1
FIRST QUARTER 2014
CONSOLIDATED FINANCIAL STATEMENTS
OF THE TERNIENERGIA GROUP
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CORPORATE DETAILS
TERNIENERGIA S.P.A. Registered office: Strada dello Stabilimento, 1 05035 Narni (TR)
Authorised, issued and paid-up share capital: Euro 50,529,680
Terni Register of Companies: no. 01339010553
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, 00-103
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.
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Index
1 MANAGEMENT REPORT ..................................................................................................................................... 5
1.1 BUSINESS AND MISSION OF THE GROUP .......................................................................................................... 5
1.2 THE GROUP’S STRUCTURE ................................................................................................................................ 7
1.3 SIGNIFICANT EVENTS OCCURRED DURING THE FINANCIAL YEAR ENDED AS AT MARCH 31, 2014.................. 8
1.3.1 ISSUE BOND “TerniEnergia 2019” ................................................................................................................ 8
1.3.2 THE BOARD OF DIRECTORS PROPOSES THE START OF A PROGRAM FOR THE PURCHASE OF OWN
SHARES (BUY-BACK) .................................................................................................................................................. 8
1.4 ECONOMIC DEVELOPMENT OF THE GROUP ................................................................................................... 10
1.5 BALANCE SHEET .............................................................................................................................................. 12
1.6 BUSINESS OUTLOOK ........................................................................................................................................ 14
2 FINANCIAL STATEMENTS ...................................................................................................................................17
2.1 STATEMENT OF CONSOLIDATED FINANCIAL SHEET ....................................................................................... 17
2.2 CONSOLIDATED INCOME STATEMENT ........................................................................................................... 18
2.3 INCOME TOTAL CONSOLIDATED STATEMENT ................................................................................................ 19
2.4 STATEMENT OF CHANGES IN EQUITY ............................................................................................................. 20
2.5. CONSOLIDATED STATEMENT ................................................................................................................................ 21
3 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31, 2014 ....................22
3.1 GENERAL INFORMATION ................................................................................................................................ 22
3.2 FORM, CONTENTS AND ACCOUNTING POLICIES ADOPTED ........................................................................... 22
3.3 COMMENTS ON THE MAIN BALANCE SHEET ITEMS ....................................................................................... 26
3.3.1 INTANGIBLE ASSETS ................................................................................................................................... 26
3.3.2 TANGIBLE FIXED ASSETS ............................................................................................................................. 28
3.3.3 EQUITY INVESTMENTS ............................................................................................................................... 30
3.3.4 DEFERRED TAX ............................................................................................................................................ 34
3.3.5 NON CURRENT FINANCIAL RECEIVABLES ................................................................................................... 35
3.3.6 INVENTORIES .............................................................................................................................................. 36
3.3.7 TRADE RECEIVABLES ................................................................................................................................... 36
3.3.8 OTHER CURRENT ASSETS ............................................................................................................................ 38
3.3.9 FINANCIAL RECEIVABLES ............................................................................................................................ 38
3.3.10 3.3.10 CASH AND CASH EQUIVALENT .................................................................................................... 39
3.4 COMMENTS ON THE PRINCIPAL LIABILITIES................................................................................................... 40
3.4.1 3.4.1 NET ASSETS ........................................................................................................................................ 40
3.4.2 FUND FOR EMPLOYEE BENEFIT .................................................................................................................. 40
3.4.3 DEFERRED TAXATION ................................................................................................................................. 41
3.4.4 FINANCIAL NON CURRENT LIABILITIES ...................................................................................................... 41
3.4.5 DERIVATIVES ............................................................................................................................................... 42
3.4.6 TRADE PAYABLE ......................................................................................................................................... 43
3.4.7 DEBT AND OTHER FINANCIAL LIABILITIES .................................................................................................. 44
3.4.8 TAX DEBIT ON INCOME .............................................................................................................................. 46
3.4.9 FURTHER CURRENT LIABILITIES .................................................................................................................. 46
3.4.10 COMMITMENTS AND GUARANTEES GIVEN .......................................................................................... 47
3.5 COMMENTS ON THE MAIN INCOME ITEMS ................................................................................................... 51
3.5.1 REVENUES ................................................................................................................................................... 51
3.5.2 CHANGES IN INVENTORIES OF SEMI-FINISHED PRODUCTS ....................................................................... 52
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3.5.3 COSTS OF RAW MATERIALS, SUPPLIES AND GOODS ................................................................................. 53
3.5.4 COSTS FOR SERVICES .................................................................................................................................. 53
3.5.5 STAFF’COSTS ............................................................................................................................................... 54
3.5.6 FURTHER OPERATING COSTS ..................................................................................................................... 54
3.5.7 DEPRECIATION,IMPAIRMENT AND PROVISIONS ....................................................................................... 55
3.5.8 FINANANCIAL INCOME AND CHARGE ....................................................................................................... 55
3.5.9 JOINT VENTURE INCOME ........................................................................................................................... 56
3.5.10 TAX ......................................................................................................................................................... 57
3.6 RELATIONS WITH RELATED PARTIES ............................................................................................................... 57
3.7 3.7ATYPICAL AND/OR UNUSUAL TRANSACTIONS ......................................................................................... 65
3.8 OTHER INFORMATION .................................................................................................................................... 66
Shareholders’ meeting approves 2013 financial Statements and a distribution of dividends equal to Euro 0.06
per share .................................................................................................................................................................. 67
Signed manifestation of interest for the acquisition of Free Energia S.p.A. ......................................................... 67
Signed a strategic agreement with Khalid Al Hamed Group LLC for the development of renewable energy and
environmental business in the Middle East and the Gulf Countries ...................................................................... 68
4 CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 154-BIS OF
LEGISLATIVE DECREE 58/98 AND ARTICLE 81-TER OF CONSOB REGULATION NO. 11971/99, AS AMENDED AND
SUPPLEMENTED .........................................................................................................................................................70
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1 MANAGEMENT REPORT
1.1 BUSINESS AND MISSION OF THE GROUP
TerniEnergia Group is the first Italian pure player in green industry, the production of energy from
renewable sources, the circular economy and energy efficiency, listed on the STAR segment of the Italian
Stock Exchange. In particular, the Group is a leading integrated environmental activities in the European
and pursues the best practices identified by the main international agreements on limiting greenhouse gas
emissions.
Thanks to a diversification policy of its activities and the full technological independence with a portfolio of
related and complementary activities, all related to the area of the green industry and renewable energies,
TerniEnergia as the only national player active in three segments of the "Climate Package" of the European
Union. In particular, the Group is active in increasing energy production from renewable sources
(particularly solar, biogas and solid biomass), energy savings through energy efficiency investments,
recovery of materials through technologically advanced equipment (tires and water treatment purification)
and reduction of CO2 emissions by means of investments to implement solutions and systems with low
environmental impact.
As at March 31, 2014 TerniEnergia made 272 photovoltaic systems with a total power of 274.1 MWp in
Italy, Greece and Romania, built and operates two biomass plants totaling 1.5 MW and 2 MWt and has
implemented energy efficiency measures for more than 400 million kWh saved, contributing significantly to
the national energy mix, to the achievement of national objectives at Community level and making
significant innovations on the technological front.
Through an intensive development and diversification of activities, which has seen the business alongside
that of the EPC construction of plants for their own solar and biomass electricity generation and the sale of
equipment already connected to the network, TerniEnergia has assumed the configuration of a green
company "asset owner" active in the renewable energy segment.
The business model, based on the development of the main activities in-house, has enabled the rapid
growth of TerniEnergia in the industry and its affirmation of the main operators at national level. Following
to modify Italian regulatory framework, the Group has made the choice to internationalize their activities,
taking on the strategic direction of strengthening the EPC photovoltaic business outside the country, even
to react to the gradual decline of national policies to promote renewable energy . The Company, therefore,
has completed the setting up of affiliated companies in Greece, South Africa, Poland and Romania, with the
objective to conclude important projects of industrial partnership with utilities of international relevance.
6
Consistent with the strategy of business diversification, TerniEnergia has recently initiated a process of
research aimed at the identification of new areas of development that can provide an opportunity for the
Company, always within the scope of the green industry. In particular, the Company has identified
attractive opportunities for growth in the segment of industrial energy efficiency and has started a research
in the energy storage.
At the national level, in the photovoltaic industry, TerniEnergia Group continue to operate in the
production of electricity by converting solar energy, through the joint venture jointly controlled with
industrial partners and the systems made directly on their own behalf. In particular, the Group currently
holds 34 photovoltaic plants with a total installed capacity of 34.3 MW, and holds in joint venture 50%
respectively 10 additional plants with a total capacity of 8.1 MWp.
Photovoltaic systems made by the Group generally have a power close to 1 MWp.
In relation to the objective of reducing energy consumption, however, TerniEnergia, through its subsidiary
Lucos Alternative Energies S.p.A., has acquired considerable know-how in the field focusing the energy
efficiency of industrial scale, developing the business on the basis of the same scheme already used for
photovoltaics. TerniEnergia aims both as an EPC (manufacturer on behalf of clients interests) either as an
investor through the system FTT (via the schema defined Third Party Financing - ESCO). Lucos Alternative
Energies has already carried out, among others, energy saving measures in public lighting in different
industrial companies of considerable size, in various Italian towns, and created alliances and partnerships
with industry.
On the environmental side are operational plants for recovery of secondary raw material from end of life
tyres (ELTs), Greenasm biodigester and composting plant and finally water treatment plants in Nera
Montoro.
The Group, therefore, despite the significant changes described herein will continue to face, in essence, as
a provider of integrated plant once the installation of photovoltaic systems for industrial and / or
installations of efficiency and energy recovery. This type of business involves offering "turnkey" through a
business model that involves the integration and control of the entire process of development,
implementation and management of systems (business marketing, design, installation and maintenance of
the same ). The Group has in fact, progressively internalized all the "core" processes, from technical design
to the management of administrative relationships, the realization in their own facilities of the support
structure and the electrical panels, the design and implementation of remote control systems (TRSUN) and
safety (iGreen Patrol).
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1.2 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. SAIM ENERGY 2 S.R.L.
RINNOVA S.R.L.
50%
GIRASOLE S.R.L.
ENERGIA BASILICATA S.R.L.
SOL TARENTI S.R.L.
ENERGIA LUCANA S.R.L. GUGLIONESI S.R.L.
VERDE ENERGIA S.R.L. GREEN ASM S.R.L.
FESTINA S.R.L.
70%
SOCIETA' AGRICOLA PADRIA SRL
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. TERNIENERGIA PROJECT L.t.d.
MEET GREEN ITALIA S.R.L.
69,5%
IGREEN PATROL S.R.L.
INFOCACIUCCI 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
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1.3 SIGNIFICANT EVENTS OCCURRED DURING THE FINANCIAL YEAR ENDED AS AT MARCH 31, 2014
1.3.1 ISSUE BOND “TerniEnergia 2019”
As at Jenuary 27, 2014, Board of Directors approves the issuance of a bond for a maximum nominal
amount of Euro 25 million and a period of five years, with a gross fixed rate equal to 6.875% and an annual
coupon.
TerniEnergia optimizes its financial structure to support the business plan "Discover the new green era
2014-2016" through the listing of the bond at ExtraMOT PRO, the professional segment of the EXTRAMOT
bond market managed by Borsa Italiana.The bonds will be underwritten by a Lead manager already
identified, for a subscription price equal to 100% of nominal value, net of a discount rate of 0.50%, and
their release will not constitute a public offer of securities.
As at February 4, 2014, the bond “TerniEnergia 2019” (ISIN: IT0004991573) was admitted to trading on
ExtraMOT PRO market, managed by the Borsa Italiana. The issuance of Euro 25 million, five-year fixed rate
equal to 6.875% with a gross annual postponed coupon, was signed and fully placed by the Sole Lead
Manager, JCI Capital Limited Investment & Asset Management, to institutional investors.
From February 6th, 2014 the bonds may be traded on the market ExtraMOT PRO, the professional segment
of the ExtraMOT market managed by the Italian Stock Exchange and dedicated to the listing of bonds,
finance bills, equity instruments and project bonds.
1.3.2 THE BOARD OF DIRECTORS PROPOSES THE START OF A PROGRAM FOR THE PURCHASE OF OWN
SHARES (BUY-BACK)
As at March 31, 2014 The Board of Directors of TerniEnergia, has presented today a plan for the purchase
of own shares ( buy-back), to be submitted to the examination of the Ordinary Shareholders Meeting.The
Board of Directors has determined to give mandate to the Chairman and Chief Executive Officer, Mr.
Stefano Neri, to convene the Ordinary General Meeting of Shareholders to vote on the plan.
Reasons for the request for authorization
The main objectives that the Board of Directors intends to pursue through this operation are:
- Acquire a portfolio consisting of TerniEnergia common shares to be used as consideration as part of any
extraordinary transactions, through an exchange of equity or as a subject of the transfer, or for other
purposes deemed of stratic, financial, industrial and/or operational interest for company;
9
- Providing shareholders with an additional tool to monetize their investment;
- Buy shares in a medium and long term investment perspective;
- Intervening directly or through intermediaries, in accordance with the existing provisions, to contain
abnormal movements in prices or to stabilize the performance of trading and prices in the event of
momentary phenomena caused by an excess volatility or low trading liquidity.
Purchase transactions are not instrumental to the reduction of share capital by cancellation of treasury
shares purchased, nor intentionally aimed at delisting the Company’s operations.
Maximum number of shares purchased
The share capital, fully subscribed and paid in, amounts to Euro 50,529,680.00 and is represented by n.
37,612,000 common shares, without par value.
