CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2013 OF TERNIENERGIA GROUP

Transcription

1 CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2013 OF TERNIENERGIA GROUP 1

2 CORPORATE DETAILS TERNIENERGIA S.P.A. Registered office: Strada dello Stabilimento, Narni (TR) Authorised, issued and paid-up share capital: Euro 50,529,680 Terni Register of Companies: no BRANCHES AND OFFICES Narni Strada dello stabilimento, 1 Milano Via Borgogna, 7 Lecce Via Costadura, 3 Atene 52, AKADIMIAS STREET Cape Town - Boulevard office Park, 2nd floor, Block D, Searle. District of Woodstock Varsavia - Sw. Krolewska 16, Bucarest - Str. Popa Petre 5 BOARD OF DIRECTORS CHAIRMAN AND CEO Stefano Neri DIRECTORS Francesca Ricci Fabrizio Venturi Monica Federici Paolo Ottone Migliavacca Mario Marco Molteni Domenico De Marinis BOARD OF STATUTORY AUDITORS Ernesto Santaniello (Presidente) Vittorio Pellegrini Simonetta Magni INDEPENDENT AUDITORS PricewaterhouseCoopers S.p.A. 2

3 INDEX 1. REPORT ON OPERATIONS MACROECONOMIC SCENARIO PERFORMANCE OF RELEVANT MARKETS THE GROUP S BUSINESS AND MISSION THE GROUP S STRUCTURE MAIN EVENTS DURING THE FINANCIAL YEAR ENDED DECEMBER, PERFORMANCE OF OPERATIONS STATEMENT OF RECONCILIATION OF THE PARENT COMPANY S OPERATING RESULT AND EQUITY WITH THE CONSOLIDATED RESULTS AS AT DECEMBER, INVESTMENTS HUMAN RESOURCES ENVIRONMENTAL POLICY RESEARCH AND DEVELOPMENT ACTIVITIES RISK FACTORS RELATED TO THE SECTOR OF REFERENCE RELATION WITH RELATED PARTIES INFORMATION REQUIRED BY ART. 123 BIS OF TUF OTHER INFORMATION SIGNIFICANT EVENTS AFTER YEAR-END REPORT ON CORPORATE GOVERNANCE BUSINESS OUTLOOK FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME STATEMENT OF CHANGES IN CONSOLIDATED EQUITY CONSOLIDATED STATEMENTS OF CASH FLOW EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, GENERAL INFORMATION

4 3.2 SEGMENT REPORTING FORM, CONTENTS AND ACCOUNTING POLICIES COMMENTS ON THE MAIN BALANCE SHEET ITEMS: ASSETS INTANGIBLE ASSETS TANGIBLE ASSETS EQUITY INVESTMENTS DEFERRED TAX ASSETS NON CURRENT LOANS INVENTORY TRADE RECEIVABLES OTHER CURRENT ASSETS FINANCIAL RECEIVABLES CASH COMMENTS ON THE MAIN BALANCE SHEET ITEMS: LIABILITIES EQUITY PROVISION FOR EMPLOYEE BENEFITS DEFERRED TAX LIABILITIES FINANCIAL LIABILITIES NON-CURRENT OTHER NON-CURRENT LIABILITIES DERIVATIVES TRADE PAYABLES DEBTS AND OTHER LIABILITIES DEBT TO INCOME TAX OTHER CURRENT LIABILITIES COMMITMENTS AND GUARANTEES AND CONTINGENCIES COMMENTS ON THE MAIN INCOME STATEMENTS ITEMS REVENUES CHANGE IN INVENTORIES OF SEMI-FINISHED PRODUCTS COST OF RAW MATERIALS, SUPPLIES AND PRODUCTS COST OF SERVICES PERSONNEL COSTS OTHER OPERATING EXPENSES DEPRECIATION AND IMPAIRMENT PROVISIONS FINANCIAL INCOME AND EXPENSES SHARE OF INCOME OF JOINT VENTURES TAXES RELATION WITH RELATED PARTIES RISKS MANAGEMENT ATYPICAL AND/OR UNUSUAL TRANSACTIONS OTHER INFORMATION CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 154-BIS OF LEGISLATIVE DECREE 58/98 AND ARTICLE 81-TER OF CONSOB REGULATION NO /99, AND FOLLOWING AMENDMENTS AND INTEGRATIONS

5 1. REPORT ON OPERATIONS 1.1 MACROECONOMIC SCENARIO The growth in global economic activity and international trade continues at a moderate pace. In the United States there are signs of a strengthening economy, which also contributes to a lower uncertainty about fiscal policy. The growth in emerging economies continues ; burden on it but the downside risks associated with global financial conditions less expansive. In the euro has begun a modest recovery with low inflation, but remains fragile. The weakness in economic activity is reflected in a very moderate dynamics of consumer prices, which translates into higher interest rates in real terms and in a slower reduction in private and public. The Governing Council of the ECB has cut official interest rates in November and has firmly reiterated that remain at levels equal to or lower than current for an extended period of time. The Council also reiterated that if necessary will use all the tools at its disposal to maintain an accommodative stance of monetary policy. The conditions in European and Italian financial markets have improved further, and contributed to the prospects for recovery, the accommodative monetary policy, progress in the governance of the euro area and Italian internal stabilization. Interest rates on long-term Italian government bonds have fallen, the differential with respect to the ten-year Bund yield fell to around 200 basis points. He returned the interest of non-residents for the Italian financial assets. In Italy, GDP, supported by exports and changes in stocks, discontinued its fall in the third quarter of Based on the surveys and the trend of industrial production, GDP growth would have been barely positive in the fourth quarter. The indices of business confidence improved in December, are still, standing on the levels seen in early The economic situation is still very different depending on the category and geographical location. Improve the prospects of industrial enterprises of greater size and those more oriented towards foreign markets, offset by an unfavorable picture even for smaller companies, for those in the service sector and to the south. Despite early signs of stabilization in employment and increase in hours worked, labor market conditions remain difficult. The unemployment rate, which usually lags behind the evolution of the economic cycle, reached 12.3 % in the third quarter and would be further increased to 12.6 % in October- November. 5

