Terna: Results as of 30 September 2016 approved


PRICE SENSITIVE

4

novembre 2016 14:38

    REVENUE at € 1,551 million (€ 1,516.8 million in 9M15, +2.3%)

    EBITDA at € 1,176.3 million (€ 1,160.8 million in 9M15, +1.3%)

    NET PROFIT OF THE GROUP at € 486.8 million (€ 454.9 million in 9M15, +7%)

    INTERIM DIVIDEND of 7.21 eurocents per share (+3% compared to 2015, in line with the new dividend policy)

     

     

    Rome, 04 November 2016 The CEO Matteo Del Fante presented the results of the first nine months and third quarter of 2016, which were examined and approved by Terna S.p.A.'s Board of Directors that met today chaired by Catia Bastioli.

     

    “The first nine months of the year”, said Matteo Del Fante, Terna's Chief Executive Officer, “show positive results on all the main economic indicators and enable us to confirm the guidance for 2016 as a year of growth as announced last July. This is an improvement compared to the indication of the beginning of the year, achieved also through the rationalisation of processes and the control on operating expenses. We shall continue with the development of the Italian electricity grid and of the important interconnections with foreign countries, through a continuously increasing focus on the evolution and needs of the electricity system. We remain focused on generating savings for Italian businesses and households and contribute to the objectives foreseen by the Energy Union”.  

     

     

    CONSOLIDATED ECONOMIC RESULTS FOR THE FIRST 9 MONTHS OF 2016

    Data in €million

    First 9 months 2016

    First 9 months 2015

    % change

    Revenue

    1,551

    1,516.8

    +2.3%

    EBITDA (Gross Operating Margin)

    1,176.3

    1,160.8

    +1.3%

    EBIT (Operating Profit)

    773.1

    798.9

    -3.2%

    Profit before taxes

    712.7

    681.8

    +4.5%

    Group net profit for the period

    486.8

    454.9

    +7%

     

     

     

    SUMMARY OF THE CONSOLIDATED RESULTS FOR THE FIRST NINE MONTHS OF 2016

    Revenue for the first nine months of 2016 amounted to € 1,551 million, with an increase of € 34.2 million compared to the same period of the previous year (+2.3%). This change is due largely to the € 46.8 million increase in Regulated Activities for the contribution in the first nine months of 2016 from the National Transmission Grid purchased in 2015 from the FSI Group.

     

    Operating expenses in the first nine months of 2016 amounted to € 374.7 million, up by 18.7 million compared to the same period of 2015, mainly due to the costs related to the subsidiary Rete Srl, partially offset by lower costs for Regulated Activities.

     

    EBITDA reached € 1,176.3 million, an improvement of € 15.5 million compared to the € 1,160.8 million of the first nine months of 2015 (+1.3%).

     

    Amortisation, depreciation and impairment of the period amounted to € 403.2 million, a € 41.3 million increase compared to the same period of financial year 2015. This was linked to the coming into operation of new plants and the depreciation and amortisation of the subsidiary Rete Srl.

     

    EBIT, therefore, amounted to € 773.1 million, compared to the € 798.9 million of the first nine months of 2015 (-3.2%) due to an increase in depreciation and amortisation.

     

    Net financial expense for the period stood at € 60.4 million, a € 56.7 million reduction compared to the figure for the same period in 2015, due largely to the general decrease in interest rates and the one-off effects connected with the Liability Management defined on 20 July 2015.

     

    Profit before taxes stood at € 712.7 million, up by 4.5% compared to the same period of the previous year.

     

    Income taxes for the period amounted to € 228.2 million, and are generally in line with the same period of the previous year (+0.6%).

     

    Net profit of the Group for the period therefore stood at € 486.8 million, a € 31.9 million increase (+7%) compared to the € 454.9 million of the first nine months of 2015.

     

    Total investments made by the Group in the first 9 months of the year amounted to € 530.2 million, in line with what was announced in the 2016-2019 Strategic Plan. The main projects of the period related to the progress of the construction sites of the Italy-Montenegro and Italy-France electrical interconnections and the “Villanova-Gissi” and “Sorgente-Rizziconi[1]” power lines. The last two already came into operation in the first half of 2016.

     

    The consolidated statement of financial position as of 30 September 2016 shows Equity attributable to the owners of the Parent of € 3,524.8 million (€ 3,320.8 million as of 31 December 2015).

