T.E.R.N.I. ENTERPRISE FOR RESEARCH AND NEW INDUSTRIES … · sources (solar, biomass, waste), in a sustainable and economically competitive way, in favor of the national and local

FINANCIAL STATEMENT - CLOSING ACCOUNTS ON 31 DECEMBER 2012

T.E.R.N.I. ENTERPRISE FOR RESEARCH

AND NEW INDUSTRIES S.p.A.

(T.E.R.N.I. 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

T.E.R.N.I. RESEARCH S.p.A.

Financial Statement as at 31 december 2012 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 date of closure of accounts

Expected evolution of business activity

Proposal of the Board of Directors

Financial Statements

Statement of assets

Statement of liabilities

Income statement



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



CORPORATE BODIES AND THE AUDITING COMPANY

The Board of Directors:

Chairman Avv. Prof. Stefano NERI

CEO Dott. Spartaco FRANCONI

Members

Avv. Giovanni RANALLI

Ing. Marziliano URBANI

Dott.Guglielmo CECCHIN

Board of Auditors:

Chairman Dott. Vittorio PELLEGRINI

Staff Auditors

Dott. Paolo SEBASTIANI

Dott. Marco CHIERUZZI

Deputy Auditors

Dott. Marco ROSATELLI

Rag. Roberto PALOMBI

External Auditors: PricewaterhouseCoopers S.p.A.



BUSINESS MANAGEMENT REPORTING



MISSION AND ACTIVITIES OF THE COMPANY AND MAIN EVENTS

OF THE YEAR

Terni Research S.p.A. is a holding company, which is part of the Group controlled by Skill & Trust

Holding Srl, based in Terni, Via Garibaldi 43, working in the field of renewable energy, applied

research, Information Technology and in the environmental field.

Since 2012, moreover, through the Company ITALEAF SpA, the group supports and sustains the

creation of enterprises in the fields of green economy, circular economy and sustainable industry .

The company is concerned with property management services and photovoltaic plants, and the

activity of "corporate service" provided over its subsidiaries. The Company also provides bank

guarantees on behalf of its subsidiaries.

The Company offers the availability of equipped areas within the facilities in its availability as well as

legal services, corporate services, administrative and information systems.

The corporate structure at December 31 2013 numbered 40 companies directly or indirectly

controlled by Terni Research SpA, and it was as follows:



TERNI RESEARCH S.P.A.

100%

5,7

2%

TERNIENERGIA S.P.A.

10

0%

NEWCOENERGY S.R.L.

CAPITAL SOLAR S.R.L.

INVESTIMENTI INFRASTRUTTURE S.R.L.

CAPITAL ENERGY S.R.L.50%

ENERGIA NUOVA

MEET SOLAR S.R.L.

DT S.R.L.

RINNOVA

ENERGIA BASILICATA

ENERGIA LUCANA

VERDE ENERGIA50%

SOC AGR FOTOSOLARA CHEREMULE S.R.L.

SOC AGR FOTOSOLARA BONNANARA S.R.L.

SOC AGR FOTOSOLARA ORISTANO S.R.L.

SOC AGR FOTOSOLARA ITTIREDDU S.R.L.

TECI S.R.L.

MEET GREEN ITALIA S.R.L.70%

IGREEN PATROL S.R.L.

SOCIETA' AGRICOLA PADRIA SRL70%

TERNIENERGIA POLSKA Sp.z.o.o.

TERNIENERGIA SOUTH AFRICA L.t.d.

TERNIENERGIA S.p.A. HELLAS M.E.P.E.

FESTINA S.R.L.

LYTE ENERGY S.R.L.

INFOCACIUCCI S.R.L.

56

,46

%

ITALEAF S.P.A.

JOINT VENTURES CON EDF EN

T.E.R.N.I. SOLARENERGY S.R.L.

ENERGIA ALTERNATIVA S.R.L.

SOLAREN S.R.L.

FOTOSOLARE SETTIMA S.R.L.

JOINT VENTURES CON ALTRI PARTNER

SAIM ENERGY 2

COLLESANTO SRL

GIRASOLE S.R.L.

LUCOS ALTERNATIVE ENERGIES S.P.A.

70

%

SOL TARENTI

GUGLIONESI S.R.L.

GREEN A.S.M.

GREENLED S.R.L.



The main events for the financial year attributable to Terni Research SpA are summarized as follows:

Merger by incorporation of Nuova Terni Industrie Chimiche S.p.A.

During last May became effective the merger of Nuova Terni Industrie Chimiche SpA in Terni

Research S.p.A. The transaction, which brought back the business of the management of equity

investments within a single legal entity, determined the attainment of significant savings in fixed,

operational and management costs.

The accounting effect of the transaction was backdated to January 1 2012. All the operations carried

out by Nuova Terni Industrie Chimiche SpA, from the beginning of the effective date of the merger,

were charged to the budget of Terni Research SpA.

The transaction resulted in a significant increase of the invested capital, especially financial holdings,

as well as a merger surplus, on the difference between the book value of the merged company and

the value of the shareholding amounting to Euro 18,212,000.

Implementation of a PV power of 881 kWp

Last June, the company built and put into operation a power plant of 881 kWp implemented at the

industrial site in Nera Montoro, owned subsidiary ITALEAF SpA. The transaction was funded

through a contract of "sale and lease back" with the Company Cariparma SpA (Credit Agricole) for

an amount of Euro 2,187,000. With this investment, the Company owns three plants with an overall

capacity of 1.7 MWp.

The main events of the year, on the main companies in the Group are summarized as follows:

Merger Ternienergia-TerniGreen

On September 12 2012 we completed the merger by incorporation of TerniGreen SpA- a company

listed on AIM market of the Italian Stock Exchange and active in the environmental sector, the

recovery of materials and energy and the development and production of technologies - in

TerniEnergia SpA.

The merging of TerniGreen in TerniEnergia is designed to strengthen the investments held in

portfolio by the same, as well as for the gradual diversification of the business of TerniEnergia, still

within the field of energy and environment. This with the aim of giving life to an operator capable of

integrating the various technologies on the market of the green industry in a horizontal manner,



creating the first "pure players" listed on the market of the green economy at a growth potential. As

a result of the merger, the Group is active as well as in the production of energy from renewable

sources, in energy efficiency, in the field of waste management and recycling, as well as in the

development of new technologies in the cleantech sector.

Following the merger TerniEnergia S.p.A. has increased its share capital by a nominal amount of

EUR 27,319,680 through the issue of no. 9.792 million ordinary shares of no par value, through a

capital increase of Euro 2.79 per share issued; at the same time steps were taken to cancel all

TerniGreen ordinary shares representing the entire share capital and actions were taken for the

allocation of n. 0.34 of TerniEnergia ordinary shares for each ordinary share held by TerniGreen.

Following this transaction, the total shareholding of Terni Research SpA in Ternienergia at 31

December 2012 amounted to 62.18%, of which 56.47% direct and 5.71% indirect through the shares

held by the subsidiary Italeaf SpA (formerly Nuova TIC S.r.l.).

TerniEnergia S.p.A.

The Company implemented in the year ended at 31 December 2012 a net profit of Euro 1,175,000

and a consolidated profit of Euro 6,879,000.

At the industry level TerniEnergia Group during the year ended at 31 December 2012 consolidated

its leadership in providing "turnkey" photovoltaic systems of medium and large size, having built 16

new plants, with a capacity of 55, 8 MWp.

Regarding the activity of producing electricity from solar energy, through the twelve joint ventures

Ternienergia, owns 61 photovoltaic plants with an overall capacity of 62.1 MWp, all already

operational and connected to the national electricity grid. The company also owns 7.5 MW coming

from owned plants.

After the growth phase of the early years and the resizing of incentives to support the industry, the

Company in September unveiled the new economic plan "TerniEnergia Group 3.0" which is

achieved through three strategic development guidelines:

Third phase of growth of the Company: After the start-up and development supported by

government incentives, the company evolves into a multi-technology and multi-function

"Green Company", through the integration of different technologies for clean energy

production, energy efficiency and recovery of marginal resources;

Construction of a new organizational identity-based on 3 business units:



o Independent Power Producer (IPP) for the production of energy from renewable

sources (solar, biomass, waste), in a sustainable and economically competitive way, in

favor of the national and local network, via direct investments of TerniEnergia and

and co-investors.

o Integrated Energy Solutions (IES) dedicated to the creation, at competitive costs, of

plants for the production of energy from renewable sources and the cogeneration for

the efficient management of the consumption of major clients providing them with a

competitive advantage, with direct investment of the client or with the formula Esco.

Are included under this business unit also third party' activities of EPC and BOT for

the various renewable sources.

o Environmental Resources Solutions (ERS) for the provision of integrated solutions

for the use of marginal resources through their economic recovery and

transformation into new uses or conversion into energy, with direct participation in

the investment. Among the lines of action already activated we have the recovery of

used tires, the treatment of the organic fraction of the urban solid waste, including

decommissioning, reclamation, conversion of industrial sites and water purification.

Internationalization in 3 continents to realize the opportunities of development and

diversification of country risk. The development will be directed both towards emerging

countries with strong growth in energy and environmental demand (South Africa, India),

both in mature markets characterized by a replacement demand for capacity and energy

efficiency (Europe).

ITALEAF S.p.A.

ITALEAF S.p.A. arises from the transformation of the joint stock company NUOVA TIC Srl with

the aim of creating a new Italian "startupper Company" focused on the Green Economy.

The Nuova TIC, in July turns into joint stock Company expanding its corporate purpose and

changing its name to ITALEAF SpA. The company was founded with an important capital

endowment having a registered capital of 15 million Euro.

The Company, from October operates with a new corporate structure, unprecedented in Italy,

created in support of new businesses or existing businesses with a view to facilitating the evolution in

business with the propensity to achieve size and industrial characteristics.



Italeaf S.p.A. is a start-up company, part of the Group TERNI Research, which supports and

sustains the creation of enterprises in the green and circular economy field and sustainable industry.

Italeaf S.p.A. pursues the creation of value through the construction, the success and the

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

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

The aim of Italeaf S.p.A. is to make replicable this model, in order to start the construction of a

national network.

Italeaf S.p.A. assists, accompanies and accelerates the development of initiatives, by rewarding this

action through the enhancement of services offered at start-up businesses (localization and a large

bouquet of administrative, ideational, financial, trade and communication services) .

Italeaf S.p.A. selects projects with a high potential, promoting the matching among start -ups looking

for capital necessary for the start-up (seed capital) and potential investors.

