales price of natural gas in Italy increased by 8.6% in 2018.
117
Report on operations Regulatory and rate issues
The European regulatory framework
Regulation of greenhouse
gas emissions
“Clean Energy for all
Europeans” legislative package
In February 2018 the European Parliament and the Council
On November 30, 2016, the European Commission issued
formally approved the reform of the EU’s ETS Directive for
the “Clean Energy for all Europeans” package of measures
the period from 2020 to 2030. The new directive entered
for proposed legislation on European climate and energy
into force on April 8, 2018. To achieve the objective of an
policy.
overall reduction in greenhouse gas emissions of 40% by
In particular, the package includes the following regula-
2030 compared with 1990, the sectors affected by the EU
tions and directives, some of which are revised versions,
Emissions Trading Scheme (EU ETS) will have to reduce
others newly issued: the Electricity Market Regulation, the
their emissions by 43% compared with their 2005 levels.
ACER Regulation, the Risk Preparedness Regulation, the
The new ETS Directive provides for a set of interrelated
Energy Union Governance Regulation, the Electricity Mar-
measures to make this possible. To accelerate the pace of
ket Directive, the Renewable Energy Directive, the Energy
emissions reductions, starting from 2021, the total quan-
Efficiency Directive and the Energy Performance of Build-
tity of emissions permits will decrease at an annual rate of
ings Directive.
2.2%, compared with the current rate of 1.74%. The Mar-
ket Stability Reserve (MSR) – the mechanism established
by the European Union to reduce the surplus of emissions
permits on the market and improve the ETS’s resilience to
future shocks – has been strengthened substantially. Be-
Revision of the Electricity
Market Directive and the
Electricity Market Regulation
tween 2019 and 2023, the amount of allowances set aside
On December 19, 2018, the European Parliament and the
in the reserve will double to 24% of the allowances in circu-
European Council reached a political agreement on two of
lation, while starting from 2024 the normal feeding rate of
the main dossiers of the “Clean Energy for all Europeans”
12% will be restored. As a long-term measure to improve
legislative proposal issued on November 30, 2016 by the
the functioning of the ETS, unless otherwise decided in the
European Commission, namely the Electricity Market Di-
first review of the MSR scheduled for 2021, from 2023 the
rective and the Electricity Market Regulation.
number of allowances in the reserve will be limited to the
The agreement reached by European legislators marks an
auction volume of the previous year. Allowances held above
important step in bringing the regulatory frameworks of
this amount will no longer be valid. The provisions of the
the EU and of the member states up to date with the aim
new EU ETS Directive will be reviewed in the context of
of efficiently integrating renewable energy and new tech-
each global stocktake agreed under the Paris Agreement, in
nologies in the electricity system, harmonizing the func-
which the efforts and ambition of each participating member
tioning of the markets, sending efficient signals for invest-
state will be quantified in aggregate: the first global stock-
ment and placing the consumer at the center.
taking will take place in 2023.
Although the definitive texts of the new directive and regu-
lation have not yet been completed, these are the main
On May 30, 2018 Regulation 2018/842/EU was published. It
firm points of the political agreement reached by the Euro-
concerns the annual greenhouse gas emission reductions by
pean institutions:
member states from 2021 to 2030 for sectors not covered
> at the discretion of the member states, maintaining forms
by the ETS, namely agriculture, transport, construction and
of electricity price regulation for the protection of vulner-
waste treatment, which together account for around 60% of
able and non-vulnerable customers;
the Union’s greenhouse gas emissions. The European non-
> introduction of the option for customers to ask their seller
EU ETS emission reduction target of 30% compared with
2005 has been incorporated into binding national targets.
(provided they serve more than 200,000 customers) for
a dynamic electricity price contract, i.e. one in which the
118
Annual Report 2018 electricity component follows the wholesale cost of elec-
tricity;
> reduction in the time to switch suppliers from the current
21 days to 24 hours by 2026;
> introduction of new actors, such as independent aggrega-
tors, self-consumption and local energy communities, into
the member states’ legal systems;
> substantial confirmation of the expectations concerning
distribution system operators (DSOs), with national regu-
lators being required to offer them incentives to use new
efficient solutions in grid operation (e.g. flexibility);
> prohibition on grid operators (TSOs and DSOs) installing
and managing storage facilities, except in cases of market
failure and in the case of technologies fully integrated into
the grid; in both cases, however, the national regulator’s
specific approval is required;
> maintaining dispatching priority for small-scale renew-
ables plants (less than 400 kW) only, safeguarding exist-
ing plants that enjoy this priority; members states may
withdraw this benefit if the markets are fully accessible to
renewables, the penetration of renewables is on the path
to reaching the targets or exceeds 50% of final electricity
consumption;
> possible derogations from balance responsibility only for
small-scale renewables plants (less than 400 kW) or inno-
vative technologies, safeguarding existing plants or incen-
tivizing them to assume such responsibility;
Directive 2018/2001/EU on the
promotion of the use of energy from
renewable sources
(Renewable Energy Directive)
On December 21, 2018, the new directive of the European
Parliament and of the Council of December 11, 2018 on
the promotion of the use of energy from renewable sourc-
es was published in the Official Journal of the European
Union.
The main objective of Directive 2018/2001, which repeals
Directive 2009/28, is to accelerate the transition towards
the development of renewables. To achieve this, the direc-
tive establishes a new binding EU target of a share of a
least 32% of renewables in the EU’s gross final consump-
tion by 2030, including a clause for assessing whether to
increase the target by 2023.
Furthermore, the directive:
> establishes new rules for designing mechanisms to sup-
port renewable energy to provide certainty to investors by
avoiding retroactive changes;
> allows members states to introduce auctions limited to
specific technologies. In any case, member states must
provide a schedule of future auctions for at least the fol-
lowing five years, indicating the timing, volumes and bud-
get;
> provides effective simplification and streamlining of ad-
ministrative procedures, including for repowering existing
> definition of a European framework for introducing capac-
plants;
ity remuneration mechanisms: need for analysis of the ad-
equacy of European and national mechanisms, strategic
reserves as the preferable option, plans for reforming the
electricity market to eliminate the causes of market fail-
ure and regulatory barriers, phase-out clauses for mecha-
nisms if there are no longer any adequacy problems, emis-
sion limits for participation of new and existing plants.
While the regulation will be directly applicable once the
definitive text is published in the Official Journal of the Eu-
ropean Union, the Directive must be transposed through
specific legislative acts of the member states within two
years of its entry into forth.
> draws attention to the elimination of regulatory barriers
that block the wider use of corporate Power Purchase
Agreement (PPAs);
> establishes a clear and stable regulatory framework for
self-consumption;
> raises the ambition gap for the transport and heating/cool-
ing sectors; and
> improves bioenergy sustainability.
The directive sets the renewable energy target for the
transport sector for 2030 at 14% and is placed on fuel sup-
pliers. Electric mobility is encouraged through to a multipli-
er of 4 for renewable electricity used in road transport. The
directive envisages a sub-target of 3.5% for “advanced
biofuels” by 2030, while first-generation biofuels will be
limited to a maximum of 7% for the entire EU, with further
limits by member state if below 7%. The counting of bio-
fuels at high risk of indirect land-use changes (ILUC) will
be frozen at 2019 levels and gradually eliminated between
2023 and 2030.
119
Report on operations Directive 2018/2002/EU
on energy efficiency
(Energy Efficiency Directive)
The new directive of the European Parliament and of the
Directive 2018/844/EU on the
energy performance of
buildings (Energy Performance of
Buildings Directive)
Council of December 11, 2018 on energy efficiency was
On June 9, 2018, Directive 2018/844/EU on the energy
published in the Official Journal of the European Union on
performance of buildings, which amends the previous di-
December 21, 2018. The directive establishes a new EU en-
rective governing this issue and part of the directive on
ergy efficiency target for 2030 of at least 32.5% compared
energy efficiency, came into force. The new directive pro-
with the reference scenario and includes a provision for re-
vides for each EU member state to establish a long-term
vising it upwards by 2023. It also requires member states
strategy to support the renovation of the national stock of
to achieve end-use energy savings for the 2021-2030 period
residential and non-residential buildings, both public and
of 0.8% per year, to be met by through obligation schemes
private, in order to obtain a decarbonized and energy ef-
on operators or through alternative measures. The provi-
ficient building stock by 2050. In the long-term renovation
sions of the directive must be transposed by the member
strategy, each country will have to establish a roadmap
states by June 25, 2020.
with indicative interim milestones for 2030, 2040 and
Regulation 2018/1999/EU on the
governance of the Energy Union
and climate action
(Energy Union Governance
Regulation)
2050, and measurable progress metrics and indicators.
The directive also promotes electric mobility, setting re-
quirements for the installation in buildings of recharging
points and ducting infrastructure, namely conduits for
electric cables. In particular, non-residential buildings with
more than 10 parking spaces, whether new or undergoing
major renovation, shall be equipped with at least one re-
Alongside with the Renewable Energy Directive and the
charging point for electric vehicles and must be prepared
Energy Efficiency Directive, the EU published in its Of-
for the subsequent installation of recharging points with
ficial Journal the new Regulation 2018/1999/EU on the
the installation of appropriate ducting infrastructure for at
governance of the Energy Union and climate change. This
least one parking space in five. By January 1, 2025, the
regulation sets out the governance mechanism to achieve
member states will also have to set additional require-
the EU targets for greenhouse gas emissions, in line with
ments for the installation of a minimum number of re-
the Paris Agreements, and energy and climate policy tar-
charging points for all non-residential buildings with more
gets for 2030. It aims to ensure greater regulatory cer-
than 20 parking spaces. Residential buildings with more
tainty and investor certainty. The governance mechanism
than 10 parking spaces, whether new or undergoing ma-
is based on the long-term objectives of the European
jor renovation, shall install ducting infrastructure for each
Commission and the member states with a perspective
parking space to enable the installation at a later stage of
of at least 30 years, the integrated national energy and
recharging points for electric vehicles.
climate plans that cover ten-year periods starting with
2021-2030, the corresponding member states’ integrated
national energy and climate progress reports and the in-
tegrated monitoring arrangements by the European Com-
mission. The governance mechanism ensures effective
opportunities for the public to participate in the prepara-
tion of the national plans and the long-term strategies.
It provides for a structured process between the Com-
mission and the member states for the purpose of final-
ization and subsequent implementation of the integrated
national energy and climate plans and the corresponding
Commission action.
The “Clean Mobility”
legislative package
In 2018 the European Commission completed its “Clean
Mobility” package, which was begun in 2017. The package
is organized into three parts, the first two of which were
published in 2017 and the third in May 2018. It contains a
series of legislative proposals and other measures to make
traffic safer, reduce CO2 emissions and air pollution, pro-
mote the development of zero- and low-emission vehicles
and create a production chain for batteries in Europe.
The main measures adopted in the first part are designed
120
Annual Report 2018 to encourage the adoption of charging for road use based
on distance driven (tolls) to best reflect actual use, emis-
sions and pollution produced by vehicles. More specifically,
The Italian regulatory
framework
the proposal calls for internalizing the external costs deriv-
The current structure of the Italian electricity market is the
ing from noise and air pollution into tolls in addition to in-
result of the liberalization process begun in 1992 with Di-
centives for zero-emission vehicles.
rective 1992/96/EC, transposed into law with Legislative
The second part of the package includes three primary
Decree 79/1999. This decree provided for: the liberalization
measures. The first sets CO2 emissions standards for new
cars and vans as at 2025 and 2030. The second, a proposed
of electricity generation and sale; reserving transmission
and ancillary services to an independent network opera-
review of the Clean Vehicles Directive (Directive 2009/33/
tor; the granting of concessions for distribution to Enel and
EC), provides a clear definition of “clean vehicle” (based
other companies run by local governments; the unbundling
on combined pollution and CO2 emission thresholds) and
aims to promote clean mobility solutions in public procure-
of network services from other activities.
The introduction of Directives 2003/54/EC and 2009/72/
ment tenders using a system of procurement targets for
EC (transposed with Law 125/2007 and Legislative De-
the member states, thereby providing a solid boost to the
cree 93/2011, respectively) in Italy lent further impetus to
demand for and to the further deployment of clean mobility
the process, particularly through the complete opening of
solutions.
the retail market and the confirmation of the total inde-
Finally, two main initiatives have emerged with the third
pendence of the national transmission network operator
and final part of the package. The first sets CO2 emissions
standard for new heavy vehicles as at 2025 and 2030 and
(already provided for in the decree of the Prime Minister
of May 11, 2004) by separating its ownership from that of
provides for a review of the regulation to be conducted in
other electricity operators.
2022, which will extend the scope of application of the
The process of liberalizing the natural gas market began
standards to other categories of heavy vehicles, including
with Directive 1998/30/EC, transposed in Italy through
buses. The second initiative provides for an action plan for
Legislative Decree 164/2000, calling for the liberalization
batteries in order to ensure access to a sustainable sup-
of the import, production and sale of gas and the sepa-
ply of raw materials through the use of European resourc-
ration of network infrastructure management from other
es (including those from recycling) and appropriate trade
activities through the establishment of distinct compa-
agreements with other countries, to support the growth of
nies. As regards the model for unbundling transport from
European battery production and to accelerate the creation
other non-network activities, with Resolution 515/2013/R/
of the enabling regulatory framework (e.g. rapid adoption
gas, the Authority for Electricity, Gas and Water System
of market design legislation, CO2 standards for vehicles).
Starting with the presentation of the first package in 2017,
(AEEGSI, since 2018 it has become the Regulatory Author-
ity for Energy, Networks and the Environment - ARERA)
the European Parliament and European Council have
mandated the transition to ownership unbundling pursuant
worked on a number of dossiers to arrive at a common
to Directive 2009/73/EC.
position on the Commission’s proposals. On December 17,
With the decree of November 10, 2017, the Ministers of the
2018 a political agreement was reached on the dossier for
Environment and of Economic Development adopted the
the CO2 emission standards for new cars and light com-
mercial vehicles. The final agreement calls for cutting CO2
emissions for new cars by 15% by 2025 from the 2021 lev-
2017 National Energy Strategy. The document, in line with
the European Energy Union Plan and the Energy Roadmap
2050, establishes the development targets for the energy
el of 37.5% for new cars, and a 31% reduction for new vans
sector by 2030 in terms of competitiveness, sustainabil-
by 2030. It also envisages an incentive mechanism to ac-
ity, the environment and procurement security. In light of
celerate the transition for zero- and low-emission vehicles.
the agreements reached at European level regarding the
In 2019, trilogue meetings between the European Parlia-
Clean Energy Package, the national targets may also be
ment, European Council and European Commission will be
revised. The new targets will be proposed to the European
held to prepare the final text of the other legislative actions
Commission through the integrated national energy and
contained in the three packages that had not been finalized
climate plan, which will be finalized in 2019.
in 2018.
121
Report on operations Wholesale electricity
generation and market
Electricity
Wholesale electricity generation
and market
Electricity generation was completely liberalized in 1999
Produzione plants: Brindisi Sud, for 2018 and for the 2019-
2020 period, Sulcis for the 2019-2020 period, and Assemini
and Portoferraio for the 2019-2020 period.
Enel Produzione’s Porto Empedocle plant has instead been
included in the multi-year cost reimbursement system un-
til 2025. The remaining capacity is subject to alternative
contracts as essential plants.
with Legislative Decree 79/1999 and can be performed by
In addition, to cut natural gas consumption in the thermo-
anyone possessing a specific permit.
electric sector in gas emergency situations and to ensure
The electricity generated can be sold wholesale on the
secure supplies of electricity, Article 38-bis of Decree
organized spot market (IPEX), managed by the Energy
Law 83/2012 authorized MED to identify plants that can
Markets Operator (GME), and through organized and over-
be powered by fuel oil and fuels other than gas, thereby
the-counter platforms for trading forward contracts. The
ensuring their availability to be called into service as a mat-
organized platform includes the Forward Electricity Market
ter of urgency. These plants, deemed “units essential for
(MTE), managed by the GME, in which forward electric-
the security of the gas system”, in exchange for the ser-
ity contracts with physical delivery are traded. Trading can
vice provided, receive a cost reimbursement fee based on
also be conducted in derivatives with electricity as their
the regulations set by ARERA. The MED made recourse to
underlying. The organized market for such transactions
these units for gas years 2012-2013 and 2013-2014. How-
is the forward market (IDEX), operated by Borsa Italiana,
ever, with Resolution 113/2018/R/eel, ARERA rejected the
while financial derivatives can also be negotiated on OTC
request for reimbursement for the 2013-2014 gas year sub-
platforms.
mitted by Enel Produzione in 2016 and set out the new cri-
Generators may also sell electricity to companies engaged
teria for determining the cost reimbursement fee for that
in energy trading and to wholesalers that buy electricity for
gas year. Enel Produzione then requested reimbursement
resale at retail.
under the new rules and also filed an appeal against the
In addition, for the purposes of the provision of dispatching
resolution with the Regional Administrative Court of Milan.
services, which is the efficient management of the flow of
electricity on the grid to ensure that deliveries and with-
Since the launch of the market in 2004, the regulations
drawals are balanced, electricity generated may be sold on
have provided for a form of administered compensation
a dedicated market, the Ancillary Services Market (MSD),
for generation capacity. In particular, plants that make their
where Terna procures the required resources from genera-
capacity available for certain periods of the year identified
tors. Dispatching services are usually procured on the spot
in advance by the grid operator to ensure the secure opera-
market, but Terna has the right to procure services on the
tion of the national electricity system receive a special fee.
forward market, subject to ARERA’s prior approval.
In August 2011, ARERA published Resolution ARG/elt
ARERA and the Ministry for Economic Development
98/11, which establishes the criteria for introducing a
(MED) are responsible for regulating the electricity market.
market mechanism for compensating generation capacity
(capacity market), replacing the current administered re-
With regard to dispatching services, ARERA has adopted a
imbursement. This mechanism involves holding auctions
number of measures regulating plants essential to the se-
through which Terna will purchase from generators the
curity of the electricity system. These plants are deemed
capacity required to ensure that the electricity system is
essential based on their geographical location, their techni-
adequately supplied in the coming years.
cal features and their importance to the solution of certain
With a decree of the Minister for Economic Development
critical grid issues by Terna. In exchange for being required
of June 30, 2014, the capacity market operational mecha-
to have electricity available and providing binding offers,
nism previously issued for consultation by the Authority for
these plants receive special remuneration determined by
Electricity, Gas and Water System was approved.
ARERA.
The mechanism is based on the allotment, by auction, of
As for the cost reimbursement scheme for essential gen-
option contracts (reliability options) that provide for pay-
eration units, ARERA has approved the following Enel
ment of a premium, established in the auction with the
122
Annual Report 2018
setting of a marginal price, against which a generator un-
Through Resolution 314/2017/R/eel, ARERA also provided
dertakes to return any positive difference between the
that, with regard to the commitments made by Enel Pro-
price formed on the spot electricity and ancillary services
duzione as part of the proceedings, any amounts exceed-
market and a benchmark price set ex ante in the option
ing the caps for the plant for the 2017-2019 period will be
contract.
transferred to Terna.
The rules approved provide for a cap of the premium to
With Resolution 319/2018/R/eel, ARERA changed the pa-
be paid for existing capacity and for newly constructed
rameters involved in the determination of the variable cost
capacity.
recognized for the generation units of the Brindisi Sud
plant for the remainder of 2018.
On February 7, 2018 the European Commission announced
Resolutions 314/2017/R/eel and 928/2017/R/eel, which
that Italy’s capacity market is compliant with the guidelines
approved the admission of the Brindisi plant to the cost
on state aid for environmental protection and energy, how-
reimbursement system for years 2017 and 2018, was chal-
ever it proposed some adjustments, which were subse-
lenged by another operator before the Regional Adminis-
quently made with Resolution 261/2018/R/eel. In addition
trative Court of Milan (Enel Produzione intervened in the
to adjusting its rules to the commitments made by Italy to
case to defend the legality of these resolutions). The hear-
the European Commission, in that resolution ARERA made
ing was held on October 10, 2018 and the Court has yet to
further changes based on previous consultations.
issue its decision.
The MED has yet to adopt the decree approving the
scheme.
With Resolution 422/2018/R/eel, ARERA approved the
scheme proposed by Terna under Resolution 300/2017/R/
Within the context of its power to procure dispatching
eel to allow aggregate virtual mixed units (AVMU, com-
services on the forward market as provided by Resolu-
posed of generation units that do not require approval and
tion 111/2006, ARERA, with Resolution 326/2016/R/eel,
consumption units) to participate in the dispatching market.
charged Terna with conducting the competitive tender for
assigning contracts for the supply of replacement tertiary
reserves in Sardinia for the period from July 1, 2016 to De-
cember 31, 2018. The contracts awarded by Terna estab-
lish a requirement to supply the Ancillary Services Market
Gas
Wholesale market
The extraction, import (from EU countries) and export of
(MSD) at the variable cost paid to the plant for a premium
natural gas have been liberalized.
established in the competitive tender. Following the ten-
According to the provisions of Legislative Decree 130/2010,
der, all of the capacity was contracted with Enel’s Sulcis
operators are permitted to hold market shares of up to 55%
plant.
of domestic consumption.
The spot trading platform (the “Gas Exchange”) began
Following ARERA’s Resolution 342/2016/E/eel, on October
operation in 2010 and ARERA established the balancing
6, 2016 the Competition Authority began an enquiry involv-
market in 2011. The forward market later completed the
ing Enel SpA and Enel Produzione SpA to determine the
structure of the Italian wholesale market, joining the Gas
existence of a possible abuse of a dominant position in the
Exchange.
MSD of the Brindisi Sud plant, which concluded in May
As for the balancing market, ARERA, implementing Com-
2017 with the acceptance of the commitments proposed
mission Regulation 2014/312/EU, redefined, starting from
by Enel SpA and Enel Produzione without the imposition of
2016, the rules for its functioning, in order to boost the
sanctions. More specifically, the commitments consist of
availability of flexible resources to balance the system and
the introduction, for the years 2017-2019, of a cap on total
improve the set of information for users.
annual revenue that can be generated by the Brindisi Sud
In 2017 the Ministry for Economic Development (MED) in-
plant, net of variable costs paid under current regulations.
dicated that, starting from 2018, the figure of market maker
The cap will also apply in the event the plant is included
would be introduced in markets organized by the Energy
under the cost reimbursement system pursuant to Resolu-
Markets Operator (GME). In 2018 Enel Global Trading SpA
tion 111/2006.
was added to the list of operators that act as market makers.
123
Report on operations Transportation, storage
and regasification
Transport, storage and regasification (of LNG) are subject to
regulation by ARERA, which sets the rate criteria for engag-
ing in these activities at the start of each regulatory period.
Storage is carried out under a concession issued by the
MED to applicants that satisfy the requirements of Legisla-
tive Decree 164/2000. Each year, the MED issues a decree
establishing the criteria for allocating capacity through an
auction mechanism.
LNG activities are subject to the grant of a special minis-
terial permit to ensure third-party access (TPA). The MED
may grant an exemption from the TPA rules. As for regasifi-
cation, in 2017 ARERA envisaged replacing the rate-based
method for allocating capacity with a system of auctions
starting in 2018.
Transport activities, defined by regulatory criteria for rate
periods, continue to be subject to fees updated annually
by ARERA. In 2017 it extended, with a few corrective mea-
sures, the rate criteria for 2014-2017 to 2018-2019, which
were challenged by Enel Trade consistent with previous dis-
putes, still pending, regarding the 2010-2013 and 2014-2017
periods.
In particular, with regard to the gas transport rates for the
2010-2013 period, with ruling 1840 of March 23, 2018, the
Council of State found that Resolution 550/2016/R/gas,
with which ARERA recalculated the rates for that regula-
tory period, was compliant with the rulings of the Regional
Administrative Court and the Council of State in the asso-
ciated judgment on the merits. Enel Trade, exercising the
option recognized by the Council of State, appealed the
aforementioned resolution before the Milan Regional Ad-
ministrative Court, claiming that it was illegitimate for rea-
sons other than violation of the ruling.
Distribution
Electricity
Distribution and metering
e-distribuzione provides distribution and metering services
under a 30-year concession set to expire in 2030.
The general criteria for the regulation of distribution rates
are set by ARERA at the start of each regulatory period
based on covering the cost of providing the services, in-
cluding operating costs, depreciation and providing an ap-
propriate net return on capital.
124
The rate component covering operating costs, established
at the start of the regulatory period based on the most re-
cent final costs available, is updated annually using a price-
cap mechanism, taking account of the inflation rate and an
annual rate of reduction of unit costs (called the X-factor),
to restore any efficiency gains achieved by operators in
previous regulatory periods. The return-on-capital and de-
preciation components are instead updated each year to
take account of new investments, depreciation incorpo-
rated in rates and the revaluation of existing assets using
the deflator for gross fixed capital formation.
Based on the recognized costs, each year ARERA autho-
rizes for each distributor a level of annual revenue (“permit-
ted revenue”) by setting reference rates that are different
for each company. This revenue is not dependent upon vol-
umes distributed owing to the equalization mechanisms,
managed by the Energy and Environmental Services
Fund, which compensates operators for any differences
between permitted revenue and actual revenue received
from invoicing sellers, based on the mandatory rates set
by ARERA at national level.
The rate for the fifth regulatory period (2016-2023) is cov-
ered by ARERA Resolution 654/2015/R/eel. This period
lasts eight years and is divided into two sub-periods of four
years each (NPR1 for 2016-2019 and NPR2 for 2020-2023).
The regulatory framework for NPR1 is basically a continua-
tion of the past, although with some new features, includ-
ing shortening the “regulatory lag” from two years to one
for the period before remuneration for new investments
is recognized and lengthening by five years the useful life
of medium- and low- voltage lines that have entered into
service since 2008.
For the NPR2 period instead, ARERA proposed an eventual
transition to rate regulation based on the no longer distinct
recognition of operating costs and investment (the Totex
method). ARERA has not yet established the schedule and
manner of implementation for this new method.
The criteria for setting WACC for electricity and gas infra-
structure services were set by ARERA with Resolution
583/2015/R/com for the 2016-2021 period, with an update
at the end of 2018 to take account of economic trends.
The real pre-tax WACC for electricity distribution for the
2016-2018 period was 5.6%. This amount was updated to
5.9% for 2019-2021 by Resolution 639/2018/R/com.
As for distribution and metering rates, in 2018 ARERA ap-
proved both the definitive reference rates for 2017, calcu-
lated by taking into account the actual balance sheet data
Annual Report 2018 for 2016 (Resolutions 150/2018/R/eel and 174/2018/R/eel),
72 hours the time limit beyond which automatic compen-
and the provisional reference rates for 2018 on the basis of
sation to users of power grids for prolonged interruptions
the preliminary balance sheet data for 2017 (Resolutions
shall be borne entirely by the grid operators.
175/2018/R/eel and 176/2018/R/eel). The definitive refer-
Finally, with Resolution 668/2018/R/eel, ARERA estab-
ence rates for 2018 are expected to be published by Feb-
lished an incentive mechanism for measures to increase
ruary 28, 2019 on the basis of actual balance sheet data
resilience, which will apply starting from the next 2019-
communicated to ARERA at the end of 2017.
2021 Resilience Plan to 2024, for “high-risk” measures
(“eligible” measures). The “eligible” measures whose ben-
With regard to second generation smart metering sys-
efits exceed the costs can receive rewards or be subject
tems, with Resolution 222/2017/R/eel, ARERA approved e-
to penalties, while “eligible” measures that have benefits
distribuzione’s plan for placing the meters in service during
that are less than the costs will only be subject to penal-
the 2017-2031 period and established the standard cost
ties. There is, however, the possibility to fully eliminate the
based on which the efficiency incentives will be calculated.
effects of the penalties if in the span of the three-year plan
Resolution 646/2016/R/eel guarantees that the metering
period measures are carried out that involve at least 90%
service rates for end users will remain unchanged.
of the customers that can take advantage of “eligible”
On December 31, 2018 the monitoring of the performance
measures. ARERA also – following future consultations –
of communication between meters and user devices
will introduce regulatory mechanisms that offer incentives
(“Chain 2”) required by ARERA was completed. ARERA
for quickly restoring the normal operation of the distribu-
will conclude by March 31, 2019 the assessments of any
tion network following exceptional weather events.
technological solutions for the incremental features of the
2.1 version of meters.
With Resolution 377/2015/R/eel, ARERA completed the
ARERA also issued specific measures to establish the reg-
regulatory framework governing losses on the distribution
ulatory framework to accompany the various implementa-
grid, providing for new conventional loss percentages for
tion phases of the plan with reference, for example, to re-
deliveries to and withdrawals from the grid to be applied
quired disclosures to end users, making the metering data
starting in 2016. With Resolution 677/2018/R/eel, ARERA
available to the Integrated Information System (IIS) and to
confirmed the percentages for 2019 and at the same time
transport users, and to the transition to hourly delivery for
initiated the process to complete the regulatory frame-
the purposes of settlement of services provided using the
work governing losses, particularly regarding the equaliza-
new meters.
tion mechanism for distributors.
As regards service quality, ARERA, with Resolution
With Resolution 268/2015/R/eel, ARERA established the
646/2015/R/eel as amended, established output-based
Model Grid Code for transport services, which governs
regulation for electricity distribution and metering ser-
the relationship between sellers and distributors concern-
vices, including the principles for regulation for 2016-2023
ing the guarantees given by sellers to distributors, the
(TIQE 2016-2023) and authorized the start of trials to test
payment terms for the transport service and the terms
some of the advanced management functions for the dis-
of payment of the system costs and other components
tribution grid.
by distributors to the Energy and Environmental Services
With regard to increasing the resilience of the electricity
Fund and the Energy Services Operator (GSE). The resolu-
transmission and distribution networks, with Resolution
tion also provided for the elimination starting from 2016
31/2018/R/eel, ARERA updated the TIQE, ordering the dis-
of the uncollectible portions of turnover withheld by dis-
tribution companies to prepare their resilience plans with a
tributors as a result of the strengthening of the system of
horizon of at least three years and to integrate these plans
guarantees.
into a specific section of their development plans. All the
As regards the calculation of the transport service guar-
measures identified by the distribution companies must be
antees, a number of different administrative court deci-
aimed at containing the risk of disruption associated with
sions handed down between May 2016 and November
the main critical factors that may impact their networks.
2017 voided ARERA’s provisions requiring the inclusion of
This provision supplements the measures already intro-
guarantees to cover system charges if not paid by end us-
duced with Resolution 127/2017/R/eel, which extended to
ers in transport contracts between distributors and sellers.
125
Report on operations e-distribuzione decided to challenge the last ruling by the
closed distribution systems and basic generation and con-
Council of State (Section VI, ruling 5620/2017) before the
sumption systems), Resolution 276/2017/R/eel updated the
Court of Cassation, where the proceeding is pending.
relative codes, adopting the provisions of Article 6(9) of De-
In accordance with these decisions, Resolution 109/2017/R/
cree Law 244/2016 concerning general system charges. The
eel established a temporary regime involving a 4.9% re-
subsequent Resolution 894/2017/R/eel updated the defini-
duction in the amount of guarantees for system charges
tion of consumption unit and postponed until June 30, 2018
to take account in advance of the average arrears of end
the deadline for “hidden end users” to declare themselves.
customers (conservatively set at equal to the unpaid ra-
In addition, ARERA is continuing its work to rationalize the
tio recognized by the Central-South Regions, where the
regulatory framework in the context of the recognition of
levels of arrears are higher than average). This resolution
cases of private networks. With Resolution 530/2018/R/
was appealed by a number of operators and the related
eel and the subsequent Resolutions 613/2018/R/eel and
proceeding is currently pending before the Milan Regional
680/2018/R/eel, ARERA established the new internal user
Administrative Court.
network (IUN) and other closed distribution systems (OCDS)
ARERA also issued Resolution 50/2018/R/eel, which intro-
registers for monitoring “hidden end users”, whose publica-
duces a reimbursement mechanism for non-recoverable
tion is expected by July 1, 2019.
receivables of distribution companies in respect of the
With Resolution 628/2018/R/eel, ARERA opened a consulta-
general system charges paid to the Energy and Environ-
tion concerning the regulation of the exchange of data be-
mental Services Fund and the Energy Services Operator
tween Terna, distributors and significant grid users - SGU (i.e.
(GSE) but not collected by defaulting sellers whose trans-
generators, closed distribution systems and high-voltage or
port contract has been terminated. The provision permits
closed distribution system customers, or customers con-
the recognition of receivables accrued as from January
nected to distribution grids that provide flexibility services).
2016. This resolution was also challenged by a number of
The first phase of the consultation will be completed by
operators and a consumer association, and the related pro-
March 14, 2019.
ceeding is pending before the Milan Regional Administra-
tive Court. At present, the Court has issued a decision only
with regard to the latter challenge, which was denied.
Energy efficiency - White certificates
The Energy Efficiency Certificates (EEC or white certificates)
Given the rise in breaches by sellers with regard to their failure
mechanism is regulated by the MED along with the Minis-
to provide adequate guarantees, with Resolution 655/2018/R/
try for the Environment. ARERA is required to establish the
eel ARERA intervened urgently to amend the Model Grid
criteria and the method for covering distributors’ costs for
Code to allow the termination of contracts for transport ser-
electricity and gas as entities obliged to satisfy the obligation
vices for failure to provide guarantees as to level of revenue.
to purchase EECs. Such coverage is guaranteed through the
payment of a rate subsidy, the amount of which in €/EEC is
As regards the procedures and financial terms for the connec-
set annually by ARERA.
tion of generation plants to distribution grids, ARERA, with
The Interministerial Decree of January 11, 2017 set the new
Resolution 581/2017/R/eel, updated the Integrated Grid Con-
energy efficiency targets for 2017-2020 and the new guide-
nection Code (TICA) in order to implement the simplification
lines for the functioning of the mechanism. The Ministerial De-
measures provided for in the Ministerial Decree of March
cree of May 10, 2018 amended and updated the Interministe-
16, 2017 for the connection and operation of micro-gener-
rial Decree, introducing, among other things, a cap of €250/
ation plants powered by renewables. In addition, following
EEC on the rate subsidy for obliged entities.
the close of the preliminary inquiry provided for by Resolu-
tion 412/2015/E/eel, ARERA with Resolution 564/2018/R/eel
ARERA Decision 4 of June 22, 2018 set the amount of the
further updated the TICA, introducing new rules governing
definitive rate subsidy for 2017 at €311.45/EEC.
payments for testing conducted by distributors of network
With Resolution 487/2018/R/efr, ARERA updated the rules es-
plants constructed by generators, recognizing the activities
tablishing the rate subsidy under the Decree of May 10, 2018.
carried out during the testing by the companies and also pro-
Enel filed an appeal with the Regional Administrative Court
viding that the estimated payment for testing be adjusted
challenging the measures and the corrective decree of May 10,
according to the actual activities performed.
2018, disputing the provisions that could jeopardize the recov-
As for the regulatory framework for private grids (specifically,
ery of the costs incurred in satisfying the efficiency obligations.
126
Annual Report 2018 Reform of electricity rates
With Resolution 782/2016/R/eel, ARERA fully eliminated,
with effect from January 1, 2017, the progressivity of the dis-
tribution rate for domestic customers.
The resolution provides for the first steps to be taken in
2017 to reduce the effect of progressivity on general system
charges. The system charges reform that was expected to
be completed by January 1, 2018, with complete elimination
of the progressive structure, was extended by ARERA with
Resolutions 867/2017/R/eel and 626/2018/R/eel to Decem-
ber 31, 2019.
With Resolution 922/2017/R/eel, ARERA implemented, start-
ing from January 1, 2018, the reform of the structure of the
general system costs for non-residential customers provided
by Law 21 of February 25, 2016.
As part of the reform of the general system costs for non-
residential customers, ARERA, with Resolution 921/2017/R/
eel, established the implementing provisions for the grant
of concessions for energy-intensive companies, as provided
by the MED Decree of December 21, 2017, with effect as of
January 1, 2018.
Sales
Electricity
As provided for by Directive 2003/54/EC, starting from
ed as of January 1, 2019 the levels of RCV payments,
which represent the reference price of the free market
sellers. The RCV levels for 2018 were set by Resolution
633/2016/R/eel.
Free-market operators are awarded contracts to provide
safeguard services on a geographical basis through two-
year auctions. For the 2017-2018 period, following the
procedure governed by Resolution 538/2016/R/eel, Enel
Energia was awarded the areas corresponding to the re-
gions of Liguria, Piedmont, Valle d’Aosta, Trentino-Alto
Adige, Lombardy, Lazio, Puglia, Molise and Basilicata. For
the 2019-2020 period, following the procedure governed
by Resolution 485/2018/R/eel, Enel Energia was awarded
the areas corresponding to the regions of Calabria and Sic-
ily. The financial terms applied to end users were defined
on the basis of the provision of the applicable primary and
secondary legislation.
The annual competition law (Law 124/2017) was approved
on August 4, 2017 and was modified by the Decree Law
of July 25, 2018; it provided that the electricity and gas
sectors of the price protection market would be eliminated
as of July 1, 2020. The law gives MED, in consultation
with ARERA and the AGCM, the task of establishing the
procedures for phasing out the market, ensuring that con-
sumers are kept informed and that there is a range of sup-
July 1, 2007 all end users may freely choose their electric-
pliers.
ity supplier on the free market or participate in regulated
markets. Law 125/2007 identified these regulated mar-
kets as the “enhanced-protection” market (for residential
customers and small businesses with low-voltage con-
nections) and the “safeguard services” market (for larger
customers not eligible for enhanced-protection services).
Enhanced-protection service is provided by sellers con-
nected with distributors. Prices are set by ARERA and are
updated periodically based on criteria designed to ensure
that the operators’ costs are covered.
ARERA updates the component for covering the opera-
tors’ costs in the enhanced-protection market (RCV) annu-
ally so as to ensure that their operating costs, delinquency
charges and amortization and depreciation are covered
and that they receive a fair return on capital. Resolutions
927/2017/R/eel and 706/2018/R/eel established rates for
2018 and 2019.
With Resolution 706/2018/R/eel, ARERA also updat-
The law also provides for the creation within the MED of a
list of electricity sellers that are authorized to sell electric-
ity on the retail market, having met certain technical, finan-
cial and reputational requirements proposed by ARERA.
ARERA, in accordance with the law above, issued Reso-
lution 555/2017/R/com, requiring all sellers to include in
their portfolios offers at free market prices with conditions
equivalent to those of the protected market (PLACET of-
fers), targeted at households and small businesses start-
ing in early 2018. This was done to make it easier for end
users to understand and compare offers and participate
in the free market. In addition, to improve understanding
of the free market, on July 1, 2018 the offers portal (es-
tablished by Resolution 51/2018/R/com, as provided by
Law 124/2017) became operational. Sellers are required
to make available through the portal all offers targeted at
households and small businesses, to ensure that they can
be compared transparently with other sellers’ offers.
127
Report on operations In 2016, ARERA lent significant impetus to the develop-
However, sales companies must also offer a safeguard
ment and implementation of the Integrated Information
service to their customers (only for residential customers
System (IIS). This system was established under Law
pursuant to Decree Law 69 of June 21, 2013), together
129/2010 and is designed to manage the flow of informa-
with their own commercial offers, at the regulated prices
tion between gas and electricity market operators, based
established by ARERA.
upon a central database of withdrawal points.
If there is no company supplying this service, the conti-
Through a number of measures ARERA governs various
nuity of supply for small customers not in arrears on bill
services, gradually centralizing the management of the
payments (residential and other uses with an annual con-
commercial processes for contract transfer and switch-
sumption of less than 50,000 standard cubic meters) and
ing, of the indemnification system and of metering data
for users involved in providing public services shall be en-
for both sectors (electricity and gas) and, for the electricity
sured by the supplier of last resort. If the customer is in
sector only, the aggregation of metering at hourly with-
arrears with bill payments or it is not possible for the sup-
drawal points for the purposes of monthly settlement.
plier of last resort to provide service, supply continuity is
Thanks to the development work carried out, the IIS is
ensured by the default distribution supplier selected, like
increasingly operating as a central hub for the exchange of
the supplier of last resort, through voluntary tenders for
information among all system operators and for this rea-
geographically-based contracts.
son Ministerial Decree 94 of May 13, 2016 designated the
IIS as the mechanism for managing the process of billing
With Resolution 465/2016/R/gas, ARERA updated the
TV license fees through electricity bills. To cover the costs
rules governing public tenders for the award of last-resort
of managing this process, ARERA Resolution 291/2017/R/
services for October 1, 2016 - September 30, 2018. Fol-
eel established the distribution criteria to be used by the
lowing the competitive procedures, Enel Energia was
Italian Revenue Agency in calculating and paying sellers in
designated as supplier of last resort for 7 of the 8 areas
the 2017-2018 period the lump-sum grant under the de-
involved in the auction (Valle d’Aosta, Piedmont and Ligu-
cree for the years 2016 and 2017 only.
ria; Lombardy; Trentino-Alto Adige and Veneto; Tuscany,
In application of Law 205/2017 (the “Maxi Adjustments
Umbria and Marche; Abruzzo, Molise, Basilicata and Pug-
Act”, which introduced a two-year period of limitations for
lia; Lazio and Campania; Sicily and Calabria) and as default
electricity, gas and water supply contracts), ARERA issued
supplier in 3 areas out of 8 (Abruzzo, Molise, Basilicata and
Resolution 264/2018/R/com establishing for the electricity
Puglia; Lazio and Campania; Sicily and Calabria).
sector that, in cases of adjustments deriving from multi-
With Resolution 407/2018/R/gas, ARERA updated the
year corrections by distributors for which the end user
rules governing public tenders for the award of last-resort
had protested the amount invoiced, the seller may ask the
services for October 1, 2018 - September 30, 2019. Fol-
distributor to recalculate the amounts relating to transport,
lowing the competitive procedures, Enel Energia was
with the consequent restitution of amounts previously paid
designated as supplier of last resort for 4 of the 9 areas
by offsetting them against other amounts owed.
involved in the auction (Abruzzo, Molise, Basilicata and
Puglia, Lazio, Campania, Sicily and Calabria) and as default
With regard to the proceedings initiated on May 11, 2017
distribution supplier in 2 out of 9 areas (Lombardy, Trenti-
by the AGCM against Enel SpA, Enel Energia SpA and Ser-
no-Alto Adige and Veneto).
vizio Elettrico Nazionale SpA for alleged abuse of domi-
nant position on the retail electricity market for residential
Starting from October 1, 2013, the reform of the finan-
and non-residential end users connected to the low volt-
cial terms and conditions applied to safeguard customers
age grid, please refer to the chapter “Contingent assets
entered into force. In this situation, ARERA modified the
and liabilities” in the notes to the financial statements.
procedures for determining the raw material component,
Gas
Legislative Decree 164/2000 established that, as from
indexing it fully to spot market prices, introduced compo-
nents to ensure a gradual transition (including one spe-
cifically for the renegotiation of long-term contracts) and
increased the component covering retail sales costs to en-
January 1, 2003, all customers may freely choose their
hance cost-reflectivity.
natural gas supplier on the free market.
With regard to the raw material (gas) cost component,
128
Annual Report 2018 on January 24, 2014, the Regional Administrative Court
in service; the deadlines for compliance vary based on the
of Lombardy, in the course of an action brought by Enel
number of end users.
Energia and Enel Trade, voided the resolutions by which
In order to enable the application of Law 205/2017 (the
ARERA changed the formula for determining (and thereby
“Maxi Adjustments Act”), which introduced a two-year
reducing) the QVD component for the 2010-2011 and 2011-
period of limitations on supply contracts, ARERA Resolu-
2012 gas years. In 2014, ARERA filed an appeal with the
tion 683/2018/R/com extended to the gas sector, starting
Council of State. In 2016, the Council of State denied the
from January 1, 2019, the regulations already in force in the
appeal, granting the appeal of Enel Energia and Enel Trade,
electricity sector under Resolution 264/2018/R/com.
finding the measures were in conflict with the statutorily
established principle of the necessary “correspondence
between recognized costs and actual costs”. Resolution
Renewable energy
737/2017/R/gas, in accordance with the Council of State’s
decision, recalculated the value of the raw material for the
October 2010 - September 2012 period. With Resolution
32/2019/R/gas, ARERA established the rules governing
the manner of handling the amounts owed to operators.
With regard to the definition of the component covering
natural gas supply rates, ARERA also confirmed, until Sep-
tember 30, 2019, the current procedures, with full index-
ing to the spot prices reported on the Dutch Title Transfer
Facility (TTF), pending the development of greater liquidity
in the Italian wholesale markets.
The regulatory framework for supporting renewable energy
technologies in Italy envisages a range of remuneration
systems. Incentives for technologies other than photovolta-
ic are awarded through competitive procedures established
with Legislative Decree 28/2011, transposing Directive
2009/28/EC, and the associated implementing ministerial
decrees of July 6, 2012 and June 23, 2016. The decrees en-
visage the use of Dutch auctions and feed-in tariffs, based
on the installed capacity and technology. Specifically:
> dutch auctions for plants with capacity of over 5 MW;
> registries for plants with capacity of less than 5 MW;
New regulations for gas settlement were introduced in
2017, providing for the recovery of a share of the costs as-
> direct access for wind plants with capacity of less than
60 kW, biomass plants of less than 200 kW and hydro-
sociated with grid loss for the previous period (2013-2017)
electric plants of less than 250 kW.
and all of the costs for the transition period (2018-2019).
With Resolution 548/2018/R/gas, ARERA approved the
provisions for the almost complete disbursement, by 2018,
The above incentive mechanisms will terminate when the
indicative cumulative annual cost of the incentives reaches
€5.8 billion. At November 30, 2018, the indicative cumula-
of the amounts relating to the results of the first adjustment
tive annual cost was about €4.7 billion.
session (for 2013-2016) due to operators with a credit.
A number of operators challenged ARERA’s resolutions
and consultations on the adjustment sessions for previous
periods and the transition period (2013-2019) before the
Lombardy Regional Administrative Court, asking that they
be suspended and ultimately annulled. Enel Global Trad-
ing has intervened in support of ARERA’s regulation. The
With regard to solar generation, the incentive system pro-
vided for the application of a number of Energy Accounts,
of which Accounts I, II, III and IV (from September 19, 2005
to August 26, 2012) were based on a feed-in premium (a
rate premium over the hourly zonal price), while Energy Ac-
count V (from August 27, 2012) was based on a feed-in tariff
(comprehensive price) and was terminated once a cost of
Court denied the requests for suspension and has yet to
€6.7 billion was reached on July 6, 2013.
set a date for a hearing on the applications for annulment.
As from January 1, 2020, under the provisions of Reso-
lution 72/2018/R/gas, the new regulations for gas settle-
ment will enter into force, providing for the socialization of
network losses that are directly sourced by Snam Rete Gas
and allocated in the rate.
With regard to metering, Resolution 669/2018/R/gas
raised to 85% the requirement for distributors with more
than 50,000 end users to place G4-G6 class smart meters
In March 2018, the new draft decree on all renewables from
mature technology was issued; MED still has to notify it to
the European Commission for approval in accordance with
the state aid guidelines. Under the decree, the develop-
ment of renewable resources will be supported through
Dutch auctions and registries (for plants of less than 1
MW), assigned through two-way contracts for differences.
129
Report on operations ARERA Resolution 558/2018 -
Remuneration of renewable energy
plants for non-interconnected
minor island
Energy Efficiency
Law 18/2014 of October 15, 2014 containing urgent mea-
sures for growth, competition and efficiency created a Na-
tional Energy Efficiency Fund to help achieve energy effi-
The February 14, 2017 decree of the MED gave instructions
ciency objectives.
for gradually covering the electricity needs of the non-inter-
Order ETU/257/2018 of March 16, 2018 set Endesa’s contri-
connected minor islands with renewable energy. The decree
bution to the National Energy Efficiency Fund at €29 million,
envisages remuneration for energy generated from renew-
corresponding to the energy savings obligations for 2018.
able resources related to the cost of the fuel avoided and the
In December the Ministry for Ecological Transition initiated
launch of pilot projects to integrate renewable resources in
the process of drafting the law that sets Endesa’s contribu-
the electricity systems of those islands.
tion to the National Energy Efficiency Fund for 2019, setting
it at €28 million.
Iberia
Spain
Electricity rates
On December 22, 2018, Order TEC/1366/2018 was pub-
lished, establishing the electricity access rates for 2019,
Social Discount (“bono social”)
On April 9, 2018 Order ETU/381/2018 was published. It modi-
fies the forms used to apply for the “bono social”, which were
established with Order ETU/943/2017 of October 6, 2017.
Order ETU/381/2018 extends until October 8, 2018 the tem-
porary deadline for accrediting electricity users qualified as
vulnerable under Royal Decree 897/2017 who are already
leaving them unchanged from the existing rates as it did the
beneficiaries of the “bono social”.
year before. This order suspended the incentives available
under Order ITC/3127/2011 until the capacity mechanisms
for adapting to European law and therefore to the energy
Order TEC/1226/2018 was published on November 21, 2018
in the Official State Gazette (BOE), laying out the percentage
contributions for funding the 2018 “bono social”; Endesa’s
transition process are reviewed.
share is 37.15%.
Natural gas rates
Order ETU/1283/2017 of December 22, 2018 confirmed the
natural gas access rates for 2018, unchanged from the previ-
ous year. It also raised the final rates of last resort (TURs) by
5% owing to the increase in the price of raw materials.
On June 30, 2018, the TURs for the 3rd Quarter of 2018 were
published, increasing by 3.4%. For the 4th Quarter of 2018,
the TURs were raised by a further 7.4% compared with the
previous period, as a result of the increase in raw material
costs.
On December 22, 2018, Order TEC/1367/2018 was published,
establishing the natural gas access rates for 2019, leaving
Public consultation of the National
Commission on Markets and
Competition (CNMC) on the rate
of return for regulated activities
On July 27, 2018 the Spanish National Commission on Mar-
kets and Competition (CNMC) opened a public consulta-
tion on the method for calculating the rate of return for the
2020-2025 period for distribution and transmission activi-
ties and for the extra-peninsular electricity system and re-
newables system. Subsequently, CNMC issued a report on
October 30, 2018 in which it proposed a return of 5.58%
for distribution, transmission and extra-peninsular systems,
them unchanged from the existing rates. Instead, on Decem-
and 7.09% for renewables.
ber 26 the final TURs as of January 1, 2019 were published,
lower on average by about 4% compared with the previous
period because of the decline in the cost of raw materials.
Based on this report, on December 28 the Ministry for Eco-
logical Transition presented a draft law containing these rates
of return for the 2020-2025 period. However, for renewable
installations benefitting from incentives prior to Royal De-
cree Law 9/2013, the return cannot be revised during the
2020-2031 period, but rather the current rate of 7.389% will
apply, while they can deduct indemnities awarded in arbitra-
130
Annual Report 2018 tion already concluded. The installations, however, can opt
raised to €15 million, of which €7 million to Endesa. The
out of this regime and adopt the general scheme.
Royal Decree establishes that this method be used for any
Following the presentation of the draft law, the government
deficit that arises in the future.
approved Royal Decree Law 1/2019, laying out in detail the
determination of the rate of return.
Law 6/2018 of July 3, 2018 on the
State budget
Royal Decree Law 15/2018 of
October 5, 2018, containing urgent
measures on energy transition and
consumer protection
Law 6/2018 concerning the 2018 State budget was pub-
On October 5, 2018, the Council of Ministers approved
lished on July 4, 2018. Among other things, for 2018 the
Royal Decree Law 15/2018, establishing a set of measures
budget law contemplates allocating the surplus revenue of
to accelerate decarbonization, giving momentum to renew-
the electricity system to paying indemnities for resolving
ables, e-mobility and energy efficiency and ensuring greater
disputes in the sector. At the same time this surplus can
protection for consumers.
be allocated for an unspecified period of time to pay down
The first block contains measures for protecting vulner-
the debt of the electricity sector or, alternatively, it can be
able consumers, in particular it expands the pool of those
used towards paying the system’s regular liquidation items.
eligible for the “bono social”, including single-parent house-
In addition, this law contains a provision whereby there is
holds or those with a large number of dependents who are
no longer need for a decision on the compatibility of invest-
below certain income thresholds. In addition, it broadens
ments in extra-peninsular installations with EU or national
the number of cases in which service cannot be suspended
legislation, provided that the installations are necessary to
for delinquent payments, with means of funding analogous
ensure an efficient supply.
to those for the “bono social”. Furthermore, it introduces a
Order TEC/1158/2018 of October
29, 2018, assigning the additional
remuneration scheme to certain
installations in the extra-peninsular
systems
In accordance with Law 6/2018 and given the need for capac-
ity in each extra-peninsular system identified by the System
Operator (REE) in its reports, Order TEC/1158/2018 of Octo-
ber 29, 2018 was published, assigning an additional remuner-
ation scheme to certain installations in Gran Canaria, Tenerife
and Menorca, based on the investment that must be made in
compliance with applicable environmental regulations.
Royal Decree 1048/2018 of August
24, 2018, on the electricity system
deficit for 2013
On September 1, 2018, Royal Decree 1048/2018 was pub-
lished, changing the method for calculating the interest
to be paid on the financing for the 2013 rate deficit, such
that this interest is calculated starting from when the cor-
responding payments are made, and not just starting from
January 1 of the following year. The total amount to the paid
to the agents that financed the 2013 rate deficit has been
“thermal” “bono social” for heating costs, which will be
funded through the State budget.
This Royal Decree Law calls for a national strategy to battle
energy poverty to be approved within six months. On De-
cember 19 the Ministry opened a public consultation on
this issue.
The second block of measures aims to give consumers
more options, for example by increasing the flexibility on
choosing contracted capacity.
A third block of measures seeks to boost self-consump-
tion, simplifying access to it and making collective self-
consumption possible, and eliminating the application of
the rates on self-consumption generated by renewables,
cogeneration or waste. Measures were also introduced to
simplify the bureaucracy, especially for small installations.
The fourth block of measures aims to increase the penetra-
tion of renewables and e-mobility. They extend until March
31, 2020 the licenses for entry into service of renewable
capacity awarded before Law 24/2013, which would have
otherwise expired on December 31, 2018. With regard to
e-mobility, it eliminates the gestor de carga, or e-mobility
manager, to make it easier to develop e-mobility services.
Finally, the Royal Decree Law contains fiscal measures,
which, for example, suspend the tax on the value of pro-
duction for electricity for the 4th Quarter of 2018 and 1st
Quarter of 2019, and it eliminates the special tax on hydro-
131
Report on operations
carbons for electricity generation. To ensure in all cases
laid down in EU law, specifically the Third Energy Pack-
that the system is sustainable, the higher revenue from
age of 2009.
the CO2 emission rights auctions will be used, as will the
accumulated surpluses of the electricity system.
Under the Royal Decree Law, the CNMC is responsible
for approving the structure, method and concrete values
Royal Decree Law 15/2018 was ratified on October 18,
of the rates for accessing the electricity and natural gas
2018 by the Congress of the Deputies.
transmission and distribution grids and LNG facilities, and
Order TEC/1380/2018 of December
20, 2018, establishing the basis
for granting aid to renewable
installations
On December 25, 2018, Order TEC/1380/2018 was pub-
lished, establishing the basis for granting aid for investment
in extra-peninsular wind and photovoltaic plants, co-funded
by the European Regional Development Fund (ERDF).
On December 27, 2018, the Spanish Institute for Energy
Diversification and Saving (IDAE) approved a resolution to
hold auctions to grant aid for investment in wind plants
in the Canary Islands with a budget of €80 million for a
maximum capacity of 217 MW.
Royal Decree Law 20/2018 of
December 7, 2018, containing
urgent measures for financial
competitiveness in industrial and
commercial sectors in Spain
the rates of return for grid operators and electricity and
gas system operators, up to the maximum limits set by
the government.
As for distribution and transmission, the maximum lim-
its set by the government refer to the average rates of
returns on 10-year government bonds over the last 24
months, plus a spread. Instead, regarding extra-penin-
sular generation, the regulated rate of return will be set
directly by the government, still based on the return on
10-year government bonds.
The Ministry for Ecological Transition will also approve a
series of energy policy guidelines that the CNMC must
follow, regarding matters such as energy supply security,
the economic and financial sustainability of the system,
the battle against climate change, the management of
demand and rational energy use. The Ministry will have
one month to approve CNMC’s circulars and can seek the
assistance of a cooperation committee to resolve any dif-
ferences.
The CNMC’s new functions will take effect starting Janu-
ary 1, 2020.
This Royal Decree Law, published on December 8, 2018
in the Official State Gazette (BOE), seeks to stimulate
Renewables
competition in the industrial sector through actions that
include reducing the cost of energy. Specifically, the Roy-
al Decree Law introduces closed distribution systems,
which already exist under EU law, and announces that
a statute will be drawn up for energy-intensive industrial
customers that takes into account their special needs.
This law also calls for extending by two years the life of
certain high-efficiency cogeneration plants.
In the 2017 renewable energy auctions, Enel Green Power
España was awarded 540 MW of wind energy and 338
MW of photovoltaic power. The auction rules established
dates before which the possible projects had to be speci-
fied, indicating 50% more than the capacity allocated,
through which the capacity would be developed. These
dates were February 4 and April 13, 2018, respectively.
Enel Green Power identified the projects by these dead-
Urgent measures to bring the
powers of the Spanish National
Commission on Markets and
Competition (CNMC) in line with
EU law
Royal Decree Law 1/2019 was published on January 12,
2019, with the purpose of bringing the powers of the na-
tional regulator (CNMC) into line with the prerogatives
lines.
After conducting a public consultation in 2017 on new
regulations for access and connection to networks, at the
end of the 1st Half of 2018, the government started the
procedures for the approval of the regulation.
Since the beginning of June, after the no-confidence vote
of the People’s Party, Spain has a new government. Dur-
ing June, the new government focused mainly on orga-
nization without taking any action relevant to the renew-
ables business in Spain.
132
Annual Report 2018 At the start of October, the Spanish government published
plan that ensures the supply of electricity throughout the
a Royal Decree Law setting out a variety of measures for
country. The main points of the decree concern:
the electricity sector, including: protection for the most
> the development of centralized electricity systems, in-
vulnerable consumers; measures for the financial stability
cluding the modernization of thermal, hydroelectric and
of the electricity system; measures to facilitate self-con-
nuclear power generation on the basis of the demand
sumption of electricity; measures for installing charging
created through socio-economic development;
stations and for renewable.
> the development of distributed generation including re-
Specifically, regarding renewables, the Royal Decree Law
newable sources, mainly in distant and isolated regions;
contains measures to extend the period of validity of ac-
> the digitalization and the introduction of smart systems
cess licenses and grid connections of some projects from
for grid management.
past auctions. It also includes measures to stop specu-
The draft decree concerning incentive schemes for modern-
lation with grid connection points for new-generation re-
izing and modifying the capacity market rules was complet-
newables. It also includes measures to facilitate demand
ed on December 14, 2018, agreed between the ministries
for new connection points for renewables at substations
and approved by the Deputy Prime Minister for Energy. The
that have no difficulties with expansion. Finally, it also ex-
signature of the Prime Minister and the official publication
empts generators from paying the rate on the value of
are expected to occur at the end of January 2019.
production under Law 15/2012 (7%). The extension ap-
The implementing decrees for holding the capacity market
plies to the three final months of 2018 and the first three
auctions were adopted by the Market Committee and will
months of 2019.
enter into force as of the date of issue of the decree.
In the 2nd Half of 2018, the government began the pro-
The first auction, for projects intended to enter into service
cess of reviewing the reasonable rate of return for renew-
in 2022-2024, is scheduled to be held by March 1, 2019,
ables for 2020-2025. CNMC presented its proposal and,
before the long-term capacity auction (KOM 2022-24).
based on it, the government began to draw up a prelimi-
The main conditions of the auction are:
nary draft law, which should become law in 2019.
> definition of maximum volumes (2.4 GW for 2022, 3.2
Furthermore, in the 2nd Half of 2018, the government
GW from 2023 onward) and approval of the CAPEX ceil-
worked on drafting the Integrated National Energy and Cli-
ings based on the types of modernization projects by the
mate Plan. However, on December 31, 2018 the draft had
government (based on installed capacity and type of fuel);
not yet been submitted to the European Commission. The
> selection of projects on the basis of the minimum lev-
government has, in various public acts, stated parts of its
elized cost of energy (LCOE); the pre-qualification and
target for the penetration of renewables in Spain by 2030
localization requirements apply 100%;
with respect to the total percentages for Europe.
> conditions for capacity-supply contracts (DPMs): payment
In addition, the government is working on a number of
guaranteed for 16 years with prices such to ensure the
proposals on energy transition, but nothing had been for-
repayment of CAPEX and OPEX costs with a fixed return
malized as of the end of 2018.
(base WACC = 14%) linked to long-term government se-
Europe and Euro-
Mediterranean Affairs
Russia
Electricity and capacity market
On May 18, 2018, the presidential decree concerning the
achievement of the national economic development targets
by 2024 was published. The decree calls for the government
to approve by October 1, 2018 an infrastructure development
curities (base return of 8.5%). For the first 12 months that
a plant enters into service, only repayment of OPEX is
envisaged. The return will be revised after the first auction
based on analysis of the impact of the final rates.
In addition to incentives for modernizing plants, changes
were made to the normal procedures for capacity market
auctions:
> selection of 6-year projects. A tender for capacity for the
2022, 2023 and 2024 will be held by May 1, 2019 and a
tender for capacity for year 2025 by November 15, 2019;
> indexing of the parameters of the demand curve set in
2017 based on the CPI (2017, 2018) + 15% for 2022 and
2023; CPI (2017, 2018) + 20% for 2024 and 2025; starting
2020 only annual indexing based on the CPI.
133
Report on operations Smart metering
On December 27, 2018, Federal Law 522-FZ was published
regarding smart meters. The law requires that smart meters
be installed starting June 1, 2020 in public building by “guar-
anteed” suppliers and for other consumers by distribution
system operators (DSOs). According to the law, the costs
of replacing obsolete meters will be included in the rates
charged by the guaranteed suppliers and by the DSOs.
Romania
Supplier of last resort
Beginning on July 1, 2018, Enel Energia and Enel Energie
Muntenia have been appointed obligated suppliers for Enel
distribution areas. Enel Energie Muntenia was appointed
by regulator ANRE as an alternative supplier for the other
were raised by 1% on average nationally, in nominal terms.
The main differences compared with the rules for the pre-
ceding period are:
> the rate of return of the regulatory asset base (RAB) was
lowered from 7.7% to 5.66% (6.66% for new invest-
ments);
> assets no longer in use or shared with other business
activities beyond that of distribution have been reduced
by the starting RAB;
> personnel and security costs are taken out of the incen-
tive mechanism for operating costs, and therefore are
treated as a clearing entry;
> it sets a ceiling of 5% on the efficiencies achievable by
distributors, net of the personnel costs above;
> all costs are adjusted annually and not at the end of the
regulatory period.
five distribution areas. New maximum prices have been ap-
Renewables
proved for universal service, with an average increase of 3%
at the national level compared with the prices valid for the
1st Half of the year.
Smart metering
In June 2018, amendments to the Energy Act were intro-
duced. By January 1, 2024, smart meters will be installed for
prosumers and customers with consumption levels above a
threshold to be set by ANRE. In October 2018 ANRE pub-
lished the method for the full roll-out through 2028, enabling
distributors to draw up detailed investment plans.
The criteria for the approval of the roll-out plans are based on
the results of the smart metering pilot projects conducted
in 2014-2016 and on the investments made in 2017-2018, as
well as the ratio between the economic value of the smart
metering projects and the total annual investment plan of
the distributors. ANRE will publish the calendar for the roll-
out for each distributor and will modify it annually. By April
30 of each year, it will also publish a report on the status of
the smart metering implementation as at December 31 of
the preceding year.
Distribution rates - 4th regulatory
period
In September 2018, ANRE published the method for calculat-
ing the distribution rates for the 4th regulatory period (2019-
2023). During the first year of the period, the distribution rates
In June, Parliament approved GEO 24/2017, which amends
the regulations governing renewable resources. The main
changes include:
> the value of green certificates financed by end users in-
creases from €11.1/MWh to €12.5/MWh from 2022 and
can subsequently be further amended by the regulatory
authority;
> green certificates contracted on the spot market for the
same price will be transferred by sellers on a prorated
basis in accordance with demand;
> without prejudice to bilateral green certificate transfer
contracts concluded before April 2017, at least 50% of
green certificates must be purchased by the obligated
parties on the anonymous spot market;
> generators with plants of up to 3 MW can only conclude
bilateral contracts for the sale of power and/or green cer-
tificates with final sellers;
> generators will be able to aggregate their output in order
to participate in the electricity market;
> renewable energy stored in battery systems will be eli-
gible for green certificates.
Under the same legislation, renewables generators with an
installed capacity of up to 27 kW are entitled to offset electric-
ity generated with that purchased from their supplier. The sale
price shall be equal to the weighted average of the spot pric-
es for the previous year, i.e. to RON 22.7 bani/kWh for 2018.
Generators are exempt from taxation of the power generated.
Government Emergency Order 114 of December 28, 2018
introduced:
134
Annual Report 2018 > an increase in the annual tax on energy companies, rais-
ing it from 0.1% to 2% of the previous year’s revenue;
> the mandatory sale of a portion of the electricity gener-
ated on the regulated market for households.
In addition, a change in the national tax regulations requires
that wind towers be considered buildings and as such are
subject to a tax of up to 1.3% of their value starting in 2019.
United Kingdom
Capacity market
Bulgaria
Last May 2018 an amendment to the renewables regulations
was approved. Starting from January 1, 2019, the change
provides for the replacement of the current feed-in tariff for
plants larger than 4 MW with a feed-in premium financed
through the sale of electricity on the Independent Bulgarian
Exchange (IBEX) spot market, supplemented by the Security
of the Energy System Fund.
Turkey
On November 15, 2018, the General Court of the European
The regulator postponed the start of the pre-qualification
Union annulled the European Commission’s decision of July
phase for the wind auctions for volumes of 2 GW (Turkish
23, 2014 that authorized the aid scheme for the electricity ca-
Electricity Transmission Company - TEIAS bids) to April 2020.
pacity market in the United Kingdom. According to the Court,
The government cancelled the YEKA (Renewable Re-
the Commission should have had doubts as to the compat-
source Area) auction for 1,200 MW of offshore wind
ibility of the UK’s measure with EU rules and, therefore, it
power scheduled for October 23, 2018.
should have initiated the formal investigation procedure in or-
The government cancelled the YEKA-2 auction for 1 GW
der to allow interested parties to submit their observations.
of photovoltaic power scheduled for January 31, 2019.
As a result of the annulment, the European Commission
On November 7, 2018 the government announced the
plans to initiate the investigation required by the Court and
next YEKA auction for 1 GW of wind power, scheduled
must carry out a new assessment of the English measure
for March 7, 2019.
in light of any observations that may be proposed by inter-
The government introduced a regulation that allows house-
ested operators.
Greece
holds to install systems for generating electricity from re-
newables with installed capacity of up to 10 kW without
the need for a generation license. In addition, they can sell
excess electricity produced to the supplier of last resort.
From January 1, 2017 new renewables capacity must par-
ticipate in public auctions to access the support mechanism
based on a “feed-in premium” system. The first two auc-
Germany
tions held in 2018 (July and December) are part of the plan
On June 8, 2018 the Parliament approved an amendment to
to develop additional wind and photovoltaic capacity for a
the renewables regulations (EEG 2014), which requires until
total of 2.6 GW between 2018 and 2020. The total capacity
June 1, 2020 local communities as well to participate in re-
awarded in 2018 was 331 MW of wind capacity and 169 MW
newables auctions with authorized facilities only (BImSchG).
of photovoltaic capacity.
The Germany energy law (Energie-Sammelgesetz) was
In October 2018 the Ministry of Environment, Energy and
published on December 17, 2018, modifying various regula-
Climate Change opened a public consultation on the nation-
tions in the energy sector. Among the changes were the
al energy and climate plan (NECP) in which, among other
introduction of additional renewable auctions for the 2019-
things, the Greek government indicates its commitment
2021 period for volumes totaling 8 GW (4 GW for wind and
having at least 30% of national energy consumed from re-
4 GW for photovoltaic).
newable resources and at least 55% of electricity produced
from renewables.
Law 4513/2018 promotes the creation of so-called “energy
communities” for the production, distribution and supply
of energy locally. It contains specials provisions for, among
other things, the development of self-consumption, energy
storage and charging stations for electric vehicles.
South America
The Group operates in South America in Argentina, Brazil,
Chile, Colombia and Peru. Each country has its own regulatory
framework, the main features of which are described below
135
Report on operations for the various business activities. Under the regulations es-
Eléctrico Mayorista) limited increases in the Valor Agrega-
tablished by the competent authorities (regulatory authorities
do de Distribución (VAD), the distribution rate, with spe-
and ministries) in the various countries, operators are free to
cific instructions to ENRE. The new value for this rate
make their own decisions concerning investment in genera-
component took effect on February 1, 2017 but invoicing
tion. Only in Argentina, following the change in energy policy
of the amount is initially limited to a maximum of 42% of
in recent years, is there a regulatory framework that envisages
the total. Invoicing of the full amount was only possible as
greater public control of investments and a model for remuner-
from February 1, 2018.
ating activities that is evolving towards a remuneration model
The rules also establish that ENRE shall pay Edesur and
based on average cost. In Brazil plans for new generation ca-
Edenor the portion already accrued and not invoiced be-
pacity are imposed by ministerial order, and this capacity is
tween February 1, 2017 and February 1, 2018 in 48 install-
developed through auctions open to every representative.
ments as from February 1, 2018, which will be incorpo-
All of the countries have a centralized dispatching system
rated in the value of the VAD to be invoiced subsequently.
with a system marginal price. Usually, the merit order is cre-
The new rules also provide for updating the rates of distri-
ated based on variable production costs that are measured
bution companies on the basis of inflation and criteria for
periodically, with the exception of Colombia, where the merit
service quality and regulation of supply.
order is based on the bids of market operators.
Currently in Argentina and Peru, regulatory measures are in
place governing the formulation of the spot market price. In
Argentina, regulators are working to ensure greater sustain-
ability in the electricity market, increase the efficiency of that
market and implement a sweeping rate revision to enable
operators to meet their cash needs and resume mainte-
nance of power stations and networks.
Long-term auction mechanisms are widely used for whole-
New regulations on natural gas
generation
On March 7, 2018, with Decree (PEN) 187/2018, the govern-
ment published the new organizational chart for the Ministry
of Mining and Energy. As a result of Ministerial Resolution
64/2018, the functions of the Secretariat for Electric Energy
were transferred to the new Undersecretariat for Electric En-
sale energy and/or capacity sales. These systems guarantee
ergy (SSEE).
continuity of supply and offer greater stability to generation
companies, with the expectation that this encourages new
Resolution 46 was published on August 1, 2018 and it re-
duced the average price of gas to be used for electricity gen-
investments. Long-term sales contracts are used in Chile,
eration from $5.20 to $4.20 per MMBtu.
Brazil, Peru and Colombia. In Brazil, the price at which elec-
tricity is sold is based on the average long-term auction pric-
In addition, it makes the SSEE responsible for launching a
tender to estimate the gas to be allocated to generation at
es for new and existing energy. In Colombia, the price is set
the maximum price established.
by auction between the operators, which usually enter into
medium-term contracts (up to four years). Finally, a regula-
tory framework recently introduced in Chile and Peru allows
distribution companies to sign long-term contracts to sell
electricity on regulated end-user markets.
Chile, Peru and Brazil have also approved legislation to encour-
age the use of unconventional renewable resources, which
For this reason, the SSEE instructed CAMMESA, the whole-
sale electricity market operator, to purchase natural gas un-
der revocable and non-revocable conditions through the elec-
tronic gas market (MEGSA) to supply thermal generation.
Finally, the tender was held to award revocable contracts for
the September-December 2018 period. The average price bid
was $3.69 per MMBtu, about 13% lower than the price set
sets out the objectives for the contribution of renewable re-
by Ministerial Resolution 46.
sources to the energy mix and governs their generation.
Argentina
Rate revision and other regulatory
developments in 2018
On November 7, 2018, Resolution 2018-70-APN-SGE was
published in the Official Journal. It enables generators, co-
generators and self-generators in the Mercado Eléctrico May-
orista to autonomously procure fuel to generate electricity.
Initially the rules applied to natural gas and allowed genera-
tors to obtain an additional margin by using the fuel in the
case in which the purchase price for gas was lower than that
Under the new rate system, provided for under Resolu-
set by CAMMESA.
tion 64/2017, the wholesale electricity market (Mercado
This resolution also contains a grant for the variable cost of
136
Annual Report 2018 production (CVP) based on recognized rates. CAMMESA is
consumption level of each customer as from 2018. Initially,
therefore responsible for continuing to supply fuel to gen-
the new rate applies to consumers with low-voltage connec-
erators that do not purchase their own.
tions (127, 220, 380 or 440 V, group B) and new customers.
In December 2018 the authorities authorized the export of
As from January 2020, it will be an option for any consumer,
natural gas, establishing a new export licensing procedure.
with the exception of those who already benefit from certain
The surplus is the result of the increased availability of natu-
preferential rates.
ral gas from the Vaca Muerta gas field.
The above regulation establishes the following concerning
The exports authorized have been sent to Chile and Bra-
the application of the white rate:
zil for a total volume of 479,250,000 cubic meters, under
> it shall apply starting from January 2018 for customers
revocable terms: until 2020 to Chile and up to 600 MW of
who consume more than 500 kWh/month and for new
electricity production to Brazil.
connections;
Renewables
In September 2018, the Undersecretariat for Renewable En-
ergy presented the third cycle (Ronda 3) of the RenovAr pro-
gram, known as MiniRen, the main characteristic of which is
the use of the capacity available in the medium-voltage grid
and the promotion of regional development in the country.
The RenovAr MiniRen program offers 400 MW of capacity
for the entire country, to be connected to the 13.2 kV, 33 kV
and 66 kV medium-voltage grids. The maximum capacity
allowed for the project is 10 MW, while the minimum is 0.5
MW.
As for the contractual portion, the winning projects will sign a
Power Purchase Agreement with wholesale market operator
CAMMESA, in the same way as the previous cycles, and a
contract with trust fund FODOR to guarantee three months
of invoicing for contracted projects.
> it shall apply starting from January 2019 for customers who
consume more than 250 kWh/month;
> it shall apply to all customers after 2020;
> applying this rate option, the cost of electricity is calculated
by dividing the day into peak, intermediate and low con-
sumption hours, and applying the rates approved by AN-
EEL following the periodic revisions with distributors;
> economically disadvantaged customers and public illumi-
nation projects cannot opt for the white rate;
> the cost of the meters is borne by the distributors, expect
for those that have special additional features;
> any adjustments of technical installations to connect them
to the electrical grid must be borne by the customer/owner.
Date of the rate revision for Enel
Distribuição Goiás changed from
October 2017 to October 2018
The Ronda 3 program was initiated in October with the pub-
ANEEL approved Enel’s request to change the date of the
lication of the specifications and will continue from March
rate revision for 2018 for Enel Distribuição Goiás following a
2019 with the presentation of the bids, the qualification pro-
public hearing. The decision was made for the rate revision
cess, the awarding and the signature of contracts that will
to take place in October 2018 and subsequently every five
conclude in July 2019.
A total of 82 out of 88 projects were signed for 1,969.1 MW
for the second cycle (Ronda 2).
Brazil
White rate
On September 12, 2016, the regulator ANEEL approved
Regulation 733/2016 establishing the conditions for ap-
plying the new hourly rates for low-voltage power, the so-
called “white rate”.
The white rate is a new hourly rate option that changes de-
pending on the time of day and differs on the basis of the
years. The new reference date for investments to be incor-
porated in the rate was moved to April 30, 2018.
Rate revision for Enel Distribuição
Rio
On March 13, 2018, ANEEL approved the fourth provision-
al rate revision for Enel Distribuição Rio, with effect from
March 15, 2018, following the assessments and evidence
presented during public hearing 078/2017.
This means an average increase of 21.04% for consumers
given that rates have risen by 19.94% for high-voltage cus-
tomers and by 21.46% for low-voltage customers. In addi-
tion, the T-component of the X-factor was set at 0.00% and
technical losses at 9.1%.
137
Report on operations Rate revision for Enel Distribuição
Ceará SA
Public charging stations must be compatible with all con-
nection standards to enable communication, monitoring
and remote control.
On April 17, 2018, ANEEL approved the provisional rate revi-
sion for Enel Distribuição Ceará with effect from April 22, 2018.
This means an average increase of 4.96% for consumers
Electric vehicle recharging stations must comply with the
rules and standards set by the distributors, as well as those
established by the competent official bodies, including AN-
given that rates have risen by 7.96% for high-voltage custom-
EEL regulations.
ers and by 3.8% for low-voltage customers.
Rate revision for Enel Distribuição
Goiás SA
On October 16, 2018, ANEEL approved the provisional rate
Electric vehicles are prohibited from delivering electricity
to the grid and, as a result, participate in the electricity re-
muneration system (Resolution 482).
Public hearing 60/2018
revision for Enel Distribuição Goiás with effect from October
ANEEL decided to open a public hearing to gather further
22, 2018.
comments and information to enable it to complete the regu-
This means an average increase of 18.54% for consumers
lation for monitoring the measurement, extraction and pro-
given that rates have risen by 26.52% for high-voltage cus-
cessing of data from low-voltage meters. The final date for
tomers and by 15.31% for low-voltage customers.
receiving comments and information was February 18, 2019.
Rate revision for Enel Distribuição
São Paulo (formerly Eletropaulo)
Public hearing 46/2018
The first phase of public hearing 46/2018 was held be-
On July 4, 2018, ANEEL approved the provisional rate revi-
tween October 4 and December 3, 2018 with the purpose
sion for Enel Distribuicão São Paulo with effect from Octo-
of gathering further comments and information to enable
ber 22, 2018.
it to complete and revise the regulations on the continuity
This results in an average rate increase of 16.4% com-
of electricity supplies and to encourage improvement in
posed of an economic adjustment of 10.5% and a financial
service quality by addressing the following points:
adjustment of 5.9%.
> formulation of indemnities to be paid to customers for
This means an average increase of 15.8% for consumers
service interruption;
given that rates have risen by 17.7% for high-voltage cus-
> rate revision;
tomers and by 15.1% for low-voltage customers.
> structuring of service continuity indicators.
Electric vehicle charging
The second phase of the public hearing will be conducted
in the 1st Half of 2019.
With Resolution 819 of 2018, ANEEL set rules for the re-
charging of electric vehicles.
Decree 9642 of December 27, 2018
Distribution companies can autonomously install public
ANEEL prohibited the application of a cumulative discount
charging stations for electric vehicles in their concession
rate, instead requiring that the most advantageous rate for
areas, classifying them in the most appropriate rate cate-
the consumer be charged.
gories (group rates for high- and medium-voltage consum-
ers or group B3 rates for low-voltage consumers).
Operating charging stations can generate revenue that de-
Renewables
rive from setting freely negotiated prices under the terms
ANEEL conducts different auctions for each kind of technol-
and conditions specified for the performance of ancillary
ogy, taking into account the development and investment
activities provided for by Resolution 581/2013.
plan prepared by the Energy Research Company (EPE),
Customers intending to install private charging stations
which is responsible for their planning, in order to reach the
must notify the distributor in advance to allow it to make
objective capacity targets for non-conventional renewable
any necessary adjustments to the utility connections.
energy plants.
138
Annual Report 2018 Chile
Electricity distribution
2018 Regulatory Plan
With Exempt Resolution 20 of January 12, 2018, in accor-
Development plan for the
electricity transmission grid - 2018
In the course of the annual transmission planning for 2018,
CNE invited all interested parties to take part in the phase
for presenting proposals for projects to expand transmis-
dance with the provisions of Article 72-19 of the law on
sion, which will last until April 30, 2018, in accordance with
general electricity services, regulator CNE published its
the provisions of Article 91 of the electricity law. The invita-
annual work program for the preparation and development
tion states that proposals can be submitted up to April 30,
of the technical resolutions corresponding to 2018. The
2018. Once the phases of the process were completed, on
document sets out the general guidelines and program-
November 14, 2018, CNE published a preliminary technical
ming priorities for CNE’s 2018 regulatory work plan and
report that contains the annual expansion plan for transmis-
the suspended regulatory procedures from the 2017 plan,
sion corresponding to the year 2018.
which will continue to be developed in 2018.
2019 Regulatory Plan
With Exempt Resolution 790 of December 10, 2018, in ac-
2018-2022 Energy Plan
With its publication in the Official Journal of April 10, 2018,
cordance with the provisions of Article 72-19 of the law
the Energy Ministry approved the long-term energy plan
on general electricity services, regulator CNE published its
for the 2018-2020 period. This corresponds to the first en-
annual work program for the preparation and development
ergy planning process under the provisions of Law 20936.
of the technical resolutions corresponding to 2019. The
This plan, which is non-binding, must be updated every five
document sets out the general guidelines and program-
years, in accordance with Article 83 of the electricity law.
ming priorities for CNE’s 2019 regulatory work plan and
the suspended regulatory procedures from the 2018 plan,
which will continue to be developed in 2019.
Rules published in 2018
Law 21076/2018 - Requirements
concerning the removal and
replacement of meters
On February 27, 2018, Law 21076 was published in the Of-
The following rules were published in 2018 in the Chilean
ficial Journal, modifying the electricity law to require distribu-
electricity sector:
tors to pay for the removal and replacement of meters in the
> rules for the group of experts: on January 5, 2018, the Ener-
event they become unusable for reasons of force majeure.
gy Ministry published new rules for the group of experts in
The sole article of the law states that meters are part of the
the Official Journal. The scope of these rules is to establish
distribution network and that ownership will be modified to
the provisions for the operation, financing and powers of
the extent that the meters are modified based on the re-
the group of experts, as well as the procedures necessary
quirements of the electricity grid.
for its proper functioning;
> rules for the electricity coordinator: on April 3, 2018, the En-
ergy Ministry approved the rules for the independent co-
ordinator of the national electricity system. The purpose of
Determination of the transmission
rates for the 2020-2023 period
these rules is to establish the provisions for the organization,
As part of the process for setting the transmission rates
composition and functioning of the independent coordinator
for the 2020-2023 period, the transmission services quali-
of the national electricity system, as well as the necessary
fication processes, the determination of the useful life of
procedures for the proper performance of its functions;
transmission plants and the establishment of technical and
> rules for the security of ancillary services and the storage
administrative databases for analyzing enhancements for
and distribution of electricity: on June 12, 2018, the Minis-
transmission plants are all currently under way.
try of Energy approved the security standards for plants for
For the purposes of the qualification process for transmis-
generation, transport, provision of ancillary services, stor-
sion services for the 2020-2023 period, CNE issued Exempt
age systems and distribution of electricity.
Resolution 771 of December 29, 2017 containing the pre-
139
Report on operations liminary technical report in which it identifies transmission
ing. The formalization of the definitive databases is subject
plants by segment (national, zonal and dedicated). Interested
to the completion of the qualification process for the plants
parties (duly listed in the register of citizen participants) sub-
indicated above.
mitted comments on this report in early January 2018. Sub-
sequently, CNE issued the final technical report with Exempt
Resolution 123 of February 13, 2018. Upon completion of
Peru
the phases indicated in the regulations, interested parties
will present their objections before the group of experts in a
Regulatory changes in 2018
public hearing.
During this process, the group of experts requested addi-
tional information from CNE within the framework of analyz-
ing and studying the discrepancies presented. As a result of
Supreme Decree 005-2018-EM modified Supreme Decree
026-2016-EM to make clearer certain aspects relating to
participation in the wholesale market (MME), guarantees to
be pledged, cases of non-compliance, withdrawal or exclu-
this request, CNE found inconsistencies in the application of
sion of participants from the MME.
the method for qualifying structures, for which it began an
administrative procedure to invalidate that process. On Sep-
tember 4, 2018, CNE published Resolution 613, with which it
invalidated the phases already carried out, rejecting the pre-
Supreme Decree 017-2018-EM established a rationing sys-
tem in emergency situations involving the procurement of
natural gas; an emergency is defined as the total or partial
lack of natural gas on the domestic market and is officially
liminary technical report published. Therefore, on October 5,
declared by the Ministry of Energy and Mining.
2018, CNE published a new preliminary technical report with
Resolution 673, which incorporated the observations of the
registered interested parties. Subsequently, with Resolution
761 of November 21, 2018, CNE issued the final technical re-
port on the qualification of transmission systems structures
Supreme Decree 022-2018-EM (amended by Supreme
Decree 026-2018-EM) modified the rules governing the
tender for electricity procurement approved by Supreme
Decree 052-2007-EM in order to establish how to evaluate
proposed modifications to the contracts resulting from any
for the 2020-2023 period. Upon completion of the phases of
bids made in public auctions.
the process, the interested parties submitted their observa-
tions to the group of experts.
With Resolution 212 of March 15, 2018, CNE issued a prelimi-
nary report on the process for determining the useful life of
transmission installations. Interested parties (duly listed in the
register of citizen participants) submitted their observations
and participated in the gap analysis process with the group
of experts. On June 5, 2018, CNE approved the final techni-
Unregulated customers market:
rate revisions
In Peru, distribution rates (Valor Agregado de Distribución
- VAD) are set every four years. However, the most recent
period lasted five years since a year was needed to imple-
ment the reforms approved in 2015 with Legislative De-
cal report that established the useful life with Resolution 412.
cree 1221.
Finally, in order to establish the technical and administrative
databases for analyzing enhancements for transmission plant,
CNE published preliminary technical and administrative data
with Resolution 769 of December 29, 2017. More generally,
In 2018, the process for setting the VAD for Enel Distri-
bución Perú for the 2018-2022 period was completed. In
general, once rates are set, the annual revenue received
from the company prior to the start of the process, which
this document sets out the process for defining transmission
corresponded to 2013-2107, is maintained.
rates and lays down the rule that has to be applied identifying
two areas: one national and one for zonal plants and dedicat-
ed structures. In accordance with the law, interested parties
(duly listed in the register of citizen participants) submitted
their requests and observations concerning the drafting of
the document in early January 2018. Subsequently, CNE is-
sued Resolution 124 of February 13, 2018 containing its final
technical report. Upon completion of the phases indicated in
the regulations, the interested parties presented additional
observations to the group of experts through a public hear-
Colombia
Regulatory changes in 2018
In February, Resolution CREG 030 of 2018 was issued, which
set out a simplified authorization process for small-scale self-
producers (up to 1 MW), large-scale self-producers (up to 5
MW) and distributed generators (defined as 0.1 MW) that
use non-conventional renewable energy sources (FNCER).
140
Annual Report 2018 March 2018 saw the issue of Ministry of Mining and En-
ergy Decree 0570 of 2018, on the basis of which the long-
North and Central America
term public policy guidelines for the use of energy were
decided. The objectives of the decree are: to strengthen
United States
the resilience of the generation matrix through risk diver-
sification, to promote competition and efficiency in price
Federal level
formation through new and existing projects, to mitigate
In June 2018, an Energy Department memo describing
the effects of climate variability through the use of the
federal actions in the US electricity markets was leaked to
available renewable resources, to strengthen national en-
the media. The memo sought to justify non-specified fed-
ergy security, to reduce greenhouse gas emissions, in ac-
eral actions to ensure financial stability for coal and nuclear
cordance with COP21 commitments.
power plants for a two-year period with the goal of imped-
Carrying forward from this decree, the Ministry of Min-
ing the retirement of plants that, according to the memo’s
ing and Energy issued Resolutions 40791 and 40795 of
authors, could be necessary for national security reasons.
August 2018, finalizing the regulatory cycle of public poli-
If these actions are carried out, the delayed closures of the
cies that will make it possible to strengthen, integrate and
coal and nuclear plants could cut into the market for new
diversify the country’s energy matrix, achieving a historic
renewable power projects in some areas.
result like that for its first long-term electricity tender.
Through Resolutions 41307 and 41314 of 2018, the Minis-
In 2018, the Trump Administration enacted the Afford-
try of Mining and Energy officially kicked off its first long-
able Clean Energy (ACE) rule to replace the Obama era’s
term electricity auction, which will conclude in the first few
Clean Power Plan (CPP), a complete program for regulating
months of 2019 and is intended to diversify, integrate and
greenhouse gas emissions by the energy sector. Rather
strengthen the competitiveness of the energy matrix, mak-
than base the emission reduction requirements on the sec-
ing it more resilient to climate variability, contributing to
tor as a whole, including new renewable energy technolo-
cutting CO2 emissions and ensuring energy security.
gies, the ACE would only require efficiency enhancements
Unregulated customers market:
rate revisions
In February 2018, the Regulatory Commission published
Resolution CREG 015 of 2018 which definitively sets out
the distribution remuneration methodology for the new
rate period. It determines the remuneration for the existing
asset base on the basis of the presentation of investment
plans, the remuneration of operating and maintenance
costs, setting out goals for the reduction of losses and the
improvement of service quality.
at the single-plant level.
State level
In September 2018, California’s governor Jerry Brown
signed a bill that would accelerate the state’s Renewable
Portfolio Standard (RPS) requiring it to satisfy 60% of its
electricity needs from renewable resources by 2030 and
100% from zero-carbon sources of electricity by 2045.
Mexico
Resolution CREG 085 was issued in July 2018 in response
Renewables
to comments submitted by distributors. It clarifies and cor-
rect some provisions of Resolution CREG 15. The new dis-
tribution rates for 2019 are expected to be approved using
the new method.
In September 2018, the Regulatory Commission published
Resolution CREG 114 of 2018 which lays out the principles
and general conditions to be satisfied so that distributors’
costs can be incorporated into the rate components that
regulated market users must pay.
The Energy Ministry published the requirements for the
Energía Limpia certificates that companies must meet for
the years 2018 through 2022, specifically: 5.0% for 2018;
5.8% for 2019; 7.4% for 2020; 10.9% for 2021; 13.9% for
2022.
The Comisión Reguladora de Energía (CRE) and Comisión
Federal de Electricidad (CFE) published the methodology
for calculating the regulated rate and the rates for 2018.
They will be revised each year.
141
Report on operations In the 1st Quarter of 2018, the latest Wholesale Market
In the 1st Quarter of 2018, the risk aversion curve (storage
Handbook was published, and powers were transferred
in the Fortuna basin) was redefined, enabling a more ef-
from the Secretariat of Energy to the CRE. One of the most
ficient use of the lake’s water.
important handbooks published is that for the Interconnec-
tion and Connection of Power Plants and Load Centers,
In the meantime, the minimum requirements for the me-
which sets out the new method for calculating the financial
ters to be used for large customers were also redefined. In
guarantees for the different interconnection standards ap-
contracting with a generation company to provide electric-
plicable as from 2015. All new projects under development
ity, large customers can opt to use the distributor’s me-
will be governed by the new handbook.
ter and avoid incurring the cost of buying a commercial
In the 2nd Quarter, the market rules consultative commit-
electric measurement system. This should speed up the
tee was established.
process of acquiring large-customer status and improve
The Enel Group participated in three of the four committees:
> Wholesale market;
> Operating in the market;
> Legacy contracts;
> Grid development.
competition between generators.
In the 2nd Quarter of 2018, the government presented a
draft law modifying Law 6 concerning the electricity sec-
tor. The proposed modifications include the creation of a
new figure in the electricity market to simplify the man-
agement of the Electricity Transmission Company, which
A number of working groups have been set up to review
is responsible for electricity sale and metering. Enel and
the market rules and offer proposals for improving them.
other market actors actively participated in the consulta-
tion stages. At the moment, the implementation of these
During the same period, the National Electricity System
changes has been postponed.
Development Program (PRODESEN) for the years from
2018 through 2034 was published.
In the 4th Quarter of 2018, the regulator approved new
In the 4th Quarter of 2018, as a result of the reform of
the public administration, the Secretariat of Energy must
coordinate with the CRE to set the regulated rates for the
services indicated in the Electricity Industry Law.
Previously this was done solely by CRE. The regulated
rate includes those for: transmission, distribution, SSB op-
erations, CENACE operations, regulated connection ser-
vices, electricity costs and associated costs (e.g. capacity
remuneration - CEL).
Panama
Renewables
Enel has begun a two-year term as representative of the
20 MW hydroelectric companies on the Operating Com-
mittee. The primary function of this committee is to tackle
issues relating to National Integrated System operations
and is composed of representatives of each company
electricity rate rules.
Guatemala
Renewables
In the 3rd Quarter of 2018, the 5-year rate rules for dis-
tributor Empresa Eléctrica de Guatemala were set.
In the 4th Quarter, the new rules were approved for the
coordination of the dispatching of electricity, the commer-
cial metering system and the importation of electricity
(NCC-10 and 14).
Central American Regional
Electricity Market (MER)
The second plenary meeting between the institutions of
the Central American Regional Electricity Market (Merca-
do Eléctrico Regional - MER) was held in the 1st Quarter
of 2018. Senior officials of MER meet to analyze the gov-
operating in the electricity sector. Enel is an active par-
ernance of that market.
ticipant in the committee, submitting proposals on how to
In 2018 MER’s Steering Committee launched a study on
modify commercial practices, operating regulations, and
how to integrate Mexico into the market.
ways of scheduling system operations.
As of December 31, 2018, the detailed complementary
142
Annual Report 2018 process (PDC) will no longer apply and instead will be re-
ed 30%). The latter is based upon a series of parameters fo-
placed by the MER Regulation (RMER), which takes ef-
cusing on the economic development of the country, includ-
fect on January 1, 2019.
ing local content and the creation of jobs for South Africans,
Africa, Asia and Oceania
especially non-whites.
The winners are awarded 20-year power Purchase Agree-
ments (PPAs) with Eskom, the national power utility.
Eskom’s payments are guaranteed by the governments.
South Africa
South Africa approved a target of 17.8 GW of installed re-
India
newable capacity by 2030 based upon the long-term en-
India is a federal republic composed of 29 states, each of
ergy strategy set out in the 2010-2030 Integrated Resource
which has specific responsibilities in various sectors as
Plan (IRP). The primary tool to be used in achieving this tar-
well as shared responsibility with the federal government
get is the Renewable Energy Independent Power Producer
in the electricity sector.
Procurement Programme (REIPPPP), an auction system
The Ministry of New and Renewable Energy (MNRE)
launched in 2011 that seeks to install around 13 GW in new
defines and implements policy for the development of
renewable capacity between 2014 and 2020 (hydroelectric
renewable energy at the national level. In addition to
<40 MW, concentrated solar and photovoltaic, wind, bio-
the Ministry, the power market is supervised at the fed-
mass, biogas and landfill gas power). The first four rounds
eral level by the Central Energy Regulatory Commission
have already been held, with the award of more than 5,000
(CERC), which sets guidelines and standard rates, and by
MW of capacity. In 2015 an additional round – called the
the State Energy Regulatory Commissions (SERC), which
Expedited Round, or Round 4.5 – was added and held for
implement them at the state level.
an additional 1,800 MW, which have not yet been assigned
In 2015 the government headed by Prime Minister Nar-
and which will probably be cancelled.
endra Modi approved a target of 175 GW of renewables
In August 2018, the 2018 Integrated Resource Plan (IRP)
capacity by 2022, including 100 GW from solar, 60 GW
was published for consultation. The IRP is the long-term
from wind and about 15 GW from other technologies. This
plan setting out the development strategy for the coun-
ambitious target was further strengthened in October
try’s electricity sector through 2030. In the new draft the
2016, when India ratified the Paris climate agreement in
capacity targets for the development of wind and solar pho-
tovoltaic power were raised to 19.4 GW of almost entirely
2015, committing itself to cut CO2 emissions by 33-35%
(Intended Nationally Determined Contribution - INDC)
wind (11.4 GW) and photovoltaic power (8 GW) compared
from their 2005 levels and to ensure that 40% of its in-
with the previous version of the IRP. This capacity is cu-
stalled capacity will be generated from non-fossil sources
mulative, including that already online or committed under
by 2030.
the REIPPPP. The new IRP also includes an allocation of
The renewables sector is highly fragmented since each
specific capacity (200 MW/year) for distributed generation
state has its own regulatory scheme for developing new
(1-10 MW).
capacity. As a general rule, each state sets annual obliga-
The public consultation process was concluded in Decem-
tions, called Renewable Purchase Obligations (RPOs), for
ber 2018. Given the importance of energy policy for the
the share of electricity to be generated from renewable
country, the timetable for the final promulgation of the IRP
resources. The state distribution companies must meet
(with possible modifications) will depend heavily on the na-
the RPOs by buying or producing renewable energy or
tional elections that will be held in May 2019.
by purchasing Renewable Energy Certificates (RECs). The
It is possible that in 2019 – following the promulgation of
RPO has been set at the national level, to gradually rise to
the IRP – a new auction, Round 5 of the REIPPPP, will be
21% of the sales of distributors by 2022. The states must
held as originally scheduled.
take part in the national RPO to the greatest possible ex-
After a pre-qualification phase, which is concerned with
tent in order to reach the national target for renewable
technical and financial issues, qualified projects are chosen
energy generation.
based upon two criteria: the bid price (weighted 70%) and
Renewable energy must be bought through auctions, in
the economic development content of the project (weight-
use since 2010 for solar power and 2017 for wind power
143
Report on operations and overseen mainly by Solar Energy Corporation India
2015 with Law 58-2015, which introduced a net meter-
(SECI).
ing scheme for high-voltage photovoltaic solar and wind
In general, the winners of the auctions are awarded 25-
plants (subsequently extended to medium- and low-volt-
year Power Purchase Agreements (PPAs) at fixed rates
age) which offered private operators the opportunity to re-
with SECI or the Power Trading Company (PTC), which
sell to their excess electricity to the grid, but for no more
will sell the electricity through Power Sales Agreements
than 20% of their annual production. However, this option
(PSAs) to state distribution companies (Discoms).
was to have been implemented with appropriate legisla-
Auctions are held frequently in India, even if some of them
tion that has not yet been issued.
in 2018 were cancelled due to failure to reach the capacity
The new regulatory framework set out a “hybrid” market
offered since the rate restrictions imposed on participants
model in which, alongside a regulated market with the
were too strict. In 2018 auctions were also held for float-
Single Buyer (Office National de l’Electricité et de l’Eau
ing photovoltaic plants, for offshore wind plants and for
Potable - ONEE) and distributors, there is to be a free mar-
hybrid wind/photovoltaic plants.
ket in which IPPS can negotiate electricity sale contracts
The PPAs can also be signed with private customers.
with ONEE or directly with end users (owing to a lack of
In 2018 it was established that solar and wind plants that
implementing legislation, this option is for the moment
enter into service by March 31, 2022 will be exempted
only exercised with respect to high-voltage customers).
from interstate transmission charges and losses for 25
The task of overseeing the implementation and proper
years.
functioning of the market is given to the Electricity Regu-
The Electricity Act is currently being revised. Among the
latory Authority (ANRE - Autorité Nationale de Régulation
proposals put forth by the Ministry of Power are reducing
de l’Electricité) by Law 48-2015 of 2016. While a Presi-
the wheeling charge, requiring the states to comply with
dent of ANRE was appointed in August 2018, it is not yet
the national RPO, exempting renewable power plants
currently operational.
from the requirement to obtain a generation license and
With regard to procurement, an auction system is used
and unbundling distribution.
to promote renewables. Specifically, in 2009 and in 2010
The regulations for ancillary services are also being re-
two programs were launched: the Morocco Solar Pro-
vised, with a proposal to hold auctions for the purchase
gram and the Integrated Wind Energy Program, with the
of such services.
Morocco
goal of developing 2 GW each of solar and wind capacity,
managed respectively by the Moroccan Agency for Solar
Energy (MASEN) and by ONEE. Both programs offer elec-
tricity sale contracts with MASEN/ONEE having durations
Morocco is a constitutional monarchy that is relatively
of 25 years for solar and 20 years for wind.
stable politically and whose economy is steadily growing.
The Moroccan electricity sector is highly energy depen-
dent. More than 90% of energy procurement is in the
form of imports of coal, gas and oil. However, in the last
few years Morocco has approved a series of regulations
that seek to both reduce dependence on foreign markets
The expected reform of the law on renewables is under
way; a series of consultations have been held with the
main stakeholders during the year. The reform should
improve the regulatory framework for the access of IPPs
to the medium-voltage grid and for the sale of electricity
generated in excess of the needs of end users. The re-
and expand the role of renewables.
form should be completed in 2019.
In 2009, the government adopted the new National En-
ergy Strategy (NES), imposing national energy policy tar-
gets through 2030. The development of renewables is a
key component of this policy with the target of making
up 42% of total installed capacity by 2020 and 52% by
2030. In order to achieve these ambitious goals, in 2010
In September 2018, King Mohammed VI requested an up-
ward revision of the targets of renewables in the energy
mix, higher than the current one of 52% by 2030.
Australia
the Moroccan government adopted Law 13-2009, which
Australia is a federal constitutional monarchy composed
in principle allows independent power producers (IPPs) to
of six states and two territories. The electricity sector
generate and export electricity.
is regulated by a collection of federal and state policies,
The regulatory framework was further completed in
overseen by various actors. The primary regulators at the
144
Annual Report 2018 central level are: the Council of Australian Governments
The Australian regulatory framework is evolving rapidly,
(COAG), made up of the federal and state energy minis-
with the primary objective of maintaining the security of
ters who guide the development of energy policies; the
the electricity system in a country that is experiencing
Australian Energy Regulator (AER), which is the econom-
the progressive obsolescence of its coal-fired generation
ic regulator; the Australian Energy Market Commission
plants, which are slowly being replaced by gas-fired and
(AEMC), which is the rule maker and is responsible for
renewable energy plants.
market development; the Australian Energy Market Op-
At the end of 2017 the federal government introduced a
erator (AEMO), which is the system and market opera-
new policy for the NEM, addressing primarily the security
tor; and the Clean Energy Regulator (CER), responsible
and reliability of the electricity system, consumer prices
for managing green certificates. Each state has its own
and reducing emissions. Under the new policy, called the
regulatory bodies.
National Energy Guarantee (NEG), retailers are required to
The electricity system is divided into two primary markets:
buy an appropriate mix of resources to provide:
the National Electricity Market (NEM), which covers the
> a “reliability guarantee”, to ensure the right amount of
eastern part of the country where almost 90% of the
dispatchable energy;
population resides, and the Wholesale Electricity Market
> an “emissions guarantee”, to help reduce emissions in
(WEM) in the west, which is much smaller. Both the NEM
line with Australia’s international commitments (reduc-
and the WEM, albeit in slightly different ways, operate as
tion of emissions by 26-28% by 2030 compared with
spot markets for electricity, facilitating exchange between
2005).
generators and suppliers to end users (retailers) and to
The NEG was almost finalized when, in August 2018,
large industrial customers.
an abrupt change in government caused it to be put on
The country has a Renewable Energy Target (RET)
hold. The part regarding the emissions guarantee was
scheme that is operated in two parts:
rejected, while that on the reliability guarantee is slowly
> the Large-scale Renewable Energy Target (LRET), set in
moving forward, in a manner still to be defined. At the
2015 at 33,000 GWh (around 23% of demand) of gener-
end of 2018 the government launched a new program
ation by 2020, to be maintained at this level until 2030.
called Underwriting New Generation Investment (UNGI),
The LRET creates a financial incentive for renewable
which appears to promote generation from traditional fos-
energy power plants, which can produce Large-scale
sil sources provided that there are concessions for non-
Generation Certificates (LGSs) to be sold to retailers.
intermittent new generation sources or for extending the
These retailers are required to buy them in an amount
life of existing assets.
equal to a certain percentage of the electricity sold to
end users, currently around 20%;
In 2019 federal elections will be held, the results of which
> the Small-scale Renewable Energy Scheme creates a
will heavily influence the future course of the country’s
financial incentive for households or small business
energy policy.
customers to install small-scale renewable energy sys-
tems (usually rooftop solar panels), for which they can
receive Small-scale Technology Certificates (STCs). Re-
tailers are also required to buy these STCs in specified
amounts.
The states have their own renewable energy policies and
some – with more ambitious targets than the federal ones
– have introduced in recent years programs in support of
green energy. The state renewable energy targets are, for
example:
> Victoria: 25% of electricity from renewable sources by
2020 and 40% by 2025 (about 3.3 GW), to be achieved
in part through auctions that began in 2017;
> Queensland: 50% by 2030;
> South Australia: 50% by 2025.
145
Report on operations Main risks and
uncertainties
Due to the nature of its business, the Group is exposed
pend essentially on variables that are outside the control
to a variety of risks, notably financial risks, industrial and
of management. More specifically, the Strategic Plan is
environmental risks, strategic risk connected with the evo-
based on assumptions about scenarios and the position-
lution of markets and risks connected with sustainability
ing of the business. The former include developments in
and climate change. In order to mitigate its exposure to
electricity, gas, fuel and raw materials prices, the evolution
these risks, Enel conducts specific analysis, measure-
of electricity and gas demand in the markets where the
ment, monitoring and management activities, as described
respective Groups operate, developments in macroeco-
in this section.
nomic variables, as well as the evolution of the regulatory
See also the “Reference scenario” section for an analysis
framework.
of the factors that represent some of the underlying bases
The 2019-2021 Strategic Plan, drawn up on the basis of
for these risks.
Strategic risks
connected with
developments in the
market, competitive and
regulatory environment
these assumptions, includes the following estimates and
forecasts for the years 2019, 2020, 2021 and average
growth in 2019-2021. The achievement of the objectives is
based on a set of assumptions on the occurrence of future
events and actions that the Enel Group plans to undertake,
including assumptions of a general and hypothetical nature
relating to future events and actions that will not neces-
sarily occur. Accordingly, the forecasts, being based on
hypotheses about future events and actions undertaken,
or still to be undertaken, by management, are character-
ized by an inherent degree of subjectivity and uncertainty
On November 20, 2018, the Enel Group presented its Stra-
and, in particular, by the risk that forecast events and the
tegic Plan for 2019-2021 to the financial community. It sets
actions that could follow from those events may not occur
out the strategic guidelines and the performance and finan-
or may occur at different times and in different amounts
cial objectives of the Group. The document used for the
from those originally planned, while events and actions
presentation, “Capital Markets Day - Strategic Plan 2019-
that were unforeseeable at the time of preparation could
2021”, is available to the public on the Enel Group website
instead occur. Therefore, divergences between final out-
at www.enel.com in the Investor Relations section.
comes and forecast values could be significant.
The Enel Group Strategic Plan is implemented through a
In addition, the markets and businesses in which the Group
process that involves all the Business Lines and the Coun-
operates are currently experiencing gradual and growing
tries/Regions of the Enel Group, which prepare their action
competition and change in their competitive, technologi-
plans on the foundation of the strategic guidelines speci-
cal and regulatory contexts, with the timing and pace of
fied by the Parent Company. These plans are finally con-
these developments varying from country to country. As a
solidated in the Group’s Strategic Plan.
result of these processes, the Group is exposed to increas-
The preparation of the Enel Strategic Plan is based, inter
ing competition.
alia, on certain assumptions concerning future events that
The business risks generated by the natural participation
management expects will occur and actions that it intends
of the Group in such markets have been addressed by
to undertake at the time the Plan is prepared, as well as
integrating along the value chain, with a greater drive for
general assumptions about future events and manage-
technological innovation, diversification and geographical
ment actions that may not necessarily occur, as they de-
expansion. More specifically, the initiatives taken have in-
146
Annual Report 2018 creased the customer base in the free market, with the
ficers of the companies involved, which are responsible
aim of integrating downstream into final markets, optimiz-
for policy setting and supervision of risk management, as
ing the generation mix improving the competitiveness
well as the definition and application of specific policies at
of plants through cost leadership, seeking out new high-
the Group and individual Region, Country and Global Busi-
potential markets and developing renewable energy re-
ness Line levels that establish the roles and responsibilities
sources with appropriate investment plans in a variety of
for risk management, monitoring and control processes,
countries.
ensuring compliance with the principle of organizational
The Group often operates in regulated markets or regulated
separation of units responsible for operations and those in
regimes, and changes in the rules governing operations in
charge of monitoring and managing risk.
such markets and regimes, and the associated instructions
The financial risk governance system also defines a system
and requirements with which the Group must comply, can
of operating limits at the Group and individual Region, Coun-
impact our operations and performance.
try and Global Business Line levels for each risk, which are
In order to mitigate the risks that such factors can engen-
monitored periodically by risk management units. For the
der, Enel has forged closer relationships with local govern-
Group, the system of limits constitutes a decision-making
ment and regulatory bodies, adopting a transparent, collab-
tool to achieve its objectives.
orative and proactive approach in tackling and eliminating
For further information on the management of financial
sources of instability in regulatory arrangements.
risks, please see note 44 “Risk management” of the An-
Risks connected with
CO2 emissions
In addition to being one of the factors with the largest po-
tential impact on Group operations, emissions of carbon
dioxide (CO2) are also one of the greatest challenges facing
the Group in safeguarding the environment.
EU legislation governing the emissions trading scheme im-
poses costs for the electricity industry. In order to mitigate
the risk factors associated with CO2 regulations, the Group
monitors the development and implementation of EU and
Italian legislation, diversifies its generation mix towards the
use of low-carbon technologies and resources, with a fo-
cus on renewables and nuclear power, develops strategies
to acquire allowances at competitive prices and, above all,
enhances the environmental performance of its generation
plants, increasing their energy efficiency.
More information on this category of risk is available in the
“Sustainability and the fight against climate change” section.
Financial risks
As part of its operations, Enel is exposed to a variety of fi-
nancial risks that, if not appropriately mitigated, can directly
impact our performance. These include market risks, credit
risk and liquidity risk.
The financial risk governance arrangements adopted by
Enel establish specific internal committees, composed of
top management and chaired by the Chief Executive Of-
nual Report.
Market risks
The market risks to which the Group is exposed are con-
nected to the fluctuation of commodity prices, exchange
rates and interest rates.
To maintain the exposure to market risk within operating
limits, Enel also uses derivatives.
Risks connected with
commodity prices and supply
continuity
Enel operates in energy markets and for this reason is ex-
posed to changes in the prices of fuel and electricity, which
can have a significant impact on its results.
To mitigate this exposure, the Group has developed a strat-
egy of stabilizing margins by contracting for supplies of fuel
and the delivery of electricity to end users or wholesalers
in advance.
Enel has also implemented a formal procedure that pro-
vides for the measurement of the residual commodity risk,
the specification of a ceiling for maximum acceptable risk
and the implementation of a hedging strategy using deriva-
tives on regulated markets and over-the-counter (OTC) mar-
kets.
In order to mitigate the risk of interruptions in fuel supplies,
the Group has diversified fuel sources, using suppliers
from different geographical areas.
147
Report on operations Exchange rate risk
Credit risk
In view of their geographical diversification, access to in-
Commercial, commodity and financial transactions ex-
ternational markets for the issuance of debt instruments
pose the Group to credit risk, i.e. the possibility of a de-
and transactions in commodities, Group companies are ex-
terioration in the creditworthiness of counterparties that
posed to the risk that changes in exchange rates between
could have an adverse impact on the expected value of
the currency of account and other currencies could gener-
the creditor position and, for trade receivables only, in-
ate unexpected changes in the performance and financial
crease average collection times.
aggregates in their respective financial statements.
The exposure to credit risk is attributable to the following
Given the current structure of Enel, the exposure to ex-
types of operations:
change rate risk is mainly linked to the US dollar and is at-
> the sale and distribution of electricity and gas in free
tributable to:
and regulated markets and the supply of goods and ser-
> cash flows in respect of the purchase or sale of fuel or
vices (trade receivables);
electricity;
> trading activities that involve the physical exchange of
> cash flows in respect of investments, dividends from for-
assets or transactions in financial instruments (the com-
eign subsidiaries or the purchase or sale of equity invest-
modity portfolio);
ments;
> trading in derivatives, bank deposits and, more gener-
> cash flows connected with commercial relationships;
ally, financial instruments (the financial portfolio).
> financial assets and liabilities.
The Group’s consolidated financial statements are also
exposed to the exchange rate risk deriving from the con-
The policy for managing credit risk associated with commer-
version into euros of the items relating to investments
cial activities provides for a preliminary assessment of the
in companies whose currency of account is not the euro
creditworthiness of counterparties and the adoption of miti-
(translation risk).
gation instruments, such as obtaining collateral or unsecured
The exchange rate risk management policy is based on sys-
guarantees.
tematically hedging the exposures to which the Group compa-
In addition, the Group undertakes transactions to assign re-
nies are exposed, with the exception of translation risk.
ceivables without recourse, which results in the complete
Appropriate operational processes ensure the definition
derecognition of the corresponding assets involved in the as-
and implementation of appropriate hedging strategies,
signment.
which typically employ financial derivatives obtained on
Finally, with regard to financial and commodity transactions,
OTC markets.
Interest rate risk
risk mitigation is pursued through the diversification of the
portfolio (preferring counterparties with a high credit standing)
and the adoption of specific standardized contractual frame-
works that contain risk mitigation clauses (e.g. netting arrange-
The Group is exposed to the risk that changes in the level
ments) and possibly the exchange of cash collateral.
of interest rates could produce unexpected changes in
net financial expense or the value of financial assets and
liabilities measured at fair value.
Liquidity risk
The exposure to interest rate risk derives mainly from the
Liquidity risk is the risk that the Group, while solvent, would
variability of the terms of financing, in the case of new
not be able to discharge its obligations in a timely manner or
debt, and from the variability of the cash flows in respect
would only be able to do so on unfavorable terms owing to
of interest on floating-rate debt.
situations of tension or systemic crises (credit crunches, sov-
The policy for managing interest rate risk seeks to con-
ereign debt crises, etc.) or changes in the perception of Group
taining financial expense and its volatility by optimizing
riskiness by the market.
the Group’s portfolio of financial liabilities and by obtain-
Among the factors that define the risk perceived by the mar-
ing financial derivatives on OTC markets.
ket, the credit rating assigned to Enel by rating agencies plays
a decisive role, since it influences its ability to access sources
of financing and the related financial terms of that financing. A
148
Annual Report 2018 deterioration in the credit rating could therefore restrict access
sures as an option for reviving national economies.
to the capital market and/or increase the cost of funding, with
The normalization of monetary policy in the advanced
consequent negative effects on the performance and financial
countries (especially in the United States) has imposed
situation of the Group.
strong pressures on emerging markets (especially the
In 2018, Enel’s ratings from the rating agencies did not change.
structurally weaker economies): among these, Argentina
Accordingly, at the end of the financial year, Enel’s rating was:
has seen its risk increase (as reflected in the country’s
(i) “BBB+” with a stable outlook for Standard & Poor’s; (ii)
rating in the model on both the macroeconomic and socio-
“BBB+” with a stable outlook for Fitch; and (iii) “Baa2” with a
political levels), connected with a deterioration in econom-
stable outlook for Moody’s. In February 2019 Fitch revised its
ic conditions (e.g. the economy slipped into recession in
rating for Enel upwards, from “BBB+” to “A-”.
2018) and domestic political uncertainty. In an attempt
Enel’s liquidity risk management policies are designed to
to reassure the markets and to meet its funding needs,
maintain a level of liquidity sufficient to meet its obligations
the government reached an agreement with the Interna-
over a specified time horizon without having recourse to ad-
tional Monetary Fund (IMF) for an aid plan of over $55
ditional sources of financing as well as to maintain a pruden-
billion, subject to eliminating the primary deficit by 2019
tial liquidity buffer sufficient to meet unexpected obligations.
and achieving a primary surplus of 1% of GDP in 2020.
In addition, in order to ensure that the Group can discharge
The main risk is tied to the possibility of continuing the
its medium and long-term commitments, Enel pursues a
recovery in the run-up to the national elections scheduled
borrowing strategy that provides for a diversified structure
for October 2019.
of financing sources to which it can turn and a balanced ma-
turity profile.
Country risk
By now, some 50% of the Enel Group’s total revenue is
generated abroad. The substantial internationalization of
the Group – which among other regions operates in South
America, North America, Africa and Russia – requires Enel
to consider and assess country risk, which consists of
the macroeconomic, financial, regulatory, market, social
and geopolitical risks whose manifestation could have an
adverse impact on income or threaten corporate assets.
Enel has therefore adopted a model for assessing country
risk in the countries in which it operates. In order to miti-
gate country risk, the model supports capital allocation
and investment evaluation processes.
In Europe, Brexit negotiations continue without significant
progress, with the British parliament again postponing ap-
proval of the preliminary agreement reached between the
Prime Minister, Theresa May, and the European Union.
Among the European economies of interest to the Group,
Italy has seen its risk increase, as reflected in model’s pro-
jections. The uncertainty surrounding the government’s
fiscal policy, the strains with the European Union over
the country’s budget targets and domestic political uncer-
tainty have combined with contingent factors to slow the
economy, which may enter recession in the 2nd Half of
2019.
Risk connected with
climate change
In 2018 the world economy grew by around 3%, in line
with the pace of 2017. The United States and China are
driving the world expansion, while euro-area growth
moved at a slower pace. However, initial signs of a slow-
Physical risks connected
with climate change
down have emerged and political and economic risks per-
The physical risks posed by climate change could be con-
sist. The economic factors include issues connected with
nected with individual events or long-term changes in cli-
the sustainability of the public finances in the face of the
mate models. Extreme meteorological events and natural
need to make investments to boost productivity, with the
disasters expose the Group to the risk of damage to in-
lack of diversification of the South American economies,
frastructure and other assets, with the consequent pos-
which leaves them more exposed to short-term economic
sibility of prolonged periods in which the assets involved
fluctuations and with the spread of protectionist mea-
would be unavailable. In addition, the Group is exposed
149
Report on operations to the risk of impacts on the operation of its generation
In addition, in order to mitigate the legal and regulatory
assets linked to gradual climate changes (for example, air
risks associated with climate change, the Group maintains
temperature, rainfall and wind). Enel is present along the
transparent and constructive relations with local and inter-
entire value chain in the electricity industry (generation,
national authorities and regulators.
distribution and sale) and has a diversified portfolio of
Additional details on this category of risk are available in the
activities, both in terms of generation technologies and
“Sustainability and the fight against climate change” section.
the geographical areas and markets in which it operates,
mitigating the risks connected with climate change and
the associated financial repercussions.
Moreover, the Group uses the most advanced prevention
Risks related to cyber
attacks
and protection strategies, with the concomitant aim of re-
The era of digitization and technological innovation means
ducing the possible impacts on the communities and the
that organizations are increasingly exposed to cybernetic
areas surrounding the assets: constant monitoring and
attacks, which are becoming increasingly numerous and
weather forecasting in the areas where the most exposed
sophisticated, partly reflecting the changes in the context
assets are located. Furthermore, numerous actions have
in which they occur. The organizational complexity of the
been taken to increase the resilience of the assets most
Group and the numerous environments it encompasses
exposed to extreme weather or natural disasters.
(data, people and the industrial world) expose our assets
All of the areas of the Group undergo ISO 14001 certifi-
to the risk of attacks. The Enel Group has adopted a model
cation and potential sources of risk are monitored with
for managing these risks based on a “systemic” vision ap-
the implementation of internationally recognized Environ-
plied to both the traditional information technology sector
mental Management Systems (EMS) so that any critical
and the industrial sector (operational technology), taking
issues can be detected promptly.
due consideration of the networking of smart “objects”
Additional details on this category of risk are available in
(Internet of Things). In particular, Enel has adopted a “Cy-
the “Sustainability and the fight against climate change”
ber Security Framework” to guide and manage cyber se-
section.
Transition risks connected
with climate change
curity activities, which provides for the involvement of the
business areas, the implementation of legislative, regu-
latory and legal requirements and recommendations, the
use of the best available technologies, the preparation of
ad hoc business processes and an informed workforce.
The transition to a low-carbon energy model may generate
The Framework bases strategic decisions and design ac-
legislative/regulatory risks or political, legal, technological
tivities on a “risk-based” approach and a design and de-
and market risks associated with the fight against climate
velopment model that defines the appropriate security
change, with an impact in the short, medium and long term.
measures throughout the life cycle of applications, pro-
Issues such as increased reporting requirements for emis-
cesses and services (cyber security by design). Enel has
sions and other legal obligations, the use of low-emissions
also created its own active Cyber Emergency Readiness
energy sources and reducing the exposure to fossil fuels,
Team (CERT), which is recognized and accredited by na-
the uncertainty of market signals with potentially unforeseen
tional and international communities, in order to direct an
variations in market prices, rising commodity prices or the
industrialized response to cyber threats and incidents.
growing interest of stakeholders in climate issues are all risk
factors connected with climate change to which Enel may be
exposed and which could impact the financial performance
of the company.
The Group is involved in the continuous improvement of the
environmental impact of its existing activities through its
emission reduction targets, first and foremost the goal of
“emission free production” by 2050. Enel adopts a strategy
aimed at growth through development of low-carbon tech-
nologies and services, in line with the COP21 objectives.
150
Annual Report 2018 Outlook
The Group’s 2019-2021 Strategic Plan presented in No-
> Improved return on investment to support dividend
vember 2018 focuses on the centrality of the integrated
growth: we expect investments focused on higher yield
business model, capable of seizing the opportunities ari-
assets, efficiency and portfolio optimization will crea-
sing from the energy transition. The growth in renewable
te value amounting to a total of 400 basis points on a
energy, the development and automation of the distribu-
WACC of 6.2% in 2021, rising by more than one and a
tion network, the opportunities for electrification and cu-
half times compared with 2018.
stomer focus are the guidelines of the Group’s strategy.
> Shareholder remuneration: a 70% dividend calculated on
More specifically, the Group’s 2019-2021 Strategic Plan
the Group’s ordinary net income from 2019 onwards is
focuses on the following issues.
confirmed, with an annual compound average growth rate
> Industrial growth: the Group plans to invest a total of
(CAGR) in the dividend per share (DPS) of approximately
€27.5 billion over the plan period, with the aim of ge-
+12%. For the first time the minimum DPS will be exten-
nerating a cumulative increase in ordinary EBITDA of
ded to the next three years, with a CAGR of about +9%.
€3.2 billion. The full range of investments in the three
categories – asset development, customers and asset
In 2019 we expect:
management – will contribute to achieving this goal.
> an acceleration of investments to contribute to indu-
> Decarbonization opens the way to creating value, with
strial growth in renewable energy projects, particularly
renewables expected to generate a cumulative incre-
in North America, with global investments increasing by
ase in EBITDA of €1 billion between 2019 and 2021.
more than 35% compared with 2018 and the continua-
The focus of investments in markets where Enel has
tion of investments in grids, especially in Italy and South
an integrated presence and in mature economies will
America;
enable the Group to increase profitability and achieve
> significant progress in operational efficiency, supported
its decarbonization targets. In 2021, 62% of the energy
by digitalization across all our businesses, with a cumu-
generated by the Enel Group is expected to have zero
lative efficiency target of €1.2 billion by 2021;
emissions, compared with an estimated 48% in 2018.
> greater customer focus on a global scale and an acce-
> Operational efficiency: the objective of €1.2 billion of
leration of Enel X’s activities in the electric mobility and
cumulative benefits generated by efficiencies expected
demand response businesses;
by 2021, mainly due to the effect of digitalization, has
> further progress in simplifying the Group and actively
been confirmed.
managing the portfolio, so as to optimize its overall risk
> Simplification: Enel will continue to increase its in-
and return profile.
vestments in its subsidiaries, continuing their integra-
tion within the Group and rationalizing our portfolio
Enel Group’s strategy is also aimed at ensuring resilience,
through asset rotation, with further optimization of the
mitigation and adaptation to changes in the external en-
overall return and risk profile.
vironment and, in particular, to climate change, thanks to
> Human capital: our commitment to achieving sustai-
a business model and leadership position in line with the
nable development goals (SDGs) has been exten-
Paris Agreement (COP21). In this regard, the “Sustainabi-
ded until 2030. A “shared value” approach towards
lity and the fight against climate change” section includes
communities and people integrated into the Group’s
a review of the main risks and opportunities related to cli-
core business processes; introduction of specific ad-
mate change, the mitigation and adaptation actions imple-
ditional targets for SDG 9 (Industrial Innovation and
mented and the key objectives and metrics.
Infrastructure) and 11 (Sustainable Cities and Com-
The progress achieved in each of the key enabling factors
munities).
and key pillars of the Strategic Plan enables us to confirm
151
Report on operations our performance and financial objectives for 2019. Further-
performance and financial objectives on which the Group’s
more, on the basis of the key elements set out above, the
Strategic Plan 2019-2021 is based are summarized below.
Financial targets
Ordinary EBITDA (billions of euro)
Net ordinary income (billions of euro)
Pay-out ratio
Implicit DPS (€/share)
Minimum dividend per share (€)
2018
~16.2
~4.1
70%
0.28
0.28
2019
~17.4
~4.8
70%
0.33
0.32
2020
~18.5
~5.4
70%
0.37
0.34
2021
~19.4
~5.6
70%
0.39
0.36
CAGR (%)
2018-2021
~+6%
~+11%
-
~+12%
~+9%
152
Annual Report 2018 Other information
Non-EU subsidiaries
At the date of approval by the Board of Directors of the
into Enel Chile SA as from April 2, 2018); 18) Enel Green
financial statements of Enel SpA for 2018 – March 21, 2019
Power North America Inc. (a US company belonging to
– the Enel Group meets the “conditions for the listing of
Enel Green Power); 19) Enel Green Power RSA (Pty) Ltd
shares of companies with control of over companies estab-
(a South African company belonging to Enel Green Pow-
lished and regulated under the law of non-EU countries”
er); 20) Enel Kansas LLC (a US company belonging to
(hereinafter “non-EU subsidiaries”) established by CON-
Enel Green Power); 21) Enel Perú SAC (a Peruvian com-
SOB with Article 15 of the Markets Regulation (approved
pany belonging to Enel Américas); 22) Enel Russia PJSC
with Resolution 20249 of December 28, 2017).
(a Russian company controlled directly by Enel SpA); 23)
Specifically, we report that:
Enel X North America Inc. (a US company belonging to
> in application of the materiality criteria for the purposes
Enel X); 24) Gas Atacama Chile SA (a Chilean company
of consolidation provided for in Article 15, paragraph 2, of
belonging to Enel Chile); and 25) Geotérmica del Norte
the CONSOB Markets Regulation, 25 non-EU subsidiar-
SA (a Chilean company belonging to Enel Chile);
ies of the Enel Group have been identified to which the
> the balance sheet and income statement of the above
rules in question apply on the basis of the consolidated
companies included in the reporting package used for
accounts of the Enel Group at December 31, 2017.
the purpose of preparing the 2018 consolidated financial
They are: 1) Enel Distribuição Rio (a Brazilian company
statements of the Enel Group will be made available to
belonging to Enel Américas); 2) Enel Distribuição Goiás
the public by Enel SpA (pursuant to Article 15, paragraph
(a Brazilian company belonging to Enel Américas); 3)
1a) of the Markets Regulation) at least 15 days prior to
Codensa SA ESP (a Colombian company belonging to
the day scheduled for the Ordinary Shareholders’ Meet-
Enel Américas); 4) Enel Distribuição Ceará SA (a Brazil-
ing called to approve the 2018 financial statements of
ian company belonging to Enel Américas); 5) Emgesa SA
Enel SpA together with the summary statements show-
ESP (a Colombian company belonging to Enel Américas);
ing the essential data of the latest annual financial state-
6) Empresa Distribuidora Sur - Edesur SA (an Argentine
ments of subsidiaries and associated companies (pursu-
company belonging to Enel Américas); 7) Enel Américas
ant to the applicable provisions of Article 77, paragraph
SA (a Chilean company controlled directly by Enel SpA);
2-bis, of the CONSOB Issuers Regulation approved with
8) Enel Brasil SA (a Brazilian company belonging to Enel
Resolution 11971 of May 14, 1999);
Américas); 9) Enel Chile SA (a Chilean company controlled
> the articles of association and composition and powers
directly by Enel SpA); 10) Enel Distribución Chile SA (a
of the control bodies from all the above subsidiaries have
Chilean company belonging to Enel Chile); 11) Enel Distri-
been obtained by Enel SpA and are available in updated
bución Perú SAA (a Peruvian company belonging to Enel
form to CONSOB where the latter should request such
Américas); 12) Enel Generación Chile SA (a Chilean com-
information for supervisory purposes (pursuant to Article
pany belonging to Enel Chile); 13) Enel Generación Perú
15, paragraph 1b) of the Markets Regulation);
SAA (a Peruvian company belonging to Enel Américas);
> Enel SpA has verified that the above subsidiaries:
14) Enel Green Power Brasil Participações Ltda (a Brazil-
- provide the auditor of the Parent Company, Enel SpA,
ian company belonging to Enel Green Power); 15) Enel
with information necessary to perform annual and inter-
Green Power Chile Ltda (a Chilean company belonging
im audits of Enel SpA (pursuant to Article 15, paragraph
to Enel Green Power); 16) Enel Green Power del Sur SpA
1 (letter c-i)) of the Markets Regulation);
(a Chilean company belonging to Enel Green Power); 17)
- use an administrative and accounting system appropri-
Enel Green Power Latin America SA (a company merged
ate for regular reporting to the management and auditor
153
Report on operations of the Parent Company, Enel SpA, of income statement,
ant to Article 15, paragraph 1 (letter c-ii)) of the Markets
balance sheet and financial data necessary for prepa-
Regulation).
ration of the consolidated financial statements (pursu-
Approval of the financial statements
The Shareholders’ Meeting called to approve the financial
120 days from the close of the financial year, permitted un-
statements, as provided for by Article 9.2 of the bylaws of
der Article 2364, paragraph 2, of the Italian Civil Code, is
Enel SpA, shall be called within 180 days of the close of the
justified by the fact that the company is required to prepare
financial year.
consolidated financial statements.
The use of that time limit rather than the ordinary limit of
Disclosures on financial instruments
The disclosures on financial instruments required by Article
ment”, note 33 “Derivatives and hedge accounting” and
2428, paragraph 2, 6-bis of the Civil Code are reported in
note 34 “Fair value measurement” to the separate financial
note 31 “Financial instruments”, note 32 “Risk manage-
statements of Enel SpA.
Transactions with related parties
For more information on transactions with related parties, please see note 35 to the separate financial statements
of Enel SpA.
Own shares
The company does not hold treasury shares nor did it engage in transactions involving own shares during the year.
Atypical or unusual operations
Pursuant to the CONSOB Notice of July 28, 2006, Enel did
lating the transfer price or timing could give rise to doubts
not carry out any atypical or unusual operations in 2018.
concerning the propriety and/or completeness of disclosure,
Such operations include transactions whose significance,
conflicts of interest, preservation of company assets or pro-
size, nature of the counterparties, object, method for calcu-
tection of minority shareholders.
Subsequent events
Significant events following the close of the year are discussed in note 52 to the consolidated financial statements.
154
Annual Report 2018 155
Report on operations 156
Annual Report 2018 02
Sustainability
and the fight
against climate
change
157
Report on operations The sustainable business model
In an environment of constant and rapid change, exposing
and which are a part of policies and standards of conduct
the energy industry to new risks and offering new oppor-
that are applicable throughout the Group.
tunities, Enel’s model of sustainable business leverages
It is a model that promotes sustainable development and
the synergies among the various business areas and the
is fully in line with the indications of the United Nations
outside world in order to develop innovative solutions to
Global Compact, of which Enel has been an active mem-
reducing our environmental impact, to meeting the needs
ber since 2004, reiterating the importance of increasing
of local communities and to improving safety for both
the integration of sustainability within the company’s stra-
employees and suppliers. Understanding the context in
tegic decision-making processes. Enel’s CEO has been
which Enel operates and actively listening to everyone
a member of the United Nations’ Global Compact Board
with whom we work enable us to create sustainable long-
since June 1, 2015.
term value, blending economic and social growth. It is a
A key aspect of this approach is the adoption of environ-
strategic and operational approach founded on the “Open
mental, social and governance (ESG) sustainability indica-
Power” concept of openness, where sustainability and in-
tors throughout the value chain, not only for assessments
novation are an essential combination.
of results achieved, but above all to drive decision-making
Framing this are the principles of ethics, transparency,
and develop a proactive stance, in line with the Sustain-
anti-corruption, human rights and health and safety that
able Development Goals (SDG) 2030 of the United Na-
have always been a distinctive feature of Enel’s operations
tions.
Enel’s commitment to the United Nations’ Sustainable
Development Goals
Since 2015, Enel has been committed to helping reach the Sustainable Development Goals (SDGs) of the United Na-
tions (UN). Through the SDGs, the United Nations called on companies to be creative and innovative in addressing the
challenges of sustainable development, such as poverty, gender equality, clean water, clean energy and climate change.
By way of our business strategies, Enel contributes to reaching all 17 SDGs, and we have renewed our commitment to
reaching four goals by 2030 in particular:7
> SDG 7 - ensuring access to affordable, reliable, sustainable and modern energy, including the promotion of energy-
efficiency services, the beneficiaries of which will include 10 million people by 2030. For the period 2015-2018, 6.2
million beneficiaries had been reached throughout the Group, 3.3 million of which in Africa, Asia and South America.
> SDG 4 - supporting projects to ensure inclusive and equitable quality education for 2.5 million people by 2030. For
the period 2015-2018, about 1 million beneficiaries had been reached.
> SDG 8 - promoting sustained, inclusive and sustainable economic growth for 8 million people by 2030. For the
period 2015-2018, around 1.8 million beneficiaries had been reached.
