third quarter 2011 ternienergia s group ......2013/04/30 · 2 corporate details ternienergia...
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THIRD QUARTER 2011 TERNIENERGIA’S GROUP
CONSOLIDATED FINANCIAL STATEMENT
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CORPORATE DETAILS
TerniEnergia S.p.A.
Sede legale in Strada dello Stabilimento 1, 05035 Narni (TR)
Capitale sociale deliberato, sottoscritto e versato: Euro 23.210.000
Iscritta al Registro Imprese di Terni con il nr. 01339010553
Branches and Offices
Narni – Strada dello Stabilimento, 1
Milano – Via Borgogna, 7
Lecce – Via Costadura 3
Board of Directors
Chairman and CEO
Stefano Neri
Directors
Paolo Ricci
Fabrizio Venturi
Eugenio Montagna Baldelli
Paolo Ottone Migliavacca
Davide Gallotti
Domenico De Marinis
Board of Statutory Auditors
Ernesto Santaniello (Presidente)
Roberto Raminelli
Vittorio Pellegrini
Independent auditors
PriceWaterhouseCoopers S.p.A.
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Sommario
1. REPORT ON OPERATIONS ............................................................................................................................. 5
1.1. EVENTS OF THE QUARTER ........................................................................................................... 5
1.1.1. Share capital increase ...................................................................................................... 5
1.1.2. Purchase of società Agricola Fotosolara Oristano ........................................................... 5
1.1.3. Purchase of Agricola Fotosolara Ittireddu ....................................................................... 5
1.1.4. Purchase of T.E.C.I. Costruzioni e Ingegneria S.r.l. ........................................................... 6
1.1.5. Business Plan ................................................................................................................... 6
1.1.6. Collected tranches of payment from Milis Energy spa ..................................................... 7
1.1.7. Joint Venture Performance .............................................................................................. 7
1.1.8. Preliminary purchase agreement of ICQ Group and subsequent termination of the
contract ........................................................................................................................... 7
1.1.9. Concerning the amendment of the price was entered into with Meet Green Italia S.r.l... 8
1.1.10. Factoring agreement signed with Enel ............................................................................ 8
1.1.11. TerniEnergia Group’s business plan update ....................................................................10
1.2. ECONOMIC DEVELOPMENT OF THE GROUP .................................................................................. 11
1.3. BALANCE SHEET .............................................................................................................................. 13
1.4. EXPECTED MANAGEMENT EVOLUTION ......................................................................................... 15
2. FINANCIAL STATEMENTS AS AT SEPTEMBER 30 2011 ............................................................................... 16
2.1. STATEMENT OF CONSOLIDATED FINANCIAL SHEET ...................................................................... 16
2.2. CONSOLIDATED INCOME STATEMENT ........................................................................................... 17
2.3. INCOME TOTAL CONSOLIDATED STATEMENT ............................................................................... 18
2.5. CONSOLIDATED STATEMENT .......................................................................................................... 20
3. EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT AS AT SEPTEMBER 30, 2011..... 21
3.1. GENERAL INFORMATION ................................................................................................................ 21
3.2. SEGMENT REPORTING .................................................................................................................... 21
3.3. FORM, CONTENT AND ACCOUNTING PRINCIPLES ADOPTED ........................................................ 21
3.4. COMMENTS ON THE MAIN ASSETS ................................................................................................ 25
3.4.1. INTANGIBLE ASSETS ............................................................................................................ 25
3.4.2. TANGIBLE ASSETS ................................................................................................................ 27
3.4.3. EQUITY INVESTMENTS ........................................................................................................ 29
3.4.4. DEFERRED TAX ASSETS ........................................................................................................ 32
3.4.5. NON –CURRENT FINANCIAL RECEIVABLES .......................................................................... 33
3.4.6. INVENTORIES ....................................................................................................................... 34
3.4.7. TRADE RECEIVABLES ............................................................................................................ 35
3.4.8. OTHER CURRENT ASSETS ..................................................................................................... 36
3.4.9. FINACIAL RECEIVABLES ........................................................................................................ 36
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3.4.10. CASH AND CASH EQUIVALENTS .......................................................................................... 37
3.5. COMMENTS ON THE MAIN BALANCE SHEET ITEMS: LIABILITIES .................................................. 37
3.5.1. SHEREHOLDERS EQUITY ...................................................................................................... 37
3.5.2. PROVISIONS FOR EMPLOYEE BENEFITS .............................................................................. 38
3.5.3. DEFERRED TAX LIABILITIES .................................................................................................. 38
3.5.4. FINANCIAL DEBT NON CURRENT ......................................................................................... 38
3.5.5. OTHER NON-CURRENT LIABILITIES ..................................................................................... 39
3.5.6. TRADE PAYABLES ................................................................................................................. 40
3.5.7. PAYABLES AND OTHER FINANCIAL LIABILITIES .................................................................... 40
3.5.8. TAX DEBT ............................................................................................................................. 42
3.5.9. OTHER CURRENT LIABILITIES ............................................................................................... 43
3.5.10. GIVEN COMMITMENTS AND GUARANTEES ........................................................................ 44
3.5.11. POTENTIAL LIABILITIES ........................................................................................................ 45
3.6. COMMENTS ON THE MAIN INCOME STATEMENT ITEMS .............................................................. 47
3.6.1. REVENUES ............................................................................................................................ 47
3.6.2. CHANGE IN INVENTORIES OF SEMI-FINISHED AND FINISHED PRODUCTS ......................... 48
3.6.3. COSTS FOR RAW MATERIALS, CONSUMABLES AND GOODS FOR RESALE ......................... 48
3.6.4. COSTS FOR SERVICES ........................................................................................................... 49
3.6.5. PERSONNEL COSTS .............................................................................................................. 49
3.6.6. OTHER OPERATING COSTS .................................................................................................. 50
3.6.7. AMORTIZATION, DEPRECIATION, PROVISIONS AND WRITE-DOWNS ............................... 50
3.6.8. FINANCIAL INCOME AND CHARGES .................................................................................... 51
3.6.9. PORTION OF RESULTS OF JOINT VENTURES ....................................................................... 52
3.6.10. INCOME TAX ........................................................................................................................ 52
3.7. RELATION WITH RELATED PARTIES ................................................................................................ 54
3.8. CONSOLIDATED STATEMENT OF FINANCIAL POSITION PUSUANT TO CONSOB RESOLUTION NO.
15519 OF JULY 27 2006 ............................................................................................................................ 55
3.9. CONSOLIDATED INCOME STATEMENT PURSUANT TO CONSOB RESOLUTION NO. 15519 OF
JULY 27, 2006 ............................................................................................................................................. 56
3.10. CONSOLIDATED CASH FLOW STATEMENT PURSUANT TO CONSOB RESOLUTION NO. 15519 OF
JULY 27, 2006 ............................................................................................................................................ 57
3.11. RELATED PARTIES............................................................................................................................ 58
3.12. ATYPICAL AND/OR UNUSUAL TRANSACTIONS .............................................................................. 63
3.13. OTHER INFORMATION .................................................................................................................... 63
4. CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 154-BIS OF
LEGISLATIVE DECREE 58/98 AND ARTICLE 81-TER OF CONSOB REGULATION NO. 11971/99, AS AMENDED AND
SUPPLEMENTED ..................................................................................................................................................... 66
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1. REPORT ON OPERATIONS
1.1. EVENTS OF THE QUARTER
1.1.1. Share capital increase
The Board of Directors of partent company TerniEnergia S.p.A, resolved on February 1st, 2011,
resolved unanimously not to proceed further with further tranches of the share capital increase by
payment amounting to a maximum of Euro 60 million and reserved exclusively to qualified Italian
investors and foreign institutional investors, with the exception of U.S., Australia , Japan and Canada
and with the exclusion of option right pursuant to art. 2441, fifth paragraph, of the Civil Code, that
was approved by the Company’s extraordinary shareholders’ meeting on August 6th , 2010.
La capogruppo , given the market conditions at the date of the issuance, had decided to carry out
the share capital increase transaction for an amount that would have been sufficient for achieving
an appropriate free floating for the admission to STAR segment of the MTA, that took place on
December 28th 2010.
The first tranche of the share capital increase, that was set by TerniEnergia in 3 million shares, was
fully subscribed on November 8th , 2010 for a total consideration of Euro 10.8 Million, with an
offering price of new shares of Euro 3.60 - per share.
1.1.2. Purchase of società Agricola Fotosolara Oristano
On February,8th 2011 Capogruppo executed the purchase of Società Agricola Fotosolara Oristano
S.r.l.. Such a purchase was aimed at developing a new industrial sized photovoltaic plant on
greenhouses in Sardinia, for a total installed power of approximately 1 MWp, ready to be in the
pipeline and provided with Autorizzazione Unica. The total cost of the transaction was Eur 0.25
million, totally financed by cash, Euro 84.000 of which were paid in advance. The balance was paid
into two instalments for equal amount on April and May 2011, entirely financed by cash
1.1.3. Purchase of Agricola Fotosolara Ittireddu
On February 21st, 2011 TerniEnergia executed the purchase of Società Agricola Fotosolara Ittireddu
S.r.l.. Such a purchase was aimed at developing a new industrial sized photovoltaic plant on
greenhouses in Sardinia, for a total installed power of approximately 2,772 MWp, ready to be in
pipeline and provided of Autorizzazione Unica. The total costs of the transaction was equal to Euro
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0,71 Million, Eur 240.000 of which financed by cash. The balance was paid into two instalments for
equal amount on April and Mai 2011 enirely financed by cash.
1.1.4. Purchase of T.E.C.I. Costruzioni e Ingegneria S.r.l.
On March 7th, 2011 TerniEnergia executed the purchase of società T.E.C.I. Costruzioni e Ingegneria
S.r.l. based in Gioia del Colle (BA). Such a purchase was aimed at the construction of 6 industrial
sized photovoltaic plants for a total installed power equal to 4,92 MWp, already authorized and
with permission to open immediately the relevant working site. The price agreed for purchasing
100% of the company was Euro 1,18 Million, totally financed by cash, Euro 118.000 of which were
paid at the execution of the purchase preliminary agreement, and Euro 413.000 paid as down-
payment. The balance was paid into two installments of Euro 472.000 in the currency of plants’ cold
test and Euro 177.000 at grid connection.
1.1.5. Business Plan
On February 28th, 2011 the Board of Directors of TerniEnergia S.p.A. approved the 2011-2013 new
strategic business plan. The new business plan provides:
Power Generation in Joint-Venture: New target of instelled capacity in three years was equal to 172
MWp (44,9 MWp instelled capacity as at September 30th, 2010);
Power Generation in full equity: Plants building (100% equity) with target of 18 MWp of instelled
capacity;
EPC: New target of installed capacity over 140 MWp in three years (with and without direct modules
supply ), to high standing customer;
Optimization of EPC activity through the sale on the market of big sized photovoltaic power stations
after putting them into service, according BOT model (build, operate and transfer);
Development of EPC and Power Generation Activity through Venture abroad;
Purchase of shareholdings in companies in Italy or abroad for boosting industrial activity
Purchase of shareholdings in companies in Italy and abroad to the strengthening of industrial
activity; Strengthening of the activities relating to the putting into exercise and maintenance of
photovoltaic plants, aimed at generating a stable revenues source with a high marginality;
In 2012 entry into “Energy Saving” and “Mini-Hydro” businesses.
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1.1.6. Collected tranches of payment from Milis Energy spa
On March 10th, 2011 TerniEnergia collected from Milis Energy S.p.A. the second tranche of payment
for the total amount of 11,88 Million Eur related to the installation of two solar power plant made
up on greenhouses in Sardegna for a total installed power of about 12 MWp, completed in
December 2010.
Milis Energy S.p.A. is 100% owned by TRP PVE BV, a joint venture between the Italian company TRP
- Technologies and Resources for the Planet belonging to Tolo Group - and the Chinese company
SAAE (Shanghai Aerospace Automobile Electromechanical Co., Ltd) a company listed on the
Shanghai Stock Exchange with a market capitalization of approximately Euro 1.3 billion.
The first tranche of payment for a total amount of Eur 4.32 million was collected from TerniEnergia
on December 7th, 2010, while the last tranche of Eur 5.4 million has been invoiced to the imminent
entry into service of plants, realized in the municipality of Milis (Oristano).
Payment tranches’ value is related to the design, construction and start up of two solar plants,
except for the purchase of panels provided by the company Shanghai Solar Energy Science &
Technology based in Shanghai and for the management and system maintenance governed by a
twenty-year contract already signed with TerniEnergia
1.1.7. Joint Venture Performance
On March 29th, TerniEnergia incorporated joint venture Guglionesi S.r.l. with SIFIP S.r.l., a company
based in Mantova and operating in real estate sector. The new equally-owned joint venture with
registered office in Narni, (TR) Nera Montoro inside Nuova Terni Industrie Chimiche plant started
his activity in building in Italy two industrial sized photovoltaic plants based in Guglionesi (CB) for a
total capacity next to 1 MWp.The Board of Directors of the new joint Venture is composed of Mr.
Guglielmo Cecchin Chairman and Ceo of Sifip company and of Mr. Stefano Neri Ceo of TerniEnergia
with respective duties of Chairman and Vice-Chairman.
1.1.8. Preliminary purchase agreement of ICQ Group and subsequent termination of the contract
On May 27th, 2011 TerniEnergia S.p.A., entered into a preliminary purchase agreement with ICQ
Holding S.p.A., the controlling company of ICQ group from Rome, specialized in energy production
from renewable sources (wind, hydro-electric, biomass and gas produced by waste), concerning a
quota representing 70% of the corporate capital of EFI Technology ESCO S.r.l. at the price of Euro
0.91 million, to be paid in cash into three instalments, each of the same amount, the last of which
to be paid at the 180th day from the execution of the final agreement.