Italeaf S.p.A. is a candidate to play a new and central role to the process of animation of the scenario

of the made in Italy Startups of the Green Economy, for three main reasons:

1) Italeaf S.p.A. intends to manage an ecosystem made up of entrepreneurs, mentors, investors,

advisors, consultants and partners through the organization of events where all these people can

meet. An example of this activity is represented by two stages envisaged in the project : (a)

Bootcamps (training camps) where the active players in the entrepreneurial community acquire the

key information on ecosystems, the meet-up and exchange reports over what they do. The

bootcamps are open to a varied world, ranging from university spin-offs to freelancer, from

managing directors, creative directors, from college students to design gurus, from programmers to

aspiring entrepreneurs, managers of non-profit organizations to artists, from associations to

professionals, from engineers to chemists, physicists, mathematicians, computer scientists, architects,

experts in legal matters; (b) The Drafts (selection events) where Italeaf Spa meets "face to face"

potential innovators in meetings, in focus groups and workshops, that are designed to stimulate and

accelerate the process of birth of startup businesses in the ecosystem world.

2) At the same time Italeaf S.p.A. wants to create a web community, accompanied by an official blog

where they are published stories, interviews and advice for start-uppers, which is a virtual coworking

space, in which the projects are open to the outside through a show window, but at the same time

those subjects collaborate and interact with one another to construct a long-term community. The

web Italeaf will be open to all, startup businesses, professionals and freelancers, having a long term

membership (potentially), which allows to focus on building a strong community with a mission

similar to the space you wish to occupy and the objectives to be achieved (the creation of new

industries in the Green Economy Made in Italy).



3) Finally, Italeaf S.p.A. wants play a key role in the national scene for the number of startups to

create within the ecosystem or with the support of its competitive factors. The ambitious goal is to

intercept for various reasons (agreements, partnerships, programs, incubation programmes,

acceleration and financing) promoting at least 50 new projects in 24 months.

RISKS ASSOCIATED WITH THE ACTIVITY

The activities carried out may conduct the Company to the following risks: credit risks, liquidity risks

and market risks. 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 the conditions for the assessment of the residual risk.

Credit Risk

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

It is the policy of the Company, in the ordinary course of business, to operate exclusively with

counterparts of proven financial strength; historically, there were no significant or particularly

problematic situations regarding the creditworthiness of business clients.

The Company has limited operating activities represented mainly by "corporate" services to

subsidiaries TerniEnergia and Alternative Energies Lucos S.p.A. and the management of real estate

properties and of photovoltaic installations. Consequently, the credit risk to which the Company is

subject, it is considered as a whole limited, in consideration of the monitoring, periodically

performed by the Company, of the receivables situation.

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

31, 2012 and December 31, 2011.



December 31 December 31 Variations Variations %

(in Euro) 2012 2011

Trade receivables

643,289 950,056 -306,766 -32%

Total trade receivables 643.289 950,056 -306,766 -32%

The prospects of recoverability of outstanding receivables are assessed position by position. All

receivables on the reporting from which there is a possibility of a loss were devalued. With regard to

the changes in the provision for write-downs receivables, please refer to the Explanatory Notes.

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

with primary counterparties, with an acceptable credit rating, thus limiting the associated credit risk.

Liquidity risks

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

that might lead to significant impact on the economic result.

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

maintaining an adequate level of the available liquidity by an increase of the share capital and by

obtaining adequate credit lines.

The Company provides via the cash flow budget the measure, the management and the daily

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

forecasting of the daily liquidity.

In order to analyse the liquidity risk, financial liabilities include trade payables and other liabilities.

The table below gives the detail of the financial and trade liabilities at 31 December 2012 and 31

December 2011:



31 December 31 December Variations Variations %

(in Euro) 2012 2011

trade payables

3,308,812 5,479,351 (2,170,539) -40%

Debts and other financial liabilities 15,904,587 (852,727) -5%

Total trade and financial payables 18,360,672 21,383,938 (3,023,266) -14%

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

On 31 December 2012, payables and other financial liabilities are represented by revocable bank

overdrafts of Euro 7,280,470, mortgages and unsecured loans of Euro 7,771,390.

The risk of revocation of credit lines is constantly monitored through periodic reassessment of

existing credit lines with the credit institutions for a renewal.

The short term financial liabilities include the bank advances in current account for an amount of

Euro 6,500,000, guaranteed by securities of TerniEnergia that, although representing a formal “short

term” exposure actually it was structured as a specific operation such as the acquisition of a stake in

Nuova Terni Industrie Chimiche SpA.; Although in fact being granted until revocation, is not

expected repayment in the short term..

For 2013 was drawn up a financial analysis of the cash flows from which emerged the financial

sustainability of the ordinary business based on the maintenance of existing lines of credit, without

providing any increase of the same. Any extraordinary investments will be financed with adequate

funding and maturity amount.

Sustainability will be ensured through from real estate income, proceeds from the "Service

Corporate", the proceeds arising from the management of the photovoltaic plants owned, as well as

financial gains from sale of shares or option rights and dividends. The company, based on the

proposal of the Board of Directors of the subsidiary TerniEnergia Spa, which provides for the

distribution of a total dividend of Euro 0,055 per share, budgeted a dividend for the period for the

payment of which Euro 1,159,908, provided for the month of May 2013 allowing the economic and

financial sustainability of the company.

The maturity analysis of financial liabilities at 31 December 2012, not including the interest not

accrued, is given below.



Date of repayment worst case payable at

sight within 12 months

between 12 and 60 months after 60 months Total

Short-term financial liabilities to banks

7,658,448 6,634,692 1,155,298 15,448,438

Medium and long-term financial liabilities to banks

Intercompany financial payables (c / bank current accounts)

456,149

456,149

Total al 31 dicembre 2012 456,149 7,658,448 6,634,692 1,155,298 15,904,587

Date of repayment worst case

Short-term financial liabilities to banks

7,829,016 6,263,848 958,996 15,051,860

Medium and long-term financial liabilities to banks Intercompany financial payables (c

/ bank current accounts) -

-

Total at 31 December 2012 -

7,829,016 6,263,848 958,996 15,051,860

Criterion for the allocation of short-term financial payables: the intercompany payables are repayable

on demand; overdraft a / c is within 12 months;

Market Risks

Risk of interest rate

The risk of interest rate which the Company is exposed is mainly originated by the financial assets

and liabilities set at a variable rate plus a spread. In particular, receivables and payables at variable

rates expose the Company to a risk arising from interest rate volatility. The Company has not

considered it appropriate to establish specific financial instruments to cover interest rate risk in that,

considering the current level of the debt, the same would be, on the whole, particularly burdensome

in relation to potential benefits. The Company's financial results are therefore affected by interest

rates.

The Company has decided to activate a specific risk coverage of interest rate, upon the signing of a

lease agreement with Credit Agricol Leasing S.p.A., and related to the photovoltaic plant called

"NuovaTIC" with Cassa di Risparmio di Parma e Piacenza SpA by signing a derivative contract of

risk coverage of the interest rates (CAP) on the 70% of the underlying loan, which allows to fix the

maximum cost of interests at a 4.25% rate.



In order to illustrate the potential volatility of the above resultant Company's exposure to interest

rate risk in the following table are shown the effects on the income statement for the financial years

ended on 31 December 2012 and 2011, related to a change of a percentage point of interest rate, net

of a theoretical fiscal effect:

31 december 2012 december 2011

Interest risks

(Euribor)

Interest risks (Euribor)

carrying amount

+100 bp -100bp carrying amount

+100 bp -100bp

Payables and other financial liabilities 15,051,860 150,519 -150,519 15,904,587 159,046

-159,046

gross impact on financial liabilities 150,519 -150,519 159,046

-159,046

Fiscal effect 27,50% -41,393 41,393 27,50% -43,738 43,738

net impact on financial liabilities 109,126 -109,126 115,308 -

115,308

Currency Risk

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

Managing of capital risk

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

while maximizing the return to shareholders.



STATEMENT OF INCOME AND FINANCIAL POSITION

The economic and financial results for the year, compared to the previous year are briefly presented

in the following table:

2012 2011 Difference Difference

(in Euro) %

Dati Economici

Economic Data 2,808,338 3,046,602 1,445,516 90.3%

-209,488 29,277 152,676 -123.7%

Net revenues from sales and services -395,474 -168,081 238,474 -58.7%

EBITDA 1,712,496 2,458,443 -823,946 -25.1%

EBIT 1,687,198 2,452,441 -787,700 -24.3%

Financial Data

Fixed Assets 46,395,393 27,647,135 21,941,384 89.7%

Net working capital net of funds 1,453,425 2,727,569 -2,087,333 -59.0%

Net Financial Position 15,003,023 15,890,091 578,931 4.0%

Net Equity 32,845,795 14,484,614 19,275,120 142.0%

The economic and financial results of Terni Research SpA for the financial year ended on December

31 2012, should be read, as mentioned in the introduction, in light of the important activities of

management of the equity investments and operating activities although limited to corporate services

in favour of the subsidiaries, including the management of the assets and the photovoltaic plants

owned.

For an assessment of the activity, therefore, it should be taken as reference the profit before tax

(EBT), which includes, as subject now prevailing, the financial management of the Company .

Net revenues from sales and services for the financial year 2012, as reported in the reclassified

income statement, shown in the "management performance" were equal to Euro 2,808,338 in respect

of costs of production for Euro 3,017,825. The operational management on the "service", the real

estate management and the management of photovoltaic plants, thus presents a negative result, even

if contained, for Euro 209,488.



Following the allocation of net depreciation and accruals for € 185,986, the operating result (EBIT)

showed a negative balance of EUR 395,474 in line with the figure for 2011 (negative for Euro

168,081).

The financial management has contributed positively to the operating income with a balance o f €

1,979,544; the income realized, inclusive of dividends from TerniEnergia Spa of Euro 1,159,908,

amounted to € 2,698,040 in respect of financial expenses of EUR 718,497. The extraordinary income

and expenses showed a negative balance of Euro 128,427. Deferred tax assets and liabilities

amounted to Euro 25,298; the result for the period was thus equal to Euro 1,687,198.