> SDG 13 - taking targeted action to achieve decarbonization by 2050. As of December 2018, specific CO2 emissions
totaled 0.369 kg/kWheq , and the new target is 0.23 kg CO2 /kWheq by 2030.
The Group has also added commitments concerning the following two SDGs:
> SDGs 9 and 11 - promoting the development of sustainable cities and of infrastructures that are reliable, sustaina-
ble, resilient and of high quality by providing about 47 million customers with smart meters and 455,000 public and
private electric vehicle recharging points by 2021 and investing €5.4 billion in digitalization for the period 2019-2021.
7 The number of beneficiaries takes into account the projects and other activities conducted in all areas in which the Group operates (including subsidiaries
consolidated at equity, the Group’s foundations and non-profit organizations, and the companies under the Build, Sell & Operate, or “BSO”, mechanism).
158
Annual Report 2018 Non-financial information is coming under increasing
particular, the analysis of this category of stakeholder has
scrutiny by investors and the financial markets, who are
pointed to the following priorities: decarbonization of the
now focusing on the ability of a company to make sustain-
energy mix; new technologies, services and digitization;
able long-term business plans that translate into concrete,
environmental compliance and management; robust gov-
measurable actions and better financial performance.
ernance and transparent conduct; efficiency in operations.
Socially responsible investment funds continued growing
Based on the material analysis results, the issues to be in-
in 2018. Enel has 169 Socially Responsible Investors - SRI
cluded in the reports are defined and the specific targets
(up from 160 in 2017), which hold about 10.5% of all Enel
and objectives of the 2019-2021 Strategic Plan are set.
shares in circulation (compared with 8.6% in 2017), equal
Operations and projects regarding various functions and
to 13.7% of the float (11.3% in 2017). In absolute value,
Business Lines of the Group contribute towards achieving
shares held by SRI investors increased by 21.2%.
these targets and objectives as detailed in the 2019-2021
Priority analysis and
definition of sustainability
goals
For several years now, Enel has conducted materiality
analyses – based on the guidelines of the most widely
adopted standards such as the Global Reporting Initiative
(GRI) – in order to identify the Group’s intervention pri-
orities, the issues to consider for disclosure and which
stakeholder-engagement activities to strengthen. The aim
is to map and assess the priority of the issues of interest
to stakeholders, integrating them into the Group’s busi-
ness strategy and priorities for action.
Through this analysis, the main stakeholders of the Group
are identified and assessed according to their importance
to the company and to their priorities on the various is-
sues approached in the numerous engagement activities.
This information is then crosschecked with the assess-
ments of the issues on which Enel intends to focus its
efforts, with the respective priority value.
By observing the two perspectives together, it is possible
to identify the issues, which, due to their relevance and
priority, are essential to Enel and our stakeholders. Conse-
quently, it is possible to verify the degree of alignment or
misalignment between external expectations and internal
priorities.
The materiality analysis, which is conducted with increas-
ingly greater detail in terms both of issues and geographi-
cal scope, makes it possible to identify the company and
stakeholder priorities for the entire Group and for each
country of operations. It is also possible to obtain results
with a specific focus such as the matrix for the sole stake-
holder category of “financial community”, which is useful
for identifying issues to be discussed in the Annual Report
in order to provide integrated reporting on performance. In
Sustainability Plan.
As part of its Strategic Plan, Enel has identified the most
significant emerging risks:
> cyber attacks (“cyber risk”): the era of digitization and
technological innovation means that organizations are
increasingly exposed to cybernetic attacks, which are
becoming increasingly numerous and sophisticated,
partly reflecting the changes in the context in which
they occur. The Group is currently undertaking a major
process of digitalization, which is expected to intensify
in the coming years, thereby further increasing our ex-
posure to this risk. The organizational complexity of the
Group and the numerous environments it encompass-
es (data, people and the industrial world) expose our
assets to the risk of attacks, which are a serious threat
not only to data, but also to service continuity, and to
the automated systems at the power plants and on the
distribution network. The Enel Group has adopted a
model for managing these risks based on a “systemic”
vision that applies both to the traditional information
technology sector and to operational technology in the
industrial sector, while taking into account the Internet
of Things associated with the networking of smart “ob-
jects”;
> extreme weather and natural disaster: forecasts re-
garding the frequency and intensity of these events
point to a marked increase according to analyses within
the scientific community, and this increases risk to the
Group over the medium and long term. This risk is also
noted as one of the emerging risks in the recommen-
dations of the Task force on Climate-related Financial
Disclosures (TCFD) of the Financial Stability Board. The
growing emphasis on renewable technologies exposes
power plants to greater vulnerability, for which there
is a foreseeable increase in the impact of extreme
events. The business impact of these phenomena is
tied to the risk of damages to assets and infrastruc-
159
Report on operations tures and of the consequent extended unavailability
cree and which since last year accompanies the Group’s
of those assets. In order to mitigate these risks, the
Sustainability Report. Furthermore, beginning with the
Group has adopted the best strategies of prevention
2018 financial year, in accordance with the 2019 Budget
and protection with the goal, in part, of reducing the
Act, along with a description of the main risks associated
potential impact on the communities and territories
with the areas specified in the decree, the report now in-
surrounding the assets. Therefore, constant weather
cludes the related approaches to managing the risks.
forecasting and other monitoring efforts are carried
The reporting process involves collecting and calculating
out in the areas in which the assets most exposed are
specific key performance indicators of economic, envi-
located. Numerous projects are also being carried out
ronmental and social sustainability in accordance with
to increase the resilience of those assets that are the
the international reporting standard composed of the GRI
most exposed to extreme weather or natural disaster.
Standards and the supplementary Electric Utilities Sector
All areas of the Group are subject to ISO 14001 certi-
Disclosures, as well as with the principles of accountabil-
fication, and internationally recognized environmental
ity of the United Nations Global Compact.
management systems (EMSs) are used to monitor the
Projects, activities, performance and the other main re-
potential sources of risk in order to detect any critical
sults, including progress made towards the SDGs in line
issues in a timely manner.
with the indications of the “Business Reporting on the
Management and
reporting of non-financial
information
Enel undertakes to constantly manage and measure sus-
tainability performance by using and developing mecha-
nisms that allow for an integrated, standardized system
of activities and information that are kept constantly up to
date based on developments in the scope of operations
and relevant standards, while promoting the sharing of
best practices and experience.
Beginning with the 2017 financial year, in implementation
of EU (Directive 2014/97/EU) and national legislation (Leg-
islative Decree 254/2016) that has introduced mandatory
of non-financial information for large public-interest enti-
ties, the Group has drafted a “Consolidated Non-Financial
Statement” that covers the areas provided for in that de-
SDGs: An Analysis of the Goals and Targets”, the guide-
lines developed by the United Nations Global Compact
in collaboration with the GRI, are presented in Enel’s
Sustainability Report, the completeness and reliability of
which are verified by an accredited external auditing firm,
by the Control and Risk Committee and by the Corporate
Governance & Sustainability Committee. The documents
are approved by the Board of Directors of Enel SpA and
presented in the Shareholders’ Meeting.
Finally, the Group is included in the leading sustainabil-
ity indexes, such as the Dow Jones Sustainability Index
World, FTSE4Good, the Carbon Disclosure Project (CDP)
Climate and the Carbon Disclosure Project (CDP) Water,
the STOXX Global ESG Leaders, the Euronext Vigeo-Eiris,
the OEKOM Prime Rating, the Thomson Reuters/S-Net-
work ESG Best Practices Indices, the Thomson Reuters
Diversity & Inclusion Index, the Equileap’s Top 200 rank-
ing, and the ECPI.
Values and pillars of corporate ethics
A robust system of ethics underlies all activities of the
the Zero-Tolerance-of-Corruption Plan, the Enel Global
Enel Group. This system is embodied in a dynamic set of
Compliance Program, the Compliance Model under Leg-
rules constantly oriented towards incorporating national
islative Decree 231/2001 and any other national compli-
and international best practices that everyone who works
ance models adopted by Group companies in accordance
for and with Enel must respect and apply in their daily
with local laws and regulations.
activities. The system is based on specific compliance in-
struments: the Code of Ethics, the Human Rights Policy,
160
Annual Report 2018 Code of Ethics
In 2002, Enel adopted a Code of Ethics, which expresses
the company’s ethical responsibilities and commitments
account of the cultural, social and economic diversity of
the various countries in which the Group operates. Enel
also requires that all associates and other investees and
its main suppliers and partners adopt conduct that is in
in conducting business, governing and standardizing cor-
line with the general principles set out in the Code.
porate conduct on the basis of standards aimed to ensure
the maximum transparency and fairness with all stake-
holders.
The Code of Ethics is valid in Italy and abroad, taking due
Any violations or suspected violations of Enel Compliance
Programs can be reported, including in anonymous form,
through a single Group-level platform (the “Ethics Point”).
Other indices
No.
Confirmed violations of the Code of Ethics (1)
2018
30
2017
31
Change
(1)
-3.2%
(1) In 2018, an analysis was performed of violations reported in 2017. As a result, the number of verified violations reported for 2017 was changed from 27 to 31.
Compliance Model
(Legislative Decree
231/2001)
Legislative Decree 231/2001 introduced into Italian law
a system of administrative (and de facto criminal) liability
for companies for certain types of offenses committed by
their directors, managers or employees on behalf of or to
the benefit of the company. Enel was the first organiza-
tion in Italy to adopt, back in 2002, this sort of compliance
model that met the requirements of Legislative Decree
231/2001 (also known as “Model 231”).
Enel Global Compliance
Program (EGCP)
Zero-Tolerance-of-
Corruption Plan and the
anti-bribery management
system
In compliance with the tenth principle of the Global
Compact, according to which “businesses should work
against corruption in all its forms, including extortion and
bribery”, Enel is committed to combating corruption. For
this reason, in 2006 we adopted the Zero-Tolerance-of-
Corruption (ZTC) Plan as confirmation of the Group’s
commitment, as described in both the Code of Ethics
and the Model 231, to ensure propriety and transparency
in conducting company business and operations and to
safeguard our image and positioning, the work of our em-
ployees, the expectations of shareholders and all of the
The Enel Global Compliance Program for the Group’s
Group’s stakeholders. Following receipt of the ISO 37001
foreign companies was approved by Enel in September
anti-corruption certification by Enel SpA in 2017, which
2016. It is a governance mechanism aimed at strengthen-
was confirmed in 2018, Enel is continuing to extend cer-
ing the Group’s ethical and professional commitment to
tification to the main Italian and international subsidiaries
preventing the commission of crimes abroad that could
of the Group.
result in criminal liability for the company and do harm to
our reputation.
The types of crime covered by the Enel Global Compli-
Human Rights Policy
ance Program – which encompasses standards of con-
In order to give effect to the United Nations Guiding Prin-
duct and areas to be monitored for preventive purposes
ciples on Business and Human Rights, in 2013 the Enel
– are based on illicit conduct that is generally considered
SpA Board of Directors approved the Human Rights Poli-
such in most countries, such as corruption, crimes against
cy, which was subsequently approved by all the subsidiar-
the government, false accounting, money laundering, vio-
ies of the Group. This policy sets out the commitments
lations of regulations governing safety in the workplace,
and responsibilities in respect of human rights on the part
environmental crimes, etc.
of the employees of Enel SpA and its subsidiaries, wheth-
161
Report on operations er they be directors or employees in any manner of those
partners as part of its business relationships. Execution
companies. Similarly, with this formal commitment, Enel
of the action plans, which were prepared following due
explicitly becomes a promoter of the observance of such
diligence on the management system in 2017, began in
rights on the part of contractors, suppliers and business
2018.
Creating value for stakeholders
Enel’s stakeholders are individuals, groups or institutions
The economic value created and shared by Enel gives a
whose contribution is needed to achieve our mission or
good indication of how the Group has created wealth for
who have a stake in its pursuit.
the following stakeholders: shareholders, lenders, employ-
ees and government.
Millions of euro
Revenue
Income/(Expense) from commodity risk
External costs
Gross global value added from continuing operations
Gross value added from discontinued operations
2018
75,672
483
53,881
22,274
-
22,274
2,765
2,493
4,582
3,168
9,266
2017
74,639
578
53,680
21,537
-
21,537
1,983
2,495
4,504
3,273
9,282
Gross global value added
distributed to:
Shareholders (1)
Lenders
Employees
Government
Enterprises (1)
(1) In order to improve presentation, the comparative figures for 2017 have been adjusted to take account of dividends actually distributed. Previously those
authorized but not yet paid had been included.
Enel’s commitment to climate change disclosure
Global trends such as decarbonization, electrification, ur-
oping a business model that is aligned with the objectives of
banization, and digitalization are redesigning the energy in-
the Paris Agreement (COP21) to maintain the average global
dustry in the direction of a new ecosystem that is gradually
temperature increase well below 2 °C compared with pre-
transforming the traditional model of the utility busi-
industrial levels and to continue with efforts to limit this in-
ness.
crease to 1.5 °C within a strategy based on a long-term view
It is therefore necessary to promote the fight against cli-
translated into practical objectives. In addition to actions that
mate change, one of the primary challenges we face as
focus on the generation mix, Enel is active in digitalization,
a society, by promoting a global low-carbon economy. As
electric mobility, energy efficiency, and innovation. Within
stated by the World Economic Forum in its 2019 Global Risk
this landscape, Enel’s commitment to the circular economy,
Report, climate change is now the leading risk to society and
which unites innovation, competitiveness, and environmen-
will have a direct impact on long-term business performance.
tal sustainability, engages all areas of the Group in working
Therefore, combating climate change and protecting the
towards these objectives.
environment are among the responsibilities of a ma-
Furthermore, Enel is committed to promoting transpar-
jor global player in the energy industry such as Enel as
ency in climate disclosure as a way to demonstrate to its
we seek to achieve the full decarbonization of electric-
stakeholders that Enel’s ambition to tackle climate change
ity generation by 2050, thereby helping to achieve the
is rigorous and determined. Therefore, Enel has made a
United Nations’ SDG 13. We are also committed to devel-
public commitment to adopt the recommendations of
162
Annual Report 2018 the Task force on Climate-related Financial Disclosures
(TCFD) of the Financial Stability Board, which in 2017 pub-
lished specific recommendations on the voluntary reporting
Climate-related responsibilities
of the governance bodies
of the financial impact of climate risks.
Board of Directors - The Board of Directors of Enel SpA
As a result, within the scope of implementing these guide-
is responsible for analyzing and approving company strat-
lines, Enel has updated the information concerning the
egy, including the Group’s annual budget and Business
management of climate-related issues. As such, this sec-
Plan, which include the primary objectives and actions
tion has been structured around the four areas recommend-
that the company intends to pursue in order to guide the
ed by the TCFD, which represent the fundamental compo-
energy transition and deal with climate change. The Board
nents of how organizations operate:
of Directors also guides and evaluates the internal control
> Governance - Description of the role of Enel’s system
and risk management system (“SCIGR”), while also de-
of corporate governance with regard to climate-related
termining the level and nature of risk that is compatible
issues and the role of management in assessing and
with the strategic objectives of the company and of the
managing such issues;
Group. The ICRMS is the set of rules, procedures, and or-
> Strategy - Overview of the main climate-related risks
ganizational structures aimed at identifying, measuring,
and opportunities over the short, medium and long term,
monitoring and managing the main risks of the company
as well as of the various physical and transition scenarios
and its subsidiaries. These risks include those that could
considered and the company’s strategy developed to
have an impact on the organization’s sustainability over the
mitigate and adapt to these risks and to maximize op-
medium to long term, including climate-related risks. In
portunities;
2018, the Board of Directors dealt with issues related to
> Risks - Description of the process adopted by the Group
climate change and sustainability, as reflected in company
to identify, assess and manage climate-related risks and
strategies and operations, during 8 of its 18 meetings held.
opportunities (a section that is complementary to the
The Board is supported mainly by two internal committees
section on the main risks and uncertainties);
with regard to climate-related issues:
> Metrics and targets - The main climate-related metrics
> Corporate Governance & Sustainability Committee -
used by Enel, including greenhouse-gas emissions and
This Committee is responsible for assisting the Board of
operational and financial indicators, together with the
Directors in evaluation and decision-making processes
main targets set in order to promote a low-carbon busi-
related to sustainability issues, including climate-related
ness model.
Governance
Enel is playing a leading role in the energy transition and has
adopted a business model that focuses on reducing the im-
pact of climate change. Within this view, Enel is committed
to promoting a sustainable energy model aimed at achiev-
ing full decarbonization and digitalization while enhancing
the electrification of energy demand in order to promote
the growth of a low-carbon economy. Enel’s organizational
model and corporate governance establishes specific roles
and responsibilities for the main governance bodies within
the organization, thereby ensuring that climate-related risks
and opportunities are given due consideration in all relevant
decision-making processes.
issues connected with the company’s business, as well
as the company’s interactions with stakeholders. The
Committee examines the guidelines of the sustainability
plan, including the climate-related targets of the plan, and
also examines the general layout of the Sustainability Re-
port and the Non-financial Report, including the approach
to climate-related disclosures adopted for these docu-
ments, and provides opinions to the Board of Directors.
The majority of the Committee is composed of indepen-
dent directors, and, in 2018, it comprised the company
Chairman, who acted as chairman of the Committee, and
two independent directors. In 2018, the Committee dealt
with issues related to climate change and sustainability,
as reflected in company strategies and operations, dur-
ing 4 of its 6 meetings held;
> Control and Risk Committee - This Committee supports
the Board in carrying out its duties with regard to internal
control and risk management. It also examines the con-
solidated financial statements, the Sustainability Report,
163
Report on operations and the Non-financial Report within the scope of their
relevance to the internal control and risk management
system (“SCIGR”), all of which include climate-related
disclosures, and issues related opinions to the Board of
Enel’s organizational model
for managing climate-related
issues
Directors for the purposes of approval of these docu-
ments. The Committee is composed of non-executive
directors, the majority of which (including the chairman)
are independent. In 2018, the Committee was made up
of four independent directors. In 2018, the Committee
dealt with issues related to climate change and sustain-
ability, as reflected in company strategies and opera-
tions, during 8 of its 13 meetings held.
Again in 2018, the company organized a specific induc-
tion program aimed at providing the directors with a suf-
ficient understanding of the fields in which the Group
operates, including climate-related issues and their im-
pact on business strategy and company operations.
Chairman - Within the role of guiding and coordinating the
efforts of the Board of Directors, as well as overseeing im-
plementation of the Board’s resolutions, the Chairman plays
a proactive role in the approval and monitoring of business
and sustainability strategies, of which growth by way of
low-carbon technologies and services is one of the pillars.
In 2018, the Chairman also led the Corporate Governance &
Sustainability Committee.
CEO and General Manager - This person is vested with
broad powers of company management, with the exception
of those powers reserved to the Board of Directors, and,
in execution of these powers, has established a sustainable
business model by defining strategies aimed at guiding the
transition to a low-carbon energy model. This position re-
ports to the Board of Directors regarding the execution of
these powers, including business-related activities in line
with Enel’s commitment to dealing with climate change. The
CEO is also the appointed senior officer responsible for the
ICRMS. Finally, the CEO represents Enel in various initia-
tives related to climate change and hold important positions
in institutions of global renown, such as the United Nations
Enel has a management team in which climate-related
responsibilities have been assigned to specific functions
that help guide Enel’s leadership in the energy transition.
Each area is responsible for managing the climate-related
risks and opportunities of relevance to that area:
> Holding company functions (i.e. Administration, Fi-
nance & Control; Audit; Innovability; and Health, Safety,
Environment & Quality) are responsible for analyzing
the scenarios and for managing the strategy and finan-
cial planning process aimed at promoting renewable
energy, the decarbonization of the energy mix, asset
digitalization, and the electrification of energy demand;
> Global service functions (i.e. Procurement and Digi-
tal Solutions) are responsible for implementing sus-
tainability and climate change related criteria in supply
chain management and fostering the development of
digital solutions to support the implementation of tech-
nologies enabling the fight against climate change;
> Global Business Lines (i.e. Enel Green Power; Ther-
mal Generation; Trading; Infrastructure & Networks;
and Enel X) are responsible for developing activities re-
lated to the promotion of renewable energy generation,
the optimization of thermal capacity, the digitalization
of the electric grid, and the development of enabling
solutions in the energy transition and the fight against
climate change (e.g. electric mobility, energy efficiency,
efficient lighting and heating systems);
> Regions and Countries (i.e. Italy, Iberia, Euro-Med-
iterranean Affairs, South America, North and Central
America, Africa, Asia and Oceania) are responsible
for promoting decarbonization and guiding the energy
transition towards a low-carbon business model within
their areas of responsibility. The Europe & Euro-Med-
iterranean Affairs function is responsible for defining
the Group’s position on climate change, for low-carbon
policies, and for the regulation of international carbon
Global Compact, the United Nations Sustainable Energy For
markets within Europe.
All, and the multi-stakeholder platform of the European Com-
mission regarding the Sustainable Development Goals.
In addition, Enel has established the following two
management committees chaired by the CEO, the re-
sponsibilities of which include climate-related issues:
> the Group Investments Committee: this Committee
approves investments related to business develop-
ment. The Committee is also responsible for ensuring
164
Annual Report 2018 that all investments are fully in line with the Group’s
managers within the Enel Green Power Global Business
commitment to promoting a low-carbon business
Line, or related to products and/or services for the en-
model and achieving full decarbonization by 2050. The
ergy transition within the Enel X Global Business Line;
Committee is made up of the heads of Administration,
> a long-term variable component that, beginning in
Finance & Control; Innovability; Legal & Corporate Af-
2018, includes a climate-related target for the reduction
fairs, and Procurement, as well as the regional heads
and the heads of the various Business Lines;
of CO2 emissions per kWheq for the Enel Group over the
next three years, which accounts for 10% of total long-
> the Group Risks Committee: the objective of this
term variable remuneration.
Committee is to ensure that the organizational struc-
tures involved in managing operating risks are in line
with business strategies and objectives, while engag-
ing management in strategic decisions concerning risk
policy, management and control.
The incentive system related
to climate change
The company’s remuneration policy includes various mech-
anisms aimed at making progress towards the energy tran-
sition, and specifically:
> a short-term variable component (or MBO) that may
include objectives related to the specific function of each
manager involved. This may, for example, include objec-
tives tied to the development of renewable energy for
Strategy
Strategic planning, value
creation, and climate change
Enel is committed to adopt a strategy based on meeting
the objectives of the Paris Agreement (COP21). By way
of strategic planning and risk management integrated with
sustainability and climate-related issues, the Enel Group
has created sustainable value over the long term. Over
the last four years (2015-2018), the Group has increased
profitability while achieving objectives related to decarbon-
ization, digitalization, and customer service. The Group’s
Strategic and Business Plan 2019-2021 (the Plan) calls for
continuing along this virtuous path based on a long-term
Renewables
CO2
Grid customers
Retail free-market customers
New businesses
Simplification
Cash generation
Renewable capacity (% of total)
CO2 emissions (kg/kWheq)
Millions
Millions
Gross margin (billions of euro)
Group earnings to total earnings (%)
FFO - Gross investment
(billions of euro)
Remuneration of shareholders
Dividend per share (€)
(1) Guaranteed minimum dividend (floor).
2015
41%
0.409
61
17
-
64%
1.8
0.16
2018
46%
0.369
73
22
0.5
72%
2.5
0.28
2021
55%
0.345
75
36
0.9
71%
4.4
0.36 (1)
165
Report on operations view and the achievement of a series of predetermined
greenhouse gases (GHGs) developed by the Intergov-
objectives.
ernmental Panel on Climate Change (IPCC) in order to
The Group’s commitment can also be seen in the objec-
include the most extreme pathways of those that are
tives pursued in relation to the United Nations’ Sustainable
plausible:
Development Goals (SDGs), specifically: inclusive and eq-
> Representative Concentration Pathway 2.6 (RCP 2.6):
uitable quality education (SDG 4); access to clean, afford-
a climate-change scenario consistent with limiting global
able energy (SDG 7); inclusive and sustainable economic
warming to below 2 °C by 2100 (mean of +1 °C over the
growth (SDG 8); industry, innovation, and infrastructure
period 2081-2100 based on the IPCC Fifth Assessment
(SDG 9); and sustainable cities and communities (SDG 11).
Report);
Enel is working to achieve the full decarbonization of elec-
> Representative Concentration Pathway 8.5 (RCP 8.5):
tricity generation by 2050, in line with the objectives of the
a business-as-usual scenario that represents the most
Paris Agreement and with the science-based targets, while
pessimistic forecast of containing GHGs, resulting in a
also helping to achieve the United Nations’ SDG 13.
mean temperature increase of 3.7 °C over the period
Our model of value creation is based on a long-term vision
2081-2100.
that aims to take advantage of opportunities in the energy
In order to study the effects of climate change and re-
transition in three main areas: (i) the decarbonization of
lated transition scenarios, the Group has entered into a
our generation capacity (increase of about 11.6 GW in the
collaboration with the International Centre for Theoretical
Group’s renewables capacity8 and decrease of about 7 GW
Physics (ICTP) concerning the geographical downscal-
in thermal capacity by 2021 compared with 2018); (ii) infra-
ing of global climate scenarios. Downscaling enables de-
structure development (+10% of electricity distributed over
tailed forecasts at a greater resolution so as to track the
the distribution network in 2021 compared with 2018; 3.4
business impact of a series of relevant variables, such as
million lamps by 2021; some 455,000 public and private
temperature, rain levels, snow levels, solar radiation, and
electric vehicle recharging points by 2021) and new cus-
wind. This approach produces a model that integrates cli-
tomer services (9.9 GW of demand response by 2021; 173
mate change with the other country-level variables, start-
MW of distributed storage installed per year by 2021) at
ing with the countries of greatest relevance to the Group
the service of electrification and urbanization; and (iii) the
and then extending out to global coverage. Integration
digitalization of assets, customers, and human capital (€5.4
of the scenario analyses with climate-related variables
billion in investment for the period 2019-2021).
will result in an increasingly important tool supporting in-
Climate-change reference
scenarios
formed strategy and operating decisions.
The initial results of the scenario analysis and climate
data have shown that significant, chronic changes
will take place gradually over the coming decades.
The Group develops financial and macroeconomic sce-
Changes compared with historical trends will be gradual,
narios over the short, medium and long term to support
with limited effects in both scenarios until 2050, but with
both business and strategic planning and the investment
more extreme, chronic effects under RCP 8.5 from 2050 to
evaluation process. This makes use of economic and
2100 compared with historical trends and RCP 2.6. Stud-
statistical models progressively integrated with climate-
ies of Europe and South America have pointed to a general
related data by introducing projections related to physi-
increase in temperature with a greater impact in southern
cal and transition scenarios in order to have a broad and
Europe and in Central and South America and of particular
consistent view of the landscape both in countries in
intensity by 2100. In these areas, rainfall levels could sig-
which the Group has a presence and in those of potential
nificantly decline after 2050 under RCP 8.5 forecasts, but
interest. Forecasts of the main variables are constantly
could increase in northern Europe (e.g. Scandinavia). Differ-
compared against the most authoritative international
ences in solar radiation patterns, on the other hand, could
sources.
be more significant beginning in 2100 in the regions most
The Group has taken two physical scenarios represent-
exposed to a significant reduction in rainfall, whereas wind
ing two distinct, extreme pathways of concentrations of
patterns could experience less homogeneous variations.
8
Includes managed capacity.
166
Annual Report 2018 Regarding the transition scenario definition, the Group
count the physical and transition scenarios and with the
refers to the leading international sources, such as the In-
support of the various components of long-term strategy
ternational Energy Agency (WEO Sustainable Develop-
assessment described in the section on risks (e.g. mate-
ment Scenario; WEO Current Policies Scenario; ETP 2017
riality analysis, ESG risk analysis, competitive analyses,
2 °C Scenario 2DS; Beyond 2 °C Scenario B2DS), the Inter-
etc.). The Group is working to gradually integrate the mod-
national Renewable Energy Agency (Reference case,
els of scenario analysis and strategic planning with climate
Remap case), and Bloomberg New Energy Finance
models in order to establish more accurate relationships
(BNEF New Energy Outlook). This approach enables Enel
between the climate scenarios themselves, the macroeco-
to associate a series of assumptions and variables to the
nomic landscape, the energy scenarios, and business fun-
potential climate-related scenarios, including pathways to
damentals.
develop a scenario consistent with the Paris Agreement
The information presented below is the result of a pre-
(COP21). The transition scenario include variables such
liminary impact analysis that, by assessing the potential
as demand for energy and services or assumptions about
long-term effects (beyond 2030) and analyzing the Group’s
electrification, the use of electric vehicles, and the prices
portfolio over the period of the Strategic Plan (2019-2021),
of commodities and CO2. In order to reach this objective, a
sharp reduction in emissions from power generation, high
associates sensitivity analyses of operational and industrial
phenomena related to physical and transition variables.
renewable energy source penetration, and the use of ef-
With regard to the risks and opportunities associated with
fective policy mechanisms and measures with regard to
physical variables, and taking the IPCC pathways as points
carbon pricing are expected. Within this landscape, we are
of reference, we analyzed the trends in the following vari-
also expecting an increase in energy efficiency, and in the
ables and associated operational and industrial phenomena
electrification of industrial and residential consumption as
with potential risks and opportunities: (i) change in mean
well as in the transport industry. This transition towards
temperatures and potential increase and/or decrease in en-
lower carbon emissions and efficiency in the use of energy
ergy demand; (ii) change in mean rainfall and snow levels
could lead to a gradual uncoupling of economic growth and
with a potential increase and/or decrease in hydroelectric
the consumption of resources and, consequently, to lower
generation; (iii) change in mean solar radiation and wind
demand and lower prices for fossil fuels.
with a potential increase and/or decrease in solar and wind
Description of climate-related
risks and opportunities
generation. In addition to chronic trends, the frequency and
impact of these events have been looked at in terms of
extreme events potentially resulting in unexpected physical
damage to assets. However, work to perfect these analy-
The Group’s strategy and positioning ensure resilience and
ses is ongoing. According to the scenarios used, signifi-
adaptation as well as mitigation capabilities with respect to
cant, chronic changes in the variables analyzed, even in the
the evolution of the external context associated to climate
event of increases, would have a material impact mainly
change, thanks to a strategy, a business model, and a posi-
over the long term.
tion of leadership that are aligned with the Paris Agreement
By integrating financial strategy with sustainability and in-
(COP21) and which are centered around the axes of sustain-
novation, the Group has already implemented a series of
ability and flexible growth of utilities:
actions aimed at mitigating potential risks and taking ad-
> world leader among private-sector operators in terms of
vantage of opportunities related to physical variables, such
installed capacity in renewable energy (about 43 GW);9
as the digitalization plan aimed at, inter alia, implement-
> world leader among private-sector operators of distribution
ing systems and plans of preventive maintenance and, in
networks in terms of customers served (some 73 million);
particular, resilience plans for the infrastructures of the
> world leader among private-sector operators in terms of
electrical grid. Enel is also active throughout the electricity
retail power and gas customers (about 70 million);
value chain (i.e. generation, distribution and sales) and has
> approximately 6 GW of demand response managed
a diversified portfolio of assets, in terms of both genera-
worldwide.
tion technologies (with a marked increase in renewables,
Risks and opportunities are described by taking into ac-
especially wind and solar) and the markets and geographi-
9
Includes operated capacity.
167
Report on operations cal areas in which we operate, thereby minimizing climate-
energy in order to move beyond the Paris Agreement with
related risks and their overall financial impact. The Group
benefits in terms of new revenue opportunities;
also adopts the best strategies of prevention and protec-
> use of low-carbon sources of energy as the main-
tion in order to reduce the potential impact on the commu-
stream segment of the energy mix in countries with
nities and territories surrounding our assets. All areas of the
opportunities to develop renewable resources and with
Group are subject to ISO 14001 certification, and the poten-
flexibility in their electricity and energy systems with posi-
tial sources of risk are monitored by way of internationally
tive impacts in terms of return on investment and new
recognized environment management systems (EMSs).
business opportunities;
> increase in the level of competition and convergence
As for the risks and opportunities associated with tran-
of opportunities from diverse fields with opportunities
sition variables, and based on the various scenarios men-
to access new markets, services and/or partnerships or
tioned above in combination with the various factors involved
for the entry of new players into the energy industry;
in the identification of risks (e.g. the competitive landscape,
> regulatory changes with a view to integrating new
the long-term outlook for the industry, materiality analyses,
digital and renewable technologies and to driving in-
etc.), we analyzed the trends in the following drivers and re-
frastructure resilience with potential benefits in terms
lated potential risks and opportunities: (i) prioritizing the phe-
of introducing new mechanisms of remuneration tied to
nomena of greatest relevance in terms of climate change; (ii)
environmental performance and innovation.
distinguishing between the short term (less than 3 years),
medium term (3-5 years), and long term (beyond 5 years);
Long-term risks and opportunities and strategic actions of
and (iii) connecting these drivers to the TCFD recommenda-
mitigation and adaptation:
tions for the classification of risks and opportunities.
> uncertainty and volatility in business drivers (e.g. mac-
Short-term risks and opportunities and strategic actions of
roeconomics, energy, climate, etc.) that are growing and
mitigation and adaptation:
persistent as new paradigms, with effects on price indi-
> introduction of laws and regulations for getting through
cators, on the cost of raw materials and technologies, on
the transition and the Paris Agreement introducing stricter
the value of assets, and on reputation;
emission limits and/or altering the generation mix not driv-
> gradual increase in the decentralization of the energy
en by price signals;
and electricity industries with a shift towards distrib-
> increasing focus within the financial community on
uted technologies and resources, which leads to new
ESG issues with potential future benefits in terms of the
business and investment opportunities with a focus on
availability of capital, which is also tied to financial sustain-
the customer and on the needs of infrastructures.
ability, and of new products and markets (e.g. green or
By integrating financial strategy with sustainability and inno-
other sustainable bonds);
vation, the Group has already implemented a series of ac-
> technological maturity and full competitiveness of re-
tions aimed at mitigating potential risks and taking advantage
newable energy, both large-scale and small-scale, with
of opportunities related to transition variables. Of particular
positive effects on return on investment.
note are the main actions concerning the energy and climate
transition:
Medium-term risks and opportunities and strategic actions
> a decarbonization strategy for power generation, result-
of mitigation and adaptation:
ing in a reduction of thermal fossil fuels of over 6 GW from
> use of more efficient means of transport from the point
2015 to 2018 and an increase of about 6 GW in renewable
of view of climate change, particularly with regard to the
sources to bring carbon-free power generation to 51% of
development of electric vehicles and recharging infra-
structures;
the total and emissions to 0.36 kgCO2/kWheq. The Plan
calls for a further reduction of 7 GW in thermal generation
> development and/or expansion of (new) assets (e.g.
by 2021 and the addition of 11 GW of renewable energy,
storage) and/or low-carbon services (e.g. Energy-as-a-
which would bring carbon-free generation to 62%;10
Service) in response to technological progress and shifts
> financial strategy aimed at integrating ESG issues,
in investment from the supply side to the demand side of
leading to a sustainable approach to debt manage-
10 All figures related to the “decarbonization strategy” include managed capacity and related output.
168
Annual Report 2018 ment, including by issuing green bonds – with Enel hav-
ing issued three green bonds for a total of €3.5 billion
– and collaboration with leading international de-
velopment banks and financial institutions (e.g. the
World Bank, the European Investment Bank (EIB), and
other banks dedicated to regional development);
> strategy to develop renewable energy, both on a large
scale with the Enel Green Power Business Line with an
IRR/WACC spread of around 150 bps and with the Enel
X Business Line by developing distributed solutions for
large and small customers;
> strategy to develop electric mobility and new ser-
vices with the Enel X Business Line, which, as of
2018, has about 3 MW of installed distributed storage
and manages some 2.5 million lamps, 49,000 public and
private electric vehicle recharging points, and more than
4 million property units connected to the fiber-optic net-
work. The 2019-2021 Business Plan calls for bringing an-
nual installed storage to 173 MW, lamps to 3.4 million,
recharging points to 455,000, and property units con-
nected to the fiber-optic network to 8.5 million;
> strategy to develop renewable-energy PPAs with
players in various industries, as well as a series of
technology and other strategic partnerships sup-
ported by innovation efforts that take advantage of
a global network of innovation hubs created to devel-
op technology startups of the greatest potential and to
transform ideas into business solutions;
> plan for the digitalization of assets, of customers, and
of human capital, which reached around €1.5 billion in
2018. The plan calls for a total investment of €5.4 billion;
> investment plan focused entirely on the transition to
renewable energy and related networks and custom-
ers. From 2015 to 2018, about €8 billion has been invest-
ed annually, over 90% of which dedicated to low-carbon
products, goods and/or services and, therefore, to the
energy transition. The plan calls for maintaining this level
of investment and of focus on climate change.
Risk management
The Group’s integrated risk
management system
In the performance of our operations, which encompass
a diverse range of countries, markets and industry seg-
ments, Enel is exposed to various types of risks over the
short, medium and long term (e.g. commodity risk, finan-
cial risks, and strategic risks, including in relation to climate
change). In order to effectively deal with events that
could lead to risks and opportunities, Enel has adopted
an internal control and risk management system (“SCI-
GR”). This system consists of the set of rules, procedures,
and organizational entities aimed at identifying, measuring,
monitoring and managing the main corporate risks within
the Group. More specifically, the SCIGR seeks to safeguard
company capital and ensure the efficiency and effective-
ness of corporate processes, the reliability of information
provided to the corporate bodies and to the market, and
the compliance with laws, regulations, as well as with the
corporate bylaws, and internal procedures.
Given the importance of identifying, monitoring and man-
aging the climate-related risks that could have an impact
on achieving company objectives, the Board of Directors
is committed to developing guidelines to ensure that
decisions at all levels of the Group are consistent with
risk appetite.
To this end, the Board has established a Control and
Risk Committee to provide support in making deci-
sions concerning approval of the Business Plan and
of financial reporting. This Committee also provides the
Board of Directors with opinions concerning the system of
internal controls and risk management guidelines so that
the main risks of Enel SpA and its subsidiaries – including
any risk that may affect the sustainability in a medium/long-
term perspective – are properly identified, measured, man-
aged and monitored. The Group also has specific internal
committees composed of senior management that are re-
sponsible for governing and overseeing risk management,
monitoring and control.
169
Report on operations Identifying risks and
opportunities
Assessing risks and
opportunities
The identification of risks and opportunities within the
Enel is committed to setting up and structuring periodical
Group’s business and strategic planning process is de-
monitoring and assessment processes of risks and op-
signed to manage short-term (less than 3 years), the medi-
portunities associated both with physical variables trends,
um-term outlook (3-5 years), and the revision of long-term
related to acute and chronic climate-related events, and
ambitions (beyond 5 years).
with transition scenarios related to changes in the socio-
Medium- and long-term planning starts with a strategic as-
economic landscape and in laws and regulations concern-
sessment of the external landscape and climate-related is-
ing the fight against climate change.
sues, which involves the following activities:
For the ex ante assessment of risk levels, a Plan risk analy-
> macroeconomic, energy and climate scenario analy-
sis, including exposure to climate-related factors, will be
sis - a series of global and local analyses and forecasts
presented each year to the Control and Risk Committee.
to identify the main macroeconomic, climate and energy-
With regard to ex post monitoring, the various risk factors,
related drivers over the short, medium and long-term
including the main climate-related variables that could have
horizon;
an impact on the Group’s objectives and operations, will be
> competitive landscape analysis - a set of analyses to
periodically evaluated and revised. These activities will be
compare financial and operating performance as well
undertaken starting from 2019, while at the operational lev-
as environmental, social and governance (ESG) perfor-
el there are already processes in place to monitor the risk
mance of competitors and players of other sectors in
of damage to assets and infrastructures caused by climate-
order to monitor, guide and support the Group’s competi-
related extreme events or natural disaster, as well as the
tive advantage and leadership position;
consequent risk of prolonged unavailability of such assets.
> Industry view - an overview of the macro-trends affect-
ing the business environment and impacting an assess-
ment of the Group business through an extensive inter-
nal and external collaborative approach;
Managing risks and
opportunities
> strategic dialogue - an ongoing process of engaging the
Consistently with the Strategic Plan, the Business Lines
Board of Directors, management, and employees in the
submit investment proposals for approval to the relevant
definition of strategies. This process ensures that there
Investments Committees, composed of Business Line
is agreement as to the Group’s priorities;
senior management. Moreover, the Group Investments
> analysis of ESG risks - analysis to identify the potential
Committee approves investments above a certain thresh-
ESG risks to which the Group may be exposed, due to
old or concerning particularly innovative projects.
geographical distribution and operations; it is conducted
The Investments Committee approval is based on a joint as-
based on an analysis of external studies such as the
sessment of both return and risk aspects. The risk assess-
World Economic Forum’s Global Risk Report, studies by
ment includes a quantitative analysis of economic, financial
leading ESG investment analysts, and internal studies
and operational risk factors and a qualitative analysis of all
such as materiality analyses or due diligence concerning
risk categories in order to determine the potential impact
human rights;
on the investment return and the appropriate mitigation
> ESG landscape analysis and materiality assessment
efforts. The units responsible for developing each project
- Enel conducts ESG and materiality analyses using an
identify the specific factors that could influence the expect-
approach that takes account of the guidelines based on
ed return on investment, including certain environmental
numerous international standards (e.g. Global Reporting
and climate-related risks (e.g. an increase in the frequency
Initiative, UN Global Compact, SDG Compass, etc.) with
of extreme environmental and climate-related events and
the goal of identifying and assessing priorities for stake-
changes in national laws and regulations regarding the fight
holders and correlating them with the Group’s strategy.
against climate change). The Group is committed to further
developing the investment analysis framework to explicitly
include an assessment of each project contribution to the
improvement of the Group’s climate resilience.
170
Annual Report 2018 Metrics and targets
The following metrics and targets are used to measure and manage the risks and opportunities connected with climate
change.
Main climate change indicators
Net renewable production (% of total)
Emission free production (% of total)
ISO 14001-certified net efficient capacity (% of total)
Average thermal generation yield (%) (1)
Specific emissions of CO2 from net production (kg CO2/kWheq) (2)
Specific water requirement for total production (I/kWheq) (3)
Drawings of water in water-stressed areas (%) (4)
Generation with water consumption in water-stressed areas (%) (4)
2018
39.5
49.1
98.5
40.1
0.369
0.38
12
8
2017
32.7
43.3
99.0
40.7
0.411
0.44
9
8
Change l
-
-
-0.01%
-
-10.2%
-13.6%
-
-
6.8
5.8
(0.5)
(0.6)
(0.042)
(0.06)
3
-
Direct greenhouse gas emissions - Scope 1 (million/t)
94.80
105.51
(10.71)
-10.2%
Indirect greenhouse gas emissions - Scope 2 (million/teq) (5)
Other indirect greenhouse gas emissions - Scope 3 (million/teq) (5)
Total direct consumption of fuel (Mtoe)
Reference price of CO2 (€)
EBITDA from low-carbon products, services and technologies (billions of euro) (6)
CAPEX for low-carbon products, services and technologies (billions of euro) (6)
Ratio of capex for low-carbon products, services and technologies to total (%) (6)
1.09
6.78
37.0
13.0
14.5
7.5
89.0
1.19
7.14
41.3
5.3
13.4
7.6
88.9
(0.10)
(0.36)
(4.3)
7.7
1.1
(0.1)
0.1
-8.4%
-5.1%
-10.4%
-
8.2%
-1.3%
-
(1) Percentages calculated using new method that does not include oil and gas plants in Italy that are in the process of decommissioning or are marginal
among thermal plants. The figures also do not consider consumption and generation for co-generation at Russian thermal plants. The average generation
yield is calculated on the basis of the number of plants and weighted by output.
(2) Specific emissions are calculated as total emissions from simple thermal generation and co-generation of electricity and heat as a ratio of total renewables
generation, nuclear generation, simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh equivalent).
(3) Following the adoption of the new GRI 303, from this year the value previously indicated as specific consumption is now indicated as specific require-
ment. Requirement is the total quantity of water drawn, including the reuse of waste water, necessary for the operation of a generation plant. The
specific requirement for total production is calculated as total water consumption by simple thermal generation and co-generation of electricity and heat
and nuclear generation as a ratio of total simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh
equivalent), renewable generation and nuclear generation. The value does not include water drawn for use in open-cycle cooling, which is then returned
to the original water source. For 2018, the value of the water requirement changed as a result of a change in the accounting criteria adopted in the nuclear
sector, where cooling water returned to the recipient body of water is no longer included, as already done for all plants that adopt an “open-cycle” cooling
system. Under the recalculated system, in 2017, total water drawn for generation processes amounted to 112.2 million cubic meters.
(4) The World Resources Institute (WRI) has defined “water-stressed area” as an area in which annual per capita water availability is less than 1,700 m3.
(5) Scope 2 emissions: indirect CO2 emissions for 2018 due to the consumption of electricity for electricity distribution, transport of fuel, coal mining, facilities
management and electricity purchased from the grid by hydroelectric plants are estimated as the product of electricity consumption and the respective
weighted coefficients of specific emissions for the entire generation mix of the countries in which the Enel Group operates (Source: Enerdata - https://
www.enerdata.net/). Following a change in methodology, the figure for 2018 also includes electricity purchased from the grid for pumping at hydroelectric
plants. The share of emissions connected with grid losses for electricity consumed has been included in Scope 3 emissions rather than Scope 2 as previ-
ously. The figure for 2017 has been recalculated. Scope 3 emissions: indirect CO2 emissions for 2018 due to the marine transport of coal are estimated on
the basis of the amount transported (equal to 69.5% of total coal used), considering Panamax ships with a tonnage of 67,600 tons travelling an average
distance of 700 nautical miles over 22 days of steaming, using 35 tons of fuel oil per day, with an emissions coefficient of 3.2 kg of CO2 for each liter of
oil burned, including three days for unloading with a consumption of 5 tons of fuel oil. Indirect emissions of CO2 from rail transport of coal are estimated
on the basis of the amount transported (equal to 30.5% of coal used), considering trains with a tonnage of 1,100 tons travelling an average distance of
1,400 km with a consumption of 6.9 kWh/t for each 100 km of transport and the average emissions coefficient of Enel in the world. Indirect CO2 emissions
from the transport of consumables, fuel oil, diesel, solid biomass, refuse-derived fuel (RDF) and waste are estimated on the basis of the amount of raw
materials transported, considering trucks with a tonnage of 28 tons travelling an average distance (out and back) of 75 km, using 1 liter of diesel for each
3 km travelled with an emissions coefficient of 3 kg of CO2 for each liter of diesel burned. The figure is an approximate estimate of fugitive methane (CH4)
emissions of the coal imported and used by the Enel Group for thermal generation. The figure does not include emissions from the transport of lignite.
The figures for 2017 have been restated following the adoption of a new methodological approach. The share of emissions connected with grid losses for
electricity consumed has been included in Scope 3 emissions rather than Scope 2 as previously.
(6) “Low-carbon products, services and technologies” include the Business Lines of Enel Green Power, Infrastructure and Networks, Enel X and Sales (80%,
excluding gas).
171
Report on operations Net efficient generation capacity by primary energy source
MW
2018
2017
Change
Net efficient thermal capacity:
- coal
- CCGT (1)
- fuel oil/gas (1)
Total
Net efficient nuclear capacity
Net efficient renewable capacity:
- hydroelectric
- wind
- geothermal
- biomass and co-generation
- other
Total
Total net efficient generation capacity
(1) Figure recalculated on the basis of a reclassification of TG plants.
Net efficient generation capacity by geographical area
MW
Italy
Iberia
South America
Russia
North and Central America
Romania
Greece
Bulgaria
India
South Africa
15,828
17,244
10,027
43,099
3,318
27,844
8,190
804
42
2,322
39,203
85,620
2018
27,624
22,717
20,997
8,879
3,826
534
307
42
172
522
15,965
17,251
10,078
43,294
3,318
27,799
7,431
802
57
2,216
38,305
84,917
2017
27,652
22,732
20,544
8,879
3,533
534
307
42
172
522
(137)
(7)
(51)
(195)
-
45
759
2
(15)
106
898
703
(28)
(15)
453
-
293
-
-
-
-
-
-0.9%
-
-0.5%
-0.5%
-
0.2%
10.2%
0.2%
-26.3%
4.8%
2.3%
0.8%
-0.1%
-0.1%
2.2%
-
8.3%
-
-
-
-
-
Change
Total net efficient generation capacity
85,620
84,917
703
0.8%
Net electricity generation by primary energy source
GWh
Net thermal electricity generation:
- coal
- CCGT
- fuel oil/gas
Total
Net nuclear electricity generation
Net renewable generation:
- hydroelectric
- wind
- geothermal
- biomass and co-generation
- other
Total
Total net electricity generation
172
2018
2017
Change
64,366
38,134
24,832
127,332
24,067
65,893
22,161
5,881
108
4,897
98,940
250,339
70,497
44,381
26,855
141,733
26,448
55,363
17,827
5,820
108
2,577
81,695
249,876
(6,131)
(6,247)
(2,023)
(14,401)
(2,381)
10,530
4,334
61
-
2,320
17,245
463
-8.7%
-14.1%
-7.5%
-10.2%
-9.0%
19.0%
24.3%
1.0%
-
90.0%
21.1%
0.2%
Annual Report 2018 Net electricity generation by geographical area
GWh
Italy
Iberia
South America
Russia
North and Central America
Romania
Greece
Bulgaria
India
South Africa
Total net electricity generation
2018
53,232
74,193
67,897
39,182
12,433
1,227
577
91
315
1,192
250,339
2017
53,518
78,618
64,627
39,830
9,793
1,358
548
103
325
1,156
249,876
Change
-0.5%
-5.6%
5.1%
-1.6%
27.0%
-9.6%
5.3%
-11.7%
-3.1%
3.1%
0.2%
(286)
(4,425)
3,270
(648)
2,640
(131)
29
(12)
(10)
36
463
In addition to the targets indicated in the “Strategy” section, the following additional targets are linked to the fight against
climate changes.
Targets
Emission free production (% of total) (1)
Specific emissions of CO2 from net production (kgCO2/kWheq) (2)
Net efficient renewable generation capacity (GW) (3)
Net efficient thermal and nuclear generation capacity (GW)
Net renewable electricity production (TWh) (1)
Net thermal and nuclear electricity production (TWh)
62 in 2021
<0.350 in 2020 (-25% compared with 2007)
0.23 in 2030 (-44% compared with 2015)
53.9 in 2021
39.5 in 2021
132 in 2021
124 in 2021
Specific water requirement for total production (l/kWheq) (4)
-35% in 2030 (compared with 2015)
(1) Includes managed capacity.
(2) Specific emissions are calculated as total emissions from simple thermal generation and co-generation of electricity and heat as a ratio of total renewables
generation, nuclear generation, simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh equivalent).
(3) Includes managed capacity.
(4) Following the adoption of the new GRI 303, from this year the value previously indicated as specific consumption is now indicated as specific requirement.
Requirement is the total quantity of water drawn, including the reuse of waste water, necessary for the operation of a generation plant. The specific
requirement from total output is calculated as total water consumption by simple thermal generation and co-generation of electricity and heat and nuclear
generation as a ratio of total simple thermal generation and co-generation of electricity and heat (including the contribution of heat in MWh equivalent),
renewable generation and nuclear generation. The value does not include water drawn for use in open-cycle cooling, which is then returned to the original
water source.
173
Report on operations In 2018, Enel had an installed capacity of 85.6 GW, up about
0.7 GW compared with 2017 following the entry into service
of new renewable plants. More specifically, the increase is
plans to have reduced specific CO2 emissions to 0.23 kg/
kWheq. Absolute CO2 emissions showed a marked decrease
compared with 2017 thanks to the significant reduction in
attributable to new wind farms in the United States and so-
the Group’s net thermal generation, in particular from coal
lar plants in Mexico. The additional capacity installed in 2018
amounted to 2.7 GW, mainly in North, Central and South
America. The difference between the overall increase in the
Group’s capacity and the new renewable capacity is due to
the fact that during the year some renewable plants left the
and combined-cycle plants. In 2018, specific CO2 emissions
(0.369 kg/kWheq) were 10% lower than the previous year
(0.411 kg/kWheq). Specific atmospheric emissions of SO2
and NOX also declined by about 11% and 9% respectively.
Dust fell steeply (-37%) compared with 2017, mainly due
Group’s scope of consolidation as part of the BSO (Build, Sell
to work to improve the dust abatement system in Russia,
and Operate) process.
and, secondarily, lower thermal generation from coal in Italy
Generation in 2018 came to 250 TWh, unchanged compared
and Spain.
with 2017. However, overall generation showed a change in
The objectives that Enel has set itself as part of the strategy
the production mix, with a reduction in thermal generation
to tackle climate change also include certain assumptions
offset by greater output from renewable sources, mainly
hydroelectric but also wind and solar. As a consequence,
such as a reference price for CO2 of €18 in 2021 and enable
us to forecast, inter alia:
the electricity generated by Enel in 2018 from zero-emission
> EBITDA from low-carbon products, services and technolo-
sources amounted to about 49% of the total, a considerable
gies11 of €17 billion in 2021;
increase compared with 2017.
> CAPEX for low-carbon products, services and technolo-
With a view to reducing its environmental impact, the Group
gies of €7.7 billion in 2021;
has set itself the goal of achieving specific CO2 emissions
of less than 0.35 kg/kWheq by 2020. This objective is in line
with the target set for 2030, the year in which the Group
> a ratio of CAPEX for low-carbon products, services and
technologies to total capex of 90.1% in 2021.
Environmental sustainability
Enel has implemented specific policies aimed at protecting
the environment and natural resources, at combatting cli-
mate change, and at contributing to sustainable economic
Responsible water
resource management
development. A key element of these policies are our inter-
Water is an essential part of electricity generation, and Enel
nationally recognized Environment Management Systems
therefore believes that the availability of this resource is a
(EMS). Within the scope of our nuclear technology activi-
critical part of future energy scenarios. The Group has always
ties, Enel is publicly committed to ensuring that our plants
managed the water we use efficiently through ongoing moni-
adopt a clear nuclear safety policy and that those facilities
toring of all power plants located in areas threatened by wa-
are operated based on standards that ensure absolute prior-
ter scarcity. Enel employs the following levels of analysis:
ity is given to safety and the protection of employees, the
> the mapping of generation sites in areas at risk of water
general public, and the environment. The policy in respect of
scarcity, i.e. where the average availability of per capita
nuclear safety is to encourage excellence in all plant activi-
water resources is below the benchmark level set by the
ties based on a strategy that seeks to go beyond mere com-
FAO (the mapping is performed using the Global Water
pliance with applicable laws and regulations and to ensure
Tool of the World Business Council for Sustainable Devel-
the adoption of management approaches that embody the
opment);
principles of continuous improvement and managing risk.
> the identification of “critical” generation sites, i.e. those
in water scarcity areas drawing on fresh water;
11 “Low-carbon products, services and technologies” include the Business Lines of Renewable Energy, Infrastructure and Networks, Enel X and Sales (80%,
excluding gas).
174
Annual Report 2018 > more efficient management of water resources in order
to maximize the use of waste water and sea water;
Preserving biodiversity
> the monitoring of meteorological and climate data for
Preserving biodiversity is one of the strategic objectives of
each site.
Globally, Enel returns about 99% of the water used for open-
cycle cooling to the original source. About 8% of the Enel
Group’s total electricity output uses and/or consumes fresh
water in water-stressed areas.12 In 2018 the total water re-
quirement was 96.3 million cubic meters, some 14% less
than in 2017, reflecting a decrease in thermal and nuclear
generation compared with the previous year.
Of the total water requirement, the total drawn from treat-
Enel’s environmental policy. The Group promotes specific
projects in the various areas in which we operate in order
to help protect local species, their natural habitats, and the
local ecosystems in general. These projects cover a vast
range of areas, including: inventory and monitoring; pro-
grams to protect specific species; methodological research
and other studies; repopulation and reforestation; and the
construction of infrastructure supports to promote the pres-
ence and activities of various species (e.g. artificial nests
along power distribution lines for birds or fish ladders at hy-
ed waste water amounted to 4.7%, a decrease on the pre-
droelectric plants).
vious year. In line with Enel’s commitment to reduce our
water requirement by 35% in 2030 compared with 2015,
the specific requirement for 2018 was 0.38 l/kWheq, 14%
less than in 2017.
Enel’s collaboration with the International Union for the Con-
servation of Nature (IUCN), a global authority on the pres-
ervation of biodiversity, which began in 2017, continued in
2018 and we consolidated our efforts to assess the risks
and opportunities connected with managing biodiversity.
Innovation, digitalization and operating efficiency
In order to foster new uses of electricity and new ways of
tion, have promoted the development of new solutions for
managing it, making it accessible to an ever larger number
e-mobility, microgrids, energy efficiency and the industri-
of people in a sustainable manner, Enel has made innova-
al Internet of Things (IoT). During 2018, the hub network
tion and digitalization key pillars of its strategy for growth in
where startups have the opportunity to test their solutions
a rapidly changing environment, establishing high standards
with the support of Enel’s structures and know-how was
of security, business continuity and operating efficiency. It
expanded. There are now six Innovation Hubs (Silicon Val-
is a path that involves both the traditional business and the
ley, Tel Aviv, Madrid, Moscow, Santiago de Chile and Rio
development of new approaches and technologies, lever-
de Janiero) and three Innovation Hub & Labs (Catania, Pisa
aging creativity, passion, ideas and technologies both in-
and Milan). In 2018 the Innovation Hubs organized 28 boot-
side and outside the company. Enel operates through an
camps, scouting initiatives dedicated to specific technolo-
Open Innovability model, in which solutions are not only in-
gies of interest to the Group.
novative but also guarantee the long-term sustainability of
The online crowdsourcing platform “Openinnovability.com”
Enel’s business and the communities in which it operates.
has become a digital forum where dialogue is always open
It represents a consensus-based ecosystem that makes it
and ideas know no limitations. Project ideas are the pro-
possible to face challenges by connecting all the areas of
tagonists of the challenges launched on the site through
the company with startups, industrial partners, small and
calls for applications. In 2018, Enel organized 27 innovation
medium-sized enterprises, research centers, universities
and sustainability challenges.
and crowdsourcing platforms. Enel has 91 innovation part-
The process of change cannot be separated from the de-
nership agreements, including eight global and cross-busi-
velopment of specific activities regarding the culture of in-
ness agreements that, in addition to Enel’s traditional lines
novation and corporate entrepreneurship at a global level.
of business such as renewables and conventional genera-
The “Innovation School” continued its work with the aim
12 The World Resources Institute (WRI) defines “water-stressed area” as an area in which annual per capita water availability is less than 1,700 m3.
175
Report on operations of providing Enel people involved in innovation activities
gies addressed within these communities. In recent years,
with skills and knowledge about innovative work methods.
Enel has intensified the use of drones in the monitoring
Some 100 Innovation Ambassadors from various depart-
and maintenance of its assets, inspecting solar fields, wind
ments and business areas in Italy, Brazil and Colombia have
farms, dams and hydroelectric reservoirs, closed compo-
been selected within Enel, with the goal of ensuring that
nents in traditional plants and distribution lines with the aim
innovation becomes part of our daily work through specific
of increasing the efficiency of operational and maintenance
work methods. The “my best failure” project is also con-
processes and above all reduce workers’ exposure to risks.
tinuing, seeking disseminate a no blame culture and en-
Furthermore, storage systems, in addition to guaranteeing
courage innovative experimentation.
ongoing support for current business activities, pave the
Furthermore, in 2018 the activities of the innovation com-
way to new frontiers of sustainable business. Using stor-
munities continued, involving different areas and skills
age systems improves reliability and increases the quality
within the company. Energy storage, blockchain, drones,
of distribution as well as ensuring, together with traditional
augmented and virtual reality, 3D printing, artificial intelli-
generation, network balancing and the stability of system
gence, wearables and robotics are the areas and technolo-
loads at the national level.
Workplace health and safety
Enel considers employee health, safety and general well-
contracts progress through numerous control processes.
being to be its most valuable asset, one to be preserved
In 2018, the qualification process was further strengthened
both at work and at home. We are committed to developing
and a new annex has been drawn up to the general con-
and promoting a strong culture of safety throughout the
tractual terms that clearly defines health, safety and envi-
world in order to ensure a healthy work environment. Qual-
ronment obligations that all suppliers must comply with.
ity and safety must go hand in hand. All of us are respon-
Furthermore, we have introduced a supplier evaluation pro-
sible for our own health and safety and that of the people
cess called “Safety Supplier Assessment”, which provides
with whom we interact and, as provided for in the Enel
for specific audits on safety issues to be undertaken at the
“Stop Work Policy”, they are required to promptly report
supplier’s premises if certain critical issues emerge.
and halt any situation of risk or unsafe behavior. The con-
stant commitment of us all, the integration of safety both in
In 2018, a number of safety innovation projects continued
our processes and in our training, the reporting and analy-
and new projects were introduced to improve health and
sis of near misses, rigor in the selection and management
safety processes, beginning with employee training and
of contractors, controls over quality, the sharing of experi-
the implementation of prevention and protection mea-
ence throughout the Group and benchmarking against the
sures and on through the execution and analysis of cor-
leading international players are all cornerstones of Enel’s
rective actions.
culture of safety.
We developed and implemented a mobile device that en-
In 2018, we brought the SHE365 project to full implementa-
ables the user to detect the voltage on both low- and medi-
tion with the aim of focusing on Safety, Health and Environ-
um-voltage power lines at a safe distance, thereby avoiding
ment (SHE) every day of the year.
contact. We launched a global initiative to reduce road ac-
The project is based on three main lines of action:
cidents for drivers during work hours as well as employees
> expanding contractor engagement;
who use cars and motorbikes to commute. The project in-
> strengthening the safety commitment chain;
cludes dedicated apps for smartphones, driving simulators,
> fostering bottom-up involvement in initiatives.
preferential terms for the purchase of personal protective
equipment and preferential motor insurance policies that
Safety is tightly integrated into Enel’s tender process, and
use black box technology. Lastly, new virtual reality scenar-
we closely monitor our contractors’ performance both up-
ios have been developed for operational training, both on
stream with our qualification system and ongoing as the
maintenance and safety issues.
176
Annual Report 2018 Safety indicators
No.
Injury frequency rate - Enel (1)
Serious and fatal injuries at Enel
Serious injuries (2)
Fatal injuries
Total
Serious and fatal injuries at contractors
Serious injuries (2)
Fatal injuries
Total
2018
0.943
6
1
7
10
7 (3)
17
2017
1.199
Change
(0.256)
4
2
6
9
11
20
2
(1)
1
1
(4)
(3)
-21%
50%
-50%
17%
11%
-36%
-15%
(1) This indicator is calculated as the ratio between the total number of injuries and hours worked in millions.
(2) Injuries with an initial prognosis, as reported on the medical certificate issued, of greater than 30 days, or with a confidential prognosis until the actual
prognosis is released, or with an unknown prognosis that, based on an initial assessment by the company/Business Line concerned, is expected to ex-
ceed 30 days. Once the official prognosis is released, the related injury is considered serious only if said prognosis exceeds 30 days. Should a confidential
prognosis never be released or an unknown prognosis remain unknown, within 30 days of the event, the injury is to be deemed serious.
(3) Considering activities managed in all of the areas in which the Group operates, which include a number of companies accounted for using the equity
method for which the Build, Sell and Operate approach has been adopted, the total number of fatal injuries was 8.
Workplace accident
statistics
In 2018, the Lost Time Injury Frequency Rate (LTIFR13) for
Enel Group employees was 0.19, a decrease from the pre-
vious year’s 0.24.
With regard to the employees of contractors, the LTIFR
was 0.17, down from the 0.19 of 2017.
In 2018, there was one fatal injury involving employees
of the Enel Group and seven14 fatal injuries involving Enel
Group contractors.
Policy 106 “Classification, communication, analysis and re-
porting of incidents” establishes the roles and procedures
that ensure the timely reporting of accidents, analysis of
their root causes, and definition and monitoring of improve-
ment plans. The policy also details the procedures for dis-
closing and analyzing all occurrences, for example near
misses, that could have resulted in serious harm. In accor-
dance with these policies, all serious and fatal injuries to
Enel personnel and the personnel of Enel contractors and
other significant, non-serious events were investigated by
a team of experts. Actions for improvement emerging from
this analysis are constantly monitored until their comple-
tion, and steps have been taken for contractors found to be
in breach of contract (e.g. contract termination, suspension
of certification, etc.).
Health
The Enel Group has created a structured health manage-
ment system based on preventive measures in order to de-
velop a corporate culture centered on promoting physical,
emotional and organizational well-being and on establishing
work-life balance. To this end, the Group carries out local
and global awareness campaigns to promote healthy life-
styles, sponsors screening programs aimed at preventing
illness, and ensures the delivery of medical services. Glob-
al programs and initiatives are developed in accordance
with the calendar of the World Health Organization and
with local needs. Furthermore, we have developed a series
of measures to support staff travelling abroad on business:
a policy has been set up for the prevention of local diseases
and emergency assistance in case of illness or accident, a
smartphone application with travel information, a guideline
on vaccinations and a new global insurance policy has been
agreed.
Development of the culture
of safety: communication,
training, information and
sharing of experiences
In 2018, we provided some 726 thousand hours of training,
in addition to awareness-raising and training activities in or-
13 The Lost Time Injury Frequency Rate (LTIFR) is calculated by as the ratio between the number of injuries and the number of hours worked/200,000.
14 Considering activities managed in all of the areas in which the Group operates, which include a number of companies accounted for using the equity method
for which the Build, Sell and Operate approach has been adopted, the total number of fatal injuries was 8.
177
Report on operations der to increase the specific skills and knowledge of work-
an important opportunity to balance company needs and
ers throughout the Group. We also used possible scenarios
employee aspirations. This system makes it possible to
reproduced in virtual reality by the Group’s Business Lines
encourage internal mobility, develop cross-sector skills,
for the training of operations personnel. There were also
integrate cultures and professional skills in the various
various training activities on safe driving, as well as safety
countries in which the Group operates. In 2018, we also
leadership training for management. There were several
launched globally a new information technology platform to
communication campaigns concerning health and safety
manage the selection process, both for internal and exter-
during the year, focusing on areas of particular importance
nal candidates.
to the organization. In particular this year, global communi-
The digitalization of the various business areas plays a key
cation efforts focused on issues related to personal health
role in our corporate strategy. Enel therefore launched a pro-
and on the most common disorders, such as: hypertension,
gram for the dissemination of digital skills in 2018, with the
hepatitis, smoking, risk factors in cardiovascular diseases,
aim of involving the entire company population by 2020 and
skin cancer, etc. These communication campaigns were
keeping this percentage constant in 2021. In particular, sev-
based both on the publication of news on the company’s in-
eral training programs were launched, including “Digital Pills”,
tranet and on specific segments on Enel TV and Enel Radio.
which are available on the company online platform, divided
As part of the Group’s strategic objective to share experi-
into 18 short videos with a total duration of one hour on the
ences, Enel has organized and actively participated in ex-
following issues: digital transformation, agile methodology,
change of views with large European utilities on health and
data, innovation methodologies and digital revolution. In the
safety issues, with a view to creating a synergistic effort
last year 35% of the population was involved in initiatives to
towards improving the prevention of injuries and accidents.
develop digital skills.
Human resource
management, development
and motivation
As at December 31, 2018, the total workforce of the Enel
Group numbered 69,272 employees, 44% of whom work-
ing in companies based in Italy. This is a net increase of
about 6,400 employees during the year, due mainly to ac-
quisitions in Brazil, Italy and Spain. Of the total of 3,414
new hires, 23% were in Italy while the remaining 77%
were distributed across the various countries abroad.
In a rapidly-changing global environment, there is the need
for lean and agile organizational structures, with clear un-
derstanding of goals and priorities, and in which corporate
relationships are based on trust, rapid problem solving, flex-
ibility and innovation.
In line with this context, the selection and recruitment pro-
cess plays a key role. In order to identify the most suit-
able employee profiles, we have strengthened partnerships
with universities, including organizing academic events to
promote knowledge exchanges or university class sessions
on specific topics. We have also enhanced the internal se-
lection program, known as “Job Posting”, which represents
The qualitative and quantitative performance-evaluation pro-
cess in 2018 involved the Group’s workforce at various lev-
els. The process in 2018 was strongly innovated in terms
of rationale, mechanisms and frequency. It moved from an
annual evaluation to a continuous process of discussion and
dialogue and turned from a dual relationship (supervisor/em-
ployee) to an all-round exchange of feedback (supervisor/em-
ployee/colleagues/team members) so as to shift the focus on
the organizational network, moving away from the hierarchi-
cal model. As the company increasingly adopts an approach
geared towards openness and the sharing of information,
the feedback philosophy is in line with the Group’s vision. In
2018, the qualitative assessment, which focused on the four
values of Enel detailed in the 10 Open Power principles in-
volved 100% of the eligible workforce,15 of whom 99% were
assessed.
Quantitative appraisals, in turn, were conducted for employ-
ees with variable remuneration plans, which involved the as-
signment of targets and the assessment of those targets.
In order to ensure merit is managed and leveraged appropri-
ately, for some years now the Enel Group has also adopted
a talent management process, which enables the effective
governance of management positions, facilitating generation-
15 Eligible employees: employees who have an open-ended contract and were employed for at least three months in 2018.
178
Annual Report 2018 al turnover by identifying young talents in development. The
objective is to leverage differences in gender and age and
to stimulate functional osmosis to foster the development
of our employees and, consequently, the Group. The pool of
developing talents is the primary source of new managers,
who are nominated following an evaluation of aptitude and
motivation designed to ensure a match between the level of
responsibility to be assigned to the employee and the man-
agement model that Enel considers necessary for today and
tomorrow, in line with the Open Power approach.
The corporate-climate survey plays an important role within
the company as it enables the identification of areas of im-
provement and the gathering of suggestions on working
life issues and aspects. In 2018, the content of the survey
was revised, with the preparation of 20 questions divided
into three key domains: Well-being, Engagement and Safe-
ty. More than 86% of Enel’s entire workforce16 participated,
evaluating aspects such as courtesy, respect, cooperation,
work-life balance, motivation, meritocracy and working re-
lationships. The analysis of the information will allow us to
Diversity and inclusion
Enel’s commitment to promoting diversity and inclusion
is a process that started in 2013 with the adoption of our
policy on human rights, followed by our global “Diversity
and Inclusion” policy, which was approved in 2015. Enel’s
approach is based on the fundamental principles of non-
discrimination, equal opportunities and human dignity in all
its forms, inclusion and promoting work-life balance. The
application of our policy has enabled us to develop global
and local projects to promote diversity in terms of gender,
age, nationality and disability, and to advance the culture
of inclusion at all levels of the Group and in every situation
that may be encountered in the workplace. The impact of
this policy is being monitored on the basis of a detailed set
of internal indicators associated with the various actions
and contexts. More specifically, Enel has set the public
objective of ensuring equal gender representation in the
initial stages of the selection and recruiting process (about
50% by 2020). In 2018, in line with the established trajec-
tory, women accounted for 39% of participants in selection
draw up global and local action plans.
processes.
Responsible relations with our communities
The energy sector is undergoing a profound transforma-
Enel is committed to respecting the rights of communities
tion and our emphasis towards social and environmental
and to contributing to their economic and social develop-
factors, together with an inclusive approach, allows us to
ment, interacting every day with a multitude of stakehold-
create long-term value for Enel and for the communities in
ers. In 2018, Enel, with over 1,600 projects and about 7
which we operate. This model has been incorporated along
million beneficiaries,17 made a concrete contribution to the
the entire value chain: analyzing the needs of communities
establishment of ecosystems in the countries in which it
right from the development phases of new activities; tak-
operates to guarantee access to electricity in rural areas
ing account of social and environmental factors in the es-
and address inadequate power supplies (SDG 7), promoted
tablishment of sustainable worksites; managing assets and
the economic and social development in the communities
plants to make them sustainable development platforms
(SDG 8) and supported quality education (SDG 4).
to the benefit of the territories in which they are located.
Contributing to this were also more than 700 partnerships
Another development was the broadening of this approach
with local organizations, social enterprises, universities,
in the design, development and supply of energy services
international associations and non-governmental organiza-
and products, helping to build cities that are increasingly
tions in the various countries.
sustainable and deploying new technologies and circular
economy approaches.
16 Eligible employees: employees who have an open-ended contract and were employed for at least three months in 2018. Eletropaulo was not involved as it was
acquired during the year.
17 Beneficiaries are those for whom a project is implemented. Enel only considers direct beneficiaries in the current year. The number of beneficiaries includes
the activities and projects carried out in all the areas in which the Group operates (including companies accounted for using the equity method, foundations
and non-profit organizations and the companies involved in the Build, Sell and Operate process).
179
Report on operations Customer management
Our constant focus on the customer and our commitment to
implemented various agreements in 2018 with local authori-
delivering high-quality products and services are important
ties to facilitate payment of electricity bills by low-income cus-
factors that distinguish Enel in the relationship with its cus-
tomers, and to avoid disconnection and late payment charges.
tomers in the various countries in which the Group operates.
Likewise, in Italy for a number of years we have been offer-
In 2018, the average number of power and gas customers
ing a discount to residential customers experiencing financial
came to about 68 million, an increase over 2017 mainly as a
hardship and to those dependent on electrical lifesaving medi-
result of the acquisition of Eletropaulo in Brazil.
cal devices (the so-called “social bonus”).
The quality of Enel’s services is closely linked to the reliability
and efficiency of the transmission and distribution infrastruc-
Enel has also established numerous processes to ensure
tures, which must be able to handle the levels of demand. In
customers receive a high level of service. In Italy, the com-
coordination with the other entities that operate in various
mercial quality of all our contact channels (customer service
roles on the grid infrastructure, Enel implements constant
calls, Enel Points and stores, utility bills, app, e-mail, social
development and efficiency efforts aimed mainly at reducing
media, account manager, fax) is ensured through systematic
the number and duration of service interruptions.
monitoring of the sales and management processes in order
Enel’s leadership position has been gained thanks to the at-
to ensure compliance with applicable laws and regulations
tention we place on the customer in providing quality servic-
and respect for the privacy, freedom and dignity of our cus-
es: aspects that concern more than just the provision of elec-
tomers.
tricity and/or natural gas, extending, above all, to intangible
aspects of our service that relate to the perception and sat-
Enel also confirms its interest in digitalization, electronic in-
isfaction of our customers. Through our products for both the
voicing and new services. With Enel X, we offer innovative
residential and business markets, the company confirmed its
solutions to residential customers (technological solutions
focus of the last few years, with dedicated offers with a lower
for smart homes, home automation, solar and photovoltaic
environmental impact and a concentration on the most vul-
systems, boilers, maintenance services, lighting, etc.), gov-
nerable segments of the population. In fact, all the countries
ernment customers (public lighting, monitoring services for
in which the Group operates provide forms of support (often
smart cities, surveillance systems, etc.) and large customers
linked to government initiatives) which assist these segments
(demand response services, consulting and energy efficiency
of the population in paying their electricity and gas bills, so as
solutions). We also promote electric mobility through the de-
to give everyone equal access to electricity. In Spain, Endesa
velopment of public and private research infrastructures.
Customers by geographical area
Average No.
Electricity:
- Italy
- South America (1)
- Iberia
- Romania
2018
2017
Change l
25,602,096
26,420,058
(817,962)
22,585,296
18,044,215
4,541,081
10,799,974
10,941,644
(141,670)
2,921,353
2,782,014
139,339
Total electricity customers
61,908,719
58,187,931
3,720,788
Natural gas:
- Italy
- Spain
- Romania
4,103,790
4,003,484
100,306
1,589,630
1,550,424
35,012
2,421
39,206
32,591
Total natural gas customers
5,728,432
5,556,329
172,103
(1) The increase in customers is attributable to Brazil as a result of the acquisition of Eletropaulo in 2018.
180
-3.1%
25.2%
-1.3%
5.0%
6.4%
2.5%
2.5%
-
3.1%
Annual Report 2018 Sustainable supply chain
Enel bases its procurement processes on pre-contractual
Supplier management involves three essential stages,
and contractual conduct centered around mutual good
which integrate social, environmental and governance is-
faith, transparency and collaboration. In addition to meeting
sues in the evaluation process. These are:
certain quality standards, the services of our vendors must
> the qualification system;
also go hand in hand with the adoption of best practices in
> general terms and conditions of contract;
terms of human rights and working conditions, workplace
> vendor ratings.
health and safety and environmental and ethical responsi-
Enel’s global vendor-qualification system (with more than
bility.
6,700 active qualifications as at December 31, 2018) en-
Our procurement procedures are designed to guarantee
ables us to accurately assess businesses that intend to
service quality in full respect of the principles of economy,
participate in tender processes and serves as a guarantee
effectiveness, timeliness, fairness and transparency.
for the company, while the vendor-rating system seeks to
The procurement process plays a central role in value cre-
monitor vendor services in terms of the quality, timeliness
ation in its various forms (safety, savings, timeliness, qual-
and sustainability of contract execution.
ity, earnings, revenue, flexibility) as a result of ever-greater
Furthermore, we continued working on those activities
interaction and integration with the outside world and the
that enable an ever-greater integration of environmental,
different parts of the company organization.
social and governance issues in the supply chain strategy,
In 2018, we signed new agreements with a total of more
creating shared value with vendors in a vision of a circular
than 31,000 vendors.
economy.
181
Report on operations Related parties
As an operator in the field of generation, distribution,
directly or indirectly controlled by the Italian State, the
transport and sale of electricity and the sale of natural gas,
Group’s controlling shareholder.
Enel carries out transactions with a number of companies
The table below summarizes the main types of transactions carried out with such counterparties.
Related party
Relationship
Nature of main transactions
Acquirente Unico - Single Buyer
Fully controlled (indirectly) by the Ministry for
the Economy and Finance
Purchase of electricity for the enhanced-
protection market
Cassa Depositi e Prestiti Group
Directly controlled by the Ministry for the
Economy and Finance
Sale of electricity on the Ancillary Services
Market (Terna)
Sale of electricity transport services (Eni Group)
Purchase of transport, dispatching and metering
services (Terna)
Purchase of postal services (Poste Italiane)
Purchase of fuels for generation plants and
natural gas storage and distribution services
(Eni Group)
GSE - Energy Services Operator
Fully controlled (directly) by the Ministry for the
Economy and Finance
Sale of subsidized electricity
Payment of A3 component for renewable
resource incentives
GME - Energy Markets Operator
Fully controlled (indirectly) by the
Ministry for the Economy and Finance
Sale of electricity on the Power Exchange
(GME)
Purchase of electricity on the Power Exchange
for pumping and plant planning (GME)
Leonardo Group
Directly controlled by the Ministry for the
Economy and Finance
Purchase of IT services and supply of goods
In addition, the Group conducts essentially commercial
All transactions with related parties were carried out on
transactions with associated companies or companies in
normal market terms and conditions, which in some cas-
which it holds minority interests.
es are determined by the Regulatory Authority for Energy,
Finally, Enel also maintains relationships with the pension
Networks and Environment.
funds FOPEN and FONDENEL, Fondazione Enel and Enel
Cuore, an Enel non-profit company devoted to providing
For more details on transactions with related parties,
social and healthcare assistance.
please see the discussion in note 49 to the consolidated
financial statements.
182
Annual Report 2018 Reconciliation of
shareholders’ equity and
net income of Enel SpA
and the corresponding
consolidated figures
Pursuant to CONSOB Notice DEM/6064293 of July 28,
results for the year and shareholders’ equity with the
2006, the following table provides a reconciliation of Group
corresponding figures for the Parent Company.
Millions of euro
Income
statement
Shareholders’
equity
Income
statement
Shareholders’
equity
at Dec. 31, 2018
at Dec. 31, 2017
Financial statements - Enel SpA
3,456
27,943
2,270
27,236
Carrying amount and impairment adjustments of consolidated equity
investments
Shareholders’ equity and net income (calculated using harmonized
accounting policies) of the consolidated companies and groups and
those accounted for using the equity method, net of non-controlling
interests
Translation reserve
Goodwill
Intercompany dividends
Elimination of unrealized intercompany profits, net of tax effects and
other minor adjustments
TOTAL SHAREHOLDERS OF THE PARENT COMPANY
NON-CONTROLLING INTERESTS
CONSOLIDATED FINANCIAL STATEMENTS
(548)
(78,109)
53
(76,076)
7,263
-
(3)
(4,836)
(543)
4,789
1,561
6,350
73,975
(3,317)
14,273
5,875
-
-
-
(4,471)
(3,045)
31,720
16,132
47,852
52
3,779
1,550
5,329
73,608
(2,614)
13,745
-
(1,104)
34,795
17,366
52,161
183
Report on operations
03
Consolidated
financial
statements
Financial statements
Consolidated income statement
Millions of euro
Notes
2018
2017
of which with
related parties
of which with
related parties
Revenue
Revenue from sales and services
Other revenue and income
Costs
Electricity, gas and fuel purchases
Services and other materials
Personnel
Net impairment/(reversals) of trade receivables and other
receivables
Depreciation, amortization and other impairment losses
Other operating expenses
Capitalized costs
Net income/(expense) from commodity contracts
measured at fair value
Operating income
Financial income from derivatives
Other financial income
Financial expense from derivatives
Other financial expense
8.a
8.b
[Subtotal]
9.a
9.b
9.c
9.d
9.e
9.f
9.g
[Subtotal]
10
11
12
11
12
Net income/(expense) from hyperinflation
11, 12
13
14
14
14
14
14
Share of income/(losses) of equity investments
accounted for using the equity method
Income before taxes
Income taxes
Net income from continuing operations
Net income from discontinued operations
Net income for the year (shareholders of the Parent
Company and non-controlling interests)
Attributable to shareholders of the Parent Company
Attributable to non-controlling interests
Basic earnings/(loss) per share attributable to
shareholders of the Parent Company (euro)
Diluted earnings/(loss) per share attributable to
shareholders of the Parent Company (euro)
Basic earnings/(loss) per share from continuing operations
attributable to shareholders of the Parent Company (euro)
Diluted earnings/(loss) per share from continuing
operations attributable to shareholders of the Parent
Company (euro)
186
73,134
2,538
75,672
35,728
18,870
4,581
1,096
5,355
2,889
(2,264)
66,255
483
9,900
1,993
1,715
1,532
4,392
168
349
8,201
1,851
6,350
-
6,350
4,789
1,561
0.47
0.47
0.47
0.47
5,124
22
7,761
2,664
531
27
18
25
5,387
38
7,737
2,644
272
10
59
55
72,664
1,975
74,639
36,039
17,982
4,504
-
5,861
2,886
(1,847)
65,425
578
9,792
1,611
2,371
2,766
3,908
-
111
7,211
1,882
5,329
-
5,329
3,779
1,550
0.37
0.37
0.37
0.37
Annual Report 2018
Statement of consolidated
comprehensive income
Millions of euro
Notes
Net income for the year
Other comprehensive income recyclable to profit or loss (net of taxes)
Effective portion of change in the fair value of cash flow hedges
Change in the fair value of hedging costs
Share of the other comprehensive income of equity investments accounted for using the
equity method
Change in the fair value of financial assets at FVOCI
Change in translation reserve
Other comprehensive income not recyclable to profit or loss (net of taxes)
Remeasurement of net liabilities/(assets) for employee benefits
Change in the fair value of equity investments in other entities
Total other comprehensive income/(loss) for the year
34
Total comprehensive income/(loss) for the year
Attributable to:
- shareholders of the Parent Company
- non-controlling interests
2018
6,350
(552)
83
(57)
(3)
2017
5,329
(204)
132
10
(129)
(1,287)
(2,519)
(120)
12
(1,924)
4,426
3,667
759
74
-
(2,636)
2,693
1,968
725
187
Consolidated financial statements
at Dec. 31, 2018
at Dec. 31, 2017
of which with
related parties
of which with
related parties
74,937
77
16,724
13,746
6,354
1,598
702
-
4,002
1,064
119,204
2,722
14,529
-
577
2,309
4,614
2,695
7,021
34,467
1,970
155,641
832
11
3
162
Consolidated balance sheet
Millions of euro
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Intangible assets
Goodwill
Deferred tax assets
Equity investments accounted for using the equity
method
Derivatives
Non-current contract assets
Other non-current financial assets
Other non-current assets
Notes
16
19
20
21
22
23
24
25
26
27
76,631
135
19,014
14,273
8,305
2,099
1,005
346
5,769
1,272
Current assets
Inventories
Trade receivables
Current contract assets
Tax receivables
Derivatives
Other current financial assets
Other current assets
Cash and cash equivalents
Assets classified as held for sale
TOTAL ASSETS
[Total]
128,849
28
29
25
24
30
31
32
[Total]
33
2,818
13,587
135
660
3,914
5,160
2,983
6,630
35,887
688
165,424
1,085
52
21
165
188
Annual Report 2018
Millions of euro
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY
at Dec. 31, 2018
at Dec. 31, 2017
of which with
related parties
of which with
related parties
Equity attributable to shareholders of the Parent
Company
Share capital
Other reserves
Retained earnings/(Loss carried forward)
Non-controlling interests
Total shareholders’ equity
Non-current liabilities
Long-term borrowings
Employee benefits
Provisions for risks and charges - non-current
Deferred tax liabilities
Derivatives
Non-current contract liabilities
Other non-current liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Provisions for risks and charges - current
Trade payables
Income tax payable
Derivatives
Other current financial liabilities
Other current liabilities
Other current liabilities
Liabilities included in disposal groups classified
as held for sale
Total liabilities
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
[Total]
34
35
36
37
22
24
25
38
35
35
37
39
24
25
40
42
[Total]
33
[Total]
76,817
10,167
1,700
19,853
31,720
16,132
47,852
10,167
3,348
21,280
34,795
17,366
52,161
48,983
804
42,439
893
3,187
5,181
8,650
2,609
6,306
1,901
3,616
3,367
1,312
2,407
4,821
8,348
2,998
-
2,003
63,016
1,894
7,000
1,210
86
89
36
89
13,387
2,924
12,671
2,365
333
4,343
1,095
788
12,107
40,348
407
117,572
165,424
35
25
69
284
2,260
-
954
12,462
38,735
1,729
103,480
155,641
9
37
189
Consolidated financial statements
Statement of changes in consolidated
shareholders’ equity (notes 4 and 34)
Share capital and reserves attributable to shareholders of the Parent Company
Millions of euro
Share
capital
Share
premium
reserve
Legal
reserve
Other
reserves
Reserve
from
translation
of financial
statements
in currencies
other than
euro
Reserves from
measurement
of cash flow
hedge financial
instruments
Reserves from
measurement
of costs of
hedging
financial
instruments
Reserves from
measurement
of financial
instruments at
FVOCI
At December 31, 2016
10,167
7,489
2,034
2,262
(1,005)
(1,448)
-
Application of new accounting
standards (IFRS 9)
-
-
-
-
-
At January 1, 2017 restated
10,167
7,489
2,034
2,262
(1,005)
480
(968)
(480)
(480)
106
-
106
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Distribution of dividends and
interim dividends
Transactions in non-controlling
interests
Change in scope of
consolidation
Comprehensive income for
the period
of which:
- other comprehensive
income/(loss)
- net income/(loss) for the
period
At December 31, 2017
restated
Application of new accounting
standards (IFRS 9 and IFRS
15)
Monetary revaluation (IAS 29)
(1,609)
(272)
132
(129)
3,779
1,968
725
2,693
(1,609)
(272)
132
(129)
(1,811)
(825)
(2,636)
-
-
-
-
3,779
3,779
1,550
5,329
10,167
7,489
2,034
2,262
(2,614)
(1,240)
(348)
(23)
(5)
(646)
(2,398)
(1,163)
21,280
34,795
17,366
52,161
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
At January 1, 2018 restated
10,167
7,489
2,034
2,262
(2,614)
(1,240)
(348)
(20)
(5)
(646)
(2,398)
(1,163)
Distribution of dividends
Monetary revaluation
Transactions in non-controlling
interests
Change in scope of
consolidation
Comprehensive income for
the period
of which:
- other comprehensive
income/(loss)
- net income/(loss) for the
period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(94)
(14)
(609)
(491)
(609)
(491)
-
-
-
-
-
-
90
90
-
-
-
-
27
9
9
-
at December 31, 2018
10,167
7,489
2,034
2,262
(3,317)
(1,745)
(258)
16
(63)
(714)
(2,381)
(1,623)
190
Reserve
Reserve from
from equity
remeasurement
investments
of net liabilities/
Reserve from
Reserve from
Equity
attributable to
accounted for
(assets) of
disposal of equity
acquisitions of
Retained
shareholders
Total
using the equity
defined benefit
interests without
non-controlling
earnings/(Loss
of the Parent
Non-controlling
shareholders’
method
plans
loss of control
interests
carried forward)
Company
interests
equity
(12)
(706)
(2,398)
(1,170)
19,484
34,803
17,772
52,575
(12)
(706)
(2,398)
(1,170)
19,484
34,803
17,772
52,575
(1,983)
(1,983)
(1,052)
(3,035)
-
7
-
-
(6)
(73)
-
1
(73)
-
-
-
-
7
7
-
-
-
-
-
-
-
-
60
60
-
-
-
-
-
-
-
-
-
-
-
(5)
(63)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,707)
212
17,785
(2,765)
73
(3,704)
212
31,303
(2,765)
73
(576)
362
(4,280)
574
17,152
48,455
(1,137)
(3,902)
143
216
17
(460)
(443)
(850)
(1,293)
(29)
(115)
65
(50)
(58)
4,789
3,667
759
4,426
(58)
(63)
(1,122)
(802)
(1,924)
4,789
19,853
4,789
31,720
1,561
6,350
16,132
47,852
Annual Report 2018
Share capital and reserves attributable to shareholders of the Parent Company
Reserve
from
translation
of financial
Reserves from
measurement
Reserves from
statements
measurement
of costs of
measurement
Reserves from
Millions of euro
Share
in currencies
of cash flow
hedging
of financial
Share
capital
premium
Legal
Other
other than
hedge financial
financial
instruments at
reserve
reserve
reserves
euro
instruments
instruments
FVOCI
At December 31, 2016
10,167
7,489
2,034
2,262
(1,005)
(1,448)
At January 1, 2017 restated
10,167
7,489
2,034
2,262
(1,005)
480
(968)
(480)
(480)
(1,609)
(272)
132
(129)
(1,609)
(272)
132
(129)
10,167
7,489
2,034
2,262
(2,614)
(1,240)
(348)
(23)
Application of new accounting
standards (IFRS 9)
Distribution of dividends and
interim dividends
Transactions in non-controlling
interests
Change in scope of
consolidation
Comprehensive income for
the period
of which:
- other comprehensive
income/(loss)
- net income/(loss) for the
period
At December 31, 2017
restated
Application of new accounting
standards (IFRS 9 and IFRS
15)
Monetary revaluation (IAS 29)
Distribution of dividends
Monetary revaluation
Transactions in non-controlling
interests
Change in scope of
consolidation
Comprehensive income for
the period
of which:
- other comprehensive
income/(loss)
- net income/(loss) for the
period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(94)
(14)
(609)
(491)
(609)
(491)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
90
90
106
106
-
-
-
-
-
-
-
-
-
3
27
9
9
-
At January 1, 2018 restated
10,167
7,489
2,034
2,262
(2,614)
(1,240)
(348)
(20)
at December 31, 2018
10,167
7,489
2,034
2,262
(3,317)
(1,745)
(258)
16
Reserve
from equity
investments
accounted for
using the equity
method
Reserve from
remeasurement
of net liabilities/
(assets) of
defined benefit
plans
Reserve from
disposal of equity
interests without
loss of control
Reserve from
acquisitions of
non-controlling
interests
Retained
earnings/(Loss
carried forward)
Equity
attributable to
shareholders
of the Parent
Company
Non-controlling
interests
Total
shareholders’
equity
(12)
-
(12)
-
-
-
7
7
-
(5)
-
-
(5)
-
-
-
-
(58)
(58)
-
(63)
(706)
(2,398)
(1,170)
19,484
34,803
17,772
52,575
-
(706)
-
-
-
60
60
-
-
-
-
-
-
-
(2,398)
(1,170)
19,484
34,803
17,772
52,575
-
-
-
-
-
-
-
7
-
-
-
-
(1,983)
(1,983)
(1,052)
(3,035)
-
-
7
-
(6)
(73)
1
(73)
3,779
1,968
725
2,693
-
(1,811)
(825)
(2,636)
3,779
3,779
1,550
5,329
(646)
(2,398)
(1,163)
21,280
34,795
17,366
52,161
-
-
-
-
-
-
(646)
(2,398)
(1,163)
-
-
-
(5)
(63)
(63)
-
(714)
-
-
-
-
17
(460)
-
-
-
-
-
-
-
-
(2,381)
(1,623)
(3,707)
212
17,785
(2,765)
73
-
(3,704)
212
31,303
(2,765)
73
(576)
362
(4,280)
574
17,152
48,455
(1,137)
(3,902)
143
216
(443)
(850)
(1,293)
(29)
(115)
65
(50)
4,789
3,667
759
4,426
-
(1,122)
(802)
(1,924)
4,789
19,853
4,789
31,720
1,561
6,350
16,132
47,852
191
Consolidated financial statements
Consolidated statement of cash flows
Millions of euro
Income before taxes for the year
Adjustments for:
Net impairment/(reversals) of trade receivables and other receivables
Depreciation, amortization and other impairment losses
Financial (income)/expense
Net income of equity investments accounted for using the equity method
Changes in net working capital:
- inventories
- trade receivables
- trade payables
- other contract assets/(liabilities)
- other assets/(liabilities)
Accruals to provisions
Utilization of provisions
Interest income and other financial income collected
Interest expense and other financial expense paid
Net (income)/expense from measurement of commodities
Income taxes paid
Capital (gains)/losses
Cash flows from operating activities (A)
Investments in property, plant and equipment
Investments in intangible assets
Investments in non-current contract assets
Investments in entities (or business units) less cash and cash equivalents acquired
Disposals of entities (or business units) less cash and cash equivalents sold
(Increase)/Decrease in other investing activities
Cash flows from investing/disinvesting activities (B)
Financial debt (new long-term borrowing)
Financial debt (repayments and other net changes)
Transactions in non-controlling interests
Dividends and interim dividends paid
Cash flows from financing activities (C)
Impact of exchange rate fluctuations on cash and cash equivalents (D)
Increase/(Decrease) in cash and cash equivalents (A+B+C+D)
Cash and cash equivalents at the start of the year (1)
Cash and cash equivalents at year end (2)
Notes
9.d
9.e
11, 12
13
28
29
39
25
8,201
1,096
5,355
2,048
(349)
153
(117)
426
734
750
(1,640)
449
(1,226)
11, 12
1,768
11, 12
(4,342)
(71)
14
(1,721)
16
20
6
6
35
35
(286)
11,075
(6,908)
(1,351)
(271)
(1,472)
424
(83)
(9,661)
13,424
(10,214)
(1,402)
(3,444)
(1,636)
(185)
(407)
7,121
6,714
2018
2017
of which
with related
parties
of which
with related
parties
126
(556)
106
18
(25)
7,211
-
5,861
2,692
(111)
(1,265)
(112)
(253)
(1,530)
559
71
59
(55)
65
-
312
353
(1,149)
2,898
(4,747)
59
(1,579)
(98)
10,125
(7,226)
(1,273)
-
(900)
216
(111)
(9,294)
12,284
(89)
(10,579)
(179)
(478)
(2,873)
(1,646)
(390)
(1,205)
8,326
7,121
(1) Of which cash and cash equivalents equal to €7,021 million at January 1, 2018 (€8,290 million at January 1, 2017), short-term securities equal to €69
million at January 1, 2018 (€36 million at January 1, 2017) and cash and cash equivalents pertaining to “Assets held for sale” in the amount of €31 million
at January 1, 2018.
(2) Of which cash and cash equivalents equal to €6,630 million at December 31, 2018 (€7,021 million at December 31, 2017), short-term securities equal to
€63 million at December 31, 2018 (€69 million at December 31, 2017) and cash and cash equivalents pertaining to “Assets held for sale” in the amount
of €21 million at December 31, 2018 (€31 million at December 31, 2017).
192
Annual Report 2018
Notes to the
financial statements
1
Form and content of the financial statements
Enel SpA has its registered office in Viale Regina Margherita
statement of changes in consolidated shareholders’ equity,
137, Rome, Italy, and since 1999 has been listed on the Milan
the consolidated statement of cash flows and the related
stock exchange. Enel is an energy multinational and is one
notes.
of the world’s leading integrated operators in the electricity
The assets and liabilities reported in the consolidated bal-
and gas industries, with a special focus on Europe and South
ance sheet are classified on a “current/non-current” basis
America.
with separate reporting of assets held for sale and liabilities
The consolidated financial statements for the period ended
included in disposal groups held for sale. Current assets,
December 31, 2017 comprise the financial statements of
which include cash and cash equivalents, are assets that are
Enel SpA, its subsidiaries and Group holdings in associates
intended to be realized, sold or consumed during the normal
and joint ventures, as well as the Group’s share of the as-
operating cycle of the Group or in the 12 months following
sets, liabilities, costs and revenue of joint operations (“the
the balance sheet date; current liabilities are liabilities that
Group”). A list of the subsidiaries, associates, joint opera-
are expected to be settled during the normal operating cycle
tions and joint ventures included in the scope of consolida-
of the Group or within the 12 months following the close of
tion is attached.
the financial year.
The consolidated financial statements were approved for
The consolidated income statement is classified on the basis
publication by the Board on March 21, 2019.
of the nature of costs, with separate reporting of net income/
These financial statements have been audited by EY SpA.
(loss) from continuing operations and net income/(loss) from
Basis of presentation
The consolidated financial statements for the year ended
December 31, 2018 have been prepared in accordance with
international accounting standards (International Accounting
discontinued operations attributable to shareholders of the
Parent Company and to non-controlling interests.
The indirect method is used for the consolidated cash flow
statement, with separate reporting of any cash flows by
operating, investing and financing activities associated with
Standards - IAS and International Financial Reporting Stan-
discontinued operations.
dards - IFRS) issued by the International Accounting Stan-
dards Board (IASB), the interpretations of the IFRS Interpre-
tations Committee (IFRIC) and the Standing Interpretations
Committee (SIC), recognized in the European Union pursu-
ant to Regulation 2002/1606/EC and in effect as of the close
In particular, although the Group does not diverge from the
provisions of IAS 7 in the classification of items:
> cash flows from operating activities report cash flows
from core operations, interest on loans granted and ob-
tained and dividends received from joint ventures or as-
of the year. All of these standards and interpretations are
sociates;
hereinafter referred to as the “IFRS-EU”.
The financial statements have also been prepared in confor-
mity with measures issued in implementation of Article 9,
paragraph 3, of Legislative Decree 38 of February 28, 2005.
The consolidated financial statements consist of the con-
solidated income statement, the statement of consolidated
comprehensive income, the consolidated balance sheet, the
> investing/disinvesting activities comprise investments in
property, plant and equipment and intangible assets and
disposals of such assets and contract assets related to
service concession arrangements. Include, also, the ef-
fects of business combinations in which the Group ac-
quires or loses control of companies, as well as other mi-
nor investments;
193
Consolidated financial statements > cash flows from financing activities include cash flows
generated by liability management transactions, dividends
paid to non-controlling interests by the Parent Company or
other consolidated companies and the effects of transac-
tions in non-controlling interests that do not change the
status of control of the companies involved;
> a separate item is used to report the impact of exchange
2
Accounting policies and
measurement criteria
rates on cash and cash equivalents and their impact on
profit or loss is eliminated in full in order to neutralize the
Use of estimates and management
judgment
effect on cash flows from operating activities.
For more information on cash flows as reported in the state-
ment of cash flows, please see the note on “Cash flows” in
the Report on operations.
The income statement, the balance sheet and the state-
ment of cash flows report transactions with related parties,
the definition of which is given in the next section below.
The consolidated financial statements have been prepared
on a going concern basis using the cost method, with the
exception of items measured at fair value in accordance with
IFRS-EU, as explained in the measurement bases applied to
each individual item, and of non-current assets and disposal
groups classified as held for sale, which are measured at
the lower of their carrying amount and fair value less costs
to sell.
The consolidated financial statements are presented in euro,
the functional currency of the Parent Company Enel SpA.
All figures are shown in millions of euro unless stated oth-
erwise.
The consolidated financial statements provide comparative
information in respect of the previous period.
Preparing the consolidated financial statements under IFRS-
EU requires management to take decisions and make esti-
mates and assumptions that may impact the value of rev-
enue, costs, assets and liabilities and the related disclosures
concerning the items involved as well as contingent assets
and liabilities at the balance sheet date. The estimates and
management’s judgments are based on previous experi-
ence and other factors considered reasonable in the circum-
stances. They are formulated when the carrying amount
of assets and liabilities is not easily determined from other
sources. The actual results may therefore differ from these
estimates. The estimates and assumptions are periodically
revised and the effects of any changes are reflected through
profit or loss if they only involve that period. If the revision
involves both the current and future periods, the change is
recognized in the period in which the revision is made and in
the related future periods.
In order to enhance understanding of the financial state-
ments, the following sections examine the main items af-
fected by the use of estimates and the cases that reflect
management judgments to a significant degree, underscor-
ing the main assumptions used by management in measur-
ing these items in compliance with the IFRS-EU. The critical
element of such valuations is the use of assumptions and
professional judgments concerning issues that are by their
very nature uncertain.
Changes in the conditions underlying the assumptions and
judgments could have a substantial impact on future results.
Use of estimates
Revenue
Revenue from supply of electricity and gas to end users is
recognized at the time the electricity or gas is delivered and
includes, in addition to amounts invoiced on the basis of pe-
riodic (and pertaining to the year) meter readings or on the
volumes notified by distributors and transporters, an esti-
mate of the electricity and gas delivered during the period
194
Annual Report 2018 but not yet invoiced that is equal to the difference between
Estimation factors used in the calculation of the recoverable
the amount of electricity and gas delivered to the distribu-
amount are described more in detail in the paragraph “Im-
tion network and that invoiced in the period, taking account
pairment of non-financial assets”. Nevertheless, possible
of any network losses. Revenue between the date of the
changes in the estimation factors on which the calculation
last meter reading and the year end is based on estimates
of such values is performed could generate different recov-
of the daily consumption of individual customers, primarily
erable values. The analysis of each group of non-current as-
determined on their historical information, adjusted to re-
sets is unique and requires management to use estimates
flect the climate factors or other matters that may affect the
and assumptions considered prudent and reasonable in the
estimated consumption.
specific circumstances.
Pensions and other post-employment
benefits
Some of the Group’s employees participate in pension plans
Expected credit losses on financial assets
At the end of each reporting date, the Group recognizes a
loss allowance for expected credit losses on trade receiv-
offering benefits based on their wage history and years of
ables and other financial assets measured at amortized
service. Certain employees are also eligible for other post-
cost, debt instruments measured at fair value through other
employment benefit schemes.
comprehensive income, contract assets and all other assets
The expenses and liabilities of such plans are calculated on
in the scope.
the basis of estimates carried out by consulting actuaries,
Loss allowances for financial assets are based on assump-
who use a combination of statistical and actuarial elements
tions about risk of default and on the measurement of
in their calculations, including statistical data on past years
expected credit losses. Management uses judgement in
and forecasts of future costs. Other components of the esti-
making these assumptions and selecting the inputs for the
mation that are considered include mortality and withdrawal
impairment calculation, based on the Group’s past history,
rates as well as assumptions concerning future develop-
existing market conditions as well as forward looking esti-
ments in discount rates, the rate of wage increases, the in-
mates at the end of each reporting period.
flation rate and trends in healthcare cost.
The expected credit loss (ECL), determined considering
These estimates can differ significantly from actual devel-
probability of default (PD), loss given default (LGD), and
opments owing to changes in economic and market condi-
exposure at default (EAD), is the difference between all
tions, increases or decreases in withdrawal rates and the
contractual cash flows that are due in accordance with the
lifespan of participants, as well as changes in the effective
contract and all cash flows that are expected to be received
cost of healthcare.
(i.e., all shortfalls) discounted at the original effective inter-
Such differences can have a substantial impact on the quan-
est rate (EIR).
tification of pension costs and other related expenses.
In particular, for trade receivables, contract assets and lease
Recoverability of non-financial assets
The carrying amount of non-current assets is reviewed peri-
receivables, including those with a significant financial com-
ponent, the Group applies the simplified approach, deter-
mining expected credit losses over a period corresponding
odically and wherever circumstances or events suggest that
to the entire life of the receivable, generally equal to 12
more frequent review is necessary. Goodwill is reviewed at
months.
least annually. Such assessments of the recoverable amount
Based on the specific reference market and the regulatory
of assets are carried out in accordance with the provisions
context of the sector, as well as expectations of recovery af-
of IAS 36, as described in greater detail in note 21 below.
ter 90 days, for such receivables, the Enel Group mainly ap-
In particular, the recoverable amount of non-current assets
plies a default definition of 180 days past due to determine
and goodwill is based on estimates and assumptions used
expected credit losses, as this is considered an effective
in order to define the measurement of cash flow and the dis-
indication of a significant increase in credit risk. Accordingly,
count rates applied. Where the value of non-current assets
financial assets that are more than 90 days past due are
is considered to be impaired, they are written down to the
generally not considered to be in default, except for some
recoverable amount, as estimated on the basis of the use
specific regulated markets.
of the asset and its future disposal, in accordance with the
For trade receivables and contract assets the Group mainly
Group’s most recent plans.
applies a collective approach based on grouping the receiv-
195
Consolidated financial statements ables into specific clusters, taking into account the specific
is no prevailing public interest for a different use of the wa-
regulatory and business context. Only if the trade receiv-
ter, incompatible with its use for hydroelectric generation,
ables are deemed to be individually significant by manage-
the competent public entity shall organize a public call for
ment and there are specific information about any signifi-
tender for the award for consideration of the concession for
cant increase in credit risk, the Group applies an analytical
a period ranging from 20 to a maximum of 30 years.
approach.
In order to ensure operational continuity, the law also gov-
In case of individual assessment, PD is mainly obtained
erns the methods of transfer ownership of the business unit
from an external provider.
necessary to operate the concession, including all legal rela-
Conversely, for collective assessment, trade receivables are
tionships relating to the concession, from the outgoing con-
grouped based on shared credit risk characteristics and past
cession holder to the new concession holder, in exchange
due information, considering a specific definition of default.
for payment of a price to be determined in negotiations
between the departing concession holder and the grantor
Based on each business and local regulatory framework as
agency, taking due account of the following elements:
well as differences in client portfolios also in terms of risks,
> for intake and governing works, penstocks and outflow
default and recovery rates, specific clusters are defined.
channels, which under the consolidated law governing
The contract assets are considered to have substantially the
waters and electrical plants are to be relinquished free
same risk characteristics as the trade receivables for the
of charge (Article 25 of Royal Decree 1775 of Decem-
same types of contracts.
ber 11, 1933), the revalued cost less government capital
grants, also revalued, received by the concession holder
In order to measure the ECL for trade receivables on a col-
for the construction of such works, depreciated for ordi-
lective basis, as well as for contract assets, the Group con-
nary wear and tear;
siders the following assumptions related to ECL parameters:
> for other property, plant and equipment, the market val-
> PD, assumed as to be the average default rate, is cal-
ue, meaning replacement value, reduced by estimated
culated on a cluster basis and taking into consideration
depreciation for ordinary wear and tear.
minimum 24 month historical data;
While acknowledging that the new regulations introduce
> LGD is function of the default bucket’s recovery rates,
important changes as to the transfer of ownership of the
discounted at the EIR; and
business unit with regard to the operation of the hydroelec-
> EAD is estimated as the carrying exposure at the report-
tric concession, the practical application of these principles
ing date net of cash deposits, including invoices issued
faces difficulties, given the uncertainties that do not permit
but not expired and invoices to be issued.
the formulation of a reliable estimate of the value that can
Based on specific management evaluations, the forward-
be recovered at the end of existing concessions (residual
looking adjustment may be applied considering qualitative
value).
and quantitative information in order to reflect possible fu-
Accordingly, management has decided it could not produce
ture events and macroeconomic scenarios, which may af-
a reasonable and reliable estimate of residual value.
fect the risk of the portfolio or the financial instrument.
The fact that the legislation requires the new concession
For additional details on the key assumptions and inputs
holder to make a payment to the departing concession hold-
used please refer to note 43 “Financial instruments”.
er prompted management to review the depreciation sched-
Depreciable value of certain elements of
Italian hydroelectric plants subsequent
to enactment of Law 134/2012
Law 134 of August 7, 2012 containing “urgent measures
ules for assets classified as to be relinquished free of charge
prior to Law 134/2012 (until the year ended on December
31, 2011, given that the assets were to be relinquished free
of charge, the depreciation period was equal to the closest
date between the term of the concession and the end of
for growth” (published in the Gazzetta Ufficiale of August
the useful life of the individual asset), calculating deprecia-
11, 2012) introduced a sweeping overhaul of the rules gov-
tion no longer over the term of the concession but, if longer,
erning hydroelectric concessions. Among its various provi-
over the economic and technical life of the individual assets.
sions, the law establishes that five years before the expira-
If additional information becomes available to enable the
tion of a major hydroelectric water diversion concession and
calculation of residual value, the carrying amounts of the as-
in cases of lapse, relinquishment or revocation, where there
sets involved will be adjusted prospectively.
196
Annual Report 2018 the Group, about whether to classify them as contingent
liabilities or liabilities.
Provisions have been recognized to cover all significant li-
abilities for cases in which legal counsel feels an adverse
outcome is likely and a reasonable estimate of the amount
of the loss can be made. Note 52 provides information on
the most significant contingent liabilities of the Group.
Obligations associated with generation
plants, including decommissioning and
site restoration
Generation activities may entail obligations for the operator
with regard to future interventions that will have to be per-
formed following the end of the operating life of the plant.
Such interventions may involve the decommissioning of
plants and site restoration, or other obligations linked to the
type of generation technology involved.
The nature of such obligations may also have a major impact
on the accounting treatment used for them.
In the case of nuclear power plants, where the costs regard
both decommissioning and the storage of waste fuel and
other radioactive materials, the estimation of the future cost
is a critical process, given that the costs will be incurred over
a very long span of time, estimated at up to 100 years.
The obligation, based on financial and engineering assump-
tions, is calculated by discounting the expected future cash
flows that the Group considers it will have to pay to meet
the obligations it has assumed.
The discount rate used to determine the present value of
the liability is the pre-tax risk-free rate and is based on the
economic parameters of the country in which the plant is
located.
That liability is quantified by management on the basis of
the technology existing at the measurement date and is re-
viewed each year, taking account of developments in stor-
age, decommissioning and site restoration technology, as
well as the ongoing evolution of the legislative framework
governing health and environmental protection.
Subsequently, the value of the obligation is adjusted to re-
flect the passage of time and any changes in estimates.
Determining the fair value of financial
instruments
The fair value of financial instruments is determined on the
basis of prices directly observable in the market, where
available, or, for unlisted financial instruments, using spe-
cific valuation techniques (mainly based on present value)
that maximize the use of observable market inputs. In rare
circumstances were this is not possible, the inputs are esti-
mated by management taking due account of the character-
istics of the instruments being measured.
In accordance with IFRS 13, the Group includes a measure-
ment of credit risk, both of the counterparty (Credit Valua-
tion Adjustment or CVA) and its own (Debit Valuation Ad-
justment or DVA), in order to adjust the fair value of financial
instruments for the corresponding amount of counterparty
risk, using the method discussed in note 47. Changes in the
assumptions made in estimating the input date could have
an impact on the fair value recognized for those instruments.
Recovery of deferred tax assets
At December 31, 2018, the consolidated financial state-
ments report deferred tax assets in respect of tax losses to
be reversed in subsequent years and income components
whose deductibility is deferred in an amount whose recov-
ery is considered by management to be highly probable.
The recoverability of such assets is subject to the achieve-
ment of future profits sufficient to absorb such tax losses
and to use the benefits of the other deferred tax assets.
Significant management judgement is required to deter-
mine the amount of deferred tax assets that can be recog-
nized, based upon the likely timing and the level of future
taxable profits together with future tax planning strategies
and the tax rates applicable at the date of reversal. However,
where the Group should become aware that it is unable to
recover all or part of recognized tax assets in future years,
the consequent adjustment would be taken to the income
statement in the year in which this circumstance arises.
Litigation
The Enel Group is involved in various civil, administrative
and tax disputes connected with the normal pursuit of its
activities that could give rise to significant liabilities. It is not
always objectively possible to predict the outcome of these
disputes. The assessment of the risks associated with this
litigation is based on complex factors whose very nature re-
quires recourse to management judgments, even when tak-
ing account of the contribution of external advisors assisting
197
Consolidated financial statements Management judgments
Identification of cash generating units
(CGUs)
In application of “IAS 36 - Impairment of assets”, the good-
will recognized in the consolidated financial statements of
the Group as a result of business combinations has been al-
located to individual or groups of CGUs that will benefit from
the combination. A CGU is the smallest group of assets that
generates largely independent cash inflows.
In identifying such CGUs, management took account of the
specific nature of its assets and the business in which it is
involved (geographical area, business area, regulatory frame-
work, etc.), verifying that the cash flows of a given group of
assets were closely independent and largely autonomous of
those associated with other assets (or groups of assets).
The assets of each CGU were also identified on the basis of
the manner in which management manages and monitors
those assets within the business model adopted. For a more
extensive discussion, please see notes 5 and 6 below and
the discussion in the section on “Results by business area”
in the Report on operations.
The CGUs identified by management to which the goodwill
recognized in these consolidated financial statements has
been allocated are indicated in the section on goodwill, to
which the reader is invited to refer.
The number and scope of the CGUs are updated systemati-
cally to reflect the impact of new business combinations and
reorganizations carried out by the Group, and to take account
of external factors that could impact the ability of groups of
assets to generate independent cash flows.
Determination of the existence of control
Under the provisions of IFRS 10, control is achieved when
the Group is exposed, or has rights, to variable returns from
its involvement with the investee and has the ability to affect
those returns through its power over the investee. Power is
defined as the current ability to direct the relevant activities
of the investee based on existing substantive rights.
The existence of control does not depend solely on own-
ership of a majority shareholding, but rather it arises from
substantive rights that each investor holds over the investee.
Consequently, management must use its judgment in as-
sessing whether specific situations determine substantive
rights that give the Group the power to direct the relevant
activities of the investee in order to affect its returns.
For the purpose of assessing control, management analy-
198
ses all facts and circumstances including any agreements
with other investors, rights arising from other contractual
arrangements and potential voting rights (call options, war-
rants, put options granted to non-controlling shareholders,
etc.). These other facts and circumstances could be espe-
cially significant in such assessment when the Group holds
less than a majority of voting rights, or similar rights, in the
investee.
Following such analysis of the existence of control, which
had already been done in previous years under the provi-
sions of the then-applicable IAS 27, the Group consolidated
certain companies (Emgesa and Codensa) on a line-by-line
basis even though it did not hold more than half of the vot-
ing rights. That approach was maintained in the assessment
carried out in application of IFRS 10 on the basis of the re-
quirements discussed above, as detailed in the attachment
“Subsidiaries, associates and other significant equity invest-
ments of the Enel Group at December 31, 2018” to these
financial statements.
The Group re-assesses whether or not it controls an invest-
ee if facts and circumstances indicate that there are chang-
es to one or more of the elements considered in verifying
the existence of control.
Finally, the assessment of the existence of control did not
find any situations of de facto control.
Determination of the existence of
joint control and of the type of joint
arrangement
Under the provisions of IFRS 11, a joint arrangement is an
agreement where two or more parties have joint control.
Joint control exists when the decisions over the relevant
activities require the unanimous consent of at least two par-
ties of a joint arrangement.
A joint arrangement can be configured as a joint venture
or a joint operation. Joint ventures are joint arrangements
whereby the parties that have joint control have rights to the
net assets of the arrangement. Conversely, joint operations
are joint arrangements whereby the parties that have joint
control have rights to the assets and obligations for the li-
abilities relating to the arrangement.
In order to determine the existence of the joint control and
the type of joint arrangement, management must apply
judgment and assess its rights and obligations arising from
the arrangement. For this purpose, the management con-
siders the structure and legal form of the arrangement, the
terms agreed by the parties in the contractual arrangement
and, when relevant, other facts and circumstances.
Annual Report 2018 Following that analysis, the Group has considered its interest
in Asociación Nuclear Ascó-Vandellós II as a joint operation.
The Group re-assesses whether or not it has joint control
if facts and circumstances indicate that changes have oc-
curred in one or more of the elements considered in verify-
ing the existence of joint control and the type of the joint
arrangement.
Determination of the existence of
significant influence over an associate
Associated companies are those in which the Group exer-
cises significant influence, i.e. the power to participate in the
financial and operating policy decisions of the investee but
not exercise control or joint control over those policies. In
general, it is presumed that the Group has a significant influ-
ence when it has an ownership interest of 20% or more.
In order to determine the existence of significant influence,
management must apply judgment and consider all facts
and circumstances.
The Group re-assesses whether or not it has significant in-
fluence if facts and circumstances indicate that there are
changes to one or more of the elements considered in veri-
fying the existence of significant influence.
Application of “IFRIC 12 - Service
concession arrangements” to
concessions
“IFRIC 12 - Service concession arrangements” applies to
“public-to-private” service concession arrangements, which
can be defined as contracts under which the grantor trans-
fers to a concession holder the right to deliver public servic-
es that give access to the main public facilities for a specified
period of time in return for managing the infrastructure used
to deliver those public services.
More specifically, IFRIC 12 applies to public-to-private ser-
vice concession arrangements if the grantor:
> controls or regulates what services the operator must
provide with the infrastructure, to whom it must provide
them, and at what price; and
> controls – through ownership or otherwise – any signifi-
cant residual interest in the infrastructure at the end of the
term of the arrangement.
In assessing the applicability of these provisions for the
Group, management carefully analyzed existing conces-
sions.
On the basis of that analysis, the provisions of IFRIC 12 are
applicable to some of the infrastructure of a number of com-
panies that operate in Brazil.
Revenue from contracts with customers
(within the scope of IFRS 15)
Identification of the contract
The Group carefully analyses the contractual terms and con-
ditions on a jurisdictional level in order to determine when a
contract exists and the terms of that contract’s enforceabil-
ity so as to apply IFRS 15 only to such contracts.
Identification and satisfaction of performance
obligations
When a contract includes multiple promised goods or ser-
vices, in order to assess if they should be accounted for
separately or as a group, the Group considers both the in-
dividual characteristics of goods/services and the nature of
the promise within the context of the contract, also evaluat-
ing all the facts and circumstances relating to the specific
contract under the relevant legal and regulatory framework.
To evaluate when a performance obligation is satisfied, the
Group evaluates when the control of the goods or services
is transferred to the customer, assessed primarily from the
perspective of the customer. The Group first determines
whether the performance obligation meets the criteria to
recognize revenue over time. If control transfers over time,
the Group selects an appropriate method to measure prog-
ress towards complete satisfaction of the performance ob-
ligation, also considering the nature of both the goods or
services promised and the performance obligation. If none
of the over-time criteria are met, the Group determines the
point in time at which the customer obtains the control,
considering whether the indicators of the transfer of control
collectively indicate that the customer has obtained control.
In particular, taking into consideration that IFRS 15 changes
the main notions and principles of revenue recognition, the
Group considers that the following main revenue streams
require a specific assessment under the new accounting
requirements:
> an electricity/gas supply agreement signed with an end
user includes a single performance obligation (sale and
transport of the commodity) because the Group has eval-
uated that the contract does not provide distinct goods/
services and the promise is satisfied by transferring the
control over the commodity to the customer when it is
delivered at the point of delivery. In order to determine
the nature of the promise included in such contracts, the
Group analyzes carefully the facts and circumstances ap-
plicable to each contract and commodity.
199
Consolidated financial statements However, the Group considers that the performance obli-
> construction contracts typically include a performance
gation provided for a repetitive service contract, as a sup-
obligation satisfied over time; for these contracts, the
ply or a transport contract of electricity/gas to end users,
Group generally considers appropriate the use of an in-
is typically satisfied over time (because the customer si-
put method for measuring progress, except when spe-
multaneously receives and consumes the benefits of the
cific contract analysis suggest the use of an alternative
commodity as it is delivered) as part of a series of distinct
method. In such cases, the cost incurred method (cost-
goods/services (i.e., each unit of commodity) that are sub-
to-cost method) is considered to be the best method to
stantially the same and have the same pattern of transfer
represent the Group’s performance obligation satisfied at
to the customer. In these cases, the Group applies an out-
the reporting date.
put method to recognize revenue in the amount to which
it has a right to invoice the customer if that amount cor-
Determination of the transaction price
responds directly with the value to the customer of the
The Group considers all relevant facts and circumstances
performance completed to date;
in determining whether a contract includes variable con-
> the network connection fees received from customers
sideration (i.e., consideration that may vary or depends
for connecting them to the electricity/gas distribution net-
upon the occurrence or non-occurrence of a future event).
works require a specific Group assessment to take into
In estimating variable consideration, the Group uses the
consideration all terms and conditions of the connection
method that better predicts the consideration to which
arrangements that could vary from country to country
it will be entitled, applying it consistently throughout the
based on the local context, regulations and law. This as-
contract and for similar contracts, also considering all avail-
sessment is finalized to evaluate if the contract includes
able information, and updating such estimates until the
other distinct goods or services, as for example, the right
uncertainly is resolved. The Group includes the estimated
to obtain the ongoing access to the infrastructure in order
variable consideration in the transaction price only to the
to receive the commodity or, when the connection fee is
extent that it is high probable that a significant reversal in
a “non-refundable up-front fee” paid at or near contract
the cumulative revenue recognized will not occur when the
inception, a material right that gives rise to a performance
uncertainty is resolved.
obligation.
In particular, in some countries in which the Group oper-
Principal versus agent assessment
ates, it assesses that the nature of the consideration re-
The Group considers that it is an agent in some contracts
ceived represents a “non-refundable up-front fee” whose
in which it is not primarily responsible for fulfilling the
payment provides a material right to the customer. In
contract and therefore it does not control goods or ser-
order to determine if the period over which to recognize
vices before they are being transferred to customers. For
this material right would be extended beyond the initial
example, the Group acts as an agent in some contracts
contractual period, the Group takes into consideration the
for electricity/gas network connection services and other
applicable legal and regulatory frameworks applicable to
related activities depending on local legal and regulatory
the contract and that affect the parties. In such cases, if
framework.
there is an implied assignment of the material right and an
obligation from the initial customer to the new customer,
Allocation of transaction price
the Group recognizes the connection fee over a period be-
For contracts that have more than one performance obli-
yond the relationship with the initial customer, consider-
gation (e.g., “bundled” sale contracts), the Group gener-
ing the concession terms as the period during which the
ally allocates the transaction price to each performance
initial customer and any future customer can benefit from
obligation in proportion to its stand-alone selling price.
the ongoing access without paying an additional connec-
The Group determines stand-alone selling prices consider-
tion fee. As a consequence, the fee is recognized over
ing all information and using observable prices when they
the period for which the payment creates for the Group
are available in the market or, if not, using an estimation
an obligation to make the lower prices available to future
method that maximizes the use of observable inputs and
customers (i.e., the period during which the customer
applying it consistently to similar arrangements.
is expected to benefit from the ongoing access service
If the Group evaluates that a contract includes an option
without having to pay an “up-front fee” upon renewal);
for additional goods or services (e.g., customer loyalty pro-
200
Annual Report 2018 grams or renewal options) that represents a material right,
it allocates the transaction price to this option since the
option gives rise to an additional performance obligation.
Hedge accounting
Hedge accounting is applied to derivatives in order to reflect
into the financial statements the effect of risk management
Contract costs
The Group only capitalizes the incremental costs that it in-
curs to obtain a contract with a customer within the scope
of IFRS 15 (directly attributable to an identified contract and
paid only if the contract is obtained) if it expects to recover
the costs, through reimbursements (direct recoverability) or
the margin (indirect recoverability).
The Group assesses recoverability of the incremental costs
of obtaining a contract either on a contract-by-contract ba-
sis, or for a group of contracts if those costs are associated
with the group of contracts.
The Group supports the recoverability of such costs on the
basis of its experience with other similar transactions and
evaluating various factors, including potential renewals,
amendments and follow-on contracts with the same cus-
tomer.
The Group amortizes such costs over the average customer
term. In order to determine this expected period of benefit
from the contract, the Group considers its past experience
(e.g., “churn rate”), the predictive evidence from similar con-
tracts and available information about the market.
Classification and measurement of
financial assets
At initial recognition, in order to classify financial assets as
financial assets at amortized cost, at fair value through other
strategies.
Accordingly, at the inception of the transaction the Group
documents the hedge relationship between hedging instru-
ments and hedged items, as well as its risk management
objectives and strategy. The Group also assesses, both at
hedge inception and on an ongoing basis, whether hedging
instruments are highly effective in offsetting changes in the
fair values or cash flows of hedged items.
On the basis of management’s judgement, the effective-
ness assessment based on the existence of an economic re-
lationship between the hedging instruments and the hedged
items, the dominance of credit risk in the value changes and
the hedge ratio, as well as the measurement of the ineffec-
tiveness, is evaluated through a qualitative assessment or
a quantitative computation, depending on the specific facts
and circumstances and on the characteristics of the hedged
items and the hedging instruments.
For cash flow hedges of forecast transactions designated as
hedged items, management assesses and documents that
they are highly probable and present an exposure to changes
in cash flows that affect profit or loss.
For additional details on the key assumptions about effec-
tiveness assessment and ineffectiveness measurement,
please refer to note 46.1 “Derivatives designated as hedging
instruments”.
comprehensive income and at fair value through profit or
Related parties
loss, management assesses both the contractual cash flow
characteristics of the instrument and the business model for
managing financial assets in order to generate cash flows.
For the purpose of evaluating the contractual cash flow
characteristics of the instrument, management performs
the SPPI test at an instrument level, in order to determine if
it gives rise to cash flows that are solely payments of princi-
pal and interest (SPPI) on the principal amount outstanding,
performing specific assessment on the contractual clauses
of the financial instruments, as well as quantitative analysis,
if required.
The business model determines whether cash flows will
result from collecting contractual cash flows, selling the fi-
nancial assets, or both.
For more details, please see note 43 “Financial instru-
ments”.
Related parties are mainly parties that have the same control-
ling entity as Enel SpA, companies that directly or indirectly
through one or more intermediaries control, are controlled or
are subject to the joint control of Enel SpA and in which the
latter has a holding that enables it to exercise a significant in-
fluence. Related parties also include entities operating post-
employment benefit plans for employees of Enel SpA or its
associates (specifically, the FOPEN and FONDENEL pension
funds), as well as the members of the boards of statutory au-
ditors, and their immediate family, and the key management
personnel, and their immediate family, of Enel SpA and its
subsidiaries. Key management personnel comprises man-
agement personnel who have the power and direct or indi-
rect responsibility for the planning, management and control
of the activities of the company. They include directors.
201
Consolidated financial statements Subsidiaries
Subsidiaries are all entities over which the Group has con-
trol. The Group controls an entity, regardless of the nature of
the formal relationship between them, when it is exposed/
has rights to variable returns deriving from its involvement
former subsidiary are accounted for as if the Group had
directly disposed of the related assets or liabilities.
Investment in joint arrangements
and associates
and has the ability, through the exercise of its power over
A joint venture is an entity over which the Group exercises
the investee, to affect its returns.
joint control and has rights to the net assets of the arrange-
The figures of the subsidiaries are consolidated on a full line-
ment. Joint control is the sharing of control of an arrange-
by-line basis as from the date control is acquired until such
ment, whereby decisions about the relevant activities re-
control ceases.
Consolidation procedures
quire unanimous consent of the parties sharing control.
An associate is an entity over which the Group has signifi-
cant influence. Significant influence is the power to partici-
pate in the financial and operating policy decisions of the
The financial statements of subsidiaries used to prepare
investee without having control or joint control over the in-
the consolidated financial statements were prepared at
vestee.
December 31, 2018 in accordance with the accounting
The Group’s investments in its joint ventures and associates
policies adopted by the Parent Company.
are accounted for using the equity method.
If a subsidiary uses different accounting policies from those
Under the equity method, these investments are initially
adopted in preparing the consolidated financial statements
recognized at cost and any goodwill arising from the differ-
for similar transactions and facts in similar circumstances,
ence between the cost of the investment and the Group’s
appropriate adjustments are made to ensure conformity
share of the net fair value of the investee’s identifiable as-
with Group accounting policies.
sets and liabilities at the acquisition date is included in the
Assets, liabilities, revenue and expenses of a subsidiary
carrying amount of the investment. Goodwill is not individu-
acquired or disposed of during the year are included in or
ally tested for impairment.
excluded from the consolidated financial statements, re-
After the acquisition date, their carrying amount is adjusted
spectively, from the date the Group gains control or until
to recognize changes in the Group’s share of profit or loss of
the date the Group ceases to control the subsidiary.
the associate or joint venture. The OCI of such investees is
Profit or loss and the other components of other compre-
presented as specific items of the Group’s OCI.
hensive income are attributed to the shareholders of the
Distributions received from joint ventures and associates re-
Parent Company and non-controlling interests, even if this
duce the carrying amount of the investments.
results in a loss for non-controlling interests.
Profits and losses resulting from transactions between the
All intercompany assets and liabilities, equity, income, ex-
Group and the associates or joint ventures are eliminated to
penses and cash flows relating to transactions between
the extent of the interest in the associate or joint venture.
entities of the Group are eliminated in full.
The financial statements of the associates or joint ventures
Changes in ownership interest in subsidiaries that do not
are prepared for the same reporting period as the Group.
result in loss of control are accounted for as equity trans-
When necessary, adjustments are made to bring the ac-
actions, with the carrying amounts of the controlling and
counting policies in line with those of the Group.
non-controlling interests adjusted to reflect changes in
After application of the equity method, the Group deter-
their interests in the subsidiary. Any difference between
mines whether it is necessary to recognize an impairment
the fair value of the consideration paid or received and the
loss on its investment in an associate or joint venture. If there
corresponding fraction of equity acquired or sold is recog-
is such evidence, the Group calculates the amount of impair-
nized in consolidated equity.
ment as the difference between the recoverable amount of
When the Group ceases to have control over a subsidiary,
the associate or joint venture and its carrying amount.
any interest retained in the entity is remeasured to its fair
In the case of the Slovak Power Holding BV joint venture,
value, recognized through profit or loss, at the date when
any impairment losses are assessed by determining the
control is lost. In addition, any amounts previously recog-
recoverable value using the price formula specified in the
nized in other comprehensive income in respect of the
agreement to sell the 66% stake in Slovenské elektrárne
202
Annual Report 2018 (SE) by Enel Produzione to EP Slovakia, which is based on
monetary assets and liabilities in foreign currency measured
various parameters, including the evolution of the net finan-
at fair value are translated using the exchange rate at the
cial position of SE, developments in energy prices in the Slo-
date that value was determined. Any exchange rate differ-
vakian market, the operating efficiency of SE as measured
ences are recognized through profit or loss.
on the basis of benchmarks defined in the contract and the
In determining the spot exchange rate to use on initial rec-
enterprise value of Mochovce units 3 and 4. This value is
ognition of the related asset, expense or income (or part
compared against the carrying amount of the investment,
of it) on the derecognition of a non-monetary asset or non-
which is measured on the basis of the results of that formula
monetary liability relating to advance consideration, the date
at the closing date for the transaction of July 28, 2017.
of the transaction is the date on which the Group initially
If the investment ceases to be an associate or a joint ven-
recognizes the non-monetary asset or non-monetary liabil-
ture, the Group recognizes any retained investment at its
ity associated with the advance consideration.
fair value, through profit or loss. Any amounts previously
If there are multiple advance payments or receipts, the
recognized in other comprehensive income in respect of
Group determines the transaction date for each payment or
the former associate or joint venture are accounted for as
receipt of advance consideration.
if the Group had directly disposed of the related assets or
liabilities.
If the Group’s ownership interest in an associate or a joint
venture is reduced, but the Group continues to exercise a
significant influence or joint control, the Group continues to
apply the equity method and the share of the gain or loss
that had previously been recognized in other comprehen-
Translation of financial statements
denominated in a foreign currency
For the purposes of the consolidated financial statements,
all profits/losses, assets and liabilities are stated in euro,
which is the functional currency of the Parent Company,
sive income relating to that reduction is accounted for as
Enel SpA.
if the Group had directly disposed of the related assets or
liabilities.
When a portion of an investment in an associate or joint ven-
ture meets the criteria to be classified as held for sale, any
retained portion of an investment in the associate or joint
venture that has not been classified as held for sale is ac-
counted for using the equity method until disposal of the
portion classified as held for sale takes place.
Joint operations are joint arrangements whereby the par-
In order to prepare the consolidated financial statements,
the financial statements of consolidated companies in func-
tional currencies other than the presentation currency used
in the consolidated financial statements are translated into
euro by applying the relevant period-end exchange rate to
the assets and liabilities, including goodwill and consolida-
tion adjustments, and the average exchange rate for the
period, which approximates the exchange rates prevailing
at the date of the respective transactions, to the income
ties that have joint control have rights to the assets and ob-
statement items.
ligations for the liabilities relating to the arrangement. For
each joint operation, the Group recognized assets, liabilities,
costs and revenue on the basis of the provisions of the ar-
rangement rather than the participating interest held.
Any resulting exchange rate gains or losses are recognized
as a separate component of equity in a special reserve. The
gains and losses are recognized proportionately in the in-
come statement on the disposal (partial or total) of the sub-
sidiary.
