Annual Report
of Enel Finance International N.V.
at December 31, 2023
2
Contents
Director’s report 3
Financial statements for the year ended 31 December 2023 17
Statement of profit or loss and other comprehensive income 18
Statement of financial position 19
Statement of changes in equity 20
Statement of cash flows 21
Notes to the financial statements 22
Other information 75
Report of the independent auditor 76
Director’s report
4
General information
The Management of the Company hereby presents its financial statements for the financial year ended
on 31 December 2023.
Enel Finance International N.V. (“the Company”) is a public company with limited liability, where
74.999% of the shares are held by Enel Holding Finance S.r.l (direct parent) and 25.001% 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 t he 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 (“Enel”), 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 2023
A dual-tranche 1,500 million-euro Sustainability-Linked Bond
On 13 February 2023 the Company launched a multi-tranche “Sustainability-Linked bond” for
institutional investors in the Eurobond market for a total of 1,500 million euros.
The issue is structured in the following two tranches:
- 750 million euros at a fixed rate of 4.000%, with issuance 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 by the Enel
Group of the following Sustainability Performance Targets (“SPTs”). In particular:
o for the KPI related to the “Proportion of CAPEX aligned to the EU Taxonomy (%)”, the
achievement of a SPT equal to or higher than 80% on 31 December 2025 for the 2023-2025
period;
o for the KPI related to the “Scope 1 GHG emissions intensity relating to power generation
(gCO2eq/kWh)”, the achievement of a SPT equal to or less than 130gCO2eq/kWh 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;
- 750 million euros at a fixed rate of 4.500%, with issuance 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 by the Enel
Group of the following SPTs. In particular:
o for the KPI related to the “Scope 1 and 3 GHG emissions Intensity relating to Integrated
Power (gCO2eq/kWh)”, the achievement of a SPT equal to ZERO on 31 December 2040;
o for the KPI related to the “Absolute Scope 3 GHG emissions relating to Gas Retail
(MtCO2eq)”, the achievement of a SPT equal to ZERO on 31 December 2040;
5
• 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%.
In March 2023 the Company renewed its Euro 8,000 million commercial paper program, linking it to
the KPI “Intensity of Scope 1 GHG emissions related to power generation (gCO2eq /kWh)” and the
KPI “Percentage of capital expenditure aligned with the EU taxonomy (%)”.
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 and associated companies in the notes 6 and 9 of the financial statements.
Overview of the Company’s performance and financial position
Income statement highlights
Millions of euro
2023
2022
Change
Net interest income/(expense)
511
112
399
Other operating expense
(5)
(6)
1
Net financial income/ (expense)
(16)
(42)
26
Income/(Loss) before taxes
490
64
426
Income Taxes
(140)
(20)
(120)
Net income
350
44
306
Net interest income totaled to Euro 511 million having an increase of Euro 399 million compared
with the prior year. The increase is mainly related to higher margin from lending operations as a result
of increased interest rates (Euro 922 million) partly offset by higher interest expenses on bonds and
other borrowings (Euro 261 million), a prior year income earned as a result of bond transfer to Enel
Finance America LLC (Euro 254 million), derivative transactions (Euro 7 million) and higher guarantee
fees (Euro 1 million).
Other operating expenses decreased to Euro 5 million in 2023, which was Euro 1 million lower than
in previous year.
Net financial expense totaled to Euro 16 million having a decrease by Euro 26 million mainly due to
an increase in results from foreign exchange transactions and derivatives.
Income taxes amounted to Euro 140 million in 2023. The increase of Euro 120 million reflected the
higher taxable profit recorded in 2023. The effective tax rate was 28.6% compared with the standard
Dutch tax rate 25.8%.
6
Analysis of the Company financial position
Millions of euro
at Dec. 31,
2023
at Dec. 31,
2022
Change
Loans and financial receivables:
- long-term loans and receivables
45,613
44,333
1,280
- short-term loans and receivables
8,018
14,190
(6,172)
Derivatives covering FX risk exposed from loans and receivables
(103)
(155)
52
Gross financial debt:
- Bonds
(41,206)
(41,090)
(116)
- Commercial papers
(2,136)
(7,228)
5,092
- Deposits from Group and associate companies
(179)
(284)
105
Derivatives covering FX risk exposed from debt
(457)
594
(1,051)
Cash collateral on derivatives
500
(485)
985
Cash and cash equivalents
3
177
(174)
Net non-current assets/ (liabilities)
(104)
(110)
6
Net current assets/ (liabilities)
(143)
36
(179)
Deferred tax assets/ (liabilities)
407
308
99
Shareholders' Equity
(10,213)
(10,286)
73
Long-term loans and financial receivables totaled to Euro 45,613 million increased by Euro 1,280
million. This was largely attributable to an increase in loans to Enel subsidiaries and associated
companies in Spain (Euro 1,525 million), Italy (Euro 556 million) and the Netherlands (Euro 15
million). Such increase was partly offset by a decrease in loans granted to Brazil (Euro 306 million),
Mexico (Euro 251 million), Chile (Euro 230 million), Costa Rica (Euro 14 million), Panama (Euro 6
million), Norway (Euro 3 million) and increase of expected credit loss allowance (Euro 7 million).
Short-term loans and financial receivables shirked by Euro 6,172 million totaling to Euro 8,018
million. The decrease was recorded mainly due to decrease in financing to Enel subsidiaries and
affiliated companies in Italy (Euro 5,540 million), in Spain (Euro 450 million), in Mexico (Euro 57
million), Brazil (Euro 234 million), in Romania (Euro 183 million) and in Australia (Euro 7 million). The
decrease was partly offset by increase in loans to Enel Group companies in Chile (Euro 194 million),
in Greece (Euro 68 million) and in South Africa (Euro 28 million), in Peru (Euro 3 million) and decrease
of expected credit loss allowance (Euro 5 million).
Derivatives covering FX risk exposed from loans and receivables increased by Euro 52 million
mainly as a result of the development in the fair value.
7
Gross financial debt amounted to Euro 43,521 million, of which Euro 31,398 million in respect of
financing connected with achievement of SDG.
Millions of Euro
at Dec. 31,
2023
at Dec. 31,
2022
Gross long-
term debt
including
current
portion
Gross short-
term debt
Gross debt
Gross long-
term debt
including
current
portion
Gross short-
term debt
Gross debt
Gross financial debt
41,206
2,315
43,521
41,090
7,512
48,602
of which:
-debt linked with the
achievement of SDGs
29,262
2,136
31,398
28,046
7,228
35,274
Debt connected with
achievement of SDGs/Total
gross financial debt (%)
72%
73%
Bonds stood at Euro 41,206 million, having an increase of Euro 116 million mainly due to newly issued
debt (Euro 1,500 million), an increase of costs to be amortised (Euro 68 million), a fair value
adjustment of GBP SDG bond (Euro 28 million) and capitalized interest on zero coupon bonds (Euro
12 million).
The increase was partly offset by matured bonds (Euro 1,035 million) and exchange rates on the
outstanding bonds denominated in non-Euro currencies (Euro 457 million).
Commercial papers declined by Euro 5,092 million due to a decrease of new notes issued.
Deposits from Group and associate companies decreased by Euro 105 million
Derivatives covering debt decreased by Euro 1,051 mainly due to a development of fair value of
derivatives designed as cash flow hedges and fair value hedge.
Cash collateral on derivatives pledged to counterparties in relation to Credit Support Annexes (CSA)
totaled to Euro 500 million.
Cash and cash equivalents amounted to Euro 3 million having a decrease by Euro 174 million mainly
reflecting a decline of Euro 172 million in bank deposits.
Net non-current liabilities decreased by Euro 6 million totaling to Euro 104 million essentially due
to decrease of up-front fees associated to derivatives.
Net current liabilities increased by Euro 179 million totaling Euro 143 million as of 31 December
2023.
Deferred tax assets increased by Euro 99 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 10,213 million as of 31 December 2023, decreased by Euro
73 million over 2023 year ended, as a result of an decrease of cash flow hedge and cost of hedging
reserves (Euro 423 million) offset by the net profit for the period (Euro 350 million).
8
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
Enel Finance International N.V. (“EFI”) adopts risk governance and control arrangements defined at
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.
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
9
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
the performance and financial situation of the Company. Enel’s long term rating was: (i) “BBB” with a
stable outlook for Standard & Poor’s; (ii) “BBB+” with a stable outlook for Fitch; and (iii) “Baa1” with
a negative outlook for Moody’s. Short-term rating at the end of the year was: (i) “A-2” for Standard
& Poor’s; (ii) “F2” for Fitch; and (iii) “P-2” for Moody’s.
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 the 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.
The policy for managing interest rate risk aims to contain financial expense and its volatility by
optimizing the Company’s portfolio of financial assets and liabilities and by entering financial
derivatives on OTC markets.
10
A certain level of interest rate risk is intrinsic in the Company’s mission and has been 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
comply with. Any breaches and defaults may have high adverse effect on the Company’s activity.
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
business processes, to strengthen people’s awareness and to implement regulatory requirement for
IT security. In addition, the Enel Group has developed an IT risk management methodology founded
on “risk-based” and “cyber-security by design” approaches. 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.
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
11
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
Solutions unit, which is responsible for guiding Enel’s digital transformation.
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. In 2020, was the Enel Group was the first in the world to include in its funding contracts
a mechanism that links the cost of financing to the achievement of one or more sustainability targets
identified in the "Sustainability-Linked Financing Framework", a document that extends the
Sustainability-Linked approach to all financial debt instruments.
In the latest version, published in January 2024, the Sustainability Performance Targets ("SPTs") of
the five Key Performance Indicators ("KPIs") included in the framework have been updated: 1)
Intensity of Scope 1 GHG emissions related to electricity production (gCO2eq/kWh), 2) Intensity of
Scope 1 and 3 GHG emissions related to Integrated Power (gCO2eq/kWh), 3) Absolute Scope 3 GHG
emissions related to Retail Gas (MtCO2eq), 4) Percentage of renewable installed capacity (%) and 5)
Percentage of capital expenditures aligned with the EU Taxonomy (%), contributing to the
achievement of SDG 11 and SDG 13 and the European Environmental Objective of Climate Change
Mitigation.
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).
Being the financial subsidiary of the Group the Company the company executes the sustainable finance
strategy by raising funds and entering into financial operations having an interest rate or other
financial or structural terms linked to the achievement by the Enel Group of targets for the reduction
of direct and indirect greenhouse gas emissions (SDG 13 "Fight against climate change") or for the
growth of installed capacity powered by renewable sources (SDG 7 "Affordable and clean energy") or
the percentage of capital expenditures, carried out over a given period, in activities that qualify as
environmentally sustainable according to the criteria set out in Article 3 of the EU Taxonomy
Regulation (2020/852).
The KPI’s and targets are stated in the latest update of Enel’s Sustainability Linked Financing
Framework. In 2023, globally, greenhouse gas (GHG) emissions continued to rise.
The Enel Group, however, managed to reduce direct and indirect greenhouse gas emissions along the
entire value chain by 26.3% overall, compared to the previous year.
Nevertheless, the war in Ukraine and the resulting restrictions on gas imports from Russia into the
EU, which have caused a decrease in gas availability accompanied by a spike in wholesale electricity
and gas prices with serious effects for households and businesses, have led EU governments to
implement a number of policy responses to mitigate the impact of rising costs and ensure the stability
of the energy system.
