ternienergia spa group unaudited interim …...2010/09/30 · ternienergia spa group unaudited...

TerniEnergia SpA GROUPUnaudited Interim Consolidated Financial Information as of and for the nine months

ended 30 September 2010

Disclaimer

This Unaudited Interim Consolidated Financial Information as of and for the nine months ended 30 September 2010 has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the report and the English version,the Italian version shall prevail, as the Italian version constitutes the sole official document.

2

TerniEnergia SpA Legal offices in Via Luigi Casale snc – 05100 Terni (TR)

Share capital (subscribed and paid in) Euro 12,410,000

Registered in the register of companies of Terni nr. 01339010553

Offices

Terni – Via Luigi Casael Snc – Via Narni (Bosco complex)

Milano – Via Borgogna, 7

Lecce – Via Costadura 3

Board of Directors

President and chief executive officer

Stefano Neri

Directors

Paolo Ricci

Fabrizio Venturi

Eugenio Montagna Baldelli

Paolo Ottone Migliavacca

Davide Gallotti

Domenico De Marinis

Statutory auditors (“collegio sindacale”)

Ernesto Santaniello (president)

Roberto Raminelli

Vittorio Pellegrini

Independent Auditors

PricewaterhouseCoopers SpA

3

SIGNIFICANT EVENTS IN THE THREE MONTHS ENDED 30 SEPTEMBER 2010

Capital increase

On 5 July 2010, the Board of Directors of TerniEnergia SpA (the “Company” or “TerniEnergia”)

resolved to submit a proposal to the extraordinary shareholders‟ meeting calling for a capital increase

by the Company, in one or more instalments, in the form of a rights issue of a maximum par value of

€60,000,000.00, excluding option rights in accordance with Article 2441, paragraph 5, of the Italian

Civil Code. The capital increase is to be undertaken by 31 July 2011 at a price determined according

to book building mechanisms by agreement with the Global Coordinator, while also taking into

consideration, in accordance with Article 2441, paragraph 6, of the Italian Civil Code, the share price

near the time of placement, the quantity and quality of demand expressed in the private placement,

the performance of Italian and international markets near the time of the placement and the

indications received from the Global Coordinator, all within the limits set by applicable legislation, to

be completed through a private placement reserved for qualified Italian and international investors,

outside the United States, Canada, Japan and Australia.

The capital increase represents an opportunity that TerniEnergia intends to seize under the

assumption that market conditions permit it to achieve an issue price that expresses the Company‟s

value and potential, with the aim of maximising the value of shareholder investments.

The transaction is part of the growth process that TerniEnergia has pursued constantly since

incorporation and thus aims to:

- put the Company into the ideal financial conditions to grow and consolidate its position of leadership

in the construction of industrial-scale photovoltaic plants, including the acquisitions of companies

operating in the sector, and further reinforce the power generation business through the incorporation

of new joint ventures or the entry into international markets;

- increasing the share‟s visibility on the market by allowing qualified investors to acquire interests,

with the additional aim of expanding the free float, and thus the share‟s trading volumes and liquidity,

while also improving the share‟s stability;

- emphasise the Company‟s nature of “public company”, given that the interest in the Company held

by Terni Research S.p.A., the majority shareholder, would fall below 50% from the present 67.38% if

the capital increase pending approval were to be fully subscribed;

- fully develop the value of the new shares offered through book building mechanisms, as a function

of the expression of interest received, the solidity of offers, the economic expedience of those offers

and the intrinsic quality of the investors;

- take timely advantage of the best conditions offered by the market, especially given the present

phase of high volatility in capital markets, by eliminating the typically extensive amount of time

associated with the exercise of option rights for shareholders through a placement with qualified

investors only.

4

The financial resources raised through the capital increase will be used for the Company‟s industrial

development and thus will not be allocated to decrease or change the structure of its financial

indebtedness.

The Company‟s Board of Directors has also resolved to put a proposal before the shareholders‟

meeting calling for the Company‟s shares to be transferred to the STAR segment of the Mercato

Telematico Azionario (screen-based market) organised and managed by Borsa Italiana S.p.A. The

transfer to the STAR segment represents a response to the need to access a market offering, greater

capitalisation, liquidity, which will permit the Company to increase its ability to compete, and visibility

with institutional investors, also at the international level, as well as to achieve full appreciation of its

economic value.

Participation in that segment is contingent upon satisfaction of the requirements set out in Article

2.2.3 of the Regulations for Markets Organised and Managed by Borsa Italiana, mainly in terms of

size, liquidity, transparency of information, corporate governance (independent director Paolo Ottone

Migliavacca has been appointed lead independent director) and economic solidity.

TerniEnergia will be assisted by BNP Paribas as global coordinator and bookrunner for the

placement of the newly issued shares, EnVent, as financial advisor, and Norton Rose, as legal

advisor.

Renewal of the service agreement by T.E.R.N.I. Research S.p.A.

On 5 July 2010, TerniEnergia and the holding company, T.E.R.N.I. Research S.p.A., entered into a

master agreement effective 1 September 2010 and terminating on 31 August 2013, governing the

provision by T.E.R.N.I. Research S.p.A. of a series of logistics services, such as access to premises

fitted for industrial activities and executive offices, as well as the provision of legal and corporate,

advisory and information technology support services. The agreement provides for the annual

consideration to be paid by TerniEnergia to T.E.R.N.I. Research S.p.A. amounting to €967 thousand,

excluding VAT, which is revised on a semi-annual basis. The new service agreement constitutes

partial changes, in terms of the subject matter, compared to the previous contract already in force

between the parties governing access to the premises on Via Casale in Terni, in which

TerniEnergia‟s current registered office is located. The consideration determined under the previous

agreement was approximately €400 thousand per year. The increase in the consideration determined

by the new agreement reflects the larger premises made available for both the conduct of industrial

and executive activities, whereas the fees of the remaining services governed by the agreement

have remained essentially unchanged. The increase in the annual consideration of the service

agreement is a consequence of the increase in the quantity of services requested by TerniEnergia

due to the expansion of its business, considering particularly the increase in revenue and number of

employees.

Given that the counterparty is a related party, TerniEnergia has provided detailed disclosure of the

transaction in accordance with Article 71-bis, paragraph 1, of Consob Regulation No 11971/99 in a

specific press release.

5

Loan received from the Intesa Sanpaolo Group

On 16 July 2010, the Intesa Sanpaolo Group, made available €6,000,000 through Mediocredito

Italiano in support of TerniEnergia‟s industrial projects aimed at expanding the realisation of

photovoltaic plants in the six months ending 31 December 2010 and therefore having access to the

incentives as provided by the Ministerial Decree of 6 February 2006 in connection with energy

production by photovoltaic plants, which will expire on 31 December 2010.

Sale of treasury shares

On 28 July 2010, TerniEnergia has settled the second tranche due to Vittoria S.r.l., headquartered in

Lecce, following the connection to the electricity grid of two new industrial-scale photovoltaic plants

with a total capacity of approximately 2 MW. In March, TerniEnergia had acquired from Vittoria S.r.l.

the projects and authorisations for the two photovoltaic plants, in addition to a land lease of

approximately eight hectares, located in the Municipality of Torchiarolo (BR), for the next 25 years.

The contract stipulated the settlement of the second tranche to be made after the connection to the

electricity grid in the form of share payment determined according to the average closing prices on

the five days of market activity prior to the transfer of the shares. The consideration was paid on 28

July 2010 through the transfer to Vittoria S.r.l. of 132,548 shares of TerniEnergia. The shares were

valued at €3.395 per share for a total amount of €450 thousand. The first tranche was settled through

the exchange of shares in the amount of €450 thousand when the agreement had been signed.

Factoring agreement entered into with MPS Leasing e Factoring

In August 2010, the Company entered into a factoring agreement with MPS relating to receivables

from its client Rete Rinnovabile S.r.l. in connection with a master agreement signed on 28 December

2009, amended on 11 June 2010. The factoring of receivables is without recourse, unless otherwise

specified. The agreement is for a rolling maximum amount of €30 million, i.e. whenever a factored

receivable is settled, the paid amount is again available for factoring.

Set up of Joint Venture

On 15 September 2010 the Company set up a joint venture, Sol Tarenti, together with Ferrero Elettra

S.r.l. which also operates in the renewable energy sector and controlled by Ferrero Mangimi S.p.A. di

Cuneo, leader in the Italian market for animal feed.

The new joint venture, with the headquarters in Narni (TR) in the Nera Montoro region, at the ex

Nuova Terni Industrie Chimiche industrial plant, will construct industrial photovoltaic power plants

with a total energy power potential of approximately 3 MWp in Italy. The Board of Directors of Sol

Tarenti comprises Mr. Stefano Neri, the CEO of TerniEnergia and Mr. Massimo Ferrero, the owner of

Ferrero Mangimi with the role of president of the board and vice president of the board respectively.

6

FINANCIAL RESULTS OF THE TERNIENERGIA GROUP

In the nine months ended 30 September 2010 the company has completed the construction of 45

photovoltaic power plants of medium and large size with a capacity of 43.9 MWp. In particular 25.1

MWp were constructed for the joint venture while the remaining 18.8 MWp were constructed for third

parties.

The total number of photovoltaic plants built by TerniEnergia, from the start of the company‟s activity

up till 30 September 2010 amounts to 173 plants with a cumulative capacity equal to 83.9 MWp of

which 44.9 MWp were constructed for the joint ventures operating in the power generation. At the

balance sheet date photovoltaic plants of the joint venture with an installed capacity of 26.6 MWp

were operational and connected to the electricity grid.

Nine months ended 30 September Change Change

(in Euro) 2010 2009 %

Revenues from sales and services 64,065,758 34,568,439 29,497,319 85.33%

Production costs (51,126,444) (27,047,854) (24,078,590) 89.02%

Gross margin 12,939,314 7,520,585 5,418,729 72.1%

Personnel costs (3,187,197) (2,300,930) (886,267) 38.5%

EBITDA 9,752,117 5,219,655 4,532,462 86.8%

Depreciation, amortisation and impairment (505,483) (439,528) (65,955) 15.0%

Operating income 9,246,634 4,780,127 4,466,507 93.4%

Financial income and expense (626,211) (427,800) (198,411) 46.4%

Share of income /(loss) from investments in joint ventures 894,651 (109,826) 1,004,477 n.a.

