Terna — Investor Presentation 2018

Jul 25, 2018

1H18 Consolidated Results

July 25th 2018

Agenda

3
7

Annexes 18

Demand Evolution – Last 12 months Highlights (1/3)

• National Demand at 159 TWh
• o/w 37% covered by RES
• Net Total Production at 136 TWh

Strong contribution from hydro and wind production

Domestic Regulated Operations	Focus on Italian grid reinforcement	 Capex delivery well on track
Non Regulated Operations	Non Regulated Activities to serve energy transition	 Tamini: positive turnaround ongoing  TLC: commercial agreements deployment  ESP: enhancing integrated energy solutions
International Operations	Limited capital absorption and low risk profile	 Brazil: project to be completed by year-end  Uruguay and Perù: ongoing activities in line with Plan

Continued focus on execution

1H 2018 Key Numbers Highlights (3/3)

€mn	1H 2018	1H 2017	Δ 1H 17 vs
Revenues	1,080	1,046	+3%
EBITDA	815	795	+3%
Group Net Income1	360	351	+3%
Total Group Capex	338	326	+4%
		1H 2018	FY 2017
	Net Debt	7,896	7,796

Growth in all P&L lines

Revenues 1H 2018 results

Revenues increase in all business lines Insourcing attività di O&M Rete FS

Revenues Analysis 1H 2018 results

NON REGULATED ACTIVITIES

Higher contribution from Regulated and Non Regulated Activities

Opex evolution driven mostly by Non Regulated

Opex Analysis 1H 2018 results

Higher volumes of activities Insourcing attività di O&M Rete FS

1H 2018 results EBITDA

3% growth at EBITDA level

From EBITDA to Net Income 1H 2018 results

3% growth at Net Income level

Capex 1H 2018 results

Incentivized Investments Other Regulated Other 1 2

Insourcing attività di O&M Rete FS 2018 Capex well on track

1H 2018 results Cash Flow & Net Debt Evolution

600 €mn of Operating Cash Flow

1H 2018 results Net Debt Evolution & Financial Structure

Maintaining a solid balance sheet

Closing Remarks

Strongly focused on Plan execution

Annex

Consolidated Income Statement¹

€ mn	1H18	2 1H17	Δmn	Δ %
Total Revenue	1,080	1,046	35	3.3%
Regulated Activities	979	968	12	1.2%
Transmission	899	895	4	0.4%
Dispatching	60	56	4	7.7%
3 Other	15	12	3	25.6%
IFRIC12	6	6	1	12.5%
Non Regulated Activities	95	78	18	22.5%
International Activities	6	0	5	n.m.
Total Costs	265	251	15	5.9%
Regulated Activities	194	190	4	1.9%
Labour Costs	108	107	2	1.4%
External Costs	71	66	6	8.4%
3 Other	8	12	-4	-33.3%
IFRIC12	6	6	1	12.5%
Non Regulated Activities	68	59	9	15.6%
International Activities	4	2	2	100.0%
EBITDA	815	795	20	2.5%
D&A	267	261	7	2.5%
EBIT	548	534	13	2.5%
Net Financial Charges	43	40	3	7.8%
Pre Tax Profit	505	494	10	2.1%
Taxes	143	144	-1	-0.8%
Tax Rate (%)	28.3%	29.1%	-0.8 pp
Total Net Income	362	351	12	3.3%
Minority Interest	2	-1	3	n.m.
Group Net Income	360	351	9	2.5%

1. Managerial Accounting 2. 1H2017 restated 3. Including Quality of Service

Annex

P&L Quarterly Analysis

€ mn	1Q18	1 1Q17	Δ	2Q18	1 2Q17	Δ
Total Revenue	538	524	14	543	522	21
Regulated Activities	488	490	-2	492	477	14
Transmission	451	451	1	447	444	3
Dispatching	29	29	0	31	27	5
2 Other	5	8	-4	10	4	7
IFRIC12	3	2	1	3	3	0
Non Regulated Act.	47	34	13	48	44	4
3 International Activities	3	0	3	2	0	2
Total Costs	129	121	7	137	130	7
Regulated Activities	95	93	2	99	97	2
Labour Costs	54	53	0	55	54	1
External Costs	34	31	3	37	35	2
2 Other	4	7	-3	4	5	-1
IFRIC12	3	2	1	3	3	0
Non Regulated Act.	32	27	5	36	32	4
International Activities	2	1	1	2	1	1
EBITDA	409	403	7	406	392	14
D&A	133	130	2	135	131	4
EBIT	277	273	4	271	261	9
Net Financial Charges	25	21	4	18	19	-1
Pre Tax Profit	252	252	0	253	242	10
Taxes	69	74	-5	74	70	4
Tax Rate (%)	27.2%	29.2%	-2.0 pp	29.4%	29.0%	0.4 pp
Total Net Income	184	179	5	178	172	7
Minority Interest	1	-1	2	1	0	1
Group Net Income	183	179	3	178	172	6

2017 Restated P&L Quarterly Figures¹ Annex

€ mn	1Q17	2Q17	3Q17	4Q17	FY17
Total Revenue	524	522	525	592	2,163
Regulated Activities	490	477	490	510	1,967
Transmission	451	444	453	457	1,804
Dispatching	29	27	29	27	112
2 Other	8	4	4	15	31
IFRIC12	2	3	4	11	21
Non Regulated Act.	34	44	34	77	189
3 International Activities	0	0	1	5	6
Total Costs	121	130	113	196	559
Regulated Activities	93	97	82	154	426
Labour Costs	53	54	46	65	218
External Costs	31	35	30	59	155
2 Other	7	5	1	19	32
IFRIC12	2	3	4	11	21
Non Regulated Act.	27	32	29	39	127
International Activities	1	1	2	3	7
EBITDA	403	392	412	397	1,604
D&A	130	131	129	137	527
EBIT	273	261	283	260	1,077
Net Financial Charges	21	19	28	21	89
Pre Tax Profit	252	242	255	240	989
Taxes	74	70	78	72	294
Tax Rate (%)	29.2%	29.0%	30.5%	30.2%	29.7%
Total Net Income	179	172	176	167	694
Minority Interest	-1	0	-1	8	6
Group Net Income	179	172	178	159	688

Annex

Consolidated Balance Sheet

€ mn	Jun. 30,2018	Dec. 31,2017	Δmn
PP&E	12,840	12,753	87
Intangible Asset	501	506	-5
Financial Inv. and Other	253	208	45
Total Fixed Assets	13,594	13,466	127
Net WC	-1,496	-1,485	-11
Funds	-327	-356	28
Net Capital Invested	11,770	11,625	145
Financed by:
Consolidated Net Debt	7,896	7,796	99
Total Shareholder's Equity	3,875	3,829	46
Total	11,770	11,625	145
D/E Ratio	2.0	2.0
D/D+E Ratio	0.7	0.7
Number of Shares (mn)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	1H18
Total Net Income	362
1 D&A	266
Net Change in Funds	-28
Operating Cash Flow	600
2 Δ Working Capital & Other	-45
Cash Flow from Operating Activities	555
Capital Expenditures	-338
Free Cash Flow to Equity	217
3 Dividends & Equity	-316
Change in Net Cash (Debt)	-99

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