     

    Net financial debt totalled € 7,800.9 million, compared to € 8,002.7 million as of 31 December 2015, a reduction of around € 200 million largely due to the effect of positive free cash flow of € 545 million and around € 320 million allocated for dividends (around € 260 million) and debt service (around € 60 million).

     

    As of 30 September 2016, Group Employees were 3,831, an increase of 64 compared to 31 December 2015. This increase was mainly due to completion of the generational turnover project announced and implemented in 2015 - which allowed more than 300 new young professionals to enter into the Terna Group - and to the launch of the integration process of the High Voltage assets acquired from the FSI Group, which led to implement the policy of recruiting resources for the future management of the plants.

     

    From 2017, in fact, Terna expects to use its own resources to manage 100% of the lines and around 20% of the electrical substations acquired from the FSI Group in December 2015.

     

     

    THIRD QUARTER 2016 ECONOMIC RESULTS

    The Group's Revenue in the third quarter of 2016 amounted to € 511.1 million, compared to the € 514.8 million of the third quarter of 2015 (-0.7%).

     

    Operating expenses in the third quarter of 2016 were € 111.8 million, down compared to € 120.6 million in the third quarter of 2015 (-7.3%).

     

    Due to these effects, EBITDA stood at € 399.3 million, up compared to the € 394.2 million of the third quarter of 2015 (+1.3%).

     

    EBIT, after deducting € 136 million of amortisation and depreciation, stood at € 263.3 million, compared to € 275.3 million in the third quarter of 2015 (-4.4%).

     

    Therefore, the Group's Net Profit for the period reached € 162 million, compared to the € 145 million in the third quarter of 2015 (+11.7%). 

     

     

     

    SIGNIFICANT EVENTS IN THE THIRD QUARTER OF 2016

     

    Interconnections with other countries

    On 20 July 2016 the Ministry of Economic Development issued the “Decree of exemption for the private line of the Italy-France interconnection power line” in favour of Piemonte Savoia S.r.l.. The 10-year exemption governs third-party right of access, the regulations on the management of proceeds linked to the assignment of interconnection capacity, the tariff regulations and the regulations on ownership unbundling. The document was sent to the European Commission for approval.

     

    International activities

    In line with the targets of the 2016–2019 Strategic Plan, which provides for a maximum amount of € 200 million, Terna is exploring business opportunities in the area of international activities.

    In Europe, in July 2016 Terna stated its interest in the tender for the privatisation of 24% of the Greek TSO. Please see, on this point, the paragraph “Events subsequent to 30 September 2016”.

     

    In September 2016, Terna won in Uruguay the tender called by UTE - a vertically integrated, state-owned company which manages the generation, transmission, distribution and sale of electricity – for the construction of three new electricity infrastructures, to increase the efficiency and security of the Uruguayan national electricity grid, promote energy diversification and help the integration of production from renewables in the north of the country. The total value of the contract, calculated on a thirty-year basis, is estimated by UTE at approximately US$ 230 million.

     

    Sustainability

    Terna won the Safety Prize awarded by Confindustria and INAIL under the patronage of the President of the Republic, presented on 20 July 2016 before the Chairman of Confindustria. The 4th edition of the "Premio Imprese per la Sicurezza", was made to reward companies that have distinguished themselves for commitment in the field of health and safety management, a useful example for highlighting and sharing their experiences in order to raise the awareness of other companies and workers on legislative, cultural, organisational and behavioural aspects.

     

    On 9 September 2016, the annual review of the Swiss sustainability rating agency RobecoSAM confirmed for the eighth consecutive year the presence of Terna in the top positions in the prestigious Dow Jones Sustainability World Index. Terna scored 97/100 for the environmental component, up three points from 2015, placing the company at the top of the Electric Utilities sector.

     

    On 21 September 2016, Terna obtained a further recognition for sustainability with confirmation, for the sixth consecutive year, in the STOXX Global ESG Leaders Indices. Terna is present in these indices created by the company STOXX Limited which based on sustainability performance, selects 345 companies among the 1,800 stocks present in the initial international basket, the STOXX Global 1800 Index.