RECLASSIFIED INCOME STATEMENT

2012 2011 Difference

Revenues from sales and services

Revenues from sales and services 2,808,338 3,046,602 -238,264

OPERATING REVENUES 2,808,338 3,046,602 -238,264

Cost of production

Raw materials 4,956 7,062 -2,105

Facilities 1,052,077 1,958,594 -906,517

Leases and rentals 709,575 410,919 298,656

Staff costs 1,084,005 559,915 524,090

Other operating costs 167,213 80,836 86,377

PRODUCTION COSTS 3,017,825 3,017,325 500

GROSS OPERATING MARGIN (EBITDA) -209,488 29,277 -238,765

Net depreciation and writedowns 185,986 197,358 -11,371

Net provisions and writedowns 0 0 0

OPERATING PROFIT (EBIT) -395,474 -168,081 -227,393

Financial net Income (expenses). 1,979,544 2,753,087 -773,543

Net extraordinary items 128,427 -126,563 254,989

EARNINGS BEFORE TAX (EBT) 1,712,496 2,458,443 -745,947

Taxes on income -25,298 -6,002 -19,296

PROFIT FOR THE PERIOD 1,687,198 2,452,441 -765,243



Reclassified balance sheet

31.12.2012 31.12.2011 Difference

NET ASSETS

Inventories

Receivables from clients 82,260 58,555 23,705

other Receivables 5,403,183 6,268,082 -864,899

Payables to suppliers -306,120 -218,582 -87,538

other payables -3,310,414 -2,969,627 -340,787

Net working capital 1,868,908 3,138,427 -1,269,519

intangible fixed assets 265,586 305,614 -40,028

tangible fixed assets 3,072,197 3,185,329 -113,132

financial fixed assets 43,057,610 24,156,193 18,901,417

Net fixed capital 46,395,393 27,647,135 18,748,258

Invested Capital 48,264,302 30,785,562 17,478,739

redunfromncy pay-out -119,380 -86,473 -32,907

other funds -296,103 -324,385 28,282

total funds -415,483 -410,858 -4,625

TOTAL NET CAPITAL 47,848,819 30,374,705 17,474,114

Coverage Short-term net financial indebtedness 7,780,180 8,100,101 -319,921

Medium/long-term Net financial indebtedness 7,222,843 7,789,989 -567,146

TOTAL NET CAPITAL 15,003,023 15,890,091 -887,067

own resources 32,845,795 14,484,614 18,361,182

TOTAL COVERAGE 47,848,819 30,374,705 17,474,113

In terms of capital it should be noted the significant increase in fixed assets (of Euro 18,748,258)

attributable entirely to increases of the shareholding in ITALEAF SpA acquired following the

merger with Nuova Industrie Chimiche Terni SpA.; Net working capital decreased by EUR

1,269,519 bringing the capital to EUR 47,848,819.

From the side of the coverings, to be reported is the improvement in the net financial position of € -

887 067 and an increase in own resources of € 18,361,182.

In the assets the stake in TerniEnergia Spa, corresponding to more than 21.2 million shares, is

measured at a cost of (17,354,848 Euro) in front of a fair value at the date of this report of over EUR

46, 2 million.



Net financial position

31 december 31 december Difference

(in Euro) 2012 2011

Cash Flow 5,522 4,670 851

Bank accounts 43,315 9,826 33,489

liquidity 48,836 14,496 34,340

Current bank borrowings (c / a) -7,280,470 -7,155,468 -125,002

Share of short-term loans -548,546 -502,980 -45,566

the current account 0 -456,149 456,149

Current financial debt -7,829,016 -8,114,598 285,581

Net financial position at short -7,780,180 -8,100,101 319,921

Mortgage loans -7,222,843 -7,789,989 567,146

M/L. term Net financial position -7,222,843 -7,789,989 567,146

Total net financial position -15,003,023 -15,890,091 887,067

As mentioned in the comments of the balance sheet, the net financial debt at 31 December 2012

amounted to EUR 15,003,023. Compared to the previous year there was an overall decrease of the

financial debt of € 887,067. The details show a decrease of the medium and long term debt, as

resulting in the gradual reimbursement of repayments; we have also a reduction of short-term

indebtedness due to debt cancellation in the current accounts held with subsidiaries. Bank overdrafts

are revocable. Below is the cash flow statement:



2012

A. INITIAL NET FINANCIAL POSITION (15,890,091)

Profit (loss) for the period 1,687,198

depreciations 185,986

M / L term Change in provisions for liabilities and charges 4,625

(Revaluations) writedowns of fixed assets

(Gains) /unrealised losses on alienation.

Change in working capital 1,269,519

B. CASH FLOW FROM / (USED IN) OPERATING ACTIVITIES 3,147,328

Investments in fixed assets:

intangible (963)

tangible (31,865)

financial operations (688,932)

Investments in fixed assets:

C. CASH FLOW FROM / (USED IN) 'from INVESTING ACTIVITIES (721,760)

Contributions from shareholders / Equity changes

D. CASH FLOW FROM / (USED IN) 'from INVESTING ACTIVITIES 0

E. DISTRIBUTION OF PROFITS (1,538,500)

F. CASH FLOW FOR THE PERIOD (B + C + D + E) 887,068

G. FINAL NET FINANCIAL POSITION (15,003,023)

INVESTMENTS

In the year ended on 31 December 2012, investments were made for 2,668,615 Euro.

It is mainly the investment in a photovoltaic plant for a power of 881 kWp built at the industrial site

in Nera Montoro and owned by the subsidiary ITALEAF SpA and subsequently the subject of a sale

and leaseback transaction. The remaining amounts were composed of the purchase of hardware and

software equipment, furniture and fixtures.

RESEARCH AND DEVELOPMENT ACTIVITIES

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

on 31 December 2012 there are no expenses for research and development. Our company to date

does not carry out any research and development, as such activity has been fully delegated to the

subsidiaries.



TRANSACTIONS WITH RELATED PARTIES

Below are presented in a synthesis chart, the main assets and liabilities during the financial year

occurred with subsidiaries, affiliated companies, parent, other associated enterprises, associates of

their direct and indirect subsidiaries and other related parties.

Name Assests Liabilities

Subsidiaries

Terni Energia S.p.A. Commercial and other: Intercompany Service Agreement

Commercial and other: tax consolidation contract

Italeaf S.p.A.

Commercial and other: tax Consolidation contract


Financial: centralized treasury Financial: Current Bank Account

Capital Energy S.r.l. Commercial and other: tax Consolidation contract


Capital Solar S.r.l. Commercial and other: tax Consolidation contract


Newcoenergy S.R.L Commercial and other: tax Consolidation contract


Investimenti Infrastrutture S.r.l. Commercial and other: tax Consolidation contract


Meet Solar S.r.l. Commercial and other: tax Consolidation contract


Festina S.r.l. Commercial and other: tax Consolidation contract

Commercial and other: tax consolidaion contract

Rinnova S.r.l. Commercial and other: tax Consolidation contract


Energia Basilicata S.r.l. Commercial and other: tax Consolidation contract


Energia Lucana S.r.l. Commercial and other: tax

Consolidation contract

Commercial and other: tax consolidation

contract

Energia Nuova S.r.l. Commercial and other: tax Consolidation contract


Verde Energia S.r.l. Commercial and other: tax



contract

Societa’ Agricola Fotosolara Bonnanaro S.r.l. Commercial and other: tax Consolidation contract


Societa’ Agricola Fotosolara Cheremule S.r.l. Commercial and other: tax Consolidation contract


I Green Patrol S.r.l. Commercial and other: tax Consolidation contract


Soc Agricola Padria S.r.l. Commercial and other: tax Consolidation contract


Lucos Alternative Energies S.p.A. Commercial and other: tax



contract

Soc. Agricola Fotosolara Oristano S.r.l. Commercial and other: tax Consolidation contract


Soc. Agricola Fotosolara Ittireddu S.r.l.





Below are also the equity and economic values arising from relationships mentioned above.

Commercial transactions and other

31.12.2012 2012

Costs Revenues

Subsidiaries accounts receivable

payables Purchases

for investments

Purchases of materials

Services Other assests Services Other

Terni Energia S.p.A. 482,611 2,449,164 2,099,500 112,800 1,595,392 4,409

Italeaf S.p.A. 128,079 416,252 450,000

236,667 Capital Energy S.r.l. - 3,218

Capital Solar S.r.l.

- 3,348

Newcoenergy S.R.L

- 14,017

Investimenti Infrastrutture S.r.l. 29,791

-

Meet Solar S.r.l. -

3,208

Festina S.r.l. 1,557

1,747

Rinnova S.r.l. 31,654

-

Energia Basilicata S.r.l.

-

1,884

Energia Lucana S.r.l.

-

1,866

Energia Nuova S.r.l.

-

2,423

Verde Energia S.r.l.

-

1,898

Societa’ Agricola Fotosolara Bonnanaro S.r.l. 67,234

-

Societa’ Agricola Fotosolara Cheremule S.r.l. 67,246

-

Societa’ Agricola Fotosolara Oristano S.r.l. 91,275

-

Societa’ Agricola Fotosolara Ittireddu S.r.l.

8,482

Societa’ Agricola Padria S.r.l.

9,198

iGreen Patrol S.r.l.

83,345

7,220

20,000 Lucos Alternative Energies S.p.A. 7,058 35,000

Power S.r.l.

-

2,079

Speed S.r.l. 4,772

-

Befast S.r.l.

-

565

TerniGreen S.p.A. 260,278

402,041

TOTAL 911,278 3,002,692 - - 380,298 256,667 0 2,032,433 -



Financial dealings

31.12.2012 2012

Subsidiary companies Financial

fixed assets. accounts receivable Debts Garantees Commitments Charges Income

TerniGreen S.p.A. 98,882

Terni Energia S.p.A. 1,159,908 1,159,908

TOTAL 1,159,908 0 0 0 0 1,159,908

Such relationships, which do not include atypical and / or unusual transactions are governed by

normal market conditions.

ECONOMIC PERFORMANCE OF THE SUBSIDIARY COMPANIES

In order to give ample evidence of the economic performance of the subsidiaries are given in the

annex the main economic and financial figures, for the financial year ended on 31 December 2012,

of the subsidiaries Terni Energia S.p.A., ITALEAF S.p.A.



TerniEnergia S.p.A.

Registered office: Narni – Nera Montoro Via dello Stabilimento 1 Share Capital Euro 50.529.680

% Sharing 54,2 % T.E.R.N.I. Research S.p.A. 0,6% Italeaf S.p.A.

Financial statements drawn up in accordance with IFRS international accounting standards / IAS

Reclassified Income Statement

2012 2011

OPERATING REVENUES 38,909,037 197,795,305

PRODUCTION COSTS (35,277,803) (181,243,500)

GROSS OPERATING MARGIN (EBITDA) 3,631,234 16,551,805

Net Depreciation, amortization and impairment of

assets 3,640,106 1,863,539

Net provisions and impairment losses

OPERATING PROFIT (EBIT) (8,872) 14,688,266

Financial Management Balance (764,649) (2,392,731)

Net extraordinary items

INCOME BEFORE TAX (EBT) (773,521) 12,295,535

Income Taxes 1,948,829 (4,347,748)

PROFIT FOR THE PERIOD 1,175,308 7,947,787


31.12.2012 31.12.2011

Net Activities

Net working capital 30,818,956 33,671,822

Net fixed assets 73,196,737 37,611,282

Invested Capital 104,015,693 71,283,104

total funds (789,237) (308,083)

TOTAL NET CAPITAL 103,226,456 70,975,021

COVERINGS

Net financial position 49,518,462 29,687,728

own resources 53,707,994 41,287,293

TOTAL COVERINGS 103,226,456 70,975,021



Italeaf S.p.A.

Registered office: Narni – Nera Montoro Via dello Stabilimento 1

Capitale Sociale Euro 15,000,000

% Sharing 100.00% T.E.R.N.I. Research S.p.A.

