Annual Report 2010 - Enel.com

Credit risk
Enel manages credit risk by operating solely with counterparties
considered solvent by the market, i.e. those with
high credit standing, and does not have any significant
concentration of credit risk.
The credit risk in respect of the derivatives portfolio is considered
negligible since transactions are conducted solely
with leading Italian and international banks, diversifying
the exposure among different institutions and constantly
monitoring their credit ratings.
In addition, during the year Enel entered into margin
agreements with the leading financial institutions with
which it operates that call for the exchange of cash collateral,
which significantly mitigates the exposure to counterparty
risk.
As part of activities related to purchasing fuels for thermal
generation and the sale and distribution of electricity,
the distribution of gas and the sale of gas to eligible customers,
Enel grants trade credit to external counterparties.
The counterparties selected are carefully monitored
through the assessment of the related credit risk and the
pledge of suitable guarantees and/or security deposits to
ensure adequate protection from default risk.
Liquidity risk
Enel SpA (directly and through its subsidiary Enel Finance
International NV) is responsible for the centralized Group
Treasury function (with the exception of the Endesa
Group, where that function is performed by Endesa SA
and its subsidiaries International Endesa BV and Endesa
Capital SA), meeting liquidity requirements primarily
through cash flows generated by ordinary operations and
drawing on a range of sources of financing. In addition, it
manages any excess liquidity as appropriate.
The Enel Group’s access to the credit market despite the
recent financial crisis was confirmed by the successful
placement during the period of bonds on the European
retail market totaling €3 billion and the 5-year €10 billion
revolving credit line obtained by Enel SpA and Enel Finance
International NV that can be used to manage working
capital (unconnected with the refinancing program
for existing debt).
At December 31, 2010, the Enel Group had a total of about
€5.2 billion in cash or cash equivalents, of which €1.8
billion held by Endesa, as well as total committed credit
lines of €20.2 billion, of which €6.7 billion held by Endesa.
The committed credit lines amounted to €29.2 billion (€9
billion drawn), of which €8.6 billion held by Endesa (€1.8
billion drawn). In addition, the Group had uncommitted
credit lines totaling €2.7 billion (€0.5 billion drawn), of
which €1.6 billion held by Endesa (€0.4 billion drawn).
Finally, the Group has outstanding commercial paper programs
with a maximum ceiling of €11 billion (€7.4 billion
drawn), of which €5 billion held by Endesa through its
subsidiaries (€2 billion drawn).
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Main changes in the scope of
consolidation
In the two periods examined here, the scope of consolidation
changed as a result of the following main transactions:
2009
> acquisition, on January 9, 2009, of 100% of KJWB (now
Endesa Ireland), which operates in Ireland in the electricity
generation sector. As it is controlled by Endesa,
the company was consolidated on a proportionate basis
until June 25, 2009, and on a full line-by-line basis
thereafter;
> disposal, on April 1, 2009, of the entire share capital of
Enel Linee Alta Tensione (ELAT), the company to which
Enel Distribuzione transferred, with effect from January
1, 2009, a business unit consisting of high-voltage
power lines and the related legal relationships;
> acquisition, on June 25, 2009, by Enel, acting through
its subsidiary Enel Energy Europe, of the 25.01% of
Endesa held, directly and indirectly, by Acciona. Following
the acquisition, Enel holds 92.06% of Endesa
and exercises full control over the company. As a result,
as from that date, Endesa is consolidated in the Enel
Group on a full, line-by-line basis rather than proportionately,
with separate reporting of the minority interest
of 7.94%;
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