2020 Integrated Annual Report
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CONSOLIDATED FINANCIAL STATEMENTS

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Management report

CONSOLIDATED FINANCIAL STATEMENTS

Comment on the economic and financial results

(€ million) 2019 2020 Abs. change Change %
Gas distribution regulated revenue                             1,206.9 1,394.3 187.4 15.5
of which distribution revenue 1,109.1 1,183.7 74.6 6.7
of which other distribution revenue (*) 97.8 102.2 4.4 4.5
of which special items 0.0  108.4 108.4
Adjusted gas distribution regulated revenue 1,206.9 1,285.9 79.0 6.5
Other revenues 51.0 47.9 (3.1) (6.1)
Total revenues (**) 1,257.9 1,442.2 184.3 14.7
Adjusted total revenues 1,257.9 1,333.8 75.9 6.0
Operating costs (**) (350.4) (414.3) (63.9) 18.2
of which special items 0.0 (51.9) (51.9)
Adjusted operating costs (350.4) (362.4) (12.0) 3.4
EBITDA 907.5 1,027.9 120.4 13.3
Adjusted EBITDA 907.5 971.4 63.9 7.0
Amortisation, depreciation and impairment (391.5) (424.6) (33.1) 8.5
EBIT 516.0 603.3 87.3 16.9
Adjusted EBIT 516.0 546.8 30.8 6.0
Net financial expense (69.3) (49.2) 20.1 (29.0)
of which special items (18.3) 0.0 18.3
Adjusted net financial expense (51.0) (49.2) 1.8 (3.5)
Net income from equity investments 100.8 1.5 (99.3) (98.5)
of which special items 85.9 0.0 (85.9)
Adjusted net income from equity investments 14.9 1.5 (13.4) (89.9)
Gross profit 547.5 555.6 8.1 1.5
Adjusted gross profit 479.9 499.1 19.2 4.0
Income taxes (123.9) (152.0) (28.1) 22.7
of which special items 4.4 (16.9) (21.3)
Adjusted income taxes (128.3) (135.1) (6.8) 5.3
Net profit 423.6 403.6 (20.0) (4.7)
Net profit attributable to the Group 417.2 383.0 (34.2) (8.2)
Net profit attributable to minority interests 6.4 20.6 14.2
Adjusted net profit 351.6 364.0 12.4 3.5
Adjusted net profit attributable to the Group 345.2 345.4 0.2 0.1
Adjusted net profit attributable to minority interests 6.4 18.6 12.2

(*) For the purposes of like-to-like comparison, as of 31 December 2019, the revenue item of the Medea company in relation to LPG distribution was reclassified from Other revenues to Distribution revenue (€ 8.9 million). Medea’s 2019 revenues in relation to the sales item, which was later transferred to Gaxa through a demerger of the branch, are stated as Other revenues.
(**) Unlike the legal statement pursuant to international accounting standards, the reclassified income statement shows Total revenues and Operating costs net of the impact of IFRIC 12 “Service concession agreements” (€ 668.7 million and € 621.1 million in 2020 and 2019 respectively), connection contributions (€ 19.5 million and € 16.6 million in 2020 and 2019 respectively) and net margin relating to EECs (€ 3.4 and € 2.8 million in 2020 and 2019 respectively).

The EBIT achieved in the 2020 financial year amounted to € 603.3 million (of which € 70.9 million due to the consolidation of Toscana Energia), with an increase of € 87.3 million compared to 31 December 2019 (+16.9%) as a result of increased revenue (€ 184.3 million, +14.7%), partly offset by higher operating costs (€ 63.9 million, +18.2%) and greater amortisation and depreciation (€ 33.1 million, +8.5%).

Adjusted EBIT (net of non-recurring items) increased by € 30.8 million compared to the 2019 EBIT (+6.0%). The increase is mainly due to higher adjusted revenue (€ 75.9 million; +6.0%), partly offset by: (i) higher operating costs (€ 12.0 million; +3.4%) and (ii) higher amortisation, depreciation and impairment (€ 33.1 million; +8.5%).

The net profit for the 2020 financial year, of € 403.6 million, was down by € 20.0 million, or -4.7%, compared to the net profit for 2019.

Adjusted net profit for the 2020 financial year amounted to € 364.0 million, up from the 2019 financial year (€ 12.4 million, +3.5%).

The net profit attributable to the Group, net of minority interests, mainly relating to minority shareholders of Toscana Energia, amounted to € 383.0 million.

The adjusted net profit attributable to the Group was € 345.4 million, up by 0.1% compared to the adjusted 2019 result.

