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SNAM RETE GAS ANNOUNCES 2008 HALF YEAR RESULTS

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  • EBIT: €500 million (up 6.2%)
  • Profit: €259 million (up 16.7%)
  • Natural gas injected into the transportation network: 45.4 billion cubic metres (up 8.3%)
  • Investments: €477 million (up 64.5%)
  • Approved 2008 interim dividend of €0.09 per share (up 12.5%)
 

San Donato Milanese, 29 July 2008 – The board of directors of Snam Rete Gas today approved the 2008 half year report (which includes the Condensed interim consolidated financial statements reviewed by the independent auditors) and the (unaudited) results for the second quarter of 2008. The board of directors resolved to distribute a 2008 interim dividend of €0.09 per share.

Carlo Malacarne, CEO of Snam Rete Gas, had the following comments on the results: “I am pleased to announce an impressive 17% increase in profit for the first half of 2008. These strong results support the decision to distribute a 2008 interim dividend of €0.09 per share, up 12.5% on the same period in 2007. We have continued to make strong progress on our strategic objectives and are on track to deliver our €1 billion capex programme for 2008, with investment increasing by more than 60% in first half. Capex growth represents one of the main driver for our company value creation�?.

 

 

First half

 

 

 

 

   

2007

 

2008

 

Change

 

Change %

 

               

Key operating and financial figures

 

 

 

 

 

 

 

 

Natural gas injected into the National Gas Pipeline (billions of cubic metres)

 

41.9

 

45.4

 

3.5

 

8.3

Regasification of liquefied natural gas (LNG) (billions of cubic metres)

 

1.30

 

0.91

 

(0.39)

 

(30.0)

Gas pipeline network (kilometres in use)

 

30,905

 

31,125

 

220

 

0.7

EBIT (€m)

 

471

 

500

 

29

 

6.2

Adjusted EBIT (*) (€m)

 

469

 

500

 

31

 

6.6

Profit (€m)

 

222

 

259

 

37

 

16.7

Adjusted profit (*) (€m)

 

221

 

259

 

38

 

17.2

(*) Adjusted profit is profit net of non-recurring transactions.

 

Highlights for the first half of 2008

Financial

  • Transportation revenue: €918 million (up 5.6%); the improvement is due to incentives received for investments (up €38 million) and higher volumes of gas transported (up €23 million), partly offset by the updated transportation tariffs (down €15 million)
  • EBIT: €500 million (up 6.2%); the increase is mainly related to higher transportation revenue (up €46 million), partly offset by higher operating costs (down €21 million), principally due to the rise in variable costs (down €12 million) and controllable fixed costs (down €5 million)
  • Profit: €259 million (up 16.7%); the increase is due to the higher EBIT (up €29 million) and lower income taxes (up €18 million), mainly attributable to the amendments introduced by the 2008 Budget Law, partly offset by higher net financial expense (down €10 million)
  • Net financial debt: €6,046 million; up €164 million on 31 December 2007. Leverage (debt/net invested capital): 62.9% (62.6% at 31 December 2007)

2008 interim dividend

On the basis of the profit for the first half of 2008, the board of directors has approved the distribution of an interim dividend of €0.09 per share (€0.08 in 2007; up 12.5%) to the shareholders, to be paid from 23 October 2008 with an ex dividend date of 20 October 2008

Operating

  • Investments: €477 million (up 64.5%). Capital expenditure is mainly related to the upgrading of the import infrastructure from North Africa and of the Po Valley pipelines
  • Gas injected into the transportation network: 45.4 billion cubic metres (up 8.3%); the increase is due to the rise in domestic natural gas demand in the first six months of the year, mainly in the residential and thermoelectric sectors
  • Volumes of regasified LNG: 0.91 billion cubic metres (down 30.0%)

Outlook

  • Domestic natural gas demand is forecast to grow at an average annual rate of more than 2% in the four year period from 2008 to 2011, based on the expected greater consumption in the thermoelectric sector
  • The Group confirms the commitment to investing in projects required to support gas market development. The Company plans to invest approximately €1 billion in 2008
  • Snam Rete Gas will continue to pursue its operating efficiency objective in 2008, by optimising its organisational and technological structures

The figures and information disclosed in this press release for the first half of 2008 have been taken from the 2008 half year report of Snam Rete Gas which includes statements from the CEO and the Manager in charge of financial reporting pursuant to article 154-bis.5 of the “Testo Unico della Finanza�?.

 

Highlights of the second quarter of 2008

Financial

  • Transportation revenue: €442 million (up 5.7%); the improvement is mainly due to incentives received for investments (up €18 million) and higher volumes of gas transported (up €12 million), partly offset by the updated transportation tariffs (down €8 million)
  • EBIT: €245 million (up 7.9%); the increase is mainly attributable to higher transportation revenue and lower provision for risks and charges (up €7 million), partly offset by higher operating costs (down €13 million), mainly due to the rise in variable costs and controllable fixed costs
  • Profit: €126 million (up 21.2%); the increase is due to the higher EBIT (up €18 million) and lower income taxes (up €8 million), partly offset by higher net financial expense (down €4 million)

Operating

  • Investments: €260 million (up 32%). Capital expenditure is mainly related to the upgrading of the import infrastructure from North Africa and of the Po Valley pipelines
  • Gas injected into the transportation network: 20.1 billion cubic metres (up 9.6%); the increase is mainly due to the higher volumes of gas injected into the storages

Pursuant to article 154-bis.2 of the “Testo Unico della Finanza�?, the manager in charge of financial reporting, Antonio Paccioretti, states that the financial information included in this press release complies with the relevant documentation, accounting ledgers and records.

