2021 The Snam shareholder The guide to getting involved in your investment
energy to inspire the world DEAR SHAREHOLDERS,
the purpose of this Guide is to provide annually both current and potential owners of Snam shares with a summary of relevant information. Starting from 2010, it is part of a series of tools to enhance our SNAM 03 Company Profile communication with retail investors. 04 Snam overview 05 Snam’s activities We believe that the trust you have 06 Management Team showed us must be cultivated through an 07 Governance in action increasingly effective dialogue. The first part 08 Regulation in Italy of the Guide outlines the Group’s structure, 09 Regulation in Europe 10 Inclusion in ESG indices its business and strategic guidelines. The 11 Snam: a strategic position in the second part presents Snam operating energy transition areas and new businesses of the energy 12 Snam's purpose and the sustainable transition. The Guide also presents some key development goals features about Snam shares and practical 13 Strategic priorities 14 Net zero carbon and ESG scorecard information so that you can get involved in 15 Investment Plan your role as a shareholder. 16 Energy transition businesses 17 Digitalisation and technological We hope that these pages will be easy and innovation interesting to read, as well as helpful. 18 Financial strategy 19 Shareholder remuneration By nature, this Guide is not an exhaustive 20 International strategy product. In order to obtain more complete 21 Corporate structure information we invite you to visit our SNAM BUSINESSES corporate website at www.snam.it or, for 23 Transport specific requests, to contact the Investor 24 Storage Relations department. 25 Regasification 26 Biomethane 27 Energy efficiency 28 Sustainable mobility 29 Hydrogen
SNAM ON THE STOCK EXCHANGE 31 Remuneration through dividends 32 Stock Market performance 34 Shareholders 35 The financial structure 36 Income Statement figures 37 Balance Sheet figures 38 Cash flow
GET INVOLVED IN YOUR SNAM INVESTMENT 41 The steps to investing 42 Keep yourself informed and participate in corporate events 43 Glossary COMPANY PROFILE
Snam is one of the world’s leading energy infrastructure operators and ranks among Italy’s largest listed companies, by market capitalization. Through a sustainable and technologically advanced network, Snam guarantees the security of supply and is a key enabler in the energy transition. Through its international footprint, it operates in Albania (AGSCo), Austria (TAG, GCA), France (Terēga), Greece (DESFA), UAE (ADNOC Gas Pipelines) and UK (Interconnector UK) and has recently started activities in China and India. Snam is also one of the leading shareholders in TAP (Trans Adriatic Pipeline).
The Group has the largest natural gas transportation network (over 41,000 km including international assets) and storage capacity (approx. 20 bcm including international assets) among its European peers and is also a leading player in regasification, through the LNG terminal in Panigaglia (GNL Italia) and its stakes in the Livorno (OLT) and Rovigo (Adriatic LNG) terminals in Italy and in the Revithoussa (DESFA) terminal in Greece.
In its 2020-2024 strategic plan, Snam plans an increase in investments to 7.4 billion euros and more focus on the energy transition businesses: biomethane (Snam4Environment), energy efficiency (Renovit), sustainable mobility (Snam4Mobility) and hydrogen. The company also operates in forestation (Arbolia) and is committed to achieving carbon neutrality (Scope 1 and Scope 2) by 2040.
The Group’s business model is based on sustainable growth, transparency, the promotion of talents and diversity and the social development of local areas also through the initiatives of Fondazione Snam. 4
SNAM OVERVIEW
(2020 Data)
5 Interconnector
3 GCA
1 TAG
4 Terēga RUSSIA
6 TAP TANAP AZERBAIGIAN 2 DESFA
IRAN
ALGERIA CIPRO
TransMed Green Stream
LIBIA ISRAELE EGITTO
7 ADNOC
ABU DHABI (EAU)
TRANSPORT NETWORK INVESTMENTS IN INTERNATIONAL ITALIAN NETWORK 32,647 Km PIPELINES Storage fields GAS INJECTED INTO 3 Storage fields TRANSPORT NETWORK 69.97 mld m Regasification plants Regasification plants TOTAL STORAGE 3 CAPACITY 17.0 mld m LNG terminals LNG terminals REGASIFICATION PLANT 1 OTHER INTERNATIONAL EMPLOYEES 3,249 PIPELINES
TRANSPORT NETWORK - LENGTH
1,140 Km 1,466 km 554 km 5,135 km 235 Km 878 Km 982 Km
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SNAM’S ACTIVITIES
NATURAL GAS Injection into the REGASIFICATION national network
Snam is one of the largest continental operators through ■ LNG Carrier the Panigaglia terminal and its equity investments in the HYDROGEN Livorno (OLT) and Rovigo (Adriatic LNG) systems, as well as in Revithoussa (DESFA) in Greece, for total pro quota The network is 70% Hydrogen generation regasification capacity of around 8.5 billion cubic metres hydrogen ready processes LNG regasification annually. plant TRANSPORT
Gas compression Snam is the leader in transport and dispatching in both Italy plant and Europe. Gas, either imported and produced in Italy, is injected into the national network via 9 entry points.
In Italy Snam is committed to carrying out some Snam Headquarters development initiatives like the Sardinia project, with the realization of the virtual pipeline and the first section of BIOGAS/BIOMETHANE Snam Dispatching the backbone; and in replacements of about 1,200 km of Center transport pipelines in the Plan period to 2024. STORAGE
Snam is the major storage operator in Italy and one of the Storage plant largest in Europe, with 9 operating concessions, 12.5 bcm
Reduction of available storage capacity and 19.6 bcm of gas moved Station through the storage system in 2020. NEW BUSINESSES
In addition those three businesses which have characterised Thermoelectric Microliquefaction Methane/LNG Civil Industrial Tertiary Snam since its establishment, the Company is investing Power Plant Plant Gas Station Use Plants Industry in the development of new energy transition businesses: ENERGY EFFICIENCY biomethane, energy efficiency, sustainable mobility and Snam Activities hydrogen. Thanks to these, Snam contributes to the Cryo LNG Other Activities Gas Truck decarbonisation of the Italian system:
■ constructing compressed (CNG and bio-CNG) and liquefied (LNG, bio-LNG and small scale LNG -SSLNG) natural gas distributors, as well as biomethane infrastructure making use of organic and agricultural and agro-industrial waste;
■ providing energy efficiency services to condominiums, public administrations, and industry;
■ launching hydrogen development projects, such as the conversion of railway lines and the installation of fuel cells on the Snam network.
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MANAGEMENT TEAM
Snam leadership team consists of professionals with proven technical and managerial skills, committed to create value in the medium-long run
NICOLA BEDIN FRANCO PRUZZI Chairman SVP Internal Audit
MARCO ALVERÀ ROZEMARIA BALA Secretary of the Board of Chief Executive Officer Directors
ALESSANDRA PASINI MASSIMO DERCHI CRISTIAN COSMA PANZACCHI ACQUISTAPACE Chief Financial Officer Chief Industrial EVP Business Unit EVP Business e Chief International Assets Officer Environment & Efficiency Unit Hydrogen & Business Development Officer
PATRIZIA RUTIGLIANO MARCO ALVERÀ PAOLA BOROMEI ALESSIO TORELLI EVP Institutional Affairs, (ad interim) EVP Human Resources, Chief Mobility Officer ESG, Communication General Counsel Organization & PFM & Marketing
CAMILLA GAETANO MASSIMO CLAUDIO FARINA LORIS SPALTINI PALLADINO MAZZITELLI MONTECCHIARI EVP Commercial, EVP Digital EVP Corporate EVP Corporate EVP International Asset Planning & Transformation Services Strategy & Investor Engineering Regulatory Affairs & Technology Relations & Construction
On behalf of the Board of Directors, the Chairman shall coordinate and make use of:
■ the Secretary of the Board, for board inductions, board evaluations, and all activities relating to shareholders' meetings, the Board of Directors, Committees of the Board, and, where necessary, supervisory bodies;
■ the Head of Internal Audit, for activities pertaining to the Internal Audit function that involve the Board.
The Board of Directors of 27 March 2020 has appointed Luca Oglialoro as “Officer responsible for the preparation of financial reports”.
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GOVERNANCE IN ACTION
Snam has a continuous commitment to maintaining the highest standards within its Governance System, with a view to supporting value creation
Snam’s governance system fosters dynamics that create value and facilitate the conditions for the proper and adequate interaction between the company and its stakeholders. Snam adheres to the UN Global Compact and operates under the frameworks of OECD Guidelines for Multinational Businesses, the UN Declaration of Human Rights the fundamental Conventions of the ILO guidelines and its own Code of Ethics, that is also an integral part of the Organisational Model ex Legislative Decree 231/2001.
The governance system reflects the “traditional” model.
SHAREHOLDERS’ MEETING
BOARD OF DIRECTORS INDEPENDENT AUDITORS
BOARD OF STATUTORY AUDITORS
ENVIRONMENTAL, CONTROL, RISK AND SOCIAL & RELATED-PARTY APPOINTMENTS REMUNERATION GOVERNANCE TRANSACTIONS COMMITTEE COMMITTEE COMMITTEE COMMITTEE
The Board instituted four Committees: Remuneration The Board of Director of Snam currently in office consists Committee, Appointments Committee, Control, of 67% independent Directors and 33% female Directors. Risk and Related-Party Transactions Committee and All Board Committees are chaired by independent Environmental, Social and Governance Committee. This Directors. last committee was established in May 2019 (in place of the former Sustainability Committee) is responsible for the During 2020, the Board of Directors held 12 meetings, with promotion and integration of environmental, social and 100% of the directors attending the meetings on average governance factors in corporate strategies in compliance (98.4% in 2019). with sustainable development, as well as the coordination of the preparation of non-financial information. In 2020, A Board Evaluation process has been implemented the ESG Committee met 18 times and addressed issues since 2019, aimed at assessing the Board and internal relating to climate change on various occasions, analysing, Committee operations. The Board Evaluation process has in particular, the Group’s results and Snam’s strategies been entrusted to an independent advisor. with regards to reaching the established decarbonisation targets.
