financial markets review (april 2014)

April 2014

Performance of the main stock indices

Source: Snam on the Bloomberg data

The financial markets pag. 1 The utility sector pag. 2

Snam shares and its peers pag. 3 1Q 2014 results pag. 4

The oil markets

Oil prices in April registered a mixed perfor-

mance, with the U.S. benchmark WTI down

(-1.8%, closing at $99.7/barrel), while the

Brent was up (+1.6%, at $108.6/barrel),

driven in particular by tensions in Ukraine.

Snam S.p.A. Investor Relations

The financial markets

April saw a positive performance across the

majority of equity markets, with rises of 0.6%

for the US S&P500, 2.1% for the European

DJ Stoxx50 and 0.4% for the Italian FTSE

MIB. The sole exception was the Stoxx Eu-

rope Utilities sector index, which closed

down (-1.0%).

Despite geopolitical tensions over the situa-

tion in Ukraine, equity markets benefited in

particular from certain macroeconomic data,

particularly the better-than-expected data in

the United States, as well as from specula-

tion on potential initiatives regarding the

ECB's expansionary monetary policy.

From a macroeconomic perspective, in the

United States (with reference to March, on a

monthly basis) data on industrial production

was up (+0.7%), as was that of retail sales

and new industry orders (both +1.1%); positi-

ve indications also came from the labour

market, which had an increase of 288,000

new jobs in April in non-agricultural sectors,

with the unemployment rate decreasing to

6.3% (from its previous 6.7%). The GDP for

the first quarter of 2014 however had limited

growth (+0.1% QoQ annualised), negatively

affected by the climate.

In the Eurozone, industrial production saw

an increase (+0.2% in February, on a mon-

thly basis), in addition to the PMI indices

(data from April), the composite one (54

points, at its highest since 2011, up from

53.1 in March) as well as the manufacturing

one (53.4 points, up from the previous 53.1).

14.8%

9.1%

2.0%

1.9%

0.4%

‐1.0%

2.1%

0.6%

-5% 0% 5% 10% 15%

DJ Stoxx 50

S&P 500

DJ Euro Stoxx Utilities

FTSE MIB

April ‘14

YtD ‘14

The Snam stock rose A largely positive performance for equity markets in April, mainly boosted by signs of improvement in the macroeconomic situation

Crude oil prices registered a mixed performance

Markets registered mostly positive perfor-

mance in April, boosted both by rumours of

potential new expansionary measures by the

ECB as well as positive macroeconomic

data from the United States.

Individual sectors registered largely positive

performance. In particular, the oil&gas sector

saw significant growth (+6.4%), driven by an

increase in the Brent prices in Europe and

the high yield of some operators during a

period of low interest rates. In contrast some

sectors, including the technology sector,

negatively impacted by lower than expected

results for the period reported by some com-

panies.

The utility sector also saw a decline, which

recorded profit taking after the outperforman-

ce in March.

The utility sector registered a decrease of

1% in April.

The sector was particularly impacted by

integrated companies which have seen a

period of profit taking following the strong

growth in previous months, in addition to

being hit by a number of profit warnings

(RWE -6.7%) and lower than expected re-

sults for the first quarter (-8.5% GDF Suez).

The Utility sector in the Stock Market


Main sector performance, April 2014

Sector and subsector performance, April 2014

‐5.8%

‐1.9%

1.7%

‐1.0%

-10% -5% 0% 5% 10%

Defensive Utilities

DJ Utility

Energy Utilities

Others

The utility sector also saw a decline, which recorded profit taking after the outperformance in March

The Utility sector performance

Financial Markets Review April 2014 Snam S.p.A. Investor Relations

DJ Ut i l i t y ; -1,0%

DJ Insur ance; 1,0%

DJ T el ecom; 2,1%

DJ Heal th Car e; 2,9%

DJ M edi a; -2,5%

DJ Real Estate; 2,5%

DJ T r avel &Lei sur e; -0,9%

DJ Chemi cal s; 2,0%

DJ Food&Bev; 2,3%

DJ Const&M ater ; 2,5%

DJ Inds Good; -1,1%

DJ Oi l &Gas; 6,4%

DJ Per s&Househol ds; 2,4%

DJ Autopar ts ; -0,8%

DJ T ech; -4,5%

DJ Fi nanci al Ser v i ces; -0,2%

DJ Retai l ; -1,4%

DJ Banks; 0,1%

DJ Basi c Resour ces; 3,4%

-10% -5% 0% 5% 10%

6.5%

7.4%

16.9%

22.2%

6.7%

8.2%

18.5%

9.1%

14.8%

2.0%

1.9%

0.3%

0.6%

0.5%

2.3%

1.2%

1.0%

‐1.0%

0.4%

2.1%

-5% 0% 5% 10% 15% 20% 25%

The Snam shares and its peers in the Stock Markets

The Snam stock closed the last session in

April at €4.33, showing an improved perfor-

mance compared to the previous month

(+1.9%).

