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(AGENPARL) – mer 08 maggio 2024 RESULTS AS OF 31 MARCH 2024 APPROVED
NEW RECORD SET FOR CAPEX IN THE FIRST QUARTER (UP 53.3%),
BENEFITTING ELECTRICITY SYSTEM AND THE ENERGY TRANSITION
SIGNIFICANT IMPROVEMENTS ACROSS ALL FINANCIAL INDICATORS
Revenues €858.1 million (€712.5 million in Q1 2023, +20.4%)
EBITDA €627.9 million (€500.0 million in Q1 2023, +25.6%)
Group net profit for the period €268.2 million (€200.2 million in Q1 2023, +34.0%)
Capex €482.7 million (€314.9 million in Q1 2023, +53.3%)
Net debt €10,587.0 million (€10,494.3 million at 31 December 2023)
Rome, 8 May 2024 – Today’s meeting of the Board of Directors of Terna S.p.A. (“Terna”), chaired
by Igor De Biasio, has examined and approved the Group’s results for the three months ended 31
March 2024 (“Q1 2024”), presented by the Chief Executive Officer and General Manager,
Giuseppina Di Foggia.
Against a constantly changing and highly challenging backdrop, Terna achieved significant
improvements across all its financial indicators in the first three months of the year. There was a
further acceleration in capex, benefitting the electricity system, the country’s energy transition and
driving the Group’s growth, in line with the new 2024-2028 Industrial Plan approved last 19 March.
In particular, Terna’s total capital expenditure in the first quarter of 2024 amounted to €482.7 million,
marking a significant 53.3% increase on the same period of 2023.
“The first-quarter results show that we have succeeded in delivering record-breaking capex growth
alongside a set of robust financial results. This is continued proof of the excellent contribution made
by everyone at Terna to the creation of value for the Company and for all our stakeholders,
strengthening the Group’s strategic role in addressing the country’s needs,” said Giuseppina Di
Foggia, Terna’s Chief Executive Officer and General Manager. “The figures confirm that we are on
track in implementing the new 2024-2028 Industrial Plan, which will see us deliver the highest
investments in Terna’s history, amounting to €16.5 billion. Our strong commitment, allied with the
wider vision we have set out in the new Plan, will enable us to support and facilitate an energy and
digital transition that is also just, inclusive and takes into account the potential impacts on all our
stakeholders, including workers, local communities and suppliers,” added Giuseppina Di Foggia.
CONSOLIDATED FINANCIAL HIGHLIGHTS FOR Q1 2024
Q1 2024*
Q1 2023*
% change
Revenues
858.1
712.5
+20.4%
EBITDA (gross operating profit)
627.9
500.0
+25.6%
EBIT (operating profit)
418.7
313.4
+33.6%
Group net profit for the period
268.2
200.2
+34.0%
Capital expenditure
482.7
314.9
+53.3%
* Given that the requirements of IFRS 5 have been met, the overall results for the first quarters of 2024 and 2023 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)
for the period from assets held for sale” in the Group’s reclassified income statement.
Revenues for the first quarter of 2024, amounting to €858.1 million, are up €145.6 million (20.4%)
compared to the same period of 2023. The result primarily reflects the increase in revenues from
Regulated Activities thanks to the growth of the WACC (Weighted Average Cost of Capital) set for
2024 and to the increase in the regulated asset base (RAB) and allowed depreciation. Non-regulated
Activities also delivered significant growth in revenues, above all reflecting increased contributions
from the Tamini Group, in the Equipment segment, and from the Energy Services provided by the
LT Group.
EBITDA (gross operating profit) for the period amounts to €627.9 million, up €127.9 million compared
to the €500.0 million of the first three months of 2023 (+25.6%), reflecting the improved performance
of Regulated Activities due to both an increase in Regulated Revenues and a remarkable reduction
of OpEx, as a demonstration of the company’s ability to maintain costs under control.
EBIT (operating profit) for the period, after amortisation, depreciation and impairment losses of
€209.2 million, amounts to €418.7 million, compared to the €313.4 million of the first three months
of 2023 (up 33.6%).
