Terna — Earnings Release 2020

Mar 24, 2021

RESULTS AS OF 31 DECEMBER 2020 APPROVED

ALL ECONOMIC INDICATORS IMPROVED, AT THE HIGHEST LEVEL IN TERNA'S HISTORY

• Revenues at €2,513.5 million (€2,295.1 million in 2019, +9.5%)
• EBITDA at €1,830.4 million (€1,741.2 million in 2019, +5.1%)
• Group net profit for the year at €785.5 million (€757.3 million in 2019, +3.7%)
• Capex at €1,351.1 million (€1,264.1 million in 2019, +6.9%)
• Net debt at €9,172.6 million (€8,258.6 million at 31 December 2019)
• Proposed dividend for 2020 of 26.95 euro cents per share, up +8% on 2019

Rome, 24 March 2021 – Today's meeting of the Board of Directors of Terna S.p.A. ("Terna"), chaired by Valentina Bosetti, has examined and approved the results for the year ended 31 December 2020.

2020 was primarily marked by the Covid-19 health emergency, which had a major impact on markets and on the Italian and world economies. Terna immediately prioritised the health of all employees and their ability to operate safely, introducing a series of measures designed, on the one hand, to guarantee the stability and efficiency of the electricity system and, on the other, to ensure the best possible working conditions for all people. Despite the climate of great uncertainty, 2020 saw Terna achieve improvements across all economic and financial indicators. This enabled the Group to record its best ever performance, reflecting the ability to significantly accelerate the delivery of investment projects as soon as the lockdown came to an end, making up the ground lost at the height of the crisis. This saw the Group further accelerate capital expenditure in the fourth quarter of the year, with total investment amounting €1,351.1 million at the end of 2020 (an increase of 6.9% compared with 2019), benefitting both the electricity system and the country's recovery.

"We are proud of the expertise and commitment shown by Terna's employees during a difficult year such as 2020, as we strove to guarantee the continuous supply of electricity, an essential good for the community. Ensuring the safety of our people was our number one priority. All the measures we put in place, above all from the second half of the year, have produced results that would have seemed unthinkable only last June, in terms of both resilience to the impact of the Covid-19 health emergency, and the amount of investments, which exceeded the already ambitious targets set prior to the pandemic. And it is thanks to the efforts of the women and men who work for Terna that we will be able to reach the challenging goals Italy has set itself for the ecological transition, and that we will play our part in achieving as the directors of the country's energy system," said Stefano Donnarumma, Terna's CEO and General Manager.

€m	2020	2019	% change
Revenues	2,513.5	2,295.1	+9.5%
EBITDA (gross operating profit)	1,830.4	1,741.2	+5.1%
EBIT (operating profit)	1,186.6	1,155.1	+2.7%
Group net profit for the year	785.5	757.3	+3.7%
CAPEX	1,351.1	1,264.1	+6.9%

CONSOLIDATED FINANCIAL HIGHLIGHTS FOR 2020

Revenues for 2020 amount to €2,513.5 million, an increase of €218.4 million (+9.5%) compared with 2019. This result primarily reflects increased revenues from Regulated Activities, combined with the greater contribution from Non-regulated Activities, mainly due to the integration of Brugg Cables.

EBITDA (gross operating profit) for 2020 is €1,830.4 million, an increase of €89.2 million (+5.1%) compared with 2019. This primarily reflects improved results from Regulated Activities, due to an increase in the assets managed by Terna, and Non-regulated Activities, thanks also to the integration of Brugg Cables.

EBIT (operating profit) for the year, after amortisation, depreciation and impairments of €643.8 million, amounts to €1,186.6 million, compared with €1,155.1 million for 2019 (+2.7%).

Net financial expenses for 2020 amount to €93.5 million, an increase of €15.8 million compared with the €77.7 million of 2019. This primarily reflects interest expense on the debt of the overseas companies and a reduction in the value of investments in associates.

Profit before taxes is €1,093.1 million, up €15.7 million (+1.5%) compared with 2019.