For more information about Snam’s Governance, please see the Report on Corporate Governance and Ownership Structure 2020 on the Snam website at: http://www.snam.it/en/governance-conduct/reports-and-documentation/
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REGULATION IN ITALY
The regulation ensures that the services are provided to third parties according to non- discriminatory criteria
Most of Snam’s revenues are “regulated”. The Regulatory Authority for Energy Grid and Environment (ARERA) regulates the different tariff systems for transportation, storage and regasification services, defining the criteria for setting the tariffs in each regulatory period, which normally lasts four years. The table below shows the primary tariff components for each of the regulated activities carried out by Snam, based on the regulatory framework in force as at 31 December 2020.
2020 - 2023 2024 - 2025
5th Regulatory Period Transportation 4 years
5th Regulatory Period Regasification 4 years
5th Regulatory Period Storage 6 years
TRANSPORTATION REGASIFICATION STORAGE
Calculation of net Transition period: Transition period: Transition period: capital invested Historic cost revalued Historic cost revalued Historic cost revalued recognised for Working capital recognised 0.8% Working capital recognised 0.8% Working capital recognised 0.8% regulatory purposes (RAB) Confirmed for 5th period Confirmed for 5th period Confirmed for 5th period
Return on net Transition period: Transition period: Transition period: capital invested 5.7% Year 2019 6.8% Year 2019 6.7 Year 2019 recognised for regulatory purposes 5th period: 5th period: 5th period: (WACC pre-tax)(*) 5.7% Years 2020-2021 6.8% Years 2020-2021 6.7% Years 2020-2021 LIC return with WACC 5.3%% LIC excluded LIC excluded
Incentives for new Transition period: Transition period: Transition period: Investments (investments in financial year 2019): (investments in financial year 2019): Withholding for 8 years of 20% of +1% for 12 years (investments in new +1.5% for 12 years (investments in new greater revenues with respect to capacity for transportation and with cost capacity regasification) revenues recognised deriving from analysis-positive benefits) auctions on new additional capacity
Remuneration of investments t-1 Remuneration of investments t-1 Remuneration of investments t-1 offsetting time-lag regulatory offsetting time-lag regulatory offsetting time-lag regulatory
5th period: 5th period: 5th period: (investments during financial year by Withholding 40% of revenues Withholding 50% of revenues from 2022): flexibility services auctions short-term +1.5% for 10 years (covering revenues not subject to Possible optional strengthening (investments in new capacity of guarantee factors) of the percentage, against transportation and with cost analysis- % reduction, revenue guarantees benefits >1.5)
Efficiency factor Transition period: Transition period: Transition period: (X FACTOR) 1.3% - on operating costs 0% 4.7% - on operating costs
5th period: 5th period: 5th period: 0.7% on operating costs (**) 3.1% on operating costs 1% on operating costs
(*) The remuneration rate for net invested capital (WACC) as of 1 January 2016 was set by the Authority with resolution 583/2015/R/com of 2 December 2015 “Remuneration rate for capital invested in infrastructural services for the electric and gas sectors: criteria for determination and update”. The duration of the regulatory period for the WACC (TIWACC) for infrastructural regulations for the gas sector was set at six years (2016-2021) and a mechanism was established to adjust the rate halfway through the period, based on current trends. With resolution 639/2018/R/COM of 6 December 2018, the Authority updated the remuneration rate for capital invested in regulated infrastructural services for the gas sector for the year 2019. The respective resolutions defined the tariff adjustment criteria for the 5th regulatory period for this type of business, confirmed the value of the Beta parameter for all sectors for the year 2020, keeping the WACC unchanged for that year, in line with the TIWACC regulations.
(**) Referring to the largest transportation company.
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REGULATION IN EUROPE
Snam constantly monitors the regulatory evolution in the European Countries in which it operates its business through international holdings
2016 2017 2018 2019 2020 2021 2022 2023 2024
TAG GCA Regulated 3rd regulatory periodo 4th regulatory periodo Transportation
Terēga Regulated ATRT6 ATRT7 Transportation
Storage Regulated ATS1 ATS2
IUK Regulated Transportation Introduction of regolated system
TAP Regulated Transportation Long-term contracts
DESFA Transportation/ Regulated 1st regulatory periodo 2nd regulatory periodo LNG
Transportation Transportation Transportation Transportation//LNG ■ RAB differentiated ■ RAB annually revalued ■ Under an exemption regime ■ RAB based on historic between equity financed using inflation (Consumer until October 2018. cost, Work in Progress portion (Revalued Historical Price Index), taking remunerated by WACC. ■ Switch from an exemption Cost) and debt financed new investments and regime to a regulated ■ portion (Book Value). amortisation/depreciation Nominal Pre-Tax regime without volume risk Additionally, different into account (Current Remuneration rate 2019- protection, upon maturity treatments are established economic cost method). 2022 period: 8.22%, 7.84%, of long-term contracts for old assets (prior to 7.52%, 7.44%. ■ WACC remuneration rate of (October 2018). 2012) and new investments. ■ 4.25% Real Pre-Tax. RAB approximately € 0.8 bn ■ Different remuneration (Transportation + LNG). rates are established for Storage ■ Socialisation of the cost of the portion of RAB financed LNG in the transportation ■ Storage under regulated Transportation with equity (Cost of Equity(*) tariff (50% from 2020 vs. regime from January 2018. ■ 8.94 Real Pre Tax) and the Third Part Access previous 75%). portion financed with debt ■ WACC remuneration rate of exemption on initial ■ (Cost of Debt 1.61 Nominal 4.75% Real Pre-Tax; RAB of capacity (10bcm/y). Recovery of the old Recoverable Difference Pre Tax). around 1.3 bn. ■ Exemption from tariff accumulated between 2006 regulation on initial capacity - 2016, around € 326 mn, and expansion. distributed over 16 years (2017 – 2032).
(*)This value includes a 3.5% risk premium linked to commercialisation of capacity.
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INCLUSION IN ESG INDICES
The continued commitment of Snam to strengthen its sustainable business model is reflected in the increasing presence of ESG investors in the Company’s shareholding base
The Company has since long time integrated sustainability chain program: the high score achieved (A-) proves Snam’s policies in its strategy, thus achieving significant commitment to engaging suppliers on the reduction of performances, which led to inclusion of Snam shares in emissions and the development of sustainable strategies. the most important sustainability indices through strict For the seven year in a row, Snam was listed in the “GC 100”, assessment processes. index developed by the UN Global Compact in partnership As at 31 December 2020, investors who build their with the research firm Sustainalytics, that lists the 100 portfolios based on Socially Responsible Investing companies which globally outstand for executive leadership criteria represent 34.1% of the total number of Snam’s commitment and consistent baseline profitability. institutional shareholders and 13.8% of the overall Snam was also awarded an AA rating by MSCI and is number. included in the five ECPI indices, in the Stoxx Global ESG Within the 2020 assessment Snam has been included in the Leaders indices, in the Euronext Vigeo Eiris120 indices, in Sustainability Yearbook 2021, as company’s sustainability the Sustainalytics index and in the ISS-Oekom index (PRIME performance is within the top 15% of the relative industry. A level and B- rating). Lastly, Snam was reconfirmed in the relevant confirmation also came in for the FTSE4Good series Bloomberg’s Gender-Equality Index (GEI) 2021, which of indices, in which Snam has been in since 2002. tracks the financial performance of the companies most The commitment to cut emissions, mitigate climate risks committed to the promotion of gender equality. and develop the low-carbon economy, is proven by the promotion in the “A List” of Carbon Disclosure Project, the index in which Snam is a component since 2012. In 2020 Snam has also joined, for the second year, the CDP supply
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SNAM: A STRATEGIC POSITION IN THE ENERGY TRANSITION
The Group will serve as enabler thanks to its infrastructures, new businesses development and international presence
Achieving global climate goals will lead to significant Snam is ideally positioned to play a role in this supercycle: investments in decarbonising the energy industry over is firmly anchored on midstream assets, with visible the next thirty years. Several countries, representing over investment opportunities and long-term cashflows, while 60% of global emissions, have already announced or are providing flexibility to the energy system and play an preparing climate neutrality goals: a new “super cycle” of essential role in getting to zero emissions. public and private investments of about $ 100-150 trillion Snam’s infrastructure is 70% hydrogen-ready, which for the innovation of energy systems is therefore expected, makes it an ideally positioned enabler of energy transition. which will result in new opportunities for creating value for In addition, Snam is building positions upstream and operators along the entire value chain. In such a context, downstream of these assets, in hydrogen and biomethane green gases – and particularly hydrogen – have significant production infrastructure and final uses, with a focus growth prospects as they can potentially reach over 25% of on mobility. Snam has also created an energy efficiency the global energy mix by 2050. platform offering clients the opportunity to lower energy consumption and reduce their environmental footprint.
