(AGENPARL) – gio 27 luglio 2023 RESULTS AS OF 30 JUNE 2023 APPROVED
IMPROVEMENT ACROSS ALL FINANCIAL INDICATORS:
FIRST-HALF EBITDA EXCEEDS €1 BILLION FOR THE FIRST TIME
PERIOD SEES RECORD INVESTMENT, UP 25.7% ON FIRST SIX
MONTHS OF 2022
Revenues €1,485.3 million (1,330.8 million in H1 2022, +11.6%)
EBITDA €1,019.2 million (946,9 million in H1 2022, +7.6%)
Group net profit for the period €411.4 million (€398.1 million H1 2022, +3.3%)
Capex €830.5 million (€660.5 million in H1 2022, +25.7%)
Net debt €9,458.4 million (€8,576.3 million at 31 December 2022)
Rome, 27 July 2023 – Today’s meeting of the Board of Directors of Terna S.p.A. (“Terna”), chaired
by Igor De Biasio, has examined and approved the results for the six months ended 30 June 2023,
presented by the Chief Executive Officer and General Manager, Giuseppina Di Foggia.
The first six months of the year have continued to be affected by a difficult and very volatile scenario,
with commodity prices remaining high due to international tensions and electricity demand in Italy
falling by 5.3% compared to the same period of the previous year.
Despite the challenging environment, Terna has achieved significant improvements across all its
financial performance indicators, including EBITDA which, for the first time in the Group’s history,
has exceeded €1 billion in the first half of the year. Capex growth continued as part of the Country’s
energy transition drive, marking a new record for the period: €830.5 million in the first six months of
the year, an increase of 25.7% compared to the first half of 2022.
“The results approved by the Board of Directors today reaffirm Terna’s key role in achieving the
Country’s decarbonisation and energy independence goals. The over €830 million invested during
the first half represents a record amount for the period, confirming Terna’s ability to meet its
economic and financial targets. We are determined to deliver investment in the grid on time with the
Industrial Plan, with the aim of facilitating the integration of renewables into the electricity system,”
said Giuseppina Di Foggia, Terna’s Chief Executive Officer and General Manager.
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR H1 2023
H1 2023*
H1 2022*
% change
Revenues
1,485.3
1,330.8
+11.6%
EBITDA (gross operating profit)
1,019.2
946.9
+7.6%
EBIT (operating profit)
639.0
607.4
+5.2%
Group net profit for the period
411.4
398.1
+3.3%
Capital expenditure
830.5
660.5
+25.7%
* Given that the requirements of IFRS 5 have been met, the total results for the first half of 2023 and 2022 attributable to the South
American subsidiaries included in the planned sale of assets, launched at the end of 2021, have been classified in the item “Profit/(Loss)
from discontinued operations and assets held for sale” in the Group’s reclassified income statement
Revenues for the first half of 2023, amounting to €1,485.3 million, is up €154.5 million (+11.6%)
compared to the same period of 2022. The result primarily reflects an improvement in revenues from
Regulated Activities thanks to the increase in the RAB and output-based incentives, in addition to
an improved contribution from Non-regulated Activities that primarily reflects increased revenues
from the industrial segment from the Brugg Cables Group and the Tamini Group and, from the
Energy Solutions segment, from the LT Group. Revenues rose 12.6% to €772.8 million in the second
quarter of the year (€686.4 million in the same period of 2022).
EBITDA (gross operating profit) for the first half of 2023 amounts to €1,019.2 million, an increase of
€72.3 million (+7.6%) compared to the €946.9 million of the first half of 2022. The increase reflects
the improved result from Regulated Activities. The EBITDA for the second quarter of 2023 is up 6.9%
to €519.2 million (€485.6 million in the same period of 2022).
EBIT (operating profit) for the period, after amortisation, depreciation and impairments, amounts to
€639.0 million, compared to €607.4 million for the first six months of 2022 (an increase of 5.2%).
Net financial expenses for the period amount to €59.1 million, an increase of €22.9 million compared
to the €36.2 million of first half 2022. This essentially reflects inflation during the period, the
agreement of new loans and rising interest rates. These factors were partially offset by an increase
in capitalised costs and greater income from the investment of liquidity.
