Contents
3
Financial statements for the year ended 31 December 2022 21
Statement of comprehensive income 22
Statement of financial position 23
Statement of changes in equity 24
Statement of cash flows 25
Notes to the financial statements 26
Other information 80
Report of the independent auditor 81
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4
General information
The Management of the Company hereby presents its financial statements for the financial year ended
on 31 December 2022.
where
74.99% of the shares are held by Enel Holding Finance S.r.l (direct parent) and 25.01% of the shares
are held by Enel S.p.A., both companies, have their seats in Rome, Italy. 100% of the shares of Enel
Holding Finance S.r.l. are held by Enel S.p.A. Therefore, Enel S.p.A. is the ultimate controlling
shareholder of the Company.
The Company is registered with the trade register of the Dutch chamber of commerce under number
34313428. The Company operates as a financing company for the Enel Group , raising funds
through bond issuances, loans and other facilities and on turn lending the funds so raised to the
companies belonging to the Enel Group.
Significant events in 2022
A triple-tranche Euro 2,750 million "Sustainability-Linked Bond" in the Eurobond market
On 10 January 2022 the Company launched a multi-tranche -
institutional investors in the Eurobond market for a total of Euro 2,750 million.
The issue is structured in the following three tranches:
- Euro 1,250 million at a fixed rate of 0.250%, with settlement date set on 17 January 2022,
maturing 17 November 2025:
the issue price has been set at 99.829% and the effective yield at maturity is equal to 0.295%;
the interest rate will remain unchanged to maturity, subject to the achievement of a
kWhas of
31 December 2023;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an external
verifier in respect of the Direct Greenhouse Gas Emissions Amount and the methodology for
measuring CO2eq emissions applied by the Enel Group;
- Euro 750 million at a fixed rate of 0.875%, with settlement date set on 17 January 2022,
maturing 17 January 2031:
the issue price has been set at 98.700% and the effective yield at maturity is equal to 1.027%;
the interest rate will remain unchanged to maturity, subject to the achievement of an SPT
equal to or lower than 140gCO2eq/kWhas of 31 December 2024;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an external
verifier in respect of the Direct Greenhouse Gas Emissions Amount and the methodology for
measuring CO2eq emissions applied by the Enel Group;
- Euro 750 million at a fixed rate of 1.250%, with settlement date set on 17 January 2022,
maturing January 17th, 2035:
the issue price has been set at 99.334% and the effective yield at maturity is equal to 1.306%;
5
the interest rate will remain unchanged to maturity, subject to the achievement of an SPT
equal to or lower than 82gCO2eq/kWhas of 31 December 2030;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an external
verifier in respect of the Direct Greenhouse Gas Emissions Amount and the methodology for
measuring CO2eq emissions applied by the Enel Group.
An increase of Sustainable Development Goal 'nK=@o( LQbWUd @eQbQ^dUUT >eb_ Commercial
Paper Program
On 31 March 2022 the Company entered into update of SDG Target Euro Commercial Paper Program
aiming to increase the maximum aggregate amount of notes that may be issued and outstanding at
any time to Euro 8,000 million.
A GBP 750 million sustainability-linked bond
On 5 April 2022 the Company launched in the market a pound sterling single- -
GBP 750 million, equivalent to approximately
Euro 898 million.
The issuance is structured as a single tranche of GBP 750 million paying a rate of 2.875% maturing
on 11 April 2029. The issue price has been set at 99.947% and the effective yield at maturity is equal
to 2.883%. The settlement date for the issue was 11 April 2022.
The interest rate will remain unchanged to maturity, subject to the achievement of an SPT equal to or
lower than 140gCO2eq/kWh at 31 December 2024.
If the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps as of
the first interest period subsequent to the publication of the report issued by an expert external verifier
in respect of the intensity of direct greenhouse gas emissions and the methodology for measuring
CO2eq emissions applied by the Enel Group.
The sustainability-linked revolving credit facility
restatement agreement to increase by 3.5 billion euros the amount of the 10 billion euro
Sustainability-Linked revolving credit facility signed in March 2021 with a pool of financing institutions.
The agreement envisages that the Euro 3,500 million increase will be made available for three years,
up until May 2025, and, alongside the main Euro 10,000 million tranche maturing in May 2026, will
position.
The Facility, whose main financing conditions did not change following the amendment and
restat
House Gas Emissions intensity.
Based on the achievement of a Direct Green House Gas Emissions amount equal to or lower than 148
gCO2eq/kWh by 31 December 2023, a step-up/step-down mechanism is envisaged, which will impact
6
the margin applicable to subsequent drawings of the Facility as well as the commitment fees for any
unused portion of the credit facility.
A multi-tranche USD 3,500 million sustainability-linked bond in the U.S. and international
markets
On 8 June 2022 the Company launched a multi-tranche Sustainability-Linked Bond for institutional
investors in the US and international markets totaling USD 3,500 million, equivalent to about Euro
3,362 million.
The issue is structured in the following four tranches:
- USD 750 million at a fixed rate of 4.250%, with settlement date set on 15 June 2022, maturing
15 June 2025:
the issue price was set at 99.580% and the effective yield at maturity is equal to 4.401%;
the interest rate will remain unchanged to maturity, subject to achievement of a Sustainability
at 31 December 2023;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an expert
external verifier in respect of the intensity of direct greenhouse gas emissions and the
methodology for measuring CO2eq emissions applied by the Enel Group;
- USD 750 million at a fixed rate of 4.625%, with settlement date set on 15 June 2022, maturing
15 June 2027:
the issue price was set at 99.788% and the effective yield at maturity is equal to 4.673%;
the interest rate will remain unchanged to maturity, subject to achievement of a SPT equal to
or lower than 140gCO2eq/kWh at 31 December 2024;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an expert
external verifier in respect of the intensity of direct greenhouse gas emissions and the
methodology for measuring CO2eq emissions applied by the Enel Group;
- USD 1,000 million at a fixed rate of 5.000%, with settlement date set on 15 June 2022,
maturing 15 June 2032:
the issue price was set at 98.701% and the effective yield at maturity is equal to 5.168%;
the interest rate will remain unchanged to maturity, subject to achievement of a SPT equal to
or lower than 82gCO2eq/kWh at 31 December 2030;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an expert
external verifier in respect of the intensity of direct greenhouse gas emissions and the
methodology for measuring CO2eq emissions applied by the Enel Group;
- USD 1,000 million at a fixed rate of 5.500%, with settlement date set on 15 June 2022,
maturing 15 June 2052:
the issue price was set at 98.784% and the effective yield at maturity is equal to 5.584%;
the interest rate will remain unchanged to maturity, subject to achievement of a SPT equal
to 0gCO2eq/kWh at 31 December 2040;
7
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an expert
external verifier in respect of the intensity of direct greenhouse gas emissions and the
methodology for measuring CO2eq emissions applied by the Enel Group.
A Euro 1,000 million euro "Sustainability-Linked Bond" in the Eurobond market
On 6 September the Company launched a Sustainability-Linked Bond for institutional investors in the
Eurobond market for a total of Euro 1,000 million euros.
The bond issue is linked to the Key Performance Indicator (KPI) related to the intensity of direct
to or less than 140gCO2eq/kWh on 31 December 2024.
The issuance is structured as a single tranche of Euro 1,000 million euros paying a rate of 3.875%
maturing on 9 March 2029. The issue price has been set at 99.630% and the effective yield at maturity
is equal to 3.944%. The settlement date for the issue is on 9 September 2022.
The interest rate will remain unchanged to maturity, subject to the achievement of an SPT equal to or
lower than 140gCO2eq/kWh at 31 December 2024.
If the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps as of
the first interest period subsequent to the publication of the report issued by an expert external verifier
in respect of the intensity of direct greenhouse gas emissions and the methodology for measuring
CO2eq emissions applied by the Enel Group.
A multi-tranche USD 3,000 million sustainability-linked bond in the U.S. and international
markets
On 6 October 2022 the Company launched Sustainability-Linked Bonds for a total aggregate amount
of USD 3,000 million, equivalent to about Euro 3,075 million, aimed at institutional investors in the
US and international markets.
The transaction comprises the following four tranches:
- USD 750 million at a fixed rate of 6.800%, with settlement date set on 14 October 2022,
maturing 14 October 2025, issued by EFI and guaranteed by Enel:
the issue price was set at 99.435% and the effective yield at maturity is equal to 7.012%;
the interest rate will remain unchanged to maturity, subject to achievement of a Sustainability
Performance Targe 31 December 2023;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an expert
external verifier in respect of the intensity of direct greenhouse gas emissions and the
methodology for measuring CO2eq emissions applied by the Enel Group;
- USD 1,250 million at a fixed rate of 7.500%, with settlement date set on 14 October 2022,
maturing 14 October 2032, issued by EFI and guaranteed by Enel:
the issue price was set at 97.869% and the effective yield at maturity is equal to 7.811%;
the interest rate will remain unchanged to maturity, subject to achievement of a SPT equal to
or lower than 82gCO2eq/kWh at 31 December 2030;
if the SPT is not achieved, a step-up mechanism will be applied, increasing the rate by 25 bps
as of the first interest period subsequent to the publication of the report issued by an expert
8
external verifier in respect of the intensity of direct greenhouse gas emissions and the
methodology for measuring CO2eq emissions applied by the Enel Group;
A transfer of USD 750 million bond
On 13 December 2022 the Company substituted for itself as principal debtor Enel Finance America
LLC for the below mentioned bond.
The bond (ISIN 144A: US29278GAQ10, ISIN Reg S: USN30706VF42) in amount of 750 million US
dollars of its 2.875% Notes due 2041 was issued on 12 July 2021.
Due to the transfer, the Company reported a gain in amount of USD 270 million (Euro 254 million)
that represents the difference between the fair value and nominal value of bond.
The Company unwound derivatives covering foreign exchange rate exposure associated to this bond.
Lending Operations
During the reporting year the Company has resolved to enter as lender into several new intercompany
financial agreements to support mainly the growth of the investments in the renewable energy sector.
Please see a disclosure of long-term and short-term loans and facility agreements granted to Enel
Group Companies in the notes 6 and 9 of the financial statements.
Russia-Ukraine conflict
On 24 February 2022, the Russian President announced "a special military operation" in Ukrainian
territory which caused the outbreak of conflict between the two countries and triggered prompt
reactions from various countries and international organizations.
The European Commission took action to address the humanitarian crisis engendered by the conflict
in Ukraine, with the deployment of humanitarian aid and emergency aid programs, including increased
financial support to Ukraine. The European Union and other countries (e.g., the United States, the
United Kingdom, Australia, Japan, Switzerland, and others) have imposed severe sanctions on Russia.
The management of the Company is carefully monitoring the status and evolution of the current
situation generated by the international crisis on its business activities and manage potential risks.
9
Overview of the Companypc performance and financial position
Income statement highlights
Millions of euro
2022 2021 Change
Net interest income/(expense) 112 (1,096) 1,208
Other operating expense (6) (5) (1)
Net financial income/ (expense) (42) 186 (228)
Income/(Loss) before taxes 64 (915) 979
Income Taxes 20 (175) 195
Net income 44 (740) 784
Net interest income totaled to Euro 112 million having an increase of Euro 1,208 million compared
with the prior year. The increase is mainly related to the cash consideration paid in 2021 for early
redemption of USD and Euro bonds and other expenses associated to these transactions
(Euro 634 million), a gain obtained in the current year from bond transfer to Enel Finance America
LLC (Euro 254 million) and an increase of interest income from subsidiaries and associated companies
(Euro 377 million).
These effects were partly offset by higher interest expenses from funding operations (Euro 29 million)
and higher net interest expenses from derivatives and cash collaterals (Euro 28 million).
Other operating expenses increased to Euro 6 million in 2022, which was Euro 1 million higher than
in previous year mainly due to increase of personnel cost.
Net financial expense totaled to Euro 42 million having an increase by Euro 228 million mainly due
to an increase in results from foreign exchange transactions and derivatives.
Income taxes amounted to Euro 20 million in 2022 (Euro (175) million in 2021). The increase was
attributable to higher taxable profit recorded in 2022. The effective tax rate was 31% compared with
the standard Dutch tax rate 25.8%.
10
Analysis of the Company financial position
Millions of euro
at Dec.
31,
2022
at Dec. 31,
2021
Change
Loans and financial receivables:
- long-term loans and receivables
44,333 40,745 3,588
- short-term loans and receivables
14,190 6,947 7,243
Derivatives covering FX risk exposed from loans and receivables
(155) (88) (67)
Financial debt:
- Bonds
(41,090) (32,867) (8,223)
- Commercial papers
(7,228) (5,084) (2,144)
- Deposits from Group and associate companies
(284) (434) 150
Derivatives covering FX risk exposed from debt
594 292 302
Cash collateral on derivatives
(485) 126 (611)
Cash and cash equivalents 177 218 (41)
Net non-current assets/ (liabilities)
(110) (11) (99)
Net current assets/ (liabilities)
36 (137) 173
Deferred tax assets/ (liabilities)
308 357 (49)
Shareholders' Equity
(10,286) (10,064) (222)
Long-term loans and financial receivables totaled to Euro 44,333 million increased by
Euro 3,588 million. This was largely attributable to an increase in loans to Enel subsidiaries and
affiliated companies in Italy (Euro 2,497 million), Spain (Euro 1,300 million), Brazil (Euro 141 million),
the Netherlands (Euro 83 million) and Mexico (Euro 42 million). It was partly offset by a slight decrease
in loans granted to Chile (Euro 269 million), Greece (Euro 168 million) and Costa Rica
(Euro 10 million).
Short-term loans and financial receivables increased by Euro 7,243 million totaling to
Euro 14,190 million. The increase was recorded mainly in due to increase in loans to Enel Group and
affiliated companies in Italy (Euro 6,859 million), Mexico (Euro 358 million), Romania
(Euro 183 million), Brazil (Euro 74 million) and Australia (Euro 7 million). The increase was partly
offset by decrease in financing to Enel subsidiaries in Greece (Euro 147 million), Chile (Euro 83 million)
and increase of expected credit loss allowance (Euro 10 million).
Derivatives covering FX risk exposed from loans and receivables increased by Euro 67 million
mainly as a result of the development in the fair value.
11
Gross financial debt amounted to Euro 48,602 million, of which Euro 35,274 million in respect of
financing connected with achievement of SDG.
Millions of Euro
at Dec. 31, 2022 at Dec. 31, 2021
Gross long-
term debt
Gross short-
term debt
Gross debt
Gross long-
term debt
Gross short-
term debt
Gross debt
Gross financial debt
41,090 7,512 48,602 32,867 5,518 38,385
of which:
-debt linked with the
achievement of SDGs
28,046 7,228 35,274
18,000 5,084 23,084
Debt connected with
achievement of SDGs/Total
gross financial debt (%)
73% 60%
Bonds stood at Euro 41,090 million, having an increase of Euro 8,223 million mainly due to newly
issued debt (Euro 11,086 million), exchange rates on the outstanding bonds denominated in non-Euro
currencies (Euro 131 million) and capitalized interest on zero coupon bonds (Euro 10 million).
The increase was partly offset by matured bonds (Euro 2,149 million), bond transferred to Enel Finance
America (Euro 705 million), an increase of costs to be amortised (Euro 85 million) and a fair value
adjustment of GBP SDG bond (Euro 65 million).
Commercial papers increased by Euro 2,144 million due to an increase of new notes issued.
Deposits from Group and associate companies decreased by Euro 150 million
Derivatives covering debt increased by Euro 302 mainly due to an improvement in fair value of
derivatives designed as cash flow hedges and fair value hedge.
Cash collateral on derivatives paid to counterparties in relation to Credit Support Annexes (CSA)
totaled to Euro 485 million.
Cash and cash equivalents amounted to Euro 177 million.
Net non-current liabilities increased by Euro 99 million totaling to Euro 110 million essentially due
to increase of up-front fees associated to derivatives.
Net current assets increased by Euro 173 million totaling Euro 36 million as of 31 December 2022.
Deferred tax assets decreased by Euro 49 million reflecting temporary differences attributed to
hedging transactions accrued directly in other comprehensive income and temporary differences
attributed to cost capitalization of bond repurchasing, interest carry forwards and impairment of
financial assets accrued in profit and loss.
Shareholders equity amounted to Euro 10,286 million as of 31 December 2022, increased by
Euro 222 million over 2022 year ended, as a result of an increase of cash flow hedge and cost of
hedging reserves (Euro 178 million) and the net profit for the period (Euro 44 million).
12
Main Risks and uncertainties
In compliance with the provisions in Dutch Accounting Standard 400, the Company has drawn up
elements of its risk section as follows.
Methodology
Group level, applicable for all wholly owned companies and companies with controlling interest, with
specific reference to financial risks (market, credit and liquidity risks). In order to mitigate its risk
exposure, the Company conducts specific analysis, monitoring, management and control activities.
The Company operates within Treasury Guidelines, which provide capital markets and treasury
operational framework. Based on current power of attorney, hedging are the subject of Board of
Directors consideration and approval.
Current or planned improvements in the risk management system
The Board of Directors considers that the existing system of risk management and internal controls
provides reasonable assurance that risks are properly assessed and managed to achieve business
objectives.
The most significant risks and the risk reduction measures taken
As part of its operations, the Company is exposed to a variety of financial risks, namely liquidity,
interest rate, foreign exchange, credit and counterparty risk.
The Company is willing to bear a low-to-moderate level of residual risk for those factors that are
intrinsically related to the pursuit of its mission of providing financial services, including funding,
lending and liquidity management, to Enel Group companies
Financial risks
Credit risk and counterparty risk
Lending and hedging transactions expose the Company to credit and counterparty risk, i.e. the
possibility of a deterioration in the creditworthiness of its counterparties that could have an adverse
impact on the expected value of the creditor position or could lead to a failure to honor their
obligations.
The lending activity is the most important source of credit risk, and, for the very nature of its activity,
the Company is prepared to bear a medium level of risk. However, such level of risk is mitigated as
borrowers are related parties and in case of specific risk situations, deemed not in line with acceptable
level, has been further reduced receiving a guarantee by a relevant shareholder with higher
creditworthiness.
The Company has a consistent counterparty risk exposure to banking counterparties, stemming from
derivative transactions traded for hedging purposes and short term treasury activity. The Company
has a very low appetite to counterparty risk and pursues risk mitigation through the selection of
counterparties with a high credit standing and the adoption of specific standardized contractual
frameworks that contain risk mitigation clauses and possibly the exchange of cash collateral.
13
Liquidity risk
Liquidity risk is the risk that the Company, while solvent, would not be able to discharge its obligations
in a timely manner or would only be able to do so on unfavorable terms owing to situations of tension
or systemic crises (credit crunches, sovereign debt crises, etc.) or changes in the perception of
Company riskiness by the market.
Among the factors that define the risk perceived by the market, 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 deterioration in the credit rating could therefore restrict
access to the capital market and/or increase the cost of funding, with consequent negative effects on
long term
a negative BBB+
with a negative Short- -
-
The Company is prepared to bear a medium to low level of risk. The liquidity risk management is
designed to maintain a level of liquidity sufficient to meet its obligations over a specified time horizon,
without having recourse to additional sources of financing, as well as to maintain a prudential liquidity
buffer sufficient to meet unexpected obligations. In addition, in order to ensure that its medium and
long-term commitments could be met, the Company pursues a borrowing strategy that provides for a
diversified structure of financing sources to which it can turn and a balanced maturity profile.
Additionally, ENEL SpA is the guarantor for the repayment of the issued Bonds and Commercial Papers,
which is a relevant consideration for management with respect to their liquidity risk management
procedures.
Please see Risk management section of financial statements for more detailed information about
liquidity risk.
Exchange rate
Due to its international funding and lending activity, the Company is significantly exposed to exchange
rate risk associated with cash flows and value of financial assets and liabilities denominated in foreign
currencies.
Consistently with Enel Group risk policy and with the Company low risk appetite, the currency profiles
of funding and lending portfolios are balanced by making recourse to derivative transactions, with the
aim of minimizing the residual exposure, or by means of a back to back structure to prevent high
hedging fee associated to not liquid currencies or in the case of high volatility in the underling financial
operation.
Please see Risk management section of financial statements for more detailed information about
exchange rate risk.
Interest rate risk
The Company is exposed to the risk that changes in the level of interest rates could produce
unexpected changes in net financial expense or the value of financial assets and liabilities measured
at fair value, related to its funding, lending and hedging portfolios.
The exposure to interest rate risk derives mainly from the variability of the terms of financing and
lending, in case of new issues, and from the variability of the cash flows of floating-rate assets and
liabilities.
14
The policy for managing interest rate risk aims to contain financial expense and its volatility by
derivatives on OTC markets.
A certain level of interest rate risk is intrinsic in the Com en actively managed
to ensure value creation.
Please see Risk management section of financial statements for more detailed information about
interest rate risk.
Compliance risks
The Company, as a global issuer, is exposed to compliance risks with applicable laws and regulation,
as well as fiscal risk. No risk appetite is defined for compliance risks and the Company control activities
aim at ensuring full compliance and consequently, no residual risk is acceptable.
Compliance with tax regulation
The Company may be subject to unfavorable changes in the respective tax laws and regulations. The
financial position of the Company may be adversely affected by new laws, changes in the interpretation
of existing laws or tax policy. The Company adopts a conservative approach based on an open
collaboration with tax authorities.
Compliance with financial legislation and regulation
The Company is committed to a high level of compliance with financial laws, regulation and standards.
Internal monitoring activities allow prompt identification of possible breaches of compliance and
consequent remediation actions, when needed. No issues of non-compliance have been detected.