Reclassified Income Statement

2012 2011

OPERATING REVENUES 3,990,542 2,423,920

PRODUCTION COSTS (4,981,389) (3,754,519)

GROSS OPERATING MARGIN (EBITDA) (990,848) (1,330,599)

Net Depreciation, amortization and writedowns of assets 823,511 771,971

Net provisions and writedowns 40,000 0

OPERATING PROFIT (EBIT) (1,854,358) (2,102,570)

Financial Management Balance 68,464 45,364

Net extraordinary items 2,942,559 1,991,915

INCOME BEFORE TAX (EBT) 1,156,665 (65,292)

Income Taxes 431,498 (92,933)

INCOME FOR THE PERIOD 725,168 27,641


31.12.2012 31.12.2011

NET ASSETS

Net working capital -867,196 -4,172,000

Net fixed assets 29,425,755 27,346,201

Invested Capital 28,558,559 23,174,201

total funds -7,287,889 -7,454,837

TOTAL NET CAPITAL 21,270,670 15,719,364

COVERINGS

Net financial position 908,397 -3,917,741

own resources 20,362,273 19,637,105

TOTAL COVERINGS 21,270,670 15,719,364



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

The Company does not own and has not purchased or sold, during the financial year, own shares

and / or shares of parent companies nor has it done through trust companies or nominees.

SIGNIFICANT EVENTS AFTER THE FINANCIAL YEAR END

There were no other significant events after the balance sheet.

BUSINESS OUTLOOK

The financial statements at December 31st 2012 shows a net worth of 32,845,797, including profit

for the year of € 1,687,198 and a net debt of 15,003,023.

It should be noted that the shareholding in TerniEnergia Spa was valued at the cost of (17,354,848 ),

compared with the fair value at the date of approval of this financial statement by the Board of

Directors, of over EUR 46,2 million .

For the year 2013, the company expects to achieve an operating income close to Euro 2,900,000

represented by “Corporate Services" with subsidiaries that should ensure a consideration of Euro

1,900,000; the activity of property management with revenues of 40 thousand euros and the

management of owned photovoltaic plants ensuring an income of Euro 900 thousand.

The cover operating costs forecast estimated at 2,900,000 euros will be made through the income

from operations; the financial management, in particular through dividends from subsidiaries will

guarantee the cash flows required to finance investments and to meet the financial obligations of the

company.



PROPOSAL OF THE BOARD OF DIRECTORS Dear Shareholders,

we conclude to invite you to approve the financial statements at December 31st 2012 in the results

shown, with the proposal to allocate the profits for the financial year equal to Euro 1,687,198 as

follows:

- EUR 84,360 equal to 5% of net profit to the legal reserve;

- Euro 1,176,500 as dividend to the extent of 0.13 Euros per share;

- EUR 426,338 to the extraordinary reserve.

Terni, 25 March 2013

To the Board of Directors

The chairman

Prof. Avv. Stefano Neri



FINANCIAL STATEMENTS



STATEMENT OF ACTIVE ASSETS 31.12.2012 31.12.2011

A) RECEIVABLES FROM SHAREHOLDERS FOR PAYMENTS STILL DUE

(of which already mentioned)

B) FIXED ASSETS

I. INTANGIBLE FIXED ASSETS

1) Installation and expansion Costs 1,720 3,440

2) Research, development and advertising costs - -

3) Industrial patents and intellectual property rights 7.745 14,510

to use intellectual property

4) Concessions, licenses, trademarks and similar rights

5) Start-up - -

6) Capital assets and payments on account

7) Other 256,122 287,664

Total I 265,587 305,614

II. TANGIBLE FIXED ASSETS

1) Land and buildings 2,979,382 3,090,321

2) Plants and machinery -

3) Industrial and commercial equipment 6,997 18,622

4) Other assets 85,818 76,386

5) Capital assets and payments on account

Total II 3,072,197 3,185,329

III. FINANCIAL ASSETS

1) Shareholdings in:

a) Subsidiary companies 40,962,585 24,106,193

b) affiliated enterprises

c) parent companies

d) Other enterprises 2,095,025 50,000

Total 1) 43,057,610 24,156,193

2) Accounts receivable:

a) From subsidiaries

- due within one financial year

- due after the following financial year

- -

b) From associated companies



- -

c) From parent companies



d) From others




- due after one year

Total 2) - -

3) Other assets

4) Own shares

Total III 43,057,610 24,156,193

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

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 82,260 58,555


82,260 58,555

2) from subsidiary companies

- due within one financial year 2,697,269 7,752,231


2,697,269 7,752,231

3) from associated companies



- -

4) from parent companies



- -

4 bis) Tax receivables

- due within one financial year 1,500,949 136,667


1,500,949 136,667

4 ter) Prepaid taxes



129,578 209,733

5) from others

a) other associated companies



- -



b) Others



103,748 103,718

Total 5) 103,748 103,718

Total II 4,513,804 8,260,904

III. FINANCIAL ASSETS

EXCLUDING FIXED ASSETS

1) Shareholdings in subsidiaries

2) Shareholdings in affiliated companies

3) Shareholdings in parent companies

4) Other shareholdings

5) Own shares

6) Other securities

Total III - -

IV. CASH AND CASH EQUIVALENTS

1) Bank and postal accounts 43,315 9,826

2) Cheques

3) Cash and valuables on hand 5,522 4,670

Total IV 48,837 14,496

Total C) Working capital 4,562,641 8,275,400

D) ACCRUALS AND DEFERRALS

I. ACCRUALS

II. DEFERRALS

1) Discounts on loans

2) Other deferrals 971,639 472,660

Total D) Accruals and deferrals 971,639 472,660

TOTAL ASSETS (A+B+C+D)) 51,929,674 36,395,196



STATEMENT OF LIABILITIES 31.12.2012 31.12.2011

A) NET EQUITY

I. CAPITAL 9,050,000 9.050.000

II. PREMIUM RESERVE OF SHARES 172,635 172,635

III. REVALUATION RESERVE

IV. LEGAL RESERVE 348,468 225,846

V. STATUTORY RESERVE

VI. RESERVE FOR TREASURY STOCK

VII. OTHER STOCKS

1. extraordinary reserve 21,587,495 2,583,690

2. other Stocks 1 3

Total VII 21,587,496 2,583,693

VIII. PROFITS (LOSSES) B/F CARRIED FORWARD

IX PROFIT (LOSS) FOR THE YEAR 1,687,198 2,452,441

Total A) Net Equity 32,845,797 14,484,615

B) PROVISIONS FOR LIABILITIES AND CHARGES

1) for liabilities and charges

2) For deferred taxes 296,103 324,385

Total B) Provisions for risks and

charges 296,103 324,385

C) EMPLOYMENT TERMINATION INDEMNITY 119,380 86,473

D) PAYABLES

1) bonds



2) Convertible bonds



3) Amounts due to shareholders for loans



4) Payables to banks


- due after the following financial year 7,222,844 7,789,989

15,051,860 15,448,437

5) Debts owed to other lenders

- due within one financial year -




6) Advances



- -

7) Debts owed to suppliers



306,120 218,582

8) Debts represented by securities



9) Debts owed to subsidiaries



3,002,692 5,260,769

10) Debts owed to associated companies



11) Debts owed to Parent Companies



- -

12) Current tax payables



29,124 262,707

13) Payables to General government Social security funds



62,951 60,220

14) Other debts

a) to other associated companies



- -

b) To others



198,118 249,008

Total 14) 198,118 249,008

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

E) ACCRUALS AND DEFERRALS

I. ACCRUALS 17,530

II. DEFERRALS

1) Premiums on loans

2) Other referrals

Total E) Accruals and deferrals 17,530 -



TOTAL LIABILITIES (A+B+C+D+E) 51,929,674 36,395,196



MEMORANDUM ACCOUNTS 31.12.2012 31.12.2011

4. OTHER MEMORANDUM ACCOUNTS

4.1 Granted Guaranties 46,224,971 41,816,319

4.2 Obligations for leasing contracts 6,861,967 3,980,710

4.3 Mortgages to guarantee mortgage loans 3,380,865

Total 4 56,467,803 45,797,029

TOTAL MEMORANDUM

ACCOUNTS 56,467,803 45,797,029



INCOME STATEMENT 2012 2011

A) REVENUES

1) REVENUES FROM SALES AND SERVICES

a)

Total 1)

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

5) OTHER REVENUES AND INCOME

a) Grants related to income 576,342 422,630

b) Other revenues and income 2,231,995 2,623,972

Total 5) 2,808,337 3,046,602

Total A) Revenues 2,808,337 3,046,602

B) PRODUCTION COSTS

6) FOR RAW MATERIALS, CONSUMABLE MATERIALS AND GOODS 4,956 7,062

7) FOR SERVICES 1,052,077 1,958,594

8) FOR USE OF THIRD PARTY ASSETS 709,575 410,919

9) FOR STAFF

a) Wages and salaries 792,684 398,475

b) social security charges 228,884 119,791

c) employee severance indemnities 41,754 22,206

d) retirement benefits and similar

e) Other costs 20,682 19,443

Total 9) 1,084,004 559,915

10) AMORTIZATION AND DEPRECIATION

a) amortization of intangible assets 40,990 53,268

b) Depreciation of tangible fixed assets 144,996 144,090

c) other write-downs of fixed assets

d) write-down of receivables included in current assets

and cash and cash equivalents

Total 10) 185,986 197,358

11) CHANGES IN INVENTORIES OF RAW MATERIALS,

ANCILLARY, CONSUMABLE AND GOODS

12) PROVISIONS FOR RISKS

13) OTHER PROVISIONS

14) SUNDRY OPERATING EXPENSES 167,213 80,836

Total B) Production costs 3,203,811 3,214,684

Difference between value and production costs (A-B) (395,474) (168,082)

C) FINANCIAL INCOME AND CHARGES



15) INCOME FROM EQUITY PARTICIPATIONS

- in subsidiaries 1,161,232 3,233,326

- In affiliated companies

- in parent companies

Total 15) 1,161,232 3,233,326

16) OTHER FINANCIAL INCOME

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 420,770 234,184

- from affiliated companies

- from parent companies

- from others 1,116,038 3,748

Total d) 1,536,808 237,932

Total 16) 1,536,808 237,932

17) INTEREST AND OTHER FINANCIAL CHARGES

- to subsidiaries 5,653 97,704

- To affiliated companies

- To parent companies

- To others 712,844 620,468

Total 17) 718,497 718,172

17 bis) Profits and losses on foreign exchange

Total C) Financial income and charges 1,979,543 2,753,086

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


Total 18)

19) DEPRECIATION

a) of equity investments

b) of financial fixed assets


c) Securities held as current assets


Total 19)

-

-



Total D) Value adjustments on financial assets

E) EXTRAORDINARY INCOME AND EXPENSE

20) EXTRAORDINARY INCOME

a) capital gains from disposals

b) depollution of fiscal interferences

c) other operating income 149,714 19,971

d) rounding figures

Total 20) 149,714 19,971

21) EXTRAORDINARY EXPENSES

a) losses from disposals

b) taxes relating to prior periods

c) charges for early retirements

d) depollution of fiscal interferences

e) Other charges 21,287 146,532

Total 21) 21,287 146,532

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

Profit before taxation (A-B+/-C+/-D+/-E) 1,712,496 2,458,443

22) TAXES ON INCOME OF THE PERIOD

CURRENT ASSETS ,DEFERRED AND ANTICIPATED

a) current taxation 45,812 13,967

b) Deferred tax assets and liabilities (20,514) (7,965)

Total 22) 25,298 6,002

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



EXPLANATORY NOTES



SECTION 1 Form and content of the financial statements The financial statements for the year ended on 31 December 2012, 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 the 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 the

preparation of the consolidated financial statements.

