Terna BoD: Results approved as at 31 March 2017

• Revenue at € 523.9 million (€ 517.2 million in 1Q16, +1.3%)
• EBITDA at € 402.8 million (€ 395.1 million in 1Q16, +1.9%)
• EBIT at € 272.8 million (€ 263.9 million in 1Q16, +3.4%)
• Group net profit for the periodat € 179.3 million (€ 162.2 million in 1Q16, +10.6%)
• Net financial debtstood at € 7,444.8 million, down € 514.1 million compared to 31 December 2016

The Chief Executive Officer Luigi Ferraris has illustrated the results of first quarter of 2017, examined and approved by the Board of Directors of Terna S.p.A. ('Terna'), at a meeting today chaired by Catia Bastioli.

'I am very proud to have been entrusted with this position and I intend to put my experience in the electricity sector at the service of Terna. The Group is based on solid foundations and a Strategic Plan which constitutes an important starting point for my term of office as CEO. We will continue to implement the strategy which has already been put in place, to reinforce the central role Terna holds in the Italian electricity sector and to accelerate Italy's transition towards energy systems with cutting-edge technologies and sustainability models.

Terna closed the first quarter of 2017 with improved economic and financial results. From these results, we will continue to pursue our strategic targets, committed to maintaining our current low risk profile and ensuring an attractive and stable return for our shareholders.'

CONSOLIDATED ECONOMIC AND FINANCIAL RESULTS OF THE 1st QUARTER OF 2017

Revenuesin the first quarter of 2017, at € 523.9 million, recorded an increase of € 6.7 million (+1.3%) compared to the corresponding period of 2016. The change is attributable to the increase in Regulated Activities' revenues.

Operating expenses totalled € 121.1 million, largely in line with the first quarter of 2016 (-€ 1 million).

EBITDA (Gross Operating Margin) for the period, therefore, came out at € 402.8 million, an increase of € 7.7 million (+1.9%) compared to the € 395.1 million of the first quarter of 2016.

TheEBITDA margin went from 76.4% in the first quarter of 2016 to 76.9% in the corresponding period of 2017.

Depreciation, Amortisation and impairmentfor the period was € 130 million, down € 1.2 million on the same period of 2016, owing mainly to lower depreciation after a review of the useful life of electricity lines, partially offset by the entry into operation of new plants.

EBIT(Operating Profit) therefore amounted to € 272.8 million, compared to the € 263.9 million of the first three months of 2016 (+3.4%).

Net financial expenseswere € 20.5 million compared to € 19.2 million in the first three months of 2016 (+€ 1.3 million) and recorded a cost of debt of 1.45%, in line with the guidelines of the Strategic Plan.

Profit before taxes stood at € 252.3 million, increasing by € 7.6 million compared to the figure for the same period in the previous year (+3.1%).

Income taxesamounted to € 73.7 million and fell by € 9.6 million compared to the corresponding period of 2016 (-11.5%) essentially due to the reduction in the corporate tax rate (IRES) from 27.5% to 24% for 2017. Therefore,tax ratefor the period was 29.2%, compared to 34% in the first quarter of 2016.

Group net profit for the period came out at € 179.3 million, up € 17.1 million compared to the € 162.2 in the first quarter of 2016 (+10.6%).

Total investments made by the Group in the first three months of 2017 amounted to € 99.7 million, in line with the guidance of the Strategic Plan for 2017, compared to € 157.9 million in the first three months of the previous year, due to the different mix of projects during the year.

The key projects for this period include work-in-progress for the Italy-Montenegro and Italy-France electrical interconnections, and the works for completion of the electrical connection between Capri and the Italian peninsula.

Net financial debtstood at € 7,444.8 million, down € 514.1 million compared to 31 December 2016 (€ 7,958.9 million), mainly thanks to strong operational cash flow generation and improvement in working capital.

Group shareholders' equityat 31 March 2017 stood at € 3,718.6 million compared to € 3,535.4 million at 31 December 2016.

At the end of March 2017, Groupheadcount stood at3,881, an increase of 12 compared with 31 December 2016. This increase is primarily attributable to the recruitment policy for in-sourcing of the service contract related to the assets purchased from Railways (FSI).

EVENTS SUBSEQUENT TO 31 March 2017

On 27 April 2017, the Shareholders' Meeting appointed a new Board of Directors and new Board of Statutory Auditors for the period 2017-2019.