6 1.2 PERFORMANCE OF RELEVANT MARKETS The photovoltaic market is recovering: the overall gross margins have grown from 0 % to 6 % by the end of 2013 (source: IHS " Integrated Solar PV Market Tracker "). After the free fall in profit margins in 2012, there has been a breath of fresh air to the manufacturer, bent by the global crisis and contention between China and Europe on the prices of the modules. The year 2013 has seen a slight decline in module prices over the year, from $ 0.74 per watt to 0.71, and the price of polycrystalline silicon around $ 20 about The market for solar modules has reached a turning point, finally returning to the path of growth, not only in terms of production, but also in sales and profits. Despite a slight drop in orders, revenues and use of production capacity, the market recovery began at the end of 2012 marked the end of a long recession. The " sour note " comes from Chinese manufacturers : some of the most reduced their production during the year because of concerns about the anti-dumping measures, which in August could be strengthened. In contrast, Japanese manufacturers have increased their production significantly during In the area EPCs, the non-european PV flies, with China, Japan and the United States in the head. In particular, in 2013, China has become the world's largest market for new installed capacity by 8.6 GW, followed by Japan ( 6.3 GW) and with the United States (4.2 GW) total. Compared to the crisis of recent years, the photovoltaic industry closed 2013 with positive numbers : according to the data, the installed capacity globally was closed at about 33.7 GW ( +10%). Bad news for Italy, which slows down : he loses his third place in 2012 and stopped in 2013 to 1.26 GW of installed capacity, with a turnover halved compared to the previous year, amounting to euro 6,2 billion. According to the best forecast for the future, the countries of Eastern Europe as possible scenarios on which to focus over the next few years, thanks to government incentives put in place. In the United States, however, the solar industry grew 41 % during the course of 2013, reaching 4.78 GW share. Average prices fell by another 15% in 2013, totaling a minimum 2,59 dollars per watt at the end of the year. In other terms a reduction of 37 % in just two years. 1.3 THE GROUP S BUSINESS AND MISSION The consequences of developments in the sector have been considered by TerniEnergia in the process of consolidation of the strategic repositioning that had been developed during the previous year. In this perspective, the company has chosen to continue its path of growth by focusing on three lines of development : Direct Investment generation for grid connection ; diversification of country risk, aiming at the development of the countries with strong demand growth (eg South Africa) and replacement demand (Europe) ; 6

7 Direct Investment in generation and energy efficiency finalized to vertical integration with private counterparts and consequent diversification of counterparty risk ; Investments in Environmental and use of marginal resources. The scope of company s activitiy is to be an industrial operator with expertise in the areas in which energy efficiency and the availability of energy are strategic, creating applications for the energy industries, integrating generation technologies and expertise for energy efficiency. TerniEnergia acts as operator in this strategy ready for vertical applications, thanks to the actions envisaged in the business plan "Discover the new green Era" presented to the London Stock Exchange October 1, In particular, TerniEnergia aims to recover a prominent role among the major international player in its sector thanks to the new business model and the integration of the financial structure. The company intends to strengthen the process of internationalization, with a strategic focus on the systems of industrial size and consolidation of partnerships and synergies with industrial and financial companies characterized by high credit rating. In this sense, TerniEnergia maintain ownership ( full or in JV ) of most of the assets, in order to ensure stable and recurring revenues in the long period. The new investments will be concentrated in energy efficiency that is estimated to be growing strongly, with significant margins and a high rate of technological innovation. The internationalization process has already begun : Ternienergia has started work on the construction of a large center in South Africa and has signed an agreement for the construction of large solar power plants ever in South Africa for a total of 150 MWp. The size of individual projects will continue to grow and give priority to partners and customers of high standing to permit new ways of capitals founding. The Group will also be able to develop the packaging for financial diversification effective than mature markets such as real estate. TerniEnergia maximizes the development of projects working with great expertise in all stages : from project development and EPC to build, operate and transfer (BOT), to the task of power generation and the O & M. 7

8 1.4 THE GROUP S STRUCTURE 100% NEWCOENERGY S.R.L. CAPITAL SOLAR S.R.L. INVESTIMENTI INFRASTRUTTURE S.R.L. CAPITAL ENERGY S.R.L. ENERGIA NUOVA S.R.L. MEET SOLAR S.R.L. DT S.R.L. RINNOVA S.R.L. ENERGIA BASILICATA S.R.L. ENERGIA LUCANA S.R.L. VERDE ENERGIA S.R.L. FESTINA S.R.L. SOCIETA' AGRICOLA PADRIA SRL 50% 70% SAIM ENERGY 2 S.R.L. GIRASOLE S.R.L. SOL TARENTI S.R.L. GUGLIONESI S.R.L. GREEN ASM S.R.L. LUCOS ALTERNATIVE ENERGIES S.P.A. SOC AGR FOTOSOLARA CHEREMULE S.R.L. 70% SOC AGR FOTOSOLARA BONNANARA S.R.L. LYTENERGY S.R.L. SOC AGR FOTOSOLARA ORISTANO S.R.L. SOC AGR FOTOSOLARA ITTIREDDU S.R.L. 80% TEVASA L.t.d. TECI S.R.L. MEET GREEN ITALIA S.R.L. IGREEN PATROL S.R.L. TERNIENERGIA POLSKA Sp.z.o.o. TERNIENERGIA SOLAR SOUTH AFRICA L.t.d. TERNIENERGIA S.p.A. HELLAS M.E.P.E. TERNIENERGIAROMANIA S.R.L. T.E.R.N.I. SOLARENERGY S.R.L. ENERGIA ALTERNATIVA S.R.L. SOLTER S.R.L. ALCHIMIA ENERGY 3 69,5% TERNIENERGIA PROJECT L.t.d. INFOCACIUCCI S.R.L. 8