Net financial expenses for the period amount to a total of €36.5 million. The figure is up €4.4 million
on the €32.1 million of the first quarter of 2023, primarily reflecting new financings and higher interest
rates, partially offset by greater income from the investment of liquidity and from other financial
assets, by the impact of falling inflation in relation to the inflation-linked bond that matured in
September 2023 and by a decline in financial expenses on energy-related pass-through items.
Profit before tax of €382.2 million is up €100.9 million compared to the same period of 2023
(+35.9%).
Income tax expense for the period totals €111.6 million, with an increase of €30.3 million compared
to the first three months of 2023, essentially due to the growth in pre-tax profit. The tax rate amounts
to 29.2%, versus the rate of 28.9% of the first three months of 2023.
Group net profit for the period amounted to €268.2 million, with an increase of €68.0 million (+34.0%)
on the €200.2 million of the first quarter of 2023.
The consolidated statement of financial position shows equity attributable to owners of the Parent of
€6,576.1 million, compared to €6,324.4 million as of 31 December 2023.
Net debt of €10,587.0 million compares with €10,494.3 million at the end of 2023, reflecting major
growth in investment in the development of an increasingly efficient electricity system.
The Terna Group’s total capital expenditure during the period, amounting to €482.7 million, marks a
sharp rise (up 53.3%) on the €314.9 million of the same period of 2023. The main projects during
the period include work on the Tyrrhenian Link, with progress made on both the ‘East Branch’, linking
Campania and Sicily, and the ‘West Branch’ between Sicily and Sardinia, and on the Adriatic Link,
the new submarine power line that will connect the Abruzzo and Marche regions and which, in
January 2024, received authorization from the Ministry of the Environment and Energy Security.
Work also continued on boosting the security and efficiency of the high voltage and very high voltage
grids in the areas due to host the Milan-Cortina Winter Olympics and Paralympics in 2026, on
construction of the “Colunga-Calenzano” connection (between Emilia-Romagna and Tuscany), on
the ‘Cassano-Chiari’ connection (in Lombardy) and on projects designed to boost exchange capacity
between different areas of the electricity market in Sicily. In addition, progress was also made on the
plan to install reactors, synchronous compensators and stabilizing resistors to improve grid security.
The Group’s workforce at the end of March 2024 totals 5,984, up 57 compared to 31 December
2023. The increase is primarily linked to the requirements relating to delivery of the challenging
investment programme provided for in the 2024-2028 Industrial Plan, and to the need to strengthen
the Group’s distinctive competencies.
KEY EVENTS IN Q1 2024 AND AFTER THE END OF THE REPORTING PERIOD
Business
The 2024-2028 Industrial Plan, targeting investment of €16.5 billion, was approved on 19 March
2024. This is the highest level in the Group’s history and is 65% up on the previous Plan.
Following presentation of the Industrial Plan, the rating agencies, Moody’s Investor Services and
S&P Global Rating, reaffirmed Terna’s long-term ratings, which remain one notch above the rating
held by the Italian Republic, with a stable outlook.
In addition, on 31 January, the Ministry of the Environment and Energy Security (MASE) authorized
the Adriatic Link, Terna’s submarine power line that will connect the Marche and Abruzzo regions.
Work on the renewal of overhead lines and substation equipment also continued in early 2024,
resulting in the replacement of approximately 49 km of lines and two transformers.
In February, Terna and RSE – Ricerca sul Sistema Energetico, a leader in analysis and applied
research in the energy sector, signed a five-year partnership agreement aimed at the development
and application of processes and technologies in the field of energy and the environment.
During the period, Terna Forward, the Terna Group company dedicated to tech innovation and
Corporate Venture Capital initiatives, also announced the completion of a €2.8 million round of
investment. This consisted of a joint capital increase with DXT Commodities S.A., a Duferco Group
company, in Wesii, an Italian leading company in inspection and remote-sensing services for the
renewable-energy sector.
Sustainable finance
On 10 January 2024, Terna successfully launched a fixed rate, single tranche bond issue for a total
amount of €850 million, made in the framework of the €9 billion Euro Medium Term Notes (EMTN)
Programme. The issue, which received a very favourable market response with demand outstripping
supply by almost 3 times the offered amount, is characterized by high quality and broad geographical
diversification of investors. The bond has a duration of 7 years and maturity on 17 January 2031. It
will pay a coupon of 3,50% and was issued at a price of 99,385%, with a spread of 100 basis points
over the midswap.