Income tax expense for the year amounts to €297.8 million, a reduction of €15.7 million (-5.0%) compared with 2019. The tax rate of 27.2% is down on the rate for 2019, reflecting the recognition of tax-exempt income.

Group net profit of €785.5 million is up €28.2 million (+3.7%) compared with the €757.3 million of 2019.

The consolidated statement of financial position shows equity attributable to owners of the Parent of €4,369.8 million, compared with €4,190.3 million at 31 December 2019.

The Terna Group's total capital expenditure (CAPEX) during the year amounts to €1,351.1 million, a 6.9% increase compared with the €1,264.1 million of 2019, despite the Covid-19 emergency. The main projects carried out during the year include those designed to boost exchange capacity between different areas of the electricity market in Campania and Sicily, progress on work on the interconnection with France and completion of the reorganisation of the grid in the Alto Bellunese area (in the Veneto region), as well as continued work on the plan to install synchronous compensators.

To fund this major acceleration of investment in Terna's Growth and the country's recovery, net debt at 31 December 2020 has risen to €9,172.6 million, compared with €8,258.6 million at the end of 2019.

The Group's employees at the end of 2020 are 4,735, an increase of 445 compared with 31 December 2019. The increase is linked to the policy of boosting the Group's expertise and the expansion of Non-regulated Activities, with the addition of the personnel of Brugg Kabel AG, acquired on 29 February of last year.

OPERATING RESULTS OF REGULATED ACTIVITIES

Following significant investment during 2020, revenues from Regulated Activities are up to €2,148.9 million (€2,055.0 million in 2019, an increase of 4.6%).

EBITDA thus amounts to €1,720.7 million, an increase of €63.2 million compared with the previous year.

OPERATING RESULTS OF NON-REGULATED ACTIVITIES

Revenues from Non-regulated Activities in 2020 are up to €341.0 million, an increase of 61.1% compared with the €211.7 million of 2019, thanks to the contribution from the acquisition of Brugg Cables.

EBITDA generated by Non-regulated Activities amounts to €96.9 million for 2020, an increase of €26.9 million compared with the previous year. This primarily regards recognition of the share of the revenues resulting from the higher value of the net assets acquired following the acquisition of Brugg Cables compared with the amount paid.

RESULTS OF THE PARENT COMPANY, TERNA S.p.A., FOR 2020

The Parent Company, Terna S.p.A., ended 2020 with revenue of €2,086.8 million (€2,054.5 million in 2019). EBITDA (gross operating profit) is €1,587.1 million (€1,603.5 million in 2019). EBIT (operating profit), after amortisation, depreciation and impairments of €571.2 million, amounts to €1,015.9 million (€1,062.8 million in 2019). Net profit for the year thus totals €687.6 million (€713.5 million for 2019).

The statement of financial position shows equity of €4,083.6 million (compared with €3,981.1 million at 31 December 2019) and net debt of €9,137.2 million (compared with €8,361.6 million at 31 December 2019).

KEY EVENTS IN 2020

Terna continued with development of the national grid in 2020, making progress on all the major investment projects supporting the current ecological transition. The pace of work was stepped up from the end of the second quarter and, subsequently, with presentation of the 2021-2025 Industrial Plan "Driving Energy", which targets investment in Italy of €8.9 billion over the period.

Key events in 2020 included the inauguration, in the presence of Italy's Prime Minister, of the power line connecting the island of Capri with the mainland. The connection, 19 km in length, will cut air pollution following decommissioning of the island's diesel power station. More generally, key infrastructure entering service in 2020 included a total of 112 km of new power lines, whilst 9 electricity substations were built and /or enlarged. At the end of the year, work was completed on the new 23.2 km long 'invisible' power line connecting Cortina d'Ampezzo with Auronzo di Cadore in Veneto, boosting the reliability of the grid during the recent FISI World Alpine Ski Championship.

As mentioned above, in February 2020, Terna completed the acquisition of a 90% stake in Brugg Kabel AG, one of the leading European operators in the terrestrial cable sector, specialising in the design, development, construction, installation and maintenance of electrical cables of all voltages and accessories for high-voltage cables. The transaction has equipped Terna with strategic competencies that will play a key role in the present and future management of power lines.

