Net financial debt
The following table shows the composition of and changes in net financial debt:
|Milions of Euro|
|at Dec 31.2018||at Dec 31.2017||2018-2017|
|- bank borrowings||8,819||8,310||509||6.1%|
|- other borrowings||1,531||1,844||(313)||-17.0%|
|Long-term financial receivables and securities||(3,272)||(2,444)||828||-33.9%|
|Net long-term debt||45,711||39,995||5,716||14.3%|
|- short-term portion of long-term bank borrowings||1,830||1,346||484||36.0%|
|- other short-term bank debt||512||249||263||-|
|Short-term bank debt||2,342||1,595||747||46.8%|
|Bonds (short-term portion)||1,341||5,429||(4,088)||-75.3%|
|Other loans (short-term portion)||196||225||(29)||-12.9%|
|Cash collateral and other financing on derivatives||301||449||(148)||-33.0%|
|Other short-term financial payables (1)||438||307||131||42.7%|
|Other short-term debt||4,669||7,299||(2,630)||-36.0%|
|Long-term financial receivables (short-term portion)||(1,522)||(1,094)||(428)||-39.1%|
|Financial receivables - cash collateral||(2,559)||(2,664)||105||-3.9%|
|Other short-term financial receivables||(859)||(589)||(270)||45.8%|
|Cash and cash equivalents with banks and short-term securities||(6,693)||(7,090)||397||5.6%|
|Cash and cash equivalents and short-term financial receivables||(11,633)||(11,479)||(154)||-1.3%|
|Net short-term debt||(4,622)||(2,585)||(2,037)||78.8%|
|NET FINANCIAL DEBT||41,089||37,410||3,679||9.8%|
|Net financial debt of “Assets held for sale”||362||1,364||(1,002)||-73.5%|
(1) Includes current financial payables that are included in “Other current financial liabilities”
Net financial debt was equal to €41,089 million at December 31, 2018, an increase of €3,679 million over December 31, 2017.
Specifically, net long-term debt increased by €5,716 million, the combined effect of the increase in long-term financial receivables of €828 million and the increase in gross longterm debt in the amount of €6,544 million.
With regard to the latter aggregate:
- bank borrowings amounted to €8,819 million, an increase of €509 million mainly due to new soft lending by the European Investment Bank to Endesa SA, e-distribuzione and Enel X Mobility and drawings on bank financing by the South American companies, the effect of which was partially offset by the reclassification of the shortterm portion of amounts falling due within 12 months and by the positive exchange differences during the year amounting to €81 million (which also includes the exchange differences in respect of the short-term portion of borrowings);
- bonds amounted to €38,633 million, an increase of €6,348 million compared with the end of 2017, mainly due to:
- new issues of bonds in 2018, including:
- €1,250 million in respect of a fixed-rate green bond maturing in 2026, issued by Enel Finance International in January 2018;
- €1,250 million in respect of two fixed-rate hybrid bonds, with call dates in 2023 and 2026, issued by Enel SpA in May 2018;
- $4,000 million (equivalent to €3,492 million) in respect of a multi-tranche bond with maturities in 2023, 2025 and 2029, issued by Enel Finance International in September 2018;
- €1,875 million in respect of local issues by South American companies, including a fixed-rate bond of $1,000 million (equivalent to €873 million) maturing in 2028, issued by Enel Chile in June 2018;
- negative exchange differences during the year of €447 million (which also includes the exchange differences in respect of the short-term portion of bonds);
- the repurchase by Enel SpA of a hybrid bond in euros in the amount of €732 million;
- reclassifications of the short-term portion of bonds maturing in the next 12 months, including a bond in pounds sterling issued by Enel SpA maturing in June 2019 in the amount of €614 million, a bond in euros issued by Enel Finance International in the amount of €125 million maturing in November 2019, and localcurrency bonds issued by South American companies in the amount of €395 million.
Net short-term debt shows a creditor position of €4,622 million at December 31, 2018, an increase of €2,037 million compared with December 31, 2017, due to the €2,630 million decrease in other borrowings, which was only partially offset by the increase of €747 million in short-term bank borrowings. Other short-term debt amounted to €4,669 million, including the commercial paper issued by Enel Finance International, International Endesa BV and South American companies for a total of €2,393 million and the bonds coming to maturity within 12 months for a total of €1,341 million.
The balance of cash collateral paid to counterparties on over-the-counter interest-rate, exchange rate and commodity contracts came to €2,559 million, while the value of cash collateral received from said counterparties came to €301 million.
