Terna's Board of Directors approved results as of 30 September 2017

Announced Date :  Nov 13, 2017


The Chief Executive Officer and General Manager Luigi Ferraris illustrated results of the first nine months and the third quarter of 2017, which were today examined and approved by the Board of Directors of Terna S.p.A., chaired by Catia Bastioli.
 “The positive results achieved in the period - said CEO and General Manager, Luigi Ferraris - confirm the company’s solid growth, in line with the targets announced to the market for 2017. Robust cash generation will support the acceleration in domestic investments aimed at supporting the energy transition phase and, in particular, the integration of renewables and system security”.

Revenues in the first 9 months of 2017, of € 1,627.4 million, recorded an increase of € 76.4 million (+4.9%) compared to the same period in 2016.

EBITDA (Gross Operating Margin) of the period came out at € 1,207.1 million, up by € 30.8 million (+2.6%) compared to € 1,176.3 million in the first 9 months of 2016.

This increase was chiefly due to the increase in revenue from Regulated Activities, partly offset by higher personnel expenses, owing to an increase in the amounts for insourcing of the O&M activities previously entrusted to RFI which, on the contrary, entails a reduction in the costs of external resources.

Amortisation, depreciation and impairment of the period were € 390.2 million and fell by € 13 million compared to the corresponding period of 2016, owing mainly to lower depreciation due to a review of the useful life of the electricity lines, partially offset by the impact of the entry into operation of new plants.

EBIT (Operating Profit) came out at € 816.9 million, compared to the € 773.1 million of the first 9 months of 2016 (+5.7%).

Net financial expense was € 68.3 million, an increase of € 7.9 million compared to the € 60.4 million of the first 9 months of 2016, mainly because of the inflation trend in the period.

Income taxes amounted to € 221.6 million and fell by € 6.6 million compared to the corresponding period of 2016 (-2.9%) owing essentially to fiscal effects deriving from the applicable legislation.

The Group net profit for the period came out at € 528.8 million, up by € 42 million compared to the € 486.8 of the first 9 months of 2016 (+8.6%).

The consolidated statement of financial position at 30 September 2017 showed equity attributable to shareholders of the parent of € 3,794.5 million, compared to € 3,535.4 million at 31 December 2016.

Net financial debt came out at € 7,362.9 million, down by € 596 million compared to 31 December 2016 (€ 7,958.9 million), thanks mainly to the strong cash generation of the period.

Total investments made by the Terna Group in the first 9 months of 2017, of € 545 million, were in line with the 2017 Guidelines of the Strategic Plan, and compared with the € 530.2 million of the corresponding period of the previous year.

The main projects of the period included progress in the works for the Italy-Montenegro and Italy-France electrical interconnections, the commissioning of the Capri-Italian mainland power line (operational since the end of June) and the “Udine Ovest-Redipuglia” 380-kV power line, a critical project for ensuring the electrical security of the Friuli grids and meeting the energy demand of the area, which has more than doubled in recent years. Furthermore, in September 2017, the process began to realise the variant of the “Ca’ Poia-Redipuglia” 132-kV power line, which will allow for 4 km of old overhead power lines to be decommissioned, demolishing 15 pylons near houses.

The Group’s employees, at the end of September 2017, totalled 3,958, up by 89 compared to 31 December 2016. This increase is primarily attributable to the recruitment policy for the integration of assets purchased from FSI.

RELEVANT EVENTS RECORDED IN THE THIRD QUARTER

Appointment of CFO and Manager in charge of preparing the company’s accounting data

On 03 August 2017, Agostino Scornajenchi became part of the Terna Group, and from 01 September 2017 he assumed the role of Head of the Administration, Finance and Audit Control Department, as well as Executive in charge of preparing Terna S.p.A.’s accounting reports.

