Economic and financial terms
Excise duty
Indirect tax for immediate payment, applied to the production or consumption of certain industrial goods (including oil products and natural gas).
Amortisation
Process by which the cost of fixed assets is spread over a certain period, usually the useful life of the asset.
Non-Current Assets
Balance sheet item which shows long-lasting assets, net of amortisation, depreciation and impairment losses. These are divided into the following categories: “Property, plant and equipment”, “Compulsory inventories”, “Intangible assets”, “Equity investments”, “Financial assets” and “Other non-current assets”.
Net working capital
Capital which is invested in short-term assets and indicator of a company’s short-term financial position. Calculated using all short-term, non-financial assets and liabilities.
Net invested capital
Net investments of an operational nature, represented by the sum of net working capital and fixed assets, provisions for employee benefits and assets and liabilities held for sale.
Cash flow
Net cash flow from operations is represented by the cash generated by an enterprise over a certain period of time. Specifically, the difference between current inflows (mainly cash revenue) and current cash outflows (costs in the period that generated cash outflows).
Controllable fixed costs
Fixed operating costs of regulated activities, represented by the sum of “Total recurring personnel expense” and “Recurring external operating costs”.
Operating costs
Costs incurred in carrying out a company’s core business. These include purchases, services, energy, consumables, maintenance and personnel expense.
Dividend
Payment to shareholders, voted for by the Shareholders’ Meeting and proposed by the Board of Directors.
Dividend payout
Ratio between the dividend and net profit for the period, and equal to the percentage of profits paid out to shareholders in the form of dividends.
Net financial debt
Indicator of the ability to meet financial obligations. Net financial debt is represented by gross financial debt minus cash and cash equivalents as well as other financial receivables not held for operations.
Investments
Costs incurred for the acquisition of long-term assets where the useful life does not expire over one reporting period.
EBITDA
Used by Snam in its internal (business plan) and external (to analysts and investors) presentations. Unit of measurement to assess the group’s operating performance, as a whole and in the individual business segments, in addition to EBIT. Determined by the difference between revenue and operating costs.
Net financial expense
Net cost incurred for using third-party capital. Includes other net expense related to financial operations.
Shareholders’ equity
Total resources contributed by shareholders, plus retained profits and minus losses.
Core business revenue
Income from selling goods and/or providing services that are integral to the core business, including all recurring economic values linked to a company’s typical field of business.
Derivatives
A financial instrument is defined as a derivative when its price/yield profile derives from the price/yield parameters of other major instruments – known as “underlying” – such as commodities, currencies, interest rates, securities and share indices.
Comprehensive income
Includes both net income for the period and changes in equity, which are recognised in equity in accordance with IFRSs (Other components of comprehensive income).
Net profit
EBIT minus result from financial operations and income taxes.
EBIT
Difference in a given period between sales and services revenues, other revenues, operating costs, depreciation and amortisation and impairment losses over a given period. It is therefore the operating result before financial revenues and costs and taxes.
Transportation and regasification
Commercial terms
Thermal year
Period of time into which the regulatory period is divided. Since 1 January 2010, transport tariffs have referred to the calendar year (1 January to 31 December). For LNG regasification, we are in the 2011/2012 thermal year, which runs from 1 October 2011 to 30 September 2012.
Transportation capacity
Transportation capacity is the maximum quantity of gas which can be injected into the system (or withdrawn from it) during the course of a gas day, at a specific location, in compliance with the technical and operating restrictions established for each section of pipeline and the maximum performance of plants located along such pipelines.
These capacities are assessed using hydraulic network simulations carried out in appropriate transportation scenarios and in accordance with recognised technical standards.
Network code
Document governing the rights and obligations of those involved in providing transportation and regasification services.
Regulatory period
Period of time (usually four years) for which criteria are defined for setting tariffs for transporting and dispatching natural gas and for regasifying liquefied natural gas. For transportation, we are currently in the third regulatory period, which runs from 1 January 2010 to 31 December 2013. For regasification, the third regulatory period runs from 1 October 2008 to 30 September 2012.
Network entry point
Each point or a localised group of physical points on the gas transportation network at which gas is delivered to the transporter.
Redelivery point
This is the physical network point, or local combination of physical points, at which the Transporter redelivers gas transported to the User, and where such gas is metered.
Virtual exchange point (VEP)
A virtual point located between the Points of Entry and Points of Exit of the National Transportation Network where users and other authorised entities may, on a daily basis, exchange and sell gas injected into the Network.
Regasification Tariffs
Unit prices applied for regasification. These include capacity and commodity tariffs, related to the required regasification capacity and to the volumes of gas actually unloaded from tankers, respectively.