Confirmation of the fact that sustainability is at the heart of the Group's strategies was provided by Terna's ranking, for the third year running, as the number one Electric Utility in the Dow Jones Sustainability World Index. Terna was also acknowledged as one of the 50 most sustainable businesses in the world at the 2020 Seal Business Sustainability Awards.

OUTLOOK

With the 2021-2025 Industrial Plan, presented last November, Terna aims to confirm and strengthen its central role in directing, driving and enabling the Italian energy system and the ecological transition. As a result, despite the ongoing pandemic, 2021 will see the Group committed to delivering on the Plan. Of the €9.2 billion to be invested over the next five years, approximately €1.4 billion will be invested in 2021.

The Group will continue to invest in Regulated Activities and in strengthening the core business. This will involve direct engagement across the country, through listening and dialogue with all the key stakeholders, local communities, authorities and institutions.

The principal electricity infrastructure under construction includes the interconnection with France, which is due to enter service in 2021, and the start of work on the new SA.CO.I.3 project (strengthening the link between Sardinia, Corsica and the Italian mainland). In addition, the main

projects to increase the exchange capacity between the various areas of the Italian electricity market include the Colunga-Calenzano (linking Tuscany and Emilia Romagna) and the Paternò-Pantano-Priolo (in Sicily) power lines, whilst the reorganisation of electricity grids in metropolitan areas will primarily involve the renewal of existing infrastructure, with new technologically advanced connections meeting the highest standards in terms of environmental sustainability (e.g., Naples, Milan and Rome).

During 2021, Terna will also engage in the usual dialogue with ARERA as part of the process of establishing the methods and criteria for determining and revising the allowed WACC for the electricity and gas sectors from 2022.

With regard to Non-regulated Activities, Terna will continue to consolidate its role as a provider of both energy solutions, developing high value-added services for corporate customers, including energy efficiency solutions, and taking advantage of market opportunities for traditional and renewable customers, and connectivity, pursuing opportunities based on exploiting the Group's own fibre infrastructure. In terms of manufacturing, the aim is to build on Tamini's performance and complete the integration of Brugg in order to take advantage of significant potential synergies with the non-regulated business and exploit the company's distinctive expertise in the production of terrestrial cables.

International Activities will continue to focus on managing and maintaining the power lines that have entered service in Brazil and Uruguay, and on completing existing projects in Peru and Brazil. The process of scouting for further opportunities in overseas markets will continue. This may take the form of partnerships and will involve the careful selection of projects with a view to ensuring a low risk profile and avoiding the need to tie up large amounts of capital.

Investment in innovation and digital solutions will play a crucial role in supporting these initiatives, as part of the transformation that will enable Terna to manage the growing complexity of the system. Attention will also be paid to the development and insourcing of strategic competencies, to the strengthening of departments, and to optimising the working environment for our people through delivery of the NexTerna project. The project will involve a transformation of the way we work, simplifying processes and rethinking the use of physical and virtual spaces, and the adoption of new digital tools, once again demonstrating our ability to pioneer and drive the transition.

The Industrial Plan, based on sustainability and respect for the ESGs, will ensure that we are able to minimise our environmental impact, involve local stakeholders and meet the need for integrity, responsibility and transparency, principles that have always formed the basis of Terna's approach to doing business.

The above objectives will be pursued whilst maintaining our commitment to maximising the cash generation necessary ensure a sound, balanced financial structure.

2020 SUSTAINABILITY REPORT- CONSOLIDATED NON-FINANCIAL STATEMENT

The Board of Directors has approved the 2020 Sustainability Report, prepared in accordance with the GRI standards and also meeting the non-financial disclosure requirements in Legislative Decree 254/2016, as amended. Among our key achievements in 2020, Terna's inclusion in all the leading international stock exchange sustainability indices was confirmed, as was the Company's ranking as Industry Leader in the Electric Utilities segment of the Dow Jones Sustainability Index.

