CONSOLIDATED INTERIM FINANCIAL ENG_SETT_2020...LA NOSTRA MISSIONE La responsabilità dell’energia. L’energia della responsabilità. Esercitare un ruolo guida per una transizione

2020ENERGY IS OUR RESPONSIBILITY

CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER

LA NOSTRA MISSIONE

La responsabilità dell’energia. L’energia della responsabilità.

Esercitare un ruolo guida per una transizione energetica sostenibile, facendo leva su innovazione, competenze e tecnologie distintive a benefi cio di tutti gli stakeholder.

Siamo un grande operatore delle reti per il trasporto dell’energia.

Gestiamo la trasmissione di energia elettrica in alta tensione in Italia e ne garantiamo la sicurezza, la qualità e l’economicità nel tempo.

Perseguiamo lo sviluppo della rete elettrica, una sempre maggiore effi cienza operativa e l’integrazione con la rete europea.

Assicuriamo parità di condizioni di accesso a tutti gli utenti delle reti.

Sviluppiamo attività di mercato e nuove opportunità di business, grazie all’esperienza e alle competenze tecniche acquisite nella gestione di sistemi complessi e alla nostra eccellenza tecnologica.

Mercurio GPMilan

Strategic advisoryCreative conceptGraphic design

LayoutEditing

www.mercuriogp.eu

All pictures are property of Terna.

www.terna.it

LA NOSTRA MISSIONE








Mercurio GPMilan


LayoutEditing

www.mercuriogp.eu


www.terna.it

OUR MISSION

Energy is our responsibility.Responsibility is our energy.

To play a leading role in the comingsustainable energy transition,by leveraging our distinctive innovationcapabilities, competencies and technologies for the benefit of all stakeholders.

We are a major operator of grids used to transport energy.

We manage the high-voltage transmission of electricity in Italy, ensuring security, quality and cost-effectiveness over time.

We are working hard on development of the electricity grid, the achievement of ongoing improvements in operational efficiency and integration with the European grid.

We guarantee equal access to all grid users.

We are developing Non-regulated Activities and new business opportunities, building on the experience and technical expertise gained in managing complex systems and on our technological excellence.

2 TERNA GROUP | CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER 2020

Terna and the Covid-19 emergencyElectricity is an essential good, above all during a health emergency. As the pandemic unfolded in 2020, Terna introduced a series of measures designed to safely ensure that everyone had continuous, round-the-clock access to electricity and that its people were fully protected.

As soon as the government began to legislate in response to the Covid-19 outbreak in February, we decided to set up a crisis committee chaired by the Chief Executive Officer. The committee’s task was to keep pace with developments, guarantee security and continuity of supply and to engage with all our stakeholders. The committee was at all time in close contact with the Civil Protection Agency, the authorities, the labour unions and Italy’s major companies.

To ensure the continuity of the country’s electricity service, Terna responded on a number of fronts, putting in place safeguards to guarantee the security of our operations as a Transmission System Operator (TSO) and the related supply chains, whilst also ensuring the health and safety of our operational personnel and, in general, all the people who work for us.

In agreement with the labour unions, the Company pared back construction work during the lockdown, only proceeding with essential operational and maintenance activities. At the same time, we took steps to deploy protective equipment (FFP2 and FFP3 masks, latex gloves and protective clothing) for operational personnel.

Real-time controls were safeguarded by adopting tighter restrictions on access to Control Rooms and Remote Control Centres and measures to ensure that sites were thoroughly cleaned between one shift and another and that social distancing rules were adhered to. We raised our network, infrastructure and cyber risk monitoring to the highest level.

The operational capacity of the three local dispatching centres was also stress tested by simulating critical scenarios based on growing shortfalls in available energy, from a control centre through to two shift lines for each local or national control room. This enabled us to stress test the transmission grid during the lockdown between 9 March and 3 May of this year.

The sharp fall in demand for electricity during this period (down 10.2% in March, 17.2% in April and 10.3% in May) was accompanied by a significant increase in the percentage of overall demand met from renewable sources: in March and April, 47% of total demand was met from green energy sources, with the figure rising to an all-time high of 51.2% in May. In terms of consumption, April saw the biggest decline, with a fall of 17.2% compared with the same month of the previous year. This was followed by a slow recovery, with demand for energy in September 2020 broadly in line with the figure for September 2019: 26.6 billion kWh.

3CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER 2020 | TERNA GROUP

During this period, the health of all our personnel and their ability to continue to operate was one of Terna’s main priorities. Precautions were adopted in line with the series of measures introduced by the government and specific insurance cover for all our personnel was also provided. After an initial extension of smart working to staff with young children, over 65s or those with pre-existing medical conditions, with the imposition of the lockdown all personnel not directly involved in operations were allowed to work from home, thanks the rapid upgrade of digital tools and telecommunications equipment.

The second half of the year began with the gradual reopening of our offices which, through to 31 December 2020, at the request of team leaders, could operate at up to 40% capacity, with the exception of people with children under 14, who were granted the option of continuing to work from home until schools reopened on 14 September. Also, in order to ensure a safe working environment, a serological testing scheme for Covid-19 was introduced in collaboration with Rome’s Tor Vergata Hospital. All Terna’s employees were offered the opportunity of taking the test free of charge: the initiative was launched for the staff of the Company’s Rome offices on 2 September with approximately 1,000 people taking part (a participation rate of 70%), before being extended to personnel throughout Italy.

At the height of the health emergency, Terna also supported the work of the Civil Protection Agency by making two donations of PPE (masks and gloves) and ventilators for intensive care units. Terna’s personnel also donated approximately 3,000 hours’ pay, with management following suit. The money raised was used to provide funding for intensive care units within the National Health Service and, in line with the initiative promoted by the labour unions, the amount donated by personnel was doubled by the Company and passed on to Italy’s Civil Protection Agency.


Highlights

• The power line connecting Capri with the mainland was inaugurated on 14 October in the presence of the Prime Minister and local dignitaries. The connection, 19 km in length, will cut pollution following retirement of the island’s diesel power station.

• The 150 kV Benevento III-Pontelandolfo power line (+15 km) entered service.

traliccio_trasmissione

ACQUISITION OF BRUGG CABLESOn 29 February 2020, Terna completed the acquisition of a 90% interest in Brugg Kabel AG, one of Europe’s leading manufacturers of terrestrial cables. The acquired company designs, develops, produces, installs and maintains electric cables for all voltages and accessories for high-voltage cables.

VEHICLE-TO-GRID (V2G) PROJECT BY TERNA AND FCAOn 14 September 2020, Terna and FCA presented their pilot Vehicle-to-Grid (V2G) project in Turin. This energy efficiency initiative involves joint trials of sustainable mobility technologies and services.

non_regolatogiallo

(€m) 9M 2020 9M 2019 Change

Revenue 1,780.6 1,665.5 6.9%

EBITDA 1,323.3 1,278.4 3.5%

Profit attributable to owners of the Parent 569.1 552.5 3.0%

Capital expenditure 749.5 670.0 11.9%

9M 2020 FY 2019

Net debt 8,824.6 8,258.6

FINANCIAL HIGHLIGHTS

BOARD OF DIRECTORS 2020-2022

Elected on 18 May 2020.

Alessandra FaellaYunpeng HeValentina CanaliniErnesto CarboneGiuseppe FerriGabriella Porcelli

Antonella BaldinoFabio CorsicoMarco GiorginoPaola GiannottiJean-Michel Aubertin

CHAIRWOMANValentina Bosetti

CHIEF EXECUTIVE OFFICER

Stefano Antonio Donnarumma

DIRECTORS

AWARDS AND

SUSTAINABILITY

• Terna is included for the second year running in the Bloomberg Gender Equality Index (GEI), for the sixteenth year running in the FTSE4GOOD index and for the tenth year running in the STOXX® ESG indexes

• The Swiss agency, SAM, has included Terna in the “Gold Class” of the “Sustainability Yearbook 2020” as “Industry Leader” in the Electric Utilities sector of the Dow Jones Sustainability Index

• Terna’s three green bond issues are listed in Borsa Italiana’s ExtraMOT PRO segment

5

CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER 2020

CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER 2020 | TERNA GROUP

Call for Innovation - Energy Efficiency for Sustainability: the new Call focusing on aspects of sustainability was launched in September.

Innovation

378 personnel added in the first nine months following the acquisition of Brugg Kabel AG.risorse_umane

People

BUSINESS ENABLERS

innovazione

PERFORMANCE OF THE ELECTRICITY SYSTEM

■ RS

■ NRS64

369M 2019* 9M 2020*

60

40

COVERAGE BY RENEWABLE SOURCES

2429M 2019*

2259M 2020*

(*) Provisional data. RS: Renewable sources - NRS: Non-renewable sources

% %

MAJOR INCIDENTS

Performance in 9M 2020: no major incidents affecting performance in 9M 2020.

9M 2019

1139M 2020*

236

(*) Provisional data.

■ Mitigation

■ Cost sharing

■ Fund for exceptional events

■ HV users

0.2

0.7

1.3

0.5

COST ALLOCATION 9M 2020

2.49M 2019

9M 2020 €m2.7

Demand[TWh]

RENS quality[MWh]

Cost of quality[€m]

distribuzione

Qualità

Costi Qualità

STOCK MARKET

AND FINANCETerna’s share priceShare price of €5.974 at 30 September 2020 versus €5.89 per share at 30 September 2019.

New all-time high of €6.786 per share registered on 19 February 2020.

FinanceS&P Global Ratings (S&P) has confirmed Terna’s ‘BBB+’ long-term rating, one notch above the Italian state, and raised its outlook to stable.

New bond issues. €500 million in new 10-year bonds, paying coupon interest of 0.78%, were issued in September. The issue of a 12-year green bond worth €500 million, paying an effective rate of interest of 0.78%, was completed in July.

Three ESG-linked Term Loans agreed. In October and August, Terna agreed three ESG-linked credit facilities amounting to €500 million. The related interest rate is linked to Terna’s performance with respect to specific environmental, social and governance (“ESG”) indices.

Purchase of own shares to service the Performance Share Plan 2020-2023. The buyback of 1,525,900 own shares (equal to 0.076% of the share capital) was completed in August at a total cost of approximately €9.5 million. The shares are to be used to service the Performance Share Plan 2020-2023.

Highlights


7



Structure of the Group

Compared with 31 December 2019:

* On 29 February 2020, Terna, acting through its subsidiary, Terna Energy Solutions S.r.l., completed the acquisition of a 90% interest in Brugg Kabel AG (a Brugg Group company). The transaction forms part of the Company’s growth strategy for Non-regulated Activities.

** On 22 May 2020, the company established SEleNe CC S.A., a joint venture 25%-owned by Terna, with the remaining shares held by three other European TSOs. The company will operate as a Regional Security Coordinator, in accordance with European Regulation 2017/1485, for the TSOs who own shares in it.

*** On 11 August 2020, Terna, acting through its subsidiary, Terna Plus S.r.l., completed the transaction with Construtora Quebec that has led to the acquisition of a 51% interest in the Brazilian-registered company, SPE Transmissora de energia Linha Verde I S.A.. On 9 September 2020, a further interest was acquired, increasing the Group’s interest to 75%.

100%Terna CrnaGora d.o.o.(Montenegro)

50%Elmed Études Sarl (Tunisia)

25%**SEleNe CC S.A.(Greece)

Joint ventures Associates

Valued using the equity method

Regulated ActivitiesNon-regulated Activities International Activities

0.01%

0.01%

0.01%

0.01%

5%100%Rete S.r.l.

42.698%CESI S.p.A.

100%Terna Rete Italia S.p.A.

15.84%CORESO S.A.(Belgium)

65%TernaInterconnector S.r.l.

22.0889%CGES(Montenegro)

100%Difebal S.A. (Uruguay)

100%Resia Interconnector S.r.l.

100%PI.SA. 2 S.r.l.

99.99%SPE Santa Maria Transmissora de Energia S.A. (Brazil)

99.99%SPE Santa Lucia Transmissora de Energia S.A.(Brazil)

99.99%Terna Peru S.A.C.(Peru)

99.99%Terna 4 Chacas S.A.C.(Peru)

75%SPE Transmissora de energia Linha Verde II S.A. (Brazil)

75%***SPE Transmissora de energia Linha Verde I S.A. (Brazil)

100%Terna Plus S.r.l.

100%Terna Chile S.p.A.(Chile)

70%Tamini Group

100%Rete Verde 17 S.r.l.




70%Avvenia The Energy Innovator S.r.l.

90%*Brugg Group(Switzerland)

Terna S.p.A.

100%Terna EnergySolutions S.r.l.