9 1.5 MAIN EVENTS DURING THE FINANCIAL YEAR ENDED DECEMBER, The Group in 2013 has pursued a strategy of consolidation of the companies held in the Joint Venture, through the following steps: acquisition of 50 % stake in the company Energia Alternativaand TerniSolar Energy respectively own 12 plantsfor an aggregate power of 13.9 MWp and 7 plants of an aggregate power of 5.7 MWp ; acquisition of 19.5 % of the company Infocaciucci owner of a photovoltaic plant of approximately 1 MWp ; acquisition of 100 % of the company Alchimia Energy 3, owner of a PV plant of approximately 0.85 MWp ; acquisition control in society Solter Srl, which owns 4 PV of the total power of 3.76 MWp, as a result of the partial spin-off of the company Fotosolare Settima (demerged company ), of which Solter has been the beneficiary. These transactions resulted in a significant increase in the assets owned by the Group, and an increasing incidence of revenues from the production and sale of electricity to the results recorded by the Group for the year With regard to the activities of the EPC, the Group during the year, has completed the construction of a photovoltaic plant of 21.0 MWp in Italy on behalf of one of the leading European companies operating in the renewable energy development, supply structures for the realization of photovoltaic systems in Romani on behalf of a leading Italian utility, as well as six PV plants in Romania with a total capacity of 5.5 MWp. As for the other markets in which the Group operates, works have been concluded by the subsidiary TerniEnergia Hellas in Greece, and is in an advanced state of realization, through its subsidiary Tevasa Ltd, a photovoltaic system in South Africa capacity of approximately 9.5 MWp, commissioned by a leading Italian utility. Since its inception in 2006, the company has realized a total of 270 photovoltaic plants with an aggregate capacity of approximately MW. During 2013 were completed 3 energy efficiency measures for about 7,200 thousand points of light. In addition, it has been awarded a contract for an industrial intervention of more than 1,100 thousand points of light. 9

10 With regard to the environmental sector, increased significantly the contribution of these activities to the Group's results. In particular, revenues attributable to this sector amounted as at December 31, 2013 to Euro 6,113 thousand ( Euro 831 thousand at December 31, this activity was performed by the Group following the merger with TerniGreen SpA, which took place in the month of September 2012 ), and are mainly due to the management of energy recovery from biomass and waste ( MSWOF - Municipal Solid Waste Organic Fraction) in Nera Montoro ( biodigester managed by the subsidiary GreenAsm, that, in this year, has treated over 28,000 thousand tn of waste with a production of about 5 million kwh of energy), the plant for the recovery of PFU ( Life Tyres ) in Nera Montoro ( in 2013 they have been treated over 12,000 thousand tn of PFU ), and the water treatment plants in Nera Montoro. Finally, during the year has been almost completed the development of Borgosesia investment (pyrogasification powered virgin wood), which operation is scheduled for the first half of The Group exercised the activity of electricity production, through its owns 34 photovoltaic plants with a total capacity of 34.3 MW, and holds in joint ventures 50% respectively 10 additional plants with a total capacity of 8.1 MWp. 10

11 The main events that occurred during the financial year include: ESTABLISHED IN BUCHAREST (ROMANIA) NEW BRANCH OF THE COMPANY On February 1, 2013 TerniEnergia completed the set up of TerniEnergia Romania Srl in Bucharest, 100% owned. The Romanian subsidiary of TerniEnergia S.p.A. will work with the extreme efficiency to conduct the considerable programs for the growth and development of TerniEnergia on Eastern European markets. The signing of this important framework agreement represented an important confirmation of internationalization strategies on the photovoltaic EPC business of the Company. Specifically, the transactions to develop projects, both in energy industry through the creation of photovoltaic plants, and environmental industry through the possible implementation of the circular economy activities, are still under development phase. ACQUISITION OF A PHOTOVOLTAIC PLAN IN UMBRIA FOR AN AGGREGATE INSTALLED POWER OF APPROXIMATELY 0,8MW On march 1, 2013 TerniEnergia completed the acquisition of the total quotas of Alchimia Energy 3 Srl.This acquisition was aimed at developing a new photovoltaic greenhouse plant of industrial size in the region of Umbria, for an aggregate installed power of approximately 0,8 MWp, already in operation at tariffs of the second "Energy Account. The cost of operation amounted to Euro 2.16 million (Euro 0.07 million related to the acquisition of the Capital Share and Euro 2.09 million to secure repayment of the shareholders loan) fully funded in cash, Euro 1,052 thousand of which paid in advance. The remaining value will be paid in subsequent tranches of equal value, the last of which by the month of January THE SHAREHOLDERS MEETING OF TERNIENERGIA S.P.A. APPROVED THE AMENDMENTS RELATED TO THE FEMALE QUOTAS On March 8, 2013 the Extraordinary Shareholders Meeting of the Parent Company examined and also passed unanimously amendments to the by-laws in order to bring them into line with Legislative Decree no.120 of 12 July 2011, in compliance with the balance of the genres in the constitution of the Group s Board of Directors and Board of Statutory Auditors, with a consequent change of the articles 13 e 21 and introduction of the article 28 of the by-law. 11

