Analysis of income statement items

Income from equity investments (€831 million) consist of: the dividends (809 million euro) distributed by the subsidiaries Snam Rete S.p.A. (329 million euro), Italgas Reti S.p.A. (275 million euro), and Stogit S.p.A. (92 million euro) as well as companies under joint control Trans Austria Gasleitung GmbH (75 million euro), TIGF Holding S.A.S. (€21 million), Gasbridge 1 B.V. and Gasbridge 2 B.V. (17 million euro)³⁹, (ii) by revenue deriving from the underwriting of a bond loan convertible in shares issued by TIGF Holding (22 million euro).

The reduction of the entry in question may be principally traced to lower dividends distributed by Snam Rete Gas S.p.A. (-96 million euro)

The expenses from shares refer to the devaluation of shares in GasBridge 1 B.V. and GasBridge 2 B.V. (25 million euro in total)⁴⁰.

The asset interest and other financial revenue (642 million euro) essentially concern: (i) the asset interest deriving from infra-group loans issued by Snam to Snam Rete Gas S.p.A., (187 million euro), to Stogit S.p.A. (53 million euro) and to the Italgas Group (40 million euro); (ii) the financial revenue deriving from the recharge to the companies Snam Rete Gas S.p.A. and Stogit S.p.A. of the charges connected to the buyback operation put into effect by Snam in the month of October 2016 (241 million euro in total); (iii) the net financial revenue form the adjustment to the fair market value of the financial credits in existence towards the Italgas Group (119 million euro).

The Liability Interest and other financial expenses (647 million euro) principally refer: (i) to the expenses connected to the bond buyback operation (329 million euro), equal to the difference between the reacquisition price for the bonds on the market and the relative value to the depreciated cost; (ii) to expenses on short – long term financial debts and concern expenses on bond loans⁴¹ (293 million euro) and on loans issued by Banks and other Financial Institutions (24 million euro).

The revenue from the provision of services (203 million euro) concern the recharge to subsidiaries of the costs incurred for the provision of services managed at the central level by Snam and the charge of the costs to Italgas deriving from the operation involving the separation of the distribution business from Snam. The services are regulated through contracts stipulated between the Parent Company and its subsidiaries and concern the following areas: ICT, personnel and organisation, planning, administration, finance and control, general services, property and security services, legal and corporate affairs and compliance, health, safety and environment, regulation, external relations and communication, internal audit and Enterprise Risk Management (ERM). The pricing model for service contracts is based on the chargeback of costs incurred to provide the services on a full-cost basis. The pricing model for service contracts is based on the recharge of the costs incurred for the provision of services according to a full-cost logic. In reference to the provision of services issued to the Italgas Group, it should be pointed out that there are partly phase-out contracts in existence between Snam, Italgas Reti and Italgas for a temporary period, with the goal of ensuring the continuity of activities previously guaranteed by Snam.

Other income (€12 million) essentially refers to revenue from leasing and maintaining fibre-optic telecommunications cables for third parties.

The cost of personnel totals 79 million euro, an 11 million euro increase in respect to the prior fiscal year, as a result of increased expenses for early retirement.

The number of employees at 31 December 2016 (783 people) is broken down below by professional status:

Costs for non-financial services and other costs (€162 million) consist mainly of expenses for the provision of services that are charged back to subsidiaries.