(AGENPARL) – mer 08 novembre 2023 RESULTS AS OF 30 SEPTEMBER 2023 APPROVED
IMPROVEMENTS IN KEY FINANCIAL INDICATORS:
NINE-MONTH EBITDA EXCEEDS €1.5 BILLION FOR THE FIRST TIME
NEW RECORD SET FOR CAPITAL EXPENDITURE: OVER €1.4 BILLION,
UP 38.8% ON THE SAME PERIOD IN 2022
CAPEX TOTALS MORE THAN €600 MILLION IN THE THIRD QUARTER
Revenues €2,247.1 million (€1,992.4 million in 9M 2022, +12.8%)
EBITDA €1,556.2 million (€1,412.2 million in 9M 2022, +10.2%)
Group net profit for the period €641.7 million (€586.9 million in 9M 2022, +9.3%)
Capex €1,433.6 million (€1,033.1 million in 9M 2022, +38.8%)
Net debt €9,486.2 million (€8,576.3 million at 31 December 2022)
Interim dividend for 2023 of 11.46 euro cents per share, up 8% on interim dividend for
2022, in line with Group’s current Dividend Policy
Rome, 8 November 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 nine months ended 30
September 2023 (“9M 2023”), presented by the Chief Executive Officer and General Manager,
Giuseppina Di Foggia.
The first nine months of the year continued to be affected by a difficult and very volatile scenario,
with commodity prices remaining high due to international tensions, which worsened following
conflict in the Middle East in October 2023. Electricity demand in Italy fell by 4% during the period
compared to the first nine months of 2022.
Despite this challenging scenario, Terna increased investment for the benefit of the country’s
energy security and recorded significant improvements across all its financial indicators.
Capital expenditure in the third quarter exceeded €600 million, marking a new record for the
period: €1,433.6 million, with an increase of 38.8% compared to the first nine months in 2022. The
Nine-month EBITDA exceeded €1.5 billion for the first time in the Group’s history.
“In line with our role in driving the energy transition, we have further accelerated investment in the
delivery of an increasingly efficient and reliable electricity system: over €600 million in the third
quarter and €1.4 billion since the beginning of 2023. This investment, combined with digitalisation
of the grid, is key to our ability to integrate renewable sources, achieve decarbonisation targets and
increase Italy’s energy security. The figure for EBITDA, which exceeded €1.5 billion for the first
time, also confirms Terna’s ability to achieve its financial objectives and the excellence work of our
people,” said Giuseppina Di Foggia, Terna’s Chief Executive Officer and General Manager.
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR 9M 2023
9M 2023*
9M 2022*
% change
Revenues
2,247.1
1,992.4
+12.8%
EBITDA (gross operating profit)
1,556.2
1,412.2
+10.2%
EBIT (operating profit)
979.7
896.3
+9.3%
Group net profit for the period
641.7
586.9
+9.3%
1,433.6
1,033.1
+38.8%
Capital expenditure
* Given that the requirements of IFRS 5 have been met, the total results for the first nine months 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 nine months of 2023, amounting to €2,247.1 million, are up €254.7 million
(+12.8%) compared to the same period of 2022. The result primarily reflects an improvement in
revenues from Regulated Activities, mainly thanks to the increase in the regulatory asset base
(RAB) and output-based incentives, in addition to an improved contribution from Non-regulated
Activities that primarily reflects increased revenues from the industrial segment, including the
Brugg Cables Group and the Tamini Group and from the Energy Solutions segment, including the
LT Group. Revenues rose 15.1% to €761.8 million in the third quarter of the year (€661.6 million in
the same period of the previous year).
EBITDA (gross operating profit) for the first nine months in 2023 amounts to €1,556.2 million, with
an increase of €144.0 million (+10.2%) compared to €1,412.2 million for the first nine months in
2022. The increase reflects the improved result from Regulated Activities. The EBITDA for the third
quarter of 2023 is up 15.4% to €537 million (€465.3 million in the same period in 2022).
EBIT (operating profit) for the period, after amortisation, depreciation and impairment losses,
amounts to €979.7 million compared to €896.3 million for the first nine months in 2022 (up 9.3%).
Net financial expenses for the period amount to €81.2 million, an increase of €24.9 million
compared to the €56.3 million of the first nine months in 2022. This is due essentially to the
agreement of new loans and rising interest rates, partially offset by falling inflation in the period, an
increase in capitalised expenses and greater income from the investment of liquidity, reflecting an
improvement in market conditions.