The structure of the Terna Group at 30 September 2020 is shown below.

Structure of the Group


INTRODUCTION

The Terna Group’s Consolidated Interim Financial Report for the nine months ended 30 September 2020, which has not been audited, has been prepared on a voluntary basis, pursuant to art. 82-ter of the CONSOB’s Regulations for Issuers (as amended by CONSOB Resolution 19770 of 26 October 2016).

9CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER 2020 | TERNA GROUP

ContentsThe Group’s strategy 11The Company and our strategy 12

Our people 14

Innovation 17

The energy environment 21Electricity demand and production in Italy 22

The Group’s business 25Regulated Activities 26

Non-regulated Activities 33

International Activities 38

Performance 43Financial review for the first nine months of 2020 44

Terna’s shares 54

Outlook 57

Declaration of the manager responsible for financial reporting 59

Annexes 61Alternative performance measures (APMs) 62

Other information 63

We promote the energy transition and sustainable development by focusing on people and innovation. Every day, we work to build an atmosphere of dialogue and trust in local areas, to which we bring a vital asset for everyone's economic and social lives: electricity. This translates into choices based on respect for the environment and local communities. Our inclination to listen begins within the Company, among our people, in the awareness that the radical transformation the world is experiencing is a shared responsibility. This responsibility is our energy.

1The Group’s strategy


The Terna Group’s main activities are the transmission and dispatching of electricity in Italy. Terna performs these activities in its role as the Italian TSO (Transmission System Operator) and ISO (Independent System Operator), operating under a monopoly arrangement and a government concession.

The energy model on which the planet’s development has depended in recent years is no longer sustainable. This is borne out by the exponential increase in global primary energy consumption, the increase in CO2 emissions and the impact on our planet’s ecosystem, as demonstrated by the growing attention paid to issues relating to the climate and environment by international institutions. This situation requires a global commitment to a progressive decarbonisation and improved efficiency across all forms of energy. In this context, the electricity sector has a central role to play in achieving the energy system’s overall decarbonisation goals, thanks to the intrinsic efficiency of electricity as an energy carrier and the technological maturity of renewable energy sources (RES).This transformation will not have zero impact on the electricity system, but will face us with a series of challenges that we must meet in order to ensure that the energy transition takes place in a decisive and effective manner, maintaining the current high levels of service quality and, at the same time, avoiding an increase in the cost to society.The large-scale use of RES has a significant impact on the way in which Terna manages the grid. This is because they are intermittent sources, not as flexible as traditional power plants and sometimes far away from centres of consumption, leading to an increase in grid congestion, especially from south to north.In addition, the growing frequency of extreme climate events, allied with the structural nature of the Italian transmission grid, puts major demands on the TSO, which is called on to protect and manage the grid in order to guarantee the security of electricity supply.

In response to the changes brought about by this new energy environment, Terna has to focus on five key dimensions of the system: Security, Adequacy, Quality of service, Resilience and Efficiency. In this regard, the Company has confirmed the strategy set out in the Plan for the period 2019-2023, further stepping up infrastructure investment to meet the new requirements of the electricity system, as part of an integrated approach based on sustainability values, community engagement, skills development and the promotion of innovation.

Consequently, the strategic guidelines for the various areas of the Group have been identified:

• Regulated Activities: to give top priority to all the activities that enable Italy to tackle its energy challenges in a safe, efficient and sustainable way by leveraging the specific characteristics of local areas;

• Non-regulated Activities: to launch new services to support the energy transition, taking advantage of opportunities beyond our core activities, to be pursued in line with Terna's mission, and if distinctive and/or of high added value;

• International Activities: to leverage the core competencies developed in Italy as a TSO through growth opportunities overseas.

The Company and our strategy

13

The Group’s strategy | The energy environment | The Group's business | Performance | Annexes



A key driver of this strategy will be investment in the innovation and digital solutions needed to manage an increasingly complex, integrated and distributed system. Attention will also be paid to the development and insourcing of the strategic skills required to cope with projects of growing size and complexity.

The guidelines identified for the Group's various strategic business areas have been divided into appropriate priority actions to be carried out over the life of the Plan.

With reference to Regulated Activities, the system needs an additional investment drive to respond to developing needs, with a focus on maximising long-term use and sustainability. The role of proactive system operator in defining the grid’s structure and in digitally managing assets should also be strengthened by combining Terna's specialist expertise with the experience gained in the most advanced markets.

Non-regulated Activities will be geared towards supporting the energy transition, with competency-based initiatives focusing on the development of services for corporate customers and on taking advantage of value-added market opportunities for traditional and renewable customers. Asset-based initiatives will, on the other hand, aim to pursue opportunities based on connectivity and distributed computing linked to the Group’s infrastructure.

International Activities will focus on the execution of projects in progress and the management of projects in operation, taking advantage of the Group's specialist expertise. Among the priority actions, the main focus will be on selecting international growth opportunities with a high technological content (a key aspect for Terna) and involving potential agreements/partnerships, including the management of assets without the need to tie up large amounts of capital.

Maintenance of a strong capital structure through robust cash generation will also help to maintain an attractive dividend policy.

StrategyTO PLAY A LEADING ROLE IN THE SUSTAINABLE ENERGY TRANSITION, BY LEVERAGING OUR DISTINCTIVE

INNOVATION CAPABILITIES, COMPETENCIES AND TECHNOLOGIES FOR THE BENEFIT OF ALL STAKEHOLDERS

Pillars

Enablers

non_regolatogiallo

Digital transformation and innovation leadership

Insourcing of key competencies and flexibility in operations

innovazione team

Stronger core businessin Italy

Overseas use of core competencies

New services to support the transition

internazionalerosso


People are Terna's most important asset, and one of the enabling factors in the Strategic Plan. Each of us brings skills and experience that can help to increase the value of the Company. Trust, passion and responsibility are our values.

Workforce trends at 30 September 2020 are as follows:

THE WORKFORCE AT 30 SEPTEMBER 2020 AT 31 DECEMBER 2019 CHANGE

Senior managers 87 72 15

Middle managers 668 617 51

Office staff 2,556 2,382 174

Blue-collar workers 1,385 1,219 166

Total 4,696 4,290 406

The increase in the Terna Group’s workforce at 30 September 2020 primarily reflects the growth of international Non-regulated Activities, involving 378 additions following the acquisition of Brugg Kabel AG.

The Covid-19 emergencySince the issue of the Cabinet Office Decree of 23 February 2020, Terna has progressively introduced measures to contain and reduce the risk of Covid-19 contagion, including suspension of corporate events and business trips in Italy and abroad, as well as the dissemination of hygiene and health measures to be implemented by all personnel, and the start of periodic sanitisation activities at workplaces, summarised in Terna's anti-contagion security protocol.

Classroom training activities were suspended during the first nine months of 2020 and replaced with digital online learning. The Company has also continued with specific initiatives aimed at sub-dividing the workforce according to location and workplace, in order to ensure that teams were kept apart and reduce the risk of contagion. Likewise, several measures were adopted for the Dispatching control and operations centres. All office and business support staff have also continued to work from home.

For the so-called re-entry phase - from 4 May - a "Safe Together" campaign was launched, aimed at providing "operating instructions" on behaviours to be adopted in the workplace. This involved placing posters containing behavioural guidance directly in the various workplaces (entrance halls, meeting rooms, lifts, canteens, corridors, break areas, etc.). Terna has also obtained a specific Covid-19 insurance policy for all our personnel, which includes the payment of compensation in the event of hospitalisation due to infection with Covid-19.

Our people

15




Serological tests were made available for all Terna’s employees at our Rome offices from September, before being extended to include employees at other sites around the country.

All the initiatives were launched in close dialogue with the labour unions.

INITIATIVES IN THE FIRST NINE MONTHS OF 2020

The Zero Accidents project is continuing in 2020, also with specific initiatives linked to suggestions for improvements received from around the country and during the competition held at all the Infrastructure Units in the previous year.

As part of the project, a review of the documents that set out the provisions for the prevention of electrical risk (DPRET) has been launched, and the new rescue procedure for live-line working carried out high above the ground submitted to the Ministry of Labour and Social Policies for approval has been defined.

The new procedure for the management of personal protective equipment (PPE) has been defined, and the new "SMART PPE" working group has been set up with the aim of developing innovative technologies for the use of protective devices. The trial phase, which began in July with the involvement of 60 people, came to a conclusion in September and a document reporting on the results is being prepared.

In 2020, the Terna-ANIE (National Association of Electricity Companies) technical working groups continued to work on drafting safety procedures at construction sites where overhead and underground cables are installed.

Health & Safety

The Terna Skill Mapping project was launched in 2020. This introduces a corporate tool for mapping employees' key skills thanks to a Terna Library that tracks and organises our professional assets. The project is also designed to periodically assess the penetration and distribution of these skills via a series of surveys, thus allowing us to increase our skills base by accurately targeting training and development pathways.

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Development


| Our people - continued

Training At 30 September 2020, approximately 77,000 hours of training had been provided, relating to the continuation of various training projects, including:

• in the area of online training: a) as regards the study of the main operating instructions (line inspections - substation

checks - line maintenance), training in "De-energised working methods" has been redesigned in order to develop and consolidate knowledge of the conventional methods applicable to work on de-energised lines and substations. 189 courses were held, involving a total of more than 15,352 hours of training and 961 participants;

b) a Train the Trainers course launched in June 2020 with the aim of developing new skills and experimenting with innovative teaching methods in order to encourage the sharing, development and preservation of knowledge within the Company. 239 faculty members were involved.

• in the corporate sphere: a) Terna continued in its role as a supporting partner for “Valore D”, an association that

promotes skills development and networking (courses, programmes and mentoring) with a special focus on diversity and women's career development. Since January, 19 colleagues have been involved, with a total of 89 hours of training;

b) as part of management training, in 2020 Terna is once again participating in the “Music and Management” programme in collaboration with the Luiss Business School and the National Academy of Santa Cecilia;

c) also in collaboration with the Luiss Business School, two courses on Program Management methodologies have been launched, delivered digitally using the "flipped classroom" approach, and involving 45 participants;

d) once again in 2020, Terna participated in the sixth edition of the "Program for Management Development (PMD)", organised by the IESE Business School-University in Navarra, which is specifically dedicated to the TSO community;

e) language training for personnel has been intensified in 2020. A fully digital programme, the Language Virtual Learning project, for control room personnel has 144 participants and forms part of the Training Programme for Dispatching Personnel, drawn up on the basis of the new European regulations governing this area.

Talent Acquisition During the first nine months of 2020, staff recruitment and selection activities focused on technical and operational roles to complete the generational turnover process launched in previous years and on staff roles (maternity leave) and roles for people covered by Law 68/99.

New partnerships with the STEM departments of leading Italian universities were entered into, with the aim of making Terna more attractive for recent graduates in physics, statistics, mathematics and data science.

To consolidate our employer branding strategy, Terna participated in a total of ten talent fairs and is set to attend four more events by the end of December 2020.

In order to foster a virtuous circle of exchange between the corporate and academic worlds and to support the new staff recruitment process, Terna manages relations with schools, universities and employment centres.

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InnovationInnovation and digital transformation are essential in an increasingly complex energy sector. Decisions regarding future development focus on the technology trends most relevant to our business.

The main tools Terna has put in place to develop innovation are an organised Innovation Plan and implementation of an Open Innovation process.

INNOVATION PLAN

The Innovation Plan organises the innovation flow in a consistent manner, from the birth of new ideas through to development of the projects emerging from the R&D process.

At the Milan Advanced Analytics laboratory, the first phase of development and training for the predictive modelling of electricity transits on a limited portion of the National Transmission Grid was completed.The predictive models, trained using the most modern machine learning techniques, have been developed by 3 start-ups (Orobix, Energy Way and MoxOff), each of which has implemented a prototype software made available to Terna for an initial assessment and testing.

The phase, for which procurement is taking place, will involve 2 start-ups and will focus on a more specific use case, with the aim of developing an application to be utilised in short-term planning of the electricity system.

The following initiatives have been completed at the Turin Innovation Hub:

• in partnership with the research centre, the ISI Foundation, the development of a prototype algorithm for predicting, using Advanced Analytics, the generation capacity needed for primary substations in a portion of the NTG. The application of advanced mathematics and statistics also enabled the project to investigate the issue of adequacy margins in the electricity system, defining the scope of potential future projects;

• in partnership with the start-up, WaterView, an investigation of the potential for video cameras to identify the weather conditions leading to the formation of ice coatings.