Compliance with bond and loan agreements
Bonds final terms and loan agreements prescribe a set of covenants, which the Company should
Internal monitoring activities allow prompt identification of possible breaches of compliance and
consequent remediation actions, when needed.
Digital technology risks
Cyber security
The speed of technological developments that constantly generate new challenges, the ever-increasing
frequency and intensity of cyber-attacks and the attraction of critical infrastructures and strategic
industrial sectors as targets underscore the potential risk that, in extreme cases, normal company
operations could grind to a halt.
In this context, cyber security risk represents the possibility that cyber-attacks could compromise
corporate information systems with the main consequence being the interruption of services and the
theft of sensitive information, with both financial and reputational impacts.
Being a part of the Enel Group, the Company seeks to use cutting age technologies, to design ad hoc
IT security. In addition, the Enel Group has developed an IT risk management methodology founded
- - Thus, integrating the analysis of business
risks into all strategic decisions. The Enel Group has also created its own Cyber Emergency Readiness
Team (CERT) in order to proactively respond to any IT security incidents.
15
Digitalization, IT effectiveness and service continuity
Following the Enel Group, the Company is carrying out a digital transformation of how it manages and
is digitizing its business processes. A consequence of this digital transformation is that the Company
is exposed to risks related to the functioning of the IT systems implemented throughout the Company,
which could lead to service interruptions or data loss and a consequent increase in operating costs
with significant reputational and financial impacts.
These risks are managed using a series of measures developed in the Enel Group by Global Digital
Risks and strategic opportunities associated with climate change
The energy transition characterized by a gradual reduction of CO2 emissions has risks and
opportunities connected both with changes in the regulatory and legal context and trends in
technology development and competition, electrification and customer behavior and the consequent
market developments.
Executing the Enel Group climate change strategy the Company has already taken actions to mitigate
potential risks and exploit the opportunities offered by the energy transition. Therefore, currently
management does not expect that the climate related risks have a material impact on the financial
statements.
In 2020, the Enel Group published the first Sustainability-Linked Financing Framework, which
explained how all financial transactions not only bonds, but also loans and commercial papers
were linked to the Enel Group's sustainability strategy and associated performance indicators.
Key performance indicators (KPIs) we set within the Framework were: the reduction of direct
greenhouse gas (GHG) emissions related to electricity production, and the increase in the percentage
of renewable capacity out of the Group's total installed capacity, confirming our commitment to
accelerate our path toward Zero Emissions.
In 2023, the Framework has been updated to include new KPIs. New features in the latest update
include:
- the intensity of direct and indirect GHG emissions related to the process of selling energy to the
end customer (Scope 1 and Scope 3, integrated energy)
- the absolute indirect GHG emissions related to the use of gas sold to our end customers (Scope 3)
- the proportion of capital expenditures (investments) aligned with the European Union Taxonomy,
i.e. the EU classification system that establishes a list of economic activities deemed to be
environmentally sustainable in order to promote investor and business involvement in achieving
the environmental and climate goals set by the 2030 Agenda and the European Green Deal.
More information can be obtained from the investor relations section of Enel S.p.A. official website
(https://www.enel.com/investors/investing/sustainable-finance).
Quantification of the impact on the result and financial position if the main financial risks
materialize
In 2022 the Company was exposed to exchange risk in relation with non-Euro denominated debt.
There was a significant exposure to fluctuation of the Euro against the U.S. dollar, which has recently
been subject to market volatility, British pound and Swiss franc.
At 31 December 2022 risk was fully covered by corresponding derivatives.
16
at Dec. 31, 2022
million euro Gross debt Derivatives After risk mitigation
Book value
Notional
value
Euro 19,988 20,280 48.62% 21,431 41,711 100.00%
US dollar 16,928 17,127 41.1% (17,127)
-
0.00%
British pound 3,815 3,945 9.5% (3,945)
-
0.00%
Swiss franc 359 359 0.9% (359)
-
0.00%
Total Non-Euro 21,102 21,431 51.38% (21,431)
-
0.00%
Total 41,090 41,711 100.00%
-
41,711 100.00%
At 31 December 2021 risk was fully covered by corresponding derivatives.
at Dec. 31, 2021
million euro Gross debt Derivatives After risk mitigation
Book value
Notional
value
Euro
18,332
18,668 55.98% 14,679 33,347 100.00%
US dollar 10,982 11,061 33.2% (11,061)
-
0.00%
British pound 3,210 3,274 9.8% (3,274)
-
0.00%
Swiss franc 344 344 1.0% (344)
-
0.00%
Total Non-Euro 14,536 14,679 44.02% (14,679)
-
0.00%
Total 32,868 33,347 100.00%
-
33,347 100.00%
The exchange risk exposure from loans and financial receivables granted in non-Euro currency is
limited to 6% in 2022 (8% in 2021) and covered by derivatives not designed as hedge for accounting
purposes.
The future significant variations in exchange rates would not materially and adversely affect the
Please see Risk Management section for sensitivity analysis on exchange rate.
As shown in the table below, in 2022 the Company has low exposure to interest rate risk, nevertheless
the risk had not been fully eliminated. The Company used derivative instruments aiming at
transforming floating rate liabilities into fixed rate liabilities.
million euro
at Dec. 31,
2022
Before risk mitigation After risk mitigation
Floating rate 300 0.7% - 0.0%
Fixed rate 41,411 99.3% 41,711 100.0%
Total
41,711 100.0% 41,711 100.0%
The table below represented the exposure to interest risk in 2021.
million euro at Dec. 31, 2021
Before risk mitigation After risk mitigation
Floating rate 450 1.3% 50 0.1%
Fixed rate 32,897 98.7% 33,297 99.9%
Total
33,347 100.0% 33,347 100.0%
17
The future significant variations in interest rates would not materially and adversely affect the
position.
Please see Risk Management section for sensitivity analysis on interest rate.
Related Parties
The main activity of Enel Finance International N.V. is to operate as financing company of the Enel
Group, raising funds through bonds issuance, loans and other facilities and on turn lending the funds
so raised to the companies belonging to Enel Group; all the transactions are part of the ordinary
operations of the Company and are settled on arm basis in line with Standard intra-Group
contract market prices.
Outlook
After just over two years of the COVID-19 pandemic, the armed conflict between Russia and Ukraine
triggered a rise in energy prices, an increase of inflation levels and a volatility on financial markets,
significantly aggravated the global macroeconomic environment. The commodity prices rose sharply,
primarily driven by tensions on gas markets, exacerbated by the conflict and the sanctions imposed
on Russia by the European Union and the United States.
During 2022 the Company increased the financing of the Enel Group companies helping them to
overcome a temporary liquidity shortfall.
The Company has no withstanding tiers to entities incorporated in Russia, Ukraine and/or Belarus.
No significant impacts related to the Russia-Ukraine conflict have emerged at 31 December 2022.
The Company should evolve normally during 2023, with the aim to maintain the funding and lending
activities currently ongoing, keeping on supporting Enel Group in its developing and execution of
strategic business plan.
Board of Directors composition
Company and a ting.
The Company is a so-
issued listed bonds on EU-regulated markets, which requires the establishment of an audit committee.
The Company however makes use of the exemption in Article 3(a) of the Dutch Decree on the Audit
Committee ("Besluit instelling auditcommissie") as foreseen in Article 39(3)(a) of Directive
2006/43/CE, as amended by Directive 2014/56/EU of the European Parliament and of the Council, as
its Parent Company (Enel S.p.A.) is an entity that fulfils the requirements set out in paragraphs 39(1),
(2) and (5) of Directive 2006/43/CE, as amended by Directive 2014/56 EU, Article 11(1), Article 11(2)
and Article 16(5) of Regulation (EU) No 537/2014 of the European Parliament and of the Council.
Pursuant to Article 19, subsection 2 of Italian Legislative Decree 39/2010 - as amended by Legislative
Decree 135/2016, implementing Directive 2014/56 EU - the audit committee of Enel S.p.A. coincides
with the
members of the board of statutory auditors of Enel S.p.A. must possess the requisites of integrity,
professionalism and independence imposed upon the statutory auditors of listed companies, as
supplemented (only as regards the professionalism requisites) by specific provisions of the bylaws.
18
The gender diversity within the Board members of the Company is currently 20%. The Company has
set the target to reach 33% ratio between the number of men and women among Directors by the
end of 2024. The Company believes that the composition of its Board of directors has a broad diversity
of experience, expertise and backgrounds, and that the backgrounds and qualifications of the
directors, considered as a group, provide a significant mix of experience, knowledge, abilities and
independence that we believe will allow our board of directors to fulfill its responsibilities and properly
execute its duties.
The Company is in compliance with the Regulation on Sound Remuneration Policies pursuant to the
The directors, with relation to Enel, are not remunerated for their services directly and any interests
they hold in relation to the Parent Company and any expense incurred in their directorship are declared
as such in the financial statements of the Parent company where necessary. The independent directors
with no relation to Enel, are remunerated in accordance with Remuneration policy of the management
board of Enel Finance International N.V., amended by the Shareholder (Resolution of the Sole
Shareholder 23.01.2017) (see note 21).
LXU <_]`Q^ipc S_^db_\ cicdU]
The appropriateness of the administrative and accounting procedures used in the preparation of the
financial statements has been verified in the assessment of the internal control system for financial
reporting. The assessment of the internal control system for financial reporting did not identify any
material issues.
On
addressed to the foreign subsidiaries of the Enel Group. The aim of EGCP is to reinforce the
commitment of the Company to the highest ethical, legal and professional standards for enhancing
and preserving the reputation as well as the prevention of criminal behaviour abroad, which may lead
to a corporate criminal liability to the Company.
The Company follows the -Tolerance-of- adopted by the Enel Group
in 2006, confirming the commitment, as also described in the Code of Ethics, to ensure propriety and
transparency in conducting company business and operations and to safeguard our image and
positioning, the work of our employees, the expectations of shareholders and all of the Enel
stakeholders.
Subsequent events
On 14 February 2023 the Company launched a dual- -
institutional investors in the Eurobond market for a total of 1.5 billion euros. The new issue envisages
for the first time the use by the Enel Group
tranche, further strengthening the commitments towards an accelerated energy transition. For the
first time in a public bond issuance, a tranche of the bond couples a KPI linked to the EU Taxonomy
of the bond is linked to two KPIs related to the Enel
and indirect greenhouse gas emission reduction, as detailed below.
Specifically, the issue is structured in the following tranches:
19
- Euro 750 million at a fixed rate of 4.000%, with settlement date set on 20 February 2023,
maturing 20 February 2031:
the issue price has been set at 98.877% and the effective yield at maturity is equal to 4.168%;
the interest rate will remain unchanged to maturity, subject to the achievement of the
o
achievement of a SPT equal to or higher than 80% on 31 December 2025 for the 2023-
2025 period;
o
31 December 2025;
if one or both of the above mentioned SPTs are not achieved, a step-up mechanism will be
applied, increasing the rate by 25 bps, as of the first interest period subsequent to the
publication of the relevant assurance report issued by an external verifier;
- Euro 750 million at a fixed rate of 4.500%, with settlement date set on 20 February 2023,
maturing 20 February 2043:
the issue price has been set at 97.669% and the effective yield at maturity is equal to 4.682%;
the interest rate will remain unchanged to maturity, subject to the achievement of the
following SPTs. In particular:
o
31 December 2040;
o emissions relating to Gas Retail
31 December 2040;
if one or both of the above mentioned SPTs are not achieved, a step-up mechanism will be
applied, increasing the rate by 25 bps, as of the first interest period subsequent to the
publication of the relevant assurance report issued by an external verifier.
The issue, which has an average duration of approximately 14 years, has an average coupon of
4.25%.
Reporting of non-financial information
Enel Group, in the implementation of the new EU (Directive 2014/97/EU) and national legislation that
has been introduced as mandatory of non-financial information from 2022 financial year for large
public- olidated Non-Financial St
Report can be obtained from the investor relations section of Enel S.p.A. official website
(http://www.enel.com).
Personnel
At 31 December 2022 the Company had, other than the directors, nine employees and one seconded
personnel (nine employees and two seconded personnel at 31 December 2021).
Average headcount comprised ten people (ten people for the 2021). All people worked in the
Netherlands.
20
Statement of the Board of Directors
To our knowledge,
- the financial statements give a true and fair view of the assets, liabilities, financial position
and result of Enel Finance International N.V.;
- the
31 December 2022 and the developments during the financial year 2022;
- the D Report describes the principal risks the Company is facing.
This annual report is prepared according to International Financial Reporting Standards as adopted by
-
company complies with the conditions of article 3:2 Wft and therefore makes use of the group
,
Furthermore this annual report complies with the EU Transparency Directive enacted in the
Netherlands in 2008 and subsequently came into force as from 1 January 2009. The Company has to
comply with this transparency Directive, since the nominal value for certain bonds is lower than EUR
summarized as follows:
- filing its approved annual financial statements electronically with the AFM (Autoriteit Financiele
Markten) in the Netherlands within five days after their approval;
- making its annual financial report generally available to the public by posting it on Enel S.p.A.
official website within 4 months after the end of the 2022 fiscal year (by 30 April 2023);
- making its annual financial report generally available to the public by issuing an information
notice on a financial newspaper or on a financial system at European level within 4 months
after the end of the 2022 fiscal year (by 30 April 2023).
Amsterdam, 24 April 2023
A. Canta
E. Di Giacomo
L.B. Van der Heijden
H. Marseille
A.J.M. Nieuwenhuizen
21
Financial statements
for the year ended 31 December 2022
prepared in ac
cordance with International
Financial Reporting Standards as adopted by
the European Union
22
Statement of comprehensive income
Millions of euro Note
2022 2021
Interest income
Interest income 1 1,074 691
Interest income from derivatives 1 339 321
Other interest related income 1 254 -
(Subtotal) 1,667 1,012
Interest expenses
Interest expenses 1 (1,313) (1,282)
Interest expense from derivatives 1 (242) (192)
Other interest related expenses 1 - (634)
(Subtotal) (1,555) (2,108)
Net interest income/ (expense) 112 (1,096)
Other operating expense 2 (6) (5)
Financial income
Financial income from derivatives 3 1,185 1,700
Other financial income 3 1,093 299
(Subtotal) 2,278 1,999
Financial expense
Financial expense from derivative 3 (1,348) (519)
Other financial expense 3 (972) (1,294)
(Subtotal) (2,320) (1,813)
Net financial income/ (expense) (42) 186
Income/(Loss) before taxes 64 (915)
Income Taxes 4 20 (175)
Net income/(loss) for the year (attributable to the shareholders) 44 (740)
Other components of comprehensive income recyclable to profit or
loss in future periods:
- effective portion of change in fair value of cash flow hedges net of
deferred taxes
17 220 403
- Change in the fair value of costs of hedging net of deferred taxes 17 (42) 185
Total comprehensive income/(loss) for the period (attributable to
the shareholders)
222 (152)
23
Statement of financial position
Millions of Euro Note
ASSETS
at Dec.31, at Dec.31,
2022 2021
Non-current assets
Deferred tax assets 5 308 373
Long-term loans and financial receivables 6 41,930 39,787
Derivatives 7 1,596 671
Other non-current financial assets 8 37 38
(Subtotal) 43,871 40,869
Current assets
Current portion of long-term loans and financial receivables 6 2,403 958
Short-term loans and financial receivables 9 14,190 6,947
Derivatives 7 34 3
Other current financial assets 10 932 662
Other current assets 1 -
Income tax receivable 1 5
Cash and cash equivalents 11 177 218
(Subtotal) 17,738 8,793
TOTAL ASSETS 61,609 49,662
LIABILITIES AND KA:J>AGD=>JKp >IMBLP
Share capital 12 1,479 1,479
Share premium reserve 12 9,126 9,126
Cash flow hedge reserve 12 (288) (508)
Cost of hedging reserve 12 (40) 2
Retained earnings 12 (35) 705
Net income for the period 12 44 (740)
Total shareholder's equity 10,286 10,064
Non-current liabilities
Long-term borrowings 13 40,056 30,721
Deferred tax liabilities 5 - 16
Derivatives 7 1,176 473
Other non-current financial liabilities 147 49
(Subtotal) 41,379 31,259
Current liabilities
Income tax payable 8 1
Current portion of long-term borrowings 13 1,034 2,146
Short-term borrowings 14 8,461 5,842
Derivatives 7 41 25
Other current financial liabilities 15 399 323
Other current liabilities 1 2
(Subtotal) 9,944 8,339
TOTAL EQUITY AND LIABILITIES 61,609 49,662
24
Statement of changes in equity
Millions of euro
Share capital
Share
premium
reserve
Cash flow
hedge
reserve
Costs of
hedging
reserve
Retained
earnings
Net income
for the
period
Equity
attributable
to the
shareholders
At January 1, 2021 1,479 1026 (911) (183) 488 217 2,116
Allocation of net income from the previous year - - - - 217 (217) -
Capital contribution - 8,100 - - 8,100
Comprehensive income for the year: - - 403 185 - (740) (152)
of which: 0
- other comprehensive income (loss) for the period - - 403 185 - - 588
- net income for period - - - (740) (740)
At December 31, 2021 1,479 9,126 (508) 2 705 (740) 10,064
Allocation of net income from the previous year - - - (740) 740 -
Comprehensive income for the year: - - 220 (42) - 44 222
of which:
- other comprehensive income (loss) for the period - - 220 (42) - - 178
- net income for period - - - - 44 44
At December 31, 2022 1,479 9,126 (288) (40) (35) 44 10,286
25
Statement of cash flows
Millions of euro Note
2022 2021
Income for the period
44 (740)
Adjustments for: 0
(Un)realised (gain)/ losses (81) 284
Expected credit loss 4 15
Income taxes 20 (175)
(Gains)/Losses and other non-monetary items - -
Changes in:
'- accrued interest income (131) 85
'- accrued interest expenses 68 (72)
'- derivatives covering interest rate risk (56) (26)
'- other assets (37) (75)
Net changes in all other operational assets and liabilities (156) (88)
Income taxes paid 0 (39)
Cash flows from operating activities (a) (169) (743)
Loans granted to/ (repaid by) Group and associate companies (10,526) (12,613)
Derivatives covering exchange rate risks - loans and RFAs (300) (123)
Cash flows from investing/disinvesting activities (b) (10,826) (12,736)
Financial debt (new borrowings) 13,14 13,230 12,455
Financial debt (repayments and other changes) 13,14 (2,854) (7,979)
Derivatives covering exchange rate risks - bonds 113 (109)
Loans due to Group and associate companies (150) (113)
Capital contribution - 8,100
Other financing 611 1,164
Cash flows from financing activities (c) 10,950 13,518
Impact of exchange rate fluctuations on cash and cash equivalent (d) 4 7
Increase/(Decrease) in cash and cash equivalents (a+b+c+d) (41) 46
Cash and cash equivalents at the beginning of the year 218 172
Cash and cash equivalents at the end of the year 177 218
26
Notes to the financial statements
Form and content of the financial statement
is as a limited liability company under the laws of the
Netherlands on 26 September 2008. The Company is registered with the trade register of the Dutch
chamber of commerce under number 34313428 with business address at Herengracht 471, 1017 BS
Amsterdam, the Netherlands. The Company is established for an indefinite duration.
where
74.99% of the shares are held by Enel Holding Finance S.r.l (direct parent) and 25.01% of the shares
are held by Enel S.p.A., both companies, have their seats in Rome, Italy. 100% of shares of Enel
Holding Finance S.r.l. are held Enel S.p.A.
Therefore, Enel S.p.A. is the ultimate controlling shareholder of the Company.
which can be obtained from the investor relations section of Enel S.p.A. official website
(http://www.enel.com).
Corporate purpose
The Company operates as a financing company for the Group, raising funds through bond issuances,
loans and other facilities and on turn, lending the funds so raised to the companies belonging to the
Enel Group. The Company is also part of the centralising financial process and acts as the primary
reference for the management of financial needs or liquidity generated by the Enel Group companies.
The Company acts solely as a financing company for the Enel Group and therefore is not engaged in
market competition in the energy sector with third parties.
The Company is managed by a Board of Directors composed of five members, appointed by the general
meeting of shareholders, which may dismiss them at any time. The management board has the power
to perform all acts of administration and disposition in compliance with the corporate objects of the
Company.
The joint signatures of any two members of the management board or the single signature of any
person to whom such signatory shall have been appointed by the management board may bind the
Company.
Compliance with IFRS/IAS
The financial statements for the year ended 31 December 2022 have been prepared in accordance
with international accounting standards (International Accounting Standards IAS and International
Financial Reporting Standards IFRS) issued by International Accounting Standards Board (IASB), the
interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the
Standing Interpretations Committee (SIC), endorsed by the European Union pursuant to Regulation
(EC) no. 1606/2002 and in effect as of the close of the year. All of these standards and interpretations
- The financial statements have also been prepared in
conformity with the statutory provisions of the Netherlands Civil Code, Book 2, Title 9 and specifically
Section 2:362(9).
The financial statements were approved by the Board of Directors and authorised for issue effective
on 10 March 2023, with an update on the final version as per 24 April 2023.
27
Basis of presentation
The financial statements consist of the statement of comprehensive income, the statement of financial
position, the statement of changes in equity, the statement of cash flows, and the related notes.
-current
. Current assets, which include cash and cash equivalents, are assets that are intended to be
used during the normal operating cycle of the Company or in the twelve months following the balance-
sheet date; current liabilities are liabilities that are expected to be settled during the normal operating
cycle of the Company or within the twelve months following the close of the financial year.
The income statement is classified on the basis of the nature of expenses, while the indirect method
is used for the cash flow statement.