1 The paragraph “Comment on the economic and financial results” refers to the Italgas Group including: Italgas S.p.A., Italgas Reti S.p.A., Medea S.p.A., Gaxa S.p.A., Italgas Acqua S.p.A., Toscana Energia S.p.A., Toscana Energia Green S.p.A., Seaside S.r.l. and Italgas NewCo S.r.l..

(€ million)20192020
Total revenue1,257.91,442.2
Excluding special items0.0(108.4)
Adjusted total revenues1,257.91,333.8
Total operating costs(350.4)(414.3)
Excluding special items0.051.9
Adjusted total operating costs(350.4)(362.4)
EBITDA907.51,027.9
Excluding special items0.0(56.5)
Adjusted EBITDA907.5971.4
EBIT516.0603.3
Excluding special items0.0(56.5)
Adjusted EBIT516.0546.8
Net financial expense(69.3)(49.2)
Excluding special items18.30.0
Adjusted net financial expense(51.0)(49.2)
Net income from equity investments100.81.5
Excluding special items(85.9)0.0
Adjusted net income from equity investments14.91.5
Gross profit547.5555.6
Excluding special items(67.6)(56.5)
Adjusted gross profit479.9499.1
Income taxes(123.9)(152.0)
Excluding special items(4.4)16.7
Net profit (loss)423.6403.6
Net profit (loss) attributable to minority interests6.4
20.6
Net profit (loss) attributable to the Group417.2
383.0
Excluding special items  
– revenues pursuant to Article 57 (*) 0.0(77.2)
– financial expense from bond buyback (*)13.90.0
– expense for staff leaving incentives (*)0.09.7
– provision for faulty meters (*)0.027.6
– co-investment plans (*) 0.00.3
– capital gain on step acquisition (85.9)0.0
Adjusted net profit (loss)
351.6364.0
Adjusted net profit (loss) attributable to minority interests
6.4
18.6
Adjusted net profit (loss) attributable to the Group
345.2
345.4

(*) Net of the related tax effect. 

Below is the adjusted version of the reclassified income statement:

(€ million)20192020Abs. change Change %
Adjusted total revenues                             1,257.91,333.875.96.0
Adjusted operating costs(350.4)(362.4)(12.0)3.4
Adjusted EBITDA907.5971.463.97.0
Amortisation, depreciation and impairment(391.5)(424.6)(33.1)8.2
Adjusted EBIT516.0546.830.86.0
Adjusted net financial expense(51.0)(49.2)1.8(3.5)
Adjusted net income from equity investments14.91.5(13.4)(89.9)
Adjusted gross profit479.9499.119.24.0
Adjusted income taxes(128.3)(135.1)(6.8)5.3
Adjusted net profit351.6364.012.43.5
Adjusted net profit attributable to the Group345.2345.40.20.1
Adjusted net profit attributable to minority interests6.418.612.2 

(*) For the purposes of like-to-like comparison, as of 31 December 2019, the revenue item of the Medea company in relation to LPG distribution was reclassified from Other revenues to Distribution revenue (€ 8.9 million). Medea’s 2019 revenues in relation to the sales item, which was later transferred to Gaxa through a demerger of the branch, are stated as Other revenues.

(**) Unlike the legal statement pursuant to international accounting standards, the reclassified income statement shows Total revenues and Operating costs net of the impact of IFRIC 12 “Service concession agreements” (€ 668.7 million and € 621.1 million in 2020 and 2019 respectively), connection contributions (€ 19.5 million and € 16.6 million in 2020 and 2019 respectively) and net margin relating to EECs (€ 3.4 and € 2.8 million in 2020 and 2019 respectively).

Italgas’ management assesses Group performance on the basis of alternative performance indicators60 not envisaged by IFRS, obtained by excluding special items from EBIT and net profit.

The income components are classified as special items, if significant, when: (i) they result from non-recurring events or transactions or from transactions or events which do not occur frequently in the ordinary course of business; or (ii) they result from events or transactions which are not representative of the normal course of business.

The tax rate applied to the items excluded from the calculation of adjusted net profit is determined on the basis of the nature of each revenue item subject to exclusion. Adjusted EBIT and adjusted net profit are not provided for by either IFRS or other standard setters. These performance metrics allow for analysis of the business trends, making it easier to compare results. The NON-GAAP financial report must be considered complementary to and not replacing the reports prepared according to IFRS.

