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snam.it
2014 3Q ResultsMilan, October 31st , 2014
2
Agenda
Highlights and Operational Performance
2014 3Q Consolidated Results
3
Highlights and operational performance
Carlo MalacarneChief Executive Officer
• Revenues 2,648 Up 0.6%
• Ebitda 2,111 Up 1.3%
• Ebit 1,528 Up 0.8%
• Net income 863 Up 28%
• Capex 856 Up 10.5%
• Free cash flow 212 vs 24 in 9M2013
• Net debt 13,734
4
€m
Solid Results
9M 2014 Highlights
An acquisition enhancing Snam’s international strategy 5
Key pillars of Snam’sInternational Strategy
• Optimize the return on current asset base in a broader European context
• Completion of the East-West corridor
• Integrated management of the North-South and East-West corridors, coordinating capex and commercial initiatives in the framework of Snam-Fluxys Strategic Alliance
International assetsDomestic pipelines LNG Terminals
Agreement with CDP for the acquisition of TAG stake
TRANSACTION DETAILS
TAG Acquisition
• Acquisition of the entire stake held by CDP in TAG GmbH
(84.47%, corresponding to 89.22% of economic rights)
• Total consideration of 505 million euro
• Payment through a reserved share capital increase to CDP
Maximum number of shares to be issued: 119 million
Issuing price: Snam weighted average stock price of the last 180 days before the closing
Minimum price of the shares to be issued: € 3.6
• Equity method consolidation
• TAG is the pipeline bringing Russian gas from Austrian/Slovak border to Italy
• 3 lines of 380 km (1,140 km overall length) and 5 compression stations
• 47.5 bcm/year transport capacity
• TAG is regulated by Austrian Authority (E – Control). Capacity is booked with long term contracts
TECHNICAL FEATURES
20.4 20.4
12.1 12.0
15.6 13.3
1.21.4
9M 2013 9M 2014 9M 2013 9M 2014
Italian Gas Market in 9M 2014
6
Residential & commercial
Industrial(*)
Thermoelectric
Other Sectors
Gas Consumption (Weather adj.)2011 -4.4%
47.149.3
Gas injected into the network
-6.2%
47.250.3
(*) Includes: NGV, Agriculture and Non-Energy Use
Source Italian Ministry of Economic Development and SRG estimates
7
2014 3Q Consolidated ResultsAntonio PacciorettiChief Financial Officer
Income Statement
8
€m 9M 2013 9M 2014 Change
Revenues 2,633 2,648 +15
Operating expenses - 550 - 537 +13
EBITDA 2,083 2,111 +28
Depreciation & amortisation - 567 - 583 - 16
EBIT 1,516 1,528 +12
Net interest income (expenses) - 363 - 301 +62
Net income from associates 28 119 +91
EBT 1,181 1,346 +165
Income taxes - 507 - 483 +24
NET PROFIT 674 863 +189
Revenues
9
€m 9M 2013 9M 2014 Change
Regulated revenues 2,603 2,603 -
Transport 1,397 1,407 +10
Distribution 743 749 +6
Storage 332 339 +7
LNG 17 14 -3
Pass-through revenues 114 94 -20
Other revenues 30 45 +15
TOTAL REVENUES 2,633 2,648 +15
Operating expenses
10
(*) net of pass-through costs
€m 9M 2013 9M 2014 Change
Regulated activities 525 518 - 7
Controllable fixed costs 336 348 +12
Variable costs 16 6 -10
Other costs 59 70 +11
Pass-through costs 114 94 -20
Non regulated activities 25 19 - 6
TOTAL COSTS 550 537 - 13
€m 9M 2013 9M 2014 Change
Cost breakdown by business(*):
Transport 147 160 +13
LNG 9 12 +3
Storage 47 46 -1
Distribution 221 212 -9
EBIT analysis
11
€m
+0.8%
2,0602,111
1,516 1,528
20 20
(12) (16)
1.000
1.100
1.200
1.300
1.400
1.500
1.600
1.700
1.800
9M 2013 Regulatedrevenues
Controllable fixedcosts
Depreciation &amortisation
Other 9M 2014
Net Profit analysis
12
+28.0%€m
674
863
12
62
9124
300
400
500
600
700
800
900
1.000
9M 2013 EBIT Net interestincome
(expenses)
Net incomefrom associates
Incometaxes
9M 2014
13
Existing debt as at 30 September 2014 (bln €) Bond Maturity Profile (bln €) as at 30 September 2014 9M 2014 main actions
bln €
Pool banking facilites
Bilateral banking facilities
Debt Capital Market(nominal value)
Institutional lenders financing
Bond issuances (fixed and variable rate):
• 10y Bond: 600 m€ (Jan-14);
• 2y Bond FRN: 150 m€ (Jan-14);
• 5y Bond : 500 m€ (Apr-14);
Reduction of undrawn credit facilities and
bilateral facilities renegotiation;
Renegotiation of pool banking facilities signing
completed at end July;
Institutional lenders financing:
• «single signature» for 300 m€ of existing EIB
financing.
