Snam Spa

Good afternoon. This is the Coral School Conference Operator. Welcome and thank you for joining the SNAM full year 2024 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 star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Francesca Pezzoli, Head of Investor Relations of SNAM. Please go ahead, Madam.

Good afternoon, ladies and gentlemen, and welcome to the presentation of SNAM full year 24 consolidated results approved by the board today. The presentation will be hosted by SNAM CEO Stefano Venier and by SNAM CFO Luca Passa. In the presentation, Stefano will provide an overview of the strong financial and industrial results delivered over the last two years, the most relevant achievements on our ambition to build the pan-European multi-molecules infrastructure player and key market highlights of the period. Luca will provide the financial performance overview, which has been remarkable as well, the emission reduction progresses and the 2025 guidance. Then back to Stefano for closing remarks and finally the Q&A session. I will now hand over to Stefano.

Thanks, Francesca, and good afternoon, ladies and gentlemen. Over the past years, we made significant progress in strengthening security of supply while reducing our carbon footprint, leading the way toward a decarbonized energy system, and establishing the foundations for long-term growth and decarb opportunities. During this period, we conducted M&A activities coherent with our asset footprint to bolster a systemic approach to the energy system. Concurrently, we worked with our associates to support their growth and maximize their value and implemented asset rotation online with our strategic focus on key energy corridors in Europe and the MED area. We achieved a double-digit growth in an environment marked by fluctuating gas demand and prices, changes in gas flows and rising interest rates. The energy market and geopolitical situation continue to be unsettled, emphasizing the need for reliable, affordable and prospectively decarbonized energy supply. These accomplishments were achieved while providing attractive remuneration to shareholders and maintaining full financial flexibility. Since the beginning of the energy crisis, SNAM has achieved significant milestones and delivered remarkable results. On the operational front, focusing on national infrastructure, first, we have continued to develop and renew our network with a future-proof approach. Second, on LNG, the capacity has tripled from 6 to 19 BCM. The Piombino Terminal and the Ravenna Terminal have been set up, And additionally, OLT capacity has increased to 5 BCM from the 3.7 BCM, and soon we will follow the Adriatic LNG. Third, on storage capacity, this has been increased organically to 17 BCM thanks to enhanced performance driven by the new investments. With the integration of Edison's storage recently closed, the total capacity will reach 18 BCM, corresponding to more than 17% of the European capacity. The SNAM group will operate 12 storage sites in central and northern Italy near main consumption hubs. Financial metrics show strong double-digit growth with 2024 EBDA up 23% versus 2022 or plus 516 million euros, and net profit rising 11% despite the higher interest rate cycle. Capital expenditures have increased by 50% compared to 2022, three times the pre-crisis average of 1 billion per year, totaling 8 billion euros. over the period between 2022 and 2023, three times the pre-crisis average of 1 billion per year, totaling 8 billion euros over the period between 2022 and 2024. During the same years, we made financial acquisitions for over 2 billion, The just announced disposal of ADNOC gas pipelines brings the total asset rotation to almost 2.5 billion between acquisitions and investors. Despite the challenging condition, including a reshuffle of gas flows, we have reduced our scope one and two emissions by a remarkable 28% in 2024 versus 2022. Page four. We are progressing on our strategy to build a pan-European multi-molecular infrastructure operator. Starting from gas infrastructure, the first phase works of the Adriatic line have fully started. Works are on track. We have upgraded export to Austria from 6 to 9 BCM per year and contracted more than 200 connections of new biomethane plants to our network. On storage, we have offered reverse flow services during winter season and storage level is currently at 45%. On LNG, the regasification vessel BW Singapore successfully completed its mooring about eight kilometers offshore Ravenna in line with the planned schedule. Operations are set to start at the end of April. In 2024, approximately 150 LNG cargoes arrived to Italy covering 25% of gas demand and providing large diversification as one third of the volumes came from United States, one third from Qatar, one fourth from Algeria and the rest from the rest of the world. Moving on the other side on energy transition, Renovit backlog reached 1.4 billion, up 17% year-on-year, as the company is repositioning its business toward long-term energy performance contracts with public authorities and large industrial clients. On biomethane, nine plants won the tariff auctions launched by the GFC. About 20 megawatts, 100% of the plants submitted, and 14 additional were submitted in January. Tout H2 Corridor and CCS were confirmed, as you know, as projects of common interest, and the H2 backbone was awarded 24 million of grants in the last CEF, Connecting European Facilities Round. CO2 injection has been performing in Ravenna and we are planning some further months of operations thanks to the very good performance posted. The