The income components classed among special items in 2020 referred to:

  • the higher revenues associated with the contribution pursuant to Article 57 relating to the replacement of traditional meters with electronic ones (smart meters) due to the change in methodology over previous years and the recovery of non-depreciation (so-called IRMA) pursuant to DCO 545/2020/R/gas and Resolution no. 570/2019/R/gas, amounting to € 108.4 million;
  • costs for staff leaving incentives incurred in the financial year and the provision for staff leaving incentives for a total amount of € 13.0 million;
  • the provision for the repair of faulty meters, amounting to € 38.5 million, determined on the basis of faulty meters detected on the field as of 31 December 2020, estimated faults for the 2021-2026 period and agreements with the suppliers;
  • expenses associated with the 2019-2021 co-investment plan, due to the adjustment of the number of rights assigned, amounting to € 0.4 million;

With reference to the higher revenues pursuant to Article 57, the company recorded the impacts in the financial statements by virtue of DCO no. 545/2020/R/gas, whereby the Authority announced its intention to amend the RTDG 2020-2025, proposing that disposals relating to meters up to class G6 be determined using the so-called regulatory FIFO method and that this criterion be extended to the disposals of traditional meters higher than class G6, thereby making the criterion for determining residual depreciation uniform for all meters disposed of under the Directives.

The greater contribution is also made up of the amount for the recovery of non-depreciation (so-called IRMA) relating to meters class G6 or lower replaced with the smart meters introduced by Resolution no. 570/2019/R/gas.

60  For the definition of alternative performance indicators, reference should be made to the chapter “Non-GAAP Measures” in this report.


TOTAL REVENUE
(€ million) 2019 2020 Abs. change Change %
Total gas distribution regulated revenue 1,206.9 1,394.3 187.4 15.5
Distribution revenue 1,109.1 1,183.7 74.6 6.7
Other distribution revenue 97.8 102.2 4.4 4.5
Special item 0.0 108.4 108.4  
Total adjusted gas distribution regulated revenue 1,206.9 1,285.9 79.0 6.5
Other revenues 51.0 47.9 (3.1) (6.1)
Adjusted total revenues 1,257.9 1,333.8 75.9 6.0
Total revenue 1,257.9 1,442.2 184.3 14.7

The total revenues of 2020 amounted to € 1,442.2 million (of which € 153.6 million relating to Toscana Energia consolidated from 1 October 2019), up by € 184.3 million compared to 2019 (+14.6%) and refer to natural gas distribution regulated revenue (€ 1,394.3 million) and other revenues (€ 47.9 million).

Adjusted total revenues for 2020, not including the € 108.4 million deriving from the updated meter contribution calculation method pursuant to Article 57, amounted to € 1,333.8 million, up by € 75.9 million compared to 2019 (+6.0%), and refer to natural gas distribution regulated revenue (€ 1,285.9 million) and other revenues (€ 47.9 million).

Adjusted distribution revenue increased by € 79.0 million compared to the corresponding period of 2019, due to an increase in distribution revenue (€ 74.6 million) and an increase in other distribution revenue (€ 4.4 million).

The increase in distribution revenue (€ 74.6 million) is mainly attributable to the change in tariff components (€ 18.2 million), the change in the scope of consolidation as a result of the acquisitions in Sardinia and central and Southern Italy from Conscoop (€ 5.1 million), effective from 1 May 2019, and the above-mentioned full consolidation of Toscana Energia (€ 98.9 million), impacts which were offset by lower tariff adjustments compared to previous years (€ 6.8 million), as well as by lower distribution revenue caused by the changes introduced by Resolution 570/2019/R/gas (€ 40.6 million).

Resolution 570/2019/R/gas also caused an overall reduction of 5.0 in distribution revenue for Toscana Energia.

The increase in other distribution revenue (€ 4.4 million) is attributable to: (i) higher contribution pursuant to Article 57 of ARERA Resolution no. 367/14, as amended, (with total recovery of non-depreciation), relating to the replacement of traditional meters with electronic ones (smart meters), equal to € 30.2 million as of 31 December 2020 (€ 22.9 million in the corresponding period of 2019; up by € 7.3 million), and (ii) higher incentives linked to the safety of plants (€ 7.3 million). These effects are partially offset by lower revenues from services for work on the network (€ 4.6 million) and lower reimbursements for gas interruption activities (€ 5.9 million), mainly as a result of the COVID-19 emergency pursuant to the Government Decree (DPCM) of 22 March 2020, as amended.

At the end of 2020, other revenues amounted to € 47.9 million (down by € 3.1 million compared to the same period of 2019). The decrease is linked mainly to lower capital gains from the sale of assets, of € 5.0 million as of 31 December 2020 (down by € 6.1 million compared to the same period in 2019), offset by higher sales of LPG and propane air to active users in Sardinia (€ 2.7 million).

