TerniEnergia SpA GROUPUnaudited Interim Consolidated Financial Information as of and for the nine months
ended 30 September 2010
Disclaimer
This Unaudited Interim Consolidated Financial Information as of and for the nine months ended 30 September 2010 has been translated into English solely for the convenience of the international reader. In the event of conflict or inconsistency between the terms used in the Italian version of the report and the English version,the Italian version shall prevail, as the Italian version constitutes the sole official document.
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TerniEnergia SpA Legal offices in Via Luigi Casale snc – 05100 Terni (TR)
Share capital (subscribed and paid in) Euro 12,410,000
Registered in the register of companies of Terni nr. 01339010553
Offices
Terni – Via Luigi Casael Snc – Via Narni (Bosco complex)
Milano – Via Borgogna, 7
Lecce – Via Costadura 3
Board of Directors
President and chief executive officer
Stefano Neri
Directors
Paolo Ricci
Fabrizio Venturi
Eugenio Montagna Baldelli
Paolo Ottone Migliavacca
Davide Gallotti
Domenico De Marinis
Statutory auditors (“collegio sindacale”)
Ernesto Santaniello (president)
Roberto Raminelli
Vittorio Pellegrini
Independent Auditors
PricewaterhouseCoopers SpA
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SIGNIFICANT EVENTS IN THE THREE MONTHS ENDED 30 SEPTEMBER 2010
Capital increase
On 5 July 2010, the Board of Directors of TerniEnergia SpA (the “Company” or “TerniEnergia”)
resolved to submit a proposal to the extraordinary shareholders‟ meeting calling for a capital increase
by the Company, in one or more instalments, in the form of a rights issue of a maximum par value of
€60,000,000.00, excluding option rights in accordance with Article 2441, paragraph 5, of the Italian
Civil Code. The capital increase is to be undertaken by 31 July 2011 at a price determined according
to book building mechanisms by agreement with the Global Coordinator, while also taking into
consideration, in accordance with Article 2441, paragraph 6, of the Italian Civil Code, the share price
near the time of placement, the quantity and quality of demand expressed in the private placement,
the performance of Italian and international markets near the time of the placement and the
indications received from the Global Coordinator, all within the limits set by applicable legislation, to
be completed through a private placement reserved for qualified Italian and international investors,
outside the United States, Canada, Japan and Australia.
The capital increase represents an opportunity that TerniEnergia intends to seize under the
assumption that market conditions permit it to achieve an issue price that expresses the Company‟s
value and potential, with the aim of maximising the value of shareholder investments.
The transaction is part of the growth process that TerniEnergia has pursued constantly since
incorporation and thus aims to:
- put the Company into the ideal financial conditions to grow and consolidate its position of leadership
in the construction of industrial-scale photovoltaic plants, including the acquisitions of companies
operating in the sector, and further reinforce the power generation business through the incorporation
of new joint ventures or the entry into international markets;
- increasing the share‟s visibility on the market by allowing qualified investors to acquire interests,
with the additional aim of expanding the free float, and thus the share‟s trading volumes and liquidity,
while also improving the share‟s stability;
- emphasise the Company‟s nature of “public company”, given that the interest in the Company held
by Terni Research S.p.A., the majority shareholder, would fall below 50% from the present 67.38% if
the capital increase pending approval were to be fully subscribed;
- fully develop the value of the new shares offered through book building mechanisms, as a function
of the expression of interest received, the solidity of offers, the economic expedience of those offers
and the intrinsic quality of the investors;
- take timely advantage of the best conditions offered by the market, especially given the present
phase of high volatility in capital markets, by eliminating the typically extensive amount of time
associated with the exercise of option rights for shareholders through a placement with qualified
investors only.
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The financial resources raised through the capital increase will be used for the Company‟s industrial
development and thus will not be allocated to decrease or change the structure of its financial
indebtedness.
The Company‟s Board of Directors has also resolved to put a proposal before the shareholders‟
meeting calling for the Company‟s shares to be transferred to the STAR segment of the Mercato
Telematico Azionario (screen-based market) organised and managed by Borsa Italiana S.p.A. The
transfer to the STAR segment represents a response to the need to access a market offering, greater
capitalisation, liquidity, which will permit the Company to increase its ability to compete, and visibility
with institutional investors, also at the international level, as well as to achieve full appreciation of its
economic value.
Participation in that segment is contingent upon satisfaction of the requirements set out in Article
2.2.3 of the Regulations for Markets Organised and Managed by Borsa Italiana, mainly in terms of
size, liquidity, transparency of information, corporate governance (independent director Paolo Ottone
Migliavacca has been appointed lead independent director) and economic solidity.
TerniEnergia will be assisted by BNP Paribas as global coordinator and bookrunner for the
placement of the newly issued shares, EnVent, as financial advisor, and Norton Rose, as legal
advisor.
Renewal of the service agreement by T.E.R.N.I. Research S.p.A.
On 5 July 2010, TerniEnergia and the holding company, T.E.R.N.I. Research S.p.A., entered into a
master agreement effective 1 September 2010 and terminating on 31 August 2013, governing the
provision by T.E.R.N.I. Research S.p.A. of a series of logistics services, such as access to premises
fitted for industrial activities and executive offices, as well as the provision of legal and corporate,
advisory and information technology support services. The agreement provides for the annual
consideration to be paid by TerniEnergia to T.E.R.N.I. Research S.p.A. amounting to €967 thousand,
excluding VAT, which is revised on a semi-annual basis. The new service agreement constitutes
partial changes, in terms of the subject matter, compared to the previous contract already in force
between the parties governing access to the premises on Via Casale in Terni, in which
TerniEnergia‟s current registered office is located. The consideration determined under the previous
agreement was approximately €400 thousand per year. The increase in the consideration determined
by the new agreement reflects the larger premises made available for both the conduct of industrial
and executive activities, whereas the fees of the remaining services governed by the agreement
have remained essentially unchanged. The increase in the annual consideration of the service
agreement is a consequence of the increase in the quantity of services requested by TerniEnergia
due to the expansion of its business, considering particularly the increase in revenue and number of
employees.
Given that the counterparty is a related party, TerniEnergia has provided detailed disclosure of the
transaction in accordance with Article 71-bis, paragraph 1, of Consob Regulation No 11971/99 in a
specific press release.
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Loan received from the Intesa Sanpaolo Group
On 16 July 2010, the Intesa Sanpaolo Group, made available €6,000,000 through Mediocredito
Italiano in support of TerniEnergia‟s industrial projects aimed at expanding the realisation of
photovoltaic plants in the six months ending 31 December 2010 and therefore having access to the
incentives as provided by the Ministerial Decree of 6 February 2006 in connection with energy
production by photovoltaic plants, which will expire on 31 December 2010.
Sale of treasury shares
On 28 July 2010, TerniEnergia has settled the second tranche due to Vittoria S.r.l., headquartered in
Lecce, following the connection to the electricity grid of two new industrial-scale photovoltaic plants
with a total capacity of approximately 2 MW. In March, TerniEnergia had acquired from Vittoria S.r.l.
the projects and authorisations for the two photovoltaic plants, in addition to a land lease of
approximately eight hectares, located in the Municipality of Torchiarolo (BR), for the next 25 years.
The contract stipulated the settlement of the second tranche to be made after the connection to the
electricity grid in the form of share payment determined according to the average closing prices on
the five days of market activity prior to the transfer of the shares. The consideration was paid on 28
July 2010 through the transfer to Vittoria S.r.l. of 132,548 shares of TerniEnergia. The shares were
valued at €3.395 per share for a total amount of €450 thousand. The first tranche was settled through
the exchange of shares in the amount of €450 thousand when the agreement had been signed.
Factoring agreement entered into with MPS Leasing e Factoring
In August 2010, the Company entered into a factoring agreement with MPS relating to receivables
from its client Rete Rinnovabile S.r.l. in connection with a master agreement signed on 28 December
2009, amended on 11 June 2010. The factoring of receivables is without recourse, unless otherwise
specified. The agreement is for a rolling maximum amount of €30 million, i.e. whenever a factored
receivable is settled, the paid amount is again available for factoring.
Set up of Joint Venture
On 15 September 2010 the Company set up a joint venture, Sol Tarenti, together with Ferrero Elettra
S.r.l. which also operates in the renewable energy sector and controlled by Ferrero Mangimi S.p.A. di
Cuneo, leader in the Italian market for animal feed.
The new joint venture, with the headquarters in Narni (TR) in the Nera Montoro region, at the ex
Nuova Terni Industrie Chimiche industrial plant, will construct industrial photovoltaic power plants
with a total energy power potential of approximately 3 MWp in Italy. The Board of Directors of Sol
Tarenti comprises Mr. Stefano Neri, the CEO of TerniEnergia and Mr. Massimo Ferrero, the owner of
Ferrero Mangimi with the role of president of the board and vice president of the board respectively.
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FINANCIAL RESULTS OF THE TERNIENERGIA GROUP
In the nine months ended 30 September 2010 the company has completed the construction of 45
photovoltaic power plants of medium and large size with a capacity of 43.9 MWp. In particular 25.1
MWp were constructed for the joint venture while the remaining 18.8 MWp were constructed for third
parties.
The total number of photovoltaic plants built by TerniEnergia, from the start of the company‟s activity
up till 30 September 2010 amounts to 173 plants with a cumulative capacity equal to 83.9 MWp of
which 44.9 MWp were constructed for the joint ventures operating in the power generation. At the
balance sheet date photovoltaic plants of the joint venture with an installed capacity of 26.6 MWp
were operational and connected to the electricity grid.
Nine months ended 30 September Change Change
(in Euro) 2010 2009 %
Revenues from sales and services 64,065,758 34,568,439 29,497,319 85.33%
Production costs (51,126,444) (27,047,854) (24,078,590) 89.02%
Gross margin 12,939,314 7,520,585 5,418,729 72.1%
Personnel costs (3,187,197) (2,300,930) (886,267) 38.5%
EBITDA 9,752,117 5,219,655 4,532,462 86.8%
Depreciation, amortisation and impairment (505,483) (439,528) (65,955) 15.0%
Operating income 9,246,634 4,780,127 4,466,507 93.4%
Financial income and expense (626,211) (427,800) (198,411) 46.4%
Share of income /(loss) from investments in joint ventures 894,651 (109,826) 1,004,477 n.a.