Translation of foreign currency
items
Business combinations
Transactions in currencies other than the functional currency
Business combinations initiated before January 1, 2010 and
are recognized at the exchange rate prevailing at the date of
completed within that financial year are recognized on the
the transaction. Monetary assets and liabilities denominated
basis of IFRS 3 (2004).
in a foreign currency other than the functional currency are
Such business combinations were recognized using the pur-
later translated using the period-end exchange rate.
chase method, where the purchase cost is equal to the fair
Non-monetary assets and liabilities denominated in foreign
value at the date of the exchange of the assets acquired
currency that are recognized at historical cost are translated
and the liabilities incurred or assumed, plus costs directly
using the exchange rate at the date of the transaction. Non-
attributable to the acquisition. This cost was allocated by
203
Consolidated financial statements recognizing the assets, liabilities and identifiable contingent
of the contingent consideration classified as an asset or a
liabilities of the acquired company at their fair values. Any
liability, or as a financial instrument within the scope of IFRS
positive difference between the cost of the acquisition and
9, are recognized in profit or loss. If the contingent consid-
the fair value of the net assets acquired attributable to the
eration is not within the scope of IFRS 9, it is measured in
shareholders of the Parent Company was recognized as
accordance with the appropriate IFRS-EU. Contingent con-
goodwill. Any negative difference was recognized in profit
sideration that is classified as equity is not remeasured, and
or loss. The value of non-controlling interests was deter-
its subsequent settlement is accounted for within equity.
mined in proportion to the interest held by minority share-
If the fair values of the assets, liabilities and contingent li-
holders in the net assets. In the case of business combi-
abilities can only be calculated on a provisional basis, the
nations achieved in stages, at the date of acquisition any
business combination is recognized using such provisional
adjustment to the fair value of the net assets acquired previ-
values. Any adjustments resulting from the completion of
ously was recognized in equity; the amount of goodwill was
the measurement process are recognized within 12 months
determined for each transaction separately based on the fair
of the date of acquisition, restating comparative figures.
values of the acquiree’s net assets at the date of each ex-
change transaction.
Fair value measurement
Business combinations carried out as from January 1, 2010
are recognized on the basis of IFRS 3 (2008), which is re-
For all fair value measurements and disclosures of fair value
that are either required or permitted by international account-
ferred to as IFRS 3 (Revised) hereafter.
ing standards the Group applies IFRS 13.
More specifically, business combinations are recognized us-
ing the acquisition method, where the purchase cost (the
consideration transferred) is equal to the fair value at the
Fair value is defined as the price that would be received to
sell an asset or paid to transfer a liability, in an orderly trans-
action, between market participants, at the measurement
purchase date of the assets acquired and the liabilities in-
date (i.e. an exit price).
curred or assumed, as well as any equity instruments issued
by the purchaser. The consideration transferred includes the
fair value of any asset or liability resulting from a contingent
consideration arrangement.
Costs directly attributable to the acquisition are recognized
through profit or loss.
The consideration transferred is allocated by recognizing the
assets, liabilities and identifiable contingent liabilities of the
The fair value measurement assumes that the transaction to
sell an asset or transfer a liability takes place in the principal
market, i.e. the market with the greatest volume and level of
activity for the asset or liability. In the absence of a principal
market, it is assumed that the transaction takes place in the
most advantageous market to which the Group has access,
i.e. the market that maximizes the amount that would be re-
ceived to sell the asset or minimizes the amount that would
acquired company at their fair values as at the acquisition
be paid to transfer the liability.
date. Any positive difference between the price paid, mea-
sured at fair value as at the acquisition date, plus the value of
any non-controlling interests, and the net value of the iden-
tifiable assets and liabilities of the acquiree measured at fair
value is recognized as goodwill. Any negative difference is
recognized in profit or loss.
The value of non-controlling interests is determined either
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pric-
ing the asset or liability, assuming that market participants
act in their economic best interest. Market participants are
independent, knowledgeable sellers and buyers who are
able to enter into a transaction for the asset or the liability
and who are motivated but not forced or otherwise com-
in proportion to the interest held by minority shareholders
pelled to do so.
in the net identifiable assets of the acquiree or at their fair
When measuring fair value, the Group takes into account the
value as at the acquisition date.
In the case of business combinations achieved in stages, at
the date of acquisition of control the previously held equity
interest in the acquiree is remeasured at fair value and any
positive or negative difference is recognized in profit or loss.
Any contingent consideration is recognized at fair value at
the acquisition date. Subsequent changes to the fair value
characteristics of the asset or liability, in particular:
> for a non-financial asset, a fair value measurement takes
into account a market participant’s ability to generate
economic benefits by using the asset in its highest and
best use or by selling it to another market participant that
would use the asset in its highest and best use;
> for liabilities and own equity instruments, the fair value
204
Annual Report 2018 reflects the effect of non-performance risk, i.e. the risk
Subsequent costs are recognized as an increase in the car-
that an entity will not fulfill an obligation, including among
rying amount of the asset when it is probable that future
others the credit risk of the Group itself;
economic benefits associated with the cost incurred to re-
> in the case of groups of financial assets and financial liabil-
place a part of the asset will flow to the Group and the cost
ities with offsetting positions in market risk or credit risk,
of the item can be measured reliably. All other costs are rec-
managed on the basis of an entity’s net exposure to such
ognized in profit or loss as incurred.
risks, it is permitted to measure fair value on a net basis.
The cost of replacing part or all of an asset is recognized as
In measuring the fair value of assets and liabilities, the Group
an increase in the carrying amount of the asset and is de-
uses valuation techniques that are appropriate in the circum-
preciated over its useful life; the net carrying amount of the
stances and for which sufficient data are available, maximiz-
replaced unit is derecognized through profit or loss.
ing the use of relevant observable inputs and minimizing the
Property, plant and equipment, net of its residual value, is
use of unobservable inputs.
depreciated on a straight-line basis over its estimated useful
Property, plant and equipment
life, which is reviewed annually and, if appropriate, adjusted
prospectively. Depreciation begins when the asset is avail-
able for use.
Property, plant and equipment is stated at cost, net of accu-
The estimated useful life of the main items of property, plant
mulated depreciation and accumulated impairment losses,
and equipment is as follows:
if any. Such cost includes expenses directly attributable to
bringing the asset to the location and condition necessary
for its intended use.
Civil buildings
10-70 years
Buildings and civil works incorporated in plants
10-100 years
The cost is also increased by the present value of the es-
timate of the costs of decommissioning and restoring the
site on which the asset is located where there is a legal or
constructive obligation to do so. The corresponding liability
Hydroelectric power plants:
- penstock
- mechanical and electrical machinery
is recognized under provisions for risks and charges. The
- other fixed hydraulic works
accounting treatment of changes in the estimate of these
Thermal power plants:
costs, the passage of time and the discount rate is discussed
- boilers and auxiliary components
under “Provisions for risks and charges”.
Property, plant and equipment transferred from customers
to connect them to the electricity distribution network and/
or to provide them with other related services is initially rec-
ognized at its fair value as at the date on which control is
obtained.
Borrowing costs that are directly attributable to the acquisi-
- gas turbine components
- mechanical and electrical machinery
- other fixed hydraulic works
Nuclear power plants
Geothermal power plants:
- cooling towers
tion, construction or production of a qualifying asset, i.e. an
- turbines and generators
asset that takes a substantial period of time to get ready for
- turbine parts in contact with fluid
7-85 years
5-60 years
5-100 years
3-59 years
3-59 years
3-59 years
3-62 years
50 years
20-25 years
25-30 years
10-25 years
its intended use or sale, are capitalized as part of the cost
- mechanical and electrical machinery
20-40 years
of the assets themselves. Borrowing costs associated with
the purchase/construction of assets that do not meet such
requirement are expensed in the period in which they are
incurred.
Wind power plants:
- towers
- turbines and generators
20-30 years
20-30 years
Certain assets that were revalued at the IFRS-EU transition
date or in previous periods are recognized at their fair value,
- mechanical and electrical machinery
15-30 years
Solar power plants:
which is considered to be their deemed cost at the revalua-
- mechanical and electrical machinery
20-30 years
tion date.
Public and artistic lighting:
Where individual items of major components of property,
- public lighting installations
plant and equipment have different useful lives, the compo-
- artistic lighting installations
10-20 years
20 years
nents are recognized and depreciated separately.
205
Consolidated financial statements Transport lines
Transformer stations
Distribution plants:
- high-voltage lines
- primary transformer stations
- low-and medium-voltage lines
Meters:
12-50 years
20-55 years
10-60 years
5-55 years
5-50 years
tion above on the “Depreciable value of certain elements of
Italian hydroelectric plants subsequent to enactment of Law
134/2012”, which you are invited to consult for more details.
In accordance with Spanish laws 29/1985 and 46/1999, hy-
droelectric power stations in Spanish territory operate under
administrative concessions at the end of which the plants
will be returned to the government in good operating condi-
- electromechanical meters
3-34 years
tion. The terms of the concessions extend up to 2067.
- electricity balance measurement equipment
3-30 years
- electronic meters
6-35 years
The useful life of leasehold improvements is determined on
the basis of the term of the lease or, if shorter, on the dura-
tion of the benefits produced by the improvements them-
selves.
Land is not depreciated as it has an indefinite useful life.
Assets recognized under property, plant and equipment are
derecognized either upon their disposal (i.e., at the date the
recipient obtains control) or when no future economic ben-
efit is expected from their use or disposal. Any gain or loss,
recognized through profit or loss, is calculated as the differ-
ence between the net disposal proceeds, determined in ac-
cordance with the transaction price requirements of IFRS 15,
and the net carrying amount of the derecognized assets.
Assets to be relinquished free of charge
The Group’s plants include assets to be relinquished free of
charge at the end of the concessions. These mainly regard
major water diversion works and the public lands used for
the operation of the thermal power plants.
Within the Italian regulatory framework in force until 2011, if
the concessions are not renewed, at those dates all intake
and governing works, penstocks, outflow channels and other
assets on public lands were to be relinquished free of charge
to the State in good operating condition. Accordingly, depre-
ciation on assets to be relinquished was calculated over the
shorter of the term of the concession and the remaining use-
ful life of the assets.
In the wake of the legislative changes introduced with Law
134 of August 7, 2012, the assets previously classified as as-
sets “to be relinquished free of charge” connected with the
hydroelectric water diversion concessions are now consid-
ered in the same manner as other categories of “property,
plant and equipment” and are therefore depreciated over
the economic and technical life of the asset (where this ex-
ceeds the term of the concession), as discussed in the sec-
A number of generation companies that operate in Argen-
tina, Brazil and Mexico hold administrative concessions with
similar conditions to those applied under the Spanish con-
cession system. These concessions will expire by 2088.
Infrastructure serving a concession
As regards the distribution of electricity, the Group is a
concession holder in Italy for this service. The concession,
granted by the Ministry for Economic Development, was is-
sued free of charge and terminates on December 31, 2030.
If the concession is not renewed upon expiry, the grantor is
required to pay an indemnity. The amount of the indemnity
will be determined by agreement of the parties using appro-
priate valuation methods, based on both the balance sheet
value of the assets themselves and their profitability.
In determining the indemnity, such profitability will be rep-
resented by the present value of future cash flows. The in-
frastructure serving the concessions is owned and available
to the concession holder. It is recognized under “Property,
plant and equipment” and is depreciated over the useful life
of the assets.
Enel also operates under administrative concessions for the
distribution of electricity in other countries (including Spain
and Romania). These concessions give the right to build and
operate distribution networks for an indefinite period of time.
Infrastructure within the scope
of “IFRIC 12 - Service concession
arrangements”
Under a “public-to-private” service concession arrangement
within the scope of “IFRIC 12 - Service concession arrange-
ments” the operator acts as a service provider and, in accor-
dance with the terms specified in the contract, it constructs/
upgrades infrastructure used to provide a public service and
operates and maintains that infrastructure for the period of
the concession.
The Group, as operator, does not account for the infrastruc-
ture within the scope of IFRIC 12 as property, plant and
206
Annual Report 2018 equipment and it recognizes and measures revenue in accor-
fair value of the leased asset and the present value of the
dance with IFRS 15 for the services it performs. In particular,
minimum lease payments due, including the payment re-
when the Group provides construction or upgrade services,
quired to exercise any purchase option.
depending on the characteristics of the service concession
The assets are depreciated on the basis of their useful life.
arrangement, it recognizes:
If it is not reasonably certain that the Group will acquire the
> a financial asset, if the Group has an unconditional con-
assets at the end of the lease, they are depreciated over the
tractual right to receive cash or another financial asset
shorter of the lease term and the useful life of the assets.
from the grantor (or from a third party at the direction of
Payment made under operating lease are recognized as a
the grantor), that is the grantor has little discretion to avoid
cost on a straight-line basis over the lease term.
payment. In this case, the grantor contractually guaran-
Although not formally designated as lease agreements,
tees to pay to the operator specified or determinable
certain types of contract can be considered as such if the
amounts or the shortfall between the amounts received
fulfilment of the arrangement is dependent on the use of a
from the users of the public service and specified or de-
specific asset (or assets) and if the arrangement conveys a
terminable amounts (defined by the contract), and such
right to use such assets.
payments are not dependent on the usage of the infra-
structure; and/or
> an intangible asset, if the Group receives the right (a li-
cense) to charge users of the public service provided. In
such a case, the operator does not have an unconditional
right to receive cash because the amounts are contingent
on the extent that the public uses the service.
If the Group (as operator) has a contractual right to receive
Investment property
Investment property consists of the Group’s real estate held
to earn rentals and/or for capital appreciate rather than for
use in the production or supply of goods and services.
Investment property is measured at acquisition cost less
any accumulated depreciation and any accumulated impair-
an intangible asset (a right to charge users of public service),
ment losses.
borrowing costs are capitalized using the criteria specified in
the paragraph “Property, plant and equipment”.
However, for construction/upgrade services, both types of
Investment property, excluding land, is depreciated on a
straight-line basis over the useful life of the related assets.
Impairment losses are determined on the basis of the crite-
consideration are generally classified as a contract asset
ria following described.
during the construction/upgrade period.
The breakdown of the fair value of investment property is
For more details about such consideration, please see note
detailed in note 47 “Assets measured at fair value”.
8 “Revenue”.
Leases
Investment property is derecognized either when it has been
transferred (i.e., at the date the recipient obtains control) or
when it is permanently withdrawn from use and no future
economic benefit is expected from its disposal. Any gain or
The Group holds property, plant and equipment and intan-
loss, recognized through profit or loss, is calculated as the
gible assets for its various activities under lease contracts.
difference between the net disposal proceeds, determined
These contracts are analyzed on the basis of the circum-
in accordance with the transaction price requirements of
stances and indicators set out in IAS 17 in order to deter-
IFRS 15, and the net book value of the derecognized assets.
mine whether they constitute operating leases or finance
Transfers are made to (or from) investment property only
leases in the presence of an identified asset.
when there is a change in use.
A finance lease is defined as a lease that transfers substan-
tially all the risks and rewards incidental to ownership of
the related asset to the lessee. All leases that do not meet
Intangible assets
the definition of a finance lease are classified as operating
Intangible assets are identifiable assets without physical
leases.
substance controlled by the entity and capable of generating
On initial recognition assets held under finance leases are
future economic benefits. They are measured at purchase
recognized as property, plant and equipment and the related
or internal development cost when it is probable that the
liability is recognized under long-term borrowings. At incep-
use of such assets will generate future economic benefits
tion date finance leases are recognized at the lower of the
and the related cost can be reliably determined.
207
Consolidated financial statements The cost includes any directly attributable expenses neces-
sary to make the assets ready for their intended use.
Internal development costs are recognized as an intangible
asset when both the Group is reasonably assured of the
technical feasibility of completing the intangible asset, that
Development costs:
- internally generated
- acquired
Industrial patents and intellectual property
rights:
it has intention and ability to complete the asset and use
- internally generated
or sell it and that the asset will generate future economic
- acquired
benefits.
Research costs are recognized as expenses.
Concessions, licenses, trademarks and similar
rights:
Intangible assets with a finite useful life are reported net of
- internally generated
accumulated amortization and any impairment losses.
- acquired
Amortization is calculated on a straight-line basis over the
item’s estimated useful life, which is reassessed at least
Intangible assets from service concession
arrangements:
annually; any changes in amortization policies are reflected
- internally generated
on a prospective basis. Amortization commences when the
asset is ready for use. Consequently, intangible assets not
- acquired
Other:
yet available for use are not amortized, but are tested for
- internally generated
impairment at least annually.
- acquired
The Group’s intangible assets have a definite useful life, with
2-26 years
3-26 years
3-10 years
2-50 years
20 years
1-40 years
-
5 years
2-28 years
1-28 years
the exception of a number of concessions and goodwill.
The Group also presents capitalized costs to obtain a con-
Intangible assets with indefinite useful life are not amor-
tract with a customer within the scope of IFRS 15 in this
tized, but are tested for impairment annually.
item.
The assessment of indefinite life is reviewed annually to de-
The Group recognized such costs as an asset only if:
termine whether the indefinite life continues to be support-
> the costs are incremental, that is the Group would not
able. If not, the change in useful life from indefinite to finite
have incurred them if the contract had not been obtained;
is accounted for as a change in accounting estimate.
> the Group expects to recover them.
Intangible assets are derecognized either at the time of their
In particular, the Group generally capitalizes trade fees and
disposal (at the date when the recipient obtains control) or
commissions paid to agents for such contracts if the capital-
when no future economic benefit is expected from their use
ization criteria are met.
or disposal. Any gain or loss, recognized through profit or
Capitalized contract costs are amortized on a systematic ba-
loss, is calculated as the difference between the net consid-
sis, consistent with the pattern of the transfer of the goods
eration received in the disposal, determined in accordance
or services to which they relate, and are subject to an impair-
with the provisions of IFRS 15 concerning the transaction
ment assessment to recognize impairment losses in profit
price, and the net book value of the derecognized assets.
or loss to the extent that the carrying amount of the asset
The estimated useful life of the main intangible assets, dis-
recognized exceeds the recoverable amount.
tinguishing between internally generated and acquired as-
The Group amortizes the capitalized contract costs on a
sets, is as follows:
208
straight-line basis over the expected period of benefit from
the contract (i.e., the average term of the customer relation-
ship); any changes in amortization policies are reflected on a
prospective basis.
The Group does not incur any costs to fulfil a contract that
are eligible for capitalization.
Goodwill
Goodwill arises on the acquisition of subsidiaries and rep-
resents the excess of the acquisition cost, of any non-con-
trolling interest and of any previously held interest over the
Annual Report 2018 acquisition date fair value of the acquiree’s assets, liabilities
If the reasons for a previously recognized impairment loss
and identifiable contingent liabilities. After initial recogni-
no longer obtain, the carrying amount of the asset is re-
tion, goodwill is not amortized, but is tested for recover-
stored through profit or loss, under “Depreciation, amorti-
ability at least annually using the criteria described in the
zation and impairment losses”, in an amount that shall not
paragraph “Impairment of non-financial assets”. For the
exceed the net carrying amount that the asset would have
purpose of impairment testing, goodwill is allocated, from
had if the impairment loss had not been recognized and
the acquisition date, to each of the cash generating units
depreciation or amortization had been performed. The origi-
identified.
nal value of goodwill is not restored even if in subsequent
Goodwill relating to equity investments in associates and
years the reasons for the impairment no longer obtain.
joint ventures is included in their carrying amount.
The recoverable amount of goodwill and intangible assets
Impairment of non-financial assets
with an indefinite useful life and intangible assets not yet
available for use is tested for recoverability annually or
more frequently if there is evidence suggesting that the
At each reporting date, non-financial assets are reviewed to
assets may be impaired.
determine whether there is evidence of impairment. If such
evidence exists, the recoverable amount of any involved as-
set is estimated. The recoverable amount is the higher of an
asset’s fair value less costs of disposal and its value in use.
In order to determine the recoverable amount of property,
If certain specific identified assets owned by the Group are
impacted by adverse economic or operating conditions that
undermine their capacity to contribute to the generation of
cash flows, they can be isolated from the rest of the assets
of the CGU, undergo separate analysis of their recoverabil-
plant and equipment, investment property, intangible assets
ity and are impaired where necessary.
and goodwill, the Group generally adopts the value-in-use
criterion.
The value in use is represented by the present value of the
Inventories
estimated future cash flows generated by the asset in ques-
Inventories are measured at the lower of cost and net
tion. Value in use is determined by discounting estimated fu-
realizable value except for inventories involved in trading
ture cash flows using a pre-tax discount rate that reflects the
activities, which are measured at fair value with recogni-
current market assessment of the time value of money and
tion through profit or loss. Cost is determined on the basis
the specific risks of the asset.
of average weighted cost, which includes related ancillary
The future cash flows used to determine value in use are
charges. Net estimated realizable value is the estimated
based on the most recent Business Plan, approved by the
normal selling price net of estimated costs to sell or, where
management, containing forecasts for volumes, revenue,
applicable, replacement cost.
operating costs and investments.
For the portion of inventories held to discharge sales that
These projections cover the next five years. Consequently,
have already been made, the net realizable value is deter-
cash flows related to subsequent periods are determined on
mined on the basis of the amount established in the con-
the basis of a long-term growth rate that does not exceed
tract of sale.
the average long-term growth rate for the particular sector
Inventories include environmental certificates (green cer-
and country.
The recoverable amount of assets that do not generate inde-
pendent cash flows is determined based on the cash-gener-
ating unit to which the asset belongs.
tificates, energy efficiency certificates and CO2 emissions
allowances) that were not utilized for compliance in the re-
porting period. As regards CO2 emissions allowances, in-
ventories are allocated between the trading portfolio and
If the carrying amount of an asset or of a cash generating
the compliance portfolio, i.e. those used for compliance
unit to which it is allocated is higher than its recoverable
with greenhouse gas emissions requirements. Within the
amount, an impairment loss is recognized in profit or loss
under “Depreciation, amortization and impairment losses”.
latter, CO2 emissions allowances are allocated to sub-port-
folios on the basis of the compliance year to which they
Impairment losses of cash generating units are firstly
have been assigned.
charged against the carrying amount of any goodwill attrib-
Inventories also include nuclear fuel stocks, use of which is
uted to it and then against the other assets, in proportion to
determined on the basis of the electricity generated.
their carrying amount.
Materials and other consumables (including energy com-
209
Consolidated financial statements modities) held for use in production are not written down
tive gains and losses upon derecognition (equity instru-
if it is expected that the final product in which they will be
ments); and
incorporated will be sold at a price sufficient to enable re-
> financial assets at fair value through profit or loss.
covery of the cost incurred.
Financial instruments
Financial assets measured at amortized
cost
This category mainly includes trade receivables, other receiv-
Financial instruments are any contract that gives rise to a
ables and financial receivables.
financial asset of one entity and a financial liability or equity
Financial assets at amortized cost are held within a business
instrument of another entity; they are recognized and mea-
model whose objective is to hold financial assets in order to
sured in accordance with IAS 32 and IFRS 9.
collect contractual cash flows and whose contractual terms
A financial asset or liability is recognized in the consolidated
give rise, on specified dates, to cash flows that are solely pay-
financial statements when, and only when, the Group be-
ments of principal and interest on the principal amount out-
comes party to the contractual provision of the instrument
standing.
(trade date).
Such assets are initially recognized at fair value, adjusted for
Trade receivables arising from contracts with customers, in
any transaction costs, and subsequently measured at amor-
the scope of IFRS 15, are initially measured at their trans-
tized cost using the effective interest method; they are sub-
action price (as defined in IFRS 15) if such receivables do
ject to impairment.
not contain a significant financing component or when the
Gains and losses are recognized in profit or loss when the as-
Group applies the practical expedient allowed by IFRS 15.
set is derecognized, modified or impaired.
Conversely, the Group initially measures financial assets
other than receivables above-mentioned at their fair value
plus, in the case of a financial asset not at fair value through
profit or loss, transaction costs.
Financial assets are classified, at initial recognition, as fi-
Financial assets at fair value through other
comprehensive income (FVOCI) -
debt instruments
This category mainly includes listed debt securities not clas-
nancial assets at amortized cost, at fair value through other
sified as held for trading by the Group reinsurance company.
comprehensive income and at fair value through profit or
Financial assets at fair value through other comprehensive
loss, on the basis of both Group’s business model and the
income are assets held within a business model whose ob-
contractual cash flow characteristics of the instrument.
jective is achieved by both collecting contractual cash flows
For this purposes, the assessment to determine wheth-
and selling financial assets and whose contractual cash flows
er the instrument gives rise to cash flows that are solely
give rise, on specified dates, to cash flows that are solely pay-
payments of principal and interest (SPPI) on the principal
ments of principal and interest on the principal amount out-
amount outstanding is referred to as the SPPI test and is
standing.
performed at an instrument level.
Changes in fair value for these financial assets are recognized
The Group’s business model for managing financial assets
in other comprehensive income as well as loss allowances
refers to how it manages its financial assets in order to gen-
that do not reduce the carrying amount of the financial assets.
erate cash flows. The business model determines whether
When a financial asset is derecognized (e.g. at the time of
cash flows will result from collecting contractual cash flows,
sale), the cumulative gains and losses previously recognized
selling the financial assets, or both.
in equity (except impairment and foreign exchange gains and
For purposes of subsequent measurement, financial assets
losses to be recognized in profit or loss) are reversed to the
are classified in four categories:
income statement.
> financial assets measured at amortized cost (debt instru-
ments);
> financial assets at fair value through other comprehen-
sive income with recycling of cumulative gains and loss-
es (debt instruments);
Financial assets at fair value through other
comprehensive income (FVOCI) -
equity instruments
This category includes mainly equity investments in un-
> financial assets designated at fair value through other
listed entities irrevocably designated as such upon initial
comprehensive income with no recycling of cumula-
recognition.
210
Annual Report 2018 Gains and losses on these financial assets are never recy-
In compliance with IFRS 9, as from January 1, 2018, the
cled to profit or loss. The Group may transfer the cumulative
Group adopted a new impairment model based on the
gain or loss within equity.
determination of expected credit losses (ECL) using a for-
Equity instruments designated at fair value through other com-
ward-looking approach. In essence, the model provides for:
prehensive income are not subject to impairment assessment.
> the application of a single framework for all financial as-
Dividends on such investments are recognized in profit or
sets;
loss unless they clearly represents a recovery of a part of the
> the recognition of expected credit losses on an ongoing
cost of the investment.
Financial assets at fair value through
profit or loss
This category mainly includes: securities, equity investments
basis and the updating of the amount of such losses at
the end of each reporting period, reflecting changes in
the credit risk of the financial instrument;
> the measurement of expected losses on the basis of
reasonable information, obtainable without undue cost,
in other entities, financial investment in fund held for trading
about past events, current conditions and forecasts of
and financial assets designated as at fair value through profit
future conditions.
or loss at initial recognition.
For trade receivables, contract assets and lease receivables,
Financial assets at fair value through profit or loss are:
including those with a significant financial component, the
> financial assets with cash flows that are not solely pay-
Group adopts the simplified approach, determining expect-
ments of principal and interest, irrespective of the busi-
ed credit losses over a period corresponding to the entire
ness model;
life of the receivable, generally equal to 12 months.
> financial assets held for trading because acquired or in-
For all financial assets other than trade receivables, contract
curred principally for the purpose of selling or repurchasing
assets and lease receivables, the Group applies the gen-
in the short term;
eral approach under IFRS 9, based on the assessment of
> debt instruments designated upon initial recognition, un-
a significant increase in credit risk since initial recognition.
der the option allowed by IFRS 9 (fair value option) if do-
Under such approach, a loss allowance on financial assets
ing so eliminates, or significantly reduces, an accounting
is recognized at an amount equal to the lifetime expected
mismatch;
credit losses, if the credit risk on those financial assets has
> derivatives, including separated embedded derivatives,
increased significantly, since initial recognition, considering
held for trading or not designated as effective hedging in-
all reasonable and supportable information, including also
struments.
forward-looking inputs.
Such financial assets are initially recognized at fair value with
If at the reporting date the credit risk on financial assets
subsequent gains and losses from changes in their fair value
has not increased significantly since initial recognition, the
recognized through profit or loss.
Group measures the loss allowance for those financial as-
This category include also listed equity investments which
sets at an amount equal to 12-month expected credit loss-
the Group had not irrevocably elected to classify at fair value
es.
through other comprehensive income. Dividends on listed
For financial assets on which loss allowance equal to life-
equity investments are also recognized as other income in
time expected credit losses has been recognized in the
the income statement when the right of payment has been
previous reporting date, the Group measures the loss al-
established.
lowance at an amount equal to 12-month expected credit
Financial assets that qualify as contingent consideration are
losses when significant increase in credit risk condition is
also measured at fair value through profit or loss.
no longer met.
Impairment of financial assets
At the end of each reporting date, the Group recognizes a
The Group recognizes in profit or loss, as impairment gain
or loss, the amount of expected credit losses (or reversal)
that is required to adjust the loss allowance at the reporting
loss allowance for expected credit losses on trade receiv-
date to the amount that is required to be recognized in ac-
ables and other financial assets measured at amortized
cordance with IFRS 9.
cost, debt instruments measured at fair value through other
The Group applies the low credit risk exemption, avoiding
comprehensive income, contract assets and all other assets
the recognition of loss allowances at an amount equal to
in the scope.
lifetime expected credit losses due to significant increase
211
Consolidated financial statements in credit risk, to debt securities at fair value through other
value through profit or loss, upon initial recognition.
comprehensive income, whose counterparty has a strong
Financial liabilities that qualify as contingent consideration
financial capacity to meet its contractual cash flow obliga-
are also measured at fair value through profit or loss.
tions (e.g. investment grade).
Cash and cash equivalents
This category includes deposits that are available on demand
Derecognition of financial assets and
liabilities
Financial assets are derecognized whenever one of the fol-
or at very short term, as well as highly short-term liquid fi-
lowing conditions is met:
nancial investments that are readily convertible into a known
> the contractual right to receive the cash flows associated
amount of cash and which are subject to insignificant risk of
with the asset expires;
changes in value.
> the Group has transferred substantially all the risks and re-
In addition, for the purpose of the consolidated statement of
wards associated with the asset, transferring its rights to
cash flows, cash and cash equivalents do not include bank
receive the cash flows of the asset or assuming a contrac-
overdrafts at period-end.
Financial liabilities at amortized cost
This category mainly includes borrowings, trade payables,
tual obligation to pay such cash flows to one or more ben-
eficiaries under a contract that meets the requirements
provided by IFRS 9 (the “pass through test”);
> the Group has not transferred or retained substantially all
finance leases and debt instruments.
the risks and rewards associated with the asset but has
Financial liabilities, other than derivatives, are recognized
transferred control over the asset.
when the Group becomes a party to the contractual clauses
Financial liabilities are derecognized when they are extin-
of the instrument and are initially measured at fair value ad-
guished, i.e. when the contractual obligation has been dis-
justed for directly attributable transaction costs. Financial li-
charged, cancelled or expired.
abilities are subsequently measured at amortized cost using
When an existing financial liability is replaced by another
the effective interest rate method.
from the same lender on substantially different terms, or the
Financial liabilities at fair value through
profit or loss
Financial liabilities at fair value through profit or loss include
terms of an existing liability are substantially modified, such
an exchange or modification is treated as the derecognition
of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recog-
financial liabilities held for trading and financial liabilities des-
nized in profit or loss.
ignated upon initial recognition as at fair value through profit
or loss.
Financial liabilities are classified as held for trading if they are
Derivative financial instruments
A derivative is a financial instrument or another contract:
incurred for the purpose of repurchasing in the near term.
> whose value changes in response to the changes in an
This category also includes derivative financial instruments
underlying variable such as an interest rate, commodity or
entered into by the Group that are not designated as hedg-
security price, foreign exchange rate, a price or rate index,
ing instruments in hedge relationships as defined by IFRS 9.
a receivable rating or other variable;
Separated embedded derivatives are also classified as at fair
> that requires no initial net investment, or one that is small-
value through profit or loss unless they are designated as
er than would be required for a contract with similar re-
effective hedging instruments.
sponse to changes in market factors;
Gains or losses on liabilities at fair value through profit or loss
> that is settled at a future date.
are recognized in profit or loss.
Derivative instruments are classified as financial assets or
Financial liabilities designated upon initial recognition at fair
liabilities depending on the positive or negative fair value and
value through profit or loss are designated at the initial date
they are classified as “held for trading” within “Other busi-
of recognition, only if the criteria in IFRS 9 are satisfied.
ness models” and measured at fair value through profit or
In this case, the portion of the change in fair value attribut-
loss, except for those designated as effective hedging instru-
able to own credit risk is recognized in other comprehensive
ments.
income.
For more details about hedge accounting, please refer to the
The Group has not designated any financial liability as at fair
note 46 “Derivatives and hedge accounting”.
212
Annual Report 2018 All derivatives held for trading are classified as current assets
or liabilities.
Derivatives not held for trading purposes, but measured at
fair value through profit or loss since they do not qualify for
hedge accounting, and derivative designated as effective
hedging instruments are classified as current or non-current
on the basis of their maturity date and the Group intention to
hold the financial instrument till maturity or not.
Embedded derivatives
An embedded derivative is a derivative included in a “com-
bined” contract (the so-called “hybrid instrument”) that con-
tains another non-derivative contract (the so-called host con-
tract) and gives rise to some or all of the combined contract’s
cash flows.
The main Group contracts that may contain embedded de-
rivatives are contracts to buy or sell non-financial items with
clauses or options that affect the contract price, volume or
maturity.
A derivative embedded in a hybrid contract containing a
financial asset host is not accounted for separately. The fi-
nancial asset host together with the embedded derivative is
required to be classified in its entirety as a financial asset at
fair value through profit or loss.
Contracts that do not represent financial instruments to
be measured at fair value are analyzed in order to identify
any embedded derivatives, which are to be separated and
measured at fair value. This analysis is performed when the
Group becomes party to the contract or when the contract
is renegotiated in a manner that significantly changes the
original associated cash flows.
Embedded derivatives are separated from the host contract
and accounted for as derivatives when:
> the host contract is not a financial instrument measured at
fair value through profit or loss;
> the economic risks and characteristics of the embedded
derivative are not closely related to those of the host con-
tract;
> a separate contract with the same terms as the embed-
ded derivative would meet the definition of a derivative.
Embedded derivatives that are separated from the host con-
tract are recognized in the consolidated financial statements
at fair value with changes recognized in profit or loss (except
when the embedded derivative is part of a designated hedg-
ing relationship).
Contracts to buy or sell non-financial
items
In general, contracts to buy or sell non-financial items that
are entered into and continue to be held for receipt or de-
livery in accordance with the Group’s normal expected pur-
chase, sale or usage requirements are out of the scope of
IFRS 9 and then recognized as executory contracts, accord-
ing to the “own use exemption”.
Such contracts are recognized as derivatives and, as a conse-
quence, at fair value through profit or loss only if:
> they can be settled net in cash; and
> they are not entered into in accordance with the Group’s
expected purchase, sale or usage requirements.
A contract to buy or sell non-financial items is classified as
“normal purchase or sale” if it is entered into:
> for the purpose of the physical delivery;
> in accordance with the entity’s expected purchase, sale or
usage requirements.
The Group analyses all contracts to buy or sell non-financial
assets, with a specific focus on forward purchases and sales
of electricity and energy commodities, in order to determine
if they shall be classified and treated according to IFRS 9 or
if they have been entered into for “own use”.
Offsetting financial assets and liabilities
The Group offsets financial assets and liabilities when:
> there is a legally enforceable right to set off the recog-
nized amounts, and
> there is the intention of either to settle on a net basis, or
to realize the asset and settle the liability simultaneously.
Hyperinflation
In a hyperinflationary economy, the Group adjusts non-mon-
etary items, shareholders’ equity and items deriving from
index-linked contracts up to the limit of recoverable value,
using a price index that reflects changes in general purchas-
ing power.
The effects of initial application are recognized in equity net
of tax effects. Conversely, during the hyperinflationary period
(until it ceases), the result (gain or loss) of adjustments is rec-
ognized in profit or loss and disclosed separately in financial
income and expense.
Starting from current year, this standard applies to the
Group’s transactions in Argentina, whose economy has
been declared hyperinflationary from July 1, 2018. Accord-
ingly, and based on the application of IAS 29, the Group has
213
Consolidated financial statements recognized the effects arising from the adoption of this stan-
dard from the beginning of the year (January 1, 2018).
Termination benefits
Employee benefits
Liabilities for benefits due to employees for the early termi-
nation of the employment relationship, both for a Group’s
decision both for an employee’s decision to accept volun-
Liabilities related to employee benefits paid upon or after
tary redundancy in exchange for these benefits, are recog-
ceasing employment in connection with defined benefit
nized at the earlier of the following dates:
plans or other long-term benefits accrued during the em-
> when the entity can no longer withdraw its offer of ben-
ployment period are determined separately for each plan,
efits; and
using actuarial assumptions to estimate the amount of the
> when the entity recognizes a cost for a restructuring that
future benefits that employees have accrued at the balance
is within the scope of IAS 37 and involves the payment of
sheet date (the projected unit credit method). More specifi-
termination benefits.
cally, the present value of the defined benefit obligation is
The liabilities are measured on the basis of the nature of
calculated by using a discount rate determined on the basis
the employee benefits. More specifically, when the benefits
of market yields at the end of the reporting period on high-
represent an enhancement of other post-employment ben-
quality corporate bonds. If there is no deep market for high-
efits, the associated liability is measured in accordance with
quality corporate bonds in the currency in which the bond is
the rules governing that type of benefits. Otherwise, if the
denominated, the corresponding yield of government securi-
termination benefits due to employees are expected to be
ties is used.
settled wholly before twelve months after the end of the
The liability is recognized on an accruals basis over the vest-
annual reporting period, the entity measures the liability in
ing period of the related rights. These appraisals are per-
accordance with the requirements for short-term employee
formed by independent actuaries.
benefits; if they are not expected to be settled wholly before
If the value of plan assets exceeds the present value of the
twelve months after the end of the annual reporting period,
related defined benefit obligation, the surplus (up to the limit
the entity measures the liability in accordance with the re-
of any cap) is recognized as an asset.
quirements for other long-term employee benefits.
As regards the liabilities/(assets) of defined benefit plans, the
cumulative actuarial gains and losses from the actuarial mea-
surement of the liabilities, the return on the plan assets (net
Provisions for risks and charges
of the associated interest income) and the effect of the asset
Provisions are recognized where there is a legal or con-
ceiling (net of the associated interest income) are recognized
structive obligation as a result of a past event at the end of
in other comprehensive income when they occur. For other
the reporting period, the settlement of which is expected
long-term benefits, the related actuarial gains and losses are
to result in an outflow of resources whose amount can be
recognized through profit or loss.
reliably estimated. Where the impact is significant, the ac-
In the event of a change being made to an existing defined
cruals are determined by discounting expected future cash
benefit plan or the introduction of a new plan, any past ser-
flows using a pre-tax discount rate that reflects the current
vice cost is recognized immediately in profit or loss.
market assessment of the time value of money and, if ap-
Employees are also enrolled in defined contribution plans un-
plicable, the risks specific to the liability.
der which the Group pays fixed contributions to a separate
If the provision is discounted, the periodic adjustment of
entity (a fund) and has no legal or constructive obligation to
the present value for the time factor is recognized as a fi-
pay further contributions if the fund does not hold sufficient
nancial expense.
assets to pay all employee benefits relating to employee ser-
When the Group expects some or all of a provision to be re-
vice in the current and prior periods. Such plans are usually
imbursed, the reimbursement is recognized as a separate
aimed to supplement pension benefits due to employees
asset, but only when the reimbursement is virtually certain.
post-employment. The related costs are recognized in in-
Where the liability relates to decommissioning and/or site
come statement on the basis of the amount of contributions
restoration in respect of property, plant and equipment, the
paid in the period.
214
initial recognition of the provision is made against the re-
lated asset and the expense is then recognized in profit or
loss through the depreciation of the asset involved.
Annual Report 2018 Where the liability regards the treatment and storage of
carrying amount of the assets is fully recoverable. If this is
nuclear waste and other radioactive materials, the provision
not the case, a loss equal to the unrecoverable amount is
is recognized against the related operating costs.
recognized in the income statement.
The Group could provide a warranty in connection with the
Decreases in estimates are recognized up to the carrying
sale of a product (whether a good or service) from con-
amount of the assets. Any excess is recognized immedi-
tracts with customers in the scope of IFRS 15, in accor-
ately in the income statement.
dance with the contract, the law or its customary business
For more information on the estimation criteria adopted in
practices. In this case, the Group assesses whether the
determining provisions for dismantling and/or restoration of
warranty provides the customer with assurance that the re-
property, plant and equipment, especially those associated
lated product will function as the parties intended because
with nuclear power plants, please see the section on the
it complies with agreed-upon specifications or whether the
use of estimates.
warranty provides the customer with a service in addition
to the assurance that the product complies with agreed-
upon specifications.
Government grants
After the assessment, if the Group establishes that an as-
surance warranty is provided, it recognizes a separate war-
ranty liability and corresponding expense when transferring
the product to the customer, as additional costs of provid-
ing goods or services, without attributing any of the trans-
Government grants, including non-monetary grants at fair
value, are recognized where there is reasonable assurance
that they will be received and that the Group will comply
with all conditions attaching to them as set by the govern-
ment, government agencies and similar bodies whether lo-
action price (and therefore revenue) to the warranty. The
cal, national or international.
liability is measured and presented as a provision.
Otherwise, if the Group determines that a service warranty
is provided, it accounts for the promised warranty as a per-
formance obligation in accordance with IFRS 15, recogniz-
ing the contract liability as revenue over the period the war-
ranty service is provided and the costs associated as they
are incurred.
Finally, if the warranty includes both an assurance element
and a service element and the Group cannot reasonably ac-
count for them separately, then it accounts for both of the
When loans are provided by governments at a below-mar-
ket rate of interest, the benefit is regarded as a government
grant. The loan is initially recognized and measured at fair
value and the government grant is measured as the differ-
ence between the initial carrying amount of the loan and
the funds received. The loan is subsequently measured in
accordance with the requirements for financial liabilities.
Government grants are recognized in profit or loss on a
systematic basis over the periods in which the Group rec-
ognizes as expenses the costs that the grants are intended
warranties together as a single performance obligation.
to compensate.
In the case of contracts in which the unavoidable costs of
meeting the obligations under the contract exceed the eco-
nomic benefits expected to be received under it (onerous
contracts), the Group recognizes a provision as the lower of
Where the Group receives government grants in the form
of a transfer of a non-monetary asset for the use of the
Group, it accounts for both the grant and the asset at the
fair value of the non-monetary asset received at the date
the costs of fulfilling the obligation that exceed the economic
of the transfer.
benefits expected to be received under the contract and any
compensation or penalty arising from failure to fulfil it.
Changes in estimates of accruals to the provision are rec-
ognized in the income statement in the period in which the
changes occur, with the exception of those in respect of
the costs of decommissioning, dismantling and/or resto-
Grants related to long-lived assets, including non-monetary
grants at fair value, i.e. those received to purchase, build or
otherwise acquire non-current assets (for example, an item
of property, plant and equipment or an intangible asset), are
recognized on a deferred basis under other liabilities and
are credited to profit or loss on a straight-line basis over the
ration resulting from changes in the timetable and costs
useful life of the asset.
necessary to extinguish the obligation or from a change in
the discount rate. These changes increase or decrease the
value of the related assets and are taken to the income
statement through depreciation. Where they increase the
value of the assets, it is also determined whether the new
Environmental certificates
Some Group companies are affected by national regulations
governing green certificates and energy efficiency certifi-
215
Consolidated financial statements cates (so-called white certificates), as well as the European
The Group applies these classification criteria as envisaged
“Emissions Trading System”.
in IFRS 5 to an investment, or a portion of an investment, in
Green certificates, which now only exist outside of Italy, ac-
an associate or a joint venture. Any retained portion of an in-
crued in proportion to electricity generated by renewable
vestment in an associate or a joint venture that has not been
energy plants and energy efficiency certificates accrued in
classified as held for sale is accounted for using the equity
proportion to energy savings achieved that have been certi-
method until disposal of the portion that is classified as held
fied by the competent authority are treated as non-mone-
for sale takes place.
tary government operating grants and are recognized at fair
Non-current assets (or disposal groups) and liabilities of dis-
value, under other revenue and income, with recognition of
posal groups classified as held for sale are presented sepa-
an asset under other non-financial assets, if the certificates
rately from other assets and liabilities in the balance sheet.
are not yet credited to the ownership account, or under in-
The amounts presented for non-current assets or for the as-
ventories, if the certificates have already been credited to
sets and liabilities of disposal groups classified as held for
that account. At the time the certificates are credited to the
sale are not reclassified or re-presented for prior periods pre-
ownership account, they are reclassified from other assets
sented.
to inventories.
Immediately before the initial classification of non-current
Revenue from the sale of such certificates are recognized un-
assets (or disposal groups) as held for sale, the carrying
der revenue, with a corresponding decrease in inventories.
amounts of such assets (or disposal groups) are measured
For the purposes of accounting for charges arising from reg-
in accordance with the IFRS-EU applicable to the specific
ulatory requirements concerning green certificates, energy
assets or liabilities. Non-current assets (or disposal groups)
efficiency certificates and CO2 emissions allowances, the
Group uses the “net liability approach”.
classified as held for sale are measured at the lower of their
carrying amount and fair value less costs to sell. Impairment
Under this accounting policy, environmental certificates re-
losses for any initial or subsequent writedown of the assets
ceived free of charge and those self-produced as a result of
(or disposal groups) to fair value less costs to sell and gains
Group’s operations that will be used for compliance purpos-
for their reversals are included in profit or loss from continu-
es are recognized at nominal value (nil). In addition, charges
ing operations.
incurred for obtaining (in the market or in some other trans-
Non-current assets are not depreciated (or amortized) while
action for consideration) any missing certificates to fulfil
they are classified as held for sale or while they are part of a
compliance requirements for the reporting period are recog-
disposal group classified as held for sale.
nized through profit or loss on an accruals basis under other
If the classification criteria are no longer met, the Group
operating expenses, as they represent “system charges”
ceases to classify non-current assets (or disposal group) as
consequent upon compliance with a regulatory requirement.
held for sale. In that case they are measured at the lower of:
Non-current assets (or disposal
groups) classified as held for sale
and discontinued operations
> the carrying amount before the asset (or disposal group)
was classified as held for sale, adjusted for any deprecia-
tion, amortization or revaluations that would have been
recognized if the asset (or disposal group) had not been
classified as held for sale; and
Non-current assets (or disposal groups) are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction, rather than through continuing use.
> the recoverable amount, which is equal to the greater of
its fair value net of costs of disposal and its value in use,
as calculated at the date of the subsequent decision not
This classification criteria is applicable only when non-current
to sell.
assets (or disposal groups) are available in their present con-
dition for immediate sale and the sale is highly probable.
Any adjustment to the carrying amount of a non-current as-
set that ceases to be classified as held for sale is included in
If the Group is committed to a sale plan involving loss of con-
profit or loss from continuing operations.
trol of a subsidiary and the requirements provided for under
IFRS 5 are met, all the assets and liabilities of that subsidiary
A discontinued operation is a component of the Group that
either has been disposed of, or is classified as held for sale,
are classified as held for sale when the classification criteria
and:
are met, regardless of whether the Group will retain a non-
> represents a separate major line of business or geographi-
controlling interest in its former subsidiary after the sale.
cal area of operations;
216
Annual Report 2018 > is part of a single coordinated plan to dispose of a separate
-
the practices and processes for establishing contracts
major line of business or geographical area of operations; or
with customers vary across legal jurisdictions, indus-
> is a subsidiary acquired exclusively with a view to resale.
tries and entities. In addition, they may vary within the
The Group presents, in a separate line item of the income
Group (for example, they may depend on the class of
statement, a single amount comprising the total of:
customer or the nature of the promised goods or ser-
> the post-tax profit or loss of discontinued operations; and
vices);
> the post-tax gain or loss recognized on the measurement
-
the Group considers those practices and processes in
to fair value less costs to sell or on the disposal of the
determining whether and when an agreement with a
assets or disposal groups constituting the discontinued
customer creates enforceable rights and obligations.
operation.
If the criteria are not met, any consideration received
The corresponding amount is re-presented in the income
from the customer is generally recognized as an advance;
statement for prior periods presented in the financial state-
> identify the performance obligations in the contract (step 2).
ments, so that the disclosures relate to all operations that
The Group identifies all goods or services promised in the
are discontinued by the end of the current reporting period.
contract, separating them into performance obligations to
If the Group ceases to classify a component as held for sale,
account for separately if they are both: capable of being
the results of the component previously presented in dis-
distinct and distinct in the context of the contract.
continued operations are reclassified and included in income
As an exception, the Group accounts for a single perfor-
from continuing operations for all periods presented.
mance obligation a series of distinct goods or services
Revenue
The Group revenue mainly arises from contracts with cus-
that are substantially the same and that have the same
pattern of transfer to the customer over time.
In assessing the existence and the nature of the perfor-
mance obligations, the Group considers all contract’s fea-
tomers in the scope of IFRS 15. The Group recognizes such
tures as mentioned in step 1.
revenue to depict the transfer of promised goods or services
to the customers at an amount that reflects the consider-
ation at which the Group expects to be entitled in exchange
for those goods or services.
The Group applies this core principle using a five-step model:
> identify the contract with the customer (step 1).
The Group applies IFRS 15 to contracts with customers
in the scope of the standard when the contract is legally
enforceable and all the following criteria are met:
-
the contract is approved and the parties are committed
For each distinct good or service identified, the Group de-
termines whether it acts as a principal or agent, respec-
tively, if it controls or not the specified good or service that
is promised to the customer before its control is trans-
ferred to the customer. Some indicators of controls are
(a) having primary responsibility to provide the goods or
services, (b) assuming inventory risk and (c) having discre-
tion to establish prices for the goods or services. When
the Group acts as agent, it recognizes revenue on a net
basis, corresponding to any fee or commission to which it
to their obligations;
expects to be entitled;
-
rights to goods or services and payment terms can be
> determine the transaction price (step 3).
identified;
-
-
the contract has commercial substance;
the consideration the Group expects to be entitled to is
probable of collection.
In order to assess such identification criteria, the Group
considers all facts and circumstances, including the fol-
lowing features:
- a contract is an agreement between two or more par-
ties that creates enforceable rights and obligations;
- enforceability of the rights and obligations in a contract
is a matter of law;
The transaction price represents the amount of consid-
eration to which the Group expects to be entitled in ex-
change for transferring promised goods or services to a
customer, excluding amounts collected on behalf of third
parties (e.g., some sale taxes and value-added taxes).
The Group determines the transaction price at inception of
the contract (using the legally enforceable contract terms
and not taking into consideration the possibility of a con-
tract being cancelled, renewed or modified) and updates it
each reporting period for any changes in circumstances.
When the Group determines the transaction price, it con-
- contract can be written, oral or implied by the Group’s
siders if the transaction price includes:
customary business practices;
- variable consideration, if the consideration to which the
217
Consolidated financial statements
Group is entitled under the contract may vary or if the
ability to direct the use of, and obtain substantially all of
stated price in the contract is fixed but the Group is
the remaining benefits from the goods or services or
entitled to the consideration only upon the occurrence
prevent others from doing so).
or non-occurrence of a future event. The amount of es-
As a first step, the Group determines if one of the over-
timated variable consideration included in the transac-
time criteria is met:
tion price is constrained to the amount for which it is
-
the customer simultaneously receives and consumes
highly probable that a significant reversal in the amount
the benefits as the Group performs;
of cumulative revenue recognized will not occur when
-
the Group’s performance creates or enhances an as-
the uncertainty is resolved;
set that the customer controls as the asset is created
- non-cash consideration received from a customer that
or enhanced; or
is measured at fair value;
-
the Group’s performance does not create an asset
- consideration payable to a customer that represents a re-
with an alternative use to the Group, and the Group
duction of the transaction price unless it is a payment for
has an enforceable right to payment for performance
distinct goods or services received from the customer;
completed to date.
- significant financing component that may exist if the
For each performance obligation satisfied over time,
timing of the payment does not match the timing of
the Group recognizes revenue over time by measuring
the transfer of goods or services to the customer. The
progress toward the complete satisfaction of that per-
Group does not consider the effects of a significant fi-
formance obligation using:
nancing component if it expects, at contract inception,
- an output method, based on direct measurement of
that the period between when it transfers a promised
the value to the customer of goods or services trans-
good or service to a customer and when the customer
ferred to date, relative to the remaining goods or ser-
pays for that good or service will be one year or less;
vices promised under the contract;
> allocate the transaction price (step 4).
- an input method, based on the Group’s efforts or in-
The Group allocates the transaction price at contract in-
puts towards satisfying a performance obligation, rela-
ception to each separate performance obligation to depict
tive to the total expected inputs to the satisfaction of
the amount of consideration to which the Group expects
that performance obligation.
to be entitled in exchange for transferring the promised
The Group consistently applies a single method of mea-
goods or services.
suring progress from contract inception until full satis-
When the contract includes a customer option to acquire
faction and to similar performance obligations and in
additional goods or services that represents a material
similar circumstances.
right (a material right exists if the customer is only able
When the Group cannot reasonably measure the prog-
to obtain the option by entering into the contract and the
ress, it recognizes revenue only to the extent of the
option provides the customer with the ability to obtain the
costs incurred that are considered recoverable.
additional goods or services at a price below stand-alone
If the performance obligation is not satisfied over time,
selling prices), the Group allocates the transaction price to
the Group determines the point in time at which control
this performance obligation (i.e. the option) and defers the
of the goods or services passes to the customer, also
relative revenue until those future goods or services are
considering the following indicators:
transferred or the option expires.
- a present obligation to pay;
The Group generally allocates the transaction price on the
- physical possession;
basis of the relative stand-alone selling price of each dis-
tinct good or service promised in the contract (that is, the
-
-
legal title;
risks and rewards of ownership; and
price at which the Group would sell that good or service
- accepted the asset.
separately to the customer);
> recognize revenue (step 5).
If the Group performs by transferring goods or services to
The Group recognizes revenue when (or as) each perfor-
a customer before the customer pays consideration or be-
mance obligation is satisfied by transferring the prom-
fore payment is due, it recognizes a contract asset relating
ised good or service to the customer, which is when the
to the right to consideration in exchange for goods or ser-
customer obtains control of the good or service (i.e., the
vices transferred to the customer.
218
Annual Report 2018
If a customer pays consideration before the Group trans-
or as costs incurred to date as a percentage of the
fers goods or services to the customer, the Group recog-
estimated total costs of the transaction. When it is
nizes a contract liability when the payment is made (or
not possible to reliably determine the value of the
the payment is due); the liability is recognized as revenue
revenue, it is recognized only to the extent of the ex-
when the Group performs under the contract.
penses recognized that are recoverable;
- under IFRS 15, it is recognized on basis of the progress
With regard to the general criteria used for the revenue
towards complete satisfaction of the performance
recognition under the previous standards, please refer to
obligation measured with an appropriate method that
the notes to financial statements at December 31, 2017.
best reflects this progress if the Group considers that
More specifically, the criteria used under IFRS 15 and pre-
the performance obligation is satisfied over time. The
vious standards for the principal transactions are summa-
cost-incurred method (cost-to-cost method) is con-
rized as below:
> revenue from the sale of goods:
sidered appropriate for measuring progress, except
when specific contract analysis suggests the use of
- under previous standards, it is recognized when the
an alternative method which better depicts satisfac-
significant risks and rewards of ownership of the
tion of the performance obligation;
goods are transferred to the customer;
> revenue from monetary and in-kind fees for connection
- under IFRS 15, it is recognized at the point in time at
to the electricity and gas distribution network:
which the customer obtains the control of goods if
- under previous standards, it is recognized in full upon
the Group considers that the sale of goods is satisfied
completion of connection activities if only the service
at a point in time;
connection is identified. If more than one separately
> revenue from the sale and transport of electricity/gas:
identifiable service is identified, the fair value of the
- under previous standards, it is recognized when
total consideration received or receivable is allocated
these commodities are delivered to the customer
to each service and the revenue related to the service
(i.e., the end user) and referred to the quantities pro-
performed in the period is recognized; in particular, if
vided during the period, even if these have not yet
any ongoing services are identified, the related reve-
been invoiced, and is determined using estimates as
nue is generally determined by the terms of the agree-
well as periodic meter readings. Where applicable,
ment with the customer or, when such an agreement
this revenue is based on the rates and related restric-
does not specify a period, over a period no longer than
tions established by law or the Regulatory Authority
the useful life of the transferred asset;
for Energy, Networks and Environment (ARERA) and
- under IFRS 15, it is recognized on basis of the sat-
analogous foreign authorities during the applicable
isfaction of the performance obligations included in
period;
the contract. The identification of distinct goods or
- under IFRS 15, the revenue recognition is generally
services requires a careful analysis of the terms and
the same but the underlying assessment is different.
conditions of the connection arrangements, which
This is a consequence of the fact that such contracts
could vary from country to country based on the local
typically include a single performance obligation (i.e.,
context, regulations and law. In order to finalize this
a series) satisfied over time for which the Group ap-
assessment, the Group considers not only the char-
plies an output method to recognize revenue in the
acteristics of the goods/services themselves (i.e., the
amount to which it has a right to invoice the customer
good or service is capable of being distinct) but also
if that amount corresponds directly with the value to
the implied promises for which the customer has a
the customer of the performance completed to date;
valid expectation as it views those promises as part of
> revenue from providing services:
the negotiated exchange, that is goods/services that
- under previous standards, it is recognized by refer-
the customer expects to receive and for which has
ence to the stage of completion of services at the
paid (i.e., the promise to transfer the good or service
end of the reporting period, that is when the services
to the customer is separately identifiable from other
are rendered. The stage of completion of the trans-
promises in the contract). For more details about this
action is determined based on service performed to
topic, please refer to the section on management
date as percentage of total services to be performed
judgments;
219
Consolidated financial statements > revenue from construction contracts:
value through profit or loss on interest rate and foreign
-
under previous standards, when the outcome can be
exchange risk;
estimated reliably and it is probable that the contract
> income and expense from fair value hedge derivatives on
will be profitable, it is recognized by reference to the
interest rate risk;
stage of completion of the contract activity at the end
> income and expense from cash flow hedge derivatives on
of the reporting period. Under this criteria, revenue
interest rate and foreign exchange risks.
and profit are attributed to the proportion of work com-
pleted.
When it is probable that total contract costs will ex-
Other financial income and expense
For all financial assets and liabilities measured at amortized
ceed total contract revenue, the expected loss on the
cost and interest-bearing financial assets classified as at fair
construction contract is recognized as an expense im-
value through other comprehensive income, interest income
mediately, regardless of the stage of completion of the
and expense is recorded using the effective interest rate
contract.
method. The effective interest rate is the rate that exactly
When the outcome of a construction contract cannot
discounts the estimated future cash payments or receipts
be estimated reliably, the contract revenue is recog-
over the expected life of the financial instrument or a shorter
nized only in an amount equal to the contract costs in-
period, where appropriate, to the net carrying amount of the
curred that are likely to be recovered.
financial asset or liability.
The stage of completion of the contract in progress
Interest income is recognized to the extent that it is probable
is determined, using the cost-to-cost method, as a ra-
that the economic benefits will flow to the Group and the
tio between costs incurred for work performed to the
amount can be reliably measured.
measurement date and the estimated total contract
Other financial income and expense include also changes in
costs. In addition to initial amount of revenue agreed in
the fair value of financial instruments other than derivatives.
the contract, contract revenue includes any payments
in respect of variations, claims and incentives, to the
extent that it is probable that they will result in revenue
Income taxes
and they are capable of being reliably measured.
The amount due from customers for contract work is
Current income taxes
Current income taxes for the period, which are recognized
presented as an asset; the amount due to customers
under “Income tax payable” net of payments on account,
for contract work is presented as a liability;
or under “Tax receivable” where there is a credit balance,
-
under IFRS 15, it is recognized over time if the Group
are determined using an estimate of taxable income and in
considers that the construction contract includes a per-
conformity with the applicable regulations.
formance obligation satisfied over time, by measuring
In particular, such payables and receivables are determined
progress toward the complete satisfaction of that per-
using the tax rates and tax laws that are enacted or sub-
formance obligation using an appropriate method that
stantively enacted by the end of the reporting period in the
better depicts this progress. The cost incurred method
countries where taxable income has been generated.
(cost-to-cost method) is considered appropriate for
Current income taxes are recognized in profit or loss with
measuring progress, except when specific contract
the exception of current income taxes related to items rec-
analysis suggests the use of an alternative method,
ognized outside profit or loss that are recognized in equity.
which better depicts the performance obligation.
The amount due from customers for contract work is
presented as a contract asset; the amount due to cus-
Deferred tax
Deferred tax liabilities and assets are calculated on the tem-
tomers for contract work is presented as a contract li-
porary differences between the carrying amounts of assets
ability.
Financial income and expense from
derivatives
Financial income and expense from derivatives includes:
and liabilities in the financial statements and their corre-
sponding values recognized for tax purposes on the basis
of tax rates in effect on the date the temporary difference
will reverse, which is determined on the basis of tax rates
that are enacted or substantively enacted as at end of the
> income and expense from derivatives measured at fair
reporting period.
220
Annual Report 2018 Deferred tax liabilities are recognized for all taxable tempo-
> “IFRS 9 - Financial instruments”, issued, in its final version,
rary differences, except when the deferred tax liability arises
on 24 July 2014, including “Amendments to IFRS 9: Pre-
from the initial recognition of goodwill or in respect of tax-
payment features with negative compensation” issued in
able temporary differences associated with investments in
October 2017 and elected by the Group to be applied start-
subsidiaries, associates and interests in joint arrangements,
ing from January 1, 2018, which replaces the current “IAS
when the Group can control the timing of the reversal of the
39 - Financial instruments: recognition and measurement”
temporary differences and it is probable that the temporary
and fully supersedes the previous version.
differences will not reverse in the foreseeable future.
> “IFRS 15 - Revenue from contracts with customers”, is-
Deferred tax assets are recognized for all deductible tempo-
sued in May 2014, including “Amendments to IFRS 15: ef-
rary differences, the carry forward of unused tax credits and
fective date of IFRS 15”, issued in September 2015, and
any unused tax losses, when recovery is probable, i.e. when
“Clarifications to IFRS 15: Revenue from contracts with
an entity expects to have sufficient future taxable income to
customers”, issued in April 2016, which provides amend-
recover the asset.
ments in the standard in order to propose some clarifica-
The recoverability of deferred tax assets is reviewed at each
tions with respect to practical expedients and some topics
period-end.
discussed by the Joint Transition Resource Group created
Unrecognized deferred tax assets are re-assessed at each
by IASB and FASB. The new standard has replaced “IAS
reporting date and they are recognized to the extent that it
11 - Construction contracts”, “IAS 18 - Revenue”, “IFRIC 13
has become probable that future taxable profits will allow
- Customer Loyalty programmes”, “IFRIC 15 - Agreements
the deferred tax asset to be recovered.
for the construction of real estate”, “IFRIC 18 - Transfers
Deferred taxes are recognized in profit or loss, with the
of assets from customers”, “SIC 31 - Revenue - Barter
exception of those in respect of items recognized outside
transactions involving advertising services” and it applies
profit or loss that are recognized in equity.
to all contracts with customers, except for some scope
Deferred tax assets and deferred tax liabilities are offset
exemptions (e.g., lease and insurance contracts, financial
against current tax liabilities related to income taxes levied
instruments, etc.).
by the same taxation authority that arise at the time of rever-
> “Amendments to IFRS 2: Classification and measurement
sal if a legally enforceable right to set-off exists.
of share-based payment transactions”, issued in June
Dividends
Dividends are recognized when the unconditional right to re-
ceive payment is established.
Dividends and interim dividends payable to a Company’s
shareholders are recognized as changes in equity in the pe-
2016. The amendments:
- clarify that the fair value of a cash-settled share-based
payment at the measuring date (i.e. when granted,
at the end of each reporting period and at the date of
settlement) is measured taking into account market
conditions (e.g. target share price) and non-vesting con-
ditions, ignoring instead service and non-market perfor-
riod in which they are approved by the Shareholders’ Meet-
mance conditions;
ing and the Board of Directors, respectively.
3
Recent accounting standards
New accounting standards applied
in 2018
The Group has applied the following standards, interpretations
- clarify that share-based payment transactions with a
net settlement feature for withholding tax obligations
would be classified as equity-settled in its entirety (as-
suming they would have been so classified without the
net settlement feature);
- provide requirements on the accounting for a modifica-
tion to the terms and conditions of a share-based pay-
ment that changes the classification of the transaction
from cash-settled to equity-settled.
The application of these amendments did not have a sig-
nificant impact in the consolidated financial statements.
> “Amendments to IFRS 4: Applying IFRS 9 - Financial in-
struments with IFRS 4 - Insurance contracts”, issued in
and amendments that took effect as from January 1, 2018:
September 2016. The amendments:
221
Consolidated financial statements - permit insurers whose activities are predominantly con-
nificant impact in the consolidated financial statements.
nected with insurance to postpone the application of
> “IAS 29 - Financial reporting in hyperinflationary econo-
IFRS 9 until 2021 (the “temporary exemption”); and
mies”, issued in July 1989; the standard essentially provides
- permit insurers, until the future issue of the new ac-
criteria for measurement, presentation and disclosure in
counting standard for insurance contracts, to recognize
the financial statements, including the consolidated finan-
the volatility that should be caused by the application
cial statements, of companies whose functional currency
of IFRS 9 in other comprehensive income (OCI), rather
is the currency of a hyperinflationary economy. Starting
than profit or loss (the “overlay approach”).
from January 1, 2018 the Group has applied the standard
The Enel Group decided to not exercise the option for the
to the financial statements of Argentine companies.
temporary exemption for the application of IFRS 9 to the
insurance sector.
> “Amendments to IAS 40: Transfers of investment proper-
Forthcoming accounting standards
ty”, issued in December 2016; the amendments clarify that
to transfer to, or from, investment properties there must
Below is a list of accounting standards, amendments and
interpretations that will be effective for the Group after De-
be a change in use. This change must be supported by
cember 31, 2018:
evidence and a simply change in intention is not enough
to support a transfer. The amendments expands the ex-
amples of change in use to include assets under construc-
tion and development and not only transfers of completed
properties. The application of these amendments did not
have an impact in the consolidated financial statements.
> “IFRS 16 - Leases”, issued on January 2016, that replaces
“IAS 17 - Leases”, “IFRIC 4 - Determining whether an ar-
rangement contains a lease”, “SIC 15 - Operating leases
- incentives” and “SIC 27 - Evaluating the substance of
transactions involving the legal form of a lease”. With the
European Regulation 2017/1986 issued on October 31,
> “IFRIC 22 - Foreign currency transactions and advance
2017 it has been endorsed the “IFRS 16 - Leases”.
consideration”, issued in December 2016; the interpreta-
tion clarifies that, for the purpose of determining the ex-
change rate to use on initial recognition of an asset, ex-
pense or income (or part of it), the date of the transaction
IFRS 16 sets out the principles for the recognition, mea-
surement, presentation and disclosure of leases and re-
quires lessees to account for all leases under a single on-
balance sheet model similar to the accounting for finance
is that on which the entity recognizes any non-monetary
leases under IAS 17.
asset or non-monetary liability arising from the payment or
receipt of advance consideration. The application of these
amendments did not have a significant impact in the con-
solidated financial statements.
> “Annual improvements to IFRSs 2014-2016 cycle”, issued
in December 2016; the document contains formal modifi-
cations and clarifications of existing standards. More spe-
cifically, the following standards were amended:
- “IFRS 1 - First-time adoption of international financial
reporting standards”; the amendments delete short-
term exemptions covering transition provisions of IFRS
7, IAS 19 and IFRS 10;
- “IAS 28 - Investments in associates and joint ven-
tures”; the amendments clarified that the option to
measure investments in associates or joint ventures at
fair value through profit or loss held by a venture capi-
tal organization (or a mutual fund, unit trust and similar
entities including investment-linked insurance) must be
At the commencement date of a lease, a lessee will rec-
ognize a liability to make lease payments (i.e., the lease
liability) and an asset representing the right to use the un-
derlying asset during the lease term (i.e., the right-of-use
asset). Lessees will be required to separately recognize
the interest expense on the lease liability and the depre-
ciation expense on the right-of-use asset.
Lessees will be also required to remeasure the lease liabil-
ity upon the occurrence of certain events (e.g., a change in
the lease term, a change in future lease payments result-
ing from a change in an index or rate used to determine
those payments). The lessee will generally recognize the
amount of the remeasurements of the lease liability as an
adjustment to the right-of-use asset.
Previously, the Group recognized operating lease expense
on a straight-line basis over the term of the lease, and rec-
ognized assets and liabilities only to the extent that there
was a timing difference between actual lease payments
elected at initial recognition separately for each associ-
and the expense recognized.
ate or joint venture.
The application of the new provisions did not have a sig-
Lessor accounting under IFRS 16 is substantially un-
changed from today’s accounting under IAS 17. Lessors
222
Annual Report 2018
will continue to classify all leases using the same classifi-
interest rate implicit in the lease cannot be readily
cation principle as in IAS 17 and distinguish between two
determined. For the transition, as permitted by the
types of leases: operating and finance leases.
standard, the Group has used the lessee’s incremen-
The standard includes two recognition exemptions for les-
tal borrowing rate (IBR) as of January 1, 2019. It is the
sees: leases of “low-value” assets (e.g., personal comput-
rate of interest that a lessee would have to pay to bor-
ers) and short-term leases (i.e., leases with a term of 12
row over a similar term, and with a similar security, the
months or less). IFRS 16 is effective for annual periods
funds necessary to obtain an asset of a similar value
beginning on or after January 1, 2019.
to the right-of-use asset in a similar economic environ-
The Group has not early adopted IFRS 16 in its consolidat-
ment. It can be determined on a contract individual
ed financial statements for the year ended December 31,
level or on a portfolio basis. One of the most signifi-
2018. In any case, in order to assess the possible impact
cant judgements the Enel Group in adopting IFRS 16
that the application of IFRS 16 will have on its financial
was determining this incremental borrowing rate nec-
statements in the period of initial application, the Group
essary to calculate the present value of the lease pay-
has set up a project team, which has reviewed all of the
ments at the transition. The Enel Group approach to
group’s lease arrangements in light of the new lease ac-
determining this incremental borrowing rate is based
counting rules in IFRS 16. In particular, the Group has iden-
on the assessment of the risk-free rate, which con-
tified a specific IT system tool in order to manage the new
siders contractual cash flows, the lease term and the
accounting requirement and has reviewed its accounting
economic environment where the lease contract has
process in order to be compliant to the new accounting
been negotiated and any credit spread adjustment, in
framework.
order to calculate an IBR that is specific for the les-
As a preliminary result of the project team, the Group has
see. This rate has been adjusted where appropriate
assessed the estimated impacts that initial application of
for leased assets whose intrinsic value would mitigate
IFRS 16 will have on its consolidated financial statements,
the risk of default for the lessor.
as described below.
The Group elected to use the exemptions proposed
The new accounting standard will impact substantially all
by the standard on lease contracts for which the lease
of the Group entities having a lease contracts. The main
terms ends within 12 months as of the date of initial
topics arisen are those represented by the lease of land
application, and lease contracts for which the underly-
and building, cars and other means of transportation and
ing asset is of low value whose amount is estimated as
other technical machinery.
not material. For example, the Group has leases for cer-
The complexity of the assessment of the lease contracts
and photocopying machines) that are considered of low
tain office equipment (i.e., personal computers, printing
and their long-term expiration date has required consid-
value.
erable professional judgements in order to estimate the
For the transition of the new accounting standard, the
potential impacts of the new accounting standard. In par-
Group elected to use the following practical expedients:
ticular, the main assumptions used are:
-
to apply the standard to contracts that were previously
-
the identification of the non-lease component in the
identified as leases applying IAS 17 and IFRIC 4;
lease arrangements;
-
to use the modified retrospective approach, the Group
-
the evaluation of any renewable option included into
recognized the cumulative effect of adopting IFRS 16
the lease arrangements identified, also considering the
as an adjustment to the opening balance of retained
probability of the exercise of any eventual termination
earnings at January 1, 2019, with no restatement of
option;
comparative information;
-
the identification of any variable lease payments that
-
to measure the lease liability at the present value of the
depend on an index or a rate to determine where those
remaining lease payments, the discount rate was rep-
changes impacts the future lease payments and also
resented by the incremental borrowing rate of the Enel
the amount of the right-of-use asset;
Group entity’s lessee as of January 1, 2019;
-
the estimate of the discount rate to calculate the pres-
-
to mainly recognize a right-of-use asset at the date
ent value of the lease payments. This is equal to the
of initial application for an amount equal to the lease
incremental borrowing rate of the lessee when the
liability, adjusted by the amount of any prepaid or ac-
223
Consolidated financial statements crued lease payments relating to that lease recog-
The Group is assessing the potential impact of the future
nized in the balance sheet immediately before the
application of the new provisions.
date of initial application;
> “Amendments to IFRS 10 and IAS 28 - Sale or contribution
-
to rely on its assessment of whether right-of-use as-
of assets between an investor and its associate or joint
sets are recoverable at January 1, 2019 on the basis of
venture”, issued in September 2014. The amendments
the assessment of whether the leases are onerous in
clarify the accounting treatment for sales or contribution
accordance with IAS 37.
of assets between an investor and its associates or joint
Based on the information currently available, the Group
ventures. They confirm that the accounting treatment de-
has estimated that it will recognize additional lease liabili-
pends on whether the assets sold or contributed to an as-
ties of €1.4 billion as at January 1, 2019.
sociate or joint venture constitute a “business” (as defined
In particular, these additional lease liabilities mainly regard
in IFRS 3). Where the assets constitute a business, the
the right-of-use in respect of buildings and the ground
investor will recognize the full gain or loss on the sale or
lease of renewable energy plants.
contribution of assets. If the assets do not meet the defi-
A reconciliation between minimum lease payments dis-
nition of a business, the gain or loss is recognized by the
closed based on the requirements of IAS 17 and IFRS 16
investor only to the extent of unrelated investors’ interests
impacts based on the information available as at at Janu-
in the associate or joint venture. The IASB has deferred
ary 1, 2019 is provided below:
the effective date of these amendments indefinitely, but if
Billions of euros
Minimum lease payments for the lease contracts –
IAS 17
Weighted average borrowing rate
Discount impact
Lease liability under IFRS 16
2.4
6.5%
1.0
1.4
> “IFRS 17 - Insurance contracts”, issued in May 2017,
essentially sets out the principle for the recognition,
measurement, presentation and disclosure of insurance
contracts, including reinsurance contracts, an entity is-
sues and reinsurance contracts an entity holds. IFRS 17
replaces the previous standard IFRS 4 for which com-
panies were not required to account for insurance con-
tracts in one specific way. Instead, insurance contracts
were accounted for differently across jurisdictions and
may even be accounted for differently within the same
company.
The new standard:
-
requires provision of updated information about the
obligations, risks and performance of insurance con-
tracts;
-
increases transparency in financial information report-
ed by insurance companies, which will give investors
and analysts more confidence in understanding the
insurance industry; and
-
introduces consistent accounting for all insurance con-
tracts based on a current measurement model.
The standard will take effect, subject to endorsement,
for annual periods beginning on or after January 1, 2021.
the amendments are applied early, they must be applied
prospectively. The Group is assessing the potential impact
of the future application of the new provisions.
> “Amendments to IAS 1 and IAS 8 - Definition of material”,
issued in October 2018. The amendments clarify the defi-
nition of “material” as follows: “information is material if
omitting, misstating or obscuring it could reasonably be
expected to influence decisions that the primary users of
general purpose financial statements make on the basis
of those financial statements, which provide financial in-
formation about a specific reporting entity.” By including
the concept of “obscuring information” in the new defi-
nition, the amendments specifies that information is ob-
scured if it is communicated in a way that would have a
similar effect as omitting or misstating the information. In
order to avoid situations in which information that is not
capable of influencing the decisions of the primary users
is required to be included in the financial statements, the
amendments also introduce a new threshold in the defini-
tion of material by replacing “could influence” with “could
reasonably be expected to influence”. Lastly, the amend-
ments clarify that an entity is required to consider primary
users of the financial statements (i.e. existing and poten-
tial investors, lenders and other creditors) when deciding
what information to disclose. The amendments will take
effect, subject to endorsement, for annual periods begin-
ning on or after January 1, 2020, with earlier application
permitted. The Group is assessing the potential impact of
the future application of the new provisions.
> “Amendments to IAS 19 - Plan amendment, curtailment or
settlement”, issued in February 2018.
224
Annual Report 2018
The amendments require entities to use the updated ac-
- a description of the reporting entity and its boundary;
tuarial assumptions to determine current service cost and
- definitions of an asset, a liability, equity, income and ex-
net interest for the remainder of the annual reporting pe-
penses and guidance supporting these definitions;
riod after such an event. The amendments also clarify how
- criteria for recognition and derecognition of assets and
the requirements for accounting for a plan amendment,
liabilities in financial statements;
curtailment or settlement affect the asset ceiling require-
- measurement bases and guidance on when to use them;
ments. The amendments do not address the accounting
- concepts and guidance on presentation and disclosure;
for “significant market fluctuations” in the absence of a
and
plan amendment, curtailment or settlement. The amend-
- concepts relating to capital and capital maintenance.
ments apply to plan amendments, curtailments or settle-
The Revised Conceptual Framework is accompanied by a
ments that occur on or after January 1, 2019, with earlier
Basis for Conclusions. The IASB has also issued a separate
application permitted. The Group is assessing the potential
accompanying document, “Amendments to References
impact of the future application of the new provisions.
to the Conceptual Framework in IFRS Standards”, which
> “Amendments to IFRS 3 - Definition of a business”, issued
sets out the amendments to affected standards in order to
in October 2018. The amendments clarify that to be con-
update references to the revised Conceptual Framework.
sidered a business, an acquisition would have to include,
The Revised Conceptual Framework will take effect for
at a minimum, an input and a substantive process that to-
annual reporting periods beginning on or after January 1,
gether significantly contribute to the ability to create out-
2020, with earlier application permitted. The Group is as-
puts. The new guidance provides a framework to evaluate
sessing the potential impact of the future application of
when an input and a substantive process are present. The
the new provisions.
definitions of a business and of outputs are now focused
> “Amendments to IAS 28 - Long-term interests in asso-
on goods and services provided to customers and the ref-
ciates and joint ventures”, issued in October 2017; the
erence to returns in the form of lower costs and other eco-
amendments clarify that an entity must apply “IFRS 9 -
nomic benefits is removed. Moreover, it is no longer nec-
Financial instruments” to non-current interests in associ-
essary to assess whether market participants are capable
ates and joint ventures to which the equity method is not
of replacing any missing inputs or processes and continu-
applied. The amendments will take effect, subject to en-
ing to produce outputs. The amendments also introduced
dorsement, for annual periods beginning on or after Janu-
an optional test that, if met, eliminates the need for further
ary 1, 2019. The Group is assessing the potential impact of
assessment (the concentration test). Under this optional
the future application of the new provisions.
test, an acquired set of activities and assets is not a busi-
> “IFRIC 23 - Uncertainty over income tax treatments”, is-
ness if substantially all of the fair value of the gross assets
sued in June 2017; the interpretation clarifies how to ap-
acquired is concentrated in a single identifiable asset (or
ply the recognition and measurement requirements in IAS
group of similar identifiable assets).
12 when there is uncertainty over income tax treatments.
The amendments will take effect, subject to endorse-
The uncertainty over income tax treatments may affect
ment, for annual periods beginning on or after January 1,
both current and deferred tax. The threshold for reflecting
2020, with earlier application permitted. The Group is as-
the effects of uncertainty is whether it is probable that the
sessing the potential impact of the future application of
taxation authority will accept or not an uncertain tax treat-
the new provisions.
ment assuming that the taxation authority will examine
> “Revised Conceptual Framework for Financial Reporting”,
amounts it has a right to examine and have full knowledge
issued in March 2018. The revised version includes com-
of all related information. The interpretation also requires
prehensive changes to the previous version of the Con-
an entity to reassess any judgments and estimates made
ceptual Framework issued in 2010. The Revised Concep-
if a change in facts and circumstances might change an
tual Framework includes some new concepts, provides
entity’s conclusions about the acceptability of a tax treat-
updated definitions and recognition criteria and clarifies
ment or the entity’s estimate of the effect of uncertainty,
some important concepts. In particular, it sets out:
or both. The interpretation will take effect for annual peri-
-
the objective of general purpose financial reporting;
ods beginning on or after January 1, 2019. The Group is
-
the qualitative characteristics of useful financial infor-
assessing the potential impact of the future application of
mation;
the new provisions.
225
Consolidated financial statements > “Annual improvements to IFRSs 2015-2017 cycle”, issued
exercise the option to use the simplification envisaged in the
in December 2017; the document contains formal modi-
standards for first-time adopters.
fications and clarifications of existing standards. Each of
The following discusses the main changes introduced by
the amendments shall be applicable for annual reporting
the new standards. For more details on their substance, see
periods beginning on or after January 1, 2019, with ear-
note 3 above:
lier application permitted. More specifically, the following
> “IFRS 9 - Financial instruments”, issued in its definitive ver-
standards were amended:
sion on July 24, 2014, replaces the existing “IAS 39 - Fi-
- “IFRS 3 - Business combinations”; the amendments
nancial instruments: Recognition and measurement” and
clarify that when a joint operator obtains control of a
supersedes all previous versions. The final version of IFRS
business that is a joint operation, it shall remeasure
9 incorporates the results of the three phases of the proj-
its previously held interest in the joint operation at fair
ect to replace IAS 39 concerning classification and mea-
value at the acquisition date;
surement, impairment and hedge accounting.
- “IFRS 11 - Joint arrangements”; the amendments clar-
During 2017 the transition project for the three areas of
ify that a party that participates in, but does not have
application of the new standard was completed. Each proj-
joint control of, a joint operation and obtains joint con-
ect stream involved the following:
trol of the joint operation that constitutes a business as
- “Classification and measurement”: the procedures for
defined in IFRS 3 is not required to remeasure previ-
classifying financial instruments provided for in IAS 39
ously held interests in the joint operation;
were assessed in comparison with those envisaged
- “IAS 12 - Income taxes”; the amendments clarify that
under IFRS 9 (i.e., SPPI test and business model). In
an entity shall recognize the income tax consequences
consideration of the fact that the 1st Quarter of 2018
of dividends (as defined in IFRS 9) when it recognizes a
saw the endorsement of the amendments to “IFRS 9
liability to pay a dividend in profit or loss, other compre-
- Prepayment features with negative compensation”,
hensive income or equity according to where the entity
issued by the IASB in October 2017 and applicable as
originally recognized the transactions that generated
from January 1, 2019, with the option of application as
distributable profits;
from January 1, 2018, the Group elected early and ret-
- “IAS 23 - Borrowing costs”; the amendments clarify
rospective application of the amendments. During the
that an entity shall include borrowings made specifi-
quarter, Enel analyzed the situations impacted by the
cally for the purpose of obtaining a qualifying asset out-
amendments, which:
standing when the asset is ready for its intended use or
a) introduce an exception for certain financial assets
sale in the generic borrowings of the entity.
that have contractual cash flows that are solely pay-
The Group is assessing the potential impact of the future
ments of principal and interest but do not pass the SPPI
application of the provisions.
4
Effects of the application of
new accounting standards
Impact of the initial application of
IFRS 9 and 15
With effect from January 1, 2018, the new standards IFRS
9 and IFRS 15 issued by the IASB took effect. First-time ret-
rospective adoption led to the restatement of a number of
balance sheet items at January 1, 2018, as Enel elected to
226
test only because of a prepayment option, permitting
their measurement at fair value through profit or loss in
certain circumstances specified by the standard;
b) clarify that the requirements of IFRS 9 for the adjust-
ment of the amortized cost of a financial liability in the
event of a modification (or an exchange) that does not
result in derecognition are consistent with the analo-
gous provisions for the adjustment of a financial asset.
Accordingly, the new cash flows shall be discounted at
the original effective interest rate and the difference be-
tween the pre-modification present value of the liability
and the new value shall be recognized through profit or
loss as at the date of the modification. In this regard,
Enel, with reference to exchanges transacted in 2015
and 2016, applied the accounting treatment envisaged
in international best practice, in compliance with IAS
39, and did not recognize any income or costs through
Annual Report 2018 profit or loss as at the date of the contractual modifi-
hedged element affects profit or loss. In practice, the
cations, but amortized them over the residual life of
reserve in OCI that contains the fair value of hedging
the modified financial liability at the effective interest
instruments (“full” fair value) has been divided into
rate recalculated as at the date of the exchange. As a
two OCI reserves that report the “basis-free” fair val-
result of the early application of these amendments,
ue and the “basis spread element”, respectively. The
the exchanges have been accounted for using the new
following table summarizes the effects of that division:
method with effect as from January 1, 2018, restating
the opening balances, which involved an increase in
Millions of euro
Group shareholders’ equity of €97 million and a con-
IFRS 9
at Jan. 1, 2018
comitant decrease in net financial debt of €129 million.
Derivatives - “full” fair value
- “Impairment”: an analysis of impaired financial assets
Derivatives - “basis-free” fair value
was conducted, with a focus on trade receivables rep-
Derivatives - “basis spread element”
(1,740)
(1,392)
(348)
resenting the majority of the Group’s credit exposure.
In particular, in application of the simplified approach
envisaged in the standard, those receivables were
At January 1, 2017, the reclassification of the OCI reserves
reflecting the basis-free fair value and the basis spread ele-
grouped into specific clusters, taking account of the
ment amounted to €480 million.
applicable legislative and regulatory environment, and
the impairment model based on expected losses de-
veloped by the Group for collective valuation was ap-
plied. For trade receivables that management deemed
significant on an individual basis and for which more
detailed information on the significant increase in
> “IFRS 15 - Revenue from contracts with customers”, is-
sued in May 2014, including the “Amendments to IFRS
15: Effective date of IFRS 15”, issued in September 2015.
The standard was applied retrospectively as from annual
periods beginning on January 1, 2018, with the possibility
of recognizing the cumulative impact in equity at January
credit risk was available, an analytical approach was
1, 2018.
adopted within the simplified model. The application
of the new impairment model decreased Group share-
holders’ equity at January 1, 2018 by €175 million.
More specifically, the most significant situations in the
Group consolidated financial statements that have been
affected by the new provisions of IFRS 15 mainly regard:
- “Hedge accounting”: specific activities were conduct-
a) revenue from grid connection contracts that were previ-
ed to implement the new hedge accounting model,
both in terms of effectiveness tests and rebalancing
hedge relationships and of analyzing the new strate-
ously recognized in profit or loss at the time of connection
but, as a result of IFRS 15, are now deferred on the basis
of the nature of the performance obligation specified in
gies applicable under IFRS 9. As regards hedging in-
the contract with customers;
struments, the most significant changes with respect
to the hedge accounting model envisaged under IAS
39 regard the possibility of deferring the time value of
an option, the forward component of a forward con-
tract and currency basis spreads (so-called “hedging
costs”) in other comprehensive income (OCI) until the
b) the capitalization of costs of obtaining a contract, lim-
ited to incremental sales commissions paid to agents. The
effects on Group shareholders’ equity at January 1, 2018
of the deferral of connection fees and the capitalization of
contract costs amounted to a negative €3,948 million and
a positive €303 million, respectively.
227
Consolidated financial statements The following table reports changes in the consolidated bal-
tion of IFRS 9 and IFRS 15, as well as other minor effects not
ance sheet at January 1, 2018 associated with the applica-
discussed above with regard to IFRS 15.
Millions of euro
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Intangible assets
Goodwill
Deferred tax assets
Equity investments accounted for using the equity method
Derivatives
Non-current contract assets
Other non-current financial assets
Other non-current assets
Current assets
Inventories
Trade receivables
Current contract assets
Tax receivables
Derivatives
Other current financial assets
Other current assets
Cash and cash equivalents
Assets classified as held for sale
TOTAL ASSETS
(1) Of which €451 million from the capitalization of contract costs.
(2) €1,066 million refers to the deferral of connection fees in Italy.
at Dec. 31, 2017
IFRS 9 effect
IFRS 15 effect
at Jan. 1, 2018
74,937
77
16,724
13,746
6,354
1,598
702
-
4,002
1,064
[Total]
119,204
2,722
14,529
-
577
2,309
4,614
2,695
7,021
34,467
1,970
155,641
[Total]
-
-
-
-
69
-
-
-
(19)
-
50
-
(207)
-
-
-
(11)
(19)
-
(237)
-
(187)
-
-
193 (1)
-
1,066 (2)
-
-
269
-
-
74,937
77
16,917
13,746
7,489
1,598
702
269
3,983
1,064
1,528
120,782
-
(11)
90
-
-
-
(66)
-
13
-
1,541
2,722
14,311
90
577
2,309
4,603
2,610
7,021
34,243
1,970
156,995
228
Annual Report 2018 Millions of euro
LIABILITIES AND SHAREHOLDERS’ EQUITY
at Dec. 31, 2017
IFRS 9 effect
IFRS 15 effect
at Jan. 1, 2018
Equity attributable to shareholders of the Parent Company
Share capital
Other reserves
Retained earnings/(Loss carried forward)
Non-controlling interests
Total shareholders’ equity
Non-current liabilities
Long-term borrowings
Employee benefits
Provisions for risks and charges (non-current portion)
Deferred tax liabilities
Derivatives
Non-current contract liabilities
Other non-current liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Provisions for risks and charges (current portion)
Trade payables
Income tax payable
Derivatives
Current contract liabilities
Other current financial liabilities
Other current liabilities
[Total]
[Total]
[Total]
10,167
3,348
21,280
34,795
17,366
52,161
-
(78)
-
(78)
(20)
(98)
42,439
(129)
2,407
4,821
8,348
2,998
-
2,003
63,016
1,894
7,000
1,210
12,671
284
2,260
-
954
12,462
38,735
-
-
40
-
-
-
(89)
-
-
-
-
-
-
-
-
-
-
-
-
(3,626)
-
(3,626)
(556) (1)
(4,182)
-
-
-
(476) (2)
-
6,210 (3)
-
5,734
-
-
-
(17)
-
-
384
-
(378)
(11)
10,167
(356)
21,280
31,091
16,790
47,881
42,310
2,407
4,821
7,912
2,998
6,210
2,003
68,661
1,894
7,000
1,210
12,654
284
2,260
384
954
12,084
38,724
-
1,729
5,723
1,541
109,114
156,995
Liabilities included in disposal groups classified as held for sale
1,729
Total liabilities
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
103,480
155,641
(89)
(187)
(1) Of which a positive impact of €24 million from the capitalization of contract costs and a negative impact of €580 million from the deferral of connection fees.
(2) Of which a positive impact of €124 million from the capitalization of contract costs and a negative impact of €600 million from the deferral of connection fees
in Spain and Romania.
(3) Of which €6,194 million from the deferral of connection fees.
229
Consolidated financial statements The following table reports the impact on the balance sheet at December 31, 2018 and the income statement for 2018 if IFRS
15 had not been adopted.
Millions of euro
Revenue
Revenue from sales and services
Other revenue and income
Costs
Electricity, gas and fuel purchases
Services and other materials
Personnel
[Subtotal]
Net impairment/(reversal of impairment) of trade receivables and
other receivables
Depreciation, amortization and other impairment losses
Other operating expenses
Capitalized costs
Net income/(expense) from commodity contracts measured
at fair value
[Subtotal]
Operating income
Financial income from derivatives
Other financial income
Financial expense from derivatives
Other financial expense
Net income/(expense) from hyperinflation adjustments
Share of income/(losses) of equity investments accounted for
using the equity method
Income before taxes
Income taxes
Net income from continuing operations
Net income from discontinued operations
Net income for the period (shareholders of the Parent
Company and non-controlling interests)
Attributable to shareholders of the Parent Company
Attributable to non-controlling interests
2018
With IFRS 15
Without IFRS 15
Change
73,134
2,538
75,672
35,728
18,870
4,581
1,096
5,355
2,889
(2,264)
66,255
483
9,900
1,993
1,715
1,532
4,392
168
349
8,201
1,851
6,350
-
6,350
4,789
1,561
73,146
2,538
75,684
35,728
19,090
35,728
1,096
5,189
2,889
(2,264)
66,309
483
9,858
1,993
1,715
1,532
4,392
168
349
8,159
1,836
6,323
-
6,323
4,743
1,580
(12)
-
(12)
-
(220)
-
-
166
-
-
(54)
-
42
-
-
-
-
-
-
42
15
27
-
27
46
(19)
230
Annual Report 2018 Millions of euro
ASSETS
Non-current assets
Property, plant and equipment
Investment property
Intangible assets
Goodwill
Deferred tax assets
Equity investments accounted for using the equity method
Derivatives
Non-current contract assets
Other non-current financial assets
Other non-current assets
Current assets
Inventories
Trade receivables
Current contract assets
Tax receivables
Derivatives
Other current financial assets
Other current assets
Cash and cash equivalents
Assets classified as held for sale
TOTAL ASSETS
at Dec. 31, 2018
With IFRS 15
Without IFRS 15
Change
76,631
135
19,014
14,273
8,305
2,099
1,005
346
5,769
1,272
76,631
135
18,844
14,273
7,229
2,099
1,005
-
5,769
1,272
-
-
170
-
1,076
-
-
346
-
-
[Total]
128,849
127,257
1,592
2,818
13,587
135
660
3,914
5,160
2,983
6,630
35,887
688
165,424
2,818
13,598
-
660
3,914
5,160
3,094
6,630
35,874
688
163,819
[Total]
-
(11)
135
-
-
-
(111)
-
13
-
1,605
231
Consolidated financial statements -
(3,626)
46
(3,580)
(575)
(4,155)
-
-
-
(451)
-
6,306
(84)
5,771
-
-
-
(17)
-
-
1,095
-
(1,089)
(11)
-
5,760
1,605
Millions of euro
at Dec 31, 2018
LIABILITIES AND SHAREHOLDERS’ EQUITY
With IFRS 15
Without IFRS 15
Change
Equity attributable to shareholders of the Parent Company
Share capital
Other reserves
Retained earnings/(Loss carried forward)
[Total]
Non-controlling interests
Total shareholders’ equity
Non-current liabilities
Long-term borrowings
Employee benefits
Provisions for risks and charges (non-current portion)
10,167
1,700
19,853
31,720
16,132
47,852
10,167
5,326
19,807
35,300
16,707
52,007
48,983
48,983
[Total]
76,817
3,187
5,181
8,650
2,609
6,306
1,901
3,616
3,367
1,312
13,387
333
4,343
1,095
788
12,107
40,348
407
117,572
165,424
3,187
5,181
9,101
2,609
-
1,985
71,046
3,616
3,367
1,312
13,404
333
4,343
-
788
13,196
40,359
407
111,812
163,819
Deferred tax liabilities
Derivatives
Non-current contract liabilities
Other non-current liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Provisions for risks and charges (current portion)
Trade payables
Income tax payable
Derivatives
Current contract liabilities
Other current financial liabilities
Other current liabilities
[Total]
Liabilities included in disposal groups classified as held for
sale
Total liabilities
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
232
Annual Report 2018 Argentina - hyperinflationary
economy: impact of the application
of IAS 29
As from July 1, 2018, the Argentine economy has been con-
sidered hyperinflationary based on the criteria established by
In order to also take account of the impact of hyperinflation
on the exchange rate of the local currency, the income state-
ment balances expressed in the hyperinflationary currency
have been translated into the Group’s presentation currency
(euro) applying, in accordance with IAS 21, the closing ex-
change rate rather than the average rate for the period in
“IAS 29 - Financial reporting in hyperinflationary economies”.
order to adjust these amounts to current values.
This designation is determined following an assessment of a
series of qualitative and quantitative circumstances, including
the presence of a cumulative inflation rate of more than 100%
over the previous three years.
Based on the provisions of IAS 21, paragraph 42.b), it was
not necessary to restate for solely comparative purposes
the balance sheet and income statement figures for 2017
because the Group’s presentation currency is not that of a
For the purposes of preparing the consolidated financial state-
hyperinflationary economy.
ments and in accordance with IAS 29, certain items of the bal-
ance sheets of the investees in Argentina have been remea-
sured by applying the general consumer price index to historical
The cumulative changes in the general price indices at De-
cember 31, 2017 and December 31, 2018 are shown in the
data in order to reflect changes in the purchasing power of the
following table:
Argentine peso at the reporting date for those companies.
Bearing in mind that the Enel Group acquired control of the
Argentine companies on June 25, 2009, the remeasure-
Periods
ment of the non-monetary balance sheet figures was con-
ducted by applying the inflation indices starting from that
date. More specifically, the accounting effects of that re-
measurement at first-time application of the standard and
From July 1, 2009 to December
31, 2017
From January 1, 2018 to
December 31, 2018
Cumulative change in general
consumer price index
286.50%
47.83%
subsequent remeasurements were recognized as follows:
The initial application of IAS 29 generated a positive adjust-
> the effect of the inflation adjustment until December 31,
ment (net of tax effects) recognized in equity reserves in the
2017 of non-monetary assets and liabilities and equity
consolidated financial statements at January 1, 2018 of €574
was recognized in equity reserves, net of the associated
million, of which €212 million attributable to shareholders of
tax effects;
the Parent Company. In addition, during 2018, the applica-
> the effect of the remeasurement of the same non-mon-
tion of IAS 29 led to the recognition of net financial income
etary items, the components of equity and the compo-
(gross of tax) of €168 million.
nents of the income statement recognized in 2018, which
was carried out to take account of the change in 2018 in
The following tables report the effects of IAS 29 on the open-
the benchmark price index, was recognized in a specific
ing balance sheet at January 1, 2018 and the cumulative hy-
line of the income statement under financial income and
perinflationary effects at December 31, 2018, as well as the
expense. The associated tax effect was recognized in tax-
impact of hyperinflation on the main income statement items
es for the period.
Millions of euro
Total assets
Total liabilities
Shareholders’ equity
for 2018, differentiating between that concerning the revalu-
ation on the basis of the general consumer price index and
that due to the application of the closing exchange rate rather
than the average exchange rate for the period in accordance
with the provisions of IAS 21 for hyperinflationary economies.
Cumulative
hyperinflation effect at
Jan. 1, 2018
Hyperinflation
effect for the period
Exchange differences
Cumulative
hyperinflation effect at
Dec. 31, 2018
763
189
574
357
97
260 (1)
(355)
(89)
(266)
765
197
568
233
(1) The figure includes net income for 2018, equal to €44 million.
Consolidated financial statements Millions of euro
Revenue
Costs
Operating income
Net financial income/(expense)
Net income/(expense) from hyperinflation
Income before taxes
Income taxes
Net income for the year (shareholders of the Parent
Company and non-controlling interests)
Attributable to shareholders of the Parent Company
Attributable to non-controlling interests
IAS 29 effect
IAS 21 effect
Total effect
237
235 (1)
2
(18)
168
152
108
44
25
19
(338)
(272) (2)
(66)
3
-
(63)
(28)
(35)
(9)
(26)
(101)
(37)
(64)
(15)
168
89
80
9
16
(7)
(1) Includes impact on depreciation, amortization and impairment losses of €58 million.
(2) Includes impact on depreciation, amortization and impairment losses of €(23) million.
5
6
Restatement of comparative
disclosures
Main changes in the scope of
consolidation
The figures presented in the comments and tables of the
In the two periods under review, the scope of consolidation
notes to the financial statements are consistent and com-
changed as a result of a number of transactions.
parable between 2017 and 2018. No restatements of the
comparative disclosures were required, taking due account
of the fact that the new standards discussed above (IFRS 15
2017
and IFRS 9) were introduced mainly with simplified retroac-
tive application using a “cumulative catch-up adjustment”
and that in the case of retroactive application of the sep-
> Acquisition, on January 10, 2017, of 100% of Demand En-
ergy Networks, a company headquartered in the United
States specialized in software solutions and smart elec-
aration of the forward component and the currency basis
tricity storage systems;
spreads relating to forward contracts we did not modify the
consolidated financial statements as the impact was entirely
> acquisition, on February 10, 2017, of 100% of Más En-
ergía, a Mexican company operating in the renewable
immaterial and merely involved a simple reclassification be-
energy sector;
tween equity reserves.
234
> acquisition, on February 14, 2017, and May 4, 2017, of
94.84% and 5.04% respectively (for a total of 99.88%) of
Enel Distribuição Goiás (formerly CELG-D), an electric-
ity distribution company operating in the Brazilian state
of Goiás;
> acquisition, on May 16, 2017, of 100% of Tynemouth En-
ergy Storage, a British company operating in the electric-
ity storage sector;
> acquisition, on June 4, 2017, of 100% of Amec Foster
Wheeler Power (now Enel Green Power Sannio), a
company that owns two wind plants in the province of
Avellino;
> acquisition, on August 10, 2017, of 100% of the EnerNOC
Annual Report 2018 Group following the acceptance of the Enel Green Pow-
pension funds, of 80% of eight special purpose vehicles
er North America (“EGPNA”) offer to the previous share-
that own eight plants in operation or under construction
holders;
in Mexico. Following the close of the transaction, Enel
> acquisition, on October 25, 2017, of 100% of eMotor-
Green Power SpA holds 20% of their share capital, mean-
Werks, a US company operating in electric mobility man-
ing that the companies are now accounted for using the
agement systems;
equity method. For more information on the financial im-
> disposal, in December 2017, by Enel Green Power North
pact of the disposal, please see note 6.5 of the consoli-
America using a cash equity agreement, of 80% of the
dated financial statements;
Class A securities of the subsidiary EGPNA Rocky Caney
> disposal, on October 18, 2018, by Enel Green Power SpA
Wind. The total price in the transaction was $233 million,
of the biomass generation plant of Finale Emilia. The total
generating a capital gain of €4 million.
price in the transaction was €59 million;
2018
> Disposal, on March 12, 2018, of 86.4% of Erdwärme
Oberland GmbH, a company developing geothermal
plants headquartered in Germany. The total transaction
price was €0.9 million, with a realized capital gain of €1
million;
> acquisition, on April 2, 2018, of 33.6% of the minority
interests in Enel Generación Chile, enabling Enel Chile
> disposal, on December 14, 2018, by Enel Green Power
SpA of its wholly owned subsidiary Enel Green Power
Uruguay SA, which in turn owns the vehicle Estrellada
SA of the 50 MW Melowind wind farm at Cerro Largo.
The total price in the transaction was $120 million.
In addition to the above changes in the scope of consolida-
tion, note the following transactions, which although they do
not represent transactions involving the acquisition or loss
of control, gave rise to a change in the interest held by the
to increase its stake in Enel Generación Chile to 93.55%.
Group in the investees:
In addition, on that date the merger of the renewables
company Enel Green Power Latin America SA into Enel
Chile took effect;
> acquisition, formalized on April 3, 2018, acting through
Enel Green Power España, of 100% of Parques Eólicos
Gestinver SLU and Parques Eólicos Gestinver Gestión
SLU for €57 million, of which €15 million of existing debt
assumed. See note 6.1 for more information;
> acquisition, on June 7, 2018, by Enel Sudeste of control of
the Brazilian distribution company Enel Distribuição São
> a corporate reorganization in Chile with the “Elqui” op-
eration, which involved the acquisition of non-controlling
interests in Enel Generación Chile to achieve a direct
holding of 93.55% through Enel Chile (the previous inter-
est was 59.98%), a reduction of the interest held in Enel
Green Power Chile, which went from 100% to 61.93%
at the Group level, following the merger of Enel Green
Power Latin America SA into Enel Chile, and an increase
in the overall stake in Enel Chile from 60.62% to 61.93%.
Subsequent sections discuss the transaction in greater
Paulo (formerly Eletropaulo Metropolitana Eletricidade de
detail;
São Paulo SA) following initial participation of sharehold-
ers. The tender for 100% of the shares ended on July 4,
2018. At September 30, 2018, the company was consoli-
dated on the basis of a 95.88% holding by the Group in
view of the circumstances detailed further later in these
notes;
> acquisition, on July 25, 2018, acting through the subsid-
iary Endesa Red, of 94.6% of Empresa de Alumbrado
Eléctrico de Ceuta SA, a company operating in the dis-
tribution and sale of electricity in the autonomous city of
Ceuta in North Africa. See note 6.3 for more information;
> disposal, on September 28, 2018, to Caisse de Dépôt
et Placement du Québec (“CDPQ”), a long-term institu-
tional investor, and CKD Infraestructura México SA de Cv
(“CKD IM”), the investment vehicle of leading Mexican
> on July 3, 2018 Enel, acting through Enel X International,
finalized the acquisition from a holding company con-
trolled by Sixth Cinven Fund (a fund managed by the inter-
national private equity firm Cinven) for an investment of
€150 million of about 21% of a vehicle company (“Zacapa
Topco Sàrl”), to which 100% of Ufinet International was
transferred. Ufinet is a leading wholesale fiber optic net-
work operator in South America. Sixth Cinven Fund in
turn holds 79% of Zacapa Topco Sàrl;
> on December 27, 2018, Enel Green Power SpA sold its
50% stake in the EF Solare Italia SpA (“EFSI”) joint ven-
ture, held through Marte Srl, a wholly owned subsidiary
of Enel Green Power, to the other partner of the joint
venture, F2i SGR SpA (“F2i”), for €214 million. Under the
235
Consolidated financial statements terms of the sales agreement, EFSI, which purchases
> in December 2018, Enel SpA increased its stake in Enel
and operates solar plants in operation in Italy, was as-
Américas by 2.43% under the provisions of the two
signed an enterprise value of about €1.3 billion, of which
share swap contracts signed with a financial institution
about €430 million in equity and around €900 million in
in order to increase the stake in Enel Américas up to a
debt. The sale produced a capital gain of €65 million;
maximum of 5%.
6.1 Acquisition of Parques Eólicos Gestinver
On April 3, 2018, Enel Green Power España (“EGPE”) com-
pacity of about 132 MW.
pleted the acquisition of 100% of Parques Eólicos Gestinver
The acquisition involved a cash outlay of €57 million.
SL, a company that owns five wind plants with a total ca-
The following table reports the definitive fair values of the net assets acquired:
Determination of goodwill
Millions of euro
Property, plant and equipment
Intangible assets
Deferred tax assets
Trade receivables
Other current assets
Cash and cash equivalents
Borrowings
Deferred tax liabilities
Other non-current liabilities
Provisions for risks and charges
Trade payables
Other current liabilities
Net assets acquired
Cost of the acquisition
(of which paid in cash)
Goodwill
Amounts recognized at April 3, 2018
139
34
8
5
2
11
(116)
(9)
(11)
(2)
(1)
(3)
57
57
57
-
Parques Eólicos Gestinver contributed €16 million in revenue and €6 million in operating income to results for 2018.
236
Annual Report 2018 6.2 Acquisition of Enel Distribuição São Paulo (formerly Eletropaulo
Metropolitana Eletricidade de São Paulo SA)
On June 4, 2018 Enel, acting through Enel Brasil Investi-
holds 3,058,154 treasury shares.
mentos Sudeste (“Enel Sudeste”), acquired control of the
Enel Distribuição São Paulo was consolidated in the con-
Brazilian distribution company Eletropaulo Metropolitana
solidated financial statements at December 31, 2018 at
Eletricidade de São Paulo SA, which following the acquisi-
95.88% as the final outcome of the tender was known as
tion was renamed Enel Distribuição São Paulo.
of that date.
The acquisition of control came after a public tender offer
The total cost of the acquisition of €1,541 million was paid
launched on April 17 at a price of 45.22 Brazilian reais per
entirely in cash.
share. At June 4, 2018, that company’s shareholders had
At December 31, 2018, the company had completed the
tendered 73.38% of the share capital. On June 7, 2018 the
allocation of the acquisition price, definitively determining
shares were transferred.
the fair value of the assets acquired and the liabilities as-
sumed.
Under Brazilian stock exchange rules, Enel Distribuição São
The main adjustments with respect to the carrying amount
Paulo shareholders could also accept the offer in the fol-
are essentially attributable to the recognition of intangible
lowing 30 days (until July 4, 2018). During that period, Enel
assets (in particular relating to concession rights) and the
Sudeste acquired an additional 33,359,292 shares of Enel
related tax effects.
Distribuição São Paulo, equal to 19.9% of the share capi-
In view of the characteristics of the concession arrange-
tal. The overall interest acquired by Enel Sudeste therefore
ments under which it operates, the distribution activity
rose to 93.31% of Enel Distribuição São Paulo, which in-
performed by the company falls within the scope of ap-
creases to 95.05% given that Enel Distribuição São Paulo
plication of IFRIC 12:
Determination of goodwill
Millions of euro
Net assets acquired before allocation (1)
Adjustments from allocation of purchase price:
- intangible assets
- deferred tax liabilities
- liabilities for risks and charges
- other adjustments
- non-controlling interests
Net assets acquired after allocation
Cost of the acquisition
Goodwill
(1) Net assets in proportion to Enel’s stake of 95.88%.
343
1,443
(490)
(252)
71
(40)
1,075
1,541
466
237
Consolidated financial statements In particular, as part of the purchase price allocation process,
intangible asset acquired as part of a business combination).
and more specifically the identification and measurement of
Amortization of that intangible asset will not begin until the
the assets acquired, the current concession rights for the
start of the concession period to which it refers.
distribution of electricity as well as their renewal for a fur-
Accordingly, the accounting situation at the acquisition date
ther concession period were taken into account, applying
after the final allocation of the price is as follows:
the assumptions provided for by IAS 38 (recognition of an
Accounts of Enel Distribuição São Paulo at the acquisition date
Millions of euro
Property, plant and equipment
Investment property
Intangible assets
Deferred tax assets
Other non-current assets
Trade receivables
Inventories
Other current assets
Cash and cash equivalents
Borrowings
Employee benefits
Deferred tax liabilities
Other non-current liabilities
Provisions for risks and charges
Trade payables
Other current liabilities
Non-controlling interests
Net assets acquired
Cost of the acquisition
Goodwill
Carrying amount before
June 7, 2018
Adjustments for purchase
price allocation
Amounts recognized at
June 7, 2018
14
10
968
611
932
828
66
179
226
(1,018)
(725)
(165)
(123)
(522)
(377)
(544)
(17)
343
1,541
1,198
-
-
1,443
93
-
-
(5)
(10)
-
(7)
-
(490)
-
(252)
-
-
(40)
732
-
(732)
14
10
2,411
704
932
828
61
169
226
(1,025)
(725)
(655)
(123)
(774)
(377)
(544)
(57)
1,075
1,541
466
Enel Distribuição São Paulo contributed €2,076 million in
tailed a cash outflow of €1,541 million and the assumption
revenue and €117 million in operating income to 2018 re-
of net financial debt of €731 million.
sults. The acquisition of Enel Distribuição São Paulo en-
238
Annual Report 2018 6.3 Acquisition of Empresa de Alumbrado Eléctrico de Ceuta
On July 25, 2018, Endesa Red finalized the acquisition of
provided for a cash outlay of €83 million.
94.6% of Empresa de Alumbrado Eléctrico de Ceuta SA, a
The following table reports the definitive fair values of the net
company operating in the distribution and sale of electricity in
assets acquired:
the autonomous city of Ceuta in North Africa. The acquisition
Determination of goodwill
Millions of euro
Property, plant and equipment
Investment property
Intangible assets
Trade receivables
Other current assets
Cash and cash equivalents
Current portion of long-term financial receivables
Deferred tax liabilities
Other non-current liabilities
Other employee benefits
Trade payables
Other current liabilities
Non-controlling interests
Net assets acquired
Cost of the acquisition
(of which paid in cash)
Goodwill
Amounts recognized at July 25, 2018
65
4
14
3
2
2
1
(5)
(15)
(1)
(2)
(3)
(2)
63
84
83
21
Empresa de Alumbrado Eléctrico de Ceuta SA contributed
€83 million, while at the time of the acquisition the company
€17 million in revenue and €1 million in operating income
held liquid assets and financial receivables of €3 million.
to 2018 results. The acquisition entailed a cash outflow of
6.4 Other minor acquisitions
Determination of goodwill
Millions of euro
Net assets acquired
Cost of the acquisition
(of which paid in cash)
Goodwill
EPM
Eólica Dolores
Energía Limpia de
Puerto Libertad
Minor acquisitions
EGPE
-
5
4
5
-
7
7
7
5
5
5
-
For the other minor acquisitions the Group will identify the fair value of the assets acquired and the liabilities assumed within
12 months of the acquisition date.
239
Consolidated financial statements 6.5 Disposal of stake in eight special purpose vehicles owning renewable
generation plants in Mexico
On September 28, 2018, acting through its subsidiary Enel
The disposal involved a total price of €329 million, which net
Green Power SpA (“EGP”), Enel finalized the disposal of
of transaction costs of €13 million produced a transaction
80% of eight special purpose vehicles (“SPVs”) owning
value of €316 million.
plants in operation and under construction in Mexico with a
The gain on the disposal amounted to €150 million. Further-
total capacity of 1.8 GW.
more, under the provisions of the relevant accounting stan-
The Group continues to own 20% of the capital of the SPVs
dards, the fair value of the non-controlling interest retained
and EGP SpA will continue to operate the plants owned by
was remeasured, with a gain of €40 million.
the vehicle companies.
Millions of euro
Value of the transaction
Net assets sold
Transaction costs
Reversal of OCI reserve
Capital gain
Remeasurement at fair value of non-controlling interest retained
Total impact on profit or loss
329
(168)
(13)
2
150
40
190
6.6 Corporate reorganization in Chile - “Elqui” operation
As part of the Group’s strategic simplification plan, during
Also on the same date, the shareholders of Enel Chile who
the 1st Half of 2018 the reorganization of equity investments
exercised their right of withdrawal as a result of that merger
was begun with the aim of reducing the number of operat-
were paid the value of their shares.
ing companies in South America.
At the level of the Enel Group, the combined effect of the
To this end, on March 26, Enel successfully completed the
two transactions led to a 1.31% increase in the Group’s in-
tender offer launched by Enel Chile for all of the shares of the
terest in Enel Chile, which rose from 60.62% to 61.93%.
subsidiary Enel Generación Chile held by the non-controlling
As the operation is a transaction in non-controlling interests
shareholders of the latter, with which Enel Chile acquired
and does not fall within the scope of application of IFRS 3,
about 33.6% of the capital of Enel Generación Chile, thus
the transaction resulted in a reduction in non-controlling in-
increasing its stake in that company to 93.55%.
terests, with a negative impact on the non-controlling inter-
The transaction was finalized on April 2, 2018, with the price
est reserve of €506 million against a total outlay of €1,406
settled 60% in cash and 40% in Enel Chile shares.
million.
On the same date, the merger of the renewables company
Enel Green Power Latin America SA into Enel Chile and a
capital increase at the latter to serve the merger took effect.
240
Annual Report 2018 7
Segment information
The representation of performance and financial position by
For more information on performance and financial develop-
business area presented here is based on the approach used
ments during the year, please see the dedicated section in
by management in monitoring Group performance for the
the Report on operations.
two periods being compared.
Segment information for 2018 and 2017
Results for 2018 (1)
Millions of euro
Italy
Iberia
Europe
and Euro-
Mediterranean
Affairs
South
America
North and
Central
America
Africa, Asia
and Oceania
Other,
eliminations
and
adjustments
Total
Revenue from third parties
37,411
19,413
14,687
2,349
1,438
Revenue from transactions
with other segments
987
79
55
Total revenue
38,398
19,492
14,742
Total costs
31,504
15,998
10,374
Net income/(expense)
from commodity contracts
measured at fair value
Depreciation and
amortization
Impairment losses
Reversals of impairment
losses
Operating income
410
64
2
1,684
1,261
401
134
1,767
1,058
(19)
4,498
Capital expenditure
2,479 (2)
12
2,361
1,844
(1)
193
51
-
1,438
738
8
245
9
-
(251)
1,724
1,433
(1)
(148)
2,976
2,246
420
390
454
1,373 (3)
100
1
101
47
-
40
4
-
10
142
274
75,672
(1,134)
(860)
(701)
-
75,672
59,804
-
24
-
(1)
(182)
89
483
5,214
1,657
(420)
9,900
8,152
(1) Segment revenue includes both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the period.
(2) Does not include €3 million regarding units classified as “held for sale”.
(3) Does not include €375 million regarding units classified as “held for sale”.
241
Consolidated financial statements Results for 2017 (1)
Millions of euro
Italy
Iberia
Europe
and Euro-
Mediterranean
Affairs
South
America
North and
Central
America
Africa, Asia
and Oceania
Other,
eliminations
and
adjustments
Total
Revenue from third parties
37,900
19,940
13,126
2,374
1,185
Revenue from transactions
with other segments
881
54
28
Total revenue
38,781
19,994
13,154
Total costs
32,455
16,434
8,976
37
2,411
1,868
2
1,187
430
Net income/(expense)
from commodity contracts
measured at fair value
Depreciation and
amortization
537
13
26
-
2
1,769
1,562
1,149
Impairment losses
626
461
134
Reversals of impairment
losses
Operating income
Capital expenditure
(2)
4,470
1,812
(292)
1,842
1,105
(49)
2,970
3,002
189
83
(35)
306
202
4
-
553
307 (2)
1,802 (3)
96
-
96
39
-
40
2
-
15
30
18
74,639
(1,002)
(984)
(638)
-
20
1
(3)
(364)
72
-
74,639
59,564
578
4,931
1,311
(381)
9,792
8,130
(1) Segment revenue includes both revenue from third parties and revenue flows between the segments. An analogous approach was taken for other
income and costs for the period.
(2) Does not include €44 million regarding units classified as “held for sale”.
(3) Does not include €325 million regarding units classified as “held for sale”.
Financial position by segment
At December 31, 2018
Millions of euro
Italy
Iberia
Europe
and Euro-
Mediterranean
Affairs
South
America
North and
Central
America
Africa, Asia
and Oceania
Other,
eliminations
and
adjustments
Property, plant and
equipment
26,295
23,750
17,387
3,218
5,745
Intangible assets
1,822
15,857
13,932
Non-current and current
contract assets
Trade receivables
Other
115
7,885
2,864
12
2,162
1,784
337
3,766
1,387
781
-
379
165
750
24
276
324
784
106
-
33
35
Operating assets
38,981 (1)
43,565
36,809 (2)
4,543
7,119
958
64
67
(7)
(890)
(201)
(967)
Total
77,243
33,315
481
13,611
6,358
131,008
Trade payables
7,385
2,658
3,074
Non-current and current
contract liabilities
Sundry provisions
Other
4,204
2,504
5,550
2,797
3,537
2,578
12
2,956
2,867
391
405
90
236
802
4
56
915
90
-
22
84
Operating liabilities
19,643
11,570
8,909 (3)
1,122
1,777
196
(1,011)
13,389
(21)
516
704
188
7,401
9,681
12,934
43,405
(1) Of which €4 million regarding units classified as “held for sale”.
(2) Of which €663 million regarding units classified as “held for sale”.
(3) Of which €22 million regarding units classified as “held for sale”.
242
Annual Report 2018 At December 31, 2017
Millions of euro
Italy
Iberia
Europe
and Euro-
Mediterranean
Affairs
South
America
North and
Central
America
Africa, Asia
and Oceania
Other,
eliminations
and
adjustments
Property, plant and
equipment
25,935
23,783
17,064
3,052
5,800
Intangible assets
1,358
15,662
11,857
Trade receivables
Other
10,073
3,033
2,340
1,697
2,432
954
731
337
194
838
193
377
749
115
29
10
54
34
(856)
(308)
Total
76,437
30,595
14,548
5,957
Operating assets
40,399 (1)
43,482
32,307
4,314 (2)
7,208 (3)
903
(1,076)
127,537
Trade payables
Sundry provisions
Other
6,847
2,843
7,170
Operating liabilities
16,860
2,738
3,592
3,225
9,555
2,790
1,325
2,451
6,566
426
101
297
782
29
254
60
20
74
824 (4)
1,065 (5)
154
(837)
527
(244)
(554)
12,806
8,437
13,227
34,470
(1) Of which €4 million regarding units classified as “held for sale”.
(2) Of which €141 million regarding units classified as “held for sale”.
(3) Of which €1,675 million regarding units classified as “held for sale”.
(4) Of which €74 million regarding units classified as “held for sale”.
(5) Of which €145 million regarding units classified as “held for sale”.
The following table reconciles segment assets and liabilities and the consolidated figures.
Millions of euro
Total assets
Equity investments accounted for using the equity method
Other non-current financial assets
Long-term tax receivables included in “Other non-current assets”
Current financial assets
Derivatives
Cash and cash equivalents
Deferred tax assets
Tax receivables
Financial and tax assets of “Assets held for sale”
Segment assets
Total liabilities
Long-term borrowings
Short-term borrowings
Current portion of long-term borrowings
Current financial liabilities
Derivatives
Deferred tax liabilities
Income tax payable
Other tax payables
Financial and tax liabilities of “Liabilities held for sale”
Segment liabilities
at Dec. 31, 2018
at Dec. 31, 2017
165,424
155,641
2,099
5,769
231
5,160
4,919
6,630
8,305
1,282
21
1,598
4,002
260
4,614
3,011
7,021
6,354
1,094
150
131,008
127,537
117,572
48,983
3,616
3,367
788
6,952
8,650
333
1,093
385
103,480
42,439
1,894
7,000
954
5,258
8,348
284
1,323
1,510
43,405
34,470
243
Consolidated financial statements Revenue
8.a Revenue from sales and services - €73,134 million
Millions of euro
Sale of electricity
Transport of electricity
Fees from network operators
Transfers from institutional market operators
Sale of gas
Transport of gas
Sale of fuel
Connection fees to electricity and gas networks
Construction contracts
Sale of environmental certificates
Sale of value-added services
Other sales and services
Total
2018
43,110
10,101
1,012
1,711
4,401
576
8,556
714
735
497
390
1,331
73,134
2017
43,433
9,973
900
1,635
3,964
570
8,340
800
674
566
42
1,767
72,664
Change
-0.7%
1.3%
12.4%
4.6%
11.0%
1.1%
2.6%
-10.8%
9.1%
-12.2%
-
-24.7%
0.6%
(323)
128
112
76
437
6
216
(86)
61
(69)
348
(436)
470
In 2018, revenue from the “Sale of electricity” came
Revenue from the “Transport of electricity” came to
to €43,110 million (€43,433 million for 2017), including
€10,101 million in 2018, an increase of €128 million. This
€32,497 million in revenue from electricity sales to end
includes revenue for the transport of electricity to end us-
users (€31,419 million for 2017), €8,276 million in revenue
ers on the regulated market in the amount of €2,955 mil-
from wholesale electricity sales (€8,819 million for 2017),
lion (€3,042 million in 2017) and on the free market in the
and €2,337 million in revenue from the trading of electricity
amount of €2,280 million (€2,132 million in 2017), as well
(€3,195 million for 2017). The reduction in revenue from the
as revenue from the transport of electricity to other op-
sale of electricity (€323 million) is attributable to:
erators in the amount of €4,866 million (€4,799 million in
> the reduction in revenue from trading (€858 million), es-
2017). This increase is mainly attributable to Enel Améri-
sentially due to the contraction in volumes traded by Enel
cas, following the acquisition of Enel Distribuição São Pau-
Global Trading;
lo, to Enel Energia in relation to the increase in volumes
> the decrease in revenue from wholesale electricity sales
sold, and to e-distribuzione in relation to rates and equaliza-
(€543 million), mainly deriving from the reduction in vol-
tion mechanisms. These effects were partially offset by the
umes sold by Enel Global Trading and Enel Produzione,
decrease in Italy due to lower revenue from transport on the
which was partially offset by the increase in energy sales
regulated market, in line with the reduction in quantities sold
by Enel Green Power SpA and Enel Américas;
and in the number of customers served.
> the increase in revenue from electricity sales to end
users (€1,078 million), related above all to the increase
Revenue related to “Fees from network operators” came to
in revenue from the sale of electricity on the regulated
€1,012 million, up €112 million compared with the previous
market (€931 million) mainly by Enel Américas due to
year. The increase is mainly attributable to the increase in
the change in the scope of consolidation following the
fees for the remuneration of generation plants in Italy falling
acquisition of Enel Distribuição São Paulo, as well as the
within the scope of plants essential to the electrical system
increase in revenue from the sale of electricity on the
in order to ensure adequate standards of safe operations.
free market (€166 million) mainly due to increased sales
in Italy, Romania and South America, partially offset by
In 2018, revenue related to “Transfers from institutional
the reduction in sales of electricity in Iberia.
market operators” came to €1,711 million, up €76 million
compared with the previous year. This increase essentially
244
Annual Report 2018 refers to the Spanish companies, in the amount of €104
Revenue from the “Sale of environmental certificates”
million, in relation to the greater fees received for costs in-
amounted to €497 million, a decrease of €69 million, mainly
curred to ensure the generation of electricity in the extra-
in Italy.
peninsular area. This effect was partially offset by the reduc-
tion in revenue from grants received for the generation of
Revenue from the “Sale of value-added services” amount-
renewable energy, by Enel Green Power SpA in the amount
ed to €390 million, an increase of €348 million, mainly at-
of €25 million, due to the expiration of incentives for certain
tributable to Enel X North America in relation to value-added
geothermal and hydroelectric plants.
services, primarily demand-response services. Enel X North
Revenue from the “Sale of gas” for 2018, which totaled
mercial and industrial consumers who agree to balance their
€4,401 million (€3,964 million in 2017), increased by €437
consumption based on the needs of the grid, renouncing
million over the previous year. This increase was essentially
their consumption at times of peak demand in exchange for
America provides these services as an aggregator of com-
affected by higher revenue in Iberia (€296 million), in Italy
contractually defined remuneration.
(€43 million), and in South America (€76 million) due to the
increase in quantities sold within a context of rising average
Revenue from “Other sales and services” amounted to
prices compared with the previous year.
€1,331 million, a decrease of €436 million. This change
mainly refers to the reduction in other sales and services,
Revenue from the “Sale of fuel” amounted to €8,556 mil-
which was partially offset by an increase in revenue from
lion, an increase of €216 million related mainly to the sale
leased plant connected to the electricity business in South
of gas. In 2018, this included the sale of natural gas, in the
America and from the tax partnerships recognized in the
amount of €8,509 million (€8,291 million in 2017) and €47
previous year (€352 million). Following substantial contrac-
million for the sale of other fuels (€49 million in 2017). The
tual changes, the tax partnerships relating to new projects
increase mainly refers to natural gas sales by Enel Global
are now recognized under “Other revenue” (see note 8.b).
Trading.
“Connection fees to electricity and gas networks” amount-
most entirely to revenue from customer contracts, as de-
ed to €714 million, a decrease of €86 million compared with
fined by IFRS 15, and the associated performance obligation
the previous year. This reduction mainly refers to the Endesa
is mainly satisfied over time.
Revenue for 2018, which totaled €73,134 million, refers al-
Group (€112 million), Servizio Elettrico Nazionale (€107 mil-
lion), and Enel Energia (€104 million), and was partially offset
by an increase in revenue for e-distribuzione (€278 million).
The decrease in this item was mainly due to application of
IFRS 15, which, for the companies that sell electricity, re-
sulted in the recognition of only those fees pertaining to the
seller, assigning the classification of “agent” to the seller for
the share of fees pertaining to the distributor. For the elec-
tricity distribution companies, on the other hand, this led to
the recognition, as at January 1, of the retroactive reclassifi-
cation of connection fees and recognition of a liability deriv-
ing from contracts with customers and a corresponding en-
try in shareholders’ equity, and in 2018 the release to profit
or loss of the portion of this liability pertaining to the period
for the fees subject to reclassification and relating to new
“over time” connections made in 2018 was recognized.
Revenue from “Construction contracts” amounted to €735
million, an increase of €61 million, particularly in South
America.
245
Consolidated financial statements
The following table shows a breakdown of point-in-time and over-time revenue for the current year.
Millions of euro
2018
Italy
Iberia South America
Europe and Euro-
Mediterranean
Affairs
North and
Central
America
Africa, Asia and
Oceania
Other,
eliminations
and
adjustments
Total
Over
time
Point
in time
Over
time
Point
in time
Over
time
Point
in time
Over
time
Point
in time
Over
time
Point
in time
Over
time
Point
in time
Over
time
Point
in time
Over
time
Point
in time
Revenue
35,153
828 18,228
1,037 14,140
298
1,247
1,030
651
396
14
81
25
6 69,458
3,676
The table below gives a breakdown of revenue from sales and services by geographical area.
Millions of euro
Italy
Europe
Iberia
France
Switzerland
Germany
Austria
Slovenia
Slovakia
Romania
Greece
Bulgaria
Belgium
Czech Republic
Hungary
Russia
Netherlands
United Kingdom
Other European countries
Americas
United States
Canada
Mexico
Brazil
Chile
Peru
Colombia
Argentina
Other South American countries
Other
Africa
Asia
Total
246
2018
27,492
18,368
1,006
1,039
2,297
155
27
-
1,214
62
9
320
113
399
989
2,139
1,685
113
466
23
520
6,518
3,169
1,275
2,242
1,265
14
82
133
73,134
2017
27,935
19,032
1,333
135
2,244
290
39
54
1,067
58
9
46
-
472
1,128
4,063
648
82
693
-
359
4,687
3,473
1,167
2,103
1,364
14
79
90
72,664
Annual Report 2018 8.b Other revenue and income - €2,538 million
Millions of euro
Operating grants
Grants for environmental certificates
Capital grants (electricity and gas business)
Sundry reimbursements
Gains on the disposal of subsidiaries, associates, joint ventures,
joint operations and non-current assets held for sale
Gains on the disposal of property, plant and equipment and
intangible assets
Service continuity bonuses
Other revenue
Total
2018
2017
Change l
20
664
22
353
287
61
44
1,087
2,538
40
878
21
361
159
43
66
407
1,975
(20)
(214)
1
(8)
128
18
(22)
680
563
-50.0%
-24.4%
4.8%
-2.2%
80.5%
41.9%
-33.3%
-
28.5%
“Grants for environmental certificates” amounted to €664
“Other revenue” amounted to €1,087 million (€407 million
million, a decrease of €214 million compared with the previ-
in 2017), an increase of €680 million from the previous year.
ous year due essentially to the reduction in grants for ener-
This increase is mainly attributable to:
gy efficiency certificates, in the amount of €197 million, and
> the increase in other revenue related to the electricity
a reduction in grants for green certificates in the amount of
business due to the recognition of gains in the amount
€17 million.
of €146 million relating to the reimbursement by the En-
ergy and Environmental Services Fund (CSEA) of system
“Sundry reimbursements” amounted to €353 million and
charges paid and not collected pursuant to Regulatory
concern reimbursements from customers and suppliers
Authority for Energy, Networks and Environment (ARE-
totaling €238 million (€165 million in 2017) and insurance
RA) Resolution 50/2018/R/eel;
indemnities in the amount of €115 million (€196 million in
> the increase in gains due to the recognition of €128 mil-
2017).
lion related to the agreement that e-distribuzione reached
with F2i and 2i Rete Gas for the early lump-sum liquida-
The item relating to gains on the disposal of companies
tion connected with the sale of the equity investment in
came to €287 million in 2018, an increase of €128 million
Enel Rete Gas;
compared with 2017, and mainly includes:
> revenue from tax partnerships recognized on new proj-
> the gain on the sale, with loss of control, of eight project
ects completed in 2018 (€361 million), which were previ-
companies in Mexico at the end of September 2018 and
ously classified as revenue from “Other sales and ser-
the associated remeasurement at fair value of the 20%
vices”, following changes in the business model, which
stake retained in the companies sold (€190 million);
prompted the amendment of contractual language.
> the gain on the sale of EF Solare Italia SpA (€65 million);
> the gain on the sale of a number of companies of the
The following table shows a breakdown of total revenue
Enel Green Power Business Line in Uruguay (€18 million).
from sales and services and of other revenue and income
In 2017, on the other hand, this item mainly included the
by business area based on the approach used by manage-
gain of €143 million deriving from the sale of the invest-
ment to monitor the Group’s performance during the two
ment in the Chilean company Electrogas.
years being compared.
“Gains on the disposal of property, plant and equipment
and intangible assets” in 2018 amounted to €61 million
(€43 million in 2017) and refer to ordinary disposals for
the period.
