Results⁴

Adjusted results⁵

EBIT adjusted (€ million)

Due to soundness of operational management and rigorous financial discipline, Snam achieved very positive results in 2017. Adjusted EBIT⁶ totalled €1,363 million, up €27 million (2.0%) compared with the same value from the 2016 financial year. The higher revenues (+€26 million, 1.1%), mainly attributable to the natural gas transportation and storage sectors, and lower operating costs (+€9 million, or 2.1%), also due to the effects of the Efficiency Plan (+€19 million), were partially offset by the increase in amortisations and depreciations for the period (-€8 million, or 1.2%), mainly due to the amortisation deriving from the entry into service of new infrastructure, which was partly absorbed by lower impairment of tangible assets.

As regards business sectors, the increase in adjusted EBIT essentially reflects the positive performance recorded by the transport sector (+2.6%, + € +27 million).

Free cash flow +€423 million

Adjusted net profit stood at €940 million, up €95 million (+11.2%) compared to the adjusted pro-forma net profit for 2016. The increase, in addition to the greater operating profit, was due to:(i) lower net financial expenses (+€36 million, or 13.7%), which benefitted from a reduction in the average cost of debt, as well as benefits deriving from optimisation actions carried out during the period 2016 and 2017, in particular, the liability management operation completed in October 2016 and the financing operations carried out during the year, as well as the reduction in average debt for the period; (ii) higher net income from investments (+ €15 million, +11.1%); (iii) lower income taxes (+ €17 million, or 4.7%) mainly attributable to the reduction from January 1, 2017 of the IRES rate from 27.5 to 24.0%, partially offset by the higher pre-tax profits.

Net financial debt was €11,550 million as at 31 December 2017, compared with €11,056 million as at 31 December 2016.The net cash flow from operating activities (€1.864 million) allowed us to fully cover the financial requirements associated with net investments for the period equal to €1.441 million, including investments in shareholdings, and to generate a free cash flow of €423 million. Net financial debt, after the payment to shareholders of the 2016 dividend (€718 million) and the cash flow deriving from the purchase of treasury shares (€210 million), shows an increase of €494 million compared to 31 December 2016, including non-monetary components related to financial indebtedness (€ 11 million).

Dividends

Our healthy results and solid business fundamentals allow us to propose a dividend of €0.2155 per share to the Shareholders’ Meeting, of which €0.0862 per share was paid in January 2018 as an interim dividend and the balance of €0.1293 per share will be paid from 18 June 2018 (record date 19 June 2018), confirming Snam’s commitment to an attractive and sustainable remuneration of its shareholders over time.

Breakdown of added value

At Snam, sustainability and the creation of value are strongly connected concepts. Sustainability creates value for the Company and stakeholders, and establishes a connection between the business and corporate social responsibility. The Company produces wealth by contributing to the economic growth of the society and environment in which it operates, and it measures this wealth in terms of added value produced and distributed to its key stakeholders.

Snam calculates the added value taking inspiration from the standard prepared by the Gruppo di Studio per il Bilancio Sociale (GBS) and the GRI Standards.

The table below is useful for understanding the Group’s economic impact and makes it possible to read the consolidated financial statements from the standpoint of stakeholders.

To this end, it should be noted that the calculation of the Value Added in 2017 was made on the basis of the values drawn from the legal scheme of the Income Statement. As for 2016, also due to the elements of discontinuity that characterised this year, we used the income statement values referring to continuing operations.⁷
In 2017, the gross global added value produced by Snam was €2,447 million: a slight reduction (€71 million, 2.8%) compared to 2016 (€2,518 million). The reduction is mainly due to the effects of the separation from Snam of natural gas distribution activities completed in 2016, which generated extraordinary financial income related to the repayment to Snam by the demerged companies, of the financial debts outstanding at the relative market value.

A total of 33.8% of the gross global added value produced by Snam was reinvested within the Group (in line compared with 2016: +9.8%), and intended essentially for the amortisation and depreciation of the intangible and tangible fixed assets used in the production process (100% in 2016).

Breakdown of added value

With regard to the main reference stakeholders, 2017 shows a stable incidence of Added Value distributed to employees (10.2%; -0.1% compared to 2016) through direct remuneration consisting of wages, salaries and employee severance indemnity and indirect remuneration consisting of social charges and personnel service costs (canteen services, travel expenses reimbursement), whilst there was an increase in the value destined for the Public administration through the payment of direct and indirect taxes (14.0%, +1.2% compared to 2016), mainly attributable to the higher pre-tax profit, despite the reduction of the IRES tax rate from 27.5% at 24.0%, which started on 1 January 2017.With reference to lenders, there was a reduction in the value distributed of 12.3% (11.9%; 24.2% in 2016) also against the benefits deriving from the optimisation actions implemented in 2016 and 2017, in particular the operation of liability management completed in October 2016.The value distributed to shareholders through distributed dividends is up (29.9%, +1.3% compared to 2016) despite the lower number of shares outstanding following the repurchase of treasury stock carried out by Snam as part of the share buyback program launched in November 2016.Lastly, an amount of approximately €5 million was designated for local communities (0.2% of the value generated) through donations and sponsorship initiatives and environmental compensation pursuant to the law.

In addition, for the protection of the environment, Snam has incurred expenses for a value of approximately 120.6 million € (108.4 million € for investments and 12.2 million € for operating costs).