Reclassified statement of financial position

The reclassified consolidated statement of financial position of the Terna Group for 2008 and 2009 is shown below. This statement was obtained by reclassifying the figures shown on the consolidated statement of financial position. As concerns the comparison with December 31, 2008, the figures for the Brazilian firms, classified as discontinued operations, remain in the various accounts concerned. Nonetheless, in order to more clearly present the actual changes in continuing operations for the period, the column “Dec. 31, 2008 - Italy” has been added, which does not include the figures for the Brazilian firms for 2008.

In millions of euros
Dec. 31, 2009Dec. 31, 2008ChangeDec. 31, 2008 ItalyChange
Net non-current assets      
Intangible assets and goodwill 372.2 483.2 -111.0 255.8 116.4
Property, plant and equipment 7,075.3 6,035.8 1,039.5 5,415.6 1,659.7
Financial assets(1) 21.0 43.7 -22.7 14.4 6.6
Total 7,468.5 6,562.7 905.8 5,685.8 1,782.7
Net working capital      
Trade receivables(2) 371.8 264.2 107.6 239.8 132.0
Inventories 11.7 17.7 -6.0 16.6 -4.9
Other assets (3) 10.7 17.5 -6.8 13.7 -3.0
Trade payables (4) 381.3 326.3 55.0 320.1 61.2
Payables for pass-through energy items, net (5) 303.4 88.1 215.3 88.1 215.3
Tax liabilities, net (6) 14.8 -21.0 35.8 -24.7 39.5
Other liabilities(7) 265.3 514.2 -248.9 250.3 15.0
Total -570.6 -608.2 37.6 -363.7 -206.9
Gross invested capital 6,897.9 5,954.5 943.4 5,322.1 1,575.8
Sundry provisions(8) 638.3 425.0 213.3 546.3 92.0
Net invested capital for continuing operations 6,259.6 5,529.5 730.1 4,775.8 1,483.8
Net invested capital for discontinued operations and assets held for sale0.1 0.0 0.1 0.0 0.1
Total net invested capital6,259.75,529.5730.24,775.81,483.9
Equity attributable to the shareholders of the Parent 2,501.5 2,076.8 424.7

Equity attributable to minority interests 0.0 86.9 -86.9

Total net financial debt (9) 3,758.2 3,365.8 392.4

Net financial debt - Italy 3,758.2 2,953.6 804.6

Total 6,259.7 5,529.5 730.2

In the consolidated statement of financial position these correspond to:
(1) “Equity-accounted investees” and “ Other non-current assets”;
(2) “Trade receivables” net of receivables for pass-through energy revenue (€797.3 million);
(3) “Other current assets” net of other tax receivables (€17.9 million) and “Current financial assets” for the value of deferred assets (€1.0 million);
(4) “Trade payables” net of payables for pass-through energy items (€1,100.7 million);
(5) “Trade receivables” for the value of receivables for pass-through energy revenue (€797.3 million) and “Trade payables” for the value of payables for pass-through energy items (€1,100.7 million);
(6) “Other current assets” for the value of other tax receivables (€17.9 million), “Other current liabilities” for other tax payables (€7.1 million), “Income tax assets” and “Income tax liabilities”;
(7) “Other non-current liabilities”, “Current financial liabilities” and “Other current liabilities” net of other tax liabilities (€88.2 million);
(8) “Employee benefits”, “Provisions for contingencies and charges" and “Deferred tax liabilities”;
(9) “Long-term loans”, “Current portion of long-term loans”, “Short-term loans”, “Non-current financial liabilities”, “Cash and cash equivalents”, “Non-current financial assets” and “Current financial assets” for the value of short-term securities (€500.0 million).

The €905.8 million increase in net non-current assets over the figures at December 31, 2008, is attributable to the following:

  • Intangible assets and goodwill: decreased by €111.0 million due to the combined effect of the following events:
    • the reclassification of the value at December 31, 2008 of assets sold in the amount of €227.4 million, and specifically for goodwill (€115.3 million) and concessions (€112.1 million) for the Brazilian subsidiaries;
    • net changes in the intangible assets of the Parent in the amount of €9 million (for details of these items, see the section “Terna S.p.A. performance and financial position”);
    • the recognition of goodwill (€101.6 million) and intangible assets (€5.8 million, net of amortisation for the last nine months of 2009) following the definitive allocation of the greater value paid for the TELAT acquisition compared with the fair value of the assets and liabilities at the date of said acquisition.
  • Property, plant and equipment: increased by €1,659.7 million for the year (net of the reclassification of the 2008 balance related to discontinued operations), due mainly to the joint effect of the following:
    • changes in property, plant and equipment for the Parent in the amount of €560.7 million, as described in relation to statement of financial position items in the section “Terna S.p.A. performance and financial position”;
    • the acquisition of the TELAT lines in the amount of €1,101.4 million, including the definitive allocation of the excess cost (€224.2 million) paid to acquire the company;
    • investments (€22.6 million) and depreciation (€28.9 million) for TELAT related to the last nine months of the year;
    • investments made by SunTergrid in 2009 (€5.7 million) related to the construction of photovoltaic plants on land owned by the Parent and located near power transformer stations. It should also be noted that the first photovoltaic plant in the Ragusa area went into operation at the end of December 2009.

