Main 2011 economic-financial results

2011 was a year that stood out not only for the reliability of the national power transmission grid and the continued investments forecast by the grid Development Plan, but also for the action taken to increase the efficiency of dispatching. It was these latter efforts in particular that have allowed us to achieve the high target for incentives, which was measured in these financial statements at fair value, in view of the three-year duration of the incentives mechanism.

The Group has also been involved in developing the photovoltaic project, which culminated in the completion of a sales contract between Terna, SunTergrid and Terra Firma Investments (GP) 3 Limited, whereby the entire share capital of Rete Rinnovabile S.r.l. was transferred. The sale generated total net income of approximately €196 million (of which €147 million recognised in the 2010 “Profit for the year from discontinued operations and assets held for sale”, as contract margin as compared with total costs sustained during the year, on the basis of works completion). Additionally, during the financial year, in order to pursue the optimisation of the projects in the field of the construction of renewable source plants, the Terna Group also undertook an investment programme named “New photovoltaic project”, which culminated in the sale, on 24 October 2011, to the private equity fund Terra Firma, of 100% of the share capital of the newly-incorporated Nuova Rete Solare S.r.l. (“NRTS S.r.l.”) for a total price of €264 million. The investments made under the scope of the "New photovoltaic project" amounted to a total of approximately €200 million.

In addition to continuing its business, optimising the management of energy flows and developing the grid, Terna did not lose sight of the opportunities arising under the scope of its core business in Italy and abroad: we note, in Montenegro, the purchase of the investment in CrnoGorski Elektroprenosni Sistem AD (“CGES”), functional to the development of the Italy-Montenegro electrical interconnection and the incorporation of the company Terna Crna Gora d.o.o..
The figures discussed below have been drawn from the reclassified statements included in the section “Group performance and financial position” of this report, taken from the consolidated financial statements as described in the notes to the reclassified statements.

Finally, we should mention the severely negative incidence seen during the financial year on the excellent results achieved by the Group during 2011. This was determined by the application to Terna and the subsidiary Terna Rete Italia, of an increased IRES (corporate income tax) rate of 10.5%, introduced by the “corrective manoeuvre-bis” approved by Italian Law Decree no. 138 of 13 August 2011, converted into Law by the Parliament on 14 September 2011. It therefore followed that for both companies, the total IRES tax rate in determining current taxes came to 38% and, in that sense, all net deferred tax funds recorded on the Parent Company’s financial statements and those of the subsidiary Terna Rete Italia were adjusted to this balance of the results as of 31 December 2011.