SECTION 2

Basis of preparation of the financial statements and assessment criteria

The financial statements at December 31st 2012 of the company have been prepared on the

assumption of business continuity.

It is believed that the company's ability to operate in a seamless business manner is properly

controlled ; In fact, the directors are aware of: a) the risks described in the section "Business risk" b)

the effects of any failure to achieve the objectives of the subsidiaries with respect to the 2013 budget

c) the current composition of the lines of credit; d) the risk that credit institutions may reduce or

withdraw existing credit facilities consisting of revoked lines of credit e) the general macroeconomic

environment submit that the company will be able, with the ordinary activities, to meet its financial

commitments during the 2013.

The criteria used in preparing the financial statements comply with the 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 . They

are consistent with those applied in preparing the financial statements for the previous financial year .

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.

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.

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 goodwill, 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.

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 15% other assets Furniture and fixtures 12% Electronic machines for the office 20% Automobiles 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.

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.

Commitments for derivative hedging contracts are recorded at a notional amount of memory

determined on the basis of the formulas from which they originate. In its note is also expressed their

fair value at the reporting date.

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. The costs are recorded net of returns, discounts, allowances and

rebates.

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.

Receivables from and payables to tax authorities also include the balances transferred from the

subsidiaries that have exercised (in June 2011 and for the fiscal years 2011, 2012 and 2013) the

option of the Group for the tax consolidation.



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

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

the conditions upon which the estimates are based.

Accounting treatment for the merger

The merger by incorporation of Nuova Terni Industrie Chimiche SpA, as amply described became

effective for accounting purposes from January 1st 2012 therefore, is based on the values that were

determined by the differences of the merger between the carrying amount of the shareholding and

the book value of assets and liabilities transferred. All transactions carried out by the merged

company during the period between January 1 2012 and May 11 2012, the effective date of the

merger, were charged to the budget of the merging company.

It should be noted that the merger by incorporation of Nuova Terni Industrie Chimiche SpA was

carried out in the presence of a total equity investment.

The merger concerned is therefore configured as the legal process that put into action a legal

consolidation and considering the basis of the accounting principle OIC 4.

Comparability of financial statement values

For a better understanding and interpretation of the budgetary data it must be taken into account,

during the financial year, the effectiveness of the merger by incorporation of Nuova Terni Industrie

Chimiche SpA, a company 100% held by Terni Research SpA. Having the merger accounting and tax

effects backdated to 1 January 2012 all accounting transactions entered into by Nuova Terni

Industrie Chimiche SpA until May 11 2012, the effective date of the merger, were recorded in the

financial statements of the parent company providing, as required by the OIC 4 the elimination of

receivables and payables and expected costs and revenues. The changes in the financial and



economic items shall take into account then the balancing items of the subsidiary Nuova Terni

Industrie Chimiche SpA.

Below are the two summary tables for the balance sheet and the income statement, showing the

effects of the merger:

Terni Research

S.p.A.

Terni Research

S.p.A.

Nuova Terni

Industrie Chimiche

S.p.A Intercompany operations

Income statement, pro-forma

2012

2011 2011 2011

2011

Revenues from sales and services Ricavi delle vendite e prestazioni 2,808,338

3,046,602 36,793

3,083,395

0

0

0

OPERATING REVENUES 2,808,338

3,046,602 36,793

3,083,395

Production costs

0

Raw materials 4,956

7,062

7,062

Services 1,052,077

1,958,594 27,028

1,985,622

Leases and rentals 709,575

410,919

410,919

Staff costs 1,084,005

559,915

559,915

Other operating costs 167,213

80,836 38,584

119,419

PRODUCTION COSTS 3,017,825

3,017,325 65,612

3,082,937

0

GROSS OPERATING PROFIT (EBITDA) -209,488

29,277 -28,819

458

Net Depreciation, amortization and impairment, 185,986

197,358

197,358

Net provisions and impairment losses 0

0

0

OPERATING PROFIT (EBIT) -395,474

-168,081 -28,819

-196,900

Net Financial Income (expense) 1,979,544

2,753,087 -15,844

2,737,243

Net extraordinary items 128,427

-126,563 187,147

60,585

EARNINGS BEFORE TAX (EBT) 1,712,496

2,458,443 142,485

2,600,928

Income Taxes -25,298

-6,002 -150,817

-156,819

INCOME FOR THE PERIOD 1,687,198

2,452,441 293,302

2,745,743

It was provided for the financial year 2011 to elide financial income and expenses for € 61,927 that

have no explicit evidence in the prospectus as shown on the same line "Other net income

(expense)”.



Terni Research

S.p.A.

Terni Research

S.p.A.

Nuova Terni Industrie Chimiche

S.p.A Intercompany

operations

Balance Sheet pro-

forma

31.12.2012

31.12.2011 31.12.2011

31.12.2011

NET ASSETS

Warehouse inventories

Receivables from customers 82,260

58,555

58,555

other Receivables 5,403,183

6,268,082 532,834 -150,817

6,650,099

Payables to suppliers -306,120

-218,582 -7,080

-225,662

other payables -3,310,414

-2,969,627 -433,504 150,817

-3,252,314

Net working capital 1,868,908

3,138,427 92,250

3,230,677

Intangible Fixed Assets 265,586

305,614

305,614

Tangible Fixed Assets 3,072,197

3,185,329

3,185,329

Financial Fixed Assets 43,057,610

24,156,193 28,341,336

52,497,529

Net fixed capital 46,395,393

27,647,135 28,341,336

55,988,472

Invested Capital 48,264,302

30,785,562 28,433,586

59,219,148

severance indemnity TFR -119,380

-86,473

-86,473

other funds -296,103

-324,385

-324,385

Total funds -415,483

-410,858

-410,858

TOTAL NET INVESTED CAPITAL 47,848,819

30,374,705 28,433,586

58,808,291

COVERINGS Net financial position at short 7,780,180

8,100,101 2,374,567

10,474,669

Net financial position at m / long-term 7,222,843

7,789,989

7,789,989

Net financial position 15,003,023

15,890,091 2,374,567

18,264,658

Own resources 32,845,795

14,484,614 26,059,019

40,543,632

TOTAL COVERINGS 47,848,819

30,374,705 28,433,586

58,808,291

It was provided for the financial year 2011 to elide the item of 150,817 Euro concerning the tax

position of the debtor Nuova Terni Industrie Chimiche SpA in respect of Terni Research S.p.A. for

the national tax consolidation.



SECTION 3

ANALYSIS OF THE FINANCIAL STATEMENTS AND THE RELATED VARIATIONS

BALANCE SHEET: ACTIVE

FIXED ASSETS

INTANGIBLE ASSETS

This item totaled Euro 265,587 for a decrease of Euro 40,027 compared to 31 December 2011.

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 FIXED ASSETS values at 31.12.2011 increases

Decreases for disposals revaluations

other changes

Values at 31.12.2012

Installation costs and 30,517 30,517

expansion

Costs of research, 34,740 34,740

development and advertising

Patents and rights to use intellectual property 41,015 1,560 42,575 Concessions, licenses, trademarks and similar rights Start-up 97,431 97,431

Assets under development and advances Others 750,051

-597 749,453

TOTAL 953,754 1,560 -597 954,716

The increase in intangible fixed assets is attributable to the purchase of software. There were no

additions to assets attributable to the merger by incorporation of Nuova Terni Industrie Chimiche

SpA.



Table 2

INTANGIBLE FIXED ASSETS

AMORTIZATION AND DEPRECIATION FUND

values at 31.12.2011 increases

Decreases for

disposals Impairment

reversals reclassifications other

changes Values at 31.12.2012

Installation costs and

extension

- formation expenses capital increase

- depreciation and amortization 27,077 1,720 28,797 Costs of research, development and advertising - Expenditure on advertis ing - depreciation and amortization 34,740 34,740 Patents and rights to use intellectual

property - depreciation and amortization 26,505 8,325 34,830

Concessions, licenses,

trademarks and similar rights

- depreciation and amortization start-up - depreciation and amortization 97,431

97,431

other

- depreciation and amortization 462,387 30,945 493,332

TOTAL 648,140 40,990 689,130

The change in the depreciation fund is due solely to the provisions for the year.

Table 3

NET VALUES

31.12.2011 31.12.2012

INTANGIBLE FIXED ASSETS original cost

Accumulated depreciation

and writedowns net values original cost

fund depreciation

and amortization net values

Costs Installation and expansion 30,517 -27,077 3,441 30,517 -28,797 1,720 Research costs development and

advertising

34,740 -34,740 -0 34,740 -34,740 -0

Patents and rights to use intellectual property 41,015 -26,505 14,510 42,575 -34,830 7,745

Concessions, licenses,

start-up 97,431 -97,431 0 97,431 -97,431 0

Others 750,051 -462,387 287,664 749,453 -493,332 256,122

TOTAL 953,754 -648,140 305,614 954,716 -689,130 265,587




This item totaled Euro 3,072,197 for a decrease of Euro 113,132 compared to 31 December 2011.

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

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

Table 1

ORIGINAL COST

Values at 31.12.2011 Increases

Decreases for disposals revaluation

Transfer from LIC and

reclassifications Value at 31.12.2012


Land and buildings - historical cost 3,697,963

3,697,963

- grants related capitale Plant and machinery - historical cost 0 2,636,750 -2,636,750 0

- grants related capitale Industrial and commercial equipment - historical cost 78,087 78,087 - grants related capitale other assets - historical cost 185,402 31,865 217,267 - grants related capitale

Assets under development and advances - historical cost - Capital grants

TOTAL 3,961,453 2,668,615 -2,636,750 - - 3,993,317

The increase is accounted for by the purchase of 32,000 hardware equipment; the sum of 2,637,000

from the investment in the photovoltaic plant with a power of 881 kWp at the site of Nera Montoro.

The plant was sold and then leased with the formula "sale and lease back" by the Company Credit -

Agriculture (Cariparma SpA), realizing a capital loss of 8,000 Euros. There were no additions to

assets attributable to the merger by incorporation of Nuova Terni Industrie Chimiche SpA.



