CLOSING ACCOUNTS ON 31 DICEMBRE 2013 - Italeaf

FINANCIAL STATEMENT - CLOSING

ACCOUNTS ON 31 DICEMBRE 2013

ITALEAF S.p.A.

Based in Narni, Strada dello Stabilimento, 1 Capitale sociale Euro 15,000,000.00 fully paid up

Cod.Fiscale Nr.Reg.Imp 01456730553 Registered in the Register of Enterprises di TERNI

Nr. REA TR - 98422

Italeaf S.p.A.

Financial Statement as at 31 December 2013 1

TABLE OF CONTENTS

Corporate bodies

Business Management Reporting

Mission and activities of the company and main events of the year

Economic performance and statement of assets and liabilities - budget

Investments

Research and development activities

Relations with correlated parts

Economic trend of subsidiary companies

Own shares

Additional information:

Significant events after the closure of accounts

Expected evolution of business activity

Proposal of the Board of Directors

Financial Statements

Statement of assets

Statement of liabilities

Income statement

Italeaf S.p.A.


Explanatory Notes

SECTION 1: Form and content of financial statements

SECTION 2: Basis of preparation of financial statements and accounting

policies

SECTION 3: Analysis of balance sheet items and related changes

SECTION 4: More information

Italeaf S.p.A.


CORPORATE BODIES AND THE AUDITING COMPANY

The Board of Directors:

Chairman Prof. Avv Stefano NERI

CEO Dott.ssa Monica Federici

Deputy Executive Officer Cav. Ivano EMILI

Board of Auditors:

Chairman Dott. Vittorio PELLEGRINI

Statutory auditor Dott. Marco CHIERUZZI

Statutory auditor Dott. Paolo SEBASTIANI

External Auditors:

PriceWaterhouseCoopers S.p.A.

Italeaf S.p.A.


BUSINESS MANAGEMENT REPORTING

Italeaf S.p.A.


MISSION AND ACTIVITIES OF THE COMPANY AND MAIN EVENTS

OF THE YEAR

ITALEAF S.p.A. arises from the transformation in stock company of Nuova TIC Srl, a limited

company incorporated on 28 December 2010 and owner of the industrial site in Narni - Nera

Montoro of over 35 acres with several buildings which host the main companies of the group Terni

Research SpA to which the Company belongs in fact..

ITALEAF S.p.A. was founded with the goal of creating a new "startupper Company" Italian focused

on the Green Economy sector that supports and sustains the creation of enterprises in the field of

green, circular economy and sustainable industry.

The Company joins the traditional activities of property management services and supply of available

spaces equipped with different services and utilities, a new corporate structure, unprecedented in

Italy, created in support of new businesses or existing businesses with the intent to facilitate the

evolution in business with a propensity to achieve size and industrial characteristics.

ITALEAF S.p.A. pursues the creation of value through the construction, the affi rmation and the

development of "a green Italian industry", a place of convergence and community for entrepreneurs,

startuppers, spin-offers, mentors, investors, advisors, consultants and partners.

Objective of ITALEAF is to make replicable this model in order to start the construction of a

national network.

Main events of the year:

Partial inversely proportional demerger of Terni Research S.p.A. in ITALEAF S.p.A.

On 6 November 2013 was filed in the commercial register of Terni the partial inversely proportional

demerger of Terni Research SpA in ITALEAF S.p.A. with the aim of simplifying the corporate

structure while also ensuring greater uniformity of the activities of the Group, in order to develop

future strategies for growth.

Terni Research SpA since its establishment has always carried out the promotion of new industrial

initiatives investing its own resources in enterprises characterized by strong growth in new sectors

(especially the Green Industry) for up to capitalize the value through listing operations as in the case

of TerniEnergia and TerniGreen S.p.A..

Italeaf SpA, conversely is the beneficiary of the transaction, as wholly owned subsidiary of Terni

Research SpA, is a startupper company that supports and sustains the creation of enterprises in the

fields of green and circular economy and sustainable industry.

Italeaf S.p.A.


The partial demerger of Terni Research with the transfer of the most significant part of its assets

(mainly consisting of all shareholdings) to the subsidiary Italeaf therefore allows the simplification of

the corporate structure with a shortening of the chain of control with regard to Italeaf SpA, which is

configured as a new group holding company. The following shows the structure of the Group Ante

and Post demerger

Group Structure - Ante Demerger

56,07%

0,6% 83%

100%

13%

52,14%

Skill & Trust

Italeaf S.p.A.


Group Structure - post Demerger

The demerger also allows to catch a strategic objective for the Group. With the demerger is reached

the result of combining the activities of "startupper company" of Italeaf with the role of investor of

Terni Research, speeding up and making more streamlined the process of growth of new businesses

and limiting intra-group transactions. This result responds effectively to the strategic needs of the

Group, whose business model is based precisely in conducting their own investment activities in the

most interesting enterprise initiatives being identified within the activity of Italeaf, in order to

replicate what has already been achieved with TerniEnergia and TerniGreen.

The increased uniformity of the activities of the Group which is realized by the demerger therefore

allows to best meet the objectives of its business model and represents the distinctive character of

the initiatives that the Group's management intends to present to the financial community through

the listing of Italeaf (after the division) on the capital market.

In fact, the new post division structure of Italeaf represents a unique business model of its kind, by

combining in one entity the function of identification and development of new strong growth &

innovative industrial initiatives, with that of capital raising for the development of the same

initiatives. The business model is based on the possibility of ever being able to attract new

businesses, thanks to the significant facilities available to Italeaf (both real estate investments and of a

professional nature) and on the replicability, with the development of more initiatives, the value of

which will be implemented by the Group through a possible IPO or a sale of the same holding in

order to get new financial resources that will be used, on the one hand, to reward shareholders, on

the other hand, to support the development of new initiatives.

From the accounting point of view the assets and liabilities subject to assignment of Italeaf SpA,

54,8% 84,7%

52,14%

52,14%

Italeaf S.p.A.


have a value equal to Euro 30,662,391.27.

As a result of the demerger therefore the net equity of Italeaf SpA, will increase by an amount equal

to the net book value of the assets that make up the Demerged Entity other than the participation in

ownership of TERNI Research S.p.A. into the capital of Italeaf SPA which carrying value amounts

to Euro 23,607,737.00.

Therefore, the net equity value of Italeaf SpA, will increase, as a result of the demerger, for Euro

7,054,654.27 and this increase will be allocated to reserves, remaining the same the share capital.

The transaction was completed on February 13th 2014 with the registration of the demerger deed in

the commercial register of Terni.

BUSINESS AS STRATUPPER COMPANY

The Company as part of its activities as "startupper company" has promoted several business

ventures from which the following information:

GREENLED INUSTRY S.P.A.

In July 2013, the Company entered into a share capital increase with exclusion of option rights in the

Company GreenLed Industry SpA; the increase undersigned amounted to Euro 2,500,000 which was

released through the transfer of certain real estate properties. At 31 December 2013, the

shareholding in GreenLed Industry SpA amounted to the 73.53% of the share capital.

The company GreenLed Industry S.p.A. is a manufacturer of lighting fixtures with LED technology,

both for street and industrial area use.

The lighting fixtures are certified by independent laboratories recognized nationally and

internationally in accordance with the industry regulations in force. In particular, the lighting fixtures

are characterized by their certification in order to operate with temperature and weather extreme

conditions (up to 75 ° C in "dirty” environments); furthermore they allow energy savings that can

reach 60% compared to the old technologies.

SKYROBOTIC S.R.L.

On 21 December 2013, the Company entered into an investment of € 530,000 corresponding to

51.46% of the share capital in the company newly established called Skyrobotic Srl ; the Company

will be active in the study, design, development, engineering and production of UAV (Unmanned

Aerial Vehicle) and in particular applications of unmanned robotic technology such as the

development of robotic unmanned aircrafts, both with fixed wing and rotary-wing.

Italeaf S.p.A.


ITALEAF U.K. LTD

The Company has established a subsidiary in the United Kingdom in order to facilitate the expansion

of its business model on the foreign market.

ARCHITECTURAL AND ENVIRONMENTAL REGENERATION PROJECT

INDUSTRIAL SITE OF NERA MONTORO- ECO-INDUSTRIAL PARK

During the financial year ended on December 31 2013, the Company outsourced the Polytechnic of

Milan - Department of Architecture and Planning-a case study on the design of a strategic

masterplan for the environmental and architectural regeneration of the Nera Montoro Industrial site.

The intent of the project is to define a new Energy Park dedicated to the production and disclosure

of the main activities of the companies Ternienergia SpA and Italeaf SpA, engaged in the production

of energy from renewable sources. The aim is also to enhance the existing site redeveloping, where it

is possible to recognize the architectural value, those artefacts and those areas currently obsolete or

disused; at the same time it was decided to intervene in a timely manner with new architectural

interventions, deemed necessary for the definition of a unitary system.

The main theme of the project is an attempt to establish an ongoing relationship between the factory

and the natural surroundings, considering the factory is not such as alien element in contrast to the

surrounding hilly landscape, but as an integral part of it.