Net income before income tax 9,515,074 4,242,501 5,272,573 124.3%
Income tax (2,960,137) (1,516,476) (1,443,661) 95.2%
Net income 6,554,937 2,726,025 3,828,912 140.5%
In the nine months ended 30 September 2010 the company recorded consolidated revenues from
sales and services of € 64,065 thousand (of which €40.8 relating to turnkey contracts with third
parties and €22.1 million with the joint venture), an increase of 85% compared to the same period in
2009 (€34.6 million of which €26.8 million relating to turnkey contracts with third parties and €7.6
million with the joint venture. The increase is due to the significant in the number of industrial size
photovoltaic plants constructed (45 compared to 24 in the same period of the prior year), and a total
installed capacity of 43.9 MWp (21.9 MWp in the same period in 2009), of which 25.1 MWp for joint
venture (10.4 MWp in the same period in 2009).
It should be noted that as of 30 September 2010 there were two photovoltaic plants with a capacity of
3.8 MWp for which construction was completed, but not all of the revenue recognition criteria had
been met.
The results recorded in the first nine months of 2010 exceeded the objectives for the entire year
2010, set forth in the business plan (“Piano Industriale”) which was presented on 30 November 2009.
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Consolidated sproduction costs are mainly variable and amounted to €51,126 thousand in the nine
months ended 30 September 2010, with an increase of 89.02% compared to the same period of the
previous year.
Net income before financial income and expense, share of income (loss) from investments in joint
ventures, income tax, and depreciation, amortisation and impairment (EBITDA) for the first nine
months 2010 amounted to €9,752 thousand, representing 15.2% of revenues from sales and
services. Compared to the same period of the last year, the percentage increase in EBITDA was
greater than the increase in gross margin (87% compared to 72.1%). This is due to economies of
scale, particularly with reference to personnel costs which changed by 39%.
Financial expense and income of €626 thousand in the nine months ended 30 September 2010 was
more than offset by the share in income from investments in joint venture of €895 thousand
(compared to a loss of €109 thousand in the same period of the previous year).
Net income for the nine months ended 30 September 2010 amounts to €6,555 thousand, an increase
of 140.5% compared to the same period in the previous year.
As of 30
September As of 31
December Change Change
(in Euro) 2010 2009 %
Intangible assets 1,260,771 1,226,059 34,712 2.83%
Property, plant and equipment 1,709,273 1,414,173 295,100 20.87% Investment in joint ventures, deferred tax assets and non current financial receivables 8,484,517 2,966,805 5,517,712 n.a.
Total non-current assets 11,454,561 5,607,037 5,847,524 104.29%
Inventories 25,329,046 4,964,460 20,364,586 n.a.
Trade receivables 48,854,241 30,677,390 18,176,851 59.25% Other current assets and assets held for sale 5,586,923 2,676,037 2,910,886 108.78%
Trade payables (52,373,744) (22,887,055) (29,486,689) 128.84%
Tax payables and other current liabilities (11,213,067) (3,131,601) (8,081,466) n.a.
Net working capital 16,183,399 12,299,231 3,884,168 31.58%
Provisions and deferred tax liabilities (3,508,352) (1,954,180) (1,554,172) 79.53%
Net invested capital 24,129,608 15,952,088 8,177,520 51.26%
Total shareholders’ equity 16,719,269 13,282,085 3,437,184 25.88%
Current net financial indebtedness 3,397,864 2,670,003 727,861 27.26%
Non-current net financial indebtedness 4,012,475 4,012,475 n.a.
Net financial indebtedness 7,410,339 2,670,003 4,740,336 n.a.
Net invested capital 24,129,608 15,952,088 8,177,520 51.26%
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As of 30 September 2010 the total non-current assets amounts to €11,454 thousand with an increase
of €5,847 thousand compared to 31 December 2009 and relates mainly to authorisations for the
construction of photovoltaic plants, investments in property, plant and equipment related to the
acquisition of land and plots of land as well as plant and machinery equipment. Total non-current
assets also include deferred tax assets, investment in joint venture and non current financial assets.
The net working capital amounts to €16,183 thousand as of 30 September 2010, an increase of
31.58% compared to the previous period (€12,299 thousand). The change in net working capital
evidences, in an important growth period, the particular focus on the management of trade
receivables and payables and the particular attention on purchasing, especially the acquisition of
panels and the inverters.
Inventories increased by more than 150% as of 30 September 2010 compared to 31 December 2009
and amounted to €25,329 thousand as of 30 September 2010. This increase is mainly due to
photovoltaic plants under construction at the ”Milis” site; the relevant contracts include the
construction of photovoltaic plants for third parties with a capacity of 12 MWp (TRP BV).
As of 30 September As of 31 December (in Euro) 2010 2009
Cash (380,904) (14,518)
Current accounts (17,193,587) (4,958,692)
Liquidity (A) (17,574,491) (4,973,210)
Current financial receivables (B) (1,204,348) (3,326,546)
Short-term borrowings (bank overdrafts) 4,989,120 1,047,943
Short-term borrowings (advances on invoices) 15,195,747 9,921,816
Short-term borrowings (other borrowings) 34,836 -
Short-term borrowings (current portion of long-term financing arrangement) 1,957,000 -
Current financial indebtedness (C) 22,176,703 10,969,759
Long-term borrowings (other borrowings) 87,725 -
Long-term borrowings (long-term financing arrangement) 3,924,750 -
Non-current financial indebtedness (D) 4,012,475 -
Net financial indebtedness (A+B+C+D) 7,410,339 2,670,003
The net financial indebtedness as of 30 September 2010 amounted to €7,410 thousand remaining at
significant reduced levels compared to the turnover generated and maintaining its ratio with the total
shareholders‟ equity (equal to €16,719 thousands) below the parity (around 0.44). As of December
2009 the ratio amounted to 0.2 with a net financial indebtedness of €2,670 thousands compared to
total shareholders‟ equity amounting to €13,282 thousands.
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The net financial indebtedness as of 30 September 2010 included €5,882 thousands relating to a
long -term financing granted by Mediocredito Italiano S.p.A, which has been classified for €3,925 as
long-term borrowings and for €1,957 as short-term borrowings. Furthermore, the non-current
financial indebtedness included the non-current portion of a loan for the acquisition of vehicles
amounting to €88 thousands. The net financial indebtedness also included (i) €20,219 thousands of
short term borrowings due to various financial institutions, mainly relating to overdrafts or advances
on invoices, (ii) liquidity amounting to €17,574 thousands and (iii) current financial receivables
amounting to €1,204 thousands.
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TerniEnergia Group – Unaudited Interim Consolidated Financial Information
as of and for the nine months ended 30 September 2010
Unaudited Interim Consolidated Balance Sheet
Unaudited Interim Consolidated Income Statement
Unaudited Interim Consolidated Statement of Comprehensive Income
Unaudited Interim Consolidated of Changes in Shareholders’ Equity
Unaudited Interim Consolidated Statement of Cash Flows
Notes to the Unaudited Interim Consolidated Financial Information as of and for the nine
months ended 30 September 2010
Certification of the Unaudited Interim Consolidated Financial Information as of and for the
nine months ended 30 September 2010 of the manager in charge of the preparation of the
accounting documents
TERNIENERGIA S.p.A.
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET
As of 30 September 2010 and 31 December 2009
F-11
Notes As of 30 September As of 31 December
(in €)
2010 2009
ASSETS
Intangible assets 1.4.1 1,260,771 1,226,059
Property, plant and equipment 1.4.2 1,709,273 1,414,173
Investments in joint ventures 1.4.3 1,439,140 1,284,749
Deferred tax assets
3,247,184 1,682,056
Non-current financial receivables 1.4.6 3,798,193 -
Total non-current assets
11,454,561 5,607,037
Inventories 1.4.4 25,329,046 4,964,460
Trade receivables 1.4.5 48,854,241 30,677,390
Other current assets
5,496,923 2,676,037
Current financial receivables 1.4.6 1,204,348 3,326,546
Cash and cash equivalents
17,574,491 4,973,210
Total current assets
98,459,049 46,617,643
Assets held for sale
90,000 -
TOTAL ASSETS
110,003,610 52,224,680
LIABILITIES AND SHAREHOLDERS’ EQUITY Share capital
12,410,000 12,410,000
Reserves
(2,245,668) (2,852,964)
Net income
6,554,937 3,725,049
Total shareholders’ equity 1.5.1 16,719,629 13,282,085
Provisions
3,047,178 1,451,801
Employee benefit liability
228,782 162,676
Deferred tax liabilities
232,392 339,703 Long-term borrowings 1.5.2 4,012,475 -
Total non-current liabilities
7,520,827 1,954,180
Trade payables 1.5.3 52,373,744 22,887,055
Short-term borrowings 1.5.4 22,176,703 10,969,759
Tax payables
4,916,472 2,103,805
Other current liabilities
6,296,595 1,027,796
Total current liabilities
85,763,514 36,988,415
TOTAL LIABILITIES
92,284,341 38,942,595
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
110,003,610 52,224,680
(The accompanying notes are an integral part of this unaudited interim consolidated financial information).
TERNIENERGIA S.p.A.
UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENT
For the nine months ended 30 September 2010 and 2009
F-12
.(in €) Notes Nine months ended
30 September
2010 2009
Revenues 1.6.1 63,336,565 34,385,850
Other income 1.6.1 729,193 182,590
Changes in inventories of semi-finished and finished products 1.6.2 15,183,872 260,286
Materials costs 1.6.3 (46,043,107) (18,265,634)
Services costs 1.6.4 (20,008,958) (8,967,487)
Personnel costs 1.6.5 (3,187,197) (2,300,930)
Other operating costs 1.6.6 (258,251) (75,018)
Depreciation, amortisation and impairment 1.6.7 (505,483) (439,528)
Operating income
9,246,634 4,780,127
Financial income 1.6.8 87,433 7,285
Financial expense 1.6.8 (713,644) (435,085)
Share of income/(loss) from investments in joint ventures 1.6.9 894,651 (109,826)
Net income before income tax
9,515,074 4,242,501
Income tax 1.6.10 (2,960,137) (1,516,476)
Net income
6,554,937 2,726,025
- Attributable to equity holders of the Group
6,544,937 2,726,025
Earnings per share – basic and diluted 1.9 0.27 0.11
(The accompanying notes are an integral part of this unaudited interim consolidated financial information).
TERNIENERGIA S.p.A.