During the first nine months of 2020, the first four workshops in the "Terna Start Hub" series took place. The aim of these meetings held at the local hubs (in Milan, Turin and Naples), with the aim of disseminating specialist content and presenting best practices and examples of technological applications to teams at Terna’s local Transmission Operating Areas. The initiative was made possible by the Terna Innovation Hub Digital Twin, a digital innovation hub set up in the first quarter of 2020.

The Padua Innovation Hub assigned the five start-ups selected following the Advanced Materials for Sustainability call (Numanova, RiceHouse, Iris Lab, Particular Materials and Linari Engineering) held in 2019 five innovative projects on the use of bio-materials to boost the energy efficiency of Terna’s buildings and of nano coatings to prevent the formation of ice on overhead power lines and ground wires.

Innovation Hubs


| Innovation - continued

OPEN INNOVATION

Open Innovation is the approach Terna adopts in developing our innovation initiatives. This approach encourages the opening up of new development fronts within and beyond the Company, through dynamic interaction with universities and research centres and partnerships with peers and large industrial players, as well as access to start-ups and small and medium enterprises.

The main innovation initiatives undertaken in the first nine months of 2020 are summarised below.

LARGE COMPANIES, INCLUDING IN THE ENERGY AND INFRASTRUCTURE SECTORS

MoU with SNAM On 15 April 2020, Snam and Terna renewed and extended their partnership regarding coordinated research and development, aimed at exploiting potential synergies between the gas and electricity systems, by renewing the memorandum of understanding first signed on 1 March 2019.The MoU covers three areas of interest:

• dual-fuel power plants, where Snam plans to convert its compression and storage plants to gas-electric power, resulting in significant environmental benefits in terms of reducing the country’s CO2 emissions, and the development of new flexibility resources for the electricity system;

• research and development, in which initiatives relating to so-called "sector coupling" will be developed, with particular reference to Power to Gas technologies;

• co-innovation, to continue the testing and development of innovative initiatives and technological solutions regarding the sustainability of energy networks.

UNIVERSITIES AND RESEARCH CENTRES

Start-up Intelligence with Polihub and Milan’s

Polytechnic University

Terna is taking part in the seventh edition of the Start-up Intelligence observatory promoted by “PoliHub”, an innovative Research, Scouting and Community programme for Innovation Managers dealing with digital innovation in businesses promoted by Milan’s Polytechnic University.

START-UPS, SMES AND VENTURE CAPITAL

Next Energy The fourth edition of Next Energy, consisting of three Calls, has come to an end:

• the Call for Talents, which selected 10 new graduates who participated in a 6-month internship at several of Terna's facilities;

• the Call for Ideas which, following the award of a prize to the start-up, Nemesys, in June, led to consideration of potential partnerships with other start-ups participating in the programme with a view to working on future projects;

• the Call for Growth which, following completion of the engagement process conducted by the selected start-ups and supported by the Cariplo Factory, led to a technical assessment of the use cases presented for potential collaborations with Terna.

Open Italy Terna participates in the Open Italy programme, an ELIS Open Innovation initiative set up to encourage dialogue and collaboration between large companies, Italian start-ups/SMEs and innovation facilitators such as accelerators and research centres, regarding concrete innovation projects relating to eight areas of innovation. The 2020 edition of Open Italy, for which Terna identified three priority areas of innovation (Urban Intelligence and Smart Mobility, Cybertech and Clean Technologies and Advanced Materials), is continuing with the launch of two co-innovation projects with other corporate partners.

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19




This new, completely digital initiative is aimed at monitoring the progress of Innovation Hub projects. It includes a series of meetings involving Terna's project managers, innovative companies and the central innovation team to discuss the state of progress of their activities, areas to be explored further and next steps.

Innovation Review

In April 2020, Terna launched a digital Call for Innovation dubbed the I4G - Innovation for the Grid call, with the support of Digital Magics, a business incubator listed on Borsa Italiana's AIM Italia. The initiative is aimed at start-ups and innovative SMEs offering solutions relating to the digitalisation and increased resilience of the NTG. This new Call specifically focuses on seeking solutions capable of being integrated with the IoT monitoring system that Terna is installing on various assets in Italy's high-voltage electricity system, and aims to identify advanced analytics algorithms and develop specialist sensors. At the pitch day in June 2020, the start-up, InSensus Project S.r.l., was selected as the winner and awarded a €15,000 prize. In September, further start-ups were selected from among the finalists to enter into a co-design process with Terna and the partner, Digital Magics, in order to produce a technical and financial deliverable for application of the solution on an industrial scale.

Call for InnovationI4G - Innovation for the Grid

The Call for Innovation, EES - Energy Efficiency for Sustainability, aimed at finding hardware and software solutions for use in managing and supporting microgrids, specialist sensors for use in Building Automation, advanced analytics algorithms, thermochemical storage solutions and system that produce technical gases recovered from waste heat.The Open Call, inviting candidates to take part, was run in September. Up to 10 finalists will be selected to participate in the final pitch day, after which a jury will choose the start-up who will receive a prize worth €15,000. Together with other selected start-ups, the winning participant will have access to a co-design phase to develop a business case that responds to the needs set out by Terna, with the aim of assessing potential commercial and technology partnerships with the selected companies.

Call for InnovationEES - Energy Efficiency for Sustainability

OTHER OPEN INNOVATION INITIATIVES IN THE FIRST NINE MONTHS OF 2020

In January 2020, specific activities relating to Intellectual Property Protection were carried out with a view to implementing a process for leveraging and protecting the intellectual property generated by Terna. In the first half of 2020, this led to the filing of a supplement to the patent application for "compact switching units on pylons", and an application to register a design model for pylons with shelters equipped with honeycomb camouflage, with registration taking place in August 2020.

Intellectual Property Protection

The new Technology Transfer and International Innovation Developments unit has been set up to manage the application of innovation solutions and to develop collaboration agreements with partners and innovative companies within a cross-technological and international perspective. The start-up ecosystem developed by Open Innovation has proved useful during the Covid-19 emergency in providing or developing six smart PPE solutions for social distancing and contact tracing in the period from July to September. Four of these solutions will be presented to management in October in order to share the results and identify potential next steps.

At international level, NDAs have been signed with US companies and an MoU with Brugg eConnect, whilst opportunities in the area of Charging Hubs have also been explored. As part of the integration of Brugg, the third quarter witnessed the launch of programme 964, which aims to develop synergies in the fields of IoT and sensors, identifying three areas of interest, the objectives and the relevant people within the two companies.

Technology Transfer and International Innovation Developments

The transition we are going through will radically change the face of the electricity system. According to the international agreements implemented by the National Integrated Plan for Energy and Climate, the share of total energy consumption met by renewables in Italy should reach 30% by 2030. The International Energy Agency (IEA) has calculated that for every euro spent on new power generation, more than one euro will need to be invested in grid infrastructure. As transmission and system operators, located in Italy and at the heart of Europe, we are working to bring about all aspects of this transformation.

2The energy environment


Demand for electricityDemand for electricity in Italy amounted to 225,154 GWh in the first nine months of 2020, marking a significant decline (6.9%) compared with the same period of 2019.

ELECTRICITY BALANCE IN ITALY (GWh)* 9M 2020 9M 2019 CHANGE % CHANGE

Net production 206,413 215,560 (9,147) (4.2%)

From overseas suppliers (imports) 27,061 32,247 (5,186) (16.1%)

Sold to overseas customers (exports) (6,486) (4,321) (2,165) 50.1%

For use in pumping** (1,834) (1,673) (161) 9.6%

Total demand in Italy 225,154 241,813 (16,659) (6.9%)

* Provisional data. Does not include demand for energy for ancillary services related to electricity production.** Electricity used for pumping water for subsequent use in electricity production.

Monthly demand for electricity in Italy in the first nine months of 2020 is down compared with the same period of 2019. Before the Covid-19 emergency hit, in January and February, the reduction compared with the previous year was due to warmer weather and calendar effects (fewer working days in January and the leap-year effect in February).

The sharp fall in the following months reflects the halt to manufacturing activity following the Covid-19 health emergency, although the figure for September is in line with the same month of the previous year.

Electricity demand and production in Italy

* Dati provvisori.

MONTHLY DEMAND FOR ELECTRICITY IN ITALY*

■ 2019 ■ 2020 Progressive year-on-year change (%)

(4.0)(1.8)

(4.5)

(7.4) (8.0)(8.9)

(8.6)

(7.7) (6.9)

18,000

20,000

22,000

24,000

26,000

30,000

28,000

Jan AugJulJunMayAprMarFeb Sep

GWh

* Provisional data.

23




Meeting demand and energy production

The sharp reduction in demand for electricity obviously also affected production. The first nine months of 2020 registered a 4.2% reduction in national production.

In the same period, approximately 40% of total energy demand was met from renewable energy sources, a significant increase on the same period of 2019. This performance reflects the increase in renewable production typically seen in spring and summer and the sharp decline in demand as a result of the Covid-19 health emergency, which reduced the need for thermoelectric production (down 9.3%) in order to meet demand for energy.

In terms of the performance of the various sources, there was a decline in wind production (down 2.5%). This was more than offset by increases in hydroelectric production (up 4.2%) and photovoltaic production (up 8.2%). Biomass and geothermal production remained broadly in line.

■ Net wind production

■ Net photovoltaic production

■ Net biomass production

■ Net geothermal production

■ Net renewable hydroelectric production

■ Net non-renewable hydroelectric production

■ Net thermoelectric production

NET ELECTRICITY PRODUCTION BY SOURCE

56.3

10.9

6.4

2.1

17.0

0.60.6

6.8

59.5

9.6

6.1

2.0

15.7

6.6

9M 2019*215.6 TWh

9M 2020*206.4 TWh

* Provisional data.

% %

With our projects and substantial investment in network infrastructure, we are laying the foundations to promote and support the current energy transition with a fit-for-purpose electricity system that is safe, efficient and makes increasing use of renewables. Thanks to the unique skills of our people, constant dialogue with local communities and the adoption of innovative solutions, we contribute to the growth and development of sustainable projects for the benefit of Italy.

3The Group’s business


Transmission and dispatchingThe Terna Group owns 99.7% of the NTG, which is among the most modern and technologically advanced transmission grids in Europe. We are the largest independent electricity transmission network operator in Europe and one of the world’s leading operators, with around 75 thousand kilometres of high and very high-voltage lines. The Group is responsible for managing the flow of electricity through the grid in every part of Italy, with the aim of ensuring that there is a constant balance between the quantity of energy injected into the grid and demand, and guaranteeing continuity and accessibility of service for the population as a whole. We are also responsible for planning, construction and maintenance of the grid.

The Group’s capital expenditure The Terna Group’s total capital expenditure in the first nine months of 2020 amounts to €749.5 million, compared with the €670.0 million of the same period of the previous year (up 11.9%). This confirms Terna’s enduring ability to continue to pursue our objectives in spite of the difficulties linked to the Covid-19 pandemic.

(€m)

9M 2020 9M 2019 CHANGE % CHANGE

Development Plan 249.6 217.4 32.2 14.8%

Security Plan 119.9 90.7 29.2 32.2%

Projects to renew electricity assets 265.3 222.7 42.6 19.1%

Other capital expenditure 70.1 64.0 6.1 9.5%

Total Regulated Assets 704.9 594.8 110.1 18.5%

Non-regulated Assets1 38.4 65.9 (27.5) (41.7%)

Capitalised financial expenses 6.2 9.3 (3.1) (33.3%)

TOTAL CAPITAL EXPENDITURE 749.5 670.0 79.5 11.9%

1 Non-regulated Assets primarily regard the private Italy-France and Italy-Austria interconnectors, re-routings for third-parties and activities in Peru.

Regulated ActivitiesThe National Transmission Grid

Capital expenditurein 9M 2020 up

+11.9%versus 9M 2019

27




The main regulated assets entering service in the first nine months of the year include the following:

• the 150 kV Benevento III-Pontelandolfo power line (15.3 km);

• renovation of the 220 kV Alfa Avio-Casalnuovo line;

• the new 132 kV cable connection linking Genoa Termica and Erzelli (4.5 km);

• new 132 kV connections linking the Mori Alta and the Mezzocorona substations with the Rovereto North primary substation (0.4 km);

• a 132 kV dual circuit line to the Hera Selice primary substation (2.6 km);

• a new 220 kV cable connection linking Udine South and Safau (7.2 km);

• a new 150 kV cable connection linking the Castellammare primary substation with Fincantieri (2.5 km);

• expansion of the 220/150 kV Pisticci substation (7 new bays);

• renovation of the 220 kV Arenella-Colli Aminei line;

• the new 150 kV substation for Sorrento (5 new bays).