Profit before tax of €579.9 million is up €8.7 million compared to the same period of 2022 (up 1.5%).
Income tax expense for the period totals €168.5 million, an increase of €8.0 million (5.0%) compared
to the first half of 2022. This reflects the increase in pre-tax profit and the greater amount of
contingent tax assets recognised during the same period of 2022. The resulting tax rate of 29.1%,
thus marks an increase compared to the figure for the first half of 2022 (28.1%).
Group net profit for the period of €411.4 million is up €13.3 million (+3.3%) compared to the €398.1
million of the first half of 2022. Net profit for the second quarter is up 2.4% to €211.2 million (€206.3
million for the same period of 2022).
The consolidated statement of financial position shows equity attributable to owners of the Parent of
€6,124.1 million, compared to €6,142.0 million at 31 December 2022.
Net debt of €9,458.4 million compares with the €8,576.3 million at the end of 2022, reflecting growth
in capital expenditure during the period.
The Terna Group’s total capital expenditure during the period amounts to €830.5 million, an increase
of 25.7% compared to the €660.5 million of the same period of 2022.
The Group’s workforce at the end of June 2023, totals 5,696, up 199 compared to 31 December
2022. This primarily reflects the requirements relating to delivery of the challenging investment
programme provided for in the “Driving Energy” 2021-2025 Industrial Plan, and the need to
strengthen the Group’s distinctive competencies.
KEY EVENTS IN H1 2023
Business
The main projects carried out during the period include continued preparations for the start-up of
work on the “East” section and the authorisation process for the “West” section of the Tyrrhenian
Link and for the Adriatic Link, works designed to boost exchange capacity between different areas
of the electricity market in Sicily and between Sicily and Calabria, construction of the ‘Elba-Mainland’
and ‘Colunga-Calenzano’ (between Emilia Romagna and Tuscany) connections and of the electricity
substations at Magenta (MI) and Cerignola (FG), the beginning of work on the new ‘LivignoPremadio’ underground cable connection (in the province of Sondrio) and a further stage of
reorganisation of the grid serving the city of Palermo. Reorganisation of the grid in the southern part
of Rome was also approved. Authorisation processes began for the modernisation projects for the
Trapani-Palermo and Palermo-Catania railway lines and for the new substation in Volpago del
Montello (TV).
Investment in statcom devices and synchronous compensators also continued, amounting to €32.8
million, for the benefit of the grid’s safety. Renewal works on overhead power lines and substation
machinery continued, with the replacement of 634km of lines and 7 pieces of equipment, including
transformers and reactors.
During the second quarter of the year, various meetings were held across Italy to present the details
of the 2023-2032 National Transmission Grid Development Plan to local authorities. Overall, the plan
provides for total capital expenditure of over €21 billion over the next 10 years to service the energy
transition.
On 12 June, Terna received the International Edison Award, the electric power industry’s highest
honour awarded each year by the Edison Electric Institute, the association that represents all USinvestor owned electric companies. The Group won the award for the planned new power connection
between Italy and France. This new connection will be the longest direct current power line in the
world and will be completely invisible, given that it will be integrated into existing motorway
infrastructure, thereby avoiding any impact on the surrounding environment.
On 26 June, Giuseppina Di Foggia, Terna’s Chief Executive Officer and General Manager, assumed
the role of Vice President of GO15, the global association bringing together very large power grid
operators, representing approximately 50% of global electricity demand.
Sustainable Finance
The senior green bonds issued by Terna at 30 June 2023, under its €9,000,000,000 Euro Medium
Term Notes (EMTN) programme, amount to €2.6 billion, in addition to the perpetual, subordinated
green bonds issued on a standalone basis in February 2022, amounting to €1 billion.