This proposal concerns the authorization to the Board of Directors to purchase one or more times its own
shares up to the maximum amount of 2,656,720 shares, up to 6% of the share capital, taking into account
the treasury shares held directly and those held from any subsidiary companies .
The Company does not currently hold any treasury shares.
Period of validity of the Shareholders’ Meeting authorization
The authorization to purchase treasury shares is requested for a period of 18 months from the date of the
Shareholders Meeting which has approved the authorization. The authorization to dispose of treasury
shares purchased from time to time and held in the portfolio is no time limit.
The Board of Directors may proceed with the completion of the authorized operations on one or more
occasions and at all times.
Indication of the minimum and maximum price
The unit price for the purchase of shares can not be higher or lower than 10% compared to the reference
price recorded by the shares in the trading session prior to each individual transaction.
From the point of view of the consideration for the sale of treasury shares purchased, the Board of
Directors shall have the discretion to determine, from time to time, price and/or any additional condition,
mode and time of use of treasury shares, had about the performance of the share price in the period prior
to the transaction and the best interests of the Company, in each case with the procedures, terms and
requirements conform to accepted market practice and in compliance with the regulations from time to
time applicable.
Manner of making the purchase
The transactions of purchase and disposal of treasury shares, for which authorization is requested, will be
performed in compliance with Article 144-bis of Consob Regulation implementing Legislative Decree 24
February 1998 n . 58 and, in general, in compliance with the applicable legislation, in particular the national
and EU laws and regulations.
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1.4 ECONOMIC DEVELOPMENT OF THE GROUP
A summary of the key financial highlights of the Group as at March 31, 2014 compared with the
corresponding figures for the previous year.
The financial results of the Group are summarized below represented:
As at March, 31 As at March, 31 Change
Change
(in Euro) 2014 2013 %
Net revenues from sales and services 10,384,088 8,667,200 1,716,888 19.8%
Production costs (4,467,570) (6,013,374) 1,545,804 (25.7)%
Added value 5,916,518 2,653,826 3,262,692 122.9%
Personnel costs (1,355,267) (1,522,905) 167,638 (11.0)%
EBITDA 4,561,251 1,130,921 3,430,330 n.a.
Amortization, depreciation, provisions and
write-downs (1,757,993) (972,518) (785,475) 80.8%
EBIT 2,803,258 158,403 2,644,855 n.a.
Financial income and charges (2,317,572) 1,634,576 (3,952,148) n.a.
Portions of results attributable to the JV 23,142 (146,721) 169,863 (115.8)%
Pre-tax result 508,828 1,646,258 (1,137,430) (69.1)%
Income taxes 151,627 7,474 144,153 n.a.
Net profit for the period 660,455 1,653,732 (993,277) (60.1)%
As at March 31, 2014, the Group recorded consolidated revenues from sales and services of Euro 10,384
thousand, an increase of 19.81% over the same period of 2013 (euro 8,667 thousand). Revenue of EPC in
the photovoltaic sector amounted to EUR 4,924 thousand, and are related to work for the realization of
photovoltaic systems in the quarter in South Africa. Revenues from the Management of Photovoltaic plants
(PV Power Generation) in the period amounted to euro 3,042 thousand, a significant increase compared to
the same period of 2013 (euro 786 thousand ), as a result of operations consolidation of facilities previously
held in the JV that occurred during 2013. The environment business has recorded revenues of euro 1,554
thousand, an increase of 11. 5% over the same period of 2013. Direct production costs, for the most part of
a variable nature, amounted to euro 4,467 thousand a decrease of 25.71% compared to the previous year
(Euro 6,013 thousand), mainly because of the different type of work carried out by the EPC line of business,
which has been characterized in the quarter under review, mainly of design activities with high added
value. EBITDA increased from euro 1,131 thousand in the first quarter of 2013 to euro 4,561 thousand in
the first three months of 2014. The significant increase in EBITDA was attributable to the higher incidence
in the quarter of revenues from power generation and environmental, both characterized by high margins
(to March 31, 2014 represented approximately 44% of revenues, compared to 25% last year). In addition,
the increase in EBITDA is also attributable to the recognition, in the quarter ended March 31, 2014,
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between the proceeds of EPC, the price received for activities in preparation and planning made on behalf
of a leading Italian utility and finalized the construction of two industrial sized photovoltaic plants in South
Africa.
Depreciation recorded a significant increase, rising from euro 973 thousand to euro 1,758 thousand due to
the increase in the number of plants held in full ownership by the Group over the same period of 2013.
Financial management, negative for approximately Euro 2,318 thousand, a record increase in absolute
value of Euro 3,952 thousand compared to the same period last year. The change was due, in part, to
enrollment, in the quarter ended March 31, 2013, a gain, amounting to 2,760 thousand , resulting from the
revaluation of 50% of the shares already held in the company Energia Alternativa Srl whose parent
company had acquired the remaining 50% on March 28, 2013, and in part, to the increased debt resulting
consolidation of the operation that took place during 2013, the company previously held in the JV.
The net result for the period to March 31, 2014 shows a positive balance of Euro 660 thousand, a decrease
in absolute value of € 993 thousand compared to the corresponding period of the previous year (euro 1,654
thousand), due to the above-described .
Consolidated net revenues
Consolidated net revenues recorded in the first three months of 2014 were higher than those of the
corresponding period of the previous year, mainly due to the impact of revenues from power generation
that saw an increase in absolute value of Euro 2,256 thousand. This change is due to the greater number of
plants held in full ownership as a result of the consolidation of the companies previously held in joint
venture during the year 2013. An important contribution to the financial results as of March 31, 2014,
especially in terms of profitability, is also represented by the revenues "Environment", amounting to Euro
1,554 thousand (up by 11, 5% over the same period of 2013). They are represented by the revenues from
the management of the biodigester plant in Nera Montoro, as well as the treatment plants of the PFU (Life
Tyres) and from the water treatment plants.
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1.5 BALANCE SHEET
Below is summarised the Group’s balance sheet:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Intangible assets 4,294,972 4,337,960 (42,988) (1.0)%
Property, plant and equipment 159,724,069 160,574,401 (850,332) (0.5)%
Financial fixed assets and other
intangible assets 20,757,205 17,493,201 3,264,004 18.7%
Fixed Assets 184,776,247 182,405,562 2,370,684 1.3%
Inventories 8,611,581 8,208,886 402,695 4.9%
Trade receivables 31,613,976 28,063,651 3,550,325 12.7%
Other assets 11,141,912 16,573,353 (5,431,441) (32.8)%
Trade payables (22,527,800) (31,416,529) 8,888,729 (28.3)%
Other liabilities (6,988,950) (7,329,882) 340,932 (4.7)%
Net working capital 21,850,719 14,099,479 7,751,240 55.0%
Provisions and other non-trade
liabilities (8,468,018) (7,444,424) (1,023,594) 13.7%
Net Invested Capital 198,158,948 189,060,617 9,098,331 4.8%
Shareholders’ Equity 53,560,013 53,887,823 (327,810) (0.6)%
Current net financial position 4,821,435 18,161,094 (13,339,659) (73.5)%
Non-current net financial position 139,777,499 117,011,700 22,765,799 19.5%
Total net financial position 144,598,935 135,172,794 9,426,141 7.0%
Net Invested Capital 198,158,948 189,060,617 9,098,331 4.8%
Net invested capital
As at March 31, 2014 Net invested capital amounted to Euro 198,158 thousand from 184,776 thousand
represented by fixed assets, from Euro 21,851 thousand and net current assets of Euro 8,468 thousand
from the funds and other non-commercial.
Compared to the year ended on December 31, 2013, the net invested capital increased by Euro 9,098
thousand due primarily (Euro 7,751 thousand) an increase in net working capital, resulting in part to the
increase in turnover and in part to the reduction of 'overall exposure to suppliers.
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Net financial position
As at March, 31 As at December, 31
(in Euro) 2014 2013
Cash (22,140) (17,909)
Available bank current accounts (17,669,393) (13,038,001)
Liquidity (17,691,533) (13,055,910)
Bond debt 249,572
Current bank debt (current account overdraft) 2,866,901 4,793,838
Current bank debt (advance) 6,720,255 11,945,016
Financial payables to other lenders 1,377,131 948,034
Current financial debt (other lenders) 3,779,357 3,734,434
Current financial debt (other lenders) 9,986,382 12,452,165
Current financial receivables (2,466,630) (2,656,483)
Current financial debt 22,512,968 31,217,004
Current net financial position 4,821,435 18,161,094
Bond debt 24,146,753
Non-current financial debt (other lenders) 47,598,000 48,015,688
Financial payables to other lenders 35,430 35,430
Non-current financial debt (Leasing) 67,997,316 68,960,582
Non-current net financial position 139,777,499 117,011,700
Total net financial position 144,598,935 135,172,794
As at March 31, 2014 Net financial debt amounted to Euro 144, 599 thousand, divided into short-term
portion of Euro 4,821 thousand and long-term portion of euro 139,777 thousand. The long-term portion is
mainly attributable to leases and loan agreements entered into with major financial institutions to cover
the financial requirements needed for the development of photovoltaic parks taught entirely fully available
to the company, as well as for the biodigester plant and the end of life tyres plant in Nera Montoro. The
non-current financial debt also includes the share over the 12 months of corporate loans granted to the
parent company TerniEnergia the end of 2013, made up mainly from a unsecured loan of Euro 10 million
for a period of 60 months, repayable 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.
Finally, the non-current financial debt also includes the bond, equal to nominal amount of Euro 25 million,
for 5 year, annual coupon of 6,875% and repayable in a single payment at maturity (February 2019). Please
14
note that the bond issued in February, 2014, is traded on ExtraMOT PRO, the professional segment of the
bond market ExtraMOT managed by the Italian Stock Exchange.
It is noted that the current financial payables comprise part of the payments incurred for investments
already made or still under construction and for which at March 31, 2014 had not yet been entered into a
specific contract financing in the medium - long term. In particular, it is the second end of life tyres plant in
progress of a pirogasification plant 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 4,821 thousand is mainly made up of short-
term debt to banks for overdrafts (euro 2,867 thousand) or advances on invoices and / or contracts (Euro
6,720 thousand), Euro 9,986 thousand represented by short-term loans to banks, from Euro 3,779
thousand represented by the short-term portion of lease payables from Euro 17,691 thousand of cash,
from Euro 2,466 thousand from short-term portion of loans receivable.
The change in the net financial position is largely attributable to the bond issue, which has increased its
non-current borrowings, partially offset by the decrease of current financial debt, due to repayments made
by the Parent Company on the lines short-term financial term.
Net equity
As at March 31, 2014 net equity, comprehensive income for the period, amounted to Euro 53,56 thousand,
with a decrease from the previous year to Euro 324 thousand. This change is due primarily to the change in
the reserve for cash flow hedges and net income in the period.
1.6 BUSINESS OUTLOOK
The current market situation is characterized by strong global growth of investments in the photovoltaic
and environment industry, but there are critical issues arising from the audit ventilated Italian regulatory
system and incentives for renewable energy sources, the quota restrictions on access to capital, the growth
of the size of the plants and the consequent need for careful and prospective vision of financial
management of projects.
Because of this changing market, TerniEnergia has diversified its sources of access to capital through the
bond issue, has changed its business model from which to derive cash flow stability with growth
opportunities arising from the replicability, has differentiated the country risk and the counterparty in B2B.
At the same time, precisely because of the rumors of the development of legal and regulatory framework,
the Company has had to deal with a delay in fund rasing for the placement of the draft ended real estate
investment trust, taking the opportunity to consolidate the full ownership of the assets photovoltaic power
15
generation activity, increasing its assets and maintaining a bouquet of assets to be valued in the event of
future opportunities at very high margins, resulting in a reduction in the NFP. TerniEnergia confirms,
therefore, for the future, a strategy that combines the size of the business, growth and development policy
of relations with capital markets and debt.
As a result, the Company expects the following lines of development:
• International Development - In the period 2014/2015 is planned the construction of a project in the
portfolio in South Africa for an amount of approximately Euro 140 million; in the short term it is
planned to establish a company in partnership with Al Hamed Group, called TerniEnergia Gulf LLC,
headquartered in Abu Dhabi, active in the fields of power generation, waste to energy and waste
management. By 2014 it is expected to open early sites and the construction of a plant for the
recovery of used tires.
• Italian Development - Strengthening tremendous growth in the areas of smart energy and the
energy efficiency. In particular, the initiation of negotiations for the acquisition of Free Energy SpA
allow a completion of the value chain downstream power generation plants owned by
TerniEnergia, thanks to the sales network of the same Free Energy. The operation, thanks to the
simultaneous acquisition of 100% of Lucos Alternative Energies, already contracted for next June,
will allow strong potential synergies and opportunities for the integration of the business, which
will be the basis for a strong growth in energy efficiency and enhancement of energy production
from renewable sources.
• Strategic Development - Focus on business lines with higher margins, consolidating, without
recourse to new investments, lines of business at a lower potential return and growth, on which is
based the recent development (EPC, O & M). Concentration on the activity of power generation
technology with full independence and diversification of sources and technologies themselves, to
enhance the opportunities for the short term and the coverage requirements of the demand curve.
TerniEnergia intends to have a balanced portfolio for the country in the process of internationalization of
photovoltaic and environmental EPC business. In particular, continues to conduct intensive scouting
activities to promote development projects in the most attractive countries for the installation of large-
scale plants.
16
The Company will also continue the process of strengthening the scope of the environmental assets,
completing a new facility for the treatment and recovery of "secondary raw material" of life tires (ELT) in
Northern Italy and exploiting a new plant in South Italy for energy recovery through composting and
anaerobic biodigestion. Finally, the new plant will be completed for the treatment of industrial waste fluids
in Nera Montoro (TR), an advanced authorization phase, which will intercept a substantial demand in a
market segment with high technological content and high growth prospects. On the financial side,
TerniEnergia intends to consolidate the excellent reputation with investors, using their presence on the
Stock Exchange for a candidate to be an investment platform for institutional investors, creating conditions,
through the stability of cash flows, using the debt in a manner efficient with respect to changes in demand.