Financial assets and liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Company has a legal right to offset the amounts and intends either
to settle on a net basis or to realize the asset and settle the liability simultaneously.
Functional and presentation currency
The financial statements are presented in euro, the functional currency of Enel Finance
International N.V. All figures are shown in millions of euro unless stated otherwise.
The accounting policies set out below have been applied consistently to all periods presented in these
financial statements.
Going Concern
The 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.
Enel S.p.A. would provide financial support to the Company should it not be able to meet its
obligations. In relation to this, this annual intent has been formally confirmed by Enel S.p.A. in a
support letter issued on 23 January 2023
Statements, should the company remain under control of the Enel Group.
Based upon the assessment of management, supported by the fact that Enel S.p.A. is the guarantor
of the bonds and the ECPs, management has not identified any going concern triggers and therefore
has prepared these financial statements on a going concern basis.
Solvency
Given the objectives of the company, the Company is strictly economically interrelated with Enel S.p.A.
In assessing the solvency as well as the general risk profile of the Company, the solvency of the Enel
Group as a whole, headed by Enel S.p.A. should be considered.
28
Accounting policies and measurement criteria
Use of estimates and management judgments
Preparing the financial statements under IFRS-EU requires the use of estimates and assumptions that
affect the carrying amount of assets and liabilities and the related information on the items involved,
as well as the disclosure required for contingent assets and liabilities at the balance sheet date. The
estimates and the related assumptions are based on previous experience and other factors considered
reasonable in the circumstances. 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 in the income statement 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
Expected credit losses on financial assets
Loss allowances for financial assets are based on assumptions about risk of default and on the
measurement of expected credit losses. Management uses judgement in making these assumptions
and selecting the inputs for the impairment calculation, based on the Company
market conditions as well as forward looking estimates at the end of each reporting period.
Determining the fair value of financial instruments
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 specific valuation techniques
(mainly based on present value) that maximise the use of observable market inputs. In the rare
circumstances were this is not possible, the inputs are estimated by management considering the
characteristics of the instruments being measured.
Recovery of deferred tax assets
The financial statements report deferred tax assets in respect of income components whose
deductibility is deferred in an amount whose recovery is considered by management to be highly
probable.
The recoverability of such assets is subject to the achievement 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 determine the amount of deferred tax assets that
can be recognised, 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.
Classification and measurement of financial assets
At initial recognition, in order to classify financial assets as financial assets at amortised cost, at fair
value through other comprehensive income and at fair value through profit or loss, management
assesses both the contractual cash flows characteristics of the instrument and the business model for
managing financial assets in order to generate cash flows.
For the purpose to evaluate the contractual cash flows characteristics of the instrument,
management performs the SPPI test at an instrument level, in order to define if it gives rise to cash
flows that are solely payments of principal and interest on the principal amount outstanding, performing
specific assessment on the contractual clauses of the financial instruments, as well as quantitative
analysis, if required.
29
The business model determines whether cash flows will result from collecting contractual cash flows,
selling the financial assets, or both.
Hedge Accounting
Hedge accounting is applied to derivatives in order to reflect into the financial statements the effect of
risk management strategies.
At such regard, the Company documents at the inception of the transaction the hedge relationship
between hedging instruments and hedged items, as well as its risk management objectives and
strategy. The Company also assesses, both at hedge inception and on an ongoing basis, whether
hedging instruments are highly effective in offsetting changes in fair values or cash flows of hedged
items.
Based on management judgement, the effectiveness assessment based on the existence of an
economic relationship between the hedging instruments and the hedged items, on the dominance of
credit risk on the value changes and on the hedge ratio, as well as the measurement of the
ineffectiveness, is evaluated through a qualitative assessment and/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 to what extend they are highly probable and present an exposure to changes in cash flows
that affect profit or loss.
Moreover, during the year, the Company has carefully monitored the effect of uncertainties related to
the Covid-19 pandemic on its hedge accounting relationships.
Uncertainty over income tax treatments
The Company determines whether to consider each uncertain income tax treatment separately or
together with one or more other uncertain tax treatments as well as whether to reflect the effect of
uncertainty by using the most likely amount or the expected value method, depending on which
approach the Company expects to better predicts the resolution of the uncertainty for each uncertain
tax treatments, taking account of local tax regulations.
The Company applies judgment in identifying uncertainties over income tax treatments and reassesses
any judgments and estimates made if a change in facts and circumstances might change a conclusions
about the acceptability of a tax treatment or the estimate of the effect of uncertainty, or both.
Significant accounting policies
Related parties
Related parties are mainly parties that have the same parent entity as Enel Finance International N.V.,
companies that directly or indirectly through one or more intermediaries control, are controlled or are
subject to the joint control of the Company. In addition, statutory directors, other key management
of the Company or the ultimate parent company and close relatives are regarded as related parties.
All transactions with related parties were carried out on normal market terms and conditions.
Translation of foreign currencies
Transactions in currencies other than the functional currency are recognized in these financial
statements at the exchange rate prevailing on the date of the transaction.
30
Monetary assets and liabilities denominated in a foreign currency other than the functional currency
are later adjusted using the balance sheet exchange rate.
Any exchange rate differences are recognized in profit or loss.
Fair value measurement
For all fair value measurements and disclosures of fair value, that are either required or permitted by
international accounting standards, the Company applies IFRS 13.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability,
in an orderly transaction, between market participants, at the measurement date (i.e. an exit price).
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 entity has access, i.e. the market that maximizes the
amount that would be received to sell the asset or minimizes the amount that would be paid to transfer
the liability.
The fair value of an asset or a liability is measured using the assumptions that market participants
would use when pricing 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
compelled to do so.
When measuring fair value an entity shall take into account the characteristics of the asset or liability,
in particular:
> for a non-
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 reflects the effect of non-performance
n
credit risks;
> in the case of groups of financial assets and financial liabilities with offsetting positions in
it is permitted to measure fair value on a net basis.
In measuring fair value of assets and liabilities, the Group uses valuation techniques that are
appropriate in the circumstances and for which sufficient data are available, maximizing the use of
relevant observable inputs and minimizing the use of unobservable inputs.
Financial instruments
Financial instruments are any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity; they are recognised and measured in accordance with
IAS 32 and IFRS 9.
A financial asset or liability is recognised in the financial statements when, and only when, the
Company becomes party to the contractual provision of the instrument (trade date).
Conversely, the Company initially measures financial assets other than trade receivables at their fair
value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs.
31
Financial assets are classified, at initial recognition, as financial assets at amortised cost, at fair value
through other comprehensive income and at fair value through profit or loss, on the basis of both
Company model and the contractual cash flows characteristics of the instrument.
For this purposes, the assessment in order to define if the instrument gives rise to cash flows that are
solely payments of principal and interest (SPPI) on the principal amount outstanding, is referred to as
the SPPI test and is performed at an instrument level.
The Company
assets in order to generate cash flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial assets, or both.
For purposes of subsequent measurement, financial assets are classified in four categories:
- financial assets at amortised cost (debt instruments);
- financial assets at fair value through OCI with recycling of cumulative gains and losses (debt
instruments);
- financial assets designated at fair value through OCI with no recycling of cumulative gains and losses
upon derecognition (equity instruments); and
- financial assets at fair value through profit or loss.
Financial assets measured at amortised cost
This category mainly includes trade receivables, other receivables and financial receivables.
Financial assets at amortised cost are held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows and whose contractual terms give rise, on specified
dates, to cash flows that are solely payments of principal and interest on the principal amount
outstanding.
Such assets are initially recognised at fair value, adjusted for any transaction costs, and subsequently
measured at amortised cost using the effective interest method and are subject to impairment.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Impairment of financial assets
At the end of each reporting date, the Company recognizes a loss allowance for expected credit losses
on trade receivables and other financial assets measured at amortised cost and all other assets in the
scope of IFRS 9 expected credit loss model.
The Company impairment model is based on the determination of expected credit losses (ECL) using
a forward- looking approach. In essence, the model provides for:
- the recognition of expected credit losses on an ongoing 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, about past events, current conditions and forecasts of future conditions.
For all financial assets, other than trade receivables, the Company applies the general approach under
IFRS 9, based on the assessment of a significant increase in credit risk since initial recognition. Under
such approach, loss allowance on financial assets is recognized at an amount equal to the lifetime
expected credit losses, if the credit risk on those financial assets has increased significantly, since
32
initial recognition, considering all reasonable and supportable information, including also forward-
looking inputs.
If at the reporting date, the credit risk on financial assets has not increased significantly since initial
recognition, the Company measures the loss allowance for those financial assets at an amount equal
to 12-month expected credit losses.
For financial assets on which loss allowance equals to lifetime expected credit losses has been
recognized in the previous reporting date, the Company measures the loss allowance at an amount
equal to 12-month expected credit losses when significant increase in credit risk condition is no longer
met.
The Company 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 date to the amount
that is required to be recognized in accordance with IFRS 9.
The loss allowances for financial assets are based on assumptions about risk of default and expected
credit losses. The Company uses judgement in making these assumptions and selecting the inputs for
ast history, existing market conditions as well
as forward looking estimates at the end of each reporting period.
Cash and cash equivalents
This category includes deposits that are available on demand or at very short term, as well as highly
short-term liquid financial investments that are readily convertible into a known amount of cash and
which are subject to insignificant risk of changes in value.
Financial liabilities at amortised cost
This category mainly includes borrowings, trade payable and debt instruments.
Financial liabilities, other than derivatives, are recognised when the Company becomes a party to the
contractual clauses of the instrument and are initially measured at fair value adjusted for directly
attributable transaction costs. Financial liabilities are subsequently measured at amortised cost using
the effective interest rate method.
Derecognition of financial assets and liabilities
Financial assets are derecognised whenever one of the following conditions is met:
- the contractual right to receive the cash flows associated with the asset expires;
- the Company has transferred substantially all the risks and rewards associated with the asset,
transferring its rights to receive the cash flows of the asset or assuming a contractual obligation to
pay such cash flows to one or more beneficiaries under a contract that meets the requirements
- the Company has not transferred or retained substantially all the risks and rewards associated with
the asset but has transferred control over the asset.
Financial liabilities are derecognised when they are extinguished, i.e. when the contractual obligation
has been discharged, cancelled or expired.
When an existing financial asset or liability is replaced by another from the same borrower or lender
on substantially different terms, or the terms of an existing asset or liability are substantially modified,
such an exchange or modification is treated as the derecognition of the original asset or liability and
33
the recognition of a new asset or liability. The difference in the respective carrying amounts is
recognised in profit or loss.
Derivative financial instruments
A derivative is a financial instrument or another contract:
- whose value changes in response to the changes in an underlying variable such as an interest rate,
commodity or security price, foreign exchange rate, a price or rate index, a receivable rating or
other variable;
- that requires no initial net investment, or one that is smaller than would be required for a contract
with similar response to changes in market factors;
- that is settled at a future date.
Derivative instruments are classified as financial assets or liabilities depending on the positive or
negative
measured at fair value through profit or loss, except for those designated as effective hedging
instruments.
For more details about hedge accounting, please refer to the note 17 Derivatives and hedge
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
are not designed as hedge instruments for hedge accounting and derivative designated as effective
hedging instruments are classified as current or not current on the basis of their maturity date and
the Group intention to hold the financial instrument till maturity or not.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary
shares and share options are recognized as a deduction from equity, net of any tax effects.
Reference is made to note 12 for the other relevant elements of equity.
Interest income and expense
Interest income and expense is recognized on an accruals basis in line with interest accrued on the
net carrying amount of the related financial assets and liabilities using the effective interest method.
Interest income is recognised to the extent that it is probable that the economic benefits will flow to
the Company and the amount can be reliably measured.
Other interest income and expense
Other interest income and expense primarily includes gain/loss on the disposal of financial assets/
liabilities that are .
Financial income and expense
Financial income and expense from derivatives include:
- income and expense from derivatives measured at fair value through profit or loss;
- income and expense from fair value hedge derivatives;
- income and expense from cash flow hedge derivatives on interest rate and foreign exchange risks.
Financial income and expense include also changes in the fair value of financial instruments other than
derivatives.
34
Dividends
Dividends and interim dividends payable are recognized as changes
in equity at the date they are
respectively.
Income taxes
Income tax expense comprises current and deferred tax.
Corporate income tax is calculated on the basis of the profit before taxation shown in the Statement
of comprehensive income, taking into account tax allowances and tax adjustments. As of 1 January
2015, the Company forms part of a fiscal unity with Enel Investment Holding B.V, whereby the
Company is the head of the fiscal unity. Starting from 1 January 2020 Enel Insurance N.V. has joined
the fiscal unity.
The Company is jointly and severally liable for all corporate income tax liabilities of the fiscal unity.
Taxation for entities within the fiscal unity is calculated on a stand-alone basis.
Current tax and deferred tax are recognised in profit or loss except to the extent that it relates to a
business combination, or items recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using
tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable
in respect of previous years. Current tax payable also includes any tax liability arising from the
declaration of dividends.
Deferred tax liabilities and assets are calculated on the temporary differences between the carrying
amounts of assets and liabilities in the financial statements and their corresponding 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 in force or substantively in force at the balance
sheet date.
Deferred tax assets are recognized when recovery is probable, i.e. when an entity expects to have
sufficient future taxable income to recover the asset.
The recoverability of deferred tax assets is reviewed at each year-end. Taxes in respect of components
recognized directly in equity are taken directly to equity.
Recently issued accounting standards and Standards issued but not yet effective
New accounting standards applied in 2022
The Company has applied the following new standards, interpretation and amendments that took effect
as from January 1, 2022:
B e7UNVMUNV\[ \W ><EF . - ENONZNVLN \W \QN 9WVLNX\]JT <ZJUN_WZSf' issued in May 2020. The
amendments are intended to update the reference regarding the definitions of asset and liability of
this Standard so that they refer to the Conceptual Framework for Financial Reporting issued in
a business combination, the acquirer, as an exception, shall not apply the definitions of assets and
liabilities of the Conceptual Framework but those of the relevant Standards in the following cases:
35
- provisions or contingent liabilities in the scope of IAS 37 Provisions, Contingent Liabilities and
Contingent Assets;
- levies in the scope of IFRIC 21 Levies.
Lastly, the amendments clarify existing guidance in IFRS 3 Business Combinations for contingent
assets acquired in a business combination, specifying that the acquirer shall not recognize the
contingent asset at the acquisition date.
An entity shall apply these amendments to business combinations for which the acquisition date is
on or after January 1, 2022.
B e7UNVMUNV\[ \W >7F ,1 - DZWXNZ\a' DTJV\ JVM ;Y]RXUNV\5 DZWLNNM[ KNOWZN >V\NVMNM H[Nf, issued
in May 2020. The amendments prohibit entities to deduct from the cost of an item of property,
plant and equipment any proceeds from selling items produced while bringing the asset to the
location and condition necessary for it to be capable of operating in the manner intended by
such items, and related cost, in profit or loss in accordance with applicable Standards, measuring
the cost of those items applying the measurement requirements of IAS 2 Inventories.
since this clarification might help an entity in determining when an asset is available for use. When
testing whether an asset is functioning properly, an entity assesses whether the technical and
physical performance of the asset is such that it is capable of being used in the production or
supply of goods or services, for rental to others, or for administrative purposes. For this reason,
the testing activities are not related to the assessment of the financial performance of an asset,
such as assessing whether the asset has achieved the level of operating margin initially anticipated
by management.
The amendments are effective for annual periods beginning on or after January 1, 2022. An entity
shall apply those amendments retrospectively only to items of property, plant and equipment that
are brought to the location and condition necessary for them to be capable of operating in the
manner intended by management on or after the beginning of the earliest period presented in the
financial statements in which the entity first applies the amendments.
B e7UNVMUNV\[ \W >7F .2 - Onerous Contracts - 9W[\[ WO <]TORTTRVP J 9WV\ZJL\f, issued in May 2020.
The amendments specify which costs an entity includes in determining the cost of fulfilling a
contract for the purpose of assessing whether the contract is onerous. To this end, the cost of
fulfilling a contract comprises the costs that relate directly to the contract consisting of both:
- the incremental costs of fulfilling that contract (e.g., direct labor and materials); and
- an allocation of other costs that relate directly to fulfilling contracts (e.g., an allocation of the
depreciation charge for an item of property, plant and equipment used in fulfilling the contract
among others or an allocation of the costs of management and supervision of contracts).
The amendments are effective for annual periods beginning on or after January 1, 2022. An entity
shall apply those amendments to contracts for which it has not yet fulfilled all its obligations at the
beginning of the annual reporting period in which it first applies the amendments (the date of
initial application). The entity shall recognize the cumulative effect of initially applying the
amendments as an adjustment to the opening balance of equity at the date of initial application
without restatement of the comparative information.
36
B e7VV]JT RUXZW^NUNV\[ \W ><EF F\JVMJZM[ -+,3--+-+f, issued in May 2020. The document mainly
makes amendments to:
- e><EF , <RZ[\-\RUN 7MWX\RWV WO >V\NZVJ\RWVJT <RVJVLRJT ENXWZ\RVP F\JVMJZM[f; the amendment
simplifies the application of IFRS 1 for an investee (subsidiary, associates, and joint ventures)
that becomes a first-time adopter of IFRSs later than its parent/investor. In particular, IFRS 1
already provides an exemption under which a subsidiary that becomes a first-time adopter
later than its parent can measure, in its financial statements, its assets and liabilities at the
consolidation procedures and for the effects of the business combination in which the parent
acquired the subsidiary. In this regard, the IASB also decided to extend the voluntary
exemption provided by IFRS 1 to cumulative translation differences specifying that, if an
investee adopts IFRSs later than its parent/investor and uses the above-mentioned exemption,
then the investee may elect, in its financial statements, to measure cumulative translation
differences for all foreign operations at the carrying amount that would be included in the
consolidated financial s
of transition to IFRSs.
- e><EF 4 <RVJVLRJT >V[\Z]UNV\[f6 the amendment clarifies which fees an entity includes in the
liability that has been
modified or exchanged, i.e. in determining if the terms of a new or modified financial liability
are substantially different from the terms of the original one. In this regard, the amendment
specifies that in determining those fees paid net of fees received, a borrower includes only
fees paid or received between the borrower and the lender, including fees paid or received by
The amendments are effective for annual periods beginning on or after January 1, 2022. An
entity shall apply these requirements prospectively to financial liabilities that are modified or
exchanged on or after the beginning of the annual reporting period in which the entity first
applies the amendment.
- e><EF ,1 @NJ[N[f6 the IASB amended Illustrative Example 13 accompanying IFRS 16 Leases.
In particular, the amendment removes the illustration of reimbursement from the lessor
relating to leasehold improvements to resolve any potential confusion regarding the treatment
of lease incentives when applying IFRS 16. In fact, the example had not explained clearly
enough the conclusion as to whether a reimbursement for leasehold improvements would meet
the definition of a lease incentive in IFRS 16.
- e>7F /, 7PZRL]T\]ZNf: the amendment removes the requirement for entities to exclude cash
flows for taxation when measuring fair value of assets within the scope of IAS 41, thereby
aligning the requirements in IAS 41 on fair value measurement with those in IFRS 13 Fair
Value Measurement. Thus, depending on the particular facts and circumstances, an entity
applying a present value technique might measure fair value by discounting after-tax cash
flows using an after-tax discount rate or pre-tax cash flows at a rate consistent with those
cash flows.
The application of these amendments did not have material impact in the financial statements.
37
Standards issued but not yet effective
Below is a list of accounting standards, amendments and interpretations that will be effective for the
Company after 31 December 2022:
B e7UNVMUNV\[ \W >7F , - Classification of Liabilities as Current or Non-current
2020. The amendments affect requirements in IAS 1 for the presentation of liabilities. More in
detail, the amendments clarify:
- the criteria for classifying a liability as current or non-current, specifying what is meant by an
right to defer settlement and that this right must exist at the end of the reporting
period;
-
entity will exercise its right to defer settlement of a liability;
- that a right to defer exists only if the entity complies with conditions specified in the loan
agreement at the end of the reporting period, even if the lender does not test compliance until
a later date; and
- that settlement refers to the transfer to the counterparty of cash, equity instruments, other
goods or services.
The amendments will be effective, subject to endorsement, for annual period beginning on or after
1 January 2024 (another amendment has been issued to postpone the effective date by one year,
from 1 January 2023 to 1 January 2024), with earlier application permitted.
B e7UNVMUNV\[ \W >7F , - Non-L]ZZNV\ @RJKRTR\RN[ _R\Q 9W^NVJV\[f, issued in October 2022. IAS 1
requires classifying debt as non-current only if the entity can avoid settling the debt in the 12
months after the reporting date. However, an entity s ability to do so is often subject to complying
with covenants. The amendments improves the information to provide when the right to defer
settlement of a liability for at least twelve months is subject to compliance with covenants and
specifies that covenants to be complied with after the reporting date do not affect the classification
of debt as current or non-current at the reporting date.
The amendments, subject to endorsement, are effective for annual reporting periods beginning on
or after 1 January 2024, with early adoption permitted.
B e7UNVMUNV\[ \W >7F , JVM ><EF DZJL\RLN F\J\NUNV\ - - :R[LTW[]ZN WO 7LLW]V\RVP DWTRLRN[f' issued
in February 2021. The amendments are intended to help entities in deciding which accounting
policies to disclose in their financial statements. The amendments to IAS 1 require entities to
disclose their material accounting policies rather than their significant accounting policies. Guidance
on how to apply the concept of materiality to the accounting policy disclosures is provided by the
amendments to IFRS Practice Statement 2. The amendments are effective for annual periods
beginning on or after January 1, 2023, with early application permitted.
