A. Material accounting policies and measurement criteria
Introduction
Terna S.p.A.\u2019s registered office is at Viale Egidio Galbani 70, Rome, Italy. The consolidated financial statements at and for the year ended 31 December 2022 include the Company\u2019s financial statements and those of its subsidiaries (the \u201cGroup\u201d). The subsidiaries included within the scope of consolidation are listed below.
Publication of the consolidated financial statements was authorised by the Board of Directors on 19 March 2024.
The consolidated financial statements at and for the year ended 31 December 2023 are available for inspection on request at Terna S.p.A.\u2019s registered office at Viale Egidio Galbani 70, Rome, or on the Company\u2019s website at www.terna.it.
The Board of Directors has authorised the Chairman and the Chief Executive Officer to make any alterations to the form of the financial statements that may be necessary during preparation of the final text to be presented to the Annual General Meeting, and to make any additions and adjustments to the sections concerning events after 31 December 2023.
The Terna Group is the largest independent transmission system operator in Europe and one of the leading operators in the world in terms of kilometres of line managed (more than 75 thousand kilometres).\n
It is responsible for the transmission and management of power flows on the high-voltage (HV) and very high-voltage (VHV) grid throughout Italy, in order to guarantee a balance between demand and supply for energy (dispatching). It is also responsible for the planning, construction and maintenance of the grid.\nIt acts as the Italian TSO (Transmission System Operator), having been granted a monopoly under a government concession, and is subject to regulation by Italy\u2019s Regulatory Authority for Energy, Networks and the Environment (ARERA) and the guidelines established by the Ministry of Enterprises and Made in Italy. It ensures the security, quality and cost-effectiveness of the national electricity system and has the task of developing the grid and integrating it with the European grid. It ensures equal access for all grid users.
As of the financial statements for the year ended 31 December 2021, the Terna Group has complied with the requirement introduced by the European Transparency Directive and publishes its Annual Reportusing the European single electronic format (ESEF), tagging all the numbers in the consolidated financial statements and the issuer\u2019s basic financial information using the ixbrl format. In addition, as of 31 December 2022, all the notes to the consolidated financial statements have been block tagged.
Compliance with IAS/IFRS
The consolidated financial statements at and for the year ended 31 December 2023 have been prepared in accordance with International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) issued by the International Accounting Standards Board (IASB) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC), as endorsed by the European Commission (\u201cEU-IFRS\u201d).
This document has also been prepared taking into account the provisions of Legislative Decree 38 of 28 February 2005, of the Italian Civil Code and CONSOB Resolutions 15519 (\u201cProvisions governing financial statements in implementation of art. 9, paragraph 3 of Legislative Decree 38/2005\u201d) and 15520 (\u201cAmendments and additions to the implementing rules for Legislative Decree 58/1998\u201d), as well as CONSOB Communication DEM/6064293 (\u201cDisclosure requirements for listed issuers and issuers of financial instruments that are widely held among the public pursuant to art. 116 of the Consolidated Law on Finance\u201d).
Basis of presentation
The consolidated financial statements consist of the statement of financial position, the income statement, and the statement of comprehensive income, the statement of cash flows, the statement of changes in equity and the notes thereto.
In the statement of financial position, assets and liabilities are classified on a \u201ccurrent/non-current\u201d basis, with separate reporting of assets and liabilities held for sale. Current assets, which include cash and cash equivalents, are those held for realisation, sale or consumption in the Group\u2019s normal operating cycle; current liabilities are those expected to be settled in the Group\u2019s normal operating cycle or within one year of the end of the financial year.
The income statement is classified on the basis of the nature of costs. The income statement is presented as two statements, the first of which (the income statement) presents revenue and expense items for the year; the second (the statement of comprehensive income) starts with the result for the year and then presents the revenue and expense items that are recognised in equity rather than profit or loss for the year.
The statement of cash flows has been prepared using the indirect method.
The consolidated financial statements are accompanied by the Report on Operations for Terna S.p.A. and the Group, which as from financial year 2008 has been prepared as a single document, exercising the option granted by Legislative Decree 32 of 2 February 2007, which amended art. 40 (Report on Operations) of Legislative Decree 127 of 9 April 1991.\nFrom 2021, the Terna Group\u2019s Annual Report contains the Integrated Report, including in a single document the Report on Operations, the Sustainability Report and the Consolidated Non-financial Statement (the \u201cNFS\u201d), in addition to the consolidated financial statements and the Parent Company\u2019s separate financial statements.
These consolidated financial statements are presented in millions of euros and all amounts are shown in millions of euros to the first decimal place, unless otherwise indicated.\n
Given that the requirements of IFRS 5 have been met, the total results for 2023 and 2022 attributable to the South American subsidiaries included in the planned sale of assets have been classified in the item \u201cProfit/(Loss) from discontinued operations and assets held for sale\u201d in the Group\u2019s reclassified income statement. Likewise, the attributable assets and liabilities at 31 December 2023 and 2022 have been classified in the item \u201cDiscontinued operations and assets held for sale\u201d and \u201cLiabilities related to discontinued operations and assets held for sale\u201d in the Group\u2019s reclassified statement of financial position.
Certain amounts in the financial statements at and for the year ended 31 December 2022 have been restated to provide an improved basis of comparison, without however modifying the amount of equity at 31 December 2022 or amounts in the income statement and statement of comprehensive income for 2022.
Use of estimates
Preparation of the consolidated financial statements requires the Group to use estimates and assumptions that affect the carrying amounts of assets and liabilities and the related disclosures, in addition to contingent assets and liabilities at the reporting date. These estimates and the associated assumptions are based on previous experience and various factors that are believed to be reasonable under the circumstances. The resulting estimates form the basis for making the judgements about the carrying amounts of assets and liabilities that are not readily apparent from other objective sources. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed periodically and the effects of any changes are recognised in the income statement for the year, if they relate solely to that period. In the case that the revision affects both current and future years, the change is recorded in the year in which the estimate is reviewed as well as in the relevant future years.
The assets and liabilities subject to estimates and key assumptions used by the Group in applying the IFRS endorsed by the European Commission, and that could have a significant impact on the consolidated financial statements, or that could give rise to risks that would entail significant adjustments to the carrying amounts of assets and liabilities in subsequent years, are summarised below.
Revenue related to incentives
Recognition in the financial statements of output-based incentives requires management to use estimates and assumptions based on judgements made using actual data and estimates of the quantity and likelihood of future events. In the case of incentive mechanisms where the performance obligation is satisfied over a period of time, the Group estimates how to allocate the reward in the period, estimating the potential for the return of all or part of the accrued amounts. The amount recognised as revenue in the accounting period is the amount that is most likely not to be returned in the future. For the purpose of recognition, the Group also evaluates, for each incentive mechanism, whether or not the right (or obligation) is subject to confirmation or verification by the regulator, ARERA.
If the mechanism includes a significant financial component, the Group determines a discount rate that takes into account the credit risk associated with the asset which, given the way in which the mechanisms work and the guarantees provided to Terna under the regulatory framework, broadly coincides with the electricity system.
Certain incentive mechanisms may result in penalties for underperformance.
Impairment losses
Property, plant and equipment and intangible assets with finite useful lives are tested at least once a year to check for evidence of impairment. If there is evidence that an asset may be impaired, its recoverable amount is estimated.
The recoverable amount of goodwill is estimated at least annually. The recoverable amount is equal to the greater of the fair value less costs to sell and value in use. Value in use is measured by discounting estimated future cash flows considering information available at the time of estimate and on the basis of estimates of the performance of future variables, such as prices, costs, demand growth rates, production profiles, and discounted at a pre-tax rate that reflects current market assessments of the time value of money for the investment period and risks specific to the asset. If the intangible asset does not generate cash inflows that are largely independent, the asset\u2019s recoverable amount is calculated as part of the Cash Generating Unit (\u201cCGU\u201d) to which it belongs.
An impairment loss is recognised in the income statement when the asset\u2019s carrying amount, or the net invested capital of the CGU to which it belongs, is greater than its recoverable amount.
Impairment losses on CGUs are first taken as a reduction in the carrying amount of any allocated goodwill and then as a reduction in other assets allocated to the CGU on a pro rata basis. Except for goodwill, impairment losses may be reversed up to the recoverable amount or the original cost of the asset if there is an indication that the impairment loss no longer exists or when there is a change in the methods used to measure the recoverable amount.
Allowance for doubtful accounts
Trade receivables are initially recognised at fair value net of any losses relating to sums considered non-recoverable, for which specific provisions have been made in the allowance for doubtful accounts. Credit losses are determined in application of IFRS 9 (a model based on expected credit losses). This requires the Group to assess expected credit losses, and the related changes, at each reporting date.
Specifically, the Group has applied the simplified approach permitted by IFRS 9 to trade receivables in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Group has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
Provisions for risks and charges
Provisions for risks and charges are allocated when a disbursement of cash, for an amount which can be reliably estimated, will be necessary to fulfil a legal or constructive obligation arising as a result of a past event. Where the time value of money is significant, provisions are discounted using a rate that the Group believes to be appropriate (a rate is used that reflects current market conditions and the specific risks connected with the liability). After initial recognition, the value of the provisions for risks and charges is updated to reflect the passage of time and any changes in the estimate changes in the estimate that result from alterations to the forecasted amounts, timing, and discount rates used. Any increase in provisions associated with the passage of time is recognised in the income statement under \u201cFinancial expenses\u201d.
Liabilities that can be associated with legal and tax disputes, early retirement incentives, urban and environmental restoration projects and other sundry charges are estimated by the Group. The measurement of provisions for legal disputes is based on the probability of incurring an expense, including through the use of external legal advisors supporting the Group companies; the estimate of provisions to be set aside for urban and environmental restoration projects which are the \u201coffsets\u201d aimed at compensating for the environmental impact of the construction of new plant, is based on an analysis of the agreements entered into with the local authorities concerned and the progress of work on construction of the new infrastructure.
Employee benefits
Post-employment benefits are defined on the basis of plans, even if not formalised, that are classified as either \u201cdefined benefit\u201d plans or \u201cdefined contribution\u201d plans depending on their nature.
The liability for employee benefits paid upon or following termination of employment in relation to defined benefit plans or other long-term benefits is recognised net of any plan assets and is measured on the basis of actuarial assumptions, estimating the amount of future benefits that employees have vested at the reporting date and is recognised on an accruals basis in line with the period of service necessary to obtain the benefit.
Changes in the value of the net liabilities (revaluations) deriving from actuarial gains or losses, resulting from changes in the actuarial assumptions used or adjustments based on experience, are recognised in other comprehensive income in the year in which they occur. If a plan is modified, curtailed or extinguished, the related effects are recognized in profit or loss.
Net financial expenses include the component of the return on plan assets and the interest cost to be recognised in profit or loss and are measured by multiplying the liabilities, net of any plan assets, by the discount rate applied to the liabilities; net interest on defined benefit plans is recognized in \u201cFinancial income/(expenses)\u201d.
The actuarial valuations used to quantify employee benefits (of all plans except termination benefits [TFR \u2013 Trattamento di Fine Rapporto]) are based on \u201cvested benefits\u201d, applying the projected unit credit method. These valuations are based on the following economic and demographic assumptions: the discount rate (used to determine the current value of the obligation, determined considering returns on high quality bonds in line with the duration of the group of workers measured), the inflation rate, the rate at which future salary levels are expected to rise, the rate of increase for average health reimbursements, rate of increase for electricity prices and demographic factors, such as mortality and invalidity, retirement, resignation, advances and household composition. The method of calculation used for TFR\u00a0consists of discounting to present value, at the measurement date, each estimated payment due to every employee, projected through to the estimated period in which the TFR\u00a0will be paid.
The obligation under defined contribution plans, limited to the payment of contributions to the state or to a legally separate entity (a fund), is measured on the basis of the contributions payable. The cost of such plans is recognised in profit or loss based on the contribution paid during the period.
Macroeconomic environment
The Terna Group closely monitors the current macroeconomic environment and the recent international political events, particularly focusing on geopolitical developments, linked above all to the ongoing conflict in Ukraine and heightened tensions in the Middle East, and the relevant legislation.
In this respect, in its Public Statement of 25 October 2023, \u201cEuropean common enforcement priorities for 2023 financial reports\u201d, ESMA reinforced the message conveyed in its previous publications of 2021 and 2022, highlighting the need to ensure the correct degree of transparency in financial reporting in order to adequately reflect the current and, as fairly as possible, foreseeable impact of the macroeconomic situation and of the conflicts on entities\u2019 financial position, financial performance and cash flows.
The fall in inflation and reduced commodity price volatility, compared with the peaks seen in 2022, have brought a certain degree of stability to a macroeconomic scenario that, however, remains uncertain. In addition, economic growth has slowed and has been made more uncertain by the geopolitical situation, with future developments also dependent on the outcome of the upcoming elections in the United States. Against this backdrop, the Group continues to focus on capex delivery and implementing its Industrial Plan. To date, we are not aware of any circumstances requiring an in-depth assessment of the validity of application of the going concern basis.
This assumption is based on the fact that the largest part of the Group\u2019s income is represented by revenue generated by our Regulated Activities in Italy and that this revenue consists of remuneration to cover both operating and capital expenditure, with both components revised annually based on the performance of inflation and a deflator. In addition, the return on invested capital is based on a WACC that is periodically revised by ARERA to enable the parameters used in calculating the cost of equity and debt to be updated.
Assessment of the impact of the current macroeconomic environment and the ongoing conflicts has not, moreover, resulted in trigger events requiring the conduct of an impairment test of the value of the property, plant and equipment owned by the Group or of intangible assets with finite useful lives.
With regard to the recoverable amount of property, plant and equipment and intangible assets with finite useful lives forming part of the RAB (regulated asset base), the assessment of expected future cash flows generated by these assets has shown that the macroeconomic effects, including those resulting from the above conflicts, have not given rise to impacts constituting trigger events requiring the Group to test for impairment.
In addition, neither the impact of the changed macroeconomic environment, nor of the geopolitical crises, has resulted in an increase in credit risk and has not affected the outcome of the measurement of expected credit losses. The Group\u2019s trade receivables fall within the hold to collect business model, primarily fall due within 12 months and do not include a significant financial component. The effect of these events has not, therefore, had any impact, including with regard to the identified business model for financial instruments, thus avoiding any changes to the chosen classification.
In addition, fair value measurement of the financial assets and liabilities held by the Group has not undergone changes in terms of an increase in the related risks (market, liquidity and credit). Similarly, movements in the underlying assumptions have not altered the sensitivity analyses linked to their measurement.
In terms of recoverable amount, it should be noted that there has not been any deterioration in 2023 in the receivables due from the Group\u2019s main counterparties (dispatching customers for injections or for withdrawals and distributors), considered solvent by the market and therefore assigned high credit ratings.
As described in more detail in the section, \u201cCredit risk\u201d, management of this risk is also driven by the provisions of ARERA Resolution 111/06, which introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. The assessment conducted has, moreover, not provided evidence of the need to modify the model used following an evaluation of the impact of the conflicts.
Terna is not exposed to any risk of greater contract expenses due to rising inflation or increased costs incurred as a result of rising commodity and energy prices and salaries, or to the possibility that, as an issuer of financial instruments, it is unable to pass such increases on by raising the prices of its own services or goods. This is because any price increases agreed by law are covered by tariff revisions, which envisage adjustments for inflation, and its capex is recognised in full in the RAB.
It should, moreover, be noted that Terna S.p.A. and its subsidiaries do not have offices or significant operations in the regions affected by the conflicts.
Climate change
Awareness of the progress of climate change and its effects has led to a growing need to provide disclosure in Report on Operations. Although there is no international accounting standard governing how the impact of climate change should be taken into account in the preparation of financial statements, the IASB has issued certain documents providing support for IFRS-adopters seeking to satisfy the demand for disclosure from interested parties. Similarly, ESMA, in its European Common Enforcement Priorities dated 25 October 2023, highlighted the need for issuers to consider climate risks when preparing their IFRS financial statements to the extent that such risks are material, regardless of whether or not this is explicitly required by the relevant accounting standards.
The Terna Group describes its considerations on the actions linked to the need to mitigate the impact of climate change primarily in the sections \u201cReference scenarios \u2013 The market environment\u201d and \u201cOpportunities and risks connected with climate change\u201d in the Report on Operations. In this context, as a TSO providing transmission and dispatching services, the Terna Group undoubtedly plays an active role in supporting the system in achieving the challenging targets linked to efforts to reduce CO2\u00a0emissions. Indeed, in addition to the emissions connected with electricity consumption, the most significant component relating to Terna\u2019s indirect emissions is linked to grid losses, which can also be associated with the indirect impact of the need to produce more energy. In themselves, a TSO\u2019s emissions (scopes 1 and 2 in the \u2018GHG emission protocol\u2019) are extremely modest when compared with the potential system-level reduction resulting from the integration of renewable sources and electrification.
The Group has chosen to report its considerations on climate change in a single note. The following is a summary of management\u2019s considerations on aspects deemed material.
IAS 1 \u2013 Presentation of Financial Statements
In the event of uncertainties, IAS 1 requires entities to analyse potential impacts in terms of the entity\u2019s ability to continue as a going concern and, with regard to the assumptions and estimates made in preparing the Annual Report. Entities are required to provide disclosure of the forward-looking estimates used and that have a significant risk of resulting in a material adjustment within the next financial year. As recommended by ESMA, which, as mentioned above, requires entities to take into account climate risks when preparing financial statements, disclosures are provided that, despite not being specifically required by IFRS, are relevant to an understanding of the financial statements.
In terms of the short term, management has not identified any specific effects of climate-related risks to be considered when applying the accounting standards.
With regard to the medium to long term, management has identified potential risks primarily linked to the Company\u2019s role as a TSO, deriving from the need to adapt the electricity grid in the form of work designed to boost resilience and allow it to handle the new profile and mix of the energy injected into the grid. However, as described in greater detail in the specific sections that follow, the steps planned with the aim of mitigating such risks do not require further consideration during application of the accounting standards used in preparation of these financial statements.
It should be noted, however, that assessment and, more specifically, quantification of climate-related risks generally requires the use of highly uncertain future-oriented assumptions, such as future technological and policy developments and Government measures.
IAS 16 \u2013 Property, Plant and Equipment
With specific regard to the grid and the related transmission service, the action plan requires a commitment to the planning, approval and delivery of investment projects related to work in response to current and future needs to integrate renewable sources, guarantee the reliability, security, adequacy and efficiency of the electricity system, such as, for example, cross-border interconnections and the development of infrastructure to enable the growing integration of renewable energy sources.
In addition, as described in the Group\u2019s Risk Framework, the Group is exposed to the risks linked to the increased intensity of weather events (tornados, heavy snowfall, ice, flooding) with a resulting impact on the continuity and quality of the service provided by Terna and/or damage to equipment, machinery, infrastructure and the grid. In response, the Group continues to carry out new investment designed to increase the resilience of the electricity grid and identify mitigation strategies.
In line with our role in driving the country\u2019s energy transition, Terna\u2019s strategic plans, further described in the section, \u201cThe value creation strategy\u201d in the Annual Report \u2013Integrate Report 2023, include action to tackle climate change, identifying:
\u2022 the works needed to develop and strengthen the electricity grid in the ten-year Development Plan, including overseas interconnections, to ensure the integration of renewable sources;
\u2022 tools to ensure the security and reliability of the electricity system in the Security Plan, in a scenario where renewable sources are increasingly more widespread and thermoelectric plants are decommissioned, resulting in issues relating to system inertia and voltage regulation;
\u2022 the works needed to improve the reliability of electricity assets in the Maintenance and Renewal Plan for electricity assets, which involves the preventive identification and resolution of initial signs of an issue that could lead to a malfunction.
Common to all these plans is the Resilience Plan, annexed to the Security Plan, which includes all the initiatives designed to increase grid resilience to enable it to withstand increasingly intense and frequent severe weather events, damaging infrastructure and resulting in outages at plants connected to the NTG. The Resilience Plan involves a preventive approach to managing infrastructure, using capital light technological solutions to mitigate the risks to which the grid is exposed and solutions for repairing and monitoring the electricity system.
This also involves the development of innovative technologies through structured collaborations with start-ups (\u201cOpen Innovation\u201d), designed to monitor weather events and increase NTG resilience.
Mitigating climate-related risk also involves the need to plan maintenance of NTG infrastructure to ensure quality of service, the security of the assets operated (power lines and electricity substations) and their ability to remain fully operational.
In addition to initiatives falling within the scope of the Group\u2019s routine maintenance programmes, in this regard, Terna is increasingly required to carry out work on the grid that calls for the replacement of specific components. Aside from renewing grid infrastructure, this enables the Company to mitigate the risk arising from the increased intensity and frequency of disruptive weather events. Management considers that this investment does not reduce or modify the expected economic benefits deriving from use of the existing grid accounted for in property, plant and equipment. In the light of the above, it has not been necessary to conduct a critical review of the useful lives of the fixed assets recognised in the financial statements.\u00a0
The Group also considers that there may be a risk connected with the supply chain due to significant changes in the strategies of key suppliers. This risk is heightened by the crisis in the global supply chain following the pandemic and the above conflicts, the energy transition launched in many countries, with a potential impact on construction and maintenance projects, and a resulting impact on the continuity and quality of service and on the time needed to complete infrastructure. The Group constantly monitors developments in the supply chain and has not so far identified any critical issues.
IAS 38 \u2013 Intangible Assets
With regard to non-regulated activities, the Group is committed to developing innovative, digital technological solutions to support the ecological transition. These activities include the offerings of the Tamini Group and Brugg Cables Group, the subsidiaries that produce power transformers and terrestrial cables, respectively (industrial activities), involving the development of expertise throughout the value chain, and the offer of Energy Solutions and Connectivity. In addition, the Group is also committed to investing in digitalisation and innovation, involving the development of solutions for the remote control of electricity substations and key infrastructure. This involves the installation of sensor, monitoring and diagnostic systems, including predictive solutions, improving the security of the grid and the surrounding area.
The Group has also developed tools for studying and planning new works designed to respond to issues relating to climate change. Through its Resilience Methodology, as set out in Annex A76 to the Grid Code, Terna has equipped itself with a tool that makes the Group a leader in the conduct of climate-change assessments in Italy and Europe. This innovative and probabilistic tool for planning work will increase the resilience of the NTG. It involves measuring the related benefit in terms of reducing expected energy not supplied, above all due to ice, snow and strong winds.To promote the spread of a well-informed energy culture and facilitate broad awareness of the issues faced by the electricity sector, in 2021, the Group developed a new Development Plan application and the digital platform called Terna4Green with a view to monitoring the progress made towards Italy\u2019s decarbonisation. Via these two new initiatives, Terna continues and strengthens its commitment to ever greater transparency and the spread of information and data, specific expertise and in-depth knowledge of the national electricity system.
In response to the risk linked to the greater intensity and frequency of extreme weather events (tornados, heavy snowfall, ice, flooding), the Group could also benefit from the \u201cPatentability\u201d of the above innovative solutions, with resulting non-regulated business opportunities.
Investment in research is expensed as incurred, whilst development costs that meet certain requirements may be recognised as intangible assets. Further information on the criteria used in the recognition of an intangible asset resulting from development work is provided in the paragraph, \u201cIntangible assets\u201d.
IAS 36 \u2013 Impairment of Assets
As indicated above with regard to property, plant and equipment, management has not identified factors requiring a critical review of useful lives. Similarly, with regard to the risk of impairment losses on property, plant and equipment, management considers that, whilst the steps taken to mitigate climate-related risk involve the need to plan maintenance work on NTG infrastructure, in keeping with the past, so as to ensure quality of service, the security of the assets operated (power lines and electricity substations) and their ability to remain fully operational, these activities do not, in any event, have a negative impact on the measurement of fair value less costs of disposal. This is because a market operator would take this investment into account as part of the fair value measurement process.
IFRS 9 \u2013 Financial Instruments
With regard to borrowings and bond issues, the Group has obtained certain bank borrowings containing ESG-linked conditions, entered into a commercial paper programme (short-term notes issued to qualified investors), enabling Terna to issue \u201cESG Notes\u201d, and issued a number of Green bonds, as described in greater detail in the section, \u201cSustainable finance\u201d. The ESG-linked bank borrowings (different from the Green Bond issues) include a bonus/penalty mechanism, applicable to the payment of accrued interest, linked to the achievement of specific environmental, social and governance (ESG) objectives. As a result of the above, the Group believes that there may be a risk, albeit not significant, connected with the achievement of such objectives. Failure to achieve the objectives within a contractually agreed date would result in a slight increase in the cost of debt. Nevertheless, the impact of this risk on financial expenses is entirely negligible. The Group constantly monitors activities relating to climate change and has not so far identified any critical issues.
IAS 37 - Provisions, Contingent Liabilities and Contingent Assets
The legislation introduced in response to climate change may give rise to new obligations that did not previously exist. In this regard, the Terna Group has introduced an environmental policy setting out its commitment to containing and reducing its environmental impact, in some cases going beyond legal requirements when this does not compromise the protection of other general interests provided for under the concession. Full implementation of this policy, which also covers efforts to reduce greenhouse gas emissions, also involved energy efficiency initiatives and the adoption of measures designed to protect biodiversity. Terna also extends the issue of environmental protection to both its supply chain and local stakeholders directly affected by NTG development projects, through increasingly eco-sustainable offsets.
Given the regulatory framework, management does not believe that such policies give rise to the need to recognise liabilities not previous accounted for. The same conclusion has also been reached with regard to the previously mentioned risk linked to the supply chain due to significant changes in the strategies of key suppliers. As a result, it has not been necessary to carry out a critical review of provisions in the financial statements.
IFRS 15 \u2013 Revenue from Contracts with Customers
In terms of Regulated Activities, part of the remuneration for transmission and dispatching services derives from regulatory incentive mechanisms linked to specific targets. The achievement of these targets may be influenced by climate change risks, as for example the intensification of extreme weather events could have an impact on the continuity and quality of the service offered by Terna. The Group monitors these risks updating the estimates relating to these incentives.
With regard to Non-regulated Activities, above all Energy Solutions, given the portfolio of products and services offered to promote the development of renewable energy in Italy, for example through the construction and operation of photovoltaic plants, infrastructure connecting the photovoltaic plants to the grid and services offered to industrial clients, and with regard to the production of cables and transformers, the Group is not exposed to new uncertainties having an impact on the current revenue recognition model. In addition, the Group did not deem it necessary to conduct a review of existing contracts.
Climate change and the subsequent adoption of policies designed to reduce CO2\u00a0emissions and achieve Net Zero Emissions targets by most industrial clients could result in increased business opportunities.
IFRS 2 \u2013 Share-based Payments
The current long-term incentive plans, so called Performance Share Plans, are linked to a series of ESG indicators with a percentage weighting that rises over time.
The 2021-2025 plan consists of an indicator linked to Terna\u2019s annual inclusion and ranking in the Dow Jones Sustainability Index (DJSI-World) with a weighting of 20%.
The ESG indicators for the 2022-2026 plan, with a higher 25% weighting than in the previous plan, include KPIs referring to inclusion in a basket of ESG indexes selected to represent the Group\u2019s ability to guarantee an all-round sustainability performance, including the Dow Jones Sustainability Index World, Stoxx ESG Leaders and the MIB 40 ESG. Inclusion is subject to the assessments conducted by the three rating agencies, S&P Global, Sustainalytics and Moody\u2019s ESG. An important part of these three assessments is explicitly linked to climate-related issues: specifically, to be included in the selected ESG indexes every year, and for the whole duration of the Performance Share Plan, performance and positioning in terms of, for example, climate strategy, the assessment and management of climate risks, cuts in greenhouse gas emissions and public disclosures on relevant metrics, are of great importance.
Finally, the Performance Share Plan 2023-2027 is linked to ESG indicators with an overall weighting of 30%, of which 15% relates to KPIs linked to inclusion in the above ESG basket and the remaining 15% to Overgeneration, representing the reduction in the modulation of generation from Non-Programmable Renewable Sources requested by Terna, due to the security requirements of the National Electricity System.
Bearing in mind the expected development of renewable generation capacity in the coming years, absent appropriate mitigation initiatives, overgeneration will become a growing issue, cancelling out (at least in part) the benefits of the energy transition.
Subsidiaries and scope of consolidation
The scope of consolidation includes the Parent Company, Terna S.p.A., and the companies over which it has the power to exercise control directly or indirectly, as defined by IFRS 10. Control exists when the Parent Company has the power or the ability to influence the relevant activities (having a substantial impact on the Parent Company\u2019s results), and is exposed to or has the right to variable returns from its involvement with the investee, and the ability to use its power over the subsidiaries to affect the amount of the investor\u2019s returns. The financial statements of subsidiaries are consolidated on a line-by-line basis from the date when the Parent Company gains control until the date when such control ceases.
The companies included within the scope of consolidation are listed below:
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA S.P.A.
Terna Rete Italia S.p.A.
Rome
Euro
300,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of power lines and grid infrastructure and other grid-related infrastructure, plant and equipment used in the above electricity transmission and dispatching activities and in similar, related and connected sectors.
Terna Crna Gora d.o.o.
Podgorica (Montenegro)
Euro
208,000,000
100%
Line-by-line
Business
Authorisation, construction and operation of the transmission infrastructure forming the Italy-Montenegro interconnector on Montenegrin territory.
Terna Plus S.r.l.
Rome
Euro
16,050,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of plant, equipment and infrastructure for grids and systems, including distributed storage and pumping and/or storage systems.
Terna Interconnector S.r.l.
Rome
Euro
10,000
65%*
Line-by-line
Business
Responsible for construction and operation of the private section of the Italy-France interconnector and civil works on the public section.
Rete S.r.l.
Rome
Euro
387,267,082
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of high-voltage power lines.
Terna EnergySolutions S.r.l.
Rome
Euro
2,000,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of distributed energy storage systems, pumping and/or storage systems, plant, equipment and infrastructure, including grids; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
ESPERIA-CC S.r.l.
Rome
Euro
10,000
1%**
Line-by-line
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
Terna Forward
Rome
Euro
10,000
100%
Line-by-line
Business
Development of new technological solutions for the Terna Group, investing in start-ups and small, medium and large enterprises with high innovation and technological potential.
*\t5% is held by Terna Rete Italia S.p.A. and 30% by Transenergia S.r.l.
** 99% is held by Selene CC S.A.
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA PLUS S.R.L.
Terna Chile S.p.A.
Santiago del Cile (Chile)
Chilean peso
2,475,710,500
100%
Line-by-line
Business
Design, construction, administration, development, operation and maintenance of any type of electricity system, plant, equipment and infrastructure, including interconnectors; provision of all types of products and service, construction, electrical and civil engineering work; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
Terna Peru S.A.C.
Lima (Peru)
Sales
116,813,900
99.99%*
Line-by-line
Business
Design, construction, administration, development, operation and maintenance of any type of electricity system, plant, equipment and infrastructure, including interconnectors; provision of all types of products and service, construction, electrical and civil engineering work; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
Terna 4 Chacas S.A.C.
Lima (Peru)
Sales
13,734,560
99.99%*
Line-by-line
Business
Responsible for construction of a new 16 km power line in Peru.
SPE Transmissora de energia Linha Verde I S.A.
Belo Horizonte (Brazil)
Real
506,999,313
75%**
Line-by-line
Business
Provision of public electricity transmission services, including construction, operation and maintenance of electricity transmission infrastructure or any other activity necessary in order to fulfil the above purpose.
TERNA USA LLC.
New York (USA)
US dollar
1
100%
Line-by-line
Business
Acquisition, development and construction of major infrastructure projects regarding onshore and offshore electricity transmission in the United States.
*\t0.01% Terna Chile S.p.A.
** 25% Quebec Holding Eireli.
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA ENERGY SOLUTIONS S.R.L.
Tamini Trasformatori S.r.l.
Legnano (MI)
Euro
4,285,714
100%
Line-by-line
Business
Construction, repair and trading in electrical equipment.
Avvenia The Energy Innovator S.r.l.
Rome
Euro
10,000
100%
Line-by-line
Business
Provision of energy efficiency, energy consulting and process engineering services to companies and public and private entities; the application of technology to increase energy end-use efficiency; the design, construction, development and maintenance of plant, equipment and infrastructure for networks and other uses.
Brugg Kabel Services AG
Brugg (Switzerland)
Swiss franc
1,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
LT S.r.l.
Roma
Euro
400,000
75%*
Line-by-line
Business
Design, construction and maintenance of renewable power plants.
SUBSIDIARIES CONTROLLED THROUGH TAMINI TRASFORMATORI S.R.L.
Tamini Transformers USA LLC
Sewickley - Pennsylvania
US dollar
52,089
100%
Line-by-line
Business
Commercialisation of industrial-grade and high-power electricity transformers.
Tamini Transformatori India Private Limited
Maharashtra (India)
Indian rupee
13,175,000
100%
Line-by-line
Business
Commercialisation of industrial-grade and high-power electricity transformers.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL SERVICES AG
Brugg Kabel Manufacturing AG
Brugg (Switzerland)
Swiss franc
7,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Kabel AG
Brugg (Switzerland)
Swiss franc
22,000,000
90%**
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL MANUFACTURING AG
Brugg Cables Italia S.r.l.
Milan
Euro
10,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL AG
Brugg Kabel GmbH
Schwieberdingen (Germany)
Euro
103,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables (Shanghai) Co. Ltd
Shanghai
US dollar
1,600,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables (India) Pvt. Ltd
Haryana (India)
Indian rupee
48,000,000
99.74%***
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Middles East Contracting LLC
Dubai (UAE)
Dirham
200,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Inc USA
Chicago (USA)
US dollar
1,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Company Saudi Arabia
Riyadh (Saudi Arabia)
Saudi Riyal
50,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG CABLES (SHANGHAI) CO. LTD
Brugg Cables (Suzhou) Co. Ltd
Suzhou (China)
Chinese renminbi
32,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH LT S.r.l.
Halfbridge Automation S.r.l.
Rome
Euro
10,000
70%****
Line-by-line
Business
Research, design and production of electronic circuit boards for innovative energy efficiency systems.
*\t25% Solaris S.r.l..
**\t10% BRUGG GROUP AG.
***\t0.26% Brugg Kabel GmbH.
****\t30% Vima Technologies S.r.l.The following changes in the structure of the Group have taken place with respect to 31 December 2022:
Liquidations and disposals:
\u2022 On 5 October 2023, the merger of the company Omnia S.r.l. with and into the company LT S.r.l. was completed. On 29 March 2023, terna, through its subsidiary LT S.r.l., completed the acquisition of a 100% stake in Omnia S.r.l., a company providing O&M services for photovoltaic plants. The acquisition helps to consolidate the LT Group\u2019s position as an Italian market leader in the construction and operation of photovoltaic plants.
\u2022 On 21 December 2023, the merger of Rete Nord S.r.l. (formerly Edyna Transmission S.r.l.) with Rete S.r.l. was completed. On 22 June 2023, Terna completed the acquisition of a 100% stake in Edyna Transmission S.r.l., at the same time renamed Rete Nord S.r.l., a company that owns two electricity substations and approximately 70 km of circuits (equal to approximately 36 km of power lines) in Alto Adige already forming part of the National Transmission Grid. The transaction is part of the Group\u2019s strategy of unifying Italy\u2019s electricity transmission infrastructure with the aim of further boosting grid efficiency and reliability.
Associates
Associates are investees over which the Terna Group exercises significant influence, being the ability to participate in the determination of these companies\u2019 financial and operating policies, without having control or joint control. In assessing whether or not Terna has significant influence, potential voting rights that are exercisable or convertible are also taken into account.
These investments are initially recognised at cost and subsequently measured using the equity method. The profits or losses attributable to the Group are recognised in the consolidated financial statements when significant influence begins and until that influence ceases. Based on application of the equity method, if there is evidence that the investment has been impaired, the Group determines the amount of the impairment based on the difference between the recoverable amount and the carrying amount of the investment in question. In the event that the loss attributable to the Group exceeds the carrying amount of the equity interest, the latter is written off and any excess is recognised in a specific provision, if the Parent Company is required to meet the legal or constructive obligations of the investee or, in any case, to cover its losses.
The list of associates is shown below:
(\u20ac/m)
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL*
PROFIT FOR THE YEAR*
% INTEREST
METHOD OF CONSOLIDATION
CARRYING AMOUNT AT 31 DECEMBER 2023 (\u20acm)
SOCIET\u00c0 COLLEGATE
Cesi S.p.A.
Milan
Euro
8,550,000
(1,917,255)
42.698%
Equity Method
46.1
Business
Experimental research and provision of services related to electro-technology.
Coreso S.A.
Brussels (Belgium)
Euro
1,000,000
805,800
15.84%
Equity Method
1.0
Business
Technical centre owned by several electricity transmission operators, responsible for coordinating joint operations of TSOs, in order to improve and upgrade the security and coordination of the electricity system in central and western Europe.
CGES A.D.
Podgorica (Montenegro)
Euro
155,108,283
20,300,000
22.0889%
Equity Method
26.7
Business
Provision of transmission and dispatching services in Montenegro.
Equigy B.V.
Arnhem, (Netherlands)
Euro
50,000
540,518
20%
Equity Method
0.4
Business
Provision of support for electricity balancing by TSOs through the development and implementation of blockchain technology.
* Figures taken from the latest approved financial statements at the date of preparation of this document.
Joint arrangements
Investments in joint arrangements, in which the Group exercises joint control with other entities, are recognised initially at cost and subsequently measured using the equity method. The profits or losses attributable to the Group are recognised in the consolidated financial statements when joint control begins and until that control ceases. The Group recognises its share of the assets and liabilities attributable to joint arrangements in accordance with IFRS 11.
In assessing the existence of joint control, it is ascertained whether the parties are bound by a contractual agreement and whether this agreement attributes to the parties the joint control of the agreement itself. Joint control exists when an entity has control over an arrangement on a contractual basis, and only when decisions relating to the relevant activities require the unanimous consent of all parties that jointly control the arrangement.
The list of joint ventures is shown below:
(\u20acm)
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL*
PROFIT FOR THE YEAR*
% INTEREST
METHOD OF CONSOLIDATION
CARRYING AMOUNT AT 31 DECEMBER 2023 (\u20acm)
JOINT VENTURES
ELMED Etudes S.a.r.l.
Tunis (Tunisia)
Tunisian dinar
2,016,120
(207,961)
50%
Equity Method
0.2
Business
Conduct of preparatory studies for the construction of the infrastructure required to connect the Tunisian and Italian electricity system.
SEleNe CC S.A.
Thessaloniki (Greece)
Euro
200,000
20,137
33.33%
Equity Method
2.1
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
BMT Energy Transmission Development LLC
Wilmington (USA)
US dollar
500,000
-
40%
Equity Method
0.2
Business
Acquisition, development and construction of major infrastructure projects regarding onshore and offshore electricity transmission in the United States.
* Figures taken from the latest approved financial statements at the date of preparation of this document.
Compared with 31 December 2022, on 7 February 2023, Terna completed the acquisition of shares in SEleNe CC S.A. following the withdrawal of the Romanian TSO, National Power Grid Company Transelectrica S.A., from the company\u2019s shareholder base. The Company\u2019s stake has thus increased from 25% to 33.33%.
Basis of consolidation
All the separate financial statements of the investees used to prepare the consolidated financial statements were drafted as of 31 December 2023 and have been approved by their respective Boards of Directors and, for the most part, by shareholders; they have been adjusted, where necessary, to align them with the Parent Company\u2019s accounting policies.
During preparation of the consolidated financial statements, intercompany balances, transactions, revenues and costs are fully eliminated, net of the related tax effect, where material (\u201cconsolidation on a line-by-line basis\u201d).
Unrealised gains and losses on transactions with associates and joint ventures are eliminated in proportion to the Group\u2019s interest therein. In both cases, unrealised losses are eliminated, unless they represent an impairment.
Translation of foreign currency items
In the Group\u2019s financial statements, all transactions in currencies other than the functional currency are recognised at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are subsequently adjusted at the exchange rate prevailing at year end. Any translation differences are taken to the income statement.Non-monetary assets and liabilities in foreign currency stated at historical cost are converted at the exchange rate prevailing when the transaction was initially recognised. Non-monetary assets and liabilities in foreign currency stated at fair value are converted at the exchange rate prevailing when fair value was measured.
B. Notes to the consolidated income statement
Revenue
1. Revenue from sales and services - \u20ac3,122.8 million
(\u20acm)
2023
2022
Change
Transmission charges billed to grid users and incentives
2,107.6
1,968.6
139.0
Dispatching and metering fees and other energy-related revenue
127.1
115.3
11.8
Incentives for dispatching activities
303.8
334.7
(30.9)
Revenue from services performed under concession
80.6
67.4
13.2
Quality of service bonuses/(penalties)
11.2
23.2
(12.0)
Other sales and services
492.5
388.9
103.6
TOTAL
3,122.8
2,898.1
224.7
Transmission charges and incentives
Transmission charges billed to grid users regard revenue generated from ownership and operation of the national transmission grid or NTG and attributable to the Parent Company (\u20ac1,955.6 million) and the subsidiaries, Rete S.r.l. (\u20ac135.5 million), Terna Crna Gora d.o.o. (\u20ac15.7 million) and Rete Nord S.r.l. (\u20ac0.8 million, relating to the period prior to the merger with and into Rete S.r.l. on 20 December 2023).
The increase in this item (up \u20ac139.0 million) is primarily linked to the increase in the RAB in the period after the volume effect (up \u20ac91.6 million) and an increase in output-based\u00a0incentives related to the delivery of additional transmission capacity between market areas, amounting to \u20ac34.5 million for the amount due as a bonus in accordance with Resolution 23/2022 and \u20ac12.9 million for the bonus awarded for the efficiency of capital expenditure in 2022, pursuant to Resolution 473/2023.
Dispatching and metering fees and other energy-related revenue
This item regards fees received in return for providing dispatching and metering services (the dispatching component, amounting to \u20ac124.2 million, and the metering component, amounting to \u20ac0.6 million) and other energy-related revenue of \u20ac2.3 million.
The item is up \u20ac11.8 million compared with the previous year, broadly due to the increase in dispatching fees introduced by Resolution 738/2022.
Incentives for dispatching activities
This item represents the output-based incentives for dispatching activities, amounting to \u20ac303.8 million.
These incentives essentially consist of the mechanisms introduced by Resolutions 597/2021 and 132/2022, designed to cut DSM costs, the shortfall in wind production and essential plants (\u20ac302.6 million, representing the accrued present value of the estimated incentive for the period 2022-2024, amounting to \u20ac813.7 million before the effect of discounting).
With reference to the mechanism introduced by Resolution 597/2021, revenue for 2023 corresponds with the overall accrued value of the estimated incentive for the three-year period, thus also incorporating the projection of factors that could result in a reduction in the incentive for 2024 due to a partial increase in DSM costs associated with a higher volume of market transactions in the event of critical situations for the adequacy of the system, tensions on overseas markets and /or extreme weather events for factors not mitigated by the calculation rules. This item is down \u20ac30.9 million compared with the previous year, broadly due to the recognition in 2022 of the incentive for grid development work in the three-year period 2019-2021 designed to relieve congestion within market areas and grid constraints due to voltage regulation and improve conditions for essential service provision (a reduction of \u20ac140.5 million, Resolution 26/2023). On the other hand, in 2023, recognition of the revenue from the mechanism designed to reduce the cost of procuring services on the DSM, the shortfall in wind production and essential services (pursuant to Resolutions 597/2021 and 132/022) resulted in an increase of \u20ac108.4 million, following an update in the overall performance estimates for the three-year period 2022-2024.
Revenue from services performed under concession
This item includes revenue from infrastructure construction and upgrade services performed under concession, recognised in application of IFRIC 12, amounting to \u20ac80.6 million.
The increase compared with the previous year, amounting to \u20ac13.2 million, regards greater investment in dispatching infrastructure during the period.
Quality of service
This item, amounting to \u20ac11.2 million, regards the RENS (Regulated Energy Not Supplied) incentive mechanism introduced by Resolution 653/2015/r/eel, calculated on a pro rata basis taking into account the estimated overall results expected in the 2020-2025 regulatory period, taking into account the extension of the regulatory period confirmed by Resolution 55/2024/r/eel.
The decrease of \u20ac12.0 million in this item compared with the previous year is broadly due to the impact of the above extension, considering the performance in 2023.
Other sales and services
The item, \u201cOther sales and services\u201d, amounting to \u20ac492.5 million, mainly regards revenue from Non-regulated Activities, regarding:
\u2022 the sale of transformers by the subsidiary, Tamini (\u20ac136.0 million);
\u2022 revenue contributed by Brugg Cables, essentially relating to contracts with third parties for the supply of cables and accessories (\u20ac159.4 million);
\u2022 Energy Solutions (\u20ac142.8 million) above all HV services, totalling \u20ac30.3 million and Smart Grids, totalling \u20ac112.5 million, including the contribution from the LT Group, which specialises in O&M services for photovoltaic plants (\u20ac92.2 million) and the energy efficiency services provided by the subsidiary, Avvenia The Energy Innovator S.r.l. amounting to \u20ac1.4 million;
\u2022 Connectivity (\u20ac34.8 million) with specific regard to support and housing services for fibre networks (\u20ac29.7 million) and fibre maintenance (\u20ac4.1 million).
This item also includes revenue from connections to the NTG (\u20ac10.8 million) and relating to the private Italy-Austria Interconnector (\u20ac0.3 million), representing the accrued portion of the revenue attributable to the Group for services provided during construction.
This item is up \u20ac103.6 million compared with 2022, primarily due to the contribution from the Brugg Group (up \u20ac30.2 million), increased revenue from Energy Solutions (up \u20ac61.7 million) and an increase in revenue from the provision of Connectivity services (up \u20ac3.3 million) and revenue from connections to the NTG (up \u20ac2.1 million). There was also an increase in revenue from the Italy-France Interconnector (up \u20ac12.1 million) due to a recognition in 2022 of a contractual penalty payable to energy intensive users for the delayed completion of work, offset by recognition of a penalty receivable from suppliers for delayed completion of the same project, recognised in the item \u201c2. Other revenue and income\u201d.
Pass-through revenue/expenses
This item regards \u201cpass-through\u201d revenue and expenses (the balance of which amounts to zero) attributable solely to the Parent Company. These items result from daily purchases and sales of electricity from electricity market operators. Measurements for each point of injection and withdrawal are taken and the differences, with respect to energy market schedules are calculated. These differences, known as imbalances, are then measured using algorithms established by the regulatory framework. The net charge resulting from calculation of the imbalances and the purchases and sales, carried out by the Parent Company Terna on the DSM, is billed on a pro rata basis to each end consumer via a specific uplift payment. This item also reflects the portion of the transmission charge that the Parent Company passes on to other grid owners, not included in the scope of consolidation.
The components of these transactions are shown in greater detail below:
(\u20acm)
2023
2022
Change
Power Exchange-related revenue items
5,244.2
11,308.4
(6,064.2)
- Uplift
479.3
1,394.5
(915.2)
- Electricity sales
442.6
1,278.2
(835.6)
- Imbalances
1,673.9
3,689.1
(2,015.2)
- Congestion revenue
355.4
710.7
(355.3)
- Charges for right to use transmission capacity and market coupling
1,209.8
1,160.0
49.8
- Interconnectors/shippers
57.6
66.3
(8.7)
- Load Profiling for public lighting
348.0
1,833.5
(1,485.5)
- Other Power Exchange-related pass-through revenue items
677.6
1,176.1
(498.5)
Total over-the counter revenue items
3,591.0
2,788.8
802.2
- Transmission and dispatching service: penalties from auxiliary service providers
0.1
-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Coverage of wind farm costs
20.6
40.5
(19.9)
- Transmission revenue passed on to other NTG owners
1.1
1.8
(0.7)
- Charge to cover cost of essential plants
1,019.6
703.5
316.1
- Charge to cover cost of interruptibility service
329.3
314.3
15.0
- Charge to cover cost of LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through revenue for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH REVENUE
8,835.2
14,097.2
(5,262.0)
Total Power Exchange-related cost items
5,244.2
11,308.4
(6,064.2)
- Electricity purchases
1,185.1
3,581.1
(2,396.0)
- Imbalances
1,624.6
3,039.6
(1,415.0)
- Congestion revenue
170.1
527.6
(357.5)
- Charges for right to use transmission capacity and market coupling
559.0
542.0
17.0
- Interconnectors/Shippers
599.7
874.7
(275.0)
- Load Profiling for public lighting
447.3
1,886.4
(1,439.1)
- Other Power Exchange-related pass-through cost items
658.4
857.0
(198.6)
Total over-the-counter cost items
3,591.0
2,788.8
802.2
- Transmission and dispatching service: penalties to auxiliary service providers
0.1
-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Shortfall in wind production
20.6
40.5
(19.9)
- Transmission costs passed on to other NTG owners
1.1
1.8
(0.7)
- Fees paid for essential units
1,019.6
703.5
316.1
- Fees paid for interruptibility service
329.3
314.3
15.0
- Fees paid for LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through costs for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH COSTS
8,835.2
14,097.2
(5,262.0)
In 2023, the total uplift was approximately \u20ac446 million (provisional data), down 76% on the previous year (\u20ac1.844 million). The reduction was due to the sharp fall in the cost of procuring services, the fall in the consideration due for start-up and Change of Set-up Tokens1, a reduction in the cost of the virtual interconnection service and, to a lesser extent, the reduced cost of contracts providing an alternative to essential providers\u00a02, the slight rise in congestion revenue in Italian and Overseas market areas, only partly offset by lower revenue from imbalances.
1\u00a0Start-up and Change of Set-up Tokens are payments made to production plants who have the right to receive them when Terna requests them to fire up the plant or change their structure.
2\u00a0These are the costs incurred by Terna for payments to production plants defined as essential for the electricity system, pursuant to Annex A27 of the Grid Code, and who chose the alternative regime described in art 63 of Resolution 111/06.
2. Other revenue and income \u2013 \u20ac63.9 million
(\u20acm)
2023
2022
Change
Gains on sale of infrastructure components
14.8
6.8
8.0
Sales to third parties
10.9
12.9
(2.0)
Sundry grants
8.8
9.2
(0.4)
Private Italy-France interconnector
8.3
1.4
6.9
Private Italy-Montenegro interconnector
6.4
6.4
-
Insurance proceeds as compensation for damages
5.7
3.2
2.5
Revenue from IRU contracts for fibre
4.3
1.3
3.0
Rental income
2.2
2.2
-
Contingent assets
0.9
4.4
(3.5)
Penalties receivables from suppliers
0.3
14.3
(14.0)
Other revenues
1.3
4.3
(3.0)
TOTAL
63.9
66.4
(2.5)
\u201cOther revenue and income\u201d consists of gains on the sale of infrastructure components (\u20ac14.8 million), in addition to other significant items relating to sales to third parties (\u20ac10.9 million), sundry grants (\u20ac8.8 million), revenue from the private Italy-France interconnector (\u20ac8.3 million) and from the private Italy-Montenegro interconnector (\u20ac6.4 million), insurance proceeds (\u20ac5.7 million) and revenue from Connectivity services linked to IRU contracts for fibre (\u20ac4.3 million).
This item, totalling \u20ac63.9 million, is down \u20ac2.5 million compared with the previous year, primarily reflecting recognition, in 2022, of a penalty receivable from suppliers in relation to delays in work on the private Italy-France interconnector 2022 (down \u20ac14.0 million), revenue for granting the right to use the infrastructure to energy-intensive companies linked to the entry into service of the private power line in November 2022 (up \u20ac6.9 million), a reduction in sales to third parties (down \u20ac2.0 million) and a decline in other revenues (down \u20ac3.0 million). These changes were partially offset by increased revenue from gains on the sale of infrastructure components (up \u20ac8.0 million, essentially scrap, transformers and motor vehicles) and increased revenue from Connectivity services linked to IRU contracts for fibre (up \u20ac3.0 million).
Operating costs
3. Raw and consumable materials used \u2013 \u20ac258.4 million
This item includes the value of the various materials and equipment used in the ordinary operation and maintenance of the plant belonging to the Group and third parties, and the materials consumed primarily in relation to the industrial and energy solutions businesses.
The increase of \u20ac37.6 million compared with the previous year primarily reflects the cost of materials incurred by the LT Group and the Brugg Cables Group (up \u20ac34.8 million and \u20ac19.4 million, respectively), after a reduction in the cost of materials at the Tamini Group (down \u20ac18.0 million). This item also reflects increased costs (up \u20ac2.8 million) linked to construction and development of the infrastructure operated under concession, accounted for in application of IFRIC 12.
4. Services \u2013 \u20ac312.3 million
(\u20acm)
2023
2022
Change
Maintenance and sundry services
139.0
123.7
15.3
Tender costs for plant
77.7
68.5
9.2
IT services
46.4
38.5
7.9
Lease expense
20.5
19.4
1.1
Insurance
19.6
16.8
2.8
Remote transmission and telecommunications
9.1
10.0
(0.9)
TOTAL
312.3
276.9
35.4
This item, totalling \u20ac312.3 million, is up \u20ac35.4 million compared with 2022 (\u20ac276.9 million). This primarily reflects increased activity and new initiatives carried out by the Group, above all the LT Group (up \u20ac12.9 million), the Tamini Group (up \u20ac1.9 million) and the Brugg Group (up \u20ac1.9 million), as well as the increased costs linked to the construction and development of infrastructure under concession, recognised in application of IFRIC 12 (up \u20ac8.1 million, in particular reflecting cost increases of \u20ac7.2 million for IT services and maintenance costs totalling \u20ac1.1 million) and an increase in advertising costs (up \u20ac7.0 million, essentially linked to the \u201cnoi siamo energia\u201d advertising campaign).
Fees payable to members of the Board of Statutory Auditors amount to \u20ac0.5 million whilst those payable to members of the Supervisory Board set up in compliance with Legislative Decree 231/2001 amount to \u20ac0.7 million.
5. Personnel expenses \u2013 \u20ac377.2 million
(\u20acm)
2023
2022
Change
Salaries, wages and other short-term benefits
461.7
427.7
34.0
Directors\u2019 remuneration
2.6
2.3
0.3
Termination benefits (TFR), energy discounts and other employee benefits
32.1
21.6
10.5
Early retirement benefits
17.2
12.6
4.6
Gross personnel expenses
513.6
464.2
49.4
Capitalised personnel expenses
(136.4)
(116.1)
(20.3)
TOTAL
377.2
348.1
29.1
Personnel expenses, amounting to \u20ac377.2 million in 2023, are up \u20ac29.1 million compared with the previous year (\u20ac348.1 million). This is due to an increase in the average workforce the impact of renewal of the national collective labour agreement for the electricity sector, partly offset by the higher amount of capitalised expenses.
The following table shows the Group\u2019s workforce by category at the end of the year and the average for the year.
(\u20acm)
AVERAGE WORKFORCE
WORKFORCE AT
2023
2022
DELTA
31 December 2023
31 December 2022
Senior managers
107
98
9
102
94
Middle managers
887
819
68
896
841
Office staff
3,205
2,941
264
3,349
3,090
Blue-collar workers
1,523
1,476
47
1,580
1,472
TOTAL
5,722
5,334
388
5,927
5,497
The net increase in the average workforce compared with 2022 is 388. This is essentially linked to the requirements relating to delivery of the investment programme included in the last approved Industrial Plan.
At 31 December 2023, the Terna Group\u2019s workforce breaks down as follows:
TERNA S.P.A.
TERNA RETEITALIA S.P.A.
TERNA ENERGY SOLUTIONS S.R.L.
TERNA PLUSS.R.L.
AVVENIA THE ENERGY INNOVATOR S.R.L.
No.
1,143
3,633
79
13
13
TAMINI GROUP
LT GROUP
Brugg Kabel AG
TERNA USA LLC
TERNA CRNA GORA D.O.O.
SPE TRANSMISSORA DE ENERGIA LINHA VERDE I S.A.
TERNA PERU S.A.C.
355
188
457
1
10
32
3
6. Amortisation, depreciation and impairment losses \u2013 \u20ac806.3 million
(\u20acm)
2023
2022
Change
Amortisation of intangible assets
126.4
93.2
33.2
\u00a0- of which on infrastructure
34.8
26.7
8.1
Depreciation of property, plant and equipment
670.6
624.2
46.4
Impairment losses on property, plant and equipment and intangible assets
8.7
7.0
1.7
Impairment losses on trade receivables
0.6
1.3
(0.7)
TOTAL
806.3
725.7
80.6
Amortisation, depreciation and impairment losses, amounting to \u20ac806.3 million (including \u20ac17.7 million recognised in application of IFRS 16), are up \u20ac80.6 million compared with 2022. This reflects the entry into service of new infrastructure, primarily at the Parent Company (up \u20ac63.3 million), in addition to an increase in impairment losses on assets recognised during the year (up \u20ac1.7 million).
7. Other operating costs - \u20ac43.2 million
(\u20acm)
2023
2022
Change
Indirect taxes and local taxes and levies
10.7
11.8
(1.1)
Fees paid to regulators and membership dues
9.9
9.3
0.6
Quality of service costs
5.3
1.9
3.4
\u00a0of which mitigation and sharing mechanisms
2.3
1.6
0.7
\u00a0of which the Fund for Exceptional Events
2.8
0.1
2.7
\u00a0of which compensation mechanisms for HV users
0.2
0.2
-
Adjustment of provisions for litigation and disputes
(0.9)
(3.2)
2.3
Net contingent liabilities
1.2
1.0
0.2
Losses on sales/disposals of plant and net contingent liabilities
1.1
1.3
(0.2)
Other
15.9
10.4
5.5
TOTAL
43.2
32.5
10.7
The Group\u2019s other operating costs, amounting to \u20ac43.2 million, are primarily attributable to the Parent Company (\u20ac22.3 million), the subsidiary, Terna Rete Italia S.p.A. (\u20ac2.3 million) and the Tamini Group (\u20ac5.0 million). They include indirect taxes, local taxes and levies (\u20ac10.7 million), membership dues and fees paid to trade bodies and associations relating to the Group\u2019s activities (\u20ac9.9 million), quality of service costs (\u20ac5.3 million) and other costs (\u20ac15.9 million) including provisions for risks and charges connected with the activities of the subsidiary, Tamini (\u20ac4.4 million, primarily in the form of provisions for product warranties) and other operating costs linked to the Brugg Group, relating to the cost of scrapping waste materials, donations and other expenses.
The increase of \u20ac10.7 million in the item, primarily reflects the increase in quality of service costs (up \u20ac3.4 million), primarily linked to provisions for exceptional events related to the outages that occurred in eastern Sicily in February 2023, additional of provisions for litigation and disputes (up \u20ac2.3 million) and an increase in the fees paid to regulators and membership dues (\u20ac0.6 million).
There was also an increase in other costs (up \u20ac5.5 million), due in particular to the increased provisions at the Tamini Group for the risks relating to product warranties (up \u20ac2.7 million).
8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
9. Share of profit/(loss) of investees accounted for using the equity method \u2013 (\u20ac2.6) million
The loss of \u20ac2.6 million reflects a reduction of \u20ac3.6 million euro compared with the previous year (a profit of \u20ac1.0 million), broadly due to an adjustment of the value of the investment in the associate, CESI.10. Income tax expense \u2013 \u20ac364.3 million
Income tax expense for the year totals \u20ac364.3 million, an increase of \u20ac8.9 million on the previous year, essentially due to the increase in pre-tax profit and the lower amount of tax-exempt income recognised in the previous year. The tax rate of 29.3%, compares with the rate of 28.8% for 2022.
(\u20acm)
2023
2022
Change
Income tax for the year
\u00a0
\u00a0
\u00a0
Current tax expense:
\u00a0
\u00a0
\u00a0
- IRES (corporate income tax)
326.3
327.7
(1.4)
- IRAP (regional tax on productive activities)
72.7
71.3
1.4
Total current expense
399.0
399.0
-
New temporary differences:
\u00a0
\u00a0
\u00a0
- deferred tax assets
(50.8)
(56.4)
5.6
Reversal of temporary differences:
\u00a0
- deferred tax assets
17.3
15.2
2.1
- deferred tax liabilities
(1.9)
(1.1)
(0.8)
Total deferred tax (income)/expense
(35.4)
(42.3)
6.9
Adjustments to taxes for previous years and other one-off changes
0.7
(1.3)
2.0
TOTAL
364.3
355.4
8.9
Current income tax expense of \u20ac399.0 million is in line with the previous year due to the adjustments recognised in pre-tax profit.
Net deferred tax expense of \u20ac35.4 million is down \u20ac6.9 million compared with the figure for the previous year (\u20ac42.3 million). This reflects the impact of taxation on depreciation and amortisation, movements in provisions for risks and charges and for employee benefits recognized by the Group during the year.
Adjustments to taxes for previous years, amounting to expense of \u20ac0.7 million, primarily regard subsidiaries and include contingent assets resulting from recognition of the effective amount payable when filing annual tax returns.
For a clearer presentation of the differences between the theoretical and effective tax rates, the table below reconciles the profit before taxes with taxable income.
(\u20acm)
\u00a0
2023
2022
Profit before tax
1,244.6
1,233.4
THEORICAL IRES TAX CHARGE (24%)
298.7
296.0
IRAP
72.7
71.3
Permanent differences
(7.8)
(10.6)
TAX (after adjustment for previous years and one-off changes)
363.6
356.7
TAX RATE
29.2%
28.9%
Adjustments to taxes for previous years and other one-off changes
0.7
(1.3)
INCOME TAX EXPENSE FOR THE YEAR
364.3
355.4
EFFECTIVE TAX RATE
29.3%
28.8%
11. Profit/(Loss) from discontinued operations and assets held for sale \u2013 (\u20ac2.5) million
This item reflects the net result from the assets included in the agreement signed by the Terna Group and CDPQ, a global investment group, on 29 April 2022 for the sale of all the Group\u2019s power line assets in Brazil, Peru and Uruguay.
The first transaction closing for the sale of the Brazilian companies, SPE Transmissora de Energia Linha Verde II S.A., SPE Santa Lucia Transmissora de Energia S.A. and SPE Santa Maria Transmissora de Energia S.A., was completed on 7 November 2022. The transaction closing for the sale of Difebal S.A., which operates a power line in Uruguay, was completed on 22 December 2022. The sale of the other assets in Brazil (expected in 2024) and Peru is due to take place in phases, following fulfilment of the conditions provided for in the agreement.
The revenue and cost items resulting in the net result for the year from assets held for sale, amounting to a profit of \u20ac2.5 million, are shown below:
(\u20acm)
2023
2022
Change
Total revenue
35.8
49.3
(13.5)
Total operating costs
53.9
45.3
8.6
OPERATING PROFIT
(18.1)
4.0
(22.1)
Net financial income/(expenses)
1.2
(9.7)
10.9
Impairment loss recognised on remeasurement of the fair value less costs to sell
21.2
(20.0)
41.2
PROFIT/(LOSS) BEFORE TAX
4.3
(25.7)
30.0
Income tax expense for the year
1.7
5.9
(4.2)
Profit/(Loss) for the year attributable to owners of the Parent
2.5
(31.6)
34.1
Net gains on disposals
-
23.0
(23.0)
Reserve for translation differences
-
(11.7)
11.7
Profit/(Loss) for the year from discontinued operations and assets held for sale
2.5
(20.3)
22.8
Revenue
This item broadly consists of revenue from construction and development of infrastructure operated under concession, above all the discontinued operations and assets held for sale located in Brazil (\u20ac34.2 million) and Peru (\u20ac1.6 million).
Operating costs
Operating costs essentially regard the costs incurred in application of IFRIC 12 for the construction work being carried out in Brazil (\u20ac52.8 million), as well as operating costs incurred in Peru.
Net gains on disposals
The item includes the gains recognised in the comparative period on the planned sale of the net assets at fair value of the companies SPE Santa Maria Transmissora de Energia S.A. (\u20ac3.2 million), SPE Santa Lucia Transmissora de Energia S.A. (\u20ac10.5 million), SPE Transmissora de Energia Linha Verde II S.A. (\u20ac14.5 million) and Difebal S.A (a loss of \u20ac5.2 million) after costs to sell.
Reserve for translation differences
The items include the differences deriving from the translation of financial statements denominated in foreign currency and is reclassified to profit or loss following the deconsolidation of companies from which it originates.
The gain from discontinued operations and assets held for sale, amounting to \u20ac2.5 million, marks an improvement of \u20ac22.8 million compared with the previous year. This essentially reflects adjustment of the fair value of the net assets held for sale in application of IFRS 5 (up \u20ac41.2 million), after the companies\u2019 operating results (a loss of \u20ac7.0 million), also taking into account the different scope and recognition, at 31 December 2022, of a net gain on the sale (down \u20ac23.0 million) and release of the reserve for translation differences (up \u20ac11.7 million).
Basic and diluted earnings per share from discontinued operations and assets held for sale, amounting to a gain of \u20ac0.001 per share (the numerator of \u20ac2.5 million represents the net gain from assets held for sale, whilst the denominator of 2,005,710,736.25 shares is the weighted average number of shares outstanding during the year).
The agreements signed with CDPQ, regarding the sale of the Brazilian companies, grant the purchaser a put option for the return of SPE Transmissora de Energia Linha Verde II S.A. to Terna Plus. This may be exercised, under determinate conditions, no sooner than 31 December 2025. At the date of preparation of these financial statements, the option is not exercisable and provides protection for the counterparty, which does not have a significant economic incentive to exercise it.
Moreover, at the date of preparation of this document, a number of disputes are in progress. The related outcomes have been classified as possible and therefore no provisions have been made in the financial statements:
\u2022 ongoing arbitration between SPE Santa Lucia Transmissora de Energia S.A. and Planova Planejamento e Constru\u00e7\u00f5es S.A. and Krasis Participa\u00e7\u00f5es S.A., regarding responsibility for postponement of the Commercial Operation Date (\u201cCOD\u201d), as defined in the EPC contract;
\u2022 ongoing arbitration between SPE Transmissora de Energia Linha Verde I S.A. and Cons\u00f3rcio Construtor Linha Verde, regarding changes to the obligations provided for in the EPC contract;
In addition, as described in the section, \u201cM. Events after 31 December 2023\u201d, the following arbitrations identified as possible in the previous year, were resolved in the Group\u2019s favour:
\u2022 arbitration between SPE Transmissora de Energia Linha Verde I S.A. and Qu\u00e9bec Engenharia S.A. and Construtora Quebec S.A., regarding cessation of the obligations provided for in the EPC contract;
\u2022 arbitration between SPE Transmissora de Energia Linha Verde II S.A. and Qu\u00e9bec Engenharia S.A. and Construtora Quebec S.A., regarding cessation of the obligations provided for in the EPC contract.
12. Earnings per share
Basic earnings per share, which corresponds to diluted earnings per share, amounts to \u20ac0.441 (based on profit for the year attributable to owners of the Parent, totalling \u20ac885.4 million divided by the number of shares outstanding, totalling 2,005,710,736.2 shares). Earnings per share from continuing operations, which corresponds to diluted earnings per share from continuing operations, is \u20ac0.439 (the numerator of \u20ac880.3 million is net profit for the year from continuing operations, whilst the denominator of 2,005,710,736.2 shares, is the weighted average number of shares outstanding during the year).
C. Operating segments
In line with the latest Industrial Plan, and in compliance with IFRS 8, the Terna Group\u2019s identified operating segments are described below:
\u2022 Regulated
\u2022 Non-Regulated
\u2022 International
The Regulated segment includes the development, operation and maintenance of the National Transmission Grid, in addition to dispatching and metering, and the activities involved in the construction of storage systems. These activities have been included in one operating segment, as they are all regulated by ARERA and have similar characteristics, in terms of the remuneration model and the method for setting the related tariffs.
The Non-regulated segment includes deregulated activities and specific business initiatives, above all relating to Industrial activities, which includes the operating results of the Tamini Group, relating essentially to the construction and commercialisation of electrical equipment, above all power transformers, and the Brugg Cables Group, which operates 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 Non-regulated segment includes initiatives linked above all to the provision of services to third parties in the areas of Energy Solutions, consisting of the development of technical solutions and the supply of innovative services, including EPC (Engineering, Procurement and Construction) services, operation and maintenance of high-voltage and very high-voltage infrastructure, and the supply of energy efficiency services, broadly attributable to the subsidiary, Avvenia The Energy Innovator S.r.l..). This segment also includes Connectivity (support and housing services for fibre networks and IRU contracts for fibre. This segment includes the activities carried out in relation to the private interconnectors launched by Law 99/2009, legislation that assigned Terna responsibility for selecting undertakings (the \u201cselected undertakings\u201d), on the basis of public tenders, willing to finance specific cross-border interconnectors in exchange for the benefits resulting from a decree granting a third-party access exemption with regard to the transmission capacity provided by the new infrastructure. The Non-regulated Activities segment also includes the results of the LT Group, acquired in October 2021 and a leading provider of O&M services for photovoltaic plants.
On the other hand, the International segment includes the results deriving from opportunities for international expansion, which the Group aims to exploit by leveraging its core competencies developed in Italy as a TSO, where such competencies are of significant importance in its home country. Overseas investment focuses on countries with stable political and regulatory regimes and a need to develop their electricity infrastructure. This segment includes the results of the subsidiary Terna Plus S.r.l., the Peruvian company, Terna 4 Chacas S.A.C. (a charitable project), the Chilean company, Terna Chile S.p.A. and the US subsidiary, Terna USA LLC.
The results of the Brazilian company, Linha Verde I S.A., and of the Peruvian company, Terna Peru S.A.C., have been reclassified to \u201cProfit/(Loss) from discontinued operations and assets held for sale\u201d.
(\u20acm)
2023
2022
Change
% change
REGULATED REVENUE
2,669.8
2,542.3
127.5
5.0%
NON-REGULATED REVENUE
516.8
421.4
95.4
22.6%
INTERNATIONAL REVENUE*
0.1
0.8
(0.7)
\u00a0(87.5%)
TOTAL REVENUE
3,186.7
2,964.5
222.2
7.5%
GROSS OPERATING PROFIT (EBITDA)**
2,168.6
2,059.2
109.4
5.3%
of which regulated EBITDA ***
2,085.6
2,007.0
78.6
3.9%
of which non-regulated EBITDA
86.9
57.5
29.4
51.1%
of which International EBITDA
\u00a0(3.9)
\u00a0(5.3)
1.4
\u00a0(26.4%)
Reconciliation of segment result with the Company\u2019s profit before tax
GROSS OPERATING PROFIT (EBITDA)
2,168.6
2,059.2
Amortisation, depreciation and impairment losses
806.3
725.7
OPERATING PROFIT/(LOSS) (EBIT)
1,362.3
1,333.5
Financial income/(expenses)
\u00a0(120.3)
\u00a0(99.1)
Share of profit/(loss) of investees accounted for using the equity method
2.6
\u00a0(1.0)
Profit/(Loss) before tax
1,244.6
1,233.4
\u00a0
\u00a0
*\tDirectly includes the margin earned on overseas concessions.
**\tGross operating profit - EBITDA is an indicator of operating performance, obtained by adding \u201cAmortisation, depreciation and impairment losses\u201d to \u201cOperating profit/(loss) (EBIT)\u201d.
***\tEBITDA including indirect costs.
The Group\u2019s revenue for 2023 amounts to \u20ac3,186.7 million, an increase of \u20ac222.2 million (7.5%) compared with 2022.
Gross operating profit (EBITDA) of \u20ac2,168.6 million is up \u20ac109.4 million (5.3%) on the \u20ac2,059.2 million of 2022.
EBITDA from Regulated Activities amounts to \u20ac2,085.6 million, an increase of \u20ac78.6 million\u00a0compared with the previous year. This primarily reflects the impact on tariff revenue and incentives (up \u20ac119.9 million) of the increase in the RAB after the volume effect and the effects of output-based incentive mechanisms.
EBITDA from Non-regulated Activities in 2023 amounts to \u20ac86,9 million, an increase of \u20ac29.4 million compared with same period of the previous year. This primarily reflects the increased contribution of the LT Group (up \u20ac9.5 million), of the Brugg Cables Group (up \u20ac6.3 million) and the Tamini Group (up \u20ac4.4 million), in addition to the greater contribution from private interconnectors (up \u20ac6.0 million), essentially due to the entry into service of the Italy-France power line in November 2022.
Negative EBITDA from International Activities, amounting to \u20ac3.9 million for 2023\u00a0essentially reflects the costs incurred by central departments to support overseas initiatives and marks an improvement of \u20ac1.4 million compared with the previous year (negative EBITDA of \u20ac5.3 million). This primarily reflects the impact on personnel expenses of a reduction in the average workforce following the reorganisation carried out within the Group.
Assets held for sale report a net profit of \u20ac2.5 million, an improvement of \u20ac22.8 million compared with a loss of \u20ac20.3 million in the previous year. This essentially reflects the reversal, in 2023, of impairment losses recognised during the previous year on assets held for sale, offset by the gain recognised in 2022 on the sale of the companies included in the first closing.
Further information is provided in the related paragraph in note 11 in the consolidated financial statements.
(\u20acm)
31 December 2023
31 December 2022
Net non-current assets*
18,964.7
17,485.3
\u00a0of which investments in associates and joint ventures
76.7
73.8
Net working capital**
\u00a0(2,174.6)
\u00a0(2,732.8)
Gross invested capital***
16,790.1
14,752.5
*\tNet non-current assets include the value of \u201cProperty, plant and equipment\u201d, \u201cGoodwill\u201d, \u201cIntangible assets\u201d, \u201cInvestments accounted for using the equity method\u201d, \u201cOther non-current assets\u201d and \u201cNon-current financial assets\u201d, excluding the value of cash flow hedges (\u20ac17.2 million).
**\tNet working capital is the difference between total current assets less cash and the items, \u201cCurrent financial assets\u201d and total current liabilities, less the short-term portion of long-term borrowings and the items, \u201cShort-term borrowings\u201d and \u201cCurrent financial liabilities\u201d, and the item, \u201cOther non-current liabilities\u201d.
***\tGross invested capital is the sum of net non-current assets and net working capital.
D. Notes to the consolidated statement of financial position
Assets
13. PROPERTY, PLANT AND EQUIPMENT \u2013 \u20ac17,596.7 million
(\u20acm)
Land
Buildings
Plant and equipment
Industrial and commercial equipment
Other assets
Assets under construction and prepayments
TOTAL
COST AT 31 DECEMBER 2022
217.7
2,403.3
20,979.8
232.2
269.3
2,581.3
26,683.6
Investment
0.1
5.1
1.0
8.1
11.7
2,047.8
2,073.8
\u00a0of which right-of-use assets
5.0
0.2
10.1
15.3
Assets entering service
9.5
191.2
1,528.0
9.4
25.8
(1,763.9)
-
Contribution from business combinations
5.6
0.8
13.5
-
-
-
19.9
Translation differences
-
2.6
-
4.9
0.4
0.1
8.0
\u00a0of which right-of-use assets
-
(0.2)
-
-
(0.1)
-
(0.3)
Disposals and impairments
(0.1)
(3.3)
(104.4)
(3.3)
(18.2)
(8.2)
(137.5)
\u00a0of which right-of-use assets
(1.8)
(1.5)
-
(0.6)
-
(3.9)
Other movements
(0.3)
(12.2)
(26.7)
-
-
28.2
(11.0)
COST AT 31 DECEMBER 2023
232.5
2,587.5
22,391.2
251.3
289.0
2,885.3
28,636.8
ACCUMULATED DEPRECIATION AND IMPAIRMENT AT 31 DECEMBER 2022
(2.2)
(798.8)
(9,318.8)
(185.2)
(177.7)
-
(10,482.7)
Depreciation for the year
(0.7)
(65.8)
(566.6)
(9.7)
(27.8)
-
(670.6)
\u00a0of which right-of-use assets
(0.7)
(7.3)
-
-
(9.7)
-
(17.7)
Contribution from business combinations
-
(0.3)
(6.3)
-
-
(6.6)
Translation differences
-
(0.9)
-
(4.7)
(0.4)
-
(6.0)
Disposals
-
2.9
100.4
3.2
18.1
-
124.6
\u00a0of which right-of-use assets
-
1.6
1.3
-
0.4
-
3.3
Other movements
-
(0.1)
1.2
0.1
-
-
1.2
ACCUMULATED DEPRECIATION AND IMPAIRMENT AT 31 DECEMBER 2023
(2.9)
(863.0)
(9,790.1)
(196.3)
(187.8)
-
(11,040.1)
Carrying amount
AT 31 DECEMBER 2023
229.6
1,724.5
12,601.1
55.0
101.2
2,885.3
17,596.7
\u00a0of which right-of-use assets
4.9
32.6
19.4
-
35.9
-
92.8
AT 31 DECEMBER 2022
215.5
1,604.5
11,661.0
47.0
91.6
2,581.3
16,200.9
\u00a0of which right-of-use assets
5.6
35.3
19.4
-
35.8
-
96.1
Change
14.1
120.0
940.1
8.0
9.6
304.0
1,395.8
The category, \u201cPlant and equipment,\u201d at 31 December 2023 includes the electricity transmission grid and transformer substations in Italy.
\u201cProperty, plant and equipment\u201d is up \u20ac1,395.8 million compared with 31 December 2022, reflecting ordinary movements during the year as a result of:
\u2022 investment of \u20ac2,073.8 million during the year, including \u20ac2,017.0 million in the Group\u2019s Regulated Activities and \u20ac56.8 million in Non-regulated Activities, primarily with regard to the re-routing of power lines at the request of third parties and the private Italy-France and Italy-Austria interconnectors;
\u2022 the contribution of the NTG assets arising from the acquisition of Edyna Transmission S.r.l. (renamed Rete Nord S.r.l. and merged with the subsidiary, rete S.r.l., in December 2023), amounting to \u20ac13.3 million;
\u2022 depreciation for the year of \u20ac670.6 million;
\u2022 other changes during the year, resulting in a reduction of \u20ac7.8 million, including grants related to assets (down \u20ac9.7 million, primarily for the re-routing of power lines at the request of third parties and projects financed by the Ministry of Enterprises and Made in Italy and the EU) and translation differences;
\u2022 disposals and impairments (down \u20ac12.9 million).
A summary of movements in property, plant and equipment during the year is shown below.
(\u20acm)
Investment
\u00a0- Power lines
1,087.6
\u00a0- Transformer substations
789.0
\u00a0- Other
197.2
Total investment in property, plant and equipment
2,073.8
Depreciation
(670.6)
Contribution from business combinations
13.3
Other changes
\u00a0(9.8)
Disposals and impairments
(12.9)
Translation differences
2.0
TOTAL
1,395.8
The following information regards work on the principal projects during the year in relation to Regulated Activities: the start of design work for the construction of the Tyrrhenian Link (\u20ac414.8 million), the start of preliminary work on construction of the Adriatic Link (\u20ac110.8 million), the installation of synchronous compensators and STATCOM systems (\u20ac58.0 million and \u20ac13.3 million, respectively), progress on construction of the Elba-Mainland power line (\u20ac54.8 million), Patern\u00f2-Pantano-Priolo (\u20ac30.6 million), the Olympics projects (\u20ac49.8 million), Colunga-Calenzano (\u20ac28.2 million), Sorgente-Rizziconi (\u20ac19.2 million) and the Italy-France interconnector (\u20ac13.1 million, with the regulated pole entering service in August), the construction of reactors (\u20ac15.3 million), extension of the fibre network as part of the \u201cFibre for the Grid\u201d project (\u20ac16.9 million), construction of the Cerignola (\u20ac18.2 million) and Magenta (\u20ac12.1 million) substations.
14. GOODWILL \u2013 \u20ac252.3 million
Goodwill, amounting to \u20ac252.3 million at 31 December 2023, regards the Parent Company\u2019s acquisition of Terna Rete Italia S.r.l., accounted for in the financial statements at a carrying amount of \u20ac101.6 million, of RTL S.p.A. accounted for in the financial statements at a carrying amount of \u20ac88.6 million and of Rete S.r.l. amounting to \u20ac26.3 million, the acquisition of TES - Transformer Electro Services by the Tamini Group, with a carrying amount of \u20ac13.6 million and the acquisitions carried out by the parent Company through the subsidiary, Terna Energy Solutions S.r.l., a 75% interest in LT S.r.l. (LT Group), accounted for at a carrying amount of \u20ac19.3 million and through the Brugg Group, a 100% interest in Laser TLC S.r.l., accounted for at a carrying amount of \u20ac1.5 million. It also includes goodwill based on preliminary recognition of the acquisition of Omnia S.r.l. in March 2023 through the LT Group and merged with and into LT S.r.l. on 5 October 2023. This goodwill has a carrying amount of \u20ac1.3 million.
The increase of \u20ac0.8 million compared with 31 December 2022 essentially reflects the above acquisition of Omnia S.r.l..
Impairment testing
For the purposes of impairment testing, goodwill has been allocated to three cash generating units (CGUs): the first consisting of \u201cTransmission activities\u201d within the Group\u2019s Regulated Activities, amounting to \u20ac216.5 million, and the second relating to the \u201cProduction and commercialisation of transformers\u201d, forming part of the Group\u2019s Non-regulated Activities, totalling \u20ac13.6 million. The third relates to the design, construction, operation and maintenance of renewable energy plants, amounting to \u20ac20.7 million.Disclosures regarding the impairment testing of the goodwill allocated to the Group\u2019s \u201cTransmission\u201d CGU are provided below. Measurement of the recoverable value of the goodwill allocated to the transmission activities was based on fair value less costs of disposal. Determination of the carrying amount of the CGU represented by the NTG was based on Terna S.p.A.\u2019s net invested capital at 31 December 2023, appropriately adjusted for the assets and liabilities not falling within the scope of Transmission activities (e.g., Dispatching, Non-regulated and International activities). The recoverable amount was based on fair value after applying an EBITDA multiple to the operating profit of the CGU represented by the NTG. This multiple was calculated at the level of the Company, as the ratio between the enterprise value (the sum of the stock market capitalization and net debt) and the Company\u2019s EBITDA. The result obtained is significantly higher than the carrying amount recognised in the financial statements inclusive of goodwill.
The impairment test of the CGU represented by the production and commercialisation of transformers was based on fair value less costs of disposal, determined on the basis of the average EBITDA multiple for the sector. Measurement of the recoverable value was based on estimated fair value applying the EBITDA multiple for 2024. This multiple was approximately 13.3, the average for a sample of companies operating in the sector. The resulting fair value was then appropriately discounted to present value at the end of 2023. The resulting value is higher than the carrying amount inclusive of goodwill.
With regard to the CGU related to the design, construction, operation and maintenance of renewable energy plants, the impairment test was carried out using the fair value less cost of disposal, determined on the basis of a multiple of the average EBITDA for the sector. To determine the recoverable value, fair value was estimated applying the multiple of EBITDA for 2024, equal to approximately 11.0x, the average for a sample of companies operating in the sector. The fair value calculated in this way was then discounted at the end of 2023. The result was higher than the carrying amount inclusive of goodwill.
15. INTANGIBLE ASSETS \u2013 \u20ac614.9 million
(\u20acm)
Infrastructure rights
Concessions
Other assets
Assets under development and prepayments
TOTAL
Cost
583.0
135.4
711.2
108.7
1,538.3
Accumulated amortisation
(421.6)
(96.1)
(496.3)
-
(1,014.0)
BALANCE AT 31 DECEMBER 2022
161.4
39.3
214.9
108.7
524.3
Investment
-
-
1.7
214.5
216.2
Assets entering service
82.1
-
110.9
(193.0)
-
Disposals and impairments
-
-
-
(1.3)
(1.3)
Depreciation
(34.8)
(5.6)
(86.0)
-
(126.4)
Other movements
-
-
1.2
0.9
2.1
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Cost
665.1
135.4
825.0
129.8
1,755.3
Accumulated amortisation
(456.4)
(101.7)
(582.3)
-
(1,140.4)
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Change
47.3
(5.6)
27.8
21.1
90.6
Intangible assets amount to \u20ac614.9 million (\u20ac524.3 million at 31 December 2022); this item includes:
\u2022 the infrastructure used in provision of the dispatching service in Italy accounted for in accordance with \u201cIFRIC 12 \u2013 Service Concession Arrangements\u201d. The carrying amount, at 31 December 2023, is \u20ac208.7 million for infrastructure in service, whilst the carrying amount of infrastructure under construction, included in the category \u201cAssets under development and prepayments\u201d, is \u20ac41.7 million (at 31 December 2022 \u20ac161.4 million and \u20ac46.1 million, respectively);\u2022 the concession for electricity transmission and dispatching activities in Italy (with a carrying amount of \u20ac33.7 million at 31 December 2023); this 25-year concession was recognised in 2005, initially at fair value and subsequently at cost.
Other intangible assets primarily include software applications, either produced internally or purchased as part of systems development programmes, and the contract to provide support services for fibre networks acquired with Rete S.r.l. in 2015 (measured as part of the process of allocating the goodwill acquired by the Terna Group). Investment in these assets during the year, primarily attributable to the Parent Company (\u20ac137.0 million), essentially regard internal development programmes.
The increase compared with the previous year (up \u20ac90.6 million) broadly reflects the net effect of investment (up \u20ac216.2 million, including \u20ac77.5 million in infrastructure rights) and amortisation (down \u20ac126.4 million).
Investment in intangible assets during the year (\u20ac216.2 million, including \u20ac214.5 million attributable to the Parent Company\u2019s Regulated Activities), included expenditure on the development of software applications for the Remote Management System for Dispatching (\u20ac41.9 million), the Power Exchange (\u20ac13.5 million), the Metering\u00a0System (\u20ac1.7 million) and for protection of the electricity system (\u20ac1.7 million), as well as software applications and generic licences (\u20ac133.4 million).
16. Deferred tax assets \u2013 \u20ac168.7 million
(\u20acm)
31 December 2022
PROVISIONS
USES AND OTHER MOVEMENTS
EFFECTS RECOGNISED IN COMPREHENSIVE INCOME
31 December 2023
DEFERRED TAX ASSETS
Property, plant and equipment
56.7
32.5
-
-
89.2
Provisions for risks and charges
21.2
5.8
(5.3)
-
21.7
Allowance for doubtful accounts
4.6
-
-
-
4.6
Employee benefits
11.5
6.6
(5.2)
0.9
13.8
Cash flow hedges and financial assets
(23.8)
-
-
11.5
(12.3)
Tax relief on goodwill
14.8
-
(3.0)
-
11.8
Other
63.7
5.9
(3.7)
-
65.9
DEFERRED TAX LIABILITIES
148.6
50.8
(17.2)
12.4
194.7
Property, plant and equipment
Other
(9.5)
-
1.2
-
\u00a0(8.3)
Employee benefits and financial instruments
(15.3)
-
0.5
-
\u00a0(14.8)
Total deferred tax liabilities
(2.9)
-
-
-
\u00a0(2.9)
DEFERRED TAX LIABILITIES
(27.7)
-
1.7
-
\u00a0(26.0)
NET DEFERRED TAX ASSETS
121.0
50.8
(15.5)
12.4
168.7
The balance of this item, amounting to \u20ac168.7 million, includes the net impact of movements in the Group\u2019s deferred tax assets and liabilities.
Deferred tax assets (\u20ac194.7 million) are up by a net amount compared with the amount at 31 December 2022 (\u20ac148.6 million). These assets underwent the following movements during the year:
\u2022 net provisions recognised through comprehensive income, totalling \u20ac12.4 million, primarily due to the tax effect of changes in cash flow hedges and employee benefits;
\u2022 provisions recognised by Terna S.p.A. for the non-deductible portion of book depreciation (\u20ac32.5 million);
\u2022 use of the accrued portion recognised in relation to tax relief on the goodwill resulting from the merger of Terna Rete Italia S.r.l. and attributable to the Parent Company (\u20ac3.0 million);
\u2022 net provisions for risks and charges (\u20ac0.5 million), primarily reflecting the impact on taxation of the release of provisions for litigation and disputes (\u20ac0.4 million);
\u2022 net provisions and other movements, totalling \u20ac2.2 million, primarily regarding the recognition of deferred tax assets revaluations of properties and on other items recognized by the overseas companies.
Deferred tax liabilities (26,0 million) are down by a net amount of \u20ac1,7 essentially due to net provisions and other movements of \u20ac1.2 million, primarily following the recognition of deferred tax liabilities on other provisions made by the subsidiary, Rete S.r.l..
17. Investments accounted for using the equity method \u2013 \u20ac76.7 million
This item, amounting to \u20ac76.7 million, regards the Parent Company\u2019s investments in the associate CESI S.p.A. (\u20ac46.1 million), the associate CORESO S.A. (\u20ac1.0 million), the associate CGES \u2013 CrnoGorski Elektroprenosni Sistem AD (\u20ac26.7 million), the associate Equigy B.V. (\u20ac0.4 million) and in the joint ventures SEleNe CC S.A. (\u20ac2.1 million), ELMED Etudes S.a.r.l. (\u20ac0.2 million) and BMT Energy Transmission Development LLC (\u20ac0.2 million). The increase compared with the previous year, totalling \u20ac2.9 million, essentially reflects the adjustment of the Group\u2019s share of equity at 31 December 2023 in the joint venture SEleNe CC S.A., which rose from 25% to 33.33% in February (up \u20ac2.1 million) and in the associates, CESI S.p.A. (up \u20ac0.7 million) and CORESO S.A. (up \u20ac0.1 million).
Financial information pre-closing for 2023 for the Terna Group\u2019s main associates is provided below:
(\u20acm)
at 31 December 2023
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity
CESI
179
13
20
(*)
99
CORESO
17
5
-
16
6
CGES
272
81
73
35
245
EQUIGY
2
-
-
-
2
(*) The pre-closing amount for 2023 does not provide a breakdown of working capital.
(\u20acm)
2023
Revenue
Profit/(Loss) before tax
Profit/(Loss)for the year
CESI
164
(5)
(5)
CORESO
33
2
1
CGES
108
42
36
EQUIGY
5
-
-
18. Financial assets
(\u20acm)
Measurement
31 December 2023
31 December 2022
Change
Deposit in the Interconnector Guarantee Fund
Amortised cost
285.0
299.1
\u00a0(14.1)
Cash flow hedges
FVTOCI
17.4
75.5
\u00a0(58.1)
Government securities
FVTOCI
119.1
119.6
\u00a0(0.5)
Other non-current financial assets
FVTOCI
4.2
0.1
4.1
Other investments
FVTOCI
0.1
0.1
-
NON-CURRENT FINANCIAL ASSETS
\u00a0
425.8
494.4
\u00a0(68.6)
Government securities
FVTOCI
96.8
148.8
\u00a0(52.0)
Other securities
FVPNL-FVTOCI
100.4
98.0
2.4
Time Deposits
Amortised cost
165.0
\u00a0-
165.0
Deferred assets on cash flow hedges
\u00a0
7.3
3.5
3.8
Currency derivatives
FVTOCI
0.4
0.2
0.2
Other current financial assets
\u00a0
14.2
4.8
9.4
CURRENT FINANCIAL ASSETS
\u00a0
384.1
255.3
128.8
\u201cNon-current financial assets\u201d are down \u20ac68.6 million, compared with 31 December 2022, reflecting:
\u2022 a reduction of \u20ac58.1 million in cash flow hedges hedging borrowings due to market interest rate movements and the change in the derivatives held. The balance of \u20ac17.4 million was measured by discounting expected cash flows using market interest rates at the measurement date;
\u2022 an increase of \u20ac4.1 million in other non-current financial assets, primarily due to investments by Terna Forward in the Infra Tech and Energy Tech segments of CDP Venture Capital\u2019s Corporate Partner I fund;
\u2022 a reduction in guarantee deposits made by operators who participate in the capacity market pursuant to Resolution 98/2011/R/eel, as amended (down \u20ac31.7 million) offset by an increase in the Interconnector Guarantee Fund, set up to fund investment in interconnections by art. 32 of Law 99/09 (up \u20ac17.6 million).
\u201cCurrent financial assets\u201d are up \u20ac128.8 million compared with the previous year, primarily due to an increase in short-term time deposits during the period (amounting to \u20ac165.0 million), the increase in unpaid accrued interest on financial investments (amounting to \u20ac9.4 million) and recognition of unpaid accrued interest on derivatives (up \u20ac3.8 million), offset by the reduction in holdings of Italian government securities (down \u20ac52.0 million).
19. Other assets
(\u20acm)
31 December 2023
31 December 2022
Change
Loans and advances to employees
10.9
11.0
\u00a0(0.1)
Deposits with third parties
4.6
4.8
\u00a0(0.2)
Other non-current assets
-
0.1
\u00a0(0.1)
OTHER NON-CURRENT ASSETS
15.5
15.9
\u00a0(0.4)
Other tax credits
110.1
86.4
23.7
Prepayments to suppliers
11.1
9.2
1.9
Prepayments of operating expenses and accrued operating income
24.0
22.7
1.3
Amounts due from partners selected for Interconnector projects
2.9
3.1
(0.2)
Amounts due from others
65.3
70.5
(5.2)
OTHER CURRENT ASSETS
213.4
191.9
21.5
\u201cOther non-current assets\u201d amount to \u20ac15.5 million and are down \u20ac0.4 million compared with the previous year. This primarily reflects decreases in guarantee deposits paid under contracts with public bodies and authorities (down \u20ac0.2 million).
\u201cOther current assets\u201d, totalling \u20ac213.4 million, are up \u20ac21.5 million compared with 31 December 2022, primarily reflecting:
\u2022 other tax credits (up \u20ac23.7 million), mainly reflecting an increase in the Group\u2019s refundable VAT (up \u20ac17.8 million);
\u2022 an increase in prepayments to suppliers (up \u20ac1.9 million), broadly due to an increase in prepayments made by the subsidiary, Terna Energy Solutions S.r.l. (up \u20ac1.3 million) following the start of work on new contracts during the year;
\u2022 a reduction in amounts due from others (\u20ac5.2 million), broadly attributable to the Parent Company, Terna S.p.A. (down \u20ac6.7 million), partially offset by a net increase in subsidies (the so-called 110% grant) due to the subsidiary, Avvenia (\u20ac1.7 million).
20. Inventories \u2013 \u20ac106.4 million
This item, amounting to \u20ac106.4 million, is up \u20ac23.4 million compared with the previous year. This primarily reflects materials to be used in contract work by the LT Group (up \u20ac21.0 million), by the Brugg Cables Group (up \u20ac1.3 million) and by Terna Rete Italia S.p.A. (up \u20ac1.1 million).
21. Trade receivables \u2013 \u20ac2,123.4 million
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Change
Energy-related receivables
1,268.5
1,622.8
(354.3)
Transmission charges receivables
576.2
472.8
103.4
Other trade receivables
278.7
262.7
16.0
TOTAL
2,123.4
2,358.3
\u00a0(234.9)
Trade receivables amount to \u20ac2,123.4 million at 31 December 2023 and are accounted for less any losses and recognised in the allowance for doubtful accounts (\u20ac13.3 million for energy- related receivables and \u20ac20.9 million for other items in 2023, compared with \u20ac19.7 million for energy-related items and \u20ac17.4 million for other items in 2022, with further details provided in the section \u201cE. Commitments and risks\u201d). The carrying amount shown broadly approximates to fair value.
The measurement of expected credit losses is described in the section, \u201cA. Accounting policies and measurement criteria\u201d.
Energy-related/regulated receivables \u2013 \u20ac1,268.5 million
This item includes so-called \u201cpass-through items\u201d relating to the Parent Company\u2019s activities in accordance with Resolution 111/06 (\u20ac602.6 million) and receivables due from the users of dispatching services forming part of Regulated Activities (\u20ac654.8 million). It also includes the amount due from the Fund for Energy and Environmental Services (Cassa per i Servizi Energetici e Ambientali\u00a0- CSEA (\u20ac11.2 million), relating to quality of service.
These receivables are down \u20ac354.2 million compared with the end of 2022, primarily due to:
\u2022 a reduction in uplift payments for the procurement of resources on the dispatching services market (\u20ac229.7 million) and in items covering the DSM (\u20ac113.2 million) and imbalances (\u20ac369.2 million), reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 partial collection of the intrazonal incentive awarded by Resolution 26/2023, as provided for in the Resolution (\u20ac38.9 million);
\u2022 partly offset by:
\u2022 recognition of the annual bonus for 2023 deriving from the three-year incentive scheme (2022-2024) introduced by Resolutions 597/2021 and 132/2022 and the financial component resulting from discounting (totalling \u20ac329.13\u00a0million);
\u2022 the increase in receivables related to essential plants for the safety of the electricity system \u2013 UESS (\u20ac79.6 million), reflecting the increase in the charge to cover the costs of the maximisation programme introduced by Resolution 430/20224.
3\u00a0The amount of \u20ac329.1 million includes the portion relating to financial income from discounting, amounting to \u20ac26.5 million, in view of the timing of collection provided for in Resolution 132/2022 (which has amended Resolution 597/2021), on the basis of which disbursement of rewards/penalties for the three-year period 2022-2024 will take place as follows:
\u00a0- the reward /penalty for 2022 over three years from 1 January 2024;
\u00a0- the reward /penalty for 2023 over three years from 1 January 2025;
\u00a0- the reward /penalty for 2024 over three years from 1 January 2026.
4\u00a0Law Decree 14/2022 (art. 5-bis) introduced certain preventive measures designed to reduce natural gas consumption in the thermoelectric sector, under which Terna adopted a plan to maximise the use of coal- and oil-fired electricity generating plants with a nominal thermal capacity in excess of 300 MW under normal operating conditions.
Transmission charges receivable \u2013 \u20ac576.2 million
Transmission charges receivable, amounting to \u20ac576.2 million, represent the amount due to the Parent Company and other grid owners from electricity distributors for use of the National Transmission Grid. This receivable is up \u20ac103.4 million compared with 31 December 2022, reflecting the revised tariff (Resolution 719/2022), recognition of the accrued return on digital substation systems in accordance with ARERA Resolution 565/2020, and recognition of the amount due to cover the added costs incurred in 2023 that were not covered by the specific tariff component relating to the Inter-TSO Compensation (ITC) scheme5, recognised from 2020 through the transmission charge.
Other trade receivables \u2013 \u20ac278.7 million
Other trade receivables primarily regard amounts receivable from customers of the non-regulated business. These amounts derive from the provision of specialist services to third parties, primarily in relation to plant engineering services, the operation and maintenance of high-voltage and very high-voltage infrastructure, and the housing of telecommunications equipment and maintenance services for fibre networks, as well as in relation to contract work carried out by the Tamini Group, the subsidiary, Brugg Cables and the LT Group.
This item is up by a net \u20ac16.0 million compared with the previous year, broadly due to increases in contract work at the Brugg Cables Group (up \u20ac10.8 million), Terna Energy Solutions S.r.l. (up \u20ac12.3 million), the LT Group (up \u20ac7.4 million) and Terna Interconnector S.r.l. (up \u20ac8.4 million), offset by a reduction in the Parent Company\u2019s receivables (down \u20ac15.1 million) and those of the subsidiary, Terna Rete Italia S.p.A. (down \u20ac6.5 million)
The following table shows receivables resulting from contract work in progress (\u20ac118.1 million), being carried out by the Group under multi-year contracts with third parties:
(\u20acm)
PRE-
PAYMENTS
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2023
PREPAYMENTS
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2022
Receivables resulting from contract work in progress
(393.0)
511.1
118.1
(305.4)
405.2
99.8
The Group\u2019s receivables resulting from contract work in progress are up by a net \u20ac18.3 million, primarily in relation to the increase in contract work at subsidiaries. This regards the Brugg Cables Group (up \u20ac25.1 million) and Terna Energy Solutions S.r.l. (up \u20ac2.6 million), partially offset by a reduction in contract work at Terna Rete Italia S.p.A. (down \u20ac4.2 million) and the Tamini Group (down \u20ac4.1 million).
22. Cash and cash equivalents \u2013 \u20ac1,378.2 million
Cash amounts to \u20ac1,378.2 million at 31 December 2023, including \u20ac1,194.5 million invested short-term readily convertible deposits and \u20ac183.7 million deposited in bank current accounts and cash in hand.
23. Income tax assets \u2013 \u20ac4.8 million
Income tax assets, amounting to \u20ac4.8 million, are down \u20ac2.0 million compared with the previous year, essentially following the settlement of taxes relating to the previous year and an increase in payments on account after the recognition of income tax for the year. This compares with net tax liabilities at 31 December 2022 (\u20ac43.8 million), recognised in \u201cTax liabilities\u201d.
5\u00a0Inter-TSO Compensation: a payment to TSOs for use of their national transmission grids (infrastructure and losses) to transport energy, including those relating to cross-border flows. The related charges are allocated to \u201cEnergy-related non pass-through payables\u201d.
Equity and liabilities
24. Equity attributable to owners of the Parent and non-controlling interests
Equity attributable to owners of the Parent \u2013 \u20ac6,324.4 million
Share capital \u2013 \u20ac442.2 million
The Parent Company\u2019s share capital consists of 2,009,992,000 ordinary shares with a par value of \u20ac0.22 per share.
Legal reserve \u2013 \u20ac88.4 million
The legal reserve accounts for 20% of the Parent Company\u2019s share capital.
Reserve for treasury shares \u2013 (\u20ac29.8) million
In implementation of the buyback programme linked to the new Performance Share Plan 2023-2027, approved by the Annual General Meeting of shareholder on 9 May 2023, in the period between 22 June 2023 and 6 July 2023, the Parent Company purchased 917,611 own shares (equal to 0.046% of the share capital), at a total cost of approximately \u20ac7 million. These are in addition to those purchased in previous years to service the Performance Share Plan 2020-2023, the Performance Share Plan 2021-2025 and the Performance Share Plan 2022-2026.
In addition, in the period between 9 May 2023 and 1 June 2023, the Parent Company allotted 1,079,860 treasury shares to the beneficiaries of the Performance Share Plan 2020-2023, amounting to a total of approximately \u20ac6.7 million.
As a result, at 31 December 2023, Terna S.p.A. now holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), purchased at a cost of \u20ac29.8 million, thereby reducing other reserves by this amount.
Reserve for equity instruments \u2013 \u20ac989.0 million
On 2 February 2022, the Parent Company issued perpetual hybrid green bonds\u00a0with a nominal value of \u20ac1 billion, recognised in the reserve for equity instruments at an amount of \u20ac989.0 million. This reserve is unchanged with respect to 31 December 2022.
These non-convertible, perpetual, subordinated green bonds are non-callable for six years and will pay coupon interest of 2.375% until 9 February 2028, the first reset date. After this date, the bonds will pay annual interest equal to the 5-year Euro Mid-Swap rate plus a spread of 212.1 basis points. This will be increased by a further spread of 25 basis points from 9 February 2033 and by an additional 75 basis points from 9 February 2048.
Share premium reserve, Cash flow hedge reserve and Other reserves \u2013 \u20ac789.0 million
The \u201cShare premium reserve\u201d, \u201cCash flow hedge reserve\u201d and \u201cOther reserves\u201d at 31 December 2023 amount to \u20ac789.0 million, having fallen \u20ac38.3 million compared with 31 December 2022, broadly as a result of other comprehensive income. This reflects:
\u2022 fair value adjustments to the Parent Company\u2019s cash flow hedges (down \u20ac37.4 million, including the related hedging costs of \u20ac0.2 million, after the related taxation);
\u2022 the change in actuarial gains and losses on provisions for employee benefits (down \u20ac3.5 million, after the related taxation);
\u2022 fair value adjustments to the value of financial assets represented by securities (up \u20ac1.0 million, after the related taxation).
Retained earnings and accumulated losses \u2013 \u20ac3,390.5 million
The increase in \u201cRetained earnings and accumulated losses\u201d, amounting to \u20ac209.6 million, primarily regards the remaining portion of the Group\u2019s profit for 2022 (up \u20ac225.0 million), following the Parent Company\u2019s payment of the dividend for 2022 (totalling \u20ac632.0 million). This item includes the translation differences resulting from the conversion of financial statements in currencies other than the euro (up \u20ac11.5 million), the change in the interest accruing on the hybrid green bonds (down \u20ac23.8 million).
On 8 November 2023, the Company\u2019s Board of Directors, having obtained the Independent Auditor\u2019s opinion required by article 2433-bis\u00a0of the Italian Civil Code, decided to pay an interim dividend of 11.46 eurocents per share. The dividend was payable from 22 November 2023, with an ex-dividend date for coupon 39 on 20 November 2023. The dividend was paid to the holders of each ordinary share outstanding, with the exception of the amount payable on treasury shares held at the record date of 21 November 2023.
The Annual General Meeting of shareholders held on 9 May 2023 approved payment of a dividend for full-year 2022 of 31.44 eurocents per share, and the payment \u2013 before any withholdings required by law \u2013 of a final dividend of 20.83 eurocents per share (payable from 21 June 2023, with an ex-dividend date for coupon 38 of 19 June 2023), of which 10.61 eurocents paid in the form of an interim dividend payable from 23 November 2022.
Equity attributable to non-controlling interests \u2013 \u20ac18.9 million
Equity attributable to non-controlling interests, relating to the non-controlling shareholders of Terna Interconnector S.r.l., SPE Transmissora de energia Linha Verde I S.A., Brugg Cables, ESPERIA-CC S.r.l. and LT Group, amounts to \u20ac18.9 million, a reduction of \u20ac8.2 million compared with 31 December 2022.
This change primarily reflects the payment of a dividend approved on 13 April 2023 by the General Meeting of shareholders of the subsidiary, Terna Interconnector. The amount due to the non-controlling shareholder, Transenergia S.r.l. was \u20ac5.4 million. A further dividend was paid by the subsidiary, LT S.r.l., on 21 March 2023, with the amount due to the non-controlling shareholder, Solaris S.r.l., amounting to \u20ac0.4 million. The change also reflects the share of profit for the period attributable to non-controlling shareholders recognised by Terna Interconnector S.r.l. (down \u20ac0.3 million), the Brugg Cables Group (down \u20ac0.1 million), Linha Verde I S.A. (down \u20ac4.7 million) and the LT Group (\u20ac2.5 million).
25. Borrowings and financial liabilities
(\u20acm)
31 December 2023
31 December 2022
Change
Bond issues
5,664.2
5,078.9
585.3
Bank borrowings
3,745.0
3,337.8
407.2
LONG-TERM BORROWINGS
9,409.2
8,416.7
992.5
Fair value hedges
164.5
247.2
\u00a0(82.7)
NON-CURRENT FINANCIAL LIABILITIES
164.5
247.2
(82.7)
SHORT-TERM BORROWINGS
1,201.7
444.1
757.6
Bond issues
826.4
1,658.8
\u00a0(832.4)
Bank borrowings
558.2
250.5
307.7
CURRENT PORTION OF LONG-TERM BORROWINGS
1,384.6
1,909.3
\u00a0(524.7)
CURRENT FINANCIAL LIABILITIES
113.8
44.9
68.9
TOTAL
12,273.8
11,062.2
1,211.6
Borrowings and financial liabilities have increased by \u20ac1,211.6 million compared with the previous year to \u20ac12,273.8 million. The change primarily reflects:
\u2022 an increase in bank borrowings, amounting to \u20ac714.9 million, following the drawdown of new EIB loans, totalling \u20ac900 million, after repayments of bank loans amounting to \u20ac100.0 million and repayments falling due on existing EIB loans. The change also reflects fair value adjustments of these financial instruments;
\u2022 an increase in short-term borrowings (\u20ac757.6 million) due to the use of short-term facilities and the issue of commercial paper by the Parent Company;
\u2022 a reduction in bond issues (down \u20ac247.1 million), essentially due to the repayment of two bonds (totalling \u20ac1,000 million in July 2023 and \u20ac670.8 million in September 2023), partially offset by the launch of the same number of issues amounting to \u20ac1,400 million, carried out by Terna S.p.A. in April and July 2023. The change also reflects fair value adjustments of these financial instruments.The latest official prices at 31 December 2023 and 31 December 2022 for the bonds listed on the Luxembourg Stock Exchange are detailed below:
(\u20acm)
ISIN
PRICE AT31 DECEMBER 2023
PRICE AT31 DECEMBER 2022
Bond maturity 2023*:
XS0328430003
\u00a0n.a.**
\u00a0133.90
Bond maturity 2023:
XS1858912915
\u00a0n.a.**
\u00a099.13
Bond maturity 2024:
XS0203712939
\u00a0100.92
\u00a0102.21
Bond maturity 2025:
XS2033351995
\u00a094.95
\u00a091.69
Bond maturity 2026:
XS1371569978
\u00a095.96
\u00a093.87
Bond maturity 2026:
XS1980270810
\u00a095.51
\u00a092.27
Bond maturity 2027:
XS1652866002
\u00a094.40
\u00a090.25
Bond maturity 2027:
XS2536846236
\u00a0100.33
\u00a0100.78
Bond maturity 2028:
XS1503131713
\u00a091.46
\u00a085.03
Bond maturity 2029:
XS2357205587
\u00a086.53
\u00a080.02
Bond maturity 2029:
XS2607193435
\u00a0102.26
\u00a0n.a.**
Bond maturity 2030:
XS2237901355
\u00a082.94
\u00a075.66
Bond maturity 2032:
XS2209023402
\u00a081.82
\u00a073.78
Bond maturity 2033:
XS2655852726
\u00a0103.26
\u00a0n.a.**
* Source: BofA, Morgan Stanley and Bloomberg.
** Not applicable.
Long-term borrowings
The table below shows movements in long-term debt during the year, including also the nominal amount:
(\u20acm)
31 December 2022
31 December 2023
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
REPAYMENTS AND CAPITALISATIONS
DRAWDOWNS
OTHER
CHANGE IN THE CARRYING AMOUNT NOTIONAL DEBT
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
IL bond
662.0
659.6
886.4
\u00a0(670.8)
\u00a0-
11.2
\u00a0(659.6)
-
-
-
Bond maturing 2023
1,000.0
999.2
991.3
\u00a0(1,000.0)
\u00a0-
0.8
\u00a0(999.2)
-
-
-
Bond maturing 2024
800.0
858.2
817.7
\u00a0-
\u00a0-
\u00a0(31.8)
\u00a0(31.8)
800.0
826.4
807.4
Bond maturing 2025
500.0
497.5
458.4
\u00a0-
\u00a0-
1.0
1.0
500.0
498.5
474.7
Private Placement 2026
80.0
79.5
75.1
\u00a0-
\u00a0-
0.2
0.2
80.0
79.7
76.8
Bond maturing 2026
500.0
498.9
461.3
\u00a0-
\u00a0-
0.3
0.3
500.0
499.2
477.6
Private Placement 2027
100.0
99.8
100.8
\u00a0-
\u00a0-
\u00a0-
\u00a0-
100.0
99.8
100.3
Bond maturing 2027
1,000.0
984.9
902.4
\u00a0-
\u00a0-
3.1
3.1
1,000.0
988.0
944.0
Bond maturing 2028
750.0
705.6
637.7
\u00a0-
\u00a0-
7.3
7.3
750.0
712.9
685.9
Bond maturing 750_2029
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0750.0
\u00a0(7.3)
742.7
750.0
742.7
766.9
Bond maturing 2029
600.0
597.1
480.1
\u00a0-
\u00a0-
0.5
0.5
600.0
597.6
519.2
Bond maturing 2030
500.0
403.8
378.3
\u00a0-
\u00a0-
33.2
33.2
500.0
437.0
414.7
Bond maturing 2032
500.0
353.6
368.9
\u00a0-
\u00a0-
12.7
12.7
500.0
366.3
409.1
Bond maturing 2033
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0650.0
\u00a0(7.5)
642.5
650.0
642.5
671.2
Total bond issues
6,992.0
6,737.7
6,558.4
\u00a0(1,670.8)
1,400.0
23.7
\u00a0(247.1)
6,730.0
6,490.6
6,347.8
Borrowings
3,524.3
3,520.6
3,520.6
\u00a0(234.4)
900.0
51.4
717.0
3,799.4
4,237.6
4,237.6
Lease liabilities
67.7
67.7
67.7
\u00a0(14.8)
\u00a0-
12.7
\u00a0(2.1)
65.6
65.6
65.6
Total borrowings
3,592.0
3,588.3
3,588.3
\u00a0(249.2)
900.0
64.1
714.9
3,865.0
4,303.2
4,303.2
Total debt
10,584.0
10,326.0
10,146.7
\u00a0(1,920.0)
2,300.0
87.8
467.8
10,595.0
10,793.8
10,651.0
At 31 December 2023, the Terna Group\u2019s has access to additional financing of \u20ac3,455.0 million, represented by two revolving credit facilities.