12 PUT IN OPERATION THE REALIZATION OF A PLANT IN CAMPANIA, FOR AN AGGREGATE INSTALLED POWER OF 21 MWP On March 25, 2013 the Parent Company TerniEnergia signed an agreement with a main European utility, aimed at constructing a new photovoltaic plant in the Campania region for an aggregate installed power of 21 MWp. The agreement provided the realization of the plant with EPC Contract (turn-key formula) without the panels supply for an annual consideration payable of Euro 16 million. The working sites have already been opened and the expected completion is scheduled for September 30th, EDF EN ITALY PURCHASE THE 50% OF THE JV ENERGIAALTERNATIVA SRL IN THE SECTOR OF THE VALORIZATION OF THE PHOTOVOLTAIC ASSET. On March 28, 2013, TerniEnergia signed an agreement with EDF EN Italia, that provided the transfer of the 50% of the corporate capital of EnergiaAlternativa Srl to TerniEnergia Srl. TerniEnergia Cda approved the operation which was communicated to the market on December 19, EnergiaAlternativa Srl owns 12 photovoltaic plants of industrial size for an aggregate installed power of approximately 13.9 MWp. The value of the asset is given by the algebraic sum of the Enterprise Value, related to the 100% of the JV, equal to Euro 54.3 million, and the value of the Amended Net Financial Position resulting in the Half-year Financial Statement in the date of the assignment. The value of the share acquired by TerniEnergia is, therefore, equal to the 50% of such sum. At the end of the operation, the final price of the sales contract was equal to Euro 2,809 thousand and it has been remitted at the beginning of May 2013, excluded some compensations. APPROVAL OF THE FINANCIAL STATEMENT 2013AND RENEWAL OF THE CORPORATE BODIES On April 29, 2013 the Shareholders' Meeting of TerniEnergia unanimously approved the draft budget and noted the presentation of the consolidated financial statements at 31 December The Shareholders' Meeting also approved the distribution of a dividend of 0,055 per ordinary share, gross of tax. The Assembly also passed the following resolutions : a) has fixed 7 the number of directors and appointed the Board of Directors for 3 years, ie until the Shareholders' Meeting called to approve the financial statements for the year ended 31 December 2015, in the persons of : - Stefano Neri, President and CEO; - Paolo Ricci, Director; - Fabrizio Venturi, Director; - Monica Federici, Director; - Domenico De Marinis, Independent Director ; - Paolo Migliavacca, Independent Director ; - Mauro Mario Molteni, Independent Director ; 12

13 b ) has appointed the Board of Auditors for 3 years, ie until the Shareholders ' Meeting called to approve the financial statements for the year ended 31 December 2015, in the persons of : - Ernesto Santaniello, President ; - Vittorio Pellegrini, Auditor; - Simonetta Magni, Auditor; - Marco Chieruzzi, Deputy Auditor ; - Marco Rosatelli, Deputy Auditor. The Shareholders' Meeting appointed the Board of Directors and the Statutory Auditors drawing components from the list presented by the majority TERNI Research SpA, representing a market share of % of the share capital of TerniEnergia SpA The presence of the female gender in the Board of Directors and Board of Statutory Auditors fully meets the criteria introduced by law in the field of gender balance. You have defined the gross annual fees payable to the Board of Directors ( Euro 450 thousand, plus a variable fee equal to 15 % of salary, if the operating result at the end of the year is higher by at least 5 % of the EBITDA of the Plan approved business, and reimbursement of expenses incurred in the office) and the Board of Auditors (Euro 70 thousand, plus reimbursement of expenses incurred by reason of the assignment). The Board of Directors then appointed the Remuneration Committee, the Audit and Risk Committee, the Director in charge of the System of Internal Control and Risk Management, the Committee for Related Parties and the Lead Independent Director. Will be part of the Compensation Committee, the Audit and Risk Committee, the Related Parties Committee, the independent directors Domenico De Marinis, Marco Mario Molteni and Paolo Ottone Migliavacca, in order to ensure the greatest possible transparency. It ' was appointed Director in charge of the Internal Control System and Risk Management Councilor Paolo Ricci. It ' was appointed Lead Independent Director Councilor Paolo Migliavacca. The Board of Directors has also proceeded to attribute responsibilities and powers. Specifically, the Chairman, Stefano Neri, was given the responsibility relating to: General Affairs, promotion of projects of strategic importance, internationalization of business, relations with the subsidiaries. The Chief Executive Officer Paolo Ricci ( vice president ) was given the responsibility relating to: Development, international expansion. The Chief Executive Officer Fabrizio Venturi was given the responsibility relating to: Marketing, managing relationships with suppliers and customers, legal affairs, international expansion, technical management, security, environmental protection, personnel. 13