B "Amendments to IAS 8 - Definition of Accounting Estimates", issued in February 2021. The
amendments help entities to distinguish between changes in accounting policies from changes in
accounting estimates; the definition of changes in accounting estimates is replaced with a definition
of accounting estimates
The distinction is important because changes in accounting estimates
are applied prospectively to future transactions and other future events, whereas changes in
accounting policies are generally applied retrospectively to past transactions and other past events
38
as well as the current period. The amendments are effective for annual periods beginning on or
after January 1, 2023, with early application permitted.
B Amendments to IAS 12 Income Taxes - Deferred Tax related to Assets and Liabilities arising from
a Single Transaction The amendments require companies to recognize
deferred tax on transactions that, on initial recognition, give rise to equal amounts of taxable and
deductible temporary differences, clarifying that the initial recognition exemption does not applies.
The amendments, subject to endorsement, are effective for annual periods beginning on or after
January 1, 2023, with earlier application permitted.
B e7UNVMUNV\[ \W ><EF ,+ JVM >7F -3 - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture ents clarify the accounting
treatment for sales or contribution of assets between an investor and its associates or joint
ventures. They confirm that the accounting treatment depends on whether the non-monetary
assets sold or contributed to an associate or
IFRS 3). The IASB has deferred the effective date of these amendments indefinitely.
B e><EF ,2 d >V[]ZJVLN 9WV\ZJL\[f' issued in May 2017. The standard will take effect for annual period
beginning on or after January 1, 2023, with earlier application permitted.
B e7UNVMUNV\ \W ><EF ,1-@NJ[N @RJKRTR\a RV J FJTN JVM @NJ[NKJLSf, issued in September 2022. The
amendment requires the seller-lessee to measure the right-of-use asset arising from a sale and
leaseback transaction at the proportion of the previous carrying amount of the asset that relates
to the right of use the seller-lessee retains and, accordingly, only the amount of any gain or loss
that relates to the rights transferred to the buyer-lessor. The amendment does not prescribe
specific measurement requirements for lease liabilities arising from a leaseback; however they
include examples illustrating the initial and subsequent measurement of the lease liability where
there are variable payments that do not depend on an index or rate (representing a departure
from the general leases model in IFRS 16, which requires variable lease payments, that do not
depend on an index or rate, to be recognized in profit or loss in the period in which the event or
condition that triggers those payments occurs). At such regard, the seller-lessee will need to
develop and apply an accounting policy for determining the lease payments in a way that any
amount of the gain or loss that relates to the right of use retained would not be recognized.
The amendment shall be applied, subject to endorsement, to annual reporting periods beginning
on or after 1 January 2024 (with earlier application permitted) and should be applied
retrospectively, in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors, to sale and leaseback transactions entered into after the date of initial application (i.e., the
annual reporting period in which IFRS 16 first applied).
The Company is assessing the potential impact of the future application of the new provisions.
39
Risk management
Market risk
As part of its operation as a financing company for the Enel Group, Enel Finance International N.V. is
exposed to different market risks, notably interest rate and exchange rates risks. The primary
objective of the Company is to mitigate such risks appropriately so that they do not give rise to
unexpected changes in results.
In order to mitigate this risk, the Company employs financial derivative instruments such as interest
rate swaps, currency forwards and cross currency interest rate swaps, that are negotiated both with
Enel S.p.A. and on the market.
The derivatives compliant with IFRS 9 requirements can be designated as cash flow hedge or fair value
hedge, otherwise are classified as trading.
There we no changes in the source of exposure to interest rate and exchange rate risk compared with
the previous year.
Interest rate risk
Interest rate risk is the risk born by an interest-bearing financial instrument due to variability of
interest rates. The optimal debt structure results from the trade-off between reducing the interest rate
exposure and minimizing the average cost of debt.
The Company is exposed to interest rate fluctuation on both liabilities and assets.
Interest rate swaps are stipulated to mitigate the exposure to interest rates fluctuation, thus reducing
the volatility of economic results. Through an interest rate swap, the Company agrees with a
counterparty to exchange, with a specified periodicity, floating rate interest flows versus fixed rate
interest flows, both calculated on a reference notional amount. In order to ensure effectiveness, all
the contracts have notional amount, periodicity and expiry date matching the underlying financial
liability and its expected future cash flows.
The notional amount of outstanding contracts is reported below.
Millions of euro Notional amount
2022 2021
Interest rate derivatives:
Interest rate swap 2,433 2,628
Total 2,433
2,628
For more details, please refer to the note 16 and 17.
At 31 December 2022, 0.72% of gross long term debt towards third parties was floating rate (1.35%
at 31 December 2021). Taking into account interest rate derivatives designated as cash flow hedge
considered effective pursuant to the IFRS EU, gross long term debt is mostly fully hedged against
interest rate risk.
Having both assets and liabilities indexed to floating rate indices, the sensitivity of the Company
income statement to the fluctuation of interest rates depends upon its net long term financial position,
please refer to the sensitivity table.
40
Interest rate risk sensitivity analysis
The Company performs sensitivity analysis by estimating the effects of changes in the level of interest
rates on financial instruments portfolio. In particular, sensitivity analysis measures the potential
impact of market scenarios both on equity, for the hedging component of derivatives in cash flow
hedge, and on income statement for all derivatives that do not qualify for hedge accounting and the
portion of net long term floating-rate debt not covered by derivatives
liabilities are accounted for at amortised costs, and not impacted by changes in the level of interest
rates.
These scenarios are represented by parallel translation, measured in basis points (bps) in the interest
rate yield curve at the reporting date. All other income and
equity before tax is impacted as follows:
Millions of euro
Interest rate risk sensitivity analysis
2022
Pre-tax impact on income Pre-tax impact on equity
Interest
Rates
scenario
increase decrease increase decrease
Change in interest expense related to long
term gross floating-rate debt after hedging
25 bp - - - -
Change in interest expense related to
floating-rate financial receivables after
hedging
25 bp 28 (28) - -
Change in Fair value of Derivative financial
instruments not qualifying for hedge
accounting
25 bp - - - -
Change in Fair value of Derivative Financial
instruments designated as hedging
instruments
25 bp - - (1) 1
Millions of euro
Interest rate risk sensitivity analysis
2021
Pre-tax impact on Pre-tax impact on
Interest
Rates
scenario
increase decrease increase decrease
Change in interest expense related to long term
gross floating-rate debt after hedging
25 bp - - - -
Change in interest expense related to floating-rate
financial receivables after hedging
25 bp 44 (44) - -
Change in Fair value of Derivative financial
instruments not qualifying for hedge accounting
25 bp - - - -
Change in Fair value of Derivative Financial
instruments designated as hedging instruments
25 bp - - (1) 1
Exchange rate risk
Exchange rate risk is a type of risk that arises from the change in price of one currency against
another. The Company exposure to such risk is mainly due to foreign currencies denominated flows,
originated by financial assets and liabilities.
In order to mitigate this risk, the Company enters into plain vanilla transactions such as currency
forwards and cross currency interest rate swaps. In order to ensure effectiveness, all the contracts
have notional amount and expiry date matching the underlying expected future cash flows.
Cross currency interest rate swaps are used to transform a long-term fixed or floating rate liability
in foreign currency into an equivalent fixed or floating rate liability in euro, while currency forwards
are used to hedge commercial papers and intercompany loans.
41
Millions of euro Notional amount
2022 2021
Foreign exchange derivatives:
Currency forwards: 2,451 2,494
Cross currency interest rate swaps 23,140 15,671
Total 25,591 18,165
For more details, please refer to the note 16 and 17.
Foreign exchange risk sensitivity analysis
The Company performs sensitivity analysis by estimating the effects on financial instruments portfolio
of changes in the level of exchange rates. In particular, sensitivity analysis measures the potential
impact of market scenarios both on equity, for the hedging component of cash flow hedges derivatives,
and on income statement for those derivatives that do not qualify for hedge accounting and the portion
of gross long-term foreign denominated debt not covered by derivatives.
These scenarios are represented by the 10% Euro appreciation/depreciation towards all foreign
currencies in comparison with end of year level. All other variables held constant, the carrying value
ollowing the
exchange rate scenario disclosed (10%),
follows:
Millions of euro
Foreign exchange risk sensitivity analysis
2022
Pre-tax impact on income Pre-tax impact on equity
Exchange
Rate
Euro Appr. Euro Depr. Euro Appr. Euro Depr.
scenario
Change in Fair value of Derivative financial
instruments not qualifying for hedge
accounting
10%
Change in Fair value of Derivative Financial
instruments designated as hedging
instruments
10% 178 (217)
Cash Flow hedge 10% (1,996) 2,440
Fair value hedge 10% (44) 54
Millions of euro
Foreign exchange risk sensitivity analysis
2021
Pre-tax impact on income Pre-tax impact on equity
Exchange
Rate
Euro Appr. Euro Depr. Euro Appr. Euro Depr.
scenario
Change in Fair value of Derivative financial
instruments not qualifying for hedge
accounting
10% - - - -
Change in Fair value of Derivative Financial
instruments designated as hedging
instruments
10% 199 (243) - -
Cash Flow hedge 10% - - (1,370) 1,675
42
Credit risk
The Company
the creditworthiness of a counterparty has an adverse impact of the expected value of the creditor
position.
The exposure to credit risk is attributable to Lending and hedging transactions.
Enel Finance International N.V. is part of the centralising financial flow process and acts as the primary
reference for the management of financial needs or liquidity generated by Enel Group entities. The
Company manages its lending operations in different countries and regions to minimise the
to make payments.
Finally, with regard to derivative transactions, risk mitigation is pursued with a uniform system for
assessing counterparties, as well as with the adoption of specific risk mitigation clauses (e.g. netting
arrangements) and possibly the exchange of cash collateral.
risk for the components of the Balance Sheet at 31
December 2022 and 2021 is the carrying amounts as illustrated in Note 6, 9 and 10.
Credit risk measurement
The Expected Credit Loss (i.e. ECL), determined considering Probability 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 short falls) discounted at the original EIR.
EAD is established on a quarterly basis using outstanding exposure data. PD and LGD are determined
at least annually.
Probability of Default (PD) indicates the likelihood that a counterparty will default within one-year time
horizon.
The Company defines a default to have occurred when:
the counterparty is overdue by more than 90 days; or
the Company considers the borrower to be unlikely to meet its contractual obligations;
besides mandatory triggers, judgmental triggers also apply.
The PD is estimated mainly in relation to the creditworthiness of each counterparty. The Company
computes the PD as the average of the P provided by the major rating agencies (e.g. Standard &
for each credit score, updated on yearly basis. Internal methodology to assess the
creditworthiness considers qualitative and quantitative information in order to reflect possible future
events and macroeconomic scenarios, which may affect the risk of the portfolio or the financial
instrument.
43
Rating Moody's PD % Standard&Poors PD% PD%
Aaa/AAA - - -
Aa1/AA+ - - -
Aa2/AA - 0.02 0.01
Aa3/AA- 0.04 0.03 0.04
A1/A+ 0.06 0.05 0.06
A2/A 0.04 0.05 0.05
A3/A- 0.05 0.05 0.05
Baa1/BBB+ 0.10 0.09 0.10
Baa2/BBB 0.14 0.14 0.14
Baa3/BBB- 0.22 0.23 0.23
Ba1/BB+ 0.41 0.31 0.36
Ba2/BB 0.66 0.46 0.56
Ba3/BB- 1.26 0.92 1.09
B1/B+ 1.89 1.94 1.92
B2/B 2.92 2.99 2.96
B3/B- 4.54 5.89 5.22
Exposure at Default (EAD) estimates the expected exposure at the time of a counterparty default and
contains the carrying exposure at the reporting date net of eventual cash deposits obtained as
guarantees or, in some cases, as the amortized cost
Loss Given Default (LGD) consider each specific exposure at default, date of default, guarantee and
deposit information, recovery rate (portfolio or benchmark), credit insurance and legal/post default
classification details.
The Company uses qualitative triggers to determine whether a financial instrument should be classified
as stage 1 or stage 2. The Company is monitoring the status of borrower and the instruments is
transferred from stage 1 to stage 2 if the credit risk increases and there is a significant past due. A
transfer to stage 3 will always be the result of default of the financial instrument.
The following table provides information about the exposure to credit risk and ECL, measured on an
individual basis, for financial assets subject to impairment other than trade receivables and contract
assets:
Millions of euro
at Dec. 31,
2022
Staging
Basis for
recognition
of expected
credit loss
provision
Weighted
average expected
credit loss rate
(PD*LGD)
Gross carrying
amount
Expected credit
loss allowance
Net amount
Performing 12 m ECL 0.10% 58,583 (60) 58,523
Underperformin
g
Lifetime ECL
- - - -
Non-performing Lifetime ECL
- - - -
Total 58,583 (60) 58,523
44
Millions of euro
at Dec. 31, 2021
Staging
Basis for
recognitio
n of
expected
credit loss
provision
Weighted average
expected credit loss
rate (PD*LGD)
Gross carrying
amount
Expected credit loss
allowance
Net amount
Performing 12 m ECL 0.11% 47,747 (54) 47,693
Underperformin
g
Lifetime
ECL - - - -
Non-performing
Lifetime
ECL - - - -
Total 47,747 (54) 47,693
The table below reports the movement in expected credit loss that has been recognized for financial
assets measured at amortized cost
Millions of euro
2022 2021 Change
Expected credit loss allowance as at 1 January (54) (38) (16)
Impairment losses recognized in profit or loss (29) (24) (5)
Reversal of impairment losses in profit or loss 25 10 15
Exchange rate differences (2) (2) -
Expected credit loss allowance as at 31 December (60) (54) (6)
Liquidity risk
Liquidity risk manifests itself as uncertainty about the Company
associated with financial liabilities that are settled by delivering cash or another financial asset.
The Company manages liquidity risk by implementing measures to ensure an appropriate level of
liquid financial resources minimizing the associated opportunity cost and maintaining a balanced debt
structure in terms of its maturity profile and funding sources.
On short term, liquidity risk is mitigated by maintaining an appropriate level of unconditionally
available resources.
On long term, liquidity risk is mitigated by maintaining a balanced debt maturity profile for our debt,
access to a range of resources of funding on different markets, in different currencies and with different
counterparties.
The mitigation of liquidity risk enables the Company to maintain a credit rating that ensures access
to the capital market and limits the cost of funds, with a positive impact on its performance and
financial position.
45
The Company holds the following undrawn lines of credit
Millions of euro
at Dec. 31,
2022
at Dec. 31,
2021
Expiring
within one
year
Expiring
beyond one
year
Expiring within
one year
Expiring beyond
one year
Committed credit lines
- 4,050
- 3,000
Commercial paper
772 -
916 -
Total
772 4,050
916 3,000
Furthermore, Enel S.p.A. has confirmed through a letter dated 23 January 2023 its commitment to
explicitly provide the Company with the financial support until the date of approval of full year 2023
financial statements of the Company. Enel S.p.A is a Guarantor on the bonds and commercial paper
program.
Maturity analysis
long-term debt on contractual
undiscounted payments.
Maturing in
Millions of Euro 2023 2024 2025 2026 2027 Beyond
Bond
Listed Bond (Fixed rate) 1,288 3,814 3,726 3,647 3,039 11,846
Listed Bond (Floating rate) 174 110 53 - - -
Unlisted Bond (Fixed rate) 787 2,192 2,140 1,843 2,238 18,718
Total Bond 2,249 6,116 5,919 5,490 5,277 30,564
46
Notes to the financial statements
1 Interest income/ (expense) m Euro 112 million
Millions of euro
2022 2021 Change
Interest income:
- interest income on long-term financial assets 961 667 294
- interest income on short-term financial assets 113 30 83
- interest income from derivatives 339 321 18
- interest income from cash collaterals - (6) 6
- other income 254 - 254
Total interest income 1,667 1,012 655
Interest expense:
- interest expense on borrowings (36) (19) (17)
- interest expense on bonds (1,188) (1,218) 30
- interest expense on commercial papers (24) 12 (36)
- interest expense from derivatives (242) (192) (50)
- interest expense from cash collaterals (2) - (2)
- guarantee fee (63) (57) (6)
- other expense - (634) 634
Total interest expense (1,555) (2,108) 553
Net interest income/ (expense) 112 (1,096) 1,208
Interest income from assets amounted to Euro 1,667 million on 31 December 2022, having an
increase of Euro 655 million with the variation mainly attributed to:
- income earned as a result of bond transfer to Enel Finance America LLC (Euro 254 million);
- higher interest income from Enel subsidiaries and affiliates incorporated in Italy
(Euro 192 million), in Brazil (Euro 68 million), in Chile (Euro 41 million), in Spain
(Euro 31 million), in Mexico (Euro 19 million), in the Netherlands (Euro 12 million), in Greece
(Euro 6 million), in Romania (Euro 5 million) and in Australia (Euro 2 million);
- increase of interest income from derivatives (Euro 18 million);
- increase of interest income from cash collaterals (Euro 6 million);
- increase of interest income from cash deposits (Euro 1 million).
Interests expenses on financial debt totaled Euro 1,555 million decreased by Euro 553 million mainly
due to:
- cash consideration paid in 2021 for early redemption of USD and Euro bonds and other
expenses associated to these transactions (Euro 634 million);
- a decrease of interest expenses for bonds due to newly issued and matured debt
(Euro 30 million)
This decrease was partly offset by:
- an increase of interest expense from derivatives (Euro 50 million);
- an increase of interest charges from the Commercial Paper (Euro 36 million);
47
- higher interests paid to Group companies (Euro 14 million) mainly to Enel S.p.A
(Euro 9 million) and EGP Romania S.r.l. (Euro 5 million);
- higher guarantee fees paid to the parent company (Euro 6 million);
- an increase of fees paid for revolving credit line (Euro 3 million);
- an increase of interest expense from cash collaterals (Euro 2 million);
2. Other operating expense Euro (6) million
Other operating expense increased be Euro 1 million totaling Euro 6 million and referred to services
(mainly related to legal and consultancy charges) for Euro 4 million and to personnel costs for
Euro 1 million and social security Euro 1 million.
At 31 December 2022 the Company had, other than the directors, nine employees and one seconded
personnel (nine employees and two seconded personnel at 31 December 2021). Average headcount
comprised ten people (ten people for the 2021). All people worked in the Netherlands.
3. Financial income/(expense)d Euro (42) million
3.1 Financial income/(expense) from derivatives
Millions of euro
2022 2021 Change
Financial income from derivatives:
- income from cash flow hedge derivatives 873 1,389 (516)
- income from fair value hedge derivatives 4 44 (40)
- income from derivatives at fair value through profit or loss 308 267 41
Total finance income from derivatives 1,185 1,700 (515)
Financial expense from derivatives:
- expenses from cash flow hedge derivatives (693) (104) (589)
- expenses from fair value hedge derivatives (100) (1) (99)
- expenses from derivatives at fair value through profit or loss (555) (414) (141)
Total financial expense from derivatives (1,348) (519) (829)
Net income/(expense) from derivatives (163) 1,181 (1,344)
Net financial expense from derivatives totaled to Euro 163 million and essentially reflected net financial
income from cash flow derivatives (Euro 180 million), net financial expenses from derivatives at fair
value through profit and loss (Euro 96 million) and net loss from fair value hedge derivatives
(Euro 247 million).
The deterioration of Euro 1,344 million compared with the previous year was due to cumulative
decrease in net financial income from cash flow hedge derivatives (Euro 1.105 million), an increase of
financial expenses from fair value hedge derivatives (Euro 139 million) and an increase of net financial
expenses from derivatives at fair value though profit and loss (Euro 100 million).
The net balance recognized in 2022 on both hedging and trading derivatives mainly reflected the
hedging of currency risk.
For more detail about derivative financial instruments, please refer to the note 16 and 17.
48
3.2 Other net financial income/ (expense)
Millions of euro
2022 2021 Change
Other financial income
- positive exchange rate differences 1,027 299 728
-fair value adjustment on bond 66 1 65
Total other financial income 1,093 299 794
Other financial expenses
-negative exchange rate differences (968) (1,280) 312
-impairment (4) (14) 10
Total other financial expense (972) (1,294) 322
Net other financial income/ (expense) 121 (995) 1,116
Net other financial income totaled to Euro 121 million composed to net exchange rate differences
(Euro 59 million), fair value adjustment on bond (Euro 66 million) partly offset by impairment
(Euro 4 million).
Net foreign exchange income totaled to Euro 59 million consisted of: positive foreign currency
evaluation of non-euro group portfolio (Euro 308 million), partly offset by negative revaluation of the
outstanding value of bonds denominated in foreign currencies (Euro 131 million), and other foreign
exchange losses (Euro 118 million).
The amount of the foreign exchange losses arisen from the revaluation of notional value of bonds
(Euro 111 million) and the amount of forex exchange gains arisen from several BRL and USD loans
(Euro 121 million) are mitigated by the same amount recycled to the Cash Flow Hedge equity reserve.
The following table shows impairment losses recognized and reversed during the period.
Millions of euro
2022 2021 Change
Expected credit losses:
Long-term loans and financial receivables (including current portion) (16) (21) 5
Short-term loans and financial receivables (13) (3) (10)
Total expected credit losses (29) (24) (5)
Reversals of expected credit losses:
Long-term loans and financial receivables (including current portion) 20 9 11
Short-term loans and financial receivables 5 1 4
Total reversals of expected credit losses 25 10 15
Total expected credit losses/ (reversal of expected credit losses) (4) (14) 10
Reversal of impairment is mainly attributed to the repayment of long-term loans and change in
structure of short-term revolving credit lines and loans granted to Enel Group Companies.