On 17 July 2023, a single tranche, euro-denominated fixed rate green bond issue amounting to a
total of €650 million was successfully launched, as part of Terna’s Euro Medium Term Notes (EMTN)
programme. The green bond has a duration of 10 years, will pay an annual coupon of 3.875% and
was issued with a spread of 90 basis points over the midswap. The green bond issuance, which
received a great market response with demand outstripping supply by almost four times the offered
amount, is characterized by high quality and broadly geographically diversified investors.
On 14 April 2023, a single tranche, euro-denominated fixed rate bond issue amounting to a total of
€750 million was successfully launched. The bond has a duration of 6 years and was issued as part
of Terna’s Euro Medium Term Notes (EMTN) programme (rated BBB+ / (P)Baa2), amounting to
€9,000,000,000, being the maximum amount that may be subscribed (renewed on 8 June 2023).
The bond saw extremely high demand, with the issue approximately four times oversubscribed.
On 12 May 2023, the ESG Revolving Credit Facility agreed in April 2019 was refinanced, extending
it by a further 5 years and increasing the total amount to the current €1.8 billion. The ESG indicators
linked to a bonus/penalty mechanism applied to contract terms regarding the commitment fee and
the spread were also amended.
The ESG-linked share buyback programme to support the Performance Share Plan 2023-2027 was
completed on 10 July 2023. In keeping with Terna’s commitment to sustainability and social and
environmental responsibility, the programme includes a mechanism based on bonuses and penalties
linked to the Company’s achievement of specific environmental, social and governance objectives.
Under the programme, Terna has purchased 917,611 own shares (equal to 0.046% of its share
capital) at a total cost of €6,999,997.07. The total shares purchased under the above programme
are in addition to the further 3,296,049 own shares already held by the Company. As a result, Terna
S.p.A. now holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital).
Subsidiaries do not hold shares in the Parent Company, Terna.
Finally, on 30 March, Terna and the European Investment Bank (EIB) signed the agreements for the
second and third tranches of the €1.9 billion loan funding the Tyrrhenian Link. After the initial € 500
million tranche, agreed on 8 November 2022, these two further tranches, amounting to €900 million,
will be used to fund the construction and commissioning of the East and West branches of the
submarine electricity cable that will connect the Italian peninsula with Sicily and then to Sardinia.
The loans, which duration is of approximately 22 years from the date of the relevant utilisation, have
a longer maturity and more favourable costs than those generally available on the market, in line
with Terna’s policy to optimise its financial structure. The transaction brings total EIB financing for
Terna to € 3.4 billion, in addition to the remaining € 500 million for the further tranches of the loan for
the Tyrrhenian Link already approved by the Bank.
Sustainability and ESG
During the first half of the year, Terna confirmed its inclusion in four of the most prestigious
international indices, which select the best companies based on their ESG practices: the Italian index
MIB ESG and the international indices FTSE4Good, Euronext Vigeo and S&P Developed 100
Gender Equality & Inclusion.
OUTLOOK
During the second part of the year, the Group will continue to focus on delivering on the updated
“Driving Energy” 2021-2025 Industrial Plan. This will be done despite the highly volatile
macroeconomic environment, marked by high global inflation and a tightening of monetary policies
by central banks, resulting in rising interest rates, in addition to the geopolitical problems resulting
from the prolonged conflict between Russia and Ukraine and continued tensions in the commodity
markets, which are having a negative impact on the outlook for global economic growth.
The sharp acceleration in capital expenditure on Regulated Activities will continue with the goal of
enabling the energy transition, facilitating the development and integration of renewable sources and
making a major contribution to achieving the ambitious goals set out in the Green Deal, which aims
to transform the European Union into a carbon-free economy by 2050, with an intermediate target
of cutting emissions by approximately 55% by 2030 compared to 1990 levels.
In terms of the Group’s most important investment projects, work is progressing on the Tyrrhenian
Link, with the award of the contract for supply of the converter stations and, with regard to the East
branch, the beginning of all the preliminary activities prior to the start of work and the beginning of
the process of supplying the terrestrial cables by the end of the year. Regarding the Adriatic Link,
the new submarine cable that will connect the Abruzzo and Marche regions, the contract to supply
and install the cables is expected to be awarded in the second half of the year. The principal assets
of the national transmission grid due to enter service in the second half include the submarine
connection between Elba and the mainland, the interconnection with France, the Paternò-Pantano
link and the Pantano substation, in Sicily.