CORPORATE GOVERNANCE, ANNUAL GENERAL MEETING AND DIVIDEND

The Board of Directors has approved the Report on Corporate Governance and Ownership Structure for 2020 (which included the outcome of the assessment of Directors' and Statutory Auditors' continued satisfaction of the related independence requirements) and, on the proposal of the Remuneration Committee, the Report on the Remuneration and Compensation Policy. Today's meeting was also presented with the results of the self-assessments of the Board of Directors, Board Committees and the Board of Statutory Auditors, which will be included in the Report on Corporate Governance and Ownership Structure.

The Board of Directors has also called the Annual General Meeting ("AGM") of shareholders, to be held in single call on 30 April 2021, in order to deliberate on the following agenda:

• 1. Approve Terna S.p.A.'s financial statements for the year ended 31 December 2020 and review the consolidated financial statements for the year ended 31 December 2020
• 1. Deliberate on the proposed allocation of profit for the year

The Board of Directors will propose the AGM the approval of a total dividend for financial year 2020 of €541,692,844.00, equal to 26.95 euro cents per share. After taking into account the ordinary interim dividend for 2020 of 9.09 euro cents per share previously paid from 25 November 2020, the Board of Directors proposes to pay a final dividend of 17.86 euro cents per share, before any legal withholdings. The final dividend will be payable starting from 23 June 2021, with "ex-dividend date" 21 June 2021 of coupon n. 34 (record date pursuant to Art. 83-terdecies of Italian Legislative Decree no. 58 of 24 February 1998, "Consolidated Law on Finance" – CLF - of 22 June 2021). The treasury shares held as of the above record date will not participate in the distribution. The final dividend for 2020 attributable to the treasury shares held by the Company at the record date will be taken to retained earnings.

1. Deliberate on adoption of a long-term incentive plan based on Performance Shares for the period 2021-2025 for the management of Terna S.p.A. and/or its subsidiaries, as defined by art. 2359 of the Italian Civil Code

This is an equity-based Plan, involving the grant of the right to receive a certain number of Terna S.p.A.'s shares (the Performance Shares) free of charge if, at the end of the vesting period, the performance targets to which the Plan is linked have been met.

The targets break down as follows: operating performance based on cumulative EBITDA – relative weighting 50%; market performance based on relative TSR – relative weighting 30%; sustainability based on the Dow Jones Sustainability Index – relative weighting 20%.

At the end of the vesting period, 30% of the shares awarded will be subject to a further two-year lock-up period, during which time the shares are non-transferable (meaning that they cannot be transferred and/or sold for a period of 24 months).

Clawback provisions also apply to the Plan, as required by the Corporate Governance Code and best market practices.

The beneficiaries of the Plan are the General Manager, who is also the Chief Executive Officer, Senior Managers with Strategic Responsibilities, as well as other Senior Managers and Middle Managers in the Company and/or its subsidiaries, pursuant to Art. 2359 of the Italian Civil Code.

In consideration of its features, its structure, and the performance objectives identified, the Plan is designed to ensure the alignment of management's interests with the priority objective of creating value for shareholders over the medium to long term.

For a full description of the plan, please see the Information Document prepared pursuant to Article 114-bis of the Consolidated Law on Finance, which will be made accessible to the public within the legal terms.

4.Approve the Report on the Remuneration and Compensation Policy

The AGM will be asked to decide on:

• (binding) the first section of the Report, which explains the policy on remuneration of the members of Terna S.p.A.'s Board of Directors and the Board of Statutory Auditors, the General Manager and the Senior Executives with Strategic Responsibilities, as well as the procedure for adopting and implementing the Policy;

• (non binding) the second section of the Report, which explains the compensation paid to the members of the Board of Directors and the Board of Statutory Auditors, the General Manager and, as an aggregate number, Senior Executives with Strategic Responsibilities.

