Terna — Investor Presentation 2017

Nov 10, 2017

9M17 Consolidated Results

November 10th, 2017

Agenda

Highlights	3

9M17 Results 6
-------------------

Annexes	16
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Highlights (1/3) Key Achievements

Regulated Activities

MoU for the realization of SACOI 3

• - Supporting the transition to renewables
• - Contribution to the completion of a single European energy market

Udine Ovest-Redipuglia

• - Increased security of supply in the area
• - Relevant environmental and social benefits:
• Decommissioning of 110 km of old power lines
• Removal of 400 pylons

Non Regulated Activities

International Activities

Perù project

Contract signed for the construction of about 132 km lines

Execution well on track: continued focus on Italy

Highlights (2/3) Demand Evolution

235.5 239.5 1.7% TWh 33 Monthly energy demand Monthy energy demand Previous Year Previous Year 31 29.9 29 28.2 27.8	Δ %	9M17	9M16		AS REPORTED (TWh)		DEMAND
Demand 26.4 27
239 TWh 26.1 25.5 26.8
9M17
25 25.1
23.6
23 Jan Feb Mar Apr Mag Jun Jul Aug Sep Jan Feb Mar Apr May Jun Jul Aug Sep
5.5% -2.6% -0.4% -3.4% 0.2% 7.6% 1.1% 9.4% -2.0%

~34% demand covered by renewables

Highlights (3/3) 9M17 Key Numbers

€mn	9M 2017	9M 2016	Δ 9M 16 vs
Revenues	1,627	1,551	+5%
EBITDA	1,207	1,176	+3%
Group Net Income1	529	487	+9%
Capex	545	530	+3%
	9M 2017	FY 2016
Net Debt	7,363	7,959
2017 Interim Dividend	7.43 €cents/share2	+3% vs 2016

Growth in all P&L lines

1. Attributable to Terna

2. Dividend per Share equal to 7.4263 €/cents. Ex Dividend Date: November 20th 2017, Payment Date: November 22nd 2017

9M17 Results Revenues

Revenues increase driven by regulated and international activities

1. Including IFRIC 12

9M17 Results Revenues Analysis

Full recognition of RHV Grid Regulated Revenues

9M17 Results Opex

€mn

Cost increase driven by international activities as expected

9M17 Results Opex Analysis

Ongoing reduction of Group's Opex

9M17 Results EBITDA

Insourcing attività di O&M Rete FS Solid EBITDA driven by domestic regulated activities

9M17 Results From EBITDA to Net Income

€mn

9% growth YoY at net income level

9M17 Results Capex

Capex guidance for the full year confirmed

9M17 Results Cash Flow & Net Debt Evolution

Positive cash flow generation covers dividend and capex

9M17 Results Net Debt Evolution & Financial Structure

Maintaining a solid balance sheet

Closing Remarks What's next…

New Management appointed First steps

Early

statements

Room to:

• Accelerate growth through investments mainly in Italy
• Improve dividend policy

Ongoing actions

• Reshaping Group's organization
• Building-up a new management team of adaptable leaders
• Strong focus on people and team working

Working on a new Strategy to lead the Energy Transition mainly through Sustainability and Innovation

Consolidated Income Statement¹ Annex

€ mn	9M17	9M16	Δmn	Δ %
Total Revenue	1,627	1,551	76	4.9%
Regulated Activities	1,458	1,424	34	2.4%
Transmission	1,347	1,306	41	3.1%
Dispatching	85	84	1	1.3%
2 Other	16	24	-8	-32.4%
IFRIC12	10	10	0	-2.0%
Non Regulated Activities	113	125	-13	-10.1%
3 International Activities	57	2	55	-
Total Costs	420	375	46	12.2%
Regulated Activities	272	275	-3	-1.2%
Labour Costs	153	138	15	10.5%
External Costs	96	107	-11	-10.1%
2 Other	13	20	-7	-34.0%
IFRIC12	10	10	0	-2.0%
Non Regulated Activities	91	98	-6	-6.3%
3 International Activities	57	2	55	-
EBITDA	1,207	1,176	31	2.6%
D&A	390	403	-13	-3.2%
EBIT	817	773	44	5.7%
Net Financial Charges	68	60	8	13.1%
Pre Tax Profit	749	713	36	5.0%
Taxes	222	228	-7	-2.9%
Tax Rate (%)	29.6%	32.0%	-2.4%
Total Net Income	527	485	42	8.8%
Minority Interest	-2	-2	1	-21.7%
Group Net Income	529	487	42	8.6%