14 FRAMEWORK AGREEMENT FOR THE DEVELOPMENT OF THE PROJECT "RA" RENEWABLE ASSETS As at May 7, the Board of Directors of TerniEnergia approved the signing of a framework agreement with Power Capital, a consulting company for investment, for the development of the project called "RA", Renewable Assets, aimed at structuring of a mutual fund Italian investment in real estate, closed, qualified investors, with the contribution of real estate and cash payments. The agreement was filed on the same date to the business and financial community and the press at the headquarters of the Italian Stock Exchange. In particular, the fund will specialize in the production of energy from renewable sources and the green industry, by standing to represent a new investment instrument in a booming industry. The objective of the operation is to increase the capital invested in a long-term time horizon, using the cash flows generated in a consistent manner by the operation of industrial plants. The fund, that will be structured, will have a term of twenty years, and It shall direct the investment choices towards an asset class, that of plants producing energy from renewable sources, a constant and high cash generation, with a cycle of investment and making regime shorter than the traditional real estate development. The " RA" expected risk -adjusted returns, adequate, predictable and poorly correlated with the performance of financial markets, more than 10% in terms of IRR. Finally, the fund will ensure full transparency and independence, since supervised party, segregated capital base and as such has a better credit rating than in a company vehicle. Depending on the project, TerniEnergia will be the concessionaire of the operational risks in the production and distribution of energy, and in the maximization of the predictability of future cash flows, thanks to the management policies and insurance. The company will also be the strategic partner of the fund for the activity of the EPC, for the development of projects and for the construction of plants, with the formula of turnkey EPC contracts through to market prices. Together with the Power Capital Advisors, the asset management company TerniEnergia evaluate and propose new projects in Italy and abroad for the construction of plants, even of great power. Power Capital, a company of professionals with great experience and recognized track record in asset management, will be the advisor also for the structuring of the fund, enhancing its experience in the evaluation and implementation of investment projects relating to property. The capital raising is expected between Euro 50 and 100 million. WARNING CONSOB ADJUSTMENT BOARD OF DIRECTORS TO THE LAW ON THE FEMALE QUOTAS. As at June 20,2013, with Resolution No , Consob issued an order of formal notice to the Parent Group to adapt to the allotment criteria established from Article. 147-ter, paragraph 1-ter of the TUF and art. 2 of Law no. 120 of July 12,2011. With this resolution, CONSOB has therefore warned the parent group to adjust the composition of its Board of Directors, appointed on April 29, 2013 by the shareholders, the provisions relating to gender balance established by the regulations in force ("quotas"), within a maximum period of 4 months. In the event of non-compliance, Consob shall impose an administrative fine ranging from Euro 100,000 to Euro 1,000,000 and setting a new deadline of three months to comply. In case of further non-compliance with respect to this new warning, the members appointed shall cease to hold office. 14

15 AGREEMENT BETWEEN PRELIOS SGR AND TERNIENERGIA FOR THE ESTABLISHMENT OF A RENEWABLE ENERGY REAL ESTATE As at June 24, Prelios SGR and TerniEnergia (a company operating in the renewable energy, energy efficiency and waste management sectors, listed on the Star segment of Borsa Italiana) signed on today s date an agreement for the establishment of RA - Renewable Assets, a closed-end real estate mutual fund, reserved for qualified investors, investing in assets functional to the generation of energy from renewable sources. The Fund will be established, placed and managed by Prelios SGR, it will have an initial equity raising target between 50 and 100 million euro and its term will be 20 years. This speculative Fund may reach an LTV of 80%. TerniEnergia will initially transfer to the Fund some renewable energy plants already operating at full capacity for a gross OMV of about 75 million euro, with consequent and concurrent subscription of the Fund units. TerniEnergia, in agreement with Prelios SGR, will also play a strategic role in the development of a pipeline of plants to be constructed or already existing in the photovoltaic sector or in other renewable energy segments, that may be transferred to the Fund and managed by TerniEnergia as tenant. Prelios SGR will rely on the specialist support of Power Capital, in its capacity as advisor, providing advisory services in investment and divestment transactions. This agreement means for Prelios SGR a significant strategic diversification in sectors close to the real estate industry with a high growth rate and capable to generate steady cash flows for investors. The funds specialized in renewable energy actually benefit from an investment cycle not strictly correlated to the traditional real estate market performance and are currently developing a true asset class, also in Italy, for the investment strategies of the major institutional investors. This agreement envisages the possibility to replicate the project through new periods for the subscription of the Fund units and/or the start of operations of other real estate funds with like features. TRANSFER OF THE SHARE OF GREENLED SRL TO T.E.R.N.I. RESEARCH S.P.A As At June 24, the Board of Directors of TerniEnergia, approved the sale of the shares held by Greenled Srl TerniEnergia to its parent Terni Research SpA. On the transaction was expressed a prior positive opinion of the Related Parties Committee, as required by the Rules for Transactions with Related Parties, as well as by Consob Regulation no of 12 March 2010.The shares sold by TerniEnergia account for 70% of the share capital of Greenled, operating in the development and production of LED street lamp intelligent, certified to operate under conditions of thermal stress particular of productive and / or industrial environments (eg areas Foundry of steel mills, glass factories, cement works, etc.. ) or urban and suburban areas particularly exposed to the elements. The remaining 30 % of the shares belongs to the company IST Srl, lead developer of the utility model of LED lamps owned by the company. ACQUIRED 50% OF THE JV T.E.R.N.I. SOLARENERGY SRL, SOLD 50% OF THE JV SOLAREN SRL As at June 28, 2013 TerniEnergia signed two agreements with EDF EN Italy for the purchase and sale of companies owning solar power plants in operation, held in joint venture by the two companies. 15