The main interventions, at least in the first phase would cover the construction of a new access road

through the industrial area and the redesign of existing open spaces, the reorganization of the

parking areas, the inclusion of some architectural volumes containing some functions deemed

necessary (quarters, new cafeteria, fitness area) and the relocation of some existing small retail

businesses, already existing in the area; the construction of a new research centre devoted to

laboratory activities made of different sizes and heights, illuminated differently and appropriately

divisible or equippable.

Finally, the redevelopment and enhancement of 'the spherical ampulla", once used for storing

ammonia, now symbol of the industrial past.

Italeaf S.p.A.


RISKS ASSOCIATED WITH THE ACTIVITY'

The activities carried out expose the Company to the following risks: credit risk, liquidity risk and

market risk. The operating and financial policies of the Company are aimed, among other things, to

minimize the negative impact of such risks on the financial performance of the Company.

The main risks are reported and discussed at the level of key management of the Company in order

to create the conditions for their coverage and assessment of the residual risk.

Credit Risk

The credit risk is related to liquid assets, financial receivables and trade receivables.

It is the policy of the Company, within the course of business, to operate exclusively with proven

financial strength.

The company since 31 December 2013 had a limited operating activity represented mainly by

services rendered inside of the industrial property in respect of the Group Companies and not.

Consequently, the credit risk to which the Company is subject, it is considered as a whole limited, in

consideration of the monitoring of the status of receivables periodically performed by the Company .

Here below is a table that summarizes the Company's maximum exposure to credit risk at 31

December 2013 and 2012.

31 December 31 December Difference

(in Euro) 2013 2012

Trade receivables

1,271,701 623,292 648,409

Total trade receivables 1.271.701 623,292 648,409

The prospects in the recovery of outstanding receivables are valued position by position. All

receivables at the balance sheet date for which there is a possibility of a loss have been written down.

With regard to the changes in the provision for bad debts, please refer to the Explanatory Notes.

With regard to bank deposits, it should be noted that the Company operates, on an ongoing basis,

with a primary credit standing, with an acceptable credit rating, thus limiting the associated credit

risk.

Italeaf S.p.A.


Liquidity Risk

Liquidity risk is the risk that financial resources may not be available or only available at a high cost

that would result in significant impact on the income statement.

The Company's objective is to ensure the ability to meet at any time its financial obligations,

maintaining an adequate level of liquidity through the increase of the share capital and obtaining

adequate credit lines.

The Company provides through the cash budget the measurement, the management and daily

monitoring of the liquidity risk; through the cash flow budget is in fact carried out the planning and

forecasting of daily liquidity.

For the analysis of liquidity risk, the financial liabilities include trade payables and other financial

liabilities.

The following table provides a breakdown of the financial liabilities as at 31 December 2013 and

2012.

31 December 31 December Difference

(in Euro) 2013 2012

Trade payables

3,348,176 2,198,665 1.149.511

Payables and other financial liabilities 2,219,977 -2,219,977

Total trade payables and financial 3.348.176 5,568,153 -1,070,466

Trade payables are in the short or include trade payables relating to the supply of goods and services .

At December 31 2013 debts and other financial liabilities were represented by an overdraft revoked

current account and by the debit balance of the bank current account of Terni Research SpA.

The risk of withdrawal of credit lines is constantly monitored through periodic revaluation of the

existing credit grantors and the credit institutions with their renewal.

Market Risks

Risk of interest rate

Italeaf S.p.A.


The interest rate risk to which the Company is exposed is mainly regulated by the financial assets and

liabilities with floating rates plus a spread. In particular, receivables and payables at variable rates

expose the Company to a risk arising from interest rate volatility. The Company did not consider it

appropriate to establish specific financial instruments to hedge interest rate risk in that, considering

the current level of financial indebtedness, the same would be, on the whole, particularly

burdensome in relation to the potential benefits. The Company's financial results are therefore

affected by interest rates. In order to illustrate the potential resultant volatility of the Company's

exposure to interest rate risk, in the following table are presented the effects on the income

statement for the financial of December 31, 2013 and 2012 related to a change of one (1) percentage

point of interest rate, net of tax effects:

31 December 31 December

Interest

Risks (Euribor)

Interest Risks (Euribor)

Rischi

interesse (Euribor)

accounting value +100 bp -100bp

accounting value

+100 bp -100bp

Payables and other financial liabilities 2,219,977 22,200 -22.200 950,675 9,507 -9.507

Impact on gross financial liabilities 22,200 -22,200 9.507 -9,507

fiscal effect 27.50% -6,105 6.105 27.50% -2,614 2.614

Impact on net financial liabilities 16,095 -16,095 6.892 -6,892

Currency Risk

The Company is not exposed to currency risk, as all operations are carried out in euros.

Managing of the capital risk

The capital is managed in such a way as to ensure that the Company is able to continue its business

while maximizing paybacks for shareholders.

Italeaf S.p.A.


STATEMENT OF INCOME AND FINANCIAL POSITION

The financial results for the year are summarized in the following table shown:

31 December 31 December (in Euro) 2013 2012

Economic data

Net revenues from sales and services 2,116,008 3,990,542 EBITDA -612,778 -990,848 EBIT -1,386,262 -1,854,358 Result for the period -563,368 725,168

Financial data Net working capital -337,184 -867,196

Fixed assets, net of funds 22,348,774 22,137,866 Net financial position at short 2,212,684 908,397 Own resources 19,798,906 20,362,273

Reclassified income statement

(in euro) 2013 2012

Net revenues from sales and services Revenues from sales and services 1,741,384 3,488,143

Other revenues and income 374,624 502,399

OPERATING REVENUES 2,116,008 3,990,542

Production costs Raw materials 15,907 30,005

Services 1,752,201 3,860,360 Rentals and leases, use of third party assests 134,401 95,912 Staff costs 582,040 766,030 Other operative costs 244,239 229,082

PRODUCTION COSTS 2,728,786 4,981,389

GROSS OPERATING MARGIN (EBITDA -612,778 -990,848

Depreciation, net amortization and impairment of assets 773,484 823,511 Net provisions and writedowns

40,000

OPERATING PROFIT (EBIT) -1,386,262 -1,854,358

Financial Management Balance -22,403 68,464 Net extraordinary items 1,304,024 2,942,559

EARNINGS BEFORE TAX (EBT) -104,641 1,156,665

Taxes on income 458,727 431,498

INCOME FOR THE PERIOD -563,368 725,168

Net revenues from sales and services for the financial year 2013, as reported in the reclassified

income statement shown in the "management performance, amounted to Euro 2,116,008 in respect

of costs of production for Euro 2,728,786.

Italeaf S.p.A.


Following the allocation of net amortization and provisions for Euros 773,484, the operating profit

(EBIT) showed a negative balance of Euro 1,386,262.

The financial management has contributed negatively to the result for the year with a balance of € -

22,403 while the extraordinary management contributed positively for Euro 1,304,024.

Deferred and current tax assets had a negative balance of Euro 458,727 resulting in a loss for the

period of € 563,368.

Reclassified balance sheet

(in euro) 2013 2012

NET ASSETS Inventories

Receivables from clients 328,519 207,352

Other receivables 1,749,214 1,412,389

Payables to suppliers -692,423 -933,471

Other payables -1,722,494 -1,553,466

Net working capital -337,184 -867,196

Intangible assets 122,116 183,174

Tangible assets 22,141,564 24,100,410

Financial assets 7,083,774 5,142,171

Net fixed assets 29,347,454 29,425,755

Invested Capital 29,010,270 28,558,559

TFR severance indemnities -112,153 -154,193

Other funds -6,886,527 -7,133,696

Total funds -6,998,680 -7,287,889

TOTAL NET INVESTED CAPITAL 22,011,590 21,270,670

COVERINGS

Net financial position at short 2,212,684 908,397

Net financial position 2,212,684 908,397

Own resources 19,798,906 20,362,273

TOTAL COVERINGS 22,011,590 21,270,670

Net invested capital at the end of the period amounted to Euro 22,011,590; Net Fixed capital

amounts to Euro 29,347,454, net working capital had a negative balance of Euro 337,184; The

Company also presents reserves for risks and severance indemnities for € 6,998,680. . From the side

of the coverings own resources amounted to € 19,798,906 and the net financial position, better

detailed below, shows a very low indebtedness for Euro 2,212,684.

Italeaf S.p.A.


Net financial position

The net financial position shows a balance of a total value of Euro 2,212,684 showing availability to

banks for Euro 6,881, an existence of cash for € 412. The Current financial debt amounted to €

2,219,977, represented by 430,156 euros from an overdraft current account and by € 1,789,821 from

the debit balance of the current account outstanding with the parent company Terni Research SpA

31 December 31 December

(in Euro) 2013 2012

Cash 412 1,332

Current bank accounts 6,881 40,946

Liquidity 7,294 42,277

Current bank borrowings (overdraft / c) -430,156 -950,674

Current account parent company -1,789,821

Current financial debt -2,219,977 -950,674

Net financial position -2,212,684 -908,397

INVESTMENTS

For the year ended on 31 December 2013, investments were made for Euro 527,170 relating to

interventions for the renovation of the industrial site in Nera Montoro.