2. Including Quality of Service

3. Of which about 49€mln of IFRIC 12

P&L Quarterly Analysis Annex

€ mn	1Q16	1Q17	Δ	2Q16	2Q17	Δ	3Q16	3Q17	Δ
Total Revenue	517	524	7	523	523	0	511	581	69
Regulated Activities	474	490	16	475	477	2	474	490	16
Transmission	431	451	20	440	444	4	435	453	18
Dispatching	28	29	1	27	27	0	29	29	0
1 Other	12	8	-4	4	4	-1	7	4	-3
IFRIC12	3	2	0	4	3	-1	3	4	1
Non Regulated Act.	41	34	-7	47	44	-3	37	34	-3
International Activities	2	0	-2	0	1	1	0	56	56
Total Costs	122	121	-1	141	131	-10	112	168	56
Regulated Activities	86	93	7	102	97	-5	87	82	-4
Labour Costs	45	53	8	49	54	4	44	46	3
External Costs	35	31	-4	37	35	-2	34	30	-4
1 Other	3	7	4	12	5	-6	5	1	-4
IFRIC12	3	2	0	4	3	-1	3	4	1
Non Regulated Act.	34	28	-6	38	33	-6	25	30	5
International Activities	2	0	-2	0	1	1	0	56	56
EBITDA	395	403	8	382	392	10	399	412	13
D&A	131	130	-1	136	131	-5	136	129	-7
EBIT	264	273	9	246	261	15	263	283	20
Net Financial Charges	19	21	1	17	19	2	24	29	5
Pre Tax Profit	245	252	8	229	242	13	239	254	15
Taxes	83	74	-10	67	70	3	78	78	0
Tax Rate (%)	34.0%	29.2%	-4.8%	29.4%	29.0%	-0.4%	32.4%	30.6%	-1.9%
Total Net Income	161	179	17	161	172	10	162	177	15
Minority Interest	-1	-1	0	-1	0	1	0	-1	-1
Group Net Income	162	179	17	163	172	9	162	178	15
Total Group Capex	158	100	-58	189	226	37	183	219	36
Net Debt (end of period)	7,687	7,445		8,172	7,942		7,801	7,363

Consolidated Balance Sheet Annex

€ mn	Dec. 31,2016	Sep.30,2017	Δmn
PP&E	12,369	12,528	159
Intangible Asset	516	497	-19
Financial Inv. and Other	89	139	50
Total Fixed Assets	12,974	13,164	190
Net WC	-1,075	-1,641	-566
Funds	-385	-347	38
Net Capital Invested	11,514	11,176	-339
Financed by:
Consolidated Net Debt	7,959	7,363	-596
Total Shareholder's Equity	3,555	3,813	258
Total	11,514	11,176	-339
D/E Ratio	2.2	1.9
D/D+E Ratio	0.7	0.7
Number of Shares ('000)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	9M16	9M17	Δ mn
Total Net Income	485	527	42
1 D&A	398	389	-8
Net Change in Funds	-15	-38	-23
Operating Cash Flow	868	879	11
2 Δ Working Capital & Other	147	532	385
Cash Flow from Operating Activities	1,015	1,411	396
Capital Expenditures	-530	-545	-15
Free Cash Flow to Equity	485	866	381
3 Dividends & Equity	-283	-270	13
Change in Net Cash (Debt)	202	596	394

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.

THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION.

THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD-LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY'S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE OR GUARANTEE OF WHATSOEVER NATURE.

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.

THE SORGENTE-RIZZICONI PROJECT INTERCONNECTION IS CO-FINANCED BY THE EUROPEAN UNION'S EUROPEAN ENERGY PROGRAMME FOR RECOVERY PROGRAMME. THE SOLE RESPONSIBILITY OF THIS PUBLICATION LIES WITH THE AUTHOR. THE EUROPEAN UNION IS NOT RESPONSIBLE FOR ANY USE THAT MAY BE MADE OF THE INFORMATION CONTAINED THEREIN.