17
2 FINANCIAL STATEMENTS
2.1 STATEMENT OF CONSOLIDATED FINANCIAL SHEET
Note As at March, 31 As at December, 31
(in Euro) 2014 2013
ASSETS
Intangible assets 3.3.1 4,294,972 4,337,960
Property, plant and equipment 3.3.2 159,724,069 160,574,401
Equity investments 3.3.3 1,176,337 1,168,140
Deferred tax assets 3.3.4 11,195,716 7,823,865
Non-current financial receivables 3.3.5 8,385,152 8,501,196
Total non-current assets 184,776,246 182,405,562
Inventories 3.3.6 8,611,581 8,208,886
Trade receivables 3.3.7 31,613,976 28,063,651
Other current assets 3.3.8 11,141,912 16,573,353
Financial receivables 3.3.9 2,466,630 2,656,483
Cash and cash equivalents 3.3.10 17,691,532 13,055,910
Total current assets 71,525,631 68,558,283
TOTAL ASSETS 256,301,877 250,963,845
LIABILITIES AND SHAREHOLDERS’ EQUITY
Share capital 50,529,680 50,529,680
Reserves 1,918,506 (3,638,119)
Result for the period 503,607 6,708,295
Total Group equity 52,951,793 53,599,856
Equity attributable to minority 451,372 155,218
Profit for the period of the third 156,848 132,749
Total equity 3.4.1 53,560,013 53,887,823
Provision for employee benefits 3.4.2 710,112 668,789
Deferred tax liabilities 3.4.3 1,304,189 1,195,886
Non-current financial payables 3.4.4 139,777,499 117,011,700
Derivatives 3.4.5 6,453,717 5,579,749
Total non-current liabilities 148,245,517 124,456,124
Trade payables 3.4.6 22,527,800 31,416,529
Payables and other financial liabilities 3.4.7 24,979,597 33,873,487
Taxes payable 3.4.8 1,140,708 563,611
Other current liabilities 3.4.9 5,848,242 6,766,271
Total current liabilities 54,496,347 72,619,898
TOTAL LIABILITIES 202,741,864 197,076,022
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUTY 256,301,877 250,963,845
18
2.2 CONSOLIDATED INCOME STATEMENT
As at March, 31 As at December, 31
(in Euro) 2014 2013
Revenues 3.5.1 9,997,180 7,858,994
Other operating income 386,908 808,206
Change in inventories of semi-finished and finished
products 3.5.2 221,611 (167,029)
Costs for raw materials, consumables and goods for resale 3.5.3 (1,882,958) (752,223)
Costs for services 3.5.4 (2,393,465) (4,854,906)
Personnel costs 3.5.5 (1,355,267) (1,522,905)
Other operating costs 3.5.6 (412,758) (239,216)
Amortisation, depreciation, provisions and writedowns 3.5.7 (1,757,993) (972,518)
Operating result 2,803,258 158,403
Financial income 3.5.8 426,588 2,896,670
Financial charges 3.5.8 (2,744,160) (1,262,094)
Portion of result attributable to the joint venture 3.5.9 23,142 (146,721)
Net profit before taxes 508,828 1,646,258
Taxes 3.5.10 151,627 7,474
Net profit for the period 660,455 1,653,732
- of which: attributable to the Group 503,607 1,663,728
- of which: attributable of Other 156,848 (9,996)
Earnings per share – Basic and diluted 3.8 0.018 0.044
19
2.3 INCOME TOTAL CONSOLIDATED STATEMENT
Note
31 March
(in Euro) 2014 2013
Net Profit for the Period 660,455 1,653,732
Net profit for the period (1,136,288) (1,691,371)
Change in the cash-flow hedge reserve of joint ventures (169,711)
Tax effect 312,479 465,127
Other comprehensive income 3.4.1. (993,520) (1,226,244)
Total comprehensive income for the period (333,065) 427,488
· of which: attributable to the Group (489,913) 437,484
· of which: attributable to third parties 156,848 (9,996)
20
2.4 STATEMENT OF CHANGES IN EQUITY
Values as at 31.12.2012 50,529,680 5,123,322 1,903,139 12,831,295 (28,730,223) (8,872,466) 6,880,120 48,537,334 232,128 48,769,462
Other Changes - - - - (8,452) (8,452) - (8,452) 8,218 (234)
Shareholder's Transactions - - - - (8,452) (8,452) - (8,452) 8,218 (234)
Net profit for the period - - - - - - 1,663,728 1,663,728 (9,996) 1,653,732
Other comprehensive - - - - (1,226,244) (1,226,244) - (1,226,244) - (1,226,244)
Total profit for the period - - - - (1,226,244) (1,226,244) 1,663,728 437,484 (9,996) 427,488
Value as at 31.03.2013 50,529,680 5,123,322 1,903,139 12,831,295 (29,964,919) (10,107,162) 8,543,848 48,966,366 230,350 49,196,716
Share capital
Total
Reserves
Result for
the period
Total net
assets of the
group
Equity
attributable
to minority
Total equity
(in Euro) Premium
Reserve
Legal
Reserve Extraordinary
Other
reserves
Values as at 31.12.2013 50,529,680 5,123,322 1,961,905 11,879,177 (22,602,524) (3,638,119) 6,708,295 53,599,856 287,967 53,887,823
Other Changes - -
(158,149) (158,149) (158,149) 163,405 5,256
Shareholder's Transactions - -
(158,149) (158,149) (158,149) 163,405 5,256
Net profit for the period - -
- - 503,607 503,607 156,848 660,455
Other comprehensive - -
(993,520) (993,520) (993,520) (993,520)
Total profit for the period
(993,520) (993,520) 503,607 (489,913) 156,848 (333,065)
Value as at 31.03.2014 50,529,680 5,123,322 1,961,905 11,879,177 (23,754,193) (4,789,789) 7,211,902 52,951,793 608,220 53,560,013
21
2.5. CONSOLIDATED STATEMENT
As At March, 31
(in Euro) Note 2014 2013
Profit before taxes
508,828 1,646,258
Amortisation and depreciation
1,757,993 972,518
Write-downs of fixed assets
Provision for employee benefits
41,323 68,687
Result of joint ventures accounted for at equity and reversal of margin (23,142) 146,721
Gains / Revaluations
Change in inventories
(402,695) 433,960
Change in trade receivables
(3,550,325) 12,514,408
Change in other assets
2,462,288 (4,193,254)
Change in trade payables
(8,888,729) (10,718,738)
Change in other liabilities
(325,985) (2,019,816)
Payment of employee benefits
Net cash flow (used in)/generated by operating activities (8,420,445) (1,149,257)
Investments in property, plant and equipment
(864,673) (1,351,693)
Disposals of property, plant and equipment
Investments in intangible assets
(2,668)
Disposals of intangible assets
Purchase Investments
697,169
Dividends from JV
160,000 640,000
Change in receivables and other financial assets
145,897 920,273
Net cash flow used in investing activities (558,776) 903,080
Change in payables and other financial liabilities
(8,893,890) (1,106,984)
Increase in non-current financial payables
22,503,479 2,381,218
Other Movements of Equity
5,255
Net cash flow generated by financing activities 13,614,844 1,274,234
Comprehensive cash flow for the period
4,635,624 1,028,057
Cash and cash equivalents at the beginning of the period 3.3.10 13,055,910 3,384,398
Cash and cash equivalents at the end of the period 3.3.10 17,691,532 4,412,456
22
3 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT MARCH 31,
2014
3.1 GENERAL INFORMATION
TerniEnergia S.p.A. (“TerniEnergia”, “Company” or “Parent Company”) is a limited company with registered
office in Narni (Italy), strada dello stabilimento 1, listed on the italian stock Exchange . Since December
28th, 2010 TerniEnergia’s ordinary share are negotiated on Star segment of MTA.
TerniEnergia operates in the field of renewable energy, energy efficiency and the environmental sector.
TerniEnergia is active as a system integrator, offering turnkey photovoltaic systems of industrial size, both
for third parties is also through its joint ventures with leading national operators. The Group also intends to
strengthen the business of selling energy produced from solar energy. TerniEnergia operates in the waste
management in the recovery of materials and energy in the development and production of technologies.
In particular, the Group is active in the recovery of used tires; in the treatment of biodegradable waste
through the implementation of biodigesters; in the production of energy from biomass; in the management
of a biological sewage treatment plant; in the decommissioning of industrial plants; in the recovery of
metals from demolition and reclamation of industrial sites; in the development and production of
technological equipment. TerniEnergia, through its subsidiary Lucos Alternative Energies, a developer of
energy efficient plants in both EPC and FTT (Third Party Financing), pursuing the goals of increasing energy
production from renewable sources, energy-saving and emission reduction dictated the European
environmental policy.
3.2 FORM, CONTENTS AND ACCOUNTING POLICIES ADOPTED
The present semiannual consolidated financial statements has been prepared in the going concern basis,
since the Directors have verified the absence of indicators of financial, managerial or other critical issues
that could report difficulties on the Group's ability to meet its obligations in the foreseeable future and in
particular over the next 12 months.
This document has been prepared in accordance with international accounting standards (IFRS) , issued
by IASB and recognized in the European community under regulation (EC) n. 1606/2002 of European
parliament and council of July 19,2002, and in particular IAS 34 – interim financial reporting, as well as
measures enacted to implement article 9 of legislative decree n. 38/2005. Under the options in IAS 34, the
group chose to publish, for the present semiannual consolidated financial statements a concise
23
information. The information herein should be read in conjunction with the consolidated financial
statements for the year ended December 31, 2013 prepared in accordance with IFRS, to which express
reference is made.
These Consolidated Financial Statement for the hal year is expressed in EUR (Euro) as this is the currency in
which operations are conducted by Group companies. All data presented in the notes to the financial
statements are, unless otherwise indicated in Euros.
The Group has elected to use the income statement by nature, while the assets and liabilities in the
statement of financial position are classified as current or non-current. The financial statements have been
prepared under the indirect method. It should be noted that in order to comply with the instructions
contained in Consob Resolution no. 15519 dated July 28, 2006 "Provisions on financial statements" in note
3.6 shows the diagrams were consolidated income statement, consolidated balance sheet and consolidated
cash flow statement, detailing for each balance sheet item of significant amounts of positions or
transactions deriving from transactions with related parties.
The preparation of these Consolidated Financial Statement requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the related disclosures, as well as
on the assets and liabilities at the balance sheet date. The estimates and associated assumptions are based
on historical experience and other factors considered reasonable in the circumstances and are taken when
the carrying amount of assets and liabilities that are not readily apparent from other sources. The actual
results could differ from those estimates. The estimates and underlying assumptions are reviewed
periodically and the effects of any changes are reflected in the income statement, if they only involve the
exercise. In the event that the revision affects both current and future periods, the change is recognized in
the period in which the revision is made and in future years.
The actual results may differ, perhaps significantly, from these estimates as a result of possible changes in
the factors considered in determining these estimates.
This Consolidated Financial Statement has been approved by the Board of Directors of the Parent Company
on May 14, 2014.
24
NEW ACCOUNTING STANDARD
From January 1,2014, the Group adopted the following new accounting standards:
• IAS 27 Revised (separate financial statements): The standard was revised in conjunction with
the adoption of IFRS 10, limiting its scope to only separate financial statements;
• IAS 28 Revised (Investments in associates and joint ventures): The standard was revised by
specifying certain procedures for applying the equity method;
• IAS 32 Amendment (Financial Instruments - Presentation): the principle clarifies the
circumstances in which it is possible to compensate for financial assets and liabilities;
• IFRS 11 (agreements to joint control), the principle has eliminated the possibility of
consolidating on a proportionate basis the qualified joint arrangement as a joint venture under
dell'IFRS11, while the consolidated financial statements include the relevant portion of costs,
revenues, assets and liabilities of the joint operation;
• IFRS 12 (Details of investments in other entities): the principle requires you to explain in the
notes to all forms of participation in other entities, including associates, joint ventures, special
purpose vehicles, and other unconsolidated SPEs;
• IAS 36 (Disclosures on the recoverable value of non-financial assets): the principle requires you
to enter a disclosure in the notes on the recoverable value of assets that have suffered
impairment in value, in cases where the same has been calculated on the basis of fair value less
costs of sale or disposal.
The adoption of these accounting standards has not had a significant impact in this Consolidated
Financial Statement ended March 31, 2014.
Changes in consolidation
The consolidated financial statements at March 31, 2014 includes the financial statements of
the Parent TerniEnergia SpA and the balance sheet of all companies in which it holds directly or indirectly
control.