• Grant the proposed authority to buy back and dispose of the Company's own shares to service the long-term incentive plan based on Performance Shares for the period 2021-2025 for the management of Terna S.p.A. and/or its subsidiaries, as defined by art. 2359 of the Italian Civil Code, following prior revocation of the previous resolution authorising such buybacks

The Board of Directors has decided to request the AGM of 30 April 2021 to approve the proposed authority to buy back and subsequent dispose of, in one or more transactions, the Company's own shares at a total cost of up to €10 million and involving up to a maximum of 1.95 million ordinary shares, representing approximately 0.10% of Terna's share capital.

This request aims to grant the Board of Directors the option of purchasing and disposing of own shares, in compliance with the current regulations and procedures indicated below, to service the Performance Share Plan and/or any share-based incentive plans for the Directors and/or employees of the Company and/or its subsidiaries and/or associates.

The authority to buy back own shares is requested for the maximum period permitted by art. 2357, paragraph 2 of the Italian Civil Code, and therefore for eighteen months from the date of the General Meeting granting the authority. There is no time limit for the subsequent disposal of the shares.

The request for the authority provides that purchases can be made at a price that must not be more than 10% higher or lower than the price of the shares on the Mercato Telematico Azionario (screenbased trading system) organised and operated by Borsa Italiana S.p.A., as recorded during the previous day's session for each individual transaction. Additionally, market purchases of own shares shall be carried out in accordance with the terms, conditions and requirements established by current regulations and, where applicable, with the market practices from time to time prevailing.

The sale or other use of the resulting treasury shares will be made to service the Performance Share Plan and/or any share-based incentive plans for the Directors and/or employees of the Company and/or its subsidiaries and/or associates, in accordance with the terms and conditions indicated in the applicable rules, without prejudice to current regulations, and, where applicable, the market practices from time to time prevailing. Buybacks will be carried out in compliance with the provisions of art. 132 of the Consolidated Law on Finance and art. 144-bis of the Regulations for Issuers and all other applicable regulations and, where applicable, with the market practices from time to time prevailing.

More specifically, pursuant to art. 132.1 of the Consolidated Law on Finance, share buybacks must be made in a way that ensures the equal treatment of all shareholders, according to the procedures established by the CONSOB. In this latter regard, among the procedures provided for in art. 144-bis of the Regulations for Issuers, Terna's share buybacks may also be carried out under the conditions indicated in art. 5 of Regulation (EU) 596/2014, except for the procedures provided for in letters d and d-bis of art. 144-bis.

It should be noted that, in cases where the option referred to in art. 144-bis, section 1(c) of the CONSOB Regulations for Issuers is to be exercised, purchases and sales of derivative instruments must be carried out through authorised financial intermediaries, specially appointed for this purpose.

In conclusion, it should be noted that, in implementation of the share buyback programme launched on 29 June 2020, and concluded on 6 August 2020, to service the Performance Share Plan 2020- 2023, Terna has purchased 1,525,900 own shares (equal to 0.076% of the share capital) at a total

cost of €9,499,998.75. The Company does not hold any additional treasury shares with respect to those purchased under the above programme, including though subsidiaries.

*****

With regard to the Annual General Meeting, in view of the ongoing health emergency linked to Covid-19, and considering the legislation enacted in order to contain the disease, the Company intends to take advantage of the option provided for in art. 106, paragraph 4 of Law Decree 18 of 17 March 2020, as amended. This means that attendance at the and AGM may only take place through the representative designated by the Company pursuant to art. 135-undecies of Legislative Decree 58 of 24 February 1998 (the "CLF"), namely Computershare S.p.A..

Finally, the Board of Directors has authorised the Chairwoman to establish the time and place for the AGM. The notice of call will be published according to the procedures and the deadline required by law, as will the documentation relating to agenda items.

BOND ISSUES AND BONDS REACHING MATURITY

Issues in 2020:

• in July 2020, Terna launched a green bond issue for institutional investors worth €500 million, maturing in July 2032 and paying coupon interest of 0.750%;
• in September 2020, Terna successfully launched a bond issue for institutional investors worth €500 million, maturing in September 2030 and paying coupon interest of 0.375%;
• in March 2020, Linha Verde II issued bonds worth €210 million Brazilian reals, maturing in July 2044 and paying coupon interest at a rate indexed to inflation (IPCA +5.33%).

