26 Operating costs

The breakdown of operating costs for the period, which totalled €1,106 million (€1,045 million in 2013), is shown in the following table:

The reasons for the most significant changes are described in the “Financial review and other information” section of the Directors’ Report.

Operating costs relating to the construction and upgrading of natural gas distribution infrastructure linked to concession agreements under IFRIC 12 amounted to €316 million (€319 million in 2013) and can be broken down as follows:

Purchases, services and other costs

Purchases, services and other costs, which amounted to €763 million (€672 million in 2013), can be broken down as follows:

Costs for services, which amounted to €434 million (€429 million in 2013), related to:

Costs for the use of third-party assets, which amounted to €89 million (€88 million in 2013), can be broken down as follows:

Fees, patents and licences (€63 million) mainly concern fees paid to concessionary bodies for the operation of natural gas distribution concessions (€52 million).

Leases and rentals (€26 million) mainly relate to charges for operating leases on office buildings and the occupancy of public land.

The positive change in raw materials, consumables, supplies and goods (−€53 million) is due mainly to the effects of gas contributions in kind by users of the transportation service and the change in stock materials, related mainly to the development of transportation networks. These effects were partly offset by the impairment loss (€30 million) recorded in relation to 0.4 billion cubic metres of strategic gas pertaining to the storage sector⁶⁰.

Net allocations to provisions for risks and charges, which amounted to €64 million, net of surplus use (€4 million in 2013), related essentially to probable costs arising from trade balancing (€45 million) and estimated costs for adapting plants in the distribution sector (€20 million).

For more details about the change in provisions for risks and charges, please see Note 19 – “Provisions for risks and charges”.

Other operating expenses, which amounted to €53 million (€60 million in 2013), can be broken down as follows:

Personnel expense

Personnel expense, which amounted to €343 million (€373 million in 2013), can be broken down as follows:

Employee benefits (€6 million) related mainly to other long-term benefits (€5 million) relating to long-term cash incentive plans.

Other expenses (€25 million) related mainly to defined-contribution plans.

A description of employee benefits can be found in Note 20 – “Provisions for employee benefits”.

Average number of employees

The average number of payroll employees of entities included in the scope of consolidation, broken down by status, is as follows:

The average number of employees is calculated on the basis of the monthly number of employees for each category.

The number of personnel in service at 31 December 2014 was 6,072 (6,045 at 31 December 2013), an increase of 27.

Share-based incentive plans for executives

In 2014, all existing stock options, which were all related to the 2008 allocation plan, had been exercised. At 31 December 2014, no stock options existed.

The change in the stock option plans at 31 December 2014 is as follows:

The breakdown of options by year of allocation is as follows:

More information about the incentive plans for executives with Snam shares can be found in the “Other information” section of the Directors’ Report.

Remuneration due to key management personnel

The remuneration due to persons with powers and responsibilities for the planning, management and control of the Company, i.e. executive and non-executive directors, general managers and managers with strategic responsibilities (“key management personnel”), in office at 31 December 2014, amounts to €6 million (the same as in 2013) and breaks down as follows:

Remuneration due to directors and statutory auditors

The remuneration due to directors amounted to €4 million (the same as in 2013). The remuneration due to statutory auditors amounted to €0.2 million (the same as in 2013).

The remuneration includes emoluments and any other amounts relating to pay, pensions and healthcare due for the performance of duties as a director or statutory auditor in Snam and in other companies included in the scope of consolidation, giving rise to a cost for Snam, even if not subject to personal income tax.