Terna : Results approved as at 31 march 2018

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May 2018 16:06

The Chief Executive Officer and General Manager Luigi Ferraris presented the results of the first quarter of 2018, which were examined and approved today by the Board of Directors of Terna S.p.A. ('Terna'), at a meeting chaired by Catia Bastioli.

'The first quarter results of the current year confirm the Group's positive performance with all key economic indicators showing growth' Luigi Ferraris, Terna Chief Executive Officer and General Manager said. 'In particular, investments, which are up over 40%, and the substantial cash generation are in line with the strategic plan presented to the market last March'.

CONSOLIDATED ECONOMIC AND FINANCIAL RESULTS OF THE 1^stQUARTER OF 2018

Revenues in the first quarter of 2018, of € 537.8 million, recorded an increase of € 13.9 million (+2.7%) compared to the same period in 2017, mainly attributable to Non-Regulated Activities.

EBITDA (Gross Operating Profit) came to € 409.3 million, an increase of € 6.5 million (+1.6%) compared to € 402.8 million in the first quarter of 2017. This result, approximately 96% due to Regulated Business, recorded the increasing contribution of Non-Regulated Activities and International, thanks in particular to the sales growth of the Tamini Group, as well as of the advancement of site activities in Latin America.

EBIT(Operating Profit), after amortisation, depreciation and impairment losses of € 132.5 million, came out at € 276.8 million, compared to the € 272.8 million in the first three months of 2017 (+1.5%).

Net financial expensesin the period amounted to € 24.6 million, compared to the € 20.5 million of the first quarter of 2017 (+€ 4.1 million). This increase is mainly due to the interest on the increased gross debt, partially compensated by the liquidity yield.

Profit before tax came out at € 252.2 million, essentially in line with the figure of corresponding period in the previous financial year (-€ 0.1 million).

Income tax expense for the periodamounted to € 68.5 million and fell by € 5.2 million compared to the corresponding period of 2017 (-7.1%) thanks to a positive tax one-off contribution of the period.

Group net profit for the period came out at € 182.7 million, up € 3.4 million compared to € 179.3 in the first quarter of 2017 (+1.9%).

Theconsolidated statement of financial positionat 31 March 2018 showedequity attributable to owners of the Parent of € 3,977.9 million, compared to € 3,803.3 million at 31 December 2017.

Net debt came out at € 7,617.7 million, down by € 178.7 million compared to € 7,796.4 million at 31 December 2017, thanks mainly to the good cash generation of the period.

Terna Group'stotal capital expenditurein the first three months of 2018 equalled € 141.6 million, up 42% compared to the € 99.7 million in the first quarter of the previous financial year, confirming the guideline envisaged in the Strategic Plan for 2018. The main projects for the period included progress in the execution of the Italy-Montenegro and Italy-France electrical interconnections, the implementation of the electrical connection between Capri and Sorrento and the Venetian Lagoon undersea connection.

The Group'semployees, at the end of March 2018, totalled 4,023, up by 126 compared to 31 December 2017. This increase is mainly linked to the core skills strengthening programme that will be carried on in 2018.

KEY EVENTS SUBSEQUENT TO 31 MARCH 2018

In the first few days of April 2018, Terna started laying the cable on the A32 relating to theItaly-Franceelectrical interconnection.

On 4 May 2018, theAnnual General Meeting of Terna's shareholdersapproved the 2017 Financial Statements and the distribution of a dividend of € 0.22 per share, in line with the policy announced to the market. The Shareholders' Meeting also approved the remuneration policy adopted by the Company and the Long-Term Incentive Plan called the '2018-2021 Phantom Stock Plan'.

ALTERNATIVE PERFORMANCE MEASURES

In this release, some 'alternative performance measures' (EBITDA and Net Debt) are used, which are not provided by the accounting standards IAS/IFRS, whose meaning and contents are explained below pursuant to the ESMA/2015/1415 guideline published on 3 December 2015:

- EBITDA (Gross Operating Profit): this is a measure of operating performance; it is calculated as 'Net profit for the year' before 'Income taxes for the year', 'Financial income/(expense)' and 'Amortisation, depreciation and impairment losses'.

- Net Debt: this is a measure of the company's financial structure; it is determined as the sum of the short ('Short-term loans', 'Current portion of long-term loans' and 'Current financial liabilities') and long-term debt ('Long-term loans') and the related derivative instruments ('Non-current financial liabilities'), net of 'Cash and cash equivalents' and of the related financial assets ('Non-current financial assets' for the value of deferrals on commissions of available loans and 'Current financial liabilities'). It should be noted that the net financial debt of the Terna Group is in compliance with the provisions of ESMA Recommendation no. 319 of 2013 regarding the definition of the net financial position, less 'Non-current financial assets'.

Today, at 16:30 a meeting will be held to illustrate the results of the first quarter of 2018 to financial analysts and investors, to which journalists may also connect in listening mode. The support material for the event will be made available on the Company's website (www.terna.it), in the Investor Relations/Presentations section, at the beginning of the meeting. In the same section it will be possible to follow the presentation through web-streaming. The Presentations will also be made available, via 'eMarket SDIR', on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) and through the authorised storage service '1Info' (www.1info.it).

The Financial Reporting Manager, Agostino Scornajenchi, pursuant to paragraph 2 of Art. 154-bis of the Consolidated Law on Finance, declares that the accounting information included in this press release corresponds to the evidence in the documents, books and accounting records.

The Consolidated Interim Financial Report of the Terna Group, dated 31 March 2018, has not been audited and was prepared voluntarily, pursuant to art. 82-ter of CONSOB Issuer Regulations (as amended by CONSOB Resolution no. 19770 of 26 October 2016). In concordance with the past, the compliance and correctness of the financial information provided to the public and the comparability of the relative information with the corresponding data in the interim reports previously disclosed to the public is ensured.

The document containing the Consolidated Interim Financial Report of the Terna Groupas of 31 March 2018 will be made available to the public before 15 May 2018 at the Company's registered office, published on the Company's website (www.terna.it) and on the website of the authorised storage service '1Info' (www.1info.it), and filed at the stock exchange management company Borsa Italiana S.p.A. (www.borsaitaliana.it). Disclosure regarding filing will be issued.

The reclassified Income Statement, Statement of Financial Position and Statement of Cash Flows of the Terna Group are attached. These represent the classification of the results used by management for a more efficient evaluation of the Terna Group's economic and financial performance.

It is highlighted that, in compliance with Directive no. DME/9081707 of 16 September 2009, these statements are included in the Terna Group's Interim Financial Report as of 31 March 2018, prepared in line with standard practices for the sector.

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