On the same date, the Meeting approved Terna S.p.A.'s financial statement as of 31 December 2016, resolving a dividend of 20.6 €/cent per share in line with the dividend policy communicated to the market (+3% annual growth). It also approved the remuneration policy adopted by Terna.

On 6 April 2017, the Ministry of Economic Development notified the company Piemonte Savoia S.r.l. of the successful conclusion of the exemption procedure for the Italy-France Interconnector, pursuant to art. 17 of Regulation (EC) No. 714/2009 of the European Parliament and of the Council of 13 July 2009, taking into account the MED Directorial Decree 20/07/2016 and positive opinion released on 9/12/2016 by the European Commission in accordance with Regulation (EC) No. 714/2009.

Information on termination of employment and termination of the position of Chief Executive Officer of Matteo Del Fante

Following the non-renewal of Matteo Del Fante's mandate as a director, the provisions already defined contractually at the moment of his appointment in 2014, approved by the Company's Board of Directors on the proposal of the Remuneration Committee and described in the 2015, 2016 and 2017 Remuneration Reports, and also assessed positively by the Shareholders' Meeting respectively in the sessions of 9/06/2015, 30/5/2016 and 27/4/2017, have been applied. Information on the procedure was provided to the Board of Directors meeting of 15 March 2017 by the Remuneration Committee.

As a consequence, a severance indemnity was provided for the Chief Executive Officer and, on termination of employment, payment of an indemnity is provided for the General Manager, in line with the best practices and the provisions set out in the National Collective Employment Contract for senior executives of companies producing goods and services. Therefore, as regards the indemnity on termination of employment and of the mandate a gross total amount of € 3,808,750 is payable. This has in part already been paid and will be paid in full by the end of May 2017.

There are no non-competition agreements, nor are Succession Plans in place.

This Consolidated Interim Financial Report of the Terna Group at 31 March 2017, which has not been audited, was prepared on a voluntary basis, pursuant to art. 82-ter of the CONSOB Issuer Regulations (as amended by CONSOB Resolution No. 19770 of 26 October 2016). As in the past, the following publicly disclosed financial information and the comparability of the information elements are guaranteed to be consistent and coherent with the corresponding data in the previously released interim financial reports.

The document containing the consolidated Interim Financial Report of the Terna Group at 31 March 2017 will be published by 15 May 2017, filed and available to the public at the head office, on the Company's website (www.terna.it) and on the website of the authorised storage system '1Info' (www.1info.it), and filed at the stock exchange management company Borsa Italiana S.p.A. (www.borsaitaliana.it). The disclosure regarding the 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 operating classification of the results used by the management for a more effective assessment of the economic and financial performance of the Terna Group. We must specify, under the terms of Communication No. DME/9081707 of 16 September 2009, that these statements are from the Interim Financial Report of the Terna Group at 31 March 2017 and have not been audited by the audit company.

The Executive in charge of preparing the company's accounting documents, Tiziano Ceccarani, pursuant to paragraph 2 of Art. 154-bis of the Consolidated Law on Finance (TUF), declares that the accounting information included in this press release corresponds to the document results, books and accounts records.

At 2.30 p.m. a conference call will be held to illustrate the results of the first quarter of 2017 to financial analysts and investors, to which journalists may also connect in listening mode. The supporting material for the conference call will be made available on the Company's website (www.terna.it), in the section Investor Relations/Presentations, at the start of the conference call. In the same section it will also be possible to follow the presentation via audio webcasting. The presentations will also be made available, via SDIR-NIS, on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) and of the authorised storage service '1Info' (www.1info.it).

A number of 'alternative performance measures' (EBITDA, EBITDA margin and Net financial debt) are used in the present communication. The meaning and content of these are illustrated here below in line with the ESMA/2015/1415 recommendation published on 03 December 2015:

• EBITDA (Gross Operating Margin): this is a measure of operating performance, calculated by combining the operating profit (EBIT) with amortisation, depreciation and impairment.
• EBITDA margin: this is a measure of operating performance, derived from the ratio between Gross Operating Margin (EBITDA) and revenue;
• Net financial debt: this is a measure of the company's financial structure, determined as the sum of the short- and long-term financial payables and the related derivative instruments, net of cash and cash equivalents and of financial assets.

For table see attached