Shaping the path towards Net Zero

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Snam is one of the world’s leading energy infrastructure operators and one of the largest Italian listed companies in terms of market capitalisation. The company’s sustainable and technologically advanced network guarantees security of supply and promotes development in the territories, while also contributing to promote the energy transition.Snam has the most extensive transmission network among European peers (over 41,000 km including international activities) and greatest natural gas storage capacity (ca. 20 billion cubic meters, including international activities). It is also one of the main regasification operators in Europe, an activity it carries out through its Panigaglia terminal and its stakes in the Livorno (OLT) and Rovigo (Adriatic LNG) plants in Italy and in the Revithoussa (DESFA) plant in Greece, with a total pro rata regasification capacity of around 8.5 billion cubic metres per year.

Snam has chosen to embark on a journey towards a net zero carbon future. Different sources indicate that 100 to 150 trillion dollars of investments are required across the value chain to achieve a complete decarbonisation. Snam is ideally positioned to play a role in this supercycle. In such a context, green gases – and particularly hydrogen – have significant growth prospects as they can potentially reach over 25% of the global energy mix by 2050.

A strategic position in energy transition

Upstream Midstream Downstream

Sector coupling/ storage/power to gas

Hydrogen

Biomethane/renewables/ waste/water

Natural gas

Early presence,leveraging

technological partnerships

Future-proof asset base to deliver

methane/biomethanevolumes while

enabling H2 ramp up,also in blending, andproviding flexibility

to the electricity grid

Biomethane supply infrastructure,

circular economy

Evolve from CNG platform to LNG and H2

mobility

Promote integrated ecosystemsto serve keysegments

Become a leading national operator in Energy Efficiency services

Snam position in the supercycle is firmly anchored on midstream assets, with visible investment opportunities and long-term cashflows. Snam’s infrastructure is 70% hydrogen-ready – which makes it an ideally positioned enabler of energy transition. In addition, Snam is building positions upstream

and downstream of these assets, in hydrogen and biomethane production infrastructure and final uses, with a focus on mobility.Snam can also leverage its energy efficiency platform for facilitating lower energy consumption and environmental footprint of its clients.

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Most of the 2020-24 investments focus on decarbonisation, with the aim to achieving carbon neutrality by 2040 and seize the opportunities offered by the energy transition supercycle. Currently, over 70% of Snam’s pipelines are ready to transport hydrogen. From now on, only “hydrogen-ready” components will be

Energy transition projects are not part of Snam’s RAB; they are selected with an accretive risk-reward profile compared to regulated business.

Investments in the energy transition will amount to €700m (nearly doubled compared to the previous plan). In 2020, these businesses have become EBITDA positive and will provide a €150m contribution to EBITDA by 2024.

purchased according to new standards set. Nearly €500m will be invested in digitalisation projects, with the aim to becoming the most technologically advanced gas TSO in the world, through the development of a “data driven” infrastructure. Core infrastructure capex will drive a RAB growth that will exceed 2.5% over the plan’s period.

Leveraging a capex supercycle

Over the 2020-24 period, Snam will cumulatively invest €7.4bn (+14% vs the previous plan), of which €6.7bn in core infrastructure, up from €6.1bn last year.

ITALIAN INFRASTRUCTURE €6.7bn

>2.5% RAB growth to 2024

NEW ENERGY TRANSITION BUSINESSES

€0.7bn€150m of EBITDA

by 2024

INTERNATIONAL PORTFOLIO

10% average cash return

2020-24 capex KPIs

2020-2024 cumulative investments

(*) Replacement, development and maintenance of assets using hydrogen-ready standards

Hydrogen-ready investments on Snam infrastructure (*) New businesses (energy transition) Digitalisation/Technology Net zero investments Maintenance & other

24%

€7.4bn 50%

10%

10%

6%

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2021 guidance and plan’s targets

Guidance 2021 2020-24 Plan

Investments ca €1.4bn€7.4bn

2020-2024

Tariff RAB ca €21bn>2.5%

CAGR 2020-2024

Net incomeca +3%

vs 2020 guidance2.5%

CAGR 2019-2024

Net debt1 ca €13.5bn<60%

Debt/RAB

1 Excluding change in tariff related items (essentially neutral)

Over the 2020-24 period, tariff RAB is expected to increase at a CAGR exceeding 2.5%, an acceleration compared to the previous plan.RAB evolution is driven by the technical requirements for network replacements.

The 2.5% CAGR does not include any hydrogen-related capex. Over the next 20 years, a 2.5% growth rate should be considered as a floor, since Snam would still have 11,000 km of fully amortised pipelines by 2040.

TARIFF RAB evolution

>2.5%CAGR

€bn

RAB 2020

20.6

RAB 2024

9,000km fully amortised

2040 RAB

<11,000km fully amortised

At least in line with 2020-24

0.9% average inflation

2021 will be a year of growth, with an acceleration in capex. Associates will provide growing contribution, especially through ADNOC and the start-up of TAP.In 2021 Net debt will rise, mainly due to higher capex and NWC. Over the plan period, Debt-to-RAB ratio including associates will remain well below 60%.

