The 2011 annual report of the Terna Group has been prepared in accordance with the provisions of Art. 154-ter of Italian Legislative Decree no. 58/98 introduced by Italian Legislative Decree no. 195 of 6 November 2007 (the “Transparency Decree”), as amended by Italian Legislative Decree no. 27 of 27 January 2010.

In implementation of the provision of Italian Legislative Decree no. 38 of 28 February 2005 and EEC Regulation no. 1606/2002, the Terna Group prepares the consolidated financial statements as at and for the year ended 31 December 2011 in compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and endorsed by the European Commission (hereinafter “IFRS-EU”).

The 2011 annual report has been prepared on a historic cost basis, modified where necessary for certain financial instruments, as well as on a going concern basis.