Profit before tax of €898.5 million is up €58.5 million compared to the first nine months in 2022 (up
7.0%).
Income tax expense for the period totals €261.6 million, an increase of €24.8 million compared to
the same period in 2022 (up 10.5%). This primarily reflects the increase in pre-tax profit and the
greater amount of contingent tax assets recognised during the same period in 2022. The resulting
tax rate of 29.1% thus marks an increase compared to the figure for the first nine months in 2022
(28.2%).
Group net profit for the period of €641.7 million is up €54.8 million compared to the €586.9 million
of the first nine months in 2022 (+9.3%). Net profit for the third quarter is up 22.0% to €230.3
million (€188.8 million for the same period in 2022).
The consolidated statement of financial position at 30 September 2023 showed equity attributable
to owners of the Parent of €6,337.3 million, compared to €6,142 million as of 31 December 2022.
Net debt of €9,486.2 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 €1,433.6 million, with an
increase of 38.8% compared to the €1,033.1 million of the same period in 2022.
The Group’s workforce at the end of September 2023 totals 5,762, up 265 compared to 31
December 2022. The increase is linked to the need to strengthen the pool of expertise and the
growth of the business, in line with the “Driving Energy” 2021-2025 Industrial Plan.
KEY EVENTS IN THE PERIOD
Business
Key events in the third quarter of 2023 included, on 5 September, the issue by the Ministry of the
Environment and Energy Security of the decree authorising the final project for the “West” section
of the Tyrrhenian Link between Sicily and Sardinia. On 28 September, the Ministry also authorized
the final project for Sa.Co.I.3, the submarine power line that will connect Sardinia, Corsica and
Tuscany. The link will involve the renewal and upgrade of the current connection, known as
Sa.Co.I.2, which dates back to the early 1990s.
On 7 September, Terna awarded Prysmian, a leading supplier in the energy and telecom cable
systems industry, the contract for the supply and laying of submarine and underground power
cables of the Adriatic Link, the HVDC (high-voltage direct current) connection between the Abruzzo
and Marche regions, for which Terna has planned an overall investment of €1.3 billion.
The submarine cable power line linking the island of Elba with Piombino (Livorno) also entered into
service during the period. The project, in which Terna has invested €90 million, has significantly
improved the safety and reliability of the island’s electricity grid.
On 8 August, Terna, STEG, the Tunisian electricity and gas operator, and the European
Commission signed the Grant Agreement authorising the provision of €307 million to support
“Elmed”, the interconnection between Italy and Tunisia which will form the invisible electricity
bridge between Europe and North Africa. The project, for which the authorisation process was
launched by the Ministry of the Environment and Energy Security at the end of 2022, will entail
total investment of approximately €850 million. This includes the above €307 million provided by
the European Commission through the Connecting Europe Facility (“CEF”), the European Union
fund established to support key projects that aim to optimise energy infrastructure in the EU. This
is the first time that CEF funds have been allocated to an infrastructure project developed by a
Member State and a Third Country.
Work continued during the period on preparations for the start-up of work on the “East Section” of
the Tyrrhenian Link, as did work on increasing exchange capacity between different areas of the
electricity market in Sicily (the ‘Paternò-Pantano-Priolo’ connection) and between Sicily and
Calabria (the ‘Sorgente-Rizziconi’ connection), as well as work on construction of the ‘ColungaCalenzano’ connection (between Emilia Romagna and Tuscany) and of the electricity substations
at Cerignola (FG) and Magenta (MI).
Investment in statcom devices, reactors and synchronous compensators, amounting to €158.3
million in the first nine months of 2023, also continued with the aim of improving grid security.
Renewal work on overhead power lines and substation machinery also continued during the
period, with the replacement of 879 km of conductors and 11 pieces of equipment, including five
transformers and six reactors, at a total cost of €316.4 million.
On 1 September, Francesco Beccali, previously Group Finance Director, took on the role of Group
Chief Financial Officer and Executive in Charge of Preparing the Company’s Accounting
Documents under the terms of Article 154-bis of Italian Legislative Decree no. 58 of 1998.
Sustainable finance
In line with Terna’s strategy, which aims to combine investment and sustainability to drive growth
and value creation, Terna intends to play a leading role in the sustainable finance market. This
strategy was also followed in the first nine months of 2023. 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. From 31 July, the bond was listed on the Euronext
Group’s ExtraMOT PRO market organised and managed by the Italian Stock Exchange, part of the
Euronext Group. This market has been established to provide opportunities for investors alike to
identify solutions for which the proceeds are used to finance projects with specific environmental
and social benefits or effects.
