22. Shareholders’ equity

Shareholders’ equity, which amounts to €6,497 million (€7,586 million at 31 December 2015) breaks down as follows:

Below is a breakdown of the shareholders’ equity of Snam at 31 December 2016.

Share capital

The share capital as at 31 December 2016 consisted of 3,500,638,294 shares without nominal value (the same as at 31 December 2015), with a total value of €2,735,670,476 (€3,696,851,994 at 31 December 2015).

The reduction in the composition of the share capital is due to the partial and proportional demerger of Snam which took effect on 7 November 2016.

Share premium reserve

The share premium reserve at 31 December 2016 totalled €1,140 million (€1,603 million at 31 December 2015). The reduction of €463 million is mainly due to: (i) the partial and proportional demerger of Snam with effect from 7 November 2016 (€416 million); (ii) the use of part of the reserve to pay shareholders the 2015 dividend (€50 million).

Legal reserve

The legal reserve at 31 December 2016 totalled €547 million (€739 million at 31 December 2016).

The reduction compared with 31 December 2015 is due to the partial and proportional demerger of Snam which took effect on 7 November 2016.

Reserve for fair value of cash flow hedging derivatives

The cash flow hedge reserve (-€2 million, compared with -€3 million at 31 December 2015) includes the fair-value measurement of cash flow hedging derivatives relating to a cross currency swap described in Note 11 “Other current and non-current assets”.

The changes in the reserve during the course of the year are shown below:

Reserve for remeasurement of defined-benefit plans for employees

At 31 December 2016, the reserve for remeasurement of employee benefit plans (-€7 million; -€16 million at 31 December 2015) included actuarial losses, net of the relative tax effect, recognised under other components of comprehensive income pursuant to IAS 19.

The changes in the reserve during the course of the year are shown below:

Consolidation reserve

The negative consolidation reserve of €674 million (compared with €1,701 million at 31 December 2015) includes the value derived from the difference between the acquisition cost of the Stogit equity investments (€1,597 million, including the additional transaction expenses and price adjustment following the agreements reached at transaction closing) and the shareholders’ equity attributable to the Group on the transaction completion date (€923 million). The reduction of €1,027 million is due to: (i) the reclassification of the reserve for the deconsolidation of Italgas Reti S.p.A. following the partial and proportional demerger of Snam S.p.A. with the allocation to Italgas S.p.A. of 52.90% of the stake in Italgas Reti S.p.A.; (ii) the price adjustment in favour of Eni, recognised in 2010, in relation to contractual agreements with Eni at the time of the acquisition of the stake in Stogit (€21 million). The adjustment follows the definitive approval by the Electricity, Gas and Water Authority (AEEGSI) of the storage tariffs for 2015, the reference tariff year for the purposes of adjusting the contractual price.

Other reserves

The other reserves of €35 million (€46 million at 31 December 2015) refer mainly to the effects of the valuation of the equity investments using the equity method.

Retained earnings

Retained earnings totalled €1,969 million (€1,987 million at 31 December 2015). The change is mainly due to the allocation of the residual profit for 2015 (€413 million) partly offset by the effect of the partial and proportional demerger of Snam as from 7 November 2016.

Negative reserve for treasury shares in the portfolio

The treasury shares held by the Company, amounting to €108 million (€5 million at 31 December 2015), are broken down in the table below:

At 31 December 2016, Snam held 29,905,180 treasury shares (1,127,250 at 31 December 2015), equal to 0.85% of its share capital, recorded as a €108 million reduction in shareholders’ equity (€5 million at 31 December 2015). Their market value at 31 December 2016 was around €117 million⁴⁰. At this date, all stock options had been exercised. There are therefore no remaining treasury shares committed to these plans.

The increase of €103 million follows the decision of the Shareholders’ Meeting which, on 1 August 2016, authorised the Board of Directors, pursuant to Articles 2357, paragraph 3 and 2357-ter of the Civil Code to purchase⁴¹, in one or more tranches, on the Mercato Telematico Azionario managed by Borsa Italiana S.p.A. within 48 months of the date of the partial and proportional demerger of Snam up to a maximum of 121,395,090 Snam ordinary shares up to the maximum limit of 3.5% of the subscribed and paid-up share capital.

On 2 March 2017, Snam S.p.A. purchased a total of 64,046,725 treasury shares, equal to 1.83% of the share capital, for a total cost of €233,081,796.89 million.

Dividends

On 27 April 2016, the Ordinary Shareholders’ Meeting of Snam S.p.A. resolved to distribute an ordinary dividend for 2015 of €0.25 per share; the dividend (€875 million) was paid out as of 23 May 2016, with an ex-coupon date of 23 May 2016 and a record date of 24 May 2016.

In its meeting of 6 March 2017, the Board of Directors proposed to the Shareholders’ Meeting convened for 11 April 2017 the distribution of an ordinary dividend of €0.21 per share. The dividend will be paid out as of 24 May 2017, with an ex-coupon date of 22 May 2017 and a record date of 23 May 2017.