Share performance

From its initial listing (June 2004) to the end of December 2007, Terna SpA guaranteed its shareholders a 62.2% increase in share price – almost two times the appreciation of the S&PMib Index (+38.2%) – and a rise in capitalization of 2.1 billion euro: from the initial 3.4 billion to over 5.5 billion. 2007 ended with a price fixed at 2.758 euro per share and Terna’s shares registered an increase of 6.1%. The relative performance compared to the Italian market average rose to over 14% (S&PMib -8.2% and Mibtel -8.8%). This allowed Terna to rank sixth for share appreciation among the Blue Chips listed on the Italian Stock Exchange and second among the Italian Utilities.

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During the first half of the year, in line with the sector's trend, Terna registered a positive performance, reaching the highest value for 2007, 2.85 euro per share on June 1.

Already in May, however, fears connected with the subprime mortgage crisis determined an increased volatility of the stock markets, leading to negative trend on the major world stock markets.

Within this unfavorable macro-economic scenario, Terna also reversed its trend and on last August 16, its shares dropped to the lowest in the year at 2.388 euro per share, still registering an increase as of the beginning of the year compared to the total market performance.

Despite repeated measures adopted by the Central Banks in support of market liquidity and reduced interest rates in the United States, the last months of 2007 continued to be characterized by an uncertain and unstable trend, worsened by an increase in the price of commodities. This situation favored the Utilities sector, typically a defensive one, and also Terna.

During the first half of 2008, the deteriorated world macro-economic scene also had a negative effect on the Italian stock market which dropped by over 22%.

On May 22, Terna's share registered its new high for the year at 2.945 euro per share. It then limited its losses by only 2.5%, supported both by its defensive nature and by the favorable news flow that characterized the first three months of the year: new regulations for transmissionElectricity transport and transformation activities along the interconnected high- and very high-voltage grid forthe purposes of delivery to customers, distributors, and recipients of self-produced energy. activity, 2008-2012 Strategic Plan and data relating to 2007 that exceeded market expectations.

Terna's share therefore ranked fourth in the S&PMib index, second among the Italian Utilities and eighth among the European ones.

Total Shareholder Return

The most complete measurement of the value created by a company for its shareholders is the total return, calculated by adding the dividends per share paid out in a given period of time, to the increase in the share price in the same period. Calculation of TSR shows the annual rate of return for an investor who purchased the Terna share on X date and sold it on Y date. This calculation includes all the dividends paid out by the Company and reinvested in Terna's shares as of the date of detachment of the related coupon.

The total return for a shareholder holding Terna shares as of December 28, 2007, last open market day of 2007, depended very much on the time the shares were purchased:

  • since IPO: 97%;
  • since January 2, 2008: 12%.

In the first half of 2007, specifically between December 28 and June 30, the TSR was equal to 0.83% (vs -20.5% S&PMib).

TRENDS IN DIVIDENDS DISTRIBUTED BY TERNA SPA 1


Year

Coupon detachment

Payment

Dividend (euro)

Interim dividend 2004

2004

October 18

October 21

0.045

Final dividend 2004

2005

May 23

May 26

0.070

Interim dividend 2005

2005

November 21

November 24

0.050

Final dividend 2005

2006

June 19

June 22

0.080

Interim dividend 2006

2006

November 20

November 23

0.053

Final dividend 2006

2007

June 18

June 21

0.087

Interim dividend 2007

2007

November 19

November 22

0.056

Final dividend 2007

2008

June 23

June 26

0.095

1 Terna has adopted a twice-yearly dividend payment policy.

Financial reporting

On January 31, 2008 the annual meeting with the financial community and the media was held in Milan to present corporate strategies. During the meeting, the management of Terna provided investors with an outline of future investment plans, programs for improving operating efficiency, grid quality and safety targets and the criteria driving growth opportunities at national and international level. Particular focus is always placed on ways to optimize the capital structure and on the dividend policy.

The road shows that Terna organizes at a world level is of significant importance. In 2007 and in the first months of 2008, the top-management went out to meet approximately 60 financial institutions, shareholders or potential shareholders, "on their home territory" in countries where the world's leading financial markets are placed (among which United States, Canada, the UK, Germany, Scandinavia, Japan and Middle East).

During the year, Terna also held one-to-one or group meetings in its Rome head office and took part in some sector-specific conferences (Utilities Conferences). When the corporate results are published (quarterly, half year and annual) and when important M&A transactions occur, the Company organizes conference calls with simultaneous web streaming in its website. Live participation in these events through the two channels provided usually exceeds about fifty people, including the nearly twenty-five analysts who follow the share and publish researches.

For 2008, dedicated measures are scheduled in particular for investors attentive to ethical performance of listed companies. First of all, Socially Responsible Investors (SRI) will be analyzed in detail and potentially interested in holding shares of Terna's capital. A specific communication procedure will also be defined starting from the availability of a Sustainability Report that can be consulted on Terna's website.

Attendance at shareholders' meetings continued to rise, mainly thanks to the increasing presence of principally foreign funds.


April 28

2008

May 24

2007

April 27

2006

Representation of share capital

50.2%

49.7%

43.3%

- Cdp, Enel, Generali and Banca d'Italia

38.2%

40.5%

41.1%

- Other shareholders

11.9%

9.2% 2

2.2%

2 The increase is due to a greater participation of foreign funds (9.2%, of which 5.1% by Pictet). In addition to European and American funds, shares were deposited also by Australian, Canadian, Japanese, Arabic and Chinese-Hong Kong funds.

The Shareholder's Meeting held on April 28, 2008 was also called to appoint the company's Board of Directors and Board of Statutory Auditors.

 

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