Terna — Earnings Release 2018

May 9, 2018

1Q18 Consolidated Results

May 9th 2018

Agenda

Highlights	3
1Q18 Results	6

Demand Evolution – Last 12 months Highlights (1/2)

1Q18 National Demand at 82 TWh

Net Total Production at 69 TWh:

• +15.6% wind production (6.1 TWh)
• +11.5% hydroelectric production (8.6 TWh)

RES contribution at 30%

Strong growth in wind and hydro production

1Q18 Key Numbers Highlights (2/2)

€mn	1Q 2018	1Q 2017	Δ 1Q 17 vs
Revenues	538	524	+3%
EBITDA	409	403	+2%
Group Net Income1	183	179	+2%
Total Group Capex	142	100	+42%
		1Q 2018	FY 2017
	Net Debt	7,618	7,796

Solid results in all P&L lines

Revenues 1Q 2018 results

Revenues increase driven by Non Regulated Activities Insourcing attività di O&M Rete FS

Revenues Analysis 1Q 2018 results

Positive contribution from Insourcing attività di O&M Rete FS Tamini's higher turnover

Opex 1Q 2018 results

Opex evolution driven by Insourcing higher volumes in Non Regulated Activities attività di O&M Rete FS

Opex Analysis 1Q 2018 results

€mn NON REGULATED ACTIVITIES

Regulated Activities cost control Insourcing attività di O&M Rete FS

EBITDA 1Q 2018 results

Positive EBITDA contribution from Insourcing attività di O&M Rete FS Tamini and other Non Regulated Activities

From EBITDA to Net Income 1Q 2018 results

2% growth YoY at net income level

Capex 1Q 2018 results

Main Projects:

• Italy-Montenegro interconnection
• Capri-Sorrento connection
• Italy-France interconnection

Insourcing attività di O&M Rete FS 2018 Capex well on track

1Q 2018 results Cash Flow & Net Debt Evolution

Positive operating cash flow generation

1Q 2018 results Net Debt Evolution & Financial Structure

Rock-solid financial structure

Closing Remarks

1Q18 ACHIEVEMENTS

Growth in all P&L lines

2018 Capex well on track

Robust cash flow generation

Annex

Consolidated Income Statement¹

€ mn	1Q18	2 1Q17	Δmn	Δ%
Total Revenue	538	524	14	2.7%
Regulated Activities	488	490	-3	-0.5%
Transmission	451	451	1	0.1%
Dispatching	29	29	0	-1.0%
3 Other	5	8	-4	-43.2%
IFRIC12	3	2	1	29.2%
Non Regulated Activities	47	34	14	40.2%
International Activities	3	0	3	n.m.
Total Costs	129	121	7	6.1%
Regulated Activities	95	93	2	2.0%
Labour Costs	54	53	1	0.9%
External Costs	34	31	3	11.1%
3 Other	4	7	-3	-39.7%
IFRIC12	3	2	1	29.2%
Non Regulated Activities	32	27	5	18.0%
International Activities	2	1	1	60.0%
EBITDA	409	403	7	1.6%
D&A	133	130	3	1.9%
EBIT	277	273	4	1.5%
Net Financial Charges	25	21	4	20.0%
Pre Tax Profit	252	252	0	0.0%
Taxes	69	74	-5	-7.1%
Tax Rate (%)	27.2%	29.2%	-2.1 pp
Total Net Income	184	179	5	2.9%
Minority Interest	1	-1	2	n.m.
Group Net Income	183	179	3	1.9%

Annex 2017 Restated P&L Quarterly Figures¹

€ mn	1Q17	2Q17	3Q17	4Q17	FY17
Total Revenue	524	522	525	592	2,163
Regulated Activities	490	477	490	510	1,967
Transmission	451	444	453	457	1,804
Dispatching	29	27	29	27	112
2 Other	8	4	4	15	31
IFRIC12	2	3	4	11	21
Non Regulated Act.	34	44	34	77	189
3 International Activities	0	1	1	5	7
Total Costs	121	130	112	196	560
Regulated Activities	93	97	82	154	426
Labour Costs	53	54	46	65	218
External Costs	31	35	30	59	155
2 Other	7	5	1	19	32
IFRIC12	2	3	4	11	21
Non Regulated Act.	27	32	29	39	127
International Activities	1	1	2	3	7
EBITDA	403	392	412	397	1,604
D&A	130	131	129	137	527
EBIT	273	261	283	260	1,077
Net Financial Charges	21	19	28	21	89
Pre Tax Profit	252	242	255	240	989
Taxes	74	70	78	72	294
Tax Rate (%)	29.2%	29.0%	30.5%	30.2%	29.7%
Total Net Income	179	172	176	167	694
Minority Interest	-1	0	-1	8	6
Group Net Income	179	172	178	159	688

Annex

Consolidated Balance Sheet

€ mn	Mar. 31,2018	Dec. 31,2017	Δmn
PP&E	12,770	12,753	17
Intangible Asset	507	506	1
Financial Inv. and Other	231	208	23
Total Fixed Assets	13,507	13,466	41
Net WC	-1,535	-1,485	-50
Funds	-345	-356	10
Net Capital Invested	11,627	11,625	1
Financed by:
Consolidated Net Debt	7,618	7,796	-179
Total Shareholder's Equity	4,009	3,829	180
Total	11,627	11,625	1
D/E Ratio	1.9	2.0
D/D+E Ratio	0.7	0.7
Number of Shares (mn)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	1Q18
Total Net Income	184
1 D&A	132
Net Change in Funds	-10
Operating Cash Flow	305
2 Δ Working Capital & Other	19
Cash Flow from Operating Activities	324
Capital Expenditures	-142
Free Cash Flow to Equity	183
3 Dividends & Equity	-4
Change in Net Cash (Debt)	179

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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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 "AGOSTINO SCORNAJENCHI" 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.

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