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the nine months ended 30 September 2010 and 2009
F-13
(in €) Notes Nine months ended
30 September
2010 2009
Net income
6,554,937 2,726,025
Changes in joint ventures‟ cash flow hedge reserve
(1,922,846) -
Tax on changes in joint ventures‟ cash flow hedge reserve
528,783 -
1.5.1 Other comprehensive income (1,394,063) -
Total comprehensive income
5,160,874 2,726,025
· Attributable to equity holders of the Group
5,160,874 2,726,025
(The accompanying notes are an integral part of this unaudited interim consolidated financial information).
TERNIENERGIA S.p.A.
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
As of and for the nine months ended 30 September 2010 and 2009
F-14
Share capital
Reserves
Total Reserves Net income
Total shareholder
s’ equity
(in €)
Share premium reserve
Legal reserve
Extraordinary reserve
Other reserves
As of 31 December 2008 12,010,000 3,550,458 22,045 206,827 (7,249,057) (3,469,727) 532,428 9,072,701
Allocation of net income - - 532,428 - - 532,428 (532,428) - Proceeds from shares issued 400,000 880,000 - - - 880,000 - 1,280,000 Purchase of treasury shares - - - - (257,960) (257,960) - (257,960) Expenses related to shares issued - - - - (67,135) (67,135) - (67,135)
Total transactions with owners 400,000 880,000 532,428 - (325,095) 1,087,333 (532,428) 954,905
Net income - - - - - - 2,726,025 2,726,025
Total comprehensive income - - - - - - 2,726,025 2,726,025
As of 30 September 2009 12,410,000 4,430,458 554,473 206,827 (7,574,152) (2,382,394) 2,726,025 12,753,631
Share capital
Reserves
Total Reserves Net income
Total shareholder
s’ equity
(in €)
Share premium reserve
Legal reserve
Extraordinary reserve
Other reserves
As of 31 December
2009 12,410,000 4,430,458 554,473 206,827 (8,044,722) (2,852,964) 3,725,049 13,282,085
Allocation of net income - - 310,020 3,408,380 6,649 3,725,049 (3,725,049) -
Dividends - - - - (2,482,000) (2,482,000) - (2,482,000)
Purchase of treasury shares
- - - - (141,690) (141,690) - (141,690)
Sale of treasury shares - 512,795 - - 387,205 900,000 - 900,000
Total transactions with owners
- 512,795 310,020 3,408,380 (2,229,836) 2,001,359 (3,725,049) (1,723,690)
Net income - - - -
6,554,937 6,554,937
Other comprehensive income
- - - - (1,394,063) (1,394,063)
(1,394,063)
Total comprehensive income
- - - - (1,394,063) (1,394,063) 6,554,937 5,160,874
As of 30 September 2010
12,410,000 4,943,253 864,493 3,615,207 (11,668,621) (2,245,668) 6,554,937 16,719,269
(The accompanying notes are an integral part of this unaudited interim consolidated financial information).
TERNIENERGIA S.p.A.
UNAUDITED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
For the nine months ended 30 September 2010 and 2009
F-15
(in €) Nine months ended
30 September
2010 2009
Net income before income tax 9,515,074 4,242,501
Depreciation and amortisation 153,717 121,036
Impairment 351,766 -
Accruals for doubtful receivables - 318,492
Accruals of provision for employee benefit liability 92,216 57,167
Share of (income)/ loss from investments in joint ventures accounted for using the equity method and elimination of margin
4,526,552 2,640,820
Loss from disposals 14,074 -
(Increase)/decrease in inventories (20,364,586) 1,279,216
Increase in trade receivables (18,366,851) (16,532,242)
(Increase)/decrease in other assets (2,803,634) (1,650,802)
Increase in trade payables 29,505,738 12,187,068
Increase in other liabilities 2,760,914 1,598,194
Employee benefits paid (26,110) -
Net cash provided by operating activities 5,358,870 4,261,450
Purchase of property, plant and equipment (462,342) (423,202)
Purchase of intangible assets (869,923) (13,177)
Proceeds from sale of intangible assets 569,156 -
Investments in joint ventures (4,479,629) (1,408,576)
Increase in receivables and other financial assets (675,995) -
Net cash used in investing activities (5,918,733) (1,844,955)
Net change of short-term borrowings 11,084,383 311,898
Increase in long-term borrowings 4,012,475 -
Proceeds from issuance of shares and other movements in shareholders‟ equity (183,056) 1,140,105
Expenses relating to shares issued - (92,600)
Dividends paid (1,752,657) -
Net cash provided by financing activities 13,161,144 1,359,403
Net increase in cash and cash equivalents 12,601,281 3,775,898
Cash and cash equivalents at the beginning of the period 4,973,210 1,015,295
Cash and cash equivalents at the end of the period 17,574,491 4,791,193
Additional cash flow disclosures: Interest paid (493,051) (309,534)
Income tax paid 1,976,933 383,511
(The accompanying notes are an integral part of this unaudited interim consolidated financial information).
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-16
1. NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION AS OF
30 SEPTEMBER 2010 AND FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010 AND 2009
1.1 GENERAL INFORMATION
TerniEnergia S.p.A (“TerniEnergia”, the “Company” or the “Parent Company”) is a public limited
company having its registered office in Terni (Italy) at Via Luigi Casale snc and is listed on the Italian
stock exchange “Mercato Telematico Azionario” managed by Borsa Italiana.
The Company and its subsidiaries (together “the Group” or “the TerniEnergia Group”) operate in the
energy business, seeking to adapt the findings of research to the needs of industry, with a close
focus on engineering work and developing industrial projects. TerniEnergia Group is also involved in
the generation of electricity by photovoltaic plants through its interests in joint ventures with EDF EN
Italia S.p.A (a subsidiary of EDF Energies Nouvelles S.A., listed on the Paris Stock Exchange) and
other partners.
1.2 SEGMENT INFORMATION
The Group operates through a single business unit that does business exclusively in Italy in the
photovoltaic sector, in which it markets, designs and installs photovoltaic plants and offers
maintenance services of photovoltaic plants. Accordingly, the management believes that there are no
requirements for segment reporting.
1.3 BASIS OF PREPARATION
As of and for the year ended 31 December 2009 the Company prepared its first consolidated
financial statements due to the acquisition of subsidiaries in the same period. Accordingly, the
unaudited interim consolidated financial information as of and for the nine months ended 30
September 2010 has been prepared on a consolidated basis. For comparative purposes, the income
statement and statement of cash flows are derived from the unaudited interim consolidated financial
information as of and for the nine months ended 30 September 2009 and considered comparable, as
the investments presented in that period have been joint ventures accounted for using the equity
method.
This unaudited interim consolidated financial information has been prepared on a going-concern
basis inasmuch as the Directors have determined that there are no financial, operational or other
indicators that would suggest difficulties involving the Group‟s ability to meet its obligations in the
foreseeable future and particularly in the next 12 months.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-17
The unaudited interim consolidated financial information has been prepared in accordance with the
International Financial Reporting Standards (IFRS) issued by IASB and recognised within the
European Community pursuant to Regulation (EC) No 1602/2002 of the European Parliament and
the Council of 19 July 2002, and, in particular, IAS 34 – Interim Financial Reporting, as well as the
provisions issued in implementation of Article 9 of Legislative Decree No 38/2005. Among the options
presented in IAS 34, the Group has elected to publish a condensed disclosure in the unaudited
interim consolidated financial information. This unaudited interim consolidated financial information
should be read in conjunction with the consolidated financial statements as of and for the year ended
31 December 2009, which were prepared in accordance with IFRS.
The unaudited interim consolidated financial information is presented in euro (€), the currency in
which the transactions of the Group are undertaken. All information presented in the notes is
presented in euro, unless otherwise indicated.
The accounting policies are consistent with those of the annual financial statements for the year
ended 31 December 2009, to which the reader is referred for further information, except as
described below.
The following new standards, amendments to standards and interpretations are mandatory for the
first time for the financial year beginning 1 January 2010 and which did not result in material effects
for the Group:
IFRS 3 – Business Combinations (2008) and IAS 27 – Consolidated and Separate Financial
Statements (2008);
2008 Improvements to IFRS 5 – Non-current Assets Held for Sale and Discontinued
Operations;
2009 Improvements to IAS 10 – Events after the Reporting Period;
Improvements to IFRSs (2009);
IAS 39 – Financial Instruments: Recognition and Measurement – Eligible Hedged Items;
Amendment to IFRS 2 (Share-based Payment);
IFRIC 17 – Distribution of Non-cash Assets to Owners;
New version of IFRS 1 – First-time Adoption of International Financial Reporting Standards,
which eliminates certain transitional provisions deemed no longer necessary and contains
some minor textual amendments;
IFRS 1 – Additional Exemptions for First-time Adopters, which aims to specify the retroactive
application of certain IFRSs so that the entities involved are no longer required to bear
excessive organisational burdens or costs during the transition process.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-18
The Group has elected the „„non-current/current‟‟ presentation for the assets and liabilities in the
balance sheet, the presentation of costs by their nature for the income statement and the indirect
method for the preparation of the statement of cash flows. It should be noted that, in order to meet
the requirements set by Consob Regulation No 15519 of 28 July 2006, note 1.7 presents the
consolidated income statement, consolidated balance sheet and consolidated statement of cash
flows, indicating significant transactions with related parties.
In preparing the unaudited interim consolidated financial information, management has made
judgements, estimates and assumptions that affect the value of assets and liabilities and the
disclosure relating to contingent assets and liabilities as of the reporting date. Those estimates and
judgements are based on historical experience and other factors that are believed to be reasonable
under the circumstances and are adopted where the carrying amount of assets and liabilities may
not readily be determined. Actual results may differ from these estimates given the uncertainty
surrounding the assumptions and conditions upon which the estimates are based. Estimates and
assumptions are periodically evaluated and the effects of all changes are reflected on the income
statement, where such changes affect the current period. If such a change has effects on both the
present and future periods, the change is recognised during the current and future periods.
Actual results could differ, also significantly, from such estimates due to possible changes in the
factors considered when determining those estimates.
This unaudited interim consolidated financial information was approved by the Company‟s Board of
Directors on 29 October 2010.
Changes in the scope of consolidation
As of and for the year ended 31 December 2009, the Company prepared consolidated financial
statements for the first time as a result of the transactions in late 2009, which resulted in the
Company‟s acquisition of controlling interests in certain companies.