See below a list of the entities included in consolidation, and their percentage of direct or indirect
ownership by the Group as at March 31, 2014:
25
List of company consolidated using the integral method:
Company Location % of
Possession % % Group
Newcoenergy S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Capital Solar S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Investimenti Infrastrutture S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
MeetSolar S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Festina S.r.l. Terni - Via Garibaldi n.43 100% - 100%
Energia Basilicata S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Energia Lucana S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Energia Nuova S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Verde Energia S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Rinnova S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Soc. Agric. Fotosolara Cheremule S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
Soc. Agric. FotosolaraBonannaro S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
Soc. Agricola Fotosolara Oristano S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
Soc. Agricola Fotosolara Ittireddu S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
T.e.c.i. costruzioni & ingegneria S.r.l. Gioia del Colle – Via Giosuè Carducci n. 122 100% - 100%
Meet Green Italia S.r.l. Nardò- Via Don Milani, n.4 100% - 100%
Lucos Alternative Energies S.p.A. Narni - Via dello Stabilimento, 1 100% - 100%
LyteEnergy S.r.l. Narni - Via dello Stabilimento, 1 - 70% 70%
Soc. Agricola Padria S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
TerniEnergia. Hellas M.EPE. Atene – 52, Akadimiasstreet 100% - 100%
TerniEnergia Polska Zoo Varsavia - Sw. Krolewska 16, 00-103 100% - 100%
Tevasa L.t.d. Cape Town, 1 Waterhouse Place, Century City,
7441 100% - 100%
D.T. S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
IGreen Patrol S.r.l Narni - Via dello Stabilimento, 1 100% - 100%
Alchimia Energy 3 S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
TerniEnergia Romania Srl Str. Popa Petre 5 - Bucarest 100% - 100%
TerniEnergia Solar South Africa L.t.d. Woodstok, De Boulevard searle street 80%
80%
TerniEnergia Project L.t.d. Woodstok, De Boulevard searle street 80%
80%
GreenAsm S.r.l. Narni - Via dello Stabilimento, 1 50% - 50%
Energia Alternativa S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
SolarEnergy S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
Solter S.r.l. Narni - Via dello Stabilimento, 1 100% - 100%
Infocaciucci S.r.l. Narni - Via dello Stabilimento, 1 69,5% - 69,5%
List of consolidated companies using the equity method:
Company Location % of Possession % of Possession
Direct Direct Group
Saim Energy 2 S.r.l. Narni - Via dello Stabilimento, 1 50% - 50%
Girasole S.r.l. Narni - Via dello Stabilimento, 1 50% - 50%
SolTarenti S.r.l. Narni - Via dello Stabilimento, 1 50% - 50%
Guglionesi S.r.l. Narni - Via dello Stabilimento, 1 50% - 50%
26
3.3 COMMENTS ON THE MAIN BALANCE SHEET ITEMS
NON CURRENT ASSETS
3.3.1 INTANGIBLE ASSETS
The tables below report the breakdown of changes in the “Initial cost” (Table 1), “Cumulated
ammortisation” (Table 2) and “Net values” (Table 3), respectively, relating to intangible assets as at March
31, 2014, at December 31, 2013 and the relative changes.
(table 1)
Intangible assets Original Cost
Values as at
31.12.2013 Increase
Decrease for Write Downs/ Values as at
31.03.2014 Disposals Reclassification
Software 578,384
578,384
Others 829,309
829,309
Building lease 331,452
331,452
Authorisations 1,133,334
1,133,334
Goodwill 2,335,176
2,335,176
Patents 116,450
116,450
Total 5,324,106 5,324,106
(table 2)
Intangible
assets
Values as at
31.12.2013
Amortisation
and
depreciation
Write Downs/ Values as at
31.03.2014 (in Euro) Reclassification
Software 458,672 13,943
472,615
Patents 115,564 221
115,786
Others 411,910 28,823
440,733
Total 986,146 42,988 1,029,134
27
(table 3)
Intangible assets
Net Values
Original Cost Cumulative
Net Values Original Cost Cumulative
Net Values (in Euro) Amortisation Amortisation
Software 578,384 (458,672) 119,712 578,384 (472,615) 105,769
Others 829,309 (411,910) 417,399 829,309 (440,733) 388,576
Building lease 331,452 331,452 331,452 331,452
Authorisations 1,133,334 1,133,334 1,133,334 1,133,334
Goodwill 2,335,176 2,335,176 2,335,176 2,335,176
Patents 116,450 (115,564) 886 116,450 (115,786) 664
Total 5,324,106 (986,146) 4,337,960 5,324,106 (1,029,134) 4,294,972
Intangible assets include the "Permissions" which refers to costs associated with administrative rights
already obtained or still in progress for the implementation of photovoltaic systems, acquired through
subsidiaries.
The amount of Euro 1,133 thousand relates to authorizations held by the group that the date of these
interim consolidated financial statements were waiting to be used and therefore not depreciated. The
residual value of permits will be acquired recovered through the future implementation of photovoltaic
system, so on the basis of business plan of the group’s parent, it is believed that the figure is fully
recoverable, are therefore not emerged indicators of impairment which required a reduction in the
carrying value in budget.
The surface rights relate to certain acquired rights and for the construction of photovoltaic systems.
The goodwill detected in the previous year and amounted to Euro 2,335 thousand, relates entirely to the
acquisition of control in Lucos Alternatives Energies SpA, a company engaged in the business of energy
efficiency. This is an indefinite life asset, so is not amortized but subject to verification at least annually
(impairment test). As at March 31,2014 there are no indicators to be assumed possible impairment of
goodwill.
28
3.3.2 TANGIBLE FIXED ASSETS
The following tables are listed, respectively, the analysis of variations of the "Original cost" (Table 1), the
"Fund Depreciation and Amortization" (Table 2) and "net values" (Table 3) relating to intangible assets as at
March 31, 2014, at December 31, 2013 and the relative changes:
(table 1)
Property, plant and
equipment
Original Cost
Values as at
31.12.2013 Increase
Decrease for Reclassification
Values as at
31.03.2014 (in Euro) Disposals
Land and buildings 4,823,548 1,955 4,825,503
Plant and machinery 165,460,308 7,487 165,467,795
Industrial equipment 779,226 8,533 787,759
Other assets 1,013,241 3,353
1,016,593
Construction in progress 15,314,243 843,666
16,157,909
Total 187,390,565 864,994 188,255,559
(table 2)
Property, plant and
equipment
Amortization Found and WriteDowns
Values as at
31.12.2013 Amortization Values as at
31.03.2014 (in Euro)
Land and buildings 210,385 47,135
257,520
Plant and machinery 25,406,034 1,606,550
27,012,584
Industrial equipment 572,485 25,281
597,767
Other assets 627,259 36,360
663,620
Total 26,816,164 1,715,326 28,531,490
29
(table 3)
Property, plant and
equipment
Net Values
As At December, 31 2013 As At March, 31 2014
(in Euro) Original Cost
Amortization and
Depreciation
Fund
Net Values Original Cost Amortization and
Depreciation Fund Net Values
Land and buildings 4,823,548 (210,385) 4,613,163 4,825,503 (257,520) 4,567,983
Plant and machinery 165,460,308 (25,406,034) 140,054,274 165,467,795 (27,012,584) 138,455,211
Industrial equipment 779,226 (572,485) 206,741 787,759 (597,767) 189,992
Other assets 1,013,241 (627,259) 385,981 1,016,593 (663,620) 352,974
Construction in progress 15,314,243 15,314,243 16,157,909 16,157,909
Total 187,390,565 (26,816,164) 160,574,401 188,255,559 (28,531,490) 159,724,069
Investments in land and buildings amounted to Euro 4,568 thousand and mainly the value of the properties
owned by the Group acquired following the merger with TerniGreen SpA. These properties are represented
by two industrial buildings present within the plant in Nera Montoro and conferred TerniGreen from the
Nuova Terni Industrie Chimiche SpA and Nuova TIC S.r.l. (Now Italeaf SpA) in previous years, as well as the
value of land always TerniGreen conferred by the GR Ambiente Srl and for the construction of a composting
plant in the province of Lecce. These buildings and land are all in the service of the Group's business.
Finally, during 2013, the Parent Company Ternienergia has acquired two industrial buildings owned by the
Italeaf Spa for a value of Euro 1,235 thousand, which are present in the plant in Nera Montoro, which will
be used in the service of the Group's industrial activities.
"Plant and Machinery" at March 31, 2014 includes the value of 34 photovoltaic systems with a total
capacity of 34.3 MW, as well as the value of the end of life tyres plants , of the biodigester plant and of
water treatment plants acquired by Italeaf SpA at the end of the previous year, they all present inside the
plant in Nera Montoro.
"Assets under construction", amounting to Euro 16,158 thousand, includes the investments in progress and
not yet in the year ended at March 31, 2014. Such investments refer to:
- The installation of anaerobic biodigester and composting plant at the town of Calimera (Lecce province);
- The plant with cogeneration of energy through the pirogasification of virgin wood to produce electricity
and heat, near the town of Borgosesia (Vercelli); the plant has been connected to the electricity grid in
December 2012, and got the feed-in tariff of 0.28 Euro / kWh;
30
- A second end of life tyres plant.
Finally, among the assets under construction are capitalized costs incurred in prior years for the
development of the wind farm from 18 MWp located in the town of Stroncone. The Parent Company is
considering whether to develop the facility on their own or, if opportunity presents interesting, to sell the
project to a third party.
3.3.3 EQUITY INVESTMENTS
Below the value of investments in joint ventures and its enhancement with the equity method related to
each company as at March 31, 2014, at December 31, 2013 and the relative changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Investments in JV
175,332 167,135 8,197 n.a
Other investments
1,001,005 1,001,005
n.a
Total Investments 1,176,337 1,168,140 8,197 4,9%
The joint ventures are active in the identification, development, financing, design, construction and the
putting into operation of photovoltaic plants in Italy, as well as in the sale of electricity produced by the
same.
Below is a detail of the movement regarding the value of investments in joint ventures as at March 31,
2014 with evidence of the effects of accounting in accordance with the equity method:
Partecipation As At March, 31
2014
Equity investments Net Deferred
Saim Energy 2 S.r.l. 114,328 114,328
Girasole S.r.l.. (2,704) (2,704)
Soltarenti S.r.l. 47,414 47,414
Guglionesi S.r.l. 13,589 13,589
Totale 172,627 175,332 (2,704)
31
It is stated that the application of equity method has resulted in previous years the elimination of
significant margin in relation to the volume of work undertaken on behalf of joint ventures, with the
consequent reduction in the value of the investment until the zeroing of itself. After resetting the value of
the investment, the further reduction is recognized as a liability. This liability called “Margin Deferred” , is
recognized under other liabilities (current and not current), because it is not representative of a legal or
constructive obligation to cover the losses of the investee, but a reduction in the value of the investment in
joint venture consequent elision of margins in future years will find that deferred recognition in the
consolidated income statement, according to the amortization of the transferred plants.
Below is a detail of the movement occurred in the first quarter of 2014 regarding the value of investments
in joint ventures (defined as net value of the value of investments in shares and the value of the margin
deferred) with evidence of the effects of accounting in accordance with the equity method:
32
JV Partecipation 2014 2013
(in Euro)
January, 1 149.486 (9.735.633)
In share capital / Additions
Reimbursement Payment (884.676)
Other changes 8.051.566
Elimination of intercompany transactions, margin
share's result 23.142 2.718.229
Reserve for cash flow hedges, net of tax
March, 31 172.628 149.486
- Of which investments in shares 175.332 167.134
- Of which Margin deferred (2.704) (17.649)
Total 172.628 149.486
Investment in Joint Venture is classified in the balance sheet for Euro 175 thousand in the item equity
investments and Euro 2,704 in the item Deferred margin, among other current liabilities.
In order to present more complete information in the following table shows the aggregate net debt of
major joint venture as at March 31, 2014.
33
Saim Energy 2 Girasole Sol Tarenti Guglionesi Total
Cash
Bank accounts 56,566 7,897 15,775 110,202 190,441
Liquidity (A) 56,566 7,897 15,775 110,202 190,441
Current financial payables
Current bank debt
Mortgages
- sale and leaseback (144,712) (267,652) (414,701) (95,863) (922,928)
- to other (500,000) (150,000) (650,000)
- to TerniEnergia (1,766) (500,000) (150,000) (651,766)
Non-current financial payables
Mortgages
- project financing
- sale and leaseback (2,440,523) (5,092,549) (8,384,780) (2,274,603) (18,192,455)
- to other (609,891) (1,030,926) (252,261) (1,893,078)
- to TerniEnergia (617,826) (1,031,202) (238,983) (1,888,011)
Financial Debt (B) (2,587,001) (7,587,918) (10,861,608) (3,161,710) (24,198,237)
Financial Net Debt (A+B) (2,530,434) (7,580,021) (10,845,833) (3,051,508) (24,007,796)
Please note that the values of net debt shown in the table above refer to the 50% to Group TerniEnergia,
equal shares of ownership held by the Group in Joint Venture.
The Joint Venture generally finance investments in solar power systems through funding granted by the
shareholders or by medium long-term loans from financial institutions and leasing companies. The term
borrowings are primarily secured by mortgages on the photovoltaic joint venture, by pledges on receivables
and cash equivalents of joint ventures and guarantees given by the shareholders. The Parent Company has
provided to Joint Ventures agreements to take over Euro 12,6 million as at March 31, 2014 (for details, see
Note 3.4.10 and 3.6 commitments and guarantees given to related parties).
Some loans require both shareholders and joint venture with respect to certain corporate and financial
parameters. In particular, the parameters corporate provision for the lending institutions to require early
repayment of loans extended in the event of changes in shareholder of reference of the joint venture, while
the financial parameters include:
• the requirement for joint venture to meet certain ratios - usually 15% / 85% - of equity / debt;
• the ability for financial institutions to require early repayment in the event of:
34
i) a debt service cover ratio generally less than 1.05 (debt service cover ratio is the ratio between
a) the cash flows expected from the project funded in a given year and b) interest, including
payments related to derivatives, and the principal amount of debt coming due for the same year);
ii) a loan life coverage ratio below 1, 10 (that is the present value of expected cash flows from the
project compared to the amount of sums paid but not yet reimbursed);
The possibilities for joint venture to distribute dividends is i) subject to satisfaction of a debt service cover
ratio less than typically 1, 15 and the loan life coverage ratio equal to or generally rates above 1, 20 and ii)
limited to amount of cash free as defined by the contract.