Cash and cash equivalents and short-term financial receivables came to €11,633 million, an increase of €154 million compared with the end of 2017, mainly due to the increase in the short-term portion of long-term financial receivables and other short-term financial receivables in the amount of €428 million and €270 million, respectively, the effect of which was only partially offset by the decrease in cash held at banks and short-term securities in the amount of €397 million and cash collateral paid to counterparties in the amount of €105 million. The main transactions in 2018 included the following:
- the receipt, on June 19, 2018, of financing of approximately $34 million (equivalent to €30 million) granted by the International Financial Corporation and the European Investment Bank to Ngonye Power Company Limited for the construction of a solar plant in Zambia; at December 31, 2018, this financing was not used;
- a 15 billion South African rand (equivalent to €913 million) financing agreement, signed on July 31, 2018, with Nedbank Limited and ABSA and granted to Enel Green Power RSA for the construction of new wind farms in South Africa; at December 31, 2018, €149 million of this line of credit was used;
- the following redemptions of bonds:
- €3,000 million in respect of two retail bonds, one fixed-rate and one floating-rate, issued by Enel SpA, which matured in February 2018;
- €591 million in respect of a fixed-rate bond issued by Enel SpA, which matured in June 2018;
- €544 million in respect of a fixed-rate bond issued by Enel Finance International, which matured in October 2018.
|Milions of Euro|
|Cash and cash equivalents at the start of the year (1)||7,121||8,326||(1,205)|
|Cash flows from operating activities||11,075||10,125||950|
|Cash flows from investing/disinvesting activities||(9,661)||(9,294)||(367)|
|Cash flows from financing activities||(1,636)||(1,646)||10|
|Effect of exchange rate changes on cash and cash equivalents||(185)||(390)||205|
|Cash and cash equivalents at year end (2)||6,714||7,121||(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 million 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 a net inflow of €11,075 million, an increase of €950 million compared with the previous year, mainly due to an increase in gross operating margin and net current assets.
Cash flows from investing/disinvesting activities for 2018 absorbed liquidity for €9,661 million, compared with a net outflow of €9,294 million in 2017.
In particular, capital expenditure and investments in property, plant and equipment and in intangible assets and non-current assets deriving from contracts with customers amounted to €8,530 million in 2018 and increased by €31 million compared with the previous year, mainly due to the increase in capital expenditure for the electricity distribution network in Italy, which was only partially offset by a decrease in expenditure in the renewable energy sector in South America and in North and Central America.
Investments in companies or business units, expressed net of the cash and cash equivalents acquired, amounted to €1,472 million and refer mainly to the acquisition of the Brazilian electricity distribution company Enel Distribuição São Paulo, of the Spanish electricity distribution company Empresa de Alumbrado Eléctrico de Ceuta in North Africa, and of two wind farms in Spain.
Disposals of companies or business units, expressed net of the cash and cash equivalents sold, totaled €424 million and mainly included:
- the early, lump-sum payment of the indemnity related to the sale of e-distribuzione’s investment in Enel Rete Gas;
- the sale of an 80% stake in the Mexican companies included in “Project Kino”;
- the sale of Enel Green Power Uruguay, owner of the Melowind wind farm;
- the sale of Enel Green Power Finale Emilia to F2i.
The same aggregate in 2017 came to €900 million and included the sale of the Caney River and Rocky Ridge wind farms in North America.
Liquidity absorbed by other investing/disinvesting activities in 2018 amounted to €83 million, essentially regarding:
- the acquisition of a 21% stake in Zacapa Topco Sàrl, a special purpose vehicle to which 100% of Ufinet International was transferred (€150 million);
- the capital contribution in favor of OpEn Fiber;
- the sale to F2i SGR of a 50% stake in the joint venture EF Solare Italia (€214 million).
Cash flows from financing activities for 2018 absorbed liquidity of €1,636 million, compared with a net outflow of €1,646 million in 2017. Cash flows for 2018 were essentially related to the €3,210 million increase in net financial debt (as the net balance between repayments and new financing) and the payment of dividends in the amount of €3,444 million.
To these effects we can also add the greater outflows relating to transactions in non-controlling interests in the amount of €1,402 million related essentially to the tender offer issued by Enel Chile on all the shares of the subsidiary Enel Generación Chile held by minority shareholders.
Accordingly, in 2018 cash flows generated by operating activities in the amount of €11,075 million were sufficient to meet only part of the funding needs for financing activities in the amount of €1,636 million and for investing activities in the amount of €9,661 million. The difference is reflected in a decrease of €407 million in cash and cash equivalents at December 31, 2018, compared with €1,205 million at the end of 2017. This change also reflects the effects related to the downward trend in the exchange rates of the various local currencies with respect to the euro in the amount of €185 million.