     

    Finance

    On 26 July 2016 Terna agreed a back-up Revolving Credit Facility for a total amount of € 500 million, with a pool of banks including Banca IMI, BNP Paribas, Bank of Tokyo - Mitsubishi, Caixa Bank and UniCredit serving as Joint Mandated Lead Arrangers and Bookrunners. The Revolving Credit Facility will have a duration of 5 years at an interest rate linked to EURIBOR, plus a margin between 0.70% and 1.10% (depending on the portion used).

     

     

     

    SIGNIFICANT EVENTS AFTER 30 SEPTEMBER 2016

     

    Laying of the underground cable for the electrical interconnection between Italy and Montenegro

    On 4 October 2016, the work for the laying the underground cable of the Montenegrin stretch of the electrical interconnection between Italy and Montenegro was inaugurated. This is a strategic project at European level and represents the first “electrical bridge” between Italy and the Balkans. The site is part of the wider project for electrical connection between Montenegro and Italy, an infrastructure in direct current for 1,000 MW of power, a total of 455 km between Villanova (Pescara) and Kotor, with no environmental impact as the cable is laid on the seabed and is underground for what concerns its land side. The infrastructure is a fundamental step for the European Energy Union, crucial for integrating the entire Balkan area into Europe through Italy.

     

    € 750 million 12-year bond issue

    On 5 October 2016 Terna finalised a bond issue in euro, at a fixed rate, for a total of € 750 million as part of its Euro Medium Term Notes (EMTN) Programme of € 8,000,000,000, that obtained a “BBB” rating by Standard and Poor’s, “(P)Baa1” by Moody’s and “BBB+” by Fitch. The bonds, with a duration of 12 years and maturity on 11 October 2028, have a coupon of 1.00%, and were issued at a price of 98,882%, with a spread of 57 basis points with respect to the midswap. The operation is part of Terna’s financial optimisation programmes, made to cover the needs of the Group’s Industrial Plan.

     

    Approval given to the project for the merger by incorporation of Terna Rete Italia S.r.l. and Terna Storage S.r.l. into Terna S.p.A.

    As part of the programme for corporate simplification of the Group, on 12 October 2016, the Board of Directors of Terna S.p.A. approved the project for the merger by incorporation into Terna SpA of two fully controlled companies, Terna Rete Italia S.r.l. and Terna Storage S.r.l.. The merger should be completed by the end of the next financial year and will not lead to any amendment of TERNA's bylaws.

     

    Development of the website dedicated to “Cantieri Aperti & Trasparenti”

    On 13 October 2016, one year after its initial launch, Cantieri Aperti & Trasparenti - the online area entirely dedicated to the construction sites of electricity infrastructures in Italy - became faster as well as more interactive and more dynamic. This has made the details for every tender and subcontract related to over 176 Terna construction sites located throughout Italy available to all, including the names of the 353 companies working on them, which employ 4,000 workers each day. Now, it is possible to have this information on any electronic device.

     

    Memorandum of Understanding signed with the Guardia di Finanza

    On 19 October 2016, Terna signed an important Memorandum of Understanding with the Guardia di Finanza regarding the project entitled “Sicurezza in Rete” in order to strengthen further the prevention of the risk of criminal infiltration into the economic fabric and to protect legality, the environment, and the health and safety of workers in the making of electrical infrastructures.

     

    EMTN programme renewed

    On 19 October 2016, Terna renewed its € 8,000,000,000 bond issue programme entitled "Euro Medium Term Note Programme" (EMTN) as resolved by the Board of Directors on 4 May 2016. Deutsche Bank and Citigroup were the Joint Arrangers for the programme, which obtained a BBB rating from Standard & Poor's, (P)Baa1 from Moody's and BBB+ from Fitch.

     

    1.6 km of power lines in the city of Vicenza demolished

    On 19 October 2016, we begun to demolish 10 pylons in Vicenza made in the 1960s. The activities are part of the rationalisation plan for the city of Vicenza, which has seen a total investment from Terna of € 13 million and has become possible thanks to the commissioning this summer of a number of underground power lines.

