Terna — Earnings Release 2015

Mar 21, 2016

FY15 Consolidated Results March 21st, 2016

MATTEO DEL FANTE CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI CHIEF FINANCIAL OFFICER

Agenda

6

14

Annexes

Highlights Electricity Market

2015 DEMAND BREAKDOWN

Highlights Electricity Market

2015 GRID MANAGEMENT

59.4GW Record Demand Peak July 2015

72,600Km Three-phase conductors +8,700km yoy

52€/MWh Pool Price In line vs. 2014

A Safe and Efficient Grid Management

Highlights Key Financials

FY15 Results

Revenues

KEY FIGURES TOTAL REVENUES EVOLUTION

FY15 Results Revenues Analysis

REGULATED ACTIVITIES

FY15 Results Opex

Total Operating Costs 543€mn

Regulated Activities 364€mn

Non Regulated Activities 153€mn

FY15 Results Opex Analysis

REGULATED ACTIVITIES

From EBITDA to Net Income FY15 Results

Group EBITDA 1,539€mn Group EBITDA Margin +3.2%yoy

73.9%

KEY FIGURES PROFIT & LOSS

Capex FY15 Results

Time Lag reduction 2015 Capex included in 2016 Tariff

Total Capex 1,103€mn

KEY FIGURES BREAKDOWN

Category (€mn)	FY14	FY15	Δ yoy	Δ % yoy
+2%	469	463	-6	-1.2%
+1.5%	355	371	16	4.4%
Development Capex	824	834	10	1.3%
Maintenance (Base Return)	226	201	-25	-11%
Regulated Capex	1,050	1,035	-15	-1.4%
Other	46	1 68	22	48%
Total Group Capex	1,096	1,103	7	0.6%

Net Debt Evolution & Financial Structure FY15 Results

1. Net Income + D&A + Net Financial Charges +/- Net Change in Funds (see Annex "Consolidated Cash Flow" for details)

• 2. Including Other Fixed Assets Changes, Change in Capital & Other
• 3. Including consideration for the assets (757€mn) and transaction taxes
• 4. Including Cash Flow Hedge accruals

THANK YOU. QUESTIONS?

MATTEO DEL FANTE CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI CHIEF FINANCIAL OFFICER

Annex Electricity Market Trends – Last 12 Months

Consolidated Income Statement¹ Annex

€ mn	FY14	FY15	Δmn	Δ%
Transmission	1,651	1,706	56	3.4%
Dispatching	117	125	8	6.7%
Other 2	55	18	-37	-67%
Regulated Activities	1,823	1,850	27	1.5%
Non Regulated Act.	143	206	63	44%
IFRIC12	30	26	-4	-14%
Total Revenues	1,996	2,082	86	4.3%
Labour Costs	236	195	-41	-17%
External Costs	129	123	-7	-5.3%
Other	35	46	12	34%
Regulated Activities	400	364	-36	-9.0%
Non Regulated Act.	75	153	78	105%
IFRIC12	30	26	-4	-14%
Total Costs	505	543	38	7.5%
EBITDA	1,491	1,539	48	3.2%
D&A	481	517	36	7.5%
EBIT	1,011	1,022	12	1.1%
Net Financial Charges	128	141	13	10%
Pre Tax Profit	883	881	-2	-0.2%
Taxes	339	286	-53	-16%
Tax Rate (%)	38.3%	32.5%
Total Net Income	544	595	51	9.3%
Minority Interest	-	-0.2	-0.2
Group Net Income	544	596	51	9.4%

NOTE: Tamini consolidation since 20th May 2014

1. Managerial Accounting

2. Quality of Service + Other Revenues

Group Costs Breakdown Annex

€ mn	FY14	FY15	Δmn	Δ%
Labour Costs	259	227	-32	-12%
Services	140	145	6	4.1%
Materials	37	90	53	142%
Other	39	55	16	40%
IFRIC12	30	26	-4	-14%
Total Costs	505	543	38	7.5%