As at March 31, 2014, all covenants are complied. Please remember that the cash flows to service
indebtedness of the Joint Venture derive from incentive rates of GSE and sale of electricity produced by
photovoltaic systems owned by the same Joint Venture.
3.3.4 DEFERRED TAX
The following table provides a breakdown of tax assets at March 31, 2014, to December 31, 2013 and its
changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Deferred tax assets 11,195,716 7,823,865 3,371,850 43.1%
Total Deferred Taxes 11,195,716 7,823,865 3,371,850 43.1%
The deferred tax assets relate primarily to the Parent Company TerniEnergia and the companies Energia
Alternativa and TERNI Solarenergy. The change compared to December 31,2013 is mainly due to the
reclassification of an amount of approximately Euro 2 million, representing the amounts due in respect of
Terni Research SpA (consolidating company), and for the ratio of tax to be consolidated until the year 2013.
Taken in consideration of the termination of tax consolidation, following the spin-off partial inverse that
has affected the company Terni Research SpA and now Italeaf SpA, the above amount, consisting of tax
losses in previous years has been reclassified to deferred tax assets.
35
3.3.5 NON CURRENT FINANCIAL RECEIVABLES
The following table provides a breakdown of non-current financial receivables at March 31, 2014 at
December 31, 2013 and its changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Soltarenti S.r.l. 1,021,565 1,061,562 (39,997) (3.8)%
Girasole S.r.l. 617,869 617,869 0.0%
Guglionesi S.r.l. 237,005 237,005 0.0%
Financial asset 5,321,246 5,397,111 (75,864) (1.4)%
Security deposits
1,187,466 1,187,650 (183) (0.0)%
Total non-current loans receivable 8,385,152 8,501,196 (116,045) (1.4)%
This caption includes Euro 5,321 thousand of loans receivable accounted for due to the application of IFRIC
12 and IFRIC 4 to contracts for energy efficiency and interest-bearing loans granted to the Joint Venture
that are renewed automatically from year to year unless canceled.
This item consists mainly of deposits the amounts deposited by the company owning PV systems to
guarantee the lease contracts for the financing of the same plants.
As at March 31, 2014 part of the financial credits earned toward the Joint Venture have been classified as
current assets; This amount represents the amount to be reimbursed in the short term, given the liquidity
in the subsidiary and any financial covenants. See the note in the notes 3.3.9.
As mentioned above, under "financial assets energy efficiency" are registered financial claims arising in
respect of contracts for energy efficiency. These credits represent the fair value of the expected cash flows
from 'energy efficiency activities carried out on a number of municipalities and industrial plants. These
contracts are intended to improve the energy efficiency of public lighting systems. The performances
consist of the planning, design and maintenance of interventions aimed at efficiency.
36
CURRENT ASSETS
3.3.6 INVENTORIES
Follow the details as at March 31, 2014, December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Commodities 1,827,890 1,643,885 184,005 11.2%
Semifinished 12,600 (12,600) (100.0)%
Finished Products 722,642 737,004 (14,362) (1.9)%
Products in process 6,061,049 5,815,397 245,652 4.2%
Total inventories 8,611,581 8,208,886 402,694 4.9%
As at March 31, 2014, the products being processed mainly include costs for PV system in different states
of completion.
As at March 31, 2014 the finished products mainly relate to the matter-before the second arising from the
recovery of End of Life Tyres, as well as to the equipment "TR gridless" (apparatus for providing power to
low voltage using a stand-alone photovoltaic energy and batteries) and "TR WOC" (sensor for the detection
of weld defects real-time). For these products, the company is implementing a strategy for marketing
abroad.
3.3.7 TRADE RECEIVABLES
Follow the detail as at March 31, 2014, December 31 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Loans to customers
32,054,703 28,806,118 3,248,585 11.3%
Receivables from joint venture 283,921 259,728 24,193 9.3%
Receivables from parent
477,851 67,956 409,895 n.a.
Loans to subsidiaries
70,761 203,414 (132,653) (65.2)%
Provision for doubtful
(1,273,261) (1,273,565) 304 (0.0)%
Total trade receivables 31,613,976 28,063,651 3,550,324 12.7%
37
As at March 31, 2014 Trade receivables, mainly from customers, amounted to Euro 32,055 thousand, of
which Euro 7,491 thousand of receivables for invoices to be issued. The change in trade receivables
compared to the same period of the previous year is mainly due to the work conducted in South Africa.
Among the accounts receivable is a receivable, amounting to about Euro 7 million, which is the remaining
part of the consideration, which originally amounted to 40 million, the sale was completed in 2011 by two
photovoltaic plants of total capacity of about 12 megawatts currently in full operation. In relation to this
credit, although in December 2012 had reached an agreement for the payment of the amount due, the
other party did not honor its obligations. Despite repeated attempts to close the issue as extra-judicial, the
company was forced to start in August 2013, the legal action to recover the amount of such claim. In
particular, the parent company, with the assistance of its legal counsel, believes specious reasons to refuse
the payment by the counterparty in the light of the factual and legal elements serious and concrete and,
therefore, the date of the balance sheet, it has reasonable grounds to believe not configurable likely a
liability to the Parent Company. For more details, please refer also to what is reported in Note 3.4.10.
The amount of trade receivables is adjusted by a provision for doubtful debts of Euro 1,273 thousand to
cover the risk of default of certain receivables arising in previous years.
For a breakdown of receivables from joint ventures, please refer to the paragraph 3.6 which lists all the
transactions with the related parties as at March 31, 2014.
As at March 31, 2014 the nominal value of trade receivables approximates their fair value.
38
3.3.8 OTHER CURRENT ASSETS
Follow the detail as at March 31, 2014, December 31 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
VAT credit
3,228,989 5,003,167 (1,774,178) (35.5)%
Advances to suppliers
113,585 398,656 (285,071) (71.5)%
Prepayments
1,979,359 2,119,541 (140,182) (6.6)%
Other credits
5,819,979 9,051,989 (3,232,010) (35.7)%
Total other current assets 11,141,912 16,573,353 (5,431,441) (32.8)%
The item "Other receivables" mainly on credit, equal to Euro 1,225 thousand , accrued for the sale of 50%
of the shares of the company Collesanto Srl, whose financial settlement will take place during the year
2014. This item also includes the credit accrued to the Terni Research SpA, amounting to Euro 807
thousand for the tax on the income of the company in relation to the ratio of tax to be consolidated until
the tax year 2013. Such credit is represented in the prevalence of tax losses that will be used by
consolidating Terni Research SpA in the tax return for the year 2013. A portion of the loans outstanding at
December 31, 2013, and related to the ratio of tax consolidation, have been reclassified to deferred tax
assets, taking into account the termination of the fiscal consolidation following operation of partial
inversely proportional split of the company Terni Research SpA (See also note 3.3.4). The remainder of the
balance of other receivables mainly relates to deferred tax receivables and advances from customers.
3.3.9 FINANCIAL RECEIVABLES
Follow the detail as at March 31, 2014, December 31 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Financial receivables from joint venture 665,992 814,379 (148,387) (18.2)%
Financial receivables from MPS 1,000,000 1,000,000
0.0 %
Financial receivables from others 800,638 842,104 (41,466) (4.9)%
Total loans receivable 2,466,630 2,656,483 (189,853) (7.1)%
39
The item "Other financial receivables" includes mainly the financial credit to the company Collesanto Srl
whose investment was sold in December 2013; this credit will be fully collected during the year 2014. The
balance relating to financial receivables from Monte dei Paschi di Siena SpA refers to storage at an escrow
account to guarantee the relationship between the parent and at the same institute.
3.3.10 3.3.10 CASH AND CASH EQUIVALENT
Follow the detail as at March 31,2014 , December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Bank accounts
17,669,393 13,038,001 4,631,392 35.5%
Cash
22,140 17,910 4,230 23.6%
Total Cash 17,691,532 13,055,911 4,635,622 35.5%
For an analysis of the change outlined above, please refer to the Statement of Cash Flows.
40
3.4 COMMENTS ON THE PRINCIPAL LIABILITIES
3.4.1 3.4.1 NET ASSETS
As at March 31, 2014 the Company's share capital subscribed and paid amounted to Euro 50,529,680
divided into n. 37,612,000 ordinary shares of no par value.
As at March 31, 2014 other reserves include the decrease of the cash flow hedge amounted to Euro 824
thousand. This reserve reflects the negative fair value, offset by related tax effects, of derivatives recorded
in joint ventures balance sheet as the hedge exposure to variability in cash flows, related to fluctuations in
interest rates of some medium - long term loans. These derivative contracts meet the requirements of IFRS
to be considered of hedge accounting and therefore changes in the fair value of these derivatives are
detected, limited to the 'effective' in a specific equity reserve ("the cash flow hedge "). The changes of this
reserve is indicated in the statement of comprehensive income.The variation of this reserve is indicated in
the statement of comprehensive income. The total value of the cash flow hedge reserve as at March 31,
2014 was a loss of 5,114 thousand.
The equity of minority interests is accounted for mainly by capital and reserves belonging to the minority
shareholders of LyteEnergy Srl and GreeASM S.r.l..
The company as at March 31, 2014 did not possess its own shares.
3.4.2 FUND FOR EMPLOYEE BENEFIT
Follow the detail as at March 31, 2014, December 31 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Provision for employee benefits 710,112 668,789 41,325 6.2%
Total Employee Benefits Fund 710,112 668,789 41,325 6.2%
The change represents the provision for the quarter, net of amounts paid to employees.
41
3.4.3 DEFERRED TAXATION
Follow the detail as at March 31, 2014 , December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Provision tax Deferred
1,304,189 1,195,886 108,303 9.1%
Total Deferred taxation 1,304,189 1,195,886 108,303 9.1%
The balance of deferred tax liabilities mainly relates to deferred tax assets recognized on the transition of
the financial statements of certain subsidiaries under Italian accounting principles "Ita GAAP" to IFRS.
3.4.4 FINANCIAL NON CURRENT LIABILITIES
Follow the detail as at March 31, 2014, December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Due to financial leasing 67,997,316 68,960,582 (963,266) (1.4)%
Non-current borrowings (other funders) 35,430 35,430 - (0.0)%
Non-current debt (mortgages) 47,598,000 48,015,688 (417,688) (0.9)%
Bond Debt 24,146,753 - 24,146,753 n.a.
Total non-current financial debts 139,777,499 117,011,700 22,765,800 19.5%
Payables for financial leases, amounting to Euro 67,997 thousand, relate to debts incurred to finance the
plant property. In particular it comes to debt "non-recourse" relative to 21 photovoltaic plants of total
capacity of 22.4 MWp through sales and lease back transactions. The debt for lease also includes donations
made by the leasing company in respect of the completion of the treatment plant OFMSW (Organic
Fraction Municipal Solid Waste) in the Establishment of Nera Montoro, as well as the funding leasing of end
of life tyres plant in Nera Montoro. These loans do not include covenants and restrictions to the
distribution of profits generated.
The item "Non-current borrowings (loans)", amounting to Euro 47,598 thousand, mainly includes the non-
current portion of loans related to 12 photovoltaic plants with a total capacity of 11.1 MWp. These loans
were granted in the form of mortgages for those covers 5 PV plants owned by the company Energia
42
Alternativa Srl, while for the other 7 plants owned by the company TERNI SolarEnergy Srl were provided
with the methods of project financing. To ensure this latest funding, signed in 2010, was made up of a
pledge on the shares of the same TERNI SolarEnergy. The remainder of the balance relates to corporate
loans granted to the parent company TerniEnergia, made up mainly by the non-current portion of an
unsecured loan of Euro 10 million for a period of 60 months, repayable in 20 quarterly installments and an
unsecured loan of Euro 5 million duration of 60 months, repayable in one installment at maturity, both
provided by Veneto Banca.
The "Debt Issue", refers to the bond issue by the Parent Company TerniEnergia in February 2014. The bond
issue, called "TernEnergia 2019," amounts to Euro 25 million, five-year fixed rate equal to the gross 6.875%
annual coupon, and is negotiated at ExtraMOT PRO, the professional segment of the bond market
ExtraMOT managed by the Italian Stock Exchange. The debt is shown net of issuance costs. It should be
noted that the bond requires compliance with the following financial covenants: Interest Coverage Ratio:
Equal to or greater than 1.5x; Net Financial Debt / EBITDA: equal to or greater than 8x; Corporate Net
Financial Debt / EBITDA: equal to or greater than 5x. These covenants will apply to the consolidated
financial statements as of December 31, 2014.
3.4.5 DERIVATIVES
Follow the detail as at March 31, 2014, December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Hedging Derivatives 6,320,115 5,446,147 873,968 16.0%
Other derivatives on interest rates 133,602 133,602
0.0%
Total Derivatives 6,453,717 5,579,749 873,968 15.7%
As at March 31, 2014 the Group does not hold any derivative instruments listed. The fair value of OTC
derivatives is measured by reference to financial valuation techniques: in particular, is calculated by
discounting future cash flows according to the parameters of the market.
The caption "Hedging derivatives", amounting to Euro 6,317 thousand, mainly refers to several derivatives
IRS (Interest Rate Swap) to cover any fluctuations in interest rates on long-term contract for the financing
43
of equipment property. These derivative contracts primarily relate to funding of the company Energia
Alternativa Srl and TERNI SolarEnergy S.r.l. and Solter S.r.l.
The item "Other derivatives on interest rates", equal to Euro 137 thousand, refers to a derivative of the
subsidiary DT S.r.l. This derivative is a "cap" that ensures that the company can not pay a Euribor major of
3.5%. In the face of this guarantee, the company pays a premium equal running at a rate of 1.2% per
annum. The assessment of the sustainability of the hedge accounting method showed that the intrinsic
value at March 31, 2014 is null.
