TERNA'S BOARD OF DIRECTORS: 1Q15 RESULTS APPROVED Revenues at 513.3 million euros (478 million euros in 1Q14, +7.4%) EBITDA at 401.6 million euros (390.2 million euros in 1Q14, +2.9%) EBIT at 281.3 million euros (277.3 million euros in 1Q14, +1.4%) Net profit at 165.2 million euros (145.2 million euros in 1Q14, +13.8%) Rome, May 6, 2015 The CEO Matteo Del Fante presented the results for the first quarter of 2015, which were examined and approved by the Board of Directors of TERNA S.p.A. ("Terna") at a meeting chaired by Catia Bastioli today. Matteo Del Fante, CEO of Terna, commented: "The main economic indicators confirm our growing trend also in the first quarter of the year. The management actions outlined in the new Strategic Plan, to drive greater operational efficiency and enhance cash flow generation, have been started. Terna will continue to generate benefits for Italian companies and families and create value for its shareholders through its ongoing commitment both to the development of the national transmission grid, also in terms of European networks integration, and to the efficiency improvement in the dispatching service." SUMMARY OF THE FIRST QUARTER 2015 CONSOLIDATED RESULTS Million euros 1st quarter 2015 1st quarter 2014 % change Revenues 513.3 478 +7.4% EBITDA 401.6 390.2 +2.9% EBIT (Operating Profit) 281.3 277.3 +1.4% Net Profit 165.2 145.2 +13.8% 1Q15 revenues amounted to 513.3 million euros, an increase of 35.3 million euros (+7.4%) compared to the same period in 2014. The change was driven by a 21.7 million euro growth in Regulated Activities and of 14.8 million euro in Non-Regulated Activities. Operating costs amount to 111.7 million euros, compared to 87,8 million euros in the same period in 2014 (+23.9 million euros), also due to the costs recorded in the period by the operations of the Tamini Group, not part of Terna Group in 1Q14, and other non-recurring items.
EBITDA reached 401.6 million euros, an increase of 11.4 million euros (+2.9%) compared to 390.2 million euros in the first quarter of 2014. The EBITDA margin stands at 78.2% compared to 81.6% in the first quarter of 2014, largely due to the dilutive effect of the Tamini Group consolidation. (the EBITDA margin amounted to 81.3% excluding the effect of Tamini). 120.3 million euros in Amortization and depreciation for the period increased of 7.4 million euros compared to the same period in 2014, due to the commissioning of new plants. EBIT (Operating Profit) stood at 281.3 million euros, compared to 277.3 million euros for the first quarter of 2014 (+1.4%). Taking into account net financial charges, in line with the same period of 2014 (-0.4 million euros), profit before tax amounted to 250.3 million euros, an increase of 4.4 million euros compared to the same period last year (+1.8%). Income tax for the period amounted to 85.1 million euros, a year on year decrease of 15.6 million euros (- 15.5%) due to the positive effect on current tax resulting from the removal of the IRES (corporate income tax) surcharge (the so-called Robin Hood Tax) 1 and the deductibility of the cost of personnel with open-ended contracts for IRAP purposes introduced by the 2015 Stability Law. The tax rate for the period therefore decreases from 41% in the first three months of 2014 to 34% in the corresponding period in 2015. Net profit for the period reached 165.2 million euros, up 20 million euros (+13.8%) compared to 145.2 million euros for the first quarter of 2014. Total investments by the Group in the period amounted to 177.2 million euros, up by 12.9 million euros compared to 164.3 million euros (+ 7.9%) in the same period last year. As of March 31, 2015, notable projects include the Italy-Montenegro electrical interconnection, the Sorgente-Rizziconi (between Sicily and Calabria), Paternò-Pantano-Priolo (in Sicily), Udine West -Redipuglia (in Friuli Venezia Giulia) and Foggia- Villanova (between Puglia and Abruzzo) power lines and the Energy Intensive and Power Intensive storage systems, mainly located in Southern Italy and in the main islands. Net financial debt stood at 6,518.2 million euros. The consolidated Statement of financial position as of March 31, 2015 registered Net Shareholders' Equity of 3,267.3 million euros, an increase compared to 3,092.9 million euros as of December 31, 2014. Group Headcount as of the end of March 2015 equaled 3,717. The total number of employees leaving in the period (121) was mainly due to the generational change initiative launched by the company in the last quarter of 2014, aimed at incentivizing employees close to retirement age to take voluntary redundancy. At the same time, as part of the initiative, 41 young professionals have joined the company during the quarter. 1 As a result of the declaration of unconstitutionality of the increase introduced by Legislative Decree no. 112/2008 so-called Robin Hood Tax).