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This signing is subject to a successful tax and accounting due diligence that TerniEnergia will carry
out on EFI and its subsidiaries. On September 1st , 2011, TerniEnergia and EFI Technology ESCO
S.r.L. announced not to proceed with the preliminary agreement as a result of different views in the
management and governance of the target company.
1.1.9. Concerning the amendment of the price was entered into with Meet Green Italia S.r.l.
On June 20th, 2011 TerniEnergia S.p.A., signed an agreement that partially amends the terms of
the purchase of 100% of Meet Green Italia S.r.l., with registered office in Nardò (LE), as it was
announced to the market on December 28th, 2010. Such an agreement amends the price and the
payment formalities, as a consequence of the supervened legislative provisions (“Fourth Energy
Account”) that significantly affected the criteria for incentivizing the electric energy production
from sun photovoltaic plants. Such a purchase is aimed at developing and building new industrial
sized photovoltaic plants in Abruzzo region, for a total installed power amounting to approximately
11 MWp, that are at different stages of authorizations process.
The price agreed for the purchase was amended from Euro 240,000 per single MWp to Euro
144.000 per single MWp for a total amount of Euro 1.58 million; the amount of Euro 250,000
thousand, already paid, must be deducted to such a total amount. The remaining amount shall be
paid into two instalments: Euro 650,000 already paid within July 1st 2011; the balance of Euro
681,148, for each single plant proportionally to the relevant power, was subject to the condition
precedent of obtaining the availability of the surface in the farmland ground, that was necessary
for obtaining the incentive to be assigned by GSE. The advance payments shall be offset up to 6,25
MWp, on the basis of the price of Euro 144,000 per single MWp.. The above mentioned investment
is wholly financed through cash.
1.1.10. Factoring agreement signed with Enel
On August 9th, 2011TerniEnergia, signed a factoring agreement with Enel. Factor S.p.A. for the sale
of "no-recourse" loans resulting from the construction of photovoltaic systems, for a total of
Euro 12 million.
Purchase of Lucos
On August 9th, 2011 TerniEnergia S.p.A., signed a frame agreement with Lamse S.p.A., Lofin S.r.l.,
Angelo Casolaro, Andrea Marano e Raffaele Maria Mellone (current members) for the acquisition of
a 70% share capital of Alternative Energies Lucos SpA, in the manner described below:
1. Share capital increase of Lucos Alternative Energies S.p.A. by payment amount with exclusion of
pre-emptive right pursuant to article 2441, fifth paragraph ,of the Civil Code , for a total amount of
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Eur 2,5 million, to be performed by issuing n. 348.675 new shares, with a nominal value of Eur 1,00
each, at a subscription price of Eur 7,17 for each new share to be reserved for subscription by
TerniEnergia S.p.A.. Such capital increase is divided into two tranches the first of which equal to
Eur 1 million, and the second equal to Eur 1,5 million;
2. At the same time TerniEnergia, acquired a total quantity of 339.432 Lucos shares , for an
amount equal to Eur 2,43 million. TerniEnergia transferred to current members 281.101 own
shares for a unit value equal to the average price recorded in the 5 trading days of
Borsa preceding the date of execution (Enhancement ). At this date TerniEnergia paid to current
members the cash amount equal the difference between the price of Shares and Enhancement of
TerniEnergia’ shares.
Downstrem of the signing of the first tranche of the Capital Increase and of such purchase of
shares, which is expected to be concluded within October 2011, TerniEnergia will own
approximately 62% of Lucos Alternative Energies’shares. This percentage will increase up to 70%
ones TerniEnergia will subscribe the second tranche of Capital increase , within June 30th, 2012;
3. Option “Put and Call” for the purchase of the remaining 30% to be exercised for cash during
2014. The basis price fixed for the operation amounted to Eur 4.2 million, to which has to be added
a control premium equal to 8.33% for a purchase price of 100% of the company amounted to Euro
4.55 million. The contract also provides a mechanism of “earn out”; enhanced by a consolidated
EBITDA 2013 by applying a multiple of 5.5 x net of NFP. Lucos Alternative Energies, with a
specialized sales network and focused on key regions of central and northern Italy and with a
dedicated engineering structure, is active (directly and through its subsidiaries) in the field of energy
efficiency through public and private counterparts, through the provision of services Energy Saving
Company (ESCO). As at December 31st, 2010 the Group achieved a turnover of Euro 1.7 million,
EBITDA equal to Euro 1.1 million and a net profit equal to Euro 0.4 million.
In the field of energy efficiency, Lucos Alternative Energies has developed, among others, energy
saving measures in public lighting in several Italian municipalities, and created covenants and
partnerships with operators and suppliers of the sector to access selected projects and public and
private medium-large importance call for bids. The company also developed a specific know-how
and a “pipeline” of replicable projects.
Lucos Alternative Energies, holds:
A share of 70% of the share capital of LytEnergy S.r.l., which is active in Energy Efficiency for Public
Lighting;
A share of 50% in the company Enerflus Srl, operating in the management of Energy Efficiency
Certificates (TEE).
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Lucos Alternative Energies capital increase is designed to strengthen the company’s financial
allocations in order to realize investment in energy efficiency projects.
The frame agreement provides TerniEnergia the right to exercise a purchase option of the
remaining 30% stake of Lucos Alternative Energies share capital from June 1st 2014 and by the
deadline of June 30th , 2014 (Option Call).
In case of failure to exercise the call option, the frame agreement provides the right for current
shareholders to sell the remaining share of 30% of the share capital of Lucos Alternative Energies to
TerniEnergia (Put Option) within 30° day after expiration of the Option Call.
The company’s governance will be ensured through the appointment of a General Manager, with
powers of ordinary management, including the power to conclude trade agreements on energy
efficiency, and the appointment of a special prosecutor to carry out activities related to the
development of the company.
1.1.11. TerniEnergia Group’s business plan update
The change in the reference scenario and the approval of the fourth tariff, following a debate that
has affected public opinion and government institutions, have established the conditions for a
reorientation of the business model need to be brought forward to 2011 for a diversification of
activities towards the development of facilities for energy efficiency plants both EPC TPF (TPF).
We have therefore revised the objectives stated in the previous business plan whose publication
appeared in the same time of the sudden cancellation by the Government of the Third Energy Bill
recently entered into force, aiming to a revenue mix characterized by a significance incidence of
the new business that will allow the maintenance of a high efficiency level and profit margins.
The new plan, prepared on the basis of a changed macroeconomic scenario and on a new system of
incentives following the approval of the Fourth Energy Bill, has been developed through the
following strategic guidelines:
Anticipated entry in 2011 in the new new business line “Energy Efficiency” with an operational
target equal to 57.000 area lights in early 2013 and first ORC plants (Rankine Organic Cycle to
energy recovery from industrial cycles) installed.
Starting of internationalization process in the EPC photovoltaic through agreements with
photovoltaic ECP Partner operating in the European important Utility
Consolidating presence in the photovoltaic sector with an expected total installed capacity of
in 2012-2013 equal to 120 MWp
Profitability Maintaining in the business Power generation and full equity in JV with existing plants
in the next 20 years.
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Dividend policy aimed at remuneration of shareholders with the proposal to Shareholders
meeting to distribute in 2011 a dividend equal to 0,19 Euro per share.
In 2013, the Group aims to achieve an EBITDA margin of 19%, thanks to the new composition of
business activities in favor of the Energy efficiency, expected revenues are equal to Eur 93.0
million. Expected investments in 2012-2013 are approximately equal to Eur 22 million and will be
finalized, both to development of photovoltaic systems and to construction of plants for energy
efficiency. The Group aims to maintain a constant gearing ratio and equal to unity.
1.2. ECONOMIC DEVELOPMENT OF THE GROUP
In the period ended on September 30, 2011, the Group completed the construction of 38
photovoltaic plants of medium and large size for an installed capacity of 69.7 Notably 11,8 MWp
were performer for equally – owned Joint Venture, 47,5 MWp were performer for third parties
and 10,4 MWp in Full Equity grid connected and working, 3,0 MWp of which were sold to other
companies, 3.2 MWp included in fixed assets and 4.2 MWp recorded in the inventory as the
company is still assessing whether to keep them permanently and then enroll in or dispose of assets
to third parties such as equipment connected and running. The total number of plants built and
connected to the grid from the beginning of the date of September 30, 2011 by the Group
TerniEnergia increase to No. 242, for a cumulated power equal to 186.9 MWp, 3.2 MWp of which
will remain wholly owned by the Group and 61.1 MWp performed for the joint ventures for Power
Generation activity
See below summarized financial information
September 30 Variazione Variazione %
(in Euro) 2011 2010
Net revenues from sales and services 152,994,682 64,065,758 88,928,924 138,81%
Production costs (136,992,175) (51,126,445) (85,865,730) n.a.
Added value 16,002,507 12,939,313 3,063,194 23,7%
Personnel costs (5,242,796) (3,187,197) (2,055,599) 64,5%
EBITDA 10,759,711 9,752,116 1,007,595 10,3% Amortisation, depreciation, provisions and write-downs (1.056.200) (505,483) (550,717) 108,9%
EBIT 9,703,511 9,246,633 456,878 4,9%
Financial income and charges (1,847,415) (626,212) (1,221,203) n.a. Portions of results attributable to the JV 2,856,077 894,651 1,961,426 n.a.
Pre-tax result 10,712,173 9,515,072 1,197,101 12,6%
Income taxes (2,950,643) (2,960,137) 9,494 (0,3%)
Net Income 7,761,530 6,554,935 1,206,595 18,4%
EBITDA MARGIN 7.03% 15.22%
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As at September 30, 2011, the Group recorded consolidated revenues from sales and services equal to Euro 152,994 thousand, an increase of 138.8% if compared to the same period of 2010 (€ 64,066 thousand). Such an increase is due to the significant increase of MWp installed number (69.7 MWp, if
compared to 43.9 MWp in the same period last year) and it is due to the fact that in 2011 they were
completed all the requirements necessary for accounting in other revenue of approximately 23.2
MWp produced in the third quarter of 2010.
It should be noted that as at September 30, 2011, work started on two large orders (15 MWp)
where the costs incurred to date are suspended in stock.
The direct and consolidated production costs, for the most varied nature, amounted to EUR 136.992
million, an small increase if compared to the same period of last year of just over 150% This great
variation compared to the matching revenues has resulted in a significant drop in EBITDA margin
level increased from 15.2% to 7.0%. This decrease is mainly due to the effects of the fourth energy
bill, the settlement of which annulled the regulation of the third energy bill on the basis of which
the company had carried out a certain policy of supply and personnel costs aligned with the sales
prices of the previous regulation. As at September 30, 2011 the company has essentially eliminated
the effect of this hysteresis, changing and hooking supplies policy only to orders already in the
portfolio and at the same time carrying on an important policy of rationalization of fixed costs.
Despite all the consolidated gross operating margin (EBITDA) posted for the first nine months of the
year, it is slightly better than last years amounting to a value of Euro 10.759 thousand against a
value of Euro 9.752 thousand of the same period last year.
The financial management, negative by approximately € 1.847 thousand was more than offset by
the positive contribution made by the results of the joint venture, amounting to Euros 2,856
thousand (EUR 895 thousand in the same period of ast year). Net income for the period to
September 30, 2011 shows a surplus of Euro 7.761 million, an increase of 18.4% if compared to the
same period last year (Euro 6.554 thousand).
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1.3. BALANCE SHEET
See below financial information in short.
September 30 December 31 Variazione Variazione
(in Euro) 2011 2010 %
Intangible assets 4,918,260 3,651,774 1,266,486 34.68%
Property, plant and equipment 12,829,656 2,068,938 10,760,718 n.a.
Financial fixed assets and other intangible assets 13,042,503 10,476,894 2,565,609 24.49%
Fixed Assets 30,790,419 16,197,606 14,592,813 90.09%
Inventories 26,180,634 68,932,005 (42,751,371) (62.02%)
Trade Receivables 59,721,945 77,473,324 (17,751,379) (22.91%)
Other assets 5,301,187 6,000,357 (699,170) (11.65%)
Trade Payables (46,730,726) (83,433,403) 36,702,677 (43.99%)
Other liabilities (6,583,128) (45,710,688) 39,127,560 (85.60%)
Net working capital 37,889,912 23,261,595 14,628,317 62.89%
Provisions and other non-trade liabilities (3,389,798) (3,611,669) 221,871 (6.14%)
Net Invested Capital 65,290,533 35,847,532 29,443,001 82.13%
Shareholders’ equity 30,910,246 30,102,497 807,749 2.68%
Current net financial position 32,194,523 2,613,368 29,581,155 n.a.
Non-current net financial position 2,185,764 3,131,667 (945,903) n.a.
Total net financial position 34,380,287 5,745,035 28,635,252 n.a.
Net Invested Capital 65,290,533 35,847,532 29,443,001 82.13%
As at September 30, 2011 Fixed assets amounted to Euro 3,079 thousand, an increase of EUR
14.593 thousand if compared to December 31, 2010, and is represented by administrative charges
for the realization of photovoltaic plants, by investment in fixed assets for purchase of equipment
and company vehicles, and land areas as well as from investments in solar power plants at full
equity of Euro 10,096 thousand (3.2 MWp). The item also includes the value of deferred tax assets,
investments in joint ventures and non-current financial receivables.
The net working capital amounted to Euro 37,890 thousand, an increase of 62.89% if compared to
December 31, 2010 (EUR 23.262 thousand): this figure shows, at a time of significant growth, the
special attention given by management in the management of trade receivables and payables in
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conjunction with the realization of significant available items in stock ready to quickly and
effectively respond to changing market needs.
The inventory showed a decrease of 62.02% if compared to December 31, 2010 (68,932 thousand),
reaching a value of Euro 26,181 thousand . This decrease is mainly attributable to the maturation of
the accounting requirements for enrollment in revenues from contracts completed by December
31, 2011.
