1H 2015 Consolidated Results

1H15 CONSOLIDATED RESULTS JULY 28h 2015

Investor Relations 1

1H15 Consolidated Results July 28th, 2015

MATTEO DEL FANTE

CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI

CHIEF FINANCIAL OFFICER



Agenda

1H15 Results

Annexes

Strategic Update 3

7

15



Electricity Market Trends

Electricity Demand Change

79.0 78.5

1Q14 1Q15

75.9 75.6

2Q14 2Q15

-0.6%

-0.5%

Demand as Reported (TWh)

Signs of stabilization

Electricity consumption at peak level in July

Higher Dispatching Market Efficiency



Regulatory Review

Published Consultation Documents on WACC and Transmission

Working on the responses

Electricity Transmission Review

January

Consultation Document

5/2015/R/eel

July

Consultation

Document

335/2015/R/eel

August/

September

Consultation

Docs

By Year End

Final Outcome June

Consultation

Document

275/2015/R/com

Fall

Consultation

Docs

By Year End

Final Outcome

2015 Expected Timeline

WACC Review



Executing the Strategy – 1H15 Highlights (1/2)

Business Process Reengineering

Efficiency and Effectiveness enhanced

New Organizational Structure

Requests of Exits ahead of target

Hirings/Exits ratio confirmed at ~70%

Voluntary Turnover Programme

Progresses on Main Projects

Dedicated SPVs Incorporated

Non Regulated Activities

Opex Discipline



Executing the Strategy – 1H15 Highlights (2/2)

Proceeding with the due diligence

Costs/Benefits Analysis

Italian Railway HV Grid

Bought ~480mn of 2017 4.125% Notes

Proactive Debt Maturities Management

Financial Charges Profile Rebalanced

Bond Buyback



Financial highlights

439€mn Total capex

6,876€mn Net Debt

1,002€mn Revenues

+5.5%yoy

310€mn Net profit

+13.1%yoy

767€mn EBITDA

+1.9%yoy

H1 2015 at a glance

KEY FINANCIALS



887

1005.6

911

12

2436 -4 -5

816

5235

31

1H14 ∆RegulatedActivities

∆Tamini

∆Other

Non RegulatedActivities

∆IFRIC

1H15

Regulated ActivitiesIFRIC12TaminiOther Non Regulated Act.

1. Tamini consolidation since 20th May 2014

1H15 Results Revenues

950

1,002 +52

KEY FIGURES TOTAL REVENUES EVOLUTION

Total Revenues

1,002€mn +5.5%yoy Regulated Activities

911€mn +2.8% yoy Non Regulated Activities

83€mn

€mn

1

Regulated Activities

Tamini

IFRIC12

Other Non Regulated Act.

€ mn 1H14 1H15 Δ yoy Δ % yoy

Regulated Activities 887 911 24 2.8%

Non Regulated Act. 51 83 32 63.8%

o/w Tamini 16 52 36 226%

Other Non Regulated Act. 35 31 -4 -10.3%

IFRIC12 12 8 -5 -37.9%

Total 950 1,002 52 5.5%

1



16

5235

36 -431

1H14 ∆Tamini

∆Other


1H15


Tamini

817 839

58 23 4 -3 6213 10

1H14 ∆ Transmission

∆ Dispatching

∆ Other

1H15

TransmissionDispatchingOther

1H15 Results Revenues Analysis

887 911

+24

+32

Tamini

+36€mn

€mn

€mn

1

REGULATED ACTIVITIES

NON REGULATED ACTIVITIES

1. Tamini consolidation since 20th May 2014 NOTE: figures net of IFRIC12 – Managerial Accounting

Transmission

RAB growth

51

83

Tamini




162

235.4

169

12

6

351 -5

814

509

10

1H14 ∆RegulatedActivities

∆Tamini

∆Other


∆IFRIC

1H15


IFRIC12

Tamini

Other Non Regulated Activities

1H15 Results Opex

1. Tamini consolidation since 20th May 2014

197

235 +38

KEY FIGURES TOTAL COSTS EVOLUTION

Total Costs

235€mn

€mn

1


169€mn

Non Regulated Activities

59€mn


Tamini

IFRIC12




14

509

35

1 10

1H14 ∆Tamini

∆Other

Non Regulated

Activities

1H15

97 97

590 -3 9

56

7 16

1H14 ∆ Labour Costs

∆ External Costs

∆ Other

1H15

Labour CostsExternal CostsOther

1H15 Results Opex Analysis

162 169 +6

+36

Stable on Other Non Regulated Act.