The following is a summary breakdown of the changes in property, plant and equipment for the year:

In millions of euros 2009
Investments  
Transmission lines 339.5
Transformer stations 377.9
Other 142.4
Total investments 859.8
Change in scope of consolidation 1,101.4
Amortisation and depreciation (277.3)
Disposals, impairment losses and other changes (24.2)
Total 1,659.7

Total investments made by the Group during the year related to continuing operations totalled €900.4 million (€859.8 million related to property, plant and equipment), for an increase of 17.7% on 2008.

  • Financial assets: the €6.6 million increase, net of the reclassification of the 2008 value of the item related to the discontinued Brazilian operations (€29.3 million), is essentially attributable to the following factors:
    • recognition of the cost incurred for the additional equity investments in the associate CESI (€2 million) acquired from A2A S.p.A. (1.871% interest) and Siemens S.p.A. (4.68% interest) and adjustment of the equity investment at the end of the period related to the share held by the Group in said companies (€3.0 million);
    • recognition of the joint venture equity investment in the Tunisian firm ELMED ÉTUDES (in the amount of €0.7 million).

Net working capital came to a negative €570.6 million for 2009, generating €206.9 million in liquidity net of the reclassification of discontinued operations, and is related essentially to the following:

  • Trade receivables: the €132.0 million increase is mainly attributable to the Parent (€129.9 million), but also includes the trade receivables of TELAT (€2.1 million) primarily from Enel.Net and Enel Distribuzione for the housing of fibre optic cables for the networks owned (€1.0 million);
  • Trade payables: the €61.2 million increase is essentially attributable to the Parent in the amount of €51.8 million, as well as to the payables contributed by TELAT in the amount of €8.6 million, which are due primarily from Enel Distribuzione for materials and services received during the last period;
  • Net payables for pass-through energy items: the €215.3 million increase is attributable in its entirety to the Parent;
  • Tax liabilities: the increase in net tax liabilities (€39.5 million) is almost entirely related to the increase in tax payables for the Parent (€16.5 million) and to the recognition of income tax expense for the year (€23.2 million) by the subsidiary TELAT;
  • Other liabilities: the €15.0 million increase is essentially attributable to the Parent.

Therefore, gross invested capital posted a balance of €6,897.9 million, for an increase of €1,575.8 million over the figure (net of the Brazilian assets) at December 31, 2008.

Sundry provisions for continuing operations increased by €92.0 million. This change is due to the changes in provisions for the Parent in the amount of €3.0 million (see “Terna S.p.A. performance and financial position” above), as well as to the following effects:

  • recognition of the net deferred tax liabilities on the greater value allocated to the NTG and to the intangible assets acquired with TELAT in the amount of €70.3 million, net of the release of related depreciation and amortisation for the last nine months of the year;
  • the contribution to net deferred tax liabilities of TELAT (€17.6 million as at December 31, 2009) related to the past allocations calculated on depreciation and amortisation in excess of ordinary depreciation and amortisation rates.

Net invested capital for continuing operations came to €6,259.6 million, for an increase of €1,483.8 million over the €4,775.8 million as at December 31, 2008.

Net invested capital for discontinued operations and assets held for sale, in the amount of €0.1 million, is related to the residual value of the equity investment in Terna Participações (10,000 units), which is to be sold by Terna as part of the public takeover bid to be issued by TAESA S.A., the company that acquired control of Terna Participações S.A.

Total net invested capital at December 31, 2009, came to €6,259.7 million and is funded by equity, attributable entirely to the shareholders of the Parent, in the amount of €2,501.5 million (compared with €2,163.7 million at December 31, 2008, €2,076.8 million of which attributable to the shareholders of the Parent) and by net financial debt, related entirely to continuing operations, in the amount of €3,758.2 million (an increase of €392.4 million from December 31, 2008, or of €804.6 million net of the debt of the Brazilian subsidiaries).

The following is a breakdown of net financial debt:

In millions of euros Dec. 31, 2009 Dec. 31, 2008 Change
Continuing operations      
Long-term debt and related hedges 4,218.3 3,642.8 575.5
Short-term loans -460.0 - -460.0
Cash and cash equivalents -0.1 -689.2 689.1
Total financial debt from continuing operations 3,758.2 2,953.6 804.6
Total financial debt from discontinued operations-412.2-412.2
Total financial debt3,758.23,365.8392.4

For a breakdown of the individual components of this net financial debt at December 31, 2009, see “Cash flows” below.

As a result, the debt-to-equity ratio at the end of 2009 came to 1.50, compared with 1.42 at December 31, 2008, which does not take account of the debt position of the Brazilian firms.