In addition, as provided for in IFRS 7, the table shows the fair value of borrowings and bond issues. In the case of bond issues, this is market value based on prices at the reporting date, whilst variable rate loans are measured by discounting expected cash flows based on the market interest rate curve at the reporting date.
The following table shows an analysis of bond issues and other borrowings by maturity, showing the related short-term portions.
(\u20acm)
Maturity
31 December 2022*
31 December 2023*
Portion falling due within 12 months
Portion falling due after 12 months
2025
2026
2027
2028
2029
After
Other**
\u00a0Average interest rate at 31 December 2023
Average interest rate after hedges at 31 December 2023
Bonds
2023
659.6
-
-
-
-
-
-
-
-
-
-
2.73%
5.08%
2023
999.2
-
-
-
-
-
-
-
-
-
-
1.00%
1.15%
2024
858.2
826.4
800.0
-
-
-
-
-
-
-
26.4
4.90%
0.87%
2025
497.6
498.5
-
500.0
500.0
-
-
-
-
-
(1.5)
0.13%
0.32%
2026
498.8
499.2
-
500.0
-
500.0
-
-
-
-
(0.8)
1.00%
1.28%
2026
79.5
79.7
-
80.0
-
80.0
-
-
-
-
(0.3)
1.60%
1.80%
2027
984.8
988.0
-
1,000.0
-
-
1,000.0
-
-
-
(12.0)
1.38%
1.91%
2027
99.8
99.8
-
100.0
-
-
100.0
-
-
-
(0.2)
3.44%
2.77%
2028
705.6
712.9
-
750.0
-
-
-
750.0
-
-
(37.1)
1.00%
1.29%
2029
597.2
597.6
600.0
-
-
-
600.0
-
(2.4)
0.38%
1.71%
2029
-
742.7
-
750.0
-
-
-
-
750.0
-
(7.3)
3.63%
3.76%
2030
403.8
437.0
-
500.0
-
-
-
-
-
500.0
(63.0)
0.38%
3.30%
2032
353.6
366.3
-
500.0
-
-
-
-
-
500.0
(133.7)
0.75%
3.11%
2033
642.5
650.0
-
-
-
-
650.0
(7.5)
3.88%
3.91%
EIB
2045
1,475.0
2,407.2
24.6
2,488.5
47.7
58.5
117.1
142.2
142.2
1,980.8
(105.9)
2.43%
1.75%
Terna\u2019s borrowing
2024
300.0
300.0
300.0
-
-
-
-
-
-
-
-
-
(1.22%)
Total fixed rate
\u00a0
8,512.7
9,197.8
1,124.6
8,418.5
547.7
638.5
1,217.1
892.2
1,492.2
3,630.8
\u00a0(345.3)
\u00a0
\u00a0
EIB
2041
950.2
836.3
115.3
721.0
115.3
115.3
115.3
115.3
96.0
163.8
\u00a0-
3.7%***
1.57%
Terna\u2019s borrowing
2025
799.1
699.4
100.0
600.0
600.0
-
-
\u00a0-
-
\u00a0-
\u00a0(0.6)
3.82%***
3.77%
Total variable rate
\u00a0
1,749.3
1,535.7
215.3
1,321.0
715.3
115.3
115.3
115.3
96.0
163.8
\u00a0(0.6)
\u00a0
\u00a0
TOTAL
\u00a0
10,262.0
10,733.5
1,339.9
9,739.5
1,263.0
753.8
1,332.4
1,007.5
1,588.2
3,794.6
\u00a0(345.9)
\u00a0
\u00a0
*\tThe balance does not include prepaid fees of \u20ac5.3 million at 31 December 2023 and of \u20ac3.7 million at 31 December 2022.
**\tIncludes portions measured at amortised cost and fair value adjustments at 31 December 2023.
***\tThis is the average of the rates fixed in the sub-periods.
(\u20acm)
31 December 2022
31 December 2023
Portion falling due within 12 months
Portion falling due after 12 months
Finance leases
1.9
1.0
1.0
-
Operating leases
65.8
64.6
17.3
47.3
TOTAL
67.7
65.6
18.3
47.3
At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac14.8 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
Non-current financial liabilities \u2013 \u20ac164.5 million
(\u20acm)
31 December 2023
31 December 2022
Change
Fair value hedges
164.5
247.2
(82.7)
TOTAL
164.5
247.2
Non-current financial liabilities, amounting to \u20ac164.5 million at 31 December 2023, reflect the fair value of fair value hedges.
Fair value was measured by discounting the expected cash flows using the market yield curve at the reporting date. The decreases of \u20ac82.7 million, compared with 31 December 2022 reflects the change in market interest rates.
Short-term borrowings \u2013 \u20ac1,201.7 million
\u201cShort-term borrowings\u201d, amounting to \u20ac1,201.7 million at 31 December 2023, have increased \u20ac757.6 million compared with the previous year, essentially due to the use of short-term credit facilities and the issue of commercial paper by the Parent Company.
Current financial liabilities \u2013 \u20ac113.8 million
(\u20acm)
31 December 2023
31 December 2022
Change
Foreign exchange cash flow hedges
\u00a00.1
\u00a0-
0.1
Fair value hedges
\u00a0-
0.8
\u00a0(0.8)
Other current financial liabilities
38.5
\u00a0-
38.5
DEFERRED LIABILITIES ON:
Hedging derivatives
1.3
0.6
0.7
Bond issues
53.5
33.5
20.0
Borrowings
20.4
10.0
10.4
TOTAL
113.8
44.9
68.9
Current financial liabilities amount to \u20ac113.8 million at 31 December 2023, an increase of \u20ac68.9 million compared with 31 December 2022. This essentially reflects the value of net unpaid financial expenses accruing on financial instruments (up \u20ac30.4 million, primarily relating to bond issues and borrowings) and recognition of the advance disbursed by the European Commission in relation to the Italy\u2013Tunisia interconnector project (up \u20ac38.5 million), attributable to the Tunisian operator, STEG.
Net debt
Pursuant to the CONSOB Communication of 28 July 2006 and in compliance with Recommendation ESMA n. 32-382-1138 of 2021, the Group\u2019s net debt is as follows:
(\u20acm)
31 DECEMBER 2023
A.
Cash
183.7
B.
Cash equivalents*
1,194.5
C.
Other current financial assets**
376.4
D.
Liquidity (A) + (B) + (C)
1,754.6
E.
Current financial liabilities (including debt instruments, but excluding the current portion of non-current financial liabilities)
1,201.7
F.
Current portion of non-current debt***
1,490.7
G.
Current debt (E+F)
2,692.4
H.
Net current debt (G) - (D)
937.8
I.
Non-current financial liabilities (excluding the current portion and debt instruments)****
3,833.4
J.
Debt instruments*****
5,723.1
K.
Non-current net debt (I) + (J)
9,556.5
L.
Net debt (H) + (K)
10,494.3
*\tCorresponds with the item, \u201cCash and can equivalents\u201d relating to the value of short-term deposits.
**\tCorresponds with the item, \u201c Current financial assets\u201d relating to the value of government securities (\u20ac197.2 million), readily convertible time deposits (\u20ac165.0 million) and accrued interest income (\u20ac14.3 million).
***\tCorresponds with the item, \u201cCurrent portion of long-term borrowings\u201d relating to the short-term portion of long-term borrowings (\u20ac539.9 million), the short-term portion of bond issues (\u20ac826.4 million) and the short-term portion of lease liabilities (\u20ac18.3 million), \u201c Current financial liabilities\u201d and \u201cCurrent financial assets\u201d relating to the value of derivative assets and accrued financial income on derivatives (down \u20ac7.7 million).
****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of borrowings (\u20ac3,697.7 million) and the long-term portion of lease liabilities (\u20ac47.3 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities (\u20ac105.6 million) and \u201cNon-current financial assets\u201d relating to derivative assets (down \u20ac17.2 million).
*****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of bond issues (\u20ac5,664.2 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities on bonds (\u20ac58.9 million).
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Group is a party may contain provisions that, if certain events occur, authorise counterparties to call in such loans immediately, thereby generating liquidity risk.
Certain long-term loans obtained by the Parent Company, Terna S.p.A., contain covenants that are typical of international practice. The principal covenants relate to:
\u2022 the Company\u2019s bond issues, which consist of an \u20ac800.0 million issued in 2004, perpetual hybrid green bonds of \u20ac1,000,000,000 and eleven issues as part of its EMTN Programme (\u201c\u20ac9,000,000,000 Euro Medium Term Notes Programme\u201d);
\u2022 bank borrowings, consisting of revolving lines of credit and bilateral term loans (\u201cbank debt\u201d);
\u2022 a series of loans to the Company from the European Investment Bank (EIB), amounting to a total of approximately \u20ac3.3 billion.
The main covenants relating to bond issues and the EMTN Programme involve clauses regarding i) \u201cnegative pledges\u201d, on the basis of which the Issuer or its Relevant Subsidiaries undertake not to create or maintain mortgages, pledges or other encumbrances on their assets or revenue to guarantee specific financial debt, unless the encumbrances are extended on an equal or pro rata basis to the bond issues in question (with the exception of certain \u201cpermitted guarantees\u201d); ii) \u201cpari passu\u201d, on the basis of which the securities constitute a direct, unconditional and unsecured obligation by the Issuer, ranking equally among them and with at least the same level of seniority as other present and future unsecured and non- subordinated borrowings of the Issuer; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g., failure to make a repayment, the liquidation of the Issuer, the breach of contractual obligations, a cross-default, etc.) a situation of default is established and the loan is immediately called in. \u00a0
The main covenants relating to bank borrowings involve clauses related to i) negative pledges, on the basis of which the Issuer or the Relevant Subsidiaries undertake not to create or maintain guarantees on their assets to secure borrowings, with the exception of \u201cpermitted guarantees\u201d; ii) pari passu\u00a0on the basis of which the Borrower\u2019s payment obligations in relation to the loan agreements in question are not subordinated to any obligation related to other unsecured and non-subordinated creditors, without prejudice to privileges under the law; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, business discontinuation, substantially prejudicial effects, the breach of contractual obligations, including pari passu\u00a0conditions, a cross-default, etc.) a situation of default is established and the loan is immediately called in; iv) \u201cratings\u201d, which involve accelerated repayment should the rating fall below investment grade for the majority of rating agencies or should the Borrower cease to be rated by at least one agency.
The main covenants related to the EIB loans involve clauses related to i) negative pledges, on the basis of which the Company cannot create personal or real guarantees or, more generally, encumbrances, with the exception of encumbrances granted in relation to borrowings below given amounts and under contractually specified circumstances; ii) the provision to the Bank, at its request, of new guarantees should the ratings assigned by the rating agencies fall below the level indicated in the respective contracts agreed or should the Company cease to be rated by the rating agencies; iii) pari passu, on the basis of which the Company ensures that payment obligations rank equally with those related to all other unsecured, non-subordinated creditors, without prejudice to privileges under the law; iv) cases of contract termination/application of the call provision/withdrawal (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, events that have a negative impact on financial commitments made by the Company, extraordinary administration, liquidation, substantial prejudicial changes, the breach of contractual commitments, etc.); v) accelerated loan payment following the occurrence of given events (e.g. change of control over the Company, loss of the concession, extraordinary corporate events, etc.).
26. Employee benefits \u2013 \u20ac49.8 million
The Group provides its employees with benefits during their period of employment (loyalty bonuses), on termination of employment (TFR, energy discounts, additional months\u2019 pay and payment in lieu of notice) and after termination in the form of post-employment benefits (ASEM health cover).
Loyalty bonuses are payable to the Group\u2019s employees and senior managers once certain requirements have been met regarding length of service (on completing 25 and 35 years of service).
Termination benefits (TFR) are payable to all employees, whilst employees hired by 30 June 1996 receive energy discounts, senior managers recruited or appointed before 28 February 1999 receive payment in lieu of notice and employees (blue-collar workers, office staff and middle managers) employed prior to 24 July 2001 are due additional months\u2019 pay on termination.
Post-employment benefits consist of a form of supplementary health cover in addition to that provided by the Italian national health service, as provided for in the national collective contract for industrial managers (the ASEM health plan).
The following table shows the composition of provisions for TFR\u00a0and other employee benefits and movements during the year ended 31 December 2023:
(\u20acm)
31 December 2022
Provisions
Interest cost
Uses and other movements
Actuarial
gains/(losses)
31 December 2023
Benefits during the period of employment
Loyalty bonuses and other incentives
4.0
0.7
0.1
\u00a0(0.4)
\u00a0-
4.4
Total
4.0
0.7
0.1
\u00a0(0.4)
\u00a0-
4.4
Termination benefits
Deferred compensation benefits (TFR)
29.2
0.4
1.0
\u00a0(2.4)
0.2
28.4
Energy discounts
2.4
\u00a0-
0.1
\u00a0(0.2)
\u00a0(0.1)
2.2
Additional months\u2019 pay
4.1
0.6
0.1
\u00a0(0.4)
0.2
4.6
Other similar benefits
0.6
-
\u00a0-
0.1
\u00a0-
0.7
Total
36.3
1.0
1.2
\u00a0(2.9)
0.3
35.9
Post-employment benefits
ASEM health plan
8.1
0.3
0.3
\u00a0(0.6)
1.4
9.5
Total
8.1
0.3
0.3
\u00a0(0.6)
1.4
9.5
TOTAL
48.4
2.0
1.6
\u00a0(3.9)
1.7
49.8
This item, amounting to \u20ac49.8 million at 31 December 2023, is up \u20ac1.4 million compared with the previous year. This is primarily due to actuarial losses (up \u20ac1.7 million, broadly due to the change in the discount rate used).
The following table shows the current service cost and interest income and expense.
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional
months\u2019 pay
Energy discounts
ASEM
TOTAL
Net impact recognised in profit or loss
- current service cost
0.7
0.4
0.1
\u00a0-
0.3
1.5
- curtailment (revenue) and other costs
\u00a0-
\u00a0-
0.5
\u00a0-
\u00a0-
0.5
- interest income and expense
0.1
1.0
0.1
0.1
0.3
1.6
TOTAL RECOGNISED IN PROFIT OR LOSS
0.8
1.4
0.7
0.1
0.6
3.6
The revaluation of the net liability for employee benefits is shown in the following table, which provides details of the type of actuarial gain or loss recognised in other comprehensive income.
(\u20acm)
TFR
Additional
Months\u2019 pay
Energy discounts
ASEM health cover
TOTAL
Actuarial gain/losses
- based on past experience
\u00a0(0.3)
0.1
\u00a0(0.2)
0.6
0.2
- due to changes in discount rate
0.5
0.1
0.1
0.8
1.5
TOTAL IMPACT ON COMPREHENSIVE INCOME
0.2
0.2
\u00a0(0.1)
1.4
1.7
Finally, the following tables show the main actuarial assumptions applied, a sensitivity analysis of movements in the assumptions and the payment schedule for the plan. In line with 2022, the interest rate used to determine the present value of the obligation was calculated on the basis of the yield on the Iboxx Eurozone Corporates AA index at 31 December 2023, matching the duration of the relevant group of plan participants.
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional
Months\u2019 pay
Energy discounts
ASEM health cover
Discount rate
3.17%
3.08%
2.95%
3.08%
3.17%
Inflation rate
2.00%
2.00%
-
-
2.70%
Duration (in years)
17-19
6-20
4-7
5-9
14-16
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional months\u2019 pay
Energy discounts
ASEM health cover
TOTAL
Discount rate + 0.25%
3.8
9.9
4.4
2.2
12.1
32.4
Discount rate - 0.25%
3.8
10.2
4.4
2.3
13.0
33.7
Inflation rate + 0.25%
3.9
10.2
\u00a0-
\u00a0-
\u00a0-
14.1
Inflation rate - 0.25%
3.8
10.0
\u00a0-
\u00a0-
\u00a0-
13.8
Annual rate of increase in health costs +3%
\u00a0-
\u00a0-
\u00a0-
\u00a0-
12.7
12.7
Annual rate of increase in health costs -3%
\u00a0-
\u00a0-
\u00a0-
\u00a0-
12.3
12.3
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional months\u2019 pay
Other similar benefits
Energy discounts
ASEM
health cover
TOTAL
By the end of 2024
0.3
1.3
1.8
\u00a0-
0.3
0.9
4.6
By the end of 2025
0.2
1.4
0.4
\u00a0-
0.2
1.0
3.2
By the end of 2026
0.4
1.2
0.6
\u00a0-
0.2
1.0
3.4
By the end of 2027
0.3
0.4
0.5
\u00a0-
\u00a0-
1.2
2.4
By the end of 2028
0.2
1.0
0.5
\u00a0-
0.2
1.3
3.2
After 5 years
3.0
23.1
0.8
0.7
1.3
4.1
33.0
TOTAL
4.4
28.4
4.6
0.7
2.2
9.5
49.8
27. Provisions for risk and charges \u2013 \u20ac151.8 million
(\u20acm)
PROVISIONS FOR LITIGATION AND DISPUTES
PROVISIONS FOR SUNDRY RISKS AND CHARGES
PROVISIONS FOR EARLY RETIREMENT INCENTIVES
TOTAL
Amount at 31 December 2022
14.0
99.9
26.9
140.8
Provisions
1.7
40.7
14.5
56.9
Uses and other movements
\u00a0(2.8)
\u00a0(35.3)
\u00a0(7.8)
\u00a0(45.9)
Amount at 31 December 2023
12.9
105.3
33.6
151.8
Provisions for litigation and disputes \u2013 \u20ac12.9 million
These provisions, set aside to cover outstanding liabilities that, at the end of the year, could result from court judgements and out-of-court settlements regarding the activities of Group companies, have been assessed partly on the basis of recommendations from internal and external legal advisors. The balance at 31 December 2023, amounting to \u20ac12.9 million, primarily regards disputes involving the Parent Company in relation to the payment of damages relating to operation and maintenance, requests for compensation for easements and labour and social security disputes. This is down by a net \u20ac1.1 million compared with the previous year as a result of lower net provisions during the year.
Provisions for sundry risks and charges \u2013 \u20ac105.3 million
These provisions amount to \u20ac105.3 million at 31 December 2023 and essentially regard liabilities associated with urban and environmental restoration projects, regulation of the quality of the electricity service, staff incentive plans, right-of-way fees and tax-related aspects.
These provisions are up by a net \u20ac5.4 million, compared with the previous year reflecting:
\u2022 net provisions of \u20ac3.8 million for urban and environmental restoration schemes;
\u2022 net provisions for right-of-way fees (up \u20ac5.1 million);
\u2022 a net decrease of \u20ac7.6 million in provisions for staff incentives and other personnel expenses;
\u2022 a net reduction of \u20ac0.8 million in provisions linked to regulation of the quality of the electricity service (the mitigation and sharing mechanism introduced by ARERA Resolution 653/2015/R/eel) which, after provisions for estimated penalties linked to outages during the year, reflects payments to distribution companies and releases following final determination of the penalties due to previous years.
Provisions for early retirement incentives \u2013 \u20ac33.6 million
Provisions for early retirement incentives reflects the estimated extraordinary expenses to be incurred in relation to the cost of the scheme for the year, linked to the early retirement of Group employees who have reached pensionable age and where the Group has an obligation. This item has increased by a net \u20ac6.7 million, reflecting payments in coming years in relation to the existing plan for generational turnover.
28. Other non-current liabilities \u2013 \u20ac948.3 million
This item, amounting to \u20ac948.3 million 31 December 2023, regards accrued grants related to assets receivable by the Parent Company (\u20ac64.3 million), in addition to payments on account received in relation to construction of the private Italy-Montenegro, Italy-France and Italy-Austria Interconnectors (totalling \u20ac464.3 million).
This item also includes the guarantee deposits received from operators participating in the capacity market in accordance with Resolution 98/2011/R/eel (\u20ac120.7 million), in addition to the Interconnector Guarantee Fund set up by Terna S.p.A. following the issue of the 2016 Stability Law (\u20ac163.9 million), in order to fund investment in interconnections by art. 32 of Law 99/09.
The decrease in this item compared with the previous year, amounting to \u20ac23.1 million, essentially reflects a reduction in guarantee deposits received from operators participating in the capacity market in accordance with Resolution 98/2011/R/eel, as amended (down \u20ac34.9 million) and a reduction in deferred income relating to grants related to assets receivable by the Parent Company (down \u20ac5.2 million), partially offset by an increase in the Interconnector Guarantee Fund (up \u20ac17.2 million).29. CURRENT LIABILITIES
(\u20acm)
31 December 2023
31 December 2022
Change
Short-term borrowings*
1,201.7
444.1
757.6
Current portion of long-term borrowings*
1,384.6
1,909.3
(524.7)
Trade payables
2,864.9
3,687.7
(822.8)
Tax liabilities
-
43.8
(43.8)
Current financial liabilities*
113.8
44.9
68.9
Other current liabilities
809.4
669.9
139.5
TOTAL
6,374.4
6,799.7
(425.3)
* Information on these items is provided in note 25, \u201cBorrowings and financial liabilities
Trade payables \u2013 \u20ac2,684.9 million
(\u20acm)
31 December 2023
31 December 2022
Change
Suppliers:
\u00a0
\u00a0
\u00a0
- Energy-related payables
1,649.1
2,649.5
(1,000.4)
- Non-energy-related payables
1,134.9
982.7
152.2
Amounts due to associates
6.7
10.1
(3.4)
Payables resulting from contract work in progress
74.2
45.4
28.8
TOTAL
2,864.9
3,687.7
(822.8)
Suppliers
Energy-related payables
The decrease of \u20ac1,000.4 million in this item compared with the end of 2022 essentially reflects energy-related pass-through payables (down \u20ac1,078.6 million). This is primarily due to:
\u2022 a reduction of \u20ac712.1 in Power Exchange payables, associated with the uplift mechanism. The reduction is due to the sharp fall in dispatching costs (above all DSM costs and the cost of imbalances) reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 a decrease in net payables relating to essential plants for the security of the electricity system - UESS (\u20ac417.1 million), reflecting higher payments made in 2023, which also take into account the maximisation programme introduced by Resolution 430/2022;
partially offset by an increase in payables (\u20ac45.9 million) linked to the Inter-TSO Compensation (ITC) scheme6.
Non-energy related payables
The exposure to suppliers regards invoices received and to be received for contract work, services and purchases The balance at 31 December 2023 (\u20ac1,134.9 million) is up \u20ac152.2 million on the previous year, largely due to increased capital expenditure towards the end of the year (primarily by the subsidiary, Terna Rete Italia S.p.A., up \u20ac127.2 million), and an increase in payables at the LT Group (up \u20ac23.1 million) and the Tamini Group (up \u20ac7.9 million), partially offset by a decrease in payables at the Parent Company (down \u20ac12.4 million).
Amounts due to associates
This item, amounting to \u20ac6.7 million, is down \u20ac3.4 million on the previous year, and regards amounts payable to the associate CESI S.p.A., for services provided primarily to the Parent Company (\u20ac1.4 million) and to the subsidiary Terna Rete Italia S.p.A. (\u20ac4.8 million), relating to electro technical studies and research.
Payables resulting from contract work in progress
Payables resulting from contract work in progress, amounting to \u20ac74.2 million at 31 December 2023, are up \u20ac28.8 million on the figure for 31 December 2022 (\u20ac45.4 million), essentially reflecting contract work in progress at the Brugg Cables Group (up \u20ac12.9 million), contract work in progress at Terna Energy Solutions S.r.l. (up \u20ac8.7 million) and the Tamini Group (up \u20ac7.9 million).
This item breaks down as follows.
(\u20acm)
PREPAYMENTs
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2023
PREPAYMENTs
VALUE OF CONTRACT
BALANACE AT31 DECEMBER 2022
Contract work in progress
131.1
(56.9)
74.2
183.8
(138.4)
45.4
The carrying amount of trade payables broadly approximates to fair value.
The commitments assumed by the Group towards suppliers amount to approximately \u20ac6,027.2 million and regard purchase commitments linked to the normal \u201coperating cycle\u201d projected for the period 2024-2028.
Tax liabilities
At 31 December 2023, this item has a zero balance due to the recognition in \u201cIncome tax assets\u201d of increased payments on account and the settlement of taxes relating to the previous year, after the recognition of income tax for the period. This compares with net tax liabilities at 31 December 2022 (\u20ac43.8 million).
Other current liabilities \u2013 \u20ac809.4 million
(\u20acm)
31 December 2023
31 December 2022
Change
Prepayments
266.5
152.0
114.5
Other tax liabilities
89.2
99.9
(10.7)
Social security payables
31.6
28.9
2.7
Amounts due to personnel
62.7
54.4
8.3
Other amounts due to third parties
359.4
334.7
24.7
TOTAL
809.4
669.9
139.5
Prepayments
This item amounts to \u20ac266.5 million at 31 December 2023 and regards grants related to assets collected by the Group (of which \u20ac112.0 million attributable to the Parent Company) to fund the construction of non-current assets in progress at 31 December 2023.
Compared with the balance at 31 December 2022 (\u20ac152.0 million) this item is up \u20ac114.5 million, essentially due to new prepayments received from third parties after grants deducted directly from the carrying amount of the related assets, totalling \u20ac9.7 million.Other tax liabilities
Other tax liabilities, amounting to \u20ac89.2 million , are down \u20ac10.7 million compared with the previous year. This primarily reflects the decrease in VAT payable by the Group (down \u20ac11.4 million).
Social security payables
Social security payables, essentially relating to contributions payable to INPS (the National Institute of Social Security) by the Parent Company and the subsidiary, Terna Rete Italia S.p.A., amount to \u20ac31.6 million. The figure is up \u20ac2.7 million compared with the previous year, due to an increase in contributions payable. This item also included the amount payable to the Fondo Previdenza Elettrici \u2013 F.P.E.\u00a0(the Electricity Industry Pension Fund), amounting to \u20ac2.3 million (\u20ac2.3 million at 31 December 2022).
Amounts due to personnel
Amounts due to personnel, amounting to \u20ac62.7 million, are up \u20ac8.3 million compared with the previous year, and essentially regard the Parent Company and the subsidiary Terna Rete Italia S.p.A.. They primarily relate to:
\u2022 incentives payable in the subsequent year (\u20ac40.3 million);
\u2022 amounts due to employees in the form of accrued and unused annual leave and bank holiday entitlements (\u20ac17.9 million);
\u2022 benefits payable to personnel leaving the Company by 31 December 2023 (\u20ac0.8 million).
Other payables due to third parties
Other payables due to third parties, amounting to \u20ac359.4 million, primarily regard guarantee deposits (\u20ac258.5 million) received from electricity market operators to guarantee their contractual obligations under dispatching and virtual interconnection contracts. This item also includes the potential liabilities attributable to the Brugg Cables Group, arising from the Purchase Price Allocation\u00a0(\u20ac33.0 million, covered by an insurance policy) and resulting from ongoing litigation regarding a number of contracts with Colombian counterparties, and deferred income (\u20ac35.1 million, primarily attributable to the Group\u2019s non-regulated business).
This item is up by a total of \u20ac24.7 million, essentially due to an increase in guarantee deposits collected during the year, totalling \u20ac34.2 million, an increase in accrued expenses (up \u20ac6.0 million), offset by a reduction in dividends payable (down \u20ac18.2 million).
30. Discontinued operations and assets held for sale
The items, \u201cDiscontinued operations and assets held for sale\u201d and \u201cLiabilities related to discontinued operations and assets held for sale\u201d included the assets and liabilities that make up the net assets attributable to the companies included in the agreement signed by the Terna Group and CDPQ, a global investment group, on 29 April 2022 for the sale of all the Group\u2019s power line assets in Brazil, Peru and Uruguay.
On 7 November 2022, the first transaction closing for the Brazilian companies, \u201cSPE Santa Maria Transmissora de Energia S.A.\u201d, \u201cSPE Santa Lucia Transmissora de Energia S.A.\u201d and \u201cSPE Transmissora de Energia Linha Verde II S.A.\u201d, owners of three power lines in Brazil, totalling 670 km, was completed. On 22 December 2022, the transaction closing for Difebal S.A., the owner of a power line in Uruguay, totalling 214 km, was completed. The sale of the other assets in Brazil and Peru is due to take place in phases, following fulfilment of the conditions provided for in the agreement.
Following the sale of the Brazilian companies, SPE Santa Lucia Transmissora de Energia S.A., SPE Santa Maria Transmissora de Energia S.A. and SPE Transmissora de Energia Linha Verde II S.A. and of the Uruguayan company, Difebal S.A., the item includes the reclassification, as required by IFRS 5, of the net assets attributable to the Brazilian company, SPE Transmissora de Energia Linha Verde I S.A., and the Peruvian company, Terna Peru S.A.C..
(\u20acm)
Assets
31 December 2023
31 December 2022
Change
Property, plant and equipment
1.4
1.3
0.1
Intangible assets
20.3
20.2
0.1
Deferred tax assets
2.4
2.9
(0.5)
Non-current financial assets
59.0
23.3
35.7
Other non-current assets
0.3
0.2
0.1
Inventories
0.4
26.9
(26.5)
Trade receivables
0.1
0.3
(0.2)
Current financial assets
7.3
6.0
1.3
Cash and cash equivalents
3.6
11.9
(8.3)
Income tax assets
0.6
0.4
0.2
Other current assets
5.5
14.4
(8.9)
Total assets
100.9
107.8
(6.9)
Accumulated impairment recognised on remeasurement of fair value less costs to sell
(15.9)
(37.1)
21.2
TOTAL ASSETS HELD FOR SALE
85.0
70.7
14.3
LIABILITIES
Deferred tax liabilities
4.1
1.6
2.5
Trade payables
0.3
7.5
(7.2)
Tax liabilities
0.1
0.4
(0.3)
Other current liabilities
0.1
0.1
-
TOTAL LIABILITIES RELATED TO ASSETS HELD FOR SALE
4.6
9.6
(5.0)
TOTAL NET ASSETS HELD FOR SALE
80.4
61.1
19.3
Amounts included in OCI:
Foreign currency translation reserve
3.6
0.9
2.7
Total reserves related to assets classified as held for sale
3.6
0.9
2.7
Net assets held for sale, amounting to \u20ac80.4 million at 31 December 2023, primarily regard investment in the infrastructure operated under concession in Brazil, related to the subsidiary, SPE Transmissora de Energia Linha Verde I S.A.
The item is up \u20ac19.3 million compared with 31 December 2022, essentially due an increase in the net assets of the subsidiary, SPE Transmissora de Energia Linha Verde I S.A..
Cash flow
The following statement of cash flows shows cash flows attributable to the Latin American assets held for sale:
(\u20acm)
CASH FLOW
2023
CASH FLOW
2022
Operating cash flow
\u00a0(8.1)
\u00a0(27.0)
Cash flow for investing activities
\u00a0(0.2)
\u00a0(3.3)
Cash flow from financing activities
\u00a0-
2.8
Cash flow for the year attributable to discontinued operations and assets held for sale
\u00a0(8.3)
\u00a0(27.5)
The operating cash outflow attributable to the Latin American assets amounts to \u20ac8.1 million and is primarily linked to the reduction in net trade payables and income tax paid, covered in full by the change in cash, amounting to \u20ac8.3 million.
E. Commitments and risks
Risk management
In the course of its operations, the Terna Group is exposed to different financial risks: market risk, liquidity risk and credit risk.\n
This section provides information regarding the Terna Group\u2019s exposure to all the above risks, along with a presentation of the objectives, policies and processes for managing those risks and the methods used to assess them, with further quantitative disclosures concerning the separate financial statements for 2023.
The Group\u2019s risk management policies seek to identify and analyse the risks that Group companies are exposed to, establishing appropriate limits and controls and monitoring the risks and compliance with such limits. These policies and the related systems are reviewed on a regular basis, in order to take account of any changes in market conditions or in the companies\u2019 operations.
The Terna Group\u2019s exposure to the aforementioned risks is substantially represented by the exposure of the Parent Company.
As a part of the financial risk management policies approved by the Board of Directors, Terna has established the responsibilities and operating procedures for financial risk management, specifically as concerns the instruments to be used and the precise operating limits to apply in managing them.
Certain amounts at 31 December 2022 have been restated for comparative purposes.
The following table shows financial statement items exposed to the above risks.
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Assets
Derivative financial instruments
\u00a0-
17.8
17.8
-
75.7
75.7
Cash on hand, securities and deposits
1,543.2
316.3
1,859.5
2,155.1
366.4
2,521.5
Trade receivables
\u00a02,123.4
-
\u00a02,123.4
2,358.3
-
2,358.3
TOTAL
3,666.6
334.1
4,000.7
4,513.4
442.1
4,995.5
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Debt
11,995.5
-
11,995.5
10,770.1
-
10,770.1
Derivative financial instruments
-
164.6
164.6
-
248.0
248.0
Trade payables
2,864.9
-
2,864.9
3,687.7
-
3,687.7
TOTAL
14,860.4
164.6
15,025.0
14,457.8
248.0
14,705.8
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in financial market conditions. Market risk includes exchange rate risk, interest rate risk and inflation risk.
Risk management must be performed with the objective of minimising the related risks by selecting counterparties and instruments compatible with the Company\u2019s Risk Management Policy. Speculative activity is not form part of the Parent Company\u2019s activities.
The Terna Group seeks to adopt a dynamic approach to financial risk management. This approach is characterised by risk aversion, aimed at minimising risk through continuous monitoring of financial markets in order to obtain new financing and conclude hedging transactions in favourable market conditions. The dynamic approach enables the Group to intervene in order to improve existing hedges should there be a change in market conditions or changes in the hedged item, making the hedges inappropriate or excessively costly.
The fair value of financial instruments is determined in accordance with the fair value hierarchy envisaged under IFRS 7 (Level 2), by means of appropriate valuation techniques for each category of financial instrument, using market data at the closing date (such as interest rates, exchange rates and volatility) and discounting projected cash flows on the basis of the market yield curve at the reporting date.
Interest rate risk
Interest rate risk is represented by the uncertainty associated with interest rate fluctuations. This is the risk that a change in market interest rates may produce effects on the fair value or future cash flows of financial instruments.
In the course of its operations, the Group is exposed to the risk of fluctuations in interest rates. Its main source of interest rate risk is associated with its borrowings and the related hedges in the form of derivative instruments that generate financial expenses. The borrowing strategy generally focuses on long-term borrowings, whose term reflects the useful life of the Group\u2019s assets. It pursues an interest rate risk hedging policy that aims to guarantee that percentage of debt represented by fixed rate liabilities is at least 40%, as provided for in the relevant policies. At the end of 2023, 87% of the Group\u2019s is fixed rate.
At 31 December 2023, interest rate risk is hedged by cash flow hedges which hedge the risk connected with the fair value of borrowings and movements in interest rates relating to borrowings.
Below are the notional amounts and fair values of the derivative financial instruments entered into by the Terna Group:
(\u20acm)
31 December 2023
31 December 2022
Change
Notional
Fair value
Notional
Fair value
Notional
Fair value
Fair value hedges
1,853.0
(164.5)
\u00a01,973.5
(248.0)
(120.5)
83.5
Cash flow hedges
2,362.8
17.2
\u00a01,996.3
75.5
\u00a0366.4
(58.3)
The notional amount of outstanding cash flow hedges at 31 December 2023, amounting to \u20ac2,362.8 million, breaks down as follows:
\u2022 \u20ac1,309.8 million (fair value gain of \u20ac27.4 million) maturing 2024;
\u2022 \u20ac260.0 million (fair value gain of \u20ac0.3 million) maturing 2025;
\u2022 \u20ac353.0 million (fair value loss of \u20ac0.3 million) maturing 2027;
\u2022 \u20ac500.0 million (fair value loss of \u20ac10.2 million) maturing 2029.
The notional amount of fair value hedges at 31 December\u00a02023, amounting to \u20ac1,853.0 million, breaks down as follows:
\u2022 \u20ac950.0 million (fair value loss of \u20ac58.9 million) maturing 2030;
\u2022 \u20ac323.0 million (fair value loss of \u20ac33.8 million) maturing 2039;
\u2022 \u20ac490.0 million (fair value loss of \u20ac60.1 million) maturing 2042;
\u2022 \u20ac90.0 million (fair value loss of \u20ac11.7 million) maturing 2043.
Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. Accordingly, in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise. The characteristics of cash flow hedges mirror those of the underlyings, with the timing of the related cash flows matching the timing of interest payments on the debt, without changes in fair value having any impact on profit or loss.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
COMPREHENSIVE INCOME
CURRENT RATES +10%
CURRENT AMOUNTS
CURRENTRATES
-10%
TASSI
CORRENTI
+10%
CURRENT AMOUNTS
CURRENTRATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
2.1
-
\u00a0(2.1)
9.8
-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
5.0
3.6
2.1
169.8
159.1
148.3
Hypothetical change
1.4
\u00a0-
\u00a0(1.4)
10.7
\u00a0-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
Inflation risk
Regarding inflation risk, the rates established by the regulator to provide a return on Terna S.p.A.\u2019s activities are determined so as to cover the allowed costs. Such cost components are updated on an annual basis to take into account the impact of inflation. Having used an inflation-linked bond issue in 2007, which matured in September 2023, the Company has put in place an effective hedge of net income; in fact, any decrease in expected revenue due to a decrease in the inflation rate would be offset by lower financial expenses and vice versa.
Exchange rate risk
The management of exchange rate risk must aim to protect a company\u2019s earnings from the risk of currency fluctuations by keeping a close eye on market movements and constantly monitoring the existing exposures. In managing this risk, Terna from time to time selects hedging instruments with structures and durations matching the Group\u2019s exchange rate exposure. The instruments used by Terna are of limited complexity, highly liquid and easy to price, such as forwards and options. Such contracts have a notional amount and maturity date less than or equal to that of the underlying financiaiability, or the expected cash flows, so that any change in the fair value and/or estimated cash flows deriving from a rise or fall in the euro against other currencies is fully offset by a corresponding change in the fair value and/or estimated cash flows of the underlying position.At 31 December 2023, the Group\u2019s exposure to the impact of exchange rate risk on its profit or loss is residual and linked to foreign currency cash flows from the subsidiaries, Tamini and Brugg.
Liquidity risk
Liquidity risk is the risk that the Terna Group might encounter difficulty in discharging its obligations in respect of its financial liabilities and operating cycle. Liquidity risk management seeks to ensure adequate coverage of borrowing requirements by obtaining adequate credit lines and appropriate management of any surplus liquidity. At 31 December 2023, the Terna Group has available short-term credit facilities of approximately \u20ac703\u00a0million (out of total facilities of approximately \u20ac1,040 million), and revolving credit facilities of \u20ac3,455 million. Finally, the Parent Company has launched a Euro Commercial Paper Programme (ECP), amounting to up to \u20ac1,000 million, including \u20ac130 million still available at 31 December 2023.
Credit risk
Credit risk is the risk a customer or one of the counterparties to a transaction in financial instruments could cause a financial loss by failing to discharge an obligation. It is mainly generated by the Group\u2019s trade receivables and financial investments.
The credit risk originated by open positions on transactions in derivatives is considered to be marginal since the counterparties, in compliance with the financial risk management policies adopted, are leading international banks with high ratings.
Terna provides its services essentially to counterparties considered solvent by the market, and therefore with a high credit standing, and does not have high concentrations of credit risk.
Credit risk management is driven by the provisions of ARERA Resolution 111/06, which, in art. 49, introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. In particular, the Resolution establishes three instruments to safeguard the electricity market: a guarantee system (bank guarantees provided by individual dispatching customers, based on their turnover); the option of terminating dispatching contracts (in the event of insolvency or failure to replace enforced guarantees); and, finally, the possibility of recovering uncollected debts, after having taken all other possible collection actions, through a specific fee to be fixed by ARERA.
The following table summarises the exposure to such risk at the reporting date:
(\u20acm)
31 December 2023
31 December 2022
Change
Derivative financial instruments
17.8
75.7
(57.9)
Cash on hand, securities and deposits
1,859.5
2,521.5
(662.0)
Trade receivables
2,123.4
2,358.3
(234.9)
TOTAL
4,000.7
4,955.5
(954.8)
The total value of the exposure to credit rate risk at 31 December 2023 is represented by the carrying amount of trade receivables, cash flows hedges, cash and cash equivalents, securities and deposits.
The following tables provide qualitative information on trade receivables regarding the geographical distribution and type of customer.
GEOGRAPHICAL DISTRIBUTION
(\u20acm)
31 December 2023
31 December 2022
Italy
1,768.7
2,092.6
Euro-area countries
267.9
165.9
Other countries
86.8
99.8
Total
2,123.4
2,358.3
CUSTOMER TYPE
(\u20acm)
31 December 2023
31 December 2022
Distributors
576.2
472.8
CSEA
72.2
94.3
Dispatching customers for injections
314.5
826.2
Dispatching customers for withdrawals (non distributors)
868.0
682.0
Parties which have signed virtual import contracts and virtual import services (interconnectors and shippers)
11.7
11.8
Sundry receivables
280.8
271.2
Total
2,123.4
2,358.3
The following table breaks down customer receivables by due date, showing any potential impairment.
(\u20acm)
31 December 2023
31 December 2022
Impairment
Gross
Impairment
Gross
Current
\u00a0(0.7)
1,871.4
\u00a0(0.6)
2,103.6
0-30 days past due
\u00a0(0.5)
31.0
\u00a0(0.6)
28.8
31-120 days past due
\u00a0(0.5)
18.8
\u00a0(0.4)
56.2
Over 120 days past due
\u00a0(32.5)
236.4
\u00a0(35.4)
206.7
Total
\u00a0(34.2)
2,157.6
\u00a0(37.0)
2,395.3
Movements in the allowance for doubtful accounts in the course of the year were as follows.
(\u20acm)
31 December 2023
31 December 2022
Balance at 1st\u00a0January
\u00a0(37.0)
\u00a0(49.6)
Release of provisions
6.4
14.3
Impairments for the year
\u00a0(3.6)
\u00a0(1.7)
Balance
\u00a0(34.2)
\u00a0(37.0)
The value of guarantees received from eligible electricity market operators is illustrated below.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Dispatching - injections
240.4
249.7
Dispatching - withdrawals
1,893.0
1,665.8
Transmission charges due from distributors
351.0
329.3
Virtual imports
273.4
269.6
Capacity market (*)
175.3
181.4
Balance
2,933.1
2,695.8
(*) Guarantees relating to Capacity Market contracts to be executed from 2024.
In addition, Non-regulated Activities are exposed to \u201ccounterparty risk\u201d, in particular in relation to the entities with which sales contracts are entered into, in consideration of the credibility and solvency of the parties in question and the impactthat their possible insolvency could have on the financial strength of the business. Counterparty risk is mitigated by implementing special procedures to assess counterparties, measuring operating, financial and reputational aspects of the counterparties in question.
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Parent Company is a party may contain provisions authorising counterparties to call in such loans immediately upon the occurrence of certain events, thereby generating liquidity risk. More information on the contractual provisions of outstanding borrowings at 31 December 2023 is provided in the section, \u201cBorrowings and financial liabilities\u201d in the notes to the Terna Group\u2019s consolidated financial statements.
Bank guarantees
Banks have issued guarantees to third parties on behalf of Group companies which, at 31 December 2023, amount to \u20ac315.5 million. This amount breaks down as follows: \u20ac71.9 million on behalf of Terna S.p.A., \u20ac101.6 million on behalf of Tamini Trasformatori S.r.l., \u20ac53.3 million on behalf of Terna Rete Italia S.p.A., \u20ac19.9 million on behalf of Terna Interconnector S.r.l., \u20ac51.6 million on behalf of Gruppo Brugg, \u20ac0.1 million on behalf of Terna Plus S.r.l., \u20ac4.5 million on behalf of Terna Per\u00f9 SAC, \u20ac12.0 million on behalf of Terna Energy Solutions S.r.l. and \u20ac0.1 million on behalf of Terna Chile S.p.A..
Litigation
The main commitments and risks not disclosed in the statement of financial position at and for the year ended 31 December 2023, relating to the Parent Company, Terna S.p.A. (\u201cTerna\u201d or the \u201cParent Company\u201d or the \u201cCompany\u201d) and its subsidiary Terna Rete Italia S.p.A., are described below. There are no significant commitments or risks for the other subsidiaries at that date.
Litigation regarding the legitimacy of construction permits and plant operations
Another aspect of litigation connected with the plant owned by the Parent Company derives from legal actions brought before the competent administrative courts, aimed at obtaining the annulment of decisions granting consent for the construction and operation of infrastructure.
Litigation relating to activities carried out under concession
As the operator of transmission and dispatching activities since 1 November 2005, the Parent Company has been a party in several court cases, contesting determinations adopted by ARERA (Italy\u2019s Regulatory Authority for Energy, Networks and the Environment), and/or the Ministry of Enterprises and Made in Italy, and/or Terna itself, in relation to these activities. In cases in which the plaintiffs have, in addition to inherent defects in the contested determinations, alleged violation of the regulations laid down by the aforementioned authorities, or in cases in which the determination has had an impact on Terna, the Company has also taken action to defend its interests through the legal system. Within the scope of such litigation \u2013 even though some cases have been concluded, at first and/or second instance, with the annulment of ARERA\u2019s resolutions and, when applicable, of the consequent determinations adopted by Terna \u2013 any negative outcomes for the Company itself may be deemed unlikely, as these disputes normally relate to pass-through items.
F. Business combinations
Acquisition of Omnia S.r.l.
On 29 March 2023, LT S.r.l. (a wholly owned subsidiary of Terna Energy Solutions S.r.l., in turn a subsidiary of Terna S.p.A.) acquired a 100% stake in Omnia S.r.l., a company providing Operation & Maintenance services for photovoltaic plants. The acquisition aims to consolidate LT S.r.l.\u2019s position as an Italian market leader in the construction and operation of photovoltaic plants.
The accounting effects of the business combination, provisionally accounted for in compliance with IFRS 3 \u2013 Business Combinations, are shown in the following table, which summarises the consideration paid in order to acquire Omnia S.r.l. and the value of the assets acquired and liabilities assumed, as recognised at the acquisition date:
Value of the assets acquired and liabilities assumed at 29 March 2023
(\u20ac000)
Fair value
ASSETS
Non-current assets
Property, plant and equipment
\u00a04
Total non-current assets
\u00a04
Current assets
Trade receivables
\u00a0179
Current financial assets
\u00a02
Income tax assets
\u00a025
Other assets
\u00a041
Cash
\u00a017
Total current assets
\u00a0264
TOTAL ASSETS
\u00a0268
EQUITY AND LIABILITIES
Non-current liabilities
Trade payables
\u00a046
Tax liabilities
\u00a027
Other liabilities
\u00a031
Total current liabilities
\u00a0104
TOTAL EQUITY AND LIABILITIES
\u00a0104
NET ASSETS ACQUIRED
\u00a0164
Net assets contributed
\u00a0164
CONSIDERATION
\u00a01,521
GOODWILL
\u00a01,357
IFRS 3 requires the acquirer to allocate the cost of the business combination in its accounts by recognising all the assets, liabilities and potential liabilities meeting specific recognition criteria at their fair value at the acquisition date. In this case, the cost of the acquisition of all the company\u2019s share capital is \u20ac1.5 million.
The expected consideration is higher than the value of the net assets at the acquisition date, resulting in goodwill of approximately \u20ac1.3 million.
On 11 October 2023, the merger deed relating to the merger of Omnia S.r.l. with and into LT S.r.l was executed. This was done in accordance with the merger plan approved on 12 May 2023 by the respective boards of directors and on 31 July 2023 by the companies\u2019 shareholders.
In accordance with the provisions of the merger deed, transactions carried out by the acquired company, Omnia S.r.l., are accounted for in the financial statements of the acquirer, LT S.r.l., with the merger effective for accounting and tax purposes from 1 January 2023.
Acquisition of Rete Nord S.r.l.
On 22 June 2023, Terna S.p.A. acquired a 100% stake in Rete Nord S.r.l. (formerly \u201cEdyna Transmission S.r.l.\u201d), a company that owns the following NTG assets:
\u2022 a portion of a 220kV power line in Trentino-Alto Adige, extending for approximately 70 km;
\u2022 the 220kV Resia substation (UD);
\u2022 the 220kV Naturno substation (BZ).
The accounting effects of the business combination, in compliance with IFRS 3 \u2013 Business Combinations, are shown in the following table, which summarises the consideration paid in order to acquire Rete Nord S.r.l. and the value of the assets acquired and liabilities assumed, as recognised at the acquisition date:
Value of the assets acquired and liabilities assumed at 22 June 2023
(\u20ac000)
Fair value
ASSETS
Non-current assets
Property, plant and equipment
\u00a013,249
Intangible assets
\u00a0801
Deferred tax assets
\u00a0180
Total non-current assets
\u00a014,230
Current assets
Trade receivables
\u00a0395
Other assets
\u00a017
Cash
\u00a0293
Total current assets
\u00a0705
TOTAL ASSETS
\u00a014,935
EQUITY AND LIABILITIES
Non-current liabilities
Deferred tax liabilities
198
Total non-current liabilities
198
Current liabilities
Trade payables
129
Tax liabilities
5
Other liabilities
8
Total current liabilities
142
TOTAL EQUITY AND LIABILITIES
340
NET ASSETS ACQUIRED
14,595
Net assets contributed
14,595
CONSIDERATION
14,609
GOODWILL
14
IFRS 3 requires the acquirer to allocate the cost of the business combination in its accounts by recognising all the assets, liabilities and potential liabilities meeting specific recognition criteria at their fair value at the acquisition date. In this case, the cost of the acquisition of all the company\u2019s share capital is \u20ac14.6 million.
The expected consideration is broadly in line with the value of the net assets at the acquisition date.
On 20 December 2023, the merger deed for the merger of Rete Nord S.r.l. with and into Rete S.r.l (a wholly owned subsidiary of Terna S.p.A.) was executed with the aim of improving Group companies\u2019 operations, increasing synergies through a reorganisation designed to simplify the chain of control, thereby boosting operational efficiency and cutting administrative costs.
The merger deed was effective for legal purposes from 20 December 2023 (the date it was filed with the Companies\u2019 Register), in accordance with the merger plan approved on 12 October 2023 by the respective boards of directors and on 26 October 2023 by the companies\u2019 shareholders.
In accordance with the provisions of the merger deed, transactions carried out by the acquired company, Rete Nord S.r.l., are accounted for in the financial statements of the acquirer, Rete S.r.l., with the merger effective for accounting and tax purposes from 20 December 2023.
G. Related party transactions
Given that Terna S.p.A. is subject to the de facto\u00a0control of Cassa Depositi e Prestiti S.p.A. (registered office at Via Goito 4, 00185 Rome, Italy and consolidated financial statements available on the website at www.cdp.it), a situation ascertained in 2007, related party transactions entered into by Terna during the year include transactions with the associates (Cesi S.p.A., Coreso S.A. and CGES) and employee pension funds (Fondenel and Fopen), as well as transactions with Cassa Depositi e Prestiti itself, with CDP Reti S.p.A. and with the companies directly or indirectly controlled by the Ministry of the Economy and Finance (\u201cMEF\u201d).
Given that Terna Group companies and the companies directly or indirectly controlled by the Ministry of the Economy and Finance meet the definition for classification as \u201cgovernment-related entities\u201d, in accordance with IAS 24 \u2013 Related Party Disclosures, the Group has elected to adopt the partial exemption \u2013 permitted by the standard \u2013 from the disclosure requirements in respect of other companies controlled, influenced or jointly controlled by the same government entity. The remainder of this section provides qualitative and quantitative disclosures on transactions with government-related entities having a significant impact on the Group\u2019s results. Amounts relating to pass-through items are not included in these disclosures.
Related party transactions in 2023 broadly regard the provision of services in the course of ordinary activities and conducted on an arm\u2019s length basis.
The nature of sales to and purchases from related parties by the Terna Group is shown below, followed by details of the revenue and costs resulting from such transactions during the year and the related assets and liabilities outstanding at 31 December 2023.
Related party
Revenue-generating transactions
Cost-generating transactions
Parent
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
\u00a0
Credit facilities.
Associates
\u00a0
Cesi S.p.A.
Rental income on laboratories and other similar facilities for specific uses, dividends.
Technical studies and consultancy, research, design and experimentation.
CORESO S.A.
\u00a0
Technical coordination service for the TSO.
Other related parties
\u00a0
\u00a0
GSE Group
Metering charge, dispatching charge.
Rental of spaces and workstations.
Fincantieri Group
\u00a0
Development and construction of infrastructure.
Enel Group
Transmission charge and aggregation of meter readings, dispatching charge, leases and rentals, power line maintenance, movement /re-routing of power lines, housing of fibre cable and maintenance of communications carried over proprietary power lines.
Recovery of energy discount, building services, MV power to new substations, specialist services for connection to Terna\u2019s control and protection systems.
Ferrovie Group
Dispatching charge, movement of power lines.
Right-of-way fees.
ENI Group
Dispatching charge.
Contributions for NTG connections, sundry services.
Poste Italiane
\u00a0
Sundry services.
Snam Rete Gas S.p.A.
Movement /re-routing of power lines.
\u00a0
ANAS S.p.A.
Movement /re-routing of power lines.
Right-of-way fees.
Open Fiber S.p.A.
IRU agreements for fibre.
Provision of services for the rental of fibre.
Fondenel e Fopen
\u00a0
Pension contributions payable by the Terna Group.
Other related parties of the MEF
Sundry services
\u00a0
Ansaldo Energia S.p.A.
Infrastructure maintenance.
\u00a0
REVENUE AND COSTS
(\u20acm)
REVENUE COMPONENTS
COST COMPONENTS
TRANSMISSION CHARGE AND OTHER REVENUE FROM REGULATED ACTIVITIES
NON-ENERGY-RELATED ITEMS
De facto parent
\u00a0
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
-
0.1
1.4
Total de facto parent
-
0.1
1.4
Associates:
Cesi S.p.A.
-
0.1
1.3
CORESO S.A.
-
-
4.9
Total associates
-
0.1
6.2
Other related parties:
GSE Group
8.5
0.9
0.1
Enel Group
1,768.3
7.3
0.4
ENI Group
8.0
2.0
0.6
Ferrovie Group
2.8
0.8
0.4
Anas S.p.A.
-
0.3
0.6
Webuild S.p.A.
-
0.4
-
Ansaldo Energia S.p.A.
-
4.8
-
Poste Italiane Group
-
-
0.1
Open Fiber S.p.A.
-
1.8
-
Other related parties of MEF
-
0.2
0.6
Total other related parties
1,787.6
18.5
2.8
Pension funds:
Fondenel
-
-
0.9
Fopen
-
-
3.4
Total pension funds
-
-
4.3
TOTAL
1,787.6
18.7
14.7
ASSETS AND LIABILITIES
(\u20acm)
PROPERTY, PLANT AND EQUIPMENT
RECEIVABLES AND OTHER ASSETS
PAYABLES ANDOTHER LIABILITIES
CASH
GUARANTEES*
CAPITALISED
COSTS
OTHER
OTHER
FINANCIAL
De facto parent
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
5.3
-
6.7
-
-
(273.9)
Total de facto parent
5.3
-
6.7
-
-
(273.9)
Associates:
Cesi S.p.A.
10.7
0.1
6.4
-
-
4.8
CORESO SA
-
-
0.3
-
-
-
Total associates
10.7
0.1
6.7
-
-
4.8
Other related parties:
GSE Group
0.2
0.7
0.3
-
-
-
Enel Group
37.7
339.2
55.0
-
-
1,024.9
ENI Group
-
1.6
1.2
-
-
111.1
Ferrovie Group
0.3
1.8
11.3
0.1
-
24.6
ANAS S.p.A.
0.2
0.2
2.7
-
-
-
Snam Rete Gas S.p.A.
-
-
0.1
-
-
-
Webuild SpA
0.1
-
12.7
-
-
5.4
Ansaldo Energia S.p.A.
1.3
0.2
1.1
-
-
22.6
Open Fiber S.p.A.
-
0.4
-
-
-
-
Poste Italiane Group
-
-
0.1
0.1
-
-
Other related parties of MEF
3.5
0.2
0.1
-
0.1
1.1
Total other related parties
43.3
344.3
84.6
0.2
0.1
1,189.7
Pension funds:
Fopen
-
-
2.8
-
-
-
Total pension funds
-
-
2.8
-
-
TOTAL
59.3
344.4
100.8
0.2
0.1
920.6
* Guarantees regard surety bonds received from contractors, with the exception of the amount relating to Cassa Depositi e Prestiti S.p.A. regarding a Revolving Credit Facility.
The impact of related-party transactions or positions on the statement of financial position and the income statement is summarised below:
STATEMENT OF FINANCIAL POSITION
(\u20acm)
31 December 2023
31 December 2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Property, plant and equipment
17,596.7
59.3
0.3%
16,200.9
41.1
0.3%
Trade receivables
2,123.4
344.4
16.2%
2,358.3
333.2
14.1%
Cash and cash equivalents
1,378.2
0.2
\u00a0-
2,155.1
0.1
\u00a0-
Trade payables
2,864.9
66.5
2.3%
3,687.7
60.9
1.7%
Other current liabilities
809.4
34.3
4.2%
669.9
22.7
3.4%
INCOME STATEMENT
(\u20acm)
2023
2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Revenue from sales and services
3,122.8
1,805.9
57.8%
2,898.1
1,718.7
59.3%
Other revenue and income
63.9
0.4
0.6%
66.4
0.8
1.2%
Raw and consumable materials used
285.4
0.1
-
247.8
\u00a0-
-
Services
312.3
10.1
3.2%
276.9
10.4
3.8%
Personnel expenses
377.2
4.4
1.2%
348.1
3.7
1.1%
Other operating costs
43.2
0.2
0.5%
32.5
0.1
0.3%
Financial expenses
\u00a0(227.7)
\u00a0-
\u00a0-
\u00a0(121.8)
\u00a0-
\u00a0-
The impact of related party cash flows is shown below:
STATEMENT OF CASH FLOWS
(\u20acm)
2023
2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Cash flow from operating activities
1,084.9
\u00a06.0
0.6%
2,323.7
\u00a0(26.6)
(1.1%)
Cash flow from investing activities
(2,334.4)
(18.2)
0.8%
(1,855.4)
19.2
(1.0%)
Cash flow from financing activities
464.3
\u00a0-
\u00a0-
92.5
\u00a0-
\u00a0-
H. Significant non-recurring, atypical or unusual events and transactions
With the exception of the instances described above, no significant non-recurring, atypical or unusual events or transactions, involving either third or related parties, took place in 2023.
I. Notes to the statement of cash flows
Cash flow from continuing operations\u00a0amounts to \u20ac1,084.9 million, with approximately \u20ac2,184.2 million in operating cash flow and an outflow of approximately \u20ac1,099.3 million generated by changes in net working capital.
The cash outflow for investing\u00a0activities\u00a0totals \u20ac2,334.4 million and regards \u20ac2,048.8 million relating to investment in property, plant and equipment (excluding right-of-use assets recognised in application of IFRS 16), \u20ac216.2 million invested in intangible assets, \u20ac118.4 million essentially relating to the change in investments in securities, and \u20ac15,8 million regarding the consideration paid for the new acquisitions described above, after capitalised financial expenses of \u20ac48.3 million.
The net change in equity\u00a0has resulted in a decrease of \u20ac678.5 million, due primarily to payment of the final dividend for 2022 and of the interim dividend for 2023 to the Parent Company\u2019s shareholders and of dividends paid to non-controlling shareholders (a reduction of \u20ac671.5 million). The reduction also reflects the purchase of own shares to service the new Performance Share Plan 2023-2027 (down \u20ac7.0 million).\u00a0More details are provided in note 24. \u201cEquity attributable to owners of the Parent and non-controlling interests\u201d.
As a result, net cash used in investing activities and to provide a return on equity during the year led to a total outflow of \u20ac3,012.9 million, covered in part by cash flow from continuing operations of \u20ac1,084.9 million and in part by an increase in net debt.
The following table shows the reconciliation of net changes deriving from financing activities in the statement of cash flows:
(\u20acm)
31 December 2022
Cash flow from financing activities
Change in FV and other
31 December 2023
\u00a0- Long-term borrowings (including current portion)
10,326.0
380.0
87.8
10,793.8
\u00a0- Short-term borrowings
444.1
762.8
\u00a0(5.2)
1,201.7
Net change deriving from financing activities
10,770.1
1,142.8
82.6
11,995.5
L. Government grants
Article 1, paragraphs 125 to 129, of Law 124 of 4 August 2017 (the annual markets and competition law) has introduced a number of measures designed to ensure the transparency of the government grants system. These measures, later amended by Law Decree 34 of 30 April 2019, include an obligation for companies to disclose amounts and information regarding assistance, subsidies, benefits, grants or aid, whether in cash or in kind, in the notes to the annual financial statements and, where applicable, in consolidated financial statements, where such amounts are not of a general nature and do not have the form of a fee, remuneration or compensation and have been received from a public body (paragraph 125-bis). The legislation also requires the disclosure of any grants disbursed (paragraph 126).
In accordance with Circular 5 of 22 February 2019 \u201cTransparency in the government grants system: an assessment of the regulations and interpretation guidance\u201d and Circular 32 of 23 December 2019 \u201cEnterprise and competition\u201d, published by Assonime, the Terna Group has adopted the following basis of reporting for government grants:
\u2022 the regulations only apply to entities resident in Italy;
\u2022 grants have the nature of grants or donations, and represent incentives or subsidies designed to give beneficiaries a recognised economic advantage; the grants therefore take the form of donations or giving and public aid for specific purposes, and are not awarded under a general aid regime;
\u2022 the public resources used are exclusively \u201cnational\u201d;
\u2022 grants are reported on a cash basis and if the amount is not less than \u20ac10,000 (with reference to each individual beneficiary) in the reporting period.
In line with the above, the following table shows government grants collected/disbursed by the Group in 2023:
Grants received (paragraph 125-bis)
Grantor
Beneficiary entity
Name
VAT number
Type of transaction
Amount (\u20ac)
Note
TERNA SPA
Ministry of Enterprises and Made in Italy
80230390587
State aid*
6,617,869
Grants collected on the basis of a report on the state of work in progress on projects carried out by Terna S.p.A. financed by government grants, with funding provided under the National Operational Programme (NOP) for Enterprises and Competitiveness 2014 - 2020 FESR - ASSE IV \u2013 Investment priority 4d - Action 4.3.1
TOTAL
\u00a0
6,617,869
Grants disbursed (paragraph 126)
Beneficiary
Grantor
Name
Tax code
VAT number
Type of transaction
Amount (\u20ac)
Note
TERNA SPA
Fondazione Venezia Capitale Mondiale della Sostenibilit\u00e0
\u00a0
94102820274
GIVING
33,000
Joining the foundation as co-founding member
TERNA SPA
Fondazione Accademia Naz. Santa Cecilia
\u00a0
05662271005
GIVING
160,000
Renewed participation as a founding partner
TERNA SPA
SUSAN G.KOMEN ITALIA ONLUS
\u00a0
06073831007
GIVING
15,000
Prevention day across the whole of Italy
TERNA SPA
Fond.Pol.Univ.A.GEMELLI IRCCS
\u00a0
13109681000
GIVING
65,000
Support for the purchase of equipment or for functional neurosurgery
TERNA SPA
Fondazione Accademica Musicale Chigiana
\u00a0
92035840526
GIVING
20,000
Summer Academy 2023
TERNA SPA
Sistech - Association loi 1901
\u00a0
FR83538232600022
GIVING
60,000
Funding for Programma Boost scholarships
TERNA SPA
ASSOCIAZIONE ITALIANA CONTRO LE LEUCEMIE
\u00a0
10823601009
GIVING
60,000
Support for a non-profit, public interest organisation
TERNA SPA
SOCIETA' BOTANICA ITALIANA ONLUS
\u00a0
00464940485
GIVING
56,314
Tiny Forest project
TAMINI TRASFORMATORI SRL
FONDIMPRESA
97278470584
\u00a0
GIVING
35,140
Training plan no. 310041- safety refresher 2021/2022
Totale
\u00a0
\u00a0
\u00a0
\u00a0
504,454
\u00a0
M. Events after 31 December 2023
Green light for the new underground cable connection in the Municipalities of Turbigo, Robecchetto con Induno and Castano Primo (MI)
On 4 January 2024, the Italian Ministry of the Environment and Energy Security issued the decree approving Terna\u2019s new electricity connection in the municipalities of Turbigo, Robecchetto con Induno and Castano Primo in the metropolitan city of Milan. The project, which will see the company invest \u20ac8 million, involves the construction of a 4.5 km-long underground cable power line to connect Terna\u2019s \u201cTurbigo\u201d Electrical Substation to the \u201cCastano Primo\u201d Primary Substation owned by the local distributor. The new line will reduce the risk of outages across the local grid and help to prevent damage to infrastructure caused by the intensification of weather events in recent decades, such as the strong winds typical of the area.
Work begins to upgrade the power grid between Colunga and Ferrara
On 09 January 2024 Terna launched the project to upgrade the power grid between Colunga and Ferrara in Emilia-Romagna. The company will invest approximately \u20ac16 million in the modernisation of the grid between Colunga and Ferrara, ensuring greater efficiency and quality of service for local businesses and citizens. The plan, which involves the municipalities of Castenaso, Budrio, Minerbio, Baricella, Malalbergo, Poggio Renatico, and Ferrara, will upgrade the following 132kV links: Colunga-Altedo\u201d, \u201cAltedo Ferrara South\u201d and \u201cFerrara South-der. Aranova Energy Centre\u201d, with the construction of approximately 20 km of power lines and the demolition of more than 60 km of lines in the provinces of Bologna and Ferrara.
Successful issue of a bond worth \u20ac850 million with a 7-year tenor
On 10 January 2024, Terna S.p.A. (\u201cTerna\u201d or the \u201cCompany\u201d) successfully launched a fixed rate, single tranche bond issue amounting to \u20ac850 million. The issue, which saw extremely high demand, was almost 3 times oversubscribed and is characterized by high quality and broad geographical diversification of investors. The bond was launched as part of the \u20ac9,000,000,000 Euro Medium Term Notes (EMTN) Programme, which has been rated \u201cBBB+\u201d by Standard and Poor\u2019s and \u201c(P)Baa2\u201d by Moody\u2019s. The bond has a nominal amount of \u20ac850 million, a duration of 7 years and maturity on 17 January 2031. It will pay a coupon of 3.50% and was issued at a price of 99,385%, with a spread of 100 basis pointsover the midswap. The settlement date for the issue was 17 January 2024. The proceeds from the issue will be used by the Company to meet ordinary financial requirements and to fund the Group\u2019s Industrial Plan. At the time of the issue, an application will be made for the bond to be listed on the Luxembourg Stock Exchange. The bond issue was placed by a syndicate of banks formed by Banca Akros, BNP Paribas, CaixaBank, Citi, Cr\u00e9dit Agricole Corporate and Investment Bank, IMI \u2013 Intesa Sanpaolo, Morgan Stanley, SMBC, Unicredit Bank AG, acting as joint-bookrunners.
Terna trials the use of a submarine\u00a0drone for marine geophysical surveys
On 11 January 2024, Terna announced the launch, in collaboration with Terradepth, a US startup and leading provider of marine survey services and ocean data solutions, of the trial for the \u201cOdisseo\u201d project. The goal of the project is to apply Autonomous Underwater Vehicles (AUV) to marine geophysical surveys during the planning of important infrastructure, ensuring respect for the environment. The first test was conducted off the coast near the port of Casamicciola Terme, on the island of Ischia (Naples, Italy). During the geophysical survey of the seabed, Terna\u2019s technicians were able to test the performance of the \u201cGavia\u201d drone, the AUV from Terradepth equipped with advanced sensors, including Echo Sounder (MBES), Side Scan Sonar and HD Camera.
Green light for the new \u201cMessina North PS \u2013 Messina Riviera PS\u201d underground connection
On 15 January 2024, the Sicilian Regional Authorities issued the decree consenting to Terna\u2019s new 150kV power line in the municipality of Messina. The project, which will see the Company invest approximately \u20ac26 million, involves the installation of an underground cable stretching approximately 10 km, connecting the \u201cMessina North\u201d and \u201cMessina Riviera\u201d primary substations. The Messina area experiences strong winds, which, combined with the topography and vegetation of the surrounding area, represent a potential risk of system outages. The new power line will increase local grid meshing and diversify transmission technology, reducing this risk of severe weather events.
Terna meets the citizens of Ferrara to present the project to restructure the local grid
On 24 January 2024, Terna held an information event with the citizens of Ferrara to present the future restructuring of the city\u2019s grid. The event was held between 5pm and 8pm at the Giorgio Bassani Library, Via Giovanni Grosoli 42, in Ferrara, and it was an opportunity to provide citizens with information on the project\u2019s features, reasons, benefits and dynamics. As a whole, the restructuring of the city of Ferrara\u2019s electricity grid involves the undergrounding of two 132kV overhead lines running from the Focomorto power station over a total length of more than 9 km, the construction of a new 132kV underground connection in the south of the city over a length of 3 km, and the expansion of the existing 380kV Ferrara Nord power station with the related new overhead connections. The works, which are aimed at increasing the security and resilience of the electricity system, will guarantee greater transport capacity to the urban area and will fully optimise the use of renewable energy produced in the area.In addition, the new infrastructure will enable the removal of approximately 20 km of overhead power lines and 70 pylons, freeing up approximately 40 hectares from the existing electricity infrastructure. The project complements the works to restructure the electricity grid in the area between Colunga and Ferrara that began in early January.The planned modernisation of the electricity grid in the Po Valley in the Emilia-Romagna region will improve the efficiency and quality of the service, benefiting local businesses and the public.
Terna presents the outcome of the public consultation on the new \u201cGR.ITA 2\u201d connection between Italy and Greece to the public
On 31 January 2024, Terna presented the outcome of the public consultation to authorities and citizens of the seven municipalities, in the province of Lecce, affected by the planned \u201cGR.ITA 2\u201d connection. During the online meeting, held on Teams from 5.00 p.m., the solutions selected for the route were presented. These decisions are the result of dialogue with local communities during the public consultation on the new infrastructure that will cross the southern Italian municipalities, in the province of Lecce, of Galatina, Soleto, Sternatia, Martignano, Calimera, Carpignano Salentino and Melendugno. At the end of this phase, Terna will launch detailed planning ready for theconsents process. The meeting is part of the shared planning process launched by the company in 2022 with the support of the Puglia Regional Authority and the municipal councils. During the public consultation phase, prior to submission of the project to obtain consent, concluded on 12 December 2023, five meetings were held to illustrate the details of the proposed project to local stakeholders, examining alternatives established on the basis of comments received during voluntary consultation and by listening to the feedback, opinions and requests of citizens.
The Ministry of the Environment and Energy Security gives its consent for the Adriatic Link, the new submarine power line connecting Marche and Abruzzo
On 6 February 2024, the Ministry of the Environment and Energy Security, through a decree of 31 January 2024, gave the green light for the construction of the Adricatic Link, Terna\u2019s submarine power line that will connect the Marche and Abruzzo regions. This development project, included among the interventions outlined in the PNIEC (National Integrated Plan for Energy and Climate) and recognised as strategic for the country by the Regulatory Authority, will strengthen energy exchange in central Italy, addressing the security and flexibility needs of the national electrical system and meeting the targets set for growth in renewables. The advanced technological and environmental electric connection will consist of two submarine cables approximately 210 km long, laid at a maximum depth of 100 meters, and two underground cables of 40 km. Converter stations will be built near the existing substations in Cepagatti (Pescara), Abruzzo, and Fano (Pesaro-Urbino), Marche. The infrastructure will provide an increase of approximately 1,000 MW in exchange capacity between Italy\u2019s Centre-South and Centre-North zones, enabling the integration and transfer of energy produced by wind and photovoltaic plants in the South to consumption centres in the North.
Terna among the world leaders in fighting climate change
On 6 February 2024, Terna was recognised as a leading international company in the fight against climate change by CDP\u2019s Climate Change survey\u00a0(former Carbon Disclosure Project). CDP is a global non-profit organisation specialising in environmental reporting and assessment of climate performance and strategies adopted by companies. The group led by Giuseppina Di Foggia achieved an \u201cA-\u201d rating (on a scale from \u201cD-\u201d to \u201cA\u201d), improving on last year\u2019s \u201cB\u201d rating. The score assigned to Terna places the company in the \u201cLeadership\u201d category, above the average for the sector (\u201cB\u201d), the European average (\u201cB\u201d) and the global average (\u201cC\u201d). This recognition from CDP confirms Terna\u2019s growing commitment to environmental sustainability, reaffirmed with the adoption of a new Science Based Target, under which Terna has committed to cut its CO2\u00a0emissions by 46% before 2030, compared to 2019 levels, raising the bar from the previous target of reducing greenhouse-gas emissions by approximately 30%. CDP\u2019s assessment of supplier engagement recognises Terna\u2019s efforts with regard the quality of Scope 3 emissions reporting, in relation to the value chain, and rewards the Group\u2019s commitment to reducing these emissions, as certified by the Science-based Target Initiative in 2023. The rating is also in line with the Company\u2019s efforts to promote the circular economy, given substance by the recent launch of Terna\u2019s Roadmap, which aims to make the Company a leader in this field.
Settlement agreement with Quebec
On 7 February 2024, all disputes related to the outstanding arbitrations\u00a0(listed in the notes in note 11. \u201cProfit/loss from discontinued operations and assets held for sale\u201d) between the companies Linha Verde I and Linha Verde II and the Quebec Group\u00a0were resolved, including any other existing or potential disputes regarding their relations. In addition, at the same time of the agreement, the company Terna Plus S.r.l. completed the purchase of a minority stake in the Brazilian company SPE Transmissora de energia Linha Verde I S.A., now an integral subsidiary of Terna Plus S.r.l..
Terna: EIB provides the last tranche of the \u20ac1.9 billion loan for the Tyrrhennian Link
On 8 February 2024, on the sidelines of the second edition of the EIB Forum in Luxembourg, which brings together Heads of State, EU Commissioners, business leaders, academics and civil society representatives, the European Investment Bank (EIB) and Terna signed the contract for the final tranche of the \u20ac1.9 billion loan for the Tyrrhenian Link, the submarine electricity cable connecting the Italian mainland with Sicily and Sardinia. At the EIB Forum, a meeting took place between EIB Vice-President Gelsomina Vigliotti and CEO and General Manager of Terna, Giuseppina Di Foggia, todiscuss future collaboration in support of the energy transition and REPowerEU\u00a0objectives. This final tranche of \u20ac500 million, in addition to the previous contracts signed on 8 November 2022 (first tranche of \u20ac500 million) and 30 March 2023 (second and third tranches, totalling \u20ac900 million), will support the construction and commissioning of the East and West sections of the Tyrrhenian Link. By connecting Sicily and Sardinia with the Italian mainland via a 970 km, 1,000 MW double submarine cable, the Tyrrhenian Link will foster the development of renewable sources, grid reliability and promote energy security in Italy. Terna plans to invest around \u20ac3.7 billion in total for this infrastructure, which is key for Italy\u2019s energy security. Around 50% of the project cost will be financed by the EIB, demonstrating the strategic nature of the project. The Tyrrhenian Link will be fully operational in 2028. Some 250 companies will be involved in its implementation, which will have a significant impact in the regions concerned. With a tenor of around 22 years from each drawdown, the loans have a longer maturity and more competitive costs than those generally available on the market, aligning them with Terna\u2019s policy to optimise its financial structure. This transaction brings the total of EIB loans granted to Terna to around \u20ac3.8 billion.
Terna and RSE join forces to develop projects and technologies in the energy and environmental sectors
On 14 February 2024, Terna and RSE, a leader in analysis and applied research in the energy sector, have signed a five-year partnership agreement\u00a0aimed at the development and application of processes and technologies in the field of energy and the environment, promoting study initiatives and development and innovation activity. The agreement was signed on 14 February in Rome by Giuseppina Di Foggia, CEO and General Manager of Terna, and Franco Cotana, CEO of RSE. Thanks to this partnership, Terna and RSE will be able to cooperate, through planning, programming and coordination activity, establishing a scenario that fosters the development of research and technology and the propagation of projects for innovation, energy security and grid resilience. This is of fundamental importance to Terna, being an enabler of the energy transition, and for RSE, in its role of promoting innovation, efficiency and circularity throughout the energy supply and sustainability chain. Specifically, the partnership involves a framework agreement aimed at launching mutual collaboration in areas including optimised grid planning and design, methodologies for smart-asset management, monitoring, control and resilience of the electricity system, development of new technology for grid flexibility, scenarios for the evolution of demand and generation from renewables, big-data management and data science, use of IoT (Internet of things) technology, cyber security, artificial intelligence and other technology enabling the Italian energy transition. The progress of projects will be monitored by a Management Committee made up of Terna and RSE representatives.
Consent for two new underground cable connections in Milan
On 16 February 2024, the Ministry of the Environment and Energy Security issued the decree approving Terna\u2019s project for the construction of two new power line connections in Milan. The Company will invest approximately \u20ac17 million in the project, which is part of the works planned to increase reliability of power supplies for the Milan - Cortina 2026 Winter Olympics and Paralympics. The project involves two underground cable connections (Porta Romana PS \u2013 Milan South Receiver SS and Porta Romana PS \u2013 Mugello PS) running for a total of 6.5 km and providing input-output connection of the local distributor\u2019s new \u201cPorta Romana\u201d primary substation. These works will upgrade the local grid, which experiences high loads\u2014particularly in the summer\u2014enabling it to cope with the growing electricity demand of the Porta Romana district set to host the Olympic Village, and the corresponding train station.
Terna: infrastructure projects consented to in 2023 amount to investment of over \u20ac3 billion
As at 19 February 2024, the Italian Ministry of Environment and Energy Security and the regional councils approved 23 development projects for Italy\u2019s national transmission grid, with total investment of more than \u20ac3 billion. This marks a new record for the Group, confirming Terna\u2019s central role in Italy\u2019s energy transition and the ongoing collaboration between the company and Italian institutions. The figure is up 20% on 2022, when authorised projects reached a total value of more than \u20ac2.5 billion, and has tripled since 2021. The main contribution to this achievement comes from the western branch of the Tyrrhenian Link, the section of the submarine power line that will connect Sicily and Sardinia, valued at over \u20ac1.8 billion. The eastern branch of the project, set to connect Sicily and Campania, was authorised in 2022. The 1,000 MW Direct Current submarine connection will run for 970 km, and is a strategic project for the Italian electricity system, crucial for achieving the energy transition goals set in the Integrated National Energy and Climate Plan (PNIEC). Another significant Terna project authorised last year is Sa.Co.I. 3, the 200kV submarine cable that will connect Sardinia, Corsica and Tuscany, with a total capacity of up to 400 MW. The project will help to strengthen the country\u2019s role as energy hub in Europe and Mediterranean region. In addition, there are two projects of around \u20ac50 million each, included in Terna\u2019s plans to increase the security and efficiency of the highand extra-high-voltage grid in the areas that will host the 2026 Milan - Cortina Olympic Games and Paralympic Games. These are the 19km \u201cMoena-Campitello\u201d underground cable power line in Val di Fassa (Trento) and the 22km underground connection between Vandoies and Brunico (Bolzano). Both projects will increase grid meshing and resilience of the electricity transmission system in areas frequently affected by extreme weather events in recent years. Terna has already begun work on the two infrastructure projects, with the aim of completing them by the end of 2025. Furthermore, by investment value, the two following projects in Lazio were also included: the underground cable power line of over 17km between the Rome South electrical substation and the Ciampino primary substation. This \u20ac30 million project is part of a wider plan to restructure the power grid in the southern area of the Italian capital. The second is the \u201cPian di Tortora-Viterbo\u201d, an underground cable connection in the province of Viterbo which will increase grid meshing in the area and boost the efficiency and reliability of the transmission service.
Green light for the new underground cable connection in Ragusa
On 22 February 2024, Sicily\u2019s Department of Energy and Public Utilities approved Terna\u2019s new \u201cRagusa SS -Ragusa North PS\u201d underground cable power line. The project, in which the company led by Giuseppina di Foggia will invest approximately \u20ac26 million, involves the construction of a 14 km-long electricity line connecting Terna\u2019s substation at Ragusa to the Ragusa North primary substation, which is owned by the local distributor. The development project will increase the available power to meet the needs of businesses and citizens and the grid meshing to improve service quality, especially during the summer, when demand in the area is significantly higher. The new connection will be completely underground and developed using latest-generation cables with XLPE (cross-linked polyethylene) insulation, a reliable, resilient, and sustainable solution. The final project design process and the preliminary activities necessary to start construction will begin in the coming weeks.
Results of the Directors\u2019 and Statutory Auditors\u2019 assessment of independence
On 6 March 2024, Terna\u2019s meeting of the Board of Directors, chaired by Igor De Biasio, proceeded to assess its members\u2019 compliance with the independence requirements\u00a0in the Articles of Association, in art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the Consolidated Law on Finance (\u201cCLF\u201d), and the independence requirements in the Corporate Governance Code (art. 2, Recommendation 7) provided in the document, \u201cCriteria and procedure for assessing independence\u201d. In view of the governance recommendations, the Chairman, Igor De Biasio, was assessed as independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the Consolidated Law on Finance (\u201cCLF\u201d) and to art. 2, Recommendation 7 of the Corporate Governance Code. The non-executive Directors Angelica Krystle Donati, Enrico Tommaso Cucchiani, Gian Luca Gregori, Simona Signoracci, Marco Giorgino, Karina Audrey Litvack, Jean-Michel Aubertin and Anna Chiara Svelto were assessed as independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the CLF and to art. 2, Recommendation 7 of the Corporate Governance Code. The Directors Regina Corradini D\u2019Arienzo, Francesco Renato Mele and Qinjing Shen were assessed as not independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the CLF and to art. 2, Recommendation 7 of the Corporate Governance Code. The Board of Directors also verified that all its members fulfil the requirements in the provisions of art. 15.5 of the Articles of Association concerning independence and incompatibility, adopted pursuant to the Unbundling Regulations. As recommended by the Corporate Governance Code, and in accordance with the role assigned to it by law, the Board of Statutory Auditors verified the correct application of the established assessment criteria and procedures adopted by the Board of Directors in assessing the independence of its non-executive members. The Board of Statutory Auditors also reported during today\u2019s meeting that all the Statutory Auditors meet the relevant independence requirement, pursuant to art. 2, Recommendation 9 of the Corporate Governance Code, verified during the meeting held on 7 February 2024 in application of the Board of Statutory Auditors\u2019 Terms of Reference.
Terna launches the \u201cDriving Energy Award 2024 \u2013 Contemporary Photography\u201d
On 7 March 2024, Terna launched the \u201cDriving Energy Award 2024 \u2013 Contemporary Photography\u201d. This free competition \u2014 open to all professional and amateur photographers in Italy \u2014 aims at promoting and developing culture in Italy and scouting new talents in the field. The theme for this year\u2019s award is \u2018The invisible\u00a0way\u2019. From today until 30 June, photographers are invited to interpret different forms of energy that although invisible, produce visible effects. This is a way to celebrate talent and the unique nature of an art capable of capturing realities that do not exist for many people, or at least not yet. This edition will have the same structure as the previous year\u2019s, which achieved ambitious goals in terms of opening, inclusion and engagement across Italy, making the Award a resounding success in the world of photography. This year will again see five different categories: the Senior Award, with a prize of \u20ac15,000, open to participants of the ageof 31 or older , the Youth Award, with a prize of \u20ac5,000, for photographers below the age of 30, the Amateur Award, with a prize of \u20ac5,000, open to all those who are not pursuing a professional career in photography, the Academy Mention, with a prize of \u20ac2,000, open to students enrolled in a higher education institute studying in a field relevant to the Award, and Terna\u2019s most voted work, with a prize of \u20ac2,000, open to all categories and awarded by Terna employees, who will vote on an exclusive preview of the finalist works through the TernaCult internal cultural platform.
Terna Forward and DXT Commodities close a \u20ac2.8 billion round of investment in WESII
On 8 March 2024, Terna Forward, the Terna Group company dedicated to tech innovation and Corporate Venture Capital initiatives, and DXT Commodities S.A. (DXT), a Duferco Group company, have announced the completion of a 2.8 million-euro round of investment, through a joint capital increase, in Wesii, an leading Italian company in inspection and remote-sensing services for the renewable energy sector. Traditional approaches for inspection of solar and wind systems or power lines involve land-based techniques that can be time-consuming and costly. Since its founding, Wesii has focused on the use of drones and aircraft equipped with high-definition and infrared thermal cameras for the thermographic analysis of renewable plants and electric infrastructure. This provides a high level of accuracy and enables identification and geolocation of any faults. The data gathered by the startup are catalogued, standardised and analysed using AI algorithms and a proprietary platform in order to further improve predictive maintenance and asset monitoring. The investment in Wesii is the first direct investment in an innovative small medium enterprise by Terna Forward, a company of the Terna Group led by Giuseppina Di Foggia. Terna Forward uses an open-innovation approach to identify and support the most promising enterprises and those with the highest-impact technology for acceleration of the energy transition, including through Corporate Venture Capital investments.
Consents process for the two new underground cable connections in the province of Sassari begins
On 12 March 2024, following the launch, by the Ministry of the Environment and Energy Security, of the consents process for the two new underground cable connections in the province of Sassari, Terna published the notice identifying the parcels of land that may be affected by the project in the municipalities of Alghero and Putifigari. The project, in which the company will invest around \u20ac45 million, involves connecting the new \u201cAlghero South\u201d Primary Substation, which belongs to the local distributor, to the existing 150kV \u201cPadria-Alghero\u201d line. This will be achieved by constructing two underground cables with an overall length of approximately 20 km. The new infrastructure will allow the demolition of around 4 km of existing overhead power lines, for a total of 8 pylons that currently cross the municipalities involved. The work will enable to increase the resilience of the electricity system in the face of extreme weather events and boosting the reliability of the local grid thanks to the construction of new supply routes, while simultaneously reducing the environmental impact of the infrastructure on the community.
Terna receives gender equality certification
On 14 March 2024, Terna announced that it has received certification from the certifying body IMQ \u2013 Istituto Italiano Marchio di Qualit\u00e0 \u2013 confirming the compliance of its Gender Equality Management System with the standard UNI/PdR 125:2022.\u00a0The audit performed by the certifying body took place in person and remotely and looked at a sample of seven organisational structures of the four Group companies \u2013 Terna S.p.A., Terna Rete Italia S.p.A., Terna Energy Solutions S.r.l., and Terna Plus S.r.l. \u2013 with the audit lasting a total of around 90 hours. The IMQ auditors certified that this achievement was the result of implementing renewed and improved principles and criteria within the Group, bringing them further into line with the new Gender Equality Management System. The GEMS was implemented in early 2023 through close collaboration between various areas of the Group. This certification marks the fourteenth integrated management system implemented and managed by Terna.
Start of consents process for reorganisation of the electricity grid between Caserta and Naples
On 16 March 2024, the Ministry of the Environment and Energy Security began the consents process for Terna\u2019s plan to reorganise the power grid in the towns of Maddaloni, in the province of Caserta, and Acerra, in the province of Naples.\u00a0The Company, led by Giuseppina Di Foggia, will invest more than \u20ac38 million in the project, which will make it possible to reduce the impact of electrical infrastructure on the land. It will also increase the local grid\u2019s resilience and security, as well as quality of service for businesses and households. The project falls under a broader local grid development plan that involvesbuilding a new 220kV section inside the existing Santa Sofia Electrical Substation. With five new underground cable connections installed in the branch which includes the Santa Sofia substation and the lines south of the Maddaloni railway station, it will be possible to take down more than 9 km of overhead power lines and a total of 36 pylons, freeing up approximately 37 hectares of land. The project took shape after a round of intense and productive discussions with local institutions and falls under the 2019 National Transmission Grid Defence Plan, which aims to resolve existing electrical infrastructure interference and make the electricity transmission service more reliable. The public and, specifically, landowners in the areas affected by the new project, will be able to read the plan documents at the offices of the Ministry of the Environment and Energy Security, Campania Regional Authority and at the Municipalities of Maddaloni (CE) and Acerra (NA). They can also submit their written comments to the Ministry and to Terna, for the Company\u2019s information, within the deadline established by law.
2024-2028 Industrial Plan approved
The\u00a0results for the year ended 31 December 2023 and the new 2024-2028 Industrial Plan were approved on 19 March 2024, with improvements across all financial performance indicators.
The meeting of the Board of Directors of Terna S.p.A. (\u201cTerna\u201d), chaired by Igor De Biasio, examined and approved the Group\u2019s 2024-2028 Industrial Plan and the results for the year ended 31 December 2023, presented by the Chief Executive Officer and General Manager, Giuseppina Di Foggia. Terna\u2019s new Industrial Plan aims to consolidate the Company\u2019s strategic role in enabling the Italian electricity system and, more generally, strengthen its commitment to driving the country\u2019s energy transition. To achieve the decarbonisation goals set in the European Green Deal and the National Integrated Energy and Climate Plan (\u201cPNIEC\u201d), which aim to cut greenhouse gas emissions by at least 55% by 2030, compared with 1990 levels, Terna plans to significantly increase investment\u00a0over the life of the Plan to \u20ac16.5 billion. \u20ac2.6 billion of this will be invested in 2024. This is\u00a0the highest level ever in the Group\u2019s history\u00a0and is 65% up on the last Plan. The key driver in the Industrial Plan is sustainable investment, a concept embedded in the Company\u2019s value creation process and in the benefits for the system and the environment. In fact 99% of Terna\u2019s capex is classified as sustainable based on EU Taxonomy\u00a0criteria.
Moody\u2019s reaffirms Terna Baa2 rating with a stable outlook
On 19 March 2024, Moody\u2019s Investor Service (Moody\u2019s) reaffirmed the long-term Baa2 rating assigned to Terna S.p.A. (Terna) with a stable outlook, one notch above Italy\u2019s sovereign rating. The assessment by the rating Agency came after the presentation of the 2024-2028 Industrial Plan, with the highest level of investments in Terna\u2019s history, aimed at strengthening the Company\u2019s central role as enabler of the energy transition and of an increasingly complex, sustainable and innovative electricity system.
On 6 February 2024, following the update of the \u201cGovernment-Related Issuers\u201d (GRI) methodology, through which the rating agency has extended its scope of application to certain entities indirectly owned by governments, Moody\u2019s once again confirmed Terna\u2019s long-term rating of \u2018Baa2\u2019, a notch above Italy\u2019s sovereign rating, with a stable outlook. The rating agency also confirmed Terna\u2019s \u2018P-2\u2019 short-term rating and the \u2018Ba1\u2019 rating of Terna\u2019s subordinated debt.
S&P reaffirms Terna\u2019s BBB+ rating with a stable outlook
On 19 March 2024, S&P Global Rating (S&P) reaffirmed the Company\u2019s BBB+ long-term rating with a stable outlook, one notch above Italy\u2019s sovereign rating. The assessment by the rating Agency came after the presentation of the 2024-2028 Industrial Plan, with the highest level of investments in Terna\u2019s history, aimed at strengthening the Company\u2019s central role as enabler of the energy transition and of an increasingly complex, sustainable and innovative electricity system.
Launch of the \u201cWe are committed to the future of energy\u201d corporate advertising campaign
On 21 March 2024, the new corporate advertising campaign produced by Terna, Italy\u2019s national grid operator, was launched in the press and digital media. Among the new features this year is the mention of the Industrial Plan, putting corporate communication on a firm basis. \u2018\u2018We are committed to the future of energy\u201d is the claim in the campaign, which will appear in the media until 14 April, accompanying the launch of the new 2024-2028 Industrial Plan presented to investors on 19 March. \u201cFaster. More digitalised. More sustainable. Fairer. This is the energy transition we want. It is an essential challenge for the future of us all: it requires Terna to have a wider vision and commit to elevating our mission of transmitting energy to the country to new levels of excellence. That is why our 2024-2028 Industrial Plan sets considerable new records and includessignificant new developments. This is the energy of the future. Today.\u201d. These are the words with which the Group, led by Giuseppina Di Foggia, substantiates its commitment towards a future that will face everyone with a series of unavoidable deadlines as we make take effective, definitive action to achieve the energy transition goals.
Consents process for new \u201cGissi - Larino \u2013 Foggia\u201d power line restarts
On 27 March 2024, the Ministry of the Environment and Energy Security restarted the consents process for Terna\u2019s new 380kV \u201cGissi- Larino- Foggia\u201d overhead power line, after it was halted whilst awaiting confirmation of the project\u2019s environmental compatibility. The project, in which the Company led by Giuseppina Di Foggia will invest over \u20ac270 million, will involve construction of a second backbone with an overall length of 134 km between the electricity substations of Villanova (PE) and Foggia, connecting with the input/output modules of the intermediate substations of Gissi (CH) and Larino (CB). The new power line will make the management and maintenance of the Adriatic Backbone more reliable and cost-effective with returns in terms of both efficiency and savings for families and businesses. In particular, the work will reduce grid losses for the transport of energy, minimise the risk of being unable to handle peak loads, and resolve congestion between the south and north and at local level that limit the production of renewable energy. Once operational, the line should help save approximately 50 Gwh per year and reduce CO2\u00a0emissions by around 21 kt CO2\u00a0per year, a testament to the Company\u2019s constant commitment to guaranteeing sustainability for future generations.
Consents process begins for rationalisation of power grid in the province of Messina
On 28 March 2024, following the start, by the Regional Authority\u2019s Energy and Public Utilities Department, of the consents process for the project involving rationalisation of the 150kV power grid in the province of Messina, Terna has published notice of the parcels of land potentially affected by the new infrastructure. The project, in which the Company is to invest approximately \u20ac18 million, will reduce the impact of electricity infrastructure on the local area and improve the reliability, security and efficiency of the local electricity service. The project involves a comprehensive restructuring and modernisation of the 150kV grid in the Valle del Mela (ME) area. The work will include extraordinary maintenance of existing power lines and the installation of 13 km of new connections and short-distance links, with over one third of these in underground cable, in the municipalities of Rometta, Saponara, Villafranca Tirrena and Messina. The project, associated with creation of the 380 kV \u201cSorgente-Rizziconi\u201d power line, follows the commitments made in the Memorandum of Understanding entered into with the Sicilian regional authority and the municipal authorities affected.
Consent received for modernisation of the \u201cSant\u2019Antimo - Fratta\u201d power line linking the provinces of Naples and Caserta
On 29 March 2024,\u00a0the Ministry of the Environment and Energy Security gave its consent for Terna\u2019s final design for renewal of the 220kV power line between the Sant\u2019Antimo primary substation and the Fratta electricity substation in the Metropolitan City of Naples. The project, in which the Company will invest approximately \u20ac18 million, meets the need to modernise the existing power line dating back to the 1940s. The project will increase the quality of the local electricity service, at the same time minimising the visual impact of the infrastructure and its effect on the landscape. The work will involve laying approximately 8 km of underground cable in the municipalities of Sant\u2019Antimo, Grumo Nevano, Frattamaggiore and Frattaminore in the province of Naples, and in the municipality of Sant\u2019Arpino in the province of Caserta.
Perpetual hybrid green bond worth \u20ac850 million successfully issued
On 4 April 2024, Terna S.p.A. successfully launched an issue of euro-denominated, perpetual, subordinated, hybrid, non-convertible, fixed-rate green bonds to institutional investors, amounting to a total of \u20ac850 million. The issue received a very favourable response from the market, with applications topping \u20ac3 billion and the issue approximately 4 times oversubscribed. The issue attracted a high quality of geographically diversified investor. The bonds, issued in a single tranche, are non-convertible, subordinated, green, hybrid and perpetual and are non-callable for 6 years. The issue price was 99.745%, with a spread of 214.2 basis points with respect to the Mid Swap rate. The issue will pay fixed annual coupon interest of 4.750%, payable until the first reset date (excluded) of 11 April 2030, and will have an effective interest rate of 4.800%. From this date, unless the bond has been redeemed early, the hybrid bond will pay interest at the 5-year Euro Mid Swap rate, increased by an initial spread of 214.2 basis points, rising by a further 25 basis points from 11 April 2035 and by another 75 basis points from 11 April 2050.
Disclosure
pursuant to art. 149-duodecies\u00a0
of the CONSOB Regulations for Issuers
The following table, prepared pursuant to art. 149-duodecies\u00a0of the CONSOB Regulations for Issuers, shows the fees paid for audit and other services provided to the Terna Group by the Parent Company\u2019s independent auditors and the network of the Parent Company\u2019s independent auditors in 2023.
(\u20ac)
ENTITY PROVIDING SERVICE
FEES DUE FOR THE YEAR
Audit of the accounts and financial statements
Parent Company\u2019s auditor
523,852
Attestation and other services7
Parent Company\u2019s auditor
131,857
Audit of the accounts and financial statements
Network of the Parent Company\u2019s auditor
213,695
Total
869,404
Attestation
of the consolidated financial statementspursuant to art. 81-ter\u00a0of CONSOB Regulation 11971of 14 May 1999, as amended
IndependentAuditor\u2019s Report
pursuant to articles 14 of Legislative Decree 39 of 27 January 2010 and aticle 10 of Regulation (EU) 537/2014 - Consolidated financial statements for the year ended31 December 2023
Introduction
Terna S.p.A.\u2019s registered office is at Viale Egidio Galbani 70, Rome, Italy. The consolidated financial statements at and for the year ended 31 December 2022 include the Company\u2019s financial statements and those of its subsidiaries (the \u201cGroup\u201d). The subsidiaries included within the scope of consolidation are listed below.
Publication of the consolidated financial statements was authorised by the Board of Directors on 19 March 2024.
The consolidated financial statements at and for the year ended 31 December 2023 are available for inspection on request at Terna S.p.A.\u2019s registered office at Viale Egidio Galbani 70, Rome, or on the Company\u2019s website at www.terna.it.
The Board of Directors has authorised the Chairman and the Chief Executive Officer to make any alterations to the form of the financial statements that may be necessary during preparation of the final text to be presented to the Annual General Meeting, and to make any additions and adjustments to the sections concerning events after 31 December 2023.
The Terna Group is the largest independent transmission system operator in Europe and one of the leading operators in the world in terms of kilometres of line managed (more than 75 thousand kilometres).\n
It is responsible for the transmission and management of power flows on the high-voltage (HV) and very high-voltage (VHV) grid throughout Italy, in order to guarantee a balance between demand and supply for energy (dispatching). It is also responsible for the planning, construction and maintenance of the grid.\nIt acts as the Italian TSO (Transmission System Operator), having been granted a monopoly under a government concession, and is subject to regulation by Italy\u2019s Regulatory Authority for Energy, Networks and the Environment (ARERA) and the guidelines established by the Ministry of Enterprises and Made in Italy. It ensures the security, quality and cost-effectiveness of the national electricity system and has the task of developing the grid and integrating it with the European grid. It ensures equal access for all grid users.
As of the financial statements for the year ended 31 December 2021, the Terna Group has complied with the requirement introduced by the European Transparency Directive and publishes its Annual Reportusing the European single electronic format (ESEF), tagging all the numbers in the consolidated financial statements and the issuer\u2019s basic financial information using the ixbrl format. In addition, as of 31 December 2022, all the notes to the consolidated financial statements have been block tagged.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130759": { "value": "S.p.A.", "dimensions": { "concept": "ifrs-full:LegalFormOfEntity", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130761": { "value": "Viale Egidio Galbani 70, Rome", "dimensions": { "concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130760": { "value": "Italy", "dimensions": { "concept": "ifrs-full:PrincipalPlaceOfBusiness", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130762": { "value": "Italy", "dimensions": { "concept": "ifrs-full:CountryOfIncorporation", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130769": { "value": "Publication of the consolidated financial statements was authorised by the Board of Directors on 19 March 2024.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130764": { "value": "Terna S.p.A", "dimensions": { "concept": "ifrs-full:NameOfReportingEntityOrOtherMeansOfIdentification", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130763": { "value": "Rome", "dimensions": { "concept": "ifrs-full:DomicileOfEntity", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130765": { "value": "It is responsible for the transmission and management of power flows on the high-voltage (HV) and very high-voltage (VHV) grid throughout Italy, in order to guarantee a balance between demand and supply for energy (dispatching). It is also responsible for the planning, construction and maintenance of the grid.\nIt acts as the Italian TSO (Transmission System Operator), having been granted a monopoly under a government concession, and is subject to regulation by Italy\u2019s Regulatory Authority for Energy, Networks and the Environment (ARERA) and the guidelines established by the Ministry of Enterprises and Made in Italy. It ensures the security, quality and cost-effectiveness of the national electricity system and has the task of developing the grid and integrating it with the European grid. It ensures equal access for all grid users. As of the financial statements for the year ended 31 December 2021, the Terna Group has complied with the requirement introduced by the European Transparency Directive and publishes its Annual Reportusing the European single electronic format (ESEF), tagging all the numbers in the consolidated financial statements and the issuer\u2019s basic financial information using the ixbrl format.", "dimensions": { "concept": "ifrs-full:DescriptionOfNatureOfEntitysOperationsAndPrincipalActivities", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130766": { "value": "Compliance with IAS/IFRS
The consolidated financial statements at and for the year ended 31 December 2023 have been prepared in accordance with International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) issued by the International Accounting Standards Board (IASB) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC), as endorsed by the European Commission (\u201cEU-IFRS\u201d).
This document has also been prepared taking into account the provisions of Legislative Decree 38 of 28 February 2005, of the Italian Civil Code and CONSOB Resolutions 15519 (\u201cProvisions governing financial statements in implementation of art. 9, paragraph 3 of Legislative Decree 38/2005\u201d) and 15520 (\u201cAmendments and additions to the implementing rules for Legislative Decree 58/1998\u201d), as well as CONSOB Communication DEM/6064293 (\u201cDisclosure requirements for listed issuers and issuers of financial instruments that are widely held among the public pursuant to art. 116 of the Consolidated Law on Finance\u201d).
", "dimensions": { "concept": "ifrs-full:StatementOfIFRSCompliance", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130770": { "value": "Basis of presentation
The consolidated financial statements consist of the statement of financial position, the income statement, and the statement of comprehensive income, the statement of cash flows, the statement of changes in equity and the notes thereto.
In the statement of financial position, assets and liabilities are classified on a \u201ccurrent/non-current\u201d basis, with separate reporting of assets and liabilities held for sale. Current assets, which include cash and cash equivalents, are those held for realisation, sale or consumption in the Group\u2019s normal operating cycle; current liabilities are those expected to be settled in the Group\u2019s normal operating cycle or within one year of the end of the financial year.
The income statement is classified on the basis of the nature of costs. The income statement is presented as two statements, the first of which (the income statement) presents revenue and expense items for the year; the second (the statement of comprehensive income) starts with the result for the year and then presents the revenue and expense items that are recognised in equity rather than profit or loss for the year.
The statement of cash flows has been prepared using the indirect method.
The consolidated financial statements are accompanied by the Report on Operations for Terna S.p.A. and the Group, which as from financial year 2008 has been prepared as a single document, exercising the option granted by Legislative Decree 32 of 2 February 2007, which amended art. 40 (Report on Operations) of Legislative Decree 127 of 9 April 1991.\nFrom 2021, the Terna Group\u2019s Annual Report contains the Integrated Report, including in a single document the Report on Operations, the Sustainability Report and the Consolidated Non-financial Statement (the \u201cNFS\u201d), in addition to the consolidated financial statements and the Parent Company\u2019s separate financial statements.
These consolidated financial statements are presented in millions of euros and all amounts are shown in millions of euros to the first decimal place, unless otherwise indicated.\n
Given that the requirements of IFRS 5 have been met, the total results for 2023 and 2022 attributable to the South American subsidiaries included in the planned sale of assets have been classified in the item \u201cProfit/(Loss) from discontinued operations and assets held for sale\u201d in the Group\u2019s reclassified income statement. Likewise, the attributable assets and liabilities at 31 December 2023 and 2022 have been classified in the item \u201cDiscontinued operations and assets held for sale\u201d and \u201cLiabilities related to discontinued operations and assets held for sale\u201d in the Group\u2019s reclassified statement of financial position.
Certain amounts in the financial statements at and for the year ended 31 December 2022 have been restated to provide an improved basis of comparison, without however modifying the amount of equity at 31 December 2022 or amounts in the income statement and statement of comprehensive income for 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130771": { "value": "Use of estimates
Preparation of the consolidated financial statements requires the Group to use estimates and assumptions that affect the carrying amounts of assets and liabilities and the related disclosures, in addition to contingent assets and liabilities at the reporting date. These estimates and the associated assumptions are based on previous experience and various factors that are believed to be reasonable under the circumstances. The resulting estimates form the basis for making the judgements about the carrying amounts of assets and liabilities that are not readily apparent from other objective sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed periodically and the effects of any changes are recognised in the income statement for the year, if they relate solely to that period. In the case that the revision affects both current and future years, the change is recorded in the year in which the estimate is reviewed as well as in the relevant future years.
The assets and liabilities subject to estimates and key assumptions used by the Group in applying the IFRS endorsed by the European Commission, and that could have a significant impact on the consolidated financial statements, or that could give rise to risks that would entail significant adjustments to the carrying amounts of assets and liabilities in subsequent years, are summarised below.
Revenue related to incentives
Recognition in the financial statements of output-based incentives requires management to use estimates and assumptions based on judgements made using actual data and estimates of the quantity and likelihood of future events. In the case of incentive mechanisms where the performance obligation is satisfied over a period of time, the Group estimates how to allocate the reward in the period, estimating the potential for the return of all or part of the accrued amounts. The amount recognised as revenue in the accounting period is the amount that is most likely not to be returned in the future. For the purpose of recognition, the Group also evaluates, for each incentive mechanism, whether or not the right (or obligation) is subject to confirmation or verification by the regulator, ARERA.
If the mechanism includes a significant financial component, the Group determines a discount rate that takes into account the credit risk associated with the asset which, given the way in which the mechanisms work and the guarantees provided to Terna under the regulatory framework, broadly coincides with the electricity system.
Certain incentive mechanisms may result in penalties for underperformance.
Impairment losses
Property, plant and equipment and intangible assets with finite useful lives are tested at least once a year to check for evidence of impairment. If there is evidence that an asset may be impaired, its recoverable amount is estimated.
The recoverable amount of goodwill is estimated at least annually. The recoverable amount is equal to the greater of the fair value less costs to sell and value in use. Value in use is measured by discounting estimated future cash flows considering information available at the time of estimate and on the basis of estimates of the performance of future variables, such as prices, costs, demand growth rates, production profiles, and discounted at a pre-tax rate that reflects current market assessments of the time value of money for the investment period and risks specific to the asset. If the intangible asset does not generate cash inflows that are largely independent, the asset\u2019s recoverable amount is calculated as part of the Cash Generating Unit (\u201cCGU\u201d) to which it belongs.
An impairment loss is recognised in the income statement when the asset\u2019s carrying amount, or the net invested capital of the CGU to which it belongs, is greater than its recoverable amount.
Impairment losses on CGUs are first taken as a reduction in the carrying amount of any allocated goodwill and then as a reduction in other assets allocated to the CGU on a pro rata basis. Except for goodwill, impairment losses may be reversed up to the recoverable amount or the original cost of the asset if there is an indication that the impairment loss no longer exists or when there is a change in the methods used to measure the recoverable amount.
Allowance for doubtful accounts
Trade receivables are initially recognised at fair value net of any losses relating to sums considered non-recoverable, for which specific provisions have been made in the allowance for doubtful accounts. Credit losses are determined in application of IFRS 9 (a model based on expected credit losses). This requires the Group to assess expected credit losses, and the related changes, at each reporting date.
Specifically, the Group has applied the simplified approach permitted by IFRS 9 to trade receivables in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Group has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
Provisions for risks and charges
Provisions for risks and charges are allocated when a disbursement of cash, for an amount which can be reliably estimated, will be necessary to fulfil a legal or constructive obligation arising as a result of a past event. Where the time value of money is significant, provisions are discounted using a rate that the Group believes to be appropriate (a rate is used that reflects current market conditions and the specific risks connected with the liability). After initial recognition, the value of the provisions for risks and charges is updated to reflect the passage of time and any changes in the estimate changes in the estimate that result from alterations to the forecasted amounts, timing, and discount rates used. Any increase in provisions associated with the passage of time is recognised in the income statement under \u201cFinancial expenses\u201d.
Liabilities that can be associated with legal and tax disputes, early retirement incentives, urban and environmental restoration projects and other sundry charges are estimated by the Group. The measurement of provisions for legal disputes is based on the probability of incurring an expense, including through the use of external legal advisors supporting the Group companies; the estimate of provisions to be set aside for urban and environmental restoration projects which are the \u201coffsets\u201d aimed at compensating for the environmental impact of the construction of new plant, is based on an analysis of the agreements entered into with the local authorities concerned and the progress of work on construction of the new infrastructure.
Employee benefits
Post-employment benefits are defined on the basis of plans, even if not formalised, that are classified as either \u201cdefined benefit\u201d plans or \u201cdefined contribution\u201d plans depending on their nature.
The liability for employee benefits paid upon or following termination of employment in relation to defined benefit plans or other long-term benefits is recognised net of any plan assets and is measured on the basis of actuarial assumptions, estimating the amount of future benefits that employees have vested at the reporting date and is recognised on an accruals basis in line with the period of service necessary to obtain the benefit.