September 30 December 31 Variazione Variazione
(in Euro) 2011 2010 %
Cash (11,576) (13,726) 2,151 (15.7%)
Available bank current accounts (16,425,819) (15,198,339) (1,227,480) 8.1%
Liquidity (16,437,394) (15,212,065) (1,225,329) 8.1%
Current bank debt (current account overdraft) 5,240,697 284,224 4,956,473 n.a.
Current bank debt (advance) 33,204,996 11,458,372 21,746,624 n.a.
Financial payables to other lenders 8,633,161 4,725,410 3,907,751 82.7%
Financial payables /(Receivables) 4,358,768 2,582,680 1,776,088 68.8%
Current financial receivables (2,805,705) (1,225,253) (1,580,452) 129.0%
Current financial debt 48,631,917 17,825,433 30,806,484 n.a.
Net short-term financial position 32,194,522 2,613,368 29,581,154 n.a.
Non-current financial debt (other lenders) 1,967,750 2,935,500 (967,750) (33.0%)
Non-current financial debt (medium-long term loan) 218,014 196,167 21,847 11.1%
Non-current net financial position 2,185,764 3,131,667 (945,903) (30.2%)
Total net financial position 34,380,286 5,745,035 28,635,252 n.a.
The Net Financial Position as at September 30, 2011 amounted to Euro 3,438 thousand, a
significantly higher value if compared to December 31, 2010 (EUR 5,745 thousand) reaching a ratio
of the equity (equal to Euro 3,091 thousand) equal to 1,1, however, slightly above the target value
of equity of the business plan. As at December 31, 2010 the ratio stood at 0.19 with a Net financial
Debt of Euro 5,745 thousand if compared to a net equity of Euro 30,102 thousand. This increase
reflects the Group’s vision and its work and takes account of significant investment in fixed assets
and plants , already connected and working and available in stock.
15
1.4. EXPECTED MANAGEMENT EVOLUTION
The changed reference scenario and the approval of the fourth energy bill after a long debate that has
affected public opinion and government institutions, have set the stage for the reorientation of the business
model by encouraging our Group to bring forward to 2011 a diversification of activities towards the
development of energy efficiency plants both in EPC and FTT (Third- party financing). The new turnover mix,
that is characterized by a significant incidence of the new business, is aimed at keeping a high level of
efficiency and profitability. The investments relating to the next three years shall be aimed at performing
energy efficient plants, in addition to the development of photovoltaic plants. Notably, the activities have
been started for the construction of plants abroad, with reference to the countries of Greece and South
Africa. The Group aims at keeping a constant gearing ratio, equal to a unit.
The new plan, prepared on the basis of a changed macroeconomic scenario and on a new system of
incentives following the approval of the Fourth Energy Bill, has been developed through the following
strategic guidelines:
Anticipated entry in 2011 in the new business line “Energy Efficiency” with an operational target equal
to 57,000 area lights in early 2013 and first ORC plants (Rankine Organic Cycle to energy recovery from
industrial cycles) installed.
Starting of internationalization process in the EPC photovoltaic through agreements with photovoltaic ECP
Partner operating in the European important Utility
Consolidating presence in the photovoltaic sector with an expected total installed capacity of in 2012-2013
equal to 120 MWp
Profitability Maintaining in the business Power generation and full equity in JV with existing plants in the next
20 years.
Dividend policy aimed at remuneration of shareholders with the proposal to Shareholders meeting to
distribute in 2011 a dividend equal to 0,19 Euro per share.
In 2013, the Group aims to achieve an EBITDA margin of 19% and thanks to the new composition of
business activities in favour of the Energy efficiency, forecasted revenues are equal to Euro 93.0
million. The expected investments in 2012-2013 are approximately of Euro 22 million and will be
finalized, as well as the development of photovoltaic plants , also to the construction of energy
efficiency plants. The Group aims to maintain a gearing ratio constant and equal to unity.
16
2. FINANCIAL STATEMENTS AS AT SEPTEMBER 30 2011
2.1. STATEMENT OF CONSOLIDATED FINANCIAL SHEET
Notes September 30 December 31
(in Euro) 2011 2010
ASSETS
Intangible assets 3.4.1 4,918,260 3,651,774 Property, plant and equipment 3.4.2 12,829,656 1,973,938
Equity investments 3.4.3 4,855,307 2,692,818
Deferred tax assets 3.4.4 4,352,765 3,749,146
Non-current financial receivables 3.4.5 3,834,431 4,034,930
Total non-current assets 30,790,419 16,102,606
Inventories 3.4.6 26,180,634 68,932,005 Trade receivables 3.4.7 59,721,945 77,473,324
Other current assets 3.4.8 5,301,187 6,000,357
Financial receivables 3.4.9 2,805,705 1,225,253
Cash and cash equivalents 3.4.10 16,437,394 15,212,065
Total current assets 110,446,865 168,843,004
Assets held for sale - 95,000
TOTAL ASSETS 141,237,284 185,040,610
LIABILITIES AND SHAREHOLDERS’ EQUITY
Share capital 23,210,000 23,210,000
Reserves (61,284) (2,129,581)
Result for the period 7,761,530 9,022,078
Total Group equity 3.5.1 30,910,246 30,102,497
Provision for employee benefits 3.5.2 305,955 260,451
Deferred tax liabilities 3.5.3 345,232 654,625 Non-current financial payables 3.5.4 2,185,764 3,131,667
Other non-current liabilities 3.5.5 2,738,611 2,696,593
Total non-current liabilities 5,575,562 6,743,336
Trade payables 3.5.6 46,730,726 83,433,403
Payables and other financial liabilities 3.5.7 51,437,622 19,050,686
Taxes payable 3.5.8 1,813,336 3,483,245
Other current liabilities 3.5.9 4,769,792 42,227,443
Total current liabilities 104,751,476 148,194,777
TOTAL LIABILITIES 110,327,038 154,938,113
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUTY 141,237,284 185,040,610
17
2.2. CONSOLIDATED INCOME STATEMENT
Note September 30
(in Euro) 2011 2010
Revenues 3.6.1 150,375,158 63,336,565
Other operating income 2,619,524 729,193
Change in inventories of semi-finished and finished products 3.6.2 (44,861,630) 15,183,872
Costs for raw materials, consumables and goods for resale 3.6.3 (54,778,407) (46,043,107)
Costs for services 3.6.4 (36,238,385) (20,008,958)
Personnel costs 3.6.5 (5,242,796) (3,187,197)
Other operating costs 3.6.6 (1,113,753) (258,251)
Amortisation, depreciation, provisions and writedowns 3.6.7 (1,056,200) (505,483)
Operating result 9,703,511 9,246,633
Financial income 3.6.8 222,521 87,433
Financial charges 3.6.8 (2,069,936) (713,644)
Portion of result attributable to the joint venture 3.6.9 2,856,077 894,651
Net profit before taxes 10,712,173 9,515,072
Taxes 3.6.10 (2,950,643) (2,960,137)
Net profit for the period 7,761,530 6,554,935
- of which: attributable to the Group 7,761,530 6,554,935
Earnings per share – Basic and diluted 0,282 0,269
18
2.3. INCOME TOTAL CONSOLIDATED STATEMENT
september 30
(in Euro) 2011 2010
Net profit for the period 7,761,530 3,584,269
Change in the cash-flow hedge reserve of joint ventures 2.379.708 (1,210,259)
Tax effect (654,420) 332,821
Other comprehensive income 1,725,288 (877,438)
Total comprehensive income for the period 9,486,818 2,706,831
· of which: attributable to the Group 9,486,818 2,706,831
19
2.4. STATEMENT OF CHANGES IN EQUITY
Description
Share
capital
Reserves
Total
reserves
Result for
the period Total equity
(in Euro)
Share
premium
reserve
Statutory
reserve
Extraordinary
Reserve
Other
Reserves
Balance as at 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
Utilization of Profit - - 310,020 3,408,380 6,649 3,725,049 (3,725,049)
-
Earning sharing - - - - (2,482,000) (2,482,000) (2,482,000)
Purchase of treasury shares - - - -
(141,690) (141,690) (141,690)
Selling of treasury shares - 512,795 - - 387,205 900,000 900,000
Operations with shareholders - 512,795 310,020 3,408,380 (2,229,836) 2,001,359 (3,725,049) (1,723,690)
Profit for the period - - - - - - 6,554,937 6,554,937
Other components of the statement of
comprehensive income - - - - (1,394,063) (1,394,063) - (1,394,063)
Comprehensive income for the period - - -
- (1,394,063) (1,394,063) 6,554,937 5,160,874
Balance as at 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
Description
Share
capital
Reserves
Total
reserves
(in Euro)
Result for
the period
Total equity
Share
premium
reserve
(in Euro)
Share
premium
reserve
Statutory
reserve
Extraordinary
Reserve
Other
Reserves
Balance as at 31 December 2010 23,210,000 4,943,253 864,493 3,615,207 (11,552,534) (2,129,581) 9,022,078 30,102,497
Utilization of Profit - - 641,257 6,951,490 1,429,331 9,022,078 (9,022,078)
-
Earning sharing - - - - (5,232,391) (5,232,391) (5,232,391)
Operations with shareholders
-
- 641,257 6,951,490 (3,803,060) 3,789,687 (9,022,078) (5,232,391)
Profit for the period - - - - - - 7,761,530 7,761,530
Other components of the statement of
comprehensive income - - - - (1,725,288) (1,725,288)
- (1,725,288)
Comprehensive income for the period
- -
-
- (1,725,288) (1,725,288) 7,761,530 6,036,242
Movments in consolidation area
- -
- - 3,898 3,898
- 3,898
Other Movements
- -
- - 3,898 3,898
- 3,898
Balance as at 30 September 2011 23,210,000 4,943,253 1,505,750 10,566,697 (17,076,984) (61,284) 7,761,530 30,910,246
20
2.5. CONSOLIDATED STATEMENT
September 30
(in Euro) 2011 2010
Profit before taxes 10,712,173 9,515,074
Amortisation and depreciation 474,258 153,717
Write-downs of fixed assets 581,942 351,766
Provision for employee benefits 110,474 92,216
Result of joint ventures accounted for at equity and reversal of margin (1,570,038) 4,526,552
Capital losses on disposals 14,074
Change in inventories 42,751,371 (20,364,586)
Change in trade receivables 17,751,379 (18,366,851)
Change in other assets 699,170 (2,803,634)
Change in trade payables (36,702,677) 29,505,738
Change in other liabilities (42,997,293) 2,760,914
Payment of employee benefits (76,199) (26,110)
Net cash flow (used in)/generated by operating activities (8,265,440) 5,358,870
Investments in property, plant and equipment (10,957,632) (462,342)
Disposals of property, plant and equipment 54,000 (869,923)
Investments in intangible assets (5,355,598) 569,156
Disposals of intangible assets 3,154,461 (4,479,629)
Investments in Joint ventures (2,258,414) (675,995)
Change in receivables and other financial assets (1,379,953)
Assets for sales 95,000
Net cash flow used in investing activities (16,648,135) (5,918,733)
Change in payables and other financial liabilities 32,386,936 11,084,383
Increase in non-current financial payables (1,019,539) 4,012,475
Other changes in equity 3,898 -183,056
Payment of dividends (5,232,391) (1,752,657)
Net cash flow generated by financing activities 26,138,904 13,161,144
Comprehensive cash flow for the period 1,225,329 12,601,281
Cash and cash equivalents at the beginning of the period 15,212,065 4,973,210
Cash and cash equivalents at the end of the period 16,437,394 17,574,491
Settled Interest (994,065) (493,051)
Tax paid (3,675,643) (1,976,933)
21
3. EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT AS AT
SEPTEMBER 30, 2011
3.1. GENERAL INFORMATION
TerniEnergia S.p.A (“TerniEnergia”, “Company” or “Partent company”) is a joint –stock Company
with registered office in Narni (Italy, strada dello stabilimento 1, listed on Borsa Italiana. From
December 28th, listed on Star Segment of MTA.
TerniEnergia Group operates in the field of renewable energy sector and is active in the
photovoltaic field. The Group focuses its activities mainly in Italy. The parent company is set up,
primarily as a provider of integrated medium and large size of photovoltaic plant. Through the
subsidiaries held in joint venture with EDF EN Italy SpA (as subsidiary of EDF Energies Nouvelles SA,
listed on the Paris Stock Exchange) and other primary partners TerniEnergia Group is also active in
the production of electricity from photovoltaic plants.
3.2. SEGMENT REPORTING
The Group operates through a single business unit operating exclusively in Italy in the photovoltaic
sector in which conducts marketing, design, installation and maintenance of photovoltaic systems.
During the first nine months of 2011, the Parent Company has realized for the first time
photovoltaic plants intended to remain in full ownership of the Group for the energy production .
Management believes that there is no basis for the presentation of information by sector or region.
3.3. FORM, CONTENT AND ACCOUNTING PRINCIPLES ADOPTED
This short half-year financial statement was prepared in compliance with in the on going of the
company as Directors have verified the absence of financial, managerial indicators , or other critical
issues that could point out Group’s ability to meet its foreseeable future obligations and in
particular in the next 12 months.
This financial statement was prepared in compliance with the International Accounting Standards
(IFRS), issued by the IASB and approved in the European Community under Regulation (EC) No
1606/2002 of the European Parliament and the Council of July 22, 2002, and in particular IAS 34 -
Interim Financial Reporting, as well as measures taken to implement art. 9 D. Decree No 38/2005.
As part of the options provided by IAS 34, the Group has chosen to publish together with this short
half-year consolidated financial statements, a summery note.
The information herein should be read in conjunction with the consolidated financial statements for the year
ended December 31, 2010, prepared under IFRS, to which it is referred to.
22
The consolidated financial statements are expressed in euros (Euros) since this is the currency in
which the transactions of the Group companies are carried out. All data reported in the notes to the
financial statements are expressed in Euros, except as otherwise stated.