ACTIVITY OF RESEARCH AND DEVELOPMENT

Pursuant to Article 2428, paragraph 2 number 1, it is acknowledged that in the year ended 31

December 2013 there are no expenses for research and development. Our company today does not

carry out any research and development activities as such has been completely delegated to other

Group companies.

TRANSACTIONS WITH RELATED PARTIES

In the following are presented in a summary table, the main assets and liabilities during the year

occurred with subsidiaries, affiliates, parent, other affiliated companies, associates of their direct and

indirect subsidiaries and other related parties.

Italeaf S.p.A.


Name Assets Liabilities

Parent companies

Terni Research S.p.A.

Commercial: Service Contract Commercial and other: Ratio of tax

consolidation Financial:centralized treasury Financial: centralized treasury

Subsidiaries

Green Led Industry S.p.A.

Commercial and other: Service Contract

ITALEAF U.K. Ltd Commercial and other: Service Contract

SkyRobotic S.r.l.

Commercial and other: Service Contract

Associated companies

Lucos Alternative Energies S.p.A. Commercial and other: Re-debit Personal/ Service

Commercial and other: Contract for Energy Efficiency of the site of Nera Montoro

I Green Patrol S.r.l. Commercial and other: Contract: Surveillance

of the industrial site

TerniEnergia S.p.A.

Commercial and other: Re-debit utilities – Contract for the management of

remediation purification activities

Commercial and other: management of remediation purification activities

The following table shows also the equity and operating values arising from relations above.

Italeaf S.p.A.


Trade and other transactions

(in euro)

Name 31.12.2013 2013

Accounts receivable

Payables Purchases for investments

Costs Revenues Purchas

es of material

s

Services

Other Services Other

Parent companies

Terni Research S.p.A. 928,154 645,182 22,400 692,000 Subsidiaries Skyrobotic S.r.l. Greenled Industry S.p.A. 1,976,042 Associated companies Terni Energia S.p.A. 6,894 282,584 572,662 167,327

Lucos Alternative Energies S.p.A. 8,134 123,594 15,000 115,260 34,130 I Green Patrol S.r.l. 14,580 24,000

Total 943,182 1,065,939 15,000 161,660 1,298,792 2,143,369

FINANCIAL DEALINGS

(in euro)

Name 31.12.2013 2013

Financial

investments

Accounts

receivables

Payables Guarantees Obligations Charges Income

Parent companies Terni Research S.p.A. 1,789,821 19,837 13,003 Subsidiaries Skyrobotic S.r.l. 397,500 ITALEAF U.K. Ltd 1,182

Associated companies Terni Energia S.p.A. Lucos Alternative Energies S.p.A.

Total 2,188,503 19,837 13,003

These reports, which do not include atypical and / or unusual transactions are governed by normal

market conditions.

Disclosures pursuant to Art. 2428, sections 3 and 4 of the Civil Code

The Company does not own and did not purchase or sell during the year own shares and / or shares

in parent companies, nor had it done through trust companies or nominees.

Italeaf S.p.A.


OTHER INFORMATION

Litigations, investigations and judicial proceedings in progress

There are no legal proceedings or litigation pending against the company

SIGNIFICANT EVENTS AFTER THE YEAR END

On February 13 2014, we completed the inversely proportional demerger of Terni Research SpA in

ITALEAF S.p.A. with the allocation to it of most of the assets of the demerged Company with a

carrying amount of € 30,662,391.27.

As a result of the demerger then, the book equity of Italeaf SPA, increased by an amount of Euro

7,054,654.27, equal to the net book value of the assets constituting the Demerged Entity, other than

the participation in ownership of TERNI Research SPA in the capital of Italeaf SPA; This increase

will be allocated to reserves, remaining unchanged, the share capital .

ITALEAF SpA, also changes the corporate structure, represented by the same members of Terni

Research SpA with Skill & Trust Holding S.r.l. as reference shareholder.

In the month of February 2014 was established the Subsidiary HK ITALEAF Ltd., headquartered in

Hong Kong, wholly owned by ITALEAF SpA, that had subscribed and fully paid up the share

capital of 10,000 HKD for the purpose of supporting and facilitating the development of

international subsidiaries in emerging markets in Asia.

There were no other significant events after the balance sheet date.

BUSINESS OUTLOOK

The financial statements at December 31st 2013 showed a net worth of Euro 19,798,906, net of loss

for the period of 563,368 euros and a net cash position, which show a total debt of € 2,212,684 .

For 2014, the beneficiary Company of the reversed partial demerger of Terni Research SpA, of

which you were given full information, will change its activity, so including the management of

shareholdings and its asset consistency.

The Company in the financial year 2014, will join the activity of startupper to the management of

the industrial site in Nera Montoro, including the management of investments and service activities

on behalf of subsidiaries, expecting a profit cash flow that can cover the current and non-current

financial needs.

Italeaf S.p.A.


PROPOSAL OF THE BOARD OF DIRECTORS

Dear Shareholders,

We conclude inviting you to approve the financial statements as at December 31st 2013 in the results

presented, with the proposal to allocate the profit for the period amounted to Euro 563,368 through

the use of available reserves.

Please note that the inverse partial demerger of Terni Research SpA in ITALEAF Spa, resulted in

the transfer to it of most of the company's assets, including the shareholding in TerniEnergia which

will entitle to cash in the month of May 2014 a significant dividend; in view so it is proposed the

distribution to the shareholders of ITALEAF SpA a dividend of EUR 0.08 per share, for a total of

Euro 1,200,000 on the extraordinary reserve.

Terni, 28 March 2014

To the Board of Directors AVV. Stefano Neri

Italeaf S.p.A.


FINANCIAL STATEMENTS

Italeaf S.p.A.


STATEMENT OF ACTIVE ASSETS 31.12.2013 31.12.2012

A) RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE (of which already mentioned)

B) FIXED ASSETS I. INTANGIBLE FIXED ASSETS 1) Installation and expansion Costs 2,566 3,848 2) Research, development and advertising costs 3) Industrial patents and intellectual property rights 1,000 1,500 to use intellectual property

4) Concessions, licenses, trademarks and similar rights 5) Start-up 118,550 177,826 6) Capital assets and payments on account 7) Other

Total I 122,116 183,174

II. TANGIBLE FIXED ASSETS 1) Land and buildings 17,325,851 19,185,626 2) Plants and machinery 4,598,206 4,835,569 3) Industrial and commercial equipment 3,074 4,347 4) Other assets 56,983 74,867 5) Capital assets and payments on account 157,450

Total II 22,141,564 24,100,409 III. FINANCIAL ASSETS 1) Shareholdings in: a) Subsidiary companies 3,031,183 b) affiliated enterprises

c) parent companies d) Other enterprises 4,000,020 5,091,905 Total 1) 7,031,203 5,091,905 2) Accounts receivable:

a) from subsidiaries - due within one financial year - due after the following financial year

- - b) from associated companies

- due within one financial year - due after the following financial year

- - c) From parent companies

- due within one financial year - due after the following financial year

d) from others - due within one financial year

- due after the following financial year 52,572 50,266

52,572 50,266

Total 2) 52,572 50,266 3) Other securities 4) Own shares

Total III 7,083,775 5,142,171

Total B) Fixed assets 29,347,455 29,425,754

Italeaf S.p.A.


C) LIQUID ASSETS I. LEFT-OVER STOCK 1) Raw materials, consumables and supplies 2) Works in progress and semifinished goods 3) Works in progress on contracts

4) Finished products and goods 5) Payments on account 6) Dispose of unused assets

Total I - -

II. ACCOUNTS RECEIVABLE 1) From clients - due within one financial year 328,519 207,352 - due after the following financial year

328,519 207,352

2) from subsidiary companies - due within one financial year

- due after the following financial year

- - 3) from associated companies - due within one financial year - due after the following financial year

- - 4) from parent companies

- due within one financial year 928,154 415,940


928,154 415,940

4 bis) Tax receivables - due within one financial year 292,649 696,988


292,649 696,988 4 ter) Prepaid taxes - due within one financial year


- - 5) from others

a) other associated companies altre imprese consociate

- due within one financial year 15,028 295,970 - due after the following financial year

15,028 295,970 b) Others - due within one financial year - 909 - due after the following financial year

- 909

Total 5) 15,028 296,879

Total II 1,564,350 1,617,159

III. FINANCIAL ASSETS EXCLUDING FIXED ASSETS 1) Shareholdings in subsidiaries 2) Shareholdings in affiliated companies 3) Shareholdings in parent companies

4) Other shareholdings 508,924 5) Own shares 6) Other securities

Total III 508,924 -

IV. CASH AND CASH EQUIVALENTS 1) Bank and postal accounts 6,881 40,946 2) Cheques 3) Cash and valuables on hand 412 1,332

Total IV 7,293 42,278

Italeaf S.p.A.


Total C) Working capital 2,080,567 1,659,437

D) ACCRUALS AND DEFERRALS I. ACCRUALS 4,459 2,582 II. DEFERRALS

1)

Discounts on loans

2) Other deferrals

Total D) Accruals and deferrals 4,459 2,582

TOTAL ASSETS (A+B+C+D) 31,432,481 31,087,773

Italeaf S.p.A.