Upstream Midstream Downstream infrastructure
Natural gas
Evolve from CNG platform to LNG and H2 mobility
Future-proof our Sector coupling/ asset base to storage/power deliver methane/ to gas biomethane Become a leading volumes while national operator enabling H2 in Energy Early presence ramp up, also Efficiency services leveraging in blending, technological and providing Promote Hydrogen partnerships flexibility to the integrated electricity grid ecosystems to serve key segments
Biomethane Biomethane/ supply renewables/ infrastructure, waste/water circular economy
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SNAM'S PURPOSE AND THE SUSTAINABLE DEVELOPMENT GOALS
“Energy to inspire the world” is the message that guides Snam's modus operandi and was formally incorporated into the company's Bylaws. 17 the SDGs, defined by the United Nations, to be achieved
Snam is much more than a company that builds and To reaffirm Snam's commitment to promoting the manages energy infrastructures: it guarantees secure energy transition, the purpose "Energy to inspire the supplies, enables millions of homes to be heated, connects world" was also formally incorpored into its Articles of countries and communities, creates opportunities for Association. The Shareholders' Meeting of 2nd February development while respecting the environment and is a 2021 approved an amendment to the Bylaws, which key player in the energy transition. “Energy to inspire the expressly recalls the energy transition businesses alongside world” is the purpose of Snam, where its history and values the core businesses of the regulated activities, as well as the come together: a purpose that is a daily commitment for principle of pursuing sustainable success among the aims to the Society. For this reason, with the new Towards Net which the Company's business activities must conform. Zero Strategic Plan, the Group has set itself the goal of taking a leading role in the energy transition, thanks to the In pursuing its purpose, Snam reconciles its strategic new businesses (biomethane, hydrogen, energy efficiency, choices with its commitment to achieving the Sustainable sustainable mobility) and the centrality of its infrastructure, Development Goals (SDGs) defined by the United and aims of achieving carbon neutrality by 2040, ahead of Nations in 2015. The 17 SDGs and their targets represent an the European target set for 2050. important reference for Snam, which focuses its efforts on those that are closest to its mission, purpose and activities.
We build innovative energy infrastructures and offer integrated services that connect people and communities
We are committed to a stable supply with maximum safety and environmental protection
We promote the development of our people, ensuring respect for the dignity and diversity of each individual
We invest in tomorrow's energy sources and design infrastructure for a more sustainable future
We integrate with the territories and provide the communities in which we operate with skills, technologies and resources to create new opportunities and contribute to economic and social development
We follow an ethical and socially responsible business model, generating value for all our stakeholders
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STRATEGIC PRIORITIES
Six pillars in the 2020-2024 Plan, including the strengthened role in the energy transition, the growth of the core business and the centrality of ESG factors
Strengthen Snam's core business, continue the Group’s international expansion, focus on technological development, innovation and new businesses for the energy transition and achieve carbon neutrality by 2040. These are the themes of Snam's 2020-2024 strategy, presented last November, entitled «Towards Net Zero». In particular, the Plan pursues a sustainable growth model that aims at value creation by leveraging on:
Net-Zero Carbon by 2040 Long-term growth Ability to execute and and ESG leader of the Core Business technological innovation
Solid financial Energy transition International profile structure and disciplined investments
The cumulative 2020-2024 investment plan amounts to 7.4 50% of the investments in the plan is dedicated to a billion euro, with an increase in investments of almost € 1 “hydrogen-ready” infrastructure (replacement and deve- billion compared to the € 6.5 billion of the previous Plan. lopment of new assets with hydrogen-ready standards). Such growth is driven by: Most of the investments are aimed at decarbonisation to achieve the carbon neutrality goal by 2040 and seize the ■ higher investments in core business of regulated opportunities offered by the energy transition. Approxi- infrastructures (€ 6.7 bn compared to € 6.1 bn of the mately 40% of the Plan investments are aligned to the previous Plan); European taxonomy criteria. ■ new activities of the energy transition (over € 0.7 bn in investments, almost doubled compared to 2019- Snam also plans to strengthen its efficiency plan launched 2023 Plan): biomethane, sustainable mobility, energy in the second half of 2016, with over € 70 mln of savings efficiency and hydrogen. expected by 2022.
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NET ZERO CARBON AND ESG SCORECARD
The new Plan establishes ambitious objectives: Snam intends to reduce Scope 1 and Scope 2 greenhouse gas emissions by 50% by 2030 compared to 2018. Published the ESG Scorecard of the key environmental, social and governance aspects
Following the target of containing global warming to Net-zero @2040 within 1.5 ° C set by the Paris Agreement, Snam has prepared an action plan that will allow it to achieve carbon neutrality by 2040, ahead of the European target set for 2050, eliminating its net direct and indirect emissions (scope 1 and 2) of CO2 equivalent.
Snam has thus raised the reduction target of Scope 1 and Scope 2 equivalent CO2 target emissions to 50% by CO2 2030 (on a 2018 basis), compared to the previous target -50% of -40% on a 2016 basis. Reductions concerning methane emissions related to the core business (transport, storage, regasification), to the direct consumption of industrial and staff activities (heating, transport), but also to the CH4 NET emissions associated with operations and the use of ZERO buildings and the Snam company fleet. In particular, almost half of the overall reduction in emissions will derive from the dual fuel project (powered by electricity as well as gas), 2018 2030 2040 while the remainder will be achieved with reduce methane emissions by 45% by 2025 (compared to 2015) in line with Snam is also committed to promoting the reduction of the UNEP framework, with which a protocol has been emissions produced by associated companies and suppliers signed. (indirect Scope 3 emissions): for this the company has strengthened collaboration initiatives with subsidiaries and suppliers to promote a progressive and significant Improving people’s lives reduction. SOCIAL Welfare, employee engagement, security, The centrality of sustainability in the Group's strategy gender diversity, responsible supply chain, is reflected into the publication of theESG Scorecard, local community engagement a tool designed to ensure stakeholders to measure the company's performance in 13 areas, with 22 material and quantitative objectives for 2023. In terms of the environment, for example, an increase in biomethane Committed to a net zero world production from 18 to 141 million cubic meters is expected ENVIRONMENT from 2021 to 2023 as well as an increase from 16 to 43 Natural gas emissions, energy savings, green thousand tons of CO₂ saved by energy efficiency activities. innovation, soil and biodiversity protection In the social sphere, indicators relating to welfare, supply chain and safety have been identified: for example, through the target of increasing the percentage of women in executive and middle management roles from 19.3% in 2019 to 25.5% in 2023, and an increase in third sector Strengthening governance suppliers in vendor list of 20% by 2023. In the governance GOVERNANCE area, the target is to dedicate at least 40% of Board of Governance structure and functioning, infrastructure reliability, anti-corruption Directors’ time to ESG matters and carry out reputational due diligences on 100% of third parties.
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INVESTMENT PLAN
7.4 bn euro of investments over the 2020-2024 period: almost 1 bn euro more than the previous Plan
0.4 7.4 24% 0.4 0.2 6.5 50%
€ 7.4 bn 10%
6% 10%
Hydrogen ready investment Digitalisation/Technology Capex Capex Transport Storage & Energy on infrastructure (*) Net Zero investments Plan Plan LNG Transition 19 - 23 20 - 24 New businesses Maintenance & other (energy transition)
(*) Replacement, development and maintenance of assets using hydrogen ready standards. DEVELOPMENT INVESTMENTS
■ Launch of the conversion of compression stations into gas-electricity hybrid. Dual-fuel compressor stations provide great flexibility to the system as you can choose whether to use gas or electricity to compress the gas. In particular, Snam will convert 8 of its stations.
■ Realization of the virtual pipeline in Sardinia and the first section of the backbone. The plan envisages the construction of a “virtual pipeline” to bring LNG from the Panigaglia and OLT regasification facilities to Sardinia, linked with the first part of the backbone. REPLACEMENT INVESTMENTS
Replacements for the modernization of the grid, also in a “hydrogen ready” perspective, for almost 1,200 km in the period 2020-2024. INVESTMENTS FOR NEW CONNECTIONS
The investment plan also provides for new connections linked to the energy transition: 245 CNG/LNG plants and 50 biomethane plants (in sharp increase compared to previous years) and another 100 connections to the grid.
€bn A GROWING TARIFF RAB At least in line with 2020-24 Planned investments will drive an average annual >2.5% Tariff RAB growth of c.2.5% over the 2020- CAGR 2024 period, therefore at the same rate of the 20.6 previous Plan. In the next 2024-2040 period, Snam forecasts a growth at least in line with 2020-24, with a potential acceleration depending on the 0.9% average inflation pace of future-proof replacements.
RAB 2020 RAB 2024 RAB 2040 9000km <11000km fully amortised fully amortised
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ENERGY TRANSITION BUSINESSES
For the period 2020-2024, Snam’s investments will amount to approximately € 720 mln, almost doubled compared to € 400 mln of the previous plan, with an annual contribution to EBITDA of € 150 mln to 2024
SNAM4ENVIRONMENT + RENOVIT BIOMETHANE ENERGY EFFICIENCY
Planned investments: € 220 million to build plants with Planned investments: € 200 million. an installed capacity of 64 Megawatt (22 more than the Called Renovit from January 2021, Snam4Efficiency has previous Plan). become, in just two years, one of the main Italian operators Snam4Environment aims to encourage market in energy efficiency services for residential, industry and development thanks to a low-risk business model, public administration. leveraging on the skills of the Renerwaste and Iniziative Renovit has a solid commercial pipeline (approximately Biometano platforms, which manage plants that produce € 700 million in weighted projects in the residential and biomethane from urban and agricultural waste in Italy, and industrial sectors) and is ready to seize the additional the expertise in design, development and construction opportunities deriving from national and European of plants of IES Biogas, active at Italian and international stimulus programs for the sector. levels. In the Plan period, also through specific research and development initiatives, the company will evaluate opportunities in adjacent sectors (recycling plastics, glass, paper and quality compost).
