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Definition of performance indicators

In order to present the results of the Group and the Parent Company and analyze its financial structure, Enel has prepared separate reclassified schedules that differ from those envisaged under the IFRS-EU adopted by the Group and by Enel SpA and presented in the consolidated and separate financial reports. These reclassified schedules contain different performance indicators from those obtained directly from the consolidated and separate financial statements, which management feels are useful in monitoring the performance of the Group and the Parent Company and representative of the financial performance of the business.
As regards those indicators, on December 3, 2015, CONSOB issued Communication 92543/2015, which gives force to the Guidelines issued on October 5, 2015, by the European Securities and Markets Authority (ESMA) concerning the presentation of alternative performance measures in regulated information disclosed or prospectuses published as from July 3, 2016. These Guidelines, which update the previous CESR Recommendation (CESR/05-178b), are intended to promote the usefulness and transparency of alternative performance indicators included in regulated information or prospectuses within the scope of application of Directive 2003/71/EC in order to improve their comparability, reliability and comprehensibility.
Accordingly, in line with the regulations cited above, the criteria used to construct these indicators are as follows.

Gross operating margin: an operating performance indicator, calculated as “Operating income” plus “Depreciation, amortization and impairment losses”.

Ordinary gross operating margin: an indicator calculated by eliminating from the gross operating margin all items connected with non-recurring transactions such as acquisitions or disposals of entities (e.g. capital gains and losses), with the exception of those in the renewables development segment, in line with the new “Build, Sell and Operate” business model launched in the 4th Quarter of 2016, in which the income from the disposal of projects in that sector is the result of an ordinary activity for the Group.

Ordinary operating income: this is calculated by correcting “operating income” for the effects of the non-recurring transactions referred to with regard to the gross operating margin, as well as significant impairment losses on assets following impairment testing or classification under “assets held for sale”.

Group ordinary net income: this is defined as “Group net income” generated by Enel’s core business and is equal to “Group net income” less the effects on net income (including the impact of any tax effects or non-controlling interests) of the items referred to in the comments on “ordinary operating income”.

Net non-current assets: calculated as the difference between “Non-current assets” and “Non-current liabilities” with the exception of:

  • “Deferred tax assets”;
  • “Securities held to maturity”, “Financial investments in funds or portfolio management products measured at fair value through profit or loss” and “Other financial receivables”included in “Other non-current financial assets”
  • “Long-term borrowings”;
  • “Employee benefits”;
  • “Provisions for risks and charges (non-current portion)”;
  • “Deferred tax liabilities”.

Net current assets: calculated as the difference between “Current assets” and “Current liabilities” with the exception of:

  • “Long-term financial receivables (short-term portion)”, “Factoring receivables”, “Securities held to maturity”, Overview of the Group’s operations, performance and financial position Report on operations 27 “Cash collateral” and “Other financial receivables” included in “Other current financial assets”;
  • “Cash and cash equivalents”
  • “Short-term borrowings” and the “Current portion of long-term borrowings”;
  • “Provisions for risks and charges (current portion)”;
  • “Other financial payables” included in “Other current liabilities”

Net assets held for sale: calculated as the algebraic sum of “Assets held for sale” and “Liabilities held for sale”.

Net capital employed: calculated as the algebraic sum of “Net non-current assets” and “Net current assets”, “Provisions for risks and charges”, “Deferred tax liabilities” and “Deferred tax assets”, as well as “Net assets held for sale”.

Net financial debt: a financial structure indicator, calculated as:

  • “Long-term borrowings” and “Short-term borrowings and the current portion of long-term borrowings”, taking account of “Short-term financial payables” included in “Other current liabilities”;
  • net of “Cash and cash equivalents”;
  • net of the “Current portion of long-term financial receivables”,“Factoring receivables”, “Cash collateral” and “Other financial receivables” included in “Other current financial assets”;
  • net of “Securities held to maturity”, “Securities available for sale”, “Financial investments in funds or portfolio management products measured at fair value through profit or loss” and “Other financial receivables” included in“Other non-current financial assets”.

More generally, the net financial debt of the Enel Group is calculated in conformity with paragraph 127 of Recommendation CESR/05-054b implementing Regulation 2004/809/EC and in line with the CONSOB instructions of July 26, 2007, net of financial receivables and long-term securities.