Terna — Investor Presentation 2016

May 4, 2016

1Q16 Consolidated Results May 4th, 2016

MATTEO DEL FANTE CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI CHIEF FINANCIAL OFFICER

Agenda

1Q16 Results	5

Annexes 13

Highlights Drivers for 1Q16 Results

New Regulatory Framework

WACC from 6.3% to 5.3%

Time-lag shortened

More selective approach for incentives

Grid Fee less exposed to consumption volatility

M&A

RHV Grid acquisition: allowed opex + TLC contract

Tamini-TES combination

Efficiencies on

Opex

Debt management

Highlights Key Financials

1Q16 Results

Revenues

Total Revenues 517
€mn +0.8% yoy
Regulated Activities 471 €mn -1.5% yoy
Non Regulated Activities 43 €mn

KEY FIGURES TOTAL REVENUES EVOLUTION

Revenues Analysis 1Q16 Results

REGULATED ACTIVITIES

Opex 1Q16 Results

Total Costs 122€mn

Regulated Activities 84€mn

Non Regulated Activities 36€mn

KEY FIGURES TOTAL COSTS EVOLUTION

Regulated Activities 86 84 -2 Non Regulated Act. 23 36 12 o/w Tamini 20 29 9 Other Non Regulated Act. 4 7 3 IFRIC12 3 3 0 Total 112 122 10	€ mn	1Q15	1Q16	Δ yoy	Δ % yoy
					-2.1%
					54%
					48%
					87%
					-10%
					9.3%

Opex Analysis 1Q16 Results

REGULATED ACTIVITIES

From EBITDA to Net Income 1Q16 Results

Group EBITDA 395€mn -1.6%yoy

Group EBITDA Margin 76.4%

KEY FIGURES PROFIT & LOSS

Capex 1Q16 Results

Regulated Capex 150€mn

KEY FIGURES BREAKDOWN

Category (€mn)	1Q15	1Q16	Δ yoy	Δ % yoy
Capex at 1% Incentive	48	43	-5	-11%
Capex at Base Return	118	107	-11	-9.5%
Regulated Capex	167	150	-17	-10%
Other	11	1 8	-3	-25%
Total Group Capex	177	158	-19	-11%

Net Debt Evolution & Financial Structure 1Q16 Results

THANK YOU. QUESTIONS?

MATTEO DEL FANTE CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI CHIEF FINANCIAL OFFICER

Annex Electricity Market Trends – Last 12 Months

Consolidated Income Statement¹ Annex

€ mn	1Q15	1Q16	Δmn	Δ%
Transmission	443	431	-12	-2.7%
Dispatching	32	28	-4	-12%
Other 2	4	12	9	230%
Regulated Activities	479	471	-7	-1.5%
Non Regulated Act.	32	43	12	37%
IFRIC12	3	3	0	-10%
Total Revenues	513	517	4	0.8%
Labour Costs	49	45	-4	-7.7%
External Costs	28	35	7	24%
Other	8	3	-5	-59%
Regulated Activities	86	84	-2	-2.1%
Non Regulated Act.	23	36	12	54%
IFRIC12	3	3	0	-10%
Total Costs	112	122	10	9.3%
EBITDA	402	395	-7	-1.6%
D&A	120	131	11	9.1%
EBIT	281	264	-17	-6.2%
Net Financial Charges	31	19	-12	-38%
Pre Tax Profit	250	245	-6	-2.2%
Taxes	85	83	-2	-2.1%
Tax Rate (%)	34%	34%
Total Net Income	165	161	-4	-2.3%
Minority Interest	-	-1	-1
Group Net Income	165	162	-3	-1.8%

Group Costs Breakdown Annex

€ mn	1Q15	1Q16	Δmn	Δ%
Labour Costs	56	54	-2	-4.1%
Services	31	41	10	31%
Materials	13	20	8	61%
Other	9	5	-4	-48%
IFRIC12	3	3	0	-10%
Total Costs	112	122	10	9.3%

Consolidated Balance Sheet Annex

€ mn	Dec. 31,2015	Mar. 31,2016	Δmn
PP&E	12,079	12,082	3
Intangible Asset	520	514	-6
Financial Inv. and Other	90	91	1
Total Fixed Assets	12,688	12,687	-1
Net WC	-962	-1,145	-183
Funds	-378	-362	17
Total Net Invested Capital	11,349	11,181	-168
Financed by
Consolidated Net Debt	8,003	7,687	-316
Total Shareholder's Equity	3,346	3,494	148
Total	11,349	11,181	-168
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	1Q15	1Q16	Δmn
Total Net Income	165	161	-4
D&A	120	131	11
Debt Service	31	19	-12
Net Change in Funds	-12	-17	-5
Operating Cash Flow	304	295	-9
1 ∆ Working Capital & Other	344	211	-133
Cash Flow from Operating Activities	649	506	-142
Capital Expenditures	-177	-158	19
Free Cash Flow	471	348	-123
Dividends & Equity 2	9	-14	-23
Debt Service	-31	-19	12
Change in Net Cash (Debt)	450	315

Disclaimer

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