Reclassified statement of financial position

The reclassified statement of financial position combines the assets and liabilities of the condensed statement based on how the business operates, conventionally split into the three basic functions: investment, operations and financing.

Management believes that this format presents useful information for investors as it allows identification of the sources of financing (equity and third-party funds) and the investment of financial resources in fixed and working capital.

The reclassified consolidated statement of financial position format is used by management to calculate the key leverage and profitability ratios.

Fixed capital (€11,608 million) decreased by €373 million compared with 31 December 2018 mainly as a result of lower long-term financial receivables (-€435 million). This effect was partly offset by the increase in equity investments (€50 million) due mainly to the share capital increase in favour of Snam 4 Enviroment S.r.l. (€55 million) and the increase in property, plant and machinery (€15 million) essentially as a result of the recording of leased assets as right-of-use assets in accordance with accounting standard IFRS 16 “Leasing”, in force from 1 January 2019.

Equity investments

This item amounts of E6,584 and is composed of equity investments in the following companies:

Non-current financial assets

Non-current financial assets, including the relative short-term portions, amount to €4,996 million and refer to receivables for long-term loans disbursed to the subsidiaries Snam Rete Gas (€4,181 million) and Stogit (€778 million). The reduction of €435 million compared with 31 December 2018 is mainly due to the closing and the simultaneous repayment of existing loans to Snam Rete Gas S.p.A. and Stogit S.p.A. (€455 million in total).

Net working capital (-€334 million) decreased by €26 million compared with 31 December 2018 mainly as a result of the increase in liabilities for derivative financial instruments (-€33 million) partly offset by the increase in other assets (€20 million) due to greater accrued income and prepaid expenses.

Assets held for sale

Assets held for sale (€10 million) relate to a 6% stake in the share capital associate company Senfluga, reclassified following the agreements signed by the shareholders of Senfluga fr the sale of a 10% stake in it, proportional to the stake held by each shareholder. The completion of the transaction, subject to the approval of the Greek regulator, took place on 13 January 2020, following a payment of €16 million (E10 milliion as Snam’s share), pegged at the values of the transaction concluded in December 2018. Following the above-mentioned sale, the percentage of Snam’s equity investment in the capital of Senfluga is 54%.

Net financial debt at 31 December 2019 was €6,874 million, a reduction of €378 million compared with 31 December 2018.

Financial and bond debts are denominated in euros and break down as follows: they refer mainly to bond loans (€9,048 million, or 61%) and bank loans (€3,672 million, or 25%, including €1,669 million provided by the European Investment Bank - EIB).

Long-term financial debt (€10,627 million) represented around 72% of gross financial debt (around 73% at 31 December 2018).

The breakdown of debt by type of interest rate at 31 December 2019 is as follows:

Bond loans (€9,048 million) rose by €602 million compared with 31 December 2018 following the issuing of: (i) the Climate Action Bond, for a nominal amount of €500 million, fixed rate with a maturity date of 28 August 2025; (ii) a Private Placement of a nominal amount of €250 million, fixed rate with a maturity date of 7 January 2030; (iii) a dual tranche bone with a nominal amount of, respectively, E700 and €600 million, making a total of €1.3 billion, fixed rate with maturity dates, respectively of 12 May 2024 and 12 September 2034. These changes were offset: (i) by the repayment of a fixed rate bond maturing on 18 January 2019, for a nominal amount of €519 million; (ii) the repayment of a fixed rate bond loan maturing on 24 April 2019, of a nominal amount of €225 million; (iii) the repayment of a JPY 10 billion bond maturing on 25 October 2019 of a nominal amount of €83 million; (iv the repurchase on the market of fixed-rate bonds for a total nominal value of €597 million with an average coupon of 1.3% and a residual duration of approximately 3.9 years; (v) the dynamics of accrued interest.

Bank loans (€3,672 million) fell by €1,077 million essentially following the lower net use of uncommitted lines of credit (€1,301 million). This effect was partly offset by the signing with the European Investment Bank - EIB: (i) on 28 January 2019 of a loan for projects promoted by Snam Rete Gas and Stogit, of a nominal amount of €135 million, at a fixed rate, to be repaid through an amortisation plan expiring in 2038; (ii) on 6 June 2019 of a loan supporting investments promoted by the subsidiary Snam4Mobility for the construction of CNG and L-CNG refuelling stations, for a nominal amount of €25 million, at a fixed rate, to be repaid through an amortisation plan expiring in 2031; (iii) on 31 July 2019 a loan for Snam Rete Gas projects, for a nominal amount of €105 million at a fixed rate to be repaid through an amortisation plan expiring in 2039.

The Euro Commercial Papers (€2,001 million) involve unsecured short-term securities issued on the money market and placed with institutional investors and recorded an increase of €1,776 million.

Short-term financial receivables (€5,120 million) showed an increase of €751 million compared with 31 December 2018. The increase is essentially attributable to the greater net use of current account balances of the subsidiaries Snam Rete Gas and Stogit (€678 million in total).

Cash and cash equivalents of €2,805 million (€1,841 million at 31 December 2018) mainly refer to a short-term liquidity facility, with a maturity of less than three months, with banks with a high credit standing (€750 million) and to ban current and deposit accounts that can be collected quickly (€2,055 million).

At 31 December 2019, Snam had unused committed long-term credit lines worth €3.2 billion.