49
4 Income tax (income)/expenses Euro (20 )million
Millions of euro
2022 2021 Change
Profit before income taxes 64 (915) 979
Withholding tax on foreign interests 25 12 13
Tax charge 7 (7) 14
Deferred tax assets (12) (180) 168
Income taxes 20 (175) 195
Effective tax rate 31% 19%
The following table reconciles the theoretical tax rate with the effective tax rate.
Millions of euro
2022 2021 Change
Accounting profit before income tax 64 (915) 979
Tax rate applicable 25.8% 25%
Theoretical tax expense 17 (229) 246
Permanent differences - 49 (49)
Adjustments in respect of current income tax of previous years (16) (4) (12)
Withholding tax deduction (6) (3) (3)
Withholding tax paid abroad 25 12 13
Impact on deferred taxation of changes in tax rates - 1 (1)
Income taxes 20 (175) 195
The increase of tax changes was attributable to higher taxable profit recorded in the reporting period
compared to the previous year. The effective tax rate in 2022 was 31% compared with the standard
Dutch rate of 25.8% which was driven mainly by the higher tax on interest income withheld abroad.
5 Deferred tax assets (liabilities) Euro 308 million
Changes in deferred tax assets and deferred tax liabilities, grouped by type of temporary difference, are shown below.
Millions of euro
at Dec.
31,
2021
Increase/
(Decrease)
taken to
income
statement
Increase/
(Decrease)
taken to equity
at Dec. 31,
2022
Deferred tax asset
Nature of temporary differences:
- derivatives 176
- (62) 114
- losses with deferred deductibility 177
1
- 178
- measurement of financial instruments 19
(3)
- 16
Deferred tax asset 372
(2) (62) 308
Deferred tax liability
Nature of temporary differences:
- measurement of financial instruments
(16) 16 - -
Total deferred tax liabilities
(16) 16 - -
Net deferred tax asset 356
14 (62) 308
50
6 Long-term loans and financial receivables including portion falling due
within twelve month Euro 44,333 million
Following table represents medium long-term loans granted to Enel Group companies and affiliated
companies:
Millions of Euro
at Dec. 31,
2022
at Dec. 31,
2021
Change
Long-term loans
Loan receivable from Enel S.p.A. 12,406 18,739 (6,333)
Loan receivable from Enel Italia S.p.A. 16,450 8,750 7,700
Loan receivable from Endesa SA 4,650 3,000 1,650
Loan receivable from Enel Iberia Srl 3,004 3,354 (350)
Loan receivable from Enel Green Power S.p.A. 1,558 1,670 (112)
Loan receivable from Enel Chile SA 1,260 1,363 (103)
Loan receivable from Slovak Power Holding BV 739 656 83
Loan receivable from Ampla Energia E Serviços S.A. 278 400 (122)
Loan receivable from Enel Brazil S.A. 252 - 252
Loan receivable from Enel Green Power México S de RL de Cv 243 237 6
Loan receivable from Enel Global Trading S.p.A. 200 200 -
Loan receivable from Energía Limpia de Palo Alto SA de Cv 117 120 (3)
Loan receivables from Enel X S.r.l. 100 100 -
Loan receivable from Energia Limpia de Amistad SA de CV 100 85 15
Loan receivable from Companhia Energetica Do Ceara - Coelce 89 79 10
Loan receivable from EGP Magdalena Solar SA DE CV 68 69 (1)
Loan receivables from Dolores Wind SA DE CV 67 69 (2)
Loan receivable from Parque Salitrillos SA de Cv 68 64 4
Loan receivable from Villanueva Solar SA de CV 52 46 6
Loan receivable from Dominica Energía Limpia SA de Cv 51 45 6
Loan receivable from PH Chucas SA 39 50 (11)
Loan receivable from Parque Solar Villanueva Tres SA de CV 35 31 4
Loan receivables from Parque Amistad II SA DE CV 31 32 (1)
Loan receivables from Parque Amistad III SA DE CV 30 31 (1)
Loan receivable from Vientos del Altiplano SA de Cv 30 27 3
Loan receivable from Enel Green Power Panama SA 27 31 (4)
Loan receivable from Parque Solar Don Jose SA de CV 21 18 3
Loan receivables from NGONYE POWER COMPANY Ltd 4 3 1
Loan receivable from Viva Labs AS 3 3 -
Loan receivable from Celg Distribuicao S.A. Celg D. - 362 (362)
Loan receivable from Enel Green Power Hellas SA - 167 (167)
Loan receivables from COHUNA SOLAR FARM Pty ltd - 27 (27)
Loan receivable from Enel X Korea Ltd - 5 (5)
Total loans 41,972 39,833 2,139
Expected credit loss
(42) (46) 4
Total loans net of expected credit loss 41,930 39,787 2,143
51
Short-term portion of long-term loans represented in the table below:
Millions of euro
at Dec. 31,
2022
at Dec. 31,
2021
Change
Short
-
term portion of long
-
term loans
Loan receivable from Enel S.p.A. 1,332 117 1,215
Loan receivable from Enel Iberia Srl 350 350 -
Loan receivable from Enel Brazil S.A. 222 - 222
Loan receivable from Enel Chile SA 187 353 (166)
Loan receivable from Ampla Energia E Serviços S.A. 141 - 141
Loan receivable from Enel Green Power S.p.A. 112 85 27
Loan receivable from PH Chucas SA 13 12 1
Loan receivable from Energía Limpia de Palo Alto SA de Cv 10 9 1
Loan receivable from Enel Green Power México S de RL de Cv 9 9 -
Loan receivable from Dolores Wind SA DE CV 6 6 -
Loan receivable from EGP Magdalena Solar SA DE CV 6 6 -
Loan receivable from Enel Green Power Panama SA 5 3 2
Loan receivable from Enel X Korea Ltd 5 - 5
Loan receivables from Parque Amistad II SA DE CV 3 3 -
Loan receivables from Parque Amistad III SA DE CV 3 2 1
Loan receivable from Parque Salitrillos SA de Cv 3 2 1
Loan receivable from Enel Green Power Hellas SA - 1 (1)
Loan receivables from COHUNA SOLAR FARM Pty ltd - 1 (1)
Total 2,407 959 1,448
Expected credit loss
(4) (1) (3)
Total loans net of expected credit loss 2,403 958 1,445
The table below reports long-term financial receivables by currency and interest rate.
Millions of Euro
at Dec. 31,
2022
at Dec. 31,
2022
at Dec. 31,
2021
Balance Nominal value Balance
Effective interest
rate
Total Euro 41,440 41,440 37,635 5.78%
Australian Dollar
- - 27 -
Brazilian Real 449 449
401
6.86%
Mexican Peso 182 182 158 12.61%
Norwegian Krone 3 3
3
7.23%
US dollar 2,302 2,302 2,565 4.97%
Zambian Kwacha 3 3
3
25.90%
Total non-Euro currencies 2,939 2,939 3,157
Total 44,379 44,379 40,792
52
7. Derivatives Euro 413 million
Derivative instruments refer to: (i) Cash flow hedge derivatives used by the Company to hedge the
exchange rate and interest rate fluctuations of bonds and long-term loans or receivables; (ii)
derivatives at fair value through profit and loss used by the Company to mitigate the loan interest
rate fluctuations and (iii) fair value hedge derivative on interest rate risk.
Millions of euro Non Current Current
at Dec. 31,
2022
at Dec. 31,
2021
at Dec. 31,
2022
at Dec. 31,
2021
Derivative financial assets 1,596 671 34 3
Derivative financial liabilities (1,176) (473) (41) (25)
For more details about the nature, the recognition and classification of derivative financial assets
and liabilities, please refer to the note 17.
8 Other non-current financial assets Euro 37 million
Other non-current financial assets totaled Euro 37 million as at 31 December 2022 (Euro 38 million
as at 31 December 2021) are essentially accounted for by transaction costs on Euro 13.5 billion
revolving credit facility agreed on 5 March 2021 between Enel SpA, Enel Finance International N.V.
and Mediobanca and prepaid expenses of derivative agreements.
9 Short-term loans and financial receivables Euro 14,190 million
The following table shows the breakdown of the short-term loans granted to Enel Group companies
and affiliated companies:
Millions of euro
at Dec. 31,
2022
at Dec. 31,
2021
Change
Short-term loans
Enel S.p.A. - Financial Services Agreement 4,259 5,310 (1,051)
Revolving short-term facility agreement with Enel Italia S.p.A 4,000 - 4,000
Revolving short-term facility agreement with Enel S.p.A 3,000 - 3,000
Revolving short-term facility agreement with Enel Global Trading Spa IT 1,500 600 900
Revolving short-term facility agreement with Endesa SA 450 - 450
Revolving short-term facility agreement with Enel Rinnovabile,S.A. de C.V. - 17 (17)
Revolving short-term facility agreement with Enel Chile SA 272 477 (205)
Revolving short-term facility agreement with Ampla Energia E Serviços S.A. 185 160 25
Revolving short-term facility agreement with Enel Americas SA 122 - 122
Revolving short-term facility agreement with Enel Energie S.A. 111 - 111
Revolving short-term facility agreement with Enel Green Power México S de RL
de Cv
75 71 4
Revolving short-term facility agreement with Enel Energie Muntenia SA 71 - 71
Revolving short-term facility agreement with Companhia Energetica Do Ceara -
Coelce
49 - 49
Revolving short-term facility agreement with Enel Green Power RSA - 38 (38)
Revolving short-term facility agreement with Enel Green Power South Africa Pty 43 - 43
Revolving short-term facility agreement with Enel Trade Energy S.r.l. 14 4 10
Revolving short-term facility agreement with PARQUE AMISTAD III SA 12 24 (12)
53
Revolving short-term facility agreement with EGP Magdalena Solar SA DE CV 10 19 (9)
Revolving short-term facility agreement with PARQUE AMISTAD IV SA 8 32 (24)
Revolving short-term facility agreement with Dolores Wind SA DE CV 7 29 (22)
Revolving short-term facility agreement with ENEL X AUSTRALIA PTY LTD 7 - 7
Revolving short-term facility agreement with PARQUE AMISTAD II SA 4 16 (12)
Revolving short-term facility agreement with S4MA DEVELOPMENTS SPOLKA Z
OGRANICZONA ODPOWIEDZIALNOSCIA
3 - 3
Revolving short-term facility agreement with ENEL X SINGAPORE PTE LTD 1 - 1
Revolving short-term facility agreement with ENEL X WAY ROMANIA 1 - 1
Revolving short-term facility agreement with Enel Green Power Hellas Sa - 147 (147)
Revolving short-term facility agreement with Enel Green Power Perú SA - 5 (5)
Revolving short-term facility agreement with Juicenet Gmbh - 2 (2)
Revolving short-term facility agreement with Enel X Japan K.K. - 1 (1)
Revolving short-term facility agreement with Enel X Norway AS - 1 (1)
Total short term loans 14,204 6,953 7,251
Expected credit loss
(14) (6) (8)
Total loans net of expected credit loss 14,190 6,947 7,243
Millions of Euro
at Dec. 31,
2022
at Dec. 31,
2022
at Dec. 31,
2021
Balance Nominal value Balance
Effective interest
rate
Total Euro 13,445 13,445 6,219 2.20%
Australian dollar 7 7
-
3.94%
Japanese yen
- - 1 -
Norwegian Krone
- - 1 -
Romanian leu
197 197 4
7.75%
South African rand 43 43 38 10.00%
Singapoure dollar 1 1
-
6.67%
US dollar 511 511 690 5.70%
Total non-Euro currencies 759 759 734
Total 14,204 14,204 6,953
The table below reports the short-term financial instruments granted to the Enel Group companies:
Facility Agreements
Financial
relationship
Commitmen
t amount as
at 31 Dec
2022
Rate of
Interest
Spread as
at 31 Dec
2022
Commitment fee
as at 31 Dec
2022
Millions of Euro
S4MA DEVELOPMENTS Revolving credit facility 2.50 EURIBOR 3M 1.80% 35% of the margin
Enel Brasil/Electropaulo/Ampla Revolving credit facility 150.00 EURIBOR
0.8%/1.25
%
35% of the margin
Endesa SA Revolving credit facility 1,700.00 EURIBOR 0.65% 0.20%
Endesa SA Revolving credit facility 700.00 EURIBOR 0.72% 35% of the margin
Endesa SA Revolving credit facility 2,000.00 EURIBOR 0.30% 35% of the margin
Endesa SA Revolving credit facility 1,000.00 EURIBOR 0.30% 35% of the margin
Enel Spa Revolving credit facility 3,000.00 EURIBOR 0.30% 35% of the margin
Enel Italia Revolving credit facility 2,000.00 EURIBOR 0.95% 35% of the margin
Enel Italia Revolving credit facility 2,000.00 EURIBOR 1.05% 35% of the margin
54
Enel Global Trading Revolving credit facility 1,500.00 EURIBOR 1.20% 35% of the margin
Enel X Germany Revolving credit facility 1.30 EURIBOR 3M 6.50% 35% of the margin
Millions of USD
Enel Americas S.A. Revolving credit facility 500.00 US LIBOR 1.08% 35% of the margin
Parque Amistad IV SA DE CV Revolving credit facility 25 SOFR 3.95% 35% of the margin
Parque Amistad II SA DE CV Revolving credit facility 20.00 SOFR 3.95% 35% of the margin
Parque Amistad III SA DE CV Revolving credit facility 20.00 SOFR 3.95% 35% of the margin
Dolores Wind SA DE CV Revolving credit facility 20.00 SOFR 3.95% 35% of the margin
EGP Magdalena Solar S.A de C.V Revolving credit facility 20.00 SOFR 3.95% 35% of the margin
Enel Green Power Mexico S.A. Revolving credit facility 80.00 SOFR 3.65% 35% of the margin
Enel Chile S.A. Revolving credit facility 290.00 SOFR 1.00% 35% of the margin
Enel Chile S.A. Revolving credit facility 200.00 SOFR 1.15% 35% of the margin
Enel Green Power Peru S.A. Revolving credit facility 30.00 SOFR 4.45% 35% of the margin
Enel Chile S.A. Revolving credit facility 50.00 US LIBOR 0.90%
0.25% of the
margin
Millions of AUD
Enel X Australia Revolving credit facility 4.00 BBSW 3M 0.45% 35% of the margin
Enel X Australia Revolving credit facility 7.00 BBSW 3M 0.75% 35% of the margin
Millions of NOK
Enel X Norway Revolving credit facility 4.00 NIBOR 3M 7.30% 35% of the margin
Millions of GBP
ENEL X WAY UK Revolving credit facility 0.200 SONIA 3M 4.65% 35% of the margin
Millions of RON
ENEL X ROMANIA Revolving credit facility 5.00 ROBOR 3M 2.70% 35% of the margin
ENEL X WAY ROMANIA Revolving credit facility 6.00 ROBOR 3M 1.50% 35% of the margin
ENEL TRADE ENERGY
Revolving credit facility 67.00 ROBOR 3M 2.30% 35% of the margin
Millions of ZAR
EGP RSA PTY LTD Revolving credit facility 1,500.00 Fixed 0.82%
Millions of SGD
ENEL X SINGAPORE Revolving credit facility 2.00 SORF 3M 2.35% 35% of the margin
10 Other current financial assets Euro 932 million
Millions of euro
at Dec. 31,
2022
at Dec. 31,
2021
Change
Cash collateral on derivatives 464 450 14
Current financial accrued income 354 212 142
Other current financial receivables 114 - 114
Total other current financial assets 932 662 270
While other current financial assets are also subject to the impairment requirements of IFRS 9, the
identified impairment loss was immaterial.
11 Cash and cash equivalents Euro 177 million
Cash and cash equivalent represent the cash availability deriving by the turnover of the lending
portfolio of the Company, temporary not invested in lending activities within Enel Group and placed in
time deposits operations with primary bank counterparties.
55
While cash and cash equivalents are also subject to the impairment requirements of IFRS 9, the
identified impairment loss was immaterial.
Cash balances are mostly denominated in euro. Cash balances are not restricted by any
encumbrances.
12 KXQbUX_\TUbpc UaeYdi Euro 10,286 million
Share capital d Euro 1,479 million
The authorized share capital of the company amounts to Euro 2,500 million, divided into 2,500 million
of shares, each share with a nominal value of Euro 1.0 each.
The issued and paid-up share capital amounts to Euro 1,478.8 million represented by 1,478,810,371
shares with nominal value of Euro 1.0 each increased by 1 share as a result of demerger in 2016 of
Enel Green Power International B.V.
Share premium reserved Euro 9,126 million
The reserve arises from the cross-border merger finalized during 2010 between Enel Finance
International S.A. and Enel Trading RUS B.V. (Euro 43 million) and demerger of net assets from Enel
Green Power International B.V. in October 2016 (Euro 983 million) and the capital contribution (Euro
8,100 million) made by the parent company in October 2021
Legal reserves include reserves such as reserve from effective portion of change in the fair value of
cash flow hedges and reserve from cost of hedging.
Reserve from effective portion of change in the fair value of cash flow hedges (legal reserve) d Euro
(288) million
The reserve includes the effective portion of the cumulative net change in the fair value of cash flow
hedging instruments related to hedged transactions.
Considering the nature of the reserve (legal), up to the amount of the negative balance of this reserve,
no distributions may be charged to the free reserves.
For more details about the nature, the recognition and classification of derivative financial assets and
liabilities, please refer to the note 17.
Reserve from cost of hedging (legal reserve) d Euro (40) million
This reserve includes net gains (losses) recognised directly in equity resulting from the measurement
of fair value cost of hedging (i.e. time value, forward element and currency basis) when excluded from
hedging relationship.
Considering the nature of the reserve (legal), up to the amount of the negative balance of this reserve,
no distributions may be charged to the free reserves.
For more details please refer to the note 17.
Capital Management
It is the policy of the Company to maintain a strong capital base to preserve creditors and market
confidence and so to sustain future development of the business. The Board of Directors monitors the
equity, the developments in the
level of its debt in relation to equity and the level of dividends to ordinary shareholders.
56
The return of capital is calculated as a percentage of financial result on total equity net of cash flow
hedge reserve excluded in this key performance indicator because
to exclude evaluation equity reserves which might be quite volatile over the periods:
Millions of euro
at Dec. 31,
2022
at Dec. 31,
2021
Total Equity
10,286 10,064
Cash flow hedge and cost of hedging reserves
(328) (506)
Adjusted equity
10,614 10,570
Net financial result
44 (740)
Return of capital (*)
0.4% -7.0%
* Key Performance Indicator determined on a yearly basis.
balance between the higher returns that might be possible with
higher levels of borrowings and the advantages and security afforded by a sound capital position.
The Company is not subject to externally imposed capital requirements.
Proposal for net result appropriation
The Board of Directors proposes to the General meeting of Shareholders the allocation of the net result
of the year 2022 to the / (accumulated loss).
13 Long-term loans and borrowings (including the portion falling due within
twelve months for Euro 1,034 million) Euro 41,090 million
loans
exposure to interest rate, foreign currency and liquidity risk, ER[S UJVJPNUNV\f.
The aggregate includes long-term payables in respect of bonds, bank loans, revolving credit facility
and other loans in Euro and other currencies.
The following table shows the nominal values, carrying amounts of long-term debt at 31 December
2022, including the portion falling due within 12 months, grouped by type of borrowing and type of
interest rate:
Millions of Euro
Balance
Nominal
value
Portion
falling
due after
more
than 12
months
Current
portion Balance
Nominal
value
Portion
falling
due after
more
than 12
months
Current
portion
at Dec. 31,
2022
at Dec.
31,
2022
at Dec.
31,
2022
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2021
at Dec.
31,
2021
at Dec.
31,
2021
Bond
Listed Bond (Fixed
rate)
23,676 24,092 22,791 884 21,211 21,604 19,264 1,947
Listed Bond (Floating
rate)
300 300 150 150 449 450 300 149
Unlisted Bond (Fixed
rate)
17,114 17,319 17,115 - 11,207 11,293 11,157 50
Total Bond 41,090 41,711 40,056 1,034 32,867 33,347 30,721 2,146
57
The table below reports long-term financial debt by currency and interest rate.
Millions of Euro
at Dec. 31,
2022
at Dec. 31,
2022
at Dec. 31,
2021
at Dec. 31,
2022
Balance Nominal value Balance
Current average
interest rate
Effective
interest rate
Total Euro 19,988 20,280 18,332 1.37% 1.76%
US dollar 16,928 17,127 10,982 4.59% 4.83%
British pound 3,815 3,945 3,210 4.43% 4.62%
Swiss Franc 359 359 343 1.81% 1.84%
Total non-Euro currencies 21,102 21,431 14,535
Total 41,090 41,711 32,867
The table below reports changes in the nominal value of long-term debt during the year.
Millions of Euro
Nominal
value
New
financing
Capitalised
interests on
ZCB
Repayments Other changes
Exchange
rate
differences
Nominal
value
at Dec.
31,
2021
at Dec.