The Group has opted to use the income statement by nature, while assets and liabilities in the
financial balance sheet are divided into current and non-current items. The cash flow statement has
been prepared according to the indirect method. It should be noted that, in order to comply with
the indications contained in Consob Resolution no. 15519 of 28 July 2006 “Provisions on financial
statement formats” (Disposizioni in materia di schemi di bilancio), note 2.7 reports the consolidated
income statement, the consolidated financial balance sheet and the consolidated cash flow
statement, specifying the significant amounts of positions or settlement agreements arising from
transactions carried out with related parties, for any individual item in the accounts.
The preparation of consolidated short half-year financial statements requires the directors to make
estimates and assumptions that affect the reported amounts of assets and liabilities and the related
disclosures, as well as on the assets and liabilities at the reporting date.
The estimates and associated assumptions are based on historical experience and other factors
considered reasonable in the circumstances and they are adopted when the book value of assets
and liabilities are not immediate to be understood from other sources.
The actual results could differ from these estimates. The estimates and assumptions are periodically
reviewed and the effects of any changes are reflected in the income statement, when it concerns
the exercise itself. If the audit concerns both current and future periods, the change is recognized in
the period in which the revision is made and in their future years.
The actual results may differ, even significantly, from these estimates due to possible changes in the
factors considered in determining these estimates
This short half - year consolidated financial statement was approved by the Company’s Board of
Directors on November 7th, 2011.
Effects of changes in accounting policies
Since January 1st, 2011 the Group has applied the following new standards and interpretations: IAS
32 Amendments, Revised IAS 24, IFRIC 14 and IFRIC Amendment 19. This application has no
significant effect on this interim financial statements.
23
Change in consolidation
Below are listed the companies included in the scope of consolidation and the related percentages
of ownership held by the Group, either directly or indirectly, as at September 30, 2011:
List of Companies consolidated on a line-by-line basis:
Denominazione Sede % di possesso nel Gruppo
Diretto Indiretto
% contribuzione
al Gruppo
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%
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%
Soc. Agric. Fotosolara Cheremule S.r.l. Sassari – Viale Mameli n. 63 100% 100%
Soc. Agric. Fotosolara Bonannaro S.r.l. Sassari – Viale Mameli n. 63 100% 100%
Società entrate nel perimetro di consolidamento nei primi nove mesi dell’esercizio 2011:
Soc. Agricola Fotosolara Oristano S.r.l. Sassari – Viale Mameli n. 63 100% 100%
Soc. Agricola Fotosolara Ittireddu S.r.l. Sassari – Viale Mameli n. 63 100% 100%
T.e.c.i. costruzioni & ingegneria S.r.l. Gioia del Colle – Via Giosuè Carducci n. 122 100% 100%
Meet Green Italia S.r.l Nardò- Via Don Milani, n.4 100% 100%
Società uscite dal perimetro di consolidamento nei primi nove mesi dell’esercizio 2011:
Isoenergy S.r.l. Corciano – Via Firenze n. 401 100% 100%
Si precisa che gli effetti del deconsolidamento della società controllata Isoenergy non sono
significativi.
24
List of Companies consolidated at Equity:
Denominazione Sede % di possesso nel Gruppo
Diretto Indiretto
% contribuzione al
Gruppo
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%
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%
Società entrate nel perimetro di consolidamento nei primi nove mesi dell’esercizio 2011:
Guglionesi S.r.l. Narni - Via dello stabilimento 1 50% 50%
Business seasonality
The reference business is not subject to seasonality.
25
3.4. COMMENTS ON THE MAIN ASSETS
3.4.1. INTANGIBLE ASSETS
The following tables recored, respectively, the analysis of variations of original cost, (Table 1), the
accumulated depreciation; (Table 2) and net value; (Table 3) relating to intangible assets related to
intangible assets as at September 30, 2011 and as December 31, 2010
(Tabella 1)
INTANGIBLE INITIAL COST
ASSETS
(in Euros) As at 31 December
2010 Increases
Decreases for
disposals
Write-
downs Reclassifications
As at 30
September
2011
Software 322,339 39,826 362,165
Others 19,140 5,197 24,337
Building lease 668,274 1,768,571 (1,563,305) (200,246) 673,293
Authorisations 2,830,668 3,542,004 (1,240,810) (581,943) (453,055) 4,096,864
Total 3,840,421 5,355,597 (2,804,115) (581,943) (653,301) 5,156,659
(Tabella 2)
INTANGIBLE ASSETS PROVISION FOR AMORTISATION AND WRITE-DOWNS
(in Euros)
As at 31 December Ammortamenti As at 30 September
2010 2011
Software 170,162 49,753 219,915
Others 18,484 0 18,484
Total 188,646 49,753 238,399
(Tabella 3)
INTANGIBLE ASSETS NET VALUES
(in Euros) As at 31 December 2010 As at 30 September 2011
Initial cost Accumulated
Amortisation Net values
Initial
cost
Accumulated
Amortisation Net values
Software 322,339 (170,162) 152,177 362,165 (219,915) 142,249
Others 19,140 (18,484) 656 24,337 (18,484) 5,853
Building lease 668,274 668,274 673,293 673,293
Authorisations 2,830,668 2,830,668 4,096,864 4,096,864
Total 3,840,421 (188,646) 3,651,774 5,156,659 (238,399) 4,918,260
26
The parts of intangible assets in progress includes costs related to already obtained or still in
progress administrative rights for the construction of photovoltaic plants, acquired through
subsidiaries.
The increase in permits, to Euro 3,542 thousand, refers to authorizations obtained in the first nine
months of 2011 following the acquisition by the parent company of the new subsidiaries became
part of the consolidation. Moreover, in the first half of 2011, administrative fees to perform
photovoltaic plants which amounted to Euro 1,391 thousand were sold together with the related
photovoltaic plants already realized.
In the first half of 2011 certain costs related to administrative rights for the construction of
photovoltaic plants previously suspended, were written down by EUR 582 thousand to align their
carrying amounts to their net realizable value.
The decrease equal to Eur 1,764 thousand is due to surface rights refers together with the related
photovoltaic plant.
The value of the Authorisations acquired will be recovered through the future construction of
photovoltaic plants; therefore, based on the business plans of the Parent Company, it is expected
that this value will be fully recovered; therefore, there were no evidence of impairment which
entailed a reduction in the value entered in the accounts.
27
3.4.2. TANGIBLE ASSETS
The tables below report respectively, the analysis of changes in the “Initial cost” (Table 1), “the
Accumulated depreciation and impairment (Table 2) and “Net values” ( Table 3) related to tangible
assets as at September 302011, and as at 31 December 2010
(Tabella 1)
PROPERTY, PLANT AND EQUIPMENT INITIAL COST
(in Euros)
As at 31
December
2010
Increases Decreases for
disposals Reclassifications
As at 30
September
2011
Land 268,518 441,385 709,903
Plant and machinery 100,419 10,412,418 302,955 10,815,792
Industrial equipment 760,995 760,995
Other assets 551,154 74,791 625,944
Fixed assets under construction 792,898 102,675 0 0 895,573
Total 2,473,984 11,031,268 0 302,955 13,808,207
(Tabella 2)
PROPERTY, PLANT AND EQUIPMENT ACCUMULATED DEPRECIATION AND WRITE-DOWNS
(in Euros)
As at 31
December
2010
Depreciation Decreases for
disposals
As at 30
September
2011
Plant and machinery 35,813 258,796 294,609
Industrial equipment 259,699 84,938 344,636
Other assets 204,534 80,771 285,305
Total 500,045 424,505 924,550
28
(Tabella 3)
PROPERTY, PLANT AND
EQUIPMENT NET VALUES
(in Euros) As at 31 december 2010 As at 30 September 2011
Initial
cost
Provision for
depreciation
and write-
downs
Net values Initial cost
Provision for
depreciation
and write-
downs
Net Value
Land 268,518 268,518 655,903 655,903
Plant and machinery 100,419 (35,813) 64,607 10,815,792 (294,609) 10,521,183
Industrial equipment 760,995 (259,699) 501,296 760,995 (344,636) 416,358
Other assets 551,154 (204,534) 346,620 625,944 (285,305) 340,638
Fixed assets under construction 792,898 792,898 895,573 895,573
TOTAL 2,473,984 (500,045) 1,973,938 13,754,207 (924,550) 12,829,656
Investments in land during that period amounted to Eur 441 thousand and are aimed to the
construction of Photovoltaic plants.
The group realized four photovoltaic plants in own property with a total capacity of 3.2 MW,
investment in line with the strategic choice of the Company to invest in “power generation”.
All four plants were put into operation. Among tangible assets in progress are also capitalized costs
incurred in previous years for the development of the wind farm from by 18 MWp located in the
town of Stroncone, amounting to Euro 896 thousand. In relation to the development of the wind
farm, please refer to the widely reported section 3.5.11 Potential liabilities.
29
3.4.3. EQUITY INVESTMENTS
The following table provides a breakdown of capital investments in joint ventures accounted for
using the equity method as at September 30, 2011, and as at 31 December 2010 and its related
variation
As at 30 September As at 31 December Change %
(in Euros) 2011 2010 Change
Equity investments in joint ventures
4,855,307 2,692,818 2,162,489 80%
Total 4,855,307 2,692,818 2,162,489 80%
Below is reported the value of investments in Joint Ventures as at September 30 2011 and the
related measurement at equity divided according to the companies:
Investments As at September 30, 2011 Equity Investments Deferred margins
Terni Solar Energy S.r.l. (1,564,887)
- (1,564,887)
Energia Alternativa S.r.l. 1,997,338 1,997,338 0
Energie S.r.l. 1,742,163 1,742,163 0
Fotosolare Settima S.r.l. 578,208 578,208 0
Solaren S.r.l. 486,979 486,979 0
Collesanto S.r.l. 50,619 50,619 (0)
Saim Energy 2 S.r.l. (102,273) 0 (102,273)
Infocaciucci S.r.l. (55,565) 0 (55,565)
Girasole S.r.l.. (452,537) 0 (452,537)
D.T. S.r.l (436,448) 0 (436,448)
Soltarenti S.r.l. (565,862) (0) (565,862)
Guglionesi S.r.l. (73,817) 0 (73,817)
Totale 1,603,916 4,855,307 (3,251,390)
The joint ventures are active in the identification, development, financing, design, construction and
the putting into operation of photovoltaic plants in Italy, as well as in the sale of electricity
produced by the same.
The following content represents a detail with the movement occurred in the six months ended on
September 30 2011 the referred to value of investments in joint ventures (defined as net value
30
between the value of equity investments and the value of deferred margin), with evidence of the
effects of accounting under the equity method:
Investments in joint ventures valued at equity 2011
(in Euros)
1 January (499,248)
Capital payments 2,258,414
Elimination of margins on intercompany transactions (1,286,038)
Portion of results 2,856,077
(1,725,288) Cash flow hedge reserve, net of tax effect
30 September 1,603,916
4,855,307 - of which: equity investments
- of which: Deferred margin (3,251,390)
Total 1,603,916
The investment in Joint Ventures is classified, in the balance sheet, for Euro 4,855 thousand under
the item “equità investments”and for Euro 3,251 thousand under item “Deferred margin, under
other liabilities (current liabilities of Euro 513 thousand, and non current of Euro 2,738 thousand).
For the purposes of a more complete disclosure, the table below reports the aggregate net financial
debt of the main joint ventures as at September 30 2011
31
(in Euro) SolarEnergy Energia
Alternativa
Energie Fotosolare
Settima
Solaren Altre joint
venture
Totale
Cassa 675 871 679 813 310 29 3,377
Conti correnti bancari 2,821,790 2,934,208 2,757,453 103,748 350,353 566,121 9,533,673
Liquidità (A) 2,822,465 2,935,079 2,758,132 104,561 350,664 566,150 9,537,051
Debiti finanziari correnti - - - - -
Debiti bancari correnti - - - - - -
- mutui (872,182) (745,938) - - - - (1,618,120)
- sale and leaseback - (619,740) (1,133,258) (293,618) (391,638) (809,419) (3,247,673)
- verso altro socio (520,395) (8,762,536) (23,796,694) (9,817,164) (3,064,031) (4,166,449) (50,127,269)
- verso TerniEnergia (520,395) (211,474) (63) (10,000) (2,726) (1,059,276) (1,803,935)
Debiti finanziari non correnti - - - - -
- mutui (13,780,867) - - - - (13,780,867)
- project financing (20,786,209) - - - - - (20,786,209)
- sale and leaseback (27,157,018) (25,817,227) (22,358,377) (12,813,078) (24,023,697) (112,169,397)
- verso altro socio (1,875,454) - - - (6,444,559) (8,320,013)
- verso TerniEnergia (1,901,245) - - - (1,933,185) (3,834,430)
Strumenti derivati (2,208,746) (2,066,244) (798,609) (23,667) (695,708) (150,995) (5,943,969)
Indebitamento finanziario (B) (28,684,626) (53,343,817) (51,545,851) (32,502,826) (16,967,181) (38,587,580) (221,631,882)
Indebitamento finanziario netto
(A+B)
(25,862,161) (50,408,737) (48,787,719) (32,398,265) (16,616,518) (38,021,430) (212,094,831)
It should be noted that the values of the net financial debt reported in the table above refer to the
TerniEnergia Group for 50%, equal to the stakes held by the Group itself in the Joint Ventures.
The joint ventures generally fund the investments in photovoltaic plants through loans granted by
the shareholders or through medium to long-term loans granted by financial institutions. Non-
current bank debts are mainly guaranteed by mortgages on the photovoltaic plants of the joint
ventures, by pledges on receivables and cash and cash equivalents of the joint ventures and by
guarantees issued by the shareholders. The Parent Company provided the joint ventures with
sureties for Euro 11.9 million and entered into agreements for the assignment of contracts for Euro
33.1 million as at September 30,2011 (for more details, reference is made to 3.5.10 Commitments
and guarantees given and 3.7 Related parties). Furthermore, the Parent Company pledged its
quotas in Terni Solar Energy Srl in favour of the financial institutions which granted a project
financing to the joint venture.
