27 Shareholders’ equity

Shareholders’ equity of €5,792 million at 31 December 2011 breaks down as follows:

Share capital

At 31 December 2011, the fully subscribed and paid-up share capital of Snam Rete Gas S.p.A. consists of 3,571,187,994 ordinary shares with a nominal value of €1 (3,570,832,994 shares at 31 December 2010). The increase of €355,000 over 31 December 2010 was due to the issue of 355,000 shares with a nominal value of €1. These shares were subscribed by executives entitled to participate in the 2003 and 2004 stock option plans.

Legal reserve

The legal reserve at 31 December 2011 totalled €463 million (€418 million at 31 December 2010), showing an increase of €45 million resulting from the allocation of 5% of the 2010 profit of parent company Snam Rete Gas S.p.A., in accordance with Article 2430 of the Italian Civil Code.

Share premium reserve

The share premium reserve at 31 December 2011 totalled €1,988 million (€1,981 at 31 December 2010). The increase of €7 million is due to the exercise of stock options by eligible executives.

Consolidation reserve

The negative consolidation reserve (€1,701 million compared with €1,713 million at 31 December 2010) includes the value derived from the difference between the acquisition cost of the Italgas and Stogit holdings (€4,628 million, including the additional transaction expenses and price adjustment following the agreements reached at transaction closing) and the relative shareholders’ equity attributable to the group on the transaction completion date (€2,004 million and €923 million, respectively, for Italgas and Stogit). The €12 million decrease over 31 December 2010 was due to the recognition of the impact of the price adjustment reflecting agreements signed when the purchase contracts were signed for Italgas and Stogit³⁰.

Cash flow hedge reserve

The cash flow hedge reserve (-€170 million) includes the valuation, net of the related tax effect, of the fair value of cash flow hedge derivatives relating to interest rate swaps used by the company to convert floating-rate loans into fixed-rate loans.

Other reserves

Other reserves of €783 million (€791 million at 31 December 2010) relate to the reserve created against the cost of 192,553,051 treasury shares.

Retained earnings

Retained earnings totalled €1,188 million (€904 million at 31 December 2010) and rose by €284 million, due essentially to 2010 retained earnings (€284 million).

Treasury shares

The treasury shares held at 31 December 2011 are broken down in the table below:

At 31 December 2011 the total number of treasury shares held by the company was 192,553,051, equal to 5.39% of the share capital.

At 31 December 2011, the company had commitments to grant 3,003,351 shares under stock option plans. At the same date, the market value of the shares totalled approximately €653 million³¹.

Interim dividends

Interim dividends of €338 million refer to the interim dividend for 2011 of €0.10 per share, as decided by the Board of Directors in the meeting of 27 July 2011, pursuant to Article 2433-bis, paragraph 5, of the Italian Civil Code. The advance dividend was payable from 27 October 2011, with an ex-dividend date of 24 October 2011.

Dividends

On 27 April 2011 the Ordinary Shareholders’ Meeting of Snam Rete Gas S.p.A. authorised the distribution of an ordinary dividend of €0.23 per share. The dividend of €0.14 per share to balance the 2010 interim dividend of €0.09 (€473 million) was made payable from 27 May 2011, with an ex-dividend date of 24 May 2011.

At its meeting of 12 March 2012, the Board of Directors proposed to the Shareholders’ Meeting convened for 26 and 27 April 2012 at first and second call, respectively, to distribute an ordinary dividend of €0.24 per share. The dividend of €0.14 per share to balance the 2011 interim dividend of €0.10 per share, will be payable from 24 May 2012, with an ex-dividend date of 21 May 2012.