Terna — Investor Presentation 2019

Nov 13, 2019

9M19 Consolidated Results

November 13th 2019

Agenda

Highlights	3
9M19 Results	6
Closing Remarks	16
Annexes	17

Demand Evolution – Last 12 months Highlights (1/2)

DEMAND AS REPORTED (TWh)

9M19 data:

• National Demand at 242 TWh, o/w 36% covered by RES
• Net Total Production at 216 TWh
• Wind increased by 14%
• PV increased by 6%

Increasing contribution from wind and PV production

€mn	9M 2019	9M 2018	Δ vs 9M18
Revenues	1,666	1,6051	+4%
EBITDA	1,278	1,230	+4%
Group Net Income2	553	542	+2%
Capex	670	561	+19%

	9M 2019	FY 2018
Net Debt	8,250	7,899

Strong capex acceleration confirmed

9M 2019 results

Revenues

Capex execution as a driver of our domestic growth Insourcing attività di O&M Rete FS

Revenues Analysis 9M 2019 results

€mn NON REGULATED AND INTERNATIONAL

Tamini's turnaround ongoing

9M 2019 results

Efficiency program well on track

9M 2019 results

Opex Analysis

Skills insourcing as a driver of improved performance Insourcing attività di O&M Rete FS

EBITDA 9M 2019 results

NON REGULATED AND INTERNATIONAL

Robust EBITDA improvement Insourcing attività di O&M Rete FS

From EBITDA to Net Income 9M 2019 results

Solid value creation for our shareholders

Note: figures may not add up due to rounding 1. Attributable to Terna. Excluding 2.1 €mn of Minorities in 9M19 and 3.5 €mn in 9M18

Capex 9M 2019 results

Strong Group's commitment to serve Italian energy transition Insourcing attività di O&M Rete FS

Note: figures may not add up due to rounding 1. I-NPR1+O-NPR1 in line with ARERA Resolution n. 579/17

2. Of which about 9 €mn of Capitalized Financial Charges in 9M19 and 12 €mn in 9M18

Cash Flow & Net Debt Evolution 9M 2019 results

Solid operating cash flow generation

Note: figures may not add up due to rounding 1. Including Other Fixed Assets Changes 2. Including Cash Flow Hedge reserve and other

Net Debt Evolution & Financial Structure 9M 2019 results

Duration 4.9 years

Resilient financial structure

Closing Remarks

Strong capex acceleration confirmed

Capex execution as a driver of our domestic growth

Robust EBITDA improvement

Solid value creation for our shareholders

Plan execution well on track

Consolidated Income Statement¹ Annex

€ mn	9M19	2 9M18	Δmn	Δ %
Total Revenue	1,666	1,605	60	3.8%
Regulated Activities	1,518	1,481	37	2.5%
Transmission	1,395	1,348	47	3.4%
Dispatching	85	103	-18	-17.7%
3 Other	27	17	10	57.5%
IFRIC12	11	12	-1	-9.2%
Non Regulated Activities	130	118	12	10.3%
International Activities	17	6	11	185.0%
Total Costs	387	375	12	3.3%
Regulated Activities	285	288	-3	-1.1%
Labour Costs	160	156	4	2.7%
External Costs	103	106	-2	-2.1%
3 Other	10	14	-4	-28.0%
IFRIC12	11	12	-1	-9.2%
Non Regulated Activities	94	81	13	16.1%
International Activities	8	6	2	36.7%
EBITDA	1,278	1,230	48	3.9%
D&A	436	400	36	9.0%
EBIT	842	830	12	1.5%
Net Financial Charges	61	67	-6	-8.5%
Pre Tax Profit	781	763	18	2.3%
Taxes	227	218	8	3.8%
Tax Rate (%)	29.0%	28.6%	+0.4 pp
Total Net Income	555	545	10	1.8%
Minority Interest	2	4	-1	-40.0%
Group Net Income	553	542	11	2.0%

1. Managerial Accounting

2. 9M18 reclassified in accordance with new IFRS. No impact at EBITDA level

Annex

Consolidated Balance Sheet

€ mn	Sep. 30,2019	Dec. 31,2018	Δmn
PP&E	13,457	13,244	212
Intangible Asset	521	519	2
Financial Inv. and Other	345	320	25
Total Fixed Assets	14,323	14,084	239
Net WC	-1,739	-1,823	83
Funds	-206	-308	101
Net Capital Invested	12,377	11,954	423
Financed by:
Consolidated Net Debt	8,250	7,899	350
Total Shareholder's Equity	4,127	4,054	73
Total	12,377	11,954	423
D/E Ratio	2.0	1.9
D/D+E Ratio	0.7	0.7
Number of Shares (mn)	2,010	2,010

Consolidated Cash Flow Annex

€ mn	9M19	9M18
Total Net Income	555	545
1 D&A	433	397
Net Change in Funds	-101	-38
Operating Cash Flow	886	904
2 Δ Working Capital & Other	-85	169
Cash Flow from Operating Activities	801	1,073
Capital Expenditures	-670	-561
Free Cash Flow to Equity	131	512
3 Dividends & Equity	-481	-307
Change in Net Cash (Debt)	-350	205

Capex Annex

€ mn	9M19	9M18	Δ mn	Δ %
1 Incentivized Investment	40	68	-27	-40%
Other Reguleted	554	434	120	28%
Regulated Capex	595	502	93	18%
2 Other	75	59	16	27%
Total Group Capex	670	561	109	19%

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.

Notes

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