Changes in the value of the net liabilities (revaluations) deriving from actuarial gains or losses, resulting from changes in the actuarial assumptions used or adjustments based on experience, are recognised in other comprehensive income in the year in which they occur. If a plan is modified, curtailed or extinguished, the related effects are recognized in profit or loss.
Net financial expenses include the component of the return on plan assets and the interest cost to be recognised in profit or loss and are measured by multiplying the liabilities, net of any plan assets, by the discount rate applied to the liabilities; net interest on defined benefit plans is recognized in \u201cFinancial income/(expenses)\u201d.
The actuarial valuations used to quantify employee benefits (of all plans except termination benefits [TFR \u2013 Trattamento di Fine Rapporto]) are based on \u201cvested benefits\u201d, applying the projected unit credit method. These valuations are based on the following economic and demographic assumptions: the discount rate (used to determine the current value of the obligation, determined considering returns on high quality bonds in line with the duration of the group of workers measured), the inflation rate, the rate at which future salary levels are expected to rise, the rate of increase for average health reimbursements, rate of increase for electricity prices and demographic factors, such as mortality and invalidity, retirement, resignation, advances and household composition. The method of calculation used for TFR\u00a0consists of discounting to present value, at the measurement date, each estimated payment due to every employee, projected through to the estimated period in which the TFR\u00a0will be paid.
The obligation under defined contribution plans, limited to the payment of contributions to the state or to a legally separate entity (a fund), is measured on the basis of the contributions payable. The cost of such plans is recognised in profit or loss based on the contribution paid during the period.
Impairment losses
Property, plant and equipment and intangible assets with finite useful lives are tested at least once a year to check for evidence of impairment. If there is evidence that an asset may be impaired, its recoverable amount is estimated.
The recoverable amount of goodwill is estimated at least annually. The recoverable amount is equal to the greater of the fair value less costs to sell and value in use. Value in use is measured by discounting estimated future cash flows considering information available at the time of estimate and on the basis of estimates of the performance of future variables, such as prices, costs, demand growth rates, production profiles, and discounted at a pre-tax rate that reflects current market assessments of the time value of money for the investment period and risks specific to the asset. If the intangible asset does not generate cash inflows that are largely independent, the asset\u2019s recoverable amount is calculated as part of the Cash Generating Unit (\u201cCGU\u201d) to which it belongs.
An impairment loss is recognised in the income statement when the asset\u2019s carrying amount, or the net invested capital of the CGU to which it belongs, is greater than its recoverable amount.
Impairment losses on CGUs are first taken as a reduction in the carrying amount of any allocated goodwill and then as a reduction in other assets allocated to the CGU on a pro rata basis. Except for goodwill, impairment losses may be reversed up to the recoverable amount or the original cost of the asset if there is an indication that the impairment loss no longer exists or when there is a change in the methods used to measure the recoverable amount.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130773": { "value": "Provisions for risks and charges
Provisions for risks and charges are allocated when a disbursement of cash, for an amount which can be reliably estimated, will be necessary to fulfil a legal or constructive obligation arising as a result of a past event. Where the time value of money is significant, provisions are discounted using a rate that the Group believes to be appropriate (a rate is used that reflects current market conditions and the specific risks connected with the liability). After initial recognition, the value of the provisions for risks and charges is updated to reflect the passage of time and any changes in the estimate changes in the estimate that result from alterations to the forecasted amounts, timing, and discount rates used. Any increase in provisions associated with the passage of time is recognised in the income statement under \u201cFinancial expenses\u201d.
Liabilities that can be associated with legal and tax disputes, early retirement incentives, urban and environmental restoration projects and other sundry charges are estimated by the Group. The measurement of provisions for legal disputes is based on the probability of incurring an expense, including through the use of external legal advisors supporting the Group companies; the estimate of provisions to be set aside for urban and environmental restoration projects which are the \u201coffsets\u201d aimed at compensating for the environmental impact of the construction of new plant, is based on an analysis of the agreements entered into with the local authorities concerned and the progress of work on construction of the new infrastructure.Provisions for risks and charges
Provisions set aside for risks and charges are recognised when, at the reporting date, the Group has a legal or constructive obligation as the result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the disbursement. Where the effect is material, provisions are made by discounting estimated future cash flows using a discount rate that reflects current market rates and the specific risk applicable to the obligation, if any. Where discounting is used, the increase in the provisions due to the passage of time is recognised in the income statement as a financial expense. If it relates to property, plant and equipment (site disposal and restoration, for example), the provision is recognised as a contra entry to the asset to which it relates. The expense is recognised in the income statement through depreciation of the item of property, plant and equipment to which it relates.
Changes in the estimates are recognised in the income statement for the year in which the change occurs, except for the expected costs of dismantling, removal and restoration resulting from changes in the timing and use of the economic resources necessary to extinguish the obligation or are attributable to a material change in the discount rate. These costs are recognised as an increase or reduction in the related assets and recognised in the income statement through depreciation.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130775": { "value": "Employee benefits
Post-employment benefits are defined on the basis of plans, even if not formalised, that are classified as either \u201cdefined benefit\u201d plans or \u201cdefined contribution\u201d plans depending on their nature.
The liability for employee benefits paid upon or following termination of employment in relation to defined benefit plans or other long-term benefits is recognised net of any plan assets and is measured on the basis of actuarial assumptions, estimating the amount of future benefits that employees have vested at the reporting date and is recognised on an accruals basis in line with the period of service necessary to obtain the benefit.
Changes in the value of the net liabilities (revaluations) deriving from actuarial gains or losses, resulting from changes in the actuarial assumptions used or adjustments based on experience, are recognised in other comprehensive income in the year in which they occur. If a plan is modified, curtailed or extinguished, the related effects are recognized in profit or loss.
Net financial expenses include the component of the return on plan assets and the interest cost to be recognised in profit or loss and are measured by multiplying the liabilities, net of any plan assets, by the discount rate applied to the liabilities; net interest on defined benefit plans is recognized in \u201cFinancial income/(expenses)\u201d.
The actuarial valuations used to quantify employee benefits (of all plans except termination benefits [TFR \u2013 Trattamento di Fine Rapporto]) are based on \u201cvested benefits\u201d, applying the projected unit credit method. These valuations are based on the following economic and demographic assumptions: the discount rate (used to determine the current value of the obligation, determined considering returns on high quality bonds in line with the duration of the group of workers measured), the inflation rate, the rate at which future salary levels are expected to rise, the rate of increase for average health reimbursements, rate of increase for electricity prices and demographic factors, such as mortality and invalidity, retirement, resignation, advances and household composition. The method of calculation used for TFR\u00a0consists of discounting to present value, at the measurement date, each estimated payment due to every employee, projected through to the estimated period in which the TFR\u00a0will be paid.
The obligation under defined contribution plans, limited to the payment of contributions to the state or to a legally separate entity (a fund), is measured on the basis of the contributions payable. The cost of such plans is recognised in profit or loss based on the contribution paid during the period.
Employee benefits
The liability associated with employee benefits payable on or after termination of employment relate to defined benefit plans (deferred compensation benefits, additional months\u2019 pay, payment in lieu of notice, energy discounts, ASEM health cover and other benefits) or other long-term employee benefits (loyalty bonuses) and is recognised net of any plan assets. The liability is measured separately for each plan on the basis of actuarial calculations that estimate the amount of vested future benefits that employees have accrued at the reporting date. The liability is recognised on an accruals basis over the vesting period and is measured by independent actuaries.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130774": { "value": "Employee benefits
Post-employment benefits are defined on the basis of plans, even if not formalised, that are classified as either \u201cdefined benefit\u201d plans or \u201cdefined contribution\u201d plans depending on their nature.
The liability for employee benefits paid upon or following termination of employment in relation to defined benefit plans or other long-term benefits is recognised net of any plan assets and is measured on the basis of actuarial assumptions, estimating the amount of future benefits that employees have vested at the reporting date and is recognised on an accruals basis in line with the period of service necessary to obtain the benefit.
Changes in the value of the net liabilities (revaluations) deriving from actuarial gains or losses, resulting from changes in the actuarial assumptions used or adjustments based on experience, are recognised in other comprehensive income in the year in which they occur. If a plan is modified, curtailed or extinguished, the related effects are recognized in profit or loss.
Net financial expenses include the component of the return on plan assets and the interest cost to be recognised in profit or loss and are measured by multiplying the liabilities, net of any plan assets, by the discount rate applied to the liabilities; net interest on defined benefit plans is recognized in \u201cFinancial income/(expenses)\u201d.
The actuarial valuations used to quantify employee benefits (of all plans except termination benefits [TFR \u2013 Trattamento di Fine Rapporto]) are based on \u201cvested benefits\u201d, applying the projected unit credit method. These valuations are based on the following economic and demographic assumptions: the discount rate (used to determine the current value of the obligation, determined considering returns on high quality bonds in line with the duration of the group of workers measured), the inflation rate, the rate at which future salary levels are expected to rise, the rate of increase for average health reimbursements, rate of increase for electricity prices and demographic factors, such as mortality and invalidity, retirement, resignation, advances and household composition. The method of calculation used for TFR\u00a0consists of discounting to present value, at the measurement date, each estimated payment due to every employee, projected through to the estimated period in which the TFR\u00a0will be paid.
The obligation under defined contribution plans, limited to the payment of contributions to the state or to a legally separate entity (a fund), is measured on the basis of the contributions payable. The cost of such plans is recognised in profit or loss based on the contribution paid during the period.
Employee benefits
The liability associated with employee benefits payable on or after termination of employment relate to defined benefit plans (deferred compensation benefits, additional months\u2019 pay, payment in lieu of notice, energy discounts, ASEM health cover and other benefits) or other long-term employee benefits (loyalty bonuses) and is recognised net of any plan assets. The liability is measured separately for each plan on the basis of actuarial calculations that estimate the amount of vested future benefits that employees have accrued at the reporting date. The liability is recognised on an accruals basis over the vesting period and is measured by independent actuaries.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130777": { "value": "Subsidiaries and scope of consolidation
The scope of consolidation includes the Parent Company, Terna S.p.A., and the companies over which it has the power to exercise control directly or indirectly, as defined by IFRS 10. Control exists when the Parent Company has the power or the ability to influence the relevant activities (having a substantial impact on the Parent Company\u2019s results), and is exposed to or has the right to variable returns from its involvement with the investee, and the ability to use its power over the subsidiaries to affect the amount of the investor\u2019s returns. The financial statements of subsidiaries are consolidated on a line-by-line basis from the date when the Parent Company gains control until the date when such control ceases.
The companies included within the scope of consolidation are listed below:
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA S.P.A.
Terna Rete Italia S.p.A.
Rome
Euro
300,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of power lines and grid infrastructure and other grid-related infrastructure, plant and equipment used in the above electricity transmission and dispatching activities and in similar, related and connected sectors.
Terna Crna Gora d.o.o.
Podgorica (Montenegro)
Euro
208,000,000
100%
Line-by-line
Business
Authorisation, construction and operation of the transmission infrastructure forming the Italy-Montenegro interconnector on Montenegrin territory.
Terna Plus S.r.l.
Rome
Euro
16,050,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of plant, equipment and infrastructure for grids and systems, including distributed storage and pumping and/or storage systems.
Terna Interconnector S.r.l.
Rome
Euro
10,000
65%*
Line-by-line
Business
Responsible for construction and operation of the private section of the Italy-France interconnector and civil works on the public section.
Rete S.r.l.
Rome
Euro
387,267,082
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of high-voltage power lines.
Terna EnergySolutions S.r.l.
Rome
Euro
2,000,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of distributed energy storage systems, pumping and/or storage systems, plant, equipment and infrastructure, including grids; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
ESPERIA-CC S.r.l.
Rome
Euro
10,000
1%**
Line-by-line
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
Terna Forward
Rome
Euro
10,000
100%
Line-by-line
Business
Development of new technological solutions for the Terna Group, investing in start-ups and small, medium and large enterprises with high innovation and technological potential.
*\t5% is held by Terna Rete Italia S.p.A. and 30% by Transenergia S.r.l.
** 99% is held by Selene CC S.A.
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA PLUS S.R.L.
Terna Chile S.p.A.
Santiago del Cile (Chile)
Chilean peso
2,475,710,500
100%
Line-by-line
Business
Design, construction, administration, development, operation and maintenance of any type of electricity system, plant, equipment and infrastructure, including interconnectors; provision of all types of products and service, construction, electrical and civil engineering work; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
Terna Peru S.A.C.
Lima (Peru)
Sales
116,813,900
99.99%*
Line-by-line
Business
Design, construction, administration, development, operation and maintenance of any type of electricity system, plant, equipment and infrastructure, including interconnectors; provision of all types of products and service, construction, electrical and civil engineering work; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
Terna 4 Chacas S.A.C.
Lima (Peru)
Sales
13,734,560
99.99%*
Line-by-line
Business
Responsible for construction of a new 16 km power line in Peru.
SPE Transmissora de energia Linha Verde I S.A.
Belo Horizonte (Brazil)
Real
506,999,313
75%**
Line-by-line
Business
Provision of public electricity transmission services, including construction, operation and maintenance of electricity transmission infrastructure or any other activity necessary in order to fulfil the above purpose.
TERNA USA LLC.
New York (USA)
US dollar
1
100%
Line-by-line
Business
Acquisition, development and construction of major infrastructure projects regarding onshore and offshore electricity transmission in the United States.
*\t0.01% Terna Chile S.p.A.
** 25% Quebec Holding EireliNAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA ENERGY SOLUTIONS S.R.L.
Tamini Trasformatori S.r.l.
Legnano (MI)
Euro
4,285,714
100%
Line-by-line
Business
Construction, repair and trading in electrical equipment.
Avvenia The Energy Innovator S.r.l.
Rome
Euro
10,000
100%
Line-by-line
Business
Provision of energy efficiency, energy consulting and process engineering services to companies and public and private entities; the application of technology to increase energy end-use efficiency; the design, construction, development and maintenance of plant, equipment and infrastructure for networks and other uses.
Brugg Kabel Services AG
Brugg (Switzerland)
Swiss franc
1,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
LT S.r.l.
Roma
Euro
400,000
75%*
Line-by-line
Business
Design, construction and maintenance of renewable power plants.
SUBSIDIARIES CONTROLLED THROUGH TAMINI TRASFORMATORI S.R.L.
Tamini Transformers USA LLC
Sewickley - Pennsylvania
US dollar
52,089
100%
Line-by-line
Business
Commercialisation of industrial-grade and high-power electricity transformers.
Tamini Transformatori India Private Limited
Maharashtra (India)
Indian rupee
13,175,000
100%
Line-by-line
Business
Commercialisation of industrial-grade and high-power electricity transformers.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL SERVICES AG
Brugg Kabel Manufacturing AG
Brugg (Switzerland)
Swiss franc
7,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Kabel AG
Brugg (Switzerland)
Swiss franc
22,000,000
90%**
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL MANUFACTURING AG
Brugg Cables Italia S.r.l.
Milan
Euro
10,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL AG
Brugg Kabel GmbH
Schwieberdingen (Germany)
Euro
103,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables (Shanghai) Co. Ltd
Shanghai
US dollar
1,600,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables (India) Pvt. Ltd
Haryana (India)
Indian rupee
48,000,000
99.74%***
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Middles East Contracting LLC
Dubai (UAE)
Dirham
200,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Inc USA
Chicago (USA)
US dollar
1,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Company Saudi Arabia
Riyadh (Saudi Arabia)
Saudi Riyal
50,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG CABLES (SHANGHAI) CO. LTD
Brugg Cables (Suzhou) Co. Ltd
Suzhou (China)
Chinese renminbi
32,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH LT S.r.l.
Halfbridge Automation S.r.l.
Rome
Euro
10,000
70%****
Line-by-line
Business
Research, design and production of electronic circuit boards for innovative energy efficiency systems.
*\t25% Solaris S.r.l..
**\t10% BRUGG GROUP AG.
***\t0.26% Brugg Kabel GmbH.
****\t30% Vima Technologies S.r.l.The following changes in the structure of the Group have taken place with respect to 31 December 2022:
Liquidations and disposals:
\u2022 On 5 October 2023, the merger of the company Omnia S.r.l. with and into the company LT S.r.l. was completed. On 29 March 2023, terna, through its subsidiary LT S.r.l., completed the acquisition of a 100% stake in Omnia S.r.l., a company providing O&M services for photovoltaic plants. The acquisition helps to consolidate the LT Group\u2019s position as an Italian market leader in the construction and operation of photovoltaic plants.
\u2022 On 21 December 2023, the merger of Rete Nord S.r.l. (formerly Edyna Transmission S.r.l.) with Rete S.r.l. was completed. On 22 June 2023, Terna completed the acquisition of a 100% stake in Edyna Transmission S.r.l., at the same time renamed Rete Nord S.r.l., a company that owns two electricity substations and approximately 70 km of circuits (equal to approximately 36 km of power lines) in Alto Adige already forming part of the National Transmission Grid. The transaction is part of the Group\u2019s strategy of unifying Italy\u2019s electricity transmission infrastructure with the aim of further boosting grid efficiency and reliability.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCompositionOfGroupExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130778": { "value": "Subsidiaries and scope of consolidation
The scope of consolidation includes the Parent Company, Terna S.p.A., and the companies over which it has the power to exercise control directly or indirectly, as defined by IFRS 10. Control exists when the Parent Company has the power or the ability to influence the relevant activities (having a substantial impact on the Parent Company\u2019s results), and is exposed to or has the right to variable returns from its involvement with the investee, and the ability to use its power over the subsidiaries to affect the amount of the investor\u2019s returns. The financial statements of subsidiaries are consolidated on a line-by-line basis from the date when the Parent Company gains control until the date when such control ceases.The companies included within the scope of consolidation are listed below:
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA S.P.A.
Terna Rete Italia S.p.A.
Rome
Euro
300,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of power lines and grid infrastructure and other grid-related infrastructure, plant and equipment used in the above electricity transmission and dispatching activities and in similar, related and connected sectors.
Terna Crna Gora d.o.o.
Podgorica (Montenegro)
Euro
208,000,000
100%
Line-by-line
Business
Authorisation, construction and operation of the transmission infrastructure forming the Italy-Montenegro interconnector on Montenegrin territory.
Terna Plus S.r.l.
Rome
Euro
16,050,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of plant, equipment and infrastructure for grids and systems, including distributed storage and pumping and/or storage systems.
Terna Interconnector S.r.l.
Rome
Euro
10,000
65%*
Line-by-line
Business
Responsible for construction and operation of the private section of the Italy-France interconnector and civil works on the public section.
Rete S.r.l.
Rome
Euro
387,267,082
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of high-voltage power lines.
Terna EnergySolutions S.r.l.
Rome
Euro
2,000,000
100%
Line-by-line
Business
Design, construction, management, development, operation and maintenance of distributed energy storage systems, pumping and/or storage systems, plant, equipment and infrastructure, including grids; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
ESPERIA-CC S.r.l.
Rome
Euro
10,000
1%**
Line-by-line
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
Terna Forward
Rome
Euro
10,000
100%
Line-by-line
Business
Development of new technological solutions for the Terna Group, investing in start-ups and small, medium and large enterprises with high innovation and technological potential.
*\t5% is held by Terna Rete Italia S.p.A. and 30% by Transenergia S.r.l.
** 99% is held by Selene CC S.A.
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA PLUS S.R.L.
Terna Chile S.p.A.
Santiago del Cile (Chile)
Chilean peso
2,475,710,500
100%
Line-by-line
Business
Design, construction, administration, development, operation and maintenance of any type of electricity system, plant, equipment and infrastructure, including interconnectors; provision of all types of products and service, construction, electrical and civil engineering work; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
Terna Peru S.A.C.
Lima (Peru)
Sales
116,813,900
99.99%*
Line-by-line
Business
Design, construction, administration, development, operation and maintenance of any type of electricity system, plant, equipment and infrastructure, including interconnectors; provision of all types of products and service, construction, electrical and civil engineering work; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
Terna 4 Chacas S.A.C.
Lima (Peru)
Sales
13,734,560
99.99%*
Line-by-line
Business
Responsible for construction of a new 16 km power line in Peru.
SPE Transmissora de energia Linha Verde I S.A.
Belo Horizonte (Brazil)
Real
506,999,313
75%**
Line-by-line
Business
Provision of public electricity transmission services, including construction, operation and maintenance of electricity transmission infrastructure or any other activity necessary in order to fulfil the above purpose.
TERNA USA LLC.
New York (USA)
US dollar
1
100%
Line-by-line
Business
Acquisition, development and construction of major infrastructure projects regarding onshore and offshore electricity transmission in the United States.
*\t0.01% Terna Chile S.p.A.
** 25% Quebec Holding Eireli.
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL
% INTEREST
METHOD OF CONSOLIDATION
SUBSIDIARIES CONTROLLED THROUGH TERNA ENERGY SOLUTIONS S.R.L.
Tamini Trasformatori S.r.l.
Legnano (MI)
Euro
4,285,714
100%
Line-by-line
Business
Construction, repair and trading in electrical equipment.
Avvenia The Energy Innovator S.r.l.
Rome
Euro
10,000
100%
Line-by-line
Business
Provision of energy efficiency, energy consulting and process engineering services to companies and public and private entities; the application of technology to increase energy end-use efficiency; the design, construction, development and maintenance of plant, equipment and infrastructure for networks and other uses.
Brugg Kabel Services AG
Brugg (Switzerland)
Swiss franc
1,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
LT S.r.l.
Roma
Euro
400,000
75%*
Line-by-line
Business
Design, construction and maintenance of renewable power plants.
SUBSIDIARIES CONTROLLED THROUGH TAMINI TRASFORMATORI S.R.L.
Tamini Transformers USA LLC
Sewickley - Pennsylvania
US dollar
52,089
100%
Line-by-line
Business
Commercialisation of industrial-grade and high-power electricity transformers.
Tamini Transformatori India Private Limited
Maharashtra (India)
Indian rupee
13,175,000
100%
Line-by-line
Business
Commercialisation of industrial-grade and high-power electricity transformers.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL SERVICES AG
Brugg Kabel Manufacturing AG
Brugg (Switzerland)
Swiss franc
7,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Kabel AG
Brugg (Switzerland)
Swiss franc
22,000,000
90%**
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL MANUFACTURING AG
Brugg Cables Italia S.r.l.
Milan
Euro
10,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG KABEL AG
Brugg Kabel GmbH
Schwieberdingen (Germany)
Euro
103,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables (Shanghai) Co. Ltd
Shanghai
US dollar
1,600,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables (India) Pvt. Ltd
Haryana (India)
Indian rupee
48,000,000
99.74%***
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Middles East Contracting LLC
Dubai (UAE)
Dirham
200,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Inc USA
Chicago (USA)
US dollar
1,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
Brugg Cables Company Saudi Arabia
Riyadh (Saudi Arabia)
Saudi Riyal
50,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH BRUGG CABLES (SHANGHAI) CO. LTD
Brugg Cables (Suzhou) Co. Ltd
Suzhou (China)
Chinese renminbi
32,000,000
100%
Line-by-line
Business
Commercialisation of terrestrial cables for use in electricity transmission.
SUBSIDIARIES CONTROLLED THROUGH LT S.r.l.
Halfbridge Automation S.r.l.
Rome
Euro
10,000
70%****
Line-by-line
Business
Research, design and production of electronic circuit boards for innovative energy efficiency systems.
*\t25% Solaris S.r.l..
**\t10% BRUGG GROUP AG.
***\t0.26% Brugg Kabel GmbH.
****\t30% Vima Technologies S.r.l..
The following changes in the structure of the Group have taken place with respect to 31 December 2022:
Liquidations and disposals:
\u2022 On 5 October 2023, the merger of the company Omnia S.r.l. with and into the company LT S.r.l. was completed. On 29 March 2023, terna, through its subsidiary LT S.r.l., completed the acquisition of a 100% stake in Omnia S.r.l., a company providing O&M services for photovoltaic plants. The acquisition helps to consolidate the LT Group\u2019s position as an Italian market leader in the construction and operation of photovoltaic plants.
\u2022 On 21 December 2023, the merger of Rete Nord S.r.l. (formerly Edyna Transmission S.r.l.) with Rete S.r.l. was completed. On 22 June 2023, Terna completed the acquisition of a 100% stake in Edyna Transmission S.r.l., at the same time renamed Rete Nord S.r.l., a company that owns two electricity substations and approximately 70 km of circuits (equal to approximately 36 km of power lines) in Alto Adige already forming part of the National Transmission Grid. The transaction is part of the Group\u2019s strategy of unifying Italy\u2019s electricity transmission infrastructure with the aim of further boosting grid efficiency and reliability.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInSubsidiariesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130776": { "value": "The scope of consolidation includes the Parent Company, Terna S.p.A., and the companies over which it has the power to exercise control directly or indirectly, as defined by IFRS 10. Control exists when the Parent Company has the power or the ability to influence the relevant activities (having a substantial impact on the Parent Company\u2019s results), and is exposed to or has the right to variable returns from its involvement with the investee, and the ability to use its power over the subsidiaries to affect the amount of the investor\u2019s returns. The financial statements of subsidiaries are consolidated on a line-by-line basis from the date when the Parent Company gains control until the date when such control ceases.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130780": { "value": "Associates
Associates are investees over which the Terna Group exercises significant influence, being the ability to participate in the determination of these companies\u2019 financial and operating policies, without having control or joint control. In assessing whether or not Terna has significant influence, potential voting rights that are exercisable or convertible are also taken into account.
These investments are initially recognised at cost and subsequently measured using the equity method. The profits or losses attributable to the Group are recognised in the consolidated financial statements when significant influence begins and until that influence ceases. Based on application of the equity method, if there is evidence that the investment has been impaired, the Group determines the amount of the impairment based on the difference between the recoverable amount and the carrying amount of the investment in question. In the event that the loss attributable to the Group exceeds the carrying amount of the equity interest, the latter is written off and any excess is recognised in a specific provision, if the Parent Company is required to meet the legal or constructive obligations of the investee or, in any case, to cover its losses.
The list of associates is shown below:
(\u20ac/m)
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL*
PROFIT FOR THE YEAR*
% INTEREST
METHOD OF CONSOLIDATION
CARRYING AMOUNT AT 31 DECEMBER 2023 (\u20acm)
SOCIET\u00c0 COLLEGATE
Cesi S.p.A.
Milan
Euro
8,550,000
(1,917,255)
42.698%
Equity Method
46.1
Business
Experimental research and provision of services related to electro-technology.
Coreso S.A.
Brussels (Belgium)
Euro
1,000,000
805,800
15.84%
Equity Method
1.0
Business
Technical centre owned by several electricity transmission operators, responsible for coordinating joint operations of TSOs, in order to improve and upgrade the security and coordination of the electricity system in central and western Europe.
CGES A.D.
Podgorica (Montenegro)
Euro
155,108,283
20,300,000
22.0889%
Equity Method
26.7
Business
Provision of transmission and dispatching services in Montenegro.
Equigy B.V.
Arnhem, (Netherlands)
Euro
50,000
540,518
20%
Equity Method
0.4
Business
Provision of support for electricity balancing by TSOs through the development and implementation of blockchain technology.
* Figures taken from the latest approved financial statements at the date of preparation of this document.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSignificantInvestmentsInAssociatesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130779": { "value": "These investments are initially recognised at cost and subsequently measured using the equity method. The profits or losses attributable to the Group are recognised in the consolidated financial statements when significant influence begins and until that influence ceases. Based on application of the equity method, if there is evidence that the investment has been impaired, the Group determines the amount of the impairment based on the difference between the recoverable amount and the carrying amount of the investment in question. In the event that the loss attributable to the Group exceeds the carrying amount of the equity interest, the latter is written off and any excess is recognised in a specific provision, if the Parent Company is required to meet the legal or constructive obligations of the investee or, in any case, to cover its losses.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentInAssociates", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130783": { "value": "Joint arrangements
Investments in joint arrangements, in which the Group exercises joint control with other entities, are recognised initially at cost and subsequently measured using the equity method. The profits or losses attributable to the Group are recognised in the consolidated financial statements when joint control begins and until that control ceases. The Group recognises its share of the assets and liabilities attributable to joint arrangements in accordance with IFRS 11.
In assessing the existence of joint control, it is ascertained whether the parties are bound by a contractual agreement and whether this agreement attributes to the parties the joint control of the agreement itself. Joint control exists when an entity has control over an arrangement on a contractual basis, and only when decisions relating to the relevant activities require the unanimous consent of all parties that jointly control the arrangement.
The list of joint ventures is shown below:
(\u20acm)
NAME
REGISTERED OFFICE
CURRENCY
SHARE CAPITAL*
PROFIT FOR THE YEAR*
% INTEREST
METHOD OF CONSOLIDATION
CARRYING AMOUNT AT 31 DECEMBER 2023 (\u20acm)
JOINT VENTURES
ELMED Etudes S.a.r.l.
Tunis (Tunisia)
Tunisian dinar
2,016,120
(207,961)
50%
Equity Method
0.2
Business
Conduct of preparatory studies for the construction of the infrastructure required to connect the Tunisian and Italian electricity system.
SEleNe CC S.A.
Thessaloniki (Greece)
Euro
200,000
20,137
33.33%
Equity Method
2.1
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
BMT Energy Transmission Development LLC
Wilmington (USA)
US dollar
500,000
-
40%
Equity Method
0.2
Business
Acquisition, development and construction of major infrastructure projects regarding onshore and offshore electricity transmission in the United States.
* Figures taken from the latest approved financial statements at the date of preparation of this document.
Compared with 31 December 2022, on 7 February 2023, Terna completed the acquisition of shares in SEleNe CC S.A. following the withdrawal of the Romanian TSO, National Power Grid Company Transelectrica S.A., from the company\u2019s shareholder base. The Company\u2019s stake has thus increased from 25% to 33.33%.
", "dimensions": { "concept": "ifrs-full:DisclosureOfJointVenturesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130782": { "value": "Investments in joint arrangements, in which the Group exercises joint control with other entities, are recognised initially at cost and subsequently measured using the equity method. The profits or losses attributable to the Group are recognised in the consolidated financial statements when joint control begins and until that control ceases. The Group recognises its share of the assets and liabilities attributable to joint arrangements in accordance with IFRS 11.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsInJointVentures", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130784": { "value": "Basis of consolidation
All the separate financial statements of the investees used to prepare the consolidated financial statements were drafted as of 31 December 2023 and have been approved by their respective Boards of Directors and, for the most part, by shareholders; they have been adjusted, where necessary, to align them with the Parent Company\u2019s accounting policies.
During preparation of the consolidated financial statements, intercompany balances, transactions, revenues and costs are fully eliminated, net of the related tax effect, where material (\u201cconsolidation on a line-by-line basis\u201d).
Unrealised gains and losses on transactions with associates and joint ventures are eliminated in proportion to the Group\u2019s interest therein. In both cases, unrealised losses are eliminated, unless they represent an impairment.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130781": { "value": "Translation of foreign currency items
In the Group\u2019s financial statements, all transactions in currencies other than the functional currency are recognised at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are subsequently adjusted at the exchange rate prevailing at year end. Any translation differences are taken to the income statement.Non-monetary assets and liabilities in foreign currency stated at historical cost are converted at the exchange rate prevailing when the transaction was initially recognised. Non-monetary assets and liabilities in foreign currency stated at fair value are converted at the exchange rate prevailing when fair value was measured.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForForeignCurrencyTranslationExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130788": { "value": "Property, plant and equipment
Property, plant and equipment is recognised at historical cost, including costs directly attributable to preparing the asset for its intended use. In the event of legal or constructive obligations, cost also includes the present value of the estimated cost of dismantling or removing the asset. The corresponding liability is recognised in provisions for risks and charges.
Penalties receivable from suppliers relating to the purchase or construction of an asset are accounted for as a direct reduction in the cost of the asset, unless the penalty is accounted for as a refund, or when the refunded costs are clearly identifiable and have been incurred due to a delay incurred by the purchaser, the compensation is payable regardless of delivery or otherwise of the asset and the agreement expressly provides for settlement of the claim to compensate for the loss of earnings resulting from the contract delays.
Borrowing costs directly attributable to the purchase, construction or production of an asset that qualify for capitalisation pursuant to IAS 23 are capitalised as part of the cost of the asset. Costs incurred after purchase are recognised as an increase in the carrying amount of the asset to which they relate if it is probable that the future benefits of that cost will flow to the Group, and if the cost can be reliably measured. All other costs are expensed as incurred.
Each element of an item of property, plant and equipment of material value, with respect to the total value of the item to which it belongs, is recognised and depreciated separately.
Property, plant and equipment is shown net of accumulated depreciation and any impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful economic life of the asset, which is reviewed annually, with revisions applied on a prospective basis. Depreciation of an asset begins when the asset becomes available for use.
Liabilities associated with items of property, plant and equipment are taken to a specific provision as a contra account of the related asset. The amount is taken to the income statement through the depreciation of the asset.
Property, plant and equipment is written off either at the time of disposal or when no future economic benefit is expected from their use or disposal. Any profit or loss, recognised in the income statement, is determined as the difference between the net proceeds deriving from disposal and the net carrying amount of the assets eliminated.
The main rates of depreciation, calculated on the basis of the useful lives of the relevant assets, are as follows:
RATES OF DEPRECIATION
Buildings - Civil and industrial buildings
2.50%
Plant and equipment - Transmission lines
2.22%
Plant and equipment - Transformer substations:
\u00a0
- Electrical machinery
2.38%
- Electrical devices and equipment
3.13%
- Automation and control systems
6.70%
Plant and equipment - Central systems for remote management and control:
\u00a0
- Devices, electrical equipment and ancillary plant
5.00%
- Computers
10.00%
Land, regardless of whether it is free of constructions or related to civil and industrial buildings, is not depreciated, since it has an indefinite useful life.
This asset class also includes right-of-use assets, recognised under IFRS 16, arising from lease arrangements where the Company is lessee and relating to the use of property, plant and equipment. A lease arrangement is, or contains, a lease, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchangefor consideration. Applying this standard, the lessee recognises: (i) a right-of-use asset in its statement of financial position and a liability representing its obligation to make the payments provided for under the arrangement, for all leases with terms in excess of twelve months where the asset cannot be considered of low value (the Group has elected to apply the practical expedient provided for in the standard, recognising payments relating to arrangements that do not fall within the scope of this type of lease in the income statement); (ii) depreciation of the recognised assets and interest expense on the lease liability separately in the income statement.
In determining the lease term, the Group considers the non-cancellable period of the lease and the additional periods resulting from any options to extend the lease, or from the decision not to exercise the option to terminate the lease early (where there is reasonable certainty that such options will be exercised).
The lease liability is initially recognised at the present value of the remaining lease payments at the commencement date: (i) fixed payments; (ii) variable lease payments that depend on an index or a rate; (iii) amounts expected to be payable by the lessee under residual value guarantees; (iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and finally (v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The present value of the payments is determined using a discount rate equal to the Group\u2019s incremental borrowing rate, bearing in mind the frequency and duration of the payments provided for in the lease contract.
Following initial recognition, the lease liability is accounted for at amortised cost and remeasured, with a matching change in the value of the related right-of-use asset, when there is a change in future lease payments as a result of: (i) a renegotiation of the contract; (ii) changes in the index or rate; or (iii) changes in the assessment of whether or not the options contained in the contract will be exercised (e.g., the purchase of the leased asset, extension or termination of the lease). The right-of-use asset is initially recognised at cost, measured as the sun of the following components: (i) the amount of the initial measurement of the lease liability; (ii) any initial direct costs incurred by the lessee; (iii) any lease payments made at or before the commencement date, less any lease incentives received; and (iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located (or restoring the underlying asset to the condition required by the terms and conditions of the lease). Following initial recognition, the right-of-use asset is adjusted to take into account (i) any accumulated depreciation, (ii) any accumulated impairment losses, and (iii) the effects of any remeasurement of the lease liability.
The Group\u2019s property, plant and equipment also includes the assets relating the private interconnectors pursuant to Law 99/2009. The legislation assigns the Group responsibility for building and operating the infrastructure on behalf of selected parties willing to finance specific interconnections in return for the benefits for them deriving from receipt of an exemption from third-party access to the transmission capacity that the related infrastructure makes available. The law also establishes that, at the end of the exemption period, generally ten years from the date of entry into service, Terna will assume ownership of the interconnections in return for payment of a fee to be set by the regulator. The existence of a binding commitment to purchase the asset means that the property, plant and equipment relating to the interconnector is recognised in the Group\u2019s accounts. the fee agreed with the selected parties for construction and operation of the interconnector is thus accounted for as revenue for the Group\u2019s effort in arranging the transaction and for granting the right to use the asset during the exemption period.
Intangible assets
Intangible assets, which all have finite useful lives, are recognised at cost and shown net of accumulated amortisation and any impairment losses. Amortisation begins when the asset becomes available for use and is calculated on a straight-line basis over the estimated useful life of the related asset, which is reviewed annually. Any revisions to estimated figures are applied on a prospective basis.
Intangible assets essentially consist of the concession to exclusively provide electricity transmission and dispatching services, granted to the Parent Company Terna S.p.A. on 1 November 2005, with the acquisition of the TSO business unit. As established in the Decree issued by the Ministry of Productive Activities on 20 April 2005, this concession has a 25-year term, renewable for another 25 years, from the date of effective transfer of the activities, functions, assets and legal arrangements of the concession from GSE (formerly GRTN) to Terna S.p.A.. This intangible asset was initially recognised at cost, which reflected fair value.Other intangible assets essentially refer to software developments and upgrades.
Development costs are capitalised by the Terna Group only if they can be reliably estimated and there is the technical possibility and intention to complete the intangible asset so that it will be available for use, and the asset can be used and it is possible to demonstrate that it will generate probable future economic benefits.
Financial expenses directly attributable to the acquisition, design or production of a non-current asset which justifies capitalisation pursuant to IAS 23 are capitalised to the asset as part of its cost.
All other development costs and research expenses are recognised in the income statement when incurred. These intangible assets are amortised over their estimated residual useful life, which is normally three years, given their rapid obsolescence.
Infrastructure rights
Infrastructure includes the property, plant and equipment and intangible assets employed in dispatching activities in Italy and in the operations in Peru. These activities are carried out under concession arrangements, which fall within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised as an intangible asset, as valued on the basis of the Intangible Asset model, given the return generated by dispatching activities thanks to the charges paid by users.
The revenue and costs relating to investment in dispatching activities are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase is limited to the amount of the internal and external construction costs incurred, considering that the fair value of the construction services is equivalent to the construction cost paid to third-party contractors plus the internal cost of the technical personnel employed on such construction activities. The assets continue to be amortised and depreciated in accordance with the initial schedule.
By contrast, dispatching revenue continues to be recognised in accordance with IFRS 15 and financial expenses continue to be capitalised pursuant to IAS 23.
IFRIC 12, instead, is not applicable to the part of the Parent Company\u2019s concession arrangement relating to transmission activities, since neither the concession nor the related legislation envisages that ownership of the NTG is to be restored to the public grantor, even for a consideration.
Goodwill
Goodwill, deriving from the acquisition of subsidiaries, is allocated to each of the cash generating units (CGU) identified, coinciding with Group companies that own electricity transmission grids and with the Tamini Group, relating to the production and commercialisation of transformers. Goodwill is not amortised after initial recognition but is adjusted to reflect impairment losses, measured as described above. Following the acquisition of investments in associates and joint ventures, goodwill is included in the carrying amount of the companies. Where negative goodwill arises, it is recognised in the income statement at the time of acquisition.
Inventories
Inventories are recognised and measured at the lower of purchase cost and net estimated realisable value. Cost is calculated as the weighted average, including accrued ancillary expenses. Net estimated realisable value means the estimated sale price under normal conditions net of completion costs and the estimated costs to sell.
Financial instruments
Financial assets
The new standard, IFRS 9 \u2013 Financial Instruments, effective from 1 January 2018, is divided into the following phases: classification and measurement, derecognition, impairment and hedge accounting.
In order to classify and measure financial instruments, the Group recognises financial assets at fair value inclusive of transaction costs.
Financial assets represented by debt instruments, and falling within the scope of application of the standard, may be measured at amortised cost, at fair value through other comprehensive income or at fair value through profit or loss, depending on the business model adopted to manage the financial assets and the characteristics of the contractual cash flows.
In accordance with the provisions of IFRS 9, the Group correctly classifies these assets based on the results of so-called SSPI (\u201csolely payments of principal and interest\u201d) tests. Under this test, assets may be recognised at amortised cost or fair value through other comprehensive income if the generate cash flows that are solely payments of principal and interest on the principal amount outstanding. This measurement is applied at the level of each individual instrument.
Specifically, the Group measures financial assets:
\u2022 at amortised cost, if the financial asset is held with the aim of collecting the contractual cash flows that meet the SPPI test, as the cash flows represent solely payments of principal and interest;
\u2022 at fair value through other comprehensive income (\u201cFVOCI\u201d), if the financial asset is held within a business model whose objective is achieved by collecting the contractual cash flows and by selling the financial asset, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Changes in fair value after initial recognition are recognised in other comprehensive income and recycled through profit or loss on derecognition. The government securities held by the Parent Company are included in this category;
\u2022 at fair value through profit or loss (\u201cFVTPL\u201d), of the asset is not held in one of the above business models. This category primarily includes derivative financial instruments held for trading and debt instruments with contractual cash flows that are not solely payments of capital and interest.
Infrastructure rights
These include the property, plant and equipment and intangible assets employed in Brazil under concession arrangements falling within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised in financial assets, as valued on the basis of the Financial Asset model, given the return generated by the activities. This derives from an unconditional contractual right to receive cash or another financial asset from, or at the direction of, the grantor and the fact that the grantor cannot avoid payment.
The revenue and costs relating to investment are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase includes a profit margin on the work performed.
Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective interest method. Receivables with due dates that reflect normal commercial terms are not discounted.
In accordance with the provisions of IFRS 9, the Group\u2019s trade receivables fall within the hold to collect business model, as these assets are held with the objective of collecting the cash flows primarily by collecting the contractual cash flows, the receivables primarily fall due within 12 months and do not include a significant financial component, and the Group does not intend to sell such receivables.
Trade receivables are recognised net of any losses recognised in a specific allowance for doubtful accounts (identified on the basis described in the paragraph, \u201cAllowance for doubtful accounts\u201d). IFRS 9 has introduced application of a model based on expected credit losses. This requires the Group to assess expected credit losses, and the related changes, at each reporting date. Specifically, the Group has applied the simplified approach permitted by IFRS 9 to trade receivables, finance lease receivables and assets deriving from contracts with customers, in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Group has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
Cash and cash equivalents
Cash and cash equivalents are recognised at nominal value and include amounts that are available on demand or can be readily converted into a known amount of cash and are subject to an insignificant risk of changes in value.
Trade payables
Trade payables are initially recognised at fair value and subsequently stated at amortised cost. If their due dates reflect normal commercial terms, they are not discounted.
Financial liabilities
Financial liabilities are recognised at the settlement date and measured at fair value, net of directly related transaction costs. Subsequently, financial liabilities are measured at amortised cost, using the original effective interest method. If the liabilities are covered by fair value hedges, they are adjusted to reflect changes in fair value with respect to the hedged risk.
Subsequent measurement of financial liabilities depends on their classification as financial liabilities at amortised cost or at fair value through profit or loss.
Derivative financial instruments
Derivatives are recognised at fair value at the trade date. The qualifying criteria applied in classifying derivatives as eligible for hedge accounting are as follows:
\u2022 the hedging relationship consists only of eligible hedging instruments and eligible hedged items;
\u2022 at the inception of the hedging relationship there is formal designation and documentation of the hedging relationship and the entity\u2019s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity will assess whether the hedging relationship meets the hedge effectiveness requirements (including its analysis of the sources of hedge ineffectiveness and how it determines the hedge ratio);
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
The Group discontinues hedge accounting prospectively only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised. For this purpose, the replacement or rollover of a hedging instrument into another hedging instrument is not an expiration or termination if such a replacement or rollover is part of, and consistent with, the entity\u2019s documented risk management objective.
For hedge accounting purposes, there are three types of hedge:
\u2022 fair value hedges when the hedge regards the exposure to changes in the fair value of the recognised asset or liability or there is an unrecognised firm commitment;
\u2022 cash flow hedges when the hedge regards the exposure to variability in cash flows that is attributable to a particular risk associated with all of the recognised asset or liability or a highly probable forecast transaction or the exchange rate risk on an unrecognised firm commitment;
\u2022 the hedge of a net investment in a foreign operation.
When derivatives cover the risk of changes in the cash flows of the hedged instruments (cash flow hedges), the portion of changes in the fair value qualifying as effective is initially recognised in \u201cOther comprehensive income\u201d (accumulated in equity) and subsequently in profit or loss, as the cash flows from the hedged item affects profit or loss. The portion of the fair value of the hedging instrument that does not qualify as effective is recognised in profit or loss.
When hedging derivatives cover the risk of changes in the fair value of hedged instruments (fair value hedges), they are recognised at fair value in profit or loss. Accordingly, the hedged items are adjusted to reflect changes in the fair value associated with the hedged risk.
Changes in the fair value of derivatives that do not meet hedge accounting requirements in accordance with the IFRS are recognised in profit or loss.
Fair value is measured on the basis of official quotations for instruments traded in regulated markets. The fair value of instruments not traded in regulated markets is measured by discounting projected cash flows along a yield curve prevailing in the market at the reporting date, and by translating amounts in currencies other than the euro at closing exchange rates.
Financial and non-financial contracts (which are not already measured at fair value) are also analysed to identify any embedded derivatives, which must be separated and measured at fair value.
Hybrid bonds
Issues of non-convertible, perpetual hybrid bonds are classified as equity instruments. These are in fact instruments that allow Terna to defer coupon payments over time and whose early redemption is permitted on the occurrence of certain events or at the reset date. These instruments cannot be converted into shares and, in the event of the Company\u2019s liquidation, winding up or insolvency, interest payments are subordinated to all the issuer\u2019s other payment obligations.
The proceeds received from the sale of the instruments and subsequent returns of capital are accounted for as an increase or a reduction in equity, respectively, in compliance with the requirements applicable to equity instruments in IAS 32. Interest expense, at the time the payment obligation arises, is recognised as a reduction in equity.
Non-current assets held for sale
Non-current assets and current and non-current assets included in disposal groups are classified as held for sale if their carrying amount is to be recovered primarily through sale rather than through continued use. This classification only applies if the non-current assets (or disposal groups) are available for immediate sale in their present condition and the sale is highly probable. An entity that is committed to a sale plan involving loss of control of a subsidiary must classify all the assets and liabilities of that subsidiary as held for sale, regardless of whether the entity will retain a non-controlling interest in its former subsidiary after the sale. The assessment of whether or not the conditions have been met for classification of an asset as held for sale requires management to make a subjective judgement, using reasonable and realistic assumptions based on the available information.
Non-current assets held for sale, current and non-current assets included in disposal groups and the directly attributable liabilities are recognised in the statement of financial position separately from the entity\u2019s other assets and liabilities. Before their classification as held for sale, the assets and liabilities included in a disposal group aremeasured in accordance with the applicable accounting standards. Subsequently, the non-current assets held for sale are no longer subject to depreciation or amortisation and are measured at the lower of carrying amount and fair value less costs to sell.
If the carrying amount of the non-current assets is lower than fair value less costs to sell, the entity must recognise an impairment loss. The entity must recognise a gain for any subsequent increase in fair value less costs to sell of the assets, but not in excess of the cumulative impairment loss previously recognised, including those recognized prior to the assets\u2019 classification as held for sale.
Non-current assets and disposal groups classified as held for sale constitute a discontinued operation if they: i) represent a major line of business or geographical area of operations; ii) are part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or iii) relate to a\u00a0subsidiary acquired exclusively with a view to resale.
Profits and losses from discontinued operations, and any gains or losses realised following the sale, are shown in a separate line item in the income statement, net of any tax, with amounts for comparative periods also shown.
When events no longer permit the entity to classify the non-current assets or disposal groups as held for sale, the assets or disposal groups must be reclassified to the respective items in the statement of financial position and recognised at the lower of: (i) their carrying amount at the date of classification as held for sale; and (ii) the recoverable amount at the date of reclassification.
On 29 April 2022, Terna S.p.A., Terna Plus S.r.l. and Terna Chile S.p.A. signed an agreement with CDPQ, a global investment group, for the sale of all the Group\u2019s power line assets, approximately 1,200 km, in Brazil, Peru and Uruguay. On 7 November 2022, the first transaction closing for the Brazilian companies, \u201cSPE Santa Maria Transmissora de Energia S.A.\u201d, \u201cSPE Santa Lucia Transmissora de Energia S.A.\u201d and \u201cSPE Transmissora de Energia Linha Verde II S.A.\u201d, owners of three power lines in Brazil, totalling 670 km, was completed. The value of the assets being sold (the equity value) is more than \u20ac145 million. On 22 December 2022, the transaction closing for Difebal S.A., the owner of a power line in Uruguay, totalling 214 km, was completed. The value of the assets being sold (the equity value) is more than \u20ac27 million. Both transaction closings are in line with the agreement. The sale of the other assets in Brazil (expected in 2024) and Peru is due to take place in phases, following fulfilment of the conditions provided for in the agreement.
Following the above transaction, in accordance with IFRS 5- Non-current Assets Held for Sale and Discontinued Operations, the consolidated assets and liabilities of the companies for which the sale process has yet to complete are included in \u201cAssets held for sale\u201d and in \u201cLiabilities related to assets held for sale\u201d in the consolidated statements of financial position for 2023 and 2022. In the consolidated income statement, the consolidated profit/(loss) of the companies included in the transaction, for the years ended 31 December 2022 and 31 December 2023, is presented as \u201cNet profit/(loss) for the year from assets held for sale\u201d.
Employee benefits
The liability associated with employee benefits payable on or after termination of employment relate to defined benefit plans (deferred compensation benefits, additional months\u2019 pay, payment in lieu of notice, energy discounts, ASEM health cover and other benefits) or other long-term employee benefits (loyalty bonuses) and is recognised net of any plan assets. The liability is measured separately for each plan on the basis of actuarial calculations that estimate the amount of vested future benefits that employees have accrued at the reporting date. The liability is recognised on an accruals basis over the vesting period and is measured by independent actuaries.
Share-based payments
Given that they are substantially a form of remuneration, personnel expenses include the cost of share-based incentive plans. The cost of the incentive is measured on the basis of the fair value of the equity instruments granted and the expected number of shares to be effectively awarded. The accrued amount for the period is determined on a straight-line basis over the vesting period, being the period between the grant date and the dateof the award. The fair value of the shares underlying the incentive plan is measured at the grant date, based on the expected satisfaction of the performance conditions associated with market conditions and is not subject to adjustment in future periods. When receipt of the benefit is linked to non-market conditions, the estimate relating to these conditions is reflected and the accrual\u2019s number of shares expected to be awarded is adjusted over the vesting period. If, at the end of the vesting period, the plan does not result in the award of any shares to beneficiaries due to the failure to satisfy the performance conditions, the portion of the cost linked to market conditions is not reversed through the income statement.
Provisions for risks and charges
Provisions set aside for risks and charges are recognised when, at the reporting date, the Group has a legal or constructive obligation as the result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the disbursement. Where the effect is material, provisions are made by discounting estimated future cash flows using a discount rate that reflects current market rates and the specific risk applicable to the obligation, if any. Where discounting is used, the increase in the provisions due to the passage of time is recognised in the income statement as a financial expense. If it relates to property, plant and equipment (site disposal and restoration, for example), the provision is recognised as a contra entry to the asset to which it relates. The expense is recognised in the income statement through depreciation of the item of property, plant and equipment to which it relates.
Changes in the estimates are recognised in the income statement for the year in which the change occurs, except for the expected costs of dismantling, removal and restoration resulting from changes in the timing and use of the economic resources necessary to extinguish the obligation or are attributable to a material change in the discount rate. These costs are recognised as an increase or reduction in the related assets and recognised in the income statement through depreciation.
Government grants
Government grants are recognised when there is a reasonable certainty that they will be received and that the Group will comply with all the conditions required for disbursement. Grants received in relation to specific assets whose value is recognised under non-current assets are recognised, in the case of plant already in operation at 31 December 2002, among other liabilities and taken to the income statement over the depreciation period for the assets in question. As of the 2003 financial year, grants related to new plant entering service are recognised as a direct reduction in the non-current asset concerned.
Grants related to income are recognised in the income statement when the conditions for recognition are met.
Revenue
The Group\u2019s revenue can be categorised as follows:
\u2022\tRevenue from sales and services,\u00a0including revenue from contracts with customers and therefore falling within the scope of IFRS 15.
\u00a0In accordance with the provisions of IFRS 15, revenue from contracts with customers is recognised when the performance obligations identified in the contract are satisfied and control over the goods or services is transferred to the customer for an amount that reflects the consideration that the Group expects to receive in exchange for the goods or services.
\u00a0The standard envisages two methods for identifying the correct time at which to recognise the revenue attributable to each performance obligation: at contract inception, the Group determines if the goods or services covered by the performance obligation will be transferred to the customer over a period of time or at a point in time:
\u00a0\u2022 Revenue from the sale of goods\u00a0is recognised when control of the goods is transferred to the customer (at a point in time). The Group determines if there are other promises in the contract representing a performanceobligation to which a part of the transaction consideration must be allocated. In determining the sale price, the Group takes into account the effects of a variable consideration, significant financial components, non-monetary components and amounts to be paid to the customer (if present);
\u00a0\u2022 Revenue from services is recognised with reference to the stage of completion of the activity, in accordance with the provisions of IFRS 15 (over a period of time).
Revenue from sales and services also includes \u201cpass-through\u201d revenue and expenses originating from the purchase and sale of energy from and to electricity market operators. The regulatory framework requires that such expenses and revenue must always amount to zero, via a pro rata charge to each consumer for the net cost resulting from the measurement of imbalances and purchase and sale transactions, carried out by Terna on the Dispatching Services Market, through a specific fee known as an uplift payment. Terna receives compensation for this activity through specific revenue for providing the dispatching service. Given that Terna does not have the power to set the prices of DSM transactions, this revenue is presented net of the related costs.
Revenue from sales and services also includes output-based incentives, as defined by ARERA, for both transmission and dispatching activities. The incentive mechanisms fall within the scope of application of IFRS 15. If the counterparties through which Terna collects an incentive are not active in the market in the year in which achievement of the targets underlying the incentive scheme is confirmed, IFRS 15 is applied in accordance with the analogy-based approach provided for in IAS 8, as confirmed with reference to the Conceptual Framework for Financial Reporting.
If the mechanism includes a significant financial component, the amounts recognised in the financial statements are discounted to present value. Based on the specific nature of each mechanism, the Group assesses whether the performance obligation is satisfied over a period of time or at a point in time, also taking into account whether or not the right is subject to confirmation or verification by the regulator, ARERA.
\u2022 Other revenue and income, which includes revenue from lease arrangements and other residual forms of revenue, included within the scope of application of IFRS 15, deriving from sales of goods not forming part of the Group\u2019s ordinary activities.
Costs
Costs are recognised on an accruals basis. They are recognised in the accounting period when they relate to goods and services sold or consumed in the same period or are allocated in a systematic way when it is not possible to identify a future use for them.
Financial income and expenses
Financial expenses directly attributable to the acquisition, construction or production of an asset that qualify for capitalisation are capitalised as part of the cost of the asset. The property, plant and equipment and intangible assets involved are those that require at least one year in order to prepare them for use. The directly attributable financial expenses are expenses that would not have been incurred had the expenditure for the asset not been incurred.
Where funds are borrowed specifically, the costs eligible for capitalisation are the actual costs incurred less any income earned on the temporary investment of such borrowings. Where loans are obtained for general purposes, the eligible amount is determined by applying a capitalisation rate to the expenditure on that asset equal to the weighted average of the financial expenses applicable to the borrowings outstanding for the year, excluding any specifically borrowed funds. The amount of capitalised financial expenses during a year will in any case not exceed the amount of financial expenses incurred during that year.
Capitalisation commences as from the date all the following conditions are first met: (a) expenditure has been incurred for the asset; (b) financial expenses have been incurred; and (c) the activities involved in preparing the asset for its intended use or sale are in progress.\nCapitalisation ceases when the activities involved in preparing the asset for its intended use or sale are substantially complete.The average capitalisation rate used for 2023 is approximately 2.0% (1.3% for 2022).
Financial income and expenses other than capitalised amounts are recognised on an accruals basis in respect of the interest on the net value of the related financial assets and liabilities, using the effective interest rate.
Treasury shares
Treasury shares, including those held to service share-based incentive plans, are recognised at cost and accounted for as a reduction in equity. Any gains or losses resulting from the later sale of such shares are recognised in equity.
Dividends
Dividends from investees are recognised when the shareholders\u2019 right to receive payment is established. Dividends and interim dividends payable to shareholders are shown as changes in equity at the date in which they are approved by the General Meeting of shareholders and the Board of Directors, respectively.
Earnings per share
Basic earnings per share is calculated by dividing the profit or loss for the year attributable to holders of the ordinary shares by the weighted average of ordinary shares outstanding during the year, excluding treasury shares.
Diluted earnings per share is determined by dividing profit for the period by the weighted average of ordinary shares outstanding during the period, excluding treasury shares, increased by the number of shares that could potentially result from the conversion of any convertible securities.
Income taxes
Current income taxes are recognised as \u201cTax liabilities\u201d, net of advances paid, or \u201cTax assets\u201d where the net balance of the items is positive. They are based on the estimated taxable income and in accordance with current legislation, taking account of applicable exemptions.
Deferred tax assets and liabilities are calculated on temporary differences between the carrying amounts of assets and liabilities recognised in the financial statements and the corresponding amounts recognised for tax purposes, using current tax rates or the rates expected to be in effect when the temporary differences reverse, based on rates approved at the reporting date.
Deferred tax assets are recognised when their recovery is considered probable, i.e. when future taxable income will be available against which the asset can be used. The recoverability of deferred tax assets is reviewed at the end of each year.
Deferred tax liabilities are recognised in any case if they exist. Taxes relating to items recognised directly in the statement of comprehensive income are also allocated to the statement of comprehensive income.
New accounting standards
International financial reporting standards effective as of 1 January 2023
A number of new amendments to standards already applied, none of which have had a significant impact, came into effect from 1 January 2023. The relevant standards are as follows:
IFRS 17: Insurance contracts
The new accounting standard for insurance contracts, endorsed by the European Commission with Regulation 2021/2036, has replaced the interim version of IFRS 4. The standard aims to ensure that an entity provides pertinentinformation providing an accurate view of the rights and obligations resulting from the insurance contracts issued. The IASB has developed the standard to remove inconsistencies and weaknesses in existing accounting policies, providing a single principle-based framework that takes into account all types of insurance contracts, including any reinsurance contracts to which an insurance undertaking is party. The new standard also introduces presentation and disclosure requirements to improve comparability between entities belonging to this sector.
The new standard has not had a significant impact on the Group\u2019s consolidated financial statements.
Regulation 2022/1491 also endorsed the amendment that aims to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, therefore improving the usefulness of comparative information for users of financial statements.
Amendment to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendment, endorsed by the European Commission with Regulation 2022/1329, clarifies how to account for deferred tax on certain transactions that can generate assets and liabilities of equal amounts, such as leasing and decommissioning obligations. The amendment has not had a significant impact on the Group\u2019s consolidated financial statements.
Amendments to IAS 1 e IAS 8: Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 and Definition of Accounting Estimates \u2013 Amendments to IAS 8
The amendment, endorsed by the European Commission with Regulation 2021/2036, introduces changes to IAS 1 Presentation of financial statements and IAS 8 Accounting standards, and changes to the treatment of accounting estimates and errors. These amendments aim to improve the disclosure of accounting policies in order to provide more useful information for investors and other primary users of financial statements and to help companies to distinguish changes in accounting estimates from changes in accounting policy.\u00a0
The changes have not had a significant impact on the Group\u2019s consolidated financial statements.
Amendment to IAS 12\u00a0Income taxes: International Tax Reform \u2013 Pillar Two Model Rules
Directive 2022/2523 \u2013 based on the paper, \u201cTax Challenges Arising from the Digitalisation of the Economy- Global Anti-Base Erosion Model Rules (Pillar Two)\u201d issued by the OECD on 14 December 2021 - has introduced a minimum effective corporate tax rate of 15% for Italian and multinational groups in each jurisdiction in which they operate, providing for the application of a top-up tax in cases where a country\u2019s effective tax rate, with the adjustments provided for in the application rules, is below the minimum rate of 15%. This legislation was transposed into domestic law in Legislative Decree 209 of 27 December 2023 (\u201cPillar II\u201d or \u201cglobal minimum tax\u201d) with effect from the 2024 tax year.
In this regard, the Terna Group (classed as a Minority-Owned Parent Entity (\u201cMOPE\u201d), for the purposes of the relevant legislation), in coordination with the parent, CDP, took part in a specific project in 2023, with the support of a leading advisor, with the aim of: i) mapping relevant entities for the purposes of Pillar II; ii) gathering the information necessary to determine the Transitional Country-by-Country Safe Harbor; iii) gathering the information needed to calculate Globe Income and Adjusted Covered Taxes, necessary to compute the minimum rate of 15%; iv) preparing the Gap Analysis. These activities were conducted with reference to the 2022 tax year.
On 23 May 2023, the IASB published an amendment called \u201cAmendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules\u201d. The document, which was adopted by the EU on 8 November 2023, introduces a temporary exception to the requirements in IAS 12 to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes and imposes specific disclosure requirements for entities affected by the related International Tax Reform. The document provides for immediate application of the temporary exception, whilst the disclosure requirements will only be applicable in annual reporting periods starting from 1 January 2023 (or a later date).
Following the analysis carried out with respect to 2022, based on the information currently available, it is not expected that will be a significant impact on the Terna Group.
International financial reporting standards, amendments and interpretations endorsed but yet to come into effect
Amendment to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Noncurrent - Deferral of Effective Date e Non-current Liabilities with Covenants
On 23 January 2020, the IASB published an amendment called \u201cAmendments to IAS 1:\u00a0Presentation of Financial Statements: Classification of Liabilities as Current or Non-current\u201d and, on 31 October 2022, published an amendment called \u201cAmendments to IAS 1:\u00a0Presentation of Financial Statements: Non-Current Liabilities with Covenants\u201d. These amendments aim to clarify how to classify payables and other short- or long-term liabilities. In addition, the amendments also improve the disclosures that an entity must provide when its right to defer the settlement of a liability for at least twelve months is subject to compliance with specified conditions (i.e., covenants). The amendments are effective from 1 January 2024, although early adoption is permitted. The Group is currently assessing the potential impact of the introduction of these amendments on the consolidated financial statements.
Amendment to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
On 22 September 2022, the IASB published the amendment called \u201cAmendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback\u201d. The document requires the seller-lessee to measure the lease liability resulting from a sale and leaseback transaction in such a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The amendments are effective from 1 January 2024, although early adoption is permitted. The Group is currently assessing the potential impact of the introduction of these amendments on the consolidated financial statements.
International financial reporting standards, amendments and interpretations awaiting endorsement
For newly issued amendments, standards and interpretations that have not yet been endorsed by the EU, but which address issues that affect or could affect the Group, assessments are currently being conducted of the possible impact of their application on the financial statements, taking into account the date on which they will take effect. In particular:
Amendment to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements
On 25 May 2023, the IASB published the amendment to IAS 7 that aims to add disclosure requirements and \u201csign posts\u201d within existing disclosure requirements, requesting entities to provide qualitative and quantitative information about supplier finance arrangements. The document requires an entity to provide additional disclosures on any reverse factoring agreements to enable users of financial statements to assess how supplier finance arrangements affect an entity\u2019s liabilities and cash flows and understand the effect of supplier finance arrangements on an entity\u2019s exposure to liquidity risk. The amendments are effective from 1 January 2024, although early adoption is permitted.
Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
The amendment, published on 15 August 2023, clarifies when a currency is exchangeable, how to estimate the exchange rate and the disclosure to provide in the notes to financial statements. The document requires an entity to apply a method on a consistent basis to determine if a currency is exchangeable and, when this is not possible, specifies how to determine the exchange rate to use and the disclosure to provide in the notes to the financial statements. The amendment is effective from 1 January 2025, although early adoption is permitted.
Property, plant and equipment
Property, plant and equipment is recognised at historical cost, including costs directly attributable to preparing the asset for its intended use. In the event of legal or constructive obligations, cost also includes the present value of the estimated cost of dismantling or removing the asset. The corresponding liability is recognised in provisions for risks and charges.
Penalties receivable from suppliers relating to the purchase or construction of an asset are accounted for as a direct reduction in the cost of the asset, unless the penalty is accounted for as a refund, or when the refunded costs are clearly identifiable and have been incurred due to a delay incurred by the purchaser, the compensation is payable regardless of delivery or otherwise of the asset and the agreement expressly provides for settlement of the claim to compensate for the loss of earnings resulting from the contract delays.
Borrowing costs directly attributable to the purchase, construction or production of an asset that qualify for capitalisation pursuant to IAS 23 are capitalised as part of the cost of the asset. Costs incurred after purchase are recognised as an increase in the carrying amount of the asset to which they relate if it is probable that the future benefits of that cost will flow to the Group, and if the cost can be reliably measured. All other costs are expensed as incurred.
Each element of an item of property, plant and equipment of material value, with respect to the total value of the item to which it belongs, is recognised and depreciated separately.
Property, plant and equipment is shown net of accumulated depreciation and any impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful economic life of the asset, which is reviewed annually, with revisions applied on a prospective basis. Depreciation of an asset begins when the asset becomes available for use.
Liabilities associated with items of property, plant and equipment are taken to a specific provision as a contra account of the related asset. The amount is taken to the income statement through the depreciation of the asset.
Property, plant and equipment is written off either at the time of disposal or when no future economic benefit is expected from their use or disposal. Any profit or loss, recognised in the income statement, is determined as the difference between the net proceeds deriving from disposal and the net carrying amount of the assets eliminated.
The main rates of depreciation, calculated on the basis of the useful lives of the relevant assets, are as follows:
RATES OF DEPRECIATION
Buildings - Civil and industrial buildings
2.50%
Plant and equipment - Transmission lines
2.22%
Plant and equipment - Transformer substations:
\u00a0
- Electrical machinery
2.38%
- Electrical devices and equipment
3.13%
- Automation and control systems
6.70%
Plant and equipment - Central systems for remote management and control:
\u00a0
- Devices, electrical equipment and ancillary plant
5.00%
- Computers
10.00%
Land, regardless of whether it is free of constructions or related to civil and industrial buildings, is not depreciated, since it has an indefinite useful life.
This asset class also includes right-of-use assets, recognised under IFRS 16, arising from lease arrangements where the Company is lessee and relating to the use of property, plant and equipment. A lease arrangement is, or contains, a lease, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchangeor consideration. Applying this standard, the lessee recognises: (i) a right-of-use asset in its statement of financial position and a liability representing its obligation to make the payments provided for under the arrangement, for all leases with terms in excess of twelve months where the asset cannot be considered of low value (the Group has elected to apply the practical expedient provided for in the standard, recognising payments relating to arrangements that do not fall within the scope of this type of lease in the income statement); (ii) depreciation of the recognised assets and interest expense on the lease liability separately in the income statement.In determining the lease term, the Group considers the non-cancellable period of the lease and the additional periods resulting from any options to extend the lease, or from the decision not to exercise the option to terminate the lease early (where there is reasonable certainty that such options will be exercised).
The lease liability is initially recognised at the present value of the remaining lease payments at the commencement date: (i) fixed payments; (ii) variable lease payments that depend on an index or a rate; (iii) amounts expected to be payable by the lessee under residual value guarantees; (iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and finally (v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The present value of the payments is determined using a discount rate equal to the Group\u2019s incremental borrowing rate, bearing in mind the frequency and duration of the payments provided for in the lease contract.
Following initial recognition, the lease liability is accounted for at amortised cost and remeasured, with a matching change in the value of the related right-of-use asset, when there is a change in future lease payments as a result of: (i) a renegotiation of the contract; (ii) changes in the index or rate; or (iii) changes in the assessment of whether or not the options contained in the contract will be exercised (e.g., the purchase of the leased asset, extension or termination of the lease). The right-of-use asset is initially recognised at cost, measured as the sun of the following components: (i) the amount of the initial measurement of the lease liability; (ii) any initial direct costs incurred by the lessee; (iii) any lease payments made at or before the commencement date, less any lease incentives received; and (iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located (or restoring the underlying asset to the condition required by the terms and conditions of the lease). Following initial recognition, the right-of-use asset is adjusted to take into account (i) any accumulated depreciation, (ii) any accumulated impairment losses, and (iii) the effects of any remeasurement of the lease liability.
The Group\u2019s property, plant and equipment also includes the assets relating the private interconnectors pursuant to Law 99/2009. The legislation assigns the Group responsibility for building and operating the infrastructure on behalf of selected parties willing to finance specific interconnections in return for the benefits for them deriving from receipt of an exemption from third-party access to the transmission capacity that the related infrastructure makes available. The law also establishes that, at the end of the exemption period, generally ten years from the date of entry into service, Terna will assume ownership of the interconnections in return for payment of a fee to be set by the regulator. The existence of a binding commitment to purchase the asset means that the property, plant and equipment relating to the interconnector is recognised in the Group\u2019s accounts. the fee agreed with the selected parties for construction and operation of the interconnector is thus accounted for as revenue for the Group\u2019s effort in arranging the transaction and for granting the right to use the asset during the exemption period.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130787": { "value": "Property, plant and equipment is shown net of accumulated depreciation and any impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful economic life of the asset, which is reviewed annually, with revisions applied on a prospective basis. Depreciation of an asset begins when the asset becomes available for use.
Liabilities associated with items of property, plant and equipment are taken to a specific provision as a contra account of the related asset. The amount is taken to the income statement through the depreciation of the asset.
Property, plant and equipment is written off either at the time of disposal or when no future economic benefit is expected from their use or disposal. Any profit or loss, recognised in the income statement, is determined as the difference between the net proceeds deriving from disposal and the net carrying amount of the assets eliminated.
The main rates of depreciation, calculated on the basis of the useful lives of the relevant assets, are as follows:
RATES OF DEPRECIATION
Buildings - Civil and industrial buildings
2.50%
Plant and equipment - Transmission lines
2.22%
Plant and equipment - Transformer substations:
\u00a0
- Electrical machinery
2.38%
- Electrical devices and equipment
3.13%
- Automation and control systems
6.70%
Plant and equipment - Central systems for remote management and control:
\u00a0
- Devices, electrical equipment and ancillary plant
5.00%
- Computers
10.00%
Land, regardless of whether it is free of constructions or related to civil and industrial buildings, is not depreciated, since it has an indefinite useful life.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130786": { "value": "This asset class also includes right-of-use assets, recognised under IFRS 16, arising from lease arrangements where the Company is lessee and relating to the use of property, plant and equipment. A lease arrangement is, or contains, a lease, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchangefor consideration. Applying this standard, the lessee recognises: (i) a right-of-use asset in its statement of financial position and a liability representing its obligation to make the payments provided for under the arrangement, for all leases with terms in excess of twelve months where the asset cannot be considered of low value (the Group has elected to apply the practical expedient provided for in the standard, recognising payments relating to arrangements that do not fall within the scope of this type of lease in the income statement); (ii) depreciation of the recognised assets and interest expense on the lease liability separately in the income statement.
In determining the lease term, the Group considers the non-cancellable period of the lease and the additional periods resulting from any options to extend the lease, or from the decision not to exercise the option to terminate the lease early (where there is reasonable certainty that such options will be exercised).
The lease liability is initially recognised at the present value of the remaining lease payments at the commencement date: (i) fixed payments; (ii) variable lease payments that depend on an index or a rate; (iii) amounts expected to be payable by the lessee under residual value guarantees; (iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and finally (v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The present value of the payments is determined using a discount rate equal to the Group\u2019s incremental borrowing rate, bearing in mind the frequency and duration of the payments provided for in the lease contract.
Following initial recognition, the lease liability is accounted for at amortised cost and remeasured, with a matching change in the value of the related right-of-use asset, when there is a change in future lease payments as a result of: (i) a renegotiation of the contract; (ii) changes in the index or rate; or (iii) changes in the assessment of whether or not the options contained in the contract will be exercised (e.g., the purchase of the leased asset, extension or termination of the lease). The right-of-use asset is initially recognised at cost, measured as the sun of the following components: (i) the amount of the initial measurement of the lease liability; (ii) any initial direct costs incurred by the lessee; (iii) any lease payments made at or before the commencement date, less any lease incentives received; and (iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located (or restoring the underlying asset to the condition required by the terms and conditions of the lease). Following initial recognition, the right-of-use asset is adjusted to take into account (i) any accumulated depreciation, (ii) any accumulated impairment losses, and (iii) the effects of any remeasurement of the lease liability.
The Group\u2019s property, plant and equipment also includes the assets relating the private interconnectors pursuant to Law 99/2009. The legislation assigns the Group responsibility for building and operating the infrastructure on behalf of selected parties willing to finance specific interconnections in return for the benefits for them deriving from receipt of an exemption from third-party access to the transmission capacity that the related infrastructure makes available. The law also establishes that, at the end of the exemption period, generally ten years from the date of entry into service, Terna will assume ownership of the interconnections in return for payment of a fee to be set by the regulator. The existence of a binding commitment to purchase the asset means that the property, plant and equipment relating to the interconnector is recognised in the Group\u2019s accounts. the fee agreed with the selected parties for construction and operation of the interconnector is thus accounted for as revenue for the Group\u2019s effort in arranging the transaction and for granting the right to use the asset during the exemption period.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130789": { "value": "Intangible assets
Intangible assets, which all have finite useful lives, are recognised at cost and shown net of accumulated amortisation and any impairment losses. Amortisation begins when the asset becomes available for use and is calculated on a straight-line basis over the estimated useful life of the related asset, which is reviewed annually. Any revisions to estimated figures are applied on a prospective basis.
Intangible assets essentially consist of the concession to exclusively provide electricity transmission and dispatching services, granted to the Parent Company Terna S.p.A. on 1 November 2005, with the acquisition of the TSO business unit. As established in the Decree issued by the Ministry of Productive Activities on 20 April 2005, this concession has a 25-year term, renewable for another 25 years, from the date of effective transfer of the activities, functions, assets and legal arrangements of the concession from GSE (formerly GRTN) to Terna S.p.A.. This intangible asset was initially recognised at cost, which reflected fair value.Other intangible assets essentially refer to software developments and upgrades.
Development costs are capitalised by the Terna Group only if they can be reliably estimated and there is the technical possibility and intention to complete the intangible asset so that it will be available for use, and the asset can be used and it is possible to demonstrate that it will generate probable future economic benefits.
Financial expenses directly attributable to the acquisition, design or production of a non-current asset which justifies capitalisation pursuant to IAS 23 are capitalised to the asset as part of its cost.
All other development costs and research expenses are recognised in the income statement when incurred. These intangible assets are amortised over their estimated residual useful life, which is normally three years, given their rapid obsolescence.
Infrastructure rights
Infrastructure includes the property, plant and equipment and intangible assets employed in dispatching activities in Italy and in the operations in Peru. These activities are carried out under concession arrangements, which fall within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised as an intangible asset, as valued on the basis of the Intangible Asset model, given the return generated by dispatching activities thanks to the charges paid by users.
The revenue and costs relating to investment in dispatching activities are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase is limited to the amount of the internal and external construction costs incurred, considering that the fair value of the construction services is equivalent to the construction cost paid to third-party contractors plus the internal cost of the technical personnel employed on such construction activities. The assets continue to be amortised and depreciated in accordance with the initial schedule.
By contrast, dispatching revenue continues to be recognised in accordance with IFRS 15 and financial expenses continue to be capitalised pursuant to IAS 23.
IFRIC 12, instead, is not applicable to the part of the Parent Company\u2019s concession arrangement relating to transmission activities, since neither the concession nor the related legislation envisages that ownership of the NTG is to be restored to the public grantor, even for a consideration.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIntangibleAssetsOtherThanGoodwillExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130792": { "value": "Infrastructure rights
Infrastructure includes the property, plant and equipment and intangible assets employed in dispatching activities in Italy and in the operations in Peru. These activities are carried out under concession arrangements, which fall within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised as an intangible asset, as valued on the basis of the Intangible Asset model, given the return generated by dispatching activities thanks to the charges paid by users.
The revenue and costs relating to investment in dispatching activities are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase is limited to the amount of the internal and external construction costs incurred, considering that the fair value of the construction services is equivalent to the construction cost paid to third-party contractors plus the internal cost of the technical personnel employed on such construction activities. The assets continue to be amortised and depreciated in accordance with the initial schedule.
By contrast, dispatching revenue continues to be recognised in accordance with IFRS 15 and financial expenses continue to be capitalised pursuant to IAS 23.
IFRIC 12, instead, is not applicable to the part of the Parent Company\u2019s concession arrangement relating to transmission activities, since neither the concession nor the related legislation envisages that ownership of the NTG is to be restored to the public grantor, even for a consideration.
Infrastructure rights
These include the property, plant and equipment and intangible assets employed in Brazil under concession arrangements falling within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised in financial assets, as valued on the basis of the Financial Asset model, given the return generated by the activities. This derives from an unconditional contractual right to receive cash or another financial asset from, or at the direction of, the grantor and the fact that the grantor cannot avoid payment.
The revenue and costs relating to investment are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase includes a profit margin on the work performed.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForServiceConcessionArrangementsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130790": { "value": "Goodwill
Goodwill, deriving from the acquisition of subsidiaries, is allocated to each of the cash generating units (CGU) identified, coinciding with Group companies that own electricity transmission grids and with the Tamini Group, relating to the production and commercialisation of transformers. Goodwill is not amortised after initial recognition but is adjusted to reflect impairment losses, measured as described above. Following the acquisition of investments in associates and joint ventures, goodwill is included in the carrying amount of the companies. Where negative goodwill arises, it is recognised in the income statement at the time of acquisition.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130791": { "value": "Inventories
Inventories are recognised and measured at the lower of purchase cost and net estimated realisable value. Cost is calculated as the weighted average, including accrued ancillary expenses. Net estimated realisable value means the estimated sale price under normal conditions net of completion costs and the estimated costs to sell.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130794": { "value": "Financial instruments
Financial assets
The new standard, IFRS 9 \u2013 Financial Instruments, effective from 1 January 2018, is divided into the following phases: classification and measurement, derecognition, impairment and hedge accounting.
In order to classify and measure financial instruments, the Group recognises financial assets at fair value inclusive of transaction costs.
Financial assets represented by debt instruments, and falling within the scope of application of the standard, may be measured at amortised cost, at fair value through other comprehensive income or at fair value through profit or loss, depending on the business model adopted to manage the financial assets and the characteristics of the contractual cash flows.
In accordance with the provisions of IFRS 9, the Group correctly classifies these assets based on the results of so-called SSPI (\u201csolely payments of principal and interest\u201d) tests. Under this test, assets may be recognised at amortised cost or fair value through other comprehensive income if the generate cash flows that are solely payments of principal and interest on the principal amount outstanding. This measurement is applied at the level of each individual instrument.
Specifically, the Group measures financial assets:
\u2022 at amortised cost, if the financial asset is held with the aim of collecting the contractual cash flows that meet the SPPI test, as the cash flows represent solely payments of principal and interest;
\u2022 at fair value through other comprehensive income (\u201cFVOCI\u201d), if the financial asset is held within a business model whose objective is achieved by collecting the contractual cash flows and by selling the financial asset, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Changes in fair value after initial recognition are recognised in other comprehensive income and recycled through profit or loss on derecognition. The government securities held by the Parent Company are included in this category;
\u2022 at fair value through profit or loss (\u201cFVTPL\u201d), of the asset is not held in one of the above business models. This category primarily includes derivative financial instruments held for trading and debt instruments with contractual cash flows that are not solely payments of capital and interest.
Infrastructure rights
These include the property, plant and equipment and intangible assets employed in Brazil under concession arrangements falling within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised in financial assets, as valued on the basis of the Financial Asset model, given the return generated by the activities. This derives from an unconditional contractual right to receive cash or another financial asset from, or at the direction of, the grantor and the fact that the grantor cannot avoid payment.
The revenue and costs relating to investment are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase includes a profit margin on the work performed.
Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective interest method. Receivables with due dates that reflect normal commercial terms are not discounted.
In accordance with the provisions of IFRS 9, the Group\u2019s trade receivables fall within the hold to collect business model, as these assets are held with the objective of collecting the cash flows primarily by collecting the contractual cash flows, the receivables primarily fall due within 12 months and do not include a significant financial component, and the Group does not intend to sell such receivables.
Trade receivables are recognised net of any losses recognised in a specific allowance for doubtful accounts (identified on the basis described in the paragraph, \u201cAllowance for doubtful accounts\u201d). IFRS 9 has introduced application of a model based on expected credit losses. This requires the Group to assess expected credit losses, and the related changes, at each reporting date. Specifically, the Group has applied the simplified approach permitted by IFRS 9 to trade receivables, finance lease receivables and assets deriving from contracts with customers, in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Group has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
Cash and cash equivalents
Cash and cash equivalents are recognised at nominal value and include amounts that are available on demand or can be readily converted into a known amount of cash and are subject to an insignificant risk of changes in value.
Trade payables
Trade payables are initially recognised at fair value and subsequently stated at amortised cost. If their due dates reflect normal commercial terms, they are not discounted.
Financial liabilities
Financial liabilities are recognised at the settlement date and measured at fair value, net of directly related transaction costs. Subsequently, financial liabilities are measured at amortised cost, using the original effective interest method. If the liabilities are covered by fair value hedges, they are adjusted to reflect changes in fair value with respect to the hedged risk.
Subsequent measurement of financial liabilities depends on their classification as financial liabilities at amortised cost or at fair value through profit or loss.
Derivative financial instruments
Derivatives are recognised at fair value at the trade date. The qualifying criteria applied in classifying derivatives as eligible for hedge accounting are as follows:
\u2022 the hedging relationship consists only of eligible hedging instruments and eligible hedged items;
\u2022 at the inception of the hedging relationship there is formal designation and documentation of the hedging relationship and the entity\u2019s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity will assess whether the hedging relationship meets the hedge effectiveness requirements (including its analysis of the sources of hedge ineffectiveness and how it determines the hedge ratio);
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
The Group discontinues hedge accounting prospectively only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised. For this purpose, the replacement or rollover of a hedging instrument into another hedging instrument is not an expiration or termination if such a replacement or rollover is part of, and consistent with, the entity\u2019s documented risk management objective.
For hedge accounting purposes, there are three types of hedge:
\u2022 fair value hedges when the hedge regards the exposure to changes in the fair value of the recognised asset or liability or there is an unrecognised firm commitment;
\u2022 cash flow hedges when the hedge regards the exposure to variability in cash flows that is attributable to a particular risk associated with all of the recognised asset or liability or a highly probable forecast transaction or the exchange rate risk on an unrecognised firm commitment;
\u2022 the hedge of a net investment in a foreign operation.
When derivatives cover the risk of changes in the cash flows of the hedged instruments (cash flow hedges), the portion of changes in the fair value qualifying as effective is initially recognised in \u201cOther comprehensive income\u201d (accumulated in equity) and subsequently in profit or loss, as the cash flows from the hedged item affects profit or loss. The portion of the fair value of the hedging instrument that does not qualify as effective is recognised in profit or loss.
When hedging derivatives cover the risk of changes in the fair value of hedged instruments (fair value hedges), they are recognised at fair value in profit or loss. Accordingly, the hedged items are adjusted to reflect changes in the fair value associated with the hedged risk.
Changes in the fair value of derivatives that do not meet hedge accounting requirements in accordance with the IFRS are recognised in profit or loss.
Fair value is measured on the basis of official quotations for instruments traded in regulated markets. The fair value of instruments not traded in regulated markets is measured by discounting projected cash flows along a yield curve prevailing in the market at the reporting date, and by translating amounts in currencies other than the euro at closing exchange rates.
Financial and non-financial contracts (which are not already measured at fair value) are also analysed to identify any embedded derivatives, which must be separated and measured at fair value.
Hybrid bonds
Issues of non-convertible, perpetual hybrid bonds are classified as equity instruments. These are in fact instruments that allow Terna to defer coupon payments over time and whose early redemption is permitted on the occurrence of certain events or at the reset date. These instruments cannot be converted into shares and, in the event of the Company\u2019s liquidation, winding up or insolvency, interest payments are subordinated to all the issuer\u2019s other payment obligations.
The proceeds received from the sale of the instruments and subsequent returns of capital are accounted for as an increase or a reduction in equity, respectively, in compliance with the requirements applicable to equity instruments in IAS 32. Interest expense, at the time the payment obligation arises, is recognised as a reduction in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130793": { "value": "Financial assets
The new standard, IFRS 9 \u2013 Financial Instruments, effective from 1 January 2018, is divided into the following phases: classification and measurement, derecognition, impairment and hedge accounting.
In order to classify and measure financial instruments, the Group recognises financial assets at fair value inclusive of transaction costs.
Financial assets represented by debt instruments, and falling within the scope of application of the standard, may be measured at amortised cost, at fair value through other comprehensive income or at fair value through profit or loss, depending on the business model adopted to manage the financial assets and the characteristics of the contractual cash flows.
In accordance with the provisions of IFRS 9, the Group correctly classifies these assets based on the results of so-called SSPI (\u201csolely payments of principal and interest\u201d) tests. Under this test, assets may be recognised at amortised cost or fair value through other comprehensive income if the generate cash flows that are solely payments of principal and interest on the principal amount outstanding. This measurement is applied at the level of each individual instrument.
Specifically, the Group measures financial assets:
\u2022 at amortised cost, if the financial asset is held with the aim of collecting the contractual cash flows that meet the SPPI test, as the cash flows represent solely payments of principal and interest;
\u2022 at fair value through other comprehensive income (\u201cFVOCI\u201d), if the financial asset is held within a business model whose objective is achieved by collecting the contractual cash flows and by selling the financial asset, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Changes in fair value after initial recognition are recognised in other comprehensive income and recycled through profit or loss on derecognition. The government securities held by the Parent Company are included in this category;
\u2022 at fair value through profit or loss (\u201cFVTPL\u201d), of the asset is not held in one of the above business models. This category primarily includes derivative financial instruments held for trading and debt instruments with contractual cash flows that are not solely payments of capital and interest.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130795": { "value": "\u2022 at fair value through other comprehensive income (\u201cFVOCI\u201d), if the financial asset is held within a business model whose objective is achieved by collecting the contractual cash flows and by selling the financial asset, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Changes in fair value after initial recognition are recognised in other comprehensive income and recycled through profit or loss on derecognition. The government securities held by the Parent Company are included in this category;
\u2022 at fair value through profit or loss (\u201cFVTPL\u201d), of the asset is not held in one of the above business models. This category primarily includes derivative financial instruments held for trading and debt instruments with contractual cash flows that are not solely payments of capital and interest.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130796": { "value": "\u2022 at fair value through profit or loss (\u201cFVTPL\u201d), of the asset is not held in one of the above business models. This category primarily includes derivative financial instruments held for trading and debt instruments with contractual cash flows that are not solely payments of capital and interest.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130797": { "value": "Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective interest method. Receivables with due dates that reflect normal commercial terms are not discounted.
In accordance with the provisions of IFRS 9, the Group\u2019s trade receivables fall within the hold to collect business model, as these assets are held with the objective of collecting the cash flows primarily by collecting the contractual cash flows, the receivables primarily fall due within 12 months and do not include a significant financial component, and the Group does not intend to sell such receivables.
Trade receivables are recognised net of any losses recognised in a specific allowance for doubtful accounts (identified on the basis described in the paragraph, \u201cAllowance for doubtful accounts\u201d). IFRS 9 has introduced application of a model based on expected credit losses. This requires the Group to assess expected credit losses, and the related changes, at each reporting date. Specifically, the Group has applied the simplified approach permitted by IFRS 9 to trade receivables, finance lease receivables and assets deriving from contracts with customers, in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Group has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130798": { "value": "Cash and cash equivalents
Cash and cash equivalents are recognised at nominal value and include amounts that are available on demand or can be readily converted into a known amount of cash and are subject to an insignificant risk of changes in value.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130799": { "value": "Trade payables
Trade payables are initially recognised at fair value and subsequently stated at amortised cost. If their due dates reflect normal commercial terms, they are not discounted.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130800": { "value": "Financial liabilities
Financial liabilities are recognised at the settlement date and measured at fair value, net of directly related transaction costs. Subsequently, financial liabilities are measured at amortised cost, using the original effective interest method. If the liabilities are covered by fair value hedges, they are adjusted to reflect changes in fair value with respect to the hedged risk.
Subsequent measurement of financial liabilities depends on their classification as financial liabilities at amortised cost or at fair value through profit or loss.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130802": { "value": "Derivative financial instruments
Derivatives are recognised at fair value at the trade date. The qualifying criteria applied in classifying derivatives as eligible for hedge accounting are as follows:
\u2022 the hedging relationship consists only of eligible hedging instruments and eligible hedged items;
\u2022 at the inception of the hedging relationship there is formal designation and documentation of the hedging relationship and the entity\u2019s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity will assess whether the hedging relationship meets the hedge effectiveness requirements (including its analysis of the sources of hedge ineffectiveness and how it determines the hedge ratio);
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
The Group discontinues hedge accounting prospectively only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised. For this purpose, the replacement or rollover of a hedging instrument into another hedging instrument is not an expiration or termination if such a replacement or rollover is part of, and consistent with, the entity\u2019s documented risk management objective.
For hedge accounting purposes, there are three types of hedge:
\u2022 fair value hedges when the hedge regards the exposure to changes in the fair value of the recognised asset or liability or there is an unrecognised firm commitment;
\u2022 cash flow hedges when the hedge regards the exposure to variability in cash flows that is attributable to a particular risk associated with all of the recognised asset or liability or a highly probable forecast transaction or the exchange rate risk on an unrecognised firm commitment;
\u2022 the hedge of a net investment in a foreign operation.
When derivatives cover the risk of changes in the cash flows of the hedged instruments (cash flow hedges), the portion of changes in the fair value qualifying as effective is initially recognised in \u201cOther comprehensive income\u201d (accumulated in equity) and subsequently in profit or loss, as the cash flows from the hedged item affects profit or loss. The portion of the fair value of the hedging instrument that does not qualify as effective is recognised in profit or loss.
When hedging derivatives cover the risk of changes in the fair value of hedged instruments (fair value hedges), they are recognised at fair value in profit or loss. Accordingly, the hedged items are adjusted to reflect changes in the fair value associated with the hedged risk.
Changes in the fair value of derivatives that do not meet hedge accounting requirements in accordance with the IFRS are recognised in profit or loss.Fair value is measured on the basis of official quotations for instruments traded in regulated markets. The fair value of instruments not traded in regulated markets is measured by discounting projected cash flows along a yield curve prevailing in the market at the reporting date, and by translating amounts in currencies other than the euro at closing exchange rates.
Financial and non-financial contracts (which are not already measured at fair value) are also analysed to identify any embedded derivatives, which must be separated and measured at fair value.
Hybrid bonds
Issues of non-convertible, perpetual hybrid bonds are classified as equity instruments. These are in fact instruments that allow Terna to defer coupon payments over time and whose early redemption is permitted on the occurrence of certain events or at the reset date. These instruments cannot be converted into shares and, in the event of the Company\u2019s liquidation, winding up or insolvency, interest payments are subordinated to all the issuer\u2019s other payment obligations.
The proceeds received from the sale of the instruments and subsequent returns of capital are accounted for as an increase or a reduction in equity, respectively, in compliance with the requirements applicable to equity instruments in IAS 32. Interest expense, at the time the payment obligation arises, is recognised as a reduction in equity", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130801": { "value": "Derivative financial instruments
Derivatives are recognised at fair value at the trade date. The qualifying criteria applied in classifying derivatives as eligible for hedge accounting are as follows:
\u2022 the hedging relationship consists only of eligible hedging instruments and eligible hedged items;
\u2022 at the inception of the hedging relationship there is formal designation and documentation of the hedging relationship and the entity\u2019s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity will assess whether the hedging relationship meets the hedge effectiveness requirements (including its analysis of the sources of hedge ineffectiveness and how it determines the hedge ratio);
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
The Group discontinues hedge accounting prospectively only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised. For this purpose, the replacement or rollover of a hedging instrument into another hedging instrument is not an expiration or termination if such a replacement or rollover is part of, and consistent with, the entity\u2019s documented risk management objective.
For hedge accounting purposes, there are three types of hedge:
\u2022 fair value hedges when the hedge regards the exposure to changes in the fair value of the recognised asset or liability or there is an unrecognised firm commitment;
\u2022 cash flow hedges when the hedge regards the exposure to variability in cash flows that is attributable to a particular risk associated with all of the recognised asset or liability or a highly probable forecast transaction or the exchange rate risk on an unrecognised firm commitment;
\u2022 the hedge of a net investment in a foreign operation.
When derivatives cover the risk of changes in the cash flows of the hedged instruments (cash flow hedges), the portion of changes in the fair value qualifying as effective is initially recognised in \u201cOther comprehensive income\u201d (accumulated in equity) and subsequently in profit or loss, as the cash flows from the hedged item affects profit or loss. The portion of the fair value of the hedging instrument that does not qualify as effective is recognised in profit or loss.
When hedging derivatives cover the risk of changes in the fair value of hedged instruments (fair value hedges), they are recognised at fair value in profit or loss. Accordingly, the hedged items are adjusted to reflect changes in the fair value associated with the hedged risk.
Changes in the fair value of derivatives that do not meet hedge accounting requirements in accordance with the IFRS are recognised in profit or loss.Fair value is measured on the basis of official quotations for instruments traded in regulated markets. The fair value of instruments not traded in regulated markets is measured by discounting projected cash flows along a yield curve prevailing in the market at the reporting date, and by translating amounts in currencies other than the euro at closing exchange rates.
Financial and non-financial contracts (which are not already measured at fair value) are also analysed to identify any embedded derivatives, which must be separated and measured at fair value.
Hybrid bonds
Issues of non-convertible, perpetual hybrid bonds are classified as equity instruments. These are in fact instruments that allow Terna to defer coupon payments over time and whose early redemption is permitted on the occurrence of certain events or at the reset date. These instruments cannot be converted into shares and, in the event of the Company\u2019s liquidation, winding up or insolvency, interest payments are subordinated to all the issuer\u2019s other payment obligations.
The proceeds received from the sale of the instruments and subsequent returns of capital are accounted for as an increase or a reduction in equity, respectively, in compliance with the requirements applicable to equity instruments in IAS 32. Interest expense, at the time the payment obligation arises, is recognised as a reduction in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerivativeFinancialInstrumentsAndHedgingExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130803": { "value": "Non-current assets held for sale
Non-current assets and current and non-current assets included in disposal groups are classified as held for sale if their carrying amount is to be recovered primarily through sale rather than through continued use. This classification only applies if the non-current assets (or disposal groups) are available for immediate sale in their present condition and the sale is highly probable. An entity that is committed to a sale plan involving loss of control of a subsidiary must classify all the assets and liabilities of that subsidiary as held for sale, regardless of whether the entity will retain a non-controlling interest in its former subsidiary after the sale. The assessment of whether or not the conditions have been met for classification of an asset as held for sale requires management to make a subjective judgement, using reasonable and realistic assumptions based on the available information.
Non-current assets held for sale, current and non-current assets included in disposal groups and the directly attributable liabilities are recognised in the statement of financial position separately from the entity\u2019s other assets and liabilities. Before their classification as held for sale, the assets and liabilities included in a disposal group aremeasured in accordance with the applicable accounting standards. Subsequently, the non-current assets held for sale are no longer subject to depreciation or amortisation and are measured at the lower of carrying amount and fair value less costs to sell.
If the carrying amount of the non-current assets is lower than fair value less costs to sell, the entity must recognise an impairment loss. The entity must recognise a gain for any subsequent increase in fair value less costs to sell of the assets, but not in excess of the cumulative impairment loss previously recognised, including those recognized prior to the assets\u2019 classification as held for sale.
Non-current assets and disposal groups classified as held for sale constitute a discontinued operation if they: i) represent a major line of business or geographical area of operations; ii) are part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or iii) relate to a\u00a0subsidiary acquired exclusively with a view to resale.
Profits and losses from discontinued operations, and any gains or losses realised following the sale, are shown in a separate line item in the income statement, net of any tax, with amounts for comparative periods also shown.
When events no longer permit the entity to classify the non-current assets or disposal groups as held for sale, the assets or disposal groups must be reclassified to the respective items in the statement of financial position and recognised at the lower of: (i) their carrying amount at the date of classification as held for sale; and (ii) the recoverable amount at the date of reclassification.
On 29 April 2022, Terna S.p.A., Terna Plus S.r.l. and Terna Chile S.p.A. signed an agreement with CDPQ, a global investment group, for the sale of all the Group\u2019s power line assets, approximately 1,200 km, in Brazil, Peru and Uruguay. On 7 November 2022, the first transaction closing for the Brazilian companies, \u201cSPE Santa Maria Transmissora de Energia S.A.\u201d, \u201cSPE Santa Lucia Transmissora de Energia S.A.\u201d and \u201cSPE Transmissora de Energia Linha Verde II S.A.\u201d, owners of three power lines in Brazil, totalling 670 km, was completed. The value of the assets being sold (the equity value) is more than \u20ac145 million. On 22 December 2022, the transaction closing for Difebal S.A., the owner of a power line in Uruguay, totalling 214 km, was completed. The value of the assets being sold (the equity value) is more than \u20ac27 million. Both transaction closings are in line with the agreement. The sale of the other assets in Brazil (expected in 2024) and Peru is due to take place in phases, following fulfilment of the conditions provided for in the agreement.
Following the above transaction, in accordance with IFRS 5- Non-current Assets Held for Sale and Discontinued Operations, the consolidated assets and liabilities of the companies for which the sale process has yet to complete are included in \u201cAssets held for sale\u201d and in \u201cLiabilities related to assets held for sale\u201d in the consolidated statements of financial position for 2023 and 2022. In the consolidated income statement, the consolidated profit/(loss) of the companies included in the transaction, for the years ended 31 December 2022 and 31 December 2023, is presented as \u201cNet profit/(loss) for the year from assets held for sale\u201d.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForNoncurrentAssetsOrDisposalGroupsClassifiedAsHeldForSaleExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130804": { "value": "Share-based payments
Given that they are substantially a form of remuneration, personnel expenses include the cost of share-based incentive plans. The cost of the incentive is measured on the basis of the fair value of the equity instruments granted and the expected number of shares to be effectively awarded. The accrued amount for the period is determined on a straight-line basis over the vesting period, being the period between the grant date and the dateof the award. The fair value of the shares underlying the incentive plan is measured at the grant date, based on the expected satisfaction of the performance conditions associated with market conditions and is not subject to adjustment in future periods. When receipt of the benefit is linked to non-market conditions, the estimate relating to these conditions is reflected and the accrual\u2019s number of shares expected to be awarded is adjusted over the vesting period. If, at the end of the vesting period, the plan does not result in the award of any shares to beneficiaries due to the failure to satisfy the performance conditions, the portion of the cost linked to market conditions is not reversed through the income statement.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130805": { "value": "Government grants
Government grants are recognised when there is a reasonable certainty that they will be received and that the Group will comply with all the conditions required for disbursement. Grants received in relation to specific assets whose value is recognised under non-current assets are recognised, in the case of plant already in operation at 31 December 2002, among other liabilities and taken to the income statement over the depreciation period for the assets in question. As of the 2003 financial year, grants related to new plant entering service are recognised as a direct reduction in the non-current asset concerned.
Grants related to income are recognised in the income statement when the conditions for recognition are met.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGovernmentGrants", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130806": { "value": "Revenue
The Group\u2019s revenue can be categorised as follows:
\u2022\tRevenue from sales and services,\u00a0including revenue from contracts with customers and therefore falling within the scope of IFRS 15.
\u00a0In accordance with the provisions of IFRS 15, revenue from contracts with customers is recognised when the performance obligations identified in the contract are satisfied and control over the goods or services is transferred to the customer for an amount that reflects the consideration that the Group expects to receive in exchange for the goods or services.
\u00a0The standard envisages two methods for identifying the correct time at which to recognise the revenue attributable to each performance obligation: at contract inception, the Group determines if the goods or services covered by the performance obligation will be transferred to the customer over a period of time or at a point in time:
\u00a0\u2022 Revenue from the sale of goods\u00a0is recognised when control of the goods is transferred to the customer (at a point in time). The Group determines if there are other promises in the contract representing a performanceobligation to which a part of the transaction consideration must be allocated. In determining the sale price, the Group takes into account the effects of a variable consideration, significant financial components, non-monetary components and amounts to be paid to the customer (if present);
\u00a0\u2022 Revenue from services is recognised with reference to the stage of completion of the activity, in accordance with the provisions of IFRS 15 (over a period of time).
Revenue from sales and services also includes \u201cpass-through\u201d revenue and expenses originating from the purchase and sale of energy from and to electricity market operators. The regulatory framework requires that such expenses and revenue must always amount to zero, via a pro rata charge to each consumer for the net cost resulting from the measurement of imbalances and purchase and sale transactions, carried out by Terna on the Dispatching Services Market, through a specific fee known as an uplift payment. Terna receives compensation for this activity through specific revenue for providing the dispatching service. Given that Terna does not have the power to set the prices of DSM transactions, this revenue is presented net of the related costs.
Revenue from sales and services also includes output-based incentives, as defined by ARERA, for both transmission and dispatching activities. The incentive mechanisms fall within the scope of application of IFRS 15. If the counterparties through which Terna collects an incentive are not active in the market in the year in which achievement of the targets underlying the incentive scheme is confirmed, IFRS 15 is applied in accordance with the analogy-based approach provided for in IAS 8, as confirmed with reference to the Conceptual Framework for Financial Reporting.
If the mechanism includes a significant financial component, the amounts recognised in the financial statements are discounted to present value. Based on the specific nature of each mechanism, the Group assesses whether the performance obligation is satisfied over a period of time or at a point in time, also taking into account whether or not the right is subject to confirmation or verification by the regulator, ARERA.
\u2022 Other revenue and income, which includes revenue from lease arrangements and other residual forms of revenue, included within the scope of application of IFRS 15, deriving from sales of goods not forming part of the Group\u2019s ordinary activities.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130807": { "value": "Costs
Costs are recognised on an accruals basis. They are recognised in the accounting period when they relate to goods and services sold or consumed in the same period or are allocated in a systematic way when it is not possible to identify a future use for them.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130809": { "value": "Financial income and expenses
Financial expenses directly attributable to the acquisition, construction or production of an asset that qualify for capitalisation are capitalised as part of the cost of the asset. The property, plant and equipment and intangible assets involved are those that require at least one year in order to prepare them for use. The directly attributable financial expenses are expenses that would not have been incurred had the expenditure for the asset not been incurred.
Where funds are borrowed specifically, the costs eligible for capitalisation are the actual costs incurred less any income earned on the temporary investment of such borrowings. Where loans are obtained for general purposes, the eligible amount is determined by applying a capitalisation rate to the expenditure on that asset equal to the weighted average of the financial expenses applicable to the borrowings outstanding for the year, excluding any specifically borrowed funds. The amount of capitalised financial expenses during a year will in any case not exceed the amount of financial expenses incurred during that year.
Capitalisation commences as from the date all the following conditions are first met: (a) expenditure has been incurred for the asset; (b) financial expenses have been incurred; and (c) the activities involved in preparing the asset for its intended use or sale are in progress.\nCapitalisation ceases when the activities involved in preparing the asset for its intended use or sale are substantially complete.The average capitalisation rate used for 2023 is approximately 2.0% (1.3% for 2022).
Financial income and expenses other than capitalised amounts are recognised on an accruals basis in respect of the interest on the net value of the related financial assets and liabilities, using the effective interest rate.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingCostsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130808": { "value": "Financial income and expenses
Financial expenses directly attributable to the acquisition, construction or production of an asset that qualify for capitalisation are capitalised as part of the cost of the asset. The property, plant and equipment and intangible assets involved are those that require at least one year in order to prepare them for use. The directly attributable financial expenses are expenses that would not have been incurred had the expenditure for the asset not been incurred.
Where funds are borrowed specifically, the costs eligible for capitalisation are the actual costs incurred less any income earned on the temporary investment of such borrowings. Where loans are obtained for general purposes, the eligible amount is determined by applying a capitalisation rate to the expenditure on that asset equal to the weighted average of the financial expenses applicable to the borrowings outstanding for the year, excluding any specifically borrowed funds. The amount of capitalised financial expenses during a year will in any case not exceed the amount of financial expenses incurred during that year.
Capitalisation commences as from the date all the following conditions are first met: (a) expenditure has been incurred for the asset; (b) financial expenses have been incurred; and (c) the activities involved in preparing the asset for its intended use or sale are in progress.\nCapitalisation ceases when the activities involved in preparing the asset for its intended use or sale are substantially complete.The average capitalisation rate used for 2023 is approximately 2.0% (1.3% for 2022).
Financial income and expenses other than capitalised amounts are recognised on an accruals basis in respect of the interest on the net value of the related financial assets and liabilities, using the effective interest rate.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130810": { "value": "Treasury shares
Treasury shares, including those held to service share-based incentive plans, are recognised at cost and accounted for as a reduction in equity. Any gains or losses resulting from the later sale of such shares are recognised in equity.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTreasurySharesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130811": { "value": "Dividends
Dividends from investees are recognised when the shareholders\u2019 right to receive payment is established. Dividends and interim dividends payable to shareholders are shown as changes in equity at the date in which they are approved by the General Meeting of shareholders and the Board of Directors, respectively.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130812": { "value": "Earnings per share
Basic earnings per share is calculated by dividing the profit or loss for the year attributable to holders of the ordinary shares by the weighted average of ordinary shares outstanding during the year, excluding treasury shares.
Diluted earnings per share is determined by dividing profit for the period by the weighted average of ordinary shares outstanding during the period, excluding treasury shares, increased by the number of shares that could potentially result from the conversion of any convertible securities.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEarningsPerShareExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130814": { "value": "Income taxes
Current income taxes are recognised as \u201cTax liabilities\u201d, net of advances paid, or \u201cTax assets\u201d where the net balance of the items is positive. They are based on the estimated taxable income and in accordance with current legislation, taking account of applicable exemptions.
Deferred tax assets and liabilities are calculated on temporary differences between the carrying amounts of assets and liabilities recognised in the financial statements and the corresponding amounts recognised for tax purposes, using current tax rates or the rates expected to be in effect when the temporary differences reverse, based on rates approved at the reporting date.
Deferred tax assets are recognised when their recovery is considered probable, i.e. when future taxable income will be available against which the asset can be used. The recoverability of deferred tax assets is reviewed at the end of each year.
Deferred tax liabilities are recognised in any case if they exist. Taxes relating to items recognised directly in the statement of comprehensive income are also allocated to the statement of comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130813": { "value": "New accounting standards
International financial reporting standards effective as of 1 January 2023
A number of new amendments to standards already applied, none of which have had a significant impact, came into effect from 1 January 2023. The relevant standards are as follows:
IFRS 17: Insurance contracts
The new accounting standard for insurance contracts, endorsed by the European Commission with Regulation 2021/2036, has replaced the interim version of IFRS 4. The standard aims to ensure that an entity provides pertinentinformation providing an accurate view of the rights and obligations resulting from the insurance contracts issued. The IASB has developed the standard to remove inconsistencies and weaknesses in existing accounting policies, providing a single principle-based framework that takes into account all types of insurance contracts, including any reinsurance contracts to which an insurance undertaking is party. The new standard also introduces presentation and disclosure requirements to improve comparability between entities belonging to this sector.
The new standard has not had a significant impact on the Group\u2019s consolidated financial statements.
Regulation 2022/1491 also endorsed the amendment that aims to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, therefore improving the usefulness of comparative information for users of financial statements.
Amendment to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendment, endorsed by the European Commission with Regulation 2022/1329, clarifies how to account for deferred tax on certain transactions that can generate assets and liabilities of equal amounts, such as leasing and decommissioning obligations. The amendment has not had a significant impact on the Group\u2019s consolidated financial statements.
Amendments to IAS 1 e IAS 8: Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 and Definition of Accounting Estimates \u2013 Amendments to IAS 8
The amendment, endorsed by the European Commission with Regulation 2021/2036, introduces changes to IAS 1 Presentation of financial statements and IAS 8 Accounting standards, and changes to the treatment of accounting estimates and errors. These amendments aim to improve the disclosure of accounting policies in order to provide more useful information for investors and other primary users of financial statements and to help companies to distinguish changes in accounting estimates from changes in accounting policy.\u00a0
The changes have not had a significant impact on the Group\u2019s consolidated financial statements.
Amendment to IAS 12\u00a0Income taxes: International Tax Reform \u2013 Pillar Two Model Rules
Directive 2022/2523 \u2013 based on the paper, \u201cTax Challenges Arising from the Digitalisation of the Economy- Global Anti-Base Erosion Model Rules (Pillar Two)\u201d issued by the OECD on 14 December 2021 - has introduced a minimum effective corporate tax rate of 15% for Italian and multinational groups in each jurisdiction in which they operate, providing for the application of a top-up tax in cases where a country\u2019s effective tax rate, with the adjustments provided for in the application rules, is below the minimum rate of 15%. This legislation was transposed into domestic law in Legislative Decree 209 of 27 December 2023 (\u201cPillar II\u201d or \u201cglobal minimum tax\u201d) with effect from the 2024 tax year.
In this regard, the Terna Group (classed as a Minority-Owned Parent Entity (\u201cMOPE\u201d), for the purposes of the relevant legislation), in coordination with the parent, CDP, took part in a specific project in 2023, with the support of a leading advisor, with the aim of: i) mapping relevant entities for the purposes of Pillar II; ii) gathering the information necessary to determine the Transitional Country-by-Country Safe Harbor; iii) gathering the information needed to calculate Globe Income and Adjusted Covered Taxes, necessary to compute the minimum rate of 15%; iv) preparing the Gap Analysis. These activities were conducted with reference to the 2022 tax year.
On 23 May 2023, the IASB published an amendment called \u201cAmendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules\u201d. The document, which was adopted by the EU on 8 November 2023, introduces a temporary exception to the requirements in IAS 12 to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes and imposes specific disclosure requirements for entities affected by the related International Tax Reform. The document provides for immediate application of the temporary exception, whilst the disclosure requirements will only be applicable in annual reporting periods starting from 1 January 2023 (or a later date).
Following the analysis carried out with respect to 2022, based on the information currently available, it is not expected that will be a significant impact on the Terna Group.
