Snam S p A : 1H 2023 Consolidated Results - TRANSCRIPT

First Half 2023 Consolidated Results Conference Call

Thursday, July 27, 2023, 15:00 PM CET

Investor Relations Snam T [phone] [e-mail]

MODERATORS: STEFANO VENIER, CHIEF EXECUTIVE OFFICER LUCA PASSA, CHIEF FINANCIAL OFFICER

OPERATOR:	Good afternoon. This is the Chorus Call conference operator. Welcome,
	and thank you for joining the Snam First Half 2023 Consolidated Results
	Conference Call. As a reminder, all participants are in listen-only mode.
	After the presentation, there will be an opportunity to ask questions. Should
	anyone need assistance during the conference call, they may signal an
	operator by pressing "*" and "0" on their telephone.
	At this time, I would like to turn the conference over to Ms. Francesca
	Pezzoli, Head of IR. Please go ahead.

FRANCESCA PEZZOLI: Good afternoon, ladies and gentlemen, and welcome to Snam H1 2023 consolidated results. Today's presentation will be hosted by our CEO, Stefano Venier and by our CFO, Luca Passa. In the presentation, Stefano will provide an overview of the H1 results, the key highlights of the period and an update on the delivery of the Strategic Plan. Luca will talk you through the financial performance, then back to Stefano for closing remarks, and finally the Q&A session.

And now let me hand over to Stefano.

STEFANO VENIER: Good afternoon also on my side. Let's start on Page 2. Gas demand declined by more than 16% on the first half. Gas prices were on average 55% below H1 2022, and experienced significant volatility showing the fragility of the energy system. Domestic gas flows continue to be impacted

pag 2 / 23

by geopolitical situation, the declining volumes from North was offset by a 20% increase of LNG import and lower demand by 16%.

On the regulatory front, we had the approval by the regulator of the output base incentives on fully amortized assets for the years 2023 and 2024, those were in line with the expectation as well as of transport and LNG tariffs.

The new Italian Integrated National Energy Plan that is so called PNIEC aligned with the most recent EU directives approved, was filed to Europe. It first sets ambitious decarbonisation target, second fully recognized the role of gas to grant security of supply and resilience, and third, support the role of Italy as energy hub.

With reference to our activity, the key elements are the confirmation of the role of biomethane whose contribution is maximized to about 6 bcm by 2030, representing approximately 10% of the gas demand mix. The relevance of hydrogen also via import and the recognition of the CCS, carbon capture and segregation opportunity to reach the decarbonisation targets set. This is fully consistent with our strategy and Business Plan targets.

The first half results were solid. EBITDA adjusted was up 5.7% or €66 million year-on-year. Net profit adjusted reached the €621 million down 3.9% year- on-year, affected by the higher D&A and the cost of debt. Investment reached the €734 million down 23% year-on-year due to the acquisition of the first vessel that happened in H1 2022.

Technical investment vice versa are instead up 33% year-on-year supported by completion of the Piombino and the start of works in Ravenna. Net debt increased to €14.6 billion as effect of the expected reversal of working capital.

Looking at the portfolio of our associates, on April the 4th, along with the other co-shareholders we successfully placed 5.7% De Nora shares via an

pag 3 / 23

Accelerated Book Building to increase free float. The deal generated cash in of approximately €144 million and a capital gain of about €76 million. Then, on the 7th of July, Nucera the joint venture between Thyssenkrupp and De Nora was successfully listed, thus further crystalizing the De Nora value.

Finally, new weighted average cost of capital of gas transmission in Greece was lifted to 7.85% for the regulatory period between 2024 and 2027. This will support the profitability of our associate Desfa while increasing the visibility of the results.

Now moving to Slide 3, beyond the financial performance we made significant achievements on security of supply. The Golar Tundra floating vessel started operations at the beginning of July in Piombino. Tariffs for the period 2023-2024 were set, and almost all the capacity sold for the next 20 years going forward.

Storage level is about 87% with a smooth infilling curve. A constructive dialogue with Italian and European institution is ongoing for a possible allocation of Repowering EU funds to some of the Snam's projects, starting with the first phase of the Adriatic pipeline construction.

Moving to energy transition, the relevance of the South H2 Corridors was reiterated by Italian and German Prime Ministers during the bilateral meeting held in June. Germany that is leading the way in terms of H2 market design and development has started to outline and define the core H2 network involving the gas TSOs, in order to have an infrastructure that connects key import, production and consumption areas, maximizing the repurposing.

Moving to Snam, we further progress on the third party appraisal of the H2 readiness for our network. Now with more than 1,500 kilometres of pipes certified by RINA, 2 times the full year 2022 levels. Our partners in the energy transition are obtaining relevant accomplishment as well. dCarbonx

pag 4 / 23

was awarded a gas storage license over the depleted Bains gas field the East Irish Sea with possible hydrogen upside in the future, while De Nora Italy Hydrogen Technologies, Snam and De Nora joint venture has signed a decree granting public funding of €32 million to finance the Gigafactory project, out of the 63m allowed under EU state aid rule.

I will now mention some relevant issues regarding our sustainability profile: CAPEX aligned to Taxonomy and SDGs represent respectively 37% and 56% of the total and sustainable finance reached ca 75% of funding. The efforts to reduce leakages are progressing and methane emissions are down by a remarkable 32% versus the first half 2022, which correspond to about 53% for full 2023 versus 2015, well ahead of the UNEP target of 45% reduction by 2025.

Then Snam has been included in the CDP Climate A list, which ranks companies for their commitment, transparency, and action on climate change. Also, we recently published a paper to describe our climate advocacy position, reiterating our commitment to the Paris Agreement and the Tax Transparency framework.

From a recent employee survey carried out emerged an engagement level well above the 70%-75% threshold set in our ESG scorecard, combined with an high participation rate of 80%. We also got 2 new important certifications on anticorruption and gender equality.

Page 4. Let me provide an update on the successful delivery of our Strategic Plan. On transport, output based incentives on fully depreciated assets were approved, effective January the 1st. We received a green light from ARERA and the government for the development of the Adriatic line. Strategic project submitted to the Italian government for the allocation of the RePower EU public funds, as I mentioned before.

pag 5 / 23