Terna BoD: Results as of December 31, 2016 approved

·Revenue of € 2,103.2 million (+1%)

·EBITDAof € 1,544.7 million (+0.4%)

·Group's Net Profitof € 633.1 million (+6.3%)

·Proposed dividend for 2016 of € 20.6 cents per share (of which € 7.21 cents already paid as interim dividend and € 13.39 cents as final dividend payable in June 2017)

The Chief Executive Officer Matteo Del Fante presented the 2016 results, which were examined and approved by the Board of Directors of TERNA S.p.A. ('Terna'), at a meeting chaired today by Catia Bastioli.

'We closed 2016 with growth in all economic and financial indicators, thanks above all to the positive effect of operating process optimisation and financial discipline programmes launched in past years' - said Chief Executive Officer, Matteo Del Fante. 'As announced in the new Strategic Plan 2017-2021, we have planned even greater investments in projects for the development of the national electricity grid and interconnection with other countries, which can help the full integration of renewable sources into the grid and allow security of supply. Our development strategy is aimed at selecting increasingly technological and efficient solutions, which will enable greater benefits for the environment and for Italian households and businesses'.

CONSOLIDATED ECONOMIC AND FINANCIAL RESULTS 2016

2016 revenues were € 2,103.2 million, an increase of € 21.1 million (+1%) compared to the previous year figure. This change is attributable to Regulated Activities (+€ 45.7 million), mainly the result of the contribution of the RHV Grid acquisition of late 2015.

Operating expenseswere €558.5 million, up € 15.6 million compared to 2015, mainly due to maintenance expenses related to the inclusion of the electricity grid acquired from Ferrovie dello Stato and € 30 million of higher provisions related to the voluntary turnover programme partially offset by the savings generated by the Group's operational efficiency plan.

EBITDA (Gross Operating Margin) of the Groupstood at € 1,544.7 million, a € 5.5 million (+0.4%) increase compared to the € 1,539.2 million of 2015, mainly due to the improvement in Regulated Activities. The EBITDA margin was substantially in line with the previous year, passing from 73.9% in 2015 to 73.4% in 2016 (75% net of provisions for retirement incentives).

Amortisation, depreciation and impairment for the year stood at € 508.7 million, down € 8.1 million compared to 2015, mainly due to a lower depreciation after a review of the useful life of electricity lines, partially offset by the coming into operation of new assets and by RHV Grid.

EBIT(Operating Profit) was € 1,036 million compared to € 1,022.4 million in 2015 (+1.3%).

Net financial expenses for the year stand at € 102.8 million, down € 38.3 million compared to the € 141.1 million of 2015, due to the positive effects of the Liability Management operation completed successfully on July 20, 2015 and to 2016's general decrease in market interest rates.

Profit before taxes totalled € 933.2 million, up € 51.9 million compared to the previous financial year.

Income taxes for the year amounted to € 305.3 million, a € 19.3 million increase compared to the previous year, due to higher pre-tax profits. The tax rate for the year was 32.7%, substantially in line with the 32.5% recorded in 2015.

The Group's net profit stood at € 633.1 million, up € 37.6 million compared to 2015 (+6.3%).

The Group's total investments were in line with the NTG Development Plans and with the Strategic Plan and amounted to € 854.3 million. Among other things, it is particularly worth noting the strategic investments related to activities in progress for the construction of the 'Italy-France' and 'Italy-Montenegro' electrical interconnections on the 'Villanova-Gissi' and 'Sorgente-Rizziconi' power lines, which came into operation in January and May 2016, respectively.

Net financial debt as of December 31, 2016 amounted to € 7,958.9 million (-€ 43.8 million) compared to the € 8,002.7 million as of December 31, 2015, down for the first time since listing as a result of good cash generation.

The consolidated financial position as of December 31, 2016 reported Equity attributable to owners of the parent company of € 3,555.2 million compared to € 3,345.8 million at the end of 2015.

As of December 31, 2016, the Group had 3,869, employees, 102 more than at the end of 2015.

2016 RESULTS OF THE PARENT COMPANY - TERNA S.p.A.

Terna S.p.A. ended 2016 with revenue of € 1,779.6 million, a decrease of 1.2% (-€ 21.3 million) compared to 2015.

Operating expensesamounted to € 446.2 million, up by € 19.2 million compared to the end of 2015, mainly due to higher provisions set aside for the voluntary turnover programme (€ 30 million). EBITDA (Gross Operating Margin) was € 1,333.4 million, 74.9% of revenue (76.3% in 2015), a reduction of € 40.5 million (-2.9%) compared to the 2015 figure.Amortisation, depreciation and impairmentin the year, equal to € 432.7 million, fell by € 23.8 million compared to 2015 (-5.2%).EBIT (Operating Profit) was therefore € 900.7 million, down by € 16.7 million (-1.8%) compared to financial year 2015.Net profitfor the year was € 535.5 million, up by € 8.4 million compared to the net profit for financial year 2015 (+1.6%).

The statement of financial position shows shareholders' equity of € 3,024.8 million (compared to € 2,908.1 million as of December 31, 2015) and net financial debt of € 8,101 million (+€ 133.9 million compared to December, 31 2015).

2016 SUSTAINABILITY REPORT

The Board of Directors also approved the 2016 Sustainability Report, drawn up according to the GRI-G4 guidelines. Among the main results achieved in 2016, we can note the confirmation of Terna among the top companies in the Electric Utilities sector of the Dow Jones Sustainability index, the reduction of direct CO emissions, less SF gas leaks, the approximately 290 km of old lines decommissioned and approximately 93% of waste recycled and, within the company, the increase in hours of training per capita (61 hours for each employee, up compared to the 56 hours of 2015 and much more than the FTSE Mib average), which reached approximately 99% of the Group's employees.

OTHER MAIN EVENTS AFTER YEAR END

Terna first in Italy in fighting corruption and in integrated security

In January 2017, Terna obtained from IMQ - the most important Italian body in the compliance assessment sector (certification, test, audits, inspections) - the first certification in Italy for its management system for the prevention of corruption according to ISO 37001:2016 international standard, applied to the holding company Terna S.p.A. and to the subsidiaries Terna Rete Italia and Terna Plus. Certification according to ISO 37001 is on a voluntary basis and is the result of Terna's ten-year commitment in policies to prevent corruption and the risk of criminal infiltration in the company's economic sector as well as in its contracts and sub-contracts.

International activities

In February 2017, through its subsidiary Terna Plus, Terna signed an agreement with Planova, a Brazilian company that constructs civil works and infrastructure, aimed at the acquisition of two thirty-year concessions to build and operate a total of around 500 km of electricity infrastructures in the country. The agreement foresees the Terna Group will own the concession and operate the lines, while engineering, planning and construction (EPC) will be assigned to Planova, as the 'executor' on Terna's account. Final closing of the contract signed by Terna Plus and Planova is linked to the following: Planova must obtain all permits and licenses needed for the construction and operation of the infrastructure, and the go ahead from the Brazilian anti-trust authorities (Cade - Conselho Administrativo de Defesa Econômica) and the Regulator (Aneel - Agência Nacional de Energia Elétrica).

Finance

On March 06, 2017, Fitch Ratings confirmed the long-term rating of the issuer (IDR) and the rating of the senior unsecured debt of Terna SpA at 'BBB+', with a Stable Outlook. At the same time, the Agency also confirmed the short-term rating of the issuer at 'F2'.

Merger by incorporation of Terna Rete Italia S.r.l. and Terna Storage S.r.l. into Terna S.p.A.

On March 14, 2017, the deed was signed for the merger by incorporation into Terna S.p.A. of the full subsidiaries Terna Rete Italia S.r.l. and Terna Storage S.r.l., the draft of which was approved by the competent bodies on 15 December 2016. The merger will be effective from 31 March 2017 or, if later, from the date of the last of the registrations provided for in article 2504, paragraph 2, of the Italian Civil Code.

BUSINESS OUTLOOK

In the next few months, the Terna Group will implement the 2017-2021 Strategic Plan that was approved by the Board of Directors and presented to the financial community on February 20, 2017. In relation to the macro-trends that will affect the Terna Group's reference context, it is expected that the electrical sector in Italy and in Europe will be characterised by an increasing growth of non-programmable renewable production sources and by the gradual decommissioning of traditional generation plants. Within this scenario, in line with the EU's indications, projects aimed at the decarbonisation of energy production, seeking greater efficiency in the markets and security of procurement will assume a central role. In order to facilitate the energy transition in progress, an appropriate development of the electricity grids becomes necessary; this should give priority to new electrical interconnections with neighbour countries and within the country, with particular attention to innovative and smart technological solutions with a low environmental impact. In this context, Terna has confirmed its strategic objectives with a focus on developing the grid to encourage the integration of renewable sources, improve the security of the system and, at the same time, accelerate the renewal of its assets in order to mitigate outage risks, increase environmental sustainability and support maintenance through grid-digitalisation technologies.

With specific reference to investments on the National Transmission Grid, over the next 5 years a total amount of approximately € 4 billion has been planned, an increase of approximately 30% compared to the previous Plan. In addition, approximately € 0.9 billion in investments have been planned. Among the main electrical infrastructures under construction, we have the interconnections with Montenegro and France, which should come into operation in 2019.

With reference to Non-Regulated and international activities, the new Strategic Plan provides for the consolidation of an industrial approach based on the Group's distinctive skills, which make Terna be considered more and more as an Energy Solutions Provider.

For 2017, we expect revenues of approximately € 2.25 billion, of which € 1.91 billion related to the transmission and dispatching tariff already approved by the AEEGSI; the EBITDA is expected to rise up to approximately € 1.58 billion. Earnings Per Share (EPS) could reach € 34 cents.

SHAREHOLDERS' MEETING AND DIVIDEND

The Board of Directors will propose to the Shareholders' Meeting the approval of a total dividend for the 2016 financial year of € 20.6 cents per share, in line with the policy presented to the market which provides for annual average growth of 3% compared to the 2015 figure, and the distribution - net of the ordinary interim dividend related to financial year 2016 of € 7.21 cents per share already payable from November 23, 2016 - of the remaining € 13.39 cents per share, before any withholdings by law, to be payable from June 21, 2017 and with 'ex-dividend date' June 19, 2017 of coupon no. 26 (record date pursuant to art.83-terdecies of Italian Legislative Decree no. 58 of February 24, 1998, the 'Consolidated Law on Finance': June 20, 2017).

In compliance with what already communicated to the market on January 30, 2017 the Shareholders' Meeting will be held on April 27, 2017 to deliberate upon Terna S.p.A. 2016 Annual Report and net profit allocation.

The Chairwoman has been appointed by the Board of Directors to set time and place of the Shareholders' Meeting.

The Shareholders' Meeting will be also called to deliberate on the renewal of the Board of Directors and the board of Statutory Auditors, that will expire on the occasion of the approval of the 2016 Annual Report.

Furthermore, to the Shareholders' Meeting will also be submitted a non-binding resolution on the section of the Remuneration Report that sets out Remuneration Policy and procedures for the adoption and implementation of such Policy.

The call notice will be published in the manner and within the deadline foreseen by the law, as will the documentation related to the agenda of the Shareholders' Meeting.

A conference call will be held today at 14:30 (CET) to illustrate the 2016 results to financial analysts and investors which journalists can also listen to. The supporting material for the event 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 webcast. The Presentations will also be made available, throughout 'eMarket SDIR' system, on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) and of the authorised storage service '1Info' (www.1info.it).

The Manager in Charge of Preparing the Company's Accounting Data, Tiziano Ceccarani, 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 documents, books and accounts.

The 2016 Annual Financial Report including Terna S.p.A.'s draft separate financial statements and the Terna Group's consolidated financial statements at December 31, 2016, accompanied by the report on operations on the separate financial statements of Terna S.p.A. and on the consolidated financial statements and by the certification of the Manager in Charge of Preparing the Company's Accounting Data and of the Chief Executive Officer under the terms of paragraph 5 of Art. 154-bis of the Consolidated Law on Finance together with the additional documents as established by the law and the Annual Report on Corporate Governance and Ownership Structure, by the deadline set out by law, will be made available to the public at the Company's registered office, published on the Company's website (www.terna.it) and on the website of the authorized storage service '1Info' (www.1info.it) and filed at the stock exchange management company Borsa Italiana S.p.A. (www.borsaitaliana.it). The prescribed disclosure regarding the filing will be issued.

The 2016 Annual Report has been submitted to the Board of Statutory Auditors and to the Independent Auditing Company for the assessments they are responsible for. The report by the Board of Statutory Auditors and the reports by the Independent Auditing Company will be made available to the public as soon as they are available according to the terms established by the law.

The reclassified Income Statement, Statement of Financial Position and Statement of Cash Flows of the Terna Group and of Terna S.p.A. are attached.

It should be noted that, pursuant to Communication No. DME/9081707 of September 16, 2009, the reclassified statements presented below are those included in the Report on Operations (included in the 2016 Annual Financial Report), for which the Independent Auditing Company, in compliance with Article 14 of Italian Legislative Decree No. 39 dated January 27, 2010 will verify consistency with the Financial Statements.

In this press release, some 'alternative performance indicators' are used (EBITDA and Net Financial Debt), the meaning and content of which are illustrated below and are in line with the ESMA/2015/1415 recommendation published on December 03, 2015:

- EBITDA (Gross Operating Margin): this is an indicator of operating performance; it is calculated by combining the operating profit (EBIT) with amortisation, depreciation and impairment.

- EBITDA margin: this represents an indicator of operating performance; it derives from the ratio between Gross Operating Margin (EBITDA) and revenue;

- Net financial debt: this represents an indicator of the company's financial structure; it is determined as the sum of the short- and long-term financial debts and the related derivative instruments, net of cash and cash equivalents and of financial assets.

For table see attachment