Due to the unprecedented crisis that the European energy system faced in 2022 and 2023, the Enel
Group's emissions reduction in 2023 was not sufficient to achieve the Scope 1 GHG emissions intensity
target related to electricity generation set for 2023. The intensity was slightly above the target of 148
12
gCO2e/kWh. In the absence of this effect, Enel would have been able to achieve an emission intensity
level well below the target of 148 gCO2e/kWh.
As a result, several Sustainability-Linked instruments issued by the Company will be subject to an
increase in the related margin and the Company will comply with its obligations in accordance with
the terms and conditions of the legal documentation of such Sustainability-Linked transactions.
Other commitment to decarbonization remains confirmed for the short, medium and long term, and a
new short-term target for 2026 is 125gCO2e/kWh. This new target, included in the Sustainability-
Linked Financing Framework updated in January 2024 and linked to the first launch of Sustainability-
Linked bonds in 2024.
Currently management does not expect that the climate related risks have a material impact on the
financial statements of the Company.
Quantification of the impact on the result and financial position if the main
financial risks materialize
In 2023 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 2023 risk was fully covered by corresponding derivatives.
at Dec. 31,
2023
million euro
Gross debt
Derivatives
After risk mitigation
Book value
Notional
value
Euro
20,510
20,757
49.75%
20,968
41,725
100.00%
US dollar
16,374
16,547
39.7%
(16,547)
-
0.00%
British pound
3,940
4,039
9.7%
(4,039)
-
0.00%
Swiss franc
382
382
0.9%
(382)
-
0.00%
Total Non-Euro
20,696
20,968
50.25%
(20,968)
-
0.00%
Total
41,206
41,725
100.00%
-
41,725
100.00%
At 31 December2022 risk was fully covered by corresponding derivatives.
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%
The exchange risk exposure from loans and financial receivables granted in non-Euro currency is
limited to 5% in 2023 (6% in in 2022) 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
Company’s financial position.
13
Please see Risk Management section of these financial statements for sensitivity analysis on exchange
rate.
As shown in the table below, in 2023 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,
2023
Before risk mitigation
After risk mitigation
Floating rate
150
0.4%
-
0.0%
Fixed rate
41,575
99.6%
41,725
100.0%
Total
41,725
100.0%
41,725
100.0%
The table below represented the exposure to interest risk in in 2022.
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 future significant variations in interest rates would not materially and adversely affect the
Company’s financial position.
Please see Risk Management section of these financial statements 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 the Enel Group or associated to it; all the transactions are
part of the ordinary operations of the Company and are settled on arm’s length basis in line with
Standard intra-Group contract market prices.
Outlook
The Company should evolve normally during 2024, with the aim to maintain the funding and lending
activities currently ongoing, keeping on supporting the Enel Group in its developing and execution of
strategic business plan.
Board of Directors composition
The Company’s organization is characterized by a Board of Directors charged with managing the
Company and a Shareholders’ Meeting.
The Company is a so-called Public Interest Entity (“Organisatie van Openbaar Belang”), since it has
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),
14
(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 “collegio sindacale” (board of statutory auditors). According to the legislation in force, 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.
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
Financial Supervision Act 2011 (the “Regeling Beheerst beloningsbeleid Wft 2011”).
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).
Diversity of Board of Directors
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’s control system
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 16 December 2016 the Company adopted the new Enel Global Compliance Program (“EGCP”),
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 “Zero-Tolerance-of-Corruption Plan” (ZTC Plan) 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 Group’s
stakeholders.
15
Subsequent events
On 16 January 2024 the Company launched a dual-tranche “Sustainability-Linked Bond” for
institutional investors in the Eurobond market for a total of 1,750 million euros.
Specifically, the issue is structured in the following tranches:
- Euro 750 million at a fixed rate of 3.375%, with issuance date set on 23 January 2024, maturing
23 July 2028:
• the issue price has been set at 99.727% and the effective yield at maturity is equal to 3.445%;
• the interest rate will remain unchanged to maturity, subject to the achievement by the Enel
Group of the following Sustainability Performance Targets (“SPTs”). In particular:
o for the KPI related to the “Proportion of CAPEX aligned to the EU Taxonomy (%)”, the
achievement of a SPT equal to or higher than 80% on 31 December 2026 for the 2024-
2026 period;
o for the KPI related to the “Scope 1 GHG emissions Intensity relating to Power Generation
(gCO2eq/kWh)”, the achievement of a SPT equal to or less than 125gCO2eq/kWh on
31 December 2026;
• 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 1,000 million at a fixed rate of 3.875%, with issuance date set on 23 January 2024, maturing
23 January 2035:
• the issue price has been set at 98.792% and the effective yield at maturity is equal to 4.013%;
• the interest rate will remain unchanged to maturity, subject to the achievement by the Enel
Group of the following SPTs. In particular:
o for the KPI related to the “Scope 1 GHG emissions Intensity relating to Power Generation
(gCO2eq/kWh)”, the achievement of a SPT equal to or less than 72gCO2eq/kWh on
31 December 2030;
o for the KPI related to the “Renewable Installed Capacity Percentage (%)”, the achievement
of a SPT equal to or higher than 80% on 31 December 2030;
• 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 8 years, has an average coupon of
3.66%.
Reporting of non-financial information
The 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 2023 financial year for large
public-interest entities, has drafted a “Consolidated Non-Financial Statement” that covers the areas
provided for in that decree, accompanying the Group’s Sustainability Report.
Report can be obtained from the investor relations section of Enel S.p.A. official website
(http://www.enel.com).
16
In addition and in view of the directive 2022/246 the Company is evaluating requirements which might
directly impact their reporting in the upcoming years.
Personnel
At 31 December 2023 the Company had, other than the directors, eight employees and two seconded
personnel (nine employees and one seconded personnel at 31 December 2022).
Average headcount comprised nine people (ten people for 2022). All people worked in the Netherlands.
Statement of the Board of Directors
Statement ex Article 5:25c Paragraph 2 sub c Financial Markets Supervision Act (“Wet op het
Financieel Toezicht”).
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 Director’s Report gives a true and fair view of the Company’s position as per 31 December
2023 and the developments during the financial year 2023;
- the Director’s Report describes the principal risks the Company is facing.
This annual report is prepared according to International Financial Reporting Standards as adopted by
the European Union (“IFRS-EU”) and its financial statement is audited by KPMG Accountants N.V. The
company complies with the conditions of article 3:2 Wft and therefore makes use of the group
financing company exemption”
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
100.000. The Company’s main obligations under the aforementioned Transparency Directive can be
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 2023 fiscal year (by 30 April 2024);
- 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 2023 fiscal year (by 30 April 2024).
Amsterdam, 23 April 2024
A. Canta H. Marseille
E. Di Giacomo A.J.M. Nieuwenhuizen
L.B. Van der Heijden
Financial statements
for the year ended 31 December 2023
prepared in accordance with International
Financial Reporting Standards as adopted by
the European Union
18
Statement of profit or loss and other comprehensive
income
Millions of euro
Note
2023
2022
Interest income
Interest income
1
2,015
1,074
Interest income from derivatives
1
269
339
Other interest related income
1
-
254
(Subtotal)
2,284
1,667
Interest expenses
Interest expenses
1
(1,597)
(1,313)
Interest expense from derivatives
1
(176)
(242)
Other interest related expenses
1
-
-
(Subtotal)
(1,773)
(1,555)
Net interest income/ (expense)
511
112
Other operating expense
2
(5)
(6)
Financial income
Financial income from derivatives
3
278
1,185
Other financial income
3
657
1,093
(Subtotal)
935
2,278
Financial expense
Financial expense from derivative
3
(686)
(1,348)
Other financial expense
3
(265)
(972)
(Subtotal)
(951)
(2,320)
Net financial income/ (expense)
(16)
(42)
Income/(Loss) before taxes
490
64
Income Taxes
4
(140)
(20)
Net income/(loss) for the year (attributable to the shareholders)
350
44
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
(457)
220
- Change in the fair value of costs of hedging net of deferred taxes
17
34
(42)
Total comprehensive income/(loss) for the period (attributable to the
shareholders)
(73)
222
19
Statement of financial position
Millions of Euro
Note
ASSETS
at Dec.31,
at Dec.31,
2023
2022
Non-current assets
Deferred tax assets
5
407
308
Long-term loans and financial receivables
6
41,378
41,930
Derivatives
7
845
1,596
Other non-current financial assets
8
33
37
(Subtotal)
42,663
43,871
Current assets
Current portion of long-term loans and financial receivables
6
4,235
2,403
Short-term loans and financial receivables
9
8,018
14,190
Derivatives
7
55
34
Other current financial assets
10
1,337
932
Other current assets
-
1
Income tax receivable
-
1
Cash and cash equivalents
11
3
177
(Subtotal)
13,648
17,738
TOTAL ASSETS
56,311
61,609
LIABILITIES AND SHAREHOLDERS’ EQUITY
Share capital
12
1,479
1,479
Share premium reserve
12
9,126
9,126
Cash flow hedge reserve
12
(745)
(288)
Cost of hedging reserve
12
(6)
(40)
Retained earnings
12
9
(35)
Net income for the period
12
350
44
Total shareholder's equity
10,213
10,286
Non-current liabilities
Long-term borrowings
13
36,281
40,056
Derivatives
7
1,405
1,176
Other non-current financial liabilities
137
147
(Subtotal)
37,823
41,379
Current liabilities
Income tax payable
82
8
Current portion of long-term borrowings
13
4,925
1,034
Short-term borrowings
14
2,762
8,461
Derivatives
7
76
41
Other current financial liabilities
15
429
399
Other current liabilities
1
1
(Subtotal)
8,275
9,944
TOTAL EQUITY AND LIABILITIES
56,311
61,609
20
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, 2022
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
Allocation of net income from the previous year
-
-
-
-
44
(44)
-
Comprehensive income for the year:
-
-
(457)
34
-
350
(73)
of which:
- other comprehensive income (loss) for the period
-
-
(457)
34
-
-
(423)
- net income for period
-
-
-
-
-
350
350
At December 31, 2023
1,479
9,126
(745)
(6)
9
350
10,213
21
Statement of cash flows
Millions of euro
Note
2023
2022
Income for the period
350
44
Adjustments for:
0
0
(Un)realised (gain)/ losses
166
(81)
Expected credit loss
3
3
4
Income taxes
4
140
20
(Gains)/Losses and other non-monetary items
-
-
Changes in:
'- accrued interest income
89
(131)
'- accrued interest expenses
27
68
'- derivatives covering interest rate risk
(5)
(56)
'- other assets
(25)
(37)
Net changes in all other operational assets and liabilities
86
(156)
Income taxes paid
-
-
Cash flows from operating activities (a)
745
(169)
Loans (granted to)/ repaid by Group and associate companies
4,856
(10,526)
Derivatives covering exchange rate risks - loans and RFAs
(22)
(300)
Cash flows from investing/disinvesting activities (b)
4,834
(10,826)
Financial debt (new borrowings)
13,14
1,465
13,230
Financial debt (repayments and other changes)
13,14
(6,127)
(2,854)
Derivatives covering exchange rate risks - bonds
-
113
Loans due to Group and associate companies
(105)
(150)
Other financing
(985)
611
Cash flows from financing activities (c)
(5,752)
10,950
Impact of exchange rate fluctuations on cash and cash equivalent (d)
(1)
4
Increase/(Decrease) in cash and cash equivalents (a+b+c+d)
(174)
(41)
Cash and cash equivalents at the beginning of the year
177
218
Cash and cash equivalents at the end of the year
3
177
22
Notes to the financial statements
Form and content of the financial statement
Enel Finance International N.V. (“the Company”) is incorporated 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 469, 1017 BS Amsterdam, the Netherlands. The Company is established for an indefinite
duration.