The following is a list of the entities included within the scope of consolidation and the percentages of
direct or indirect ownership by the Group as of 30 September 2010:
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-19
Consolidated companies: Company name Registered office % Group ownership
Direct Indirect
Total Group
Shareholding
Capital Energy S.r.l Nardò- Via Don Milani, n.4 100% 100%
Newcoenergy S.r.l Nardò- Via Don Milani, n.4 100% 100%
Capital Solar S.r.l Nardò- Via Don Milani, n.4 100% 100%
Investimenti Infrastrutture S.r.l. Nardò- Via Don Milani, n.4 100% 100%
MeetSolar S.r.l Nardò- Via Don Milani, n.4 100% 100%
Festina S.r.l Terni - Via Garibaldi n.43 100% 100%
Change in scope of consolidation during the nine months ended 30 September 2010:
Energia Basilicata S.r.l. Nardò- Via Don Milani, n.4 100% 100%
Energia Lucana S.r.l. Nardò- Via Don Milani, n.4 100% 100%
Energia NuovaS.r.l. Nardò- Via Don Milani, n.4 100% 100%
Verde Energia S.r.l. Nardò- Via Don Milani, n.4 100% 100%
Rinnova S.r.l. Nardò- Via Don Milani, n.4 100% 100%
Companies accounted for using the equity method:
Company name Registered office % Group ownership
Direct Indirect
Total Group
Shareholding
SolarEnergy S.r.l Terni - Via Luigi Casale Snc 50% 50%
Energia Alternativa S.r.l Terni - Via Luigi Casale Snc 50% 50%
Fotosolare Settima S.r.l Terni - Via Luigi Casale Snc 50% 50%
Energie S.r.l Terni - Via Luigi Casale Snc 50% 50%
Change in scope of consolidation during the nine months ended 30 September 2010:
Solaren S.r.l. Terni - Via Luigi Casale Snc 50% 50%
Collesanto S.r.l. Terni - Via Luigi Casale Snc 50% 50%
Saim Energy 2 S.r.l. Terni - Via Luigi Casale Snc 50% 50%
Infocaciucci S.r.l. Terni - Via Luigi Casale Snc 50% 50%
Girasole S.r.l.. Terni - Via Luigi Casale Snc 50% 50%
D.T. S.r.l Terni - Via Luigi Casale Snc 50% 50%
SolTarenti S.r.l. Narni – Via dello Stabilimento 1 50% 50%
Seasonality of business
The Company‟s business is not of a seasonal nature.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-20
1.4 ASSETS
1.4.1 INTANGIBLE ASSETS
The following tables set forth the changes in the historical cost, the accumulated amortisation and the
net book value of intangible assets.
(in €)
HISTORICAL COST
As of 31 December
2009 Additions Disposals Impairment Reclassification
As of 30 September
2010
Software 245,414 40,915 - - - 286,329
Other 19,140 - - - - 19,140
Land leases - - - - 185,916 185,916
Intangibles in progress 1,081,856 643,091 (569,156) (351,766) 126,443 930,468
Total 1,346,410 684,006 (569,156) (351,766) 312,359 1,421,853
(in €)
ACCUMULATED AMORTISATION
As of 31 December 2009
Amortisation As of 30
September 2010
Software 105,694 38,107 143,801
Other 14,656 2,625 17,281
Total 120,350 40,732 161,082
(in €)
NET BOOK VALUE
As of 31 December 2009 As of 30 September 2010
Historical cost Accumulated amortisation
Net book value Historica
l cost
Accumulated
amortisation
Net book value
Software 245,414 (105,695) 139,719 286,329 (143,801) 142,528
Other 19,140 (14,656) 4,484 19,140 (17,281) 1,859
Land leases - - - 185,916 - 185,916
Intangibles in progress
1,081,856 - 1,081,856 930,468 - 930,468
Total 1,346,410 (120,351) 1,226,059 1,421,853 (161,082) 1,260,771
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-21
Intangibles in progress include the costs of authorisations related to the realisation of photovoltaic
plants already obtained or currently pending and acquired through subsidiaries in 2009 and in the
nine months ended 30 September 2010. The purchase agreements of these subsidiaries require a
purchase price adjustment subject to the finalisation of certain authorisation procedures currently
pending and amounting to a maximum of €7.2 million as of the balance sheet date.
In the nine months ended 30 September 2010 certain costs associated with authorisations and
previously capitalised were impaired by €352 thousand in order to align their carrying amount with
their net realisable value. In addition, administrative authorisations for the realisation of photovoltaic
plants amounting to €569 thousand were sold together with the completed photovoltaic plants in the
nine months ended 30 September 2010.
Investments in land leases in the nine months ended 30 September 2010 are intended for the
realisation of photovoltaic plants.
1.4.2 PROPERTY, PLANT AND EQUIPMENT
The following tables set forth the changes in the historical cost, the accumulated depreciation and
impairment and the net book value of property, plant and equipment.
(in €)
HISTORICAL COST
As of 31 December
2009 Additions Disposals Reclassification
As of 30 September
2010
Land - 358,518 - (90,000) 268,518
Plant and machinery 83,343 - - - 83,343
Equipment 469,886 129,659 - - 599,545
Other assets 292,831 150,426 (44,253) - 399,004
Assets under construction
919,341 - - (126,443) 792,898
Total 1,765,401 638,603 (44,253) (216,443) 2,143,308
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-22
(in €)
ACCUMULATED DEPRECIATION AND IMPAIRMENT
As of 31 December 2009
Additions Disposals As of 30
September 2010
Plant and machinery 24,787 7,501 - 32,288
Equipment 168,282 59,481 - 227,763
Other assets 158,159 46,003 (30,178) 173,984
Total 351,228 112,985 (30,178) 434,035
(in €)
NET BOOK VALUE
As of 31 December 2009 As of 30 September 2010
Historical cost Accumulated depreciation
and impairment Net book value
Historical cost
Accumulated depreciation
and impairment
Net book value
Land - - - 268,518 - 268,518 Plant and machinery 83,343 (24,787) 58,556 83,343 (32,288) 51,055 Equipment 469,886 (168,282) 301,604 599,545 (227,763) 371,782 Other assets 292,831 (158,159) 134,672 399,004 (173,984) 225,020 Assets under construction
919,341 - 919,341 792,898 - 792,898
Total 1,765,401 (351,228) 1,414,173 2,143,308 (434,035) 1,709,273
Investments in land amounted to €359 thousand in the nine months ended 30 September 2010 and
are intended for the realisation of photovoltaic plants. The increase in industrial equipment by €130
thousand referred to the purchase of equipment in order to enhance the capacity for the realisation of
photovoltaic plants.
The vehicle fleet was renewed in the nine months ended 30 September 2010 by an investment of
€150 thousand and a disposal of €14 thousand.
Assets under construction include the capitalised costs incurred in previous years for the
development of the 18 MWp wind farm located in the Municipality of Stroncone amounting to €793
thousand. For further information regarding the contingency related to this wind farm see paragraph
1.5.6 Contingent liabilities.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-23
1.4.3 INVESTMENTS IN JOINT VENTURES
The following table sets forth the investments in joint ventures accounted for using to the equity
method as of 30 September 2010 and 31 December 2009:
As of 30 September As of 31 December Change Change
(in €) 2010 2009 %
Investments in joint ventures
1,439,140 1,284,749 154,391 12%
Total 1,439,140 1,284,749 154,391 12%
The following table sets forth a breakdown of the carrying amount of investments in joint ventures as
of 30 September 2010 and their classification on the balance sheet:
Investments in joint ventures
As of 30 September 2010
Investments in joint ventures
Provisions
Terni Solar Energy S.r.l. (1,589,383) - 1,589,383
Energia Alternativa S.r.l. 1,096,348 1,096,348 -
Energie S.r.l. 229,219 229,219 -
Fotosolare Settima S.r.l. 110,334 110,334 -
Solaren S.r.l. (26,135) - 26,135
Collesanto S.r.l. (107,879) - 107,879
Saim Energy 2 S.r.l. (251,571) - 251,571
Infocaciucci S.r.l. (229,305) - 229,305
Girasole S.r.l.. (662,701) - 662,701
D.T. S.r.l 3,239 3,239 -
SolTarenti S.r.l (180,204) - 180,204
Total (1,608,038) 1,439,140 3,047,178
The joint ventures identify, develop, finance, design and commission the installation of photovoltaic
plants and sell the electricity produced by such plants in Italy.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-24
The following table sets forth a breakdown of the changes in the carrying amount of the joint ventures
accounted for using the equity method in the nine months ended 30 September 2010 (classified as
investments in joint ventures and provisions on the balance sheet):
Investments in joint ventures accounted for using the equity method (in €) 2010
As of 1 January (167,052)
Capital contributions 4,479,629
Elimination of intragroup margin (5,421,203)
Share of income from investments in joint ventures 894,651
Changes in cash flow hedge reserve, net of tax (1,394,063)
As of 30 September (1,608,038)
- of which investments in joint ventures 1,439,140
- of which provisions (3,047,178)
The carrying amounts of the joint ventures are classified for €1,439 thousand as investments in joint
ventures and for €3,047 thousand as provisions. Provisions include the negative carrying amount of
the joint ventures measured using the equity method, primarily due to the elimination of the
intragroup margin from the sale of photovoltaic plants to joint ventures.
The following table sets forth a breakdown of the aggregated net financial indebtedness of the joint
ventures as of 30 September 2010.
As of 30 September 2010
(in €)
Terni SolarEnergy
S.r.l.
Energia Alternativa
S.r.l. Energie
S.r.l. Fotosolare
Settima S.r.l. Collesanto
S.r.l.
Saim Energy 2
S.r.l.
Infocaciucci S.r.l.
