Snam Group and business model
Snam is leader in Europe in the construction and integrated management of natural gas infrastructure. At European level Snam is one of the main operator in terms of regulatory asset base (around 21.3 billion euro of RAB at year end 2016) and operates in Europe’s major markets through agreements with the leading industry players and direct equity investments in the share capital of companies.
In Italy, acting as an integrated group of gas infrastructures, the company transports, dispatches and stores natural gas and regasifies liquefied natural gas and through three operating companies, 100% controlled by the Corporate Snam SpA: Snam Rete Gas, Stogit and Gnl Italia. By managing the system infrastructures efficiently and by providing integrate services for the market, Snam supports the right conditions for fair energy costs.
With the separation of Italgas and the initiation of the new organisation that led to the creation of four Business Units for the management and control, respectively, of growth and development activities, the management of Italian subsidiaries, the coordination of foreign equity Investments and the offer of its know-how to support infrastructures and services of the natural gas industry.
Snam promotes the use of natural gas, as a flexible, safe and low environmental impact. In the next years Snam will develop several projects, aiming at promoting Compressed Natural Gas (CNG, €150 mln of Investments in 2017-2021 plan), biomethane, Liquified Natural Gas (LNG) in trasports. The company aims also at fostering new technologies, such as gas heat pumps and power to gas. Snam’s business is mainly focused on regulated activities. Regulation makes provision for tariff systems that cover the costs incurred by the operator and for a fair return on invested capital. Snam is therefore able to maintain a limited risk profile and to provide its shareholders with attractive and sustainable returns, while ensuring that it provides its services to all operators in a non-discriminatory manner and with the highest standards of quality and safety.
Italgas separation and the future of the Group
The demerger process of Snam and Italgas was completed on November 7 2016, with the listing of the latter. Gas distribution activities in Italy - a sector that Italgas is active in with its subsidiaries and associates - were separated from the transport and dispatch activities, LNG, and gas storage in Italy as well as abroad. The transaction has taken into consideration that the business profile of urban gas distribution is substantially different from other activities in which Snam is involved in terms of operational organisation, competitive environment, regulation, investment needs. With this transaction, both companies can focus on their core business: they have clearly defined objectives that are understood by the market and the best operating and financial structure to seize respective strategic development opportunities, providing clear benefits for all stakeholders.
Snam is focused on regulated activities, in order to maintain a limited risk profile. Almost all Snam’s consolidated revenues are "regulated", subject to the regulation set by the Regulatory Authority for Electricity, Gas and Water (AEEGSI),in order to ensure that transportation, regasification, storage and distribution services are provided to third parties according to non-discriminatory criteria and at regulated tariffs.
At the European level, the company promotes the integration of the European networks through strategic partnerships with the biggest operator in the sector. In line with the principles of the European Third Energy Package, which promotes the integrated development of infrastructures and common rules for network access in different countries, Snam has increased its focus on the international scene in recent years.
The international strategy, which from 2012 saw the company engaged in strategic partnerships and M&A operations, led to the reshaping of its role within the European infrastructure system. Moving from its role as an operator of assets, Snam has transformed into a market facilitator, committed to promoting the development of the European gas market through the provision of new integrated services to its customers.
In the strategic plan 2017-2021 is expected to enhance the value of existing participations and create opportunities to fully exploit Snam’s expertise in transport infrastructures: in particular, the areas of interest are the integration of European market with debottlenecking of borders and reverse flow, and new routes to Europe to strengthen the southern corridor and the Mediterraneo hub. The approach of Snam will be selective, with a strict financial discipline, and will target on assets with capex opportunities and a risk profile comparable with current portfolio.
In all its activities, in Italy and abroad, Snam pursues a sustainable and socially responsible model of growth, in order to create value for the company and for the communities in which it operates through four main strategic drivers: solid investments, operational and financial efficiency, new asset-light services and attractive and sustainable return for shareholders.
Over the 2017-2021 period Snam will invest 5 billion euro, of which 4.7 billion euro will be deployed to further develop the Italian gas network and its interconnection with the European infrastructure system, and 270 million euro will be invested in TAP, thus enhancing the security, flexibility and liquidity of the overall gas system. This target will be achieved mainly through the completion of the reverse flow infrastructure, the 55 km-long pipeline that will connect TAP from its landing point onshore in Italy to the existing network, along with the further development of the Fiume Treste storage field. Snam will also support the roll-out of 300 CNG filling stations throughout Italy.
As the operational and financial efficiency are concerned, in the 2017-2021 plan the company's target expects to maintain flat in real terms the controllable fixed costs. From a financial prospective, having successfully established a new Group financial structure in 2012, Snam began work to optimize this in 2013, with the aim to achieve a competitive cost of debt over time as well as to make the debt structure more consistent with business requirements, both in terms of financing maturity and of exposure to changes in interest rates.
Finally, Snam is committed to provide an attractive and sustainable remuneration of its shareholders in the medium and long term. Thanks to its healthy results and solid business fundamentals, the Company has paid a dividend for the year 2016 of €0.21 per share, in May 2017. The dividend is expected to grow by 2.5% a year until 2018. The 2018 dividend is a floor for the following years. Starting from 2017, an interim dividend will be introduced. The Company will propose to the Shareholder Meeting the payment of the interim dividend in January 2018, corresponding to 40% of the total 2017 dividend, with payment of the remaining 60% in June.
22 August 2017 - 14:41 CEST