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Natural gas distribution

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Key performance indicators (*)

 

 

 

 

 

 

Financial
year

 

First half

Change

% change

2014

(€ million)

2014

2015

(*)

The figures relating to the first half of 2015 include Acam Gas S.p.A. and AES S.p.A., which were fully consolidated as of 1 April 2015 and 1 July 2014 respectively, and Metano Arcore S.p.A. and SETEAP S.p.A., which were merged by incorporation into Italgas S.p.A. and Napoletanagas S.p.A. respectively, with effect from 1 January 2015.

(**)

Purely for the purposes of the reclassified income statement, total revenue is shown net of revenue relating to building and upgrading distribution infrastructures recorded pursuant to IFRIC 12, which is recorded in equal measure alongside the relevant costs incurred, and stated as a direct reduction in the respective cost item.

(***)

Before consolidation adjustments.

(****)

This figure refers to the kilometres of network managed by Italgas.

1,053

Total revenue (**) (***)

502

543

41

8.2

1,026

- of which regulated

489

532

43

8.8

331

Operating costs (**) (***)

136

163

27

19.9

477

EBIT

257

248

(9)

(3.5)

359

Technical investments

152

142

(10)

(6.6)

6,500

Gas distribution (millions of cubic metres)

3,521

4,431

910

25.8

55,278

Distribution network (kilometres) (****)

53,308

56,636

3,328

6.2

6.408

Active meters (millions)

5.911

6.518

0.607

10.3

3,124

Employees in service at period end (number)

3,001

3,221

220

7.3

Italgas – Exit from judicial administration and reappointment of the company’s Board of Directors

The activities relating to the revocation of the judicial administration order imposed on Italgas by the Court of Palermo were completed on 9 July 2015. In view of the outcome of the checks performed and the active cooperation of the Snam Group, the Court ordered the handover of the company on 29 June 2015.

Having acknowledged the revocation of the judicial administration order, on 9 July 2015 the Italgas Shareholders’ Meeting reappointed all members of the Board of Directors, the term of which expires at the Shareholders’ Meeting called to approve the financial statements for the year ended 31 December 2015.

Italgas will comply with the obligation to provide the competent authorities with the information required pursuant to Article 34, paragraph 8 of Legislative Decree 159/2011 (judicial control), in relation to the relevant transactions, but it has appealed before the Palermo Court of Appeal against the provision of such information. Italgas S.p.A. will also provide the competent authorities with the results of the periodic reports by the Supervisory Body.

More details on this measure can be found in Note 18 “Guarantees, commitments and risks – Disputes and other measures” of the notes to the condensed interim consolidated financial statements.

Extraordinary transactions

Acquisition of control of Acam Gas S.p.A. – Effects of the transaction

On 1 April 2015, Italgas completed the acquisition from Acam of a 51% stake in Acam Gas, for a fee of €46 million. By means of this transaction, Italgas, which already owned 49% of Acam Gas, acquired the company’s entire share capital, further consolidating its gas distribution business in the minimum geographical area (ATEM) of La Spezia. Acam Gas holds the concession to distribute gas in the city of La Spezia and another 28 municipalities in the same province, with around 112,000 active redelivery points and a network covering approximately 1,400 km.

The effects of the acquisition of control of Acam Gas on the company’s income statement are recognised as of 1 April 201515, or the second quarter of 2015, and can be summarised as follows:

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(€ million)

1 April – 30 June 2015

(*)

Net of the effects of IFRIC 12.

Total revenue (*)

5

- of which regulated

5

Operating costs (*)

2

EBITDA

3

EBIT

2

Mergers by incorporation

With effect from 1 January 2015, Metano Arcore S.p.A., which holds the concession to distribute natural gas in the municipality of Arcore through a network of more than 60 km and approximately 8,700 redelivery points, and SETEAP S.p.A.16 were merged by incorporation into Italgas S.p.A. and Napoletanagas S.p.A. respectively.

Results

Total revenue amounted to €543 million, up by €41 million, or 8.2%, compared with the first half of 2014. Total revenue, net of components offset in costs, amounted to €539 million, an increase of €37 million, or 7.4%, compared with the corresponding period of the previous year.

