2013 full year results snam
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snam.it
2013 Full Year ResultsMilan, February 28th, 2014
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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 perates 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.
Disclaimer
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Highlights and operational performance
2013 Consolidated Results
Agenda
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Highlights and operational performance
Carlo MalacarneChief Executive Officer
• Revenues 3,529 Down 2.5%
• Ebitda 2,803 Down 0.5%
• Ebit Adj. 2,060 Down 2.4%
• Net profit 917 Up 17.7%
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[ €m ]
Solid Results
Sound Growth & Cash Flow generation
Operational & Financial Efficiency
• 1,290 capex
• 597 Equity Interest acquisition of 45% in TIGF
• Oper. Cash Flow 1,698
• Net debt 13,326
• Strict control of operating costs: controllable fixed costs flat in real terms versus 2012
• Optimization of the debt structure with a competitive cost of debt
Positive Outcomes in 2013, an eventfull year
New RegulatoryFramework • Approved Transport, Distribution & LNG Regulatory Framework
[ €m ]
Up 76.7%
31.0 30.8
16.6 16.3
25.3 21.2
2.01.8
2012 2013 2012 2013
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Residential & commercial
Industrial(*)
Thermoelectric
Other Sectors
Gas Consumption
-6.5%
70.174.9
Gas injected into the network
-8.9%
69.075.8
(*) Includes: NGV, Agriculture and Non-Energy Use
Source Italian Ministry of Economic Development and SRG estimates
Italian Gas Market in 2013
7* Calculated on the basis of Snam official closing price of December 30th 2013: € 4.04/share
Robust shareholders return with an attractive yield
FY 2013 0.25 €/share
Paid on October 24th 2013
2013 Interim Dividend 0.10 €/share
YIELD 6.2%*
2013 Final Dividend 0.15 €/share
Payable from May 22nd 2014
Delivering Shareholders Return
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2013 FY Consolidated Results
Antonio PacciorettiChief Financial Officer
Income Statement
9
(*) do not include the effect of IFRIC 12.
€m 2012 2013 Change
Revenues (*) 3,621 3,529 - 92
Operating expenses (*) - 804 - 726 +78
EBITDA 2,817 2,803 - 14
Depreciation & amortisation - 706 - 769 - 63
EBIT 2,111 2,034 - 77
EBIT adjusted 2,111 2,060 - 51
Net interest income (expenses) - 794 - 472 +322
Net income from associates 55 45 - 10
EBT 1,372 1,607 +235
Income taxes - 593 - 690 - 97
NET PROFIT 779 917 +138
NET PROFIT adjusted 992 934 - 58
Revenues
10
€m 2012 2013 Change
Regulated revenues 3,477 3,491 +14
Transport 1,813 1,878 +65
Distribution 1,155 1,008 -147
Storage 393 444 +51
LNG 23 22 -1
Pass-through revenues 93 139 +46
Other revenues 144 38 - 106
TOTAL REVENUES 3,621 3,529 - 92
Operating expenses
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€m 2012 2013 Change
Regulated activities 686 682 - 4
Controllable fixed costs 453 460 +7
Variable costs 4 18 +14
Other costs 136 65 -71
Pass-through costs 93 139 +46
Non regulated activities 118 44 - 74
TOTAL COSTS 804 726 - 78
€m 2012 2013 Change
Transport 328 173 -155
LNG 14 12 -2
Storage 66 68 +2
Distribution 295 313 +18
Corporate 8 21 +13
Pass-through costs 93 139 +46
TOTAL COSTS 804 726 - 78
111
25 26(143) (7)
(63)
1.500
1.600
1.700
1.800
1.900
2.000
2.100
2.200
2.300
2012 Regulatedrevenues
One-offDistributiontariff 2012
Controllablefixed costs
Depreciation &amortisation
Other Adj. onearly
retirementplan
2013
EBIT adjusted analysis
12
€m
-2.4% vs 2012
+4.7% vs 2012net of one-off
distribution tariff 2012
2,0602,111
Net Profit analysis
13
+17.7%
779917
25
213
(77) (13) (10)
0
100
200
300
400
500
600
700
800
900
1.000
Net profit2012
EBIT Net interestincome
(expenses)
Net incomefrom
associates
Netincometaxes
Adj. onunwinding of
IRS
Net profit2013
€m
14
Existing debt as at 31 Dec 2013 (bln €)
Bilateral banking facilities
Debt Capital Market
Institutional lenders financing
Bond Maturity Profile (bln €) as at 31 Dec 20132013 Actions