The following bonds will fall due in the period between 1 January 2021 and 30 June 2022:

• €1,250 million relating to a fixed rate bond issue issued by Terna and maturing in March 2021;
• €1 billion relating to a fixed rate bond issue issued by Terna and maturing in February 2022.

ALTERNATIVE PERFORMANCE MEASURES

This release includes a number of "alternative performance measures" (EBITDA, the tax rate and net debt) not required by IAS/IFRS. A description of these measures is provided below in accordance with the ESMA/2015/1415 guidelines published on 3 December 2015:

• EBITDA (Gross Operating Profit): an indicator of operating performance, representing "Profit for the period" before "Income tax expense for the period", "Net financial income/(expenses)" and "Amortisation, depreciation and impairment losses";

• Tax rate: the amount of tax paid as a proportion of pre-tax profit, based on the ratio of "Income tax expense" to "Profit/(Loss) before tax";

• Net debt: an indicator of the financial structure, calculated by deducting "Cash and cash equivalents", "Current financial assets" and "Non-current financial assets", as they relate to the value of the derivatives hedging bond issues and, in the Parent Company's case, loans to subsidiaries, from short-term financial liabilities ("Short-term borrowings", the "Current portion of long-term borrowings" and "Current financial liabilities") and long-term financial liabilities ("Long-term borrowings") and the related derivative instruments ("Non-current financial liabilities"). The net debt of the Terna Group and of Terna S.p.A. complies with the requirements of ESMA Recommendation 319 of 2013 with regard to the definition of net debt or funds, which does not include "Non-current financial assets".

A meeting will be held at 4.00pm CET today to present the results for the year ended 31 December 2020 to financial analysts and investors. Back-up material for the event will be made available in the Investors section of the Company's website (www.terna.it) as the meeting starts. The presentation will also be made available via "eMarket SDIR", on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) and through the authorised storage service (). Journalists will have the opportunity to follow the meeting by telephone without any right to speak. It will also be possible to follow the presentation by connecting to the audio webcast on the Company website (www.terna.it): following the live broadcast, the file will be available in the Investors section of the website.

The Manager Responsible for Financial Reporting, Agostino Scornajenchi, declares that, pursuant to section two of article 154-bis of the Consolidated Law on Finance, the information contained in this release is consistent with the underlying accounting records. The Annual Report for 2020, including Terna S.p.A.'s separate financial statements and the Terna Group's consolidated financial statements for the year ended 31 December 2020, accompanied by the report on operations on Terna S.p.A.'s separate financial statements and the consolidated financial statements, and by the attestation issued by the Manager Responsible for Financial Reporting and the Chief Executive Officer under the terms of paragraph 5 of art. 154-bis of the Consolidated Law on Finance, together with the additional documents required by the law, the Consolidated Non-Financial Statement and the Annual Report on Corporate Governance and Ownership Structures, will, by the deadline set out by law, be made available to the public at the Company's registered office, and published on the Company's website (www.terna.it) and on the website of the authorised storage service (). The documents will also be filed at the stock exchange management company, Borsa Italiana S.p.A. (www.borsaitalian.it). The required announcement of the filing will also be published.

The Annual Report and Consolidated Non-Financial Statement for 2020 have been submitted to the Board of Statutory Auditors and to the Independent Auditors to enable them to carry out the procedures they are responsible for. The report of the Board of Statutory Auditors and the report of the Independent Auditors will be made available to the public as soon as they are available according to the terms established by the law.

The reclassified income statement and statement of financial position and the statement of cash flows of the Terna Group and of Terna S.p.A. are attached. It should be noted that, pursuant to CONSOB Statement DME/9081707 of 16 September 2009, the reclassified statements presented below are those included in the Report on Operations (included in the Annual Report for 2020), for which the Independent Auditors, in compliance with art. 14 of Legislative Decree 39 dated 27 January 2010, will verify consistency with the financial statements.

