Net financial debt

Net financial debt and changes in the period are detailed in the table below.

Millions of euro    
at Dec. 31, 2017at Dec. 31, 2016 Change
Long-term debt:  
- bank borrowings 8,310 7,446 864 11.6%
- bonds 32,285 32,401 (116) -0.4%
- other borrowings 1,844 1,489 355 23.8%
Long-term debt 42,439 41,336 1,103 2.7%
Long-term financial receivables and securities (2,444) (2,621) 177 6.8%
Net long-term debt 39,995 38,715 1,280 3.3%
Short-term debt:        
Bank borrowings:        
- short-term portion of long-term bank borrowings 1,346 749 597 79.7%
- other short-term bank borrowings 249 909 (660) -72.6%
Short-term bank borrowings 1,595 1,658 (63) -3.8%
Bonds (short-term portion) 5,429 3,446 1,983 57.5%
Other borrowings (short-term portion) 225 189 36 19.0%
Commercial paper 889 3,059 (2,170) -70.9%
Cash collateral on derivatives and other financing 449 1,286 (837) -65.1%
Other short-term financial payables (1) 307 414 (107) -25.8%
Other short-term debt 7,299 8,394 (1,095) -13.0%
Long-term financial receivables (short-term portion) (1,094) (767) (327) -42.6%
Factoring receivables (42) (128) 86 67.2%
Financial receivables - cash collateral (2,664) (1,082) (1,582) -
Other short-term financial receivables (589) (911) 322 -35.3%
Cash and cash equivalents with banks and short-term securities (7,090) (8,326) 1,236 14.8%
Cash and cash equivalents and short-term financial receivables (11,479) (11,214) (265) -2.4%
Net short-term debt (2,585) (1,162) (1,423) -
NET FINANCIAL DEBT 37,410 37,553 (143) -0.4%
Net financial debt of “Assets held for sale” 1,364 - 1,364 -

(1) Includes current financial payables included in ”Other current financial liabilities”.

Net financial debt amounted to €37,410 million at December 31, 2017, a decrease of €143 million on December 31, 2016.

More specifically, net long-term debt rose by €1,280 million, the joint effect of a decrease in long-term financial receivables of €177 million and an increase in gross long-term debt of €1,103 million.

With regard to the latter aggregate:

  • bank borrowings amounted to €8,310 million, an increase of €864 million due mainly to drawings on bank financing by Enel SpA and subsidized loans to Endesa, e-distribuzione, and Enel Green Power Perú, partly offset by the reclassification to short-term of amounts falling due within 12 months and the exchange gains of €287 million (the amount includes exchange differences in respect of the short-term portion of borrowings);
  • bonds amounted to €32,285 million, a decrease of €116 million on the end of 2016, mainly reflecting:
    • the repurchase by Enel Finance International of its own 10-year bonds issued in US dollars in October 2009 amounting to €1,479 million;
    • the reclassification to short term of the current portion of bonds maturing within the next 12 months, the residual amount of two retail bonds issued by Enel SpA with a nominal value of €3,000 million falling due in February 2018, €512 million and €543 million in respect of two fixed-rate bond issued by Enel Finance International falling due in April 2018 and October 2018 respectively and €191 million in respect of issues in local currencies by the South America companies;
    • new issues in 2017, including:
      • €1,250 million in respect of a fixed-rate Green Bond falling due in 2024, issued by Enel Finance International in January 2017;
        • $5,000 million (the equivalent of €4,169 million) in respect of a multi-tranche bond falling due in 2022, 2027 and 2047, issued by Enel Finance International in May 2017;
        • $3,000 million (the equivalent of €2,501 million) in respect of a multi-tranche bond, falling due in 2023, 2028 and 2047, issued by Enel Finance International in October 2017;
          • €484 million in respect of issues in local currencies by the South American companies;
    • exchange rate gains during the year in the amount of about €1,850 million (the amount also includes the exchange difference on the short-term portion of the bonds).

Net short-term debt showed a creditor position of €2,585 million at December 31, 2017, an increase of €1,423 million on the end of 2016, the result of the decrease in other borrowings and in short-term bank borrowings of €1,095 million and €63 million, respectively, and an increase in cash and cash equivalents and short-term financial receivables in the amount of €265 million.

Other short-term debt, totaling €7,299 million, includes commercial paper issued by International Endesa BV amounting to €889 million, as well as bonds maturing within 12 months amounting to €5,429 million.

Finally, cash collateral paid to counterparties in over-thecounter derivatives transactions on interest rates, exchange rates and commodities totaled €2,664 million, while cash collateral received from such counterparties amounted to €449 million.

Cash and cash equivalents and short-term financial receivables came to €11,479 million, up €265 million compared with the end of 2016, mainly reflecting the increase in cash collateral paid to counterparties of €1,582 million, partly offset by a decrease in cash with banks and short-term securities of €1,236 million.

