snam.it
2016 3Q ResultsMilan, November 15th , 2016
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2016 3Q Consolidated
ResultsHighlights
Outline
Weather-adjusted gas demand up 2.3% driven by:
• Industrial sector (+3.1%) with evidence of a moderate production recovery.
• Thermoelectric (+6%), with lower imports, hydroelectric• Residential consumption contained by energy efficency
initiatives
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Gas demand trends
19,1 18,4
11,9 12,3
15,2 16,2
1,4 1,5
9M 2015 9M 2016
19,9 19,6
11,9 12,3
15,2 16,2
1,4 1,5
9M 2015 9M 2016
Residential& commercial
Industrial*
Thermoelectric
Other Sectors
GAS CONSUMPTION (bcm)
+2.3%
49.648.5
* Includes: NGV, Agriculture and Non-Energy Use Source: National Transport Network Balance
Weather adjusted
+1.3%
48.447.7
GAS INJECTED
51.4 bcm+3.0% vs 9M 2015
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Operational highlights
Transport• Capex in line with targets• New balancing regime in place
Storage• 100% of the offered storage capacity conferred• Record working gas storage (98% of available capacity) achieved Oct 2016• Capacity: 16.5 bcm +3.1% vs Sept 2015
LNG• Seasonal price differentials driving summer demand for LNG• LNG cargoes returned to Italy and Panigaglia in the last six months
€ 512 Mn invested in the first 9 months of 2016 o.w. 47% in development initiatives
4 LNG cargoes to Panigagliabetween May and July totalling264.000 liquid cubic meters
+5% Working gas CAGR 2008 to 2016 (+0.5 bcm compared to 2015)
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Corporate highlights
Corporate activity• Italgas demerger achieved• New organization
Liability management executed in October• Faster cost of debt reduction• Maturity extension and lower refinancing risk
Share Buyback initiated• Flexible instrument to optimize financial structure• Agency Agreement signed for first 4-month tranche
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Gas Connect Austria
Rationale for the acquisition
• Consolidate Snam’s position in a key country for the interconnection of European natural gas markets
• Leverage on decades of experience in Austria, TAG ownership
• Strong financial discipline applied
The deal
• Acquisition completed through a vehicle owned 60%/40% by Allianz and Snam respectively
• Acquisition price of 601 M€• Binding non-recourse financing of 310 M€• Closing of the transaction expected by year-end
900km gas transmission
pipelines,5 compression
stations
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Financial highlights
Solid 9M results• Revenues in line with expectations (€2.469bn, -4,2% owing to new
regulatory WACC)
• Increased investments (capex €842m, +5%)
• Strong free cashflow generation (€669m)
FY 2016 (Snam pro-forma) Guidance confirmed• 0.9bn€ capex
• 19.5bn€ consolidated RAB
• 0.8bn€ adjusted net income
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Outline2016 3Q
ConsolidatedResults
Highlights
9
9M 2016 consolidated results
REGULATED REVENUES EBIT NET PROFIT
CAPEX FREE CASH FLOW NET DEBT
€ 2,469mn
-4.2% vs 9M 2015
+5% vs 9M 2015
€ 1,296mn
€ 783mn
€ 669mn
€ 14.0bn
-12.0% vs 9M 2015 -11.8% vs 9M 2015
€ 842mn
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Ebit Analysis
[ € mn ] -176 € mn-12.0%
EBIT2015 9M
Regulatedrevenues
Controllable fixedcosts
Depreciation &amortisation
Other EBIT2016 9M
1,4721,296
-108
+4
-36 -36
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Net Profit Analysis
[ € mn ] -105 € mn-11.8%
Net profit2015 9M
EBIT Net InterestIncome
(expenses)
Net Income fromassociates
Income taxes Net profit2016 9M
888783
-176
+22 +2+47
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Snam debt structure
