Reclassified statement of financial position 42

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(€ million)

31.12.2016

31.12.2017

Change

Fixed capital

13,298

13,125

(173)

Property, plants and equipment

3

6

3

Intangible assets

17

16

(1)

Equity investments

6,093

6,327

234

Financial receivables held for operations

7,190

6,780

(410)

Net payables for investments

(5)

(4)

1

Net working capital

73

(271)

(344)

Provisions for employee benefits

(12)

(16)

(4)

NET INVESTED CAPITAL

13,359

12,838

(521)

Shareholders’ equity

5,394

4,861

(533)

Net financial debt

7,965

7,977

12

COVERAGE

13,359

12,838

(521)

The fixed capital (€13,125 million) decreased by €173 million in respect to 31 December 2016 principally as a result of lower financial credits in operating activities (-€410 million).These effects were partly offset by the increase in equity investments (+€234 million), mainly due to increases in the share capital of Asset Company 2 S.r.l.(+€172 million) and Trans Adriatic Pipeline AG – TAP (+€66 million).

Equity investments

Equity investments of €6,327 million break down as follows:

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(€ million)

% ownership

Opening balance

Acqui­sitions and subscrip­tions

Re­payments and transfers

Recovery of value

Final balance at 31.12.2017

Equity investments in subsidiaries

 

 

 

 

 

 

Snam Rete Gas S.p.A.

100%

2,849

 

 

 

2,849

GNL Italia S.p.A.

100%

43

 

 

 

43

Stogit S.p.A.

100%

1,597

 

 

 

1,597

Gasrule Insurance D.A.C.

100%

20

 

 

 

20

Asset Company 2 S.r.l.

100%

 

172

 

 

172

Investments in joint ventures

 

 

 

 

 

 

TIGF Holding SAS

40.50%

452

 

 

 

452

Gasbridge 1 B.V. and Gasbridge 2 B.V.

50%

87

 

(18)

(13)

56

Trans Austria Gasleitung GmbH

84.47%

500

 

 

 

500

AS Gasinfrastruktur Beteiligung GmbH

40%

135

 

(17)

 

118

Investments in associates

 

 

 

 

 

 

Italgas S.p.A.

13.50%

244

 

 

 

244

Trans Adriatic Pipeline AG

20%

166

66

 

 

232

Other investments

 

 

 

 

 

 

Terminale GNL Adriatico S.r.l.

7.30%

 

45

(1)

 

44

 

 

 

 

 

 

 

 

 

6,093

283

(36)

(13)

6,327

Acquisitions and subscriptions (€283 million) relate to:(i) the capital increase of Asset Company 2 S.r.l.(€172 million) for the acquisition transaction ofInfrastrutture Trasporto Gas S.p.A. (ITG); (ii) the capital increase of TAP paid in 2017 (€66 million); (iii) the acquisition of an amount equal to 7.3% of the capital of Terminale GNL Adriatico S.r.l. from Edison(€45 million).

The disposals and redemptions (€36 million) mainly refer to the reduction in the cost of registration of the investments in the companies GasBridge 1 BV, GasBridge 2 BV(€18 million) and AS Gasinfrastruktur Beteiligung GmbH (€ 17 million), against the distribution of part of the share premium reserve generated at the time the companies were established.

Value adjustments refer to the effects of the impairment loss (€13 million) on the equity investments in GasBridge 1 B.V. and GasBridge 2 B.V.

Financial receivables held for operations

Financial receivables held for operating activities, including the relative short-term portions, amount to €6,780 million and refer to receivables for loans disbursed to the subsidiaries Snam Rete Gas (€4,983 million) and Stogit (€1,424million), and the associate TAP (€373 million).The reduction of 411 million euros compared to 31 December 2016 is mainly due to the closure and simultaneous repayment of loans in place with Snam Rete Gas S.p.A. and Stogit S.p.A.(-€889 million of total nominal value, of which -€424 million as part of the Liability Management operation).This change was partially offset by the loan to Snam Rete Gas S.p.A.(+€310 million) on funding from the European Investment Bank – EIB and higher receivables in favour of TAP (+€154 million) against cash calls received during the year.

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(€ million)

31.12.2016

31.12.2017

Change

Trade receivables

100

94

(6)

Tax receivables

67

44

(23)

Other assets

31

32

1

Net prepaid tax assets

7

12

5

Derivative liabilities/(assets)

24

(12)

(36)

Provisions for risks and charges

(6)

(7)

(1)

Tax liabilities

(5)

(15)

(10)

Trade payables

(78)

(68)

10

Other liabilities

(67)

(351)

(284)

 

73

(271)

(344)

Net working capital (-€271 million) decreased by €344 million compared with 31 December 2016 due primarily to: (i) the increase in other liabilities (-€284 million) mainly due to the distribution of the interim dividend (-€294 million); (ii) the reduction in the market value of derivative financial instruments (-€36 million); (iii) the reduction in tax receivables (-€23 million) mainly due to lower Group VAT credits.

