14 Equity-accounted investments

Equity-accounted investments of €1,402 million (€1,024 million at 31 December 2013) break down as follows:

Acquisitions and subscriptions (€488 million) relate mainly to Snam S.p.A.’s acquisition of the equity investment (84.47% of share capital, giving entitlement to 89.22% of the economic rights)²⁶ held by CDP Gas S.r.l. (CDP GAS) in Trans Austria Gasleitung GmbH (TAG) for a contractual amount of €505²⁷ million. The value of the investment was then adjusted for the negative effect (−€19 million) of the difference between the issue price of Snam shares determined by the Board of Directors on 17 December 2014 (€4.218 per share) and the fair value of Snam shares (€4.056 per share) on the transaction completion date (19 December 2014). For more information on the acquisition of the equity investment in TAG, see the “Profile of the year – Main events” section of the Directors’ Report.

Capital gains from measurement using the equity method (€79 million) refer essentially to TIGF (€24 million) and GasBridge 1 B.V. and GasBridge 2 B.V. (€9 million), investee companies of Snam S.p.A., and Toscana Energia S.p.A. (€23 million) and A.E.S. (€20 million)²⁸, investee companies of Italgas S.p.A.

Capital gains from fair-value remeasurement (€52 million) refer mainly to the remeasurement of the equity investment previously held in A.E.S. (49%) at the respective fair value on the date of acquisition of control²⁹.

The change in the scope of consolidation refers to the acquisition of control of A.E.S. S.p.A.

The interest in the contingent liabilities of joint ventures and associates is reported in Note 24 – “Guarantees, commitments and risks”.

Equity investments are not collateralised.

For companies operating exclusively in regulated activities, the recoverable value of equity investments is determined using the value of the RAB (or the present value of expected future cash flows based on the value of the RAB and the settlement system) adjusted to take account of net financial position.

For companies operating exclusively or partly in significant non-regulated activities, the recoverable value of equity investments is based on generally accepted company valuation methods such as the discounted cash flow (DCF) method, discounted dividend model (DDM), simple equity method, income-based method, and combined equity and income-based method, or on the fair-value measurement of the equity investment according to recent market transactions. The recoverable value is estimated based on an explicit period of five years (or less), in accordance with plans approved by the boards in question and taking account of a terminal value (TV) determined using, for each particular case, market multiples or the equity RAB at the relevant date.

For all equity investments, the recoverable value thus estimated was greater than the book value.

Consolidated companies, non-consolidated subsidiaries, joint ventures, associates and other significant equity investments are indicated separately in the appendix “Significant shareholdings, associates and equity investments of Snam S.p.A. at 31 December 2014”, which is an integral part of these Notes.

Other information on equity investments

In accordance with the provisions of IFRS 12 – “Disclosure of interests in other entities”, the economic and financial data for joint ventures, associates and non-consolidated subsidiaries are provided below.

Investments in joint ventures

The IFRS-compliant economic and financial data for each significant joint venture³⁰, are reported below:

INFORMATION ON INVESTMENTS IN JOINT VENTURES

TIGF Holding S.A.S.

TIGF Holding S.A.S. is a company operating under French law, which, through TIGF Investissements S.A.S. (a wholly owned subsidiary of TIGF Holding), controls 100% of TIGF S.A.

TIGF SA (Transport et Infrastructures Gaz France) operates in the transportation and storage of natural gas in southwest France. Natural gas transportation in France is a regulated activity.

As at 31 December 2014, TIGF Holding S.A.S.’s shareholder structure included Snam (45%), Singapore sovereign wealth fund GIC (35%) and EDF (20%, held through a fund dedicated to liabilities arising from the dismantling of nuclear reactors)³¹.

TIGF Holding S.A.S.’s consolidated financial statements include TIGF Investissements S.A.S. and TIGF S.A.

The corporate governance rules stipulate that decisions on significant activities must be taken with the unanimous consent of shareholders Snam and GIC.

