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Company profile and strategy

Strategy

 

Snam and its business model

Snam is Europe’s leading gas utility. Founded in 1941 as Società Nazionale Metanodotti, it has been building and managing sustainable and technologically advanced infrastructure guaranteeing energy security for over 75 years. Snam operates in Italy and, through subsidiaries, in Albania (AGSCo), Austria (TAG and GCA), France (Teréga), Greece (DESFA) and the United Kingdom (Interconnector UK). It is one of the main shareholders ofTAP (Trans Adriatic Pipeline) and is the company most involved in projects for the creation of the Energy Union.

First in Europe by transport network size (32,625 km in Italy, over 41,000 with international subsidiaries) and storage capacity (16.9 billion cubic meters in Italy, more than 20 bcm with international subsidiaries), Snam manages the first liquefied natural gas (LNG) plant built in Italy and is a shareholder of Adriatic LNG, the country’s main terminal and one of the most strategic in the Mediterranean, and -via DESFA - in the Greek terminal in Revithoussa, with a total pro rata regasification capacity of around 6 bcm per year.

Snam’s business model is based on sustainable growth, transparencynurturing talent, and development of local areas by constantly listening to and exchanging dialogues with local communities, also thanks to the social initiatives of the Snam Foundation. Through the Snamtec project, launched under the scope of the 2018-2022 business plan, Snam has given a great boost to investments for energy transition, focused on technology initiatives, innovation and R&D supporting large national and international networks and green economy businesses, like sustainable mobility, renewable gas, hydrogen and energy efficiency.

 

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. Snam has launched several projects, aiming at promoting Compressed Natural Gas (CNG), biomethane, Liquified Natural Gas (LNG) in trasports. The company aims also at fostering new technologies, such as gas heat pumps and power to gas.

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The regulation

Almost all Snam's revenues are regulated. The Regulatory Authority for Energy, Networks and Environment (ARERA) regulates the different tariff system for transportation, storage and regasification services, defining the criteria for setting the tariffs in each regulatory period, which normally lasts for 4 years. The regulation ensures that the services are provided to third parties according to non-discriminatory criteria. Snam is therefore able to maintain a limited risk profile and to provide its shareholders with attractive and sustainable returns.

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International strategy

Snam is expected to enhance the value of existing participations and create opportunities to fully exploit its 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.

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Business strategy

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 these main strategic drivers: continuous improvement in core business; enhanced exposure to the energy transition; strong performance of international activities; optimization of financial structure.
In November 2018 Snam has forecast an increase in investments to € 5.7 billion for the 2018-2022 period, up 10% compared to € 5.2 billion presented in the 2017-2021 Plan. The increase is due to both investments in new businesses and an increase in investments in maintenance and replacement activities. The €5.7 billion investment can be broken down into €4.8 billion of planned investment for the transportation network, €0.7 billion for storage and regasification and €0.2 billion for new businesses linked to the energy transition. Approximately a quarter of the plan’s investments concerns development initiatives, including the TAP interconnection, connections in the North-West to service the local market and cross-border flows, the network in Sardinia and upgrading of the Fiume Treste storage facility.
 

> More about the business development

 

Financial strategy

As the operational and financial efficiency are concerned, in the 2018-2022 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. The healthy results and solid business fundamentals allowed to propose a dividend of €0.2263 per share to the Shareholders’ Meeting, of which €0.0905 per share was paid in January 2019 as an interim dividend and the balance of €0.1358 per share will be paid from 26 June 2019 with an ex-dividend date of 24 June 2019 (record date 25 June 2019).

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updated
20 May 2019 - 08:52 CEST