Table 2


AMORTIZATION AND DEPRECIATION FUND

Values at 31.12.2011 increases

Decrease due to

disposals

Reversal of impairment

losses reclassifications other

changes * Values at 31.12.2012

Land and buildings

- depreciation and

amortization

- write-downs 607,642 110,939 718,581 Plants and machinery

- depreciation and

amortization

- write-downs Industrial and commercial equipment

- depreciation and

amortization

- write-downs 59,466 11,624 71,090 Other assets

- depreciation and amortization

- write-downs 109,016 22,433 131,449 Assets under development and advances - write-downs Land and buildings

TOTAL 776,124 144,996 921,120

Table 3


NET VALUES

31.12.2011 31.12.2012

original cost

Accumulated depreciation

and writedowns net values original cost

fund depreciation

and amortization net values

Land and buildings 3,697,963 -607,642 3,090,321 3,697,963 -718,581 2,979,382 Industrial and commercial equipment - - - -

78,087 -59,466 18,622 78,087 -71,090 6,997

Other assets 185,402 -109,016 76,386 217,267 -131,449 85,818

TOTAL 3,961,453 -776,124 3,185,329 3,993,317 -921,120 3,072,197



For material goods received under finance leases is shown below a detailed statement showing the

impact that would have been on the financial statements of the company if it had applied the

financial method with respect to the asset.

In particular, the activities:

Assets under finance leases

31.12.2011 CHANGES IN THE FINANCIAL YEAR 31.12.2012

gross value

accumulated amortization

Adjustments reversals of impairment

gross value

accumulated amortization

Adjustments reversals of impairment

gross value

(a)

- Plants FTV Skill 330,000 (71,500) 258,500 (16,500) 242,000 - Plant FTV Nardo 3,450,500 (258,788) 3,191,713 (172,525) 3,019,188

- Plant FTV Ntic 2,734,315 (68,358) 2,665,957

- Electric Machines 17,179 (10,599) 6,580 (3,436) 3,144

TOTAL 3,797,679 (340,887) - 3,456,792 2,734,315 - (260,819) - 5,930,289

on liabilities:

Implicit liabilities for

financial leasing transactions

Values at

31.12.2011

CHANGES IN THE FINANCIAL YEAR

Values at

31.12.2012 increases

Share Capital

repayment repurchases

- Plant FTV Skill 217,247 (23,988) 193,259

- due within 12 months 23,988 25,067

- due between 1 to 5 years 107,236 114,610

- due beyond 5 years 86,023 53,582

Plant FTV Nardo' 2,936,957 (139,277) - 2,797,680

- due within 12 months 139,277 143,388

- due between 1 to 5 years 599,455 658,160

- due beyond 5 years 2,198,225

1,996,131

Plant FTV Ntic - 2,734,315 (543,714) - 2,190,601

- due within 12 months 93,025

- due between 1 to 5 years 447,711

- due beyond 5 years

1,649,866

- Electric Machines 1,178

(1,178)

-

- due within 12 months -

- due between 1 to 5 years -

- due beyond 5 years -



TOTAL 3,155,382 2,734,315 (708,157) 5,181,541



On net equity:

Overview 31.12.2012

Total gross effect (a - b) 748,748

fiscal effect 20,450

EFFECT ON NET ASSETS 769,198

On the income statement:

Overview 2012

Reversal of fees on finance leases (333,873)

Detection of finance charges on finance leases 138,182

Recognition of:

- amortization quotas: 260,819

- Adjustments / reversals of impairment on assets under finance leases

EFFECT ON INCOME BEFORE TAXES 65,128

Fiscal effect (20,450)

EFFECT ON RESULT FOR THE FINANCIAL YEAR 44,678

FINANCIAL FIXED ASSETS

Financial fixed assets: Equity investments

The item amounted to Euro 43,057,610 with an increase of € 18,901,417 compared to 31 December

2011.

Financial fixed assets: Shareholdings in subsidiaries

The item amounted to Euro 40,962,585 with an increase of € 16,856,392 compared to 31 December

2011. It is of the shareholding for the companies below:

Name Site Share

Capital %

ownership

Carrying amount of the

investment Profit / Loss

Period Net equity at 31/12/2012

TerniEnergia S.p.A. Narni - Via dello stabilimento 1 50,529,680 56.47%

17,354,848

1,175,308

53,707,994

Italeaf S.p.A. Narni - Via dello stabilimento 1 15,000,000 100.00%

23,607,737

725,168

20,362,273



Following tables show changes during the financial year:

Shareholdings in subsidiaries

Values at 31.12.2011

CHANGES IN THE FINANCIAL YEAR Values at 31.12.2012 Increases revaluations decreases writedowns

original cost

TerniGreen S.p.A. 6,218,027 545,191 2,714,699 -9,477,918 -

TerniEnergia S.p.A. 10,041,630 7,313,219 17,354,848

Italeaf S.p.A. 23,607,737 23,607,737

Nuova Terni Industrie Chimiche S.p.A. 7,846,536 -7,846,536 -

Total 24,106,193 7,858,410 26,322,436 -17,324,454 40,962,585

The changes in shareholdings are due to the two extraordinary transactions involving the Group.

On one hand, the merger of Nuova Terni Industria Chimiche SpA in Terni Research S.p.A. resulted

in the elimination of the investment and the acquisition of the shareholding in ITALEAF SpA .

(already Nuova TIC S.r.l.) at the carrying amount which the same had in the merged company (Euro

23,608,000). On the other hand the merger of the subsidiaries TerniGreen SpA and Ternienergia

SpA, of which was given ample information in the management report, resulted in the disappearance

of the shareholding in TerniGreen SpA.

Concerning the shareholding in Italeaf SpA, it is believed that the value of the same is fully

recoverable taking account of the development plans of the subsidiary, which confirms that the

economic value of the company exceeds the net book value.

It should be noted that to guarantee the credit facility granted by Monte dei Paschi di Siena for €

6,500,000, was constituted a pledge no. 3,550,000 shares of TerniEnergia S.p.A...

Financial fixed assets: Shareholdings in other companies

The item amounted to Euro 2,095,025 and refers for Euro 50,000 for the shareholding in VITA

EDITORIALE SpA acquired in 2010, listed on the AIM segment of the Italian Stock Exchange and

Euro 2,045,000 for the shareholding in Banca Popolare di Vicenza inherited from 'the incorporation

of Nuova Terni Industria Chimiche SpA..



CURRENT ASSETS

ACCOUNTS RECEIVABLE

The item, exclusively represented by loans to Italian parties, amounted to Euro 4,513,804 with a

decrease of Euro 3,747,100 compared to 31 December 2011. Below is the detail :

accounts receivable 31.12.2012 31.12.2011 Differences

Loans and advances to clients 82,260 58,555 23,705

Receivables from subsidiaries 2,697,269 7,752,231 -5,054,962

Receivables from affiliated companies

Receivables from parent companies

Tax receivables 1,500,949 136,667 1,364,282

Receivables from Deferred tax asset 129,578 209,733 -80,155

Receivables from associated companies

Receivables from others 103,748 103,718 30

TOTAL 4,513,804 8,260,904 -3,747,100

Accounts receivables: from clients

Trade receivables amounted to € 82,260 and relate to amounts owed for services to Italian subjects

and are payable within 12 months.

Overview 31.12.2012 31.12.2011 Differences

ordinary clients 94,260 70,555 23,705

Provision for impairment -12,000 -12,000 -

TOTAL 82,260 58,555 23,705

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

for bad debts of € 12,000 that appreciates the risk of non-recoverability of certain credit positions.



Accounts receivables: from clients

This item amounts to Euro 2,697,269 and is represented by trade and financial receivables from

subsidiaries as shown below:


trade - Receivables from services 482,612 1,535,965 -1,053,353

Financial: - c / intercompany - 2,406,927 -2,406,927 - dividends 1,159,908 3,216,795 -2,056,887 - Other 1,054,749 592,545 462,205

TOTAL 2,697,269 7,752,231 -5,054,962

In the financial figures, receivables are included for Euro 1,160,000, a claim against the subsidiary

TerniEnergia Spa for the dividend of 2012, registered on the purpose. The change compared to the

previous year is justified in the least amount of dividends to be collected and in the zeroing of the

credit position relative to the c /a in respect of Nuova Terni Industria Chimiche SpA, as a result of

the incorporation of the same.

Receivables: Tax credits

Tax receivables amounted to € 1,500,949 and are detailed as:


VAT 377,098 47,170 329,928

IRES tax 1,079,870 52,960 1,026,910

IRAP tax 10,657 2,023 8,634

Other Receivables 33,323 34,513 -1,189

TOTAL 1,500,949 136,667 1,364,282

Tax credits are related to the VAT credit in addition to the credit for the 'income tax on companies

"transferred as a result of the option of the Group for the consolidated tax regime carried out in the

month of June 2011, and valid for the fiscal years 2011, 2012 and 2013.



Receivables: advance taxes

This item amounted to Euro 129,578 and is related to the recognition of deferred tax assets.


IRES paid in advance 129,578 209,733 -80,155

IRAP paid in advance

TOTAL 129,578 209,733 -80,155

Hereinafter Changes during the financial year of the temporary differences that have determined the

recording of advance taxes and changes in the corresponding IRES taxes:

TEMPORARY DIFFERENCES

31.12.2011 uses increases 31.12.2012

Compensation of directors 75,750 -58,750 30,500 47,500

Representation expenses

down payment for bad debts

27,428

27,428

Interest earned Article. 97 263,227 -263,227 Tax loss 396,259

396,259

TOTAL 762,664 -321,977 30,500 471,187

DEFERRED TAX ASSETS

31.12.2011 Uses Increases 31.12.2012

Compensation of directors 20,831 -16,156 8,388 13,062

Representation expenses

down payment for bad debts

7,543

7,543

Interest earned Article. 97 72,388 -72,388

- Tax loss 108,971

108,971

TOTAL 209,733 -88,545 8,388 129,576

Receivables: from others

Other receivables amounted to EUR 103,748 and are mainly represented by loans from GSE for the

contribution of the so-called "Energy account" on the production of photovoltaic systems of 2012 in

addition to guarantees given to third parties.




Others

- guarantee deposits 8,398 8,398 -

- Other Receivables 95,349 95,321 28

TOTAL 103,748 103,719 28

Cash and cash equivalents

This item amounted to Euro 48,837 with an increase of € 34,340 compared to 31 December 2011. It

is so detailed:


Casse di Risparmio dell'Umbria S.p.A. 12,504 2,045 10,459

UBS S.p.A. 2,401 2,093 308

Unipol S.p.A. 7,582 2,441 5,141

Banca Popolare di Vicenza S.p.A. 8,749 3,247 5,502

Cariparma S.p.A. 11,937

11,937

Intesa S Paolo S.p.A. 141

141

Checkout 5,522 4,670 851

TOTAL 48,837 14,496 34,340

Prepayments and accrued income

The item amounts to Euro 971,639 and is represented by prepayments of insurance premiums in

advance as well as the deferral of the maxi lease signed for the financing of the photovoltaic plant

(Nardo’ and Nuova TIC) and the capital loss in 2009 with the sale of the photovoltaic plant (Nardo'),

charged on an accrual basis for the entire duration of the contract.