International Activities

On 08 September 2017, Terna – via its subsidiary Terna Plus – formalised the contract for the construction of the 138-kV line in the centre of Peru, which will extend for 132 km and connect the electricity substations of Aguaytìa and Pucallpa. The concession, which Terna was awarded at the end of May following the tender called by Proinversion (the state agency for infrastructural investments controlled by the Peruvian Ministry of Energy and Mines) will last thirty years and is worth approximately 9 million USD.

Finance

On 14 July 2017, Terna signed the Project Finance agreement for 81 million USD for the construction of a 500-kV transmission line in Uruguay, to connect the cities of Melo and Tacuarembó. The funding has been qualified as a “green loan” by Vigeo Eiris, an agency specialising in the assessment of sustainability aspects in the field of business strategy and management, due to the positive impact of the new transmission line on electricity generation from renewables in Uruguay.

On 19 July 2017 Terna launched successfully a bond issue at fixed rate for a total of € 1 billion as part of its Euro Medium Term Notes (EMTN) Programme of € 8,000,000,000, to which has been attributed a “BBB” rating by Standard and Poor’s, “(P)Baa1” by Moody’s and “BBB+” by Fitch. The operation is part of Terna’s financial optimisation programmes serving the Group’s investment plan, designed to modernise the electricity grid and create a transmission grid that is even more sustainable, efficient and interconnected at European level. The bonds, with a duration of 10 years and maturity on 26 July 2027, are subject to a coupon of 1.375%, and were issued at a price of 99.602%, with a spread of 50 basis points with respect to the midswap. The bonds are admitted to listing on the Luxembourg stock exchange.

Sustainability

On 07 September 2017, Terna was confirmed in the Dow Jones Sustainability Index for the 9th year running. Compared to last year, Terna has further improved its position in the Index, passing, by 89 points, from fifth to fourth position (among the 64 companies evaluated), confirming that it is the number one Italian company in the Electric Utilities sector, according to the evaluation of RobecoSAM (which selects the best world-leading companies in the sustainability fields for inclusion in the Index). On 20 September 2017, Terna was confirmed on the Stoxx Global Leaders Index for the 7th year running, and thanks to its outstanding performance in all areas analysed – environmental, social and governance – it was confirmed in all three indices that make up the ESG Leaders.

RELEVANT EVENTS RECORDED AFTER 30 SEPTEMBER

Finance

On 13 October 2017, Terna S.p.A. renewed its € 8,000,000,000 EMTN bond issue programme. Deutsche Bank and Citigroup were the joint arrangers of the programme, which was given a BBB rating by S&P, (P)Baa1 by Moody’s and BBB+ by Fitch.

On 30 October 2017, S&P Global Ratings raised Terna S.p.A.’s long-term rating from ‘BBB’ to ‘BBB+’, confirming its short-term rating at ‘A-2’ (the assigned outlook is stable). Terna’s upgrade follows that of Italian Republic from ‘BBB-’ to ‘BBB’ and reflects the Company’s stand-alone credit profile (SACP) which S&P judges to be level ‘a-’.

2017 INTERIM DIVIDEND OF 7.4263 EUROCENTS PER SHARE

In view of the financial and equity position and income statement results achieved by Terna S.p.A. in the first semester of 2017 and the information regarding the economic prospects and business outlook for the current financial year, the Board of Directors of Terna S.p.A, having today received the opinion from the Auditing Company PricewaterhouseCoopers (PwC) required under Article 2433-bis of the Italian Civil Code, has resolved to pay the ordinary interim dividend for the year 2017 in the amount of 7.4263 eurocents per share, which, in the implementation of the 2017/2021 Strategic Plan, confirms an annual growth of 3% until 2021, aligned with the expected evolution of earnings and main capital parameters. The interim dividends, net of any withholdings required by law, will be payable from 22 November 2017 (record date pursuant to Article 83-terdecies of Legislative Decree no. 58 of 24 February 1998 known as the “Consolidated Law on Finance”: 21 November 2017), with “ex-dividend” date of coupon no. 27 on 20 November 2017.

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