247
Consolidated financial statements Millions of euro
2018
Europe
and Euro-
Mediterranean
Affairs
South
America
North and
Central
America
Africa, Asia
and Oceania
Other,
eliminations and
adjustments
Italy
Iberia
Revenue from sales and
services
35,981
19,265
14,438
2,277
Other revenue and income
1,430
148
249
72
Total revenue
37,411
19,413
14,687
2,349
Revenue from sales and
services
36,663
19,825
12,766
Other revenue and income
1,237
115
360
Total revenue
37,900
19,940
13,126
2017
2,264
110
2,374
1,047
391
1,438
1,044
141
1,185
95
5
100
93
3
96
31
243
274
9
9
18
Total
73,134
2,538
75,672
72,664
1,975
74,639
Costs
9.a Electricity, gas and fuel purchases - €35,728 million
Millions of euro
Electricity
Gas
Nuclear fuel
Other fuels
Total
2018
19,584
12,944
118
3,082
35,728
2017
20,011
12,654
137
3,237
36,039
Change
-2.1%
2.3%
-13.9%
-4.8%
-0.9%
(427)
290
(19)
(155)
(311)
Purchases of “Electricity” totaled €19,584 million in 2018,
Purchases of “Gas” posted an increase of €290 million due
decreasing by €427 million compared with 2017 (€20,011
to the increase in the prices of long-term and spot contracts
million). These costs include purchases made by way of bilat-
incurred by Italian companies.
eral agreements on national and international markets in the
Purchases of “Other fuels” decreased by €155 million to
amount of €12,337 million (€12,573 million in 2017), electric-
€3,082 million in 2018, due primarily to the decline in the
ity purchases on the electricity exchanges in the amount of
volume of electricity output by Enel Produzione. Further-
€7,083 million (€7,168 million in 2017), and other purchases
more, starting on January 1, 2018, the results of the cash
made on local and international markets totaling €164 million
flow hedge derivative contracts established to hedge the
(€270 million on 2017).
purchase prices of coal were recognized using the basis-
The reduction in costs is attributable to the reduction in pur-
adjustment approach as required by “IFRS 9 - Financial in-
chases made through bilateral agreements (€236 million)
struments”. As a result, these results (a positive €43 million)
mainly relating to the reduction in volumes traded by Enel
have not been classified as net income/(expense) from com-
Global Trading, associated with a reduction in purchases both
modity contracts measured at fair value, but have been rec-
on other local and foreign markets in the amount of €106
ognized under fuel purchases, with an impact on the change
million and on the electricity exchanges in the amount of €85
in inventories.
million. These effects were partially offset by the increase in
electricity purchases in South America following the consoli-
dation of Enel Distribuição São Paulo.
248
Annual Report 2018 9.b Services and other materials - €18,870 million
Millions of euro
Transmission and transport
Maintenance and repairs
Telephone and postal costs
Communication services
IT services
Leases and rentals
Other services
Other materials
Total
2018
9,754
1,013
180
129
773
589
4,057
2,375
18,870
2017
9,840
1,128
199
127
627
525
3,656
1,880
17,982
Change
-0.9%
-10.2%
-9.5%
1.6%
23.3%
12.2%
11.0%
26.3%
4.9%
(86)
(115)
(19)
2
146
64
401
495
888
Costs for services and other materials amounted to
ers in the amount of €220 million, which are capitalized in
€18,870 million in 2018, an increase on 2017 of €888 mil-
accordance with the new IFRS 15.
lion. The reduction of €86 million in costs for transmission
The increase in costs for other materials, on the other
and transport and of €115 million in maintenance and re-
hand, was concentrated in Italy and Spain for the purchase
pairs was offset, above all, by the significant increase in
of materials and equipment for work on infrastructure and
costs for other services (€401 million) and other materials
networks, as well as for the increase in costs for environ-
(€495 million).
mental certificates (€179 million) for generation in Italy and
The increase in costs for other services was seen, in par-
for the sales companies in Romania.
ticular, in South and North America in relation to the con-
Costs for IT services also increased, by €146 million, main-
solidation of Enel Distribuição São Paulo in 2018 and of
ly in Italy and Spain, as did costs for leases and rentals
Enel X North America (formerly EnerNOC) starting from
in relation to an increase in hydroelectric lease payments
the 2nd Half of 2017. This increase was partially offset by
incurred in Spain following a greater use of hydroelectric
the reduction in costs related to the acquisition of custom-
production (€52 million).
9.c Personnel - €4,581 million
Millions of euro
Wages and salaries
Social security contributions
Deferred compensation benefits
Other post-employment and long-term benefits
Early retirement incentives
Other costs
Total
2018
3,157
894
103
113
138
176
2017
3,152
895
104
139
76
138
4,581
4,504
Change
0.2%
-0.1%
-1.0%
-18.7%
81.6%
27.5%
1.7%
5
(1)
(1)
(26)
62
38
77
Personnel costs amounted to €4,581 million in 2018, an in-
(1,332 employees) due to early-retirement incentives, re-
crease of €77 million.
flecting changes in the scope of consolidation (7,704 em-
The Group’s workforce increased by 6,372 employees de-
ployees) essentially attributable to:
spite the negative balance of new hires and terminations
> the acquisition of Enel Distribuição São Paulo in Brazil in June;
249
Consolidated financial statements > the acquisition of the YouSave business unit in Italy in
lion, up €62 million, mainly in Spain (€40 million), for the
July;
“Plan de Salida” incentive plan, and in Italy for terminations
> the acquisition of Empresa de Alumbrado Eléctrico de
pursuant to the provisions of Article 4 of Law 92/2012 (the
Ceuta and Empresa de Alumbrado Eléctrico de Ceuta
“Fornero Act”).
Distribución in Spain in August;
> the sale of Enel Green Power Uruguay in December.
The table below shows the average number of employees
by category, along with a comparison with the previous
The increase in wages and salaries essentially reflects the
year, as well as the actual numbers as of December 31,
increase in the average workforce in 2018.
2018.
Early retirement incentives in 2018 amounted to €138 mil-
No.
Senior managers
Middle managers
Office staff
Blue collar
Total
Average number (1)
Headcount (1)
2018
1,343
10,614
33,906
20,834
66,697
2017
1,308
10,073
32,558
18,956
62,895
Change
at Dec. 31, 2018
35
541
1,348
1,878
3,802
1,346
10,985
34,710
22,231
69,272
(1) For companies consolidated proportionately, the headcount corresponds to Enel’s percentage share of the total.
9.d Net impairment/(reversals) of trade receivables and other
receivables - €1,096 million
Millions of euro
Impairment of trade receivables
Impairment of other receivables
Total impairment of trade and other receivables
Reversals of impairment on trade receivables
Reversals of impairment on other receivables
Total reversals of impairment on trade and other
receivables
TOTAL NET IMPAIRMENT/(REVERSALS) ON TRADE AND
OTHER RECEIVABLES
2018
1,367
18
1,385
(281)
(8)
(289)
1,096
2017
Change
-
-
-
-
-
-
-
1,367
18
1,385
(281)
(8)
(289)
1,096
-
-
-
-
-
-
-
The aggregate, which totaled €1,096 million, includes im-
comparative figures for 2017, recognized under “Depre-
pairment losses and reversals of impairment losses on
ciation, amortization and other impairment losses” in the
trade and other receivables as a result of amendments of
amount of €910 million, have not been reclassified, as IFRS
IAS 1 as a consequence of the application of IFRS 9. The
9 was applied using the simplified approach.
250
Annual Report 2018 9.e Depreciation, amortization and other impairment losses -
€5,355 million
Millions of euro
Property, plant and equipment
Investment property
Intangible assets
Other impairment losses
Other reversals of impairment losses
Total
2018
4,132
7
1,075
272
(131)
5,355
2017
4,119
7
805
1,311
(381)
5,861
Change
0.3%
-
33.5%
-79.3%
65.6%
-8.6%
13
-
270
(1,039)
250
(506)
Depreciation, amortization and other impairment losses in
in 2018, of IFRS 15, which resulted in a reduction in agency
2018 decreased by €506 million.
and teleseller costs as they are capitalized when they result
This change essentially reflects amendments of IAS 1 as
in an increase in the customer base (€166 million).
a consequence of the application of IFRS 9, under which
The slight increase in depreciation of property, plant and
impairment losses on trade and other receivables in 2018
equipment (€13 million) was affected by the decrese in
were presented as a separate item. The comparative fig-
depreciation recognized by e-distribuzione (€94 million) fol-
ures for 2017, equal to €910 million, have not been reclas-
lowing a study of the operating performance of distribution
sified, as IFRS 9 was applied using the simplified approach
plants, supported by technical advisors, following which it
provided for in that standard.
was considered reasonable to extend the economic-techni-
These effects were partially offset by a €270 million in-
cal lives of certain components of distribution plants com-
crease in amortization due to the acquisition of Enel Distri-
pared with forecasts made in previous years.
buição São Paulo (€93 million) and the application, starting
Millions of euro
Impairment losses:
- property, plant and equipment
- investment property
- intangible assets
- goodwill
- trade receivables
- other assets
Total impairment losses
Reversals of impairment losses:
- property, plant and equipment
- investment property
- intangible assets
- trade receivables
- other assets
Total reversals of impairment losses
TOTAL IMPAIRMENT AND RELATED REVERSALS
2018
2017
Change
235
3
31
3
-
-
272
(86)
-
(45)
-
-
(131)
141
65
10
7
-
1,204
25
1,311
(53)
-
(9)
(310)
(9)
(381)
930
170
(7)
24
3
(1,204)
(25)
(1,039)
(33)
-
(36)
310
9
250
(789)
-
-70.0%
-
-
-
-
-79.3%
62.3%
-
-
-
-
65.6%
-84.8%
251
Consolidated financial statements Impairment losses decreased by €1,039 million on the previ-
Alcúdia power plant in Spain (€82 million). These increases
ous year.
were partially offset by the reversal of impairment for the Hel-
Of particular note was the greater impairment of property,
las CGU (€117 million).
plant and equipment (€194 million), in particular as a result
In 2017, this aggregate included impairment losses on the geo-
of the impairment of biomass and solar assets in Italy (€91
thermal assets of the German company Erdwärme (€42 mil-
million), of the assets of Nuove Energie (€24 million), of the
lion), which were recognized following unsuccessful explora-
Augusta and Bastardo power plants (€23 million), and of the
tion work.
9.f Other operating expenses - €2,889 million
Millions of euro
System charges - emissions allowances
Charges for energy efficiency certificates
Charges for purchases of green certificates
Losses on disposal of property, plant and equipment and
intangible assets
Taxes and duties
Other
Total
2018
443
607
41
61
1,126
611
2,889
2017
392
776
35
105
1,197
381
2,886
Change
13.0%
-21.8%
17.1%
-41.9%
-5.9%
60.4%
0.1%
51
(169)
6
(44)
(71)
230
3
Other operating expenses, totaling €2,889 million, increased
> lower charges for taxes and duties in the amount of €71
by €3 million.
million, essentially related to lower taxes on thermal gen-
This was due essentially to the following:
eration in Spain (€109 million), due in part to the greater
> higher charges in Spain, mainly for the “bono social”, in the
use of hydroelectric generation, which was only partially
amount of €229 million, as in 2017 a favorable judgment
offset by the increase in taxes on real estate in the amount
was issued that led to the reversal of costs incurred for
of €25 million, particularly in Italy;
2015, 2016 and 2017;
> a decrease of €89 million in costs related to the improve-
> an increase in indemnities paid to customers and suppliers
ment of service quality, which decreased mainly in Argen-
in the amount of €22 million;
tina and was only partially offset by the greater fines recog-
> lower environmental compliance costs in the amount of
nized in relation to distribution in Italy.
€112 million, mainly in Italy and Spain;
9.g Capitalized costs - €(2,264) million
Millions of euro
Personnel
Materials
Other
Total
2018
(836)
(852)
(576)
2017
(780)
(618)
(449)
(2,264)
(1,847)
Change
-7.2%
-37.9%
-28.3%
-22.6%
(56)
(234)
(127)
(417)
Capitalized costs consist of €836 million in personnel costs,
million, respectively, for 2017). Capitalized costs mainly regard
€852 million in materials costs, and €576 million in service
the development and implementation of major investments,
costs (compared with €780 million, €618 million, and €449
mainly in Enel Green Power and the distribution sector.
252
Annual Report 2018 10. Net income/(expense) from commodity contracts measured
at fair value - €483 million
Net income from the management of commodity risk amount-
> net income on derivatives at fair value through profit or
ed to €483 million in 2018 (compared with net income of €578
loss in the amount of €458 million (net income of €332
million in 2017), which may be broken down as follows:
million in 2017).
> net income on cash flow hedge derivatives in the amount
For more information on derivatives, see note 46 “Deriva-
of €25 million (net income of €246 million in 2017);
tives and hedge accounting”.
Millions of euro
Income:
- income from cash flow hedge derivatives
- income from derivatives at fair value through profit or loss
Total income
Expense:
- expense on cash flow hedge derivatives
- expense on derivatives at fair value through profit or loss
Total expense
NET INCOME/(EXPENSE) FROM COMMODITY
CONTRACTS MEASURED AT FAIR VALUE
2018
2017
Change
93
3,813
3,906
(68)
(3,355)
(3,423)
483
284
1,288
1,572
(38)
(956)
(994)
578
(191)
2,525
2,334
(30)
(2,399)
(2,429)
-67.3%
-
-
-78.9%
-
-
(95)
-16.4%
11. Financial income/(expense) from derivatives -
€461 million
Millions of euro
Income:
- income from cash flow hedge derivatives
- income from derivatives at fair value through profit or loss
- income from fair value hedge derivatives
Total income
Expense:
- expense on cash flow hedge derivatives
- expense on derivatives at fair value through profit or loss
- expense on fair value hedge derivatives
Total expense
TOTAL FINANCIAL INCOME/(EXPENSE) FROM
DERIVATIVES
2018
2017
Change
1,087
851
55
1,993
(376)
(1,124)
(32)
(1,532)
728
847
36
1,611
(2,171)
(552)
(43)
(2,766)
461
(1,155)
359
4
19
382
1,795
(572)
11
1,234
1,616
49.3%
0.5%
52.8%
23.7%
82.7%
-
25.6%
44.6%
-
Net income from derivatives amounted to €461 million
€1,443 million in 2017);
for 2018 (compared with net expense of €1,155 million in
> net expense on derivatives at fair value through profit
2017), which may be broken down as follows:
or loss in the amount of €273 million (net income of
> net income on cash flow hedge derivatives in the
€295 million in 2017);
amount of €711 million (compared with net expense of
253
Consolidated financial statements > net income on fair value hedge derivatives in the amount
atives mainly refer to the hedging of exchange rate risk. For
of €23 million (net expense of €7 million in 2017).
more information on derivatives, see note 46 “Derivatives
The net balances in 2018 on both hedging and trading deriv-
and hedge accounting”.
12. Other financial income/(expense) - €(2,509) million
Other financial income
Millions of euro
Interest income from financial assets (current and non-
current):
- interest income at effective rate on non-current securities
and receivables
- interest income at effective rate on short-term financial
investments
Total interest income at effective rate
Financial income on non-current securities at fair value
through profit or loss
Exchange gains
Income on equity investments
Other income
TOTAL FINANCIAL INCOME
2018
2017
Change
93
163
256
-
910
12
1,190
2,368
52
132
184
-
1,852
54
281
2,371
41
31
72
-
(942)
(42)
909
(3)
78.8%
23.5%
39.1%
-
-50.9%
-77.8%
-
-0.1%
Other financial income amounted to €2,368 million, a small
-
the adjustment in the value of the financial receivable
decrease of €3 million compared with the previous year
arising as a result of the sale of the 50% stake in Slo-
due mainly to:
vak Power Holding as a result of updating the pricing
> a decrease in exchange gains in the amount of €942
formula included in the agreements with EPH, which
million, reflecting the impact, above all, of trends in ex-
resulted in a €134 million increase in financial income;
change rates on net financial debt denominated in cur-
-
the recognition by Enel SpA of financial income in the
rencies other than the euro. This change is mainly at-
amount of €54 million related to reimbursements of
tributable to Enel Finance International (-€1,052 million)
direct taxes;
and Enel SpA (-€209 million) and was partially offset by
- an increase of €38 million in past-due interest rec-
the Enel Américas Group (+€212 million) and Enel Green
ognized, especially by e-distribuzione and the Enel
Power Brazil (+€62 million);
Américas Group;
> a decrease of €42 million in income on equity invest-
- an increase in interest and income accrued on financial
ments, which totaled €12 million in 2018, due essentially
assets in relation to the public service concession ar-
to the gain, in 2017, on the sale of the investment in the
rangements of the Brazilian companies in the amount
Indonesian firm Bayan Resources (€52 million);
of €30 million;
> an increase of €909 million in other income, due mainly to:
> an increase of €72 million in interest and other income
-
the recognition of financial income of €653 million for
on financial assets essentially related to financial receiv-
the Argentine companies following the application
ables, particularly for Enel Finance International and the
of IAS 29 related to accounting for hyperinflationary
Enel Américas Group.
economies, as explained in greater detail in note 2
to the consolidated financial statements for the year
ended December 31, 2018;
254
Annual Report 2018 Other financial expense
Millions of euro
Interest expense on financial debt (current and non-
current):
- interest on bank borrowings
- interest expense on bonds
- interest expense on other borrowings
Total interest expense
Exchange losses
Accretion of post-employment and other employee
benefits
Accretion of other provisions
Charges on equity investments
Other expenses
2018
2017
Change
408
1,953
127
2,488
1,378
107
169
1
734
357
1,987
95
2,439
820
72
190
-
387
51
(34)
32
49
558
35
(21)
1
347
969
14.3%
-1.7%
33.7%
2.0%
68.0%
48.6%
-11.1%
-
89.7%
24.8%
TOTAL FINANCIAL EXPENSE
4,877
3,908
Other financial expense amounted to €4,877 million, a total
- a decrease in financial expense recognized by Enel Fi-
increase of €969 million compared with 2017. The change re-
nance International in the amount of €108 million due
flects the following factors in particular:
to the early redemption in 2017 of bonds based on
> an increase in exchange losses in the amount of €558 mil-
the “make-whole call option” provided for under the
lion, reflecting the impact, above all, of trends in exchange
original financing agreement;
rates on net financial debt denominated in currencies oth-
- a reduction in charges related to medium- and long-
er than the euro. This change is mainly attributable to the
term revolving credit lines in the amount of €52 mil-
Enel Américas Group (€269 million), Enel Green Power
lion, above all for Enel SpA and Enel Finance Interna-
Brazil (€115 million), and Enel SpA (€60 million);
tional;
> an increase of €347 million in other charges due mainly to
> an increase of €49 million in interest expense on finan-
the following factors:
cial liabilities. This change was due to the increase in
-
the recognition of financial expenses of €485 million for
interest expense on bank borrowings in the amount of
the Argentine companies following the application of
€51 million, particularly in South America, and on oth-
IAS 29 related to recognitions during hyperinflationary
er non-bank borrowings in the amount of €32 million,
economies;
mainly due to the increase in interest expense on tax
- an €89 million decrease in capitalized interest mainly for
partnerships (€21 million). These effects were partially
Enel Green Power Brazil and Enel Green Power Chile;
offset by the reduction in interest expense on bonds in
- a €62 million increase in charges for the transfer and
the amount of €34 million, essentially for Enel SpA and
derecognition of receivables, mainly attributable to
Enel Finance International;
Enel Energia (€23 million), the Enel Américas Group
> an increase of €35 million in costs for the accretion of
(€21 million), and Servizio Elettrico Nazionale (€14
liabilities for employee benefits, essentially attributable
million);
to the Enel Américas Group (€38 million), mainly for the
- a reduction in financial charges for the adjustment of
acquisition of Enel Distribuição São Paulo;
the fair value of the financial receivable arising following
> a decrease of €21 million due to the accretion of other
the sale of 50% of Slovak Power Holding, which led to
provisions, mainly relating to the Enel Américas Group
the reversal of the total value of the receivable subject
(€28 million) due to the exchange rate effect and a de-
to impairment in 2016 (€220 million). Specifically, €186
crease in the discounting of past fines being disputed in
million in reversals was recognized in 2018, compared
Argentina.
with €34 million in 2017;
255
Consolidated financial statements 13. Share of income/(losses) of equity investments accounted
for using the equity method - €349 million
Millions of euro
Share of income of associates
Share of losses of associates
Total
2018
521
(172)
349
2017
225
(114)
111
Change
-
-50.9%
-
296
(58)
238
The share of net income on equity investments accounted
pro-rated recognition of the profits earned by associates
for using the equity method increased by €238 million com-
and joint ventures. These increases were only partially off-
pared with the previous year. This change was essentially
set by the impairment of certain assets of the Greek proj-
due to the adjustment of the value of the 50% stake in
ect companies involved in development of wind farms on
Slovak Power Holding (€362 million), which had been writ-
the Cyclades islands (€49 million) and of biomass develop-
ten down multiple times in previous years. The increase
ment projects in Italy (€12 million), as well as the effect of
described above was due to the changes in the parameters
the pro-rated recognition of losses for the year related to
used to determine the pricing formula, as included in the
associates and joint ventures.
agreements with EPH, as well as to the net effect of the
14. Income taxes - €1,851 million
Millions of euro
Current taxes
Adjustments for income taxes relating to prior years
Total current taxes
Deferred tax liabilities
Deferred tax assets
TOTAL
2018
2,014
(150)
1,864
92
(105)
1,851
2017
1,926
(59)
1,867
(169)
184
1,882
Change
4.6%
-
-0.2%
-
-
-1.6%
88
(91)
(3)
261
(289)
(31)
Income taxes for 2018 amounted to €1,851 million, com-
ing the tax reform in Colombia, which led to a reduction
pared with €1,882 million in 2017.
in progressive tax rates from 33% to 30%.
The €31 million reduction in taxes for 2018 compared with
These decreases were partially offset by greater taxes
the previous year was mainly due to the following factors:
resulting from the improvement in pre-tax income, from
> the recognition of greater deferred tax assets on past
taxes recognized in Mexico following the sale of the “Proj-
losses by Enel Distribuição Goiás as a result of the ef-
ect Kino” companies, from the release of deferred taxes
ficiency improvement measures implemented by the
recognized in 2017 by Enel Green Power North America in
Group subsequent to the acquisition (€274 million);
response to tax reform (€170 million), and from the recogni-
> a decrease in income taxes in Italy due to the recognition
tion in 2017 of deferred tax assets in Argentina by Edesur
of deferred tax assets (€85 million) for the past losses of
(€60 million).
3Sun following the merger with Enel Green Power SpA;
> the more favorable tax regime applicable to net income
For more information on changes in deferred taxes, see
deriving from extraordinary items compared with the
note 22.
previous year (€180 million);
> a reduction in deferred tax liabilities (€61 million) follow-
256
Annual Report 2018 The following table provides a reconciliation of the theoretical tax rate and the effective tax rate.
Millions of euro
Income before taxes
Theoretical taxes
Change in tax effect on impairment losses, capital gains and negative
goodwill
Recognition of deferred taxes on past losses in South America
Recognition of deferred taxes on past losses in Italy
Change in tax effect of “Project Kino” capital gains and other items in Mexico
Impact on deferred taxation of changes in tax rates
IRAP
Other differences, effect of different tax rates abroad compared with the
theoretical rate in Italy, and other minor items
Total
24.0%
24.0%
2018
8,201
1,968
(180)
(274)
(86)
100
(61)
237
147
1,851
2017
7,211
1,731
(6)
(60)
-
-
(182)
231
168
1,882
15. Basic and diluted earnings per share
Both metrics are calculated on the basis of the average num-
shares, adjusted for the diluting effect of outstanding stock
ber of ordinary shares in the period, equal to 10,166,679,946
options (none in both periods).
Net income from continuing operations attributable to
shareholders of the Parent Company (millions of euro)
Net income from discontinued operations attributable to
shareholders of the Parent Company (millions of euro)
Net income attributable to shareholders of the Parent
Company (millions of euro)
Number of ordinary shares
Dilutive effect of stock options
Basic and diluted earnings per share (euro)
Basic and diluted earnings from continuing operations per
share (euro)
Basic and diluted earnings from discontinued operations per
share (euro)
2018
4,789
-
2017
3,779
-
Change
1,010
26.7%
-
-
4,789
3,779
1,010
26.7%
10,166,679,946
10,166,679,946
-
0.47
0.47
-
-
0.37
0.37
-
-
-
0.10
0.10
-
-
-
27.0%
27.0%
-
257
Consolidated financial statements 16. Property, plant and equipment - €76,631 million
The breakdown of and changes in property, plant and equipment for 2018 are shown below:
Buildings
Plant and machinery
Industrial and commercial
equipment
Other assets
Leased assets
Leasehold improvements
and advances
Assets under construction
9,425
5,182
4,243
451
166
(25)
(3)
-
(169)
(26)
9
63
(93)
373
9,919
5,303
4,616
154,013
91,671
62,342
3,114
2,469
(1,060)
107
(27)
(3,753)
(142)
76
1,345
(528)
1,601
158,257
94,314
63,943
491
340
151
25
1
1
-
(4)
(24)
-
-
8
-
7
503
345
158
1,321
1,022
299
67
29
(14)
3
(5)
(89)
16
-
-
-
7
1,401
1,095
306
1,054
311
743
6
(2)
(1)
14
(48)
-
-
-
-
2
(29)
1,077
363
714
429
282
147
15
23
(8)
(31)
-
-
-
-
1
-
-
411
264
147
6,363
6,363
2,838
(2,693)
(321)
7
(7)
(66)
(105)
76
(271)
6,092
6,092
-
-
-
-
Total
173,745
98,808
74,937
6,530
-
(1,433)
129
(53)
(4,114)
(235)
86
1,334
(550)
1,694
178,315
101,684
76,631
Millions of euro
Cost
Accumulated depreciation and
impairment
Balance at Dec. 31, 2017
Capital expenditure
Assets entering service
Exchange rate differences
Change in scope of consolidation
Disposals
Depreciation
Impairment losses
Reversals of impairment losses
Other changes
Reclassifications from/to assets held
for sale
Total changes
Cost
Accumulated depreciation and
impairment
Balance at Dec. 31, 2018
Land
649
-
649
14
7
(13)
1
(2)
-
(1)
1
4
(5)
6
655
-
655
258
Annual Report 2018 16. Property, plant and equipment - €76,631 million
The breakdown of and changes in property, plant and equipment for 2018 are shown below:
Millions of euro
Cost
Accumulated depreciation and
impairment
Balance at Dec. 31, 2017
Capital expenditure
Assets entering service
Exchange rate differences
Change in scope of consolidation
Disposals
Depreciation
Impairment losses
Other changes
for sale
Total changes
Cost
Reversals of impairment losses
Reclassifications from/to assets held
Accumulated depreciation and
impairment
Balance at Dec. 31, 2018
Land
649
-
649
14
(13)
7
1
(2)
-
(1)
1
4
(5)
6
655
-
655
9,425
5,182
4,243
451
166
(25)
(3)
-
(169)
(26)
9
63
(93)
373
9,919
5,303
4,616
154,013
91,671
62,342
3,114
2,469
(1,060)
107
(27)
(3,753)
(142)
76
1,345
(528)
1,601
158,257
94,314
63,943
491
340
151
25
(4)
(24)
1
1
-
-
-
8
-
7
503
345
158
Buildings
Plant and machinery
equipment
Industrial and commercial
Other assets
Leased assets
Leasehold improvements
Assets under construction
and advances
1,321
1,022
299
67
29
(14)
3
(5)
(89)
-
-
16
-
7
1,401
1,095
306
1,054
311
743
6
(2)
(1)
14
-
(48)
-
-
2
-
(29)
1,077
363
714
429
282
147
15
23
-
-
(8)
(31)
-
-
1
-
-
411
264
147
6,363
-
6,363
2,838
(2,693)
(321)
7
(7)
-
(66)
-
(105)
76
(271)
6,092
-
6,092
Total
173,745
98,808
74,937
6,530
-
(1,433)
129
(53)
(4,114)
(235)
86
1,334
(550)
1,694
178,315
101,684
76,631
259
Consolidated financial statements “Plant and machinery” includes assets to be relinquished
For more information on leased assets, see note 18 below.
free of charge with a net carrying amount of €8,747 mil-
lion (€8,702 million at December 31, 2017), largely regard-
The types of capital expenditure made during 2018 are
ing power plants in Iberia and South America amounting to
summarized below. These expenditures, totaling €6,530
€4,390 million (€4,624 million at December 31, 2017), and
million, decreased by €327 million from 2017, a decrease
the electricity distribution network in South America totaling
that was particularly concentrated in solar power plants.
€3,806 million (€3,453 million at December 31, 2017).
Millions of euro
Power plants:
- thermal
- hydroelectric
- geothermal
- nuclear
- alternative energy sources
Total power plants
Electricity distribution networks
Land, buildings, and other assets and equipment
TOTAL
2018
400
504
114
156
2,170
3,344
3,090
96
6,530
2017
577
450
224
127
2,819
4,197
2,627
33
6,857
Capital expenditure on power plants amounted to €3,344
offset by the sale, on December 14, 2018, of Enel Green
million, a decrease of €853 million on the previous year,
Power Uruguay and the related special-purpose vehicle
essentially reflecting decreased investment in alterna-
Estrellada.
tive-energy plants in Brazil, Peru, Mexico and the United
States. Capital expenditure on renewables plants mainly
Reclassifications from/to assets held for sale mainly refer
concerned wind farms, in the amount of €1,792 million,
to the carrying value of three solar plants in Brazil (€620
and photovoltaic plants, in the amount of €375 million.
million), which, following decisions taken by management,
Capital expenditure on the electricity distribution network
meet the requirements of IFRS 5 for classification in this
amounted to €3,090 million, an increase of €463 million
aggregate. These effects were partially offset by the re-
compared with the previous year, and mainly concerned
classification of the project companies relating to the Kaf-
service-quality improvements and activities relating to the
ireas wind farm as no longer available for sale as a result
replacement of electronic meters for implementation of
of no longer meeting the conditions for continuing with the
the Open Meter plan in Italy.
sale.
The changes in the scope of consolidation for 2018 mainly
Other changes include the effects of IAS 29 on property,
concerned the acquisitions of Parques Eólicos Gestinver
plant and equipment as at January 1, 2018, and the effects
(€139 million), a company operating in the production of
of hyperinflation as of December 31, 2018, for a total of
wind energy, of Empresa de Alumbrado Eléctrico de Ceuta
€1,130 million, as well as the effect of capitalizing interest
(€65 million), a company operating in the distribution and
on loans specifically dedicated to capital expenditure in the
sale of electricity in the autonomous city of Ceuta in North
amount of €77 million (€167 million in 2017), as detailed
Africa, and of the Brazilian distribution company Enel Distri-
below.
buição São Paulo (€14 million). These effects were partially
260
Annual Report 2018 Millions of euro
Enel Green Power SpA
PH Chucas SA
Enel Green Power Brazil
Enel Green Power North
America
Enel Green Power México
Enel Green Power South Africa
Enel Américas Group
Enel Chile Group
Endesa Group
Enel Produzione
Total
2018
Rate (%)
2017
Rate (%)
Change
4
-
19
9
3
6
16
9
4
7
77
1.7%
-
0.9%
0.5%
5.2%
6.3%
8.5%
7.7%
1.9%
4.8%
14
1
84
10
12
7
7
19
8
5
167
4.8%
6.1%
6.8%
1.3%
4.6%
7.8%
9.0%
5.2%
2.1%
4.8%
(10)
(1)
(65)
(1)
(9)
(1)
9
(10)
(4)
2
(90)
-71.4%
-
-77.4%
-10.0%
-75.0%
-14.3%
-
-52.6%
-50.0%
40.0%
-53.9%
At December 31, 2018, contractual commitments to purchase property, plant and equipment amounted to €583 million.
17. Infrastructure within the scope of “IFRIC 12 -
Service concession arrangements”
Service concession arrangements, which are recognized
The following table summarizes the salient details of those
in accordance with IFRIC 12, regard certain infrastructure
concessions.
serving concessions for electricity distribution in Brazil.
Millions of euro
Grantor
Activity Country
Concession
period
Concession
period
remaining
Renewal
option
Amount
recognized
among contract
assets at Dec.
31, 2018
Amount
recognized
among
financial
assets at Dec.
31, 2018
Amount
recognized
among
intangible
assets at Dec.
31, 2018
Enel
Distribuição
Rio
Enel
Distribuição
Ceará
Brazilian
government
Electricity
distribution
Brazilian
government
Electricity
distribution
Enel Green
Power Mourão
Brazilian
government
Power
generation
Enel Green
Power
Paranapanema
Enel
Distribuição
Goiás
Enel Green
Power Volta
Grande
Enel
Distribuição
São Paulo
Total
Brazilian
government
Power
generation
Brazilian
government
Electricity
distribution
Brazilian
government
Power
generation
Brazilian
government
Electricity
distribution
Brazil
1997-2026
8 years
Yes
108
761
672
Brazil
1998-2028
10 years
Yes
36
425
648
Brazil
2016-2046
28 years
No
Brazil
2016-2046
28 years
No
-
-
Brazil
2015-2045
27 years
No
106
6
31
29
-
-
458
Brazil
2017-2047
29 years
No
-
320
-
Brazil
1998-2028
10 years
No
86
336
855
2,428
1,002
2,780
The value of the assets at the end of the concessions
fair value. For more information, see note 47 “Assets
classified under financial assets has been measured at
measured at fair value”.
261
Consolidated financial statements 18. Leases
The Group, in the role of lessee, has entered into finance
In Peru, leases concern agreements related to financing for
lease agreements. They include certain assets which the
the Ventanilla combined-cycle plant (with a duration of eight
Group is using in Spain, Peru, Italy and Greece. In Spain,
years remunerated at an annual rate of Libor + 1.75%), as
the assets relate to a 25-year tolling agreement (18 years
well as an agreement that financed construction of a new
remaining) for which an analysis pursuant to IFRIC 4 identi-
open-cycle system at the Santa Rosa plant (with a duration
fied an embedded finance lease, under which Endesa has
of nine years and annual interest of Libor + 1.75%).
access to the generation capacity of a combined-cycle plant
The other lease agreements regard wind plants that the
for which the toller, Elecgas, has undertaken to transform
Group uses in Italy (expiring in 2030-2031 and with a dis-
gas into electricity in exchange for a toll at a rate of 9.62%.
count rate of between 4.95% and 5.5%).
The carrying amount of assets held under finance leases is
reported in the following table.
Millions of euro
Property, plant and equipment
Intangible assets
Total
2018
714
-
714
2017
743
-
743
Change
-3.9%
-
-3.9%
(29)
-
(29)
The following table reconciles total future minimum lease payments and the present value, broken down by maturity
based on the contracts deemed to fall within the scope of IAS 17-IFRIC 4.
Millions of euro
Periods
Within 1 year
Between 1 and 5 years
Beyond 5 years
Total
Financial expense
Present value of minimum lease payments
Future minimum
payments
Present value of
future minimum
payments
Future minimum
payments
Present value of
future minimum
payments
at Dec. 31, 2018
at Dec. 31, 2017
98
345
518
961
(306)
655
65
221
369
655
-
88
326
573
987
(293)
694
58
210
426
694
-
The Group, in the role of lessee, has entered also into oper-
Costs for operating leases are broken down in the follow-
ating lease agreements regarding the use of certain assets
ing table into minimum payments, contingent rents and
for industrial purposes. The associated lease payments
sublease payments.
are expensed under “Services and other materials”.
262
Annual Report 2018 Millions of euro
Minimum lease payments
Contingent rents
Sublease payments
Total
The future minimum lease payments due by the Group under such leases break down by maturity as follows:
Millions of euro
Periods
Within 1 year
Beyond 1 year and within 5 years
Beyond 5 years
Total
19. Investment property - €135 million
Investment property at December 31, 2018 came to €135 million, an increase of €58 million year on year.
Millions of euro
Cost
Accumulated depreciation and impairment
Balance at Dec. 31, 2017
Assets entering service
Exchange rate differences
Change in scope of consolidation
Depreciation
Impairment losses
Other changes
Total changes
Cost
Accumulated depreciation and impairment
Balance at Dec. 31, 2018
2018
2,441
10
-
2,451
2018
230
657
1,554
2,441
2018
121
44
77
-
-
12
(7)
(3)
56
58
179
44
135
The Group’s investment property consists of properties in
2018 from a building for the Group’s own use to investment
Italy, Spain and Chile, which are free of restrictions on the
property, as well as to the acquisition of the Brazilian distri-
realizability of the investment property or the remittance of
bution company Enel Distribuição São Paulo.
income and proceeds of disposal. In addition, the Group has
no contractual obligations to purchase, construct or develop
For more information on the valuation of investment prop-
investment property or for repairs, maintenance or enhance-
erty, see notes 47 “Assets measured at fair value” and 47.1
ments.
“Fair value of other assets”.
The change for the year was mainly due to the reclassifica-
tion of the land at La Palma, the former offices of Gas y Elec-
tricidad Generación SAU, the use of which was changed in
263
Consolidated financial statements 20. Intangible assets - €19,014 million
A breakdown of and changes in intangible assets for 2018 are shown below:
Develop-
ment costs
Industrial patents
and intellectual
property rights
Concessions,
licenses,
trademarks and
similar rights
Service
concession
arrangements
Assets under
development
and advances
Other
Contract costs
Total
31
22
9
4
16
(1)
-
(1)
(5)
-
-
1
-
14
42
19
23
2,148
14,171
4,840
3,060
814
1,840
1,633
2,626
2,219
-
12,538
2,214
11
6
442
-
841
57
233
814
520
(384)
(334)
(175)
8
(15)
1,440
(1)
(199)
-
6
74
-
1,003
968
(29)
54
(13)
(291)
(243)
-
-
(23)
39
(349)
(131)
-
566
(7)
(26)
-
-
-
(8)
-
6
52
171
985
2,352
15,246
6,899
3,294
308
97
129
(8)
-
(3)
(181)
-
-
23
-
57
-
-
-
25,064
8,340
16,724
220
1,351
-
-
-
-
-
(525)
2,462
(47)
(166)
(1,085)
-
-
451
-
(31)
45
75
45
505
2,290
986
29,804
1,987
1,705
4,119
2,479
-
481
10,790
365
13,541
2,780
815
985
505
19,014
Millions of euro
Cost
Accumulated
amortization and
impairment
Balance at Dec. 31,
2017
Investments
Assets entering service
Exchange rate
differences
Change in scope of
consolidation
Disposals
Amortization
Impairment losses
Reversals of impairment
losses
Other changes
Reclassifications from/to
assets held for sale
Total changes
Cost
Accumulated
amortization and
impairment
Balance at Dec. 31,
2018
“Industrial patents and intellectual property rights” relate
three and five years).
mainly to costs incurred in purchasing software and open-
“Concessions, licenses, trademarks and similar rights” in-
ended software licenses. The most important applications
clude the costs incurred for the acquisition of customers by
relate to invoicing and customer management, the develop-
the foreign electricity distribution and gas sales companies.
ment of Internet portals and the management of company
Amortization is calculated on a straight-line basis over the
systems. Amortization is calculated on a straight-line basis
term of the average period of the relationship with custom-
over the asset’s residual useful life (on average between
ers or of the concessions.
264
Annual Report 2018 -
-
-
-
5,678
5,673
1,457
1,839
1,522
1,667
614
548
The following table reports service concession arrangements that do not fall within the scope of IFRIC 12 and had a bal-
ance as at December 31, 2018.
Millions of euro
Grantor
Activity
Country
Concession
period
Concession
period
remaining
Renewal
option
at Dec. 31,
2018
Initial fair
value
Endesa Distribución
Eléctrica
Electricity
distribution
-
Spain
Indefinite
Indefinite
Codensa
Republic of
Colombia
Electricity
distribution
Colombia
Indefinite
Indefinite
Enel Distribución Chile
(formerly Chilectra)
Republic of
Chile
Electricity
distribution
Chile
Indefinite
Indefinite
Enel Distribución Perú
(formerly Empresa de
Distribución Eléctrica de
Lima Norte)
Enel Distribuţie
Muntenia
Republic of Peru
Romanian
Ministry for the
Economy
Electricity
distribution
Electricity
distribution
Peru
Indefinite
Indefinite
Romania
2005-2054
35 years
Yes
138
191
The item includes assets with an indefinite useful life in
“Impairment losses” amounted to €31 million in 2018. For
the amount of €9,271 million (€9,445 million at Decem-
more information, see note 9.e.
ber 31, 2017), essentially accounted for by concessions for
distribution activities in Spain (€5,678 million), Colombia
“Other changes” include the recognition as at January 1,
(€1,457 million), Chile (€1,522 million), and Peru (€614 mil-
2018 of contract costs as well as the reclassification of
lion), for which there is no statutory or currently predictable
public-to-private service concession agreements (under
expiration date. On the basis of the forecasts developed,
development) to non-current assets deriving from con-
cash flows for each CGU, with which the various conces-
tracts with customers in Brazil in application of IFRS 15.
sions are associated, are sufficient to recover the carrying
amount. The change during the year is essentially attribut-
“Reclassifications from/to assets held for sale” amounted
able to changes in exchange rates. For more information
to €45 million, and essentially refer to the reclassification
on service concession arrangements, see note 26.
of the project companies related to the Kafireas wind farm
as no longer available for sale as they no longer met the
Changes in the scope of consolidation for 2018 mainly con-
conditions for continuing with the sale.
cerned the acquisition of the Brazilian distribution company
Enel Distribuição São Paulo (€2,411 million), reflecting the
adjustments for the purchase price allocation and was only
partially offset by disposals for the period.
265
Consolidated financial statements 21. Goodwill - €14,273 million
Goodwill amounted to €14,273 million, an increase of €527 million over the previous year.
Millions of euro
at Dec. 31, 2017
Change in scope
of cons.
Exchange rate diff.
Impairment losses
to assets held for sale
Other changes
at Dec. 31, 2018
Reclassifications from/
-
-
-
-
-
-
-
-
-
-
-
-
(3)
(3)
(23)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5)
22
Cost
11,177
1,209
1,420
276
561
530
54
106
328
579
23
426
3
Cumulative
impairment
(2,392)
Net carrying
amount
-
-
-
-
-
-
-
-
-
(11)
(3)
(13)
8,785
1,209
1,420
276
561
530
54
95
328
579
20
413
3
(23)
17
16,692
(2,419)
14,273
Iberia (1)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power North America
Enel X North America
Market Italy (2)
Enel Green Power Italy
Romania (3)
Tynemouth Energy
Total
Cost
11,156
1,209
276
561
530
945
56
106
292
579
23
426
3
Cumulative
impairment
Net carrying
amount
(2,392)
-
-
-
-
-
-
(11)
-
-
-
(13)
-
8,764
1,209
276
561
530
945
56
95
292
579
23
413
3
21
-
-
-
-
466
2
-
-
-
-
-
-
16,162
(2,416)
13,746
489
-
-
-
-
-
32
1
-
14
-
-
-
-
47
(1) Includes Endesa and Enel Green Power España.
(2) Includes Enel Energia.
(3) Includes Enel Distribuţie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
Changes in the scope of consolidation refer to the acquisi-
characteristics of their business, on the operational rules
tion of the Brazilian distribution company Enel Distribuição
and regulations of the markets in which Enel operates, on
São Paulo (€466 million), which reflects the adjustments to
the corporate organization, and on the level of reporting
the purchase price allocation, as well as to the acquisition
monitored by management.
of Empresa de Alumbrado Eléctrico de Ceuta, a company
operating in the distribution and sale of electricity in the
The recoverable value of the goodwill recognized was es-
autonomous city of Ceuta in North Africa.
timated by calculating the value in use of the CGUs using
Reclassifications from/to assets held for sale, which
expected future cash flows and applying an appropriate
amounted to €23 million, concern the goodwill associated
discount rate, selected on the basis of market inputs such
with the Brazil CGU allocated to the three wind farms in
as risk-free rates, betas and market-risk premiums.
Brazil which during the year qualified for such classification
Cash flows were determined on the basis of the best in-
discounted cash flow models, which involve estimating
under IFRS 5.
formation available at the time of the estimate, taking ac-
count of the specific risks of each CGU, and drawn:
Impairment losses amounted to €3 million, and refer to the
> for the explicit period, from the 5-year Business Plan ap-
adjustment of the sale price of the Finale Emilia biomass
proved by the Board of Directors of the Parent Company
power generation plant.
on November 19, 2018, containing forecasts for volumes,
revenue, operating costs, capital expenditure, industrial
The criteria used to identify the cash generating units
and commercial organization and developments in the
(CGUs) were essentially based – in line with manage-
main macroeconomic variables (inflation, nominal inter-
ment’s strategic and operational vision – on the specific
est rates and exchange rates) and commodity prices. The
266
Annual Report 2018 21. Goodwill - €14,273 million
Goodwill amounted to €14,273 million, an increase of €527 million over the previous year.
Change in scope
Cumulative
Net carrying
impairment
amount
(2,392)
21
8,764
1,209
276
561
530
945
56
95
292
579
23
413
3
-
-
-
-
-
-
-
-
-
-
(11)
(13)
466
2
-
-
-
-
-
-
-
-
-
-
Cost
11,156
1,209
276
561
530
945
56
106
292
579
23
426
3
-
-
-
-
-
-
-
-
-
-
32
1
14
Iberia (1)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power North America
Enel X North America
Market Italy (2)
Enel Green Power Italy
Romania (3)
Tynemouth Energy
Total
16,162
(2,416)
13,746
489
47
(1) Includes Endesa and Enel Green Power España.
(2) Includes Enel Energia.
(3) Includes Enel Distribuţie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
Millions of euro
at Dec. 31, 2017
of cons.
Exchange rate diff.
Impairment losses
Reclassifications from/
to assets held for sale
Other changes
at Dec. 31, 2018
-
-
-
-
-
-
-
-
-
-
(3)
-
-
(3)
-
-
-
-
-
(23)
-
-
-
-
-
-
-
(23)
-
-
-
-
-
-
(5)
-
22
-
-
-
-
17
Cost
11,177
1,209
276
561
530
1,420
54
106
328
579
23
426
3
Cumulative
impairment
(2,392)
-
-
-
-
-
-
(11)
-
-
(3)
(13)
-
Net carrying
amount
8,785
1,209
276
561
530
1,420
54
95
328
579
20
413
3
16,692
(2,419)
14,273
explicit period of cash flows considered in impairment
More specifically, the terminal value was calculated as a
testing differs in accordance with the specific features
perpetuity or annuity with a nominal growth rate equal to
and business cycles of the various CGUs being tested.
the long-term rate of growth in electricity and/or inflation
These differences are generally associated with the
(depending on the country and business involved) and in
different average times needed to build and bring into
any case no higher than the average long-term growth rate
service the plant and other works that characterize the
of the reference market. The value in use calculated as de-
investments of the specific businesses that make up the
scribed above was found to be greater than the amount
CGU (conventional thermal generation, nuclear power,
recognized on the balance sheet, with the exceptions dis-
renewables, distribution, etc.);
cussed below.
> for subsequent years, from assumptions concerning
In order to verify the robustness of the value in use of the
long-term developments in the main variables that de-
CGUs, sensitivity analyses were conducted for the main
termine cash flows, the average residual useful life of
drivers of the values, in particular WACC, the long-term
assets or the duration of the concessions.
growth rate and margins, the outcomes of which fully sup-
ported that value.
267
Consolidated financial statements Amount
at Dec. 31,
2017
8,764
1,209
276
561
530
945
56
95
292
579
23
413
3
1.7%
2.9%
8.6%
3.4%
2.9%
4.0%
1.4%
2.3%
2.3%
0.7%
1.9%
2.4%
n/a
6.9%
7.4%
18.7%
6.9%
9.3%
10.0%
8.2%
6.4%
10.3%
10.8%
7.3%
6.7%
n/a
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
n/a
Perpetuity/19 years
Perpetuity/23 years
Perpetuity/29 years
Perpetuity/27 years
Perpetuity/29 years
Perpetuity/26 years
26 years
25 years
15 years
15 years
Perpetuity/22 years
Perpetuity/19 years
n/a
The table below reports the composition of the main good-
rates applied and the time horizon over which the expected
will values according to the company to which the cash-
cash flows have been discounted.
generating unit (CGU) belongs, along with the discount
Millions of euro
Amount
Growth rate (1)
Pre-tax WACC
discount rate (2)
Explicit period
of cash flows
Terminal value (3)
Growth rate (1)
Pre-tax WACC
discount rate (2)
Explicit period
of cash flows
Terminal value (3)
Iberia (4)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power North America
Enel X North America
Market Italy (5)
Enel Green Power Italy
Romania (6)
Tynemouth Energy
at Dec. 31,
2018
8,785
1,209
276
561
530
1,420
54
95
328
579
20
413
3
1.6%
2.6%
7.1%
3.4%
3.0%
4.0%
1.5%
2.3%
2.3%
0.7%
1.0%
2.4%
n/a
6.9%
7.5%
5 years
Perpetuity/24 years
5 years
Perpetuity/25 years
20.1%
5 years
Perpetuity
6.8%
9.3%
9.5%
9.0%
6.8%
10.3%
11.0%
6.7%
6.8%
n/a
5 years
Perpetuity/26 years
5 years
Perpetuity/28 years
5 years
Perpetuity/26 years
5 years
5 years
5 years
5 years
24 years
25 years
Perpetuity
15 years
5 years
Perpetuity/23 years
5 years
Perpetuity/18 years
n/a
n/a
(1) Perpetual growth rate for cash flows after the explicit forecast period.
(2) Pre-tax WACC calculated using the iterative method: the discount rate that ensures that the value in use calculated with pre-tax cash flows is equal
to that calculated with post-tax cash flows discounted with the post-tax WACC.
(3) The terminal value has been estimated on the basis of a perpetuity or an annuity with a rising yield for the years indicated in the column.
(4) Includes Endesa and Enel Green Power España.
(5) Goodwill allocated to the Market Italy CGU.
(6) Includes Enel Distribuţie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
At December 31, 2018, impairment tests conducted for the CGUs to which goodwill was allocated pointed to no impair-
ment losses, similarly to 2017.
268
Annual Report 2018 Millions of euro
Amount
Growth rate (1)
discount rate (2)
of cash flows
Terminal value (3)
Pre-tax WACC
Explicit period
Iberia (4)
Chile
Argentina
Peru
Colombia
Brazil
Central America
Enel Green Power North America
Enel X North America
Market Italy (5)
Enel Green Power Italy
Romania (6)
Tynemouth Energy
at Dec. 31,
2018
8,785
1,209
1,420
276
561
530
54
95
328
579
20
413
3
1.6%
2.6%
7.1%
3.4%
3.0%
4.0%
1.5%
2.3%
2.3%
0.7%
1.0%
2.4%
n/a
20.1%
5 years
Perpetuity
6.9%
7.5%
6.8%
9.3%
9.5%
9.0%
6.8%
10.3%
11.0%
6.7%
6.8%
n/a
5 years
Perpetuity/24 years
5 years
Perpetuity/25 years
5 years
Perpetuity/26 years
5 years
Perpetuity/28 years
5 years
Perpetuity/26 years
5 years
5 years
5 years
5 years
24 years
25 years
Perpetuity
15 years
5 years
Perpetuity/23 years
5 years
Perpetuity/18 years
n/a
n/a
(1) Perpetual growth rate for cash flows after the explicit forecast period.
(2) Pre-tax WACC calculated using the iterative method: the discount rate that ensures that the value in use calculated with pre-tax cash flows is equal
to that calculated with post-tax cash flows discounted with the post-tax WACC.
(3) The terminal value has been estimated on the basis of a perpetuity or an annuity with a rising yield for the years indicated in the column.
(4) Includes Endesa and Enel Green Power España.
(5) Goodwill allocated to the Market Italy CGU.
(6) Includes Enel Distribuţie Muntenia, Enel Energie Muntenia and Enel Green Power Romania.
At December 31, 2018, impairment tests conducted for the CGUs to which goodwill was allocated pointed to no impair-
ment losses, similarly to 2017.
Amount
at Dec. 31,
2017
8,764
1,209
276
561
530
945
56
95
292
579
23
413
3
Growth rate (1)
Pre-tax WACC
discount rate (2)
Explicit period
of cash flows
Terminal value (3)
1.7%
2.9%
8.6%
3.4%
2.9%
4.0%
1.4%
2.3%
2.3%
0.7%
1.9%
2.4%
n/a
6.9%
7.4%
18.7%
6.9%
9.3%
10.0%
8.2%
6.4%
10.3%
10.8%
7.3%
6.7%
n/a
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
n/a
Perpetuity/19 years
Perpetuity/23 years
Perpetuity/29 years
Perpetuity/27 years
Perpetuity/29 years
Perpetuity/26 years
26 years
25 years
15 years
15 years
Perpetuity/22 years
Perpetuity/19 years
n/a
269
Consolidated financial statements 22. Deferred tax assets and liabilities - €8,305 million and
€8,650 million
The following table details changes in deferred tax assets
as well as the amount of deferred tax assets offsettable,
and liabilities by type of timing difference and calculated
where permitted, against deferred tax liabilities.
based on the tax rates established by applicable regulations,
Millions of euro
Deferred tax assets:
- differences in the value of intangible assets,
property, plant and equipment
- accruals to provisions for risks and charges and
impairment losses with deferred deductibility
- tax loss carried forward
- measurement of financial instruments
- employee benefits
- other items
Total
Deferred tax liabilities:
- differences on non-current and financial assets
- measurement of financial instruments
- other items
Total
Non-offsettable deferred tax assets
Non-offsettable deferred tax liabilities
Excess net deferred tax liabilities after any
offsetting
Incr./(Decr.) taken
to income statement
Incr./(Decr.)
taken to equity
Change in scope
of cons.
Exchange
differences
Other
changes
Reclassifications
of assets held for sale
at Dec. 31, 2017
at Dec. 31, 2018
1,617
1,439
167
690
604
1,837
6,354
6,051
237
2,060
8,348
(83)
9
336
(9)
(2)
(150)
101
(132)
10
202
80
-
-
-
118
51
(3)
166
-
146
-
146
135
288
46
3
209
32
713
610
-
61
671
3
(40)
(10)
(1)
(3)
(9)
(60)
(200)
(1)
(29)
(230)
(3)
30
(31)
-
10
1,026
1,032
295
11
(685)
(379)
-
-
-
-
-
-
-
(1)
(1)
14
14
1,669
1,726
508
801
869
2,732
8,305
6,638
403
1,609
8,650
4,581
3,116
1,810
At December 31, 2018, deferred tax assets, which are rec-
Distribuição Goiás (€274 million) and Enel Green Power SpA
ognized when their recoverability is reasonably certain, to-
(€85 million) following the merger of 3Sun.
taled €8,305 million (€6,354 million at December 31, 2017).
This increase was only partially offset by the increase in
Deferred tax assets increased by €1,951 million during the
deferred tax assets on past losses in Argentina recognized
year, essentially due to the change in the scope of consoli-
in 2017 in light of the improved earnings forecasts for the
dation and the purchase price allocation of Enel Distribuição
companies in that country.
São Paulo (€704 million) and application of the new IFRS
It should also be noted that deferred tax assets (in the
15, which led to recognition of the tax component on ad-
amount of €318 million) were not recorded in relation to
justments made as at January 1, 2018, regarding certain
prior tax losses in the amount of €1,218 million because, on
balance sheet items, mainly for e-distribuzione (€1,066
the basis of current estimates of future taxable income, it is
million). In addition, deferred tax assets increased due to
not certain that such assets will be recovered.
recognition of those resulting from the past losses of Enel
270
Annual Report 2018 Millions of euro
Deferred tax assets:
- differences in the value of intangible assets,
property, plant and equipment
- accruals to provisions for risks and charges and
impairment losses with deferred deductibility
- tax loss carried forward
- measurement of financial instruments
- employee benefits
- other items
Total
Deferred tax liabilities:
- differences on non-current and financial assets
- measurement of financial instruments
- other items
Total
Non-offsettable deferred tax assets
Non-offsettable deferred tax liabilities
Excess net deferred tax liabilities after any
offsetting
1,617
1,439
167
690
604
1,837
6,354
6,051
237
2,060
8,348
(83)
9
336
(9)
(2)
(150)
101
(132)
10
202
80
-
-
-
-
-
118
51
(3)
166
146
146
Incr./(Decr.) taken
to income statement
Incr./(Decr.)
taken to equity
Change in scope
of cons.
Exchange
differences
Other
changes
Reclassifications
of assets held for sale
at Dec. 31, 2017
at Dec. 31, 2018
135
288
46
3
209
32
713
610
-
61
671
3
(40)
(10)
(1)
(3)
(9)
(60)
(200)
(1)
(29)
(230)
(3)
30
(31)
-
10
1,026
1,032
295
11
(685)
(379)
-
-
-
-
-
(1)
(1)
14
-
-
14
1,669
1,726
508
801
869
2,732
8,305
6,638
403
1,609
8,650
4,581
3,116
1,810
Deferred tax liabilities amounted to €8,650 million at De-
(€655 million), the effect of application of IAS 29 to the
cember 31, 2018 (€8,348 million at December 31, 2017).
Argentine companies (€189 million), and the tax effect as-
They essentially include the determination of the tax ef-
sociated mainly with initial application of IFRS 15 for the
fects of the value adjustments to assets acquired as part of
capitalization of customer acquisition costs for Enel Energia
the final allocation of the cost of acquisitions made in the
(€98 million) and Endesa Energia (€24 million).
various years and the deferred taxation in respect of the dif-
These increases were partially offset by the reversal, with
ferences between depreciation charged for tax purposes,
regard to distribution in Spain, of the deferred tax liabilities
including accelerated depreciation, and depreciation based
previously allocated for the postponement of recognition of
on the estimated useful life of assets.
revenue related to customer connections (-€557 million), as
Deferred tax liabilities increased by a total of €302 million,
required by IFRS 15, and the reduction of the tax rate from
due in particular to the change in the scope of consolida-
33% to 30% in Colombia due to tax reform (€61 million).
tion following the acquisition of Enel Distribuição São Paulo
271
Consolidated financial statements 23. Equity investments accounted for using the equity method -
€2,099 million
Investments in joint arrangements and associated companies accounted for using the equity method are as follows:
Millions of euro
Joint arrangements
Slovak Power Holding
EGPNA Renewable Energy Partners
OpEn Fiber
Zacapa Topco Sàrl
Project Kino companies
Tejo Energia Produção e Distribuição de
Energia Eléctrica
Rocky Caney Holding
Drift Sand Wind Project
Front Marítim del Besòs
Enel Green Power Bungala
RusEnergoSbyt
Energie Electrique de Tahaddart
Transmisora Eléctrica de Quillota
EF Solare Italia
PowerCrop
Centrales Hidroeléctricas de Aysén
Associates
Elica 2
Tecnatom
Suministradora Eléctrica de Cádiz
Compañía Eólica Tierras Altas
Newco Cogenerazione.Si
Other
Total
% held
Income
effect
Change in
scope of cons.
Reclassifications from/to
Dividends
assets held for sale
Other
changes
at Dec. 31, 2017
at Dec. 31, 2018
50.0%
50.0%
50.0%
50.0%
20.0%
43.8%
-
50.0%
-
50.0%
49.5%
32.0%
50,0%
50.0%
50.0%
51.0%
30.0%
45.0%
33.5%
35.6%
20.0%
190
404
343
-
-
73
39
32
-
13
36
30
12
163
12
6
49
29
13
12
-
142
1,598
362
36
(56)
(5)
(2)
7
2
4
-
1
34
2
1
(9)
(12)
2
(49)
-
2
1
-
28
349
-
-
-
150
82
-
-
-
37
-
-
-
-
(135)
-
(8)
-
-
-
-
8
-
134
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(8)
(44)
(5)
(16)
(5)
(2)
(6)
(86)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
6
% held
50.0%
50.0%
50.0%
21.4%
20.0%
43.8%
20.0%
50.0%
61.4%
50.0%
49.5%
32.0%
50.0%
50.0%
50.0%
51.0%
30.0%
45.0%
33.5%
35.6%
20.0%
(55)
19
107
2
(1)
2
-
-
-
9
-
26
(1)
(3)
-
-
-
-
-
-
-
(7)
98
497
459
394
147
79
72
43
36
37
40
35
27
12
-
-
-
-
29
10
11
8
163
2,099
Income effects include the profits and losses recognized
The changes in the scope of consolidation refer mainly
by the companies in proportion to the interest that the
to the acquisition of the special-purpose vehicle Zacapa
Enel Group holds and refers mainly to the adjustment of
Topco Sàrl, which received 100% of the capital of Ufinet
the value of the 50% stake in Slovak Power Holding (€362
International, the leading operator of fiber-optic networks
million), which in previous years had been written down.
in Latin America, to the measurement using the equity
These effects were only partially offset by the impairment
method of the Mexican renewable companies (the “Proj-
of the Greek project companies involved in the develop-
ect Kino” companies) for the remaining portion attributable
ment of wind plants on the Cyclades islands (€49 million)
to the Group following the sale of 80% of their share capi-
and biomass development projects in Italy (€12 million). No
tal. These effects were partially offset by the sale, on De-
indications of impairment were found for the other equity
cember 27, 2018, of the joint venture EF Solare Italia held
investments.
by Marte Srl for €214 million.
272
Annual Report 2018 23. Equity investments accounted for using the equity method -
€2,099 million
Investments in joint arrangements and associated companies accounted for using the equity method are as follows:
Tejo Energia Produção e Distribuição de
EGPNA Renewable Energy Partners
Millions of euro
Joint arrangements
Slovak Power Holding
OpEn Fiber
Zacapa Topco Sàrl
Project Kino companies
Energia Eléctrica
Rocky Caney Holding
Drift Sand Wind Project
Front Marítim del Besòs
Enel Green Power Bungala
RusEnergoSbyt
Energie Electrique de Tahaddart
Transmisora Eléctrica de Quillota
Centrales Hidroeléctricas de Aysén
EF Solare Italia
PowerCrop
Associates
Elica 2
Tecnatom
Suministradora Eléctrica de Cádiz
Compañía Eólica Tierras Altas
Newco Cogenerazione.Si
Other
Total
50.0%
50.0%
50.0%
50.0%
20.0%
43.8%
50.0%
-
-
50.0%
49.5%
32.0%
50,0%
50.0%
50.0%
51.0%
30.0%
45.0%
33.5%
35.6%
20.0%
190
404
343
-
-
73
39
32
-
13
36
30
12
163
12
6
49
29
13
12
-
142
1,598
362
36
(56)
(5)
(2)
7
2
4
-
1
2
1
-
2
1
-
34
(9)
(12)
2
(49)
28
349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
150
82
37
(135)
(8)
8
134
% held
Income
effect
Change in
scope of cons.
Dividends
Reclassifications from/to
assets held for sale
Other
changes
at Dec. 31, 2017
at Dec. 31, 2018
-
-
-
-
-
(8)
-
-
-
-
(44)
(5)
-
(16)
-
-
-
-
(5)
(2)
-
(6)
(86)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6
6
(55)
19
107
2
(1)
-
2
-
-
26
9
-
(1)
(3)
-
-
-
-
-
-
-
(7)
98
497
459
394
147
79
72
43
36
37
40
35
27
12
-
-
-
-
29
10
11
8
163
2,099
% held
50.0%
50.0%
50.0%
21.4%
20.0%
43.8%
20.0%
50.0%
61.4%
50.0%
49.5%
32.0%
50.0%
50.0%
50.0%
51.0%
30.0%
45.0%
33.5%
35.6%
20.0%
Other changes mainly include the pro-rated changes in the
It should also be noted that application of the equity meth-
OCI reserves or other changes recognized directly in eq-
od to the investment in RusEnergoSbyt incorporates im-
uity. In particular, €55 million for Slovak Power Holding re-
plicit goodwill of €27 million.
fers to OCI changes on cash flow hedge derivatives, while
€107 million for OpEn Fiber is attributable to an increase in
reserves for future capital increases by shareholders (€125
million) and OCI reserves for cash flow hedge derivatives
(-€18 million).
273
Consolidated financial statements The following table provides a summary of financial infor-
Group not classified as held for sale in accordance with
mation for each joint arrangement and associate of the
IFRS 5.
Millions of euro
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Shareholders’ equity
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
Joint arrangements
Slovak Power Holding
OpEn Fiber
Zacapa Topco Sàrl
RusEnergoSbyt
Tejo Energia Produção e
Distribuição de Energia
Eléctrica
Energie Electrique de
Tahaddart
Associates
Tecnatom
Suministradora Eléctrica
de Cádiz
Compañía Eólica Tierras
Altas
9,295
2,084
1,343
3
9,079
1,224
-
4
203
250
91
51
6
6
93
74
71
29
922
313
81
116
163
11
67
70
27
757
125
-
138
149
27
59
24
6
10,217
2,397
1,424
119
366
102
118
76
33
9,836
1,349
-
142
399
120
133
95
35
129
126
102
198
231
168
168
5,643
1,043
669
-
72
8
29
26
3
5,298
369
-
-
10
25
23
2
981
565
65
112
9
24
21
2
981
281
-
127
16
43
34
1
6,624
1,608
734
112
17
53
47
5
6,279
3,593
3,557
650
-
127
26
68
57
3
789
690
7
85
65
29
28
699
-
15
94
65
38
32
274
Annual Report 2018 Millions of euro
Non-current assets
Current assets
Total assets
Non-current liabilities
Current liabilities
Total liabilities
Shareholders’ equity
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
Joint arrangements
Slovak Power Holding
OpEn Fiber
Zacapa Topco Sàrl
RusEnergoSbyt
Tejo Energia Produção e
Distribuição de Energia
Eléctrica
Energie Electrique de
Tahaddart
Associates
Tecnatom
Suministradora Eléctrica
de Cádiz
Compañía Eólica Tierras
Altas
203
250
9,295
2,084
1,343
3
91
51
6
6
9,079
1,224
-
4
93
74
71
29
922
313
81
116
163
11
67
70
27
757
125
-
138
149
27
59
24
6
10,217
2,397
1,424
119
366
102
118
76
33
9,836
1,349
-
142
399
120
133
95
35
5,643
1,043
669
-
72
8
29
26
3
5,298
369
-
-
981
565
65
112
981
281
-
127
6,624
1,608
734
112
6,279
3,593
3,557
650
-
127
789
690
7
699
-
15
129
126
102
198
231
168
168
10
25
23
2
9
24
21
2
16
43
34
1
17
53
47
5
26
68
57
3
85
65
29
28
94
65
38
32
275
Consolidated financial statements Millions of euro
Total revenue
Income before taxes
Net income from
continuing operations
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
at Dec.
31, 2018
at Dec.
31, 2017
Joint arrangements
Slovak Power Holding
2,587
2,362
OpEn Fiber
Zacapa Topco Sàrl
114
91
68
-
RusEnergoSbyt
2,378
2,515
205
(162)
(21)
88
Tejo Energia Produção e
Distribuição de Energia
Eléctrica
Energie Electrique de
Tahaddart
Associates
Tecnatom
Suministradora Eléctrica
de Cádiz
Compañía Eólica Tierras
Altas
24. Derivatives
234
267
30
35
97
10
12
56
57
5
11
7
-
6
4
141
(15)
-
106
34
30
(9)
3
2
103
(127)
(25)
70
21
5
-
6
3
104
(11)
-
85
23
21
(9)
3
1
Millions of euro
Non-current
Current
Derivative financial assets
Derivative financial liabilities
1,005
2,609
702
2,998
3,914
4,343
2,309
2,260
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
For more information on derivatives classified as non-current financial assets, please see note 46 for hedging derivatives
and trading derivatives.
276
Annual Report 2018 25. Current/Non-current contract assets/(liabilities)
Millions of euro
Non-current
Current
Contract assets
Contract liabilities
346
6,306
-
-
135
1,095
-
-
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
Non-current assets deriving from contracts with customers
ers concern the recognition as at January 1, 2018, in ap-
refer mainly to assets under development resulting from
plication of IFRS 15 and taking account of the regulatory
public-to-private service concession arrangements recog-
obligations applicable in the various jurisdictions in which
nized in accordance with IFRIC 12 and which have an ex-
the Group operates, of the contract liabilities related to rev-
piration of beyond 12 months (€336 million). These cases
enue from contracts for connection to the electricity grid,
arise when the concession holder has not yet obtained
which had previously been recognized in profit or loss at
the full right to recognize the asset from the grantor at the
the moment of the connection. The figure at December 31,
hypothetical conclusion of the concession arrangement in
2018 is mainly attributable to distribution in Italy (€3,613
that there remains a contractual obligation to ensure that
million), Spain (€2,251 million), and Romania (€405 million).
the asset becomes operational. It should also be noted that
For more information, see note 2 to the consolidated finan-
the figure at December 31, 2018 includes investments for
cial statements.
the period in the amount of €271 million, €80 million of
which deriving from the acquisition of Enel Distribuição São
Current liabilities deriving from contract with customers
Paulo.
include the contract liabilities related to revenue from con-
nections to the electricity grid expiring within 12 months in
Current assets deriving from contracts with customers
the amount of €726 million recognized in Italy and Spain,
mainly concern assets in respect of construction contracts
as well as liabilities for construction work in progress (€326
(€109 million) that are still open, payment of which is sub-
million).
ject to satisfaction of a performance obligation.
The comparative figures for 2017 have not been reclassi-
fied, given that IFRS 15 has been adopted initially using the
Non-current liabilities deriving from contracts with custom-
simplified approach.
277
Consolidated financial statements 26. Other non-current financial assets - €5,769 million
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Change
Equity investments in other companies measured at fair value
63
58
Receivables and securities included in net financial debt (see
note 26.1)
Service concession arrangements
Non-current prepaid financial expense
Total
3,272
2,415
19
5,769
2,444
1,476
24
4,002
5
828
939
(5)
1,767
8.6%
33.9%
63.6%
-20.8%
44.2%
Total non-current financial assets increased by €1,767 mil-
structures involved in concession arrangements, which
lion in 2018 as compared with the previous year. In particu-
have been recognized in accordance with IFRIC 12.
lar, the change reflects an increase in receivables included
in net financial debt, as discussed in note 26.1, and ser-
Equity investments in other companies measured at fair
vice concession arrangements, the €855 million increase
value include, in accordance with IFRS 9, the balance of
in which is mainly attributable to the consolidation of Enel
equity investments in other companies previously mea-
Distribuição São Paulo. Service concession arrangements
sured at cost. The change is mainly due to the adjustments
concern amounts paid to the licensing authorities for the
detailed below:
construction and/or improvement of public-service infra-
Millions of euro
% held
% held
at Dec. 31, 2018
at Dec. 31, 2017
Change
Galsi
Empresa Propietaria de la Red SA
European Energy Exchange
Athonet Srl
Korea Line Corporation
TAE Technologies Inc.
Echelon
Other
Total
17.6%
11.1%
2.2%
16.0%
0.3%
1.2%
-
14
17
8
7
2
1
-
14
63
17.6%
11.1%
2.2%
-
0.3%
1.2%
7.1%
17
5
6
-
2
5
1
22
58
(3)
12
2
7
-
(4)
(1)
(8)
5
278
Annual Report 2018 26.1 Other non-current financial assets included in net financial debt
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Change
Securities at FVOCI
360
382
Financial receivables in respect of Spanish electrical system
deficit
Other financial receivables
Total
-
2,912
3,272
3
2,059
2,444
(22)
(3)
853
828
-5.8%
-
41.4%
33.9%
Securities measured at FVOCI represent financial instru-
the sale of the 50% stake in Slovak Power Holding fol-
ments in which the Dutch insurance companies invest a
lowing the update to the pricing formula included in the
portion of their liquidity.
agreements with EPH. The change for the year takes ac-
count of a number of parameters, including the evolution
Other financial receivables increased by €853 million in
of Slovenské elektrárne’s net financial position, trends in
2018 compared with the previous year. The change mainly
energy prices on the Slovakian market, the levels of oper-
reflects the following factors:
ating efficiency of Slovenské elektrárne based on bench-
> an increase of €427 million in the financial receivable
marks established in the agreement, and the enterprise
held by Enel Finance International from the “Project
value of Mochovce units 3 and 4.
Kino” companies following their deconsolidation;
These increases were only partially offset by the decrease
> an adjustment in the fair value, in the amount of €320
in security deposits of €106 million.
million, of the financial receivable arising as a result of
27. Other non-current assets - €1,272 million
Millions of euro
Receivables from institutional market operators
Other receivables
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
200
1,072
1,272
200
864
1,064
-
208
208
-
24.1%
19.5%
Receivables from institutional market operators came to
monetary grants to be received in respect of green cer-
€200 million at December 31, 2018, remaining essentially
tificates totaling €50 million (€61 million at December 31,
unchanged compared with the previous year.
2017).
At December 31, 2018, other receivables mainly regarded
of Enel Distribuição São Paulo and the contingent consid-
tax receivables in the amount of €231 million (€261 million
eration (€91 million) related to development of new proj-
at December 31, 2017), security deposits in the amount
ects (the High Lonesome, Outlaw and Road Runner wind
of €307 million (€189 million at the end of 2017), and non-
farms).
The change for the year mainly reflects the consolidation
279
Consolidated financial statements 28. Inventories - €2,818 million
Millions of euro
Raw materials, consumables and supplies:
- fuel
- materials, equipment and other inventories
Total
Environmental certificates:
- CO2 emissions allowances
- green certificates
- white certificates
Total
Buildings available for sale
Payments on account
TOTAL
at Dec. 31, 2018
at Dec. 31, 2017
Change
1,260
1,345
2,605
119
16
-
135
57
21
1,215
1,136
2,351
287
14
1
302
62
7
2,818
2,722
45
209
254
(168)
2
(1)
(167)
(5)
14
96
3.7%
18.4%
10.8%
-58.5%
14.3%
-
-55.3%
-8.1%
-
3.5%
Raw materials, consumables and supplies amounted to
components, as well as an increase in natural gas invento-
€2,605 million at December 31, 2018 (€2,351 million in
ries.
2017), and consist of fuel inventories, particularly natural
gas, to cover the requirements of the generation compa-
Inventories of CO2 emissions allowances, on the other
hand, decreased due to compliance by the Group and lower
nies and trading activities, as well as materials and equip-
allowances for trading purposes.
ment for the operation, maintenance and construction of
Buildings available for sale are related to the remaining
plants and distribution networks.
units from the Group’s real estate portfolio and are primar-
During the year, the overall increase in inventories (€96 mil-
ily civil buildings.
lion) was mainly due to the increase in the latter of these
280
Annual Report 2018 29. Trade receivables - €13,587 million
Millions of euro
Customers:
- sale and transport of electricity
- distribution and sale of gas
- other assets
Total customer receivables
Trade receivables due from associates and joint arrangements
TOTAL
at Dec. 31, 2018
at Dec. 31, 2017
Change
8,556
1,145
3,687
13,388
199
13,587
11,123
2,029
1,234
14,386
143
14,529
(2,567)
(884)
2,453
(998)
56
(942)
-23.1%
-43.6%
-
-6.9%
39.2%
-6.5%
Trade receivables from customers are recognized net of
receivables for the sale and transport of electricity and for
allowances for doubtful accounts, which totaled €2,828
the sale of natural gas, to an increase in allowances, and to
million at the end of the year, as compared with a balance
the increased use of factoring.
of €2,402 million at the end of the previous year. Specifi-
For more information on trade receivables, see note 43
cally, the reduction for the period was mainly due to lower
“Financial instruments”.
30. Other current financial assets - €5,160 million
Millions of euro
Current financial assets included in net financial debt
Other
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
5,003
157
5,160
4,458
156
4,614
545
1
546
12.2%
0.6%
11.8%
30.1 Other current financial assets included in net financial debt -
€5,003 million
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Change
Short-term portion of long-term financial receivables
1,522
1,094
Receivables for factoring
Securities at FVOCI
Financial receivables and cash collateral
Other
Total
-
72
2,559
850
5,003
42
69
2,664
589
4,458
428
(42)
3
(105)
261
545
39.1%
-
4.3%
-3.9%
44.3%
12.2%
Other current financial assets included in net financial debt
increased by €428 million due mainly to the increase in fi-
totaled €5,003 million (€4,458 million at December 31,
nancial receivables from the Spanish electricity system for
2017).
the financing of the rate deficit, as well as to the consolida-
The change is mainly attributable to the increase in the
tion of Enel Distribuição São Paulo.
short-term portion of long-term financial receivables, which
The aggregate “Other” also increased, by €261 million,
281
Consolidated financial statements due to the increase in financial receivables recognized by
Financial receivables and cash collateral, on the other hand,
Enel Finance International from the Mexican companies
decreased by €105 million following a reduction in cash col-
of “Project Kino”, which are accounted for using the equity
lateral paid to counterparties for transactions in over-the-
method.
counter derivatives on interest rates and exchange rates.
31. Other current assets - €2,983 million
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Change
Receivables from institutional market operators
Advances to suppliers
Receivables due from employees
Receivables due from others
Sundry tax receivables
Accrued operating income and prepaid expenses
Revenue for construction contracts
745
299
30
1,139
622
148
-
853
217
20
872
517
150
66
Total
2,983
2,695
(108)
-12.7%
82
10
267
105
(2)
(66)
288
37.8%
50.0%
30.6%
20.3%
-1.3%
-
10.7%
Receivables from institutional market operators include re-
mainly attributable to the sale of the eight renewables com-
ceivables in respect of the Italian system in the amount of
panies in Mexico, as this item includes the receivable of Enel
€526 million (€575 million at December 31, 2017) and the
Green Power SpA from the institutional investor Caisse de
Spanish system in the amount of €185 million (€260 million at
dépôt et placement du Québec and from the investment ve-
December 31, 2017). The reduction for the period mainly re-
hicle CKD Infraestructura México SA de Cv.
flects the collection of the 2017 social bonus reimbursement,
The increase of €105 million in sundry tax receivables was
relating to financial years 2014, 2015 and 2016 following a rul-
due to greater VAT prepayments compared with the amount
ing in favor of Endesa. Including the portion of receivables
paid in 2017.
classified as long-term in the amount of €200 million (€200
Revenue for construction contracts at December 31, 2018 (in
million in 2017), receivables due from institutional market op-
the amount of €135 million) has been reclassified to assets
erators at December 31, 2018 totaled €945 million (€1,053
deriving from contracts with customers following application
million at December 31, 2017), with payables of €4,117 mil-
of the simplified approach allowed under IFRS 15. For this
lion (€5,029 million at December 31, 2017).
reason, the balances at December 31, 2017 (€66 million) have
The €267 million increase in receivables due from others is
not been reclassified.
282
Annual Report 2018 32. Cash and cash equivalents - €6,630 million
Cash and cash equivalents, detailed in the table below, are
lion essentially in respect of deposits pledged to secure
not restricted by any encumbrances, apart from €52 mil-
transactions carried out.
Millions of euro
Bank and post office deposits
Cash and cash equivalents on hand
Other investments of liquidity
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
5,531
328
771
6,630
6,487
343
191
7,021
(956)
(15)
580
(391)
-14.7%
-4.4%
-
-5.6%
33. Assets and disposal groups classified as held for sale -
€688 million and €407 million
Changes in assets held for sale during 2018 may be broken down as follows:
Millions of euro
Property, plant and equipment
Intangible assets
Goodwill
Deferred tax assets
Investments accounted for using the equity method
Non-current financial assets
Other non-current assets
Cash and cash equivalents
Current financial assets
Inventories, trade receivables, and other current assets
Reclassification
from/to current
and non-current
assets
Disposals and
change in scope
of consolidation
at Dec. 31,
2017
Other
changes
at Dec. 31,
2018
1,501
87
38
109
6
-
2
30
3
193
550
(45)
23
1
(6)
-
(2)
18
-
30
(1,884)
(36)
(38)
(118)
-
-
-
(105)
-
(231)
444
(1)
-
8
-
-
1
78
(3)
35
611
5
23
-
-
-
1
21
-
27
Total
1,970
569
(2,412)
561
688
283
Consolidated financial statements Changes in liabilities in 2018 were as follows:
Millions of euro
Long-term borrowings
Employee benefits
Provisions for risks and charges, non-
current portion
Deferred tax liabilities
Non-current financial liabilities
Other non-current liabilities
Short-term borrowings
Other current financial liabilities
Provisions for risks and charges, current
portion
Trade payables and other current liabilities
Total
at Dec.
31, 2017
416
-
-
113
-
58
980
2
-
160
1,729
Reclassification
from/to current and
non-current assets
Disposals and
change in scope of
consolidation
Other changes
at Dec. 31, 2018
(282)
(1,429)
1,394
-
2
(14)
-
(53)
(685)
3
-
12
(1,017)
-
(1)
(116)
-
-
-
-
-
(41)
(1,587)
-
-
17
-
-
(11)
(3)
-
(115)
1,282
99
-
1
-
-
5
284
2
-
16
407
Assets and liabilities held for sale at December 31, 2018
an 80% stake in eight Mexican project companies (“Project
amount to €688 million and €407 million respectively and
Kino”) classified as held for sale as of December 31, 2017,
mainly regard the carrying amount of three solar plants in
and now accounted for using the equity method for the
Brazil, which, following decisions by management, meet
remaining share attributable to the Group, and the reclas-
the requirements of IFRS 5 for classification as held for
sification of the project companies relating to the Kafireas
sale.
wind farm as no longer available for sale as the conditions
The change for the period essentially concerns the sale of
for the sale were no longer met.
34. Shareholders’ equity - €47,852 million
34.1 Equity attributable to shareholders of the Parent Company -
€31,720 million
Share capital - €10,167 million
At December 31, 2018, the share capital of Enel SpA – con-
sidering that as at December 31, 2017, there were no ap-
proved stock option plans (and thus no options exercised) –
amounted to €10,166,679,946 fully subscribed and paid up,
represented by the same number of ordinary shares with a
par value of €1.00 each.
At December 31, 2018, based on the shareholders register
vestment” (represented by shares with voting rights, shares
in securities lending arrangements and other long positions
with cash settlement involving contracts for differences) of
4.827% as at September 5, 2018 for asset management
purposes. As from that moment, BlackRock is exempt from
the requirements to notify significant investments in Enel
pursuant to Article 119-bis, paragraphs 7 and 8, of the Issu-
ers’ Regulation approved with CONSOB Resolution 11971 of
and the notices submitted to CONSOB and received by the
May 14, 1999.
company pursuant to Article 120 of Legislative Decree 58
of February 24, 1998, as well as other available information,
Other reserves - €1,700 million
shareholders with an interest of greater than 3% in the com-
pany’s share capital were the Ministry for the Economy and
Finance (with a 23.585% stake). In addition, BlackRock Inc.
Share premium reserve - €7,489 million
Pursuant to Article 2431 of the Italian Civil Code, the share
reported that it held, through subsidiaries, an “aggregate in-
premium reserve contains, in the case of the issue of shares
284
Annual Report 2018 at a price above par, the difference between the issue price
the incentivized tax rules in the countries in which those in-
of the shares and their par value, including those resulting
struments are held.
from conversion from bonds. The reserve, which is a capital
reserve, may not be distributed until the legal reserve has
reached the threshold established under Article 2430 of the
Italian Civil Code.
Legal reserve - €2,034 million
The legal reserve is formed of the part of net income that,
Reserve from equity investments
accounted for using the equity method -
€(63) million
The reserve reports the share of comprehensive income to
be recognized directly in equity of companies accounted for
using the equity method. The cumulative tax effect is equal
pursuant to Article 2430 of the Italian Civil Code, cannot be
to €22 million.
distributed as dividends.
Other reserves - €2,262 million
These include €2,215 million related to the remaining portion
of the value adjustments carried out when Enel was trans-
Reserve from remeasurement of net
liabilities/(assets) of defined benefit
plans - €(714) million
This reserve includes all actuarial gains and losses, net of tax
formed from a public entity to a joint-stock company.
effects. The change is mainly attributable to the decrease
Pursuant to Article 47 of the Uniform Income Tax Code (Tes-
in net actuarial losses recognized during the period, mainly
to Unico Imposte sul Reddito, or “TUIR”), this amount does
reflecting changes in the discount rate. The cumulative tax
not constitute taxable income when distributed.
effect is equal to €121 million.
Reserve from translation of financial
statements in currencies other than euro
- €(3,317) million
The decrease for the year, of €703 million, was mainly due to
Reserve from disposal of equity interests
without loss of control - €(2,381) million
This item mainly reports:
> the gain posted on the public offering of Enel Green Pow-
the net strengthening of the functional currency against the
er shares, net of expenses associated with the disposal
foreign currencies used by subsidiaries.
and the related taxation;
Reserves from measurement of cash
flow hedge financial instruments -
€(1,745) million
These include the net charges recognized in equity from the
> the sale of minority interests recognized as a result of
the Enersis (now Enel Américas and Enel Chile) capital
increase;
> the capital loss, net of expenses associated with the dis-
posal and the related taxation, from the public offering of
measurement of cash flow hedge derivatives. The cumula-
21.92% of Endesa;
tive tax effect is equal to €513 million.
> the income from the disposal of the minority interest
Reserves from measurement of costs of
hedging financial instruments -
€(258) million
As of January 1, 2018, in application of IFRS 9, these re-
in Enel Green Power North America Renewable Energy
Partners;
> the effects of the merger into Enel Américas of Endesa
Américas and Chilectra Américas;
> the disposal to third parties of a minority interest without
serves include the change in fair value of currency basis
loss of control in Enel Green Power North America Re-
points and forward points.
newable Energy Partners.
Reserves from measurement of financial
instruments at FVOCI - €16 million
These include net unrealized income from the measurement
at fair value of financial assets.
The increase of €36 million for the year is mainly attributable
to the sale of the 7.1% stake in Echelon Corporation.
The change for the period amounted to €17 million, and
refers to the income deriving from the sale of minority in-
terests in certain South African companies.
Reserve from acquisitions of non-
controlling interests - €(1,623) million
This reserve mainly includes the surplus of acquisition pric-
There is no cumulative tax effect on the reserve in view of
es with respect to the carrying value of the equity acquired
285
Consolidated financial statements following the acquisition from third parties of further inter-
on the provisions of the two share swap agreements with
ests in companies already controlled in South America and
a financial institution in order to increase the stake in Enel
in Italy (Enel Green Power SpA).
Américas to a maximum of 5%.
The decrease for the period, of €460 million, mainly reflects
to the effects of:
> the “Elqui” transaction, which resulted in a consolidated
increase in the total investment held in Enel Chile of 1.3%,
the combined effect of the sale of 38% of Enel Green Power
Chile, following the merger of Enel Green Power Latin Amer-
ica SA into Enel Chile, and of the public tender for Enel Gen-
eración Chile, which resulted in the purchase of an additional
33.6%;
Retained earnings/(Loss carried forward)
- €19,853 million
This reserve reports earnings from previous years that have
not been distributed or allocated to other reserves.
The table below shows the changes in gains and losses
recognized directly in other comprehensive income, includ-
ing non-controlling interests, with specific reporting of the
> the increase in the 2.43% interest in Enel Américas based
related tax effects.
at Dec. 31, 2017
Change
Of which
sharehold-
ers of the
Parent
Company
Of which
non-con-
trolling
interests
Gains/
(Losses)
recognized
in equity for
the year
Total
Released
to income
statement
at Dec. 31, 2018
Of which
sharehold-
ers of the
Parent
Company
Of which
non-con-
trolling
interests
Of which
sharehold-
ers of the
Parent
Company
Of which
non-con-
trolling
interests
Total
Taxes
Total
(5,422)
(2,597)
(2,825)
(1,287)
-
-
(1,287)
(609)
(678)
(6,709)
(3,206)
(3,503)
(1,455)
(1,230)
(225)
(101)
(519)
68
(552)
(491)
(61)
(2,007)
(1,721)
(286)
(348)
(348)
-
83
(1)
-
(1)
(3)
(52)
(54)
(23)
(23)
2
-
(62)
12
(853)
(664)
(189)
(172)
-
-
-
-
-
-
-
83
90
(7)
(265)
(258)
(7)
(3)
(3)
-
(4)
(3)
(1)
5
(57)
(58)
1
(109)
(112)
-
12
12
-
(11)
(11)
3
-
52
(120)
(63)
(57)
(973)
(727)
(246)
(8,154)
(4,916)
(3,238)
(1,530)
(519)
125 (1,924)
(1,122)
(802) (10,078)
(6,038)
(4,040)
Millions of euro
Reserve from
translation
of financial
statements in
currencies other
than euro
Reserves from
measurement
of cash flow
hedge financial
instruments
Reserves from
measurement
of costs of
hedging financial
instruments
Reserves from
measurement of
financial assets
at FVOCI
Share of OCI
of associates
accounted for
using the equity
method
Reserves from
measurement
of equity
investments in
other companies
Reserve from
remeasurement
of net liabilities/
(assets) of
defined benefit
plans
Total gains/
(losses)
recognized in
equity
286
Annual Report 2018 34.2 Dividends
Net dividends paid in 2017
Dividends for 2016
Interim dividends for 2017 (1)
Special dividends
Total dividends paid in 2017
Net dividends paid in 2018
Dividends for 2017
Interim dividends for 2018 (2)
Special dividends
Total dividends paid in 2018
Amount distributed
(millions of euro)
Dividend per share
(euro)
1,830
-
-
1,830
2,410
-
-
2,410
0.18
-
-
0.18
-
0.24
-
-
0.24
(1) Approved by the Board of Directors on November 8, 2017, and paid as from January 24, 2018 (interim dividend of €0.105 per share for a total of €1,068
million).
(2) Approved by the Board of Directors on November 6, 2018, and paid as from January 23, 2019 (interim dividend of €0.14 per share for a total of €1,423
million).
The dividend for 2018, equal to €0.28 per share, amounting
tory return for shareholders and ensure access to external
to a total of €2,847 million (of which €0.14 per share, for a
sources of financing, in part by maintaining an adequate
total of €1,423 million, already paid as an interim dividend
rating.
as from January 23, 2019), has been proposed to and re-
In this context, the Group manages its capital structure
solved by the Shareholders’ Meeting of May 16, 2019, at
and adjusts that structure when changes in economic con-
a single call.
ditions so require. There were no substantive changes in
Capital management
The Group’s objectives for managing capital comprise safe-
guarding the business as a going concern, creating value
objectives, policies or processes in 2018.
To this end, the Group constantly monitors developments
in the level of its debt in relation to equity. The situation at
December 31, 2018 and 2017 is summarized in the follow-
for stakeholders and supporting the development of the
ing table.
Group. In particular, the Group seeks to maintain an ad-
equate capitalization that enables it to achieve a satisfac-
Millions of euro
Non-current financial position
Net current financial position
Non-current financial receivables and long-term securities
Net financial debt
Equity attributable to shareholders of the Parent Company
Non-controlling interests
Shareholders’ equity
Debt/equity ratio
at Dec. 31, 2018
at Dec. 31, 2017
48,983
(4,622)
(3,272)
41,089
31,720
16,132
47,852
0.86
42,439
(2,585)
(2,444)
37,410
34,795
17,366
52,161
0.72
Change
6,544
(2,037)
(828)
3,679
(3,075)
(1,234)
(4,309)
-
The percentage increase in the use of debt is attributable
partly to the increase in net financial debt.
to the reduction in the Group’s consolidated shareholders’
See note 41 for a breakdown of the individual items in the
equity of €3,705 million mainly due to the retrospective
table.
application of IFRS 9 and IFRS 15 (for €3,074 million) and
287
Consolidated financial statements 34.3 Non-controlling interests - €16,132 million
The following table reports the composition of non-controlling interests by Region.
Millions of euro
Non-controlling interests
Net income attributable
to non-controlling interests
Italy
Iberia
South America
Europe and Euro-Mediterranean Affairs
North and Central America
Africa, Asia and Oceania
Total
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
7
6,405
8,185
908
402
225
4
6,954
8,934
1,002
387
85
-
386
1,062
68
37
8
-
396
1,020
67
60
7
16,132
17,366
1,561
1,550
It should be noted that the decrease in the share attribut-
of Endesa, and the change in the scope of consolidation
able to non-controlling interests mainly refers to the effect
associated with the “Elqui” transaction.
of exchange rates, to the dividends in South America and
35. Borrowings
Millions of euro
Non-current
Current
Long-term borrowings
Short-term borrowings
Total
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
48,983
-
48,983
42,439
-
42,439
3,367
3,616
6,983
7,000
1,894
8,894
For more information on the nature of borrowings, see note 43 “Financial instruments”.
288
Annual Report 2018 36. Employee benefits - €3,187 million
The Group provides its employees with a variety of ben-
collective bargaining agreement prior to the changes in-
efits, including deferred compensation benefits, additional
troduced with the framework agreement noted earlier
months’ pay for having reached age limits or eligibility for
and (ii) for employees of the former Catalan companies
old-age pension, loyalty bonuses for achievement of senior-
(Fecsa/Enher/HidroEmpordà). Both are defined benefit
ity milestones, supplemental retirement and healthcare
plans and benefits are fully ensured, with the exception
plans, residential electricity discounts and similar benefits.
of the former plan for benefits in the event of the death
More specifically:
of a retired employee. Finally, the Brazilian companies
> for Italy, the item “Pension benefits” regards estimated
have also established defined benefit plans;
accruals made to cover benefits due under the supple-
> the item “Electricity discount” comprises benefits re-
mental retirement schemes of retired executives and
garding electricity supply associated with foreign com-
the benefits due to personnel under law or contract at
panies. For Italy, that benefit, which was granted until
the time the employment relationship is terminated.
the end of 2015 to retired employees only, was unilater-
For the foreign companies, the item reports post-em-
ally cancelled;
ployment benefits, of which the most material regard
> the item “Health insurance” reports benefits for current
the pension benefit schemes of Endesa in Spain, which
or retired employees covering medical expenses;
break down into three types that differ on the basis of
> “Other benefits” mainly regard the loyalty bonus, which
employee seniority and company. In general, under the
is adopted in various countries and for Italy is repre-
framework agreement of October 25, 2000, employees
sented by the estimated liability for the benefit entitling
participate in a specific defined contribution pension
employees covered by the electricity workers national
plan and, in cases of disability or death of employees in
collective bargaining agreement to a bonus for achieve-
service, a defined benefit plan which is covered by ap-
ment of seniority milestones (25th and 35th year of
propriate insurance policies. In addition, Endesa has two
service). It also includes other incentive plans, which
other limited-enrollment plans (i) for current and retired
provide for the award to certain company managers of a
Endesa employees covered by the electricity industry
monetary bonus subject to specified conditions.
289
Consolidated financial statements The following table reports changes in the defined benefit
2017, respectively, as well as a reconciliation of that obliga-
obligation for post-employment and other long-term em-
tion with the actuarial liability.
ployee benefits at December 31, 2018, and December 31,
Millions of euro
2018
2017
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
CHANGES IN ACTUARIAL OBLIGATION
Actuarial obligation at the start of the year
2,413
Current service cost
Interest expense
Actuarial (gains)/losses arising from changes
in demographic assumptions
Actuarial (gains)/losses arising from changes
in financial assumptions
Experience adjustments
Past service cost
(Gains)/Losses arising from settlements
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other changes
Liabilities classified as held for sale
Actuarial obligation at year end (A)
CHANGES IN PLAN ASSETS
Fair value of plan assets at the start of the year
Interest income
Expected return on plan assets excluding amounts
included in interest income
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other payments
Change in scope of consolidation
Fair value of plan assets at year end (B)
EFFECT OF ASSET CEILING
Asset ceiling at the start of the year
Interest income
Change in asset ceiling
Exchange differences
Change in scope of consolidation
Asset ceiling at year end (C)
16
247
(2)
213
21
(1)
-
(114)
-
2
(370)
2,647
-
5,072
1,317
173
70
(82)
171
2
(370)
-
1,879
3,160
64
4
(38)
(6)
-
24
739
4
14
-
(10)
48
-
-
(1)
-
-
(30)
3
-
767
-
-
-
-
30
-
(30)
-
-
-
-
-
-
-
-
-
253
5
10
-
4
2
-
-
(9)
-
-
(12)
-
-
253
-
-
-
-
12
-
(12)
-
-
-
-
-
-
-
-
-
254
36
5
-
(5)
7
7
-
(6)
-
-
(65)
(2)
-
231
-
-
-
-
24
-
(24)
-
-
-
-
-
-
-
-
-
Total
3,659
61
276
(2)
202
78
6
-
(130)
-
2
(477)
2,648
-
6,323
1,317
173
70
(82)
237
2
(436)
-
1,879
3,160
64
4
(38)
(6)
-
24
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
2,440
17
118
2
1
-
-
-
54
(35)
5
(124)
(226)
161
2,413
1,272
83
53
(94)
142
1
(226)
1,317
-
86
54
4
16
(9)
-
65
847
5
16
30
(138)
(1)
(22)
2
-
739
22
(22)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
3,802
74
152
(1)
89
(163)
5
-
-
1
-
(143)
(339)
182
3,659
1,272
83
53
(94)
199
1
(283)
-
86
1,317
54
4
16
(9)
-
65
284
47
7
(1)
2
(5)
(6)
(79)
5
-
254
23
(23)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
231
5
11
(2)
3
15
(12)
(12)
14
253
12
(12)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Net liability in balance sheet (A-B+C)
1,936
767
253
231
3,187
1,161
739
253
254
2,407
290
Annual Report 2018
Millions of euro
2018
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
CHANGES IN ACTUARIAL OBLIGATION
Actuarial obligation at the start of the year
2,413
Current service cost
Interest expense
Actuarial (gains)/losses arising from changes
in demographic assumptions
Actuarial (gains)/losses arising from changes
(Gains)/Losses arising from settlements
in financial assumptions
Experience adjustments
Past service cost
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other changes
Liabilities classified as held for sale
Actuarial obligation at year end (A)
CHANGES IN PLAN ASSETS
Fair value of plan assets at the start of the year
Interest income
Expected return on plan assets excluding amounts
included in interest income
Exchange differences
Employer contributions
Employee contributions
Benefits paid
Other payments
Change in scope of consolidation
Fair value of plan assets at year end (B)
EFFECT OF ASSET CEILING
Asset ceiling at the start of the year
Interest income
Change in asset ceiling
Exchange differences
Change in scope of consolidation
Asset ceiling at year end (C)
16
247
(2)
213
21
(1)
2
-
-
-
(370)
2,647
5,072
1,317
173
70
(82)
171
(370)
2
-
1,879
3,160
64
4
(38)
(6)
-
24
(114)
(1)
(9)
(6)
(130)
Total
3,659
61
276
(2)
202
78
6
-
-
2
-
1,317
173
70
(82)
237
2
-
1,879
3,160
64
4
(38)
(6)
-
24
254
36
5
-
7
7
(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(65)
(2)
(477)
2,648
253
231
6,323
12
24
(12)
(24)
(436)
253
5
10
-
4
2
(12)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
739
4
14
(10)
48
(30)
3
-
767
30
(30)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Pension
benefits
2,440
17
118
2
54
(35)
5
-
(124)
-
1
(226)
161
-
2,413
1,272
83
53
(94)
142
1
(226)
-
86
1,317
54
4
16
(9)
-
65
2017
Electricity
discount
Health
insurance
Other
benefits
847
5
16
-
30
(138)
-
-
(1)
-
-
(22)
2
-
739
-
-
-
-
22
-
(22)
-
-
-
-
-
-
-
-
-
231
284
5
11
(2)
3
15
-
-
(12)
-
-
(12)
14
-
253
-
-
-
-
12
-
(12)
-
-
-
-
-
-
-
-
-
47
7
(1)
2
(5)
-
-
(6)
-
-
(79)
5
-
254
-
-
-
-
23
-
(23)
-
-
-
-
-
-
-
-
-
Net liability in balance sheet (A-B+C)
1,936
767
253
231
3,187
1,161
739
253
254
Total
3,802
74
152
(1)
89
(163)
5
-
(143)
-
1
(339)
182
-
3,659
1,272
83
53
(94)
199
1
(283)
-
86
1,317
54
4
16
(9)
-
65
2,407
291
Consolidated financial statements
Millions of euro
(Gains)/Losses charged to profit or loss
Service cost and past service cost
Net interest expense
(Gains)/Losses arising from settlements
Actuarial (gains)/losses on other long-term benefits
Other changes
Total
Millions of euro
Change in (gains)/losses in OCI
Expected return on plan assets excluding amounts included in interest income
Actuarial (gains)/losses on defined benefit plans
Changes in asset ceiling excluding amounts included in interest income
Other changes
Total
2018
2017
39
107
-
28
(4)
170
40
73
-
39
(4)
148
2018
2017
(70)
282
(38)
(2)
172
(53)
(71)
16
9
(99)
The change in cost recognized through profit or loss was
The liability recognized in the balance sheet at the end of
equal to €22 million. The impact on the income statement
the year is reported net of the fair value of plan assets,
is, therefore, greater than in 2017, due mainly to the effect
amounting to €3,159 million at December 31, 2018. Those
of interest on pension funds for Enel Distribuição São Paulo
assets, which are entirely in Spain and Brazil, break down
in Brazil.
as follows.
2018
8%
65%
4%
-
-
23%
100%
2017
4%
37%
5%
-
-
54%
100%
Investments quoted in active markets
Equity instruments
Fixed-income securities
Investment property
Other
Unquoted investments
Assets held by insurance undertakings
Other
Total
292
Annual Report 2018 The main actuarial assumptions used to calculate the liabili-
which are consistent with those used the previous year, are
ties in respect of employee benefits and the plan assets,
set out in the following table.
Italy
Iberia
South
America
Other
countries
Italy
Iberia
South
America
Other
countries
Discount rate
0.25%-
1.50%
0.21%-
1.75%
2018
Inflation rate
1.50%
2.00%
Rate of wage
increases
Rate of increase in
healthcare costs
Expected rate of
return on plan assets
2.50%
2.00%
2.50%
3.20%
-
1.75%
4.70%-
9.15%
3.00%-
4.00%
3.80%-
5.00%
7.12%-
8.00%
8.63%-
9.04%
1.50%-
8.77%
1.50%-
4.14%
3.00%-
4.20%
-
-
0.20%-
1.50%
1.50%
1.50%-
3.50%
2017
0.65%
-1.67%
2.00%
2.00%
2.50%
3.20%
-
1.65%
5.00%-
9.93%
3.00%-
4.25%
3.00%-
7.38%
3.00%-
8.00%
9.72%-
9.78%
1.50%-
7.18%
1.50%-
4.22%
3.00%-
4.22%
-
-
The following table reports the outcome of a sensitivity
of the year in the actuarial assumptions used in estimating
analysis that demonstrates the effects on the defined ben-
the obligation.
efit obligation of changes reasonably possible at the end
Millions of euro
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
Pension
benefits
Electricity
discount
Health
insurance
Other
benefits
at Dec. 31, 2018
at Dec. 31, 2017
Decrease of 0.5% in
discount rate
Increase of 0.5% in
discount rate
Increase of 0.5% in
inflation rate
Decrease of 0.5% in
inflation rate
Increase of 0.5% in
remuneration
Increase of 0.5% in
pensions currently being
paid
Increase of 1% in
healthcare costs
Increase of 1 year in life
expectancy of active
and retired employees
280
(243)
(5)
32
10
11
-
155
63
(59)
(59)
61
(2)
(2)
-
25
9
(12)
(3)
3
(3)
(3)
32
8
3
(9)
(6)
2
1
(3)
-
(3)
155
(121)
(20)
47
32
35
-
54
60
(55)
(63)
61
(1)
(1)
-
25
15
4
(18)
(10)
(14)
(9)
12
-
-
28
147
1
1
(3)
-
(3)
The sensitivity analysis used an approach that extrapolates
The contributions expected to be paid into defined benefit
the effect on the defined benefit obligation of reasonable
plans in the subsequent year amount to €28 million.
changes in an individual actuarial assumption, leaving the
other assumptions unchanged.
293
Consolidated financial statements The following table reports expected benefit payments in the coming years for defined benefit plans.
Millions of euro
Within 1 year
In 1-2 years
In 2-5 years
More than 5 years
at Dec. 31, 2018
at Dec. 31, 2017
436
429
1,273
2,017
197
184
591
1,030
37. Provisions for risks and charges - €6,493 million
Millions of euro
Provision for litigation, risks and other charges:
- nuclear decommissioning
- retirement, removal and site restoration
- litigation
- environmental certificates
- taxes and duties
- other
Total
Provision for early retirement incentives
TOTAL
at Dec. 31, 2018
at Dec. 31, 2017
Non-current
Current
Non-current
Current
552
986
1,315
-
409
742
4,004
1,177
5,181
-
71
191
27
23
603
915
397
1,312
538
814
861
-
300
778
3,291
1,530
4,821
-
64
70
29
23
637
823
387
1,210
294
Annual Report 2018 Millions of euro
Accruals Reversals Utilization
at Dec.
31, 2017
Unwinding
of interest
Change in
scope of
consolidation
Translation
adjustment
Other
changes
Reclas-
sifications of
assets held
for sale
at Dec.
31, 2018
Provision for
litigation, risks
and other
charges:
- nuclear
decommissioning
538
-
-
-
- retirement,
removal and site
restoration
- litigation
- environmental
certificates
- taxes and duties
- other
Total
Provision for early
retirement
incentives
TOTAL
878
931
29
323
1,415
4,114
1,917
6,031
21
(16)
(30)
214
(184)
(112)
27
32
(8)
(18)
(21)
(36)
237
(112)
(234)
531
(338)
(433)
96
(3)
(426)
627
(341)
(859)
8
7
56
-
3
55
129
(4)
125
-
1
462
-
41
20
524
-
524
-
6
-
552
(8)
(39)
-
3
(63)
(107)
-
(107)
206
178
-
84
27
(2)
-
-
-
-
501
(2)
1,057
1,506
27
432
1,345
4,919
(6)
495
-
(2)
1,574
6,493
Nuclear decommissioning
provision
Non-nuclear plant retirement and
site restoration provision
At December 31, 2018, the provision reflected solely the
The provision for non-nuclear plant retirement and site res-
costs that will be incurred at the time of decommissioning
toration represents the present value of the estimated cost
of nuclear plants by Endesa, a Spanish public enterprise re-
for the retirement and removal of non-nuclear plants where
sponsible for such activities in accordance with Royal De-
there is a legal or constructive obligation to do so. The provi-
cree 1349/2003 and Law 24/2005. Quantification of the
sion mainly regards the Endesa Group, Enel Produzione and
costs is based on the standard contract between Endesa
the companies in South America.
and the electricity companies approved by the Ministry
for the Economy in September 2001, which regulates the
retirement and closing of nuclear power plants. The time
horizon envisaged, three years, corresponds to the period
from the termination of power generation to the transfer of
plant management to Endesa (so-called post-operational
costs) and takes into account, among the various assump-
tions used to estimate the amount, the quantity of unused
nuclear fuel expected at the date of closure of each of the
Spanish nuclear plants on the basis of the provisions of the
concession agreement.
Litigation provision
The litigation provision covers contingent liabilities in respect
of pending litigation and other disputes. It includes an esti-
mate of the potential liability relating to disputes that arose
during the period, as well as revised estimates of the poten-
tial costs associated with disputes initiated in prior periods.
The balance for litigation mainly regards disputes concerning
service quality and disputes with employees, end users or
suppliers of the companies in Spain (€170 million), Italy (€182
million) and South America (€1,145 million).
The increase compared with the previous year, equal to €575
million, mainly reflects the change in the scope of consolida-
tion with the acquisition of Enel Distribuição São Paulo and
provisions for disputes with employees, partly offset by re-
versals and uses, primarily in Iberia, Italy and South America.
295
Consolidated financial statements Provision for environmental
certificates
The provision for environmental certificates covers costs in
respect of shortfalls in the environmental certificates need
for compliance with national or supranational environmental
protection requirements and mainly regards Enel Energia.
Provision for charges in respect of
taxes and duties
The provision for charges in respect of taxes and duties re-
ports the estimated liability deriving from tax disputes con-
cerning direct and indirect taxes. The balance of the pro-
vision also includes the provision for current and potential
disputes concerning local property tax – whether the Im-
posta Comunale sugli Immobili (“ICI”) or the new Imposta
Municipale Unica (“IMU”) – in Italy. The Group has taken
due account of the criteria introduced with circular 6/2012
of the Public Land Agency (which resolved interpretive is-
sues concerning the valuation methods for movable assets
considered relevant for property registry purposes, includ-
ing certain assets typical to generation plants, such as tur-
bines) in estimating the liability for such taxes, both for the
purposes of quantifying the probable risk associated with
pending litigation and generating a reasonable valuation of
probable future charges on positions that have not yet been
assessed by Land Agency offices and municipalities.
The increase compared with the previous year, equal to
€109 million, mainly reflects the change in the scope of
consolidation with the acquisition of Enel Distribuição São
Paulo, partly offset by reversals and uses, primarily in Spain
and Italy.
Other provisions
Other provisions cover various risks and charges, mainly in
connection with regulatory disputes and disputes with lo-
cal authorities regarding various duties and fees or other
charges.
The decrease of €70 million for the year is mainly attrib-
utable to the reversal of part of the provision allocated by
e-distribuzione for the charges to be paid in relation to excep-
tional weather events, to utilizations by Enel Global Trading
of the provisions linked to the abandonment of the upstream
gas projects in Algeria, to the reversal by Enel Energia of the
rebranding provision following the transfer of points of sale
from Servizio Elettrico Nazionale to Enel Energia due to the
abolition of the regulated market by 2020, which was partly
offset by the provision allocated by Servizio Elettrico Nazio-
nale following penalty proceedings initiated by the antitrust
authority and by the change in scope of consolidation fol-
lowing the acquisition of Enel Distribuição São Paulo.
Provision for early retirement
incentives
The provision for early retirement incentives includes the
estimated charges related to binding agreements for the
voluntary termination of employment contracts in response
to organizational needs. The reduction of €343 million for
the year reflects, among other factors, uses for incentive
provisions established in Spain and Italy in previous years.
In Italy, the latter is largely associated with the union-com-
pany agreements signed in September 2013 and Decem-
ber 2015, implementing, for a number of companies in Italy,
the mechanism provided for under Article 4, paragraphs 1-7
ter, of Law 92/2012 (the Fornero Act). The latter agreement
envisages the voluntary termination, in Italy, of about 6,100
employees in 2016-2020.
In Spain, the provisions regard the expansion, in 2015, of
the Acuerdo de Salida Voluntaria (ASV) introduced in Spain
in 2014. The ASV mechanism was agreed in Spain in con-
nection with Endesa’s restructuring and reorganization plan,
which provides for the suspension of the employment con-
tract with tacit annual renewal. With regard to that plan, on
December 30, 2014, the company had signed an agreement
with union representatives in which it undertook to not ex-
ercise the option to request a return to work at subsequent
annual renewal dates for the employees participating in the
mechanism.
296
Annual Report 2018 38. Other non-current liabilities - €1,901 million
Millions of euro
Accrued operating expenses and deferred income
Other items
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
484
1,417
1,901
929
1,074
2,003
(445)
343
(102)
-47.9%
31.9%
-5.1%
The reduction of €445 million in accrued operating expens-
The increase in other items mainly refers to payables due
es and deferred income is mainly attributable to the reclas-
to tax partnerships recognized by the renewable energy
sification of deferred income for fees received from cus-
companies in North America in the amount of €325 million
tomers to liabilities deriving from contracts with customers
as a result of the start of operations at the Diamond Vista,
in application of IFRS 15.
HillTopper, Rattlesnake Creek and Fenner plants.
39. Trade payables - €13,387 million
The item amounted to €13,387 million (€12,671 million in
More specifically, trade payables falling due in less than 12
2017) and includes payables in respect of electricity supplies,
months amounted to €12,718 million (€11,965 million in 2017),
fuel, materials, equipment associated with tenders, and other
while those falling due in more than 12 months amounted to
services.
€669 million (€706 million in 2017).
40. Other current financial liabilities - €788 million
Millions of euro
Deferred financial liabilities
Other items
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
654
134
788
857
97
954
(203)
37
(166)
-23.7%
38.1%
-17.4%
The decrease in other current financial liabilities is attribut-
The other items mainly refer to amounts due for accrued
able to the €203 million decrease in deferred financial liabili-
interest.
ties as a result of a decrease in accrued liabilities on bonds.
297
Consolidated financial statements 41. Net financial position and long-term financial receivables
and securities - €41,089 million
The following table shows the net financial position and long-term financial receivables and securities on the basis of the
items on the consolidated balance sheet.
Millions of euro
Long-term borrowings
Short-term borrowings
Other current financial payables (1)
Current portion of long-term borrowings
Other non-current financial assets included in debt
Other current financial assets included in debt
Cash and cash equivalents
Total
Notes
43
43
43
26.1
30.1
32
at Dec. 31,
2018
at Dec. 31,
2017
48,983
3,616
28
3,367
(3,272)
(5,003)
(6,630)
41,089
42,439
1,894
-
7,000
(2,444)
(4,458)
(7,021)
37,410
Change
6,544
1,722
28
15.4%
90.9%
-
(3,633)
-51.9%
(828)
(545)
391
3,679
-33.9%
-12.2%
5.6%
9.8%
(1) Includes current financial payables included under other current financial liabilities.
298
Annual Report 2018
Pursuant to CONSOB instructions of July 28, 2006, the fol-
nancial debt as provided for in the presentation methods of
lowing table reports the net financial position at December
the Enel Group.
31, 2018, and December 31, 2017, reconciled with net fi-
Millions of euro
Cash and cash equivalents on hand
Bank and post office deposits
Other investments of liquidity
Securities
Liquidity
Short-term financial receivables
Factoring receivables
Short-term portion of long-term financial receivables
Current financial receivables
Short-term bank debt
Commercial paper
Short-term portion of long-term bank debt
Bonds issued (short-term portion)
Other borrowings (short-term portion)
Other short-term financial payables
Total short-term financial debt
Net short-term financial position
Debt to banks and financing entities
Bonds
Other borrowings
Long-term financial position
NET FINANCIAL POSITION as per CONSOB instructions
Long-term financial receivables and securities
NET FINANCIAL DEBT
at Dec. 31, 2018
at Dec. 31, 2017
Change
328
5,531
771
63
6,693
3,418
-
1,522
4,940
(512)
(2,393)
(1,830)
(1,341)
(196)
(739)
(7,011)
4,622
(8,819)
(38,633)
(1,531)
(48,983)
(44,361)
3,272
(41,089)
343
6,487
191
69
7,090
3,253
42
1,094
4,389
(249)
(889)
(1,346)
(5,429)
(225)
(756)
(8,894)
2,585
(8,310)
(15)
(956)
580
(6)
(397)
165
(42)
428
551
(263)
(1,504)
(484)
4,088
29
17
1,883
2,037
(509)
-4.4%
-14.7%
-
-8.7%
-5.6%
5.1%
-
39.1%
12.6%
-
-
-36.0%
75.3%
12.9%
2.2%
21.2%
78.8%
-6.1%
(32,285)
(6,348)
-19.7%
(1,844)
(42,439)
(39,854)
2,444
313
17.0%
(6,544)
-15.4%
(4,507)
-11.3%
828
(37,410)
(3,679)
33.9%
-9.8%
299
Consolidated financial statements 42. Other current liabilities - €12,107 million
Millions of euro
Payables due to customers
Payables due to institutional market operators
Payables due to employees
Other tax payables
Payables due to social security institutions
Contingent considerations
Payables for put options granted to minority shareholders
Current accrued expenses and deferred income
Payables for dividends
Liabilities for construction contracts
Other
Total
at Dec. 31, 2018 at Dec. 31, 2017
Change
1,773
3,945
472
1,093
212
109
-
459
1,913
-
2,131
12,107
1,824
4,765
422
1,323
218
56
1
302
1,541
364
1,646
12,462
(51)
(820)
50
(230)
(6)
53
(1)
157
372
(364)
485
(355)
-2.8%
-17.2%
11.8%
-17.4%
-2.8%
94.6%
-
52.0%
24.1%
-
29.5%
-2.8%
Payables due to customers include €936 million (€984 mil-
whose fair value was determined on the basis of the terms
lion at December 31, 2017) in security deposits related to
and conditions of the contractual agreements between the
amounts received from customers in Italy as part of elec-
parties.
tricity and gas supply contracts. Following the finalization
The change in payables for dividends refers to the increase
of the contract, deposits for electricity sales, the use of
in the minimum dividend to be paid to shareholders, which
which is not restricted in any way, are classified as current
went from €0.21 to €0.28 per share.
liabilities given that the company does not have an uncon-
The increase in other payables mainly relates to the change
ditional right to defer repayment beyond 12 months.
in scope of consolidation following the acquisition of Enel
Payables due to institutional market operators include
Distribuição São Paulo.
payables arising from the application of equalization
Liabilities for construction contracts at December 31, 2018
mechanisms to electricity purchases on the Italian market
(in the amount of €326 million) have been reclassified to
amounting to €2,546 million (€3,042 million at December
liabilities deriving from contracts with customers follow-
31, 2017) and on the Spanish market amounting to €1,131
ing application of the simplified approach allowed under
million (€1,399 million at December 31, 2017), and on the
IFRS 15. For this reason, the balances at December 31,
South American market amounting to €268 million (€324
2017 (€364 million) have not been reclassified. For more in-
million at December 31, 2017).
formation, see note 25 of the consolidated financial state-
Contingent consideration mainly regard a number of share-
ments.
holdings held primarily by the Group in North America
43. Financial instruments
This note provides disclosures necessary for users to assess the significance of financial instruments for the company’s
financial position and performance.
300
Annual Report 2018 43.1 Financial assets by category
The following table reports the carrying amount for each
showing hedging derivatives and derivatives measured at
category of financial asset provided for under IFRS 9, bro-
fair value through profit or loss separately.
ken down into current and non-current financial assets,
Millions of euro
Non-current
Current
Notes at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018 at Dec. 31, 2017
Financial assets at amortized cost
Financial assets at FVOCI
Financial assets at fair value through profit or loss
Derivative financial assets at FVTPL
Other financial assets at FVTPL
Financial assets designated upon initial recognition (fair
value option)
Total financial assets at fair value through profit or
loss
Derivative financial assets designated as hedging
instruments
Fair value hedge derivatives
Cash flow hedge derivatives
Total derivative financial assets designated as
hedging instruments
TOTAL
43.1.1
43.1.2
43.1.3
43.1.3
43.1.3
43.1.4
43.1.4
4,292
413
31
2,080
-
2,817
438
17
1,478
-
25,268
26,496
72
69
3,163
1,982
-
-
16
-
2,111
1,495
3,163
1,998
25
949
974
7,790
23
662
685
5,435
4
747
751
-
327
327
29,254
28,890
For more information on fair value measurement, see note 47 “Assets measured at fair value”.
43.1.1 Financial assets measured at amortized cost
The following table reports financial assets measured at amortized cost by nature, broken down into current and non-
current financial assets.
Millions of euro
Non-current
Current
Notes at Dec. 31, 2018
at Dec. 31, 2017
Notes
at Dec. 31, 2018 at Dec. 31, 2017
Cash and cash equivalents
Trade receivables
29
Short-term portion of long-term financial
receivables
Receivables for factoring
Cash collateral
-
835
-
-
-
-
557
-
-
-
32
29
30.1
30.1
30.1
Other financial receivables
26.1
2,912
2,059
30.1
Financial assets from service concession
arrangements at amortized cost
Other financial assets at amortized cost
26
26, 27
Total
345
200
4,292
-
30
201
30, 31
2,817
6,630
12,752
1,522
-
2,559
859
12
934
25,268
7,021
13,972
1,094
42
2,664
589
-
1,114
26,496
301
Consolidated financial statements Impairment of financial assets at
amortized cost
Financial assets measured at amortized cost at December
31, 2018 amounted to €29,560 million (€29,313 million at De-
cember 31, 2017) and are recognized net of allowances for
expected credit losses, which totaled €3,083 million at the
end of the year, compared with a balance of €2,402 million at
the end of previous year.
The Group mainly has the following types of financial assets
measured at amortized cost subject to impairment testing:
-
lifetime ECL, for financial assets for which there has been
a significant increase in credit risk or which are credit im-
paired (i.e. defaulted based on past due information);
> the simplified approach, for trade receivables, contract
assets and lease receivables with or without a significant
financing component, based on lifetime ECL without
tracking changes in credit risk.
For more information on assets deriving from contracts with
customers, please see note 25 “Current/Non-current contract
assets/(liabilities)”.
> cash and cash equivalents;
> trade receivables;
> financial receivables; and
> other financial assets.
While cash and cash equivalents are also subject to the im-
pairment requirements of IFRS 9, the identified impairment
loss was immaterial.
The expected credit loss (ECL), determined considering prob-
ability of default (PD), loss given default (LGD), and exposure
at default (EAD), is the difference between all contractual cash
flows that are due in accordance with the contract and all cash
flows that are expected to be received (i.e., all shortfalls) dis-
counted at the original effective interest rate (EIR).
For calculating ECL, the Group applies two different approach-
es:
> the general approach, for financial assets other than trade
receivables, contract assets and lease receivables. This
approach, based on an assessment of any significant in-
crease in credit risk since initial recognition, is performed
comparing the PD at origination with PD at the reporting
date, at each reporting date.
Then, based on the results of the assessment, a loss
allowance is recognized based on 12-month ECL or life-
time ECL (i.e. staging):
- 12-month ECL, for financial assets for which there has
not been a significant increase in credit risk since ini-
Depending on the nature of the financial assets and the credit
risk information available, the assessment of the increase in
credit risk may be performed on:
> an individual basis, if the receivables are individually sig-
nificant and for all receivables which have been individu-
ally identified for impairment based on reasonable and
supportable information;
> a collective basis, if no reasonable and supportable infor-
mation is available without undue cost or effort to mea-
sure expected credit losses on an individual instrument
basis.
When there is no reasonable expectation of recovering a fi-
nancial asset in its entirety or a portion thereof, the gross car-
rying amount of the financial asset shall be reduced.
A write-off represents a derecognition event (e.g. the right to
cash flows is legally or contractually extinguished, transferred
or expired).
To measure expected losses, the Group assesses trade re-
ceivables and contract assets using the simplified approach
both individually (e.g. for governments, authorities, financial
counterparties, wholesalers, traders, large enterprises, etc.)
and collectively (e.g. for retail customers).
The following table reports expected credit losses on finan-
cial assets measured at amortized cost on the basis of the
general simplified approach.
tial recognition;
Millions of euro
at Dec. 31, 2018
Allowance
for expected
losses
Gross amount
Total Gross amount
at Dec. 31, 2017
Allowance
for expected
losses
-
Total
7,021
2,402
14,529
-
-
6,448
1,315
2
2,828
229
24
6,630
13,587
7,852
1,491
7,021
16,931
6,448
1,315
3,083
29,560
31,715
2,402
29,313
Cash and cash equivalents
Trade receivables
Financial receivables
Other financial assets at amortized cost
Total
302
6,632
16,415
8,081
1,515
32,643
Annual Report 2018 The following table reports changes in the allowance for expected credit losses on financial receivables.
Millions of euro
Opening balance at Jan. 1, 2017 - IAS 39
Provisions
Uses
Reversals to profit or loss
Other changes
Closing balance at Dec. 31, 2017 - IAS 39
Adjustment for IFRS 9 FTA
Opening balance at Jan. 1, 2018 - IFRS 9
Provisions
Uses
Reversals to profit or loss (1)
Other changes (2)
Closing balance at Dec. 31, 2018
Allowance for 12-month
expected losses
Allowance for lifetime
expected losses
-
-
-
-
-
-
7
7
-
-
(188)
268
87
-
-
-
-
-
-
23
23
4
-
(2)
117
142
(1) Includes €186 million from the reversal of the impairment loss on the financial receivable generated following the disposal of 50% of Slovak Power Holding.
(2) Includes €186 million from the cumulative impairment losses at December 31, 2017 on the financial receivable generated following the disposal of 50%
of Slovak Power Holding, previously recognized on the receivable account and reclassified in 2018 to the provision for expected losses.
The following table reports changes in the allowance for expected credit losses on trade receivables:
Millions of euro
Opening balance at Jan. 1, 2017 - IAS 39
Provisions
Uses
Reversals to profit or loss
Other changes
Closing balance at Dec. 31, 2017 - IAS 39
Adjustment for IFRS 9 FTA
Opening balance at Jan. 1, 2018 - IFRS 9
Provisions
Uses
Reversals to profit or loss
Other changes
Closing balance at Dec. 31, 2018
2,028
1,204
(601)
(310)
81
2,402
207
2,609
1,367
(897)
(281)
30
2,828
303
Consolidated financial statements The following table reports changes in the allowance for expected credit losses on other financial assets at amortized cost:
Millions of euro
Opening balance at Jan. 1, 2017 - IAS 39
Provisions
Uses
Reversals to profit or loss
Other changes
Closing balance at Dec. 31, 2017 - IAS 39
Adjustment for IFRS 9 FTA
Opening balance at Jan. 1, 2018 - IFRS 9
Provisions
Uses
Reversals to profit or loss
Other changes
Closing balance at Dec. 31, 2018
Allowance for lifetime
expected losses
-
-
-
-
-
-
15
15
3
-
(3)
9
24
Note 44 “Risk management” provides additional information on the exposure to credit risk and expected losses.
43.1.2 Financial assets at fair value through other comprehensive income
The following table shows financial assets at fair value through other comprehensive income by nature, broken down into
current and non-current financial assets.
Millions of euro
Non-current
Current
Equity investments in other entities at FVOCI
Securities
Total
Notes at Dec. 31, 2018
at Dec. 31, 2017
Notes
at Dec. 31, 2018 at Dec. 31, 2017
26
26.1
53
360
413
56
382
438
30.1
-
72
72
-
69
69
Changes in financial assets at FVOCI
Equity investments in other entities
Millions of euro
Closing balance at Dec. 31, 2017 - IAS 39
Adjustment for IFRS 9 FTA
Opening balance at Jan. 1, 2018 - IFRS 9
Purchases
Sales
Changes in fair value through OCI
Other changes
Closing balance at Dec. 31, 2018
Non-current
Current
4
(5)
(1)
16
-
13
25
53
-
-
-
-
-
-
-
-
304
Annual Report 2018 Securities at FVOCI
Millions of euro
Closing balance at Dec. 31, 2017 - IAS 39
Adjustment for IFRS 9 FTA
Opening balance at Jan. 1, 2018 - IFRS 9
Purchases
Sales
Changes in fair value through OCI
Reclassifications
Other changes
Closing balance at Dec. 31, 2018
Non-current
Current
382
-
382
93
(45)
(3)
(64)
(3)
360
69
-
69
18
(9)
-
64
(70)
72
43.1.3 Financial assets at fair value through profit or loss
The following table shows financial assets at fair value through profit or loss by nature, broken down into current and non-
current financial assets.
Millions of euro
Non-current
Current
Notes
at Dec. 31, 2018 at Dec. 31, 2017
Notes
at Dec. 31, 2018
at Dec. 31, 2017
Derivatives at FVTPL
Equity investments in other entities at FVTPL
Financial assets from service concession
arrangements at FVTPL
46
26
26
Total
31
10
2,070
2,111
46
30
17
2
1,476
1,495
3,163
1,982
-
-
-
16
3,163
1,998
43.1.4 Derivative financial assets designated as hedging instruments
For more information on derivative financial assets, please see note 46 “Derivatives and hedge accounting”.
305
Consolidated financial statements 43.2 Financial liabilities by category
The following table shows the carrying amount for each
showing hedging derivatives and derivatives measured at
category of financial liability provided for under IFRS 9, bro-
fair value through profit or loss separately.
ken down into current and non-current financial liabilities,
Millions of euro
Non-current
Current
Financial liabilities at amortized cost
43.2.1
49,824
43,408
27,567
29,355
Notes at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018 at Dec. 31, 2017
Financial liabilities at fair value through profit or loss
Derivative financial liabilities at FVTPL
43.4
Total financial liabilities at fair value through profit
or loss
Derivative financial liabilities designated as hedging
instruments
Fair value hedge derivatives
Cash flow hedge derivatives
43.4
43.4
Total derivative financial liabilities designated as
hedging instruments
TOTAL
34
34
-
2,575
2,575
52,433
21
21
7
2,970
2,977
46,406
3,135
3,135
-
1,208
1,208
31,910
1,980
1,980
6
274
280
31,615
For more information on fair value measurement, please see note 48 “Liabilities measured at fair value”.
43.2.1 Financial liabilities measured at amortized cost
The following table shows financial liabilities at amortized cost by nature, broken down into current and non-current finan-
cial liabilities.
Millions of euro
Long-term borrowings
Short-term borrowings
Trade payables
Other financial liabilities
Total
Non-current
Current
Notes
at Dec. 31, 2018 at Dec. 31, 2017
Notes
at Dec. 31, 2018 at Dec. 31, 2017
43.3
48,983
42,439
39
38
-
669
172
-
706
263
49,824
43,408
43.3
43.3
39
42
3,367
3,616
12,718
7,866
27,567
7,000
1,894
11,965
8,496
29,355
306
Annual Report 2018 43.3 Borrowings
43.3.1 Long-term borrowings (including the portion falling due within 12 months) -
€52,350 million
The following table reports the carrying amount and fair value
market data at the reporting date, including the credit spreads
for each category of debt, including the portion falling due
of Enel SpA.
within 12 months. For listed debt instruments, the fair value
is given by official prices, while for unlisted debt instruments,
The table reports the situation of long-term borrowings and
fair value is determined using valuation techniques appropriate
repayment schedules at December 31, 2018, broken down by
for each category of financial instrument and the associated
type of borrowing and interest rate.
Nominal
value
Carrying
amount
Current
portion
Portion
due in
more than
12 months
Fair
value
Nominal
value
Carrying
amount
Current
portion
at Dec. 31, 2018
at Dec. 31, 2017
Portion
due in
more
than 12
months
Changes
in carrying
amount
Fair
value
Millions of euro
Bonds:
- listed, fixed rate
23,811
23,099
- listed, floating rate
3,187
3,166
845
305
2,861
3,288
- unlisted, fixed rate
12,860
12,758
-
12,758 12,563
- unlisted, floating rate
951
951
191
760
932
2,942
8,532
1,055
2,926
8,458
1,055
684
2,242
3,201
-
66
8,458
9,257
989
1,051
22,254 25,944
25,862
25,275
4,679
20,596 29,561
(2,176)
Total bonds
40,809
39,974
1,341
38,633 42,727
38,391
37,714
5,429
32,285 43,070
Bank borrowings:
- fixed rate
- floating rate
- use of revolving credit lines
1,495
8,987
209
1,486
8,954
209
477
1,009
1,539
1,353
7,601
8,817
-
209
210
1,545
8,146
8
1,533
8,116
7
293
1,240
4,155
1,053
7,063
8,445
-
7
7
Total bank borrowings
10,691
10,649
1,830
8,819 10,566
9,699
9,656
1,346
8,310 12,607
Non-bank borrowings:
- fixed rate
- floating rate
Total non-bank
borrowings
Total fixed-rate
borrowings
Total floating-rate
borrowings
TOTAL
1,569
1,549
197
178
164
32
1,385
1,585
1,884
1,865
146
182
223
204
198
27
1,667
2,149
177
231
(316)
(26)
1,766
1,727
196
1,531
1,767
2,107
2,069
225
1,844
2,380
(342)
39,735
38,892
1,486
37,406 41,631
37,823
37,131
5,170
31,961 45,122
1,761
13,531
13,458
53,266
52,350
1,881
3,367
11,577 13,429
12,374
12,308
1,830
10,478 12,935
48,983 55,060
50,197
49,439
7,000
42,439 58,057
1,150
2,911
The balance for bonds is reported net of €898 million in re-
reserved for employees 1994-2019”, which the Parent Com-
spect of the unlisted floating-rate “Special series of bonds
pany holds in portfolio.
307
240
4,300
(104)
2,260
(47)
838
202
993
Consolidated financial statements The table below reports long-term financial debt by currency and interest rate.
Long-term financial debt by currency and interest rate
Millions of euro
Carrying amount
Nominal value
Carrying amount
Nominal value
Current average
nominal interest
rate
Current effective
interest rate
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
Euro
US dollar
Pound sterling
Colombian peso
Brazilian real
Swiss franc
Chilean peso/UF
Peruvian sol
Russian ruble
Japanese yen
Other currencies
23,388
18,541
4,750
1,543
2,074
403
700
404
247
-
300
24,025
18,720
4,794
1,543
2,114
403
710
404
247
-
306
25,925
13,521
4,786
1,618
1,201
687
465
385
245
233
373
26,449
13,658
4,835
1,618
1,230
688
475
385
245
233
381
2.8%
4.7%
6.1%
7.5%
8.3%
2.1%
6.1%
6.2%
8.1%
-
3.3%
4.9%
6.2%
7.5%
8.4%
2.1%
6.1%
6.2%
8.1%
-
Total non-euro currencies
TOTAL
28,962
52,350
29,241
53,266
23,514
49,439
23,748
50,197
Long-term financial debt denominated in currencies other
Finance International as well as the increase in debt de-
than the euro increased by €5,448 million. The change is
nominated in the Brazilian real following the acquisition of
largely attributable to new borrowing in US dollars by Enel
Enel Distribuição São Paulo in Brazil.
Change in the nominal value of long-term debt
Millions of euro
value Repayments
Nominal
Change
in own
bonds
Change in
scope of
consolidation
Exchange
offer
New
financing
Exchange
differences
at Dec. 31,
2017
Reclassification
from/to assets/
(liabilities) held
for sale
Nominal
value
at Dec. 31,
2018
Bonds
38,391
(8,987)
(38)
Borrowings
11,806
(3,053)
-
Total financial debt
50,197
(12,040)
(38)
771
170
941
-
-
-
9,809
3,615
13,424
447
(81)
366
416
40,809
-
12,457
416
53,266
Compared with December 31, 2017, the nominal value of
More specifically, the main bonds maturing in 2018 included:
long-term debt at December 31, 2018 increased by €3,069
> two retail bonds, one fixed-rate and one floating-rate
million, the net effect of €13,424 million in new borrow-
(€3,000 million) issued by Enel SpA, maturing in Febru-
ings, €941 million from the change in the scope of consoli-
ary 2018;
dation, the reclassification to “Assets/(Liabilities) held for
> a fixed-rate bond (€512 million) issued by Enel Finance
sale” of €416 million and the impact of adverse exchange
International, maturing in April 2018;
rate developments in the amount of €366 million, only part-
> a fixed-rate bond (€591 million) issued by Enel SpA, ma-
ly offset by repayments of €12,040 million. The change in
turing in June 2018;
the scope of consolidation mainly reflects the increase in
> a fixed-rate bond (€544 million) issued by Enel Finance
debt following the acquisition of the Brazilian distribution
International, maturing in October 2018;
company Enel Distribuição São Paulo.
