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Terna – 9M 2023 Consolidated Results Presentation

Terna reported its consolidated results for the first nine months of 2023. Revenues increased 13% to €2,247 million driven by higher contributions from regulated transmission and dispatching activities. EBITDA grew 10% to €1,556 million due to growth in regulated activities. Capex increased 39% to a record €1,434 million as Terna continues significant investments to support energy transition goals. Net debt rose to €9,486 million due to capex outpacing cash flow, though financial ratios remained solid. The company reaffirmed its sustainability leadership and progress on key infrastructure projects.

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9M 2023 Consolidated Results Rome, November 8th 2023
7 9M 2023 Results 3 Highlights Agenda 2 Annexes 16
Highlights 3
Highlights 4 Latest main achievements Well on track on execution REGULATED ACTIVITIES SUSTAINABILITY ACHIEVEMENTS ▪ Terna reconfirmed as global sustainability leader ▪ Tyrrhenian link fully authorized ▪ Final project of Sa.Co.I. 3 authorized ▪ Adriatic link: contract secured for the supply of power cables SHAREHOLDERS REMUNERATION ▪ 11.46 € cents/share approved by today’s Board of Director as 2023 Interim Dividend
Highlights 5 Demand Evolution – Last 12 months DEMAND AS REPORTED (TWh) ▪ National Demand at 232 TWh, o/w 37% covered by RES ▪ Net Total Production at 197 TWh, o/w 44% covered by RES 9M 2023 Note: 2022 and 2023 preliminary figures Ensuring the security of supply in a challenging scenario TWh 24.7 25.0 25.0 26.2 25.1 26.2 23.4 24.3 25.4 30.1 25.7 26.2 20 22 24 26 28 30 32 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Monthly energy demand Previous Year Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep -6.2% -6.2% -9.1% -4.6% -2.2% -5.0% -4.3% -6.3% -9.2% -3.3% -1.1% 0.5% YoY Chg% Δ % -4.0% 9M23 9M22 232.5 242.1
Highlights 6 9M 2023 Key Numbers Strong growth in all P&L lines and Capex 1. Attributable to Terna Revenues +13% EBITDA +10% Group Net Income1 +9% Net Debt 9,486 2,247 1,556 642 8,576 1,992 1,412 587 Actual €mn 9M 2023 9M 2022 ∆ % Actual €mn Capex +39% 1,434 1,033 FY 2022
9M 2023 Results 7
9M 2023 Results 8 Revenues Note: figures may not add up due to rounding 1. Including IFRIC12 Revenues increase in all business areas Regulated Activities1 Non Regulated and International Activities +255 +12.8% 1 1,720 1,904 272 343 1,992 184 71 2,247 9M22 ∆ Regulated Activities ∆ Non Regulated and International Activities 9M23
9M 2023 Results 9 Revenues Analysis Note: figures may not add up due to rounding Higher contribution from Regulated activities 1,657 1,810 27 153 22 9 49 36 45 1,720 1,904 9M22 ∆ Transmission & Dispatching ∆ Other ∆ IFRIC12 9M23 €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +184 +10.7% +71 +25.9% Transmission & Dispatching Other IFRIC12 272 343 272 71 343 9M22 ∆ Non Regulated and International Activities 9M23
9M 2023 Results 10 Opex Note: figures may not add up due to rounding 1. Including IFRIC12 Operating costs evolution driven by higher volume of activity 344 396 232 292 5 3 52 60 -2 580 691 9M22 ∆ Regulated Activities¹ ∆ Non Regulated Activities ∆ International Activities 9M23 Regulated Activities1 Non Regulated Act. International Act. €mn +111 +19.1%
9M 2023 Results 11 EBITDA Note: figures may not add up due to rounding Regulated activities as EBITDA growth driver €mn GROUP €mn REGULATED €mn NON REGULATED AND INTERNATIONAL +144 +10.2% 1,412 1,556 9M22 9M23 36 48 12 9M22 ∆ 9M23 1,376 1,508 132 9M22 ∆ 9M23