On 26 October 2020, the new 150 kV electricity substation serving Selegas, in the Croxideoni area of southern Sardinia, entered service.

Non-regulated capital expenditure regards the re-routing work carried out for the “Marco Simone golf club” (1.7 km).

On 14 October 2020, the Prime Minister Giuseppe Conte, local dignitaries and Terna’s Chief Executive Officer, Stefano Antonio Donnarumma, attended the inauguration of the new power line connecting Capri with the mainland. This technologically advanced infrastructure will supply the island with renewable energy and cut polluting emissions thanks to the retirement of the island’s diesel power station, at the same time boosting the island’s security. The new ‘Capri-Sorrento’ submarine power line laid by Terna is 19 km long and completes the 160 MW electricity ring, the first section of which between the island and Torre Annunziata was completed in 2017.


| Regulated Activities - continued

MAIN REGULATED WORKS CARRIED OUT DURING THE PERIOD

The construction sites previously suspended due to restrictions connected with the Covid-19 emergency were progressively re-opened from May.

DEVELOPMENT PLAN - €249.6 million

Paternò-Pantano-Priolo(€23.2 million)

380 kV Paternò-Pantano power line: the procurement of materials is in progress. Preliminary activities relating to removal of unexploded war-time bombs, geological and archaeological surveys, preparation of the executive design and the related approval process have been completed. Construction work began at the end of September.

380 kV Paternò-Priolo power line: the procurement of materials, the removal of unexploded war-time bombs, geological and archaeological surveys and preparation of the executive design for Lot 1 are in progress.

380/220/150 kV Pantano substation: the procurement of materials is in progress. Following completion of the executive design, the contract was awarded for civil works. Following the removal of unexploded war-time bombs, site preparation has begun.

Italy-France Interconnector(€18.7 million)

Piossasco converter station: all the activities in the station have been completed, except for the command, protection and control system that are due to be completed by the beginning of next year.

Cable connection: cables have been laid over an 82.4 km section, representing 87% of the connection as a whole:

• section not appertaining to Sitaf (off the A32 motorway): completed;

• upper and lower sections (A32 motorway): 35.1 km of cable has been laid out of a total 45 km;

• middle section (avoiding the A32 motorway): 22.7 km of cable has been laid out of a total 25 km;

• Frejus tunnel: completed.

Reorganisation in Alto Bellunese (€15.4 million)

132 kV Zuel-Somprade cable: excavation and cable laying are in progress. 21.5 km of piping has been laid out of a total of 23.1 km, and 12.9 km of cable has been laid. Installation of the joints is in progress, with 16 out of a total of 41 completed.

Agnosine substation and connections (€11.3 million)

Agnosine substation: the site is being prepared with excavation and earthworks and construction of the perimeter wall in progress.

Reorganisation in Naples(€10.4 million)

220 kV Castelluccia-Naples Primary Substation cable: construction work is in progress, with 3.1 km of cable laid out of 3.6 km.

220 kV Astroni-Naples Centre cable: construction work is in progress, with 6.7 km of cable laid out of 9.4 km.

220 kV Castelluccia-San Sebastiano power line: excavation of the last section is in progress, with 6.5 km of cable laid out of 7 km and 11 out of 15 joints installed.

Vizzini substation(€9.3 million)

Vizzini substation: the procurement of materials is in progress, whilst the executive design and the related checks have been completed; the process of awarding the contract for civil works is in progress.

Garaguso substation(€9.1 million)

Garaguso substation: preparation of the site and construction of the foundations and prefabricated buildings have been completed. Electromechanical assembly of the HV equipment is nearing completion. Installation of the control system and ancillary/general services is close to completion.

Grid upgrades in the Foggia-Benevento area (€7.8 million)

Bisaccia-Deliceto power line: construction work is in progress, with 25% of the foundations completed.

Expansion of the Bisaccia electricity substation and the installation of PSTs: civil works and the assembly and testing of high-voltage equipment have been completed. Installation of the control system and ancillary/general services is close to completion.

Sorrento Peninsula Interconnector(€3.1 million)

150 kV Sorrento substation: energy transmission testing of the first five modules of the 150 kV GIS was completed prior to delivery at the end of September. The remaining modules are in the process of being commissioned.

29




SECURITY PLAN - €119.9 million

The plan to install synchronous compensators in Sardinia and central and southern Italy is being implemented. This will support the regulation of short-circuit voltage and power in areas of the country characterised by a high level of production from renewable sources and a significant reduction in traditional production.

Selargius and Matera compensators: assembly of the equipment (synchronous compensators and step-up transformers) has been completed and commissioning is underway;

Garigliano compensators: the civil works are in progress;

Maida and Foggia compensators: the construction sites have been opened and the site-layout civil works have begun; production of the related supplies is in progress.

Synchronous compensators(€57.1 million)

This project aims to boost the availability of data on the grid in order to make it easier to monitor and manage the security of the electricity system, by increasing and expanding the fibre optic network.

A further 26 electricity substations on the NTG (making a total of 462 substations) have been connected and lit as of 30 September 2020.

Fiber for the Grid (€20.8 million)

Cable laying is in progress, with excavation work and the laying of 11.1 km of the 12.2 km section completed. Installation of the joints is in progress, with 15 out of a total of 24 completed.

Brindisi Pignicelle - Brindisi EniPower 380 kV cable (€10.2 million)

RENEWAL PLAN - €265.3 million

The commitment to carry out work on the renewal of electricity assets in order to improve the reliability and resilience of the NTG has been confirmed.

The renewal of overhead lines and substation equipment continued during the first nine months of 2020: approximately 1,700 km of conductors and 7 pieces of equipment were replaced, 1 with “green” piece of equipment, insulated using vegetable esters.

Renewal of electricity assets (€225.9 million, before functional separations)

Work continued on the project involving the separation of Rete S.r.l.’s substations, aimed at progressive integration into the grid of the HV substations acquired from FSI S.p.A..

During the first nine months of 2020, an additional 7 substations were taken over (making a total of 313 out of the 350 electricity substations acquired in 2015).

Separation of Rete S.r.l.’s substations (€39.4 million)

Various consents processes for new works or projects were initiated in 2020. These include those for: • Construction of the 380 kV power line between Chiaramonte Gulfi and Ciminna;• Rationalisation of the grid between Dolo and Camin;• Partial undergrounding and subsequent demolition of the Mercallo-Cameri power line;• Reorganisation of the grid serving towns in the Novara area;• Reorganisation of the grid between Catanzaro and Calusia;• Construction of the grid between Malcontenta and Fusina;• Reorganisation of the grid in Teramo and Pescara;• Reorganisation of the HV grid in the Bologna area.

Consents processes in progress

A number of projects were approved and initiated in the first nine months of 2020. These include:• The start-up of work on the reorganisation of 5 132 kV power lines in the Magenta area;• Approval of the final design for the construction of the 150 kV underground Pettino-Torrione line;• The start-up of work on new chromatic experimentation on pylons located close to the

San Bellino electricity substation, in the province of Rovigo; • The start-up of work on moving the 380 kV Lacchiarella-Chignolo Po power line; • The start-up of work on removing reinforced concrete foundations in the Venetian Lagoon;• The signature of an agreement with the Municipality of Foiano for the implementation of public

utility works, linked to construction of a new substation at Ariano Irpino and of a power line approximately 20 km long.

Projects initiated in the first nine months of 2020


Quality of service Each segment of the electricity system - generation, transmission and distribution - plays a role in ensuring the availability of electricity in Italy, guaranteeing adequate quality standards and keeping the number of outages below pre-set thresholds.

Terna monitors service continuity through various indicators defined by ARERA (Resolution 567/19) and in Terna’s Grid Code. These continuity indicators are significant for the system, as they monitor the frequency and impact of events that have occurred on the electricity grid as a result of faults or due to external factors, such as weather events. In all cases, the period of observation is three years, a period in which annual targets have not been exceeded, testifying to the high quality of service achieved.

The “NTG RENS” indicator for the period from January to September 2020 based on preliminary data, amounts to 113 MWh (compared with an annual target of approximately 850 MWh set by ARERA). Indeed, the first nine months of 2020 saw a limited number of economically insignificant power outages, due to the favourable weather conditions in the early months of the year and Italy’s lockdown period, which led to considerable delays in implementing the entire plan for grid shutdowns to enable works to take place on the NTG.

As regards the ASA indicator, availability was 99.9998595% in the first nine months of 2020, compared with 99.9998783% in the same period of the previous year. The operating performance shows that ASA has remained stable at a high level over the years (the higher the indicator, the better the performance). This indicator shows that the energy not supplied following a fault on the owned grid represents a minimal part of the total quantity of energy supplied to users of the grid.

0

200

400

600

800

1,000

2018 2019* 9M 2020*

NTG RENS INDICATOR1

Target (MWh)RENS Terna (MWh) (regulated by ARERA)

CONTINUITY INDICATORS USED

RENS*

What it measuresEnergy not supplied following events affecting the relevant grid.**How it is calculatedThe sum of the energy not supplied to users connected to the NTG (following events affecting the relevant grid, as defined in the ARERA regulations governing quality of service).

* Regulated Energy Not Supplied.** The “relevant grid” refers to all of the high-

voltage and very high-voltage network.

ASA*

What it measuresAvailability of the service provided by the NTG.How it is calculatedBased on the ratio of the sum of energy not supplied to users connected to the NTG (ENS) and energy fed into the grid.

* Average Service Availability.

1 The target for 2016-2023 has been set as an average of the 2012-2015 NTG RENS indicator, referred to in ARERA Resolution 653/15/R/eel, with a 3.5% improvement in performance required for each year compared with the previous one.

* Provisional data.


31




Existing regulations (set out in Resolution 567/2019/R/eel) envisage a series of mechanisms designed to regulate and encourage improvements in the quality of service provided by Terna. The overall economic effects of these mechanisms are accounted for at year end (including RENS). The overall economic effects of the bonus/penalty mechanisms related to quality of service for the first nine months of 2020, compared with the same period of 2019, are shown below.

(€m)

QUALITY OF SERVICE INCENTIVES 9M 2020 9M 2019 CHANGE

RENS bonuses/(penalties) 15.2 5.6 9.6

Revenue 15.2 5.6 9.6

Mitigation and sharing mechanisms 2.7 1.9 0.8

Contributions to the Fund for Exceptional Events 0.7 0.3 0.4

Compensation mechanisms for HV users 0.3 0.3 -

Contingent assets (1.0) (0.1) (0.9)

Costs 2.7 2.4 0.3

TOTAL 12.5 3.2 9.3


■ Revenue 2020 ■ Costs 2020

* Provisional data.

MONTHLY PERFORMANCE OF REVENUE AND UPLIFT COSTS (€m)

Jan AugJulJunMayAprMarFeb Sep*

142156

131 131 121

256

132

331

297

161

215

314

121

290

134

294

142151

Electricity cost trendsTerna uses the Dispatching Services Market (DSM) to procure dispatching resources to guarantee the security and adequacy of the electricity system.

Dispatching Services Market

The net charge for using the DSM was €1,680 million in the first nine months of 2020 (provisional data), up on the same period of the previous year (€1,343 million).The increase is primarily due to an increase in the cost of selection to aid in resolving local technical constraints and in the associated prices, solely in relation to the period from March to May at the time of the Covid-19 health emergency.

Cost of procuring resources on the Dispatching Services Market (Uplift)

The total uplift was approximately €1,783 million in the first nine months of 2020 (provisional data), up on the same period of the previous year (€1,391 million). This reflects an increase in the cost of using the DSM, a reduction in revenue linked to imbalances for which penalties are not applied and a reduction in congestion revenue, partially offset by a reduction in the cost of the virtual interconnector.


MONTHLY DSM COSTS (€m)

* Provisional data.

■ Monthly DSM charge 2019 ■ Monthly DSM charge 2020

Jan AugJulJunMayAprMarFeb Sep

145157

116131

156

246

185

305

274

223203

120111 114

137

97116*

188

33




Non-regulated ActivitiesEnergy market solutions

The main areas in which these activities are developed are:

• PRODUCTION OF CABLES AND ACCESSORIES - BRUGG CABLES

• ASSET-BASED INITIATIVES

• COMPETENCY-BASED INITIATIVES

• PRIVATE INTERCONNECTORS PURSUANT TO LAW 99/2009

• TRASFORMERS - TAMINI GROUP

Acquisition of Brugg Cables On 29 February 2020, in implementation of the preliminary agreement signed on 20 December 2019, Terna acquired a 90% interest in Brugg Kabel AG (Brugg Group), one of the leading European operators in the terrestrial cable sector, specialising in the design, development, construction, installation and maintenance of electrical cables of all voltages and accessories for high-voltage cables.The acquisition, which Terna financed with its own funds, was finalised through the subsidiary Terna Energy Solutions S.r.l.. The preliminary amount paid for acquisition of the equity interest is CHF25.8 million.The acquisition of Brugg Kabel provides Terna with a centre of excellence for research, development and testing in one of the core technologies for the TSO, such as terrestrial cable technology.In particular, the transaction gives Terna the opportunity to rapidly integrate core competencies, by acquiring a company featuring:

• specialisation in 150 kV cables with standards in line with those Terna requires;

• HV cable production capacity in line with Terna S.p.A.’s requirements;

• expertise consolidated over 120 years, which has been widely verified by Terna;

• significant potential synergies with the Group’s Non-regulated Activities.