The Terna Group's reclassified income statement

				(€m)
	2020	2019	Change	% change
TOTAL REVENUES	2,513.5	2,295.1	218.4	9.5%
- Regulated revenue	2,148.9	2,055.0	93.9	4.6%
of which Revenue from construction services
performed under concession	28.5	27.6	0.9	3.3%
- Non-Regulated revenue	341.0	211.7	129.3	61.1%
- International revenue	23.6	28.4	(4.8)	(16.9%)
TOTAL OPERATING COSTS	683.1	553.9	129.2	23.3%
- Personnel expenses	282.9	251.6	31.3	12.4%
- Cost of services, leases and rentals	174.0	171.8	2.2	1.3%
- Materials	155.6	86.2	69.4	80.5%
- Other costs	33.8	16.1	17.7	109.9%
- Quality of service	8.3	0.6	7.7	-
- Cost of construction services performed
under concession	28.5	27.6	0.9	3.3%
GROSS OPERATING PROFIT (EBITDA)	1,830.4	1,741.2	89.2	5.1%
- Amortisation, depreciation and impairment losses	643.8	586.1	57.7	9.8%
OPERATING PROFIT (EBIT)	1,186.6	1,155.1	31.5	2.7%
- Net financial income/(expenses)	(93.5)	(77.7)	(15.8)	20.3%
PROFIT/(LOSS) BEFORE TAX	1,093.1	1,077.4	15.7	1.5%
- Income tax expense for the year	297.8	313.5	(15.7)	(5.0%)
PROFIT FOR THE YEAR	795.3	763.9	31.4	4.1%
- Profit/(Loss) attributable to non-controlling
interests	9.8	6.6	3.2	48.5%
PROFIT FOR THE YEAR ATTRIBUTABLE TO OWNERS
OF THE PARENT	785.5	757.3	28.2	3.7%

The Terna Group's reclassified statement of financial position

			(€m)
	at 31 December 2020	at 31 December 2019	Change
Total net non-current assets	15,645.9	14,908.5	737.4
- Intangible assets and goodwill	577.9	542.7	35.2
- Property, plant and equipment	14,559.7	13,864.2	695.5
- Financial assets	508.3	501.6	6.7
Total net working capital	(1,936.2)	(2,207.8)	271.6
- Net energy-related pass-through payables	(385.0)	(575.8)	190.8
- Net receivables resulting from Regulated Activities	230.9	320.4	(89.5)
- Net trade payables	(818.0)	(899.1)	81.1
- Net tax assets	40.5	(5.3)	45.8
- Other net liabilities	(1,004.6)	(1,048.0)	43.4
Gross invested capital	13,709.7	12,700.7	1,009.0
Sundry provisions	(121.3)	(210.2)	88.9
NET INVESTED CAPITAL	13,588.4	12,490.5	1,097.9
Equity attributable to owners of the Parent	4,369.8	4,190.3	179.5
Equity attributable to non-controlling interests	46.0	41.6	4.4
Net debt	9,172.6	8,258.6	914.0
TOTAL	13,588.4	12,490.5	1,097.9

The Terna Group's cash flow

		(€m)
	Cash flow 2020	Cash flow 2019
- Profit for the year	795.3	763.9
- Amortisation, depreciation and impairment losses	643.8	586.1
- Net change in provisions	(88.9)	(97.3)
of which contributed by Brugg Cables	10.4	-
- Net losses/(gains) on sale of assets	(7.7)	(12.9)
Operating cash flow	1.342.5	1.239.8
- Change in net working capital	(272.0)	386.2
of which contributed by Brugg Cables	21.1	-
- Other changes in property, plant and equipment and intangible assets	(15.3)	46.8
of which contributed by Brugg Cables	(62.4)	-
- Change in investments	3.6	(3.3)
- Change in financial assets	(10.3)	(178.4)
Cash flow from operating activities	1.048.5	1.491.1
- Total capital expenditure	(1.351.1)	(1.264.1)
Free cash flow	(302.6)	227.0
- Dividends paid to the Parent Company's shareholders	(515.0)	(479.7)
- Cash flow hedge reserve after taxation and other movements in equity attributable to owners of the Parent	(91.0)	(106.5)
- Other movements in equity attributable to non-controlling interests	(5.4)	-
Change in net debt	(914.0)	(359.2)