HYDROGEN
Planned investments: approx. € 150 million. SNAM4MOBILITY Snam has launched a Business Unit focused on hydrogen, SUSTAINABLE MOBILITY with the aim of being at the forefront in a sector with great prospects. Over the Plan period Snam will start Planned investments: approx. € 150 million. the conversion of the first railway lines from diesel to The company expects the construction of 150 new hydrogen, leveraging on partnership agreements with FS refuelling stations and the expansion of the offer for heavy Italiane and Alstom, and will install fuel cells for Snam’s vehicles, also thanks to the activation of a new small-scale own energy consumption. The company intends to liquefaction plant and the adaptation of the Panigaglia LNG focus on new technologies (as per the ITM and De Nora terminal for truck-loading services for transport. In addition partnerships) and start new pilot projects. Snam, together Snam4Mobility plans to launch five hydrogen refuelling with other partners, has also won three grants under the stations. “Fuel Cells and Hydrogen Joint Undertaking”, which allow access to funds and pilot projects at European level and create new end-use partnerships.
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DIGITALISATION AND TECHNOLOGICAL INNOVATION
World’s most technologically advanced gas TSO with € 500 mln of investments in digitalization. Partnerships with De Nora and ITM to oversee the technologies for the development of hydrogen
INVESTMENTS IN INFRASTRUCTURE STRATEGIC PARTNERSHIPS IN DIGITALISATION HYDROGEN TECHNOLOGIES
Digitalisation is another key investment priority, with Snam also aims to excel from a technological point of nearly €500 mln earmarked in the Plan period to allow view also to be increasingly competitive in new hydrogen Snam to become the most technologically advanced gas development projects. transmission company in the world and to guarantee ever greater safety and sustainability of operating activities. The company strucked two partnerships in 2020, one In particular, the integration of IoT systems and machine with De Nora Industrie, a leading company on Electrode learning will allow 100 times more daily data to be and Water Technologies with a promising hydrogen transmitted, analyzed and historicized almost in real time. angle, and the other with leading PEM electrolyzer manufacturer ITM. Through the acquisition of stakes in In 2021, the first district of the future (TecHub) in Bologna these companies, Snam gain exposure to the fast growing will be launched, equipped with the most advanced electrolyzer market, with complementary alkaline and PEM technologies. Activities will include, among others, technologies. real time measure of 1,100 delivery points for better The acquisitions will also support the ramp up of hydrogen operational management, the use of drones and satellites business unit: having access to leading technologies and for asset monitoring in extreme conditions, real time and competences is crucial to win projects, especially at this geo-referenced identification of any leakage and potential first stage. corrosion detection and predictive maintenance on 2,700 valves.
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FINANCIAL STRATEGY
Snam aims to minimize the risk profile of the Plan and to preserve the solidity of the balance sheet
FINANCIAL DE-RISKING
The actions taken to lock in favourable market conditions and the improved interest rate and credit spread scenario, compared to the previous Plan, have led to reduction in the average cost of gross debt from 2.4% in 2016 to approximately 1.2% average over the Plan horizon (compared to 1.4% in the previous Plan), with an average cost of debt recorded for 2020 of approximately 0.9%. Further possible savings could derive from treasury optimisation, as well as further diversifying sources and increasing sustainable finance instruments.
■ Financial structure defined via an Asset and Liability Management model: ~3/4 fix rate; > 5 years M/LT maturity with lower than sector-average gearing.
■ Strong liquidity profile with undrawn committed lines covering more than three years of bond maturities.
■ Commitment to maintain the credit rating unchanged.
GREEN FINANCING
Since 2016 Snam has sought to increase the share For the 2020-2024 Plan, the ambition is to increase of the sustainable finance, reaching 40% recorded the weight of sustainable finance up to 60% of total at 31 December 2020, thanks, among others, to the available funding, leveraging on: conversion of revolving credit facilities to a sustainable loan with a bonus/malus mechanism depending on ■ ~ € 7 bn of sustainable financing (~40% of the achievement of the KPIs which are included in the committed funding) at 31 December 2020; management incentive plans. Furthermore, confirming ■ the draft of ESG Commercial Paper for a its commitment to sustainable finance, after the maximum capacity of 2.5 billion provided by Euro first "Climate Action Bond" in 2019, Snam issued two Commercial Paper ESG (EE from Standard Ethics); "Transition Bonds" in June and November 2020 for 500 and 600 million euros respectively and, in the first ■ further room for debt capital market sustainable months of 2021, it issued a 500 million euro Transition instruments. Bond and increased the amount of the bond issued in June 2020 for 250 million euros. With reference In recognition of the Group efforts, Snam joined the to the issue of Transition bonds, and in particular for Nasdaq Sustainable Bond Network, a sustainable the Transition Bond Framework, Snam was awarded finance platform managed by Nasdaq, that unites the 'Bond Awards 2021 - Award for innovation' by the investors, issuers, investment banks and specialist specialized international magazine “Environmental organisations. Finance”.
energy to inspire the world 19
SHAREHOLDER REMUNERATION
The strategy outlined envisages a strengthened growth profile of earnings per share and a significant value creation for shareholders
The positioning along the entire value chain of the energy transition, the continuous improvement of the results of the core business and new activities, the greater internationalisation and the strong supervision of the optimization of the financial structure will allow Snam to obtain sustainable growth ni the main indicators in the period Plan.
GUIDANCE 2021 2020-2024 PLAN
INVESTMENTS € ~ 1.4 bn € 7.4 bn 2020-2024
TARIFF RAB € ~ 21 bn >2.5% CAGR 2020-2024
NET INCOME € 1,170 m (including De Nora) 2.5% CAGR 2019-2024
NET DEBT € ~ 14 bn (including De Nora) Debit/RAB <60%
Snam has increased cumulated investments, from 6.5 to 7.4 billion euro, compared to the previous Plan, and expects a growth of the RAB at an average yearly rate higher than 2.5%. RAB growth will sustain revenues, which will also benefit from the contribution of new businesses and incentives on non RAB-based activities. This, together with the focus on financial and operating efficiency, will sustain the accelerated growth profile and its sustainability over the long term. Furthermore Snam, in the presentation of the annual results in March, has revised upward its guidance on adjusted net profit for 2021, bringing it to € 1,170 mln, compared to the previous figure of approx. € 1,130 mln (announced in the Plan). Finally the Company has set a dividend policy with an annual growth of 5% until 2022, and a minimum growth of 2.5% in the period 2023-2024, assuming a Debt/RAB below 60% in the Plan’s period.
DPS € cent +2.5% DIVIDENDS POLICY +5% Snam confirms its commitment to guarantee to shareholders an attractive and sustainable remuneration and the payment of an interim dividend. The new Plan provides:
24.95 ■ the growth of the dividend per share of 5% until 2022 is confirmed, with a further minimum growth of 2.5% in the period 2023-2024.
FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 NEW
Snam - The Snam shareholder 2021 20
INTERNATIONAL STRATEGY
In the course of 2020, Snam further strengthened its position as leader in energy infrastructures at an international level, thanks to the acquisition of the stake in ADNOC Gas Pipelines, the consolidation of its presence in China and the entry in India and Israel
In 2020, Snam continued to pursue its internationalisation strategy, developing relationships in key countries for the expansion of its business:
■ With SOCAR, the state energy company of the and management of gas infrastructure in the country) Republic of Azerbaijan, Snam has signed a cooperation Snam has signed a Memorandum of Understanding agreement to study development of renewable gas for strategic cooperation including technical support and sustainable energy, also in terms of prospects (for transportation infrastructure, regasification and for future use in the Southern Energy Corridor and, storage of natural gas) and research and development therefore, the Trans Adriatic Pipeline (TAP). for the energy transition in China (including experiments in the hydrogen sector), as well as ■ Snam finalised one of the most important transactions possibilities for joint investments. Also in China, the in the sector at the global level. A consortium supply of technical services to the main government consisting of Snam, the sole state operator, and five energy companies continued in 2020, mainly for international funds acquired, 49% of ADNOC Gas storage business. Pipelines, a company which holds for 20 years the management rights to 38 gas pipelines in the United ■ Snam signed a series of cooperation agreements for Arab Emirates. the energy transition in the Indian market, in particular for hydrogen and sustainable mobility, with Adani Gas ■ With Pipechina (China Oil and Gas Piping Network Limited, Greenko and Indian Oil. Corporation, a company recently established by the Chinese government to supervise the development
energy to inspire the world 21
CORPORATE STRUCTURE
SCOPE OF CONSOLIDATION
ENERGY EFFICIENCY Snam4 70% 70% 100% 100% S.r.l. Evolve S.p.A. Mieci S.p.A. TEP Energy Solution S.r.l.
85% Tlux S.r.l.
BIOGAS / BIOMETHANE Snam4 82.63% 100% GROUP INSURANCE Environment SERVICES S.r.l. Renerwaste S.r.l. 100% 17.37% 45% 100% 100%
Ecoprogetto Ecoprogetto Renerwaste Enersi IES Gasrule Milano S.r.l. Tortona S.r.l. Lodi S.r.l Sicilia S.r.l Biogas S.r.l. Insurance 55% 100% 70% DAC IE
SUSTAINABLE MOBILITY Snam4 100% 100% Mobility S.p.A. Cubogas S.r.l
Snam Snam Gas & Energy Services 100% 100% International (Beijing) Co., Ltd. CN B.V. NL
NATURAL GAS Asset TRANSPORTATION Infrastrutture Trasporto 100% Company 2 100% Gas S.p.A S.r.l.
Enura 55% S.p.A.
Snam 100% Rete gas S.p.A.
NATURAL GAS GNL REGASIFICATION 100% Italia S.p.A.
NATURAL GAS STORAGE Stogit 100% S.p.A.
The changes in the Snam Group’s scope of consolidation as working in the energy efficiency sector in Italy, Mieci and of 31 December 2020, with respect to that as of 31 December Evolve. Additionally, on 18 November, the entry of Snam as 2019, involve the acquisition on 5 October 2020, through a significant minority shareholder of Industrie De Nora was the subsidiary Snam 4 Efficiency, of 70% of two companies announced. The transaction was finalised on 8 January 2021.
