Snam — Investor Presentation 2015

Mar 17, 2016

2015 Full Year Results

Milan, March 17th, 2016

snam.it

Outline

Highlights & Market Context

2015 FY Consolidated Results

Highlights and Market Context

Carlo Malacarne

Chief Executive Officer

Marco Alverà

Chief Operating Officer

2015: A Year of Positive Outcomes

[ bc ] m
	• G C T l i t t o a a s o n s u m p o n	6 7. 5		U 8. 9 % p
G k t a s m a r e	• G I j d i h t t t tw a s n e c e n o e n e	k 6 7. 3 o r		% U 8. 0 p
[ € m ] n
	• R e v e nu e s	3, 6 4 9		U 2. 3 % p
S l i d R l t o e s s u	• A d j. E b i t	1, 9 9 0		U 0. 9 % p
	• A d j. N f i t t e p r o	1, 2 0 9		U 1 2. 2 % p
[ € m ] n	• T l I t t t o a nv e s m e n s	1, 5 4 0
S d G h & t o u n r o w	• Ca p ex	1, 2 7 2
C h F l a s o w	• F ina ia l inv tm ts nc es en	2 6 8
i t g e n e r a o n	• O C i h F l t p e r a n g a s o w	2, 0 5 4
	• N d b t t e e	1 3, 9 7 7
A iv t t t r a c e h h l d s a r e o e r i t r e m u n e r a o n	• D iv i d d l F Y 2 0 e n p r o p o s a	1 *: € 2 5 5 t c e n	/ h s s a r e
th 2 * Pa b le fro Ma 25 y a m y	0 16

Market context

Transmission & Storage Distribution

• • European market moving towards the integration of the network to boost security and diversification of supply
• • Integrated management of transport and storage
• • Evolution of Italy from consumption destination to key transit country

• • Investment opportunities in Italy and abroad

• •A business based on local concessions

• • Labour intensive requiring daily interaction with local institutions
• • Operational efficiencies are key to create value
• •Distinct regulatory framework
• • Small scale investments on a continuous basis
• •Tender process finally underway
• • Fragmented market with consolidation investment opportunities

TAP: a priority project for the EU

The project Key pillars

• •Length: 879 km
• •Capacity: 8 bcm/y to Italy (+ 1 in Greece and 1 in Bulgaria)
• •Starts of operation: 2020
• •25 years ship or pay contracts from 2020

• •20% stake purchase price: € 130 mln+ 78 mln (shareholder loan)

• • Strategic infrastructure for:

• • Realization of the Southern European Hub in Italy
• •Security and diversification of European supply
• • Entering the Southern Corridor, a key area for further potential projects
• •Fostering Snam's Italian infrastructure development

Acquisition reinforces Snam's leading role in Europe

2015 FY ConsolidatedResults

Antonio Paccioretti

Chief Financial Officer

Income Statement

$[$ $\varepsilon$ mn ]	2014	2015	Change
Revenues	3,566	3,649	$+83$
Operating expenses	$-790$	- 850	$-60$
EBITDA	2,776	2,799	$+23$
Depreciation & amortisation	$-803$	- 849	$-46$
EBIT	1,973	1,950	$-23$
EBIT adjusted	1,973	1,990	$+17$
Net interest income (expenses)	$-397$	$-380$	$+17$
Net income from associates	131	135	$+4$
EBT	1,707	1,705	$-2$
Income taxes	$-509$	$-467$	$+42$
NET PROFIT	1,198	1,238	$+40$
NET PROFIT adjusted	1,078	1,209	$+131$

Revenues

$[$ $\varepsilon$ mn ]	2014	2015	Change
Regulated revenues	3,506	3,573	$+67$
Transport	1,895	1,912	$+17$
Distribution	1,017	1,063	$+46$
Storage	458	454	$-4$
LNG	19	18	$-1$
Pass-through revenues	117	126	$+9$
Other revenues	60	76	$+16$
TOTAL REVENUES	3,566	3,649	$+83$

Operating Expenses

$E \in \text{mm}$	2014	2015	Change
Regulated activities	750	792	$+42$
Controllable fixed costs	471	482	$+11$
Variable costs	8	20	$+12$
Other costs	154	164	$+10$
Pass-through costs	117	126	$+9$
Non regulated activities	40	58	$+18$
TOTAL COSTS	790	850	$+60$
$[$ $\varepsilon$ mn ]	2014	2015	Change
Cost breakdown by business (1) :
Transport	215	283	$+68$
LNG	17	18	$+1$
Storage	95	65	$-30$
Distribution	316	342	$+26$

