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Results approved as of 31 March 2019


NEWS

9

May 2019

    Revenues at € 537.0 million (€ 523.1 million in 1Q18, +2.7%)
    EBITDA at € 420.2 million (€ 409.3 million in 1Q18, +2.7%)
    Group net profit for the period at € 186.0 million (€ 182.7 million in 1Q18, +1.8%)
    Capital expenditure at € 164.4 million (€ 141.6 million in 1Q18, +16.1%)
    Net debt at € 7,918.7 million (€ 7,899.4 million as of 31 December 2018)

    The Chief Executive Officer and General Manager Luigi Ferraris has presented the results of the first quarter of 2019, which were examined and approved by the Board of Directors of Terna S.p.A. ("Terna") at a meeting on 8 May 2019 chaired by Catia Bastioli.

    "I am very satisfied with the good results achieved in the first quarter of the year, which confirm the positive growth trend already outlined in the 2019-2023 Strategic Plan. The sharp acceleration seen in investments, once again, places Terna at the heart of the energy transition process towards complete decarbonisation and the full integration of energy from renewable sources into the grid. Moreover, these investments demonstrate the ongoing Terna's strong commitment to innovation, through the opening of Innovation Hubs across Italy, to promote the development of an increasingly secure, resilient and sustainable electricity grid" said Luigi Ferraris, Terna’s CEO and General Manager.

     

    CONSOLIDATED ECONOMIC AND FINANCIAL RESULTS OF THE 1ST QUARTER OF 2019 € million

    Q1 2019

    Q1 2018

    % change

    Revenues

    537.0

    523.1*

    +2.7%

    EBITDA (Gross Operating Profit)

    420.2

    409.3

    +2.7%

    EBIT (Operating Profit)

    279.8

    276.8

    +1.1%

      

    Group net profit for the period

    186.0

    182.7

    +1.8%

    CAPEX

    164.4

    141.6

    +16.1%

      * Reclassified in compliance with the new IFRS. No impact at EBITDA level

     Revenues in the first quarter of 2019, of € 537 million, recorded an increase of € 13.9 million (+2.7%) compared with the same period in 2018. This result was mainly attributable to the increase in revenues from Regulated Activities, which reflects the adjustment of the weighted average cost of capital (WACC) for the period 2019-2021.

    EBITDA (Gross Operating Profit) of the period stood at € 420.2 million, up by € 10.9 million (+2.7%) compared with € 409.3 million in the first quarter of 2018.

    EBIT (Operating Profit) of the period, after amortisation, depreciation and impairment of € 140.4 million, stood at € 279.8 million, compared with the € 276.8 million of the first three months of 2018 (+1.1%).

    Net financial expenses amounted to € 15.9 million, a reduction of € 8.7 million compared with the € 24.6 million of the first quarter of 2018. The decrease was mainly due to the seasonality of inflation.

    Profit before tax stood at € 263.9 million, up by € 11.7 million compared with the same period of 2018 (+4.6%).

    Income tax expense of the period amounted to € 77.9 million and increased, compared with the corresponding period of the previous year, by € 9.4 million (+13.7%) mainly due to items generated in the comparative period that did not contribute to the tax base. The tax rate stood at 29.5% (substantially in line with the tax rate of 29.4% recorded in FY 2018).

    Group net profit for the period was € 186.0 million, up € 3.3 million (+1.8%) compared with €182.7 million for the first quarter of 2018.

    The consolidated statement of financial position as of 31 March 2019 showed equity attributable to owners of the Parent of €4,162.9 million, compared with €4,019.2 million at 31 December 2018.

    Net debt, stood at € 7,918.7 million, essentially in line with the figure as of 31 December 2018 (€7,899.4 million).

    The Terna Group’s total capital expenditure made by the Terna Group in the first quarter of 2019 amounted to €164.4 million, compared to € with €141.6 million in the same period of the previous

    year (+16.1%). The main projects in the period included progress on the Italy-France and Italy-Montenegro interconnections and the rationalization of Rome’s electricity grid.

    The Group’s employees, at the end of March 2019, totalled 4,280, up by 28 compared with 31 December 2018. This increase was mainly linked to the policy of strengthening core competences, in line with the 2019-2023 Strategic Plan.

    KEY EVENTS AFTER 31 MARCH 2019

     

    On 9 April 2019, Terna inaugurated, in the Turin office, the first of the "Innovation Hubs - platforms for the development of innovation", which will be focused on the IoT (Internet of Things) and on advanced monitoring processes for electricity transmission infrastructure.

    On 15 April 2019, Terna began the decommissioning of the "Fusina 2 – Sacca Fisola" overhead power line as part of work on modernising the electricity grid in the Venetian Lagoon. These operations will allow the dismantling of 6.5 kilometres of lines and 24 pylons.

    On 19 April 2019, Terna, Eni, CDP and Fincantieri signed a non-binding agreement for the development and construction on an industrial scale of plants for generating electricity using wave power.

    On 8 May 2019, the Terna’s Annual General Meeting of shareholders ("AGM") approved the Annual Report for 2018 and the distribution of a dividend for 2018 of 23.32 euro cents per share, in line with the policy announced.

    Finance

     

    On 3 April 2019, Terna launched a green bond issue worth €500 million. The securities have a duration of 7 years and will pay a coupon of 1%, with an indicative spread approximately 100 basis points lower than BTPs of the same duration. The issue was very well received by investors, with demand exceeding supply by seven times.