Work on the new electricity grid for the “Milan-Cortina 2026” Olympic and Paralympic Games will
continue in the second half of 2023 with the aim of increasing the reliability of energy supply in the
locations hosting the event, using infrastructure that will have a reduced impact on the landscape.
In terms of the Defence Plan, work will continue on the planned installation of synchronous
compensators and STATCOMs supporting the regulation of short-circuit voltage and power, with
four new items of equipment due to enter service by the end of the year.
Finally, the Group will continue to make progress towards achieving the objectives foreseen by
output-based incentive mechanisms introduced by ARERA, especially related to the increase of
transport capacity between market zones (interzonal incentives) and the reduction of dispatching
costs (DSM incentives).
With regard to Non-regulated Activities, in the second half of the year the Terna Group will continue
to consolidate its role as a provider of both connectivity and energy solutions, developing high valueadded services for corporate customers and exploiting market opportunities for traditional and
renewable customers. This will include exploitation of the LT Group’s know-how.
In the industrial segment, the aim is to build on the Tamini Group’s performance and, with regard to
the Brugg Cables Group, take full advantage of its distinctive expertise in underground cables and
of synergies with the Terna Group’s other businesses.
In terms of International Activities, the strategic assessment of further opportunities in overseas
markets, focusing above all on the US market, will continue. This may take the form of partnerships
and will involve the careful selection of projects with a view to ensuring a low risk profile and limited
capital absorption. In addition, as regards the assets being sold, the process of selling the Peruvian
assets will continue, whilst work will proceed on construction of the Linha Verde I power line in Brazil.
In line with the approach carried out in 2022, the Group will focus on stepping up investment in
innovation and digital solutions as part of the transformation that will enable it to manage the growing
complexity of the electricity system. In addition, significant attention will also be paid to people
development and the insourcing of strategic competencies, to the strengthening of departments, and
to optimising the working environment for everyone within the Group.
Management of the Terna Group’s business will continue to be based on a sustainable approach
and respect for the ESGs, ensuring that it is able to minimise its environmental impact, involve local
stakeholders and meet the need for integrity, responsibility and transparency.
Also thanks to the above initiatives, including those designed to further increase the efficiency of the
electric system, is confirmed that Terna expects for 2023 revenues of €3.11 billion, an EBITDA of
€2.12 billion and an EPS of €0.43. Regarding Capex, Terna expects a figure of about €2.2 billion in
2023. The above objectives will be pursued whilst maintaining a commitment to maximising the cash
generation, necessary to ensure a sound and balanced financial structure.
BOND ISSUES AND BONDS NEARING MATURITY
Issues in 2023:
On 14 April 2023, a single tranche, euro-denominated fixed rate bond issue amounting to a
total of €750 million was successfully launched, as part of Terna’s Euro Medium Term Notes
(EMTN) programme (rated BBB+ / (P)Baa2). The bond, issued at a price of 99.281%, with a
spread of 70 basis points over the midswap, have a duration of 6 years and will mature on
21 April 2029. The bond will pay annual coupon of 3.625%.
On 17 July 2023, a single tranche, euro-denominated fixed rate green bond issue amounting
to a total of €650 million was successfully launched, as part of Terna’s Euro Medium Term
Notes (EMTN) programme (BBB+ / (P)Baa2). The green bond has a duration of 10 years and
maturity date falling on 24 July 2033, will pay an annual coupon of 3.875% per annum and
will be issued at a price of 99.107%, with a spread of 90 basis points over the midswap. The
final cost of the issuance for Terna will be significantly lower than the issue cost, thanks to
the previous subscription of interest rate hedges at lower values compared to current market
conditions.
In the period between 1 July 2023 and 31 December 2024, the following bonds will reach maturity:
€1 billion relating to a fixed-rate green bond issue maturing in July 2023;
€500 million relating to a bond issue linked to Italian inflation maturing in September 2023;
€800 million relating to a bond issue maturing in October 2024.