Terna S.p.A.'s reclassified income statement

				(€m)
	2020	2019	Change	% change
TOTAL REVENUES	2,086.8	2,054.5	32.3	1.6%
- Tariff revenue	1,906.2	1,838.5	67.7	3.7%
of which transmission revenue	1,796.9	1,725.6	71.3	4.1%
of which dispatching, metering and other revenue	109.3	112.9	(3.6)	(3.2%)
- Other operating income	152.1	188.4	(36.3)	(19.3%)
- Revenue from construction services performed under concession*	28.5	27.6	0.9	3.3%
TOTAL OPERATING COSTS	499.7	451.0	48.7	10.8%
- Personnel expenses	70.8	60.0	10.8	18.0%
- Cost of services, leases and rentals	369.2	354.5	14.7	4.1%
- Materials	0.7	1.2	(0.5)	(41.7%)
- Other costs	22.2	7.1	15.1	212.7%
- Quality of service	8.3	0.6	7.7	-
- Cost of construction services performed under Concession*	28.5	27.6	0.9	3.3%
GROSS OPERATING PROFIT (EBITDA)	1,587.1	1,603.5	(16.4)	(1.0%)
- Amortisation, depreciation and impairment losses	571.2	540.7	30.5	5.6%
OPERATING PROFIT/(LOSS) (EBIT)	1,015.9	1,062.8	(46.9)	(4.4%)
- Net financial income/(expenses)	(59.0)	(63.6)	4.6	(7.2%)
PROFIT/(LOSS) BEFORE TAX	956.9	999.2	(42.3)	(4.2%)
- Income tax expense	269.3	285.7	(16.4)	(5.7%)
PROFIT FOR THE YEAR	687.6	713.5	(25.9)	(3.6%)

* Recognised in application of interpretation IFRIC 12 – Service Concession Arrangements.

Terna S.p.A.'s reclassified statement of financial position

			(€m)
	at 31 December 2020	at 31 December 2019	Change
Total net non-current assets	14,632.1	13,981.2	650.9
- Intangible assets and goodwill	475.9	443.8	32.1
- Property, plant and equipment	12,755.2	12,258.3	496.9
- Financial assets	1,401.0	1,279.1	121.9
Total net current liabilities	(1,365.8)	(1,517.4)	151.6
- Net energy-related pass-through payables	(408.9)	(598.6)	189.7
- Net receivables resulting from regulated activities	230.9	320.4	(89.5)
- Net trade payables	(615.4)	(592.5)	(22.9)
- Net tax assets	(25.6)	(79.3)	53.7
- Other liabilities net	(546.8)	(567.4)	20.6
Gross invested capital	13,266.3	12,463.8	802.5
Sundry provisions	(45.5)	(121.1)	75.6
NET INVESTED CAPITAL	13,220.8	12,342.7	878.1
Equity	4,083.6	3,981.1	102.5
Net debt	9,137.2	8,361.6	775.6
TOTAL	13,220.8	12,342.7	878.1

Terna S.p.A.'s cash flow

		(€m)
	Cash flow	Cash flow
	2020	2019
- Profit for the year	687.6	713.5
- Amortisation, depreciation and impairment losses	571.2	540.7
- Net change in provisions	(75.6)	(86.3)
- Net losses/(gains) on sale of assets	(5.5)	(11.2)
Operating cash flow	1,177.7	1,156.7
- Change in net working capital	(152.1)	130.5
- Change in investments	(102.9)	(29.2)
- Other movements in property, plant and equipment and intangible assets	40.1	275.6
- Change in financial assets	(19.0)	(164.5)
Cash flow from operating activities	943.8	1,369.1
- Total capital expenditure	(1,134.3)	(1,045.6)
Free cash flow	(190.5)	323.5
- Dividends paid to shareholders	(515.0)	(479.7)
- Cash flow hedge reserve after taxation and other movements in equity	(70.1)	(103.6)
Change in net debt	(775.6)	(259.8)