Annex P&L Quarterly Analysis

Net Debt (end of period)	6,629	6,518		7,083	6,876		6,688	6,561		6,966	8,003
Total Group Capex	164	177	13	222	262	40	266	263	- 3	444	401	-43
Minority Interest Group Net Income	145	165	20	129	145	16	144	145	1	127	-0.2 141	14
Total Net Income	145	165	20	129	145	16	144	145	1	127	140	14
Taxes	101	85	-16	78	65	-13	95	77	-18	65	59	- 6
Pre Tax Profit	246	250	4	207	210	2	238	222	-17	191	200	8
Net Financial Charges	31	31	0	33	33	0	36	53	18	28	24	- 4
EBIT	277	281	4	240	242	2	274	275	1	220	224	4
D&A	113	120	7	122	123	1	108	119	11	137	155	18
EBITDA	390	402	11	362	365	3	382	394	12	357	378	22
Operating Expenses	88	112	24	110	124	14	115	121	5	192	187	- 5
IFRIC 12	4	3	- 1	8	5	- 4	5	5	- 1	13	14	1
Non Regulated Act.	3	23	20	20	36	16	29	40	10	22	54	32
Regulated Activities	81	85	5	81	83	2	81	76	- 4	157	119	-38
Operating Revenues	478	513	35	472	489	17	498	515	17	549	565	17
IFRIC 12	4	3	- 1	8	5	- 4	5	5	- 1	13	14	1
Non Regulated Act.	17	32	15	34	52	18	37	54	18	55	69	13
Regulated Activities	457	479	22	430	432	3	456	456	0	481	483	2
€ mn	1Q14	1Q15	Δ	2Q14	2Q15	Δ	3Q14	3Q15	Δ	4Q14	4Q15	Δ

Consolidated Balance Sheet Annex

€ mn	Dec. 31,2014	Dec. 31,2015	Δmn
PP&E	10,779	12,079	1,300
Intangible Asset	453	520	68
Financial Inv. and Other	89	90	0
Total Fixed Assets	11,320	12,688	1,368
Net WC	-821	-962	-141
Funds	-441	-378	63
Total Net Invested Capital	10,059	11,349	1,290
Financed by
Consolidated Net Debt	6,966	8,003	1,037
Total Shareholder's Equity	3,093	3,346	253
Total	10,059	11,349	1,290
D/E Ratio	2.3	2.4
D/D+E Ratio	0.69	0.71
Number of Shares ('000)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	FY14	FY15	Δmn
Total Net Income	544	595	51
D&A	481	517	36
Debt Service	128	141	13
Net Change in Funds	-14	-65	-51
Operating Cash Flow	1,139	1,189	49
1 ∆ Working Capital & Other	191	-600	-791
Cash Flow from Operating Activities	1,331	589	-742
Capital Expenditures	-1,096	-1,103	-7
Free Cash Flow	235	-515	-749
Dividends & Equity 2	-375	-381	-7
Debt Service	-128	-141	-13
Change in Net Cash (Debt)	-268	-1,037

1. Including RHV Grid acquisition, Other Fixed Assets Changes, Change in Capital & Other

2. Including Cash Flow Hedge accruals

Disclaimer

THIS DOCUMENT HAS BEEN PREPARED BY TERNA S.P.A. (THE "COMPANY") FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES.

THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION.

THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE OR GUARANTEE OF WHATSOEVER NATURE.

HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE DATE THEY ARE MADE. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY'S ACTUAL RESULTS AND PROVISIONS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN COMPANY'S BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT, DIFFERENT INTERPRETATION OF THE LAW AND REGULATION, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL OF FUTURE CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. TERNA DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN TERNA'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGES IN EVENTS.

EXECUTIVE IN CHARGE OF THE PREPARATION OF ACCOUNTING DOCUMENTS "PIERPAOLO CRISTOFORI" DECLARES, PURSUANT TO PARAGRAPH 2 OF ARTICLE 154-BIS OF THE CONSOLIDATED LAW ON FINANCE, THAT THE ACCOUNTING INFORMATION CONTAINED IN THIS PRESENTATION, FOR WHAT CONCERNS THE ACTUAL FIGURES, CORRESPONDS TO THE DOCUMENT RESULTS, BOOKS AND ACCOUNTING RECORDS.

