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Snam: 2018 consolidated financial statements and draft financial statements

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BoD

San Donato Milanese, 19 February 2019 - Snam’s Board of Directors, under the chairmanship of Carlo Malacarne, yesterday approved the 2018 consolidated financial statements and draft financial statements and the 2018 Consolidated Non-Financial Disclosure, prepared pursuant to Legislative Decree No. 254/2016. The Board also approved the proposal to the Shareholders’ Meeting to distribute a dividend of €0.2263 per share, of which an interim payment of €0.0905 per share was already made in January 2019.

 

Highlights

Snam’s evolution continues: main economic indicators all increased compared to the prior year and were higher than previously communicated guidance

  • Adjusted net profit1: €1,010 million (+€70 million; +7.4% compared with 2017), thanks to positive operational performance and a reduction in average cost of debt
  • Adjusted EPS2: € cent 30.6 (+8.8% than 2017)
  • Increase in 2019 net profit guidance: revised to +5% compared to 2018 (versus previous guidance of +4%)
  • Adjusted EBIT1: €1,405 million (+€42 million; +3.1% compared with 2017, also due to the effects of the efficiency measures implemented, as well as balancing services)
  • Technical investments: €882 million, of which investments in innovation and energy transition (Snamtec) totalled €125 million
  • Free cash flow: €1,161 million
  • Net financial debt: €11,548 million (€11,550 million as at 31 December 2017)
  • Cost of debt reduction: from 2% in 2017 to 1.5%
  • Increase in operating efficiency: cost savings of €36 million compared to 2016
  • Shareholder return: over €1.1 billion between dividends and buybacks
  • Proposed dividend: €0.2263 per share

 

Significant events

  • International assets: acquired a 66% stake in DESFA on 20 December 2018, through an investment company owned by Snam (60%), Enagás (20%) and Fluxys (20%), for a total value of €535 million
  • Energy transition: as announced in November 2018 as part of the Strategic Plan, new businesses were launched, including through the acquisition of innovative technologies in the sector, which positioned Snam as a leader in the energy transition. Specifically, the acquisitions of an 82% stake in TEP Energy Solutions (TEP), a 70% stake in IES Biogas (a company specialising in the construction of biomethane plants), a 100% of Enersi Sicilia S.r.l. and the business unit dedicated to technological solutions for natural gas refuelling stations for M.T.M. transport were all concluded during the period. In 2018, the first six natural gas transport refuelling stations were also delivered
  • Bond buyback: on 10 December 2018, Snam successfully completed a buyback of its listed bonds for a total nominal value of around €538 million, with an average coupon of approximately 2.6% and a remaining maturity of approximately 3.7 years
  • Share buyback: in 2018, under the scope of the share buyback programme, a total of 113,881,762 Snam shares were purchased, equal to 3.28% of the share capital, at a cost of €426 million

 

Marco Alverà, Snam’s CEO, commented on the results:

“2018 was a year of great evolution at Snam. We exceeded all our industrial and financial objectives and have enhanced our positioning as a leading player in the energy transition through the launch of the Snamtec project. Our new initiatives in renewable gas, energy efficiency and sustainable mobility, as well as our ongoing technological and social innovation, have all become important distinguishing features for Snam going forward.

Thanks to our strong operating performance, effort on efficiency, the reduction in the cost of debt and the share buyback, we have increased earnings per share by 26% and the dividend by 8% in the last two years, positioning ourselves in the highest segment in the sector.

The good progress in 2018 has allowed us to present an important new growth and development plan for the next four years. Under the new plan, Snam will increase investment in Italy and aims to increase profit and dividend per share by 5% per year. In addition, at the end of the plan, we expect the profit deriving from investments for the energy transition, new services and international activities to exceed 25% of Snam’s total profitability”.

 

***

 

The 2018 Annual Report, which contains the 2018 Consolidated Non-Financial Disclosure, prepared in the format of a specific section of the Directors' Report, in conformity with the provisions pursuant to Article 5, paragraph 1 (a) of Legislative Decree No. 254/2016, was submitted to the Board of Statutory Auditors and the Independent Auditors and is available to the public at the registered office, the Company's website www.snam.it, together with the reports of the Board of Statutory Auditors and the Independent Auditors, in compliance with the terms of Legislative Decree No. 58/98 (Consolidated Finance Act - TUF).

 

Summary of 2018 results

In order to facilitate a better evaluation of the performance of the financial management, this Press Release contains reclassified financial statements and several alternative performance indicators (Non-GAAP measures)3, mainly represented by results in an adjusted configuration. Specifically, the adjusted EBIT and the adjusted Net profit are obtained by excluding the special items (respectively gross and net of the related taxes) from the operating profit and the reported net profit, as per the reclassified Income Statement.

The income components classified under special items for 2018, subject to adjustment, are represented by: (i) the financial expenses resulting from the buyback on the market of bonds under the scope of the liability management transaction (€35 million, net of the related tax effect); (ii) voluntary redundancy expenses through the application of early retirement regulated by Article 4, paragraphs 1-7 of Law 92/2012 the “Fornero Law”, together with the introduction of the “quota100”, provided for by the 2019 Budget Law (€ 15 million, net of the related tax effect).

 


 

[1] For the reconciliation of EBIT and the reported net profit with the corresponding adjusted result measurements, refer to page 18 of this Press Release.

[2] Adjusted EPS is calculated using the number of shares outstanding, excluding treasury shares, at year end.

[3] For more details, refer to the "Non‐GAAP measures” section of this Press Release.

 

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20 February 2019 - 15:26 CET