€mn

€mn

1

REGULATED ACTIVITIES

NON REGULATED ACTIVITIES

1. Tamini consolidation since 20th May 2014 NOTE: figures net of IFRIC12 – Managerial Accounting

Labour and External Costs

under control

23

59

Tamini


Controllable costs



From EBITDA to Net Income

KEY FIGURES PROFIT & LOSS

Group EBITDA

767€mn

Group EBITDA Margin

76.5%

Group Net Income

310€mn

+1.9%yoy

+13.1%yoy

€mn

1H15 Results

Cost of Net Debt

2.3%

767524 460

310

243

64150

EBITDA D&A EBIT NetFinancial

Expenses

PBT Taxes GroupNet

Income

€ mn 1H14 1H15 Δ Δ %

EBITDA 753 767 14 1.9%

Ebitda % 79.2% 76.5% -2.7pp

D&A 235 243 8 3.4%

EBIT 517 524 6 1.2%

Net Financial Expenses 64 64 -1 -0.9%

PBT 453 460 7 1.5%

Tax Rate 40% 33% -7pp

Taxes 179 150 -29 -16.2%

Group Net Income 274 310 36 13.1%



Capex

KEY FIGURES BREAKDOWN

1H15 Total Capex

439€mn

1H15 Results

NOTE: Figures in accordance with AEEGSI resolutions

1. Of which 16mn Capitalized Financial Charges

Development Capex

332€mn

Category (€mn) 1H14 1H15 Δ yoy Δ % yoy

+2% 148 189 41 27%

+1.5% 124 143 19 16%

Development Capex 272 332 60 22%

Maintenance (Base Return) 93 80 -14 -15%

Regulated Capex 366 412 46 13%

Other1 20 27 7 33%

Total Group Capex 386 439 53 14%



6,615 6,8766,966

587

266 43964 261

Net Debt Evolution & Financial Structure

KEY FIGURES

Net Debt

6,876€mn

Fixed/floating ratio3

54/46

GROSS DEBT BREAKDOWN

1H15 Results

8.4€bn

1. Net Income + D&A + Net Financial Charges +/- Net Change in Funds (see Annex “Consolidated Cash Flow” for details) 2. Including Other Fixed Assets Changes, Change in Capital & Other 3. Calculated on Net Debt

Dec.31,

2014

Operating

Cash

Flow1

Δ WC

&

Other2

June. 30,

2015

-90

Capex

FCF AND NET DEBT EVOLUTION

€mn

Debt

Service

Free Cash Flow

415

Dividends

74%

20%

6%Terna SpA BondsEIB LoansBanks



THANK YOU. QUESTIONS?

MATTEO DEL FANTE

CHIEF EXECUTIVE OFFICER

PIERPAOLO CRISTOFORI

CHIEF FINANCIAL OFFICER



Annexes



28.0

23.9

26.325.7 26.2

25.6

26.727.0

26.3

24.624.8

26.6

23

25

27

29

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Montly Energy Demand (normalized)

Prior Year

Annex Electricity Market Trends – Last 12 Months

TWh

TWh

DEMAND AS REPORTED (TWh)

NOTE: 2014 final figures, 2015 provisional figures (as of July 2015)

1. For temperature and number of days

DEMAND ADJUSTED1 (TWh)

28.2

23.8

26.2 26.425.5 25.7

26.8

24.9

26.8

24.2

25.0

26.3

23

25

27

29


Monthy energy demand

Prior Year


YoY Chg% -5.1% -5.5% 0.4% -1.3% -2.7% -3.4% -2.0% -0.7% 1.1% 0.0% -1.3% -0.1%

1H14 1H15 Δ %

154.9 154.1 -0.5%

1H14 1H15 Δ %

157.9 156.1 -1.1%


YoY Chg% -2.9% -3.1% -0.2% -1.3% -2.0% -2.9% -1.9% -2.0% 0.0% -1.6% -0.1% -1.1%



Consolidated Income Statement1 Annex

NOTE: Tamini consolidation since 20th May 2014 1. Managerial Accounting 2. Quality of Service + Other Revenues

