Letter to the Shareholders


Dear Shareholders,
The 2014 Annual Report, the tenth since Terna’s listing, further consolidates a longstanding trend of positive results. But this is also the first Annual Report that we present as the new Top Management, after taking office one year ago. We are therefore particularly proud to present continued growth in the company’s results, but also the virtuous change necessary to design a Terna of the future, in a rapidly developing environment at both European and global level.

Over the past months, we have improved our understanding of a strong company, among the top European network operators, that strives to achieve excellence in the sustainable development of infrastructures, in innovation and in services for users, with consequent benefits for the electricity system, without overlooking attractive remuneration for shareholders.

2014 represents a solid starting point, both from an economic and financial point of view, as well as from the equally important perspective of sustainability performance. Regarding the first point, results reflect the positive contribution of both Regulated and Non-Regulated Activities.
Compared to 2013, revenues increased by 5.3%, almost reaching 2 billion euro, EBITDA reached almost one and a half billion euro and Net Profit increased by 6%, well above 500 million euro. Capex, in line with the Development Plans, tood at approximately 1.1 billion and during the year new strategic infrastructures have become operational, such as the “Trino-Lacchiarella” and “Foggia-Benevento” lines, significant projects for the Country’s safety and energy efficiency.

Regarding technological innovation, we carried on with our efforts to develop energy storage systems. Despite high investment levels, the Group generated 260 million in Free Cash Flow and Net Debt has been kept below 7 billion euro, confirming close attention to the management of the financial structure. Within Non-Regulated Activities, during 2014 we have worked hard to incorporate the Tamini Group into the Terna Group.
Progress has also been considerable in terms of sustainability performance. The per capita training hours have been increased to 43, involving 91% of employees; the number of occupational injuries has decreased, with the injury rate down to 1.27%. On the environmental front, containment programs have enabled us to reduce the impact of SF6 leakage – the Group’s main source of direct greenhouse gas emissions – down to 0.55%, below our target of 0.60%. Grid development has continued to provide an indirect but significant contribution to the growth of electricity production from
wind and solar systems, that in 2014 reached 14.3% of total production. Research activities have been focused on the development of new sustainable technologies. The commitment to continuous improvement of processes has focused on relations with the stakeholders: the new map presented in this Report is the first step towards better organisation of involvement methods.

These results represent an important reference to explore and seize new opportunities that may arise, as well as to face the challenges posed by the general market conditions, the evolution of the European electricity sector and the new regulation expected in 2015. For this reason the new 2015-2019 Strategic Plan foresees specific management actions focused on a further strengthening of the electricity system, with a view to an increasingly interconnected European grid; on a more selective approach to investments, with lower impacts on electricity tariffs and debt; on the development of Non-Regulated Activities, with particular reference to Tamini and the Interconnectors; and finally, on increased operating efficiency, also thanks to the new organisational structure and the launch of an important voluntary generational turnover programme. To sum up, starting from the results achieved and from a track record of value creation, we believe the Group is well positioned to positively face and overcome future challenges, leveraging the competence, willingness and strong values of all members of the Terna team.


The Chairwoman                                                            The Chief Executive Officer
CATIA BASTIOLI                                                           MATTEO DEL FANTE

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