Disclaimer Notes

MAY IT BE INTERPRETED	AS AN OFFER OR INVITATION	TO SELL OR	PURCHASE ANY SECURITY	ISSUED BY THE	COMPANY OR ITS
SUBSIDIARIES.
THE CONTENT OF THIS	DOCUMENT HAS A MERELY	INFORMATIVE AND	PROVISIONAL NATURE AND	THE STATEMENTS	CONTAINED HEREIN
HAVE NOT BEEN	INDEPENDENTLY VERIFIED. NEITHER	THE COMPANY NOR	ANY OF ITS	REPRESENTATIVES SHALL ACCEPT	ANY LIABILITY
WHATSOEVER (WHETHER	IN NEGLIGENCE OR	OTHERWISE) ARISING IN ANY	WAY FROM THE USE	OF THIS DOCUMENT	OR ITS CONTENTS
OTHERWISE ARISING	IN CONNECTION WITH THIS	DOCUMENT OR ANY	MATERIAL DISCUSSED	DURING THE PRESENTATION.
DOCUMENT MAY	NOT BE REPRODUCED OR	REDISTRIBUTED, IN WHOLE	OR IN PART, TO	ANY OTHER PERSON.	THE INFORMATION
THIS
CONTAINED HEREIN AND	OTHER MATERIAL DISCUSSED	AT THE CONFERENCE	CALL MAY	INCLUDE FORWARD-LOOKING	STATEMENTS
THAT ARE NOT HISTORICAL	FACTS, INCLUDING	STATEMENTS ABOUT THE	COMPANY'S BELIEFS	AND EXPECTATIONS.	THESE STATEMENTS
ARE
BASED ON CURRENT	PLANS, ESTIMATES,	PROJECTIONS AND	PROJECTS, AND CANNOT	BE INTERPRETED AS	A PROMISE OR
GUARANTEE OF WHATSOEVER	NATURE.
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
DIFFER MATERIALLY FROM	THOSE CONTAINED IN ANY	FORWARD-LOOKING	STATEMENT. SUCH	FACTORS INCLUDE, BUT	ARE NOT LIMITED
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
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 "PIERPAOLO	CRISTOFORI" DECLARES,	PURSUANT
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.
THE SORGENTE-RIZZICONI	PROJECT AND THE	ITALY-FRANCE	INTERCONNECTION ARE	CO-FINANCED BY THE	EUROPEAN UNION'S
EUROPEAN ENERGY	PROGRAMME FOR RECOVERY	PROGRAMME. THE	SOLE RESPONSIBILITY	OF THIS PUBLICATION	LIES WITH THE
AUTHOR. THE EUROPEAN	UNION IS NO RESPONSIBLE	FOR ANY USE THAT	MAY BE MADE OF THE	INFORMATION CONTAINED	THEREIN.

Disclaimer Notes

MAY IT BE INTERPRETED	AS AN OFFER OR INVITATION	TO SELL OR	PURCHASE ANY SECURITY	ISSUED BY THE	COMPANY OR ITS
SUBSIDIARIES.
THE CONTENT OF THIS	DOCUMENT HAS A MERELY	INFORMATIVE AND	PROVISIONAL NATURE AND	THE STATEMENTS	CONTAINED HEREIN
HAVE NOT BEEN	INDEPENDENTLY VERIFIED. NEITHER	THE COMPANY NOR	ANY OF ITS	REPRESENTATIVES SHALL ACCEPT	ANY LIABILITY
WHATSOEVER (WHETHER	IN NEGLIGENCE OR	OTHERWISE) ARISING IN ANY	WAY FROM THE USE	OF THIS DOCUMENT	OR ITS CONTENTS
OTHERWISE ARISING	IN CONNECTION WITH THIS	DOCUMENT OR ANY	MATERIAL DISCUSSED	DURING THE PRESENTATION.
DOCUMENT MAY	NOT BE REPRODUCED OR	REDISTRIBUTED, IN WHOLE	OR IN PART, TO	ANY OTHER PERSON.	THE INFORMATION
THIS
CONTAINED HEREIN AND	OTHER MATERIAL DISCUSSED	AT THE CONFERENCE	CALL MAY	INCLUDE FORWARD-LOOKING	STATEMENTS
THAT ARE NOT HISTORICAL	FACTS, INCLUDING	STATEMENTS ABOUT THE	COMPANY'S BELIEFS	AND EXPECTATIONS.	THESE STATEMENTS
ARE
BASED ON CURRENT	PLANS, ESTIMATES,	PROJECTIONS AND	PROJECTS, AND CANNOT	BE INTERPRETED AS	A PROMISE OR
GUARANTEE OF WHATSOEVER	NATURE.
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
DIFFER MATERIALLY FROM	THOSE CONTAINED IN ANY	FORWARD-LOOKING	STATEMENT. SUCH	FACTORS INCLUDE, BUT	ARE NOT LIMITED
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
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 "PIERPAOLO	CRISTOFORI" DECLARES,	PURSUANT
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.
THE SORGENTE-RIZZICONI	PROJECT AND THE	ITALY-FRANCE	INTERCONNECTION ARE	CO-FINANCED BY THE	EUROPEAN UNION'S
EUROPEAN ENERGY	PROGRAMME FOR RECOVERY	PROGRAMME. THE	SOLE RESPONSIBILITY	OF THIS PUBLICATION	LIES WITH THE
AUTHOR. THE EUROPEAN	UNION IS NO RESPONSIBLE	FOR ANY USE THAT	MAY BE MADE OF THE	INFORMATION CONTAINED	THEREIN.

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