Terna — Investor Presentation 2016

Jul 27, 2016

1H16 Consolidated Results July 27th, 2016

MATTEO DEL FANTE CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI CHIEF FINANCIAL OFFICER

Agenda

Highlights
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o1H16 Results
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5

Final Remarks	12
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Execution and Control Highlights

SICILY – MAINLAND POWER LINE IN OPERATION

• Completion one month ahead (28th May 2016)
• 2% incentive for 12 years on >700€mn capex achieved
• Main bottleneck at energy zone level eliminated

OTHER ACHIEVEMENTS

Extra remuneration confirmed on 2015 WIP for I3 incentivized capex¹

Positive impact on 2016 Revenues

ITALY-FRANCE INTERCONNECTOR²

• Green light from Italian Institutions
• Defined main terms of exemption
• Confirmed ~ 400 €mn

Highlights Key Financials

Positive results across all the P&L

A solid base for the FY

1H16 Results

Revenues

KEY FIGURES TOTAL REVENUES EVOLUTION

Revenues Analysis 1H16 Results

REGULATED ACTIVITIES

Opex 1H16 Results

Total Costs 263€mn

Regulated Activities 182€mn

Non Regulated Activities 74€mn

Activities

€ mn	1H15	1H16	Δ yoy	Δ %yoy
Regulated Activities	169	182	13	7.8%
Non Regulated Act.	59	74	15	25%
o/w Tamini	50	60	11	21%
Other Non Regulated Act.	10	14	4	46%
IFRIC12	8	7	-1	-7.8%
Total	235	263	28	12%

Opex Analysis 1H16 Results

REGULATED ACTIVITIES

From EBITDA to Net Income 1H16 Results

Group EBITDA 777€mn Group EBITDA Margin 74.7% +1.4%yoy

Group Net Income¹ 325€mn +4.8%yoy

Capex 1H16 Results

Total Capex 347€mn

Regulated Capex 333€mn

KEY FIGURES BREAKDOWN

Category (€mn)	1H15	1H16	Δ yoy	Δ % yoy
Capex at 1% Incentive		126
Capex at Base Return		206
Regulated Capex	412	333	-79	-19%
Other	27	1 14	-13	-47%
Total Group Capex	439	1 347	-92	-21%

Net Debt Evolution & Financial Structure 1H16 Results

KEY FIGURES

Fixed/floating ratio Calculated on Net Debt 86/14

Final Remarks

EXPLORING OPPORTUNITIES IN INTERNATIONAL

In line with our max 200€mn Strategic Plan commitment

FY 2016 OUTLOOK

Revenues ~2.1€bn previous ~ 2.09€bn

EBITDA ~1.53€bn previous ~ 1.52€bn

CAPEX ~0.9€bn confirmed

THANK YOU. QUESTIONS?

MATTEO DEL FANTE CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI CHIEF FINANCIAL OFFICER

Annex Electricity Market Trends – Last 12 Months

NOTE: 2014 final figures, 2015 & 2016 provisional figures (as of July 2016)

1. For temperature and number of days

Consolidated Income Statement¹ Annex

€ mn	1H15	1H16	Δmn	Δ %
Transmission	839	871	32	3.8%
Dispatching	62	55	-7	-12%
Other 2	10	16	7	68%
Regulated Activities	911	942	31	3.4%
Non Regulated Act.	83	90	7	8.7%
IFRIC12	8	7	-1	-7.8%
Total Revenues	1,002	1,040	38	3.8%
Labour Costs	97	95	-2	-2.4%
External Costs	56	72	16	29%
Other	15	15	-1	-4.5%
Regulated Activities	169	182	13	7.8%
Non Regulated Act.	59	74	15	25%
IFRIC12	8	7	-1	-7.8%
Total Costs	235	263	28	12%
EBITDA	767	777	10	1.4%
D&A	243	267	24	10%
EBIT	524	510	-14	-2.6%
Net Financial Charges	64	36	-28	-43%
Pre Tax Profit	460	474	14	3.0%
Taxes	150	151	1	0.5%
Tax Rate (%)	33%	32%
Total Net Income	310	323	13	4.2%
Minority Interest		-2	-2

Group Costs Breakdown Annex

€ mn	1H15	1H16	Δmn	Δ %
Labour Costs	112	113	1	1.3%
Services	66	84	18	28%
Materials	32	39	7	21%
Other	18	20	2	9.5%
IFRIC12	8	7	-1	-7.8%
Total Costs	235	263	28	12%

P&L Quarterly Analysis Annex

€ mn	1Q15	1Q16	Δ	2Q15	2Q16	Δ
Regulated Activities	479	471	-7	432	471	39
Non Regulated Act.	32	43	12	52	47	-4
IFRIC 12	3	3	0	5	4	0
Operating Revenues	513	517	4	489	523	34
Regulated Activities	86	84	-2	83	98	15
Non Regulated Act.	23	36	12	36	38	2
IFRIC 12	3	3	0	5	4	0
Operating Expenses	112	122	10	124	141	17
EBITDA	402	395	-7	365	382	17
D&A	120	131	11	123	136	13
EBIT	281	264	-17	242	246	4
Net Financial Charges	31	19	-12	33	17	-16
Pre Tax Profit	250	245	-6	210	229	19
Taxes	85	83	-2	65	67	2
Total Net Income	165	161	-4	145	161	17
Minority Interest		-1	-1		-1	-1
Group Net Income	165	162	-3	145	163	18
Total Group Capex	177	158	-19	262	189	-73
Net Debt (end of period)	6,518	7,687		6,876	8,172

Consolidated Balance Sheet Annex

€ mn	Dec. 31,2015	Jun. 30,2016	Δmn
PP&E	12,079	12,171	93
Intangible Asset	530	519	-11
Financial Inv. and Other	90	90	0
Total Fixed Assets	12,698	12,780	82
Net WC	-977	-842	135
Funds	-373	-377	-4
Total Net Invested Capital	11,349	11,561	212
Financed by
Consolidated Net Debt	8,003	8,172	170
Total Shareholder's Equity	3,346	3,388	43
Total	11,349	11,561	212
D/E Ratio	2.4	2.4
D/D+E Ratio	0.7	0.7
Number of Shares ('000)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	1H15	1H16	Δmn
Total Net Income	310	323	13
1 D&A	242	265	23
Debt Service	64	36	-28
Net Change in Funds	-28	4	32
Operating Cash Flow	587	629	41
2 ∆ Working Capital & Other	244	-135	-379
Cash Flow from Operating Activities	831	494	-337
Capital Expenditures	-439	-347	92
Free Cash Flow	392	147	-245
3 Dividends & Equity	-239	-280	-42
Debt Service	-64	-36	28
Change in Net Cash (Debt)	90	-170

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

3. Including Cash Flow Hedge accruals and other

Disclaimer

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