Net income before income tax 9,515,074 4,242,501 5,272,573 124.3%

Income tax (2,960,137) (1,516,476) (1,443,661) 95.2%

Net income 6,554,937 2,726,025 3,828,912 140.5%

In the nine months ended 30 September 2010 the company recorded consolidated revenues from

sales and services of € 64,065 thousand (of which €40.8 relating to turnkey contracts with third

parties and €22.1 million with the joint venture), an increase of 85% compared to the same period in

2009 (€34.6 million of which €26.8 million relating to turnkey contracts with third parties and €7.6

million with the joint venture. The increase is due to the significant in the number of industrial size

photovoltaic plants constructed (45 compared to 24 in the same period of the prior year), and a total

installed capacity of 43.9 MWp (21.9 MWp in the same period in 2009), of which 25.1 MWp for joint

venture (10.4 MWp in the same period in 2009).

It should be noted that as of 30 September 2010 there were two photovoltaic plants with a capacity of

3.8 MWp for which construction was completed, but not all of the revenue recognition criteria had

been met.

The results recorded in the first nine months of 2010 exceeded the objectives for the entire year

2010, set forth in the business plan (“Piano Industriale”) which was presented on 30 November 2009.

7

Consolidated sproduction costs are mainly variable and amounted to €51,126 thousand in the nine

months ended 30 September 2010, with an increase of 89.02% compared to the same period of the

previous year.

Net income before financial income and expense, share of income (loss) from investments in joint

ventures, income tax, and depreciation, amortisation and impairment (EBITDA) for the first nine

months 2010 amounted to €9,752 thousand, representing 15.2% of revenues from sales and

services. Compared to the same period of the last year, the percentage increase in EBITDA was

greater than the increase in gross margin (87% compared to 72.1%). This is due to economies of

scale, particularly with reference to personnel costs which changed by 39%.

Financial expense and income of €626 thousand in the nine months ended 30 September 2010 was

more than offset by the share in income from investments in joint venture of €895 thousand

(compared to a loss of €109 thousand in the same period of the previous year).

Net income for the nine months ended 30 September 2010 amounts to €6,555 thousand, an increase

of 140.5% compared to the same period in the previous year.

As of 30

September As of 31

December Change Change

(in Euro) 2010 2009 %

Intangible assets 1,260,771 1,226,059 34,712 2.83%

Property, plant and equipment 1,709,273 1,414,173 295,100 20.87% Investment in joint ventures, deferred tax assets and non current financial receivables 8,484,517 2,966,805 5,517,712 n.a.

Total non-current assets 11,454,561 5,607,037 5,847,524 104.29%

Inventories 25,329,046 4,964,460 20,364,586 n.a.

Trade receivables 48,854,241 30,677,390 18,176,851 59.25% Other current assets and assets held for sale 5,586,923 2,676,037 2,910,886 108.78%

Trade payables (52,373,744) (22,887,055) (29,486,689) 128.84%

Tax payables and other current liabilities (11,213,067) (3,131,601) (8,081,466) n.a.

Net working capital 16,183,399 12,299,231 3,884,168 31.58%

Provisions and deferred tax liabilities (3,508,352) (1,954,180) (1,554,172) 79.53%

Net invested capital 24,129,608 15,952,088 8,177,520 51.26%

Total shareholders’ equity 16,719,269 13,282,085 3,437,184 25.88%

Current net financial indebtedness 3,397,864 2,670,003 727,861 27.26%

Non-current net financial indebtedness 4,012,475 4,012,475 n.a.

Net financial indebtedness 7,410,339 2,670,003 4,740,336 n.a.

Net invested capital 24,129,608 15,952,088 8,177,520 51.26%

8

As of 30 September 2010 the total non-current assets amounts to €11,454 thousand with an increase

of €5,847 thousand compared to 31 December 2009 and relates mainly to authorisations for the

construction of photovoltaic plants, investments in property, plant and equipment related to the

acquisition of land and plots of land as well as plant and machinery equipment. Total non-current

assets also include deferred tax assets, investment in joint venture and non current financial assets.

The net working capital amounts to €16,183 thousand as of 30 September 2010, an increase of

31.58% compared to the previous period (€12,299 thousand). The change in net working capital

evidences, in an important growth period, the particular focus on the management of trade

receivables and payables and the particular attention on purchasing, especially the acquisition of

panels and the inverters.

Inventories increased by more than 150% as of 30 September 2010 compared to 31 December 2009

and amounted to €25,329 thousand as of 30 September 2010. This increase is mainly due to

photovoltaic plants under construction at the ”Milis” site; the relevant contracts include the

construction of photovoltaic plants for third parties with a capacity of 12 MWp (TRP BV).

As of 30 September As of 31 December (in Euro) 2010 2009

Cash (380,904) (14,518)

Current accounts (17,193,587) (4,958,692)

Liquidity (A) (17,574,491) (4,973,210)

Current financial receivables (B) (1,204,348) (3,326,546)

Short-term borrowings (bank overdrafts) 4,989,120 1,047,943

Short-term borrowings (advances on invoices) 15,195,747 9,921,816

Short-term borrowings (other borrowings) 34,836 -

Short-term borrowings (current portion of long-term financing arrangement) 1,957,000 -

Current financial indebtedness (C) 22,176,703 10,969,759

Long-term borrowings (other borrowings) 87,725 -

Long-term borrowings (long-term financing arrangement) 3,924,750 -

Non-current financial indebtedness (D) 4,012,475 -

Net financial indebtedness (A+B+C+D) 7,410,339 2,670,003

The net financial indebtedness as of 30 September 2010 amounted to €7,410 thousand remaining at

significant reduced levels compared to the turnover generated and maintaining its ratio with the total

shareholders‟ equity (equal to €16,719 thousands) below the parity (around 0.44). As of December

2009 the ratio amounted to 0.2 with a net financial indebtedness of €2,670 thousands compared to

total shareholders‟ equity amounting to €13,282 thousands.

9

The net financial indebtedness as of 30 September 2010 included €5,882 thousands relating to a

long -term financing granted by Mediocredito Italiano S.p.A, which has been classified for €3,925 as

long-term borrowings and for €1,957 as short-term borrowings. Furthermore, the non-current

financial indebtedness included the non-current portion of a loan for the acquisition of vehicles

amounting to €88 thousands. The net financial indebtedness also included (i) €20,219 thousands of

short term borrowings due to various financial institutions, mainly relating to overdrafts or advances

on invoices, (ii) liquidity amounting to €17,574 thousands and (iii) current financial receivables

amounting to €1,204 thousands.

10

TerniEnergia Group – Unaudited Interim Consolidated Financial Information

as of and for the nine months ended 30 September 2010

Unaudited Interim Consolidated Balance Sheet

Unaudited Interim Consolidated Income Statement

Unaudited Interim Consolidated Statement of Comprehensive Income

Unaudited Interim Consolidated of Changes in Shareholders’ Equity

Unaudited Interim Consolidated Statement of Cash Flows

Notes to the Unaudited Interim Consolidated Financial Information as of and for the nine

months ended 30 September 2010

Certification of the Unaudited Interim Consolidated Financial Information as of and for the

nine months ended 30 September 2010 of the manager in charge of the preparation of the

accounting documents

TERNIENERGIA S.p.A.

UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET

As of 30 September 2010 and 31 December 2009

F-11

Notes As of 30 September As of 31 December

(in €)

2010 2009

ASSETS

Intangible assets 1.4.1 1,260,771 1,226,059

Property, plant and equipment 1.4.2 1,709,273 1,414,173

Investments in joint ventures 1.4.3 1,439,140 1,284,749

Deferred tax assets

3,247,184 1,682,056

Non-current financial receivables 1.4.6 3,798,193 -

Total non-current assets

11,454,561 5,607,037

Inventories 1.4.4 25,329,046 4,964,460

Trade receivables 1.4.5 48,854,241 30,677,390

Other current assets

5,496,923 2,676,037

Current financial receivables 1.4.6 1,204,348 3,326,546

Cash and cash equivalents

17,574,491 4,973,210

Total current assets

98,459,049 46,617,643

Assets held for sale

90,000 -

TOTAL ASSETS

110,003,610 52,224,680

LIABILITIES AND SHAREHOLDERS’ EQUITY Share capital

12,410,000 12,410,000

Reserves

(2,245,668) (2,852,964)

Net income

6,554,937 3,725,049

Total shareholders’ equity 1.5.1 16,719,629 13,282,085

Provisions

3,047,178 1,451,801

Employee benefit liability

228,782 162,676

Deferred tax liabilities

232,392 339,703 Long-term borrowings 1.5.2 4,012,475 -

Total non-current liabilities

7,520,827 1,954,180

Trade payables 1.5.3 52,373,744 22,887,055

Short-term borrowings 1.5.4 22,176,703 10,969,759

Tax payables

4,916,472 2,103,805

Other current liabilities

6,296,595 1,027,796

Total current liabilities

85,763,514 36,988,415

TOTAL LIABILITIES

92,284,341 38,942,595

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

110,003,610 52,224,680

(The accompanying notes are an integral part of this unaudited interim consolidated financial information).

TERNIENERGIA S.p.A.

UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENT

For the nine months ended 30 September 2010 and 2009

F-12

.(in €) Notes Nine months ended

30 September

2010 2009

Revenues 1.6.1 63,336,565 34,385,850

Other income 1.6.1 729,193 182,590

Changes in inventories of semi-finished and finished products 1.6.2 15,183,872 260,286

Materials costs 1.6.3 (46,043,107) (18,265,634)

Services costs 1.6.4 (20,008,958) (8,967,487)

Personnel costs 1.6.5 (3,187,197) (2,300,930)

Other operating costs 1.6.6 (258,251) (75,018)

Depreciation, amortisation and impairment 1.6.7 (505,483) (439,528)

Operating income

9,246,634 4,780,127

Financial income 1.6.8 87,433 7,285

Financial expense 1.6.8 (713,644) (435,085)

Share of income/(loss) from investments in joint ventures 1.6.9 894,651 (109,826)

Net income before income tax

9,515,074 4,242,501

Income tax 1.6.10 (2,960,137) (1,516,476)

Net income

6,554,937 2,726,025

- Attributable to equity holders of the Group

6,544,937 2,726,025

Earnings per share – basic and diluted 1.9 0.27 0.11


TERNIENERGIA S.p.A.