> a fixed-rate bond (€311 million) issued by Enel Finance
Repayments in 2018 concerned bonds in the amount of
International, maturing in December 2018.
€8,987 million and borrowings totaling €3,053 million.
308
Annual Report 2018 In addition, in May 2018 Enel SpA repurchased €732 million
> the equivalent of €102 million in respect of loans of Enel
in hybrid bonds it had issued in September 2013.
Green Power North America;
> the equivalent of €2,020 million in respect of loans of
The main repayments of borrowings in the year included
companies in South America.
the following:
> €250 million in respect of subsidized loans of e-distribuz-
The main new borrowing carried out in 2018 involved bonds
ione and Enel Produzione;
in the amount of €9,809 million and borrowings of €3,615
> €68 million in respect of bank borrowings of Endesa, of
million.
which €12 million in subsidized loans;
> €133 million in respect of bank borrowings of Enel Green
Power SpA, of which €51 million in subsidized loans;
> the equivalent of €54 million in respect of bank borrow-
ings of Enel Russia, of which €27 million in subsidized
loans;
309
Consolidated financial statements The table below shows the main characteristics of financial transactions carried out in 2018.
Bonds:
Issuer/Borrower
Issue/
Grant date
Amount in
millions of
euro
Currency
Interest rate
Interest
rate type
Maturity
Enel Finance
International
16.01.2018
1,250
Enel SpA
24.05.2018
Enel SpA
24.05.2018
Enel Chile
12.06.2018
Enel Distribuição São
Paulo
13.09.2018
Enel Distribuição São
Paulo
13.09.2018
Enel Distribuição São
Paulo
13.09.2018
500
750
873
159
314
203
EUR
EUR
EUR
USD
1.13%
Fixed rate
16.09.2026
2.50%
Fixed rate
24.11.2023
3.38%
Fixed rate
24.11.2026
4.88%
Fixed rate
12.06.2028
BRL 108.25% CDI
Floating rate
13.09.2021
BRL
111% CDI
Floating rate
13.09.2023
BRL CDI + 1.45% Floating rate
13.09.2025
Enel Finance
International
Enel Finance
International
Enel Finance
International
14.09.2018
14.09.2018
1,091
USD
4.25%
Fixed rate
14.09.2023
14.09.2018
1,309
USD
4.63%
Fixed rate
14.09.2025
Total bonds
Bank borrowings:
Enel Chile
28.03.2018
Enel Chile
28.03.2018
Enel Chile
28.03.2018
1,091
7,540
83
93
93
USD
4.88%
Fixed rate
14.06.2029
CLP TAB + 55 bps
Floating rate
12.07.2019
CLP TAB + 55 bps
Floating rate
12.07.2019
CLP TAB + 55 bps
Floating rate
12.07.2019
e-distribuzione
03.05.2018
200
EUR
Endesa
29.05.2018
500
EUR
Enel Green Power
RSA
31.07.2018
149
ZAR
e-distribuzione
19.10.2018
200
EUR
Enel X Mobility
20.11.2018
50
EUR
Euribor 6M +
42.9 bps
Euribor 6M +
21.7 bps
CPI RRR +
300 bps
Euribor 6M +
34.6 bps
Euribor 6M +
33.9 bps
Floating rate
03.05.2033
Floating rate
29.05.2030
Floating rate
31.12.2021
Floating rate
19.10.2033
Floating rate
20.11.2028
Total bank borrowings
1,368
The Group’s main long-term financial liabilities are gov-
The main covenants regarding bond issues carried out
erned by covenants that are commonly adopted in interna-
within the framework of the Global/Euro Medium-Term
tional business practice. These liabilities primarily regard
Notes program of Enel and Enel Finance International NV
the bond issues carried out within the framework of the
(including the green bonds of Enel Finance International
Global/Euro Medium-Term Notes program, issues of sub-
NV guaranteed by Enel SpA, which are used to finance
ordinated unconvertible hybrid bonds (so-called “hybrid
the Group’s so-called eligible green projects) and those
bonds”) and loans granted by banks and other financial
regarding bonds issued by Enel Finance International NV
institutions (including the European Investment Bank and
on the US market guaranteed by Enel SpA can be sum-
Cassa Depositi e Prestiti SpA).
marized as follows:
> negative pledge clauses under which the issuer and
310
Annual Report 2018 the guarantor may not establish or maintain mortgages,
exception of expressly permitted encumbrances;
liens or other encumbrances on all or part of its assets or
> disposals clauses, under which the borrower and, in
revenue to secure certain financial liabilities, unless the
some cases, the guarantor may not dispose of their as-
same encumbrances are extended equally or pro rata to
sets or operations, with the exception of expressly per-
the bonds in question;
mitted disposals;
> pari passu clauses, under which the bonds and the as-
> pari passu clauses, under which the payment undertak-
sociated security constitute a direct, unconditional and
ings of the borrower have the same seniority as its other
unsecured obligation of the issuer and the guarantor and
unsecured and unsubordinated payment obligations;
are issued without preferential rights among them and
> change of control clauses, under which the borrower
have at least the same seniority as other present and fu-
and, in some cases, the guarantor could be required to
ture unsubordinated and unsecured bonds of the issuer
renegotiate the terms and conditions of the financing or
and the guarantor;
make compulsory early repayment of the loans granted;
> cross-default clauses, under which the occurrence of a
> rating clauses, which provide for the borrower or the
default event in respect of a specified financial liability
guarantor to maintain their rating above a certain speci-
(above a threshold level) of the issuer, the guarantor or,
fied level;
in some cases, “significant” subsidiaries constitutes a
> cross-default clauses, under which the occurrence of a
default in respect of the liabilities in question, which be-
default event in respect of a specified financial liability
come immediately repayable.
(above a threshold level) of the issuer or, in some cases,
the guarantor constitutes a default in respect of the liabil-
The main covenants covering Enel’s hybrid bonds can be
ities in question, which become immediately repayable.
summarized as follows:
In some cases the covenants are also binding for the sig-
> subordination clauses, under which each hybrid bond is
nificant companies or subsidiaries of the obligated parties.
subordinate to all other bonds issued by the company
All the financial borrowings considered specify “events of
and has the same seniority with all other hybrid financial
default” typical of international business practice, such as,
instruments issued, being senior only to equity instru-
for example, insolvency, bankruptcy proceedings or the en-
ments;
tity ceases trading.
> prohibition on mergers with other companies, the sale
In addition, the guarantees issued by Enel in the interest of
or leasing of all or a substantial part of the company’s
e-distribuzione SpA for certain loans to e-distribuzione SpA
assets to another company, unless the latter succeeds in
from Cassa Depositi e Prestiti SpA require that at the end
all obligations of the issuer.
of each six-month measurement period Enel’s net consoli-
dated financial debt shall not exceed 4.5 times annual con-
The main covenants envisaged in the loan contracts of
solidated EBITDA.
Enel and Enel Finance International NV and the other Group
Finally, the debt of Enel Américas SA, Enel Chile SA and
companies can be summarized as follows:
the other South American subsidiaries (notably Enel Gen-
> negative pledge clauses, under which the borrower and,
eración Chile SA) contain covenants and events of default
in some cases, the guarantor are subject to limitations on
typical of international business practice, which had all
the establishment of mortgages, liens or other encum-
been complied with as at December 31, 2018.
brances on all or part of their respective assets, with the
311
Consolidated financial statements The following table reports the impact on gross long-term debt of hedges established to mitigate exchange risk.
Hedged long-term financial debt by currency
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Initial debt structure l
Impact of hedge
Debt structure after
hedging
Initial debt structure
Initial debt structure l
Impact of hedge
Debt structure after
hedging
Carrying amount
Nominal amount
25,925
13,521
4,786
1,618
1,201
687
465
385
245
233
373
23,514
49,439
26,449
13,658
4,835
1,618
1,230
688
475
385
245
233
381
23,748
50,197
%
52.7%
27.2%
9.6%
3.2%
2.5%
1.4%
0.9%
0.8%
0.5%
0.5%
0.7%
47.3%
100.0%
15,144
(10,577)
(4,835)
29
977
(688)
100
(233)
83
-
-
-
(15,144)
41,593
3,081
1,647
2,207
-
-
-
475
385
345
464
8,604
50,197
%
82.9%
6.1%
-
-
-
3.3%
4.4%
0.9%
0.8%
0.7%
0.9%
17.1%
100.0%
Euro
US dollar
Pound sterling
Colombian peso
Brazilian real
Swiss franc
Chilean peso/UF
Peruvian sol
Russian ruble
Japanese yen
Other currencies
Total non-euro
currencies
TOTAL
Carrying amount Nominal amount
23,388
18,541
4,750
1,543
2,074
403
700
404
247
-
300
24,025
18,720
4,794
1,543
2,114
403
710
404
247
-
306
%
45.0%
35.1%
9.0%
2.9%
4.0%
0.8%
1.3%
0.8%
0.5%
-
0.6%
18,901
(15,064)
(4,794)
-
1,207
(403)
-
-
73
-
80
42,926
3,656
-
1,543
3,321
-
710
404
320
-
386
%
80.6%
6.9%
-
2.9%
6.2%
-
1.3%
0.8%
0.6%
-
0.7%
28,962
52,350
29,241
53,266
55.0%
100.0%
(18,901)
-
10,340
53,266
19.4%
100.0%
The amount of floating-rate debt that is not hedged against
the income statement (raising borrowing costs) in the
interest rate risk is the main risk factor that could impact
event of an increase in market interest rates.
Millions of euro
Floating rate
Fixed rate
Total
2018
2017
Pre-hedge
% Post-hedge
% Pre-hedge
% Post hedge
%
17,175
30.2%
12,983
22.8%
14,268
27.4%
11,358
21.8%
39,735
69.8%
43,927
77.2%
37,823
72.6%
40,733
78.2%
56,910
56,910
52,091
52,091
At December 31, 2018, 30.2% of financial debt was float-
ment purposes but ineligible for hedge accounting, 77% of
ing rate (27.4% at December 31, 2017). Taking account of
net financial debt was hedged (78% hedged at December
hedges of interest rates considered effective pursuant to
31, 2017).
the IFRS-EU, 22.8% of net financial debt (21.8% at De-
cember 31, 2017) was exposed to interest rate risk. Includ-
These results are in line with the limits established in the
ing interest rate derivatives treated as hedges for manage-
risk management policy.
312
Annual Report 2018 The following table reports the impact on gross long-term debt of hedges established to mitigate exchange risk.
Hedged long-term financial debt by currency
Millions of euro
Euro
US dollar
Pound sterling
Colombian peso
Brazilian real
Swiss franc
Chilean peso/UF
Peruvian sol
Russian ruble
Japanese yen
Other currencies
Total non-euro
currencies
TOTAL
23,388
18,541
4,750
1,543
2,074
403
700
404
247
-
300
24,025
18,720
4,794
1,543
2,114
403
710
404
247
-
306
%
45.0%
35.1%
9.0%
2.9%
4.0%
0.8%
1.3%
0.8%
0.5%
-
0.6%
18,901
(15,064)
(4,794)
1,207
(403)
-
-
-
-
-
73
80
42,926
3,656
1,543
3,321
-
-
-
710
404
320
386
10,340
53,266
%
80.6%
6.9%
-
-
-
2.9%
6.2%
1.3%
0.8%
0.6%
0.7%
19.4%
100.0%
28,962
52,350
29,241
53,266
55.0%
100.0%
(18,901)
at Dec. 31, 2018
at Dec. 31, 2017
Initial debt structure l
Impact of hedge
hedging
Initial debt structure
Initial debt structure l
Impact of hedge
Debt structure after
Debt structure after
hedging
Carrying amount Nominal amount
Carrying amount
Nominal amount
25,925
13,521
4,786
1,618
1,201
687
465
385
245
233
373
23,514
49,439
26,449
13,658
4,835
1,618
1,230
688
475
385
245
233
381
23,748
50,197
%
52.7%
27.2%
9.6%
3.2%
2.5%
1.4%
0.9%
0.8%
0.5%
0.5%
0.7%
47.3%
100.0%
15,144
(10,577)
(4,835)
29
977
(688)
-
-
100
(233)
83
41,593
3,081
-
1,647
2,207
-
475
385
345
-
464
%
82.9%
6.1%
-
3.3%
4.4%
-
0.9%
0.8%
0.7%
-
0.9%
(15,144)
-
8,604
50,197
17.1%
100.0%
313
Consolidated financial statements 43.3.2 Short-term borrowings - €3,616 million
At December 31, 2018 short-term borrowings amounted to €3,616 million, an increase of €1,722 million on December 31,
2017. They break down as follows.
Millions of euro
Short-term bank borrowings
Commercial paper
Cash collateral on derivatives and other financing
Other short-term borrowings (1)
Short-term borrowings
at Dec. 31, 2018
at Dec. 31, 2017
512
2,393
301
410
3,616
249
889
449
307
1,894
Change
263
1,504
(148)
103
1,722
(1) Does not include current financial debt included in other current financial liabilities.
Short-term bank borrowings amounted to €512 million.
> €6,000 million of Enel Finance International guaranteed
Commercial paper amounted to €2,393 million, issued by
by Enel SpA;
Enel Finance International, International Endesa BV and a
> €3,000 million of International Endesa BV;
number of South American companies.
> $400 million (equivalent to €349 million) of Enel Américas
The main commercial paper programs include:
and Enel Generación Chile.
43.4 Derivative financial liabilities
For more information on derivative financial liabilities, please see note 46 “Derivatives and hedge accounting”.
43.5 Net gains and losses
The following table shows net gains and losses by category of financial instruments, excluding derivatives:
Millions of euro
Financial assets at amortized cost
Financial assets at FVOCI
Equity investments at FVOCI
Other financial assets at FVOCI (1)
Total financial assets at FVOCI
Financial assets at FVTPL
Financial assets at FVTPL
Financial assets designated upon initial recognition (fair value option)
Total financial assets at FVTPL
10
4
14
385
-
385
Financial liabilities measured at amortized cost
(3,545)
Financial liabilities at FVTPL
Financial liabilities held for trading
Financial liabilities designated upon initial recognition (fair value option)
Total financial liabilities at FVTPL
-
-
-
2018
2017
Net gains/
(losses)
(409)
Of which
impairment/reversal
of impairment
Net gains/
(losses)
Of which
impairment/reversal
of impairment
(1,101)
(701)
(870)
-
-
-
188
-
188
-
-
-
-
-
82
82
-
-
-
(1,054)
1
-
1
-
-
-
-
-
-
-
-
-
-
(1) The value of other assets at FVOCI for 2017 includes income from assets in respect of service concession arrangements that were classified as assets
available for sale, while in 2018, following application of IFRS 9, those assets were mainly classified as assets at FVTPL.
For more details on net gains and losses on derivatives, please see note 11 “Net financial income/(expense) from deriva-
tives”.
314
Annual Report 2018 44. Risk management
Financial risk management
governance and objectives
As part of its operations, the Enel Group is exposed to a
variety of financial risks, notably market risks (including in-
terest rate risk, exchange risk and commodity risk), credit
risk and liquidity risk.
As noted in the section “Main risks and uncertainties”,
the Group’s governance arrangements for financial risks
include internal committees and the establishment of spe-
cific policies and operational limits. Enel’s primary objec-
tive is to mitigate financial risks appropriately so that they
do not give rise to unexpected changes in results.
of translation risk (connected with consolidation of the
accounts). This objective is achieved at the source of the
risk, through the diversification of both the nature of the
financial instruments and the sources of revenue, and
by modifying the risk profile of specific exposures with
derivatives entered into on OTC markets or with specific
commercial agreements.
The risk of fluctuations in commodity prices is generated
by the volatility of those prices and existing structural cor-
relations between them, which creates uncertainty about
the margin on transactions in fuels and energy. Price de-
velopments are observed and analyzed in order to develop
the Group’s industrial, financial and commercial strategies
Market risks
and policies.
Market risks are mainly composed of interest rate risk,
exchange risk and commodity price risk. The sources of
Enel’s exposure to market risks have not changed since
the previous year.
Interest rate risk is primarily generated by the use of finan-
cial instruments. The main financial liabilities held by the
Group include bonds, bank borrowings, other borrowings,
commercial paper, derivatives, cash deposits received to
secure commercial or derivatives transactions (guaran-
tees received, cash collateral), liabilities for construction
contracts and trade payables. The main financial assets
held by the Group include financial receivables, factor-
ing receivables, derivatives, cash deposits made to se-
cure commercial or derivatives transactions (guarantees
pledged, cash collateral), cash (and cash equivalents), re-
ceivables for construction contracts and trade receivables.
The main purpose of those financial instruments is to sup-
port the operations of the Group. For more details, please
see note 43 “Financial instruments” of the consolidated
financial statements.
Exchange risk is generated by transactions in fuels and
power, industrial investments, dividends from investees,
commercial transactions and the use of financial instru-
ments. The consolidated financial statements of the
Group are also exposed to translation risk.
The Group’s policies for managing market risks provide for
the mitigation of the effects on performance of changes
in interest rates and exchange rates with the exclusion
In order to contain the effects of such fluctuations and
stabilize margins, in accordance with the Group’s policies
and operational limits established with the risk gover-
nance arrangements, Enel develops and plans strategies
that impact the various stages of the industrial process
associated with the production and sale of electricity and
gas (such as advance sourcing and long-term commercial
agreements) and risk mitigation plans and techniques for
hedging risks with derivatives.
As part of its governance of market risks, Enel regularly
monitors the size of the OTC derivatives portfolio in rela-
tion to the threshold values set by regulators for the ac-
tivation of clearing obligations (EMIR - European Market
Infrastructure Regulation 648/2012 of the European Parlia-
ment and of the Council). During 2018, no overshoot of
those threshold values was detected.
Interest rate risk
Interest rate risk primarily manifests itself as unexpected
changes in charges on financial liabilities, if indexed to
floating rates and/or exposed to the uncertainty of finan-
cial terms and conditions in negotiating new debt instru-
ments, or as an unexpected change in the value of finan-
cial instruments measured at fair value (such as fixed-rate
debt).
The Enel Group mainly manages interest rate risk through
the definition of an optimal financial structure, with the
315
Consolidated financial statements dual goal of stabilizing borrowing costs and containing the
Floating-to-floating interest rate swaps transform the in-
cost of funds. This goal is pursued through the diversification
dexing criteria for floating-rate financial liabilities.
of the portfolio of financial liabilities by contract type, maturi-
Some structured borrowings have multi-stage cash flows
ty and interest rate, and modifying the risk profile of specific
hedged by interest rate swaps that at the reporting date,
exposures using OTC derivatives, mainly interest rate swaps
and for a limited time, provide for the exchange of fixed-
and interest rate options. The term of such derivatives does
rate interest flows.
not exceed the maturity of the underlying financial liability, so
Interest rate options involve the exchange of interest dif-
that any change in the fair value and/or expected cash flows
ferences calculated on a notional principal amount once
of such contracts is offset by a corresponding change in the
certain thresholds (strike prices) are reached. These
fair value and/or cash flows of the hedged position.
thresholds specify the effective maximum rate (cap) or
Proxy hedging techniques may be used in a number of re-
the minimum rate (floor) to which the synthetic financial
sidual circumstances, when the hedging instruments for the
instrument will be indexed as a result of the hedge. Cer-
risk factors are not available on the market or are not suffi-
tain hedging strategies provide for the use of combina-
ciently liquid. For the purpose of EMIR compliance, in order
tions of options (collars) that establish the minimum and
to test the actual effectiveness of the hedging techniques
maximum rates at the same time. In this case, the strike
adopted, the Group subjects its hedge portfolios to periodic
prices are normally set so that no premium is paid on the
statistical assessment.
contract (zero cost collars).
Such contracts are normally used when the fixed inter-
Using interest rate swaps, the Enel Group agrees with the
est rate that can be obtained in an interest rate swap is
counterparty to periodically exchange floating-rate interest
considered too high with respect to market expectations
flows with fixed-rate flows, both calculated on the same no-
for future interest rate developments. In addition, inter-
tional principal amount.
est rate options are also considered most appropriate in
Floating-to-fixed interest rate swaps transform floating-rate
periods of greater uncertainty about future interest rate
financial liabilities into fixed-rate liabilities, thereby neutraliz-
developments because they make it possible to benefit
ing the exposure of cash flows to changes in interest rates.
from any decrease in interest rates.
Fixed-to-floating interest rate swaps transform fixed-rate fi-
nancial liabilities into floating-rate liabilities, thereby neutral-
The following table reports the notional amount of interest
izing the exposure of their fair value to changes in interest
rate derivatives at December 31, 2018 and December 31,
rates.
Millions of euro
Floating-to-fixed interest rate swaps
Fixed-to-floating interest rate swaps
Fixed-to-fixed interest rate swaps
Floating-to-floating interest rate swaps
Interest rate options
Total
2017 broken down by type of contract:
Notional amount
2018
10,032
154
-
165
50
2017
11,166
884
-
165
50
10,401
12,265
For more details on interest rate derivatives, please see note 46 “Derivatives and hedge accounting”.
316
Annual Report 2018 Interest rate risk sensitivity analysis
Enel analyzes the sensitivity of its exposure by estimating
the effects of a change in interest rates on the portfolio of
financial instruments.
More specifically, sensitivity analysis measures the poten-
tial impact on profit or loss and on equity of market sce-
narios that would cause a change in the fair value of deriva-
tives or in the financial expense associated with unhedged
These market scenarios are obtained by simulating parallel
increases and decreases in the yield curve as at the report-
ing date.
There were no changes introduced in the methods and as-
sumptions used in the sensitivity analysis compared with
the previous year.
With all other variables held constant, the Group’s profit
before tax would be affected by a change in the level of
interest rates as follows.
gross debt.
Millions of euro
Change in financial expense on gross long-term
floating-rate debt after hedging
Change in fair value of derivatives classified as
non-hedging instruments
Change in fair value of derivatives designated
as hedging instruments
Cash flow hedges
Fair value hedges
2018
Pre-tax impact on profit or loss
Pre-tax impact on equity
Basis points
Increase
Decrease
Increase
Decrease
25
25
25
25
23
6
-
(1)
(23)
(6)
-
1
-
-
108
-
-
-
(108)
-
Exchange risk
Exchange risk mainly manifests itself as unexpected
Cross currency interest rate swaps are used to transform a
changes in the financial statement items associated with
long-term financial liability denominated in currency other
transactions denominated in a currency other than the cur-
than the currency of account into an equivalent liability in
rency of account. The Group’s exposure is connected with
the currency of account.
the purchase or sale of fuels and power, investments (cash
Currency forwards are contracts in which the counterpar-
flows for capitalized costs), dividends and the purchase or
ties agree to exchange principal amounts denominated
sale of equity investments, commercial transactions and
in different currencies at a specified future date and ex-
financial assets and liabilities.
change rate (the strike). Such contracts may call for the
In order to minimize the exposure to exchange risk, Enel
actual exchange of the two principal amounts (deliverable
implements diversified revenue and cost sources geo-
forwards) or payment of the difference generated by dif-
graphically, and uses indexing mechanisms in commercial
ferences between the strike exchange rate and the prevail-
contracts. Enel also uses various types of derivative, typi-
ing exchange rate at maturity (non-deliverable forwards). In
cally on the OTC market.
the latter case, the strike rate and/or the spot rate may be
The derivatives in the Group’s portfolio of financial instru-
determined as averages of the rates observed in a given
ments include cross currency interest rate swaps, currency
period.
forwards and currency swaps. The term of such contracts
Currency swaps are contracts in which the counterparties
does not exceed the maturity of the underlying instru-
enter into two transactions of the opposite sign at different
ment, so that any change in the fair value and/or expected
future dates (normally one spot, the other forward) that
cash flows of such instruments offsets the corresponding
provide for the exchange of principal denominated in dif-
change in the fair value and/or cash flows of the hedged
ferent currencies.
position.
317
Consolidated financial statements The following table reports the notional amount of transactions outstanding at December 31, 2018 and December 31, 2017,
broken down by type of hedged item.
Millions of euro
Notional amount
Cross currency interest rate swaps (CCIRSs) hedging debt denominated in
currencies other than the euro
Currency forwards hedging exchange risk on commodities
Currency forwards hedging future cash flows in currencies other than the euro
Currency swaps hedging commercial paper
Currency forwards hedging loans
Other currency forwards
Total
2018
24,712
4,924
5,386
-
-
1,584
36,606
2017
19,004
3,526
6,319
-
-
300
29,149
More specifically, these include:
count connected with the purchase of investment goods
> CCIRSs with a notional amount of €24,712 million to hedge
in the renewables and infrastructure and networks sectors
the exchange risk on debt denominated in currencies other
(new generation digital meters), on operating expenses for
than the euro (€19,004 million at December 31, 2017);
the supply of cloud services and on revenue from the sale
> currency forwards with a total notional amount of €10,310
of renewable energy.
million used to hedge the exchange risk associated with
purchases and sales of natural gas, purchases of fuel and
At December 31, 2018, 55% (47% at December 31, 2017) of
expected cash flows in currencies other than the euro
Group long-term debt was denominated in currencies other
(€9,845 million at December 31, 2017);
than the euro.
> other currency forwards including OTC derivatives trans-
Taking account of hedges of exchange risk, the percentage
actions carried out to mitigate exchange risk on expected
of debt not hedged against that risk amounted to 19% at De-
cash flows in currencies other than the currency of ac-
cember 31, 2018 (17% at December 31, 2017).
Exchange risk sensitivity analysis
The Group analyses the sensitivity of its exposure by esti-
These scenarios are obtained by simulating the appreciation/
depreciation of the euro against all of the currencies com-
mating the effects of a change in exchange rates on the port-
pared with the value observed as at the reporting date.
folio of financial instruments. More specifically, sensitivity
There were no changes in the methods or assumptions used
analysis measures the potential impact on profit or loss and
in the sensitivity analysis compared with the previous year.
equity of market scenarios that would cause a change in the
With all other variables held constant, the profit before tax
fair value of derivatives or in the financial expense associated
would be affected by changes in exchange rates as follows.
with unhedged gross medium/long-term debt.
Millions of euro
2018
Pre-tax impact on profit or loss
Pre-tax impact on equity
Exchange rate
Increase
Decrease
Increase
Decrease
Change in financial expense on gross long-term debt
denominated in currencies other than the euro after
hedging
Change in fair value of derivatives classified as non-
hedging instruments
Change in fair value of derivatives designated as
hedging instruments
Cash flow hedges
Fair value hedges
10%
10%
10%
10%
-
493
-
8
-
(600)
-
(9)
-
-
-
-
(2,712)
3,311
-
-
318
Annual Report 2018 Commodity risk
The risk of fluctuations in the price of commodities is
struments for the specific risk factors generating the expo-
mainly associated with the purchase and sale of electricity
sure are not available on the market or are not sufficiently
and fuels at variable prices (e.g. indexed bilateral contracts,
liquid. In addition, Enel uses portfolio hedging techniques to
transactions on the spot market, etc.).
assess opportunities for netting intercompany exposures.
The exposures on indexed contracts are quantified by
The Group mainly uses plain vanilla derivatives for hedging
breaking down the contracts that generate exposure into
(more specifically, forwards, swaps, options on commodi-
the underlying risk factors.
ties, futures, contracts for differences).
As regards electricity sold by the Group, Enel mainly uses
Enel also engages in proprietary trading in order to main-
fixed-price contracts in the form of bilateral physical con-
tain a presence in the Group’s reference energy commodity
tracts (PPAs) and financial contracts (e.g. contracts for
markets. These operations consist in taking on exposures
differences, VPP contracts, etc.) in which differences are
paid to the counterparty if the market electricity price ex-
in energy commodities (oil products, gas, coal, CO2 certifi-
cates and electricity) using financial derivatives and physi-
ceeds the strike price and to Enel in the opposite case. The
cal contracts traded on regulated and OTC markets, opti-
residual exposure in respect of the sale of energy on the
mizing profits through transactions carried out on the basis
spot market not hedged with such contracts is aggregated
of expected market developments.
by uniform risk factors that can be managed with hedging
The following table reports the notional amount of out-
transactions on the market. Proxy hedging techniques may
standing transactions at December 31, 2018 and Decem-
be used for the industrial portfolios when the hedging in-
ber 31, 2017, broken down by type of instrument.
Millions of euro
Forward and futures contracts
Swaps
Options
Embedded derivatives
Total
Notional amount
2017
24,824
4,584
422
-
29,830
2018
41,157
6,346
549
-
48,052
For more details, please see note 46 “Derivatives and hedge accounting”.
Commodity risk sensitivity analysis
The following table presents the results of the analysis of
sensitivity to a reasonably possible change in the commodity
prices underlying the valuation model used in the scenario at
the same date, with all other variables held constant.
The impact on pre-tax profit of shifts of +10% and -10% in
the price curve for the main commodities that make up the
fuel scenario and the basket of formulas used in the con-
tracts is mainly attributable to the change in the price of gas
and petroleum products and, to a lesser extent, of electricity
and CO2. The impact on equity of the same shifts in the price
curve is primarily due to changes in the price of electricity
and, to a lesser extent, coal and CO2.
Millions of euro
2018
Pre-tax impact on profit or loss
Pre-tax impact on equity
Commodity price
Increase
Decrease
Increase
Decrease
Change in the fair value of trading derivatives on
commodities
Change in the fair value of derivatives on
commodities designated as hedging instruments
10%
10%
(114)
-
101
-
-
70
-
(60)
319
Consolidated financial statements Credit risk
The Group’s commercial, commodity and financial opera-
Global Business Lines and at the consolidated level – in
tions expose it to credit risk, i.e. the possibility that a dete-
measuring commercial credit exposures in order to prompt-
rioration in the creditworthiness of a counterparty has an
ly identify any deterioration in the quality of outstanding re-
adverse impact on the expected value of the creditor posi-
ceivables and any mitigation actions to be taken.
tion or, for trade payables only, increase average collection
The policy for managing credit risk associated with com-
times.
mercial activities provides for a preliminary assessment of
Accordingly, the exposure to credit risk is attributable to the
the creditworthiness of counterparties and the adoption of
following types of operations:
mitigation instruments, such as obtaining collateral or unse-
> the sale and distribution of electricity and gas in free and
cured guarantees.
regulated markets and the supply of goods and services
In addition, the Group undertakes transactions to assign re-
(trade receivables);
ceivables without recourse, which results in the complete
> trading activities that involve the physical exchange of
derecognition of the corresponding assets involved in the
assets or transactions in financial instruments (the com-
assignment, as the risks and rewards associated with them
modity portfolio);
have been transferred.
> trading in derivatives, bank deposits and, more generally,
Finally, with regard to financial and commodity transac-
financial instruments (the financial portfolio).
tions, risk mitigation is pursued with a uniform system
In order to minimize credit risk, credit exposures are man-
for assessing counterparties at the Group level, including
aged at the Region/Country/Global Business Line level by
implementation at the level of Regions/Countries/Global
different units, thereby ensuring the necessary segregation
Business Lines, as well as with the adoption of specific
of risk management and control activities. Monitoring of
standardized contractual frameworks that contain risk miti-
the consolidated exposure is carried out by Enel SpA.
gation clauses (e.g. netting arrangements) and possibly the
In addition, at the Group level the policy provides for the
exchange of cash collateral.
use of uniform criteria – in all the main Regions/Countries/
at Dec. 31, 2018
Basis for
recognition of
expected loss
allowance
12 m ECL
Lifetime ECL
Average
loss rate
(PD*LGD)
0.3%
44.2%
Lifetime ECL
100.0%
Gross carrying
amount
Expected loss
allowance
Net value
7,682
344
55
8,081
22
152
55
229
7,660
192
-
7,852
Financial receivables
Millions of euro
Staging
Performing
Underperforming
Non-performing
Total
320
Annual Report 2018 Assets deriving from contracts with customers, trade receivables and other receivables: individual measurement
Millions of euro
Contract assets
Trade receivables
Trade receivables not past due
Trade receivables past due:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
- 121-150 days
- 151-180 days
- more than 180 days (credit impaired)
Total trade receivables
Other receivables
Other receivables not past due
Other receivables past due:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
- 121-150 days
- 151-180 days
- more than 180 days (credit impaired)
Total other receivables
TOTAL
at Dec. 31, 2018
Average loss rate
(PD*LGD)
Gross
carrying amount
Expected loss
allowance
-
37
0.9%
4,349
4.6%
13.0%
6.7%
15.6%
4.3%
20.3%
51.6%
1.1%
-
-
-
-
-
-
-
368
77
60
45
46
79
1,088
6,112
999
83
-
-
-
-
-
-
-
37
17
10
4
7
2
16
561
654
11
-
-
-
-
-
-
-
Net value
37
4,312
351
67
56
38
44
63
527
5,458
988
83
-
-
-
-
-
-
1,082
7,231
11
665
1,071
6,566
321
Consolidated financial statements Assets deriving from contracts with customers, trade receivables and other receivables: collective measurement
at Dec. 31, 2018
Average loss rate
(PD*LGD)
Gross carrying
amount
Expected loss
allowance
0.2%
445
2.3%
3,988
1.9%
12.0%
18.7%
24.8%
22.5%
29.3%
56.9%
3.3%
-
-
-
-
-
-
-
2,289
209
139
125
111
92
3,350
10,303
393
40
-
-
-
-
-
-
1
91
44
25
26
31
25
27
1,905
2,174
13
-
-
-
-
-
-
-
Net value
444
3,897
2,245
184
113
94
86
65
1,445
8,129
380
40
-
-
-
-
-
-
433
11,181
13
2,188
420
8,993
Millions of euro
Contract assets
Trade receivables
Trade receivables not past due
Trade receivables past due:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
- 121-150 days
- 151-180 days
- more than 180 days (credit impaired)
Total trade receivables
Other receivables
Other receivables not past due
Other receivables past due:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
- 121-150 days
- 151-180 days
- more than 180 days (credit impaired)
Total other receivables
TOTAL
322
Annual Report 2018 Liquidity risk
Liquidity risk manifests itself as uncertainty about the
able committed credit lines and a portfolio of highly liquid
Group’s ability to discharge its obligations associated with
assets.
financial liabilities that are settled by delivering cash or an-
In the long term, liquidity risk is mitigated by maintaining a
other financial asset.
balanced maturity profile for our debt, access to a range of
Enel manages liquidity risk by implementing measures to
sources of funding on different markets, in different curren-
ensure an appropriate level of liquid financial resources,
cies and with diverse counterparties.
minimizing the associated opportunity cost and maintain-
The mitigation of liquidity risk enables the Group to main-
ing a balanced debt structure in terms of its maturity profile
tain a credit rating that ensures access to the capital market
and funding sources.
and limits the cost of funds, with a positive impact on its
In the short term, liquidity risk is mitigated by maintaining
performance and financial position.
an appropriate level of unconditionally available resources,
The Group holds the following undrawn lines of credit.
including liquidity on hand and short-term deposits, avail-
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Committed credit lines
Uncommitted credit lines
Commercial paper
Total
Expiring within
one year
Expiring beyond
one year
Expiring within
one year
Expiring beyond
one year
750
355
6,990
8,095
13,758
-
-
13,758
245
360
7,464
8,069
13,761
1
-
13,762
Maturity analysis
The table below summarizes the maturity profile of the Group’s long-term debt.
Millions of euro
Maturing in
Bonds:
- listed, fixed rate
- listed, floating rate
- unlisted, fixed rate
- unlisted, floating rate
Total bonds
Bank borrowings:
- fixed rate
- floating rate
- use of revolving credit lines
Total bank borrowings
Non-bank borrowings:
- fixed rate
- floating rate
Total non-bank borrowings
TOTAL
Less than 3
months
From 3
months to 1
year
2020
2021
2022
2023
Beyond
55
106
-
135
296
82
188
-
270
42
7
49
615
790
199
-
56
1,928
283
-
27
1,309
355
-
111
1,045
2,238
1,775
395
1,165
-
1,560
122
25
147
397
1,381
73
1,851
176
37
213
244
1,175
136
1,555
165
31
196
2,250
465
1,787
97
4,599
75
629
-
704
169
27
196
2,801
567
2,172
97
5,637
42
636
-
678
176
20
196
13,966
1,191
8,799
428
24,384
251
3,780
-
4,031
699
31
730
2,752
4,302
3,526
5,499
6,511
29,145
323
Consolidated financial statements Commitments to purchase commodities
In conducting its business, the Enel Group has entered into
The following table reports the undiscounted cash flows
contracts to purchase specified quantities of commodities
associated with outstanding commitments at December
at a certain future date for its own use, which qualify for the
31, 2018.
own use exemption provided for under IAS 39.
Millions of euro
Commitments to purchase commodities:
- electricity
- fuels
Total
at Dec. 31, 2018
2015-2019
2020-2024
2025-2029
Beyond
109,638
43,668
153,306
27,358
26,536
53,894
20,282
10,969
31,251
19,892
4,398
24,290
42,106
1,765
43,871
45. Offsetting financial assets and financial liabilities
At December 31, 2018, the Group did not hold offset positions in assets and liabilities, as it is not the Enel Group’s policy
to settle financial assets and liabilities on a net basis.
46. Derivatives and hedge accounting
The following tables show the notional amount and the fair
on the basis of which cash flows are exchanged. This
value of derivative financial assets and derivative financial
amount can be expressed as a value or a quantity (for ex-
liabilities eligible for hedge accounting or measured a FVT-
ample tons, converted into euros by multiplying the notion-
PL, classified on the basis of the type of hedge relationship
al amount by the agreed price). Amounts denominated in
and the hedged risk, broken down into current and non-
currencies other than the euro are converted at the official
current instruments.
year end exchange rates provided by the World Markets Re-
The notional amount of a derivative contract is the amount
uters (WMR) Company.
Millions of euro
Non-current
Current
Notional
Fair value
Notional
Fair value
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Fair value hedge
derivatives:
- on interest rates
- on exchange rates
Total
Cash flow hedge
derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
TOTAL DERIVATIVE
FINANCIAL ASSETS
324
12
171
183
404
8,318
1,126
9,848
50
197
261
508
827
-
827
780
3,644
367
4,791
394
134
177
705
6
19
25
12
675
262
949
2
4
25
31
23
-
23
5
594
63
662
3
5
9
17
15
66
81
427
4,689
1,428
6,544
-
4,057
20,553
24,610
-
-
-
127
1,130
1,975
3,232
-
4,442
12,909
17,351
1
3
4
1
252
494
747
-
51
3,112
3,163
-
-
-
1
45
281
327
-
80
1,902
1,982
10,539
6,323
1,005
702
31,235
20,583
3,914
2,309
Annual Report 2018 Millions of euro
Non-current
Current
Notional
Fair value
Notional
Fair value
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Fair value hedge
derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
Cash flow hedge
derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
Total
TOTAL DERIVATIVE
FINANCIAL LIABILITIES
-
-
-
-
-
63
-
63
8,605
13,025
656
9,899
15,756
368
22,286
26,023
478
191
133
802
88
326
18
432
-
-
-
-
605
1,803
167
2,575
17
3
14
34
-
7
-
7
556
2,375
39
2,970
9
10
2
21
-
-
-
-
272
2,791
2,050
5,113
138
3,101
21,845
25,084
-
35
-
35
50
2,096
1,114
3,260
100
1,474
12,902
14,476
-
-
-
-
1
348
859
1,208
66
33
3,036
3,135
-
6
-
6
1
114
159
274
65
38
1,877
1,980
23,088
26,518
2,609
2,998
30,197
17,771
4,343
2,260
46.1 Derivatives designated as hedging instruments
Derivatives are initially recognized at fair value, on the
> fair value hedge; or
trade date of the contract and are subsequently remea-
> cash flow hedge.
sured at their fair value. The method of recognizing the
For more details about the nature and the extent of risks
resulting gain or loss depends on whether the derivative is
arising from financial instruments to which the Group is ex-
designated as a hedging instrument, and if so, the nature
posed, please refer the note 44 “Risk management”.
of the item being hedged.
To be effective a hedging relationship shall meet all of the
Hedge accounting is applied to derivatives entered into
following criteria:
in order to reduce risks such as interest rate risk, foreign
> existence of an economic relationship between hedging
exchange rate risk, commodity price risk and net invest-
instrument and hedged item;
ments in foreign operations when all the criteria provided
> the effect of credit risk shall not dominate the value chang-
by IFRS 9 are met.
es resulting from the economic relationship;
At the inception of the transaction, the Group docu-
> the hedge ratio defined at initial designation shall be equal
ments the relationship between hedging instruments
to the one used for risk management purposes (i.e. same
and hedged items, as well as its risk management objec-
quantity of the hedged item that the entity actually hedges
tives and strategy. The Group also documents its assess-
and the quantity of the hedging instrument that the entity
ment, both at hedge inception and on an ongoing basis,
actually uses to hedge the quantity of the hedged item).
of whether hedging instruments are highly effective in
Based on the IFRS 9 requirements, the existence of an
offsetting changes in fair values or cash flows of hedged
economic relationship is evaluated by the Group through a
items.
qualitative assessment or a quantitative computation, de-
For cash flow hedges of forecast transactions designated
pending of the following circumstances:
as hedged items, the Group assesses and documents
> if the underlying risk of the hedging instrument and the
that they are highly probable and present an exposure to
hedged item is the same, the existence of an economic
changes in cash flows that affect profit or loss.
relationship will be provided through a qualitative analysis;
Depending on the nature of the risks exposure, the Group
> on the other hand, if the underling risk of the hedging in-
designates derivatives as either:
strument and the hedged item is not the same, the exis-
325
Consolidated financial statements tence of the economic relationship will be demonstrated
> quantity or notional amount differences (i.e. the hedged
through a quantitative method in addition to a qualitative
item and hedging instrument are based on different quan-
analysis of the nature of the economic relationship (i.e. lin-
tities or notional amounts);
ear regression).
> other risks (i.e. changes in the fair value or cash flows of
a derivative hedging instrument or hedged item relate to
In order to demonstrate that the behavior of the hedging
risks other than the specific risk being hedged);
instrument is in line with those of the hedged item, differ-
> credit risk (i.e. the counterparty credit risk differently im-
ent scenarios will be analyzed.
pact the fair value movements of the hedging instruments
For hedging of commodity price risk, the existence of an
and hedge items).
economic relationship is deduced from a ranking matrix
that defines, for each possible risk component, a set of all
standard derivatives available in the market whose ranking
Fair value hedges
Fair value hedges are used to protect the Group against ex-
is based on their effectiveness in hedging the considered
posures to changes in the fair value of assets, liabilities or
risk.
firm commitment attributable to a particular risk that could
In order to evaluate the credit risk effects, the Group con-
affect profit or loss.
siders the existence of risk mitigating measures (collateral,
Changes in the fair value of derivatives that qualify and are
mutual break-up clauses, netting agreements, etc.).
designated as hedging instruments are recognized in the in-
come statement, together with changes in the fair value of
The Group has established a hedge ratio of 1:1 for all the
the hedged item that are attributable to the hedged risk.
hedging relationships (including commodity price risk hedg-
If the hedge no longer meets the criteria for hedge account-
ing) as the underlying risk of the hedging derivative is iden-
ing, the adjustment to the carrying amount of a hedged item
tical to the hedged risk, in order to minimize hedging inef-
for which the effective interest rate method is used is amor-
fectiveness.
tized to profit or loss over the period to maturity.
The hedge ineffectiveness will be evaluated through a qual-
itative assessment or a quantitative computation, depend-
ing on the following circumstances:
Cash flow hedges
Cash flow hedges are applied in order to hedge the Group
> if the critical terms of the hedged item and hedging instru-
exposure to changes in future cash flows that are attribut-
ment match and there aren’t other sources of ineffective-
able to a particular risk associated with a recognized asset
ness, including the credit risk adjustment on the hedging
or liability or a highly probable transaction that could affect
derivative, the hedge relationship will be considered fully
profit or loss.
effective on the basis of a qualitative assessment;
The effective portion of changes in the fair value of deriva-
> if the critical terms of the hedged item and hedging in-
tives that are designated and qualify as cash flow hedges is
strument do not match or there is at least one source
recognized in other comprehensive income. The gain or loss
of ineffectiveness, the hedge ineffectiveness will be
relating to the ineffective portion is recognized immediately
quantified applying the “dollar offset” cumulative meth-
in the income statement.
od with hypothetical derivative. This method compares
Amounts accumulated in equity are reclassified to profit
changes in fair values of the hedging instrument and the
or loss in the periods when the hedged item affects profit
hypothetical derivative between the reporting date and
or loss (for example, when the hedged forecast sale takes
the inception date.
place).
If the hedged item results in the recognition of a non-financial
The main causes of hedge ineffectiveness may be the fol-
asset (i.e. property, plant and equipment or inventories, etc.)
lowings:
or a non-financial liability, or a hedged forecast transaction
> basis differences (i.e. the fair value or cash flows of the
for a non-financial asset or a non-financial liability becomes
hedged item depend on a variable that is different from
a firm commitment for which fair value hedge accounting
the variable that causes the fair value or cash flows of the
is applied, the amount accumulated in equity (i.e. cash flow
hedging instrument to change);
reserve) shall be removed and included in the initial value
> timing differences (i.e. the hedged item and hedging in-
(cost or other carrying amount) of the asset or the liability
strument occur or are settled at different dates);
hedged (i.e. “basis adjustment”).
326
Annual Report 2018 When a hedging instrument expires or is sold, or when a
> it represents a best proxy of the old derivative in terms
hedge no longer meets the criteria for hedge accounting,
of ranking;
any cumulative gain or loss existing in equity at that time re-
> it meets specific liquidity requirements.
mains in equity and is recognized when the forecast trans-
Satisfaction of these requirements is verified quarterly.
action is ultimately recognized in the income statement.
At the roll-over date, the hedging relationship is discontin-
When a forecast transaction is no longer expected to occur,
ued. Therefore, starting from that date, changes in the ef-
the cumulative gain or loss that was reported in equity is
fective fair value of the new derivative will be recognized in
immediately transferred to the income statement.
shareholders’ equity (the cash flow hedge reserve), while
For hedging relationships using forward as hedging instru-
changes in the fair value of the old derivative are recognized
ment, where only the change in the value of the spot ele-
through profit or loss.
ment is designated as the hedging instrument, accounting
for the forward element (profit or loss vs OCI) is defined
The following tables show the notional amount and the fair
case by case. This approach is actually applied by the Group
value of hedging derivatives assets and liabilities, classified
for hedging of foreign currency risk on renewables assets.
on the basis of each type of hedge relationship and hedged
Conversely, for hedging relationships using cross currency
risk, broken down into current and non-current.
interest rate swap as hedging instrument, the Group sep-
arates foreign currency basis spread, in designating the
The notional amount of a derivative contract is the amount
hedging derivative, and present them in other comprehen-
on the basis of which cash flows are exchanged. This
sive income (OCI) as hedging costs.
amount can be expressed as a value or a quantity (for ex-
With specific regard to cash flow hedges of commodity risk,
ample tons, converted into CU by multiplying the notional
in order to improve their consistency with the risk manage-
amount by the agreed price). Amounts denominated in
ment strategy, the Enel Group applies a dynamic hedge ac-
currencies other than CU are converted at the year end
counting approach based on specific liquidity requirements
exchange rates provided by the World Markets Reuters
(the so-called liquidity-based approach).
(WMR) Company.
This approach requires the designation of hedges through
the use of the most liquid derivatives available on the mar-
For more information about the fair value measurement of
ket and replacing them with others that are more effective
derivative contracts, please see notes 47 “Assets measured
in covering the risk in question.
at fair value” and 48 “Liabilities measured at fair value”.
Consistent with the risk management strategy, the liquidity-
based approach allows the roll-over of a derivative by replac-
ing it with a new derivative, not only in the event of expiry
but also during the hedging relationship, if and only if the
new derivative meets both of the following requirements:
327
Consolidated financial statements 46.1.1 Hedge relationships by type of risk hedged
Interest rate risk
The following table shows the notional amount and the fair
of transactions outstanding as at December 31, 2018 and
value of the hedging instruments on the interest rate risk
December 31, 2017, broken down by type of hedge.
Millions of euro
Hedging instrument
Interest rate swaps
Interest rate swaps
Interest rate swaps
Total
Fair value
Notional amount
Fair value Notional amount
Hedged item
at Dec. 31, 2018
at Dec. 31, 2017
Fixed-rate
borrowings
Floating-rate
borrowings
Floating-rate financial
receivables
6
12
22
812
(599)
7
(586)
9,581
(550)
10,799
142
9,735
-
72
(528)
11,683
The following table shows the notional amount and the fair value of hedging derivatives on interest rate risk as at Decem-
ber 31, 2018 and December 31, 2017, broken down by type of hedge.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Fair value hedge
derivatives:
- interest rate swaps
27
827
7
23
-
-
-
-
Cash flow hedge
derivatives:
- interest rate swaps
831
907
Total interest rate
derivatives
858
1,734
13
20
6
29
8,877
9,949
(606)
(557)
8,877
9,949
(606)
(557)
The notional amount of derivatives classified as hedging in-
> the early termination of interest rate swaps amounting
struments at December 31, 2018, came to €9,735 million,
to €938 million, of which €800 million in respect of the
with a corresponding negative fair value of €586 million.
tender offer for the hybrid bond issued by Enel SpA in
2013;
Compared with December 31, 2017, the notional amount
> the expiry of interest rate swaps amounting to €177 mil-
decreased by €1,948 million, mainly reflecting:
lion;
> the early termination of pre-hedge interest rate swaps
> new interest rate swaps amounting to €2,445 million.
amounting to €1,250 million in respect of the issue of
The value also reflects the reduction of €527 million in the
the green bond;
notional amount of amortizing interest rate swaps.
> the early termination of pre-hedge interest rate swaps
The deterioration in the fair value of €58 million mainly re-
amounting to €1,500 million in respect of the US-dollar
flects developments in the yield curve.
denominated bond issue in September;
328
Annual Report 2018 Cash flow hedge derivatives
The following table shows the cash flows expected in coming years from cash flow hedge derivatives on interest rate risk.
Millions of euro
Fair value
at Dec 31,
2018
Cash flow hedge derivatives on interest
rates:
Distribution of expected cash flows
2019
2020
2021
2022
2023
Beyond
- positive fair value
- negative fair value
13
(606)
5
(84)
3
2
(122)
(116)
1
(91)
1
(78)
3
(146)
The following table shows the impact of reserves from cash flow hedge derivatives on interest rate risk on equity during
the period, gross of tax effects.
Millions of euro
Opening balance at January 1, 2017
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2017
Opening balance at January 1, 2018
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2018
(768)
99
52
(617)
(617)
(77)
37
(657)
Exchange risk
The following table shows the notional amount and the fair
transactions outstanding as at December 31, 2018 and De-
value of the hedging instruments on the exchange risk of
cember 31, 2017, broken down by type of hedged item.
Millions of euro
Fair value Notional amount
Fair value Notional amount
at Dec. 31, 2018
at Dec. 31, 2017
Hedging instrument
Cross currency interest rate swaps (CCIRSs)
Cross currency interest rate swaps (CCIRSs)
Cross currency interest rate swaps (CCIRSs)
Currency forwards
Currency forwards
Currency forwards
Total
Hedged asset
Fixed-rate
borrowings
Floating-rate
borrowings
Future cash flows
denominated in
foreign currencies
Future commodity
purchases
denominated in
foreign currencies
Future cash flows
denominated in
foreign currencies
Purchases of
investment goods
and other
(1,325)
21,114
(1,720)
17,616
95
1,021
(4)
(71)
297
(29)
977
321
99
4,298
(130)
3,076
(30)
1,089
30
(1,202)
1,241
29,060
30
(9)
(1,863)
552
183
22,725
329
Consolidated financial statements Cash flow hedges and fair value hedges include:
> currency forwards with a notional amount of €1,241 mil-
> CCIRSs with a notional amount of €21,114 million used
lion and a positive fair value of €30 million in respect of
to hedge the exchange risk on fixed-rate debt denomi-
OTC transactions to mitigate the exchange risk on ex-
nated in currencies other than the euro, with a negative
pected cash flows in currencies other than the currency
fair value of €1,325 million;
of account connected with the purchase of investment
> CCIRSs with a notional amount of €1,318 million used to
goods in the renewables and infrastructure and networks
hedge the exchange risk on floating-rate debt denomi-
sectors (new generation digital meters), on operating ex-
nated in currencies other than the euro, with a positive
penses for the supply of cloud services and on revenue
fair value of €24 million;
from the sale of renewable energy.
> currency forwards with a notional amount of €5,387 mil-
lion used to hedge the exchange risk associated with
The following table reports the notional amount and fair val-
purchases of natural gas, purchases of fuel and expected
ue of foreign exchange derivatives at December 31, 2018
cash flows in currencies other than the euro, with a posi-
and December 31, 2017, broken down by type of hedge.
tive fair value of €69 million;
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Fair value hedge
derivatives:
- currency forwards
- CCIRSs
Cash flow hedge
derivatives:
- currency forwards
- CCIRSs
Total foreign exchange
derivatives
-
237
-
-
4,302
8,705
747
4,028
13,244
4,775
-
22
160
767
949
-
-
32
607
-
-
4
93
-
-
-
(13)
2,326
3,060
(61)
(142)
13,490
14,793
(2,090)
(2,347)
639
15,816
17,950
(2,151)
(2,502)
The notional amount of CCIRSs at December 31, 2018
2018 amounted to €6,628 million (€3,807 million at Decem-
amounted to €22,432 million (€18,914 million at Decem-
ber 31, 2017), an increase of €2,821 million. The exposure to
ber 31, 2017), an increase of €3,518 million. Cross currency
exchange risk, especially that associated with the US dollar,
interest rate swaps with a total value of €654 million ex-
is mainly due to purchases of natural gas, purchase of fuel
pired, while cross currency interest rate swaps with a value
and cash flows in respect of investments. Changes in the
of €148 were closed early. New derivatives amounted to
notional amount are connected with normal developments
€3,871 million, of which €3,492 million in respect of bond
in operations.
issues denominated in US dollars in September 2018. The
value also reflects developments in the exchange rate of the
Cash flow hedge derivatives
euro against the main other currencies, which caused their
The following table shows the cash flows expected in
notional amount to increase by €358 million.
coming years from cash flow hedge derivatives on ex-
The notional value of currency forwards at December 31,
change risk.
Millions of euro
Fair value
Distribution of expected cash flows
at Dec. 31, 2018
2019
2020
2021
2022
2023
Beyond
Cash flow hedge derivatives on exchange rates:
- positive fair value
- negative fair value
926
380
(2,150)
(237)
261
72
182
43
163
29
332
65
1,112
124
330
Annual Report 2018 The following table shows the impact of reserves from cash flow hedge derivatives on exchange risk on equity during the
period, gross of tax effects.
Millions of euro
Opening balance at January 1, 2017
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2017
Opening balance at January 1, 2018
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2018
(1,341)
(211)
(88)
(1,640)
(1,640)
181
65
(1,394)
331
Consolidated financial statements Commodity risk
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Fair value hedge derivatives
Derivatives on power:
- swaps
- forwards/futures
- options
Total derivatives on power
Cash flow hedge derivatives
Derivatives on power:
- swaps
- forwards/futures
- options
Total derivatives on power
Derivatives on coal:
- swaps
- forwards/futures
- options
Total derivatives on coal
Derivatives on gas and oil:
- swaps
- forwards/futures
- options
-
-
-
-
1,249
293
-
1,542
10
-
-
10
-
-
-
-
-
458
116
-
574
525
-
-
525
45
723
1,036
-
-
Total derivatives on gas and oil
723
1,081
Derivatives on CO2:
- swaps
- forwards/futures
- options
Total derivatives on CO2
TOTAL DERIVATIVES ON
COMMODITIES
-
279
-
279
-
162
-
162
2,554
2,342
-
-
-
-
139
20
-
159
74
-
-
74
-
222
-
222
-
301
-
301
756
-
-
-
-
39
11
-
50
84
-
-
84
12
130
-
142
-
68
-
68
-
-
-
-
512
159
-
671
619
-
-
619
-
1,415
-
1,415
-
1
-
1
-
-
-
-
238
545
-
783
18
-
-
18
-
681
-
681
-
-
-
-
-
-
-
-
-
-
-
-
(227)
(12)
-
(22)
(102)
-
(239)
(124)
(94)
-
-
(94)
-
(693)
-
(693)
-
-
-
-
(1)
-
-
(1)
-
(73)
-
(73)
-
-
-
-
344
2,706
1,482
(1,026)
(198)
The table reports the notional amount and fair value of de-
tions in the price of natural gas, for both purchases and
rivatives hedging the price risk on commodities at Decem-
sales, carried out for oil commodities and gas products with
ber 31, 2018 and at December 31, 2017, broken down by
physical delivery (all-in-one hedges).
type of hedge. The positive fair value of cash flow hedge
Cash flow hedge derivatives on commodities included in
derivatives on commodities regards derivatives on gas and
liabilities regard derivatives on gas and oil commodities in
oil commodities in the amount of €222 million, derivatives
the amount of €693 million, derivatives on power in the
on CO2 (€301 million), derivatives on power (€159 million)
and, to a lesser extent, hedges of coal purchases request-
ed by the generation companies in the amount of €74 mil-
lion. The first category primarily regards hedges of fluctua-
amount of €239 million and derivatives on coal (€94 mil-
lion).
332
Annual Report 2018 Cash flow hedge derivatives
The following table shows the cash flows expected in coming years from cash flow hedge derivatives on commodity risk.
Millions of euro
Fair value
Distribution of expected cash flows
at Dec. 31, 2018
2019
2020
2021
2022
2023 Beyond
Cash flow hedge derivatives on commodities:
- positive fair value
- negative fair value
756
494
(1,026)
(859)
178
(143)
4
(10)
5
(7)
6
(5)
69
(2)
The following table shows the impact of reserves from cash flow hedge derivatives on commodity risk on equity during
the period, gross of tax effects.
Millions of euro
Opening balance at January 1, 2017
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2017
Opening balance at January 1, 2018
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss
Closing balance at December 31, 2018
345
409
(513)
241
241
(199)
(129)
(87)
333
Consolidated financial statements 46.2 Derivatives at fair value through profit or loss
The following table shows the notional amount and the fair value of derivatives at FVTPL as at December 31, 2018 and
December 31, 2017.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Derivatives at FVTPL
Derivatives on interest rates:
- interest rate swaps
- interest rate options
Derivatives on exchange rates:
- currency forwards
- CCIRSs
Derivatives on commodities
Derivatives on power:
- swaps
- forwards/futures
- options
50
-
4,092
162
1,070
6,260
15
394
-
4,576
-
776
3,439
7
2
-
54
1
167
814
28
Total derivatives on power
7,345
4,222
1,009
Derivatives on coal:
- swaps
- forwards/futures
- options
Total derivatives on coal
Derivatives on gas and oil:
- swaps
- forwards/futures
- options
201
-
-
201
896
11,894
225
Total derivatives on gas and oil
13,015
Derivatives on CO2:
- swaps
- forwards/futures
- options
Total derivatives on CO2
Derivatives on other:
- swaps
- forwards/futures
- options
Total derivatives on other
Embedded derivatives
-
243
-
243
9
1
-
10
-
369
29
-
398
534
7,653
181
8,368
-
97
1
98
-
-
-
-
-
56
-
-
56
215
1,640
147
2,002
-
68
-
68
2
-
-
2
-
3
-
85
-
125
457
9
591
86
1
-
87
125
823
254
566
50
1,175
2,117
229
6,955
20
138
50
1,759
90
608
3,500
16
(79)
(5)
(18)
(18)
(28)
(1,016)
(11)
7,204
4,124
(1,055)
(68)
(6)
(46)
(2)
(107)
(522)
(5)
(634)
823
294
(48)
(57)
-
-
4
-
-
-
-
-
823
298
(48)
(57)
728
12,712
289
629
7,483
216
(186)
(1,531)
(165)
(123)
(732)
(293)
1,202
13,729
8,328
(1,882)
(1,148)
-
30
1
31
-
-
-
-
-
-
221
-
221
-
1
-
1
-
-
79
1
80
90
-
-
90
-
-
(65)
-
(65)
-
-
-
-
-
-
(34)
(1)
(35)
(5)
-
-
(5)
-
TOTAL DERIVATIVES
25,118
18,056
3,194
1,999
25,886
14,957
(3,169)
(2,001)
At December 31, 2018 the notional amount of trading deriva-
their notional value and the decline in the associated net fair
tives on interest rates came to €666 million. The fair value of
value of €18 million mainly reflected normal operations and
a negative €81 million deteriorated by €10 million on the pre-
developments in exchange rates.
vious year, mainly due to developments in the yield curve.
At December 31, 2018, the notional amount of derivatives
At December 31, 2018, the notional amount of derivatives
on commodities came to €42,792 million. The fair value
on exchange rates was €7,546 million. The overall increase in
of trading derivatives on commodities classified as assets
334
Annual Report 2018 mainly reflects the market valuation of hedges of gas and
for hedging purposes, did not meet the requirements for
oil amounting to €2,002 million and derivatives on power
hedge accounting.
amounting to €1,009 million.
The “Other” category includes hedges using weather de-
The fair value of trading derivatives on commodities classified
rivatives. In addition to commodity risk, the Group compa-
as liabilities mainly regards hedges of gas and oil amount-
nies are also exposed to changes in volumes associated with
ing to €1,882 million and derivatives on power amounting to
weather conditions (for example, temperature impacts the
€1,055 million.
consumption of gas and power).
These values include transactions that, although established
47. Assets measured at fair value
The Group determines fair value in accordance with IFRS
> Level 2, where the fair value is determined on basis of
13 whenever such measurement is required by the inter-
inputs other than quoted prices included within Level 1
national accounting standards as a recognition or measure-
that are observable for the asset or liability, either directly
ment criterion.
(such as prices) or indirectly (derived from prices);
Fair value is defined as the price that would be received to
> Level 3, where the fair value is determined on the basis
sell an asset or paid to transfer a liability, in an orderly trans-
of unobservable inputs.
action, between market participants, at the measurement
This note also provides detailed disclosures concerning
date (i.e. an exit price).
the valuation techniques and inputs used to perform these
The best proxy of fair value is market price, i.e. the current
measurements.
publically available price actually used on a liquid and active
To that end:
market.
> recurring fair value measurements of assets or liabilities
The fair value of assets and liabilities is classified in ac-
are those required or permitted by the IFRSs in the bal-
cordance with the three-level hierarchy described below,
ance sheet at the close of each period;
depending on the inputs and valuation techniques used in
> non-recurring fair value measurements are those re-
determining their fair value:
quired or permitted by the IFRSs in the balance sheet in
> Level 1, where the fair value is determined on the basis
particular circumstances.
of quoted prices (unadjusted) in active markets for identi-
For general information or specific disclosures on the ac-
cal assets or liabilities that the entity can access at the
counting treatment of these circumstances, please see
measurement date;
note 2 “Accounting policies and measurement criteria”.
335
Consolidated financial statements The following table shows, for each class of assets mea-
end of the reporting period and the level in the fair value
sured at fair value on a recurring or non-recurring basis in
hierarchy into which the fair value measurements of those
the financial statements, the fair value measurement at the
assets are classified.
Millions of euro
Non-current assets
Current assets
Equity investments in other entities at FVOCI
Securities at FVOCI
Securities at FVTPL
Financial assets from service concession
arrangements at FVTPL
Loans and receivables measured at fair value
Other investments of liquidity at fair value
Cash flow hedge derivatives:
- on interest rates
- on exchange rates
- on commodities
Fair value hedge derivatives:
- on interest rates
- on exchange rates
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
Inventories measured at fair value
Contingent consideration
Notes
26
26.1,
30.1
26.1
26
26
32
46
46
46
46
46
46
46
46
28
27
Fair
value
Level 1
Level 2
Level 3
Fair
value
Level 1
Level 2 Level 3
53
2
12
360
10
2,070
359
-
12
675
262
6
19
2
4
25
37
91
360
-
-
-
-
-
-
11
-
-
-
-
9
37
-
-
-
2,070
-
-
12
675
251
6
19
2
4
16
-
91
39
-
10
-
359
-
-
-
-
-
-
-
-
-
-
-
-
-
72
72
-
-
92
84
1
252
494
1
3
-
51
-
-
92
84
-
-
171
-
-
-
-
-
-
-
-
-
-
1
252
323
1
3
-
51
3,112
1,951
1,159
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
The fair value of “Equity investments in other entities at
The fair value of derivative contracts is determined using
FVOCI” is determined for listed companies on the basis of
the official prices for instruments traded on regulated mar-
the quoted price set on the closing date of the year, while
kets. The fair value of instruments not listed on a regulated
that for unlisted companies is based on a reliable valuation
market is determined using valuation methods appropriate
of the relevant assets and liabilities.
for each type of financial instrument and market data as of
the close of the period (such as interest rates, exchange
“Financial assets from service concession arrangements at
rates, volatility), discounting expected future cash flows on
FVTPL” concern electricity distribution operations in Bra-
the basis of the market yield curve and translating amounts
zil, mainly by Enel Distribuição São Paulo, Enel Distribuição
in currencies other than the euro using exchange rates pro-
Rio, Enel Distribuição Ceará and Enel Green Power Volta
vided by the World Markets Reuters (WMR) Company. For
Grande and are accounted for in accordance with IFRIC
contracts involving commodities, the measurement is con-
12. Fair value was estimated as the net replacement cost
ducted using prices, where available, for the same instru-
based on the most recent rate information available and on
ments on both regulated and unregulated markets.
the general price index for the Brazilian market.
In accordance with the new international accounting stan-
dards, in 2013 the Group included a measurement of credit
The non-current portion of “Loans and receivables mea-
risk, both of the counterparty (Credit Valuation Adjustment
sured at fair value” includes (recognized in level 3) the fair
or CVA) and its own (Debit Valuation Adjustment or DVA), in
value of the receivable from the disposal of Slovak Power
order to adjust the fair value of financial instruments for the
Holding of €359 million at December 31, 2018. The fair val-
corresponding amount of counterparty risk. More specifi-
ue is determined on the basis of the price formula specified
cally, the Group measures CVA/DVA using a Potential Fu-
in the contract.
ture Exposure valuation technique for the net exposure of
336
Annual Report 2018 the position and subsequently allocating the adjustment to
converted into euros at the year-end exchange rates provided
the individual financial instruments that make up the overall
by the World Markets Reuters (WMR) Company.
portfolio. All of the inputs used in this technique are observ-
The notional amounts of derivatives reported here do not
able on the market.
necessarily represent amounts exchanged between the par-
The notional amount of a derivative contract is the amount
ties and therefore are not a measure of the Group’s credit
on which cash flows are exchanged. This amount can be
risk exposure. For listed debt instruments, the fair value is
expressed as a value or a quantity (for example tons, con-
given by official prices. For unlisted instruments the fair value
verted into euros by multiplying the notional amount by the
is determined using appropriate valuation techniques for each
agreed price).
category of financial instrument and market data at the clos-
Amounts denominated in currencies other than the euro are
ing date of the year, including the credit spreads of Enel SpA.
47.1 Fair value of other assets
For each class of assets not measured at fair value on a
riod and the level in the fair value hierarchy into which the
recurring basis but whose fair value must be reported, the
fair value measurements of those assets are classified.
following table reports the fair value at the end of the pe-
Millions of euro
Non-current assets
Current assets
Notes
Fair value
Level 1
Level 2
Level 3 Fair value
Level 1
Level 2
Level 3
Loans and receivables
26, 30
Investment property
Inventories
19
26
608
196
57
-
22
-
130
-
-
478
174
57
1,385
-
-
-
-
-
1,254
131
-
-
-
-
The table reports the fair value of investment property and
ods depending on the specific assets involved.
inventories of real estate not used in the business in the
“Loans and receivables” mainly regards e-distribuzione’s re-
amount of €196 million and €57 million respectively. The
ceivables for the elimination of the Electrical Workers Pension
amounts were calculated with the assistance of appraisals
Fund and for the reimbursement of charges connected with
conducted by independent experts, who used different meth-
the early retirement of electromechanical meters.
337
Consolidated financial statements 48. Liabilities measured at fair value
The following table reports for each class of liabilities mea-
end of the reporting period and the level in the fair value
sured at fair value on a recurring or non-recurring basis in
hierarchy into which the fair value measurements are cat-
the financial statements the fair value measurement at the
egorized.
Millions of euro
Non-current liabilities
Current liabilities
Notes Fair value
Level 1 Level 2
Level 3 Fair value
Level 1
Level 2
Level 3
Cash flow hedge derivatives:
- on interest rates
- on exchange rates
- on commodities
Trading derivatives:
- on interest rates
- on exchange rates
- on commodities
46
46
46
46
46
46
605
1,803
167
17
3
14
Contingent consideration
38, 42
117
-
-
67
-
-
7
-
605
1,803
100
17
3
7
117
-
-
-
-
-
-
-
1
348
859
66
33
-
-
491
-
-
1
348
368
66
33
3,036
1,653
1,383
109
-
109
-
-
-
-
-
-
-
Contingent consideration regards the Enel X Business Line
measurement uses certified historical data on the under-
and Enel Green Power North America, whose fair value
lying variables. For example, an HDD (“Heating Degree
was determined on the basis of the contractual terms and
Days”) derivative on a given measurement station indicat-
conditions.
ed in the derivative contract is measured at fair value by
calculating the difference between the agreed strike and
The fair value of derivatives on commodities classified as
the historical average of the same variable observed at the
level 3 regards the measurement of hedging derivatives on
same station.
weather indices (weather derivatives). For these contracts,
48.1 Fair value of other liabilities
For each class of liabilities not measured at fair value in the
riod and the level in the fair value hierarchy into which the
balance sheet but whose fair value must be reported, the
fair value measurements of those liabilities are classified.
following table reports the fair value at the end of the pe-
Notes
Fair value
Level 1
Level 2
Level 3
43.3.1
43.3.1
43.3.1
43.3.1
43.3.1
43.3.1
38,507
4,220
1,539
9,027
1,585
182
55,060
35,179
165
-
-
-
-
35,344
3,328
4,055
1,539
9,027
1,585
182
19,716
-
-
-
-
-
-
-
Millions of euro
Bonds:
- fixed rate
- floating rate
Bank borrowings:
- fixed rate
- floating rate
Non-bank borrowings:
- fixed rate
- floating rate
Total
338
Annual Report 2018 49. Related parties
As an operator in the field of generation, distribution, trans-
The table below summarizes the main types of transactions
port and sale of electricity and the sale of natural gas,
carried out with such counterparties.
Enel carries out transactions with a number of companies
directly or indirectly controlled by the Italian State, the
Group’s controlling shareholder.
Related party
Relationship
Nature of main transactions
Acquirente Unico - Single Buyer
Fully controlled (indirectly) by the Ministry
for the Economy and Finance
Purchase of electricity for the enhanced-
protection market
Cassa Depositi e Prestiti Group
Directly controlled by the Ministry for the
Economy and Finance
GSE - Energy Services Operator
Fully controlled (directly) by the Ministry
for the Economy and Finance
GME - Energy Markets Operator
Fully controlled (indirectly) by the
Ministry for the Economy and Finance
Sale of electricity on the Ancillary Services
Market (Terna)
Sale of electricity transport services (Eni Group)
Purchase of transport, dispatching and metering
services (Terna)
Purchase of postal services (Poste Italiane)
Purchase of fuels for generation plants and
natural gas storage and distribution services
(Eni Group)
Sale of subsidized electricity
Payment of A3 component for renewable
resource incentives
Sale of electricity on the Power Exchange
(GME)
Purchase of electricity on the Power Exchange
for pumping and plant planning (GME)
Leonardo Group
Directly controlled by the Ministry for the
Economy and Finance
Purchase of IT services and supply of goods
In addition, the Group conducts essentially commercial
providing social and healthcare assistance.
transactions with associated companies or companies in
All transactions with related parties were carried out on
which it holds minority interests.
normal market terms and conditions, which in some cases
Finally, Enel also maintains relationships with the pension
are determined by the Regulatory Authority for Energy,
funds FOPEN and FONDENEL, as well as Fondazione Enel
Networks and the Environment.
and Enel Cuore, an Enel non-profit company devoted to
339
Consolidated financial statements The following tables summarize transactions with related
standing at December 31, 2018 and December 31, 2017
parties, associated companies and joint arrangements out-
and carried out during the period.
Millions of euro
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total 2018
arrangements
Overall total 2018
% of total
Associates and joint
Total in financial
statements
-
-
-
-
-
-
-
-
-
-
-
-
-
6
1
1,952
2,622
389
222
7
-
-
3
-
-
8
3
-
-
163
-
-
-
3,228
3,234
1,136
-
6
-
-
52
262
-
-
2,299
4
1
16
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total at Dec. 31, 2018
Associates and joint
arrangements
Overall total at
Dec. 31, 2018
Total in financial
statements
% of total
-
-
-
-
-
-
120
-
8
-
-
-
871
160
-
-
-
-
-
-
-
2
-
-
-
250
-
-
717
-
10
-
-
804
983
7
11
-
89
354
135
29
20
-
146
-
-
-
833
-
-
-
-
-
-
-
36
-
-
-
6
-
19
-
14
-
-
132
16
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,185
16
1
7,598
2,517
272
1
24
804
2,866
893
164
-
-
6
9
25
-
89
736
151
36
202
22
58
139
127
-
9
31
21
1
52
80
58
60
35
-
-
-
-
-
-
5,387
38
59
7,737
2,644
272
10
55
2,924
21
165
52
86
804
69
25
35
89
736
151
36
192
1,085
73,134
2,538
1,715
35,728
18,870
2,889
483
4,392
13,587
5,160
2,983
3,914
1,901
48,983
13,387
12,107
1,095
4,343
3,367
7.4%
1.5%
3.4%
21.7%
14.0%
9.4%
2.1%
1.3%
8.0%
0.4%
5.5%
1.3%
4.5%
1.6%
0.6%
2.3%
0.8%
2.6%
21.8%
Income statement
Revenue from sales and services
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
Costs for services and other
materials
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current contract liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
340
Annual Report 2018 Revenue from sales and services
1,952
2,622
3,228
3,234
1,136
Income statement
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
materials
Costs for services and other
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current contract liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
871
-
-
-
-
-
-
-
-
-
-
-
-
-
52
262
120
8
160
2
250
6
1
4
1
16
2,299
717
10
-
-
-
804
983
7
11
-
89
354
135
29
389
7
-
-
-
-
3
8
-
-
-
-
-
-
-
-
-
-
-
20
146
833
222
3
163
-
-
-
-
-
-
-
-
-
-
-
-
36
6
19
14
132
16
7
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Millions of euro
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Cassa Depositi e
Key
management
Total 2018
Associates and joint
arrangements
Overall total 2018
Total in financial
statements
% of total
5,185
16
1
7,598
2,517
272
1
24
202
22
58
139
127
-
9
31
5,387
38
59
7,737
2,644
272
10
55
73,134
2,538
1,715
35,728
18,870
2,889
483
4,392
7.4%
1.5%
3.4%
21.7%
14.0%
9.4%
2.1%
1.3%
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Total at Dec. 31, 2018
Associates and joint
arrangements
Overall total at
Dec. 31, 2018
Total in financial
statements
% of total
Cassa Depositi e
Key
management
893
-
164
-
6
804
2,866
9
25
-
89
736
151
36
13,587
5,160
2,983
3,914
1,901
48,983
13,387
12,107
1,095
4,343
3,367
192
1,085
21
1
52
80
-
58
60
-
35
-
-
-
-
21
165
52
86
804
2,924
69
25
35
89
736
151
36
8.0%
0.4%
5.5%
1.3%
4.5%
1.6%
21.8%
0.6%
2.3%
0.8%
2.6%
341
Consolidated financial statements Millions of euro
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total 2017
arrangements
Overall total 2017
% of total
Associates and joint
Total in financial
statements
Income statement
Revenue from sales and services
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
Costs for services and other
materials
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
1
-
-
-
-
-
5
-
-
1
1.767
2.668
443
-
-
2
-
89
3
-
4
115
-
-
-
-
-
-
-
-
-
-
-
3.345
2.458
1.636
-
4
-
-
75
524
-
-
2.340
3
32
-
Acquirente Unico
Cassa Depositi e
Prestiti Group
GME
GSE
Other
Key
management
personnel
Total at Dec. 31, 2017
Associates and joint
arrangements
Overall total at
Dec. 31, 2017
Total in financial
statements
% of total
-
-
-
-
-
-
77
-
-
-
-
-
682
110
-
-
-
-
-
-
-
-
-
280
-
-
526
-
24
-
-
893
543
10
-
89
360
208
46
57
-
129
-
-
-
977
-
-
-
-
-
-
34
-
1
-
6
-
11
-
-
-
108
23
6
-
-
-
-
-
-
-
-
-
-
-
-
-
4,968
5
-
7,443
2,535
531
32
1
893
2,323
694
154
-
-
6
10
-
89
748
231
52
156
17
18
318
129
-
(5)
24
138
3
8
11
30
-
42
27
9
-
-
-
-
5,124
22
18
7,761
2,664
531
27
25
2,365
832
3
162
11
36
893
37
9
89
748
231
52
72,664
1,975
2,371
36,039
17,982
2,886
578
3,908
14,529
4,614
2,695
2,309
2,003
42,439
12,671
12,462
2,260
7,000
7.1%
1.1%
0.8%
21.5%
14.8%
18.4%
4.7%
0.6%
5.7%
0.1%
6.0%
0.5%
1.8%
2.1%
18.7%
0.3%
0.4%
1.3%
In November 2010, the Board of Directors of Enel SpA ap-
ed in implementation of the provisions of Article 2391-bis
proved a procedure governing the approval and execution
of the Italian Civil Code and the implementing regulations
of transactions with related parties carried out by Enel SpA
issued by CONSOB. In 2018, no transactions were carried
directly or through subsidiaries. The procedure (available at
out for which it was necessary to make the disclosures re-
https://www.enel.com/investors/bylaws-rules-and-policies/
quired in the rules on transactions with related parties ad-
transactions-with-related-parties) sets out rules designed
opted with CONSOB Resolution 17221 of March 12, 2010,
to ensure the transparency and procedural and substantive
as amended with Resolution 17389 of June 23, 2010.
propriety of transactions with related parties. It was adopt-
342
Annual Report 2018 Revenue from sales and services
1.767
2.668
443
89
Income statement
Other revenue and income
Other financial income
Purchases of electricity, gas and
fuel
materials
Costs for services and other
Other operating expenses
Net income/(expense) from
commodity risk management
Other financial expense
Millions of euro
Balance sheet
Trade receivables
Other current financial assets
Other current assets
Derivative assets
Other non-current liabilities
Long-term borrowings
Trade payables
Other current liabilities
Current derivative liabilities
Current portion of long-term
borrowings
Other information
Guarantees issued
Guarantees received
Commitments
3.345
2.458
1.636
75
524
2.340
115
1
-
-
-
4
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
280
2
-
3
32
-
526
24
-
-
-
893
543
10
-
89
360
208
46
-
-
-
-
-
5
1
-
-
-
-
-
-
-
-
-
-
57
129
3
-
4
-
-
-
1
-
-
6
-
-
-
-
108
23
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
77
34
682
110
977
11
Millions of euro
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Cassa Depositi e
Key
management
Total 2017
Associates and joint
arrangements
Overall total 2017
Total in financial
statements
% of total
4,968
5
-
7,443
2,535
531
32
1
156
17
18
318
129
-
(5)
24
5,124
22
18
7,761
2,664
531
27
25
72,664
1,975
2,371
36,039
17,982
2,886
578
3,908
7.1%
1.1%
0.8%
21.5%
14.8%
18.4%
4.7%
0.6%
Acquirente Unico
GME
Prestiti Group
GSE
Other
personnel
Total at Dec. 31, 2017
Associates and joint
arrangements
Overall total at
Dec. 31, 2017
Total in financial
statements
% of total
Cassa Depositi e
Key
management
694
-
154
-
6
893
2,323
10
-
89
748
231
52
138
3
8
11
30
-
42
27
9
-
-
-
-
14,529
4,614
2,695
2,309
2,003
42,439
12,671
12,462
2,260
7,000
832
3
162
11
36
893
2,365
37
9
89
748
231
52
5.7%
0.1%
6.0%
0.5%
1.8%
2.1%
18.7%
0.3%
0.4%
1.3%
343
Consolidated financial statements 50. Government grants - Disclosure pursuant to
Article 1, paragraphs 125-129, of Law 124/2017
Pursuant to Article 1, paragraphs 125-129, of Law 124/2017
€10,000 made by the same grantor/donor during 2018,
as amended, the following provides information on grants
even if made through multiple financial transactions. They
received from Italian public agencies and bodies, as well
are recognized on a cash basis.
as donations by Enel SpA and the fully consolidated sub-
Pursuant to the provisions of Article 3-quater of Decree
sidiaries to companies, individuals and public and private
Law 135 of December 14, 2018, ratified with Law 12 of
entities. The disclosure comprises: (i) grants received from
February 11, 2019, for grants received, please refer to the
Italian public entities/State entities; and (ii) donations made
information contained in the National Register of State Aid
by Enel SpA and Group subsidiaries to public or private par-
referred to in Article 52 of Law 234 of December 24, 2012.
ties resident or established in Italy.
As far as donations made are concerned, the material cas-
The following disclosure includes payments in excess of
es are listed below.
Grants received in millions of euro
Financial institution/Grantor
Beneficiary
Amount Notes
Min. Education, Universities &
Research (MIUR)
e-distribuzione
Instalment of grant received for Internet of Energy project,
funded as part of the Artemis - Joint Undertaking tender
0.10
Grant received as part of Decree Law 74/2012 financing -
Urgent measures for those affected by seismic events of
May 20 and 29 2012 in Emilia Romagna
1.25
Ascoli P.R. Project - Balance of grant received under funding
initiative - Tender 14 - Industry 2002 - Law 488/1992
0.09
Volturno 2 project - Balance of grant received under funding
initiative - Tender 14 - Industry 2002 - Law 488/1992
0.44
R&D project co-financed by EU and national resources.
Instalment of prefinancing transferred by Enel SpA, following
assignment of financing contract to Enel X - Connect Project
0.09
R&D project co-financed by EU and national resources.
Receipt of prefinancing - WinSic4AP Project
0.10
Intermediate instalment of grant received for O.M.E.G.A.
Project financed within FIT Technology Innovation Programs
under Law 46/1982
0.16
Interest subsidies on loans for investments in foreign
enterprises held in part by SIMEST. Palo Viejo 2 Project
(Guatemala), funded under Art. 4 of Law 100/1990
0.12
Interest subsidies on loans for investments in foreign
enterprises held in part by SIMEST. Chucas Project (Costa
Rica), funded under Art. 4 of Law 100/1990
0.63
Interest subsidies on loans for investments in foreign
enterprises held in part by SIMEST. Talinay Project (Chile),
funded under Art. 4 of Law 100/1990
0.57
3.55 Total
Emilia-Romagna Region
e-distribuzione
Intesa Sanpaolo
Enel Produzione SpA
Intesa Sanpaolo
Enel Produzione SpA
Enel SpA
Enel X Srl
ECSEL JU-MIUR
Enel X Srl
Enel Green Power
SpA
Enel Green Power
SpA
Enel Green Power
SpA
Enel Green Power
SpA
Min. Economic Development (MiSE)
SIMEST SpA
SIMEST SpA
SIMEST SpA
344
Annual Report 2018 Donations made
in millions of euro
Donor
Beneficiary
Amount Notes
e-distribuzione SpA
Public Security Department of Ministry of
the Interior, State Police, Central Highway
Police Office
Donation of 10 Top Crash systems to support Highway
Police operations
0.12
e-distribuzione SpA
Fondazione Centro Studi
0.63 1st payment on account for 2017 donation
e-distribuzione SpA
Fondazione Centro Studi
1.07 2nd payment on account for 2017 donation
e-distribuzione SpA
Fondazione Centro Studi
1.70 Balance of 2017 donation
e-distribuzione SpA
Fondazione Centro Studi
e-distribuzione SpA
Enel Cuore
e-distribuzione SpA
Enel Cuore
e-distribuzione SpA
Enel Cuore
e-distribuzione SpA
Enel Cuore
Enel Produzione SpA
Public Security Department of Ministry of
the Interior, State Police, Central Highway
Police Office
Enel Produzione SpA
Fondazione Centro Studi
Enel Produzione SpA
Enel Cuore
Enel Produzione SpA
Enel Cuore
1.59 50% of 2018 donation
0.04 Association dues 2018
0.63 20% of 2017 donation
2.52 80% balance of 2017 donation
0.65 20% of 2018 donation
Donation of 1 Top Crash system to support Highway Police
operations
0.01
0.03 50% of 2018 donation
0.04 Association dues 2018
0.01 20% of 2018 donation
Enel Energia SpA
Public Security Department of Ministry of
the Interior, State Police, Central Highway
Police Office
Donation of 1 Top Crash system to support Highway Police
operations
0.01
Enel Energia SpA
Fondazione Centro Studi
1.10 Balance of 2017 donation
Enel Energia SpA
Fondazione Centro Studi
Enel Energia SpA
Enel Energia SpA
Enel Energia SpA
Enel Energia SpA
Enel Energia SpA
Enel Cuore
Enel Cuore
Enel Cuore
Enel Cuore
Enel Cuore
0.80 50% of 2018 donation
0.04 Association dues 2018
0.41 20% of 2017 donation
1.64 80% balance of 2017 donation
0.06 Donation for Schools Project
0.32 20% of 2018 donation
Enel Italia Srl
Enel Italia Srl
Enel Italia Srl
Enel Italia Srl
Enel Italia Srl
Enel Italia Srl
Enel Italia Srl
Public Security Department of Ministry of
the Interior, State Police, Central Highway
Police Office
Donation of 2 Top Crash systems to support Highway Police
operations
0.02
Enel Cuore
Enel Cuore
Enel Cuore
Enel Cuore
Fondazione Centro Studi
Fondazione Centro Studi
0.04 Association dues 2018
0.01 20% of 2017 donation
0.04 80% balance of 2017 donation
0.02 20% of 2018 donation
0.03 Balance of 2017 donation
0.04 50% of 2018 donation
Enel Green Power SpA
Public Security Department of Ministry of
the Interior, State Police, Central Highway
Police Office
Enel Green Power SpA
Ethiopian Catholic Church Social and
Development
Donation of 2 Top Crash systems to support Highway Police
operations
0.03
Health Service Program in Saint Luke Catholic Hospital
and College of Nursing and Midwifery: donation of hybrid
photovoltaic system
0.45
Enel Green Power SpA
Treasury of Roma Capitale-Cultural
Heritage Superintendency
Redevelopment of external areas of “Giardino Caffarelli”
and “Giardino De Vico” plus restoration of three fountains
0.18
Enel Green Power SpA
Fondazione Centro Studi
0.12 Balance of 2017 donation
Enel Green Power SpA
Enel Cuore
Enel Green Power SpA
Enel Cuore
Enel Green Power SpA
Enel Cuore
0.04 Association dues 2018
0.05 20% of 2017 donation
0.20 80% balance of 2017 donation
Enel Green Power SpA
Enel Green Power SpA
Renewable Energy Solutions for the
Mediterranean (RES4MED)
Renewable Energy Solutions for the
Mediterranean (RES4MED)
0.06 Association dues 2018
0.06 Association dues 2019
345
Consolidated financial statements Donations made
in millions of euro
Donor
Enel Green Power SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
Enel SpA
346
Beneficiary
Amount Notes
Shared Value Project Limited
Public Security Department of Ministry of the
Interior, State Police, Central Highway Police
Office
ASHOKA Italia ONLUS
European University Institute
Fondazione Centro Studi Enel
0.02 Association dues 2018
0.02
Donation of 2 Top Crash systems to support Highway Police
operations
0.06 Donation to promote sustainable growth
0.10 Donation to support research
0.10 Donation to support research and advanced training projects
Enel Cuore
LUISS
0.04 Association dues 2018
0.06 Donation to support study grants
Fondazione Teatro del Maggio Musicale
0.40 Donation for cultural projects 2018
Fondazione MAXXI
Fondazione Accademia Nazionale “Santa
Cecilia”
Elettrici senza frontiere
Fondazione Teatro alla Scala
OECD
Enel X Srl
0.59 Donation for cultural projects 2018
0.50 Donation for cultural projects 2018
0.04 Donation for development energy
0.60 Donation for cultural projects 2018
0.08 Donation for 2018
0.09
R&D project co-financed by EU and national resources.
Instalment transferred by Enel SpA, following assignment of
financing contract to Enel X - Connect Project
CharIN - Charging Interface Initiative e. V.
0.01 Association dues 2018
Fondazione Italia Giappone
OME - Observatorie Méditerranéen de
l’Energie
Global Reporting Initiative
WBCSD
Open Innovation Corporation
A.I.I.A.- Associazione Italiana
ANIMA
Mind the bridge
EU40 ASBL
Centre on regulation in Europe
ASSONIME
EUTC
BRUEGEL
Bettercoal
International Integrated
IETA - International Emissions Trading
Association
Valore D.
CSR Europe Asbli
Roma Start up
Transparency International Italia
FSG INC.
The European House Ambrosetti
The Trilateral Commission
0.02 Association dues 2018
0.06 Association dues 2018
0.01 Association dues 2018
0.06 Association dues 2018
0.04 Association dues 2018
0.01 Association dues 2018
0.01 Association dues 2018
0.12 Association dues 2018
0.02 Association dues 2018
0.04 Association dues 2018
0.04 Association dues 2018
0.01 Association dues 2018
0.05 Association dues 2018
0.07 Association dues 2018
0.01 Association dues 2018
0.02 Association dues 2018
0.02 Association dues 2018
0.02 Association dues 2018
0.01 Association dues 2018
0.02 Association dues 2018
0.06 Association dues 2018
0.07 Association dues 2018
0.03 Association dues 2018
ISPI - Istituto Studi di Politica Internazionale
0.04 Association dues 2018
Consiglio Cooperazione Economica
CEPS - Centre for European Policy Studies
CONSIUSA - Consiglio per le Relazioni fra
Italia e Stati Uniti
Centro Studi Americani
Transparency International Italia
CONSEL
GSEP - Global Sustainable Electricity
Partnership
Human Foundation
Open Innovation Corporation
Foundation for the global compact
Innovation Roundtable ApS
KIC INNOENERGY IBERIA
0.03 Association dues 2018
0.01 Association dues 2018
0.01 Association dues 2018
0.02 Association dues 2018
0.02 Association dues 2018
0.02 Association dues 2018
0.10 Association dues 2018
0.03 Association dues 2018
0.03 Association dues 2018
0.05 Association dues 2018
0.01 Association dues 2018
0.04 Association dues 2018
EMF Trading - Ellen MacArthur Foundation
0.04 Association dues 2018
Annual Report 2018 Enel SpA
Enel SpA
ICC ITALIA
Business Europe
Enel Global Trading SpA
Enel Cuore
Enel X Srl
Enel Sole Srl
Enel Cuore
Enel Cuore
0.01 Association dues 2018
0.02 Association dues 2018
0.04 Association dues 2018
0.04 Association dues 2018
0.02 Balance donation 2016
18.92 Total
51. Contractual commitments and guarantees
The commitments entered into by the Enel Group and the guarantees given to third parties are shown below:
Millions of euro
Guarantees given:
- sureties and other guarantees granted to third
parties
Commitments to suppliers for:
- electricity purchases
- fuel purchases
- various supplies
- tenders
- other
Total
TOTAL
at Dec. 31, 2018
at Dec. 31, 2017
Change
10,310
8,171
2,139
109,638
43,668
3,122
3,133
3,270
162,831
173,141
79,163
42,302
3,119
3,334
2,912
130,830
139,001
30,475
1,366
3
(201)
358
32,001
34,140
For more details on the expiry of commitments and guarantees, please see the section “Commitments to purchase com-
modities” in note 44.
347
Consolidated financial statements 52. Contingent assets and liabilities
The following reports the main contingent assets and li-
Court of Appeal to order Enel SpA and Enel Produzione to
abilities at December 31, 2017, which are not recognized in
pay civil damages for harm caused by the emissions from
the financial statements as they do not meet the require-
the Porto Tolle power station. The amount of damages
ments provided for in IAS 37.
requested for economic and environmental losses was
Porto Tolle thermal plant
- Air pollution - Criminal
proceedings against Enel
directors and employees
The Court of Adria, in a ruling issued on March 31, 2006,
convicted former directors and employees of Enel for a
number of incidents of air pollution caused by emissions
from the Porto Tolle thermoelectric plant. The decision
held the defendants and Enel (as a civilly liable party) joint-
ly liable for the payment of damages for harm to multiple
parties, both natural persons and public authorities. Dam-
ages for a number of mainly private parties (individuals
and environmental associations), were set at the amount
of €367,000. The calculation of the amount of damages
owed to certain public entities (Ministry for the Environ-
ment, a number of public entities of Veneto and Emilia Ro-
magna, including the area’s park agencies) was postponed
to a later civil trial, although a “provisional award” of about
€2.5 million was immediately due.
An appeal was lodged against the ruling of the Court of
Adria and on March 12, 2009, the Court of Appeal of Ven-
ice partially reversed the lower court decision. It found that
the former directors had not committed a crime and that
there was no environmental damage and therefore ordered
recovery of the provisional award already paid. The prose-
cutors and the civil claimants lodged an appeal against the
ruling with the Court of Cassation. In a ruling on January
11, 2011, the Court of Cassation granted the appeal, over-
turning the decision of the Venice Court of Appeal, and
referred the case to the civil section of the Venice Court
of Appeal to rule as regards payment of damages and the
about €100 million, which Enel contested. During 2013,
an agreement was reached – with no admission of liability
by Enel/Enel Produzione – with the public entities of Emilia
Romagna to express social solidarity in line with the gen-
eral sustainability policies of the Group. The suits with the
Ministry and private parties (environmental associations
and a number of resident individuals, who have received
no payments from Enel during the proceedings) remain
open. On July 10, 2014, the decision of the Venice Court
of Appeal was filed ordering the defendants, jointly with
Enel/Enel Produzione, to pay damages in the amount of
€312,500, plus more than €55,000 in legal expenses. The
Ministry’s request for calculation of the amount of dam-
ages it claimed it was owed was deemed inadmissible, as
grounds for barring such action arose in the course of the
criminal proceedings. In the meantime the Court issued a
general conviction with damages to be awarded in a sep-
arate decision and ordered payment of legal costs. Enel
lodged an appeal with the Court of Cassation in February
2015 of the ruling of the Venice Court of Appeal of July 10,
2014 and is currently waiting for the date of the hearing to
be set. On September 25, 2018, the Court of Cassation
upheld one of the grounds of the appeal, overturning the
general ruling in favor of the Ministry for the Environment
and referring the proceeding to the Venice Court of Appeal
for it to rule on any damages. At present, the Ministry has
not yet appealed the case to the Venice Court of Appeal.
Brindisi Sud thermal
generation plant - Criminal
proceedings against Enel
employees
division of such damages among the accused. As regards
A criminal proceeding was held before the Court of Brindi-
amounts paid to a number of public entities in Veneto, Enel
si concerning the Brindisi Sud thermal plant. A number of
has already made payment under a settlement agreement
employees of Enel Produzione – cited in 2013 as a liable
reached in 2008. With a suit lodged in July 2011, the Min-
party in civil litigation – have been accused of causing crim-
istry for the Environment, the public entities of Emilia Ro-
inal damage and dumping of hazardous substances with
magna and the private actors who had already participated
regard to the alleged contamination of land adjacent to the
as injured parties in the criminal case asked the Venice
plant with coal dust as a result of actions between 1999
348
Annual Report 2018 and 2011. At the end of 2013, the accusations were ex-
journed to February 28, 2019, in order to hear the testi-
tended to cover 2012 and 2013. As part of the proceeding,
mony of the witnesses called by the other defendants), as
injured parties, including the Province and City of Brindisi,
the court ruled that the offenses could not be dismissed
have submitted claims for total damages of about €1.4
under the statute of limitations.
billion. In its decision of October 26, 2016, the Court of
Brindisi: (i) acquitted nine of the thirteen defendants (em-
ployees/managers of Enel Produzione) for not having com-
mitted the offense; (ii) ruled that it did not have to proceed
as the offense was time-barred for two of the defendants;
and (iii) convicted the remaining two defendants, sentenc-
ing them with all the allowances provided for by law to nine
months’ imprisonment. With regard to payment of dam-
ages, the Court’s ruling also: (i) denied all claims of public
parties and associations acting in the criminal proceeding
to recover damages; and (ii) granted most of the claims
filed by the private parties acting to recover damages, re-
ferring the latter to the civil courts for quantification with-
out granting a provisional award. The convicted employees
and the civil defendant, Enel Produzione SpA, as well as by
the employee for whom the expiry of period of limitations
had been declared, appealed the conviction. On February
8, 2019, the Lecce Court of Appeal: (i) confirmed the trial
court ruling regarding the criminal convictions of two Enel
Produzione executives; (ii) denied the claims for damages
of some private appellants; (iii) granted some claims for
damages, which had been denied in the trial court, refer-
ring the parties, like the others – whose claims had been
granted by the trial court – to the civil courts for quantifica-
tion, without granting a provisional award; (iv) confirmed
for the rest the ruling of the Court of Brindisi except for
extending litigation costs to the Province of Brindisi, which
had not been awarded damages at either the trial court or
on appeal. Criminal proceedings are also under way before
the Courts of Reggio Calabria and Vibo Valentia against a
number of employees of Enel Produzione for the offense
of illegal waste disposal in connection with alleged viola-
tions concerning the disposal of waste from the Brindisi
plant. Enel Produzione has not been cited as a liable party
for civil damages.
The criminal proceedings before the Court of Reggio Cal-
abria ended with the hearing of June 23, 2016. The court
acquitted nearly all of the Enel defendants of the main
charges because no crime was committed. Just one case
was dismissed under the statute of limitations. Similarly,
all of the remaining charges involving minor offenses were
dismissed under the statute of limitations. The proceed-
ings before the Court of Vibo Valentia are still pending and
are currently in the testimony phase (they were again ad-
Out-of-court disputes and
litigation connected with the
blackout of September 28,
2003
In the wake of the blackout that occurred on September
28, 2003, numerous claims were filed against Enel Dis-
tribuzione (now e-distribuzione) for automatic and other in-
demnities for losses. These claims gave rise to substantial
litigation before justices of the peace, mainly in the regions
of Calabria, Campania and Basilicata, with a total of some
120,000 proceedings. Charges in respect of such indemni-
ties could be recovered in part under existing insurance
policies. Most of the initial rulings by these judges found in
favor of the plaintiffs, while appellate courts have nearly all
found in favor of Enel Distribuzione. The Court of Cassation
has also consistently ruled in favor of Enel Distribuzione. In
addition, in view of the rulings in Enel’s favor by both the
courts of appeal and the Court of Cassation, the flow of
new claims has come to a halt. Beginning in 2012, a num-
ber of actions for recovery were initiated, which continue,
to obtain repayment of amounts paid by Enel in execution
of the rulings in the courts of first instance.
In May 2008, Enel served its insurance company (Cat-
tolica) a summons to ascertain its right to reimbursement
of amounts paid in settlement of unfavorable rulings. The
case also involved a number of reinsurance companies in
the proceedings, which have challenged Enel’s claim. In
a ruling of October 21, 2013, the Court of Rome granted
Enel’s petition, finding the insurance coverage to be valid
and ordering Cattolica, and consequently the reinsurance
companies, to hold Enel harmless in respect of amounts
paid or to be paid to users and their legal counsel as well
as, within the limits established by the policies, to pay de-
fense costs.
Subsequently, Cattolica appealed the ruling of the court of
first instance of October 21, 2013, before the Rome Court
of Appeal, asking that it be overturned. In a ruling published
on October 9, 2018, the Rome Court of Appeal denied the
appeal of Cattolica, thereby upholding the original ruling.
On the basis of the ruling of October 21, 2013, in Octo-
349
Consolidated financial statements ber 2014, Enel filed suit against Cattolica with the Court
of Rome to obtain a quantification and payment of the
BEG litigation
amounts due to Enel from Cattolica. At the hearing of Oc-
tober 3, 2016, the court denied the counterparties’ petition
for a suspension of the proceeding pending completion of
the appeals process. In a ruling of July 12, 2017 the court
decided on the basis of the preliminary briefs to adjourn
the suit until November 25, 2019 for closing arguments.
Enel Energia and Servizio
Elettrico Nazionale
antitrust proceeding
On May 11, 2017, the Competition Authority announced the
beginning of proceedings for alleged abuse of a dominant
position under Article 102 of the Treaty on the Functioning
of the European Union (TFEU) against Enel SpA (“Enel”),
Enel Energia SpA (“EE”) and Servizio Elettrico Nazionale
SpA (“SEN”), alleging, inter alia, that they had engaged in
an exclusionary strategy, using a series of non-replicable
commercial stratagems capable of hindering their non-
integrated competitors to the benefit of the Group’s com-
pany operating on the free market (EE).
On December 20, 2018 the Competition Authority adopted
its final ruling, subsequently notified to the parties on Janu-
ary 8, 2019, with which it levied a fine on Enel SpA, SEN
and Enel Energia of €93,084,790.50, for abuse of a domi-
nant position in violation of Article 102 of the TFEU.
The disputed conduct consisted in the adoption of an ex-
clusionary strategy through the illegitimate use of the data
on regulated market customers acquired as part of the pri-
vacy consent mechanism for commercial purposes.
With regard to other allegations made with the measure
to initiate the proceeding, concerning the organization and
performance of sales activities at physical locations (Enel
Points and Enel Point Partner Shops) and winback policies,
the Competition Authority reached the conclusion that the
preliminary findings did not provide sufficient evidence of
any abusive conduct on the part of Enel Group companies.
SEN, EE and Enel appealed the ruling before the Lazio Re-
gional Administrative Court on February 15 and 18, 2019
and March 5, 2019, respectively.
Following an arbitration proceeding initiated by BEG SpA
in Italy, Enelpower obtained a ruling in its favor in 2002,
which was upheld by the Court of Cassation in 2010,
which entirely rejected the complaint with regard to al-
leged breach by Enelpower of an agreement concerning
the construction of a hydroelectric power station in Alba-
nia. Subsequently, BEG, acting through its subsidiary Al-
bania BEG Ambient, filed suit against Enelpower and Enel
SpA in Albania concerning the matter, obtaining a ruling
from the District Court of Tirana, upheld by the Albanian
Court of Cassation, ordering Enelpower and Enel to pay
tortious damages of about €25 million for 2004 as well
as an unspecified amount of tortious damages for subse-
quent years. Following the ruling, Albania BEG Ambient
demanded payment of more than €430 million from Enel.
The European Court of Human Rights, with which Enelpower
SpA and Enel SpA had filed an appeal for violation of the right
to a fair trial and the rule of law by the Republic of Albania,
rejected the petition as inadmissible. The ruling was purely
procedural and did not address the substance of the suit.
With a ruling of June 16, 2015, the first level was completed
in the additional suit lodged by Enelpower SpA and Enel
SpA with the Court of Rome asking the Court to ascertain
the liability of BEG SpA for having evaded compliance with
the arbitration ruling issued in Italy in favor of Enelpower
SpA through the legal action taken by Albania BEG Ambient
Shpk. With this action, Enelpower SpA and Enel SpA asked
the Court to find BEG liable and order it to pay damages in
the amount that the other could be required to pay to Alba-
nia BEG Ambient Shpk in the event of the enforcement of
the sentence issued by the Albanian courts. With the ruling,
the Court of Rome found that BEG SpA did not have stand-
ing to be sued, or alternatively, that the request was not ad-
missible for lack of an interest for Enel SpA and Enelpower
SpA to sue, as the Albanian ruling had not yet been declared
enforceable in any court. The Court ordered the setting off
of court costs. Enel SpA and Enelpower SpA appealed the
ruling before the Rome Court of Appeal, asking that it be
overturned in full. The next hearing, originally scheduled for
November 14, 2018, was postponed until May 8, 2019.
On November 5, 2016, Enel SpA and Enelpower SpA filed
a petition with the Albanian Court of Cassation, asking for
350
Annual Report 2018 the ruling issued by the District Court of Tirana on March
Enelpower, the court revoked the previous ruling issued
24, 2009 to be voided. The proceeding is still pending.
with no hearing of the parties against the companies freez-
Proceedings undertaken by
Albania BEG Ambient Shpk
to obtain enforcement of
the ruling of the District
Court of Tirana of March
24, 2009
ing assets of around $600 million. In a unanimous decision
of February 8, 2018, the Appellate Court of the state of
New York upheld the appeal of Enel SpA and Enelpower
SpA, rejecting the argument that the Court of New York
had jurisdiction over the request for enforcement submit-
ted by Albania BEG Ambient Shpk. On February 23, 2018,
the Supreme Court of the state of New York denied the
petition of ABA to obtain recognition of the ruling of the
Albanian court in the state of New York.
France
The Netherlands
In February 2012, Albania BEG Ambient filed suit against
On June 2, 2014 Albania BEG Ambient Shpk obtained an
Enel SpA and Enelpower SpA with the Tribunal de Grande
order from the court in the Hague, based upon the pre-
Instance in Paris in order to render the ruling of the Alba-
liminary injunction, freezing up to €440 million held with a
nian court enforceable in France. Enel SpA and Enelpower
number of entities and the establishment of a lien on the
SpA challenged the suit.
shares of two subsidiaries of Enel SpA in that country. Enel
Following the beginning of the case before the Tribunal de
SpA and Enelpower SpA challenged that ruling and on July
Grande Instance, again at the initiative of BEG Ambient,
1, 2014, the Dutch court, in granting the petition of Enel
between 2012 and 2013 Enel France was served with two
and Enelpower, provisionally determined the value of the
“Saise Conservatoire de Créances” (orders for the precau-
suit at €25 million and ordered the removal of the prelimi-
tionary attachment of receivables) to conserve any receiv-
nary injunction subject to the issue of a bank guarantee in
ables of Enel SpA in respect of Enel France.
the amount of €25 million by Enel and Enelpower. Enel and
On January 29, 2018, the Tribunal de Grande Instance
Enelpower have appealed this ruling.
issued a ruling in favor of Enel and Enelpower, denying
On July 3, 2014, Albania BEG Ambient Shpk petitioned for
Albania BEG Ambient Shpk the recognition and enforce-
a second precautionary freeze of assets with no hearing of
ment of the Tirana court’s ruling in France for lack of the
the parties. Following the hearing of August 28, 2014, the
requirements under French law for the purposes of grant-
Hague Court granted a precautionary freeze of €425 mil-
ing exequatur. Among other issues, the Tribunal de Grande
lion on September 18, 2014. Enel and Enelpower appealed
Instance ruled that: (i) the Albanian ruling conflicted with
that measure.
an existing decision, in this case the arbitration ruling of
In a ruling of February 9, 2016, the Hague Court of Appeal
2002 and that (ii) the fact that BEG sought to obtain in Al-
upheld the appeals, ordering the revocation of the prelimi-
bania what it was not able to obtain in the Italian arbitration
nary injunctions subject to the pledging of a guarantee by
proceeding, resubmitting the same claim through Albania
Enel of €440 million and a counter-guarantee by Albania
BEG Ambient Shpk, represented fraud.
BEG Ambient Shpk of about €50 million (the estimated val-
Albania BEG Ambient Shpk appealed the ruling and the briefs
ue of the losses of Enel and Enelpower from the seizure of
are being exchanged between the parties. The hearing be-
assets and the pledge of bank guarantees). Enel’s guaran-
fore the Paris Court of Appeal is scheduled for June 9, 2020.
tee was issued on March 30, 2016. Albania BEG Ambient
State of New York
Shpk did not issue its counter-guarantee.
On April 4, 2016, Albania BEG Ambient Shpk appealed the
ruling of February 9, 2016 before the Court of Cassation in
In March 2014, Albania BEG Ambient Shpk filed suit
the Netherlands, which in a ruling of June 23, 2017, denied
against Enel SpA and Enelpower SpA in New York to ren-
the appeal of Albania BEG Ambient Shpk, definitively de-
der the ruling of the Albanian court enforceable in the state
ciding the revocation of the preliminary injunctions.
of New York.
At the end of July 2014, Albania BEG Ambient Shpk filed
On April 22, 2014, in response to a motion filed by Enel and
suit with the Court of Amsterdam to render the ruling of
351
Consolidated financial statements the Albanian court enforceable in the Netherlands. On
forced in the Netherlands. The Court of Appeal found that
June 29, 2016, the court filed its judgment, which: (i) ruled
the Albanian decision was arbitrary and manifestly unrea-
that the Albanian ruling meet the requirements for recogni-
sonable and therefore contrary to Dutch public order. For
tion and enforcement in the Netherlands; (ii) ordered Enel
these reasons, the court did not consider it necessary to
and Enelpower to pay €433,091,870.00 to Albania BEG
analyze the additional arguments of Enel and Enelpower.
Ambient Shpk, in addition to costs and ancillary charges of
The proceeding before the Court of Appeal continues with
€60,673.78; and (iii) denied Albania BEG Ambient Shpk’s
regard to the subordinate question raised by Albania BEG
request to declare the ruling provisionally enforceable. On
Ambient Shpk in the appeal proceedings, with which it is
July 14, 2016, Albania BEG Ambient Shpk filed an appeal
asking the court to rule on the merits of the dispute in Al-
for a precautionary seizure on the basis of the Court of
bania and in particular the alleged non-contractual liability
Amsterdam’s decision of June 29, 2016 in the amount of
of Enel and Enelpower in the failure to build the plant in
€440 million with a number of entities and the seizure of
Albania. On October 9, 2018, Albania BEG Ambient Shpk
the shares of three companies controlled by Enel SpA in
filed a brief, to which Enel and Enelpower replied on De-
the Netherlands. Enel appealed and in a ruling of August
cember 6, 2018, arguing for the lack of jurisdiction of the
26, 2016, the Court of Amsterdam decided that the pre-
Dutch courts and, in any case, contesting the merits in full,
cautionary measures issued in 2014 and 2016 would be re-
reiterating that the claim is entirely groundless. The case
voked if Albania BEG Ambient Shpk did not provide a bank
will be heard on April 8, 2019.
guarantee of €7 million to Enel and Enelpower by October
21, 2016. Albania BEG Ambient Shpk did not provide the
guarantee and, accordingly, the seizures of the assets of
Ireland
Enel and Enelpower in the Netherlands were revoked and
no longer effective as from October 21, 2016. Albania BEG
Ambient Shpk appealed the decision of August 26, 2016
but the proceeding was suspended under an agreement
between the parties pending the ruling of the Dutch Court
of Cassation in the proceeding over the precautionary
measures (which was then issued on June 23, 2017). The
appeal against the decision of August 26, 2016 therefore
Albania BEG Ambient Shpk also filed suit in Ireland to ren-
der the ruling of the Court of Tirana enforceable in this
country. The High Court issued a ruling on March 8, 2016
upholding the defense of Enel and Enelpower, finding that
the country had no jurisdiction. On March 31, 2017, Albania
BEG Ambient Shpk filed an expedited appeal against the
ruling of March 8, 2016 finding that Ireland had no jurisdic-
tion. Enel and Enelpower responded to the appeal filing on
remains suspended in the absence of a specific request by
April 7, 2017.
one of the parties. The suspension has had no impact on
the fact that the seizures of assets in the Netherlands have
not been in effect since October 2016.
On June 29, 2016, Enel and Enelpower filed appeals
against the ruling of the Court of Amsterdam issued on the
same date. On September 27, 2016, Albania BEG Ambi-
ent also appealed the court’s ruling of June 29, 2016, to
request the reversal of its partial loss on the merits. On
April 11, 2017, the Amsterdam Court of Appeal granted the
request of Enel and Enelpower to join to two pending ap-
peals.
On January 29, 2018, oral arguments in the appellate pro-
ceeding were held, following which the Court allowed
In a ruling of February 26, 2018, the Irish court denied the
appeal of Albania BEG Ambient Shpk. Enel and Enelpower
have taken action to recover the costs awarded in the ruling.
Luxembourg
In Luxembourg, again at the initiative of Albania BEG Am-
bient Shpk, J.P. Morgan Bank Luxembourg SA was also
served with an order for the precautionary attachment of
any receivables of Enel SpA. In parallel Albania BEG Ambi-
ent Shpk filed a claim to obtain enforcement of the ruling
of the Court of Tirana in that country. The proceeding is still
under way and briefs are being exchanged between the
Enel and Enelpower to place in evidence the decision with
parties. No ruling has been issued.
which the Tribunal de Grande Instance of Paris denied rec-
ognition of the Albanian ruling in France.
In a ruling of July 17, 2018, the Amsterdam Court of Appeal
upheld the appeal advanced by Enel and Enelpower, ruling
that the Albanian judgment cannot be recognized and en-
352
Annual Report 2018 Violations of Legislative
Decree 231/2001
On July 14, 2017, Enel Green Power SpA received notice
of charges brought before the Court of Ancona for alleged
violation of Legislative Decree 231/2001 concerning the
administrative liability of legal persons. The proceeding
was begun for the alleged commission by an agent of the
company, in the company’s interest, of the offence of de-
the European Union’s environmental policy. On April 13,
2018, Endesa Generación SA, acting as an interested third
party, submitted comments contesting this interpretation,
while on July 30, 2018, it was learned that Gas Natural had
appealed the decision of the Commission.
Furnas - Tractebel litigation
- Brazil
struction of a natural habitat in a protected area. The case
In 1998 the Brazilian company CIEN (now Enel CIEN)
has been joined with a separate proceeding involving the
signed an agreement with Tractebel for the delivery of
same agent and two other defendants for the same al-
electricity from Argentina through its Argentina-Brazil in-
leged offences.
terconnection line. As a result of Argentine regulatory
On 10 August 2018, a direct summons for judgment was
changes introduced as a consequence of the economic cri-
notified to e-distribuzione to appear before the Court of
sis in 2002, CIEN was unable to make the electricity avail-
Milan on May 23, 2019. In addition to e-distribuzione SpA,
able to Tractebel. In October 2009, Tractebel sued CIEN,
the proceeding involves one of its employees, as well as
which submitted its defense. CIEN cited force majeure as
a number of third-party companies and their representa-
a result of the Argentine crisis as the main argument in its
tives, concerning alleged violations of Legislative Decree
defense. Out of court, Tractebel has indicated that it plans
231/2001 on the administrative liability of legal persons.
to acquire 30% of the interconnection line involved in the
The proceeding was initiated for the alleged commission
dispute. In March 2014, the court had granted CIEN’s mo-
of the crime of unauthorized handling of waste (Article 256
tion to suspend the proceedings in view of the existence of
of the Uniform Environmental Code) and for the violation of
other litigation pending between the parties. On February
the provisions of the Code of Cultural Heritage (Legislative
14, 2019, CIEN received notice of an order reopening the
Decree 42/2004) in relation to works to remove a power
proceeding, with the beginning of expert witness opera-
line. The examination of a number of witnesses called by
tions. The amount involved in the dispute is estimated at
the prosecutor is scheduled for a hearing on May 23, 2019.
about 118 million Brazilian reais (about €28 million), plus
Environmental incentives -
Spain
Following the Decision of the European Commission of
November 27, 2017 on the issue of environmental incen-
tives for thermal power plants, the European Commis-
sion’s Directorate-General for Competition opened an
investigation pursuant to Article 108, paragraph 2, of the
Treaty on the Functioning of the European Union (TFEU)
in order to assess whether the environmental incentive
for coal power plants provided for in Order ITC/3860/2007
represents State aid compatible with the internal market.
According to a literal interpretation of that Decision, the
Commission reached the preliminary conclusion that the
incentive in question would constitute State aid pursuant
to Article 107, paragraph 1, of the TFEU, expressing doubts
about the compatibility of the incentive with the internal
market while recognizing that the incentives are in line with
unspecified damages. For analogous reasons, in May 2010
Furnas also filed suit against CIEN for failure to deliver elec-
tricity, requesting payment of about 520 million Brazilian
reais (about €124 million), in addition to unspecified dam-
ages. In alleging non-performance by CIEN, Furnas is also
seeking to acquire ownership (in this case 70%) of the in-
terconnection line. CIEN’s defense is similar to the earlier
case. The claims put forth by Furnas were rejected by the
trial court in August 2014. Furnas lodged an appeal against
the latter decision, while CIEN also lodged a counter-ap-
peal. On August 21, 2018, the Tribunal de Justiça denied
the appeal of Furnas while granting CIEN’s petition.
Cibran litigation - Brazil
Companhia Brasileira de Antibióticos (“Cibran”) has filed
six suits against Ampla Energia e Serviços SA (“Ampla”)
to obtain damages for alleged losses incurred as a result
of the interruption of electricity service by the Brazilian dis-
tribution company between 1987 and 2002, in addition to
353
Consolidated financial statements non-pecuniary damages. The Court ordered a unified tech-
of appeal, but Coperva filed a further appeal (Embargo de
nical appraisal for those cases, the findings of which were
Declaração), which was denied in a ruling of January 11,
partly unfavorable to Ampla. The latter challenged the find-
2016. Coperva lodged an extraordinary appeal before the
ings, asking for a new study, which led to the denial of part
Superior Tribunal de Justiça on February 3, 2016, which
of Cibran’s petitions. Cibran subsequently appealed the
was granted on November 5, 2018 for the ruling issued in
decision and the ruling was in favor of Ampla.
the previous appeal (Embargo de Declaração). On Decem-
The first suit, filed in 1999 and regarding the years from
ber 3, 2018, Enel filed an appeal (Agravo Interno) against
1994 to 1999, was adjudicated in September 2014 when
this ruling of the Superior Tribunal de Justiça. The proceed-
the court of first instance issued a ruling against Ampla, levy-
ings are currently pending.
ing a fine of about 200,000 Brazilian reais (about €46,000)
as well as other damages to be quantified at a later stage.
Ampla appealed the ruling and the appeal was upheld by
the Tribunal de Justiça. In response, on December 16, 2016,
Cibran filed an appeal (recurso especial) before the Superior
Tribunal de Justiça, and the proceeding is under way.
With regard to the second case, filed in 2006 and regarding
the years from 1987 to 2002, on June 1, 2015, the courts
issued a ruling ordering Ampla to pay 80,000 Brazilian
reais (about €19,000) in non-pecuniary damages as well as
96,465,103 Brazilian reais (about €23 million) in pecuniary
damages, plus interest. On July 8, 2015 Ampla appealed
the decision with the Tribunal de Justiça of Rio de Janeiro
and the parties are awaiting a ruling.
Decisions are still pending with regard to the remaining
four suits. The value of all the disputes is estimated at
about 464 million Brazilian reais (about €107 million).
Coperva litigation - Brazil
AGM litigation - Brazil
In 1993, Enel Distribuição Goiás, the Association of Munici-
palities of Goiás (AGM), the state of Goiás and the Bank of
Goiás reached an agreement (convenio) for the payment
of municipal debts to Enel Distribuição Goiás through the
transfer of the portion of ICMS (VAT) that the state would
have transferred to those governments. In 2001 the parties
to the agreement were sued by the individual municipal
governments to obtain a ruling that the agreement was
invalid, a position then upheld by the Supreme Federal
Court on the grounds of the non-participation of the local
governments themselves in the agreement process. In
September 2004, Enel Distribuição Goiás reached a settle-
ment with 23 municipalities. Between 2007 and 2008,
Enel Distribuição Goiás was again sued on numerous oc-
casions (there are currently 90 pending suits) seeking the
restitution of amounts paid under the agreement. Despite
the ruling that the agreement was void, Enel Distribuição
As part of the project to expand the grid in rural areas
Goiás argues that the payment of the debts on the part
of Brazil, in 1982 Companhia Energética do Ceará SA
of the local governments is legitimate, as electricity was
(“Coelce”), then owned by the Brazilian government and
supplied in accordance with the supply contracts and, ac-
now an Enel Group company, had entered into contracts
cordingly, the claims for restitution of amounts paid should
for the use of the grids of a number of cooperatives es-
be denied. The total value of the suits is equal to about 1
tablished specifically to pursue the expansion project. The
billion Brazilian reais (about €231 million).
contracts provided for the payment of a monthly fee by
It is important to note that as part of the privatization of
Coelce, which was also required to maintain the networks.
Enel Distribuição Goiás, a tax relief mechanism was in-
Those contracts, between cooperatives established in
troduced that allows Enel Distribuição Goiás to offset its
special circumstances and the then public-sector compa-
ICMS (VAT) liability with a tax credit in respect of invest-
ny, do not specifically identify the grids governed by the
ments by Enel Distribuição Goiás in the development and
agreements, which has prompted a number of the coop-
maintenance of its grid.
eratives to sue Coelce asking for, among other things, a
revision of the fees agreed in the contracts. These actions
include the suit filed by Cooperativa de Eletrificação Ru-
ral do V do Acarau Ltda (“Coperva”) with a value of about
218 million Brazilian reais (about €53 million). Coelce was
granted rulings in its favor from the trial court and the court
ANEEL litigation - Brazil
In 2014, Enel Distribuição São Paulo initiated an action be-
fore the federal courts seeking to void the administrative
measure of ANEEL (the National Electricity Agency), which
354
Annual Report 2018 in 2012 retroactively introduced a negative coefficient to be
Another acción popular was brought by a number of fish
applied in determining rates for the following regulatory pe-
farming companies over the alleged impact that filling the
riod (2011-2015). With this provision, the Authority ordered
El Quimbo basin would have on fishing in the Betania basin
the restitution of the value of some components of the
downstream from El Quimbo. In February 2015, the Court
network previously included in rates because they were
ordered the precautionary suspension of filling operations
considered non-existent and rejected Enel Distribuição
until a number of specific requirements have been met.
São Paulo’s request to include additional components in
The precautionary suspension was subsequently modified
rates. On September 9, 2014, the administrative measure
to permit filling to proceed, which began on June 30, 2015.
of ANEEL was suspended on a precautionary basis. The
However, on July 17, 2015 Emgesa received a notice modi-
first-instance proceeding is in its preliminary stages and
fying the precautionary measure to prohibit generation ac-
the value of the suit is 833 million Brazilian reais (about
tivities until ANLA (the national environmental authority)
€185 million).
certifies that the company removed the biomass and for-
Neoenergia arbitration -
Brazil
On June 18, 2018, Neoenergia brought an arbitration ac-
tion against Enel Distribuição São Paulo before the Câmara
de Arbitragem do Mercado (CAM) concerning the invest-
ment agreement signed by the two companies on April
16, 2018. Neoenergia alleged unequal treatment of the
participants in the procedure for the acquisition of Enel
Distribuição São Paulo. On September 3, 2018, Neoener-
gia modified its claim, abandoning its request for specific
execution of the obligation contained in the contract. The
current claim is a request for damages for losses caused
by alleged non-performance of the investment agreement.
The value of the dispute is currently undetermined.
El Quimbo - Colombia
est waste from the El Quimbo reservoir basin.
Pending the ruling, as an energy emergency has been de-
clared, the Ministry of Energy issued a decree authorizing
Emgesa to begin generation. On December 16, 2015, the
Constitutional Court ruled that the presidential Decree was
unconstitutional and as from that date Emgesa suspended
electricity generation.
On December 24, 2015, the Ministerio de Minas y Energía
and AUNAP (the authority for agriculture and fishing) filed
a joint motion asking the criminal court to authorize gen-
eration as a precautionary measure. On January 8, 2016,
the court granted the precautionary measure requested by
the Ministry and AUNAP, authorizing the temporary and
immediate resumption of generation at El Quimbo. The
precautionary measure granted by the court would remain
in force until the Huila court issued a ruling on the sub-
stance of the case, i.e. the revocation or upholding of the
precautionary measure previously issued by the local ad-
ministrative court. With a decision of February 22, 2016,
the Huila court issued a ruling allowing generation to con-
A number of legal actions (“acciones de grupo” and “ac-
tinue for six months. The court ordered Emgesa to prepare
ciones populares”) brought by residents and fishermen in
a technical design that would ensure compliance with oxy-
the affected area are pending with regard to the El Quimbo
gen level requirements and to provide collateral of about
project for the construction of a 400 MW hydroelectric
20,000,000,000 Colombian pesos (about €5.5 million). In a
plant in the region of Huila (Colombia). More specifically,
ruling of the Administrative Court of Huila of April 11, 2016
the first acción de grupo, currently in the preliminary stage,
the temporary revocation of the precautionary injunction
was brought by around 1,140 residents of the municipal-
was upheld for a period of six months until October 16,
ity of Garzón, who claim that the construction of the plant
2016, which was subsequently extended for a further six
would reduce their business revenue by 30%. A second
months as from February 2017. Following the deadline for
action was brought, between August 2011 and December
the suspension of the precautionary injunction in August
2012, by residents and businesses/associations of five mu-
2017, in the absence of contrary court rulings the El Quim-
nicipalities of Huila claiming damages related to the clos-
bo plant is continuing to generate electricity as the oxygen-
ing of a bridge (Paso El Colegio). With regard to acciones
ation system installed by Emgesa has so far demonstrated
populares, or class action lawsuits, in 2008 a suit was filed
that it can maintain the oxygen levels required by the court.
by a number of residents of the area demanding, among
The proceeding is currently stalled as the Court evaluates
other things, that the environmental permit be suspended.
a proposed settlement between the parties, submitted on
355
Consolidated financial statements November 27, 2017, which has also been notified to the
competent authorities. On January 24, 2018, the Court of
Huila rejected the settlement agreement, a ruling that has
been appealed by the parties.
On March 22, 2018, ANLA and CAM jointly presented the
SAPE (formerly Electrica)
arbitration proceedings -
Romania
final report on the monitoring of water quality downstream
On April 20, 2016 SAPE submitted a further request for
of the dam of the El Quimbo hydroelectric plant. Both au-
arbitration before the International Chamber of Commerce
thorities confirmed the compliance of Emgesa with the
in Paris in respect of Enel SpA and Enel Investment Hold-
oxygen level requirements. On June 15, 2018, Emgesa
ing BV concerning an alleged contractual breach for failure
filed its final pleadings and is waiting for the court to issue
to distribute dividends from E-Distribuţie Muntenia and
its ruling.
Nivel de Tensión Uno
proceedings - Colombia
This dispute involves an “acción de grupo” brought by Cen-
tro Médico de la Sabana hospital and other parties against
Codensa seeking restitution of allegedly excess rates. The
action is based upon the alleged failure of Codensa to ap-
ply a subsidized rate that they claim the users should have
paid as Tensión Uno category users (voltage of less than 1
kV) and owners of infrastructure, as established in Reso-
Enel Energie Muntenia. In September 2016 SAPE modi-
fied its arbitration claims, suing Enel Energie Muntenia and
E-Distribuţie Muntenia as well and revising its monetary
claim to about €56 million. On May 22, 2017 SAPE again
modified its claim, quantifying it in the amount of about
€110 million plus interest. A hearing was held in the first
week of October 2018 and the ruling of the arbitrators is
pending.
Gabčíkovo dispute -
Slovakia
lution 82/2002, as amended by Resolution 97/2008. The
Slovenské elektrárne (“SE”) is involved in a number of
suit is at a preliminary stage. The estimated value of the
cases before the national courts concerning the 720 MW
proceeding is about 337 billion Colombian pesos (about
Gabčíkovo hydroelectric plant, which is administered by
€96 million).
Emgesa and Codensa
arbitration proceedings -
Colombia
Vodohospodárska Výsatavba Štátny Podnik (“VV”) and
whose operation and maintenance, as part of the privatiza-
tion of SE in 2006, had been entrusted to SE for a period
of 30 years under a management agreement (the VEG Op-
erating Agreement).
Immediately after the closing of the privatization, the Pub-
lic Procurement Office (PPO) filed suit with the Court of
On December 4, 2017, Enel Américas SA was notified by
Bratislava seeking to void the VEG Operating Agreement
the Grupo Energía de Bogotá (“GEB”) (which holds about
on the basis of alleged violations of the regulations gov-
51.5% of Emgesa and Codensa) of the start of arbitration
erning public tenders, qualifying the contract as a service
proceedings before the Centro de Arbitraje y Conciliación
contract and as such governed by those regulations. In No-
de la Cámara de Comercio de Bogotá.
vember 2011 the trial court ruled in favor of SE, whereupon
GEB has filed a claim of about 63,619,000,000 Colombian
the PPO immediately appealed the decision.
pesos (about €18 million) for Codensa and 82,820,000,000
In parallel with the PPO action, VV also filed a number of
Colombian pesos (about €23 million) for Emgesa.
suits, asking in particular for the voidance of the VEG Op-
On August 22, 2018, Enel Américas was informed that
erating Agreement.
GEB had abandoned its action. On October 8, 2018, GEB
On December 12, 2014, VV withdrew unilaterally from the
announced it was seeking a new arbitration proceeding
VEG Operating Agreement, notifying its termination on
against Enel Américas SA before the Arbitration Board of
March 9, 2015, for breach of contract. On March 9, 2015,
Bogotá, the content of which had not yet been disclosed.
the decision of the appeals court overturned the ruling of
the trial court and voided the contract as part of the ac-
tion pursued by the PPO. SE lodged an extraordinary ap-
356
Annual Report 2018 peal against that decision before the Supreme Court. At a
hydroelectric plant and the sale of the power generated by
hearing of June 29, 2016, the Supreme Court denied the
the plant to ICE under a build, operate and transfer contract
appeal. SE then appealed the ruling to the Constitutional
(“BOT”). The agreement provides for Chucas to build and
Court, which denied the appeal on January 18, 2017.
operate the plant for 20 years, before transferring it to ICE.
In addition, SE lodged a request for arbitration with the
Under the BOT contract, the plant should have entered
Vienna International Arbitral Centre (VIAC) under the VEG
service on September 26, 2014. For a number of reasons,
Indemnity Agreement. Under that accord, which had been
including flooding, landslides and similar events, the proj-
signed as part of the privatization between the National
ect experienced cost overruns and delays, with a conse-
Property Fund (now MH Manazment) of the Slovak Repub-
quent delay in meeting the obligation to deliver electricity.
lic and SE, the latter is entitled to an indemnity in the event
In view of these developments, in 2012 and 2013 Chucas
of the early termination of the VEG Operating Agreement
submitted an administrative petition to ICE to recover the
for reasons not attributable to SE. The arbitration court re-
higher costs incurred and obtain a postponement of the
jected the objection that it did not have jurisdiction and the
entry into service of the plant. ICE denied the petition in
arbitration proceeding continued to examine the merits of
2015 and in fact levied two fines of about $9 million (about
the case, with a ruling on the amount involved being de-
€7 million) for the delays in entering service. Following the
ferred to any subsequent proceeding. On June 30, 2017,
precautionary appeal of Chucas, payment of the fines was
the arbitration court issued its ruling denying the request
suspended. The plant entered service in December 2016.
of SE.
In addition, as ICE had rejected the administrative peti-
In parallel with the arbitration proceeding launched by SE,
tion, on May 27, 2015, under the provisions of the BOT
both VV and MH Manazment filed two suits in the Slova-
contract, Chucas initiated an arbitration proceeding before
kian courts to void the VEG Indemnity Agreement owing to
the Cámara Costarricense-Norteamericana de Comercio
the alleged connection of the latter with the VEG Operat-
(AMCHAM CICA) seeking reimbursement of the additional
ing Agreement. These proceedings were joindered and, on
costs incurred to build the plant and as a result of the de-
September 27, 2017, a hearing was held before the Court
lays in completing the project as well as voidance of the
of Bratislava in which the judge denied the request of the
fine levied by ICE. In a decision issued in December 2017,
plaintiffs for procedural reasons. Both VV and MH Manaz-
the arbitration board ruled in Chucas’ favor, granting recog-
ment appealed that decisions and the proceedings are un-
nition of the additional costs in the amount of about $113
der way. In addition, at the local level, SE was sued by
million (about €91 million) and legal costs and ruling that
VV for alleged unjustified enrichment (estimated at about
the fines should not be paid. ICE appealed the arbitration
€360 million plus interest) for the period from 2006 to
ruling in the local courts. Chucas filed a brief as part of the
2015. SE filed counter-claims for all of the proceedings un-
litigation and the proceeding is under way.
der way. Finally, in another proceeding before the Court of
Bratislava, VV asked for SE to return the fee for the transfer
In addition, on October 3, 2015, in consideration of the
from SE to VV of the technology assets of the Gabčíkovo
violation of a number of contractual obligations (including
plant as part of the privatization, with a value of about €43
failure to meet the deadline to complete the works) on the
million plus interest. The parties exchanged briefs and at
part of FCC Construcción América SA and FCC Construc-
the last hearing on December 6, 2018, the court again ad-
ción SA (FCC) – which had been engaged to build some
journed the case without specifying a date.
of the works for the hydroelectric plant – Chucas notified
Precautionary
administrative proceeding
and Chucas arbitration
the parties that it was terminating the contract for breach,
enforcing the guarantees issued to it. However, the guar-
antees have not yet been paid pending resolution of a
precautionary proceeding initiated by FCC on October 27,
2015, at the International Court of Arbitration in Paris. In a
filing of March 10, 2017, FCC requested a ruling that the
PH Chucas SA (“Chucas”) is a special purpose entity es-
contract had been terminated without cause and asked
tablished by Enel Green Power Costa Rica SA after it won
for damages of about $27 million (about €22 million). In
a tender organized in 2007 by the Instituto Costarricense
a brief filed in May 2017, Chucas, in addition to asking for
de Electricidad (“ICE”) for the construction of a 50 MW
the plaintiff’s claims to be denied, filed a counter-claim
357
Consolidated financial statements to obtain confirmation of termination of contract for non-
nian company to refinance itself with its Brazilian parent,
performance, asking for damages of at least $38 million
which for that purpose obtained loans from local banks.
