Net financial debt

The Group's net financial debt at 31 December 2012 (€5,855 million) is broken down in the table below.

€ million  31.12.2012 31.12.2011 Change
Net financial debt from continuing operations
A. Medium- and long-term debt
- Bond (1) 6,544 4,304 2,240
- Floating-rate loans (1) 2,366 2,435 (69)
- Derivative financial instruments (2) (614) (411) (203)
Total 8,296 6,328 1,968
B. Short-term debt (liquidity):
- Floating-rate loans (current portions) (3) 69 60 9
- Short-term investments - (150) 150
- Cash and cash equivalents (2,510) (1,115) (1,395)
Total (2,441) (1,205) (1,236)
Total net financial debt 5,855 5,123 732
In the Consolidated Statement of Financial Position: (1) the balance corresponds to "Long-term loans"; (2) the balance corresponds to “Non-current financial liabilities” and “Non-current financial assets” for the value of FVH derivatives (€754.9 million); (3) this balance corresponds to "Current portion of long-term loans".
 

During the year 2012 net financial debt increased by €732 million owing to the combined effect of:

  • increase in bond loans (€2,240 million), due essentially to the bonds issued in February and October for a nominal amount of €1,250 and €750 million (€1,991 million at 31 December 2012 net of initial expenses and issue fees) and as a result of adjusting bond loans to fair value (€234 million, including the amortised cost) and the capitalisation of period inflation linked to the IL bond (€15 million);
  • repayment of EIB loan instalments due for €60 million;
  • increase in the positive net balance of derivative financial instruments (€203 million), mainly due to lowering of the reference interest rate curve compared to the previous financial year. In particular, note the change in fair value hedges of bonds of +€233 million and the change in cash flow hedges of floating-rate debt of -€30 million;
  • advance redemption of deposit certificates subscribed in 2011 and due on 14 June 2013 (€150 million);
  • increased cash and cash equivalents (€1,395 million) mainly due to the liquidity generated by the issues of the bonds described above and by current Group operations.

Statement of cash flows

€ million Cash flow 31.12.2012 Reconciliation financial statements Cash flow 31.12.2011 Reconciliation financial statements
Opening cash and cash equivalents 1,114.9   156.3  
of which Cash and cash equivalents of discontinued operations   -   6.2
- Profit for the year 463.6   440.0  
- Amortisation and depreciation 420.6   394.1  
- Net change in provisions (90.7)   (34.2)  
Employee benefits   0.2   (3.1)
Provisions for risks and charges   (26.9)   22.2
Deferred tax liabilities   (64.0)   (53.3)
- Net Losses (gains) on asset disposals (1) (5.9)   (3.6)  
Self-financing 787.6   796.3  
- Change in net working capital: 46.2   342.9  
Inventories   9.7   (4.9)
Trade receivables   (193.9)   (194.4)
Current financial assets   (15.8)   (5.0)
Income tax receivables   (14.2)   (0.2)
Other current assets   (39.1)   (0.2)
Trade payables   262.3   487.6
Tax liabilities   (21.5)   46.9
Current financial liabilities   35.2   15.9
Other liabilities   23.5   (2.8)
Cash flows from operating activities 833.8   1,139.2  
Total investments -1.235,2 -1.229,2
Property, plant and equipment (2) -1.181,1  -1.178,1 
- Intangible assets (3) -54,1  -51,1 
- Other changes in non-current assets 89.8   (20.8)  
Other intangible assets (2)   0.2   -
Property, plant and equipment (2)   97.0   22.8
Non-current financial assets   (0.2)   (0.1)
Other non-current assets   (0.5)   (0.3)
Equity-accounted investees   (6.7)   (43.2)
Total cash flows generated by/(used in) investing activities (1,145.4)   (1,250.0)  
NIC in discontinued operations and assets held for sale -   398.8  
- Change in loans 2,127.1   1,133.0  
Non-current financial assets   (233.1)   (321.5)
Current financial assets   150.0   (150.0)
Non-current financial liabilities   29.8   64.3
Long-term loans   2,170.7   1,591.2
Current portion of long-term loans   9.7   -
Short-term loans   -   (73.1)
Discontinued operations and assets held for sale   -   22.1
- Other changes in equity attributable to owners of the Parent (4) (18.3)   (40.1)  
Equity attributable to owners of the Parent - Share capital, Other reserves and retained earnings   (18.3)   (24.1)
Equity attributable to owners of the Parent - Reserves for assets held for sale   -   (16.0)
- Dividends paid to the owners of the Parent (402.0)   (422.1)  
- Equity attributable to non-controlling interests in discontinued operations and assets held for sale -   (0.2)  
Total cash flows generated by/(used in) financing activities 1,706.8   670.6  
Total cash flows for the year 1,395.2   958.6  
Closing cash and cash equivalents 2,510.1   1,114.9  
(1)included in the balances of "Other revenue and income" and "Other operating expenses" of the consolidated Income statement; (2)see note 13 to the financial statements; (3)see note 15 to the financial statements; (4)see the statement of changes in consolidated equity.

Change in net financial position

The cash flows for the years 2012 and 2011 are reported in the following statement.

€ million 31.12.2012 31.12.2011
Opening net financial debt (5,123) (4,949)
Self-financing 787 796
Change in net working capital 47 343
Cash flows generated from operating activities 834 1,139
Total investments (1.235) (1.229)
Other changes in non-current assets 97 22
Change in equity investments (7) (43)
Cash flows used in investing activities (1,145) (1,250)
NIC Assets held for sale - 399
Dividends (402) (422)
Other changes in equity attributable to the owners of the Parent (19) (40)
Self-financing flows (421) (462)
Change in financial debt (732) (174)
Closing net financial debt (5,855) (5,123)
 

The cash flow generated from operating activities during the financial year stands at about €834 million and is related to self-financing (€787 million) and other financial resources generated by net working capital (€47 million).

As far as self-financing is concerned, note the profit for the period of €464 million, the amortisation and depreciation for the period of €421 million and a net decrease in provisions of €91 million, which reflects the change in provisions for net deferred tax liabilities and provisions for risks and charges.

The change in net working capital, of €47 million, is mostly attributable to the net increase in trade payables (including pass-through energy-related economic items).

Investing activities have used financial resources for approximately €1,145 million, for the most part relating to the investments made during the year in property, plant and machinery (€1,181 million of which €1,153 million relating to investments in core-business) and in intangible assets (€54 million) - attributable to the Group Parent for a total of €1,167 million; other changes are also recorded, mainly relating to the impairment of fixed assets for €43 million for the capitalisations carried out in previous periods due to accruals to the provision for "Projects for urban and environmental renewal", currently considered unlikely, to set-up grants relating to plants for €25 million and other disposals and changes for €23 million.

In this regard also note a change in the value of equity interests (€7 million), mainly due to the adjustment of equity at year-end of the investment held by Terna S.p.A. in the associate CESI, in which during the period the Group purchased a further stake for approximately 0.292%.

Cash flows used in self/financing were mainly used in distributing the 2011 dividend balance to owners of the Parent Company (€261 million) and the interim 2012 dividend (€141 million).

The other changes in equity attributable to owners of the Parent relate to recognition at fair value of the cash flow hedges of the floating-rate debt, net of the related tax effect (-€19 million).

Therefore, financial resources used in investing activities and in equity movements determined in the year a total requirement of €1,566 million funded in part by cash flows provided by operating activities (€834 million) and, for the rest, by increasing net debt (€732 million).