Enel Finance International N.V. (“the Company”) is a public company with limited liability, 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 by Enel S.p.A.
Therefore, Enel S.p.A. is the ultimate controlling shareholder of the Company.
Company’s financial statements are included into the consolidated financial statements of Enel S.p.A.,
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 or associated to it. 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 2023 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
are hereinafter referred to as the “IFRS-EU”. 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).
23
The financial statements were approved by the Board of Directors and authorised for issue effective
on 18 March 2024, with an update on the final version as per 23 April 2024.
Basis of presentation
The financial statements consist of the statement of profit and loss and comprehensive income, the
statement of financial position, the statement of changes in equity, the statement of cash flows, and
the related notes.
The assets and liabilities reported in the financial position are classified on a “current/non-current
basis”. 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 15 January 2024 and valid until next year’s approval date of the Financial
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.
24
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’s past history, existing
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.
25
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.
Material 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.
26
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-financial asset, a fair value measurement takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or by selling it to
another market participant that would use the asset in its highest and best use;
> for liabilities and own equity instruments, the fair value reflects the effect of non-performance
risk, i.e the risk that an entity will not fulfill an obligation, including but not limited to the entity’s own
credit risks;
> in the case of groups of financial assets and financial liabilities with offsetting positions in
market risk or counterparty credit risk, managed on the basis of an entity’s net exposure to such risks,
it is permitted to measure fair value on a net basis.
In measuring fair value of assets and liabilities, the Company 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.
27
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’s business 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’s business model for managing financial assets refers to how it manages its financial
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
28
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
the impairment calculation, based on the Company’s past 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
provided by IFRS 9 (the “pass through test”);
- 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
29
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 fair value and they are classified as “held for trading” within “Other business model” and
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
accounting”.
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 Company 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 not an output of the Company’s ordinary activity.
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 foreign exchange risks.
Financial income and expense include also changes in the fair value of financial instruments other than
derivatives.
30
Dividends
Dividends and interim dividends payable to the Company’s sole shareholder are recognized as changes
in equity at the date they are approved by the Shareholders’ Meeting and the Board of Directors,
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 profit and loss and 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.
The Company has assessed the expected impact of the Pillar II - global minimum top-up tax and notes
that the financial statements are not impacted due to the local effective tax rate that is higher than
15 percent and the entity has not paid any Pillar II top-up tax on behalf of other entities in the Enel
Group. Also, no Pillar II top-up tax has been recharged to the entity.
Recently issued accounting standards and Standards issued but not yet effective
New accounting standards applied in 2023
The Company has applied the following new standards, interpretation and amendments that took
effect as from January 1, 2023:
“Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure of Accounting Policies”,
issued in February 2021. The amendments are intended to support in deciding which accounting
policies to disclose in the financial statements.
31
In this respect:
- the “amendments to IAS 1 Presentation of Financial Statements” require disclosing
material accounting policies information rather than significant accounting policies;
- the “amendments to IFRS Practice Statement 2 Making Materiality Judgements” seek to
provide a guide on how to apply the concept of materiality to the accounting policy
information.
In the absence of a definition of “significant” in the IFRSs, in the context of disclosures of accounting
policies, the term has been replaced with “material”. In this regard, the definition of material was
changed in October 2018 and aligned with the IFRSs and the Conceptual Framework and, therefore,
it was largely understood by primary users of the financial statements. Accounting policy information,
in accordance with IAS 1, is material if, when considered together with other information included in
the financial statements, it can reasonably be expected to influence the decisions that the primary
users of financial statements make on the basis of those financial statements.
In assessing the materiality of accounting policy information, it is appropriate to consider both the
size of the transactions, other events or conditions and their nature. However, it should be highlighted
that, although a transaction, other event, or condition to which the accounting policy information
refers may be material, this does not imply that the corresponding accounting policy information is
material for the purposes of the financial statements.
In this context, the amendments to IFRS Practice Statement 2 seek to illustrate how it could be
assessed whether an accounting policy information is material for the purposes of the financial
statements, providing guidance. These amendments aim to: (i) clarify that the assessment of the
materiality of accounting policy information should follow the same guidance applicable in the
assessment of the materiality of other information, thus considering both qualitative and quantitative
factors; (ii) emphasize the importance of providing accounting policy information that is specific to
the Company; (iii) provide examples of situations where generic or standardized information, which
summarizes or duplicates the requirements of IFRSs, may be considered material accounting policy
information.
The accounting policies have been reviewed in line with the requirements of the amendments and the
information disclosed have been updated in the section Accounting policies and measurement criteria.
> “Amendments to IAS 8 – Definition of Accounting Estimates”, issued in February 2021. The
amendments clarify how to distinguish changes in accounting policies from changes in accounting
estimates. The definition of changes in accounting estimates has been replaced with a definition of
accounting estimates as “monetary amounts in financial statements that are subject to measurement
uncertainty”. In order to clarify the interaction between an accounting policy and an accounting
estimate, IAS 8 was amended to state that an accounting policy could require the measurement of
items in financial statements at monetary amounts that cannot be directly observed, and therefore
must be estimated (since they involve uncertainty in the measurement). In these circumstances,
accounting estimates are developed to achieve the objective established by the accounting policy,
including the use of judgements and assumptions based on the most recent reliable information
available. The amendments explain how measurement techniques and inputs should be used to
develop accounting estimates and establish that such techniques include both estimation and valuation
techniques.
To provide greater guidance, the amendments clarify that the effects on an accounting estimate of a
change in an input or a change in a measurement technique are changes in accounting estimates,
32
unless they result from the correction of prior period errors. Moreover, changes in accounting
estimates resulting from new information are not corrections of errors.
The application of the amendments has not had a material impact in these financial statements.
> “Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising
from a Single Transaction”, issued in May 2021. The amendments clarify that the exemption from
initial recognition envisaged by the standard no longer applies to transactions that give rise to taxable
and deductible temporary differences of the same amount.
It is specified that, in general, the exemption from initial recognition under IAS 12 prohibits the
recognition of deferred assets and liabilities relating to the initial recognition of assets or liabilities in
a transaction that does not constitute a business combination and does not affect either accounting
or taxable income. In this context, the amendments, as illustrated, have narrowed the scope of the
exception.
For transactions (e.g., leases and decommissioning provisions) subject to the amendments, the
associated deferred assets and liabilities shall be recognized from the beginning of the first
comparative period presented, with any cumulative effect recognized as an adjustment to retained
earnings (or other component of equity) at that date.
In this regard, the application of the amendments did not have an impact on “Retained earnings” in
the opening equity of the Company as of 1 January 2022.
> “Amendments to IAS 12 – International Tax Reform – Pillar Two Model Rules, issued in May
2023. The amendments have been introduced in response to the OECD’s Pillar Two rules, designed to
ensure that large multinational enterprises, within the scope of the rules, pay a minimum level of tax
on the income arising in a specific period in each jurisdiction where they operate. In general, the rules
apply a system of top-up taxes that brings the total amount of taxes paid on an entity's excess profit
in a jurisdiction up to the minimum rate of 15%.
The amendments include:
- a mandatory temporary exception to the recognition and disclosure of deferred taxes arising
from the jurisdictional implementation of the Pillar Two model rules; and
- disclosure requirements to help users of the financial statements better understand the
exposure to Pillar Two income taxes. Particularly, for periods in which legislation is enacted
but not applied, qualitative (e.g., information about the Pillar Two legislation impact and the
main jurisdictions in which exposures to its income taxes might exist) and quantitative
information (i.e., the proportion of profit that might be subject to Pillar Two income taxes and
the average effective tax rate applicable to those profits or how the average effective tax rate
would have changed if Pillar Two legislation had been in effect) are required.
The application of these amendments did not have material impact in the financial statements.
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 2023:
“Amendments to IAS 1 - Classification of Liabilities as Current or Non-current”, issued in
January 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 a
right to defer settlement and that this right must exist at the end of the reporting period;
− that classification is unaffected by management’s intentions or expectations about whether
the right to defer settlement of a liability will be exercised or not;
33
− that a right to defer exists only if the conditions specified in the loan agreement at the end of
the reporting period are met, even if the lender does not test compliance with such conditions
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 for annual period beginning on or after 1 January 2024
1
.
“Amendments to IAS 1 - Non-current Liabilities with Covenants”, issued in October 2022.
IAS 1 requires classifying debt as non-current only if the settlement of a debt can be avoided in the
12 months after the reporting date. However, the ability to do so is often subject to complying with
covenants. The amendments improve 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 they specify 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 are effective for annual reporting periods beginning on or after 1 January 2024.
“Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor
and its Associate or Joint Venture”, issued in September 2014. The amendments 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 joint venture constitute a ‘business’ (as defined in IFRS 3). The IASB
has deferred the effective date of these amendments indefinitely.
“Amendments to IFRS 16-Lease Liability in a Sale and Leaseback”, issued in September 2022.
The amendments require 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 amendments do 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 amendments shall be applied to annual reporting periods beginning on or after 1 January 2024
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).
“Amendments to IAS 21-The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability”, issued in August 2023. The Amendments require to apply a consistent approach in
assessing whether a currency is exchangeable into another currency and, when it is not, in determine
the exchange rate to use and the disclosures to provide.
1
Another amendment has been issued to postpone the effective date by one year, from 1 January
2023 to 1 January 2024
34
The amendments shall be applied, subject to endorsement, to annual reporting periods beginning on
or after 1 January 2025 (with earlier application permitted).
“Amendments to IAS 7 and IFRS 7-Supplier Finance Arrangements” In May 2023. The
amendments clarify the characteristics of supplier finance arrangements and require additional
disclosure of such arrangements, intended to assist users of financial statements in understanding the
effects of supplier finance arrangements on liabilities, cash flows and exposure to liquidity risk.
The IASB has provided transitional relief by not requiring comparative information in the first year,
and also not requiring disclosure of specified opening balances. Further, the required disclosures are
only applicable for annual periods during the first year of application. Therefore, considering that the
amendments will be effective, subject to endorsement, for annual reporting periods beginning on or
after 1 January 2024, the earliest that the new disclosures will have to be provided is in annual financial
reports for December 2024 year-ends.
The Company is assessing the potential impact of the future application of the new provisions.
35
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 were 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
2023
2022
Interest rate derivatives:
Interest rate swap
2,189
2,433
Total
2,189
2,433
For more details, please refer to the note 16 and 17.
At 31 December 2023, 0.72% of gross long term debt towards third parties was floating rate (1.35%
at 31 December 2022). 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.