Transportation Tariffs
Unit prices applied for transporting and dispatching natural gas. These include capacity and commodity tariffs, related to the required transportation capacity and to the volumes of gas actually injected into the network, respectively.
User
The user of the gas system, which, by confirming the capacity granted, acquires transportation capacity for its own use or assignment to others.
Technical terms
Natural gas
Hydrocarbon mixture consisting mainly of methane, and to a lesser degree, ethane, propane and higher hydrocarbons. Natural gas injected in the gas pipeline network must comply with a single quality specification to ensure that the gas in transit is interchangeable.
Liquefied natural gas (LNG)
Natural gas comprised essentially of methane liquefied by cooling at around -160°C, at atmospheric pressure, to make it suitable for tanker transportation or reservoir storage. In order to be injected into the transportation network, the liquid must be reconverted into a gas at regasification plants and brought to the operating pressure of the pipelines.
Natural gas transportation network
The aggregate of gas pipelines, line plants, compression stations and infrastructure, which, at the national and regional level, provide the transportation of gas by interconnecting with international transportation networks, production and storage points and redelivery points for the purposes of distribution and use.
Regional transportation network
This consists of gas pipelines not included in the list in Article 2 of the Ministerial Decree of 22 December 2000, as updated annually, and its main function is to move and distribute gas in demarcated local areas, which are typically regional in scale.
National gas pipeline network
This consists of the gas pipelines indicated in Article 2 of the Ministerial Decree of 22 December 2000, as updated annually. It is the aggregate of gas pipelines and plants which have been assessed and checked taking into account restrictions imposed by imports, exports, key national production and storage facilities, and is used to transfer significant quantities of gas from these network injection points to major areas of consumption. Several inter-regional gas pipelines as well as smaller pipelines which serve to close network links formed by the above pipelines are also included for the same purpose. The National Transportation Network also includes compression stations and plants connected to the pipelines described above.
LNG regasification
Industrial process whereby natural gas is converted from a liquid to a gaseous state.
Natural gas storage
Commercial terms
Thermal year
Period of time into which the regulatory period is divided. Since 1 January 2011, storage tariffs have been based on the calendar year (1 January to 31 December).
Withdrawal phase
Period from 1 November of one year to 31 March of the following year.
Injection phase
Period from 1 April to 31 October of the same year.
Regulatory period
Period of time (usually four years) for which criteria are defined for setting tariffs for natural gas storage services. We are currently in the third regulatory period, which runs from 1 January 2011 to 31 December 2014.
Technical terms
Modulation storage
Aims to respond to changing hourly, daily and seasonal demands.
Mining storage
Mining storage is necessary for technical and economic reasons in order to enable optimum cultivation of Italy’s natural gas fields.
Strategic storage
Aims to provide for a lack of or reduction in supplies from non-EU imports or crises in the gas system.
Natural gas distribution
Commercial terms
Tariff area
The tariff area is the area used to determine distribution tariffs and consists of all communities served by the same distribution plant. If several local authorities collectively designate an operator to perform the distribution service, or declare themselves a single tariff area, the tariff area coincides with the group of municipalities served through several distribution plants by one or more operators.
Thermal year
Period of time into which the regulatory period is divided. Since 1 January 2009, distribution tariffs have been based on the calendar year (1 January to 31 December).
End client
Consumer who buys gas for own use.
Network code
Document governing the rights and obligations of those involved in providing gas distribution services.
Concession
Act by which a local authority entrusts to a company the management of a service which falls within the remit of said authority and for which said company assumes the operational risk.
Regulatory period
Period of time (usually four years) for which criteria are defined for setting tariffs for gas distribution services. We are currently in the third regulatory period, which runs from 1 January 2009 to 31 December 2012.
Redelivery point
This is the point of demarcation between the gas distribution plant and the plant owned or managed by the end customer at which the distribution company redelivers gas transported for supply to the end customer, and at which metering occurs.
Gas distribution service
Service of transporting natural gas through networks of local pipelines from one or more delivery points to redelivery points, generally at low pressure and in urban areas, for delivery to end clients.
Retail Company
Company which, by way of a contract giving it access to the networks managed by a distributor, sells the gas.
Technical terms
Gas distributed
Amount of gas delivered to users of the distribution network at the redelivery points.
Equalisation
Difference between revenues for the period (annual TRL) and those invoiced to retail companies on the basis of volumes distributed. The net position with the Equalisation Fund is established at the end of the thermal year and settled over the course of the year on the basis of advanced payments.
TRL (Total Revenue Limit)
Total revenues allowed for distribution companies by the regulatory body to cover costs for providing distribution and metering services.
