11. Other current and non-current assets

Other current assets, which amount to €52 million (€98 million at 31 December 2015) and other non-current assets of €138 million (€137 million at 31 December 2015) break down as follows:

Other regulated assets (€106 million; €150 million at 31 December 2015) relate to the natural gas transportation service and refer to the shortfall in amounts invoiced compared with the restriction imposed by the regulator¹⁷, of which the current portion accounts for €37 million (€76 million at 31 December 2015) and the non-current portion accounts for €69 million (€70 million at 31 December 2015).

The market value of derivatives outstanding at 31 December 2016 is as follows:

The assets arising from the market-value measurement of fair value hedging derivatives (€21 million, including the share of the accrual matured) refer to an interest rate swap (IRS) entered into in 2014. The IRS is used to hedge against the fluctuation risk of the fair value of a fixed rate liability resulting from a long-term bond issue of more than €500 million. The eight-year bond has a maturity of 21 April 2023 and a fixed annual coupon of 1.5%. The IRS has converted the fixed-rate liability into an equivalent floating-rate liability benchmarked to the 12-month Euribor + 0.5645%.

The main characteristics of the derivative in question are summarised in the table below:

The assets arising from the market-value measurement of cash flow hedging derivatives (€3 million) refer to a Cross Currency Swap agreement (CCS) entered into in 2013. The CCS is used to hedge against fluctuations in the exchange rate of a ¥10 billion long-term bond issue. The six-year bond has a maturity of 25 October 2019 and a half-yearly coupon with an annual fixed rate of 1.115%. The CCS has converted the fixed-rate, foreign-currency liability into an equivalent liability in Euro with a fixed annual rate of 2.717%.

The main characteristics of the derivative in question are summarised in the table below:

In relation to this contract, Snam agrees with its counterparties on the exchange of two capital flows (at the time of entering into the contract and upon the maturity of the underlying financial instrument) and periodic interest flows (on the same dates stipulated for the hedged item) denominated in different currencies at a predetermined exchange rate.

The fair value of hedging derivatives and their classification as a current or non-current asset/liability have been determined using generally accepted financial measurement models and market parameters at the end of the year.

Information on the risks being hedged by the derivatives and on policies adopted by the Company to hedge against these risks is provided in Note 23 – “Guarantees, commitments and risks – Management of financial risks”.

The item “Other assets” (€60 million; €77 million at 31 December 2015) essentially comprises:

• prepayments (€25 million), relating mainly to up-front fees and the substitute tax on revolving credit lines¹⁸ (€22 million) and to insurance premiums (€3 million). The current and non-current portions amount to €9 million and €16 million respectively (€11 million and €21 million at 31 December 2015);
• security deposits (€11 million) refer to the transportation segment;
• assets in the transportation segment (€21 million), mainly recognised for lower quantities of fuel gas allocated by users in previous years pursuant to Resolution ARG/gas 184/09 compared with the quantities actually used in those years, adjusted in future years by increasing the quantity to be allocated by the users. The amount corresponds entirely to the non-current portion (€2 million and €21 million respectively for the current and the non-current portions at 31 December 2015).