16 The first agreement provides the acquisition by TerniEnergia of the 50% share capital of the JV Terni SolarEnergy Srl, owned by EDF EN Italy. The company owns 7 industrial sized photovoltaic plants for a total of 6 MWp. The value of assets was determined based on the sum of the Enterprise Value on 100% of the JV, amounting to Euro 22,6 million, and the value of the adjusted net financial position resulting from the interim financial statements of the company on the effective date the assignment. The price of the stake acquired by TerniEnergia was, therefore, equal to 50% of the value of Euro 1,026 thousand. The second agreement provides the transfer from TerniEnergia to EDF EN Italia of the 50% of the share capital of the JV Solaren Ltd. The company owns five industrial sized photovoltaic plants for a total of 4.5 MWp. The value of assets was determined based on the sum of the Enterprise Value on 100% of the JV, amounting to Euro 17,8 million, and the value of the adjusted net financial position resulting from the interim financial statements of the company on the effective date the assignment. The price of the stake acquired by TerniEnergia was, therefore, equal to 50% of the value of Euro 2,886 thousand. SPLIT THE JV FOTOSOLARE SETTIMA SRL As at July , the Parent Company and EDF EN TerniEnergia Italy SpA signed an agreement for the non-proportional demerger of the company Fotosolare Settima Srl, which owns 10 photovoltaic plants in operation for a total of 9.4 MWp, previously held in the JV to 50 %. The agreement provides for the establishment of a new company, to be known as Solter Srl, whose registered capital will be entirely made out to TerniEnergia and to whom will be given the business that deals with the production of electricity by photovoltaic systems of industrial size 4 for a total of 3.8 MWp. It will remain fully available to the demerged company EDF EN Italy with the remaining 6 for a total of 5.6 MWp photovoltaic systems. The enterprise value of the assets acquired by TerniEnergia is Euro 13,56 million. The effectiveness of the transaction is subject to the signing of the act of splitting from the members of Fotosolare Settima, scheduled for September PRESENTATION OF NEW BUSINESS PLAN As at October 1, the company unveiled in London 's business plan The operating model that will carry out the plan maintains and enhances the 3 business units through which you get a full diversification and organizational skills : Independent Power Producer dedicated to Power Generation Integrated Energy Solutions focused in the EPC and system integration, energy efficiency through Lucos Alternative Energies Environmental Resources Solutions for biomass plants, recovery of used tires, drainage, water purification. In the period the Company will increase the international activities by selecting the geographical areas of intervention and focusing in particular on: emerging countries characterized by strong growth in energy demand markets characterized by replacement demand of energy supply and efficiency of electrical systems 16

17 geographical areas are close to achieving grid parity or alternatively areas in which you can work through the PPA ( power purchase agreement ). The internationalization process has already been started, the Company expects to soon launch major projects in Ukraine, has started work on the construction of a large center in South Africa and in the coming weeks is expected to be the outcome of the government's third bid South African for the construction of large solar power plants. The size of individual projects will continue to grow and give priority to partners and customers of high standing to enable new ways of accessing capital. With the business plan TerniEnergia adapts to market developments, ensuring double digit IRR to large customers, with limited risk for the investor, with total control of the industrial process, minimizing the impact on investment and conducting technically efficient plant. The Company will also be able to develop the packaging for financial diversification effective than mature markets such as real estate. TerniEnergia maximizes the development of projects working with great expertise in all stages : from project development and EPC to build, operate and transfer (BOT), to the task of power generation and the O & M. CO-OPTATION DIRECTORS FOR PERFORMANCE " FEMALES QUOTAS " As at October 17, 2013, the company has accepted the resignation of the executive director and vicepresident Mr. Paolo Ricci, who resigned on account of the need to ensure compliance with the cd " Gender quotas " and thanked him for the important and constructive contribution to the start of today. The ing. Paolo Ricci will continue to operate within the corporate group, maintaining, by means of a special power of attorney, all operational duties already assigned by the Board of Directors on May 7, At the same time, the Board of Directors, in compliance with the provisions introduced by Law n 120 July 12, 2011 in the area of gender balance in the composition of the Board of Directors and Board of Statutory Auditors and taking into account the provisions of art. 13 of the bylaws, co-opted as a non-executive director the lawyer. Francesca Ricci. Following this co-optation Consob took note of the adjustment to the provision of formal notice notified by resolution no of June 20, TERNIENERGIA PROJECT ( PTY ) Ltd EPC SIGNS TWO CONTRACTS FOR A TOTAL CAPACITY OF MWp The TerniEnergia Project ( Pty ) Ltd on October 31, signed two framework agreements with a leading Italian utility for the installation of photovoltaic systems of industrial size of the total power of 148,5 MWp in South Africa. In particular, the agreements - which became effective following the award of preferred bidder status of the client - form the basis for negotiation of the two projects, and provide for the creation by TerniEnergia Project PTY Ltd, a subsidiary of South African TerniEnergia, two photovoltaic plants with the formula "EPC Contract " ( turnkey ) with the supply of panels and inverters, respectively, in the locality Paleisheuwel to 82,5 MWp and Tom Burke in location for 66 MWp of installed capacity and for a total consideration of approximately ZAR 2 billion corresponding to the current exchange rates, to Euro 147 million. The time schedule of sites expected to open by the end of August 2014 and completion by August

18 ACQUIRED 19.5 % OF THE COMPANY INFOCACIUCCI SRL, OWNER OF A PHOTOVOLTAIC POWER 1 MWP As at December 23, 2013 completed the acquisition of 19.5 % of the shares of the company Infocaciucci, society Massarelle Srl, at a price of Euro 285 thousand financed entirely by cash, paid Euro 100 thousand at the signing of the deed of assignment and the rest 90 days from the date of the act. Following the TerniEnergia holds 69.5 % of the shares of Infocacciuci Srl, owner of a photovoltaic plant in Puglia power of about 1 MW. VALUATION OF ASSETS PHOTOVOLTAIC SOLD 50 % OF THE JV COLLESANTO SRL As at December 29, 2013 was signed an agreement for the sale to PVGE 1 Srl ( 99% controlled by Genera SpA) 50% of the share capital of the JV Collesanto Srl, owner of two industrial-size of the installed capacity of about 1 MWp each. The total price of the sale has been agreed between the parties to Euro 1,9 million, of which Euro 1,2 million relating to the value of the shares and Euro 0,7 million for the repayment of shareholder loans made by TerniEnergia Collesanto Ltd. 18