Some of the loans require both the shareholders and the joint ventures to satisfy certain corporate
and financial parameters. Specifically, the corporate parameters provide for the right for the
lending institutions to demand early repayment of the loans disbursed in case of any changes in the
majority shareholders of the joint ventures, whereas the financial parameters provide for:
32
•the obligation for the joint ventures to satisfy certain equity/debt ratios - generally 15%/85%;
• the right by the financial institutions to demand early repayment in case of:
i) a debt service cover ratio generally lower than 1.05 (the debt service cover ratio is the ratio
between a) expected cash flows in a given year from the financed project and b) interests, including
payments related to derivative instruments, and the capital quota of the debt due on the same
year);
ii) a loan life coverage ratio of less than 1.10 (i.e. the present value of the cash flows expected from
the project compared with the amount of the sums disbursed and not yet repaid).
The possibility for the joint ventures to distribute dividends is i) subject to a debt service cover ratio
which generally must be equal to or higher than 1.15 and a loan life coverage ratio which generally
must be equal to or higher than 1.20 and ii) limited to the amount of cash and cash equivalents
available as defined in the agreement.
As at September 30 2011 all the covenants were met. It should be kept in mind that cash flows
serving the financial debt of the Joint Ventures are generated from the incentive tariffs of the GSE
and from the sale of the electricity produced by the photovoltaic plants owned by the Joint
Ventures themselves.
3.4.4. DEFERRED TAX ASSETS
The table below reports the breakdown of deferred tax assets as at September 2011, and as at
December 2010 and the related change:
As at 30 September As at 31 december Change %
(in Euros) 2011 2010 Change
Deferred tax assets 4,352,765 3,749,146 603,619 16%
Total 4,352,765 3,749,146 603,619 16%
The change in deferred tax assets of Euro 604 thousand is mainly due to the tax effect relating to
the reversal of intercompany margins realised with the joint ventures and the accounting treatment
33
of capital increase costs. Deferred tax assets relating to the reversal of margins are recovered in
future financial years when deferred margins will be recognised in the income statement.
3.4.5. NON –CURRENT FINANCIAL RECEIVABLES
Financial receivables include interest-bearing loans granted to Terni SolarEnergy S.r.l., Collesanto
S.r.l., Infocaciucci S.r.l., Girasole S.r.l., Guglionesi S.r.l. e Soltarenti S.r.l. these are loans which may
be automatically extended from one year to the next except in case of termination.
As at September 30 2011 there loans equal to Euro 3,834 thousand were classified as non-current
items given that their repayment is not expected within the next 12 months
The table below reports the brakedown of current financial receivables as at September 30 2011
and as December 31 2010 and the related change:
As at September 30 As at December 31 Change Change
(in Euro) 2011 2010 %
Terni SolarEnergy S.r.l. 1,901,245 3,215,165 (1.313.920) (41%)
Collesanto S.r.l. 582,149 217,804 364.345 n.a.
Infocaciucci S.r.l. 183,448 253,615 (70.167) (28%)
Dt S.r.l. 349,599 256,803 92.797 36%
Soltarenti S.r.l. 817,989 91,543 726.446 n.a.
0 n.a.
Totale crediti finanziari non correnti 3.834.431 4,034,930 (200,499) (5%)
As at September 30 2011 part of the financial credit accrued to Solar Energy S.r.l., amounting to
Euro 520 thousand, has been classified as current, this amount represents the amount of refund
expected in the short term, taking account the liquidity in the investee company and of contract
financial covenants for project finance of Solar Energy S.r.l.
34
CURRENT ACTIVITIES
3.4.6. INVENTORIES
The table below reports the breakdown of this item as at September 30 2011, and as at December
31 2010 and the related change
As at 30 September As at 31 december Change
Change
%
(in Euro) 2011 2010
Raw materials 8,342,129 6,231,871 2,110,258 34%
Semi-finished products - 167,847 (167,847) (100%)
Work in progress 17,838,505 62,532,287 (44,693,782) (71%)
Total 26,180,634 68,932,005 (42,751,371) (62%)
As at September 30 2011 the item raw material included solar panels for Euro 3,600 thousand (Euro
2,753 thousand as at December 31 2010), inverters for Euro 740 thousand (Euro 1,067 thousand as
at 31 December 2010) and stock and consumables of Euro 4,000 thousand (Euro 2,412 thousand as
at December 31 2010). The stocks of panels is related to a quantity corresponding to 2.7 MWp as at
September 30 2011 compared to 1.6 MWp as at December 31 2010.
This semi-finished item refers to inventories of semi-finished products, in particular concrete
substrates and structural supports for the realization of photovoltaic plants.
Work in progress include the costs incurred mainly the realization of 4.2 MWp completed and
connected to the grid in Full Equity for Euro 13,191 thousand. Such plants were partly built in “full
equity”. The remaining part of items under working process includes 2 plants at an advanced stage
of completion for a total power of 15 MW for which the designing stage has already been planned.
The decrease of item under working progress is due to the many plants available in warehouse at
the end of 2010 led to revenue in the first nine months of the year of 2011.
35
3.4.7. TRADE RECEIVABLES
The table below reports the breakdown of this item as at September 30 2011, and as at December
31 2010 and the related change.
As at 30 September As at 31 December Change %
Change
(in Euros) 2011 2010
Receivables from customers 55,250,332 63,768,266 (8,517,934) (13%)
Receivables from joint ventures 4,645,913 13,891,358 (9,245,445) (67%)
Receivables from the controlling company 115,500 115,500 0 n.a.
Receivables from affiliated companies 267,000 255,000 12,000 5%
Provision for Bad Debts (556,800) (556,800) 0 0%
Totale 59,721,945 77,473,324 (17,751,379) (23%)
As at September 2011, trade receivables amounted to Euro 59,721 thousand, Euro 12,534 of which
thousand represented by receivables for invoices to be issued.
The amount of trade receivables is adjusted by an appropriate provision for bad debts of Euro 557
thousand to cover the insolvency risk of some credit positions from previous financial years.
The fund did not change during that period. The change compared to December 31 2010 is mainly
due to lower claims on the joint venture for the lower activity undertaken in the same period.
For a breakdown of loans to joint ventures refer to the information in paragraph 3.7 that lists all the
reports in respect of related parties as of September 30, 2011
36
3.4.8. OTHER CURRENT ASSETS
The table below reports the breakdown of this item as at September 30 2011, and as December 31,
2010 and the related change
As at 30 September As at 31 December Change %
(in Euros) 2011 2010 Change
VAT credit 2,864,221 5,023,221 (2,159,000) (43%)
Advances to suppliers 0 86,382 (86,382) (100%)
Prepaid expenses 453,134 351,247 101,887 29%
Guarantee deposits 180,830 14,380 166,450 n.a.
Other receivables 1,803,002 525,127 1,277,875 n.a.
Total 5,301,187 6,000,357 (699,170) (12%)
The VAT credit arises from the application of a VAT tax rate on sales which is lower than the rate
that is generally applied to the purchase order made by the Group.
In other credits have included the advance tax IRES paid to the parent Research Terni SpA for a total
of Eur 1,257 thousand in virtue of accession to the tax consolidation.
3.4.9. FINACIAL RECEIVABLES
The table below reports the breakdown of this item as at September 30 2011, and as December 31
2010 and the related change
As at 31 September As at 31 December Change %
(in Euros) 2011 2010 Change
Financial receivables from joint ventures 1,805,705 225,253 1,580,452 n.a.
Financial receivables from MPS 1,000,000 1,000,000 0 0%
Total 2,805,705 1,225,253 1,580,452 129%
Current financial receivables are referred to, for an amount of Eur 1,806 thousand, the interest-
bearing loans settled at arm’s length and granted to the Joint ventures to meet specific financial
requirements. The increase over the previous year is mainly due to reclassification of a portion of
financial receivable towards Solar Energy S.r.l., amounting to Euro 520 thousand, from non-current
financial receivables.
37
The balance relating to financial receivables towards Monte dei Paschi di Siena S.p.A. is realated to
the cash on hand held with a deposit account securing the relations existing between the Parent
Company and the bank itself.
3.4.10. CASH AND CASH EQUIVALENTS
The table below reports the breakdown of this item as at September 30 2011, and as December 31
2010 and the related change :
As at 30 September As at 31 december Change Change
(in Euro) 2011 2010 %
Bank current accounts 16,425,819 15,198,424 1,227,395 8%
Cash 11,576 13,641 (2,066) (15%)
Total 16,437,394 15,212,065 1,225,329 8%
3.5. COMMENTS ON THE MAIN BALANCE SHEET ITEMS: LIABILITIES
3.5.1. SHEREHOLDERS EQUITY
As at September 30 2011 the issued and paid-up share capital of the Company amounted to Euro
23,210,000 divided into 27,820,000 ordinary shares with no par value. Social capital did not change
in that time.
The legal reserve and the extraordinary reserve have been increased respectively of Euro 641
thousand and of Euro 6,951 thousand due to the allocation of the result achieved for the year
ended 31 December 2010, as approved during the shareholders’ meeting of TerniEnergia on April
22 April 2011.
The item Other reserves has been recorded a changes due to the distribution of the dividend
resolved by the Shareholders’ Meeting held on April 22, 2011, equal to Euro 5,232 thousand
As at September 30 2011 other reserves included the positive change in the reserve of cash flow
hedge of the joint ventures valued at equity, equal to Euro 1,725 thousand. This reserve reflects the
negative fair value, net of the related tax effects, of derivative instruments entered into by some
Joint Ventures to cover risks of changes in cash flows linked to fluctuations in interest rates of some
medium-long term loans. These derivative contracts meet the requirements expected by IFRS to be
qualified for hedge accounting; therefore, changes in the fair value of these derivatives are
38
recognised, limitedly to the “effective” portion only, under a specific equity reserve (cash flow
hedge reserve). The change in this reserve is indicated in the statement of comprehensive income.
As at September 30 2011 the company held 281,101 own shares, acquired by virtue of the
resolution during the Shareholders’ Meeting held on September 1, 2009, for a total cost of Euro
483,016 thousand.
3.5.2. PROVISIONS FOR EMPLOYEE BENEFITS
The table below reports the breakdown of this item as at September 30 2011, and as at December
31 2010 and the related change:
As at 30 September As at 31 december Change Change
(in Euros) 2011 2010 %
Provision for employee benefits 305,955 260,451 45,504 17%
Total 305,955 260,451 45,504 17%
3.5.3. DEFERRED TAX LIABILITIES
The table below reports the breakdown of this item as at September 30 2011, and as at December
31 2010 and the related change
As at 30 September AS at 31 december Change Change
(in Euros) 2011 2010 %
Deferred tax liabilities 345,232 654,625 (309,393) (47%)
Total 345,232 654,625 (309,393) (47%)
3.5.4. FINANCIAL DEBT NON CURRENT
The table below reports the breakdown of this item as at September 30 2011, and as at December
31 2010 and the related change:
As at 30 September 31 december Change Change
(in Euros) 2011 2010 %
Payables to other lenders 218.014 196.167 21.847 11%
Loans payable 1.967.750 2.935.500 (967.750) (33%)
Total 2.185.764 3.131.667 (945.903) (30%)
39
The payable loans include the current long-term portion (current portion equal to Eur 1,957
thousand) of the loan agreement with Mediocredito that the parent has signed on July 16, 2010 in
support of its industrial projects, amounting to Eur 6.0 million, which includes principal repayments
by the payment of No 6 installments, amounting to Eur 1.0 million each, expiring June 30 and
December 31 of each year, beginning on December 31, 2010 and ending September 30, 2013.
The interest on the financed amount, calculated at a variable rate and a regular annual percentage
rate equal to 4.70%, starting from the day disbursement of funding, are paid quarterly on March 31,
June 30, the September 30 and December 31 of each year. As of September 30, 2011 was repaid to
the first and second tranches of the debt, amounting to Eur 2.0 million. The amount in question
refers to non-current portion of the funding
The remaining portion of long-term debt, amounting to 218 thousand, refers to the debt due after
12 months of a loan used to purchase vehicles.
3.5.5. OTHER NON-CURRENT LIABILITIES
The table below reports the breakdown of this item as at September 30 2011, and as December 31
2010 and the related change:
30 Settembre 31 dicembre Variazione Variazione
(in Euro) 2011 2010 %
Altre passività non correnti 2,738,611 2,696,593 42,017 2%
Totale Altre passività non correnti 2,738,611 2,696,593 42,017 2%
This item relates to the long-term portions (a short-term portion of Euro 513 thousand) of the
Deferred margin entered in the account after the write-off of equity investments to recognise the
additional reduction generated by the reversal of margins.
This Margin, which was eliminated upon recognition of revenue, was subsequently realised by
TerniEnergia starting from the time when the Joint Ventures started to depreciate the
corresponding plant. Accordingly, at the end of each period, the margin quota shall be determined
and it can be considered to have been realised, recovering the same as an increase in the book
value of the equity investment or as a reduction in the liability under consideration.
40
The amount under consideration represents the Deferred margin which will not be recognised in
the consolidated income statement before 12 months.
3.5.6. TRADE PAYABLES
The table below reports the breakdown of this item as at September 30 2011, and as at December
31, 2010 and the related change
As at 30 September As at 31 december Change Change
(in Euros) 2011 2010
%
Payables to suppliers 44.517.335 82.757.172 (38.239.837) (46%)
Payables to the controlling company 140.530 217.831 (77.300) (35%)
Payables to affiliated companies 2.072.861 458.400 1.614.461 n.a.