SUBSEQUENT EVENTS AFTER MARCH 31, 2015 Within the scope of development of the Group's Non-Regulated Activities, with particular reference to the implementation and management of the interconnection infrastructures with neighboring countries, on April 13, 2015, the Parent Company Terna and the subsidiary Terna Rete Italia SpA established Monita Interconnector Srl, a company with a share capital of 10,000 euros, 95% of Terna SpA with the remaining stake held by the aforementioned subsidiary. The creation of this company is part of the broader Interconnector development project illustrated in the Strategic Plan 2015-2019. A conference call will be held at 4 pm C.E.T. to present the results of the first quarter of 2015 to financial analysts and institutional investors. Journalists can also connect in listen-only mode. Support materials will be available on the Company's website (www.terna.it) in the Investor Relations/Presentations section, at the beginning of the conference call. In the same section it will be possible to follow the presentation through audio webcasting. The presentations will also be made available via the SDIR-NIS system, on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) through the authorized storage service "1Info" (www.1info.it). Terna drafted the Interim financial Report as of March 31, 2015 in compliance with the provisions stated in Article 154 ter of Italian Legislative Decree 58/98 (Consolidated Law on Finance) and with Consob Communication no. DEM/8041082 dated April 30, 2008. The reclassified Income Statement, Balance Sheet and Consolidated Statement of Cash Flows of the Terna Group are attached. In compliance with Communication no. DME/9081707 dated September 16, 2009, such statements and sheets are included in the Interim Management Report of the Terna Group as of March 31, 2015. These are not subject to auditing on the part of the auditing company. The Interim Report as of March 31, 2015 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 internet site 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), by the deadline set out by law. The information required on filing shall be provided. The Executive in Charge of preparing the company s financial reports, Pierpaolo Cristofori, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance (TUF), declares that the accounting information included in this press release corresponds to the document results, books and accounting records. In this release some "alternative performance indicators" are used (EBITDA, EBITDA margin and Net financial debt), the meaning and content of which are illustrated below in line with CESR /05-178b recommendation published on November 3, 2005: - Ebitda: is an indicator of operating performance; it is calculated by adding Amortization and Depreciation to the Operating Profit (EBIT); - Ebitda margin: is an indicator of operating performance; it derives from the ratio between the Gross Operating Margin (Ebitda) and revenues; - Net financial debt: is an indicator of the company s own financial structure; it is calculated according to the short- and long-term financial debt and relevant derivatives, net of cash and cash equivalents and of financial assets.
Terna Group's Reclassified Income Statement 2 Million euros Revenues: 1Q2015 1Q2014 Δ Δ% - Transmission fees (1) 443.3 417.2 26.1 6.3% - Dispatching fees (1) 31.8 30.9 0.9 2.9% - Other revenues and income 35.2 25.7 9.5 37.0% of which other revenues from Regulated Activities (1) 3.7 9.0 (5.3) (58.9%) of which other revenues from Unregulated Activities 31.5 16.7 14.8 88.6% - Revenues from construction activities under concession** (2) (1.2) 3.0 4.2 (28.6%) Operating costs: Total revenues 513.3 478.0 35.3 7.4% - Personnel expenses 56.3 51.3 5.0 9.7% - Services, leases and rentals 30.9 25.4 5.5 21.7% - Materials 12.5 2.2 10.3 468.2% - Other expenses 9.0 4.7 4.3 91.5% - Costs from construction activities under concession (2) 3.0 4.2 (1.2) (28.6%) Total operating costs 111.7 87.8 23.9 27.2% GROSS OPERATING MARGIN 401.6 390.2 11.4 2.9% - Amortization and Depreciation 120.3 112.9 7.4 6.6% OPERATING PROFIT 281.3 277.3 4.0 1.4% - Net financial income (expense) (31.0) (31.4) 0.4 (1.3%) INCOME BEFORE TAXES 250.3 245.9 4.4 1.8% - Income taxes for the period 85.1 100.7 (15.6) (15.5%) NET PROFIT FOR THE PERIOD 165.2 145.2 20.0 13.8% (1) Revenues from Regulated Activities includes revenues of the items Transmission Fees Dispatching Fees and Other revenues and income. (2) Recognized in accordance with IFRIC 12 "Service Concession Arrangements".
Terna Group s Reclassified Statement of Financial Position Million euros as at 31.03.2015 as at 31.12.2014 Δ Net non-current assets - Intangible assets and goodwill 442.9 452.5 (9.6) - Property, plant and equipment 10,834.6 10,778.6 56.0 - Financial assets 90.7 91.3 (0.6) Total 11,368.2 11,322.4 45.8 Net working capital - Trade receivables 580.1 670.8 (90.7) - Inventories 29.4 21.6 7.8 - Other assets 22.2 24.4 (2.2) - Trade payables 589.4 742.9 (153.5) - Net liabilities let-through lots 717.6 453.9 263.7 - Net tax liabilities 124.6 (6.2) 130.8 - Other liabilities 353.2 347.0 6.2 Total (1,153.1) (820.8) (332.3) Gross invested capital 10,215.1 10,501.6 (286.5) Sundry provisions 429.6 440.9 (11.3) NET INVESTED CAPITAL 9,785.5 10,060.7 (275.2) Group's Net Equity 3,267.3 3,092.9 174.4 Net financial debt 6,518.2 6,967.8 (449.6) TOTAL 9,785.5 10,060.7 (275.2)
Terna Group s Cash Flow Million euros Cash flow 1Q2015 Cash flow 1Q2014 - Net profit for the year 165.2 145.2 - Amortization and Depreciation 120.3 112.9 - Net financial charges 31.0 31.4 - Net change in provisions (11.3) (7.6) - Net losses (gains) on asset disposals (0.8) - Self-financing (Operating Cash Flow) 304.4 281.9 - Other changes in net fixed assets 12.9 2.4 - Change in equity investments (1.1) (1.4) - Other changes in equity attributable to owners of the Parent 9.3 7.7 Other changes 21.1 8.7 - Change in net working capital 332.3 (51.6) - Total investments (177.2) (164.3) Free Cash Flow from operations 155.1 (215.9) - Net financial charges (31.0) (31.4) Change in net financial debt 449.6 43.3