STATEMENT OF LIABILITIES 31.12.2013 31.12.2012

A) NET EQUITY

I. CAPITAL 15,000,000 15,000,000 II. PREMIUM RESERVE OF SHARES III. REVALUATION RESERVE IV. LEGAL RESERVE 37.640 1,382 V. STATUTORY RESERVE VI. RESERVE FOR TREASURY STOCK VII. OTHER STOCKS 1. extraordinary reserve 4.609.464 4,609,464 2. other Stocks

Total VII 4,609,465 4,609,464 VIII. PROFITS (LOSSES) B/F CARRIED FORWARD 715.170 26,259 IX PROFIT (LOSS) FOR THE YEAR (563.368) 725,168

Total A) Net Equity 19,798,906 20,362,273

B) PROVISIONS FOR LIABILITIES AND CHARGES 1) For pensions and similar obligations 2) For deferred taxes 6,886,527 7,133,696 3) Other

Total B) Provisions for risks and charges 6,886,527 7,133,696

C) EMPLOYMENT TERMINATION INDEMNITY 112,153 154,193

D) PAYABLES 1) bonds - due within one financial year - due after the following financial year

2)

Convertible bonds - due within one financial year - due after the following financial year

3)

Amounts due to shareholders for loans - due within one financial year - due after the following financial year

4) Payables to banks

- due within one financial year 430,156 950,674 - due after the following financial year

430,156 950,674 5) Debts owed to other lenders - due within one financial year - -


6)

Advances - due within one financial year 200,000 - due after the following financial year

200,000 - 7) Debts owed to suppliers - due within one financial year 692,424 933,471

Italeaf S.p.A.



692,424 933,471

8) Debts represented by securities - due within one financial year - due after the following financial year

9) Debts owed to subsidiaries

- due within one financial year 398,683 - due after the following financial year

398,683 - 10) Debts owed to associated companies - due within one financial year - due after the following financial year

11) Debts owed to Parent Companies - due within one financial year 2.434.995 754.145 - due after the following financial year

2,434,995 754,145 12) Current tax payables - due within one financial year 88,353 28,819 - due after the following financial year

88,353 28,819

13)

Payables to General government Social security funds - due within one financial year 41,451 77,316 - due after the following financial year

41,451 77,316

14) Other debts a) to other associated companies - due within one financial year 220,757 511,049 - due after the following financial year

220,757 511,049

b) To others - due within one financial year 125,729 169,497 - due after the following financial year

125,729 169,497

Total 14) 346,486 680,546

Totale D) Debts 4,632,548 3,424,971

E) ACCRUALS AND DEFERRALS I. ACCRUALS - 10,777

II. DEFERRALS 2,347 1,863

Total E) Accruals and deferrals

2,347 12,640

TOTAL LIABILITIES (A+B+C+D+E) 31,432,481 31,087,773

Italeaf S.p.A.


INCOME STATEMENT 2013 2012

A) REVENUES 1) REVENUES FROM SALES AND SERVICES a) Revenues from sales and services 1,741,384 3,488,143

Total 1) 1,741,384 3,488,143

2) CHANGES IN INVENTORIES OF PRODUCTS OF WORKS IN PROGRESS, SEMI-FINISHED OR FINISHED 3) VARIATION OF THE WORKS IN PROGRESS ON ORDERS 4) INCREASE IN FIXED ASSETS FOR INTERNAL WORK 134,950 5) OTHER REVENUES AND INCOME 239,674 502,399

Totale A) REVENUES 2,116,008 3,990,542

B) PRODUCTION COSTS 6) FOR RAW MATERIALS, CONSUMABLE MATERIALS AND GOODS 15,907 30,005 7) FOR SERVICES 1,752,201 3,860,360 8) FOR USE OF THIRD PARTY ASSETS 134,401 95,912 9) FOR STAFF a) Wages and salaries 447,682 563,618 b) social security charges 108,555 157,451

c) employee severance indemnities 15,057 29,785 d) retirement benefits and similar e) Other costs 10,746 15,176

Total 9) 582,040 766,030

10) AMORTIZATION AND DEPRECIATION a) amortization of intangible assets 61,058 61,058 b) Depreciation of tangible fixed assets 712,426 762,453 c) other write-downs of fixed assets d) write-down of receivables included in current assets 40,000 and cash and cash equivalents

Total 10) 773,484 863,511

11) CHANGES IN INVENTORIES OF RAW MATERIALS, ANCILLARY, CONSUMABLE AND GOODS

12) PROVISIONS FOR RISKS

13) OTHER PROVISIONS

14) SUNDRY OPERATING EXPENSES 244,239 229,082

Totale B) Production costs 3,502,272 5,844,900

Difference between value and production costs (A-B) (1,386,264) (1,854,358)

C) FINANCIAL INCOME AND CHARGES

15) INCOME FROM EQUITY PARTICIPATIONS - in subsidiaries - In affiliated companies - in parent companies

Total 15)

16) ALTRI PROVENTI FINANZIARI

Italeaf S.p.A.


a) from capital assets receivables: - from subsidiaries

- interdivisional interest receivables, retroactive currency, increases in share capital

- from affiliated companies

- from parent companies - from others

total a) b) From securities in fixed assets other than

equity investments c) from securities held as current assets other than equity investments d) other income from the preceding: - from subsidiaries - from affiliated companies - from parent companies - from others 46,886 85,530

total d) 46,886 85,530

Total 16) 46,886 85,530

17) INTEREST AND OTHER FINANCIAL CHARGES - to subsidiaries

-

- To affiliated companies 5,671 941 - To parent companies 63,618 16,124

Total 17) 69,289 17,065

17 bis) Profits and losses on foreign exchange

Totale C) Financial income and charges (22,403) 68,465

D) VALUE ADJUSTMENTS ON FINANCIAL ASSETS

18) REVALUATIONS a) of equity investments

b) of financial fixed assets other than equity investments c) Securities held as current assets other than equity investments

Total 18)

19) DEPRECIATION a) of equity investments b) of financial fixed assets other than equity investments c) Securities held as current assets other than equity investments

Total 19)

-

-

Totale D) Value adjustments on financial assets

E) EXTRAORDINARY INCOME AND EXPENSE

20) EXTRAORDINARY INCOME a) capital gains from disposals 1,976,042 2,942,559 b) depollution of fiscal interferences c) other operating income 124,720 d) rounding figures

Total 20) 2,100,762 2,942,559

21) EXTRAORDINARY EXPENSES a) losses from disposals

Italeaf S.p.A.


b) taxes relating to prior periods c) charges for early retirements d) depollution of fiscal interferences e) Other charges 796,736

Total 21) 796,736

Totale E) Extraordinary income and expenses 1,304,026 2,942,559

Profit before taxation (A-B+/-C+/-D+/-E) (104,641) 1,156,666

22) TAXES ON INCOME OF THE PERIOD

CURRENT ASSETS ,DEFERRED AND ANTICIPATED a) current taxation 705,896 626,083 b) Deferred tax assets and liabilities (247,169) (194,585)

Total 22) 458,727 431,498

Profit (loss) for the financial year (563,368) 725,168

Italeaf S.p.A.


EXPLANATORY NOTES

Italeaf S.p.A.


SECTION 1

Form and content of the financial statements

The financial statements for the year ended on 31 December 2013, submitted for your approval,

consists of: Balance Sheet, Income Statement and Explanatory Notes.

With regard to the activities of the company and significant events occurring after the reporting

period see the Management Report. Please also refer to the detailed information on relations with

subsidiaries, affiliates, parent companies and companies subject to control by the latter, other related

parties and affiliated of subsidiaries, and the relations with the company engaged in the business of

management and coordination, and with the other companies subject to it.

The financial statements and the explanatory notes are expressed in euro .

The financial statements have been subjected to an audit by PricewaterhouseCoopers SpA. We also

report that the Company does not issue consolidated financial statements making use of the

exemption envisaged by Art. 27 of Legislative Decree 127/1991; In fact, the company is subject to

the control of Skill & Trust Holding Srl, based in Terni, Via Garibaldi 43, which provides for the

drafting of the consolidated financial statements.

SEZIONE 2

Basis of preparation of the financial statements and assessment criteria

The criteria used in preparing the financial statements comply with applicable laws and regulations

mentioned above, integrated and interpreted by national accounting standards issued by the National

Board of Certified Public Accountants as well as by the Italian Accounting Body.

The assessment of the budget items was made based on general criteria of prudence and

competence, on a going concern basis and taking into account the economic function of the assets

and liabilities.

The application of the principle of prudence has led to the evaluation of the individual components

of the single entries or items of assets or liabilities, in order to avoid any offset of losses that should

be recognized and profits not to be recognized because unrealized gains.

Italeaf S.p.A.


In accordance with the principle of competence, the effect of transactions and other events has been

accounted for and allocated to the financial year to which such transactions and events are related,

and not to the period in which the related cash (receipts and payments) are effectively made. Profits

are included only if realized by the closing date of the period, while taking account of the risks and

losses even if known later.

Heterogeneous elements included in each budget item were evaluated separately. Assets intended for

long-term use are classified as fixed assets.

The continuity for the application of the assessment criteria over time is necessary to ensure the

comparability of financial statements of the company over the financial years .