Other joint
venture Total
Cash (729) (1,802) (6,457) (1,171) - - - (1,350) (11,509)
Current accounts (3,670,534) (1,683,641) (1,109,243) (16,061) (20,090) (48,247) (3,453) (94,763) (6,646,032)
Liquidity (A) (3,671,263) (1,685,443) (1,115,700) (17,232) (20,090) (48,247) (3,453) (96,113) (6,657,541)
Current bank borrowings
Current financial borrowings
846,528 1,095,746 599,634 - - 130,779 81,815 - 2,754,502
- due to other shareholders
- 13,694,526 13,558,703 27,522,221 - - - 7,291,091 62,066,541
- due to TerniEnergia
- 204,347 - - - - - 3,088 207,435
Current financial indebtedness (B)
846,528 14,994,619 14,158,337 27,522,221 - 130,779 81,815 7,294,179 65,028,478
Non-current borrowings
- mortgages - 14,526,804 - - - - - - 14,526,804
- project financing 21,668,069 - - - - - - - 21,668,069
- sale and leaseback 7,910,924 14,382,926 - 1,998,752 2,929,221 2,970,025 - 30,191,848
- due to other shareholders
3,215,179 - - - 150,891 200,118 246,867 - 3,813,055
- due to TerniEnergia
3,190,147 - - - 151,244 204,852 251,601 - 3,797,844
Derivative instruments 2,287,297 1,158,455 748,374 - - - - - 4,194,126
Non-current financial indebtedness (C)
30,360,692 23,596,183 15,131,300 - 2,300,887 3,334,191 3,468,493 - 78,191,746
Net financial
indebtedness (A+B+C)
27,535,957 36,905,359 28,173,937 27,504,989 2,280,797 3,416,723 3,546,855 7,198,066 136,562,683
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-25
The Company‟s share in the aggregated net financial indebtedness of the joint ventures is in line with
its ownership interest in the joint ventures of 50%.
The joint ventures generally finance investments in photovoltaic plants through shareholders‟ loans
or medium-/ long-term borrowings provided by financial institutions. Non-current bank borrowings
are primarily secured by mortgages of the joint ventures‟ photovoltaic plants, pledges of receivables
and cash and cash equivalents and guarantees given by the shareholders. As of 30 September 2010
the Company has provided sureties for the joint ventures of €11.9 million and entered into lease
succession agreements amounting to €17.1 million (refer to note 1.5.5, Guarantees and
commitments and note 1.7 Related Party Transactions). In addition, the Company has pledged its
quota in Terni Solar Energy Srl to the financial institutions that have provided project financing for
that joint venture.
The financing arrangements provide that the financing institutions may require the prepayment of the
outstanding financial liabilities, upon the occurrence of certain events constituting a change of control
in the joint ventures. Furthermore, some financing arrangements require both the joint ventures and
their quotaholders to meet certain financial conditions.
Certain financial conditions typically include:
the obligation for the joint ventures to maintain certain equity/debt ratios – generally
15%/85%;
the option for the financial institutions to demand prepayment in the event of:
i) a debt service cover ratio generally below 1.05 (the debt service cover ratio is the
ratio of a) the cash flows expected from the financed project in a given year and b)
the interest, including payments associated with derivative instruments, and the
principal repayments due during that same year);
ii) a loan life coverage ratio below 1.10 (i.e., the ratio of the present value of the
project‟s expected cash flows to the outstanding amount of the loan);
The possibility for joint ventures to distribute dividends is: i) contingent upon achieving a debt service
cover ratio generally of no less than 1.15 and a loan life coverage ratio generally of no less than 1.20
and ii) limited to the amount of free cash and cash equivalents, as defined by the contract.
All covenants had been satisfied as of 30 September 2010. It should be noted that the cash flows
necessary for the repayment of the joint ventures‟ financial liabilities derive from the incentives
applied by the GSE S.p.A (Electrical Services Operator) and the sale of the electricity generated by
the photovoltaic plants owned by the joint ventures.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-26
1.4.4 INVENTORIES
The following table sets forth a breakdown of inventories as of 30 September 2010 and as of 31
December 2009:
As of 30 September As of 31 December Change Change
(in €) 2010 2009 %
Raw materials
7,664,808 2,484,093 5,180,715 n.a.
Semi-finished products
214,648 651,128 (436,480) (67%)
Work in progress
17,449,590 1,829,239 15,620,351 n.a.
Total 25,329,046 4,964,460 20,364,586 n.a.
Work in progress include €7,736 thousand relating to costs incurred for eight photovoltaic plants in
the initial stages of realisation (corresponding to a contractual installed capacity of 22.4 MWp) and €
700 thousand relating to costs incurred for one photovoltaic plants (corresponding to a contractual
installed capacity of 1.0 MWp) in the advanced stages of realisation and €9,026 thousand relating to
costs incurred for two photovoltaic plants (corresponding to a contractual installed capacity of 3.8
MWp) completed, for which as of 30 September 2010 not all revenue recognition requirements had
been met.
Based on contractual agreements, some clients have made advance payments (included in other
current liabilities) relating to photovoltaic plants included in work in progress as of 30 September
2010.
As of 30 September 2010, raw materials included €4,040 thousand in solar panels (€448 thousand
as of 31 December 2009), €903 thousand in inverters (€1,019 thousand as of 31 December 2009)
and €2,545 thousand in other materials and consumables (€1,017 thousand as of 31 December
2009). Solar panels included in inventories as of 30 September 2010 and as of 31 December 2009
corresponded to a capacity of 2.8 MWp and 0.2 MWp, respectively.
Semi-finished products included in inventories referred to semi-finished concrete and other supports
for the realisation of photovoltaic plants.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-27
1.4.5 TRADE RECEIVABLES
The following table sets forth a breakdown of the trade receivables as of 30 September 2010 and as
of 31 December 2009:
As of 30 September As of 31 December Change Change
(in €) 2010 2009
%
Receivables from clients
32,740,679 27,991,742 4,748,937 17%
Receivables from joint ventures
16,071,099 2,758,685 13,312,414 n.a.
Receivables from parent company
115,500 0 115,500 n.a.
Receivables from T.E.R.N.I. Research SpA group companies
252,000 252,000 0 0%
Provision for doubtful receivables
(325,037) (325,037) (0) 0%
Total 48,854,241 30,677,390 18,176,851 59%
As of 30 September 2010 trade receivables amounted to €48,854 thousand, of which €37,064
thousand relating to invoices to be issued. The increase in trade receivables is in line with the
Group‟s business expansion and is almost entirely attributable to the increase in receivables from
joint ventures.
Trade receivables are shown net of the provision for doubtful receivables of €325 thousand. The
accruals for doubtful receivables relate to specific trade receivables past due for which management
considered an increased collection risk. No amounts have been charged to or released from the
provision for doubtful receivables in the nine months ended 30 September 2010.
A breakdown of receivables from joint ventures is provided in paragraph 2.7 Related Party
Transactions.
1.4.6 FINANCIAL RECEIVABLES
Non-current financial receivables mainly include the interest-bearing loans granted to Terni
SolarEnergy S.r.l., Collesanto S.r.l., Infocaciucci S.r.l. and Saim Energy 2 S.r.l., which are
automatically renewed from year to year, unless cancelled, and which bear interest at six-month
Euribor plus a spread of 1.9%.
As of 30 September 2010, the financing arrangements amounted to €3,798 and were classified as
non-current financial receivables, due to the fact that their reimbursement is not expected within the
next 12 months.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-28
The following table sets forth a breakdown of current financial receivables as of 30 September 2010
and as of 31 December 2009:
As of 30
September As of 31 December Change Change
(in €) 2010 2009
%
Financial receivables from joint
ventures
204,348 3,326,546 (3,122,198) (93,9)%
Financial receivables from MPS
1,000,000 - 1,000,000 n.a.
Total 1,204,348 3,326,546 (2,122,198) (63,8%)
Current financial receivables include the €204 thousand interest-bearing loan provided on an arm‟s-
length basis to Energia Alternativa S.r.l. in order to meet certain financial needs. Financial
receivables from Monte dei Paschi di Siena S.p.A. refer to the current account pledged as security in
transactions between the Company and that financial institution.
1.5 SHAREHOLDERS’ EQUITY AND LIABILITIES
1.5.1 SHAREHOLDERS’ EQUITY
As of 30 September 2010, the Company‟s subscribed and paid-in share capital amounted to
€12,410,000 divided into 24,820,000 shares without par value. Share capital did not change in the
nine months ended 30 September 2010.
The legal reserve increased by €310 thousand due to the allocation of 5% of net income for the year
ended 31 December 2009 as approved by the Company‟s shareholders‟ meeting of 20 April 2010.
As of 30 September 2010, other reserves included the negative cash-flow hedge reserve of joint
ventures accounted for using the equity method amounting to €1,394 thousand. This reserve reflects
the negative fair value change, net of the tax, of the derivative instruments agreements entered into
by joint ventures to hedge the risk of changes in cash flows associated with the fluctuation of interest
rates on certain non-current borrowings. Those derivative contracts comply with the requirements of
IFRS for the application of hedge-accounting. Accordingly, changes in the fair values of such
derivative instruments are recognised, to the extent of the effective portion of those derivative
instruments, in a specific equity reserve (the “cash-flow hedge reserve”). The change in this reserve
is included in other comprehensive income.
As of 30 September 2010, the Company held 281,101 treasury shares acquired according to the
resolution of the shareholders‟ meeting of 1 September 2009, for a total cost of €483 thousand.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-29
During the nine months ended 30 September 2010, the Company acquired 36,000 new treasury
shares for an amount of €142 thousand. Furthermore, the acquisition of authorisations for the
realisation of photovoltaic plants for €900 thousand was settled through the transfer of 113,550
treasury shares at their market value of €450 thousand as of the payment date, 15 March 2010, and
the transfer of 132,548 treasury shares at their market value of €450 thousand as of the payment
date, 28 July 2010.
1.5.2 LONG-TERM BORROWINGS
Long-term borrowings as of 30 September 2010 amounting to €3,925 thousand referred to the non-
current portion of a long term financing arrangement entered into on 16 July 2010 with Mediocredito
Italiano SpA for a total of €6 million. The agreement provides for six semi-annual principal
repayments between 31 December 2010 and 30 June 2013 and bears interest of three months
Euribor plus a spread of 2.40%, rounded up to the next 0.05%. The current portion of the financing
arrangement amounted to €1,957 thousand as of 30 September 2010. The cash received in
connection with the financing arrangement was net of transaction costs amounting to €129 thousand.
Long-term borrowings as of 30 September 2010 furthermore included the non-current portion of €88
thousand of a financing arrangement entered into in connection with the acquisition with vehicles.