Snam - The Snam shareholder 2021 SNAM BUSINESSES 23
TRANSPORT
Also in 2020, a year characterized by difficulties and uncertainties due to the pandemic, Snam has demonstrated its essential role in guaranteeing the security of energy supplies
Snam, through its subsidiaries Snam Rete Gas 32,647 and Infrastrutture Trasporto Gas, is the leading km Italian natural gas transportation and dispatching Trasportation operator, and owns almost all the transportation network infrastructures in Italy, approximately 94% of the entire transportation system. 9,649 22,998 Snam manages the gas pipeline network via 8 districts, 48 km km maintenance centres throughout Italy, 13 compression National 69.97 Regional network network stations and a dispatching unit. Gas coming from mld m3 abroad is injected into the network at nine entry Gas injected into the national points, in correspondence with the 6 methane pipeline network interconnection points (including the TAP pipeline which began operating in November 2020) and the three interconnection points for the LNG regasification 3.86 3 terminals. Once it has been imported or regasified, the 66.11 mld m mld m³ Gas from gas is transported to the local distribution networks, the Imported gas national regional network redelivery points or large end users (such production as thermoelectric power stations or manufacturing plants).
Snam awards transportation capacity to shippers who apply. In 2020, 103 connection agreements were entered into In this way, users acquire the right to inject or withdraw a for the creation of new delivery/redelivery points or for quantity of gas not exceeding the daily rate allocated on upgrading existing ones, 19 contracts for the injection of any day of the thermal year. The conditions for access to the biomethane and 35 relating to CNG service areas. service are contained in the Network Code. Shippers have the possibility of making gas sales and trades at a Virtual . Trading Point (PSV) of the National Network, thanks to the 2020 – Imports by entry points (bcm) dedicated IT platform.
28.43 The transportation capacity of the network again TARVISIO covered all user demand in 2020. MAZARA DEL VALLO 12.02 In addition to the transportation capacity offered at entry points connected with foreign countries and with LNG PASSO GRIES 8.6 terminals equal to 363.1 million cubic metres/day; Snam has made further transport capacities available at entry CAVARZERE 6.81 points interconnected with national producers for a total LNG of 22.0 million cubic metres average/day and with the production of biomethane for a total of 0.6 million of cubic GELA 4.46 metres average/day. LIVORNO LNG 3.27 Over the last 17 years transportation operators have been constantly increasing, going from around 30 operators in PANIGAGLIA 2.51 2003 to around 213 operators in 2020 (including shippers LNG and traders). MELENDUGNO 0.01
GORIZIA 0.00 Data updated as at 14 January 2021
Snam - The Snam shareholder 2021 24
STORAGE
With 17 bcm of total storage capacity, Snam has the largest capacity in Europe
The storage system makes it possible to compensate for the different requirements for gas supply and consumption: whilst supply has a substantially constant flow throughout the year, gas demand is concentrated mainly in the winter period. Storage also ensures that quantities of strategic gas are available to compensate for any lack of or reduction in non-EU supply or crises in the gas system. Snam carries out its activity through an integrated system of 17 bcm infrastructures, composed of deposits, wells, gas treatment plants, compression Total storage capacity stations and the operational dispatching system. Snam has nine storage concessions located in Lombardy (five), Emilia-Romagna (three) and Abruzzo (one). 4.5 bcm In 2020 Snam took action to promote the replenishment of national storage Strategic storage capacity facilities for the purpose of being able to manage seasonal peaks in demand. The replenishment level at the end of the injection campaign (October 2020) was 99%, in line with the European average. The market oriented approach adopted allowed the Company to increase the 9.3 bcm mix of customers owing a Storage contract (not only shippers serving end users Gas injected into the fields but also traders who maximise revenues from buying and selling gas to the PSV - virtual trading point) as well as attracting major European players.
Through its subsidiary company Stogit, Snam is the largest storage 19.6 bcm operator in Europe by total available capacity. Total storage capacity at the end of 2020, holding strategic storage equal, came Gas moved through the storage to 17 billion cubic metres. A result that attests to Stogit's ability to respond to system both the needs of the national market as well as the contingent dynamics linked to international markets and policies, which can significantly modify demand by increasing the value of business with policies to support the security of supplies. 12.5 bcm Available storage capacity
10.3 bcm Gas withdrawn 9 Operating concessions
energy to inspire the world 25
REGASIFICATION
GNL Italia provides a key contribution to diversification and flexibility of gas supply
Regasification represents the final activity in the liquefied natural gas (LNG) chain. In the exporting country, the natural gas extracted from the fields is liquefied at a temperature of -160°C in order to allow for its transport via tanker to the regasification terminal. Once offloaded from the tanker, the LNG is heated and returned to the gaseous state in order to be injected into the 3 transport network. 17,500 m The regasification service therefore also includes the offloading of the LNG from Maximum daily regasification the tanker, operational storage (i.e. storage for the time needed to vaporize the capacity of the Panigaglia LNG), regasification and injection into the national network. terminal The Panigaglia plant, built in 1971 and owned by GNL Italia, is able to regasify 17,500 m3 of LNG every day. The total amount of gas regasified at the Panigaglia plant in 2020 was 2.52 bcm (+5% vs 2019). The continued increase in 2.52 bcm volumes of activities compared with 2018 (0.91 bcm in 2018, more than doubled Quantity of LNG regasified in in 2020) is mainly due to the greater competitiveness of the cost of LNG 2020 in Panigaglia compared with natural gas, as well as the new regasification capacity llocationa mechanisms through dedicated auctions. The capacity allocation mechanisms based on auctions as well as the new businesses in the SSLNG sector, linked specifically to the possible future uses in 3.5 bcm heavy transportation and maritime transport, will lead to a scenario of further Maximum annual quantity of growth in the consumption of LNG in future years. natural gas that can be released into the transport network In 2020, 60 methane tankers were unloaded (+3 with respect to 2019; +5.3%; +39 unloaded with respect to 2018).
LNG ship trends
2014 3
2015 1
2016 5
2017 15
2018 21
2019 57
2020 60
In February 2020, Snam acquired from Iren Group a 49.07% stake in the share capital of OLT Offshore LNG Toscana, the company that owns the offshore regasification terminal located 22 km offshore of the Tuscan coast between Livorno and Pisa. With a maximum annual regasification capacity of 3.75 bcm, OLT is the second largest Italian terminal of liquefied natural gas (LNG).
Snam - The Snam shareholder 2021 26
BIOMETHANE
Since 2017, Snam has invested in biomethane as an alternative Additionally, with an eye to internalising the skills of energy solution, also through Snam4Environment, which sector leaders and strengthening its position in the specializes in infrastructure for biomethane production (from biomethane value chain, Snam completed its acquisition in organic waste, agricultural and agro-industrial waste and 2020 of Renerwaste (involved in biogas and biomethane zootechnical effluents), playing a fundamental role in the infrastructure that operates through three plants located development of biomethane in Italy. in the provinces of Lodi, Milan and Tortona) and continued its projects with Enersi Sicilia to create a biomethane and compost production plant, that will be used as natural Investments of approx. € 220 mln are fertiliser instead of chemical fertiliser. The facility will planned to 2024 to build biomethane be able to recover 36,000 tonnes per year of FORSU, corresponding to approximately 3.2 million cubic metres plants with an installed capacity of 64 of biomethane, equal to 30 GWh of energy produced per MW. year, bringing numerous benefits to the area, including the creation of new jobs, skills, economic return for local businesses involved in the construction, support and supply Snam, through its subsidiary IES Biogas, designed and of the new plant, as well as advantages for citizens in terms built advanced biomethane from food industry waste of reduced emissions and waste transport costs. and by-products and from waste, in particular from FORSU, the Organic Fraction of Municipal Solid Waste. The Group also acquired a 50% stake in Iniziative Specifically, in addition to the conversion of existing Biometano, a company which manages biogas and plants to biomethane, four new plants have been built in biomethane systems powered by agricultural biomass, and Veneto, Lombardy and Sicily to produce biomethane as an owner of five biogas plants already in operation for which alternative fuel for vehicles. IES Biogas has been involved the conversion to biomethane is planned, thanks to IES also in the design and construction of various plants for the Biogas, with a total potential production at full capacity production of advanced biomethane from livestock waste, of about 39 MW. The first of these, in Sicily, went into agro-industrial waste, agricultural byproducts and second- production in October. harvest crops.
Agricultural biomethane and biomethane from FORSU plant
Organic fraction of municipal Livestock manure, agri-food ANAEROBIC BIOMETHANE AGRICULTURAL solid waste (FORSU) = BIOMETHANE byproducts and DIGESTION PLANT PLANT FROM Wet and green waste from PLANT second-harvest crops FORSU separate collection
DIGESTATE FERMENTATION Final residue from the that transforms biomass COGENERATOR transformation process into BIOGAS Direct Electricity use production PURIFICATION(upgrading) COMPOSTING of biogas by removing CO2, Production of PLANT impurities and pollutants thermal energy
Production of compost to be used as a fertilizer as an alternative to chemical fertilizers
Compression and Liquefaction feeding biomethane into BIOMETHANE of biomethane the grid for use in the for use as liquefied transport sector natural gas (LNG)
energy to inspire the world 27
ENERGY EFFICIENCY
Snam4Efficiency, now called Renovit, has become, in just two years, one of the main Italian operators in energy efficiency services for residential, industry and public administration.
The company intends to continue its growth path organically and through acquisitions. It has a solid commercial pipeline (approximately € 700 million in weighted projects in the residential and industrial sectors) and is ready to seize the additional opportunities deriving from national and European stimulus programs for the sector.
Investments of € 200 mln are planned to 2024, with long-term cash flow visibility.