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Profitable growth

DPSEBITDA growth of 3.3% over the 2019-24 period is driven by:

• yearly RAB increase of over 2.5% and new businesses, both supporting Revenues;

• an efficiency plan of €70m savings by 2022, a year earlier than in the previous plan, that offsets higher R&D costs.

Investments of €700m in new businesses will contribute to EBITDA with €150m in 2024 and additional €50m beyond the plan’s horizon.

Net profit is expected to rise by 2.5% yearly vs 2019, led by EBITDA growth, despite higher D&A due to the capex plan, while cost of debt is expected to remain stable at 1.2%. 2019-2024 EPS growth is expected to exceed 3%.

€cent

FY 2020 FY 2021 FY 2022 FY 2023 FY 2024

NEW

24.95

Policy of 5% DPS annual growth to 2022 confirmed

The new dividend policy for the 2023-2024 period envisages a floor of at least 2.5% annual growth.

+2.5%

+5%

2017 2018 2019 20242020E

€bnEBITDA

3.4%

3.3%

2,022 2,095 2,169

2017 2018 2019 20242020E

€EPS

5.0% 3.2%

0.27 0.290.32 0.33

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Towards net zero

Snam net zero target by 2040 is the most ambitious in the industry so far.

Snam has designed a clear pathway to net zero by 2040 in its own emissions (both Scope 1&2). To reduce Scope 3 emissions, intensive engagement with both suppliers and associates has been planned. Snam will also act as an enabler of

system decarbonisation through a range of initiatives – energy efficiency, hydrogen, small-scale LNG, biomethane and sustainable mobility. Relentless effort to secure infrastructure readiness to green gases will continue.

CO2

CH4

Net zero

-50%

2018 2030 2040

Indirect CO2 emissionsDirect CO2 emissionsDirect CH4 emissions

Already by 2030, Snam commits to cutting emissions by half, thus reducing c800Ktons of CO2 equivalent. Almost half of this reduction will come from installing new dual fuel gas-electric compressor stations, which will also promote sector coupling. Snam will also pursue a 45% reduction in CH4 emissions by 2025 compared to 2015, in line with the UNEP framework.

The enabling of the infrastructure to transport increasing quantities of renewable gas and the new activities in the energy transition will also make it possible to contribute to the general reduction of emissions in the territories in which Snam operates: in 2024, Snam will allow the system to avoid emissions of over 600,000 tons of CO2 equivalent, also thanks to the production of biomethane, energy efficiency initiatives and sustainable CNG and LNG mobility projects.

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A scorecard for 2023 ESG goals

• -36% Reduction of total natural gas emissions (vs 2015)• Energy Saving: >40% natural gas recovered from maintenance• 860 MWh of electricity production by photovoltaic plants• 61% of retrofit and methane fuelled cars out of total car fleet• 121 Mscm Production of biomethane• -43 Ktons CO2 eq from energy efficiency interventions• 167 Cumulated number of CNG and L-CNG stations• 250 ktons available LNG capacity for SSLNG market• >99% vegetation restoration in construction areas

ENVIRONMENT Natural gas emissions,

energy savings, green innovation, soil and

biodiversity protectionCommitted to

a net zero world

• 54% participation in welfare initiatives• 75% employee engagement index• <average last 5 years- IpFG (Combined Frequency and Severity Index)• <average last 5 years- No. HS remarks / no. total (internal/external)

audits conducted • 25.5% of women in executive and middle-management roles• 27% of women in succession planning (1st and 2nd reporting line)• 50% Spending to local suppliers (Italy based SMEs) on total non-public procurement• +20% Increase third sector suppliers in Vendor List• +10% Employees hours in Snam Foundation’s initiatives supporting

local communities

SOCIAL Welfare, employee

engagement, security, gender diversity,

responsible supply chain, local community engagement

Improving people’s lives

• >40% of BoD time dedicated to ESG matters in strategy meetings and induction

• 8.1 Average annual customer satisfaction rate for service quality• 99.9% of reliability levels on gas supply • 100% of third parties to undergo reputational due diligence checks

GOVERNANCE governance structure

and functioning, infrastructure reliability,

anti-corruptionStrengthening

governance

Measuring the Company’s impact on the planet and society

In its Sustainability Report, Snam already monitors over 140 KPIs in the ESG field, many of which are supported by multi-year targets. Over time, Snam has strengthened its business model with a view to achieving the UN’s development goals. As ESG factors are increasingly integrated into strategy and management of the Company, the goal setting process will be now based on a scorecard for 22 targets, with three-year timescale and subject to annual monitoring and review.

Snam: a unique platform to invest in the energy transition

Solid and future-proof asset base Over the long term, visible and sustainable RAB growth, underpinned by green gas development

Exposure to net zero supercycleLeadership in a distinctive set of new businesses – hydrogen, biomethane, circular economy, energy efficiency, and sustainable mobility

International footprintPresence in multiple geographies with upside from energy transition

Commitment to financial discipline and shareholder returnsBalance sheet and cashflows to guarantee a solid credit rating and growing shareholder remuneration

snam.it