Snam S.p.a. · MIL:SRG

Snam — Snam Rete Gas — Investor Presentation (March 2010)

30 slides from Snam's investor presentation, Mar 11, 2010

  1. Slide 1: 2010 – 2013 Strategy Presentation

    2010 – 2013 Strategy Presentation Milan, March 11th, 2010 www.snamretegas.it

  2. Slide 2: Disclaimer

    Disclaimer Snam Rete Gas’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

  3. Slide 3: Focused on Delivering Value along the Regulated Gas Chain

    Focused on Delivering Value along the Regulated Gas Chain Carlo Malacarne Chief Executive Officer 3

  4. Slide 4: A Leader in the Regulated Gas Business

    A Leader in the Regulated Gas Business Infrastructure Sales to Supply end users CAPITAL EXPENDITURE Driving profitable long term growth EFFICIENCY Exploit value through operational synergies and financial structure LOW RISK PROFILE Focus on regulated gas business and solid balance sheet SHAREHOLDERS

  5. Slide 5: Agenda

    Agenda Business Environment Capex Plan Operational Efficiency Associates & Financial Management Final Remarks 5

  6. Slide 6: Agenda

    Agenda Business Environment Capex Plan Operational Efficiency Associates & Financial Management Final Remarks 6

  7. Slide 7: A Clear and Stable Regulatory Framework along the Integrated Gas Chain

    A Clear and Stable Regulatory Framework along the Integrated Gas Chain TRANSPORT DISTRIBUTION STORAGE* REGASIFICATION RAB ƒ Re-valued ƒ Re-valued ƒ Re-valued ƒ Re-valued methodology historical cost historical cost historical cost historical cost ƒ Parametric method for central assets WACC ƒ 6.4% (tr

  8. Slide 8: A Very Low Risk Business

    A Very Low Risk Business Factor Exposure Note ƒ Clear and stable: ~ 85% of the overall business (*) with regulatory rules Regulation Low set for 3 to 4 years ƒ Well placed to leverage best regulatory practices Demand Low ƒ No exposure in distribution and storage business ƒ Limited exposure in transp

  9. Slide 9: European Gas Market

    European Gas Market Gas Demand in Europe* bcm Net Import in Europe* 700 CAGR CAGR 09 09 -- 20 20 ~ 1.0% ~ 1.0% ~425 600 500 ~86 339 CAGR CAGR 09 09 -- 20 20 400 Net import ~ ~ 3.0% 3.0% 97 300 Norway Africa & 118 200 Middle East 100 Domestic production Russia 124 0 08 E E E 2008 2020E 09 15 20 20 Ad

  10. Slide 10: Italian Gas Market 2009-2020

    Italian Gas Market 2009-2020 Cagr + 1.9% bcm ~96 ~2 86 88 77.6* 1.3 Other Sectors Cagr + 3.3% ~41 Thermoelectric 28.7 16.5 ~21 Industrial** Residential & ~32 Commercial* 31.1 2009 2013E 2015E 2020E * Weather adjusted ** Include: NGV, Agriculture and Non-Energy Use Demand growth driven by thermoelect

  11. Slide 11: Agenda

    Agenda Business Environment Capex Plan Operational Efficiency Associates & Financial Management Final Remarks 11

  12. Slide 12: Investment Priorities to tackle Current and Future Challenges

    Investment Priorities to tackle Current and Future Challenges Transport & LNG Strengthen ƒ Selected projects to meet capacity requirements security, flexibility and ƒ Facilitate swap among different supply sources for the domestic market service quality of the gas system ƒ Create conditions for the

  13. Slide 13: New Investments to strengthen Italian System Security and Flexibility

    New Investments to strengthen Italian System Security and Flexibility Italian Transport and Storage System European Main Transport System Peak capacity vs Peak Demand* Load factor** Mscm/d 600 ~15% 2005-2009 Average ~12% 500 ~3% 400 47% 300 52% 200 2009 2013 2015 52% 70% Peak Capacity Peak Demand Sa

  14. Slide 14: Gas Hub and Reverse Flow Opportunities

    Gas Hub and Reverse Flow Opportunities PASSO GRIES TARVISIO GORIZIA NEGP ROVIGO LNG (CAVARZERE) PANIGAGLIA LNG SOUTH STREAM NABUCCO IGI GALSI GME MEDGAZ TRANSMED Existing import pipelines Planned import pipelines MAZARA DEL VALLO Gas hubs Existing LNG terminals Planned LNG terminals GELA 14

  15. Slide 15: Consolidated Capex Plan 2010 - 2013

    Consolidated Capex Plan 2010 - 2013 € 6.4 billion Spending* Consolidated RAB** RAB Breakdown € bn % 30 CAGR 4.5% 100% 25 14 16 80% € 1.4 bn € 5 bn 20 22 20 60% 15 40% 10 64 64 2010 2011 - 2013 20% 5 0 0% 2009E 2010E 2011E 2012E 2013E 2009 2013 RAB incentivized Transport Distribution Storage RAB with

  16. Slide 16: Consolidated Capex Plan Details

    Consolidated Capex Plan Details Spending (*) 2010 – 2013 Incentive scheme Expansion & New entry points % 3% premium for 10 – 15 yrs Regional & National Develop. 54 2% premium for 7 – 10 yrs Transport € ~0.9 bn € ~3.4 bn Safety 1% premium for 5 yrs 10 2010 2011 - 2013 8 28 Maintenance Base return: 6.