In October 2020 the acquisition of 70% of Mieci and constructed in previous years, allowing for reductions in Evolve was finalized, for a total of around € 50 million, CO2 emissions of around 2.2 kton/year. thus increasing the portfolio of clients to whom Renovit offers integrated efficiency and technological services. At the end of January 2021, a transaction was finalised through which CDP Equity became a shareholder of During 2020, 54 deep renovation projects were completed Snam4Efficiency, which changed its name toRenovit . for condominiums, leading to a reduction of CO2 Renovit is intended to serve as a new Italian platform to emissions of around 1.7 kton/year, for a total reduction promote energy efficiency in condominiums, companies of over 2.3 kton/year, when also considering the projects and public administrations, supporting sustainable implemented the previous year. development and the country’s energy transition.
In the industrial sector, 4 new plants were commissioned and 6 were acquired through the merger with TEA, for a total of 17 plants operated, also considering the 7
Snam - The Snam shareholder 2021 28
SUSTAINABLE MOBILITY
Snam4Mobility provides integrated services for sustainable "smart green" natural gas (CNG and LNG) and biomethane mobility, building distribution infrastructure and supplying components for distributors (compressors, dispensers) of which, through Cubogas, it is among market leaders.
The construction of 150 new refuelling stations and the expansion of the offer for heavy vehicles is expected, also thanks to the activation of a new small-scale liquefaction plant and the adaptation of the Panigaglia LNG terminal for truck- loading services for transport, and the launch of the first five hydrogen refuelling stations. Approximately € 150 mln of investments are planned to 2024.
With regard to the Panigaglia LNG terminal, requests for authorisation to construct infrastructures used by LNG on load transportation tankers were submitted to the competent bodies and authorisation is currently underway for the construction of a micro-liquefaction plant in Campania, to allow loading of tankers for distribution of LNG and bio-LNG in Italy. Additionally, during the year Snam signed agreements and partnerships, continuing negotiations and establishing contracts with over 25 counterparts, for a total of approximately 132 contractualised stations, of which 20 LNG.
FUEL MAKER AGREEMENT WITH SIAD: LNG AND BIO-LNG FOR SUSTAINABLE An effective response to the needs of many MOBILITY businesses, who would In March 2021 Snam and SIAD, a leading chemical group like to switch to C-LNG in the production and supply of industrial gases and in the but do not have a nearby Engineering, Healthcare, LPG and Natural Gas sectors, have gas station. For this signed a framework agreement to start a technological reason Cubogas has collaboration in the small-scale and mid-scale liquefaction produced “Fuel Maker”, sector. The aim of the agreement is to foster the use which can be installed of LNG and Bio-LNG as alternative fuels for sustainable directly "at home" of mobility and other end uses. As part of the collaboration the fleet, at its facilities between Snam and SIAD, a project will be launched in and internal parking Campania in 2021, with a capacity of 50 ktpa (small- lots, optimizing logistics scale), which has already obtained European funding. The and vehicle refueling plants, which will be operated by Snam, will also ensure times. The Fuel Maker, the security of LNG and Bio-LNG supply to other regions in fact, can fill up to of Southern Italy, shortening the chain between supply four vehicles with natural gas at the same time, wanting and end users and serving a rapidly growing market. LNG even at night, at a cheaper rate than at the pump, without trucks have registered quite an increase in Italy in the last forgetting that those who install it benefit from a tax five years from fewer than 100 to about 3,000 units and credit that can reach up to 50% of the investment. Fuel there are now around 90 filling stations. Maker has a development potential also abroad. For this was signed a partnership with Piaggio Veicoli Commerciali and Iveco to offer Fuel Maker in co-marketing with the City Truck Porter and the Daily Iveco methane.
energy to inspire the world 29
HYDROGEN
Snam has launched a Business Unit focused on hydrogen, with the aim of being at the forefront in a sector with great prospects. The company intends to focus on new technologies and continue the experiments and activities to support the development of the hydrogen value chain.
Investments of at least € 150 mln are planned to 2024, dedicated to the conversion of the first railway lines from diesel to hydrogen and the installation of fuel cells for Snam’s own energy consumption.
Strategic parnerships and supervision of new project, together with FNM and Trenord, to create the technologies first Italian “Hydrogen Valley”, in Lombardy, in particular in Sebino and Valcamonia, with the objective of creating With the intention of implementing new technological a fleet of hydrogen trains and associated infrastructure, solutions for the energy transition based on green hydrogen starting in 2023. In December a project was implemented and the capture and reuse of CO2, Snam has developed by Snam, Tenaris and Edison to experiment with the multiple partnerships to acquire technical skills, improve its production of steel using green hydrogen, to contribute technological position and become more competitive to decarbonisation of the iron/steel sector. The project In November Snam announced the acquisition of a calls for the use of green hydrogen in the Tenaris steel significant minority stake inDe Nora, which was finalised mill in Dalmine (Bergamo). In February 2021 Snam and on 8 January 2021. In addition to being a global innovator in Hera announce that they have signed a Letter of Intent sustainable energies and technologies for water treatment for a technological collaboration aimed at developing and a global technological leader in alkaline electrodes, hydrogen, for their own areas of activity respectively. with significant knowledge in the electrochemical field, The aim is to test and subsequently implement a number the Company also holds a 34% stake in ThyssenKrupp of solutions able to respond to the decarbonisation Uhde Chlorine Engineers (TKUCE), a joint venture with needs of the Emilia-Romagna region in a cross-cutting ThyssenKrupp, a world leader in water electrolysis, involved manner, from production to mobility to individual citizens. in multiple major projects for green hydrogen production. In This agreement will also contribute to promote the November Snam also signed an agreement with ITM Power, development of renewable energies in Italy, in line with the one of the major global manufacturers of electrolysers. guidelines set out by the European Union.
Collaborations to reduce the cost of production of The Indian market green hydrogen In November 2020 Snam signed another agreement In December, Snam announced its participation in a for the hydrogen business with Greenko to support global coalition of seven companies. Through the “Green the development of the hydrogen supply chain in India, Hydrogen Catapult” initiative, they aim to develop 25 MW studying methods for producing hydrogen from renewable in green hydrogen production capacity by 2026, halving sources, designing hydrogen-ready infrastructure current production costs, bringing them to less than $2/ and applying those solutions to both industry and kg. This threshold is the turning point to make green transportation. hydrogen and its derivatives (such as green ammonia) the ideal energy resource for various sectors, from the United Arab Emirates manufacturing of steel to fertilisers, from electricity In March 2021 Snam and Mubadala have signed a generation to long haul shipping, for which there is Memorandum of Understanding (MoU), with the aim potential short-term demand in Europe and globally. to collaborate on joint investment and development Collaborations in the hydrogen value chain, also initiatives on hydrogen. The two companies will carry out at the international level a number of assessment activities, including technical and economic feasibility studies to explore potential In 2020 Snam continued to develop hydrogen applications projects and solutions to foster and promote hydrogen in the industrial sector for railway transportation, thanks development in the UAE, and elsewhere globally. to cooperative projects begun with Ferrovie dello Stato Italiane and Alstom. Snam is involved in the H2iseO
Snam - The Snam shareholder 2021 SNAM ON THE STOCK EXCHANGE
Snam shares have returned great value to shareholders over time. From 11.9 billion euros in 2012 to 15.5 billion euros as of 31 March 2021 the increase in market capitalization. Over 14.5 billion euros total amount of dividends distributed over the last 20 years as listed Company. 31
REMUNERATION THROUGH DIVIDENDS
Positive results in 2020 as well as solid business fundamentals allow Snam to propose a dividend of 0.2495 Payout % euros per share, to the Shareholders’ Meeting, of which:
■ 40%, i.e. 0.0998 euro per share, already paid in January 77.7 2021 as an interim dividend; 71.6 74.1
■ the remaining 60%, equal to 0.1497 euro per share, as a balance dividend to be paid from 23 June 2021 with an ex-dividend date of 21 June 2021 (record date 22 June 2021).
The proposed dividend is in line with the dividend policy announced in the Strategic Plan (+5% CAGR until 2022, with a further minimum growth of 2.5% in the period 2023-2024); it also confirms Snam commitment to ensuring an attractive and sustainable remuneration to 2018 2019 2020 shareholders over time. Dividends for the period/Net profit.
Dividend per share (€ cent - for the period)
Italgas separation 26.20 25.00 25.00 25.00 25.00 24.95 24.00 23.76 23.00 23.00 22.63 21.55 21.00 21.00 20.00 20.00 20.00 19.00 17.00 16.00
9.00
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E
Snam - The Snam shareholder 2021 32
STOCK MARKET PERFORMANCE
Share capital evolution
3,570,768,494 3,381,638,294 3,469,038,579 3,360,857,809 1,955,000,000 1,956,318,100 3,571,187,994 3,500,638,294 3,394,840,916
2001 2005 2007 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
After buy After capital After After capital After back increase for cancellation increase for cancellation of the acquisition of treasury TAG acquisition treasury shares of Italgas and shares(189.549.700) (501.9 € mln) (74,197,663) Stogit(3.47 Extraordinary € bn) Sale of Eni’s stake Eni’s stake is Eni’s stake Eni’s stakeis 0.02% After After dividend of 1.96 (30% + 1 share) and 8.54%; shares reduced to following the cancellation cancellation € bn accelerated book subordinated to 2.2% completion of treasury of treasury building of 5% bonds, convertible following of the bond shares shares into Snam’s the bond conversion (31,599,715) (33,983,107) shares, issued on conversion process the market
Market capitalization(*) (€ billion)
Italgas separation
17.00
15.5 15.4 15.0 14.4 13.7 13.6 13.9 12.6 12.6 11.9 11.7 11.4
8.4 7.9 7.7 6.8 7.0 6.3 6.6 5.5 5.8 06.12.2001 31.12.2001 31.12.2002 31.12.2003 31.12.2004 31.12.2005 31.12.2006 31.12.2007 31.12.2008 31.12.2009 31.12.2010 31.12.2011 31.12.2012 31.12.2013 31.12.2014 31.12.2015 31.12.2016 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.03.2021
(*) Product of the number of outstanding shares multiplied by the official share price.
energy to inspire the world 33
Snam vs. FTSE MIB and STOXX Europe 600 Utilities
31 December 2019 - 31 March 2021 (Base 31 December 2019=100)
120,0
110,0
100,0
90,0
80,0
70,0
60,0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr 2020 2020 2020 2020 2019 2020 2020 2020 2020 2020 2020 2020 2021 2021 2021 2021
SNAM STOXX EURO 600 UTILITIES FTSE MIB
Analysts’ recommendations Target price as at 31 March 2021 (€)
6.0
10% 5.0
30%
3.5
60%
Hold Buy Sell Low Average High
The Snam stock is covered by 21 brokers. Snam’s closing price as at 31 March 2021 is 4.73 euro.