Snam debt structure
bln €
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
13.7
3.2
9.9
2.5
1.316.9
0
2
4
6
8
10
12
14
16
18
Net debt Total committed creditfacilities and bonds
-600
-400
-200
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2.000
Cash flow
14
Netprofit
Change inworkingcapital
Net investments
Depreciation& other
non monetary items
Change in Net Debt9M 2014
-243
863
475
-408
212
€m
Cash Flowfrom
operation
-8831,095 Free
Cash Flow9M 2014
Other-113Dividend
-507
Balance Sheet
15
€m Dec, 31 2013
Sep, 30 2014 Change
Net invested capital 19,320 20,096 +776
Fixed capital 20,583 21,026 +443
Tangible fixed assets 14,847 15,103 +256
Intangible fixed assets 4,710 5,010 +300
Equity-accounted and other investments 1,026 913 -113
Net working capital -1,155 -817 +338
Receivables 2,708 2,535 -173
Liabilities -3,863 -3,352 +511
Provisions for employee benefits -124 -129 -5
Assets held for sale and directly related liabilities 16 16 -
Net financial debt 13,326 13,734 +408
Shareholders' equity 5,994 6,362 +368
16
Q & A S e s s i o n
17
A n n e x e s
35
54132
221
9737
21
155
147
6391
97
398 195
47
203
23
5399
183
49
232
175
445
Capital Expenditure*
18
Transportand LNG
Storage
Distribution
9M 20149M 2013 Expansion & new entry points:
+3% for 10 – 15 yrs
Regional & national development:+2% for 7 – 10 yrs
Safety: +1% for 5 yrs
Maintenance: Base remuneration 6.4%
Development of new fields: +4% for 16 yrs
Expansion of existing fields:+4% for 8 yrs
Maintenance: Base remuneration 6.7%
Substitution of cast iron pipes:+2% for 8 yrs
Metering: 8% allowed return
Other investments: Base remuneration 7.6%
[ €m ]
(*) Gross of subsidies. In 9M 2013 and in 9M 2014 capex amounting to €4 million was carried out by Snam S.p.A.
Expansion of existing fields+ 4% for 8 yrs
Development of new fields + 4% for 16 yrs
Others 6.7%
Metering7.2% remuneration
Distribution6.9% remuneration
Remuneration for new investments7.3%
Remuneration for new investments6.7%
Regional & national develop.+ 1% for 7 – 10 yrs
Import & export capacity develop.+ 2% for 10 yrs
Others 7.3%
Operational Data
9M 2013 9M 2014 ∆ %
Transport Gas injected into the network (bcm) 50.3 47.2 - 6.2
Gas pipeline network (km in operation) 32,277 32,320 +0.1
Storage Storage capacity (bcm)•Modulation (*)
•Strategic
15.911.44.5
15.911.44.5
- -- -- -
Gas moved through storage system (bcm)•Injection•Withdrawal
15.327.967.36
12.587.814.77
-17.9-1.9
-35.2
Distribution Gas distributed (bcm) 5.16 4.51 -12.6
Active Gas Metering at redelivery points (# mln) 5.92 6.38 +7.8
19(*) Available capacity
20
Disclaimer
Snam’s Chief Financial Officer, Antonio Paccioretti, in his position as manager responsible for the preparation of financial reports, certifiespursuant to paragraph 2, article 154-bis of the Legislative Decree n. 58/1998, that data and information disclosures herewith set forthcorrespond to the company’s evidence and accounting books and entries.
This presentation contains forward-looking statements regarding future events and the future results of Snam that are based on currentexpectations, estimates, forecasts, and projections about the industries in which Snam operates and the beliefs and assumptions of themanagement of Snam.In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs,return on equity, risk management are forward-looking in nature.Words such as ‘expects’, ‘anticipates’, ‘targets’, ‘goals’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, ‘seeks’, ‘estimates’, variations of such words, andsimilar expressions are intended to identify such forward-looking statements.These forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predictbecause they relate to events and depend on circumstances that will occur in the future.Therefore, Snam’s actual results may differ materially and adversely from those expressed or implied in any forward-looking statements.Factors that might cause or contribute to such differences include, but are not limited to, economic conditions globally, political, economic andregulatory developments in Italy and internationally.Any forward-looking statements made by or on behalf of Snam speak only as of the date they are made. Snam does not undertake to updateforward-looking statements to reflect any changes in Snam’s expectations with regard thereto or any changes in events, conditions orcircumstances on which any such statement is based.The reader should, however, consult any further disclosures Snam may make in documents it files with the Italian Securities and ExchangeCommission and with the Italian Stock Exchange.
snam.it
2014 3Q ResultsMilan, October 31st , 2014