OPERATING COSTS61
(€ million) 2019 2020 Abs. change Change %
Fixed gas distribution costs 254.7 258.5 3.8 1.5
– net personnel cost 144.1 145.7 1.6 1.1
special items      0.0   0.4 0.4  
– net external costs 110.6 112.8 2.2 2.0
Adjusted Fixed gas distribution costs 254.7 258.1 3.4  
Other assets 22.9 24.9 2.0 8.7
– net personnel cost 2.1 3.6 1.5  
– net external costs 20.8 21.3 0.5 2.4
Other costs and provisions 2.2 57.9 55.7  
special items 0.0  51.5 51.5  
Other adjusted costs and provisions 2.2 6.4 4.2  
Energy Efficiency Certificates 7.8 5.0 (2.8) (35.9)
Concession-related expenses 62.8 68.0 5.2 8.3
Adjusted operating costs 350.4 362.4 12.0 3.4
Operating costs 350.4 414.3 63.9 18.2

Operating costs as of 31 December 2020 amounted to € 414.3 million (of which € 42.1 million due to the full consolidation of Toscana Energia and the acquisitions in Sardinia and central and Southern Italy by Conscoop).

Adjusted operating costs amounted to € 362.4 million, of which € 38.6 million due to the aforementioned change in the scope of consolidation (€ +12.0 million compared to the same period of 2019). This increase was partially offset by the measures taken by the company to boost efficiency.

Net of the change in scope of consolidation, costs decreased by € 18.6 million compared to the same period in 2019, due to lower: (i) net personnel costs (€ 8.1 million); (ii) net external costs (€ 7.8 million); (iii) net costs related to Energy Efficiency Certificates (€ 3.5 million); offset by higher concession charges (€ 0.8 million). The special items refer to higher expenses relating to the voluntary redundancy incentive plans (€ 13.0 million), the expenses relating to the co-investment plans (€ 0.4 million) and the provisions for faulty meters (€ 38.5 million).

AMORTISATION, DEPRECIATION AND IMPAIRMENT
(€ million) 2019 2020 Abs. change Change %
Amortisation and depreciation 389.6 423.7 34.1 8.8
Intangible assets IFRIC 12 317.3 339.8 22.5 7.1
Other Intangible Assets 43.3 47.6 4.3 9.9 
Property, plant and equipment 29.0 36.3 7.3 25.2
– of which amortisation of Right of Use 15.2 20.2 5.0 32.9
Impairment 1.9 0.9 (1.0) (52.6)
391.5 424.6 33.1 8.5

Amortisation, depreciation and impairment (€ 424.6 million) increased by € 33.1 million, (+8.5% compared to 31 December 2019). Against an increase of € 60.0 million (of which € 32.4 million due to the full consolidation of Toscana Energia and € 3.6 million related to increased investments pursuant to IFRS 16), lower depreciation was recorded in relation to the replacement of traditional meters with smart meters, amounting to € 17.7 million at year end (€ 44.6 million in the corresponding period of 2019).

NET FINANCIAL EXPENSE
(€ million) 2019 2020 Abs. change Change %
Expense (income) on short-term and long-term financial debt 44.7 48.9 4.2 9.4
Upfront fee and fee 23.2 4.8 (18.4) (79.3)
of which special items 18.3   0.0   (18.3)
Upfront fee and adjusted fee 4.9 4.8 (0.1) (2.0)
Other net financial expense (income)   2.1 (2.6) (4.7)
– Expenses (income) related to the discounting of environmental provisions and provisions for employee benefits   2.7 2.0 (0.7) (25.9)
– Other net financial expense (income) (0.6) (4.6) (4.0)
Financial expense capitalised (0.7) (1.9) (1.2)
Adjusted net financial expense 51.0 49.2 (1.8) (3.5)
Net financial expense 69.3 49.2 (20.1) (29.0)

Net financial expense (€ 49.2 million) decreased by € 20.1 million compared to the 2019 financial year, mainly due to the lower expenses resulting from the bond buyback transaction completed on 11 December 2019 for a total value of € 18.3 million.

Adjusted net financial expensedecreased by € 1.8 million compared to the corresponding period of 2019. The increase in expenses relating to bonds (€ 4.3 million), due to the cost of the new bond issues made in July 2019, December 2019 and June 2020, is partially offset by: (i) higher other net financial income for € 4.0 million, (of which € 2.8 million is attributable to interest income accrued on the receivables claimed by Italgas for the redemption of networks as part of the arbitration award in Viadana) and (ii) higher capitalised financial expense for € 1.2 million.