The assessment taking into account the economic function of the assets and liabilities which

expresses the principle of substance over form - obligatory unless otherwise in conflict with other

specific rules for the financial statements - allows the representation of the operations looking at that

the economic reality underlying the formal aspects.

INTANGIBLE FIXED ASSETS

Are recorded at the cost of acquisition or internal production, including the imputable ancillary

charges and are shown net of any accumulated amortization, being calculated on a constant measure

depending on the residual useful life of the asset.

Intangible assets that, at the financial year end, have a permanent impairment in value lower than that

represented in the financial statements will be reported at such lower value.

If and when the causes that gave rise to impairment losses are restored, the values of the fixed assets

within the limits of the writedowns made, taking account of the depreciation accrued. The writeback

is not made for starting-up and deferred costs.

The costs for Installation and expansion, research, development and advertising, if proven as long-

term benefits, are capitalized prior consent of the Board of Statutory Auditors and amortized over

the period of their useful economic life, and in any case no longer than 5 years.

The Industrial patents, trademarks and rights to use intellectual property are recorded at acquisition

cost and are amortized on a systematic basis in accordance with the contractual period of use.

Other deferred charges relate to costs for future benefits, and are systematically amortized over 5

years. The start-up, if acquired for valuable consideration, is registered, including the possibility of

recovery through future revenues generated by the same company (or business unit), with the

consent Board of Statutory Auditors within the limits of the incurred cost.

Italeaf S.p.A.


TANGIBLE FIXED ASSETS

Are recorded at the purchase cost or manufacturing cost, including imputable accessory charges, net

of amortization.

Tangible fixed assets which, at the financial year end, have a permanent impairment in value lower

than that represented in the financial statements, will be reported at such lower value. If and when

the causes that have generated the write-downs are reset to the values of the fixed assets within the

limits of the write-downs made taking account of the depreciation accrued.

The costs of maintenance are charged in the income statement when those costs, except those

having an incremental nature, are capitalized.

Amortisation is calculated on a straight-line using the rates considered representative of the estimated

economic useful life of the assets.

The amortization rates used are as follows

Rates

Buildings

Industrial buildings 3%

Industrial and commercial equipment

Industrial and commercial equipment 5%

other assets

Furniture and fixtures 15%

Electronic machines for the office

Automobiles 12%

Buildings 20%

Industrial buildings 25%

FINANCIAL FIXED ASSETS

Equity investments

They are measured at the acquisition cost or other underwriting including imputable accessory

charges adjusted where necessary for impairment losses. Impairment losses exceeding the

corresponding values are recorded under provisions for risks and charges.

In case of no conditions of impairment losses it is reset the value of the stake, up to, at most, of the

original cost.

Italeaf S.p.A.


Receivables and payables

Credits of any nature are stated at nominal value, reduced to their estimated realizable value through

a specific valuation allowance for a direct reduction of them.

Payables are shown at their nominal value.

Cash and cash equivalents

Cash and cash equivalents are made up by bank deposits, cash and cash equivalents and are recorded

at their estimated realizable value, which coincides with the nominal value.

Accrued expenses, deferred assets and liabilities

Under these items are recorded portions of costs and revenues which are common to two or more

periods, in accordance with the principle of accrual basis.

Provisions for risks and charges

Provisions for risks and charges are made in relation to charges and losses realistically to be expected

for which, at the end of the financial year, are undetermined the amount and the date of occurrence .

The provision for taxation includes allocations made in respect of the income tax expenses for the

sustainable foreseeable future.

The tax provision includes deferred taxes calculated on the basis of timing differences between the

pre-tax profit calculated according to statutory criteria and the company's taxable income calculated

for tax purposes.

Memorandum Accounts

Guarantees issued are recorded at an amount corresponding to the amount of the secured debt.

The commitments are recorded on the basis of contracts existing at end of the period not falling

within the normal operational cycle to the part not yet executed.

Italeaf S.p.A.


Revenues and costs

They are stated in the balance sheet in accordance with the principles of prudence and competence.

Revenues are recorded net of returns, discounts, allowances and bonuses and taxes related to the sale

of goods and provision of services.

Grants

Grants related to income

Are accrued in the period in which it is originated the right to receive payment, regardless of

the date of settlement.

Taxes on income

Income taxes are accounted for on the accrual basis of a realistic forecast of the taxes payable under

current tax regulations.

Deferred taxes are payable on temporary taxable differences, and where there are the necessary

conditions of certainty, and where exist the future tax benefits arising both from deductible

temporary differences and losses carried forward. The assets for advance taxes are recognized in

accordance with the principle of prudence and only if there is reasonable certainty that, in the

periods in which the temporary differences will be reversed that have led to the recognition of

deferred taxes, of a taxable income non-less than the differences that will be cancelled.

Any net receivables and payables are stated for IRES (tax), and are detected, respectively, among the

other receivables and payables to the parent company Terni Research SpA, as a result of the option

of the Company for fiscal consolidation carried out in the month of June 2011 and valid for the

fiscal years 2011, 2012 and 2013.

Use of estimates

The preparation of the financial statements requires from the management to apply accounting

principles and methodologies that, in certain circumstances, are based on difficult and subjective

valuations and estimates based on past experience and assumptions that are from time to time

considered reasonable and realistic, related to certain circumstances. The application of these

estimates and assumptions affect the amounts reported in the financial statements, including balance

sheet, income statement and cash flow statement, as well as the disclosures. The actual results of the

balance sheet items for which have been used these estimates and assumptions may differ from those

Italeaf S.p.A.


reported in the financial statements due to the uncertainty which characterizes the assumptions and

the conditions upon which the estimates are based.

SECTION 3

ANALYSIS OF THE FINANCIAL STATEMENTS AND THE RELATED VARIATIONS

BALANCE SHEET: ACTIVE

FIXED ASSETS

INTANGIBLE ASSETS

This item totaled Euro 122,116.

In the pages that follow are given, respectively, the analysis of the variations of the "Original cost"

(Table 1), of the "Provision for depreciation and amortization" (Table 2) and "Net values" (Table 3) .

Table 1

ORIGINAL COST

INTANGIBLE ASSETS

values at

31.12.2012

Increases from

acquisition

Decreases

for disposals revaluations

other

changes

Values at

31.12.2013

Installation costs and 6,414 6,414

expansion

Costs of research,

development and advertising 2,500 2,500 Patents and rights to use intellectual property

Concessions, licenses, 296,376 296,376 trademarks and similar rights Start-up

Installation costs and

TOTAL 305,290 305,290

Italeaf S.p.A.


Table 2

INTANGIBLE ASSETS

AMORTIZATION AND DEPRECIATION FUND

values at

31.12.2012

Increases in

the period

Decreases for

disposals reclassifications

other

changes

values at

31.12.2013

Installation costs and

extension

- formation expenses 2,566 1,283 3,848

capital increase

Costs for development and advertising

- Advertising costs

- depreciation and amortization

Patents and rights to use intellectual property

- depreciation and amortization 1,000 500 1,500 Concessions, licenses, trademarks and similar rights

- depreciation and amortization

Goodwill

- depreciation and amortization 118,550 59,275

177,826

Altre

- depreciation and amortization 0 0

TOTAL 122,116 61,058 183,174

Table 3

NET VALUES

31.12.2012 31.12.2013

INTANGIBLE ASSETS

original

cost

Accumulated depreciation and

writedowns net values original cost

fund depreciation

and

amortization net values

Costs Installation and expansion 6,414 -2,566 3,848 6,414 -3,848 2,565 Research costs development and advertising

Patents and rights to use intellectual property 2,500 -1,000 1,500 2,500 -1,500 1,000

Concessions, licenses,

start-up 296,376 -118,550 177,826 296,376 -177,826 118,550 Other

TOTAL 305,290 -122,116 183,174 305,290 -183,174 122,116

Italeaf S.p.A.


The start-up recorded in the financial statements is derived from the transfer of the company,

performed within the constitution of the Company in December 2010, to release the subscription of

the share capital as resulting from the appraisal of the independent expert .


The item amounted to Euro 22,141,564 with a decrease of Euro 1,958,845 compared to the 2012

financial year.

In the pages that follow are reported, respectively, the analysis of the variations of the "Original cost"

(Table 1), the "Provision for amortization and depreciation" (Table 2) and "Net values" (Table 3).

Table 1

ORIGINAL COST

Values at

31.12.2013 Increases

Decreases

for disposals revaluation

Transfer from LIC and

reclassifications

Value at

31.12.2012

TANGIBLE FIXED

ASSETS

Land and buildings

- historical cost 20,033,423 335,313

-1,915,431 18,453,305

- grants related capitale

Plant and machinery

- historical cost 5,369,282 33,247 5,402,529

- grants related capitale Industrial and commercial equipment

- historical cost 6,368 6,368

- grants related capitale

other assets

- historical cost 94,640 1,160 95,800

- grants related capitale Assets under development and advances

- historical cost 157,450 157,450

TOTAL 25,503,713 527,170 -1,915,431 24,115,452

The item land and buildings includes full ownership of of the areas, the land and buildings of the

industrial site of Narni-Nera Montoro as well as the investments to upgrade some of the existing

buildings. The increases are related to investments for the re-use of some properties of the site. The

decreases, however, relate to the transfer of two buildings in July 2013 with a release of a capital

increase in the Company Led Green Industry SpA for € 2,500,000 and a sell with payment in money

made in December in favor of TerniEnergia Spa.

