Terna — Earnings Release 2016

Mar 15, 2017

FY16 Consolidated Results March 15th, 2017

Agenda

FY16 Results

12

4

Highlights

	FY 2015		FY 2016
		Reported	Δ % 2015 vs	Guidance
Revenues	2,082 €mn	2,103 €mn	+1.0%	~ 2.1 €bn
EBITDA	1,539 €mn	1,545 €mn	+0.4%	~ 1.53 €bn
Group Net Income	596 €mn	633 €mn	+6.3%
Capex	1,103 €mn	854 €mn	-23%	~ 0.9 €bn
Net Debt	8,003 €mn	7,959 €mn	-0.5%
EPS	29.6 €cents	31.5 €cents		~ 29 €cents
DPS	20 €cents	20.6 1 €cents	+3.0%

FY16 Results Revenues

Total Revenues 2,103€mn +1.0%yoy Regulated Activities 1,895€mn Non Regulated Activities 187€mn of which

KEY FIGURES TOTAL REVENUES EVOLUTION

€mn		+21
2,082					2,103
90	46	-6	-5	-14	84
116					102 21
26
1.850		Non Regulated IFRIC12 Tamini	Regulated Activities Act.		1.895
FY15 FY15	∆ Regulated Activities	∆ Non Regulated Activities	∆ IFRIC	∆ Tamini	FY16 FY16
€ mn		FY15	FY16	Δ yoy	Δ %yoy
Regulated Activities		1,850	1,895	46	2.5%
Non Regulated Act.		206	187	-20	-9.5%
o/w Tamini		116	102	-14	-12%
Other Non Regulated Act.		90	84	-6	-6.7%
IFRIC12		26	21	-5	-19%
Total		2,082	2,103	21	1.0%

Revenues Analysis FY16 Results

REGULATED ACTIVITIES

Opex Analysis FY16 Results

KEY FIGURES

Quality of Service Other

Provision for Voluntary Turnover Labour

RHV Grid Service Contract External

EBITDA Analysis FY16 Results

From EBITDA to Net Income FY16 Results

Group EBITDA 1,545€mn +0.4%yoy

Group EBITDA Margin 73.4%¹

Group Net Income² 633€mn +6.3%yoy

	€mn
		509
	1,545			103		305
			1,036		933		633
	EBITDA	D&A	EBIT	Net Financial Expenses	PBT	Taxes	Group 2 Net Income
	€ mn			FY15	FY16	Δ		Δ %
	EBITDA			1,539	1,545	6		0.4%
	Ebitda %			73.9%	73.4%
D&A				517	509	-8		-1.6%
	EBIT			1,022	1,036	14		1.3%
		Net Financial Expenses		141	103	-38		-27%
PBT				881	933	52		5.9%
	Tax Rate			32%	33%
Taxes				286	305	19		6.7%

1. 75% net of provision on labour costs

2. Attributable to Terna

KEY FIGURES PROFIT & LOSS

Capex FY16 Results

Category (€mn)	FY15	FY16	Δ yoy	Δ % yoy
Capex at 1% Incentive		281
Capex at Base Return		517
Regulated Capex	1,035	799	-236	-23%
Other	68	1 56	-12	-18%
Total Group Capex	1,103	854	-249	-23%

1. Of which 16 €mn of Capitalized Financial Charges

Net Debt Evolution & Financial Structure FY16 Results

2. Including Cash Flow Hedge accruals and other

• 3. IAS accounting
• 4. By Fitch and Moody's

THANK YOU. QUESTIONS?