31,
2022
Bonds in non-Euro
currencies and Euro
currency
33,347 11,086 10 (2,149) (705) 122 41,711
Total long-term
financial debt
33,347 11,086 10 (2,149) (705) 122 41,711
New bonds issue
- a multi-tranche sustainability-linked bond in the amount of Euro 2,750 million, with repayment
in single instalment, issued in January 2022 and structured as follows:
o Euro 1,250million at a fixed rate of 0.250% and maturity on 17 November 2025;
o Euro 750million at a fixed rate of 0.875% and maturity on 17 January 2031;
o Euro 750 million at a fixed rate of 1.250% and maturity on 17 January 2035;
- a single-tranche sustainability-linked bond of GBP 750 million (equivalent to approximately
Euro 898 million), with a rate of 2.875% issued in April 2022 and maturity on 11 April 2029;
- a multi-tranche sustainability-linked bond in the amount of USD 3,500 million (equivalent to
approximately Euro 3,362 million), with repayment in single instalment, issued in June 2022 and
structured as follows:
o USD 750 million at a fixed rate of 4.250% and maturity on 15 June 2025;
o USD 750 million at a fixed rate of 4.625% and maturity on 15 June 2027;
o USD 1,000 million at a fixed rate of 5.000% and maturity on 15 June 2032;
o USD 1,000 million at a fixed rate of 5.500% and maturity on 15 June 2052;
- a single tranche sustainability-linked bond in amount of Euro 1,000 million with a rate of
3.875% issued in September 2022 and maturing on 9 March 2029.
- a multi-tranche sustainability-linked bond in the amount of USD 3,000 million (equivalent to
approximately 3,076 million euros), with repayment in single instalment, issued in October 2022 and
structured as follows:
o USD 750 million at a fixed rate of 6.800 and maturity on 14 October 2025;
o USD 1,000 million at a fixed rate of 7.100%, maturing 14 on October 2027;
o USD 1,250 million at a fixed rate of 7.500%, and maturity on 14 October 2032;
58
Bond repayments
Repayment at maturity
- Euro 50 million in respect of a fixed-rate bond matured on 2 February 2022;
- Euro 50 million in respect of a floating-rate bond matured on 21 February 2022;
- Euro 50 million in respect of a floating-rate bond matured on 21 February 2022;
- Euro 1,949 million in respect of a floating-rate bond matured on 14 September 2022;
- Euro 50 million in respect of a floating-rate bond matured on 28 November 2022;
Substitution of principal debtor
On 13 December 2022 the Company substituted for itself as principal debtor Enel Finance America
LLC.
The bond (ISIN 144A: US29278GAQ10, ISIN Reg S: USN30706VF42) in amount of 750 million US
dollars of its 2.875% Notes due 2041 was issued on 12 July 2021.
Debt covenants
The main long-term financial debts of the Company are governed by covenants containing
undertakings by the borrowers (Enel S.p.A. and the Company) and by Enel S.p.A. as guarantor that
are commonly adopted in international business practice. The main covenants for the Company are
related to the bond issues carried out within the Euro / Global Medium-Term Notes Programme and
the Revolving Facility Agreement dated 5 March 2021 as amended and restated on May 11, 2022,
between Enel S.p.A. , the Company and a pool of banks, of up to Euro 13.5 billion
Covenants are non-financial. To date none of the covenants have been
triggered.
The main covenants in respect of the bond issues under the Global/Euro Medium-Term Notes program
(including the Green Bonds of the Company guaranteed by Enel S.p.A., which are used to finance the
market guaranteed by Enel SpA can be summarized as follows:
negative pledge clauses under which the issuer may not establish or maintain (except under
statutory requirement) mortgages, liens or other encumbrances on all or part of its assets or
revenues to secure any listed bond or bond for which listing is planned unless the same guarantee
is extended equally or pro rata to the bonds in question;
pari passu clauses, under which the securities constitute a direct, unconditional and unsecured
obligation of the issuer and are issued without preferential rights among them and have at least
the same seniority as other unsubordinated and unsecured obligations, present and future, of the
issuer;
under cross-default clauses, the occurrence of a default event (above a threshold level) in
respect of certain indebtedness of the issuer constitutes a default in respect of the bonds in
question, which may become immediately repayable;
From 2019, the Comp
Euro Medium Term Notes - EMTN bond issue program) and on the US market, guaranteed by Enel
SpA, linked to the achievement of a number of the Sustainable Development Goals (SDGs) of the
United Nations that contain the same covenants as other bonds of the same type.
59
The main covenants for the Amended Revolving Facility Agreement involving the Company and Enel
S.p.A. can be summarized as follows:
may not establish or maintain (with the exception of permitted guarantees) mortgages, liens or
other encumbrances on all or part of their assets to secure certain financial indebtedness;
pari passu clause, under which the payment obligation of the borrower have at least the same
seniority as its other unsubordinated and unsecured payment obligations;
change of control clause which is triggered in the event (i) control of Enel is acquired by one
or more shareholders other than the Italian state or (ii) Enel or any of its subsidiaries transfer a
financial reliability of the Group is significantly compromised. The occurrence of one of the two
circumstances may give rise to (a) the renegotiation of the terms and conditions of the facility or
(b) compulsory early repayment of the facility by the borrower;
rating clauses, which provide for the borrower to maintain their rating above a certain specified
level;
under cross-default clause, the occurrence of a default event (above a threshold level) in
(i.e. consolidated companies whose gross revenues or total assets are at least equal to a specified
percentage (10% of gross consolidated revenues or total consolidated assets)) constitutes a default
in respect of the facility in question, which may become immediately repayable;
dispose of all or any material part of their assets or undertaking with the exception of permitted
disposals.
The following table provides disclosures about changes in bonds and commercial papers, as defined
in the cash flows statements, including both changes arising from cash flows and non-cash changes.
Millions of CU
Notes
at
Jan.1,
2022
Changes from
financing cash flows
Non-cash changes
at Dec. 31,
2022
New
issues
Repayments
and other
net changes
Effect of
changes
in foreign
exchange
rates
Changes
in fair
values
Other
non-
cash
changes
Long-term borrowings
32,867 11,086 (2,854) 131 (66) (74)
41,090
Commercial papers
14 5,084 2,144 - - - -
7,228
Total
37,951 13,230 (2,854) 131 (66) (74)
48,318
14 Short-term loans and borrowings Euro 8,461 million
Millions of Euro
at Dec. 31,
2022
at Dec. 31,
2021
Change
Short-term loans from the Enel Group and associated companies 284 434 (150)
Commercial papers 7,228 5,084 2,144
Cash collaterals on derivatives 949 324 625
Short-term financial debt 8,461 5,842 2,619
60
Short-term loans
At 31 December 2022 short-term loans decreased by Euro 150 million from 31 December 2021.
Millions of Euro
Original
currency
Euro
countervalue
at 31 Dec
2022
Euro
countervalue
at 31 Dec
2021
Change
Enel Iberia S.r.l. Euro 190 171 19
Enel Green Power Romania Srl RON 81 203 (122)
Enel X Germany GmbH Euro 12 - 12
Enel Investment Holding B.V. Euro 1 - 1
Generadora Montecristo SA USD - 40 (40)
Enel Fortuna SA USD - 9 (9)
Proveedora de Electricidad de Occidente S de RL de Cv USD - 6 (6)
Enel Trade Energy SRL Euro - 2 (2)
Kongul Energì Sanayive Tìcaret Anonìm Sìrket TRY - 2 (2)
Enel X UK Limited GBP - 1 (1)
Total 284 434 (150)
Commercial Papers
The payables represented by commercial papers relate to outstanding issuances at 2022 year-end in
in 2005 by the Company and guaranteed by Enel S.p.A.
In the context of the last update of the commercial paper programme the Company can issue short-
term promissory notes issued in the interest-bearer form up to an amount of Euro 8,000 million. Each
note can be denominated in any currency, with a minimum denomination of Euro 500,000 (or GBP
100,000, or USD 500,000, or JPY 100 million or its equivalent in the relevant currency) and a maturity
between one day and one year. The notes may be issued on a discounted basis or may bear fixed or
floating interest rate or a coupon calculated by reference to an index or formula, and are not listed on
any stock exchange.
The total nominal value of commercial papers issued and not yet reimbursed as of 31 December 2022
was Euro 7,228 million (Euro 5,084 million at 31 December 2021).
15 Other current financial liabilities Euro 399 million
Other current financial liabilities increased by Euro 76 million and mainly related to interest expenses
accrued on debt outstanding at 31 December 2022.
All payments are expected within 12 months.
16 Fair value measurement
The fair value of assets and liabilities is categorized into a fair value hierarchy that provides three
levels defined as follows on the basis of the inputs to valuation techniques used to measure fair value:
61
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities to which the
company has access at the measurement date;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (that is, as prices) or indirectly (that is, derived from prices);
Level 3: inputs for the asset or liability that are not based on observable market data (that is,
unobservable inputs).
In this note, the relevant disclosures are provided in order to assess the following:
- for assets and liabilities that are measured at fair value on a recurring or non-recurring basis
in the balance sheet after initial recognition, the valuation techniques and inputs used to develop those
measurements; and
- for recurring fair value measurements using significant unobservable inputs (Level 3), the
effect of the measurements on profit or loss or other comprehensive income for the period.
For this purpose:
- recurring fair value measurements are those that IFRSs require or permit in the balance sheet
at the end of each reporting period;
- non-recurring fair value measurements are those that IFRSs require or permit in the balance
sheet in particular circumstances.
The fair value of derivative contracts is determined using the official prices for instruments traded on
markets.
The fair value of instruments not listed on a market is determined using valuation methods appropriate
for each type of financial instrument and market data as of the close of the period (such as interest
rates, exchange rates, volatility), discounting expected future cash flows on the basis of the market
yield curve and translating amounts in currencies other than the euro using exchange rates provided
by the European Central Bank.
The notional amount of a derivative contract is the amount on which cash flows are exchanged. This
amount can be expressed as a value or a quantity (for example tons, converted into euros by
multiplying the notional amount by the agreed price).
Amounts denominated in currencies other than euro are converted into euros at the exchange rate
provided by the European Central Bank.
The notional amounts of derivatives reported here do not necessarily represent amounts exchanged
risk exposure.
For listed debt instruments, the fair value is given by official prices. For unlisted instruments the fair
value is determined using appropriate valuation techniques for each category of financial instrument
and market data at the closing date of the year, including the credit spreads of Enel Finance
International N.V.
62
Assets and liabilities measured at fair value in the financial statements
The following table shows the fair value measurement at the end of the reporting period and the level
in the fair value hierarchy into which the fair value measurements are categorised:
Milions of euro Non Current Current
at Dec.
31,
2022
Level 1 Level 2 Level 3
at Dec.
31,
2022
Level 1 Level 2 Level 3
DERIVATIVE ASSETS
Cash flow hedge
on interest rate risk 29 - 29 - - -
-
-
on foreign exchange risk 1,550 - 1,550 - - -
-
-
Total 1,579 - 1,579 - - -
-
-
At fair value through
profit or loss
on interest rate risk 17 - 17 - - - - -
on foreign exchange risk - - - - 34 - 34
Total 17 - 17 - 34 - 34 -
TOTAL DERIVATIVE
ASSETS
1,596 - 1,596 - 34 - 34 -
DERIVATIVE
LIABILITIES
Fair value hedge
on foreign exchange risk (87) - (87) - - - - -
Total (87) - (87) - - - - -
Cash flow hedge
on interest rate risk (55) - (55) - (1) - (1) -
on foreign exchange risk (1,017) - (1,017) - (38) - (38) -
Total (1,072) - (1,072) - (39) - (39) -
At fair value through
profit or loss
on interest rate risk (17) - (17) - - - - -
on foreign exchange risk - - - - (2) - (2) -
Total (17) - (17) - (2) - (2) -
TOTAL DERIVATIVE
LIABILITIES
(1,176) - (1,176) - (41) - (41) -
63
Millions of euro Non Current Current
at Dec.
31,
2021
Level 1 Level 2 Level 3
at Dec.
31,
2021
Level 1 Level 2 Level 3
DERIVATIVE ASSETS
Fair value hedge
on foreign exchange risk 12 -
12
- - - - -
Total 12 -
12
- - - - -
Cash flow hedge
on interest rate risk 29 -
29
- - -
-
-
on foreign exchange risk 592 -
592
- - -
-
-
Total 621 -
621
- - -
-
-
At fair value through
profit or loss
on interest rate risk 38 -
38
- - -
-
-
on foreign exchange risk - - - - 3 -
3
-
Total 38 -
38
- 3 -
3
-
TOTAL DERIVATIVE
ASSETS
671 -
671
- 3 -
3
-
DERIVATIVE
LIABILITIES
Cash flow hedge
on interest rate risk (55) -
(55)
- - -
-
-
on foreign exchange risk (380) -
(380)
- - -
-
-
Total (435) -
(435)
- - -
-
-
At fair value through
profit or loss
on interest rate risk (38) -
(38)
- (2) -
(
2
)
-
on foreign exchange risk - - - - (23) -
(23)
-
Total (38) -
(38)
- (25) -
(25)
-
TOTAL DERIVATIVE
LIABILITIES
(473) -
(473)
- (25) -
(25)
-
Assets and liabilities not measured at fair value in the financial statements
The following table shows, for each class of liabilities not measured at fair value in the balance sheet
but for which the fair value shall be disclosed, the fair value at the end of the reporting period and the
level in the fair value hierarchy into which the fair value measurements are categorized.
For listed debt instruments, the fair value is given by official prices while for unlisted instruments the
fair value is determined using appropriate valuation technique for each category of financial instrument
and market data at the closing date of the year.
64
Milions of euro
note
at Dec. 31,
2022
Level 1 Level 2 Level 3
Financial assets at amortized cost
Medium/long-term financial receivables 6
41,682 - 41,682 -
Short-term financial receivables 9 9,989 - 9,989 -
Total 51,671 - 51,671 -
Borrowings:
Bonds
-fixed rate 13 37,025 37,025 - -
-floating rate 13 310 310 - -
Short-term loans from the Enel Group companies 14 284 - 284 -
Short-term borrowings at amortized cost 14 7,220
7,220
- -
Total 44,839 44,555 284 -
Level 2 includes financial assets/liabilities measured at fair value on the basis of the curve on the
market for each currency and the exchange rate for the non-euro currency.
17 Derivatives and hedge accounting
Derivatives are initially recognised at fair value, on the trade date of the contract and are subsequently
re-measured at their fair value. The method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument, and if so, the nature of the item being
hedged.
Hedge accounting is applied to derivatives entered into, in order to reduce risks such as interest rate
risk, foreign exchange rate risk, when all the criteria provided by IFRS 9 are met.
The Company documents at the inception of the transaction the relationship between hedging
instruments and hedged items, as well as its risk management objectives and strategy. The Company
also documents its assessment, both at hedge inception and on an ongoing basis, of whether hedging
instruments are highly effective in offsetting changes in fair values or cash flows of hedged items.
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.
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 does not dominate the value changes resulting from the economic
relationship;
- the hedge ratio defined at designation resulting 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 instrument that the entity actually uses to hedge the quantity of the hedged item).
Based on the IFRS 9 requirements, the existence of an economic relationship is evaluated by the
Company through a qualitatively assessment or a quantitatively computation, depending of the
following circumstances:
65
- 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 analysis;
- on the other hand, if the underling risk of the hedging instrument and the hedged item is not
the same, the existence 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. linear
regression).
In order to demonstrate that the behaviour of the hedging instrument in line with those of the hedged
item, different scenarios will be analysed
In order to evaluate the credit risk effects, the Company considers the existence of risk mitigating
measures (collateral, mutual break-up clauses, netting agreements, etc.).
The Company has established a hedge ratio of 1:1 for all the hedging relationships as the underlying
risk of the hedging derivative is identical to the hedged risk, in order to minimize hedging
ineffectiveness.
The hedge ineffectiveness will be evaluated through a qualitative assessment or a quantitative
computation, depending on the following circumstances:
-
sources of ineffectiveness included the credit risk adjustment on the hedging derivative, the hedge
relationship will be considered fully effective on the basis of a qualitative assessment;
- if the critical terms of the hedged item and hedging instrument do not match or there is at
least one source of ineffectiveness, the hedge ineffectiveness will be quantified applying the dollar
offset cumulative method with hypothetical derivative. This method compares changes in fair
values of the hedging instrument and the hypothetical derivative between the reporting date and
the inception date.
The main causes of hedge ineffectiveness may be the followings:
- basis differences (i.e. the fair value or cash flows of the hedged item depend on a variable
that is different from the variable that causes the fair value or cash flows of the hedging instrument
to change);
- timing differences (i.e. the hedged item and hedging instrument occur or are settled at
different dates);
- quantity or notional amount differences (i.e. the hedged item and hedging instrument are
based on different quantities or notional amounts);
- other risks (i.e. changes in the fair value or cash flows of a derivative hedging instrument or
hedged item relate to risks other than the specific risk being hedged);
- credit risk (i.e. the counterparty credit risk differently impact the fair value movements of the
hedging instruments and hedging item)
Fair value hedge
Fair value hedges are used to protect the Company against exposures to changes in the fair value of
assets, liabilities or firm commitment attributable to a particular risk that could affect profit or loss.
Changes in fair value of derivatives that qualify and are designated as hedging instruments are
recognised in the income statement, together with changes in the fair value of the hedged item that
are attributable to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount
of a hedged item for which the effective interest rate method is used is amortized to profit or loss over
the period to maturity.
66
Cash flow hedge
Cash flow hedges are applied in order to hedge the Company exposure to changes in future cash flows
that are attributable to a particular risk associated with a recognised asset or liability or a highly
probable transaction that could affect profit or loss.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash
flow hedges is recognised in other comprehensive income. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item
affects profit or loss.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is
recognised when the forecast transaction is ultimately recognised in the income statement. When a
forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in
equity is immediately transferred to the income statement.
Hedging relationships using cross currency basis spread as hedging instrument, the Company
separates foreign currency basis spread, in designating the hedging derivative, and present them in
other comprehensive income (OCI).
The following tables report the notional amount and fair value of derivative financial assets and
liabilities by type of hedge relationship and hedged risk, broken down into current and non-current
derivative financial assets and liabilities.
The notional amount of a derivative contract is the amount on the basis of which cash flows are
exchanged. Amounts denominated in currencies other than the euro are converted at the end-year
exchange rates provided by the European Central Bank.
Milions of euro Non Current Current
Notional amount Fair value Notional amount Fair value
at Dec.
31,
2022
at Dec. 31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
DERIVATIVE ASSETS
Fair value hedge
on foreign exchange risk - 595 - 12 - - - -
Total - 595 - 12 - - - -
Cash flow hedge
on interest rate risk
650 722 29 29
- - - -
on foreign exchange risk
13,738 10,090 1,550 592
- - - -
Total
14,388 10,812 1,579 621
- - - -
DERIVATIVE
LIABILITIES
Fair value hedge
on foreign exchange risk
564
-
87
- - - - -
Total
564
-
87
- - - - -
Cash flow hedge
on interest rate risk
715 841 (55) (55)
150 100
(1)
-
on foreign exchange risk
8,611 5,581 (1,017) (380)
227 -
(38)
-
Total
9,326 6,422 (1,072) (435)
377 100
(39)
-
67
Interest rate benchmark reform -nB;GJo bUV_b]
Overview
Interbank Offered Rates
interbank market on an unsecured basis for a given period ranging from overnight to twelve months,
in a specific currency.
In recent years there have been several cases of manipulation of these rates by the banks contributing
to their calculation. For this reason, regulators around the world have begun a fundamental reform of
major interest rate benchmarks, including the replacement of some IBORs with alternative nearly risk-
The Company
Euribor is still considered compliant with the European Benchmarks Regulation (BMR) and this allows
market participants to continue to use Euribor for both existing and new contracts.
According to the most recent announcements on this matter published from the relevant regulators:
- USD LIBOR 1-month, 3-month and 6-month will become non-representative after 30 June 2023
and the alternative reference rate is the Secured Overnight Financing Rate (SOFR);
- GBP LIBOR 1-month, 3-month and 6-month became non-representative at 31 December 2021
and the alternative reference rate is currently the Sterling Overnight Index Average (SONIA).
As a consequence of the IBOR reform some temporary reliefs to hedge accounting rules were provided
by the amendments to IFRS 9 issued in September 2019 (Phase 1) and in August 2020 (Phase 2), in
order to address, respectively:
- pre-replacement issues affecting financial reporting in the period preceding the replacement of
an existing interest rate benchmark with an alternative risk-free rate; (i.e. Phase 1); and
- replacement issues that might affect financial reporting when an existing interest rate
benchmark is either reformed or replaced, hence when initial uncertainty is gone, but contracts
and hedging relationships are to be updated in order to reflect new rates (i.e. Phase 2).
Impact of IBOR reform on the Company
Loans, debt and derivatives
The Company holds floating rate lending portfolio mainly indexed to Euribor and USD Libor.
At the reporting date, no actions are planned by the Company for Euribor since, as mentioned before,
it has been fully reformed to comply with the European Union Benchmarks Regulation.
Notwithstanding the Euribor continuation, fallback provisions may be required and therefore would be
practice.
During 2022, the Company has signed new loans in USD indexed in SOFR. The main objective of the
following months will be to decide how to move to USD SOFR for USD LIBOR existing exposure and
how to use the new alternative risk-free rates for new financial transactions.
cts mainly based on the International
ISDA reviewed its standard contracts in light of IBOR reform and amended certain floating-rate options
in the 2006 ISDA definitions to include fallback clauses that would apply on the permanent
68
discontinuation of specific key IBORs; these changes came into effect on 25 January 2021.
Transactions incorporating the 2006 ISDA Definitions, that are entered into on or after 25 January
2021, include the amended floating rate option (i.e., the floating rate option with the fallback), while
to be based on the 2006 ISDA Definitions. For this reason, ISDA published an IBOR fallback protocol
to facilitate multilateral amendments to include the amended definitions. The Company is still
evaluating whether: (i) to adhere to the protocol, based on its exposure and on the IBOR Reform
evolution, or; (ii) to early amend the contracts impacted by the reform bilaterally.
Hedge Accounting
USD Libor.
