Terna — Investor Presentation 2017

May 9, 2017

1Q17 Consolidated Results May 9 th, 2017

LUIGI FERRARIS CHIEF EXECUTIVE OFFICER

TIZIANO CECCARANI CHIEF FINANCIAL OFFICER

Agenda

Highlights	3

1Q17 Results

Annexes

5

13

Highlights Guidelines

Maintain our central role in enabling energy transition

Focus on strategic plan execution: continuity of mission delivery of our key strategic pillars

• Continue our growth in a sustainable way
• Confirm our low risk profile

Ongoing strong commitment on shareholders' return

Highlights

	1Q 2016	1Q 2017	Δ % vs 1Q2016
Revenues	517	524	+1.3%
EBITDA	€mn 395	€mn 403	+1.9%
	€mn	€mn
Group Net Income	162 €mn	179 €mn	+10.6%
Capex	158 €mn	100 €mn
	FY 2016	1Q 2017
Net Debt	7,959 €mn	7,445 €mn

1Q17 Results Revenues

KEY FIGURES TOTAL REVENUES EVOLUTION

Revenues Analysis 1Q17 Results

REGULATED ACTIVITIES

Opex 1Q17 Results

Total Costs 121€mn Regulated Activities

91€mn

Non Regulated Activities 28€mn

€ mn	1Q16	1Q17	Δ yoy	Δ %yoy
Regulated Activities	84	91	7	8.2%
Non Regulated Act.	7	5	-2	-22%
Tamini	29	23	-6	-21%
IFRIC12	3	2	0	-11%
Total	122	121	-1	-0.8%

KEY FIGURES TOTAL COSTS EVOLUTION

Regulated Opex Analysis 1Q17 Results

Total 84 91 7 8.2%

RHV Grid Activities in-sourcing

on track

From EBITDA to Net Income 1Q17 Results

Group EBITDA Margin 76.9%

of which

Regulated 81.4%

Non Regulated 59.4%

Capex 1Q17 Results

Category (€mn)	1Q16	1Q17	Δ yoy	Δ % yoy
Capex at 1% Incentive	43	22	-20	-48%
Capex at Base Return	107	70	-37	-35%
Regulated Capex	150	92	-58	-38%
Other	8	1 7	-1	-7.6%
Total Group Capex	158	100	-58	-37%

1. Of which about 4 €mn of Capitalized Financial Charges

Net Debt Evolution & Financial Structure 1Q17 Results

THANK YOU. QUESTIONS?

Annex Electricity Market Trends – Last 12 Months

Consolidated Income Statement¹ Annex

€ mn	1Q16	1Q17	Δmn	Δ %
Transmission	431	451	20	4.5%
Dispatching	28	29	1	2.9%
Other 2	12	8	-4	-34%
Regulated Activities	471	488	16	3.5%
Non Regulated Act.	43	34	-9	-22%
IFRIC12	3	2	0	-11%
Total Revenues	517	524	7	1.3%
Labour Costs	45	53	8	16%
External Costs	35	31	-4	-12%
Other	3	7	4	112%
Regulated Activities	84	91	7	8.2%
Non Regulated Act.	36	28	-7	-21%
IFRIC12	3	2	0	-11%
Total Costs	122	121	-1	-0.8%
EBITDA	395	403	8	1.9%
D&A	131	130	-1	-0.9%
EBIT	264	273	9	3.4%
Net Financial Charges	19	21	1	6.6%
Pre Tax Profit	245	252	8	3.1%
Taxes	83	74	-10	-12%
Tax Rate (%)	34%	29%
Total Net Income	161	179	17	11%
Minority Interest	-1	-1	0
Group Net Income	162	179	17	11%

1. Managerial Accounting

2. Quality of Service + Other Revenues

Consolidated Balance Sheet Annex

€ mn	Dec. 31,2016	Mar. 31,2017	Δmn
PP&E	12,386	12,363	-23
Intangible Asset	516	508	-8
Financial Inv. and Other	89	90	1
Total Fixed Assets	12,991	12,962	-29
Net WC	-1,093	-1,404	-312
Funds	-385	-375	10
Total Net Invested Capital	11,514	11,182	-332
Financed by
Consolidated Net Debt	7,959	7,445	-514
Total Shareholder's Equity	3,555	3,738	183
Total	11,514	11,182	-332
D/E Ratio	2.2	2.0
D/D+E Ratio	0.7	0.7
Number of Shares ('000)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	1Q16	1Q17	Δmn
Total Net Income	161	179	17
1 D&A	131	130	-1
Net Financial Charges	19	21	1
Net Change in Funds	-17	-10	7
Operating Cash Flow	295	319	24
2 ∆ Working Capital & Other	211	311	100
Cash Flow from Operating Activities	506	630	124
Capital Expenditures	-158	-100	58
Net Financial Charges	-19	-21	-1
Free Cash Flow to Equity	329	510	181
3 Dividends & Equity	-14	4	17
Change in Net Cash (Debt)	315	514	199

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

3. Including Cash Flow Hedge accruals and other

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 "TIZIANO CECCARANI" 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.

investor.relations@terna.it I +39 06 8313 9041 I www.terna.it