The main transactions carried out in 2017 included:

  • the renegotiation with an extension until 2020 of the main credit lines of Endesa in the total amount of €1,985 million. As at December 31, 2017, the credit was drawn in the amount of €12 million;
  • the agreement, on July 28, 2017, of the first tranche of a loan of €500 million from the European Investment Bank to e-distribuzione for the replacement of digital meters in Italy. As at December 31, 2017, the credit was drawn in the amount of €100 million;
  • the agreement, on December 18, 2017, between Enel SpA and Enel Finance International and a pool of banks of a revolving credit line of €10 billion, which will fall due in December 2022 and as at December 31, 2017 was not drawn. This credit facility replaces an existing €9.4 billion facility agreed in 2015 and falling due in February 2020;
  • the following bond repayments:
    • €908 million in respect of a fixed-rate bond, issued by Enel SpA in 2007, maturing in June 2017;
    • the equivalent of €1,254 million in respect of a fixedrate bond in US dollars, issued by Enel Finance International, maturing in September 2017.

The net financial debt of assets and liabilities held for sale at December 31, 2017 amounted to €1,364 million and mainly regarded the borrowing with which the Group financed the construction of the plants of the Mexican project companies (the “Kino Project”).

Cash flows

Millions of euro   
 20172016Change
Cash and cash equivalents at the beginning of the period (1) 8,326 10,790 (2,464)
Cash flows from operating activities 10,125 9,847 278
Cash flows from investing/disinvesting activities (9,294) (8,087) (1,207)
Cash flows from financing activities (1,646) (4,474) 2,828
Effect of exchange rate changes on cash and cash equivalents (390) 250 (640)
Cash and cash equivalents at the end of the period (2) 7,121 8,326 (1,205)

(1) Of which cash and cash equivalents equal to €8,290 million at January 1, 2017 (€10,639 million at January 1, 2016), short-term securities equal to €36 million at January 1, 2017 (€1 million at January 1, 2016) and cash and cash equivalents pertaining to assets held for sale equal to €150 million at January 1, 2016.
(2) Of which cash and cash equivalents equal to €7,021 million at December 31, 2017 (€8,290 million at December 31, 2016), short-term securities equal to €69 million at December 31, 2017 (€36 million at December 31, 2016) and cash and cash equivalents pertaining to assets held for sale equal to €31 million at December 31, 2017.

Cash flows from operating activities in 2017 were a positive €10,125 million, up €278 million compared with 2016, mainly reflecting an increase in the gross operating margin, a decline in the use of provisions and a reduction in taxes paid, which more than offset the deterioration in net working capital.

Cash flows from investing/disinvesting activities in 2017 absorbed funds in the amount of €9,294 million, while in 2016 they had absorbed liquidity totaling €8,087 million.

More specifically, cash requirements in respect of investments in property, plant and equipment and in intangible assets amounted to €8,499 million in 2017, down €343 million on the previous year, mainly due to decreased investment in renewable technologies.

Investments in entities or business units, net of cash and cash equivalents acquired, amounted to €900 million in 2017 and primarily regarded the acquisition of Enel Distribuição Goiás (formerly CELG-D), a power distribution company operating in the Brazilian state of Goiás, as well as EnerNOC, which operates in active demand response and energy intelligence software services in North America, Europe and Asia-Pacific.

In 2017, the disposal of entities and business units, net of cash and cash equivalents sold, generated cash flows of €216 million and mainly regarded the disposal of the Caney River and Rocky Ridge wind farms in North America. In 2016, the item amounted to €1,032 million and included:

  • the disposal of Hydro Dolomiti Enel, which operates in the hydroelectric generation sector in Italy, for €313 million;
  • the disposal, in December 2016, of the Cimarron and Lindahl wind farms to EGPNA Renewable Energy Partners (for €216 million), a vehicle to which plants operating in the United States for which a partnership agreement was reached with General Electric were transferred (and will continue to be transferred);
  • the disposal of GNL Quintero, an associate in which the Group held 20%, for €177 million;
  • the sale of 50% of Slovak Power Holding, which in turn holds 66% of Slovenské elektrárne, for €139 million;
  • the disposal, in May 2016, of 65% of Drift Sand Wind Project, a company operating in the wind generation sector in the United States, for €98 million;
  • the sale of Marcinelle Energie, a company operating in the thermal generation sector in Belgium, for a total of €36 million;
  • price adjustments for disposals carried out in previous years totaling €60 million.

Cash flows from financing activities absorbed liquidity in the amount of €1,646 million, while in 2016 they showed cash absorbed of €4,474 million. The flow in 2017 is essentially associated with the increase in net financial debt (the net balance of repayments and new borrowing) in the amount of €1,705 million and the payment of dividends totaling €2,873 million.

These factors were accompanied by an increase in outlays for transactions involving non-controlling interests in the amount of €478 million, mainly regarding the outlay for the put option that enabled the acquisition of an additional 13.6% of e-distribut¸ie Muntenia and Enel Energie Muntenia.

Accordingly, in 2017, cash flows from operating activities in the amount of €10,125 million only partly covered the cash needs for financing activities in the amount of €1,646 million and for investing activities totaling €9,294 million. The difference is reflected in the decrease in cash and cash equivalents, which at December 31, 2017 amounted to €7,121 million, compared with €8,326 million at the end of 2016. This decrease also reflects the effect of negative developments in the exchange rates of the various local currencies against the euro, equal to €390 million.