From the economic point of view the two transactions resulted in gains of Euro 2,143,270.

Italeaf S.p.A.


Table 2


AMORTIZATION AND DEPRECIATION FUND

Values at 31.12.2012 increases

Decrease due to

disposals

Reversal of impairment

losses reclassifications other

changes * Values at 31.12.2013

Land and buildings

- depreciation and amortization 847,797 421,499

-141,841 1,127,455

Plants and machinery

- depreciation and

amortization 533,713 270,610 804,323

Industrial and commercial equipment

- depreciation and

amortization 2,021 1,274 3,294

Other assets

- depreciation and

amortization 19,773 19,044 38,817

Assets under development and advances

TOTAL 1,403,303 712,426 -141,841 1,973,888

Table 3

Net Values

31.12.2012 31.12.2013


original cost

Accumulated depreciation

and writedowns net values original cost

fund depreciation

and amortization net values

Land and buildings 20,033,423 -847,797 19,185,626 18,453,305 -1,127,455 17,325,851 Industrial and commercial equipment 5,369,282 -533,713 4,835,569 5,402,529 -804,323 4,598,206

6,368 -2,021 4,347 6,368 -3,294 3,074

Other assets 94,640 -19,773 74,867 95,800 -38,817 56,983

Land and buildings 157,450 157,450

TOTAL 25,503,713 -1,403,303 24,100,409 24,115,452 -1,973,888 22,141,564

Italeaf S.p.A.


FINANCIAL FIXED ASSETS

Financial fixed assets:

This item totaled Euro 7,083,775.

Financial fixed assets: Shareholdings in subsidiaries

The item amounted to Euro 3,031,183.

It is the Company's shareholding in listed below:

Name Site Share capital

% ownership

Carrying amount of the

investment

Profit / Loss

Period Net equity at

31.12.2013

Greenled Industry S.p.A. Narni - Via dello stabilimento 1 3,400,000 73.53%

2,500,000 97,140 3,523,948

SkyRobotic S.r.l. Narni - Via dello stabilimento 1 1,030,000 51.46%

530,000

-

530,000

ITALEAF U.K. London - Corn Hill 1,183 100.00%

1,183

-

1,183

Following the Changes during the year:

Name Site Share capital

% ownership

Carrying amount of the

investment

Profit / Loss

Period Net equity at

31.12.2013 Net Equity attributable

Greenled Industry S.p.A. Narni - Via dello

stabilimento 1 3,400,000 73.53% 2,500,000 97,140 3,523,948 2,591,159

SkyRobotic S.r.l. Narni - Via dello

stabilimento 1 1,030,000 51.46% 530,000 - 1,030,000 530,000

ITALEAF U.K. London - Corn Hill 1,183 100.00% 1,183 - 1,183 1,183

The change is attributable to equity investments in subsidiaries for the subscription, in the month of

July 2013, of an increase of share capital in the Company GreenLed Industry SpA, with the exclusion

of the option right; the increase subscribed for Euro 2,500,000 was released through the transfer of

certain real estate properties. At 31 December 2013, the shareholding in GreenLed Industry SpA

amounted to 73.53% of the Share Capital.

The company GreenLed Industry S.p.A. is a manufacturer of lighting fixtures on LED technology,

both for street and industrial area use.

On December 21 2013 moreover, the Company entered into a stake of € 530,000, corresponding to

51.46% of the share capital in the company of new constitution called Skyrobotic Srl ; the Company

will be active in the study, design, development, engineering and production of UAV (Unmanned

Italeaf S.p.A.


Aerial Vehicle), in particular applications of 'unmanned' robotics technologies, such as the

development of robotic unmanned fixed wing and rotary-wing aircrafts.

The total equity investment of the Company in ITALEAF U.K Ltd responds to the need to create a

subsidiary in order to facilitate the expansion and reproduction of its model on foreign markets.

Financial assets: Shareholdings in other companies

This item totaled Euro 4,000,020 and is represented by shares in the company in Veneto Banca SpA.

The following changes during the year:

Shareholdings in other companies

Values at 31.12.2012

CHANGES IN FOR THE YEAR Values at 31.12.2013 Increases Decreases reclassifications revaluations

TerniEnergia S.p.A. 5,091,905 -5,091,905 0

Veneto Banca S.c.r.l

4,000,020

4,000,020

Total 5,091,905 4,000,020 -5,091,905 4,000,020

The equity investment in the subsidiary TerniEnergia has been reclassified under current assets,

given the resolution of the board of directors that authorized the sale to the extent of its entire

amount.

Financial assets: Other receivables

The item amounted to € 52,572 and is represented by security deposits in cash.

Receivables

The item, exclusively represented by loans to Italian parties, amounted to 1,564,350 euros and it is so

detailed:

Italeaf S.p.A.


Accounts receivable 31.12.2013 31.12.2012 Differences

Receivables from clients 328,519 207,352 121,167

Receivables from subsidiaries

Receivables from affiliated companies

Receivables from parent companies 928,154 415,940 512,214

Tax receivables 292,649 696,988 -404,339

Receivables from Deferred tax asset

Receivables from associated companies 15,028

Receivables from others 0 296,879 -296,879

TOTAL 1,564,350 1,617,159 -67,838

Accounts receivables: from clients

Trade receivables from clients amounted to € 328,519 and refer to receivables owed for services for

Italian organizations and are payable within 12 months.

Name 31.12.2013 31.12.2012 Difference

Ordinary clients 599,403 478,236 121,167

Provision for impairment -270,884 -270,884 0

TOTAL 328,519 207,352 121,167

It is in the detail made of receivables arising from the supply of utilities.

The value of receivables is adjusted to their estimated realizable value with the recording of the

reserve for bad debts for € 270,884.

Receivables from parent companies

This item amounted to Euro 928,154 and is represented by trade and financial receivables from

parent companies such as shown below:

Italeaf S.p.A.


Kind 31.12.2013 31.12.2012 Difference

Commercial

- credits from performance 928,154 415,940 512,214 Financial: - c / intercompany

- dividends - Other

TOTAL 928,154 415,940 512,214

In detail it comes to Euro 928,154 of trade receivables from Terni Research SpA

Receivables: Tax credits

This item amounted to Euro 292,649 as shown below:

Name 31.12.2013 31.12.2012 Difference

VAT 286,388 656,131 -369,743

IRES tax

IRAP tax 38,139 -38,139

Other Receivables 6,261 2,717 3,543

TOTAL 292,649 696,988 -404,339

Receivables: from others

Other receivables, amounted to € 15,028, and are as follows:

Name 31.12.2013 31.12.2012 Difference

Others

- Security deposits 0 0 0

- Other Receivables 0 909 -909

- Receivables from Associated

companies 15,028 295,970 -280,942

TOTAL 15,028 296,879 -281,852

For any further information we refer to the prospectus of the relations with related parties set out in

the annual report.

Financial assets not representing fixed assets

Other equity investments

The other equity investments classified as financial assets other than fixed assets, amounted to Euro

508,924 and are represented by shareholdings in TerniEnergia:

Italeaf S.p.A.


Below are the changes during the year:

Shareholdings in other companies

Values at 31.12.2012

CHANGES IN FOR THE YEAR Values at 31.12.2013

Increases Decreases reclassifications revaluations

TerniEnergia S.p.A. -4,582,981 5,091,905 508,924

Total -4,582,981 5,091,905 508,924

The equity investment in the subsidiary TerniEnergia was originally entered under financial fixed

assets and then reclassified under current assets, given the resolution of the board of directors that

authorized the sale of up to its entire amount.

Cash and cash equivalents

This item amounted to Euro 7,293 and is detailed as follows:

Name 31.12.2013 31.12.2012 Difference

Bank current accounts 6,881 40,946 -34,064

Cash 412 1,332 -920

TOTAL 7,293 42,278 -34,985

This is the cash on hand in addition to the availability of the current account with theCassa di

Risparmio dell’ Umbria SpA., Veneto Banca S.p.A., Monte Paschi Siena S.p.A. and Banca Popolare

di Vicenza.

Italeaf S.p.A.


ACCRUED INCOME AND PREPAYMENTS

This item amounted to Euro 4,459 and is detailed as follows:

Name 31.12.2013 31.12.2012 Difference

Accrued expenses 4,459 2,582 1,877

4,459 2,582 1,877

THE BALANCE SHEET: LIABILITIES

NET EQUITY


The following tables show the movements in equity during 2012 and 2013.

Net Equity composition

balance at

31.12.2012

Allocation of the earnings for the period Other variations

Profit for the year

Balance at 31.12.2013

distribution of dividends Other Increases Decreases reclassifications

Share capital 80,000 14,920,000 15,000,000

Share premium reserve 0 0

Legal reserve 0 1,382 1,382

Satutory Stocks 0 0

Other Stocks 19,529,465 -14,920,000 -1 4,609,464

Profit (loss) for the year 0 26,259 26,259

Share capital 27,641 -27,641

725,168 725,168

TOTAL 19,637,106 0 0 725,168 20,362,273

Italeaf S.p.A.


