SNAM Annual Report 2016 - 8. Trade receivables and other current and non-current receivables

Trade receivables and other current receivables equal to €1,307 million (€1,824 million at 31 December 2015) and other non-current receivables equal to €213 million (€78 million at 31 December 2015) break down as follows:

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	31.12.2015			31.12.2016
(€ million)	Current	Non-current	Total	Current	Non-current	Total
Trade receivables	1,677		1,677	1,271		1,271
Financial receivables		78	78		213	213
- held for operations		78	78		213	213
Receivables from investment/divestment activities	23		23	16		16
Other receivables	124		124	20		20
	1,824	78	1,902	1,307	213	1,520

Trade receivables of €1,271 million (€1,677 million at 31 December 2015) mainly refer to the natural gas transportation (€988 million) and storage (€218 million) segments.

Trade receivables relating to the storage segment (€218 million) include the effects of the addition of revenue connected to the allocation of natural gas storage capacity by auction (€68 million)¹¹.

Receivables are reported net of the provision for impairment losses of €132 million (€157 million at 31 December 2015). The provision essentially involves the impairment losses in previous financial years on receivables from the balancing service pursuant to Resolution 608/2015/R/gas through which the Authority provided for partial payment to the balancing supervisor (Snam Rete Gas), of uncollected receivables for the period from 1 December 2011 to 23 October 2012¹². With regard to these receivables, the provision for impairment losses, including interest, totalled approximately €126 million.

Changes in the provision for impairment losses on receivables during the year are shown below:

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(€ million)

Provision for impairment losses at 31.12.2015

Provisions (*)

Utilisations

Changes in scope of consolidation

Other changes

Provision for impairment losses at 31.12.2016

(*)	The value refers entirely to discontinued operations.

Trade receivables

156

(3)

(20)

(2)

132

Other receivables

(1)

157

(3)

(21)

(2)

132

The changes in the scope of consolidation (€21 million) refer to the deconsolidation of Italgas Reti S.p.A. following the loss of control after the transaction separating the natural gas distribution business from Snam S.p.A.

Financial receivables held for operating activities (€213 million; €78 million at 31 December 2015) relate to the shareholders’ loan to the associate Trans Adriatic Pipeline AG (TAP), which Snam took on under contractual agreements relating to the acquisition of the equity investment¹³. The classification of receivables as “non-current” was based on the contractual agreements in place between shareholders. Compared with 31 December 2015, receivables rose by €135 million, including accrued interest, following the cash calls requested by the Snam investee companies in 2016 based on the above-mentioned agreements.

Receivables for investment/divestment activities (€16 million; €23 million at 31 December 2015) include receivables for public and private contributions recorded in the light of investment activities involving the transportation segment. The reduction of €7 million compared with 31 December 2015 is due to the deconsolidation of Italgas Reti S.p.A.

Other receivables of €20 million (€124 million at 31 December 2015) comprise:

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(€ million)	31.12.2015	31.12.2016
IRES receivables for the national tax consolidation scheme	34	10
Other receivables:	90	10
- Advances to suppliers	9	5
- Energy and Environmental Services Fund (CSEA)	48
- Other	33	5
	124	20

IRES receivables for the national tax consolidation scheme (€10 million, compared with €34 million at 31 December 2015) mainly concern receivables with the former parent company, Eni, relating to the IRES refund request resulting from the partial IRAP deduction relating to tax years 2007 to 2011 (pursuant to Decree-Law 201/2011).

The reduction in trade receivables and other current receivables of €517 million compared with 31 December 2015 is due mainly to the deconsolidation of Italgas Reti S.p.A.

All receivables are in euros. The fair value measurement of trade and other receivables has no material impact considering the short period of time from when the receivable arises and its due date and contractual conditions.

The seniority of trade and other receivables is shown below:

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31.12.2015

31.12.2016

(€ million)

Trade receivables

Other receivables (*)

Total

Trade receivables

Other receivables (*)

Total

(*)	Including financial receivables, receivables from investment/divestment activities and other receivables.

Non-overdue and non-impaired receivables

1,461

190

1,651

1,130

236

1,366

Overdue and non-impaired receivables:

216

251

141

154

- 0-3 months overdue

- 3-6 months overdue

- 6-12 months overdue

- more than 12 months overdue

172

184

128

134

1,677

225

1,902

1,271

249

1,520

Overdue and non-impaired receivables (€154 million; €251 million at 31 December 2015) mainly relate to the following sectors: (i) storage (€99 million) mainly with regard to VAT¹⁴ invoiced to users in previous years for the use of strategic gas withdrawn and not replenished under the terms of the Storage Code; (ii) transportation (€47 million) essentially involving receivables from users (€31 million) for penalties and additional tariffs, not impaired because they were covered through the fee tariff method.

Receivables from related parties are described in Note 32 “Related-party transactions”.

Specific information on credit risk can be found in Note 23 “Guarantees, commitments and risks – Financial risk management – Credit risk”.

11 This revenue follows the application of Resolution 323/2016/R/gas of the Authority (“Provisions for the regulation of income statement items related to the storage service for the 2016 – 2017 thermal year”), published on 17 June 2016, with which the Authority defined, for the 2016-2017 thermal year, ways of neutralising any differences between the amount paid to storage companies based on tariffs defined under Resolution 77/2016/R/gas and the amount received from the auctions for the allocation of capacity referred to in the same resolution.

12 Through resolution 608/2015/R/gas, published on 11 December 2015, the Authority closed the process launched through resolution 145/2013/R/gas of 5 April 2013 for determining the share of expenses to be paid to the balance director with regard to receivables not collected related to the balance sheet entries in the period 1 December 2011 – 23 October 2012. The nominal value of the total receivables not paid by the Authority with regard to the case that is covered by the preliminary investigation comes to a total of approximately €130 million, including VAT. For more information, please see Note 23 “Guarantees, commitments and risks – Disputes and other measures – Recovering receivables from certain users of the transportation and balancing system”.

13 Based on the agreements entered into, the shareholders are obliged to finance the project pro rata to their respective shareholding, until the pipeline becomes operational. The potential expansion of the pipeline capacity is subject to an assessment on economic viability and, thus, on TAP’s economic interest, also in accordance with the exemption decision of the Regulatory Authorities. For additional information, see Note no. 14 “Shares evaluated with the net worth method” of the Notes to the consolidated Financial Statement.

14 As provided for under the applicable legislation, notices of VAT changes may be issued at the end of bankruptcy proceedings or unsuccessful enforcement proceedings.