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


F-13

(in €) Notes Nine months ended

30 September

2010 2009

Net income

6,554,937 2,726,025

Changes in joint ventures‟ cash flow hedge reserve

(1,922,846) -

Tax on changes in joint ventures‟ cash flow hedge reserve

528,783 -

1.5.1 Other comprehensive income (1,394,063) -

Total comprehensive income

5,160,874 2,726,025

· Attributable to equity holders of the Group

5,160,874 2,726,025


TERNIENERGIA S.p.A.

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

As of and for the nine months ended 30 September 2010 and 2009

F-14

Share capital

Reserves

Total Reserves Net income

Total shareholder

s’ equity

(in €)

Share premium reserve

Legal reserve

Extraordinary reserve

Other reserves

As of 31 December 2008 12,010,000 3,550,458 22,045 206,827 (7,249,057) (3,469,727) 532,428 9,072,701

Allocation of net income - - 532,428 - - 532,428 (532,428) - Proceeds from shares issued 400,000 880,000 - - - 880,000 - 1,280,000 Purchase of treasury shares - - - - (257,960) (257,960) - (257,960) Expenses related to shares issued - - - - (67,135) (67,135) - (67,135)

Total transactions with owners 400,000 880,000 532,428 - (325,095) 1,087,333 (532,428) 954,905

Net income - - - - - - 2,726,025 2,726,025

Total comprehensive income - - - - - - 2,726,025 2,726,025

As of 30 September 2009 12,410,000 4,430,458 554,473 206,827 (7,574,152) (2,382,394) 2,726,025 12,753,631

Share capital

Reserves

Total Reserves Net income

Total shareholder

s’ equity

(in €)

Share premium reserve

Legal reserve

Extraordinary reserve

Other reserves

As of 31 December

2009 12,410,000 4,430,458 554,473 206,827 (8,044,722) (2,852,964) 3,725,049 13,282,085

Allocation of net income - - 310,020 3,408,380 6,649 3,725,049 (3,725,049) -

Dividends - - - - (2,482,000) (2,482,000) - (2,482,000)

Purchase of treasury shares

- - - - (141,690) (141,690) - (141,690)

Sale of treasury shares - 512,795 - - 387,205 900,000 - 900,000

Total transactions with owners

- 512,795 310,020 3,408,380 (2,229,836) 2,001,359 (3,725,049) (1,723,690)

Net income - - - -

6,554,937 6,554,937

Other comprehensive income

- - - - (1,394,063) (1,394,063)

(1,394,063)

Total comprehensive income

- - - - (1,394,063) (1,394,063) 6,554,937 5,160,874

As of 30 September 2010

12,410,000 4,943,253 864,493 3,615,207 (11,668,621) (2,245,668) 6,554,937 16,719,269


TERNIENERGIA S.p.A.

UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS


F-15

(in €) Nine months ended

30 September

2010 2009

Net income before income tax 9,515,074 4,242,501

Depreciation and amortisation 153,717 121,036

Impairment 351,766 -

Accruals for doubtful receivables - 318,492

Accruals of provision for employee benefit liability 92,216 57,167

Share of (income)/ loss from investments in joint ventures accounted for using the equity method and elimination of margin

4,526,552 2,640,820

Loss from disposals 14,074 -

(Increase)/decrease in inventories (20,364,586) 1,279,216

Increase in trade receivables (18,366,851) (16,532,242)

(Increase)/decrease in other assets (2,803,634) (1,650,802)

Increase in trade payables 29,505,738 12,187,068

Increase in other liabilities 2,760,914 1,598,194

Employee benefits paid (26,110) -

Net cash provided by operating activities 5,358,870 4,261,450

Purchase of property, plant and equipment (462,342) (423,202)

Purchase of intangible assets (869,923) (13,177)

Proceeds from sale of intangible assets 569,156 -

Investments in joint ventures (4,479,629) (1,408,576)

Increase in receivables and other financial assets (675,995) -

Net cash used in investing activities (5,918,733) (1,844,955)

Net change of short-term borrowings 11,084,383 311,898

Increase in long-term borrowings 4,012,475 -

Proceeds from issuance of shares and other movements in shareholders‟ equity (183,056) 1,140,105

Expenses relating to shares issued - (92,600)

Dividends paid (1,752,657) -

Net cash provided by financing activities 13,161,144 1,359,403

Net increase in cash and cash equivalents 12,601,281 3,775,898

Cash and cash equivalents at the beginning of the period 4,973,210 1,015,295

Cash and cash equivalents at the end of the period 17,574,491 4,791,193

Additional cash flow disclosures: Interest paid (493,051) (309,534)

Income tax paid 1,976,933 383,511


TERNIENERGIA S.p.A.

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION

As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009

F-16

1. NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION AS OF

30 SEPTEMBER 2010 AND FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010 AND 2009

1.1 GENERAL INFORMATION

TerniEnergia S.p.A (“TerniEnergia”, the “Company” or the “Parent Company”) is a public limited

company having its registered office in Terni (Italy) at Via Luigi Casale snc and is listed on the Italian

stock exchange “Mercato Telematico Azionario” managed by Borsa Italiana.

The Company and its subsidiaries (together “the Group” or “the TerniEnergia Group”) operate in the

energy business, seeking to adapt the findings of research to the needs of industry, with a close

focus on engineering work and developing industrial projects. TerniEnergia Group is also involved in

the generation of electricity by photovoltaic plants through its interests in joint ventures with EDF EN

Italia S.p.A (a subsidiary of EDF Energies Nouvelles S.A., listed on the Paris Stock Exchange) and

other partners.

1.2 SEGMENT INFORMATION

The Group operates through a single business unit that does business exclusively in Italy in the

photovoltaic sector, in which it markets, designs and installs photovoltaic plants and offers

maintenance services of photovoltaic plants. Accordingly, the management believes that there are no

requirements for segment reporting.

1.3 BASIS OF PREPARATION

As of and for the year ended 31 December 2009 the Company prepared its first consolidated

financial statements due to the acquisition of subsidiaries in the same period. Accordingly, the

unaudited interim consolidated financial information as of and for the nine months ended 30

September 2010 has been prepared on a consolidated basis. For comparative purposes, the income

statement and statement of cash flows are derived from the unaudited interim consolidated financial

information as of and for the nine months ended 30 September 2009 and considered comparable, as

the investments presented in that period have been joint ventures accounted for using the equity

method.

This unaudited interim consolidated financial information has been prepared on a going-concern

basis inasmuch as the Directors have determined that there are no financial, operational or other

indicators that would suggest difficulties involving the Group‟s ability to meet its obligations in the

foreseeable future and particularly in the next 12 months.

TERNIENERGIA S.p.A.

NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)


F-17

The unaudited interim consolidated financial information has been prepared in accordance with the

International Financial Reporting Standards (IFRS) issued by IASB and recognised within the

European Community pursuant to Regulation (EC) No 1602/2002 of the European Parliament and

the Council of 19 July 2002, and, in particular, IAS 34 – Interim Financial Reporting, as well as the

provisions issued in implementation of Article 9 of Legislative Decree No 38/2005. Among the options

presented in IAS 34, the Group has elected to publish a condensed disclosure in the unaudited

interim consolidated financial information. This unaudited interim consolidated financial information

should be read in conjunction with the consolidated financial statements as of and for the year ended

31 December 2009, which were prepared in accordance with IFRS.

The unaudited interim consolidated financial information is presented in euro (€), the currency in

which the transactions of the Group are undertaken. All information presented in the notes is

presented in euro, unless otherwise indicated.

The accounting policies are consistent with those of the annual financial statements for the year

ended 31 December 2009, to which the reader is referred for further information, except as

described below.

The following new standards, amendments to standards and interpretations are mandatory for the

first time for the financial year beginning 1 January 2010 and which did not result in material effects

for the Group:

IFRS 3 – Business Combinations (2008) and IAS 27 – Consolidated and Separate Financial

Statements (2008);

2008 Improvements to IFRS 5 – Non-current Assets Held for Sale and Discontinued

Operations;

2009 Improvements to IAS 10 – Events after the Reporting Period;

Improvements to IFRSs (2009);

IAS 39 – Financial Instruments: Recognition and Measurement – Eligible Hedged Items;

Amendment to IFRS 2 (Share-based Payment);

IFRIC 17 – Distribution of Non-cash Assets to Owners;

New version of IFRS 1 – First-time Adoption of International Financial Reporting Standards,

which eliminates certain transitional provisions deemed no longer necessary and contains

some minor textual amendments;

IFRS 1 – Additional Exemptions for First-time Adopters, which aims to specify the retroactive

application of certain IFRSs so that the entities involved are no longer required to bear

excessive organisational burdens or costs during the transition process.

TERNIENERGIA S.p.A.



F-18

The Group has elected the „„non-current/current‟‟ presentation for the assets and liabilities in the

balance sheet, the presentation of costs by their nature for the income statement and the indirect

method for the preparation of the statement of cash flows. It should be noted that, in order to meet

the requirements set by Consob Regulation No 15519 of 28 July 2006, note 1.7 presents the

consolidated income statement, consolidated balance sheet and consolidated statement of cash

flows, indicating significant transactions with related parties.

In preparing the unaudited interim consolidated financial information, management has made

judgements, estimates and assumptions that affect the value of assets and liabilities and the

disclosure relating to contingent assets and liabilities as of the reporting date. Those estimates and

judgements are based on historical experience and other factors that are believed to be reasonable

under the circumstances and are adopted where the carrying amount of assets and liabilities may

not readily be determined. Actual results may differ from these estimates given the uncertainty

surrounding the assumptions and conditions upon which the estimates are based. Estimates and

assumptions are periodically evaluated and the effects of all changes are reflected on the income

statement, where such changes affect the current period. If such a change has effects on both the

present and future periods, the change is recognised during the current and future periods.

Actual results could differ, also significantly, from such estimates due to possible changes in the

factors considered when determining those estimates.

This unaudited interim consolidated financial information was approved by the Company‟s Board of

Directors on 29 October 2010.

Changes in the scope of consolidation

As of and for the year ended 31 December 2009, the Company prepared consolidated financial

statements for the first time as a result of the transactions in late 2009, which resulted in the

Company‟s acquisition of controlling interests in certain companies.

The following is a list of the entities included within the scope of consolidation and the percentages of

direct or indirect ownership by the Group as of 30 September 2010:

TERNIENERGIA S.p.A.