Snam - The Snam shareholder 2021 34
SHAREHOLDERS
As of 31 December 2020 Snam share capital amounts to 2,735,670,475.56 euro and is divided into 3,360,857,809 ordinary shares, with no nominal value. Snam is one of the few Italian listed companies with free float higher than 50%. Snam’s shareholding structure is broad and well-diversified, by both investor type and geographical distribution. With a 64.9% free float, today the market controls the most relevant stake of Snam share capital. Institutional investors hold an overall 48% stake and are mostly international. Retail investors, who have always had a sizeable weight in Snam’s share capital, currently account for a 16.8% share, including the holdings (7.5%) of Romano Minozzi. CDP Reti is the shareholder controlling the single largest stake in Snam (31.4%). ESG investors represent 34.1% of Snam’s institutional investors.
Shareholding Shareholders' structure geographical September 2020 update breakdown September 2020 update
9.4% Retail investors 32.4% Italy - Strategic holders(*) 48% Institutional investors 16.8% Italy - Retails(**) 1.0% Bank of Italy 3.1% Italy - Institutionals 31.4% CDP Reti 13.2% Continental Europe 7.5% Romano Minozzi 10.2% UK and Ireland 2.7% Treasury shares 16.8% USA and Canada 4.8% Rest of the World 2.7% Treasury shares
(*) Italy - Strategic holders includes Bank of Italy and CDP Reti. (**) Italy - Retails includes the shares held by Romano Minozzi (7.5%).
Relevant participations (shareholders owning more than 3% of Snam capital) (February 2021 update)
CDP Reti 31.4% (1,053,692,127 shares held) Romano Minozzi 7.5% (250,687,453 shares held) BlackRock 5.161% (173,447,961 shares held) Lazard 5.038%
Sources: Information available and communications received pursuant to Article 120 of the Testo Unico della Finanza (Consolidated Finance Act).
energy to inspire the world 35
THE FINANCIAL STRUCTURE
As at 31 December 2020, the Group’s net financial position was € 12,887 mln, resulting from a gross financial debt of € 15,937 mln and liquid funds and equivalents of € 3,050 mln
CAPITAL MARKET: 2020 BANKING MARKET: 2020 TRANSACTIONS TRANSACTIONS
In June Snam concluded the issue of its first Transition At the end of 2020, Snam has unused committed long- Bond, which followed the first Climate Action Bond, issued term credit facilities (“Sustainable Loan”) for an amount in 2019, for a sum of 500 million euros, with an annual of approximately 3.2 billion euros. During the year, as coupon of 0.75% maturing on 17 June 2030. Moreover, part of the process to optimise the financial structure of in November, Snam issued a second Transition Bond for Group, their duration was extended without an increase a sum of 600 million euros, with an annual coupon of 0%, in margins. Moreover, in May Snam maintained the a re-offer of 99.728%, maturing on 7 December 2028: reduction of the margin for the “Sustainable Loan” that that issue was structured as the longest bond loan with a had been obtained previously in April 2019 following coupon equal to 0% to have ever been issued by an Italian the achievement of the objectives linked to social and issuer, when it was issued. environmental sustainability parameters. In December, Snam successfully completed a buyback In order to increase the proportion of total available on the bond market of bonds (Liability Management) funding represented by sustainable finance, the Euro with a total nominal value of around 629 million euros, Commercial Paper programme was renewed, rising from 2 with an average coupon of approximately 0.62% and a billion to 2.5 billion euros, linking it to environmental and remaining maturity of approximately 2.80 years. The total social sustainability targets in line with the Sustainable disbursement resulting from the buy back of securities as Loan and with the instrument obtaining an ESG rating of EE part of the Liability Management transaction stood at 651 assigned by the ESG rating company Standard Ethics. million euros, including the fees paid to intermediaries and As at 31 December 2020, Snam had an active Euro Medium accrued interest (4 million euros in total). Term Notes (EMTN) programme with a total nominal maximum value of 11 billion euros, of which it has used approximately 8.2 billion euros.
Breakdown Last 11 January 22 February 22 January by rate update 2021 2021 2021
Rating on long-term Baa2 BBB + BBB + 67% Fixed rate 33% Variable rate debt
Rating on short-term P2 A-2 F2 debt Breakdown by duration
Outlook Stable Stable Stable
35% Short term 65% Long term
Snam - The Snam shareholder 2021 36
INCOME STATEMENT FIGURES
2020 adjusted 2018 2019 2020 vs 2019 adjusted Adjusted (*) (million of E) Reported Adjusted (*) Reported Adjusted (*) Change % change 2,429 Regulated revenues (**) 2,491 2,491 2,548 2,548 57 2.3 51 Non-regulated revenues 30 30 30 30 0 0.0 2,480 Core business revenues 2,521 2,521 2,578 2,578 57 2.3 50 New business revenues 85 85 192 192 107 2,530 TOTAL REVENUES (**) 2,606 2,606 2,770 2,770 164 6.3 Core business operating (385) (316) (351) (437) (393) (42) 12.0 costs (**)
(50) New business operating costs (86) (86) (180) (180) (94) (435) TOTAL OPERATING COSTS (**) (402) (437) (617) (573) (136) 31.1 2,095 EBITDA 2,204 2,169 2,153 2,197 28 1.3 Amortisation, depreciation (690) (752) (752) (773) (773) (21) 2.8 and impairment losses
1,405 EBIT 1,452 1,417 1,380 1,424 7 0.5 (195) Net financial expense (203) (165) (158) (126) 39 (23.6) Net income from equity 159 216 216 249 249 33 15.3 investments
1,369 Pre-tax profit 1,465 1,468 1,471 1,547 79 5.4 (359) Income tax (375) (375) (370) (383) (8) 2.1 1,010 Net profit 1,090 1,093 1,101 1,164 71 6.5 - Attributable to parent 1,010 1,090 1,093 1,101 1,164 71 6.5 company shareholders - Minority interests
(*) The values exclude special items. (**) Starting 1 January 2020, the cost components that are offset in revenues (so-called pass-through items), essentially attributable to interconnection, are recognised as a direct reduction of the corresponding revenue (53 million euros in 2020). Similarly, the relative values from previous years (59 and 56 million euros respectively for 2019 and 2018) have been restated.
Adjusted ROE Adjusted ROI 18.3% 17.9% 8.0% 7.9% 16.6% 7.6%
2018 2019 2020 2018 2019 2020
Adjusted Return On Equity (ROE) has been calculated Adjusted Return On Investment (ROI) is the ratio of EBIT as the ratio of net profit and the average of net equity and the average of net invested capital at the start at the start and at the end of the period considered. and at the end of the period considered.
energy to inspire the world 37
BALANCE SHEET FIGURES
(million of €) 31.12.2019 31.12.2020 Change
Fixed capital 19,311 20,260 935,949
Property, plant and equipment 16,439 16,815 376
- of which right-of-use leased assets 21 21
Non-current inventories - Compulsory inventories 363 363
Intangible assets and goodwill 990 1,125 135
Equity investments accounted for using the equity method 1,787 1,923 136
Other financial assets 44 421 363377
Net payables for investments (312) (387) (75)
Net working capital (1,094) (861) 233
Provision for employee benefits (46) (40) 6
Non-current assets held for sale 10
NET INVESTED CAPITAL 18,181 19,359 1,164178
Shareholders’ equity 6,258 6,472 200214
- Shareholders’ equity pertaining to Parent Company shareholders 6,255 6,469 200214
- Minority interests 3 3
Net financial debt 11,923 12,887 964
- of which financial payables for leased assets (*) 21 21
COVERAGE 18,181 19,359 1,178
(*) Including non-current lease liabilities (15 million euros) and the current portion of non-current lease liabilities (6 million euros).
Tariff RAB (€ billion) Net financial debt (€ billion)
20.3% 20.4% 20.6% 12.9% 11.5% 11.9%
2018 2019 2020E 2018 2019 2020
Snam - The Snam shareholder 2021 38
CASH FLOW
(million of €) 2019 2020
Net profit 1,090 1,101
Adjusted for:
- Amortisation, depreciation and other non-monetary components 527 523
- Net capital losses (capital gains) on asset sales and write-offs 8 13
- Dividends, interest and income taxes 552 504
Change in net working capital (264) (224)
Dividends, interest and income taxes collected (paid) (427) (320)
Cash inflow from operating activities 1,486 1,597
Technical investments (954) (1,166)
Technical divestments 0 2
Acquisition of subsidiaries and businesses, net of liquidity acquired (41) (30)
Equity investments 12 (193)
Change in non current financial assets (5) (298)
Other changes relating to investment activities (16) 53
Free cash flow 482 (35)
Repayment of financial payables for leased assets (6) (7)
Change in current and non-current financial liabilities 1,285 1,133
Change in current financial assets (5)
Equity cash flow(a) (782) (893)
Net cash flow for the year 979 193
(a) Includes cash flow and payment to shareholders of the dividend.