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
36
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. The Company’s assets and
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 variables held constant, the Company’s income and
equity before tax is impacted as follows:
Millions of euro
Interest rate risk sensitivity analysis
2023
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
132
(132)
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
(2)
2
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
Currency risk
Currency 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.
37
Millions of euro
Notional amount
2023
2022
Foreign exchange derivatives:
Currency forwards:
1,502
2,451
Cross currency interest rate swaps
22,418
23,140
Total
23,920
25,591
For more details, please refer to the note 16 and 17.
Currency 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
of the Company’s assets and liabilities denominated in foreign currencies are impacted following the
exchange rate scenario disclosed (10%), the Company’s income and equity before tax is impacted as
follows:
Millions of euro
Foreign exchange risk sensitivity analysis
2023
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%
86
(105)
Cash Flow hedge
10%
(1,989)
2,432
Fair value hedge
10%
(48)
58
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
38
Credit risk
The Company’s financial operations expose it to credit risk, i.e. the possibility that a deterioration in
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
concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure
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.
The Company’s maximum exposure to credit risk for the components of the Balance Sheet at 31
December 2023 and 2022 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 &
Poor’s, Moody’s) 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.
39
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
0.05
A2/A
0.04
0.05
0.05
A3/A-
0.05
0.05
0.05
Baa1/BBB+
0.10
0.09
0.09
Baa2/BBB
0.16
0.14
0.15
Baa3/BBB-
0.28
0.22
0.25
Ba1/BB+
0.52
0.29
0.40
Ba2/BB
0.76
0.45
0.61
Ba3/BB-
1.33
0.91
1.12
B1/B+
1.92
1.91
1.92
B2/B
3.00
2.85
2.92
B3/B-
4.60
5.53
5.07
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,
2023
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
0.12%
53,694
62
53,632
Underperforming
Lifetime ECL
-
-
-
-
Non-performing
Lifetime ECL
-
-
-
-
Total
53,694
62
53,632
40
The table below reports the movement in expected credit loss that has been recognized for financial
assets measured at amortized cost:
Millions of euro
2023
2022
Change
Expected credit loss allowance as at 1 January
(60)
(54)
(6)
Impairment losses recognized in profit or loss
(23)
(29)
6
Reversal of impairment losses in profit or loss
20
25
(5)
Exchange rate differences
1
(2)
3
Expected credit loss allowance as at 31 December
(62)
(60)
(2)
Liquidity risk
Liquidity risk manifests itself as uncertainty about the Company’s ability to discharge its obligations
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.
The Company holds the following undrawn lines of credit
Millions of euro
at Dec. 31,
2023
at Dec. 31,
2022
Expiring
within one
year
Expiring
beyond one
year
Expiring within
one year
Expiring beyond
one year
Committed credit lines
4,050
-
4,050
Commercial paper
5,864
772
-
Total
5,864
4,050
772
4,050
Furthermore, Enel S.p.A. has confirmed through a letter dated 15 January 2024 its commitment to
explicitly provide the Company with the financial support until the date of approval of full year 2024
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
Underperforming
Lifetime ECL
-
-
-
-
Non-performing
Lifetime ECL
-
-
-
-
Total
58,583
(60)
58,523
41
financial statements of the Company. Enel S.p.A is a Guarantor on the bonds and commercial paper
program.
Maturity analysis
The table below summarizes the maturity profile of the Company’s long-term debt on contractual
undiscounted payments.
Maturing in
Millions of Euro
2024
2025
2026
2027
2028
Beyond
Bond
Listed Bond (Fixed rate)
3,920
3,793
3,714
3,128
335
13,758
Listed Bond (Floating rate)
108
52
-
-
-
-
Unlisted Bond (Fixed rate)
2,118
2,067
1,781
2,162
2,587
15,508
Total Bond
6,146
5,912
5,495
5,290
2,922
29,266
42
Notes to the financial statements
1 Interest income/ (expense) – Euro 511 million
Millions of euro
2023
2022
Change
Interest income:
- interest income on long-term financial assets
1,482
961
521
- interest income on short-term financial assets
514
113
401
- interest income from derivatives
269
339
(70)
- interest income from cash collaterals
19
-
19
- other income
-
254
(254)
Total interest income
2,284
1,667
617
Interest expense:
- interest expense on borrowings
(18)
(36)
18
- interest expense on bonds
(1,357)
(1,188)
(169)
- interest expense on commercial papers
(134)
(24)
(110)
- interest expense from derivatives
(176)
(242)
66
- interest expense from cash collaterals
(24)
(2)
(22)
- guarantee fee
(64)
(63)
(1)
Total interest expense
(1,773)
(1,555)
(218)
Net interest income/ (expense)
511
112
399
Interest income from assets amounted to Euro 2,284 million on 31 December 2023, having an
increase of Euro 617 million with the variation mainly attributed to:
- higher interest income from Enel subsidiaries and affiliates incorporated in Italy (Euro 852
million), in Spain (Euro 91 million), in the Netherlands (Euro 28 million), in Romania (Euro 12
million), in Mexico (Euro 8 million) and in South Africa (Euro 2 million);
- increase of interest income from cash collaterals (Euro 19 million).
Such increase has been partly offset by:
- income earned as a result of bond transfer to Enel Finance America LLC (Euro 254 million)
registered in the previous year;
- decrease of interest income from derivatives (Euro 70 million);
- lower interest income from Enel subsidiaries and affiliates incorporated in in Greece (Euro 29
million), Brazil (Euro 23 million), in Chile (Euro 19 million).
Interests expenses on financial debt totaled Euro 1,773 million increased by Euro 218 million mainly
due to:
- an increase of interest expenses for bonds due to newly issued and matured debt (Euro 169
million);
- an increase of interest charges from the Commercial Paper (Euro 110 million);
- an increase of interest expense from cash collaterals (Euro 22 million);
- higher interests paid to Group companies mainly to Enel Iberia Srl (Euro 3 million);
- higher guarantee fees paid to the parent company (Euro 1 million);
43
This increase was partly offset by:
- lower interests paid to Group companies mainly to Enel S.p.A (Euro 13 million) and EGP
Romania S.r.l. (Euro 2 million);
- a decrease of interest expense from derivatives (Euro 66 million);
- a decrease of fees paid for revolving credit line (Euro 6 million).
2. Other operating expense – Euro (5) million
Other operating expense decreased by Euro 1 million totaling Euro 5 million and referred to:
- services (mainly related to legal and consultancy charges) for Euro 4 million remaining in line
with previous year;
- personnel costs for Euro 1 million (Euro 2 million in 2022) composed by remuneration in
amount of Euro 0.9 million (Euro 1 million in 2022) and social changes in amount of Euro 0.1
million (Euro 1 million in 2022).
At 31 December 2023 the Company had, other than the directors, eight employees and two seconded
personnel (nine employees and one seconded personnel at 31 December 2022). Average headcount
comprised nine people (ten people for the 2022). All people worked in the Netherlands.
3. Financial income/(expense)– Euro (16) million
3.1 Financial income/(expense) from derivatives
Millions of euro
2023
2022
Change
Financial income from derivatives:
- income from cash flow hedge derivatives
198
873
(675)
- income from fair value hedge derivatives
42
4
38
- income from derivatives at fair value through profit or loss
38
308
(270)
Total finance income from derivatives
278
1,185
(907)
Financial expense from derivatives:
- expenses from cash flow hedge derivatives
(593)
(693)
100
- expenses from fair value hedge derivatives
(16)
(100)
84
- expenses from derivatives at fair value through profit or loss
(77)
(555)
478
Total financial expense from derivatives
(686)
(1,348)
662
Net income/(expense) from derivatives
(408)
(163)
(245)
Net financial expense from derivatives totaled to Euro 408 million and essentially reflected net financial
expenses from cash flow derivatives (Euro 395 million), net financial income from derivatives at fair
value through profit and loss (Euro 26 million) and net loss from fair value hedge derivatives (Euro 39
million).
The deterioration of Euro 245 million compared with the previous year was due to cumulative increase
in net financial expenses from cash flow hedge derivatives (Euro 575 million), an increase of financial
income from fair value hedge derivatives (Euro 122 million) and a decrease of net financial expenses
from derivatives at fair value though profit and loss (Euro 208 million).
The net balance recognized in 2023 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.
44
3.2 Other net financial income/ (expense)
Millions of euro
2023
2022
Change
Other financial income
- positive exchange rate differences
657
1,027
(370)
-fair value adjustment on bond
-
66
(66)
Total other financial income
657
1,093
(436)
Other financial expenses
-negative exchange rate differences
(234)
(968)
734
-impairment
(28)
(4)
(24)
-fair value adjustment on bond
(3)
-
(3)
Total other financial expense
(265)
(972)
707
Net other financial income/ (expense)
392
121
271
Net other financial income totaled to Euro 392 million composed to net exchange rate differences
(Euro 423 million), fair value adjustment on bond (Euro 28 million) partly offset by impairment (Euro
3 million).
Net foreign exchange income totaled to Euro 423 million consisted of: positive revaluation of the
outstanding value of bonds denominated in foreign currencies (Euro 457 million), partly offset by
negative foreign currency evaluation of non-euro group portfolio (Euro 33 million) and other foreign
exchange losses (Euro 1 million).
The amount of the foreign exchange gain arisen from the revaluation of notional value of bonds
(Euro 477 million) and the amount of forex exchange losses arisen from several BRL and USD loans
(Euro 32 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
2023
2022
Change
Expected credit losses:
Long-term loans and financial receivables (including current portion)
(15)
(16)
1
Short-term loans and financial receivables
(8)
(13)
5
Total expected credit losses
(23)
(29)
6
Reversals of expected credit losses:
Long-term loans and financial receivables (including current portion)
5
20
(15)
Short-term loans and financial receivables
15
5
10
Total reversals of expected credit losses
20
25
(5)
Total expected credit losses/ (reversal of expected credit losses)
(3)
(4)
1
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 and associated
Companies.
45
4 Income tax (income)/expenses – Euro 140 million
Millions of euro
2023
2022
Change
Profit before income taxes
490
64
426
Withholding tax on foreign interests
18
25
(7)
Current tax
74
7
67
Deferred tax
48
(12)
60
Income taxes
140
20
120
Effective tax rate
29%
31%
The following table reconciles the theoretical tax rate with the effective tax rate.
Millions of euro
2023
2022
Change
Accounting profit before income tax
490
64
426
Tax rate applicable
25.8%
25.8%
Theoretical tax expense
127
17
110
Adjustments in respect of current income tax of previous years
-
(16)
16
Withholding tax deduction
(5)
(6)
1
Withholding tax paid abroad
18
25
(7)
Income taxes
140
20
120
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 2023 was 28.6% compared with the standard
Dutch rate of 25.8% which was driven mainly by the tax on interest income withheld abroad.
5 Deferred tax assets (liabilities) – Euro 407 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,
2022
Increase/
(Decrease)
taken to
income
statement
Increase/
(Decrease)
taken to
equity
at Dec. 31,
2023
Deferred tax asset
Nature of temporary differences:
- derivatives
114
147
261
- losses with deferred deductibility
178
(48)
130
- measurement of financial instruments
16
16
Deferred tax asset
308
(48)
147
407
Net deferred tax asset
308
(48)
147
407
46
6 Long-term loans and financial receivables including portion falling due
within twelve month – Euro 45,613 million
Following table represents medium long-term loans granted to Enel Group companies and affiliated
companies:
Millions of Euro
at Dec. 31,
2023
at Dec. 31,
2022
Change
Long-term loans
Enel S.p.A.