Accrued expenses 971,639 472,660 498,979

TOTAL 971,639 472,660 498,979



STATEMENT OF LIABILITIES

NET EQUITY

The item amounted to Euro 32,845,797.

The following tables shows the movements in equity during 2011 and 2012.

Net Equity composition balance at 31.12.2010

Allocation of the earnings for the

period Other variations

Profit for the year

Balance at 31.12.2011

Distrib.ne dividendi Other Increases Decreases reclassifications

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

Share premium reserve 172,635

172,635

Legal reserve 64,960 160,886 225,846

Satutory Stocks - 1,518,334 1,518,334

Other Stocks 1,065,360 -1 1,065,359

Profit (loss) for the year 3,217,720 -1,538,500 -1,679,220

2,452,441 2,452,441

Dividends

TOTAL 13,570,675 -1,538,500

-1 2,452,441 14,484,615

Net Equity composition balance at 31.12.2011

Allocation of the earnings for the

period Other variations

Profit for the year

balance at 31.12.2012

Distrib.ne dividendi Other Increases Decreases reclassifications

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

Share premium reserve 172,635 172,635

Legal reserve 225,846 122,622 348,468

Satutory Stocks 1,518,334 791,320 2,309,654

Other Stocks 1,065,359 18,212,485 -1 19,277,843

Profit (loss) for the year 2,452,442 -2,452,442

1,687,198 1,687,198

TOTAL 14,484,615 -2,452,442 913,942 18,212,485 -1 1,687,198 32,845,797

The increase in other reserves of € 18,212,485 are relative to the surplus arising on the merger of

Nuova Terni Industrie Chimiche Spa. See what is widely described in the the relevant paragraph.

Below is the table with the information on the availability of Stocks in the net equity:



Source Amount Possibility of use Available quota

Share capital 9,050,000

Capital Stocks:

Share premium reserve 172,635 A,B 172,635

Retained earnings:

Legal reserve 348,468 A,B

Other Stocks 21,587,496 A,B 21,587,496

Profit (loss) for the year 1,687,198 A,B,C

TOTAL 32,845,797 21,760,131

Key: A: for capital increase B: for loss coverage C: for distribution to shareholders

With reference to Article 2426 of the Civil Code, it is stated that there are sufficient Stocks to cover

the amount not yet amortized of the Industrial Plant and expansion costs.

PROVISIONS FOR LIABILITIES AND CHARGES

This item totaled Euro 296,103.

The entire entry is represented by the provision for deferred taxes. It is in the detail of the provision

for deferred taxes posted in relation to the transfer of a business unit of Skill & Trust Srl 2006 in

addition to the provision for deferred taxes that the incorporated Terni Research Energy had

allocated on the capital gain on transfer in Terni Research and industries in 2009. This item also

includes deferred tax liabilities on the income from dividends recorded but not yet collected at 31

December 2012.

Description 31.12.2012 31.12.2011 Differences

Provision for deferred taxes 296,103 324,385 -28,282

TOTAL 296,103 324,385 -28,282



EMPLOYMENT TERMINATION INDEMNITY

This item totaled Euro 119,380 with an increase of € 32,907 compared to 31 December 2011. The

increase is accounted for by the provision in the period net of the advances paid to employees.


Employee severance indemnitity fund 119,380 86,473 32,907

TOTAL 119,380 86,473 32,907

PAYABLES

The item amounted to Euro 18,650,865 with a decrease of Euro 2,848,858 compared to December

312011 and is structured as follows:


Bonds Convertible bonds Amounts due to shareholders for loans

Debts owed to banks 15,051,860 15,448,438 -396,578

Payables to other lenders Advances

Payables to suppliers 306,120 218,582 87,538

Debts represented by securities

Payables to subsidiaries 3,002,692 5,260,769 -2,258,077 Payables to affiliated companies

Payables to parent companies Tax Payables 29,124 262,707 -233,583

Payables to general government Social security funds 62,951 60,220 2,731

Other debts 198,118 249,008 -50,890

TOTAL 18,650,865 21,499,723 -2,848,858



Debts: Debts owed to banks

This item amounted to Euro 15,051,860 and is represented by payables to banks for overdrafts (€

7,280,470) as well as mortgage loans (7,771,390 Euro).


Within 12 months - Bank overdrafts -7,280,470 7,155,468 -14,435,938

- Loans -548,546 502,980 -1,051,526

Over 12 months

- Loans -7,222,843 7,789,989 -15,012,833

TOTAL -15,051,860 15,448,437 -30,500,297

Overall, the loans granted by loans for a nominal value of Euro 2,658,000 are guaranteed by a

mortgage on real estate properties for an amount of € 4,520,000.

It should be noted that on guarantee of the credit line granted by Monte dei Paschi di Siena for €

6,500,000, was constituted a pledge on 4,700,000 shares of TerniEnergia S.p.A..

The variation of mortgage loans in the period is due to the periodic reimbursement in accordance

with the deadlines set by contract.

It should be noted that the funds are not subject to demands for immediate repayment on the

overcoming of specific capital requirements / economic (covenants).

Debts: Payables to suppliers

This item amounted to Euro 306,120 and is represented by amounts due to italian suppliers.


Ordinary suppliers 245,194 119,230 125,963

Invoices to be received 60,927 99,352 -38,425

TOTAL 306,120 218,582 87,538



Debiti: Payables to subsidiaries

This item amounts to Euro 3,002,692, as detailed by type:

Type 31.12.2012 31.12.2011 Differences

Trade

- services provision 1,511,296 2,047,505 -536,209

- Others 1,491,396 350,188 1,141,208

Financial - C/a centralized Treasury - 2,863,076 -2,863,076

TOTAL 3,002,692 5,260,769 -2,258,077

The change compared to the previous year is attributable to the definition of the debt position

relative to the current account as at 31 December 2011 with Nuova ICT Srl..

Debts: Tax Payables This item amounted to Euro 29,124 and is as follows:


Tax payables IVA (VAT) 216,638 -216,638

Tax payables Irap 22,113 -22,113

Inland Revenue C / Rit. Self-Employment 4,939 1,825 3,114

Inland Revenue C / Rit. employees. 24,185 11,477 12,708

Inland Revenue C / Rit. Contributors. - 10,654 -10,654

TOTAL 29,124 262,707 -233,583

The item refers to payments due to withholding taxes on income from employment and self -

employment income.

Liabilities: Payables to pension and social security

This item amounted to Euro 62,951 and consists of the debt for the contributions on remuneration

of directors, partners and employees.




Payables V / INPS 57,539 54,241 3,298

Payables V / other institutions 5,412 5,979 -567

TOTAL 62,951 60,220 2,731

Debts: Other payables

This item amounted to Euro 198,118 and is represented by the debt to directors for the unpaid fees,

by the obligation to employees for salaries for the month of September, accrued bonuses and unused

leave.


Others

Liabilities for wages and salaries 125,673 87,560 38,113

Debt V / Directors 47,500 75,750 -28,250

Sundry creditors 24,945 85,698 -60,753

TOTAL 198,118 249,008 -50,890



MEMORANDUM ACCOUNTS The Company has made the following commitments and guarantees:

GUARANTEES

Guarantee on mortgages in favour of 3,380,865

Casse di Risparmio dell'Umbria S.p.A.

3,380,865

For TerniEnergia S.p.A. in favour of:

Unicredit Leasing S.p.A. 17,426,319

Unicredit S.p.A. 1,000,000

Unicredit S.p.A. 2,700,000

Monte Paschi Siena S.p.A. 4,500,000

Monte Paschi Siena S.p.A. 8,652

Banca popolare Novara S.p.A. 10,000,000

Banca Popolare Commercio e Industria S.p.A. 4,350,000

Mediocredito S.p.A. 2,940,000

Banca Popolare dell'Etruria e Lazio S.c.r.l. 3,300,000

TOTAL GUARANTEES 46,224,971

OBLIGATIONS FOR LEASE CONTRACTS

Fineco Leasing S.p.A. 3,499,065

M.P.S Leasiong & Factoring S.p.A. 223,846

Cariparma Credit Agricole 3,139,055

TOTAL OBLIGATIONS FOR LEASE CONTRACTS 6,861,967



INCOME STATEMENT

The following is an analysis of the revenue and expenses for the period ended on 31 December 2012

compared with the previous year.

PRODUCTION VALUE

The value production amounted to Euro 2,808,337. It is composed as follows:

Description 2012 2011 Differences

Revenues from sales and services

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 2,808,337 3,046,602 -238,265

TOTAL 2,808,337 3,046,602 -238,265

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

comments set out below.

Other revenues and income

This item amounts to Euro 2,808,337, as detailed below::

Description 2012 2011 Differences

Grants related to income

Other contributions c / Financial year 576,342 422,630 153,713

Other revenues and income

Proceeds from Real Estate properties 25,458 46,565 -21,106

Proceeds from "Service Corporate" 1,868,546 1,276,042 592,504

Proceeds from sale of decommissioning materials 160,278 1,164,731 -1,004,453

Other proceeds 177,712 136,635 41,077

TOTAL 2,808,337 3,046,602 -238,266



Other revenue from sales and services are made up of the income from property, by intra-group

service for corporate services rendered to subsidiaries Terni Energia SpA and TerniGreen SpA, as

well as the contribution for operating expenses for "Energy Account" on the production of

electricity from photovoltaic systems available to the Company. This item also includes the proceeds

from the disposal of waste material arising from the activity of decommissioning of the site in Nera

Montoro owned by the subsidiary ITALEAF SpA, of which the Company took charge .

The change compared to the previous year is due to lower revenues from decommissioning (-

1,004,453 compared to 2011), partly offset by higher revenues from service and management of

photovoltaic systems.

PRODUCTION COSTS

The costs amounted to € 3,203,811 with a decrease of Euro 10,873 compared to 2011.

They are as follows:


Raw materials, consumables, supplies and goods 4,956 7,062 -2,105

Services 1,052,077 1,958,594 -906,517

Use of third party assets 709,575 410,919 298,656

Staff 1,084,004 559,914 524,090

Amortisation and impairment 185,986 197,358 -11,371

Other operating expenses 167,213 80,836 86,377

TOTAL 3,203,811 3,214,684 -10,873

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 Euro 4,956 and is represented by costs for the purchase of supplies and fuel .



Description 31 December

2012 31 December

2011 Differences

Purchase of materials 4,513 6,687 -2,175

Motor fuels and lubricants 444 375 69

TOTAL 4,956 7,062 -2,105

Services

This item amounts to Euro 1,052,077; it mainly comprises expenses for technical advice, the

operating costs of the corporate bodies, utility expenses, expenses for employees and advertising

expenses.

