Basis of presentation

The measurement and recognition criteria applied in this annual financial report are consistent with those adopted in the separate financial statements at 31 December 2010.

It is appropriate to point out that, following maturity during the financial year of the contractual obligations deriving from the 2009 sale of the stake in Terna Participações, the economic effect for the release of the related earlier accrual was reclassified in accordance with the provisions of accounting standard “IFRS 5 - Non-current assets held for sale and discontinued operations”

It is also specified that some comparative financial and economic balances of year 2010 have been adjusted to consider the change to the model for booking the effects relating to the release [8] of goodwill made by Terna in 2009. More specifically, the previous model for booking substitute tax (advances on current taxes) has been reviewed in line with the different accounting recognition (prepaid and current taxes) of the substitute tax paid for the release [9] of goodwill originating from the consolidation of the subsidiary Terna Rete Italia.

More specifically, this restatement has entailed the recording at 31 December 2010 of greater deferred tax assets for an amount of €25.2 million and lower tax assets for €12.6 million, with an impact of €14.2 million recognised amongst retained earnings and €1.6 million as a lower result (greater current taxes) under shareholders’ equity as at 31 December 2010.

(8) Law Decree no. 185 of 29 November 2008, as converted into Law no. 2 of 28 January 2009.

(9) Law Decree no. 98 of 6 July 2011, converted with amendments into Law no. 111 of 15 July 2011.