14,274
12,406
1,868
Enel Italia S.p.A.
16,450
16,450
-
Endesa SA
3,525
4,650
(1,125)
Enel Iberia Srl
2,654
3,004
(350)
Enel Green Power S.p.A.
1,447
1,558
(111)
Enel Chile SA
1,071
1,260
(189)
Slovak Power Holding BV
754
739
15
Enel Global Trading S.p.A.
200
200
-
Energia Limpia de Amistad SA de CV
117
100
17
Energía Limpia de Palo Alto SA de Cv
104
117
(13)
Enel X S.r.l.
100
100
-
Enel Distribuição Ceará
93
89
4
Enel Brasil S.A.
92
252
(160)
Parque Salitrillos SA de Cv
64
68
(4)
EGP Magdalena Solar SA DE CV
60
68
(8)
Dolores Wind Sa De Cv
59
67
(8)
Dominica Energía Limpia SA de Cv
59
51
8
Villanueva Solar SA de CV
55
52
3
Ampla Energia E Serviços S.A.
46
278
(232)
Parque Solar Villanueva Tres SA de CV
37
35
2
Vientos del Altiplano SA de Cv
33
30
3
Parque Amistad II SA DE CV
27
31
(4)
Parque Amistad III SA DE CV
26
30
(4)
PH Chucas SA
25
39
(14)
Parque Solar Don Jose SA de CV
22
21
1
ENEL PANAMA CAM, S.R.L
21
27
(6)
Enel X Korea Ltd
5
-
5
NGONYE POWER COMPANY Ltd
3
4
(1)
Enel X Taiwan Co. Ltd
2
-
2
Enel Green Power México S de RL de Cv
-
243
(243)
Viva Labs AS
-
3
(3)
Total loans
41,425
41,972
(547)
Expected credit loss
(47)
(42)
(5)
Total loans net of expected credit loss
41,378
41,930
(552)
47
Current portion of long-term loans represented in the table below:
Millions of euro
at Dec. 31,
2023
at Dec. 31,
2022
Change
Short-term portion of long-term loans
Enel S.p.A.
132
1,332
(1,200)
Endesa S.A.
3,000
-
3,000
Enel Iberia Srl
350
350
-
Ampla Energia E Serviços S.A.
285
141
144
Enel Brasil S.A.
160
222
(62)
Enel Chile SA
146
187
(41)
Enel Green Power S.p.A.
111
112
(1)
PH Chucas SA
13
13
-
Energía Limpia de Palo Alto SA de Cv
10
10
-
Dolores Wind Sa De Cv
9
6
3
EGP Magdalena Solar SA DE CV
9
6
3
ENEL PANAMA CAM, S.R.L.
5
5
-
Parque Amistad II SA DE CV
4
3
1
Parque Amistad III SA DE CV
4
3
1
Parque Salitrillos SA de Cv
3
3
-
Enel Green Power México S de RL de Cv
-
9
(9)
Enel X Korea Ltd
-
5
(5)
Total
4,241
2,407
1,834
Expected credit loss
(6)
(4)
(2)
Total loans net of expected credit loss
4,235
2,403
1,832
The table below reports long-term financial receivables by currency and interest rate.
Millions of Euro
at Dec. 31,
2023
at Dec. 31,
2023
at Dec. 31,
2023
at Dec. 31,
2022
at Dec. 31,
2022
at Dec. 31,
2022
Balance
Nominal
value
Effective
interest rate
Balance
Nominal
value
Effective
interest rate
Total Euro
43,449
43,449
3.39%
41,440
41,440
5.78%
Brazilian Real
233
233
6.31%
449
449
6.86%
Mexican Peso
210
210
12.62%
182
182
12.61%
Norwegian Krone
-
-
-
3
3
7.23%
US dollar
1,772
1,772
4.86%
2,302
2,302
4.97%
Zambian Kwacha
2
2
25.90%
3
3
25.90%
Total non-Euro currencies
2,217
2,217
2,939
2,939
Total
45,666
45,666
44,379
44,379
48
7. Derivatives – Euro 581 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,
2023
at Dec. 31,
2022
at Dec. 31,
2023
at Dec. 31,
2022
Derivative financial assets
845
1,596
55
34
Derivative financial liabilities
(1,405)
(1,176)
(76)
(41)
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 33 million
Other non-current financial assets totaled Euro 33 million as at 31 December 2023 (Euro 37 million
as at 31 December 2022) 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 8,018million
The following table shows the breakdown of the short-term facilities granted to Enel Group companies
and affiliated companies:
Millions of euro
at Dec.
31,
2023
at Dec. 31,
2022
Change
Short-term loans
Enel S.p.A. - Financial Services Agreement
733
4,259
(3,526)
Enel S.p.A
4,500
3,000
1,500
Enel Italia S.p.A
2,000
4,000
(2,000)
Enel Americas SA
588
122
466
Enel Green Power South Africa Pty Ltd
71
43
28
HELLAS RES SOCIETE Anonyme
60
-
60
Dolores Wind Sa De Cv
15
7
8
EGP Magdalena Solar SA DE CV
14
10
4
PARQUE AMISTAD III SA de CV
13
12
1
PARQUE AMISTAD II SA de CV
9
4
5
PARQUE AMISTAD IV SA de CV
8
8
-
Enel Green Power Hellas Supply Single Member SA
7
-
7
S4MA DEVELOPMENTS SPOLKA Z OGRANICZONA ODPOWIEDZIALNOSCIA
3
3
-
Enel X Way Perú S.A.C
3
-
3
EGP GERMANY GMBH
1
-
1
EGP KOREA LLC
1
-
1
EGP VIETNAM LLC
1
-
1
Enel Global Trading Spa IT
-
1,500
(1,500)
Endesa SA
-
450
(450)
Enel Rinnovabile,S.A. de C.V.
-
-
-
49
Enel Chile SA
-
272
(272)
Ampla Energia E Serviços S.A.
-
185
(185)
Enel Energie S.A. (currently PPC Energie SA)
-
111
(111)
Enel Green Power México S de RL de Cv
-
75
(75)
Enel Energie Muntenia SA (currently PPC Energie Muntenia SA)
-
71
(71)
Enel Distribuição Ceará
-
49
(49)
Enel Green Power RSA Ltd
-
-
-
Enel Trade Energy S.r.l. (currently PPC Trading SRL)
-
14
(14)
ENEL X AUSTRALIA PTY LTD
-
7
(7)
ENEL X SINGAPORE PTE LTD
-
1
(1)
ENEL X WAY ROMANIA(currently PPC Blue Romania SRL)
-
1
(1)
Total short term loans
8,027
14,204
(6,177)
Expected credit loss
(9)
(14)
5
Total loans net of expected credit loss
8,018
14,190
(6,172)
The table below reports short -term financial receivables by currency and interest rate.
Millions of Euro
at Dec. 31,
2023
at Dec. 31,
2023
at Dec. 31,
2023
at Dec. 31,
2022
at Dec. 31,
2022
at Dec. 31,
2022
Balance
Nominal
value
Effective
interest rate
Balance
Nominal
value
Effective
interest rate
Total Euro
7,303
7,303
4.57%
13,445
13,445
2.20%
Australian dollar
-
-
-
7
7
3.94%
Romanian leu
-
-
-
197
197
7.75%
South African rand
71
71
10.20%
43
43
10.00%
Singapoure dollar
-
-
-
1
1
6.67%
US dollar
653
653
7.08%
511
511
5.70%
Total non-Euro currencies
724
724
759
759
Total
8,027
8,027
14,204
14,204
50
The table below reports the short-term financial instruments granted to the Enel Group companies:
Facility Agreements
Financial
relationship
Commitment
amount as
at 31 Dec
2023
Rate of Interest
Spread
as at 31
Dec
2023
Commitment fee
as at 31 Dec 2023
Millions of Euro
Enel Green Power Germany
GmbH
Revolving credit facility
2.00
EURIBOR 3M
3.90%
35% of the margin
per annum
Enel Green Power Germany
GmbH
Revolving credit facility
1.00
EURIBOR 3M
5.50%
35% of the margin
per annum
Enel Green Power Hellas
Supply Single Member SA
Revolving credit facility
15.00
EURIBOR 1/3 M
1.35%
35% of the margin
per annum
Enel Green Power Korea LLC
Revolving credit facility
1.00
EURIBOR 3M
2.45%
35% of the margin
per annum
Endesa S.A.
Revolving credit facility
1,125.00
EURIBOR 1/3/6M
1.32%
35% of the margin
per annum
Endesa S.A.
Revolving credit facility
700.00
EURIBOR 1/3/6M
0.72%
35% of the margin
per annum
Endesa S.A.
Revolving credit facility
1,700.00
EURIBOR 1/3/6M
0.65%
0.002
Enel
Brasil/Electropaulo/Ampla/Enel
Distribuição Ceará
Revolving credit facility
150.00
EURIBOR 1/3 M
1.20%
35% of the margin
of 120 bps
Enel Italia S.p.A.
Revolving credit facility
2,000.00
EURIBOR 1/3/6M
0.95%
35% of the margin
per annum
Enel S.p.A.
Revolving credit facility
4,500.00
EURIBOR
1W/1/3/6M
0.70%
35% of the margin
per annum
Enel X France SAS
Revolving credit facility
1.50
EURIBOR 3M
5.90%
35% of the margin
per annum
Enel X Way Germany GmbH
Revolving credit facility
1.00
EURIBOR 3M
5.15%
35% of the margin
per annum
Enel Global Trading S.p.A.
Revolving credit facility
1,500.00
EURIBOR 1/3/6M
1.20%
35% of the margin
per annum
S4MA DEVELOPMENTS
SPÓŁKA Z
Revolving credit facility
2.50
EURIBOR 3M
1.50%
35% of the margin
per annum
Millions of USD
Enel Americas S.A.
Revolving credit facility
700.00
SOFR
1.25%
35% of the margin
per annum
Enel Green Power Vietnam,
LLC
Revolving credit facility
2.8
SOFR
3.00%
35% of the margin
per annum
ENEL X WAY PERU S.A.C
Revolving credit facility
3.00
SOFR
5.50%
35% of the margin
per annum
Enel Chile S.A.
Revolving credit facility
100.00
SOFR
1.25%
30% of the margin
per annum
Enel Chile S.A.
Revolving credit facility
200.00
SOFR
1.15%
30% of the margin
per annum
Enel Chile S.A.
Revolving credit facility
50.00
SOFR
0.90%
0,25% of the
margin
Enel Chile S.A.
Revolving credit facility
290.00
SOFR
1.00%
35% of the margin
per annum
Enel Americas S.A.
Revolving credit facility
500.00
SOFR
1.08%
35% of the margin
per annum
Millions of GBP
Enel X Way UK LTD
Revolving credit facility
0.400
STIB 3M
1.55%
35% of the margin
per annum
Millions of ZAR
Enel Green Power RSA (Pty)
Ltd
Revolving credit facility
1,500.00
Fixed
n/a
0.65%
10 Other current financial assets – Euro 1,337 million
Millions of euro
at Dec. 31,
2023
at Dec. 31,
2022
Change
Cash collateral on derivatives
947
464
483
Current financial accrued income
387
354
33
Other current financial receivables
3
114
(111)
Total other current financial assets
1,337
932
405
51
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 3 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 the Enel Group and placed
in time deposits operations with primary bank counterparties.