3.4.6 TRADE PAYABLE
Follow the detail as at March 31, 2014, December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Payables to suppliers 22,323,201 31,335,263 (9,012,062) (28.8)%
Payables to parent 18,205 10,898 7,308 67.1%
Payables to associated 186,394 70,369 116,025 n.a.
Payables to Joint Venture n.a.
Total trade payables 22,527,800 31,416,529 (8,888,729) (28.3)%
Trade payables amounted to Euro 22,528 thousand as at December 31, 2013, relate to the supply of
materials as well as the acquisition of goods and services. Trade payables include Euro 1,307 thousand of
bills not yet received as at March 31, 2014.
44
3.4.7 DEBT AND OTHER FINANCIAL LIABILITIES
Follow the detail as at March 31, 2014, December 31, 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Current bank debt (current account
overdraft) 2,866,901 4,793,838 (1,926,937) (40.2)%
Current bank debt (advance) 6,720,255 11,945,016 (5,224,761) (43.7)%
Financial payables to other lenders 1,377,131 948,034 429,097 45.3%
Current Part of lease 3,779,357 3,734,434 44,923 1.2%
Current financial debt (other lenders) 9,986,382 12,452,165 (2,465,783) (19.8)%
Total debts and other
liabilities 24,979,598 33,873,487 (8,893,889) (26.3)%
Payables and other financial liabilities mainly refer to payables to banks for overdrafts and advances on the
account contracts and invoices, as well as the short-term portion of debt for financing and leasing.
The change in the item "Current bank debt (anticipation)" reflects the significant repayments made by the
Parent Company on short-term credit lines.
The "Debt Issue" includes the balance of interest expense accrued at March 31, 2014 on the bond debt, the
coupon will be paid in February 2015.
It is noted that the current financial payables comprise part of the payments incurred for investments
already made or still under construction and for which at March 31, 2014 had not yet been entered into a
specific contract financing in the medium - long term. In particular, it is the second PFU treatment plant in
progress of a pirogasification plant already connected to the grid in December 2012 and a composting plant
under construction in Puglia.
45
The following table presents the net financial debt at March 31, 2014 and December 31, 2013:
As at March, 31 As at December, 31
(in Euro) 2014 2013
Cash (22,140) (17,909)
Available bank current accounts (17,669,393) (13,038,001)
Liquidity (17,691,533) (13,055,910)
Bond debt 249,572
Current bank debt (current account overdraft) 2,866,901 4,793,838
Current bank debt (advance) 6,720,255 11,945,016
Financial payables to other lenders 1,377,131 948,034
Current financial debt (other lenders) 3,779,357 3,734,434
Current financial debt (other lenders) 9,986,382 12,452,165
Current financial receivables (2,466,630) (2,656,483)
Current financial debt 22,512,968 31,217,004
Current net financial position 4,821,435 18,161,094
Bond debt 24,146,753
Non-current financial debt (other lenders) 47,598,000 48,015,688
Financial payables to other lenders 35,430 35,430
Non-current financial debt (Leasing) 67,997,316 68,960,582
Non-current net financial position 139,777,499 117,011,700
Total net financial position 144,598,935 135,172,794
As at March 31, 2014 Current financial receivables include the fixed deposit account with Monte dei Paschi
di Siena SpA, amounting to Euro 1 million as security for bank overdrafts and advances on invoices with the
same. For more details on the net financial position of the Group, please refer to the Report on Operations
under the heading "Balance Sheet".
The increase in the net financial position was due mainly to the bond issue, as well as the current dynamic
in which the reduction is attributable to the repayment of debts to credit institutions by the Parent
TerniEnergia.
Italeaf SpA, the parent company of the parent company, issued bank guarantees in favor of the Parent
Company for a total amount of Euro 47,5 million at the date of approval of these financial statements.
At the date of approval of these consolidated financial statements, the Group has available credit lines with
various banks for Euro 71,6 million (considering the credit lines for credit commitments and the amount
approved by the factoring company).
46
3.4.8 TAX DEBIT ON INCOME
Follow the detail as at March 31, 2014, December 31 ,2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Direct Taxex 1,140,708 563,611 577,096 102.4%
Total current tax liabilities 1,140,708 563,611 577,096 102.4%
The change in this item is attributable mainly to direct taxes accrued on the results of the companies
operating in South Africa and Greece.
3.4.9 FURTHER CURRENT LIABILITIES
Follow the detail as at March 31, 2014, December 31 2013 and changes:
As at March, 31 As at December, 31 Change Change
(in Euro) 2014 2013 %
Withholding tax
187,429 210,825 (23,396) (11.1)%
Due to personnel
884,388 440,886 443,501 100.6%
Payables to social security institutions and
welfare 350,493 574,989 (224,496) (39.0)%
Net Deferred
2,704 17,650 (14,946) (84.7)%
Due for purchase Investments 2,135,046 2,135,046
0.0%
Other current liabilities
2,288,183 3,386,874 (1,098,691) (32.4)%
Total other current liabilities 5,848,242 6,766,271 (918,029) (13.6)%
This item includes payables to employees and social security institutions and welfare.
The voice Payable for purchase of investments includes, for Euro 1,950 thousand , the debt related to the
fair value of the call option that the parent company will exercise to purchase the remaining 30% of the
Lucos Alternative Energies SpA, in June 2014.
The item Other current liabilities also includes the debt of Euro 605 thousand recorded in the year
following the accession to a report of findings of the Revenue received by the parent company in August
2013. Given that in the prevalence of claims for taxes already paid in the tax year following the year
audited, among other claims has been detected in a compensation claim for the same amount.
47
3.4.10 COMMITMENTS AND GUARANTEES GIVEN
Guarantees
In some cases, customers of the Parent Company have funded the purchase of the photovoltaic system
through lease agreements with leasing companies. For some of these customers, the Parent has signed
with the leasing company for a takeover agreement to the customer in the lease in the event of, and
subordinate to, the failure by its customers. Customers are also involved in this case, to transfer to
TerniEnergia the lease agreement and any debt outstanding at the date of transfer, if generated by power
plant under contract.
TerniEnergia administrators believe that the probability of occurrence of transfer is extremely remote,
since, in practice and with the exception of the initial maxi tranche of leasing contract. Whereas the
existence of a maxi initial paid by the customer to the leasing company, the values in effect at time of a
takeover, based on current development plans for the cash flows of photovoltaic systems affected, would
see a future excess flows generated by energy production compared to outflows for royalties due.
As at March 31, 2014, the residual customers’ payables to leasing companies for which the above
mentioned agreements were taken over total Euro 67,7 million, of which Euro 45,9 million for companies
managed or owned by related parties,( 22,5 million for 100%controlled companies), Euro 12,6 million for
joint ventures, Euro 4,7 million for Terni Research S.p.A, and Euro 6,1 million for other related parties ; the
rest of the balance, equal to 21, 7 million, relates to other third-party customers.
For the same reasons outlined above, the directors also believe that the taking over of the lease
agreements by the Parent Company would not adversely affect the economic situation of TerniEnergia. See
also note 3.7 Related parties.
As at March 31, 2014, primary credit institutions issued guarantees on the contractual obligations
undertaken by the Parent Company TerniEnergia to third-party customers, equal to Euro 8,5 million.
48
Contingent liabilities
Litigation, investigations and judicial proceedings in progress
As at March 31, 2014 there were no legal proceedings or litigation pending against the TerniEnergia or
other Group companies, except as outlined below.
Litigation Milis Energy SpA
The dispute concerns the divestment made by Milis Energy SpA against TerniEnergia on a photovoltaic
system on greenhouses constructed in Sardinia in the Municipality of Milis. The Milis Energy S.p.A. denies
alleged breach of TerniEnergia in order for this system and for that reason it has suspended payment of
Euro 7 million, claiming that it would require intervention replacement of bolts ( allegedly impaired ), the
amount of work is about Euro 50 thousand.
By virtue of this Milis Energy S.p.A. he then proceeded to oust Terni Energia by the yard, with bare act of
07/17/2013.
The TerniEnergia brought an action before the Court of Oristano, getting the order of February 4, 2014,
which declared illegal and ordered the counting performed at Milis Energy SpA to reinstate immediately
the Terni Energia in possession of the works covered by the contract.
TerniEnergia, in relation to a loan owed by the customer, sought and obtained an injunction against the
Energy SpA Milis which by the same amount due Milis for the contract referred to in the preceding
paragraph.
The Milan Court upheld the appeal and issued the injunction that has been duly served.
The party has appealed and the first hearing is scheduled for May 27, 2014.
The company, also based on advice of its legal counsel, believes that in light of what has already been
stated in the previous point, there are ample chances of success.
Litigation Mada Srl
We show that the contractual maturity date scheduled for the sale of a photovoltaic system power of 997
kWp the customer has not paid anything by way of compensation for the work performed by the Company.
Accordingly, the Parent Company, only after repeated requests for payment :
• has taken steps to remove the solar panels and other removable materials from the site ( in perfect
conformity to what was decided in the previous private writings between the parties) ;
49
• proposed subpoena to appear before the Court of Terni, in order to ascertain the gross misconduct of the
customer, to fulfill the contracts and therefore, to obtain the termination of such contract pursuant to Art.
1453 cc, resulting in condemnation of the customer to pay all damages suffered and the amount of €
1,046,890.00 ( the amount identified in the loss of earnings, classified in 30 % of the contract price which
the total amount was equal to the total € 3,489,640.00 ) or in greater or smaller amount that will be
determined in the course of the proceedings. The case was registered with the role R.G. 2005/11. In the
course of the proceedings referred to in the previous point, it was notified TerniEnergia an instrument of
appointment of arbitrator and request for arbitration, on 7 December 2011. It ' been appealed to
arbitration by serving a deed December 27, 2011 and, in any case, identifying its arbitrator in the unlikely
event that it was not deemed competent Judge Ordinary. At the date of preparation of this report was
issued on the arbitration award dismissing the claim of Mada. With regard to the proceedings before the
Court of Terni, the judge adjourned to 14 April 2014 in order to gain the award, also in order to avoid a
conflict between judged.
Therefore, it stops the natural randomness that characterizes each type of case and based on the
assessments already shown by our lawyers, the company believes that there are reasonable grounds for
considering the high probability of success in the civil case above. Based on the above analysis brief survey
of the facts, translated in the civil case that the company has promoted and considered a possible
reconciliation with the customer resulting in the conclusion of the supply, it is not considered appropriate
to provide to affix any residual impairment costs (approximately euro 0.4 million ) is not representative of
the material removed (panels, inverters, etc. ) between the products of work in progress at March 31, 2014.
Litigation Regni
We give evidence that the company is involved in two disputes with the Heirs Kingdoms, which arose
as a result of the failure by the latter to grant a right of easement necessary for the passage of the conduit
of a photovoltaic system owned by the Group. The first dispute is pending before the Council of State, on
appeal concerns the trial and appeal of the order for demolition and restoration of part of the conduit
realized in the absence of the security authorization of enslavement of the land on which it insists, issued
by the City of Perugia. The second dispute was promoted by TerniEnergia against the Heirs Kingdoms
before the Court of Perugia in order to obtain the grant of easement of, by reason of the commitments
made by the same contract Kingdoms, at the time when TerniEnergia ceded to the design of photovoltaic
and the surface rights relating to the land on which to make it happen.
In reference to the first was granted the suspension of the decision of the TAR authorizing the demolition
and restoration and expects the hearing on the merits. In reference to the second was arranged a referral
50
for negotiations. In fact, pending lawsuits, the heirs of the two kingdoms have made proposals to the
transaction. The negotiations are still ongoing. Meanwhile, the judge accepted the request for technical
advice in order to ascertain that the original plan - drafted by Eng. Kingdoms - was lacking and wrong. The
next hearing is scheduled for June 5, 2014 for the appointment of CTU.
The Company, with the assistance of its legal counsel, has reasonable grounds to believe can not be
assigned a probable liability to be borne by the Company, nor, at present, there were elements such as to
configure a loss in value of the investment in the subsidiary proprietor of ' photovoltaic system in
question.
51
3.5 COMMENTS ON THE MAIN INCOME ITEMS
3.5.1 REVENUES
The following table provides details of the item in question for the semester ended March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Revenues installation of photovoltaic
4,923,855 5,125,247 (201,392) (3.9)%
Revenue from operating Photovoltaic
3,042,177 786,283 2,255,894 n.a.
Revenues from maintenance
340,362 539,357 (198,995) (36.9)%
Revenues from Gain
n.a.
Revenues from "Environment"
1,553,806 1,393,685 160,121 11.5%
Revenues from Energy Saving
43,614 418,190 (374,576) (89.6)%
Revenues from development / Other services 480,275 404,439 75,836 18.8%
Total 10,384,088 8,667,200 1,716,888 19.8%
As at March 31, 2014, the Group recorded consolidated revenues from sales and services of Euro 10,384
thousand, an increase of 19.8% compared to the same period of 2013.
Revenues from installation of photovoltaic systems, equal to Euro 4,924 thousand, are mainly related to
work performed in South Africa, commissioned by a leading European utility.
"Revenues from operating Photovoltaic Systems", amounting to Euro 3,042 thousand including revenues
from the production and sale of electricity from solar energy produced by photovoltaic systems owned by
the Group. The change from the previous year is due to the fact that the 7 plants owned by the company
TERNI SolarEnergy (5.7 MWp) have contributed to the operating results of the Group for only part of 2013,
taking into account that the acquisition of 50% of shares of the company took place on June 28, 2013.
Moreover, the 12 plants owned by the company Energia Alternativa (13.9 MWp) have contributed to the
Group's operating results only from the end of the month of March 2013, taking into account that the
acquisition of 50% of the shares took place on March 28, 2013.