It should be noted that Terna’s Development Plan, in line with the objectives of greater sustainability and resilience for the NTG, envisages doubling the number of terrestrial cables over the next 10 years. Consequently, the development of distinctive expertise in the underground cable sector to support cable design and construction activities, as well as O&M, may be a crucial factor in Terna’s future.

From an organisational point of view, Samuel Ansorge has been confirmed in the role of COO, whilst the Group’s CFO, Agostino Scornajenchi has been appointed Executive Chairman.

The order book amounts to approximately CHF126 million (approximately €117 million), a significant increase compared with the same period of 2019 (CHF104 million, equal to approximately €96 million). The High Voltage Systems unit made a significant contribution in terms of both new orders and revenue, in both cases primarily due to contracts won by the Swiss holding company, Brugg Kabel AG. The remaining orders were obtained by overseas subsidiaries. The Low Medium Voltage unit also made an important contribution.


ASSET-BASED INITIATIVES

Fibre Open Fiber: the customer sent the activation letter for 2020. The delivery plan was also defined, involving the delivery of 3,697 km of optical fibre, with estimated total revenue of €3.1 million.

Following the suspension of work at a number of sites due to the Covid-19 emergency and the temporary halt to the supply of ground wires from Prysmian’s Spanish factory, delivery of a part of the fibre scheduled to take place in the first half recommenced. The volume of fibre expected to be delivered during the year is still expected to be broadly on track.

Smart Towers The second phase of the Hackathon project, carried out in partnership with the Polytechnic University of Turin, has been completed. This involved the prototyping of two solutions based on the Smart Tower platform for dynamic fire risk monitoring, and for monitoring the effects of saline deposits on metal structures and crops.

During the period, a technical round table on environmental monitoring was also launched, in application of the memorandum of understanding between the Sicily Region and Terna. This particularly relates to agriculture and forest monitoring, hydrogeological instability and protection of archaeological areas.

FWA pylons Inspection, design and authorisation activities began in preparation for the installation of FWA solutions in remote areas in connection with the contracts already signed with Open Fiber and Eolo.

Following a suspension due to the Covid-19 emergency, work began again in the second half of the year. A number of FWA sites are in the process of being activated, whilst some of the scheduled activities have been put back to 2021.

COMPETENCY-BASED INITIATIVES

Smart Grids Energy efficiency initiatives forming part of the memorandum of understanding between Terna and FCA regarding the joint trials of sustainable mobility technologies and services, such as Vehicle-to-Grid (V2G).

On 14 September 2020, Terna, FCA and Engie Eps presented their pilot Vehicle-to-Grid (V2G) project at FCA’s Mirafiori complex in Turin. The project was launched following the signature, on 25 March 2020, of a contract between the investee, Avvenia, and FCA regarding the identification of possible areas of efficiency recovery, white certificate management and improved sustainability performance, to be partly achieved through the design and installation of monitoring plans.

Energy efficiency initiatives forming part of the memorandum of understanding, signed by Terna and Ansaldo Energia on 30 September 2019.

Work on identifying, evaluating and implementing joint energy research, development and innovation initiatives is continuing. Avvenia is the Terna Group company that plays an active role regarding energy efficiency issues by providing specific technical support, in the identification of possible areas of efficiency recovery, and in the economic leveraging of services and any ad hoc initiatives.

High Voltage Metering devices: under the existing framework agreement, in the first nine months of 2020, RFI issued executive contracts for 51 devices that, once suitably finalised, enabled Terna to begin design work (17 in progress and 34 formally issued, of which 10 have been formally approved by RFI and 24 awaiting approval) before proceeding to plan their installation. The customer has also made a formal commitment with an attached request to bring forward the procurement of a further 91 devices. Terna has initiated all the necessary steps in the procurement process. The installation of between 10 and 21 devices is expected to be completed by the end of the year.

| Non-regulated Activities - continued

35




PRIVATE INTERCONNECTORS PURSUANT TO LAW 99/2009

On 28 December 2019, the first module of the 500 kV direct current interconnector between the substations of Villanova (Italy) and Lastva (Montenegro) entered commercial operation. The line, part in submarine cable and part in terrestrial cable, extends for approximately 445 km and provides interconnection capacity of 600 MW between the two countries, including 200 MW available under the exemption to the private backers pursuant to Law 99/09.

The private portion of the project is owned by Monita Interconnector S.r.l., which the Terna Group sold to private backers on 17 December 2019. From the date of entry into commercial operation of the asset until the end of the exemption period, Terna will manage routine and special maintenance activities and operate the interconnector for an annual fee to be paid by Monita.

Italy - Montenegro

The new direct current interconnection between Piossasco (IT) and Grande Ile (FR) will increase interconnection capacity between Italy and France by 1200 MW, raising it from approximately the existing 3 GW to over 4 GW. The Terna Group continued work on construction of the private line, in implementation of Law 99/09 on behalf of Piemonte Savoia S.r.l. (Pi.Sa.), which was transferred to the private backers selected under the same law on 4 July 2017. With regard to work in progress, out of a total of approximately 95 km of cable for the Italian end of the interconnection, at September 2020, approximately 92.5 km of civil works had been completed and 82 km of cable laid. In more detail, approximately 42.2 km of civil works had been completed and 34.7 km of cable laid along the upper and lower sections of the A32 motorway operated by SITAF (Società Italiana per il traforo autostradale del Frejus). Around 24.9 km of civil works and approximately 22.7 km of cable had also been completed for the middle section by September 2020. In addition, with regard to the section in the Frejus Tunnel, all the civil works and cable laying had been completed by September 2020. Finally, on the section not appertaining to Sitaf, the civil works and the laying of cable for the entire section were completed at the end of August 2018.The civil works for the Piossasco converter station had been completed by September 2020 and assembly of the electromechanical equipment is nearing completion. Preparation and testing of the protection system and checks of the functioning of the converter are, on the other hand, still in progress.

>>

Italy - France


Italy - Austria The Italy-Austria interconnector (the Reschenpass project) involves construction of a new 220 kV AC interconnection between the Glorenza (Italy) and Nauders (Austria) substations. This will consist of 26 km of underground cable and the necessary upgrade of the domestic grid. The project will increase cross-border interconnection capacity between Italy and Austria by around 300 MW, practically doubling the currently available capacity.

On 16 March 2020, the exemption process formally began with Resia submitting an exemption application to the Ministry for Economic Development. The Ministry for Economic Development subsequently submitted the exemption application to ARERA for its approval, to be issued in agreement with the Austrian regulator E-Control.

On 16 July 2018, the Terna Group had set up the special purpose vehicle, Resia Interconnector S.r.l., which, on behalf of the private backers, is to prepare and submit a request for exemption from the right of third parties to access capacity of 150 MW, for a period of 10 years.

On 18 April 2019, Terna received clearance for the laying and operation of the 220 kV cable for the Italian section between the Glorenza substation and Passo Resia, which, together with enlargement of the Glorenza substation, comprises the Italy-Austria interconnector envisaged pursuant to Law 99/09. Terna has obtained all the consents required for the interconnector project and the related works. At the Austrian end, all the consents required to implement the project were granted to the Austrian national grid operator in the second half of 2019.

In addition, on 1 October 2019, the Ministry for Economic Development issued the decree transferring the consents for the interconnector to Resia.

Italy - Switzerland The project involves the development of new transmission lines between Italy and Switzerland, with the aim of increasing interconnection capacity between Italy and Switzerland.

Italy - Slovenia The creation of a direct current line is planned, partly in undersea cable, between the substations of Salgareda (IT) and Divaça/Bericevo (SL), together with work on upgrading the domestic grids in Italy and in Slovenia. The project is currently awaiting the necessary consents on the Italian side. The expected increase in cross-border capacity of approximately 1 GW will raise the interconnection capacity to more than double the current level.

| Non-regulated Activities - continued

37




TRANSFORMERS - TAMINI GROUP

Tamini received orders for transformers worth approximately €86.1 million in the first nine months of 2020, an increase of approximately €3 million on the same period of 2019, thanks to the strong performance of orders in the Power sector.

Service orders in the first nine months of 2020 amount to approximately €7.6 million, down on the first nine months of 2019.

Factory order books are up 9% compared with the end of 2019.

Order book

Revenue for the first nine months of 2020 is down compared with the same period of 2019 (a decline of 8.1%), reflecting the fact that production at plants slowed in March and April due to Covid-19.In the Power sector, a Phase Shifting Transformer (PST) for northern Europe and a number of 215 to 440 MVA power transformers for use in the upgrade of two electricity power stations for the Capacity Market were produced during the period or are currently in production, whilst work for industrial customers includes the production of three furnace transformers and a reactor for a steelworks in the United States.

9M 2020 results

In 2020, in line with the business plan, Tamini will continue to allocate a significant part of its production to vegetable oil transformers for the power sector. Two 250 MVA vegetable oil transformers and a 400 MVA vegetable oil transformer were designed, produced and tested at the Legnano plant in the first nine months of 2020. During the year, a further four green 400 MVA transformers will be produced.Tamini also produced and tested two vegetable oil transformers for industrial use in the first nine months of 2020.

Vegetable oil transformers


International ActivitiesOverseas initiatives of interest to the Terna Group are:

• Concessions: this model envisages the acquisition and operation of transmission systems abroad by taking part in international concession and/or secondary market awards, leveraging the core competencies and experience developed in the international arena;

• Energy solutions: this includes all high value-added non-traditional activities aimed at exporting the experience Terna has in Italy in the fields of energy storage and smart solutions;

• Technical assistance: this involves the provision of consulting and technical assistance services regarding a TSO’s core activity, as well as the definition and implementation of regulatory and market frameworks in the local energy context, with a view to exporting and taking advantage of the distinctive expertise acquired in Italy;

• Project Management: Project Management (EPCM) activities enable the Group to leverage its expertise in managing overseas projects and in infrastructure management.

Latin America witnessed a gradual worsening of the situation brought about by Covid-19 during the first nine months of 2020. At 30 September 2020, a number of countries are still in the throes of a full-blown health emergency. Progress on projects in Brazil and Peru has been affected by the emergency. In Peru, after suspending work in response to measures introduced by the government, onsite activity restarted in line with local regulations and the best practices applied by the Terna Group.

INITIATIVES IN PROGRESS IN SOUTH AMERICA

UruguayActivities connected with the line that has entered service continued in the first nine months of 2020.

BrazilOperation and maintenance of the Santa Maria Transmissora de Energia (SMTE) power line in the State of Rio Grande do Sul and the Santa Lucia Transmissora de Energia (SLTE) power line in the State of Mato Grosso continued in the first nine months of 2020.

In addition, onsite activity began and engineering work and the acquisition of rights and easements for the SPE Transmissora de energia Linha Verde II S.A. project continued. This is the first of the two concessions covered by the preliminary agreement with Construtora Quebec signed on 9 April 2019, regarding the construction of a 150 km 500 kV power line in the State of Minas Gerais.

Acquisition of the second concession covered by the above agreement was completed in August. This regards the SPE Transmissora de Energia Linha Verde I S.A. project, involving the construction of a 150 km long 500 kV power line dubbed the “Governador Valadares-Mutum” in the State of Minas Gerais. The consents process and related design engineering work is underway.

PeruWork, which began in 2017, on construction of 132 km of new 138 kV lines between Aguaytìa and Pucallpa is continuing.

Construction, which was temporarily interrupted by the lockdown imposed by the government in response to the Covid-19 pandemic, resumed in July 2020.

In the meantime, the procurement of transmission line materials has been completed and the project is expected to reach completion in 2021.

39




OTHER INTERNATIONAL ACTIVITIES

New Governance rules for the GO15 (a voluntary international association bringing together the 19 leading grid operators worldwide in order to share best practices in the management of electricity transmission grids) was presented. At the proposal of the Steering Board (a body made up of members’ CEOs and/or their delegates), Terna’s CEO, Stefano Antonio Donnarumma, was nominated Deputy Chair for 2021 and Chair for 2022.