Net income from equity investments amounted to € 1.5 million in the financial year 2020 (€ 100.8 million in 2019; down by € 99.3 million). Net of the 2019 special item of € 85.9 million, relating to the capital gain generated by the recalculation of the value of the equity investment in Toscana Energia following the acquisition of control pursuant to IFRS 3 – “Business Combination”, net income reduced by € 13.4 million as a result of the full consolidation of Toscana Energia.

INCOME TAXES
(€ million) 2019 2020 Abs. change Change %
Current taxes 127.7 185.5 57.8 45.3
Net deferred taxes (3.7) (33.5) (29.8)
Income taxes 123.9   152.0 28.1 22.7
– Adjustments for special items 4.4 (16.9) (21.3)
Adjusted income taxes 128.3 135.1 6.8 5.3
Effective tax rate (%) 22.63% 27.36%   
Adjusted effective tax rate (%) 26.74% 27.07%

Income taxes for the 2020 financial year (€ 152.0 million) increased by € 28.1 million compared to the corresponding value of the previous year, mainly due to the higher revenue resulting from the recalculation of the contribution for meters pursuant to Article 57.

Net of the tax impact from the non-recurring cost and revenue items for € 16.9 million, adjusted income taxes for the 2020 financial year amounted to € 135.1 million (up € 6.8 million compared to the corresponding period of 2019), mainly as a result of the increase in gross profit.

The effective tax rate was 27.36% (22.63% in the 2019 financial year) due to the aforementioned impacts.

The adjusted tax rate was 27.07% (26.74% in the corresponding period of 2019).

The reconciliation of the theoretical tax rate with the effective tax rate is described in the note “Income taxes” in the Notes to the consolidated financial statements.

61 The representation of operating costs has changed compared to the criterion used up to 31 December 2019. Specifically, the following were eliminated: (i) the item “variable gas distribution costs” restating the amount of € 6.2 million as of 31 December 2019 among the “gas distribution” net external costs, (ii) the item “other gas distribution costs” restating the costs related to IMU, as of 31 December 2019 equal to € 2.9 million, among the “gas distribution” net external costs, the costs related to capital losses for € 6.4 million, costs of staff leaving incentives for € 1.0 million and increased use for € 4.8 million, under the item “other costs and provisions”. Part of the net personnel cost related to other activities has been reclassified for a value, as of 31 December 2019 of € 2.9 million, in the net personnel cost “gas distribution”. Lastly, € 2.2 million were reclassified from “net external costs related to other activities” to “gas distribution” net external costs; € 0.4 millions of uses from “net external costs related to other activities” to the “Other costs and provisions” item; and € 0.1 million from “net external costs related to other activities” to the “Concession-related expenses” item.

The Reclassified Statement of Financial Position combines the assets and liabilities of the mandatory format included in the Annual Report based on the criterion of how the business operates, conventionally split into the three basic functions of investment, operations and financing.

The statement provided represents useful information for the investor because it makes it possible to identify the sources of financial resources (own and third-party funds) and uses of financial resources in fixed and working capital.

The Italgas Reclassified Statement of Financial Position as of 31 December 2020, compared with that as of 31 December 2019, is summarised below:

(€ million) 31.12.2019 31.12.2020 Abs. change   
Fixed capital  6,335.0  6,712.3  377.3
Property, plant and equipment  350.0  369.9  19.9
Intangible assets  6,176.1  6,516.6  340.5
Equity investments  33.7  34.2  0.5
Financial receivables and securities held for operations  0.2  0.2  0.0
Net payables for investments (225.0) (208.6)  16.4
Net working capital  56.3  109.7  53.4
Provisions for employee benefits (113.2) (104.6)  8.6
Assets held for sale and directly related liabilities  2.1  0.1 (2.0)
NET INVESTED CAPITAL  6,280.2  6,717.5  437.3
Shareholders’ equity  1,794.9  1,981.0  186.1
– attributable to the Italgas Group  1,560.4  1,740.9  180.5
– attributable to minority shareholders  234.6  240.1  5.5
Net financial debt  4,485.3  4,736.5  251.2
COVERAGE  6,280.2  6,717.5  437.3

The net invested capital at 31 December 2020 amounted to € 6,717.5 million and consists of the items discussed below.

The fixed capital (€ 6,712.3 million) increased by € 377.3 million compared to 31 December 2019, primarily due to the increase in tangible and intangible assets (€ 360.4 million) and the reduction in net payables related to investments (€ 16.4 million).

