Terna — Earnings Release 2019

May 9, 2019

1Q19 Consolidated Results

May 9th 2019

Agenda

Highlights	3
1Q19 Results	6
Annexes	16

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

• National Demand at 80 TWh, o/w 32% covered by RES vs 30% in 1Q18
• Net Total Production at 71 TWh
• PV increased by 36%
• Wind increased by 16%

Strong growth in PV and wind production

€mn	1Q 2019	1Q 2018	Δ 1Q18 vs
Revenues	537	5231	+3%
EBITDA	420	409	+3%
Group Net Income2	186	183	+2%
Capex	164	142	+16%
	1Q 2019		FY 2018
	Net Debt	7,919	7,899

Solid results in all P&L lines

1Q 2019 results

Revenues

Revenues increase mainly driven by Regulated Activities

Revenues Analysis 1Q 2019 results

Higher contribution from Regulated, Tamini and International

Opex under control

Opex Analysis 1Q 2019 results

Non Regulated Opex Insourcing driven by higher volumes of activity attività di O&M Rete FS

EBITDA 1Q 2019 results

3% growth at EBITDA level Insourcing attività di O&M Rete FS

From EBITDA to Net Income 1Q 2019 results

2% growth at Net Income level

Capex 1Q 2019 results

Insourcing attività di O&M Rete FS 2019 Capex well on track

Note: figures may not add up due to rounding 1. I-NPR1+O-NPR1 in line with ARERA Resolution n. 579/17 2. Of which about 3 €mn of Capitalized Financial Charges

Cash Flow & Net Debt Evolution 1Q 2019 results

Strong operating cash flow generation

Note: figures may not add up due to rounding 1. Including Other Fixed Assets Changes 2. Including Cash Flow Hedge reserve and other

Net Debt Evolution & Financial Structure 1Q 2019 results

GROSS DEBT BREAKDOWN KEY RATIOS ^{1 1}

Maturity 5.2 years

Maintaining a solid financial structure

Annex

Consolidated Income Statement¹

€ mn	1Q19	2 1Q18	Δmn	Δ %
Total Revenue	537	523	14	2.7%
Regulated Activities	500	488	12	2.5%
Transmission	464	451	13	2.9%
Dispatching	28	29	0	-1.1%
3 Other	5	5	1	15.2%
IFRIC12	2	3	-1	-35.5%
Non Regulated Activities	33	32	1	1.5%
International Activities	4.2	3	1	35.5%
Total Costs	117	114	3	2.6%
Regulated Activities	95	95	0	-0.3%
Labour Costs	57	54	4	7.3%
External Costs	34	34	0	-1.2%
Other 3	1	4	-3	-65.9%
IFRIC12	2	3	-1	-35.5%
Non Regulated Activities	21	17	3	18.4%
International Activities	2	2	0	6.2%
EBITDA	420	409	11	2.7%
D&A	140	133	8	6.0%
EBIT	280	277	3	1.1%
Net Financial Charges	16	25	-9	-35.4%
Pre Tax Profit	264	252	12	4.6%
Taxes	78	69	9	13.7%
Tax Rate (%)	29.5%	27.2%	+2.4 pp
Total Net Income	186	184	2	1.3%
Minority Interest	0	1	-1	-100.0%
Group Net Income	186	183	3	1.8%

1. Managerial Accounting

2. 1Q18 reclassified in accordance with new IFRS. No impact at EBITDA level

2017 Restated P&L Quarterly Figures¹ Annex

€ 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	0	1	5	6
Total Costs	121	130	113	196	559
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	29	21	89
Pre Tax Profit	252	242	254	240	988
Taxes	74	70	78	72	294
Tax Rate (%)	29.2%	29.0%	30.6%	30.2%	29.8%
Total Net Income	179	172	177	167	694
Minority Interest	-1	0	-1	8	6
Group Net Income	179	172	178	159	688

1. Unaudited Managerial Accounting

2. Including Quality of Service

3. Construction margin, including IFRIC 12

Annex

Consolidated Balance Sheet

€ mn	Mar. 31,2019	Dec. 31,2018	Δmn
PP&E	13,268	13,244	23
Intangible Asset	511	519	-8
Financial Inv. and Other	333	320	13
Total Fixed Assets	14,112	14,084	28
Net WC	-1,717	-1,823	106
Funds	-279	-308	29
Net Capital Invested	12,117	11,954	163
Financed by:
Consolidated Net Debt	7,919	7,899	19
Total Shareholder's Equity	4,198	4,054	144
Total	12,117	11,954	163
D/E Ratio	1.9	1.9
D/D+E Ratio	0.7	0.7
Number of Shares (mn)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	1Q19
Total Net Income	186
1 D&A	140
Net Change in Funds	-29
Operating Cash Flow	297
Δ Working Capital & Other 2	-109
Cash Flow from Operating Activities	187
Capital Expenditures	-164
Free Cash Flow to Equity	23
Dividends & Equity 3	-42
Change in Net Cash (Debt) 3	-19

Capex Annex

€ mn	1Q18	1Q19	Δ mn	Δ %
1
Incentivized Investment Other Reguleted	20 97	9 136	-11 38	-54% 39%
Regulated Capex	117	144	28	24%
2 Other	25	20	-5	-19%
Total Group Capex	142	164	23	16%

Disclaimer

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