On 7 February, Terna and the European Investment Bank (EIB) signed the agreement for the final
tranche of the €1.9 billion financing of the Tyrrhenian Link, the submarine electricity cable connecting
the Italian mainland with Sicily and Sardinia. Terna plans to invest around €3.7 billion in total for this
infrastructure, which is key for Italy’s energy security. Around 50% of the project cost will be financed
by the EIB, demonstrating the strategic nature of the project. The final tranche of €500 million follows
on from the earlier agreements signed on 8 November 2022 (first tranche of €500 million) and 30
March 2023 (second and third tranches, totalling €900 million). With terms of around 22 years from
each drawdown, all the above loans have a longer maturity and more competitive costs than those
generally available on the market, aligning them with Terna’s policy of optimising its financial
structure.
The senior green bonds issued by Terna at 31 March 2024, under its €9 billion Euro Medium Term
Notes (EMTN) programme, amount to €2.25 billion, in addition to the perpetual, subordinated green
bond issued on a standalone basis in February 2022, amounting to €1 billion.
On 4 April 2024, Terna successfully launched an issue of perpetual, subordinated, hybrid, nonconvertible, green, fixed rate bond for institutional investors, with a total nominal amount of € 850
million. The bond is non-callable for six years. The issue price was 99.745%, with a spread of 214.2
basis points over the Midswap. The issue will pay an annual coupon of 4.750%, until the first reset
date scheduled on 11 April 2030 and will have an effective rate equal to 4.800%. From this date, if
the bond has not been called, it will pay annual interests equal to the 5-year Euro Mid-Swap rate
plus an initial spread of 214.2 basis points. This will be increased by a further spread of 25 basis
points from 11 April 2035 and an additional increase of 75 basis points from 11 April 2050.
Finally, on 15 April 2024, Terna signed an amendment and restatement agreement aimed at
increasing to € 2.255 billion the total amount of the ESG-linked Revolving Credit Facility signed on
12 May 2023.
Sustainability and ESG
For the first time ever, Terna’s Sustainability Plan has been embedded in the Industrial Plan
presented on 19 March 2024. The Sustainability Plan includes projects and initiatives confirming
Terna’s commitment to delivering a Just Transition: a fair, inclusive process that takes into account
the potential impacts on all stakeholders, including workers, local communities and suppliers.
In the first quarter of 2024, Terna received gender equality certification from the certification body,
IMQ – Istituto italiano Marchio di Qualità, confirming the compliance of its Gender Equality
Management System with the UNI/PdR 125:2022 standard.
Terna has also been recognised by CDP (formerly the Carbon Disclosure Project) as one of the
international companies leading efforts to combat climate change, having seen its rating upgraded
to ‘A-’ from the previous ‘B’. CDP also ranked Terna among the leading international companies
engaging their suppliers in the fight against climate change, assigning the Company a Supplier
Engagement Rating of ‘A’, an improvement on the ‘A-’ of last year.
Terna’s position as a sustainability leader has also received renewed confirmation, with inclusion in
the new “LargeMidCap SDG Index” and “LargeMidCap Biodiversity Index”, both launched by S&P
Global in January and February 2024. The indexes measure companies’ alignment with the United
Nations Sustainable Development Goals and their ability to limit the impact of their businesses on
ecosystems.
CORPORATE GOVERNANCE
At today’s meeting, the Board of Directors of Terna S.p.A. resolved to increase to five the number of
members of the “Related-Party Transactions Committee”, in order to align with the other Committees
within the Board, all established with Board resolution of 9 May 2023.
The Board of Directors therefore resolved to appoint Simona Signoracci as additional member of the
aforementioned Committee, confirming the presence of Angelica Krystle Donati, Marco Giorgino and
Gian Luca Gregori and maintaining Anna Chiara Svelto as Chairman of the Committee.
All Committee members meet the independence requirements pursuant to the Consolidated Law on
Finance (art. 147-ter, paragraph 4 as required by art. 148, paragraph 3 of the CLF) and to the
Corporate Governance Code (art. 2, Recommendation 7 of the Corporate Governance Code, as well
as articles 2, 5 and 6 of the document “Criteria and procedure for assessing independence”), and to
art. 15.4 of Terna S.p.A. Articles of Associations.