ALTERNATIVE PERFORMANCE INDICATORS
This release includes a number of “alternative performance measures” (EBITDA, the tax rate and
net debt) not required by IAS/IFRS. A description of these measures is provided below in accordance
with the ESMA/2015/1415 guidelines published on 3 December 2015:
EBITDA (Gross Operating Profit): an indicator of operating performance, representing “Profit for
the period” before “Income tax expense for the period”, “Net financial income/(expenses)” and
“Amortisation, depreciation and impairment losses”;
Tax rate: the amount of tax paid as a proportion of pre-tax profit, based on the ratio of “Income
tax expense” to “Profit/(Loss) before tax”;
Net debt: an indicator of the financial structure, calculated by deducting “Cash and cash
equivalents”, “Current financial assets” and “Non-current financial assets”, as they relate to the
value of the derivatives hedging bank borrowing, from short-term financial liabilities (“Short-term
borrowings”, the “Current portion of long-term borrowings” and “Current financial liabilities”) and
long-term financial liabilities (“Long-term borrowings”) and the related derivative instruments
(“Non-current financial liabilities”). The net debt of the Terna Group complies with the
requirements of ESMA Recommendation 32-382-1138 of 2021 with regard to the definition of
net debt or funds.
It should be noted that, compared to 31 March 2023, on 22 June 2023, Terna completed the acquisition of a
100% stake in Edyna Transmission S.r.l., at the same time renamed Rete Nord S.r.l., a company that owns
two electricity substations and approximately 70 km of power lines in Alto Adige already forming part of the
National Transmission Grid. The transaction is part of the Group’s strategy of unifying Italy’s electricity
transmission infrastructure with the aim of further boosting grid efficiency and reliability.
A meeting will be held at 5.00pm today to present the results for the six months ended 30 June 2023 to financial
analysts and investors. Back-up material for the event will be made available in the Investors section of the
Company’s website (www.terna.it) as the meeting starts. The presentation will also be made available via
“eMarket SDIR”, on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) and through the authorised
storage service “1Info” (www.1info.it). Journalists will have the opportunity to follow the meeting by telephone
without any right to speak. It will also be possible to follow the presentation by connecting to the audio webcast
on the Company’s website (www.terna.it): following the live broadcast, the file will be available in the Investors
section of the website.
The Manager Responsible for Financial Reporting, Agostino Scornajenchi, declares that, pursuant to section
two of article 154-bis of the Consolidated Law on Finance, the information contained in this release
corresponds to the underlying accounting records.
The Half-year Report for the six months ended 30 June 2023, accompanied by the attestation required by
art.154-bis, paragraph 5 of Legislative Decree 58/98 (the Consolidated Law on Finance) and the report
containing the opinion issued by the Independent Auditors, will, by the deadline set out by law, be made
available at the Company’s registered office, published on the Company’s website, (www.terna.it) and on the
website of the authorised storage service “1Info” (www.1info.it), and filed at the stock exchange management
company Borsa Italiana S.p.A. (www.borsaitaliana.it). The required announcement of the filing will also be
published.
The Terna Group’s reclassified income statement and statement of financial position and statement of cash
flows, prepared on the basis of the classifications used by management in order to more effectively assess the
Terna Group’s operating and financial performance, are attached.
are those included in the Terna Group’s interim report on operations for the six months ended 30 June 2023,
included in the Terna Group’s Half-year Report for the six months ended 30 June 2023, and for which the
Independent Auditors, in compliance with art. 14 of Legislative Decree 39 dated 27 January 2010, will verify
consistency with the condensed consolidated interim financial statements.