International financial reporting standards, amendments and interpretations endorsed but yet to come into effect
Amendment to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Noncurrent - Deferral of Effective Date e Non-current Liabilities with Covenants
On 23 January 2020, the IASB published an amendment called \u201cAmendments to IAS 1:\u00a0Presentation of Financial Statements: Classification of Liabilities as Current or Non-current\u201d and, on 31 October 2022, published an amendment called \u201cAmendments to IAS 1:\u00a0Presentation of Financial Statements: Non-Current Liabilities with Covenants\u201d. These amendments aim to clarify how to classify payables and other short- or long-term liabilities. In addition, the amendments also improve the disclosures that an entity must provide when its right to defer the settlement of a liability for at least twelve months is subject to compliance with specified conditions (i.e., covenants). The amendments are effective from 1 January 2024, although early adoption is permitted. The Group is currently assessing the potential impact of the introduction of these amendments on the consolidated financial statements.
Amendment to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
On 22 September 2022, the IASB published the amendment called \u201cAmendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback\u201d. The document requires the seller-lessee to measure the lease liability resulting from a sale and leaseback transaction in such a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The amendments are effective from 1 January 2024, although early adoption is permitted. The Group is currently assessing the potential impact of the introduction of these amendments on the consolidated financial statements.
International financial reporting standards, amendments and interpretations awaiting endorsement
For newly issued amendments, standards and interpretations that have not yet been endorsed by the EU, but which address issues that affect or could affect the Group, assessments are currently being conducted of the possible impact of their application on the financial statements, taking into account the date on which they will take effect. In particular:
Amendment to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements
On 25 May 2023, the IASB published the amendment to IAS 7 that aims to add disclosure requirements and \u201csign posts\u201d within existing disclosure requirements, requesting entities to provide qualitative and quantitative information about supplier finance arrangements. The document requires an entity to provide additional disclosures on any reverse factoring agreements to enable users of financial statements to assess how supplier finance arrangements affect an entity\u2019s liabilities and cash flows and understand the effect of supplier finance arrangements on an entity\u2019s exposure to liquidity risk. The amendments are effective from 1 January 2024, although early adoption is permitted.
Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
The amendment, published on 15 August 2023, clarifies when a currency is exchangeable, how to estimate the exchange rate and the disclosure to provide in the notes to financial statements. The document requires an entity to apply a method on a consistent basis to determine if a currency is exchangeable and, when this is not possible, specifies how to determine the exchange rate to use and the disclosure to provide in the notes to the financial statements. The amendment is effective from 1 January 2025, although early adoption is permitted.
Revenue
1. Revenue from sales and services - \u20ac3,122.8 million
(\u20acm)
2023
2022
Change
Transmission charges billed to grid users and incentives
2,107.6
1,968.6
139.0
Dispatching and metering fees and other energy-related revenue
127.1
115.3
11.8
Incentives for dispatching activities
303.8
334.7
(30.9)
Revenue from services performed under concession
80.6
67.4
13.2
Quality of service bonuses/(penalties)
11.2
23.2
(12.0)
Other sales and services
492.5
388.9
103.6
TOTAL
3,122.8
2,898.1
224.7
Transmission charges and incentives
Transmission charges billed to grid users regard revenue generated from ownership and operation of the national transmission grid or NTG and attributable to the Parent Company (\u20ac1,955.6 million) and the subsidiaries, Rete S.r.l. (\u20ac135.5 million), Terna Crna Gora d.o.o. (\u20ac15.7 million) and Rete Nord S.r.l. (\u20ac0.8 million, relating to the period prior to the merger with and into Rete S.r.l. on 20 December 2023).
The increase in this item (up \u20ac139.0 million) is primarily linked to the increase in the RAB in the period after the volume effect (up \u20ac91.6 million) and an increase in output-based\u00a0incentives related to the delivery of additional transmission capacity between market areas, amounting to \u20ac34.5 million for the amount due as a bonus in accordance with Resolution 23/2022 and \u20ac12.9 million for the bonus awarded for the efficiency of capital expenditure in 2022, pursuant to Resolution 473/2023.
Dispatching and metering fees and other energy-related revenue
This item regards fees received in return for providing dispatching and metering services (the dispatching component, amounting to \u20ac124.2 million, and the metering component, amounting to \u20ac0.6 million) and other energy-related revenue of \u20ac2.3 million.
The item is up \u20ac11.8 million compared with the previous year, broadly due to the increase in dispatching fees introduced by Resolution 738/2022.
Incentives for dispatching activities
This item represents the output-based incentives for dispatching activities, amounting to \u20ac303.8 million.
These incentives essentially consist of the mechanisms introduced by Resolutions 597/2021 and 132/2022, designed to cut DSM costs, the shortfall in wind production and essential plants (\u20ac302.6 million, representing the accrued present value of the estimated incentive for the period 2022-2024, amounting to \u20ac813.7 million before the effect of discounting).
With reference to the mechanism introduced by Resolution 597/2021, revenue for 2023 corresponds with the overall accrued value of the estimated incentive for the three-year period, thus also incorporating the projection of factors that could result in a reduction in the incentive for 2024 due to a partial increase in DSM costs associated with a higher volume of market transactions in the event of critical situations for the adequacy of the system, tensions on overseas markets and /or extreme weather events for factors not mitigated by the calculation rules. This item is down \u20ac30.9 million compared with the previous year, broadly due to the recognition in 2022 of the incentive for grid development work in the three-year period 2019-2021 designed to relieve congestion within market areas and grid constraints due to voltage regulation and improve conditions for essential service provision (a reduction of \u20ac140.5 million, Resolution 26/2023). On the other hand, in 2023, recognition of the revenue from the mechanism designed to reduce the cost of procuring services on the DSM, the shortfall in wind production and essential services (pursuant to Resolutions 597/2021 and 132/022) resulted in an increase of \u20ac108.4 million, following an update in the overall performance estimates for the three-year period 2022-2024.
Revenue from services performed under concession
This item includes revenue from infrastructure construction and upgrade services performed under concession, recognised in application of IFRIC 12, amounting to \u20ac80.6 million.
The increase compared with the previous year, amounting to \u20ac13.2 million, regards greater investment in dispatching infrastructure during the period.
Quality of service
This item, amounting to \u20ac11.2 million, regards the RENS (Regulated Energy Not Supplied) incentive mechanism introduced by Resolution 653/2015/r/eel, calculated on a pro rata basis taking into account the estimated overall results expected in the 2020-2025 regulatory period, taking into account the extension of the regulatory period confirmed by Resolution 55/2024/r/eel.
The decrease of \u20ac12.0 million in this item compared with the previous year is broadly due to the impact of the above extension, considering the performance in 2023.
Other sales and services
The item, \u201cOther sales and services\u201d, amounting to \u20ac492.5 million, mainly regards revenue from Non-regulated Activities, regarding:
\u2022 the sale of transformers by the subsidiary, Tamini (\u20ac136.0 million);
\u2022 revenue contributed by Brugg Cables, essentially relating to contracts with third parties for the supply of cables and accessories (\u20ac159.4 million);
\u2022 Energy Solutions (\u20ac142.8 million) above all HV services, totalling \u20ac30.3 million and Smart Grids, totalling \u20ac112.5 million, including the contribution from the LT Group, which specialises in O&M services for photovoltaic plants (\u20ac92.2 million) and the energy efficiency services provided by the subsidiary, Avvenia The Energy Innovator S.r.l. amounting to \u20ac1.4 million;
\u2022 Connectivity (\u20ac34.8 million) with specific regard to support and housing services for fibre networks (\u20ac29.7 million) and fibre maintenance (\u20ac4.1 million).
This item also includes revenue from connections to the NTG (\u20ac10.8 million) and relating to the private Italy-Austria Interconnector (\u20ac0.3 million), representing the accrued portion of the revenue attributable to the Group for services provided during construction.
This item is up \u20ac103.6 million compared with 2022, primarily due to the contribution from the Brugg Group (up \u20ac30.2 million), increased revenue from Energy Solutions (up \u20ac61.7 million) and an increase in revenue from the provision of Connectivity services (up \u20ac3.3 million) and revenue from connections to the NTG (up \u20ac2.1 million). There was also an increase in revenue from the Italy-France Interconnector (up \u20ac12.1 million) due to a recognition in 2022 of a contractual penalty payable to energy intensive users for the delayed completion of work, offset by recognition of a penalty receivable from suppliers for delayed completion of the same project, recognised in the item \u201c2. Other revenue and income\u201d.
Pass-through revenue/expenses
This item regards \u201cpass-through\u201d revenue and expenses (the balance of which amounts to zero) attributable solely to the Parent Company. These items result from daily purchases and sales of electricity from electricity market operators. Measurements for each point of injection and withdrawal are taken and the differences, with respect to energy market schedules are calculated. These differences, known as imbalances, are then measured using algorithms established by the regulatory framework. The net charge resulting from calculation of the imbalances and the purchases and sales, carried out by the Parent Company Terna on the DSM, is billed on a pro rata basis to each end consumer via a specific uplift payment. This item also reflects the portion of the transmission charge that the Parent Company passes on to other grid owners, not included in the scope of consolidation.
The components of these transactions are shown in greater detail below:
(\u20acm)
2023
2022
Change
Power Exchange-related revenue items
5,244.2
11,308.4
(6,064.2)
- Uplift
479.3
1,394.5
(915.2)
- Electricity sales
442.6
1,278.2
(835.6)
- Imbalances
1,673.9
3,689.1
(2,015.2)
- Congestion revenue
355.4
710.7
(355.3)
- Charges for right to use transmission capacity and market coupling
1,209.8
1,160.0
49.8
- Interconnectors/shippers
57.6
66.3
(8.7)
- Load Profiling for public lighting
348.0
1,833.5
(1,485.5)
- Other Power Exchange-related pass-through revenue items
677.6
1,176.1
(498.5)
Total over-the counter revenue items
3,591.0
2,788.8
802.2
- Transmission and dispatching service: penalties from auxiliary service providers
0.1
-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Coverage of wind farm costs
20.6
40.5
(19.9)
- Transmission revenue passed on to other NTG owners
1.1
1.8
(0.7)
- Charge to cover cost of essential plants
1,019.6
703.5
316.1
- Charge to cover cost of interruptibility service
329.3
314.3
15.0
- Charge to cover cost of LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through revenue for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH REVENUE
8,835.2
14,097.2
(5,262.0)
Total Power Exchange-related cost items
5,244.2
11,308.4
(6,064.2)
- Electricity purchases
1,185.1
3,581.1
(2,396.0)
- Imbalances
1,624.6
3,039.6
(1,415.0)
- Congestion revenue
170.1
527.6
(357.5)
- Charges for right to use transmission capacity and market coupling
559.0
542.0
17.0
- Interconnectors/Shippers
599.7
874.7
(275.0)
- Load Profiling for public lighting
447.3
1,886.4
(1,439.1)
- Other Power Exchange-related pass-through cost items
658.4
857.0
(198.6)
Total over-the-counter cost items
3,591.0
2,788.8
802.2
- Transmission and dispatching service: penalties to auxiliary service providers
0.1
-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Shortfall in wind production
20.6
40.5
(19.9)
- Transmission costs passed on to other NTG owners
1.1
1.8
(0.7)
- Fees paid for essential units
1,019.6
703.5
316.1
- Fees paid for interruptibility service
329.3
314.3
15.0
- Fees paid for LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through costs for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH COSTS
8,835.2
14,097.2
(5,262.0)
In 2023, the total uplift was approximately \u20ac446 million (provisional data), down 76% on the previous year (\u20ac1.844 million). The reduction was due to the sharp fall in the cost of procuring services, the fall in the consideration due for start-up and Change of Set-up Tokens1, a reduction in the cost of the virtual interconnection service and, to a lesser extent, the reduced cost of contracts providing an alternative to essential providers\u00a02, the slight rise in congestion revenue in Italian and Overseas market areas, only partly offset by lower revenue from imbalances.
1\u00a0Start-up and Change of Set-up Tokens are payments made to production plants who have the right to receive them when Terna requests them to fire up the plant or change their structure.
2\u00a0These are the costs incurred by Terna for payments to production plants defined as essential for the electricity system, pursuant to Annex A27 of the Grid Code, and who chose the alternative regime described in art 63 of Resolution 111/06.
2. Other revenue and income \u2013 \u20ac63.9 million
(\u20acm)
2023
2022
Change
Gains on sale of infrastructure components
14.8
6.8
8.0
Sales to third parties
10.9
12.9
(2.0)
Sundry grants
8.8
9.2
(0.4)
Private Italy-France interconnector
8.3
1.4
6.9
Private Italy-Montenegro interconnector
6.4
6.4
-
Insurance proceeds as compensation for damages
5.7
3.2
2.5
Revenue from IRU contracts for fibre
4.3
1.3
3.0
Rental income
2.2
2.2
-
Contingent assets
0.9
4.4
(3.5)
Penalties receivables from suppliers
0.3
14.3
(14.0)
Other revenues
1.3
4.3
(3.0)
TOTAL
63.9
66.4
(2.5)
\u201cOther revenue and income\u201d consists of gains on the sale of infrastructure components (\u20ac14.8 million), in addition to other significant items relating to sales to third parties (\u20ac10.9 million), sundry grants (\u20ac8.8 million), revenue from the private Italy-France interconnector (\u20ac8.3 million) and from the private Italy-Montenegro interconnector (\u20ac6.4 million), insurance proceeds (\u20ac5.7 million) and revenue from Connectivity services linked to IRU contracts for fibre (\u20ac4.3 million).
This item, totalling \u20ac63.9 million, is down \u20ac2.5 million compared with the previous year, primarily reflecting recognition, in 2022, of a penalty receivable from suppliers in relation to delays in work on the private Italy-France interconnector 2022 (down \u20ac14.0 million), revenue for granting the right to use the infrastructure to energy-intensive companies linked to the entry into service of the private power line in November 2022 (up \u20ac6.9 million), a reduction in sales to third parties (down \u20ac2.0 million) and a decline in other revenues (down \u20ac3.0 million). These changes were partially offset by increased revenue from gains on the sale of infrastructure components (up \u20ac8.0 million, essentially scrap, transformers and motor vehicles) and increased revenue from Connectivity services linked to IRU contracts for fibre (up \u20ac3.0 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfRevenueExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130816": { "value": "1. Revenue from sales and services - \u20ac3,122.8 million
(\u20acm)
2023
2022
Change
Transmission charges billed to grid users and incentives
2,107.6
1,968.6
139.0
Dispatching and metering fees and other energy-related revenue
127.1
115.3
11.8
Incentives for dispatching activities
303.8
334.7
(30.9)
Revenue from services performed under concession
80.6
67.4
13.2
Quality of service bonuses/(penalties)
11.2
23.2
(12.0)
Other sales and services
492.5
388.9
103.6
TOTAL
3,122.8
2,898.1
224.7
Transmission charges and incentives
Transmission charges billed to grid users regard revenue generated from ownership and operation of the national transmission grid or NTG and attributable to the Parent Company (\u20ac1,955.6 million) and the subsidiaries, Rete S.r.l. (\u20ac135.5 million), Terna Crna Gora d.o.o. (\u20ac15.7 million) and Rete Nord S.r.l. (\u20ac0.8 million, relating to the period prior to the merger with and into Rete S.r.l. on 20 December 2023).
The increase in this item (up \u20ac139.0 million) is primarily linked to the increase in the RAB in the period after the volume effect (up \u20ac91.6 million) and an increase in output-based\u00a0incentives related to the delivery of additional transmission capacity between market areas, amounting to \u20ac34.5 million for the amount due as a bonus in accordance with Resolution 23/2022 and \u20ac12.9 million for the bonus awarded for the efficiency of capital expenditure in 2022, pursuant to Resolution 473/2023.
Dispatching and metering fees and other energy-related revenue
This item regards fees received in return for providing dispatching and metering services (the dispatching component, amounting to \u20ac124.2 million, and the metering component, amounting to \u20ac0.6 million) and other energy-related revenue of \u20ac2.3 million.
The item is up \u20ac11.8 million compared with the previous year, broadly due to the increase in dispatching fees introduced by Resolution 738/2022.
Incentives for dispatching activities
This item represents the output-based incentives for dispatching activities, amounting to \u20ac303.8 million.
These incentives essentially consist of the mechanisms introduced by Resolutions 597/2021 and 132/2022, designed to cut DSM costs, the shortfall in wind production and essential plants (\u20ac302.6 million, representing the accrued present value of the estimated incentive for the period 2022-2024, amounting to \u20ac813.7 million before the effect of discounting).
With reference to the mechanism introduced by Resolution 597/2021, revenue for 2023 corresponds with the overall accrued value of the estimated incentive for the three-year period, thus also incorporating the projection of factors that could result in a reduction in the incentive for 2024 due to a partial increase in DSM costs associated with a higher volume of market transactions in the event of critical situations for the adequacy of the system, tensions on overseas markets and /or extreme weather events for factors not mitigated by the calculation rules. This item is down \u20ac30.9 million compared with the previous year, broadly due to the recognition in 2022 of the incentive for grid development work in the three-year period 2019-2021 designed to relieve congestion within market areas and grid constraints due to voltage regulation and improve conditions for essential service provision (a reduction of \u20ac140.5 million, Resolution 26/2023). On the other hand, in 2023, recognition of the revenue from the mechanism designed to reduce the cost of procuring services on the DSM, the shortfall in wind production and essential services (pursuant to Resolutions 597/2021 and 132/022) resulted in an increase of \u20ac108.4 million, following an update in the overall performance estimates for the three-year period 2022-2024.
Revenue from services performed under concession
This item includes revenue from infrastructure construction and upgrade services performed under concession, recognised in application of IFRIC 12, amounting to \u20ac80.6 million.
The increase compared with the previous year, amounting to \u20ac13.2 million, regards greater investment in dispatching infrastructure during the period.
Quality of service
This item, amounting to \u20ac11.2 million, regards the RENS (Regulated Energy Not Supplied) incentive mechanism introduced by Resolution 653/2015/r/eel, calculated on a pro rata basis taking into account the estimated overall results expected in the 2020-2025 regulatory period, taking into account the extension of the regulatory period confirmed by Resolution 55/2024/r/eel.
The decrease of \u20ac12.0 million in this item compared with the previous year is broadly due to the impact of the above extension, considering the performance in 2023.
Other sales and services
The item, \u201cOther sales and services\u201d, amounting to \u20ac492.5 million, mainly regards revenue from Non-regulated Activities, regarding:
\u2022 the sale of transformers by the subsidiary, Tamini (\u20ac136.0 million);
\u2022 revenue contributed by Brugg Cables, essentially relating to contracts with third parties for the supply of cables and accessories (\u20ac159.4 million);
\u2022 Energy Solutions (\u20ac142.8 million) above all HV services, totalling \u20ac30.3 million and Smart Grids, totalling \u20ac112.5 million, including the contribution from the LT Group, which specialises in O&M services for photovoltaic plants (\u20ac92.2 million) and the energy efficiency services provided by the subsidiary, Avvenia The Energy Innovator S.r.l. amounting to \u20ac1.4 million;
\u2022 Connectivity (\u20ac34.8 million) with specific regard to support and housing services for fibre networks (\u20ac29.7 million) and fibre maintenance (\u20ac4.1 million).
This item also includes revenue from connections to the NTG (\u20ac10.8 million) and relating to the private Italy-Austria Interconnector (\u20ac0.3 million), representing the accrued portion of the revenue attributable to the Group for services provided during construction.
This item is up \u20ac103.6 million compared with 2022, primarily due to the contribution from the Brugg Group (up \u20ac30.2 million), increased revenue from Energy Solutions (up \u20ac61.7 million) and an increase in revenue from the provision of Connectivity services (up \u20ac3.3 million) and revenue from connections to the NTG (up \u20ac2.1 million). There was also an increase in revenue from the Italy-France Interconnector (up \u20ac12.1 million) due to a recognition in 2022 of a contractual penalty payable to energy intensive users for the delayed completion of work, offset by recognition of a penalty receivable from suppliers for delayed completion of the same project, recognised in the item \u201c2. Other revenue and income\u201d.
Pass-through revenue/expenses
This item regards \u201cpass-through\u201d revenue and expenses (the balance of which amounts to zero) attributable solely to the Parent Company. These items result from daily purchases and sales of electricity from electricity market operators. Measurements for each point of injection and withdrawal are taken and the differences, with respect to energy market schedules are calculated. These differences, known as imbalances, are then measured using algorithms established by the regulatory framework. The net charge resulting from calculation of the imbalances and the purchases and sales, carried out by the Parent Company Terna on the DSM, is billed on a pro rata basis to each end consumer via a specific uplift payment. This item also reflects the portion of the transmission charge that the Parent Company passes on to other grid owners, not included in the scope of consolidation.
The components of these transactions are shown in greater detail below:
(\u20acm)
2023
2022
Change
Power Exchange-related revenue items
5,244.2
11,308.4
(6,064.2)
- Uplift
479.3
1,394.5
(915.2)
- Electricity sales
442.6
1,278.2
(835.6)
- Imbalances
1,673.9
3,689.1
(2,015.2)
- Congestion revenue
355.4
710.7
(355.3)
- Charges for right to use transmission capacity and market coupling
1,209.8
1,160.0
49.8
- Interconnectors/shippers
57.6
66.3
(8.7)
- Load Profiling for public lighting
348.0
1,833.5
(1,485.5)
- Other Power Exchange-related pass-through revenue items
677.6
1,176.1
(498.5)
Total over-the counter revenue items
3,591.0
2,788.8
802.2
- Transmission and dispatching service: penalties from auxiliary service providers
0.1
-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Coverage of wind farm costs
20.6
40.5
(19.9)
- Transmission revenue passed on to other NTG owners
1.1
1.8
(0.7)
- Charge to cover cost of essential plants
1,019.6
703.5
316.1
- Charge to cover cost of interruptibility service
329.3
314.3
15.0
- Charge to cover cost of LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through revenue for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH REVENUE
8,835.2
14,097.2
(5,262.0)
Total Power Exchange-related cost items
5,244.2
11,308.4
(6,064.2)
- Electricity purchases
1,185.1
3,581.1
(2,396.0)
- Imbalances
1,624.6
3,039.6
(1,415.0)
- Congestion revenue
170.1
527.6
(357.5)
- Charges for right to use transmission capacity and market coupling
559.0
542.0
17.0
- Interconnectors/Shippers
599.7
874.7
(275.0)
- Load Profiling for public lighting
447.3
1,886.4
(1,439.1)
- Other Power Exchange-related pass-through cost items
658.4
857.0
(198.6)
Total over-the-counter cost items
3,591.0
2,788.8
802.2
- Transmission and dispatching service: penalties to auxiliary service providers
0.1
-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Shortfall in wind production
20.6
40.5
(19.9)
- Transmission costs passed on to other NTG owners
1.1
1.8
(0.7)
- Fees paid for essential units
1,019.6
703.5
316.1
- Fees paid for interruptibility service
329.3
314.3
15.0
- Fees paid for LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through costs for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH COSTS
8,835.2
14,097.2
(5,262.0)
In 2023, the total uplift was approximately \u20ac446 million (provisional data), down 76% on the previous year (\u20ac1.844 million). The reduction was due to the sharp fall in the cost of procuring services, the fall in the consideration due for start-up and Change of Set-up Tokens1, a reduction in the cost of the virtual interconnection service and, to a lesser extent, the reduced cost of contracts providing an alternative to essential providers\u00a02, the slight rise in congestion revenue in Italian and Overseas market areas, only partly offset by lower revenue from imbalances.
1\u00a0Start-up and Change of Set-up Tokens are payments made to production plants who have the right to receive them when Terna requests them to fire up the plant or change their structure.
2\u00a0These are the costs incurred by Terna for payments to production plants defined as essential for the electricity system, pursuant to Annex A27 of the Grid Code, and who chose the alternative regime described in art 63 of Resolution 111/06.
2. Other revenue and income \u2013 \u20ac63.9 million
(\u20acm)
2023
2022
Change
Gains on sale of infrastructure components
14.8
6.8
8.0
Sales to third parties
10.9
12.9
(2.0)
Sundry grants
8.8
9.2
(0.4)
Private Italy-France interconnector
8.3
1.4
6.9
Private Italy-Montenegro interconnector
6.4
6.4
-
Insurance proceeds as compensation for damages
5.7
3.2
2.5
Revenue from IRU contracts for fibre
4.3
1.3
3.0
Rental income
2.2
2.2
-
Contingent assets
0.9
4.4
(3.5)
Penalties receivables from suppliers
0.3
14.3
(14.0)
Other revenues
1.3
4.3
(3.0)
TOTAL
63.9
66.4
(2.5)
\u201cOther revenue and income\u201d consists of gains on the sale of infrastructure components (\u20ac14.8 million), in addition to other significant items relating to sales to third parties (\u20ac10.9 million), sundry grants (\u20ac8.8 million), revenue from the private Italy-France interconnector (\u20ac8.3 million) and from the private Italy-Montenegro interconnector (\u20ac6.4 million), insurance proceeds (\u20ac5.7 million) and revenue from Connectivity services linked to IRU contracts for fibre (\u20ac4.3 million).
This item, totalling \u20ac63.9 million, is down \u20ac2.5 million compared with the previous year, primarily reflecting recognition, in 2022, of a penalty receivable from suppliers in relation to delays in work on the private Italy-France interconnector 2022 (down \u20ac14.0 million), revenue for granting the right to use the infrastructure to energy-intensive companies linked to the entry into service of the private power line in November 2022 (up \u20ac6.9 million), a reduction in sales to third parties (down \u20ac2.0 million) and a decline in other revenues (down \u20ac3.0 million). These changes were partially offset by increased revenue from gains on the sale of infrastructure components (up \u20ac8.0 million, essentially scrap, transformers and motor vehicles) and increased revenue from Connectivity services linked to IRU contracts for fibre (up \u20ac3.0 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingIncomeExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130819": { "value": "Operating costs
3. Raw and consumable materials used \u2013 \u20ac258.4 million
This item includes the value of the various materials and equipment used in the ordinary operation and maintenance of the plant belonging to the Group and third parties, and the materials consumed primarily in relation to the industrial and energy solutions businesses.
The increase of \u20ac37.6 million compared with the previous year primarily reflects the cost of materials incurred by the LT Group and the Brugg Cables Group (up \u20ac34.8 million and \u20ac19.4 million, respectively), after a reduction in the cost of materials at the Tamini Group (down \u20ac18.0 million). This item also reflects increased costs (up \u20ac2.8 million) linked to construction and development of the infrastructure operated under concession, accounted for in application of IFRIC 12.
4. Services \u2013 \u20ac312.3 million
(\u20acm)
2023
2022
Change
Maintenance and sundry services
139.0
123.7
15.3
Tender costs for plant
77.7
68.5
9.2
IT services
46.4
38.5
7.9
Lease expense
20.5
19.4
1.1
Insurance
19.6
16.8
2.8
Remote transmission and telecommunications
9.1
10.0
(0.9)
TOTAL
312.3
276.9
35.4
This item, totalling \u20ac312.3 million, is up \u20ac35.4 million compared with 2022 (\u20ac276.9 million). This primarily reflects increased activity and new initiatives carried out by the Group, above all the LT Group (up \u20ac12.9 million), the Tamini Group (up \u20ac1.9 million) and the Brugg Group (up \u20ac1.9 million), as well as the increased costs linked to the construction and development of infrastructure under concession, recognised in application of IFRIC 12 (up \u20ac8.1 million, in particular reflecting cost increases of \u20ac7.2 million for IT services and maintenance costs totalling \u20ac1.1 million) and an increase in advertising costs (up \u20ac7.0 million, essentially linked to the \u201cnoi siamo energia\u201d advertising campaign).
Fees payable to members of the Board of Statutory Auditors amount to \u20ac0.5 million whilst those payable to members of the Supervisory Board set up in compliance with Legislative Decree 231/2001 amount to \u20ac0.7 million.
5. Personnel expenses \u2013 \u20ac377.2 million
(\u20acm)
2023
2022
Change
Salaries, wages and other short-term benefits
461.7
427.7
34.0
Directors\u2019 remuneration
2.6
2.3
0.3
Termination benefits (TFR), energy discounts and other employee benefits
32.1
21.6
10.5
Early retirement benefits
17.2
12.6
4.6
Gross personnel expenses
513.6
464.2
49.4
Capitalised personnel expenses
(136.4)
(116.1)
(20.3)
TOTAL
377.2
348.1
29.1
Personnel expenses, amounting to \u20ac377.2 million in 2023, are up \u20ac29.1 million compared with the previous year (\u20ac348.1 million). This is due to an increase in the average workforce the impact of renewal of the national collective labour agreement for the electricity sector, partly offset by the higher amount of capitalised expenses.
The following table shows the Group\u2019s workforce by category at the end of the year and the average for the year.
(\u20acm)
AVERAGE WORKFORCE
WORKFORCE AT
2023
2022
DELTA
31 December 2023
31 December 2022
Senior managers
107
98
9
102
94
Middle managers
887
819
68
896
841
Office staff
3,205
2,941
264
3,349
3,090
Blue-collar workers
1,523
1,476
47
1,580
1,472
TOTAL
5,722
5,334
388
5,927
5,497
The net increase in the average workforce compared with 2022 is 388. This is essentially linked to the requirements relating to delivery of the investment programme included in the last approved Industrial Plan.
At 31 December 2023, the Terna Group\u2019s workforce breaks down as follows:
TERNA S.P.A.
TERNA RETEITALIA S.P.A.
TERNA ENERGY SOLUTIONS S.R.L.
TERNA PLUSS.R.L.
AVVENIA THE ENERGY INNOVATOR S.R.L.
No.
1,143
3,633
79
13
13
TAMINI GROUP
LT GROUP
Brugg Kabel AG
TERNA USA LLC
TERNA CRNA GORA D.O.O.
SPE TRANSMISSORA DE ENERGIA LINHA VERDE I S.A.
TERNA PERU S.A.C.
355
188
457
1
10
32
3
6. Amortisation, depreciation and impairment losses \u2013 \u20ac806.3 million
(\u20acm)
2023
2022
Change
Amortisation of intangible assets
126.4
93.2
33.2
\u00a0- of which on infrastructure
34.8
26.7
8.1
Depreciation of property, plant and equipment
670.6
624.2
46.4
Impairment losses on property, plant and equipment and intangible assets
8.7
7.0
1.7
Impairment losses on trade receivables
0.6
1.3
(0.7)
TOTAL
806.3
725.7
80.6
Amortisation, depreciation and impairment losses, amounting to \u20ac806.3 million (including \u20ac17.7 million recognised in application of IFRS 16), are up \u20ac80.6 million compared with 2022. This reflects the entry into service of new infrastructure, primarily at the Parent Company (up \u20ac63.3 million), in addition to an increase in impairment losses on assets recognised during the year (up \u20ac1.7 million).
7. Other operating costs - \u20ac43.2 million
(\u20acm)
2023
2022
Change
Indirect taxes and local taxes and levies
10.7
11.8
(1.1)
Fees paid to regulators and membership dues
9.9
9.3
0.6
Quality of service costs
5.3
1.9
3.4
\u00a0of which mitigation and sharing mechanisms
2.3
1.6
0.7
\u00a0of which the Fund for Exceptional Events
2.8
0.1
2.7
\u00a0of which compensation mechanisms for HV users
0.2
0.2
-
Adjustment of provisions for litigation and disputes
(0.9)
(3.2)
2.3
Net contingent liabilities
1.2
1.0
0.2
Losses on sales/disposals of plant and net contingent liabilities
1.1
1.3
(0.2)
Other
15.9
10.4
5.5
TOTAL
43.2
32.5
10.7
The Group\u2019s other operating costs, amounting to \u20ac43.2 million, are primarily attributable to the Parent Company (\u20ac22.3 million), the subsidiary, Terna Rete Italia S.p.A. (\u20ac2.3 million) and the Tamini Group (\u20ac5.0 million). They include indirect taxes, local taxes and levies (\u20ac10.7 million), membership dues and fees paid to trade bodies and associations relating to the Group\u2019s activities (\u20ac9.9 million), quality of service costs (\u20ac5.3 million) and other costs (\u20ac15.9 million) including provisions for risks and charges connected with the activities of the subsidiary, Tamini (\u20ac4.4 million, primarily in the form of provisions for product warranties) and other operating costs linked to the Brugg Group, relating to the cost of scrapping waste materials, donations and other expenses.
The increase of \u20ac10.7 million in the item, primarily reflects the increase in quality of service costs (up \u20ac3.4 million), primarily linked to provisions for exceptional events related to the outages that occurred in eastern Sicily in February 2023, additional of provisions for litigation and disputes (up \u20ac2.3 million) and an increase in the fees paid to regulators and membership dues (\u20ac0.6 million).
There was also an increase in other costs (up \u20ac5.5 million), due in particular to the increased provisions at the Tamini Group for the risks relating to product warranties (up \u20ac2.7 million).
Operating costs
3. Raw and consumable materials used \u2013 \u20ac258.4 million
This item includes the value of the various materials and equipment used in the ordinary operation and maintenance of the plant belonging to the Group and third parties, and the materials consumed primarily in relation to the industrial and energy solutions businesses.
The increase of \u20ac37.6 million compared with the previous year primarily reflects the cost of materials incurred by the LT Group and the Brugg Cables Group (up \u20ac34.8 million and \u20ac19.4 million, respectively), after a reduction in the cost of materials at the Tamini Group (down \u20ac18.0 million). This item also reflects increased costs (up \u20ac2.8 million) linked to construction and development of the infrastructure operated under concession, accounted for in application of IFRIC 12.
4. Services \u2013 \u20ac312.3 million
(\u20acm)
2023
2022
Change
Maintenance and sundry services
139.0
123.7
15.3
Tender costs for plant
77.7
68.5
9.2
IT services
46.4
38.5
7.9
Lease expense
20.5
19.4
1.1
Insurance
19.6
16.8
2.8
Remote transmission and telecommunications
9.1
10.0
(0.9)
TOTAL
312.3
276.9
35.4
This item, totalling \u20ac312.3 million, is up \u20ac35.4 million compared with 2022 (\u20ac276.9 million). This primarily reflects increased activity and new initiatives carried out by the Group, above all the LT Group (up \u20ac12.9 million), the Tamini Group (up \u20ac1.9 million) and the Brugg Group (up \u20ac1.9 million), as well as the increased costs linked to the construction and development of infrastructure under concession, recognised in application of IFRIC 12 (up \u20ac8.1 million, in particular reflecting cost increases of \u20ac7.2 million for IT services and maintenance costs totalling \u20ac1.1 million) and an increase in advertising costs (up \u20ac7.0 million, essentially linked to the \u201cnoi siamo energia\u201d advertising campaign).
Fees payable to members of the Board of Statutory Auditors amount to \u20ac0.5 million whilst those payable to members of the Supervisory Board set up in compliance with Legislative Decree 231/2001 amount to \u20ac0.7 million.
5. Personnel expenses \u2013 \u20ac377.2 million
(\u20acm)
2023
2022
Change
Salaries, wages and other short-term benefits
461.7
427.7
34.0
Directors\u2019 remuneration
2.6
2.3
0.3
Termination benefits (TFR), energy discounts and other employee benefits
32.1
21.6
10.5
Early retirement benefits
17.2
12.6
4.6
Gross personnel expenses
513.6
464.2
49.4
Capitalised personnel expenses
(136.4)
(116.1)
(20.3)
TOTAL
377.2
348.1
29.1
Personnel expenses, amounting to \u20ac377.2 million in 2023, are up \u20ac29.1 million compared with the previous year (\u20ac348.1 million). This is due to an increase in the average workforce the impact of renewal of the national collective labour agreement for the electricity sector, partly offset by the higher amount of capitalised expenses.
The following table shows the Group\u2019s workforce by category at the end of the year and the average for the year.
(\u20acm)
AVERAGE WORKFORCE
WORKFORCE AT
2023
2022
DELTA
31 December 2023
31 December 2022
Senior managers
107
98
9
102
94
Middle managers
887
819
68
896
841
Office staff
3,205
2,941
264
3,349
3,090
Blue-collar workers
1,523
1,476
47
1,580
1,472
TOTAL
5,722
5,334
388
5,927
5,497
The net increase in the average workforce compared with 2022 is 388. This is essentially linked to the requirements relating to delivery of the investment programme included in the last approved Industrial Plan.
At 31 December 2023, the Terna Group\u2019s workforce breaks down as follows:
TERNA S.P.A.
TERNA RETEITALIA S.P.A.
TERNA ENERGY SOLUTIONS S.R.L.
TERNA PLUSS.R.L.
AVVENIA THE ENERGY INNOVATOR S.R.L.
No.
1,143
3,633
79
13
13
TAMINI GROUP
LT GROUP
Brugg Kabel AG
TERNA USA LLC
TERNA CRNA GORA D.O.O.
SPE TRANSMISSORA DE ENERGIA LINHA VERDE I S.A.
TERNA PERU S.A.C.
355
188
457
1
10
32
3
6. Amortisation, depreciation and impairment losses \u2013 \u20ac806.3 million
(\u20acm)
2023
2022
Change
Amortisation of intangible assets
126.4
93.2
33.2
\u00a0- of which on infrastructure
34.8
26.7
8.1
Depreciation of property, plant and equipment
670.6
624.2
46.4
Impairment losses on property, plant and equipment and intangible assets
8.7
7.0
1.7
Impairment losses on trade receivables
0.6
1.3
(0.7)
TOTAL
806.3
725.7
80.6
Amortisation, depreciation and impairment losses, amounting to \u20ac806.3 million (including \u20ac17.7 million recognised in application of IFRS 16), are up \u20ac80.6 million compared with 2022. This reflects the entry into service of new infrastructure, primarily at the Parent Company (up \u20ac63.3 million), in addition to an increase in impairment losses on assets recognised during the year (up \u20ac1.7 million).
7. Other operating costs - \u20ac43.2 million
(\u20acm)
2023
2022
Change
Indirect taxes and local taxes and levies
10.7
11.8
(1.1)
Fees paid to regulators and membership dues
9.9
9.3
0.6
Quality of service costs
5.3
1.9
3.4
\u00a0of which mitigation and sharing mechanisms
2.3
1.6
0.7
\u00a0of which the Fund for Exceptional Events
2.8
0.1
2.7
\u00a0of which compensation mechanisms for HV users
0.2
0.2
-
Adjustment of provisions for litigation and disputes
(0.9)
(3.2)
2.3
Net contingent liabilities
1.2
1.0
0.2
Losses on sales/disposals of plant and net contingent liabilities
1.1
1.3
(0.2)
Other
15.9
10.4
5.5
TOTAL
43.2
32.5
10.7
The Group\u2019s other operating costs, amounting to \u20ac43.2 million, are primarily attributable to the Parent Company (\u20ac22.3 million), the subsidiary, Terna Rete Italia S.p.A. (\u20ac2.3 million) and the Tamini Group (\u20ac5.0 million). They include indirect taxes, local taxes and levies (\u20ac10.7 million), membership dues and fees paid to trade bodies and associations relating to the Group\u2019s activities (\u20ac9.9 million), quality of service costs (\u20ac5.3 million) and other costs (\u20ac15.9 million) including provisions for risks and charges connected with the activities of the subsidiary, Tamini (\u20ac4.4 million, primarily in the form of provisions for product warranties) and other operating costs linked to the Brugg Group, relating to the cost of scrapping waste materials, donations and other expenses.
The increase of \u20ac10.7 million in the item, primarily reflects the increase in quality of service costs (up \u20ac3.4 million), primarily linked to provisions for exceptional events related to the outages that occurred in eastern Sicily in February 2023, additional of provisions for litigation and disputes (up \u20ac2.3 million) and an increase in the fees paid to regulators and membership dues (\u20ac0.6 million).
There was also an increase in other costs (up \u20ac5.5 million), due in particular to the increased provisions at the Tamini Group for the risks relating to product warranties (up \u20ac2.7 million).
Operating costs
3. Raw and consumable materials used \u2013 \u20ac258.4 million
This item includes the value of the various materials and equipment used in the ordinary operation and maintenance of the plant belonging to the Group and third parties, and the materials consumed primarily in relation to the industrial and energy solutions businesses.
The increase of \u20ac37.6 million compared with the previous year primarily reflects the cost of materials incurred by the LT Group and the Brugg Cables Group (up \u20ac34.8 million and \u20ac19.4 million, respectively), after a reduction in the cost of materials at the Tamini Group (down \u20ac18.0 million). This item also reflects increased costs (up \u20ac2.8 million) linked to construction and development of the infrastructure operated under concession, accounted for in application of IFRIC 12.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCostOfSalesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130821": { "value": "5. Personnel expenses \u2013 \u20ac377.2 million
(\u20acm)
2023
2022
Change
Salaries, wages and other short-term benefits
461.7
427.7
34.0
Directors\u2019 remuneration
2.6
2.3
0.3
Termination benefits (TFR), energy discounts and other employee benefits
32.1
21.6
10.5
Early retirement benefits
17.2
12.6
4.6
Gross personnel expenses
513.6
464.2
49.4
Capitalised personnel expenses
(136.4)
(116.1)
(20.3)
TOTAL
377.2
348.1
29.1
Personnel expenses, amounting to \u20ac377.2 million in 2023, are up \u20ac29.1 million compared with the previous year (\u20ac348.1 million). This is due to an increase in the average workforce the impact of renewal of the national collective labour agreement for the electricity sector, partly offset by the higher amount of capitalised expenses.
The following table shows the Group\u2019s workforce by category at the end of the year and the average for the year.
(\u20acm)
AVERAGE WORKFORCE
WORKFORCE AT
2023
2022
DELTA
31 December 2023
31 December 2022
Senior managers
107
98
9
102
94
Middle managers
887
819
68
896
841
Office staff
3,205
2,941
264
3,349
3,090
Blue-collar workers
1,523
1,476
47
1,580
1,472
TOTAL
5,722
5,334
388
5,927
5,497
The net increase in the average workforce compared with 2022 is 388. This is essentially linked to the requirements relating to delivery of the investment programme included in the last approved Industrial Plan.
At 31 December 2023, the Terna Group\u2019s workforce breaks down as follows:
TERNA S.P.A.
TERNA RETEITALIA S.P.A.
TERNA ENERGY SOLUTIONS S.R.L.
TERNA PLUSS.R.L.
AVVENIA THE ENERGY INNOVATOR S.R.L.
No.
1,143
3,633
79
13
13
TAMINI GROUP
LT GROUP
Brugg Kabel AG
TERNA USA LLC
TERNA CRNA GORA D.O.O.
SPE TRANSMISSORA DE ENERGIA LINHA VERDE I S.A.
TERNA PERU S.A.C.
355
188
457
1
10
32
3
6. Amortisation, depreciation and impairment losses \u2013 \u20ac806.3 million
(\u20acm)
2023
2022
Change
Amortisation of intangible assets
126.4
93.2
33.2
\u00a0- of which on infrastructure
34.8
26.7
8.1
Depreciation of property, plant and equipment
670.6
624.2
46.4
Impairment losses on property, plant and equipment and intangible assets
8.7
7.0
1.7
Impairment losses on trade receivables
0.6
1.3
(0.7)
TOTAL
806.3
725.7
80.6
Amortisation, depreciation and impairment losses, amounting to \u20ac806.3 million (including \u20ac17.7 million recognised in application of IFRS 16), are up \u20ac80.6 million compared with 2022. This reflects the entry into service of new infrastructure, primarily at the Parent Company (up \u20ac63.3 million), in addition to an increase in impairment losses on assets recognised during the year (up \u20ac1.7 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfDepreciationAndAmortisationExpenseExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130823": { "value": "7. Other operating costs - \u20ac43.2 million
(\u20acm)
2023
2022
Change
Indirect taxes and local taxes and levies
10.7
11.8
(1.1)
Fees paid to regulators and membership dues
9.9
9.3
0.6
Quality of service costs
5.3
1.9
3.4
\u00a0of which mitigation and sharing mechanisms
2.3
1.6
0.7
\u00a0of which the Fund for Exceptional Events
2.8
0.1
2.7
\u00a0of which compensation mechanisms for HV users
0.2
0.2
-
Adjustment of provisions for litigation and disputes
(0.9)
(3.2)
2.3
Net contingent liabilities
1.2
1.0
0.2
Losses on sales/disposals of plant and net contingent liabilities
1.1
1.3
(0.2)
Other
15.9
10.4
5.5
TOTAL
43.2
32.5
10.7
The Group\u2019s other operating costs, amounting to \u20ac43.2 million, are primarily attributable to the Parent Company (\u20ac22.3 million), the subsidiary, Terna Rete Italia S.p.A. (\u20ac2.3 million) and the Tamini Group (\u20ac5.0 million). They include indirect taxes, local taxes and levies (\u20ac10.7 million), membership dues and fees paid to trade bodies and associations relating to the Group\u2019s activities (\u20ac9.9 million), quality of service costs (\u20ac5.3 million) and other costs (\u20ac15.9 million) including provisions for risks and charges connected with the activities of the subsidiary, Tamini (\u20ac4.4 million, primarily in the form of provisions for product warranties) and other operating costs linked to the Brugg Group, relating to the cost of scrapping waste materials, donations and other expenses.
The increase of \u20ac10.7 million in the item, primarily reflects the increase in quality of service costs (up \u20ac3.4 million), primarily linked to provisions for exceptional events related to the outages that occurred in eastern Sicily in February 2023, additional of provisions for litigation and disputes (up \u20ac2.3 million) and an increase in the fees paid to regulators and membership dues (\u20ac0.6 million).
There was also an increase in other costs (up \u20ac5.5 million), due in particular to the increased provisions at the Tamini Group for the risks relating to product warranties (up \u20ac2.7 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherOperatingExpenseExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130830": { "value": "8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestExpenseExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130829": { "value": "8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInterestIncomeExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130828": { "value": "8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingCostsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130827": { "value": "8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceCostExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130826": { "value": "8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130825": { "value": "8. Financial income/(expenses) \u2013 (\u20ac120.3) million
(\u20acm)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Interest expense on medium/long-term borrowings and related hedges
(235.5)
(138.7)
(96.8)
Adjustment of borrowings and related hedges
(2.8)
-
(2.8)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
-
(3.7)
3.7
Capitalised financial expenses
48.3
24.8
23.5
Foreign exchange losses
(0.4)
-
(0.4)
Other financial expenses
(37.3)
(4.2)
(33.1)
Total expenses
(227.7)
(121.8)
(105.9)
FINANCIAL INCOME
\u00a0
\u00a0
\u00a0
Interest income and other financial income
84.6
14.6
70.0
Adjustment of borrowings and related hedges
-
5.4
(5.4)
Discounting of receivables, termination benefits (TFR), operating leases and other liabilities
22.8
-
22.8
Foreign exchange gains
-
2.7
(2.7)
Total INCOME
107.4
22.7
84.7
TOTAL
(120.3)
(99.1)
(21.2)
Net financial expenses of \u20ac120.3 million are essentially attributable to the Parent Company (\u20ac118.8 million) and reflect \u20ac227.8 million in financial expenses and \u20ac107.4 million in financial income. The increase in net financial expenses compared with 2022, amounting to \u20ac21.2 million, primarily reflects higher interest rates and regards:
\u2022 an increase of \u20ac96.8 million in the cost of debt following the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September;
\u2022 an increase of \u20ac33.1 million in other financial expenses, broadly due to the uplift component;\u00a0
\u2022 an increase of \u20ac70.0 million in financial income on cash and other financial assets as a result of improved market conditions;
\u2022 an increase of \u20ac23.5 million in capitalised expenses due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac26.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130824": { "value": "9. Share of profit/(loss) of investees accounted for using the equity method \u2013 (\u20ac2.6) million
The loss of \u20ac2.6 million reflects a reduction of \u20ac3.6 million euro compared with the previous year (a profit of \u20ac1.0 million), broadly due to an adjustment of the value of the investment in the associate, CESI.17. Investments accounted for using the equity method \u2013 \u20ac76.7 million
This item, amounting to \u20ac76.7 million, regards the Parent Company\u2019s investments in the associate CESI S.p.A. (\u20ac46.1 million), the associate CORESO S.A. (\u20ac1.0 million), the associate CGES \u2013 CrnoGorski Elektroprenosni Sistem AD (\u20ac26.7 million), the associate Equigy B.V. (\u20ac0.4 million) and in the joint ventures SEleNe CC S.A. (\u20ac2.1 million), ELMED Etudes S.a.r.l. (\u20ac0.2 million) and BMT Energy Transmission Development LLC (\u20ac0.2 million). The increase compared with the previous year, totalling \u20ac2.9 million, essentially reflects the adjustment of the Group\u2019s share of equity at 31 December 2023 in the joint venture SEleNe CC S.A., which rose from 25% to 33.33% in February (up \u20ac2.1 million) and in the associates, CESI S.p.A. (up \u20ac0.7 million) and CORESO S.A. (up \u20ac0.1 million).
Financial information pre-closing for 2023 for the Terna Group\u2019s main associates is provided below:
(\u20acm)
at 31 December 2023
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Equity
CESI
179
13
20
(*)
99
CORESO
17
5
-
16
6
CGES
272
81
73
35
245
EQUIGY
2
-
-
-
2
(*) The pre-closing amount for 2023 does not provide a breakdown of working capital.
(\u20acm)
2023
Revenue
Profit/(Loss) before tax
Profit/(Loss)for the year
CESI
164
(5)
(5)
CORESO
33
2
1
CGES
108
42
36
EQUIGY
5
-
-
10. Income tax expense \u2013 \u20ac364.3 million
Income tax expense for the year totals \u20ac364.3 million, an increase of \u20ac8.9 million on the previous year, essentially due to the increase in pre-tax profit and the lower amount of tax-exempt income recognised in the previous year. The tax rate of 29.3%, compares with the rate of 28.8% for 2022.
(\u20acm)
2023
2022
Change
Income tax for the year
\u00a0
\u00a0
\u00a0
Current tax expense:
\u00a0
\u00a0
\u00a0
- IRES (corporate income tax)
326.3
327.7
(1.4)
- IRAP (regional tax on productive activities)
72.7
71.3
1.4
Total current expense
399.0
399.0
-
New temporary differences:
\u00a0
\u00a0
\u00a0
- deferred tax assets
(50.8)
(56.4)
5.6
Reversal of temporary differences:
\u00a0
- deferred tax assets
17.3
15.2
2.1
- deferred tax liabilities
(1.9)
(1.1)
(0.8)
Total deferred tax (income)/expense
(35.4)
(42.3)
6.9
Adjustments to taxes for previous years and other one-off changes
0.7
(1.3)
2.0
TOTAL
364.3
355.4
8.9
Current income tax expense of \u20ac399.0 million is in line with the previous year due to the adjustments recognised in pre-tax profit.
Net deferred tax expense of \u20ac35.4 million is down \u20ac6.9 million compared with the figure for the previous year (\u20ac42.3 million). This reflects the impact of taxation on depreciation and amortisation, movements in provisions for risks and charges and for employee benefits recognized by the Group during the year.
Adjustments to taxes for previous years, amounting to expense of \u20ac0.7 million, primarily regard subsidiaries and include contingent assets resulting from recognition of the effective amount payable when filing annual tax returns.
For a clearer presentation of the differences between the theoretical and effective tax rates, the table below reconciles the profit before taxes with taxable income.
(\u20acm)
\u00a0
2023
2022
Profit before tax
1,244.6
1,233.4
THEORICAL IRES TAX CHARGE (24%)
298.7
296.0
IRAP
72.7
71.3
Permanent differences
(7.8)
(10.6)
TAX (after adjustment for previous years and one-off changes)
363.6
356.7
TAX RATE
29.2%
28.9%
Adjustments to taxes for previous years and other one-off changes
0.7
(1.3)
INCOME TAX EXPENSE FOR THE YEAR
364.3
355.4
EFFECTIVE TAX RATE
29.3%
28.8%
11. Profit/(Loss) from discontinued operations and assets held for sale \u2013 (\u20ac2.5) million
This item reflects the net result from the assets included in the agreement signed by the Terna Group and CDPQ, a global investment group, on 29 April 2022 for the sale of all the Group\u2019s power line assets in Brazil, Peru and Uruguay.
The first transaction closing for the sale of the Brazilian companies, SPE Transmissora de Energia Linha Verde II S.A., SPE Santa Lucia Transmissora de Energia S.A. and SPE Santa Maria Transmissora de Energia S.A., was completed on 7 November 2022. The transaction closing for the sale of Difebal S.A., which operates a power line in Uruguay, was completed on 22 December 2022. The sale of the other assets in Brazil (expected in 2024) and Peru is due to take place in phases, following fulfilment of the conditions provided for in the agreement.
The revenue and cost items resulting in the net result for the year from assets held for sale, amounting to a profit of \u20ac2.5 million, are shown below:
(\u20acm)
2023
2022
Change
Total revenue
35.8
49.3
(13.5)
Total operating costs
53.9
45.3
8.6
OPERATING PROFIT
(18.1)
4.0
(22.1)
Net financial income/(expenses)
1.2
(9.7)
10.9
Impairment loss recognised on remeasurement of the fair value less costs to sell
21.2
(20.0)
41.2
PROFIT/(LOSS) BEFORE TAX
4.3
(25.7)
30.0
Income tax expense for the year
1.7
5.9
(4.2)
Profit/(Loss) for the year attributable to owners of the Parent
2.5
(31.6)
34.1
Net gains on disposals
-
23.0
(23.0)
Reserve for translation differences
-
(11.7)
11.7
Profit/(Loss) for the year from discontinued operations and assets held for sale
2.5
(20.3)
22.8
Revenue
This item broadly consists of revenue from construction and development of infrastructure operated under concession, above all the discontinued operations and assets held for sale located in Brazil (\u20ac34.2 million) and Peru (\u20ac1.6 million).
Operating costs
Operating costs essentially regard the costs incurred in application of IFRIC 12 for the construction work being carried out in Brazil (\u20ac52.8 million), as well as operating costs incurred in Peru.
Net gains on disposals
The item includes the gains recognised in the comparative period on the planned sale of the net assets at fair value of the companies SPE Santa Maria Transmissora de Energia S.A. (\u20ac3.2 million), SPE Santa Lucia Transmissora de Energia S.A. (\u20ac10.5 million), SPE Transmissora de Energia Linha Verde II S.A. (\u20ac14.5 million) and Difebal S.A (a loss of \u20ac5.2 million) after costs to sell.
Reserve for translation differences
The items include the differences deriving from the translation of financial statements denominated in foreign currency and is reclassified to profit or loss following the deconsolidation of companies from which it originates.
The gain from discontinued operations and assets held for sale, amounting to \u20ac2.5 million, marks an improvement of \u20ac22.8 million compared with the previous year. This essentially reflects adjustment of the fair value of the net assets held for sale in application of IFRS 5 (up \u20ac41.2 million), after the companies\u2019 operating results (a loss of \u20ac7.0 million), also taking into account the different scope and recognition, at 31 December 2022, of a net gain on the sale (down \u20ac23.0 million) and release of the reserve for translation differences (up \u20ac11.7 million).
Basic and diluted earnings per share from discontinued operations and assets held for sale, amounting to a gain of \u20ac0.001 per share (the numerator of \u20ac2.5 million represents the net gain from assets held for sale, whilst the denominator of 2,005,710,736.25 shares is the weighted average number of shares outstanding during the year).
The agreements signed with CDPQ, regarding the sale of the Brazilian companies, grant the purchaser a put option for the return of SPE Transmissora de Energia Linha Verde II S.A. to Terna Plus. This may be exercised, under determinate conditions, no sooner than 31 December 2025. At the date of preparation of these financial statements, the option is not exercisable and provides protection for the counterparty, which does not have a significant economic incentive to exercise it.
Moreover, at the date of preparation of this document, a number of disputes are in progress. The related outcomes have been classified as possible and therefore no provisions have been made in the financial statements:
\u2022 ongoing arbitration between SPE Santa Lucia Transmissora de Energia S.A. and Planova Planejamento e Constru\u00e7\u00f5es S.A. and Krasis Participa\u00e7\u00f5es S.A., regarding responsibility for postponement of the Commercial Operation Date (\u201cCOD\u201d), as defined in the EPC contract;
\u2022 ongoing arbitration between SPE Transmissora de Energia Linha Verde I S.A. and Cons\u00f3rcio Construtor Linha Verde, regarding changes to the obligations provided for in the EPC contract;
In addition, as described in the section, \u201cM. Events after 31 December 2023\u201d, the following arbitrations identified as possible in the previous year, were resolved in the Group\u2019s favour:
\u2022 arbitration between SPE Transmissora de Energia Linha Verde I S.A. and Qu\u00e9bec Engenharia S.A. and Construtora Quebec S.A., regarding cessation of the obligations provided for in the EPC contract;
\u2022 arbitration between SPE Transmissora de Energia Linha Verde II S.A. and Qu\u00e9bec Engenharia S.A. and Construtora Quebec S.A., regarding cessation of the obligations provided for in the EPC contract.
30. Discontinued operations and assets held for sale
The items, \u201cDiscontinued operations and assets held for sale\u201d and \u201cLiabilities related to discontinued operations and assets held for sale\u201d included the assets and liabilities that make up the net assets attributable to the companies included in the agreement signed by the Terna Group and CDPQ, a global investment group, on 29 April 2022 for the sale of all the Group\u2019s power line assets in Brazil, Peru and Uruguay.
On 7 November 2022, the first transaction closing for the Brazilian companies, \u201cSPE Santa Maria Transmissora de Energia S.A.\u201d, \u201cSPE Santa Lucia Transmissora de Energia S.A.\u201d and \u201cSPE Transmissora de Energia Linha Verde II S.A.\u201d, owners of three power lines in Brazil, totalling 670 km, was completed. On 22 December 2022, the transaction closing for Difebal S.A., the owner of a power line in Uruguay, totalling 214 km, was completed. The sale of the other assets in Brazil and Peru is due to take place in phases, following fulfilment of the conditions provided for in the agreement.
Following the sale of the Brazilian companies, SPE Santa Lucia Transmissora de Energia S.A., SPE Santa Maria Transmissora de Energia S.A. and SPE Transmissora de Energia Linha Verde II S.A. and of the Uruguayan company, Difebal S.A., the item includes the reclassification, as required by IFRS 5, of the net assets attributable to the Brazilian company, SPE Transmissora de Energia Linha Verde I S.A., and the Peruvian company, Terna Peru S.A.C..
(\u20acm)
Assets
31 December 2023
31 December 2022
Change
Property, plant and equipment
1.4
1.3
0.1
Intangible assets
20.3
20.2
0.1
Deferred tax assets
2.4
2.9
(0.5)
Non-current financial assets
59.0
23.3
35.7
Other non-current assets
0.3
0.2
0.1
Inventories
0.4
26.9
(26.5)
Trade receivables
0.1
0.3
(0.2)
Current financial assets
7.3
6.0
1.3
Cash and cash equivalents
3.6
11.9
(8.3)
Income tax assets
0.6
0.4
0.2
Other current assets
5.5
14.4
(8.9)
Total assets
100.9
107.8
(6.9)
Accumulated impairment recognised on remeasurement of fair value less costs to sell
(15.9)
(37.1)
21.2
TOTAL ASSETS HELD FOR SALE
85.0
70.7
14.3
LIABILITIES
Deferred tax liabilities
4.1
1.6
2.5
Trade payables
0.3
7.5
(7.2)
Tax liabilities
0.1
0.4
(0.3)
Other current liabilities
0.1
0.1
-
TOTAL LIABILITIES RELATED TO ASSETS HELD FOR SALE
4.6
9.6
(5.0)
TOTAL NET ASSETS HELD FOR SALE
80.4
61.1
19.3
Amounts included in OCI:
Foreign currency translation reserve
3.6
0.9
2.7
Total reserves related to assets classified as held for sale
3.6
0.9
2.7
Net assets held for sale, amounting to \u20ac80.4 million at 31 December 2023, primarily regard investment in the infrastructure operated under concession in Brazil, related to the subsidiary, SPE Transmissora de Energia Linha Verde I S.A.
The item is up \u20ac19.3 million compared with 31 December 2022, essentially due an increase in the net assets of the subsidiary, SPE Transmissora de Energia Linha Verde I S.A..
Cash flow
The following statement of cash flows shows cash flows attributable to the Latin American assets held for sale:
(\u20acm)
CASH FLOW
2023
CASH FLOW
2022
Operating cash flow
\u00a0(8.1)
\u00a0(27.0)
Cash flow for investing activities
\u00a0(0.2)
\u00a0(3.3)
Cash flow from financing activities
\u00a0-
2.8
Cash flow for the year attributable to discontinued operations and assets held for sale
\u00a0(8.3)
\u00a0(27.5)
The operating cash outflow attributable to the Latin American assets amounts to \u20ac8.1 million and is primarily linked to the reduction in net trade payables and income tax paid, covered in full by the change in cash, amounting to \u20ac8.3 million.
12. Earnings per share
Basic earnings per share, which corresponds to diluted earnings per share, amounts to \u20ac0.441 (based on profit for the year attributable to owners of the Parent, totalling \u20ac885.4 million divided by the number of shares outstanding, totalling 2,005,710,736.2 shares). Earnings per share from continuing operations, which corresponds to diluted earnings per share from continuing operations, is \u20ac0.439 (the numerator of \u20ac880.3 million is net profit for the year from continuing operations, whilst the denominator of 2,005,710,736.2 shares, is the weighted average number of shares outstanding during the year).
", "dimensions": { "concept": "ifrs-full:DisclosureOfEarningsPerShareExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130835": { "value": "C. Operating segments
In line with the latest Industrial Plan, and in compliance with IFRS 8, the Terna Group\u2019s identified operating segments are described below:
\u2022 Regulated
\u2022 Non-Regulated
\u2022 International
The Regulated segment includes the development, operation and maintenance of the National Transmission Grid, in addition to dispatching and metering, and the activities involved in the construction of storage systems. These activities have been included in one operating segment, as they are all regulated by ARERA and have similar characteristics, in terms of the remuneration model and the method for setting the related tariffs.
The Non-regulated segment includes deregulated activities and specific business initiatives, above all relating to Industrial activities, which includes the operating results of the Tamini Group, relating essentially to the construction and commercialisation of electrical equipment, above all power transformers, and the Brugg Cables Group, which operates 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 Non-regulated segment includes initiatives linked above all to the provision of services to third parties in the areas of Energy Solutions, consisting of the development of technical solutions and the supply of innovative services, including EPC (Engineering, Procurement and Construction) services, operation and maintenance of high-voltage and very high-voltage infrastructure, and the supply of energy efficiency services, broadly attributable to the subsidiary, Avvenia The Energy Innovator S.r.l..). This segment also includes Connectivity (support and housing services for fibre networks and IRU contracts for fibre. This segment includes the activities carried out in relation to the private interconnectors launched by Law 99/2009, legislation that assigned Terna responsibility for selecting undertakings (the \u201cselected undertakings\u201d), on the basis of public tenders, willing to finance specific cross-border interconnectors in exchange for the benefits resulting from a decree granting a third-party access exemption with regard to the transmission capacity provided by the new infrastructure. The Non-regulated Activities segment also includes the results of the LT Group, acquired in October 2021 and a leading provider of O&M services for photovoltaic plants.
On the other hand, the International segment includes the results deriving from opportunities for international expansion, which the Group aims to exploit by leveraging its core competencies developed in Italy as a TSO, where such competencies are of significant importance in its home country. Overseas investment focuses on countries with stable political and regulatory regimes and a need to develop their electricity infrastructure. This segment includes the results of the subsidiary Terna Plus S.r.l., the Peruvian company, Terna 4 Chacas S.A.C. (a charitable project), the Chilean company, Terna Chile S.p.A. and the US subsidiary, Terna USA LLC.
The results of the Brazilian company, Linha Verde I S.A., and of the Peruvian company, Terna Peru S.A.C., have been reclassified to \u201cProfit/(Loss) from discontinued operations and assets held for sale\u201d.
(\u20acm)
2023
2022
Change
% change
REGULATED REVENUE
2,669.8
2,542.3
127.5
5.0%
NON-REGULATED REVENUE
516.8
421.4
95.4
22.6%
INTERNATIONAL REVENUE*
0.1
0.8
(0.7)
\u00a0(87.5%)
TOTAL REVENUE
3,186.7
2,964.5
222.2
7.5%
GROSS OPERATING PROFIT (EBITDA)**
2,168.6
2,059.2
109.4
5.3%
of which regulated EBITDA ***
2,085.6
2,007.0
78.6
3.9%
of which non-regulated EBITDA
86.9
57.5
29.4
51.1%
of which International EBITDA
\u00a0(3.9)
\u00a0(5.3)
1.4
\u00a0(26.4%)
Reconciliation of segment result with the Company\u2019s profit before tax
GROSS OPERATING PROFIT (EBITDA)
2,168.6
2,059.2
Amortisation, depreciation and impairment losses
806.3
725.7
OPERATING PROFIT/(LOSS) (EBIT)
1,362.3
1,333.5
Financial income/(expenses)
\u00a0(120.3)
\u00a0(99.1)
Share of profit/(loss) of investees accounted for using the equity method
2.6
\u00a0(1.0)
Profit/(Loss) before tax
1,244.6
1,233.4
\u00a0
\u00a0
*\tDirectly includes the margin earned on overseas concessions.
**\tGross operating profit - EBITDA is an indicator of operating performance, obtained by adding \u201cAmortisation, depreciation and impairment losses\u201d to \u201cOperating profit/(loss) (EBIT)\u201d.
***\tEBITDA including indirect costs.
The Group\u2019s revenue for 2023 amounts to \u20ac3,186.7 million, an increase of \u20ac222.2 million (7.5%) compared with 2022.
Gross operating profit (EBITDA) of \u20ac2,168.6 million is up \u20ac109.4 million (5.3%) on the \u20ac2,059.2 million of 2022.
EBITDA from Regulated Activities amounts to \u20ac2,085.6 million, an increase of \u20ac78.6 million\u00a0compared with the previous year. This primarily reflects the impact on tariff revenue and incentives (up \u20ac119.9 million) of the increase in the RAB after the volume effect and the effects of output-based incentive mechanisms.
EBITDA from Non-regulated Activities in 2023 amounts to \u20ac86,9 million, an increase of \u20ac29.4 million compared with same period of the previous year. This primarily reflects the increased contribution of the LT Group (up \u20ac9.5 million), of the Brugg Cables Group (up \u20ac6.3 million) and the Tamini Group (up \u20ac4.4 million), in addition to the greater contribution from private interconnectors (up \u20ac6.0 million), essentially due to the entry into service of the Italy-France power line in November 2022.
Negative EBITDA from International Activities, amounting to \u20ac3.9 million for 2023\u00a0essentially reflects the costs incurred by central departments to support overseas initiatives and marks an improvement of \u20ac1.4 million compared with the previous year (negative EBITDA of \u20ac5.3 million). This primarily reflects the impact on personnel expenses of a reduction in the average workforce following the reorganisation carried out within the Group.
Assets held for sale report a net profit of \u20ac2.5 million, an improvement of \u20ac22.8 million compared with a loss of \u20ac20.3 million in the previous year. This essentially reflects the reversal, in 2023, of impairment losses recognised during the previous year on assets held for sale, offset by the gain recognised in 2022 on the sale of the companies included in the first closing.
Further information is provided in the related paragraph in note 11 in the consolidated financial statements.
(\u20acm)
31 December 2023
31 December 2022
Net non-current assets*
18,964.7
17,485.3
\u00a0of which investments in associates and joint ventures
76.7
73.8
Net working capital**
\u00a0(2,174.6)
\u00a0(2,732.8)
Gross invested capital***
16,790.1
14,752.5
*\tNet non-current assets include the value of \u201cProperty, plant and equipment\u201d, \u201cGoodwill\u201d, \u201cIntangible assets\u201d, \u201cInvestments accounted for using the equity method\u201d, \u201cOther non-current assets\u201d and \u201cNon-current financial assets\u201d, excluding the value of cash flow hedges (\u20ac17.2 million).
**\tNet working capital is the difference between total current assets less cash and the items, \u201cCurrent financial assets\u201d and total current liabilities, less the short-term portion of long-term borrowings and the items, \u201cShort-term borrowings\u201d and \u201cCurrent financial liabilities\u201d, and the item, \u201cOther non-current liabilities\u201d.
***\tGross invested capital is the sum of net non-current assets and net working capital.
C. Operating segments
In line with the latest Industrial Plan, and in compliance with IFRS 8, the Terna Group\u2019s identified operating segments are described below:
\u2022 Regulated
\u2022 Non-Regulated
\u2022 International
The Regulated segment includes the development, operation and maintenance of the National Transmission Grid, in addition to dispatching and metering, and the activities involved in the construction of storage systems. These activities have been included in one operating segment, as they are all regulated by ARERA and have similar characteristics, in terms of the remuneration model and the method for setting the related tariffs.
The Non-regulated segment includes deregulated activities and specific business initiatives, above all relating to Industrial activities, which includes the operating results of the Tamini Group, relating essentially to the construction and commercialisation of electrical equipment, above all power transformers, and the Brugg Cables Group, which operates 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 Non-regulated segment includes initiatives linked above all to the provision of services to third parties in the areas of Energy Solutions, consisting of the development of technical solutions and the supply of innovative services, including EPC (Engineering, Procurement and Construction) services, operation and maintenance of high-voltage and very high-voltage infrastructure, and the supply of energy efficiency services, broadly attributable to the subsidiary, Avvenia The Energy Innovator S.r.l..). This segment also includes Connectivity (support and housing services for fibre networks and IRU contracts for fibre. This segment includes the activities carried out in relation to the private interconnectors launched by Law 99/2009, legislation that assigned Terna responsibility for selecting undertakings (the \u201cselected undertakings\u201d), on the basis of public tenders, willing to finance specific cross-border interconnectors in exchange for the benefits resulting from a decree granting a third-party access exemption with regard to the transmission capacity provided by the new infrastructure. The Non-regulated Activities segment also includes the results of the LT Group, acquired in October 2021 and a leading provider of O&M services for photovoltaic plants.
On the other hand, the International segment includes the results deriving from opportunities for international expansion, which the Group aims to exploit by leveraging its core competencies developed in Italy as a TSO, where such competencies are of significant importance in its home country. Overseas investment focuses on countries with stable political and regulatory regimes and a need to develop their electricity infrastructure. This segment includes the results of the subsidiary Terna Plus S.r.l., the Peruvian company, Terna 4 Chacas S.A.C. (a charitable project), the Chilean company, Terna Chile S.p.A. and the US subsidiary, Terna USA LLC.
The results of the Brazilian company, Linha Verde I S.A., and of the Peruvian company, Terna Peru S.A.C., have been reclassified to \u201cProfit/(Loss) from discontinued operations and assets held for sale\u201d.
(\u20acm)
2023
2022
Change
% change
REGULATED REVENUE
2,669.8
2,542.3
127.5
5.0%
NON-REGULATED REVENUE
516.8
421.4
95.4
22.6%
INTERNATIONAL REVENUE*
0.1
0.8
(0.7)
\u00a0(87.5%)
TOTAL REVENUE
3,186.7
2,964.5
222.2
7.5%
GROSS OPERATING PROFIT (EBITDA)**
2,168.6
2,059.2
109.4
5.3%
of which regulated EBITDA ***
2,085.6
2,007.0
78.6
3.9%
of which non-regulated EBITDA
86.9
57.5
29.4
51.1%
of which International EBITDA
\u00a0(3.9)
\u00a0(5.3)
1.4
\u00a0(26.4%)
Reconciliation of segment result with the Company\u2019s profit before tax
GROSS OPERATING PROFIT (EBITDA)
2,168.6
2,059.2
Amortisation, depreciation and impairment losses
806.3
725.7
OPERATING PROFIT/(LOSS) (EBIT)
1,362.3
1,333.5
Financial income/(expenses)
\u00a0(120.3)
\u00a0(99.1)
Share of profit/(loss) of investees accounted for using the equity method
2.6
\u00a0(1.0)
Profit/(Loss) before tax
1,244.6
1,233.4
\u00a0
\u00a0
*\tDirectly includes the margin earned on overseas concessions.
**\tGross operating profit - EBITDA is an indicator of operating performance, obtained by adding \u201cAmortisation, depreciation and impairment losses\u201d to \u201cOperating profit/(loss) (EBIT)\u201d.
***\tEBITDA including indirect costs.
The Group\u2019s revenue for 2023 amounts to \u20ac3,186.7 million, an increase of \u20ac222.2 million (7.5%) compared with 2022.
Gross operating profit (EBITDA) of \u20ac2,168.6 million is up \u20ac109.4 million (5.3%) on the \u20ac2,059.2 million of 2022.
EBITDA from Regulated Activities amounts to \u20ac2,085.6 million, an increase of \u20ac78.6 million\u00a0compared with the previous year. This primarily reflects the impact on tariff revenue and incentives (up \u20ac119.9 million) of the increase in the RAB after the volume effect and the effects of output-based incentive mechanisms.
EBITDA from Non-regulated Activities in 2023 amounts to \u20ac86,9 million, an increase of \u20ac29.4 million compared with same period of the previous year. This primarily reflects the increased contribution of the LT Group (up \u20ac9.5 million), of the Brugg Cables Group (up \u20ac6.3 million) and the Tamini Group (up \u20ac4.4 million), in addition to the greater contribution from private interconnectors (up \u20ac6.0 million), essentially due to the entry into service of the Italy-France power line in November 2022.
Negative EBITDA from International Activities, amounting to \u20ac3.9 million for 2023\u00a0essentially reflects the costs incurred by central departments to support overseas initiatives and marks an improvement of \u20ac1.4 million compared with the previous year (negative EBITDA of \u20ac5.3 million). This primarily reflects the impact on personnel expenses of a reduction in the average workforce following the reorganisation carried out within the Group.
Assets held for sale report a net profit of \u20ac2.5 million, an improvement of \u20ac22.8 million compared with a loss of \u20ac20.3 million in the previous year. This essentially reflects the reversal, in 2023, of impairment losses recognised during the previous year on assets held for sale, offset by the gain recognised in 2022 on the sale of the companies included in the first closing.
Further information is provided in the related paragraph in note 11 in the consolidated financial statements.
(\u20acm)
31 December 2023
31 December 2022
Net non-current assets*
18,964.7
17,485.3
\u00a0of which investments in associates and joint ventures
76.7
73.8
Net working capital**
\u00a0(2,174.6)
\u00a0(2,732.8)
Gross invested capital***
16,790.1
14,752.5
*\tNet non-current assets include the value of \u201cProperty, plant and equipment\u201d, \u201cGoodwill\u201d, \u201cIntangible assets\u201d, \u201cInvestments accounted for using the equity method\u201d, \u201cOther non-current assets\u201d and \u201cNon-current financial assets\u201d, excluding the value of cash flow hedges (\u20ac17.2 million).
**\tNet working capital is the difference between total current assets less cash and the items, \u201cCurrent financial assets\u201d and total current liabilities, less the short-term portion of long-term borrowings and the items, \u201cShort-term borrowings\u201d and \u201cCurrent financial liabilities\u201d, and the item, \u201cOther non-current liabilities\u201d.
***\tGross invested capital is the sum of net non-current assets and net working capital.
Assets
13. PROPERTY, PLANT AND EQUIPMENT \u2013 \u20ac17,596.7 million
(\u20acm)
Land
Buildings
Plant and equipment
Industrial and commercial equipment
Other assets
Assets under construction and prepayments
TOTAL
COST AT 31 DECEMBER 2022
217.7
2,403.3
20,979.8
232.2
269.3
2,581.3
26,683.6
Investment
0.1
5.1
1.0
8.1
11.7
2,047.8
2,073.8
\u00a0of which right-of-use assets
5.0
0.2
10.1
15.3
Assets entering service
9.5
191.2
1,528.0
9.4
25.8
(1,763.9)
-
Contribution from business combinations
5.6
0.8
13.5
-
-
-
19.9
Translation differences
-
2.6
-
4.9
0.4
0.1
8.0
\u00a0of which right-of-use assets
-
(0.2)
-
-
(0.1)
-
(0.3)
Disposals and impairments
(0.1)
(3.3)
(104.4)
(3.3)
(18.2)
(8.2)
(137.5)
\u00a0of which right-of-use assets
(1.8)
(1.5)
-
(0.6)
-
(3.9)
Other movements
(0.3)
(12.2)
(26.7)
-
-
28.2
(11.0)
COST AT 31 DECEMBER 2023
232.5
2,587.5
22,391.2
251.3
289.0
2,885.3
28,636.8
ACCUMULATED DEPRECIATION AND IMPAIRMENT AT 31 DECEMBER 2022
(2.2)
(798.8)
(9,318.8)
(185.2)
(177.7)
-
(10,482.7)
Depreciation for the year
(0.7)
(65.8)
(566.6)
(9.7)
(27.8)
-
(670.6)
\u00a0of which right-of-use assets
(0.7)
(7.3)
-
-
(9.7)
-
(17.7)
Contribution from business combinations
-
(0.3)
(6.3)
-
-
(6.6)
Translation differences
-
(0.9)
-
(4.7)
(0.4)
-
(6.0)
Disposals
-
2.9
100.4
3.2
18.1
-
124.6
\u00a0of which right-of-use assets
-
1.6
1.3
-
0.4
-
3.3
Other movements
-
(0.1)
1.2
0.1
-
-
1.2
ACCUMULATED DEPRECIATION AND IMPAIRMENT AT 31 DECEMBER 2023
(2.9)
(863.0)
(9,790.1)
(196.3)
(187.8)
-
(11,040.1)
Carrying amount
AT 31 DECEMBER 2023
229.6
1,724.5
12,601.1
55.0
101.2
2,885.3
17,596.7
\u00a0of which right-of-use assets
4.9
32.6
19.4
-
35.9
-
92.8
AT 31 DECEMBER 2022
215.5
1,604.5
11,661.0
47.0
91.6
2,581.3
16,200.9
\u00a0of which right-of-use assets
5.6
35.3
19.4
-
35.8
-
96.1
Change
14.1
120.0
940.1
8.0
9.6
304.0
1,395.8
The category, \u201cPlant and equipment,\u201d at 31 December 2023 includes the electricity transmission grid and transformer substations in Italy.
\u201cProperty, plant and equipment\u201d is up \u20ac1,395.8 million compared with 31 December 2022, reflecting ordinary movements during the year as a result of:
\u2022 investment of \u20ac2,073.8 million during the year, including \u20ac2,017.0 million in the Group\u2019s Regulated Activities and \u20ac56.8 million in Non-regulated Activities, primarily with regard to the re-routing of power lines at the request of third parties and the private Italy-France and Italy-Austria interconnectors;
\u2022 the contribution of the NTG assets arising from the acquisition of Edyna Transmission S.r.l. (renamed Rete Nord S.r.l. and merged with the subsidiary, rete S.r.l., in December 2023), amounting to \u20ac13.3 million;
\u2022 depreciation for the year of \u20ac670.6 million;
\u2022 other changes during the year, resulting in a reduction of \u20ac7.8 million, including grants related to assets (down \u20ac9.7 million, primarily for the re-routing of power lines at the request of third parties and projects financed by the Ministry of Enterprises and Made in Italy and the EU) and translation differences;
\u2022 disposals and impairments (down \u20ac12.9 million).
A summary of movements in property, plant and equipment during the year is shown below.
(\u20acm)
Investment
\u00a0- Power lines
1,087.6
\u00a0- Transformer substations
789.0
\u00a0- Other
197.2
Total investment in property, plant and equipment
2,073.8
Depreciation
(670.6)
Contribution from business combinations
13.3
Other changes
\u00a0(9.8)
Disposals and impairments
(12.9)
Translation differences
2.0
TOTAL
1,395.8
The following information regards work on the principal projects during the year in relation to Regulated Activities: the start of design work for the construction of the Tyrrhenian Link (\u20ac414.8 million), the start of preliminary work on construction of the Adriatic Link (\u20ac110.8 million), the installation of synchronous compensators and STATCOM systems (\u20ac58.0 million and \u20ac13.3 million, respectively), progress on construction of the Elba-Mainland power line (\u20ac54.8 million), Patern\u00f2-Pantano-Priolo (\u20ac30.6 million), the Olympics projects (\u20ac49.8 million), Colunga-Calenzano (\u20ac28.2 million), Sorgente-Rizziconi (\u20ac19.2 million) and the Italy-France interconnector (\u20ac13.1 million, with the regulated pole entering service in August), the construction of reactors (\u20ac15.3 million), extension of the fibre network as part of the \u201cFibre for the Grid\u201d project (\u20ac16.9 million), construction of the Cerignola (\u20ac18.2 million) and Magenta (\u20ac12.1 million) substations.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130838": { "value": "14. GOODWILL \u2013 \u20ac252.3 million
Goodwill, amounting to \u20ac252.3 million at 31 December 2023, regards the Parent Company\u2019s acquisition of Terna Rete Italia S.r.l., accounted for in the financial statements at a carrying amount of \u20ac101.6 million, of RTL S.p.A. accounted for in the financial statements at a carrying amount of \u20ac88.6 million and of Rete S.r.l. amounting to \u20ac26.3 million, the acquisition of TES - Transformer Electro Services by the Tamini Group, with a carrying amount of \u20ac13.6 million and the acquisitions carried out by the parent Company through the subsidiary, Terna Energy Solutions S.r.l., a 75% interest in LT S.r.l. (LT Group), accounted for at a carrying amount of \u20ac19.3 million and through the Brugg Group, a 100% interest in Laser TLC S.r.l., accounted for at a carrying amount of \u20ac1.5 million. It also includes goodwill based on preliminary recognition of the acquisition of Omnia S.r.l. in March 2023 through the LT Group and merged with and into LT S.r.l. on 5 October 2023. This goodwill has a carrying amount of \u20ac1.3 million.
The increase of \u20ac0.8 million compared with 31 December 2022 essentially reflects the above acquisition of Omnia S.r.l..
Impairment testing
For the purposes of impairment testing, goodwill has been allocated to three cash generating units (CGUs): the first consisting of \u201cTransmission activities\u201d within the Group\u2019s Regulated Activities, amounting to \u20ac216.5 million, and the second relating to the \u201cProduction and commercialisation of transformers\u201d, forming part of the Group\u2019s Non-regulated Activities, totalling \u20ac13.6 million. The third relates to the design, construction, operation and maintenance of renewable energy plants, amounting to \u20ac20.7 million.Disclosures regarding the impairment testing of the goodwill allocated to the Group\u2019s \u201cTransmission\u201d CGU are provided below. Measurement of the recoverable value of the goodwill allocated to the transmission activities was based on fair value less costs of disposal. Determination of the carrying amount of the CGU represented by the NTG was based on Terna S.p.A.\u2019s net invested capital at 31 December 2023, appropriately adjusted for the assets and liabilities not falling within the scope of Transmission activities (e.g., Dispatching, Non-regulated and International activities). The recoverable amount was based on fair value after applying an EBITDA multiple to the operating profit of the CGU represented by the NTG. This multiple was calculated at the level of the Company, as the ratio between the enterprise value (the sum of the stock market capitalization and net debt) and the Company\u2019s EBITDA. The result obtained is significantly higher than the carrying amount recognised in the financial statements inclusive of goodwill.
The impairment test of the CGU represented by the production and commercialisation of transformers was based on fair value less costs of disposal, determined on the basis of the average EBITDA multiple for the sector. Measurement of the recoverable value was based on estimated fair value applying the EBITDA multiple for 2024. This multiple was approximately 13.3, the average for a sample of companies operating in the sector. The resulting fair value was then appropriately discounted to present value at the end of 2023. The resulting value is higher than the carrying amount inclusive of goodwill.
With regard to the CGU related to the design, construction, operation and maintenance of renewable energy plants, the impairment test was carried out using the fair value less cost of disposal, determined on the basis of a multiple of the average EBITDA for the sector. To determine the recoverable value, fair value was estimated applying the multiple of EBITDA for 2024, equal to approximately 11.0x, the average for a sample of companies operating in the sector. The fair value calculated in this way was then discounted at the end of 2023. The result was higher than the carrying amount inclusive of goodwill.
15. INTANGIBLE ASSETS \u2013 \u20ac614.9 million
(\u20acm)
Infrastructure rights
Concessions
Other assets
Assets under development and prepayments
TOTAL
Cost
583.0
135.4
711.2
108.7
1,538.3
Accumulated amortisation
(421.6)
(96.1)
(496.3)
-
(1,014.0)
BALANCE AT 31 DECEMBER 2022
161.4
39.3
214.9
108.7
524.3
Investment
-
-
1.7
214.5
216.2
Assets entering service
82.1
-
110.9
(193.0)
-
Disposals and impairments
-
-
-
(1.3)
(1.3)
Depreciation
(34.8)
(5.6)
(86.0)
-
(126.4)
Other movements
-
-
1.2
0.9
2.1
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Cost
665.1
135.4
825.0
129.8
1,755.3
Accumulated amortisation
(456.4)
(101.7)
(582.3)
-
(1,140.4)
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Change
47.3
(5.6)
27.8
21.1
90.6
Intangible assets amount to \u20ac614.9 million (\u20ac524.3 million at 31 December 2022); this item includes:
\u2022 the infrastructure used in provision of the dispatching service in Italy accounted for in accordance with \u201cIFRIC 12 \u2013 Service Concession Arrangements\u201d. The carrying amount, at 31 December 2023, is \u20ac208.7 million for infrastructure in service, whilst the carrying amount of infrastructure under construction, included in the category \u201cAssets under development and prepayments\u201d, is \u20ac41.7 million (at 31 December 2022 \u20ac161.4 million and \u20ac46.1 million, respectively);\u2022 the concession for electricity transmission and dispatching activities in Italy (with a carrying amount of \u20ac33.7 million at 31 December 2023); this 25-year concession was recognised in 2005, initially at fair value and subsequently at cost.
Other intangible assets primarily include software applications, either produced internally or purchased as part of systems development programmes, and the contract to provide support services for fibre networks acquired with Rete S.r.l. in 2015 (measured as part of the process of allocating the goodwill acquired by the Terna Group). Investment in these assets during the year, primarily attributable to the Parent Company (\u20ac137.0 million), essentially regard internal development programmes.
The increase compared with the previous year (up \u20ac90.6 million) broadly reflects the net effect of investment (up \u20ac216.2 million, including \u20ac77.5 million in infrastructure rights) and amortisation (down \u20ac126.4 million).
Investment in intangible assets during the year (\u20ac216.2 million, including \u20ac214.5 million attributable to the Parent Company\u2019s Regulated Activities), included expenditure on the development of software applications for the Remote Management System for Dispatching (\u20ac41.9 million), the Power Exchange (\u20ac13.5 million), the Metering\u00a0System (\u20ac1.7 million) and for protection of the electricity system (\u20ac1.7 million), as well as software applications and generic licences (\u20ac133.4 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsAndGoodwillExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130839": { "value": "14. GOODWILL \u2013 \u20ac252.3 million
Goodwill, amounting to \u20ac252.3 million at 31 December 2023, regards the Parent Company\u2019s acquisition of Terna Rete Italia S.r.l., accounted for in the financial statements at a carrying amount of \u20ac101.6 million, of RTL S.p.A. accounted for in the financial statements at a carrying amount of \u20ac88.6 million and of Rete S.r.l. amounting to \u20ac26.3 million, the acquisition of TES - Transformer Electro Services by the Tamini Group, with a carrying amount of \u20ac13.6 million and the acquisitions carried out by the parent Company through the subsidiary, Terna Energy Solutions S.r.l., a 75% interest in LT S.r.l. (LT Group), accounted for at a carrying amount of \u20ac19.3 million and through the Brugg Group, a 100% interest in Laser TLC S.r.l., accounted for at a carrying amount of \u20ac1.5 million. It also includes goodwill based on preliminary recognition of the acquisition of Omnia S.r.l. in March 2023 through the LT Group and merged with and into LT S.r.l. on 5 October 2023. This goodwill has a carrying amount of \u20ac1.3 million.
The increase of \u20ac0.8 million compared with 31 December 2022 essentially reflects the above acquisition of Omnia S.r.l..
", "dimensions": { "concept": "ifrs-full:DisclosureOfGoodwillExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130837": { "value": "Impairment testing
For the purposes of impairment testing, goodwill has been allocated to three cash generating units (CGUs): the first consisting of \u201cTransmission activities\u201d within the Group\u2019s Regulated Activities, amounting to \u20ac216.5 million, and the second relating to the \u201cProduction and commercialisation of transformers\u201d, forming part of the Group\u2019s Non-regulated Activities, totalling \u20ac13.6 million. The third relates to the design, construction, operation and maintenance of renewable energy plants, amounting to \u20ac20.7 million.
Disclosures regarding the impairment testing of the goodwill allocated to the Group\u2019s \u201cTransmission\u201d CGU are provided below. Measurement of the recoverable value of the goodwill allocated to the transmission activities was based on fair value less costs of disposal. Determination of the carrying amount of the CGU represented by the NTG was based on Terna S.p.A.\u2019s net invested capital at 31 December 2023, appropriately adjusted for the assets and liabilities not falling within the scope of Transmission activities (e.g., Dispatching, Non-regulated and International activities). The recoverable amount was based on fair value after applying an EBITDA multiple to the operating profit of the CGU represented by the NTG. This multiple was calculated at the level of the Company, as the ratio between the enterprise value (the sum of the stock market capitalization and net debt) and the Company\u2019s EBITDA. The result obtained is significantly higher than the carrying amount recognised in the financial statements inclusive of goodwill.
The impairment test of the CGU represented by the production and commercialisation of transformers was based on fair value less costs of disposal, determined on the basis of the average EBITDA multiple for the sector. Measurement of the recoverable value was based on estimated fair value applying the EBITDA multiple for 2024. This multiple was approximately 13.3, the average for a sample of companies operating in the sector. The resulting fair value was then appropriately discounted to present value at the end of 2023. The resulting value is higher than the carrying amount inclusive of goodwill.
With regard to the CGU related to the design, construction, operation and maintenance of renewable energy plants, the impairment test was carried out using the fair value less cost of disposal, determined on the basis of a multiple of the average EBITDA for the sector. To determine the recoverable value, fair value was estimated applying the multiple of EBITDA for 2024, equal to approximately 11.0x, the average for a sample of companies operating in the sector. The fair value calculated in this way was then discounted at the end of 2023. The result was higher than the carrying amount inclusive of goodwill.
", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130841": { "value": "15. INTANGIBLE ASSETS \u2013 \u20ac614.9 million
(\u20acm)
Infrastructure rights
Concessions
Other assets
Assets under development and prepayments
TOTAL
Cost
583.0
135.4
711.2
108.7
1,538.3
Accumulated amortisation
(421.6)
(96.1)
(496.3)
-
(1,014.0)
BALANCE AT 31 DECEMBER 2022
161.4
39.3
214.9
108.7
524.3
Investment
-
-
1.7
214.5
216.2
Assets entering service
82.1
-
110.9
(193.0)
-
Disposals and impairments
-
-
-
(1.3)
(1.3)
Depreciation
(34.8)
(5.6)
(86.0)
-
(126.4)
Other movements
-
-
1.2
0.9
2.1
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Cost
665.1
135.4
825.0
129.8
1,755.3
Accumulated amortisation
(456.4)
(101.7)
(582.3)
-
(1,140.4)
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Change
47.3
(5.6)
27.8
21.1
90.6
Intangible assets amount to \u20ac614.9 million (\u20ac524.3 million at 31 December 2022); this item includes:
\u2022 the infrastructure used in provision of the dispatching service in Italy accounted for in accordance with \u201cIFRIC 12 \u2013 Service Concession Arrangements\u201d. The carrying amount, at 31 December 2023, is \u20ac208.7 million for infrastructure in service, whilst the carrying amount of infrastructure under construction, included in the category \u201cAssets under development and prepayments\u201d, is \u20ac41.7 million (at 31 December 2022 \u20ac161.4 million and \u20ac46.1 million, respectively);\u2022 the concession for electricity transmission and dispatching activities in Italy (with a carrying amount of \u20ac33.7 million at 31 December 2023); this 25-year concession was recognised in 2005, initially at fair value and subsequently at cost.
", "dimensions": { "concept": "ifrs-full:DisclosureOfServiceConcessionArrangementsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130840": { "value": "15. INTANGIBLE ASSETS \u2013 \u20ac614.9 million
(\u20acm)
Infrastructure rights
Concessions
Other assets
Assets under development and prepayments
TOTAL
Cost
583.0
135.4
711.2
108.7
1,538.3
Accumulated amortisation
(421.6)
(96.1)
(496.3)
-
(1,014.0)
BALANCE AT 31 DECEMBER 2022
161.4
39.3
214.9
108.7
524.3
Investment
-
-
1.7
214.5
216.2
Assets entering service
82.1
-
110.9
(193.0)
-
Disposals and impairments
-
-
-
(1.3)
(1.3)
Depreciation
(34.8)
(5.6)
(86.0)
-
(126.4)
Other movements
-
-
1.2
0.9
2.1
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Cost
665.1
135.4
825.0
129.8
1,755.3
Accumulated amortisation
(456.4)
(101.7)
(582.3)
-
(1,140.4)
BALANCE AT 31 DECEMBER 2023
208.7
33.7
242.7
129.8
614.9
Change
47.3
(5.6)
27.8
21.1
90.6
Intangible assets amount to \u20ac614.9 million (\u20ac524.3 million at 31 December 2022); this item includes:
\u2022 the infrastructure used in provision of the dispatching service in Italy accounted for in accordance with \u201cIFRIC 12 \u2013 Service Concession Arrangements\u201d. The carrying amount, at 31 December 2023, is \u20ac208.7 million for infrastructure in service, whilst the carrying amount of infrastructure under construction, included in the category \u201cAssets under development and prepayments\u201d, is \u20ac41.7 million (at 31 December 2022 \u20ac161.4 million and \u20ac46.1 million, respectively);\u2022 the concession for electricity transmission and dispatching activities in Italy (with a carrying amount of \u20ac33.7 million at 31 December 2023); this 25-year concession was recognised in 2005, initially at fair value and subsequently at cost.
Other intangible assets primarily include software applications, either produced internally or purchased as part of systems development programmes, and the contract to provide support services for fibre networks acquired with Rete S.r.l. in 2015 (measured as part of the process of allocating the goodwill acquired by the Terna Group). Investment in these assets during the year, primarily attributable to the Parent Company (\u20ac137.0 million), essentially regard internal development programmes.
The increase compared with the previous year (up \u20ac90.6 million) broadly reflects the net effect of investment (up \u20ac216.2 million, including \u20ac77.5 million in infrastructure rights) and amortisation (down \u20ac126.4 million).
Investment in intangible assets during the year (\u20ac216.2 million, including \u20ac214.5 million attributable to the Parent Company\u2019s Regulated Activities), included expenditure on the development of software applications for the Remote Management System for Dispatching (\u20ac41.9 million), the Power Exchange (\u20ac13.5 million), the Metering\u00a0System (\u20ac1.7 million) and for protection of the electricity system (\u20ac1.7 million), as well as software applications and generic licences (\u20ac133.4 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfIntangibleAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130842": { "value": "16. Deferred tax assets \u2013 \u20ac168.7 million
(\u20acm)
31 December 2022
PROVISIONS
USES AND OTHER MOVEMENTS
EFFECTS RECOGNISED IN COMPREHENSIVE INCOME
31 December 2023
DEFERRED TAX ASSETS
Property, plant and equipment
56.7
32.5
-
-
89.2
Provisions for risks and charges
21.2
5.8
(5.3)
-
21.7
Allowance for doubtful accounts
4.6
-
-
-
4.6
Employee benefits
11.5
6.6
(5.2)
0.9
13.8
Cash flow hedges and financial assets
(23.8)
-
-
11.5
(12.3)
Tax relief on goodwill
14.8
-
(3.0)
-
11.8
Other
63.7
5.9
(3.7)
-
65.9
DEFERRED TAX LIABILITIES
148.6
50.8
(17.2)
12.4
194.7
Property, plant and equipment
Other
(9.5)
-
1.2
-
\u00a0(8.3)
Employee benefits and financial instruments
(15.3)
-
0.5
-
\u00a0(14.8)
Total deferred tax liabilities
(2.9)
-
-
-
\u00a0(2.9)
DEFERRED TAX LIABILITIES
(27.7)
-
1.7
-
\u00a0(26.0)
NET DEFERRED TAX ASSETS
121.0
50.8
(15.5)
12.4
168.7
The balance of this item, amounting to \u20ac168.7 million, includes the net impact of movements in the Group\u2019s deferred tax assets and liabilities.
Deferred tax assets (\u20ac194.7 million) are up by a net amount compared with the amount at 31 December 2022 (\u20ac148.6 million). These assets underwent the following movements during the year:
\u2022 net provisions recognised through comprehensive income, totalling \u20ac12.4 million, primarily due to the tax effect of changes in cash flow hedges and employee benefits;
\u2022 provisions recognised by Terna S.p.A. for the non-deductible portion of book depreciation (\u20ac32.5 million);
\u2022 use of the accrued portion recognised in relation to tax relief on the goodwill resulting from the merger of Terna Rete Italia S.r.l. and attributable to the Parent Company (\u20ac3.0 million);
\u2022 net provisions for risks and charges (\u20ac0.5 million), primarily reflecting the impact on taxation of the release of provisions for litigation and disputes (\u20ac0.4 million);
\u2022 net provisions and other movements, totalling \u20ac2.2 million, primarily regarding the recognition of deferred tax assets revaluations of properties and on other items recognized by the overseas companies.
Deferred tax liabilities (26,0 million) are down by a net amount of \u20ac1,7 essentially due to net provisions and other movements of \u20ac1.2 million, primarily following the recognition of deferred tax liabilities on other provisions made by the subsidiary, Rete S.r.l..
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130849": { "value": "18. Financial assets
(\u20acm)
Measurement
31 December 2023
31 December 2022
Change
Deposit in the Interconnector Guarantee Fund
Amortised cost
285.0
299.1
\u00a0(14.1)
Cash flow hedges
FVTOCI
17.4
75.5
\u00a0(58.1)
Government securities
FVTOCI
119.1
119.6
\u00a0(0.5)
Other non-current financial assets
FVTOCI
4.2
0.1
4.1
Other investments
FVTOCI
0.1
0.1
-
NON-CURRENT FINANCIAL ASSETS
\u00a0
425.8
494.4
\u00a0(68.6)
Government securities
FVTOCI
96.8
148.8
\u00a0(52.0)
Other securities
FVPNL-FVTOCI
100.4
98.0
2.4
Time Deposits
Amortised cost
165.0
\u00a0-
165.0
Deferred assets on cash flow hedges
\u00a0
7.3
3.5
3.8
Currency derivatives
FVTOCI
0.4
0.2
0.2
Other current financial assets
\u00a0
14.2
4.8
9.4
CURRENT FINANCIAL ASSETS
\u00a0
384.1
255.3
128.8
\u201cNon-current financial assets\u201d are down \u20ac68.6 million, compared with 31 December 2022, reflecting:
\u2022 a reduction of \u20ac58.1 million in cash flow hedges hedging borrowings due to market interest rate movements and the change in the derivatives held. The balance of \u20ac17.4 million was measured by discounting expected cash flows using market interest rates at the measurement date;
\u2022 an increase of \u20ac4.1 million in other non-current financial assets, primarily due to investments by Terna Forward in the Infra Tech and Energy Tech segments of CDP Venture Capital\u2019s Corporate Partner I fund;
\u2022 a reduction in guarantee deposits made by operators who participate in the capacity market pursuant to Resolution 98/2011/R/eel, as amended (down \u20ac31.7 million) offset by an increase in the Interconnector Guarantee Fund, set up to fund investment in interconnections by art. 32 of Law 99/09 (up \u20ac17.6 million).
\u201cCurrent financial assets\u201d are up \u20ac128.8 million compared with the previous year, primarily due to an increase in short-term time deposits during the period (amounting to \u20ac165.0 million), the increase in unpaid accrued interest on financial investments (amounting to \u20ac9.4 million) and recognition of unpaid accrued interest on derivatives (up \u20ac3.8 million), offset by the reduction in holdings of Italian government securities (down \u20ac52.0 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsDesignatedAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130845": { "value": "18. Financial assets
(\u20acm)
Measurement
31 December 2023
31 December 2022
Change
Deposit in the Interconnector Guarantee Fund
Amortised cost
285.0
299.1
\u00a0(14.1)
Cash flow hedges
FVTOCI
17.4
75.5
\u00a0(58.1)
Government securities
FVTOCI
119.1
119.6
\u00a0(0.5)
Other non-current financial assets
FVTOCI
4.2
0.1
4.1
Other investments
FVTOCI
0.1
0.1
-
NON-CURRENT FINANCIAL ASSETS
\u00a0
425.8
494.4
\u00a0(68.6)
Government securities
FVTOCI
96.8
148.8
\u00a0(52.0)
Other securities
FVPNL-FVTOCI
100.4
98.0
2.4
Time Deposits
Amortised cost
165.0
\u00a0-
165.0
Deferred assets on cash flow hedges
\u00a0
7.3
3.5
3.8
Currency derivatives
FVTOCI
0.4
0.2
0.2
Other current financial assets
\u00a0
14.2
4.8
9.4
CURRENT FINANCIAL ASSETS
\u00a0
384.1
255.3
128.8
\u201cNon-current financial assets\u201d are down \u20ac68.6 million, compared with 31 December 2022, reflecting:
\u2022 a reduction of \u20ac58.1 million in cash flow hedges hedging borrowings due to market interest rate movements and the change in the derivatives held. The balance of \u20ac17.4 million was measured by discounting expected cash flows using market interest rates at the measurement date;
\u2022 an increase of \u20ac4.1 million in other non-current financial assets, primarily due to investments by Terna Forward in the Infra Tech and Energy Tech segments of CDP Venture Capital\u2019s Corporate Partner I fund;
\u2022 a reduction in guarantee deposits made by operators who participate in the capacity market pursuant to Resolution 98/2011/R/eel, as amended (down \u20ac31.7 million) offset by an increase in the Interconnector Guarantee Fund, set up to fund investment in interconnections by art. 32 of Law 99/09 (up \u20ac17.6 million).
\u201cCurrent financial assets\u201d are up \u20ac128.8 million compared with the previous year, primarily due to an increase in short-term time deposits during the period (amounting to \u20ac165.0 million), the increase in unpaid accrued interest on financial investments (amounting to \u20ac9.4 million) and recognition of unpaid accrued interest on derivatives (up \u20ac3.8 million), offset by the reduction in holdings of Italian government securities (down \u20ac52.0 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfDepositsFromCustomersExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130844": { "value": "18. Financial assets
(\u20acm)
Measurement
31 December 2023
31 December 2022
Change
Deposit in the Interconnector Guarantee Fund
Amortised cost
285.0
299.1
\u00a0(14.1)
Cash flow hedges
FVTOCI
17.4
75.5
\u00a0(58.1)
Government securities
FVTOCI
119.1
119.6
\u00a0(0.5)
Other non-current financial assets
FVTOCI
4.2
0.1
4.1
Other investments
FVTOCI
0.1
0.1
-
NON-CURRENT FINANCIAL ASSETS
\u00a0
425.8
494.4
\u00a0(68.6)
Government securities
FVTOCI
96.8
148.8
\u00a0(52.0)
Other securities
FVPNL-FVTOCI
100.4
98.0
2.4
Time Deposits
Amortised cost
165.0
\u00a0-
165.0
Deferred assets on cash flow hedges
\u00a0
7.3
3.5
3.8
Currency derivatives
FVTOCI
0.4
0.2
0.2
Other current financial assets
\u00a0
14.2
4.8
9.4
CURRENT FINANCIAL ASSETS
\u00a0
384.1
255.3
128.8
\u201cNon-current financial assets\u201d are down \u20ac68.6 million, compared with 31 December 2022, reflecting:
\u2022 a reduction of \u20ac58.1 million in cash flow hedges hedging borrowings due to market interest rate movements and the change in the derivatives held. The balance of \u20ac17.4 million was measured by discounting expected cash flows using market interest rates at the measurement date;
\u2022 an increase of \u20ac4.1 million in other non-current financial assets, primarily due to investments by Terna Forward in the Infra Tech and Energy Tech segments of CDP Venture Capital\u2019s Corporate Partner I fund;
\u2022 a reduction in guarantee deposits made by operators who participate in the capacity market pursuant to Resolution 98/2011/R/eel, as amended (down \u20ac31.7 million) offset by an increase in the Interconnector Guarantee Fund, set up to fund investment in interconnections by art. 32 of Law 99/09 (up \u20ac17.6 million).
\u201cCurrent financial assets\u201d are up \u20ac128.8 million compared with the previous year, primarily due to an increase in short-term time deposits during the period (amounting to \u20ac165.0 million), the increase in unpaid accrued interest on financial investments (amounting to \u20ac9.4 million) and recognition of unpaid accrued interest on derivatives (up \u20ac3.8 million), offset by the reduction in holdings of Italian government securities (down \u20ac52.0 million).25. Borrowings and financial liabilities
(\u20acm)
31 December 2023
31 December 2022
Change
Bond issues
5,664.2
5,078.9
585.3
Bank borrowings
3,745.0
3,337.8
407.2
LONG-TERM BORROWINGS
9,409.2
8,416.7
992.5
Fair value hedges
164.5
247.2
\u00a0(82.7)
NON-CURRENT FINANCIAL LIABILITIES
164.5
247.2
(82.7)
SHORT-TERM BORROWINGS
1,201.7
444.1
757.6
Bond issues
826.4
1,658.8
\u00a0(832.4)
Bank borrowings
558.2
250.5
307.7
CURRENT PORTION OF LONG-TERM BORROWINGS
1,384.6
1,909.3
\u00a0(524.7)
CURRENT FINANCIAL LIABILITIES
113.8
44.9
68.9
TOTAL
12,273.8
11,062.2
1,211.6
Borrowings and financial liabilities have increased by \u20ac1,211.6 million compared with the previous year to \u20ac12,273.8 million. The change primarily reflects:
\u2022 an increase in bank borrowings, amounting to \u20ac714.9 million, following the drawdown of new EIB loans, totalling \u20ac900 million, after repayments of bank loans amounting to \u20ac100.0 million and repayments falling due on existing EIB loans. The change also reflects fair value adjustments of these financial instruments;
\u2022 an increase in short-term borrowings (\u20ac757.6 million) due to the use of short-term facilities and the issue of commercial paper by the Parent Company;
\u2022 a reduction in bond issues (down \u20ac247.1 million), essentially due to the repayment of two bonds (totalling \u20ac1,000 million in July 2023 and \u20ac670.8 million in September 2023), partially offset by the launch of the same number of issues amounting to \u20ac1,400 million, carried out by Terna S.p.A. in April and July 2023. The change also reflects fair value adjustments of these financial instruments.The latest official prices at 31 December 2023 and 31 December 2022 for the bonds listed on the Luxembourg Stock Exchange are detailed below:
(\u20acm)
ISIN
PRICE AT31 DECEMBER 2023
PRICE AT31 DECEMBER 2022
Bond maturity 2023*:
XS0328430003
\u00a0n.a.**
\u00a0133.90
Bond maturity 2023:
XS1858912915
\u00a0n.a.**
\u00a099.13
Bond maturity 2024:
XS0203712939
\u00a0100.92
\u00a0102.21
Bond maturity 2025:
XS2033351995
\u00a094.95
\u00a091.69
Bond maturity 2026:
XS1371569978
\u00a095.96
\u00a093.87
Bond maturity 2026:
XS1980270810
\u00a095.51
\u00a092.27
Bond maturity 2027:
XS1652866002
\u00a094.40
\u00a090.25
Bond maturity 2027:
XS2536846236
\u00a0100.33
\u00a0100.78
Bond maturity 2028:
XS1503131713
\u00a091.46
\u00a085.03
Bond maturity 2029:
XS2357205587
\u00a086.53
\u00a080.02
Bond maturity 2029:
XS2607193435
\u00a0102.26
\u00a0n.a.**
Bond maturity 2030:
XS2237901355
\u00a082.94
\u00a075.66
Bond maturity 2032:
XS2209023402
\u00a081.82
\u00a073.78
Bond maturity 2033:
XS2655852726
\u00a0103.26
\u00a0n.a.**
* Source: BofA, Morgan Stanley and Bloomberg.
** Not applicable.
Long-term borrowings
The table below shows movements in long-term debt during the year, including also the nominal amount:
(\u20acm)
31 December 2022
31 December 2023
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
REPAYMENTS AND CAPITALISATIONS
DRAWDOWNS
OTHER
CHANGE IN THE CARRYING AMOUNT NOTIONAL DEBT
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
IL bond
662.0
659.6
886.4
\u00a0(670.8)
\u00a0-
11.2
\u00a0(659.6)
-
-
-
Bond maturing 2023
1,000.0
999.2
991.3
\u00a0(1,000.0)
\u00a0-
0.8
\u00a0(999.2)
-
-
-
Bond maturing 2024
800.0
858.2
817.7
\u00a0-
\u00a0-
\u00a0(31.8)
\u00a0(31.8)
800.0
826.4
807.4
Bond maturing 2025
500.0
497.5
458.4
\u00a0-
\u00a0-
1.0
1.0
500.0
498.5
474.7
Private Placement 2026
80.0
79.5
75.1
\u00a0-
\u00a0-
0.2
0.2
80.0
79.7
76.8
Bond maturing 2026
500.0
498.9
461.3
\u00a0-
\u00a0-
0.3
0.3
500.0
499.2
477.6
Private Placement 2027
100.0
99.8
100.8
\u00a0-
\u00a0-
\u00a0-
\u00a0-
100.0
99.8
100.3
Bond maturing 2027
1,000.0
984.9
902.4
\u00a0-
\u00a0-
3.1
3.1
1,000.0
988.0
944.0
Bond maturing 2028
750.0
705.6
637.7
\u00a0-
\u00a0-
7.3
7.3
750.0
712.9
685.9
Bond maturing 750_2029
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0750.0
\u00a0(7.3)
742.7
750.0
742.7
766.9
Bond maturing 2029
600.0
597.1
480.1
\u00a0-
\u00a0-
0.5
0.5
600.0
597.6
519.2
Bond maturing 2030
500.0
403.8
378.3
\u00a0-
\u00a0-
33.2
33.2
500.0
437.0
414.7
Bond maturing 2032
500.0
353.6
368.9
\u00a0-
\u00a0-
12.7
12.7
500.0
366.3
409.1
Bond maturing 2033
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0650.0
\u00a0(7.5)
642.5
650.0
642.5
671.2
Total bond issues
6,992.0
6,737.7
6,558.4
\u00a0(1,670.8)
1,400.0
23.7
\u00a0(247.1)
6,730.0
6,490.6
6,347.8
Borrowings
3,524.3
3,520.6
3,520.6
\u00a0(234.4)
900.0
51.4
717.0
3,799.4
4,237.6
4,237.6
Lease liabilities
67.7
67.7
67.7
\u00a0(14.8)
\u00a0-
12.7
\u00a0(2.1)
65.6
65.6
65.6
Total borrowings
3,592.0
3,588.3
3,588.3
\u00a0(249.2)
900.0
64.1
714.9
3,865.0
4,303.2
4,303.2
Total debt
10,584.0
10,326.0
10,146.7
\u00a0(1,920.0)
2,300.0
87.8
467.8
10,595.0
10,793.8
10,651.0
At 31 December 2023, the Terna Group\u2019s has access to additional financing of \u20ac3,455.0 million, represented by two revolving credit facilities.
