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Growth Drivers

CAPEX PLAN UPDATE 2017-2021 IN ITALY

Grafico Investimenti

* Total RAB evolution calculated assuming an average annual inflation rate of ~1% and according to current regulatory framework.
** Gross of subsides.

Focus: capex in energy efficiency and lowering emissions

  • Energy efficiency on our grid, € >200 mln
    high-efficiency gas turbines and heaters, electric compression unit, cogeneration,LED lights, renovation of 4 buildings with improvement of energy class
     
  • Energy efficiency: new services, € >17 mln
    entry into EE services business through the acquisition of 82% of TEP the largest Italian Esco (Energy Service Company)
     
  • Innovations to reduce emissions, €120 mln
    remote monitoring systems in hydrogeological risk areas, real-time remote leak detection, mobile and augmented reality tools, georeferenced pipelines, algorithm to schedule activities on fields, R&D Investments
     
  • Reducing CH4 emissions, €20 mln
    installation of gas recompression system and gas flare equipment, replacement of pneumatic gas valves/actuators, improving methodology to measure methane emissions

Efficiency programme

  • All Lean: continuous improvement
    - 80% of employees involved
    - 210+ actions under implementation
    - 40+ dedicated team
    - Streamlined and reduced procedures and methodologies
     
  • Cost efficiency activities
    - Integration cross functional activities (O&M, Disp) into operating companies
    - 70+ initiatives under implementation
     
  • Organizational efficiency
    - Delayering organizational structure
    - Launched Snam Institute to invest in our competences and talent development

Improved efficiency target: > €40 mln in 2021 (+60% vs old Plan)

Digitalisation

  • Improvement of IT infrastructure through simplified and flexible application architecture
    - From >100 to ~50 applications within the strategic plan timeframe
    - Integrated data model (from silos to data-lake approach)
    - Agile application development approach
    - From 100% on premise to hybrid cloud model with a minimum target of 40% within the strategic plan timeframe
    - Insourcing of key strategic skills
     
  • Main projects:
    - Smart Gas: integrated tool to design, build and maintain assets. Improved maintenance and scheduling practices (from days to minutes)
    - Advanced Pipeline Control: fully integrated SCADA systems. Hybrid inspection model through satellites, drones and operators
    - Advanced Geologic Monitoring of storage
    - Demand Forecast 4.0: new demand model based on AI and machine learning. Prediction accuracy already improved by ~40%
    - New Commercial Systems (JARVIS): integrated suite of services to favor operations on the PSV and integration among EU gas markets

 

Regulated services on the Italian market

  • New Balancing Regime
    (new demand forecasting IT system in place since Oct 17, improved accuracy and performance)
    - 2017 achievements: overperformed vs budget, increase in market liquidity
    - Further development: Demand Forecast 4.0 will enable us to improve intraday forecasting activity
     
  • Additional services
    - Oversubscription & Buyback to provide additional capacity at entry point to increase liquidity
    - Additional storage services to increase flexibility
    - New products and services to provide the flexibility required by the market under evaluation

Snam Global Solutions

  • Rationale
    - Leverage on key competencies and expertise to consolidate and develop international positioning in relevant gas markets
    - Secure new high margin revenue stream providing high value services as driver to enter new market
     
  • Growing contract portfolio
    Services offered : O&M, Project Management, Regulatory and market development support, Information & Communication Technology, Security
 

SUPERIOR LONG-TERM RETURNS WITH LOW RISK PROFILE

  • Growing organic capex plan with fair regulation
  • Asset-light services
  • Operational excellence and efficiency
  • All growth targets improved to 2021
  • Well positioned to capture additional accretive opportunities

Plan entirely financed with organic cash flow
       

Dividend policy updated

  • +2.5% DPS growth confirmed for 2018 and extended to 2019
  • 2019 DPS is a floor in real terms to 2021

Buyback optionality

  • The authorization for a new buyback plan will be requested at the Ordinary Shareholder Meeting
  • Up to 6.5% outstanding shares
  • Max amount: € 500 mn
Page Alert
updated
15 June 2018 - 10:45 CEST