The summarised professional profile of Director Signoracci is available on the Company website at
the following link: https://www.terna.it/en/Governance/board-directors/simona-signoracci.
OUTLOOK
The Global economy is expected to record moderate growth in 2024, with ongoing trade tensions
between the world’s major economies and the risk of new protectionist measures. Geopolitical
tensions may well persist or even worsen, having a negative effect on political and economic stability.
In this scenario, the Terna Group will continue to focus on delivering on the 2024-2028 Industrial
Plan.
The acceleration in expenditure on Regulated Activities will continue with the goal of achieving the
targets set in the EU’s Fit for 55 package. This will involve facilitating the integration of renewable
sources, developing cross-border interconnections, boosting the level of security and resilience of
the electricity system and investing in grid digitalisation.
In terms of the Group’s most important projects, work is progressing on the Tyrrhenian Link, with
construction of the civil works for the converter stations on the “West Branch” due to start, whilst the
installation of underground cables for the “East Branch” will also begin. Following the award of key
contracts, work on the detailed design of the converter stations for the Adriatic Link will also begin.
The principal National Transmission Grid assets due to enter into service by the end of the year
include the Monte Malo (VI) and Ponte Caffaro (BS) substations.
Work on the new electricity grid for the “Milan-Cortina 2026” Olympic and Paralympic Games will
continue during the year, 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.
Finally, the Group will continue to make progress towards meeting the requirements resulting from
output-based regulatory mechanisms introduced by ARERA, above all with regard to reducing
dispatching costs (Dispatching Service Market incentives). The Group will also continue to be
engaged during the year in the consultation process with ARERA regarding its update of the
regulations underlying the WACC, valid for the period 2025-2027, and finalisation of the criteria for
applying the Totex/Output-based approach to the transmission service.
With regard to Non-regulated Activities, the Terna Group will continue to consolidate its role as a
provider of both Connectivity (relating to the fibre optic network) and Energy Services, developing
high value-added services for corporate customers and exploiting market opportunities,
consolidating the LT Group’s market leadership and investing in the development of technical and
digital skills. In the Equipment 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 process of selling the assets in Peru and Linha Verde I in
Brazil will continue. The strategic assessment of further opportunities in overseas markets, involving
the careful selection of projects with a view to ensuring a low risk profile and limited capital
absorption, will also continue.
During the year, the Group will intensify its focus on improving operational efficiency and
management of the power grid through the adoption of innovative technologies and the digitalisation
of grid assets, also thanks to the implementation of IoT technologies. This will include, by way of
example, implementation of the latest mobile network technologies, the upgrade of monitoring
systems and the development of advanced predictive algorithms designed to optimise infrastructure
maintenance and boost grid resilience.
Management of Terna’s business will continue to be based on a sustainable approach and respect
for ESG aspects, ensuring that it is able to minimise the environmental impact, involve local
stakeholders and meet the need for integrity, responsibility and transparency.
Furthermore, the Terna Foundation, one of the main innovations in the Group’s Sustainability Plan
presented on 19 March of this year, is expected to be created by the end of 2024.
Also thanks to the above initiatives, including those designed to further increase the efficiency of the
electricity system, for 2024 Terna expects revenues at €3.55 billion, EBITDA of €2.42 billion and an
EPS of €0.49.
Regarding Capex, for the next year the Group expects a figure of approximately €2.6 billion in 2024.
The above objectives will be pursued whilst maintaining a commitment to maximising the cash
generation necessary to ensure a sound and balanced financial structure.
ALTERNATIVE PERFORMANCE MEASURES
This release includes a number of “alternative performance measures” (EBITDA, EBIT, 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 of 5 October 2015:
– EBITDA (Gross Operating Profit): an indicator of operating performance, representing “Profit for
the year” before “Income tax expense for the year”, “Net financial income/(expenses)” and
“Amortisation, depreciation and impairment losses”;
– EBIT (Operating Profit): an indicator of operating performance, representing the sum of
“Profit/(Loss) before tax” and “Net financial income/(expenses)”;
– 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 bond issues and 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.
