Performance of Terna S.p.A. shares

In a year of highly volatile stock markets, the defensive nature of Terna’s stock enabled the Company to post performance that was decidedly better than both the average for Italian blue chips and for European securities in the industry. Indeed, the stock posted gains of 28.5%, as compared with the 19.5% gain for the FTSE Mib index and 0.98% for DJ STOXX Utilities.
On the last trading day of 2009, Terna’s stock even reached its highest level ever since the IPO, at €3, thereby becoming the only blue chip stock to close the year at an all-time high.

In 2009, fears of an extended global recession, the disappointing numbers for the US economy, and the difficulties of the banking industry caused the world’s markets to lose 35% of their value in less than three months. Conversely, during this same period, Terna was able to hold its ground, subsiding only fractionally (1.6%).

From mid-March, efforts by governments and central banks to support banks and market liquidity resulted in the full recovery of this value, such that the European and American markets closed the year with gains of around 20 percentage points from the end of 2008. Terna’s stock also continued to rise, supported by a flow of positive news related mainly to the favourable regulatory framework (including the introduction of measures aimed at mitigating the economic effect of declining energy volumes on the Company’s revenue), as well as to a significant acceleration in investment and, above all, to intensive M&A activities (the acquisition of Enel Distribuzione’s high-voltage power grid and the sale of the Brazilian subsidiary Terna Participações), which led to a number of strategically important developments, such as the announcement of a project in the photovoltaic power area and a new dividend policy.

Indeed, the new dividend policy helped support returns for shareholders. In 2009, Total Shareholder Return (TSR) came to 37.2%, which is much higher than the return provided by the industry for the same period (7.9% for DJ STOXX Utilities) and by the Italian market (23.9% for FTSE Mib).

With this TSR, Terna ranked number one both among all European utilities and was the leading utility among Italian blue chip stocks.

The crisis had a negative impact on trading volumes on the Italian market, where blue chips shed 13% of their volumes compared with the previous year. However, the decline for Terna was not as marked, with average daily trading volumes falling just 9% in 2009 (11 million shares).

Terna shares continued to perform well in the first few months of 2010. In mid-March, it reached an all-time high (€3.1825), up 6% since the start of the year, in a context in which both the FTSE Mib and the European sector fell roughly 3%1.

Since its placement in June 2004, Terna has posted growth of around 87%, as compared with the decline of 19% posted by the FTSE Mib index. Total shareholder return has also been significantly higher than the average provided by Italian firms (at 157% vs. the 0.3% of the FTSE Mib)1.

PERFORMANCE OF TERNA SHARES AND THE FTSE MIB AND DJ STOXX 600 UTILITIES INDICES

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Source: Bloomberg.
(1) With respect to the closing price on March 16, 2010.