Description 31 December 2012 31 December 2011 Differences

- Consultancy / Professional services 292,217 155,336 136,881

- Cost administrative body 130,210 158,113 -27,903

- remuneration of auditors 9,100 9,100 -

- Travel and transfers 25,283 18,444 6,839

- Maintenance and fees 209,470 212,433 -2,963

- Cleaning and security 22,357 21,880 477

- utilities 44,932 37,075 7,856

- Banking and postal 12,023 13,597 -1,574

- Insurance 13,641 10,989 2,652

- Other external services 292,843 1,321,625 -1,028,782

TOTAL 1,052,077 1,958,594 -906,517

"Other external services" includes the consideration paid to TerniGreen SpA in relation to a contract

for the decommissioning of the industrial site in Nera Montoro for Euro 160,278 (€ 1,164,731 in

2011) justifying the change, from the previous financial year, of the item services.

Use of third party assets

The item amounts to Euros 709,575 and is represented by the expenses for the lease of offices in

Milano, Lecce and Narni, by the finance leases relating to photovoltaic plants in leasing and by

rentals for equipment and vehicles.




property leases 316,507 78,560 237,947

FTV Plant Leasing / Equipment 333,873 292,175 41,697

Hire Equipment / Vehicles 57,036 39,485 17,551

Other costs 2,159 699 1,460

TOTAL 709,575 410,919 298,656

Staff

Staff on duty costs amounted to € 1,084,004:


Wages and salaries 792,684 398,475 394,209

social security charges 228,884 119,791 109,093 Provision for severance indemnities 41,754 22,206 19,548

Other charges 20,682 19,443 1,239

TOTAL 1,084,004 559,915 524,089

.

The cost of staff is a staff of 21 units. The change compared to the previous year is explained in

2011, there was an increase in headcount of 21 units only since the second semester.

Amortisation and impairment

This item amounted to Euro 185,986 and is as follows:


2012 31 December

2011 Differences

Amortization of intangible assets 40,990 53,268 -12,278

Amortization of tangible fixed assets 144,996 144,090 907

TOTAL 185,986 197,358 -11,371

Other operating expenses

This item amounted to Euro 167,213 and was calculated as:




2012 31 December

2011 Differences

Other costs

- Other 11,685 7,108 4,577

- Losses 14,981 7,380 7,601

Tax expense

- Taxes other than income taxes 140,546 66,348 74,199

TOTAL 167,213 80,836 86,377

FINANCIAL INCOME AND EXPENSES

The Financial management has a positive balance of € 1,979,543.

They are as follows:

Description

31 December

2012

31 December

2011 Differences

FINANCIAL PROCEEDS Income from equity investments - in subsidiaries 2,277,149 3,233,326 -956,177

- 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 420,770 234,184 186,585

- from affiliated companies - from parent companies

- from others - Interest earned on bank and post a / c 121 3,748 -3,627

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

transactions with compulsory repurchase

agreements

- different investments

Profit on exchange rates Total financial income 2,698,039 3,471,258 -773,219

FINANCIAL CHARGES Interest and other financial charges - to subsidiaries 5,653 97,704 -92,051

- to affiliated companies - to parent companies - verso others - on bond debt

- on payables to banks 633,153 540,660 92,493 - interest payable on repurchase agreements

- Other financial income from sales

transactions with compulsory repurchase

agreements

- different investments 79,691 79,808 -118

Losses on foreign exchange



Total financial charges 718,496 718,172 324

TOTAL 1,979,543 2,753,086 -773,543

The amount of financial charges includes interest on bank overdrafts and loans plus interest on the

deferred payment of taxes. The item income from equity investments is recorded as, on the purpose,

the dividend of Ternienergia SpA for the year 2012 and amounted to Euro 1,159,908 in addition to

the capital gain for Euro 1,089,706 achieved by the merged Nuova Terni Industrie Chimiche SpA,

corresponding to the sale of. 3,828,712 shares of TerniGreen S.p.A. carried out in the month of

January 2012.

The change during the year is due to the lower dividend of Ternienergia recorded in the f inancial

statements as at 31 December 2012 (Euro 1,159,908) compared to the previous year (€ 3,216,795) .

EXTRAORDINARY INCOME AND EXPENSES

The Extraordinary management showed a deficit of EUR 128 427.


2012 31 December

2011 Differences

EXTRAORDINARY PROCEEDS - Windfall gains 149,714 19,970 129,744

Gains on disposal of property

TOTAL EXTRAORDINARY INCOME

EXTRAORDINARY EXPENSE - contingent liability -21,287 -146,532 125,245

- extraordinary costs -2 - -2

TOTAL 128,427 -126,563 254,989

Among the extraordinary incomes was recorded the proceed on the repayment of IRES for the

missing deduction of IRAP on staff costs for the years 2007-2011 as a result of the application

submitted pursuant to art. 2, paragraph 1-c, Decree-Law December 6, 2011, n. 201) for more than

21,629 Euro including 128,087 Euro relative to a higher estimate of the IRES and IRAP taxes in

2011, compared to those actually paid when submitting them.

The contingent liabilities detected are related to costs associated with prior periods, not registered in

their respective balance sheets.



Income taxes of the period, current deferred and advanced

Income taxes amounted to Euro 25,298 and are as follows:


Current taxes

IRES 23,614 -8,146 31,760

IRAP 22,198 22,113 85

Deferred and advanced taxes advanced taxes 7,768 1,128 6,640

Deferred taxes -28,282 -9,093 -19,190

TOTAL 25,298 6,002 19,296

FURTHER INFORMATION

Average number of employees

The number of employees at 31 December 2012 was 21 units, and so divided by category:

STAFF 2012 2011 Differences

Executives 1 1 -

Managers 3 4 -1

Employees 16 18 -2

Workers 1 -

1

TOTAL 21 23 -2

Remuneration of directors and auditors

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

performance of their duties.

THE PERCIPIENTS 2012 2011 Differences

Directors 129,250 158,000 -28,750

Auditors 9,100 9,100 -

TOTAL 138,350 167,100 -28,750



Remuneration of Auditors'

The table below shows the fees of the independent auditors for the performance of the auditing .

THE PERCIPIENTS 2012 2011 Differences

PriceWaterhouseCoopers S.p.A. 18,000 16,000 2,000

TOTAL 18,000 16,000 2,000

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.

Derivative financial instruments

Pursuant to art. 2427 bis of the Civil Code, it should be noted that the company with reference to the

financial lease contract signed for the financing of an owned photovoltaic parkland called “Nuova

TIC” has enabled an instrument of financial derivatives to cover the interest rate risk.

Specifically, for the lease contract signed with Credit Agricole Leasing SpA for an amount of Euro

2,734,315, was signed with Cassa di Risparmio di Parma e Piacenza SpA a hedging contract CAP,

with duration (18 years) and of a notional amount of Euro 1,533,42, equivalent to 70% of the

underlying loan, being actually able to set the maximum cost of the interest rate at 4.25%. The

signing of these contracts is how to relate to the prudent policy of the company in the field of

financial risk management; in fact the derivative contract has the exclusive function to limit, in view

of the duration of the loan contracts, any negative risk of fluctuation caused by an increase of interest

rates.

The situation of the contract is as follows

Funded by Institute : Casse di Risparmio di Parma e Piacenza S.p.A.

Signing date: 04/07/2012

Starting date: 29/12/2012

Maturity date: 29/06/2022

Notional principal amount: Euro 2,593,940 Indexed parameter: Euribor 3 M



Strike rate 4,5%

MTM Value: Euro +29,950

The current projection of the curve of interest rates (the rate calculation is carried out by the

institutions with which it is signed the swap contract), it generates an actual differential future value

(positive / negative) for an amount of € +17,934. The realization of such negative differential during

the year, being also possible a positive differential, is related to a future performance of interest rates

and will be applied in accordance with generally accepted accounting principles, as it relates to

hedging contracts for competence.

Contentious, investigations and judicial proceedings in progress

There are no legal proceedings or litigation pending against the company in addition to what follows .

It should be noted that an administrative proceeding is pending before the Consob for alleged

liability of the Company pursuant to art. 187-quinquies of the Consolidated Law on Finance,

connected to an alleged market manipulation on the securities of TerniEnergia, in the era in which

they were traded on the Expandi Market. Consob with decision no. 18323 of September 12th 2012

proceeded to impose an administrative penalty to the Company, in the era in which they were traded

on the Expandi Market. Consob with decision no. 18323 of September 12th 2012 proceeded to

impose an administrative penalty to the Company for Euro 150,000. Against this measure, the

Company promptly filed an appeal with the Court of Appeals in Perugia with the request for

suspension of payment.

On January 17 2013, the Court of Appeal of Perugia granted the application for suspension of the

sanction in response to requests of the Company. The management of Terni Research SpA, also on

the basis of the suspension of the sanction and the opinion of its legal advisors believes that there is

no liability to be recorded in the financial statements with respect to the recalled measure.

Information on Article 2497 ter Civil Code.

The table below shows the summary of the essential data of the last financial statements of the

Company that performs the activity of direction and coordination, pursuant to art. 2497bis of the

Civil Code.



Skill & Trust Holding S.r.l. Based in Terni - Via Garibaldi

Share capital Euro 55621.00 i.v Fiscal code Nr.Reg.Imp. n. 01399930559

Registered with the Register of Companies of Terni No. R.E.A. TR-93973

BALANCE SHEET 31.12.2011 31.12.2010

ACTIVE: A) Receivables from shareholders for outstanding

payments B) Fixed assets 2,654,206 2,655,894

C) Current assets 921,777 893,311 D) Prepayments and accrued -

TOTAL 3,575,983 3,549,206

LIABILITIES:

A) Net Equity:

Share capital 55,621 55,621

Stocks 2,460,141 2,352,398 Profit (loss) for the year 759,589 757,743 B) Provisions for risks and charges 11,031 11,031 C) Provision for employment termination benefits

D) Debts 289,562 372,303 E) Prepayments and accrued 39 109

TOTAL 3,575,983 3,549,206

INCOME STATEMENT 2011 2010

A) Production value - 57

B) Production costs 33,582 - 22,091

C) Financial income and expenses 794,933 796,284

D) Value adjustments to financial assets

E) Extraordinary income and expenses 52 - 8,045

Taxation for the year 1,814 - 8,463

Profit (loss) for the year

759,589 757,743

The highlights of the Parent Skill & Trust Holding Srl shown in the chart required by article 2497-bis

of the Civil Code have been extracted from the financial statements for the period ended on 31

December 2011. For an adequate and complete understanding of the equity and financial position at

December 31 2011 and the economic result achieved by the company for the period ended on that

date, please refer to the financial statement which together with the report of the independent

auditors is available in the forms and under the conditions provided by law.

This financial statement is composed by the balance sheet, the income statement and the explanatory

notes giving a true fair view of the assets/liabilities and financial si tuation of the company and are

consistent with the accounting records

Narni, March 25 2013

The Board of Directors

The chairman

Documents

T.E.R.N.I. ENTERPRISE FOR RESEARCH AND NEW INDUSTRIES … · sources (solar, biomass, waste), in a sustainable and economically competitive way, in favor of the national and local