F-19

Consolidated companies: Company name Registered office % Group ownership

Direct Indirect

Total Group

Shareholding

Capital Energy S.r.l Nardò- Via Don Milani, n.4 100% 100%

Newcoenergy S.r.l Nardò- Via Don Milani, n.4 100% 100%

Capital Solar S.r.l Nardò- Via Don Milani, n.4 100% 100%

Investimenti Infrastrutture S.r.l. Nardò- Via Don Milani, n.4 100% 100%

MeetSolar S.r.l Nardò- Via Don Milani, n.4 100% 100%

Festina S.r.l Terni - Via Garibaldi n.43 100% 100%

Change in scope of consolidation during the nine months ended 30 September 2010:

Energia Basilicata S.r.l. Nardò- Via Don Milani, n.4 100% 100%

Energia Lucana S.r.l. Nardò- Via Don Milani, n.4 100% 100%

Energia NuovaS.r.l. Nardò- Via Don Milani, n.4 100% 100%

Verde Energia S.r.l. Nardò- Via Don Milani, n.4 100% 100%

Rinnova S.r.l. Nardò- Via Don Milani, n.4 100% 100%

Companies accounted for using the equity method:

Company name Registered office % Group ownership

Direct Indirect

Total Group

Shareholding

SolarEnergy S.r.l Terni - Via Luigi Casale Snc 50% 50%

Energia Alternativa S.r.l Terni - Via Luigi Casale Snc 50% 50%

Fotosolare Settima S.r.l Terni - Via Luigi Casale Snc 50% 50%

Energie S.r.l Terni - Via Luigi Casale Snc 50% 50%

Change in scope of consolidation during the nine months ended 30 September 2010:

Solaren S.r.l. Terni - Via Luigi Casale Snc 50% 50%

Collesanto S.r.l. Terni - Via Luigi Casale Snc 50% 50%

Saim Energy 2 S.r.l. Terni - Via Luigi Casale Snc 50% 50%

Infocaciucci S.r.l. Terni - Via Luigi Casale Snc 50% 50%

Girasole S.r.l.. Terni - Via Luigi Casale Snc 50% 50%

D.T. S.r.l Terni - Via Luigi Casale Snc 50% 50%

SolTarenti S.r.l. Narni – Via dello Stabilimento 1 50% 50%

Seasonality of business

The Company‟s business is not of a seasonal nature.

TERNIENERGIA S.p.A.



F-20

1.4 ASSETS

1.4.1 INTANGIBLE ASSETS

The following tables set forth the changes in the historical cost, the accumulated amortisation and the

net book value of intangible assets.

(in €)

HISTORICAL COST

As of 31 December

2009 Additions Disposals Impairment Reclassification

As of 30 September

2010

Software 245,414 40,915 - - - 286,329

Other 19,140 - - - - 19,140

Land leases - - - - 185,916 185,916

Intangibles in progress 1,081,856 643,091 (569,156) (351,766) 126,443 930,468

Total 1,346,410 684,006 (569,156) (351,766) 312,359 1,421,853

(in €)

ACCUMULATED AMORTISATION

As of 31 December 2009

Amortisation As of 30

September 2010

Software 105,694 38,107 143,801

Other 14,656 2,625 17,281

Total 120,350 40,732 161,082

(in €)

NET BOOK VALUE

As of 31 December 2009 As of 30 September 2010

Historical cost Accumulated amortisation

Net book value Historica

l cost

Accumulated

amortisation

Net book value

Software 245,414 (105,695) 139,719 286,329 (143,801) 142,528

Other 19,140 (14,656) 4,484 19,140 (17,281) 1,859

Land leases - - - 185,916 - 185,916

Intangibles in progress

1,081,856 - 1,081,856 930,468 - 930,468

Total 1,346,410 (120,351) 1,226,059 1,421,853 (161,082) 1,260,771

TERNIENERGIA S.p.A.



F-21

Intangibles in progress include the costs of authorisations related to the realisation of photovoltaic

plants already obtained or currently pending and acquired through subsidiaries in 2009 and in the

nine months ended 30 September 2010. The purchase agreements of these subsidiaries require a

purchase price adjustment subject to the finalisation of certain authorisation procedures currently

pending and amounting to a maximum of €7.2 million as of the balance sheet date.

In the nine months ended 30 September 2010 certain costs associated with authorisations and

previously capitalised were impaired by €352 thousand in order to align their carrying amount with

their net realisable value. In addition, administrative authorisations for the realisation of photovoltaic

plants amounting to €569 thousand were sold together with the completed photovoltaic plants in the

nine months ended 30 September 2010.

Investments in land leases in the nine months ended 30 September 2010 are intended for the

realisation of photovoltaic plants.

1.4.2 PROPERTY, PLANT AND EQUIPMENT

The following tables set forth the changes in the historical cost, the accumulated depreciation and

impairment and the net book value of property, plant and equipment.

(in €)

HISTORICAL COST

As of 31 December

2009 Additions Disposals Reclassification

As of 30 September

2010

Land - 358,518 - (90,000) 268,518

Plant and machinery 83,343 - - - 83,343

Equipment 469,886 129,659 - - 599,545

Other assets 292,831 150,426 (44,253) - 399,004

Assets under construction

919,341 - - (126,443) 792,898

Total 1,765,401 638,603 (44,253) (216,443) 2,143,308

TERNIENERGIA S.p.A.



F-22

(in €)

ACCUMULATED DEPRECIATION AND IMPAIRMENT

As of 31 December 2009

Additions Disposals As of 30

September 2010

Plant and machinery 24,787 7,501 - 32,288

Equipment 168,282 59,481 - 227,763

Other assets 158,159 46,003 (30,178) 173,984

Total 351,228 112,985 (30,178) 434,035

(in €)

NET BOOK VALUE

As of 31 December 2009 As of 30 September 2010

Historical cost Accumulated depreciation

and impairment Net book value

Historical cost

Accumulated depreciation

and impairment

Net book value

Land - - - 268,518 - 268,518 Plant and machinery 83,343 (24,787) 58,556 83,343 (32,288) 51,055 Equipment 469,886 (168,282) 301,604 599,545 (227,763) 371,782 Other assets 292,831 (158,159) 134,672 399,004 (173,984) 225,020 Assets under construction

919,341 - 919,341 792,898 - 792,898

Total 1,765,401 (351,228) 1,414,173 2,143,308 (434,035) 1,709,273

Investments in land amounted to €359 thousand in the nine months ended 30 September 2010 and

are intended for the realisation of photovoltaic plants. The increase in industrial equipment by €130

thousand referred to the purchase of equipment in order to enhance the capacity for the realisation of

photovoltaic plants.

The vehicle fleet was renewed in the nine months ended 30 September 2010 by an investment of

€150 thousand and a disposal of €14 thousand.

Assets under construction include the capitalised costs incurred in previous years for the

development of the 18 MWp wind farm located in the Municipality of Stroncone amounting to €793

thousand. For further information regarding the contingency related to this wind farm see paragraph

1.5.6 Contingent liabilities.

TERNIENERGIA S.p.A.



F-23

1.4.3 INVESTMENTS IN JOINT VENTURES

The following table sets forth the investments in joint ventures accounted for using to the equity

method as of 30 September 2010 and 31 December 2009:

As of 30 September As of 31 December Change Change

(in €) 2010 2009 %

Investments in joint ventures

1,439,140 1,284,749 154,391 12%

Total 1,439,140 1,284,749 154,391 12%

The following table sets forth a breakdown of the carrying amount of investments in joint ventures as

of 30 September 2010 and their classification on the balance sheet:




Provisions

Terni Solar Energy S.r.l. (1,589,383) - 1,589,383

Energia Alternativa S.r.l. 1,096,348 1,096,348 -

Energie S.r.l. 229,219 229,219 -

Fotosolare Settima S.r.l. 110,334 110,334 -

Solaren S.r.l. (26,135) - 26,135

Collesanto S.r.l. (107,879) - 107,879

Saim Energy 2 S.r.l. (251,571) - 251,571

Infocaciucci S.r.l. (229,305) - 229,305

Girasole S.r.l.. (662,701) - 662,701

D.T. S.r.l 3,239 3,239 -

SolTarenti S.r.l (180,204) - 180,204

Total (1,608,038) 1,439,140 3,047,178

The joint ventures identify, develop, finance, design and commission the installation of photovoltaic

plants and sell the electricity produced by such plants in Italy.

TERNIENERGIA S.p.A.



F-24

The following table sets forth a breakdown of the changes in the carrying amount of the joint ventures

accounted for using the equity method in the nine months ended 30 September 2010 (classified as

investments in joint ventures and provisions on the balance sheet):

Investments in joint ventures accounted for using the equity method (in €) 2010

As of 1 January (167,052)

Capital contributions 4,479,629

Elimination of intragroup margin (5,421,203)

Share of income from investments in joint ventures 894,651

Changes in cash flow hedge reserve, net of tax (1,394,063)

As of 30 September (1,608,038)

- of which investments in joint ventures 1,439,140

- of which provisions (3,047,178)

The carrying amounts of the joint ventures are classified for €1,439 thousand as investments in joint

ventures and for €3,047 thousand as provisions. Provisions include the negative carrying amount of

the joint ventures measured using the equity method, primarily due to the elimination of the

intragroup margin from the sale of photovoltaic plants to joint ventures.

The following table sets forth a breakdown of the aggregated net financial indebtedness of the joint

ventures as of 30 September 2010.


(in €)

Terni SolarEnergy

S.r.l.

Energia Alternativa

S.r.l. Energie

S.r.l. Fotosolare

Settima S.r.l. Collesanto

S.r.l.

Saim Energy 2

S.r.l.

Infocaciucci S.r.l.