1.5.3 TRADE PAYABLES
The following table sets forth a breakdown of trade payables as of 30 September 2010 and as of 31
December 2009:
As of 30 September As of 31 December Change Change
(in €) 2010 2009
%
Payables to suppliers
52,231,811 22,538,300 29,693,511 132%
Payables to parent
company
98,925 52,355 46,570 89%
Payables to T.E.R.N.I
Research SpA group
companies
43,008 296,400 (253,392) (85%)
Total 52,373,744 22,887,055 29,486,689 129%
Trade payables amounted to €52,374 thousand as of 30 September 2010 and related to the supply
of solar panels, inverters and the purchase of other goods and services. Trade payables included
€3,100 thousand in invoices to be received as of 30 September 2010.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-30
As of 30 September 2010 trade payables for the supply of solar panels and inverters amounted to
€20,736 thousand and €3,915 thousand respectively, whereas the residual balance referred primarily
to materials and services purchased in the nine months ended 30 September 2010 and not due as of
30 September 2010.
Trade payables included €43 thousand in payables to the related party T.E.R.N.I. Tecnologie S.p.A.
in relation to information-technology and technical services and €99 thousand in payables to the
parent company, Terni Research S.p.A. for corporate services.
1.5.4 SHORT-TERM BORROWINGS
The following table sets forth a breakdown of short-term borrowings as of 30 September 2010 and as
of 31 December 2009:
As of 30 September As of 31 December Change Change
(in €) 2010 2009
%
Bank overdrafts
6,479,206 1,047,943 5,431,263 n.a.
Advances on invoices
13,705,661 9,921,816 3,783,845 -
Other borrowings
34,836 - 34,836 n.a.
Current portion of long term
financing arrangement
1,957,000 - 1,957,000 n.a.
Total 22.176.703 10.969.759 9.249.944 84%
Short-term borrowings referred primarily to bank overdrafts and advances on contracts and invoices.
Furthermore, short-term borrowings included borrowings from other lenders for the purchase of
vehicles.
Short-term borrowings are due within 12 months as of 30 September 2010 and their carrying
amounts therefore approximate their fair values.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-31
The following table sets forth the net financial indebtedness as of 30 September 2010 and as of 31 December 2009:
As of 30 September As of 31 December
(in €) 2010 2009
Cash (380,904) (14,518)
Current accounts (17,193,587) (4,958,692)
Liquidity (A) (17,574,491) (4,973,210)
Current financial receivables (B) (1,204,348) (3,326,546)
Short-term borrowings (bank overdrafts) 4,989,120 1,047,943
Short-term borrowings (advances on invoices) 15,195,747 9,921,816
Short-term borrowings (other borrowings) 34,836 -
Short-term borrowings (current portion of long-term financing arrangement) 1,957,000 -
Current financial indebtedness (C) 22,176,703 10,969,759
Long-term borrowings (other borrowings) 87,725 -
Long-term borrowings (long-term financing arrangement) 3,924,750 -
Non -current financial indebtedness (D) 4,012,475 -
Net financial indebtedness (A+B+C+D) 7,410,339 2,670,003
For the net financial indebtedness of joint ventures, refer to note 1.4.3 Investments in Joint Ventures.
As of 30 September 2010, current financial receivables included the current account of €1 million
pledged to Monte Paschi di Siena S.p.A. to secure overdrafts and advances on invoices provided by
that financial institution.
The parent company Terni Research S.p.A. has provided bank guarantees of €14.3 million on the
Company‟s behalf as of the date of approval of this unaudited interim consolidated financial
information
As of the date of approval of this unaudited interim consolidated financial information, the Group had
lines of credit with various financial institutions amounting to €60 million.
The Group entered into a without recourse factoring agreement relating to receivables regarding
transactions initiated in 2010 with a key client. The agreement is for a rolling maximum of €30 million,
and as of 30 September 2010 €1.49 million have been utilised.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-32
1.5.5 GUARANTEES AND COMMITMENTS
Guarantees given
Some clients have entered into sale and leaseback agreements with certain financial institutions in
order to finance the purchase of photovoltaic plants from the Company. Under certain circumstances,
the Company has entered into lease succession agreements with the financial institutions that
require the Company to step-in the original sale and leaseback agreement obligations of the clients
in the event of the clients breaching the financing agreements. The clients on the other side are
required to transfer their legal title of the sale and leaseback agreements together with any
receivable relating to the power production of the photovoltaic plants at the date the lease succession
agreement is executed.
The Directors of the Company believe that the probability of the occurrence of such transfers is
extremely remote, considering that the lease agreements are generally structured in such a way that
the cash flows generated by the photovoltaic plants should cover the reimbursement of the related
financing agreement. According to current business plans of the interested photovoltaic plants and
given the initial upfront payment made by the client under the sale and leaseback agreement, cash
flows provided by the photovoltaic power production should be sufficient to repay the financing
agreement.
As of 30 September 2010 the outstanding amounts under the sale and leaseback agreements for
which the Company has entered into lease succession agreements amounted to €38.0 million, of
which, €17.0 million related to financing arrangements of joint ventures, €3.0 million related to a
financing arrangement of the parent company T.E.R.N.I. Research, €14.3 million related to financing
arrangements of other related parties and €3.6 million related to a third party financing arrangement.
For the same reasons mentioned above the Directors of the Company believe that any execution of
the lease succession agreements would not have a negative effect on the Company‟s results.
The Company has issued sureties to financial institutions for the principal repayments of some long-
term borrowings and sale and leaseback arrangements entered into by its joint ventures Energia
Alternativa and Energie in relation to the acquisition of photovoltaic plants. As of 30 September 2010
the sureties issued by the Company amounted to €11.9 million. For further details see note 2.7
Related Parties.
Investment-grade rated financial institutions have provided guarantees relating to contractual
obligations of the Company with clients in the amount of €5.2 million.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-33
Commitments associated with lease agreements
The Company has signed an operating lease agreement for a property used as a production
workshop which will expire on 31 December 2011 with an annual rent of €15 thousand. The
Company has also signed a lease agreement for property used as a warehouse with an annual rent
of €4 thousand, which has been renewed.
1.5.6 CONTINGENT LIABILITIES
By order No. 2958 issued on 12 February 2010, the Conservation of Architectural and Landscape
Heritage of Umbria and Perugia revoked previously-issued favourable opinions in relation to an
authorisation (No. 6/2008) issued by the municipality of Stroncone in connection with a request by
the Company to build a wind farm plant to be known as “Colle Ventatoio” in Stroncone. In relation to
such authorisation request, on 23 January 2009, the municipality of Stroncone issued to the
Company the Single Authorisation No. 1/2009 required pursuant to article 12 of Legislative Decree
No. 387/2003 and on 11 December 2007 the Umbria Region issued a positive opinion in relation to
environmental impact matters. Following the above-mentioned revocation, on 12 February 2010 the
Ministry for Heritage and Cultural Activities issued a decree, which also revoked an authorisation
(No. 25/2009) issued by the municipality of Stroncone in connection with the Company‟s request to
amend the Single Authorisation No. 1/2009 it had previously been granted.
The Company has submitted two appeals to the Regional Administrative Court of Umbria in respect
of these adverse revocation orders. The Company believes that the revocation orders were issued
without merit and illegally for a number of reasons, both procedural and substantive, which it believes
is supported by a number of previous judicial rulings. The first appeal hearing (postponed from 7 July
2010) will take place on 3 November 2010.
Intangibles in progress include €793 thousand associated with the development of the foregoing wind
farm in the Municipality of Stroncone. The Company‟s Directors believe that the amount of
capitalised expenses as of 30 September 2010 is recoverable. In addition, as of 30 September 2010
no provisions had been recognised in connection with the dispute surrounding the issue of permits
for the construction of the wind farm inasmuch as the Company‟s Directors believe the occurrence of
liabilities to be unlikely. .
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-34
1.6 INCOME STATEMENT
1.6.1 REVENUES AND OTHER INCOME
The following table sets forth a breakdown of revenues and other income for the nine months ended
on 30 September 2010 and 2009:
Nine months ended 30 September
Change
Change % (in €)
2010 2009
Revenues from the installation of photovoltaic plants
62,009,964 33,200,582 28,809,382 87%
Revenues from development activities
743,381 954,268 (210,887) (22%)
Revenues from maintenance activities
583,220 231,000 352,220 n.a.
Other operating income
729,193 182,590 546,603 n.a.
Total
64,065,758 34,568,440 29,497,318 85%
Revenues and other income increased by 85%, essentially attributable to revenues from the
installation of photovoltaic plants, which increased from €33,199 thousand in 2009, related to 24
photovoltaic plants for total installed capacity of 21.9 MWp, to €62,010 thousand in 2010, related to
43 photovoltaic plants for total installed capacity of 40.2 MWp.
1.6.2 CHANGES IN INVENTORIES OF SEMI-FINISHED PRODUCTS AND FINISHED PRODUCTS
The following table sets forth a breakdown of changes in inventories of semi-finished products and
finished products for the nine months ended 30 September 2010 and 2009:
Nine months ended
30 September
Change
Change %
(in €) 2010 2009
Semi-finished products (436,480) (135,839) (572,319) n.a.
Work in progress 15,620,352 396,125 16,016,477 n.a.
Total 15,183,872 260,286 15,444,158 n.a.
The change in semi-finished products and finished products during the first nine months ended 30
September 2010 compared to the corresponding period of 2009 was mainly due to the costs
associated with various large-scale photovoltaic plants included among inventories and not yet
completed as of 30 September 2010. Refer to note 2.4.4 Inventories for further information.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-35
1.6.3 MATERIALS COSTS
The following table sets forth a breakdown of materials costs for the nine months ended 30
September 2010 and 2009:
Nine months ended 30 September
Change
Change
(in €)
2010 2009
%
Purchase of materials
49,147,037 15,799,574 33,347,463 n.a.
Consumables
730,868 883,361 (152,493) (17%)
Fuels and lubricants
88,761 43,197 45,564 105%
Acquisition of authorisations
1,257,156 0 1,257,156 n.a.
Change in inventories of materials and consumables
(5.180.715) 1,539,502 (6,720,217) n.a.
Total 46,043,107 18,265,634 27,777,473 n.a.
The materials costs are reported net of the elimination of intragroup costs with joint ventures
amounting to €8,693 thousand for the nine months ended 30 September 2010 and related to the
portion attributable to the Company‟s materials costs incurred in connection with the sale of
photovoltaic plants to joint ventures.