The following changes in the structure of the Terna Group have taken place with respect to 31 December
2023:
on 7 February 2024, the subsidiary, Terna Plus S.r.l., completed the acquisition of the remaining 25%
non-controlling interest in the Brazilian company, “SPE Transmissora de energia Linha Verde I S.A.”,
which is now a wholly owned subsidiary.
on 7 March 2024, the subsidiary, Terna Forward S.r.l., completed the acquisition of a 33% stake in
Wesii S.r.l., a leading provider of inspection and remote-sensing services for the renewable energy
sector, based in Chiavari (GE).
A meeting will be held at 5:00 pm today to present the results for the three months ended 31 March 2024 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 three months ended 31 March 2024 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 Terna Group’s Consolidated Interim
Financial Report for the three months ended 31 March 2024 will be made available to the public by 15 May
2024 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
of 16 September 2009, the above reclassified financial statements are those included in the Terna Group’s
Consolidated Interim Financial Report for the three months ended 31 March 2024, prepared in accordance
with usual market practices.
The Group’s reclassified income statement
(€m)
Q1 2024*
TOTAL REVENUES
– Regulated revenues
of which Revenues from construction services
performed under concession
858.1
730.1
Q1 2023*
712.5
613.9
Change
145.6
116.2
% change
20.4%
18.9%
128.0
29.8%
TOTAL OPERATING COSTS
– Personnel expenses
– Cost of services, leases and rentals
– Materials
– Other costs
– Quality of service
– Cost of construction services performed
under concession
230.2
212.5
(1.2)
(0.5)
(1.3%)
30.0%
(14.7%)
GROSS OPERATING PROFIT (EBITDA)
– Amortisation, depreciation and impairment losses
OPERATING PROFIT (EBIT)
500.0
186.6
313.4
(32.1)
127.9
105.3
25.6%
12.1%
33.6%
– Net financial income/(expenses)
PROFIT/(LOSS) BEFORE TAX
– Income tax expense for the period
627.9
209.2
418.7
(36.5)
382.2
111.6
281.3
(4.4)
100.9
13.7%
35.9%
37.3%
PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING
OPERATIONS
270.6
200.0
35.3%
– Profit/(Loss) for the period from assets held for sale
PROFIT FOR THE PERIOD
(3.0)
267.6
(0.5)
199.5
(2.5)
34.1%
(0.6)
(0.7)
(14.3%)
268.2
200.2
34.0%
– Non-Regulated revenues
– Profit/(Loss) attributable to non-controlling interests
PROFIT FOR THE PERIOD ATTRIBUTABLE TO OWNERS
OF THE PARENT
* Given that the requirements of IFRS 5 have been met, the total results for the first quarters of 2024 and 2023 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)
for the period from assets held for sale” in the Group’s reclassified income statement.
The Group’s reclassified statement of financial position
(€m)
at 31 March 2024 at 31 December 2023
Change
Total net non-current assets
19,204.6
18,964.7
239.9
– Intangible assets and goodwill
– Property, plant and equipment
– Financial assets
865.7
17,838.3
500.6
867.2
17,596.7
500.8
(1.5)
241.6
(0.2)
(2,078.2)
(2,174.6)
(936.4)
1,192.6
(806.4)
(147.1)
(1,380.9)
(912.0)
1,107.6
(937.1)
(1,458.8)
(24.4)
130.7
(172.8)
17,126.4
16,790.1
336.3
(17.5)
(32.9)
17,108.9
17,186.2
16,757.2
16,837.6
351.7
(3.1)
348.6
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
Equity attributable to owners of the Parent
Equity attributable to non-controlling interests
Net debt
6,576.1
6,324.4
251.7
10,587.0
10,494.3
TOTAL
17,186.2
16,837.6
348.6
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
– 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
Q1 2024
Cash flow
Q1 2023
267.6
209.2
(15.4)
(0.6)
460.8
(96.6)
199.5
186.6
(13.8)
(4.0)
368.3
(333.8)
(3.0)
(1.5)
(6.8)
398.6
(482.7)
(84.1)
(314.9)
(255.6)
(4.0)
(16.5)
(92.7)
(10.8)
(0.5)
(270.9)