Other joint

venture Total

Cash (729) (1,802) (6,457) (1,171) - - - (1,350) (11,509)

Current accounts (3,670,534) (1,683,641) (1,109,243) (16,061) (20,090) (48,247) (3,453) (94,763) (6,646,032)

Liquidity (A) (3,671,263) (1,685,443) (1,115,700) (17,232) (20,090) (48,247) (3,453) (96,113) (6,657,541)

Current bank borrowings

Current financial borrowings

846,528 1,095,746 599,634 - - 130,779 81,815 - 2,754,502

- due to other shareholders

- 13,694,526 13,558,703 27,522,221 - - - 7,291,091 62,066,541

- due to TerniEnergia

- 204,347 - - - - - 3,088 207,435

Current financial indebtedness (B)

846,528 14,994,619 14,158,337 27,522,221 - 130,779 81,815 7,294,179 65,028,478

Non-current borrowings

- mortgages - 14,526,804 - - - - - - 14,526,804

- project financing 21,668,069 - - - - - - - 21,668,069

- sale and leaseback 7,910,924 14,382,926 - 1,998,752 2,929,221 2,970,025 - 30,191,848

- due to other shareholders

3,215,179 - - - 150,891 200,118 246,867 - 3,813,055

- due to TerniEnergia

3,190,147 - - - 151,244 204,852 251,601 - 3,797,844

Derivative instruments 2,287,297 1,158,455 748,374 - - - - - 4,194,126

Non-current financial indebtedness (C)

30,360,692 23,596,183 15,131,300 - 2,300,887 3,334,191 3,468,493 - 78,191,746

Net financial

indebtedness (A+B+C)

27,535,957 36,905,359 28,173,937 27,504,989 2,280,797 3,416,723 3,546,855 7,198,066 136,562,683

TERNIENERGIA S.p.A.



F-25

The Company‟s share in the aggregated net financial indebtedness of the joint ventures is in line with

its ownership interest in the joint ventures of 50%.

The joint ventures generally finance investments in photovoltaic plants through shareholders‟ loans

or medium-/ long-term borrowings provided by financial institutions. Non-current bank borrowings

are primarily secured by mortgages of the joint ventures‟ photovoltaic plants, pledges of receivables

and cash and cash equivalents and guarantees given by the shareholders. As of 30 September 2010

the Company has provided sureties for the joint ventures of €11.9 million and entered into lease

succession agreements amounting to €17.1 million (refer to note 1.5.5, Guarantees and

commitments and note 1.7 Related Party Transactions). In addition, the Company has pledged its

quota in Terni Solar Energy Srl to the financial institutions that have provided project financing for

that joint venture.

The financing arrangements provide that the financing institutions may require the prepayment of the

outstanding financial liabilities, upon the occurrence of certain events constituting a change of control

in the joint ventures. Furthermore, some financing arrangements require both the joint ventures and

their quotaholders to meet certain financial conditions.

Certain financial conditions typically include:

the obligation for the joint ventures to maintain certain equity/debt ratios – generally

15%/85%;

the option for the financial institutions to demand prepayment in the event of:

i) a debt service cover ratio generally below 1.05 (the debt service cover ratio is the

ratio of a) the cash flows expected from the financed project in a given year and b)

the interest, including payments associated with derivative instruments, and the

principal repayments due during that same year);

ii) a loan life coverage ratio below 1.10 (i.e., the ratio of the present value of the

project‟s expected cash flows to the outstanding amount of the loan);

The possibility for joint ventures to distribute dividends is: i) contingent upon achieving a debt service

cover ratio generally of no less than 1.15 and a loan life coverage ratio generally of no less than 1.20

and ii) limited to the amount of free cash and cash equivalents, as defined by the contract.

All covenants had been satisfied as of 30 September 2010. It should be noted that the cash flows

necessary for the repayment of the joint ventures‟ financial liabilities derive from the incentives

applied by the GSE S.p.A (Electrical Services Operator) and the sale of the electricity generated by

the photovoltaic plants owned by the joint ventures.

TERNIENERGIA S.p.A.



F-26

1.4.4 INVENTORIES

The following table sets forth a breakdown of inventories as of 30 September 2010 and as of 31

December 2009:


(in €) 2010 2009 %

Raw materials

7,664,808 2,484,093 5,180,715 n.a.

Semi-finished products

214,648 651,128 (436,480) (67%)

Work in progress

17,449,590 1,829,239 15,620,351 n.a.

Total 25,329,046 4,964,460 20,364,586 n.a.

Work in progress include €7,736 thousand relating to costs incurred for eight photovoltaic plants in

the initial stages of realisation (corresponding to a contractual installed capacity of 22.4 MWp) and €

700 thousand relating to costs incurred for one photovoltaic plants (corresponding to a contractual

installed capacity of 1.0 MWp) in the advanced stages of realisation and €9,026 thousand relating to

costs incurred for two photovoltaic plants (corresponding to a contractual installed capacity of 3.8

MWp) completed, for which as of 30 September 2010 not all revenue recognition requirements had

been met.

Based on contractual agreements, some clients have made advance payments (included in other

current liabilities) relating to photovoltaic plants included in work in progress as of 30 September

2010.

As of 30 September 2010, raw materials included €4,040 thousand in solar panels (€448 thousand

as of 31 December 2009), €903 thousand in inverters (€1,019 thousand as of 31 December 2009)

and €2,545 thousand in other materials and consumables (€1,017 thousand as of 31 December

2009). Solar panels included in inventories as of 30 September 2010 and as of 31 December 2009

corresponded to a capacity of 2.8 MWp and 0.2 MWp, respectively.

Semi-finished products included in inventories referred to semi-finished concrete and other supports

for the realisation of photovoltaic plants.

TERNIENERGIA S.p.A.



F-27

1.4.5 TRADE RECEIVABLES

The following table sets forth a breakdown of the trade receivables as of 30 September 2010 and as

of 31 December 2009:


(in €) 2010 2009

%

Receivables from clients

32,740,679 27,991,742 4,748,937 17%

Receivables from joint ventures

16,071,099 2,758,685 13,312,414 n.a.

Receivables from parent company

115,500 0 115,500 n.a.

Receivables from T.E.R.N.I. Research SpA group companies

252,000 252,000 0 0%

Provision for doubtful receivables

(325,037) (325,037) (0) 0%

Total 48,854,241 30,677,390 18,176,851 59%

As of 30 September 2010 trade receivables amounted to €48,854 thousand, of which €37,064

thousand relating to invoices to be issued. The increase in trade receivables is in line with the

Group‟s business expansion and is almost entirely attributable to the increase in receivables from

joint ventures.

Trade receivables are shown net of the provision for doubtful receivables of €325 thousand. The

accruals for doubtful receivables relate to specific trade receivables past due for which management

considered an increased collection risk. No amounts have been charged to or released from the

provision for doubtful receivables in the nine months ended 30 September 2010.

A breakdown of receivables from joint ventures is provided in paragraph 2.7 Related Party

Transactions.

1.4.6 FINANCIAL RECEIVABLES

Non-current financial receivables mainly include the interest-bearing loans granted to Terni

SolarEnergy S.r.l., Collesanto S.r.l., Infocaciucci S.r.l. and Saim Energy 2 S.r.l., which are

automatically renewed from year to year, unless cancelled, and which bear interest at six-month

Euribor plus a spread of 1.9%.

As of 30 September 2010, the financing arrangements amounted to €3,798 and were classified as

non-current financial receivables, due to the fact that their reimbursement is not expected within the

next 12 months.

TERNIENERGIA S.p.A.



F-28

The following table sets forth a breakdown of current financial receivables as of 30 September 2010

and as of 31 December 2009:

As of 30

September As of 31 December Change Change

(in €) 2010 2009

%

Financial receivables from joint

ventures

204,348 3,326,546 (3,122,198) (93,9)%

Financial receivables from MPS

1,000,000 - 1,000,000 n.a.

Total 1,204,348 3,326,546 (2,122,198) (63,8%)

Current financial receivables include the €204 thousand interest-bearing loan provided on an arm‟s-

length basis to Energia Alternativa S.r.l. in order to meet certain financial needs. Financial

receivables from Monte dei Paschi di Siena S.p.A. refer to the current account pledged as security in

transactions between the Company and that financial institution.

1.5 SHAREHOLDERS’ EQUITY AND LIABILITIES

1.5.1 SHAREHOLDERS’ EQUITY

As of 30 September 2010, the Company‟s subscribed and paid-in share capital amounted to

€12,410,000 divided into 24,820,000 shares without par value. Share capital did not change in the

nine months ended 30 September 2010.

The legal reserve increased by €310 thousand due to the allocation of 5% of net income for the year

ended 31 December 2009 as approved by the Company‟s shareholders‟ meeting of 20 April 2010.

As of 30 September 2010, other reserves included the negative cash-flow hedge reserve of joint

ventures accounted for using the equity method amounting to €1,394 thousand. This reserve reflects

the negative fair value change, net of the tax, of the derivative instruments agreements entered into

by joint ventures to hedge the risk of changes in cash flows associated with the fluctuation of interest

rates on certain non-current borrowings. Those derivative contracts comply with the requirements of

IFRS for the application of hedge-accounting. Accordingly, changes in the fair values of such

derivative instruments are recognised, to the extent of the effective portion of those derivative

instruments, in a specific equity reserve (the “cash-flow hedge reserve”). The change in this reserve

is included in other comprehensive income.

As of 30 September 2010, the Company held 281,101 treasury shares acquired according to the

resolution of the shareholders‟ meeting of 1 September 2009, for a total cost of €483 thousand.

TERNIENERGIA S.p.A.



F-29

During the nine months ended 30 September 2010, the Company acquired 36,000 new treasury

shares for an amount of €142 thousand. Furthermore, the acquisition of authorisations for the

realisation of photovoltaic plants for €900 thousand was settled through the transfer of 113,550

treasury shares at their market value of €450 thousand as of the payment date, 15 March 2010, and

the transfer of 132,548 treasury shares at their market value of €450 thousand as of the payment

date, 28 July 2010.

1.5.2 LONG-TERM BORROWINGS

Long-term borrowings as of 30 September 2010 amounting to €3,925 thousand referred to the non-

current portion of a long term financing arrangement entered into on 16 July 2010 with Mediocredito

Italiano SpA for a total of €6 million. The agreement provides for six semi-annual principal

repayments between 31 December 2010 and 30 June 2013 and bears interest of three months

Euribor plus a spread of 2.40%, rounded up to the next 0.05%. The current portion of the financing

arrangement amounted to €1,957 thousand as of 30 September 2010. The cash received in

connection with the financing arrangement was net of transaction costs amounting to €129 thousand.

Long-term borrowings as of 30 September 2010 furthermore included the non-current portion of €88

thousand of a financing arrangement entered into in connection with the acquisition with vehicles.

1.5.3 TRADE PAYABLES

The following table sets forth a breakdown of trade payables as of 30 September 2010 and as of 31

December 2009:


(in €) 2010 2009

%

Payables to suppliers

52,231,811 22,538,300 29,693,511 132%

Payables to parent

company

98,925 52,355 46,570 89%

Payables to T.E.R.N.I

Research SpA group

companies

43,008 296,400 (253,392) (85%)

Total 52,373,744 22,887,055 29,486,689 129%

Trade payables amounted to €52,374 thousand as of 30 September 2010 and related to the supply

of solar panels, inverters and the purchase of other goods and services. Trade payables included

€3,100 thousand in invoices to be received as of 30 September 2010.