• Fixed/variable rate debt: 58% / 42%
• M/L Term debt maturity: ca. 4.4 years
• Bondholders’ Meeting on the separation of Italgas from Snam
• Consent solicitation launched on 8.6bn€ outstanding bonds
• Approval of the separation with a vast majority
• Liability management executed in October paves the way to further cost of debt reduction going forward
Pool banking facilities
Bilateral banking facilities
Debt capital market
Institutional lenders financing
EXISTING DEBT as of 30 September 2016 (€ bn)
BOND MATURITY PROFILEas of 30 September 2016 (€ bn)KEY FIGURES
14.0
3.2
8.8
2.7
1.6
Net debt9M 2016
Total committedcredit facilities and
bonds
16.3
0
200
400
600
800
1000
1200
1400
1600
2016 2017 2018 2019 2020 2021 2022 2023 2024
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2016 9M: cash flow and change in net debt
783
1,686
669
-206
+683
+220
-1,017
-875
€m
FreeCash Flow
2016 9M
Netprofit
Depreciation& otheritems
Change inworkingcapital
Cash Flowfrom
operation2016 9M Cash Flow
2016 9M
Netinvestments
Shareholder's equity
Net financialDebt 2015
Net financialDebt
2016 9M
Cash Flow2016 9M
Non cashfinancials
items
€m
Cash flow Change in net debt
240 €m
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Driving balance sheet efficiency
Resizing and reshaping of Snam debt structure
following the 3.6 bn€ received from repayment of
intercompany/assigned debt by Italgas
Increasing the average maturity of debt, smoothing
the Company’s maturity profile and pro-actively
managing upcoming redemptions
Taking advantage of the market conditions to reduce
the average cost of debt (from 2017 onwards)
Debt structure
Average maturity
Cost of debt
1 bn€ reduction in ourstanding Bonds
average maturity of M/L term debt:from ca. 4.4 to ca. 5.4 years
Cost of new bonds well below 1%
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Liability Management overview
Timing• Launch: 10 October 2016
• Announcement of the Results: 18 October 2016
• Settlement: 25 October 2016
Highlights• 2.75 bln€ bonds buyback (3.1 bln€ of cash spent)…
• Average residual maturity: ca. 3.3 years
• Average yield: ca. 3.8%
• …financed via a mix of existing credit lines and new
bonds:
• 1.25 bln€ 10Y Oct- 2026 - 0.875% coupon
• 0.5 bln€ 4Y Oct- 2020 - 0% coupon
• ca. 1.35 bln€ from already available banking lines
average yield: 0.7% average maturity: 8.3 years
Residual Amount outstanding
Oct -16 New issues Amount repurchased
Bond Maturity Profile after October 2016
0,0
0,5
1,0
1,5
2,0
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
(bln €) Liability Management Transaction
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Q & A S e s s i o n
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A n n e x e s
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GCA overview
• Founded in Jan 2012 as wholly owned subsidiary of OMV
• One of the two Transport System Operators (TSO) in Austria
• Owns and operates 886 km of high pressure pipelines linking Germany, Hungary, Slovenia and Slovakia
• Plays an important part in the Austrian and European gas supply network
• Holds equity stake in several key infrastructure companies
CGAat a
glance
2012
Certified ITO and market area
manager for the Eastern market area by Austrian
regulator
September2014
GCA’s Trans Austria Gasleitung (TAG)
pipeline transferred to Austrian TSO Trans Austria Gasleitung
GmbH
September2016
Agreement for the sale and purchase of a 49% minority stake
in Gas Connect Austria GmbH (GCA) signed by OMV and
the Consortium composed of Allianz
andSnam S.p.A.
• Competitive auction process for the 49% stake in GCAstarted by OMV in Q2-2016.
• Snam and Allianz Capital Partners (ACP) formed a Consortium in Q3-2016 to jointly bid for GCA.