"Revenues for maintenance", equal to Euro 340 thousand, refer to maintenance services carried out by the
Parent TerniEnergia, based on long-term contracts, the photovoltaic system is made on behalf of its clients.
The decrease is attributable to intercompany eliminations of maintenance carried out on behalf of the
52
company and Energia Alternativa and TERNI SolarEnergy, that in the first quarter of 2013 were still
consolidated using the equity method.
"Revenues Environment", amounting to Euro 1,554 thousand, mainly relate to revenues from the
biodigester and composting plant in Nera Montoro (these revenues are made up not only of the
consideration received for removal of waste – OFMSW - Organic Fraction of Municipal Solid Waste - but
also from the sale of the energy produced by the recovery of biogas resulting from the anaerobic
biodigester process ), the activity of treatment PFU (End of Life Tyres) and the management of the water
treatment plant in Nera Montoro.
3.5.2 CHANGES IN INVENTORIES OF SEMI-FINISHED PRODUCTS
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Finished Products
80,552 63,568 16,984 26.7%
Semifinished
114,880 (114,880) (100.0)%
Products in process
141,059 (345,477) 486,536 (140.8)%
Total 221,611 (167,029) 388,640 n.a.
The products work in progress mainly include the costs incurred for various activities related to the
implementation of photovoltaic systems and their parts.
53
3.5.3 COSTS OF RAW MATERIALS, SUPPLIES AND GOODS
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Purchase of materials
1,681,858 286,537 1,395,321 n.a.
Materials consumption
161,144 99,272 61,872 62.3%
Fuels and lubricants
84,996 91,349 (6,353) (7.0)%
Change in inventories of raw materials,
consumables (45,040)
275,065 (320,105) (116.4)%
Total 1,882,958 752,223 1,130,735 n.a.
3.5.4 COSTS FOR SERVICES
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Outwork
153,341 2,249,653 (2,096,312) (93.2)%
Consultancy and external collaborators
367,712 396,140 (28,428) (7.2)%
Rental and hire
157,799 202,353 (44,554) (22.0)%
parent services
483,386 487,137 (3,751) (0.8)%
Leases
11,182 10,540 642 6.1%
Transportation
53,030 175,688 (122,658) (69.8)%
Maintenance and repairs and assistance
197,324 227,607 (30,283) (13.3)%
Supervision and Insurance
220,582 511,820 (291,238) (56.9)%
Other Costs for services
749,107 593,969 155,138 26.1%
Total 2,393,465 4,854,906 (2,461,442) (50.7)%
This item includes primarily costs for external work, consulting and collaboration, supervision and
transportation insurance and other benefits. The "parent Services" includes the consideration paid by the
Group in respect of services provided by the parent TERNI Research SpA (Italeaf SpA since February 13,
2014), for more details see also refer to Note 3.6. The decrease in "work" is mainly due to the different type
of activities carried out by the EPC business line, characterized by a design activity with higher added value.
54
3.5.5 STAFF’COSTS
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Wages and salaries
743,087 889,741 (146,654) (16.5)%
social security contributions
250,526 325,622 (75,096) (23.1)%
remuneration of directors
113,500 113,500
0.0%
Provision for employee benefits
45,406 40,646 4,760 11.7%
temporary staff
202,749 153,396 49,353 32.2%
Total 1,355,267 1,522,905 (167,638) (11.0)%
3.5.6 FURTHER OPERATING COSTS
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Taxes other than income
193,986 33,435 160,551 n.a.
Fines and penalties
3,174 10,328 (7,154) (69.3)%
Other operating costs
215,598 195,453 20,145 10.3%
Total 412,758 239,216 173,542 72.5%
55
3.5.7 DEPRECIATION,IMPAIRMENT AND PROVISIONS
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Amortization of intangible assets
42,658 73,172 (30,514) (41.7)%
Depreciation of tangible fixed assets
1,715,335 899,346 815,989 90.7%
Provisions for doubtful accounts
n.a.
Write-down of non-current assets
n.a.
Total 1,757,993 972,518 785,475 80.8%
The change in the item "Depreciation of tangible fixed assets" compared to the previous year is attributable
to the increase in the number of PV plants in operation owned by the Group.
3.5.8 FINANANCIAL INCOME AND CHARGE
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Interest expense on debt
(2,081,105) (1,050,100) (1,031,005) 98.2%
banking Commission
(391,730) (211,994) (179,736) 84.8%
#N/D
(271,325)
(271,325) n.a.
Total finance costs
(2,744,160) (1,262,094) (1,482,066) 117.4%
Interest earned on bank accounts
110,703 75 110,628 n.a.
Interest income / joint venture
23,002 91,410 (68,408) (74.8)%
Other financial income
292,883 2,805,185 (2,512,302) (89.6)%
Total financial income
426,588 2,896,670 (2,470,082) (85.3)%
Total (2,317,572) 1,634,576 (3,952,148) n.a.
The increase in financial expenses is mainly due to the incidence of interest expenses of the subsidiaries
Energia Alternativa and Terni SolarEnergy, whose results on March 31, 2013 were detected even with the
56
equity method rather than using the integral method, as well as to the recognition of interest expense
accrued at March 31, 2014 on bonds issued in February 2014.
The item "Other financial income", as at March 31, 2013, had enrolled the proceeds, amounting to Euro
2,760 thousand , resulting from the revaluation of 50% of the shares already held in the company Energia
Alternativa Srl, in which the Parent Company acquired the remaining 50% on March 28, 2013.
3.5.9 JOINT VENTURE INCOME
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Terni Solar Energy S.r.l.
(84,899) 84,899 (100.0)%
Energia Alternativa S.r.l.
(124,144) 124,144 (100.0)%
Energie S.r.l.
n.a.
Fotosolare Settima S.r.l.
(65,340) 65,340 (100.0)%
Solaren S.r.l.
12,535 (12,535) (100.0)%
Collesanto S.r.l.
9,639 (9,639) (100.0)%
Saim Energy 2 S.r.l. 1,598 19,877 (18,279) (92.0)%
Infocaciucci S.r.l.
11,634 (11,634) (100.0)%
Girasole S.r.l.. 14,945 35,693 (20,748) (58.1)%
D.T. S.r.l
n.a.
Soltarenti S.r.l. 12,336 32,992 (20,656) (62.6)%
Guglionesi S.r.l. (5,737) 5,293 (11,029) n.a.
Green Asm
0.0%
Total 23,142 (146,721) 169,863 (115.8)%
The "share result of the Joint Venture" includes both the results for the period according to IFRS on equity
investments in joint ventures, to the extent attributable to the Group, and the positive effect resulting from
the recovery of margins eliminated as a result of accounting with the equity method. See also provided in
note 3.3.3.
The change compared with the corresponding figure for the previous year is due to the lower number of
joint ventures in the Company.
57
3.5.10 TAX
The following table provides details of the item in question for the quarter ended on March 31, 2014 and
2013:
As At March, 31
2014
As At March, 31
2013 Change Change %
(in Euro)
Current taxes
656,810 74,429 582,381 n.a.
Deferred tax assets
(819,343) (18,096) (801,247) n.a.
Deferred
10,907 (36,083) 46,990 (130.2)%
Revenues from taxes consolidation
(27,724) 27,724 (100.0)%
Total (151,627) (7,474) (144,153) n.a.
Deferred tax assets primarily relate to deferred tax assets on tax loss accrued during the first quarter of
2014 by the Parent company TerniEnergia.
3.6 RELATIONS WITH RELATED PARTIES
Below The financial statements with evidence of related party transactions pursuant to CONSOB. 15519 of
27/7/06.
58
CONSOLIDATED FINANCIAL STATEMENT FOR THE PURPOSES OF CONSOB n. 15519 of 27/7/06
As At March, Related
As At
December, Related
(in Euro) 31 2014 Parties 31 2013 Parties
ASSETS
Intangible assets 4,294,972 4,337,960
Property, plant and equipment 159,724,069 160,574,401 1,235,000
Equity investments 1,176,337 1,168,140
Deferred tax assets 11,195,716 7,823,865
Non-current financial receivables 8,385,152 1878209 8,501,196 1,918,206
Total non-current assets 184,776,246 1,878,209 182,405,562 3,153,206
Inventories 8,611,581 8,208,886
Trade receivables 31,613,976 1,050,170 28,063,651 737,072
Other current assets 11,141,912 1,428,633 16,573,353 3,738,741
Financial receivables 2,466,630 665,992 2,656,483 814,379
Cash and cash equivalents 17,691,532 13,055,910
Total current assets 71,525,631 3,144,795 68,558,283 5,290,192
TOTAL ASSETS 256,301,877 5,023,004 250,963,845 8,443,398
LIABILITIES AND SHAREHOLDERS’ EQUITY
Share capital 50,529,680 50,529,680
Reserves 1,918,506
(3,638,119)
Result for the period 503,607 6,708,295
Total Group equity 52,951,793 53,599,856
Equity attributable to minority 451,372 155,218
Profit for the period of the third 156,848
132,749
Total equity 53,560,013 53,887,823
Provision for employee benefits 710,112 668,789
Deferred tax liabilities 1,304,189 1,195,886
Non-current financial payables 139,777,499 117,011,700
Other non-current liabilities
Derivatives 6,453,717 5,579,749
Total non-current liabilities 148,245,517 124,456,124
Trade payables 22,527,800 296868 31,416,529 173,536
Payables and other financial liabilities 24,979,597 33,873,487
Taxes payable 1,140,708 563,611
Other current liabilities 5,848,242 20,719 6,766,271 20,719
Total current liabilities 54,496,347 317,587 72,619,898 194,255
TOTAL LIABILITIES 202,741,864 317,587 197,076,022 194,255
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUTY 256,301,877 317,587 250,963,845 194,255
59
CONSOLIDATED INCOME STATEMENT FOR THE PURPOSES OF CONSOB n. 15519 of 27/07/06
As at March, 31 Related As at March, 31 Related
(in Euro) 2014 Parties 2013 Parties
Revenues 9,997,180 7,858,994
Other operating income 386,908 808,206 171,801
Change in inventories of semi-finished and finished
products 221,611 (167,029)
Costs for raw materials, consumables and goods for
resale (1,882,958) (150,000) (752,223)
Costs for services (2,393,465) (537,019) (4,854,906) (578,824)
Personnel costs (1,355,267) (137,000) (1,522,905) (143,511)
Other operating costs (412,758) (239,216)
Amortisation, depreciation, provisions and
writedowns (1,757,993) (972,518)
Operating result 2,803,258 158,403
Financial income 426,588 23,003 2,896,670 54,204
Financial charges (2,744,160) (262,588) (1,262,094) (107,291)
Portion of result attributable to the joint venture 23,142 (146,721)
Net profit before taxes 508,828 1,646,258
Taxes 151,627 7,474
Net profit for the period 660,455 1,653,732
60
CONSOLIDATED CASH FLOW STATEMENT FOR THE PURPOSES OF CONSOB n. 15519 of
27/07/06
As At March, 31
(in Euro) Note 2014 2013
Profit before taxes
508,828 1,646,258
Amortisation and depreciation
1,757,993 972,518
Write-downs of fixed assets
Provision for employee benefits
41,323 68,687
Result of joint ventures accounted for at equity and reversal of margin (23,142) 146,721
Gains / Revaluations
Change in inventories
(402,695) 433,960
Change in trade receivables
(3,550,325) 12,514,408
Change in other assets
2,462,288 (4,193,254)
Change in trade payables
(8,888,729) (10,718,738)
Change in other liabilities
(325,985) (2,019,816)
Payment of employee benefits
Net cash flow (used in)/generated by operating activities (8,420,445) (1,149,257)
Investments in property, plant and equipment
(864,673) (1,351,693)
Disposals of property, plant and equipment
Investments in intangible assets
(2,668)
Disposals of intangible assets
Purchase Investments
697,169
Dividends from JV
160,000 640,000
Change in receivables and other financial assets
145,897 920,273
Net cash flow used in investing activities (558,776) 903,080
Change in payables and other financial liabilities
(8,893,890) (1,106,984)
Increase in non-current financial payables
22,503,479 2,381,218
Other Movements of Equity
5,255
Net cash flow generated by financing activities 13,614,844 1,274,234
Comprehensive cash flow for the period
4,635,624 1,028,057
Cash and cash equivalents at the beginning of the period
13,055,910 3,384,398
Cash and cash equivalents at the end of the period
17,691,532 4,412,456
61
Relate parties
Following the list of relate parties:
Name of Company Status
Skill & Trust Holding S.r.l. Controlling companies
T.E.R.N.I. Research S.p.A. Controlling companies
Saim Energy 2 S.r.l. Joint venture
Girasole S.r.l.. Joint venture
Soltarenti S.r.l. Joint venture
Guglionesi S.r.l. Joint venture
Gubela S.p.A. Joint venture
Serramenti del Chiese S.r.l. Company managed by a related party
Ferrero Elettra S.r.l. Company managed by a related party
Ferrero Mangimi S.p.A. Company managed by a related party
Italeaf SpA Company managed by a related party
Lizzanello S.r.l. Company managed by a related party
Camene Srl Company managed by a related party
Royal Club Snc di Lucia e Francesco Urbani Company managed by a related party
Studio Ranalli & Associati Professional Activity administered by a related party
Stefano Neri Member of the Board of Directors of the Company
Fabrizio Venturi Member of the Board of Directors of the Company
Paolo Ricci Attorney of the Company
Domenico De Marinis Member of the Board of Directors of the Company
Paolo Ottone Migliavacca Member of the Board of Directors of the Company
Giovanni Ranalli Member of the Board of Directors of the Company
Mario Marco Molteni Member of the Board of Directors of the Company
Monica Federici Controlling companies
Francesca Ricci Controlling companies
The parent company TerniEnergia is controlled since its establishment by TERNI Research SpA. it is noted
that on February 13, 2014, became effective operation of partial inversely proportional split, which
involved companies TERNI Research SpA, as divided, and Italeaf SpA, for its own benefit. In consequence of
this operation all the shares TerniEnergia held by TERNI Research SpA, part of the financial assets and
liabilities to be demerged, were transferred to Italeaf SpA. It should be noted that prior to the demerger
100% of the share capital of Italeaf SpA was held by T.E.R.N.I. Research S.p.A. and, as a result of the
demerger, the shares representing the capital of Italeaf SpA have been allocated in proportion to the
members of TERNI Research SpA . As a result of the social structure of post-split TERNI Research S.p.A. and
Italeaf SpA is the same. Therefore, with effect from February 13, 2014, Italeaf SpA is the parent of
TerniEnergia S.p.A.
