Financial results

Revenue from natural gas distribution amounted to €1,398 million in 2012, an increase of €135 million, or 10.7%, compared with 2011. Excluding revenue from the application of IFRIC 12, distribution revenue recorded an increase of €170 million, or 18.8%. This increase was mainly due to: (i) the positive impact of Electricity and Gas Authority Resolutions 315/2012/R/gas and 450/2012/R/gas16, which amended some tariff determination criteria for the third regulatory period, specifically by eliminating the effects of the ‘gradual’ mechanism for the years 2009, 2010 and 2011(+€143 million); and (ii) tariff updating mechanisms (+€59 million). These effects were partly offset by the recognition in 2011 of greater revenues for the thermal years from 2005-2006 to 2007-2008 (-€32 million)17.

EBIT generated in 2012 amounted to €626 million and includes allocations to the provisions for environmental expenses (€71 million) paid as indemnification, net of tax effect, by eni to Snam pursuant to agreements entered into between the parties upon completion of the acquisition of Italgas. These expenses are therefore not recognised for the purposes of the consolidated financial statements. The increase of €67 million, or 12.0%, compared with 2011, was due essentially to: (i) increased revenue from natural gas transmission (+€170 million); (ii) an increase in other revenue and income (+€24 million), due principally to the sale of plants transferred to municipalities granting natural gas distribution mandates; and (iii) greater income from technical distribution services (+€5 million) deriving mainly from the recognition of costs relating to switch readers18.

These factors were partly offset by: (i) the increase in operating costs (-€100 million), attributable mainly to higher net allocations to the provisions for environmental expenses (-€65 million) and to higher capital losses on disposals of plants transferred to municipalities granting natural gas distribution mandates (-€16 million); and (ii) higher amortisation, depreciation and impairment losses (-€29 million), due to the entry into service of new infrastructure (-€16 million), and to asset write-downs (-€4 million) in relation to write-backs carried out in 2011 (-€9 million).

16 For further details, see the “Regulation” paragraph.

17 Additional revenues recognised pursuant to Electricity and Gas Authority Resolution ARG/gas 119/11.

18 The Electricity and Gas Authority Resolution ARG/gas 159/08 provided for the introduction of a specific mechanism for standardising meter reading costs, which produces breakeven costs for businesses, taking account of the fact that readings from switch meters will be compulsory but will be provided free of charge.

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