The Terna Group’s reclassified income statement
(€m)
Change
change
772.8
686.4
12.6%
649.3
591.6
H1 2023
TOTAL REVENUE
32.3%
– Regulated revenue
of which Revenue from construction services performed
under concession
123.4
30.2%
– Non-Regulated revenue
253.6
200.8
26.3%
TOTAL OPERATING COSTS
12.1%
27.4%
36.5%
111.6%
25.3%
383.9
163.7
21.4%
– Personnel expenses
466.1
181.3
10.8%
– Cost of services, leases and rentals
114.5
26.2%
– Materials
121.2
29.3%
41.7%
20.0%
– International revenue
– Other costs
32.3%
GROSS OPERATING PROFIT (EBITDA)
193.6
171.9
12.6%
325.6
313.7
(27.0)
(11.8)
(15.2)
128.8%
1,019.2
946.9
380.2
339.5
12.0%
639.0
607.4
(59.1)
(36.2)
(22.9)
63.3%
PROFIT/(LOSS) BEFORE TAX
579.9
– Income tax expense for the period
168.5
571.2
160.5
411.4
410.7
– Amortisation, depreciation and impairment losses
OPERATING PROFIT (EBIT)
– Net financial income/(expenses)
PROFIT/(LOSS) FOR THE PERIOD FROM
(2.8%) CONTINUING OPERATIONS
211.4
217.6
(6.2)
(3.0)
(9.0)
66.7%
208.4
208.6
(0.2)
(0.1%)
(2.8)
(5.1)
211.2
206.3
20.0%
11.6%
109.6
154.5
1,153.6
1,330.8
485.6
(1.1%)
1,485.3
1,263.2
177.2
(3.3)
change
519.2
301.9
Change
222.0
– Quality of service
– Cost of construction services performed
under concession
298.6
H1 2022
– Profit/(Loss) for the period from discontinued operations and
assets held for sale
PROFIT FOR THE PERIOD
– Profit/(Loss) attributable to non-controlling
interests
PROFIT FOR THE PERIOD ATTRIBUTABLE TO OWNERS
2.4% OF THE PARENT
(3.5)
(10.1)
65.3%
407.9
400.6
(3.5)
(6.0)
411.4
398.1
The Terna Group’s reclassified statement of financial position
(€m)
at 30 June 2023 at 31 December 2022
Change
Total net non-current assets
17,921.1
17,485.3
435.8
– Intangible assets and goodwill
– Property, plant and equipment
– Financial assets
791.2
16,623.3
506.6
775.8
16,200.9
508.6
422.4
(2.0)
(2,357.2)
(2,732.8)
375.6
(1,312.5)
929.2
(641.2)
(57.8)
(1,274.9)
(1,332.6)
778.7
(775.5)
(50.5)
(1,352.9)
150.5
134.3
(7.3)
15,563.9
14,752.5
811.4
(39.6)
(68.2)
15,524.3
15,600.4
14,684.3
14,745.4
840.0
855.0
Equity attributable to owners of the Parent
6,124.1
6,142.0
(17.9)
Equity attributable to non-controlling interests
Net debt
9,458.4
8,576.3
(9.2)
882.1
15,600.4
14,745.4
855.0
Total net working capital
– Net energy-related pass-through payables
– Net receivables resulting from Regulated Activities
– Net trade payables
– Net tax assets
– Other net liabilities
Gross invested capital
Sundry provisions
Net invested capital
Net assets held for sale
TOTAL NET INVESTED CAPITAL
TOTAL
The Terna Group’s cash flow
(€m)
Cash flow
H1 2023
Cash flow
H1 2022
407.9
380.2
(28.6)
(9.7)
749.8
(375.3)
400.6
339.5
(2.0)
740.1
260.0
(2.5)
(54.6)
Cash flow from operating activities
– Total capital expenditure
Free cash flow
Net assets held for sale
– Dividends paid to Parent Company’s shareholders
398.4
(830.5)
(432.1)
(15.0)
(418.7)
988.8
(660.5)
328.3
(88.3)
(387.7)
– Cash flow hedge reserve after taxation and other movements in equity attributable
to owners of the Parent
– Other movements in equity attributable to non-controlling interests
Change in net debt
(10.6)
(5.7)
(882.1)
1,008.5
– Profit for the period
– Amortisation, depreciation and impairment losses
– Net change in provisions
– Net losses/(gains) on sale of assets
Operating cash flow
– Change in net working capital
– Other changes in property. plant and equipment and intangible assets
– Change in investments
– Change in financial assets