19 1.6 PERFORMANCE OF OPERATIONS Below are summarised the main economic and financial highlights of the Ternienergia Group as at 31 December 2013 compared to those of the previous year: (in Euro) As At December, As At December, Change Change % Economic Highlights Net revenues from sales and services 66,969,952 65,400,333 1,569, % EBITDA 12,392,013 10,676,412 1,715, % EBIT 5,037,396 5,854,147 (816,751) (14.0)% Result for the period 6,841,044 6,878,864 (37,820) (0.5)% Ebitda Margin 18.5% 16.3% 2.2% 13.3% (in Euro) As At December, As At December, Change Change % Financial highlights Fixed Assets 182,405,562 90,383,374 92,022, % Networking Capital 6,655,055 20,723,996 (14,068,941) (67.9)% Net Financial Position 135,172,794 62,337,908 72,834, % Shareholders Equity 53,887,823 48,769,462 5,118, % 19

20 As At December, As At December, As At December, PROFITABILITY RATIOS ROE 14.5% 16.4% 38.9% ROI 3.4% 6.5% 25.3% ROS 7.5% 9.0% 7.7% FINANCIAL RATIOS Fixed asset coverage 306.0% 150.0% 113.8% Current net Financial Position / Shareholders equity 33.7% 70.0% 69.6% Net Financial Position / Shareholders equity 250.8% 127.8% 111.1% PFN / CIN 71.5% 56.1% 52.6% Equity / CIN 28.5% 43.9% 47.4% PFN / EBITDA 10.91% 5.84% 2.35% CCN ROTATION CCN / Revenues 21.10% 51.80% 15.90% Consolidated net revenues for the year amounted to Euro 66,970 thousand, an increase of 2.4% compared to the previous year. The increase is mainly attributable to the higher proportion of revenues from industrial plants owned by the Group. In particular, revenues from the production and sale of electricity from solar energy is equal to 31 December 2013 to EUR 13,083 thousand (Euro 4,084 thousand at 31 December 2012), an increase of Euro 8,998 thousand, mainly due to the consolidation operations of the joint venture company made during the year An important contribution was also made by the industry " Environment" in which revenues amounted at 31 December 2013 to Euro 6,113 thousand ( Euro 831 thousand at December 31, 2012), an increase of Euro 5,282 thousand, due to the activities developed from treatment plants in operation ( biodigestion plant, treatment plant and sewage treatment plant PFU of groundwater ). Should be noted that in 2012 the contribution of these activities to the Group's results started from the month of September 2012 with the completion of the merger with TerniGreen. The contribution from the activity of " power generation " and " environment" has more than offset the decrease seen in the activity of the EPC, this figure is even more significant in relation to the quality of revenues relating to industrial plants, as it is a stable and recurring revenues, characterized by a high margin. 20

21 ECONOMIC RESULTS The financial results of the Group are summarized below : As at December, 31 As at December, 31 Change Change (in Euro) % Net revenues from sales and services 66,969,952 65,400,333 1,569, % Production costs (49,418,092) (49,348,595) (69,497) 0.1% Added value 17,551,860 16,051,738 1,500, % Personnel costs (5,159,847) (5,375,326) 215,479 (4.0)% EBITDA 12,392,013 10,676,412 1,715, % Amortization, depreciation, provisions and write-downs (7,354,617) (4,822,265) (2,532,352) 52.5% EBIT 5,037,396 5,854,147 (816,751) (14.0)% Financial income and charges (2,017,869) (2,084,735) 66,866 (3.2)% Portions of results attributable to the JV 2,718,229 3,243,281 (525,052) (16.2)% Pre-tax result 5,737,756 7,012,693 (1,274,937) (18.2)% Income taxes 1,103,288 (133,829) 1,237,117 n.a. Net profit for the period 6,841,044 6,878,864 (37,820) (0.5)% With regard to the mode of representation of the results is provided in later in the paragraph "Alternative performance indicators". 21

22 Consolidated net revenues Consolidated net revenues for the year amounted to Euro 66,970 thousand, an increase of 2.4% compared to the previous year. The increase was mainly due to the higher contribution of revenues from industrial plants (which is related to the power generation sector Environment), which has more than offset the decrease in revenues related to EPC. Gross operating profit (EBITDA) The EBITDA amounted to Euro 12,392 thousand, an increase in absolute value of Euro 1,715 thousand compared to the prior year and an EBITDA margin amounted to 18.50% of revenues (16.32% in 2012). The increase in EBITDA margin was primarily attributable to the different composition of revenues compared to the previous year, with a higher proportion of revenues related to power generation and in the Environment. The high profitability is also due to the gains recorded in the year related to the sale of certain joint ventures 22

23 Operating profit (EBIT) Operating income amounted to Euro 5,037 thousand, a decrease compared to the previous year (Euro 817,000 thousand) due to the greater impact of the amortization period (Euro 7,354 thousand). ROI reaching 3.4% compared to 6.5% last year. The significant decrease in the ROI is explained by the significant increase in fixed assets increased from Euro 90,383 thousand last year to EUR 182,406 thousand in The investment activities of 2013, although it has significantly increased the total assets, in terms of operating profit will reflect its effects in future years. Net result Net profit for the period amounted to Euro 6,841 thousand, broadly in line with that of The result of the Joint Venture has clearly exceeded the negative impact of financial charges, with a tax rate no material due to the non- taxability of the majority of revenues coming from the disposal of Joint Venture shares. The result of the joint venture registered in 2013 benefited from an extraordinary gain on the application of the tax benefit (so-called Tremonti - TER) ; financial management in 2013 benefited from the recognition of income due to the revaluation of the shares originally held by those companies in joint ventures, and for which the Group acquired control during the year 2013 (for further details please refer to the information in the Notes to the point 3.6.8) The return on equity is broadly in line with that of last year. ROE stood at 14.5% compared to 16.4 % last year. 23