TERNIENERGIA S.p.A.



F-30

As of 30 September 2010 trade payables for the supply of solar panels and inverters amounted to

€20,736 thousand and €3,915 thousand respectively, whereas the residual balance referred primarily

to materials and services purchased in the nine months ended 30 September 2010 and not due as of

30 September 2010.

Trade payables included €43 thousand in payables to the related party T.E.R.N.I. Tecnologie S.p.A.

in relation to information-technology and technical services and €99 thousand in payables to the

parent company, Terni Research S.p.A. for corporate services.

1.5.4 SHORT-TERM BORROWINGS

The following table sets forth a breakdown of short-term borrowings as of 30 September 2010 and as

of 31 December 2009:


(in €) 2010 2009

%

Bank overdrafts

6,479,206 1,047,943 5,431,263 n.a.

Advances on invoices

13,705,661 9,921,816 3,783,845 -

Other borrowings

34,836 - 34,836 n.a.

Current portion of long term

financing arrangement

1,957,000 - 1,957,000 n.a.

Total 22.176.703 10.969.759 9.249.944 84%

Short-term borrowings referred primarily to bank overdrafts and advances on contracts and invoices.

Furthermore, short-term borrowings included borrowings from other lenders for the purchase of

vehicles.

Short-term borrowings are due within 12 months as of 30 September 2010 and their carrying

amounts therefore approximate their fair values.

TERNIENERGIA S.p.A.



F-31

The following table sets forth the net financial indebtedness as of 30 September 2010 and as of 31 December 2009:

As of 30 September As of 31 December

(in €) 2010 2009

Cash (380,904) (14,518)

Current accounts (17,193,587) (4,958,692)

Liquidity (A) (17,574,491) (4,973,210)

Current financial receivables (B) (1,204,348) (3,326,546)

Short-term borrowings (bank overdrafts) 4,989,120 1,047,943

Short-term borrowings (advances on invoices) 15,195,747 9,921,816

Short-term borrowings (other borrowings) 34,836 -

Short-term borrowings (current portion of long-term financing arrangement) 1,957,000 -

Current financial indebtedness (C) 22,176,703 10,969,759

Long-term borrowings (other borrowings) 87,725 -

Long-term borrowings (long-term financing arrangement) 3,924,750 -

Non -current financial indebtedness (D) 4,012,475 -

Net financial indebtedness (A+B+C+D) 7,410,339 2,670,003

For the net financial indebtedness of joint ventures, refer to note 1.4.3 Investments in Joint Ventures.

As of 30 September 2010, current financial receivables included the current account of €1 million

pledged to Monte Paschi di Siena S.p.A. to secure overdrafts and advances on invoices provided by

that financial institution.

The parent company Terni Research S.p.A. has provided bank guarantees of €14.3 million on the

Company‟s behalf as of the date of approval of this unaudited interim consolidated financial

information

As of the date of approval of this unaudited interim consolidated financial information, the Group had

lines of credit with various financial institutions amounting to €60 million.

The Group entered into a without recourse factoring agreement relating to receivables regarding

transactions initiated in 2010 with a key client. The agreement is for a rolling maximum of €30 million,

and as of 30 September 2010 €1.49 million have been utilised.

TERNIENERGIA S.p.A.



F-32

1.5.5 GUARANTEES AND COMMITMENTS

Guarantees given

Some clients have entered into sale and leaseback agreements with certain financial institutions in

order to finance the purchase of photovoltaic plants from the Company. Under certain circumstances,

the Company has entered into lease succession agreements with the financial institutions that

require the Company to step-in the original sale and leaseback agreement obligations of the clients

in the event of the clients breaching the financing agreements. The clients on the other side are

required to transfer their legal title of the sale and leaseback agreements together with any

receivable relating to the power production of the photovoltaic plants at the date the lease succession

agreement is executed.

The Directors of the Company believe that the probability of the occurrence of such transfers is

extremely remote, considering that the lease agreements are generally structured in such a way that

the cash flows generated by the photovoltaic plants should cover the reimbursement of the related

financing agreement. According to current business plans of the interested photovoltaic plants and

given the initial upfront payment made by the client under the sale and leaseback agreement, cash

flows provided by the photovoltaic power production should be sufficient to repay the financing

agreement.

As of 30 September 2010 the outstanding amounts under the sale and leaseback agreements for

which the Company has entered into lease succession agreements amounted to €38.0 million, of

which, €17.0 million related to financing arrangements of joint ventures, €3.0 million related to a

financing arrangement of the parent company T.E.R.N.I. Research, €14.3 million related to financing

arrangements of other related parties and €3.6 million related to a third party financing arrangement.

For the same reasons mentioned above the Directors of the Company believe that any execution of

the lease succession agreements would not have a negative effect on the Company‟s results.

The Company has issued sureties to financial institutions for the principal repayments of some long-

term borrowings and sale and leaseback arrangements entered into by its joint ventures Energia

Alternativa and Energie in relation to the acquisition of photovoltaic plants. As of 30 September 2010

the sureties issued by the Company amounted to €11.9 million. For further details see note 2.7

Related Parties.

Investment-grade rated financial institutions have provided guarantees relating to contractual

obligations of the Company with clients in the amount of €5.2 million.

TERNIENERGIA S.p.A.



F-33

Commitments associated with lease agreements

The Company has signed an operating lease agreement for a property used as a production

workshop which will expire on 31 December 2011 with an annual rent of €15 thousand. The

Company has also signed a lease agreement for property used as a warehouse with an annual rent

of €4 thousand, which has been renewed.

1.5.6 CONTINGENT LIABILITIES

By order No. 2958 issued on 12 February 2010, the Conservation of Architectural and Landscape

Heritage of Umbria and Perugia revoked previously-issued favourable opinions in relation to an

authorisation (No. 6/2008) issued by the municipality of Stroncone in connection with a request by

the Company to build a wind farm plant to be known as “Colle Ventatoio” in Stroncone. In relation to

such authorisation request, on 23 January 2009, the municipality of Stroncone issued to the

Company the Single Authorisation No. 1/2009 required pursuant to article 12 of Legislative Decree

No. 387/2003 and on 11 December 2007 the Umbria Region issued a positive opinion in relation to

environmental impact matters. Following the above-mentioned revocation, on 12 February 2010 the

Ministry for Heritage and Cultural Activities issued a decree, which also revoked an authorisation

(No. 25/2009) issued by the municipality of Stroncone in connection with the Company‟s request to

amend the Single Authorisation No. 1/2009 it had previously been granted.

The Company has submitted two appeals to the Regional Administrative Court of Umbria in respect

of these adverse revocation orders. The Company believes that the revocation orders were issued

without merit and illegally for a number of reasons, both procedural and substantive, which it believes

is supported by a number of previous judicial rulings. The first appeal hearing (postponed from 7 July

2010) will take place on 3 November 2010.

Intangibles in progress include €793 thousand associated with the development of the foregoing wind

farm in the Municipality of Stroncone. The Company‟s Directors believe that the amount of

capitalised expenses as of 30 September 2010 is recoverable. In addition, as of 30 September 2010

no provisions had been recognised in connection with the dispute surrounding the issue of permits

for the construction of the wind farm inasmuch as the Company‟s Directors believe the occurrence of

liabilities to be unlikely. .

TERNIENERGIA S.p.A.



F-34

1.6 INCOME STATEMENT

1.6.1 REVENUES AND OTHER INCOME

The following table sets forth a breakdown of revenues and other income for the nine months ended

on 30 September 2010 and 2009:

Nine months ended 30 September

Change

Change % (in €)

2010 2009

Revenues from the installation of photovoltaic plants

62,009,964 33,200,582 28,809,382 87%

Revenues from development activities

743,381 954,268 (210,887) (22%)

Revenues from maintenance activities

583,220 231,000 352,220 n.a.

Other operating income

729,193 182,590 546,603 n.a.

Total

64,065,758 34,568,440 29,497,318 85%

Revenues and other income increased by 85%, essentially attributable to revenues from the

installation of photovoltaic plants, which increased from €33,199 thousand in 2009, related to 24

photovoltaic plants for total installed capacity of 21.9 MWp, to €62,010 thousand in 2010, related to

43 photovoltaic plants for total installed capacity of 40.2 MWp.

1.6.2 CHANGES IN INVENTORIES OF SEMI-FINISHED PRODUCTS AND FINISHED PRODUCTS

The following table sets forth a breakdown of changes in inventories of semi-finished products and

finished products for the nine months ended 30 September 2010 and 2009:

Nine months ended

30 September

Change

Change %

(in €) 2010 2009

Semi-finished products (436,480) (135,839) (572,319) n.a.

Work in progress 15,620,352 396,125 16,016,477 n.a.

Total 15,183,872 260,286 15,444,158 n.a.

The change in semi-finished products and finished products during the first nine months ended 30

September 2010 compared to the corresponding period of 2009 was mainly due to the costs

associated with various large-scale photovoltaic plants included among inventories and not yet

completed as of 30 September 2010. Refer to note 2.4.4 Inventories for further information.

TERNIENERGIA S.p.A.



F-35

1.6.3 MATERIALS COSTS

The following table sets forth a breakdown of materials costs for the nine months ended 30

September 2010 and 2009:


Change

Change

(in €)

2010 2009

%

Purchase of materials

49,147,037 15,799,574 33,347,463 n.a.

Consumables

730,868 883,361 (152,493) (17%)

Fuels and lubricants

88,761 43,197 45,564 105%

Acquisition of authorisations

1,257,156 0 1,257,156 n.a.

Change in inventories of materials and consumables

(5.180.715) 1,539,502 (6,720,217) n.a.

Total 46,043,107 18,265,634 27,777,473 n.a.

The materials costs are reported net of the elimination of intragroup costs with joint ventures

amounting to €8,693 thousand for the nine months ended 30 September 2010 and related to the

portion attributable to the Company‟s materials costs incurred in connection with the sale of

photovoltaic plants to joint ventures.

The increase in costs for the purchase of materials is mainly due to the considerable increase in the

Group‟s business activities. Furthermore, the increase in costs for the acquisition of authorisations for

the realisation of photovoltaic plants from third parties is related to the necessity of supporting the in-

house development of authorisations.