The increase in costs for the purchase of materials is mainly due to the considerable increase in the
Group‟s business activities. Furthermore, the increase in costs for the acquisition of authorisations for
the realisation of photovoltaic plants from third parties is related to the necessity of supporting the in-
house development of authorisations.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-36
1.6.4 SERVICES COSTS
The following table sets forth a breakdown of services costs for the nine months ended 30
September 2010 and 2009:
Nine months ended
30 September 2010 2009
Change
Change
% (in €)
Subcontractor costs
10,903,028 5.058.153 5.844.875 116%
Professional and consulting fees 2,737,974 1,191,333 1.546.641 130%
Other rents and leases 918,873 339.812 579.061 n.a.
Parent company services 376,690 243.433 133.257 55%
Statutory auditors‟ compensation 40,046 32.760 7.286 22%
Leases of buildings 42,177 50.210 (8.033) (16%)
Transportation 690,470 467.647 222.823 48%
Maintenance, repairs and assistance 98,318 43,359 54.959 127%
Security and insurance 3,391,816 1.003.306 2.388.510 n.a.
Advertising expenses 149,688 52.891 96.797 n.a.
Other services 659,878 484.583 175.295 36%
Total
20,008,958 8,967,487 11,041,471 123%
The services costs are reported net of the elimination of intragroup costs with joint ventures
amounting to €7,166 thousand for the nine months ended 30 September 2010 and related to the
portion attributable to the Company‟s services costs incurred in connection with the sale of
photovoltaic plants to joint ventures.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-37
1.6.5 PERSONNEL COSTS
The following table sets forth a breakdown of personnel costs for the nine months ended 30
September 2010 and 2009:
Nine months ended 30 September
2010 2009
Change
Change %
(in €)
Wages and salaries 1,146,710 1,253,817 (107,107) (9%)
Social security contributions 870,599 330,777 539,822 n.a.
Board of Directors‟ compensation 418,986 273,746 145,240 53%
Employee benefit liability 91,216 77,767 13,449 17%
Temporary workers 659,686 364,823 294,863 81%
Total
3,187,197 2,300,930 886,267 39%
The personnel costs are reported net of the elimination of intragroup costs with joint ventures
amounting to €630 thousand for the nine months ended 30 September 2010 and related to the
portion attributable to the Company‟s personnel costs incurred in connection with the sale of
photovoltaic plants to joint ventures.
1.6.6 OTHER OPERATING COSTS
The following table sets forth a breakdown of other operating costs for the nine months ended 30
September 2010 and 2009:
(in €)
Nine months ended 30 September
2010 2009 Change Change %
Taxes, other than income tax
45,702 11,605 34,097 n.a.
Penalties and sanctions
6,619 1,571 5,048 n.a.
Other costs
205,930 61,842 144,088 n.a.
Total 258,251 75,018 183,233 n.a.
Other operating costs mainly related to taxes other than income tax, penalties and sanctions and
administrative costs associated with the realisation of photovoltaic plants. The increase for the nine
months ended 30 September 2010 compared to the same period in 2009 was mainly due to the
increased business activities.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-38
1.6.7 DEPRECIATION, AMORTISATION AND IMPAIRMENT
The following table sets forth a breakdown of depreciation, amortisation and impairment for the nine
months ended 30 September 2010 and 2009:
Nine months ended 30 September
2010 2009 Change Change %
(in €)
Amortisation of intangible assets
40,732 29,121 11,611 40%
Depreciation of property, plant and equipment
112,985 91,915 21,070 23%
Accruals for doubtful receivables
- 318,492 (318,492) (100%)
Impairment of intangible assets
351,766 - 351,766 n.a.
Total 505,483 439,528 65,955 15%
The impairment of intangible assets related to pending authorisations for the realisation of
photovoltaic plants, previously captialised.
1.6.8 FINANCIAL INCOME AND EXPENSE
The following table sets forth a breakdown of financial income and expense for the nine months
ended 30 September 2010 and 2009:
Nine months ended
30 September 2010 2009
Change Change % (in €)
Interest expense on borrowings (464,705) (262,190) (202,515) 77%
Bank fees
(240,283) (101,630) (138,653) 136%
Other financial expense
(8,656) (71,266) 62,610 (88%)
Total financial expense
(713,644) (435,085) (278,558) 64%
Interest income on current accounts 12,580 7,285 5,295 73%
Interest income from joint venture
74,853
74,853 n.a.
Total financial income
87,433 7,285 80,148 n.a.
Total financial income and expense (626,211) (427,800) (198,410) 46%
The increase in short-term borrowings in order to finance increased working capital requirements in
connection with the increased business activities, increased the financial expense and related bank
fees, partially offset by interest income on current accounts and financial receivables due from joint
ventures.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-39
1.6.9 SHARE OF INCOME/(LOSS) FROM INVESTMENTS IN JOINT VENTURES
The following table sets forth a breakdown of share of income /(loss) from investments in joint
ventures for the nine months ended 30 September 2010 and 2009:
(in €)
Nine months ended
30 September Change Change
2010 2009 %
Terni Solar Energy S.r.l. 154,459 338,184 (183,725) (54%)
Energia Alternativa S.r.l. 459,327 (284,535) 743,862 n.a,
Energie S.r.l. 246,318 (53,867) 300,185 n.a.
Fotosolare Settima S.r.l. (13,906) (109,608) 95,702 (87%)
Solaren S.r.l. (1,611) - (1,611) n.a.
Collesanto S.r.l. (1,728) - (1,728) n.a.
Saim Energy 2 S.r.l. 23,780 - 23,780 n.a.
Infocaciucci S.r.l. 31,204 - 31,204 n.a.
Girasole S.r.l.. (1,431) - (1,431) n.a.
D.T. S.r.l (1,761) - (1,761) n.a.
Total 894.651 (109.826) 1.004.477 n.a.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-40
1.6.10 INCOME TAX
The following table sets forth a breakdown of income tax for the nine months ended 30 September
2010 and 2009:
Nine months ended 30 September
2010 2009
Change Change %
(in €)
Current income tax
4,787,420 2,174,092 2,613,328 120%
Deferred tax assets
(1,565,127) (657,616) (907,511) 138%
Deferred tax liabilities
(262,156) - (262,156) n.a.
Total
2,960,137 1,516,476 1,443,662 n.a.
1.7 RELATED PARTY TRANSACTIONS
The balance sheet, income statement and statement of cash flows highlight transactions with related
parties in accordance with CONSOB resolution no. 15519 of 27 July 2006.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-41
UNAUDITED INTERIM CONSOLIDATED BALANCE SHEET AS OF 30 SEPTEMBER 2010 AND
AS OF 31 DECEMBER 2009 IN ACCORDANCE WITH CONSOB n. 15519 AS OF 27/7/06
As of 30 September of which related As of 31 December of which related
(in €) 2010
parties
2009
parties
ASSETS
Intangible assets 1,260,771 - 1,226,059 60,000 Property, plant and equipment 1,709,273 - 1,414,173 -
Investments in joint ventures 1,439,140 - 1,284,749 -
Deferred tax assets 3,247,184 - 1,682,056 - Non-current financial receivables 3,798,193 3,798,192 - -
Total non-current assets 11,454,561 3,798,192 5,607,037 60,000
Inventories 25,329,046 - 4,964,460 -
Trade receivables 48,854,241 22,840,547 30,677,390 12,524,345
Other current assets 5,496,923 3,402 2,676,037 -
Current financial receivables 1,204,348 204,348 3,326,546 3,326,546
Cash and cash equivalents 17,574,491 - 4,973,210 -
Total current assets 98,459,049 23,048,297 46,617,643 15,850,891
Assets held for sale 90,000 - - -
TOTAL ASSETS 110,003,610 26,846,489 52,224,680 15,910,891
LIABILITIES AND SHAREHOLDERS’ EQUITY
Share capital 12,410,000 - 12,410,000 -
Reserves (2,245,668) - (2,852,964) -
Retained earnings 6,554,937 - 3,725,049 -
Total shareholders’ equity 16,719,269 - 13,282,085 -
Provisions 3,047,178 - 1,451,801 -
Employee benefit liability 228,782 - 162,676 -
Deferred tax liabilities 232,392 - 339,703 -
Long-term borrowings 4,012,475 - - -
Total non-current liabilities 7,520,827 - 1,954,180 -
Trade payables 52,373,744 43,008 22,887,055 348,755
Short-term borrowings 22,176,703 - 10,969,759 -
Tax payables 4,916,472 - 2,103,805 -
Other current liabilities 6,296,595 - 1,027,796 -
Total current liabilities 85,763,514 43,008 36,988,415 348,755
TOTAL LIABILITIES 93,284,341 43,008 38,942,595 348,755
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
110,003,610 43,008 52,224,680 348,755
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-42
UNAUDITED INTERIM CONSOLIDATED INCOME STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2010 AND 2009 IN ACCORDANCE WITH CONSOB n. 15519 AS OF 27/07/06
Nine months
ended 30 September
2010 of which related
Nine months ended
30 September 2009
of which related
(in €)
parties
parties
Revenues 63,336,565 22,011,618 34,385,850 4,521,183
Other income 729,193 436,223 182,590 -
Changes in inventories of semi-finished and finished products
15,183,872 - 260,286 -
Materials costs (46,043,107) (73,300) (18,265,634) -
Services costs (20,008,958) (762,805) (8,967,487) (163,233)
Personnel costs (3,187,197) (384,018) (2,300,930) (175,976)
Other operating costs (258,251) - (75,018) -
Depreciation, amortisation and impairment (505,483) - (439,528) -
Operating income 9,246,634 4,780,127
Financial income 87,433 73,944 7,285 -
Financial expense (713,644) (46,425) (435,085) -
Share of income/(loss) from investments in joint ventures
894,651 - (109,826) -
Net income before income tax 9,515,074 4,242,501
Income tax (2,960,137) - (1,516,476) -
Net income 6,554,937 2,726,025
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-43
Related party transactions
The following is a list of the Group‟s related parties.