Net Equity composition

balance at

31.12.2012

Allocation of the earnings for the period Other variations

balance at 31.12.2012

Allocation of the

earnings for the period

distribution of dividends Other

Increases distribution

of dividends Other

Share capital 15,000,000 15,000,000

Share premium reserve 0 0

Legal reserve 1,382 36,258 37,640

Satutory Stocks 0 0

Other Stocks 4,609,464

4,609,465

Profit (loss) for the year 26,259 688,911 715,170

Share capital 725,168 -725,168

-563,368 -563,368

TOTAL 20,362,273 -563,368 19,798,906

The share capital at 31 December 2013 amounted to Euro 15,000,000.00 and 15,000,000.00 are the

number of shares at a nominal value of one Euro, owned entirely by Terni Research SpA in relation

to the possibility of distribution of reserves as shown below at the bottom:

Source

Amount

on 31.12.2013

(a+b)

Available

quota (a)

Available

quota (b) Distributable

share b

Summary of the uses of the three previous years

Increase in share

capital Loss

covering

Distribution

to shareholders Other

Share capital 15,000,000

Capital Stocks:

Share premium reserve

Retained earnings:

Legal reserve

Other Stocks

Profit (loss) for the year 5,324,635 5,324,633 5,324,633

Share capital -563,368

TOTAL 19,761,267 5,324,633 5,324,633

Italeaf S.p.A.


PROVISIONS FOR LIABILITIES AND CHARGES


Name 31.12.2013 31.12.2012 Difference

Provision for deferred taxes 6,886,527 7,133,696 -247,169

TOTAL 6,886,527 7,133,696 -247,169

The entire entry shall be represented by the deferred tax reserve. It is in the detail of the provision

for latent taxes posted in relation to the contribution made by the company Nuova Terni Industrie

Chimiche SpA on favour of Nuova TIC S.r.l. (now ITALEAF SpA) and of which the reversal takes

place simultaneously with the amortization of the related capital gains.

EMPLOYMENT TERMINATION INDEMNITY

This item totaled Euro 112,153. The change is attributable to the provision of the year over the

transfer of 6 units from the associated company TerniEnergia S.p.A. last January 2013.

Name 31.12.2013 31.12.2012 Difference

Employee severance indemnitity fund 112,153 154,193 -42,040

TOTAL 112,153 154,193 -42,040

PAYABLES

This item totaled Euro 4,632,548 and is structured as follows:

Italeaf S.p.A.


Description 31.12.2013 31.12.2012 Differences

Bonds

Convertible bonds Amounts due to shareholders for loans

Debts owed to banks 430,156 950,674 -520,518 Payables to other lenders Advances 200,000 200,000

Payables to suppliers 692,424 933,471 -241,047

Debts represented by securities Payables to subsidiaries 398,683 Payables to affiliated companies

Payables to parent companies 2,434,995 754,145 1,680,851 Tax Payables 88,353 28,819 59,534

Payables to general government Social security funds 41,451 77,316 -35,865

Other debts 346,486 680,546 -334,060

TOTAL 4,632,548 3,424,971 1,207,577

Debts: Debts owed to banks

This item amounted to Euro 430,156; This is the bank overdraft with Monte Paschi Siena SpA,

granted for a nominal value of € 962,500 and as guarantee the parent company Terni Research SpA

issued a surety guarantee to the Banca Popolare di Vicenza S.p.A..


- C/A Bank overdrafts 430,156 950,674 -520,518

TOTAL 430,156 950,674 -520,518

Debts: Payments on account

The account amounts to Euro 200,000 and is represented by payments received from the subsidiary

TerniEnergia for the supply of utilities.

Italeaf S.p.A.


Liabilities: Accounts payable to suppliers

This item amounted to Euro 692,424 and is represented by payables to suppliers including invoices

to be received for € 168,336.


Ordinary suppliers 524,088 660,525 -136,437

Invoices to be received 168,336 272,945 -104,609

TOTAL 692,424 933,471 -241,047

Debits: Payables to parent companies

This item amounted to Euro 398,683 and is detailed as for kind:

Kind 31.12.2013 31.12.2012 Difference

Trade

- services provision

- Others 398,683 398,683

Financial - C/a centralized Treasury

TOTAL 398,683 398,683

It is specifically the debt due from the subsidiaries Skyrobotic Srl and Italeaf U.K. Ltd for the

subscription of the share capital not fully paid up upon incorporation.

Debits: Payables to parent companies

This item amounts to Euro 2,434,995, as detailed by type:

Kind 31.12.2013 31.12.2012 Difference

Trade

- services provision

- Others 645,174 754,145 -108,971

Financial - C/a

centralized Treasury 1,789,821 1,789,821

TOTAL 2,434,995 754,145 1,680,850

Italeaf S.p.A.


This item refers entirely to the debt to the controlling company Terni Research SpA for income tax

(IRES). The Company participates in fact at the tax consolidation regime for which Terni Research

SpA joined in on June 2011 for the years 2011,2012,2013.

For the amount Euro 1,789,821 the entry shall be represented by the negative balance of the bank

current account with Terni Research SpA, regulated at normal market conditions.

Debts: Tax Payables

This item amounted to Euro 88,353 and is as follows:

Description 31.12.2013 31.12.2012 Difference

Tax payables Irap 69,580 0 69,580

Inland Revenue C / Rit. Self-Employment 1,016 125 891

Inland Revenue C / Rit. employees. 17,757 28,695 -10,937

TOTAL 88,353 28,819 59,534

This is the debt to the tax authorities for withholdings on wages and salaries for the month of

December.

Debts: Payables to general government Social security funds

The item amounts to Euros 41,451 and consists of the debt for contributions on remuneration of

employees


Debts / INPS (Employees) 41,451 75,057 -33,606

Debts / other institutions 2,260 -2,260

TOTAL 41,451 77,316 -35,865

Debts: Other payables

This item amounted to Euro 346,486 and is detailed as:

Italeaf S.p.A.



To affiliated companies

TerniEnergia S.p.A. 82,584 1,720,467 -1,637,884

Lucos Alternative Energies S.p.A. 123,594

123,594

Igreen patrol S.r.l. 14,580

14,580

Others

Liabilities for wages and salaries 76,741 44,890 31,851

Amounts due to others 48,986 129,025 -80,039

TOTAL 346,486 1,894,382 -1,547,897

It consists mostly of trade payables to sister company TerniEnergia for remediation activities and

miscellaneous services, of the debt owed to employees for remuneration for the month of December

and accrued bonuses and holiday pay.

MEMORANDUM ACCOUNTS

The Company has provided bank guarantees for a total of Euro 15,164; detailed as follos:

- Customs Agency Euro 10,000 - Bank guarantee for payment of tax on electricity

consumption.

- City of Narni € 5,164 - Bank guarantee for the costs arising from building works.

INCOME STATEMENT

The following is an analysis of the revenues and expenses for the period ended on 31 December

2013 compared with the previous year

REVENUES

The revenues value amounted to Euros 2,116,008 and is composed as follows:

Italeaf S.p.A.


Description 2013 2012 Difference

Revenues from sales and services 1,741,384 3,488,143 -1,746,759 Changes in inventories of works in progress, of semi-finished and finished goods

Variations on works in progress of custom products

Increase in fixed assets for internal works 134,950

134,950

Other revenues and income 239,674 502,399 -262,724

TOTAL 2,116,008 3,990,542 -1,874,532

Revenues from sales and services

This item amounts to Euro 1,741,384, as detailed below:


Revenues from sales and services

Revenues from the management of the biological

sector 1,265,868 -1,265,868

Revenues from the remediation management 1,109,400 -1,109,400

Miscellaneous revenues 316,124 625,293 -309,169

Revenues from the management of the biological sector 1,425,260 487,582 937,678

TOTAL 1,741,384 3,488,143 -1,746,759

The item includes for Euro 607,960 revenues from the lease and the services provided pursuant to

service contracts in place with some Group Companies and with the new initiatives located at Italeaf

SpA.

The item miscellaneous revenues includes income from the re-debiting of the utilities and the cost

of common services (cleaning of the site, security, reception) to various companies in the industrial

site in Nera Montoro.

" Biological and organic revenue management " and " Remediation revenue management " for the

year 2012 included the consideration for the remediation of the site and for the purification of

groundwater, assets transferred together with the relevant business unit to TerniEnergia on

December 21, 2012.

Italeaf S.p.A.


Increase in fixed assets for internal works

The account amounts to Euro 134,950, and is represented by the amount of deferred costs related to

upgrading and redevelopment of the site of Nera Montoro, in relation to the most extensive

architectural and environmental regeneration project entrusted to the Politecnico di Milano -

Department of Architecture and Planning of which you are given ample information in the

management report.

Other Revenues

The account amounts to Euro 239,674, and is as follows:


Real Estate leases 38,217

38,217

Other revenues 34,130 52,399 -18,269

Capital gains 167,327 450,000 -282,673

TOTAL 239,674 502,399 -262,725

The Capital gains includes the gain on the sale of a building to the subsidiary TerniEnergia which

was completed in December.