In addition, as provided for in IFRS 7, the table shows the fair value of borrowings and bond issues. In the case of bond issues, this is market value based on prices at the reporting date, whilst variable rate loans are measured by discounting expected cash flows based on the market interest rate curve at the reporting date.
The following table shows an analysis of bond issues and other borrowings by maturity, showing the related short-term portions.
(\u20acm)
Maturity
31 December 2022*
31 December 2023*
Portion falling due within 12 months
Portion falling due after 12 months
2025
2026
2027
2028
2029
After
Other**
\u00a0Average interest rate at 31 December 2023
Average interest rate after hedges at 31 December 2023
Bonds
2023
659.6
-
-
-
-
-
-
-
-
-
-
2.73%
5.08%
2023
999.2
-
-
-
-
-
-
-
-
-
-
1.00%
1.15%
2024
858.2
826.4
800.0
-
-
-
-
-
-
-
26.4
4.90%
0.87%
2025
497.6
498.5
-
500.0
500.0
-
-
-
-
-
(1.5)
0.13%
0.32%
2026
498.8
499.2
-
500.0
-
500.0
-
-
-
-
(0.8)
1.00%
1.28%
2026
79.5
79.7
-
80.0
-
80.0
-
-
-
-
(0.3)
1.60%
1.80%
2027
984.8
988.0
-
1,000.0
-
-
1,000.0
-
-
-
(12.0)
1.38%
1.91%
2027
99.8
99.8
-
100.0
-
-
100.0
-
-
-
(0.2)
3.44%
2.77%
2028
705.6
712.9
-
750.0
-
-
-
750.0
-
-
(37.1)
1.00%
1.29%
2029
597.2
597.6
600.0
-
-
-
600.0
-
(2.4)
0.38%
1.71%
2029
-
742.7
-
750.0
-
-
-
-
750.0
-
(7.3)
3.63%
3.76%
2030
403.8
437.0
-
500.0
-
-
-
-
-
500.0
(63.0)
0.38%
3.30%
2032
353.6
366.3
-
500.0
-
-
-
-
-
500.0
(133.7)
0.75%
3.11%
2033
642.5
650.0
-
-
-
-
650.0
(7.5)
3.88%
3.91%
EIB
2045
1,475.0
2,407.2
24.6
2,488.5
47.7
58.5
117.1
142.2
142.2
1,980.8
(105.9)
2.43%
1.75%
Terna\u2019s borrowing
2024
300.0
300.0
300.0
-
-
-
-
-
-
-
-
-
(1.22%)
Total fixed rate
\u00a0
8,512.7
9,197.8
1,124.6
8,418.5
547.7
638.5
1,217.1
892.2
1,492.2
3,630.8
\u00a0(345.3)
\u00a0
\u00a0
EIB
2041
950.2
836.3
115.3
721.0
115.3
115.3
115.3
115.3
96.0
163.8
\u00a0-
3.7%***
1.57%
Terna\u2019s borrowing
2025
799.1
699.4
100.0
600.0
600.0
-
-
\u00a0-
-
\u00a0-
\u00a0(0.6)
3.82%***
3.77%
Total variable rate
\u00a0
1,749.3
1,535.7
215.3
1,321.0
715.3
115.3
115.3
115.3
96.0
163.8
\u00a0(0.6)
\u00a0
\u00a0
TOTAL
\u00a0
10,262.0
10,733.5
1,339.9
9,739.5
1,263.0
753.8
1,332.4
1,007.5
1,588.2
3,794.6
\u00a0(345.9)
\u00a0
\u00a0
*\tThe balance does not include prepaid fees of \u20ac5.3 million at 31 December 2023 and of \u20ac3.7 million at 31 December 2022.
**\tIncludes portions measured at amortised cost and fair value adjustments at 31 December 2023.
***\tThis is the average of the rates fixed in the sub-periods.
(\u20acm)
31 December 2022
31 December 2023
Portion falling due within 12 months
Portion falling due after 12 months
Finance leases
1.9
1.0
1.0
-
Operating leases
65.8
64.6
17.3
47.3
TOTAL
67.7
65.6
18.3
47.3
At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac14.8 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
Non-current financial liabilities \u2013 \u20ac164.5 million
(\u20acm)
31 December 2023
31 December 2022
Change
Fair value hedges
164.5
247.2
(82.7)
TOTAL
164.5
247.2
\u00a0(82.7)
Non-current financial liabilities, amounting to \u20ac164.5 million at 31 December 2023, reflect the fair value of fair value hedges.
Fair value was measured by discounting the expected cash flows using the market yield curve at the reporting date. The decreases of \u20ac82.7 million, compared with 31 December 2022 reflects the change in market interest rates.
Short-term borrowings \u2013 \u20ac1,201.7 million
\u201cShort-term borrowings\u201d, amounting to \u20ac1,201.7 million at 31 December 2023, have increased \u20ac757.6 million compared with the previous year, essentially due to the use of short-term credit facilities and the issue of commercial paper by the Parent Company.
Current financial liabilities \u2013 \u20ac113.8 million
(\u20acm)
31 December 2023
31 December 2022
Change
Foreign exchange cash flow hedges
\u00a00.1
\u00a0-
0.1
Fair value hedges
\u00a0-
0.8
\u00a0(0.8)
Other current financial liabilities
38.5
\u00a0-
38.5
DEFERRED LIABILITIES ON:
Hedging derivatives
1.3
0.6
0.7
Bond issues
53.5
33.5
20.0
Borrowings
20.4
10.0
10.4
TOTAL
113.8
44.9
68.9
Current financial liabilities amount to \u20ac113.8 million at 31 December 2023, an increase of \u20ac68.9 million compared with 31 December 2022. This essentially reflects the value of net unpaid financial expenses accruing on financial instruments (up \u20ac30.4 million, primarily relating to bond issues and borrowings) and recognition of the advance disbursed by the European Commission in relation to the Italy\u2013Tunisia interconnector project (up \u20ac38.5 million), attributable to the Tunisian operator, STEG.
Net debt
Pursuant to the CONSOB Communication of 28 July 2006 and in compliance with Recommendation ESMA n. 32-382-1138 of 2021, the Group\u2019s net debt is as follows:
(\u20acm)
31 DECEMBER 2023
A.
Cash
183.7
B.
Cash equivalents*
1,194.5
C.
Other current financial assets**
376.4
D.
Liquidity (A) + (B) + (C)
1,754.6
E.
Current financial liabilities (including debt instruments, but excluding the current portion of non-current financial liabilities)
1,201.7
F.
Current portion of non-current debt***
1,490.7
G.
Current debt (E+F)
2,692.4
H.
Net current debt (G) - (D)
937.8
I.
Non-current financial liabilities (excluding the current portion and debt instruments)****
3,833.4
J.
Debt instruments*****
5,723.1
K.
Non-current net debt (I) + (J)
9,556.5
L.
Net debt (H) + (K)
10,494.3
*\tCorresponds with the item, \u201cCash and can equivalents\u201d relating to the value of short-term deposits.
**\tCorresponds with the item, \u201c Current financial assets\u201d relating to the value of government securities (\u20ac197.2 million), readily convertible time deposits (\u20ac165.0 million) and accrued interest income (\u20ac14.3 million).
***\tCorresponds with the item, \u201cCurrent portion of long-term borrowings\u201d relating to the short-term portion of long-term borrowings (\u20ac539.9 million), the short-term portion of bond issues (\u20ac826.4 million) and the short-term portion of lease liabilities (\u20ac18.3 million), \u201c Current financial liabilities\u201d and \u201cCurrent financial assets\u201d relating to the value of derivative assets and accrued financial income on derivatives (down \u20ac7.7 million).
****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of borrowings (\u20ac3,697.7 million) and the long-term portion of lease liabilities (\u20ac47.3 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities (\u20ac105.6 million) and \u201cNon-current financial assets\u201d relating to derivative assets (down \u20ac17.2 million).
*****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of bond issues (\u20ac5,664.2 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities on bonds (\u20ac58.9 million).
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Group is a party may contain provisions that, if certain events occur, authorise counterparties to call in such loans immediately, thereby generating liquidity risk.
Certain long-term loans obtained by the Parent Company, Terna S.p.A., contain covenants that are typical of international practice. The principal covenants relate to:
\u2022 the Company\u2019s bond issues, which consist of an \u20ac800.0 million issued in 2004, perpetual hybrid green bonds of \u20ac1,000,000,000 and eleven issues as part of its EMTN Programme (\u201c\u20ac9,000,000,000 Euro Medium Term Notes Programme\u201d);
\u2022 bank borrowings, consisting of revolving lines of credit and bilateral term loans (\u201cbank debt\u201d);
\u2022 a series of loans to the Company from the European Investment Bank (EIB), amounting to a total of approximately \u20ac3.3 billion.
The main covenants relating to bond issues and the EMTN Programme involve clauses regarding i) \u201cnegative pledges\u201d, on the basis of which the Issuer or its Relevant Subsidiaries undertake not to create or maintain mortgages, pledges or other encumbrances on their assets or revenue to guarantee specific financial debt, unless the encumbrances are extended on an equal or pro rata basis to the bond issues in question (with the exception of certain \u201cpermitted guarantees\u201d); ii) \u201cpari passu\u201d, on the basis of which the securities constitute a direct, unconditional and unsecured obligation by the Issuer, ranking equally among them and with at least the same level of seniority as other present and future unsecured and non- subordinated borrowings of the Issuer; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g., failure to make a repayment, the liquidation of the Issuer, the breach of contractual obligations, a cross-default, etc.) a situation of default is established and the loan is immediately called in. \u00a0
The main covenants relating to bank borrowings involve clauses related to i) negative pledges, on the basis of which the Issuer or the Relevant Subsidiaries undertake not to create or maintain guarantees on their assets to secure borrowings, with the exception of \u201cpermitted guarantees\u201d; ii) pari passu\u00a0on the basis of which the Borrower\u2019s payment obligations in relation to the loan agreements in question are not subordinated to any obligation related to other unsecured and non-subordinated creditors, without prejudice to privileges under the law; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, business discontinuation, substantially prejudicial effects, the breach of contractual obligations, including pari passu\u00a0conditions, a cross-default, etc.) a situation of default is established and the loan is immediately called in; iv) \u201cratings\u201d, which involve accelerated repayment should the rating fall below investment grade for the majority of rating agencies or should the Borrower cease to be rated by at least one agency.
The main covenants related to the EIB loans involve clauses related to i) negative pledges, on the basis of which the Company cannot create personal or real guarantees or, more generally, encumbrances, with the exception of encumbrances granted in relation to borrowings below given amounts and under contractually specified circumstances; ii) the provision to the Bank, at its request, of new guarantees should the ratings assigned by the rating agencies fall below the level indicated in the respective contracts agreed or should the Company cease to be rated by the rating agencies; iii) pari passu, on the basis of which the Company ensures that payment obligations rank equally with those related to all other unsecured, non-subordinated creditors, without prejudice to privileges under the law; iv) cases of contract termination/application of the call provision/withdrawal (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, events that have a negative impact on financial commitments made by the Company, extraordinary administration, liquidation, substantial prejudicial changes, the breach of contractual commitments, etc.); v) accelerated loan payment following the occurrence of given events (e.g. change of control over the Company, loss of the concession, extraordinary corporate events, etc.).
18. Financial assets
(\u20acm)
Measurement
31 December 2023
31 December 2022
Change
Deposit in the Interconnector Guarantee Fund
Amortised cost
285.0
299.1
\u00a0(14.1)
Cash flow hedges
FVTOCI
17.4
75.5
\u00a0(58.1)
Government securities
FVTOCI
119.1
119.6
\u00a0(0.5)
Other non-current financial assets
FVTOCI
4.2
0.1
4.1
Other investments
FVTOCI
0.1
0.1
-
NON-CURRENT FINANCIAL ASSETS
\u00a0
425.8
494.4
\u00a0(68.6)
Government securities
FVTOCI
96.8
148.8
\u00a0(52.0)
Other securities
FVPNL-FVTOCI
100.4
98.0
2.4
Time Deposits
Amortised cost
165.0
\u00a0-
165.0
Deferred assets on cash flow hedges
\u00a0
7.3
3.5
3.8
Currency derivatives
FVTOCI
0.4
0.2
0.2
Other current financial assets
\u00a0
14.2
4.8
9.4
CURRENT FINANCIAL ASSETS
\u00a0
384.1
255.3
128.8
\u201cNon-current financial assets\u201d are down \u20ac68.6 million, compared with 31 December 2022, reflecting:
\u2022 a reduction of \u20ac58.1 million in cash flow hedges hedging borrowings due to market interest rate movements and the change in the derivatives held. The balance of \u20ac17.4 million was measured by discounting expected cash flows using market interest rates at the measurement date;
\u2022 an increase of \u20ac4.1 million in other non-current financial assets, primarily due to investments by Terna Forward in the Infra Tech and Energy Tech segments of CDP Venture Capital\u2019s Corporate Partner I fund;
\u2022 a reduction in guarantee deposits made by operators who participate in the capacity market pursuant to Resolution 98/2011/R/eel, as amended (down \u20ac31.7 million) offset by an increase in the Interconnector Guarantee Fund, set up to fund investment in interconnections by art. 32 of Law 99/09 (up \u20ac17.6 million).
\u201cCurrent financial assets\u201d are up \u20ac128.8 million compared with the previous year, primarily due to an increase in short-term time deposits during the period (amounting to \u20ac165.0 million), the increase in unpaid accrued interest on financial investments (amounting to \u20ac9.4 million) and recognition of unpaid accrued interest on derivatives (up \u20ac3.8 million), offset by the reduction in holdings of Italian government securities (down \u20ac52.0 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130850": { "value": "19. Other assets
(\u20acm)
31 December 2023
31 December 2022
Change
Loans and advances to employees
10.9
11.0
\u00a0(0.1)
Deposits with third parties
4.6
4.8
\u00a0(0.2)
Other non-current assets
-
0.1
\u00a0(0.1)
OTHER NON-CURRENT ASSETS
15.5
15.9
\u00a0(0.4)
Other tax credits
110.1
86.4
23.7
Prepayments to suppliers
11.1
9.2
1.9
Prepayments of operating expenses and accrued operating income
24.0
22.7
1.3
Amounts due from partners selected for Interconnector projects
2.9
3.1
(0.2)
Amounts due from others
65.3
70.5
(5.2)
OTHER CURRENT ASSETS
213.4
191.9
21.5
\u201cOther non-current assets\u201d amount to \u20ac15.5 million and are down \u20ac0.4 million compared with the previous year. This primarily reflects decreases in guarantee deposits paid under contracts with public bodies and authorities (down \u20ac0.2 million).
\u201cOther current assets\u201d, totalling \u20ac213.4 million, are up \u20ac21.5 million compared with 31 December 2022, primarily reflecting:
\u2022 other tax credits (up \u20ac23.7 million), mainly reflecting an increase in the Group\u2019s refundable VAT (up \u20ac17.8 million);
\u2022 an increase in prepayments to suppliers (up \u20ac1.9 million), broadly due to an increase in prepayments made by the subsidiary, Terna Energy Solutions S.r.l. (up \u20ac1.3 million) following the start of work on new contracts during the year;
\u2022 a reduction in amounts due from others (\u20ac5.2 million), broadly attributable to the Parent Company, Terna S.p.A. (down \u20ac6.7 million), partially offset by a net increase in subsidies (the so-called 110% grant) due to the subsidiary, Avvenia (\u20ac1.7 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130848": { "value": "19. Other assets
(\u20acm)
31 December 2023
31 December 2022
Change
Loans and advances to employees
10.9
11.0
\u00a0(0.1)
Deposits with third parties
4.6
4.8
\u00a0(0.2)
Other non-current assets
-
0.1
\u00a0(0.1)
OTHER NON-CURRENT ASSETS
15.5
15.9
\u00a0(0.4)
Other tax credits
110.1
86.4
23.7
Prepayments to suppliers
11.1
9.2
1.9
Prepayments of operating expenses and accrued operating income
24.0
22.7
1.3
Amounts due from partners selected for Interconnector projects
2.9
3.1
(0.2)
Amounts due from others
65.3
70.5
(5.2)
OTHER CURRENT ASSETS
213.4
191.9
21.5
\u201cOther non-current assets\u201d amount to \u20ac15.5 million and are down \u20ac0.4 million compared with the previous year. This primarily reflects decreases in guarantee deposits paid under contracts with public bodies and authorities (down \u20ac0.2 million).
\u201cOther current assets\u201d, totalling \u20ac213.4 million, are up \u20ac21.5 million compared with 31 December 2022, primarily reflecting:
\u2022 other tax credits (up \u20ac23.7 million), mainly reflecting an increase in the Group\u2019s refundable VAT (up \u20ac17.8 million);
\u2022 an increase in prepayments to suppliers (up \u20ac1.9 million), broadly due to an increase in prepayments made by the subsidiary, Terna Energy Solutions S.r.l. (up \u20ac1.3 million) following the start of work on new contracts during the year;
\u2022 a reduction in amounts due from others (\u20ac5.2 million), broadly attributable to the Parent Company, Terna S.p.A. (down \u20ac6.7 million), partially offset by a net increase in subsidies (the so-called 110% grant) due to the subsidiary, Avvenia (\u20ac1.7 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "shtag_130847": { "value": "19. Other assets
(\u20acm)
31 December 2023
31 December 2022
Change
Loans and advances to employees
10.9
11.0
\u00a0(0.1)
Deposits with third parties
4.6
4.8
\u00a0(0.2)
Other non-current assets
-
0.1
\u00a0(0.1)
OTHER NON-CURRENT ASSETS
15.5
15.9
\u00a0(0.4)
Other tax credits
110.1
86.4
23.7
Prepayments to suppliers
11.1
9.2
1.9
Prepayments of operating expenses and accrued operating income
24.0
22.7
1.3
Amounts due from partners selected for Interconnector projects
2.9
3.1
(0.2)
Amounts due from others
65.3
70.5
(5.2)
OTHER CURRENT ASSETS
213.4
191.9
21.5
\u201cOther non-current assets\u201d amount to \u20ac15.5 million and are down \u20ac0.4 million compared with the previous year. This primarily reflects decreases in guarantee deposits paid under contracts with public bodies and authorities (down \u20ac0.2 million).
\u201cOther current assets\u201d, totalling \u20ac213.4 million, are up \u20ac21.5 million compared with 31 December 2022, primarily reflecting:
\u2022 other tax credits (up \u20ac23.7 million), mainly reflecting an increase in the Group\u2019s refundable VAT (up \u20ac17.8 million);
\u2022 an increase in prepayments to suppliers (up \u20ac1.9 million), broadly due to an increase in prepayments made by the subsidiary, Terna Energy Solutions S.r.l. (up \u20ac1.3 million) following the start of work on new contracts during the year;
\u2022 a reduction in amounts due from others (\u20ac5.2 million), broadly attributable to the Parent Company, Terna S.p.A. (down \u20ac6.7 million), partially offset by a net increase in subsidies (the so-called 110% grant) due to the subsidiary, Avvenia (\u20ac1.7 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "shtag_130846": { "value": "19. Other assets
(\u20acm)
31 December 2023
31 December 2022
Change
Loans and advances to employees
10.9
11.0
\u00a0(0.1)
Deposits with third parties
4.6
4.8
\u00a0(0.2)
Other non-current assets
-
0.1
\u00a0(0.1)
OTHER NON-CURRENT ASSETS
15.5
15.9
\u00a0(0.4)
Other tax credits
110.1
86.4
23.7
Prepayments to suppliers
11.1
9.2
1.9
Prepayments of operating expenses and accrued operating income
24.0
22.7
1.3
Amounts due from partners selected for Interconnector projects
2.9
3.1
(0.2)
Amounts due from others
65.3
70.5
(5.2)
OTHER CURRENT ASSETS
213.4
191.9
21.5
\u201cOther non-current assets\u201d amount to \u20ac15.5 million and are down \u20ac0.4 million compared with the previous year. This primarily reflects decreases in guarantee deposits paid under contracts with public bodies and authorities (down \u20ac0.2 million).
\u201cOther current assets\u201d, totalling \u20ac213.4 million, are up \u20ac21.5 million compared with 31 December 2022, primarily reflecting:
\u2022 other tax credits (up \u20ac23.7 million), mainly reflecting an increase in the Group\u2019s refundable VAT (up \u20ac17.8 million);
\u2022 an increase in prepayments to suppliers (up \u20ac1.9 million), broadly due to an increase in prepayments made by the subsidiary, Terna Energy Solutions S.r.l. (up \u20ac1.3 million) following the start of work on new contracts during the year;
\u2022 a reduction in amounts due from others (\u20ac5.2 million), broadly attributable to the Parent Company, Terna S.p.A. (down \u20ac6.7 million), partially offset by a net increase in subsidies (the so-called 110% grant) due to the subsidiary, Avvenia (\u20ac1.7 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "shtag_130851": { "value": "20. Inventories \u2013 \u20ac106.4 million
This item, amounting to \u20ac106.4 million, is up \u20ac23.4 million compared with the previous year. This primarily reflects materials to be used in contract work by the LT Group (up \u20ac21.0 million), by the Brugg Cables Group (up \u20ac1.3 million) and by Terna Rete Italia S.p.A. (up \u20ac1.1 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfInventoriesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130852": { "value": "21. Trade receivables \u2013 \u20ac2,123.4 million
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Change
Energy-related receivables
1,268.5
1,622.8
(354.3)
Transmission charges receivables
576.2
472.8
103.4
Other trade receivables
278.7
262.7
16.0
TOTAL
2,123.4
2,358.3
\u00a0(234.9)
Trade receivables amount to \u20ac2,123.4 million at 31 December 2023 and are accounted for less any losses and recognised in the allowance for doubtful accounts (\u20ac13.3 million for energy- related receivables and \u20ac20.9 million for other items in 2023, compared with \u20ac19.7 million for energy-related items and \u20ac17.4 million for other items in 2022, with further details provided in the section \u201cE. Commitments and risks\u201d). The carrying amount shown broadly approximates to fair value.
The measurement of expected credit losses is described in the section, \u201cA. Accounting policies and measurement criteria\u201d.
Energy-related/regulated receivables \u2013 \u20ac1,268.5 million
This item includes so-called \u201cpass-through items\u201d relating to the Parent Company\u2019s activities in accordance with Resolution 111/06 (\u20ac602.6 million) and receivables due from the users of dispatching services forming part of Regulated Activities (\u20ac654.8 million). It also includes the amount due from the Fund for Energy and Environmental Services (Cassa per i Servizi Energetici e Ambientali\u00a0- CSEA (\u20ac11.2 million), relating to quality of service.
These receivables are down \u20ac354.2 million compared with the end of 2022, primarily due to:
\u2022 a reduction in uplift payments for the procurement of resources on the dispatching services market (\u20ac229.7 million) and in items covering the DSM (\u20ac113.2 million) and imbalances (\u20ac369.2 million), reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 partial collection of the intrazonal incentive awarded by Resolution 26/2023, as provided for in the Resolution (\u20ac38.9 million);
\u2022 partly offset by:
\u2022 recognition of the annual bonus for 2023 deriving from the three-year incentive scheme (2022-2024) introduced by Resolutions 597/2021 and 132/2022 and the financial component resulting from discounting (totalling \u20ac329.13\u00a0million);
\u2022 the increase in receivables related to essential plants for the safety of the electricity system \u2013 UESS (\u20ac79.6 million), reflecting the increase in the charge to cover the costs of the maximisation programme introduced by Resolution 430/20224.
Transmission charges receivable \u2013 \u20ac576.2 million
Transmission charges receivable, amounting to \u20ac576.2 million, represent the amount due to the Parent Company and other grid owners from electricity distributors for use of the National Transmission Grid. This receivable is up \u20ac103.4 million compared with 31 December 2022, reflecting the revised tariff (Resolution 719/2022), recognition of the accrued return on digital substation systems in accordance with ARERA Resolution 565/2020, and recognition of the amount due to cover the added costs incurred in 2023 that were not covered by the specific tariff component relating to the Inter-TSO Compensation (ITC) scheme5, recognised from 2020 through the transmission charge.
Other trade receivables \u2013 \u20ac278.7 million
Other trade receivables primarily regard amounts receivable from customers of the non-regulated business. These amounts derive from the provision of specialist services to third parties, primarily in relation to plant engineering services, the operation and maintenance of high-voltage and very high-voltage infrastructure, and the housing of telecommunications equipment and maintenance services for fibre networks, as well as in relation to contract work carried out by the Tamini Group, the subsidiary, Brugg Cables and the LT Group.
This item is up by a net \u20ac16.0 million compared with the previous year, broadly due to increases in contract work at the Brugg Cables Group (up \u20ac10.8 million), Terna Energy Solutions S.r.l. (up \u20ac12.3 million), the LT Group (up \u20ac7.4 million) and Terna Interconnector S.r.l. (up \u20ac8.4 million), offset by a reduction in the Parent Company\u2019s receivables (down \u20ac15.1 million) and those of the subsidiary, Terna Rete Italia S.p.A. (down \u20ac6.5 million)
The following table shows receivables resulting from contract work in progress (\u20ac118.1 million), being carried out by the Group under multi-year contracts with third parties:
(\u20acm)
PRE-
PAYMENTS
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2023
PREPAYMENTS
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2022
Receivables resulting from contract work in progress
(393.0)
511.1
118.1
(305.4)
405.2
99.8
The Group\u2019s receivables resulting from contract work in progress are up by a net \u20ac18.3 million, primarily in relation to the increase in contract work at subsidiaries. This regards the Brugg Cables Group (up \u20ac25.1 million) and Terna Energy Solutions S.r.l. (up \u20ac2.6 million), partially offset by a reduction in contract work at Terna Rete Italia S.p.A. (down \u20ac4.2 million) and the Tamini Group (down \u20ac4.1 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130853": { "value": "22. Cash and cash equivalents \u2013 \u20ac1,378.2 million
Cash amounts to \u20ac1,378.2 million at 31 December 2023, including \u20ac1,194.5 million invested short-term readily convertible deposits and \u20ac183.7 million deposited in bank current accounts and cash in hand.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130854": { "value": "23. Income tax assets \u2013 \u20ac4.8 million
Income tax assets, amounting to \u20ac4.8 million, are down \u20ac2.0 million compared with the previous year, essentially following the settlement of taxes relating to the previous year and an increase in payments on account after the recognition of income tax for the year. This compares with net tax liabilities at 31 December 2022 (\u20ac43.8 million), recognised in \u201cTax liabilities\u201d.
5\u00a0Inter-TSO Compensation: a payment to TSOs for use of their national transmission grids (infrastructure and losses) to transport energy, including those relating to cross-border flows. The related charges are allocated to \u201cEnergy-related non pass-through payables\u201d.
Tax liabilities
At 31 December 2023, this item has a zero balance due to the recognition in \u201cIncome tax assets\u201d of increased payments on account and the settlement of taxes relating to the previous year, after the recognition of income tax for the period. This compares with net tax liabilities at 31 December 2022 (\u20ac43.8 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfTaxReceivablesAndPayablesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130856": { "value": "24. Equity attributable to owners of the Parent and non-controlling interests
Equity attributable to owners of the Parent \u2013 \u20ac6,324.4 million
Share capital \u2013 \u20ac442.2 million
The Parent Company\u2019s share capital consists of 2,009,992,000 ordinary shares with a par value of \u20ac0.22 per share.
Legal reserve \u2013 \u20ac88.4 million
The legal reserve accounts for 20% of the Parent Company\u2019s share capital.
Reserve for treasury shares \u2013 (\u20ac29.8) million
In implementation of the buyback programme linked to the new Performance Share Plan 2023-2027, approved by the Annual General Meeting of shareholder on 9 May 2023, in the period between 22 June 2023 and 6 July 2023, the Parent Company purchased 917,611 own shares (equal to 0.046% of the share capital), at a total cost of approximately \u20ac7 million. These are in addition to those purchased in previous years to service the Performance Share Plan 2020-2023, the Performance Share Plan 2021-2025 and the Performance Share Plan 2022-2026.
In addition, in the period between 9 May 2023 and 1 June 2023, the Parent Company allotted 1,079,860 treasury shares to the beneficiaries of the Performance Share Plan 2020-2023, amounting to a total of approximately \u20ac6.7 million.
As a result, at 31 December 2023, Terna S.p.A. now holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), purchased at a cost of \u20ac29.8 million, thereby reducing other reserves by this amount.
Reserve for equity instruments \u2013 \u20ac989.0 million
On 2 February 2022, the Parent Company issued perpetual hybrid green bonds\u00a0with a nominal value of \u20ac1 billion, recognised in the reserve for equity instruments at an amount of \u20ac989.0 million. This reserve is unchanged with respect to 31 December 2022.
These non-convertible, perpetual, subordinated green bonds are non-callable for six years and will pay coupon interest of 2.375% until 9 February 2028, the first reset date. After this date, the bonds will pay annual interest equal to the 5-year Euro Mid-Swap rate plus a spread of 212.1 basis points. This will be increased by a further spread of 25 basis points from 9 February 2033 and by an additional 75 basis points from 9 February 2048.
Share premium reserve, Cash flow hedge reserve and Other reserves \u2013 \u20ac789.0 million
The \u201cShare premium reserve\u201d, \u201cCash flow hedge reserve\u201d and \u201cOther reserves\u201d at 31 December 2023 amount to \u20ac789.0 million, having fallen \u20ac38.3 million compared with 31 December 2022, broadly as a result of other comprehensive income. This reflects:
\u2022 fair value adjustments to the Parent Company\u2019s cash flow hedges (down \u20ac37.4 million, including the related hedging costs of \u20ac0.2 million, after the related taxation);
\u2022 the change in actuarial gains and losses on provisions for employee benefits (down \u20ac3.5 million, after the related taxation);
\u2022 fair value adjustments to the value of financial assets represented by securities (up \u20ac1.0 million, after the related taxation).
Retained earnings and accumulated losses \u2013 \u20ac3,390.5 million
The increase in \u201cRetained earnings and accumulated losses\u201d, amounting to \u20ac209.6 million, primarily regards the remaining portion of the Group\u2019s profit for 2022 (up \u20ac225.0 million), following the Parent Company\u2019s payment of the dividend for 2022 (totalling \u20ac632.0 million). This item includes the translation differences resulting from the conversion of financial statements in currencies other than the euro (up \u20ac11.5 million), the change in the interest accruing on the hybrid green bonds (down \u20ac23.8 million).
Interim dividend for 2023 and final dividend for 2022
On 8 November 2023, the Company\u2019s Board of Directors, having obtained the Independent Auditor\u2019s opinion required by article 2433-bis\u00a0of the Italian Civil Code, decided to pay an interim dividend of 11.46 eurocents per share. The dividend was payable from 22 November 2023, with an ex-dividend date for coupon 39 on 20 November 2023. The dividend was paid to the holders of each ordinary share outstanding, with the exception of the amount payable on treasury shares held at the record date of 21 November 2023.
The Annual General Meeting of shareholders held on 9 May 2023 approved payment of a dividend for full-year 2022 of 31.44 eurocents per share, and the payment \u2013 before any withholdings required by law \u2013 of a final dividend of 20.83 eurocents per share (payable from 21 June 2023, with an ex-dividend date for coupon 38 of 19 June 2023), of which 10.61 eurocents paid in the form of an interim dividend payable from 23 November 2022.
Equity attributable to non-controlling interests \u2013 \u20ac18.9 million
Equity attributable to non-controlling interests, relating to the non-controlling shareholders of Terna Interconnector S.r.l., SPE Transmissora de energia Linha Verde I S.A., Brugg Cables, ESPERIA-CC S.r.l. and LT Group, amounts to \u20ac18.9 million, a reduction of \u20ac8.2 million compared with 31 December 2022.
This change primarily reflects the payment of a dividend approved on 13 April 2023 by the General Meeting of shareholders of the subsidiary, Terna Interconnector. The amount due to the non-controlling shareholder, Transenergia S.r.l. was \u20ac5.4 million. A further dividend was paid by the subsidiary, LT S.r.l., on 21 March 2023, with the amount due to the non-controlling shareholder, Solaris S.r.l., amounting to \u20ac0.4 million. The change also reflects the share of profit for the period attributable to non-controlling shareholders recognised by Terna Interconnector S.r.l. (down \u20ac0.3 million), the Brugg Cables Group (down \u20ac0.1 million), Linha Verde I S.A. (down \u20ac4.7 million) and the LT Group (\u20ac2.5 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfShareCapitalReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130855": { "value": "Share capital \u2013 \u20ac442.2 million
The Parent Company\u2019s share capital consists of 2,009,992,000 ordinary shares with a par value of \u20ac0.22 per share.
", "dimensions": { "concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130857": { "value": "Legal reserve \u2013 \u20ac88.4 million
The legal reserve accounts for 20% of the Parent Company\u2019s share capital.
Reserve for equity instruments \u2013 \u20ac989.0 million
On 2 February 2022, the Parent Company issued perpetual hybrid green bonds\u00a0with a nominal value of \u20ac1 billion, recognised in the reserve for equity instruments at an amount of \u20ac989.0 million. This reserve is unchanged with respect to 31 December 2022.
These non-convertible, perpetual, subordinated green bonds are non-callable for six years and will pay coupon interest of 2.375% until 9 February 2028, the first reset date. After this date, the bonds will pay annual interest equal to the 5-year Euro Mid-Swap rate plus a spread of 212.1 basis points. This will be increased by a further spread of 25 basis points from 9 February 2033 and by an additional 75 basis points from 9 February 2048.
Share premium reserve, Cash flow hedge reserve and Other reserves \u2013 \u20ac789.0 million
The \u201cShare premium reserve\u201d, \u201cCash flow hedge reserve\u201d and \u201cOther reserves\u201d at 31 December 2023 amount to \u20ac789.0 million, having fallen \u20ac38.3 million compared with 31 December 2022, broadly as a result of other comprehensive income. This reflects:
\u2022 fair value adjustments to the Parent Company\u2019s cash flow hedges (down \u20ac37.4 million, including the related hedging costs of \u20ac0.2 million, after the related taxation);
\u2022 the change in actuarial gains and losses on provisions for employee benefits (down \u20ac3.5 million, after the related taxation);
\u2022 fair value adjustments to the value of financial assets represented by securities (up \u20ac1.0 million, after the related taxation).
Retained earnings and accumulated losses \u2013 \u20ac3,390.5 million
The increase in \u201cRetained earnings and accumulated losses\u201d, amounting to \u20ac209.6 million, primarily regards the remaining portion of the Group\u2019s profit for 2022 (up \u20ac225.0 million), following the Parent Company\u2019s payment of the dividend for 2022 (totalling \u20ac632.0 million). This item includes the translation differences resulting from the conversion of financial statements in currencies other than the euro (up \u20ac11.5 million), the change in the interest accruing on the hybrid green bonds (down \u20ac23.8 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfReservesAndOtherEquityInterestExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130858": { "value": "Reserve for treasury shares \u2013 (\u20ac29.8) million
In implementation of the buyback programme linked to the new Performance Share Plan 2023-2027, approved by the Annual General Meeting of shareholder on 9 May 2023, in the period between 22 June 2023 and 6 July 2023, the Parent Company purchased 917,611 own shares (equal to 0.046% of the share capital), at a total cost of approximately \u20ac7 million. These are in addition to those purchased in previous years to service the Performance Share Plan 2020-2023, the Performance Share Plan 2021-2025 and the Performance Share Plan 2022-2026.
In addition, in the period between 9 May 2023 and 1 June 2023, the Parent Company allotted 1,079,860 treasury shares to the beneficiaries of the Performance Share Plan 2020-2023, amounting to a total of approximately \u20ac6.7 million.
As a result, at 31 December 2023, Terna S.p.A. now holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), purchased at a cost of \u20ac29.8 million, thereby reducing other reserves by this amount.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTreasurySharesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130859": { "value": "In implementation of the buyback programme linked to the new Performance Share Plan 2023-2027, approved by the Annual General Meeting of shareholder on 9 May 2023, in the period between 22 June 2023 and 6 July 2023, the Parent Company purchased 917,611 own shares (equal to 0.046% of the share capital), at a total cost of approximately \u20ac7 million. These are in addition to those purchased in previous years to service the Performance Share Plan 2020-2023, the Performance Share Plan 2021-2025 and the Performance Share Plan 2022-2026.
In addition, in the period between 9 May 2023 and 1 June 2023, the Parent Company allotted 1,079,860 treasury shares to the beneficiaries of the Performance Share Plan 2020-2023, amounting to a total of approximately \u20ac6.7 million.
As a result, at 31 December 2023, Terna S.p.A. now holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), purchased at a cost of \u20ac29.8 million, thereby reducing other reserves by this amount.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130861": { "value": "Interim dividend for 2023 and final dividend for 2022
On 8 November 2023, the Company\u2019s Board of Directors, having obtained the Independent Auditor\u2019s opinion required by article 2433-bis\u00a0of the Italian Civil Code, decided to pay an interim dividend of 11.46 eurocents per share. The dividend was payable from 22 November 2023, with an ex-dividend date for coupon 39 on 20 November 2023. The dividend was paid to the holders of each ordinary share outstanding, with the exception of the amount payable on treasury shares held at the record date of 21 November 2023.
The Annual General Meeting of shareholders held on 9 May 2023 approved payment of a dividend for full-year 2022 of 31.44 eurocents per share, and the payment \u2013 before any withholdings required by law \u2013 of a final dividend of 20.83 eurocents per share (payable from 21 June 2023, with an ex-dividend date for coupon 38 of 19 June 2023), of which 10.61 eurocents paid in the form of an interim dividend payable from 23 November 2022.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130864": { "value": "11.46", "decimals": 0, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "shtag_130860": { "value": "Equity attributable to non-controlling interests \u2013 \u20ac18.9 million
Equity attributable to non-controlling interests, relating to the non-controlling shareholders of Terna Interconnector S.r.l., SPE Transmissora de energia Linha Verde I S.A., Brugg Cables, ESPERIA-CC S.r.l. and LT Group, amounts to \u20ac18.9 million, a reduction of \u20ac8.2 million compared with 31 December 2022.
This change primarily reflects the payment of a dividend approved on 13 April 2023 by the General Meeting of shareholders of the subsidiary, Terna Interconnector. The amount due to the non-controlling shareholder, Transenergia S.r.l. was \u20ac5.4 million. A further dividend was paid by the subsidiary, LT S.r.l., on 21 March 2023, with the amount due to the non-controlling shareholder, Solaris S.r.l., amounting to \u20ac0.4 million. The change also reflects the share of profit for the period attributable to non-controlling shareholders recognised by Terna Interconnector S.r.l. (down \u20ac0.3 million), the Brugg Cables Group (down \u20ac0.1 million), Linha Verde I S.A. (down \u20ac4.7 million) and the LT Group (\u20ac2.5 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130863": { "value": "25. Borrowings and financial liabilities
(\u20acm)
31 December 2023
31 December 2022
Change
Bond issues
5,664.2
5,078.9
585.3
Bank borrowings
3,745.0
3,337.8
407.2
LONG-TERM BORROWINGS
9,409.2
8,416.7
992.5
Fair value hedges
164.5
247.2
\u00a0(82.7)
NON-CURRENT FINANCIAL LIABILITIES
164.5
247.2
(82.7)
SHORT-TERM BORROWINGS
1,201.7
444.1
757.6
Bond issues
826.4
1,658.8
\u00a0(832.4)
Bank borrowings
558.2
250.5
307.7
CURRENT PORTION OF LONG-TERM BORROWINGS
1,384.6
1,909.3
\u00a0(524.7)
CURRENT FINANCIAL LIABILITIES
113.8
44.9
68.9
TOTAL
12,273.8
11,062.2
1,211.6
Borrowings and financial liabilities have increased by \u20ac1,211.6 million compared with the previous year to \u20ac12,273.8 million. The change primarily reflects:
\u2022 an increase in bank borrowings, amounting to \u20ac714.9 million, following the drawdown of new EIB loans, totalling \u20ac900 million, after repayments of bank loans amounting to \u20ac100.0 million and repayments falling due on existing EIB loans. The change also reflects fair value adjustments of these financial instruments;
\u2022 an increase in short-term borrowings (\u20ac757.6 million) due to the use of short-term facilities and the issue of commercial paper by the Parent Company;
\u2022 a reduction in bond issues (down \u20ac247.1 million), essentially due to the repayment of two bonds (totalling \u20ac1,000 million in July 2023 and \u20ac670.8 million in September 2023), partially offset by the launch of the same number of issues amounting to \u20ac1,400 million, carried out by Terna S.p.A. in April and July 2023. The change also reflects fair value adjustments of these financial instruments.The latest official prices at 31 December 2023 and 31 December 2022 for the bonds listed on the Luxembourg Stock Exchange are detailed below:
(\u20acm)
ISIN
PRICE AT31 DECEMBER 2023
PRICE AT31 DECEMBER 2022
Bond maturity 2023*:
XS0328430003
\u00a0n.a.**
\u00a0133.90
Bond maturity 2023:
XS1858912915
\u00a0n.a.**
\u00a099.13
Bond maturity 2024:
XS0203712939
\u00a0100.92
\u00a0102.21
Bond maturity 2025:
XS2033351995
\u00a094.95
\u00a091.69
Bond maturity 2026:
XS1371569978
\u00a095.96
\u00a093.87
Bond maturity 2026:
XS1980270810
\u00a095.51
\u00a092.27
Bond maturity 2027:
XS1652866002
\u00a094.40
\u00a090.25
Bond maturity 2027:
XS2536846236
\u00a0100.33
\u00a0100.78
Bond maturity 2028:
XS1503131713
\u00a091.46
\u00a085.03
Bond maturity 2029:
XS2357205587
\u00a086.53
\u00a080.02
Bond maturity 2029:
XS2607193435
\u00a0102.26
\u00a0n.a.**
Bond maturity 2030:
XS2237901355
\u00a082.94
\u00a075.66
Bond maturity 2032:
XS2209023402
\u00a081.82
\u00a073.78
Bond maturity 2033:
XS2655852726
\u00a0103.26
\u00a0n.a.**
* Source: BofA, Morgan Stanley and Bloomberg.
** Not applicable.
Long-term borrowings
The table below shows movements in long-term debt during the year, including also the nominal amount:
(\u20acm)
31 December 2022
31 December 2023
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
REPAYMENTS AND CAPITALISATIONS
DRAWDOWNS
OTHER
CHANGE IN THE CARRYING AMOUNT NOTIONAL DEBT
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
IL bond
662.0
659.6
886.4
\u00a0(670.8)
\u00a0-
11.2
\u00a0(659.6)
-
-
-
Bond maturing 2023
1,000.0
999.2
991.3
\u00a0(1,000.0)
\u00a0-
0.8
\u00a0(999.2)
-
-
-
Bond maturing 2024
800.0
858.2
817.7
\u00a0-
\u00a0-
\u00a0(31.8)
\u00a0(31.8)
800.0
826.4
807.4
Bond maturing 2025
500.0
497.5
458.4
\u00a0-
\u00a0-
1.0
1.0
500.0
498.5
474.7
Private Placement 2026
80.0
79.5
75.1
\u00a0-
\u00a0-
0.2
0.2
80.0
79.7
76.8
Bond maturing 2026
500.0
498.9
461.3
\u00a0-
\u00a0-
0.3
0.3
500.0
499.2
477.6
Private Placement 2027
100.0
99.8
100.8
\u00a0-
\u00a0-
\u00a0-
\u00a0-
100.0
99.8
100.3
Bond maturing 2027
1,000.0
984.9
902.4
\u00a0-
\u00a0-
3.1
3.1
1,000.0
988.0
944.0
Bond maturing 2028
750.0
705.6
637.7
\u00a0-
\u00a0-
7.3
7.3
750.0
712.9
685.9
Bond maturing 750_2029
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0750.0
\u00a0(7.3)
742.7
750.0
742.7
766.9
Bond maturing 2029
600.0
597.1
480.1
\u00a0-
\u00a0-
0.5
0.5
600.0
597.6
519.2
Bond maturing 2030
500.0
403.8
378.3
\u00a0-
\u00a0-
33.2
33.2
500.0
437.0
414.7
Bond maturing 2032
500.0
353.6
368.9
\u00a0-
\u00a0-
12.7
12.7
500.0
366.3
409.1
Bond maturing 2033
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0650.0
\u00a0(7.5)
642.5
650.0
642.5
671.2
Total bond issues
6,992.0
6,737.7
6,558.4
\u00a0(1,670.8)
1,400.0
23.7
\u00a0(247.1)
6,730.0
6,490.6
6,347.8
Borrowings
3,524.3
3,520.6
3,520.6
\u00a0(234.4)
900.0
51.4
717.0
3,799.4
4,237.6
4,237.6
Lease liabilities
67.7
67.7
67.7
\u00a0(14.8)
\u00a0-
12.7
\u00a0(2.1)
65.6
65.6
65.6
Total borrowings
3,592.0
3,588.3
3,588.3
\u00a0(249.2)
900.0
64.1
714.9
3,865.0
4,303.2
4,303.2
Total debt
10,584.0
10,326.0
10,146.7
\u00a0(1,920.0)
2,300.0
87.8
467.8
10,595.0
10,793.8
10,651.0
At 31 December 2023, the Terna Group\u2019s has access to additional financing of \u20ac3,455.0 million, represented by two revolving credit facilities.
In addition, as provided for in IFRS 7, the table shows the fair value of borrowings and bond issues. In the case of bond issues, this is market value based on prices at the reporting date, whilst variable rate loans are measured by discounting expected cash flows based on the market interest rate curve at the reporting date.
The following table shows an analysis of bond issues and other borrowings by maturity, showing the related short-term portions.
(\u20acm)
Maturity
31 December 2022*
31 December 2023*
Portion falling due within 12 months
Portion falling due after 12 months
2025
2026
2027
2028
2029
After
Other**
\u00a0Average interest rate at 31 December 2023
Average interest rate after hedges at 31 December 2023
Bonds
2023
659.6
-
-
-
-
-
-
-
-
-
-
2.73%
5.08%
2023
999.2
-
-
-
-
-
-
-
-
-
-
1.00%
1.15%
2024
858.2
826.4
800.0
-
-
-
-
-
-
-
26.4
4.90%
0.87%
2025
497.6
498.5
-
500.0
500.0
-
-
-
-
-
(1.5)
0.13%
0.32%
2026
498.8
499.2
-
500.0
-
500.0
-
-
-
-
(0.8)
1.00%
1.28%
2026
79.5
79.7
-
80.0
-
80.0
-
-
-
-
(0.3)
1.60%
1.80%
2027
984.8
988.0
-
1,000.0
-
-
1,000.0
-
-
-
(12.0)
1.38%
1.91%
2027
99.8
99.8
-
100.0
-
-
100.0
-
-
-
(0.2)
3.44%
2.77%
2028
705.6
712.9
-
750.0
-
-
-
750.0
-
-
(37.1)
1.00%
1.29%
2029
597.2
597.6
600.0
-
-
-
600.0
-
(2.4)
0.38%
1.71%
2029
-
742.7
-
750.0
-
-
-
-
750.0
-
(7.3)
3.63%
3.76%
2030
403.8
437.0
-
500.0
-
-
-
-
-
500.0
(63.0)
0.38%
3.30%
2032
353.6
366.3
-
500.0
-
-
-
-
-
500.0
(133.7)
0.75%
3.11%
2033
642.5
650.0
-
-
-
-
650.0
(7.5)
3.88%
3.91%
EIB
2045
1,475.0
2,407.2
24.6
2,488.5
47.7
58.5
117.1
142.2
142.2
1,980.8
(105.9)
2.43%
1.75%
Terna\u2019s borrowing
2024
300.0
300.0
300.0
-
-
-
-
-
-
-
-
-
(1.22%)
Total fixed rate
\u00a0
8,512.7
9,197.8
1,124.6
8,418.5
547.7
638.5
1,217.1
892.2
1,492.2
3,630.8
\u00a0(345.3)
\u00a0
\u00a0
EIB
2041
950.2
836.3
115.3
721.0
115.3
115.3
115.3
115.3
96.0
163.8
\u00a0-
3.7%***
1.57%
Terna\u2019s borrowing
2025
799.1
699.4
100.0
600.0
600.0
-
-
\u00a0-
-
\u00a0-
\u00a0(0.6)
3.82%***
3.77%
Total variable rate
\u00a0
1,749.3
1,535.7
215.3
1,321.0
715.3
115.3
115.3
115.3
96.0
163.8
\u00a0(0.6)
\u00a0
\u00a0
TOTAL
\u00a0
10,262.0
10,733.5
1,339.9
9,739.5
1,263.0
753.8
1,332.4
1,007.5
1,588.2
3,794.6
\u00a0(345.9)
\u00a0
\u00a0
*\tThe balance does not include prepaid fees of \u20ac5.3 million at 31 December 2023 and of \u20ac3.7 million at 31 December 2022.
**\tIncludes portions measured at amortised cost and fair value adjustments at 31 December 2023.
***\tThis is the average of the rates fixed in the sub-periods.
(\u20acm)
31 December 2022
31 December 2023
Portion falling due within 12 months
Portion falling due after 12 months
Finance leases
1.9
1.0
1.0
-
Operating leases
65.8
64.6
17.3
47.3
TOTAL
67.7
65.6
18.3
47.3
At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac14.8 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
Non-current financial liabilities \u2013 \u20ac164.5 million
(\u20acm)
31 December 2023
31 December 2022
Change
Fair value hedges
164.5
247.2
(82.7)
TOTAL
164.5
247.2
Non-current financial liabilities, amounting to \u20ac164.5 million at 31 December 2023, reflect the fair value of fair value hedges.
Fair value was measured by discounting the expected cash flows using the market yield curve at the reporting date. The decreases of \u20ac82.7 million, compared with 31 December 2022 reflects the change in market interest rates.
Short-term borrowings \u2013 \u20ac1,201.7 million
\u201cShort-term borrowings\u201d, amounting to \u20ac1,201.7 million at 31 December 2023, have increased \u20ac757.6 million compared with the previous year, essentially due to the use of short-term credit facilities and the issue of commercial paper by the Parent Company.
Current financial liabilities \u2013 \u20ac113.8 million
(\u20acm)
31 December 2023
31 December 2022
Change
Foreign exchange cash flow hedges
\u00a00.1
\u00a0-
0.1
Fair value hedges
\u00a0-
0.8
\u00a0(0.8)
Other current financial liabilities
38.5
\u00a0-
38.5
DEFERRED LIABILITIES ON:
Hedging derivatives
1.3
0.6
0.7
Bond issues
53.5
33.5
20.0
Borrowings
20.4
10.0
10.4
TOTAL
113.8
44.9
68.9
Current financial liabilities amount to \u20ac113.8 million at 31 December 2023, an increase of \u20ac68.9 million compared with 31 December 2022. This essentially reflects the value of net unpaid financial expenses accruing on financial instruments (up \u20ac30.4 million, primarily relating to bond issues and borrowings) and recognition of the advance disbursed by the European Commission in relation to the Italy\u2013Tunisia interconnector project (up \u20ac38.5 million), attributable to the Tunisian operator, STEG.
Net debt
Pursuant to the CONSOB Communication of 28 July 2006 and in compliance with Recommendation ESMA n. 32-382-1138 of 2021, the Group\u2019s net debt is as follows:
(\u20acm)
31 DECEMBER 2023
A.
Cash
183.7
B.
Cash equivalents*
1,194.5
C.
Other current financial assets**
376.4
D.
Liquidity (A) + (B) + (C)
1,754.6
E.
Current financial liabilities (including debt instruments, but excluding the current portion of non-current financial liabilities)
1,201.7
F.
Current portion of non-current debt***
1,490.7
G.
Current debt (E+F)
2,692.4
H.
Net current debt (G) - (D)
937.8
I.
Non-current financial liabilities (excluding the current portion and debt instruments)****
3,833.4
J.
Debt instruments*****
5,723.1
K.
Non-current net debt (I) + (J)
9,556.5
L.
Net debt (H) + (K)
10,494.3
*\tCorresponds with the item, \u201cCash and can equivalents\u201d relating to the value of short-term deposits.
**\tCorresponds with the item, \u201c Current financial assets\u201d relating to the value of government securities (\u20ac197.2 million), readily convertible time deposits (\u20ac165.0 million) and accrued interest income (\u20ac14.3 million).
***\tCorresponds with the item, \u201cCurrent portion of long-term borrowings\u201d relating to the short-term portion of long-term borrowings (\u20ac539.9 million), the short-term portion of bond issues (\u20ac826.4 million) and the short-term portion of lease liabilities (\u20ac18.3 million), \u201c Current financial liabilities\u201d and \u201cCurrent financial assets\u201d relating to the value of derivative assets and accrued financial income on derivatives (down \u20ac7.7 million).
****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of borrowings (\u20ac3,697.7 million) and the long-term portion of lease liabilities (\u20ac47.3 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities (\u20ac105.6 million) and \u201cNon-current financial assets\u201d relating to derivative assets (down \u20ac17.2 million).
*****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of bond issues (\u20ac5,664.2 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities on bonds (\u20ac58.9 million).
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Group is a party may contain provisions that, if certain events occur, authorise counterparties to call in such loans immediately, thereby generating liquidity risk.
Certain long-term loans obtained by the Parent Company, Terna S.p.A., contain covenants that are typical of international practice. The principal covenants relate to:
\u2022 the Company\u2019s bond issues, which consist of an \u20ac800.0 million issued in 2004, perpetual hybrid green bonds of \u20ac1,000,000,000 and eleven issues as part of its EMTN Programme (\u201c\u20ac9,000,000,000 Euro Medium Term Notes Programme\u201d);
\u2022 bank borrowings, consisting of revolving lines of credit and bilateral term loans (\u201cbank debt\u201d);
\u2022 a series of loans to the Company from the European Investment Bank (EIB), amounting to a total of approximately \u20ac3.3 billion.
The main covenants relating to bond issues and the EMTN Programme involve clauses regarding i) \u201cnegative pledges\u201d, on the basis of which the Issuer or its Relevant Subsidiaries undertake not to create or maintain mortgages, pledges or other encumbrances on their assets or revenue to guarantee specific financial debt, unless the encumbrances are extended on an equal or pro rata basis to the bond issues in question (with the exception of certain \u201cpermitted guarantees\u201d); ii) \u201cpari passu\u201d, on the basis of which the securities constitute a direct, unconditional and unsecured obligation by the Issuer, ranking equally among them and with at least the same level of seniority as other present and future unsecured and non- subordinated borrowings of the Issuer; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g., failure to make a repayment, the liquidation of the Issuer, the breach of contractual obligations, a cross-default, etc.) a situation of default is established and the loan is immediately called in. \u00a0
The main covenants relating to bank borrowings involve clauses related to i) negative pledges, on the basis of which the Issuer or the Relevant Subsidiaries undertake not to create or maintain guarantees on their assets to secure borrowings, with the exception of \u201cpermitted guarantees\u201d; ii) pari passu\u00a0on the basis of which the Borrower\u2019s payment obligations in relation to the loan agreements in question are not subordinated to any obligation related to other unsecured and non-subordinated creditors, without prejudice to privileges under the law; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, business discontinuation, substantially prejudicial effects, the breach of contractual obligations, including pari passu\u00a0conditions, a cross-default, etc.) a situation of default is established and the loan is immediately called in; iv) \u201cratings\u201d, which involve accelerated repayment should the rating fall below investment grade for the majority of rating agencies or should the Borrower cease to be rated by at least one agency.
The main covenants related to the EIB loans involve clauses related to i) negative pledges, on the basis of which the Company cannot create personal or real guarantees or, more generally, encumbrances, with the exception of encumbrances granted in relation to borrowings below given amounts and under contractually specified circumstances; ii) the provision to the Bank, at its request, of new guarantees should the ratings assigned by the rating agencies fall below the level indicated in the respective contracts agreed or should the Company cease to be rated by the rating agencies; iii) pari passu, on the basis of which the Company ensures that payment obligations rank equally with those related to all other unsecured, non-subordinated creditors, without prejudice to privileges under the law; iv) cases of contract termination/application of the call provision/withdrawal (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, events that have a negative impact on financial commitments made by the Company, extraordinary administration, liquidation, substantial prejudicial changes, the breach of contractual commitments, etc.); v) accelerated loan payment following the occurrence of given events (e.g. change of control over the Company, loss of the concession, extraordinary corporate events, etc.).
25. Borrowings and financial liabilities
(\u20acm)
31 December 2023
31 December 2022
Change
Bond issues
5,664.2
5,078.9
585.3
Bank borrowings
3,745.0
3,337.8
407.2
LONG-TERM BORROWINGS
9,409.2
8,416.7
992.5
Fair value hedges
164.5
247.2
\u00a0(82.7)
NON-CURRENT FINANCIAL LIABILITIES
164.5
247.2
(82.7)
SHORT-TERM BORROWINGS
1,201.7
444.1
757.6
Bond issues
826.4
1,658.8
\u00a0(832.4)
Bank borrowings
558.2
250.5
307.7
CURRENT PORTION OF LONG-TERM BORROWINGS
1,384.6
1,909.3
\u00a0(524.7)
CURRENT FINANCIAL LIABILITIES
113.8
44.9
68.9
TOTAL
12,273.8
11,062.2
1,211.6
Borrowings and financial liabilities have increased by \u20ac1,211.6 million compared with the previous year to \u20ac12,273.8 million. The change primarily reflects:
\u2022 an increase in bank borrowings, amounting to \u20ac714.9 million, following the drawdown of new EIB loans, totalling \u20ac900 million, after repayments of bank loans amounting to \u20ac100.0 million and repayments falling due on existing EIB loans. The change also reflects fair value adjustments of these financial instruments;
\u2022 an increase in short-term borrowings (\u20ac757.6 million) due to the use of short-term facilities and the issue of commercial paper by the Parent Company;
\u2022 a reduction in bond issues (down \u20ac247.1 million), essentially due to the repayment of two bonds (totalling \u20ac1,000 million in July 2023 and \u20ac670.8 million in September 2023), partially offset by the launch of the same number of issues amounting to \u20ac1,400 million, carried out by Terna S.p.A. in April and July 2023. The change also reflects fair value adjustments of these financial instruments.The latest official prices at 31 December 2023 and 31 December 2022 for the bonds listed on the Luxembourg Stock Exchange are detailed below:
(\u20acm)
ISIN
PRICE AT31 DECEMBER 2023
PRICE AT31 DECEMBER 2022
Bond maturity 2023*:
XS0328430003
\u00a0n.a.**
\u00a0133.90
Bond maturity 2023:
XS1858912915
\u00a0n.a.**
\u00a099.13
Bond maturity 2024:
XS0203712939
\u00a0100.92
\u00a0102.21
Bond maturity 2025:
XS2033351995
\u00a094.95
\u00a091.69
Bond maturity 2026:
XS1371569978
\u00a095.96
\u00a093.87
Bond maturity 2026:
XS1980270810
\u00a095.51
\u00a092.27
Bond maturity 2027:
XS1652866002
\u00a094.40
\u00a090.25
Bond maturity 2027:
XS2536846236
\u00a0100.33
\u00a0100.78
Bond maturity 2028:
XS1503131713
\u00a091.46
\u00a085.03
Bond maturity 2029:
XS2357205587
\u00a086.53
\u00a080.02
Bond maturity 2029:
XS2607193435
\u00a0102.26
\u00a0n.a.**
Bond maturity 2030:
XS2237901355
\u00a082.94
\u00a075.66
Bond maturity 2032:
XS2209023402
\u00a081.82
\u00a073.78
Bond maturity 2033:
XS2655852726
\u00a0103.26
\u00a0n.a.**
* Source: BofA, Morgan Stanley and Bloomberg.
** Not applicable.
Long-term borrowings
The table below shows movements in long-term debt during the year, including also the nominal amount:
(\u20acm)
31 December 2022
31 December 2023
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
REPAYMENTS AND CAPITALISATIONS
DRAWDOWNS
OTHER
CHANGE IN THE CARRYING AMOUNT NOTIONAL DEBT
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
IL bond
662.0
659.6
886.4
\u00a0(670.8)
\u00a0-
11.2
\u00a0(659.6)
-
-
-
Bond maturing 2023
1,000.0
999.2
991.3
\u00a0(1,000.0)
\u00a0-
0.8
\u00a0(999.2)
-
-
-
Bond maturing 2024
800.0
858.2
817.7
\u00a0-
\u00a0-
\u00a0(31.8)
\u00a0(31.8)
800.0
826.4
807.4
Bond maturing 2025
500.0
497.5
458.4
\u00a0-
\u00a0-
1.0
1.0
500.0
498.5
474.7
Private Placement 2026
80.0
79.5
75.1
\u00a0-
\u00a0-
0.2
0.2
80.0
79.7
76.8
Bond maturing 2026
500.0
498.9
461.3
\u00a0-
\u00a0-
0.3
0.3
500.0
499.2
477.6
Private Placement 2027
100.0
99.8
100.8
\u00a0-
\u00a0-
\u00a0-
\u00a0-
100.0
99.8
100.3
Bond maturing 2027
1,000.0
984.9
902.4
\u00a0-
\u00a0-
3.1
3.1
1,000.0
988.0
944.0
Bond maturing 2028
750.0
705.6
637.7
\u00a0-
\u00a0-
7.3
7.3
750.0
712.9
685.9
Bond maturing 750_2029
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0750.0
\u00a0(7.3)
742.7
750.0
742.7
766.9
Bond maturing 2029
600.0
597.1
480.1
\u00a0-
\u00a0-
0.5
0.5
600.0
597.6
519.2
Bond maturing 2030
500.0
403.8
378.3
\u00a0-
\u00a0-
33.2
33.2
500.0
437.0
414.7
Bond maturing 2032
500.0
353.6
368.9
\u00a0-
\u00a0-
12.7
12.7
500.0
366.3
409.1
Bond maturing 2033
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0650.0
\u00a0(7.5)
642.5
650.0
642.5
671.2
Total bond issues
6,992.0
6,737.7
6,558.4
\u00a0(1,670.8)
1,400.0
23.7
\u00a0(247.1)
6,730.0
6,490.6
6,347.8
Borrowings
3,524.3
3,520.6
3,520.6
\u00a0(234.4)
900.0
51.4
717.0
3,799.4
4,237.6
4,237.6
Lease liabilities
67.7
67.7
67.7
\u00a0(14.8)
\u00a0-
12.7
\u00a0(2.1)
65.6
65.6
65.6
Total borrowings
3,592.0
3,588.3
3,588.3
\u00a0(249.2)
900.0
64.1
714.9
3,865.0
4,303.2
4,303.2
Total debt
10,584.0
10,326.0
10,146.7
\u00a0(1,920.0)
2,300.0
87.8
467.8
10,595.0
10,793.8
10,651.0
At 31 December 2023, the Terna Group\u2019s has access to additional financing of \u20ac3,455.0 million, represented by two revolving credit facilities.
In addition, as provided for in IFRS 7, the table shows the fair value of borrowings and bond issues. In the case of bond issues, this is market value based on prices at the reporting date, whilst variable rate loans are measured by discounting expected cash flows based on the market interest rate curve at the reporting date.
The following table shows an analysis of bond issues and other borrowings by maturity, showing the related short-term portions.
(\u20acm)
Maturity
31 December 2022*
31 December 2023*
Portion falling due within 12 months
Portion falling due after 12 months
2025
2026
2027
2028
2029
After
Other**
\u00a0Average interest rate at 31 December 2023
Average interest rate after hedges at 31 December 2023
Bonds
2023
659.6
-
-
-
-
-
-
-
-
-
-
2.73%
5.08%
2023
999.2
-
-
-
-
-
-
-
-
-
-
1.00%
1.15%
2024
858.2
826.4
800.0
-
-
-
-
-
-
-
26.4
4.90%
0.87%
2025
497.6
498.5
-
500.0
500.0
-
-
-
-
-
(1.5)
0.13%
0.32%
2026
498.8
499.2
-
500.0
-
500.0
-
-
-
-
(0.8)
1.00%
1.28%
2026
79.5
79.7
-
80.0
-
80.0
-
-
-
-
(0.3)
1.60%
1.80%
2027
984.8
988.0
-
1,000.0
-
-
1,000.0
-
-
-
(12.0)
1.38%
1.91%
2027
99.8
99.8
-
100.0
-
-
100.0
-
-
-
(0.2)
3.44%
2.77%
2028
705.6
712.9
-
750.0
-
-
-
750.0
-
-
(37.1)
1.00%
1.29%
2029
597.2
597.6
600.0
-
-
-
600.0
-
(2.4)
0.38%
1.71%
2029
-
742.7
-
750.0
-
-
-
-
750.0
-
(7.3)
3.63%
3.76%
2030
403.8
437.0
-
500.0
-
-
-
-
-
500.0
(63.0)
0.38%
3.30%
2032
353.6
366.3
-
500.0
-
-
-
-
-
500.0
(133.7)
0.75%
3.11%
2033
642.5
650.0
-
-
-
-
650.0
(7.5)
3.88%
3.91%
EIB
2045
1,475.0
2,407.2
24.6
2,488.5
47.7
58.5
117.1
142.2
142.2
1,980.8
(105.9)
2.43%
1.75%
Terna\u2019s borrowing
2024
300.0
300.0
300.0
-
-
-
-
-
-
-
-
-
(1.22%)
Total fixed rate
\u00a0
8,512.7
9,197.8
1,124.6
8,418.5
547.7
638.5
1,217.1
892.2
1,492.2
3,630.8
\u00a0(345.3)
\u00a0
\u00a0
EIB
2041
950.2
836.3
115.3
721.0
115.3
115.3
115.3
115.3
96.0
163.8
\u00a0-
3.7%***
1.57%
Terna\u2019s borrowing
2025
799.1
699.4
100.0
600.0
600.0
-
-
\u00a0-
-
\u00a0-
\u00a0(0.6)
3.82%***
3.77%
Total variable rate
\u00a0
1,749.3
1,535.7
215.3
1,321.0
715.3
115.3
115.3
115.3
96.0
163.8
\u00a0(0.6)
\u00a0
\u00a0
TOTAL
\u00a0
10,262.0
10,733.5
1,339.9
9,739.5
1,263.0
753.8
1,332.4
1,007.5
1,588.2
3,794.6
\u00a0(345.9)
\u00a0
\u00a0
*\tThe balance does not include prepaid fees of \u20ac5.3 million at 31 December 2023 and of \u20ac3.7 million at 31 December 2022.
**\tIncludes portions measured at amortised cost and fair value adjustments at 31 December 2023.
***\tThis is the average of the rates fixed in the sub-periods.
(\u20acm)
31 December 2022
31 December 2023
Portion falling due within 12 months
Portion falling due after 12 months
Finance leases
1.9
1.0
1.0
-
Operating leases
65.8
64.6
17.3
47.3
TOTAL
67.7
65.6
18.3
47.3
At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac14.8 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
Non-current financial liabilities \u2013 \u20ac164.5 million
(\u20acm)
31 December 2023
31 December 2022
Change
Fair value hedges
164.5
247.2
(82.7)
TOTAL
164.5
247.2
\u00a0(82.7)
Non-current financial liabilities, amounting to \u20ac164.5 million at 31 December 2023, reflect the fair value of fair value hedges.
Fair value was measured by discounting the expected cash flows using the market yield curve at the reporting date. The decreases of \u20ac82.7 million, compared with 31 December 2022 reflects the change in market interest rates.
Short-term borrowings \u2013 \u20ac1,201.7 million
\u201cShort-term borrowings\u201d, amounting to \u20ac1,201.7 million at 31 December 2023, have increased \u20ac757.6 million compared with the previous year, essentially due to the use of short-term credit facilities and the issue of commercial paper by the Parent Company.
Current financial liabilities \u2013 \u20ac113.8 million
(\u20acm)
31 December 2023
31 December 2022
Change
Foreign exchange cash flow hedges
\u00a00.1
\u00a0-
0.1
Fair value hedges
\u00a0-
0.8
\u00a0(0.8)
Other current financial liabilities
38.5
\u00a0-
38.5
DEFERRED LIABILITIES ON:
Hedging derivatives
1.3
0.6
0.7
Bond issues
53.5
33.5
20.0
Borrowings
20.4
10.0
10.4
TOTAL
113.8
44.9
68.9
Current financial liabilities amount to \u20ac113.8 million at 31 December 2023, an increase of \u20ac68.9 million compared with 31 December 2022. This essentially reflects the value of net unpaid financial expenses accruing on financial instruments (up \u20ac30.4 million, primarily relating to bond issues and borrowings) and recognition of the advance disbursed by the European Commission in relation to the Italy\u2013Tunisia interconnector project (up \u20ac38.5 million), attributable to the Tunisian operator, STEG.
Net debt
Pursuant to the CONSOB Communication of 28 July 2006 and in compliance with Recommendation ESMA n. 32-382-1138 of 2021, the Group\u2019s net debt is as follows:
(\u20acm)
31 DECEMBER 2023
A.
Cash
183.7
B.
Cash equivalents*
1,194.5
C.
Other current financial assets**
376.4
D.
Liquidity (A) + (B) + (C)
1,754.6
E.
Current financial liabilities (including debt instruments, but excluding the current portion of non-current financial liabilities)
1,201.7
F.
Current portion of non-current debt***
1,490.7
G.
Current debt (E+F)
2,692.4
H.
Net current debt (G) - (D)
937.8
I.
Non-current financial liabilities (excluding the current portion and debt instruments)****
3,833.4
J.
Debt instruments*****
5,723.1
K.
Non-current net debt (I) + (J)
9,556.5
L.
Net debt (H) + (K)
10,494.3
*\tCorresponds with the item, \u201cCash and can equivalents\u201d relating to the value of short-term deposits.
**\tCorresponds with the item, \u201c Current financial assets\u201d relating to the value of government securities (\u20ac197.2 million), readily convertible time deposits (\u20ac165.0 million) and accrued interest income (\u20ac14.3 million).
***\tCorresponds with the item, \u201cCurrent portion of long-term borrowings\u201d relating to the short-term portion of long-term borrowings (\u20ac539.9 million), the short-term portion of bond issues (\u20ac826.4 million) and the short-term portion of lease liabilities (\u20ac18.3 million), \u201c Current financial liabilities\u201d and \u201cCurrent financial assets\u201d relating to the value of derivative assets and accrued financial income on derivatives (down \u20ac7.7 million).
****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of borrowings (\u20ac3,697.7 million) and the long-term portion of lease liabilities (\u20ac47.3 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities (\u20ac105.6 million) and \u201cNon-current financial assets\u201d relating to derivative assets (down \u20ac17.2 million).
*****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of bond issues (\u20ac5,664.2 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities on bonds (\u20ac58.9 million).
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Group is a party may contain provisions that, if certain events occur, authorise counterparties to call in such loans immediately, thereby generating liquidity risk.
Certain long-term loans obtained by the Parent Company, Terna S.p.A., contain covenants that are typical of international practice. The principal covenants relate to:
\u2022 the Company\u2019s bond issues, which consist of an \u20ac800.0 million issued in 2004, perpetual hybrid green bonds of \u20ac1,000,000,000 and eleven issues as part of its EMTN Programme (\u201c\u20ac9,000,000,000 Euro Medium Term Notes Programme\u201d);
\u2022 bank borrowings, consisting of revolving lines of credit and bilateral term loans (\u201cbank debt\u201d);
\u2022 a series of loans to the Company from the European Investment Bank (EIB), amounting to a total of approximately \u20ac3.3 billion.
The main covenants relating to bond issues and the EMTN Programme involve clauses regarding i) \u201cnegative pledges\u201d, on the basis of which the Issuer or its Relevant Subsidiaries undertake not to create or maintain mortgages, pledges or other encumbrances on their assets or revenue to guarantee specific financial debt, unless the encumbrances are extended on an equal or pro rata basis to the bond issues in question (with the exception of certain \u201cpermitted guarantees\u201d); ii) \u201cpari passu\u201d, on the basis of which the securities constitute a direct, unconditional and unsecured obligation by the Issuer, ranking equally among them and with at least the same level of seniority as other present and future unsecured and non- subordinated borrowings of the Issuer; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g., failure to make a repayment, the liquidation of the Issuer, the breach of contractual obligations, a cross-default, etc.) a situation of default is established and the loan is immediately called in. \u00a0
The main covenants relating to bank borrowings involve clauses related to i) negative pledges, on the basis of which the Issuer or the Relevant Subsidiaries undertake not to create or maintain guarantees on their assets to secure borrowings, with the exception of \u201cpermitted guarantees\u201d; ii) pari passu\u00a0on the basis of which the Borrower\u2019s payment obligations in relation to the loan agreements in question are not subordinated to any obligation related to other unsecured and non-subordinated creditors, without prejudice to privileges under the law; iii) \u201cevent of default\u201d, on the basis of which if certain predetermined events occur (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, business discontinuation, substantially prejudicial effects, the breach of contractual obligations, including pari passu\u00a0conditions, a cross-default, etc.) a situation of default is established and the loan is immediately called in; iv) \u201cratings\u201d, which involve accelerated repayment should the rating fall below investment grade for the majority of rating agencies or should the Borrower cease to be rated by at least one agency.
The main covenants related to the EIB loans involve clauses related to i) negative pledges, on the basis of which the Company cannot create personal or real guarantees or, more generally, encumbrances, with the exception of encumbrances granted in relation to borrowings below given amounts and under contractually specified circumstances; ii) the provision to the Bank, at its request, of new guarantees should the ratings assigned by the rating agencies fall below the level indicated in the respective contracts agreed or should the Company cease to be rated by the rating agencies; iii) pari passu, on the basis of which the Company ensures that payment obligations rank equally with those related to all other unsecured, non-subordinated creditors, without prejudice to privileges under the law; iv) cases of contract termination/application of the call provision/withdrawal (e.g. failure to make a repayment, serious inaccuracies in documents and/or declarations, insolvency, events that have a negative impact on financial commitments made by the Company, extraordinary administration, liquidation, substantial prejudicial changes, the breach of contractual commitments, etc.); v) accelerated loan payment following the occurrence of given events (e.g. change of control over the Company, loss of the concession, extraordinary corporate events, etc.).
Long-term borrowings
The table below shows movements in long-term debt during the year, including also the nominal amount:
(\u20acm)
31 December 2022
31 December 2023
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
REPAYMENTS AND CAPITALISATIONS
DRAWDOWNS
OTHER
CHANGE IN THE CARRYING AMOUNT NOTIONAL DEBT
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
IL bond
662.0
659.6
886.4
\u00a0(670.8)
\u00a0-
11.2
\u00a0(659.6)
-
-
-
Bond maturing 2023
1,000.0
999.2
991.3
\u00a0(1,000.0)
\u00a0-
0.8
\u00a0(999.2)
-
-
-
Bond maturing 2024
800.0
858.2
817.7
\u00a0-
\u00a0-
\u00a0(31.8)
\u00a0(31.8)
800.0
826.4
807.4
Bond maturing 2025
500.0
497.5
458.4
\u00a0-
\u00a0-
1.0
1.0
500.0
498.5
474.7
Private Placement 2026
80.0
79.5
75.1
\u00a0-
\u00a0-
0.2
0.2
80.0
79.7
76.8
Bond maturing 2026
500.0
498.9
461.3
\u00a0-
\u00a0-
0.3
0.3
500.0
499.2
477.6
Private Placement 2027
100.0
99.8
100.8
\u00a0-
\u00a0-
\u00a0-
\u00a0-
100.0
99.8
100.3
Bond maturing 2027
1,000.0
984.9
902.4
\u00a0-
\u00a0-
3.1
3.1
1,000.0
988.0
944.0
Bond maturing 2028
750.0
705.6
637.7
\u00a0-
\u00a0-
7.3
7.3
750.0
712.9
685.9
Bond maturing 750_2029
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0750.0
\u00a0(7.3)
742.7
750.0
742.7
766.9
Bond maturing 2029
600.0
597.1
480.1
\u00a0-
\u00a0-
0.5
0.5
600.0
597.6
519.2
Bond maturing 2030
500.0
403.8
378.3
\u00a0-
\u00a0-
33.2
33.2
500.0
437.0
414.7
Bond maturing 2032
500.0
353.6
368.9
\u00a0-
\u00a0-
12.7
12.7
500.0
366.3
409.1
Bond maturing 2033
\u00a0-
\u00a0-
\u00a0-
\u00a0-
\u00a0650.0
\u00a0(7.5)
642.5
650.0
642.5
671.2
Total bond issues
6,992.0
6,737.7
6,558.4
\u00a0(1,670.8)
1,400.0
23.7
\u00a0(247.1)
6,730.0
6,490.6
6,347.8
Borrowings
3,524.3
3,520.6
3,520.6
\u00a0(234.4)
900.0
51.4
717.0
3,799.4
4,237.6
4,237.6
Lease liabilities
67.7
67.7
67.7
\u00a0(14.8)
\u00a0-
12.7
\u00a0(2.1)
65.6
65.6
65.6
Total borrowings
3,592.0
3,588.3
3,588.3
\u00a0(249.2)
900.0
64.1
714.9
3,865.0
4,303.2
4,303.2
Total debt
10,584.0
10,326.0
10,146.7
\u00a0(1,920.0)
2,300.0
87.8
467.8
10,595.0
10,793.8
10,651.0
At 31 December 2023, the Terna Group\u2019s has access to additional financing of \u20ac3,455.0 million, represented by two revolving credit facilities.
In addition, as provided for in IFRS 7, the table shows the fair value of borrowings and bond issues. In the case of bond issues, this is market value based on prices at the reporting date, whilst variable rate loans are measured by discounting expected cash flows based on the market interest rate curve at the reporting date.
The following table shows an analysis of bond issues and other borrowings by maturity, showing the related short-term portions.
(\u20acm)
Maturity
31 December 2022*
31 December 2023*
Portion falling due within 12 months
Portion falling due after 12 months
2025
2026
2027
2028
2029
After
Other**
\u00a0Average interest rate at 31 December 2023
Average interest rate after hedges at 31 December 2023
Bonds
2023
659.6
-
-
-
-
-
-
-
-
-
-
2.73%
5.08%
2023
999.2
-
-
-
-
-
-
-
-
-
-
1.00%
1.15%
2024
858.2
826.4
800.0
-
-
-
-
-
-
-
26.4
4.90%
0.87%
2025
497.6
498.5
-
500.0
500.0
-
-
-
-
-
(1.5)
0.13%
0.32%
2026
498.8
499.2
-
500.0
-
500.0
-
-
-
-
(0.8)
1.00%
1.28%
2026
79.5
79.7
-
80.0
-
80.0
-
-
-
-
(0.3)
1.60%
1.80%
2027
984.8
988.0
-
1,000.0
-
-
1,000.0
-
-
-
(12.0)
1.38%
1.91%
2027
99.8
99.8
-
100.0
-
-
100.0
-
-
-
(0.2)
3.44%
2.77%
2028
705.6
712.9
-
750.0
-
-
-
750.0
-
-
(37.1)
1.00%
1.29%
2029
597.2
597.6
600.0
-
-
-
600.0
-
(2.4)
0.38%
1.71%
2029
-
742.7
-
750.0
-
-
-
-
750.0
-
(7.3)
3.63%
3.76%
2030
403.8
437.0
-
500.0
-
-
-
-
-
500.0
(63.0)
0.38%
3.30%
2032
353.6
366.3
-
500.0
-
-
-
-
-
500.0
(133.7)
0.75%
3.11%
2033
642.5
650.0
-
-
-
-
650.0
(7.5)
3.88%
3.91%
EIB
2045
1,475.0
2,407.2
24.6
2,488.5
47.7
58.5
117.1
142.2
142.2
1,980.8
(105.9)
2.43%
1.75%
Terna\u2019s borrowing
2024
300.0
300.0
300.0
-
-
-
-
-
-
-
-
-
(1.22%)
Total fixed rate
\u00a0
8,512.7
9,197.8
1,124.6
8,418.5
547.7
638.5
1,217.1
892.2
1,492.2
3,630.8
\u00a0(345.3)
\u00a0
\u00a0
EIB
2041
950.2
836.3
115.3
721.0
115.3
115.3
115.3
115.3
96.0
163.8
\u00a0-
3.7%***
1.57%
Terna\u2019s borrowing
2025
799.1
699.4
100.0
600.0
600.0
-
-
\u00a0-
-
\u00a0-
\u00a0(0.6)
3.82%***
3.77%
Total variable rate
\u00a0
1,749.3
1,535.7
215.3
1,321.0
715.3
115.3
115.3
115.3
96.0
163.8
\u00a0(0.6)
\u00a0
\u00a0
TOTAL
\u00a0
10,262.0
10,733.5
1,339.9
9,739.5
1,263.0
753.8
1,332.4
1,007.5
1,588.2
3,794.6
\u00a0(345.9)
\u00a0
\u00a0
*\tThe balance does not include prepaid fees of \u20ac5.3 million at 31 December 2023 and of \u20ac3.7 million at 31 December 2022.
**\tIncludes portions measured at amortised cost and fair value adjustments at 31 December 2023.
***\tThis is the average of the rates fixed in the sub-periods.
(\u20acm)
31 December 2022
31 December 2023
Portion falling due within 12 months
Portion falling due after 12 months
Finance leases
1.9
1.0
1.0
-
Operating leases
65.8
64.6
17.3
47.3
TOTAL
67.7
65.6
18.3
47.3
At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac14.8 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
Short-term borrowings \u2013 \u20ac1,201.7 million
\u201cShort-term borrowings\u201d, amounting to \u20ac1,201.7 million at 31 December 2023, have increased \u20ac757.6 million compared with the previous year, essentially due to the use of short-term credit facilities and the issue of commercial paper by the Parent Company.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBorrowingsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130866": { "value": "At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac14.8 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLeasesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2022-01-01T00:00:00/2023-01-01T00:00:00" } }, "shtag_130867": { "value": "26. Employee benefits \u2013 \u20ac49.8 million
The Group provides its employees with benefits during their period of employment (loyalty bonuses), on termination of employment (TFR, energy discounts, additional months\u2019 pay and payment in lieu of notice) and after termination in the form of post-employment benefits (ASEM health cover).
Loyalty bonuses are payable to the Group\u2019s employees and senior managers once certain requirements have been met regarding length of service (on completing 25 and 35 years of service).
Termination benefits (TFR) are payable to all employees, whilst employees hired by 30 June 1996 receive energy discounts, senior managers recruited or appointed before 28 February 1999 receive payment in lieu of notice and employees (blue-collar workers, office staff and middle managers) employed prior to 24 July 2001 are due additional months\u2019 pay on termination.
Post-employment benefits consist of a form of supplementary health cover in addition to that provided by the Italian national health service, as provided for in the national collective contract for industrial managers (the ASEM health plan).
The following table shows the composition of provisions for TFR\u00a0and other employee benefits and movements during the year ended 31 December 2023:
(\u20acm)
31 December 2022
Provisions
Interest cost
Uses and other movements
Actuarial
gains/(losses)
31 December 2023
Benefits during the period of employment
Loyalty bonuses and other incentives
4.0
0.7
0.1
\u00a0(0.4)
\u00a0-
4.4
Total
4.0
0.7
0.1
\u00a0(0.4)
\u00a0-
4.4
Termination benefits
Deferred compensation benefits (TFR)
29.2
0.4
1.0
\u00a0(2.4)
0.2
28.4
Energy discounts
2.4
\u00a0-
0.1
\u00a0(0.2)
\u00a0(0.1)
2.2
Additional months\u2019 pay
4.1
0.6
0.1
\u00a0(0.4)
0.2
4.6
Other similar benefits
0.6
-
\u00a0-
0.1
\u00a0-
0.7
Total
36.3
1.0
1.2
\u00a0(2.9)
0.3
35.9
Post-employment benefits
ASEM health plan
8.1
0.3
0.3
\u00a0(0.6)
1.4
9.5
Total
8.1
0.3
0.3
\u00a0(0.6)
1.4
9.5
TOTAL
48.4
2.0
1.6
\u00a0(3.9)
1.7
49.8
This item, amounting to \u20ac49.8 million at 31 December 2023, is up \u20ac1.4 million compared with the previous year. This is primarily due to actuarial losses (up \u20ac1.7 million, broadly due to the change in the discount rate used).
The following table shows the current service cost and interest income and expense.
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional
months\u2019 pay
Energy discounts
ASEM
TOTAL
Net impact recognised in profit or loss
- current service cost
0.7
0.4
0.1
\u00a0-
0.3
1.5
- curtailment (revenue) and other costs
\u00a0-
\u00a0-
0.5
\u00a0-
\u00a0-
0.5
- interest income and expense
0.1
1.0
0.1
0.1
0.3
1.6
TOTAL RECOGNISED IN PROFIT OR LOSS
0.8
1.4
0.7
0.1
0.6
3.6
The revaluation of the net liability for employee benefits is shown in the following table, which provides details of the type of actuarial gain or loss recognised in other comprehensive income.
(\u20acm)
TFR
Additional
Months\u2019 pay
Energy discounts
ASEM health cover
TOTAL
Actuarial gain/losses
- based on past experience
\u00a0(0.3)
0.1
\u00a0(0.2)
0.6
0.2
- due to changes in discount rate
0.5
0.1
0.1
0.8
1.5
TOTAL IMPACT ON COMPREHENSIVE INCOME
0.2
0.2
\u00a0(0.1)
1.4
1.7
Finally, the following tables show the main actuarial assumptions applied, a sensitivity analysis of movements in the assumptions and the payment schedule for the plan. In line with 2022, the interest rate used to determine the present value of the obligation was calculated on the basis of the yield on the Iboxx Eurozone Corporates AA index at 31 December 2023, matching the duration of the relevant group of plan participants.
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional
Months\u2019 pay
Energy discounts
ASEM health cover
Discount rate
3.17%
3.08%
2.95%
3.08%
3.17%
Inflation rate
2.00%
2.00%
-
-
2.70%
Duration (in years)
17-19
6-20
4-7
5-9
14-16
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional months\u2019 pay
Energy discounts
ASEM health cover
TOTAL
Discount rate + 0.25%
3.8
9.9
4.4
2.2
12.1
32.4
Discount rate - 0.25%
3.8
10.2
4.4
2.3
13.0
33.7
Inflation rate + 0.25%
3.9
10.2
\u00a0-
\u00a0-
\u00a0-
14.1
Inflation rate - 0.25%
3.8
10.0
\u00a0-
\u00a0-
\u00a0-
13.8
Annual rate of increase in health costs +3%
\u00a0-
\u00a0-
\u00a0-
\u00a0-
12.7
12.7
Annual rate of increase in health costs -3%
\u00a0-
\u00a0-
\u00a0-
\u00a0-
12.3
12.3
(\u20acm)
Loyalty bonuses and other incentives
TFR
Additional months\u2019 pay
Other similar benefits
Energy discounts
ASEM
health cover
TOTAL
By the end of 2024
0.3
1.3
1.8
\u00a0-
0.3
0.9
4.6
By the end of 2025
0.2
1.4
0.4
\u00a0-
0.2
1.0
3.2
By the end of 2026
0.4
1.2
0.6
\u00a0-
0.2
1.0
3.4
By the end of 2027
0.3
0.4
0.5
\u00a0-
\u00a0-
1.2
2.4
By the end of 2028
0.2
1.0
0.5
\u00a0-
0.2
1.3
3.2
After 5 years
3.0
23.1
0.8
0.7
1.3
4.1
33.0
TOTAL
4.4
28.4
4.6
0.7
2.2
9.5
49.8
27. Provisions for risk and charges \u2013 \u20ac151.8 million
(\u20acm)
PROVISIONS FOR LITIGATION AND DISPUTES
PROVISIONS FOR SUNDRY RISKS AND CHARGES
PROVISIONS FOR EARLY RETIREMENT INCENTIVES
TOTAL
Amount at 31 December 2022
14.0
99.9
26.9
140.8
Provisions
1.7
40.7
14.5
56.9
Uses and other movements
\u00a0(2.8)
\u00a0(35.3)
\u00a0(7.8)
\u00a0(45.9)
Amount at 31 December 2023
12.9
105.3
33.6
151.8
Provisions for litigation and disputes \u2013 \u20ac12.9 million
These provisions, set aside to cover outstanding liabilities that, at the end of the year, could result from court judgements and out-of-court settlements regarding the activities of Group companies, have been assessed partly on the basis of recommendations from internal and external legal advisors. The balance at 31 December 2023, amounting to \u20ac12.9 million, primarily regards disputes involving the Parent Company in relation to the payment of damages relating to operation and maintenance, requests for compensation for easements and labour and social security disputes. This is down by a net \u20ac1.1 million compared with the previous year as a result of lower net provisions during the year.
Provisions for sundry risks and charges \u2013 \u20ac105.3 million
These provisions amount to \u20ac105.3 million at 31 December 2023 and essentially regard liabilities associated with urban and environmental restoration projects, regulation of the quality of the electricity service, staff incentive plans, right-of-way fees and tax-related aspects.
These provisions are up by a net \u20ac5.4 million, compared with the previous year reflecting:
\u2022 net provisions of \u20ac3.8 million for urban and environmental restoration schemes;
\u2022 net provisions for right-of-way fees (up \u20ac5.1 million);
\u2022 a net decrease of \u20ac7.6 million in provisions for staff incentives and other personnel expenses;
\u2022 a net reduction of \u20ac0.8 million in provisions linked to regulation of the quality of the electricity service (the mitigation and sharing mechanism introduced by ARERA Resolution 653/2015/R/eel) which, after provisions for estimated penalties linked to outages during the year, reflects payments to distribution companies and releases following final determination of the penalties due to previous years.
Provisions for early retirement incentives \u2013 \u20ac33.6 million
Provisions for early retirement incentives reflects the estimated extraordinary expenses to be incurred in relation to the cost of the scheme for the year, linked to the early retirement of Group employees who have reached pensionable age and where the Group has an obligation. This item has increased by a net \u20ac6.7 million, reflecting payments in coming years in relation to the existing plan for generational turnover.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProvisionsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130869": { "value": "28. Other non-current liabilities \u2013 \u20ac948.3 million
This item, amounting to \u20ac948.3 million 31 December 2023, regards accrued grants related to assets receivable by the Parent Company (\u20ac64.3 million), in addition to payments on account received in relation to construction of the private Italy-Montenegro, Italy-France and Italy-Austria Interconnectors (totalling \u20ac464.3 million).
This item also includes the guarantee deposits received from operators participating in the capacity market in accordance with Resolution 98/2011/R/eel (\u20ac120.7 million), in addition to the Interconnector Guarantee Fund set up by Terna S.p.A. following the issue of the 2016 Stability Law (\u20ac163.9 million), in order to fund investment in interconnections by art. 32 of Law 99/09.
The decrease in this item compared with the previous year, amounting to \u20ac23.1 million, essentially reflects a reduction in guarantee deposits received from operators participating in the capacity market in accordance with Resolution 98/2011/R/eel, as amended (down \u20ac34.9 million) and a reduction in deferred income relating to grants related to assets receivable by the Parent Company (down \u20ac5.2 million), partially offset by an increase in the Interconnector Guarantee Fund (up \u20ac17.2 million).", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130870": { "value": "29. CURRENT LIABILITIES
(\u20acm)
31 December 2023
31 December 2022
Change
Short-term borrowings*
1,201.7
444.1
757.6
Current portion of long-term borrowings*
1,384.6
1,909.3
(524.7)
Trade payables
2,864.9
3,687.7
(822.8)
Tax liabilities
-
43.8
(43.8)
Current financial liabilities*
113.8
44.9
68.9
Other current liabilities
809.4
669.9
139.5
TOTAL
6,374.4
6,799.7
(425.3)
* Information on these items is provided in note 25, \u201cBorrowings and financial liabilities
Trade payables \u2013 \u20ac2,684.9 million
(\u20acm)
31 December 2023
31 December 2022
Change
Suppliers:
\u00a0
\u00a0
\u00a0
- Energy-related payables
1,649.1
2,649.5
(1,000.4)
- Non-energy-related payables
1,134.9
982.7
152.2
Amounts due to associates
6.7
10.1
(3.4)
Payables resulting from contract work in progress
74.2
45.4
28.8
TOTAL
2,864.9
3,687.7
(822.8)
Suppliers
Energy-related payables
The decrease of \u20ac1,000.4 million in this item compared with the end of 2022 essentially reflects energy-related pass-through payables (down \u20ac1,078.6 million). This is primarily due to:
\u2022 a reduction of \u20ac712.1 in Power Exchange payables, associated with the uplift mechanism. The reduction is due to the sharp fall in dispatching costs (above all DSM costs and the cost of imbalances) reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 a decrease in net payables relating to essential plants for the security of the electricity system - UESS (\u20ac417.1 million), reflecting higher payments made in 2023, which also take into account the maximisation programme introduced by Resolution 430/2022;
partially offset by an increase in payables (\u20ac45.9 million) linked to the Inter-TSO Compensation (ITC) scheme6.
Non-energy related payables
The exposure to suppliers regards invoices received and to be received for contract work, services and purchases The balance at 31 December 2023 (\u20ac1,134.9 million) is up \u20ac152.2 million on the previous year, largely due to increased capital expenditure towards the end of the year (primarily by the subsidiary, Terna Rete Italia S.p.A., up \u20ac127.2 million), and an increase in payables at the LT Group (up \u20ac23.1 million) and the Tamini Group (up \u20ac7.9 million), partially offset by a decrease in payables at the Parent Company (down \u20ac12.4 million).
Amounts due to associates
This item, amounting to \u20ac6.7 million, is down \u20ac3.4 million on the previous year, and regards amounts payable to the associate CESI S.p.A., for services provided primarily to the Parent Company (\u20ac1.4 million) and to the subsidiary Terna Rete Italia S.p.A. (\u20ac4.8 million), relating to electro technical studies and research.
Payables resulting from contract work in progress
Payables resulting from contract work in progress, amounting to \u20ac74.2 million at 31 December 2023, are up \u20ac28.8 million on the figure for 31 December 2022 (\u20ac45.4 million), essentially reflecting contract work in progress at the Brugg Cables Group (up \u20ac12.9 million), contract work in progress at Terna Energy Solutions S.r.l. (up \u20ac8.7 million) and the Tamini Group (up \u20ac7.9 million).
This item breaks down as follows.
(\u20acm)
PREPAYMENTs
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2023
PREPAYMENTs
VALUE OF CONTRACT
BALANACE AT31 DECEMBER 2022
Contract work in progress
131.1
(56.9)
74.2
183.8
(138.4)
45.4
The carrying amount of trade payables broadly approximates to fair value.
The commitments assumed by the Group towards suppliers amount to approximately \u20ac6,027.2 million and regard purchase commitments linked to the normal \u201coperating cycle\u201d projected for the period 2024-2028.
Tax liabilities
At 31 December 2023, this item has a zero balance due to the recognition in \u201cIncome tax assets\u201d of increased payments on account and the settlement of taxes relating to the previous year, after the recognition of income tax for the period. This compares with net tax liabilities at 31 December 2022 (\u20ac43.8 million).
Other current liabilities \u2013 \u20ac809.4 million
(\u20acm)
31 December 2023
31 December 2022
Change
Prepayments
266.5
152.0
114.5
Other tax liabilities
89.2
99.9
(10.7)
Social security payables
31.6
28.9
2.7
Amounts due to personnel
62.7
54.4
8.3
Other amounts due to third parties
359.4
334.7
24.7
TOTAL
809.4
669.9
139.5
Prepayments
This item amounts to \u20ac266.5 million at 31 December 2023 and regards grants related to assets collected by the Group (of which \u20ac112.0 million attributable to the Parent Company) to fund the construction of non-current assets in progress at 31 December 2023.
Compared with the balance at 31 December 2022 (\u20ac152.0 million) this item is up \u20ac114.5 million, essentially due to new prepayments received from third parties after grants deducted directly from the carrying amount of the related assets, totalling \u20ac9.7 million.Other tax liabilities
Other tax liabilities, amounting to \u20ac89.2 million , are down \u20ac10.7 million compared with the previous year. This primarily reflects the decrease in VAT payable by the Group (down \u20ac11.4 million).
Social security payables
Social security payables, essentially relating to contributions payable to INPS (the National Institute of Social Security) by the Parent Company and the subsidiary, Terna Rete Italia S.p.A., amount to \u20ac31.6 million. The figure is up \u20ac2.7 million compared with the previous year, due to an increase in contributions payable. This item also included the amount payable to the Fondo Previdenza Elettrici \u2013 F.P.E.\u00a0(the Electricity Industry Pension Fund), amounting to \u20ac2.3 million (\u20ac2.3 million at 31 December 2022).
Amounts due to personnel
Amounts due to personnel, amounting to \u20ac62.7 million, are up \u20ac8.3 million compared with the previous year, and essentially regard the Parent Company and the subsidiary Terna Rete Italia S.p.A.. They primarily relate to:
\u2022 incentives payable in the subsequent year (\u20ac40.3 million);
\u2022 amounts due to employees in the form of accrued and unused annual leave and bank holiday entitlements (\u20ac17.9 million);
\u2022 benefits payable to personnel leaving the Company by 31 December 2023 (\u20ac0.8 million).
Other payables due to third parties
Other payables due to third parties, amounting to \u20ac359.4 million, primarily regard guarantee deposits (\u20ac258.5 million) received from electricity market operators to guarantee their contractual obligations under dispatching and virtual interconnection contracts. This item also includes the potential liabilities attributable to the Brugg Cables Group, arising from the Purchase Price Allocation\u00a0(\u20ac33.0 million, covered by an insurance policy) and resulting from ongoing litigation regarding a number of contracts with Colombian counterparties, and deferred income (\u20ac35.1 million, primarily attributable to the Group\u2019s non-regulated business).
This item is up by a total of \u20ac24.7 million, essentially due to an increase in guarantee deposits collected during the year, totalling \u20ac34.2 million, an increase in accrued expenses (up \u20ac6.0 million), offset by a reduction in dividends payable (down \u20ac18.2 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130871": { "value": "Trade payables \u2013 \u20ac2,684.9 million
(\u20acm)
31 December 2023
31 December 2022
Change
Suppliers:
\u00a0
\u00a0
\u00a0
- Energy-related payables
1,649.1
2,649.5
(1,000.4)
- Non-energy-related payables
1,134.9
982.7
152.2
Amounts due to associates
6.7
10.1
(3.4)
Payables resulting from contract work in progress
74.2
45.4
28.8
TOTAL
2,864.9
3,687.7
(822.8)
Suppliers
Energy-related payables
The decrease of \u20ac1,000.4 million in this item compared with the end of 2022 essentially reflects energy-related pass-through payables (down \u20ac1,078.6 million). This is primarily due to:
\u2022 a reduction of \u20ac712.1 in Power Exchange payables, associated with the uplift mechanism. The reduction is due to the sharp fall in dispatching costs (above all DSM costs and the cost of imbalances) reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 a decrease in net payables relating to essential plants for the security of the electricity system - UESS (\u20ac417.1 million), reflecting higher payments made in 2023, which also take into account the maximisation programme introduced by Resolution 430/2022;
partially offset by an increase in payables (\u20ac45.9 million) linked to the Inter-TSO Compensation (ITC) scheme6.
Non-energy related payables
The exposure to suppliers regards invoices received and to be received for contract work, services and purchases The balance at 31 December 2023 (\u20ac1,134.9 million) is up \u20ac152.2 million on the previous year, largely due to increased capital expenditure towards the end of the year (primarily by the subsidiary, Terna Rete Italia S.p.A., up \u20ac127.2 million), and an increase in payables at the LT Group (up \u20ac23.1 million) and the Tamini Group (up \u20ac7.9 million), partially offset by a decrease in payables at the Parent Company (down \u20ac12.4 million).
6\u00a0Inter-TSO Compensation: a payment to TSOs for use of their national transmission grids (infrastructure and losses) to transport energy, including those relating to cross-border flows. The related costs are covered from 2020 by a specific component of the transmission charge. The related receivables are described in the note on \u201cTrade receivables\u201d in these notes.Amounts due to associates
This item, amounting to \u20ac6.7 million, is down \u20ac3.4 million on the previous year, and regards amounts payable to the associate CESI S.p.A., for services provided primarily to the Parent Company (\u20ac1.4 million) and to the subsidiary Terna Rete Italia S.p.A. (\u20ac4.8 million), relating to electro technical studies and research.
Payables resulting from contract work in progress
Payables resulting from contract work in progress, amounting to \u20ac74.2 million at 31 December 2023, are up \u20ac28.8 million on the figure for 31 December 2022 (\u20ac45.4 million), essentially reflecting contract work in progress at the Brugg Cables Group (up \u20ac12.9 million), contract work in progress at Terna Energy Solutions S.r.l. (up \u20ac8.7 million) and the Tamini Group (up \u20ac7.9 million).
This item breaks down as follows.
(\u20acm)
PREPAYMENTs
VALUE OF CONTRACT
BALANCE AT 31 DECEMBER 2023
PREPAYMENTs
VALUE OF CONTRACT
BALANACE AT31 DECEMBER 2022
Contract work in progress
131.1
(56.9)
74.2
183.8
(138.4)
45.4
The carrying amount of trade payables broadly approximates to fair value.
The commitments assumed by the Group towards suppliers amount to approximately \u20ac6,027.2 million and regard purchase commitments linked to the normal \u201coperating cycle\u201d projected for the period 2024-2028.
", "dimensions": { "concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130873": { "value": "Other current liabilities \u2013 \u20ac809.4 million
(\u20acm)
31 December 2023
31 December 2022
Change
Prepayments
266.5
152.0
114.5
Other tax liabilities
89.2
99.9
(10.7)
Social security payables
31.6
28.9
2.7
Amounts due to personnel
62.7
54.4
8.3
Other amounts due to third parties
359.4
334.7
24.7
TOTAL
809.4
669.9
139.5
Prepayments
This item amounts to \u20ac266.5 million at 31 December 2023 and regards grants related to assets collected by the Group (of which \u20ac112.0 million attributable to the Parent Company) to fund the construction of non-current assets in progress at 31 December 2023.
Compared with the balance at 31 December 2022 (\u20ac152.0 million) this item is up \u20ac114.5 million, essentially due to new prepayments received from third parties after grants deducted directly from the carrying amount of the related assets, totalling \u20ac9.7 million.Other tax liabilities
Other tax liabilities, amounting to \u20ac89.2 million , are down \u20ac10.7 million compared with the previous year. This primarily reflects the decrease in VAT payable by the Group (down \u20ac11.4 million).
Social security payables
Social security payables, essentially relating to contributions payable to INPS (the National Institute of Social Security) by the Parent Company and the subsidiary, Terna Rete Italia S.p.A., amount to \u20ac31.6 million. The figure is up \u20ac2.7 million compared with the previous year, due to an increase in contributions payable. This item also included the amount payable to the Fondo Previdenza Elettrici \u2013 F.P.E.\u00a0(the Electricity Industry Pension Fund), amounting to \u20ac2.3 million (\u20ac2.3 million at 31 December 2022).
Amounts due to personnel
Amounts due to personnel, amounting to \u20ac62.7 million, are up \u20ac8.3 million compared with the previous year, and essentially regard the Parent Company and the subsidiary Terna Rete Italia S.p.A.. They primarily relate to:
\u2022 incentives payable in the subsequent year (\u20ac40.3 million);
\u2022 amounts due to employees in the form of accrued and unused annual leave and bank holiday entitlements (\u20ac17.9 million);
\u2022 benefits payable to personnel leaving the Company by 31 December 2023 (\u20ac0.8 million).
Other payables due to third parties
Other payables due to third parties, amounting to \u20ac359.4 million, primarily regard guarantee deposits (\u20ac258.5 million) received from electricity market operators to guarantee their contractual obligations under dispatching and virtual interconnection contracts. This item also includes the potential liabilities attributable to the Brugg Cables Group, arising from the Purchase Price Allocation\u00a0(\u20ac33.0 million, covered by an insurance policy) and resulting from ongoing litigation regarding a number of contracts with Colombian counterparties, and deferred income (\u20ac35.1 million, primarily attributable to the Group\u2019s non-regulated business).
This item is up by a total of \u20ac24.7 million, essentially due to an increase in guarantee deposits collected during the year, totalling \u20ac34.2 million, an increase in accrued expenses (up \u20ac6.0 million), offset by a reduction in dividends payable (down \u20ac18.2 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130872": { "value": "Other current liabilities \u2013 \u20ac809.4 million
(\u20acm)
31 December 2023
31 December 2022
Change
Prepayments
266.5
152.0
114.5
Other tax liabilities
89.2
99.9
(10.7)
Social security payables
31.6
28.9
2.7
Amounts due to personnel
62.7
54.4
8.3
Other amounts due to third parties
359.4
334.7
24.7
TOTAL
809.4
669.9
139.5
Prepayments
This item amounts to \u20ac266.5 million at 31 December 2023 and regards grants related to assets collected by the Group (of which \u20ac112.0 million attributable to the Parent Company) to fund the construction of non-current assets in progress at 31 December 2023.
Compared with the balance at 31 December 2022 (\u20ac152.0 million) this item is up \u20ac114.5 million, essentially due to new prepayments received from third parties after grants deducted directly from the carrying amount of the related assets, totalling \u20ac9.7 million.Other tax liabilities
Other tax liabilities, amounting to \u20ac89.2 million , are down \u20ac10.7 million compared with the previous year. This primarily reflects the decrease in VAT payable by the Group (down \u20ac11.4 million).
Social security payables
Social security payables, essentially relating to contributions payable to INPS (the National Institute of Social Security) by the Parent Company and the subsidiary, Terna Rete Italia S.p.A., amount to \u20ac31.6 million. The figure is up \u20ac2.7 million compared with the previous year, due to an increase in contributions payable. This item also included the amount payable to the Fondo Previdenza Elettrici \u2013 F.P.E.\u00a0(the Electricity Industry Pension Fund), amounting to \u20ac2.3 million (\u20ac2.3 million at 31 December 2022).
Amounts due to personnel
Amounts due to personnel, amounting to \u20ac62.7 million, are up \u20ac8.3 million compared with the previous year, and essentially regard the Parent Company and the subsidiary Terna Rete Italia S.p.A.. They primarily relate to:
\u2022 incentives payable in the subsequent year (\u20ac40.3 million);
\u2022 amounts due to employees in the form of accrued and unused annual leave and bank holiday entitlements (\u20ac17.9 million);
\u2022 benefits payable to personnel leaving the Company by 31 December 2023 (\u20ac0.8 million).
Other payables due to third parties
Other payables due to third parties, amounting to \u20ac359.4 million, primarily regard guarantee deposits (\u20ac258.5 million) received from electricity market operators to guarantee their contractual obligations under dispatching and virtual interconnection contracts. This item also includes the potential liabilities attributable to the Brugg Cables Group, arising from the Purchase Price Allocation\u00a0(\u20ac33.0 million, covered by an insurance policy) and resulting from ongoing litigation regarding a number of contracts with Colombian counterparties, and deferred income (\u20ac35.1 million, primarily attributable to the Group\u2019s non-regulated business).
This item is up by a total of \u20ac24.7 million, essentially due to an increase in guarantee deposits collected during the year, totalling \u20ac34.2 million, an increase in accrued expenses (up \u20ac6.0 million), offset by a reduction in dividends payable (down \u20ac18.2 million).
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130874": { "value": "E. Commitments and risks
Risk management
In the course of its operations, the Terna Group is exposed to different financial risks: market risk, liquidity risk and credit risk.\n
This section provides information regarding the Terna Group\u2019s exposure to all the above risks, along with a presentation of the objectives, policies and processes for managing those risks and the methods used to assess them, with further quantitative disclosures concerning the separate financial statements for 2023.
The Group\u2019s risk management policies seek to identify and analyse the risks that Group companies are exposed to, establishing appropriate limits and controls and monitoring the risks and compliance with such limits. These policies and the related systems are reviewed on a regular basis, in order to take account of any changes in market conditions or in the companies\u2019 operations.
The Terna Group\u2019s exposure to the aforementioned risks is substantially represented by the exposure of the Parent Company.
As a part of the financial risk management policies approved by the Board of Directors, Terna has established the responsibilities and operating procedures for financial risk management, specifically as concerns the instruments to be used and the precise operating limits to apply in managing them.
Certain amounts at 31 December 2022 have been restated for comparative purposes.
The following table shows financial statement items exposed to the above risks.
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Assets
Derivative financial instruments
\u00a0-
17.8
17.8
-
75.7
75.7
Cash on hand, securities and deposits
1,543.2
316.3
1,859.5
2,155.1
366.4
2,521.5
Trade receivables
\u00a02,123.4
-
\u00a02,123.4
2,358.3
-
2,358.3
TOTAL
3,666.6
334.1
4,000.7
4,513.4
442.1
4,995.5
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Debt
11,995.5
-
11,995.5
10,770.1
-
10,770.1
Derivative financial instruments
-
164.6
164.6
-
248.0
248.0
Trade payables
2,864.9
-
2,864.9
3,687.7
-
3,687.7
TOTAL
14,860.4
164.6
15,025.0
14,457.8
248.0
14,705.8
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in financial market conditions. Market risk includes exchange rate risk, interest rate risk and inflation risk.
Risk management must be performed with the objective of minimising the related risks by selecting counterparties and instruments compatible with the Company\u2019s Risk Management Policy. Speculative activity is not form part of the Parent Company\u2019s activities.
The Terna Group seeks to adopt a dynamic approach to financial risk management. This approach is characterised by risk aversion, aimed at minimising risk through continuous monitoring of financial markets in order to obtain new financing and conclude hedging transactions in favourable market conditions. The dynamic approach enables the Group to intervene in order to improve existing hedges should there be a change in market conditions or changes in the hedged item, making the hedges inappropriate or excessively costly.
The fair value of financial instruments is determined in accordance with the fair value hierarchy envisaged under IFRS 7 (Level 2), by means of appropriate valuation techniques for each category of financial instrument, using market data at the closing date (such as interest rates, exchange rates and volatility) and discounting projected cash flows on the basis of the market yield curve at the reporting date.
Interest rate risk
Interest rate risk is represented by the uncertainty associated with interest rate fluctuations. This is the risk that a change in market interest rates may produce effects on the fair value or future cash flows of financial instruments.
In the course of its operations, the Group is exposed to the risk of fluctuations in interest rates. Its main source of interest rate risk is associated with its borrowings and the related hedges in the form of derivative instruments that generate financial expenses. The borrowing strategy generally focuses on long-term borrowings, whose term reflects the useful life of the Group\u2019s assets. It pursues an interest rate risk hedging policy that aims to guarantee that percentage of debt represented by fixed rate liabilities is at least 40%, as provided for in the relevant policies. At the end of 2023, 87% of the Group\u2019s is fixed rate.
At 31 December 2023, interest rate risk is hedged by cash flow hedges which hedge the risk connected with the fair value of borrowings and movements in interest rates relating to borrowings.