Entity name Status
Skill & Trust Holding S.r.l. Parent company
T.E.R.N.I. Research S.p.A. Parent company
Terni Solar Energy S.r.l. Joint venture
Energia Alternativa S.r.l. Joint venture
Energie S.r.l. Joint venture
Fotosolare Settima S.r.l. Joint venture Solaren S.r.l. Joint venture Collesanto S.r.l. Joint venture Saim Energy 2 S.r.l. Joint venture Infocaciucci S.r.l. Joint venture Girasole S.r.l.. Joint venture D.T. S.r.l Joint venture
Sol Tarenti S.r.l. Carovigno S.r.l. Company managed or owned by related party
T.E.R.N.I.Tecnologie S.p.A. Company managed or owned by related party
Power S.r.l. Company managed or owned by related party
Speed S.r.l. Company managed or owned by related party
Lizzanello S.r.l. Company managed or owned by related party
Boschetto Srl Company managed or owned by related party
Gala Srl Company managed or owned by related party
Camene Srl Company managed or owned by related party
Royal Club Snc di Lucia e Francesco Urbani Company managed or owned by related party
Studio Ranalli & Associati Professional firm managed or owned by related party
Stefano Neri Director
Eugenio Montagna Baldelli Director
Fabrizio Venturi Director
Paolo Ricci Director
Domenico De Marinis Director
Paolo Ottone Migliavacca Director
Davide Galotti Director
Francesca Ricci Directors‟ daughter
Since its incorporation, the Company has been controlled by T.E.R.N.I. Research S.p.A.
Transactions between the Group and its related parties mainly related to:
trade transactions related to the realisation of photovoltaic plants and maintenance services
rendered to joint ventures and companies managed or owned by related parties;
financial transactions involving loans issued to joint ventures (see also note 1.4.6 Financial
Receivables);
lease succession agreements in connection with photovoltaic plants that become executable in
the event of the breach of contractual conditions by certain companies managed or owned by
related parties, joint ventures and the parent company, Terni Research S.p.A. (see also note
1.5.5 Guarantees and commitments);
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-44
sureties given to financial institutions in connection with medium-/long-term loans entered into
by joint ventures (see also note 1.5.5 Guarantees and commitments);
services, including technical, organisational, building lease, legal and administrative services,
provided by the parent company Terni Research S.p.A.;
technical services provided by T.E.R.N.I. Tecnologie S.p.A.;
professional services provided by Studio Ranalli & Associati, Director Paolo Ricci and his
daughter Francesca Ricci.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-45
The following table sets forth a breakdown of the trade transactions with related parties and their
impact on the balance sheet as of 30 September 2010 and on the income statement for the nine
months ended 30 September 2010.
Trade transactions
Total 22.840.547 232.665 73.300 762.805 384.018 22.111.618 436.223
Relevant line item 48.854.241 58.670.339 46.043.107 20.008.958 3.187.197 63.336.565 729.193
% of relevant line item 46,80% 0,40% 0,20% 3,80% 12,00% 34,90% 59,80%
As of 30 September 2010
Nine months ended 30 September 2010
(in €)
Trade
Expense Income
Entity Name Receivables Payables Goods Services Personnel Goods Services
Parent company
T.E.R.N.I. Research S.p.A. 115,500 98,508 - 376,690 - - -
Joint venture
Terni Solar Energy S.r.l. 44,000 - - - - - 89,388
Energia Alternativa S.r.l. 713,705 - - - - 2,519,522
204,447
Energie S.r.l. 3,881,508 - - - - 4,280,314
140,638
Fotosolare settima S.r.l. 3,009,608 - - - - 3,664,842
1,500
Infocaciucci S.r.l. - - - - - 1,641,668
-
Saim Energy 2 S.r.l. 59,255 - - - - 1,645,116
-
Collesanto S.r.l. 3,592,120 - - - - 2,956,676
-
Solaren S.r.l. 2,066,718 - - - - 1,015,908
250
Girasole S.r.l. 2,025,164 - - - - 3,018,028
-
Sol tarenti S.r.l. 2,739,087 - - - - 1,369,544
-
D.T. S.r.l. T.E.R.N.I.Research SpA group
companies
Terni Green S.p.A. - 43,008 73,300 102,700 - - -
Power S.r.l. 72,000 - - - - - -
Speed S.r.l. 180,000 - - - - - -
Other related parties
Francesca Ricci - - - 77,316 - - -
Lizzanello S.r.l. 14,400 - - - - - -
Carovigno S.r.l. 4,344,384 - - - - - -
Studio Ranalli & Associati 18,000 - - 3,140 - - -
Key management - 91,149 - 202,959 384,018 - -
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-46
The following table sets forth a breakdown of the financial transactions with related parties and their
impact on the balance sheet as of 30 September 2010 and on the income statement for the nine
months ended 30 September 2010.
Financial transactions
(in €) As of 30 September 2010 Nine months ended 30 September 2010
Entity Name Receivables Guarantee received
Sureties provided
Lease Succession Expense Income
Parent company T.E.R.N.I. Research S.p.A. - 14,340,000 - 3,000,450 46,425 -
Joint venture
Terni Solar Energy S.r.l. 3,190,147 - - - - 69,009
Energia Alternativa S.r.l. 204,347 - 5,408,100 8,298,939 - 4,348
Energie S.r.l. - - 6,500,000 - - -
Saim Energy 2 S.r.l. 204,852 - - 3,060,000 - 175
Infocaciucci S.r.l. 251,601 - - 3,051,840 - 425
Collesanto S.r.l. 151,244 - - 2,688,000 - 896
Related entities
Boschetto S.r.l. - - - 3,508,930 - -
Gala S.r.l. - - - 3,570,580 - -
Camene S.r.l. - - - 3,656,841 - -
Royal Club Snc di Lucia e Francesco
Urbani
- - - 3,613,122 - -
Total
4,002,191 14,340,000 11,908,100 34,448,702 46,425 74,853
Relevant line item
5,002,541 713,644 87,433
% of relevant line item 80.00% 6.50% 85.60%
The following is a brief description on transactions between the Company and its related parties:
Trade transactions
Trade transactions primarily referred to:
a master agreement for the realisation of photovoltaic plants with a capacity of no less than
500 kWp between the Company and the joint ventures. Revenues with joint ventures primarily
related to this agreement and amounted to €22,012 thousand for the nine months ended 30
September 2010; trade receivables for invoices issued and to be issued amounted to €18,131
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-47
thousand as of 30 September 2010 and referred to the realisation of large-scale photovoltaic
plants;
a contract for the realisation of a photovoltaic plant signed with Carovigno S.r.l. in 2009. The
trade receivables deriving from that contract amounted to €4,344 thousand as of 30
September 2010;
a master agreement between the Company and the parent company, Terni Research S.p.A.,
governing administrative and logistics services, including the lease of the buildings located in
Terni at Via Luigi Casale snc, in Milan on Via Borgogna and in Lecce, the management of
legal and corporate affairs and the management of human resources and information
technology systems;
the purchase of software and information technology services from TerniTecnologie S.p.A.
Financial transactions
Current and non-current financial receivables and financial income for the nine months ended 30
September 2010 referred to interest-bearing financing arrangements with joint ventures.
It should be noted that as of 30 September 2010 the holding company, Terni Research S.p.A.,
provided financial institutions with guarantees in connection with the Company‟s credit facilities in the
amount of €14.3 million. Commissions for the guarantees issued by Terni Research S.p.A.
amounted to €46 thousand for the nine months ended 30 September 2010 and are included in
financial expense.
The Company has provided sureties in connection with medium-/long-term bank loans and sale and
leaseback agreements in the amount of €11.9 million to Energia Alternativa S.r.l. and to Energie S.r.l.
Some clients have financed the acquisition of photovoltaic plants through sale and leaseback
agreements. Under certain circumstances, the Company has entered into lease succession
agreements with the lenders that require the Company to step-in the original sale and leaseback
agreement obligations of the clients in the event of and contingent upon the clients breaching the
financing agreements. The outstanding amount under such lease agreements amounted to €38,0
million as of 30 September 2010, out of which €34,4 million were due to related parties and €3.6
million to a third party client.
Key management compensation
Transactions between the Company and key management primarily referred to technical and
administrative consulting activities. The key management includes Company‟s Board of Directors
members.
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-48
1.8 SIGNIFICANT NON-RECURRING EVENTS AND OPERATIONS
In accordance with Consob Notice No DEM/6064293 of 28.7.2006, Corporate disclosures of listed
issuers and issuers whose financial instruments are widely held by the public, as defined in Article
116 of the Consolidated Finance Act – Requirements under Article 114, paragraph 5, of Legislative
Decree No 58/98, we report that:
there were no transactions or events the occurrence of which may be considered non-
recurring or transactions or events that do not recur frequently in the usual course of
business; and
no atypical and/or unusual transactions were undertaken.
1.9 OTHER INFORMATION
Dividends
On 29 April 2010, the shareholders‟ meeting of the Company approved the financial statements as of
and for the year ended 31 December 2009 and the distribution of a dividend of €0.1 per ordinary
share, for a total amount of €2,482 thousand. The dividend was made available on 13 May 2010. A
total of €1,753 thousand had been paid to shareholders as of the date of approval of this unaudited
interim consolidated financial information.
Earnings per share
The basic earnings per share attributable to the holders of the Company‟s ordinary shares are
calculated on the basis of the average number of shares during the period.
Nine months ended 30 September 2010 2009
(in €)
Net income attributable to the equity holders of the Group
6,554,937 2,726,025
Average number of shares for the period
24,418,557 24,551,529
Earnings per share - basic and diluted 0.27 0.11
There are no differences between basic and diluted earnings per share inasmuch as there are no
classes of shares with dilutive effects.
Subsequent events
On 26 October 2010 TerniEnergia received from Consob – with note no.10087499 – the
authorisation to public its prospectus relating to the admission of trading on the MTA of the ordinary
TERNIENERGIA S.p.A.
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL INFORMATION – (Continued)
As of 30 September 2010 and for the nine months ended 30 September 2010 and 2009
F-49
shares of TerniEnergia; those ordinary shares are issued in form of a rights issue in connection with
the capital increase of a maximum of €60 million, excluding option rights in accordance with Article
2441, paragraph 5 of the Italian Civil code, which has been approved by the extraordinary
shareholders‟ meeting on 6 August 2010.
F-50
Certification of the Unaudited Interim Consolidated Financial Information as of and for the
nine months ended 30 September 2010 of the manager in charge of the preparation of the
accounting documents
Dott. Paolo Allegretti, the manager in charge of the preparation of the accounting documents of
TerniEnergia SpA, certifies in accordance with art. 154-bis, paragraph 2 of the Legislative Decree 58
of 24 Feburary 1998 that the Unaudited Interim Consolidated Financial Information as of and for the
nine months ended 30 September 2010 correspond to the entries in the books and accounting
records.