Total 46.730.726 83.433.403 (36.702.677) (44%)
Trade payables, equal to Euro 46,731 thousand as at September 30, 2011, relate to the supply of
panels and inverters, in addition to the acquisition of goods and services. Trade payables include
Euro 4,584 thousand of invoices to be received within September 30,2011.
This item includes payables of Euro 2,073 thousand to the affiliated company TerniGreen SpA, for
the supply of informatic and technical services .
3.5.7. PAYABLES AND OTHER FINANCIAL LIABILITIES
The table below reports the breakdown of this item as at September 30 2011, and as at December
31, 2010 and the related change
As at 30 September As at 31 december Change Change
(in Euros) 2011 2010 %
Current account overdrafts 5,240,697 284,224 4,956,473 n.a.
Advance account 33,204,996 11,458,372 21,746,624 n.a.
Payables to other lenders 8,633,161 4,725,410 3,907,751 83%
Current portion of non-current debt 4,358,768 2,582,680 1,776,088 69%
Total 51,437,622 19,050,686 30,610,848 n.a.
The item payables and other financial liabilities mainly refers to payables to credit institutions for
current account overdrafts and to the account for advances on contracts and invoices; furthermore,
41
this item also includes payables to other lenders for the purchase of motor vehicles equal to Eur
102 thousand and the and the amount accrued to the member of Cheremule, amounting to Euro
8,531 thousand.
Current financial receivables, for an amount equal to 4,359 thousand, included the current portion
of the funding Mediocredito fora n amount of Euro 1,957 thousand, as well as other short-term
contracts in the period mentioned.
The following table provides net financial debt as at September 30 2011 and December 31, 2010:
As at 30 September AS at 31 December
(in Euros) 2011 2010
Cash (11,576) (13,726)
Unavailable bank current accounts (16,425,819) (15,198,339)
Liquidity (16,437,394) (15,212,065)
Current bank debt (current account overdraft) 5,240,697 284,224
Current bank debt (advance) 33,204,996 11,458,372
Financial payables to other lenders 8,633,161 4,725,410
Current portion of loans 4,358,768 2,582,680
Financial Payables /(Receivables) (2,805,705) (1,225,253)
Current financial debt 48,631,917 17,825,433
Net short-term financial position 32,194,522 2,613,368
Non-current loan 1,967,750 2,935,500
Financial payables to other lenders 218,014 196,167
Non-current net financial position 2,185,764 3,131,667
Total net financial position 34,380,286 5,745,035
Current financial receivables as at September 30 2011 include the deposit account held with Monte
Paschi di Siena S.p.A., equal to Euro 1.0 million, as security for current account overdrafts and
advances on invoices with the bank.
The increase of net financial debt, recorded in the first nine months of 2011 is mainly due to
investments in wholly owned plants.
42
Terni Research S.p.A., the controlling company of the Parent Company, issued bank guarantees in
favour of the Parent Company for a total amount of Euro 25.4 million as at the date of approval of
these consolidated financial statements, Euro 2.9 million of which for the loan disbursed by
Mediocredito Italiano during the previous year.
As at the date of approval of these consolidated financial statements, the Group had available
credit facilities with a number of credit institutions for Euro 119 million .
3.5.8. TAX DEBT
The following table provides a breakdown of this item as at September 30, 2011, and as December
31, 2010 and its variation:
As at 30 September AS at 31 december Change Change
(in Euros) 2011 2010 %
IRES tax 1,145,690 2,982,718 (1,837,028) (62%)
IRAP tax 667,645 500,527 167,118 33%
Total other current liabilities 1,813,336 3,483,245 (1,669,909) (48%)
The items includes the liability for tax year 2010 corporate income tax, net of withholding taxes and
advance payments not yet paid as of September 30, 2011. The Company, in June, has exercised the
option for three years the tax regime for the taxation of group called "national consolidation"
within the meaning and pursuant to Articles 117 to 129 of the Income Tax Code, which is
consolidating Terni Research S.p.A.. Therefore, the IRES debt accrued during the first nine months
of the year 2011 is recorded in other current liabilities in the item debt to the parent for IRES. The
IRAP debt includes the debt relating to IRAP of the fiscal year 2010, net of advances paid, not yet
paid as of September 30 2011, in addition to amounts accrued in the period.
43
3.5.9. OTHER CURRENT LIABILITIES
The following table provides a breakdown of this item as at September 30, 2011, and as at
December 31, 2010 and its variation:
As at30 September As at 31 december Change Change
(in Euros) 2011 2010 %
Withholdings on income from subordinate
employment 51,231 94,644 (43,413) (46%)
Withholdings on income from self-employment 31,171 44,803 (13,632) (30%)
Payables to personnel 464,124 569,367 (105,243) (18%)
Social security payables 163,112 272,293 (109,181) (40%)
Advances from customers 0 39,492,843 (39,492,843) (100%)
Payables to directors 22,150 46,625 (24,475) (52%)
Payables IRES to controlling company 3,150,527 - 3,150,527 n.a.
Other payables 374,697 1,211,396 (836,699) (69%)
Deferred Margin 512,780 495,472 17,308 3%
Total other current liabilities 4,769,792 42,227,443 (37,474,959) (89%)
The item “Payables IRES to controlling company” includes the payable to parent company Terni
Research S.p.A. due to IRES as corporate income tax then transferred to the Group for fiscal
consolidation carried out in the month of June 2011and valid for the fiscal years 2011, 2012 and
2013.
This item also includes amounts due to employees and to social security and welfare.
The item “deferred margin” relates to the short-term portions (a long-term portion of Euro 2,739
thousand) of the deferred margin entered in the accounts after the write-off of the equity
investments to recognize the additional reduction generated by the reversal of margins
The change in period is attributable to the term “ advanced payment from customers” related to
photovoltaic plants under construction, which at December 31, 2010 amounted to Eur 39,493
thousand and was related to advances invoiced to customers on the basis of contractually agreed
work in progress . At September 30, 2011 following the completion of all the plants which were
under construction at December 31, 2010, the voice was entirely absorbed .
44
3.5.10. GIVEN COMMITMENTS AND GUARANTEES
Given Guarantees
In some cases, the customers of the Parent Company funded the purchase of the photovoltaic plant
through lease agreements entered into with leasing companies. For some of these customers, the
Parent Company entered into agreements for taking over lease agreements with the relevant
leasing companies, in the event of, and subject to, default by the respective customers. The
customer, in turn, undertook to transfer, in such cases, to TerniEnergia the leasing agreement and
any credit existing as at the date of transfer, if resulting from the production of energy at the plant
under the agreement.
The directors of TerniEnergia believe that it is extremely unlikely that the transfers will be required,
since, in practice and with the exception of the initial "maxi-rentals" (maxi-canoni), the lease
agreements are structured so that the income flows generated by the plant will provide the
financial cover to the instalments. Also in consideration of the initial "maxi-rental" paid by the
customer to the leasing company, the current values as at the time of taking over a possible
contract, based on the current development plan of the cash flows from the photovoltaic plants in
question, would result in a future excess of flows generated from the production of energy
compared to the outflows for the rents due.
As at September 2011, the residual customers’ payables to leasing companies for which the above
mentioned agreements were taken over amounted to Euro 50.1million, Euro 13.9 million of which
for companies managed or owned by related parties, Euro 33.1 million for joint ventures, Euro 2,9
million for the controlling company Terni Research S.p.A, and Euro 7.9 million for other third-party
customers.
For the same reasons outlined above, the directors also believe that the taking over of the lease
agreements by the Parent Company would not adversely affect the economic situation of
TerniEnergia. See also note 3.7 Related parties.
The Parent Company has also issued sureties in favour of financial institutions to secure repayment
of the capital of certain medium-long term loans and finance leases, entered into by Energia
Alternativa S.r.l. and by Energie S.r.l., respectively, for the acquisition of photovoltaic plants. As at
September 30, 2011 guarantees issued by the Company amounted to Euro 11.9 million. See also
note 3.7. Related parties.
45
As at September 30, 2011, major banks and insurance companies have issued guarantees on
contractual obligations of the Parent TerniEnergia against third parties, for Euro 4.5 million
3.5.11. POTENTIAL LIABILITIES
On February 12, 2010 the Superintendence for the architectural and landscape of Umbria - Perugia,
annulled, and in self-defense, previous favourable opinions issued in respect of landscaping No
authorization 6 / 2008 for the municipality of Stroncone released to TerniEnergia to build the wind
farm of “ Colle Ventatoio”. Against these measures, the parent company had filed an appeal to the
TAR of Umbria. On May 31, 2011 No decision has been published 153/2011, with which the appeal
filed by the parent company was accepted.
On June 15, 2011 TerniEnergia received from the town of Chieuti an Ordinance concerning the:
Loss and recovery of DIA places "Construction and operation of the production of electricity from
renewable sources, photovoltaic system, called" Chieuti - 04 "located in the municipality of Chieuti
(FG) with provided power equal to 0.99 MWp - DPRN 380/2001 and subsequent amendments The
order received by the municipality relates to the DIA for the construction of the plant in question,
asked on 16.10.2007 and for whom requests were received requests for variations and additions by
the municipality at a later date. The completion of sending the required documentation was
completed on 25.8.2008. On June 27, 2011 was appealed to the Administrative Court of Puglia
with which TerniEnergia and Power TimeWind Srl (a company from which TerniEnergia SpA had
purchased the authorization) have demanded the suspension of the order mentioned above. On
June 27 th 2011 the Regional Administrative Court has upheld the request temporarily suspending
the effectiveness of the Ordinance. As at 30 September 2011 the plant is connected to the grid and
booked in the assets of TerniEnergia SpA among the equipment used to produce energy for the
entire company.
We point out that at the achievement of the contractual deadline for installation of a photovoltaic
system supplying power of 997 kWp the customer, has not paid anything by way of compensation
for work performed by the Company.
Consequently, the TerniEnergia SpA, only after repeated demands for payment:
has taken steps to remove the solar panels and other removable materials from the site (in perfect
conformity to what was decided in previous private deeds between the parties);
proposed writ of summons in front of the Court of Terni, in order to check the customer's material
breach, its contractual obligations and therefore, to obtain the termination of such contract
46
pursuant to Art. 1453 cc, resulting in condemnation of the customer to pay for all damages
suffered.
Therefore, without the natural randomness that characterizes each type of case and based on the
assessments already explained by our lawyers, the company believes that there are reasonable
grounds for considering the high probability of success in the civil case above.
Based on the brief survey of the facts set forth above, translated into the civil suit that the company
has promoted, and can be considered a reconciliation with the customer resulting in the conclusion
of the supply, it was considered non desirable to provide to cover any devaluation of the present
contract between the work in progress at the date of 30 September 2011.
47
3.6. COMMENTS ON THE MAIN INCOME STATEMENT ITEMS
3.6.1. REVENUES
The following table provides a breakdown of the subject in the 9 months ended as at September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
Revenues from the installation of photovoltaic plants 148,147,660 62,009,964 86,137,696 139%
Revenues for development 473,000 743,381 (270,381) (36%)
Revenues for energy production 488,753 488,753 n.a.
Revenues from maintenance/transfer 1,265,720 583,220 682,500 117%
Other Revenues 2,619,549 729,193 1,890,356 n.a.
Total 152,994,682 64,065,758 88,928,924 139%
Revenues recorded an increase of 139% substantially attributable to Revenues from the installation
of photovoltaic plants which passed from Euro 62,010 thousand in 2010, relating to 43 plants for an
aggregate installed power of 43.9 MWp, to Euro 148,148 thousand in 2011, for an aggregate
installed capacity of 69.7 MWp
This item also includes revenues from the development activities (Euro 473 thousand), revenues
from the sale of energy produced by photovoltaic owned by the parent company (Euro 489
thousand), revenues from maintenance activities (Euro 1,266 thousand) and other revenues for
Euro 2,620 thousand.
For the purposes of accounting for joint ventures at equity, the portion of revenues and costs
generated by the supply of the photovoltaic plants constructed on the basis of contracts entered
into with the joint ventures, which is calculated as an ownership percentage of the same, was
eliminated. The portion attributable to the other shareholders was included under revenues and
amounted to Euro 9,666 thousand.
48
3.6.2. CHANGE IN INVENTORIES OF SEMI-FINISHED AND FINISHED PRODUCTS
The following table provides a breakdown of this item for the nine months ended September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
Semi-finished products (167,847) (436,480) 268,633 (62%)
Work in progress (44,693,783) 15,620,352 (60,314,135) n.a.
Total (44,861,630) 15,183,872 (60,045,502) n.a.
The change in the item in this financial statement was mainly determined by a lot of large
photovoltaic plants included under inventories as at December 31 2010, completed and transferred
to the customers during the first nine months of the year 2011, and consequently recorded on
revenues
3.6.3. COSTS FOR RAW MATERIALS, CONSUMABLES AND GOODS FOR RESALE
The following table provides a breakdown of this item for the six months ended June 30, 2011 and
2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
Purchase of materials 54,966,925 49,147,037 5,819,888 12%
Consumables 406,207 730,868 (324,661) (44%)
Fuels and lubricants 227,869 88,761 139,108 n.a.
Costs for the acquisition of administrative rights 1,287,664 1,257,156 30,508 n.a.
Change in inventories of raw materials, consumables (2,110,258) (5,180,715) 3,070,457 (59%)
Total 54,778,407 46,043,107 8,735,300 19%
This item is shown according to net of the elimination of intergroup costs with joint ventures of
Euro 3,915 thousand corresponding to the portion attributable to the Parent Company for costs
related to raw materials, consumables and goods for resale incurred for the supply of the
photovoltaic plants constructed on the basis of contracts entered into with the joint ventures.
The increase in the costs for the purchase of materials reflects the considerable increase in the
business volumes of the Group.