Further disintermediation of the banking system via DCM for a total amount of ca. 2.7 bln €
Pool banking & bilateral facilities renegotiation for over 5 billion €
EIB project related financing for a total amount of 0.65 billion €
Pool banking facilities
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 beyond2022
Snam debt structure
-1.200
-800
-400
400
800
1.200
1.600
2.000
Cash flow
15
Netprofit
Change inworkingcapital
Net technical
investments
Depreciation& other
non monetary items
Change in Net Debt
2013
53
917
728
-836-928
-1,191
FreeCash Flow
-92
Cash flow from Shareholders’
equityand other
Financialinvestments
-599
€m Cash Flowfrom
operation
1,698
Balance Sheet
16
€mDec, 31
2012Dec, 31
2013 Change
Net invested capital 18,314 19,320 +1,006
Fixed capital 19,567 20,583 +1,016
Tangible fixed assets 14,499 14,847 +348
Intangible fixed assets 4,593 4,710 +117
Equity-accounted and other investments 475 1,026 +551
Net working capital -1,139 -1,155 -16
Receivables 2,441 2,708 +267
Liabilities -3,580 -3,863 -283
Provisions for employee benefits -129 -124 +5
Assets held for sale and directly related liabilities 15 16 +1
Net financial debt 12,398 13,326 +928
Shareholders' equity 5,916 5,994 +78
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Q & A S e s s i o n
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A n n e x e s
Operational Data
2012 2013 ∆ %
Transport Gas injected into the network (bcm) 75.8 69.0 -8.9
Gas pipeline network (km in operation) 32,245 32,306 +0.2
Storage Storage capacity (bcm)•Modulation (*)
•Strategic
15.711.24.5
15.911.44.5
+1.3+1.8
--
Gas moved through storage system (bcm)•Injection•Withdrawal
15.638.437.20
18.428.929.50
+17.9+5.8
+31.9
Distribution Gas distributed (bcm) 7.46 7.35 -1.5
Active Gas Metering at redelivery points (# mln) 5.91 5.93 +0.4
19(*) Available capacity
20
52
83223
15462
35
277
92149
159
340
86
131
146
95
99
39
2012 2013
50
79230
Distribution**
Storage
Transportand LNG**
€m
703
358
251
677
233
359
Expansion & new entry points:3% higher remuneration for 10 – 15 yrs Regional & national development:
2% higher remuneration for 7 – 10 yrs Safety: 1% higher remuneration for 5 yrs Maintenance: Base return: 6.4%
Development of new fields: 4% higher remuneration for 16 yrs
Expansion of existing fields:4% higher remuneration for 8 yrs
Maintenance: Base return: 6.7%
Substitution of cast iron pipes:2% higher remuneration for 8 yrs
Metering: 8% allowed return
Other investments: Base return: 7.6%
Capital Expenditure*
* Gross of subsidies. In 2012 and in 2013 capex for € 7 million was carried out by Snam S.p.A.
** The remuneration is based on the rules of the regulatory framework expired at December 31st, 2013
RAB methodology Re-valued historical cost Re-valued historical cost
Parametric method for central assets
Re-valued historical cost
WACC real pre-tax
6.3%* +1% covering the time lag on
investments since 1 January 2014
6.9% (distribution)* 7.2% (metering)*
7.3%* +1% covering the time lag on
investments since 1 January 2014
INCENTIVES on new investments
1% for 7-10 years (for investments on development of regional or national network)
2% for 10 years (for investments on development of entry capacity)
Incentives on the quality of the service
+2% for 16 years on upgrades > 30% of existing capacity and for the construction of new terminals
EFFICIENCY X-factor1
2.4% on opex 1.7% on opex (distribution)** 0% on opex (metering)**
X factor on opex differentiated by LNG terminal
GAS DEMAND Exposure <1% of revenues No exposure No exposure
Assumed useful life of the network
50 yr pipelines 20 yr pressure reduction stations
50 yr pipelines 40 yr connections 20 yr stations 15 yr meters
50 yr pipelines 25 yr LNG plant 20 yr meters
EXPIRY December 2017 December 2019 December 2017
A clear regulatory framework
1 Applied only on opex
Transport Distribution Regasification
* With review of the risk-free component starting from January 2016 ** With review starting from January 2017
snam.it
2013 Full Year ResultsMilan, February 28th, 2014