(about €30 million). On December 9, 2018, the ruling of the
The tax authorities considered this financing to be the
arbitrators was issued, declaring valid Chucas’ termination
equivalent of the early extinguishment of the bond, with
of the contract for breach. On December 4, 2018, Chucas
the consequent loss of entitlement to the exemption from
received payment of about $12 million (about €11 million)
withholding tax.
in execution of the arbitration ruling.
In December 2005, Ampla carried out a spin-off that in-
GasAtacama Chile - Chile
On August 4, 2016, the Superintendencia de Electricidad
y Combustibles (“SEC”) fined GasAtacama Chile $8.3
million for information provided by the latter to the CDEC-
SING (Centro de Despacho Económico de Carga) between
January 1, 2011 and October 29, 2015, relating to the Mini-
mum Technical and Minimum Operating Time variables at
the Atacama plant.
GasAtacama Chile appealed this measure with the SEC,
which denied the appeal on November 2, 2016. GasAta-
cama Chile appealed this decision before the Santiago
Court of Appeals and the proceeding is close to a ruling.
In parallel, GasAtacama Chile also filed an appeal before
the Constitutional Court, claiming that the legal provisions
under which the SEC imposed the fine had been repealed
at the time the penalty was issued. On July 17, 2018, the
Constitutional Court rejected GasAtacama Chile’s appeal.
In relation to this issue, some operators of the Sistema
Interconectado del Norte Grande (SING), including Aes
Gener SA, Eléctrica Angamos SA and Engie Energía Chile
SA have initiated actions in order to obtain damages in an
amount of about €58 million (the former) and about €141
million (the latter two). The disputes were joindered in part
in a single proceeding and are currently pending.
Tax litigation in Brazil
Withholding tax - Ampla
In 1998, Ampla Energia e Serviços SA (“Ampla”) financed
the acquisition of Coelce with the issue of bonds in the
amount of $350 million (“Fixed Rate Notes” – FRN) sub-
scribed by its Panamanian subsidiary, which had been
established to raise funds abroad. Under the special rules
then in force, subject to maintaining the bond until 2008,
the interest paid by Ampla to its subsidiary was not subject
to withholding tax in Brazil.
However, the financial crisis of 1998 forced the Panama-
358
volved the transfer of the residual FRN debt and the as-
sociated rights and obligations to Ampla Investimentos e
Serviços SA.
On November 6, 2012, the Câmara Superior de Recursos
Fiscais (the highest level of administrative courts) issued
a ruling against Ampla, for which the company promptly
asked that body for clarifications. On October 15, 2013,
Ampla was notified of the denial of the request for clarifica-
tion (Embargo de Declaração), thereby upholding the previ-
ous adverse decision. The company provided security for
the debt and on June 27, 2014 continued litigation before
the ordinary courts (Tribunal de Justiça).
In December 2017, the court appointed an expert to ex-
amine the issue in greater detail in support of the future
ruling. In September 2018, the expert submitted a report,
requesting additional documentation.
In December 2018, the company provided the additional
documentation and is awaiting the court’s assessment of
the arguments and documents presented.
The amount involved in the dispute at December 31, 2018
was about €286 million.
PIS - Eletropaulo
In July 2000, Eletropaulo filed suit seeking a tax credit
for PIS (Programa Integração Social) paid in application of
regulations (Decree Laws 2.445/1988 and 2.449/1988)
that were subsequently declared unconstitutional by the
Supremo Tribunal Federal (STF). In May 2012, the Superior
Tribunal de Justiça (STJ) issued a final ruling in favor of the
company that recognized the right to the credit.
In 2002, before the issue of that favorable final ruling, the
company had offset its credit against other federal taxes.
This behavior was contested by the federal tax authori-
ties but the company, claiming it had acted correctly, chal-
lenged in court the assessments issued by the federal tax
authorities. Following defeat at the initial level of adjudica-
tion, the company appealed.
The amount involved in the dispute at December 31, 2018
was about €144 million.
Annual Report 2018 ICMS - Ampla, Coelce
and Eletropaulo
The states of Rio de Janeiro, Ceará and São Paulo issued a
number of tax assessments against Ampla Energia e Ser-
PIS - Eletropaulo
In December 1995, the Brazilian government increased
the rate of the federal PIS (Programa Integração Social) tax
from 0.50% to 0.65% with the issue of a provisional mea-
viços SA (for the years 1996-1999 and 2007-2017), Com-
sure (Executive Provisional Order).
panhia Energética do Ceará (2003, 2004 and 2006-2012)
and Eletropaulo (2008-2017), challenging the deduction
of ICMS (Imposto sobre Circulação de Mercadorias e Ser-
viços) in relation to the purchase of certain non-current as-
Subsequently, the provisional measure was re-issued five
times before its definitive ratification into law in 1998. Un-
der Brazilian legislation, an increase in the tax rate (or the
establishment of a new tax) can only be ordered by law
sets. The companies challenged the assessments, arguing
and take effect 90 days after its publication.
that they correctly deducted the tax and asserting that the
assets, the purchase of which generated the ICMS, are
intended for use in their electricity distribution activities.
The companies are continuing to defend their actions at
the various levels of adjudication.
The amount involved in the disputes totaled approximately
€92 million at December 31, 2018.
Eletropaulo therefore filed suit arguing that an increase in
the tax rate would only have been effective 90 days af-
ter the last Provisional Order, claiming that the effects of
the first four provisional measures should be considered
void (since they were never ratified into law). This dispute
ended in April 2008 with recognition of the validity of the
increase in the PIS rate starting from the first provisional
measure.
Withholding tax - Endesa Brasil
In May 2008, the Brazilian tax authorities filed a suit against
Eletropaulo to request payment of taxes corresponding to
On November 4, 2014, the Brazilian tax authorities issued an
the rate increase from March 1996 to December 1998.
assessment against Endesa Brasil SA (now Enel Brasil SA)
Eletropaulo has fought the request at the various levels
alleging the failure to apply withholding tax to payments of
of adjudication, arguing that the time limit for the issue of
allegedly higher dividends to non-resident recipients.
the notice of assessment had lapsed. In particular, since
More specifically, in 2009, Endesa Brasil, as a result of
more than five years have passed since the taxable event
the first-time application of the IFRS-IAS, had cancelled
(December 1995, the date of the first provisional measure)
goodwill, recognizing the effects in equity, on the basis of
without issuing any formal instrument, the right of the tax
the correct application of the accounting standards it had
authorities to request the payment of additional taxes and
adopted. The Brazilian tax authorities, however, asserted
the authority to undertake legal action to obtain payment
– during an audit – that the accounting treatment was in-
has been challenged.
correct and that the effects of the cancellation should have
In 2017, following the unfavorable decisions issued in pre-
been recognized through profit or loss. As a result, the cor-
vious rulings, Eletropaulo filed an appeal in defense of its
responding value (about €202 million) was reclassified as
rights and its actions with the Superior Tribunal de Justiça
a payment of income to non-residents and, therefore, sub-
(STJ) and the Supremo Tribunal Federal (STF). The pro-
ject to withholding tax of 15%.
ceedings are still pending while the amounts subject to
It should be noted that the accounting treatment adopted
dispute have been covered by a bank guarantee.
by the company was agreed with the external auditor and
In this last regard, it should be noted that, while awaiting
also confirmed by a specific legal opinion issued by a local
the outcome of these proceedings, the Office of the Attor-
firm specializing in corporate law.
ney General of the Brazilian National Treasury Department
The first two levels of the administrative courts ruled – in
has submitted a request for the replacement of the bank
July 2016 and September 2018 respectively – for the tax
guarantee with a deposit in court. This request was denied
authorities. The company will continue its defend its ac-
in September 2017, with the Attorney General’s Office ap-
tions and the appropriateness of the accounting treatment
pealing that decision in February 2018.
at the third level of jurisdiction.
The total value of the case at December 31, 2018 was
The overall amount involved in the dispute at December
about €54 million.
31, 2018 was about €64 million.
359
Consolidated financial statements Tax litigation in Spain
financial charges (about €22 million) and costs for decom-
missioning nuclear power plants (about €5 million).
Income tax - Enel Iberia,
Endesa and subsidiaries
In 2018, the Spanish tax authorities completed a general au-
Income taxes -
Enel Green Power España SL
On June 7, 2017, the Spanish tax authorities issued a no-
dit involving the companies of the Group participating in the
tice of assessment to Enel Green Power España SL, con-
Spanish tax consolidation mechanism. This audit, which be-
testing the treatment of the merger of Enel Unión Fenosa
gan in 2016, involved corporate income tax, value added tax
Renovables SA (“EUFER”) into Enel Green Power España
and withholding taxes (mainly for the years 2012 to 2014).
SL in 2011 as a tax neutral transaction, asserting that the
With reference to the main claims, the companies involved
transaction had no valid economic reason.
have challenged the related assessments at the first ad-
On July 6, 2017, the company appealed the assessment at
ministrative level (Tribunal Económico-Administrativo Cen-
the first administrative level (Tribunal Económico-Adminis-
tral - TEAC), defending the correctness of their actions.
trativo Central - TEAC), defending the appropriateness of
With regard to the disputes concerning corporate income
the tax treatment applied to the merger. During the pro-
tax, the issues for which an unfavorable outcome is consid-
ceeding, the company will provide all the supporting docu-
ered possible amounted to about €141 million at December
mentation demonstrating the synergies achieved as a re-
31, 2018: (i) Enel Iberia is defending the appropriateness of
sult of the merger in order to prove the existence of a valid
the criterion adopted for determining the deductibility of
economic reason for the transaction.
capital losses deriving from stock sales (around €99 mil-
The total value involved in the proceeding as at Decem-
lion) and certain financial charges (around €15 million); (ii)
ber 31, 2018 was about €90 million. This amount has been
Endesa and its subsidiaries are defending the appropriate-
secured with bank guarantees to obtain a suspension of
ness of the criteria adopted for the deductibility of certain
collection efforts.
53. Events after the reporting period
Issue of new €1 billion
green bond in Europe
On January 14, 2019, Enel Finance International NV (“EFI”),
an Enel Group finance company controlled by Enel SpA
(“Enel”, rated BBB+ for S&P, Baa2 for Moody’s, and BBB+
for Fitch), successfully placed its third green bond on the
European market, reserved for institutional investors and
backed by a guarantee issued by Enel. The issue amounts
to a total of €1,000 million and provides for repayment in
a single instalment at maturity on July 21, 2025 and the
payment of a fixed-rate coupon equal to 1.500%, payable
annually in arrears in the month of July as from 2019. The
issue price was set at 98.565% and the effective yield at
maturity is equal to 1.736%. The settlement date for the
issue was January 21, 2019.
The green bond is expected to be listed on the Irish Stock
Exchange, on the Luxembourg Stock Exchange and be ad-
mitted to trading on the multilateral trading facility “Extra-
MOT PRO” organized and operated by Borsa Italiana. It is
also expected that the green bond will be assigned ratings
in line with those of Enel.
The transaction has received subscriptions amounting to
more than €4.2 billion, with the significant participation of
Socially Responsible Investors (“SRI”), enabling the Enel
Group to continue to diversify its investor base.
Agreement to sell 540 MW
of renewables capacity in
Brazil for €700 million
On January 16, Enel SpA (“Enel”), acting through its re-
newables subsidiary Enel Green Power Brasil Participa-
ções Ltda (“EGP Brazil”), signed agreements with Chinese
company CGN Energy International Holdings Co. Limited
(“CGNEI”) for the sale of 100% of three renewable gen-
eration plants totaling 540 MW. The overall price in the
transaction, to be paid at closing, is equal to the assets’
360
Annual Report 2018 enterprise value and amounts to approximately 2.9 billion
2019 to approve a capital increase of up to $3.5 billion, to
Brazilian reais, equivalent to around €700 million at current
be fully subscribed in cash. The increase is expected to
exchange rates.
be carried out through the issue of new ordinary shares
The three operating renewable assets being sold are the
and American Depositary Shares (“ADSs”) to be offered in
solar plants Nova Olinda (292 MW), located in the north-
pre-emption to shareholders in proportion to the number
eastern Brazilian state of Piauí, and Lapa (158 MW), situ-
of shares/ADSs they hold.
ated in the north-eastern Brazilian state of Bahia, as well as
Through the capital increase Enel Américas, according to
the 90 MW Cristalândia wind farm, also in Bahia.
the proposal of its Board of Directors, will seek to enhance
Enel Green Power España
starts construction of 90
MW of new wind capacity
in Spain
Enel Green Power España has started construction of
three wind farms with an overall capacity of around 90
MW located across the municipalities of Allueva, Fonfría,
Mezquita de Jarque, Fuentes Calientes, Cañada Vellida
and Rillo in the Spanish province of Teruel, in the region
of Aragon. The total investment in the three facilities
amounts to approximately €88 million. The three wind
farms are slated to enter service by the end of 2019, and
once completed they will generate over 295 GWh per
year, while avoiding the annual emission of some 196
thousand metric tons of CO2 into the atmosphere. The
expected capacity of the 7-turbine Allueva plant exceeds
25 MW, while that of the 4-turbine Sierra Pelarda wind
farm, situated in Fonfría, is about 15 MW. The largest of
the three facilities is the 14-turbine Sierra Costera I, which
will boast a capacity of around 50 MW and is located
across the municipalities of Mezquita de Jarque, Fuentes
Calientes, Cañada Vellida and Rillo.
Board of Directors
of Enel Américas
calls extraordinary
shareholders’ meeting to
approve capital increase of
up to $3.5 billion
On February 28, 2019, Enel SpA (“Enel”) announced that
the Board of Directors of the Chilean subsidiary Enel Améri-
cas SA (“Enel Américas”), of which Enel owns 51.8%, has
called an extraordinary shareholders’ meeting for April 30,
its financial position to pursue new opportunities for or-
ganic and inorganic growth, both through minority buy-
outs and M&As, optimizing cash flows and improving its
debt level. Moreover, the capital increase will enable an in-
crease in the free float and capitalization of Enel Américas.
Enel Américas invests in electricity generation and distri-
bution in Argentina, Brazil, Colombia and Peru. With an
installed capacity of over 11 GW and more than 24 million
customers, it is the largest private electricity company in
South America.
Amendment of
regulatory framework for
hydroelectric concessions
The changes introduced with Decree Law 135 of Decem-
ber 14, 2018, concerning simplification and development
support (the “Simplification Act”), ratified into law in Feb-
ruary 2019, included the amendment of certain aspects of
the regulatory framework for hydroelectric concessions.
The main changes concern: i) the extension for consider-
ation of expired concessions (a situation regarding entities
that do not belong to the Enel Group) until 2023, ii) the
regulation of the reassignment of concessions upon their
expiry; and iii) the mechanism for indemnifying the outgo-
ing concessionaire for the transfer of the assets related to
the hydroelectric concession.
These rules establish a series of general principles, with
implementing provisions to be enacted by the regions and
the competent authorities in order to regulate in detail the
renewal of concessions in compliance with the principles
laid down in the Constitution.
The Group is analyzing the possible consequences of the
reform, which at present does not appear to produce a sig-
nificant impact.
The hydroelectric concessions currently held by the Group
that fall within the scope of this measure will begin to ex-
pire starting from 2029.
361
Consolidated financial statements Declaration of the Chief
Executive Officer and the
officer responsible for the
preparation of the corporate
financial reports
362
Annual Report 2018 Declaration of the Chief Executive Officer and the officer responsible for the preparation
of the consolidated financial report of the Enel Group at December 31, 2018, pursuant
to the provisions of Article 154-bis, paragraph 5, of Legislative Decree 58 of February 24,
1998 and Article 81-ter of CONSOB Regulation no. 11971 of May 14, 1999
1. The undersigned Francesco Starace and Alberto De Paoli, in their respective capacities as Chief Executive Officer and
officer responsible for the preparation of the financial reports of Enel SpA, hereby certify, taking account of the provi-
sions of Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of February 24, 1998:
a. the appropriateness with respect to the characteristics of the Enel Group and
b. the effective adoption of
the administrative and accounting procedures for the preparation of the consolidated financial statements of the Enel
Group in the period between January 1, 2018 and December 31, 2018.
2. In this regard, we report that:
a. the appropriateness of the administrative and accounting procedures used in the preparation of the consolidated
financial statements of the Enel Group has been verified in an assessment of the internal control system for financial
reporting. The assessment was carried out on the basis of the guidelines set out in the “Internal Controls - Integrated
Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO);
b. the assessment of the internal control system for financial reporting did not identify any material issues.
3. In addition, we certify that the consolidated financial statements of the Enel Group at December 31, 2018:
a. have been prepared in compliance with the international accounting standards recognized in the European Union
pursuant to Regulation 2002/1606/EC of the European Parliament and of the Council of July 19, 2002;
b. correspond to the information in the books and other accounting records;
c. provide a true and fair representation of the performance and financial position of the issuer and the companies
included in the scope of consolidation.
4. Finally, we certify that the Report on operations, included in the Annual Report 2018 and accompanied by the con-
solidated financial statements of the Enel Group at December 31, 2018, contains a reliable analysis of operations and
performance, as well as the situation of the issuer and the companies included in the scope of consolidation, together
with a description of the main risks and uncertainties to which they are exposed.
Rome, March 21, 2019
Francesco Starace
Alberto De Paoli
Chief Executive Officer of Enel SpA
Officer responsible for the preparation
of the financial reports of Enel SpA
363
Consolidated financial statements 04
Financial
statements
of Enel SpA
Financial statements
Income statement
Euro
Notes
Revenue
Revenue from sales and services
Other revenue and income
Costs
Purchases of consumables
Services, leases and rentals
Personnel
Depreciation, amortization and impairment losses
Other operating expenses
Operating income
Income from equity investments
Financial income from derivatives
Other financial income
Financial expense from derivatives
Other financial expense
Income before taxes
Income taxes
NET INCOME FOR THE YEAR
2018
2017
of which with
related parties
of which with
related parties
4.a
4.b
37,979,400
37,948,667
119,973,169
117,964,169
14,663,248
11,611,943
12,536,313
11,816,934
[Subtotal]
52,642,648
132,509,482
5.a
5.b
5.c
5.d
5.e
775,602
755,960
527,618
397,627
127,046,752
73,565,421
164,647,974
83,362,136
109,461,719
(330,561,950)
173,833,672
15,386,821
38,375,592
5,116,819
19,640,692
1,042,212
[Subtotal]
(54,902,285)
107,544,933
374,036,777
(241,527,295)
6
7
8
7
8
3,566,532,771
3,556,152,376
3,032,755,082
3,032,046,630
1,626,147,028
436,713,046
2,682,999,217
1,639,718,234
319,791,543
215,238,109
409,494,784
157,113,888
1,580,719,721
1,033,303,779
2,901,726,027
835,546,371
767,625,196
84,563,946
872,053,419
71,712,486
[Subtotal]
3,164,126,425
3,271,671,358
9
(184,490,162)
3,456,161,520
2,351,469,637
2,109,942,342
(160,045,845)
2,269,988,187
366
Annual Report 2018 Statement of comprehensive income
Euro
Notes
Net income for the year
Other comprehensive income recyclable to profit or loss (net of taxes)
Effective portion of change in the fair value of cash flow hedges
Change in the fair value of hedging costs
2018
2017
3,456,161,520
2,269,988,187
(6,800,397)
(9,862,121)
17,324,068
48,053,432
Income/(Loss) recognized directly in equity recyclable to profit or loss
10,523,671
38,191,311
Other comprehensive income not recyclable to profit or loss (net of taxes)
Change in the fair value of equity investments in other entities
Remeasurement of employee benefit liabilities
11,342,491
-
72,245
(5,419,377)
Income/(Loss) recognized directly in equity not recyclable to profit or loss
11,414,736
(5,419,377)
Income/(Loss) recognized directly in equity
22
21,938,407
32,771,934
TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR
3,478,099,927
2,302,760,121
367
Financial statements of Enel SpA Balance sheet
Euro
ASSETS
Notes
at Dec. 31, 2018
at Dec. 31, 2017
of which with
related parties
of which with
related parties
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Equity investments
Derivatives
Other non-current financial assets
Other non-current assets
Current assets
Trade receivables
Income tax receivables
Derivatives
Other current financial assets
Other current assets
Cash and cash equivalents
10
11
12
9,482,612
46,939,952
287,982,943
10,130,911
31,499,091
298,564,422
13
45,714,720,133
42,811,272,440
14
15
16
793,268,184
306,396,047
1,455,620,268
911,987,785
135,969,073
125,000,000
16,520,527
133,926,173
124,949,541
147,703,070
138,750,969
[Total]
47,122,289,070
44,771,310,729
190,738,941
189,168,814
236,901,820
228,047,369
165,402,633
29,133
265,116,255
91,538,429
13,908,972
111,187,134
98,089,135
1,859,556,945
536,107,527
4,350,254,731
2,185,263,224
268,390,867
74,420,100
451,717,926
435,163,901
17
18
14
19
20
21
2,006,698,099
[Total]
4,582,325,914
2,489,231,277
7,904,409,143
TOTAL ASSETS
51,704,614,984
52,675,719,872
368
Annual Report 2018 Euro
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY
at Dec. 31, 2018
at Dec. 31, 2017
of which with
related parties
of which with
related parties
Shareholders’ equity
Share capital
Other reserves
Retained earnings/(Loss carried forward)
Net income for the year (1)
10,166,679,946
11,464,338,885
4,279,339,236
2,032,826,328
Total shareholders’ equity
22
27,943,184,395
10,166,679,946
11,442,355,799
4,424,283,417
1,202,486,793
27,235,805,955
Non-current liabilities
Long-term borrowings
Employee benefits
Provisions for risks and charges
Deferred tax liabilities
Derivatives
Other non-current liabilities
Current liabilities
Short-term borrowings
Current portion of long-term borrowings
Trade payables
Derivatives
Other current financial liabilities
Other current liabilities
23
24
25
12
14
26
13,397,135,493
4,140,976,595
10,780,028,411
1,200,000,000
231,247,089
45,167,912
132,741,154
273,380,648
43,060,382
168,341,991
1,395,260,905
19,846,698
2,270,128,975
28,238,268
11,554,982
9,303,012
11,486,594
9,283,268
[Subtotal]
15,213,107,535
13,546,427,001
23
23
27
14
28
30
5,000,917,516
4,715,485,231
5,397,181,835
4,896,380,309
805,454,249
3,653,698,811
82,378,904
43,230,644
136,749,208
73,724,909
354,554,531
53,004,689
175,573,958
13,057,571
275,922,893
31,397,597
465,099,793
28,593,746
2,029,094,961
317,248,312
2,065,183,311
428,216,349
Total liabilities
23,761,430,589
[Subtotal]
8,548,323,054
11,893,486,916
25,439,913,917
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
51,704,614,984
52,675,719,872
(1) For 2018, net income for the period of €3,456 million (€2,270 million in 2017) is reported net of the interim dividend of €1,423 million (€1,068 million in 2017).
369
Financial statements of Enel SpA Statement of changes in shareholders’ equity
Share capital and reserves (note 22)
Euro
Share capital
Share premium
reserve
Legal reserve
Reserve pursuant to
Law 292/1993
Other sundry
reserves
At January 1, 2016
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,244,757
(27,203,744)
(376,254,402)
4,534,347,074
804,937,538
26,915,547,720
Application of new accounting
standards
-
-
-
-
-
117,706,432
(117,706,432)
At January 1, 2017 restated
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,244,757
(27,203,744)
(258,547,970)
(117,706,432)
4,534,347,074
804,937,538
26,915,547,720
Reserve from
Reserves from
Reserves from
measurement
measurement
Reserves from
remeasurement
of net employee
of cash flow
of costs of
measurement of
Retained earnings/
Total
benefit plan
hedge financial
hedging financial
financial assets at
(Loss carried
Net income for the
shareholders’
liabilities/(assets)
instruments
instruments
FVOCI
forward)
year
equity
Other changes
Allocation of 2016 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2017 interim dividend (1)
Comprehensive income for the year:
- income/(loss) recognized directly in
equity
- net income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
703
-
-
-
-
-
-
-
At December 31, 2017 restated
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,245,460
(32,623,121)
(268,410,091)
(69,653,000)
4,424,283,417
1,202,486,793
27,235,805,955
Application of new accounting
standards
-
-
-
-
-
11,342,491
(5,429,221)
5,913,270
At January 1, 2018 restated
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,245,460
(32,623,121)
(268,410,091)
(69,653,000)
11,342,491
4,418,854,196
1,202,486,793
27,241,719,225
Other changes
Allocation of 2017 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2018 interim dividend (2)
Comprehensive income for the year:
- income/(loss) recognized directly in
equity
- net income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,679
-
At December 31, 2018
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,290,139
(32,550,876)
(275,210,488)
(52,328,932)
11,342,491
4,279,339,236
2,032,826,328
27,943,184,395
(1) Approved by the Board of Directors on November 8, 2017 and paid as from January 24, 2018.
(2) Approved by the Board of Directors on November 6, 2018 and paid as from January 23, 2019.
370
(5,419,377)
(9,862,121)
48,053,432
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
703
-
-
-
-
-
-
-
-
(203,333,599)
(711,667,596)
(915,001,195)
93,269,942
(93,269,942)
(1,067,501,394)
(1,067,501,394)
32,771,934
2,269,988,187
2,269,988,187
(142,333,519)
(1,199,668,234)
(1,342,001,753)
2,818,559
(2,818,559)
(1,423,335,192)
(1,423,335,192)
10,640,595
3,456,161,520
3,456,161,520
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
72,245
(6,800,397)
17,324,068
Annual Report 2018 Share capital and reserves (note 22)
Euro
Share capital
reserve
Legal reserve
Law 292/1993
reserves
Share premium
Reserve pursuant to
Other sundry
Reserve from
remeasurement
of net employee
benefit plan
liabilities/(assets)
Reserves from
measurement
of cash flow
hedge financial
instruments
Reserves from
measurement
of costs of
hedging financial
instruments
Reserves from
measurement of
financial assets at
FVOCI
Retained earnings/
(Loss carried
forward)
Net income for the
year
Total
shareholders’
equity
At January 1, 2016
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,244,757
(27,203,744)
(376,254,402)
-
At January 1, 2017 restated
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,244,757
(27,203,744)
(258,547,970)
(117,706,432)
-
117,706,432
(117,706,432)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5,419,377)
(9,862,121)
48,053,432
-
-
-
At December 31, 2017 restated
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,245,460
(32,623,121)
(268,410,091)
(69,653,000)
-
-
-
-
-
-
-
-
-
-
-
-
Application of new accounting
standards
Other changes
Allocation of 2016 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2017 interim dividend (1)
Comprehensive income for the year:
- income/(loss) recognized directly in
equity
- net income for the year
Application of new accounting
standards
Other changes
Allocation of 2017 net income:
- distribution of dividends
- legal reserve
- retaining earnings
Capital increase
2018 interim dividend (2)
Comprehensive income for the year:
- income/(loss) recognized directly in
equity
- net income for the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
703
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44,679
72,245
(6,800,397)
17,324,068
-
-
-
-
-
-
-
-
-
-
4,534,347,074
804,937,538
26,915,547,720
-
-
-
4,534,347,074
804,937,538
26,915,547,720
-
-
703
(203,333,599)
(711,667,596)
(915,001,195)
-
-
93,269,942
(93,269,942)
(1,067,501,394)
(1,067,501,394)
-
32,771,934
2,269,988,187
2,269,988,187
4,424,283,417
1,202,486,793
27,235,805,955
-
-
-
(142,333,519)
(1,199,668,234)
(1,342,001,753)
-
-
2,818,559
(2,818,559)
(1,423,335,192)
(1,423,335,192)
-
10,640,595
3,456,161,520
3,456,161,520
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At January 1, 2018 restated
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,245,460
(32,623,121)
(268,410,091)
(69,653,000)
11,342,491
4,418,854,196
1,202,486,793
27,241,719,225
-
-
-
11,342,491
(5,429,221)
-
5,913,270
At December 31, 2018
10,166,679,946
7,496,016,063
2,033,335,988
2,215,444,500
68,290,139
(32,550,876)
(275,210,488)
(52,328,932)
11,342,491
4,279,339,236
2,032,826,328
27,943,184,395
(1) Approved by the Board of Directors on November 8, 2017 and paid as from January 24, 2018.
(2) Approved by the Board of Directors on November 6, 2018 and paid as from January 23, 2019.
371
Financial statements of Enel SpA Statement of cash flows
Euro
Notes
Income before taxes
Adjustments for:
2018
2017
of which with
related parties
of which with
related parties
3,271,671,358
2,109,942,342
Amortization and impairment losses
5.d
(330,561,950)
15,386,821
Exchange rate adjustments of foreign currency assets and
liabilities
Accruals to provisions
39,628,904
30,514,837
(231,638,389)
37,912,889
Dividends from subsidiaries, associates and other companies
6
(3,566,532,771)
(3,556,152,376)
(3,032,755,082) (3,032,046,630)
Net financial (income)/expense
355,948,018
466,123,883
905,461,585
(889,403,744)
(Gains)/Losses from disposals and other non-monetary items
-
-
Cash flows from operating activities before changes in
net current assets
Increase/(Decrease) in provisions
(199,331,604)
(70,540,865)
(195,689,834)
(74,765,165)
(Increase)/Decrease in trade receivables
17
46,077,886
38,878,555
18,144,344
19,768,270
(Increase)/Decrease in other financial and non-financial
assets/liabilities
1,329,718,118
984,924,384
886,354,164 (1,526,661,213)
Increase/(Decrease) in trade payables
27
(54,370,304)
(30,494,265)
(13,164,033)
5,636,596
Interest income and other financial income collected
802,804,925
422,320,744
1,134,440,570
325,498,532
Interest expense and other financial expense paid
(1,381,667,689)
(212,858,041)
(1,823,403,773)
(716,621,016)
Dividends from subsidiaries, associates and other companies
6
3,510,078,770
3,499,698,376
2,976,903,441 2,976,194,989
Income taxes paid (consolidated taxation mechanism)
Cash flows from operating activities (a)
(533,543,154)
3,449,226,083
(443,549,585)
2,465,270,129
Investments in property, plant and equipment and intangible
assets
Investments in equity investments
Disposals of equity investments
Cash flows from investing/disinvesting activities (b)
Financial debt (new long-term borrowing)
Financial debt (repayments)
Net change in long-term financial payables/(receivables)
Net change in short-term financial payables/(receivables)
Dividends paid
Increase in capital and reserves
Cash flows from financing activities (c)
Increase/(Decrease) in cash and cash equivalents (a+b+c)
Cash and cash equivalents at the start of the year
Cash and cash equivalents at year end
10-11
(32,089,910)
(29,716,867)
(29,716,867)
13
13
23
23
22
22
21
21
(2,555,503,401)
(2,544,488,283)
(17,898,158)
(17,898,158)
-
(2,587,593,311)
-
(47,615,025)
3,500,000,000
2,940,976,595
989,235,387
(4,426,410,410)
(992,598,185)
2,735,706,549
2,815,976,594
(2,854,462,654)
(26,612,508)
(743,785,882)
1,516,803,548
1,721,306,401 1,511,596,115
(2,409,676,207)
(1,829,783,012)
-
-
(1,344,165,950)
(2,966,302,063)
(482,533,178)
2,489,231,277
2,006,698,099
(548,646,959)
3,037,878,236
2,489,231,277
372
Annual Report 2018 Notes to the separate
financial statements
1
Form and content of the
financial statements
Enel SpA is a corporation (società per azioni) that operates
> carrying out their activity in an operating company other
in the electricity and gas sector and has its registered office
than Enel SpA;
in Viale Regina Margherita 137, Rome, Italy.
> provide technical services at a global level to Group com-
In its capacity as holding company, Enel SpA sets the stra-
panies with a uniform business, pursuing objectives of
tegic objectives for the Group and its subsidiaries and co-
effectiveness and operating efficiency as well as legal
ordinates their activities. The activities that Enel SpA per-
and accounting clarity;
forms in respect of the other Group companies as part of
> seize opportunities to develop their business in interna-
its management and coordination function, including with
tional markets.
regard to the Company’s organizational structure, can be
In this context, Enel SpA increasingly takes on the role of
summarized as follows:
industrial holding company, concentrating its activity:
> Holding company functions, associated with the coor-
nies;
dination of governance processes at the Group level:
> on the strategic direction of activities, remunerated ex-
- Administration, Finance and Control;
clusively through the dividends received from the sub-
> on the management and coordination of Group compa-
- People and Organization;
- Communications;
- Legal and Corporate Affairs;
-
Innovability;
- Audit.
sidiaries;
> on institutional services provided by the holding compa-
ny staff functions for the benefit of the subsidiaries (re-
munerated through an “institutional services” contract).
Within the Group, Enel SpA meets liquidity requirements
On January 1, 2018 the Global Business Lines and the
primarily through cash flows generated by ordinary opera-
Global services function (hereinafter “Global Structures”),
tions and the use of a range of sources of funds, while
i.e. Global Infrastructure & Networks, Global Thermal Gen-
managing any excess liquidity appropriately.
eration and Global Procurement, previously allocated to
As the Parent Company, Enel SpA has prepared the consoli-
Enel SpA, were transferred to the wholly owned Italian
dated financial statements of the Enel Group for the year
subsidiaries Enel Global Infrastructure & Networks Srl, Enel
ending December 31, 2018, which form an integral part of
Global Thermal Generation Srl and Enel Italia Srl.
this Annual Report pursuant to Article 154-ter, paragraph 1,
The corporate reorganization of the Global Structures
of the Consolidate Law on Financial Intermediation (Legis-
equipped the Group with a uniform organizational and cor-
lative Decree 58 of February 24, 1998).
porate structure, within which each Global Structure will be
On March 21, 2019, the Board authorized the publication of
able to aim for maximum efficiency and a clearer focus of
these financial statements at December 31, 2018.
its activities, in accordance with the “Global Hub” model,
These financial statements have undergone statutory au-
namely organizational entities capable of:
diting by EY SpA.
373
Financial statements of Enel SpA Basis of presentation
The separate financial statements for the year ended De-
cember 31, 2018 have been prepared in accordance with
international accounting standards (International Accounting
Standards - IAS and International Financial Reporting Stan-
dards - IFRS) issued by the International Accounting Stan-
dards Board (IASB), the interpretations of the International
Financial Reporting Interpretations Committee (IFRIC) and
the Standing Interpretations Committee (SIC), recognized in
the European Union pursuant to Regulation 2002/1606/EC
and in effect as of the close of the year. All of these stan-
dards and interpretations are hereinafter referred to as the
“IFRS-EU”.
The financial statements have also been prepared in confor-
mity with measures issued in implementation of Article 9,
paragraph 3, of Legislative Decree 38 of February 28, 2005.
The financial statements consist of the income statement,
plained in the measurement bases applied to each individual
item in the consolidated financial statements.
The financial statements are presented in euro, the func-
tional currency of the Company, and the figures shown in
the notes are reported in millions of euro unless stated oth-
erwise.
The financial statements provide comparative information in
respect of the previous period.
2
Accounting policies and
measurement criteria
the statement of comprehensive income, the balance sheet,
The accounting policies and measurement criteria are the
the statement of changes in shareholders’ equity and the
same, where applicable, as those adopted in the prepara-
statement of cash flows and the related notes.
tion of the consolidated financial statements, to which the
The assets and liabilities reported in the balance sheet are
reader should refer for more information, with the excep-
classified on a “current/non-current” basis, with separate
tion of those regarding equity investments in subsidiaries,
reporting of assets held for sale and liabilities included in
associated companies and joint ventures.
disposal groups held for sale, if any. Current assets, which
Subsidiaries are all entities over which Enel SpA has con-
include cash and cash equivalents, are assets that are in-
trol. The Company controls an entity when it is exposed to
tended to be realized, sold or consumed during the normal
or has rights to variable returns deriving from its involve-
operating cycle of the Company or in the 12 months follow-
ment and has the ability, through the exercise of its power
ing the close of the financial year; current liabilities are liabili-
over the investee, to affect its returns. Power is defined as
ties that are expected to be settled during the normal operat-
having the concrete ability to direct the significant activi-
ing cycle of the Company or within the 12 months following
ties of the entity by virtue of the existence of substantive
the close of the financial year.
rights.
The income statement is classified on the basis of the na-
Associates comprise those entities in which Enel SpA has
ture of costs, with separate reporting of net income/(loss)
a significant influence. Significant influence is the power to
from continuing operations and net income/(loss) from any
participate in the financial and operating policy decisions
discontinued operations.
of investees but not exercise control or joint control over
The indirect method is used for the statement of cash flows,
those entities.
with separate reporting of any cash flows by operating, in-
Joint ventures are entities over which Enel SpA exercises
vesting and financing activities associated with discontinued
joint control and has rights to the net assets of the entities.
operations, if any.
Joint control means sharing control of an arrangement,
The income statement, the balance sheet and the state-
which only exists when the decisions over the relevant
ment of cash flows report transactions with related parties,
activities require the unanimous consent of all the parties
the definition of which is given in the section “Accounting
that share control.
policies and measurement criteria” for the consolidated fi-
Equity investments in subsidiaries, associates and joint
nancial statements.
ventures are measured at cost. Cost is adjusted for any im-
The financial statements have been prepared on a going
pairment losses, which are reversed where the reasons for
concern basis using the cost method, with the exception of
their recognition no longer obtain. The carrying amount re-
items measured at fair value in accordance with IFRS, as ex-
sulting from the reversal may not exceed the original cost.
374
Annual Report 2018 Where the loss pertaining to Enel SpA exceeds the carry-
ing amount of the investment and the Company is obligat-
ed to perform the legal or constructive obligations of the
investee or in any event to cover its losses, the excess with
respect to the carrying amount is recognized in liabilities in
the provision for risks and charges.
In the case of a disposal, without economic substance, of
an investment to an entity under common control, any dif-
ference between the consideration received and the carry-
ing amount of the investment is recognized in equity.
Dividends from equity investments are recognized in profit
or loss when the shareholder’s right to receive them is es-
tablished.
Dividends and interim dividends payable to third parties
are recognized as changes in equity at the date they are
approved by the Shareholders’ Meeting and the Board of
Directors, respectively.
3
Recent accounting standards
For information on recent accounting standards, please
refer to the corresponding section of the notes to the con-
solidated financial statements.
The application of IFRS 9 as from January 1, 2018 gave rise
to a non-material decrease in shareholders’ equity net of
the associated tax effects, mainly reflecting the adoption
of the expected credit loss model.
No significant situations were affected by the application
of IFRS 15.
With regard to accounting standards taking effect after
December 31, 2018, in 2018 Enel completed the analysis
of the Company’s lease contracts in the light of the new
accounting rules provided for under “IFRS 16 - Leases”.
The analysis found that the new standard will not have a
Use of estimates and management
judgments
significant impact.
The use of estimates and management judgements adopt-
ed in preparing the separate financial statements are the
same, where applicable, as those adopted in the prepara-
tion of the consolidated financial statements, which read-
ers are invited to consult, with the exception of the mea-
surement of equity investments, which is discussed below.
Recoverability of equity investments
The Company assesses the presence of evidence of im-
pairment of each equity investment at least once a year,
consistent with its strategy for managing the legal entities
within the Group. If such evidence is found, the assets
involved undergo impairment testing. The processes and
procedures for determining the recoverable value of each
equity investment are based on assumptions that can be
complex and whose nature requires management to use
its judgment, especially as regards the identification of
evidence of impairment, the forecasting of future profit-
ability over the horizon of the Group Business Plan, the
determination of the normalized cash flows underlying the
estimation of terminal value and the determination of long-
term growth rates and discount rates applied to forecasts
of future cash flows.
375
Financial statements of Enel SpA Information on the income statement
Revenue
4.a Revenue from sales and services - €38 million
Revenue from sales and services break down as follows.
Millions of euro
Revenue from sales and services
Group companies
Non-Group counterparties
Total revenue from sales and services
2018
2017
Change
38
-
38
118
2
120
(80)
(2)
(82)
Revenue from sales and services, in the amount of €38
transferred to the wholly owned subsidiaries Enel Global
million, refers to services provided to subsidiaries within
Infrastructure & Networks Srl, Enel Global Thermal Genera-
the scope of the Company’s management and coordina-
tion Srl and Enel Italia Srl. It also reflected negative adjust-
tion functions and for the billing of costs of various nature
ments related to 2017.
incurred in relation to subsidiaries.
Revenue from sales and services can be broken down by
The overall decrease of €82 million compared with the pre-
geographical area as follows:
vious year was essentially due to the reduction in revenue
> €34 million in Italy (€75 million in 2017);
from the provision of technical and managerial services fol-
> a negative €4 million in the European Union (€25 million
lowing the reorganization that took place at the beginning of
in 2017);
2018 for the Global Structures, as part of which the Global
> €3 million in non-EU Europe (€7 million in 2017);
Business Lines, previously included within Enel SpA, were
> €5 million in other countries (€13 million in 2017).
4.b Other revenue and income - €15 million
Other revenue and income, in the amount of €15 million in
the year under review and the previous year. It increased
2018, is essentially related to seconded personnel in both
by €2 million (€13 million in 2017).
376
Annual Report 2018 Costs
5.a Purchases of consumables - €1 million
Purchases of consumables amounted to €1 million, unchanged from the previous year.
5.b Services, leases and rentals - €127 million
Costs for services, leases and rentals break down as follows.
Millions of euro
Services
Leases and rentals
Total services, leases and rentals
2018
116
11
127
2017
149
16
165
Change
(33)
(5)
(38)
Costs for services, totaling €116 million, include costs for
partially offset by the increase in costs for other services.
services provided by third parties in the amount of €53 mil-
Costs for services provided by Group companies decreased
lion (€79 million in 2017) and costs for services provided by
by €7 million due to the reduction in costs for personal ser-
Group companies in the amount of €63 million (€70 million
vices and costs for other services, which were partially off-
in 2017). More specifically, the €26 million decrease in costs
set by the increase in costs for IT services.
for services provided by third parties was mainly due both
Costs for leases and rentals mainly concern costs for leasing
to the decrease in costs incurred for strategic, management
assets from the subsidiary Enel Italia Srl and decreased by
and organizational consulting and to lower costs for advertis-
€5 million compared with the previous year.
ing, marketing, promotional and press materials, which were
5.c Personnel - €109 million
Personnel costs break down as follows.
Millions of euro
Wages and salaries
Social security costs
Post-employment benefits
Other long-term benefits
Other costs and other incentive plans
Total personnel costs
Notes
24
24
25
2018
68
22
6
5
8
109
2017
108
34
9
20
3
174
Change
(40)
(12)
(3)
(15)
5
(65)
Personnel costs came to €109 million for a decrease of
transfers referred to earlier, with a consequent reduction in
€65 million from 2017. The decline is mainly attributable
wages and salaries and related social security costs, for a
to the decrease in the average number of employees (399
total of €52 million, and in costs for long-term benefits of
fewer than in the previous year), partly deriving from the
€15 million.
377
Financial statements of Enel SpA The table below shows the average number of employees by category, compared with the previous year, and the actual
number of employees at December 31, 2018.
No.
Senior managers
Middle managers
Office staff
Total
Average number
Headcount
2018
148
354
270
772
2017
239
565
367
1,171
Change
at Dec. 31, 2018
(91)
(211)
(97)
(399)
144
369
254
767
5.d Depreciation, amortization and impairment losses - €(331)
million
Millions of euro
Depreciation
Amortization
Impairment losses
Reversals of impairment losses
Total depreciation, amortization and impairment losses
2018
2017
Change
4
13
55
(403)
(331)
4
11
-
-
15
-
2
55
(403)
(346)
Depreciation, amortization and impairment losses shows net
Russia PSJC (€40 million) and Enel Investment Holding BV
income of €331 million (€15 million in 2017 and a decrease of
(€15 million).
€346 million compared with the previous year.
Reversals of impairment losses, in the amount of €403 mil-
Depreciation and amortization (€17 million) includes depre-
lion, include only the positive adjustment to the value of the
ciation of €4 million and amortization of €13 million. It in-
equity investment in Enel Produzione SpA following the re-
creased by a total of €2 million on the previous year, mainly
calculation of the value of the investment in Slovenské ele-
reflecting the increase in the average stock of industrial pat-
ktrárne.
ents and intellectual property rights following investments
during the year.
For details on the criteria used to determine this impairment
In 2018, impairment losses amounted to €55 million and re-
loss, see note 13 below.
fer to the adjustments of equity investments held in Enel
5.e Other operating expenses - €39 million
Other operating expenses, totaling €39 million, increased
essentially due to the joint effect of the recognition in
by €19 million compared with the previous year due es-
2018 of the restoration of the value of the equity invest-
sentially to provisions for risks and charges in the amount
ment in Enel Produzione SpA (€403 million), offset in part
of €15 million.
by the adjustment of equity investments held in Enel Rus-
Operating income, in the amount of €108 million, im-
sia PJSC (€40 million) and Enel Investment Holding BV
proved by €350 million compared with the previous year,
(€15 million).
378
Annual Report 2018 6. Income from equity investments - €3,567 million
Income from equity investments amounted to €3,567 mil-
approved by subsidiaries and associates in the amount of
lion in 2018, an increase of €534 million compared with the
€3,557 million and by other investees in the amount of €10
previous year, and regards dividends and interim dividends
million.
Millions of euro
Dividends from subsidiaries and associates
Enel Produzione SpA
e-distribuzione SpA
Enel.Factor SpA
Enel Italia Srl
Enel Energia SpA
Servizio Elettrico Nazionale SpA
Enel Green Power SpA
Enel Iberia Srl
Enel Sole Srl
Enel Américas SA
Enel Chile SA
Enel Global Infrastructure & Networks Srl
Enel Investment Holding BV
RusEnergoSbyt LLC
CESI SpA
Dividends from other companies
Emittenti Titoli SpA
Empresa Propietaria de la Red SA
2018
3,556
229
949
2
16
792
100
557
486
-
162
157
2
66
37
1
11
10
1
2017
3,032
-
1,448
3
23
679
80
50
677
15
25
31
-
-
-
1
1
-
1
Change
524
229
(499)
(1)
(7)
113
20
507
(191)
(15)
137
126
2
66
37
-
10
10
-
Total income from equity investments
3,567
3,033
534
379
Financial statements of Enel SpA 7. Net financial income/(expense) from derivatives - €45 million
This item breaks down as follows.
Millions of euro
Income from derivatives
- on behalf of Group companies:
- income from derivatives at fair value through profit or loss
- on behalf of Enel SpA:
- income from fair value hedge derivatives
- income from cash flow hedge derivatives
- income from derivatives at fair value through profit or loss
Total income from derivatives
Expense on derivatives
- on behalf of Group companies:
- expense on derivatives at fair value through profit or loss
- on behalf of Enel SpA:
- expense on fair value hedge derivatives
- expense on cash flow hedge derivatives
- expense on derivatives at fair value through profit or loss
Total expense on derivatives
TOTAL FINANCIAL INCOME/(EXPENSE) FROM
DERIVATIVES
2018
1,420
1,420
206
18
166
22
1,626
1,414
1,414
167
18
121
28
1,581
45
2017
Change
2,533
2,533
150
32
108
10
2,683
2,523
2,523
379
30
341
8
2,902
(219)
(1,113)
(1,113)
56
(14)
58
12
(1,057)
(1,109)
(1,109)
(212)
(12)
(220)
20
(1,321)
264
The net financial income from derivatives came to €45
were entered into on behalf of Enel SpA on both interest
million (as compared with a net expense of €219 million
rates and exchange rates.
in 2017) and essentially represents the net gain on deriva-
tives entered into on behalf of Enel SpA.
For more details on derivatives, see note 31 “Financial
The improvement of €264 million compared with the previ-
instruments” and note 33 “Derivatives and hedge ac-
ous year is essentially due to the decrease in net expense
counting”.
on cash flow hedge derivatives (€220 million), all of which
380
Annual Report 2018 8. Other net financial income/(expense) - €(448) million
This item breaks down as follows.
Millions of euro
Other financial income
Interest income
Interest income on long-term financial assets
Interest income on short-term financial assets
Total
Positive exchange rate differences
Income on fair value hedges - post-hedge adjustment
Other
Total other financial income
Other financial expense
Interest expense
Interest expense on bank borrowings
Interest expense on bonds
Interest expense on other borrowings
Total
Negative exchange rate differences
Interest expense on defined benefit plans and other long-
term employee benefits
Other
Total other financial expense
TOTAL OTHER NET FINANCIAL INCOME/(EXPENSE)
2018
2017
Change
3
16
19
28
4
269
320
32
549
85
666
65
3
34
768
(448)
2
30
32
238
13
127
410
55
735
70
860
5
4
3
872
(462)
1
(14)
(13)
(210)
(9)
142
(90)
(23)
(186)
15
(194)
60
(1)
31
(104)
14
Other net financial expense, in the amount of €448 mil-
The decrease of €14 million in other net financial expense
lion, essentially reflects interest expense on financial debt
compared with 2017 was due mainly to the decrease in
of €666 million, partly offset by interest income and fees
interest expense on bonds in the amount of €186 million,
and commissions on the intercompany current account of
partially offset by the €210 million decrease in positive
€202 million and interest income on the refund of income
exchange rate differences on hedged loans in foreign cur-
taxes (IRPEG and ILOR) for the years 1996 and 1997 in
rencies, which were affected by the developments in the
the amount of €54 million (see note 9 below for more
exchange rate of the euro against the US dollar and the
information).
pound sterling.
9. Income taxes - €(184) million
Millions of euro
Current taxes
Deferred tax income
Deferred tax expense
Total taxes
2018
(189)
4
1
(184)
2017
(162)
4
(2)
(160)
Change
(27)
-
3
(24)
381
Financial statements of Enel SpA Income taxes for 2018 showed a creditor position of €184
€160 million), the increase of €24 million was essentially
million, mainly as a result of the reduction in the tax base
due to the reimbursement of income taxes (IRPEG and
for the corporate income tax (IRES) compared with income
ILOR) for 1996 and 1997, following two favorable rulings
before taxes due to the exclusion of 95% of the dividends
of the Court of Cassation, in the amount of €90 million,
received from the subsidiaries and the deductibility of Enel
partially offset by a smaller creditor tax position on current
SpA’s interest expense for the Group in accordance with
income (€65 million).
corporate income tax law (Article 96 of the Uniform Income
Tax Code).
The following table reconciles the theoretical tax rate with
Compared with the previous year (a creditor position of
the effective tax rate.
Millions of euro
Income before taxes
Theoretical corporate income taxes (IRES)
Tax decreases:
- dividends on equity investments, collected
- dividends from equity investments, not collected
- uses of provisions
- prior-year writedowns
- other
Tax increases:
- writedowns/(writebacks) for the year
- accruals to provisions
- prior-year expense
- other
Total current corporate income taxes (IRES)
IRAP
Difference on estimated income taxes from prior
years
Definitive withholdings on dividends from
foreign shareholdings
Total deferred tax items
- of which impact of change in tax rate
- of which changes for the year
- of which difference of prior-year estimates
% rate
24.0%
-24.4%
-0.4%
-0.4%
-3.0%
-0.1%
0.4%
0.4%
0.2%
0.3%
-3.0%
-3.8%
0.7%
0.1%
2018
3,272
785
(799)
(14)
(14)
(97)
(2)
13
13
7
9
(99)
-
(111)
21
5
-
5
-
TOTAL INCOME TAXES
(184)
-5.6%
2017
2,110
506
(678)
(13)
(16)
-
-
-
12
2
23
(164)
-
-
2
2
-
4
(2)
(160)
% rate
24.0%
-32.1%
-0.6%
-0.8%
0.6%
0.1%
1.1%
-7.8%
0.1%
0.1%
-7.6%
382
Annual Report 2018 Information on the balance sheet
Assets
10. Property, plant and equipment - €9 million
Developments in property, plant and equipment for 2017 and 2018 are set out in the table below.
Millions of euro
Land
Buildings
Plant and
machinery
Industrial and
commercial
equipment
Other
assets
Leasehold
improvements
Assets under
construction
and advances
Cost
Accumulated depreciation
Balance at Dec. 31, 2016
Capital expenditure
Depreciation
Total changes
Cost
Accumulated depreciation
Balance at Dec. 31, 2017
Capital expenditure
Depreciation
Total changes
Cost
Accumulated depreciation
Balance at Dec. 31, 2018
1
-
1
-
-
-
1
-
1
-
-
-
1
-
1
3
(2)
1
-
-
-
3
(2)
1
-
-
-
3
(2)
1
3
(3)
-
-
-
-
3
(3)
-
-
-
-
3
(3)
-
5
(5)
-
-
-
-
5
(5)
-
-
-
-
5
(5)
-
20
(19)
1
4
(1)
3
24
40
(34)
6
1
(3)
(2)
41
(20)
(37)
4
2
(1)
1
26
(21)
5
4
-
(3)
(3)
41
(40)
1
-
-
-
-
-
-
-
-
-
1
-
1
1
-
1
Total
72
(63)
9
5
(4)
1
77
(67)
10
3
(4)
(1)
80
(71)
9
Property, plant and equipment totaled €9 million, a de-
the same period (€4 million). Capital expenditure for other
crease of €1 million compared with the previous year, es-
assets refer to hardware systems, while the capital expen-
sentially attributable to the negative net balance between
diture relating to assets under construction refer to engi-
capital expenditure in 2018 (€3 million) and depreciation for
neering works on office buildings.
383
Financial statements of Enel SpA 11. Intangible assets - €47 million
Intangible assets, all of which have a finite useful life, break down as follows.
Millions of euro
Balance at Dec. 31, 2016
Investments
Assets entering service
Amortization
Total changes
Balance at Dec. 31, 2017
Investments
Changes
Assets entering service
Amortization
Total changes
Balance at Dec. 31, 2018
Industrial patents and
intellectual property rights
Other intangible assets
under development
11
24
7
(11)
20
31
14
(2)
-
(13)
(1)
30
7
-
(7)
-
(7)
-
17
-
-
-
17
17
Total
18
24
-
(11)
13
31
31
(2)
-
(13)
16
47
Industrial patents and intellectual property rights, in the
related to the evolution of software associated with exist-
amount of €30 million at December 31, 2018, relate mainly
ing systems and the development of new systems, while
to costs incurred in purchasing software as well as related
assets entering service refer mainly to the Evolution for
evolutionary maintenance. Amortization is calculated on a
Energy (E4E) project, which was undertaken at the global
straight-line basis over the item’s residual useful life (three
level to harmonize and integrate processes and systems to
years on average). Compared with the previous year, the
support the Global Business Lines and the Administration,
aggregate decreased by €1 million due to the negative bal-
Finance and Control, and Global Procurement functions, as
ance of investments made in 2018 (€14 million), to amorti-
well as other projects connected with the evolution of soft-
zation recorded during the same period (€13 million), and to
ware associated with existing systems.
the transfer of intangible assets to Enel Global Infrastruc-
Other intangible assets under development at December
ture & Networks Srl, Enel Global Thermal Generation Srl,
31, 2018 amounted to €17 million, an increase of the same
and Enel Italia Srl for a total of €2 million.
amount due to investments during the period.
Investments concerned information-technology projects
384
Annual Report 2018 12. Deferred tax assets and liabilities - €288 million and €133
million
Changes in deferred tax assets and deferred tax liabilities, grouped by type of temporary difference, are shown below.
Millions of euro
Increase/(Decrease)
taken to income
statement
at Dec. 31,
2017
Total
Increase/(Decrease)
taken to equity
Other
changes
at Dec. 31,
2018
Deferred tax assets
Nature of temporary differences:
- provisions for risks and charges and impairment
losses
- derivatives
- costs for capital increase
- other items
Total deferred tax assets
Deferred tax liabilities
Nature of temporary differences:
- measurement of financial instruments
- other items
Total deferred tax liabilities
Excess net deferred IRES tax assets after any
offsetting
Excess net deferred IRAP tax liabilities after any
offsetting
5
230
2
62
299
163
5
168
162
(31)
1
-
-
(5)
(4)
-
1
1
-
-
(2)
2
-
(36)
-
(36)
-
-
-
(7)
(7)
-
-
-
Total
6
230
-
52
288
127
6
133
155
-
Deferred tax assets totaled €288 million (€299 million at De-
by €35 million (€168 million at December 31, 2017), essen-
cember 31, 2017), a decrease of €11 million compared with
tially due to the release of deferred tax liabilities related to
the previous year, which was due mainly to the recognition
IRAP on the fair value measurement of cash flow hedge in-
of deferred tax assets on changes in provisions for risks and
struments (€30 million), given that, over the next few years,
charges and the transfer of deferred tax assets to the com-
we do not expect to generate enough taxable income for
panies involved in the transfer of the Global Structures as
IRAP to absorb the temporary deductible differences.
described above.
The amount of deferred tax assets and liabilities was deter-
Deferred tax liabilities came to €133 million and decreased
mined by applying a rate of 24% for IRES.
13. Equity investments - €45,715 million
The table below shows the changes during the year for
ments held in subsidiaries, joint ventures, associates, and
each investment, with the corresponding values at the be-
other companies.
ginning and end of the year, as well as the list of invest-
385
Financial statements of Enel SpA Millions of euro
Original cost
(Writedowns)/
Revaluations
Other changes
- IFRIC 11 &
IFRS 2
Carrying amount
%
holding
Capital grants
and loss
coverage
Acquisitions/
(Disposals)/
(Liquidations)/
(Repayments)
at Dec. 31, 2017
New cos./
Transfers (+/-)/
Spin-offs (+/-)
Adjustments in value
Mergers (+/-)
Net change
Original cost
Revaluations
IFRIC 11 & IFRS 2
(Writedowns)/
Other changes -
Changes in 2018
Carrying
amount
%
holding
at Dec. 31, 2018
A) Subsidiaries
Enel Produzione SpA
e-distribuzione SpA
Servizio Elettrico Nazionale
SpA
Enel Global Trading SpA
Enel Green Power SpA
Enel X Srl
Enel Investment Holding
BV
Enelpower SpA
Enel Global Thermal
Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel.Factor SpA
Enel Italia Srl
Enel Innovation Hubs Srl
Enel Global Infrastructure
& Networks Srl
Enel Finance International
NV
Enel Holding Finance Srl
Tynemouth Energy
Storage Limited
Enel Américas SA
Enel Chile SA
Enel Holding Chile Srl
E-Distribuţie Banat SA
E-Distribuţie Dobrogea SA
E-Distribuţie Muntenia SA
Enel Energie Muntenia SA
Enel Energie SA
Enel Romania SA
Enel Russia PJSC
Enel Insurance NV
Vektör Enerji Üretim AŞ
Enel Green Power Chile
Ltda
Total subsidiaries
B) Joint ventures
OpEn Fiber SpA
RusEnergoSbyt LLC
Total joint ventures
C) Associates
CESI SpA
Total associates
D) Other companies
Empresa Propietaria de la
Red SA
Red Centroamericana de
Telecomunicaciones SA
Compañía de Transmisión
del Mercosur Ltda
Elcogas SA
Emittenti Titoli SpA in
liquidation
Idrosicilia SpA
4,895
4,054
110
1,401
6,538
5
8,498
189
1
1,321
13,713
18
525
70
12
2,397
-
5
2,822
1,760
-
-
-
-
-
-
-
-
-
-
-
(986)
-
-
(208)
-
-
(4,473)
(159)
-
(8)
-
-
(41)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
2
-
1
2
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,913
4,056
110
1,194
6,540
5
4,025
30
1
1,313
13,713
18
487
16
12
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
2,397
100.0
-
5
2,822
1,760
-
-
-
-
-
-
-
-
-
-
-
-
-
51.8
60.6
-
-
-
-
-
-
-
-
-
-
-
-
2,275
-
-
-
518
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,001)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
421
261
952
330
208
15
442
252
-
-
-
-
-
-
(71)
-
-
-
10
-
-
-
-
-
10
(1,798)
1,798
(5)
-
-
71
-
-
-
-
-
-
-
-
-
-
48,334
(5,929)
12
42,417
2,793
(1,120)
15
348
691
2,727
50,713
(5,581)
12
45,144
(18)
18
762
(71)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
403
2,275
(71)
518
(4,016)
(1,798)
1,798
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10
(18)
18
10
(5)
762
421
261
952
330
208
15
402
252
125
41
166
12
(1)
11
4,895
6,329
110
1,401
6,467
523
4,497
189
11
1,321
13,713
-
543
70
22
599
1,798
2,822
2,522
-
-
-
-
421
261
952
330
208
15
442
252
490
41
531
23
23
5
5
-
-
-
-
10
(583)
(208)
(4,488)
(159)
(8)
(41)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12
(5)
7
4
2
-
1
2
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,316
6,331
110
1,194
6,469
523
1,313
13,713
9
30
11
-
505
16
22
599
1,798
2,822
2,522
421
261
952
330
208
15
402
252
490
41
531
23
23
17
-
-
-
-
-
-
-
-
-
17
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
25.0
100.0
51.8
61.9
51.0
51.0
78.0
78.0
51.0
100.0
56.4
100.0
100.0
-
-
-
-
50.0
49.5
42.7
11.1
11.1
4.3
-
-
1.0
(40)
(40)
403
(15)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12
12
360
-
-
-
-
-
-
-
-
-
(5)
-
-
(5)
-
-
-
-
-
-
-
-
-
-
-
-
-
365
-
365
23
23
5
-
-
-
1
-
6
50.0
-
42.7
11.1
11.1
-
4.3
10.0
1.0
125
-
125
-
-
-
-
-
-
-
-
-
-
41
41
-
-
-
-
-
-
(1)
-
(1)
-
-
-
-
-
-
-
-
-
-
-
-
365
-
365
23
23
5
-
-
5
1
-
Total other companies
11
48,733
(5,934)
12
42,811
2,918
(1,080)
15
691
2,904
51,277
(5,574)
12
45,715
TOTAL EQUITY
INVESTMENTS
386
Annual Report 2018 Millions of euro
Original cost
Revaluations
IFRS 2
Carrying amount
Other changes
(Writedowns)/
- IFRIC 11 &
%
holding
Capital grants
and loss
coverage
Acquisitions/
(Disposals)/
(Liquidations)/
(Repayments)
at Dec. 31, 2017
New cos./
Transfers (+/-)/
Spin-offs (+/-)
Adjustments in value
Mergers (+/-)
Net change
Original cost
Changes in 2018
(Writedowns)/
Revaluations
Other changes -
IFRIC 11 & IFRS 2
Carrying
amount
%
holding
at Dec. 31, 2018
A) Subsidiaries
Enel Produzione SpA
e-distribuzione SpA
Servizio Elettrico Nazionale
SpA
Enel Global Trading SpA
Enel Green Power SpA
Enel X Srl
BV
Enel Investment Holding
Enelpower SpA
Enel Global Thermal
Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel.Factor SpA
Enel Italia Srl
Enel Innovation Hubs Srl
Enel Global Infrastructure
& Networks Srl
Enel Finance International
NV
Enel Holding Finance Srl
Tynemouth Energy
Storage Limited
Enel Américas SA
Enel Chile SA
Enel Holding Chile Srl
E-Distribuţie Banat SA
E-Distribuţie Dobrogea SA
E-Distribuţie Muntenia SA
Enel Energie Muntenia SA
Enel Energie SA
Enel Romania SA
Enel Russia PJSC
Enel Insurance NV
Vektör Enerji Üretim AŞ
Enel Green Power Chile
Ltda
Total subsidiaries
B) Joint ventures
OpEn Fiber SpA
RusEnergoSbyt LLC
Total joint ventures
C) Associates
CESI SpA
Total associates
D) Other companies
Empresa Propietaria de la
Red SA
Red Centroamericana de
Telecomunicaciones SA
Compañía de Transmisión
del Mercosur Ltda
Elcogas SA
Emittenti Titoli SpA in
liquidation
Idrosicilia SpA
TOTAL EQUITY
INVESTMENTS
4,895
4,054
110
1,401
6,538
8,498
189
1,321
13,713
18
525
70
12
2,397
2,822
1,760
5
1
-
5
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
5
1
-
365
365
23
23
(986)
(208)
(4,473)
(159)
(8)
(41)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(5)
2,275
518
(4,001)
4
2
-
1
2
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,397
100.0
3,913
4,056
110
1,194
6,540
5
4,025
30
1
1,313
13,713
18
487
16
12
-
5
2,822
1,760
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
-
1
-
6
365
365
23
23
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
51.8
60.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50.0
42.7
11.1
11.1
-
4.3
10.0
1.0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
125
125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
421
261
952
330
208
15
442
252
41
41
(1)
(1)
(71)
10
10
(5)
71
(1,798)
1,798
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total other companies
11
(5)
48,733
(5,934)
12
42,811
2,918
(1,080)
15
403
-
-
-
-
-
(15)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(40)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(18)
18
-
-
-
-
-
-
762
(71)
-
-
-
-
-
-
-
-
-
-
403
2,275
-
-
(71)
518
(4,016)
-
10
-
-
(18)
18
-
10
(1,798)
1,798
(5)
-
762
-
421
261
952
330
208
15
402
252
-
-
4,895
6,329
110
1,401
6,467
523
4,497
189
11
1,321
13,713
-
543
70
22
599
1,798
-
2,822
2,522
-
421
261
952
330
208
15
442
252
-
-
(583)
-
-
(208)
-
-
(4,488)
(159)
-
(8)
-
-
(41)
(54)
-
-
-
-
-
-
-
-
-
-
-
-
-
(40)
-
-
-
4
2
-
1
2
-
-
-
-
-
-
-
3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,316
6,331
110
1,194
6,469
523
9
30
11
1,313
13,713
-
505
16
22
599
1,798
-
2,822
2,522
-
421
261
952
330
208
15
402
252
-
-
48,334
(5,929)
12
42,417
2,793
(1,120)
15
348
691
2,727
50,713
(5,581)
12
45,144
-
-
-
-
-
12
-
-
-
-
-
12
360
-
-
-
-
-
-
-
-
-
-
-
-
125
41
166
-
-
12
-
-
-
(1)
-
11
490
41
531
23
23
5
-
-
5
-
-
10
-
-
-
-
-
12
-
-
(5)
-
-
7
-
-
-
-
-
-
-
-
-
-
-
-
490
41
531
23
23
17
-
-
-
-
-
17
691
2,904
51,277
(5,574)
12
45,715
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
-
100.0
100.0
100.0
25.0
100.0
-
51.8
61.9
-
51.0
51.0
78.0
78.0
51.0
100.0
56.4
100.0
100.0
-
50.0
49.5
42.7
11.1
11.1
-
4.3
-
1.0
387
Financial statements of Enel SpA The table below reports changes in equity investments in 2018.
Millions of euro
Increases
Transfer to Enel Global Infrastructure & Networks Srl of the “Global Infrastructure & Networks”
Business Line
Transfer of the “Global Thermal Generation” Business Line to Enel Global Thermal Generation Srl
Recapitalization of e-distribuzione SpA
Recapitalization of Enel X Srl
Merger of Enel.Factor Srl into Enel Italia Srl
Incorporation of Enel Holding Finance Srl with the transfer of 75% of the investment in Enel
Finance International NV
Capital contribution to OpEn Fiber SpA
Acquisition of Enel Russia PSJC by Enel Investment Holding BV
Acquisition of E-Distribuţie Banat SA by Enel Investment Holding BV
Acquisition of E-Distribuţie Muntenia SA by Enel Investment Holding BV
Acquisition of E-Distribuţie Dobrogea SA by Enel Investment Holding BV
Acquisition of Enel Energie SA by Enel Investment Holding BV
Acquisition of Enel Energie Muntenia SA by Enel Investment Holding BV
Acquisition of Enel Romania SA by Enel Investment Holding BV
Acquisition of RusEnergoSbyt LLC by Enel Investment Holding BV
Acquisition of Enel Insurance NV by Enel Investment Holding BV
Increase in the value of the investment in Enel Chile SA due to the merger of Enel Holding Chile Srl
and Hydromac Energy Srl (holder of the investment) into Enel SpA
Revaluation of the equity investment held in Empresa Propietaria de la Red SA
Writeback of the equity investment in Enel Produzione SpA
Total increases
Decreases
Transfer of the company Tynemouth Energy Storage Limited
Partial spin-off of Enel Green Power SpA to Enel Holding Chile Srl
Liquidation of Emittente Titoli SpA
Merger of Enel.Factor Srl into Enel Italia Srl
Incorporation of Enel Holding Finance Srl with the transfer of 75% of the investment
in Enel Finance International NV
Reduction in the value of the investment in Enel Investment Holding BV
Writedown of the investment in Enel Investment Holding BV
Writedown of the investment in Enel Russia PJSC
Total decreases
NET CHANGE
10
10
2,275
518
18
1,798
125
442
421
952
261
208
330
15
41
252
762
12
403
8,853
(5)
(71)
(1)
(18)
(1,798)
(4,001)
(15)
(40)
(5,949)
2,904
In 2018, the value of investments in subsidiaries, joint
of the subsidiary Enel Global Infrastructure & Networks
ventures, associated and other companies increased by
Srl (formerly Enel M@p Srl) in the amount of €10 million
€2,904 million as a result of:
through the transfer of the “Global Infrastructure & Net-
> the increase, on January 1, 2018, of the share capital
> the increase, on January 1, 2018, of the share capital of
works” Business Line;
388
Annual Report 2018 the subsidiary Enel Global Thermal Generation Srl in the
measured at cost, in the amount of €12 million;
amount of €10 million through the transfer of the “Global
> the adjustment of €15 million to the equity investment
Thermal Generation” Business Line;
held in Enel Investment Holding BV to take account of
> the transfer of the entire investment in Tynemouth Ener-
the change in performance and financial position follow-
gy Storage Limited to the subsidiary Enel Global Thermal
ing the aforementioned sale of equity investments;
Generation Srl in the amount of €5 million as part of the
> a writeback of €403 million in the value of the interest
Business Line transfer described above;
held in Enel Produzione SpA in order to take account of
> the recapitalization, on March 8, 2018, of the subsidiary
the adjustment in the value of the equity investment in
e-distribuzione SpA by waiving a portion of the financial
Slovenské elektrárne;
receivable from this company on the intercompany cur-
> the adjustment of €40 million to the equity investment
rent account in the amount of €2,275 million, which was
held in Enel Russia PJSC to take account of current per-
allocated to a specific available equity reserve;
formance and financial position.
> the recapitalization, on March 30, 2018, of the subsidiary
Enel X Srl by waiving a portion of the financial receivable
Within the scope of “Project Elqui - Italian side”, on March
from this company on the intercompany current account
30, 2018, the partial spin-off of Enel Green Power SpA was
in the amount of €78 million;
completed in favor of the newly incorporated Enel Holding
> the recapitalization, on June 20, 2018, of the subsidiary
Chile Srl, which led to an adjustment of €71 million in the
Enel X Srl through a capital contribution in the amount of
investment in Enel Green Power SpA and the acquisition of
€290 million, which was allocated to a specific available
the equity investment, for the same amount, for the entire
equity reserve;
share capital of the newly incorporated Enel Holding Chile
> the recapitalization, on July 18, 2018, of the subsidiary
Srl, the parent company of Hydromac Energy Srl, holder of
Enel X Srl through a capital contribution in the amount of
an equity investment in Enel Chile SA with a value of €762
€150 million for the purpose of supplementing the equity
million. On December 12, 2018, the merger into Enel of
of Enel X International Srl;
Enel Holding Chile Srl and Hydromac Energy Srl was com-
> the incorporation, on July 9, 2018, of Enel Holding Fi-
pleted, resulting in an increase of €762 million in Enel’s
nance Srl by transferring approximately 75% of the in-
investment in Enel Chile SA.
vestment in the Dutch company Enel Finance Interna-
The transaction is part of the process of simplifying the
tional NV, a wholly owned subsidiary of Enel SpA;
Group’s structure, which is one of the underlying princi-
> the acquisition of the equity investments held by Enel
ples of Enel’s 2018-2020 Strategic Plan. The transaction
Investment Holding BV, a wholly owned Dutch subsidiary
enabled Enel to consolidate the Group’s 61.93% interest in
of Enel SpA, in the Russian companies Enel Russia PJSC
Enel Chile SA, previously held directly by Enel for a 43.03%
and RusEnergoSbyt LLC, in the Romanian companies
stake and indirectly through Hydromac Energy for 18.88%
Enel Romania SA, E-Distribuţie Banat SA, E-Distribuţie
and through Enel Holding Chile for 0.02%.
Dobrogea SA, E-Distribuţie Muntenia SA, Enel Energie
SA, and Enel Energie Muntenia SA, and in the Dutch
It should also be noted that the merger of Enel.Factor SpA
company Enel Insurance NV, for a total of €2,922 million;
into the wholly owned subsidiary Enel Italia Srl was com-
> the reduction in the value of the equity investment of
pleted on July 1, 2018. This transaction did not result in
Enel Investment Holding BV in the amount of €4,001
changes in the total value of the equity investments held
million following the reduction of the share capital in
by Enel SpA.
the amount of €1,592 million and the distribution of the
share premium reserve in the amount of €2,409 million;
The following table shows the previous assumptions used
> the capital contribution, on October 3, 2018, in favor of
in determining the impairment loss on the investments
OpEn Fiber, a joint venture with CDP Equity SpA, in the
held in Enel Russia PJSC and Enel Investment Holding BV
amount of €125 million, in order to support the invest-
and the reversal of the impairment loss on Enel Produzione
ments needed for execution of the company’s 2018-2027
SpA and Empresa Propietaria de la Red SA.
Business Plan;
> the increase in the fair value of the equity investment
held in Empresa Propietaria de la Red SA, previously
389
Financial statements of Enel SpA Millions of euro
Original
cost
Growth
rate (1)
Pre-tax
WACC
discount
rate (2)
Explicit
period of
cash flows
Terminal
value (3)
Original
cost
Growth
rate (1)
Pre-tax
WACC
discount
rate (2)
Explicit
period
of cash
flows
Terminal
value (3)
at Dec. 31, 2018
at Dec. 31, 2017
Enel Russia PJSC
442
1.8%
13.2%
5 years
Perpetuity/28
years
Enel Investment
Holding BV
23
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Enel Produzione SpA
3,913
0.7%
8.9%
5 years
Perpetuity
3,913
0.7%
8.9% 5 years
Perpetuity
Empresa Propietaria
de la Red SA
5
-
8.7%
3 years
19 years
n/a
n/a
n/a
n/a
n/a
(1) Perpetual growth rate for cash flows after the explicit forecast period.
(2) Pre-tax WACC calculated using the iterative method: the discount rate that ensures that the value in use calculated with pre-tax cash flows is equal to that
calculated with post-tax cash flows discounted with the post-tax WACC.
(3) The terminal value has been estimated on the basis of a perpetuity or an annuity with a rising yield for the years indicated in the column.
The recoverable value of the equity investments recognized
developments in the main macroeconomic variables (infla-
through the impairment tests was estimated by calculating
tion, nominal interest rates and exchange rates) and com-
the equity value of the investments through an estimate
modity prices. The explicit period of cash flows considered
of their value in use using discounted cash flow models,
in impairment testing for these equity investments differs
which involve estimating expected future cash flows and
in accordance with the specific features and business cy-
applying an appropriate discount rate, selected on the basis
cles of the various companies. The terminal value, on the
of market inputs such as risk-free rates, betas and market
other hand, was calculated as a perpetuity or annuity with a
risk premiums. For the purpose of comparing the carrying
nominal growth rate equal to the long-term rate of growth
amount of the investments, the enterprise value resulting
in electricity and/or inflation (depending on the country and
from the estimation of future cash flows was converted
business involved) and in any case no higher than the aver-
into the equity value by subtracting the net financial posi-
age long-term growth rate of the reference market.
tion of the investee. Cash flows were determined on the
basis of the best information available at the time of the
The share certificates for Enel SpA’s investments in Italian
estimate and drawn for the explicit period from the 2019-
subsidiaries are held in custody at Monte dei Paschi di Siena.
2023 Business Plan approved by the Board of Directors of
The following table reports the share capital and share-
the Parent Company on November 19, 2018, containing
holders’ equity of the investments in subsidiaries, joint
forecasts for volumes, revenue, operating costs, capital
ventures, associates and other companies at December
expenditure, industrial and commercial organization and
31, 2018.
390
Annual Report 2018 Registered
office
Currency
Share capital
Shareholders’
equity
(millions of
euro)
Prior year
income/(loss)
(millions of euro)
Carrying
amount
(millions of
euro)
%
holding
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
USD
1,800,000,000
2,600,000,000
10,000,000
90,885,000
272,000,000
1,050,000
1,000,000
2,000,000
11,000,000
302,039
336,142,500
50,100,000
1,100,000
10,100,000
1,478,810,371
10,000
6,763,204,424
CLP 3,954,491,478,786
RON
RON
RON
RON
RON
RON
RUB
EUR
TRY
USD
EUR
RUB
382,158,580
280,285,560
271,635,250
37,004,350
140,000,000
200,000
35,371,898,370
60,000
3,500,000
842,086,000
250,000,000
2,760,000
4,318
4,657
152
304
6,136
488
8
28
7
2,067
16,918
449
22
9
1,746
1,798
7,710
4,622
480
325
1,026
152
98
3
589
258
(8)
757
800
8
111
613
1,507
75
(73)
237
(23)
794
(2)
(4)
801
956
15
1
(1)
99
-
1,017
478
18
18
16
3
(1)
-
97
9
(8)
91
(97)
65
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
25.0
100.0
51.8
61.9
51.0
51.0
78.0
78.0
51.0
100.0
56.4
100.0
100.0
-
50.0
49.5
4,316
6,331
110
1,194
6,469
523
9
30
11
1,313
13,713
505
16
22
599
1,798
2,822
2,522
421
261
952
330
208
15
402
252
-
-
490
41
7
42.7
23
Milan
Moscow
Milan
EUR
8,550,000
A) Subsidiaries
Enel Produzione SpA
e-distribuzione SpA
Servizio Elettrico Nazionale
SpA
Enel Global Trading SpA
Enel Green Power SpA
Enel X Srl
Rome
Rome
Rome
Rome
Rome
Rome
Enel Investment Holding BV
Amsterdam
Enelpower SpA
Enel Global Thermal
Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel Italia Srl
Enel Innovation Hubs Srl
Enel Global Infrastructure &
Networks Srl
Milan
Rome
Rome
Madrid
Rome
Rome
Rome
Enel Finance International NV
Amsterdam
Enel Holding Finance Srl
Enel Américas SA
Enel Chile SA
Rome
Santiago
Santiago
E-Distribuţie Banat SA
Timisoara
E-Distribuţie Dobrogea SA
Constanța
E-Distribuţie Muntenia SA
Bucharest
Enel Energie Muntenia SA
Bucharest
Enel Energia SA
Enel Romania SA
Enel Russia PJSC
Enel Insurance NV
Bucharest
Judetul Ilfov
Ekaterinburg
Amsterdam
Vektör Enerji Üretim AŞ
Istanbul
Enel Green Power Chile Ltda
Santiago
B) Joint ventures
OpEn Fiber SpA
RusEnergoSbyt LLC
C) Associates
CESI SpA (1)
D) Other companies
Empresa Propietaria de la
Red SA
Red Centroamericana de
Telecomunicaciones SA
Compañía de Transmisión del
Mercosur SA (1)
Elcogas SA
Idrosicilia SpA (1)
Panama
USD
58,500,000
118
Panama
Buenos
Aires
Puertollano
Milan
USD
2,700,000
-
ARS
EUR
EUR
14,012,000
809,690
22,520,000
(25)
(111)
51
15
(1)
(8)
(2)
4
11.1
11.1
-
4.3
1.0
(1) The figures for share capital, shareholders’ equity and net income refer to the financial statements at December 31, 2017.
17
-
-
-
-
391
Financial statements of Enel SpA
With regard to the investments held in the companies Enel
to an extent necessary to confirm the full recoverability
Green Power SpA, e-distribuzione SpA, E-Distribuţie Banat
of the value of the investments;
SA, E-Distribuţie Dobrogea SA, E-Distribuţie Muntenia SA,
> in the case of Enel Finance International NV, it is attribut-
Enel Energie Muntenia SA, Enel Energie SA, Enel Romania
able to the negative developments in the fair value of a
SA, RusEnergoSbyt LLC, Enel Global Infrastructure & Net-
number of items in shareholders’ equity.
works Srl, Enel X Srl, Enel Global Trading SpA, OpEn Fiber
SpA, and Enel Finance International NV, the carrying amount
It should also be noted that these shareholdings have passed
is deemed to be recoverable even if individually greater than
their related impairment tests.
shareholders’ equity at December 31, 2018, for each share-
holding. This circumstance is not felt to represent an impair-
Equity investments in other companies at December 31,
ment loss in respect of the investment but rather a tempo-
2018 are all related to unlisted companies. During the transi-
rary mismatch between the two amounts. More specifically:
tion to IFRS 9, the option of measuring these financial as-
sets at fair value thorugh other comprehensive income was
> for the companies Enel Green Power SpA, e-distribuzi-
applied.
one SpA, E-Distribuţie Banat SA, E-Distribuţie Dobrogea
For the investment in Empresa Propietaria de la Red, previ-
SA, E-Distribuţie Muntenia SA, Enel Energie Muntenia
ously measured at cost, the fair value was determined on
SA, Enel Energie SA, Enel Romania SA, RusEnergoSbyt
the basis of a reliable valuation of the significant balance
LLC, Enel Global Infrastructure & Networks Srl, Enel X
sheet items.
Srl, Enel Global Trading SpA, and OpEn Fiber SpA, the
In 2018, following the final liquidation report and the final
negative difference between the carrying amount of the
distribution plan, the liquidation procedure of the company
investments and their shareholders’ equity represented
Emittenti Titoli SpA was completed.
a trigger event, following which the value was deter-
The investment in Elcogas was completely written off in
mined by means of an impairment test of the equity val-
2014 and since January 1, 2015, the company, in which Enel
ue of the investments in consideration of their expected
has a stake of 4.3%, has been in liquidation. The profit par-
future cash flows. As a result of this test, a greater value
ticipation loan of €6 million granted in 2014 has also been
emerged that was not reflected in shareholders’ equity
written down to take account of accumulated losses.
Millions of euro
Equity investments in unlisted companies measured at FVOCI
Empresa Propietaria de la Red SA
Red Centroamericana de Telecomunicaciones SA
Compañía de Transmisión del Mercosur SA
Elcogas SA
Emittenti Titoli SpA in liquidation
Idrosicilia SpA
at Dec. 31, 2018
at Dec. 31, 2017
17
17
-
-
-
-
-
6
5
-
-
-
1
-
392
Annual Report 2018 14. Derivatives - €793 million, €92 million, €1,395 million, €355
million
Millions of euro
Non-current
Current
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
Derivative financial assets
Derivative financial liabilities
793
1,395
1,456
2,270
92
355
111
176
For more details about the nature, recognition and classi-
see notes 31 “Financial instruments” and 33 “Derivatives
fication of derivative financial assets and liabilities, please
and hedge accounting”.
15. Other non-current financial assets - €136 million
The aggregate is composed of the following.
Millions of euro
Prepaid financial expense
Other non-current financial assets
included in debt
Total
Notes
at Dec. 31, 2018
at Dec. 31, 2017
Change
15.1
8
128
136
10
6
16
(2)
122
120
Prepaid financial expense essentially refers to the remain-
national, and Mediobanca following the closure of the exist-
ing portion of the transaction costs on the €10 billion revolv-
ing line. The item reports the non-current portion of those
ing credit line, established on December 18, 2017, and with
costs, and their reversal through profit or loss depends on
a five-year duration, between Enel SpA, Enel Finance Inter-
the type of fee involved and the maturity of the credit line.
15.1 Other non-current financial assets included in debt - €128 million
Millions of euro
Financial receivables
Other financial receivables
Total
Notes
31.1.1
at Dec. 31, 2018
at Dec. 31, 2017
Change
125
3
128
-
6
6
125
(3)
122
Other non-current financial assets included in debt at De-
carry out the investments provided for in the Business Plan
cember 31, 2018, amounted to €128 million, an increase of
in relation to the national project for the development of an
€122 million compared with the previous year.
ultra-broadband fiber-optic network.
This change was essentially due to the disbursement of a
Other financial receivables amounted to €3 million and are
loan of €125 million to the joint venture OpEn Fiber SpA,
entirely accounted for by loans to employees. They de-
in order to provide the company with the funds needed to
creased by €3 million compared with the previous year.
393
Financial statements of Enel SpA 16. Other non-current assets - €134 million
This item breaks down as follows.
Millions of euro
Tax receivables
Receivable from subsidiaries for assumption of
supplementary pension plan liabilities
Total other non-current assets
at Dec. 31, 2018
at Dec. 31, 2017
Change
9
125
134
9
139
148
-
(14)
(14)
Tax receivables regard the tax credit in respect of the claim
companies of their share of the supplementary pension
for reimbursement for excess income tax paid as a result of
plan. The terms of the agreement state that the Group
not partially deducting IRAP in calculating taxable income for
companies concerned have to reimburse the costs of extin-
IRES purposes. These claims were submitted by Enel SpA
guishing defined benefit obligations of the Parent Company,
on its own behalf for 2003 and on its own behalf and as the
which are recognized under employee benefits.
consolidating company for 2004-2011.
On the basis of actuarial forecasts made using current as-
Receivable from subsidiaries for assumption of supplemen-
ceivables from subsidiaries for assumption of supplemen-
tary pension plan liabilities, in the amount of €125 million,
tary pension plan liabilities came to €63 million (€76 million
refers to receivables in respect of the assumption by Group
at December 31, 2017).
sumptions, the portion due beyond five years of these re-
17. Trade receivables - €191 million
The item breaks down as follows.
Millions of euro
Trade receivables:
- due from subsidiaries
- due from non-Group customers
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
166
25
191
208
29
237
(42)
(4)
(46)
Trade receivables, which totaled €191 million, consist of
million is related both to the trend in revenue connected
receivables due from subsidiaries (€166 million) and non-
to these services and to the reorganization of the Global
Group customers (€25 million).
Structures, which led to a reduction in revenue from techni-
Trade receivables due from subsidiaries primarily regard the
cal services.
management and coordination services and other activities
Receivables from non-Group customers concern services
performed by Enel SpA on behalf of Group companies.
of various nature and totaled €25 million, which, compared
Compared with December 31, 2017, the decrease of €42
with December 31, 2017, is a decrease of €4 million.
394
Annual Report 2018 Trade receivables due from subsidiaries break down as follows:
Millions of euro
Subsidiaries
Enel Iberia Srl
Enel Produzione SpA
e-distribuzione SpA
Enel Green Power SpA
Enel Américas SA
Endesa SA
Servizio Elettrico Nazionale SpA
Enel Global Trading SpA
Enel Energia SpA
Enel Italia Srl
Enel Green Power North America Inc.
Enel X Srl
Enel Russia PJSC
Endesa Distribución Eléctrica SL
Enel Global Thermal Generation Srl
Endesa Generación SA
Endesa Energía SA
Enel Romania SA
Enel Brasil SA
Enel Distribución Perú SAA
Enel Generación Perú SAA
Unión Eléctrica de Canarias Generación SAU
Other
Total
Trade receivables by geographical area are shown below.
Millions of euro
Italy
EU
Non-EU Europe
Other
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
1
3
10
9
4
3
2
-
6
16
1
-
11
21
1
(2)
2
5
24
5
5
(1)
40
166
1
13
33
3
3
4
1
1
1
18
1
2
16
27
-
10
4
4
25
6
6
3
26
208
-
(10)
(23)
6
1
(1)
1
(1)
5
(2)
-
(2)
(5)
(6)
-
(12)
(2)
1
(1)
(1)
(1)
(4)
14
(42)
at Dec. 31, 2018
at Dec. 31, 2017
Change
54
68
12
57
191
77
97
17
46
237
(23)
(29)
(5)
11
(46)
395
Financial statements of Enel SpA 18. Income tax receivables - €165 million
Income tax receivables at December 31, 2018 amounted
ceivable with respect to the consolidated IRES return for
to €165 million and essentially regard the Company’s IRES
2018 (€56 million).
credit for estimated current taxes (€99 million) and the re-
19. Other current financial assets - €1,860 million
This item can be broken down as follows.
Millions of euro
Other current financial assets included in net financial debt
19.1
Other sundry current financial assets
Total
1,579
281
1,860
4,085
265
4,350
Notes
at Dec. 31, 2018
at Dec. 31, 2017
Change
(2,506)
16
(2,490)
19.1 Other current financial assets included in debt - €1,579 million
Millions of euro
Notes
at Dec. 31, 2018
at Dec. 31, 2017
Change
Financial receivables due from Group companies:
- short-term financial receivables (intercompany current
accounts)
- current portion of receivables for assumption of loans
Financial receivables due from others:
- current portion of long-term financial receivables
- other financial receivables
31.1.1
31.1.1
- cash collateral for margin agreements on OTC derivatives
31.1.1
Total
313
-
1
12
1,253
1,579
1,984
27
1
(1)
2,074
4,085
(1,671)
(27)
-
13
(821)
(2,506)
Other current financial assets included in debt, amounting
Group companies on the intercompany current account
to €1,579 million at December 31, 2018, refer to financial
(€1,671 million).
receivables due from Group companies (€313 million) and
Financial receivables due from others decreased by €808
financial receivables due from others (€1,266 million).
million, essentially attributable to the decrease in cash col-
Financial receivables due from Group companies decreased
lateral paid to counterparties for OTC derivatives on interest
by €1,698 million compared with December 31, 2017, due
rates and exchange rates.
to the decline in short-term financial receivables due from
20. Other current assets - €268 million
At December 31, 2018, the item broke down as follows.
Millions of euro
Tax receivables
Other receivables due from Group companies
Other receivables
Total
396
at Dec. 31, 2018
at Dec. 31, 2017
Change
173
74
21
268
10
435
7
452
163
(361)
14
(184)
Annual Report 2018 Other current assets decreased by a total of €184 million as
of participating in the Group VAT mechanism (€3 million).
compared with December 31, 2017.
The decrease of €361 million compared with December 31,
Tax receivables amounted to €173 million, primarily includ-
2017, was essentially due to the lower VAT receivables in
ing the remaining receivable for prepaid VAT for 2018 in the
respect of participating in the Group VAT mechanism (€345
amount of €168 million and receivables with respect to
million) and the reduction in intragroup receivables related
prior-year income taxes of €4 million.
to the Italian IRES tax consolidation (€28 million), partially
Other receivables due from Group companies essentially
offset by the increase in receivable from subsidiaries (€9
regard receivables for the interim dividend approved in
million) and the increase in interim dividends (€4 million).
2018 by the subsidiaries Enel Chile SA and Enel Américas
Other receivables, in the amount of €21 million at Decem-
SA (€24 million and €33 million, respectively), which was
ber 31, 2018, increased by €14 million compared with 2017
collected in January 2019, IRES receivables in respect of
(€7 million), €8 million of which due to recognition of the
the Group companies participating in the consolidated taxa-
installment, relating to 2019, of the contribution to the Enel
tion mechanism (€5 million), and VAT receivables in respect
employee recreational association (Arca).
21. Cash and cash equivalents - €2,007 million
Cash and cash equivalents break down as follows.
Millions of euro
Bank and post office deposits
Cash and cash equivalents on hand
Total
at Dec. 31, 2018
at Dec. 31, 2017
2,007
-
2,007
2,489
-
2,489
Change
(482)
-
(482)
Cash and cash equivalents amounted to €2,007 million,
2017 as approved by the shareholders of Enel SpA on May
a decrease of €482 million compared with December 31,
24, 2018, as well as normal operations connected with the
2017, mainly due to the impact of the redemption and is-
central treasury function performed by the Parent Com-
sue of a number of bonds, the payment of dividends during
pany.
Liabilities and equity
22. Shareholders’ equity - €27,943 million
Shareholders’ equity amounted to €27,943 million, up
lion), as approved by the shareholders on May 24, 2018,
€707 million compared with December 31, 2017. The
and the interim dividend for 2018 approved by the Board of
change is mainly attributable to net income for the year
Directors on November 6, 2018, and paid as from January
(€3,478 million), the distribution of the dividend for 2017 in
23, 2019 (€0.14 per share, for a total of €1,423 million).
the amount of €0.132 per share (for a total of €1,342 mil-
Share capital - €10,167 million
At December 31, 2018, the share capital of Enel SpA
and the notices submitted to CONSOB and received by the
amounted to €10,166,679,946 fully subscribed and paid
Company pursuant to Article 120 of Legislative Decree 58
up, represented by that same number of ordinary shares
of February 24, 1998, as well as other available informa-
with a par value of €1.00 each. This figure for Enel SpA
tion, the only shareholder with an interest of greater than
share capital is therefore unchanged compared with the
3% in the Company’s share capital was the Ministry for the
€10,166,679,946 of December 31, 2017.
Economy and Finance (with a 23.585% stake).
At December 31, 2018, based on the shareholders register
397
Financial statements of Enel SpA Other reserves - €11,464 million
includes €29 million in respect of the stock option reserve
and €20 million for other reserves.
Share premium reserve -
€7,496 million
The share premium reserve as at December 31, 2018 is
unchanged compared with the previous year.
Legal reserve - €2,034 million
The legal reserve, equal to 20.0% of share capital, is un-
changed compared with the previous year.
Reserve pursuant to Law 292/1993 -
€2,215 million
The reserve shows the remaining portion of the value ad-
justments carried out when Enel was transformed from a
Reserve from measurement of financial
instruments - €(328) million
At December 31, 2018, the item was represented by the
reserve from measurement of cash flow hedge derivatives
and costs of hedging with a negative value of €328 million
(net of the positive tax effect of €103 million).
Reserves from measurement of financial
assets at FVOCI - €11 million
At December 31, 2018, the reserves from measurement
of financial assets at FVOCI amounted to €11 million due
to the fair value measurement of Empresa Propietaria de
public entity to a joint-stock company.
la Red SA.
In the case of a distribution of this reserve, the tax treat-
ment for capital reserves as defined by Article 47 of the
Uniform Income Tax Code shall apply.
Other sundry reserves - €68 million
Other reserves include €19 million related to the reserve for
capital grants, which reflects 50% of the grants received
from Italian public entities and EU bodies in application of
related laws for new works (pursuant to Article 55 of Presi-
dential Decree 917/1986), which is recognized in equity in
order to take advantage of tax deferment benefits. It also
Reserve from remeasurement of net
employee benefit plan liabilities/(assets)
- €(32) million
At December 31, 2018, the employee benefit plan reserve
amounted to €32 million (net of the positive tax effect of
€8 million). The reserve includes actuarial gains and losses
recognized directly in equity, as the corridor approach is no
longer permitted under the new version of “IAS 19 - Em-
ployee benefits”.
398
Annual Report 2018 The table below provides a breakdown of changes in the
the reserve from measurement of defined benefit plan li-
reserve from measurement of financial instruments and
abilities/assets in 2017 and 2018.
Gross gains/
(losses)
recognized in
equity for the
year
Gross
released
to income
statement
Taxes
Gross gains/
(losses)
recognized in
equity for the
year
Gross
released
to income
statement
Taxes
at Jan. 1,
2017
at Dec. 31,
2017
at Dec. 31,
2018
(258)
(249)
232
7
(268)
1
(45)
37
(275)
(118)
-
48
-
(27)
(7)
-
-
-
(403)
(208)
232
-
-
2
9
(70)
-
17
11
(32)
-
-
-
-
-
-
-
(53)
11
(32)
(370)
29
(45)
37
(349)
Millions of euro
Reserves from
measurement of
cash flow hedge
financial instruments
Reserves from
measurement of
costs of hedging
financial instruments
Reserves for
financial assets at
FVOCI
Reserve from
remeasurement
of net employee
benefit plan
liabilities/(assets)
Gains/(Losses)
recognized directly
in equity
Retained earnings/(Loss carried forward) - €4,279 million
For 2018, the item shows a decrease of €145 million, attrib-
amount of €142 million for the distribution of dividends to
utable to the resolution of the Shareholders’ Meeting of May
shareholders and the allocation to retained earnings of part
24, 2018, which provided for the use of this reserve in the
of the net income for 2017, equal to €3 million.
Net income for the year - €2,033 million
Net income for 2018, net of the interim dividend for 2018 of €0.14 per share (for a total of €1,423 million), amounted to
€2,033 million.
399
Financial statements of Enel SpA The table below shows the availability of shareholders’ equity for distribution.
Millions of euro
Share capital
Capital reserves:
- share premium reserve
Income reserves:
- legal reserve
- reserve pursuant to Law 292/1993
- reserve from measurement of financial instruments
- reserves for financial assets at FVOCI
- reserve for capital grants
- stock option reserve
- reserve from remeasurement of employee benefit plan
liabilities
- other
Retained earnings/(Loss carried forward)
Total
of which amount available for distribution
at Dec. 31, 2018
Possible uses
Amount available
10,167
7,496
2,034
2,215
(328)
11
19
29
(32)
20
4,279
25,910
ABC
B
ABC
ABC
ABC
ABC
ABC
7,496
2,215
19
29 (1) (2)
20
4,279
14,058
14,055
A: for capital increases.
B: to cover losses.
C: for distribution to shareholders.
(1) Regards lapsed options.
(2) Not distributable in the amount of €3 million regarding options granted by the Parent Company to employees of subsidiaries that have lapsed.
There are no restrictions on the distribution of the reserves
Enel’s goals in capital management are focused on the cre-
pursuant to Article 2426, paragraph 1(5), of the Italian Civil
ation of value for shareholders, safeguarding the interests of
Code since there are no unamortized start-up and expansion
stakeholders and ensuring business continuity, as well as on
costs or research and development costs, or departures pur-
maintaining sufficient capitalization to ensure cost-effective
suant to Article 2423, paragraph 4, of the Civil Code.
access to outside sources of financing, so as to adequately
It should be noted that, in the three previous years, the avail-
support growth in the Group’s business.
able reserve denominated “Retained earnings/(Loss carried
forward) has been used in the amount of €1,159 million for
the distribution of dividends to shareholders.
400
Annual Report 2018 22.1 Dividends
The table below shows the dividends paid by the Company in 2017 and 2018.
Amount distributed (in millions of euro)
Net dividend per share (in euro)
Dividends paid in 2017
Dividends for 2016
Interim dividend for 2017 (1)
Special dividends
Total dividends paid in 2017
Dividends paid in 2018
Dividends for 2017
Interim dividend for 2018 (2)
Special dividends
Total dividends paid in 2018
1,830
-
-
1,830
2,410
-
-
2,410
0.18
-
-
0.18
0.237
-
-
0.237
(1) Approved by the Board of Directors on November 8, 2017, and paid as from January 24, 2018 (interim dividend per share of €0.105 for a total of €1,068
million).
(2) Approved by the Board of Directors on November 6, 2018, and paid as from January 23, 2019 (interim dividend of €0.14 per share for a total of €1,423
million).
The dividend for 2017, equal to €0.28 per share, amounting
call. These financial statements do not reflect the effects
to a total of €2,847 million (of which €0.14 per share, for a
of the distribution of this dividend for 2018 to shareholders,
total of €1,423 million already paid as an interim dividend as
with the exception of liabilities due to shareholders for the
from January 23, 2019), has been proposed to and resolved
2018 interim dividend approved by the Board of Directors
by the Shareholders’ Meeting of May 16, 2019, at a single
on November 6, 2018, and paid as from January 23, 2019.
22.2 Capital management
The Company’s objectives for managing capital comprise
In this context, the Company manages its capital structure
safeguarding the business as a going concern, creating
and adjusts that structure when changes in economic con-
value for stakeholders and supporting the development of
ditions so require. There were no substantive changes in
the Group. In particular, the Group seeks to maintain an
objectives, policies or processes in 2018.
adequate capitalization that enables it to achieve a satisfac-
To this end, the Company constantly monitors develop-
tory return for shareholders and ensure access to external
ments in the level of its debt in relation to equity. The situ-
sources of financing, in part by maintaining an adequate
ation at December 31, 2018 and 2017 is summarized in the
rating.
Millions of euro
Non-current financial position
Net current financial position
Non-current financial receivables and long-term securities
Net financial debt
Shareholders’ equity
Debt/equity ratio
following table.
at Dec. 31, 2018
at Dec. 31, 2017
(13,397)
(2,221)
128
(15,490)
27,943
(0.55)
(10,780)
(2,477)
6
(13,251)
27,236
(0.49)
Change
(2,617)
256
122
(2,239)
707
(0.06)
401
Financial statements of Enel SpA 23. Borrowings - €13,397 million, €806 million, €5,001 million
Millions of euro
Non-current
Current
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
Long-term borrowings
Short-term borrowings
13,397
-
10,780
-
806
5,001
3,654
5,397
For more details about the nature, recognition and classification of borrowings, please see note 31 “Financial instruments”.
24. Employee benefits - €231 million
The Company provides its employees with a variety
ment benefits under defined benefit plans and other long-
of benefits, including termination benefits, additional
term benefits to which employees are entitled by law,
months’ pay, indemnities in lieu of notice, loyalty bonuses
by contract, or under other forms of employee incentive
for achievement of seniority milestones, supplementary
schemes.
pension plans, supplementary healthcare plans, additional
These obligations, in accordance with IAS 19, were deter-
indemnity for FOPEN pension contributions, FOPEN pen-
mined using the projected unit credit method.
sion contributions in excess of deductible amount and per-
The following table reports the change during the year in
sonnel incentive plans.
the defined benefit obligation, as well as a reconciliation
of the defined benefit obligation with the obligation recog-
The item includes accruals made to cover post-employ-
nized at December 31, 2018, and December 31, 2017.
Millions of euro
2018
2017
Pension
benefits
Health
insurance
Other
benefits
Total
Pension
benefits
Health
insurance
Other
benefits
Total
CHANGES IN ACTUARIAL OBLIGATION
Actuarial obligation at January 1
200
45
Current service cost
Interest expense
Actuarial (gains)/losses arising from changes in
demographic assumptions
Actuarial (gains)/losses arising from changes in
financial assumptions
Experience adjustments
Past service cost
(Gains)/Losses arising from settlements
Employer contributions
Contributions from plan participants
Payments for closures
Other payments
Other changes
Actuarial obligation at December 31
-
3
-
-
-
-
-
-
-
-
(23)
(6)
174
1
1
-
-
(1)
-
-
-
-
-
(2)
(4)
40
402
273
222
40
28
6
-
-
-
-
-
-
-
-
-
7
4
-
-
(1)
-
-
-
-
-
(10)
(7)
17
(35)
(17)
231
-
3
-
(1)
2
-
-
-
-
-
(25)
(1)
200
2
1
-
-
6
-
-
-
-
-
(2)
(2)
45
24
20
-
-
-
-
-
-
-
-
-
286
22
4
-
(1)
8
-
-
-
-
-
(14)
(41)
(2)
28
(5)
273
Annual Report 2018 Millions of euro
(Gains)/Losses charged to profit or loss
Service cost
Interest expense
(Gains)/Losses arising from settlements
Total
Millions of euro
Change in (gains)/losses in OCI
Actuarial (gains)/losses on defined benefit plans
Other changes
Total
2018
7
4
-
11
2018
-
-
-
2017
22
4
-
26
2017
7
-
7
The current service cost for employee benefits in 2018
The main actuarial assumptions used to calculate the liabili-
amounted to €7 million, recognized under personnel costs
ties arising from employee benefits, which are consistent
(€22 million in 2017), while the interest expense from the
with those used the previous year, are set out below.
accretion of the liability amounted to €4 million, which is in
line with 2017.
Discount rate
Rate of wage increases
Rate of increase in healthcare costs
2018
0.25%-1.50%
1.50%-3.50%
2.50%
2017
0.20%-1.50%
1.50%-3.50%
2.50%
The following table reports the outcome of a sensitivity
at the end of the year in the actuarial assumptions used in
analysis that demonstrates the effects on the liability for
estimating the obligation.
healthcare plans as a result of changes reasonably possible
Millions of euro
Healthcare
plans: ASEM
An increase
of 0.5% in
discount rate
A decrease
of 0.5% in
discount rate
An increase of
0.5% in inflation
rate
An increase
of 0.5% in
remuneration
An increase of
0.5% in pensions
currently being
paid
An increase of
1% in healthcare
costs
An increase of
1 year in life
expectancy of
active and retired
employees
(2)
2
(1)
-
-
5
38
25. Provisions for risks and charges - €45 million
Provisions for risks and charges cover probable potential
In determining the balance of the provision, we have taken
liabilities that could arise from legal proceedings and other
account of both the charges that are expected to result
disputes, without considering the effects of rulings that are
from court judgments and other dispute settlements for
expected to be in the Company’s favor and those for which
the year and an update of the estimates for positions aris-
any charge cannot be quantified with reasonable certainty.
ing in previous years.
403
Financial statements of Enel SpA The following table shows changes in provisions for risks and charges.
Taken to profit or loss
Millions of euro
Accruals
Reversals
Utilization
at Dec. 31, 2017
Other
changes
Total
at Dec. 31, 2018
of which
current portion
Provision for litigation, risks and
other charges:
- litigation
- other
Total
Provision for early retirement
incentives
TOTAL
11
11
22
21
43
15
-
15
6
21
(5)
-
(5)
-
(5)
(3)
(5)
(8)
(5)
(13)
-
-
-
(1)
(1)
18
6
24
21
45
15
3
18
4
22
The increase in the provision for litigation, in the amount
The decrease of €5 million in other provisions is due to
of €7 million, reflects the allocation for the year of €15
utilizations for the year.
million, partially offset by reversals to profit or loss and
The provision for early retirement incentives, in the
uses resulting from the settlement of a number of dis-
amount of €21 million, is unchanged compared with the
putes for a total of €8 million.
previous year.
This provision refers to labor disputes (€4 million) and
other disputes of €14 million.
26. Other non-current liabilities - €12 million
Other non-current liabilities amounted to €12 million (€12
ing part of IRAP in computing taxable income for IRES pur-
million at December 31, 2017). They essentially regard the
poses. The liability in respect of the subsidiaries is balanced
debt towards Group companies that initially arose following
by the recognition of non-current tax receivables (note 16).
Enel SpA’s application (submitted in its capacity as the con-
The amount of the liability at December 31, 2018 reflects
solidating company) for reimbursement for 2004-2011 of
the updating of the interest accrued on the residual receiv-
the additional income taxes paid as a result of not deduct-
able.
27. Trade payables - €82 million
Millions of euro
Trade payables:
- due to third parties
- due to Group companies
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
41
41
82
66
71
137
(25)
(30)
(55)
Trade payables mainly include payables for the provision of
at December 31, 2017) and payables due to Group compa-
services and other activities performed in 2018, and com-
nies of €41 million (€71 million at December 31, 2017).
prise payables due to third parties of €41 million (€66 million
404
Annual Report 2018 Trade payables due to subsidiaries at December 31, 2018 break down as follows.
Millions of euro
Subsidiaries
Enel Produzione SpA
e-distribuzione SpA
Enel Ingegneria e Ricerca SpA
Servizio Elettrico Nazionale SpA
Enel Global Trading SpA
Enel Green Power SpA
Enel Italia Srl
Enel Iberia Srl
Enel Global Infrastructure &
Networks Srl
Enel X Srl
Enel Innovation Hubs Srl
Enel.Factor SpA
Endesa SA
Enel Russia PJSC
Other
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
1
-
-
-
1
-
18
4
3
1
2
-
3
-
8
41
1
1
-
-
1
1
35
21
-
-
-
2
3
-
6
71
-
(1)
-
-
-
(1)
(17)
(17)
3
1
2
(2)
-
-
2
(30)
Trade payables break down by geographical area as follows.
at Dec. 31, 2018
at Dec. 31, 2017
Change
Millions of euro
Suppliers
Italy
EU
Non-EU Europe
Other
Total
59
17
1
5
82
99
31
4
3
137
28. Other current financial liabilities - €276 million
Other current financial liabilities mainly regard interest expense accrued on debt outstanding at year end.
Millions of euro
Deferred financial liabilities
Other items
Total
Notes
31.2.1
31.2.1
at Dec. 31, 2018
at Dec. 31, 2017
259
17
276
450
15
465
(40)
(14)
(3)
2
(55)
Change
(191)
2
(189)
405
Financial statements of Enel SpA More specifically, deferred financial liabilities consist of in-
the following year, comprising both financial expense on
terest expense accrued on financial debt, while the other
hedge derivatives on commodity exchange rates and inter-
items essentially include amounts due to Group companies
est expense on intercompany current accounts.
that accrued as of December 31, 2018, but to be settled in
29. Net financial position and long-term financial receivables and
securities - €15,490 million
The following table shows the net financial position and long-term financial receivables and securities on the basis of the
items on the balance sheet.
Millions of euro
Long-term borrowings
Short-term borrowings
Current portion of long-term borrowings
Non-current financial assets included in
debt
Current financial assets included in debt
Cash and cash equivalents
Total
Notes
at Dec. 31, 2018
at Dec. 31, 2017
23
23
23
15.1
19.1
21
13,397
5,001
806
128
1,579
2,007
15,490
10,780
5,397
3,654
6
4,085
2,489
13,251
Change
2,617
(396)
(2,848)
122
(2,506)
(482)
2,239
Pursuant to the CONSOB instructions of July 28, 2006, the
ber 31, 2018, reconciled with net financial debt as reported
following table reports the net financial position at Decem-
in the Report on operations.
Millions of euro
Bank and post office deposits
Liquidity
Short-term portion of long-term financial receivables
Current financial receivables
Short-term bank debt
Short-term portion of long-term bank debt
Other short-term financial payables
Short-term financial debt
Net short-term financial position
Long-term bank debt
Bonds
Other long-term debt
Long-term borrowings
Non-current financial position
NET FINANCIAL POSITION as per CONSOB
instructions
Long-term financial receivables
NET FINANCIAL DEBT
406
at Dec. 31, 2018
at Dec. 31, 2017
Change
of which with
related parties
of which with
related parties
2,007
2,007
1
1,579
(45)
(806)
(4,956)
(5,807)
(2,221)
(1,048)
(8,208)
(4,141)
(13,397)
(13,397)
(15,618)
128
(15,490)
2,489
2,489
1
4,085
(245)
(3,654)
(5,152)
(9,051)
(2,477)
(1,039)
(8,541)
(1,200)
(10,780)
(10,780)
(13,257)
6
(13,251)
(482)
(482)
-
2,011
(2,506)
(4,896)
-
200
2,848
196
3,244
256
(9)
333
(2,941)
(2,617)
(2,617)
(2,361)
122
(2,239)
313
(4,716)
125
Annual Report 2018 30. Other current liabilities - €2,029 million
Other current liabilities mainly concern payables due to tax
interim dividend for 2018 approved by the Enel SpA Board
authorities and to the Group companies participating in the
of Directors on November 6, 2018, and paid as from Janu-
consolidated IRES taxation mechanism and the Group VAT
ary 23, 2019 (€1,423 million in 2018 and €1,068 million in
system, as well as the liability due to shareholders for the
2017).
Millions of euro
Tax payables
Payables due to Group companies
Payables due to employees,
recreational/assistance associations
Payables due to social security
institutions
Payables due to customers for
security deposits and reimbursements
Other
Total
at Dec. 31, 2018
at Dec. 31, 2017
245
317
18
7
2
1,440
2,029
502
428
27
12
2
1,094
2,065
Change
(257)
(111)
(9)
(5)
-
346
(36)
Tax payables amounted to €245 million and essentially re-
respect of the IRES liability under the consolidated taxation
gard amounts due to tax authorities for consolidated IRES
mechanism (€175 million at December 31, 2017) and €173
(€240 million). The decrease compared with the previous
million in respect of Group VAT (€252 million at December
year amounted to €257 million, mainly due to the decrease
31, 2017). The decrease of €111 million reflects develop-
in the debtor position with tax authorities for consolidated
ments in the debtor positions noted above.
IRES (€165 million). For the previous year, this item includ-
The item “Other”, equal to €1,440 million, includes €1,423
ed the amount payable to tax authorities for Group VAT for
million (€1,068 million at December 31, 2017) for the liabil-
the 4th Quarter of 2017, in the amount of €90 million.
ity due to shareholders for the interim dividend to be paid
Payables due to Group companies amounted to €317 mil-
as from January 23, 2019 (€0.14 per share for 2018 and
lion. They essentially consist of €139 million in payables in
€0.105 per share for 2017).
407
Financial statements of Enel SpA 31. Financial instruments
31.1 Financial assets by category
The following table shows the carrying amount for each cat-
arately hedging derivatives and derivatives measured at fair
egory of financial assets provided by IFRS 9, broken down
value through profit or loss.
into current and non-current financial assets, showing sep-
Millions of euro
Non-current
Current
Notes
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
Financial assets at amortized cost
Financial assets at FVOCI
Equity investments in other companies
Total financial assets at FVOCI
Financial assets at FVTPL
Derivative financial assets at FVTPL
Financial assets designated at fair value upon
initial recognition (fair value option)
Total financial assets at FVTPL
Derivative financial assets designated as
hedging instruments
Cash flow hedge derivatives
Fair value hedge derivatives
Total derivative financial assets designated as
hedging instruments
TOTAL
31.1.1
31.1.2
33
33
33
128
-
17
17
325
-
325
468
-
468
938
6
-
-
-
940
940
501
15
516
1,462
4,050
7,018
-
-
-
78
-
78
14
-
14
-
-
-
111
111
-
-
-
4,142
7,129
For more details on the recognition and classification of current and non-current derivative financial assets, please see
note 33 “Derivatives and hedge accounting”.
31.1.1 Financial assets measured at amortized cost
The following table shows financial assets measured at amortized cost by nature, broken down into current and non-
current financial assets.
Millions of euro
Non-current
Current
Notes
at Dec. 31,
2018
at Dec. 31,
2017
Cash and cash equivalents
Trade receivables
Financial receivables due from Group companies
Receivables on intercompany current accounts
Current portion of long-term financial receivables
19.1
Other financial receivables
Total financial receivables due from Group companies
Financial receivables due from others
-
-
-
-
-
-
Financial receivables
15.1
125
Current portion of long-term financial receivables
Cash collateral for margin agreements on OTC derivatives
Other financial receivables
Total financial receivables due from others
Other receivables
TOTAL
408
-
-
3
128
-
128
-
-
-
-
-
-
-
-
-
6
6
-
6
Notes
21
17
19.1
19.1
at Dec. 31,
2018
at Dec. 31,
2017
2,007
191
313
-
209
522
-
1
1,253
18
1,272
58
4,050
2,489
237
1,984
27
153
2,164
-
1
2,074
-
2,075
53
7,018
Annual Report 2018 The primary changes compared with 2017 regarded:
crease in receivables on the intercompany current ac-
> a decrease of €482 million in cash and cash equivalents,
count held with Group companies (€1,671 million);
essentially attributable to the redemption and repurchase
> a total decrease of €681 million in financial receivables
of a number of bonds, the payment of dividends for 2017
due from others, mainly as a result of a decrease in
and the normal central treasury functions performed by
cash collateral paid to counterparties for OTC derivatives
Enel SpA;
transactions on interest rates and exchange rates (€821
> a total decrease of €1,642 million in financial receivables
million).
due from Group companies, largely reflecting the de-
Impairment of financial assets
at amortized cost
Financial assets measured at amortized cost at Decem-
The expected credit loss (ECL), determined considering
probability of default (PD), loss given default (LGD), and
exposure at default (EAD), is the difference between all
ber 31, 2018 amounted to €4,178 million (€7,024 million at
contractual cash flows that are due in accordance with the
December 31, 2017) and are recognized net of allowances
contract and all cash flows that are expected to be received
for expected credit losses, which totaled €12 million at De-
(i.e., all shortfalls) discounted at the original effective inter-
cember 31, 2018, compared with a balance of €5 million at
est rate.
the end of previous year.
The assessment of the increase in credit risk may be per-
The Company mainly has the following types of financial
formed on:
assets measured at amortized cost subject to impairment:
> an individual basis, if the receivables have been individu-
> cash and cash equivalents;
> trade receivables;
> financial receivables;
> other receivables.
ally identified for impairment based on available informa-
tion;
> a collective basis on other cases.
No signficant expected loss was found in the impairment
The following table shows the expected losses for each
testing of cash and cash equivalents and other receivables.
class of financial assets measured at amortized cost.
Millions of euro
at Dec. 31, 2018
at Jan. 1, 2018
Gross carrying
amount
Allowance
for expected
losses
Cash and cash equivalents
Trade receivables
Financial receivables due from Group companies
Financial receivables due from others
Other receivables
Total
2,007
196
523
1,406
58
4,190
-
5
1
6
-
12
Gross carrying
amount
Allowance
for expected
losses
2,489
237
2,164
2,086
53
7,029
-
5
1
6
-
12
Total
2,007
191
522
1,400
58
4,178
Total
2,489
232
2,163
2,080
53
7,017
409
Financial statements of Enel SpA Financial receivables
Millions of euro
At Jan. 1, 2017 - IAS 39
Impairment losses
Utilization
Reversals
Other
Total at Dec. 31, 2017 - IAS 39
Application of IFRS 9
At Jan. 1, 2018 - IFRS 9
Impairment losses
Utilization
Reversals
Other
Total at Dec. 31, 2018 - IFRS 9
Trade receivables
Millions of euro
At Jan. 1, 2017 - IAS 39
Impairment losses
Utilization
Reversals
Other
Total at Dec. 31, 2017 - IAS 39
Application of IFRS 9
At Jan. 1, 2018 - IFRS 9
Impairment losses
Utilization
Reversals
Other
Total at Dec. 31, 2018 - IFRS 9
Allowance for expected losses
Individual
Collective
Total
5
-
-
-
5
2
7
-
-
-
-
7
-
-
-
-
-
-
-
-
-
-
-
-
5
-
-
-
5
2
7
-
-
-
-
7
Allowance for expected losses
Individual
Collective
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5
5
-
-
-
-
5
-
-
-
-
-
5
5
-
-
-
-
5
31.1.2 Financial assets at fair value through other comprehensive income (FVOCI)
This category mainly includes equity investments in unlist-
Equity investments in other companies, in the amount of
ed companies irrevocably designated as such at the time
€17 million, essentially concern the investment held by
of initial recognition.
Enel SpA in the company Empresa Propietaria de la Red
At December 31, 2017, investments in other companies
SA (€17 million).
were recognized among financial assets available for sale
At December 31, 2018, the fair value of the investment
in accordance with IAS 39 and were measured at cost.
was determined on the basis of a reliable valuation of the
During the transition to IFRS 9, the option of measuring
significant items of the balance sheet.
these financial assets at fair value through other compre-
hensive income was applied.
410
Annual Report 2018 31.2 Financial liabilities by category
The following table shows the carrying amount for each
ing separately hedging derivatives and derivatives mea-
category of financial liabilities provided by IFRS 9, broken
sured at fair value through profit or loss.
down into current and non-current financial liabilities, show-
Millions of euro
Non-current
Current
Financial liabilities at amortized cost
Financial liabilities at fair value through
profit or loss
Derivative liabilities at FVTPL
Total
Derivative liabilities designated as hedging
instruments
Cash flow hedge derivatives
Total
TOTAL
Notes
31.2.1
33
33
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2017
13,397
10,780
6,165
9,653
324
324
1,071
1,071
14,792
943
943
1,327
1,327
13,050
134
134
221
221
6,520
176
176
-
-
9,829
For more details on the recognition and classification of current and non-current derivative financial liabilities, please see
note 33 “Derivatives and hedge accounting”.
For more details about fair value measurement, please see note 34 “Fair value measurement”.
31.2.1 Financial liabilities measured at amortized cost
The following table shows financial liabilities at amortized cost by nature, broken down into current and non-current finan-
cial liabilities.
Millions of euro
Long-term borrowings
Short-term borrowings
Trade payables
Other current financial liabilities
Total
Notes
23
Non-current
Current
at Dec. 31,
2018
at Dec. 31,
2017
Notes
at Dec. 31,
2018
at Dec. 31,
2017
13,397
10,780
-
-
-
-
-
-
23
27
28
806
5,001
82
276
3,654
5,397
137
465
13,397
10,780
6,165
9,653
411
Financial statements of Enel SpA Borrowings
Long-term borrowings (including the portion falling
due within 12 months) - €14,203 million
amounts and fair values of long-term borrowings at De-
cember 31, 2018, including the portion falling due within 12
months, grouped by type of borrowing and type of interest
Long-term borrowings, which refer to bonds, bank bor-
rate. For listed debt instruments, the fair value is given by
rowings and loans from Group companies, denominated
official prices. For unlisted debt instruments, the fair value
in euros and other currencies, including the portion falling
is determined using valuation techniques appropriate for
due within 12 months (equal to €806 million), amounted to
each category of financial instrument and the associated
€14,203 million at December 31, 2018.
market data for the reporting date, including the credit
The following table shows the nominal values, carrying
spreads of the Group.
Millions of euro
Nominal
value
Carrying
amount
Current
portion
Portion
due in
more than
12 months
Fair
value
Nominal
value
Carrying
amount
Current
portion
Portion
due in
more than
12 months
Fair
value
Carrying
amount
at Dec. 31, 2018
at Dec. 31, 2017
Change
Bonds:
- fixed rate
7,904
7,813
- floating rate
1,201
1,201
Total
9,105
9,014
614
192
806
7,199
8,561
10,447
10,390
3,088
7,302
11,880
(2,577)
1,009
1,141
1,805
1,805
566
1,239
1,767
(604)
8,208
9,702
12,252
12,195
3,654
8,541
13,647
(3,181)
Bank
borrowings:
- fixed rate
-
-
- floating rate
1,048
1,048
Total
1,048
1,048
Loans from
Group
companies:
- fixed rate
2,300
2,300
- floating rate
1,841
1,841
Total
4,141
4,141
-
-
-
-
-
-
-
-
-
-
1,048
1,045
1,039
1,039
1,048
1,045
1,039
1,039
2,300
2,596
1,200
1,200
1,841
1,895
-
-
4,141
4,491
1,200
1,200
-
-
-
-
-
-
-
-
1,039
1,043
1,039
1,043
-
9
9
1,200
1,540
2,941
-
-
-
1,200
1,540
2,941
Total fixed-rate
borrowings
Total floating-
rate borrowings
10,204
10,113
614
9,499
11,157
11,647
11,590
3,088
8,502
13,420
364
TOTAL
14,294
14,203
4,090
4,090
192
806
3,898
4,081
2,844
2,844
566
2,278
2,810
(595)
13,397
15,238
14,491
14,434
3,654
10,780
16,230
(231)
The balance for bonds is reported net of €898 million in re-
please see note 32 “Risk management”, while for more
spect of the unlisted floating-rate “Special series of bonds
about fair value measurement inputs, please see note 34
reserved for employees 1994-2019”, which Enel SpA holds
“Fair value measurement”.
in its portfolio.
For more details about the maturity analysis of borrowings,
and interest rate.
The table below shows long-term borrowings by currency
412
Annual Report 2018 Long-term borrowings by currency and interest rate
Millions of euro
Carrying amount
Nominal value
Current average
nominal interest rate
Current effective
interest rate
at Dec. 31, 2017
at Dec. 31, 2018
at Dec. 31, 2018
Euro
US dollar
Pound sterling
Total non-euro
currencies
TOTAL
10,939
1,218
2,277
3,495
14,434
10,665
1,277
2,261
3,538
14,203
10,725
1,289
2,280
3,569
14,294
The table below reports changes in the nominal value of long-term debt.
3.4%
7.9%
6.5%
3.6%
8.3%
6.7%
Millions of euro
Nominal value Repayments
New
borrowing
Other
Own bonds
repurchased
Exchange
differences
at Dec. 31, 2017
Bonds
Bank borrowings
Loans from Group
companies
Total
12,252
1,039
1,200
14,491
(4,388)
1,250
-
-
(4,388)
-
2,250
3,500
-
-
691
691
(38)
-
-
(38)
29
9
-
38
Nominal value
at Dec. 31, 2018
9,105
1,048
4,141
14,294
Compared with December 31, 2017, the nominal value of
> the recognition of exchange losses of €38 million;
long-term debt decreased by €197 million, reflecting:
> the issue of two hybrid bonds in euros for a total of €1,250
> repayments of €4,388 million, including two retail bonds,
million;
one fixed-rate and one floating-rate, for a total of €3,000
> new intercompany financing granted by Enel Finance In-
million maturing in February 2018, a fixed-rate loan in euros
ternational for a total of €2,250 million;
of €591 million due in June 2018, and the repurchase of a
> an intercompany loan of €691 million acquired in Decem-
hybrid bond in euros of €732 million done in May 2018;
ber 2018 following the merger of Enel Holding Chile Srl.
> the repurchase of €38 million in own unlisted floating-rate
The table below reports the characteristics of the bank bor-
bonds of the “Special series of bonds reserved for em-
rowings obtained in 2018.
ployees 1994-2019”;
New borrowings
Type of loan
Bonds
Hybrid bonds
Hybrid bonds
Total
Counterparty
Issue date
Amount financed
(millions of euro)
Currency
Interest rate
(%)
Type of
interest rate
Due date
Enel SpA May 24, 2018
Enel SpA May 24, 2018
500
750
1,250
EUR
EUR
2.5%
3.4%
Fixed rate Nov. 24, 2023
Fixed rate Nov. 24, 2026
In 2018, the following borrowings were obtained:
by covenants that are commonly adopted in international
> the issue of a hybrid bond in euros in the amount of €500
business practice. These borrowings are mainly represent-
million, with the first call date scheduled for November
ed by the bond issues carried out within the framework
24, 2023;
of the Global/Euro Medium-Term Notes program, issues
> the issue of a hybrid bond in euros in the amount of €750
of subordinated unconvertible hybrid bonds, the Revolving
million, with the first call date scheduled for November
Facility Agreement agreed on December 18, 2017 by Enel
24, 2026.
SpA and Enel Finance International NV with a pool of banks
of up to €10 billion and the loans granted by UniCredit SpA.
The main long-term borrowings of Enel SpA are governed
The main covenants in respect of the bond issues in the
413
Financial statements of Enel SpA
Global/ Euro Medium-Term Notes program of Enel SpA
cumbrances;
and Enel Finance International NV (including the green
> disposals clauses, under which the borrower and, in
bonds of Enel Finance International NV guaranteed by
some cases, the subsidiaries of Enel may not dispose
Enel SpA, which are used to finance the Group’s eligible
of their assets or a significant portion of their assets or
green projects) and those related to bonds issued by Enel
operations, with the exception of expressly permitted
Finance International NV on the American market can be
disposals;
summarized as follows:
> pari passu clauses, under which the payment undertak-
> negative pledge clauses under which the issuer and the
ings of the borrower have the same seniority as its other
guarantor may not establish or maintain (except under
unsecured and unsubordinated payment obligations;
statutory requirement) mortgages, liens or other encum-
> change of control clauses, which are triggered in the
brances on all or part of its assets or revenue, to secure
event (i) control of Enel is acquired by one or more par-
certain financial borrowings, unless the same restrictions
ties other than the Italian State or (ii) Enel or any of its
are extended equally or pro rata to the bonds in question;
subsidiaries transfer a substantial portion of the Group’s
> pari passu clauses, under which bonds and the associ-
assets to parties outside the Group such that the finan-
ated guarantees constitute a direct, unconditional and
cial reliability of the Group is significantly compromised.
unsecured obligation of the issuer and the guarantor,
The occurrence of one of the two circumstances may
do not grant preferential rights among them and have
give rise to (a) the renegotiation of the terms and condi-
at least the same seniority as other present and future
tions of the financing or (b) compulsory early repayment
unsubordinated and unsecured bonds of the issuer and
of the financing by the borrower;
the guarantor;
> cross-default clauses, under which the occurrence of a
> cross-default clauses, under which the occurrence of a
default event in respect of a specified financial liability
default event in respect of a specified financial liability
(above a threshold level) of the borrower or significant
(above a threshold level) of the issuer, the guarantor or
subsidiaries constitutes a default in respect of the liabili-
significant subsidiaries constitutes a default in respect
ties in question, which may become immediately repay-
of the liabilities in question, which may become imme-
able.
diately repayable.
The main covenants covering the hybrid bonds of Enel SpA
All the financial borrowings considered specify events of
can be summarized as follows:
default typical of international business practice, such as,
> subordination clauses: each hybrid bond is subordinate
for example, insolvency, bankruptcy proceedings or the en-
to all other bonds of the issuer and has the same se-
tity ceases trading.
niority as other hybrid financial instruments issued and
None of the covenants indicated above has been triggered
greater seniority than equity instruments;
to date.
> prohibition on mergers with other companies, the sale
Lastly, it should be noted that Enel SpA issued certain
or leasing of all or a substantial part of the company’s
guarantees in the interest of Enel Green Power and its sub-
assets to another company, unless the latter succeeds in
sidiaries in relation to the commitments undertaken within
all obligations of the issuer.
the context of the loan agreements. These guarantees and
The main covenants for the Revolving Facility Agreement and
the associated loan contracts include certain covenants
the loan agreements between Enel SpA and UniCredit SpA
and events of default, some borne by Enel SpA as the guar-
are substantially similar and can be summarized as follows:
antor, typical of international business practice.
> negative pledge clauses, under which the borrower and,
in some cases, significant subsidiaries may not establish
mortgages, liens or other encumbrances on all or part
of their respective assets to secure certain financial li-
abilities, with the exception of expressly permitted en-
414
Annual Report 2018 Debt structure after hedging
The following table shows the effect of the hedges of foreign currency risk on the gross long-term debt structure (including
portions maturing in the next 12 months).
Millions of euro
at Dec. 31, 2018
at Dec. 31, 2017
Initial debt structure
Carrying
amount
Nominal
value
%
Debt
structure
after
hedging
Hedged
debt
Initial debt structure
Carrying
amount
Nominal
value
%
Debt
structure
after
hedging
Hedged
debt
Euro
US dollar
Pound sterling
10,665
10,725
75.0%
3,569
14,294
10,939
10,961
75.6%
3,530
14,491
1,277
2,261
1,289
2,280
9.0%
(1,289)
16.0%
(2,280)
-
-
1,218
2,277
1,232
2,298
8.5%
(1,232)
15.9%
(2,298)
-
-
Total
14,203
14,294
100.0%
-
14,294
14,434
14,491
100.0%
-
14,491
The following table shows the effect of the hedges of interest rate risk on the gross long-term debt outstanding at the
reporting date.
Gross long-term debt
%
Floating rate
Fixed rate
Total
at Dec. 31, 2018
at Dec. 31, 2017
Before hedging
After hedging
Before hedging
After hedging
18.1%
81.9%
100.0%
15.4%
84.6%
100.0%
19.6%
80.4%
100.0%
24.2%
75.8%
100.0%
Short-term borrowings - €5,001 million
The following table shows short-term borrowings at December 31, 2018, by nature.
Millions of euro
Loans from non-Group counterparties
Bank borrowings
Short-term bank borrowings (ordinary current account)
Cash collateral for CSAs on OTC derivatives received
Total
Borrowings from Group counterparties
Short-term borrowings from Group companies (on intercompany current
account)
Total
TOTAL
at Dec. 31, 2018
at Dec. 31, 2017
Change
-
45
240
285
4,716
4,716
5,001
120
125
256
501
4,896
4,896
5,397
(120)
(80)
(16)
(216)
(180)
(180)
(396)
Short-term borrowings amounted to €5,001 million (€5,397
> the €120 million decrease in liabilities to banks for short-
million in 2017), down €396 million from the previous year,
term loans received;
mainly due to:
> the €80 million decrease in bank borrowings;
415
Financial statements of Enel SpA > the €180 million decrease in short-term borrowings from
It should be specified that the fair value of current bor-
Group companies, attributable to the improvement in
rowings equals their carrying amount as the impact of dis-
the debtor position on the intercompany current account
counting is not significant.
held with subsidiaries.
31.2.2 Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss, bro-
million) financial liabilities, refer solely to derivative financial
ken down into non-current (€324 million) and current (€134
liabilities.
31.2.3 Net gains and losses
The following table shows net gains and losses by category of financial instruments, excluding derivatives.
Millions of euro
Financial assets at amortized cost
Financial assets at FVOCI
Financial liabilities at amortized cost
at Dec. 31, 2018
at Dec. 31, 2017
at Dec. 31, 2018
Net gains/(losses)
of which impairment/reversal
of impairment
6
10
(639)
2
1
(546)
1
-
-
For more details on net gains and losses on derivatives, please see note 7 “Net financial income/(expense) from deriva-
tives.
32. Risk management
32.1 Financial risk management objectives and policies
As part of its operations, the Company is exposed to a vari-
ness Line levels that establish the roles and responsibilities
ety of financial risks, notably market risks (including interest
for risk management, monitoring and control processes,
rate risk and exchange risk), credit risk and liquidity risk.
ensuring compliance with the principle of organizational
separation of units responsible for operations and those in
The financial risk governance arrangements adopted by
charge of monitoring and managing risk.
Enel establish specific internal committees, composed of
The financial risk governance system also defines a system
top management and chaired by the Chief Executive Of-
of operating limits at the Group and individual Region, Coun-
ficers of the companies involved, which are responsible
try and Global Business Line levels for each risk, which are
for policy setting and supervision of risk management, as
monitored periodically by risk management units. For the
well as the definition and application of specific policies at
Group, the system of limits constitutes a decision-making
the Group and individual Region, Country and Global Busi-
tool to achieve its objectives.