49
3.6.4. COSTS FOR SERVICES
The following table provides a breakdown of this item for the nine months ended on September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
External manufacturing 22,889,574 10,903,028 11,986,546 110%
Advice and external collaborators 4,169,647 2,737,974 1,431,673 52%
Leases and hires 1,725,027 918,873 806,154 88%
Services for the controlling company 809,996 376,690 433,306 115%
Lease of properties 20,105 42,177 (22,072) (52%)
Transport 1,318,824 690,470 628,354 91%
Maintenance, repairs and assistance 171,619 98,318 73,301 75%
Surveillance and insurance 3,862,275 3,391,816 470,459 14%
Advertising costs 144,852 149,688 (4,836) (3%)
Other services 1,126,466 699,924 426,542 61%
Total 36,238,385 20,008,958 16,229,427 81%
This item is shown according to net of the portion of intergroup costs with Joint ventures. The
elimination of intergroup costs with Joint Ventures was equal to Euro 3,949 thousands and refers to
the portion attributable to the Parent Company of the costs for services incurred for the supply of
the photovoltaic plants constructed on the basis of contracts with the joint ventures.
The considerable increase recorded in costs for services mainly reflects the increase of production
expressed in the number of plants and MWp quantity installed during the first nine months in the
year 2011 if year compared to the same period of the previous financial statement.
3.6.5. PERSONNEL COSTS
The following table provides a breakdown of this item for the nine months ended on September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
Wages and salaries 2,729,789 1,146,711 1,583,078 138%
Social security contributions 815,398 870,599 (55,201) (6%)
Fees due to directors 394,429 418,986 (24,557) (6%)
Provision for employee benefits 110,474 91,216 19,258 21%
Temporary staff /Collaborators 1,192,707 659,686 533,021 81%
Total 5,242,796 3,187,197 2,055,599 64%
50
This item is reported as net of the portion of intergroup costs with Joint Ventures. The elimination
of intergroup costs with Joint Ventures was equal to Euro 515 thousands and refers to the portion
attributable to the Parent Company of personnel costs incurred for the supply of the photovoltaic
plants constructed on the basis of contracts with the joint ventures
The change in personnel costs is due both to the increased use of temporary staff and to the
increase in hiring done from the end of the six months ended as at September 30, 2010.
3.6.6. OTHER OPERATING COSTS
The following table provides a breakdown of this item for the nine months ended September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
Taxes and duties other than income taxes 117,922 45,702 72,220 n.a.
Fines and penalties 15,096 6,619 8,477 128%
Other operating costs 980,735 205,930 774,805 n.a.
Total 1,113,753 258,251 855,502 n.a.
Operating costs are substantially related to taxes other than income taxes, fines and penalties,
administrative costs connected with the construction of the plants
3.6.7. AMORTIZATION, DEPRECIATION, PROVISIONS AND WRITE-DOWNS
The following table provides a breakdown of this item for the nine months ended September 30,
2011 and 2010
30 September 2011 30 September 2010 Change Change %
(in Euros)
Amortisation of intangible assets 49,753 40,732 9,021 22%
Depreciation of property, plant and equipment 424,505 112,985 311,520 n.a.
Provision for bad debts 0 0 0 n.a.
Write-down of intangible assets 581,942 351,766 230,176 n.a.
Total 1,056,200 505,483 550,717 109%
The amortisation of intangible assets includes Euro 582 thousand of costs previously suspended
related to administrative rights being obtained for the construction of photovoltaic plants. The
51
write-down was carried out in order to align the value of certain authorisations to their presumed
realisable value.
3.6.8. FINANCIAL INCOME AND CHARGES
The following table provides a breakdown of this item for the nine months ended on September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euros)
Bank interest expense (1,406,501) (464,705) (941,796) n.a.
Bank charges (538,000) (240,283) (297,717) 124%
Other financial charges (125,435) (8,656) (116,778) n.a.
Total financial charges (2,069,936) (713,644) (1,356,292) n.a.
Interest income on bank current accounts 72,158 12,580 59,578 n.a.
Interest income from subsidiary companies 150,363 74,853 75,510 101%
Other (87,433) n.a.
Total financial income 222,521 87,433 47,655 55%
Total financial income and charges (1,847,415) (626,211) (1,308,637) n.a.
The increase in financial charges is due to the increase in net debt
52
3.6.9. PORTION OF RESULTS OF JOINT VENTURES
The following table provides a breakdown of this item for the nine months ended on September 30,
2011 and 2010:
30 September 2011 30 September 2010 Change Change %
(in Euro)
Terni Solar Energy S.r.l. 130,422 154,459 (24,037) (16%)
Energia Alternativa S.r.l. 777,825 459,327 318,498 69%
Energie S.r.l. 797,062 246,318 550,744 n.a.
Fotosolare Settima S.r.l. 333,248 (13,906) 347,154 n.a.
Solaren S.r.l. 278,667 (1,611) 280,278 n.a.
Collesanto S.r.l. 91,258 (1,728) 92,986 n.a.
Saim Energy 2 S.r.l. 112,235 23,780 88,455 n.a.
Infocaciucci S.r.l. 128,819 31,204 97,615 n.a.
Girasole S.r.l.. 106,103 (1,431) 107,534 n.a.
D.T. S.r.l 55,780 (1,761) 57,541 n.a.
Soltarenti S.r.l. 51,986 0 51,986 n.a.
Guglionesi S.r.l. (7,329) 0 (7,329) n.a.
Totale 2,856,077 894,651 1,961,426 n.a.
3.6.10. INCOME TAX
The following table provides a breakdown of this item for the nine months ended on September 30,
2011 and 2010:
30 September 2011 30 September
2010 Change
Change
%
(in Euros)
Current taxes 3,863,656 4,787,421 (923,765) (19%)
Deferred tax assets (603,619) (1,565,127) 961,508 (61%)
Deferred tax liabilities (309,393) (262,156) (47,237) 18%
Total 2,950,643 2,960,138 (9,495) 0%
53
The following is the reconciliation table between the tax burden from the budget and the
theoretical tax liability as at September 30, 2011:
Nine months ended 30 September
2011
(in Euros)
Net profit before taxes 10.712.173
Theoretical current taxes (27.5% tax rate) 2.945.848
Result of investments valued at equity (700.965)
Non-deductible costs 76.966
IRAP tax 628.794
Effective current taxes 2.950.643
54
3.7. RELATION WITH RELATED PARTIES
Below are reported the accounting statements showing relations with related parties pursuant to
CONSOB resolution no. 15519 of July 27, 2006
55
3.8. CONSOLIDATED STATEMENT OF FINANCIAL POSITION PUSUANT TO CONSOB RESOLUTION
NO. 15519 OF JULY 27 2006
(in Euros) of which: with related parties of which: with related parties
ASSETS
Intangible assets 4,918,260 - 3,651,774
Property, plant and equipment 12,829,656 - 1,973,938
Equity investments 4,855,307 - 2,692,818
Deferred tax assets 4,352,765 - 3,749,146
Non-current financial receivables 3,834,431 3,834,431 4,034,930 4,034,930
Total non-current assets 30,790,419 3,834,431 16,102,606 4,034,930
Inventories 26,180,634 - 68,932,005 -
Trade receivables 59,721,945 10,763,547 77,473,324 15,000,677
Other current assets 5,301,187 6,000,357 28,192
Financial receivables 2,805,705 1,782,250 1,225,253 225,253
Cash and cash equivalents 16,437,394 - 15,212,065 -
Total current assets 110,446,865 12,545,797 168,843,004 15,254,122
Assets held for sale - - 95,000 -
TOTAL ASSETS 141,237,284 16,380,228 185,040,610 19,289,052
LIABILITIES & SHAREHOLDERS’ EQUITY
Share capital 23,210,000 - 23,210,000 -
Reserves (61,284) - (2,129,581) -
Result for the period 7,761,530 - 9,022,078 -
Total shareholders’ equity 30,910,246 - 30,102,497 -
Provision for employee benefits 305,955 - 260,451 -
Deferred tax liabilities 345,232 - 654,625 -
Non-current financial payables 2,185,764 3,131,667
Other non-current liabilities 2,738,611 2,696,593
Total non-current liabilities 5,575,562 - 6,743,336 -
Trade payables 46,730,726 1,362,722 83,433,403 685,543
Payables and other financial liabilities 51,437,622 - 19,050,686 -
Taxes payable 1,813,336 - 3,483,245 -
Other current liabilities 4,769,792 47,116 42,227,443 128,847
Total current liabilities 104,751,476 1,409,837 148,194,777 814,390
TOTAL LIABILITIES 110,327,038 1,409,837 154,938,113 814,390
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY 141,237,284 1,409,837 185,040,610 814,390
56
3.9. CONSOLIDATED INCOME STATEMENT PURSUANT TO CONSOB RESOLUTION NO. 15519 OF
JULY 27, 2006
30 September 2011 30 September 2010
(in Euros) of which: with
related parties
of which: with
related parties
Revenues 150,375,158 15,699,276 63,336,565 22,111,618
Other operating income 2,619,524 721,473 729,193 436,223
Change in inventories of semi-finished products and f.p. (44,861,630) - 15,183,872 0
Costs for raw materials, consumables and goods for resale (54,778,407) (1,755,122) (46,043,107) (73,300)
Costs for services (36,238,385) (1,076,772) (20,008,958) (762,805)
Personnel costs (5,242,796) (412,622) (3,187,197) (384,018)
Other operating costs (1,113,753) - (258,251) -
Amortisation, depreciation, provisions and write-downs (1,056,200) - (505,483) -
Operating result 9,703,511 9,246,633
Financial income 222,521 130,320 87,433 73,944
Financial charges (2,069,936) 88,771 (713,644) (46,425)
Portion of results of joint ventures 2,856,077 0 894,651 -
Net profit before taxes 10,712,173 9,515,072
Taxes (2,950,643) - (2,960,137) -
Utile netto del periodo 7,761,530 6,554,935
57
3.10. CONSOLIDATED CASH FLOW STATEMENT PURSUANT TO CONSOB RESOLUTION NO. 15519 OF
JULY 27, 2006
September 30
(in Euro) 2011 2010
Profit before taxes 10,712,173 9,515,074
Amortisation and depreciation 474,258 153,717
Write-downs of fixed assets 581,942 351,766
Provision for employee benefits 110,474 92,216
Result of joint ventures accounted for at equity and reversal of margin (1,570,038) 4,526,552
Capital losses on disposals 14,074
Change in inventories 42,751,371 (20,364,586)
Change in trade receivables 17,751,379 (18,366,851)
Change in other assets 699,170 (2,803,634)
Change in trade payables (36,702,677) 29,505,738
Change in other liabilities (42,997,293) 2,760,914
Payment of employee benefits (76,199) (26,110)
Net cash flow (used in)/generated by operating activities (8,265,440) 5,358,870
of which: with related parties 4,860,770 (15,952,203)
Investments in property, plant and equipment (10,957,632) (462,342)
Disposals of property, plant and equipment 54,000 (869,923)
Investments in intangible assets (5,355,598) 569,156
Disposals of intangible assets 3,154,461 (4,479,629)
Investments in Joint ventures (2,258,414) (675,995)
Change in receivables and other financial assets (1,379,953)
Assets for sales 95,000
Net cash flow used in investing activities (16,648,135) (5,918,733)
of which: with related parties (1,356,498) (42,467)
Change in payables and other financial liabilities 32,386,936 11,084,383
Increase in non-current financial payables (1,019,539) 4,012,475
Other changes in equity 3,898 -183,056
Payment of dividends (5,232,391) (1,752,657)
Net cash flow generated by financing activities 26,138,904 13,161,144
of which: with related parties 0 0
Comprehensive cash flow for the period 1,225,329 12,601,281
Cash and cash equivalents at the beginning of the period 15,212,065 4,973,210
Cash and cash equivalents at the end of the period 16,437,394 17,574,491
Settled Interest (994,065) (493,051)
Tax paid (3,675,643) (1,976,933)
58
3.11. RELATED PARTIES
See below related parties of the Group.
Ragione Sociale o Cognome e nome Status
Skill & Trust Holding S.r.l. Società controllante
T.E.R.N.I. Research S.p.A. Società controllante
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
Soltarenti S.r.l. Joint venture
Guglionesi S.r.l. Joint venture
EDF EN IItalia S.p.A. Socio di Joint venture
GE Progetti & 3i S.p.A. Socio di Joint venture
Proven S.r.l. Socio di Joint venture
Massarelle S.r.l. Socio di Joint venture
errenergia S.r.l. Socio di Joint venture
Diocesi di Terni-Narni-Amelia Socio di Joint venture
Ferrero Elettra S.r.l. Socio di Joint venture
Gubela S.p.A. Società amministrata o posseduta da parte correlata
Serramenti del Chiese S.r.l. Società amministrata o posseduta da parte correlata
Ferrero Mangimi S.p.A. Società amministrata o posseduta da parte correlata
Carovigno S.r.l. Società amministrata o posseduta da parte correlata
TerniGreen S.p.A. Società amministrata o posseduta da parte correlata
Nuova Terni Industrie Chimiche S.p.A. Società amministrata o posseduta da parte correlata
Nuova TIC S.r.l. Società amministrata o posseduta da parte correlata
Power S.r.l. Società amministrata o posseduta da parte correlata
Speed S.r.l. Società amministrata o posseduta da parte correlata
Lizzanello S.r.l. Società amministrata o posseduta da parte correlata
Boschetto Srl Società amministrata o posseduta da parte correlata
Gala Srl Società amministrata o posseduta da parte correlata
Camene Srl Società amministrata o posseduta da parte correlata
Royal Club Snc di Lucia e Francesco Urbani Società amministrata o posseduta da parte correlata
Costruzioni Baldelli S.r.l. Società amministrata o posseduta da parte correlata
Studio Ranalli & Associati Studio professionale amministrato o posseduto da parte correlata
Stefano Neri Membro del consiglio di amministrazione della Società
Eugenio Montagna Baldelli Membro del consiglio di amministrazione della Società
Fabrizio Venturi Membro del consiglio di amministrazione della Società
Paolo Ricci Membro del consiglio di amministrazione della Società
Domenico De Marinis Membro del consiglio di amministrazione della Società
Paolo Ottone Migliavacca Membro del consiglio di amministrazione della Società
Davide Galotti Membro del consiglio di amministrazione della Società
Giovanni Ranalli Membro del consiglio di amministrazione di una parte correlata
Francesca Ricci Figlia di un membro del consiglio di amministrazione della Società
59
The Parent Company is controlled, since its incorporation, by T.E.R.N.I. Research S.p.A..