24 "PRO-FORMA" RESULTS as at December 31, 2013 In accordance with IAS 31 - Interests in Joint Ventures, the Group has opted for using the equity method in accounting for joint ventures or, therefore, the results of the Group in the consolidated income statement separate line "Share of profit JV. "The following table shows the Group's financial results to 31 December 2013 if the results of the joint ventures were accounted for using the proportionate method, which consists in the detection of the relevant portion of all assets and liabilities, income and expenses arising from the financial statements joint ventures: Total Total Revenues 75,773,504 85,192,276 EBITDA 19,662,470 27,315,201 EBIT 9,940,020 17,019,646 Net Result 6,841,043 6,878,864 Ebitda Margin 25.95% 32.06% This method of accounting would not result in any adjustment to the net income of the Group during the period under review. 24

25 BALANCE SHEET OVERVIEW Below is summarised the Group s consolidated balance sheet: As at December, 31 As at December, 31 Change Change (in Euro) % Intangible assets 4,337,960 5,555,935 (1,217,975) (21.9)% Property, plant and equipment 160,574,401 67,605,402 92,968, % Financial fixed assets and other intangible assets 17,493,201 17,222, , % Fixed Assets 182,405,562 90,383,374 92,022, % Inventories 8,208,886 8,773,234 (564,348) (6.4)% Trade receivables 28,063,651 45,108,376 (17,044,725) (37.8)% Other assets 16,573,353 9,538,845 7,034, % Trade payables (31,416,529) (26,909,257) (4,507,272) 16.7% Other liabilities (7,329,882) (2,608,321) (4,721,561) n.a. Net working capital 14,099,479 33,902,877 (19,803,398) (58.4)% Provisions and other non-trade liabilities (7,444,424) (13,178,881) 5,734,457 (43.5)% Net Invested Capital 189,060, ,107,370 77,953, % Shareholders Equity 53,887,823 48,769,462 5,118, % Current net financial position 18,161,094 34,157,998 (15,996,904) (46.8)% Non-current net financial position 117,011,700 28,179,910 88,831,790 n.a. Total net financial position 135,172,794 62,337,908 72,834, % Net Invested Capital 189,060, ,107,370 77,953, % Net invested capital Net invested capital as at December 31, 2013 amounted to Euro 189,060 thousand consist of Euro 182,405 thousand from fixed assets, Euro 14,099 thousand from NWC and 7,444 thousand from accruals. Compared to the year ended December 31, 2012, net assets, has an increase of Euro 77,953 thousand due primarily (Euro 92,022 thousand ) to an increase in fixed assets. In particular, tangible assets increased, net of accumulated amortization, of Euro 92,969 thousand. These increases pertain mainly to the consolidation of the companies originally owned in JV during the year and included in the scope of consolidation (in 2012 the Group owned 9 PV systems with a capacity of 9.1 MWp, against 34 plants with a capacity of approximately 34.3 MWp as at December 31, 2013). Net working capital showed a decrease of Euro 19,803 thousand. The decrease in net working capital was primarily due to the significant cash available in 2013 ( especially in relation to credits earned in the last quarter of 2012 from TerniEnergia Hellas for work done in Greece which amounted to Euro 19,939 thousand ), and an increase in the timing of payment of account payables. Net financial position 25

26 As at December, 31 As at December, 31 (in Euro) Cash (17,909) (21,373) Available bank current accounts (13,038,001) (3,363,025) Liquidity (13,055,910) (3,384,398) Current bank debt (current account overdraft) 4,793,838 3,421,723 Current bank debt (advance) 11,945,016 33,687,152 Financial payables to other lenders 948, ,075 Current financial debt (other lenders) 3,734, ,483 Current financial debt (other lenders) 12,452,165 8,680,765 Current financial receivables (2,656,483) (9,376,802) Current financial debt 31,217,004 37,542,396 Current net financial position 18,161,094 34,157,998 Non-current financial debt (other lenders) 48,015,688 1,495,824 Financial payables to other lenders 35, ,639 Non-current financial debt (Leasing) 68,960,582 26,582,447 Non-current net financial position 117,011,700 28,179,910 Total net financial position 135,172,794 62,337,908 Net debt as at December 31, 2013 amounted to Euro 135,173 thousand, divided into short-term portion of Euro 18,161 thousand and long-term portion of Euro 117,012 thousand. The long-term portion is attributable to leases entered into with major financial institutions to cover the financial requirements necessary for the development of PV plants and for the investments in the treatment plant, biodigestor and PFU in Nera Montoro. It is noted that the current financial payables includes part of the payments incurred for investments already made or still under construction and for which on December 31, 2013 had not yet been entered into a specific contract financing in the medium - long term. In particular, it is the second treatment plant PFU in progress of a pyrogasification already connected to the grid in December 2012 and a composting plant under construction in Puglia. The financial position in the short term for an amount of Euro 18,161 thousand is basically made up of short-term debt to banks for overdrafts (Euro thousand ) or advances on invoices and / or contracts (Euro 11,945 thousand), Euro 12,452 thousand consisting of short-term financing to banks, Euro 3,734 thousand represented by the short-term portion of lease payables, Euro 13,056 thousand of cash, Euro 2,656 thousand from short-term portion of loans financial. The change in the item " Current bank debt ( anticipation) " reflects the significant repayments made by the parent company over its lines of credit in the short term. The change in non-current borrowings is attributable mainly to the entry in the consolidation of certain companies previously held in joint ventures. It also highlights the change in " Funding not current ", due in particular to corporate loans granted to the parent company TerniEnergia in late 2013, consisting mainly of the non-current portion of an unsecured loan of Euro 10 million for a period of 60 months with repayment in 20 quarterly installments and an unsecured loan of Euro 5 million for a period of 60 months, repayable in one installment at maturity, both provided by Veneto Banca. 26