Snam 2014 3Q results

snam.it

2014 3Q ResultsMilan, October 31st , 2014

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Agenda

Highlights and Operational Performance

2014 3Q Consolidated Results

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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

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€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

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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

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2014 3Q Consolidated ResultsAntonio PacciorettiChief Financial Officer

Income Statement

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€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

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€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

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(*) 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

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€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

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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

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€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

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Q & A S e s s i o n

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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*

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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

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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