The Company has assessed the impact of uncertainty engendered by the IBOR reform on hedging
relationships at 31 December 2022 with reference to both hedging instruments and hedged items.
Both the hedged items and the hedging instruments will change their indexation from IBORs to RFRs
(Risk Free Rate) as a result of contractual amendments that are expected to come into effect in the
following years.
In particular, there is still uncertainty on how the replacement may occur, with respect to both relevant
hedged items and hedging instruments indexed to USD Libor. In order to deal with the uncertainties
related to such hedging relationships, the Company, therefore, continues to apply the temporary
reliefs provided by the amendments to IFRS 9 issued in September 2019 (Phase 1). Hence, it has
considered that the interest rate benchmark on which the cash flows of the hedged item or of the
hedging instrument were based is not altered because of the IBOR reform. The relief has been applied
for the purposes of the following hedge accounting requirements:
- determining whether a forecast transaction is highly probable;
- determining whether the hedged future cash flows are still expected to occur for a discontinued
cash flow hedging; and
- assessing the economic relationship between the hedged item and the hedging instrument.
The hedging relationships impacted may experience ineffectiveness attributable to the different
replacement of the existing IBOR benchmark rates to their alternative RFRs. However, the Company
will work in order to implement the same replacements at the same time.
The following table provides a breakdown of the notional amounts of the hedging instruments for
which the Phase 1 amendments or Phase 2 amendments to IFRS 9 have been applied as of 31
December 2021, disaggregated by IBOR rate:
Milions of euro
Notional amount
at Dec. 31, 2022
Hedging instruments (1) Fase 1
GBP LIBOR/ SONIA
-
USD LIBOR/SOFR
162
EURIBOR
-
Total
162
69
Unreformed contracts including those with an appropriate fallback clause
The Company monitors the progress of transition from IBORs to new benchmark rates by reviewing
the total amounts of contracts that have yet to transition to an alternative benchmark rate and the
amounts of such contracts that include an appropriate fallback clause. The Company considers that a
contract is not yet transitioned to an alternative benchmark rate when interest under the contract is
indexed to a benchmark rate that is still subject to IBOR reform, hence when uncertainties related to
how and when the replacement with a new rate still exists.
Hedge relationships by type of risk hedged
Interest rate risk
The following table shows the notional amount and the average price of interest rate risk hedging
instruments outstanding as at 31 December 2022 broken down by maturity:
Millions of euro
Maturity
2023
2024
2025
2026
2027
Beyond
Total
Interest rate swap:
Total Notional value
150 100 50
-
1,971 162 2,433
Notional value in Euro 150 100 50
-
1,053
-
1,353
Average interest rate in Euro
4.5633 6.0790 4.9150
-
1.7726
-
Notional value in USD
- - - -
918 162 1,080
Average interest rate in USD
- - - -
3.3012
4.170
The following table reports the notional amount and fair value of the hedging instruments on interest
rate risk of transactions outstanding as at 31 December 2022 and 31 December 2021, broken down
by type of hedged item:
Millions of euro Fair value
Notional
amount
Fair value
Notional
amount
Hedged instruments Hedged item
at Dec. 31,
2022
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2021
Interest rate swaps
Floating-rate
borrowings
28 800 (60) 900
Interest rate swaps
Floating-rate
lendings
(54) 1,633 30 763
Total (26) 2,433 (30) 1,663
The following table shows the notional amount and the fair value of hedging derivatives on interest
rate risk as at 31 December 2022 and 31 December 2021, broken down by type of hedge:
Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities
Derivatives
at Dec.
31,
2022
at Dec.
31,
2021
at
Dec.
31,
2022
at Dec.
31,
2021
at
Dec.
31,
2022
at
Dec.
31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
Interest rate swaps 1,109 872 46 32 1,324 791 (72) (62)
Total 1,109 872 46 32 1,324 791 (72) (62)
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 Distribution of expected cash flows
at Dec. 31,
2023
2024
2025
2026
2027
Beyond
Cash flow hedge derivatives on
interest rates:
- Positive fair value 29 12 11 6 7 3 -
- Negative fair value (55) (12) (18) (12) (11) (5) (2)
Total (26) - (7) (6) (4) (2) (2)
70
Exchange rate risk
The following table shows the notional amount and the average price of foreign exchange risk hedging
instruments outstanding as at 31 December 2022 broken down by maturity.
Millions of euro
Maturity
2023
2024
2025
2026
2027
Beyond
Total
Cross currency interest rate swap:
Total Notional value
- 3,248 1,780 1,171 2,179 13,952 22,330
Notional value CCIRS Euro-USD - 2,290 1,780 1,171 1,615 11,529 18,385
Average exchange rate Euro/USD
-
1.1345 1.0556 1.1790 1.0990
1.1521
Notional value CCIRS Euro-GBP - 958 - - 564 2,423 3,945
Average exchange rate Euro/GBP
-
0.8765
- -
0.9040 0.8636
-
The following table shows the notional amount and the fair value of the hedging instruments on foreign
exchange risk of transactions outstanding as at 31 December 2022 and 31 December 2021, broken
down by type of hedged item:
Millions of euro Fair value
Notional
amount
Fair value
Notional
amount
Hedged instruments Hedged item
at Dec. 31,
2022
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2021
Cross currency interest rate swap (CCIRS)
Fixed-rate
borrowings in
foreign
currencies
594 21,431 327 14,083
Cross currency interest rate swap (CCIRS)
Fixed-rate
lendings in
foreign
currencies
(186) 1,709 (75) 1,588
Total 408 23,140 252 15,671
The following table shows the notional amount and the fair value of hedging derivatives on foreign
exchange risk of transactions outstanding as at 31 December 2022 and 31 December 2021, broken
down by type of hedge:
Millions of euro Notional amount Fair value assets Notional amount Fair value liabilities
Derivatives
at Dec.
31,
2022
at Dec.
31,
2021
at
Dec.
31,
2022
at Dec.
31,
2021
at
Dec.
31,
2022
at
Dec.
31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
Cross currency interest rate swap (CCIRS) 13,738 11,652 1,550 631 8,838 4,019 (1,055) (379)
Total 13,738 11,652 1,550 631 8,838 4,019 (1,055) (379)
Fair value hedge derivatives
The following table shows separately gains or losses of fair value hedge derivatives on foreign
exchange risk and those on the hedged items attributable to the hedged risk for
Millions of CU 2022 2021
Net Gains /(Losses) Net Gains /(Losses)
Hedging instruments (96) 10
Hedged items 66 34
Ineffectiveness - -
71
Cash flow hedge derivatives
The following table reports expected cash flows related to derivatives for the coming years:
Millions of euro
Fair value Distribution of expected cash flows
at Dec. 31,
2023 2024 2025 2026 2027 Beyond
Cross currency interest rate swap
- Positive Fair value derivatives 1,550 227 290 196 297 229 2,133
- Negative fair value derivatives (1,056) (39) (100) (88) 19 19 41
Total 494 187 190 107 316 248 2,173
Impact of hedging derivatives on balance sheet, statement of profit or loss and other
comprehensive income and equity
The impact of the hedging instruments on the balance sheet is, as follows:
Millions of Euro
Notional
amount
Carrying
amount
Line item in
the
statement
of financial
position
Fair value
used for
measuring
ineffectiveness
for the period
at Dec. 31, 2022
Interest rate swap (IRS)
1,515 (27) Derivatives (27)
Cross currency interest rate swap (CCIRS)
22,576 495 Derivatives 551
at Dec. 31, 2021
Interest rate swap (IRS)
1,663 (27) Derivatives (27)
Cross currency interest rate swap (CCIRS)
15,671 213 Derivatives 214
The impact of the hedged item on the balance sheet is, as follows:
Millions of
2022 2021
Fair value
used for
measuring
ineffectivenes
s
Offsetting
effect on
P&L
Cash
flow
hedge
reserv
e
Cost of
hedging
reserve
Fair value
used for
measuring
ineffectivenes
s
Cash
flow
hedge
reserv
e
Cost of
hedging
reserve
Floating-rate
borrowings
(28)
-
28
-
54 (54)
-
Floating-rate
lendings
55
-
(55)
-
(27) 27
-
Floating-rate
lendings in
foreign
currencies
182
-
(182) (4) 67 (67)
-
Fixed-rate
borrowings in
foreign
currencies
(733) 118 614 (52) (281) 281 2
Total
(524) 118 405 (56) (187) 187 2
72
The effect of the cash flow hedge in the statement of profit or loss and other comprehensive income
is:
Millions of Euro
Total
hedging
gain/(loss)
recognised
in OCI
Ineffectiveness
recognised in
profit or loss
Line item
in the
statement
of profit
or loss
Cost of
hedging
recognised
in OCI
Amount
reclassified
from OCI to
profit or
loss
Line item
in the
statement
of profit
or loss
at Dec. 31,
2022
Floating-rate borrowings 82 - Derivatives - -
Financial
expense
from
derivative
Floating-rate lendings (82) - Derivatives - -
Financial
expense
from
derivative
Floating-rate lendings in
foreign currencies
(115) - Derivatives - (111)
Financial
expense
from
derivative
Fixed-rate borrowings in
foreign currencies
333 - Derivatives (58) 121
Financial
expense
from
derivative
at Dec. 31,
2021
Floating-rate borrowings 40 - Derivatives - -
Financial
expense
from
derivative
Floating-rate lendings (27) - Derivatives - -
Financial
expense
from
derivative
Floating-rate lendings in
foreign currencies
(69) - Derivatives - -
Financial
expense
from
derivative
Fixed-rate borrowings in
foreign currencies
1,453 - Derivatives 185 (1,102)
Financial
expense
from
derivative
The following table reports the impact of cash flow hedge derivatives on equity during the period,
gross of the fiscal impact:
2022 2021
Millions of
Euro
Cost of
hedging
Gross
changes
in fair
value
recogniz
ed in
equity (
b)
Gross
changes in
fair value
transferred
to income m
Recycling
(1)
(c)
Gross
changes in
fair value
transferred
to income -
Ineffectiven
ess
Cost of
hedging
Gross
changes
in fair
value
recogniz
ed in
equity (
b)
Gross
changes in
fair value
transferred
to income m
Recycling
(1)
(c)
Gross
changes in
fair value
transferred
to income -
Ineffectiven
ess
Interest
rate
hedging
-
1
-
13
- -
Exchange
rate
hedging
(58) 221 185 1,384
- -
Hedging
derivativ
es
(58) 222 0 0 185 1,397
- -
The amount of effective changes in the fair value of cash flow hedge derivatives, not yet settled,
corresponding to hedges on the exchange rate on hedged items released in order to offset the
adjustment at the spot exchange rate of the hedged assets/liabilities denominated in a foreign
currency at the end of the reporting period totalled to Euro 1,335 million.
73
Derivatives at fair value through profit or loss
The following tables show the notional amount and the fair value of derivatives assets and liabilities
at FVTPL, as at 31 December 2022 and 31 December 2021, classified on the basis of each type of risk,
broken down into current and non-current.
Millions of euro Non Current Current
Notional amount Fair value Notional amount Fair value
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2022
at Dec.
31,
2021
at Dec.
31,
2022
at Dec. 31,
2021
DERIVATIVE ASSETS
At fair value through
profit or loss
on interest rate risk
459 433 17 38 50 1
on foreign exchange risk - - - -
1,987 968 34 2
Total
459 433 17 38 1,987 1,018 34 3
DERIVATIVE
LIABILITIES
At fair value through
profit or loss
on interest rate risk
459 433 (17) (38)
50 - 2
on foreign exchange risk - - - -
464 1,526 (2) (23)
Total
459 433 (17) (38) 464 1,576 (2) (25)
The following table reports expected cash flows related to derivatives for the coming years:
Millions of euro
Fair value Distribution of expected cash flows
at Dec. 31, 2022
2023
2024
2025
2026
2027
Beyond
Fair value through profit or loss
derivatives on interest rates:
- Positive fair value 17 5 8 3 2 1 -
- Negative fair value (17) (5) (8) (3) (2) (1) -
Total
-
- - - - - -
Millions of euro
Fair value Distribution of expected cash flows
at Dec. 31, 2022
2023
2024
2025
2026
2027
Beyond
Fair value through profit or loss
derivatives on exchange rates:
- Positive fair value 34 34
- - - - -
- Negative fair value (2) (2)
- - - - -
Total 32 32
- - - - -
74
18 Related parties
Transactions between Enel Finance International N.V. and other companies of Enel Group involve
Financing and Treasury management.
The main activity of Enel Finance International N.V. is to operate as financing company of the Enel
Group, raising funds through bonds issuance, loans and other facilities and on turn lending the funds
so raised to the companies belonging to Enel Group.
Enel Finance International N.V. is also part of the centralizing financial flow process and acts as the
primary reference for the management of financial needs or liquidity generated by the entities that
operate outside of Italy and are part of Enel Group.
Enel Finance International N.V. has no business relations with Key management personnel during the
financial year.
The following table summarizes the financial relationships between the Company and its related
parties at 31 December 2022 and 31 December2021 respectively:
Millions of euro Receivables Payables Income Cost
at Dec. 31,
2022
2022
Shareholder
Enel S.p.A 21,087 2 308 77
(Subtotal) 21,087 2 308 77
Other affiliated companies
Villanueva Solar, S.A. De C.V. 54 - 7 -
Ampla Energia E Servicos S.A. 605 - 53 4
Parque Solar Villanueva Tres, S.A. De C.V. 36 - 5 -
Enel Green Power Vietnam LLC (Cong ty TNHH
Enel Green Power Viet Nam)
1 - - -
Parque Solar Don Jose, S.A. De C.V. 21 - 3 -
Energia Limpia De Amistad, S.A De C.V. 99 - 23 1
Enel Green Power Peru Sa (USD) - - 1 -
Slovak Power Holding B.V. 765 - 42 1
Enel Green Power Romania Srl - 82 1 7
Parque Salitrillos, S.A. de C.V. 71 2 9 -
Ngonye Power Company Limited 4 - 1 -
Enel Green Power Australia Pty Ltd - - 2 2
Enel X S.r.l. 101 - 2 -
S4MA DEVELOPMENTS SPOLKA Z
OGRANICZONA ODPOWIEDZIALNOSCIA
2 - - -
Companhia Energetica Do Ceara - Coelce 141 - 24 -
Enel Rinnovabile, S.A. de C.V. - - 4 -
Enel Finance America LLC - - 254 -
Dolores Wind Sa De Cv 79 - 10 2
Parque Amistad Ii Sa De Cv 38 - 6 1
Parque Amistad Iii Sa De Cv 44 - 8 2
Parque Amistad Iv Sa De Cv 8 - 4 1
Enel Green Power Hellas Sa - - 29 (1)
Endesa SA 5,118 - 124 1
Enel Brasil S.A 482 - 34 2
Enel Energie Muntenia SA 71 - 2 2
Enel Energie SA 111 - 2 2
Enel Iberia SRL 3,366 190 26 (1)
Enel Green Power Spa GLO 1,682 65 38 44
Enel Investment Holding BV - 3 - 1
75
Enel Green Power Panama SA 31 - 4 -
Enel Italia S.p.A. 20,533 - 220 5
Egp Magdalena Solar SA de CV 82 - 11 2
Enel Global Trading Spa IT 1,697 - 11 2
Enel Americas S.A. 124 1 52 20
Enel Green Power Mexico S de RL de CV 320 - 55 16
Enel X Australia Pty Ltd 7 - - 1
Enel X Korea Limited 5 - - -
PH Chucas S.A. 52 - 8 -
Enel X Way Romania SRL 1 - - -
Enel X Singapore PTE. LTD 1 - - -
Cohuna Solar Farm Pty Ltd - - 1 -
Celg Distribuicao S.A. Celg D. - - 55 1
Enel X Sweden AB - - - -
Enel Insurance NV - 6 - -
Viva Labs AS 3 - - -
Enel Trade Energy SRL 13 - 1 -
Dominica Energia Limpia S.Ade C.V. 50 - 12 -
Enel Green Power Rsa (PTY) Ltd - - 2 1
Kongul Enerji Sanayi Ve Ticaret Anonim Sirketi - 1 - -
Enel X Germany GmbH - 12 - -
Enel Green Power South Africa Pty 43 - 2 1
Energia Limpia De Palo Alto, S. A. De C.V. 128 7 17 -
Vientos de Altiplano, SA. de C.V. 30 - 7 -
Enel Chile S.A. 1,728 - 298 78
(Subtotal) 37,747 369 1,470 198
Total 58,834 371 1,778 275
Millions of euro
Receivables Payables Income Cost
at Dec. 31,
2021
2021
Shareholder
Enel S.p.A 24236 1 204 67
(Subtotal) 24,236 1 204 67
Other affiliated companies
Villanueva Solar, S.A. De C.V. 47 - 7 -
Ampla Energia E Servicos S.A. 562 - 14 1
Parque Solar Villanueva Tres, S.A. De C.V. 31 - 5 -
Parque Solar Don Jose, S.A. De C.V. 19 - 3 -
Energia Limpia De Amistad, S.A De C.V. 84 - 15 -
Enel Green Power Peru Sa (USD) 5 - - -
Slovak Power Holding B.V. 655 - 31 -
Enel Green Power Romania Srl - 203 3 1
Parque Salitrillos, S.A. de C.V. 70 - 9 -
Enel Energia, S.A. de C.V. - - - -
Ngonye Power Company Limited 3- - 1 -
Enel Green Power Argentina Sa - - - -
Enel Green Power Australia Pty Ltd - - 1 1
Enel X S.r.l. 101 - 1 -
Companhia Energetica Do Ceara - Coelce 81 - 11 -
Enel Rinnovabile, S.A. de C.V. 17 - 2 -
Kino Contractor S.A. de C.V. - - - -
Dolores Wind Sa De Cv 104 - 11 -
Parque Amistad Ii Sa De Cv 51 - 6 -
Parque Amistad Iii Sa De Cv 57 - 6 -
Parque Amistad Iv Sa De Cv 32 - 4 1
Enel Green Power Hellas Sa 316 - 23 (1)
Endesa SA 3,014 - 93 (1)
Enel Brasil S.A - - 1 -
Enel Green Power Chile Ltda - - - -
Enel Green Power Costa Rica S.A. - - 2 3
Parque Eolico Pampa Sa - - - -
Enel Iberia SRL 3,712 171 25 -
Enel Fortuna SA - 9 - 1
Enel Green Power Bulgaria EAD - - - -
76
Enel Green Power Spa GLO 1,809 - 39 38
Enel Investment Holding BV - 2 - (1)
Enel Green Power Panama SA 34 - 5 -
Enel Servicii Comune SA - - - -
Enel Italia S.p.A. 8,767 - 136 (1)
Egp Magdalena Solar SA de CV 94 - 11 -
Enel Global Trading Spa IT 799 - 11 1
Enel Trade Romania Srl - - - -
Enel Green Power Global Investment Bv - - - -
Eletropaulo Metropolitana Eletricidade De Sao
Paulo S.A.
- - - -
Enel X Uk Limited - 1 - -
EnerNOC Ireland Limited - - - -
Enel X Polska Sp. Zo.O. - - - -
Pincher Creek Lp - - - -
Riverview Lp - - - -
Enel Americas S.A. 1 2 9 1
Generadora Montecristo, S.A. - 40 - 5
Hidromac Energy BV - - - -
Enel Green Power Mexico S de RL de CV 314 - 41 2
Enel Finance America, Llc - - - -
Enel X Korea Limited 5 - - -
PH Chucas S.A. 62 - 12 -
Enel X Japan K.K. 1 - - -
Enel X Taiwan Co., Ltd - - - -
Juicenet Gmbh 2 - - -
Juicenet Ltd - - - -
Enel X Mobility Romania SRL - - - -
Enel X Romania SRL - - - -
Cohuna Solar Farm Pty Ltd 27 - 2 1
Proveedora de Electricidad de Occidente Srl de
cv
- 6 - -
Enel X Norway AS 1 - - -
Enel Green Power Colombia Sas Esp - - - -
Enel Global Services S.r.l. - - - -
Celg Distribuicao S.A. Celg D. 366 - 21 1
Enel X Sweden AB - - - -
Enel Insurance NV 5 - - -
Viva Labs AS 3 - - -
EGP Americas SpA - - - 14
Enel Trade Energy SRL 4 2 - -
Dominica Energia Limpia SA de C.V. 44 - 8 -
Energias Renovables La Mata SAPI de CV - - 5 (1)
Enel Green Power Rsa (PTY) Ltd 38 - 3 1
Kongul Enerji Sanayi Ve Ticaret Anonim Sirketi - 2 2 1
Enel Green Power Chile SA - - 24 -
Energia Limpia De Palo Alto, SA De C.V. 139 1 18 -
Vientos de Altiplano, SA de C.V. 27 - 5 -
Generadora Estrella Solar, S.A. - - - -
Kirklareli Eoliko Enerji Elektrik Uretim Ve
Ticaret Anonim Sirketi
- - - -
Enel Chile S.A. 2,199 - 161 (1)
(Subtotal) 23,702 439 787 67
Total 47,938 440 991 134
For further details of the each relation with related parties please refer to notes 6, 9, 14.
The impact of transactions with related parties on the balance sheet and income statement is reported
in the following tables.