PRODUCTION COSTS The costs amounted to Euro 3,502,272. They are as follows:

Italeaf S.p.A.



Raw materials, consumables, supplies and goods 15,907 30,005 -14,098

Services 1,752,201 3,860,360 -2,108,159

Use of third party assets 134,401 95,912 38,489

Staff 582,040 766,030 -183,991

Amortisation and impairment 773,484 823,511 -50,026

Change in inventories of raw, ancillary and consumable materials and goods 0 0 0

Provisions for risks 0 0 0

other provisions

40,000 -40,000

Other operating expenses 244,239 229,082 15,156

TOTAL 3,502,272 5,844,900 -2,342,629

The details of the items that make up the production cost is shown in the tables and in the

comments set out below.

Raw materials, consumables, supplies and goods

This item amounted to for Euro 15,907 and is represented by costs for the purchase of consumables

for the management of water treatment plants and the maintenance and management of the site .


Purchase of materials 15,907 30,005 -14,098

Motor fuels and lubricants

TOTAL 15,907 30,005 -14,098

Services

This item amounted to for Euro 1,752,201 and mainly includes expenses for technical advice, utility

expenses and fees for the management of the site, as detailed in the following table :

Italeaf S.p.A.



- Subcontracted work 24,903 2,280,922 -2,256,020

- Waste disposal 14,350 35,164 -20,814

- Cleaning and surveillance 120,726 124,960 -4,234

- Consulting / Professional services 127,717 148,018 -20,302

- Utilities 1,179,959 913,809 266,150

- Insurance 18,324 21,654 -3,330

- Banking and Postal 5,237 5,786 -548

- Other external services 260,985 330,047 -69,062

TOTAL 1,752,201 3,860,360 -2,108,160

The "Subcontracted work " includes the fee paid to TerniEnergia Spa, which in 2012 merged with

TerniGreen SpA, with which the Company had a contract for the remediation of the site and for the

purification of groundwater.

Use of third party assets

This item amounted to for Euro 134,401 and is represented by the rent expenses for equipment.


Hire Equipment / Vehicles 14,082 13,900 182

Other costs use of third party assts 120,319 82,012 38,307

TOTAL 134,401 95,912 38,489

Staff

Personnel costs amounted to € 582,040. At 31 December 2013 the workforce was represented by 11

units; in this regard see the table in Section 4, "Other Information". See information below.

Italeaf S.p.A.



Wages and salaries 447,682 563,618 -115,936

social security charges 108,555 157,451 -48,896

Provision for severance indemnities 15,057 29,785 -14,729

Other charges 10,746 15,176 -4,430

TOTAL 582,040 766,030 -183,991

Amortisation and impairment



Amortization of intangible assets 61,058 61,058 0

Amortization of tangible fixed assets 712,426 762,453 -50,026

Other write-downs of fixed assets

Write-down of receivables included in current assets and in cash and cash equivalents 0 40,000 -40,000

TOTAL 773,484 863,511 -90,026

Other operating expenses



- IMU 158,271 144,475 13,796

- Taxes other than on income 82,453 74,940 7,513

- Other expenses 3,515 9,667 -6,152

TOTAL 244,239 229,082 15,156

FINANCIAL INCOME AND EXPENSES

Financial management has a negative balance of Euro 22,403.

They are as follows::

Italeaf S.p.A.



FINANCIAL PROCEEDS Income from equity investments - in subsidiaries - in affiliated companies - in other enterprises Other financial revenue from receivables held as fixed assets - from subsidiaries

- from affiliated companies - from parent companies securities inscribed in fixed assets other than

equity investments

securities inscribed in current assets other than equity investments

Other income different from above - from subsidiaries - from affiliated companies - from parent companies 0 0 0

- from others 46,886 85,530 -38,644 - Interest earned on bank and post a / c

- interest receivable on repurchase agreements Other financial income from sales transactions with

compulsory repurchase agreements FINANCIAL PROCEEDS Total financial income 46,886 85,530 -38,644

FINANCIAL CHARGES Interest and other financial charges - to subsidiaries - to affiliated companies - to parent companies 5,671 941 4,729

- verso others - on bond debt - on payables to banks 63,618 16,124 47,494

- interest payable on repurchase agreements Other financial income from sales transactions with

compulsory repurchase agreements - verso others - on bond debt Losses on foreign exchange Total financial charges 69,289 17,065 52,223

TOTAL -22,403 68,465 -90,867

EXTRAORDINARY INCOME AND EXPENSES

The account amounts to Euro 1,304,026, as detailed below:

Italeaf S.p.A.



EXTRAORDINARY PROCEEDS - Windfall gains 124,720 0 124,720

Gains on disposal of property 1,976,042 2,942,559 -966,517

TOTAL EXTRAORDINARY INCOME

EXTRAORDINARY EXPENSE - contingent liability -28,321 0 -28,321

- extraordinary costs -768,415

-768,415

TOTAL 1,304,026 2,942,559 -1,638,533

The extraordinary income mainly includes the gain on the transfer of two properties for the

subscription of the capital of Greenled Industry SpA completed in July. The capital gains are due to

the fact that the values assigned, identified on the basis of an appropriate appraisal prepared by an

independent expert, were recorded at a lower net book value in the financial statements of the

Company.

The item "Capital losses" includes losses on the sale of shares of TerniEnergia Spa conducted during

the financial year.

Income taxes of the period, current deferred and advanced

Income taxes, current and deferred amounted to 458,727 Euro and are detailed as so:


current taxes 705,896 626,083 79,813

Prepaid taxes and deferred -247,169 -194,585 -52,584

TOTAL 458,727 431,498 27,230

FURTHER INFORMATION

Average number of employees

The numbers of employees at 31 December 2013 were 11 units distributed as follows by category:

Italeaf S.p.A.


Staff 2013 2012 Difference

Executives 0 0

Managers 3 4 -1

Employees 5 6 -1

Workers 3 12 -9

TOTAL 11 22 -11

Remuneration of directors and auditors

The table below shows the total remuneration paid to Directors and Statutory Auditors for the

performance of their duties.

(in Euro) 2013 2012 Difference

PricewaterhouseCoopers S.p.A. 15,000 25,000 -10,000

Total 15,000 25,000 -10,000

Remuneration of the corporate bodies

The table below shows the remuneration of Directors and Board of Statutory Auditors

(in Euro) 2013 2012 'Difference

Directors 6,000 2,000 4,000

Auditors 7,072 3,400 3,672

Total 13,072 5,400 7,672

Derivative financial instruments and assets intended for a specific business deal

Pursuant to art. 2427 bis of the Civil Code, it is noted that the company has not used during the year

any derivative financial instruments, and pursuant to art. 2447 bis of the Civil Code does not

currently have assets for a specific business deal.

Information on Article 2497 ter Civil Code.

The table, hereinafter summarises the key figures of the last financial statements of the Company

exercising the activity of direction and coordination, pursuant to art. 2497bis of the Civil Code.

Italeaf S.p.A.


Terni Research S.p.A.

Based in Narni, Strada dello Stabilimento, 1

Share capital: Euro 9,050,000.00 fully paid-in

Fiscal code. Registry of enterprises: 01312370552 Registered in the Register of Enterprises of TERNI

Num. R.E.A. TR-87475

BALANCE SHEET 31.12.2012 31.12.2011

ASSETS:

A) A) Receivables from shareholders for outstanding payments

B) Fixed assets 46,395,394 27,647,136

C) Current assets 4,562,641 8,275,400

D) Prepayments and accrued income 971,639 472,660

TOTAL 51,929,674 36,395,196

LIABILITIES:

A) Net Equity:

Share capital 9,050,000 9,050,000

Stocks 22,108,599 2,982,174

Profit (loss) for the year 1,687,198 2,452,441

B) Provisions for risks and charges 296,103 324,385

C) Provision for employment termination benefits 119,380 86,473

D) Debts 18,650,865 21,499,723

E) Prepayments and accrued 17,530 -

TOTAL 51,929,675 36,395,196

THE INCOME STATEMENT 2012 2011

Production value (non-financial income) 2,808,337 3,046,602

Production costs (non-financial costs) 3,203,811 3,214,684

Difference (395,474) (168,082)

Financial income and expenses 1,979,543 2,753,086

Value adjustments on financial assets

Extraordinary income and expenses 128,427 (126,561)

Earnings before income taxes 1,712,496 2,458,443

Taxes on income 25,298 6,002

Profit (loss) for the year 1,687,198 2,452,441

The essential figures of the Parent Company Terni Research SpA shown in the chart required by

article 2497-bis of the Civil Code have been extracted from the financial statements for the financial

year ended on 31 December 2012. For an adequate and complete understanding of the equity and

financial position at 31 December 2012 and profit or loss earned by the company for the year ended

Italeaf S.p.A.


on that date, please refer to the financial statements which together with the report of the

independent auditors is available in the form and manner prescribed by law.

The financial statements, comprising the balance sheet, income statement and explanatory notes give

a true and fair view of the financial position and economic result and are consistent with the

accounting records.

Narni, 28 March 2014

To the Board of Directors

Prof. Avv. Stefano Neri

Documents

CLOSING ACCOUNTS ON 31 DICEMBRE 2013 - Italeaf