project is set to become one of the world's largest CO2 storage sites as it moves to industrial phase. On page five, let's now focus on two key strategic levers of our framework that are sustainability and innovation. When it comes to sustainability, we have a comprehensive approach fully integrated into our business operations. In 2024, we achieved several significant milestones. Let me mention some. We managed to greatly reduce our scope one and two emissions and received the UNEP gold standard for the EU taxonomy and sustainable development goals, accounting for 31% and 65% of the total, respectively, with the sustainable finance represent now 84% of the total. Third, we published our first transition plan and we maintain our leadership in the ESG ratings. We will propose to the next AGM the approval of an employee stock ownership plan for the period 2025-2027, enabling employees to invest in SNAM and share long-term value generated by the company. Moving now to innovation, we have a dual-track approach focusing on proven and explorative innovation. In 2024, we have invested approximately 100 million euros in proven innovation as the rollout of the Asset Control Room continues and SNAM Tech advanced analytics for predictive maintenance implemented. Our goal with this investment is to drive operational excellence and sustainability by increasing digitalization, the IoT deployment, and leveraging the use of AI. On May, we will present our first innovation plan aimed at addressing the strategic level of transformative innovation, an ambitious moment of reflection on the future evolution of Snam journey over the next decade. On page six, a quick summary. In 2024, we have delivered and adjusted EBDA in excess of 2,075,000,000 up 14% year on year. The adjusted net income at 1,289,000,000 is well above the guidance of 1,230,000,000 provided during the strategic plan presentation on January 22nd. mainly thanks to better than expected contribution of associates and lower financial charges. The investments at 2.9 billion are up 31% versus 2023. This is a touch below the guidance of 3 billion as some investments in the Ravenna breakwater slip to 2025. As a result, the tariff rub reached 23.7 billion, the net debt was 16.2 billion, 2% ahead of the guidance, and financial relations stands significantly below the rating agency's thresholds. It will be proposed a final dividend distribution of 0.1743 euro per share to the shareholders meeting that combined with the interim dividend distributed in January 25 brings the total dividend for 2024 to 0.25 2,905 per share. On the regulatory front, 2024 marked the first year of implementing the base ROS, the regulation by expenditure and service targets for gas transport, resulting in a more positive cash conversion ratio. The WAC formula was updated, as you know, for the next three years period, providing future visibility across all regulated businesses. Then moving to output-based incentives, we have proposed three additional ones focused on service quality, asset resilience, and sustainability. And we will suggest the extension of the asset health methodology to storage. Then now on M&A, in December 24, we successfully finalized the increase of our stake in Adriatic LNG to 30%. taking an industrial role in the asset and strengthening our position in the energy sector, specifically in the Italian territory. March 25 saw the completion of two transactions. First, the acquisition of Edison Storage, further solidifying our footprint in the energy storage market, and second, the sale of Adnox Stake to Lunate for $234 million that will generate a 14.5% internal rate of return. This transaction underscores a strategic approach to our associated portfolio, focusing key energy corridors, as I said, for Italy and MED. On finance, in 2024, we have issued our inaugural green bond, hybrid instrument, and SLB in sterling. Then global gas demand was up 3% in 2024, driven by Asia, while Italy demand was stable at 62 BCM. Interestingly, European gas demand soared by 10% year on year in the period November-February, with low wind speed and low hydroavailability as key driver, which led to a surge in gas-fired power generation. This confirms our view of the growing relevance of gas and storage in a less predictable power market. Let me now focus a bit more on gas supply and demand on page seven. With regard to gas supply and demand, Italian full year 2024 reached around 62 BCM, 0.5 more than 2023, broadly stable versus previous year. This was driven by civil sector up by around 3% due to a slightly colder weather and to the end of demand containment measures in place at the beginning of 2023. The thermoelectric sector down by 1.4% year-on-year, driven by rising hydroelectric production, plus 11.6 terawatt-hours, around 2.16 BCM equivalent, and increasing renewable generation, partly counterbalanced by increasing electricity demand and lower utilization of coal and other fossil fuels. The industrial sector substantially was in line. In 2024, around 25% of gas demand was met by LNG, despite reduced volumes due to the maintenance period on Ault and Panigalea terminals. In early 2025, gas demand increased by 8.8%, driven mainly by a 20% rise in the thermoelectric sector due to the lower imports and decreased renewables, and a 4% rise in the civil sector due to slightly colder weather. Higher demand was met by pipeline and LNG growth, aided by the full operation of the old terminal, bringing to 30% of the import the LNG contribution in the first two months of 2025. Now I will hand over to Luke for an overview of the full year results.