Transactions with related parties are attributable to activities that relate to the ordinary and are based on
normal market conditions, as it is the settlement of interest-bearing loans. As at March 31, 2014, there
62
were no significant transactions with related parties of non-recurring or unusual and / or atypical.
Transactions between the Parent Company, the Parent Company, the Joint Venture and other related
parties mainly refer to:
• business relationships relating to the construction of photovoltaic systems and maintenance
services with joint ventures and companies managed or owned by related parties and companies
participating in joint ventures with TerniEnergia;
• financial ratios relating to loans granted to joint ventures (see also 3.3.5 and 3.3.9 financial
receivables);
• agreements for taking over leasing contracts related to photovoltaic systems in cases of , and
subordinate to, the failure on the part of some companies managed or owned by related parties,
joint ventures and the parent company Terni Research SpA (Italeaf SpA since February 13, 2014,
see also note 3.4.10 commitments and guarantees);
• Transactions involving the provision of services (technical, organizational, leasing of real estate,
legal and administrative) with the parent Terni Research SpA (Italeaf SpA since February 13, 2014);
• guarantees issued by the parent company Italeaf SpA in favor of the lenders who financed
TerniEnergia;
• Professional performance by the adviser Paolo Ricci and Francesca Ricci.
The following table details the economic and financial effects of commercial and financial transactions with
related parties as at March 31, 2014.
63
Business transactions
(in Euro) As At March, 31 2014 As At March, 31 2014
Credits Debts Other credits Costs Revenues
Goods Service Cost Personnel Goods Service Cost
Parents
T.E.R.N.I. Research S.p.A. 477,851 18,205 620,975 150,000 229,193 5,529 41,655
Joint Venture
Saim Energy 2 S.r.l. 73,679
Girasole S.r.l. 165,080 23,220
Sol tarenti S.r.l. 20,862 17,100
Guglionesi S.r.l. 24,300 5,000
Associated companies
Italeaf S.p.A. 70,760 186,394 807,658 229,193 4,450
Other Related Parties
Francesca Ricci 13,632
Lizzanello S.r.l. 42,471 4,000
Studio Ranalli & Associati 18,000
Alta direzione 20,719 131,471
Gianni Ranalli 29,205
Ferrero Elettra S.r.l. 4,552 3,731
Ferrero Mangimi S.p.A. 4,579 3,739
Gubela S.p.A. 93,943 71,123 5,430
Serramenti del Chiese S.r.l. 24,888 3,750
Paolo Ricci 21,147 65,000
Total 1,050,170 317,587 1,428,633 150,000 537,019 137,000 112,075
Balance Sheet Value
31,613,976
22,527,800 11,141,912 1,882,958 2,393,465 1,355,267 9,997,180 386,908
% Effect 3.30% 1.40% 12.80% 8.00% 22.40% 10.10% 0.00% 29.00%
64
Financial transactions
(in Euro) As at March, 31 2014 As at March, 31 2014
Description Credits Guarantees Guarantees
given
Obligations
Take Over Charges Income
Parents
T.E.R.N.I. Research S.p.A. 47,517,707 131,294
Joint Venture
Saim Energy 2 S.r.l. 1,766 2,585,235
Girasole S.r.l. 1,117,826 1,220,000 10,348
Sol tarenti S.r.l. 1,033,856 8,799,481 9,862
Guglionesi S.r.l. 388,983 2,792
Other Related Parties
Camene S.r.l. 3,059,147
Royal Club Snc 3,056,604
Lizzanello S.r.l. 1,770
Total 2,544,201 47,517,707 23,436,581 262,588 23,003
Balance Sheet Value 10,851,782 2,744,160 426,588
% Effect 23.40%
9.60% 5.40%
Below are briefly commented on the transactions entered into between the Group and related parties:
Commercial transactions
The operations of a commercial nature mainly concerned:
• O & M contracts between the Joint Venture company for photovoltaic plants and restoration
activities of the plants due to theft;
• framework agreement between the parent company and the parent company Terni Research SpA
(Italeaf SpA since February 13, 2014) relating to the provision of administrative and logistical
services, including the leasing of the properties located in Narni, strada dello Stabilimento 1, in
Milano, via Borgogna, and Lecce, the management of corporate and legal affairs, as well as the
human resource management and information systems;
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• claims towards T.E.R.N.I. Research SpA, consolidating company based on the tax consolidation
agreement which the Company has adopted for the period 2011 - 2013;
• remuneration received by executive members of the Board of Directors and the executive in charge
with strategic responsibility for services provided to the Group.
Financial transactions
The current financial and non-current as well as financial income for the quarter ended March 31, 2014,
refer to the relations of interest-bearing loans with the Joint Venture.
It should be noted that in the date of March 31, 2014 the parent Italeaf SpA, provided,to leading banks,
guarantees on bank loans to TerniEnergia for Euro 47,5 million for which they have applied to subsidiary
commissions on sureties of euro 262 thousand included among financial expenses (of which Euro 131
thousand accrued until February 12 , 2014, and within the jurisdiction of Terni Research SpA).
For some customers who have financed the purchase of the PV system through finance lease agreements
with leasing companies, the Parent Company signed an agreement with the latter taking over the said lease
in the event of, and subject to, the failure by its customers. As at March 31, 2014 the remaining debts of
the leases for which they were hired these commitments amounted to euro 67,7 million, of which euro
45,9 million in respect of related parties and euro 21,7 million in respect of other third-party customers.
3.7 3.7ATYPICAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to CONSOB. DEM/6064293, 28.7.2006 "Disclosure of listed issuers and corporate issuers with
financial instruments widely distributed among the public referred to in Article .116 of TUF - Requests
under ART.114, paragraph 5, of Legislative Decree no. 58/98 "reported that:
• There were no transactions or events whose occurrence is not the applicant or transactions or
events that occur frequently in the ordinary course of business;
• There were no atypical and / or unusual transactions.
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3.8 OTHER INFORMATION
Earnings per share
The calculation of basic earnings per share due to ordinary shareholders by the company is based on the
average number of shares during the reporting period.
(in Euro) As At March, 31 2014 As At March, 31 2013
Net profit for the period - Group
660,455 1,663,728
Average number of shares for the period 37,612,000 37,612,000
Earnings per share – Basic and diluted 0.018 0.044
There were no differences between basic and diluted earnings per share as there are classes of shares with
diluting effect.
Information relating to the opt-out
In compliance with the provisions of Article 70, paragraph 8 of the Regulations for Issuers it is also informs
that the Board of Directors, which met on December 19, 2012, resolved to adhere to the system of "opt-
out" referred to the Articles 70 , paragraph 8, and 71, paragraph 1-bis of the Issuers' Regulations, therefore
making use of the option to derogate from the obligations to publish information documents prescribed at
significant mergers, demergers, capital increase by contribution in kind, acquisitions and disposals.
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Subsequent events
Shareholders’ meeting approves 2013 financial Statements and a distribution of dividends equal to Euro 0.06 per
share
As at April 23, 2014 The Shareholders’ meeting of TerniEnergia, approved unanimously the draft financial
statements and noted the presentation of the consolidated financial statements as at December 31, 2013.
Shareholders’ meeting also approved the distribution of a dividend equal to Euro 0.06 per ordinary share
gross with-holdings set forth by law. The dividend shall be paid on May 22, 2014 and the relevant coupon
no. 5 shall be separated on May 19, 2014. The Shareholders' Meeting has finally approved the confirmation
as a non-executive director of Atty. Francesca Ricci, co-opted to the Board of Directors on October 17, 2013
in observance of the provisions introduced by Law n. 120 July 12, 2011, in matter of gender balance in the
composition of the Board of Directors and the Statutory Auditors.
Signed manifestation of interest for the acquisition of Free Energia S.p.A.
As at April 24, 2014 TerniEnergia SpA and Italeaf, a holding company and majority shareholder of
TerniEnergia, signed a manifestation of interest for the acquisition of 100% of the share capital of Free
Energia S.p.A. with the shareholders of the Company. Free Energia, a company that in 2013 had revenues of
approximately Euro 100 million and that in the first quarter of 2014 and recorded a revenue growth of
+100% compared to the previous financial year, as an innovative energy trader, providing energy to
electricity-consumptive customers and/or consolidated re-seller but, more importantly, carrying out
hedging and trading planning "evolved". Organized in a simple and flexible structure, is able to seize the
opportunities of a market characterized by rapid and complex changes, succeeding the energy needs of its
customers.
Free Energia offers a variety of value-added integrated services for companies producing renewable
energy, which normally provide only the power generation. The distribution system is based on an
integrated package of services conveyed through a platform built in-house.
The strategic priority is the acquisition of customer energy consumers, who want a competitive rate, which
offer a wide range of marketing services (administrative, financial, supply and consulting) through a
network of direct and indirect distributors (re-seller).
The manifestation of interest is subject to:
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• the evaluation of the respective competent corporate bodies and the eventual signing of the definitive
agreement;
• the positive pronouncement of any competent authorities and the persons entitled thereto (including
banks and bondholders ) of the Companies;
• the positive outcome of the legal, employment law, tax and financial due diligence that TerniEnergia will
execute on Free Energia Group;
• the preparation of a consolidated business plan taking into account the integration of the activities of
Free Energia and those of TerniEnergia and its subsidiaries.
The structure of the transaction, if will occur the conditions for a final settlement, will consist of a capital
increase of TerniEnergia, reserved to shareholders of Free Energia, to subscribe through the transfer of
shares to Free Energia. There is no cash outlay. The estimated value of the transaction is approximately 15
million Euros.
Signed a strategic agreement with Khalid Al Hamed Group LLC for the development of renewable energy and
environmental business in the Middle East and the Gulf Countries
As at April 29, 2014 TerniEnergia signed in Abu Dhabi a joint venture agreement for the establishment of a
NewCo with Khalid Al Hamed Group LLC Dubai, represented by the Chairman and CEO Sheikh Khalid Bin
Ahmed Al Hamed. In particular, TerniEnergia has signed a binding and immediately operative agreement
between the parties, that provides for the establishment of a company named TerniEnergia Gulf LLC, based
in Abu Dhabi, which is 51% owned by Khalid Al Hamed Group LLC and 49% by TerniEnergia, which will
operate in the Middle East and the Gulf Cooperation Council (GCC).The business model identified by
TerniEnergia and Al Hamed Group is aimed at developing the engineering, design, construction and
operation of facilities and plants for the production of energy from renewable sources, for energy recovery
from waste and for the value chain of recovery of materials, particularly from end of life tires. In regard to
the latter activity, is expected to start for a first site for the construction of an important initiative in the
Gulf already by 2014.
The strategic partnership between the two Groups, will see Khalid Al Hamed Group LLC engaged primarily
in the management of relationships with government authorities in the area, in facilitating the
authorization processes, in the acquisition of requirements and support in negotiations with financial
partners and with the banking institutions to support the business development, and TerniEnergia with
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responsibility for management of the operational activities and the industrial sites. Through this
management model, the parties aim to combine and enhance the know-how and technological expertise in
the field of renewable energy and waste management of TerniEnergia with the financial capacity and
business development skills of Al Hamed Group, allowing a TerniEnergia Gulf rapid growth process
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4 CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE
154-BIS OF LEGISLATIVE DECREE 58/98 AND ARTICLE 81-TER OF CONSOB REGULATION NO.
11971/99, AS AMENDED AND SUPPLEMENTED
1. The undersigned Stefano Neri, in the capacity as Chairman and Chief Executive Officer, and Mr. Paolo
Allegretti, in the capacity of Manager responsible for preparing corporate accounting documents of
TerniEnergia S.p.A. hereby certify, also taking account of provisions under article 154-bis, paragraphs 3 and
4, of Legislative Decree no. 58 of 24 February 1998:
• the adequacy with reference to the characteristics of the enterprise;
• the actual application of the administrative and accounting procedures for the preparation of
the consolidated financial statements as at March 31, 2014.
2. To this regard, no further significant aspects emerged.
3. We further certify that the consolidated financial statements:
a) correspond to the results reported in the books and in the accounting records;
b) are prepared in compliance with the applicable international accounting standards recognized in the
European Community pursuant to Regulation (EC) no. 1606/2002, and, to the best of our knowledge, they
adequately provide a true and correct representation of the equity, economic and financial position of the
issuer and of the group of companies included in the scope of consolidation.
4. Finally, we certify that the report on operations as at March 31, 2014 includes a reliable analysis of the
relevant events that occurred during the first half 2014 and of their impact on the consolidated financial
statement, together with a description of the main risks to which the Group is exposed. The report on
operations as at March 31, 2014 also includes a reliable analysis of the significant information with related
parties.
5. This certification is issued pursuant to and for the purposes of article 154-bis, paragraphs 2 and 5, of
Legislative Decree no. 58 of 1998.
Narni, May 14, 2014
The CEO The Manager responsible for preparing
corporate accounting documents
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