€ mn 1H14 1H15 Δmn Δ%

Transmission 817 839 23 2.8%

Dispatching 58 62 4 7.8%

Other 2 13 10 -3 -22%


Non Regulated Act. 51 83 32 64%

IFRIC12 12 8 -5 -38%

Total Revenues 950 1,002 52 5.5%

Labour Costs 97 97 0 0.1%

External Costs 59 56 -3 -5.2%

Other 7 16 9 142%


Non Regulated Act. 23 59 36 159%

IFRIC12 12 8 -5 -38%

Total Costs 197 235 38 19.3%

EBITDA 753 767 14 1.9%

D&A 235 243 8 3.4%

EBIT 517 524 6 1.2%

Net Financial Charges 64 64 -1 -0.9%

Pre Tax Profit 453 460 7 1.5%

Taxes 179 150 -29 -16%

Tax Rate (%) 40% 33%

Group Net Income 274 310 36 13.1%



Group Costs Breakdown Annex

NOTE: Tamini consolidation since 20th May 2014

€ mn 1H14 1H15 Δmn Δ%

Labour Costs 104 112 8 8%

Services 58 66 8 13%

Materials 15 32 18 121%

Other 8 18 10 113%

IFRIC12 12 8 -5 -38%

Total Costs 197 235 38 19.3%



€ mn 1Q14 1Q15 Δ 2Q14 2Q15 Δ

Regulated Activities 457 479 22 430 432 3

Non Regulated Act. 17 32 15 34 52 18

IFRIC 12 4 3 -1 8 5 -4

Operating Revenues 478 513 35 472 489 17

Regulated Activities 81 85 5 81 83 2

Non Regulated Act. 3 23 20 20 36 16

IFRIC 12 4 3 -1 8 5 -4

Operating Expenses 88 112 24 110 124 14

EBITDA 390 402 11 362 365 3

D&A 113 120 7 122 123 1

EBIT 277 281 4 240 242 2

Net Financial Charges 31 31 0 33 33 0

Pre Tax Profit 246 250 4 207 210 2

Taxes 101 85 -16 78 65 -13

Group Net Income 145 165 20 129 145 16

Total Group Capex 164 177 13 222 262 40

Net Debt (end of period) 6,629 6,518 7,083 6,876

Annex


1H15 – P&L Quarterly Analysis



Consolidated Balance Sheet Annex


€ mn Dec. 31,2014 Jun. 30,2015 Δmn

PP&E 10,779 10,983 204

Intangible Asset 453 436 -16

Financial Inv. and Other 89 90 0

Total Fixed Assets 11,320 11,509 188

Net WC -821 -1,056 -235

Funds -441 -413 28

Total Net Invested Capital 10,059 10,040 -19

Financed by

Consolidated Net Debt 6,966 6,876 -90

Total Shareholder's Equity 3,093 3,164 71

Total 10,059 10,040 -19

D/E Ratio 2.3 2.2

D/D+E Ratio 0.69 0.68

Number of Shares ('000) 2,010 2,010



€ mn 1H14 1H15 Δmn

Group Net Income 274 310 36

D&A 1 235 242 7

Debt Service 64 64 -1

Net Change in Funds -3 -28 -25

Operating Cash Flow 570 587 17

∆ Working Capital & Other 2 -286 266 552

Cash Flow from Operating Activities 284 854 569

Capital Expenditures -386 -439 -53

Free Cash Flow -102 415 516

Dividends -261 -261 0

Debt Service -64 -64 1

Change in Net Cash (Debt) -427 90

Consolidated Cash Flow Annex


1. Net of assets’ disposal

2. Including Other Fixed Assets Changes, Change in Capital & Other



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1H 2015 Consolidated Results

Investor Relations

Transcript of 1H 2015 Consolidated Results