Below are the notional amounts and fair values of the derivative financial instruments entered into by the Terna Group:
(\u20acm)
31 December 2023
31 December 2022
Change
Notional
Fair value
Notional
Fair value
Notional
Fair value
Fair value hedges
1,853.0
(164.5)
\u00a01,973.5
(248.0)
(120.5)
83.5
Cash flow hedges
2,362.8
17.2
\u00a01,996.3
75.5
\u00a0366.4
(58.3)
The notional amount of outstanding cash flow hedges at 31 December 2023, amounting to \u20ac2,362.8 million, breaks down as follows:
\u2022 \u20ac1,309.8 million (fair value gain of \u20ac27.4 million) maturing 2024;
\u2022 \u20ac260.0 million (fair value gain of \u20ac0.3 million) maturing 2025;
\u2022 \u20ac353.0 million (fair value loss of \u20ac0.3 million) maturing 2027;
\u2022 \u20ac500.0 million (fair value loss of \u20ac10.2 million) maturing 2029.
The notional amount of fair value hedges at 31 December\u00a02023, amounting to \u20ac1,853.0 million, breaks down as follows:
\u2022 \u20ac950.0 million (fair value loss of \u20ac58.9 million) maturing 2030;
\u2022 \u20ac323.0 million (fair value loss of \u20ac33.8 million) maturing 2039;
\u2022 \u20ac490.0 million (fair value loss of \u20ac60.1 million) maturing 2042;
\u2022 \u20ac90.0 million (fair value loss of \u20ac11.7 million) maturing 2043.
Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. Accordingly, in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise. The characteristics of cash flow hedges mirror those of the underlyings, with the timing of the related cash flows matching the timing of interest payments on the debt, without changes in fair value having any impact on profit or loss.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
COMPREHENSIVE INCOME
CURRENT RATES +10%
CURRENT AMOUNTS
CURRENTRATES
-10%
TASSI
CORRENTI
+10%
CURRENT AMOUNTS
CURRENTRATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
2.1
-
\u00a0(2.1)
9.8
-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
5.0
3.6
2.1
169.8
159.1
148.3
Hypothetical change
1.4
\u00a0-
\u00a0(1.4)
10.7
\u00a0-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
Inflation risk
Regarding inflation risk, the rates established by the regulator to provide a return on Terna S.p.A.\u2019s activities are determined so as to cover the allowed costs. Such cost components are updated on an annual basis to take into account the impact of inflation. Having used an inflation-linked bond issue in 2007, which matured in September 2023, the Company has put in place an effective hedge of net income; in fact, any decrease in expected revenue due to a decrease in the inflation rate would be offset by lower financial expenses and vice versa.
Exchange rate risk
The management of exchange rate risk must aim to protect a company\u2019s earnings from the risk of currency fluctuations by keeping a close eye on market movements and constantly monitoring the existing exposures. In managing this risk, Terna from time to time selects hedging instruments with structures and durations matching the Group\u2019s exchange rate exposure. The instruments used by Terna are of limited complexity, highly liquid and easy to price, such as forwards and options. Such contracts have a notional amount and maturity date less than or equal to that of the underlying financialliability, or the expected cash flows, so that any change in the fair value and/or estimated cash flows deriving from a rise or fall in the euro against other currencies is fully offset by a corresponding change in the fair value and/or estimated cash flows of the underlying position.
At 31 December 2023, the Group\u2019s exposure to the impact of exchange rate risk on its profit or loss is residual and linked to foreign currency cash flows from the subsidiaries, Tamini and Brugg.
Liquidity risk
Liquidity risk is the risk that the Terna Group might encounter difficulty in discharging its obligations in respect of its financial liabilities and operating cycle. Liquidity risk management seeks to ensure adequate coverage of borrowing requirements by obtaining adequate credit lines and appropriate management of any surplus liquidity. At 31 December 2023, the Terna Group has available short-term credit facilities of approximately \u20ac703\u00a0million (out of total facilities of approximately \u20ac1,040 million), and revolving credit facilities of \u20ac3,455 million. Finally, the Parent Company has launched a Euro Commercial Paper Programme (ECP), amounting to up to \u20ac1,000 million, including \u20ac130 million still available at 31 December 2023.
Credit risk
Credit risk is the risk a customer or one of the counterparties to a transaction in financial instruments could cause a financial loss by failing to discharge an obligation. It is mainly generated by the Group\u2019s trade receivables and financial investments.
The credit risk originated by open positions on transactions in derivatives is considered to be marginal since the counterparties, in compliance with the financial risk management policies adopted, are leading international banks with high ratings.
Terna provides its services essentially to counterparties considered solvent by the market, and therefore with a high credit standing, and does not have high concentrations of credit risk.
Credit risk management is driven by the provisions of ARERA Resolution 111/06, which, in art. 49, introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. In particular, the Resolution establishes three instruments to safeguard the electricity market: a guarantee system (bank guarantees provided by individual dispatching customers, based on their turnover); the option of terminating dispatching contracts (in the event of insolvency or failure to replace enforced guarantees); and, finally, the possibility of recovering uncollected debts, after having taken all other possible collection actions, through a specific fee to be fixed by ARERA.
The following table summarises the exposure to such risk at the reporting date:
(\u20acm)
31 December 2023
31 December 2022
Change
Derivative financial instruments
17.8
75.7
(57.9)
Cash on hand, securities and deposits
1,859.5
2,521.5
(662.0)
Trade receivables
2,123.4
2,358.3
(234.9)
TOTAL
4,000.7
4,955.5
(954.8)
The total value of the exposure to credit rate risk at 31 December 2023 is represented by the carrying amount of trade receivables, cash flows hedges, cash and cash equivalents, securities and deposits.
The following tables provide qualitative information on trade receivables regarding the geographical distribution and type of customer.
GEOGRAPHICAL DISTRIBUTION
(\u20acm)
31 December 2023
31 December 2022
Italy
1,768.7
2,092.6
Euro-area countries
267.9
165.9
Other countries
86.8
99.8
Total
2,123.4
2,358.3
CUSTOMER TYPE
(\u20acm)
31 December 2023
31 December 2022
Distributors
576.2
472.8
CSEA
72.2
94.3
Dispatching customers for injections
314.5
826.2
Dispatching customers for withdrawals (non distributors)
868.0
682.0
Parties which have signed virtual import contracts and virtual import services (interconnectors and shippers)
11.7
11.8
Sundry receivables
280.8
271.2
Total
2,123.4
2,358.3
The following table breaks down customer receivables by due date, showing any potential impairment.
(\u20acm)
31 December 2023
31 December 2022
Impairment
Gross
Impairment
Gross
Current
\u00a0(0.7)
1,871.4
\u00a0(0.6)
2,103.6
0-30 days past due
\u00a0(0.5)
31.0
\u00a0(0.6)
28.8
31-120 days past due
\u00a0(0.5)
18.8
\u00a0(0.4)
56.2
Over 120 days past due
\u00a0(32.5)
236.4
\u00a0(35.4)
206.7
Total
\u00a0(34.2)
2,157.6
\u00a0(37.0)
2,395.3
Movements in the allowance for doubtful accounts in the course of the year were as follows.
(\u20acm)
31 December 2023
31 December 2022
Balance at 1st\u00a0January
\u00a0(37.0)
\u00a0(49.6)
Release of provisions
6.4
14.3
Impairments for the year
\u00a0(3.6)
\u00a0(1.7)
Balance
\u00a0(34.2)
\u00a0(37.0)
The value of guarantees received from eligible electricity market operators is illustrated below.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Dispatching - injections
240.4
249.7
Dispatching - withdrawals
1,893.0
1,665.8
Transmission charges due from distributors
351.0
329.3
Virtual imports
273.4
269.6
Capacity market (*)
175.3
181.4
Balance
2,933.1
2,695.8
(*) Guarantees relating to Capacity Market contracts to be executed from 2024.
In addition, Non-regulated Activities are exposed to \u201ccounterparty risk\u201d, in particular in relation to the entities with which sales contracts are entered into, in consideration of the credibility and solvency of the parties in question and the impactthat their possible insolvency could have on the financial strength of the business. Counterparty risk is mitigated by implementing special procedures to assess counterparties, measuring operating, financial and reputational aspects of the counterparties in question.
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Parent Company is a party may contain provisions authorising counterparties to call in such loans immediately upon the occurrence of certain events, thereby generating liquidity risk. More information on the contractual provisions of outstanding borrowings at 31 December 2023 is provided in the section, \u201cBorrowings and financial liabilities\u201d in the notes to the Terna Group\u2019s consolidated financial statements.
Bank guarantees
Banks have issued guarantees to third parties on behalf of Group companies which, at 31 December 2023, amount to \u20ac315.5 million. This amount breaks down as follows: \u20ac71.9 million on behalf of Terna S.p.A., \u20ac101.6 million on behalf of Tamini Trasformatori S.r.l., \u20ac53.3 million on behalf of Terna Rete Italia S.p.A., \u20ac19.9 million on behalf of Terna Interconnector S.r.l., \u20ac51.6 million on behalf of Gruppo Brugg, \u20ac0.1 million on behalf of Terna Plus S.r.l., \u20ac4.5 million on behalf of Terna Per\u00f9 SAC, \u20ac12.0 million on behalf of Terna Energy Solutions S.r.l. and \u20ac0.1 million on behalf of Terna Chile S.p.A..
Litigation
The main commitments and risks not disclosed in the statement of financial position at and for the year ended 31 December 2023, relating to the Parent Company, Terna S.p.A. (\u201cTerna\u201d or the \u201cParent Company\u201d or the \u201cCompany\u201d) and its subsidiary Terna Rete Italia S.p.A., are described below. There are no significant commitments or risks for the other subsidiaries at that date.
Litigation regarding the legitimacy of construction permits and plant operations
Another aspect of litigation connected with the plant owned by the Parent Company derives from legal actions brought before the competent administrative courts, aimed at obtaining the annulment of decisions granting consent for the construction and operation of infrastructure.
Litigation relating to activities carried out under concession
As the operator of transmission and dispatching activities since 1 November 2005, the Parent Company has been a party in several court cases, contesting determinations adopted by ARERA (Italy\u2019s Regulatory Authority for Energy, Networks and the Environment), and/or the Ministry of Enterprises and Made in Italy, and/or Terna itself, in relation to these activities. In cases in which the plaintiffs have, in addition to inherent defects in the contested determinations, alleged violation of the regulations laid down by the aforementioned authorities, or in cases in which the determination has had an impact on Terna, the Company has also taken action to defend its interests through the legal system. Within the scope of such litigation \u2013 even though some cases have been concluded, at first and/or second instance, with the annulment of ARERA\u2019s resolutions and, when applicable, of the consequent determinations adopted by Terna \u2013 any negative outcomes for the Company itself may be deemed unlikely, as these disputes normally relate to pass-through items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsAndContingentLiabilitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130875": { "value": "Risk management
In the course of its operations, the Terna Group is exposed to different financial risks: market risk, liquidity risk and credit risk.\n
This section provides information regarding the Terna Group\u2019s exposure to all the above risks, along with a presentation of the objectives, policies and processes for managing those risks and the methods used to assess them, with further quantitative disclosures concerning the separate financial statements for 2023.
The Group\u2019s risk management policies seek to identify and analyse the risks that Group companies are exposed to, establishing appropriate limits and controls and monitoring the risks and compliance with such limits. These policies and the related systems are reviewed on a regular basis, in order to take account of any changes in market conditions or in the companies\u2019 operations.
The Terna Group\u2019s exposure to the aforementioned risks is substantially represented by the exposure of the Parent Company.
As a part of the financial risk management policies approved by the Board of Directors, Terna has established the responsibilities and operating procedures for financial risk management, specifically as concerns the instruments to be used and the precise operating limits to apply in managing them.
Certain amounts at 31 December 2022 have been restated for comparative purposes.
The following table shows financial statement items exposed to the above risks.
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Assets
Derivative financial instruments
\u00a0-
17.8
17.8
-
75.7
75.7
Cash on hand, securities and deposits
1,543.2
316.3
1,859.5
2,155.1
366.4
2,521.5
Trade receivables
\u00a02,123.4
-
\u00a02,123.4
2,358.3
-
2,358.3
TOTAL
3,666.6
334.1
4,000.7
4,513.4
442.1
4,995.5
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Debt
11,995.5
-
11,995.5
10,770.1
-
10,770.1
Derivative financial instruments
-
164.6
164.6
-
248.0
248.0
Trade payables
2,864.9
-
2,864.9
3,687.7
-
3,687.7
TOTAL
14,860.4
164.6
15,025.0
14,457.8
248.0
14,705.8
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in financial market conditions. Market risk includes exchange rate risk, interest rate risk and inflation risk.
Risk management must be performed with the objective of minimising the related risks by selecting counterparties and instruments compatible with the Company\u2019s Risk Management Policy. Speculative activity is not form part of the Parent Company\u2019s activities.
The Terna Group seeks to adopt a dynamic approach to financial risk management. This approach is characterised by risk aversion, aimed at minimising risk through continuous monitoring of financial markets in order to obtain new financing and conclude hedging transactions in favourable market conditions. The dynamic approach enables the Group to intervene in order to improve existing hedges should there be a change in market conditions or changes in the hedged item, making the hedges inappropriate or excessively costly.
The fair value of financial instruments is determined in accordance with the fair value hierarchy envisaged under IFRS 7 (Level 2), by means of appropriate valuation techniques for each category of financial instrument, using market data at the closing date (such as interest rates, exchange rates and volatility) and discounting projected cash flows on the basis of the market yield curve at the reporting date.
Interest rate risk
Interest rate risk is represented by the uncertainty associated with interest rate fluctuations. This is the risk that a change in market interest rates may produce effects on the fair value or future cash flows of financial instruments.
In the course of its operations, the Group is exposed to the risk of fluctuations in interest rates. Its main source of interest rate risk is associated with its borrowings and the related hedges in the form of derivative instruments that generate financial expenses. The borrowing strategy generally focuses on long-term borrowings, whose term reflects the useful life of the Group\u2019s assets. It pursues an interest rate risk hedging policy that aims to guarantee that percentage of debt represented by fixed rate liabilities is at least 40%, as provided for in the relevant policies. At the end of 2023, 87% of the Group\u2019s is fixed rate.
At 31 December 2023, interest rate risk is hedged by cash flow hedges which hedge the risk connected with the fair value of borrowings and movements in interest rates relating to borrowings.
Below are the notional amounts and fair values of the derivative financial instruments entered into by the Terna Group:
(\u20acm)
31 December 2023
31 December 2022
Change
Notional
Fair value
Notional
Fair value
Notional
Fair value
Fair value hedges
1,853.0
(164.5)
\u00a01,973.5
(248.0)
(120.5)
83.5
Cash flow hedges
2,362.8
17.2
\u00a01,996.3
75.5
\u00a0366.4
(58.3)
The notional amount of outstanding cash flow hedges at 31 December 2023, amounting to \u20ac2,362.8 million, breaks down as follows:
\u2022 \u20ac1,309.8 million (fair value gain of \u20ac27.4 million) maturing 2024;
\u2022 \u20ac260.0 million (fair value gain of \u20ac0.3 million) maturing 2025;
\u2022 \u20ac353.0 million (fair value loss of \u20ac0.3 million) maturing 2027;
\u2022 \u20ac500.0 million (fair value loss of \u20ac10.2 million) maturing 2029.
The notional amount of fair value hedges at 31 December\u00a02023, amounting to \u20ac1,853.0 million, breaks down as follows:
\u2022 \u20ac950.0 million (fair value loss of \u20ac58.9 million) maturing 2030;
\u2022 \u20ac323.0 million (fair value loss of \u20ac33.8 million) maturing 2039;
\u2022 \u20ac490.0 million (fair value loss of \u20ac60.1 million) maturing 2042;
\u2022 \u20ac90.0 million (fair value loss of \u20ac11.7 million) maturing 2043.
Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. Accordingly, in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise. The characteristics of cash flow hedges mirror those of the underlyings, with the timing of the related cash flows matching the timing of interest payments on the debt, without changes in fair value having any impact on profit or loss.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
COMPREHENSIVE INCOME
CURRENT RATES +10%
CURRENT AMOUNTS
CURRENTRATES
-10%
TASSI
CORRENTI
+10%
CURRENT AMOUNTS
CURRENTRATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
2.1
-
\u00a0(2.1)
9.8
-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
5.0
3.6
2.1
169.8
159.1
148.3
Hypothetical change
1.4
\u00a0-
\u00a0(1.4)
10.7
\u00a0-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
Inflation risk
Regarding inflation risk, the rates established by the regulator to provide a return on Terna S.p.A.\u2019s activities are determined so as to cover the allowed costs. Such cost components are updated on an annual basis to take into account the impact of inflation. Having used an inflation-linked bond issue in 2007, which matured in September 2023, the Company has put in place an effective hedge of net income; in fact, any decrease in expected revenue due to a decrease in the inflation rate would be offset by lower financial expenses and vice versa.
Exchange rate risk
The management of exchange rate risk must aim to protect a company\u2019s earnings from the risk of currency fluctuations by keeping a close eye on market movements and constantly monitoring the existing exposures. In managing this risk, Terna from time to time selects hedging instruments with structures and durations matching the Group\u2019s exchange rate exposure. The instruments used by Terna are of limited complexity, highly liquid and easy to price, such as forwards and options. Such contracts have a notional amount and maturity date less than or equal to that of the underlying financialliability, or the expected cash flows, so that any change in the fair value and/or estimated cash flows deriving from a rise or fall in the euro against other currencies is fully offset by a corresponding change in the fair value and/or estimated cash flows of the underlying position.
At 31 December 2023, the Group\u2019s exposure to the impact of exchange rate risk on its profit or loss is residual and linked to foreign currency cash flows from the subsidiaries, Tamini and Brugg.
Liquidity risk
Liquidity risk is the risk that the Terna Group might encounter difficulty in discharging its obligations in respect of its financial liabilities and operating cycle. Liquidity risk management seeks to ensure adequate coverage of borrowing requirements by obtaining adequate credit lines and appropriate management of any surplus liquidity. At 31 December 2023, the Terna Group has available short-term credit facilities of approximately \u20ac703\u00a0million (out of total facilities of approximately \u20ac1,040 million), and revolving credit facilities of \u20ac3,455 million. Finally, the Parent Company has launched a Euro Commercial Paper Programme (ECP), amounting to up to \u20ac1,000 million, including \u20ac130 million still available at 31 December 2023.
Credit risk
Credit risk is the risk a customer or one of the counterparties to a transaction in financial instruments could cause a financial loss by failing to discharge an obligation. It is mainly generated by the Group\u2019s trade receivables and financial investments.
The credit risk originated by open positions on transactions in derivatives is considered to be marginal since the counterparties, in compliance with the financial risk management policies adopted, are leading international banks with high ratings.
Terna provides its services essentially to counterparties considered solvent by the market, and therefore with a high credit standing, and does not have high concentrations of credit risk.
Credit risk management is driven by the provisions of ARERA Resolution 111/06, which, in art. 49, introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. In particular, the Resolution establishes three instruments to safeguard the electricity market: a guarantee system (bank guarantees provided by individual dispatching customers, based on their turnover); the option of terminating dispatching contracts (in the event of insolvency or failure to replace enforced guarantees); and, finally, the possibility of recovering uncollected debts, after having taken all other possible collection actions, through a specific fee to be fixed by ARERA.
The following table summarises the exposure to such risk at the reporting date:
(\u20acm)
31 December 2023
31 December 2022
Change
Derivative financial instruments
17.8
75.7
(57.9)
Cash on hand, securities and deposits
1,859.5
2,521.5
(662.0)
Trade receivables
2,123.4
2,358.3
(234.9)
TOTAL
4,000.7
4,955.5
(954.8)
The total value of the exposure to credit rate risk at 31 December 2023 is represented by the carrying amount of trade receivables, cash flows hedges, cash and cash equivalents, securities and deposits.
The following tables provide qualitative information on trade receivables regarding the geographical distribution and type of customer.
GEOGRAPHICAL DISTRIBUTION
(\u20acm)
31 December 2023
31 December 2022
Italy
1,768.7
2,092.6
Euro-area countries
267.9
165.9
Other countries
86.8
99.8
Total
2,123.4
2,358.3
CUSTOMER TYPE
(\u20acm)
31 December 2023
31 December 2022
Distributors
576.2
472.8
CSEA
72.2
94.3
Dispatching customers for injections
314.5
826.2
Dispatching customers for withdrawals (non distributors)
868.0
682.0
Parties which have signed virtual import contracts and virtual import services (interconnectors and shippers)
11.7
11.8
Sundry receivables
280.8
271.2
Total
2,123.4
2,358.3
The following table breaks down customer receivables by due date, showing any potential impairment.
(\u20acm)
31 December 2023
31 December 2022
Impairment
Gross
Impairment
Gross
Current
\u00a0(0.7)
1,871.4
\u00a0(0.6)
2,103.6
0-30 days past due
\u00a0(0.5)
31.0
\u00a0(0.6)
28.8
31-120 days past due
\u00a0(0.5)
18.8
\u00a0(0.4)
56.2
Over 120 days past due
\u00a0(32.5)
236.4
\u00a0(35.4)
206.7
Total
\u00a0(34.2)
2,157.6
\u00a0(37.0)
2,395.3
Movements in the allowance for doubtful accounts in the course of the year were as follows.
(\u20acm)
31 December 2023
31 December 2022
Balance at 1st\u00a0January
\u00a0(37.0)
\u00a0(49.6)
Release of provisions
6.4
14.3
Impairments for the year
\u00a0(3.6)
\u00a0(1.7)
Balance
\u00a0(34.2)
\u00a0(37.0)
The value of guarantees received from eligible electricity market operators is illustrated below.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Dispatching - injections
240.4
249.7
Dispatching - withdrawals
1,893.0
1,665.8
Transmission charges due from distributors
351.0
329.3
Virtual imports
273.4
269.6
Capacity market (*)
175.3
181.4
Balance
2,933.1
2,695.8
(*) Guarantees relating to Capacity Market contracts to be executed from 2024.
In addition, Non-regulated Activities are exposed to \u201ccounterparty risk\u201d, in particular in relation to the entities with which sales contracts are entered into, in consideration of the credibility and solvency of the parties in question and the impactthat their possible insolvency could have on the financial strength of the business. Counterparty risk is mitigated by implementing special procedures to assess counterparties, measuring operating, financial and reputational aspects of the counterparties in question.
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Parent Company is a party may contain provisions authorising counterparties to call in such loans immediately upon the occurrence of certain events, thereby generating liquidity risk. More information on the contractual provisions of outstanding borrowings at 31 December 2023 is provided in the section, \u201cBorrowings and financial liabilities\u201d in the notes to the Terna Group\u2019s consolidated financial statements.
Bank guarantees
Banks have issued guarantees to third parties on behalf of Group companies which, at 31 December 2023, amount to \u20ac315.5 million. This amount breaks down as follows: \u20ac71.9 million on behalf of Terna S.p.A., \u20ac101.6 million on behalf of Tamini Trasformatori S.r.l., \u20ac53.3 million on behalf of Terna Rete Italia S.p.A., \u20ac19.9 million on behalf of Terna Interconnector S.r.l., \u20ac51.6 million on behalf of Gruppo Brugg, \u20ac0.1 million on behalf of Terna Plus S.r.l., \u20ac4.5 million on behalf of Terna Per\u00f9 SAC, \u20ac12.0 million on behalf of Terna Energy Solutions S.r.l. and \u20ac0.1 million on behalf of Terna Chile S.p.A..
Litigation
The main commitments and risks not disclosed in the statement of financial position at and for the year ended 31 December 2023, relating to the Parent Company, Terna S.p.A. (\u201cTerna\u201d or the \u201cParent Company\u201d or the \u201cCompany\u201d) and its subsidiary Terna Rete Italia S.p.A., are described below. There are no significant commitments or risks for the other subsidiaries at that date.
Litigation regarding the legitimacy of construction permits and plant operations
Another aspect of litigation connected with the plant owned by the Parent Company derives from legal actions brought before the competent administrative courts, aimed at obtaining the annulment of decisions granting consent for the construction and operation of infrastructure.
Litigation relating to activities carried out under concession
As the operator of transmission and dispatching activities since 1 November 2005, the Parent Company has been a party in several court cases, contesting determinations adopted by ARERA (Italy\u2019s Regulatory Authority for Energy, Networks and the Environment), and/or the Ministry of Enterprises and Made in Italy, and/or Terna itself, in relation to these activities. In cases in which the plaintiffs have, in addition to inherent defects in the contested determinations, alleged violation of the regulations laid down by the aforementioned authorities, or in cases in which the determination has had an impact on Terna, the Company has also taken action to defend its interests through the legal system. Within the scope of such litigation \u2013 even though some cases have been concluded, at first and/or second instance, with the annulment of ARERA\u2019s resolutions and, when applicable, of the consequent determinations adopted by Terna \u2013 any negative outcomes for the Company itself may be deemed unlikely, as these disputes normally relate to pass-through items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialRiskManagementExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130877": { "value": "Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in financial market conditions. Market risk includes exchange rate risk, interest rate risk and inflation risk.
Risk management must be performed with the objective of minimising the related risks by selecting counterparties and instruments compatible with the Company\u2019s Risk Management Policy. Speculative activity is not form part of the Parent Company\u2019s activities.
The Terna Group seeks to adopt a dynamic approach to financial risk management. This approach is characterised by risk aversion, aimed at minimising risk through continuous monitoring of financial markets in order to obtain new financing and conclude hedging transactions in favourable market conditions. The dynamic approach enables the Group to intervene in order to improve existing hedges should there be a change in market conditions or changes in the hedged item, making the hedges inappropriate or excessively costly.
The fair value of financial instruments is determined in accordance with the fair value hierarchy envisaged under IFRS 7 (Level 2), by means of appropriate valuation techniques for each category of financial instrument, using market data at the closing date (such as interest rates, exchange rates and volatility) and discounting projected cash flows on the basis of the market yield curve at the reporting date.
Interest rate risk
Interest rate risk is represented by the uncertainty associated with interest rate fluctuations. This is the risk that a change in market interest rates may produce effects on the fair value or future cash flows of financial instruments.
In the course of its operations, the Group is exposed to the risk of fluctuations in interest rates. Its main source of interest rate risk is associated with its borrowings and the related hedges in the form of derivative instruments that generate financial expenses. The borrowing strategy generally focuses on long-term borrowings, whose term reflects the useful life of the Group\u2019s assets. It pursues an interest rate risk hedging policy that aims to guarantee that percentage of debt represented by fixed rate liabilities is at least 40%, as provided for in the relevant policies. At the end of 2023, 87% of the Group\u2019s is fixed rate.
At 31 December 2023, interest rate risk is hedged by cash flow hedges which hedge the risk connected with the fair value of borrowings and movements in interest rates relating to borrowings.
Below are the notional amounts and fair values of the derivative financial instruments entered into by the Terna Group:
(\u20acm)
31 December 2023
31 December 2022
Change
Notional
Fair value
Notional
Fair value
Notional
Fair value
Fair value hedges
1,853.0
(164.5)
\u00a01,973.5
(248.0)
(120.5)
83.5
Cash flow hedges
2,362.8
17.2
\u00a01,996.3
75.5
\u00a0366.4
(58.3)
The notional amount of outstanding cash flow hedges at 31 December 2023, amounting to \u20ac2,362.8 million, breaks down as follows:
\u2022 \u20ac1,309.8 million (fair value gain of \u20ac27.4 million) maturing 2024;
\u2022 \u20ac260.0 million (fair value gain of \u20ac0.3 million) maturing 2025;
\u2022 \u20ac353.0 million (fair value loss of \u20ac0.3 million) maturing 2027;
\u2022 \u20ac500.0 million (fair value loss of \u20ac10.2 million) maturing 2029.
The notional amount of fair value hedges at 31 December\u00a02023, amounting to \u20ac1,853.0 million, breaks down as follows:
\u2022 \u20ac950.0 million (fair value loss of \u20ac58.9 million) maturing 2030;
\u2022 \u20ac323.0 million (fair value loss of \u20ac33.8 million) maturing 2039;
\u2022 \u20ac490.0 million (fair value loss of \u20ac60.1 million) maturing 2042;
\u2022 \u20ac90.0 million (fair value loss of \u20ac11.7 million) maturing 2043.
Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. Accordingly, in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise. The characteristics of cash flow hedges mirror those of the underlyings, with the timing of the related cash flows matching the timing of interest payments on the debt, without changes in fair value having any impact on profit or loss.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
COMPREHENSIVE INCOME
CURRENT RATES +10%
CURRENT AMOUNTS
CURRENTRATES
-10%
TASSI
CORRENTI
+10%
CURRENT AMOUNTS
CURRENTRATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
2.1
-
\u00a0(2.1)
9.8
-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
5.0
3.6
2.1
169.8
159.1
148.3
Hypothetical change
1.4
\u00a0-
\u00a0(1.4)
10.7
\u00a0-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
Inflation risk
Regarding inflation risk, the rates established by the regulator to provide a return on Terna S.p.A.\u2019s activities are determined so as to cover the allowed costs. Such cost components are updated on an annual basis to take into account the impact of inflation. Having used an inflation-linked bond issue in 2007, which matured in September 2023, the Company has put in place an effective hedge of net income; in fact, any decrease in expected revenue due to a decrease in the inflation rate would be offset by lower financial expenses and vice versa.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130876": { "value": "Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in financial market conditions. Market risk includes exchange rate risk, interest rate risk and inflation risk.
Risk management must be performed with the objective of minimising the related risks by selecting counterparties and instruments compatible with the Company\u2019s Risk Management Policy. Speculative activity is not form part of the Parent Company\u2019s activities.
The Terna Group seeks to adopt a dynamic approach to financial risk management. This approach is characterised by risk aversion, aimed at minimising risk through continuous monitoring of financial markets in order to obtain new financing and conclude hedging transactions in favourable market conditions. The dynamic approach enables the Group to intervene in order to improve existing hedges should there be a change in market conditions or changes in the hedged item, making the hedges inappropriate or excessively costly.
The fair value of financial instruments is determined in accordance with the fair value hierarchy envisaged under IFRS 7 (Level 2), by means of appropriate valuation techniques for each category of financial instrument, using market data at the closing date (such as interest rates, exchange rates and volatility) and discounting projected cash flows on the basis of the market yield curve at the reporting date.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130879": { "value": "Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. Accordingly, in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise. The characteristics of cash flow hedges mirror those of the underlyings, with the timing of the related cash flows matching the timing of interest payments on the debt, without changes in fair value having any impact on profit or loss.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
COMPREHENSIVE INCOME
CURRENT RATES +10%
CURRENT AMOUNTS
CURRENTRATES
-10%
TASSI
CORRENTI
+10%
CURRENT AMOUNTS
CURRENTRATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
2.1
-
\u00a0(2.1)
9.8
-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
5.0
3.6
2.1
169.8
159.1
148.3
Hypothetical change
1.4
\u00a0-
\u00a0(1.4)
10.7
\u00a0-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130878": { "value": "Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. Accordingly, in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise. The characteristics of cash flow hedges mirror those of the underlyings, with the timing of the related cash flows matching the timing of interest payments on the debt, without changes in fair value having any impact on profit or loss.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
COMPREHENSIVE INCOME
CURRENT RATES +10%
CURRENT AMOUNTS
CURRENTRATES
-10%
TASSI
CORRENTI
+10%
CURRENT AMOUNTS
CURRENTRATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
2.1
-
\u00a0(2.1)
9.8
-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
5.0
3.6
2.1
169.8
159.1
148.3
Hypothetical change
1.4
\u00a0-
\u00a0(1.4)
10.7
\u00a0-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
", "dimensions": { "concept": "ifrs-full:SensitivityAnalysisForEachTypeOfMarketRisk", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130880": { "value": "Exchange rate risk
The management of exchange rate risk must aim to protect a company\u2019s earnings from the risk of currency fluctuations by keeping a close eye on market movements and constantly monitoring the existing exposures. In managing this risk, Terna from time to time selects hedging instruments with structures and durations matching the Group\u2019s exchange rate exposure. The instruments used by Terna are of limited complexity, highly liquid and easy to price, such as forwards and options. Such contracts have a notional amount and maturity date less than or equal to that of the underlying financialiability, or the expected cash flows, so that any change in the fair value and/or estimated cash flows deriving from a rise or fall in the euro against other currencies is fully offset by a corresponding change in the fair value and/or estimated cash flows of the underlying position.At 31 December 2023, the Group\u2019s exposure to the impact of exchange rate risk on its profit or loss is residual and linked to foreign currency cash flows from the subsidiaries, Tamini and Brugg.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEffectOfChangesInForeignExchangeRatesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130881": { "value": "Liquidity risk
Liquidity risk is the risk that the Terna Group might encounter difficulty in discharging its obligations in respect of its financial liabilities and operating cycle. Liquidity risk management seeks to ensure adequate coverage of borrowing requirements by obtaining adequate credit lines and appropriate management of any surplus liquidity. At 31 December 2023, the Terna Group has available short-term credit facilities of approximately \u20ac703\u00a0million (out of total facilities of approximately \u20ac1,040 million), and revolving credit facilities of \u20ac3,455 million. Finally, the Parent Company has launched a Euro Commercial Paper Programme (ECP), amounting to up to \u20ac1,000 million, including \u20ac130 million still available at 31 December 2023.
", "dimensions": { "concept": "ifrs-full:DisclosureOfLiquidityRiskExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130883": { "value": "Credit risk
Credit risk is the risk a customer or one of the counterparties to a transaction in financial instruments could cause a financial loss by failing to discharge an obligation. It is mainly generated by the Group\u2019s trade receivables and financial investments.
The credit risk originated by open positions on transactions in derivatives is considered to be marginal since the counterparties, in compliance with the financial risk management policies adopted, are leading international banks with high ratings.
Terna provides its services essentially to counterparties considered solvent by the market, and therefore with a high credit standing, and does not have high concentrations of credit risk.
Credit risk management is driven by the provisions of ARERA Resolution 111/06, which, in art. 49, introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. In particular, the Resolution establishes three instruments to safeguard the electricity market: a guarantee system (bank guarantees provided by individual dispatching customers, based on their turnover); the option of terminating dispatching contracts (in the event of insolvency or failure to replace enforced guarantees); and, finally, the possibility of recovering uncollected debts, after having taken all other possible collection actions, through a specific fee to be fixed by ARERA.
The following table summarises the exposure to such risk at the reporting date:
(\u20acm)
31 December 2023
31 December 2022
Change
Derivative financial instruments
17.8
75.7
(57.9)
Cash on hand, securities and deposits
1,859.5
2,521.5
(662.0)
Trade receivables
2,123.4
2,358.3
(234.9)
TOTAL
4,000.7
4,955.5
(954.8)
The total value of the exposure to credit rate risk at 31 December 2023 is represented by the carrying amount of trade receivables, cash flows hedges, cash and cash equivalents, securities and deposits.
The following tables provide qualitative information on trade receivables regarding the geographical distribution and type of customer.
GEOGRAPHICAL DISTRIBUTION
(\u20acm)
31 December 2023
31 December 2022
Italy
1,768.7
2,092.6
Euro-area countries
267.9
165.9
Other countries
86.8
99.8
Total
2,123.4
2,358.3
CUSTOMER TYPE
(\u20acm)
31 December 2023
31 December 2022
Distributors
576.2
472.8
CSEA
72.2
94.3
Dispatching customers for injections
314.5
826.2
Dispatching customers for withdrawals (non distributors)
868.0
682.0
Parties which have signed virtual import contracts and virtual import services (interconnectors and shippers)
11.7
11.8
Sundry receivables
280.8
271.2
Total
2,123.4
2,358.3
The following table breaks down customer receivables by due date, showing any potential impairment.
(\u20acm)
31 December 2023
31 December 2022
Impairment
Gross
Impairment
Gross
Current
\u00a0(0.7)
1,871.4
\u00a0(0.6)
2,103.6
0-30 days past due
\u00a0(0.5)
31.0
\u00a0(0.6)
28.8
31-120 days past due
\u00a0(0.5)
18.8
\u00a0(0.4)
56.2
Over 120 days past due
\u00a0(32.5)
236.4
\u00a0(35.4)
206.7
Total
\u00a0(34.2)
2,157.6
\u00a0(37.0)
2,395.3
Movements in the allowance for doubtful accounts in the course of the year were as follows.
(\u20acm)
31 December 2023
31 December 2022
Balance at 1st\u00a0January
\u00a0(37.0)
\u00a0(49.6)
Release of provisions
6.4
14.3
Impairments for the year
\u00a0(3.6)
\u00a0(1.7)
Balance
\u00a0(34.2)
\u00a0(37.0)
The value of guarantees received from eligible electricity market operators is illustrated below.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Dispatching - injections
240.4
249.7
Dispatching - withdrawals
1,893.0
1,665.8
Transmission charges due from distributors
351.0
329.3
Virtual imports
273.4
269.6
Capacity market (*)
175.3
181.4
Balance
2,933.1
2,695.8
(*) Guarantees relating to Capacity Market contracts to be executed from 2024.
In addition, Non-regulated Activities are exposed to \u201ccounterparty risk\u201d, in particular in relation to the entities with which sales contracts are entered into, in consideration of the credibility and solvency of the parties in question and the impacthat their possible insolvency could have on the financial strength of the business. Counterparty risk is mitigated by implementing special procedures to assess counterparties, measuring operating, financial and reputational aspects of the counterparties in question.", "dimensions": { "concept": "ifrs-full:DisclosureOfCreditRiskExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130882": { "value": "Credit risk
Credit risk is the risk a customer or one of the counterparties to a transaction in financial instruments could cause a financial loss by failing to discharge an obligation. It is mainly generated by the Group\u2019s trade receivables and financial investments.
The credit risk originated by open positions on transactions in derivatives is considered to be marginal since the counterparties, in compliance with the financial risk management policies adopted, are leading international banks with high ratings.
Terna provides its services essentially to counterparties considered solvent by the market, and therefore with a high credit standing, and does not have high concentrations of credit risk.
Credit risk management is driven by the provisions of ARERA Resolution 111/06, which, in art. 49, introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. In particular, the Resolution establishes three instruments to safeguard the electricity market: a guarantee system (bank guarantees provided by individual dispatching customers, based on their turnover); the option of terminating dispatching contracts (in the event of insolvency or failure to replace enforced guarantees); and, finally, the possibility of recovering uncollected debts, after having taken all other possible collection actions, through a specific fee to be fixed by ARERA.
The following table summarises the exposure to such risk at the reporting date:
(\u20acm)
31 December 2023
31 December 2022
Change
Derivative financial instruments
17.8
75.7
(57.9)
Cash on hand, securities and deposits
1,859.5
2,521.5
(662.0)
Trade receivables
2,123.4
2,358.3
(234.9)
TOTAL
4,000.7
4,955.5
(954.8)
The total value of the exposure to credit rate risk at 31 December 2023 is represented by the carrying amount of trade receivables, cash flows hedges, cash and cash equivalents, securities and deposits.
The following tables provide qualitative information on trade receivables regarding the geographical distribution and type of customer.
GEOGRAPHICAL DISTRIBUTION
(\u20acm)
31 December 2023
31 December 2022
Italy
1,768.7
2,092.6
Euro-area countries
267.9
165.9
Other countries
86.8
99.8
Total
2,123.4
2,358.3
CUSTOMER TYPE
(\u20acm)
31 December 2023
31 December 2022
Distributors
576.2
472.8
CSEA
72.2
94.3
Dispatching customers for injections
314.5
826.2
Dispatching customers for withdrawals (non distributors)
868.0
682.0
Parties which have signed virtual import contracts and virtual import services (interconnectors and shippers)
11.7
11.8
Sundry receivables
280.8
271.2
Total
2,123.4
2,358.3
The following table breaks down customer receivables by due date, showing any potential impairment.
(\u20acm)
31 December 2023
31 December 2022
Impairment
Gross
Impairment
Gross
Current
\u00a0(0.7)
1,871.4
\u00a0(0.6)
2,103.6
0-30 days past due
\u00a0(0.5)
31.0
\u00a0(0.6)
28.8
31-120 days past due
\u00a0(0.5)
18.8
\u00a0(0.4)
56.2
Over 120 days past due
\u00a0(32.5)
236.4
\u00a0(35.4)
206.7
Total
\u00a0(34.2)
2,157.6
\u00a0(37.0)
2,395.3
Movements in the allowance for doubtful accounts in the course of the year were as follows.
(\u20acm)
31 December 2023
31 December 2022
Balance at 1st\u00a0January
\u00a0(37.0)
\u00a0(49.6)
Release of provisions
6.4
14.3
Impairments for the year
\u00a0(3.6)
\u00a0(1.7)
Balance
\u00a0(34.2)
\u00a0(37.0)
The value of guarantees received from eligible electricity market operators is illustrated below.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Dispatching - injections
240.4
249.7
Dispatching - withdrawals
1,893.0
1,665.8
Transmission charges due from distributors
351.0
329.3
Virtual imports
273.4
269.6
Capacity market (*)
175.3
181.4
Balance
2,933.1
2,695.8
(*) Guarantees relating to Capacity Market contracts to be executed from 2024.
In addition, Non-regulated Activities are exposed to \u201ccounterparty risk\u201d, in particular in relation to the entities with which sales contracts are entered into, in consideration of the credibility and solvency of the parties in question and the impactthat their possible insolvency could have on the financial strength of the business. Counterparty risk is mitigated by implementing special procedures to assess counterparties, measuring operating, financial and reputational aspects of the counterparties in question.", "dimensions": { "concept": "ifrs-full:DisclosureOfAllowanceForCreditLossesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130885": { "value": "Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Parent Company is a party may contain provisions authorising counterparties to call in such loans immediately upon the occurrence of certain events, thereby generating liquidity risk. More information on the contractual provisions of outstanding borrowings at 31 December 2023 is provided in the section, \u201cBorrowings and financial liabilities\u201d in the notes to the Terna Group\u2019s consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130886": { "value": "Bank guarantees
Banks have issued guarantees to third parties on behalf of Group companies which, at 31 December 2023, amount to \u20ac315.5 million. This amount breaks down as follows: \u20ac71.9 million on behalf of Terna S.p.A., \u20ac101.6 million on behalf of Tamini Trasformatori S.r.l., \u20ac53.3 million on behalf of Terna Rete Italia S.p.A., \u20ac19.9 million on behalf of Terna Interconnector S.r.l., \u20ac51.6 million on behalf of Gruppo Brugg, \u20ac0.1 million on behalf of Terna Plus S.r.l., \u20ac4.5 million on behalf of Terna Per\u00f9 SAC, \u20ac12.0 million on behalf of Terna Energy Solutions S.r.l. and \u20ac0.1 million on behalf of Terna Chile S.p.A..
", "dimensions": { "concept": "ifrs-full:DisclosureOfCommitmentsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130887": { "value": "Litigation
The main commitments and risks not disclosed in the statement of financial position at and for the year ended 31 December 2023, relating to the Parent Company, Terna S.p.A. (\u201cTerna\u201d or the \u201cParent Company\u201d or the \u201cCompany\u201d) and its subsidiary Terna Rete Italia S.p.A., are described below. There are no significant commitments or risks for the other subsidiaries at that date.
Litigation regarding the legitimacy of construction permits and plant operations
Another aspect of litigation connected with the plant owned by the Parent Company derives from legal actions brought before the competent administrative courts, aimed at obtaining the annulment of decisions granting consent for the construction and operation of infrastructure.
Litigation relating to activities carried out under concession
As the operator of transmission and dispatching activities since 1 November 2005, the Parent Company has been a party in several court cases, contesting determinations adopted by ARERA (Italy\u2019s Regulatory Authority for Energy, Networks and the Environment), and/or the Ministry of Enterprises and Made in Italy, and/or Terna itself, in relation to these activities. In cases in which the plaintiffs have, in addition to inherent defects in the contested determinations, alleged violation of the regulations laid down by the aforementioned authorities, or in cases in which the determination has had an impact on Terna, the Company has also taken action to defend its interests through the legal system. Within the scope of such litigation \u2013 even though some cases have been concluded, at first and/or second instance, with the annulment of ARERA\u2019s resolutions and, when applicable, of the consequent determinations adopted by Terna \u2013 any negative outcomes for the Company itself may be deemed unlikely, as these disputes normally relate to pass-through items.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherProvisionsContingentLiabilitiesAndContingentAssetsExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130884": { "value": "F. Business combinations
Acquisition of Omnia S.r.l.
On 29 March 2023, LT S.r.l. (a wholly owned subsidiary of Terna Energy Solutions S.r.l., in turn a subsidiary of Terna S.p.A.) acquired a 100% stake in Omnia S.r.l., a company providing Operation & Maintenance services for photovoltaic plants. The acquisition aims to consolidate LT S.r.l.\u2019s position as an Italian market leader in the construction and operation of photovoltaic plants.
The accounting effects of the business combination, provisionally accounted for in compliance with IFRS 3 \u2013 Business Combinations, are shown in the following table, which summarises the consideration paid in order to acquire Omnia S.r.l. and the value of the assets acquired and liabilities assumed, as recognised at the acquisition date:
Value of the assets acquired and liabilities assumed at 29 March 2023
(\u20ac000)
Fair value
ASSETS
Non-current assets
Property, plant and equipment
\u00a04
Total non-current assets
\u00a04
Current assets
Trade receivables
\u00a0179
Current financial assets
\u00a02
Income tax assets
\u00a025
Other assets
\u00a041
Cash
\u00a017
Total current assets
\u00a0264
TOTAL ASSETS
\u00a0268
EQUITY AND LIABILITIES
Non-current liabilities
Trade payables
\u00a046
Tax liabilities
\u00a027
Other liabilities
\u00a031
Total current liabilities
\u00a0104
TOTAL EQUITY AND LIABILITIES
\u00a0104
NET ASSETS ACQUIRED
\u00a0164
Net assets contributed
\u00a0164
CONSIDERATION
\u00a01,521
GOODWILL
\u00a01,357
IFRS 3 requires the acquirer to allocate the cost of the business combination in its accounts by recognising all the assets, liabilities and potential liabilities meeting specific recognition criteria at their fair value at the acquisition date. In this case, the cost of the acquisition of all the company\u2019s share capital is \u20ac1.5 million.
The expected consideration is higher than the value of the net assets at the acquisition date, resulting in goodwill of approximately \u20ac1.3 million.
On 11 October 2023, the merger deed relating to the merger of Omnia S.r.l. with and into LT S.r.l was executed. This was done in accordance with the merger plan approved on 12 May 2023 by the respective boards of directors and on 31 July 2023 by the companies\u2019 shareholders.
In accordance with the provisions of the merger deed, transactions carried out by the acquired company, Omnia S.r.l., are accounted for in the financial statements of the acquirer, LT S.r.l., with the merger effective for accounting and tax purposes from 1 January 2023.
Acquisition of Rete Nord S.r.l.
On 22 June 2023, Terna S.p.A. acquired a 100% stake in Rete Nord S.r.l. (formerly \u201cEdyna Transmission S.r.l.\u201d), a company that owns the following NTG assets:
\u2022 a portion of a 220kV power line in Trentino-Alto Adige, extending for approximately 70 km;
\u2022 the 220kV Resia substation (UD);
\u2022 the 220kV Naturno substation (BZ).
The accounting effects of the business combination, in compliance with IFRS 3 \u2013 Business Combinations, are shown in the following table, which summarises the consideration paid in order to acquire Rete Nord S.r.l. and the value of the assets acquired and liabilities assumed, as recognised at the acquisition date:
Value of the assets acquired and liabilities assumed at 22 June 2023
(\u20ac000)
Fair value
ASSETS
Non-current assets
Property, plant and equipment
\u00a013,249
Intangible assets
\u00a0801
Deferred tax assets
\u00a0180
Total non-current assets
\u00a014,230
Current assets
Trade receivables
\u00a0395
Other assets
\u00a017
Cash
\u00a0293
Total current assets
\u00a0705
TOTAL ASSETS
\u00a014,935
EQUITY AND LIABILITIES
Non-current liabilities
Deferred tax liabilities
198
Total non-current liabilities
198
Current liabilities
Trade payables
129
Tax liabilities
5
Other liabilities
8
Total current liabilities
142
TOTAL EQUITY AND LIABILITIES
340
NET ASSETS ACQUIRED
14,595
Net assets contributed
14,595
CONSIDERATION
14,609
GOODWILL
14
IFRS 3 requires the acquirer to allocate the cost of the business combination in its accounts by recognising all the assets, liabilities and potential liabilities meeting specific recognition criteria at their fair value at the acquisition date. In this case, the cost of the acquisition of all the company\u2019s share capital is \u20ac14.6 million.
The expected consideration is broadly in line with the value of the net assets at the acquisition date.
On 20 December 2023, the merger deed for the merger of Rete Nord S.r.l. with and into Rete S.r.l (a wholly owned subsidiary of Terna S.p.A.) was executed with the aim of improving Group companies\u2019 operations, increasing synergies through a reorganisation designed to simplify the chain of control, thereby boosting operational efficiency and cutting administrative costs.
The merger deed was effective for legal purposes from 20 December 2023 (the date it was filed with the Companies\u2019 Register), in accordance with the merger plan approved on 12 October 2023 by the respective boards of directors and on 26 October 2023 by the companies\u2019 shareholders.
In accordance with the provisions of the merger deed, transactions carried out by the acquired company, Rete Nord S.r.l., are accounted for in the financial statements of the acquirer, Rete S.r.l., with the merger effective for accounting and tax purposes from 20 December 2023.
G. Related party transactions
Given that Terna S.p.A. is subject to the de facto\u00a0control of Cassa Depositi e Prestiti S.p.A. (registered office at Via Goito 4, 00185 Rome, Italy and consolidated financial statements available on the website at www.cdp.it), a situation ascertained in 2007, related party transactions entered into by Terna during the year include transactions with the associates (Cesi S.p.A., Coreso S.A. and CGES) and employee pension funds (Fondenel and Fopen), as well as transactions with Cassa Depositi e Prestiti itself, with CDP Reti S.p.A. and with the companies directly or indirectly controlled by the Ministry of the Economy and Finance (\u201cMEF\u201d).
Given that Terna Group companies and the companies directly or indirectly controlled by the Ministry of the Economy and Finance meet the definition for classification as \u201cgovernment-related entities\u201d, in accordance with IAS 24 \u2013 Related Party Disclosures, the Group has elected to adopt the partial exemption \u2013 permitted by the standard \u2013 from the disclosure requirements in respect of other companies controlled, influenced or jointly controlled by the same government entity. The remainder of this section provides qualitative and quantitative disclosures on transactions with government-related entities having a significant impact on the Group\u2019s results. Amounts relating to pass-through items are not included in these disclosures.
Related party transactions in 2023 broadly regard the provision of services in the course of ordinary activities and conducted on an arm\u2019s length basis.
The nature of sales to and purchases from related parties by the Terna Group is shown below, followed by details of the revenue and costs resulting from such transactions during the year and the related assets and liabilities outstanding at 31 December 2023.
Related party
Revenue-generating transactions
Cost-generating transactions
Parent
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
\u00a0
Credit facilities.
Associates
\u00a0
Cesi S.p.A.
Rental income on laboratories and other similar facilities for specific uses, dividends.
Technical studies and consultancy, research, design and experimentation.
CORESO S.A.
\u00a0
Technical coordination service for the TSO.
Other related parties
\u00a0
\u00a0
GSE Group
Metering charge, dispatching charge.
Rental of spaces and workstations.
Fincantieri Group
\u00a0
Development and construction of infrastructure.
Enel Group
Transmission charge and aggregation of meter readings, dispatching charge, leases and rentals, power line maintenance, movement /re-routing of power lines, housing of fibre cable and maintenance of communications carried over proprietary power lines.
Recovery of energy discount, building services, MV power to new substations, specialist services for connection to Terna\u2019s control and protection systems.
Ferrovie Group
Dispatching charge, movement of power lines.
Right-of-way fees.
ENI Group
Dispatching charge.
Contributions for NTG connections, sundry services.
Poste Italiane
\u00a0
Sundry services.
Snam Rete Gas S.p.A.
Movement /re-routing of power lines.
\u00a0
ANAS S.p.A.
Movement /re-routing of power lines.
Right-of-way fees.
Open Fiber S.p.A.
IRU agreements for fibre.
Provision of services for the rental of fibre.
Fondenel e Fopen
\u00a0
Pension contributions payable by the Terna Group.
Other related parties of the MEF
Sundry services
\u00a0
Ansaldo Energia S.p.A.
Infrastructure maintenance.
\u00a0
REVENUE AND COSTS
(\u20acm)
REVENUE COMPONENTS
COST COMPONENTS
TRANSMISSION CHARGE AND OTHER REVENUE FROM REGULATED ACTIVITIES
NON-ENERGY-RELATED ITEMS
De facto parent
\u00a0
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
-
0.1
1.4
Total de facto parent
-
0.1
1.4
Associates:
Cesi S.p.A.
-
0.1
1.3
CORESO S.A.
-
-
4.9
Total associates
-
0.1
6.2
Other related parties:
GSE Group
8.5
0.9
0.1
Enel Group
1,768.3
7.3
0.4
ENI Group
8.0
2.0
0.6
Ferrovie Group
2.8
0.8
0.4
Anas S.p.A.
-
0.3
0.6
Webuild S.p.A.
-
0.4
-
Ansaldo Energia S.p.A.
-
4.8
-
Poste Italiane Group
-
-
0.1
Open Fiber S.p.A.
-
1.8
-
Other related parties of MEF
-
0.2
0.6
Total other related parties
1,787.6
18.5
2.8
Pension funds:
Fondenel
-
-
0.9
Fopen
-
-
3.4
Total pension funds
-
-
4.3
TOTAL
1,787.6
18.7
14.7
ASSETS AND LIABILITIES
(\u20acm)
PROPERTY, PLANT AND EQUIPMENT
RECEIVABLES AND OTHER ASSETS
PAYABLES ANDOTHER LIABILITIES
CASH
GUARANTEES*
CAPITALISED
COSTS
OTHER
OTHER
FINANCIAL
De facto parent
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
5.3
-
6.7
-
-
(273.9)
Total de facto parent
5.3
-
6.7
-
-
(273.9)
Associates:
Cesi S.p.A.
10.7
0.1
6.4
-
-
4.8
CORESO SA
-
-
0.3
-
-
-
Total associates
10.7
0.1
6.7
-
-
4.8
Other related parties:
GSE Group
0.2
0.7
0.3
-
-
-
Enel Group
37.7
339.2
55.0
-
-
1,024.9
ENI Group
-
1.6
1.2
-
-
111.1
Ferrovie Group
0.3
1.8
11.3
0.1
-
24.6
ANAS S.p.A.
0.2
0.2
2.7
-
-
-
Snam Rete Gas S.p.A.
-
-
0.1
-
-
-
Webuild SpA
0.1
-
12.7
-
-
5.4
Ansaldo Energia S.p.A.
1.3
0.2
1.1
-
-
22.6
Open Fiber S.p.A.
-
0.4
-
-
-
-
Poste Italiane Group
-
-
0.1
0.1
-
-
Other related parties of MEF
3.5
0.2
0.1
-
0.1
1.1
Total other related parties
43.3
344.3
84.6
0.2
0.1
1,189.7
Pension funds:
Fopen
-
-
2.8
-
-
-
Total pension funds
-
-
2.8
-
-
TOTAL
59.3
344.4
100.8
0.2
0.1
920.6
* Guarantees regard surety bonds received from contractors, with the exception of the amount relating to Cassa Depositi e Prestiti S.p.A. regarding a Revolving Credit Facility.
The impact of related-party transactions or positions on the statement of financial position and the income statement is summarised below:
STATEMENT OF FINANCIAL POSITION
(\u20acm)
31 December 2023
31 December 2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Property, plant and equipment
17,596.7
59.3
0.3%
16,200.9
41.1
0.3%
Trade receivables
2,123.4
344.4
16.2%
2,358.3
333.2
14.1%
Cash and cash equivalents
1,378.2
0.2
\u00a0-
2,155.1
0.1
\u00a0-
Trade payables
2,864.9
66.5
2.3%
3,687.7
60.9
1.7%
Other current liabilities
809.4
34.3
4.2%
669.9
22.7
3.4%
INCOME STATEMENT
(\u20acm)
2023
2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Revenue from sales and services
3,122.8
1,805.9
57.8%
2,898.1
1,718.7
59.3%
Other revenue and income
63.9
0.4
0.6%
66.4
0.8
1.2%
Raw and consumable materials used
285.4
0.1
-
247.8
\u00a0-
-
Services
312.3
10.1
3.2%
276.9
10.4
3.8%
Personnel expenses
377.2
4.4
1.2%
348.1
3.7
1.1%
Other operating costs
43.2
0.2
0.5%
32.5
0.1
0.3%
Financial expenses
\u00a0(227.7)
\u00a0-
\u00a0-
\u00a0(121.8)
\u00a0-
\u00a0-
The impact of related party cash flows is shown below:
STATEMENT OF CASH FLOWS
(\u20acm)
2023
2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Cash flow from operating activities
1,084.9
\u00a06.0
0.6%
2,323.7
\u00a0(26.6)
(1.1%)
Cash flow from investing activities
(2,334.4)
(18.2)
0.8%
(1,855.4)
19.2
(1.0%)
Cash flow from financing activities
464.3
\u00a0-
\u00a0-
92.5
\u00a0-
Given that Terna Group companies and the companies directly or indirectly controlled by the Ministry of the Economy and Finance meet the definition for classification as \u201cgovernment-related entities\u201d, in accordance with IAS 24 \u2013 Related Party Disclosures, the Group has elected to adopt the partial exemption \u2013 permitted by the standard \u2013 from the disclosure requirements in respect of other companies controlled, influenced or jointly controlled by the same government entity. The remainder of this section provides qualitative and quantitative disclosures on transactions with government-related entities having a significant impact on the Group\u2019s results. Amounts relating to pass-through items are not included in these disclosures.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithRelatedPartiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130892": { "value": "I. Notes to the statement of cash flows
Cash flow from continuing operations\u00a0amounts to \u20ac1,084.9 million, with approximately \u20ac2,184.2 million in operating cash flow and an outflow of approximately \u20ac1,099.3 million generated by changes in net working capital.
The cash outflow for investing\u00a0activities\u00a0totals \u20ac2,334.4 million and regards \u20ac2,048.8 million relating to investment in property, plant and equipment (excluding right-of-use assets recognised in application of IFRS 16), \u20ac216.2 million invested in intangible assets, \u20ac118.4 million essentially relating to the change in investments in securities, and \u20ac15,8 million regarding the consideration paid for the new acquisitions described above, after capitalised financial expenses of \u20ac48.3 million.
The net change in equity\u00a0has resulted in a decrease of \u20ac678.5 million, due primarily to payment of the final dividend for 2022 and of the interim dividend for 2023 to the Parent Company\u2019s shareholders and of dividends paid to non-controlling shareholders (a reduction of \u20ac671.5 million). The reduction also reflects the purchase of own shares to service the new Performance Share Plan 2023-2027 (down \u20ac7.0 million).\u00a0More details are provided in note 24. \u201cEquity attributable to owners of the Parent and non-controlling interests\u201d.
As a result, net cash used in investing activities and to provide a return on equity during the year led to a total outflow of \u20ac3,012.9 million, covered in part by cash flow from continuing operations of \u20ac1,084.9 million and in part by an increase in net debt.
The following table shows the reconciliation of net changes deriving from financing activities in the statement of cash flows:
(\u20acm)
31 December 2022
Cash flow from financing activities
Change in FV and other
31 December 2023
\u00a0- Long-term borrowings (including current portion)
10,326.0
380.0
87.8
10,793.8
\u00a0- Short-term borrowings
444.1
762.8
\u00a0(5.2)
1,201.7
Net change deriving from financing activities
10,770.1
1,142.8
82.6
11,995.5
Cash flow from continuing operations\u00a0amounts to \u20ac1,084.9 million, with approximately \u20ac2,184.2 million in operating cash flow and an outflow of approximately \u20ac1,099.3 million generated by changes in net working capital.
", "dimensions": { "concept": "ifrs-full:DisclosureOfProfitLossFromOperatingActivitiesExplanatory", "language": "en", "entity": "scheme:8156009E94ED54DE7C31", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "shtag_130894": { "value": "L. Government grants
Article 1, paragraphs 125 to 129, of Law 124 of 4 August 2017 (the annual markets and competition law) has introduced a number of measures designed to ensure the transparency of the government grants system. These measures, later amended by Law Decree 34 of 30 April 2019, include an obligation for companies to disclose amounts and information regarding assistance, subsidies, benefits, grants or aid, whether in cash or in kind, in the notes to the annual financial statements and, where applicable, in consolidated financial statements, where such amounts are not of a general nature and do not have the form of a fee, remuneration or compensation and have been received from a public body (paragraph 125-bis). The legislation also requires the disclosure of any grants disbursed (paragraph 126).
In accordance with Circular 5 of 22 February 2019 \u201cTransparency in the government grants system: an assessment of the regulations and interpretation guidance\u201d and Circular 32 of 23 December 2019 \u201cEnterprise and competition\u201d, published by Assonime, the Terna Group has adopted the following basis of reporting for government grants:
\u2022 the regulations only apply to entities resident in Italy;
\u2022 grants have the nature of grants or donations, and represent incentives or subsidies designed to give beneficiaries a recognised economic advantage; the grants therefore take the form of donations or giving and public aid for specific purposes, and are not awarded under a general aid regime;
\u2022 the public resources used are exclusively \u201cnational\u201d;
\u2022 grants are reported on a cash basis and if the amount is not less than \u20ac10,000 (with reference to each individual beneficiary) in the reporting period.
In line with the above, the following table shows government grants collected/disbursed by the Group in 2023:
Grants received (paragraph 125-bis)
Grantor
Beneficiary entity
Name
VAT number
Type of transaction
Amount (\u20ac)
Note
TERNA SPA
Ministry of Enterprises and Made in Italy
80230390587
State aid*
6,617,869
Grants collected on the basis of a report on the state of work in progress on projects carried out by Terna S.p.A. financed by government grants, with funding provided under the National Operational Programme (NOP) for Enterprises and Competitiveness 2014 - 2020 FESR - ASSE IV \u2013 Investment priority 4d - Action 4.3.1
TOTAL
\u00a0
6,617,869
Grants disbursed (paragraph 126)
Beneficiary
Grantor
Name
Tax code
VAT number
Type of transaction
Amount (\u20ac)
Note
TERNA SPA
Fondazione Venezia Capitale Mondiale della Sostenibilit\u00e0
\u00a0
94102820274
GIVING
33,000
Joining the foundation as co-founding member
TERNA SPA
Fondazione Accademia Naz. Santa Cecilia
\u00a0
05662271005
GIVING
160,000
Renewed participation as a founding partner
TERNA SPA
SUSAN G.KOMEN ITALIA ONLUS
\u00a0
06073831007
GIVING
15,000
Prevention day across the whole of Italy
TERNA SPA
Fond.Pol.Univ.A.GEMELLI IRCCS
\u00a0
13109681000
GIVING
65,000
Support for the purchase of equipment or for functional neurosurgery
TERNA SPA
Fondazione Accademica Musicale Chigiana
\u00a0
92035840526
GIVING
20,000
Summer Academy 2023
TERNA SPA
Sistech - Association loi 1901
\u00a0
FR83538232600022
GIVING
60,000
Funding for Programma Boost scholarships
TERNA SPA
ASSOCIAZIONE ITALIANA CONTRO LE LEUCEMIE
\u00a0
10823601009
GIVING
60,000
Support for a non-profit, public interest organisation
TERNA SPA
SOCIETA' BOTANICA ITALIANA ONLUS
\u00a0
00464940485
GIVING
56,314
Tiny Forest project
TAMINI TRASFORMATORI SRL
FONDIMPRESA
97278470584
\u00a0
GIVING
35,140
Training plan no. 310041- safety refresher 2021/2022
Totale
\u00a0
\u00a0
\u00a0
\u00a0
504,454
M. Events after 31 December 2023
Green light for the new underground cable connection in the Municipalities of Turbigo, Robecchetto con Induno and Castano Primo (MI)
On 4 January 2024, the Italian Ministry of the Environment and Energy Security issued the decree approving Terna\u2019s new electricity connection in the municipalities of Turbigo, Robecchetto con Induno and Castano Primo in the metropolitan city of Milan. The project, which will see the company invest \u20ac8 million, involves the construction of a 4.5 km-long underground cable power line to connect Terna\u2019s \u201cTurbigo\u201d Electrical Substation to the \u201cCastano Primo\u201d Primary Substation owned by the local distributor. The new line will reduce the risk of outages across the local grid and help to prevent damage to infrastructure caused by the intensification of weather events in recent decades, such as the strong winds typical of the area.
Work begins to upgrade the power grid between Colunga and Ferrara
On 09 January 2024 Terna launched the project to upgrade the power grid between Colunga and Ferrara in Emilia-Romagna. The company will invest approximately \u20ac16 million in the modernisation of the grid between Colunga and Ferrara, ensuring greater efficiency and quality of service for local businesses and citizens. The plan, which involves the municipalities of Castenaso, Budrio, Minerbio, Baricella, Malalbergo, Poggio Renatico, and Ferrara, will upgrade the following 132kV links: Colunga-Altedo\u201d, \u201cAltedo Ferrara South\u201d and \u201cFerrara South-der. Aranova Energy Centre\u201d, with the construction of approximately 20 km of power lines and the demolition of more than 60 km of lines in the provinces of Bologna and Ferrara.
Successful issue of a bond worth \u20ac850 million with a 7-year tenor
On 10 January 2024, Terna S.p.A. (\u201cTerna\u201d or the \u201cCompany\u201d) successfully launched a fixed rate, single tranche bond issue amounting to \u20ac850 million. The issue, which saw extremely high demand, was almost 3 times oversubscribed and is characterized by high quality and broad geographical diversification of investors. The bond was launched as part of the \u20ac9,000,000,000 Euro Medium Term Notes (EMTN) Programme, which has been rated \u201cBBB+\u201d by Standard and Poor\u2019s and \u201c(P)Baa2\u201d by Moody\u2019s. The bond has a nominal amount of \u20ac850 million, a duration of 7 years and maturity on 17 January 2031. It will pay a coupon of 3.50% and was issued at a price of 99,385%, with a spread of 100 basis pointsover the midswap. The settlement date for the issue was 17 January 2024. The proceeds from the issue will be used by the Company to meet ordinary financial requirements and to fund the Group\u2019s Industrial Plan. At the time of the issue, an application will be made for the bond to be listed on the Luxembourg Stock Exchange. The bond issue was placed by a syndicate of banks formed by Banca Akros, BNP Paribas, CaixaBank, Citi, Cr\u00e9dit Agricole Corporate and Investment Bank, IMI \u2013 Intesa Sanpaolo, Morgan Stanley, SMBC, Unicredit Bank AG, acting as joint-bookrunners.
Terna trials the use of a submarine\u00a0drone for marine geophysical surveys
On 11 January 2024, Terna announced the launch, in collaboration with Terradepth, a US startup and leading provider of marine survey services and ocean data solutions, of the trial for the \u201cOdisseo\u201d project. The goal of the project is to apply Autonomous Underwater Vehicles (AUV) to marine geophysical surveys during the planning of important infrastructure, ensuring respect for the environment. The first test was conducted off the coast near the port of Casamicciola Terme, on the island of Ischia (Naples, Italy). During the geophysical survey of the seabed, Terna\u2019s technicians were able to test the performance of the \u201cGavia\u201d drone, the AUV from Terradepth equipped with advanced sensors, including Echo Sounder (MBES), Side Scan Sonar and HD Camera.
Green light for the new \u201cMessina North PS \u2013 Messina Riviera PS\u201d underground connection
On 15 January 2024, the Sicilian Regional Authorities issued the decree consenting to Terna\u2019s new 150kV power line in the municipality of Messina. The project, which will see the Company invest approximately \u20ac26 million, involves the installation of an underground cable stretching approximately 10 km, connecting the \u201cMessina North\u201d and \u201cMessina Riviera\u201d primary substations. The Messina area experiences strong winds, which, combined with the topography and vegetation of the surrounding area, represent a potential risk of system outages. The new power line will increase local grid meshing and diversify transmission technology, reducing this risk of severe weather events.
Terna meets the citizens of Ferrara to present the project to restructure the local grid
On 24 January 2024, Terna held an information event with the citizens of Ferrara to present the future restructuring of the city\u2019s grid. The event was held between 5pm and 8pm at the Giorgio Bassani Library, Via Giovanni Grosoli 42, in Ferrara, and it was an opportunity to provide citizens with information on the project\u2019s features, reasons, benefits and dynamics. As a whole, the restructuring of the city of Ferrara\u2019s electricity grid involves the undergrounding of two 132kV overhead lines running from the Focomorto power station over a total length of more than 9 km, the construction of a new 132kV underground connection in the south of the city over a length of 3 km, and the expansion of the existing 380kV Ferrara Nord power station with the related new overhead connections. The works, which are aimed at increasing the security and resilience of the electricity system, will guarantee greater transport capacity to the urban area and will fully optimise the use of renewable energy produced in the area.In addition, the new infrastructure will enable the removal of approximately 20 km of overhead power lines and 70 pylons, freeing up approximately 40 hectares from the existing electricity infrastructure. The project complements the works to restructure the electricity grid in the area between Colunga and Ferrara that began in early January.The planned modernisation of the electricity grid in the Po Valley in the Emilia-Romagna region will improve the efficiency and quality of the service, benefiting local businesses and the public.
Terna presents the outcome of the public consultation on the new \u201cGR.ITA 2\u201d connection between Italy and Greece to the public
On 31 January 2024, Terna presented the outcome of the public consultation to authorities and citizens of the seven municipalities, in the province of Lecce, affected by the planned \u201cGR.ITA 2\u201d connection. During the online meeting, held on Teams from 5.00 p.m., the solutions selected for the route were presented. These decisions are the result of dialogue with local communities during the public consultation on the new infrastructure that will cross the southern Italian municipalities, in the province of Lecce, of Galatina, Soleto, Sternatia, Martignano, Calimera, Carpignano Salentino and Melendugno. At the end of this phase, Terna will launch detailed planning ready for theconsents process. The meeting is part of the shared planning process launched by the company in 2022 with the support of the Puglia Regional Authority and the municipal councils. During the public consultation phase, prior to submission of the project to obtain consent, concluded on 12 December 2023, five meetings were held to illustrate the details of the proposed project to local stakeholders, examining alternatives established on the basis of comments received during voluntary consultation and by listening to the feedback, opinions and requests of citizens.
The Ministry of the Environment and Energy Security gives its consent for the Adriatic Link, the new submarine power line connecting Marche and Abruzzo
On 6 February 2024, the Ministry of the Environment and Energy Security, through a decree of 31 January 2024, gave the green light for the construction of the Adricatic Link, Terna\u2019s submarine power line that will connect the Marche and Abruzzo regions. This development project, included among the interventions outlined in the PNIEC (National Integrated Plan for Energy and Climate) and recognised as strategic for the country by the Regulatory Authority, will strengthen energy exchange in central Italy, addressing the security and flexibility needs of the national electrical system and meeting the targets set for growth in renewables. The advanced technological and environmental electric connection will consist of two submarine cables approximately 210 km long, laid at a maximum depth of 100 meters, and two underground cables of 40 km. Converter stations will be built near the existing substations in Cepagatti (Pescara), Abruzzo, and Fano (Pesaro-Urbino), Marche. The infrastructure will provide an increase of approximately 1,000 MW in exchange capacity between Italy\u2019s Centre-South and Centre-North zones, enabling the integration and transfer of energy produced by wind and photovoltaic plants in the South to consumption centres in the North.
Terna among the world leaders in fighting climate change
On 6 February 2024, Terna was recognised as a leading international company in the fight against climate change by CDP\u2019s Climate Change survey\u00a0(former Carbon Disclosure Project). CDP is a global non-profit organisation specialising in environmental reporting and assessment of climate performance and strategies adopted by companies. The group led by Giuseppina Di Foggia achieved an \u201cA-\u201d rating (on a scale from \u201cD-\u201d to \u201cA\u201d), improving on last year\u2019s \u201cB\u201d rating. The score assigned to Terna places the company in the \u201cLeadership\u201d category, above the average for the sector (\u201cB\u201d), the European average (\u201cB\u201d) and the global average (\u201cC\u201d). This recognition from CDP confirms Terna\u2019s growing commitment to environmental sustainability, reaffirmed with the adoption of a new Science Based Target, under which Terna has committed to cut its CO2\u00a0emissions by 46% before 2030, compared to 2019 levels, raising the bar from the previous target of reducing greenhouse-gas emissions by approximately 30%. CDP\u2019s assessment of supplier engagement recognises Terna\u2019s efforts with regard the quality of Scope 3 emissions reporting, in relation to the value chain, and rewards the Group\u2019s commitment to reducing these emissions, as certified by the Science-based Target Initiative in 2023. The rating is also in line with the Company\u2019s efforts to promote the circular economy, given substance by the recent launch of Terna\u2019s Roadmap, which aims to make the Company a leader in this field.
Settlement agreement with Quebec
On 7 February 2024, all disputes related to the outstanding arbitrations\u00a0(listed in the notes in note 11. \u201cProfit/loss from discontinued operations and assets held for sale\u201d) between the companies Linha Verde I and Linha Verde II and the Quebec Group\u00a0were resolved, including any other existing or potential disputes regarding their relations. In addition, at the same time of the agreement, the company Terna Plus S.r.l. completed the purchase of a minority stake in the Brazilian company SPE Transmissora de energia Linha Verde I S.A., now an integral subsidiary of Terna Plus S.r.l..
Terna: EIB provides the last tranche of the \u20ac1.9 billion loan for the Tyrrhennian Link
On 8 February 2024, on the sidelines of the second edition of the EIB Forum in Luxembourg, which brings together Heads of State, EU Commissioners, business leaders, academics and civil society representatives, the European Investment Bank (EIB) and Terna signed the contract for the final tranche of the \u20ac1.9 billion loan for the Tyrrhenian Link, the submarine electricity cable connecting the Italian mainland with Sicily and Sardinia. At the EIB Forum, a meeting took place between EIB Vice-President Gelsomina Vigliotti and CEO and General Manager of Terna, Giuseppina Di Foggia, todiscuss future collaboration in support of the energy transition and REPowerEU\u00a0objectives. This final tranche of \u20ac500 million, in addition to the previous contracts signed on 8 November 2022 (first tranche of \u20ac500 million) and 30 March 2023 (second and third tranches, totalling \u20ac900 million), will support the construction and commissioning of the East and West sections of the Tyrrhenian Link. By connecting Sicily and Sardinia with the Italian mainland via a 970 km, 1,000 MW double submarine cable, the Tyrrhenian Link will foster the development of renewable sources, grid reliability and promote energy security in Italy. Terna plans to invest around \u20ac3.7 billion in total for this infrastructure, which is key for Italy\u2019s energy security. Around 50% of the project cost will be financed by the EIB, demonstrating the strategic nature of the project. The Tyrrhenian Link will be fully operational in 2028. Some 250 companies will be involved in its implementation, which will have a significant impact in the regions concerned. With a tenor of around 22 years from each drawdown, the loans have a longer maturity and more competitive costs than those generally available on the market, aligning them with Terna\u2019s policy to optimise its financial structure. This transaction brings the total of EIB loans granted to Terna to around \u20ac3.8 billion.
Terna and RSE join forces to develop projects and technologies in the energy and environmental sectors
On 14 February 2024, Terna and RSE, a leader in analysis and applied research in the energy sector, have signed a five-year partnership agreement\u00a0aimed at the development and application of processes and technologies in the field of energy and the environment, promoting study initiatives and development and innovation activity. The agreement was signed on 14 February in Rome by Giuseppina Di Foggia, CEO and General Manager of Terna, and Franco Cotana, CEO of RSE. Thanks to this partnership, Terna and RSE will be able to cooperate, through planning, programming and coordination activity, establishing a scenario that fosters the development of research and technology and the propagation of projects for innovation, energy security and grid resilience. This is of fundamental importance to Terna, being an enabler of the energy transition, and for RSE, in its role of promoting innovation, efficiency and circularity throughout the energy supply and sustainability chain. Specifically, the partnership involves a framework agreement aimed at launching mutual collaboration in areas including optimised grid planning and design, methodologies for smart-asset management, monitoring, control and resilience of the electricity system, development of new technology for grid flexibility, scenarios for the evolution of demand and generation from renewables, big-data management and data science, use of IoT (Internet of things) technology, cyber security, artificial intelligence and other technology enabling the Italian energy transition. The progress of projects will be monitored by a Management Committee made up of Terna and RSE representatives.
Consent for two new underground cable connections in Milan
On 16 February 2024, the Ministry of the Environment and Energy Security issued the decree approving Terna\u2019s project for the construction of two new power line connections in Milan. The Company will invest approximately \u20ac17 million in the project, which is part of the works planned to increase reliability of power supplies for the Milan - Cortina 2026 Winter Olympics and Paralympics. The project involves two underground cable connections (Porta Romana PS \u2013 Milan South Receiver SS and Porta Romana PS \u2013 Mugello PS) running for a total of 6.5 km and providing input-output connection of the local distributor\u2019s new \u201cPorta Romana\u201d primary substation. These works will upgrade the local grid, which experiences high loads\u2014particularly in the summer\u2014enabling it to cope with the growing electricity demand of the Porta Romana district set to host the Olympic Village, and the corresponding train station.
Terna: infrastructure projects consented to in 2023 amount to investment of over \u20ac3 billion
As at 19 February 2024, the Italian Ministry of Environment and Energy Security and the regional councils approved 23 development projects for Italy\u2019s national transmission grid, with total investment of more than \u20ac3 billion. This marks a new record for the Group, confirming Terna\u2019s central role in Italy\u2019s energy transition and the ongoing collaboration between the company and Italian institutions. The figure is up 20% on 2022, when authorised projects reached a total value of more than \u20ac2.5 billion, and has tripled since 2021. The main contribution to this achievement comes from the western branch of the Tyrrhenian Link, the section of the submarine power line that will connect Sicily and Sardinia, valued at over \u20ac1.8 billion. The eastern branch of the project, set to connect Sicily and Campania, was authorised in 2022. The 1,000 MW Direct Current submarine connection will run for 970 km, and is a strategic project for the Italian electricity system, crucial for achieving the energy transition goals set in the Integrated National Energy and Climate Plan (PNIEC). Another significant Terna project authorised last year is Sa.Co.I. 3, the 200kV submarine cable that will connect Sardinia, Corsica and Tuscany, with a total capacity of up to 400 MW. The project will help to strengthen the country\u2019s role as energy hub in Europe and Mediterranean region. In addition, there are two projects of around \u20ac50 million each, included in Terna\u2019s plans to increase the security and efficiency of the highand extra-high-voltage grid in the areas that will host the 2026 Milan - Cortina Olympic Games and Paralympic Games. These are the 19km \u201cMoena-Campitello\u201d underground cable power line in Val di Fassa (Trento) and the 22km underground connection between Vandoies and Brunico (Bolzano). Both projects will increase grid meshing and resilience of the electricity transmission system in areas frequently affected by extreme weather events in recent years. Terna has already begun work on the two infrastructure projects, with the aim of completing them by the end of 2025. Furthermore, by investment value, the two following projects in Lazio were also included: the underground cable power line of over 17km between the Rome South electrical substation and the Ciampino primary substation. This \u20ac30 million project is part of a wider plan to restructure the power grid in the southern area of the Italian capital. The second is the \u201cPian di Tortora-Viterbo\u201d, an underground cable connection in the province of Viterbo which will increase grid meshing in the area and boost the efficiency and reliability of the transmission service.
Green light for the new underground cable connection in Ragusa
On 22 February 2024, Sicily\u2019s Department of Energy and Public Utilities approved Terna\u2019s new \u201cRagusa SS -Ragusa North PS\u201d underground cable power line. The project, in which the company led by Giuseppina di Foggia will invest approximately \u20ac26 million, involves the construction of a 14 km-long electricity line connecting Terna\u2019s substation at Ragusa to the Ragusa North primary substation, which is owned by the local distributor. The development project will increase the available power to meet the needs of businesses and citizens and the grid meshing to improve service quality, especially during the summer, when demand in the area is significantly higher. The new connection will be completely underground and developed using latest-generation cables with XLPE (cross-linked polyethylene) insulation, a reliable, resilient, and sustainable solution. The final project design process and the preliminary activities necessary to start construction will begin in the coming weeks.
Results of the Directors\u2019 and Statutory Auditors\u2019 assessment of independence
On 6 March 2024, Terna\u2019s meeting of the Board of Directors, chaired by Igor De Biasio, proceeded to assess its members\u2019 compliance with the independence requirements\u00a0in the Articles of Association, in art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the Consolidated Law on Finance (\u201cCLF\u201d), and the independence requirements in the Corporate Governance Code (art. 2, Recommendation 7) provided in the document, \u201cCriteria and procedure for assessing independence\u201d. In view of the governance recommendations, the Chairman, Igor De Biasio, was assessed as independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the Consolidated Law on Finance (\u201cCLF\u201d) and to art. 2, Recommendation 7 of the Corporate Governance Code. The non-executive Directors Angelica Krystle Donati, Enrico Tommaso Cucchiani, Gian Luca Gregori, Simona Signoracci, Marco Giorgino, Karina Audrey Litvack, Jean-Michel Aubertin and Anna Chiara Svelto were assessed as independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the CLF and to art. 2, Recommendation 7 of the Corporate Governance Code. The Directors Regina Corradini D\u2019Arienzo, Francesco Renato Mele and Qinjing Shen were assessed as not independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the CLF and to art. 2, Recommendation 7 of the Corporate Governance Code. The Board of Directors also verified that all its members fulfil the requirements in the provisions of art. 15.5 of the Articles of Association concerning independence and incompatibility, adopted pursuant to the Unbundling Regulations. As recommended by the Corporate Governance Code, and in accordance with the role assigned to it by law, the Board of Statutory Auditors verified the correct application of the established assessment criteria and procedures adopted by the Board of Directors in assessing the independence of its non-executive members. The Board of Statutory Auditors also reported during today\u2019s meeting that all the Statutory Auditors meet the relevant independence requirement, pursuant to art. 2, Recommendation 9 of the Corporate Governance Code, verified during the meeting held on 7 February 2024 in application of the Board of Statutory Auditors\u2019 Terms of Reference.
Terna launches the \u201cDriving Energy Award 2024 \u2013 Contemporary Photography\u201d
On 7 March 2024, Terna launched the \u201cDriving Energy Award 2024 \u2013 Contemporary Photography\u201d. This free competition \u2014 open to all professional and amateur photographers in Italy \u2014 aims at promoting and developing culture in Italy and scouting new talents in the field. The theme for this year\u2019s award is \u2018The invisible\u00a0way\u2019. From today until 30 June, photographers are invited to interpret different forms of energy that although invisible, produce visible effects. This is a way to celebrate talent and the unique nature of an art capable of capturing realities that do not exist for many people, or at least not yet. This edition will have the same structure as the previous year\u2019s, which achieved ambitious goals in terms of opening, inclusion and engagement across Italy, making the Award a resounding success in the world of photography. This year will again see five different categories: the Senior Award, with a prize of \u20ac15,000, open to participants of the ageof 31 or older , the Youth Award, with a prize of \u20ac5,000, for photographers below the age of 30, the Amateur Award, with a prize of \u20ac5,000, open to all those who are not pursuing a professional career in photography, the Academy Mention, with a prize of \u20ac2,000, open to students enrolled in a higher education institute studying in a field relevant to the Award, and Terna\u2019s most voted work, with a prize of \u20ac2,000, open to all categories and awarded by Terna employees, who will vote on an exclusive preview of the finalist works through the TernaCult internal cultural platform.
Terna Forward and DXT Commodities close a \u20ac2.8 billion round of investment in WESII
On 8 March 2024, Terna Forward, the Terna Group company dedicated to tech innovation and Corporate Venture Capital initiatives, and DXT Commodities S.A. (DXT), a Duferco Group company, have announced the completion of a 2.8 million-euro round of investment, through a joint capital increase, in Wesii, an leading Italian company in inspection and remote-sensing services for the renewable energy sector. Traditional approaches for inspection of solar and wind systems or power lines involve land-based techniques that can be time-consuming and costly. Since its founding, Wesii has focused on the use of drones and aircraft equipped with high-definition and infrared thermal cameras for the thermographic analysis of renewable plants and electric infrastructure. This provides a high level of accuracy and enables identification and geolocation of any faults. The data gathered by the startup are catalogued, standardised and analysed using AI algorithms and a proprietary platform in order to further improve predictive maintenance and asset monitoring. The investment in Wesii is the first direct investment in an innovative small medium enterprise by Terna Forward, a company of the Terna Group led by Giuseppina Di Foggia. Terna Forward uses an open-innovation approach to identify and support the most promising enterprises and those with the highest-impact technology for acceleration of the energy transition, including through Corporate Venture Capital investments.
Consents process for the two new underground cable connections in the province of Sassari begins
On 12 March 2024, following the launch, by the Ministry of the Environment and Energy Security, of the consents process for the two new underground cable connections in the province of Sassari, Terna published the notice identifying the parcels of land that may be affected by the project in the municipalities of Alghero and Putifigari. The project, in which the company will invest around \u20ac45 million, involves connecting the new \u201cAlghero South\u201d Primary Substation, which belongs to the local distributor, to the existing 150kV \u201cPadria-Alghero\u201d line. This will be achieved by constructing two underground cables with an overall length of approximately 20 km. The new infrastructure will allow the demolition of around 4 km of existing overhead power lines, for a total of 8 pylons that currently cross the municipalities involved. The work will enable to increase the resilience of the electricity system in the face of extreme weather events and boosting the reliability of the local grid thanks to the construction of new supply routes, while simultaneously reducing the environmental impact of the infrastructure on the community.
Terna receives gender equality certification
On 14 March 2024, Terna announced that it has received certification from the certifying body IMQ \u2013 Istituto Italiano Marchio di Qualit\u00e0 \u2013 confirming the compliance of its Gender Equality Management System with the standard UNI/PdR 125:2022.\u00a0The audit performed by the certifying body took place in person and remotely and looked at a sample of seven organisational structures of the four Group companies \u2013 Terna S.p.A., Terna Rete Italia S.p.A., Terna Energy Solutions S.r.l., and Terna Plus S.r.l. \u2013 with the audit lasting a total of around 90 hours. The IMQ auditors certified that this achievement was the result of implementing renewed and improved principles and criteria within the Group, bringing them further into line with the new Gender Equality Management System. The GEMS was implemented in early 2023 through close collaboration between various areas of the Group. This certification marks the fourteenth integrated management system implemented and managed by Terna.
Start of consents process for reorganisation of the electricity grid between Caserta and Naples
On 16 March 2024, the Ministry of the Environment and Energy Security began the consents process for Terna\u2019s plan to reorganise the power grid in the towns of Maddaloni, in the province of Caserta, and Acerra, in the province of Naples.\u00a0The Company, led by Giuseppina Di Foggia, will invest more than \u20ac38 million in the project, which will make it possible to reduce the impact of electrical infrastructure on the land. It will also increase the local grid\u2019s resilience and security, as well as quality of service for businesses and households. The project falls under a broader local grid development plan that involvesbuilding a new 220kV section inside the existing Santa Sofia Electrical Substation. With five new underground cable connections installed in the branch which includes the Santa Sofia substation and the lines south of the Maddaloni railway station, it will be possible to take down more than 9 km of overhead power lines and a total of 36 pylons, freeing up approximately 37 hectares of land. The project took shape after a round of intense and productive discussions with local institutions and falls under the 2019 National Transmission Grid Defence Plan, which aims to resolve existing electrical infrastructure interference and make the electricity transmission service more reliable. The public and, specifically, landowners in the areas affected by the new project, will be able to read the plan documents at the offices of the Ministry of the Environment and Energy Security, Campania Regional Authority and at the Municipalities of Maddaloni (CE) and Acerra (NA). They can also submit their written comments to the Ministry and to Terna, for the Company\u2019s information, within the deadline established by law.
2024-2028 Industrial Plan approved
The\u00a0results for the year ended 31 December 2023 and the new 2024-2028 Industrial Plan were approved on 19 March 2024, with improvements across all financial performance indicators.
The meeting of the Board of Directors of Terna S.p.A. (\u201cTerna\u201d), chaired by Igor De Biasio, examined and approved the Group\u2019s 2024-2028 Industrial Plan and the results for the year ended 31 December 2023, presented by the Chief Executive Officer and General Manager, Giuseppina Di Foggia. Terna\u2019s new Industrial Plan aims to consolidate the Company\u2019s strategic role in enabling the Italian electricity system and, more generally, strengthen its commitment to driving the country\u2019s energy transition. To achieve the decarbonisation goals set in the European Green Deal and the National Integrated Energy and Climate Plan (\u201cPNIEC\u201d), which aim to cut greenhouse gas emissions by at least 55% by 2030, compared with 1990 levels, Terna plans to significantly increase investment\u00a0over the life of the Plan to \u20ac16.5 billion. \u20ac2.6 billion of this will be invested in 2024. This is\u00a0the highest level ever in the Group\u2019s history\u00a0and is 65% up on the last Plan. The key driver in the Industrial Plan is sustainable investment, a concept embedded in the Company\u2019s value creation process and in the benefits for the system and the environment. In fact 99% of Terna\u2019s capex is classified as sustainable based on EU Taxonomy\u00a0criteria.
Moody\u2019s reaffirms Terna Baa2 rating with a stable outlook
On 19 March 2024, Moody\u2019s Investor Service (Moody\u2019s) reaffirmed the long-term Baa2 rating assigned to Terna S.p.A. (Terna) with a stable outlook, one notch above Italy\u2019s sovereign rating. The assessment by the rating Agency came after the presentation of the 2024-2028 Industrial Plan, with the highest level of investments in Terna\u2019s history, aimed at strengthening the Company\u2019s central role as enabler of the energy transition and of an increasingly complex, sustainable and innovative electricity system.
On 6 February 2024, following the update of the \u201cGovernment-Related Issuers\u201d (GRI) methodology, through which the rating agency has extended its scope of application to certain entities indirectly owned by governments, Moody\u2019s once again confirmed Terna\u2019s long-term rating of \u2018Baa2\u2019, a notch above Italy\u2019s sovereign rating, with a stable outlook. The rating agency also confirmed Terna\u2019s \u2018P-2\u2019 short-term rating and the \u2018Ba1\u2019 rating of Terna\u2019s subordinated debt.
S&P reaffirms Terna\u2019s BBB+ rating with a stable outlook
On 19 March 2024, S&P Global Rating (S&P) reaffirmed the Company\u2019s BBB+ long-term rating with a stable outlook, one notch above Italy\u2019s sovereign rating. The assessment by the rating Agency came after the presentation of the 2024-2028 Industrial Plan, with the highest level of investments in Terna\u2019s history, aimed at strengthening the Company\u2019s central role as enabler of the energy transition and of an increasingly complex, sustainable and innovative electricity system.
Launch of the \u201cWe are committed to the future of energy\u201d corporate advertising campaign
On 21 March 2024, the new corporate advertising campaign produced by Terna, Italy\u2019s national grid operator, was launched in the press and digital media. Among the new features this year is the mention of the Industrial Plan, putting corporate communication on a firm basis. \u2018\u2018We are committed to the future of energy\u201d is the claim in the campaign, which will appear in the media until 14 April, accompanying the launch of the new 2024-2028 Industrial Plan presented to investors on 19 March. \u201cFaster. More digitalised. More sustainable. Fairer. This is the energy transition we want. It is an essential challenge for the future of us all: it requires Terna to have a wider vision and commit to elevating our mission of transmitting energy to the country to new levels of excellence. That is why our 2024-2028 Industrial Plan sets considerable new records and includessignificant new developments. This is the energy of the future. Today.\u201d. These are the words with which the Group, led by Giuseppina Di Foggia, substantiates its commitment towards a future that will face everyone with a series of unavoidable deadlines as we make take effective, definitive action to achieve the energy transition goals.
Consents process for new \u201cGissi - Larino \u2013 Foggia\u201d power line restarts
On 27 March 2024, the Ministry of the Environment and Energy Security restarted the consents process for Terna\u2019s new 380kV \u201cGissi- Larino- Foggia\u201d overhead power line, after it was halted whilst awaiting confirmation of the project\u2019s environmental compatibility. The project, in which the Company led by Giuseppina Di Foggia will invest over \u20ac270 million, will involve construction of a second backbone with an overall length of 134 km between the electricity substations of Villanova (PE) and Foggia, connecting with the input/output modules of the intermediate substations of Gissi (CH) and Larino (CB). The new power line will make the management and maintenance of the Adriatic Backbone more reliable and cost-effective with returns in terms of both efficiency and savings for families and businesses. In particular, the work will reduce grid losses for the transport of energy, minimise the risk of being unable to handle peak loads, and resolve congestion between the south and north and at local level that limit the production of renewable energy. Once operational, the line should help save approximately 50 Gwh per year and reduce CO2\u00a0emissions by around 21 kt CO2\u00a0per year, a testament to the Company\u2019s constant commitment to guaranteeing sustainability for future generations.
Consents process begins for rationalisation of power grid in the province of Messina
On 28 March 2024, following the start, by the Regional Authority\u2019s Energy and Public Utilities Department, of the consents process for the project involving rationalisation of the 150kV power grid in the province of Messina, Terna has published notice of the parcels of land potentially affected by the new infrastructure. The project, in which the Company is to invest approximately \u20ac18 million, will reduce the impact of electricity infrastructure on the local area and improve the reliability, security and efficiency of the local electricity service. The project involves a comprehensive restructuring and modernisation of the 150kV grid in the Valle del Mela (ME) area. The work will include extraordinary maintenance of existing power lines and the installation of 13 km of new connections and short-distance links, with over one third of these in underground cable, in the municipalities of Rometta, Saponara, Villafranca Tirrena and Messina. The project, associated with creation of the 380 kV \u201cSorgente-Rizziconi\u201d power line, follows the commitments made in the Memorandum of Understanding entered into with the Sicilian regional authority and the municipal authorities affected.
Consent received for modernisation of the \u201cSant\u2019Antimo - Fratta\u201d power line linking the provinces of Naples and Caserta
On 29 March 2024,\u00a0the Ministry of the Environment and Energy Security gave its consent for Terna\u2019s final design for renewal of the 220kV power line between the Sant\u2019Antimo primary substation and the Fratta electricity substation in the Metropolitan City of Naples. The project, in which the Company will invest approximately \u20ac18 million, meets the need to modernise the existing power line dating back to the 1940s. The project will increase the quality of the local electricity service, at the same time minimising the visual impact of the infrastructure and its effect on the landscape. The work will involve laying approximately 8 km of underground cable in the municipalities of Sant\u2019Antimo, Grumo Nevano, Frattamaggiore and Frattaminore in the province of Naples, and in the municipality of Sant\u2019Arpino in the province of Caserta.
Perpetual hybrid green bond worth \u20ac850 million successfully issued
On 4 April 2024, Terna S.p.A. successfully launched an issue of euro-denominated, perpetual, subordinated, hybrid, non-convertible, fixed-rate green bonds to institutional investors, amounting to a total of \u20ac850 million. The issue received a very favourable response from the market, with applications topping \u20ac3 billion and the issue approximately 4 times oversubscribed. The issue attracted a high quality of geographically diversified investor. The bonds, issued in a single tranche, are non-convertible, subordinated, green, hybrid and perpetual and are non-callable for 6 years. The issue price was 99.745%, with a spread of 214.2 basis points with respect to the Mid Swap rate. The issue will pay fixed annual coupon interest of 4.750%, payable until the first reset date (excluded) of 11 April 2030, and will have an effective interest rate of 4.800%. From this date, unless the bond has been redeemed early, the hybrid bond will pay interest at the 5-year Euro Mid Swap rate, increased by an initial spread of 214.2 basis points, rising by a further 25 basis points from 11 April 2035 and by another 75 basis points from 11 April 2050.
Disclosure
pursuant to art. 149-duodecies\u00a0
of the CONSOB Regulations for Issuers
The following table, prepared pursuant to art. 149-duodecies\u00a0of the CONSOB Regulations for Issuers, shows the fees paid for audit and other services provided to the Terna Group by the Parent Company\u2019s independent auditors and the network of the Parent Company\u2019s independent auditors in 2023.
(\u20ac)
ENTITY PROVIDING SERVICE
FEES DUE FOR THE YEAR
Audit of the accounts and financial statements
Parent Company\u2019s auditor
523,852
Attestation and other services7
Parent Company\u2019s auditor
131,857
Audit of the accounts and financial statements
Network of the Parent Company\u2019s auditor
213,695
Total
869,404
7\u00a0Attestation and other services include the services linked to the audit of the regulatory accounts, the opinion on the distribution of interim dividends, the limited review of the Non-financial Statement, the limited assurance for the Green Bond Report and Comfort Letters for bonds.
Contents
Separate financial statements\t460
Income statement of Terna S.p.A.\t460
Statement of comprehensive income of Terna S.p.A.\t461
Statement of financial position of Terna S.p.A.\t462
Statement of changes in equity\t464
Statement of cash flows\t466
Notes\t468
A.\tMaterial accounting policies and measurement criteria\t468
B.\tNotes to the income statements\t487
C.\tOperating segments\t495
D.\tNotes to the statement of financial position\t496
E.\tCommitments and risks\t516
F.\tBusiness combinations\t522
G.\tRelated party transactions\t523
H.\tSignificant non-recurring, atypical or unusual events and transactions\t529
I.\tNotes to the statement of cash flows\t529
L.\tGovernment grants 530
M.\tProposal for appropriation of profit for the year 531
N.\tEvents after 31 December 2023\t531
Disclosure pursuant to art. 149-duodecies\u00a0of the CONSOB Regulations for issuers\t539
Attestation of the separate financial statements pursuant to art. 81-ter\u00a0of CONSOB Regulation 11971 of 14 May 1999,
as amended\t540
Report of the Board of Statutory Auditors
to the Annual General Meeting of Terna S.p.A.\u2019s shareholders\t542
Independent Auditor\u2019s Report pursuant to articles 14 of Legislative Decree 39 of 27 January 2010 and article 10 of Regulation (EU) 537/2014 - Separate financial statements for the year ended 31 December 2023\t558
Income statement of Terna S.p.A.
(\u20ac)
\u00a0
Note
2023
2022
A - REVENUE
\u00a0
\u00a0
\u00a0
\u00a01: Revenue from sales and services
1
2,567,295,537
2,459,716,731
\u00a0of which: related parties
\u00a0
1,787,600,000
1,701,200,000
\u00a02: Other revenue and income
2
67,480,763
60,771,937
\u00a0of which: related parties
\u00a0
33,168,146
33,058,251
\u00a0Total revenue
\u00a0
2,634,776,300
2,520,488,668
B - OPERATING COSTS
\u00a0
\u00a01: Raw and consumable materials used
3
7,240,844
6,369,068
\u00a0of which: related parties
\u00a0
80,014
4,317
\u00a02: Services
4
498,441,079
482,977,197
\u00a0of which: related parties
\u00a0
398,584,781
396,569,826
\u00a03: Personnel expenses
5
119,148,280
102,351,580
\u00a0- gross personnel expenses
\u00a0
138,252,288
116,841,972
\u00a0- capitalised personnel expenses
\u00a0
(19,104,008)
(14,490,392)
\u00a0of which: related parties
\u00a0
1,458,975
1,212,603
\u00a04: Amortisation, depreciation and impairment losses
6
719,320,420
650,291,846
\u00a05: Other operating costs
7
29,688,540
21,946,270
\u00a0of which: related parties
\u00a0
144,779
76,572
\u00a0Total operating costs
\u00a0
1,373,839,163
1,263,935,961
A-B OPERATING PROFIT/(LOSS)
\u00a0
1,260,937,137
1,256,552,707
C - FINANCIAL INCOME/(EXPENSES)
\u00a0
\u00a01: Financial income
8
142,007,633
38,576,427
\u00a0of which: related parties
\u00a0
27,385,018
14,171,302
\u00a02: Financial expenses
8
(232,825,258)
(125,644,106)
\u00a0of which: related parties
\u00a0
7,119,867
7,884,814
D - PROFIT/(LOSS) BEFORE TAX
\u00a0
1,170,119,512
1,169,485,028
E - INCOME TAX EXPENSE
9
335,462,844
334,802,306
F - PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS
\u00a0
834,656,668
834,682,722
G - PROFIT/(LOSS) FOR THE YEAR FROM DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE
10
140,000
(544,018)
H - PROFIT FOR THE YEAR
\u00a0
834,796,668
834,138,704
Financial statements
Statement of comprehensive income of Terna S.p.A.*
(\u20ac)
\u00a0
Note
2023
2022
PROFIT FOR THE YEAR
834,796,668
834,138,704
Other comprehensive income for the year reclassifiable to profit or loss
\u00a0
\u00a0
\u00a0
\u00a0- Cash flow hedge
20
\u00a0(37,470,529)
222,870,545
\u00a0- Financial assets at fair value through other comprehensive income
20
1,011,643
\u00a0(4,364,155)
\u00a0- Cost of hedges
20
246,085
\u00a0(603,150)
Other comprehensive income for the year not reclassifiable to profit or loss
\u00a0
\u00a0
\u00a0
\u00a0- Actuarial gains/(losses) on provisions for employee benefits
20
\u00a0(642,245)
1,398,106
COMPREHENSIVE INCOME FOR THE YEAR
\u00a0
797,941,622
1,053,440,050
Statement of financial position of Terna S.p.A.
(\u20ac)
\u00a0
Note
31 December 2023
31 December 2022
A \u2013 NON-CURRENT ASSETS
\u00a0
\u00a0
\u00a0
\u00a01 Property, plant and equipment
11
15,612,445,163
14,252,842,069
\u00a0of which: related parties
\u00a0
145,758,709
121,293,597
\u00a02 Goodwill
12
190,228,231
190,228,231
\u00a03 Intangible assets
13
573,282,035
478,476,472
\u00a04 Deferred tax assets
14
112,962,270
69,861,565
\u00a05 Non-current financial assets
15
1,587,322,763
1,636,686,066
\u00a06 Other non-current assets
16
7,926,548
7,923,963
\u00a0of which: related parties
\u00a0
2,773,538
2,800,167
\u00a0Total non-current assets
\u00a0
18,084,167,010
16,636,018,366
B \u2013 CURRENTS ASSETS
\u00a0
\u00a01 Trade receivables
17
1,928,810,157
2,179,392,711
\u00a0of which: related parties
\u00a0
355,583,234
343,259,089
\u00a02 Current financial assets
15
368,573,965
255,177,882
\u00a03 Cash and cash equivalents
18
1,456,303,637
2,202,562,495
\u00a0of which: related parties
\u00a0
216,717,235
172,981,760
\u00a04 Income tax assets
19
3,277,022
3,277,022
\u00a0of which: related parties
\u00a0
1,192,624
23,050,708
\u00a05 Other current assets
16
61,518,479,0
53,590,269
\u00a0of which: related parties
\u00a0
350,000
-
\u00a0Total current assets
\u00a0
3,818,483,260
4,694,000,379
TOTAL ASSETS
\u00a0
21,902,650,270
21,330,018,745
(\u20ac)
\u00a0
Note
31 December 2023
31 December 2022
C - EQUITY
\u00a0
\u00a0
\u00a0
\u00a01 Share capital
\u00a0
442,198,240
442,198,240
\u00a02 Other reserves
\u00a0
1,851,226,767
1,888,190,860
\u00a03 Retained earnings/(accumulated losses)
\u00a0
2,973,143,405
2,794,828,077
\u00a04 Interim dividend
\u00a0
(230,345,083)
(213,260,151)
\u00a05 Profit for the year
\u00a0
834,796,668
834,138,704
\u00a0Total equity
\u00a020
5,871,019,997
5,746,095,730
D - NON-CURRENT LIABILITIES
\u00a0
\u00a01 Long-term borrowings
\u00a021
9,369,221,337
8,372,355,904
\u00a02 Employee benefits
\u00a022
11,247,559
10,330,998
\u00a03 Provisions for risks and charges
\u00a023
108,368,153
97,382,471
\u00a04 Non-current financial liabilities
\u00a021
164,499,824
247,170,043
\u00a05 Other non-current liabilities
\u00a024
373,057,942
397,089,647
\u00a0of which: related parties
\u00a0
24,178,449
25,323,200
\u00a0Total non-current liabilities
\u00a0
10,026,394,815
9,124,329,063
E - CURRENT LIABILITIES
\u00a0
\u00a01 Short-term borrowings
\u00a021
1,190,390,479
419,496,075
\u00a02 Current portion of long-term borrowings
\u00a021
1,368,961,833
1,895,331,276
\u00a03 Trade payables
\u00a025
2,669,674,313
3,515,917,931
\u00a0of which: related parties
\u00a0
940,637,485
722,369,117
\u00a04 Tax liabilities
\u00a025
2,905,520
50,819,421
\u00a05 Current financial liabilities
\u00a021
113,681,019
44,851,810
\u00a06 Other current liabilities
\u00a025
659,622,294
533,177,439
\u00a0of which: related parties
\u00a0
33,245,713
18,776,726
\u00a0Total current liabilities
\u00a0
6,005,235,458
6,459,593,952
TOTAL LIABILITIES AND EQUITY
21,902,650,270
21,330,018,745
Statement of changes in equity
31 December 2022 - 31 December 2023
(\u20ac/m)
SHARE CAPITAL
LEGAL RESERVE
SHARE PREMIUM RESERVE
CASH FLOW HEDGE RESERVE
RESERVE FOR TREASURY SHARES
RESERVE FOR EQUITY INSTRUMENTS - PERPETUAL HYBRID BONDS
OTHER RESERVES
RETAINED EARNINGS/ (ACCUMULATED LOSSES
INTERIM DIVIDEND
PROFIT FOR THE YEAR
EQUITY
EQUITY AT 31 DECEMBER 2022
442.2
88.4
20.0
81.9
(29.5)
989.0
738.4
2,794.9
(213.3)
834.1
5,746.1
Profit for the year
834.8
834.8
Other comprehensive income:
- Change in fair value of cash flow hedges
(37.5)
(37.5)
- Financial assets at fair value through other comprehensive income
1.0
1.0
- Cost of hedges
0.2
0.2
- Actuarial gains/(losses) on employee benefits
(0.6)
(0.6)
Total other comprehensive income
-
-
-
(37.3)
-
-
0.4
-
-
-
(36.9)
Comprehensive income
-
-
-
(37.3)
-
-
0.4
-
-
834.8
797.9
Transactions with shareholders:
- Appropriation of profit for 2022
\u00a0- Retained earnings
202.1
(202.1)
-
\u00a0- Dividends
213.3
(632.0)
(418.7)
- Interim dividend 2023
(230.3)
(230.3)
- Purchase of treasury shares
(0.3)
-
(0.3)
Total transactions with shareholders
-
-
-
-
(0.3)
-
-
202.1
(17.0)
(834.1)
(649.3)
Share option reserve
0.2
0.2
Coupon payable to holders of hybrid bonds
(23.8)
(23.8)
Other changes
(0.1)
(0.1)
Total other changes
-
-
-
-
-
-
0.2
(23.9)
-
-
(23.7)
EQUITY AT 31 DECEMBER 2023
442.2
88.4
20.0
44.6
(29.8)
989.0
739.0
2,973.1
(230.3)
834.8
5,871.0
31 December 2021 - 31 December 2022
Share Capital and Reserves of Terna S:p:A:
(\u20ac/m)
SHARE CAPITAL
LEGAL RESERVE
SHARE PREMIUM RESERVE
CASH FLOW HEDGE RESERVE
RESERVE FOR TREASURY SHARES
RESERVE FOR EQUITY INSTRUMENTS - PERPETUAL HYBRID BONDS
OTHER RESERVES
RETAINED EARNINGS/ (ACCUMULATED LOSSES)
INTERIM DIVIDEND
PROFIT FOR THE YEAR
EQUITY
EQUITY AT 31 DECEMBER 2021
442.2
88.4
20.0
(140.4)
(19.5)
-
735.6
2,665.4
(197.4)
735.2
4,329.5
Profit for the year
834.1
834.1
Other comprehensive income:
- Change in fair value of cash flow hedges
222.9
222.9
- Financial assets at fair value through other comprehensive income
(4.4)
(4.4)
- Cost of hedges
(0.6)
(0.6)
- Actuarial gains/(losses) on employee benefits
1.4
1.4
Total other comprehensive income
-
-
-
222.3
-
-
(3.0)
-
-
-
219.3
Comprehensive income
-
-
-
222.3
-
-
(3.0)
-
-
834.1
1,053.4
Transactions with shareholders:
- Appropriation of profit for 2021
\u00a0- Retained earnings
150.1
(150.1)
-
\u00a0- Dividends
197.4
(585.1)
(387.7)
- Interim dividend 2022
(213.3)
(213.3)
- Purchase of treasury shares
(10.0)
(10.0)
Total transactions with shareholders
-
-
-
-
(10.0)
-
-
150.1
(15.9)
(735.2)
(611.0)
Share option reserve
5.8
5.8
Equity instruments \u2013 Perpetual hybrid bonds
989.0
989.0
Coupons payable to holders of hybrid bonds
(21.1)
(21.1)
Other changes
0.5
0.5
Total other changes
-
-
-
-
-
989.0
5.8
(20.6)
-
-
974.2
EQUITY AT 31 DECEMBER 2022
442.2
88.4
20.0
81.9
(29.5)
989.0
738.4
2,794.9
(213.3)
834.1
5,746.1
Statement of cash flows
(\u20ac/m)
Note
2023
2022
PROFIT FOR THE YEAR
\u00a0
834.8
834.1
ADJUSTED BY:
\u00a0
\u00a0
\u00a0
Amortisation: depreciation and impairment losses / (reversals of impairment losses) on non-current property, plant and equipment and intangible assets*
710.7
639.5
Accruals to provisions (including provisions for employee benefits) and impairment losses
31.4
27.8
(Gains)/Losses on sale of property, plant and equipment
\u00a0(15.7)
\u00a0(5.9)
Financial (income)/expense
8
90.7
88.9
Income tax expense
9
335.4
334.8
Other non-cash movements
20
4.0
5.8
CASH FLOW FROM OPERATING ACTIVITIES BEFORE CHANGES IN NET WORKING CAPITAL
\u00a0
1,991.3
1,925.0
Increase/(decrease) in provisions (including provisions for employee benefits and taxation)
\u00a0(20.6)
\u00a0(35.5)
(Increase)/decrease in trade receivables and other current assets
247.5
421.7
Increase/(decrease) in trade payables and other current liabilities
\u00a0(696.6)
541.4
(Increase)/decrease in other non-current assets
30.4
76.6
Increase/(decrease) in other non-current liabilities
\u00a0(18.9)
\u00a0(155.0)
Interest income and other financial income received
113.2
62.6
Dividends collected
8
18.3
11.9
Interest expense and other financial expenses paid
\u00a0(264.9)
\u00a0(152.2)
Income tax paid
\u00a0(411.0)
\u00a0(344.8)
CASH FLOW FROM OPERATING ACTIVITIES [A]
988.7
2,351.7
\u00a0- of which: related parties
\u00a0
197.1
31.4
Capital expenditure in non-current property, plant and equipment after grants received
11
\u00a0(1,951.6)
\u00a0(1,358.1)
Revenue from sale of non-current property, plant and equipment and intangible assets and other movements
19.0
11.7
Capital expenditure in non-current intangible assets after grants received
13
\u00a0(214.5)
\u00a0(210.7)
Intercompany (additions)/sales of property, plant and equipment
\u00a0(6.7)
\u00a0(16.5)
Capitalised financial expenses
48.3
24.8
(Increase)/decrease in investments
\u00a0(25.9)
\u00a0(0.5)
Movements in short- and medium/long-term financial investments
\u00a0(99.3)
\u00a0(350.5)
Proceeds from sale of companies
\u00a0-
27.4
CASH FLOW FOR INVESTING ACTIVITIES [B]
\u00a0(2,230.7)
\u00a0(1,872.4)
\u00a0- of which: related parties
\u00a0
\u00a0(24.5)
39.6
Movement in the reserve for treasury shares
20
\u00a0(7.0)
\u00a0(10.0)
Movement in the reserve for equity instruments
20
\u00a0-
989.0
Dividends paid
\u00a0(665.8)
\u00a0(592.4)
Movements in short- and medium/long-term financial liabilities (including short-term portion)**
1,168.5
\u00a0(283.1)
CASH FLOW FROM/(FOR) FINANCING ACTIVITIES [C]
495.7
103.5
INCREASE/(DECREASE) IN CASH AND EQUIVALENTS [A+B+C]
\u00a0
\u00a0(746.3)
582.8
Cash and cash equivalents at beginning of year
2,202.6
1,619.8
Cash and cash equivalents at end of year
1,456.3
2,202.6
*\tAfter grants related to assets recognised in the income statement for the year.