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Statement of comprehensive income

(€ million)

2016

2017

Net profit

761

677

Other components of comprehensive income

 

 

Components that can be reclassified to the income statement:

 

 

Change in fair value of cash flow hedge derivatives

1

(8)

Tax effect

 

2

 

1

(6)

 

 

 

Total other components of comprehensive income, net of tax effect

1

(6)

Total comprehensive income

762

671

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Shareholders’ equity

(€ million)

 

 

(*)

For further details, please refer to the Statement of comprehensive income of the Snam SpA Financial Statement.

(**)

The item includes the equity component of the convertible bond loan (€17 million).

Shareholders’ equity as at 31 December 2016

 

5,394

Increases owing to:

 

 

- Comprehensive income for 2017 (*)

671

 

- Other changes (**)

18

 

 

 

689

Decreases owing to:

 

 

- 2016 dividend

(718)

 

- 2017 interim dividend

(294)

 

- Acquisition of treasury shares

(210)

 

 

 

(1,222)

Shareholders’ equity as at 31 December 2017

 

4,861

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Net financial debt

(€ million)

31.12.2016

31.12.2017

Change

(*)

Includes the short-term portion of long-term financial debt.

Financial and bond debt

11,086

12,634

1,548

Short-term financial debt (*)

2,349

2,458

109

Long-term financial debt

8,737

10,176

1,439

Financial receivables and cash and cash equivalents

(3,121)

(4,657)

(1,536)

Financial receivables not held for operations

(3,109)

(3,962)

(853)

Cash and cash equivalents

(12)

(695)

(683)

 

7,965

7,977

12

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(€ million)

31.12.2016

%

31.12.2017

%

Change

Fixed rate

7,092

64

9,834

78

2,742

Floating rate

3,994

36

2,800

22

(1,194)

 

11,086

100

12,634

100

1,548

Fixed-rate financial liabilities (€9,834 million) increased by €2,742 million mainly as a result of:(i) the issue of a bond issue on 25 January 2017, for a nominal value of €500 million; (ii) the classification of a bond with a nominal value of €338 million at a fixed rate following the aforementioned early repayment of the Interest Rate Swap (IRS) derivative hedging contract; (iii) the issue of a variable rate bond loan43 on 21 February 2017 for a nominal amount of €300 million; (iv) the issue of a convertible bond loan44 without interest accrued on 20 March 2017, for a nominal value of €400 million; (v) the issue of a variable rate bond45 on 2 August 2017, for a nominal value of €350 million; (vi) the subscription of an EIB bank loan issued on 24 August 2017 for a nominal amount of €310 million; (vii) the issue of a bond issue on 25 October 2017, for a nominal value of €650 million; (viii) the subscription of a Term Loan bank loan for a nominal value of €500 million. These effects were partially offset by the repayment of a bond maturing on 30 June 2017, for a nominal amount of €506 million and by the repurchase on the market of fixed-rate bonds for a total nominal value of €607 million with average coupon of 2.5% and a residual term of around 4.4 years, for a total outlay of approximately €656 million46, carried out as part of the Liability Management operation completed in October 2017.

Variable-rate financial liabilities (€2,800 million) show a reduction of €1,194 million compared to 31 December 2016 attributable essentially to:(i) the classification of a bond with a nominal value of €500 million at a fixed rate, following the early termination, on 27 January 2017, of the Interest Rate Swap (IRS) derivative hedging contract used up to that date to convert the fixed rate debt into an equivalent variable rate liability (-€518 million); (ii) lower net utilisation of uncommitted lines of credit (-€108 million); (iii) repayment of a Term Loan bank loan with a nominal value of €200 million.

At 31 December 2017, Snam had unused committed long-term credit lines worth €3.2 billion.

Non-operating financial receivables (€3,962 million) show an increase of €853 million compared to 31 December 2016.The increase is mainly attributable to a short-term liquidity-use transaction, with a maturity of less than six months, with a bank with a high credit standing (€350 million) as counterparty, and greater net use of account balances current of the subsidiaries Snam Rete Gas and Stogit (€502 million overall).

Cash and cash equivalents (€695 million) essentially refer to a short-term liquidity facility, with a maturity of less than three months, with a bank with a high credit standing (€300 million) as counterparty, and to a bank deposit (€395 million).

42 Please refer to the paragraph “Non-GAAP measures” for the methodological illustration of the reclassified statements.

43 The variable rate bond is converted into a fixed rate bond loan through an interest rate swap (IRS) derivative hedging contract.

44 The bond loan has become convertible following the resolution of the Shareholders’ Meeting of 11 April 2017.

45 The variable rate bond is converted into a fixed rate bond loan through an interest rate swap (IRS) derivative hedging contract.

46 For more information on the transaction, refer to the section “Summary data and information – Main events” of this Report.

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