77
Impact on balance sheet
Millions of Euro
Total
Related
parties
%of total Total
Related
parties
%of
total
at Dec. 31, 2022 at Dec. 31, 2021
Assets
Long-term loans and financial receivables
including current portion
44,333 44,333 100% 40,745 40,745 100%
Derivatives- non-current 1,596 25 2% 671 80 12%
Short-term loans and financial receivables 14,190 14,190 100% 6,947 6,947 100%
Derivatives - current 34
-
0% 3 - 0%
Other current financial assets 932 286 31% 662 161 24%
Other current assets
1 -
0% - - 0%
Liabilities
Derivatives- non-current 1,176 74 6% 473 2 0%
Income tax payable 8 8 100% 1 1 100%
Short-term loans and borrowings 8,461 284 3% 5,842 434 7%
Derivatives - current 41
-
0% 25 - 0%
Other current financial liabilities 399 4 1% 323 1 0%
Other current liabilities 1 1 100% 2 1 50%
Impact on income statement
Millions of Euro
Total
Related
parties
%of total Total
Related
parties
%of
total
at Dec. 31, 2022 at Dec. 31, 2021
Interest income 1,074 1,070 100% 691 696 101%
Interest income from derivatives 339 19 6% 321 25 8%
Other income 254 254 0% - - 0%
Interest expense 1,313 85 6% 1,282 65 5%
Interest expense from derivatives 242 59 24% 192 26 14%
Other expenses
- -
- 634 - 0%
Other operating expenses 6 1 17% 5 2 40%
Financial income on derivatives 1,185
-
0% 1,700 1 0%
Other financial income 1,093 435 40% 299 271 91%
Financial expense on derivatives 1,348
-
0% 519 1 0%
Other financial expense 972 130 13% 1,294 45 3%
19 Contractual commitments and guarantees
The notes issued by the Company under the GMTN programme are guaranteed by Enel
S.p.A. Commercial papers issued in the context of the Euro Commercial Paper Programme
launched in 2005 by the Company are also guaranteed by Enel S.p.A. More information is obtainable
in the public available programmes mentioned above.
78
Furthermore, Enel S.p.A has confirmed their commitment to provide the Company with support until
next year's approval of the financial statements, should the Company remain under control of
EnelS.p.A. The Company has not given guarantees to third parties up to the reporting date.
20 Offsetting financial assets and financial liabilities
At December 31, 2022, the Company did not hold offset positions in assets and liabilities, as it is not
the Enel policy to settle financial assets and liabilities on a net basis.
21 Compensation of Directors
The emoluments of the Company Directors as intended in Section 2:383 (1) of the Dutch Civil Code,
which were charged in 2022, amounted to Euro 91 thousand (Euro 111 thousand in 2021) represented
short-term employee benefits and summarized in the following table:
Thousands of euro
at Dec. 31,
2022
at Dec. 31,
2021
A.J.M. Nieuwenhuizen 29 29
H. Marseille 29 29
E. Di Giacomo 29 29
L.B. Van der Heijden 4 -
J. Homan - 24
A. Canta - -
Total 91 111
22 Fees of the auditors
The independent auditor of the Company is KPMG Accountants N.V. having been appointed by the
the Company held on 20 May 2020.
With reference to Section 2:382 a (1) and (2) of the Netherlands Civil Code, below a summary is
provided of services performed by KPMG Accountants N.V. and fees for each year accrued as per 31
December in the respective years.
Thousands of euro
at Dec. 31,
2022
at Dec. 31,
2021
Audit
96 124
Audit related services in connection with GMTN prospectus
28 29
Tax
- -
Other
- -
Total
124 153
23 Subsequent events
On 14 February 2023 the Company launched a dual- -
institutional investors in the Eurobond market for a total of 1.5 billion euros. The new issue envisages
for the first time the use by the Enel Group of multiple Key P
tranche, further strengthening the commitments towards an accelerated energy transition. For the
first time in a public bond issuance, a tranche of the bond couples a KPI linked to the EU Taxonomy
79
with a KPI linked to the
of the bond is linked to two KPIs related to the Enel
and indirect greenhouse gas emission reduction, as detailed below.
Specifically, the issue is structured in the following tranches:
- Euro 750 million at a fixed rate of 4.000%, with settlement date set on 20 February 2023,
maturing 20 February 2031:
the issue price has been set at 98.877% and the effective yield at maturity is equal to 4.168%;
the interest rate will remain unchanged to maturity, subject to the achievement of the
o
achievement of a SPT equal to or higher than 80% on 31 December 2025 for the 2023-
2025 period;
o
on
31 December 2025;
if one or both of the above mentioned SPTs are not achieved, a step-up mechanism will be
applied, increasing the rate by 25 bps, as of the first interest period subsequent to the
publication of the relevant assurance report issued by an external verifier;
- Euro 750 million at a fixed rate of 4.500%, with settlement date set on 20 February 2023,
maturing 20 February 2043:
the issue price has been set at 97.669% and the effective yield at maturity is equal to 4.682%;
the interest rate will remain unchanged to maturity, subject to the achievement of the
following SPTs. In particular:
o GHG emissions Intensity relating to Integrated
31 December 2040;
o
ZERO on 31 December 2040;
if one or both of the above mentioned SPTs are not achieved, a step-up mechanism will be
applied, increasing the rate by 25 bps, as of the first interest period subsequent to the
publication of the relevant assurance report issued by an external verifier.
The issue, which has an average duration of approximately 14 years, has an average coupon of
4.25%.
Amsterdam, 24 April 2023
E. Di Giacomo
A. Canta
L.B. Van der Heijden
H. Marseille
A.J.M. Nieuwenhuizen
80
Other information
Provisions in the articles of association governing the appropriation of profit
Under article
Meeting of Shareholders, which can allocate said profit either wholly or partly to the formation of or
in addition to one or more general or special reserve funds.
The Company can only make distributions to shareholders from profits qualifying for payment insofar
the paid-up and called-up part of the capital plus the legally
required reserves.
81
Report of the independent audit
firm on the 2022 financial statements of
Enel Financial International BV
set forth on the following page.
2438936/23W00187649AVN
KPMG Accountants N.V., a Dutch limited liability company registered with the trade register in the Netherlands under number 33263683, is a member firm of the global organization of
independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
Independent auditor's report
To: the General Meeting of Shareholders of ENEL Finance International N.V. and the Audit
Committee of ENEL S.p.A.
Report on the audit of the financial statements 2022 included in the annual report
Our opinion
In our opinion the accompanying financial statements give a true and fair view of the financial
position of ENEL Finance International N.V. as at 31 December 2022 and of its result and its
cash flows for the year then ended, in accordance with International Financial Reporting
Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch
Civil Code.
What we have audited
We have audited the financial statements 2022 of ENEL Finance International N.V. based in
Amsterdam.
The financial statements comprise:
1 the statement of financial position as at 31 December 2022;
2 the statement of comprehensive income for the year ended 31 December 2022;
3 the statement of changes in equity for the year ended 31 December 2022;
4 the statement of cash flows for the year ended 31 December 2022; and
5 the notes comprising a summary of the significant accounting policies and other explanatory
information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch Standards on
Auditing. Our responsibilities under those standards are further described in the ‘Our
responsibilities for the audit of the financial statements’ section of our report.
We are independent of ENEL Finance International N.V. in accordance with the ‘Verordening
inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to independence) and other relevant
independence regulations in the Netherlands. Furthermore, we have complied with the
‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics).
We designed our audit procedures in the context of our audit of the financial statements as a
whole and in forming our opinion thereon. The information in respect of going concern, fraud and
non-compliance with laws and regulations, climate and the key audit matters was addressed in
this context, and we do not provide a separate opinion or conclusion on these matters.
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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Information in support of our opinion
Summary
Materiality
Materiality of EUR 410 million
0,75% of Total Assets
Fraud/Noclar and Going concern
Fraud & Non-compliance with laws and regulations (Noclar) related risks: presumed risk of
management override of controls identified
Going concern related risk: no going concern risk identified
Climate related risks: We have considered the impact of climate-related risks on the financial statements and
described our approach and observations in the section ‘Audit response to climate-related risks’.
Key audit matters
Recoverability of the long-term and short-term loans and financial receivables due from
ENEL S.p.A. (parent company) and the ENEL S.p.A. group companies
Opinion
Unqualified
Materiality
Based on our professional judgement we determined the materiality for the financial statements
as a whole at EUR 410 million (2021: EUR 287 million). The materiality is determined with
reference to 0,75% of total assets (0,75% in 2021). The increase in a level of materiality between
the years is mainly attributable to the growth of the financing operations in 2022. We consider
total assets, which mainly include accounts related to financing activities, as the most
appropriate benchmark given the activities of ENEL Finance International N.V. as a group
financing company. We have also taken into account misstatements and/or possible
misstatements that in our opinion are material for the users of the financial statements for
qualitative reasons.
We agreed with the Board of Directors of ENEL Finance International N.V. and the Audit
Committee of the ultimate parent company, ENEL S.p.A., that misstatements identified during
our audit in excess of EUR 20 million would be reported to them, as well as smaller
misstatements that in our view must be reported on qualitative grounds.
Audit response to the risk of fraud and non-compliance with laws and regulations
In the paragraphs “Main risk and uncertainties” and “The Company’s control system” of the
Directors’ report, the directors describe the procedures in respect of the risk of fraud and non-
compliance with laws and regulations.
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As part of our audit, we gained insight into the Company and its business environment, and
assessed the design and implementation of the Company’s risk management in relation to fraud
and non-compliance. Our procedures included, among other things, assessing the Company’s
code of conduct, whistleblowing procedures, and its procedures to investigate indications of
possible fraud and non-compliance. Furthermore, we performed relevant inquiries with
management and those charged with governance.
In addition, we performed procedures to obtain an understanding of the legal and regulatory
frameworks that are applicable to the Company and did not identify areas that likely to have a
material effect on the financial statements.
We evaluated the fraud and non-compliance risk factors to consider whether those factors by
themselves would cause the existence of a reasonable possibility of a risk of material
misstatement in the financial statements.
Further, we assessed the presumed fraud risk on revenue recognition as irrelevant, since the
Company’s sole significant source of income is finance income. Such finance income is derived
from long- and short-term loan agreements with the parent company and with the group
companies including fixed terms and conditions in respect of interest. As a consequence, we did
not identify an incentive nor pressure for the Board of Directors’ members to achieve certain
results or specific finance income targets and there appears to be limited perceived opportunity
to commit a material fraud in this area.
Based on the above and the relevant auditing standards, we identified the following presumed
fraud risk in respect of management override of controls that is relevant to our audit and
responded as follows:
Management override of controls (a presumed risk)
Risk:
- Management is in a unique position to manipulate accounting records and prepare fraudulent
financial statements by overriding controls that otherwise appear to be operating effectively
such as: accounting records around the estimate related to the recoverability of loans
(principle and interest) receivable from related parties.
Responses:
- We evaluated the design and the implementation of internal controls that mitigate fraud and
non-compliance risks, such as processes related to journal entries and estimates.
- We performed a data analysis of journal entries to determine any potential high risk criteria
and performed procedures for any identified risk.
- We involved a specialist to challenge the assumptions underlying the fair value of the
derivatives and the valuation assessment of loans and interest receivables from the parent
company and other ENEL S.p.A. group companies. The latter is considered a key audit
matter and we refer to the procedures performed to the key audit matter paragraph below.
- We incorporated elements of unpredictability in our audit, including the use of different
sampling methods for a selection of commercial papers, interest payments vouching and
selection of the cash collateral confirmations.
Our evaluation of procedures performed related to fraud in respect of management override of
controls did not result in any other key audit matter.
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We communicated our risk assessment, audit responses and results to the Company’s Board of
Directors’ and the Audit Committee of ENEL S.p.A.
Our audit procedures did not reveal indications and/or reasonable suspicion of fraud and non-
compliance that are considered material for our audit.
Audit response to going concern
As explained on page 27 of the financial statements, the Board of Directors has performed its
going concern assessment, in which amongst others, the Company’s high dependency of the
parent company’s and group companies’ ability to fulfill its obligations towards the Company was
considered, and has not identified any going concern risks.
Our main procedures to assess the Board of Directors’ assessment were:
- We considered whether the Board of Directors’ assessment of the going concern risks
includes all relevant information of which we are aware as a result of our audit.
- We considered whether (new) strategic decisions and targets, developments in the electricity
industry, and evolution of recent geopolitical events indicate a significant going concern risk.
- We inspected the (new) financing agreements in terms of conditions that could lead to
significant going concern risks, including the term of the agreements and we did not identify
specific (or new) financial covenants.
- We analysed the Company’s financial position, result of the year and cashflow as at year-end
and compared it to the previous financial year in terms of indicators that could identify
significant going concern risks.
- Considering ENEL S.p.A. is a guarantor for the bonds issued by the Company, through
inspection of audited consolidated financial statement as of 31 December 2022, we verified
the going concern basis of the Group as a whole.
- We considered whether the outcome of our audit procedures to determine the recoverability
of the intercompany loans, as described in the key audit matter paragraph below, could
indicate a significant going concern risk.
The outcome of our risk assessment procedures did not give reason to perform additional audit
procedures on the Board of Directors’ going concern assessment.
Audit response to climate-related risks
The Board of directors prepared the financial statements, including considering whether the
implications from climate-related risks have been appropriately accounted for and disclosed. As
disclosed in the paragraph “Risk and strategic opportunities associated with climate change” in
the Director’s report, the Company has already taken actions to mitigate potential risks and
exploit the opportunities offered by the energy transition.
As part of our audit we performed a risk assessment of the impact of climate-related risk in
respect of the Company’s operations. In doing this we inquired management, obtained an
understanding on management's processes regarding intercompany receivables and external
borrowings and have read the related disclosures in the financial statements. We have evaluated
the existence of climate related fraud risk factors, and none have been identified to be assessed
as an event or condition that would indicate a risk of material misstatement in the financial
statements. Based on the procedures performed, we found that climate related risks have no
5
material impact on the current financial statements under the requirements of EU-IFRS and no
material impact on our key audit matters.
Our key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements. We have communicated the key audit matter
to the Board of Directors of ENEL Finance International N.V. and the Audit Committee of
ENEL S.p.A. The key audit matter is not a comprehensive reflection of all matters discussed.
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Recoverability of the long-term and short-term loans and financial receivables due from ENEL
S.p.A. (parent Company) and the ENEL S.p.A. group companies
Description
As included in note 6 and 9 to the financial statements, the Company’s exposure, in terms of
credit risk, to group companies may have a significant effect on the Company’s financial
statements. The outstanding balances at 31 December 2022 of EUR 60,153 million (EUR
48,366 million in 2021) (long-term and short-term loans and financial receivables, net of the
impairment loss allowance of EUR 60 million (EUR 53 million as at 31 December 2021)
represent approx. 98% (2021: approx. 97%) oof the balance sheet total.
The Company’s most significant assets are the long-term and short-term loans and financial
receivables due from ENEL S.p.A. and/or the ENEL S.p.A. group companies. In the event that
ENEL S.p.A. and/or group companies can no longer fulfill their financial obligations towards
the Company this would have a significant impact on the Company. The Company’s ability to
meet its financial obligations depends on the cash flows generated from the repayment of
(accrued) interest and principal by ENEL S.p.A. and/or ENEL S.p.A. group companies. Current
and future developments of the energy market is an example of factors that can impact the
Company’s ability to meet its financial obligations.
The Company records the long-term and short-term loans and financial receivables, net of the
impairment loss allowance, which is done by estimating intercompany Probability of Default
(PD) and Loss Given Default (LGD) on the basis of the creditworthiness of ENEL S.p.A. and/or
ENEL S.p.A. group companies and the applicable market data.
As the long-term and short-term loans and financial receivables from ENEL S.p.A. and/or
ENEL S.p.A. group companies are material to the Company’s balance sheet and given the
related estimation uncertainty on impairment losses, the risk of a financial loss of the Company
is significant when ENEL S.p.A. and/or ENEL S.p.A. group companies fail to meet their
contractual obligations towards the Company. We therefore consider the valuation on the long-
term and short-term loans and financial receivables provided to the ENEL S.p.A. and/or
ENEL S.p.A. group companies to be a key audit matter.
Our response
We evaluated the design and implementation of the controls regarding the valuation
assessment by the Board of Directors in respect to the long-term and short-term loans and
financial receivables.
We performed, amongst others, the following procedures with respect to management’s
assessment of the recoverability of the long-term and short-term loans and financial
receivables from the ENEL S.p.A. and/or ENEL S.p.A. group companies:
— We inquired with the Board of Directors of the Company about its assessment of the
valuation of the long-term and short-term loans and financial receivables, based upon its
knowledge of the developments in the financial position and cash flows of ENEL S.p.A.
and/or ENEL S.p.A. group companies considering among others the impact, if any, of the
current and future developments on the energy market, and about its evaluation with
respect to the recoverability of the long-term and short-term loans and financial receivables
from ENEL S.p.A. and/or ENEL S.p.A. group companies;
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— We inspected and analysed ENEL S.p.A.’s financial position by evaluating its audited
consolidated financial statements for the year 2022. Furthermore, we inquired the auditor
of ENEL S.p.A. with respect to the Group going concern evaluation;
— We inspected the terms and conditions of the loan agreements between ENEL S.p.A. and
certain ENEL S.p.A. group companies and the Company;
— We involved a specialist in evaluating the reasonableness of the Board of Directors’ key
judgements and estimates in relation to Probability of Default (PD) and Loss Given Default
(LGD) made in respect of IFRS 9, including selection of methods, models, assumptions
and data sources;
— We evaluated the long-term credit ratings and outlook of ENEL S.p.A., from Standard &
Poor’s, Fitch and Moody’s;
In addition, we evaluated the appropriateness of the accounting principles applied based on
IFRS 9’s requirements and the adequacy of the Company’s related disclosures as presented
in the notes to the financial statements.
Our observation
The results of our audit procedures relating to the valuation of the long-term and short-term
loans and financial receivables from ENEL S.p.A. and/or ENEL S.p.A. group companies were
satisfactory and we consider the disclosures relating to credit risk as included in the credit risk
paragraph on pages 42-44 and Notes 6 and 9 of the financial statements to be adequate.
Report on the other information included in the annual report
In addition to the financial statements and our auditor’s report thereon, the annual report
contains other information.
Based on the following procedures performed, we conclude that the other information:
is consistent with the financial statements and does not contain material misstatements; and
contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the Board
of Directors’ report and other information.
We have read the other information. Based on our knowledge and understanding obtained
through our audit of the financial statements or otherwise, we have considered whether the other
information contains material misstatements.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the
Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less
than the scope of those performed in our audit of the financial statements.
The Board of Directors is responsible for the preparation of the other information, including the
information as required by Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the General Meeting of Shareholders as auditor of ENEL Finance
International N.V. on 20 May 2020, as of the audit for the year 2020 and have operated as
statutory auditor ever since that financial year.
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No prohibited non-audit services
We have not provided prohibited non-audit services as referred to in Article 5(1) of the
EU Regulation on specific requirements regarding statutory audits of public-interest entities.
European Single Electronic Format (ESEF)
ENEL Finance International N.V. has prepared its annual report in ESEF. The requirements for
this are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory technical
standards on the specification of a single electronic reporting format (hereinafter: the RTS on
ESEF).
In our opinion the annual report prepared in XHTML format, including the financial statements of
ENEL Finance International N.V., has been prepared in all material respects in accordance with
the RTS on ESEF.
The Board of Directors of ENEL Finance International N.V. is responsible for preparing the
annual financial report, including the financial statements, in accordance with the RTS on ESEF.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual financial
report is in accordance with the RTS on ESEF. We performed our examination in accordance
with Dutch law, including Dutch Standard 3950N ’Assurance-opdrachten inzake het voldoen aan
de criteria voor het opstellen van een digitaal verantwoordingsdocument’ (assurance
engagements relating to compliance with criteria for digital reporting). Our examination included
amongst others:
Obtaining an understanding of the entity's financial reporting process, including the
preparation of the annual financial report in XHTML- format;
Identifying and assessing the risks that the annual report does not comply in all material
respects with the RTS on ESEF and designing and performing further assurance procedures
responsive to those risks to provide a basis for our opinion, including examining whether the
annual financial report in XHTML-format is in accordance with the RTS on ESEF.
Description of responsibilities regarding the financial statements
Responsibilities of the Board of Directors of ENEL Finance International N.V. and
the Audit Committee of ENEL S.p.A. for the financial statements
The Board of Directors is responsible for the preparation and fair presentation of the financial
statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code.
Furthermore, the Board of Directors is responsible for such internal control as management
determines is necessary to enable the preparation of the financial statements that are free from
material misstatement, whether due to fraud or error. In that respect the Board of Directors,
under supervision of the Audit Committee of ENEL S.p.A., is responsible for the prevention and
detection of fraud and non-compliance with laws and regulations, including determining
measures to resolve the consequences of it and to prevent recurrence.
As part of the preparation of the financial statements, the Board of Directors is responsible for
assessing the Company’s ability to continue as a going concern. Based on the financial reporting
frameworks mentioned, the Board of Directors should prepare the financial statements using the
going concern basis of accounting unless the Board of Directors either intends to liquidate the
Company or to cease operations, or has no realistic alternative but to do so.
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The Board of Directors should disclose events and circumstances that may cast significant doubt
on the company’s ability to continue as a going concern in the financial statements.
The Audit Committee of ENEL S.p.A. is responsible for overseeing the Company’s financial
reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain
sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we
may not detect all material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements. The materiality affects the nature, timing and
extent of our audit procedures and the evaluation of the effect of identified misstatements on our
opinion.
A further description of our responsibilities for the audit of the financial statements is located at
the website of de ‘Koninklijke Nederlandse Beroepsorganisatie van Accountants’ (NBA, Royal
Netherlands Institute of Chartered Accountants) at eng_oob_01.pdf (nba.nl). This description
forms part of our auditor’s report.
Amstelveen, 24 April 2023
KPMG Accountants N.V.
L.M.A. van Opzeeland RA