Intangible assets (€ 6,516.6 million), which primarily include assets for the concession services accounted for pursuant to IFRIC 12, recorded an increase of € 340.5 million, mainly due to investments for € 711.5 million, net of amortisation and impairment for € 388.3 million, as well as an increase related to change in the scope of consolidation for € 19.8 million, offset by decreases and other changes for € -2.5 million.

Tangible assets (€ 369.9 million), which mainly concern property, plant and equipment, increased by € 19.9 million, mainly due to investments for € 66.0 million, € 26.5 million of which linked to the application of IFRS 16, net of depreciation for € 36.3 million, of which € 20.2 million linked to the right of use pursuant to IFRS 16 and decreases and other changes for € -9.8 million.

Below is an analysis of the change in Property, plant and equipment and Intangible assets :

(€ million)Property, plant and equipmentIFRIC 12 assetsIntangible assetsTotal
Balance at 31 December 2019350.05,984.2191.96,526.1
Investments66.0669.841.7777.5
– of which IFRS 1626.5  26.5
Amortisation, depreciation and impairment(36.3)(340.7)(47.6)(424.6)
– of which metering instruments (ordinary depreciation) 3.6 3.6 
– of which, acceleration of metering instruments* 14.1 14.1
– of which, amortisation as per IFRS 16(20.2)  (20.2)
Change in the scope of consolidation (entities and business units) 19.8 19.8
Contributions(0.1)(9.1) (9.2)
Other changes(9.7)8.6(2.0)(3.1)
Balance at 31 December 2020369.96,332.6184.06,886.5

* Accelerated depreciation as at 31.12.2020 and 31.12.2019 amounted to € 17.7 million and € 44.6 million respectively

The equity investments item (€ 34.2 million) refers primarily to the equity investments in Valdarno in liquidation, Umbria Distribuzione Gas, Metano S. Angelo Lodigiano and Enerpaper, consolidated using the equity method.

Consolidated net working capital62 at 31 December 2020 amounts to € 109.7 million and is broken down as follows:

(€ million) 31.12.2019 31.12.2020 Abs. change
Trade receivables 432.3 462.2 29.9
Inventories 52.3 101.2 48.9
Tax receivables 87.7 64.4 (23.3)
Accruals and deferrals from regulated activities 127.0 202.8 75.8
Other assets 147.6 148.3 0.7
Trade payables (288.1) (303.0) (14.9)
Provisions for risks and charges (168.0) (202.6) (34.6)
Deferred tax liabilities (92.5) (55.2) 37.3
Tax payables (11.1) (45.0) (33.9)
Other liabilities (230.9) (263.4) (32.5)
  56.3 109.7 53.4

Compared to 31 December 2019, net working capitalrose by € 53.4 million, mainly as a result of: i) an increase in trade receivables (€ 29.9 million); ii) an increase in inventories (€ 48.9 million); iii) an increase in net tax payables (€ 19.9 million) due mainly to taxes in the period; iv) an increase in accruals and deferrals from regulated activities (€ 75.8 million) due to the change in methodology of the contribution paid for meters pursuant to Article 57; v) an increase in other assets (€ 0.7 million), mainly due to higher safety incentives (€ 22.5 million), partly offset by lower receivables from the CSEA for EECs (€ 19.1 million) and lower other assets due to the valuation of existing derivatives (€ 2.4 million); vi) an increase in trade payables (€ 14.9 million); vii) an increase in provisions for risks and charges (€ 34.6 million); viii) an increase in other liabilities for the financial year (€ 32.5 million), mainly as a result of payables due to the CSEA, associated with the additional distribution components (€ 24.6 million), and payables for penalties (€ 11.6 million).

Note that the Company has finalised factoring agreements with financial counterparties on the basis of which the Company’s receivables can be factored without recourse. Specifically, in the fourth quarter, transactions were finalised for the factoring of receivables relating to: (i) trade receivables for distribution due on 31 December 2020, collecting a total of € 85.3 million; (ii) receivables due from CSEA, collecting a total of € 100.5 million; (iii) receivables linked to Energy Efficiency Certificates, collecting a total of € 131.8 million and (iv) tax receivables, collecting € 38.6 million.