THE SORGENTE-RIZZICONI PROJECT INTERCONNECTION IS CO-FINANCED BY THE EUROPEAN UNION'S EUROPEAN ENERGY PROGRAMME FOR RECOVERY PROGRAMME. THE SOLE RESPONSIBILITY OF THIS PUBLICATION LIES WITH THE AUTHOR. THE EUROPEAN UNION IS NO RESPONSIBLE FOR ANY USE THAT MAY BE MADE OF THE INFORMATION CONTAINED THEREIN.

Disclaimer Notes

MAY	IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR	ITS
	SUBSIDIARIES.
THE	CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED	HEREIN
HAVE	NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY
	WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS
OR	OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION.
THIS	DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION
	CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS
THAT	ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS. THESE STATEMENTS
ARE	BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE	OR
	GUARANTEE OF WHATSOEVER NATURE.
	HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE	DATE
THEY	ARE MADE. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY'S ACTUAL RESULTS AND PROVISIONS	TO
DIFFER	MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED
TO:	TRENDS IN COMPANY'S BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT,
	DIFFERENT INTERPRETATION OF THE LAW AND REGULATION, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL	OF
FUTURE	CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS.
TERNA	DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN TERNA'S
	EXPECTATIONS WITH REGARD THERETO OR ANY CHANGES IN EVENTS.
	EXECUTIVE IN CHARGE OF THE PREPARATION OF ACCOUNTING DOCUMENTS "PIERPAOLO CRISTOFORI" DECLARES, PURSUANT	TO
	PARAGRAPH 2 OF ARTICLE 154-BIS OF THE CONSOLIDATED LAW ON FINANCE, THAT THE ACCOUNTING INFORMATION CONTAINED IN	THIS
	PRESENTATION, FOR WHAT CONCERNS THE ACTUAL FIGURES, CORRESPONDS TO THE DOCUMENT RESULTS, BOOKS AND ACCOUNTING
	RECORDS.
THE	SORGENTE-RIZZICONI PROJECT AND THE ITALY-FRANCE INTERCONNECTION ARE CO-FINANCED BY THE EUROPEAN UNION'S
	EUROPEAN ENERGY PROGRAMME FOR RECOVERY PROGRAMME. THE SOLE RESPONSIBILITY OF THIS PUBLICATION LIES WITH	THE
	AUTHOR. THE EUROPEAN UNION IS NO RESPONSIBLE FOR ANY USE THAT MAY BE MADE OF THE INFORMATION CONTAINED THEREIN.

Disclaimer Notes

MAY	IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR	ITS
	SUBSIDIARIES.
THE	CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED	HEREIN
HAVE	NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY
	WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS
OR	OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION.
THIS	DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION
	CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS
THAT	ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS. THESE STATEMENTS
ARE	BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE	OR
	GUARANTEE OF WHATSOEVER NATURE.
	HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE	DATE
THEY	ARE MADE. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY'S ACTUAL RESULTS AND PROVISIONS	TO
DIFFER	MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED
TO:	TRENDS IN COMPANY'S BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT,
	DIFFERENT INTERPRETATION OF THE LAW AND REGULATION, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL	OF
FUTURE	CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS.
TERNA	DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN TERNA'S
	EXPECTATIONS WITH REGARD THERETO OR ANY CHANGES IN EVENTS.
	EXECUTIVE IN CHARGE OF THE PREPARATION OF ACCOUNTING DOCUMENTS "PIERPAOLO CRISTOFORI" DECLARES, PURSUANT	TO
	PARAGRAPH 2 OF ARTICLE 154-BIS OF THE CONSOLIDATED LAW ON FINANCE, THAT THE ACCOUNTING INFORMATION CONTAINED IN	THIS
	PRESENTATION, FOR WHAT CONCERNS THE ACTUAL FIGURES, CORRESPONDS TO THE DOCUMENT RESULTS, BOOKS AND ACCOUNTING
	RECORDS.
THE	SORGENTE-RIZZICONI PROJECT AND THE ITALY-FRANCE INTERCONNECTION ARE CO-FINANCED BY THE EUROPEAN UNION'S
	EUROPEAN ENERGY PROGRAMME FOR RECOVERY PROGRAMME. THE SOLE RESPONSIBILITY OF THIS PUBLICATION LIES WITH	THE
	AUTHOR. THE EUROPEAN UNION IS NO RESPONSIBLE FOR ANY USE THAT MAY BE MADE OF THE INFORMATION CONTAINED THEREIN.