EBIT Analysis

[ € mn ]

Income from Associates

$[$ $\varepsilon$ mn ]	2014	2015	Change
Distribution in Italy	98	30	$-68$
AES Torino	20	$\frac{1}{2}$	$-20$
Toscana Energia	23	20	$-3$
Other equity interests	3	1	$-2$
Restatement of equity interest	52	9	$-43$
International activities	33	105	$+72$
Interconnector UK	9	10	$+1$
TIGF	24	23	$-1$
TAG	$\overline{\phantom{0}}$	73	$+73$
INCOME FROM ASSOCIATES	131	135	$+4$
$[$ $\varepsilon$ mn ]	2014	2015	Change
Distribution in Italy	49	17	$-32$
International activities	59	197	$+138$
CASH IN FROM ASSOCIATES	108	214	$+106$

Main Financial Actions and Results in 2015

2015 Actions

Fitch rating assignment (BBB+)

New recourse to Debt Capital

Bond buyback for €1 billion

Market (€1 billion)

(€3.2 billion)

billion)

•

•

•

•

•

• Main Results
• •Significant cost of debt reduction

• •Fixed/variable rate debt: 64%/36%

• • Average tenor of M/L term debt: approx. 5 years

• •No banking refinancing until end-2017
• • Strong liquidity profile covering 24 months maturities

as of 31 December 20151.6 13.816.3141618

FINANCIAL STRUCTURE (€ bn)

1

Nominal value

12

•Treasury management optimization

New EIB financing (approx. €0.7

Pool banking facilities renegotiation

Net Profit Analysis

Cash flow

Balance Sheet

$[$ $\varepsilon$ mn ]	Dec, 31 2014	Dec, 31 2015	Change
Net invested capital	20,824	21,365	$+541$
Fixed capital	21,813	22,121	$+308$
Tangible fixed assets	15,335	15,396	$+61$
Intangible fixed assets	5,076	5,275	$+199$
Financial receivables held for operating activities	$\overline{\phantom{0}}$	78	$+78$
Equity-accounted and other investments	1,402	1,372	$-30$
Net working capital	$-864$	$-607$	$+257$
Receivables	2,190	2,092	$-98$
Liabilities	$-3,054$	$-2.699$	$+355$
Provisions for employee benefits	$-141$	$-166$	$-25$
Assets held for sale and directly related liabilities	16	17	$+1$
Net financial debt	13,652	13,779	$+127$
Shareholders' equity	7,172	7,586	$+414$

A n n e x e s

Italian Gas Market in 2015

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

Source:National Transport Network Balance

Operational Data

		2 0 1 4	2 0 1 5	∆ %
T t r a n s p o r	G i j d i h k ( b ) t t t t a s n e c e n o e n e o r c m w	6 2. 3	6 7. 3	8. 0 +
	G i l i k ( k i i ) t t a s p p e n e n e o r m n o p e r a o n w	3 2, 3 3 9	3 2, 5 3 4	0. 6 +
S t o r a g e	S ( ) i b t t o r a g e c a p a c y c m	1 5. 9	1 6. 0	0. 6 +
	( *) •M d l i t o a o n u	1 1. 4	1 1. 5	0. 9 +
	S i • t t r a e g c	4. 5	4. 5	--
	G d h h ( b ) t t t a s m o e r o g s o r a g e s s e m c m v u y	1 0 5. 7	1 9. 8 5	2 4. 7 +
	•I j i t n e c o n	8. 1 3	9. 8 4	2 1. 0 +
	•W i h d l t r a a w	7. 5 7	9. 7 4	2 8. 7 +
D i t i b t i s r u o n	G ( ) d i i b d b t t a s s r u e c m	6. 5 0	7. 6 0	1 6. 9 +
	A i G M i d l i i ( ) # t t t t c e a s e e r n g a r e e e r p o n s m n v v y	6. 4 1	6. 5 3	1. 8 +

Disclaimer

Snam's Chief Financial Officer, Antonio Paccioretti, in his position as manager responsible for the preparation of financial reports, certifies pursuant to paragraph 2, article 154-bis of the Legislative Decree n. 58/1998, that data and information disclosures herewith set forth correspond 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 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 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 predict because 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 and regulatory 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 update forward-looking statements to reflect any changes in Snam's expectations with regard thereto or any changes in events, conditions or circumstances 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 Exchange Commission and with the Italian Stock Exchange.

2015 Full Year Results

Milan, March 17th, 2016

snam.it