• Total cash consideration paid to OMV equal to 601 M€, including 147 M€ pro-quota reimbursement of existing GCA shareholder loan
• Binding non-recourse financing of 310 M€ granted to the Consortium by a pool of international banks
• Acquisition completed through a jointly controlled vehicle owned 60%/40% by Allianz and Snam respectively
• Closing of the transaction expected by year-end
Ownership Transaction structure
19
vehicle
60% 40%
Senior Loan
financing
49%GCA
51%Pool of banks
TAG GmbH
15.5%
84.5%
Transaction structure
9M 2015 9M 2016 ∆ %Transport Gas injected into the network (bcm) 49.9 51.4 +3.0
Gas pipeline network (km in operation) 32,454 32,455 - -
Storage Storage capacity (bcm)• Modulation • Strategic
16.011.54.5
16.512.0
4.5
+3.1+4.3
- -
Gas moved through storage system (bcm)• Injection• Withdrawal
16.529.327.20
15.859.316.54
-4.1-0.1-9.2
Distribution Gas distributed (bcm) 5.09 4.96 -2.6
Active Gas Metering at redelivery points (# mln) 6.52 6.52 +0.1
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Operational data
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Income Statement
[ € mn ] 2015 9M 2016 9M Change
Revenues 2,748 2,586 - 162
Operating expenses - 640 - 618 +22
EBITDA 2,108 1,968 - 140
Depreciation & amortisation - 636 - 672 - 36
EBIT 1,472 1,296 - 176
Net interest income (expenses) - 277 - 255 +22
Net income from associates 97 99 +2
EBT 1,292 1,140 - 152
Income taxes - 404 - 357 +47
NET PROFIT 888 783 - 105
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Revenues
[ € mn ] 2015 9M 2016 9M Change
Regulated revenues 2,695 2,549 - 146
Transport 1,429 1,326 -103
Distribution 792 754 -38
Storage 343 376 +33
LNG 13 13
Pass-through revenues 118 80 -38
Other revenues 53 37 - 16
TOTAL REVENUES 2,748 2,586 - 162
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Operating Expenses
(1) Net of pass-through costs.
[ € mn ] 2015 9M 2016 9M Change
Regulated activities 601 573 - 28
Controllable fixed costs 374 370 -4
Variable costs 13 16 +3
Other costs 96 107 +11
Pass-through costs 118 80 -38
Non regulated activities 39 45 +6
TOTAL COSTS 640 618 - 22
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Balance Sheet
[ € mn ]Dec, 31
2015Sep, 30
2016 Change
Net invested capital 21,365 21,524 +159
Fixed capital 22,121 22,610 +489
Tangible fixed assets 15,396 15,808 +412
Intangible fixed assets 5,275 5,275 -
Financial receivables held for operating activities 78 164 +86
Equity-accounted and other investments 1,372 1,363 -9
Net working capital -607 -938 -331
Receivables 2,092 1,751 -341
Liabilities -2,699 -2,689 +10
Provisions for employee benefits -166 -166 -
Assets held for sale and directly related liabilities 17 18 +1
Net financial debt 13,779 14,019 +240
Shareholders' equity 7,586 7,505 -81
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Disclaimer
This presentation contains forward-looking statements regarding future events and the future results of Snam that are based on current expectations,estimates, forecasts, and projections about the industries in which Snam operates and the beliefs and assumptions of the management of Snam.
In particular, among other statements, certain statements with regard to management objectives, trends in results of operations, margins, costs, return onequity, 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 similarexpressions 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 predict because they relateto 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 mightcause or contribute to such differences include, but are not limited to, economic conditions globally, political, economic and regulatory developments in Italyand 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 update forward-lookingstatements to reflect any changes in Snam’s expectations with regard thereto or any changes in events, conditions or circumstances on which any suchstatement is based.
The reader should, however, consult any further disclosures Snam may make in documents it files with the Italian Securities and Exchange Commission andwith the Italian Stock Exchange.
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