    On 23 April 2019, Terna signed an ESG-linked back-up Revolving Credit Facility, in the form of a committed facility amounting to €1.5 billion, with a pool of banks made up of Banca IMI, BNP Paribas, Cassa Depositi e Prestiti, UniCredit (as Bookrunners and Joint Mandated Lead Arrangers),

    Santander and SMBC (as Joint Mandated Lead Arrangers). At the same time, two back-up credit facilities, amounting to €1.3 billion, due to expire by 2021 were cancelled. The duration is 5 years and the amount available can be used to fund day-to-day operations. The interest rate is indexed to EURIBOR plus an initial spread of 0.65% (variable between 0.6% and 1.45%, based on Terna’s rating). The transaction ensures liquidity adequate for the current rating level and strengthens the integration of the sustainability objectives of the business strategy through a bonus/penalty mechanism linked to the ESG targets.

    International Activities

     

    On 12 April 2019, Terna signed a preliminary agreement with Construtora Quebec (a construction company operating in Brazil) for the acquisition of two new concessions for the construction of power lines in Brazil. Terna will build 350 km of electricity infrastructure in the State of Minas Gerais to increase the efficiency, safety and sustainability of local grids and facilitate the full integration of renewable sources.

    INDEPENDENCE ASSESSMENT FOR NEW DIRECTORS

     

    According to the statements made by the Directors elected by AGM of TERNA S.p.A.’s shareholders held on 8 May 2019, Marco Giorgino and Paolo Calcagnini, the Board of Directors has ascertained that all the members of the Board meet the independence requirements provided for in legislation concerning electricity transmission system operators, as well as the requirements regarding integrity and the absence of reasons for ineligibility and incompatibility, as required by current legislation and the Bylaws.

    According to the assessments made by the Board of Directors with reference to the statements made by the newly elected Directors, and taking into account all the assessment parameters stipulated in the Corporate Governance Code and articles 147-ter paragraph 4, and 148 paragraph 3 of Italian Legislative Decree 58/2008, as well as TERNA S.p.A.’s Bylaws:

    - the newly elected Director, Marco Giorgino, meets the independence requirements, pursuant to article 3 of the Corporate Governance Code and in accordance with articles 147-ter paragraph 4, and 148 paragraph 3 of Italian Legislative Decree 58/2008 and TERNA S.p.A.’s Bylaws.

    - the newly elected Director, Paolo Calcagnini, does not meet the independence requirements, pursuant to article 3 of the Corporate Governance Code and in accordance with articles 147-ter paragraph 4, and 148 paragraph 3 of Italian Legislative Decree 58/2008.

    ALTERNATIVE PERFORMANCE MEASURES

     

    In this release, some "alternative performance measures" (EBITDA, Tax Rate and Net Debt) are used, which are not provided by the IAS/IFRS accounting standards, whose meaning and contents are explained below pursuant to the ESMA/2015/1415 guideline published on 3 December 2015:

    - EBITDA (Gross Operating Margin): this is a measure of operating performance; it is calculated as "Net profit for the year" before "Income taxes for the year", "Financial income/(expense)" and "Amortisation, depreciation and impairment losses";

    - Tax rate: this expresses the proportion of tax with respect to the profit/(loss) and derives from the ratio between "Income taxes for the year" and "Profit/(loss) before taxes";

    - Net Debt: this is a measure of the company’s financial structure; it is determined as the sum of the short-term ("Short-term loans", "Current portion of long-term loans" and "Current financial liabilities") and long-term debt ("Long-term loans") and the related derivative instruments ("Non-current financial liabilities"), net of "Cash and cash equivalents" and "Current financial liabilities"). It should be noted that the net financial debt of the Terna Group is in compliance with the provisions of ESMA Recommendation no. 319 of 2013 regarding the definition of the net financial position.

    Today at 9.30am, a meeting will be held to illustrate the results of the first quarter of 2019 to financial analysts and investors. The support material for the event will be made available on the Company’s website (www.terna.it), in the Investor Relations/Presentations section, at the beginning of the meeting. 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 without any right to speak. It will also be possible to follow the presentation by connecting to the audio webcast on the Company website (www.terna.it): the file will be available in the Investor Relations/Presentations section.

    The Financial Reporting Manager, Agostino Scornajenchi, pursuant to paragraph 2 of Art. 154-bis of the Consolidated Law on Finance, declares that the accounting information included in this press release corresponds to the evidence in the documents, books and accounting records.

    The Consolidated Interim Financial Report of the Terna Group, dated 31 March 2019 has not been audited and was prepared voluntarily, pursuant to art. 82-ter of CONSOB Issuer Regulations (as amended by CONSOB Resolution no. 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 the interim reports previously disclosed to the public is ensured. The document containing the Terna Group Interim Report at 31 March 2019 will be made available to the public by 15 May 2019 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 prescribed disclosure regarding the filing will be issued.

    The reclassified Income Statement, Statement of Financial Position and Statement of Cash Flows of the Terna Group have been attached. These represent the classification of the results used by management for a more efficient evaluation of the Terna Group’s economic and financial performance.

    It is highlighted that, in compliance with Directive no. DME/9081707 of 16 September 2009, these reclassified statements are included in the Terna Group’s Consolidated Interim Financial Report as of 31 March 2019, prepared in line with standard practices for the Sector.

    For table see attachment


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