Millions of euro
at Dec.
31,
2023
at Dec. 31,
2022
Change
Bank balances
2
4
(2)
Bank deposits
1
173
(172)
Total other current financial assets
3
177
(174)
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 Shareholder’s equity – Euro 10,213 million
Share capital – 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.
The share capital was unchanged compared with the amount reported at 31 December 2022.
Share premium reserve– 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) – Euro
(745) 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.
52
Reserve from cost of hedging (legal reserve) – Euro (6) 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
return on capital that the Company defines as total shareholder’s equity, the developments in the
level of its debt in relation to equity and the level of dividends to ordinary shareholders.
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 Company’s management preferred
to exclude evaluation equity reserves which might be quite volatile over the periods:
Millions of euro
at Dec. 31,
2023
at Dec. 31,
2022
Total Equity
10,213
10,286
Cash flow hedge and cost of hedging reserves
(751)
(328)
Adjusted equity
10,964
10,614
Net financial result
350
44
Return of capital (*)
3.2%
0.4%
* Key Performance Indicator determined on a yearly basis.
The Board’s objective is to maintain a 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 2023 to the Company’s retained earnings/ (accumulated loss).
13 Long-term loans and borrowings (including the portion falling due within
twelve months for Euro 4,926 million) – Euro 41,206 million
This note provides information about the contractual terms of the Company’s interest bearing loans
and borrowings, which are measured at amortized cost. For more information about the Company’s
exposure to interest rate, foreign currency and liquidity risk, see paragraph “Risk management”.
The aggregate includes long-term payables in respect of bonds, bank loans, revolving credit facility
and other loans in Euro and other currencies.
53
The following table shows the nominal values, carrying amounts of long-term debt at 31 December
2023, 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,
2023
at Dec.
31,
2023
at Dec.
31,
2023
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2022
at Dec.
31,
2022
at Dec.
31,
2022
Bond
Listed Bond (Fixed rate)
24,484
24,823
21,015
3,469
23,676
24,092
22,791
884
Listed Bond (Floating
rate)
150
150
50
100
300
300
150
150
Unlisted Bond (Fixed
rate)
16,572
16,752
15,215
1,357
17,114
17,319
17,115
-
Total Bond
41,206
41,725
36,280
4,926
41,090
41,711
40,056
1,034
The table below reports long-term financial debt by currency and interest rate.
Millions of Euro
at Dec. 31,
2023
at Dec. 31,
2023
at Dec. 31,
2022
at Dec. 31,
2023
Balance
Nominal value
Balance
Current average
interest rate
Effective
interest rate
Total Euro
20,510
20,757
19,988
1.37%
1.76%
US dollar
16,374
16,547
16,928
4.59%
4.83%
British pound
3,940
4,039
3,815
4.43%
4.62%
Swiss Franc
382
382
359
1.81%
1.84%
Total non-Euro currencies
20,696
20,968
21,102
Total
41,206
41,725
41,090
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,
2022
at Dec.
31,
2023
Bonds in non-Euro
currencies and Euro
currency
41,711
1,500
12
(1,035)
-
(463)
41,725
Total long-term
financial debt
41,711
1,500
12
(1,035)
-
(463)
41,725
New bonds issue
A dual-tranche sustainability-linked bond in the amount of Euro 1,500 million, with repayment in single
instalment, issued in 2023 and structured as follows:
- Euro 750million at a fixed rate of 4.000% and maturity on 20 February 2031;
- Euro 750 million at a fixed rate of 4.500% and maturity on 20 February 2043;
54
Bond repayments
Repayment at maturity
- Euro 100 million in respect of a floating-rate bond matured on 18 February 2023;
- Euro 50 million in respect of a floating-rate bond matured on 27 March 2023;
- Euro 585 million in respect of a fixed-rate bond matured on 17 April 2023;
- Euro 300 million in respect of a fixed-rate bond matured on 29 September 2023.
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 (“Amended Revolving
Facility Agreement”). 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
Enel Group’s eligible green projects) and those related to the bonds issued by the Company on the US
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 Company issued some “sustainable” bonds on the European market (as part of the
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.
The main covenants for the Amended Revolving Facility Agreement involving the Company and Enel
S.p.A. can be summarized as follows:
• negative pledge clause under which the borrower (and Enel S.p.A.’s significant subsidiaries)
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;
55
• 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 substantial portion of the Enel Group’s assets to any other persons outside the Enel Group
such that the financial reliability of the Enel 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
respect of certain financial indebtedness of the borrower or Enel S.p.A.’s “significant”
subsidiaries (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;
• disposals clause, under which the borrower (and Enel S.p.A.’s controlled subsidiaries) may not
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,
2023
Changes from
financing cash flows
Non-cash changes
at Dec.
31,
2023
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
41,090
1,465
(1,035)
(457)
28
115
41,206
Commercial papers
14
7,228
-
(5,092)
-
-
-
2,136
Total
48,318
1,465
(6,127)
(457)
28
115
43,342
56
14 Short-term loans and borrowings – Euro 2,762 million
Millions of Euro
at Dec. 31,
2023
at Dec. 31,
2022
Change
Short-term loans from the Enel Group and associated companies
179
284
(105)
Commercial papers
2,136
7,228
(5,092)
Cash collaterals on derivatives
447
949
(502)
Short-term financial debt
2,762
8,461
(5,699)
Short-term loans
At 31 December 2023 short-term loans totaled to Euro 179 million having a decrease by Euro 105
million comparing with 31 December 2023.
Millions of Euro
Original
currency
Euro
countervalue
at 31 Dec
2023
Euro
countervalue
at 31 Dec
2022
Change
Enel Iberia S.r.l.
Euro
176
190
(14)
Enel X Germany GmbH
Euro
2
12
(10)
Enel Green Power Turkey Enerjí Yatirimlari Anoním Şírketí
TRY
1
-
1
Enel Green Power Romania Srl
RON
-
81
(81)
Enel Investment Holding B.V.
Euro
-
1
(1)
Total
179
284
(105)
Commercial Papers
The payables represented by commercial papers relate to outstanding issuances at 2023 year-end in
the context of the Euro Commercial Paper Programme (hereinafter, also “ECP Programme”), launched
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 2023
was Euro 2,136 million (Euro 7,228 million at 31 December 2022)
15 Other current financial liabilities – Euro 429 million
Other current financial liabilities increased by Euro 30 million and mainly related to interest expenses
accrued on debt outstanding at 31 December 2023.
All payments are expected within 12 months.
57
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:
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
between the parties and therefore are not a measure of the company’s credit 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.
58
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,
2023
Level 1
Level 2
Level 3
at Dec.
31,
2023
Level 1
Level 2
Level 3
Derivative assets
Cash flow hedge
on interest rate risk
12
-
12
-
-
-
-
-
on foreign exchange risk
821
-
821
-
43.00
-
43
-
Total
833
-
833
-
43.00
-
43
-
At fair value through
profit or loss
on interest rate risk
11
-
11
-
-
-
-
-
on foreign exchange risk
-
-
-
-
12
-
12
-
Total
11
-
11
-
12
-
12
-
Total derivative assets
844
-
844
-
55
-
55
-
Derivative liabilities
Fair value hedge
on foreign exchange risk
(46)
-
(46)
-
-
-
-
-
Total
(46)
-
(46)
-
-
-
-
-
Cash flow hedge
on interest rate risk
(33)
-
(33)
-
0
-
0
-
on foreign exchange risk
(1,314)
-
(1,314)
-
(73)
-
(73)
-
Total
(1,347)
-
(1,347)
-
(73)
-
(73)
-
At fair value through
profit or loss
on interest rate risk
(11)
-
(11)
-
-
-
-
-
on foreign exchange risk
-
-
-
-
(4)
-
(4)
-
Total
(11)
-
(11)
-
(4)
-
-
Total derivative
liabilities
(1,404)
-
(1,404)
-
(77)
-
(77)
-
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
Fair value hedge
on foreign exchange risk
-
-
-
-
-
-
-
-
Total
-
-
-
-
-
-
-
-
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
-
-
-
-
-
59
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)
-
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.
Milions of euro
note
Fair value
Level 1
Level 2
Level 3
at Dec. 31,
2023
Financial assets at amortized cost
Medium/long-term financial receivables
6
45,124
-
45,124
-
Short-term financial receivables
9
7,263
-
7,263
-
Total
52,387
-
52,387
-
Borrowings:
Bonds
-fixed rate
13
39,456
39,307
149
-
-floating rate
13
152
-
152
-
Short-term loans from the Enel Group companies
14
179
-
179
-
Short-term borrowings at amortized cost
14
2,136
2,136
-
-
Total
41,923
41,443
480
-
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.
60
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:
- 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:
- if the critical terms of the hedged item and hedging instrument match and there aren’t other
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;
61
- 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.
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).
62
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,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
Derivative assets
Fair value hedge
on foreign exchange risk
-
-
-
-
-
-
-
-
Total
-
-
-
-
-
-
-
-
Cash flow hedge
on interest rate risk
500
650
12
29
-
-
-
-
on foreign exchange risk
9,444
13,738
821
1,550
2,581
-
43
-
Total
9,944
14,388
833
1,579
2,581
-
43
-
Derivative liabilities
Fair value hedge
on foreign exchange risk
577
564
(46)
87
-
-
-
-
Total
577
564
(46)
87
-
-
-
-
Cash flow hedge
on interest rate risk
701
715
(33)
(55)
100
150
0
(1)
on foreign exchange risk
8,821
8,611
(1,314)
(1,017)
995
227
(73)
(38)
Total
9,522
9,326
(1,347)
(1,072)
1,095
377
(73)
(39)
Interest rate benchmark reform -“IBOR” reform
Overview
Interbank Offered Rates (“IBORs”) are benchmark rates at which banks can borrow funds on the
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-
free rates (“IBOR reform”).
The Company’s main IBOR exposure is based to EURIBOR, USD LIBOR.
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 became non-representative after 30 June 2023 and the
alternative reference rate is currently the Secured Overnight Financing Rate (SOFR).
63
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
implemented by the Company within new contracts according to the evolution of market’s best
practice.
During 2023, the Company has signed new loans in USD indexed in SOFR and moved to USD SOFR
the existing exposure for USD LIBOR.
The Company’s derivative instruments are governed by contracts mainly based on the International
Swaps and Derivatives Association (ISDA)’s master agreements.
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
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
the other transactions, signed previous to this date (so called “legacy derivative contracts”), continue
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
The Company’s and hedging instruments as at the reporting date are mainly indexed to Euribor, SOFR
and SONIA
The Company has assessed the impact of uncertainty engendered by the IBOR reform on hedging
relationships at 31 December 2023 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, in order to deal with the uncertainties related to both relevant hedged items and hedging
instruments indexed to USD Libor, the Enel Group, until 30 June 2023 continued to apply the
temporary reliefs provided by the amendments to IFRS 9 issued in September 2019 (Phase 1). Hence,
64
it had considered that the interest rate benchmark on which the cash flows of the hedged item or of
the hedging instrument were based was 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.