The senior green bonds issued by Terna as of 30 September 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.
Sustainability and ESG
During the period, Terna confirmed its inclusion in the STOXX “Global ESG Leaders” index and in
the “Environmental Leaders”, “Social Leaders” and “Governance Leaders” sub-indices, managed
by the company Qontigo, part of the Deutsche Börse Group. These indices select the world’s best
STOXX Global 1800-listed companies based on their ESG best practices.
OUTLOOK
During the final 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 to the potential outbreak of new
conflicts in other parts of the world (e.g., the Middle East), as well as significant rise in the price of
oil, which could drive renewed increases in commodity prices. All of the above 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 preliminary activities prior to the start-up of work on the East branch under way and
installation of the terrestrial cables due to begin by the end of the year. In addition, the principal
assets of the national transmission grid due to enter service by the end of the year include the
Paternò-Pantano power line 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 last quarter of 2023 with the aim of increasing the reliability of energy supply in the
locations hosting the event, with infrastructure having 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
three new items of equipment due to enter into service by the end of the year (a STATCOM and
two compensators).
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
transmission capacity between market zones (interzonal incentives) and the reduction of
dispatching costs (DSM incentives). The Group will also be engaged in the consultation process in
preparation for ARERA’s definition of application criteria for the Totex/Output-based approach and
updates to Infrastructure Regulation and incentives for the next regulatory period from 2024 to
2027.
With regard to Non-regulated Activities, in the last part 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, using 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 will continue, involving 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 the last part of 2023, 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, the Group’s activities will focus on people development and the
insourcing of strategic competencies, 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 the 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 electricity system, Terna confirms expected 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.
INTERIM DIVIDEND FOR 2023 OF 11.46 EURO CENTS PER SHARE
In consideration of the operating and financial performance and the guidance and outlook for the
rest of the current year, the Board of Directors of Terna S.p.A. has decided to pay an ordinary
interim dividend for 2023 of 11.46 cents per share, an increase of 8% compared to the previous
year. This is in line with the policy set out in the updated 2021-2025 Industrial Plan. In this regard,
the independent auditors, Deloitte & Touche S.p.A., have today issued the relevant opinion
required by art. 2433-bis of the Italian Civil Code.
As required by art. 2357-ter, paragraph 2 of the Italian Civil Code, the treasury shares purchased
to service the 2020-2023, 2021-2025 and 2022-2026 Share Performance Plans may not participate
in the distribution of the interim dividend.
The total distribution of €230,345,083.20 has been calculated on the basis of the 2,009,992,000
ordinary shares representing the Company’s share capital. Treasury shares held at the record date
shown below will not participate in the distribution. The interim dividend for 2023 payable on the
treasury shares held by the Company at the record date, currently totalling 4,213,660 (equal to
0.210% of the share capital), will thus be taken to the “Retained earnings” reserve.
The interim dividend, before any withholdings required by law, will be payable from 22 November
2023 (the record date, as defined by art. 83-terdecies of Legislative Decree 58/1998, the “CLF”, is
21 November 2023), with an ex-dividend date for coupon 39 of 20 November 2023.
ALTERNATIVE PERFORMANCE MEASURES
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:
EBIT (Operating Profit): an indicator of operating performance, representing the sum of
“Profit/(Loss) before tax” and “Net financial income/(expenses)”;
EBITDA (Gross Operating Profit): an indicator of operating performance, representing the sum
of Operating Profit (EBIT) 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 borrowings, 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.
A meeting will be held at 4.00pm today to present the results for the nine months ended 30 September 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, Francesco Beccali, declares that, pursuant to section two
of article 154-bis of the Consolidated Law on Finance, the information contained in this release is consistent
with the underlying accounting records.
The Terna Group’s Consolidated Interim Financial Report for the nine months ended 30 September 2023
has not been audited and was prepared voluntarily, pursuant to art. 82-ter of CONSOB Issuer Regulations
(as amended by CONSOB Resolution 19770 of 26 October 2016). As in the past, the compliance and
correctness of the financial information provided to the public and the comparability of the related information
with the corresponding data in previously published interim reports is ensured. The document containing the
Terna Group’s Consolidated Interim Financial Report for the nine months ended 30 September 2023 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 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 consolidated 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. Pursuant to
included in the Terna Group’s Consolidated Interim Financial Report for the nine months ended 30
September 2023, prepared in accordance with usual market practices.
