8 Other current and non-current assets

Other current assets, with an amount of €70 million (€98 million at 31 of December, 2015) and other non-current assets of €159 million (€137 million at 31 of December, 2015) break down as follows:

Other regulated assets (€114 million; €150 million at 31 December, 2015) relate to the natural gas transportation service and refer mainly to the shortfall in amounts invoiced compared with the restriction imposed by the regulator (€112 million of which €42 million relates to the current portion and €70 million relates to the non-current portion).

The market value of derivatives outstanding at 30 June, 2016 is as follows:

The assets arising from the market-value measurement of fair value hedging derivatives (€25 million) refer to an interest rate swap (IRS) entered into in 2014. The IRS is used to hedge against fluctuations in the fair value of a fixed-rate liability arising from a €500 million long-term bond issue. 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 (€10 million) refer to a cross-currency swap (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 (JPY). 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:

The liabilities arising from the market-value measurement of other derivatives, of an amount less than €1million, refer to a forward currency contract entered into on 24 of June 2016. The derivative in question is used to hedge against fluctuations in the exchange rate of the debt of Snam towards the associate company TAP in the amount of 28.6 million Swiss Francs (CHF) as a future capital increase. Snam made the payment on 13 of July 2016. With the valuation criteria adopted for the two financial instruments, the foreign liability is converted into an equivalent liability in Euro, and the variation in value of the cover element and of the covering instrument are reported in a symmetrical and contrary manner in the income statement.

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

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 semester.

The item “Other assets” (€80 million; €77 million at 31 of December, 2015) essentially comprises:

• prepayments (€35 million, of which €16 million for current portion and €19 million for non-current portion), relating mainly to upfront fees and the substitute tax on revolving credit lines⁸ (€25 million);
• security deposits (€13 million), mainly relating to the natural gas transportation segment;
• assets in the transportation segment (€22 million), mainly recognised for lower quantities of fuel gas allocated by users in previous years pursuant to Resolution ARG/gas 184/09, compared to the quantities actually used in those years, adjusted in future years by increasing the quantity to be allocated by the users. The current and non-current portions amount to €1 million and €21 million respectively.