TERNIENERGIA S.p.A.



F-36

1.6.4 SERVICES COSTS

The following table sets forth a breakdown of services costs for the nine months ended 30


Nine months ended

30 September 2010 2009

Change

Change

% (in €)

Subcontractor costs

10,903,028 5.058.153 5.844.875 116%

Professional and consulting fees 2,737,974 1,191,333 1.546.641 130%

Other rents and leases 918,873 339.812 579.061 n.a.

Parent company services 376,690 243.433 133.257 55%

Statutory auditors‟ compensation 40,046 32.760 7.286 22%

Leases of buildings 42,177 50.210 (8.033) (16%)

Transportation 690,470 467.647 222.823 48%

Maintenance, repairs and assistance 98,318 43,359 54.959 127%

Security and insurance 3,391,816 1.003.306 2.388.510 n.a.

Advertising expenses 149,688 52.891 96.797 n.a.

Other services 659,878 484.583 175.295 36%

Total

20,008,958 8,967,487 11,041,471 123%

The services costs are reported net of the elimination of intragroup costs with joint ventures

amounting to €7,166 thousand for the nine months ended 30 September 2010 and related to the

portion attributable to the Company‟s services costs incurred in connection with the sale of


TERNIENERGIA S.p.A.



F-37

1.6.5 PERSONNEL COSTS

The following table sets forth a breakdown of personnel costs for the nine months ended 30



2010 2009

Change

Change %

(in €)

Wages and salaries 1,146,710 1,253,817 (107,107) (9%)

Social security contributions 870,599 330,777 539,822 n.a.

Board of Directors‟ compensation 418,986 273,746 145,240 53%

Employee benefit liability 91,216 77,767 13,449 17%

Temporary workers 659,686 364,823 294,863 81%

Total

3,187,197 2,300,930 886,267 39%

The personnel costs are reported net of the elimination of intragroup costs with joint ventures

amounting to €630 thousand for the nine months ended 30 September 2010 and related to the

portion attributable to the Company‟s personnel costs incurred in connection with the sale of


1.6.6 OTHER OPERATING COSTS

The following table sets forth a breakdown of other operating costs for the nine months ended 30


(in €)


2010 2009 Change Change %

Taxes, other than income tax

45,702 11,605 34,097 n.a.

Penalties and sanctions

6,619 1,571 5,048 n.a.

Other costs

205,930 61,842 144,088 n.a.

Total 258,251 75,018 183,233 n.a.

Other operating costs mainly related to taxes other than income tax, penalties and sanctions and

administrative costs associated with the realisation of photovoltaic plants. The increase for the nine

months ended 30 September 2010 compared to the same period in 2009 was mainly due to the

increased business activities.

TERNIENERGIA S.p.A.



F-38

1.6.7 DEPRECIATION, AMORTISATION AND IMPAIRMENT

The following table sets forth a breakdown of depreciation, amortisation and impairment for the nine

months ended 30 September 2010 and 2009:


2010 2009 Change Change %

(in €)

Amortisation of intangible assets

40,732 29,121 11,611 40%

Depreciation of property, plant and equipment

112,985 91,915 21,070 23%

Accruals for doubtful receivables

- 318,492 (318,492) (100%)

Impairment of intangible assets

351,766 - 351,766 n.a.

Total 505,483 439,528 65,955 15%

The impairment of intangible assets related to pending authorisations for the realisation of

photovoltaic plants, previously captialised.

1.6.8 FINANCIAL INCOME AND EXPENSE

The following table sets forth a breakdown of financial income and expense for the nine months

ended 30 September 2010 and 2009:

Nine months ended

30 September 2010 2009

Change Change % (in €)

Interest expense on borrowings (464,705) (262,190) (202,515) 77%

Bank fees

(240,283) (101,630) (138,653) 136%

Other financial expense

(8,656) (71,266) 62,610 (88%)

Total financial expense

(713,644) (435,085) (278,558) 64%

Interest income on current accounts 12,580 7,285 5,295 73%

Interest income from joint venture

74,853

74,853 n.a.

Total financial income

87,433 7,285 80,148 n.a.

Total financial income and expense (626,211) (427,800) (198,410) 46%

The increase in short-term borrowings in order to finance increased working capital requirements in

connection with the increased business activities, increased the financial expense and related bank

fees, partially offset by interest income on current accounts and financial receivables due from joint

ventures.

TERNIENERGIA S.p.A.



F-39

1.6.9 SHARE OF INCOME/(LOSS) FROM INVESTMENTS IN JOINT VENTURES

The following table sets forth a breakdown of share of income /(loss) from investments in joint

ventures for the nine months ended 30 September 2010 and 2009:

(in €)

Nine months ended

30 September Change Change

2010 2009 %

Terni Solar Energy S.r.l. 154,459 338,184 (183,725) (54%)

Energia Alternativa S.r.l. 459,327 (284,535) 743,862 n.a,

Energie S.r.l. 246,318 (53,867) 300,185 n.a.

Fotosolare Settima S.r.l. (13,906) (109,608) 95,702 (87%)

Solaren S.r.l. (1,611) - (1,611) n.a.

Collesanto S.r.l. (1,728) - (1,728) n.a.

Saim Energy 2 S.r.l. 23,780 - 23,780 n.a.

Infocaciucci S.r.l. 31,204 - 31,204 n.a.

Girasole S.r.l.. (1,431) - (1,431) n.a.

D.T. S.r.l (1,761) - (1,761) n.a.

Total 894.651 (109.826) 1.004.477 n.a.

TERNIENERGIA S.p.A.



F-40

1.6.10 INCOME TAX

The following table sets forth a breakdown of income tax for the nine months ended 30 September

2010 and 2009:


2010 2009

Change Change %

(in €)

Current income tax

4,787,420 2,174,092 2,613,328 120%

Deferred tax assets

(1,565,127) (657,616) (907,511) 138%

Deferred tax liabilities

(262,156) - (262,156) n.a.

Total

2,960,137 1,516,476 1,443,662 n.a.

1.7 RELATED PARTY TRANSACTIONS

The balance sheet, income statement and statement of cash flows highlight transactions with related

parties in accordance with CONSOB resolution no. 15519 of 27 July 2006.

TERNIENERGIA S.p.A.



F-41

UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET AS OF 30 SEPTEMBER 2010 AND

AS OF 31 DECEMBER 2009 IN ACCORDANCE WITH CONSOB n. 15519 AS OF 27/7/06

As of 30 September of which related As of 31 December of which related

(in €) 2010

parties

2009

parties

ASSETS

Intangible assets 1,260,771 - 1,226,059 60,000 Property, plant and equipment 1,709,273 - 1,414,173 -

Investments in joint ventures 1,439,140 - 1,284,749 -

Deferred tax assets 3,247,184 - 1,682,056 - Non-current financial receivables 3,798,193 3,798,192 - -

Total non-current assets 11,454,561 3,798,192 5,607,037 60,000

Inventories 25,329,046 - 4,964,460 -

Trade receivables 48,854,241 22,840,547 30,677,390 12,524,345

Other current assets 5,496,923 3,402 2,676,037 -

Current financial receivables 1,204,348 204,348 3,326,546 3,326,546

Cash and cash equivalents 17,574,491 - 4,973,210 -

Total current assets 98,459,049 23,048,297 46,617,643 15,850,891

Assets held for sale 90,000 - - -

TOTAL ASSETS 110,003,610 26,846,489 52,224,680 15,910,891

LIABILITIES AND SHAREHOLDERS’ EQUITY

Share capital 12,410,000 - 12,410,000 -

Reserves (2,245,668) - (2,852,964) -

Retained earnings 6,554,937 - 3,725,049 -

Total shareholders’ equity 16,719,269 - 13,282,085 -

Provisions 3,047,178 - 1,451,801 -

Employee benefit liability 228,782 - 162,676 -

Deferred tax liabilities 232,392 - 339,703 -

Long-term borrowings 4,012,475 - - -

Total non-current liabilities 7,520,827 - 1,954,180 -

Trade payables 52,373,744 43,008 22,887,055 348,755

Short-term borrowings 22,176,703 - 10,969,759 -

Tax payables 4,916,472 - 2,103,805 -

Other current liabilities 6,296,595 - 1,027,796 -

Total current liabilities 85,763,514 43,008 36,988,415 348,755

TOTAL LIABILITIES 93,284,341 43,008 38,942,595 348,755

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

110,003,610 43,008 52,224,680 348,755

TERNIENERGIA S.p.A.



F-42

UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010 AND 2009 IN ACCORDANCE WITH CONSOB n. 15519 AS OF 27/07/06

Nine months

ended 30 September

2010 of which related

Nine months ended

30 September 2009

of which related

(in €)

parties

parties

Revenues 63,336,565 22,011,618 34,385,850 4,521,183

Other income 729,193 436,223 182,590 -

Changes in inventories of semi-finished and finished products

15,183,872 - 260,286 -

Materials costs (46,043,107) (73,300) (18,265,634) -

Services costs (20,008,958) (762,805) (8,967,487) (163,233)

Personnel costs (3,187,197) (384,018) (2,300,930) (175,976)

Other operating costs (258,251) - (75,018) -

Depreciation, amortisation and impairment (505,483) - (439,528) -

Operating income 9,246,634 4,780,127

Financial income 87,433 73,944 7,285 -

Financial expense (713,644) (46,425) (435,085) -

Share of income/(loss) from investments in joint ventures

894,651 - (109,826) -

Net income before income tax 9,515,074 4,242,501

Income tax (2,960,137) - (1,516,476) -

Net income 6,554,937 2,726,025

TERNIENERGIA S.p.A.



F-43

Related party transactions

The following is a list of the Group‟s related parties.