9M 2023 Results 12 From EBITDA to Net Income Note: figures may not add up due to rounding 1. Attributable to Terna. +9% increase in Group Net Income 1,556 980 642 587 577 81 262 -1 -4 EBITDA D&A EBIT Net Financial Expenses Taxes (Profit)/Loss from discontinued operation Minority Interest Group Net Income Group Net Income 9M22 €mn 1 1 +9.3% YoY
9M 2023 Results 13 Capex Note: figures may not add up due to rounding 1. Of which about € 17mn of Capitalized Financial Charges in 9M2022 and € 36mn in 9M2023 Record-breaking Capex TOTAL CAPEX €mn REGULATED CAPEX €mn 1 985 1,360 48 74 1,033 1,434 9M22 9M23 Regulated Non Regulated and Other 56% 12% 32% Development Defence Asset Renewal & Efficiency 1,360 +401 +38.8%
9M 2023 Results 14 Cash Flow & Net Debt Evolution 1. Including Other Fixed Assets Changes 2. Including Assets Held for Sale, Cash Flow Hedge reserve and other Note: figures may not add up due to rounding Net debt evolution under control 8,576 9,486 1,168 172 1,434 472 Dec.31, 2022 Operating Cash Flow Δ WC & Other Capex Dividends,Equity & Others Sep.30, 2023 2 1 €mn +910
9M 2023 Results 15 Net Debt Evolution & Financial Structure Maintaining a solid financial structure ~11€bn GROSS DEBT BREAKDOWN KEY RATIOS ~ 87% Fixed ~ 6 years Calculated on Gross Debt Fixed/Floating Ratio Maturity Terna SpA Bonds EIB Banks 63% 27% 10%
Annexes 16
Annexes 17 Consolidated Income Statement1 Note: figures may not add up due to rounding 1. Managerial Accounting 2. Including Quality of Service € mn 9M23 9M22 Δmn Δ% Total Revenue 2,247 1,992 255 12.8% Regulated Activities 1,904 1,720 184 10.7% Transmission 1,564 1,485 79 5.3% Dispatching 246 172 74 43.3% Other² 49 27 22 80.6% IFRIC12 45 36 9 23.9% Non Regulated and International Activities 343 272 71 25.9% Total Costs 691 580 111 19.1% Regulated Activities 396 344 52 15.1% Labour Costs 201 181 20 11.3% External Costs 128 112 16 14.7% Other² 22 15 7 44.3% IFRIC12 45 36 9 23.9% Non Regulated Activities 292 232 60 26.1% International Activities 3 5 -2 -39.1% EBITDA 1,556 1,412 144 10.2% D&A 577 516 61 11.7% EBIT 980 896 83 9.3% Net Financial Charges 81 56 25 44.2% Pre Tax Profit 899 840 58 7.0% Taxes 262 237 25 10.5% Tax Rate (%) 29.1% 28.2% - 0.9 pp Net Income 637 603 34 5.6% Net Financial Charges Profit/(Loss) From Discontinued Operations 1 -15 16 105.4% Total Net Income 638 589 49 8.4% Minority Interest -4 2 -6 -350.0% Group Net Income 642 587 55 9.3%
Annexes 18 Consolidated Balance Sheet € mn Sep. 30,2023 Dec. 31,2022 Δmn PP&E 17,012 16,201 811 Intangible Asset 807 776 31 Financial Inv. and Other 504 509 -5 Total Fixed Assets 18,323 17,485 838 Net WC -2,529 -2,733 204 Funds -34 -68 34 Net Capital Invested 15,760 14,684 1,076 Net Assets Held for Sale 81 61 19 Total Net Capital Invested 15,841 14,745 1,095 Financed by: Consolidated Net Debt 9,486 8,576 910 Total Shareholder's Equity 6,355 6,169 186 Total 15,841 14,745 1,095
Annexes 19 Consolidated Cash Flow Note: figures may not add up due to rounding 1. Net of assets’ disposal 2. Including Other Fixed Assets Changes 3. Including Cash Flow Hedge accruals, Hybrid Green Bond and other € mn 9M23 9M22 Total Net Income 638 589 D&A1 564 514 Net Change in Funds -34 6 Operating Cash Flow 1,168 1,108 Δ Working Capital & Other 2 -172 541 Cash Flow from Operating Activities 995 1,649 Capital Expenditures -1,434 -1,033 Free Cash Flow to Equity -438 616 Net Assets Held for Sale -19 -91 Dividends & Equity 3 -452 827 Change in Net Cash (Debt) -910 1,351
Disclaimer 20 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 21
Notes 22
23 investor.relations@terna.it www.terna.it
Terna – 9M 2023 Consolidated Results Presentation