Snam 2014 Interim Results

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San Donato Milanese, 30 July 2014 The Snam Board of Directors, at yesterdays meeting chaired by Lorenzo Bini Smaghi, approved the consolidated half-year report to 30 June 2014 (subjected to a limited audit) and examined the consolidated results for the second quarter of 2014 (unaudited). Financial highlights Total revenue: 1,782 million (+0.4%) EBIT: 1,044 million (+2.4%) Net profit: 561 million (+21.4%) Technical investments: 526 million (+7.3%) Operating highlights Gas injected into the transportation network: 32.78 billion cubic metres (-5.0%) Number of active meters: 5.911 million (5.915 million at 30 June 2013) Available storage capacity: 11.4 billion cubic metres (unchanged compared with 30 June 2013) Carlo Malacarne, Snam CEO, made the following comments on the results: In the first half of 2014 the EBIT growth of 2.4%, as well as the remarkable increase in net income of more than 21%, is the result of our continued focus on operating efficiency as well as the increasing contribution of associates and the on-going optimization measures in the cost of debt. We remain committed to investing for profitable growth and value creation for our shareholders, confirming our selective capex plan.

Transcript

Microsoft PowerPoint - Analyst Presentation - 1H 2014 Consolidated Results webcast

snam.it

2014 Interim ReviewMilan, July 30th , 2014

2Agenda

Highlights and operational performance

2014 1H Consolidated Results

3Highlightsandoperationalperformance

Carlo MalacarneChief Executive Officer

Revenues 1,782 Up 0.4% Ebit 1,044 Up 2.4% Net income 561 Up 21.4%

Capex 526 Up 7.3% Net debt 13,730

4

m

Solid Results

1H 2014 Highlights

18.5 18.4

8.4 8.3

10.1 8.5

0.80.8

1H 2013 1H 2014 1H 2013 1H 2014

5

Residential & commercial

Industrial(*)

Thermoelectric

Other Sectors

Gas Consumption (Weather adj.)

-4.7%36.0

37.8

Gas injected into the network

-5.0%

32.834.5

(*) Includes: NGV, Agriculture and Non-Energy Use

Source: Italian Ministry of Economic Development and SRG estimates

Italian Gas Market in 1H 2014

620141HConsolidatedResultsAntonio PacciorettiChief Financial Officer

Income Statement

7

m 1H 2013 1H 2014 Change

Revenues 1,775 1,782 +7

Operating expenses - 379 - 354 +25

EBITDA 1,396 1,428 +32

Depreciation & amortisation - 376 - 384 - 8

EBIT 1,020 1,044 +24

Net interest income (expenses) - 262 - 204 +58

Net income from associates 35 49 +14

EBT 793 889 +96

Income taxes - 331 - 328 +3

NET PROFIT 462 561 +99

Revenues

8

m 1H 2013 1H 2014 Change

Regulated revenues 1,755 1,748 - 7

Transport 930 939 +9

Distribution 498 489 -9

Storage 236 243 +7

LNG 12 10 -2

Pass-through revenues 79 67 -12

Other revenues 20 34 +14

TOTAL REVENUES 1,775 1,782 +7

Operating expenses

9(*) net of pass-through costs

m 1H 2013 1H 2014 Change

Regulated activities 360 341 - 19

Controllable fixed costs 228 225 -3

Variable costs 12 7 -5

Other costs 41 42 +1

Pass-through costs 79 67 -12

Non regulated activities 19 13 - 6

TOTAL COSTS 379 354 - 25

m 1H 2013 1H 2014 Change

Cost breakdown by activity(*):

Transport 102 108 +6

LNG 7 7

Storage 32 30 -2

Distribution 151 133 -18

EBIT analysis

10

m

+2.4%

2,0602,111

1,0201,044

5 324

(8)

800

900

1.000

1.100

1H 2013 Regulatedrevenues

Controllable fixedcosts

Depreciation &amortisation

Other 1H 2014

Net Profit analysis

11

+21.4%

m

462

561

24

5814 3

200

300

400

500

600

700

1H 2013 EBIT Net interestincome

(expenses)

Net incomefrom associates

Incometaxes

1H 2014

12

Existing debt as at 30 June 2014 (bln ) Bond Maturity Profile (bln ) as at 30 June 2014 1H 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 3.2 bln pool banking facilities (signing occurred in July)

Institutional lenders financing: single signature for 300 m of

existing EIB financing;

bln

13.7

3.2

9.9

2.8

1.217.2

0

2

4

6

8

10

12

14

16

18

20

1H 2014 Net debt Total committed creditfacilities and bonds

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

Snam debt structure

-600

-400

-200

200

400

600

800

1.000

Cash flow

13

Netprofit

Change inworking

capital

Net investments

Depreciation& other

non monetary items

Change in Net Debt

1H 2014

-256

561

342

-404

104

m

Cash Flowfrom

operation

-543647

FreeCash Flow

1H 2014

Cash flowfrom

shareholders equity

-508

Balance Sheet

14

m Dec, 31 2013Jun, 30

2014 Change

Net invested capital 19,320 19,786 +466

Fixed capital 20,583 20,746 +163

Tangible fixed assets 14,847 15,003 +156

Intangible fixed assets 4,710 4,735 +25

Equity-accounted and other investments 1,026 1,008 -18

Net working capital -1,155 -850 +305

Receivables 2,708 2,343 -365

Liabilities -3,863 -3,193 +670

Provisions for employee benefits -124 -126 -2

Assets held for sale and directly related liabilities 16 16 -

Net financial debt 13,326 13,730 +404

Shareholders' equity 5,994 6,056 +62

15

Q & A S e s s i o n

16

A n n e x e s

20

3786

143

6230

13

105

87

3959

55

240 118

28

107

15

4163

121

31

152

119

253

Capital Expenditure*

17

Transportand LNG

Storage

Distribution

1H 20141H 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 1H 2013 and 1H 2014 capex for 3 million and 2 million respectively 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

1H 2013 1H 2014 %

Transport Gas injected into the network (bcm) 34.5 32.8 -5.0

Gas pipeline network (km in operation) 32,229 32,303 +0.2

Storage Storage capacity (bcm)Modulation (*)Strategic

15.911.4

4.5

15.911.4

4.5

- -- -- -

Gas moved through storage system (bcm)InjectionWithdrawal

11.243.887.36

9.514.754.76

-15.4+22.4

-35.3

Distribution Gas distributed (bcm) 4.48 3.52 -21.4

Active Gas Metering at redelivery points (# million) 5.92 5.91 -0.1

18(*) Available capacity.

19

Disclaimer

Snams 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 companys 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, and

similar 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, Snams 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 Snams 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 Interim ReviewMilan, July 30th , 2014