It outperformed both the Italian market as

well as the the utility sector, and through the

month it reinforced the growth trend seen

since the beginning of the year, supported

by the attractive yield in a low interest rate

environment.

The stock's average daily trading volume

totaled 10 million units, down from 11 million

in March.

1Q 2014 Snam results

Corporate News

Snam and its peers


YtD ‘14

April ‘14

FTSE MIB

Stoxx 50

DJ Utility

United Utilities

NG

Severn Trent

REE

Enagas

Snam

Terna

The Board of Directors, chaired by Lorenzo

Bini Smaghi, on May 6 met and approved the

consolidated results for the first quarter of

2014 (unaudited).

Carlo Malacarne, CEO of Snam, made the

following comments on the results:

“Through our continuous focus on operating

efficiency and strict financial discipline, we

recorded higher operating profit in the first

quarter of 2014 than the same period last

year, despite the reduction in gas demand

due to the economic environment.

The significant increase in net profit also

reflects the on-going process of debt opti-

mization, in addition to the increased contri-

bution from our subsidiaries.

We remain firmly focused on investing in

productive and profitable growth for our

shareholders and reconfirm the commitment

to our investment plan".

On 9th of April Iren Energia, a company

entirely owned by Iren, and Italgas (a com-

pany entirely owned by Snam) signed a

binding agreement for the separation of the

distribution of natural gas and district heating

activities currently carried out by AES Torino

(Iren Energia 51%, Italgas 49%).

According to the agreement, which provides

for the non-proportional demerger of AES

Torino, Iren Group will be the beneficiary of

the business relating to the distribution of

district heating and will exit the shareholding

structure of AES Torino, whereas Italgas will

hold the entire share capital of AES Torino

(which it will be after the completion of the

demerger). The transaction is subject to the

attainment of the necessary permits

(including antitrust) and will end with the

effectiveness of the separation scheduled for

July 1, 2014.


Agenda

May 19/22 Ex - dividend 2013/Dividend payment 2013

On April 16th Snam SpA (rated BBB+ by

S&P and Baa1 by Moody’s ) successfully

launched a fixed rate note issue with tenor of

5 years for an amount of 500 million euro

under its EMTN Programme (Euro Medium

Term Notes) which was approved by the

Board of Directors on June 11 th, 2013.

The transaction attracted over 3 billion euro

of investor orders, the composition of which

was both of very high quality and geographi-

cally widely diversified.

Today’s issue, which was launched in favou-

rable market conditions, is a further step in

the optimization process of Snam’s debt

structure and cost of capital, in line with the

Company’s targets.

The bond has an annual coupon of 1.5%

with a re-offer price of 99.352.

IREN energia and Italgas: agreement on AES Torino

A bond issue of 500 million eu-ro successfully launched

Snam and its peers: 1Q 2014 results

Operating Highlights

Financial Highlights

On 6th May Snam presented the 1Q 2014 results

1 Net of IFRIC 12 (equal to 66 million euro). The total revenue including IFRIC 12 amounted to

973 milion euro, up 1.6% compared to 957 of 2013.

* Debt at 12.31.2013

Terna will present the 1Q 2014 preliminary results on May the 14th

On 29th April Enagas presented the 1Q 2014 results

(million euro) 1Q 2013 1Q 2014 Change

Total revenue 312 314 +0.6%

EBITDA 234 246 +4.9%

EBIT 153 163 +6.6%

Net profit 95 100 +5.0%

Investments 300 399 +33%

Net debt 3,772* 3,897 +10.3%


On 30th April Red Electrica presented the 1Q 2014 results


Total revenue 450 463 +2.8%

EBITDA 358 368 +2.9%

EBIT 258 264 +2.1%

Net profit 150 159 +6.0%

Net debt 4,541* 4,770 +5.0%

Investments 90 94 +4.9%


Snam SpA

Piazza Santa Barbara 7 - 20097 S. Donato Milanese (Mi) Italia

www.snam.it — [email protected]

tel: +39 02 37037272- fax: +39 02 37037803



Total revenue1 896 907 +1.2%

EBITDA 717 732 +2.1%

EBIT 531 542 +2.1%

Net profit 242 292 +20.7%

Investments 216 229 +6.0%

Net debt 12,326* 13,120 (1.5%)

(billion cubic meters) 1Q 2013 Change

Gas injected into the transportation

network 18.65 (12.7%)

Available storage capacity 11.2 +1.8%

Number of active meters (mln) 5.91 +0.2%

1Q 2014

16.29

11.4

5.92

* Debt at 12.31.2013

* Debt at 12.31.2013

financial markets review (april 2014)

Economy & Finance