Highlights
Total revenue in the first half of 2016 amounted to €1,724 million, down by €113 million (-6.2%) compared with the first half of 2015. Net of revenue items offset in costs2, total revenue in the first half of 2016 was €1,668 million, down by €95 million (5.4%) compared with the same period of the previous year. The reduction was due to lower regulated revenues (-€78 million; -4.5%) mainly as a result of the reduction in the net invested capital remuneration rate (WACC)3 for 2016 which affected the natural gas transport and distribution sectors. This effect was partly offset by the increased regulated revenues for the storage sector, which benefited from an improvement in the WACC in 2016 compared with 2015, the first year of the fourth period of regulation.
The reduction in non-regulated revenues (-€17 million) also contributed to the decrease in revenues, essentially attributable to less income from the sale of natural gas no longer part of operations.
EBIT4 for the first half of 2016 totalled €867 million, down by €145 million (14.3%) compared with the first half of 2015. The reduction was due to lower revenues (-€95 million; -5.4%), higher operating costs (-€25 million excluding items offset in revenues), attributable to the distribution sector, and to the increase in amortisation and depreciation for the period (-€25 million; equal to 5.9%) due, essentially, to the entry into service of new infrastructures.
With regard to operating segments5, the reduction reflects the performance of the transport sector (-12.9%; -€76 million) and distribution sector (-28.2%; -€70 million, of which €31 million is attributable to greater provision for risks and charges), partly offset by the positive performance recorded by the storage sector (+5.9%; +€10 million).
Net profit for the first half of 2016 totalled €526 million, down by €86 million (14.1%) compared with the first half of 2015. The lower EBIT (-€145 million; -14.3%) was partly offset by lower net financial expenses (+€10 million, equal to 5.4%), thanks to the reduction in the average cost of borrowing, and the reduction in income tax (€54 million; equal to 19.1%) mainly due to the lower pre-tax profit.
Net financial debt at 30 June 2016 was €14,177 million, compared with €13,799 million at 31 December 2015. The net cash flow from operating activities (€1,200 million) allowed us to fully cover the financial requirements associated with net investments for the period (€692 million) and to generate a free cash flow of €508 million. The net financial debt at 30 June 2016, after the payment to shareholders of the 2015 dividend of €875 million, increased by €398 million compared with 31 December 2015.
Technical investments for the first half of 2016 stood at €526 million (€487 million in the first half of 2015) and refer, in the main, to the natural gas transport sector (€319 million; €278 million in the first half of 2015), the distribution sector (€152 million; €142 million in the first half of 2015) and the natural gas storage sector (€51 million; €62 million in the first half of 2015).
2 The main revenue items offset in costs relate to interconnection and to sales of natural gas carried out for the purposes of balancing the gas system.
3 With Resolution 583/2015/R/com of 2 December 2015 “Rate of return on invested capital for infrastructure services in the electricity and gas sectors: criteria for determination and updating”, the Electricity, Gas and Water Authority (AEEGSI) approved the criteria for calculating and updating the rate of return on net invested capital (WACC) for 2016-2021 and established the rates of return for 2016. The resolution also included an updating mechanism for the rate midway through the period depending on the economic situation.
4 EBIT was analysed by isolating only the elements that determined a change therein. To this end, applying gas segment tariff regulations generates revenue components that are offset in costs.
5 More information on the changes in the EBIT of each operating segment is provided in the next section “Business segment operating performance”.