Moreover, the Company amended reference to USD LIBOR in its interest rate derivatives used in cash
flow hedging relationships to the new, economically equivalent SOFR benchmark during 2023.
Therefore, the Company no longer applies the amendments to IFRS 9 issued in September 2019
(Phase 1) to those hedging and, then, is applying the amendments to IFRS 9 issued in August 2020
(Phase 2). Accordingly, the Company has amended the formal designation of the hedging relationship
to reflect the changes required by the IBOR reform, without considering this as an event of
discontinuation.
Furthermore, for cash flow hedges relationships, when amending the description of the hedged item
in the hedge documentation, the amounts accumulated in the Cash Flow Hedge reserve have been
deemed to be based on the alternative benchmark rate on which the hedged future cash flows are
determined.
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
2024
2025
2026
2027
2028
Beyond
Total
Interest rate swap:
Total Notional value
100
50
1,894
145
2,189
Notional value in Euro
100
50
1,007
1,157
Average interest rate in Euro
6.0790
4.9150
3
Notional value in USD
887
145
1,032
Average interest rate in USD
4.569
5.896
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 2023 and 31 December 2022, 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,
2023
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2022
Interest rate swaps
Floating-rate
borrowings
12
650
28
800
Interest rate swaps
Floating-rate
lendings
(33)
1,539
(54)
1,633
Total
(21)
2,189
(26)
2,433
65
The following table shows the notional amount and the fair value of hedging derivatives on interest
rate risk as at 31 December 2023 and 31 December 2022, broken down by type of hedge:
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
Derivatives
at Dec.
31,
2023
at Dec.
31,
2022
at
Dec.
31,
2023
at Dec.
31,
2022
at
Dec.
31,
2023
at
Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
Interest rate swaps
944
1,109
24
46
1,245
1,324
(45)
(72)
Total
944
1,109
24
46
1,245
1,324
(45)
(72)
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
2028
Beyond
Cash flow hedge derivatives on
interest rates:
- Positive fair value
13
9
2
2
0
0
-
- Negative fair value
(34)
(17)
(8)
(6)
(2)
(1)
(1)
Total
(21)
(8)
(6)
(4)
(2)
(1)
(1)
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 2023 broken down by maturity.
Millions of euro
Maturity
2024
2025
2026
2027
2028
Beyond
Total
Cross currency interest rate swap:
Total Notional value
3,194
1,720
1,132
2,137
2,037
11,583
21,803
Notional value CCIRS Euro-USD
2,213
1,720
1,132
1,560
2,037
9,102
17,764
Average exchange rate Euro/USD
1
1.0556
1.1790
1.0990
1.1763
1.1468
Notional value CCIRS Euro-GBP
981
577
2,481
4,039
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 2023 and 31 December 2022, 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,
2023
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2022
Cross currency interest rate swap (CCIRS)
Fixed-rate
borrowings in
foreign
currencies
(457)
20,968
594
21,431
Cross currency interest rate swap (CCIRS)
Fixed-rate
lendings in
foreign
currencies
(112)
1,450
(186)
1,709
Total
(569)
22,418
408
23,140
66
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 2023 and 31 December 2022, broken
down by type of hedge:
Millions of euro
Notional amount
Fair value assets
Notional amount
Fair value liabilities
Derivatives
at Dec.
31,
2023
at Dec.
31,
2022
at
Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at
Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
Cross currency interest rate swap (CCIRS)
12,026
13,738
864
1,550
10,392
8,838
(1,433)
(1,055)
Total
12,026
13,738
864
1,550
10,392
8,838
(1,433)
(1,055)
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
2023
2022
Net Gains /(Losses)
Net Gains /(Losses)
Hedging instruments
42
(96)
Hedged items
(28)
66
Ineffectiveness
-
-
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
2028
Beyond
Cross currency interest rate
swap
- Positive Fair value derivatives
864
171
151
145
129
102
1,283
- Negative fair value derivatives
(1,387)
40
43
34
28
24
307
Total
(523)
211
194
179
157
126
1,590
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,
2023
Interest rate swap (IRS)
1,301
(21)
Derivatives
(21)
Cross currency interest rate swap (CCIRS)
21,841
(523)
Derivatives
(513)
at Dec. 31,
2022
Interest rate swap (IRS)
1,515
(27)
Derivatives
(27)
Cross currency interest rate swap (CCIRS)
22,576
495
Derivatives
551
67
The impact of the hedged item on the balance sheet is, as follows:
Millions of Euro
2023
2022
Fair value
used for
measuring
ineffectiveness
Other
effects
Cash
flow
hedge
reserve
Cost of
hedging
reserve
Fair value
used for
measuring
ineffectiveness
Other
effects
Cash
flow
hedge
reserve
Cost of
hedging
reserve
Floating-rate
borrowings
(12)
-
12
-
(28)
-
28
-
Floating-rate lendings
33
-
(33)
-
55
-
(55)
-
Floating-rate lendings
in foreign currencies
113
-
(113)
-
182
-
(182)
(4)
Fixed-rate borrowings
in foreign currencies
400
118
(518)
(10)
(733)
118
614
(52)
Total
534
118
(652)
(10)
(524)
118
405
(56)
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/(lo
ss)
recognis
ed in
OCI
Ineffectiv
eness
recognise
d in profit
or loss
Line item
in the
statement
of profit
or loss
Cost of
hedging
recognis
ed in
OCI
Amount
reclassifi
ed from
OCI to
profit or
loss
Line item in the
statement of profit or
loss
at Dec. 31, 2023
Floating-rate borrowings
12
-
Derivative
-
-
Financial expense from
derivative
Floating-rate lendings
(33)
-
Derivative
-
-
Financial expense from
derivative
Floating-rate lendings in
foreign currencies
(113)
-
Derivatives
-
(32)
Financial expense from deri
vative
Fixed-
rate borrowings in foreign c
urrencies
(518)
-
Derivatives
46
477
Financial expense from
derivative
at Dec. 31, 2022
Floating-rate borrowings
82
-
Derivatives
-
-
Financial expense from deri
vative
Floating-rate lendings
(82)
-
Derivative
-
-
Financial expense from
derivative
Floating-rate lendings in
foreign currencies
(115)
-
Derivative
-
(111)
Financial expense from
derivative
Fixed-rate borrowings in
foreign currencies
333
-
Derivatives
(58)
121
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:
2023
2022
Millions of Euro
Cost of
hedging
Gross
changes
in fair
value
recogniz
ed in
equity
(b)
Gross
changes in
fair value
transferred
to income –
Recycling
(1)
(c)
Gross
changes in
fair value
transferred
to income -
Ineffectivene
ss
Cost of
hedging
Gross
change
s in fair
value
recogni
zed in
equity
(b)
Gross
changes in
fair value
transferred
to income –
Recycling
(1)
(c)
Gross changes
in fair value
transferred to
income -
Ineffectiveness
Interest rate
hedging
-
5
-
-
-
1
-
-
Exchange rate
hedging
46
(1,064)
-
-
(58)
221
-
-
Hedging
derivatives
46
(1,059)
-
-
(58)
222
-
-
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
68
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.
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 2023 and 31 December 2022, 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,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
at Dec.
31,
2023
at Dec.
31,
2022
Derivative assets
At fair value through
profit or loss
on interest rate risk
444
459
11
17
-
0
-
0
on foreign exchange risk
-
-
-
-
906
1,987
12
34
Total
444
459
11
17
906
1,987
12
34
Derivative liabilities
At fair value through
profit or loss
on interest rate risk
444
459
(11)
(17)
on foreign exchange risk
-
-
-
-
596
464
(4)
(2)
Total
444
459
(11)
(17)
596
464
(4)
(2)
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
2028
Beyond
Fair value through profit or loss
derivatives on interest rates:
- Positive fair value
11
8
2
1
-
-
-
- Negative fair value
(11)
(8)
(2)
(1)
-
-
-
Total
-
-
-
-
-
-
-
Millions of euro
Fair value
Distribution of expected cash flows
at Dec. 31,
2023
2024
2025
2026
2027
2028
Beyond
Fair value through profit or loss
derivatives on exchange rates:
- Positive fair value
12
12
-
-
-
-
-
- Negative fair value
(4)
(4)
-
-
-
-
-
Total
8
8
-
-
-
-
-
69
18 Related parties
Transactions between Enel Finance International N.V. and other companies of the 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 the Enel Group or associated to it.
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 the 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 2023 and 31 December 2022 respectively:
Millions of euro
Receivables
Payables
Income
Cost
at Dec. 31,
2023
2023
Shareholder
Enel S.p.A
19,766
-
423
68
(Subtotal)
19,766
-
423
68
Other affiliated companies
Villanueva Solar, S.A. De C.V.
56
-
4
2
Ampla Energia E Servicos S.A.
332
-
51
(3)
Parque Solar Villanueva Tres, S.A. De C.V.
37
-
3
2
Enel Green Power Vietnam LLC (Cong ty TNHH
Enel Green Power Viet Nam)
1
-
-
-
Parque Solar Don Jose, S.A. De C.V.
22
-
2
1
Energia Limpia De Amistad, S.A De C.V.
115
-
26
1
Slovak Power Holding B.V.
754
-
70
(1)
Enel Green Power Romania Srl
-
-
1
5
Parque Salitrillos, S.A. de C.V.
67
2
6
4
Enel Green Power Germany Gmbh
1
-
-
-
Ngonye Power Company Limited
2
-
1
1
Enel X S.r.l.
101
-
2
-
S4MA DEVELOPMENTS SPOLKA Z
OGRANICZONA ODPOWIEDZIALNOSCIA
2
-
-
-
Enel Distribuição Ceará
97
-
20
-
Enel X Way Peru S.A.C.
3
-
-
-
Dolores Wind Sa De Cv
78
-
9
7
Parque Amistad Ii Sa De Cv
38
-
4
3
Parque Amistad Iii Sa De Cv
41
-
5
4
Parque Amistad Iv Sa De Cv
7
-
2
1
Enel Green Power Hellas Supply Single
Member SA
7
-
-
-
Endesa SA
6,554
8
190
1
Enel Brasil S.A
254
-
17
(2)
Enel Energie Muntenia SA (currently PPC
Energie Muntenia SA)
-
-
8
1
Enel Energie SA (currently PPC Energie SA)
-
-
13
3
Enel Iberia SRL
3,027
176
51
4
Enel Green Power Spa GLO
1,573
48
60
24
Enel Investment Holding BV
-
3
-
(2)
Enel Panamá CAM Srl
26
-
3
1
70
Enel Italia S.p.A.
18,548
-
913
1
Egp Magdalena Solar SA de CV
77
-
9
7
Enel Global Trading Spa IT
205
-
21
(2)
Enel Americas S.A.
593
-
10
12
HELLAS RES SOCIETE ANONYME
60
-
-
-
Enel Green Power Mexico S de RL de CV
-
-
18
(2)
Enel X Australia Pty Ltd
-
-
1
-
Enel X Korea Limited
5
-
-
-
PH Chucas S.A.
38
-
6
2
Enel X Taiwan Co., Ltd
3
-
-
-
Enel Insurance NV
-
33
-
-
Enel Green Power Korea LLC
1
-
-
-
Viva Labs AS
-
-
-
-
Enel Trade Energy SRL
-
-
1
-
Dominica Energia Limpia SA de C.V.