32.2 Market risks
Market risk is the risk that the value of financial and non-
Interest rate risk and exchange risk are primarily gener-
financial assets or liabilities and the associated expected
ated by the presence of financial instruments.
cash flows could change owing to changes in market
The main financial liabilities held by the Company include
prices.
bonds, bank borrowings, other borrowings, derivatives,
As part of its operations as an industrial holding company,
cash collateral for derivatives transactions and trade pay-
Enel SpA is exposed to different market risks, notably the
ables. The main purpose of those financial instruments is
risk of changes in interest rates and exchange rates.
to finance the operations of the Company.
416
Annual Report 2018 The main financial assets held by the Company include fi-
expressed as a value or a quantity (for example tons, con-
nancial receivables, derivatives, cash collateral for deriva-
verted into euro by multiplying the notional amount by the
tives transactions, cash and short-term deposits and trade
agreed price).
receivables.
The notional amounts of derivatives reported here do not
For more details, please see note 31 “Financial instru-
represent amounts exchanged between the parties and
ments”.
therefore are not a measure of the Company’s credit risk
The source of exposure to interest rate risk and exchange
exposure.
risk did not change with respect to the previous year.
As the Parent Company, Enel SpA centralizes some trea-
sury management functions and access to financial mar-
kets with regard to financial derivatives contracts on inter-
est rates and exchange rates. As part of this activity, Enel
SpA acts as an intermediary for Group companies with the
market, taking positions that, while they can be substantial,
do not however represent an exposure to markets risks for
Enel SpA.
During 2018, no overshoots of the threshold values set by
regulators for the activation of clearing obligations (EMIR -
European Market Infrastructure Regulation 648/2012 of the
European Parliament) were detected.
The volume of transactions in financial derivatives outstand-
ing at December 31, 2018 is reported below, with specifi-
cation of the notional amount of each class of instrument.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate because of
changes in market interest rates.
Interest rate risk for the Company manifests itself as a change
in the flows associated with interest payments on floating-
rate financial liabilities, a change in financial terms and condi-
tions in negotiating new debt instruments or as an adverse
change in the value of financial assets/liabilities measured at
fair value, which are typically fixed-rate debt instruments.
Interest rate risk is managed with the dual goals of reducing
the amount of debt exposed to interest rate fluctuations and
containing the cost of funds, limiting the volatility of results.
This goal is pursued through the strategic diversification of
the portfolio of financial liabilities by contract type, maturity
and interest rate, and modifying the risk profile of specific
exposures using OTC derivatives, mainly interest rate swaps.
The notional amount of a derivative contract is the amount
on which cash flows are exchanged. This amount can be
The notional amount of outstanding contracts is reported
below:
Millions of euro
Notional amount
at Dec. 31, 2018
at Dec. 31, 2017
Interest rate derivatives
Interest rate swaps
Interest rate collars
Swaptions
Total
10,901
-
-
10,901
20,599
-
-
20,599
The term of such contracts does not exceed the maturity of
The notional amount of open interest rate swaps at the end
the underlying financial liability, so that any change in the fair
of the year was €10,901 million (€20,599 million at December
value and/or cash flows of such contracts is offset by a cor-
31, 2017), of which €1,578 million (essentially unchanged on
responding change in the fair value and/or cash flows of the
December 31, 2017) in respect of hedges of the Company’s
underlying position.
share of debt, and €9,323 million (€19,271 million at Decem-
Interest rate swaps normally provide for the periodic ex-
ber 31, 2017) in respect of hedges of the debt of Group com-
change of floating-rate interest flows for fixed-rate interest
panies with the market intermediated in the same notional
flows, both of which are calculated on the basis of the no-
amount with those companies. The substantial decrease in
tional principal amount.
the latter is due to the novation of numerous interest rate
swaps from Enel SpA to Enel Finance International NV.
417
Financial statements of Enel SpA For more details on interest rate derivatives, please see note
33 “Derivatives and hedge accounting”.
The amount of floating-rate debt that is not hedged against
interest rate risk is the main risk factor that could impact the
income statement (raising borrowing costs) in the event of an
increase in market interest rates.
At December 31, 2018, 18.1% of gross long-term financial
debt was floating rate (19.6% at December 31, 2017). Taking
account of hedges of interest rates considered effective pur-
suant to the IAS 39, 84.3% of gross long-term financial debt
was hedged at December 31, 2018 (75.8% at December 31,
2017). Including derivatives treated as hedges for manage-
ment purposes but ineligible for hedge accounting, the ratio
is essentially unchanged.
Interest rate risk sensitivity analysis
The Company analyses the sensitivity of its exposure by
estimating the effects of a change in interest rates on the
portfolio of financial instruments.
More specifically, sensitivity analysis measures the poten-
tial impact of market scenarios on equity, for the cash flow
hedge component, and on profit or loss, for the fair value
hedge component, for derivatives that are not eligible for
hedge accounting and for the portion of gross long-term
debt not hedged using derivative financial instruments.
These scenarios are represented by parallel increases and
decreases in the yield curve as at the reporting date.
There were no changes in the methods and assumptions
used in the sensitivity analysis compared with the previous
year.
With all other variables held constant, the Company’s prof-
it before tax would be affected as follows.
Millions of euro
Change in financial
expense on gross long-
term floating-rate debt in
foreign currency
Change in fair value of
derivatives classified as
non-hedging instruments
Change in fair value of
derivatives designated
as hedging instruments
Cash flow hedges
Fair value hedges
Basis
points
25
25
25
25
at Dec. 31, 2018
at Dec. 31, 2017
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Increase
Decrease
Increase
Decrease
Increase
Decrease
Increase
Decrease
5
6
-
-
(5)
(6)
-
-
-
-
36
-
-
-
(36)
-
9
6
-
(2)
(9)
(6)
-
2
-
-
11
-
-
-
(11)
-
Exchange risk
Exchange risk is the risk that the fair value or future cash
ments”. In order to minimize exposure to changes in ex-
flows of a financial instrument will fluctuate because of
change rates, the Company normally uses a variety of OTC
changes in exchange rates.
derivatives such as currency forwards and cross currency
interest rate swaps. The term of such contracts does not
For Enel SpA, the main source of exchange risk is the pres-
exceed the maturity of the underlying exposure.
ence of monetary financial instruments denominated in a
currency other than the euro, mainly bonds denominated in
Currency forwards are contracts in which the counterpar-
foreign currency.
ties agree to exchange principal amounts denominated
The exposure to exchange risk did not change with respect
in different currencies at a specified future date and ex-
to the previous year.
change rate (the strike). Such contracts may call for the
For more details, please see note 31 “Financial instru-
actual exchange of the two amounts (deliverable forwards)
418
Annual Report 2018 or payment of the difference between the strike exchange
ferent currencies, these instruments differ from interest
rate and the prevailing exchange rate at maturity (non-de-
rate swaps in that they provide both for the periodic ex-
liverable forwards).
change of cash flows and the final exchange of principal.
Cross currency interest rate swaps are used to transform
a long-term fixed- or floating-rate liability in foreign cur-
The following table reports the notional amount of transac-
rency into an equivalent floating- or fixed-rate liability in
tions outstanding at December 31, 2018 and December
euros. In addition to having notionals denominated in dif-
31, 2017, broken down by type of hedged item.
Millions of euro
Notional amount
at Dec. 31, 2018
at Dec. 31, 2017
Foreign exchange derivatives
Currency forwards:
- hedging exchange risk on commodities
- hedging future cash flows
- other currency forwards
Cross currency interest rate swaps
Total
More specifically, these include:
6,980
5,349
825
806
5,264
12,244
5,410
3,664
1,190
556
15,527
20,937
> currency forward contracts with a total notional amount
An analysis of the Group’s debt shows that 25% of gross
of €5,349 million (€3,664 million at December 31, 2017),
medium and long-term debt (24.4% at December 31, 2017)
of which €2,675 million to hedge the exchange risk asso-
is denominated in currencies other than the euro.
ciated with purchases of energy commodities by Group
Considering exchange rate hedges and the portion of debt
companies, with matching transactions with the market;
in foreign currency that is denominated in the currency of
> currency forward contracts with a notional amount of
account or the functional currency of the Company, the debt
€825 million (€1,190 million at December 31, 2017), to
is fully hedged using cross currency interest rate swaps.
hedge the exchange risk associated with other expected
cash flows in currencies other than the euro, of which
€493 million in market transactions;
Exchange risk sensitivity analysis
The Company analyses the sensitivity of its exposure by
> currency forward contracts with a notional amount of
estimating the effects of a change in exchange rates on the
€806 million (€556 million at December 31, 2017), of
portfolio of financial instruments.
which €403 million in market transactions to hedge the
More specifically, sensitivity analysis measures the poten-
exchange rate risk on investment spending and, to a less-
tial impact of market scenarios on equity, for the cash flow
er extent, operating expenditure;
hedge component, and on profit or loss, for the fair value
> cross currency interest rate swaps with a notional
hedge component, for derivatives that are not eligible for
amount of €5,264 million (€15,527 million at December
hedge accounting and for the portion of gross long-term
31, 2017), to hedge the exchange risk on the debt of Enel
debt not hedged using derivative financial instruments.
SpA or other Group companies denominated in curren-
These scenarios are represented by the appreciation/de-
cies other than the euro.
preciation of the euro against all of the foreign currencies
compared with the value observed as at the reporting date.
For more details, please see note 33 “Derivatives and
There were no changes in the methods and assumptions
hedge accounting”.
used in the sensitivity analysis compared with the previ-
ous year.
419
Financial statements of Enel SpA With all other variables held constant, the profit before tax would be affected as follows.
Millions of euro
Change in financial expense
on gross long-term floating-
rate debt in foreign currency
after hedging
Change in fair value of
derivatives classified as
non-hedging instruments
Change in fair value of
derivatives designated as
hedging instruments
at Dec. 31, 2018
at Dec. 31, 2017
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Pre-tax impact
on profit or loss
Pre-tax impact
on equity
Exchange
rate
Appreciation
of euro
Depreciation
of euro
Appreciation
of euro
Depreciation
of euro
Appreciation
of euro
Depreciation
of euro
Appreciation
of euro
Depreciation
of euro
10%
-
-
10%
(14)
17
-
-
-
-
-
5
-
-
-
(6)
-
-
-
-
-
-
(431)
-
525
-
Cash flow hedges
Fair value hedges
10%
10%
-
-
-
-
(411)
-
502
-
32.3 Credit risk
Credit risk is represented by the possibility of a deteriora-
considered solvent both by the market and on the basis
tion in the creditworthiness of a counterparty in a financial
of internal assessments, diversifying the exposure among
transaction that could have an adverse impact on the credi-
them. Credit exposures and associated credit risk are regu-
tor position. The Company is exposed to credit risk from
larly monitored by the departments responsible for moni-
its financial activities, including transactions in derivatives
toring risks under the policies and procedures outlined in
(typically on financial or commodity underlyings), depos-
the governance rules for managing the Group’s risks, which
its with banks and financial institutions, foreign exchange
are also designed to ensure prompt identification of pos-
transactions and other financial instruments.
sible mitigation actions to be taken.
The sources of exposure to credit risk did not change with
Within this general framework, Enel entered into margin
respect to the previous year.
agreements with the leading financial institutions with
The Company’s management of credit risk is based on the
which it operates that call for the exchange of cash col-
selection of counterparties from among leading Italian and
lateral, which significantly mitigates the exposure to coun-
international financial institutions with high credit standing
terparty risk.
at Dec. 31, 2018
Basis for
recognition of
expected loss
allowance
12 m ECL
Lifetime ECL
Average loss rate
(PD*LGD)
Gross carrying
amount
Expected loss
allowance
0.36%
1,929
-
-
-
-
1,929
7
-
-
7
Net value
1,922
-
-
1,922
Financial receivables
Millions of euro
Staging
Performing
Underperforming
Non-performing
Total
420
Annual Report 2018 Trade receivables and other receivables: collective measurement
Millions of euro
at Dec. 31,2018
Average loss rate
(PD*LGD)
Gross carrying
amount
Expected loss
allowance
Net value
Trade receivables
Trade receivables not past due
Trade receivables past due:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
- 121-150 days
- 151-180 days
-
-
-
-
-
-
-
- more than 180 days (credit impaired)
2.55%
Total trade receivables
Other receivables
Other receivables not past due
Other receivables past due:
- 1-30 days
- 31-60 days
- 61-90 days
- 91-120 days
- 121-150 days
- 151-180 days
- more than 180 days (credit impaired)
Total other receivables
TOTAL
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
196
196
-
-
-
-
-
-
-
-
-
196
-
-
-
-
-
-
-
5
5
-
-
-
-
-
-
-
-
-
5
-
-
-
-
-
-
-
191
191
-
-
-
-
-
-
-
-
-
191
421
Financial statements of Enel SpA 32.4 Liquidity risk
Liquidity risk is the risk that the Company will encounter
a balanced debt maturity profile and diversifying funding
difficulty in meeting obligations associated with financial
sources in terms of instruments, markets/currencies and
liabilities that are settled by delivering cash or another fi-
counterparties.
nancial asset.
The objectives of liquidity risk management policies are:
At December 31, 2018 Enel SpA had a total of about €2,007
> ensuring an appropriate level of liquidity for the Group,
million in cash or cash equivalents (€2,489 million at De-
minimizing the associated opportunity cost;
cember 31, 2017), and committed lines of credit amount-
> maintaining a balanced debt structure in terms of the ma-
ing to €5,800 million (of which none had been drawn) ma-
turity profile and funding sources.
turing in more than one year (€5,800 million at December
In the short term, liquidity risk is mitigated by maintaining
31, 2017).
an appropriate level of unconditionally available resources,
including cash and short-term deposits, available commit-
ted credit lines and a portfolio of highly liquid assets.
Maturity analysis
The table below summarizes the maturity profile of the
In the long term, liquidity risk is mitigated by maintaining
Company’s long-term debt.
Millions of euro
Maturing in
Less than 3
months
Between 3 months
and 1 year
Between 1 and
2 years
Between 2 and 5
years
Over 5 years
Bonds:
- fixed rate
- floating rate
Total
Bank borrowings
- fixed rate
- floating rate
Total
Loans from Group companies
- fixed rate
- floating rate
Total
TOTAL
-
135
135
-
-
-
-
-
-
614
56
670
-
-
-
-
-
-
1,192
27
1,219
-
650
650
-
46
46
135
670
1,915
2,347
305
2,652
-
398
398
1,200
138
1,338
4,388
3,660
678
4,338
-
-
-
1,100
1,657
2,757
7,095
422
Annual Report 2018 32.5 Offsetting financial assets and financial liabilities
The following table reports the net financial assets and
and to guarantee transactions involving derivatives, Enel
liabilities. More specifically, it shows that there are no
SpA has entered into margin agreements with leading fi-
netting arrangements for derivatives in the financial state-
nancial institutions that call for the exchange of cash col-
ments since the Company does not plan to set-off assets
lateral, broken down as shown in the table.
and liabilities. As envisaged by current market regulations
Millions of euro
at Dec. 31, 2018
(a)
(b)
(c)=(a)-(b)
(d)
(e)=(c)-(d)
Correlated amounts not set off in
the balance sheet
(d)(i),(d)(ii)
(d)(iii)
Gross amounts
of recognized
financial assets/
(liabilities) set off
in the balance
sheet
Net amounts of
financial assets/
(liabilities)
presented in the
balance sheet
Gross amounts
of recognized
financial assets/
(liabilities)
Net portion of
financial assets/
(liabilities)
guaranteed with
cash collateral
Net amount of
financial assets/
(liabilities)
Financial
instruments
FINANCIAL ASSETS
Derivative financial assets:
- on interest rate risk
- on exchange risk
- other
Total derivative financial
assets
TOTAL FINANCIAL ASSETS
FINANCIAL LIABILITIES
Derivative financial liabilities:
- on interest rate risk
- on exchange risk
- other
304
570
11
885
885
(527)
(1,223)
-
TOTAL FINANCIAL LIABILITIES
(1,750)
TOTAL NET FINANCIAL
ASSETS/(LIABILITIES)
(865)
-
-
-
-
-
-
-
-
-
-
304
570
11
885
885
(527)
(1,223)
-
(1,750)
(865)
-
-
-
-
-
-
-
-
-
-
-
(658)
-
(658)
(658)
431
1,240
-
1,671
1,013
304
(88)
11
227
227
(96)
17
-
(79)
148
423
Financial statements of Enel SpA 33. Derivatives and hedge accounting
The following tables report the notional amount and fair
amount can be expressed as a value or a quantity (for ex-
value of derivative financial assets and liabilities by type
ample tons, converted into euros by multiplying the notion-
of hedge relationship and hedged risk, broken down into
al amount by the agreed price). Amounts denominated in
current and non-current derivative financial assets and li-
currencies other than the euro are converted at the official
abilities.
end-year exchange rates provided by the World Markets
The notional amount of a derivative contract is the amount
Reuters (WMR) Company.
on the basis of which cash flows are exchanged. This
Millions of euro
Non-current
Current
Notional amount
Fair value
Notional amount
Fair value
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017 Change
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017 Change
Derivatives designated
as hedging instruments
Cash flow hedges:
- on exchange risk
Total cash flow hedges
Fair value hedges:
- on interest rate risk
Total fair value hedges
Derivatives at FVTPL:
- on interest rate risk
- on exchange risk
- other
Total derivatives at
FVTPL
TOTAL DERIVATIVE
FINANCIAL ASSETS
1,751
1,751
2,327
2,327
-
-
4,661
1,096
-
800
800
9,586
5,632
-
5,757
15,218
468
468
-
-
304
21
-
325
501
501
15
15
405
535
-
(33)
(33)
(15)
(15)
(101)
(514)
-
615
615
-
-
-
2,543
203
-
-
-
-
50
2,419
-
940
(615)
2,746
2,469
7,508
18,345
793
1,456
(663)
3,361
2,469
14
14
-
-
-
67
11
78
92
-
-
-
-
1
110
-
14
14
-
-
(1)
(43)
-
111
(33)
111
(19)
Millions of euro
Non-current
Current
Notional amount
Fair value
Notional amount
Fair value
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017 Change
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017 Change
1,440
1,876
3,316
4,661
1,096
390
2,501
2,891
9,624
5,632
5,757
15,256
159
912
135
24
1,192
(280)
1,071
1,327
(256)
-
615
615
-
-
-
302
22
324
408
535
(106)
(513)
138
150
2,655
2,425
943
(619)
2,793
2,575
9,073
18,147
1,395
2,270
(875)
3,408
2,575
-
221
221
66
68
134
355
-
-
-
-
221
221
66
-
110
(42)
176
(42)
176
179
Derivatives designated
as hedging instruments
Cash flow hedges:
- on interest rate risk
- on exchange risk
Total cash flow hedges
Derivatives at FVTPL:
- on interest rate risk
- on exchange risk
Total derivatives at
FVTPL
TOTAL DERIVATIVE
FINANCIAL LIABILITIES
424
Annual Report 2018 33.1 Hedge accounting
Derivatives are initially recognized at fair value, on the trade
> if the underlying risk of the hedging instrument and the
hedged item is the same, the existence of an economic
relationship will be provided through a qualitative analy-
date of the contract and are subsequently remeasured at
sis;
their fair value. The method of recognizing the resulting
> on the other hand, if the underling risk of the hedging in-
gain or loss depends on whether the derivative is desig-
nated as a hedging instrument, and if so, the nature of the
item being hedged.
Hedge accounting is applied to derivatives entered into in
strument and the hedged item is not the same, the exis-
tence of the economic relationship will be demonstrated
through a quantitative method in addition to a qualitative
analysis of the nature of the economic relationship (i.e.
order to reduce risks such as interest rate risk, foreign ex-
linear regression).
change rate risk, commodity price risk and net investments
in foreign operations when all the criteria provided by IFRS
9 are met.
In order to demonstrate that the behavior of the hedging
instrument is in line with those of the hedged item, differ-
At the inception of the transaction, the Company docu-
ent scenarios will be analyzed.
ments the relationship between hedging instruments and
hedged items, as well as its risk management objectives
and strategy. The Company also documents its assess-
ment, both at hedge inception and on an ongoing basis, of
whether hedging instruments are highly effective in offset-
For hedging of commodity price risk, the existence of an
economic relationship is deduced from a ranking matrix
that defines, for each possible risk component, a set of all
standard derivatives available in the market whose ranking
is based on their effectiveness in hedging the considered
ting changes in fair values or cash flows of hedged items.
risk.
For cash flow hedges of forecast transactions designated
as hedged items, the Company assesses and documents
that they are highly probable and present an exposure to
changes in cash flows that affect profit or loss.
Depending on the nature of the risks exposure, the Com-
pany designates derivatives as either:
> fair value hedge;
> cash flow hedge.
In order to evaluate the credit risk effects, the Company
considers the existence of risk mitigating measures (col-
lateral, mutual break-up clauses, netting agreements, etc.).
The Company has established a hedge ratio of 1:1 for all
the hedging relationships (including commodity price risk
hedging) as the underlying risk of the hedging derivative is
identical to the hedged risk, in order to minimize hedging
ineffectiveness.
For more details about the nature and the extent of risks
arising from financial instruments to which the Company
The hedge ineffectiveness will be evaluated through a qual-
itative assessment or a quantitative computation, depend-
is exposed, please refer the note 32 “Risk management”.
ing on the following circumstances:
To be effective a hedging relationship shall meet all of the
following criteria:
> existence of an economic relationship between hedging
instrument and hedged item;
> the effect of credit risk shall not dominate the value
changes resulting from the economic relationship;
> if the critical terms of the hedged item and hedging in-
strument match and there aren’t other sources of inef-
fectiveness, including the credit risk adjustment on the
hedging derivative, the hedge relationship will be con-
sidered fully effective on the basis of a qualitative as-
> the hedge ratio defined at initial designation shall be
sessment;
equal to the one used for risk management purposes
(i.e. same quantity of the hedged item that the entity
actually hedges and the quantity of the hedging instru-
ment that the entity actually uses to hedge the quantity
of the hedged item).
Based on the IFRS 9 requirements, the existence of an eco-
nomic relationship is evaluated by the Company through a
> if the critical terms of the hedged item and hedging in-
strument do not match or there is at least one source
of ineffectiveness, the hedge ineffectiveness will be
quantified applying the “dollar offset” cumulative meth-
od with hypothetical derivative. This method compares
changes in fair values of the hedging instrument and the
hypothetical derivative between the reporting date and
qualitative assessment or a quantitative computation, de-
the inception date.
pending of the following circumstances:
425
Financial statements of Enel SpA The main causes of hedge ineffectiveness may be the fol-
the cumulative gain or loss that was reported in equity is
lowings:
immediately transferred to the income statement.
> basis differences (i.e. the fair value or cash flows of the
For hedging relationships using forward as hedging instru-
hedged item depend on a variable that is different from
ment, where only the change in the value of the spot ele-
the variable that causes the fair value or cash flows of
ment is designated as the hedging instrument, accounting
the hedging instrument to change);
for the forward element (profit or loss vs OCI) is defined
> timing differences (i.e. the hedged item and hedging in-
case by case. This approach is actually applied by the Com-
strument occur or are settled at different dates);
pany for hedging of foreign currency risk on renewables
> quantity or notional amount differences (i.e. the hedged
assets.
item and hedging instrument are based on different
Conversely, for hedging relationships using cross currency
quantities or notional amounts);
interest rate swap as hedging instrument, the Company
> other risks (i.e. changes in the fair value or cash flows of
separates foreign currency basis spread, in designating the
a derivative hedging instrument or hedged item relate to
hedging derivative, and present them in other comprehen-
risks other than the specific risk being hedged);
sive income (OCI) as hedging costs.
> credit risk (i.e. the counterparty credit risk differently
With specific regard to cash flow hedges of commodity
impact the fair value movements of the hedging instru-
risk, in order to improve their consistency with the risk
ments and hedged items).
management strategy, the Company applies a dynamic
Cash flow hedges
Cash flow hedges are applied in order to hedge the Com-
hedge accounting approach based on specific liquidity re-
quirements (the so-called liquidity-based approach).
This approach requires the designation of hedges through
pany exposure to changes in future cash flows that are at-
the use of the most liquid derivatives available on the mar-
tributable to a particular risk associated with a recognized
ket and replacing them with others that are more effective
asset or liability or a highly probable transaction that could
in covering the risk in question.
affect profit or loss.
Consistent with the risk management strategy, the liquid-
The effective portion of changes in the fair value of deriva-
ity-based approach allows the roll-over of a derivative by
tives that are designated and qualify as cash flow hedges
replacing it with a new derivative, not only in the event of
is recognized in other comprehensive income. The gain or
expiry but also during the hedging relationship, if and only
loss relating to the ineffective portion is recognized imme-
if the new derivative meets both of the following require-
diately in the income statement.
ments:
Amounts accumulated in equity are reclassified to profit
> it represents a best proxy of the old derivative in terms
or loss in the periods when the hedged item affects profit
of ranking;
or loss (for example, when the hedged forecast sale takes
> it meets specific liquidity requirements.
place).
Satisfaction of these requirements is verified quarterly.
If the hedged item results in the recognition of a non-fi-
At the roll-over date, the hedging relationship is discontin-
nancial asset (i.e. property, plant and equipment or inven-
ued. Therefore, starting from that date, changes in the ef-
tories, etc.) or a non-financial liability, or a hedged forecast
fective fair value of the new derivative will be recognized in
transaction for a non-financial asset or a non-financial liabil-
shareholders’ equity (the cash flow hedge reserve), while
ity becomes a firm commitment for which fair value hedge
changes in the fair value of the old derivative are recognized
accounting is applied, the amount accumulated in equity
through profit or loss.
(i.e. cash flow reserve) shall be removed and included in
the initial value (cost or other carrying amount) of the asset
The Company currently uses these hedge relationships to
or the liability hedged (i.e. “basis adjustment”).
minimize the volatility of profit or loss.
When a hedging instrument expires or is sold, or when a
hedge no longer meets the criteria for hedge accounting,
The impact of hedging instruments on the accounts is as
any cumulative gain or loss existing in equity at that time re-
follows.
mains in equity and is recognized when the forecast trans-
action is ultimately recognized in the income statement.
When a forecast transaction is no longer expected to occur,
426
Annual Report 2018 Millions of euro
at December 31, 2018
Interest rate swap
Cross currency interest rate swap
at December 31, 2017
Interest rate swap
Cross currency interest rate swap
Notional amount
Carrying amount
Fair value used to measure
the ineffective portion for
the period
1,440
4,856
390
4,828
(159)
(650)
(135)
(691)
(159)
(650)
(135)
(691)
The impact of hedged items on the accounts is as follows:
Fair value used
to measure
the ineffective
portion for the
period
Cash flow hedge
reserve
Hedging costs
reserve
Fair value used
to measure
the ineffective
portion for the
period
Cash flow hedge
reserve
Hedging costs
reserve
2018
2017
159
649
1
809
(159)
(596)
(2)
(757)
-
(53)
1
(52)
136
679
11
826
(135)
(609)
(12)
(756)
-
(70)
-
(70)
Millions of euro
Floating-rate borrowings
Fixed-rate borrowings in foreign
currency
Floating-rate borrowings in
foreign currency
Total
The following table reports the impact of cash flow hedges on profit or loss and on OCI:
Gross
change in
fair value
recognized
in profit
or loss -
Ineffective
portion
Gross
change in
fair value
recognized
in profit or
loss
Gross change
in fair value
recognized in
equity
Hedging
costs
Gross
change in
fair value
recognized
in equity
Gross
change in
fair value
recognized
in profit or
loss
Gross change
in fair value
recognized in
profit or loss
- Ineffective
portion
Hedging
costs
at Dec. 31, 2018
at Dec. 31, 2017
-
17
17
(38)
39
1
11
(55)
(44)
-
-
-
-
48
48
3
(252)
(249)
8
224
232
-
-
-
Millions of euro
Interest rate hedges
Foreign exchange hedges
Hedging derivatives
427
Financial statements of Enel SpA The following table reports the impact of cash flow hedge derivatives on equity in the period, gross of tax effects:
Total gain/(loss)
recognized in
OCI
Ineffective
portion through
profit or loss
Income
statement item Hedging costs
Amount
reclassified from
OCI to profit or
loss
Income statement
item
Millions of euro
At 31 December 2018
Floating-rate borrowings
(38)
Fixed-rate borrowings in foreign
currency
Floating-rate borrowings in
foreign currency
Total at December 31, 2018
At 31 December 2017
Floating-rate borrowings
Fixed-rate borrowings in foreign
currency
Floating-rate borrowings in
foreign currency
Total at December 31, 2017
29
10
1
3
(263)
11
(249)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
-
17
-
48
-
48
11
financial expense
50
financial income
5
financial income
8
financial expense
215
financial expense
9
financial expense
Fair value hedges
Fair value hedges are used by the Group to hedge changes
ing, the adjustment to the carrying amount of a hedged
in the fair value of assets, liabilities or firm commitments
item for which the effective interest method is used is am-
attributable to a particular risk that could affect profit or loss.
ortized to profit or loss over the period to maturity.
Changes in the fair value of derivatives that qualify and are
designated as hedging instruments are recognized in the
The Company currently does not make use of such hedge
income statement, together with changes in the fair value
relationships.
of the hedged item that are attributable to the hedged risk.
For more on the fair value measurement of derivatives,
If the hedge no longer meets the criteria for hedge account-
please see note 34 “Fair value measurement”.
Hedge relationships by type of risk hedged
33.1.1 Interest rate risk
The following table shows the notional amount and the fair
of transactions outstanding as at December 31, 2018 and
value of the hedging instruments on the interest rate risk
December 31, 2017, broken down by type of hedged item.
Millions of euro
Hedging instrument
Interest rate swaps
Interest rate swaps
Total
Hedged item
Floating-rate
borrowings
Fixed-rate
borrowings
Fair
value
Notional
amount
Fair
value
Notional
amount
at Dec. 31, 2018
at Dec. 31, 2017
(159)
-
(159)
1,440
-
1,440
(135)
15
(120)
390
800
1,190
The interest rate swaps outstanding at the end of the year and
rate bonds issued since 2001.
designated as hedging instruments function as a cash flow
The following table shows the notional amount and the fair value
hedge and fair value hedge for the hedged item. The cash flow
of hedging derivatives on interest rate risk as at December 31,
hedge derivatives mainly refer to the hedging of certain floating-
2018 and December 31, 2017, broken down by type of hedge.
428
Annual Report 2018 Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Cash flow hedge
derivatives:
- interest rate swaps
Fair value hedge
derivatives:
- interest rate swaps
Total interest rate
derivatives
-
-
-
-
-
-
-
800
800
800
-
-
-
-
-
-
-
15
15
15
1,440
1,440
-
-
390
390
-
-
(159)
(159)
(135)
(135)
-
-
-
-
1,440
390
(159)
(135)
The notional amount of the interest rate swaps at Decem-
The deterioration in the fair value of derivatives compared
ber 31, 2018 came to €1,440 million (€1,190 million at De-
with the previous year is mainly attributable to the general
cember 31, 2017) with a corresponding negative fair value
decline in the long-term segment of the yield curve over
of €159 million (negative €120 million at December 31,
the course of 2018.
2017).
Cash flow hedge derivatives
The following table shows the cash flows expected in coming years from cash flow hedge derivatives.
Millions of euro
Cash flow hedge derivatives
on interest rates:
- positive fair value
- negative fair value
Fair value
at Dec. 31,
2018
Distribution of expected cash flows
2019
2020
2021
2022
2023
Beyond
-
(159)
-
(15)
-
(14)
-
(14)
-
(10)
-
(23)
-
(95)
The following table shows the impact of cash flow hedge derivatives on interest rate risk on equity during the period, gross
of tax effects.
Millions of euro
Opening balance at January 1
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss - recycling
Changes in fair value recognized in profit or loss - ineffective portion
Closing balance at December 31
2018
(98)
(38)
11
-
(125)
2017
(110)
-
12
-
(98)
429
Financial statements of Enel SpA 33.1.2 Exchange risk
The following table shows the notional amount and the fair
actions outstanding as at December 31, 2018 and Decem-
value of the hedging instruments on exchange risk of trans-
ber 31, 2017, broken down by type of hedged item.
Millions of euro
Fair value
Notional amount
Fair value
Notional amount
Hedging instrument
Hedged item
at Dec. 31, 2018
at Dec. 31, 2017
Cross currency interest rate swaps
(CCIRSs)
Cross currency interest rate swaps
(CCIRSs)
Fixed-rate
borrowings
Floating-rate
borrowings
Total
(649)
(1)
(650)
4,658
198
4,856
(679)
(12)
(691)
4,639
189
4,828
The cross currency interest rate swaps outstanding at the
The following table shows the notional amount and the
end of the year and designated as hedging instruments
fair value of derivatives on exchange risk as at December
function as a cash flow hedge for the hedged item. More
31, 2018 and December 31, 2017, broken down by type of
specifically, these derivatives hedge fixed-rate bonds de-
hedge.
nominated in foreign currencies and floating-rate borrow-
ing in US dollars obtained from Bank of America in 2017.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Cash flow hedge
derivatives:
- forwards
- options
- cross currency interest
rate swaps
Total foreign exchange
derivatives
2,365
2,327
482
501
2,491
2,501
(1,132)
(1,192)
-
-
-
-
2,365
2,327
2,365
2,327
-
-
482
482
-
-
-
-
-
-
-
-
-
-
501
2,491
2,501
(1,132)
(1,192)
501
2,491
2,501
(1,132)
(1,192)
The notional amount of the cross currency interest rate
ciation of the euro against the pound sterling and its depre-
swaps at December 31, 2018 came to €4,856 million
ciation against the US dollar.
(€4,828 million at December 31, 2017) with a corresponding
negative fair value of €650 million (a negative €691 million
at December 31, 2017).
Cash flow hedge derivatives
The following table shows the cash flows expected in com-
The change in the value of the notional amount and the as-
ing years from cash flow hedge derivatives on exchange
sociated fair value of derivatives mainly reflects the appre-
risk.
Millions of euro
Fair value
at Dec. 31,
2018
Cash flow hedge derivatives
on exchange rates:
Distribution of expected cash flows
2019
2020
2021
2022
2023
Beyond
- positive fair value
- negative fair value
482
(1,132)
86
(245)
51
(52)
51
(79)
50
(37)
204
(36)
307
(655)
430
Annual Report 2018 The following table shows the impact of cash flow hedge derivatives on exchange risk on equity during the period, gross
of tax effects.
Millions of euro
2018
2017
Change in hedging
reserve
Cost of hedging
Change in hedging
reserve
Cost of hedging
Opening balance at January 1
Changes in fair value recognized in equity (OCI)
Changes in fair value recognized in profit or loss - recycling
Changes in fair value recognized in profit or loss -
ineffective portion
Closing balance at December 31
(236)
39
(55)
-
(252)
(70)
17
-
-
(53)
(208)
(252)
224
-
(236)
(118)
48
-
-
(70)
33.2 Derivatives at fair value through profit or loss
The following table shows the notional amount and the fair value of derivatives at FVTPL as at December 31, 2018 and
December 31, 2017.
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
at Dec. 31,
2018
at Dec. 31,
2017
Derivatives at FVTPL
on interest rates:
- interest rate swaps
Derivatives at FVTPL on
exchange rates:
- forwards
- options
- cross currency interest
rate swaps
Total derivatives
at FVTPL
4,661
4,661
3,638
3,434
-
9,635
9,635
8,052
2,702
-
204
5,350
304
304
88
83
-
5
405
405
645
123
-
522
4,799
4,799
3,750
3,546
-
9,774
9,774
8,057
2,708
-
(368)
(368)
(91)
(84)
-
(473)
(473)
(645)
(122)
-
204
5,349
(7)
(523)
8,299
17,687
392
1,050
8,549
17,831
(459)
(1,118)
At December 31, 2018, the notional amount of derivatives
terest rate swaps in respect of the issue of a green bond;
at fair value through profit or loss on interest rates and for-
> €3,900 from the novation of interest rate swaps from
eign exchange rates came to €16,848 million (€35,518 mil-
Enel SpA to Enel Finance International;
lion at December 31, 2017) corresponding to a negative fair
> €233 million from interest rate swaps reaching their natu-
value of €67 million (a negative €68 million at December
ral expiry date or as a result of amortization;
31, 2017).
> €753 million in new interest rate swaps.
Interest rate swaps at the end of the year amounted to
Forward contracts with the market, with a notional amount
€9,460 million. They refer primarily to hedges of the debt
of €3,434 million (€2,702 million at December 31, 2017), re-
of the Group companies with the market (€4,799 million)
late mainly to OTC derivatives entered into to mitigate the
and intermediated with those companies (€4,661 million).
exchange risk associated with the prices of energy com-
modities within the provisioning process of Group com-
The overall notional amount shows a decline of €9,949 mil-
panies and matched with market transactions. They also
lion on the previous year. More specifically, the decline of
hedge the expected cash flows in currencies other than the
€4,975 million in transactions with the market is mainly at-
currency of account connected with the acquisition of non-
tributable to the following developments:
energy commodities and investment goods in the sectors
> €1,250 million from the early termination of pre-hedge in-
of renewable energy and infrastructure and networks (new
431
Financial statements of Enel SpA generation digital meters) and the expected cash flows in
and matched with market transactions. The decline in the
currencies other than the euro connected with operating
notional amount of cross currency interest rate swaps of
expenses for the provision of cloud services. The change
€5,146 million is mainly due to the novation of cross cur-
in the notional amount and the fair value as compared with
rency interest rate swaps from Enel SpA to Enel Finance
the previous year is associated with normal operations.
International in the amount of €4,768 million and to cross
Cross currency interest rate swaps, with a notional amount
currency interest rate swaps that expired naturally in the
of €204 million (€5,350 million at December 31, 2017), re-
amount of €384 million. The value also reflects develop-
late to hedges of exchange risk on the debt of the Group
ments in the exchange rate of the euro against the other
companies denominated in currencies other than the euro
major currencies.
34. Fair value measurement
The Company measures fair value in accordance with IFRS
The fair value of derivative contracts is determined using
13 whenever required by international accounting standards.
the official prices for instruments traded on regulated mar-
Fair value is defined as the price that would be received to
kets. The fair value of instruments not listed on a regulated
sell an asset or paid to transfer a liability. The best estimate
market is determined using valuation methods appropriate
is the market price, i.e. its current price, publicly available
for each type of financial instrument and market data as of
and effectively traded on an active, liquid market.
the close of the period (such as interest rates, exchange
The fair value of assets and liabilities is categorized into a
rates, volatility), discounting expected future cash flows on
fair value hierarchy that provides three levels defined as fol-
the basis of the market yield curve and translating amounts
lows on the basis of the inputs to valuation techniques used
in currencies other than the euro using exchange rates pro-
to measure fair value:
vided by the World Markets Reuters (WMR) Company. For
> Level 1: quoted prices (unadjusted) in active markets for
contracts involving commodities, the measurement is con-
identical assets or liabilities to which the Company has
ducted using prices, where available, for the same instru-
access at the measurement date;
ments on both regulated and unregulated markets.
> Level 2: inputs other than quoted prices included within
In accordance with the new international accounting
level 1 that are observable for the asset or liability, either
standards, in 2013 the Group included a measurement of
directly (that is, as prices) or indirectly (that is, derived
credit risk, both of the counterparty (Credit Valuation Ad-
from prices);
justment or CVA) and its own (Debit Valuation Adjustment
> Level 3: inputs for the asset or liability that are not based
or DVA), in order to adjust the fair value of financial instru-
on observable market data (that is, unobservable inputs).
ments for the corresponding amount of counterparty risk.
In this note, the relevant disclosures are provided in order to
More specifically, the Group measures CVA/DVA using
assess the following:
a Potential Future Exposure valuation technique for the
> for assets and liabilities that are measured at fair value on
net exposure of the position and subsequently allocating
a recurring or non-recurring basis in the balance sheet af-
the adjustment to the individual financial instruments that
ter initial recognition, the valuation techniques and inputs
make up the overall portfolio. All of the inputs used in this
used to develop those measurements; and
technique are observable on the market. Changes in the
> for recurring fair value measurements using significant
assumptions underlying the estimated inputs could have
unobservable inputs (Level 3), the effect of the measure-
an effect on the fair value reported for such instruments.
ments on profit or loss or other comprehensive income
The notional amount of a derivative contract is the amount
for the period.
For this purpose:
on which cash flows are exchanged. This amount can be
expressed as a value or a quantity (for example tons, con-
> recurring fair value measurements are those that IFRSs
verted into euros by multiplying the notional amount by
require or permit in the balance sheet at the end of each
the agreed price).
reporting period;
Amounts denominated in currencies other than the euro
> non-recurring fair value measurements are those that IF-
are converted into euros at the official exchange rates pro-
RSs require or permit in the balance sheet in particular
vided by the World Markets Reuters (WMR) Company.
circumstances.
The notional amounts of derivatives reported here do not
432
Annual Report 2018 necessarily represent amounts exchanged between the
termined using appropriate valuation techniques for each
parties and therefore are not a measure of the Company’s
category of financial instrument and market data at the
credit risk exposure.
closing date of the year, including the credit spreads of
For listed debt instruments, the fair value is given by of-
Enel SpA.
ficial prices. For unlisted instruments the fair value is de-
34.1 Assets measured at fair value in the balance sheet
The following table shows, for each class of assets mea-
of the reporting period and the level in the fair value hier-
sured at fair value on a recurring or non-recurring basis in
archy into which the fair value measurements are catego-
the balance sheet, the fair value measurement at the end
rized.
Millions of euro
Non-current assets
Current assets
Fair value at
Dec. 31, 2018
Notes
Level 1
Level 2
Level 3
Fair value at
Dec. 31, 2018
Level 1
Level 2
Level 3
Derivatives
Cash flow hedge derivatives:
- on exchange risk
Total
Fair value hedge derivatives:
- on interest rate risk
Total
Fair value through profit or loss:
- on interest rate risk
- on exchange risk
- other
Total fair value through profit or
loss
TOTAL
33
33
33
33
468
468
-
-
304
21
-
325
793
-
-
-
-
-
-
-
-
-
468
468
-
-
304
21
-
325
793
-
-
-
-
-
-
-
-
-
14
14
-
-
-
67
11
78
92
-
-
-
-
-
-
-
-
-
14
14
-
-
-
67
11
78
92
-
-
-
-
-
-
-
-
-
433
Financial statements of Enel SpA 34.2 Liabilities measured at fair value in the balance sheet
The following table reports, for each class of liabilities
the end of the reporting period and the level in the fair
measured at fair value on a recurring or non-recurring ba-
value hierarchy into which the fair value measurements
sis in the balance sheet, the fair value measurement at
are categorized.
Millions of euro
Non-current liabilities
Current liabilities
Fair value at
Dec. 31, 2018
Notes
Level 1
Level 2
Level 3
Fair value at
Dec. 31, 2018
Level 1
Level 2
Level 3
Derivatives
Cash flow hedge derivatives:
- on interest rate risk
- on exchange risk
Total
Fair value through profit or loss:
- on interest rate risk
- on exchange risk
Total
TOTAL
33
33
33
33
159
912
1,071
302
22
324
1,395
-
-
-
-
-
-
-
159
912
1,071
302
22
324
1,395
-
-
-
-
-
-
-
-
221
221
66
68
134
355
-
-
-
-
-
-
-
-
221
221
66
68
134
355
-
-
-
-
-
-
-
34.3 Liabilities not measured at fair value in the balance sheet
The following table shows, for each class of liabilities not
the reporting period and the level in the fair value hierarchy
measured at fair value in the balance sheet but for which
into which the fair value measurements are categorized.
the fair value shall be disclosed, the fair value at the end of
Millions of euro
Liabilities
Notes
31.2.1
31.2.1
31.2.1
31.2.1
31.2.1
Fair value at
Dec. 31, 2018
Level 1
Level 2
Level 3
8,561
1,141
9,702
-
1,045
1,045
2,596
1,895
4,491
15,238
8,561
70
8,631
-
-
-
-
-
-
8,631
-
1,071
1,071
-
1,045
1,045
2,596
1,895
4,491
6,607
-
-
-
-
-
-
-
-
-
-
Bonds:
- fixed rate
- floating rate
Total
Bank borrowings:
- fixed rate
- floating rate
Total
Loans from Group companies:
- fixed rate
- floating rate
Total
TOTAL
434
Annual Report 2018 35. Related parties
Related parties have been identified on the basis of the
In November 2010, the Board of Directors of Enel SpA
provisions of international accounting standards and the
approved a procedure governing the approval and execu-
applicable CONSOB measures.
tion of transactions with related parties carried out by
Enel SpA directly or through subsidiaries. The procedure
The transactions Enel SpA entered into with its subsidiar-
(available at www.enel.com/investors/bylaws-rules-and-
ies mainly involved the provision of services, the sourcing
policies/transactions-with-related-parties) sets out rules
and employment of financial resources, insurance cover-
designed to ensure the transparency and procedural and
age, human resource management and organization, legal
substantive propriety of transactions with related parties.
and corporate services, and the planning and coordination
It was adopted in implementation of the provisions of Ar-
of tax and administrative activities.
ticle 2391-bis of the Italian Civil Code and the implement-
ing regulations issued by CONSOB. In 2018, no transac-
All the transactions are part of routine operations, are car-
tions were carried out for which it was necessary to make
ried out in the interest of the Company and are settled on
the disclosures required in the rules on transactions with
an arm’s length basis, i.e. on the same market terms as
related parties adopted with CONSOB Resolution 17221
agreements entered into between two independent par-
of March 12, 2010, as amended with Resolution 17389 of
ties.
June 23, 2010.
Finally, the Enel Group’s corporate governance rules,
The following tables summarize commercial, financial and
which are discussed in greater detail in the Report on Cor-
other relationships between the Company and related par-
porate Governance and Ownership Structure available on
ties.
the Company’s website (www.enel.com), establish condi-
tions for ensuring that transactions with related parties
are performed in accordance with procedural and sub-
stantive propriety.
435
Financial statements of Enel SpA Commercial and other relationships
2018
Millions of euro
Subsidiaries
Codensa SA ESP
Central Geradora Termelétrica Fortaleza SA
Enel Generación Perú SAA
Enel Américas SA
Enel Chile SA
Enel Distribución Perú SAA
Enel Generación Piura SA
Enel Generación Chile SA
Enel Brasil SA
Enel X Srl
Enel X Italia SpA
Endesa Distribución Eléctrica SL
Endesa Generación SA
Endesa Ingeniería SLU
Endesa Red SA
Endesa SA
E-Distribuţie Banat SA
E-Distribuţie Dobrogea SA
E-Distribuţie Muntenia SA
e-distribuzione SpA
Enel Distribución Chile SA
Enel Energia SpA
Enel Iberia Srl
Enel Green Power Chile Ltda
Enel Green Power Romania Srl
Enel Green Power SpA
Enel Green Power España SL
Enel Green Power North America Inc.
Enel Innovation Hubs Srl
Enel Global Infrastructure & Networks Srl
Enel Global Thermal Generation Srl
Enel Russia PJSC
Enel Produzione SpA
Enel Romania Srl
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Green Power North America Inc.
Enel Global Trading SpA
Enel.Factor SpA
Endesa Energía SA
Energía Nueva Energía Limpia México S de RL de Cv
Gas y Electricidad Generación SAU
OpEn Fiber SpA
RusEnergoSbyt LLC
Enel Green Power Hellas SA
Slovenské elektrárne AS
Unión Eléctrica de Canarias Generación SAU
Vektör Enerji Üretim AŞ
Total
Other related parties
Eni
GSE
Fondazione Centro Studi Enel
Monte dei Paschi di Siena
Total
TOTAL
436
Receivables
Payables
Goods
Services
Goods
Services
at Dec. 31, 2018
at Dec. 31, 2018
2018
2018
Costs
Revenue
-
1
5
37
26
5
1
2
24
-
-
21
(2)
-
1
3
4
3
8
90
2
6
1
2
-
9
1
1
-
5
2
11
44
5
24
2
4
1
2
-
2
1
1
4
-
2
17
-
8
386
-
1
1
-
2
1
-
-
-
-
-
-
-
-
5
6
3
1
1
-
3
-
-
-
111
-
47
4
-
1
32
-
-
2
3
-
-
46
1
21
46
3
2
26
-
1
-
-
-
-
-
-
1
-
367
-
1
-
1
2
388
369
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
2
1
1
-
1
-
-
-
-
-
-
3
-
-
-
-
-
2
3
-
1
-
-
61
-
-
-
-
-
1
-
-
-
-
-
-
1
-
78
1
-
-
1
2
80
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
1
1
-
1
-
-
-
(5)
(1)
-
1
1
-
-
-
8
1
5
-
1
-
9
1
-
-
2
1
3
2
1
7
2
(1)
-
-
-
-
-
(1)
4
1
1
-
-
-
48
-
-
2
-
2
50
Annual Report 2018 2017
Millions of euro
Subsidiaries
Codensa SA ESP
Central Geradora Termelétrica Fortaleza SA
Enel Generación Perú SAA
Enel Américas SA
Enel Chile SA
Enel Distribución Perú SAA
Enel Generación Piura SA
Enel Brasil SA
Enel X Srl
Endesa Distribución Eléctrica SL
Endesa Generación SA
Endesa Red SA
Endesa SA
E-Distribuţie Banat SA
E-Distribuţie Dobrogea SA
E-Distribuţie Muntenia SA
e-distribuzione SpA
Enel Distribución Chile SA
Enel Energia SpA
Enel Energie Muntenia SA
Enel Energie SA
Enel Iberia Srl
Enel Green Power SpA
Enel Green Power North America Inc.
Enel Innovation Hubs Srl
Enel Russia PJSC
Enel Produzione SpA
Enel Romania Srl
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade SpA
Enel.Factor SpA
Endesa Energía SA
Energía Nueva Energía Limpia México S de RL de Cv
Gas y Electricidad Generación SAU
OpEn Fiber SpA
RusEnergoSbyt LLC
Slovenské elektrárne AS
Tynemouth Energy Storage Limited
Unión Eléctrica de Canarias Generación SAU
3Sun Srl
Total
Other related parties
CESI SpA
Enel Cuore Onlus
Eni
GSE
Fondazione Centro Studi Enel
Monte dei Paschi di Siena
Total
TOTAL
Receivables
Payables
Goods
Services
Goods
Services
at Dec. 31, 2017 at Dec. 31, 2017
2017
2017
Costs
Revenue
-
1
6
27
30
6
1
25
2
27
10
1
4
4
4
7
124
1
204
1
1
1
10
1
-
16
59
4
30
158
5
1
-
4
1
3
1
-
17
-
3
-
800
-
-
-
1
1
-
2
1
-
-
-
-
-
-
-
-
1
-
-
3
-
-
-
164
-
-
-
-
22
1
1
1
-
97
-
86
-
8
100
3
-
-
-
-
-
-
1
-
19
508
-
-
1
1
-
1
3
802
511
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
1
-
-
-
2
-
-
-
-
11
1
-
-
-
1
-
66
-
-
-
-
-
-
-
-
-
-
-
-
-
83
1
-
-
-
-
-
1
84
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2
1
-
-
12
2
6
2
1
5
1
1
2
34
1
2
-
-
1
8
-
-
8
13
1
15
1
-
1
-
3
-
1
-
1
-
-
1
-
127
-
1
-
-
2
-
3
130
437
Financial statements of Enel SpA Financial relationships
2018
Millions of euro
Receivables
Payables
Guarantees
Costs
Revenue
Dividends
at Dec. 31, 2018
2018
Subsidiaries
Concert Srl
Enel Américas SA
Enel Chile SA
e-distribuzione SpA
Enel X Srl
Enel Global Thermal Generation Srl
Enel Energia SpA
Enel Iberia Srl
Enel Finance International NV
Enel Green Power Chile Ltda
Enel Green Power México S de RL de
Cv
Enel Green Power North America Inc.
Enel Green Power Colombia SAS
Enel Green Power Costa Rica SA
Enel Green Power Australia (Pty) Ltd
Enel Green Power Romania Srl
Enel Green Power SpA
Enel Green Power Perú SA
Enel Green Power RUS LLC
Enel Green Power South Africa
Enel Green Power Development Srl
Enel Investment Holding BV
Enel Global Infrastructure & Networks
Srl
Enel Produzione SpA
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade Romania Srl
Enel Global Trading SpA
Enel.Factor SpA
Enel Innovation Hubs Srl
Enel.si Srl
Enelpower SpA
Enel Green Power RSA (Pty) Ltd
Nuove Energie Srl
Enel Green Power Brasil Participações
Ltd
OpEn Fiber SpA
RusEnergoSbyt LLC
Enel Green Power Panama SA
Enel X Italia SpA
Enel X Mobility Srl
Enel Green Power Hellas SA
Enel X International Srl
Enel X North America Inc.
Generadora de Montecristo SA
Parque Eólico Pampa SA
Tynemouth Energy Storage Limited
Total
Other related parties
CESI SpA
Total
TOTAL
438
-
-
-
121
58
12
8
1
164
-
23
13
-
-
-
-
59
6
-
-
-
1
17
64
2
122
1
-
89
-
-
15
-
11
27
38
127
-
-
-
-
-
-
-
-
2
-
981
-
-
981
1
-
-
370
-
-
1,504
-
6,095
-
-
-
-
-
-
-
245
-
-
-
2
-
-
466
29
-
51
-
54
-
21
-
35
-
-
-
-
-
-
13
55
-
19
-
-
-
-
-
-
-
4,343
-
-
1,912
-
33,377
47
3,086
6,787
48
8
12
36
1,724
271
50
1,113
-
-
1
1,998
236
1,217
321
7
1,614
-
1
21
-
-
86
3,015
36
-
8
3
53
105
-
20
8
22
11
-
-
-
23
-
-
-
-
802
-
-
-
-
-
-
-
60
1
-
-
-
-
-
55
3
-
-
-
174
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,960
61,597
1,118
-
-
-
-
-
-
8,960
61,597
1,118
-
-
-
69
-
-
8
1
240
-
23
12
-
-
-
-
97
8
-
-
-
-
-
35
3
7
1
-
95
-
-
1
-
11
1
36
2
-
-
-
-
-
-
-
-
2
-
652
-
-
652
-
162
157
949
-
-
792
486
-
-
-
-
-
-
-
-
557
-
-
-
-
66
2
229
16
100
-
-
-
2
-
-
-
-
-
-
-
37
-
-
-
-
-
-
-
-
-
3,555
1
1
3,556
Annual Report 2018 2017
Millions of euro
Subsidiaries
Concert Srl
Enel Américas SA
Enel Chile SA
e-distribuzione SpA
Enel X Srl
Enel Energia SpA
Enel Iberia Srl
Enel Finance International NV
Enel Green Power North America Inc.
Enel Green Power SpA
Enel Green Power Perú SA
Enel Green Power Development Srl
Enel Investment Holding BV
Enel M@P Srl
Enel Produzione SpA
Enel Italia Srl
Servizio Elettrico Nazionale SpA
Enel Sole Srl
Enel Trade Romania Srl
Enel Trade SpA
Enel Trade d.o.o.
Enel.Factor SpA
Enel Innovation Hubs Srl
Enel.si Srl
Enelpower SpA
Nuove Energie Srl
OpEn Fiber SpA
Enel X Italia SpA
Tynemouth Energy Storage Limited
Total
Other related parties
CESI SpA
Total
TOTAL
Receivables
Payables
Guarantees
Costs
Revenue
Dividends
at Dec. 31, 2017
2017
-
-
-
1,759
6
7
1
756
-
161
-
-
-
3
192
35
114
1
-
105
-
18
-
8
-
23
-
-
6
2
-
-
-
-
-
-
-
3,765
-
1,007
1,806
-
-
-
-
-
33
-
-
-
-
-
-
84
-
8
1
3,735
28,196
679
1,268
-
4
-
2
1
-
523
16
-
60
-
46
12,994
-
-
-
1
2,141
123
1,402
277
5
-
57
11
-
-
-
30
1
-
-
-
-
68
6
-
1
-
75
12
7
1
-
761
1,578
97
265
-
-
16
-
37
-
-
2
-
1
-
1
18
1
87
300
-
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
-
-
25
31
1,448
-
679
677
-
-
50
-
-
-
-
-
23
80
15
-
-
-
3
-
-
-
-
-
-
-
3,195
6,166
52,752
908
1,797
3,031
-
-
-
-
-
-
-
-
-
-
1
1
3,195
6,166
52,752
908
1,797
3,032
439
Financial statements of Enel SpA The impact of transactions with related parties on the balance sheet, income statement and cash flows is reported in the
following tables.
Impact on balance sheet
Millions of euro
Total Related parties
% of total
Total Related parties
% of total
at Dec. 31, 2018
at Dec. 31, 2017
Assets
Derivatives - non-current
Other non-current financial assets
Other non-current assets
Trade receivables
Derivatives - current
Other current financial assets
Other current assets
Liabilities
Long-term borrowings
Derivatives - non-current
Other non-current liabilities
Short-term borrowings
Trade payables
Derivatives - current
Other current financial liabilities
Other current liabilities
Impact on income statement
793
136
134
191
92
1,860
268
13,397
1,395
12
5,001
82
355
276
2,029
306
125
125
189
14
536
74
4,141
20
9
4,715
43
53
31
317
38.6%
91.9%
93.3%
99.0%
15.2%
28.8%
27.6%
30.9%
1.4%
75.0%
94.3%
52.4%
14.9%
11.2%
15.6%
1,456
16
148
237
111
4,350
453
10,780
2,270
12
5,397
137
176
465
912
-
139
228
98
2,185
435
1,200
28
9
4,896
74
13
29
62.6%
-
93.9%
96.2%
88.3%
50.2%
96.0%
11.1%
1.2%
75.0%
90.7%
54.0%
7.4%
6.2%
2,065
428
20.7%
Millions of euro
Total Related parties
% of total
Total Related parties
% of total
Revenue
Services and other operating expenses
Income from equity investments
Financial income on derivatives
Other financial income
Financial expense on derivatives
Other financial expense
Impact on cash flows
Millions of euro
2018
2017
53
275
3,567
1,626
320
1,581
768
50
79
3,556
437
215
1,033
85
94.3%
28.7%
99.7%
26.9%
67.2%
65.3%
11.1%
133
359
3,033
2,683
410
2,902
872
130
84
3,032
1,640
157
836
72
97.7%
23.4%
100.0%
61.1%
38.3%
28.8%
8.3%
Total Related parties
% of total
Total Related parties
% of total
2018
2017
Cash flows from operating activities
3,449
1,613
46.8%
2,465
(2,838)
-
Cash flows from investing/disinvesting
activities
Cash flows from financing activities
(2,587)
(1,344)
(2,544)
7,274
98.4%
(48)
-
(2,966)
(48)
1,485
100.0%
-50.1%
440
Annual Report 2018 36. Government grants - Disclosure pursuant to
Article 1, paragraphs 125-129, of Law 124/2017
Pursuant to Article 1, paragraphs 125-129, of Law 124/2017
The following disclosure includes payments in excess of
as amended, the following provides information on grants
€10,000 made by the same grantor/donor during 2018,
received from Italian public agencies and bodies, as well
even if made through multiple financial transactions. They
as donations by Enel SpA and the fully consolidated sub-
are recognized on a cash basis.
sidiaries to companies, individuals and public and private
Pursuant to the provisions of Article 3-quater of Decree
entities. The disclosure comprises: (i) grants received from
Law 135 of December 14, 2018, ratified with Law 12 of
Italian public entities/State entities; and (ii) donations made
February 11, 2019, for grants received, please refer to the
by Enel SpA and Group subsidiaries to public or private par-
information contained in the National Register of State Aid
ties resident or established in Italy.
referred to in Article 52 of Law 234 of December 24, 2012.
441
Financial statements of Enel SpA As far as donations made are concerned, the material cases are listed below.
Euro
Beneficiary
Ashoka Italia Onlus
European University Institute
Fondazione Centro Studi Enel
LUISS
Fondazione Teatro del Maggio Musicale
Fondazione MAXXI
Fondazione Accademia Nazionale “Santa Cecilia”
Elettrici senza frontiere Onlus
Fondazione Teatro alla Scala
Organization for Economic Cooperation and Development (OECD)
Public Security Department of Ministry of the Interior, State Police, Central Highway
Police Office
Enel X Srl
Enel Cuore Onlus
CharIN - Charging Interface Initiative e. V.
Fondazione Italia Giappone
OME - Observatorie Méditerranéen de l’Energie
Global Reporting Initiative
WBCSD
Open Innovation Corporation
A.I.I.A.- Associazione Italiana
ANIMA
Mind the bridge
EU40 ASBL
Centre on regulation in Europe
ASSONIME
EUTC
BRUEGEL
Bettercoal
International Integrated
IETA - International Emissions Trading Association
Valore D.
CSR Europe Asbli
Roma Start up
Transparency International Italia
FSG INC.
The European House Ambrosetti
The Trilateral Commission
ISPI - Istituto Studi di Politica Internazionale
Consiglio Cooperazione Economica
CEPS - Centre for European Policy Studies
CONSIUSA - Consiglio per le Relazioni fra Italia e Stati Uniti
Centro Studi Americani
Transparency International Italia
CONSEL
GSEP - Global Sustainable Electricity Partnership
Human Foundation
Open Innovation Corporation
Foundation for the global compact
Innovation Roundtable ApS
KIC INNOENERGY IBERIA
EMF Trading - Ellen Macarthur Foundation
ICC ITALIA
Business Europe
Total donations
442
Amount Description of donation
60,000 Donation to promote sustainable growth of territory
100,000 Donation to support research
100,000
Donation to support research and advanced training
projects
61,800 Donation to support study grants
400,000 Donation for cultural projects 2018
600,000 Donation for cultural projects 2018
500,000 Donation for cultural projects 2018
40,000 Donation for development energy
600,000 Donation for cultural projects 2018
75,000 Donation for 2018
Donation of 2 Top Crash systems to support
Highway Police operations
R&D project co-financed by EU and national
resources. Financing received in 2017.
Instalment transferred by Enel SpA, following
assignment of financing contract to Enel X - Connect
Project
23,000
91,745
40,000 Association dues 2018
10,000 Association dues 2018
20,000 Association dues 2018
63,000 Association dues 2018
14,000 Association dues 2018
72,718 Association dues 2018
35,752 Association dues 2018
10,000 Association dues 2018
10,000 Association dues 2018
120,000 Association dues 2018
17,000 Association dues 2018
35,000 Association dues 2018
38,315 Association dues 2018
10,000 Association dues 2018
50,000 Association dues 2018
70,000 Association dues 2018
10,000 Association dues 2018
18,663 Association dues 2018
15,000 Association dues 2018
19,750 Association dues 2018
10,000 Association dues 2018
20,000 Association dues 2018
63,781 Association dues 2018
66,000 Association dues 2018
25,000 Association dues 2018
39,000 Association dues 2018
25,000 Association dues 2018
12,000 Association dues 2018
12,500 Association dues 2018
20,000 Association dues 2018
20,000 Association dues 2018
22,750 Association dues 2018
103,204 Association dues 2018
30,000 Association dues 2018
25,794 Association dues 2018
51,624 Association dues 2018
11,000 Association dues 2018
39,975 Association dues 2018
39,375 Association dues 2018
13,405 Association dues 2018
18,150 Association dues 2018
3,999,300
Annual Report 2018
37. Contractual commitments and guarantees
Millions of euro
Sureties and guarantees given:
- third parties
- subsidiaries
Total
at Dec. 31, 2018
at Dec. 31, 2017
Change
25
61,597
61,622
36
52,752
52,788
(11)
8,845
8,834
Sureties granted to third parties essentially regard a bank
Global Trading and Enel.si for gas transport capacity;
surety issued in favor of Banco Centroamericano de Inte-
> €300 million as counter-guarantees in favor of the banks
gración Economica (BCIE) of €25 million, acquired following
that guaranteed the Energy Markets Operator on behalf
the merger of Enel South America into Enel SpA.
of Enel Global Trading and Enel Produzione;
> €50 million issued to RWE Supply & Trading GmbH on
Other sureties and guarantees issued on behalf of subsidiar-
behalf of Enel Global Trading for electricity purchases;
ies include:
> €50 million issued to E.ON on behalf of Enel Global Trad-
> €31,923 million issued on behalf of Enel Finance Inter-
ing for trading on the electricity market;
national securing bonds issued in European and other
> €32 million issued to Wingas GmbH & CO.KG on behalf
international markets;
of Enel Global Trading for the supply of gas;
> €15,216 million issued on behalf of various companies
> €38 million issued on behalf of Enel Italia to Excelsia
controlled by Enel Green Power for the development of
Nove for the performance of obligations under rental
new projects under the Business Plan;
contracts;
> €3,344 million issued to the European Investment Bank
> €3,288 million issued to various beneficiaries as part of
(EIB) for loans granted to e-distribuzione, Enel Produzi-
financial support activities by the Parent Company on be-
one, Enel Green Power, Enel Green Power Perú, Enel
half of subsidiaries.
Sole and Enel X Mobility;
> €1,472 million issued to the tax authorities in respect
Compared with December 31, 2017, the increase in other
of participation in the Group VAT procedure on behalf of
sureties and guarantees issued on behalf of subsidiaries
Enel Italia, Enel Innovation Hubs, Enel Global Trading,
mainly reflects the issue of bonds as part of the Enel Group
Enel Produzione, Enelpower, Nuove Energie, Enel.si,
finance strategy and the refinancing strategy for consolidat-
Enel Green Power, Enel Sole and Enel X Italia;
ed debt.
> €1,454 million issued on behalf of Enel Finance Inter-
In particular, on January 9, 2018 Enel Finance International
national to secure the Euro commercial paper program;
placed its second green bond on the European market in the
> €1,407 million in favor of Cassa Depositi e Prestiti issued
total amount of €1,250 million, intended for institutional in-
on behalf of e-distribuzione, which received the Enel
vestors and backed by a guarantee issued by Enel SpA. On
Grid Efficiency II loan;
September 12, 2018 it placed a multi-tranche bond issue on
> €1,150 million issued by Enel SpA to the Single Buyer
the US market and other international markets, guaranteed
on behalf of Servizio Elettrico Nazionale for obligations
by Enel and intended for institutional investors in the total
under the electricity purchase contract;
amount of $4 billion, equal to a total of about €3,500 million.
> €973 million issued to INPS on behalf of various Group
companies whose employees elected to participate
In its capacity as the Parent Company, Enel SpA has also
in the structural staff reduction plan (Article 4 of Law
granted letters of patronage to a number of Group compa-
92/2012);
nies, essentially for assignments of receivables.
> €597 million issued to Terna on behalf of e-distribuzione,
Enel Global Trading, Enel Produzione, Enel Energia and
Enel X Italia in respect of agreements for electricity
transmission services;
> €302 million issued to Snam Rete Gas on behalf of Enel
443
Financial statements of Enel SpA 38. Contingent assets and liabilities
Please see note 52 to the consolidated financial statements for information on contingent assets and liabilities.
39. Events after the reporting period
Please see note 53 to the consolidated financial statements for information on other events after the reporting date.
444
Annual Report 2018 40. Fees of Audit Firm pursuant
to Article 149-duodecies of the
CONSOB “Issuers Regulation”
Fees paid in 2018 by Enel SpA and its subsidiaries at De-
table, pursuant to the provisions of Article 149-duodecies of
cember 31, 2018 to the Audit Firm and entities belonging
the CONSOB “Issuers Regulation”.
to its network for services are summarized in the following
Type of service
Enel SpA
Auditing
Certification services
Other services
Total
Enel SpA subsidiaries
Auditing
Certification services
Other services
Total
TOTAL
Entity providing the service
Fees (millions of euro)
of which:
- EY SpA
- Entities of EY network
of which:
- EY SpA
- Entities of EY network
of which:
- EY SpA
- Entities of EY network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
of which:
- EY SpA
- Entities of Ernst & Young Global Limited
network
0.6
-
0.8
-
-
-
1.4
2.8
10.3
1.3
1.9
0.4
0.3
17.0
18.4
445
Financial statements of Enel SpA Declaration of the Chief
Executive Officer and
the officer responsible
for the preparation of the
corporate financial reports
446
Annual Report 2018 Declaration of the Chief Executive Officer and the officer responsible for the prepara-
tion of the financial reports of Enel SpA at December 31, 2018, pursuant to the provi-
sions of Article 154-bis, paragraph 5, of Legislative Decree 58 of February 24, 1998 and
Article 81-ter of CONSOB Regulation 11971 of May 14, 1999
1. The undersigned Francesco Starace and Alberto De Paoli, in their respective capacities as Chief Executive Officer and
officer responsible for the preparation of the financial reports of Enel SpA, hereby certify, taking account of the provi-
sions of Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of February 24, 1998:
a. the appropriateness with respect to the characteristics of the Company and
b. the effective adoption of
the administrative and accounting procedures for the preparation of the separate financial statements of Enel SpA in
the period between January 1, 2018 and December 31, 2018.
2. In this regard, we report that:
a. the appropriateness of the administrative and accounting procedures used in the preparation of the separate finan-
cial statements of Enel SpA has been verified in an assessment of the internal control system for financial reporting.
The assessment was carried out on the basis of the guidelines set out in the “Internal Controls - Integrated Fra-
mework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO);
b. the assessment of the internal control system for financial reporting did not identify any material issues.
3. In addition, we certify that the separate financial statements of Enel SpA at December 31, 2018:
a. have been prepared in compliance with the international accounting standards recognized in the European Union
pursuant to Regulation 2002/1606/EC of the European Parliament and of the Council of July 19, 2002;
b. correspond to the information in the books and other accounting records;
c. provide a true and fair representation of the performance and financial position of the issuer.
4. Finally, we certify that the Report on operations, included in the Annual Report 2018 and accompanied by the financial
statements of Enel SpA at December 31, 2018, contains a reliable analysis of operations and performance, as well as
the situation of the issuer, together with a description of the main risks and uncertainties to which it is exposed.
Rome, March 21, 2019
Francesco Starace
Alberto De Paoli
Chief Executive Officer of Enel SpA
Officer responsible for the preparation
of the financial reports of Enel SpA
Financial statements of Enel SpA
447
448
Annual Report 2018 05
Reports
449
Reports Report of the Board of
Statutory Auditors to the
Shareholders’ Meeting
of Enel SpA
450
Annual Report 2018 REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS’
MEETING OF ENEL SpA CALLED TO APPROVE THE FINANCIAL STATEMENTS FOR 2018
(pursuant to Article 153 of Legislative Decree 58/1998)
Shareholders,
during the year ended December 31, 2018 we performed the oversight activities
envisaged by law at Enel SpA (hereinafter also “Enel” or the “Company”). In
particular, pursuant to the provisions of Article 149, paragraph 1, of Legislative
Decree 58 of February 24, 1998 (hereinafter the “Consolidated Law on Financial
Intermediation”) and Article 19, paragraph 1 of Legislative Decree 39 of January 27,
2010, as amended by Legislative Decree 135 of July 17, 2016 (hereinafter “Decree
39/2010”), we monitored:
- compliance with the law and the corporate bylaws as well as compliance with the
principles of sound administration in the performance of the Company’s business;
-
-
-
-
-
-
the Company’s financial reporting process and the adequacy of the administrative
and accounting system, as well as the reliability of the latter in representing
operational events;
the statutory audit of the annual statutory and consolidated accounts and the
selection process and independence of the Audit Firm;
the adequacy and effectiveness of the internal control and risk management
system;
the adequacy of the organizational structure of the Company, within the scope of
our responsibilities;
the implementation of the corporate governance rules as provided for by the
Corporate Governance Code for Listed Companies (hereinafter, the “Corporate
Governance Code”), which the Company has adopted;
the appropriateness of the instructions given by the Company to its subsidiaries
to enable Enel to meet statutory public disclosure requirements.
In performing our checks and assessments of the above issues, we did not find any
particular issues to report.
In compliance with the instructions issued by CONSOB with Communication
DEM/1025564 of April 6, 2001, as amended, we report the following:
• we monitored compliance with the law and the bylaws and we have no issues to
report;
• on a quarterly basis, we received adequate information from the Chief Executive
Officer, as well as through our participation in the meetings of the Board of
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Directors of Enel, on activities performed, general developments in operations
and the outlook, and on transactions with the most significant impact on
performance or the financial position carried out by the Company and its
subsidiaries. We report that the actions approved and implemented were in
compliance with the law and the bylaws and were not manifestly imprudent,
risky, in potential conflict of interest or in contrast with the resolutions of the
Shareholders’ Meeting or otherwise prejudicial to the integrity of the Company’s
assets. For a discussion of the features of the most significant transactions,
please see the Report on operations accompanying the separate financial
statements of the Company and the consolidated financial statements of the Enel
Group for 2018 (in the section “Significant events in 2018”);
• we did not find any atypical or unusual transactions conducted with third parties,
Group companies or other related parties;
•
in the section “Related parties” of the notes to the separate 2018 financial
statements of the Company, the directors describe the main transactions with
related-parties – the latter being identified on the basis of international
accounting standards and the instructions of CONSOB – carried out by the
Company, to which readers may refer for details on the transactions and their
financial impact. They also detail the procedures adopted to ensure that related-
party transactions are carried out in accordance with the principles of
transparency and procedural and substantive fairness. The transactions were
carried out in compliance with the approval and execution processes set out in
the related procedure – adopted in compliance with the provisions of Article 2391-
bis of the Italian Civil Code and the implementing regulations issued by Co –
described in the report on corporate governance and ownership structure for
2018. All transactions with related parties reported in the notes to the separate
2018 financial statements of the Company were executed as part of ordinary
operations in the interest of the Company and settled on market terms and
conditions;
•
the Company declares that it has prepared its statutory financial statements for
2018 on the basis of international accounting standards (IAS/IFRS) and the
interpretations issued by the IFRIC and the SIC, endorsed by the European Union
pursuant to Regulation 2002/1606/EC and in force at the close of 2018, as well as
the provisions of Legislative Decree 38 of February 28, 2005 and its related
implementing measures, as it did the previous year. The Company’s separate
financial statements for 2018 have been prepared on a going-concern basis using
the cost method, with the exception of items that are measured at fair value
2
452
Annual Report 2018
under the IFRS-EU, as indicated in the accounting policies for the individual items
of the consolidated financial statements. The notes to the Company’s separate
financial statements also refer readers to the consolidated financial statements for
information on the accounting standards and measurement criteria adopted, with
the exception of equity investments in subsidiaries, associates and joint ventures,
which are carried in the Company’s separate financial statements at purchase
costs adjusted for any impairment losses. The notes to the Company’s separate
financial statements also refer readers to the consolidated financial statements for
information on recently issued accounting standards. The separate financial
statements for 2018 of the Company underwent the statutory audit by the Audit
Firm, EY SpA, which issued an unqualified opinion, including with regard to the
consistency of the Report on operations and certain information in the report on
corporate governance and ownership structure of the Company with the financial
statements, as well as the compliance of the Report on operations with the
provisions of law, pursuant to Article 14 of Decree 39/2010 and Article 10 of
Regulation 2014/537/EU. The report of EY SpA also includes:
-
-
a discussion of key aspects of the audit report on the Company’s financial
statements; and
the declaration provided pursuant to Article 14, paragraph 2(e) of Decree
39/2010 stating that the Audit Firm did not identify any significant errors in
the contents of the report on operations;
•
the Company declares that it has also prepared the consolidated financial
statements of the Enel Group for 2018 on the basis of international accounting
standards (IAS/IFRS) and the interpretations issued by the IFRIC and the SIC,
endorsed by the European Union pursuant to Regulation 2002/1606/EC and in
force at the close of 2018, as well as the provisions of Legislative Decree 38 of
February 28, 2005 and its related implementing measures, as it did the previous
year. The 2018 consolidated financial statements of the Enel Group are also
prepared on a going-concern basis using the cost method, with the exception of
items that are measured at fair value under the IFRS-EU (as indicated in the
discussion of measurement criteria for the individual items) and non-current
assets (or disposal groups) classified as held for sale, which are measured at the
lower of carrying amount and fair value less costs to sell. The notes to the
consolidated financial statements provide a detailed discussion of the accounting
standards and measurement criteria adopted. As regards recently issued
accounting standards, the notes to the consolidated financial statements discuss
(i) new standards applied in 2018, which according to the notes did not have a
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material impact in the year under review; and (ii) standards that will apply in the
future. The consolidated financial statements for 2018 of the Enel Group
underwent statutory audit by the Audit Firm EY SpA, which issued an unqualified
opinion, including with regard to the consistency of the Report on operations and
certain information in the report on corporate governance and ownership
structure with the consolidated financial statements, as well as the compliance of
the Report on operations with the provisions of law, pursuant to Article 14 of
Decree 39/2010 and Article 10 of Regulation 2014/537/EU. The report of EY SpA
also includes:
-
-
a discussion of key aspects of the audit report on the consolidated financial
statements; and
the declaration provided pursuant to Article 14, paragraph 2(e) of Decree
39/2010 and Article 4 of CONSOB Regulation 20267 (implementing Legislative
Decree 254 of December 30, 2016) concerning, respectively, a statement that
the Audit Firm did not identify any significant errors in the contents of the
Report on operations and that it verified that the Board of Directors had
approved the consolidated non-financial statement;
Under the terms of its engagement, EY SpA also issued unqualified opinions on
the financial statements for 2018 of the most significant Italian companies of the
Enel Group. Moreover, during periodic meetings with the representatives of the
Audit Firm, EY SpA, the latter did not raise any issues concerning the reporting
packages of the main foreign companies of the Enel Group, selected by the
auditors on the basis of the work plan established for the auditing of the
consolidated financial statements of the Enel Group, that would have a sufficiently
material impact to be reported in the opinion on those financial statements;
•
taking due account of the recommendations of the European Securities and
Markets Authority issued on January 21, 2013, and most recently confirmed with
the Public Statement of October 27, 2015, to ensure greater transparency
concerning the methods used by listed companies in testing goodwill for
impairment, in line with the recommendations contained in the joint Bank of Italy
- CONSOB - ISVAP document 4 of March 3, 2010, and in the light of indications of
CONSOB in its Communication 7780 of January 28, 2016, the compliance of the
impairment testing procedure with the provisions of IAS 36 was expressly
approved by the Board of Directors of the Company, having obtained a favorable
opinion in this regard from the Control and Risk Committee in February 2019, i.e.
prior to the date of approval of the financial statements for 2018;
4
454
Annual Report 2018
• we examined the Board of Directors’ proposal for the allocation of net income for
2018 and have no comments in this regard;
• we note that the Board of Directors of the Company certified, following
appropriate checks by the Control and Risk Committee and the Board of Statutory
Auditors in March 2019, that as at the date on which the 2018 financial
statements were approved, the Enel Group continued to meet the conditions
established by CONSOB (set out in Article 15 of the Market Rules, approved with
Resolution 20249 of December 28, 2017) concerning the accounting transparency
and adequacy of the organizational structures and internal control systems that
subsidiaries established and regulated under the law of non-EU countries must
comply with so that Enel shares can continue to be listed on regulated markets in
Italy;
• we monitored, within the scope of our responsibilities, the adequacy of the
organizational structure of the Company (and the Enel Group as a whole),
obtaining information from department heads and in meetings with the boards of
statutory auditors or equivalent bodies of a number of the main Enel Group
companies in Italy and abroad, for the purpose of the reciprocal exchange of
material information. As from the second half of 2014, the organizational
structure of the Enel Group is based on a matrix of Global Business Lines and
geographical areas. Taking account of the changes implemented most recently in
2017, it is organized into: (i) Global Business Lines, which are responsible for
managing and developing assets, optimizing their performance and the return on
capital employed in the various geographical areas in which the Group operates.
The Global Business Lines are Infrastructure and Networks, Enel Green Power,
Thermal Generation, Trading and Enel X; (ii) Regions and Countries, which are
responsible for managing relationships with local institutional bodies, regulatory
authorities, the media and other local stakeholders, as well as the development of
the customer base with regard to the sale of electricity and gas, in each of the
countries in which the Group is present, while also providing staff and other
service support to the Global Business Lines and adopting appropriate security,
safety and environmental standards. Regions and Countries comprise: Italy,
Iberia, Europe and Euro-Mediterranean Affairs, South America, North and Central
America, and Africa, Asia and Oceania; (iii) Global service functions, which are
responsible for managing information and communication technology activities
and procurement at the Group level; and (iv) Holding company functions, which
are responsible for managing governance processes at the Group level. They
include: Administration, Finance and Control, People and Organization,
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Communications, Legal and Corporate Affairs, Audit, and Innovability. The Board
of Statutory Auditors feels that the organizational system described above is
adequate to support the strategic development of the Company and the Enel
Group and is consistent with control requirements;
• during meetings with the boards of statutory auditors or equivalent bodies of a
number of the Group’s main companies in Italy and abroad, no material issues
emerged that would require reporting here;
• we monitored the independence of the Audit Firm EY SpA, having received from
them specific written confirmation today that they met that requirement
(pursuant to the provisions of Article 6, paragraph 2(a), of Regulation
2014/537/EU and having discussed the substance of that declaration with the
audit partner. In this regard, we also monitored, as provided for under Article 19,
paragraph 1(e), of Decree 39/2010, the nature and the scale of non-audit
services provided to the Company and other Enel Group companies by EY SpA
and the entities belonging to its network, the fees for which are reported in the
notes to the financial statements of the Company. Following our examinations,
the Board of Statutory Auditors feels that there are no critical issues concerning
the independence of the Audit Firm EY SpA. We held periodic meetings with the
representatives of the Audit Firm, pursuant to Article 150, paragraph 3, of the
Consolidated Law on Financial Intermediation, and no material issues emerged
that would require mention in this Report.
As regards the provisions of Article 11 of Regulation 2014/537/EU, EY SpA today
provided the Board of Statutory Auditors with the “additional report” for 2018 on
the results of the statutory audit carried out, which indicates no significant
difficulties encountered during the audit or any significant shortcomings in the
internal control system for financial reporting or the Enel accounting system. The
Board of Statutory Auditors will transmit that report to the Board of Directors
promptly, accompanied by any comments it may have, in accordance with Article
19, paragraph 1(a), of Decree 39/2010.
The Audit Firm also reported that it did not prepare any management letter for
2018;
• we supervised a specific selection process for the engagement to perform the
statutory audit of the accounts of Enel SpA for the 2020-2028 period, in which
qualified audit firms took part. As part of this procedure, the Board of Statutory
Auditors first assessed and approved the technical and financial selection criteria
and then examined and approved the findings of the technical and financial
evaluation of the offers received, in compliance with the provisions of Article 19,
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456
Annual Report 2018
paragraph 1, letter f) of Legislative Decree 39/2010 and Article 16 of Regulation
2014/537/EU, which assign responsibility for the appointment process to the
Board of Statutory Auditors. In compliance with the applicable legislation, this
process ended with the Board of Statutory Auditors drafting a motivated proposal,
presented to the Shareholders’ Meeting, containing two possible alternative
selections for engagement from among the audit firms that participated in the
process, accompanied by a duly justified preference for one of the two;
• we monitored the financial reporting process, the appropriateness of the
administrative and accounting system and
its reliability
in representing
operational events, as well as compliance with the principles of sound
administration in the performance of the Company’s business and we have no
comments in that regard. We conducted our checks by obtaining information from
the head of the Administration, Finance and Control department (taking due
account of the head’s role as the officer responsible for the preparation of the
Company’s financial reports), examining Company documentation and analyzing
the findings of the examination performed by EY SpA. The Chief Executive Officer
and the officer responsible for the preparation of the financial reports of Enel
issued a statement (regarding the Company’s 2018 financial statements)
certifying (i) the appropriateness with respect to the characteristics of the
Company and the effective adoption of the administrative and accounting
procedures used in the preparation of the financial statements; (ii) the
compliance of the content of the financial reports with international accounting
standards endorsed by
the European Union pursuant
to Regulation
2002/1606/EC; (iii) the correspondence of the financial statements with the
information in the books and other accounting records and their ability to provide
a true and fair representation of the performance and financial position of the
Company; and (iv) that the Report on operations accompanying the financial
statements contains a reliable analysis of operations and performance, as well as
the situation of the issuer, together with a description of the main risks and
uncertainties to which it is exposed. The statement also affirmed that the
appropriateness of the administrative and accounting procedures used in the
preparation of the financial statements of the Company had been verified in an
assessment of the internal control system for financial reporting (supported by
the findings of the independent testing performed by a qualified external advisor
and the Company’s Audit department, with each focusing on their respective
areas of responsibility on the basis of the different nature of the various checks)
and that the assessment of the internal control system did not identify any
7
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Reports
material issues. An analogous statement was prepared for the consolidated
financial statements for 2018 of the Enel Group;
• we monitored the adequacy and effectiveness of the internal control system,
primarily through periodic meetings with the head of the Audit department of the
Company and holding most of the meetings jointly with the Control and Risk
Committee. In the light of our examination and in the absence of significant
issues, the internal control and risk management system can be considered
adequate and effective. In February 2019, the Board of Directors of the Company
expressed an analogous assessment of the situation and also noted, in November
2018, that the main risks associated with the strategic targets set out in the
2019-2023 Business Plan were compatible with the management of the Company
in a manner consistent with those targets;
•
in 2018 we received two complaints concerning events deemed censurable by
that shareholder pursuant to Article 2408 of the Italian Civil Code in connection
with the procedures of the Shareholders’ Meeting of May 24, 2018. More
specifically, the complaints regarded the timing of the distribution to shareholders
of the materials containing the pre-Meeting questions and the associated replies
and, in the second case, the failure to provide accreditation to the Meeting and
the failure to reply to post-Meeting questions. In both cases, the Board of
Statutory Auditors, having conducted appropriate enquiries with the support of
the Legal and Corporate Affairs department, found no irregularities to report and
notified the shareholders involved of our findings. No petitions were received by
the Board of Statutory Auditors during 2018;
• we monitored the effective implementation of the Corporate Governance Code,
which the Company has adopted, verifying the compliance of Enel’s governance
arrangements with the recommendations of the Code. Detailed information on the
Company’s corporate governance system can be found in the report on corporate
governance and ownership structure for 2018. In June 2017, March 2018 and
March 2019, the Board of Statutory Auditors verified that the Board of Directors,
in evaluating the independence of non-executive directors, correctly applied the
assessment criteria specified in the Corporate Governance Code and the principle
of the priority of substance over form set out in that Code, adopting a transparent
procedure, the details of which are discussed in the report on corporate
governance and ownership structure for 2018.
In March and September 2017, March 2018 and March 2019, the Board of
Statutory Auditors conducted a “self-assessment” of the independence of its
members. On those occasions, the Board of Statutory Auditors verified that the
8
458
Annual Report 2018
Chairman Sergio Duca and the standing auditor Romina Guglielmetti met the
independence requirements established by the Consolidated Law on Financial
Intermediation and the Corporate Governance Code with regard to directors. In
September 2017, March 2018 and March 2019, the Board of Statutory Auditors
found that the standing auditor Roberto Mazzei, while no longer meeting the
independence requirements provided for in the Corporate Governance Code for
directors (following the hiring of a close family member as head of the “Global
Brand and Advertising Management” unit within Enel’s Communications
department), continues to meet the
independence requirements of the
Consolidated Law on Financial Intermediation with regard to the members of the
boards of statutory auditors of listed companies;
• a Board review was conducted for the first time with reference to 2018, assessing
the size, composition and functioning of the Board of Statutory Auditors, similar
to the review conducted for the Board of Directors since 2004. This is a best
practice that the Board of Statutory Auditors intended to adopt even in the
absence of a specific recommendation of the Corporate Governance Code, a
“peer-to-peer review” approach, i.e. the assessment not only of the functioning of
the body as a whole, but also of the style and content of the contribution provided
by each of the auditors. The findings of the Board review offer an especially
positive picture of the functioning of Enel’s Board of Statutory Auditors, from
which it emerges that this body has adopted effective and efficient operating
methods that comply with the reference regulatory framework, as attested by the
independent advisory firm charged with supporting the evaluation process.
It should also be noted that, based on the findings of the Board review (further
details of which can be found in the report on corporate governance and
ownership structure for 2018) and taking account of the provisions of the policy
on the diversity of its members (approved on January 29, 2018), the Board of
Statutory Auditors – in view of its re-appointment due to expiry of its term of
office on the occasion of the Shareholders’ Meeting called to approve the
Company’s financial statements for the 2018 financial year – has reached
consensus on “guidance” for the shareholders (available on the Company website)
on the various professional qualifications it would consider appropriate for the
members of the new Board;
• during 2018 the Board of Statutory Auditors also participated in an induction
program, structured into 5 meetings, organized by the Company to provide
directors and statutory auditors with an adequate understanding of the business
sectors in which the Enel Group operates, as well as the Company dynamics and
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their evolution, market trends and the applicable regulatory framework. For an
analysis of the issues addressed at the various induction sessions, please see the
report on corporate governance and ownership structure for 2018;
• we monitored the application of the provisions of Legislative Decree 254 of
December 30, 2016 (hereinafter “Decree 254”) concerning the disclosure of non-
financial and diversity information by certain large undertakings and groups. In
performing that activity, we monitored the adequacy of the organizational,
administrative, reporting and control system established by the Company in order
to enable the accurate representation in the consolidated non-financial statement
for 2018 of the activity of the Enel Group, its results and its impacts in the non-
financial areas referred to in Article 3, paragraph 1, of Decree 254, and have no
comments in this regard. The Audit Firm, EY SpA, issued, pursuant to Article 3,
paragraph 10, of Decree 254 and Article 5 of CONSOB Regulation 20267 of
January 18, 2018, its certification of the conformity of the information provided in
the consolidated non-financial statement with the requirements of applicable law;
•
since the listing of its shares, the Company has adopted specific rules (most
recently amended in September 2018) for the internal management and
processing of confidential information, which also set out the procedures for the
disclosure of documentation and information concerning the Company and the
Group, with specific regard to inside information. Those rules (which can be
consulted on the corporate website) contain appropriate provisions directed at
subsidiaries to enable Enel to comply with statutory public disclosure
requirements, pursuant to Article 114, paragraph 2, of the Consolidated Law on
Financial Intermediation;
•
in 2002 the Company also adopted (and has subsequently updated) a Code of
Ethics (also available on the corporate website) that expresses the commitments
and ethical responsibilities involved in the conduct of business, regulating and
harmonizing corporate conduct in accordance with standards of maximum
transparency and fairness with respect to all stakeholders;
• with regard to the provisions of Legislative Decree 231 of June 8, 2001 – which
introduced into Italian law a system of administrative (in fact criminal) liability for
companies for certain types of offences committed by its directors, managers or
employees on behalf of or to the benefit of the company – since July 2002 Enel
has adopted a compliance program consisting of a “general part” and various
“special parts” concerning the difference offences specified by Legislative Decree
231/2001 that the program is intended to prevent. For a description of the
manner in which the model has been adapted to the characteristics of the various
10
460
Annual Report 2018
Italian companies of the Group, as well as a description of the purposes of the
“Enel Global Compliance Program” for the Group’s foreign companies, please see
the report on corporate governance and ownership structure for 2018. The
structure that monitors the operation and compliance with the program and is
responsible for updating it is a collegial body. Since December 2017 it has been
composed of three external members with specific professional expertise on
corporate organization matters. The Board of Statutory Auditors received
adequate information on the main activities carried out in 2018 by that structure,
including in meetings with its members. Our examination of those activities found
no facts or situations that would require mention in this report;
•
in 2018, the Board of Statutory Auditors issued the following opinions:
- a favorable opinion (at the meeting of January 29, 2018), concerning the
2018 Audit Plan in accordance with the provisions of Article 7.C.1, letter c) of
the Corporate Governance Code, preliminary to the resolutions pertaining to
the Board of Directors in that regard;
- a favorable opinion (at the meeting of April 17, 2018), pursuant to Article
2389, paragraph 3, of the Italian Civil Code, concerning the proposed revision
of the decision concerning the remuneration and job conditions of the Chief
Executive Officer/General Manager during the 2017-2019 term;
• a report on the fixed and variable compensation accrued by those who served as
Chairman of the Board of Directors, the Chief Executive Officer/General Manager
and other directors in 2018 for their respective positions and any compensation
instruments awarded to them is contained in the Remuneration Report referred to
in Article 123-ter of the Consolidated Law on Financial Intermediation, approved
by the Board of Directors, acting on a proposal of the Nomination and
Compensation Committee on April 10, 2019, and published in compliance with the
time limits established by law. The design of these compensation instruments is
in line with best practices, complying with the principle of establishing a link with
appropriate financial and non-financial performance targets and pursuing the
creation of shareholder value over the medium and long term. The proposals to
the Board of Directors concerning such forms of compensation and the
determination of the associated parameters were prepared by the Nomination and
Compensation Committee, which is made up entirely of independent directors,
drawing on the findings of benchmarking analyses, including at the international
level, conducted by an independent consulting firm Finally, the Report on
Remuneration referred to in Article 123-ter of the Consolidated Law on Financial
Intermediation contains, in compliance with the applicable CONSOB regulations,
11
461
Reports
specific disclosures on the remuneration earned in 2018 by key management
personnel.
The Board of Statutory Auditors’ oversight activity in 2018 was carried out in 23
meetings (14 of which held jointly with the Control and Risk Committee) and with
participation in the 18 meetings of the Board of Directors, and, through the Chairman
or together, in the 6 meetings of the Nomination and Compensation Committee, in
the 4 meetings of the Related Parties Committee and in the 6 meetings of the
Corporate Governance and Sustainability Committee. The delegated magistrate of
the State Audit Court participated in the meetings of the Board of Statutory Auditors
and those of the Board of Directors.
During the course of this activity and on the basis of information obtained from EY
SpA, no omissions, censurable facts, irregularities or other significant developments
were found that would require reporting to the regulatory authorities or mention in
this report.
Based on the oversight activity performed and the information exchanged with the
independent auditors EY SpA, we recommend that you approve the Company’s
financial statements for the year ended December 31, 2018 in conformity with the
proposals of the Board of Directors.
Rome, April 17, 2019 The Board of Statutory Auditors
____________________
Sergio Duca - Chairman
____________________
Romina Guglielmetti - Auditor
____________________
Roberto Mazzei - Auditor
462
12
Annual Report 2018
463
Reports Report of the independent
Audit Firm on the 2018
financial statements
of Enel SpA
464
Annual Report 2018 465
Reports 466
Annual Report 2018 467
Reports 468
Annual Report 2018 469
Reports 470
Annual Report 2018 471
Reports Report of the
independent Audit Firm
on the 2018 consolidated
financial statements
of the Enel Group
472
Annual Report 2018 473
Reports 474
Annual Report 2018 475
Reports 476
Annual Report 2018 477
Reports 478
Annual Report 2018 479
Reports 480
Annual Report 2018 481
Reports Summary of the
resolutions of the Ordinary
Shareholders’ Meeting
Summary of the resolutions of the Ordinary Shareholders’ Meeting of May 16, 2019
The Ordinary Shareholders’ Meeting of Enel SpA held in Rome in single call on May 16, 2019 at the Enel Conference
Center at 125, Viale Regina Margherita, adopted the following resolutions:
1. approved the financial statements of Enel SpA for the year ended December 31, 2018, having acknowledged the
results of the consolidated financial statements of the Enel Group, which closed with Group’s net income of €4,789
million, together with the consolidated non-financial statement, both referred to the financial year 2018;
2. resolved:
(i)
to allocate Enel SpA’s net income for the year 2018, amounting to €3,456,161,520.41, as follows:
a) to earmark for distribution to the shareholders:
• €0.14 for each of the 10,166,679,946 ordinary shares in circulation on the ex-dividend date, to cover the inte-
rim dividend payable from January 23, 2019, the ex-dividend date of coupon no. 29 having fallen on January
21, 2019 and the “record date” (i.e. the date of the title to the payment of the dividend) on January 22, 2019,
for an overall amount of €1,423,335,192.44;
• €0.14 for each of the 10,166,679,946 ordinary shares in circulation on July 22, 2019 (i.e. on the scheduled
ex-dividend date), as the balance of the dividend, for an overall amount of €1,423,335,192.44;
b) to earmark for “retained earnings” the remaining part of the net income, for an overall amount of
€609,491,135.53;
(ii)
to pay, before withholding tax, if any, the balance of the dividend of €0.14 per ordinary share as from July 24,
2019, with the ex-dividend date of coupon no. 30 falling on July 22, 2019 and the “record date” (i.e. the date of
the title to the payment of the dividend) coinciding with July 23, 2019;
3. resolved:
(i)
to revoke the resolution concerning the authorization for the acquisition and the disposal of own shares approved
by the Shareholders’ Meeting held on May 24, 2018;
(ii)
to authorize the Board of Directors to acquire, in one or more instalments and for a period of eighteen months
starting from the date of the Shareholders’ Meeting resolution, a maximum number of 500 million ordinary sha-
res of the Company, representing approximately 4.92% of the share capital of Enel SpA, for a maximum outlay
of €2 billion; and
(iii)
to authorize the Board of Directors to dispose, in one or more instalments and for an unlimited period of time, of
all or part of the own shares held in portfolio, also before having reached the maximum amount of shares that
can be purchased, as well as, as the case may be, to buy-back the shares, provided that the own shares held by
the Company and, if applicable, by its subsidiaries, do not exceed the limit set by above-mentioned authorization
to the purchase;
482
Annual Report 2018 4. appointed the new Board of Statutory Auditors, which will remain in office until the approval of the 2021 financial sta-
tements, in the persons of:
• Barbara Tadolini - Chair;
• Claudio Sottoriva - Regular Auditor;
• Romina Guglielmetti - Regular Auditor;
• Francesca Di Donato - Alternate Auditor;
• Maurizio De Filippo - Alternate Auditor;
• Piera Vitali - Alternate Auditor;
confirming their yearly gross compensation at €85,000 for the Chair and €75,000 for each of the other regular Sta-
tutory Auditors, in addition to the reimbursement of properly documented travel and living expenses incurred in the
performance of their duties;
5. resolved to appoint KPMG SpA as Enel SpA external auditor with reference to the financial years from 2020 to 2028,
for an overall consideration of €4,352,865 for the whole period;
6. approved the long-term incentive Plan for 2019 reserved to the management of Enel SpA and/or of its subsidiaries
pursuant to Article 2359 of the Italian Civil Code, whose features are described in the relevant information document
prepared pursuant to Article 84-bis, paragraph 1, of the Issuers Regulation adopted by CONSOB with resolution
11971/1999, and to grant the Board of Directors, with the faculty to sub-delegate, all powers necessary for the actual
implementation of the aforesaid Plan;
7. resolved in favour of the first section of the remuneration report drawn up pursuant to Article 123-ter of Legislative
Decree 58 dated February 24, 1998, and Article 84-quater of the Issuers Regulation adopted by CONSOB with reso-
lution 11971/1999, containing the description of the policy for the remuneration of Directors, General Manager and
Executives with strategic responsibilities adopted by Enel SpA for the financial year 2019, as well as the procedures
used for the adoption and implementation of such policy.
483
Reports 06
Attachments
Subsidiaries, associates
and other significant
equity investments
of the Enel Group
at December 31, 2018
In compliance with CONSOB Notice DEM/6064293 of July 28, 2006 and Article 126 of CONSOB Resolution 11971 of May
14, 1999, a list of subsidiaries and associates of Enel SpA at December 31, 2018, pursuant to Article 2359 of the Italian Civil
Code, and of other significant equity investments is provided below. Enel has full title to all investments.
The following information is included for each company: name, registered office, share capital, currency in which share
capital is denominated, activity, method of consolidation, Group companies that have a stake in the company and their
respective ownership share, and the Group’s ownership share.
486
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
%
holding
Group %
holding
Parent
Company
Enel SpA
Subsidiaries
Rome
Italy
10,166,679,946.00
EUR
Holding
Holding
100.00%
(Cataldo) Hydro
Power Associates
New York (New
York)
USA
-
USD
Milan
Italy
37,419,179.00
EUR
Societa di
sviluppo,
realizzazione e
gestione
del gasdotto
Algeria-
Italia via Sardegna
SpA (“Galsi SpA”)
3-101-665717 SA San José
Costa Rica
10,000.00
CRC
Abc Solar 10 SpA Santiago
Chile
1,000,000.00
CLP
Abc Solar 2 SpA
Santiago
Chile
1,000,000.00
CLP
Aced Renewables
Hidden Valley (Pty)
Ltd
-
South Africa 1,000.00
ZAR
Activation Energy
Limited
-
Ireland
100,000.00
EUR
Renewables
Line-by-line
Adams Solar Pv
Project Two (RF)
(Pty) Ltd
Johannesburg
South Africa 10,000,000.00
ZAR
Adria Link Srl
Gorizia
Italy
500,000.00
EUR
Agassiz Beach LLC Minnesota
USA
-
USD
Line-by-line
Electricity
generation
from renewable
resources
Equity
Design,
construction
and operation of
merchant lines
Rome
Italy
10,000.00
EUR
Agatos Green
Power Trino
Agrupación
Acefhat AIE
Barcelona
Spain
793,340.00
Aguilón 20 SA
Zaragoza
Spain
2,682,000.00
Equity
Electricity
generation
from renewable
resources
-
Energy and
infrastructure
engineering
50.00%
50.00%
Hydro Development
Group Acquisition
LLC
Pyrites Hydro LLC
50.00%
Enel Produzione
SpA
17.65% 17.65%
Line-by-line
PH Chucas SA
100.00% 65.00%
Line-by-line
Enel Green Power
Chile Ltda
100.00% 61.93%
Line-by-line
Enel Green Power
Chile Ltda
100.00% 61.93%
Electricity
generation
from renewable
resources
Plant
construction
and electricity
generation
from renewable
resources
Plant
construction
and electricity
generation
from renewable
resources
Electricity
generation
and sale from
renewable
resources
Line-by-line
Enel Green Power
RSA 2 (Pty) Ltd
Karusa Wind Farm
Community Trust
SPV (RF) (Pty) Ltd
Pele Green Energy
Karusa BEE SPV
(RF) (Pty) Ltd
EnerNOC Ireland
Limited
Enel Green Power
RSA (Pty) Ltd
60.00%
60.00%
5.00%
35.00%
100.00% 100.00%
60.00% 60.00%
Enel Produzione
SpA
33.33% 33.33%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Enel Green Power
Solar Energy Srl
80.00% 80.00%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
EUR
EUR
Design and
services
-
Endesa Distribución
Eléctrica SL
16.67% 11.69%
Line-by-line
Enel Green Power
España SL
51.00% 35.75%
Electricity
generation
from renewable
resources
487
Attachments Company name Headquarters Country
Share capital
Currency Activity
Alba Energia Ltda Rio de Janeiro Brazil
15,061,880.00
BRL
Albany Solar LLC Delaware
USA
-
USD
Plant
development,
design,
construction
and operation
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Aurora Distributed
Solar LLC
%
holding
Group %
holding
99.99%
100.00%
0.01%
100.00% 51.00%
Alliance SA
Managua
Nicaragua
6,180,150.00
NIO
-
Equity
Daniel Hajj
Aboumrad
Estesa Holding
Corp.
Francisco Javier
Lacasa Fuertes
Ufinet Latam SLU
Enel Green Power
Chile Ltda
0.10%
10.68%
49.90%
0.10%
49.90%
100.00% 61.93%
Almeyda Solar
SpA
Almussafes
Servicios
Energéticos SL
Santiago
Chile
1,736,965,000.00
CLP
Valencia
Spain
3,010.00
EUR
Electricity
generation
from renewable
resources
Management
and
maintenance of
power plants
Line-by-line
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Alpe Adria Energia
Srl
Udine
Italy
900,000.00
EUR
Line-by-line
Design,
construction
and operation of
merchant lines
Enel Produzione
SpA
50.00% 50.00%
Alvorada Energia
SA
Ampla Energia e
Serviços SA (Enel
Distribuição Rio
SA)
Annandale Solar
LLC
Apiácas
Energia SA
Rio de Janeiro Brazil
17,117,415.92
BRL
Rio de Janeiro Brazil
2,498,230,386.65
BRL
Delaware
USA
-
USD
Rio de Janeiro Brazil
21,216,846.33
BRL
Aquenergy
Systems LLC
Greenville
(South Carolina)
USA
-
USD
Teruel
Spain
60,100.00
EUR
Electricity
generation and
sale
Electricity
generation,
transmission
and distribution
Electricity
generation
from renewable
resources
Electricity
generation
Electricity
generation
from renewable
resources
Electricity
generation
Line-by-line
Equity
Line-by-line
Madrid
Spain
3,010.00
EUR
Wind plants
Line-by-line
Aragonesa de
Actividades
Energéticas SA
Aranort
Desarrollos SL
Asociación Nuclear
Ascó-Vandellós
II AIE
Tarragona
Spain
19,232,400.00
EUR
Proportional
Management
and
maintenance of
power plants
Line-by-line
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
Line-by-line
Enel Brasil SA
99.79% 54.09%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Enel Green Power
Brasil Participações
Ltda
EGPNA REP Hydro
Holdings LLC
100.00% 100.00%
100.00% 50.00%
Endesa Red
SA (Sociedad
Unipersonal)
Enel Green Power
España SL
Endesa Generación
SA
100.00% 70.10%
100.00% 70.10%
85.41% 59.87%
Athonet Srl
Trieste
Italy
60,946.48
EUR
-
Equity
Enel X Srl
16.00% 16.00%
Atwater Solar LLC Delaware
USA
Aurora Distributed
Solar LLC
Wilmington
(Delaware)
USA
-
-
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Aurora Solar
Holdings LLC
51.00% 51.00%
488
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Aurora Land
Holdings LLC
Delaware
USA
Aurora Solar
Holdings LLC
Delaware
USA
Autumn Hills LLC Delaware
USA
-
-
-
USD
USD
USD
Avikiran Energy
India Private
Limited
Gurugram
(Haryana)
India
100,000.00
INR
Avikiran Solar India
Private Limited
Haryana
India
100,000.00
INR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
from renewable
resources
Avikiran Surya
India Private
Limited
Haryana
India
100,000.00
INR
-
Line-by-line
Avikiran Vayu India
Private Limited
Gurugram
(Haryana)
India
100,000.00
INR
Line-by-line
Electricity
generation,
distribution and
sale
Aysén Energía SA
en liquidación
Aysén Transmisión
SA en liquidación
Santiago
Chile
4,900,100.00
Santiago
Chile
22,368,000.00
Barnet Hydro
Company LLC
Burlington
(Vermont)
USA
-
CLP
CLP
USD
Baylio Solar SLU Seville
Spain
3,000.00
EUR
Beaver Falls Water
Power Company
Philadelphia
(Pennsylvania)
USA
Beaver Valley
Holdings LLC
Philadelphia
(Pennsylvania)
USA
Beaver Valley
Power Company
LLC
Philadelphia
(Pennsylvania)
USA
-
-
-
USD
USD
USD
Belomechetskaya Moscow
Russia
3,010,000.00
RUB
Bioenergy Casei
Gerola Srl
Rome
Italy
100,000.00
EUR
Black River Hydro
Assoc.
New York (New
York)
USA
-
USD
Electricity
activities
Electricity
generation and
sale
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Thermal
generation
plants
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Held by
%
holding
Group %
holding
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Line-by-line
Equity
Equity
AFS
Line-by-line
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
BLP Energy Private
Limited
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
Mr. Sandy Khera
Enel Generación
Chile SA
Enel Generación
Chile SA
Enel Green Power
North America Inc.
Sweetwater
Hydroelectric LLC
Enel Green Power
España SL
100.00% 76.56%
100.00% 76.56%
100.00% 100.00%
99.90%
76.48%
0.10%
51.00% 29.55%
51.00% 29.55%
10.00%
100.00%
90.00%
100.00% 70.10%
Line-by-line
Beaver Valley
Holdings LLC
67.50% 67.50%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Green Power
Rus LLC
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Equity
(Cataldo) Hydro
Power Associates
Enel Green Power
North America Inc.
75.00%
62.50%
25.00%
489
Attachments Company name Headquarters Country
Share capital
Currency Activity
BLP Vayu (Project
1) Private Limited
Haryana
India
7,500,000.00
INR
BLP Vayu (Project
2) Private Limited
Haryana
India
45,000,000.00
INR
BLP Wind Project
(Amberi) Private
Limited
New Delhi
India
5,000,000.00
INR
Boiro Energía SA Boiro
Spain
601,010.00
EUR
Bondia Energia
Ltda
Rio de Janeiro Brazil
2,000,888.00
BRL
Boott Hydropower
LLC
Boston
(Massachusetts)
USA
-
USD
Bosa del Ebro SL Zaragoza
Spain
3,010.00
EUR
Bp Hydro
Associates
Boise (Idaho)
USA
Bp Hydro Finance
Partnership
Salt Lake City
(Utah)
USA
-
-
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Plant
development,
design,
construction
and operation
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Line-by-line
Equity
Line-by-line
Equity
Line-by-line
Line-by-line
Line-by-line
Broadband
Comunicaciones
SA
Buffalo Dunes
Wind Project LLC
Quito
Ecuador
30,290.00
USD
-
Equity
Topeka (Kansas) USA
-
USD
Line-by-line
Electricity
generation
from renewable
resources
Buffalo Jump Lp
Calgary
(Alberta)
Canada
10.00
CAD
Holding
Line-by-line
Bungala One Finco
(Pty) Ltd
Sydney
Australia
1,000.00
AUD
Sydney
Australia
100.00
Sydney
Australia
100.00
AUD
AUD
Sydney
Australia
1,000.00
AUD
Equity
Equity
Equity
Equity
Electricity
generation
from renewable
resources
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Sydney
Australia
-
AUD
Renewable
energy
Equity
Bungala One
Operation Holding
Trust
Bungala One
Operations
Holding (Pty) Ltd
Bungala One
Operations (Pty)
Ltd
Bungala One
Operations Trust
490
Held by
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
Enel Green Power
España SL
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
EGPNA REP Hydro
Holdings LLC
%
holding
Group %
holding
100.00% 76.56%
100.00% 76.56%
100.00% 76.56%
40.00% 28.04%
99.99%
100.00%
0.01%
100.00% 50.00%
Bancale Servicios
Integrales SL
Enel Green Power
España SL
Chi Idaho LLC
Enel Green Power
North America Inc.
Bp Hydro
Associates
Enel Green Power
North America Inc.
Ufinet Ecuador
Ufiec SA
Ufinet Latam SLU
EGPNA
Development
Holdings LLC
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
Bungala One
Property (Pty) Ltd
49.00%
35.75%
51.00%
68.00%
32.00%
100.00%
75.92%
100.00%
24.08%
99.99%
21.40%
0.01%
75.00% 75.00%
0.10%
100.00%
99.90%
100.00% 50.00%
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Bungala One
Operations Holding
(Pty) Ltd
Bungala One
Operations Holding
(Pty) Ltd
100.00% 50.00%
100.00% 50.00%
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
Sydney
Australia
1,000.00
AUD
Sydney
Australia
100.00
AUD
Sydney
Australia
100.00
AUD
Bungala One
Property (Pty) Ltd
Bungala One
Property Holding
(Pty) Ltd
Bungala One
Property Holding
Trust
Bungala One
Property Trust
Bungala Two
Operations
Holding (Pty) Ltd
Bungala Two
Operations
Holding Trust
Bungala Two
Operations (Pty)
Ltd
Bungala Two
Operations Trust
Bungala Two
Property Holding
(Pty) Ltd
Bungala Two
Property Holding
Trust
Bungala Two
Property (Pty) Ltd
Bungala Two
Property Trust
Business Venture
Investments 1468
(Pty) Ltd
Sydney
Australia
Bungala Two Finco
(Pty) Ltd
Sydney
Australia
-
-
-
-
-
-
-
-
-
Sydney
Australia
Sydney
Australia
Sydney
Australia
Sydney
Australia
Sydney
Australia
Sydney
Australia
Sydney
Australia
Sydney
Australia
1.00
Lombardy East South Africa 1,000.00
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
Renewable
energy
Renewable
energy
Electricity
generation
from renewable
resources
Renewable
energy
Renewable
energy
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
AUD
AUD
AUD
AUD
AUD
AUD
AUD
AUD
AUD
AUD
ZAR
USD
USD
%
holding
Group %
holding
100.00% 50.00%
Bungala One
Property Holding
(Pty) Ltd
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Bungala One
Property Holding
(Pty) Ltd
100.00% 50.00%
Bungala Two
Property (Pty) Ltd
100.00% 50.00%
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Bungala Two
Operations Holding
(Pty) Ltd
Bungala Two
Operations Holding
(Pty) Ltd
Enel Green Power
Bungala (Pty) Ltd
100.00% 50.00%
100.00% 50.00%
50.00% 50.00%
Enel Green Power
Bungala (Pty) Ltd
50.00% 50.00%
Bungala Two
Property Holding
(Pty) Ltd
Bungala Two
Property Holding
(Pty) Ltd
Enel Green Power
RSA (Pty) Ltd
100.00% 50.00%
100.00% 50.00%
100.00% 100.00%
Canastota Wind
Power LLC
Wilmington
(Delaware)
USA
Caney River Wind
Project LLC
Topeka (Kansas) USA
-
-
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
Rocky Caney Wind
LLC
20.00% 20.00%
Abrantes
Portugal
50,000.00
EUR
Fuel supply
Equity
Carbopego -
Abastecimientos
e Combustíveis
SA
Carodex (Pty) Ltd Houghton
South Africa 116.00
ZAR
Line-by-line
Electricity
generation
from renewable
resources
Endesa Generación
Portugal SA
Endesa Generación
SA
Enel Green Power
RSA (Pty) Ltd
0.01%
35.05%
49.99%
98.49% 98.49%
491
Attachments Company name Headquarters Country
Share capital
Currency Activity
Cascade Energy
Storage LLC
Delaware
USA
-
USD
Renewable
energy
Consolidation
method
Line-by-line
Held by
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Green Power
España SL
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
%
holding
Group %
holding
100.00% 100.00%
100.00% 70.10%
0.10%
100.00%
99.90%
Line-by-line
Enel Brasil SA
99.93% 54.19%
Line-by-line
Enel Argentina SA
Inversora Dock
Sud SA
0.25%
69.99%
21.83%
Line-by-line
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
Line-by-line
Enel Brasil SA
100.00% 54.23%
Enel Green Power
España SL
Endesa Generación
SA
Central Dock Sud
SA
Enel Generación
Costanera SA
Enel Generación El
Chocón SA
Endesa Generación
SA
Nuclenor SA
Slovenské
elektrárne AS
33.30% 23.34%
33.33% 23.36%
6.40%
13.76%
1.30%
33.20%
23.57%
16.76%
0.69%
100.00% 33.00%
Equity
Enel SpA
42.70% 42.70%
Line-by-line
Line-by-line
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Green Power
North America Inc.
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Castiblanco Solar
SL
Castle Rock
Ridge Limited
Partnership
Celg Distribuição
SA - Celg D. (Enel
Distribuição Goiás)
Central Dock Sud
SA
Central Geradora
Fotovoltaica Bom
Nome Ltda
Central Geradora
Termelétrica
Fortaleza SA
Central Hidráulica
Güejar-Sierra SL
Central Térmica de
Anllares Aie
Central Vuelta de
Obligado SA
Centrales
Nucleares
Almaraz-Trillo AIE
Madrid
Spain
3,000.00
EUR
Photovoltaic
Line-by-line
Line-by-line
Calgary
(Alberta)
Canada
-
CAD
Goiás
Brazil
5,075,679,362.52
BRL
Buenos Aires
Argentina
35,595,178,229.00
ARS
Bahia
Brazil
4,859,739.00
BRL
Caucaia
Brazil
151,940,000.00
BRL
Electricity
generation
from renewable
resources
Electricity
transmission,
distribution and
sale
Electricity
generation,
transmission
and distribution
Electricity
generation
and sale from
renewable
resources
Thermal
generation
plants
Seville
Spain
364,210.00
EUR
Plant operation Equity
Madrid
Spain
595,000.00
EUR
Plant operation Equity
Buenos Aires
Argentina
500,000.00
ARS
Equity
Electrical
facilities
construction
Madrid
Spain
-
EUR
Plant operation Equity
Equity
Centrum Pre Vedu
A Vyskum Sro
Kalná nad
Hronom
Slovakia
(Slovak
Republic)
6,639.00
EUR
Milan
Italy
8,550,000.00
EUR
CESI - Centro
Elettrotecnico
Sperimentale
Italiano Giacinto
Motta SpA
Champagne
Storage LLC
Wilmington
(Delaware)
USA
1.00
USD
Cherokee Falls
Hydroelectric
Project LLC
Delaware
USA
Chi Black River
LLC
Wilmington
(Delaware)
USA
Chi Idaho LLC
Wilmington
(Delaware)
USA
-
-
-
USD
USD
USD
Research and
development
in sciences and
engineering
Testing,
inspection and
certification
services,
engineering
and consulting
services
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
492
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Chi Minnesota
Wind LLC
Wilmington
(Delaware)
USA
-
USD
Chi Operations
Inc.
Wilmington
(Delaware)
USA
100.00
USD
Chi Power Inc.
Wilmington
(Delaware)
USA
100.00
USD
Chi Power
Marketing Inc.
Wilmington
(Delaware)
USA
100.00
USD
Chi West LLC
Wilmington
(Delaware)
USA
100.00
USD
Chinango SAC
Lima
Peru
294,249,298.00
PEN
Chisago Solar LLC Delaware
USA
Chisholm View II
Holding LLC
Delaware
USA
Chisholm View
Wind Project II
LLC
Delaware
USA
Chisholm View
Wind Project LLC
Oklahoma City
(Oklahoma)
USA
Cimarron Bend
Assets LLC
Wilmington
(Delaware)
USA
Cimarron Bend
Wind Holdings I
LLC
Cimarron Bend
Wind Holdings
LLC
Delaware
USA
Delaware
USA
Cimarron Bend
Wind Project I LLC
Delaware
USA
Cimarron Bend
Wind Project II
LLC
Cimarron Bend
Wind Project III
LLC
Delaware
USA
Wilmington
(Delaware)
USA
-
-
-
-
-
-
-
-
-
-
USD
USD
USD
USD
USD
USD
USD
USD
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation,
sale and
transmission
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Enel Green Power
North America Inc.
%
holding
Group %
holding
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Generación
Perú SAA
80.00% 36.27%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Chisholm View II
Holding LLC
100.00% 51.00%
Equity
Equity
Equity
Equity
EGPNA REP Wind
Holdings LLC
100.00% 50.00%
Cimarron Bend
Wind Project I LLC
Cimarron Bend
Wind Project II LLC
Cimarron Bend
Wind Project III
LLC
Enel Kansas LLC
Cimarron Bend
Wind Holdings LLC
49.00%
50.00%
49.00%
1.00%
1.00%
100.00% 50.00%
EGPNA Preferred
Wind Holdings LLC
100.00% 50.00%
Line-by-line
Equity
Cimarron Bend
Wind Holdings I
LLC
Cimarron Bend
Wind Holdings I
LLC
100.00% 50.00%
100.00% 50.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
493
Attachments Company name Headquarters Country
Share capital
Currency Activity
Codensa SA ESP Bogotá DC
Colombia
13,514,515,800.00
COP
Cogeneración El
Salto SL
Comercializadora
Eléctrica de Cádiz
SA
Compagnia Porto
di Civitavecchia
SpA in liquidazione
Companhia
Energética do
Ceará - Coelce
(Enel Distribuição
Ceará SA)
Compañía de
Transmisión del
Mercosur Ltda -
CTM
Compañía
Energética
Veracruz SAC
Zaragoza
Spain
36,060.73
EUR
Cadiz
Spain
600,000.00
EUR
Rome
Italy
14,730,800.00
EUR
Fortaleza
Brazil
741,046,885.77
BRL
Buenos Aires
Argentina
14,012,000.00
ARS
Lima
Peru
2,886,000.00
PEN
Electricity
distribution and
sale
Cogeneration of
electricity and
heat
Electricity
transmission,
distribution and
sale
Construction
of port
infrastructure
Electricity
distribution
Electricity
generation,
transmission
and distribution
Hydroelectric
projects
Consolidation
method
Held by
%
holding
Group %
holding
Line-by-line
Enel Américas SA 48.41% 26.25%
Equity
Equity
Equity
Enel Green Power
España SL
20.00% 14.02%
Endesa Red
SA (Sociedad
Unipersonal)
33.50% 23.48%
Enel Produzione
SpA
25.00% 25.00%
Line-by-line
Enel Brasil SA
74.05% 40.16%
Line-by-line
Enel CIEN SA
Enel SpA
100.00%
0.00%
54.23%
Line-by-line
Enel Perú SAC
100.00% 54.23%
Compañía Eólica
Tierras Altas SA
Soria
Spain
13,222,000.00
EUR
Wind plants
Equity
Concert Srl
Rome
Italy
10,000.00
EUR
Coneross Power
Corporation Inc.
Greenville
(South Carolina)
USA
110,000.00
USD
Consolidated
Hydro New
Hampshire LLC
Consolidated
Hydro New York
LLC
Wilmington
(Delaware)
USA
Wilmington
(Delaware)
USA
Consolidated
Hydro Southeast
LLC
Wilmington
(Delaware)
USA
-
-
-
USD
USD
USD
Consolidated
Pumped Storage
Inc.
Wilmington
(Delaware)
Copenhagen
Hydro LLC
Wilmington
(Delaware)
USA
550,000.00
USD
USA
-
USD
Corporación Eólica
de Zaragoza SL
Zaragoza
Spain
271,652.00
EUR
Cranberry Point
Energy Storage
LLC
Danax Energy
(Pty) Ltd
Dover
(Delaware)
USA
100.00
Houghton
South Africa 100.00
USD
ZAR
De Rock’l Srl
Bucharest
Romania
5,629,000.00
RON
Product, plant
and equipment
certification
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
494
Line-by-line
Enel Green Power
España SL
Enel Produzione
SpA
37.51% 26.29%
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
81.82% 81.82%
Equity
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Enel Green Power
España SL
25.00% 17.53%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
Line-by-line
Enel Green Power
Romania Srl
Enel Green Power
SpA
100.00%
100.00%
0.00%
Annual Report 2018 Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
distribution and
sale
Dehesa de Los
Guadalupes Solar
SLU
Demand Energy
Networks Inc.
Depuración
Destilación
Reciclaje SL
Desarrollo
de Fuerzas
Renovables S de
RL de Cv
Distribuidora de
Energía Eléctrica
del Bages SA
Distribuidora
Eléctrica del
Puerto de La Cruz
SA
Distrilec Inversora
SA
Dodge Center
Distributed Solar
LLC
Dolores Wind SA
de Cv
Dominica Energía
Limpia S de RL
de Cv
Company name Headquarters Country
Share capital
Currency Activity
Seville
Spain
3,000.00
EUR
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Enel Green Power
España SL
%
holding
Group %
holding
100.00% 70.10%
Washington
USA
171,689.00
USD
Services
Line-by-line
Enel X North
America Inc.
100.00% 100.00%
Boiro
Spain
600,000.00
EUR
Mexico City
Mexico
33,101,350.00
MXN
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Equity
Enel Green Power
España SL
40.00% 28.04%
Line-by-line
99.99%
100.00%
0.01%
Enel Green Power
México S de RL
de Cv
Energía Nueva
Energía Limpia
México S de RL
de Cv
Diamond Vista
Holdings LLC
Wilmington
(Delaware)
USA
1.00
USD
Holding
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Diego de Almagro
Matriz SpA
Santiago
Chile
351,604,338.00
CLP
Dietrich Drop LLC Delaware
USA
-
USD
Line-by-line
Empresa Eléctrica
Panguipulli SA
100.00% 61.93%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Barcelona
Spain
108,240.00
EUR
Line-by-line
Tenerife
Spain
12,621,210.00
EUR
Line-by-line
Electricity
purchase,
transmission
and distribution
Buenos Aires
Argentina
497,610,000.00
ARS
Holding
Line-by-line
Enel Américas SA 51.50% 27.93%
Endesa Red
SA (Sociedad
Unipersonal)
Hidroeléctrica de
Catalunya SL
Endesa Red
SA (Sociedad
Unipersonal)
55.00%
70.10%
45.00%
100.00% 70.10%
Delaware
USA
-
USD
Mexico City
Mexico
100.00
MXN
Mexico City
Mexico
2,070,600,646.00
MXN
Drift Sand Wind
Holdings LLC
Delaware
USA
Drift Sand Wind
Project LLC
Delaware
USA
-
-
USD
USD
E-Distribuţie Banat
SA
E-Distribuţie
Dobrogea SA
E-Distribuţie
Muntenia SA
e-distribuzione
SpA
Timisoara
Romania
382,158,580.00
RON
Constanța
Romania
280,285,560.00
RON
Bucharest
Romania
271,635,250.00
RON
Rome
Italy
2,600,000,000.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
distribution
Electricity
distribution
Electricity
distribution
Electricity
distribution
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Equity
99.00%
100.00%
1.00%
60.80% 20.00%
Enel Rinnovabile SA
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Equity
Enel Kansas LLC
35.00% 50.00%
Equity
Drift Sand Wind
Holdings LLC
100.00% 50.00%
Line-by-line
Enel SpA
51.00% 51.00%
Line-by-line
Enel SpA
51.00% 51.00%
Line-by-line
Enel SpA
78.00% 78.00%
Line-by-line
Enel SpA
100.00% 100.00%
495
Attachments Company name Headquarters Country
Share capital
Currency Activity
Eastwood Solar
LLC
Delaware
USA
-
USD
EGP BioEnergy Srl Rome
Italy
1,000,000.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Aurora Distributed
Solar LLC
%
holding
Group %
holding
100.00% 51.00%
Line-by-line
Enel Green Power
Puglia Srl
100.00% 100.00%
EGP Geronimo
Holding Company
Inc.
EGP Magdalena
Solar SA de Cv
Wilmington
(Delaware)
USA
1,000.00
USD
Holding
Line-by-line
Mexico City
Mexico
100.00
MXN
Renewable
energy
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Enel Rinnovabile SA
de Cv
Hidroelectricidad del
Pacífico S
de RL de Cv
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
99.00%
100.00%
1.00%
100.00% 100.00%
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
EGPNA REP Solar
Holdings LLC
100.00% 50.00%
Equity
Enel Stillwater LLC 100.00% 50.00%
Line-by-line
Stillwater Woods
Hill Holdings LLC
100.00% 100.00%
Line-by-line
Padoma Wind
Power LLC
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
EGP Nevada
Power LLC
EGP Salt Wells
Solar LLC
Delaware
USA
Delaware
USA
EGP San Leandro
Microgrid I LLC
Delaware
USA
EGP Solar 1 LLC Wilmington
USA
(Delaware)
EGP Stillwater
Solar LLC
Wilmington
(Delaware)
USA
-
-
-
-
-
EGP Stillwater
Solar Pv II LLC
Delaware
USA
1.00
EGP Timber Hills
Project LLC
Los Angeles
(California)
USA
-
USD
USD
USD
USD
USD
USD
USD
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
EGP Ventos de
São Roque 01 SA
EGP Ventos de
São Roque 02 SA
EGP Ventos de
São Roque 04 SA
EGP Ventos de
São Roque 08 SA
EGP Ventos de
São Roque 11 SA
-
-
-
-
-
496
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
EGP Ventos de
São Roque 13 SA
EGP Ventos de
São Roque 16 SA
EGP Ventos de
São Roque 17 SA
EGP Ventos de
São Roque 18 SA
EGP Ventos de
São Roque 19 SA
EGP Ventos de
São Roque 22 SA
EGP Ventos de
São Roque 26 SA
EGP Ventos de
São Roque 29 SA
-
-
-
-
-
-
-
-
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
EGPNA
Development
Holdings LLC
Wilmington
(Delaware)
USA
EGPNA Hydro
Holdings LLC
EGPNA Preferred
Holdings II LLC
EGPNA Preferred
Wind Holdings
LLC
Delaware
USA
Delaware
USA
Delaware
USA
EGPNA Project
HoldCo 1 LLC
Dover
(Delaware)
EGPNA Project
HoldCo 2 LLC
Dover
(Delaware)
EGPNA Project
HoldCo 3 LLC
Dover
(Delaware)
EGPNA Project
HoldCo 4 LLC
Dover
(Delaware)
EGPNA Project
HoldCo 5 LLC
Dover
(Delaware)
EGPNA Project
HoldCo 6 LLC
Dover
(Delaware)
EGPNA Project
HoldCo 7 LLC
Dover
(Delaware)
USA
USA
USA
USA
USA
USA
USA
-
-
-
-
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Consolidation
method
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
USD
USD
Holding
Line-by-line
USD
Holding
Line-by-line
USD
Holding
Equity
USD
Holding
Line-by-line
USD
Holding
Line-by-line
USD
Holding
Line-by-line
USD
Holding
Line-by-line
USD
Holding
Line-by-line
USD
Holding
Line-by-line
USD
Holding
Line-by-line
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento Ltda
Enel Green Power
North America
Development LLC
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
EGPNA REP Wind
Holdings LLC
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
Enel Green Power
North America Inc.
%
holding
Group %
holding
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 50.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
497
Attachments Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
EGPNA
Renewable Energy
Partners LLC
EGPNA REP
Holdings LLC
Delaware
USA
Delaware
USA
EGPNA REP Hydro
Holdings LLC
Delaware
USA
EGPNA REP Solar
Holdings LLC
Delaware
USA
EGPNA REP Wind
Holdings LLC
Delaware
USA
EGPNA Wind
Holdings 1 LLC
Wilmington
(Delaware)
USA
El Dorado Hydro
LLC
Los Angeles
(California)
USA
-
-
-
-
-
-
-
El Paso Solar SAS
ESP
Bogotá DC
Colombia
91,690,000.00
Elcogas SA
Puertollano
Spain
809,690.40
Elcomex Solar
Energy Srl
Constanța
Romania
4,590,000.00
RON
Elecgas SA
Santarem
(Pego)
Portugal
50,000.00
EUR
Electra Capital (RF)
(Pty) Ltd
Johannesburg
South Africa 10,000,000.00
ZAR
Eléctrica de Lijar
SL
Eléctrica del Ebro
SA (Sociedad
Unipersonal)
Electricidad de
Puerto Real SA
Cadiz
Spain
1,081,820.00
EUR
Tarragona
Spain
500,000.00
EUR
Cadiz
Spain
6,611,130.00
EUR
Brazil
2,823,486,421.33
BRL
São
Paulo
Eletropaulo
Metropolitana
Eletricidade de
São Paulo SA (Enel
Distribuição São
Paulo)
%
holding
Group %
holding
50.00% 50.00%
100.00% 100.00%
100.00% 50.00%
100.00% 50.00%
100.00% 50.00%
Held by
EGPNA REP
Holdings LLC
Enel Green Power
North America Inc.
EGPNA Renewable
Energy Partners
LLC
EGPNA Renewable
Energy Partners
LLC
EGPNA Renewable
Energy Partners
LLC
EGPNA REP Wind
Holdings LLC
100.00% 50.00%
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
USD
Joint Venture
Equity
USD
Holding
Line-by-line
USD
Holding
Equity
USD
Holding
Equity
USD
USD
USD
COP
EUR
Equity
Equity
Equity
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
Electricity
generation
Electricity
generation
from renewable
resources
Combined-
cycle electricity
generation
Electricity
generation
from renewable
resources
Electricity
transmission
and distribution
Electricity
supply
Line-by-line
Equity
Line-by-line
Equity
Enel Green Power
Colombia SAS ESP
Endesa Generación
SA
Enel SpA
Enel Green Power
Romania Srl
Enel Green Power
SpA
Endesa Generación
Portugal SA
100.00% 100.00%
40.99%
33.05%
4.32%
100.00%
100.00%
0.00%
50.00% 35.05%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
60.00% 60.00%
Equity
Line-by-line
Equity
Electricity
distribution and
sale
Electricity
distribution
Line-by-line
Endesa Red
SA (Sociedad
Unipersonal)
Endesa Red
SA (Sociedad
Unipersonal)
Endesa Red
SA (Sociedad
Unipersonal)
Enel Brasil
Investimentos
Sudeste SA
50.00% 35.05%
100.00% 70.10%
50.00% 35.05%
94.40% 52.00%
Elk Creek Hydro
LLC
Emerging
Networks Panama
SA
Delaware
USA
-
USD
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Electricity
generation
from renewable
resources
Panama
Panama
1,000.00
USD
-
Equity
Ifx/eni - Spc
Panama Inc.
100.00% 21.40%
Emgesa SA ESP
Bogotá DC
Colombia
655,222,310,000.00
COP
Line-by-line
Enel Américas SA 48.48% 26.29%
Electricity
generation and
sale
Emittenti Titoli SpA
in liquidazione
Milan
Italy
5,200,000.00
EUR
-
-
Enel SpA
10.00% 10.00%
eMotorWerks Inc. Wilmington
USA
1,000.00
USD
(Delaware)
Renewable
energy
Line-by-line
Enel X North
America Inc.