The Equigy project, a new crowd balancing platform (CBP), based on blockchain technology and developed by Terna in partnership with the system operators, Swissgrid and TenneT, was launched in the first nine months of 2020. The project aims to facilitate the participation of distributed demand in the electricity grid balancing process. The project, to be launched in Italy, the Netherlands, Germany and Switzerland, will allow distributed energy resources to provide flexibility to the grid, thus supporting Terna in its mission to guarantee an increasingly secure, efficient and sustainable electricity grid, with the ultimate objective of facilitating the energy transition currently underway.

Terna has also continued with its coordination role with senior representatives from European TSOs. These provide opportunities for discussion, the exchange of information and the launch of joint initiatives designed to share best practices, including those linked to Covid-19.

Via ELMED Etudes SARL2, work continued on development of the electricity interconnector project between Italy and Tunisia. In particular, tenders for contracts to conduct surveys for the submarine and overland sections and the environmental and social impact assessment have been launched. Funding is being provided by the two credit facilities granted by the World Bank to the Tunisian Republic in relation to the project to provide technical assistance for the Tunisia - Italy electricity interconnector, for which ELMED Etudes has been appointed the implementing agency.

On 29 September 2020, Terna launched the Public Consultation on the new Italy-Tunisia Interconnector. The process will last eight weeks, during which members of the public can engage directly with Terna’s engineers and express their opinions and preferences with regard to the two proposed routes for the new power line. The results of the consultation, together with the design, will then be submitted, marking the start of the related consents process.

>>

2 This is the 50/50 Tunisian joint venture between Terna S.p.A. and STEG (Tunisia’s vertically integrated, state-owned electrical utility) established in 2009 with the role of conducting studies and providing technical assistance for the Italy-Tunisia electricity interconnector.


During the Covid-19 emergency, Terna provided an example of best practice for transmission operators who are members of the various trade associations (including GO15, WEC, etc.), with regard to both measures aimed at combating the spread of the virus among personnel and activities linked to operation of the grid against a backdrop of significant, abrupt changes in the structure of consumption. Terna also played an active role in the international debate on the measures to be adopted by grid operators in order to support the economic recovery post-Covid-19.

Finally, in the first nine months of 2020, Terna took part in the steering committees set up by the Ministry of Foreign Affairs to examine issues relating to energy, the climate and the environment. In addition to describing the status of electricity interconnections in the Mediterranean area and the electricity transmission operator’s commitment to decarbonisation and the economic sustainability, Terna also used the committees to express its views on the opportunities and challenges faced by the national transmission grid as a result of EU (Green Deal) and international (COP26) policies. This included highlighting the positive role played by European funding programmes, above all with regard to the interconnection infrastructure needed to further upgrade the national and European transmission grid.

In June, Terna also took part in the States General of the Economy organized by the Italian government in order to discuss plans for the country’s restart and recovery following the Covid-19 emergency.

| International Activities - continued

41




As a major transmission and dispatching operator, we invest in skills, technology and innovation to ensure that we are well equipped to plan, develop and maintain the grid (Transmission Operator), and guarantee an electricity service that is balanced, secure and high quality (System Operator). Italy and Terna are at the centre of a system that includes 25 interconnections with neighbouring countries: this gives us a leading role to play in energy integration in Europe and the Mediterranean area. This know-how is, naturally, also applied in our Non-regulated and International activities.

4Performance


In order to report on the Terna Group’s operating performance and analyse its financial position, this section includes management accounts prepared in line with industry best practice. These reclassified statements contain alternative performance measures (APMs, as defined in the guidance provided by ESMA/2015/1415), which management considers to be useful in assessing the performance of the Group and representative of the business’s operating results and financial position.The criteria used in constructing these indicators are the same as those used in the annual report. Details are provided in the Annex, “Alternative performance measures (APMs)”.

Basis of presentationThe measurement and recognition criteria applied in this Interim Report are consistent with those adopted in the consolidated financial statements for the year ended 31 December 2019.

The Group’s reclassified income statement The Terna Group’s operating results for the first nine months of 2020, compared with those for the same period of the previous year, and for the third quarter of 2020 and 2019, are summarised in the following reclassified income statement.

(€m)Q3

2020 2019 CHANGE % CHANGE 9M 2020 9M 2019 CHANGE % CHANGE

597.5 567.7 29.8 5.2% TOTAL REVENUE 1,780.6 1,665.5 115.1 6.9%

519.7 513.2 6.5 1.3% - Regulated revenue 1,545.0 1,518.0 27.0 1.8%

5.5 5.9 (0.4) (6.8%)of which Revenue from construction services performed under concession 13.8 10.9 2.9 26.6%

72.2 48.2 24.0 49.8% - Non-Regulated revenue 217.7 130.4 87.3 66.9%

5.6 6.3 (0.7) (11.1%) - International revenue 17.9 17.1 0.8 4.7%

150.2 135.5 14.7 10.8% TOTAL OPERATING COSTS 457.3 387.1 70.2 18.1%

63.3 59.6 3.7 6.2% - Personnel expenses 206.7 189.2 17.5 9.2%

38.6 40.8 (2.2) (5.4%) - Cost of services, leases and rentals 114.7 115.8 (1.1) (0.9%)

35.2 22.0 13.2 60.0% - Materials 100.5 51.6 48.9 94.8%

4.4 7.0 (2.6) (37.1%) - Other costs 18.9 17.2 1.7 9.9%

3.2 0.2 3.0 - - Quality of service 2.7 2.4 0.3 12.5%

5.5 5.9 (0.4) (6.8%) - Cost of construction services performed under concession 13.8 10.9 2.9 26.6%

447.3 432.2 15.1 3.5% GROSS OPERATING PROFIT (EBITDA) 1,323.3 1,278.4 44.9 3.5%

155.9 147.5 8.4 5.7% - Amortisation, depreciation and impairment losses 458.2 436.2 22.0 5.0%

291.4 284.7 6.7 2.4% OPERATING PROFIT (EBIT) 865.1 842.2 22.9 2.7%

(31.3) (22.3) (9.0) 40.4% - Net financial income/(expenses) (70.4) (61.1) (9.3) 15.2%

260.1 262.4 (2.3) (0.9%) PROFIT/(LOSS) BEFORE TAX 794.7 781.1 13.6 1.7%

67.9 76.2 (8.3) (10.9%) - Income tax expense for the period 222.9 226.5 (3.6) (1.6%)

192.2 186.2 6.0 3.2% PROFIT FOR THE PERIOD 571.8 554.6 17.2 3.1%

0.6 0.3 0.3 100.0% - Profit/(Loss) attributable to non-controlling interests 2.7 2.1 0.6 28.6%

191.6 185.9 5.7 3.1%PROFIT FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT 569.1 552.5 16.6 3.0%

Financial review for the first nine months of 2020

45




(€m)

EBITDA BY SEGMENT 9M 2020 9M 2019 CHANGE

Regulated 1,260.7 1,233.4 27.3Non-regulated 52.0 36.1 15.9International 10.6 8.9 1.7EBITDA 1,323.3 1,278.4 44.9

Gross operating profit (EBITDA) for the first nine months amounts to €1,323.3 million, up €44.9 million on the €1,278.4 million of the first nine months of 2019. This primarily reflects an improvement in EBITDA from Regulated Activities and the recognition of revenue resulting from the bargain purchase gain recognised following the purchase of the interest in Brugg Cables, determined on a provisional basis.

Revenue(€m)

REGULATED ACTIVITIES 9M 2020 9M 2019 CHANGE

Tariff revenue 1,498.5 1,479.7 18.8

- Transmission revenue 1,416.5 1,394.9 21.6

- Dispatching, metering and other revenue 82.0 84.8 (2.8)

Other regulated revenue 32.7 27.4 5.3Revenue from construction services performed under concession in Italy 13.8 10.9 2.9

TOTAL 1,545.0 1,518.0 27.0

Regulated revenue is up €27 million, primarily due to the impact of the transmission revenue (up €21.6 million) following the tariff adjustment provided for in ARERA Resolution 568/19 that has increased RAB (Regulatory Asset Based), partly offset by the negative impact of changes in volumes. There was also an improvement in revenue generated by quality of service incentives in the form of the RENS (Regulated Energy Not Supplied) bonus (up €9.6 million, following the definition of certain events occurring in previous years) and by the one-off effect of the contribution to regulated revenue resulting from the consolidation of Brugg Cables. The performance also reflects the fact that revenue from insurance proceeds (down €4.5 million) and one-off events was higher in the same period of 2019.

(€m)

NON-REGULATED ACTIVITIES 9M 2020 9M 2019 CHANGE

Tamini 70.6 76.8 (6.2)

Brugg 87.3 - 87.3

Services for third parties (Asset-based, Competency-based, other) 48.7 47.6 1.1

Private interconnectors 11.1 6.0 5.1

TOTAL 217.7 130.4 87.3


The increase in Non-Regulated revenue, totalling €87.3 million, primarily reflects revenue the overall contribution resulting from the integration of Brugg Cables and increased revenue from private interconnector projects pursuant to Law 99/2009 (€5.1 million), after a decline in revenue at Tamini linked to the Covid-19 health emergency (down €6.2 million).

International revenue for the first nine months of 2020 is broadly in line with the same period of the previous year (up €0.8 million). This primarily reflects the effect of one-off revenue earned from penalties applied to suppliers in connection with contract work concluded in October 2019 in Uruguay, and increased activity in Brazil linked to development of the new power line in Minas Gerais, after taking into account the overall impact of the decline in the value of the Brazilian real against the euro.

Revenue rose €29.8 million in the third quarter of 2020, compared with the same period of the previous year, primarily due to the impact of the integration of Brugg Cables and the other items referred to above.

Costs

After stripping out the contribution from Brugg (up €70.8 million), operating costs are broadly in line with the first nine months of the previous year (down €0.6 million). This primarily reflects the performance of the Tamini Group’s order book (down €2.3 million, essentially due to the impact of Covid-19) and a reduction in travel expenses (down €4.3 million), partly offset by increased provisions for staff incentives (up €4.6 million).

Operating costs rose €14.7 million in the third quarter of 2020 compared with the third quarter of the previous year, due mainly to the impact of the acquisition of Brugg and the other items referred to above.

Amortisation, depreciation and impairment losses for the period amount to €458.2 million, an increase of €22 million compared with the first nine months of 2019. This primarily reflects the entry into service of new infrastructure, with particular regard to the Italy-Montenegro interconnector.

Operating profit (EBIT), after amortisation, depreciation and impairment losses, amounts to €865.1 million, compared with the €842.2 million of the first nine months of 2019 (up 2.7%).

Net financial expenses for the period total €70.4 million and are primarily attributable to the Parent Company (€64.4 million). These expenses are up €9.3 million compared with the €61.1 million of the first nine months of 2019, reflecting adjustments to the value of investments in associates during the period and a reduction in capitalised expenses.

After net financial expenses, profit before tax amounts to €794.7 million, an increase of €13.6 million compared with the same period of 2019 (up 1.7%).

Income tax expense for the period totals €222.9 million and is down €3.6 million (1.6%) compared with the first nine months of 2020, essentially due to the increase in tax-exempt income recognised during the period. As a result, the tax rate is 28%, compared with the 29% of the first nine months of 2019.

Profit for the period amounts to €571.8 million, up €17.2 million (3.1%) compared with the €554.6 million of the first nine months of 2019.

Profit for the period attributable to owners of the Parent (after excluding the share attributable to non-controlling interests) amounts to €569.1 million, up €16.6 million (3%) compared with the

€552.5 million of the first nine months of 2019.

| Financial review for the first nine months of 2020 - continued

47




Cash flowThe above performance, combined with non-cash items and other cash flows from and for operating activities, has resulted in a cash inflow of €610.1 million, enabling the Group to finance a large part of its investing activities (€749.5 million) and movements in equity (€426.6 million, including €332.3 million in the form of dividends paid to shareholders). The remainder was financed by net debt, which totals €8,824.6 million, compared with the €8,258.6 million of 2019

(up €566 million).