 

Disclaimer

This press release includes forward-looking statements, especially in the section on the group's outlook about future gas demand, investment plans and future performance. Such statements by their very nature are subject to risk and uncertainty as they depend on the fact that certain events and developments will take place. The actual results may differ from those communicated due to different reasons, such as foreseeable trends in demand, offer and natural gas prices, general macro-economic conditions, the effect of new energy and environment legislation, the successful development and implementation of new technologies, changes in the stakeholders' expectations and other changes in business conditions

 

Contacts

Snam Rete Gas Investor Relations
Tel +39.02.520.38272 - Fax: +39.02.520.38650
e-mail: investor.relations@snamretegas.it


 

Snam Rete Gas External Relations
Tel +39.02.520.58691 - Fax: +39.02.520.38227
e-mail: relazioni.esterne@snamretegas.it


 

Eni Press Office
Tel +39 02.52031875 – +39 06.5982398
e-mail: ufficio.stampa@eni.it

The 2008 half year report will be available from 18.00 today

 

Summary of the results for the first half of 2008

Profit (€259 million) increased by €37 million (16.7%) compared to the same period of 2007 due to the higher EBIT (up €29 million) and lower income taxes (up €18 million), mainly attributable to the amendments introduced by the 2008 Budget Law and partly offset by higher net financial expense (down €10 million).

EBIT 1 recorded for the first half of 2008 amounts to €500 million, up €29 million or 6.2% compared to the same period of 2007, mainly due to: (i) the increase in transportation revenue (€46 million, net of the items netted against costs), positively affected by the incentives received for investments (up €38 million) and higher volumes of gas transported (up €23 million) and negatively impacted by the updated transportation tariffs (down €15 million); and (ii) lower provision for risks and charges (up €3 million). These positive factors were partly offset by the increase in operating costs (€21 million, net of the items netted against revenue), mainly due to the rise in variable costs for the purchase of fuel gas used by the compression stations (down €12 million) and the increase in controllable fixed costs (down €5 million).

Non-recurring significant events and transactions and special items
No non-recurring significant events and transactions took place during the six months nor were there any other special items. Non-recurring significant events and transactions of the first half of 2007 related to the recognition of income following the changes to the treatment of Italian post-employment benefits introduced by the 2007 Budget Law (€2 million).

Net financial expense (€110 million) increased by €10 million compared to the first half of 2007 due to the increase in average borrowing and the higher average cost of debt, partly offset by greater capitalisations. The average borrowing cost was approximately 4.2% (4.0% in the first half of 2007).

Income taxes (€131 million) decreased by €18 million compared to the first half of 2007, mainly due to the decreases in the IRES tax rate (from 33% to 27.5%) and the IRAP tax rate (from 4.25% to 3.9%) from 1 January 2008, partly offset by the higher pre-tax profit.
The €35 million decrease in current taxes is mainly due to the reduction in the IRES and IRAP tax rate and to the alignment of taxable income to the profit recognised in financial statements which led to a decrease in deferred tax assets.
The tax rate is 33.6% compared to 40.2% in the same period of 2007.

Net financial debt amounted to €6,046 million, an increase of €164 million from 31 December 2007. Positive net cash flows from operating activities (€600 million) partly covered payment of the final 2007 dividend of €0.13 per share (€229 million) and net investment outlays (€ 535 million).

The leverage ratio, ie, the ratio of net financial debt to net invested capital, is 62.9% (31 December 2007: 62.6%).

Long-term financial liabilities of €4,801 million represent 79% of net financial debt (77% at 31 December 2007).

1 EBIT is analysed by considering only those elements that have led to a change therein, as application of the gas sector tariff regulations generate costs and revenue which are netted

 

Summary of the results for the second quarter of 2008

Profit (€126 million) increased by €22 million (21.2%) compared to the same period of 2007 due to the higher EBIT (up €18 million) and lower income taxes (up €8 million), mainly attributable to the amendments introduced by the 2008 Budget Law and partly offset by higher net financial expense (down €4 million).

EBIT 2 recorded for the second quarter of 2008 amounts to €245 million, up €18 million or 7.9% from the same period of 2007, mainly due to: (i) the increase in transportation revenue (€22 million, net of the items netted against costs), positively affected by incentives received for investments (up €18 million) and higher volumes of gas transported (up €12 million) and negatively impacted by the updated transportation tariffs (down €8 million); and (ii) lower provision for risks and charges (up €7 million). These positive factors were partly offset by the increase in operating costs (down €13 million, net of the items netted against revenue), mainly due to the rise in variable costs for the purchase of fuel gas used by the compression stations (down €5 million) and the increase in controllable fixed costs (down €5 million).