Trans Austria Gasleitung GmbH (TAG)

Trans Austria Gasleitung GmbH (TAG) is a company operating under Austrian law that is active in the natural gas transportation segment and owns the gas pipeline that links the Slovakian-Austrian border to the Tarvisio entry point.

TAG’s natural gas transportation business is regulated by the competent Austrian authorities.

As at 31 December 2014, Snam S.p.A. holds 84.47% of the share capital, entitling it to 89.22% of the economic rights. The remainder of the share capital is held by Gas Connect Austria GmbH (GCA).

The contractual agreements drawn up between Snam, TAG and (GCA) also stipulate that if TAG is not capable of self-financing, the other companies must finance it according to the equity investment held by each shareholder.

The corporate governance rules stipulate that decisions on significant activities must be taken with the unanimous consent of shareholders Snam and GCA.

Toscana Energia S.p.A

Toscana Energia S.p.A. operates in the natural gas distribution segment in Tuscany.

Natural gas distribution is a regulated activity.

The shareholder structure of Toscana Energia S.p.A. includes Italgas S.p.A. (48.08%), the Municipality of Florence (20.61%), Publiservizi S.p.A.³² (10.38%) and local government authorities³³ (20.93%).

The corporate governance rules stipulate that decisions on significant activities must be taken with the unanimous consent of the private (Italgas) and public (municipalities) shareholders.

Toscana Energia S.p.A.’s consolidated financial statements include Toscana Energia Green S.p.A. and Agestel S.r.l.

GasBridge 1 BV e GasBridge 2 BV

GasBridge 1 BV and GasBridge 2 BV are two companies operating under Dutch law that are equal-stake joint ventures of Snam S.p.A. and Fluxys Europe BV.

The two companies hold equal shares in the following equity investments:

• 31.5% of Interconnector UK Ltd;
• 51% of Interconnector Zeebrugge Terminal S.C.R.L.;
• 10% of Huberator S.A., a subsidiary of Fluxys.

The corporate governance rules stipulate that decisions on significant activities must be taken with the unanimous consent of shareholders Snam S.p.A. and Fluxys Europe BV.

The book value of the equity investments in all equity-accounted joint ventures not deemed to be significant is €1 million. The 2014 profit of all equity-accounted joint ventures not deemed to be significant totals around €0.3 million.

Significant restrictions

Pursuant to the provisions of IFRS 12, the major significant restrictions on investee companies’ ability to transfer funds to Snam in the form of dividends, loan repayments or advances appear below.

TIGF Investissement S.A.S.

The payment of interest on the nominal amount of the €790 million convertible bond (of which Snam has subscribed €356 million) may be deferred at the discretion of the issuer TIGF Investissement. The bond debt is subordinate to the outstanding bank loans.

TAG GmbH

Snam’s financial receivable (€216 million at 31 December 2014)³⁴ is subordinate to the outstanding bank loans.

Investments in associates

The IFRS-compliant economic and financial data for each significant associate³⁵ are reported below:

INFORMATION ON INVESTMENTS IN ASSOCIATES

Acam Gas S.p.A.

ACAM Gas S.p.A. operates in the natural gas distribution segment in Liguria.

ACAM Gas S.p.A.’s share capital is 49% owned by Italgas S.p.A. and 51% owned by ACAM S.p.A., which consolidates the company in full by virtue of its controlling interest.

Investments in non-consolidated subsidiaries

Information on the group’s non-consolidated subsidiaries as at 31 December 2014 is provided below.

The book value of the equity investments in all equity-accounted non-consolidated subsidiaries (Metano Arcore S.p.A.³⁶ and SETEAP S.p.A.,³⁷ wholly owned by Italgas S.p.A. and Napoletana Gas S.p.A. respectively) totals €9 million.

The main reference data of consolidated companies, non-consolidated subsidiaries, joint ventures, associates and other significant equity investments are indicated separately in the annex “Significant shareholdings, associates and equity investments of Snam S.p.A. at 31 December 2014”, which is an integral part of these Notes.