** After derivatives and impact of fair value adjustments, including cash movements in right-of-use assets.
A. Material accounting policies and measurement criteria
Introduction
Terna S.p.A., which provides electricity transmission and dispatching services, is a joint-stock company and its registered office is at Viale Egidio Galbani 70, Rome, Italy.
Publication of the separate financial statements was authorised by the Board of Directors on 19 March 2024.
The separate financial statements at and for the year ended 31 December 2023 are available for inspection on request at Terna S.p.A.\u2019s registered office at Viale Egidio Galbani 70, Rome, or on the Company\u2019s website at www.terna.it.
The Board of Directors has authorised the Chairman and the Chief Executive Officer to make any alterations to the form of the financial statements that may be necessary during preparation of the final text to be presented to the Annual General Meeting, and to make any additions and adjustments to the sections concerning events after 31 December 2023.
As of the financial statements for the year ended 31 December 2021, Terna has complied with the requirement introduce by the European Transparency Directive and publishes its Annual Report using the European single electronic format (ESEF), tagging all the numbers in the consolidated financial statements and the issuer\u2019s basic financial information using the ixbrl format. In addition, as of 31 December 2022, all the notes to the consolidated financial statements have been block tagged.
Compliance with IAS/IFRS
The separate financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), International Accounting Standards (IAS) issued by the International Accounting Standards Board (IASB) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) and the Standing Interpretations Committee (SIC), as endorsed by the European Commission (\u201cIFRS\u201d).
This document has also been prepared taking into account the provisions of Legislative Decree 38 of 28 February 2005 of the Italian Civil Code and CONSOB Resolutions 15519 (\u201cProvisions governing financial statements in implementation of art. 9, paragraph 3 of Legislative Decree 38/2005\u201d) and 15520 (\u201cAmendments to the implementing rules for Legislative Decree 58/1998\u201d), as well as CONSOB Communication DEM/6064293 (\u201cDisclosure requirements for listed issuers and issuers of financial instruments that are widely held among the public pursuant to art. 116 of the Consolidated Law on Finance\u201d).
The separate financial statements have been prepared on a historical cost basis, with the exception of certain financial instruments, and on a going concern basis.
Basis of presentation
The separate financial statements consist of the statement of financial position, the income statement, the statement of comprehensive income, the statement of changes in equity, the statement of cash flows and the notes thereto.
In the statement of financial position, assets and liabilities are classified on a \u201ccurrent/non-current\u201d basis, with separate reporting of assets and liabilities held for sale. Current assets, which include cash and cash equivalents, are those held for realisation, sale or consumption in the Company\u2019s normal operating cycle; current liabilities are those expected to be settled in the Company\u2019s normal operating cycle or within one year of the end of the financial year.
The income statement is classified based on the nature of costs. The income statement is presented as two statements, the first of which (the income statement) presents revenue and expense items for the year; the second (the statement of comprehensive income) starts with the result for the year and then presents the revenue and expense items that are recognised in equity rather than profit or loss for the year.
The statement of cash flows has been prepared using the indirect method.
The separate financial statements are accompanied by the Report on Operations for Terna S.p.A. and the Group, which as from financial year 2008 have been prepared as a single document, exercising the option granted by Legislative Decree 32 of 2 February 2007, which amended art. 40 (Report on Operations) of Legislative Decree 127 of 9 April 1991. From 2021, the Terna Group\u2019s Annual Financial Report contains the Integrated Report, including in a single document the Report on Operations, the Sustainability Report and the Consolidated Non-financial Statement (the \u201cNFS\u201d), in addition to the consolidated financial statements and the Parent Company\u2019s separate financial statements.
The separate financial statements are presented in euros, whilst amounts in the statement of changes in equity, the statement of cash flows and these notes are presented in millions of euros to the first decimal place, unless otherwise stated.
The separate financial statements have been prepared on a historical cost basis, with the exception of certain items that, in accordance with IFRS, are recognised at fair value, as indicated in the measurement criteria for individual items.
Certain amounts in the financial statements at and for the year ended 31 December 2022 have been restated in order to provide an improved basis of comparison, without however modifying the amount of equity at 31 December 2022 or amounts in the income statement and statement of comprehensive income for 2022.
Use of estimates
In application of IFRS, preparation of the statement of financial position and the income statement requires the Company to use estimates and assumptions that affect the carrying amounts of assets and liabilities and the related disclosures, in addition to contingent assets and liabilities at the reporting date. Estimates are based on the information available to management at the date of preparation of the financial statements. These estimates and the associated assumptions are based on previous experience and various factors that are believed to be reasonable under the circumstances. The resulting estimates form the basis for making the judgements about the carrying amounts of assets and liabilities that are not readily apparent from other objective sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed periodically and the effects of any changes are recognised in the income statement for the year, if they relate solely to that period. In the case that the revision affects both current and future years, the change is recorded in the year in which the estimate is reviewed as well as in the relevant future years.
The assets and liabilities subject to key estimates and assumptions used by the Company in applying the IFRS endorsed by the European Commission, and that could have a significant impact on the separate financial statements, or that could give rise to risks that would entail significant adjustments to the carrying amounts of assets and liabilities in subsequent years, are summarised below.
The assessment of external and systemic aspects are dealt with in an integrated manner at Group level. The Terna Group\u2019s considerations on the conflict in Ukraine, the macroeconomic environment and climate change are thus summarised below in a single note.
Revenue related to incentives
Recognition in the financial statements of output-based incentives requires management to use estimates and assumptions based on judgements made using actual data and estimates of the quantity and likelihood of future events. In the case of incentive mechanisms where the performance obligation is satisfied over a period of time, the Group estimates how to allocate the reward in the period, estimating the potential for the return of all or part of the accrued amounts. The amount recognised as revenue in the accounting period is the amount that is most likely not to be returned in the future. For the purpose of recognition, the Group also evaluates, for each incentive mechanism, whether or not the right (or obligation) is subject to confirmation or verification by the regulator, ARERA.
If the mechanism includes a significant financial component, the Group determines a discount rate that takes into account the credit risk associated with the asset which, given the way in which the mechanisms work and the guarantees provided to Terna under the regulatory framework, broadly coincides with the electricity system.
Certain incentive mechanisms may result in penalties for underperformance.
Impairment losses
Property, plant and equipment and intangible assets with finite useful lives are tested at least once a year to check for evidence of impairment. If there is evidence that an asset may be impaired, its recoverable amount is estimated.
The recoverable amount of goodwill is estimated at least annually. The recoverable amount is equal to the greater of the fair value less costs to sell and value in use. Value in use is measured by discounting estimated future cash flows considering information available at the time of estimate and on the basis of estimates of the performance of future variables, such as prices, costs, demand growth rates, production profiles, and discounted at a pre-tax rate that reflects current market assessments of the time value of money for the investment period and risks specific to the asset. If the intangible asset does not generate cash inflows that are largely independent, the asset\u2019s recoverable amount is calculated as part of the Cash Generating Unit (\u201cCGU\u201d) to which it belongs.
An impairment loss is recognised in the income statement when the asset\u2019s carrying amount, or the net invested capital of the CGU to which it belongs, is greater than its recoverable amount.
Impairment losses on CGUs are first taken as a reduction in the carrying amount of any allocated goodwill and then as a reduction in other assets allocated to the CGU on a pro rata basis. Except for goodwill, impairment losses may be reversed up to the recoverable amount or the original cost of the asset if there is an indication that the impairment loss no longer exists or when there is a change in the methods used to measure the recoverable amount.
Allowance for doubtful accounts
Trade receivables are initially recognised at fair value net of any losses relating to sums considered non-recoverable, for which specific provisions have been made in the allowance for doubtful accounts.
Credit losses are determined in application of IFRS 9 (a model based on expected credit losses). This requires the Company to assess expected credit losses, and the related changes, at each reporting date.
Specifically, the Company has applied the simplified approach permitted by IFRS 9 to trade receivables, in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Company has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
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Provisions for risks and charges
Provisions for risks and charges are allocated when a disbursement of cash, for an amount which can be reliably estimated, will be necessary to fulfil a legal or constructive obligation arising as a result of a past event.
Where the time value of money is significant, provisions are discounted using a rate that the Company believes to be appropriate (a rate is used gross of taxes, which reflects current market conditions and the specific risks connected with the liability). After initial recognition, the value of the provisions for risks and charges is updated to reflect the passage of time and any changes in the estimate changes in the estimate that result from alterations to the forecasted amounts, timing, and discount rates used. Any increase in provisions associated with the passage of time is recognised in the income statement under \u201cFinancial expenses\u201d.
Liabilities that can be associated with legal and tax disputes, early retirement incentives, urban and environmental restoration projects and other sundry charges are estimated by the Company. The measurement of provisions for legal disputes is based on the probability of incurring an expense, including through the use of external legal advisorssupporting the Company; the estimate of provisions to be set aside for urban and environmental restoration projects which are the offsets aimed at compensating for the environmental impact of the construction of new infrastructure, is based on an analysis of the agreements entered into with the local authorities concerned and the progress of work on construction of the new infrastructure.
Employee benefits
Post-employment benefits are defined on the basis of plans, even if not formalised, that are classified as either \u201cdefined benefit\u201d plans or \u201cdefined contribution\u201d plans depending on their nature.
The liability for employee benefits paid upon or following termination of employment in relation to defined benefit plans or other long-term benefits is recognised net of any plan assets and is measured on the basis of actuarial assumptions, estimating the amount of future benefits that employees have vested at the reporting date and is recognised on an accruals basis in line with the period of service necessary to obtain the benefit.
Changes in the value of the net liabilities (revaluations) deriving from actuarial gains or losses, resulting from changes in the actuarial assumptions used or adjustments based on experience, are recognised in other comprehensive income in the year in which they occur. If a plan is modified, curtailed or extinguished, the related effects are recognized in profit or loss.
Net financial expenses include the component of the return on plan assets and the interest cost to be recognised in profit or loss and are measured by multiplying the liabilities, net of any plan assets, by the discount rate applied to the liabilities; net interest on defined benefit plans is recognized in \u201cFinancial income/(expenses)\u201d.
The actuarial valuations used to quantify employee benefits (of all plans except termination benefits or TFR) were based on \u201cvested benefits\u201d, applying the projected unit credit method. These valuations are based on the following economic and demographic assumptions: the discount rate (used to determine the present value of the obligation, determined considering returns on high quality bonds in line with the duration of the group of workers measured), the inflation rate, the rate at which future salary levels are expected to rise, the rate of increase for average health reimbursements, rate of increase for electricity prices and demographic factors, such as mortality and invalidity, retirement, resignation, advances and household composition. The method of calculation used for TFR\u00a0consists of discounting to present value, at the measurement date, each estimated payment due to every employee, projected through to the estimated period in which the TFR\u00a0will be paid.
The Company\u2019s obligation under defined contribution plans, limited to the payment of contributions to the state or to a legally separate entity (a fund), is measured on the basis of the contributions payable. The cost of such plans is recognised in profit or loss based on the contribution paid during the period.
Macroeconomic environment
The Terna Group closely monitors the current macroeconomic environment and the recent international political events, particularly focusing on geopolitical developments, linked above all to the ongoing conflict in Ukraine and heightened tensions in the Middle East, and the relevant legislation.
In this respect, in its Public Statement of 25 October 2023, \u201cEuropean common enforcement priorities for 2023 financial reports\u201d, ESMA reinforced the message conveyed in its previous publications of 2021 and 2022, highlighting the need to ensure the correct degree of transparency in financial reporting in order to adequately reflect the current and, as fairly as possible, foreseeable impact of the macroeconomic situation and of the conflicts on entities\u2019 financial position, financial performance and cash flows.
The fall in inflation and reduced commodity price volatility, compared with the peaks seen in 2022, have brought a certain degree of stability to a macroeconomic scenario that, however, remains uncertain. In addition, economic growth has slowed and has been made more uncertain by the geopolitical situation, with future developments also dependent on the outcome of the upcoming elections in the United States. Against this backdrop, the Group continues to focus on capex delivery and implementing its Industrial Plan. To date, we are not aware of any circumstances requiring an in-depth assessment of the validity of application of the going concern basis.
This assumption is based on the fact that the largest part of the Group\u2019s income is represented by revenue generated by our Regulated Activities in Italy and that this revenue consists of remuneration to cover both operating and capitalexpenditure, with both components revised annually based on the performance of inflation and a deflator. In addition, the return on invested capital is based on a WACC that is periodically revised by ARERA to enable the parameters used in calculating the cost of equity and debt to be updated.
Assessment of the impact of the current macroeconomic environment and the ongoing conflicts has not, moreover, resulted in trigger events requiring the conduct of an impairment test of the value of the property, plant and equipment owned by the Group or of intangible assets with finite useful lives.
With regard to the recoverable amount of property, plant and equipment and intangible assets with finite useful lives forming part of the RAB (regulated asset base), the assessment of expected future cash flows generated by these assets has shown that the macroeconomic effects, including those resulting from the above conflicts, have not given rise to impacts constituting trigger events requiring the Group to test for impairment.
In addition, neither the impact of the changed macroeconomic environment, nor of the geopolitical crises, has resulted in an increase in credit risk and has not affected the outcome of the measurement of expected credit losses. The Group\u2019s trade receivables fall within the hold to collect business model, primarily fall due within 12 months and do not include a significant financial component. The effect of these events has not, therefore, had any impact, including with regard to the identified business model for financial instruments, thus avoiding any changes to the chosen classification.
In addition, fair value measurement of the financial assets and liabilities held by the Group has not undergone changes in terms of an increase in the related risks (market, liquidity and credit). Similarly, movements in the underlying assumptions have not altered the sensitivity analyses linked to their measurement.
In terms of recoverable amount, it should be noted that there has not been any deterioration in 2023 in the receivables due from the Group\u2019s main counterparties (dispatching customers for injections or for withdrawals and distributors), considered solvent by the market and therefore assigned high credit ratings.
As described in more detail in the section, \u201cCredit risk\u201d, management of this risk is also driven by the provisions of ARERA Resolution 111/06, which introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. The assessment conducted has, moreover, not provided evidence of the need to modify the model used following an evaluation of the impact of the conflicts.
Terna is not exposed to any risk of greater contract expenses due to rising inflation or increased costs incurred as a result of rising commodity and energy prices and salaries, or to the possibility that, as an issuer of financial instruments, it is unable to pass such increases on by raising the prices of its own services or goods. This is because any price increases agreed by law are covered by tariff revisions, which envisage adjustments for inflation, and its capex is recognised in full in the RAB.
It should, moreover, be noted that Terna S.p.A. and its subsidiaries do not have offices or significant operations in the regions affected by the conflicts.
Climate change
Awareness of the progress of climate change and its effects has led to a growing need to provide disclosure in Report on Operations. Although there is no international accounting standard governing how the impact of climate change should be taken into account in the preparation of financial statements, the IASB has issued certain documents providing support for IFRS-adopters seeking to satisfy the demand for disclosure from interested parties. Similarly, ESMA, in its European Common Enforcement Priorities dated 25 October 2023, highlighted the need for issuers to consider climate risks when preparing their IFRS financial statements to the extent that such risks are material, regardless of whether or not this is explicitly required by the relevant accounting standards.
The Terna Group describes its considerations on the actions linked to the need to mitigate the impact of climate change primarily in the sections \u201cReference scenarios \u2013 The market environment\u201d and \u201cOpportunities and risks connected with climate change\u201d in the Report on Operations. In this context, as a TSO providing transmission and dispatching services, the Terna Group undoubtedly plays an active role in supporting the system in achieving the challenging targets linked to efforts to reduce CO2\u00a0emissions. Indeed, in addition to the emissions connected with electricity consumption, the most significant component relating to Terna\u2019s indirect emissions is linked to grid losses, which can also be associated with the indirect impact of the need to produce more energy. In themselves, a TSO\u2019s emissions (scopes 1 and 2 in the \u2018GHG emission protocol\u2019) are extremely modest when compared with thepotential system-level reduction resulting from the integration of renewable sources and electrification.The Group has chosen to report its considerations on climate change in a single note. The following is a summary of management\u2019s considerations on aspects deemed material.
IAS 1 \u2013 Presentation of Financial Statements
In the event of uncertainties, IAS 1 requires entities to analyse potential impacts in terms of the entity\u2019s ability to continue as a going concern and, with regard to the assumptions and estimates made in preparing the Annual Report. Entities are required to provide disclosure of the forward-looking estimates used and that have a significant risk of resulting in a material adjustment within the next financial year. As recommended by ESMA, which, as mentioned above, requires entities to take into account climate risks when preparing financial statements, disclosures are provided that, despite not being specifically required by IFRS, are relevant to an understanding of the financial statements.
In terms of the short term, management has not identified any specific effects of climate-related risks to be considered when applying the accounting standards.
With regard to the medium to long term, management has identified potential risks primarily linked to the Company\u2019s role as a TSO, deriving from the need to adapt the electricity grid in the form of work designed to boost resilience and allow it to handle the new profile and mix of the energy injected into the grid. However, as described in greater detail in the specific sections that follow, the steps planned with the aim of mitigating such risks do not require further consideration during application of the accounting standards used in preparation of these financial statements.
It should be noted, however, that assessment and, more specifically, quantification of climate-related risks generally requires the use of highly uncertain future-oriented assumptions, such as future technological and policy developments and Government measures.
IAS 16 \u2013 Property, Plant and Equipment
With specific regard to the grid and the related transmission service, the action plan requires a commitment to the planning, approval and delivery of investment projects related to work in response to current and future needs to integrate renewable sources, guarantee the reliability, security, adequacy and efficiency of the electricity system, such as, for example, cross-border interconnections and the development of infrastructure to enable the growing integration of renewable energy sources.
In addition, as described in the Group\u2019s Risk Framework, the Group is exposed to the risks linked to the increased intensity of weather events (tornados, heavy snowfall, ice, flooding) with a resulting impact on the continuity and quality of the service provided by Terna and/or damage to equipment, machinery, infrastructure and the grid. In response, the Group continues to carry out new investment designed to increase the resilience of the electricity grid and identify mitigation strategies.
In line with our role in driving the country\u2019s energy transition, Terna\u2019s strategic plans, further described in the section, \u201cThe value creation strategy\u201d in the Annual Report \u2013 Integrated Report 2023, include action to tackle climate change, identifying:
\u2022 the works needed to develop and strengthen the electricity grid in the ten-year Development Plan, including overseas interconnections, to ensure the integration of renewable sources;
\u2022 tools to ensure the security and reliability of the electricity system in the Security Plan, in a scenario where renewable sources are increasingly more widespread and thermoelectric plants are decommissioned, resulting in issues relating to system inertia and voltage regulation;
\u2022 the works needed to improve the reliability of electricity assets in the Maintenance and Renewal Plan for electricity assets, which involves the preventive identification and resolution of initial signs of an issue that could lead to a malfunction.
Common to all these plans is the Resilience Plan, annexed to the Security Plan, which includes all the initiatives designed to increase grid resilience to enable it to withstand increasingly intense and frequent severe weather events, damaging infrastructure and resulting in outages at plants connected to the NTG. The Resilience Plan involves a preventive approach to managing infrastructure, using capital light technological solutions to mitigate the risks to which the grid is exposed and solutions for repairing and monitoring the electricity system.This also involves the development of innovative technologies through structured collaborations with start-ups (\u201cOpen Innovation\u201d), designed to monitor weather events and increase NTG resilience.
Mitigating climate-related risk also involves the need to plan maintenance of NTG infrastructure to ensure quality of service, the security of the assets operated (power lines and electricity substations) and their ability to remain fully operational.
In addition to initiatives falling within the scope of the Group\u2019s routine maintenance programmes, in this regard, Terna is increasingly required to carry out work on the grid that calls for the replacement of specific components. Aside from renewing grid infrastructure, this enables the Company to mitigate the risk arising from the increased intensity and frequency of disruptive weather events. Management considers that this investment does not reduce or modify the expected economic benefits deriving from use of the existing grid accounted for in property, plant and equipment. In the light of the above, it has not been necessary to conduct a critical review of the useful lives of the fixed assets recognised in the financial statements.
The Group also considers that there may be a risk connected with the supply chain due to significant changes in the strategies of key suppliers. This risk is heightened by the crisis in the global supply chain following the pandemic and the above conflicts, the energy transition launched in many countries, with a potential impact on construction and maintenance projects, and a resulting impact on the continuity and quality of service and on the time needed to complete infrastructure. The Group constantly monitors developments in the supply chain and has not so far identified any critical issues.
IAS 38 \u2013 Intangible Assets
With regard to non-regulated activities, the Group is committed to developing innovative, digital technological solutions to support the ecological transition. These activities include the offerings of the Tamini Group and Brugg Cables Group, the subsidiaries that produce power transformers and terrestrial cables, respectively (industrial activities), involving the development of expertise throughout the value chain, and the offer of Energy Solutions and Connectivity. In addition, the Group is also committed to investing in digitalisation and innovation, involving the development of solutions for the remote control of electricity substations and key infrastructure. This involves the installation of sensor, monitoring and diagnostic systems, including predictive solutions, improving the security of the grid and the surrounding area.
The Group has also developed tools for studying and planning new works designed to respond to issues relating to climate change. Through its Resilience Methodology, as set out in Annex A76 to the Grid Code, Terna has equipped itself with a tool that makes the Group a leader in the conduct of climate-change assessments in Italy and Europe. This innovative and probabilistic tool for planning work will increase the resilience of the NTG. This involves measuring the related benefit in terms of reducing expected energy not supplied, above all due to ice, snow and strong winds.
To promote the spread of a well-informed energy culture and facilitate broad awareness of the issues faced by the electricity sector, in 2021, the Group developed a new Development Plan application and the digital platform called Terna4Green with a view to monitoring the progress made towards Italy\u2019s decarbonisation. Via these two new initiatives, Terna continues and strengthens its commitment to ever greater transparency and the spread of information and data, specific expertise and in-depth knowledge of the national electricity system.
In response to the risk linked to the greater intensity and frequency of extreme weather events (tornados, heavy snowfall, ice, flooding), the Group could also benefit from the \u201cPatentability\u201d of the above innovative solutions, with resulting non-regulated business opportunities.
Investment in research is expensed as incurred, whilst development costs that meet certain requirements may be recognised as intangible assets. Further information on the criteria used in the recognition of an intangible asset resulting from development work is provided in the paragraph, \u201cIntangible assets\u201d.
IAS 36 \u2013 Impairment of Assets
As indicated above with regard to property, plant and equipment, management has not identified factors requiring a critical review of useful lives. Similarly, with regard to the risk of impairment losses on property, plant and equipment, management considers that, whilst the steps taken to mitigate climate-related risk involve the need to planmaintenance work on NTG infrastructure, in keeping with the past, so as to ensure quality of service, the security of the assets operated (power lines and electricity substations) and their ability to remain fully operational, these activities do not, in any event, have a negative impact on the measurement of fair value less costs of disposal. This is because a market operator would take this investment into account as part of the fair value measurement process.
IFRS 9 \u2013 Financial Instruments
With regard to borrowings and bond issues, the Group has obtained certain bank borrowings containing ESG-linked conditions, entered into a commercial paper programme (short-term notes issued to qualified investors), enabling Terna to issue \u201cESG Notes\u201d, and issued a number of Green bonds, as described in greater detail in the section, \u201cSustainable finance\u201d. The ESG-linked bank borrowings (different from the Green Bond issues) include a bonus/penalty mechanism, applicable to the payment of accrued interest, linked to the achievement of specific environmental, social and governance (ESG) objectives. As a result of the above, the Group believes that there may be a risk, albeit not significant, connected with the achievement of such objectives. Failure to achieve the objectives within a contractually agreed date would result in a slight increase in the cost of debt. Nevertheless, the impact of this risk on financial expenses is entirely negligible. The Group constantly monitors activities relating to climate change and has not so far identified any critical issues.
IAS 37 - Provisions, Contingent Liabilities and Contingent Assets
The legislation introduced in response to climate change may give rise to new obligations that did not previously exist. In this regard, the Terna Group has introduced an environmental policy setting out its commitment to containing and reducing its environmental impact, in some cases going beyond legal requirements when this does not compromise the protection of other general interests provided for under the concession. Full implementation of this policy, which also covers efforts to reduce greenhouse gas emissions, also involved energy efficiency initiatives and the adoption of measures designed to protect biodiversity. Terna also extends the issue of environmental protection to both its supply chain and local stakeholders directly affected by NTG development projects, through increasingly eco-sustainable offsets. Given the regulatory framework, management does not believe that such policies give rise to the need to recognise liabilities not previous accounted for. The same conclusion has also been reached with regard to the previously mentioned risk linked to the supply chain due to significant changes in the strategies of key suppliers. As a result, it has not been necessary to carry out a critical review of provisions in the financial statements.
IFRS 15 \u2013 Revenue from Contracts with Customers
In terms of Regulated Activities, part of the remuneration for transmission and dispatching services derives from regulatory incentive mechanisms linked to specific targets. The achievement of these targets may be influenced by climate change risks, as for example the intensification of extreme weather events could have an impact on the continuity and quality of the service offered by Terna. The Group monitors these risks updating the estimates relating to these incentives.
With regard to Non-regulated Activities, above all Energy Solutions, given the portfolio of products and services offered to promote the development of renewable energy in Italy, for example through the construction and operation of photovoltaic plants, infrastructure connecting the photovoltaic plants to the grid and services offered to industrial clients, and with regard to the production of cables and transformers, the Group is not exposed to new uncertainties having an impact on the current revenue recognition model. In addition, the Group did not deem it necessary to conduct a review of existing contracts.
Climate change and the subsequent adoption of policies designed to reduce CO2\u00a0emissions and achieve Net Zero Emissions targets by most industrial clients could result in increased business opportunities.
IFRS 2 \u2013 Share-based Payments
The current long-term incentive plans, so called Performance Share Plans, are linked to a series of ESG indicators with a percentage weighting that rises over time.
The 2021-2025 plan consists of an indicator linked to Terna\u2019s annual inclusion and ranking in the Dow Jones Sustainability Index (DJSI-World)\u00a0with a weighting of 20%.
The ESG indicators for the 2022-2026 plan, with a higher 25% weighting than in the previous plan, include KPIs referring to inclusion in a basket of ESG indexes selected to represent the Group\u2019s ability to guarantee an all-round sustainability performance, including the Dow Jones Sustainability Index World, Stoxx ESG Leaders and the MIB 40 ESG. Inclusion is subject to the assessments conducted by the three rating agencies, S&P Global, Sustainalytics and Moody\u2019s ESG. An important part of these three assessments is explicitly linked to climate-related issues: specifically, to be included in the selected ESG indexes every year, and for the whole duration of the Performance Share Plan, performance and positioning in terms of, for example, climate strategy, the assessment and management of climate risks, cuts in greenhouse gas emissions and public disclosures on relevant metrics, are of great importance.
Finally, the Performance Share Plan 2023-2027 is linked to ESG indicators with an overall weighting of 30%, of which 15% relates to KPIs linked to inclusion in the above ESG basket and the remaining 15% to Overgeneration, representing the reduction in the modulation of generation from Non-Programmable Renewable Sources requested by Terna, due to the security requirements of the National Electricity System.
Bearing in mind the expected development of renewable generation capacity in the coming years, absent appropriate mitigation initiatives, overgeneration will become a growing issue, cancelling out (at least in part) the benefits of the energy transition.
Investments in subsidiaries and associates
Investments in subsidiaries are investments where Terna has the power to directly or indirectly govern the financial and operating policies of the investee so as to obtain benefits from its activities. Associates are investees over which Terna exercises significant influence.
In assessing whether or not Terna has control or significant influence, being the ability to participate in the determination of these companies\u2019 financial and operating policies, without having control or joint control, potential voting rights that are exercisable or convertible are also taken into account.
Investments in subsidiaries and associates are recognised at cost, written down in the event of an impairment loss. If the circumstances that gave rise to the impairment cease to exist, the value of the investment is restored to the extent of the impairment loss recognised and the reversal is recognised in the income statement.
In the event that the loss attributable to the Company exceeds the carrying amount of the equity interest, and the Company is required to meet the legal or constructive obligations of the investee or, in any case, to cover its losses, any excess is recognised in a specific provision.
Joint arrangements
Investments in joint arrangements, in which the Group exercises joint control with other entities, are recognised initially at cost and subsequently measured using the equity method. The Company recognises its share of the assets and liabilities attributable to joint arrangements in accordance with IFRS 11.
In assessing the existence of joint control, it is ascertained whether the parties are bound by a contractual agreement and whether this agreement attributes to the parties the joint control of the agreement itself. Joint control exists when an entity has control over an arrangement on a contractual basis, and only when decisions relating to the relevant activities require the unanimous consent of all parties that jointly control the arrangement.
Translation of foreign currency items
Terna\u2019s financial statements are prepared in euros, the Company\u2019s functional currency. In the financial statements, all transactions in currencies other than the functional currency are recognised at the exchange rate prevailing on the date of the transaction. Monetary assets and liabilities in currencies other than the functional currency are subsequently adjusted at the exchange rate prevailing at year end.Any translation differences are taken to the income statement. Non-monetary assets and liabilities in foreign currency stated at historical cost are converted at the exchange rate prevailing when the transaction was initially recognised. Non-monetary assets and liabilities in foreign currency stated at fair value are converted at the exchange rate prevailing when fair value was measured.
Property, plant and equipment
Property, plant and equipment is recognised at historical cost, including costs directly attributable to preparing the asset for its intended use. In the event of legal or constructive obligations, cost also includes the present value of the estimated cost of dismantling or removing the asset. The corresponding liability is recognised in provisions for risks and charges.
Penalties receivable from suppliers relating to the purchase or construction of an asset are accounted for as a direct reduction in the cost of the asset, unless the penalty is accounted for as a refund, or when the refunded costs are clearly identifiable and have been incurred due to a delay incurred by the purchaser, the compensation is payable regardless of delivery or otherwise of the asset and the agreement expressly provides for settlement of the claim to compensate for the loss of earnings resulting from the contract delays.
Borrowing costs directly attributable to the purchase, construction or production of an asset that qualify for capitalisation pursuant to IAS 23 are capitalised as part of the cost of the asset. Costs incurred after purchase are recognised as an increase in the carrying amount of the asset to which they relate if it is probable that the future benefits of that cost will flow to the Company, and if the cost can be reliably measured. All other costs are expensed as incurred.
Each element of an item of property, plant and equipment of material value, with respect to the total value of the item to which it belongs, is recognised and depreciated separately.
Property, plant and equipment is shown net of accumulated depreciation and any impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful economic life of the asset, which is reviewed annually, with revisions applied on a prospective basis. Depreciation of an asset begins when the asset becomes available for use.
Liabilities associated with items of property, plant and equipment are taken to a specific provision as a contra account of the related asset. The amount is taken to the income statement through the depreciation of the asset.
Property, plant and equipment is written off either at the time of disposal or when no future economic benefit is expected from their use or disposal. Any profit or loss, recognised in the income statement, is determined as the difference between the net proceeds deriving from disposal and the net carrying amount of the assets eliminated.
The main rates of depreciation, calculated on the basis of the useful lives of the relevant assets, are as follows:
Rates of Depreciation
Buildings - Civil and industrial buildings
2.50%
Plant and equipment - Transmission lines
2.22%
Plant and equipment - Transformer substations:
\u00a0
- Electrical machinery
2.38%
- Electrical devices and equipment
3.13%
- Automation and control systems
6.70%
Plant and equipment - Central systems for remote management and control:
\u00a0
- Devices, electrical equipment and ancillary plant
5.00%
- Computers
10.00%
Land, regardless of whether it is free of constructions or related to civil and industrial buildings, is not depreciated, since it has an indefinite useful life.
This asset class also includes right-of-use assets, recognised under IFRS 16, arising from lease arrangements where the Company is lessee and relating to the use of property, plant and equipment. A lease arrangement is, or contains, a lease, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Applying this standard, the lessee recognises: (i) a right-of-use asset in its statement of financial position and a liability representing its obligation to make the payments provided for under the arrangement, for all leases with terms in excess of twelve months where the asset cannot be considered of low value (Terna has elected to apply the practical expedient provided for in the standard, recognising payments relating to arrangements that do not fall within the scope of this type of lease in the income statement); (ii) depreciation of the recognised assets and interest expense on the lease liability separately in the income statement.In determining the lease term, the Company considers the non-cancellable period of the lease and the additional periods resulting from any options to extend the lease, or from the decision not to exercise the option to terminate the lease early (where there is reasonable certainty that such options will be exercised).
The lease liability is initially recognised at the present value of the remaining lease payments at the commencement date: (i) fixed payments; (ii) variable lease payments that depend on an index or a rate; (iii) amounts expected to be payable by the lessee under residual value guarantees; (iv) the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and finally (v) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The present value of the payments is determined using a discount rate equal to the Company\u2019s incremental borrowing rate, bearing in mind the frequency and duration of the payments provided for in the lease contract.
Following initial recognition, the lease liability is accounted for at amortised cost and remeasured, with a matching change in the value of the related right-of-use asset, when there is a change in future lease payments as a result of: (i) a renegotiation of the contract; (ii) changes in the index or rate; or (iii) changes in the assessment of whether or not the options contained in the contract will be exercised (e.g., the purchase of the leased asset, extension or termination of the lease). The right-of-use asset is initially recognised at cost, measured as the sun of the following components: (i) the amount of the initial measurement of the lease liability; (ii) any initial direct costs incurred by the lessee; (iii) any lease payments made at or before the commencement date, less any lease incentives received; and (iv) an estimate of costs to be incurred by the lessee in dismantling and removing the underlying asset, restoring the site on which it is located (or restoring the underlying asset to the condition required by the terms and conditions of the lease). Following initial recognition, the right-of-use asset is adjusted to take into account (i) any accumulated depreciation, (ii) any accumulated impairment losses, and (iii) the effects of any remeasurement of the lease liability.
Intangible assets
Intangible assets, which all have finite useful lives, are recognised at cost, and shown net of accumulated amortisation and any impairment losses. Amortisation begins when the asset becomes available for use and is calculated on a straight-line basis over the estimated useful life of the related asset, which is reviewed annually. Any revisions to estimated figures are applied on a prospective basis.
Intangible assets essentially consist of the concession to exclusively provide electricity transmission and dispatching services, granted to Terna S.p.A., on 1 November 2005, with the acquisition of the TSO business unit. As established in the Decree issued by the Ministry of Productive Activities on 20 April 2005, this concession has a 25-year term, renewable for another 25 years, from the date of effective transfer of the activities, functions, assets and legal arrangements of the concession from GSE (formerly GRTN) to Terna S.p.A.. This intangible asset was initially recognised at cost, which reflected fair value.
Other intangible assets essentially refer to software developments and upgrades with a useful life of three years.
Development costs are capitalised by the Company only if they can be reliably estimated and there is the technical possibility and intention to complete the intangible asset so that it will be available for use, and the asset can be used and it is possible to demonstrate that it will generate probable future economic benefits.
Financial expenses directly attributable to the acquisition, design or production of a non-current asset which justifies capitalisation pursuant to IAS 23 are capitalised to the asset as part of its cost.
All other development costs and research expenses are recognised in the income statement when incurred. These intangible assets are amortised over their estimated residual useful life, which is normally three years, given their rapid obsolescence.
Infrastructure rights
Infrastructure includes the property, plant and equipment and intangible assets employed in dispatching activities in Italy. These activities are carried out under concession arrangements, which fall within the scope of application of IFRIC 12, since the services provided are regulated and control exists over the residual interest. More specifically, infrastructure rights have been recognised as an intangible asset, as valued on the basis of the Intangible Asset model, given the return generated by dispatching activities thanks to the charges paid by users. These assets have a useful life of three years.
The revenue and costs relating to investment in dispatching activities are recognised with reference to the contracts concerned on a stage-of-completion basis; revenue recognised during the construction phase is limited to the amount of the internal and external construction costs incurred, considering that the fair value of the construction services is equivalent to the construction cost paid to third-party contractors plus the internal cost of the technical personnel employed on such construction activities. The assets continue to be amortised and depreciated in accordance with the initial schedule.
By contrast, dispatching revenue continues to be recognised in accordance with IFRS 15 and financial expenses continue to be capitalised pursuant to IAS 23.
IFRIC 12, instead, is not applicable to the part of the Parent Company\u2019s concession arrangement relating to transmission activities, since neither the concession nor the related legislation envisages that ownership of the NTG is to be restored to the public grantor, even for a consideration.
Goodwill
Goodwill, deriving from the acquisition of subsidiaries, is allocated to each of the cash generating units (CGU) identified, corresponding with Terna S.p.A.\u2019s regulated activities. Goodwill is not amortised after initial recognition but is adjusted to reflect impairment losses, measured as described above. Goodwill relating to investments in associates and joint ventures is included in the carrying amount of those companies. Where negative goodwill arises, it is recognised in the income statement at the time of acquisition.
Financial instruments
Financial assets
IFRS 9 \u2013 Financial Instruments, effective from 1 January 2018, is divided into the following phases: classification and measurement, derecognition, impairment and hedge accounting.
In order to classify and measure financial instruments, the Company recognises financial assets at fair value inclusive of transaction costs.
Financial assets represented by debt instruments, falling within the scope of application of the standard, may be measured at amortised cost, at fair value through other comprehensive income or at fair value through profit or loss, depending on the business model adopted to manage the financial assets and the characteristics of the contractual cash flows.
In accordance with the provisions of IFRS 9, the Company correctly classifies these assets based on the results of co-called SSPI (\u201csolely payments of principal and interest\u201d) tests. Under this test, assets may be recognised at amortised cost or fair value through other comprehensive income if they generate cash flows that are solely payments of principal and interest on the principal amount outstanding. This measurement is applied at the level of each individual instrument.
Specifically, the Company measures financial assets:
\u2022 at amortised cost, if the financial asset is held with the aim of collecting the contractual cash flows that meet the SPPI test, as the cash flows represent solely payments of principal and interest;
\u2022 at fair value through other comprehensive income (\u201cFVOCI\u201d), if the financial asset is held within a business model whose objective is achieved by collecting the contractual cash flows and by selling the financial asset, and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Changes in fair value after initial recognition are recognised in other comprehensive income and recycled through profit or loss on derecognition. The government securities held by the Parent Company are included in this category;
\u2022 at fair value through profit or loss (\u201cFVTPL\u201d), of the asset is not held in one of the above business models. This category primarily includes derivative financial instruments held for trading and debt instruments with contractual cash flows that are not solely payments of capital and interest.Trade receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost, using the effective interest method. Receivables with due dates that reflect normal commercial terms are not discounted.
In accordance with the provisions of IFRS 9, the Company\u2019s trade receivables fall within the hold to collect business model, as these assets are held with the objective of collecting the cash flows primarily by collecting the contractual cash flows, the receivables primarily fall due within 12 months and do not include a significant financial component, and the Company does not intend to sell such receivables.
Trade receivables are recognised net of any losses recognised in a specific allowance for doubtful accounts (identified on the basis described in the paragraph, \u201cAllowance for doubtful accounts\u201d). The new standard, IFRS 9, has introduced application of a model based on expected credit losses. This requires the Company to assess expected credit losses, and the related changes, at each reporting date. Specifically, the Company has applied the simplified approach permitted by IFRS 9 to trade receivables, finance lease receivables and assets deriving from contracts with customers, in order to measure the allowance for doubtful accounts based on expected losses over the life of the receivable. The Company has thus determined the amount of expected credit losses using a provisioning matrix, based on information regarding historical credit losses for similar past due exposures, adjusted to take into account current conditions and forward-looking elements.
Cash and cash equivalents
Cash and cash equivalents are recognised at nominal value and include amounts that are available on demand or can be readily converted into a known amount of cash and are subject to an insignificant risk of changes in value.
Trade payables
Trade payables are initially recognised at fair value and subsequently stated at amortised cost. If their due dates reflect normal commercial terms, they are not discounted.
Financial liabilities
Financial liabilities are recognised at the settlement date and measured at fair value, net of directly related transaction costs. Subsequently, financial liabilities are measured at amortised cost, using the original effective interest method. If the liabilities are covered by fair value hedges, they are adjusted to reflect changes in fair value with respect to the hedged risk.
Subsequent measurement of financial liabilities depends on their classification as financial liabilities at amortised cost and at fair value through profit or loss.
Derivative financial instruments
Derivatives are recognised at fair value at the trade date.
The qualifying criteria applied in classifying derivatives as eligible for hedge accounting are as follows:
\u2022 the hedging relationship consists only of eligible hedging instruments and eligible hedged items;
\u2022 at the inception of the hedging relationship there is formal designation and documentation of the hedging relationship and the entity\u2019s risk management objective and strategy for undertaking the hedge. That documentation shall include identification of the hedging instrument, the hedged item, the nature of the risk being hedged and how the entity will assess whether the hedging relationship meets the hedge effectiveness requirements (including its analysis of the sources of hedge ineffectiveness and how it determines the hedge ratio);
\u2022 the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the entity actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.
The Company discontinues hedge accounting prospectively only when the hedging relationship (or a part of a hedging relationship) ceases to meet the qualifying criteria. This includes instances when the hedging instrument expires or is sold, terminated or exercised. For this purpose, the replacement or rollover of a hedging instrument into another hedging instrument is not an expiration or termination if such a replacement or rollover is part of, and consistent with, the entity\u2019s documented risk management objective.
\u2022 fair value hedges when the hedge regards the exposure to changes in the fair value of the recognised asset or liability or there is an unrecognised firm commitment;
\u2022 cash flow hedges when the hedge regards the exposure to variability in cash flows that is attributable to a particular risk associated with all of the recognised asset or liability or a highly probable forecast transaction or the exchange rate risk on an unrecognised firm commitment;
\u2022 the hedge of a net investment in a foreign operation.
When derivatives cover the risk of changes in the cash flows of the hedged instruments (cash flow hedges), the portion of changes in the fair value qualifying as effective is initially recognised in \u201cOther comprehensive income\u201d (accumulated in equity) and subsequently in profit or loss, as the cash flows from the hedged item affects profit or loss. The portion of the fair value of the hedging instrument that does not qualify as effective is recognised in profit or loss.
When hedging derivatives cover the risk of changes in the fair value of hedged instruments (fair value hedges), they are recognised at fair value in profit or loss. Accordingly, the hedged items are adjusted to reflect changes in the fair value associated with the hedged risk.
Changes in the fair value of derivatives that do not meet hedge accounting requirements in accordance with IFRS are recognised in profit or loss.
Fair value is measured on the basis of official quotations for instruments traded in regulated markets. The fair value of instruments not traded in regulated markets is measured by discounting projected cash flows along a yield curve prevailing in the market at the reporting date, and by translating amounts in currencies other than the euro at closing exchange rates.
Financial and non- financial contracts (which are not already measured at fair value) are also analysed to identify any embedded derivatives, which must be separated and measured at fair value.
This analysis is conducted at the time the entity becomes party to the contract or when the contract is renegotiated in a manner that produces a material change in the original associated cash flows.
Hybrid bonds
Issues of non-convertible, perpetual hybrid bonds are classified as equity instruments. These are in fact instruments that allow Terna to defer coupon payments over time and whose early redemption is permitted on the occurrence of certain events or at the reset date. These instruments cannot be converted into shares and, in the event of the Company\u2019s liquidation, winding up or insolvency, interest payments are subordinated to all the issuer\u2019s other payment obligations.
The proceeds received from the sale of the instruments and subsequent returns of capital are accounted for as an increase or a reduction in equity, respectively, in compliance with the requirements applicable to equity instruments in IAS 32. Interest expense, at the time the payment obligation arises, is recognised as a reduction in equity.
Employee benefits
The liability associated with employee benefits payable on or after termination of employment relate to defined benefit plans (deferred compensation benefits, additional months\u2019 pay, payment in lieu of notice, energy discounts, ASEM health cover and other benefits) or with other long-term employee benefits (loyalty bonuses) is recognised net of any plan assets. The liability is measured separately for each plan on the basis of actuarial calculations that estimate the amount of vested future benefits that employees have accrued at the reporting date. The liability is recognised on an accruals basis over the vesting period and is measured by independent actuaries.Share-based payments
Given that they are substantially a form of remuneration, personnel expenses include the cost of share-based incentive plans. The cost of the incentive is measured on the basis of the fair value of the equity instruments granted and the expected number of shares to be effectively awarded. The accrued amount for the period is determined on a straight-line basis over the vesting period, being the period between the grant date and the date of the award. The fair value of the shares underlying the incentive plan is measured at the grant date, based on the expected satisfaction of the performance conditions associated with market conditions and is not subject to adjustment in future periods. When receipt of the benefit is linked to non-market conditions, the estimate relating to these conditions is reflected and the accrual\u2019s number of shares expected to be awarded is adjusted over the vesting period. If, at the end of the vesting period, the plan does not result in the award of any shares to beneficiaries due to the failure to satisfy the performance conditions, the portion of the cost linked to market conditions is not reversed through the income statement.
Provisions for risks and charges
Provisions set aside for risks and charges are recognised when, at the reporting date, the Company has a legal or constructive obligation as the result of a past event and it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the disbursement. Where the effect is material, provisions are made by discounting estimated future cash flows using a discount rate that reflects current market rates and the specific risk applicable to the obligation, if any. Where discounting is used, the increase in the provisions due to the passage of time is recognised in the income statement as a financial expense. If it relates to property, plant and equipment (site disposal and restoration, for example), the provision is recognised as a contra entry to the asset to which it relates. The expense is recognised in the income statement through depreciation of the item of property, plant and equipment to which it relates.
Changes in the estimates are recognised in the income statement for the year in which the change occurs, except for the expected costs of dismantling, removal and restoration resulting from changes in the timing and use of the economic resources necessary to extinguish the obligation or are attributable to a material change in the discount rate. These costs are recognised as an increase or reduction in the related assets and recognised in the income statement through depreciation.
Government grants
Government grants are recognised when there is a reasonable certainty that they will be received and that the Company will comply with all the conditions required for disbursement. Grants received in relation to specific assets whose value is recognised under non-current assets are recognised, in the case of plant already in operation at 31 December 2002, among other liabilities and taken to the income statement over the depreciation period for the assets in question. As of the 2003 financial year, grants related to new plant entering service are recognised as a direct reduction in the non-current asset concerned. Grants related to income are recognised in the income statement when the conditions for recognition are met.
Revenue
The Company\u2019s revenue can be categorised as follows:
\u2022 Revenue from sales and services, including revenue from contracts with customers and therefore falling within the scope of IFRS 15. In accordance with the provisions of IFRS 15, revenue from contracts with customers is recognised when the performance obligations identified in the contract are satisfied and control over the goods or services is transferred to the customer for an amount that reflects the consideration that the Company expects to receive in exchange for the goods or services. The standard envisages two methods for identifying the correct time at which to recognise the revenue attributable to each performance obligation: at contract inception, the Company determines if the goods or services covered by the performance obligation will be transferred to the customer over a period of time or at a point in time:
- Revenue from the sale of goods is recognised when control of the goods is transferred to the customer (at a point in time). The Company determines if there are other promises in the contract representing a performance obligation to which a part of the transaction consideration must be allocated. In determining the sale price, the Company takes into account the effects of a variable consideration, significant financial components, non-monetary components and amounts to be paid to the customer (if present);
- Revenue from services is recognised with reference to the stage of completion of the activity, in accordance with the provisions of IFRS 15 (over a period of time).
Revenue from sales and services also includes \u201cpass-through\u201d revenue and expenses originating from the purchase and sale of energy from and to electricity market operators. The regulatory framework requires that such expenses and revenue must always amount to zero, via a pro rata charge to each consumer for the net cost resulting from the measurement of imbalances and purchase and sale transactions, carried out by Terna on the Dispatching Services Market, through a specific fee known as an uplift payment. Terna receives compensation for this activity through specific revenue for providing the dispatching service. Given that Terna does not have the power to set the prices of DSM transactions, this revenue is presented net of the related costs.
Revenue from sales and services also includes output-based incentives, as defined by ARERA, for both transmission and dispatching activities. The incentive mechanisms fall within the scope of application of IFRS 15. If the counterparties through which Terna collects an incentive are not active in the market in the year in which achievement of the targets underlying the incentive scheme is confirmed, IFRS 15 is applied in accordance with the analogy-based approach provided for in IAS 8, as confirmed with reference to the Conceptual Framework for Financial Reporting.
If the mechanism includes a significant financial component, the amounts recognised in the financial statements are discounted to present value. Based on the specific nature of each mechanism, the Group assesses whether the performance obligation is satisfied over a period of time or at a point in time, also taking into account whether or not the right is subject to confirmation or verification by the regulator, ARERA.
\u2022 Other revenue and income, which includes revenue from lease arrangements and other residual forms of revenue, included within the scope of application of IFRS 15, deriving from sales of goods not forming part of the Company\u2019s ordinary activities.
Costs
Costs are recognised on an accruals basis. They are recognised in the accounting period when they relate to goods and services sold or consumed in the same period or are allocated in a systematic way when it is not possible to identify a future use for them.
Financial income and expenses
Financial expenses directly attributable to the acquisition, construction or production of an asset that qualify for capitalisation are capitalised as part of the cost of the asset. The property, plant and equipment and intangible assets involved are those that require at least one year in order to prepare them for use. The directly attributable financial expenses are expenses that would not have been incurred had the expenditure for the asset not been incurred.
Where funds are borrowed specifically, the costs eligible for capitalisation are the actual costs incurred less any income earned on the temporary investment of such borrowings. Where loans are obtained for general purposes, the eligible amount is determined by applying a capitalisation rate to the expenditure on that asset equal to the weighted average of the financial expenses applicable to the borrowings outstanding for the year, excluding any specifically borrowed funds. The amount of capitalised financial expenses during a year will in any case not exceed the amount of financial expenses incurred during that year.
Capitalisation commences as from the date all the following conditions are first met: (a) expenditure has been incurred for the asset; (b) financial expenses have been incurred; and (c) the activities involved in preparing the asset for itsintended use or sale are in progress.\nCapitalisation ceases when the activities involved in preparing the asset for its intended use or sale are substantially complete.
The average capitalisation rate used for 2023 is approximately 2.0% (1.3% for 2022).
Financial income and expenses other than capitalised amounts are recognised on an accruals basis in respect of the interest on the net value of the related financial assets and liabilities, using the effective interest rate.
Treasury shares
Treasury shares, including those held to service share-based incentive plans, are recognised at cost and accounted for as a reduction in equity. Any gains or losses resulting from the later sale of such shares are recognised in equity.
Dividends
Dividends from investees are recognised when the shareholders\u2019 right to receive payment is established. Dividends and interim dividends payable to shareholders are shown as changes in equity at the date in which they are approved by the General Meeting of shareholders and the Board of Directors, respectively.
Income taxes
Current income taxes are recognised as \u201cTax liabilities\u201d, net of advances paid, or \u201cTax assets\u201d where the net balance of the items is positive. They are based on the estimated taxable income and in accordance with current legislation, taking account of applicable exemptions.
Deferred tax assets and liabilities are calculated on temporary differences between the carrying amounts of assets and liabilities recognised in the separate financial statements and the corresponding amounts recognised for tax purposes, using current tax rates or the rates expected to be in effect when the temporary differences reverse, based on rates approved at the reporting date.
Deferred tax assets are recognised when their recovery is considered probable, i.e. when future taxable income will be available against which the asset can be used. The recoverability of deferred tax assets is reviewed at the end of each year.
Deferred tax liabilities are recognised in any case if they exist. Taxes relating to items recognised directly in the income statement are also allocated to the income statement.
Discontinued operations and assets held for sale
Where the carrying amount of non-current assets (or disposal groups) is to be recovered primarily through sale rather than through continued use, these items are classified as held for sale and shown separately from other assets and liabilities in the statement of financial position. Non-current assets (or disposal groups) classified as held for sale are initially recognised under the specific IFRS/IAS applicable to each asset and liability and subsequently accounted for at the lower of the carrying amount and fair value less costs to sell. The carrying amounts of each asset and liability not falling within the scope of application of the measurement criteria provided for in IFRS 5, but that are held for sale, are remeasured in accordance with the applicable IFRS before remeasurement of the fair value less costs to sell. Any subsequent impairment losses are recognised directly as an adjustment to non-current assets (or disposal groups) classified as held for sale with a matching entry in profit or loss. The matching amounts for the previous year are not reclassified. A discontinued operation is a component of an entity that either has been disposed of or is classified as held for sale, represents a major line of business or geographical area of operations, is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or, finally, is an investment acquired exclusively with a view to resale.
New accounting standards
International financial reporting standards effective as of 1 January 2023
A number of new amendments to standards already applied, none of which have had a significant impact, came into effect from 1 January 2023. The relevant standards are as follows:
IFRS 17: Insurance contracts
The new accounting standard for insurance contracts, endorsed by the European Commission with Regulation 2021/2036, has replaced the interim version of IFRS 4. The standard aims to ensure that an entity provides pertinent information providing an accurate view of the rights and obligations resulting from the insurance contracts issued. The IASB has developed the standard to remove inconsistencies and weaknesses in existing accounting policies, providing a single principle-based framework that takes into account all types of insurance contracts, including any reinsurance contracts to which an insurance undertaking is party. The new standard also introduces presentation and disclosure requirements to improve comparability between entities belonging to this sector.
The new standard has not had a significant impact on the Company\u2019s financial statements.
Regulation 2022/1491 also endorsed the amendment that aims to avoid temporary accounting mismatches between financial assets and insurance contract liabilities, therefore improving the usefulness of comparative information for users of financial statements.
Amendment to IAS 12: Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendment, endorsed by the European Commission with Regulation 2022/1329, clarifies how to account for deferred tax on certain transactions that can generate assets and liabilities of equal amounts, such as leasing and decommissioning obligations. The amendment has not had a significant impact on the Company\u2019s financial statements.
Amendments to IAS 1 e IAS 8: Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2 and Definition of Accounting Estimates \u2013 Amendments to IAS 8
The amendment, endorsed by the European Commission with Regulation 2021/2036, introduces changes to IAS 1 Presentation of financial statements and IAS 8 Accounting standards, and changes to the treatment of accounting estimates and errors. These amendments aim to improve the disclosure of accounting policies in order to provide more useful information for investors and other primary users of financial statements and to help companies to distinguish changes in accounting estimates from changes in accounting policy.
The changes have not had a significant impact on the Company\u2019s financial statements.
Amendment to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules
Directive 2022/2523 \u2013 based on the paper, \u201cTax Challenges Arising from the Digitalisation of the Economy- Global Anti-Base Erosion Model Rules (Pillar Two)\u201d issued by the OECD on 14 December 2021 - has introduced a minimum effective corporate tax rate of 15% for Italian and multinational groups in each jurisdiction in which they operate, providing for the application of a top-up tax in cases where a country\u2019s effective tax rate, with the adjustments provided for in the application rules, is below the minimum rate of 15%. This legislation was transposed into domestic law in Legislative Decree 209 of 27 December 2023 (\u201cPillar II\u201d or \u201cglobal minimum tax\u201d) with effect from the 2024 tax year.
In this regard, the Terna Group (classed as a Minority-Owned Parent Entity (\u201cMOPE\u201d), for the purposes of the relevant legislation), in coordination with the parent, CDP, took part in a specific project in 2023, with the support of a leading advisor, with the aim of: i) mapping relevant entities for the purposes of Pillar II; ii) gathering the information necessary to determine the Transitional Country-by-Country Safe Harbor; iii) gathering the information needed to calculate Globe Income and Adjusted Covered Taxes, necessary to compute the minimum rate of 15%; iv) preparing the Gap Analysis. These activities were conducted with reference to the 2022 tax year.
On 23 May 2023, the IASB published an amendment called \u201cAmendments to IAS 12 Income taxes: International Tax Reform \u2013 Pillar Two Model Rules\u201d. The document, which was adopted by the EU on 8 November 2023, introduces a temporary exception to the requirements in IAS 12 to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes and imposes specific disclosure requirements for entities affected by the related International Tax Reform. The document provides for immediate application of the temporary exception, whilst the disclosure requirements will only be applicable in annual reporting periods starting from 1 January 2023 (or a later date).
Following the analysis carried out with respect to 2022, based on the information currently available, it is not expected that will be a significant impact on the Company.
International financial reporting standards, amendments and interpretations endorsed but yet to come into effect
Amendment to IAS 1: Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Noncurrent - Deferral of Effective Date e Non-current Liabilities with Covenants
On 23 January 2020, the IASB published an amendment called \u201cAmendments to IAS 1 : Presentation of Financial Statements: Classification of Liabilities as Current or Non-current\u201d and, on 31 October 2022, published an amendment called \u201cAmendments to IAS 1 : Presentation of Financial Statements: Non-Current Liabilities with Covenants\u201d. These amendments aim to clarify how to classify payables and other short- or long-term liabilities. In addition, the amendments also improve the disclosures that an entity must provide when its right to defer the settlement of a liability for at least twelve months is subject to compliance with specified conditions (i.e., covenants). The amendments are effective from 1 January 2024, although early adoption is permitted. The Company is currently assessing the potential impact of the introduction of these amendments on the financial statements.
Amendment to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
On 22 September 2022, the IASB published the amendment called \u201cAmendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback\u201d. The document requires the seller-lessee to measure the lease liability resulting from a sale and leaseback transaction in such a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The amendments are effective from 1 January 2024, although early adoption is permitted. The Company is currently assessing the potential impact of the introduction of these amendments on the consolidated financial statements.
International financial reporting standards, amendments and interpretations awaiting endorsement
For newly-issued amendments, standards and interpretations that have not yet been endorsed by the EU, but which address issues that affect or could affect the Terna Group, assessments are currently being conducted of the possible impact of their application on the financial statements, taking into account the date on which they will take effect. In particular:
Amendment to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements
On 25 May 2023, the IASB published the amendment to IAS 7 that aims to add disclosure requirements and \u201csign-posts\u201d within existing disclosure requirements, requesting entities to provide qualitative and quantitative information about supplier finance arrangements. The document requires an entity to provide additional disclosures on any reverse factoring agreements to enable users of financial statements to assess how supplier finance arrangements affect an entity\u2019s liabilities and cash flows and understand the effect of supplier finance arrangements on an entity\u2019s exposure to liquidity risk. The amendments are effective from 1 January 2024, although early adoption is permitted.
Amendment to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability
The amendment, published on 15 August 2023, clarifies when a currency is exchangeable, how to estimate the exchange rate and the disclosure to provide in the notes to financial statements. The document requires an entity to apply a method on a consistent basis to determine if a currency is exchangeable and, when this is not possible, specifies how to determine the exchange rate to use and the disclosure to provide in the notes to the financial statements. The amendment is effective from 1 January 2025, although early adoption is permitted.
B. Notes to the income statement
Revenue
1. Revenue from sales and services - \u20ac2,567.3 million
(\u20ac/m)
\u00a0
2023
2022
Change
Transmission charges billed to grid users and incentives
1,955.6
1,823.8
131.8
Dispatching and metering fees and other energy-related revenue
127.1
115.3
11.8
Incentives for dispatching activities
303.8
334.7
(30.9)
Revenue from services performed under concession
80.6
67.4
13.2
Quality of service bonuses/(penalties)
11.2
23.2
(12.0)
Other sales and services
89.0
95.3
(6.3)
TOTAL
2,567.3
2,459.7
107.6
Transmission charges and incentives
This item, amounting to \u20ac1,955.6 million, includes revenue from the core business relating to the allowed return due to the Company for use of the National Transmission Grid.
The increase in the item (up \u20ac131.8 million) primarily reflects the increase in the RAB in the period after the volume effect (up \u20ac84.4 million) and an increase in output-based incentives related to the delivery of additional transmission capacity between market areas, amounting to \u20ac34.5 million for the amount due as a bonus in accordance with Resolution 23/2022 and \u20ac12.9 million for the bonus awarded for the efficiency of capital expenditure in 2022, pursuant to Resolution 473/2023.
Dispatching and metering fees and other energy-related revenue
This item regards fees received in return for providing dispatching and metering services (the dispatching component, amounting to \u20ac124.2 million, and the metering component, amounting to \u20ac0.6 million) and other energy-related revenue of \u20ac2.3 million.
The item is up \u20ac11.8 million compared with the previous year, broadly due to the increase in dispatching fees introduced by Resolution 738/2022.
Incentives for dispatching activities
This item represents the output-based incentives for dispatching activities, amounting to \u20ac303.8 million.
These incentives essentially consist of the mechanisms introduced by Resolutions 597/2021 and 132/2022, designed to cut DSM costs, the shortfall in wind production and essential plants (\u20ac302.6 million, representing the accrued present value of the estimated incentive for the period 2022-2024, amounting to \u20ac813.7 million before the effect of discounting).
With reference to the mechanism introduced by Resolution 597/2021, revenue for 2023 corresponds with the overall accrued value of the estimated incentive for the three-year period, thus also incorporating the projection of factors that could result in a reduction in the incentive for 2024 due to a partial increase in DSM costs associated with a higher volume of market transactions in the event of critical situations for the adequacy of the system, tensions on overseas markets and /or extreme weather events for factors not mitigated by the calculation rules. This item is down \u20ac30.9 million compared with the previous year, broadly due to the recognition in 2022 of the incentive for grid development work in the three-year period 2019-2021 designed to relieve congestion within market areas and grid constraints due to voltage regulation and improve conditions for essential service provision (a reduction of \u20ac140.5 million, Resolution 26/2023). On the other hand, in 2023, recognition of the revenue from the mechanism designed to reduce the cost of procuring services on the DSM, the shortfall in wind production and essential services (pursuant to Resolutions 597/2021 and 132/022) resulted in an increase of \u20ac108.4 million, following an update in the overall performance estimates for the three-year period 2022-2024.
Revenue from services performed under concession
This item includes revenue from infrastructure construction and upgrade services performed under concession, recognised in application of IFRIC 12, amounting to \u20ac80.6 million.
The increase compared with the previous year, amounting to \u20ac13.2 million, regards greater investment in dispatching infrastructure during the period.
Quality of service
This item, amounting to \u20ac11.2 million, regards the RENS (Regulated Energy Not Supplied) incentive mechanism introduced by Resolution 653/2015/r/eel, calculated on a pro rata basis taking into account the estimated overall results expected in the 2020-2025 regulatory period, taking into account the extension of the regulatory period confirmed by Resolution 55/2024/r/eel.
The decrease of \u20ac12.0 million in this item compared with the previous year is broadly due to the impact of the above extension, considering the performance in 2023.
Other sales and service
The item, \u201cOther sales and services\u201d, amounting to \u20ac89 million mainly regards revenue from administrative, support and consultancy services provided to subsidiaries (\u20ac26.3 million, including \u20ac20.4 million from services rendered to Terna Rete Italia S.p.A.), from connections to the NTG (\u20ac10.8 million) and from Non-regulated Activities (\u20ac51.8 million), primarily support and housing services for fibre networks (\u20ac23.8 million) and progress on construction of the private Italy-Austria interconnector (\u20ac11.1 million).
The decrease of \u20ac6.3 million compared with the previous year is primarily due to a reduction in revenue reflecting the state of progress of work on the private Italy-Austria interconnector (down \u20ac14.1 million), partially offset by an increase in revenue from the Connectivity services provided by the Non-regulated business (up \u20ac2.7 million), from connections to the NTG (up \u20ac2.1 million), from the O&M services provided under the Sacoi contract (up \u20ac1.2 million) and from subsidiaries (up \u20ac1.3 million), primarily due to administrative services following changes to the range of activities carried out, as well as other non-recurring items.
Pass-through revenue/expenses
This item regards \u201cpass-through\u201d revenue and expenses (the balance of which amounts to zero). These items result from purchases and sales of electricity from electricity market operators carried out each day. Measurements for each point of injection and withdrawal are taken and the differences, with respect to energy market schedules are calculated. These differences, known as imbalances, are then measured using algorithms established by the regulatory framework. The net charge resulting from calculation of the imbalances and the purchases and sales, carried out by Terna, on the DSM, is billed on a pro rata basis to each end consumer via a specific uplift payment. This item also reflects the portion of the transmission charge that Terna passes on to other grid owners.
The components of these transactions are shown in greater detail below.
(\u20ac/m)
2023
2022
Change
Power Exchange-related revenue items
5,244.2
11,308.4
\u00a0(6,064.2)
- Uplift
479.3
1,394.5
(915.2)
- Electricity sales
442.6
1,278.2
(835.6)
- Imbalances
1,673.9
3,689.1
(2,015.2)
- Congestion revenue
355.4
710.7
(355.3)
- Load Profiling for public lighting
348.0
1,833.5
(1,485.5)
- Charges for right to use transmission capacity and market coupling
1,209.8
1,160.0
49.8
- Interconnector/shippers
57.6
66.3
(8.7)
- Other Power Exchange-related pass-through revenue items
677.6
1,176.1
(498.5)
Total over-the-counter revenue items
3,742.9
2,933.6
809.3
- Transmission and dispatching service: penalties from auxiliary service providers
0.1
\u00a0-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Coverage of wind farm costs
20.6
40.5
(19.9)
- Transmission revenue passed on to other NTG owners
153.0
146.6
6.4
- Charge to cover cost of essential plants
1,019.6
703.5
316.1
- Charge to cover cost of interruptibility service
329.3
314.3
15.0
- Charge to cover cost of LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through revenue for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH REVENUE
8,987.1
14,242.0
(5,254.9)
Total Power Exchange-related cost items
5,244.2
11,308.4
\u00a0(6,064.2)
- Electricity purchases
1,185.1
3,581.1
(2,396.0)
- Imbalances
1,624.6
3,039.6
(1,415.0)
- Congestion revenue
170.1
527.6
(357.5)
- Load Profiling for public lighting
447.3
1,886.4
(1,439.1)
- Charges for right to use transmission capacity and market coupling
559.0
542.0
17.0
- Interconnectors/Shippers
599.7
874.7
(275.0)
- Other Power Exchange-related pass-through cost items
658.4
857.0
(198.6)
Total over-the-counter cost items
3,742.9
2,933.6
809.3
- Transmission and dispatching service: penalties to auxiliary service providers
0.1
\u00a0-
0.1
- Capacity market
1,470.4
1,204.3
266.1
- Shortfall in wind production
20.6
40.5
(19.9)
- Transmission costs passed on to other NTG owners
153.0
146.6
6.4
- Fees paid for essential units
1,019.6
703.5
316.1
- Fees paid for interruptibility service
329.3
314.3
15.0
- Fees paid for LV capacity and protection service
328.6
425.4
(96.8)
- Other pass-through costs for over-the-counter trades
421.3
99.0
322.3
TOTAL PASS-THROUGH COSTS
8,987.1
14,242.0
(5,254.9)
In 2023, the total uplift was approximately \u20ac446 million (provisional data), down 76% on the previous year (\u20ac1,844 million). The reduction was due to the reduced cost of procuring services, the fall in the consideration due for Start-up and Change of Set-up Tokens1, a reduction in the cost of the virtual interconnection service and, to a lesser extent, the reduced cost of contracts providing an alternative to essential providers2\u00a0the slight rise in congestion revenue in Italian and Overseas market areas, only partly offset by lower revenue from imbalances. Further information is provided in \u201cElectricity market trends\u201d in the section, \u201cThe Group\u2019s business\u201d, in the Report on Operations.
1\u00a0Start-up and Change of Set-up Tokens are payments made to production plants who have the right to receive them when Terna requests them to fire up the plant or change their structure.
2\u00a0These are the costs incurred by Terna for payments to production plants defined as essential for the electricity system, pursuant to Annex A27 of the Grid Code, and who chose the alternative regime described in art 63 of Resolution 111/06.
2. Other revenue and income \u2013 \u20ac67.5 million
(\u20ac/m)
2023
2022
Change
Payment for lease of operations
22.7
22.2
0.5
Gains on sale of infrastructure components
12.4
5.1
7.3
Sundry grants
8.5
8.9
(0.4)
Insurance proceeds as compensation for damages
4.9
2.9
2.0
Revenue from IRU contracts for fibre
4.2
0.9
3.3
Rental income
2.9
3.0
(0.1)
Sales to third parties
1.5
3.3
(1.8)
Contingent assets
0.2
4.3
(4.1)
Other revenues
10.2
10.2
-
TOTAL
67.5
60.8
6.7
The most significant components of \u201cOther revenue and income\u201d primarily regard the revenue received from the subsidiary, Terna Rete Italia S.p.A., as payment for the year made under the agreement for the lease of certain operations (\u20ac22.7 million), gains on the sale of infrastructure components (\u20ac12.4 million), sundry grants (\u20ac8.5 million) primarily in relation to the re-routing of lines for third parties, the sale of IRU contracts for fibre (\u20ac4.2 million), in addition to other revenues and contingent assets totalling \u20ac10.4 million, including \u20ac8.7 million from subsidiaries for services rendered under existing intercompany contracts.
The increase in this item of \u20ac6.7 million compared to the previous year primarily reflects increased revenue from gains on the sale of infrastructure components (up \u20ac7.3 million, essentially scrap, transformers and motor vehicles) and increased revenue from Connectivity services linked to IRU contracts for fibre (up \u20ac3.3 million), after a reduction in contingent assets compared with the previous year (down \u20ac4.1 million).
\u00a0
Operating costs
3. Raw and consumable materials used - \u20ac7.3 million
This item, amounting to \u20ac7.3 million, includes the value of the various materials and supplies, including fuel for the vehicle fleet. This item is up \u20ac0.9 million compared with the previous year, broadly due to increased purchases of telecommunications equipment.
4. Services \u2013 \u20ac498.4 million
(\u20ac/m)
2023
2022
Change
Intercompany services, including technical and administrative services
390.6
389.3
1.3
Maintenance and sundry services
61.5
51.2
10.3
Tender costs for plant
14.9
15.5
(0.6)
Lease expense
14.5
12.2
2.3
Insurance
10.6
9.6
1.0
IT services
5.5
4.5
1.0
Remote transmission and telecommunications
0.8
0.7
0.1
TOTAL
498.4
483.0
15.4
The item, \u201cIntercompany services, including technical and administrative services\u201d regards the accrued costs incurred under specific intercompany contracts (\u20ac390.6 million), largely regarding the subsidiary Terna Rete Italia S.p.A., which maintains and operates the infrastructure owned by the Company (\u20ac294.3 million), to investment in the development of the Company\u2019s transmission and dispatching infrastructure (\u20ac63.0 million) and activities and services relating to plant owned by third parties (\u20ac11.0 million). This item also includes bonuses relating to the quality of the transmission service attributable to Terna Rete Italia S.p.A. (up \u20ac5.9 million).
Fees payable to members of the Board of Statutory Auditors amount to \u20ac0.2 million, whilst those payable to members of the Supervisory Board set up in compliance with Legislative Decree 231/2001 amount to \u20ac0.1 million.
After the costs recognised in application of IFRIC 12 for the development of dispatching infrastructure (up \u20ac13.7 million), the increase in \u201cServices\u201d amounts to \u20ac15.4 million. This primarily reflects increases in advertising costs (up \u20ac7.1 million, essentially linked to the \u201cnoi siamo energia\u201d\u00a0advertising campaign), in the costs linked to Terna\u2019s investments in GRIT and CORESO (up \u20ac1.0 million), in insurance costs (up \u20ac1.0 million), IT services (up \u20ac1.0 million) provisions for right-of-way fees for power lines (up \u20ac1.0 million). There was also a reduction in amounts payable to the subsidiary, Terna Rete Italia S.p.A. (down \u20ac13.4 million) due to a reduction in operations and services provided for third-party infrastructure on behalf of the Company (down \u20ac8.4 million, essentially regarding a reduction in work carried out on the private Italy-Austria Interconnector) and a decline in the company\u2019s share of the performance bonus linked to the quality of the transmission service (down \u20ac4.1 million).
Under the Terna Group\u2019s current organisational structure, responsibility for the activities involved in investment in the development and upgrade of dispatching infrastructure lies with both Terna S.p.A. itself and the subsidiary Terna Rete Italia S.p.A.. The related cost is charged in full to \u201cServices\u201d as a service received from the subsidiary. The following table shows details of the costs recognised in application of IFRIC 12 and within the scope of the item under review.
(\u20ac/m)
2023
2022
Change
IT services
0.8
0.9
(0.1)
Tender costs for plant
14.0
14.6
(0.6)
Maintenance and sundry services
3.4
2.7
0.7
Cost of services relating to investment in dispatching infrastructure (IFRIC 12)
18.2
18.2
-
Cost of services recognised in application of IFRIC 12 \u2013 Services from Terna Rete Italia S.p.A.
57.5
43.8
13.7
Total cost of services relating to investment in dispatching infrastructure (IFRIC 12)
75.7
62.0
13.7
5. Personnel expenses - \u20ac119.2 million
(\u20ac/m)
2023
2022
Change
Salaries, wages and other short-term benefits
105.0
96.1
8.9
Directors\u2019 remuneration
2.1
1.9
0.2
Termination benefits (TFR), energy discounts and other employee benefits
14.0
6.2
7.8
Early retirement incentives
17.2
12.6
4.6
Gross personnel expenses
138.3
116.8
21.5
Capitalised personnel expenses
\u00a0(19.1)
\u00a0(14.5)
(4.60)
TOTAL
119.2
102.3
16.9
The following table shows the Company\u2019s workforce by category at the end of the year and as the average for the year.
AVERAGE WORKFORCE
WORKFORCE AT
2023
2022
31 DECEMBER 2023
31 DECEMBER 2022
Senior managers
56
51
54
49
Middle managers
342
319
347
326
Office staff
717
629
742
692
TOTAL
1,115
999
1,143
\u00a01,067
The net increase in the average workforce compared with 2022 is 116. This is essentially linked to the requirements relating to delivery of the investment programme included in the last approved Industrial Plan.
6. Amortisation, depreciation and impairment losses \u2013 \u20ac719.3 million
(\u20ac/m)
2023
2022
Change
Amortisation of intangible assets
118.7
85.8
32.9
\u00a0- of which rights on infrastructure
34.8
26.7
8.1
Depreciation of property, plant and equipment
591.8
557.4
34.4
Impairment losses on property, plant and equipment and intangible assets
8.7
7.0
1.7
Impairment losses on trade receivables
0.1
0.1
-
TOTAL
719.3
650.3
69.0
Amortisation, depreciation and impairment losses for the year amount to \u20ac719.3 million, an increase of \u20ac69.0 million compared with 2022. This primarily reflects the entry into service of infrastructure and the higher value of impairment losses on assets recognized during the year (up \u20ac1.7 million).
7. Other operating costs - \u20ac29.7 million
(\u20ac/m)
2023
2022
Change
Fees paid to regulators and membership dues
9.7
9.1
0.6
Indirect taxes and local taxes and levies
8.8
9.6
\u00a0(0.8)
Quality of service costs
5.3
1.9
3.4
\u00a0of which mitigation and sharing mechanisms
2.3
1.6
0.7
\u00a0of which Fund for Exceptional Events
2.8
0.1
2.7
\u00a0of which compensation mechanisms for HV users
0.2
0.2
\u00a0-
Adjustment of provisions for litigation and disputes
\u00a0(0.9)
\u00a0(4.5)
3.6
Losses on sales/disposal of plant
0.8
0.1
0.7
Other
6.0
5.7
0.3
TOTAL
29.7
21.9
7.8
The most significant components of this item regard the costs incurred by the Company for membership dues and fees paid to trade bodies and associations relating to the Group\u2019s activities (\u20ac9.7 million), indirect taxes, local taxes and levies (\u20ac8.8 million, including \u20ac7.0 million in council tax), quality of service costs (\u20ac5.3 million ), and other costs (\u20ac6.0 million), which include donations and other expenses.
The increase \u20ac7.8 million is due essentially to the adjustment to provisions linked to amounts previously set aside in relation to Land Registry Circular 6/2012 and for litigation and disputes (up \u20ac3.6 million), in addition to an increase in the costs incurred for quality of service (up \u20ac3.4 million), primarily linked to provisions for exceptional events related to the outages that occurred in eastern Sicily in February 2023, and in the fees paid to regulators and membership dues (up \u20ac0.6 million).
8. Financial income/(expenses) \u2013 (\u20ac90.8) million
(\u20ac/m)
2023
2022
Change
FINANCIAL EXPENSES
\u00a0
\u00a0
\u00a0
Financial expenses attributable to subsidiaries
(7.1)
(7.9)
0.8
Interest expense on medium/long-term borrowings
and related hedges
(235.5)
(138.7)
(96.8)
Adjustments to bonds in issue and the related hedges
(2.8)
-
(2.8)
Foreign exchange losses
(0.1)
-
-
Capitalised financial expenses
48.3
24.8
23.5
Other financial expenses
(35.6)
(3.9)
(31.7)
Total expenses
(232.8)
(125.7)
(107.1)
FINANCIAL INCOME
Dividends from subsidiaries
17.3
10.4
6.9
Dividends from associates
1.8
1.5
0.3
Financial income from subsidiaries
8.3
2.3
6.0
Adjustments to bonds in issue and the related hedges
-
5.5
(5.5)
Discounting of receivables, termination benefits (TFR) and operating leases
31.6
0.1
31.5
Interest income and other financial income
83.0
17.0
66.0
Foreign exchange gains
-
1.8
(1.8)
Total income
142.0
38.6
103.4
TOTAL
(90.8)
(87.1)
(3.7)
Net financial expenses for the year amount to \u20ac90.8 million, reflecting \u20ac232.8 million in financial expenses and \u20ac142.0 million in financial income. The increase in net financial expenses compared with the previous year, amounting to \u20ac3.7 million, primarily reflects the following:
\u2022 an increase in financial expenses of \u20ac96.8 million on medium/long-term debt, reflecting the increase in market interest rates, partially offset by the impact of falling inflation in relation to the inflation-linked bonds maturing in September 2023;
\u2022 an increase of \u20ac31.7 million in other financial expenses, broadly due to the uplift component;
\u2022 an increase in capitalised financial expenses (up \u20ac23.5 million) due to increased investment during the period and rising interest rates;
\u2022 an increase of \u20ac31.5 million in net income from discounting, essentially due to discounting of the receivable recognised in 2022, following measurement of the incentives for reducing dispatching market costs (in accordance with Resolution 597/2021- as amended by determination 132/2022 and Resolutions 699/2018 and 26/2023), taking into account the timing of collection under the above resolutions;
\u2022 an increase in financial expenses attributable to subsidiaries (up \u20ac2.4 million), relating primarily to the change in accrued interest on intercompany current accounts held by subsidiaries;
\u2022 recognition of an impairment loss on the investment in Terna Plus S.r.l., amounting to \u20ac2.6 million, following the adjustment to the investment to reflect the value of the company\u2019s equity at 31 December 2023, compared with the impairment loss recognised in the previous year (\u20ac7.0 million);
\u2022 an increase in dividends paid by the subsidiaries, Terna Interconnector (up \u20ac5.2 million) and Terna Gora (\u20ac1.7 million), and by the associate, CGES (up \u20ac0.3 million);
\u2022 a \u20ac66.0 million increase in financial income on cash and other financial assets due to improved market conditions.
9. Income tax for the year \u2013 \u20ac335.4 million
(\u20ac/m)
2023
2022
Change
Income tax for the year
\u00a0
\u00a0
\u00a0
Current tax expense:
\u00a0
\u00a0
\u00a0
- IRES (corporate income tax)
299.0
300.8
(1.8)
- IRAP (regional tax on productive activities)
67.3
65.8
1.5
Total current tax expense
366.3
366.6
(0.3)
New temporary differences:
\u00a0
\u00a0
\u00a0
- deferred tax assets
(41.3)
(41.3)
-
Reversal of temporary differences:
\u00a0
- deferred tax assets
9.9
11.7
(1.8)
Total deferred tax (income)/expense
(31.4)
(29.6)
(1.8)
Adjustments of taxes for previous years
0.5
(2.2)
2.7
TOTAL
335.4
334.8
0.6
Current income tax expense for the year of \u20ac366.3 million is in line with the previous year, essentially reflecting the increase in pre-tax profit and the greater amount of tax-exempt income recognised in the previous year.
Net deferred tax expense of \u20ac31.4 million is up \u20ac1.8 million, primarily due to the net effect of the reversal of temporary differences, primarily connected with the impact of taxation on depreciation and amortisation.
Adjustments to taxes for previous years, amounting to a reduction of \u20ac0.5 million, reflect the overpayment of current tax expense in previous years and have increased by \u20ac2.7 million.
The effective tax charge for the year (\u20ac335.4 million) results in a tax rate of 28.7%, broadly in line with 2022 (28.6%). For a clearer presentation of the differences between the theoretical and effective tax charges, the table below reconciles the theoretical and effective tax rates for the year.
(\u20ac/m)
Taxable income
Tax
\u00a0% Change
Profit before tax
1,170.1
IRES \u2013 Theoretical tax charge (rate of 24.0%)
280.8
IRAP \u2013 theoretical tax charge (rate of 5.08% on the operating profit of \u20ac1,260.9 million)
64.1
344.9
THEORETICAL TAX RATE
\u00a0
\u00a0
29.5%
Permanent differences in IRES
Impairments
0.4
-
Non-deductible remuneration
0.5
0.1%
Contingent assets and liabilities
0.4
-
Membership fees
0.1
Other increases
1.5
0.2%
Accelerated depreciation
(4.8)
(0.4%)
Dividends
(3.6)
(0.2%)
Tax relief (ACE \u2013 Aiuto alla Crescita Economica)
(6.0)
(0.5%)
IRAP at a rate of 10%
(1.8)
(0.1%)
Permanent differences in IRAP
Capitalised financial expenses
2.5
0.2%
Personnel expenses
0.3
0.1%
Effective tax rate after adjustments of taxes for previous years
\u00a0
28.9%
Income tax for previous years
0.5
(0.2%)
Total income tax expense for the year
\u00a0
335.4
EFFECTIVE TAX RATE
\u00a0
28.7%
10. Profit/(Loss) from discontinued operations and assets held for sale \u2013 \u20ac0.1 million
The profit from discontinued operations and assets held for sale, amounting to \u20ac0.1 million, reflects the release of provisions for other risks (\u20ac0.1 million) relating to liabilities recognised at 31 December 2022 in connection with the sale of Difebal S.A., completed on 22 December 2022. The costs of the sale were lower than expected. This item also reflects a reduction of \u20ac0.7 million broadly due to recognition in the previous year of a net loss on the sale of the subsidiary (up \u20ac2.4 million) after the net result from the overseas company\u2019s operations (\u20ac1.7 million).
C. Operating segments
In line with the requirements of \u201cIFRS 8 \u2013 Operating segments\u201d, companies that publish a parent company\u2019s consolidated financial statements in a single document, together with the company\u2019s separate financial statements, only have to present segment information in the consolidated financial statements.
D. Notes to the statement of financial position
Assets
11. Property, plant and equipment \u2013 \u20ac15,612.5 Million
(\u20ac/m)
Land
Buildings
Plant and equipment
Industrial and commercial equipment
Other
\u00a0assets
Assets under construction and prepayments
TOTAL
COST At 31 DECEMBER 2022
137.4
2,201.3
19,375.9
133.4
221.1
2,217.1
24,286.2
Investments
0.1
2.3
0.2
6.5
2.8
1,953.2
1,965.1
\u00a0of which right-of-use assets
\u00a0-
2.3
0.2
\u00a0-
1.8
\u00a0-
4.3
Assets entering service
9.0
179.1
1,459.1
7.1
25.6
\u00a0(1,679.9)
\u00a0-
Intragroup purchases
\u00a0-
\u00a0-
9.3
\u00a0-
\u00a0-
0.1
9.4
Intercompany sales
\u00a0-
\u00a0-
\u00a0(0.5)
\u00a0-
\u00a0-
\u00a0-
\u00a0(0.5)
\u00a0of which right-of-use assets
\u00a0-
\u00a0-
\u00a0(0.1)
\u00a0-
\u00a0-
\u00a0-
\u00a0(0.1)
Disposals and impairments
\u00a0-
\u00a0(2.4)
\u00a0(100.0)
\u00a0(1.0)
\u00a0(17.2)
\u00a0(8.2)
\u00a0(128.8)
\u00a0of which right-of-use assets
\u00a0-
\u00a0(1.3)
\u00a0(1.4)
\u00a0-
\u00a0(0.2)
\u00a0-
\u00a0(3.0)
Other changes
\u00a0(0.3)
\u00a0(12.2)
\u00a0(26.3)
\u00a0-
\u00a0-
29.1
\u00a0(9.7)
COST AT 31 DECEMBER 2023
146.2
2,368.1
20,717.7
146.0
232.3
2,511.4
26,121.7
ACCUMULATED DEPRECIATION AND IMPAIRMENT
AT 31 DECEMBER 2022
\u00a0(1.2)
\u00a0(747.7)
\u00a0(9,024.2)
\u00a0(95.9)
\u00a0(164.3)
\u00a0-
\u00a0(10,033.3)
Depreciation
\u00a0(0.3)
\u00a0(55.4)
\u00a0(511.1)
\u00a0(6.6)
\u00a0(18.4)
\u00a0-
\u00a0(591.8)
\u00a0of which right-of-use assets
\u00a0(0.3)
\u00a0(1.4)
\u00a0(2.4)
\u00a0-
\u00a0(1.1)
\u00a0(5.2)
Intercompany purchases
\u00a0-
\u00a0-
\u00a0(2.3)
\u00a0-
\u00a0-
\u00a0-
\u00a0(2.3)
Intercompany sales
\u00a0-
\u00a0-
0.1
\u00a0-
\u00a0-
\u00a0-
0.1
Disposals
\u00a0-
2.4
97.5
1.0
17.2
\u00a0-
118.1
\u00a0of which right-of-use assets
\u00a0-
1.3
1.4
\u00a0-
0.2
\u00a0-
2.9
ACCUMULATED DEPRECIATION AND IMPAIRMENT
AT 31 DECEMBER 2023
\u00a0(1.5)
\u00a0(800.7)
\u00a0(9,440.0)
\u00a0(101.5)
\u00a0(165.5)
\u00a0-
\u00a0(10,509.2)
Carrying amount
AT 31 DECEMBER 2023
144.7
1,567.4
11,277.7
44.5
66.8
2,511.4
15,612.5
\u00a0of which right-of-use assets
4.4
4.4
16.0
\u00a0-
2.1
\u00a0-
26.8
AT 31 DECEMBER 2022
136.2
1,453.6
10,351.7
37.5
56.8
2,217.1
14,252.9
\u00a0of which right-of-use assets
4.7
3.5
18.3
\u00a0-
1.4
\u00a0-
27.9
Change
8.5
113.8
926.0
7.0
10.0
294.3
1,359.6
The category, \u201cPlant and equipment\u201d, essentially includes the electricity transmission grid and transformer substations in Italy.
\u201cProperty, plant and equipment\u201d is up \u20ac1,359.6 million, compared 31 December 2022, broadly due to the following movements:
\u2022 investment of \u20ac1,965.1 million during the year, including \u20ac1,940.4 million in Regulated Activities;
\u2022 the purchase, on 24 July 2023, from the subsidiary, Rete S.r.l., of the 132kV \u201cFidenza RT - Parma\u201d power line for a consideration of \u20ac7.1 million;
\u2022 amortisation and depreciation for the year of \u20ac591,8 million;
\u2022 other movements during the year in \u201cProperty, plant and equipment\u201d, resulting in a reduction of \u20ac20.8 million. This includes grants related to assets (down \u20ac9.7 million, primarily for the re-routing of power lines at the request of third parties and projects financed by the Ministry of Enterprises and Made in Italy and the EU) and disposals and impairment losses resulting in a reduction of \u20ac10.7 million.
The following information regards work on the principal projects during the year in relation to Regulated Activities: the start of design work for the construction of the Tyrrhenian Link (\u20ac414.8 million), the start of preliminary work on construction of the Adriatic Link (\u20ac110.8 million), the installation of synchronous compensators and STATCOM systems (\u20ac58.0 million and \u20ac13.3 million, respectively), progress on construction of the Elba-Mainland power line (\u20ac54.8 million), Patern\u00f2-Pantano-Priolo (\u20ac30.6 million), the Olympics projects (\u20ac49.8 million), Colunga-Calenzano (\u20ac28.2 million), Sorgente-Rizziconi (\u20ac19.2 million and the Italy-France interconnector (\u20ac13.1 million, with the regulated pole entering service in August), the construction of reactors (\u20ac15.3 million), extension of the fibre network as part of the \u201cFibre for the Grid\u201d project (\u20ac16.9 million), construction of the Cerignola (\u20ac18.2 million) and Magenta (\u20ac12.1 million) substations).
12. Goodwill \u2013 \u20ac190.2 Million
Goodwill of \u20ac190.2 million regards the goodwill resulting from the mergers with the subsidiaries RTL (\u20ac88.6 million, merged into the Company in 2008) and Terna Rete Italia S.r.l. (\u20ac101.6 million) merged in 2017.
The balance is unchanged with respect to the previous year.
Impairment testing
Cash Generating Unit \u2013 Terna S.p.A.\u2019s transmission activities
For impairment testing purposes, Terna S.p.A.\u2019s Regulated Activities were considered to be a cash generating unit (CGU). Measurement of the recoverable value of the goodwill allocated to the transmission activities was based on fair value less costs of disposal. Determination of the carrying amount of the CGU represented by the NTG was based on Terna S.p.A.\u2019s net invested capital at 31 December 2023, appropriately adjusted for the assets and liabilities not falling within the scope of Transmission activities (e.g., Dispatching, Non-regulated and International activities). The recoverable amount was based on fair value after applying an EBITDA multiple to the operating profit of the CGU represented by the NTG. This multiple was calculated at the level of the Company, as the ratio between the enterprise value (the sum of the stock market capitalization and net debt) and the Company\u2019s EBITDA. The result obtained is significantly higher than the carrying amount recognised in the financial statements inclusive of goodwill.
13. Intangible assets \u2013 \u20ac573.3 Million
(\u20ac/m)
Infrastructure rights
Concessions
Other
assets
Assets under development and prepayments
TOTAL
Cost
583.0
135.4
523.7
108.7
1,350.8
Accumulated amortisation
\u00a0(421.6)
\u00a0(96.1)
\u00a0(354.6)
\u00a0-
\u00a0(872.3)
BALANCE AT 31 DECEMBER 2022
161.4
39.3
169.1
108.7
478.5
Investments
\u00a0-
\u00a0-
\u00a0-
214.5
214.5
Assets entering service
82.1
\u00a0-
110.0
\u00a0(192.1)
\u00a0-
Disposals and impairments
\u00a0-
\u00a0-
\u00a0-
\u00a0(1.3)
\u00a0(1.3)
Amortisation
\u00a0(34.8)
\u00a0(5.6)
\u00a0(78.3)
\u00a0-
\u00a0(118.7)
Other changes
\u00a0-
\u00a0-
0.3
\u00a0-
0.3
BALANCE AT 31 DECEMBER 2023
208.7
33.7
201.1
129.8
573.3
Cost
665.1
135.4
634.0
129.8
1,564.3
Accumulated amortisation
\u00a0(456.4)
\u00a0(101.7)
\u00a0(432.9)
\u00a0-
\u00a0(991.0)
BALANCE AT 31 DECEMBER 2023
208.7
33.7
201.1
129.8
573.3
Change
47.3
\u00a0(5.6)
32.0
21.1
94.8
Intangible assets amount to \u20ac573.3 million and include:
\u2022 the infrastructure used in provision of the dispatching service in Italy accounted for in accordance with \u201cIFRIC 12 \u2013 Service Concession Arrangements\u201d, with the carrying amount, at 31 December 2023 of infrastructure entering service during the year amounting to \u20ac208.7 million and of those under construction, included in the category \u201cAssets under development and prepayments\u201d, amounting to \u20ac41.7 million (at 31 December 2022, the matching figures were \u20ac161.4 million and \u20ac46.1 million, respectively);\u2022 the concession for electricity transmission and dispatching activities in Italy (with a carrying amount of \u20ac33.7 million at 31 December 2023). This 25-year concession was recognised in 2005, initially at fair value and subsequently at cost.
Other intangible assets primarily include software applications, either produced internally or purchased as part of systems development programmes. Investment in these assets during the year (\u20ac137.0 million) essentially regards internal development programmes.
The increase compared with the previous year (up \u20ac94.8 million) reflects the net effect of investment (\u20ac214.5 million, including \u20ac77.5 million in infrastructure rights) and amortisation (down \u20ac118.7 million).
Investment in intangible assets during the year (\u20ac214.5 million, entirely within the scope of Regulated Activities) included expenditure on the development of software applications for the Remote Management System for Dispatching (\u20ac41.9 million), the Power Exchange (\u20ac13.5 million), the Metering System (\u20ac1.7 million) and for protection of the electricity system (\u20ac1.7 million), as well as software applications and generic licences (\u20ac133.4 million).
14. Deferred tax assets \u2013 \u20ac113.0 Million
(\u20ac/m)
31 December 2022
PROVISIONS
USES
AND OTHER MOVEMENTS
EFFECTS RECOGNISED IN COMPRE-HENSIVE
INCOME
31 December 2023
DEFERRED TAX ASSETS
Property, plant and equipment
56.7
32.5
-
-
89.2
Provisions for risks and charges
15.6
2.6
(1.8)
-
16.4
Allowance for doubtful accounts
4.3
-
-
-
4.3
Amounts due to employees
(0.1)
6.2
(5.0)
0.2
1.3
Cash flow hedges and financial assets
(24.8)
-
-
11.4
(13.4)
Tax relief on goodwill
14.9
-
(3.0)
-
11.9
Other
6.4
-
-
-
6.4
TOTAL DEFERRED TAX ASSETS
73.0
41.3
\u00a0(9.8)
11.6
116.1
DEFERRED TAX LIABILITIES
Employee benefits and financial instruments
\u00a0(3.1)
-
-
-
(3.1)
TOTAL DEFERRED TAX LIABILITIES
\u00a0(3.1)
-
-
-
(3.1)
NET DEFFERRED TAX ASSETS
69.9
41.3
\u00a0(9.8)
11.6
113.0
The balance of this item, amounting to \u20ac113.0 million, includes the net impact of movements in the Company\u2019s deferred tax assets and liabilities.
Deferred tax assets (\u20ac116.1 million) are up by a net \u20ac43.1 million compared with the previous year, reflecting the following movements:
\u2022 provisions of \u20ac11.4 million, reflecting the tax effect on the comprehensive income statement, primarily of movements in cash flow hedges;
\u2022 provisions of \u20ac32.5 million due to provisions for accelerated depreciation
\u2022 net provisions \u20ac0.8 million, relating to movements during the year in provisions for risks and charges, primarily due to the tax effect on the release of provisions for quality of service (\u20ac0.2 million);
\u2022 net provisions of \u20ac1.4 million relating to movements during the year in provisions for risks and charges linked to amounts payable to employees;
\u2022 the release of deferred tax assets recognised in relation to tax relief on the goodwill resulting from the merger with Terna Rete Italia S.r.l. (\u20ac3.0 million).
Deferred tax liabilities of \u20ac3.1 million are in line with the figure for 31 December 2022.
15. Financial assets
(\u20ac/m)
Measurement
31 December 2023
31 December 2022
Change
Investments in subsidiaries
at cost
1,119.0
1,097.7
21.3
Investments in associates
at cost
46.8
44.8
2.0
Guarantee deposits
Amortised cost
285.0
299.1
\u00a0(14.1)
Government securities
FVTOCI
119.1
119.6
\u00a0(0.5)
Cash flow hedges
FVTOCI
17.4
75.5
\u00a0(58.1)
NON-CURRENT FINANCIAL ASSETS
\u00a0
1,587.3
1,636.7
\u00a0(49.4)
Government securities
FVTOCI
96.8
148.8
\u00a0(52.0)
Other securities
FVPNL-FVTOCI
100.4
98.0
2.4
Time deposits
Amortised cost
150.0
\u00a0-
150.0
Deferred assets on cash flow hedges
\u00a0
7.3
3.5
3.8
Other current financial assets
\u00a0
14.1
4.8
9.3
CURRENT FINANCIAL ASSETS
\u00a0
368.6
255.1
113.5
\u201cNon-current financial assets\u201d includes the items described below.
The value of \u201cInvestments in subsidiaries\u201d (\u20ac1,119.0 million) regards investments in Terna S.p.A.\u2019s direct subsidiaries and is up \u20ac21.3 million compared with 31 December 2022. This primarily reflects a capital contribution to Terna Forward S.r.l. (up \u20ac9.3 million) and an increase in the investment in Rete S.r.l. (up \u20ac14.6 million), following the merger of the subsidiary, Rete Nord S.r.l. (previously acquired by Terna S.p.A. on 22 June 2023), with and into Rete S.r.l. in December 2023, offset by an impairment loss on the investment in the subsidiary, Terna Plus (down \u20ac2.6 million), following the adjustment to the investment to reflect the value of the company\u2019s equity at 31 December 2023.
The value of \u201cInvestments in associates\u201d (\u20ac46.8 million) mainly regards the investments in CGES \u2013 CrnoGorski Elektroprenosni Sistem AD (\u20ac26.7 million), CESI S.p.A. (\u20ac17.5 million), CORESO S.A. (\u20ac0.2 million) and the joint operations, ELMED Etudes S.a.r.l. (\u20ac0.3 million) and Selene CC S.A. (\u20ac2.1million). The change with respect to 31 December 2022, amounting an increase of \u20ac2.0 million, essentially reflects the adjustment of the Group\u2019s share of equity at 31 December 2023 in the joint venture SEleNe CC S.A., which rose from 25% to 33.33% in February.
The following table shows key information on investments in subsidiaries, associates and joint ventures owned directly by Terna S.p.A. at 31 December 2023. Amounts relate to the latest approved financial statements.
NAME
REGISTERED OFFICE
CURRENCY
SHARE
CAPITAL
% INTEREST
CARRYING
AMOUNT (\u20ac)
SUBSIDIARIES CONTROLLED DIRECTLY BY TERNA S.P.A.
Terna Rete Italia S.p.A.
Rome
Euro
300,000
100%
21,461,425
Business
Design, construction, management, development, operation and maintenance of power lines and grid infrastructure and other grid-related infrastructure, plant and equipment used in the above electricity transmission and dispatching activities and in similar, related and connected sectors.
Terna Crna Gora d.o.o.
Podgorica (Montenegro)
Euro
208,000,000
100%
208,000,000
Business
Authorisation, construction and operation of the transmission infrastructure forming the Italy-Montenegro interconnector on Montenegrin territory.
Terna Plus S.r.l.
Rome
Euro
16,050,000
100%
77,291,727
Business
Design, construction, management, development, operation and maintenance of plant, equipment and infrastructure for grids and systems, including distributed storage and pumping and/or storage systems.
Terna Interconnector S.r.l.
Rome
Euro
10,000
65%*
19,926
Business
Responsible for construction and operation of the private section of the Italy-France interconnector and civil works on the public section.
Rete S.r.l.
Rome
Euro
387,267,082
100%
790,178,808
Business
Design, construction, management, development, operation and maintenance of high-voltage power lines.
Terna Energy Solutions S.r.l.
Rome
Euro
2,000,000
100%
12,282,156
Business
Design, construction, management, development, operation and maintenance of distributed energy storage systems, pumping and/or storage systems, plant, equipment and infrastructure, including grids; research, consultancy and assistance in matters relating to the core business; any other activity capable of improving the use and development of plant, resources and expertise.
ESPERIA-CC S.r.l.
Rome
Euro
10,000
1%**
100
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
Terna Forward
Rome
Euro
10,000
100%
9,810,000
Business
Development of new technological solutions for the Terna Group, investing in start-ups and small, medium and large enterprises with high innovation and technological potential.
* 5% is held by Terna Rete Italia S.p.A. and 30% by Transenergia S.r.l..
** 99% is held by Selene CC S.A.
NAME
REGISTERED OFFICE
CURRENCY
SHARE
CAPITAL
% INTEREST
CARRYING
AMOUNT (\u20ac)
ASSOCIATES
Cesi S.p.A.
Milan
Euro
8,550,000
42.698%
17,563,381
Business
Experimental research and provision of services related to electro-technology.
Coreso S.A.
Bruxelles (Belgium)
Euro
1,000,000
15.84%
210,742
Business
Technical centre owned by several electricity transmission operators, responsible for coordinating joint operations of TSOs, in order to improve and upgrade the security and coordination of the electricity system in central and western Europe.
CGES A.D.
Podgorica (Montenegro)
Euro
155,108,283
22.0889%
26,694,419
Business
Provision of transmission and dispatching services in Montenegro.
JOINT VENTURES
ELMED Etudes S.a.r.l.
Tunis (Tunisia)
Dinaro Tunisino
2,016,120
50%
274,917
Business
Conduct of preparatory studies for construction of the infrastructure required to connect the Tunisian and Italian electricity systems.
SEleNe CC S.A.
Thessaloniki (Greece)
Euro
200,000
33.33%
2,071,219
Business
A technical centre owned by a number of transmission system operators, which acts as the regional security coordinator for the TSOs, with the aim of improving and upgrading the security and coordination of the electricity system in south-eastern Europe.
Equigy B.V.
Arnhem, (Netherlands)
Euro
50,000
20%
10,000
Business
Provision of support for electricity balancing by TSOs through the development and implementation of blockchain technology.
* Figures taken from the latest approved financial statements at the date of preparation of this document.
This item also includes:
\u2022 guarantee deposits (\u20ac285.0 million), including the Interconnector Guarantee Fund (\u20ac161.1 million) set up to fund investment in interconnections by art. 32 of Law 99/09 and up \u20ac17.6 million compared with the previous year. Guarantee deposits also include \u20ac123.9 million received from operators participating in the capacity market in accordance with Resolution Del.98/2011/R/eel3, as amended, registering a decrease of \u20ac31.7 million compared with the previous year;
\u2022 cash flow hedges, amounting to \u20ac17.4 million, hedging borrowings, measured by discounting expected cash flows using market interest rates at the measurement date; the reduction of \u20ac58.1 million reflects the change in market interest rates and a change in the derivatives portfolio;
\u2022 the value of Italian government bonds (\u201cBTP\u201d), amounting to \u20ac119.1 million, maturing in May 2025, essentially in line with 31 December 2022.
\u201cCurrent financial assets\u201d are up \u20ac113.5 million compared with the previous year, primarily due to an increase in short-term time deposits during the period (amounting to \u20ac150.0 million), the increase in unpaid accrued interest on financial investments (amounting to \u20ac9.3 million) and recognition of unpaid accrued interest on derivatives (up \u20ac3.8 million), offset by the reduction in holdings of Italian government securities (down \u20ac52.0 million).
16. Other assets
(\u20ac/m)
31 December 2023
31 December 2022
Change
Loans and advances to employees
3.8
3.8
-
Deposits with third parties
1.3
1.3
-
Non-current receivables due from subsidiaries
2.8
2.8
-
OTHER NON-CURRENT ASSETS
7.9
7.9
-
Current receivables due from subsidiaries
0.4
-
0.4
Other tax credits
42.4
28.7
13.7
Other current assets \u2013 Interconnector Guarantee Fund
2.9
3.1
(0.2)
Prepayments to suppliers
1.8
1.0
0.8
Prepayments of operating expenses and accrued operating income
9.5
9.2
0.3
Amounts due from others
4.6
11.6
(7.0)
OTHER CURRENT ASSETS
61.6
53.6
8.0
\u201cOther non-current assets\u201d amount to \u20ac7.9 million are in line with the previous year and include receivables due from subsidiaries in relation to incentive plans benefitting the Company\u2019s employees through share-based payments (the Performance Share Plans 2021-2025, 2022-2026 and 2023-20274).
\u201cOther current assets\u201d of \u20ac61.6 million are up \u20ac8.0 million compared with 31 December 2022, essentially reflecting:
\u2022 the change in \u201cOther tax credits\u201d (up \u20ac13.7 million), primarily reflecting an increase in refundable VAT (up \u20ac7.7 million) and withholding tax paid on interest income (up \u20ac4.0 million);
\u2022 a decrease of \u20ac7.0 million in \u201cAmounts due from others\u201d, broadly due to other items to be settled recognized during the year and collected in early 2023.
3\u00a0The 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.
4\u00a0On 16 June 2021, 15 June 2022 and 14 June 2023, Terna S.p.A.\u2019s Board of Directors approved the Terms and Conditions of the Performance Share Plans for 2021-2025, 2022-2026 and 2023-2027, respectively, in implementation of the terms established by the Annual General Meetings of shareholders held on 30 April 2021, 29 April 2022 and 9 May 2023. The three LTI plans provide for the grant of the right to be allotted a certain number of Terna S.p.A.\u2019s shares (Performance Shares) free of charge at the end of the performance period provided that the performance targets to which the Plans are linked have been met.
17. Trade receivables \u2013 \u20ac1,928.8 Million
(\u20ac/m)
31 December 2023
31 December 2022
Change
Energy-related receivables
1,268.5
1,622.8
(354.3)
Transmission charges receivables
576.3
472.8
103.5
Other trade receivables
60.6
63.6
(3.0)
Amounts due from subsidiaries
23.4
20.2
3.2
TRADE RECEIVABLES
1,928.8
2,179.4
(250.6)
Trade receivables amount to \u20ac1,928,8 million and are accounted for less any losses on items deemed not to be recoverable and recognised in the allowance for doubtful accounts (\u20ac13.3 million for energy-related receivables and \u20ac10.1 million for other items in 2023, compared with \u20ac19.6 million for energy-related items and \u20ac10.1 million for other items in 2022, with further details provided in the section \u201cE. Commitments and risks\u201d). The carrying amount shown broadly approximates to fair value.
The measurement of expected credit losses is described in the section, \u201cA. Accounting policies and measurement criteria\u201d.
Energy-related/regulated receivables \u2013 \u20ac1,268.5 million
This item includes so-called \u201cpass-through items\u201d relating to the Parent Company\u2019s activities in accordance with Resolution 111/06 (\u20ac602.6 million) and receivables due from the users of dispatching services forming part of Regulated Activities (\u20ac654.8 million). It also includes the amount due from the Fund for Energy and Environmental Services (Cassa per i Servizi Energetici e Ambientali\u00a0- CSEA)( \u20ac11.2 million),relating to quality of service.
These receivables are down \u20ac354.3 million compared with the end of 2022, primarily due to:
\u2022 a reduction in uplift payments for the procurement of resources on the dispatching services market (\u20ac229.7 million) and in items covering the DSM (\u20ac113.2 million) and imbalances (\u20ac369.2 million), reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 partial collection of the intrazonal incentive awarded by Resolution 26/2023, as provided for in the Resolution (\u20ac38.9 million);
partly offset by:
\u2022 recognition of the annual bonus for 2023 deriving from the three-year incentive scheme (2022-2024) introduced by Resolutions 597/2021 and 132/2022 and the financial component resulting from discounting (totalling \u20ac329.15\u00a0million);
\u2022 the increase in receivables related to essential plants for the safety of the electricity system \u2013 UESS (\u20ac79.6 million), reflecting the increase in the charge to cover the costs of the maximisation programme introduced by Resolution 430/20226.
5\u00a0The amount of \u20ac329.1 million includes the portion relating to financial income from discounting, amounting to \u20ac26.5 million, in view of the timing of collection provided for in Resolution 132/2022 (which has amended Resolution 597/2021), on the basis of which disbursement of rewards/penalties for the three-year period 2022-2024 will take place as follows:
\u00a0- the reward /penalty for 2022 over three years from 1 January 2024;
\u00a0- the reward /penalty for 2023 over three years from 1 January 2025;
\u00a0- the reward /penalty for 2024 over three years from 1 January 2026.
6\u00a0Law Decree 14/2022 (art. 5-bis) introduced certain preventive measures designed to reduce natural gas consumption in the thermoelectric sector, under which Terna adopted a plan to maximise the use of coal- and oil-fired electricity generating plants with a nominal thermal capacity in excess of 300 MW under normal operating conditions.Transmission charges receivable \u2013 \u20ac576.3 million
Transmission charges receivable, amounting to \u20ac576.3 million, represent the amount due to the Parent Company and other grid owners from electricity distributors for use of the National Transmission Grid. This receivable is up \u20ac103.5 million compared with 31 December 2022, reflecting the revised tariff (Resolution 719/2022), recognition of the accrued return on digital substation systems in accordance with ARERA Resolution 565/2020, and recognition of the amount due to cover the added costs incurred in 2023 that were not covered by the specific tariff component relating to the Inter-TSO Compensation (ITC) scheme7, recognised from 2020 through the transmission charge.
Other trade receivables \u2013 \u20ac60.6 million
Other trade receivables, totalling \u20ac60.6 million, are down \u20ac3.0 million compared with the previous year. This primarily reflects a decrease in receivables resulting from Non-regulated Activities in the final quarter of the year.
Amounts due from subsidiaries \u2013 \u20ac23.4 million
This item, totalling \u20ac23.4 million, primarily regards the amount receivable from the subsidiary, Terna Rete Italia S.p.A. (\u20ac14.7 million), mainly relating to services provided in the last part of the year under existing contracts, primarily relating to the amount due on the business unit leased to this company (\u20ac6.8 million), administrative services (\u20ac4.8 million) and from the subsidiary, Terna Energy Solutions S.r.l. (\u20ac5.8 million).