  17. Slide 17: Solid Transport Projects to develop Capacity Requirements

    Solid Transport Projects to develop Capacity Requirements Reverse flow Mscm/d PASSO GRIES TARVISIO 500 GORIZIA 450 North- East 400 Reinforcement Po Valley infrastructure ROVIGO LNG 350 (CAVARZERE) 300 South-North Developments 250 PANIGAGLIA LNG 200 150 100 50 0 2001 2009 2013E 2015E >2015E Import fr

  18. Slide 18: New Storage Capacity to facilitate Gas System Development

    New Storage Capacity to facilitate Gas System Development PASSO GRIES TARVISIO SETTALA GORIZIA ROVIGO LNG Mscm/d bcm BORDOLANO MINERBIO (CAVARZERE) 400 20 + ~13% 305 300 270 15 ~12 PANIGAGLIA + ~35% 200 8.9 10 LNG 100 5 FIUME TRESTE 0 0 2009 2013E Peak Capacity Modulation Capacity MAZARA DEL VALLO G

  19. Slide 19: Selected Investments to increase Profitability in the Distribution Business

    Selected Investments to increase Profitability in the Distribution Business Main projects ƒ Substitution of: ƒ ~500 km mainly of cast iron pipes ƒ 1.5 mln of old metering devices ƒ New connections on existing distribution network and development of new distribution network (~ 2,000 km) 7 ƒ Start up

  20. Slide 20: Agenda

    Agenda Business Environment Capex Plan Operational Efficiency Associates & Financial Management Final Remarks 20

  21. Slide 21: Operating Costs: a solid baseline to value creation

    Operating Costs: a solid baseline to value creation 2008 2009 €m Opex Allowed outperformance opex Controllable Controllable fixed fixed costs costs ~110 500 ~590 480 Outperformance: ƒ Fully retained for 3-4 years ƒ Mainly due to transport and distribution business 21

  22. Slide 22: Savings from Integration: further cost efficiency and synergies

    Savings from Integration: further cost efficiency and synergies Controllable fixed costs (in real terms) FY 2008 Annual Savings* €m Total amount*: €m 500 % ~ 80 Labour cost Launching already selected 52 ~ 40 projects 27 to exploit 48 additional efficiency External costs 2009 2010E 2012E >2012E * Pro

  23. Slide 23: Agenda

    Agenda Business Environment Capex Plan Operational Efficiency Associates & Financial Management Final Remarks 23

  24. Slide 24: Italgas Associates: a profitable asset base

    Italgas Associates: a profitable asset base Others Operational Data 2009 ƒ 1.3 million redelivery points AES Torino ƒ 147 Local Municipalities served ƒ 1 District Heating in Turin (AES Torino) Umbria Distribuzione 2009 Preliminary Results (pro-quota) Acam Gas Gas (€m) AES Toscana Other Toscana Total

  25. Slide 25: Solid and Efficient Capital Structure

    Solid and Efficient Capital Structure 2010-2013 Average STRONG BALANCE ƒ Confirming leverage SHEET targets in the (D/RAB) medium/long term ~ 50% 2010-2013 Fixed-rate debt ƒ Benefiting current low LIMITED interest rate scenario EXPOSURE TO ~60% of the total INTEREST RATES ƒ Active control of P&L Aver

  26. Slide 26: Agenda

    Agenda Business environment Capex plan Operational efficiency Associates & Financial management Final Remarks 26

  27. Slide 27: Confirming Attractive Shareholders Returns

    Confirming Attractive Shareholders Returns Yearly growth +4% 0.20 €/share 2009 2010E 2011E 2012E ƒ Dividend policy based on DPS ƒ Semi-annual payment ƒ Dividend sustainable 27

  28. Slide 28: A Clear Strategy to drive Performance and Value Creation

    A Clear Strategy to drive Performance and Value Creation ƒ € 6.4 bln capex program for 2010 – 2013 ƒ 50% investments financed by cash flow generation CAPITAL EXPENDITURE ƒ RAB: estimated 4.5% yearly increase in 2010-2013 ƒ Incentivized RAB from ~20% to ~40% of the total ƒ Current operational efficie

  29. Slide 29: Q & A Session

    ia snamretegas ~ Q &A Session fre 20 on

  30. Slide 30: 2010 – 2013 Strategy Presentation

    2010 – 2013 Strategy Presentation Milan, March 11th, 2010 www.snamretegas.it

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