Other commitments and risks

The other unevaluated commitments and risks are:

Commitments arising from the contract for the acquisition of Italgas and Stogit from Eni

The price determined for the acquisition of Italgas and Stogit is subject to adjustment mechanisms based on commitments made when the transaction was completed, which were also intended to apply after the date of execution.

Acquisition of Italgas

Note that, at the same time as the transaction to separate Italgas Reti S.p.A. from Snam S.p.A., the following were transferred to the Company Italgas S.p.A. (formerly ITG Holding S.p.A) all the rights and obligations pertaining to Snam S.p.A with regard to the sale of the Roma Ostiense property complex as a result of contractual arrangements entered into during the purchase in 2009 by Eni of the entire share capital of Italgas.

Therefore at 31 December 2016 there are no residual commitments from the above agreements with regard to the adjustment of the Italgas purchase price.

For more information, refer to the Information Document on the demerger of Snam S.p.A. in favour of Italgas S.p.A., prepared pursuant to Article 70, paragraph 6 of the regulation adopted by CONSOB through Resolution 11971 of 14 May 1999 and later amendments and supplements, available on the Snam website (www.snam.it, in the section “Investor Relations/Separation of Italgas from Snam).

Acquisition of Stogit

At 31 December 2016 the residual commitments resulting from the above agreements involve hedging mechanisms to keep the risks and/or benefits that may derive from the following pertaining to Eni: (i) the possible exploitation of the gas owned by Stogit at the time of the transfer of the shares other than that recognised by the Authority for Electricity, Gas and the Water System (the AEEGSI) in the case of its sale, or partial sale, if certain quantities were to become no longer instrumental to the regulated concessions and therefore available for sale; (ii) the possible sale of the storage capacity which should be freely available on a negotiable basis rather than a regulated basis, or the transfer of concessions held by Stogit at the time of the share transfer that may become dedicated mainly to storage activities which are no longer regulated.

With regard to the adjustment of the Stogit purchase price, in order to take into account the different value, compared with the share transfer date, paid by the AEEGSI for the quantities of natural gas owned by Stogit included in the RAB (Regulatory Asset Base) assets, note that following the definitive approval by the AEEGSI of the 2015 storage tariffs, a price adjustment was made in favour of Eni, amounting to a total of €6 million.

See below for the comments on the income statement items. Note that, following the operation of separating the natural gas business in Italy from Snam, which led to the transfer, with effect from 7 November 2016, of the entire equity investment held by Snam S.p.A. in Italgas Reti S.p.A. (formerly Italgas S.p.A.) to Italgas S.p.A. (formerly ITG Holding S.p.A.), the result of the Natural gas distribution sector for the period 1 January – 6 November 2016 was reported separately under the item “Net profit – discontinued operations” in the income statemen⁵³, as required by the provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”. Therefore, the comments below refer solely to continuing operations (transportation and dispatching, regasification, storage, as well as corporate activities).

However, it should be borne in mind that the separate reporting of discontinued operations in accordance with the criteria pursuant to IFRS 5 only refers to relations with third parties leaving eliminations for inter-company transactions in place. This creates a distortion in the separation of the values between continuing and discontinued operations which, at an economic level, penalises one or the other, the more important, the greater the inter-company relations of the discontinued sectors.

To eliminate these distortions, the Directors’ Report contains alternative performance measures, not included in the IFRS (Non – GAAP measures), which restore inter-company transactions for discontinued operations in the results of continuing operations, at the level of individual income statement items, to obtain a representation of the results of continuing operations as if the discontinued operations had been deconsolidated. On the basis of these representations, refer to the chapter “Financial review and other information” in the Directors’ Report for the reasons behind the most significant changes.