100.00% 100.00%
498
Annual Report 2018 Lima
Peru
3,368,424.00
PEN
Line-by-line
Enel Green Power
Perú SA
Energética Monzón
SAC
100.00%
100.00%
0.00%
Company name Headquarters Country
Share capital
Currency Activity
Eléctrica de Jafre
SA
Girona
Spain
165,876.00
EUR
Electricity
distribution and
sale
Consolidation
method
Line-by-line
Madrid
Spain
18,030,000.00
EUR
Mining
Line-by-line
Ceuta
Spain
65,000.00
EUR
Electricity
supply
Line-by-line
Ceuta
Spain
9,335,000.00
EUR
Electricity
distribution
Line-by-line
Ceuta
Spain
16,562,250.00
EUR
Holding
Line-by-line
Empresa
Carbonífera del
Sur SA
Empresa de
Alumbrado
Eléctrico de Ceuta
Comercialización
de Referencia
SA (Sociedad
Unipersonal)
Empresa de
Alumbrado
Eléctrico de Ceuta
Distribución
SA (Sociedad
Unipersonal)
Empresa de
Alumbrado
Eléctrico de Ceuta
SA
Empresa de
Generación
Eléctrica Marcona
SA
Electricity
generation,
transmission,
distribution
purchase and
sale
Electricity
transmission
Electricity
distribution and
sale
Electricity
generation,
transmission
and distribution
Electricity
generation
from renewable
resources
Electricity
generation,
transmission
and distribution
Electricity
supply
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Equity
Line-by-line
Empresa de
Transmisión Chena
SA
Santiago
Chile
250,428,941.00
CLP
Empresa
Distribuidora Sur
SA - Edesur
Empresa Eléctrica
de Colina Ltda
Empresa Eléctrica
Panguipulli SA
Empresa Eléctrica
Pehuenche SA
Buenos Aires
Argentina
898,590,000.00
ARS
Santiago
Chile
82,222,000.00
CLP
Santiago
Chile
48,038,937.00
CLP
Santiago
Chile
175,774,920,733.00
CLP
Empresa Energía
SA
Cadiz
Spain
2,500,000.00
EUR
Santiago
Chile
12,647,752,517.00
CLP
Empresa Nacional
de Geotermia SA
Empresa
Propietaria de La
Red SA
Endesa
Comercialização de
Energia SA
Endesa
Distribución
Eléctrica SL
Panama
Panama
58,500,000.00
USD
-
Electricity
transmission
and distribution
Endesa Capital SA Madrid
Spain
60,200.00
Oporto
Portugal
250,000.00
Madrid
Spain
1,204,540,060.00
EUR
Endesa Energía SA Madrid
Spain
12,981,860.00
EUR
Held by
Endesa Red
SA (Sociedad
Unipersonal)
Hidroeléctrica de
Catalunya SL
%
holding
Group %
holding
52.54%
70.10%
47.46%
Endesa Generación
SA
100.00% 70.10%
100.00% 67.50%
Empresa de
Alumbrado
Eléctrico de Ceuta
SA
100.00% 67.50%
Empresa de
Alumbrado
Eléctrico de Ceuta
SA
Endesa Red
SA (Sociedad
Unipersonal)
96.29% 67.50%
Empresa Eléctrica
de Colina Ltda
Enel Distribución
Chile SA
Distrilec Inversora
SA
Enel Argentina SA
Enel Distribución
Chile SA
Luz Andes Ltda
0.10%
61.37%
99.90%
56.36%
39.10%
43.10%
100.00%
61.37%
0.00%
Enel Green Power
Chile Ltda
Energía y Servicios
South America SpA
Enel Generación
Chile SA
99.96%
61.93%
0.04%
92.65% 53.68%
Endesa Red
SA (Sociedad
Unipersonal)
Enel Green Power
Chile Ltda
50.00% 35.05%
51.00% 31.59%
Enel SpA
11.11% 11.11%
EUR
EUR
Finance
company
Electricity
generation and
sale
Electricity
distribution
Marketing of
energy products
Line-by-line
Endesa SA
100.00% 70.10%
Line-by-line
Endesa Energía SA 100.00% 70.10%
Line-by-line
Endesa Red
SA (Sociedad
Unipersonal)
100.00% 70.10%
Line-by-line
Endesa SA
100.00% 70.10%
499
Attachments Company name Headquarters Country
Share capital
Currency Activity
Endesa Energía
XXI SL
Endesa
Financiación
Filiales SA
Endesa
Generación II SA
Endesa
Generación
Nuclear SA
Endesa
Generación
Portugal SA
Endesa
Generación SA
Endesa Ingeniería
SLU
Endesa Medios
y Sistemas
SL (Sociedad
Unipersonal)
Endesa
Operaciones
y Servicios
Comerciales SL
Endesa Power
Trading Ltd
Endesa Red
SA (Sociedad
Unipersonal)
Madrid
Spain
2,000,000.00
EUR
Madrid
Spain
4,621,003,006.00
EUR
Seville
Spain
63,107.00
Seville
Spain
60,000.00
Paço de Arcos
(Oeiras)
Portugal
50,000.00
EUR
EUR
EUR
Seville
Spain
1,940,379,737.02
EUR
Seville
Spain
1,000,000.00
EUR
Marketing and
energy-related
services
Finance
company
Electricity
generation
Subholding
company in the
nuclear sector
Electricity
generation
Electricity
generation and
sale
Consulting and
engineering
services
Consolidation
method
Held by
%
holding
Group %
holding
Line-by-line
Endesa Energía SA 100.00% 70.10%
Line-by-line
Endesa SA
100.00% 70.10%
Line-by-line
Endesa SA
100.00% 70.10%
Line-by-line
Endesa Generación
SA
100.00% 70.10%
Line-by-line
70.10%
Endesa Energía SA
Endesa Generación
SA
Enel Green Power
España SL
Energías de Aragón
II SL
0.20%
99.20%
0.40%
0.20%
Line-by-line
Endesa SA
100.00% 70.10%
Line-by-line
Endesa Red
SA (Sociedad
Unipersonal)
100.00% 70.10%
Madrid
Spain
89,999,790.00
EUR
Services
Line-by-line
Endesa SA
100.00% 70.10%
Madrid
Spain
10,138,580.00
EUR
Services
Line-by-line
Endesa Energía SA 100.00% 70.10%
London
United
Kingdom
2.00
GBP
Trading
Line-by-line
Endesa SA
100.00% 70.10%
Madrid
Spain
719,901,728.28
EUR
Electricity
distribution
Holding
company
Line-by-line
Endesa SA
100.00% 70.10%
Line-by-line
Enel Iberia Srl
70.10% 70.10%
Endesa SA
Madrid
Spain
1,270,502,540.40
EUR
Endesa X SA
(Sociedad
Unipersonal)
Madrid
Spain
60,000.00
EUR
Services
Line-by-line
Endesa SA
100.00% 70.10%
Enel Alberta Wind
Inc.
Calgary
(Alberta)
Canada
16,251,021.00
CAD
Enel Américas SA Santiago
Chile
6,763,204,424.00
USD
Line-by-line
Enel Green Power
Canada Inc.
100.00% 100.00%
Line-by-line
Enel SpA
51.80% 54.23%
Electricity
generation
from renewable
resources
Holding.
Electricity
generation and
distribution
Airport City
Israel
10,000.00
EUR
Legal services Equity
Enel and
Shikun&binui
Innovation Infralab
Ltd
Enel Argentina SA Buenos Aires
Argentina
514,530,000.00
ARS
Holding
Line-by-line
Enel Bella Energy
Storage LLC
Wilmington
(Delaware)
USA
-
USD
Renewable
energy
Line-by-line
Enel Innovation
Hubs Srl
50.00% 50.00%
99.88%
0.12%
54.19%
100.00% 100.00%
Enel Américas SA
Gas Atacama Chile
SA
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Brasil
Investimentos
Nordeste 82 SA
Niterói (Rio de
Janeiro)
Brazil
10,000.00
BRL
Electricity
generation,
transmission,
distribution
purchase and
sale
Line-by-line
Enel Brasil SA
100.00% 51.02%
500
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Enel Brasil
Investimentos
Nordeste 86 SA
Niterói (Rio de
Janeiro)
Brazil
10,000.00
BRL
Enel Brasil
Investimentos
Sudeste SA
-
Brazil
10,000.00
BRL
Electricity
generation,
transmission,
distribution
purchase and
sale
Holding
company
Consolidation
method
Held by
%
holding
Group %
holding
Line-by-line
Enel Brasil SA
100.00% 51.02%
Line-by-line
Enel Brasil SA
100.00% 54.23%
Enel Brasil SA
Rio de Janeiro Brazil
6,276,994,956.09
BRL
Holding
Line-by-line
Enel Américas SA 98.50% 54.23%
Enel Chile SA
Santiago
Chile
3,954,491,478,786.00
CLP
Enel CIEN SA
Rio de Janeiro Brazil
285,050,000.00
BRL
Enel Cove Fort II
LLC
Wilmington
(Delaware)
USA
Enel Cove Fort
LLC
Wilmington
(Delaware)
USA
-
-
USD
USD
Enel Distribución
Chile SA
Santiago
Chile
230,137,980,270.00
CLP
Enel Distribución
Perú SAA
Lima
Peru
638,563,900.00
PEN
Enel Energia SpA Rome
Italy
302,039.00
EUR
Mexico City
Mexico
25,000,100.00
MXN
Holding.
Electricity
generation and
distribution
Electricity
generation,
transmission
and distribution
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Holding.
Electricity
distribution
Electricity
distribution and
sale
Electricity and
gas sale
Electricity
generation
from renewable
resources
Line-by-line
Enel Holding Chile
Srl
Enel SpA
0.02%
61.93%
61.91%
Line-by-line
Enel Brasil SA
100.00% 54.23%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
Enel Geothermal
LLC
100.00% 50.00%
Line-by-line
Enel Chile SA
99.09% 61.36%
Line-by-line
Enel Perú SAC
83.15% 45.10%
Line-by-line
Enel SpA
100.00% 100.00%
Line-by-line
Enel Green Power
México S de RL
de Cv
Energía Nueva de
Iguu S de RL de Cv
100.00%
100.00%
0.00%
Bucharest
Romania
37,004,350.00
RON
Electricity sale Line-by-line
Enel SpA
78.00% 78.00%
Enel Energie SA
Bucharest
Romania
140,000,000.00
RON
Electricity sale Line-by-line
Enel SpA
51.00% 51.00%
Gauteng
South Africa 100.00
ZAR
Delaware
USA
100.00
USD
Line-by-line
Enel X International
Srl
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Wilmington
(Delaware)
Amsterdam
USA
100.00
USD
Finance
company
Line-by-line
The
Netherlands
1,478,810,371.00
EUR
Holding
Line-by-line
Enel Holding
Finance Srl
Enel Holding
Finance Srl
Enel SpA
100.00% 100.00%
75.00%
100.00%
25.00%
50.06% 50.06%
Enel Energía SA
de Cv
Enel Energie
Muntenia SA
Enel Energy South
Africa
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Finance
America LLC
Enel Finance
International NV
Enel Fortuna SA
Panama
Panama
100,000,000.00
USD
Enel Generación
Chile SA
Santiago
Chile
552,777,320,871.00
CLP
Electricity
generation
from renewable
resources
Electricity
generation,
transmission
and distribution
Line-by-line
Enel Green Power
Panama SA
Line-by-line
Enel Chile SA
93.55% 57.93%
501
Attachments Company name Headquarters Country
Share capital
Currency Activity
Enel Generación
Costanera SA
Buenos Aires
Argentina
701,988,378.00
ARS
Enel Generación El
Chocón SA
Buenos Aires
Argentina
298,584,050.00
ARS
Enel Generación
Perú SAA
Lima
Enel Generación
Piura SA
Lima
Peru
2,498,101,267.20
PEN
Peru
73,982,594.00
PEN
Enel Generación
SA de Cv
Mexico City
Mexico
7,100,100.00
MXN
Electricity
generation and
sale
Electricity
generation and
sale
Electricity
generation,
distribution and
sale
Electricity
generation
Electricity
generation
Enel Geothermal
LLC
Wilmington
(Delaware)
USA
-
USD
Enel Global
Infrastructure and
Networks Srl
Enel Global
Thermal
Generation Srl
Rome
Italy
10,100,000.00
EUR
Rome
Italy
11,000,000.00
EUR
Equity
Electricity
generation
from renewable
resources
Line-by-line
Metering,
remote control
and connectivity
services via
power line
communication
Consolidation
method
Held by
%
holding
Group %
holding
Line-by-line
Enel Argentina SA 75.68% 41.01%
Line-by-line
Enel Argentina SA
Hidroinvest SA
8.67%
59.00%
35.63%
Line-by-line
Enel Perú SAC
83.60% 45.34%
Line-by-line
Enel Perú SAC
96.50% 52.33%
Line-by-line
Enel Green Power
México S de RL
de Cv
Energía Nueva de
Iguu S de RL de Cv
EGPNA Renewable
Energy Partners
LLC
100.00%
100.00%
0.00%
100.00% 50.00%
Enel SpA
100.00% 100.00%
Enel Global Trading
SpA
Rome
Italy
90,885,000.00
Newfoundland Canada
1,000.00
EUR
CAD
Buenos Aires
Argentina
46,346,484.00
ARS
Sydney
Australia
100.00
AUD
Sydney
Australia
100.00
Niterói (Rio de
Janeiro)
Brazil
115,513,587.00
AUD
BRL
Rio de Janeiro Brazil
379,249,747.00
BRL
Enel Green Power
Newfoundland and
Labrador Inc.
Enel Green Power
Argentina SA
Enel Green Power
Australia (Pty) Ltd
Enel Green Power
Australia Trust
Enel Green Power
Boa Vista Eólica
SA
Enel Green Power
Bom Jesus da
Lapa Solar SA
Enel Green
Power Brasil
Participações Ltda
Business
consulting,
administrative
and
management
consulting
and corporate
planning
Fuel trading and
logistics
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Enel SpA
100.00% 100.00%
Line-by-line
Enel SpA
100.00% 100.00%
Equity
EGPNA REP Wind
Holdings LLC
100.00% 50.00%
Line-by-line
Line-by-line
Line-by-line
Line-by-line
AFS
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Green Power
SpA
96.97%
100.00%
3.03%
100.00% 100.00%
Enel Green Power
SpA
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
Enel Green Power
SpA
100.00% 100.00%
Rio de Janeiro Brazil
7,161,724,678.00
BRL
Holding
Line-by-line
Enel Green Power
Bulgaria EAD
Sofia
Bulgaria
35,231,000.00
BGN
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Plant
construction,
operation and
maintenance
502
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Sydney
Australia
100.00
AUD
Electricity
generation
from renewable
resources
Sydney
Australia
-
AUD
Renewable
energy
Rio de Janeiro Brazil
245,400,766.00
BRL
Goiania
Brazil
6,433,983,585.00
BRL
Enel Green Power
Bungala (Pty) Ltd
Enel Green Power
Bungala Trust
Enel Green Power
Cabeça de Boi SA
Enel Green Power
Cachoeira Dourada
SA
Enel Green Power
Calabria Srl
Rome
Italy
10,000.00
EUR
Enel Green Power
Canada Inc.
Montreal
(Quebec)
Canada
85,681,857.00
CAD
Enel Green Power
Chile Ltda
Enel Green Power
Colombia SAS ESP
Enel Green Power
Costa Rica SA
Santiago
Chile
842,086,000.00
USD
Bogotá DC
Colombia
843,635,000.00
COP
San José
Costa Rica
27,500,000.00
USD
Enel Green Power
Cove Fort Solar
LLC
Wilmington
(Delaware)
Enel Green Power
Cremzow GmbH &
Co. Kg
Brandenburg
Germany
1,000.00
EUR
Enel Green
Power Cremzow
Verwaltungs
GmbH
Enel Green Power
Cristal Eólica SA
Enel Green Power
Cristalândia I
Eólica SA
Enel Green Power
Cristalândia II
Eólica SA
Brandenburg
Germany
25,000.00
EUR
Rio de Janeiro Brazil
144,474,900.00
BRL
Rio de Janeiro Brazil
220,018,418.00
BRL
Rio de Janeiro Brazil
368,236,837.00
BRL
Enel Green Power
Cumaru 01 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Consolidation
method
Line-by-line
Held by
Enel Green Power
Australia (Pty) Ltd
%
holding
Group %
holding
100.00% 100.00%
Line-by-line
Line-by-line
Enel Green Power
Australia (Pty) Ltd
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Brasil SA
99.75% 54.10%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Chile SA
Enel SpA
99.99%
0.01%
61.93%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Electricity
generation
from renewable
resources
Electricity
generation and
sale
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Plant
construction
and operation
Business
services
Line-by-line
Line-by-line
Electricity
generation
and sale from
renewable
resources
AFS
AFS
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
and sale from
renewable
resources
Enel Green Power
Germany GmbH
ENERTRAG
Aktiengesellschaft
Enel Green Power
Germany GmbH
ENERTRAG
Aktiengesell-schaft
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
90.00%
90.00%
10.00%
90.00%
90.00%
10.00%
99.17%
100.00%
0.83%
99.93% 99.93%
99.93% 99.93%
99.90%
100.00%
0.10%
503
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Attachments Company name Headquarters Country
Share capital
Currency Activity
Enel Green Power
Cumaru 02 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Cumaru 03 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Cumaru 04 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green
Power Cumaru
05 Sociedade
Limitada
Enel Green Power
Damascena Eólica
SA
Enel Green Power
del Sur SpA
(formerly Parque
Eólico Renaico
SpA)
Enel Green Power
Delfina A Eólica SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Rio de Janeiro Brazil
76,873,003.00
BRL
Santiago
Chile
353,605,313.37
USD
Rio de Janeiro Brazil
519,612,483.00
BRL
Enel Green Power
Delfina B Eólica SA
Niterói (Rio de
Janeiro)
Brazil
149,538,826.00
BRL
Enel Green Power
Delfina C Eólica SA
Rio de Janeiro Brazil
46,558,322.00
BRL
Enel Green Power
Delfina D Eólica
SA
Enel Green Power
Delfina E Eólica SA
Enel Green Power
Desenvolvimento
Ltda
Rio de Janeiro Brazil
159,170,233.00
BRL
Rio de Janeiro Brazil
160,923,464.00
BRL
Rio de Janeiro Brazil
13,900,297.00
BRL
Enel Green Power
Development Srl
Rome
Italy
20,000.00
EUR
504
Consolidation
method
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
and sale from
renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Chile SA
Enel Green Power
Chile Ltda
%
holding
Group %
holding
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.10%
100.00%
0.90%
0.00%
100.00%
61.93%
Enel Green Power
Brasil Participações
Ltda
Parque Eólico
Delfina Ltda
Enel Green Power
Brasil Participações
Ltda
Parque Eólico
Delfina Ltda
Enel Green Power
Brasil Participações
Ltda
Parque Eólico
Delfina Ltda
Enel Green Power
Brasil Participações
Ltda
Parque Eólico
Delfina Ltda
Enel Green Power
Brasil Participações
Ltda
Parque Eólico
Delfina Ltda
Enel Green Power
Brasil Participações
Ltda
Energía y Servicios
South America SpA
Enel Green Power
SpA
99.99%
100.00%
0.01%
99.98%
100.00%
0.02%
99.98%
100.00%
0.02%
99.99%
100.00%
0.01%
99.98%
100.00%
0.02%
99.99%
100.00%
0.01%
100.00% 100.00%
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Enel Green Power
Diamond Vista
Wind Project LLC
Enel Green Power
Dois Riachos
Eólica SA
Wilmington
USA
1.00
USD
Rio de Janeiro Brazil
146,472,009.00
BRL
Enel Green Power
Ecuador SA
Quito
Enel Green Power
Egypt SAE
Cairo
Ecuador
26,000.00
USD
Egypt
250,000.00
EGP
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Management,
operation and
maintenance
of all types
of generation
plant and their
distribution
grids
Consolidation
method
Line-by-line
Held by
Diamond Vista
Holdings LLC
%
holding
Group %
holding
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Green Power
SpA
100.00% 100.00%
99.90%
100.00%
0.10%
100.00% 100.00%
Enel Green
Power Elkwater
Wind Limited
Partnership
Enel Green Power
Emiliana Eólica SA
Enel Green Power
España SL
Enel Green Power
Esperança Eólica
SA
Enel Green Power
Fazenda SA
Enel Green Power
Germany GmbH
Enel Green Power
Global Investment
BV
Enel Green Power
Granadilla SL
Enel Green Power
Guatemala SA
Enel Green
Power Hadros
Wind Limited
Partnership
Enel Green Power
Hellas SA
Enel Green Power
Hellas Supply SA
Alberta
(Canada)
Canada
1,000.00
CAD
Holding
Line-by-line
Rio de Janeiro Brazil
160,187,530.00
BRL
Madrid
Spain
11,152.74
EUR
Rio de Janeiro Brazil
138,385,174.00
BRL
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Rio de Janeiro Brazil
232,629,073.00
BRL
Munich
Germany
25,000.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation and
sale
Line-by-line
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Endesa Generación
SA
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
1.00%
100.00%
99.00%
100.00%
100.00%
0.00%
100.00% 70.10%
99.20%
100.00%
0.80%
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Amsterdam
The
Netherlands
10,000.00
EUR
Holding
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Tenerife
Spain
3,012.00
EUR
Line-by-line
Enel Green Power
España SL
65.00% 45.57%
Electricity
generation
from renewable
resources
Guatemala City Guatemala
100,000.00
GTQ
Holding
Line-by-line
Alberta (Canada) Canada
1,000.00
CAD
Holding
Line-by-line
Maroussi
Greece
8,170,350.00
EUR
Maroussi
Greece
600,000.00
EUR
Holding
company –
Energy services
Electricity
generation,
transport, sale
and trading
Line-by-line
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
Enel Green Power
SpA
98.00%
100.00%
2.00%
1.00%
100.00%
99.00%
100.00% 100.00%
Line-by-line
Enel Green Power
Hellas SA
100.00% 100.00%
505
Attachments Company name Headquarters Country
Share capital
Currency Activity
Maroussi
Greece
106,599,641.00
EUR
Electricity
generation
Consolidation
method
Line-by-line
Held by
Enel Green Power
Hellas SA
%
holding
Group %
holding
100.00% 100.00%
Dover
(Delaware)
USA
1.00
USD
Operator Wind Line-by-line
HillTopper Wind
Holdings LLC
100.00% 100.00%
Brazil
Brazil
488,696,053.00
BRL
New Delhi
India
100,000,000.00
INR
Electricity
generation
from renewable
resources
Holding
company
Line-by-line
Line-by-line
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Development Srl
0.01%
99.99%
100.00%
76.56% 76.56%
Enel Green Power
Hellas Wind Parks
South Evia SA
Enel Green Power
HillTopper Wind
LLC (formerly
HillTopper Wind
Power LLC)
Enel Green Power
Horizonte Mp
Solar SA
Enel Green Power
India Private
Limited (formerly
BLP Energy
Private Limited)
Enel Green Power
Ituverava Norte
Solar SA
Enel Green Power
Ituverava Solar SA
Enel Green Power
Ituverava Sul Solar
SA
Enel Green Power
Joana Eólica SA
Enel Green Power
Maniçoba Eólica
SA
Enel Green Power
México S de RL
de Cv
Enel Green Power
Modelo I Eólica SA
Enel Green Power
Modelo II Eólica
SA
Enel Green Power
Morocco SARLAU
Rio de Janeiro Brazil
176,552,644.00
BRL
Rio de Janeiro Brazil
186,235,933.00
BRL
Rio de Janeiro Brazil
366,279,143.00
BRL
Rio de Janeiro Brazil
148,487,530.00
BRL
Enel Green Power
Kenya Limited
Nairobi
Kenya
100,000.00
KES
Rio de Janeiro Brazil
90,722,530.00
BRL
Rio de Janeiro Brazil
150,050,000.00
BRL
Rio de Janeiro Brazil
130,850,000.00
BRL
Morocco
Morocco
170,000,000.00
MAD
Enel Green Power
Morro do Chapéu I
Eólica SA
Niterói (Rio de
Janeiro)
Brazil
390,841,942.00
BRL
506
Bondia Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Bondia Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
RSA (Pty) Ltd
Enel Green Power
SpA
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
0.09%
99.91%
100.00%
0.09%
99.91%
100.00%
100.00% 100.00%
100.00%
100.00%
0.00%
1.00%
100.00%
99.00%
99.20%
100.00%
0.80%
100.00%
100.00%
0.00%
100.00% 100.00%
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation,
transmission,
distribution
purchase and
sale
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Plant
development,
design,
construction
and operation
Electricity
generation
from renewable
resources
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
Mexico City
Mexico
2,399,774,165.00
MXN
Holding
Line-by-line
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Enel Green Power
Morro do Chapéu
II Eólica SA
Niterói (Rio de
Janeiro)
Brazil
343,991,942.00
BRL
Enel Green Power
Mourão SA
Enel Green Power
Namibia (Pty) Ltd
Rio de Janeiro Brazil
25,600,100.00
BRL
Windhoek
Namibia
100.00
NAD
Enel Green Power
North America
Development LLC
Wilmington
(Delaware)
Enel Green Power
North America Inc.
Wilmington
(Delaware)
USA
-
USD
USA
50.00
USD
Enel Green Power
Nova Lapa Solar
SA
Enel Green Power
Nova Olinda B
Solar SA
Enel Green Power
Nova Olinda C
Solar SA
Rio de Janeiro Brazil
366,352,371.00
BRL
Rio de Janeiro Brazil
452,903,076.00
BRL
Rio de Janeiro Brazil
382,703,076.00
BRL
Enel Green Power
Nova Olinda Norte
Solar SA
Niterói (Rio de
Janeiro)
Enel Green Power
Nova Olinda Sul
Solar SA
Niterói (Rio de
Janeiro)
Brazil
384,003,076.00
BRL
Brazil
196,076,538.00
BRL
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
AFS
AFS
AFS
AFS
AFS
Enel Green Power
Panama SA
Enel Green Power
Paranapanema SA
Enel Green Power
Partecipazioni
Speciali Srl
Enel Green Power
Pau Ferro Eólica
SA
Enel Green
Power Pedra do
Gerônimo Eólica
SA
Panama
Panama
3,000.00
USD
Holding
Line-by-line
Rio de Janeiro Brazil
123,350,100.00
BRL
Rome
Italy
10,000.00
EUR
Rio de Janeiro Brazil
140,000,000.00
BRL
Rio de Janeiro Brazil
202,534,527.57
BRL
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Line-by-line
Enel Green Power
Perú SA
Lima
Peru
394,035,184.00
PEN
Line-by-line
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
%
holding
Group %
holding
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
SpA
Enel Green Power
Brasil Participações
Ltda
99.99% 99.99%
99.99% 99.99%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
SpA
98.72% 98.72%
98.97%
100.00%
1.03%
100.00% 100.00%
507
Attachments Company name Headquarters Country
Share capital
Currency Activity
Enel Green Power
Primavera Eólica
SA
Rio de Janeiro Brazil
144,640,892.85
BRL
Enel Green Power
Projetos 31 SA
Niterói
(Rio de Janeiro)
Brazil
1,000.00
BRL
Electricity
generation
and sale from
renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Enel Green Power
Projetos 32 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 35 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 37 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 39 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 40 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 41 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 45 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Enel Green Power
Projetos 46 SA
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
%
holding
Group %
holding
99.00%
100.00%
1.00%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.00%
99.10%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Projetos I SA
Niterói (Rio de
Janeiro)
Enel Green Power
Puglia Srl
Rome
Brazil
1,000.00
BRL
Trading
Line-by-line
Enel Brasil SA
100.00% 54.23%
Italy
1,000,000.00
EUR
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Electricity
generation
from renewable
resources
508
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Enel Green
Power Ra SAE (in
liquidation)
Cairo
Egypt
15,000,000.00
EGP
Lincoln
(Nebraska)
Enel Green Power
Rattlesnake Creek
Wind Project
LLC (formerly
Rattlesnake Creek
Wind Project LLC)
Enel Green Power
Romania Srl
Rusu de Sus
(Nuşeni)
USA
1.00
USD
Romania
2,430,631,000.00
RON
Enel Green Power
RSA (Pty) Ltd
Enel Green Power
RSA 2 (Pty) Ltd
Johannesburg
South Africa 1,000.00
ZAR
Johannesburg
South Africa 120.00
ZAR
Enel Green Power
Rus Limited
Liability Company
Moscow
Russian
Federation
25,500,000.00
RUB
Niterói (Rio de
Janeiro)
Brazil
246,269,552.00
BRL
Enel Green Power
Salto Apiacás SA
(formerly Enel
Green Power
Damascena Eólica
SA)
Enel Green Power
Sannio
Rome
Enel Green Power
São Abraão Eólica
SA
Niterói (Rio de
Janeiro)
Italy
750,000.00
Brazil
115,513,587.00
EUR
BRL
-
-
-
-
Enel Green Power
São Gonçalo 07
SA (formerly Enel
Green Power
Projetos 42 SA)
Enel Green Power
São Gonçalo 08
SA (formerly Enel
Green Power
Projetos 43 SA)
Enel Green Power
São Gonçalo 1
SA (formerly EGP
Projetos X)
Enel Green Power
São Gonçalo 10
SA (formerly EGP
Projetos XV)
Brazil
30,001,000.00
BRL
Brazil
30,001,000.00
BRL
Brazil
15,376,000.00
BRL
Brazil
676,000.00
BRL
Consolidation
method
Line-by-line
Held by
Enel Green Power
Egypt SAE
%
holding
Group %
holding
100.00% 100.00%
Line-by-line
Rattlesnake Creek
Holdings LLC
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
Development Srl
100.00% 100.00%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
Design,
decision,
operation and
maintenance
of generation
plants of all
types and their
distribution
grids
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
Electricity
generation
from renewable
resources
Electricity
generation
and sale from
renewable
resources
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Enel Green Power
Partecipazioni
Speciali Srl
Enel Green Power
SpA
Enel Green Power
Brasil Participações
Ltda
1.00%
100.00%
99.00%
100.00% 100.00%
Enel Green Power
SpA
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
100.00% 100.00%
99.99%
100.00%
0.01%
99.99%
100.00%
0.01%
0.01%
100.00%
99.99%
0.01%
100.00%
99.99%
509
Attachments Company name Headquarters Country
Share capital
Currency Activity
Brazil
30,001,000.00
BRL
Brazil
30,001,000.00
BRL
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Brazil
1,000.00
BRL
Electricity
generation
Line-by-line
Enel Green Power
São Gonçalo 15
-
Brazil
1,000.00
BRL
Electricity
generation
Line-by-line
Brazil
16,876,000.00
BRL
Brazil
676,000.00
BRL
Brazil
676,000.00
BRL
Brazil
676,000.00
BRL
Brazil
14,976,000.00
BRL
Brazil
162,676,000.00
BRL
Niterói (Rio de
Janeiro)
Brazil
16,876,000.00
BRL
Niterói (Rio de
Janeiro)
Brazil
14,976,000.00
BRL
Rio de Janeiro Brazil
144,640,892.85
BRL
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
Electricity
generation
and sale from
renewable
resources
-
-
Enel Green Power
São Gonçalo 11
SA (formerly EGP
Enel Green Power
Projetos 44 SA)
Enel Green Power
São Gonçalo 12
SA (formerly Enel
Green Power
Projetos 22 SA)
Enel Green Power
São Gonçalo 14
-
-
-
Enel Green Power
São Gonçalo 2
SA (formerly EGP
Projetos XI)
Enel Green Power
São Gonçalo 21
SA (formerly EGP
Projetos XVI)
Enel Green Power
São Gonçalo 22
-
-
-
-
Enel Green Power
São Gonçalo 22
SA (formerly EGP
Projetos 30)
Enel Green Power
São Gonçalo 3
SA (formerly EGP
Projetos XII)
Enel Green Power
São Gonçalo 4
SA (formerly EGP
Projetos XIII)
Enel Green Power
São Gonçalo 5
SA (formerly EGP
Projetos XIV)
Enel Green Power
São Gonçalo 6
SA (formerly Enel
Green Power
Projetos 19 SA)
Enel Green Power
São Judas Eólica
SA
510
%
holding
Group %
holding
99.99%
100.00%
0.01%
99.99%
100.00%
0.01%
99.99%
100.00%
0.01%
99.99%
100.00%
0.01%
0.01%
100.00%
99.99%
0.00%
100.00%
100.00%
0.01%
99.99%
100.00%
0.00%
100.00%
100.00%
0.01%
99.99%
100.00%
0.01%
99.99%
100.00%
0.01%
99.99%
100.00%
99.99%
100.00%
0.01%
99.00%
100.00%
1.00%
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Alba Energia Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Enel Green Power
Services LLC
-
USA
100.00
USD
-
Enel Green Power
Shu SAE (in
liquidation)
Cairo
Egypt
15,000,000.00
EGP
Enel Green Power
Singapore Pte Ltd
Singapore
Singapore
50,000.00
SGD
Enel Green Power
Solar Energy Srl
Rome
Italy
10,000.00
EUR
Rome
Italy
50,000.00
EUR
Rome
Italy
50,000.00
EUR
Enel Green Power
Solar Metehara
SpA
Enel Green Power
Solar Ngonye
SpA (formerly
Enel Green Power
Africa Srl)
Enel Green Power
SpA
Rome
Italy
272,000,000.00
EUR
Enel Green Power
Tacaicó Eólica SA
Rio de Janeiro Brazil
106,517,360.00
BRL
Enel Green Power
Tefnut SAE (in
liquidation)
Cairo
Egypt
15,000,000.00
EGP
Istanbul
Turkey
65,654,658.00
TRY
-
-
-
Brazil
132,001,000.00
BRL
Brazil
171,001,000.00
BRL
Brazil
185,001,000.00
BRL
Enel Green Power
Turkey Enerji
Yatirimlari Anonim
Şirketi
Enel Green Power
Ventos de Santa
Ângela 1 SA
(formerly EGP
Projetos II)
Enel Green Power
Ventos de Santa
Ângela 10 SA
(formerly EGP
Projetos 21)
Enel Green Power
Ventos de Santa
Ângela 11 SA
(formerly EGP
Projetos 23)
Consolidation
method
Line-by-line
Line-by-line
Held by
Enel Green Power
North America Inc.
Enel Green Power
Egypt SAE
%
holding
Group %
holding
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Enel SpA
100.00% 100.00%
Line-by-line
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Egypt SAE
99.10%
100.00%
0.90%
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Design,
decision,
operation and
maintenance
of generation
plants of all
types and their
distribution
grids
Electricity
generation
from renewable
resources
Plant
development,
design,
construction
and operation
Electricity
generation
from renewable
resources
Electricity
generation
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Design,
decision,
operation and
maintenance
of generation
plants of all
types and their
distribution
grids
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
511
Attachments Company name Headquarters Country
Share capital
Currency Activity
Brazil
1,000.00
BRL
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Brazil
1,000.00
HUF
Brazil
178,001,000.00
BRL
Brazil
182,001,000.00
BRL
Brazil
1,000.00
BRL
Brazil
198,001,000.00
BRL
Brazil
1,000.00
BRL
Brazil
126,001,000.00
BRL
Brazil
132,001,000.00
BRL
Brazil
126,001,000.00
BRL
Brazil
113,001,000.00
BRL
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
%
holding
Group %
holding
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
-
-
-
-
-
-
-
-
-
-
-
Enel Green Power
Ventos de Santa
Ângela 12
Enel Green Power
Ventos de Santa
Ângela 13
Enel Green Power
Ventos de Santa
Ângela 14 SA
(formerly EGP
Projetos XXIV)
Enel Green Power
Ventos de Santa
Ângela 15 SA
(formerly EGP
Projetos 25)
Enel Green Power
Ventos de Santa
Ângela 16
Enel Green Power
Ventos de Santa
Ângela 17 SA
(formerly EGP
Projetos 26)
Enel Green Power
Ventos de Santa
Ângela 18
Enel Green Power
Ventos de Santa
Ângela 19 SA
(formerly EGP
Projetos 27)
Enel Green Power
Ventos de Santa
Ângela 2 SA
(formerly EGP
Projetos III)
Enel Green Power
Ventos de Santa
Ângela 20 SA
(formerly EGP
Projetos 28)
Enel Green Power
Ventos de Santa
Ângela 21 SA
(formerly EGP
Projetos XXIX)
512
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Brazil
132,001,000.00
BRL
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
-
-
-
-
-
-
-
-
-
-
-
Enel Green Power
Ventos de Santa
Ângela 3 SA
(formerly EGP
Projetos IV)
Enel Green Power
Ventos de Santa
Ângela 4 SA
(formerly EGP
Projetos VI)
Enel Green Power
Ventos de Santa
Ângela 5 SA
(formerly EGP
Projetos VII)
Enel Green Power
Ventos de Santa
Ângela 6 SA
(formerly EGP
Projetos VIII)
Enel Green Power
Ventos de Santa
Ângela 7 SA
(formerly EGP
Projetos IX)
Enel Green Power
Ventos de Santa
Ângela 8 SA
(formerly EGP
Projetos 18)
Enel Green Power
Ventos de Santa
Ângela 9 SA
(formerly EGP
Projetos 20)
Enel Green Power
Ventos de Santa
Ângela Acl 12
(formerly EGP
Green Power
Projetos 36)
Enel Green Power
Ventos de Santa
Angela Acl 13 SA
(formerly Enel
Green Power
Projetos XVII SA)
Enel Green Power
Ventos de Santa
Angela Acl 16 SA
(formerly Enel
Green Power
Projetos 38 SA)
Enel Green Power
Ventos de Santa
Angela Acl 18 SA
(formerly Enel
Green Power
Projetos 47 SA)
Brazil
132,001,000.00
BRL
Brazil
132,001,000.00
BRL
Brazil
132,001,000.00
BRL
Brazil
106,000,001.00
BRL
Brazil
132,001,000.00
BRL
Brazil
185,001,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Brazil
1,000.00
BRL
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
and sale from
renewable
resources
%
holding
Group %
holding
99.99%
0.10%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
99.90%
100.00%
0.10%
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
513
Attachments Company name Headquarters Country
Share capital
Currency Activity
Niterói (Rio de
Janeiro)
Brazil
110,200,000.00
BRL
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Enel Green Power
Ventos de Santa
Esperança 08 SA
(formerly Enel
Green Power
Projetos 34 SA)
Enel Green Power
Ventos de Santa
Esperança 13
(formerly Enel
Green Power
Projetos 33 SA)
Enel Green Power
Ventos de Santa
Esperança 15 SA
Niterói (Rio de
Janeiro)
Brazil
147,000,000.00
BRL
Niterói (Rio de
Janeiro)
Brazil
202,100,000.00
BRL
Enel Green Power
Ventos de Santa
Esperança 16 SA
Niterói (Rio de
Janeiro)
Brazil
183,700,000.00
BRL
Enel Green Power
Ventos de Santa
Esperança 17 SA
Niterói (Rio de
Janeiro)
Brazil
183,700,000.00
BRL
Enel Green Power
Ventos de Santa
Esperança 21 SA
Niterói (Rio de
Janeiro)
Brazil
202,100,000.00
BRL
Enel Green Power
Ventos de Santa
Esperança 22 SA
Niterói (Rio de
Janeiro)
Brazil
202,100,000.00
BRL
Enel Green Power
Ventos de Santa
Esperança 25 SA
Niterói (Rio de
Janeiro)
Brazil
110,200,000.00
BRL
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
%
holding
Group %
holding
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.90%
99.91%
0.10%
99.99%
100.00%
0.01%
99.90%
100.00%
0.10%
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Green Power
Ventos de Santa
Esperança 26 SA
Niterói (Rio de
Janeiro)
Brazil
202,100,000.00
BRL
-
Line-by-line
Niterói (Rio de
Janeiro)
Brazil
1,000.00
BRL
Holding
Line-by-line
Enel Green
Power Ventos de
Santa Esperança
Participações SA
(formerly Enel
Green Power
Cumaru 06 SA)
Enel Green Power
Villoresi Srl
Rome
Italy
1,200,000.00
EUR
Line-by-line
Enel Green Power
SpA
51.00% 51.00%
Electricity
generation
from renewable
resources
Enel Green Power
Zambia Limited
Lusaka
Zambia
15,000.00
ZMW Electricity sale Line-by-line
Enel Green Power
Development Srl
Enel Green Power
RSA (Pty) Ltd
1.00%
100.00%
99.00%
514
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Rio de Janeiro Brazil
140,001,000.00
BRL
Electricity
generation
from renewable
resources
Enel Green Power
Zeus II - Delfina
8 SA
Enel Holding
Finance Srl
Consolidation
method
Line-by-line
%
holding
Group %
holding
99.00%
100.00%
1.00%
Held by
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Rome
Italy
10,000.00
EUR
Holding
Line-by-line
Enel SpA
100.00% 100.00%
Enel Iberia Srl
Madrid
Spain
336,142,500.00
EUR
Holding
Line-by-line
Enel SpA
100.00% 100.00%
Enel Innovation
Hubs Srl
Rome
Italy
1,100,000.00
EUR
Civil and
mechanical
engineering,
water systems
Line-by-line
Enel SpA
100.00% 100.00%
Enel Insurance NV Amsterdam
Enel Investment
Holding BV
Amsterdam
The
Netherlands
The
Netherlands
60,000.00
EUR
Holding
Line-by-line
Enel SpA
100.00% 100.00%
1,000,000.00
EUR
Holding
Line-by-line
Enel SpA
100.00% 100.00%
Enel Italia Srl
Rome
Italy
50,100,000.00
EUR
Enel Kansas LLC Wilmington
USA
(Delaware)
Enel Minnesota
Holdings LLC
Minnesota
USA
Enel Nevkan Inc. Wilmington
USA
(Delaware)
-
-
-
USD
USD
USD
Line-by-line
Enel SpA
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
EGP Geronimo
Holding Company
Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Personnel
administration
activities,
information
technology,
real estate
and business
services
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Enel Operations
Canada Ltd
Calgary
(Alberta)
Canada
1,000.00
CAD
-
Line-by-line
Enel Green Power
Canada Inc.
100.00% 100.00%
Enel Perú SAC
Lima
Peru
5,361,789,105.00
PEN
Holding
Line-by-line
Enel Américas SA 100.00% 54.23%
Enel Productie Srl Bucharest
Romania
20,210,200.00
RON
Enel Produzione
SpA
Enel Rinnovabile
SA de Cv
Rome
Italy
1,800,000,000.00
EUR
Mexico City
Mexico
100.00
MXN
Electricity
generation
Electricity
generation
Electricity
generation
Line-by-line
Enel Investment
Holding BV
100.00% 100.00%
Line-by-line
Enel SpA
100.00% 100.00%
Line-by-line
Enel Green Power
Global Investment
BV
Enel Green Power
México S de RL
de Cv
99.00%
100.00%
1.00%
Line-by-line
Enel SpA
100.00% 100.00%
Line-by-line
Enel Russia PJSC 100.00% 56.43%
Enel Romania SA Judetul Ilfov
Romania
200,000.00
10,000.00
RON
RUB
Business
services
Renewable
energy
Enel Rus Wind
Azov Limited
Liability Company
Enel Rus Wind
Generation LLC
Moscow
Moscow
Enel Rus Wind
Kola LLC
Murmansk
Enel Russia PJSC Ekaterinburg
Russian
Federation
Russian
Federation
Russian
Federation
Russian
Federation
350,000.00
RUB
Energy services Line-by-line
Enel Russia PJSC 100.00% 56.43%
10,000.00
RUB
-
Line-by-line
Enel Russia PJSC 100.00% 56.43%
35,371,898,370.00
RUB
Electricity
generation
Line-by-line
Enel SpA
56.43% 56.43%
515
Attachments Company name Headquarters Country
Share capital
Currency Activity
Enel Salt Wells
LLC
Wilmington
(Delaware)
USA
-
USD
Enel Saudi Arabia
Limited
Al-Khobar
Saudi Arabia 5,000,000.00
SAR
Electricity
generation
from renewable
resources
Management
of activities
associated with
participation
in tenders
called by the
SEC for the
development of
smart metering
and grid
automation
Consolidation
method
Held by
Equity
Enel Geothermal
LLC
%
holding
Group %
holding
100.00% 50.00%
Line-by-line
e-distribuzione SpA 60.00% 60.00%
Enel Servicii
Comune SA
Bucharest
Romania
33,000,000.00
RON
Energy services Line-by-line
E-Distribuţie Banat
SA
E-Distribuţie
Dobrogea SA
50.00%
51.00%
50.00%
Enel Sole Srl
Rome
Italy
4,600,000.00
EUR
Enel Soluções
Energéticas Ltda
Niterói (Rio de
Janeiro)
Brazil
48,500,000.00
BRL
Enel Stillwater LLC Wilmington
USA
(Delaware)
Enel Surprise
Valley LLC
Wilmington
(Delaware)
USA
Enel Texkan Inc. Wilmington
USA
(Delaware)
-
-
-
USD
USD
USD
Enel Trade d.o.o.
Zagreb
Croatia
2,240,000.00
HRK
Enel Trade
Romania Srl
Enel Trade Serbia
d.o.o.
Enel Trading
Argentina Srl
Bucharest
Romania
21,250,000.00
RON
Beograd
Serbia
300,000.00
Buenos Aires
Argentina
14,010,014.00
EUR
ARS
Public lighting
systems and
services
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
trading
Electricity
sourcing and
trading
Electricity
trading
Electricity
trading
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Enel Trading North
America LLC
Wilmington
(Delaware)
USA
10,000,000.00
USD
Trading
Line-by-line
Enel X Argentina
SAU
Enel X Battery
Storage Limited
Partnership
Enel X Brasil
Gerenciamento de
Energia Ltda
Buenos Aires
Argentina
42,440,000.00
ARS
Line-by-line
Marketing and
energy-related
services
Vancouver
Canada
10,000.00
CAD
-
Line-by-line
São Paulo
Brazil
117,240.00
BRL
Renewable
energy
Line-by-line
Line-by-line
Enel X Srl
100.00% 100.00%
Line-by-line
Equity
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
Desenvolvimento
Ltda
Enel Geothermal
LLC
100.00%
100.00%
0.00%
100.00% 50.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Chi Power Inc.
100.00% 100.00%
Enel Global Trading
SpA
Enel Global Trading
SpA
100.00% 100.00%
100.00% 100.00%
Enel Global Trading
SpA
100.00% 100.00%
Enel Américas SA
Enel Argentina SA
55.00%
45.00%
54.21%
Enel Green Power
North America Inc.
Enel X International
Srl
100.00% 100.00%
100.00% 100.00%
Enel X Canada
Holding Inc.
Enel X Canada Ltd
EnerNOC Ireland
Holding Limited
EnerNOC Uk II
Limited
0.01%
100.00%
99.99%
0.00%
100.00%
100.00%
Enel X Brasil SA
Rio de Janeiro Brazil
62,972,136.60
BRL
Electricity
Line-by-line
Enel Brasil SA
100.00% 54.23%
Enel X Canada
Holding Inc.
Vancouver
Canada
1,000.00
CAD
Holding
Line-by-line
Enel X Canada Ltd 100.00% 100.00%
Enel X Canada Ltd Oakville
Canada
1,000.00
CAD
Renewable
energy
Line-by-line
Enel X International
Srl
100.00% 100.00%
516
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
%
holding
Group %
holding
Enel X Chile SA
Santiago
Chile
3,800,000,000.00
CLP
Services
Line-by-line
Enel Chile SA
100.00% 61.93%
Enel X Colombia
SAS
Bogotá DC
Colombia
5,000,000,000.00
COP
Enel X Federal LLC Delaware
USA
5,000.00
USD
Installation,
maintenance
and repair of
electronic plant
Renewable
energy
Line-by-line
Codensa SA ESP
100.00% 26.25%
Line-by-line
Enel X North
America Inc.
100.00% 100.00%
Enel X Financial
Services Srl
Rome
Italy
1,000,000.00
EUR
Services
Line-by-line
Enel X Srl
100.00% 100.00%
Enel X Finance
Partner LLC
Lutherville
(Maryland)
USA
100.00
USD
-
Line-by-line
Enel X North
America Inc.
100.00% 100.00%
Enel X
International Srl
Rome
Enel X Italia SpA Rome
Italy
Italy
100,000.00
EUR
Holding
company
Line-by-line
Enel X Srl
100.00% 100.00%
200,000,000.00
EUR
Upstream gas
Line-by-line
Enel X Srl
100.00% 100.00%
Enel X Korea
Limited
Seoul
Korea,
Republic of
(South Korea)
Enel X MA
Holdings LLC
Lutherville
(Maryland)
Enel X Morrissey
Blvd. Project LLC
Lutherville
(Maryland)
Enel X Mobility Srl Rome
USA
USA
Italy
1,200,000,000.00
KRW
Renewable
energy
Line-by-line
Enel X International
Srl
100.00% 100.00%
100.00
100.00
USD
USD
-
-
Line-by-line
Line-by-line
Enel X Finance
Partner LLC
Enel X MA
Holdings
100.00% 100.00%
100.00% 100.00%
100,000.00
EUR
Electric mobility Line-by-line
Enel X Srl
100.00% 100.00%
Enel X New
Zealand Limited
Enel X North
America Inc.
Wellington
New Zealand 313,606.00
Delaware
USA
1,000.00
AUD
USD
Renewable
energy
Renewable
energy
Line-by-line
Line-by-line
Enel X Rus LLC
-
Russian
Federation
8,000,000.00
RUB
-
Line-by-line
Energy Response
Holdings (Pty) Ltd
Enel X International
Srl
Enel X International
Srl
Giulio Carone
100.00% 100.00%
100.00% 100.00%
99.00%
99.00%
1.00%
Enel X Srl
Rome
Italy
1,050,000.00
EUR
Holding
Line-by-line
Enel SpA
100.00% 100.00%
Enel X Services
India Private
Limited
Marathon
Chamber - A
India
45,000.00
INR
Renewable
energy
Line-by-line
Enel X Taiwan Co.
Ltd
Taipei City
Taiwan
65,000,000.00
TWD
Enel X Uk Limited London
United
Kingdom
10,001.00
Enel.Si Srl
Rome
Italy
5,000,000.00
Enelco SA
Athens
Greece
60,108.80
GBP
EUR
EUR
Enelpower
Contractor and
Development
Saudi Arabia Ltd
Enelpower do
Brasil Ltda
Riyadh
Saudi Arabia 5,000,000.00
SAR
Rio de Janeiro Brazil
18,342,000.00
BRL
Renewable
energy
Renewable
energy
Plant
engineering and
energy services
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Electrical
engineering
Enelpower SpA Milan
Italy
2,000,000.00
Energética de
Rosselló AIE
Barcelona
Spain
3,606,060.00
EUR
EUR
Engineering and
construction
Cogeneration of
electricity and
heat
Enel X International
Srl
Enel X North
America, Inc.
EnerNOC Ireland
Holding Limited
Enel X International
Srl
100.00%
100.00%
0.00%
100.00% 100.00%
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Enel X Srl
100.00% 100.00%
Line-by-line
Enel Investment
Holding BV
75.00% 75.00%
Line-by-line
Enelpower SpA
51.00% 51.00%
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Energía y Servicios
South America SpA
99.99%
100.00%
0.01%
Line-by-line
Enel SpA
100.00% 100.00%
Equity
Enel Green Power
España SL
27.00% 18.93%
517
Attachments Company name Headquarters Country
Share capital
Currency Activity
Lima
Peru
6,463,000.00
PEN
Tarragona
Spain
96,160.00
EUR
Energética
Monzón SAC
Energía Eléctrica
del Ebro SA
(Sociedad
Unipersonal)
Energía Eólica Alto
del Llano SLU
Valencia
Spain
3,300.00
Energia Eolica Srl Rome
Italy
4,840,000.00
EUR
EUR
Mexico City
Mexico
50,000.00
MXN
San José
Costa Rica
10,000.00
CRC
Mexico City
Mexico
33,452,769.00
MXN
Mexico City
Mexico
673,583,489.00
MXN
Santiago
Chile
2,404,240,000.00
CLP
Mexico City
Mexico
51,879,307.00
MXN
Mexico City
Mexico
5,339,650.00
MXN
Energía Global de
México (Enermex)
SA de Cv
Energía Global
Operaciones SA
Energía Limpia de
Amistad S de RL
de Cv
Energía Limpia de
Palo Alto S de RL
de Cv
Energía Marina
SpA
Energía Nueva
de Iguu S de RL
de Cv
Energía Nueva
Energía Limpia
México S de RL
de Cv
Energía y Servicios
South America
SpA
Santiago
Chile
3,000,001.73
USD
Mexico City
Mexico
2,953,980.00
MXN
Energía Limpia
de Puerto Libertad
S de RL
de Cv
Energías
Alternativas del
Sur SL
Las Palmas de
Gran Canaria
Spain
546,919.10
EUR
Zaragoza
Spain
3,200,000.00
EUR
Zaragoza
Spain
18,500,000.00
Barcelona
Spain
1,298,160.00
EUR
EUR
Energías de
Aragón I SL
Energías de
Aragón II SL
Energías de Graus
SL
518
Consolidation
method
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Held by
Enel Green Power
Perú SA
Energía y Servicios
South America SpA
Eléctrica del Ebro
SA (Sociedad
Unipersonal)
Enel Green Power
España SL
Enel Green Power
SpA
%
holding
Group %
holding
99.99%
100.00%
0.01%
100.00% 70.10%
100.00% 70.10%
100.00% 100.00%
Line-by-line
Enel Green Power
SpA
99.00% 99.00%
Line-by-line
Enel Green Power
Costa Rica SA
100.00% 100.00%
Equity
Equity
Equity
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Enel Green Power
Chile Ltda
Enel Green Power
México S de RL
de Cv
Energía Nueva
Energía Limpia
México S de RL
de Cv
Enel Green Power
Guatemala SA
Enel Green Power
SpA
Enel Green Power
SpA
60.80% 20.00%
60.80% 20.00%
25.00% 15.49%
99.90%
99.91%
0.01%
0.04%
100.00%
99.96%
100.00% 100.00%
99.99%
100.00%
Enel Rinnovabile SA
de Cv
Enel Green Power
México S de RL
de Cv
0.01%
Line-by-line
Enel Green Power
España SL
54.95% 38.52%
Line-by-line
Endesa Red
SA (Sociedad
Unipersonal)
100.00% 70.10%
Line-by-line
Line-by-line
Enel Green Power
España SL
Enel Green Power
España SL
100.00% 70.10%
66.67% 46.74%
Electricity
generation
from renewable
resources
Electricity
generation and
supply
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
transmission,
distribution and
sale
Electricity
generation
Hydroelectric
plants
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
La Coruña
Spain
270,450.00
EUR
Madrid
Spain
963,300.00
EUR
Madrid
Spain
1,722,600.00
EUR
Torre del Bierzo Spain
1,635,000.00
EUR
Mexico City
Mexico
656,615,400.00
MXN
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Tangiers
Morocco
750,400,000.00
MAD
Equity
Combined-cycle
generation
plants
Consolidation
method
Line-by-line
Held by
Enel Green Power
España SL
%
holding
Group %
holding
77.00% 53.98%
Line-by-line
Enel Green Power
España SL
80.00% 56.08%
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Equity
Enel Green Power
España SL
50.00% 35.05%
Line-by-line
Enel Green Power
México S de RL
de Cv
Energía Nueva de
Iguu S de RL de Cv
Endesa Generación
SA
99.99%
100.00%
0.01%
32.00% 22.43%
Energías
Especiales de
Careón SA
Energías
Especiales de
Peña Armada SA
Energías
Especiales del Alto
Ulla SA
Energías
Especiales del
Bierzo SA
Energías
Renovables La
Mata SAPI de Cv
Energie Electrique
de Tahaddart SA
ENergy Hydro
Piave Srl
Energy Response
Holdings (Pty) Ltd
Energotel AS
Bratislava
2,191,200.00
EUR
Slovakia
(Slovak
Republic)
Soverzene
Italy
800,000.00
EUR
Melbourne
Australia
630,451.00
Enerlive Srl
Rome
Italy
6,520,000.00
AUD
EUR
EnerNOC
Australia (Pty) Ltd
Melbourne
Australia
2,324,698.00
AUD
EnerNOC GmbH Darmstadt
Germany
25,000.00
EnerNOC Ireland
Holding Limited
EnerNOC
Ireland Limited
-
-
Ireland
100,000.00
Ireland
100,000.00
EnerNOC
Japan K.K.
EnerNOC
Polska Sp Z Oo
EnerNOC
(Pty) Ltd
Tokyo
Japan
165,000,000.00
Warsaw
Poland
5,000.00
Melbourne
Australia
9,880.00
EnerNOC Uk II
Limited
London
United
Kingdom
21,000.00
EnTech (China)
Information
Technology Co Ltd
EnTech Utility
Service Bureau
Inc.
Eólica del Cierzo
SLU
Eólica del
Noroeste SL
China
China
1,500.00
Delaware
USA
1,500.00
Zaragoza
Spain
225,000.00
La Coruña
Spain
36,100.00
EUR
EUR
EUR
JPY
PLN
AUD
GBP
EUR
USD
EUR
EUR
Equity
Slovenské
elektrárne AS
20.00% 6.60%
Line-by-line
Enel Produzione
SpA
51.00% 51.00%
Line-by-line
EnerNOC Australia
(Pty) Ltd
100.00% 100.00%
Line-by-line
Maicor Wind Srl
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Line-by-line
Enel X International
Srl
100.00% 100.00%
Enel X North
America Inc.
Enel X International
Srl
EnerNOC Ireland
Holding Limited
Enel X International
Srl
EnerNOC Ireland
Holding Limited
Energy Response
Holdings (Pty) Ltd
100.00% 100.00%
100.00% 100.00%
100.00% 100.00%
60.00% 60.00%
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel X Uk Limited 100.00% 100.00%
Equity
EnerNOC Uk II
Limited
50.00% 50.00%
Line-by-line
Enel X North
America Inc.
100.00% 100.00%
Line-by-line
Line-by-line
Enel Green Power
España SL
Enel Green Power
España SL
100.00% 70.10%
51.00% 35.75%
Operation of
optical fiber
network
Electricity
purchasing and
sale
Renewable
energy
Electricity
generation
from renewable
resources
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Renewable
energy
Plant
development
and
construction
519
Attachments Company name Headquarters Country
Share capital
Currency Activity
Eólica del
Principado SAU
Eólica Valle del
Ebro SA
Eólica Zopiloapan
SAPI de Cv
Oviedo
Spain
60,000.00
EUR
Zaragoza
Spain
3,561,342.50
EUR
Mexico City
Mexico
1,877,201.54
MXN
Eólicas de Agaete
SL
Las Palmas de
Gran Canaria
Spain
240,400.00
EUR
Eólicas de
Fuencaliente SA
Las Palmas de
Gran Canaria
Spain
216,360.00
EUR
Eólicas de
Fuerteventura AIE
Fuerteventura
(Las Palmas)
Spain
-
EUR
Eólicas de La
Patagonia SA
Buenos Aires
Argentina
480,930.00
ARS
Eólicas de
Lanzarote SL
Las Palmas de
Gran Canaria
Spain
1,758,000.00
EUR
Eólicas de Tenerife
AIE
Santa Cruz de
Tenerife
Spain
420,708.40
EUR
Eólicas de Tirajana
AIE
Las Palmas de
Gran Canaria
Spain
-
EUR
EPM Eólica
Dolores SA de Cv
Mexico City
Mexico
100.00
MXN
Erecosalz SL
Zaragoza
Spain
18,030.36
EUR
Essex Company
LLC
Boston
(Massachusetts)
USA
-
USD
Explotaciones
Eólicas de Escucha
SA
Zaragoza
Spain
3,505,000.00
EUR
Teruel
Spain
3,230,000.00
EUR
Zaragoza
Spain
100,000.00
EUR
Explotaciones
Eólicas El Puerto
SA
Explotaciones
Eólicas Santo
Domingo de Luna
SA
520
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation and
distribution
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation,
transmission,
distribution
purchase and
sale
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Enel Green Power
España SL
%
holding
Group %
holding
100.00% 70.10%
Line-by-line
Enel Green Power
España SL
50.50% 35.40%
Line-by-line
Line-by-line
Enel Green Power
México S de RL
de Cv
Enel Green Power
Partecipazioni
Speciali Srl
Enel Green Power
España SL
56.98%
96.48%
39.50%
80.00% 56.08%
Line-by-line
Enel Green Power
España SL
55.00% 38.56%
Equity
Equity
Equity
Equity
Enel Green Power
España SL
40.00% 28.04%
Enel Green Power
España SL
50.00% 35.05%
Enel Green Power
España SL
40.00% 28.04%
Enel Green Power
España SL
50.00% 35.05%
Line-by-line
Enel Green Power
España SL
60.00% 42.06%
Line-by-line
Equity
Equity
99.00%
100.00%
Enel Rinnovabile SA
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
1.00%
Enel Green Power
España SL
33.00% 23.13%
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Green Power
España SL
70.00% 49.07%
Line-by-line
Enel Green Power
España SL
73.60% 51.59%
Line-by-line
Enel Green Power
España SL
51.00% 35.75%
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Explotaciones
Eólicas Saso Plano
SA
Explotaciones
Eólicas Sierra
Costera SA
Explotaciones
Eólicas Sierra La
Virgen SA
Zaragoza
Spain
5,488,500.00
EUR
Zaragoza
Spain
8,046,800.00
EUR
Zaragoza
Spain
4,200,000.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Enel Green Power
España SL
%
holding
Group %
holding
65.00% 45.57%
Line-by-line
Enel Green Power
España SL
90.00% 63.09%
Line-by-line
Enel Green Power
España SL
90.00% 63.09%
Fenner Wind
Holdings LLC
Dover
(Delaware)
USA
100.00
USD
Holding
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Florence Hills LLC Minnesota
USA
Fowler Hydro LLC Delaware
USA
-
-
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Front Marítim
del Besòs SL
Barcelona
Spain
3,000.00
EUR
Real estate
Equity
Fulcrum LLC
Boise (Idaho)
USA
-
USD
Furatena Solar 1
SLU
Garob Wind Farm
(Pty) Ltd
Seville
Spain
3,000.00
EUR
Gauteng
South Africa 100.00
ZAR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
and sale from
renewable
resources
Line-by-line
Equity
Endesa Generación
SA
EGPNA REP Hydro
Holdings LLC
61.37% 43.02%
100.00% 50.00%
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Enel Green Power
RSA 2 (Pty) Ltd
Garo Community
Trust Investment
(RF) (Pty) Ltd
Hepax Trade and
Invest (Pty) Ltd
Enel Chile SA
Enel Generación
Chile SA
Endesa Generación
SA
Enel Generación
Chile SA
Gas Atacama Chile
SA
Gasoducto
Atacama Argentina
SA
60.00%
60.00%
5.00%
35.00%
2.63%
97.37%
58.04%
100.00% 70.10%
0.03%
58.04%
99.97%
100.00% 58.04%
Gas Atacama Chile
SA
Santiago
Gas y Electricidad
Generación SAU
Palma de
Mallorca
Gasoducto
Atacama Argentina
SA
Santiago
Chile
589,318,016,243.00
CLP
Spain
213,775,700.00
EUR
Chile
208,173,124.00
USD
Electricity
generation
Electricity
generation
Natural gas
transport
Line-by-line
Line-by-line
Line-by-line
Buenos Aires
Gasoducto
Atacama Argentina
SA Sucursal
Argentina
Argentina
Gauley Hydro LLC Wilmington
USA
(Delaware)
-
-
USA
1.00
USA
-
Gauley River
Management
Corporation
Willison
(Vermont)
Gauley River
Power Partners
LLC
Willison
(Vermont)
Genability Inc.
San Francisco
(California)
ARS
Natural gas
transport
Line-by-line
USD
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
USA
6,010,074.72
USD
-
Equity
Enel X North
America Inc.
50.00% 50.00%
521
Attachments Company name Headquarters Country
Share capital
Currency Activity
Generadora de
Occidente Ltda
Guatemala
City
Guatemala
16,261,697.33
GTQ
Generadora
Eólica Alto
Pacora SA
Generadora
Estrella Solar SA
Generadora
Fotovoltaica
Chiriquí SA
Panama
Panama
10,000.00
USD
Panama
Panama
10,000.00
USD
Panama
Panama
10,000.00
USD
Generadora
Montecristo SA
Guatemala
City
Guatemala
3,820,000.00
GTQ
Generadora Solar
Caldera SA
Generadora Solar
Tolé SA
Geotérmica del
Norte SA
Gibson Bay Wind
Farm (RF) (Pty) Ltd
Panama
Panama
10,000.00
USD
Panama
Panama
10,000.00
USD
Santiago
Chile
326,577,419,702.00
CLP
Johannesburg
South Africa 1,000.00
ZAR
Gnl Chile SA
Santiago
Chile
3,026,160.00
Goodwell Wind
Project LLC
Wilmington
(Delaware)
USA
Goodyear Lake
Hydro LLC
Delaware
USA
-
-
USD
USD
USD
Gorona del Viento
El Hierro SA
Valverde de El
Hierro
Spain
30,936,736.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Development
and
maintenance
of El Hierro
generation plant
Consolidation
method
Line-by-line
Line-by-line
Held by
Enel Green Power
Guatemala SA
Enel Green Power
SpA
Enel Green Power
Panama SA
Group %
holding
100.00%
%
holding
1.00%
99.00%
100.00% 100.00%
Line-by-line
Enel Green Power
Panama SA
100.00% 100.00%
Line-by-line
Enel Green Power
Panama SA
100.00% 100.00%
Line-by-line
Line-by-line
Enel Green Power
Guatemala SA
Enel Green Power
SpA
Enel Green Power
Panama SA
0.01%
100.00%
99.99%
100.00% 100.00%
Line-by-line
Enel Green Power
Panama SA
100.00% 100.00%
Line-by-line
Enel Green Power
Chile Ltda
84.59% 52.39%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
60.00% 60.00%
Design and LNG
supply
Equity
Equity
Enel Generación
Chile SA
Origin Goodwell
Holdings LLC
33.33% 19.31%
100.00% 50.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
Unión Eléctrica
de Canarias
Generación SAU
23.21% 16.27%
Gratiot Farms
Wind Project LLC
Wilmington
(Delaware)
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Guadarranque
Solar 4 SL
Unipersonal
GV Energie
Rigenerabili ITAL-
RO Srl
Seville
Spain
3,006.00
EUR
Bucharest
Romania
1,145,400.00
RON
Hadley Ridge LLC Minnesota
USA
Hastings Solar LLC Delaware
USA
-
-
USD
USD
Line-by-line
Endesa Generación
II SA
100.00% 70.10%
Line-by-line
Line-by-line
Enel Green Power
Romania Srl
Enel Green Power
SpA
Chi Minnesota
Wind LLC
100.00%
100.00%
0.00%
51.00% 51.00%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
522
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
%
holding
Group %
holding
Heartland Farms
Wind Project LLC
Wilmington
(Delaware)
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Hidroeléctrica de
Catalunya SL
Barcelona
Spain
126,210.00
EUR
Hidroeléctrica de
Ourol SL
Lugo
Spain
1,608,200.00
EUR
Hidroeléctrica Don
Rafael SA
Hidroelectricidad
del Pacífico S de
RL de Cv
San José
Costa Rica
10,000.00
CRC
Mexico City
Mexico
30,890,736.00
MXN
Hidroflamicell SL Barcelona
Spain
78,120.00
EUR
Electricity
transmission
and distribution
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
distribution and
sale
Line-by-line
Equity
Endesa Red
SA (Sociedad
Unipersonal)
Enel Green Power
España SL
100.00% 70.10%
30.00% 21.03%
Line-by-line
Enel Green Power
Costa Rica SA
65.00% 65.00%
Line-by-line
Enel Green Power
México S de RL
de Cv
99.99% 99.99%
Line-by-line
Hidroeléctrica de
Catalunya SL
75.00% 52.58%
Hidroinvest SA
Buenos Aires
Argentina
55,312,093.00
ARS
Holding
Line-by-line
Hidromondego -
Hidroeléctrica do
Mondego Lda
Lisbon
Portugal
3,000.00
EUR
Hydroelectric
power
Line-by-line
USA
100.00
USD
Holding
Line-by-line
Enel Américas SA
Enel Argentina SA
41.94%
54.76%
52.42%
Endesa Generación
Portugal SA
Endesa Generación
SA
10.00%
70.10%
90.00%
Enel Kansas LLC
Wind HoldCo 3 LLC
68.00%
32.00%
68.00%
High Lonesome
Wind Holdings
LLC
Wilmington
(Delaware)
High Lonesome
Wind Power LLC
-
USA
100.00
High Shoals LLC Delaware
USA
-
High Street
Corporation (Pty)
Ltd
Melbourne
Australia
2.00
Highfalls Hydro
Company Inc.
Wilmington
(Delaware)
USA
-
HillTopper Wind
Holdings LLC
Wilmington
(Delaware)
Hispano
Generación de
Energía Solar SL
Jerez de los
Caballeros
(Badajoz)
USA
1,000.00
Spain
3,500.00
Hope Creek LLC Minnesota
USA
-
Hydro
Development
Group Acquisition
LLC
Albany (New
York)
USA
1.00
USD
USD
AUD
USD
USD
EUR
USD
USD
Renewable
energy
Electricity
generation
from renewable
resources
Renewable
energy
Electricity
generation
from renewable
resources
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Design and
development
Line-by-line
Equity
High Lonesome
Wind Holdings LLC
EGPNA REP Hydro
Holdings LLC
100.00% 68.00%
100.00% 50.00%
Line-by-line
Energy Response
Holdings (Pty) Ltd
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Enel Green Power
España SL
51.00% 35.75%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Equity
AFS
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
Enel X Srl
30.00% 30.00%
Hydro Energies
Corporation
Willison
(Vermont)
USA
5,000.00
USD
I-EM Srl
Turin
Italy
28,571.43
EUR
Ifx Networks
Argentina Srl
Buenos Aires
Argentina
2,260,551.00
ARS
-
Equity
Ifx/eni - Spc V Inc.
Minority Stock
Holding Corp.
99.85%
0.15%
21.40%
523
Attachments Ifx/eni - Spc III Inc. -
Ifx/eni - Spc IV Inc. -
-
-
-
Ifx/eni - Spc
Panama Inc.
Ifx/eni - Spc V Inc.
Ifx/eni - Spc VII
Inc.
Ingendesa do
Brasil Ltda em
liquidação
Inkolan
Información y
Coordinación de
obras AIE
International
Endesa BV
International
Multimedia
University Srl (in
fallimento)
Inversora Codensa
SAS
Inversora Dock
Sud SA
Isamu Ikeda
Energia SA
Italgest Energy
(Pty) Ltd
Company name Headquarters Country
Share capital
Currency Activity
Ifx Networks Chile
SA
Ifx Networks
Colombia SAS
Santiago
Chile
5,761,374,444.00
CLP
Bogotá DC
Colombia
15,734,959,000.00
COP
Ifx Networks LLC Delaware
USA
80,848,653.00
Ifx Networks Ltd
-
Virgin Islands
(British)
100,000.00
Ifx Networks
Panama SA
Panama
Panama
21,000.00
Consolidation
method
Held by
Equity
Equity
Ifx/eni - Spc IV Inc.
Servicios de
Internet Eni Chile
Ltda
Ifx Networks
Panama SA
Ifx/eni - Spc III Inc.
%
holding
41.00%
59.00%
Group %
holding
21.39%
58.33%
41.67%
21.40%
Equity
Ufinet Latam SLU 100.00% 21.40%
Equity
Ifx Networks LLC 100.00% 21.40%
Equity
Ifx/eni - Spc
Panama Inc.
100.00% 21.40%
Equity
Ifx Networks Ltd
100.00% 21.40%
Equity
Ifx Networks Ltd
100.00% 21.40%
Equity
Ifx Networks Ltd
100.00% 21.40%
Equity
Ifx Networks Ltd
100.00% 21.40%
Equity
Ifx Networks Ltd
100.00% 21.40%
-
-
-
-
-
-
-
-
-
-
USD
USD
USD
USD
USD
USD
USD
USD
BRL
Virgin Islands
(British)
Virgin Islands
(British)
Virgin Islands
(British)
Virgin Islands
(British)
Virgin Islands
(British)
50,000.00
50,000.00
50,000.00
50,000.00
50,000.00
Rio de Janeiro Brazil
500,000.00
Bilbao
Spain
84,140.00
EUR
Line-by-line
Design,
engineering and
consulting
Equity
Information on
infrastructure
of Inkolan
associates
Enel Generación
Chile SA
Gas Atacama Chile
SA
1.00%
58.04%
99.00%
Endesa Distribución
Eléctrica SL
12.50% 8.76%
Amsterdam
The
Netherlands
15,428,520.00
EUR
Holding
Line-by-line
Endesa SA
100.00% 70.10%
Rome
Italy
24,000.00
EUR
Training
-
Enel Italia Srl
13.04% 13.04%
Bogotá DC
Colombia
5,000,000.00
COP
Line-by-line
Codensa SA ESP
100.00% 26.25%
Electricity
transmission
and distribution
Buenos Aires
Argentina
241,490,000.00
ARS
Holding
Line-by-line
Enel Américas SA 57.14% 30.99%
Rio de Janeiro Brazil
45,474,475.77
BRL
Johannesburg
South Africa 1,000.00
ZAR
Jack River LLC
Minnesota
USA
Jessica Mills LLC Minnesota
USA
-
-
JuiceNet GmbH
Berlin
Germany
25,000.00
JuiceNet Ltd
London
United
Kingdom
1.00
JuiceNet SAS
Paris
France
10,000.00
USD
USD
EUR
GBP
EUR
524
Electricity
generation and
sale
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
-
-
Line-by-line
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
100.00% 100.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
eMotorWerks Inc. 100.00% 100.00%
Line-by-line
eMotorWerks Inc. 100.00% 100.00%
Line-by-line
eMotorWerks Inc. 100.00% 100.00%
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Julia Hills LLC
Minnesota
USA
-
USD
Kalenta SA
Maroussi
Greece
4,359,000.00
EUR
Istanbul
Kavacik Eoliko
Enerji Elektrik
Üretim Ve Ticaret
Anonim Şirketi
Kelley’s Falls LLC Delaware
Turkey
9,000,000.00
TRY
USA
-
USD
Kings River Hydro
Company Inc.
Wilmington
(Delaware)
USA
100.00
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Chi Minnesota
Wind LLC
%
holding
Group %
holding
51.00% 51.00%
Line-by-line
Enel Green Power
Solar Energy Srl
100.00% 100.00%
Line-by-line
AFS
Enel Green Power
Turkey Enerji
Yatirimlari Anonim
Şirketi
Enel Green Power
North America Inc.
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Kingston Energy
Storage LLC
Wilmington
(Delaware)
USA
-
USD
Renewable
energy
Line-by-line
Kinneytown Hydro
Company Inc.
Wilmington
(Delaware)
USA
100.00
USD
Kino Contractor SA
de Cv
Mexico City
Mexico
100.00
MXN
Kino Facilities
Manager SA de Cv
Mexico City
Mexico
100.00
MXN
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Kirklareli Eoliko
Enerji Elektrik
Üretim Ve Ticaret
Anonim Şirketi
Kongul Enerji
Sanayi Ve Ticaret
Anonim Şirketi
Istanbul
Turkey
5,250,000.00
TRY
-
Line-by-line
Istanbul
Turkey
125,000,000.00
TRY
Line-by-line
Electricity
generation
from renewable
resources
Kromschroeder SA Barcelona
Spain
627,126.00
EUR
Services
Equity
La Pereda CO2 AIE Oviedo
Spain
224,286.00
EUR
Services
Equity
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Green Power
North America Inc.
100.00% 100.00%
100.00% 100.00%
100.00%
100.00%
Enel Green Power
México S de RL
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
Enel Green Power
México S de RL
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
99.00%
1.00%
99.00%
1.00%
Enel Green Power
Turkey Enerji
Yatirimlari Anonim
Şirketi
Enel Green Power
Turkey Enerji
Yatirimlari Anonim
Şirketi
Endesa Medios
y Sistemas
SL (Sociedad
Unipersonal)
Endesa Generación
SA
EGPNA REP Hydro
Holdings LLC
100.00% 100.00%
100.00% 100.00%
29.26% 20.51%
33.33% 23.36%
100.00% 50.00%
LaChute Hydro
Company LLC
Wilmington
(Delaware)
USA
Lake Emily Solar
LLC
Delaware
USA
Lake Pulaski Solar
LLC
Delaware
USA
Lawrence Creek
Solar LLC
Minnesota
USA
-
-
-
-
Equity
USD
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
USD
-
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
525
Attachments Company name Headquarters Country
Share capital
Currency Activity
Lindahl Wind
Holdings LLC
Delaware
USA
Lindahl Wind
Project LLC
Delaware
USA
Little Elk Wind
Holdings LLC
Delaware
USA
Little Elk Wind
Project LLC
Oklahoma City
(Oklahoma)
USA
-
-
-
-
Littleville Power
Company Inc.
Boston
(Massachusetts)
USA
1.00
Livister Guatemala
SA
Guatemala
City
Guatemala
5,000.00
Livister Latam SLU Madrid
Spain
3,000.00
Panama
Panama
10,000.00
USD
USD
USD
USD
USD
GTQ
EUR
USD
Llano Sánchez
Solar Power
Cuatro SA
Llano Sánchez
Solar Power One
SA
Llano Sánchez
Solar Power Tres
SA
Panama
Panama
10,000.00
USD
Panama
Panama
10,000.00
USD
LLC
Belomechetskaya
Wps
LLC
Rodnikovskaya
Wps
Moscow
Moscow
Lone Pine Wind
Project LP
Alberta
(Canada)
Russian
Federation
Russian
Federation
Canada
Lower Saranac
Hydro Partners
LLC
Lower Saranac
Hydro LLC
Delaware
USA
Delaware
USA
Lower Valley LLC Delaware
USA
Lowline Rapids
LLC
Delaware
USA
10,000.00
10,000.00
-
-
-
-
-
RUB
RUB
CAD
USD
USD
USD
USD
Luz Andes Ltda
Santiago
Chile
1,224,348.00
CLP
Maicor Wind Srl Rome
Italy
20,850,000.00
EUR
526
Consolidation
method
Line-by-line
Held by
EGPNA Preferred
Wind Holdings LLC
%
holding
Group %
holding
100.00% 50.00%
Equity
Lindahl Wind
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Little Elk Wind
Holdings LLC
100.00% 100.00%
AFS
Equity
Enel Green Power
North America Inc.
100.00% 100.00%
Ufinet Guatemala
SA
Ufinet Latam SLU
2.00%
21.40%
98.00%
Equity
Ufinet Latam SLU 100.00% 21.40%
Line-by-line
Enel Green Power
Panama SA
100.00% 100.00%
Line-by-line
Enel Green Power
Panama SA
100.00% 100.00%
Line-by-line
Enel Green Power
Panama SA
100.00% 100.00%
Line-by-line
Line-by-line
Line-by-line
Equity
Enel Green Power
Rus Limited
Liability Company
Enel Green Power
Rus Limited
Liability Company
Enel Green Power
Canada Inc.
100.00% 100.00%
100.00% 100.00%
10.00% 10.00%
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Chile SA
Enel Distribución
Chile SA
0.10%
99.90%
61.37%
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
-
-
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Thermal
generation
plants
Thermal
generation
plants
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
transmission,
distribution and
sales and fuel
Electricity
generation
from renewable
resources
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
%
holding
Group %
holding
Marengo Solar
LLC
Wilmington
(Delaware)
USA
1.00
USD
Photovoltaic
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Marte Srl
Rome
Italy
5,100,000.00
EUR
Marudhar Wind
Energy Private
Limited
Más Energía S
de RL de Cv
Gurgaon
India
100,000.00
INR
Mexico City
Mexico
100.00
MXN
Mason Mountain
Wind Project LLC
Wilmington
(Delaware)
USA
-
USD
Matrigenix (Pty)
Ltd
Houghton
South Africa 1,000.00
ZAR
Electricity
generation
from renewable
resources
Electricity
transmission,
distribution and
sale
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Enel Green Power
SpA
100.00% 100.00%
Line-by-line
Line-by-line
99.00% 75.79%
Enel Green Power
India Private
Limited (formerly
BLP Energy Private
Limited)
99.00%
100.00%
Enel Green Power
México S de RL
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
1.00%
Line-by-line
Padoma Wind
Power LLC
100.00% 100.00%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
Mcbride Wind
Project LLC
Wilmington
(Delaware)
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Medidas
Ambientales SL
Medina de
Pomar (Burgos)
Spain
60,100.00
Mercure Srl
Rome
Italy
10,000.00
Metro Wind LLC Minnesota
USA
-
EUR
EUR
USD
Mexico City
Mexico
181,728,901.00
MXN
Mexicana de
Hidroelectricidad
Mexhidro S de RL
de Cv
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Environmental
studies
Equity
Nuclenor SA
50.00% 17.53%
Electricity
generation
Equity
Line-by-line
Enel Produzione
SpA
Chi Minnesota
Wind LLC
100.00% 100.00%
51.00% 51.00%
Line-by-line
Enel Green Power
México S de RL
de Cv
99.99% 99.99%
Mibgas SA
Madrid
Spain
3,000,000.00
EUR
Gas market
operator
-
Endesa SA
1.35%
0.95%
Midelt Wind Farm
SA
-
Morocco
300,000.00
MAD
Mill Shoals Hydro
Company I LLC
Wilmington
(Delaware)
USA
-
USD
Equity
Nareva Enel Green
Power Morocco SA
70.00% 35.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Analysis,
design,
construction
and
maintenance
of engineering
works
Electricity
generation
from renewable
resources
Minicentrales
del Canal de Las
Bárdenas AIE
Minicentrales del
Canal Imperial-
Gallur SL
Zaragoza
Spain
1,202,000.00
EUR
Hydroelectric
plants
-
Enel Green Power
España SL
15.00% 10.52%
Zaragoza
Spain
1,820,000.00
EUR
Hydroelectric
plants
Equity
Enel Green Power
España SL
36.50% 25.59%
Minority Stock
Holding Corp.
-
Virgin Islands
(British)
50,000.00
USD
-
Equity
Ifx Networks Ltd
100.00% 21.40%
Mira Energy (Pty)
Ltd
Houghton
South Africa 100.00
ZAR
Line-by-line
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
Electricity
generation
from renewable
resources
527
Attachments Company name Headquarters Country
Share capital
Currency Activity
Missisquoi
Associates LLC
Los Angeles
(California)
USA
Montrose Solar
LLC
Delaware
USA
-
-
USD
USD
Msn Solar Tres
SpA
Santiago
Chile
1,000,000.00
CLP
Nareva Enel Green
Power Morocco
SA
-
Morocco
300,000.00
MAD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Plant
construction
and electricity
generation
from renewable
resources
Holding.
Electricity
generation
Consolidation
method
Held by
Equity
EGPNA REP Hydro
Holdings LLC
%
holding
Group %
holding
100.00% 50.00%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Enel Green Power
Chile Ltda
100.00% 61.93%
Equity
Enel Green Power
Morocco SARLAU
50.00% 50.00%
Navalvillar Solar SL Madrid
Spain
3,000.00
EUR
Photovoltaic
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Nevkan
Renewables LLC
Wilmington
(Delaware)
USA
Newbury Hydro
Company LLC
Delaware
USA
-
-
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Enel Nevkan Inc.
100.00% 100.00%
AFS
Enel Green Power
North America Inc.
100.00% 100.00%
Rome
Italy
1,710,000.00
EUR
-
Equity
Enel.Si Srl
20.00% 20.00%
Newco
Cogenerazione.
Si Srl
Ngonye Power
Company Limited
Nojoli Wind Farm
(RF) (Pty) Ltd
Lusaka
Zambia
10,000.00
ZMW Electricity sales Line-by-line
Johannesburg
South Africa 10,000,000.00
ZAR
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Enel Green Power
Solar Ngonye SpA
(formerly Enel
Green Power Africa
Srl)
Enel Green Power
RSA (Pty) Ltd
80.00% 80.00%
60.00% 60.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Chi West LLC
100.00% 100.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Endesa Generación
SA
Enel Global Trading
SpA
50.00% 35.05%
100.00% 100.00%
Line-by-line
Enel Brasil SA
100.00% 54.23%
North Canal
Waterworks
Boston
(Massachusetts)
USA
Northwest Hydro
LLC
Wilmington
(Delaware)
USA
-
-
USD
USD
Notch Butte Hydro
Company Inc.
Wilmington
(Delaware)
USA
100.00
USD
Nuclenor SA
Burgos
Spain
102,000,000.00
EUR
Nuclear plants Equity
Nuove Energie Srl Porto
Italy
5,204,028.73
EUR
Empedocle
Nuxer Trading SA Montevideo
Uruguay
80,000.00
UYU
Construction
and
management
of LNG
regasification
infrastructure
Electricity
trading
528
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Nxuba Wind
Farm (Pty) Ltd
Gauteng
South Africa 1,000.00
ZAR
Electricity
generation
and sale from
renewable
resources
Consolidation
method
Line-by-line
Nyc Storage (353
Chester) Spe LLC
Wilmington
(Delaware)
Ochrana A
Bezpecnost Se AS
Mochovce
OGK-5 Finance
LLC
Moscow
USA
1.00
USD
-
Line-by-line
Slovakia
(Slovak
Republic)
Russian
Federation
33,193.92
EUR
10,000,000.00
RUB
Equity
OpEn Fiber SpA Milan
Italy
250,000,000.00
EUR
Origin Goodwell
Holdings LLC
Wilmington
(Delaware)
USA
Origin Wind
Energy LLC
Wilmington
(Delaware)
USA
-
-
USD
USD
Osage Wind
Holdings LLC
Delaware
USA
100.00
USD
Osage Wind LLC Delaware
USA
-
USD
Ottauquechee
Hydro Company
Inc.
Wilmington
(Delaware)
USA
100.00
USD
Held by
Enel Green Power
RSA 2 (Pty) Ltd
Nxuba Wind Farm
Community Trust
SPV (RF) (Pty) Ltd
Pele Green Energy
Nxuba BEE SPV
(Pty) Ltd
Request
Renewables (Pty)
Ltd
Demand Energy
Networks Inc.
Slovenské
elektrárne AS
%
holding
Group %
holding
51.00%
51.00%
5.00%
35.00%
9.00%
100.00% 100.00%
100.00% 33.00%
Security
services
Finance
company
Installation,
maintenance
and repair of
electronic plant
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Enel Russia PJSC 100.00% 56.43%
Equity
Enel SpA
50.00% 50.00%
Equity
Equity
EGPNA Wind
Holdings 1 LLC
100.00% 50.00%
Origin Goodwell
Holdings LLC
100.00% 50.00%
Line-by-line
Apollo Global
Management LLC
Enel Kansas LLC
Line-by-line
Osage Wind
Holdings LLC
50.00%
50.00%
50.00%
100.00% 50.00%
AFS
Enel Green Power
North America Inc.
100.00% 100.00%
Istanbul
Turkey
11,250,000.00
TRY
-
Line-by-line
Ovacik Eoliko
Enerji Elektrik
Üretim Ve Ticaret
Anonim Şirketi
Oxagesa AIE
Teruel
Spain
6,010.00
Oyster Bay Wind
Farm (Pty) Ltd
Johannesburg
South Africa 1,000.00
Padoma Wind
Power LLC
Los Angeles
(California)
USA
Palo Alto Farms
Wind Project LLC
Dallas (Texas)
USA
-
-
EUR
ZAR
USD
USD
Paravento SL
Lugo
Spain
3,006.00
EUR
Equity
Cogeneration of
electricity and
heat
Line-by-line
Electricity
generation
and sale from
renewable
resources
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Enel Green Power
Turkey Enerji
Yatirimlari Anonim
Şirketi
Enel Green Power
España SL
Enel Green Power
RSA 2 (Pty) Ltd
OOZ Trading (Pty)
Ltd
Oyster Bay
Community Trust
Invsetment (RF)
(Pty) Ltd
Enel Green Power
North America Inc.
100.00% 100.00%
33.33% 23.36%
60.00%
60.00%
35.00%
5.00%
100.00% 100.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Enel Green Power
España SL
90.00% 63.09%
529
Attachments Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
Madrid
Spain
1,183,100.00
EUR
Madrid
Spain
1,313,100.00
EUR
Mexico City
Mexico
100.00
MXN
Mexico City
Mexico
100.00
MXN
Mexico City
Mexico
100.00
MXN
Santiago de
Compostela
Las Palmas de
Gran Canaria
Spain
5,857,586.40
EUR
Spain
1,603,000.00
EUR
Rio de Janeiro Brazil
6,545,639.00
BRL
La Coruña
Spain
3,606,000.00
EUR
Madrid
Spain
120,400.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Equity
Equity
Line-by-line
Line-by-line
Line-by-line
%
holding
Group %
holding
30.00% 21.03%
Enel Green Power
España SL
Enel Green Power
España SL
30.00% 21.03%
100.00%
100.00%
100.00%
Enel Rinnovabile SA
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
Enel Rinnovabile SA
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
Enel Rinnovabile SA
de Cv
Hidroelectricidad
del Pacífico S de RL
de Cv
99.00%
1.00%
99.00%
1.00%
99.00%
1.00%
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Line-by-line
Enel Green Power
España SL
80.00% 56.08%
Line-by-line
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
Line-by-line
Enel Green Power
España SL
75.00% 52.58%
Line-by-line
Enel Green Power
España SL
50.16% 35.16%
Madrid
Spain
3,006.00
EUR
Wind plants
Line-by-line
La Coruña
Spain
552,920.00
EUR
Line-by-line
Enel Green Power
España SL
Enel Green Power
España SL
100.00% 70.10%
82.00% 57.48%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Parque Eólico de
Santa Lucía SA
Las Palmas de
Gran Canaria
Spain
901,500.00
EUR
Line-by-line
Enel Green Power
España SL
66.33% 46.50%
Buenos Aires
Argentina
1,201,745.00
ARS
Holding
Line-by-line
Rio de Janeiro Brazil
6,964,177.00
BRL
Santa Cruz de
Tenerife
Spain
3,810,340.00
EUR
Madrid
Spain
6,540,000.00
EUR
Electricity
generation
from renewable
resources
Plant
construction
and operation
Plant
construction
and operation
Line-by-line
Enel Green Power
Argentina SA
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
España SL
90.00% 63.09%
Line-by-line
Enel Green Power
España SL
75.50% 52.93%
Madrid
Spain
3,006.00
EUR
Wind plants
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Parc Eòlic La
Tossa-La Mola
D’en Pascual SL
Parc Eòlic Los
Aligars SL
Parque Amistad
II SA de Cv
Parque Amistad
III SA de Cv
Parque Amistad
IV SA de Cv
Parque Eólico
A Capelada
SL (Sociedad
Unipersonal)
Parque Eólico
Carretera de
Arinaga SA
Parque Eólico
Cristalândia Ltda
Parque Eólico de
Barbanza SA
Parque Eólico de
Belmonte SA
Parque Eólico de
Farlan SLU
Parque Eólico de
San Andrés SA
Parque Eólico del
Castillo SA
Parque Eólico
Delfina Ltda
Parque Eólico
Finca de Mogán
SA
Parque Eólico
Montes de Las
Navas SA
Parque Eólico
Muniesa SL
530
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Parque Eólico
Palmas Dos
Ventos Ltda
Parque Eólico
Pampa SA
Parque Eólico
Punta de Teno SA
Parque Eólico
Sierra del Madero
SA
Bahia
Brazil
4,096,626.00
BRL
Buenos Aires
Argentina
6,500,000.00
ARS
Tenerife
Spain
528,880.00
EUR
Soria
Spain
7,193,970.00
EUR
Parque Eólico Taltal
SA
Santiago
Chile
20,878,010,000.00
CLP
Parque Eólico Valle
de Los Vientos SA
Parque Salitrillos
SA de Cv
Santiago
Chile
566,096,564.00
CLP
Mexico City
Mexico
100.00
MXN
Parque Solar
Cauchari IV SA
San Salvador de
Jujuy
Argentina
500,000.00
ARS
Electricity
generation
and sale from
renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
Enel Green Power
Brasil Participações
Ltda
%
holding
Group %
holding
100.00% 100.00%
Line-by-line
Line-by-line
Enel Green Power
Argentina SA
Parque Eólico del
Castillo SA
Enel Green Power
España SL
20.00%
100.00%
80.00%
52.00% 36.45%
Line-by-line
Enel Green Power
España SL
58.00% 40.66%
Line-by-line
Enel Chile SA
Enel Green Power
Chile Ltda
0.01%
99.99%
61.93%
Line-by-line
Enel Chile SA
Enel Green Power
Chile Ltda
0.01%
99.99%
61.93%
Equity
Line-by-line
Parque Solar
Fotovoltaico
Sabanalarga SAS
Parque Solar
Maipú SpA
Parque Solar
Valledupar SAS
Parque Talinay
Oriente SA
Parques Eólicos
Gestinver Gestión
SL
Parques Eólicos
Gestinver SL
Paynesville Solar
LLC
Pegop - Energia
Eléctrica SA
Bogotá DC
Colombia
400,000.00
COP
-
Line-by-line
Santiago
Chile
404,212,503.00
CLP
Line-by-line
Electricity
generation
and sale from
renewable
resources
Bogotá DC
Colombia
400,000.00
COP
-
Line-by-line
Santiago
Chile
66,092,165,171.00
CLP
Madrid
Spain
3,200.00
EUR
Line-by-line
Electricity
generation
from renewable
resources
Renewable
energy
Line-by-line
Madrid
Spain
13,050.00
EUR
Wind plants
Line-by-line
Delaware
USA
-
USD
Abrantes
Portugal
50,000.00
EUR
Pelzer Hydro
Company LLC
Wilmington
(Delaware)
USA
-
USD
Pereda Power SL La Pereda
Spain
5,000.00
EUR
(Mieres)
Line-by-line
Equity
Equity
Electricity
generation
from renewable
resources
Electricity
generation
Electricity
generation
from renewable
resources
Development
of generation
activities
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Enel Green Power
Argentina SA
Energía y Servicios
South America SpA
Enel Green Power
Colombia SAS
Enel Green Power
Chile Ltda
Enel Green Power
del Sur SpA
(formerly Parque
Eólico Renaico SpA)
Enel Green Power
Colombia SAS
Enel Green Power
Chile Ltda
Enel Green Power
SpA
SIMEST SpA
Parques Eólicos
Gestinver SL
Enel Green Power
España SL
Aurora Distributed
Solar LLC
60.80% 20.00%
95.00%
100.00%
5.00%
100.00% 100.00%
1.00%
61.93%
99.00%
100.00% 100.00%
60.91%
76.64%
34.56%
4.52%
100.00% 70.10%
100.00% 70.10%
100.00% 51.00%
Endesa Generación
Portugal SA
Endesa Generación
SA
EGPNA REP Hydro
Holdings LLC
0.02%
35.05%
49.98%
100.00% 50.00%
Line-by-line
Endesa Generación
II SA
70.00% 49.07%
531
Attachments Company name Headquarters Country
Share capital
Currency Activity
PH Chucas SA
San José
Costa Rica
100,000.00
CRC
PH Don Pedro SA San José
Costa Rica
100,001.00
CRC
PH Guacimo SA
San José
Costa Rica
50,000.00
CRC
PH
Río Volcán SA
San José
Costa Rica
100,001.00
CRC
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Held by
Enel Green Power
Costa Rica SA
Enel Green Power
SpA
Enel Green Power
Costa Rica SA
%
holding
Group %
holding
40.31%
65.00%
24.69%
33.44% 33.44%
Line-by-line
Enel Green Power
Costa Rica SA
65.00% 65.00%
Line-by-line
Enel Green Power
Costa Rica SA
34.32% 34.32%
Pincher Creek Lp Alberta
Canada
(Canada)
CAD
Renewable
energy
Line-by-line
-
-
Delaware
USA
USD
Line-by-line
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
Aurora Distributed
Solar LLC
99.00%
100.00%
1.00%
100.00% 51.00%
Line-by-line
Enel Green Power
España SL
56.12% 39.34%
Line-by-line
Equity
Equity
Equity
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
PowerCrop
SpA (formerly
PowerCrop Srl)
PowerCrop
SpA (formerly
PowerCrop Srl)
100.00% 100.00%
100.00% 50.00%
100.00% 50.00%
Enel Green Power
SpA
50.00% 50.00%
Line-by-line
Prairie Rose Wind
LLC
100.00% 50.00%
Equity
EGPNA REP Wind
Holdings LLC
100.00% 50.00%
Line-by-line
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Enel Green Power
España SL
100.00% 100.00%
100.00% 70.10%
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Equity
Enel Green Power
España SL
30.00% 21.03%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation and
sale
Plant
development
and
construction
Plant
development
and
construction
Hydroelectric
plants
Pine Island
Distributed Solar
LLC
Planta Eólica
Europea SA
Pomerado Energy
Storage LLC
PowerCrop
Macchiareddu Srl
PowerCrop Russi
Srl
PowerCrop
SpA (formerly
PowerCrop Srl)
Seville
Spain
1,198,530.00
EUR
Wilmington
USA
1.00
USD
Bologna
Italy
100,000.00
EUR
Bologna
Italy
100,000.00
EUR
Bologna
Italy
4,000,000.00
EUR
Prairie Rose
Transmission LLC
Minnesota
USA
Prairie Rose Wind
LLC
New York
(New York)
USA
-
-
USD
USD
Primavera Energia
SA
Rio de Janeiro Brazil
36,965,444.64
BRL
Productor Regional
de Energía
Renovable III SA
Madrid
Productor Regional
de Energía
Renovable SA
Madrid
Spain
3,088,398.00
EUR
Spain
710,500.00
EUR
Productora de
Energías SA
Barcelona
Spain
30,050.00
EUR
532
Annual Report 2018 Consolidation
method
Line-by-line
Held by
Enel Green Power
España SL
%
holding
Group %
holding
100.00% 70.10%
Line-by-line
Enel Green Power
México S de RL
de Cv
99.99% 99.99%
Equity
Endesa SA
45.00% 31.55%
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Green Power
SpA
Energía y Servicios
South America SpA
Enel Green Power
España SL
Enel Green Power
Partecipazioni
Speciali Srl
Energía y Servicios
South America SpA
Enel Green Power
SpA
60.80% 20.00%
60.80% 20.00%
99.00%
100.00%
1.00%
99.00%
100.00%
1.00%
99.00%
100.00%
1.00%
33.33% 23.36%
99.90%
100.00%
0.10%
90.00% 90.00%
Company name Headquarters Country
Share capital
Currency Activity
Promociones
Energéticas del
Bierzo SL
Proveedora de
Electricidad de
Occidente S de RL
de Cv
Proyecto Almería
Mediterráneo SA
Proyecto Solar
Don José SA de
Cv
Proyecto Solar
Villanueva Tres SA
de Cv
Proyectos de
Energía Sol y
Viento 5 SA de Cv
Proyectos de
Energía Sol y
Viento 6 SA de Cv
Proyectos de
Energía Sol y
Viento 7 SA de Cv
Proyectos
Universitarios
de Energías
Renovables SL
Proyectos y
Soluciones
Renovables SAC
Pt Enel Green
Power Optima
Way Ratai
Pulida Energy (RF)
(Pty) Ltd
Madrid
Spain
12,020.00
EUR
Mexico City
Mexico
89,708,835.00
MXN
Madrid
Spain
601,000.00
EUR
Mexico City
Mexico
100.00
MXN
Mexico City
Mexico
56,370,700.00
MXN
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Desalinization
and water
supply
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Equity
Equity
Mexico City
Mexico
139.00
MXN
Renewable
energy
Line-by-line
Mexico City
Mexico
139.00
MXN
Line-by-line
Electricity
generation
from renewable
resources
Mexico City
Mexico
139.00
MXN
Renewable
energy
Line-by-line
Alicante
Spain
27,000.00
EUR
Lima
Peru
1,000.00
PEN
Electricity
generation
from renewable
resources
Electricity
generation
Equity
Line-by-line
Jakarta
Indonesia
10,001,000.00
USD
Houghton
South Africa 10,000,000.00
ZAR
Line-by-line
PV Huacas SA
San José
Costa Rica
10,000.00
CRC
Pyrites Hydro LLC New York (New
USA
-
USD
York)
Quatiara Energia
SA
Rio de Janeiro Brazil
16,566,510.61
BRL
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
Line-by-line
Enel Green Power
RSA (Pty) Ltd
52.70% 52.70%
Line-by-line
Enel Green Power
Costa Rica SA
65.00% 65.00%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
Rattlesnake Creek
Holdings LLC
Wilmington
(Delaware)
Reaktortest Sro
Trnava
Panama
Red
Centroamericana de
Telecomunicaciones
SA
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Slovakia
(Slovak
Republic)
Panama
66,389.00
EUR
Research and
development
Equity
Framatome GmbH
Slovenské
elektrárne AS
51.00%
16.17%
49.00%
2,700,000.00
USD
Telecommunications -
Enel SpA
11.11% 11.11%
533
Attachments Company name Headquarters Country
Share capital
Currency Activity
Red Dirt Wind
Holdings LLC
Delaware
USA
-
Red Dirt Wind
Project LLC
Wilmington
(Delaware)
USA
1.00
USD
USD
Renewable
energy
Electricity
generation
from renewable
resources
Consolidation
method
Held by
%
holding
Group %
holding
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Red Dirt Wind
Holdings LLC
100.00% 100.00%
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Red Fox Wind
Project LLC
Wilmington
(Delaware)
Reftinskaya Gres
Limited Liability
Company
Asbest
Renovables de
Guatemala SA
Guatemala
City
Russian
Federation
10,000.00
RUB
Guatemala
1,924,465,600.00
GTQ
Electricity
generation and
sale
Electricity
generation
from renewable
resources
Line-by-line
Line-by-line
Enel Russia PJSC 100.00% 56.43%
Enel Green Power
Guatemala SA
Enel Green Power
SpA
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
0.01%
100.00%
99.99%
99.00%
100.00%
1.00%
Riverview Lp
Alberta
(Canada)
Canada
-
CAD
Renewable
energy
Line-by-line
Roadrunner Solar
Project LLC
Delaware
USA
100.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Rochelle Solar LLC Wilmington
USA
1.00
USD
Photovoltaic
Line-by-line
Enel Kansas LLC
100.00% 100.00%
(Delaware)
Rock Creek Hydro
LLC
Delaware
USA
Rock Creek Wind
Holdings LLC
-
USA
Rock Creek Wind
Project LLC
Wilmington
(Delaware)
USA
Rocky Caney
Holdings LLC
Oklahoma City
(Oklahoma)
USA
Rocky Caney Wind
LLC
New York (New
York)
USA
Rocky Ridge Wind
Project LLC
Oklahoma City
(Oklahoma)
USA
-
-
1.00
1.00
-
-
USD
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
EGPNA Preferred
Holdings II LLC
100.00% 100.00%
USD
Holding
Line-by-line
Rock Creek Wind
Holdings LLC
100.00% 100.00%
USD
USD
USD
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Thermal
generation
plants
Line-by-line
Enel Kansas LLC
20.00% 20.00%
Line-by-line
Enel Kansas LLC
20.00% 20.00%
Line-by-line
Rocky Caney Wind
LLC
20.00% 20.00%
Line-by-line
Enel Green Power
Rus LLC
100.00% 100.00%
Rodnikovskaya
Moscow
Russia
6,010,000.00
RUB
Rsl Telecom
(Panama) SA
Panama
Panama
10,000.00
USD
-
Equity
Ufinet Latam SLU 100.00% 21.40%
2,760,000.00
RUB
Electricity
trading
Equity
Enel SpA
49.50% 49.50%
RusEnergoSbyt
LLC
Moscow
Russian
Federation
RusEnergoSbyt
Siberia LLC
Krasnoyarskiy
Kray
Russian
Federation
RusEnergoSbyt
Yaroslavl
Yaroslavl
Russian
Federation
4,600,000.00
RUB
Electricity sales Equity
100,000.00
RUB
Electricity sales Equity
RusEnergoSbyt
LLC
RusEnergoSbyt
LLC
Chi Minnesota
Wind LLC
50.00% 24.75%
50.00% 24.75%
51.00% 51.00%
Ruthton Ridge LLC Minnesota
USA
-
USD
Line-by-line
Electricity
generation
from renewable
resources
Saburoy SA
Montevideo
Uruguay
400,000.00
UYU
-
Equity
Ifx Networks LLC 100.00% 21.40%
Sacme SA
Buenos Aires
Argentina
12,000.00
ARS
Equity
Monitoring
of electricity
system
Empresa
Distribuidora Sur
SA - Edesur
50.00% 18.68%
534
Annual Report 2018 Salto de San
Rafael SL
San Francisco de
Borja SA
San Juan Mesa
Wind Project II
LLC
Sanatorium-
preventorium
Energetik LLC
Santo Rostro
Cogeneración SA
Se Služby
Inžinierskych
Stavieb SRO
Seguidores
Solares Planta
2 SL (Sociedad
Unipersonal)
Servicio de
Operación y
Mantenimiento
para Energías
Renovables S de
RL de Cv
Servicios de
Internet Eni Chile
Ltda
Servizio Elettrico
Nazionale SpA
SIET - Società
Informazioni
Esperienze
Termoidrauliche
SpA
Sistema Eléctrico
de Conexión
Montes Orientales
SL
Sistema Eléctrico
de Conexión
Valcaire SL
Sistemas
Energéticos
Alcohujate
SA (Sociedad
Unipersonal)
Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
Salmon Falls
Hydro LLC
Delaware
USA
-
Seville
Spain
461,410.00
Zaragoza
Spain
60,000.00
Wilmington
(Delaware)
USA
-
Nevinnomyssk Russian
10,571,300.00
RUB
Federation
Seville
Spain
207,000.00
EUR
USD
EUR
EUR
USD
AFS
Equity
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Hydroelectric
plants
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
services
Equity
Cogeneration of
electricity and
heat
%
holding
Group %
holding
100.00% 100.00%
Enel Green Power
North America Inc.
Enel Green Power
España SL
Enel Green Power
España SL
Padoma Wind
Power LLC
50.00% 35.05%
66.67% 46.74%
100.00% 100.00%
Line-by-line
Enel Russia PJSC
OGK-5 Finance LLC
99.99%
0.01%
56.43%
Enel Green Power
España SL
45.00% 31.55%
Slovenské
elektrárne AS
100.00% 33.00%
Kalná nad
Hronom
Madrid
Slovakia
(Slovak
Republic)
Spain
200,000.00
EUR
Services
Equity
3,010.00
EUR
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Mexico City
Mexico
3,000.00
MXN
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
0.01%
100.00%
99.99%
Enel Green Power
Guatemala SA
Energía Nueva
Energía Limpia
México
S de RL de Cv
Ifx Networks Ltd
Ifx/eni - Spc IV Inc.
0.01%
99.90%
21.38%
Santiago
Chile
2,768,688,228.00
CLP
-
Equity
Rome
Italy
10,000,000.00
EUR
Electricity sale Line-by-line
Enel SpA
100.00% 100.00%
Shiawassee Wind
Project LLC
Wilmington
(Delaware)
USA
1.00
USD
-
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Shield Energy
Storage Project
LLC
Delaware
USA
Sierra
Energystorage
LLC
Camden
(Delaware)
USA
-
-
USD
USD
Line-by-line
Line-by-line
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Piacenza
Italy
697,820.00
EUR
Equity
Analysis, design
and research
in thermal
technology
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
Enel Innovation
Hubs Srl
100.00% 100.00%
51.00% 51.00%
41.55% 41.55%
Granada
Spain
44,900.00
EUR
Electricity
generation
Equity
Enel Green Power
España SL
16.70% 11.71%
Madrid
Spain
175,200.00
EUR
Electricity
generation
Equity
Enel Green Power
España SL
28.13% 19.72%
Zaragoza
Spain
61,000.00
EUR
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Electricity
generation
and sale from
renewable
resources
535
Attachments Sistemas
Energéticos
Campoliva
SA (Sociedad
Unipersonal)
Sistemas
Energéticos
Mañón Ortigueira
SA
Sistemas
Energéticos
Sierra del Carazo
SL (Sociedad
Unipersonal)
Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
Zaragoza
Spain
61,000.00
EUR
Wind plants
Line-by-line
Enel Green Power
España SL
%
holding
Group %
holding
100.00% 70.10%
La Coruña
Spain
2,007,750.00
EUR
Zaragoza
Spain
3,006.00
EUR
Line-by-line
Enel Green Power
España SL
96.00% 67.30%
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Slate Creek Hydro
Associates LP
Los Angeles
(California)
USA
Slate Creek Hydro
Company LLC
Wilmington
(Delaware)
USA
-
-
USD
USD
Equity
Equity
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Slovak Power
Holding BV
Amsterdam
The
Netherlands
25,010,000.00
EUR
Holding
Equity
4,505,000.00
EUR
Electricity
supply
Equity
Slate Creek Hydro
Company LLC
95.00% 47.50%
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Enel Produzione
SpA
Slovenské
elektrárne AS
50.00% 50.00%
100.00% 33.00%
Slovenské
elektrárne -
Energetické Služby
SRO
Slovenské
elektrárne AS
Bratislava
Bratislava
Slovenské
elektrárne Česká
Republika SRO
Praha
Slovakia
(Slovak
Republic)
Slovakia
(Slovak
Republic)
Czech
Republic
1,269,295,724.66
EUR
295,819.00
CZK
Electricity
generation
Electricity
supply
Equity
Equity
Slovak Power
Holding BV
Slovenské
elektrárne AS
66.00% 33.00%
100.00% 33.00%
Smart P@per SpA Potenza
Italy
2,184,000.00
EUR
Services
-
Servizio Elettrico
Nazionale SpA
10.00% 10.00%
Smoky Hill
Holdings II LLC
Wilmington
(Delaware)
USA
Smoky Hills Wind
Farm LLC
Topeka (Kansas) USA
Smoky Hills Wind
Project II LLC
Topeka (Kansas) USA
Snyder Wind Farm
LLC
Dallas (Texas)
USA
-
-
-
-
USD
USD
USD
USD
Socibe Energia SA Rio de Janeiro Brazil
19,969,032.25
BRL
Sociedad Agrícola
de Cameros Ltda
Santiago
Chile
5,738,046,495.00
CLP
Sociedad Eólica de
Andalucía SA
Seville
Sociedad Eólica El
Puntal SL
Seville
Spain
4,507,590.78
Spain
1,643,000.00
EUR
EUR
Sociedad Eólica
Los Lances SA
Seville
Spain
2,404,048.42
EUR
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Texkan Wind LLC
100.00% 100.00%
Line-by-line
Nevkan
Renewables LLC
100.00% 100.00%
Line-by-line
Texkan Wind LLC
100.00% 100.00%
Line-by-line
Enel Green Power
Brasil Participações
Ltda
100.00% 100.00%
Line-by-line
Enel Chile SA
57.50% 35.61%
Line-by-line
Equity
Enel Green Power
España SL
Enel Green Power
España SL
64.74% 45.38%
50.00% 35.05%
Line-by-line
Enel Green Power
España SL
60.00% 42.06%
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation and
sale
Financial
investment
Electricity
generation
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
536
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Sociedad Portuaria
Central Cartagena
SA
Soetwater Wind
Farm (RF) (Pty) Ltd
Bogotá DC
Colombia
89,714,600.00
COP
Northern Cape South Africa 1,000.00
ZAR
Sol Real Istmo SA Panama
Panama
10,000.00
USD
Soliloquoy Ridge
LLC
Minnesota
USA
-
USD
Somersworth
Hydro Company
Inc.
Wilmington
(Delaware)
USA
100.00
USD
Sona Enerji Üretim
Anonim Şirketi
Istanbul
Turkey
50,000.00
TRY
Sotavento Galicia
SA
Santiago de
Compostela
Spain
601,000.00
EUR
Southwest
Transmission LLC
Minnesota
USA
Spartan Hills LLC Minnesota
USA
Stillman Valley
Solar LLC
Delaware
USA
-
-
-
Stillwater Woods
Hill Holdings LLC
Wilmington
(Delaware)
USA
1.00
USD
USD
USD
USD
Stipa Nayaá SA
de Cv
Mexico City
Mexico
1,811,016,348.00
MXN
Sublunary Trading
(RF) (Pty) Ltd
Suministradora
Eléctrica de Cádiz
SA
Johannesburg
South Africa 10,000.00
ZAR
Cadiz
Spain
12,020,240.00
EUR
Suministro de Luz
y Fuerza SL
Torroella de
Montgri (Girona)
Spain
2,800,000.00
Summit Energy
Storage Inc.
Wilmington
(Delaware)
USA
2,050,000.00
Sun River LLC
Minnesota
USA
-
EUR
USD
USD
Port
construction
and
management
Electricity
generation
and sale from
renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
distribution and
sale
Electricity
distribution
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Line-by-line
Line-by-line
Held by
Emgesa SA ESP
Inversora Codensa
SAS
Enel Green Power
RSA 2 (Pty) Ltd
Pele Green Energy
Soetwater BEE
SPV (Pty) Ltd
Soetwater Wind
Farm Community
Trust
Enel Green Power
Panama SA
%
holding
94.94%
5.05%
Group %
holding
26.25%
60.00%
60.00%
35.00%
5.00%
100.00% 100.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
AFS
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Equity
Enel Green Power
Turkey Enerji
Yatirimlari Anonim
Şirketi
Enel Green Power
España SL
100.00% 100.00%
36.00% 25.24%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Line-by-line
Equity
Line-by-line
Line-by-line
Enel Green Power
México S de RL
de Cv
Enel Green Power
Partecipazioni
Speciali Srl
Enel Green Power
Solar Energy Srl
Endesa Red
SA (Sociedad
Unipersonal)
Hidroeléctrica de
Catalunya SL
Enel Green Power
North America Inc.
55.21%
95.37%
40.16%
57.00% 57.00%
33.50% 23.48%
60.00% 42.06%
75.00% 75.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
537
Attachments Company name Headquarters Country
Share capital
Currency Activity
Consolidation
method
Held by
Sweetwater
Hydroelectric LLC
Concord (New
Hampshire)
USA
-
USD
AFS
Electricity
generation
from renewable
resources
Enel Green Power
North America Inc.
%
holding
Group %
holding
100.00% 100.00%
Tauste Energía
Distribuida SL
Zaragoza
Spain
60,508.00
EUR
Renewable
energy
Line-by-line
Tecnatom SA
Madrid
Spain
4,025,700.00
EUR
Tecnoguat SA
Guatemala
City
Guatemala
30,948,000.00
GTQ
Paço de Arcos
(Oeiras)
Portugal
5,025,000.00
EUR
Enel Green Power
España SL
Posidonia
Inversiones
Endesa Generación
SA
51.00%
35.75%
49.00%
45.00% 31.55%
Line-by-line
Enel Green Power
SpA
75.00% 75.00%
Equity
Endesa Generación
SA
43.75% 30.67%
Equity
Electricity
generation and
services
Electricity
generation
from renewable
resources
Electricity
generation,
transmission
and distribution
Mexico City
Mexico
2,892,643,576.00
MXN
Renewable
energy
Equity
Enel Green Power
SpA
32.90% 32.90%
Sredneuralsk
Russian
Federation
128,000,000.00
RUB
Electricity sales Line-by-line
Enel Russia PJSC 60.00% 33.86%
Buenos Aires
Argentina
500,000.00
ARS
Buenos Aires
Argentina
500,000.00
ARS
Equity
Plant
construction
and operation
Equity
Plant
construction
and operation
Tejo Energia
Produção e
Distribução de
Energia Eléctrica
SA
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Teploprogress
OJSC
Termoeléctrica
José de San
Martín SA
Termoeléctrica
Manuel Belgrano
SA
Central Dock Sud
SA
Enel Generación
Costanera SA
Enel Generación El
Chocón SA
Central Dock Sud
SA
Enel Generación
Costanera SA
Enel Generación El
Chocón SA
Enel Green Power
España SL
1.42%
9.21%
5.33%
18.85%
1.42%
9.21%
5.33%
18.85%
45.00% 31.55%
Equity
Line-by-line
Enel Texkan Inc.
100.00% 100.00%
Line-by-line
Enel Kansas LLC
100.00% 100.00%
Line-by-line
Thunder Ranch
Wind Holdings LLC
100.00% 100.00%
Equity
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
60.00% 60.00%
Equity
Line-by-line
Equity
Enel Green Power
España SL
Enel Green Power
Guatemala SA
Enel Green Power
SpA
Gas Atacama Chile
SA
33.33% 23.36%
0.00%
100.00%
100.00%
50.00% 29.02%
Termotec Energía
AIE en liquidación
Valencia
Spain
481,000.00
EUR
Texkan Wind LLC Wilmington
USA
(Delaware)
Thunder Ranch
Wind Holdings
LLC
Delaware
USA
-
-
Thunder Ranch
Wind Project LLC
Wilmington
(Delaware)
USA
1.00
Tko Power LLC
Los Angeles
(California)
USA
-
USD
USD
USD
USD
Tobivox (RF) (Pty)
Ltd
Houghton
South Africa 10,000,000.00
ZAR
Toledo Pv AEIE
Madrid
Spain
26,887.96
EUR
Transmisora de
Energía Renovable
SA
Guatemala
City
Guatemala
233,561,800.00
GTQ
Santiago
Chile
440,644,600.00
CLP
Transmisora
Eléctrica de
Quillota Ltda
538
Cogeneration of
electricity and
heat
Electricity
generation
from renewable
resources
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Photovoltaic
plants
Electricity
generation
from renewable
resources
Electricity
transmission
and distribution
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
Transportadora de
Energía SA - TESA
Buenos Aires
Argentina
100,000.00
ARS
Transportes y
Distribuciones
Eléctricas SA
Triton Energy
Inc.
Olot (Girona)
Spain
72,120.00
Delaware
USA
5,000.00
Triton Power
Company
New York
(New York)
USA
Tsar Nicholas LLC Minnesota
USA
Twin Falls Hydro
Associates
Seattle
(Washington)
USA
Twin Falls Hydro
Company LLC
Wilmington
(Delaware)
USA
Twin Lake Hills
LLC
Minnesota
USA
Twin Saranac
Holdings LLC
Wilmington
(Delaware)
USA
-
-
-
-
-
-
EUR
USD
USD
USD
USD
USD
USD
USD
Electricity
generation,
transmission
and distribution
Electricity
transmission
Renewable
energy
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Line-by-line
Held by
%
holding
Enel Argentina SA
Enel CIEN SA
0.00%
100.00%
Group %
holding
54.23%
Line-by-line
Endesa Distribución
Eléctrica SL
73.33% 51.41%
Line-by-line
Line-by-line
Line-by-line
Enel X North
America Inc.
Enel Green Power
North America Inc.
Highfalls Hydro
Company Inc.
Chi Minnesota
Wind LLC
100.00% 100.00%
2.00%
100.00%
98.00%
51.00% 51.00%
Equity
Equity
Twin Falls Hydro
Company LLC
99.51% 49.76%
EGPNA REP Hydro
Holdings LLC
100.00% 50.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Tynemouth Energy
Storage Limited
London
United
Kingdom
2.00
GBP
Services
Line-by-line
Ufefys SL
en liquidación
Aranjuez
Spain
304,150.00
EUR
-
Electricity
generation
from renewable
resources
Enel Global Thermal
Generation Srl
Enel Green Power
España SL
100.00% 100.00%
40.00% 28.04%
Ufinet Argentina
SA
Buenos Aires
Argentina
100,000.00
Ufinet Chile SA
Santiago
Chile
233,750,000.00
ARS
CLP
Ufinet Colombia
SA
Bogotá DC
Colombia
1,180,000,000.00
COP
Ufinet Costa Rica
SA
Ufinet Ecuador
Ufiec SA
Ufinet El Salvador
SA de Cv
San José
Costa Rica
15,000.00
Quito
Ecuador
600,800.00
San Salvador
El Salvador
10,000.00
Ufinet Guatemala
SA
Guatemala
City
Guatemala
7,500,000.00
Ufinet Honduras
SA
Tegucigalpa
Honduras
194,520.00
Ufinet Latam SLU Madrid
Spain
15,906.31
USD
USD
USD
GTQ
HNL
EUR
-
-
-
-
-
-
-
-
-
Equity
Ufinet Latam SLU
Ufinet Panama SA
95.00%
5.00%
21.40%
Equity
Ufinet Latam SLU 100.00% 21.40%
Equity
10.00%
19.26%
Empresa de
Energía del Pacífico
SA ESP
Ufinet Guatemala
SA
Ufinet Honduras SA
Ufinet Latam SLU
Ufinet Panama SA
0.00%
0.00%
90.00%
0.00%
Equity
Ufinet Latam SLU 100.00% 21.40%
Equity
Equity
Equity
Equity
Ufinet Guatemala
SA
Ufinet Latam SLU
Ufinet Guatemala
SA
Ufinet Latam SLU
Ufinet Latam SLU
Ufinet Panama SA
0.00%
21.40%
100.00%
0.01%
21.40%
99.99%
99.99%
0.01%
21.40%
21.40%
Ufinet Latam SLU
Ufinet Panama SA
99.99%
0.01%
Equity
Zacapa Sàrl
100.00% 21.40%
539
Attachments Ustav Jaderného
Výzkumu Rez AS
Rez
Czech
Republic
524,139,000.00
CZK
Madrid
Spain
3,000.00
EUR
Photovoltaic
Line-by-line
Enel Green Power
España SL
100.00% 70.10%
Company name Headquarters Country
Share capital
Currency Activity
Ufinet México S
de RL de Cv
Ufinet Nicaragua
SA
Ufinet Panama
SA
Ufinet Paraguay
SA
Mexico City
Mexico
10,032,150.00
MXN
Managua
Nicaragua
2,800,000.00
NIO
Panama
Panama
3,500,000.00
Asunción
Paraguay
13,960,000.00
USD
USD
Ufinet Peru SAC
Lima
Peru
1,450,923.00
PEN
Ufinet US LLC
Delaware
USA
1,000.00
Johannesburg
South Africa 1,000.00
USD
ZAR
Las Palmas de
Gran Canaria
Spain
190,171,520.00
EUR
Johannesburg
South Africa 1,000.00
ZAR
Ukuqala Solar
(Pty) Ltd
Unión Eléctrica
de Canarias
Generación SAU
Upington Solar
(Pty) Ltd
Valdecaballero
Solar SL
Vektör Enerji
Üretim Anonim
Şirketi
Ventos de Santa
Angela Energias
Renováveis SA
Vientos del
Altiplano S de RL
de Cv
Istanbul
Turkey
3,500,000.00
TRY
Niterói (Rio de
Janeiro)
Brazil
10,000.00
BRL
Mexico City
Mexico
1,455,854,094.00
MXN
Villanueva Solar SA
de Cv
Mexico City
Mexico
100.00
MXN
Viruleiros SL
Santiago de
Compostela
Spain
160,000.00
EUR
Walden Hydro LLC Delaware
USA
Waseca Solar LLC Delaware
USA
Weber Energy
Storage Project
LLC
Delaware
USA
-
-
-
USD
USD
USD
540
Consolidation
method
Held by
Equity
Equity
Ufinet Guatemala
SA
Ufinet Latam SLU
Ufinet Guatemala
SA
Ufinet Latam SLU
Ufinet Panama SA
%
holding
Group %
holding
0.01%
21.40%
99.99%
0.50%
21.40%
99.00%
0.50%
Equity
Ufinet Latam SLU 100.00% 21.40%
Equity
Equity
Tecnología en
Electrónica e
Informática SA
Ufinet Latam SLU
Ufinet Latam SLU
Ufinet Panama SA
25.00%
16.05%
75.00%
99.99%
21.40%
0.01%
Equity
Ufinet Latam SLU 100.00% 21.40%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
Line-by-line
Endesa Generación
SA
100.00% 70.10%
Line-by-line
Enel Green Power
RSA (Pty) Ltd
100.00% 100.00%
Equity
Slovenské
elektrárne AS
27.77% 9.17%
-
-
-
-
-
-
Electricity
generation
from renewable
resources
Electricity
generation
Electricity
generation
from renewable
resources
Research and
development
Plant
construction
and electricity
generation
from renewable
resources
Electricity
generation
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
AFS
Enel SpA
100.00% 100.00%
Line-by-line
Equity
Equity
Line-by-line
Enel Green Power
Brasil Participações
Ltda
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Tenedora de
Energía Renovable
Sol y Viento SAPI
de Cv
Enel Green Power
España SL
100.00% 100.00%
60.80% 20.00%
60.80% 20.00%
67.00% 46.97%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Enel Energy
Storage Holdings
LLC (formerly EGP
Energy Storage
Holdings LLC)
100.00% 100.00%
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
1,625,000.00
USD
-
WeSpire Inc.
West Faribault
Solar LLC
Boston
(Massachusetts)
USA
Delaware
USA
West Hopkinton
Hydro LLC
Delaware
USA
West Waconia
Solar LLC
Delaware
USA
-
-
-
USD
USD
USD
Western New York
Wind Corporation
Albany (New
York)
USA
300.00
USD
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Wild Run Lp
Calgary
(Alberta)
Canada
10.00
CAD
Holding
Line-by-line
Willimantic Power
Corporation
Hartford
(Connecticut)
USA
1,000.00
USD
Wind Parks
Anatolis - Prinias
SA
Wind Parks
Bolibas SA
Wind Parks
Distomos SA
Wind Parks Folia
SA
Wind Parks Gagari
SA
Wind Parks Goraki
SA
Wind Parks
Gourles SA
Wind Parks
Kafoutsi SA
Wind Parks
Katharas SA
Wind Parks
Kerasias SA
Maroussi
Greece
1,208,188.00
EUR
Maroussi
Greece
551,500.00
EUR
Maroussi
Greece
556,500.00
EUR
Maroussi
Greece
424,000.00
EUR
Maroussi
Greece
389,000.00
EUR
Maroussi
Greece
551,500.00
EUR
Maroussi
Greece
555,000.00
EUR
Maroussi
Greece
551,500.00
EUR
Maroussi
Greece
768,648.00
EUR
Maroussi
Greece
935,990.00
EUR
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Consolidation
method
Equity
Held by
Enel X North
America Inc.
%
holding
Group %
holding
11.21% 11.21%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
AFS
Enel Green Power
North America Inc.
100.00% 100.00%
Line-by-line
Aurora Distributed
Solar LLC
100.00% 51.00%
Line-by-line
Enel Green Power
North America Inc.
100.00% 100.00%
Enel Alberta Wind
Inc.
Enel Green Power
Canada Inc.
Enel Green Power
North America Inc.
0.10%
100.00%
99.90%
100.00% 100.00%
Line-by-line
Line-by-line
Enel Green Power
Hellas Wind Parks
South Evia SA
100.00% 100.00%
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Line-by-line
Line-by-line
Enel Green Power
Hellas Wind Parks
South Evia SA
Enel Green Power
Hellas Wind Parks
South Evia SA
100.00% 100.00%
100.00% 100.00%
541
Attachments Company name Headquarters Country
Share capital
Currency Activity
Wind Parks Milias
SA
Maroussi
Greece
1,024,774.00
EUR
Wind Parks
Mitikas SA
Wind Parks
Paliopirgos SA
Wind Parks Petalo
SA
Wind Parks
Platanos SA
Wind Parks Skoubi
SA
Wind Parks Spilias
SA
Wind Parks
Strouboulas SA
Wind Parks Vitalio
SA
Maroussi
Greece
772,639.00
EUR
Maroussi
Greece
200,000.00
EUR
Maroussi
Greece
575,000.00
EUR
Maroussi
Greece
625,467.00
EUR
Maroussi
Greece
472,000.00
EUR
Maroussi
Greece
847,490.00
EUR
Maroussi
Greece
576,500.00
EUR
Maroussi
Greece
361,000.00
EUR
Wind Parks Vourlas
SA
Maroussi
Greece
554,000.00
EUR
Winter’s Spawn
LLC
Minnesota
USA
Woods Hill Solar
LLC
Wilmington
(Delaware)
USA
-
-
Sofia
Bulgaria
5,000.00
USD
USD
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
WP Bulgaria 1
EOOD
WP Bulgaria 10
EOOD
WP Bulgaria 11
EOOD
WP Bulgaria 12
EOOD
WP Bulgaria 13
EOOD
542
Consolidation
method
Line-by-line
Line-by-line
Held by
Enel Green Power
Hellas Wind Parks
South Evia SA
Enel Green Power
Hellas Wind Parks
South Evia SA
%
holding
Group %
holding
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
Hellas SA
80.00% 80.00%
Equity
Enel Green Power
Hellas SA
30.00% 30.00%
Line-by-line
Enel Green Power
Hellas Wind Parks
South Evia SA
100.00% 100.00%
Equity
Enel Green Power
Hellas SA
30.00% 30.00%
Line-by-line
Enel Green Power
Hellas Wind Parks
South Evia SA
100.00% 100.00%
Equity
Equity
Equity
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Enel Green Power
Hellas SA
30.00% 30.00%
Line-by-line
Chi Minnesota
Wind LLC
51.00% 51.00%
Line-by-line
Line-by-line
Stillwater Woods
Hill Holdings LLC
Enel Green Power
Bulgaria EAD
100.00% 100.00%
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Electricity
generation
from renewable
resources
Renewable
energy
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Annual Report 2018 Company name Headquarters Country
Share capital
Currency Activity
WP Bulgaria 14
EOOD
WP Bulgaria 15
EOOD
WP Bulgaria 19
EOOD
WP Bulgaria 21
EOOD
WP Bulgaria 26
EOOD
WP Bulgaria 3
EOOD
WP Bulgaria 6
EOOD
WP Bulgaria 8
EOOD
WP Bulgaria 9
EOOD
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Sofia
Bulgaria
5,000.00
BGN
Yacylec SA
Buenos Aires
Argentina
20,000,000.00
Yedesa-
cogeneración SA
Zacapa HoldCo
Sàrl
Almería
Spain
234,394.72
Luxembourg
Luxembourg 300,000.00
Zacapa LLC
Delaware
USA
1,000.00
Zacapa Sàrl
Luxembourg
Luxembourg 300,000.00
Zacapa Topco
Sàrl
Luxembourg
Luxembourg 250,000.00
ARS
EUR
USD
USD
USD
USD
Consolidation
method
Line-by-line
Held by
Enel Green Power
Bulgaria EAD
%
holding
Group %
holding
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Line-by-line
Enel Green Power
Bulgaria EAD
100.00% 100.00%
Equity
Enel Américas SA 22.22% 12.05%
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Plant
construction,
operation and
maintenance
Electricity
transmission
Equity
Cogeneration of
electricity and
heat
Enel Green Power
España SL
40.00% 28.04%
-
-
-
-
Equity
Zacapa Topco Sàrl
100.00% 21.40%
Equity
Zacapa Sàrl
100.00% 21.40%
Equity
Zacapa HoldCo Sàrl 100.00% 21.40%
Equity
Enel X International
Srl
Zacapa Feeder Sàrl
21.40%
21.40%
78.60%
543
Attachments 544
Annual Report 2018 07
Corporate
Governance
545
Corporate Governance Report on corporate
governance and ownership
structure
The corporate governance structure of Enel SpA complies
importance of the Group’s business operations and the con-
with the principles set forth in the edition of the Corporate
sequent need, in conducting such operations, to adequately
Governance Code for listed companies most recently amend-
consider all the interests involved.
ed in July 2018,18 which has been adopted by the company,
In compliance with the provisions of Italian law governing
and with international best practice.
companies with listed shares, the company’s organization is
The corporate governance system adopted by Enel and the
characterized by:
Group is essentially aimed at creating value for the sharehold-
corporate governance Model
ers over the medium/long term, taking into account the social
> a Board of Directors charged with managing the company;
> a Board of Statutory Auditors charged with monitoring:
For more detailed information on the
corporate governance system, please see
the Report on Corporate Governance and
Ownership Structure of Enel, which has
been published on the company’s website
(http://www.enel.com) in the “Governance”
section.
18 The current edition of the Code is available on the website of Borsa Italiana (https://www.borsaitaliana.it/comitato-corporate-governance/codice/2018clean.pdf).
546
Annual Report 2018
98
Report on Corporate Governance and Ownership Structure
ENEL_CORPORATE_GOVERNANCE_2018.indb 98
03/05/19 16:35
(i) compliance with the law and the bylaws, and with the
traordinary session: (i) the appointment and termination of
principles of sound administration in the performance of
members of the Board of Directors and the Board of Statu-
company business; (ii) the financial reporting process, as
tory Auditors and their compensation and responsibilities;
well as the adequacy of the organizational structure, the
(ii) the approval of the financial statements and allocation of
internal control system and the administrative-accounting
net income; (iii) the purchase and sale of treasury shares;
system of the company; (iii) the statutory auditing of the
(iv) stock-based compensation plans; (v) amendments of
annual accounts and the consolidated accounts, as well as
the bylaws; and (vi) the issue of convertible bonds.
the independence of the Audit Firm; and (iv) the manner in
The statutory auditing of the accounts is performed by a spe-
which the corporate governance rules set out in the Cor-
cialized firm entered in the appropriate official register. It was
porate Governance Code are actually implemented;
engaged by the Shareholders’ Meeting on the basis of a rea-
> a Shareholders’ Meeting, which is competent to take deci-
soned proposal of the Board of Statutory Auditors.
sions concerning, among other issues – in ordinary or ex-
ENEL_CORPORATE_GOVERNANCE_2018.indb 99
99
03/05/19 16:35
547
Corporate Governance Concept design and realization
HNTO - Gruppo HDRÀ
Copy editing
postScriptum di Paola Urbani
Printing
Varigrafica Alto Lazio
Print run: 20 copies
Published in June 2019
INSIDE PAGES
Paper
Fedrigoni Arcoprint 1 E.W.
Weight
120 g/m2
Number of pages
548
COVER
Paper
Fedrigoni Arcoprint 1 E.W.
Weight
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This publication is printed on FSC® certified 100% paper
Publication not for sale
By
Communications Italy
Enel Società per azioni
Registered Office 00198 Rome - Italy
Viale Regina Margherita, 137
Stock Capital Euro 10,166,679,946 fully paid-in
Companies Register of Rome and Tax I.D. 00811720580
R.E.A. of Rome 756032 VAT Code 00934061003
© Enel SpA
00198 Rome, Viale Regina Margherita, 137
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Relazione Finanziaria
Annuale 2018