     

    Binding offer presented for the acquisition of a 24% stake in the capital of ADMIE

    On 21 October 2016, the consortium - which became a Qualified Participant on 12 August 2016 -formed by Terna S.p.A. and F2i SGR S.p.A. - both with 50% stakes - submitted a binding offer for the acquisition of a 24% stake in ADMIE - also known as Independent Power Transmission Operator S.A. (IPTO) - in line with the tender procedure launched by Public Power Corporation (PPC) - sole shareholder of ADMIE – on 12 July 2016. On 31 October 2016, the BoD of PPC, officialised the appointment of State Grid International Development as Preferred Strategic Investor, this appointment will be approved by the Shareholders’ Meeting called for 24 November 2016.

     

     

    2016 INTERIM DIVIDEND OF 7.21 EUROCENTS PER SHARE

    In the light of the financial and equity position and income statement results achieved by Terna S.p.A. in the first half of 2016 and the information regarding the economic prospects and business outlook for the current financial year, after having received today the opinion from the Audit Company PricewaterhouseCoopers (PwC)  - required by Article 2433-bis of the Italian Civil Code – Terna S.p.A. has established to pay the ordinary interim dividend for the year 2016 at 7.21 eurocents per share, in compliance with the dividend policy announced on 17 February 2016 that foresees a 3% growth rate over the period of the Strategic Plan (2016–2019), taking 2015 as basis. The interim dividend, net of any withholdings required by law, will be payable from 23 November 2016 (record date pursuant to Article 83-terdecies of Legislative Decree no. 58 of 24 February 1998 known as the “Consolidated Law on Finance”: 22 November 2016) with “ex-dividend” date of coupon no. 25 on 21 November 2016.

     

    ****

    Please note that this communication related to the consolidated results as of 30 September 2016 has been prepared, as in the past, following a resolution by the Board of Directors, while awaiting the implementation of the regulatory framework outlined by Italian Legislative Decree No. 25 of 15 February 2016 (the “Decree”), which eliminated the duty for listed companies to publish interim financial statements, delegating to Consob the task of evaluating the possible reintroduction of the obligation to publish “additional periodic financial information” within the limits and conditions set out in the aforementioned Decree. Within this context the document containing the consolidated Interim Financial Report of the Terna Group at 30 September 2016 will be published by 15 November 2016, filed and available to the public at the head office, on the Company's website (www.terna.it) and on the website of the authorised storage system "1Info" (www.1info.it), and filed at the stock exchange management company Borsa Italiana S.p.A. (www.borsaitaliana.it). The disclosure regarding the filing will also be issued.

     

    Please find attached the reclassified income statement, statement of financial position and statement of consolidated cash flows of the Terna Group. These documents represent the operating classification of the results used by the management for a more effective assessment of the economic and financial performance of the Terna Group. Please note that under the terms of Communication No. DME/9081707 of 16 September 2009, these statements are taken from the Interim Financial Report of the Terna Group as of 30 September 2016 and have not been audited yet by the audit company.

     

    The Financial Reporting Manager, Tiziano Ceccarani, in accordance with paragraph 2 of Art. 154-bis of the Consolidated Law on Finance, declares that the accounting disclosure provided in this communication is consistent with the documents, books and accounts.

     

    At 14.30 a conference call will be held to present the results of the first nine months of 2016 to financial analysts and institutional investors. Journalists are also invited to listen to the call. The supporting material for the conference call will be available on the Company's website (www.terna.it) in the Investor Relations/Presentations section at the time of the start of the conference call itself. In the same section it will also be possible to follow the presentation via audio webcasting. The Presentations will also be made available, via SDIR-NIS, on the website of Borsa Italiana S.p.A. (www.borsaitaliana.it) and of the authorised storage service "1Info" (www.1info.it).

     

    In this release, some "alternative performance measures" (EBITDA, EBIT, EBITDA Margin and Net Financial Debt) are used, whose meaning and contents are explained below pursuant to ESMA/2015/1415 guideline published on 03 December 2015.

    - EBITDA (Gross Operating Margin): this is an indicator of operating performance; it is calculated by combining the operating profit (EBIT) with amortisation, depreciation and impairment.

    - EBIT (Gross Operating Margin) this is a measure of operating performance and it is calculated by combining the Profit before taxes with Net financial expenses/income;

    - EBITDA Margin: this represents an indicator of operating performance; it derives from the ratio between Gross Operating Margin (EBITDA) and revenue;

    - Net Financial Debt: this represents an indicator of the company's financial structure; it is determined as the sum of the short- and long-term financial debts and the related derivative instruments, net of cash and cash equivalents


    For table see attachment
     



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