Net financial debt
(€ million) 31.12.201931.12.2020Abs. change
Financial and bond debt4,746.25,405.1658.9
Short-term financial debt (*) (**)471.4677.7206.3
Long-term financial debt4,200.14,651.1451.0
Financial liabilities for leasing pursuant to IFRS 1674.776.31.6
Financial receivables and cash and cash equivalents (260.9)(668.6)(407.7)
Cash and cash equivalents (**)(255.8)(663.5)(407.7)
Financial receivables(5.0)(5.0)(0.0)
Securities not instrumental to operations(0.1)(0.1)0.0
Net financial debt4,485.34,736.5251.2
of which financial liabilities pursuant to IFRS 1674.776.31.6
Net financial debt (excluding the effects pursuant to IFRS 16)4,410.64,660.2249.6

(*) These include the short-term portions of long-term financial debt.
(**) The items are recognised net of € 0.5 million relating to factoring transactions, the underlying amounts on which were collected as of 31 December 2020 and repaid to the factor in the first few business days of January 2021.

Net financial debt at 31 December 2020, including the effects of the application of IFRS 16, of € 76.3 million, amounted to € 4,736.5 million, up by € 251.2 million (€ 4,485.3 million as of 31 December 2019). Net of that effect, net financial debt amounted to € 4,660.2 million (€ 4,410.6 million as of 31 December 2019, up by € 249.6 million).

Gross financial and bond debt at 31 December 2020 totalled € 5,405.1 million (€ 4,746.2 million at 31 December 2019) and refers to: (i) bonds (€ 3,854.5 million), (ii) loan agreements with the European Investment Bank (EIB) (€ 869.5 million), iii) bank loans (€ 604.8 million) and financial liabilities pursuant to IFRS 16 (€ 76.3 million).

Cash, amounting to € 663.5 million, is held in current accounts and fixed-term deposits that can be immediately liquidated with leading banks.

The breakdown of gross financial debt by type of interest rate as of 31 December 2020 is as follows:

(€ million) 31.12.2019 % 31.12.2020 %
Fixed rate 4,178.4 88.0 4,676.3 86.5
Floating rate 567.8 12.0 728.8 13.5
Gross financial debt 4,746.2 100.0 5,405.1 100.0

Fixed-rate financial liabilities amounted to € 4,676.3 million and refer to bonds (€ 3,854.5 million), three EIB loans (€ 745.5 million) and financial liabilities pursuant to IFRS 16 (€ 76.3 million).

Fixed-rate financial liabilities increased by € 497.9 million compared to 31 December 2019, mainly due to the bond issue completed in June 2020 for a nominal value of € 500 million.

Floating-rate liabilities stood at € 728.8 million and were up by € 161.0 million due to the increased use of bank credit lines.

Net of the effects of the financial liabilities pursuant to IFRS 16, the gross financial debt was 86.3% at fixed rate and 13.7% at floating rate.

As of 31 December 2020, Italgas had unused committed credit facilities of € 500 million, maturing in October 2021.

As of 31 December 2020, there were no loan agreements containing financial covenants and/or secured by collateral, with the exception of an EIB loan for nominal € 90 million taken out by Toscana Energia, which requires compliance with certain financial covenants.

Some of these contracts provide, inter alia, for the following: (i) negative pledge undertakings, pursuant to which Italgas and the subsidiaries are subject to limitations regarding the creation of real rights of guarantee or other restrictions concerning all or part of the respective assets, shares or goods; (ii) pari passu and change of control clauses; (iii) limitations on some extraordinary transactions that the company and its subsidiaries may carry out. As of 31 December 2020, these commitments were respected.

Statement of Comprehensive income
(€ million) 2019 2020
Net profit 423.6 403.6
Other Comprehensive income
Components reclassifiable to the income statement
Change in fair value of Cash flow hedge derivatives (Effective portion) (4.2) (10.3)
Tax effect 1.0 2.5
(3.2) (7.8)    
Components not reclassifiable to the income statement:
Actuarial gains (losses) from remeasurement of defined benefit plans for employees (3.5) (4.6)
Tax effect 1.0 1.3
(2.5) (3.3)
Total other components of Comprehensive income, net of tax effect  (5.7) (11.1)
Total Comprehensive income for the year 417.9 392.5  
Attributable to:
– Italgas 411.7 372.0
– Minority interests 6.2 20.5
417.9 392.5
Shareholders’ equity 
(€ million) 
Shareholders’ equity as of 31 December 20191,794.9
of which: 
– Group shareholders’ equity 1,560.4
– Shareholders’ equity of minority shareholders234.6
  
Increase for: 
– 2020 Comprehensive income403.6
of which:383.0
– Profit attributable to the Group 20.6
– Profit attributable to minority shareholders5.1
– Stock grant reserve408.7
  
Decrease for: 
– Italgas 2019 dividend distribution(207.1)
– 2019 dividend distributed to minority shareholders*(13.9)
– Cash flow Hedge valuation reserve(7.8)
– IAS 19 valuation reserve(3.2)
 (232.0)
  
– Other changes 
of which: 
– Attributable to the Group10.5
– Attributable to minority shareholders (1.1)
 9.4
Group shareholders’ equity1,740.9
Shareholders’ equity of minority shareholders240.2
Shareholders’ equity as of 31 December 2020 1,981.0

* This is the extraordinary dividend paid by Toscana Energia.