This item is up on the previous year (\u20ac3.2 million), broadly due to an increase in amounts due from the subsidiary, Terna Energy Solutions S.r.l. (up \u20ac4.1 million), as a result of receivables recognised in the last quarter in relation to the sale fibre, and from the Brugg Group (up \u20ac0.9 million), offset by a reduction in amounts due from Terna Plus S.r.l. (down \u20ac1.7 million).
18. Cash and cash equivalents \u2013 \u20ac1,456.3 million
Cash amounts to \u20ac1,456.3 million at 31 December 2023, having decrease by \u20ac746.3 million compared with 31 December 2022. This item consists of \u20ac1,170.0 million invested short-term readily convertible deposits, \u20ac129.3 million deposited in bank current accounts and as cash in hand and \u20ac157.0 million representing the net amount receivable on intercompany current accounts held by the Company on behalf of its subsidiaries.
19. Income tax assets \u2013 \u20ac3.2 million
Income tax assets, amounting to \u20ac3.2 million, are in line with the figure for the previous year.
Equity and liabilities
20. Equity \u2013 \u20ac5,871.0 million
Share capital \u2013 \u20ac442.2 million
Terna\u2019s share capital consists of 2,009,992,000 ordinary shares with a par value of \u20ac0.22 per share.
Legal reserve \u2013 \u20ac88.4 million
The legal reserve accounts for 20% of the Company\u2019s share capital and is unchanged with respect to the previous year.
Reserve for treasury shares - (\u20ac29.8) million
In implementation of the buyback programme linked to the new Performance Share Plan 2023-2027, approved by the Annual General Meeting of shareholder on 9 May 2023, in the period between 22 June 2023 and 6 July 2023, the Parent Company purchased 917,611 own shares (equal to 0.046% of the share capital), at a total cost of approximately \u20ac7 million. These are in addition to those purchased in previous years to service the Performance Share Plan 2020-2023, the Performance Share Plan 2021-2025 and the Performance Share Plan 2022-2026.
In addition, in the period between 9 May 2023 and 1 June 2023, the Company allotted 1,079,860 treasury shares to the beneficiaries of the Performance Share Plan 2020-2023, amounting to a total of approximately \u20ac6.7 million.
As a result, at 31 December 2023, Terna S.p.A. now holds a total of 4,213,660 treasury shares (equal to 0.210% of the share capital), purchased at a cost of \u20ac29.8 million, thereby reducing other reserves by this amount.
Reserve for equity instruments \u2013 \u20ac989.0 million
On 2 February 2022, the Company issued perpetual hybrid green bonds with a nominal value of \u20ac1 billion, recognised in the reserve for equity instruments at an amount of \u20ac989.0 million. This reserve is unchanged with respect to 31 December 2022.
These non-convertible, perpetual, subordinated green bonds are non-callable for six years and will pay coupon interest of 2.375% until 9 February 2028, the first reset date. After this date, the bonds will pay annual interest equal to the 5-year Euro Mid-Swap rate plus a spread of 212.1 basis points. This will be increased by a further spread of 25 basis points from 9 February 2033 and by an additional 75 basis points from 9 February 2048.
Share premium reserve, Cash flow hedge reserve and Other reserves \u2013 \u20ac803.6 million
The \u201cShare premium reserve\u201d, \u201cCash flow hedge reserve\u201d and \u201cOther reserves\u201d at 31 December 2023 amount to \u20ac803.6 million, having fallen \u20ac36.7 million compared with 31 December 2022, broadly as a result of other comprehensive income. This reflects:
\u2022 fair value adjustments to the Parent Company\u2019s cash flow hedges (down \u20ac37.3 million, including the related hedging costs of \u20ac0.6 million, after the related taxation);
\u2022 fair value adjustments to the value of financial assets represented by securities (up \u20ac1.0 million, after the related taxation);
\u2022 the change in actuarial gains and losses on provisions for employee benefits (down \u20ac0.6 million, after the related taxation).
Retained earnings and accumulated losses \u2013 \u20ac2,973.1 million
The increase in \u201cRetained earnings and accumulated losses\u201d, amounting to \u20ac178.2 million, primarily regards the remaining portion of profit for 2022 (up \u20ac202.1 million), following the Company\u2019s payment of the dividend for 2022 (totalling \u20ac632.0 million) and recognition of the interest accruing on the hybrid green bonds (down \u20ac23.8 million).
Interim dividend for 2023 and final dividend for 2022
On 8 November 2023, the Company\u2019s Board of Directors, having obtained the Independent Auditor\u2019s opinion required by article 2433-bis of the Italian Civil Code, decided to pay an interim dividend of 11.46 euro cents per share. The dividend was payable from 22 November 2023, with an ex-dividend date for coupon 39 on 20 November 2023. The dividend was paid to the holders of each ordinary share outstanding, with the exception of the amount payable on treasury shares held at the record date of 21 November 2023.
The Annual General Meeting of shareholders held on 9 May 2023 approved payment of a dividend for full-year 2022 of 31.44 eurocents per share, and the payment \u2013 before any withholdings required by law \u2013 of a final dividend of 20.83 eurocents per share (payable from 21 June 2023, with an ex-dividend date for coupon 38 of 19 June 2023), of which 10.61 eurocents paid in the form of an interim dividend payable from 23 November 2022.
The individual components of equity at the end of the year are shown below, specifying their origin, availability and distributability.
(\u20ac/m)
31 December 2023
Potential use
Available amount
Share capital
442.2
-
-
Legal reserve:
- equity instruments \u2013 Perpetual hybrid bonds
989.0
-
-
- other
416.1
A.B.C
416.1
Revenue reserves:
- legal reserve
88.4
B
88.4
- actuarial gains (losses) on employee benefits, cash flow hedges and financial assets after taxation
42.5
-
-
- reserve for share-based payments (LTI Plan)
11.2
-
-
- negative reserve for treasury shares
\u00a0(29.8)
-
-
- other
333.8
A.B.C
333.8
Retained earnings and accumulated losses
2,973.1
A.B.C
2,973.1
Interim dividend
\u00a0(230.3)
A.B.C
-
TOTAL
\u00a05,036.2
\u00a0
\u00a0
Key:
A \u2013 for capital increases
B \u2013 to cover losses
C \u2013 for distribution to shareholders
The available amount includes \u20ac501.2 million in untaxed revenue reserves.
21. Borrowings and financial liabilities
(\u20acm)
31 December 2023
31 December 2022
Change
Bond issues
5,664.2
5,078.9
585.3
Bank borrowings
3,705.0
3,293.4
411.6
LONG-TERM BORROWINGS
9,369.2
8,372.3
996.9
Fair value hedges
164.5
247.2
\u00a0(82.7)
NON-CURRENT FINANCIAL LIABILITIES
164.5
247.2
(82.7)
SHORT-TERM BORROWINGS
1,190.4
419.5
770.9
Bond issues
826.4
1,658.8
\u00a0(832.4)
Bank borrowings
542.6
236.5
306.1
CURRENT PORTION OF LONG-TERM BORROWINGS
1,369.0
1,895.3
\u00a0(526.3)
CURRENT FINANCIAL LIABILITIES
113.7
44.9
68.8
TOTAL
12,206.8
10,979.2
1,227.6
Borrowings and financial liabilities have increased by \u20ac1,227.6 million compared with the previous year to \u20ac12,206.8 million. The change primarily reflects:
- an increase in bank borrowings, amounting to \u20ac717.7 million, following the drawdown of new EIB loans, totalling \u20ac900 million, after repayments of bank loans amounting to \u20ac100.0 million and repayments falling due on existing EIB loans. The change also reflects fair value adjustments of these financial instruments;
- an increase in short-term borrowings (\u20ac770.9 million) due to the use of short-term facilities and the issue of commercial paper by the Company;
- a reduction in bond issues (down \u20ac247.1 million), essentially due to the repayment of two bonds (totalling \u20ac1,000 million in July 2023 and \u20ac670.8 million in September 2023), partially offset by the launch of the same number of issues amounting to \u20ac1,400 million, carried out by Terna S.p.A. in April and July 2023. The change also reflects fair value adjustments of these financial instruments.
The latest official prices at 31 December 2023 and 31 December 2022 for the bonds listed on the Luxembourg Stock Exchange are detailed below:
(\u20acm)
ISIN
PRICE AT 31 DECEMBER 2023
PRICE AT 31 DECEMBER 2022
Bond maturity 2023*:
XS0328430003
\u00a0n.a**
\u00a0133.90
Bond maturity 2023:
XS1858912915
\u00a0n.a**
\u00a099.13
Bond maturity 2024:
XS0203712939
\u00a0100.92
\u00a0102.21
Bond maturity 2025:
XS2033351995
\u00a094.95
\u00a091.69
Bond maturity 2026:
XS1371569978
\u00a095.96
\u00a093.87
Bond maturity 2026:
XS1980270810
\u00a095.51
\u00a092.27
Bond maturity 2027:
XS1652866002
\u00a094.40
\u00a090.25
Bond maturity 2027:
XS2536846236
\u00a0100.33
\u00a0100.78
Bond maturity 2028:
XS1503131713
\u00a091.46
\u00a085.03
Bond maturity 2029:
XS2357205587
\u00a086.53
\u00a080.02
Bond maturity 2029:
XS2607193435
\u00a0102.26
\u00a0n.a**
Bond maturity 2030:
XS2237901355
\u00a082.94
\u00a075.66
Bond maturity 2032:
XS2209023402
\u00a081.82
\u00a073.78
Bond maturity 2033:
XS2655852726
\u00a0103.26
\u00a0n.a**
*\tSource: BofA, Morgan Stanley and Bloomber.
**\tNot applicable.
Long-term borrowings
The table below shows movements in long-term debt during the year, including also the nominal amount:
(\u20acm)
31 December 2022
REPAYMENTS AND CAPITALISATIONS
DRAWDOWNS
OTHER
CHANGE IN THE CARRYING AMOUNT
31 December 2023
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
NOTIONAL DEBT
CARRYING AMOUNT
FAIR VALUE
Bond maturing IL
662.0
659.6
886.4
(670.8)
-
11.2
(659.6)
-
-
-
Bond maturing 2023
1,000.0
999.2
991.3
(1,000.0)
-
0.8
(999.2)
-
-
-
Bond maturing 2024
800.0
858.2
817.7
-
-
(31.8)
(31.8)
800.0
826.4
807.4
Bond maturing 2025
500.0
497.5
458.4
-
-
1.0
1.0
500.0
498.5
474.7
Private Placement 2026
80.0
79.5
75.1
-
-
0.2
0.2
80.0
79.7
76.8
Bond maturing 2026
500.0
498.9
461.3
-
-
0.3
0.3
500.0
499.2
477.6
Private Placement 2027
100.0
99.8
100.8
-
-
-
-
100.0
99.8
100.3
Bond maturing 2027
1,000.0
984.9
902.4
-
-
3.1
3.1
1,000.0
988.0
944.0
Bond maturing 2028
750.0
705.6
637.7
-
-
7.3
7.3
750.0
712.9
685.9
Bond maturing 750_2029
-
-
-
-
750.0
(7.3)
742.7
750.0
742.7
766.9
Bond maturing 2029
600.0
597.1
480.1
-
-
0.5
0.5
600.0
597.6
519.2
Bond maturing 2030
500.0
403.8
378.3
-
-
33.2
33.2
500.0
437.0
414.7
Bond maturing 2032
500.0
353.6
368.9
-
-
12.7
12.7
500.0
366.3
409.1
Bond maturing 2033
-
-
-
-
650.0
(7.5)
642.5
650.0
642.5
671.2
Total bond issues
6,992.0
6,737.7
6,558.4
(1,670.8)
1,400.0
23.7
(247.1)
6,730.0
6,490.6
6,347.8
Borrowings
3,524.3
3,520.6
3,520.6
(234.4)
900.0
51.4
717.0
3,799.4
4,237.6
4,237.6
Lease liabilities
9.3
9.3
9.3
(2.5)
-
3.2
0.7
10.0
10.0
10.0
Total borrowings
3,533.6
3,529.9
3,529.9
(236.9)
900.0
54.6
717.7
3,809.4
4,247.6
4,247.6
Total debt
10,525.6
10,267.6
10,088.3
(1,907.7)
2,300.0
78.3
470.6
10,539.4
10,738.2
10,595.4
At 31 December 2023, Terna has access to additional financing of \u20ac3,455.0 million, represented by two revolving credit facilities.
In addition, as provided for in IFRS 7, the table shows the fair value of borrowings and bond issues. In the case of bond
issues, this is market value based on prices at the reporting date, whilst variable rate loans are measured by discounting
expected cash flows based on the market interest rate curve at the reporting date.
The following table shows an analysis of bond issues and other borrowings by maturity, showing the related short-term portions.
(\u20acm)
Maturity
31 December 2022*
31 December 2023*
Portion falling due within 12 months
Portion falling due after 12 months
2025
2026
2027
2028
2029
After
Other**
\u00a0Average interest rate at 31 December 2023
Average interest rate after hedges at 31 December 2023
Bonds
2023
659.6
-
-
-
-
-
-
-
-
-
-
2.73%
5.08%
2023
999.2
-
-
-
-
-
-
-
-
-
-
1.00%
1.15%
2024
858.2
826.4
800.0
-
-
-
-
-
-
-
26.4
4.90%
0.87%
2025
497.6
498.5
-
500.0
500.0
-
-
-
-
-
(1.5)
0.13%
0.32%
2026
498.8
499.2
-
500.0
-
500.0
-
-
-
-
(0.8)
1.00%
1.28%
2026
79.5
79.7
-
80.0
-
80.0
-
-
-
-
(0.3)
1.60%
1.80%
2027
984.8
988.0
-
1,000.0
-
-
1,000.0
-
-
-
(12.0)
1.38%
1.91%
2027
99.8
99.8
-
100.0
-
-
100.0
-
-
-
(0.2)
3.44%
2.77%
2028
705.6
712.9
-
750.0
-
-
-
750.0
-
-
(37.1)
1.00%
1.29%
2029
597.2
597.6
-
600.0
-
-
-
-
600.0
-
(2.4)
0.38%
1.71%
2029
-
742.7
-
750.0
-
-
-
-
750.0
-
(7.3)
3.63%
3.76%
2030
403.8
437.0
-
500.0
-
-
-
-
-
500.0
(63.0)
0.38%
3.30%
2032
353.6
366.3
-
500.0
-
-
-
-
-
500.0
(133.7)
0.75%
3.11%
2033
-
642.5
-
650.0
-
-
-
-
-
650.0
(7.5)
3.88%
3.91%
EIB
2045
1,475.0
2,407.2
24.6
2,488.5
47.7
58.5
117.1
142.2
142.2
1,980.8
(105.9)
2.43%
1.75%
Terna\u2019s borrowing
2024
300.0
300.0
300.0
-
-
-
-
-
-
-
-
-
(1.22%)
Total fixed rate
\u00a0
8,512.7
9,197.8
1,124.6
8,418.5
547.7
638.5
1,217.1
892.2
1,492.2
3,630.8
(345.3)
EIB
2041
950.2
836.3
115.3
721.0
115.3
115.3
115.3
115.3
96.0
163.8
-
3.7%***
1.57%
Terna\u2019s borrowing
2025
799.1
699.4
100.0
600.0
600.0
-
-
-
-
-
(0.6)
3.82%***
3.77%
Total variable rate
\u00a0
1,749.3
1,535.7
215.3
1,321.0
715.3
115.3
115.3
115.3
96.0
163.8
(0.6)
TOTAL
\u00a0
10,262.0
10,733.5
1,339.9
9,739.5
1,263.0
753.8
1,332.4
1,007.5
1,588.2
3,794.6
(345.9)
*\tThe balance does not include prepaid fees of \u20ac5.3 million at 31 December 2023 and \u20ac3.7 million at 31 December 2022.
**\tIncludes portions measured at amortised cost and fair value adjustments at 31 December 2023.
***\tThis is the average of the rates fixed in the sub-periods.
(\u20acm)
31 December 2022
31 December 2023
Portion falling due within 12 months
Portion falling due after 12 months
Operating leases
9.3
10.0
2.7
7.3
TOTAL
9.3
10.0
2.7
7.3
At 31 December 2023, payments on operating leases recognised in application of IFRS 16 amount to \u20ac2.5 million.
The total value of the Terna Group\u2019s borrowings at 31 December 2023 is \u20ac10,733.5 million (\u20ac1,339.9 million falling due within 12 months and \u20ac9,739.5 million falling due after 12 months net of portions measured at amortised cost and fair value adjustments), of which \u20ac3,794.6 million maturing after five years.
Non-current financial liabilities \u2013 \u20ac164.5 million
(\u20acm)
31 December 2023
31 December 2022
Change
Fair value hedges
164.5
247.2
(82.7)
TOTAL
164.5
247.2
(82.7)
Non-current financial liabilities, amounting to \u20ac164.5 million at 31 December 2023, reflect the fair value of fair value hedges.
Fair value was measured by discounting the expected cash flows using the market yield curve at the reporting date. The decreases of \u20ac82.7 million, compared with 31 December 2022 reflects the change in the market interest rate curve.
Short-term borrowings \u2013 \u20ac1,190.4 million
\u201cShort-term borrowings\u201d, amounting to \u20ac1,190.4 million at 31 December 2023, have increased \u20ac770.9 million compared with the previous year, essentially due to the use of short-term credit facilities and the issue of commercial paper by the Company.
Current financial liabilities \u2013 \u20ac113.7 million
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Change
\u00a0Fair value hedges
\u00a0-
0.8
\u00a0(0.8)
Other current financial liabilities
38.5
\u00a0-
38.5
DEFERRED LIABILITIES ON:
Hedging derivatives
1.3
0.6
0.7
Bond issues
53.5
33.5
20.0
Borrowings
20.4
10.0
10.4
TOTAL
113.7
44.9
68.8
Current financial liabilities amount to \u20ac113.7 million at 31 December 2023, an increase of \u20ac68.8 million compared with 31 December 2022. This essentially reflects the value of net unpaid financial expenses accruing on financial instruments (up \u20ac30.3 million, primarily relating to bond issues and borrowings) and recognition of the advance disbursed by the European Commission in relation to the Italy\u2013Tunisia interconnector project (up \u20ac38.5 million), attributable to the Tunisian operator, STEG.
Net debt
Pursuant to the CONSOB Communication of 28 July 2006 and in compliance with ESMA Recommendation no. 32-382-1138 of 2021, the Company\u2019s net debt is as follows:
(\u20acm)
\u00a0
\u00a0
31 December 2023
A.
Cash
286.3
B.
Cash equivalents*
1,170.0
C.
Other current financial assets**
361.3
D.
Liquidity (A) + (B) + (C)
1,817.6
E.
Current financial liabilities (including debt instruments, but excluding the current portion of non-current financial liabilities)
1,190.4
F.
Current portion of non-current debt***
1,475.4
G.
Current debt (D+E+F)
2,665.8
H.
Net current debt (G) - (D)
848.2
I.
Non-current financial liabilities (excluding the current portion and debt instruments)****
3,793.4
J.
Debt instruments*****
5,723.1
K.
Non-current net debt (I) + (J)
9,516.5
L.
Net debt (H) + (K)
10,364.7
*\tCorresponds with the item, \u201cCash and can equivalents\u201d relating to the value of short-term deposits.
**\tCorresponds with the item, \u201c Current financial assets\u201d relating to the value of government securities (\u20ac197.2 million), readily convertible time deposits (\u20ac150.0 million) and accrued interest income (\u20ac14.1 million).
***\tCorresponds with the item, \u201cCurrent portion of long-term borrowings\u201d relating to the short-term portion of long-term borrowings (\u20ac539.9 million), the short-term portion of bond issues (\u20ac826.4 million) and the short-term portion of lease liabilities (\u20ac2.7 million), \u201c Current financial liabilities\u201d and \u201cCurrent financial assets\u201d relating to the value of accrued financial income on derivatives (down \u20ac7.3 million).
**** Corresponds with the item, \u201cLong-term borrowings\u201d relating to the value of borrowings (\u20ac3,697.7 million) and the long-term portion of lease liabilities (\u20ac7.3 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities (\u20ac105.6 million) and \u201cNon-current financial assets\u201d relating to derivative assets (down \u20ac17.2 million).
*****\tCorresponds with the item, \u201cLong-term borrowings\u201d relating to the value of bond issues (\u20ac5,664.2 million) and the item, \u201cNon-current financial liabilities\u201d relating to the value of derivative liabilities on bonds (\u20ac58.9 million).
Information on the provisions in outstanding loan agreements at 31 December 2023 is provided in the notes to the consolidated financial statements.
22. Employee benefits \u2013 \u20ac11.3 million
Terna provides its employees with benefits during their period of employment (loyalty bonuses), on termination of employment (TFR, energy discounts, additional months\u2019 pay) and after termination in the form of post-employment benefits (ASEM health cover).
Loyalty bonuses are payable to the Company\u2019s employees and senior managers once certain requirements have been met regarding length of service (on completing 25 and 35 years of service).
Termination benefits (TFR) are payable to all employees, whilst employees hired by 30 June 1996 receive energy discounts, and employees (blue-collar workers, office staff and middle managers) employed prior to 24 July 2001 are due additional months\u2019 pay on termination.
Post-employment benefits consist of a form of supplementary health cover in addition to that provided by the Italian national health service, as provided for in the national collective contract for industrial managers (the ASEM health plan).
The following table shows the composition of provisions for TFR\u00a0and other employee benefits and movements during the year ended 31 December 2023.
(\u20acm)
31 December 2022
Provisions
Interest cost
Uses and other movements
Actuarial gains/(losses)
31 December 2023
Benefits during the period of employment
Loyalty bonuses
0.8
0.1
0.1
\u00a0(0.1)
\u00a0-
0.9
Total
0.8
0.1
0.1
\u00a0(0.1)
\u00a0-
0.9
Termination benefits
Deferred compensation benefits (TFR)
3.7
\u00a0-
0.1
\u00a0(0.2)
\u00a0-
3.6
Energy discounts
0.2
\u00a0-
\u00a0-
\u00a0-
\u00a0-
0.2
Additional months\u2019 pay
0.5
0.1
\u00a0-
\u00a0(0.1)
\u00a0-
0.5
Total
4.4
0.1
0.1
\u00a0(0.3)
\u00a0-
4.3
Post-employment benefits
ASEM health cover
5.1
0.2
0.2
\u00a0(0.3)
0.9
6.1
Total
5.1
0.2
0.2
\u00a0(0.3)
0.9
6.1
Total
10.3
0.4
0.4
\u00a0(0.7)
0.9
11.3
This item, amounting to \u20ac11.3 million, is up \u20ac1.0 million compared with 31 December 2022, due primarily to the change in actuarial gains and losses (up \u20ac0.9 million relating to the ASEM health plan).
The following table shows the current service cost and interest income and expense.
(\u20acm)
Loyalty bonus
TFR
Additional months\u2019 pay
ASEM health plan
TOTAL
Net impact recognised in profit or loss
- current service cost
0.1
\u00a0-
\u00a0-
0.2
0.3
- curtailment (revenue) and other costs
-
-
0.1
-
0.1
- interest income and expense
0.1
0.1
\u00a0-
0.2
0.4
TOTAL RECOGNISED IN PROFIT OR LOSS
0.2
0.1
0.1
0.4
0.8
Revaluation of the net liability for employee benefits is shown in the following table, which provides details of the type of actuarial gain or loss recognised in other comprehensive income.
(\u20acm)
TFR
ASEM health plan
TOTAL
Actuarial gain/(losses)
- based on past experience
\u00a0(0.1)
0.4
0.3
- due to changes in discount rate
0.1
0.5
0.6
TOTAL IMPACT ON COMPREHENSIVE INCOME
\u00a0-
0.9
0.9
Finally, the following tables show the main actuarial assumptions applied, a sensitivity analysis of movements in the assumptions and the payment schedule for the plan. In line with 2022, the interest rate used to determine the present value of the obligation was calculated on the basis of the yield on the Iboxx Eurozone Corporates AA index at Iboxx Eurozone Corporates AA at 31 December 2023, matching the duration of the relevant group of plan participants.
Loyalty bonuses
TFR
Additional months\u2019 pay
Energy discounts
ASEM health plan
Discount rate
3.17%
3.08%
2.95%
3.08%
3.17%
Inflation rate
2.00%
2.00%
-
-
2.70%
Duration (in years)
17.71
6.53
4.07
5.50
13.73
(\u20acm)
Loyalty bonuses
TFR
Additional months\u2019 pay
Energy discounts
ASEM health plan
TOTAL
Discount rate +0.25%
0.9
3.6
0.5
0.2
5.8
11.0
Discount rate -0.25%
0.9
3.7
0.5
0.2
6.2
11.5
Inflation rate +0.25%
0.9
3.7
n/a
n/a
\u00a0n/a
4.6
Inflation rate -0.25%
0.8
3.6
\u00a0n/a
n/a
\u00a0n/a
4.4
Annual rate of increase in health costs +3%
\u00a0n/a
\u00a0n/a
\u00a0n/a
\u00a0n/a
6.1
6.1
Annual rate of increase in health costs -3%
\u00a0n/a
\u00a0n/a
\u00a0n/a
\u00a0n/a
5.9
5.9
(\u20acm)
Loyalty bonuses
TFR
Additional months\u2019 pay
Energy discounts
ASEM health plan
TOTAL
By the end of 2024
\u00a0-
0.5
0.3
\u00a0-
0.5
1.3
By the end of 2025
\u00a0-
0.6
\u00a0-
\u00a0-
0.5
1.1
By the end of 2026
0.1
0.5
0.1
\u00a0-
0.5
1.2
By the end of 2027
\u00a0-
0.1
\u00a0-
\u00a0-
0.6
0.7
By the end of 2028
0.1
0.4
0.1
\u00a0-
0.6
1.2
After 5 years
0.7
1.5
-
0.2
3.4
5.8
TOTAL
0.9
3.6
0.5
0.2
6.1
11.3
23. Provisions for risks and charges \u2013 \u20ac108.4 million
(\u20acm)
PROVISIONS FOR LITIGATION AND DISPUTES
PROVISIONS FOR SUNDRY RISKS AND CHARGES
PROVISIONS FOR EARLY RETIREMENT INCENTIVES
TOTAL
Amount at 31 December 2022
11.3
59.2
26.9
97.4
New provisions
1.0
24.2
14.5
39.7
Uses and other movements
\u00a0(1.9)
\u00a0(19.0)
\u00a0(7.8)
\u00a0(28.7)
Amount at 31 December 2023
10.4
64.4
33.6
108.4
Provisions for litigation and disputes \u2013 \u20ac10.4 million
These provisions, set aside to cover outstanding liabilities that, at the end of the year, could result from court judgements and out-of-court settlements regarding the activities of Group companies, have been assessed partly on the basis of recommendations from internal and external legal advisors. The balance at 31 December 2023, totalling \u20ac10.4 million, primarily regards disputes involving the Company in relation to the payment of damages relating to operation and maintenance, requests for compensation for easements and labour and social security disputes. This is down by a net \u20ac0.9 million compared with the previous year as a result of lower net provisions during the year.Provisions for sundry risks and charges \u2013 \u20ac64.4 million
These provisions amount to \u20ac64.4 million at 31 December 2023 and essentially regard liabilities associated with urban and environmental restoration projects, regulation of the quality of the electricity service, staff incentive plans, right-of-way fees and tax-related aspects.
Compared with the previous year, the provisions are up by a net \u20ac5.2 million, reflecting:
\u2022 net provisions for right-of-way fees (up \u20ac4.8 million);
\u2022 net provisions of \u20ac3.8 million for urban and environmental restoration schemes;
\u2022 net provisions of \u20ac2.5 million for staff incentives;
\u2022 a net decrease of \u20ac0.8 million in provisions linked to regulation of the quality of the electricity service (the mitigation and sharing mechanism introduced by ARERA Resolution 653/2015/R/eel) which, after provisions for estimated penalties linked to outages during the year, reflects payments to distribution companies and releases following final determination of the penalties due to previous years.
Provisions for early retirement incentives \u2013 \u20ac33.6 million
Provisions for early retirement incentives reflects the estimated extraordinary expenses to be incurred in relation to the cost of the scheme for the year, linked to the early retirement of the Company\u2019s employees who have reached pensionable age and where the Company has an obligation. This item has increased by a net \u20ac6.7 million, reflecting payments in coming years in relation to the existing plan for generational turnover.
24. Other non-current liabilities \u2013 \u20ac373.0 million
This item, amounting to \u20ac373.0 million at 31 December 2023, regards the amount payable to Terna Rete Italia S.p.A., resulting from the transfer of net liabilities included in the operations leased to this subsidiary (\u20ac24.2 million), accrued grants related to assets receivable (\u20ac64.3 million) and the Interconnector Guarantee Fund (\u20ac163.9 million) set up by the 2016 Stability Law, in order to fund investment in interconnections by art. 32 of Law 99/09. This item also includes guarantee deposits received from operators participating in the capacity market and electricity market operators guaranteeing their obligations assumed in dispatching and virtual interconnection agreements (\u20ac120.7 million).
The decrease in this item compared with the previous year, amounting to \u20ac24.1 million, essentially reflects a decrease in the guarantee deposits received from operators and subsequent modifications and additions (down \u20ac34.9 million), settlement of a part of the liabilities included in the leased business unit (down \u20ac1.1 million), with particular regard to the termination benefits (TFR) payable to personnel participating in the generational turnover plan, and the release of portions of grants related to assets (a reduction of \u20ac5.2 million). after an increase in the Interconnector Guarantee Fund (up \u20ac17.2 million).
25. Current liabilities
(\u20acm)
31 December 2023
31 December 2022
Change
Short-term borrowings*
1,190.4
419.5
770.9
Current portion of long-term borrowings*
1,369.0
1,895.3
(526.3)
Trade payables
2,669.7
3,515.9
(846.2)
Tax liabilities
2.9
50.8
(47.9)
Current financial liabilities*
113.7
44.9
68.8
Other current liabilities
659.6
533.2
126.4
TOTAL
6,005.3
6,459.6
(454.3)
(*) Information on these items is provided in note 21. \u201cBorrowings and financial liabilities\u201d.
Trade payables \u2013 \u20ac2,669.7 million
(\u20acm)
31 December 2023
31 December 2022
Change
Suppliers:
\u00a0
\u00a0
\u00a0
- Energy-related payables
1,675.6
2,673.3
(997.7)
- Non-energy-related payables
139.3
150.7
(11.4)
Non-energy-related payables due to subsidiaries
852.3
688.5
163.8
Amounts due to associates
1.7
2.6
(0.9)
Payables resulting from contract work in progress
0.8
0.8
-
TOTAL
2,669.7
3,515.9
(846.2)
Suppliers
Energy-related payables
The decrease of \u20ac997.7 million in this item compared with 31 December 2022 essentially reflects energy-related pass-through payables (down \u20ac1,075.9 million). The decrease in these payables is primarily due to:
\u2022 a reduction of \u20ac712.1 in Power Exchange payables, associated with the uplift mechanism. The reduction is due to the sharp fall in dispatching costs (above all DSM costs and the cost of imbalances) reflecting the fall in energy prices and in the volumes traded, partly following the efficiencies achieved and investment by Terna in reducing DSM costs;
\u2022 a decrease in net payables relating to essential plants for the security of the electricity system - UESS (\u20ac417.1 million), reflecting higher payments made in 2023, which also take into account the maximisation programme introduced by Resolution 430/2022;
partially offset by an increase in payables (\u20ac45.9 million) linked to the Inter-TSO Compensation (ITC) scheme8.
Non-energy related payables
The exposure to suppliers regards invoices received and to be received for contract work, services and purchases of materials and equipment.
The increase compared with the previous year (down \u20ac11.4 million) is largely due to an increase in activity towards the end of the year.
Non-energy-related payables due to subsidiaries
This item, totalling \u20ac852.3 million, is up \u20ac163.8 million compared with the previous year, primarily due to the increased amount payable to Terna Rete Italia S.p.A. (up \u20ac161.9 million) as a result of the greater volume of capital expenditure carried out towards the end of the year, compared with the same period of 2022.
Amounts due to associates
This item, amounting to \u20ac1.7 million, is down \u20ac0.9 million compared with the previous year, primarily reflecting a reduction in amounts payable to the associate, CESI S.p.A., for services provided to the Company, relating to electro technical studies and research.
The commitments assumed by the Company towards suppliers amount to approximately \u20ac328.4 million and regard purchase commitments linked to the normal \u201coperating cycle\u201d projected for the period 2024-2028.
Tax liabilities \u2013 \u20ac2.9 million
This item amounts to \u20ac2.9 million at 31 December 2023, a reduction of \u20ac47.9 million compared with 31 December 2022. This reflects the net impact of income tax for the year, the settlement of taxes relating to the previous year and an increase in payments on account.
Other current liabilities \u2013 \u20ac659.6 million
(\u20acm)
31 December 2023
31 December 2022
Change
Prepayments
259.2
147.2
112.0
Other tax liabilities
76.2
84.5
(8.3)
Social security payables
8.7
7.7
1.0
Amounts due to subsidiaries
1.1
0.6
0.5
Amounts due to personnel
16.8
14.2
2.6
Other amounts due to third parties
297.6
279.0
18.6
TOTAL
659.6
533.2
126.4
Prepayments
This item (\u20ac259.2 million) regards grants related to assets collected by the Company to fund the construction of non-current assets in progress at 31 December 2023.
Compared with the balance at 31 December 2022 (\u20ac147.2 million), the balance is up \u20ac112.0 million, essentially due to the impact of grants deducted directly from the carrying amount of the related assets, totalling \u20ac9.7 million, and new prepayments from third parties.
Other tax liabilities
Other tax liabilities, amounting to \u20ac76.2 million, regard withholding tax payable on salaries paid at the end of the year, in addition to the balance of the Group\u2019s VAT at the end of the year.
This item is down \u20ac8.3 million, broadly due to a decrease in VAT payable at 31 December 2023 (down \u20ac8.9 million).
Social security payables
Social security payables, essentially relating to employee contributions payable to INPS (the National Institute of Social Security), amount to \u20ac8.7 million. This is broadly in line with the figure for the previous year.
Amounts due to personnel
Amounts due to personnel, amounting to \u20ac16.8 million, primarily regard:
\u2022 staff incentives and early retirement incentives payable in the subsequent year (\u20ac11.9 million);
\u2022 amounts due to employees in the form of accrued and unused annual leave and bank holiday entitlements (\u20ac4.2 million).
The increase of \u20ac2.6 million in this item compared with the previous year primarily reflects an increase in staff incentives (up \u20ac1.5 million) and benefits payable to personnel leaving the Company in the following year (up \u20ac1.0 million).
Amounts due to subsidiaries
Amounts due to subsidiaries, totalling \u20ac1.1 million, regard the amount payable to Terna Interconnector S.r.l., primarily in the form of compensation payable in relation to the interconnector with France (\u20ac0.6 million).
This item is broadly in line with the figure for 31 December 2022.
Other payables due to third parties
Other payables due to third parties, amounting to \u20ac297.6 million, essentially relate to guarantee deposits (\u20ac257.2 million) received from electricity market operators to guarantee their contractual obligations under dispatching and virtual interconnection contracts. This item also includes deferred income (\u20ac11.7 million, primarily attributable to Non-regulated Activities) and coupon interest payable to the holders of hybrid instruments issued during the year (\u20ac21.1 million).
The increase of \u20ac18.6 million in this item compared with 31 December 2022 essentially reflects the greater amount of guarantee deposits collected during the year (up \u20ac32.9 million), partially offset by dividends paid to shareholders during the year (down \u20ac18.2 million).
E. Commitments and risks
Risk management
In the course of its operations, Terna is exposed to different financial risks: market risk, liquidity risk and credit risk.
This section provides information regarding Terna\u2019s exposure to all the above risks, along with a presentation of the objectives, policies and processes for managing those risks and the methods used to assess them, with further Terna\u2019s risk management policies seek to identify and analyse the risks that the Company is exposed to, establishing appropriate limits and controls and monitoring the risks and compliance with such limits. These policies and the related systems are reviewed on a regular basis, in order to take account of any changes in market conditions or in the Company\u2019s operations.
As a part of the financial risk management policies approved by the Board of Directors, Terna S.p.A. has established the responsibilities and operating procedures for financial risk management, specifically as concerns the instruments to be used and the precise operating limits to apply in managing them.
Certain amounts at 31 December 2022 have been restated for comparative purposes.
The following table shows financial statement items exposed to the above risks.
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Assets
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Derivative financial instruments
-
17.4
17.4
-
75.5
75.5
Cash on hand and government securities
1,606.3
316.3
1,922.6
2,202.6
366.4
2,569.0
Trade receivables
1,928.8
-
1,928.8
2,179.4
\u00a0-
2,179.4
TOTAL
3,535.1
333.7
3,868.8
4,382.0
441.9
4,823.9
(\u20acm)
31 December 2023
31 December 2022
Receivables at amortised cost
Fair value
Total
Receivables at amortised cost
Fair value
Total
Liabilities
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Long-term debt
11,928.6
\u00a0-
11,928.6
10,687.1
\u00a0-
10,687.1
Derivative financial instruments
\u00a0-
164.5
164.5
\u00a0-
\u00a0248.0
248.0
Trade payables
2,669.7
-
2,669.7
\u00a03,515.9
-
3,515.9
TOTAL
14,598.3
164.5
14,762.8
\u00a014,203.0
\u00a0248.0
\u00a014,451.0
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument may fluctuate as a result of changes in financial market conditions. Market risk includes exchange rate risk, interest rate risk and inflation risk.
Risk management must be performed with the objective of minimising the related risks by selecting counterparties and instruments compatible with the Company\u2019s Risk Management Policy. Speculative activity is not form part of the Company\u2019s activities.
The Terna Group seeks to adopt a dynamic approach to financial risk management. This approach is characterised by risk aversion, aimed at minimising risk through continuous monitoring of financial markets in order to obtain new financing and conclude hedging transactions in favourable market conditions. The dynamic approach enables the Group to intervene in order to improve existing hedges should there be a change in market conditions or changes in the hedged item, making the hedges inappropriate or excessively costly.
The fair value of financial instruments is determined in accordance with the fair value hierarchy envisaged under IFRS 7 (Level 2), by means of appropriate valuation techniques for each category of financial instrument, using market data at the closing date (such as interest rates, exchange rates and volatility) and discounting projected cash flows on the basis of the market yield curve at the reporting date.
Interest rate risk
Interest rate risk is represented by the uncertainty associated with interest rate fluctuations. This is the risk that a change in market interest rates may produce effects on the fair value or future cash flows of financial instruments.
In the course of its operations, Terna is exposed to the risk of fluctuations in interest rates. Its main source of interest rate risk is associated with its borrowings and the related hedges in the form of derivative instruments that generate financial expenses. Terna\u2019s borrowing strategy focuses on long-term borrowings, whose term reflects the useful life of the Company\u2019s assets. It pursues an interest rate risk hedging policy that aims to guarantee that the percentage of debt represented by fixed rate liabilities is at least 40%, as provided for in the relevant policies. Considering the low level of interest rates and the new regulatory review, all debt is now fixed rate.
At 31 December 2023, interest rate risk is hedged by cash flow hedges, which hedge the risk connected with movements in interest rates relating to long-term borrowings.
Below are the notional amounts and fair values of the derivative financial instruments entered into by Terna:
(\u20acm)
31 December 2023
31 December 2022
Change
Notional
Fair value
Notional
Fair value
Notional
Fair value
Fair value hedges
1,853.0
(164.5)
1,973.5
(248.0)
(120.5)
83.5
Cash flow hedges
2,362.8
17.2
1,996.3
75.5
366.5
(58.3)
The notional amount of outstanding cash flow hedges at 31 December 2023, amounting to \u20ac2,362.8 million, breaks down as follows:
\u2022 \u20ac1,309.8 million (fair value gain of \u20ac27.4 million) maturing 2024;
\u2022 \u20ac260.0 million (fair value gain of \u20ac0.3 million) maturing 2025;
\u2022 \u20ac353.0 million (fair value loss of \u20ac0.3 million) maturing 2027;
\u2022 \u20ac500.0 million (fair value loss of \u20ac10.2 million) maturing 2029;
The notional amount of fair value hedges at 31 December\u00a02023, amounting to \u20ac1,853.0 million, breaks down as follows:
\u2022 \u20ac950.0 million (fair value loss of \u20ac58.9million) maturing 2030;
\u2022 \u20ac323.0 million (fair value loss of \u20ac33.8 million) maturing 2039;
\u2022 \u20ac490.0 million (fair value loss of \u20ac60.1million) maturing 2042;
\u2022 \u20ac90.0 million (fair value loss of \u20ac11.7 million) maturing 2043.
Sensitivity to interest rate risk
Terna has floating-to-fixed interest rate swaps in place to manage the risk of movements in interest rates.
Since the hedging relationship between the derivative and the hedged item is formally documented and the effectiveness of the hedge, as verified initially and periodically over its life, is high, the Company has elected to use hedge accounting to ensure a perfect match between the maturities of the hedge and the hedged item. The aim of hedge accounting is to recognise the effects of the hedges and the hedged items in profit or loss at the same time. As a result:
\u2022 in the case of fair value hedges, changes in the fair value of the hedged item, attributable to the hedged risk, must be accounted for in profit or loss, where they are offset against changes in the fair value of the derivative;
\u2022 in the case of cash flow hedges, changes in the fair value of the derivative must be recognised in \u201cOther comprehensive income\u201d (recognising any ineffective portion immediately through profit or loss) and then recycled through profit or loss in the same period in which the cash flows of the hedged instrument materialise.
The following table reports the amounts recognised through profit or loss and in \u201cOther comprehensive income\u201d for positions that are sensitive to changes in interest rates, in addition to the theoretical value of the positions following a positive or negative shift in the yield curve and the differential impact of such changes recognised through profit or loss and in \u201cOther Comprehensive Income\u201d. A hypothetical 10% movement in interest rates with respect to market interest rates at the reporting date was assumed:
(\u20acm)
PROFIT OR LOSS
OCI
CURRENTRATES +10%
CURRENT VALUES
CURRENT RATES
-10%
CURRENTRATES +10%
CURRENT VALUES
CURRENT RATES
-10%
31 December 2023
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a0(0.7)
\u00a0(2.8)
\u00a0(4.9)
\u00a0(48.5)
\u00a0(58.3)
\u00a0(68.2)
Hypothetical change
\u00a02.1
\u00a0-
\u00a0(2.1)
\u00a09.8
\u00a0-
\u00a0(9.9)
31 December 2022
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Positions sensitive to interest rate variations (FVHs, bond issues, CFHs)
\u00a05.0
\u00a03.6
\u00a02.1
\u00a0169.8
\u00a0159.1
\u00a0148.3
Hypothetical change
\u00a01.4
-
\u00a0(1.4)
\u00a010.7
-
\u00a0(10.8)
Regulators around the world have launched a reform of IBOR (Interbank Offered Rates), which are used as the benchmark for most financial instruments sold throughout the world, with the aim of restoring confidence in the benchmark. The transition from EONIA to ESTER took place in 2022 without any significant impact. The Group is continuing to closely monitor the market and the results produced by the various working groups overseeing the transition to the new benchmark rates for the other maturities (EURIBOR). Management is aware of the associated risks and, for this reason, the Group plans to complete the transition in step with the change in the related legislation. At the same time, all the new financial contracts contain fallback provisions governing the transition period.
Inflation risk
Regarding inflation risk, the rates established by the regulator to provide a return on Terna S.p.A.\u2019s activities are determined so as to cover the allowed costs. Such cost components are updated on an annual basis to take into account the impact of inflation. Having used an inflation-linked bond issue in 2007, which matured in September 2023, the Company has put in place a partial hedge of net income; in fact, any decrease in expected revenue due to a decrease in the inflation rate would be offset by lower financial expenses and vice versa.Exchange rate risk
The management of exchange rate risk must aim to protect a company\u2019s earnings from the risk of currency fluctuations by keeping a close eye on market movements and constantly monitoring the existing exposures. In managing this risk, Terna from time to time selects hedging instruments with structures and durations matching the Company\u2019s exchange rate exposure. The instruments used by Terna are of limited complexity, highly liquid and easy to price, such as forwards and options. Such contracts have a notional amount and maturity date less than or equal to that of the underlying financial liability, or the expected cash flows, so that any change in the fair value and/or estimated cash flows deriving from a rise or fall in the euro against other currencies is fully offset by a corresponding change in the fair value and/or estimated cash flows of the underlying position.
At 31 December 2023, the component of financial instruments associated with exchange rate risk is zero.
Liquidity risk
Liquidity risk is the risk that Terna might encounter difficulty in discharging its obligations in respect of its financial liabilities and operating cycle. Liquidity risk management seeks to ensure adequate coverage of borrowing requirements by obtaining adequate lines of credit and appropriate management of any surplus liquidity.
At 31 December 2023, Terna has available short-term credit facilities of approximately \u20ac660 million (out of total facilities of approximately \u20ac987 million), revolving credit facilities of \u20ac3,455 million and facilities agreed.
Finally, Terna S.p.A. has launched a Euro Commercial Paper Programme (ECP), amounting to up to \u20ac1,000 million, including \u20ac130 million still available at 31 December 2023.
Credit risk
Credit risk is the risk a customer or one of the counterparties to a transaction in financial instruments could cause a financial loss by failing to discharge an obligation. It is mainly generated by the Company\u2019s trade receivables and financial investments.
The credit risk originated by open positions on transactions in derivatives is considered to be marginal since the counterparties, in compliance with the financial risk management policies adopted, are leading international banks with high ratings.
Terna provides its services essentially to counterparties considered solvent by the market, and therefore with a high credit standing, and does not have high concentrations of credit risk.
Credit risk management is driven by the provisions of ARERA Resolution 111/06, which, in art. 49, introduced instruments designed to limit the risks related to the insolvency of dispatching customers, both on a preventive basis and in the event of an actual insolvency. In particular, the Resolution establishes three instruments to safeguard the electricity market: a guarantee system (bank guarantees provided by individual dispatching customers, based on their turnover); the option of terminating dispatching contracts (in the event of insolvency or failure to replace enforced guarantees); and, finally, the possibility of recovering uncollected debts, after having taken all other possible collection actions, through a specific fee to be fixed by the regulator.
The following table summarises the exposure to such risk at the reporting date:
(\u20acm)
31 December 2023
31 December 2022
Change
Derivative financial instruments
17.4
75.5
(58.1)
Cash on hand, securities and deposits
1,922.6
2,569.0
(646.4)
Trade receivables
1,928.8
2,179.4
(250.6)
TOTAL
3,868.8
\u00a04,823.9
(955.1)
The total value of the exposure to credit rate risk at 31 December 2023 is represented by the carrying amount of trade receivables, cash and cash equivalents, securities and deposits and cash flow hedges.
The following tables provide qualitative information on trade receivables regarding the geographical distribution and type of customer.
GEOGRAPHICAL DISTRIBUTION
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Italy
1,670.1
2,030.4
Euro-area countries
238.8
140.4
Other countries
19.9
8.6
Total
1,928.8
2,179.4
CUSTOMER TYPE
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Distributors
576.2
472.8
CSEA
72.2
94.3
Dispatching customers for injections
314.5
826.2
Dispatching customers for withdrawals
868.0
682.0
Parties which have signed virtual import contracts and virtual import services (interconnectors and shippers)
11.7
11.8
Sundry receivables
86.2
92.3
Total
1,928.8
2,179.4
The following table breaks down customer receivables by due date, reporting any potential impairment.
(\u20acm)
31 December 2023
31 December 2022
Impairment
Gross
Impairment
Gross
Current
\u00a0(0.4)
1,738.8
\u00a0(0.3)
1,974.2
0-30 days past due
\u00a0-
17.3
\u00a0-
18.2
31-120 days past due
\u00a0(0.2)
3.2
\u00a0(0.2)
51.1
Over 120 days past due
\u00a0(22.9)
193.0
\u00a0(29.2)
165.6
Total
\u00a0(23.5)
1,952.3
\u00a0(29.7)
2,209.1
Movements in the allowance for doubtful accounts in the course of the year were as follows.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Balance at 1st\u00a0January
\u00a0(29.7)
\u00a0(43.1)
Release of provisions
6.3
13.6
Impairments for the year
\u00a0(0.1)
\u00a0(0.2)
Balance at 31 December
\u00a0(23.5)
\u00a0(29.7)
The value of guarantees received from eligible electricity market operators is illustrated below.
(\u20acm)
\u00a0
31 December 2023
31 December 2022
Dispatching - injections
240.4
249.7
Dispatching \u2013 withdrawals
1,893.0
1,665.8
Transmission charges due from distributors
351.0
329.3
Virtual imports
273.4
269.6
Capacity market (*)
175.3
181.4
Balance
2,933.1
2,695.8
(*) Guarantees relating to Capacity Market contracts to be executed from 2024.
Non-regulated Activities are exposed to \u201ccounterparty risk\u201d, in particular in relation to the entities with which sales contracts are entered into, in consideration of the credibility and solvency of the parties in question and the impact that their possible insolvency could have on the financial strength of the business. Counterparty risk is mitigated by implementing special procedures to assess counterparties, measuring operating, financial and reputational aspects of the counterparties in question.
Default risk and debt covenants
This risk is associated with the possibility that the loan agreements or bond terms and conditions to which the Company is a party may contain provisions authorising counterparties to call in such loans immediately upon the occurrence of certain events, thereby generating liquidity risk. More information on the contractual provisions of outstanding borrowings at 31 December 2023, is provided in the section, \u201cBorrowings and financial liabilities\u201d in the notes to Terna S.p.A.\u2019s consolidated financial statements.
Parent company guarantees issued on behalf of subsidiaries
The Company has issued parent company guarantees to third parties to guarantee the fulfilment of certain contractual and/or tax obligations assumed by its subsidiaries, with the Company\u2019s maximum exposure at 31 December 2023 amounting to \u20ac808.8 million, This breaks down as follows: \u20ac6.8 for Terna Interconnector S.r.l., \u20ac713.3 million for Terna Rete Italia S.p.A., \u20ac82.1 million for Rete S.r.l., \u20ac5.6 million for Terna energy solutions S.r.l, \u20ac1.0 million for Terna Plus S.r.l..
Bank guarantees
Bank guarantees issued to third parties and on behalf of Group companies amount to \u20ac157.3 million at 31 December 2023 and break down as follows: \u20ac71.9 million on behalf of Terna S.p.A., \u20ac53.3 million on behalf of Terna Rete Italia S.p.A., \u20ac19.9 million on behalf of Terna Interconnector S.r.l., \u20ac0.1 million on behalf of Terna Plus S.r.l., \u20ac12.0 million on behalf of Terna Energy Solutions S.r.l and \u20ac0.1 million on behalf of Terna Chile S.r.l..
Litigation
The main commitments and risks not disclosed in the statement of financial position at and for the year ended 31 December 2023, relating to the Company are described below.
Litigation regarding the legitimacy of construction permits and plant operations
Another aspect of litigation connected with the plant owned by the Company derives from legal actions brought before the competent administrative courts, aimed at obtaining the annulment of decisions granting consent for the construction and operation of infrastructure.
Litigation relating to activities carried out under concession
As the operator of transmission and dispatching activities since 1 November 2005, the Parent Company has been a party in several court cases, contesting determinations adopted by ARERA (Italy\u2019s Regulatory Authority for Energy, Networks and the Environment), and/or the Ministry of Enterprises and Made in Italy, and/or Terna itself, in relation to these activities. In cases in which the plaintiffs have, in addition to inherent defects in the contested determinations, alleged violation of the regulations laid down by the aforementioned authorities, or in cases in which the determination has had an impact on Terna, the Company has also taken action to defend its interests through the legal system. Within the scope of such litigation \u2013 even though some cases have been concluded, at first and/or second instance, with the annulment of ARERA\u2019s resolutions and, when applicable, of the consequent determinations adopted by Terna \u2013 any negative outcomes for the Company itself may be deemed unlikely, as these disputes normally relate to pass-through items.
F. Business combinations
There were no business combinations in 2023.
G. Related party transactions
Given that Terna S.p.A. is subject to the de facto\u00a0control of Cassa Depositi e Prestiti S.p.A. (registered office at Via Goito 4, 00185 Rome, Italy and consolidated financial statements available on the website at www.cdp.it), a situation ascertained in 2007, related party transactions entered into by Terna during the year include transactions with the associates (Cesi S.p.A., Coreso S.A. and CGES) and employee pension funds (Fondenel and Fopen), as well as transactions with Cassa Depositi e Prestiti itself, with CDP Reti S.p.A. and with the companies directly or indirectly controlled by the Ministry of the Economy and Finance (\u201cMEF\u201d).
Given that Terna S.p.A. and the above companies meet the definition for classification as \u201cgovernment-related entities\u201d, in accordance with IAS 24 \u2013 Related Party Disclosures, the Company has elected to adopt the partial exemption \u2013 permitted by the standard \u2013 from the disclosure requirements in respect of other companies controlled, influenced or jointly controlled by the same government entity. The remainder of this section provides qualitative and quantitative disclosures on transactions with government-related entities having a significant impact on the Company\u2019s results. Amounts relating to pass-through items are not included in these disclosures.
Related party transactions in 2023 broadly regard the provision of services in the course of ordinary activities and conducted on an arm\u2019s length basis.
Under the Terna Group\u2019s current organisational structure, the subsidiary, Terna Rete Italia S.p.A., which has entered into an agreement with the Company covering the lease of certain operations and a number of related intercompany agreements. In accordance with these arrangements, the subsidiary is responsible for the traditional activities involved in operation and routine and extraordinary maintenance of the owned portion of the NTG, and for management and implementation of the grid development initiatives included in the related concession arrangement for transmission and dispatching operations, as set out in Terna\u2019s Development Plan.
Terna is responsible for managing the operations of all its subsidiaries under specific service agreements which, in addition to covering administrative and financial coordination and the coordination of relations with government bodies and other institutions, give the Company the right to act on behalf of its subsidiaries, or in their name and on their behalf.
The Company\u2019s Non-regulated Activities are conducted in Italy and overseas through the subsidiaries, Terna Energy Solutions S.r.l., Terna Plus S.r.l. and Terna Forward S.r.l. under existing intercompany service agreements.
From a financial viewpoint, Terna is responsible for subsidiaries\u2019 cash management in accordance with specific treasury management arrangements. These cover the conduct and coordination of all the transactions carried out from time to time, in order to manage financial resources and meet subsidiaries\u2019 cash and treasury requirements, and the execution of any other related transaction.
The following table shows the contractual terms and conditions governing financial relations with subsidiaries.
\u00a0
Deposits*
Withdrawals
Terna Rete Italia S.p.A.
monthly average 1-month Euribor+0.30%
monthly average 1-month Euribor+0.80%
Rete S.r.l.
monthly average 1-month Euribor+0.30%
monthly average 1-month Euribor+0.80%
Terna Energy Solutions S.r.l.
monthly average 1-month Euribor+0.30%
monthly average 1-month Euribor+0.80%
Terna Plus S.r.l.
monthly average 1-month Euribor+0.30%
monthly average 1-month Euribor+0.80%
Avvenia the Energy Innovator S.r.l.
monthly average 1-month Euribor+0.30%
monthly average 1-month Euribor+0.80%
* If the sum of the average \u201c1-month Euribor\u201d plus the spread of 0.30% is negative, the interest rate applied will be 0.01%.
Existing intercompany agreements at 31 December 2023 are summarised below.
(\u20ac)
Counterparty
Type
Annual fee
Terna Rete Italia S.p.A.
Service agreement:
\u00a0
Operation & Maintenance
\u20ac270,974,726
Upgrade and development
equal to costs incurred + allowed margin on personal expenses incurred
Administrative, support and consultancy services
\u00a0
- from Terna S.p.A. to Terna Rete Italia S.p.A. (revenue-generating)
\u20ac20,368,353
- from Terna Rete Italia S.p.A. to Terna S.p.A. (cost-generating)
\u20ac4,739,545
Rental of workstations for staff
\u00a0
- from Terna S.p.A. to Terna Rete Italia S.p.A. (revenue-generating)
\u20ac433,344
- from Terna Rete Italia S.p.A. to Terna S.p.A. (cost-generating)
\u20ac546,000
Lease of operations
\u20ac22,647,500
Rete S.r.l.
Service agreement:
\u00a0
Upgrade and development
equal to costs incurred +5.82% of personnel expenses incurred
Admin. Support and consultancy service agreement (revenue-generating)
\u20ac1,340,110
Terna Plus S.r.l.
Service agreement:
\u00a0
Management fee (revenue-generating)
\u20ac 175,375
Rental of workstations for staff (revenue-generating)
\u20ac 26,352
Terna Energy Solutions S.r.l.
Service agreement:
\u00a0
Terna\u2019s Non-regulated Activities (cost-generating)
\u20ac10,700,949
Management fee (revenue-generating)
\u20ac1,015,421
Rental of workstations for staff (revenue-generating)
\u20ac168,192
Tamini Group
Service agreement
\u00a0
Administrative service (revenue-generating)
\u20ac43,770
Technical services
equal to costs incurred +5.82%
Services provided by staff on secondment and on assignment
(revenue-generating)
\u20ac484,845
Brugg Kabel AG
Administrative Service agreement (revenue-generating)
\u20ac96,819
Services provided by staff on secondment and on assignment (revenue-generating)
\u20ac812,185
Terna Interconnector S.r.l.
Administrative Service agreement (revenue-generating)
\u20ac303,292
Management and coordination of civil works for Italy-France Interconnector (cost-generating)
equal to costs incurred +5.82% of personnel expenses incurred
Esperia CC S.r.l.
Administrative Service agreement (revenue-generating)
\u20ac127,518
Services provided by staff on secondment and on assignment (revenue-generating)
\u20ac192,672
Rental of workstations for staff (revenue-generating)
\u20ac66,740
Terna Crna Gora d.o.o.
Service agreement:
\u00a0
Technical services
equal to costs incurred +5.82%
Administrative services
\u20ac49,872
Avvenia The Energy Innovator S.r.l.
Administrative service agreement (revenue-generating)
\u20ac32,313
Technical services (cost-generating)
\u20ac35,000
Terna Forward S.r.l.
Service agreement
\u00a0
Terna\u2019s Non-regulated Activities (cost-generating)
\u20ac357,670
Management fee (revenue-generating)
\u20ac22,248
Rental of workstations for staff (revenue-generating)
\u20ac5,897
Services provided by staff on secondment and on assignment (revenue-generating)
\u20ac136,547
Terna S.p.A. is the consolidating entity in a tax consolidation arrangement for the purposes of corporation tax (IRES), in which the following subsidiaries participate: Terna Rete Italia S.p.A., Rete S.r.l., Terna Plus S.r.l., Terna Energy Solutions S.r.l., Tamini Trasformatori S.r.l., Avvenia The Energy Innovator S.r.l. and Terna Forward S.r.l..
The nature of sales and purchases from related parties9\u00a0by the Company is shown below, followed by details of the revenue and costs resulting from such transactions during the year, and the related receivables and payables outstanding at 31 December 2023.
Related party
Revenue-generating transactions
Cost-generating transactions
Parent
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
\u00a0
Credit facilities
Related parties: subsidiaries operating in Regulated Activities
\u00a0
\u00a0
Terna Rete Italia S.p.A.
Rental for leased operations, administrative services, rental of workstations and other services.
Maintenance and other technical services, grid upgrade and development, quality of service allowance, administrative services, rental of workstations for staff
Rete S.r.l.
Provision of technical and administrative services
Transmission charge
Terna Crna Gora d.o.o.
Administrative services, services provided by seconded personnel and staff on temporary transfers.
Transmission charge
Esperia CC S.r.l.
Administrative services, services provided by seconded personnel, rental of workstations.
\u00a0
Related parties: subsidiaries operating in Non-regulated Activities
\u00a0
Terna Energy Solutions S.r.l.
Technical, administrative and financial services, rental of spaces and workstations.
Operation of Non-regulated Activities
Terna Plus S.r.l.
Technical, administrative and financial services, rental of spaces and workstations.
Operation of Non-regulated Activities
Tamini Group
Administrative services, services provided by seconded personnel, other services.
\u00a0
Terna Forward S.r.l.
Administrative services and other services, rental of spaces and workstations, services provided by seconded personnel.
Operation of Non-regulated Activities
Brugg Kabel AG
Administrative services and other services, services provided by seconded personnel.
\u00a0
Terna Interconnnector S.r.l.
Administrative and consultancy services, loan agreement.
Management and coordination of performance of civil works for Italy-France interconnector
Avvenia The Energy Innovator S.r.l.
Administrative and other services.
\u00a0
Associates
\u00a0
\u00a0
Cesi S.p.A.
Rental income on laboratories and other similar facilities for specific uses, dividends.
Technical studies and consultancy, research, design and experimentation
CGES
Dividends.
\u00a0
CORESO S.A.
\u00a0
Technical coordination service for the TSO
Other related parties
\u00a0
\u00a0
GSE Group
Metering charge, dispatching charge.
Rental of spaces and workstations
Enel Group
Transmission charge and aggregation of meter readings, dispatching charge, leases and rentals, power line maintenance, movement /re-routing of power lines, housing of fibre cable and maintenance of communications carried over proprietary power lines.
Recovery of energy discount, building services, MV power to new substations, specialist services for connection to Terna\u2019s control and protection systems
Ferrovie Group
Dispatching charge, movement of power lines.
Right-of-way fees
Open Fiber S.p.A.
IRU agreements for fibre.
Provision of services for the rental of fibre
ENI Group
Dispatching charge.
Contributions for NTG connections, sundry services
ANAS S.p.A.
Movement/re-routing of power lines.
Right-of-way fees
Other related parties of the MEF
\u00a0
Sundry services
Fondenel and Fopen
\u00a0
Pension contributions payable by the Terna Group
REVENUE AND COSTS
(\u20acm)
Revenue components
Cost components
Transmission charge and other revenue from regulated activities
Non-energy-related items
Dividends
Non-energy-related items
Subsidiaries
\u00a0
\u00a0
\u00a0
\u00a0
Terna Rete Italia S.p.A.
\u00a0-
\u00a050.5
\u00a0-
\u00a0383.9
Terna Crna Gora d.o.o.
\u00a0-
\u00a0-
\u00a05.6
\u00a0-
Terna Plus S.r.l.
\u00a0-
\u00a00.7
\u00a0-
\u00a02.6
Tamini Group
\u00a0-
\u00a00.2
\u00a0-
\u00a0-
Terna Energy Solutions S.r.l.
\u00a0-
\u00a08.3
\u00a0-
\u00a010.7
Rete S.r.l.
\u00a0-
\u00a03.7
\u00a0-
\u00a0-
Terna Interconnector S.r.l.
\u00a0-
\u00a00.4
\u00a011.7
\u00a0-
Esperia CC S.r.l.
\u00a0-
\u00a00.4
\u00a0-
\u00a0-
Avvenia The Energy Innovator S.r.l.
\u00a0-
\u00a00.4
\u00a0-
\u00a0-
Brugg Kabel AG
\u00a0-
\u00a00.2
\u00a0-
\u00a0-
Terna Forward S.r.l.
\u00a0-
\u00a00.2
\u00a0-
\u00a00.5
Total subsidiaries
\u00a0-
65.0
17.3
397.7
De facto parent
\u00a0
\u00a0
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
\u00a0-
\u00a0-
\u00a0-
1.4
Total de facto parent
\u00a0-
\u00a0-
\u00a0-
1.4
Associates:
\u00a0
\u00a0
\u00a0
\u00a0
Cesi S.p.A.
\u00a0-
0.1
\u00a0-
0.3
CGES
\u00a0-
\u00a0-
1.8
5.0
Total associates
\u00a0-
0.1
1.8
5.3
Other related parties:
\u00a0
\u00a0
\u00a0
\u00a0
GSE Group
\u00a08.5
\u00a0-
\u00a0-
\u00a00.10
Open Fiber S.p.A.
\u00a0-
1.7
\u00a0-
\u00a0-
Enel Group
\u00a01,768.3
0.7
\u00a0-
0.3
Eni Group
\u00a08.0
0.1
\u00a0-
0.1
Ferrovie Group
\u00a02.8
0.4
\u00a0-
\u00a0-
ANAS S.p.A.
\u00a0-
0.2
\u00a0-
0.6
Ministry of Economic and Finance
\u00a0-
0.2
\u00a0-
0.6
Total other related parties
1,787.6
3.3
\u00a0-
1.7
Pension funds:
\u00a0
\u00a0
\u00a0
\u00a0
Fondenel
\u00a0-
\u00a0-
\u00a0-
0.6
Fopen
\u00a0-
\u00a0-
\u00a0-
0.7
Total pension funds
\u00a0-
\u00a0-
\u00a0-
1.3
TOTAL
\u00a01,787.6
\u00a068.4
\u00a019.1
ASSETS AND LIABILITIES
(\u20acm)
Property, plant and equipment
Receivables and other assets
Payables and other liabilities
Balance on inter-company treasury account and cash
Guarantees**
Capitalised costs
Other
Other
Subsidiaries
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Terna Rete Italia S.p.A.*
105.8
17.2
923.9
27.3
\u00a0-
Terna Gora
\u00a0-
\u00a0-
2.6
\u00a0-
\u00a0-
Terna Plus S.r.l.*
\u00a0-
0.7
\u00a0-
12.0
\u00a0-
Tamini Group*
33.2
1.3
\u00a0-
\u00a0-
\u00a0-
Terna Energy Solutions S.r.l.*
\u00a0-
5.8
2.6
138.8
\u00a0-
Rete S.r.l.*
\u00a0-
0.6
23.8
34.4
\u00a0-
Terna Interconnector S.r.l.
0.4
0.2
2.0
\u00a0-
\u00a0-
Esperia CC S.r.l.
\u00a0-
0.1
\u00a0-
\u00a0-
\u00a0-
Avvenia The Energy Innovator S.r.l.*
\u00a0-
\u00a0-
\u00a0-
4.1
\u00a0-
Terna Forward S.r.l.
\u00a0-
0.1
5.2
\u00a0-
\u00a0-
Total subsidiaries
139.5
26.0
960.1
216.6
\u00a0-
De facto parent
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Cassa Depositi e Prestiti S.p.A.
\u00a0-
\u00a0-
\u00a01.80
\u00a0-
(274.3)
Total de facto parent
\u00a0-
\u00a0-
1.8
\u00a0-
\u00a0(274.3)
Associates:
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Cesi S.p.A.
2.3
\u00a00.1
\u00a01.4
\u00a0-
\u00a00.4
CORESO S.A.
\u00a0-
\u00a0-
\u00a00.3
\u00a0-
\u00a0-
Total associates
2.3
0.1
1.7
\u00a0-
0.4
Other related parties:
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
GSE Group
\u00a0-
\u00a00.7
\u00a00.1
\u00a0-
\u00a0-
Open Fiber S.p.A.
\u00a0-
\u00a00.3
\u00a0-
\u00a0-
\u00a0-
Enel Group
0.4
\u00a0330.6
\u00a017.1
\u00a0-
\u00a01,019.6
Eni Group
\u00a0-
\u00a01.0
\u00a01.1
\u00a0-
\u00a0110.7
Ferrovie Group
\u00a0-
\u00a00.9
\u00a01.8
\u00a0-
\u00a024.3
ANAS S.p.A.
0.2
\u00a00.2
\u00a02.2
\u00a0-
\u00a0-
Snam Rete Gas S.p.A.
\u00a0-
\u00a0-
\u00a00.1
\u00a0-
\u00a0-
Webuld S.p.A.
\u00a0-
-
11.4
\u00a0-
-
Other related parties of the MEF
3.5
0.1
0.1
0.1
1.1
Total other related parties
4.1
333.8
33.9
0.1
1,155.7
Pension funds:
\u00a0
\u00a0
\u00a0
\u00a0
\u00a0
Fopen
\u00a0-
\u00a0-
\u00a00.6
\u00a0-
\u00a0-
Total pension funds
\u00a0-
\u00a0-
0.6
\u00a0-
\u00a0-
TOTAL
\u00a0145.9
\u00a0359.9
\u00a0998.1
\u00a0216.7
\u00a0881.8
*\tThe balances for the item, \u201cOther\u201d, include receivables and payables relating to the tax consolidation arrangement for IRES.
**\tGuarantees regard surety bonds received from contractors, with the exception of the amount relating to Cassa Depositi e Prestiti S.p.A. regarding a Revolving Credit Facility
The impact of related-party transactions or positions on the statement of financial position and the income statement is summarised below:
STATEMENT OF FINANCIAL POSITION
(\u20acm)
AT 31 DECEMBER 2023
AT 31 DECEMBER 2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED
PARTIES
% SHARE
Property, plant and equipment
15,613
145.8
0.9%
14,253
121.3
0.9%
Non-current financial assets
1,636.7
\u00a0-
-
1,415.1
\u00a0-
-
Other non-current assets
7.9
2.8
35.4%
7.9
2.8
35.4%
Trade receivables
1,928.8
355.6
18.4%
2,179.4
343.2
15.7%
Cash and cash equivalents
1,456.3
216.7
14.9%
2,202.6
173.0
7.9%
Tax assets*
3.3
1.2
36.4%
3.2
23.1
721.9%
Other current assets
61.5
0.4
0.7%
53.6
\u00a0-
-
Other non-current liabilities
373.0
24.2
6.5%
397.1
25.3
6.4%
Trade payables
2,669.7
940.6
35.2%
3,515.9
722.4
20.5%
Tax liabilities*
2.9
\u00a0-
-
50.8
\u00a0-
-
Other current liabilities
659.6
33.2
5.0%
533.2
18.8
3.5%
* The balances for the items include receivables and payables relating to the tax consolidation arrangement for the IRES.
INCOME STATEMENT
(\u20acm)
2023
2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Revenue from sales and services
2,567.3
1,787.6
69.6%
2,459.7
1,701.2
69.2%
Other revenue and income
67.5
33.1
49.0%
60.8
33.1
54.4%
Raw and consumable materials used
7.3
0.1
1.4%
6.4
\u00a0-
-
Services
498.4
398.6
80.0%
483.0
396.6
82.1%
Personnel expenses
119.2
1.5
1.3%
102.3
1.2
1.2%
Other operating costs
29.7
0.1
0.3%
21.9
0.1
0.5%
Financial income
142.0
27.4
19.3%
38.6
14.2
36.8%
Financial expenses
\u00a0(232.8)
7.1
(3.0%)
\u00a0(125.7)
7.9
(6.3%)
The impact of related party cash flows is shown below:
STATEMENT OF CASH FLOWS
(\u20acm)
2023
2022
TOTAL
RELATED PARTIES
% SHARE
TOTAL
RELATED PARTIES
% SHARE
Cash flow from operating activities
988.7
197.1
19.9%
2,351.7
31.4
1.3%
Cash flow from investing activities
\u00a0(2,230.7)
\u00a0(24.5)
1.1%
\u00a0(1,872.4)
39.6
(2.1%)
Cash flow from financing activities
495.7
\u00a0-
\u00a0-
103.5
\u00a0-
-
H. Significant non-recurring, atypical or unusual events and transactions
No significant non-recurring, atypical or unusual events or transactions, involving either third or related parties, took place in 2023.
I. Notes to the statement of cash flows
Cash flow from continuing operations\u00a0amounts to \u20ac988.7 million, with \u20ac1,991.3 million in operating cash flow and an outflow of \u20ac1,002.6 million generated by changes in net working capital.
The net cash outflow for investing\u00a0activities\u00a0totals\u00a0approximately \u20ac2,230.7 million and regards \u20ac1,951.6 million relating to investment in property, plant and equipment (excluding right-of-use assets recognised in application of IFRS 16), \u20ac214.5 million invested in intangible assets and \u20ac99.3 million relating to the change in investments in securities, after capitalised financial expenses of \u20ac48.3 million.
The net change in equity\u00a0has resulted in a decrease of \u20ac672.8 million, due primarily to payment of the final dividend for 2022 and of the interim dividend for 2023 to the Company\u2019s shareholders and of dividends paid to non-controlling shareholders (a reduction of \u20ac665.8 million). The reduction also reflects the purchase of own shares to service the new Performance Share Plan 2023-2027 (down \u20ac7.0 million). More details are provided in note 20. \u201cEquity\u201d.
As a result, net cash used in investing activities and to provide a return on equity during the year led to a total outflow of \u20ac2,903.5 million, covered in part by cash flow from continuing operations of \u20ac988.7 million and in part by an increase in net debt.
The following table shows the reconciliation of net changes deriving from financing activities in the statement of cash flows:
(\u20acm)
31 December 2022
Cash flow from financing activities
Change in FV and other
31 December 2023
\u00a0- Long-term borrowings (including current portion)
10,267.6
392.3
78.3
10,738.2
\u00a0- Short-term borrowings
419.5
776.2
\u00a0(5.3)
1,190.4
Net change deriving from financing activities
10,687.1
1,168.5
73.0
11,928.6
L. Government grants
Article 1, paragraphs 125 to 129, of Law 124 of 4 August 2017 (the annual markets and competition law) has introduced a number of measures designed to ensure the transparency of the government grants system. These measures, later amended by Law Decree 34 of 30 April 2019, include an obligation for companies to disclose amounts and information regarding assistance, subsidies, benefits, grants or aid, whether in cash or in kind, in the notes to the annual financial statements and, where applicable, in consolidated financial statements, where such amounts are not of a general nature and do not have the form of a fee, remuneration or compensation and have been received from a public body (paragraph 125-bis). The legislation also requires the disclosure of any grants disbursed (paragraph 126).
In accordance with Assonime circulars, Circular 5 of 22 February 2019 on \u201cTransparency in the government grants system: an assessment of the regulations and interpretation guidance\u201d and Circular 32 of 23 December 2019 on \u201cEnterprise and competition\u201d, Terna S.p.A. uses the following criteria and basis of reporting for government grants:
\u2022 the regulations only apply to entities resident in Italy;
\u2022 grants have the nature of grants or donations, and represent incentives or subsidies designed to give beneficiaries a recognised economic advantage; the grants therefore take the form of donations or giving and public aid for specific purposes, and are not awarded under a general aid regime;
\u2022 the public resources used are exclusively \u201cnational\u201d;
\u2022 grants are reported on a cash basis and if the amount is not less than \u20ac10,000 (with reference to each individual beneficiary) in the reporting period.
In line with the above, the following table shows government grants collected/disbursed by Terna S.p.A. in 2023:
Grants received (paragraph 125-bis)
\u00a0
Grantor
Beneficiary entity
Name
VAT number
Type of transaction
Amount (\u20ac)
Note
TERNA SPA
Ministry of Enterprises and Made in Italy
80230390587
State aid*
6,617,869
Grants collected on the basis of a report on the state of work in progress on projects carried out by Terna S.p.A. financed by government grants, with funding provided under the National Operational Programme (NOP) for Enterprises and Competitiveness 2014 - 2020 FESR - ASSE IV \u2013 Investment priority 4d - Action 4.3.1
TOTAL
\u00a0
6,617,869
* These grants are covered by the obligation to publish them in the national state aid register.
Grants disbursed (paragraph 126)
Beneficiary
Grantor
Name
VAT number
Type of transaction
Amount( \u20ac )
Note
TERNA SPA
Fondazione Venezia Capitale Mondiale della Sostenibilit\u00e0
94102820274
GIVING
33,000
Joining the foundation as co-founding member
TERNA SPA
Fondazione Accademia Naz. Santa Cecilia
05662271005
GIVING
160,000
Renewed participation as a founding partner
TERNA SPA
SUSAN G.KOMEN ITALIA ONLUS
06073831007
GIVING
15,000
Prevention day across the whole of Italy
TERNA SPA
Fond.Pol.Univ.A.GEMELLI IRCCS
13109681000
GIVING
65,000
Support for the purchase of equipment or for functional neurosurgery
TERNA SPA
Fondazione Accademica Musicale Chigiana
92035840526
GIVING
20,000
Summer Academy 2023
TERNA SPA
Sistech - Association loi 1901
FR83538232600022
GIVING
60,000
Funding for Programma Boost scholarships
TERNA SPA
ASSOCIAZIONE ITALIANA CONTRO LE LEUCEMIE
10823601009
GIVING
60,000
Support for a non-profit, public interest organisation
TERNA SPA
SOCIET\u00c0 BOTANICA ITALIANA ONLUS
00464940485
GIVING
56,314
Tiny Forest project
Total
\u00a0
\u00a0
\u00a0
469,314
\u00a0
M. Proposal for appropriation of profit for the year
Terna S.p.A.\u2019s Board of Directors proposes to pay a total dividend of \u20ac682,593,283.20 for 2023, equal to \u20ac0.3396 per share, of which \u20ac0.1146 per share was declared in the form of an interim dividend on 8 November 2023.
The Board of Directors thus proposes to appropriate Terna S.p.A.\u2019s profit for 2023, amounting to \u20ac834,796,667.58, as follows:
\u2022 \u20ac230,345,083.20 to cover payment of the interim dividend payable from 22 November 2023 to the holders of each of the ordinary shares outstanding after adjusting for the treasury shares held at the record date of 21 November 2023 (with the relevant amount of \u20ac482,885.44 taken to retained earnings);
\u2022 \u20ac452,248,200.0 to pay a final dividend of \u20ac0.2250 to the holders of each of the 2,009,992,000 ordinary shares representing the share capital at the date of this Board of Directors\u2019 meeting. The final dividend will be payable on 26 June 2024, with an ex-dividend date for coupon 40 of 24 June 2024 (a record date, as defined by art. 83-terdecies\u00a0of Legislative Decree 58 of 24 February 1998, the Consolidated Law on Finance, of 25 June 2024). The treasury shares held as of the above record date will not participate in the distribution. The final dividend for 2023 attributable to the treasury shares held by the Company at the record date, will be taken to retained earnings;
\u2022 \u20ac152,203,384.38 to be taken to retained earnings.
N. Events after 31 December 2023
Green light for the new underground cable connection in the Municipalities of Turbigo, Robecchetto con Induno and Castano Primo (MI)
On 4 January 2024, the Italian Ministry of the Environment and Energy Security issued the decree approving Terna\u2019s new electricity connection in the municipalities of Turbigo, Robecchetto con Induno and Castano Primo in the metropolitan city of Milan. The project, which will see the company invest \u20ac8 million, involves the construction of a 4.5 km-long underground cable power line to connect Terna\u2019s \u201cTurbigo\u201d Electrical Substation to the \u201cCastano Primo\u201d Primary Substation owned by the local distributor. The new line will reduce the risk of outages across the local grid and help to prevent damage to infrastructure caused by the intensification of weather events in recent decades, such as the strong winds typical of the area.
Work begins to upgrade the power grid between Colunga and Ferrara
On 09 January 2024 Terna launched the project to upgrade the power grid between Colunga and Ferrara in Emilia-Romagna. The company will invest approximately \u20ac16 million in the modernisation of the grid between Colunga and Ferrara, ensuring greater efficiency and quality of service for local businesses and citizens. The plan, which involves the municipalities of Castenaso, Budrio, Minerbio, Baricella, Malalbergo, Poggio Renatico, and Ferrara, will upgrade the following 132kV links: Colunga-Altedo\u201d, \u201cAltedo Ferrara South\u201d and \u201cFerrara South-der. Aranova Energy Centre\u201d, with the construction of approximately 20 km of power lines and the demolition of more than 60 km of lines in the provinces of Bologna and Ferrara.
Successful issue of a bond worth \u20ac850 million with a 7-year tenor
On 10 January 2024, Terna S.p.A. (\u201cTerna\u201d or the \u201cCompany\u201d) successfully launched a fixed rate, single tranche bond issue amounting to \u20ac850 million. The issue, which saw extremely high demand, was almost 3 times oversubscribed and is characterized by high quality and broad geographical diversification of investors. The bond was launched as part of the \u20ac9,000,000,000 Euro Medium Term Notes (EMTN) Programme, which has been rated \u201cBBB+\u201d by Standard and Poor\u2019s and \u201c(P)Baa2\u201d by Moody\u2019s. The bond has a nominal amount of \u20ac850 million, a duration of 7 years and maturity on 17 January 2031. It will pay a coupon of 3.50% and was issued at a price of 99,385%, with a spread of 100 basis points over the midswap. The settlement date for the issue was 17 January 2024. The proceeds from the issue will be used bythe Company to meet ordinary financial requirements and to fund the Group\u2019s Industrial Plan. At the time of the issue, an application will be made for the bond to be listed on the Luxembourg Stock Exchange. The bond issue was placed by a syndicate of banks formed by Banca Akros, BNP Paribas, CaixaBank, Citi, Cr\u00e9dit Agricole Corporate and Investment Bank, IMI \u2013 Intesa Sanpaolo, Morgan Stanley, SMBC, Unicredit Bank AG, acting as joint-bookrunners.
Terna trials the use of a submarine\u00a0drone for marine geophysical surveys
On 11 January 2024, Terna announced the launch, in collaboration with Terradepth, a US startup and leading provider of marine survey services and ocean data solutions, of the trial for the \u201cOdisseo\u201d project. The goal of the project is to apply Autonomous Underwater Vehicles (AUV) to marine geophysical surveys during the planning of important infrastructure, ensuring respect for the environment. The first test was conducted off the coast near the port of Casamicciola Terme, on the island of Ischia (Naples, Italy). During the geophysical survey of the seabed, Terna\u2019s technicians were able to test the performance of the \u201cGavia\u201d drone, the AUV from Terradepth equipped with advanced sensors, including Echo Sounder (MBES), Side Scan Sonar and HD Camera.
Green light for the new \u201cMessina North PS \u2013 Messina Riviera PS\u201d underground connection
On 15 January 2024, the Sicilian Regional Authorities issued the decree consenting to Terna\u2019s new 150kV power line in the municipality of Messina. The project, which will see the Company invest approximately \u20ac26 million, involves the installation of an underground cable stretching approximately 10 km, connecting the \u201cMessina North\u201d and \u201cMessina Riviera\u201d primary substations. The Messina area experiences strong winds, which, combined with the topography and vegetation of the surrounding area, represent a potential risk of system outages. The new power line will increase local grid meshing and diversify transmission technology, reducing this risk of severe weather events.
Terna meets the citizens of Ferrara to present the project to restructure the local grid
On 24 January 2024, Terna held an information event with the citizens of Ferrara to present the future restructuring of the city\u2019s grid. The event was held between 5pm and 8pm at the Giorgio Bassani Library, Via Giovanni Grosoli 42, in Ferrara, and it was an opportunity to provide citizens with information on the project\u2019s features, reasons, benefits and dynamics. As a whole, the restructuring of the city of Ferrara\u2019s electricity grid involves the undergrounding of two 132kV overhead lines running from the Focomorto power station over a total length of more than 9 km, the construction of a new 132kV underground connection in the south of the city over a length of 3 km, and the expansion of the existing 380kV Ferrara Nord power station with the related new overhead connections. The works, which are aimed at increasing the security and resilience of the electricity system, will guarantee greater transport capacity to the urban area and will fully optimise the use of renewable energy produced in the area.In addition, the new infrastructure will enable the removal of approximately 20 km of overhead power lines and 70 pylons, freeing up approximately 40 hectares from the existing electricity infrastructure. The project complements the works to restructure the electricity grid in the area between Colunga and Ferrara that began in early January.The planned modernisation of the electricity grid in the Po Valley in the Emilia-Romagna region will improve the efficiency and quality of the service, benefiting local businesses and the public.
Terna presents the outcome of the public consultation on the new \u201cGR.ITA 2\u201d connection between Italy and Greece to the public
On 31 January 2024, Terna presented the outcome of the public consultation to authorities and citizens of the seven municipalities, in the province of Lecce, affected by the planned \u201cGR.ITA 2\u201d connection. During the online meeting, held on Teams from 5.00 p.m., the solutions selected for the route were presented. These decisions are the result of dialogue with local communities during the public consultation on the new infrastructure that will cross the southern Italian municipalities, in the province of Lecce, of Galatina, Soleto, Sternatia, Martignano, Calimera, Carpignano Salentino and Melendugno. At the end of this phase, Terna will launch detailed planning ready for theconsents process. The meeting is part of the shared planning process launched by the company in 2022 with the support of the Puglia Regional Authority and the municipal councils. During the public consultation phase, prior to submission of the project to obtain consent, concluded on 12 December 2023, five meetings were held to illustrate the details of the proposed project to local stakeholders, examining alternatives established on the basis of comments received during voluntary consultation and by listening to the feedback, opinions and requests of citizens.
The Ministry of the Environment and Energy Security gives its consent for the Adriatic Link, the new submarine power line connecting Marche and Abruzzo
On 6 February 2024, the Ministry of the Environment and Energy Security, through a decree of 31 January 2024, gave the green light for the construction of the Adricatic Link, Terna\u2019s submarine power line that will connect the Marche and Abruzzo regions. This development project, included among the interventions outlined in the PNIEC (National Integrated Plan for Energy and Climate) and recognised as strategic for the country by the Regulatory Authority, will strengthen energy exchange in central Italy, addressing the security and flexibility needs of the national electrical system and meeting the targets set for growth in renewables. The advanced technological and environmental electric connection will consist of two submarine cables approximately 210 km long, laid at a maximum depth of 100 meters, and two underground cables of 40 km. Converter stations will be built near the existing substations in Cepagatti (Pescara), Abruzzo, and Fano (Pesaro-Urbino), Marche. The infrastructure will provide an increase of approximately 1,000 MW in exchange capacity between Italy\u2019s Centre-South and Centre-North zones, enabling the integration and transfer of energy produced by wind and photovoltaic plants in the South to consumption centres in the North.
Terna among the world leaders in fighting climate change
On 6 February 2024, Terna was recognised as a leading international company in the fight against climate change by CDP\u2019s Climate Change survey\u00a0(former Carbon Disclosure Project). CDP is a global non-profit organisation specialising in environmental reporting and assessment of climate performance and strategies adopted by companies. The group led by Giuseppina Di Foggia achieved an \u201cA-\u201d rating (on a scale from \u201cD-\u201d to \u201cA\u201d), improving on last year\u2019s \u201cB\u201d rating. The score assigned to Terna places the company in the \u201cLeadership\u201d category, above the average for the sector (\u201cB\u201d), the European average (\u201cB\u201d) and the global average (\u201cC\u201d). This recognition from CDP confirms Terna\u2019s growing commitment to environmental sustainability, reaffirmed with the adoption of a new Science Based Target, under which Terna has committed to cut its CO2\u00a0emissions by 46% before 2030, compared to 2019 levels, raising the bar from the previous target of reducing greenhouse-gas emissions by approximately 30%. CDP\u2019s assessment of supplier engagement recognises Terna\u2019s efforts with regard the quality of Scope 3 emissions reporting, in relation to the value chain, and rewards the Group\u2019s commitment to reducing these emissions, as certified by the Science-based Target Initiative in 2023. The rating is also in line with the Company\u2019s efforts to promote the circular economy, given substance by the recent launch of Terna\u2019s Roadmap, which aims to make the Company a leader in this field.
Settlement agreement with Quebec
On 7 February 2024, all disputes related to the outstanding arbitrations\u00a0(listed in the notes in note 11. \u201cProfit/loss from discontinued operations and assets held for sale\u201d) between the companies Linha Verde I and Linha Verde II and the Quebec Group\u00a0were resolved, including any other existing or potential disputes regarding their relations. In addition, at the same time of the agreement, the company Terna Plus S.r.l. completed the purchase of a minority stake in the Brazilian company SPE Transmissora de energia Linha Verde I S.A., now an integral subsidiary of Terna Plus S.r.l..
Terna: EIB provides the last tranche of the \u20ac1.9 billion loan for the Tyrrhennian Link
On 8 February 2024, on the sidelines of the second edition of the EIB Forum in Luxembourg, which brings together Heads of State, EU Commissioners, business leaders, academics and civil society representatives, the European Investment Bank (EIB) and Terna signed the contract for the final tranche of the \u20ac1.9 billion loan for the Tyrrhenian Link, the submarine electricity cable connecting the Italian mainland with Sicily and Sardinia. At the EIB Forum, a meeting took place between EIB Vice-President Gelsomina Vigliotti and CEO and General Manager of Terna, Giuseppina DiFoggia, to discuss future collaboration in support of the energy transition and REPowerEU\u00a0objectives. This final tranche of \u20ac500 million, in addition to the previous contracts signed on 8 November 2022 (first tranche of \u20ac500 million) and 30 March 2023 (second and third tranches, totalling \u20ac900 million), will support the construction and commissioning of the East and West sections of the Tyrrhenian Link. By connecting Sicily and Sardinia with the Italian mainland via a 970 km, 1,000 MW double submarine cable, the Tyrrhenian Link will foster the development of renewable sources, grid reliability and promote energy security in Italy. Terna plans to invest around \u20ac3.7 billion in total for this infrastructure, which is key for Italy\u2019s energy security. Around 50% of the project cost will be financed by the EIB, demonstrating the strategic nature of the project. The Tyrrhenian Link will be fully operational in 2028. Some 250 companies will be involved in its implementation, which will have a significant impact in the regions concerned. With a tenor of around 22 years from each drawdown, the loans have a longer maturity and more competitive costs than those generally available on the market, aligning them with Terna\u2019s policy to optimise its financial structure. This transaction brings the total of EIB loans granted to Terna to around \u20ac3.8 billion.
Terna and RSE join forces to develop projects and technologies in the energy and environmental sectors
On 14 February 2024, Terna and RSE, a leader in analysis and applied research in the energy sector, have signed a five-year partnership agreement\u00a0aimed at the development and application of processes and technologies in the field of energy and the environment, promoting study initiatives and development and innovation activity. The agreement was signed on 14 February in Rome by Giuseppina Di Foggia, CEO and General Manager of Terna, and Franco Cotana, CEO of RSE. Thanks to this partnership, Terna and RSE will be able to cooperate, through planning, programming and coordination activity, establishing a scenario that fosters the development of research and technology and the propagation of projects for innovation, energy security and grid resilience. This is of fundamental importance to Terna, being an enabler of the energy transition, and for RSE, in its role of promoting innovation, efficiency and circularity throughout the energy supply and sustainability chain. Specifically, the partnership involves a framework agreement aimed at launching mutual collaboration in areas including optimised grid planning and design, methodologies for smart-asset management, monitoring, control and resilience of the electricity system, development of new technology for grid flexibility, scenarios for the evolution of demand and generation from renewables, big-data management and data science, use of IoT (Internet of things) technology, cyber security, artificial intelligence and other technology enabling the Italian energy transition. The progress of projects will be monitored by a Management Committee made up of Terna and RSE representatives.
Consent for two new underground cable connections in Milan
On 16 February 2024, the Ministry of the Environment and Energy Security issued the decree approving Terna\u2019s project for the construction of two new power line connections in Milan. The Company will invest approximately \u20ac17 million in the project, which is part of the works planned to increase reliability of power supplies for the Milan - Cortina 2026 Winter Olympics and Paralympics. The project involves two underground cable connections (Porta Romana PS \u2013 Milan South Receiver SS and Porta Romana PS \u2013 Mugello PS) running for a total of 6.5 km and providing input-output connection of the local distributor\u2019s new \u201cPorta Romana\u201d primary substation. These works will upgrade the local grid, which experiences high loads\u2014particularly in the summer\u2014enabling it to cope with the growing electricity demand of the Porta Romana district set to host the Olympic Village, and the corresponding train station.
Terna: infrastructure projects consented to in 2023 amount to investment of over \u20ac3 billion
As at 19 February 2024, the Italian Ministry of Environment and Energy Security and the regional councils approved 23 development projects for Italy\u2019s national transmission grid, with total investment of more than \u20ac3 billion. This marks a new record for the Group, confirming Terna\u2019s central role in Italy\u2019s energy transition and the ongoing collaboration between the company and Italian institutions. The figure is up 20% on 2022, when authorised projects reached a total value of more than \u20ac2.5 billion, and has tripled since 2021. The main contribution to this achievement comes from the western branch of the Tyrrhenian Link, the section of the submarine power line that will connect Sicily and Sardinia, valued at over \u20ac1.8 billion. The eastern branch of the project, set to connect Sicily and Campania, was authorised in 2022. The 1,000 MW Direct Current submarine connection will run for 970 km, and is a strategic project for the Italian electricity system, crucial for achieving the energy transition goals set in the Integrated National Energy and Climate Plan (PNIEC). Another significant Terna project authorised last year is Sa.Co.I. 3, the 200kV submarine cable that will connectSardinia, Corsica and Tuscany, with a total capacity of up to 400 MW. The project will help to strengthen the country\u2019s role as energy hub in Europe and Mediterranean region. In addition, there are two projects of around \u20ac50 million each, included in Terna\u2019s plans to increase the security and efficiency of the high and extra-high-voltage grid in the areas that will host the 2026 Milan - Cortina Olympic Games and Paralympic Games. These are the 19km \u201cMoena-Campitello\u201d underground cable power line in Val di Fassa (Trento) and the 22km underground connection between Vandoies and Brunico (Bolzano). Both projects will increase grid meshing and resilience of the electricity transmission system in areas frequently affected by extreme weather events in recent years. Terna has already begun work on the two infrastructure projects, with the aim of completing them by the end of 2025. Furthermore, by investment value, the two following projects in Lazio were also included: the underground cable power line of over 17km between the Rome South electrical substation and the Ciampino primary substation. This \u20ac30 million project is part of a wider plan to restructure the power grid in the southern area of the Italian capital. The second is the \u201cPian di Tortora-Viterbo\u201d, an underground cable connection in the province of Viterbo which will increase grid meshing in the area and boost the efficiency and reliability of the transmission service.
Green light for the new underground cable connection in Ragusa
On 22 February 2024, Sicily\u2019s Department of Energy and Public Utilities approved Terna\u2019s new \u201cRagusa SS -Ragusa North PS\u201d underground cable power line. The project, in which the company led by Giuseppina di Foggia will invest approximately \u20ac26 million, involves the construction of a 14 km-long electricity line connecting Terna\u2019s substation at Ragusa to the Ragusa North primary substation, which is owned by the local distributor. The development project will increase the available power to meet the needs of businesses and citizens and the grid meshing to improve service quality, especially during the summer, when demand in the area is significantly higher. The new connection will be completely underground and developed using latest-generation cables with XLPE (cross-linked polyethylene) insulation, a reliable, resilient, and sustainable solution. The final project design process and the preliminary activities necessary to start construction will begin in the coming weeks.
Results of the Directors\u2019 and Statutory Auditors\u2019 assessment of independence
On 6 March 2024, Terna\u2019s meeting of the Board of Directors, chaired by Igor De Biasio, proceeded to assess its members\u2019 compliance with the independence requirements\u00a0in the Articles of Association, in art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the Consolidated Law on Finance (\u201cCLF\u201d), and the independence requirements in the Corporate Governance Code (art. 2, Recommendation 7) provided in the document, \u201cCriteria and procedure for assessing independence\u201d. In view of the governance recommendations, the Chairman, Igor De Biasio, was assessed as independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the Consolidated Law on Finance (\u201cCLF\u201d) and to art. 2, Recommendation 7 of the Corporate Governance Code. The non-executive Directors Angelica Krystle Donati, Enrico Tommaso Cucchiani, Gian Luca Gregori, Simona Signoracci, Marco Giorgino, Karina Audrey Litvack, Jean-Michel Aubertin and Anna Chiara Svelto were assessed as independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the CLF and to art. 2, Recommendation 7 of the Corporate Governance Code. The Directors Regina Corradini D\u2019Arienzo, Francesco Renato Mele and Qinjing Shen were assessed as not independent pursuant to both art. 147-ter, paragraph 4 and art. 148, paragraph 3 of the CLF and to art. 2, Recommendation 7 of the Corporate Governance Code. The Board of Directors also verified that all its members fulfil the requirements in the provisions of art. 15.5 of the Articles of Association concerning independence and incompatibility, adopted pursuant to the Unbundling Regulations. As recommended by the Corporate Governance Code, and in accordance with the role assigned to it by law, the Board of Statutory Auditors verified the correct application of the established assessment criteria and procedures adopted by the Board of Directors in assessing the independence of its non-executive members. The Board of Statutory Auditors also reported during today\u2019s meeting that all the Statutory Auditors meet the relevant independence requirement, pursuant to art. 2, Recommendation 9 of the Corporate Governance Code, verified during the meeting held on 7 February 2024 in application of the Board of Statutory Auditors\u2019 Terms of Reference.
Terna launches the \u201cDriving Energy Award 2024 \u2013 Contemporary Photography\u201d
On 7 March 2024, Terna launched the \u201cDriving Energy Award 2024 \u2013 Contemporary Photography\u201d. This free competition \u2014 open to all professional and amateur photographers in Italy \u2014 aims at promoting and developing culture in Italy and scouting new talents in the field. The theme for this year\u2019s award is \u2018The invisible\u00a0way\u2019. From today until 30 June, photographers are invited to interpret different forms of energy that although invisible, produce visible effects. This is a way to celebrate talent and the unique nature of an art capable of capturing realities that do not exist for many people, orat least not yet. This edition will have the same structure as the previous year\u2019s, which achieved ambitious goals in terms of opening, inclusion and engagement across Italy, making the Award a resounding success in the world of photography. This year will again see five different categories: the Senior Award, with a prize of \u20ac15,000, open to participants of the age of 31 or older , the Youth Award, with a prize of \u20ac5,000, for photographers below the age of 30, the Amateur Award, with a prize of \u20ac5,000, open to all those who are not pursuing a professional career in photography, the Academy Mention, with a prize of \u20ac2,000, open to students enrolled in a higher education institute studying in a field relevant to the Award, and Terna\u2019s most voted work, with a prize of \u20ac2,000, open to all categories and awarded by Terna employees, who will vote on an exclusive preview of the finalist works through the TernaCult internal cultural platform.
Terna Forward and DXT Commodities close a \u20ac2.8 billion round of investment in WESII
On 8 March 2024, Terna Forward, the Terna Group company dedicated to tech innovation and Corporate Venture Capital initiatives, and DXT Commodities S.A. (DXT), a Duferco Group company, have announced the completion of a 2.8 million-euro round of investment, through a joint capital increase, in Wesii, an leading Italian company in inspection and remote-sensing services for the renewable energy sector. Traditional approaches for inspection of solar and wind systems or power lines involve land-based techniques that can be time-consuming and costly. Since its founding, Wesii has focused on the use of drones and aircraft equipped with high-definition and infrared thermal cameras for the thermographic analysis of renewable plants and electric infrastructure. This provides a high level of accuracy and enables identification and geolocation of any faults. The data gathered by the startup are catalogued, standardised and analysed using AI algorithms and a proprietary platform in order to further improve predictive maintenance and asset monitoring. The investment in Wesii is the first direct investment in an innovative small medium enterprise by Terna Forward, a company of the Terna Group led by Giuseppina Di Foggia. Terna Forward uses an open-innovation approach to identify and support the most promising enterprises and those with the highest-impact technology for acceleration of the energy transition, including through Corporate Venture Capital investments.
Consents process for the two new underground cable connections in the province of Sassari begins
On 12 March 2024, following the launch, by the Ministry of the Environment and Energy Security, of the consents process for the two new underground cable connections in the province of Sassari, Terna published the notice identifying the parcels of land that may be affected by the project in the municipalities of Alghero and Putifigari. The project, in which the company will invest around \u20ac45 million, involves connecting the new \u201cAlghero South\u201d Primary Substation, which belongs to the local distributor, to the existing 150kV \u201cPadria-Alghero\u201d line. This will be achieved by constructing two underground cables with an overall length of approximately 20 km. The new infrastructure will allow the demolition of around 4 km of existing overhead power lines, for a total of 8 pylons that currently cross the municipalities involved. The work will enable to increase the resilience of the electricity system in the face of extreme weather events and boosting the reliability of the local grid thanks to the construction of new supply routes, while simultaneously reducing the environmental impact of the infrastructure on the community.
Terna receives gender equality certification
On 14 March 2024, Terna announced that it has received certification from the certifying body IMQ \u2013 Istituto Italiano Marchio di Qualit\u00e0 \u2013 confirming the compliance of its Gender Equality Management System with the standard UNI/PdR 125:2022.\u00a0The audit performed by the certifying body took place in person and remotely and looked at a sample of seven organisational structures of the four Group companies \u2013 Terna S.p.A., Terna Rete Italia S.p.A., Terna Energy Solutions S.r.l., and Terna Plus S.r.l. \u2013 with the audit lasting a total of around 90 hours. The IMQ auditors certified that this achievement was the result of implementing renewed and improved principles and criteria within the Group, bringing them further into line with the new Gender Equality Management System. The GEMS was implemented in early 2023 through close collaboration between various areas of the Group. This certification marks the fourteenth integrated management system implemented and managed by Terna.
Start of consents process for reorganisation of the electricity grid between Caserta and Naples
On 16 March 2024, the Ministry of the Environment and Energy Security began the consents process for Terna\u2019s plan to reorganise the power grid in the towns of Maddaloni, in the province of Caserta, and Acerra, in the province of Naples.\u00a0The Company, led by Giuseppina Di Foggia, will invest more than \u20ac38 million in the project, which will make it possibleto reduce the impact of electrical infrastructure on the land. It will also increase the local grid\u2019s resilience and security, as well as quality of service for businesses and households. The project falls under a broader local grid development plan that involves building a new 220kV section inside the existing Santa Sofia Electrical Substation. With five new underground cable connections installed in the branch which includes the Santa Sofia substation and the lines south of the Maddaloni railway station, it will be possible to take down more than 9 km of overhead power lines and a total of 36 pylons, freeing up approximately 37 hectares of land. The project took shape after a round of intense and productive discussions with local institutions and falls under the 2019 National Transmission Grid Defence Plan, which aims to resolve existing electrical infrastructure interference and make the electricity transmission service more reliable. The public and, specifically, landowners in the areas affected by the new project, will be able to read the plan documents at the offices of the Ministry of the Environment and Energy Security, Campania Regional Authority and at the Municipalities of Maddaloni (CE) and Acerra (NA). They can also submit their written comments to the Ministry and to Terna, for the Company\u2019s information, within the deadline established by law.
2024-2028 Industrial Plan approved
The\u00a0results for the year ended 31 December 2023 and the new 2024-2028 Industrial Plan were approved on 19 March 2024, with improvements across all financial performance indicators.
The meeting of the Board of Directors of Terna S.p.A. (\u201cTerna\u201d), chaired by Igor De Biasio, examined and approved the Group\u2019s 2024-2028 Industrial Plan and the results for the year ended 31 December 2023, presented by the Chief Executive Officer and General Manager, Giuseppina Di Foggia. Terna\u2019s new Industrial Plan aims to consolidate the Company\u2019s strategic role in enabling the Italian electricity system and, more generally, strengthen its commitment to driving the country\u2019s energy transition. To achieve the decarbonisation goals set in the European Green Deal and the National Integrated Energy and Climate Plan (\u201cPNIEC\u201d), which aim to cut greenhouse gas emissions by at least 55% by 2030, compared with 1990 levels, Terna plans to significantly increase investment\u00a0over the life of the Plan to \u20ac16.5 billion. \u20ac2.6 billion of this will be invested in 2024. This is\u00a0the highest level ever in the Group\u2019s history\u00a0and is 65% up on the last Plan. The key driver in the Industrial Plan is sustainable investment, a concept embedded in the Company\u2019s value creation process and in the benefits for the system and the environment. In fact 99% of Terna\u2019s capex is classified as sustainable based on EU Taxonomy\u00a0criteria.
Moody\u2019s reaffirms Terna Baa2 rating with a stable outlook
On 19 March 2024, Moody\u2019s Investor Service (Moody\u2019s) reaffirmed the long-term Baa2 rating assigned to Terna S.p.A. (Terna) with a stable outlook, one notch above Italy\u2019s sovereign rating. The assessment by the rating Agency came after the presentation of the 2024-2028 Industrial Plan, with the highest level of investments in Terna\u2019s history, aimed at strengthening the Company\u2019s central role as enabler of the energy transition and of an increasingly complex, sustainable and innovative electricity system.
On 6 February 2024, following the update of the \u201cGovernment-Related Issuers\u201d (GRI) methodology, through which the rating agency has extended its scope of application to certain entities indirectly owned by governments, Moody\u2019s once again confirmed Terna\u2019s long-term rating of \u2018Baa2\u2019, a notch above Italy\u2019s sovereign rating, with a stable outlook. The rating agency also confirmed Terna\u2019s \u2018P-2\u2019 short-term rating and the \u2018Ba1\u2019 rating of Terna\u2019s subordinated debt.
S&P reaffirms Terna\u2019s BBB+ rating with a stable outlook
On 19 March 2024, S&P Global Rating (S&P) reaffirmed the Company\u2019s BBB+ long-term rating with a stable outlook, one notch above Italy\u2019s sovereign rating. The assessment by the rating Agency came after the presentation of the 2024-2028 Industrial Plan, with the highest level of investments in Terna\u2019s history, aimed at strengthening the Company\u2019s central role as enabler of the energy transition and of an increasingly complex, sustainable and innovative electricity system.
Launch of the \u201cWe are committed to the future of energy\u201d corporate advertising campaign
On 21 March 2024, the new corporate advertising campaign produced by Terna, Italy\u2019s national grid operator, was launched in the press and digital media. Among the new features this year is the mention of the Industrial Plan, putting corporate communication on a firm basis. \u2018\u2018We are committed to the future of energy\u201d is the claim in the campaign, which will appear in the media until 14 April, accompanying the launch of the new 2024-2028 Industrial Plan presented to investors on 19 March. \u201cFaster. More digitalised. More sustainable. Fairer. This is the energy transition we want. It is an essential challenge for the future of us all: it requires Terna to have a wider vision and commit to elevating our mission of transmitting energy to the country to new levels of excellence. That is why our 2024-2028 Industrial Plan sets considerable new records and includessignificant new developments. This is the energy of the future. Today.\u201d. These are the words with which the Group, led by Giuseppina Di Foggia, substantiates its commitment towards a future that will face everyone with a series of unavoidable deadlines as we make take effective, definitive action to achieve the energy transition goals.
Consents process for new \u201cGissi - Larino \u2013 Foggia\u201d power line restarts
On 27 March 2024, the Ministry of the Environment and Energy Security restarted the consents process for Terna\u2019s new 380kV \u201cGissi- Larino- Foggia\u201d overhead power line, after it was halted whilst awaiting confirmation of the project\u2019s environmental compatibility. The project, in which the Company led by Giuseppina Di Foggia will invest over \u20ac270 million, will involve construction of a second backbone with an overall length of 134 km between the electricity substations of Villanova (PE) and Foggia, connecting with the input/output modules of the intermediate substations of Gissi (CH) and Larino (CB). The new power line will make the management and maintenance of the Adriatic Backbone more reliable and cost-effective with returns in terms of both efficiency and savings for families and businesses. In particular, the work will reduce grid losses for the transport of energy, minimise the risk of being unable to handle peak loads, and resolve congestion between the south and north and at local level that limit the production of renewable energy. Once operational, the line should help save approximately 50 Gwh per year and reduce CO2\u00a0emissions by around 21 kt CO2\u00a0per year, a testament to the Company\u2019s constant commitment to guaranteeing sustainability for future generations.
Consents process begins for rationalisation of power grid in the province of Messina
On 28 March 2024, following the start, by the Regional Authority\u2019s Energy and Public Utilities Department, of the consents process for the project involving rationalisation of the 150kV power grid in the province of Messina, Terna has published notice of the parcels of land potentially affected by the new infrastructure. The project, in which the Company is to invest approximately \u20ac18 million, will reduce the impact of electricity infrastructure on the local area and improve the reliability, security and efficiency of the local electricity service. The project involves a comprehensive restructuring and modernisation of the 150kV grid in the Valle del Mela (ME) area. The work will include extraordinary maintenance of existing power lines and the installation of 13 km of new connections and short-distance links, with over one third of these in underground cable, in the municipalities of Rometta, Saponara, Villafranca Tirrena and Messina. The project, associated with creation of the 380 kV \u201cSorgente-Rizziconi\u201d power line, follows the commitments made in the Memorandum of Understanding entered into with the Sicilian regional authority and the municipal authorities affected.
Consent received for modernisation of the \u201cSant\u2019Antimo - Fratta\u201d power line linking the provinces of Naples and Caserta
On 29 March 2024,\u00a0the Ministry of the Environment and Energy Security gave its consent for Terna\u2019s final design for renewal of the 220kV power line between the Sant\u2019Antimo primary substation and the Fratta electricity substation in the Metropolitan City of Naples. The project, in which the Company will invest approximately \u20ac18 million, meets the need to modernise the existing power line dating back to the 1940s. The project will increase the quality of the local electricity service, at the same time minimising the visual impact of the infrastructure and its effect on the landscape. The work will involve laying approximately 8 km of underground cable in the municipalities of Sant\u2019Antimo, Grumo Nevano, Frattamaggiore and Frattaminore in the province of Naples, and in the municipality of Sant\u2019Arpino in the province of Caserta.
Perpetual hybrid green bond worth \u20ac850 million successfully issued
On 4 April 2024, Terna S.p.A. successfully launched an issue of euro-denominated, perpetual, subordinated, hybrid, non-convertible, fixed-rate green bonds to institutional investors, amounting to a total of \u20ac850 million. The issue received a very favourable response from the market, with applications topping \u20ac3 billion and the issue approximately 4 times oversubscribed. The issue attracted a high quality of geographically diversified investor. The bonds, issued in a single tranche, are non-convertible, subordinated, green, hybrid and perpetual and are non-callable for 6 years. The issue price was 99.745%, with a spread of 214.2 basis points with respect to the Mid Swap rate. The issue will pay fixed annual coupon interest of 4.750%, payable until the first reset date (excluded) of 11 April 2030, and will have an effective interest rate of 4.800%. From this date, unless the bond has been redeemed early, the hybrid bond will pay interest at the 5-year Euro Mid Swap rate, increased by an initial spread of 214.2 basis points, rising by a further 25 basis points from 11 April 2035 and by another 75 basis points from 11 April 2050.
Disclosure
pursuant to art. 149-duodecies
of the CONSOB Regulations for Issuers
The following table, prepared pursuant to art. 149-duodecies\u00a0of the CONSOB Regulations for Issuers, shows the fees paid for audit and other services provided by Terna S.p.A.\u2019s independent auditors in 2023.
\u00a0
(\u20ac)
ENTITY PROVIDING SERVICE
FEES DUE FOR THE YEAR
Audit of the accounts and financial statements
Deloitte & Touche S.p.A.
254,402
Attestation and other services10
Deloitte & Touche S.p.A.
124,288
Total
\u00a0
378,690
Attestation
of the separate financial statements pursuant toart. 81-ter of CONSOB Regulation 11971 of 14 May 1999, as amended
Report
of the Board of Statutory Auditors to the Annual General Meeting of Terna S.p.A.\u2019s shareholders