8 Trade and other receivables

Trade and other receivables of €2,081 million (€2,442 million at 31 December 2013) comprise:

Trade receivables of €1,728 million (€2,268 million at 31 December 2013) mainly refer to the natural gas transportation (€1,068 million), distribution (€399 million) and storage (€242 million) segments.

Trade receivables in the transportation segment (€1,068 million) include those arising from the provision of natural gas balancing services (€506 million)⁹, which have been operational since 1 December 2011 pursuant to AEEGSI Resolution ARG/gas 45/11. Pursuant to this measure, the leading natural gas transportation company (Snam Rete Gas), in its role as Balancing Supervisor, is obliged to procure the quantities of gas required to balance the system and offered on the market by users through a dedicated platform of the Energy Markets Operator, and to financially settle the imbalances of individual users by buying and selling gas on the basis of a benchmark unit price (the “principle of economic merit”). Although the effects of this activity are essentially neutral in terms of the Company’s income statement and it does not receive specific compensation for performing this role, the gas sales generated by balancing activities in the 2014 financial year and offset in costs totalled around €1.7 billion.

Trade receivables relating to the storage segment (€242 million) include the effects of the addition of revenue connected to the allocation of natural gas storage capacity by auction¹⁰. The fall in trade receivables compared with 31 December 2013 (€493 million) was due mainly to:

• presentation of the item “Trade and other receivables” net of the related liabilities¹¹ associated with the strategic gas withdrawals by certain users in 2010 and 2011, in connection with which the fees set by the AEEGSI have not been paid and the quantities withdrawn have not been replenished within the time frames set forth in the Storage Code. This presentation of liabilities, in a total amount of €420 million, follows recent developments in the ongoing bankruptcy procedures, which suggest that it is unlikely that Stogit will be able to collect the receivables it is owed and that the gas wrongfully withdrawn will be replenished;
• the offsetting of receivables with the related payables (€83 million) for the replenishment of some of the strategic gas by two users of the storage service.

Receivables are reported net of the provision for impairment losses of €34 million (€44 million at 31 December 2013). Changes in the provision for impairment losses on receivables during the year are shown below:

Provisions (€5 million) relate mainly to trade receivables in the transportation segment (€3 million).

Utilisations (€6 million) relate mainly to the portion of the provisions associated with the transportation segment (€5 million).

The changes in the scope of consolidation (€1 million) concern A.E.S. S.p.A, which was consolidated in the distribution segment as of 1 July 2014.

Other changes (−€10 million) relate mainly to the use of the provision for impairment losses to write off bad debts mainly relating primarily to the transportation segment (€6 million).

Financial receivables not held for operations (€216 million) refer to Snam S.p.A. awarding a short-term revolving credit line to Trans Austria Gasleitung GmbH (TAG) following contractual agreements regarding the acquisition of CDP Gas S.r.l.’s equity investment in TAG¹².

Receivables from investment/divestment activities (€13 million; €12 million at 31 December 2013) concern receivables for public and private grants for investment activities (€7 million) and receivables from the sale of property, plant and equipment and intangible assets (€6 million).

Other receivables of €124 million (€160 million at 31 December 2013) comprise:

IRES receivables for the national tax consolidation scheme (€32 million, compared with €30 million at 31 December 2013) concern receivables with the former parent company, eni, relating to the IRES refund request resulting from the partial IRAP deduction relating to tax years 2004-2007 (pursuant to Article 6 of Decree-Law No. 185 of 28 November 2008, enacted by Law No. 2 of 28 January 2009) and tax years 2007-2011 (pursuant to Decree-Law 201/2011).

Receivables from the Electricity Equalisation Fund (€49 million, compared with €60 million at 31 December 2013) relate mainly to additional tariff components in the distribution segment.

The item “Other” (€37 million, compared with €62 million at 31 December 2013) refers mainly to receivables from government authorities in the natural gas distribution segment.

The market value of trade and other receivables is analysed in Note 24 – “Guarantees, commitments and risks – Other information about financial instruments”. All receivables are in euros.

The seniority of trade and other receivables is shown below:

Overdue and non-impaired receivables (€254 million; €721 million at 31 December 2013) refer mainly to the natural gas storage sectors (€127 million), primarily concerning VAT invoiced to users for the use of withdrawn strategic gas they had not replenished within the timeframes established by the Storage Code, transportation (€70 million), arising essentially from the balancing service¹³, and distribution (€56 million) segments.

The decrease in overdue and non-impaired receivables compared with 31 December 2013 (€467 million) was due mainly to the aforementioned difference in the way in which the effects of the strategic gas withdrawals made in 2010 and 2011 were presented in the balance sheet.

Receivables from related parties are described in Note 33 – “Related-party transactions”.

Specific information on credit risk can be found in Note 24 “Guarantees, commitments and risks – Management of financial risks – Credit risk”.