Regulated revenue for the first half of 2015 (€532 million) related mainly to fees for the natural gas distribution service (€509 million; +€40 million) and to technical services (€12 million). Net of components offset in costs, regulated revenue amounted to €528 million, up by €39 million, or 8.0%, compared with the corresponding period of the previous year. This increase was due to the change in the scope of consolidation and to tariff updates.

EBIT totalled €248 million in the first half of 2015, down by €9 million, or 3.5%, compared with the corresponding period of 2014. The increase in revenue (+€37 million) was more than offset by: (i) higher amortisation and depreciation for the period (-€23 million), resulting mainly from the change in the scope of consolidation and the reduction (from 20 to 15 years) in the useful life of some metering facilities reviewed for tariff purposes by the Electricity, Gas and Water Authority; and (ii) the increase in operating costs (-€23 million, net of components offset in revenue), due mainly to the lower portion of expenses absorbed by investment activities and to the change in the scope of consolidation, the effects of which were partly offset by the changes in provisions for risks and charges.

Operating review

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Technical investments

 

 

 

 

 

 

Financial
year

 

First half

Change

% change

2014

(€ million)

2014

2015

231

Distribution

109

83

(26)

(23.9)

180

Network maintenance and development

83

69

(14)

(16.9)

51

Replacement of cast-iron pipes

26

14

(12)

(46.2)

88

Metering

31

42

11

35.5

40

Other investments

12

17

5

41.7

359

 

152

142

(10)

(6.6)

Technical investments in the first half of 2015 amounted to €142 million, down by €10 million, or 6.6%, compared with the first half of 2014 (€152 million).

Investments in distribution (€83 million) mainly involved development projects (extensions and new networks) and the renovation of sections of pipe, including the replacement of cast-iron pipes.

Investments in metering (€42 million) primarily concerned the meter replacement programme and the remote meter-reading project.

Other investments (€17 million) mainly concerned investments in IT, property and vehicles.

Gas distribution

In the first half of 2015, 4,431 million cubic metres of gas were distributed, an increase of 910 million cubic metres, or 25.8%, compared with the first half of 2014, mainly due to weather conditions.

At 30 June 2015, Snam had concessions for gas distribution services in 1,472 municipalities (1,437 at 31 December 2014; 1,435 at 30 June 2014), of which 1,392 were in operation (1,361 at 31 December 2014) and 80 had to complete and/or create networks (76 at 31 December 2014). It had 6.518 million active meters at gas redelivery points to end users (households, businesses, etc.), compared with 5.911 million at 30 June 2014.

Distribution network

At 30 June 2015, the gas distribution network covered 56,636 km, an increase of 1,358 km compared with 31 December 2014 (55,278 km).

Tariff regulations

Resolution 89/2015/R/gas – “Redetermination of the reference tariffs for gas distribution and metering services for 2009-2013 and correction of material errors”

By means of this resolution, published on 6 March 2015, the Authority re-determined the reference tariffs for the years 2009-2013, based on the adjustment requests received from some operators by 16 February 2015, and corrected some material errors in Resolution 634/2014/R/gas of 18 December 2014.

Resolution 90/2015/R/gas – “Determination of the definitive reference tariffs for gas distribution and metering services for 2014”

By means of this resolution, published on 6 March 2015, the Authority determined the definitive reference tariffs for 2014, based on the provisions of Article 3, paragraph 2, letter b) of the Gas Distribution Tariff Regulation, calculated based on the final balance sheet figures for 2013.

Resolution 147/2015/R/gas – “Determination of the provisional reference tariffs for gas distribution and metering services for 2015”

By means of this resolution, published on 2 April 2015, the Authority determined the provisional reference tariffs for 2015, based on the provisions of Article 3, paragraph 2, letter a) of the Gas Distribution Tariff Regulation, calculated based on the provisional balance sheet figures for 2014.

15 The share attributable to Snam of the net profit generated by Acam Gas in the first half of 2015, before the acquisition, is included in the valuation of the investment using the equity method as at 31 March 2015.

16 The company holds distribution concessions in five municipalities on the Sorrento Peninsula in which the plants are under construction and therefore are not yet operational.

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