62 In order to ensure the comparability of net working capital items, receivables for incentives as of 31 December 2019, of € 46.7 million, were reclassified in the item other assets, while payables for penalties as of 31 December 2019, of € 12.6 million, were reclassified in the item other liabilities.

The reclassified statement of cash flows provided below is the summary of the legally required Cash flow statement. The reclassified statement of cash flows makes it possible to reconcile the change in cash and cash equivalents at the start and end of the period with the change in net financial debt at the start and end of the period. The measure which allows for the reconciliation between the two statements is the free Cash flow63, i.e. the cash surplus or deficit remaining after the financing of investments.

RECLASSIFIED STATEMENT OF CASH FLOWS64
(€ million)   2019   2020
Net profit   423.6   403.6
Correction:
– Amortisation, depreciation and other non-monetary components 290.8 428.3
– Net capital losses (capital gains) on asset sales and eliminations (4.4) (1.1)
– Interest and income taxes 193.2 201.2
Change in working capital due to operating activities 20.9 (110.8)
Dividends, interest and income taxes collected (paid) (209.7) (176.2)
Cash flow from operations (*)   714.4   745.0
Technical investments (688.6) (741.8)
Other changes related to investments activities 89.9 (5.2)
Divestments and other changes 8.0 2.0
Free Cash flow before M&A transactions   123.7   0.0
Change in scope of consolidation (96.4) (4.4)
of which:
– price paid for equity   (40.2)   (4.4)
– takeover of payables of acquired companies   (56.2)   0.0
Acquisition of business branches (25.1) (9.7)
Free Cash flow   2.3   (14.1)
Change in short- and long-term financial debt and financial receivables 434.7 657.3
Reimbursements of financial liabilities for leased assets (17.2) (24.1)
Transfer of minority interests (**) 24.8 0.0
Equity Cash flow (***) (196.8) (211.4)
Cash flow for the year   247.8   407.7

(*) Net of the effects deriving from accounting standard IFRS 15.
(**) The transfer of interests means the minority transfer of the equity investments in Medea and Gaxa to the Marguerite II Fund.
(***) Includes, as of 31 December 2020, the dividend paid by Italgas to its shareholders for € 207.1 million, the extraordinary dividend paid by Toscana Energia to minority shareholders for € 13.9 million and payment of part of the credit still owed by Fondo Marguerite II in the capital of Medea, for a value of € 9.6 million.

CHANGE IN NET FINANCIAL DEBT
(€ million)   2019   2020
Free Cash flow before M&A transactions   123.7   0.0
Change due to acquisitions of equity investments and business units (121.4) (14.1)
Transfer of minority investments 24.8 0.0
Equity Cash flow (196.8) (211.4)
Change in financial liabilities for leased assets   (37.7)   (25.7)
Change in debt for EGN shareholder loan   21.0   0.0
Change in scope of consolidation of financial liabilities deriving from M&A transactions (*)   (414.5)   0.0
Change in net financial debt   (600.9)   (251.2)

* The figure refers to the net financial debt of Toscana Energia and Toscana Energia Green as of 1 October 2019.

The Cash flow from operations as of 31 December 2020, of € 745.0 million, was fully absorbed by net investments. As of 31 December 2020, Cash flow after M&A transactions was negative, for € 14.1 million.

Taking into account payment of the dividend for € 207.1 million and the change in financial liabilities pursuant to IFRS 16, for € 25.7 million, net financial debt increased by € 251.2 million.

63 The free Cash flow alternatively closed: (i) the change in cash for the period, after the addition/subtraction of cash flows relating to financial payables/receivables (usage/repayment of financial receivables/payables) and equity (payment of dividends/capital contributions); (ii) the change in net financial debt for the period, after the addition/subtraction of flows of debt relating to equity (payment of dividends/capital contributions).
64 For the purposes of like-for-like comparison with the position reported for 2020, including the effects of the application of the IFRS 16 accounting standard, the 2019 flows were adjusted accordingly.