Annex Electricity Market Trends – Last 12 Months

Consolidated Income Statement¹ Annex

€ mn	FY15	FY16	Δmn	Δ%
Transmission	1,706	1,735	29	1.7%
Dispatching	125	111	-14	-11%
Other 2	18	49	31	171%
Regulated Activities	1,850	1,895	46	2.5%
Non Regulated Act.	206	187	-20	-9.5%
IFRIC12	26	21	-5	-19%
Total Revenues	2,082	2,103	21	1.0%
Labour Costs	195	227	32	16%
External Costs	123	154	30	25%
Other	46	20	-26	-57%
Regulated Activities	364	400	36	9.9%
Non Regulated Act.	153	137	-15	-10%
IFRIC12	26	21	-5	-19%
Total Costs	543	559	16	2.9%
EBITDA	1,539	1,545	6	0.4%
D&A	517	509	-8	-1.6%
EBIT	1,022	1,036	14	1.3%
Net Financial Charges	141	103	-38	-27%
Pre Tax Profit	881	933	52	5.9%
Taxes	286	305	19	6.7%
Tax Rate (%)	32%	33%
Total Net Income	595	628	33	5.5%
Minority Interest	0	-5	-5
Group Net Income	596	633	38	6.3%

1. Managerial Accounting

2. Quality of Service + Other Revenues

P&L Quarterly Analysis Annex

Annex
P&L Quarterly Analysis
€ mn	1Q15	1Q16	Δ	2Q15	2Q16	Δ	3Q15	3Q16	Δ	4Q15	4Q16	Δ
Regulated Activities	479	471	- 7	432	471	39	456	471	15	483	482	- 1
Non Regulated Act.	32	43	12	52	47	- 4	54	37	-17	69	59	-10
IFRIC 12	3	3	0	5	4	0	5	3	- 2	14	11	- 3
Operating Revenues	513	517	4	489	523	34	515	511	- 4	565	552	-13
Regulated Activities	86	84	- 2	83	98	15	76	83	7	119	135	15
Non Regulated Act.	23	36	12	36	38	2	40	25	-14	54	38	-16
IFRIC 12	3	3	0	5	4	0	5	3	- 2	14	11	- 3
Operating Expenses	112	122	10	124	141	17	121	112	- 9	187	184	- 3
EBITDA	402	395	- 7	365	382	17	394	399	5	378	368	-10
D&A	120	131	11	123	136	13	119	136	17	155	106	-49
EBIT	281	264	-17	242	246	4	275	263	-12	224	263	39
Net Financial Charges	31	19	-12	33	17	-16	53	24	-29	24	42	18
Pre Tax Profit	250	245	- 6	210	229	19	222	239	17	200	221	21
Taxes	85	83	- 2	65	67	2	77	78	1	59	77	18
Total Net Income	165	161	- 4	145	161	17	145	162	17	140	143	3
Minority Interest		- 1	- 1		- 1	- 1		-0.4	-0.4	-0.2	-2.9
Group Net Income	165	162	- 3	145	163	18	145	162	17	141	146	6
Total Group Capex	177	158	-19	262	189	-73	263	183	-80	401	324	-77
Net Debt (end of period)	6,518	7,687		6,876	8,172		6,561	7,801		8,003	7,959

Consolidated Balance Sheet Annex

€ mn	Dec. 31,2015	Dec. 31,2016	Δmn
PP&E	12,079	12,386	307
Intangible Asset	530	516	-14
Financial Inv. and Other	90	89	0
Total Fixed Assets	12,698	12,991	294
Net WC	-976	-1,093	-117
Funds	-374	-385	-11
Total Net Invested Capital	11,349	11,514	166
Financed by
Consolidated Net Debt	8,003	7,959	-44
Total Shareholder's Equity	3,346	3,555	209
Total	11,349	11,514	166
D/E Ratio	2.4	2.2
D/D+E Ratio	0.7	0.7
Number of Shares ('000)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	FY15	FY16	Δmn
Total Net Income	595	628	33
1 D&A	517	509	-8
Net Financial Charges	141	103	-38
Net Change in Funds	-65	1	66
Operating Cash Flow	1,189	1,241	52
2 ∆ Working Capital & Other	-639	179	818
Cash Flow from Operating Activities	550	1,419	870
Capital Expenditures	-1,103	-854	249
Net Financial Charges	-141	-103	38
Free Cash Flow to Equity	-695	462	1,157
3 Dividends & Equity	-342	-419	-76
Change in Net Cash (Debt)	-1,037	44	1,081

2. Including, Other Fixed Assets Changes, Change in Capital & Other

3. Including Cash Flow Hedge accruals and other

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.

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