33. Relationships with related parties

Given that CDP S.p.A. has de facto control over Snam S.p.A. under the terms of IFRS 10 – Consolidated Financial Statements, Snam’s related parties, based on the Group’s current ownership structure, are not only Snam’s associates and joint ventures but also the parent company CDP S.p.A. and its subsidiaries and associates, as well as the direct or indirect subsidiaries, associates and joint ventures of the Ministry of Economy and Finance. Members of the Board of Directors, Statutory Auditors and Snam Group managers with strategic responsibilities, and their relatives, are also regarded as related parties.

As explained in detail below, related-party transactions concern the exchange of goods and the provision of regulated services in the gas sector. Transactions between Snam and related parties are part of ordinary business operations and are generally settled under market conditions, i.e. the conditions that would be applied between two independent parties. All the transactions carried out were in the interest of the companies of the Snam Group.

Pursuant to the provisions of the applicable legislation, the Company has adopted internal procedures to ensure that transactions carried out by Snam or its subsidiaries with related parties are transparent and correct in their substance and procedure.

Directors and statutory auditors declare potential interests that they have in relation to the Company and the Group every six months, and/or when changes in said interests occur; they also inform the Chief Executive Officer (or the Chairman, in the case of the Chief Executive Officer’s interests), who in turns informs the other directors and the Board of Statutory Auditors, of individual transactions that the Company intends to carry out and in which they have an interest.

Snam is not subject to management and coordination. Snam manages and coordinates its subsidiaries, pursuant to Article 2497 et seq. of the Italian Civil Code.

Pursuant to the related-party transaction disclosure obligations mentioned in Consob Regulation 17221 of 12 March 2010, note that on 18 September 2015, Eni S.p.A. was awarded natural gas transportation capacity on Snam Rete Gas S.p.A.’s pipeline network for the 2015-2016 thermal year (1 October 2015 – 30 September 2016). These commitments are assumed in accordance with the procedures defined in the Snam Rete Gas S.p.A. Network Code approved by the Authority by means of Resolution 75/2003, as amended. As in the case of contractual agreements, the finalisation of these commitments entails the calculation of a fee for services rendered by applying the natural gas transportation and dispatching tariffs approved by resolution of the Authority. This fee is estimated at approximately €344 million.

In accordance with Article 13 of the aforementioned Consob Regulation, these agreements are classed as ordinary transactions concluded under arm’s-length or standard conditions since, pursuant to Article 3 of the Procedure:

1. they are part of ordinary operations and the related financial asset;
2. the conditions applied are based on regulated tariffs and are the same as those usually applied to unrelated parties for transactions of a corresponding nature, size and risk.

The amounts involved in commercial, financial and other transactions with the above-mentioned related parties are shown below for the 2014 and 2015 financial years. The nature of the most significant transactions is also stated.

Commercial and other transactions

Commercial and other transactions can be broken down as follows:

Companies under joint control and associates

Transactions with TAG, which are governed by the Service Balance Agreement, concern the sale and purchase of gas in order to ensure the daily balance between the quantities metered and the quantities expected at the Tarvisio entry point.

Other transactions with joint ventures and associates relate mainly to the provision of services governed by contracts entered into under normal market conditions.

Companies owned or controlled by the State

Transactions with state-owned or -controlled companies relate mainly to the Eni Group and the Enel Group, and concern natural gas transportation, regasification, distribution and storage services, which are settled on the basis of tariffs set by the Authority. The most significant passive commercial transactions with the Eni Group include: (i) the planning and supervision of works to build natural gas transportation infrastructure, governed by contracts concluded under normal market conditions; (ii) the supply of electricity and the purchase of natural gas used in activities connected to the building of storage infrastructure, governed by contracts concluded under normal market conditions; and (iii) the provision of consultancy services and technical and operational assistance relating to storage reservoirs. These transactions are governed by service agreements on the basis of the costs incurred.

As at 31 December 2015, there were liabilities with Eni arising from price adjustment mechanisms, as established by the contract for the purchase of Italgas and Stogit from Eni signed on 30 June 2009, and assets posted in reference to transactions arising from the national tax consolidation scheme in force until 31 July 2012.

Financial transactions

Financial transactions can be broken down as follows:

Companies under joint control and associates

Transactions with Gasbridge 1 B.V. and Gasbridge 2 B.V. refer to financing received and repayable on demand.

Transactions with TAG GmbH refer to income from the shareholders’ loan awarded to Trans Austria Gasleitung GmbH (TAG) by Snam S.p.A. in the form of a short-term revolving credit line closed and simultaneously repaid to Snam as part of a refinancing of the entire TAG debt arranged through the banking system.

Transactions with TAP AG refer to the shareholders’ loan in favour of associate Trans Adriatic Pipeline AG (TAP) following the contractual agreements relating to the acquisition of the stake held in TAP⁵⁵.

Transactions with directors, statutory auditors and key managers, with reference in particular to their remuneration, are described in Note 26 “Operating costs”.

Impact of related-party transactions or positions on the balance sheet, income statement and statement of cash flows.

The impact of related-party transactions or positions on the balance sheet is summarised in the following table:

The impact of related-party transactions on the income statement is summarised in the following table:

Related-party transactions are generally governed on the basis of market conditions, i.e. the conditions that would be applied between two independent parties.

The principal cash flows with related parties are shown in the following table:

The effect of cash flows with related parties is shown in the following table: