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1Q 2020 Terna Consolidated Results Presentation

Terna reported its consolidated results for the first quarter of 2020. Key highlights include: - Revenues increased 6% to €567 million driven by growth across all business lines. - EBITDA rose 3.3% to €434 million due to higher revenues partially offset by rising costs. - Capex increased 32% to €218 million, accelerating Terna's investment plan. - Net debt rose slightly to €8.4 billion while financial ratios remained solid.

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1 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 May 13th 2020 1Q2020 Consolidated Results
2 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Agenda 1Q20 Results 6 Highlights 3 Annexes 16
3 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Highlights
4 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 24.0 25.3 27.6 31.2 26.4 26.6 26.3 25.8 25.6 27.5 25.8 23.7 20 22 24 26 28 30 32 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Monthly energy demand Previous Year Demand Evolution – Last 12 months DEMAND AS REPORTED (TWh) Highlights (1/2) Note: 2018 final figures, 2019 and 2020 preliminary figures Strong contribution from hydro production 1Q2020 data: ▪ National Demand at 77 TWh, o/w 33% covered by RES ▪ Net Total Production at 66 TWh ❖ Hydro increased by 19% YoY Change 1Q2020 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar -1.7% -3.6% 2.5% 3.5% 0.4% -1.1% -0.9% -1.1% -3.0% -4.0% 0.7% -10.2% Δ % -4.5% 1Q20 1Q19 77.0 80.6
5 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Results driven by ongoing capex acceleration 1Q 2020 Key Figures Note: excluding Brugg contribution 1. Attributable to Terna 1Q 2019€mn Revenues EBITDA Group Net Income1 Capex Δ vs 1Q191Q 2020 567 537 434 420 187 186 218 164 Highlights (2/2) +6% +3% +0.3% +32% 8,409 8,259Net Debt FY 20191Q 2020
6 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 1Q20 Results
7 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 500 517 33 444 7 537 17 11 3 567 1Q19 ∆ Regulated Activities ∆ Non Regulated Activities ∆ International Activities 1Q20 Revenues Note: figures may not add up due to rounding 1. Including IFRIC12 2. Construction margin, including IFRIC12 Insourcing attività di O&M Rete FS Revenues +6% YoY 1 2 €mn Regulated Activities1 Non Regulated Act. International Act.2 1Q 2020 results +31 +5.7%
8 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 33 44 4 7 37 11 3 51 1Q19 ∆ Non Regulated Activities ∆ International Activities 1Q20 493 502 5 10 5 2 10 2 4 500 517 1Q19 ∆ Transmission & Dispatching ∆ Other ∆ IFRIC12 1Q20 Revenues Analysis €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +17 +3.3% +14 +37.2% Revenues increase in all business lines Transmission & Dispatching Other IFRIC 12 Note: figures may not add up due to rounding Non Regulated Act. International Act. 1Q 2020 results
9 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 95 98 21 332 2 4 13 0 117 133 1Q19 ∆ Regulated Activities ∆ Non Regulated Activities ∆ International Activities 1Q20 1 +17 +14.1% €mn Opex Note: figures may not add up due to rounding 1. Including IFRIC12 Insourcing attività di O&M Rete FS Rising volumes effect on Opex increase Regulated Activities1 Non Regulated Act. International Act. 1Q 2020 results
10 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 21 33 2 13 0 2 22 35 1Q19 ∆ Non Regulated Activities ∆ International Activities 1Q20 57 57 35 -1 2 2 37 2 4 95 98 1Q19 ∆ Labour Costs ∆ External Costs & Other ∆ IFRIC12 1Q20 Opex Analysis Insourcing attività di O&M Rete FSRegulated Activities costs substantially in line €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +4 +3.9% +13 +54.7% Labour Costs External Costs & Other IFRIC 12 Note: figures may not add up due to rounding Non Regulated Act. International Act. 1Q 2020 results
11 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 420 434 1Q19 1Q20 EBITDA Insourcing attività di O&M Rete FS Investment acceleration driving EBITDA growth €mn TOTAL EBITDA €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +14 +3.3% Note: figures may not add up due to rounding 1Q 2020 results 405 418 13 1Q19 ∆ 1Q20 15 16 1 1Q19 ∆ 1Q20
12 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 434 282 187 186 152 19 76 EBITDA D&A EBIT Net Financial Expenses Taxes Group Net Income Group Net Income 1Q19 From EBITDA to Net Income Note: figures may not add up due to rounding 1. Attributable to Terna. Excluding Minorities Maintaining Net Income level vis-à-vis higher D&A 1 €mn 1 1Q 2020 results
13 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 36% 19% 45% Development Defence Asset Renewal & Efficiency 144 206 20 11164 218 1Q19 1Q20 Regulated Non Regulated and Other Capex Insourcing attività di O&M Rete FSRobust Capex acceleration TOTAL CAPEX €mn 1 REGULATED CAPEX Note: figures may not add up due to rounding 1. Of which about 2 €mn of Capitalized Financial Charges in 1Q2020 and 3 €mn in 1Q2019 206 €mn 1Q 2020 results +32%
14 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 8,259 8,409 306 191 218 47 Dec.31, 2019 Operating Cash Flow Δ WC & Other Capex Dividends & Equity Mar.31, 2020 Note: figures may not add up due to rounding 1. Including Other Fixed Assets Changes 2. Including Cash Flow Hedge reserve and other Cash Flow & Net Debt Evolution Operating cash flow generation to support capex plan €mn 2 +150 1 1Q 2020 results
15 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 80% 17% 3% Terna SpA Bonds EIB Banks Net Debt Evolution & Financial Structure 1. Percentages and key ratios calculated on Gross Debt nominal value 2. IAS value Maintaining a solid financial structure GROSS DEBT BREAKDOWN KEY RATIOS 1 1 Fixed/Floating Ratio Calculated on Gross Debt 81% Fixed Duration 4.8 years 9.9€bn 2 1Q 2020 results
16 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Annexes
17 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 € mn 1Q20 1Q19 Δmn Δ% Total Revenue 567 537 31 5.7% Regulated Activities 517 500 17 3.3% Transmission 475 464 11 2.3% Dispatching 27 28 -1 -2.8% Other 10 5 5 90.6% IFRIC12 4 2 2 110.0% Non Regulated Activities 44 33 11 33.4% International Activities 7 4 3 66.7% Total Costs 133 117 17 14.1% Regulated Activities 98 95 4 3.9% Labour Costs 57 57 -1 -1.4% External Costs 34 34 1 1.8% Other 3 1 2 121.4% IFRIC12 4 2 2 110.0% Non Regulated Activities 33 21 13 61.7% International Activities 2 2 0 5.9% EBITDA 434 420 14 3.3% D&A 152 140 12 8.4% EBIT 282 280 2 0.8% Net Financial Charges 19 16 3 21.4% Pre Tax Profit 263 264 -1 -0.5% Taxes 76 78 -1 -1.9% Tax Rate (%) 29.1% 29.5% -0.4 pp Total Net Income 186 186 0 0.2% Minority Interest 0 0 0 Group Net Income 187 186 1 0.3% 1. Managerial Accounting 2. Including Quality of Service Consolidated Income Statement1 Annex 2 2
18 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Consolidated Balance Sheet Annex € mn PP&E Intangible Asset Financial Inv. and Other Total Fixed Assets Net WC Funds Net Capital Invested Financed by: Consolidated Net Debt Total Shareholder's Equity Total D/E Ratio D/D+E Ratio Number of Shares (mn) Mar. 31,2020 Dic. 31,2019 Δmn 13,922 13,864 58 541 543 -1 473 502 -28 14,937 14,908 28 -1,979 -2,208 229 -178 -210 32 12,780 12,490 289 8,409 8,259 150 4,371 4,232 139 12,780 12,490 289 1.9 2.0 0.7 0.7 2,010 2,010
19 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 1. Net of assets’ disposal 2. Including Other Fixed Assets Changes 3. Including Cash Flow Hedge accruals and other Consolidated Cash Flow Annex € mn 1Q20 1Q19 Total Net Income 186 186 D&A 151 140 Net Change in Funds -32 -29 Operating Cash Flow 306 297 Δ Working Capital & Other -191 -110 Cash Flow from Operating Activities 115 187 Capital Expenditures -218 -164 Free Cash Flow to Equity -103 23 Dividends & Equity -47 -42 Change in Net Cash (Debt) -150 -19 1 2 3
20 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 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. Disclaimer
21 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Notes
22 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Notes
23 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 Notes
24 1Q20 CONSOLIDATED RESULTS MAY 13th 2020 investor.relations@terna.it I +39 06 8313 8282 I www.terna.it