58
-
13
-
Enel Green Power Turkey Enerji Yatirimlari
Anonim Sirketi
-
1
1
-
Kongul Enerji Sanayi Ve Ticaret Anonim Sirketi
-
-
-
-
Enel X Germany GmbH
-
1
-
-
Enel Green Power South Africa Pty Ltd
71
-
10
10
Energia Limpia De Palo Alto, SA De C.V.
115
6
10
6
Vientos de Altiplano, SA de C.V.
33
-
8
-
Enel Chile S.A.
1,222
-
90
57
(Subtotal)
34,224
278
1,659
148
Total
53,990
278
2,082
216
Millions of euro
Receivables
Payables
Income
Cost
at Dec. 31,
2022
2022
Shareholder
Enel S.p.A
21087
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
-
-
-
Enel Distribuição Ceará
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 Supply Single
Member SA
-
-
29
(1)
Endesa SA
5,118
-
124
1
Enel Brasil S.A
482
-
34
2
Enel Energie Muntenia SA (currently PPC
Energie Muntenia SA)
71
-
2
2
Enel Energie SA (currently PPC 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
71
Enel Panamá CAM Srl
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 SA de 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 Ltd
43
-
2
1
Energia Limpia De Palo Alto, SA 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
Juicenet Ltd
-
-
-
-
Total
58,834
371
1,778
275
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.
Impact on balance sheet
Millions of Euro
Total
Related
parties
%of total
Total
Related
parties
%of
total
at Dec. 31,
2023
at Dec. 31,
2022
Assets
Long-term loans and financial receivables
including current portion
45,613
45,613
100%
44,333
44,333
100%
Derivatives- non-current
845
36
4%
1,596
25
2%
Short-term loans and financial receivables
8,018
8,018
100%
14,190
14,190
100%
Derivatives - current
55
-
0%
34
-
0%
Other current financial assets
1,337
323
24%
932
286
31%
Other current assets
-
-
0%
1.00
-
0%
Liabilities
Derivatives- non-current
1,405
44
3%
1,176
74
6%
33
8
24%
37
-
0%
Income tax payable
82
34
41%
8
8
100%
Short-term loans and borrowings
2,762
179
6%
8,461
284
3%
Derivatives - current
76
-
0%
41
-
0%
Other current financial liabilities
429
11
3%
399
4
1%
Other current liabilities
1
1
100%
1
1
100%
72
Impact on income statement
Millions of Euro
Total
Related
parties
%of total
Total
Related
parties
%of
total
at Dec. 31,
2023
at Dec. 31,
2022
Interest income
2,015
1,994
99%
1,074
1,070
100%
Interest income from derivatives
269
6
2%
339
19
6%
Other income
-
-
0%
254
254
0%
Interest expense
1,597
73
5%
1,313
85
6%
Interest expense from derivatives
176
27
15%
242
59
24%
Other expenses
-
-
0%
-
-
-
Other operating expenses
5
1
20%
6
1
17%
Financial income on derivatives
278
-
0%
1,185
0
0%
Other financial income
657
83
13%
1,093
435
40%
Financial expense on derivatives
686
-
0%
1,348
0
0%
Other financial expense
265
118
45%
972
130
13%
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 could be found in the above mention programmes.
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 Enel
S.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, 2023, 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 2023, amounted to Euro 116 thousand (Euro 91 thousand in 2022) represented
short-term employee benefits and summarized in the following table:
Thousands of euro
at Dec. 31,
2023
at Dec. 31,
2022
A.J.M. Nieuwenhuizen
29
29
H. Marseille
29
29
E. Di Giacomo
29
29
L.B. Van der Heijden
29
4
A. Canta
-
-
Total
116
91
73
22 Fees of the auditors
The independent auditor of the Company is KPMG Accountants N.V. having been appointed by the
shareholders’ meeting of 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,
2023
at Dec. 31,
2022
Audit
104
96
Audit related services in connection with GMTN prospectus
32
28
Tax
-
-
Other
-
-
Total
136
124
23 Subsequent events
On 16 January 2024 the Company launched a dual-tranche “Sustainability-Linked Bond” for
institutional investors in the Eurobond market for a total of 1,750 million euros.
Specifically, the issue is structured in the following tranches:
- Euro 750 million at a fixed rate of 3.375%, with issuance date set on 23 January 2024, maturing
23 July 2028:
• the issue price has been set at 99.727% and the effective yield at maturity is equal to 3.445%;
• the interest rate will remain unchanged to maturity, subject to the achievement by the Enel
Group of the following Sustainability Performance Targets (“SPTs”). In particular:
o for the KPI related to the “Proportion of CAPEX aligned to the EU Taxonomy (%)”, the
achievement of a SPT equal to or higher than 80% on 31 December 2026 for the 2024-
2026 period;
o for the KPI related to the “Scope 1 GHG emissions Intensity relating to Power Generation
(gCO2eq/kWh)”, the achievement of a SPT equal to or less than 125gCO2eq/kWh on
31 December 2026;
• 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 1,000 million at a fixed rate of 3.875%, with issuance date set on 23 January 2024, maturing
23 January 2035:
• the issue price has been set at 98.792% and the effective yield at maturity is equal to 4.013%;
• the interest rate will remain unchanged to maturity, subject to the achievement by the Enel
Group of the following SPTs. In particular:
o for the KPI related to the “Scope 1 GHG emissions Intensity relating to Power Generation
(gCO2eq/kWh)”, the achievement of a SPT equal to or less than 72gCO2eq/kWh on
31 December 2030;
74
o for the KPI related to the “Renewable Installed Capacity Percentage (%)”, the achievement
of a SPT equal to or higher than 80% on 31 December 2030;
• 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 8 years, has an average coupon of
3.66%.
Amsterdam, 23 April 2024
E. Di Giacomo
A. Canta
L.B. Van der Heijden
H. Marseille
A.J.M. Nieuwenhuizen
75
Other information
Provisions in the articles of association governing the appropriation of profit
Under article 16 of the Company’s articles of association, the profit is at the disposal of the General
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
as the shareholders’ equity is greater than the paid-up and called-up part of the capital plus the legally
required reserves.
Report of the independent audit
firm on the 2023 financial statements of
Enel Financial International BV
The auditor’s report is set forth on the following page.
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 2023 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 2023 and of its result and its cash
flows for the year then ended, in accordance with IFRS Accounting Standards as endorsed 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 2023 of ENEL Finance International N.V. based in
Amsterdam.
The financial statements comprise:
1 the statement of financial position as at 31 December 2023;
2 the following statements for 2023: profit or loss and other comprehensive income, changes in
equity and cash flows; and
3 the notes comprising material accounting policy information 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-related risks and the key audit matters was
2
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.
Information in support of our opinion
Summary
Materiality
• Materiality of EUR 425 million
• 0.75% of Total Assets
Risk of material misstatements related to Fraud, NOCLAR, Going concern and Climate-
related risks
• Fraud risks: presumed risk of management override of controls identified and further
described in the section ‘Audit response to the risk of fraud and non-compliance with laws
and regulations’.
• Non-compliance with laws and regulations (NOCLAR) risks: no reportable risk of material
misstatements related to NOCLAR risks identified.
• Going concern risks: no going concern risks identified.
• Climate 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 ENEL S.p.A. group companies.
Materiality
Based on our professional judgement we determined the materiality for the financial statements
as a whole at EUR 425 million (2022: EUR 410 million). The materiality is determined with
reference to 0,75% of total assets (2022: 0,67%). 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
3
audit in excess of EUR 21 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 risks and uncertainties” and “The Company`s control system” of the
Directors’ report, the directors describes its procedures in respect of the risk of fraud and non-
compliance with laws and regulations.
As part of our audit, we have gained insights into the Company and its business environment and
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. We have also incorporated elements of unpredictability in our audit by applying
specific sampling method for selection of counterparties to assess the estimated intercompany
probability of default and involved forensic specialist in our audit procedures.
As a result from our risk assessment, we identified the following laws and regulations as those
may have a material effect on the financial statements in case of non-compliance:
- Anti-bribery and corruption laws and regulations (reflecting the Company’s involvement in the
regulated market);
- Anti-money laundering and terrorist financing laws and regulations (reflecting the Company’s
significant and geographically diverse lending operations).
Further, we assessed the presumed fraud risk on revenue recognition as not significant, 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 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 on the auditing standards, we identified the following presumed fraud risk
laid down in the auditing standards 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) received from related parties.
4
Responses:
- We evaluated the design and the implementation of internal controls that mitigate fraud 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.
Where we identified instances of unexpected journal entries or other risks through our data
analytics, we performed additional audit procedures to address each identified risk, including
testing of transactions back to source information.
- 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.
Our evaluation of procedures performed related to fraud in respect of management override of
controls did not result in an additional key audit matter.
We communicated our risk assessment, audit responses and results to 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 23 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. The Board of Directors did not identify any going concern risks.
To assess the Board of Directors’ assessment, we performed, inter alia, the following procedures:
- 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, effect of climate-related risks 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 terms of the agreements.
- We analyzed the Company’s financial position as at year-end, results and cashflow for the year
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 the audited consolidated financial statements as of 31 December 2023 of ENEL
S.p.A., we verified the going concern basis of the Group as a whole.
5
- 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 its considerations 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, in accordance with the Group strategy, 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 in relation to climate-related risk 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 risk assessment performed, we found that climate related risks
have no material impact on the current financial statements under the requirements of EU-IFRS
and no material impact on our key audit matters.
Furthermore, we have read the Director`s report with respect to climate-related risks as included
in the annual report and considered whether such information contains material inconsistencies
with the financial statements or our knowledge obtained through the audit, in particular as
described above and our knowledge obtained otherwise.
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 matters to the Board
of Directors of ENEL Finance International N.V. and the Audit Committee of ENEL S.p.A. The key
audit matters are not a comprehensive reflection of all matters discussed.
Recoverability of the long-term and short-term loans and financial receivables including
current financial accrued income due from ENEL S.p.A. (parent Company) and ENEL
S.p.A. group companies
Description
As included in note 6, 9 and 10 to the financial statements, the Company’s exposure, in terms of
credit risk, to group companies may have a significant effect in the Company’s financial
statements. The outstanding balance as at 31 December 2023 of EUR 49,783 million (EUR
56,474 million as at 31 December 2022) (long-term and short-term loans and financial receivables
including current financial accrued income, net of the impairment loss allowance of EUR 62 million
6
(EUR 60 million as at 31 December 2022) represents approx. 88% (2022 approx. 92%) of total
balance sheet.
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 are 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 from ENEL S.p.A. and/or ENEL S.p.A. group
companies to be a key audit matter.
Our response
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 ENEL S.p.A. and/or ENEL S.p.A. group companies:
- 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 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.
- We inspected and analysed ENEL S.p.A.'s financial position by evaluating its audited
consolidated financial statements for the year 2023. 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.
7
- 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 38-40 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
management 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 initially appointed 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.
8
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 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.
9
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.
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) his description forms
part of our auditor’s report.
Amstelveen, 23 April 2024
KPMG Accountants N.V.
L.M.A. van Opzeeland RA
