Reclassified statement of financial position

The reclassified statement of financial position combines the assets and liabilities of the compulsory format included in the Annual Report and the Half-Year Report based on how the business operates, usually split into the three basic functions of investment, operations and financing.

Management believes that this format presents useful information for investors as it allows the identification of the sources of financing (equity and third-party funds) and the investment of financial resources in fixed and working capital.

Management uses the reclassified statement of financial position to calculate the key profitability ratios (ROI and ROE).

Fixed capital (€22,121 million) increased by €308 million compared with 31 December 2014, due mainly to the increase in property, plant and equipment and intangible assets (+€278 million) and the increase in financial receivables relating to operations (+€78 million).

The change in property, plant and equipment and in intangible assets can be broken down as follows:

Other changes (-€212 million) relate essentially to: (i) the effects of adjusting the present value of disbursements for the dismantling and restoration of sites (-€116 million), mainly due to a change in the expected discounting rates²⁸; (ii) grants for the period (-€57 million); and (iii) the change in inventories of pipes and related accessory materials used to construct the plants (-€30 million);

The change of the scope of consolidation (+€105 million) refers to the acquisition of control of Acam Gas S.p.A. as of 1 April 2015. From that date, Italgas holds 100% of the company capital.

Technical investments in 2015, totalling €1,272 million²⁹ (€1,313 million in 2014), referred mainly to the transportation (€693 million), distribution (€393 million) and storage (€170 million) segments.

Compulsory inventories

Compulsory inventories, of €363 million (the same as at 31 December 2014), consist of the minimum quantities of natural gas that the storage companies are obliged to hold pursuant to Presidential Decree 22 of 31 January 2001. The quantities of gas in stock, corresponding to approximately 4.5 billion standard cubic metres of natural gas, are determined annually by the Ministry of Economic Development³⁰.

Equity investments

Equity investments (€1,372 million) includes the equity method valuation and refers to Trans Austria Gasleitung GmbH – TAG (€496 million), TIGF Holding S.A.S. (€446 million), Toscana Energia S.p.A. (€167 million), Gasbridge 1 B.V. and Gasbridge 2 B.V. (€131 million in total) and Trans Adriatic Pipeline AG – TAP (€130 million).

Financial receivables held for operating activities

Financial receivables held for operating activities (€78 million) refer to Snam’s sub-entry of Statoil Holding Netherlands B.V. in the shareholders’ loan granted in favour of the associate Trans Adriatic Pipeline AG (TAP), with regard to contractual agreements related to the acquisition of the stake held by Statoil³¹.

Net working capital (-€607 million) increased by €257 million compared with 31 December 2014, owing mainly to: (i) the reduction of the provision for risks and charges (+€238 million) attributable to the provision for site dismantling and restoration of transportation and storage segment sites (a total of +€135 million), mainly due to the change in expected discount rates, and reclassification to the provision for impairment losses on receivables of estimated charges arising from commercial balancing at 31 December 2014 (+€85 million): (ii) the reduction of deferred tax liabilities (+€125 million), including the adjustment of the deferred tax as a result of the reduction in IRES from 27.5% to 24% (+€57 million) as of 1 January 2017; and (iii) the reduction of trade payables (+€122 million), mainly relating to the transportation segment (+€98 million, of which +€42 million resulted from the balancing service debt).

These factors were partly offset by: (i) the increase of other liabilities (-€92 million), referred mainly to the transportation segment for the higher payables to the Energy and Environmental Services Fund (CSEA)³² (-€86 million), related mainly to the additional tariff components; and (ii) the reduction of trade receivables (-€51 million), attributable mainly to the transportation segment (-€75 million), partly absorbed by the increase recorded in the distribution segment (+€54 million). The reduction in the transportation segment is due mainly to lower receivables from the balancing service (-€174 million, including the effects of the write-down on the share of receivables related to the period from 1 December 2011 – 23 October 2012 not recognised by the Authority³³), partially offset by the higher receivables for tariff components additional to the transportation tariff; and (iii) the reduction of other activities (-€50 million) as a result of the impact of fuel gas allocated to transportation users with respect to the quantities actually used.

Assets held for sale and directly related liabilities

Assets held for sale and directly related liabilities relate to a property complex owned by Italgas (€17 million, net of environmental provisions for charges relating to restoration work on the property), for which negotiations for a sale are ongoing.

Net financial debt was €13,779 million at 31 December 2015, an increase of €127 million (€13,652 million at 31 December 2014).

Net cash flow from operating activities (€2,054 million), which benefited from the contribution cashed by the investee companies valued using the equity method (ordinary dividends of €141 million³⁴) allowed us to fully cover the financial requirements associated with technical and equity investments equal to €1,283 million net of disinvestment flows and to generate a free cash flow of €771 million. Net financial debt, after the payment to shareholders of the 2014 dividend of €875 million, increased by €127 million.

Financial and bond debts at 31 December 2015 equal to €13,796 million (€13,942 million at 31 December 2014) comprise the following:

Financial and bond debts are denominated in euros³⁵ and refer mainly to bond loans (€9,811 million, 71.1%) and bank loans (€3,950 million, or 28.6%, including €1,627 million provided by the EIB).

Financial and bond debts decreased by €146 million compared with 31 December 2014. The reduction is attributable mainly to: (i) the reduction of bonds (-€820 million) following the repayment of a bond maturing in November 2015 with a nominal value of €750 million and the net repurchase of bonds with a nominal value of €250 million carried out as a part of the liability management operation completed in November 2015³⁶, the impact of which was partially offset by a new issue finalised in January 2015 with a nominal value of €250 million; and (ii) to the increase in bank loans (+€654 million) attributable to new loans taken out with the EIB (+€376 million net of repayments) and higher net utilisation of uncommitted bank credit lines (+€278 million).

Long-term financial debt (€11,067 million) represents around 80% of gross financial debt (around 85% at 31 December 2014). Fixed-rate financial debts total around 64% of gross financial debt.

The reduction in financial receivables not held for operating activities (-€216 million) is due to the closure and simultaneous repayment of the shareholders’ loan provided by Snam to the jointly owned company TAG, under the scope of an operation to refinance the entire debt of TAG through the banking system.

Cash and cash equivalents (€17 million) mainly refer to the cash at Gasrule Ltd for the Group’s insurance activities (€15 million). The reduction of €57 million compared with 31 December 2014 mainly reflects the use of the deposit account in 2015 (€47 million) created to close the acquisition by Italgas S.p.A. of 51% of Acam Gas S.p.A.

At 31 December 2015, Snam had unused committed long-term credit lines worth €3.95 billion.