Non-recurring significant events and transactions and special items
No non-recurring significant events and transactions took place during the three months nor were there any other special items.

Net financial expense (€55 million) increased by €4 million compared to the second quarter of 2007 due to the increase in average borrowing and the higher average cost of debt.

Income taxes (€64 million) decreased by €8 million, mainly due to the decreases in the IRES tax rate (from 33% to 27.5%) and the IRAP tax rate (from 4.25% to 3.9%) from 1 January 2008, partly offset by the higher pre-tax profit.

2 EBIT is analysed by considering only those elements that have led to a change therein, as application of the gas sector tariff regulations generate costs and revenue which are netted.

 

Other information

Covenants

At 30 June 2008, there are no financial liabilities subject to covenants (unchanged from 31 December 2007).

 

Key operating data

Second quarter

 

 

 

First half

 

 

 

 

2007

 

2008

 

   

2007

 

2008

 

Change

 

Change %

18.4

 

20.1

 

Natural gas injected into the National Gas Pipeline (billions of cubic metres)

 

41.9

 

45.4

 

3.5

 

8.3

0.61

 

0.30

 

Regasification of liquefied natural gas (LNG) (billions of cubic metres)

 

1.30

 

0.91

 

(0.39)

 

(30.0)

197

 

260

 

Investments (€m)

 

290

 

477

 

187

 

64.5

 

Reclassified financial statements (*)

 

Reclassified consolidated income statement

     

 

 

 

(€m)

Second quarter

 

First half

   

2007

2008

 

2007

2008

Change

Change %

426

450

Core business revenue

886

934

48

5.4

1

5

Other revenue and income

1

6

5

 

427

455

Total revenue

887

940

53

6.0

(81)

(89)

Operating costs (**)

(178)

(199)

(21)

11.8

2

 

including: non-recurring

2

 

(2)

(100.0)

346

366

EBITDA

709

741

32

4.5

(119)

(121)

Amortisation, depreciation and impairment losses

(238)

(241)

(3)

1.3

227

245

EBIT

471

500

29

6.2

225

245

Adjusted EBIT

469

500

31

6.6

(51)

(55)

Net financial expense

(100)

(110)

(10)

10.0

176

190

Profit before tax

371

390

19

5.1

(72)

(64)

Income taxes

(149)

(131)

18

(12.1)

(1)

 

including: non-recurring

(1)

 

1

(100.0)

104

126

Profit for the period (***)

222

259

37

16.7

103

126

Adjusted profit for the period (***)

221

259

38

17.2

(*) The reclassified financial statements have not been reviewed by the independent auditors

(**) Operating costs include “Purchases, services and other costs�? and “ Personnel expense�? of the condensed consolidated interim income statement.

(***) The profit for the period is wholly attributable to the shareholders of Snam Rete Gas.

 

Reclassified consolidated balance sheet

The reclassified consolidated balance sheet combines the assets and liabilities of the balance sheet format included in the annual consolidated financial statements and condensed interim consolidated financial statements in accordance with their function, split into the three basic functions: investment, operations and financing. Group management holds that this format presents information useful for investors as it allows identification of the sources of financing (own and third party funds) and the application of such funds for non-current assets and working capital. The reclassified balance sheet format is used by management to calculate the key leverage ratios

Reclassified consolidated balance sheet (*)

       

(€m)

31.03.2008

 

31.12.2007

30.06.2008

Change

10,122

Property, plant and equipment

9,957

10,209

252

41

Intangible assets

41

43

2

(220)

Net payables for investments

(212)

(172)

40

9,943

Non-current assets

9,786

10,080

294

(529)

Net working capital

(368)

(434)

(66)

(28)

Employee benefits

(29)

(29)

 

9,386

Net invested capital

9,389

9,617

228

3,620

Equity

3,507

3,571

64

5,766

Net financial debt

5,882

6,046

164

9,386

Coverage

9,389

9,617

228

(*) Reference should be made to the paragraph on the reconciliation of the reclassified balance sheet with the condensed interim consolidated balance sheet in the section on "Financial review" in the directors' report of the 2008 half year report.

 

Reclassified consolidated cash flow statement and changes in net financial debt

   

(€m)

 

First half

 

2007

2008

Profit for the period

222

259

Adjusted by:

   

- Amortisation, depreciation and other non-monetary components

238

242

- Interest and income taxes

249

240

Cash flows from operating activities before changes in working capital

709

741

Changes in working capital due to operating activities

96

156

Interest and income taxes paid

(257)

(297)

Net cash flows from operating activities

548

600

Investments in property, plant and equipment and intangible assets

(269)

(497)

Disinvestments

 

2

Net payables for investments

(88)

(40)

Free cash flow

191

65

Change in financial liabilities

479

164

Cash flows of equity

(670)

(229)

Net cash flows for the period

0

0

 

 

 

Free cash flow

191

65

Cash flows of equity

(670)

(229)

Change in net financial debt

(479)

(164)

 
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updated
05 August 2016 - 16:18 CEST