Entity name Status

Skill & Trust Holding S.r.l. Parent company

T.E.R.N.I. Research S.p.A. Parent company

Terni Solar Energy S.r.l. Joint venture

Energia Alternativa S.r.l. Joint venture

Energie S.r.l. Joint venture

Fotosolare Settima S.r.l. Joint venture Solaren S.r.l. Joint venture Collesanto S.r.l. Joint venture Saim Energy 2 S.r.l. Joint venture Infocaciucci S.r.l. Joint venture Girasole S.r.l.. Joint venture D.T. S.r.l Joint venture

Sol Tarenti S.r.l. Carovigno S.r.l. Company managed or owned by related party

T.E.R.N.I.Tecnologie S.p.A. Company managed or owned by related party

Power S.r.l. Company managed or owned by related party

Speed S.r.l. Company managed or owned by related party

Lizzanello S.r.l. Company managed or owned by related party

Boschetto Srl Company managed or owned by related party

Gala Srl Company managed or owned by related party

Camene Srl Company managed or owned by related party

Royal Club Snc di Lucia e Francesco Urbani Company managed or owned by related party

Studio Ranalli & Associati Professional firm managed or owned by related party

Stefano Neri Director

Eugenio Montagna Baldelli Director

Fabrizio Venturi Director

Paolo Ricci Director

Domenico De Marinis Director

Paolo Ottone Migliavacca Director

Davide Galotti Director

Francesca Ricci Directors‟ daughter

Since its incorporation, the Company has been controlled by T.E.R.N.I. Research S.p.A.

Transactions between the Group and its related parties mainly related to:

trade transactions related to the realisation of photovoltaic plants and maintenance services

rendered to joint ventures and companies managed or owned by related parties;

financial transactions involving loans issued to joint ventures (see also note 1.4.6 Financial

Receivables);

lease succession agreements in connection with photovoltaic plants that become executable in

the event of the breach of contractual conditions by certain companies managed or owned by

related parties, joint ventures and the parent company, Terni Research S.p.A. (see also note

1.5.5 Guarantees and commitments);

TERNIENERGIA S.p.A.



F-44

sureties given to financial institutions in connection with medium-/long-term loans entered into

by joint ventures (see also note 1.5.5 Guarantees and commitments);

services, including technical, organisational, building lease, legal and administrative services,

provided by the parent company Terni Research S.p.A.;

technical services provided by T.E.R.N.I. Tecnologie S.p.A.;

professional services provided by Studio Ranalli & Associati, Director Paolo Ricci and his

daughter Francesca Ricci.

TERNIENERGIA S.p.A.



F-45

The following table sets forth a breakdown of the trade transactions with related parties and their

impact on the balance sheet as of 30 September 2010 and on the income statement for the nine

months ended 30 September 2010.

Trade transactions

Total 22.840.547 232.665 73.300 762.805 384.018 22.111.618 436.223

Relevant line item 48.854.241 58.670.339 46.043.107 20.008.958 3.187.197 63.336.565 729.193

% of relevant line item 46,80% 0,40% 0,20% 3,80% 12,00% 34,90% 59,80%


Nine months ended 30 September 2010

(in €)

Trade

Expense Income

Entity Name Receivables Payables Goods Services Personnel Goods Services

Parent company

T.E.R.N.I. Research S.p.A. 115,500 98,508 - 376,690 - - -

Joint venture

Terni Solar Energy S.r.l. 44,000 - - - - - 89,388

Energia Alternativa S.r.l. 713,705 - - - - 2,519,522

204,447

Energie S.r.l. 3,881,508 - - - - 4,280,314

140,638

Fotosolare settima S.r.l. 3,009,608 - - - - 3,664,842

1,500

Infocaciucci S.r.l. - - - - - 1,641,668

-

Saim Energy 2 S.r.l. 59,255 - - - - 1,645,116

-

Collesanto S.r.l. 3,592,120 - - - - 2,956,676

-

Solaren S.r.l. 2,066,718 - - - - 1,015,908

250

Girasole S.r.l. 2,025,164 - - - - 3,018,028

-

Sol tarenti S.r.l. 2,739,087 - - - - 1,369,544

-

D.T. S.r.l. T.E.R.N.I.Research SpA group

companies

Terni Green S.p.A. - 43,008 73,300 102,700 - - -

Power S.r.l. 72,000 - - - - - -

Speed S.r.l. 180,000 - - - - - -

Other related parties

Francesca Ricci - - - 77,316 - - -

Lizzanello S.r.l. 14,400 - - - - - -

Carovigno S.r.l. 4,344,384 - - - - - -

Studio Ranalli & Associati 18,000 - - 3,140 - - -

Key management - 91,149 - 202,959 384,018 - -

TERNIENERGIA S.p.A.



F-46

The following table sets forth a breakdown of the financial transactions with related parties and their

impact on the balance sheet as of 30 September 2010 and on the income statement for the nine

months ended 30 September 2010.

Financial transactions

(in €) As of 30 September 2010 Nine months ended 30 September 2010

Entity Name Receivables Guarantee received

Sureties provided

Lease Succession Expense Income

Parent company T.E.R.N.I. Research S.p.A. - 14,340,000 - 3,000,450 46,425 -

Joint venture

Terni Solar Energy S.r.l. 3,190,147 - - - - 69,009

Energia Alternativa S.r.l. 204,347 - 5,408,100 8,298,939 - 4,348

Energie S.r.l. - - 6,500,000 - - -

Saim Energy 2 S.r.l. 204,852 - - 3,060,000 - 175

Infocaciucci S.r.l. 251,601 - - 3,051,840 - 425

Collesanto S.r.l. 151,244 - - 2,688,000 - 896

Related entities

Boschetto S.r.l. - - - 3,508,930 - -

Gala S.r.l. - - - 3,570,580 - -

Camene S.r.l. - - - 3,656,841 - -

Royal Club Snc di Lucia e Francesco

Urbani

- - - 3,613,122 - -

Total

4,002,191 14,340,000 11,908,100 34,448,702 46,425 74,853

Relevant line item

5,002,541 713,644 87,433

% of relevant line item 80.00% 6.50% 85.60%

The following is a brief description on transactions between the Company and its related parties:

Trade transactions

Trade transactions primarily referred to:

a master agreement for the realisation of photovoltaic plants with a capacity of no less than

500 kWp between the Company and the joint ventures. Revenues with joint ventures primarily

related to this agreement and amounted to €22,012 thousand for the nine months ended 30

September 2010; trade receivables for invoices issued and to be issued amounted to €18,131

TERNIENERGIA S.p.A.



F-47

thousand as of 30 September 2010 and referred to the realisation of large-scale photovoltaic

plants;

a contract for the realisation of a photovoltaic plant signed with Carovigno S.r.l. in 2009. The

trade receivables deriving from that contract amounted to €4,344 thousand as of 30

September 2010;

a master agreement between the Company and the parent company, Terni Research S.p.A.,

governing administrative and logistics services, including the lease of the buildings located in

Terni at Via Luigi Casale snc, in Milan on Via Borgogna and in Lecce, the management of

legal and corporate affairs and the management of human resources and information

technology systems;

the purchase of software and information technology services from TerniTecnologie S.p.A.

Financial transactions

Current and non-current financial receivables and financial income for the nine months ended 30

September 2010 referred to interest-bearing financing arrangements with joint ventures.

It should be noted that as of 30 September 2010 the holding company, Terni Research S.p.A.,

provided financial institutions with guarantees in connection with the Company‟s credit facilities in the

amount of €14.3 million. Commissions for the guarantees issued by Terni Research S.p.A.

amounted to €46 thousand for the nine months ended 30 September 2010 and are included in

financial expense.

The Company has provided sureties in connection with medium-/long-term bank loans and sale and

leaseback agreements in the amount of €11.9 million to Energia Alternativa S.r.l. and to Energie S.r.l.

Some clients have financed the acquisition of photovoltaic plants through sale and leaseback

agreements. Under certain circumstances, the Company has entered into lease succession

agreements with the lenders that require the Company to step-in the original sale and leaseback

agreement obligations of the clients in the event of and contingent upon the clients breaching the

financing agreements. The outstanding amount under such lease agreements amounted to €38,0

million as of 30 September 2010, out of which €34,4 million were due to related parties and €3.6

million to a third party client.

Key management compensation

Transactions between the Company and key management primarily referred to technical and

administrative consulting activities. The key management includes Company‟s Board of Directors

members.

TERNIENERGIA S.p.A.



F-48

1.8 SIGNIFICANT NON-RECURRING EVENTS AND OPERATIONS

In accordance with Consob Notice No DEM/6064293 of 28.7.2006, Corporate disclosures of listed

issuers and issuers whose financial instruments are widely held by the public, as defined in Article

116 of the Consolidated Finance Act – Requirements under Article 114, paragraph 5, of Legislative

Decree No 58/98, we report that:

there were no transactions or events the occurrence of which may be considered non-

recurring or transactions or events that do not recur frequently in the usual course of

business; and

no atypical and/or unusual transactions were undertaken.

1.9 OTHER INFORMATION

Dividends

On 29 April 2010, the shareholders‟ meeting of the Company approved the financial statements as of

and for the year ended 31 December 2009 and the distribution of a dividend of €0.1 per ordinary

share, for a total amount of €2,482 thousand. The dividend was made available on 13 May 2010. A

total of €1,753 thousand had been paid to shareholders as of the date of approval of this unaudited

interim consolidated financial information.

Earnings per share

The basic earnings per share attributable to the holders of the Company‟s ordinary shares are

calculated on the basis of the average number of shares during the period.

Nine months ended 30 September 2010 2009

(in €)

Net income attributable to the equity holders of the Group

6,554,937 2,726,025

Average number of shares for the period

24,418,557 24,551,529

Earnings per share - basic and diluted 0.27 0.11

There are no differences between basic and diluted earnings per share inasmuch as there are no

classes of shares with dilutive effects.

Subsequent events

On 26 October 2010 TerniEnergia received from Consob – with note no.10087499 – the

authorisation to public its prospectus relating to the admission of trading on the MTA of the ordinary

TERNIENERGIA S.p.A.



F-49

shares of TerniEnergia; those ordinary shares are issued in form of a rights issue in connection with

the capital increase of a maximum of €60 million, excluding option rights in accordance with Article

2441, paragraph 5 of the Italian Civil code, which has been approved by the extraordinary

shareholders‟ meeting on 6 August 2010.

F-50

Certification of the Unaudited Interim Consolidated Financial Information as of and for the

nine months ended 30 September 2010 of the manager in charge of the preparation of the

accounting documents

Dott. Paolo Allegretti, the manager in charge of the preparation of the accounting documents of

TerniEnergia SpA, certifies in accordance with art. 154-bis, paragraph 2 of the Legislative Decree 58

of 24 Feburary 1998 that the Unaudited Interim Consolidated Financial Information as of and for the

nine months ended 30 September 2010 correspond to the entries in the books and accounting

records.

ternienergia spa group unaudited interim …...2010/09/30 · ternienergia spa group unaudited...

Documents