30 Related party transactions

Snam’s related parties are associates and companies under joint control, as well as subsidiaries outside the Group’s scope of consolidation, and other companies owned or controlled by the State, particularly by Group companies Eni, Enel and CDP. Transactions with these entities refer to the exchange of assets and the provision of regulated services within the gas sector and, with regard to CDP, the provision of financial resources. Members of the Board of Directors, Statutory Auditors and Snam Group managers with strategic responsibilities, and their families, are also regarded as related parties.

Transactions between Snam and related parties are part of ordinary business operations and are generally settled under market conditions, i.e. the conditions that would be applied between two independent parties. All the transactions carried out were in the interest of the companies of the Snam Group.

Pursuant to the provisions of the relevant legislation, the Company has adopted internal procedures to ensure that transactions carried out with related parties by Snam or its subsidiaries are transparent and correct in their substance and procedure¹⁶.

Directors and auditors declare their interests affecting the Company and the Group every six months, and/or when changes in said interests occur; they also inform the Chief Executive Officer (or the Chairman, in the case of the Chief Executive Officer), who in turns informs the other directors and the Board of Statutory Auditors, of individual transactions that the Company intends to carry out and in which they have an interest.

There are no shareholders that exercise control over Snam, and it is not subject to management and coordination. Snam manages and coordinates its subsidiaries, pursuant to Article 2497 et seq. of the Italian Civil Code.

The amounts involved in commercial, miscellaneous and financial transactions with related parties for the first halves of 2013 and 2014 are reported below. The nature of the most significant transactions is also stated.

Commercial transactions

Companies under joint control and associates

Transactions with TIGF Investissement relate to receivables from income on the convertible bond subscripted by¹⁷ Snam during 2013.

Transactions with AES Torino S.p.A. relate to hold-harmless letter issued to guarantee a bank loan obtained by AES Torino S.p.A.. In July 2014, the loan has been repaid and the guarantee extinguished.

Transactions with other companies under joint control and associates relate to the provision of IT services governed by contracts entered into under normal market conditions.

Companies owned or controlled by the State

Transactions with other companies owned or controlled by the State relate mainly to the eni Group end to the Enel group and concern natural gas transportation, regasification, distribution and storage services. These transactions are governed on the basis of tariffs established by the Authority.

The most significant passive commercial transactions with the Eni group include: (i) the planning and supervision of works to build natural gas transportation infrastructure, governed by contracts concluded under normal market conditions; (ii) the provision of electricity and natural gas used in activities connected to the building of storage infrastructure, governed by contracts concluded under normal market conditions; and (iii) the provision of consultancy services and technical and operational assistance relating to storage reservoirs. These transactions are governed by service agreements on the basis of the costs incurred.

Other transactions

As at 30 June 2014, there were liabilities with Eni arising from price adjustment mechanisms, as established by the contract for the purchase of Italgas and Stogit from Eni signed on 30 June 2009, and assets posted in reference to transactions arising from the national tax consolidation scheme in force until 31 July 2012.

Impact of related-party transactions or positions on the balance sheet, income statement and statement of cash flows

The effect of related-party transactions or positions on the balance sheet is summarised in the following table.

The effect of related-party transactions or positions on the income statement is summarised in the following table.

The principal cash flows with related parties are shown in the following table.

The effect of cash flows with related parties is shown in the following table.