Definition of performance measures

In order to present the performance of the Group and analyze its financial structure, separate reclassified schedules have been prepared that differ from the schedules envisaged under the IFRS-EU adopted by the Group and contained in the consolidated financial statements. These reclassified schedules contain different performance measures from those obtained directly from the consolidated financial statements, in line with the ESMA Guidelines on Alternative Performance Measures (ESMA/2015/1415) published on October 5, 2015. Management believes that these measures are useful in monitoring the performance of the Group and representative of the financial performance and position of our business, ensuring greater comparability over time.

With regard to those measures, on April 29, 2021, CONSOB issued warning notice no. 5/2021, which gives force to the Guidelines issued on March 4, 2021, by the European Securities and Markets Authority (ESMA) on disclosure requirements under Regulation (EU) 2017/1129 (the Prospectus Regulation), which took effect on May 5, 2021 and replace the references to the CESR Recommendations and those contained in Communication no. DEM/6064293 of July 28, 2006 regarding the net financial position.
The Guidelines update the previous CESR Recommendations (ESMA/2013/319, in the revised version of March 20, 2013) with the exception of those concerning the special issuers referred to in Annex no. 29 of Delegated Regulation (EU) 2019/980, which were not converted into Guidelines and remain applicable.
The Guidelines are intended to promote the usefulness and transparency of alternative performance measures 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.
In line with the regulations cited above, the criteria used to construct these measures for the Enel Group are the following.

Gross operating profit (EBITDA): an operating performance indicator, calculated as the sum of “Operating profit”, “Net impairment/(reversals of impairment) on trade receivables and other receivables” and “Depreciation, amortization and other impairment”.

Ordinary gross operating profit (ordinary EBITDA): defined as “Gross operating profit” from core businesses connected with the Ownership, Partnership and Stewardship business models with which the Group operates plus the ordinary gross operating profit of discontinued operations where present. It does not include costs connected with corporate restructurings and “Extraordinary solidarity levies” imposed by local foreign governments on energy companies.

Ordinary operating profit: defined as “Operating profit” plus the ordinary operating profit of discontinued operations, excluding the effects of transactions not connected with core operations referred to with regard to ordinary gross operating profit. It also excludes significant impairment losses (including reversals of impairment losses) on assets and/or groups of assets following an assessment of the recoverability of their carrying amount under the provisions of “IAS 36 - Impairment of assets” or “IFRS 5 - Non-current assets held for sale and discontinued operations”.

Group ordinary profit: it is determined by adjusting “Group profit” for the items discussed under “Ordinary operating profit”, taking account of any tax effects and non-controlling interests.
Also excluded are a number of financial components not strictly attributable to the Group’s core business operations and the extraordinary solidarity levy imposed on energy companies in Italy.

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

• “Deferred tax assets”;
• “Other non-current financial assets included in net financial debt” included in “Other non-current financial assets”;
• “Long-term borrowings”;
• “Employee benefits”;
• “Provisions for risks and charges (non-current portion)”;
• “Deferred tax liabilities”;
• “Other non-current financial liabilities”. 

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

• “Current financial assets included in net financial debt” 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 current financial liabilities included in net financial debt” included in “Other current financial liabilities”.

Net assets held for sale: calculated as the algebraic sum of “Assets classified as held for sale” and “Liabilities included in disposal groups classified as held for sale”.

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

Net financial debt: a financial structure indicator, determined by:

• “Long-term borrowings”, “Short-term borrowings”, “Current portion of long-term borrowings”, “Other non-current financial liabilities” and “Other current financial liabilities included in net financial debt” included in “Other current financial liabilities”;
• net of “Cash and cash equivalents”;
• net of “Current financial assets included in net financial debt” included in “Other current financial assets”, which include: (i) the current portion of long-term loan assets, (ii) securities, (iii) loan assets and (iv) other current financial assets;
• net of “Non-current financial assets included in net financial debt” included in “Other non-current financial assets”, which include (i) securities and (ii) financial assets.

More generally, the net financial debt of the Enel Group is reported in accordance with Guideline 39, issued on March 4, 2021 by ESMA, applicable as from May 5, 2021, and with the above warning notice no. 5/2021 issued by CONSOB on April 29, 2021.
A reconciliation of the Group’s financial debt as determined with the criteria indicated above and the financial debt determined in accordance with the criteria of CONSOB Communication no. DEM/6064293 of July 28, 2006 is reported in note 47 to the consolidated financial statements.

In the two periods under review, the consolidation scope changed. For more information, please see note 9 “Main acquisitions and disposals in the year” of the consolidated financial statements.