The transactions effected with related parties are attributable to activities which relate to ordinary
operations and are settled at arm’s length, as interest-bearing receivables. As at September 30,
2011 no significant transactions had been effected with related parties including transactions of a
non-recurring nature or unusual and/or atypical transactions.
Transactions between the Parent Company, the Controlling Company, the Joint Ventures and other
related parties mainly concern:
• business relations relating to the construction of photovoltaic plants and maintenance services
with joint ventures and companies managed or owned by related parties and companies which
participation in Joint Ventures together with TerniEnergia;
• financial relations relating to loans granted to joint ventures (see also 3.4.5 e 3.4.9 financial
receivables);
• agreements for taking over finance lease agreements related to already purchased photovoltaic
plants, in case of, and subject to, default by some companies managed or owned by related parties,
joint ventures and the controlling company Terni Research S.p.A. (see also note 3.5.10
commitments and guarantees given);
• sureties given in favour of banks in relation to medium-long term loans entered into by the Joint
Ventures (see also note 3.5.10 commitments and guarantees given);
• relations connected with contracts for performance of (technical, organisational, property leases,
legal and administrative) services with the controlling company Terni Research S.p.A.;
• technical services rendered by Terni Green S.p.A. ;
• professional services rendered by the firm Ranalli & Associati, by the director Paolo Ricci and by
Mrs. Francesca Ricci.
The table below reports the breakdown of economic and financial effects of business and financial
transactions with related parties as at September 30, 2011.
60
Business transactions
(in Euro) As at September 30 2011 As at September 30 2011
Receivables Payables Cost Revenues
Materials Serivces Personell Material Services
Holding
T.E.R.N.I. Research S.p.A. 1,372,690 108,793 809,996 3,500
Joint venture
Terni Solar Energy S.r.l. 217,444 67,500
Energia Alternativa S.r.l. 228,464 1,950,842 172,333
Energie S.r.l. 350,471 3,266,293 129,888
Fotosolare settima S.r.l. 55,062 93,750 45,693
Infocaciucci S.r.l. 46,603 35,811
Saim Energy 2 S.r.l. 48,511 40,401
Collesanto S.r.l. 30,100 25,000
Solaren S.r.l. 74,325 772,192 61,771
Girasole S.r.l. 1,120,308 50,000 3,333
Sol tarenti S.r.l. 698,628 2,179,834 3333
Guglionesi S.r.l. 1,813,847 1,511,539
D.t. S.r.l. 37,750 10,000
Parent companies
Terni Green S.p.A. 15,000 1,160,179 1,755,122 41,126
Power S.r.l. 72,000
Speed S.r.l. 180,000
Nuova Tic S.p.A. -
Nuova Tic S.r.l. 329,742 95,500
Other parent companies
Francesca Ricci 51,893
Lizzanello S.r.l. 14,400
Carovigno S.r.l. 28,192
Studio Ranalli & Associati 18,000 12,383
Alta direzione 47,116 202,500 412,622
Gianni Ranalli
Costruzioni Baldelli S.r.l. 625,394 5,000
EDF EN Italia S.p.A.
Ferrero Elettra S.r.l. 13,469 11,193
Ferrero Mangimi S.p.A. 13,497 11216,7
Gubela S.p.A. 1,519,207 2,662,193
Serramenti del Chiese S.r.l. 1,840,442 3,265,258
Total 10,763,547 1,409,837 - 1,755,122 1,076,772 412,622 15,699,276 721,473
Amount 59,721,945 51,500,518 54,778,407 36,238,385 5,242,796 150,375,158 2,619,524
Incidence % 18.00% 2.70% 3.20% 3.00% 7.90% 10.40% 27.50%
61
Financial operation
(in Euro) As at September 30 2011 As at September 30 2011
Receibles Received
Guarantees Commitments
Other
Commitments Charges Income
Holding
T.E.R.N.I. Research S.p.A. 25,390,000 2,971,386 88,771
Joint venture
Terni Solar Energy S.r.l. 2,421,640 81,475
Energia Alternativa S.r.l. 211,474 5,408,100 16,216,829 5,445
Energie S.r.l. 63 6,500,000
Fotosolare settima S.r.l. 10,000
Infocaciucci S.r.l. 183,448 2,970,025 4,778
Saim Energy 2 S.r.l. 140,032 2,929,221 4,520
Collesanto S.r.l. 582,149 5,278,580 9,345
Solaren S.r.l. 2,726
Girasole S.r.l. 624,040 8,412
Sol tarenti S.r.l. 804,131 3,009,999 13,858
D.T. S.r.l. 349,599 2,741,521 328
Guglionesi S.r.l. 285,609 2,158
Other Parent companies
Boschetto S.r.l. 3,408,930
Gala S.r.l. 3,502,706
Camene S.r.l. 3,536,176
Royal Club Snc di Lucia e Francesco Urbani 3,493,466
Costruzioni Baldelli S.r.l.
Lizzanello S.r.l. 1,770
Carovigno S.r.l.
Total 5,616,681 25,390,000 11,908,100 50,058,839 88,771 130,320
Amount 6,640,136 2,069,936 222,521
Incidence % 84.60% 4.30% 58.60%
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Below are summarised the transactions effected between the Group and the related parties ;
Business operations
Business transactions are mainly related to:
• framework agreement for the development of photovoltaic projects for plants with a capacity not
lower than 500 kWp between the Company and the Joint Ventures. Total revenues related to nine
months and ended as at September 30, 2011 are equal to Euro 9,730 thousand and trade
receivables on invoices issued and to be issued for Euro 4,721 thousand are related to the
construction of large size photovoltaic plants.
• construction and transfer of a photovoltaic plant with a power of 163 Kwp to Costruzioni Baldelli
Srl, a company managed by a member of the Company’s Board of Directors, in respect of which the
parent company has a credit of Euro 619 thousand;
• construction and transfer of a photovoltaic plant with a power of 998 Kwp to Serramenti del
Chiese S.r.l., company managed and owned by a related party., for a value of Euro 3,265 thousand;
in respect of which the company has a credit of Euro 1,840 thousand;
• framework agreement between the Parent Company and the controlling company Terni Research
S.p.A. related to the provision of administrative and logistic services, including the lease of the
properties located in Narni, in Strada dello Stabilimento, 1, in Milan at via Borgogna and in Lecce,
the management of legal and corporate affairs, as well as the management of human resources and
IT systems;
•purchase of software, IT services and works from the affiliated company TerniGreen S.p.A
• compensation received by executive members of the Board of Directors and the executive in charge with
strategic responsibility for service provided to the Group.
Financial transactions
Current and non-current financial receivables, as well as financial income, for the financial year
ended as at September 30 2011, are related to interest-bearing loans with the Joint Ventures.
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It should be noted that, as at September 30 2011, the controlling company Terni Research S.p.A.
had granted to primary credit institutions guarantees on the banking credit facilities of the Parent
Company for Euro 25.4 million for which it asked the subsidiary to pay Euro 88.7 thousand as fees
on sureties, which were entered under financial charges.
The Parent Company has given sureties in relation to medium-long term loans and finance leases
for Euro 11.9 million, in favour of Energia Alternativa S.r.l. and Energie S.r.l..
For some customers who funded the purchase of the photovoltaic plant through finance lease
agreements entered into with leasing companies, the Parent Company entered into agreements for
taking over lease agreements with the relevant leasing companies, in the event of, and subject to,
default by the respective customers. As at September 30 2011 the residual payables of lease
agreements for which the above mentioned commitments had been undertaken amounted to Euro
58 million, of which Euro 50.1 million to related parties and Euro 7.9 million to other third-party
customers.
3.12. ATYPICAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to Consob notice no. DEM/6064293 of July 28, 2006 “Corporate disclosures of listed
issuers and of issuers having financial instruments offered to the public referred to in article 116 of
the TUF – Requests pursuant to article 114, paragraph 5, of Legislative Decree no. 58/98”
(Informativa societaria degli emittenti quotati e degli emittenti aventi strumenti finanziari diffusi tra
il pubblico di cui all’art.116 del TUF – Richieste ai sensi dell’ art.114, comma 5, del D.Lgs. 58/98”), it
should be noted that:
•No transactions were carried out and no events occurred of a non-recurring nature, nor
any transactions or events which only rarely occur in the ordinary conduct of business;
• No atypical and/or unusual transactions were carried out.
3.13. OTHER INFORMATION
Dividends
On 22 April 2011, the shareholders’ meeting of the Parent Company TerniEnergia approved the
financial statements as at 31 December 2010 and to distribute a unit dividend of Euro 0.19 per
ordinary share for a total amount of Euro 5,232 thousand. The dividend has been paid on May 12,
2011, with coupon detachment on May 9, 2011.
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Earnings per share
The calculation of basic earnings per share attributable to the holders of the company’s ordinary
shares is based on the average number of shares of the relevant period.
Nine months ended Nine months ended
(in Euro) 30 September 2011 30 September 2010
Net profit for the period – Group 7,761,530 6,554,935
Average number of shares in the period 27,538,899 24,417,975
Earnings per share – Basic and diluted 0.282 0.268
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Subsequent events
As at October 4, 2011 - TerniEnergia has carried out the subscription and payment of the first
tranche of di Lucos Alternative Energies S.p.A. capital increase by payment amount, with exclusion
of pre-emption right pursuant to Articles 2441, fifth paragraph of the Civil Code, and have
performed the sale of shares expected by the frame agreement signed with Lamse S.p.A., Lofin
S.r.l., Angelo Casolaro, Andrea Marano and Raffaele Maria Mellone on August, 9th, 2011. Therefore
the company held a sharing of 61.89%.
In addition to this, TerniEnergia has acquired a total quantity of 339.432 Lucos shares , for an
amount equal to Eur 2,43 million. TerniEnergia transferred to current members 281.101 own shares
for a unit value equal to the average price recorded in the 5 trading days of Borsa preceding the
date of execution (Enhancement of Eur 2,358888), corresponding to a total value equal to Eur
663.086. The acquisition of Lucos Alternative Energies byTerniEnergia is part of activities designed
to anticipate to 2011 the company entry into the new business of Energy efficiency for industrial
cycles as provided in the updated business plan 2011-2013, presented to the market last September
27th. Lucos Alternative Energies, with a specialized sales network and focused on key regions of
central and northern Italy and with a dedicated engineering structure, is active (directly and
through its subsidiaries) in the field of energy efficiency through public and private counterparts
through the provision of services Energy Saving Company (ESCO).
As at October 29, 2011 - TerniEnergia S.p.A, as part of its development strategy, executed the
purchase of Società Agricola Padria based in Sassari. Such a purchase is aimed at the realization of a
new industrial sized photovoltaic plants in Sardegna, for a total installed power of 2,9 MWp, already
authorized and with permission to open immediately the relevant working site. The price agreed for
purchasing 100% of the company was Euro 0,25 Million, totally financed by cash, just paid.
As at November 4, 2011 - Lucos Alternative Energies S.p.A., active in the field of energy services and
controlled by TerniEnergia S.p.A., a company listed on Star Segment of Borsa Italiana, and Cofely
Italia S.p.A., an industrial company leader in Italy and Europe in the energy field and technology
multi-services part of the branch “Servizi Energia” of the Group GDF SUEZ, signed a Memorandum
of Undestanding for the development of projects and business relationship in energy efficiency field
in Italy. Notably, the partnership, which will be in force until December 31st, 2014, provides for the
identification of projects to be carried out with and in favour of private customer (such as
industries, distribution companies, logistics, ect.) or public customer aimed to reduce primary
energy consumption.
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4. CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE
154-BIS OF LEGISLATIVE DECREE 58/98 AND ARTICLE 81-TER OF CONSOB REGULATION NO.
11971/99, AS AMENDED AND SUPPLEMENTED
1. The undersigned Stefano Neri, as Chairman and General Manager of the company and Mr.
Paolo Allegretti Chief Executive Officer, and Manager responsible for preparing corporate
accounting documents of TerniEnergia S.p.A. hereby certify, also taking account of
provisions under article 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of 24
February 1998:
• the adequacy with reference to the characteristics of the enterprise;
• the actual application of the administrative and accounting procedures for the
preparation of the consolidated financial statements as at September 30 2011;
2. To this regard, no further significant aspects emerged.
3. We further certify that the consolidated financial statements:
a) correspond to the results reported in the books and in the accounting records;
b) are prepared in compliance with the applicable international accounting standards
recognised in the European Community pursuant to Regulation (EC) no. 1606/2002,
and, to the best of our knowledge, they adequately provide a true and correct
representation of the equity, economic and financial position of the issuer and of the
group of companies included in the scope of consolidation.
4. Finally, we certify that the report on operations includes a reliable analysis of the relevant
events that occurred during the financial year and of their impact on the consolidated
financial statement, together with a description of the main risks to which the Group is
exposed. The report on operations also includes a reliable analysis of the significant
information with related parties.
5. This certification is issued pursuant to and for the purposes of article 154-bis, paragraphs 2
and 5, of Legislative Decree no. 58 of 1998.
Narni, lì November 7th, 2011
CEO and General Manager
The Manager responsible for preparing
corporate accounting documents