(€m)

CASH FLOW 9M 2020

CASH FLOW 9M 2019

- Profit for the period 571.8 554.6

- Amortisation, depreciation and impairment losses 458.2 436.2

- Net change in provisions (69.6) (101.1)

of which contributed by Brugg Cables 11.4 -

- Net losses/(gains) on sale of assets (3.7) (3.5)

Operating cash flow 956.7 886.2

- Change in net working capital (374.4) (82.8)

of which contributed by Brugg Cables (44.4) -

- Other changes in property, plant and equipment and intangible assets 7.2 23.3

of which contributed by Brugg Cables (24.2) -

- Change in investments 2.1 (3.4)

- Change in financial assets 18.5 (22.0)

Cash flow from operating activities 610.1 801.3

- Total capital expenditure (749.5) (670.0)

Free cash flow (139.4) 131.3

- Dividends paid to the Parent Company’s shareholders (332.3) (310.5)

- Cash flow hedge reserve after taxation and other movements in equity attributable to owners of the Parent

(93.6) (170.9)

- Other movements in equity attributable to non-controlling interests (0.7) -

Change in net debt (566.0) (350.1)

31 Dec 2019 30 Sep 2020

CHANGE IN NET DEBT (€m)

8,258.6

8,824.6426.6

Dividends and other changes

in equity

749.5

Capex

346.6

Change in working capital

and other

(956.7)

Operating cash �ow


The Group’s reclassified statement of financial positionThe Terna Group’s financial position at 30 September 2020 and 31 December 2019 is summarised in the following reclassified statement of financial position.

(€m)

AT 30 SEPTEMBER 2020

AT 31 DECEMBER 2019 CHANGE

Total net non-current assets 15,174.9 14,908.5 266.4

- Intangible assets and goodwill 547.0 542.7 4.3

- Property, plant and equipment 14,146.9 13,864.2 282.7

- Financial assets 481.0 501.6 (20.6)

Total net working capital (1,832.6) (2,207.8) 375.2

- Net energy-related pass-through payables (405.0) (575.8) 170.8

- Net receivables resulting from Regulated Activities 201.1 320.4 (119.3)

- Net trade payables (549.5) (899.1) 349.6

- Net tax liabilities (112.2) (5.3) (106.9)

- Other net liabilities (967.0) (1,048.0) 81.0

Gross invested capital 13,342.3 12,700.7 641.6

Sundry provisions (140.6) (210.2) 69.6

NET INVESTED CAPITAL 13,201.7 12,490.5 711.2

Equity attributable to owners of the Parent 4,333.5 4,190.3 143.2

Equity attributable to non-controlling interests 43.6 41.6 2.0

Net debt 8,824.6 8,258.6 566.0

TOTAL 13,201.7 12,490.5 711.2

The €266.4 million increase in net non-current assets compared with 31 December 2019 primarily reflects a combination of the following:

• total capital expenditure of €749.5 million, as described in the paragraph on “Regulated Activities”;

• a decrease of €20.6 million in financial assets, broadly due to collection of fees from infrastructure under concession in Brazil (down €33.6 million) and a reduction in the amounts deposited by operators who participate in the capacity market pursuant to Resolution 98/2011/R/eel3, as amended, after definition of each party’s committed capacity following the auctions held in November 2019 (down €25.6 million); partially offset by the purchase, in May 2020, of Italian government bonds (“BTP”) with a notional value of €21.2 million, maturing in May 2025 and paying interest at a rate of 1.4% (€22.2 million) and an increase in the Interconnector Guarantee Fund, set up to fund investment in interconnections by art. 32 of Law 99/09 (up €16.4 million);

• amortisation and depreciation during the period, totalling €459 million;

• the previously mentioned contribution of assets resulting from the acquisition of Brugg Cables (up €24.2 million at the acquisition date);

• other movements during the period, resulting in a decrease of €20.9 million, including grants related to assets (primarily in relation to the re-routing of power lines at the request of third parties); disposals and impairment losses amount to €6.8 million.

3 The regulations regarding the system of remuneration for availability of production capacity was approved by a Ministerial Decree of 28 June 2019. The deposits were paid by the energy-intensive operators after the competition held by Terna on 6 and 28 November 2019. These provide a guarantee for the entire capacity market from 2022, with the aim of ensuring the achievement and maintenance of the adequacy of the national electricity system, in order to structurally fulfil expected electricity consumption and the power reserve margins needed to meet predetermined levels of safety and quality of service.


49




The Terna Group’s total capital expenditure during the period, amounting to €749.5 million, is up 11.9% compared with the €670.0 million of the same period of 2019.

KEY CAPITAL EXPENDITURE ON THE RTN* (€m)

Synchronous compensators 57.8

Functional separations 39.4

Paternò-Pantano-Priolo 23.3

Fibre for the Grid 20.8

Italy-France interconnector 19.7

Reorganisation Upper Bellunese area 15.5

Agnosene substation and connections 11.4

Rationalisation of Naples grid 10.5

380kV Brindisi Pignicelle-Brindisi EniPower cables 10.4

Vizzini substation 9.3

Garaguso substation 9.2

Upgrade of Foggia-Benevento area grid 8.0

Sorrentine peninsula interconnection 3.1

* Amounts include �nancial expenses.

Net working capital (net current liabilities) of €1,832.6 million resulted in a cash outflow of €375.2 million in the period, compared with 31 December 2019. This reflects the combined effect of:

Cash outflows• a reduction of €349.6 million in net trade payables, largely due to payments made in relation to

the greater volume of capital expenditure towards the end of the previous year and the different performance of payments to suppliers;

• a decrease in net energy-related pass-through payables of €170.8 million compared with the end of 2019, primarily reflecting the combined effect of:

- an increase in net receivables (€235.3 million) linked essentially to the amount receivable (the Uplift) to cover the cost of dispatching services, reflecting, among other things, a rise in the cost of Dispatching Services Market (DSM) transactions in the period between March and May4;

- a reduction in amounts payable at the end of the period, linked to both the DSM (€121.7 million), with the performance of the related costs returning to normal in the third quarter of 2020, and the cost of the virtual interconnection5 (€16.4 million);

partially offset by

- an increase in net payables relating to essential plants for the security of the electricity system

- UESS (€81.4 million) and in capacity payments due (€65.2 million), reflecting items related to capacity provided during the period after payments made in the first nine months of the year6;

- the impact of the reduction in revenue linked to imbalances for which penalties are not applied (a €19.3 million reduction in receivables) and an increase in costs relating to congestion charges and the related funding (a €19 million increase in payables);

4 The reduction in electricity consumption due to the restrictions introduced in response to the Covid-19 health emergency has led to an increase in selections needed to resolve localised technical limitations and ensure the security of the system.

5 The entry into service of the Italy-Montenegro interconnector at the end of 2019.6 ARERA ordered payments to the owners of essential plants via resolutions 563/2019 and 35-44-108-109-120-

133-146-154-260-281-314/2020. Capacity payments were approved in Resolution 289/2019.


• the reduction in other net liabilities of €81 million, primarily due to the contribution from Brugg Cables (€37.6 million, essentially consisting of inventories), the change in guarantee deposits received from operators participating in the above-mentioned capacity market and electricity market operators to guarantee the obligations undertaken regarding dispatching and virtual interconnection contracts (down €25.5 million and €2 million, respectively), to the reduction in amounts payable for employee benefits due to personnel leaving the Group 31 December 2019 (down €11.7 million).

Cash inflows• a reduction in net receivables resulting from Regulated Activities of €119.3 million, broadly

reflecting the collection of receivables in the form of transmission and dispatching service charges factored on a non-recourse basis, originally falling due in October (totalling €143.1 million); this movement was partially offset by recognition of amounts due in relation to estimate RENS bonuses for years prior to the first nine months of 2020 (€15.2 million) and is net of the factored increase in receivable in the form of transmission service charges due to the tariff adjustment (€12 million);

• an increase of €106.9 million in net tax liabilities, mainly reflecting the higher amount of income tax payable for the period, after payments on account in June and the settlement of tax due for the previous year (€99.3 million), in addition to the net amount payable for VAT, totalling €15.3 million, in line with the reduction in net trade payables.

Gross invested capital thus amounts to €13,342.3 million, marking an increase of €641.6 million compared with the previous year.

Sundry provisions are down €69.6 million, primarily due to:

• net provisions for net deferred tax assets (up €48.9 million), primarily due to the effect on taxation of movements in derivative financial instruments held by the Group, amortisation and depreciation and movements in provisions for risks and charge;

• net uses of provisions for amounts payable to personnel (down €18.3 million).

Net invested capital of €13,201.7 million is up €711.2 million compared with 31 December 2019 and is financed by equity attributable to owners of the Parent, totalling €4,333.5 million (compared with €4,190.3 million at 31 December 2019), equity attributable to non-controlling interests of €43.6 million (€41.6 million at 31 December 2019) and net debt of €8,824.6 million (up €566 million compared with the €8,258.6 million of 31 December 2019).


51




Debt The Terna Group’s financial management is based on an approach that aims to maximise efficiency and achieve and maintain a solid financial structure, whilst adopting a highly prudent stance towards mitigation of the potential financial risks.

The key aspects of the Group’s financial policy are diversification of the sources of funding, the balance between short- and medium/long-term forms of debt and the proactive management of debt.

Gross debt at 30 September 2020 amounts to approximately €12 billion, consisting of €9 billion in the form of bond issues and €3 billion in bank borrowings. The average term to maturity of debt, which is almost all fixed rate, is approximately 5 years.

■ Bond issues (€8.8bn)

■ Bank borrowings (€2.8bn)

■ Hedging derivatives and other liabilities (€0.2bn)

19

79

2

INDEBITAMENTO FINANZIARIO LORDO

%

Fully in line with Terna’s strategy, which aims to combine investment and sustainability to drive growth and value creation, it is Terna’s ambition to play a leading role in the sustainable finance market. This strategy has been confirmed during 2020: on 17 July 2020, Terna launched a green bond issue for institutional investors, with a nominal value of €500 million. The issue, which forms part of Terna’s €8 billion Euro Medium Term Notes (EMTN) Programme, was very popular with investors, with the bonds being four times overscribed, and was notable for the high quality and wide geographical diversification of investors. The green bond has a term of twelve years and will mature on 24 July 2032. The issue was priced at 99.623%, with a spread of 90 basis points with respect to the midswap rate. The bond pays a coupon of 0.75% and an effective coupon of 0.78%.

Terna has issued green bonds worth €2 billion in the last two years: in July 2018, Terna successfully issued its first green bond worth €750 million, whilst two issues with a total value of €750 million were launched in 2019.

These green issues are to be used to finance or refinance “Eligible Green Projects”. These are projects producing environmental benefits that meet certain criteria (the use of the issue proceeds, the process of selecting and assessing projects, management of the issue proceeds and reporting) listed in the “Green Bond Framework”, published by Terna in compliance with the “Green Bond Principles 2018” drawn up by the ICMA (International Capital Market Association). Specifically, the net proceeds from the issues will be used to finance:

• projects that aim to increase renewable energy production - for example, infrastructure enabling renewable energy plants to be connected to the national grid or that allow for a larger volume of renewable energy to be injected into the grid;

• projects designed to cut carbon emissions by reducing grid losses - for example, infrastructure designed to boost the efficiency of the electricity transmission grid;

• projects that aim to reduce soil use and protect biodiversity.

Terna also has access to two ESG-linked Revolving Credit Facilities: these facilities, amounting to €2.65 billion, apply a mechanism based on a series of bonuses and penalties linked to the achievement of specific ESG objectives.

>>

Sustainable finance


On 28 October and 6 and 3 August 2020, Terna also agreed three bilateral ESG-linked Term Loans, amounting to €200 million, €100 million and €200 million, respectively, and having terms of 2, 3 and 2 years. The interest rates for all the loans are linked to Terna’s performance with respect to specific environmental, social and governance (“ESG”) indices.

On 10 August 2020, the ESG-linked share buyback programme to service the Performance Share Plan 2020-2023 was completed. Under the programme, Terna has acquired 1,525,900 own shares (equal to 0.076% of its share capital) at a total cost of approximately €9.5 million. The Programme includes a mechanism based on bonuses and penalties linked to the Company’s achievement of specific environmental, social and governance objectives. This mechanism will enable the Company to support reforestation projects and the creation of green spaces around Italy, consolidating the key role played by sustainability in driving the creation of value for all our stakeholders.

Key events relating to finance during the third quarter of 2020 are described below:

• on 30 September 2020, Terna’s three green bond issues were admitted to listing in Borsa Italiana’s ExtraMOT PRO segment;

• on 18 September 2020, Terna S.p.A. successfully launched a €500 million bond issue for institutional investors. The issue, which was popular with investors, being three times oversubscribed, forms part of Terna’s €8 billion Euro Medium Term Notes (EMTN) Programme. The bonds have a term of ten years and will mature on 25 September 2030, paying a coupon of 0.375%, at the time of issue the lowest ever coupon for an Italian corporate bond with the same term to maturity. The bonds were issued at a price of 99.502, with a spread of 65 basis points with respect to the midswap rate and an indicative spread approximately 50 basis points below Italian treasury bills (BTPs) with the same term. The effective cost of the issue to Terna is 0.426%.