The Terna Group’s reclassified income statement
(€m)
Change
761.8
661.6
100.2
641.2
566.6
% change
9M 2023
9M 2022
Change
% change
15.1% TOTAL REVENUES
2,247.1
1,992.4
254.7
12.8%
13.2%
1,904.4
1,720.2
184.2
10.7%
– Regulated Revenues
of which Revenues from construction
30.2% services performed under concession
120.6
27.8%
23.9%
342.6
271.6
26.1%
(0.6)
(100.0%)
(0.5)
(83.3%)
224.8
196.3
14.5% TOTAL OPERATING COSTS
690.9
580.2
110.7
19.1%
11.7%
– Personnel expenses
262.5
236.4
11.0%
11.9%
– Cost of services, leases and rentals
164.4
135.3
21.5%
18.7%
– Materials
187.1
149.2
25.4%
(0.3)
(3.4%)
– Other costs
22.5%
57.1%
210.0%
30.2%
– Quality of service
– Cost of construction services performed
under concession
23.9%
537.0
465.3
1,556.2
1,412.2
144.0
10.2%
196.3
176.4
15.4% GROSS OPERATING PROFIT (EBITDA)
– Amortisation, depreciation and
11.3% impairment losses
576.5
515.9
11.7%
340.7
288.9
17.9% OPERATING PROFIT (EBIT)
979.7
896.3
(22.1)
(20.1)
(2.0)
10.0%
(81.2)
(56.3)
(24.9)
44.2%
318.6
268.8
18.5% PROFIT/(LOSS) BEFORE TAX
898.5
840.0
236.8
10.5%
636.9
603.2
– Non-Regulated Revenues
– International Revenues
– Net financial income/(expenses)
22.0%
– Income tax expense for the period
225.5
192.5
PROFIT/(LOSS) FOR THE PERIOD FROM
17.1% CONTINUING OPERATIONS
(4.6)
229.8
187.9
(0.5)
(0.9)
230.3
188.8
– Profit/(Loss) for the period from discontinued
193.5% operations and assets held for sale
22.3% PROFIT FOR THE PERIOD
– Profit/(Loss) attributable to non-controlling
44.4% interests
PROFIT FOR THE PERIOD
ATTRIBUTABLE TO OWNERS OF THE
22.0% PARENT
261.6
(14.7)
105.4%
637.7
588.5
(4.0)
(5.6)
(350.0%)
641.7
586.9
The Terna Group’s reclassified statement of financial position
(€m)
at 30 September 2023 at 31 December 2022
Change
Total net non-current assets
18,322.8
17,485.3
837.5
– Intangible assets and goodwill
– Property, plant and equipment
– Financial assets
807.1
17,012.2
503.5
775.8
16,200.9
508.6
811.3
(5.1)
(2,528.5)
(2,732.8)
204.3
(1,236.8)
992.4
(821.6)
(178.6)
(1,283.9)
(1,332.6)
778.7
(775.5)
(50.5)
(1,352.9)
213.7
(46.1)
(128.1)
15,794.3
14,752.5
1,041.8
(34.0)
(68.2)
15,760.3
15,840.8
14,684.3
14,745.4
1,076.0
1,095.4
Equity attributable to owners of the Parent
6,337.3
6,142.0
195.3
Equity attributable to non-controlling interests
Net debt
9,486.2
8,576.3
(9.8)
909.9
15,840.8
14,745.4
1,095.4
Total net working capital
– Net energy-related pass-through payables
– Net receivables resulting from Regulated Activities
– Net trade payables
– Net tax liabilities
– 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)
– 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
Cash flow from operating activities
– Total capital expenditure
Free cash flow
Net assets held for sale
– Dividends paid to the Parent Company’s shareholders
– Reserve for equity instruments, 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
Cash flow
9M 2023
Cash flow
9M 2022
637.7
576.5
(34.2)
(12.4)
1,167.6
(204.1)
588.5
515.9
(2.3)
1,107.7
646.9
(2.7)
(152.3)
995.3
(1,433.6)
(438.3)
(19.4)
(418.7)
1,649.1
(1,033.1)
616.0
(91.4)
(387.7)
(27.7)
(5.8)
(909.9)
1,213.8
1,351.1