Income statement

Net profit

Net profit achieved in the first half of 2015 amounted to €612 million, an increase of €51 million, or 9.1%, compared with the first half of 2014. This increase was due to: (i) a reduction in income taxes (+€45 million) due mainly to the elimination of the additional corporate income tax known as the Robin Hood Tax, which was declared to be unconstitutional (+€44 million); (ii) higher net income from equity investments (+€20 million) thanks to the contribution from recently acquired assets; and (iii) a reduction in net financial expense (+€18 million) due mainly to the lower average cost of debt. These effects were partially absorbed by the reduction in EBIT (-€32 million).

Analysis of income statement items

Regulated revenue (€1,796 million, net of consolidation adjustments) relates to transportation (€1,043 million; +1.1%), distribution (€532 million; +8.8%), storage (€210 million; -3.2%) and regasification (€11 million; +10.0%). Regulated revenue, net of components that are offset in costs, amounted to €1,722 million, up by €41 million, or 2.4%, compared with the first half of 2014.

Non-regulated revenue (€41 million, net of consolidation adjustments) mainly comprises: (i) income from the sale of natural gas no longer useful for transportation activities (€22 million); (ii) income from renting and maintaining fibre optic telecommunications cables (€6 million); and (iii) technical services relating to natural gas distribution activities (€2 million).

Operating costs of regulated activities

Controllable fixed costs (€248 million), which comprise the sum of personnel expenses and recurring external costs, rose by €23 million, or 10.2%, compared with the first half of 2014 (€225 million). This increase was due essentially to the lower portion of expenses absorbed by investment activities. The higher costs resulting from the changed scope of consolidation (€10 million) were absorbed by cost control on a comparable basis. Variable costs (€47 million; +€4 million, or +9.3%) mainly reflect withdrawals from storage for natural gas sales carried out for balancing purposes.

Other costs of €72 million (in line with the first half of 2014) relate mainly to interconnection costs (€30 million) offset in revenue and concession charges relating to natural gas distribution (€27 million).

Operating costs of non-regulated activities

Operating costs of non-regulated activities (€36 million) rose by €23 million compared with the first half of 2014, due mainly to withdrawals from storage for proprietary gas sales (€19 million).

Operating costs of regulated and non-regulated activities, net of components offset in costs, amounted to €329 million, up by €42 million, or 14.6%, compared with the corresponding period of the previous year.

The following table shows the employees in service at 30 June 2015 (6,219 people) by business segment and professional status.

Amortisation, depreciation and impairment losses (€422 million) rose by €38 million, or 9.9%, compared with the first half of 2014, due mainly to the entry into service of new infrastructure, 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.

EBIT¹⁷ achieved in the first half of 2015 amounted to €1,012 million, a reduction of €32 million, or 3.1%, compared with the first half of 2014. This reduction was due to¹⁸:

• the natural gas storage segment (-€29 million; -14.6%), due mainly to lower regulated revenue (-€7 million; -2.9%), in relation to a different timing profile over the year compared with 2014, the reduction in regulated revenue (-€14 million), and higher amortisation and depreciation (-€7 million);
• the natural gas distribution segment (-€9 million; -3.5%), due to the increase in operating costs (-€23 million) resulting from the lower portion of expenses absorbed by investment activities and the change in the scope of consolidation, as well as due to higher amortisation and depreciation for the period (-€23 million),
• which were partly offset by higher revenue (+€37 million), thanks to the change in the scope of consolidation.

The EBIT recorded in the transportation segment (€591 million) was unchanged compared with the corresponding period of the previous year.

Net financial expenses (€186 million) decreased by €18 million compared with the first half of 2014, due mainly to a lower average cost of debt, thanks partly to the initiatives to optimise the Group’s financial structure implemented by Snam, which were partly offset by an increase in average debt in the period.

Financial expenses of €14 million was capitalised in the first half of 2015, compared with €17 million in the first half of 2014.

Income from equity investments (€69 million) refers to the share of net profit for the period of investee companies valued using the equity method. The increase of €20 million compared with the first half of 2014 was due essentially to income from the valuation using the equity method of Trans Austria Gasleitung GmbH - TAG¹⁹, which was partly offset by the elimination of income from the valuation using the equity method of AES Torino, which was fully consolidated as of 1 July 2014.

Income taxes for the first half of 2015 (€283 million) fell by €45 million, or 13.7%, compared with the corresponding period of 2014. This reduction is attributable mainly to the elimination of the additional corporate income tax known as the Robin Hood Tax (€44 million), which was declared to be unconstitutional, and to the increase in the economic growth assistance given to companies that strengthen their capital structure, which was introduced by Decree-Law 201 of 6 December 2011, converted by Law 214 of 22 December 2011, as subsequently amended.

The tax rate for the first half of 2015 was 31.6% (36.9% in the first half of 2014).