53




The Group’s net debt at 30 September 2020 amounts to €8,824.6 million, up €566 million compared with 31 December 2019.

(€m)

NET DEBT (BY TERM TO MATURITY) 30 SEPTEMBER 2020

31 DECEMBER 2019 CHANGE

Total medium/long-term debt 9,679.7 9,596.1 83.6

- Bond issues 7,493.2 7,757.3 (264.1)

- Borrowings 2,032.3 1,723.4 308.9

- Derivative financial instruments 154.2 115.4 38.8

Total short-term debt/ (funds) (855.1) (1,337.5) 482.4

- Bond issues (current portions) 1,269.8 - 1,269.8

- Short-term borrowings 669.1 25.0 644.1

- Borrowings (current portions) 122.7 126.5 (3.8)

- Other current financial liabilities. net 81.4 81.8 (0.4)

- Derivative financial instruments - (0.1) 0.1

- Financial assets (612.2) (513.3) (98.9)

- Cash and cash equivalents (2,385.9) (1,057.4) (1,328.5)

Total net debt 8,824.6 8,258.6 566.0

NET DEBT (BY TYPE OF INSTRUMENT)

- Bond issues 8,763.0 7,757.3 1,005.7 - Borrowings 2,155.0 1,849.9 305.1

- Short-term borrowings 669.1 25.0 644.1

- Derivative financial instruments 154.2 115.3 38.9

- Other financial liabilities. net 81.4 81.8 (0.4)

GROSS DEBT 11,822.7 9,829.3 1,993.4

- Financial assets (612.2) (513.3) (98.9)

- Cash and cash equivalents (2,385.9) (1,057.4) (1,328.5)

Total net debt 8,824.6 8,258.6 566.0

Changes in the Group’s net debt are as follows:

• an increase in bond issues (up €1,005.7 million), primarily due to the two issues, totalling €1,000 million, carried out by Terna S.p.A. in July and September 2020;

• an increase in borrowings (up €305.1 million), primarily due to the agreement and drawdown of two Term Loans totalling €300 million;

• an increase in short-term borrowings (up €644.1 million) primarily due to the Parent Company’s use of short-term credit facilities;

• an increase in the fair value of derivative financial instruments (up €38.9 million), primarily due to movements in market interest rates;

• an increase in financial assets (up €98.9 million), primarily due to the greater number of Italian government securities held in the portfolio;

• an increase in cash and cash equivalents (up €1,328.5 million). Cash amounts to €2,385.9 million at 30 September 2020, including €1,215.5 million invested in short-term, readily convertible deposits and €1,170.4 million held in bank current accounts and in the form of cash in hand.


Terna S.p.A. has been listed on Borsa Italiana’s screen-based trading system (Mercato Telematico Azionario) since 23 June 2004. From the date of floatation to the end of September 2020, the share price has risen 251% (a capital gain), providing a Total Shareholder Return (TSR7) of 749%, ahead of both the Italian market (the FTSE MIB, up 22%) and the relevant European sector index (DJ Stoxx Utilities), which is up 241%.

Europe’s leading stock markets registered negative performances during the first nine months of 2020, due to the health emergency linked to the spread of Covid-19. Milan fell 19.1%, Frankfurt and Paris were down 6.5% and 19.7%, respectively, whilst London was down 22.2% and Madrid 29.7%.

Performance of Terna’s sharesIn contrast, Terna’s shares ended the period in positive territory (rising 0.3%) at €5.974 per share. The daily average volume traded during the period amounted to approximately 6.0 million. It should be noted that on 19 February 2020, the share price rose to a record high of €6.786. The ex-dividend date for the final dividend for 2019, amounting to 16.53 euro cents per share, was on 22 June.

Terna’s shares

PERFORMANCE OF TERNA’S SHARES (Price between 1 January and 30 September 2020)

Source: Bloomberg

(€/share)€6.786 per share

all-time high(19 Feb 2020)

€5.974 per shareclosing price

(30 Sep 2020)

4.5

4.9

5.3

5.7

6.1

6.5

6.9

Jan-20 Aug-20Jul-20Jun-20May-20Apr-20Mar-20Feb-20 Sep-20

Terna

7 Total Shareholder Return (TSR): total return on an equity investment, calculated as the sum of: I. capital gain: the change in the share price (difference between the price at the end and at the beginning of the

relevant period) as a percentage of the price at the beginning of the period; II. reinvested dividends: the ratio between dividends per share paid out during the period and the share price at the

beginning of the period. Dividends are assumed to have been reinvested in the shares.

55




TOTAL SHAREHOLDER RETURN ON TERNA’S SHARES AND THE FTSE MIB AND DJ STOXX UTILITIES (from the flotation to the end of September 2020) (%)

Source: Bloomberg

Terna DJ Stoxx Utilities FTSE MIB+749%at 30 September 2020

+241%at 30 September 2020

+22%at 30 September 2020

050

100

-50

150200250300350400450500550600650700750800850

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20202019

TERNA’S SHARES AND THE FTSE MIB (Price between 1 January and 30 September 2020)

Source: Bloomberg

60.065.070.075.080.085.090.095.0

100.0105.0110.0115.0

Terna FTSE MIB

Sep-20Aug-20Jul-20Jun-20May-20Apr-20Mar-20Feb-20Jan-20

WEIGHTING OF TERNA’S SHARES 9M 2020 9M 2019

> on the FTSE MIB 2.72% 2.36%

Source: Borsa Italiana


RATINGS

SHORT-TERM MEDIUM/ LONG-TERM OUTLOOK

Terna S.p.A.Standard & Poor’s A-2 BBB+ StableMoody’s Prime-2 Baa2 StableFitch F2 BBB+ StableScope S-1 A- Stable

Italian stateStandard & Poor’s A-2 BBB StableMoody’s Prime-3 Baa3 StableFitch F3 BBB- StableScope S-2 BBB+ Negative

Terna’s rating did not undergo any changes in the first nine months of the year. Following the presentation of the 2020-2024 Strategic Plan, which envisages investment of €7.3 billion in the Italian electricity grid, the agencies Standard & Poor’s (S&P), Moody’s, Fitch ratings (Fitch) and Scope Rating (Scope) confirmed a long-term issuer default rating (IDR) of “BBB+”, “Baa2”, “BBB+” and “A-” respectively.

On 27 October, S&P reiterated its long-term rating of Terna S.p.A. as ‘BBB+’ and, following its revision of the outlook for the ratings of Italian government bonds, raised Terna’s outlook from negative to stable.

Among the positive factors impacting the Company’s financial soundness are the reliability of the regulatory environment, the Company’s robust cash flow generation and its reliability in achieving its objectives.

| Terna’s shares - continued

57




The global health emergency caused by the widespread outbreak of Covid-19 had a major impact on markets and on the Italian and global economies in the first nine months of 2020. The current situation, marked by a continually changing backdrop and increased uncertainty linked to the potential development of the pandemic, also means that the outlook for the global economy in the last quarter of the year remains weak.

Against this backdrop, the Group will continue to be engaged in delivering new grid infrastructure, carrying out renewal work and boosting the security of its assets, confirming Terna’s leading role for a sustainable energy transition. This will involve leveraging innovation, skills and distinctive technologies to the benefit of all stakeholders. Moreover, with a view to supporting initiatives essential to the country’s rapid recovery, Terna intends to revise its long-term plan with the aim of, wherever possible, further accelerating infrastructure development.

The Group will continue to step up investment in Regulated Activities and to strengthen the core business. This will involve direct engagement across the country, through listening and dialogue with all the key stakeholders, local communities, authorities and institutions. Following the Covid-19 health emergency, the Group is working hard to implement the action plan drawn up in order to make up for earlier delays. This will be done by bringing forward the timing of work (speeding up activities and carrying them out in parallel) and by expediting suppliers (optimising the supplier base and monitoring performance).

The principal electricity infrastructure under construction includes the interconnection with France, as well as the start of work on the new SA.CO.I.3 project (strengthening the link between Sardinia, Corsica and the Italian mainland). In addition, the main projects to increase the exchange capacity between the various areas of the Italian electricity market include the Paternò-Pantano-Priolo power line, and the reorganisation of electricity grids in metropolitan areas, such as Naples.

In terms of our Non-regulated Activities, Terna will continue to consolidate our competency-based activities, developing high value-added services for corporate customers, including energy efficiency solutions, and taking advantage of market opportunities for traditional and renewable customers. Meanwhile, asset-based initiatives will pursue opportunities linked to connectivity, based on exploiting the Group’s own fibre infrastructure. The Group also plans to take specific steps to compensate for the slowdown in activity in its non-regulated segment, with the aim of mitigating the negative impact of delays caused by the Covid-19 emergency.

Outlook


The full integration of Brugg Cables within the Terna Group will also continue in the last quarter of 2020.

International Activities will continue to focus on managing and maintaining the power lines that have entered service in Brazil and Uruguay, and on completing existing projects in Peru and Brazil.

The process of scouting for further opportunities in overseas markets will continue. This may take the form of partnerships and will involve the careful selection of projects with a view to ensuring a low risk profile and avoiding the need to tie up large amounts of capital.

In spite of the above, the Covid-19 health emergency is not expected to have a significant financial impact on the Terna Group’s performance, given the highly regulated nature of our business.

| Outlook - continued

59




The manager responsible for financial reporting, Agostino Scornajenchi, declares, pursuant to paragraph 2 of article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this Consolidated Interim Report for the nine months ended 30 September 2020 is consistent with the underlying accounting records.

Declaration

of the manager responsible for financial reporting in accordance with paragraph 2 of art. 154-bis of Legislative Decree 58/1998


| Titolo - continued

5Annexes


In accordance with the guidelines in ESMA/2015/1415, the APMs used in this Consolidated Interim Report are described below.

MEASURE DESCRIPTION

OPERATING RESULTS

Operating profit/(loss) - EBIT Is an indicator of operating performance, representing “Profit for the period” before “Income tax expense for the period” and “Net financial income/(expenses)”.

Gross operating profit/(loss) - EBITDA

Is an indicator of operating performance obtained by adding “Amortisation, depreciation and impairment losses” to Operating profit/(loss) (EBIT).

TAX RATE Is the amount of tax paid as a proportion of pre-tax profit and is based on the ratio of “Income tax expense” to “Profit/(Loss) before tax”.

FINANCIAL POSITION

Net working capital Is an indicator of financial position, showing the Group’s liquidity position; it is based on the difference between current non-financial assets and current non-financial liabilities, as presented in the statement of financial position.

Gross invested capital Is an indicator of financial position, showing the Group’s total assets and is obtained by adding “Net non-current assets” and “Net working capital”.

Net invested capital Is calculated by deducting “Sundry provisions” from “Gross invested capital”.

CASH FLOW

Net debt Is an indicator of the Group’s financial structure and is obtained by deducting cash and cash equivalents and financial assets from short- and long-term financial liabilities and the related derivative instruments.

Free cash flow Is cash generated and is the difference between cash flow from operating activities and cash flow for investing activities.

The criteria used in preparing the reconciliation of the above APMs with the IFRS financial statements are described in the Annual Report for the year ended 31 December 2019.

Alternative performance measures (APMs)

63




Additional information is presented below in accordance with specific statutory or industry requirements.

Treasury shares

In implementation of the programme described in the section on debt, the Parent Company launched a share buyback programme to service the Performance Share Plan 2020-2023. This was completed on 6 August 2020, as announced in the press release of 10 August 2020, and cost a total of €9,499,998.75.

At 30 September 2020, the Company holds 1,525,900 treasury shares, equal to 0.076% of the share capital.

The Parent Company does not directly or indirectly hold any shares in CDP Reti S.p.A. or Cassa Depositi e Prestiti S.p.A., nor has it purchased or sold any such shares during the first nine

months of 2020.

Related party transactions

Information on related party transactions is provided in the Annual Report for the year ended 31 December 2019.

Participation in the regulatory simplification process introduced by CONSOB Resolution 18079 of 20 January 2012

Information on participation in the simplified process introduced by the CONSOB is provided in the Annual Report for the year ended 31 December 2019.

Other information

LA NOSTRA MISSIONE








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2020ENERGY IS OUR RESPONSIBILITY

CONSOLIDATED INTERIM FINANCIAL REPORT - 30 SEPTEMBER

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CONSOLIDATED INTERIM FINANCIAL ENG_SETT_2020...LA NOSTRA MISSIONE La responsabilità dell’energia. L’energia della responsabilità. Esercitare un ruolo guida per una transizione