Technical investments (€ million) Free Cash flow (€ million) 1,189
963 882
1,161
482
2018 2019 2020 -35 2018 2019 2020
energy to inspire the world
GET INVOLVED IN YOUR SNAM INVESTMENT
Interim Financial Report at 31 March 2021 ■ 11 May 2021 Board of Directors ■ 12 May 2021 Press release and Conference call
Dividend 2020 ■ 21 June 2021 Coupon payment date ■ 23 June 2021 Dividend payment
Half-year report at 30 June 2021 ■ 29 July 2021 Board of Directors, Press release and Conference call
Interim Financial Report at 30 September 2021 ■ 3 November 2021 Board of Directors ■ 4 November 2021 Press release and Conference call
Strategic Plan 2021-2025 ■ 24 November 2021 Board of Directors ■ 25 November 2021 Strategy presentation 41
THE STEPS TO INVESTING You can buy Snam shares on the stock market, through a financial intermediary: a bank or an authorized SIM (Società di Intermediazione Mobiliare, i.e. a broker)
HOW TO BUY SHARES HOW TO COLLECT DIVIDENDS
It is very easy to buy shares: all you need is to have a Once you have become a shareholder, the dividend bank account. You have to indicate how many shares you will be paid automatically to your account. Once you want to buy and, if appropriate, the price at which the hold a certain number of shares, you do not need to do transaction should be completed. anything in order to receive the respective dividends.
To buy Snam shares you need to have an account with an If you still own the shares when the coupon is detached, authorized intermediary: a bank or a SIM. You can place on payment date the amount will be directly paid to your the purchase order through the intermediary or through account through the financial intermediary managing your the online trading systems that the intermediaries make brokerage account. available for their clients. In the purchase order you have to specify the number of shares you want to include in You can monitor the performance of your portfolio, indicating a price limit and a time limit for your investment in Snam by: the order’s validity, if appropriate. A market-to-limit order will be executed buying the ■ visiting the Snam website, www.snam.it, section maximum number of shares available at the lowest price Investor Relations; at that time. The intermediary issues the “executed order” ■ visiting Borsa Italiana website, www. borsaitaliana.it, when completed. Shares listed on the stock market are section quotes/stocks; “dematerialized” securities – therefore following the purchase you will not receive any actual printed share ■ consulting leading financial newspapers and websites. certificate. The intermediary’s written confirmation is proof that the shares should be credited to the shareholder’s account.
Snam - The Snam shareholder 2021 42
HOW TO KEEP YOURSELF INFORMED AND PARTICIPATE IN CORPORATE EVENTS
Information tools are available through different communication channels
CORPORATE WEBSITE INVESTORS PUBLICATIONS
Snam’s website www.snam.it is the preferred reference Among contents of its INVESTOR RELATIONS section point to visitors looking for real-time Company’s news Snam website presents the subsection INVESTORS and contents useful for deeper knowledge. A "destination PUBLICATIONS, in which you can find the complete site" appreciated for the its functionality, richness of series of the issues of different products, aimed to keep content and transparency, such as also demonstrates shareholders informed about results and perspectives the confirmation of Snam in 2020 in the second place in of Snam. Besides the issues of this Guide “The Snam «Webranking by Comprend», which evaluates the quality Shareholder”, there is also “Il metanino”, an annual of communication and the transparency of the 122 major publication that provides an overview on the main aspects companies listed on the stock exchange. Snam is also and developments of the European and international gas among the eight Italian companies to have obtained five market. Through these contents, the energy context in stars, the maximum reputation, for digital communication. which Snam operates takes shape.
“SNAM SHARE” SECTION SNAM APPS
From the INVESTOR RELATIONS section you can go to the Snam has developed two apps, “The Snam Network App” sub-section “SNAM SHARE”. Snam shares’ performances and “Snam Reports”, for iPad, tablet and iPhone. The apps can be calculated and displayed over a certain time are downloadable for free. span, even comparing them with those of peers and of benchmark indices.
THE PRESENCE ON SOCIAL MEDIA
Snam is increasingly active on Twitter, posting and interacting with stakeholders, especially during events and shows. You can learn more and follow news about Snam also on Facebook and LinkedIn. Group videos and photos are shared on YouTube, Instagram and Flickr, while presentations are available on Slideshare.
Paper copies of the disclosure documents are available Contacts: [email protected] at the Company’s registered office or with Borsa Italiana S.p.A. ■ Francesca Pezzoli, Head of Investor Relations If you wish to receive information documents by mail, [email protected] please ask the Investor Relations department. ■ Giovanni Belloni [email protected] For a better understanding of technical terms, you can ■ Pietro De Luca [email protected] refer to the glossary available on the corporate website ■ Francesca Olgiati [email protected] homepage. ■ Maria Daniela Maselli [email protected]
energy to inspire the world 43
GLOSSARY
Economic-financial terms
Treasury shares Shares owned by the Company, which it has provisions made in prior years, from the disposal of Company assets repurchased for a variety of objectives. or from other corporate strategies. Compound Annual Growth Rate (CAGR) Compound Average Growth Dividend yield It measures the yield of an equity investment linked to Rate. the dividend distribution, in terms of percentage ratio of dividend for Corporate governance Set of rules that monitor and guide the the fiscal year to the share price at the end of the year. companies’ management and control. The corporate governance Capital gain It measures the return of an equity investment linked systems establish the segregation of duties and rights amongst the to price changes, in terms of the percentage ratio share price at the corporate roles by assigning tasks, responsibilities and decision- beginning of the period to share price at the end of the period. making powers. Total shareholder return (TSR) It measures the overall percentage Market capitalization Value of a listed company that is obtained by return of an equity investment, calculated on an annual basis, multiplying the share price by the number of outstanding shares. considering both the price change, measured in terms of capital gain, Ordinary and extraordinary dividend The ordinary dividend stems and the dividend yield, assuming that the distributed dividend is re- from earnings. In the case of an extraordinary dividend, however, invested in the stock at the ex-dividend date. shareholders receive, rather than a share of net profit, a part of WACC Weighted Average Cost of Capital. the Company’s distributable reserves. This amount may come from
Technical terms Compression Stations Facilities that increase the pressure of gas in to the Shipper and where it is measured. the pipelines to bring it to the necessary level to ensure the required Natural Gas Transportation Network The network consists of gas flows or facilities that lower the gas pressure to allow the pipelines, compression stations and infrastructure, which work both injection into storage fields. The Compression Stations are positioned at national and regional levels, to ensure the transportation of gas along the National Pipeline Network and generally comprise several by interconnections to the international networks, to production and compression units. storage facilities, to the redelivery points (for gas distribution and Dispatching centre Operating centre continuously controlled, consumption). which is responsible for monitoring, overseeing and remote National Gas Pipeline Network The network comprises pipelines control of the transport network. The dispatching centre receives and plants that are sized and checked to meet the requirements telecommunication information about the gas pressure, capacity for imports, exports and the main national production and storage and temperature as well as about the state of the valves at the facilities; the pipelines transfer large quantities of gas from entry interception of the pipelines and of the Compression Stations. On points to large areas of consumption. the back of the information received and according to transport Regional Transportation Network The network consists of a pipeline programs, the Dispatching Centre regulates gas flows, remotely that allows natural gas to be transported across geographic areas, controlling valves and compression units. typically at a regional level. Natural gas Mixture of hydrocarbons, composed mainly of methane Shipper or User User of the gas system. Shippers purchase natural and with some small amounts of ethane, propane and higher gas from producers, importers or other Shippers and sell it to hydrocarbons. The natural gas injected into the pipeline network other Shippers or to final users, including electricity producers and must respect a set quality to guarantee its compatibility with the gas industrial plants, which are usually connected to the Transport already in the pipelines. Network, or to the residential and commercial clients, which are Liquefied natural gas (LNG) Natural gas, which has been liquefied connected to the local distribution network, or to other Shippers. by cooling at - 161°C under normal atmospheric pressure in order Modulation storage Modulation storage aims to respond to changing to make it suitable for transportation by special ships (tankers) or hourly, daily and seasonal demands. for storage in tanks. In order to be injected into the transportation Mining storage Mining storage is necessary for technical and network, the liquid product must first be reconverted into its gas economic reasons in order to enable the optimum cultivation of state in regasification plants and brought up to the pressure in the Italy’s natural gas fields. pipelines. Strategic storage Strategic storage aims to compensate for a lack of Redelivery point The physical point or local group of physical points or reduction in supplies, either from import or for crises in the gas on the network where the Transporter redelivers the transported gas system
Regulatory terms Thermal year Period of time into which the regulatory period is Regulatory period Period of time for which the regulation is defined divided for the businesses of natural gas transport, storage and by the Authority for each different sector. distribution as well as for LNG regasification. Regulatory Asset Base (RAB) Value of net invested capital calculated Regulated activities Activities subject to regulation by the Regulatory as per the criteria established by the Regulatory Authority for Authority for Energy, Networks and Environment. In the gas business Energy, Networks and Environment for companies operating in transportation, distribution, storage and regasification are regulated the transportation and dispatch of natural gas, LNG regasification, activities. storage and distribution in order to set the reference revenue. Network Code Document governing the rights and obligations of the parties involved in providing the transportation service.
Snam - The Snam shareholder 2021
By Snam
Concept & Design Inarea e Gosmarty
Layout Gosmarty
For information: Snam S.p.A. Investor Relations [email protected] T. +39 02 3703 7272 Piazza Santa Barbara, 7 20097 San Donato Milanese (Milano) - Italia www.snam.it
April 2021 snam.it